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Page added on January 17, 2016
Think Plummeting Oil Prices a Good Thing? Think Again
It is far from clear whether the recent plunge in international commodity prices in general, and in oil prices in particular, will provide a boost to the U.S. economic recovery.
While those price declines would certainly provide the equivalent of a sizable tax cut for U.S. consumers, they will deliver a major blow to the increasingly important U.S. oil industry, as well as to commodity-producing emerging market economies.
In so doing, they could cause serious strains in the U.S. and global financial system.
Over the past year, the earlier super-international commodity boom has turned into a spectacular bust. International oil prices—which a little over a year ago had exceeded $100 a barrel—have declined by 70 percent to their present level of around $30 a barrel.
Similar outsized price declines have been recorded in a wide range of other industrial commodity prices like iron ore and copper. It is not expected that these price declines will be reversed anytime soon, especially given the marked slowing under way in Chinese economic growth.
Lower international oil prices soon translate into significantly lower gasoline prices at the pump, the equivalent of a tax cut for U.S. consumers. That in turn may boost the U.S. economic recovery. Indeed, various macro-economic estimates would suggest that the consumption boost to U.S. GDP growth from a 70 percent decline in oil prices could be anywhere between 0.75 percent and 1.5 percent.
Sadly, there are two major offsets of this benefit for the U.S. economic recovery. The first is that the U.S. economy itself now again has a large oil sector. Over the past five years, as a result of the shale oil revolution, U.S. oil production has increased by 50 percent from around 6 million barrels a day to its present level of 9 million barrels a day.
However, at $30 a barrel, the shale oil industry is no longer profitable. This is already causing major investment and employment cutbacks in the oil and gas industry, which is estimated to employ around 2 percent of the U.S. workforce. It is also raising the risk of major defaults on the $200 billion in loans that have been extended to the domestic shale oil industry.
The second major downside to the bust in international commodity prices is that it plunges into recession major emerging market economies like Brazil, Russia and South Africa. This could have important consequences for the U.S. and global economic recoveries.
According to World Bank estimates, a 1 percentage point decline in the growth of the BRICS economies (Brazil, Russia, India, China and South Africa) could shave off as much as 0.4 percent from global economic growth.
More serious still, the sharp reversal of the emerging market economies’ fortunes could put into question their corporate sector’s ability to service its $5 trillion in U.S. dollar denominated debt. That in turn could add to the stresses already appearing in the global financial system.
Hopefully, the Fed is paying close attention to the negative fallout from the international commodity prices on the emerging market economies. For then it might not be in quite as much of a hurry to raise U.S. interest rates three to four times in 2016, as it presently seems to be contemplating.
38 Comments on "Think Plummeting Oil Prices a Good Thing? Think Again"
makati1 on Sun, 17th Jan 2016 8:34 pm
Of course it is a good thing! It will cause the collapse of the current global system and force a reset to a much lower world economy. It will also destroy the ability of a certain arrogant nation to support 11+ carrier fleets and 1,000 foreign bases. THAT is a very good thing.
It will take down the elite and make their toys worthless. Their paper wealth will evaporate into the nothingness it really is. Their power will drain away. The resources of the world will remain where they are.
I only ask, Can it happen tomorrow?
twocats on Sun, 17th Jan 2016 8:48 pm
Even newsweek is smarter than Boat: that’s gotta sting.
Boat on Sun, 17th Jan 2016 9:42 pm
twocats,
I am not emotionally invested in who pumps the oil or how much it costs. I am also not emotionally invested in the US or world economy or climate change or the price of cheese in Scotland. I do enjoy looking at numbers and try to stay current and know what is going on. Since as one human I cannot make an impact on any global or national topic I am content with just learning information. This is how a mature adult looks at the world. Try it.
Apneaman on Sun, 17th Jan 2016 9:54 pm
Boat, you cheerlead capitalism, techno industrial civilization and the American myth as much as anyone I have ever come across on the tubes. You’re a true believer Boat and belief is 100% pure emotion. Keep bullshitting yourself by all means though. It keeps up the dopamine levels.
