Leaderboard


Popular Content

Showing content with the highest reputation since 06/22/2018 in all areas

  1. 7 points
    As I have previously stated, with explanations, I believe that the basic outlook for the next several years is down. This expected trend is simply applying the thirty-year cycle to a system managed, or mis-managed, by OPEC. There are two significant events that add to my "lower price for longer" expectation. 1) The IMO-dictated elimination of a home for about two million barrels a day of heavy sour crude (price war) and 2) The assured collapse of the world economy due to the over-committed borrowing. Looks pretty straight-forward to me. Fluctuations will be enhanced by Jan's mindless futures speculators.
  2. 6 points
    Some of you may be tired of my ad nauseum comments about my hope for an average of $65 oil for this year. As a reminder, my preference for a balanced oil price doesn't tend to get changed very often. About 6 months ago, I finally upped my preferred hoped-for range from $50 to $65, after staying around $50 since 2015. Paying attention to global events, particularly the last few weeks, leads me to reconsider the realities of oil supply & demand, oil prices and the global economy. Looks like the possibility of an oil supply shortfall is increasing. Venezuela in a tailspin, and looming reductions from Iran mean oil supplies are likely to tighten. The risk of hiccups to global oil supply seem to be increasing, and it seems fairly inevitable that something will happen eventually to affect an oil producer somewhere. With the global oil supply glut drawn down during the last 18 months or so, the upcoming oil production increase planned primarily by Saudi Arabia and Russia may not be sufficient to offset the drops in production by Venezuela and a few other producers. And if Iran's total output gets successfully cut off completely by sanctions, then the increase by Russia + Saudi Arabia will not be sufficient. I'm not an oil trader. I'm not an oil price forecaster. But from what I can see going on lately in the global oil & gas industry + the global politics intertwined with the O&G biz, it seems increasingly likely that we may see $80-ish oil this Summer, and even more likely by this Fall. Do you own reading of what's going on, and draw your own conclusions about what is happening. Just my opinion; as always, you are free to disagree.
  3. 6 points
    I expect twenty upvotes for having held class, gotta keep up my contest with Tom Kirkman. The computer has whacked me for over 50 points, so I am losing ground fast! The Hunchback of Notre Dame is inside the Leaderboard computer, and it doesn't like me, so I face its wrath.....
  4. 5 points
    Steel Saga, Part III (retaliatory tariffs) So you have seen how The Donald has whacked the traditional shippers of steel and aluminum into the USA. with hefty tariffs. All kinds of people, politicians and talking heads, expected these to be lifted once new trade deals were structured. No chance. Donald is perfectly serious about this, and good thing or bad thing, this is the New Normal. Until he leaves office, you will see these tariffs. For the Canadians, this is the second Big Whack. The Canadians have traditionally held some 1/3 or more of the total US softwood dimensional lumber business, and those exports supported a host of small towns in the Northern hinterlands of B.C., New Brunswick, and Quebec. THe US already whacked that business with both tariffs and a quota, where the tariff I think is about 12% and the quota is the most hurtful. What this does is shift production to the Southeast USA, where timber farms operate. That has protected the US operators with a larger market share and better pricing, and the treasury does not pick up much more as the Canadian export business is collapsing. But it does put entire towns in Canada out of work, and is catastrophic, so again that enrages the Canadians. It also put up homebuilding costs in the Northern USA, the traditional markets for Canadian building lumber, up by $10-20,000 per house, so it is hitting homebuyers. So the response of the trading partners is to try to hit back, and they have been levying tariffs on selected US exports, precisely calculated to hit Trump and the Republicans in districts where they need votos. So you see the hit on Harley Davidson precisely because Milwaukie sits in the backyard (and voting district) of Paul Ryan and Governor Walker, the Republican heavyweights. Florida orange juice gets hit because Florida is a swing State in the national elections and causing Florida voters grief because of Trump will presumably motivate Floridians to vote Democratic inthe next election round. Vermont maple syrup gets hit because Bernie Sanders is this influential Independent Senator and can be expected to yowl in pain (which happened). Trump's response is to threaten 25% tariffs on Canadian and Mexican auto producers, and that will Really, Really hurt as some 12% or 15% of Canadian GNP is in auto building and parts manufacturing. So at this point Justin Trudeau is hunkering down and saying nothing, his last boradside about Canadians not going to take it, after the G-7, having led to a puerile twitter outburst from Trump threatening even more and more tariffs (which would turn Canada into Greece, incidentally). The real problem is that Trump is this loose cannon who has gotten drunk on power, and is doing totally crazy things. WIll the USA survive? Probably. Will the Allies? Probably not. They are going to see their economies fall into Depression. Coming soon, to a theater near you. Back to Harley: Harley faces a demographic in the USA that is not buying its big road-cruiser bikes. The last segments of the baby boomers are aging out of bikes, the grey-hairs, so where are the customers? THey have been developing an interesting customer base in Europe, and will continue to do so in Eastern Europe, where motorcycles have traditionally been used for personal transport. But their bikes are pricey - double the cost of the 1-liter Indian motorcycle built in Iowa. So that exgtra 25% tariff, and then the 17% VAT tax on the new higher balance, really hurts them. Harley had already set up a plant in Thailand, and somewhere else I think, so the production destined for Europe is shifted to those plants. I do not hear that Harley is actually building a plant "in Europe;" rather, they are shifting that production traditionally done in Milwaukie, Wisconsin to the plants in Thailand, and shipping the finished bikes from Thailand to Europe, thus avoiding the tariff wall. And that is exactly the result that the E.U. was looking for - whack The Donald, but not necessarily disrupt internal markets. You can expect a lot more of this, and it will go in unexpected ways, because the guys that surround The Donald are seriously stupid. And arrogant. and very, very self-righteous. And have no sense of humor (neither does The Boss). It will get worse.