If you have five minutes, Dr. Robert Sapolsky, professor of biology and neurology at Stanford University, delivers a brilliant crash course on how dopamine manipulates behavior. As Dr. Sapolsky explains, dopamine levels increase as soon as we start anticipating a reward. Once the dopamine starts flowing, monkeys and people will work and work and work in expectation of receiving a treat at the end of the toil. For monkeys, the anticipated reward can be a grape. For people it can be a pair of sneakers, a shiny car, an MBA that might lead to a high-paying job, early retirement, a couple of minutes of entertaining diversion, a few seconds of sexual gratification, or the promise of eternal salvation.
There are no discernible differences between how monkeys’ and human’s neurochemistry functions. The only distinction is that monkeys don’t get hooked on beliefs, ideologies, dogma, degrees, titles, fantasies, lies, empty promises, or self-deceptions.
http://dopamineproject.org/2011/07/same-neurochemistry-one-difference-dr-robert-sapolsky-on-dopamine/
twocats on Sun, 17th Jan 2016 10:02 pm
I am not emotionally invested in who pumps the oil or how much it costs. [boat]
do you only catch red herring on your boat, Boat? Because that’s all you seem to bring back. Never said you were emotionally invested. The comment I made was in response to your “greatest wealth transfer” statement from a couple days ago and other comments implying that the drop in prices are unequivocally good. Which I agree with Apman, was a hysterical is a sad, bizarre way.
twocats on Sun, 17th Jan 2016 10:04 pm
*was hysterical IN a sad way
twocats on Sun, 17th Jan 2016 10:11 pm
Apneaman – Robert Sapolsky –> well played, I’ve read several of his books. Yes, Boat often plays the savvy “I’ve got moves like Jagger” businessman. If that’s a front, that’s pathetic. If it’s not, it just goes to your point. He’s in the game and of the game. Every now and again he might be able to latch onto a nugget of truth, but he certainly doesn’t know what to do with it.
Apneaman on Sun, 17th Jan 2016 10:45 pm
twocats, if you dig Sapolsky, but can’t afford the University of Stanford tuition……
https://www.youtube.com/playlist?list=PL150326949691B199
makati1 on Sun, 17th Jan 2016 11:05 pm
This is what is happening to the ‘exceptional’ country…
“A 2015 list compiled by a private consulting firm ranked the U.S. 22nd among the world’s most reputable countries. Canada occupied the top spot, and nations like Sweden, Australia, Finland and Thailand all ranked higher than the U.S., which came in just ahead of Poland and the Czech Republic.”
http://www.truthdig.com/report/item/donald_trump_police_brutality_guns_the_united_states_reputation_20160115
The list?
http://www.forbes.com/sites/susanadams/2015/07/15/the-worlds-most-reputable-countries-2015/#2715e4857a0b6e9eef4e3802
Interesting!
Apneaman on Sun, 17th Jan 2016 11:47 pm
Drilling Downturn Hits U.S. Oil Consumption: Kemp
“INPUT-OUTPUT ACCOUNTS
In 2014, oil and gas producers required around 10 cents worth of oil and gas production to produce $1 of oil and gas output, according to the BEA (“Commodity-by-industry direct requirements” 2014).
Drilling rigs and hydraulic fracturing pumps mostly employ high-horsepower diesel-electric engines that run 24 hours per day consuming enormous quantities of diesel.
Most of the heating, lighting and other services at remote well sites are also provided by diesel-electric generators.
Fuel consumption is one of the largest operating costs for oil and gas drilling firms, especially when diesel prices are high.
In addition to all this direct demand for oil and gas created by the drilling industry, there is also the indirect demand created by all the other products used by the drilling industry.”
http://www.worldenergynews.com/news/drilling-downturn-hits-oil-consumption-kemp-638894
Hello on Mon, 18th Jan 2016 5:47 am
High oil price == doom.
Low oil price == doom.
Is that true?
But then we look at reality and find:
high oil price != doom
low oil price != doom
It certainly makes one wonder.
rockman on Mon, 18th Jan 2016 6:42 am
“Fuel consumption is one of the largest operating costs for oil and gas drilling firms” Sorry Ape…not even close. I approve the invoices for all the services we use to drill so I see all the costs. It varies but the fuel bill for a well typically runs between 5% and 10% of the total costs. A big 1,500 hp rig might burn 1,500 gallons of diesel per day. At $4/gal that’s $6,000/day. Consider during the Eagle Ford Shale boom rigs were running $24k/day and directional drilling services $18k/day. Add the mud bill et al and a typical burn rate was $60k to $90k per day depending on what they were doing on a given day.
This is the point that so many have gotten wrong about EROEI: it doesn’t take much oi production to replace the diesel burned during drilling including all the transport fuel. As I’ve pointed out many times most wells fail to reach economic muster at an EROEI of around 5 or 6: at that point the total drilling/completion cost will usually kill a project…not the EROEI. One can try to use the embedded energy used to make the rig, casing, drill pipe, etc. But even that has to be amortized over the hundreds of wells drilled by a rig over its lifetime. OTOH that energy has been spent and it plays no part in the decision to drill: that energy is gone whether the rig drills 10 wells or 100 wells over its life. No operator pays to have a rig built to just drill its wells. Of course drilling costs have come down as a result of the decrease in activity as a result of lower oil prices…but so has the price of diesel: since the drilling slump began in late 2014 that price has declined 40% so the % of total well cost has changed very little.
Davy on Mon, 18th Jan 2016 7:09 am
Is the energy mark-to-market debacle the next disguised US bank bailout?
“Wells Fargo Is Bad, But Citi Is Worse”
“Earlier we reported that Wells Fargo may have an energy problem because as CFO John Shrewsbury revealed, of the $17 billion in energy exposure, “most of it” was junk rated.” Citi did not. Yes, the bank did disclose its holdings to the oil and gas sector at $21 billion funded and $58 billion which included unfunded (watch that unfunded exposure collapsing and shrinking the available pool of shale company liquidity in the coming weeks),”
“One wonders just how much of Gerspach’s decision was dictated by the Fed’s under the table suggestion to avoid mark to market in energy entirely, and thus to stop marking its loan book. To be sure, without knowing the total amount of reserves to oil are, one simply can’t do any calculations on Citi’s total energy book,”
“Because with megabanks such as Citi refusing to disclose energy losses, the longer the Fed remains mute on just what it knows that nobody else does, the more concerned the market will be that the subprime crisis is quietly playing out under its nose all over again.”
Davy on Mon, 18th Jan 2016 7:55 am
This may not be direct correlation and causation but it does indicate instability and disequilibrium.
“What Crisis Is The Gold/Oil Ratio Predicting This Time?”
http://www.zerohedge.com/news/2016-01-17/what-crisis-goldoil-ratio-predicting-time
“The number of barrels of oil that a single ounce of gold can buy has never, ever been higher. For the last 30 years, when the ratio of gold-to-oil spikes, something systemically serious occurs globally (as opposed to the usual bullshit “this is transitory” statements). So what happens next?”
shortonoil on Mon, 18th Jan 2016 9:40 am
“This is the point that so many have gotten wrong about EROEI: it doesn’t take much oi production to replace the diesel burned during drilling including all the transport fuel. As I’ve pointed out many times most wells fail to reach economic muster at an EROEI of around 5 or 6:”
The rule of thumb that reservoir engineers use is a WOR (water oil ratio) of 40 – 45: 1 were a well is no longer economical to operate, and is shut in. That is for a water cut (Sw) of 97.5 to 97.8%. A WOR of 45:1 gives an ERoEI of 6.9:1. That is also the theoretical limit established for oil production as determined by the Etp Model. Those calculations are shown in Section 7, page 38 of our report “Depletion: A determination for the world’s petroleum reserves”. The Etp Model has derived from thermodynamic considerations the “dead state” for petroleum production at the same point that reserve engineers, through trail and error, have determined the point where a well is to be shut in. It is a straight forward confirmation of the Model’s validity.
“This is the point that so many have gotten wrong about EROEI: it doesn’t take much oil production to replace the diesel burned during drilling including all the transport fuel.