  5. 5 points
    Steel saga, Part II You have these integrated supply chains across the US-Canada border. For example, the Canadian Govt has let contracts to build two new Arctic icebreakers, which are military contracts. For domestic voter consumption purposes, one ship is being built in the Davis Shipyard in British Columbia, and the other on the East Coast I think in Halifax. Now the B.C. shipyard is owned by the Americans, so the real benefit (to the voters) is the local employment. Meanwhile the yard has purchased the specialty plate steel for the hull from a mill in Alabama, which is set up to roll high-strength steel with anti-corrosion properties needed for ships. And the reason the mill is in Alabama is that both Alabama and Mississippi have these private yards that build US military ships, so the plate mill is next door. Could Davis have bought from the mills in Hamilton, and paid rail freight to bring it to Vancouver? Sure, except that specific grade of steel is not rolled in Hamilton. It could be, if there was enough lead time, but meanwhile the contracts are already let. And that brings up to the real reason the Canadians are livid: their product sold to the automakers is being hammered, but meanwhile the Cdn taxpayers are supporting some mill in Alabama on millions of dollars of heavy plate. Originally the Canadians calculated that they would receive a "waiver" from the tariffs, but when Trump did not do that, all hell broke loose. Meanwhile, over in Europe, there are lots and lots of legacy steel mills, especially in France and Germany, which have been supported by taxpayer bailouts for decades. ULtimately Mittal Steel out of India bought most of them up and is the big integrated player in europe. But given the chronic over-capacity, europe needs the US markets or their voter steelworkers go on the dole. Was Acelor-Mittal dumping steel into the US markets? Of course they were. And so Trump decided to stick it to them. Nothing they can do about it. Aside from certain tool steels, which are high specialty steels (and I think not being dutied), the run-of-the-mill stuff is lower grade, such as "rebar," used in concrete construction, that sort of thing. And nobody in the USA cares if European rebar gets whacked, the stuff is available everywhere. The big dumping threat comes from China, where their aluminum capacity totally swamps Canada, and there are lots of steel mills, again over-capacity seeking to find a home. And the Chinese are notorious dumpers. More in Installment III to come.