Dollar fuel cost can not be used to determine ERoEI. ERoEI is an energy relationship, and dollars will usually not accurately represent that relationship. The energy to produce the fuel must be taken into consideration. All the energy costs of producing a fuel are not borne by the the producer. The producer does not pay for much of the infrastructure, and services used to produce the product. They do not pay for the roads, military, regulatory agencies, education of the their employees, health care services, and etc. The producer is but a very tiny fraction of the society that must operate in the background to make production possible. It is only through a thermodynamic analysis that ERoEI can be determined. Economic analysis is almost completely useless in this situation. It can not ascertain all the inputs that go into the production of petroleum and its products.
http://www.thehillsgroup.org/
Davy on Mon, 18th Jan 2016 9:59 am
Are commodity trading firms a significant sources of systematic risk? This question of course knocks on to energy sector. Are we heading into an environment not unlike the 08 crisis? A different time and circumstance but the same fundamental economic destabilization with a systematically worse global financial arrangement especially considering China’s unwind.
“Glencore’s “Investment Grade” Bonds Just Took Out September Crash Lows: Downgrade To Junk Imminent”
http://www.zerohedge.com/news/2016-01-18/glencores-investment-grade-bonds-just-took-out-september-crash-lows-downgrade-junk-i
“However, following the recent junking of Noble Group which has sent its stock price to 12 year lows and which hints that a bankruptcy is now virtually inevitable, we expect Glencore to be junked any day now, with the ensuing cascade of margin and collateral calls testing just how “systematically unimportant” the world’s largest commodity traders really are, because remember: the world’s favorite finance “expert” for Wall Street hire, Craig Pirrong, recently concluded that “Commodity trading firms are not a source of systemic risk.” We’ll find out soon enough.”
Kenz300 on Mon, 18th Jan 2016 10:08 am
Prices will stabilize when high cost producers go broke.
Half of U.S. Fracking Industry Could Go Bankrupt as Oil Prices Continue to Fall
http://ecowatch.com/2016/01/18/fracking-industry-bankrupt/?utm_source=EcoWatch+List&utm_campaign=bddf330f10-Top_News_1_18_2016&utm_medium=email&utm_term=0_49c7d43dc9-bddf330f10-86023917
Apneaman on Mon, 18th Jan 2016 11:32 am
What’s Next for Oil: Whiplash
“BUT those stocks did not just appear because prices fell — or in order to make prices fall. If you go back ten years or more in IEA records, you find that there have always been around 2.7 billion barrels in the pipeline, so to speak. So the present number, far from representing a sudden tsunami of unwanted oil, represents an uptick of just 300 million barrels, a 10 per cent increase. It represents about a three day supply of oil at current global consumption rates.
Far from being a tsunami of excess oil swamping the world, this glut is hardly enough to get our shoes wet.”
http://www.dailyimpact.net/2016/01/18/whats-next-for-oil-whiplash/
shortonoil on Mon, 18th Jan 2016 11:35 am
The loss of a Gb of production will reduce the world’s economy by about 3%, or $2.1 trillion per year. As production falls demand will also fall because the economy will be slowing. We expect reporting of a fall in production to take place with a considerable lag. Most reporting agencies, like the EIA or JODY, depend heavily on reports from individual producing nations to compile total world production. Nations will be very reluctant to report a fall in their output for several reasons.
A fall in production will affect their credit standing, and will have a negative impact on their bond portfolios. It will increase the interest rate on the bonds that they issue, thus increasing their cost to borrow. Many nations, especially in the Middle East, are already experiencing considerable social unrest. A report of a fall in production will only serve to aggravate an already delicate situation. People, or parties now in power are not likely to be willing to weaken their now often tenuous positions by allowing reports of falling production.
We can hardly expect truthfulness from governments when it is likely to have devastating results for them. It is more likely that we will see a continuation of the unraveling of the world’s economy as production declines go unreported!
http://www.thehillsgroup.org/
Davy on Mon, 18th Jan 2016 11:42 am
“It is very similar to what you get before you slip into a crisis”
http://www.fuw.ch/article/it-is-very-similar-to-what-you-get-before-you-slip-into-a-crisis/
“Wall Street veteran Art Cashin warns that bankruptcies in the US oil industry could cause severe stress in the financial system. He believes the rate hike of the Federal Reserve was a mistake.”
“A main source of concern is the sharp drop in oil prices. Both, WTI and Brent, closed below $30 on Friday. Why is this causing so much havoc on Wall Street?
Investors are concerned that many of the small and domestic producers here in the United States have money owned in the high yield market. So if oil prices continue to go lower they’re afraid that up to two thirds of those fracking companies may go into bankruptcy. They fear that through financial contagion those bankruptcies would then begin to spread into other areas of the financial markets.”
“Are there already signs of contagion?
Several market participants have been asked to put up more collateral to prepare for bad loans. Also, on Wednesday there were both rumors and indications that there was a good deal of forced selling going on. There were rumors that it could have been either a hedge fund or a sovereign wealth fund, maybe investors who are exposed to the oil prices. It could have been Saudi Arabia or Norway. Forced selling and margin calls are very hard to deal with because such an investor basically has no latitude. Positions must be sold at any price and that’s very difficult for the market.”
Dredd on Mon, 18th Jan 2016 11:59 am
Plummeting oil usage is a good thing (The Evolution of Models – 20)
Apneaman on Mon, 18th Jan 2016 11:59 am
Yabut we don’t need oil because of the solar and EV revolution.
The power grid’s greatest enemy has four legs and a bushy tail
CyberSquirrel1 aims to show that it’s not hackers we should be afraid of – it’s squirrels
http://www.theguardian.com/technology/2016/jan/14/power-grid-cybersquirrel1-hackers-cyberwarfare
The mighty techno industrial ape about to be brought down by a cute rodent.
rockman on Mon, 18th Jan 2016 12:27 pm
“Dollar fuel cost cannot be used to determine EROEI. EROEI is an energy relationship, and dollars will usually not accurately represent that relationship. The energy to produce the fuel must be taken into consideration”. But from a drilling decision point of view I couldn’t care less what the EROEI of the refining process might be. The refiner might be using 10% more Btu’s to make my diesel then in the fuel itself. All I care about is the economic analysis of my project. If it passes muster on that basis I drill…if not I don’t.
But it’s also same for the refiner: if I use 20,000 bo to produce 10,000 bo the refiner couldn’t care less. He buys my oil based on a price he estimates he can make a profit by selling the products. If you want to run an EROEI estimate on the entire dynamic from prospect generating, leasing, drilling, producing, transporting, refining, marketing, Etc that’s fine But that EROEI will not have any bearing on the various decisions made by the various actors in this play. As I’ve said many times EROEI never has and never will be used to make drilling decisions. I’ll assume the same for a refiner: he might well use 100 Btu’s to generate 90 Btu’s of product. But if he sells those 90 Btu’s for 50% more than the cost of those 100 Btu’s then he’ll do it.
None of us, the Rockman, the drilling contractor or the refiner, are in the business of creating more Btu’s then we use. We’re in the business of generating a profit from our INDIVIDUAL efforts. In the case of the Rockman it will be rare to find an ECONOMICALLY viable drilling opportunity with an EROEI of less than 5. And a refiner? The Rockman doesn’t know. And more important: doesn’t care.
Outcast_Searcher on Mon, 18th Jan 2016 1:05 pm
shortonoil wrote:
“All the energy costs of producing a fuel are not borne by the the producer. The producer does not pay for much of the infrastructure, and services used to produce the product.”
Unimportant. They either produce them or buy them or pay taxes on them. That’s the way capitalism works. Something for nothing doesn’t work. There’s nothing new here just because we’re in a glut.
“They do not pay for the roads, military, regulatory agencies, education of the their employees, health care services, and etc.”
Wrong again. They pay taxes. Taxes fund government services, whether for oil producers, producers of other products, or the citizens that consume them. Do you act this daft deliberately?