  6. 5 points
    While there are "export controls" on goods leaving the country (including cash, incidentally), you only get export "tariffs" on actual cash being taken out, where you are charged income tax at the maximum rate. Other goods, and I am excluding military goods, are not taxed in export. Getting past that, Mr. Trump started the trend by hitting steel and aluminum in various forms (bar, plate, ingot, wire) with tariffs of 25% for steel and 10% for aluminum. He had no realistic option for the aluminum as aluminum is formed by electric reduction from bauxite, and you need staggeringly vas amounts of electricity. So the big smelting operations are in Canada, where you have these giant rivers cascading down off the QUebec Plateau, and in China, where large rivers flow down from the Himalayas and the North face of the Mongol plateau. Since the ARio Tinto aluminum operation in Canada is already bigger than all of US production combined, and since some 95% of Canadian aluminum goes to the USA, to hit aluminum with a hefty tariff (i.e. 25%) would be suicide for US aluminum users, their products could then not compete on the world market. So Trump used 10%, but it was stupid, and hurt US business and nobody else. That part was all for show. Now the steel tariffs of 25% are more interesting. Today most US steel is recycling scrap, little is from ore. The big ore-based operations used anthracite coal to make coke and then the coke to make steel, so US ore is shipped from Minnesota to Pittsburgh and Allentown, PA, in order to be close to the coal operations. If you go to either town you will see miles upon miles of old abandoned steel plants along the riverbanks. those places are no longer usable, been down too long. US steelmaking fell apart due to legacy promises to the unions for paid pensions and healthcare, it got so steep that the owners could not even give the companies away due to the legacy costs. So it all went bankrupt. Meanwhile you have these Canadian steelmaking operations in several locations, basically Hamilton Ontario at the far Western end of Lake Ontario, and Algoma Steel up in the Soo, or Sault Ste. Marie area. The Hamilton plants are very old, the legacy operations in Canada, and today two plants, "Stelco II," and "Dofasco II," remain and run nicely. There was a third mill but that is now gone. Stelco II (my designation) is the Steel Co. of Canada, and that was owned by US Steel, went bankrupt, recapitalized along with the remnants of the US operations out of that bankruptcy, and is now pretty much owned by the Americans, as I understand it. Half that production output goes to the USA as hot rolled steel coiled for use by US automakers in their stamping plants. It is a specialty steel and cannot be easily replaced so right now the US customers have to "eat" the duty, because these supply chains are so integrated. Heavy plate steel will I expect largely go over to the plate mills located in Alabama and Mississippi, so they benefit from the tariff. More in the next post on this long saga.
  7. 5 points
    Bill, don't place too much credence on the Tony Seba's of the world. Seba (and others) actually think that in ten years over 95% of car owners will have abandoned or scrapped their private autos, never to own one again. That mindset might work for him; it is emphatically not the mindset of the overwhelming vast majority of Americans. Does anyone seriously think that the farmer in Iowa is about to abandon his pick-up? How about the young women out in Wyoming, the ones in knee-high boots and Levis and obligatory Stetson rolling up to the dance hall on Friday night complete with that gun rack across the back window? Tall, lean, lanky, unbelievably fit, and totally self-assured, intent on picking up men, you think they are going to roll with some "autonomous vehicle"? No chance. Tonhy Seba is what Americans call a "metrosexual," someone born male but commanding no male personal presence. He turns everything into some slave to the electric machine. The possibility of any of this actually happening is precisely zero.
  8. 4 points
    West Virginia – update through December 2017 This article contains still images from interactive dashboards available on the blog post. To follow the instructions detailed here, use the interactive dashboards. You can also explore the dashboards to uncover different insights and trends. --- This interactive presentation contains the latest gas production data through December, from all 2,368 horizontal wells in West Virginia that started producing since 2010. West Virginia only publishes production data once per year, and this post contains the data released last month. Of the 3 states in the Appalachian basin (Ohio, Pennsylvania & West Virginia), unconventional gas production from horizontal wells is the lowest in West Virginia, just behind Ohio. Still, percentage wise there was a major growth spurt in 2017 (28%), as shown in the above graph, and last year ended at a level of 4.3 Bcf/d. Add this together with the production from the other 2 states, and total gas production (hz. wells only) in the Appalachian basin came in at ~26 Bcf/d in December, or about 1/3rd of total US gas production. Average well productivity has improved every year since 2010, as the ‘Well quality’ tab shows. Two major contributing factors were increasing lateral lengths, and higher proppant loadings. There are not many unconventional operators in this state, and the largest one, Antero Resources, is good for more than 40% of total production (see the ‘Top operators’) The ‘Advanced Insights’ presentation is displayed below: This “Ultimate Return” overview shows the relationship between gas production rates, and cumulative gas production, averaged for all horizontal wells that started producing in a certain year. If you select ‘Antero Resources’ here in the ‘Operator (current)’ selection, you’ll note that its well productivity is quite a bit better than the average. In fact, looking at the ‘Productivity ranking’ overview, it has the best average well results among all operators, as measured by the average cumulative production in the first 2 years. The ‘Well status map’ shows where these wells are located: almost all in the north. Ohio still hasn’t released Q1 production data, so later this week I will have another post on the Permian, followed by the Eagle Ford and all 10 covered states next week. Production data is subject to revisions. For this presentation, I used data gathered from the following sources: West Virginia Department of Environmental Protection West Virginia Geological & Economical Survey FracFocus.org Visit our blog to read the full post and use the interactive dashboards to gain more insight https://shaleprofile.com/index.php/2018/07/02/west-virginia-update-through-december-2017/ Follow us on Social Media: Twitter: @ShaleProfile Linkedin: ShaleProfile Facebook: ShaleProfile
  9. 4 points
    They should install in the oval office an Amazon dash button you just have to press to order 2 millions barrels a day to the Saudis. It would be more convenient than ordering it on Twitter.