Again, just because we currently have a glut of oil doesn’t mean any of these basic concepts have changed.
twocats on Mon, 18th Jan 2016 1:05 pm
I love this conversation between rockman and short. Go outside and find the nearest ant-colony and systematically begin destroying it. Not too quickly (so that the ants bail and move the queen to a new location), but fast enough that they can’t rebuild what’s getting destroyed. At no point will the ants stop and say, “Jeez, all this running around isn’t doing us any good”. Each individual ant will look at the section he just repaired or contributed to and will say, “Job well done! Time for a cold one.”
Apneaman on Mon, 18th Jan 2016 1:23 pm
Outcast, thanks for the text book indoctrination version of how capitalism is supposed to work and did for a few decades. It’s actually working the opposite way you have described. Can’t do all that shit when you impoverish the tax base. As long as the story makes you feel good.
Oxfam says wealth of richest 1% equal to other 99%
http://www.bbc.com/news/business-35339475
Bernie Sanders Exposes 18 Top Corporate Tax Dodgers
“These are some of the same CEOs who head corporations that:
*Received a total taxpayer bailout of more than $2.5 trillion from the Federal Reserve and the Treasury Department and nearly caused the economy to collapse just four years ago;
*Outsourced hundreds of thousands of American jobs to China and other low wage countries, forcing their workers to receive unemployment insurance and other federal benefits;
*Avoided at least $34.5 billion in taxes by setting up more than 600 subsidiaries in the Cayman Islands, Bermuda, and other offshore tax havens since 2008;
*And a dozen of these companies paid no corporate income taxes in at least one year since 2008, while receiving more than $6.4 billion in tax refunds from the IRS, after making billions in profits.”
http://www.dailykos.com/story/2015/5/8/1356547/-Good-Times-The-Day-Bernie-Sanders-Exposed-18-Top-Corporate-Tax-Dodgers
onlooker on Mon, 18th Jan 2016 2:06 pm
So true what AP said the very nature of capitalism and the way it has evolved precludes and sense of fairness or responsibility. Here is this quote I found: “Capitalism is like cancer. Once it enters a host country’s economy, it will spread and devour labor, the environment, and any other impediment to the growth of profit. Growth for the sake of growth is the ideology of the cancer cell. The essence of capitalism is to turn nature into commodities and commodities into capital. However, the world cannot continue to get richer as the earth becomes poorer. Just as the only inevitability in life is death, the only inevitability about our capitalist way of life, is the death of our planet [and our civilization].”
shortonoil on Mon, 18th Jan 2016 2:20 pm
“Outcast, thanks for the text book indoctrination version of how capitalism is supposed to work”
Less than half of all government expenditures are covered by taxes, the remainder is borrowed. All the income taxes paid to the IRS each year just barely covers the interest cost on the National debt. So much for the, they pay for it in taxes, idea.
shortonoil on Mon, 18th Jan 2016 2:37 pm
For 2012, the last year we calculated the societal cost of producing petroleum, it was $2.1 trillion. 59% of the 2012 US Federal budget. 13% of its GDP.
http://www.thehillsgroup.org/
BC on Mon, 18th Jan 2016 3:09 pm
With the post-2007 trend rate of real GDP per capita at ~0% and the cyclical trend at ~1%, the collapse in oil and gasoline prices is being more than offset by the acceleration of the increase in “health” care costs (19% of GDP, $10,000 per capita, and $26,000 per household) and rents for 35% of US households.
And this is occurring with ~3-3.5Mbd of marginal increase in US oil production since 2008-09 being unprofitable, implying a decline in oil production into the end of the decade to continue the inexorable decline in oil production per capita below the current 45% decline since 1970.
$28-$29 WTI is still not net “cheap” vs. oil consumption to final sales and the differential change rates since 2007-08.
The deleveraging financial sector will exacerbate the effects of this fact in the next 12-18+ months.
shortonoil on Mon, 18th Jan 2016 3:26 pm
Thanks BC
“implying a decline in oil production into the end of the decade to continue the inexorable decline in oil production per capita below the current 45% decline since 1970.”
We concur completely.
http://www.thehillsgroup.org/
shortonoil on Mon, 18th Jan 2016 3:35 pm
We also would like to state that by our calculations it will require the formation of $59 trillion in additional debt over the next decade to maintain world petroleum production to a level equal to world consumption over that same period.
shortonoil on Mon, 18th Jan 2016 4:44 pm
Typ0, that should be $39 trillion
Outcast_Searcher on Mon, 18th Jan 2016 5:58 pm
shortonoil said:
“Less than half of all government expenditures are covered by taxes, the remainder is borrowed. All the income taxes paid to the IRS each year just barely covers the interest cost on the National debt. So much for the, they pay for it in taxes, idea.”
Funny thing about numbers, short. They have precise meanings and statements about them can be evaluated.
In fiscal 2015, Federal tax receipts were at a record, just shy $3.25 trillion. The federal deficit was just shy of $440 billion.
http://www.cnsnews.com/news/article/terence-p-jeffrey/3248723000000-federal-taxes-set-record-fy-2015-21833-worker-feds-0
OTOH, the interest on the US national debt averaged very close to $400 billion in Fiscal 2012 through 2015.
https://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm
So, the 2015 revenue was about EIGHT TIMES the anount of the interest on the
Federal debt in recent years.
Also, Federal tax receipts were over $3 trillion for 2014, and $2.8 trillion for 2013. So while the federal revenue has been increasing in recent years, reflecting an improving economy, the overall pattern here is quite solid.
Also, since the US Federal deficit for 2015 is only a little over an eighth of the Federal tax receipts, that makes your statement that “less than half of government expenditures are covered by taxes” completely false. Actually, nearly 90% are.
The sad thing is, it’s not like this kind of thing isn’t easily verified on the web, with multiple reliable sources.
Now, if you make statements this wildly inaccurate about taxes, with no confirming work, how carefully should we believe your statements about oil production and its future economic impacts are?
Apneaman on Tue, 19th Jan 2016 1:25 am
Hollande says France in state of economic emergency
http://www.bbc.com/news/business-35343611
Davy on Tue, 19th Jan 2016 2:04 am
“China’s Housing Is Recovering, Just Ignore The 10 Billion Square Feet Of Vacant Housing”
http://www.zerohedge.com/news/2016-01-18/chinas-housing-recovering-just-ignore-10-billion-square-feet-vacant-housing
“let’s put the country’s vacant housing problem in context: China has some 13 million homes vacant – enough to house the families of several small countries .”
“Actually, it’s worse: Zhu Min, deputy managing director at the International Monetary Fund, recently admitted that China’s real estate bubble now manifests itself in 10. 7 billion square feet (1 billion square meters) of unused housing! Min added that many housing stock go unused, and the market may see a significant price correction in the future, wiping out vast household wealth.”
“According to Zhang Liqun, a researcher with a Chinese regime think tank, the bulk of China’s housing projects have shifted to smaller, so-called third- and fourth-tier cities. But market demand has not kept up, a fact that Zhang said could well lead to those cities becoming ghost towns. Because that is precisely what China needs: even more ghost towns.”
“And here is a spoiler alert: Premier Li Keqiang said this past Saturday that China’s economy grew by around 7% in 2015, which generated much laughter among the China-watchers, because if the currently global pre-recession environment is the result of China growing at 7%, one wonders just how acute the global depression will be when China grows at 5%, or 3%, or 1%, or stops growing altogether.”
shortonoil on Tue, 19th Jan 2016 7:31 am
“Funny thing about numbers, short. They have precise meanings and statements about them can be evaluated.”
Funny thing it depends on how you keep the books. The Federal Government uses a cash accounting system. GAAP requires an accrual system, but the government gets to do what any legitimate company can not do; ignore its future liabilities. Also, you missed state, and municipal governments. You should read a few more GAO reports, and less MSA junk. Put down the KolAid jug before you drown yourself.
marmico on Tue, 19th Jan 2016 7:57 am
The quart shy of oil caught in another misrepresentation. Par for the course.
His most egregious lie is that it takes 48,900 Btus to refine one gallon of oil.