  10. 4 points
    Donald is not very bright. He has certain instincts when it comes to both politics and real estate, for the rest it is a bust. He is not trying to start a world war, he is trying to hurt the Europeans (notwithstanding his long list of European brides, as the domestic versions declined). Besides, there is nobody out there that could even begin to challenge the US military. There is one superpower, and everybody else is a nobody. The US can do as it pleases, and with The Donald, it does. So you can expect irrational behavior, and the rest of the world has to put up with it.
  11. 4 points
    Sorry, you guys that are not Europeans or Canadians - VAT stands for Value Added Tax, a wierd tax on goods and services tacked on to whatever the final invoice price is. It is typically instead of a Sales Tax. It is a poor instrument of taxation, tends to fall heavily on poorer folks, and also discriminates against small manufacturers, thus depressing the entrepreneurial sector in favor of the vertically-integrated manufacturer. YOu see it in these countries influenced as colonies of the old European Powers. What the Europeans do is first levy a tariff, so that bumps up the price by say 25% "at the dock." Now the distributor sells it forward, and the final buyer then pays the VAT on both the manufacturer's price AND the tariff, so it is 17% on top of 25%. It stacks up the retail price. You get that all over Europe. It is a stealth way of financing socialism, and I say that with detachment, it is what it is.
  12. 4 points
    The paper traders have run up prices just enough to suck in more victims. Look for another bloodbath in O&G.
  13. 4 points
    Actually, I studied physics at Yale. Could build you a nice nuclear warhead, if you like. Not much future in that job market, though.
  14. 4 points
    Bill, your man Tony Seba dramatically underestimates the draw of the private automobile. It is not just that each buyer/consumer/driver likes his own appointments to his own taste. It is also that lots of other people are slobs. Who wants to go sit in some "Uber"-style rent-a-car where somebody else has barfed? Which has cigarette stink? Which somebody urinated in? See, that is where Mr. Seba's ideas fall apart. People like to have control over their environment. Even the city dweller, who pays more for his parking space than I do for my mortgage in the country, is still going to want his own personal BMW or Escalade or Mercedes Coupe, and he will pay for it. That ten thousand bucks is not going to derail him. And for the poor boy, hey he will drive something older - even a lot older. There are plenty of cars and pick-ups on the road that were built in the 1990's. Seba thinks the world runs on some accountant's calculator. It doesn't. The world runs on individuals, and their preferences, and the overwhelming preference is for private ownership. And that is not going away any time soon. Cost money? So does your cable TV subscription. PS if your posts are evaporating, write them in Word and save them to a folder, then do a copy and paste into the Reply Box. If it blows up, you can do a repeat copy and paste. Cheers.
  15. 4 points
    Hi, here is my first post on this site Processing of waste in the coutry of origin Of course, you can burn waste and generate the low value product electric power with poor efficiency and nasty flue gas as well as toxic dust and ash. Better solution would be gasifying the waste and convert the produced syngas either into bulk fuels like methanol or methane if there are sufficient subsidies or convert the syngas into high value products by new synthesis routes currently being commercialized. I have fun with the latter one. The main fraction of carbon will stay in product and the minor fraction (the tribute to entropie) of carbon converted to CO2 can be either extracted an e.g. sold to glasshouse farmer or enhanced oil recovery or could be utilized in downstream product synthesis. If the process concept and technologies are chosen carefully, then gasification and synthesis can have all: - high efficiency as chemical efficiency (carbon in product vs. carbon in feedstock) and high thermal efficiency (heating value/energy of products vs. heating value of feedstock) - low water consumption, no toxic wastes - revenues from all products - possibility to feed in power from renewable energy either directly as electric power for motors etc or as hydrogen as additional feedstock of product synthesis Cheers Juergen
  16. 4 points
    I would be quite surprised if President Trump "had the guts" to craft a counter-cartel. That is not quite how it works in the USA. First off, all legislation starts in the House of Representatives, and has then to pass through both the House and the Senate, then sent for approval signature to the President. He can approve or disapprove ("veto"), but do it all himself? Nope. Notwithstanding Mr. Trump's personal penchant for the Executive Order, that option cannot be used to go around the Sherman Anti-Trust Act. So, legally speaking, Trump has no ability to do what you propose. One of the ironies of the USA is that the President's powers are remarkably limited (although those Presidents do not seem to either believe or understand that!). He can shout and scream and stomp his feet, of course, but he tends to do that anyway. Now, where do oil prices go? I would remind readers of the truths set forth by William Edwards here, and go back and read his careful postings on the realities of oil pricing, and how that flows from oil traders, not market fundamentals. Oil prices will go where the traders, who are rank speculators, push it, and those guys operate only on two things: greed, and fear. They neither know nor care about oil "facts." Truth, to a trader, is what the other fellow believes, and how you can exploit that for your own gain.
  17. 4 points
    Hmmmmmm, would it surprise anyone if I said I was hoping for an average of $65 oil this year?
  18. 4 points
    Free gasoline doesn't do much good when you can't buy tires, batteries or any other spare parts for your vehicles. All free gasoline does, is lead to massive smuggling of fuel to other countries where they can sell it for a little under market prices.
  19. 4 points
    That sounds sinister, perhaps unfairly so. Exporting is preferred when companies can get a higher price for it through exporting it, plain and simple. I sell my services to the highest payer, regardless of where they are located. Not sure anyone else should be held to a different standard. US oil companies operate in their own best interests (or in the interests of their shareholders, as a proxy for operating in their own best interests), and rightly so. And perhaps a bit overly simplistic, but all oil is not equal--our refineries here are not equipped to process an infinite variety of crude grades. Much of the US refinery infrastructure were built prior to the shale revolution, and therefore were built to run other grades of crude, like heavy stuff. Our refineries still need those grades. So we can pump ~11 million bpd until the cows come home, but our refineries can't process 11 million bpd of that grade of crude. I don't think it is some evil plot. It's business.
  20. 3 points
    I've read all these interesting and well-informed comments. The one thing that is missing is a comparison of oil--a non-repleting asset--to every other commodity out there in the daily marketplace. I won't go into detail, but have you checked out the price of a loaf of "artisan" sourdough bread lately, or a pound of good cheddar? What about the price of an F150, or a new roof using shingles from Canada? In brief, hundred-dollar oil is very much in line with the stealth inflation that hit ordinary items about five years ago. We're producing plenty of light sweet crude to handle our domestic needs. The problem is the same one we have failed to address for several years now: most of our refineries are set to handle a very narrow window of crude feedstock: it has to be mixed with tar-oil from Canada, or heavy oil from Venezuela (oops, that's out), or, more importantly to the president's giant plan, the heavier (by comparison) oil from Saudi Arabia. If we retooled one refinery at a time, we could take care of our domestic production, cut back on this frenetic export/import gambit, and have the enclosed energy-independence that the president said he wanted.
  21. 3 points
    The Iran sanctions were after consulting GCC, especially KSA. So, these GCC countries will increase the oil production to contain Iran. I see the GCC countries taking out 2 billion barrels of oil as spare to contain Iran. The 2 billion barrels will be used to substitute about 1.5 million barrels lost from Iranian 2.5 million barrels of export for 4 years. Iran is still likely to sell oil to China, Turkey and Russia to the tune of 1Mbd.
  22. 3 points
    I worked under the whole Ramirez administration and i can say that he is the main responsible for all the mess in what has become PDVSA now, he turned the venezuelan oil company into his dark money machine and masterfully he managed to balance between the needs of the Chavez bolivarian revolution and his personal lucrative businesses, rampant careless spending in meaningless things, and turning pdvsa also into a food provider (weird as it seems) but yes this and more weird things happened during his tenure. But why hasnt he been turned in U.S. justice or Venezuela's justice system now that the Maduro administration has been fiercely pursuing corruption (more like clash between factions to get the largest share of PDVSA). Definitely he is the main responsible for all the chaos reigning in PDVSA now.
  23. 3 points
    Tesla and General Motors are seeing the beginning of the end for crucial U.S. federal tax incentives needed to transition interested car shoppers into electric vehicle owners. The federal government years ago had placed a 200,000-vehicle cap, per automaker, on EV sales before tax incentives up to $7,500 would begin to be cut back. By the end of May, Tesla was estimated to be at about 194,000 EVs sold and GM was a little bit over 182,000. https://oilprice.com/Energy/Energy-General/Tesla-And-GM-Close-To-Capping-Out-On-EV-Tax-Incentives.html
  24. 3 points
    I think Putin and al-Falih both realize the possibility of a global recession caused almost entirely by the recent spike in energy costs. Global quantitative easing has masked the underlying weakness of the economy, and alone will no longer be able to fix the problems. Developing economies are crushed by the run-up in energy costs. This additional supply may mute the adverse effect of Trump's tariffs and Iran sanctions.
  25. 3 points