oil price

Podcast

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Art Berman: Think Oil Is Getting Expensive? You Ain't Seen Nothing Yet.

A global supply crunch approaches...
Tuesday, May 29, 2018, 11:28 AM

After issuing clear warnings on this program that sub-$50 oil prices were going to be short-lived, oil expert and geological consultant Art Berman returns to the podcast this week to explain why today's $70 oil prices will go higher -- likely much higher -- and start materially contricting world economic growth.

Art explains how the current glut of oil created by the US shale boom -- along with high crude output by both OPEC and non-OPEC  producers -- is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue the trajectory of the global demand curve. And at the same time, we're extracting our reserves at a faster rate than ever. That's a mathematical recipe for a coming supply crunch -- it's not a matter of if, but when.

Click the play button below to listen to Chris' interview with Art Berman (60m:06s). » Read more

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Why The Shale Oil "Miracle" Is Becoming A "Debacle"

Dispelling the magical thinking behind the hype
Friday, August 25, 2017, 9:21 PM

The central point of this report is that the US is deluding itself when it comes to energy abundance (generally) and oil (specifically).

The bottom line is this: The US shale industry resembles a fraudulent Ponzi scheme much more so than it does any kind of "miracle". » Read more

Insider

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Why Oil Is Going To Double In Price

ETA? About a year from now
Tuesday, March 3, 2015, 11:01 AM

We’ve got an oil emergency brewing right now. I know that this idea runs utterly counter to the mainstream narrative of a shale oil bonanza that has us swimming in oil; but that’s why this site exists.

Within a year, possibly a little longer but not much, I think the price of oil is going to double from its current per barrel price of $50 US/$60 Brent. » Read more

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About that Shale Oil 'Miracle'…

Unpacking the propaganda
Tuesday, October 28, 2014, 8:16 AM

It's been said that humans are rationalizing -- not 'rational' -- animals. The deep truth in that statement is that we humans have strongly-held beliefs that color the information we take in an accept. We're often guilty of recognizing only the data that supports those beliefs while rejecting the rest.

For example, today most people place a great deal of faith in the potential for technology to fix whatever predicaments society may face in the future. And they support that view with cherry-picked data, while conveniently overlooking evidence suggesting technology is instead a sword with two edges. » Read more

Insider

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The Hard Facts About Shale Oil

Its impact wil be short-lived. Much shorter at these prices.
Tuesday, October 28, 2014, 8:15 AM

Executive Summary

  • Why prices under $100 per barrel just aren't cash flow positive for shale oil producers
  • VIDEO: all you need to know about the shale oil industry
  • Why the Boom/Bust cycle is swinging to 'Bust' for shale companies
  • Why a prolonged 'Bust' in oil prices will create massive economic shockwaves

If you have not yet read Part 1: About That Shale 'Miracle'... available free to all readers, please click here to read it first.

The Shale Reality

Now, let me build on the case that not only are shale companies not profitable at $50 per barrel oil, but they are often not profitable at prices nearly 100% higher than that.

I’m not about to make the case that all shale operators are unprofitable or about to go bust on the plays, but I am going to make the case that any sweeping statements like “technology will bring us Shale 2.0” are utterly adrift from the evidence at our disposal.

Let’s go back to September 2014, before any oil price weakness had crept into the picture.  At that point in time, according the WSJ author, the shale operators should have been swimming in cash.

Well, that’s just not the case. And some of them were losing their shirts:

Sumitomo’s US shale oil foray turns sour

Sept 29, 2014

Sumitomo Corp of Japan has drawn a line under its disastrous two-year foray into shale oil in the US, with writedowns connected to the project almost completely erasing its full-year earnings.

On Monday, Sumitomo, the fourth biggest of Japan’s trading companies by market capitalisation, said that an impairment loss of Y170bn ($1.6bn) on a “tight oil” project in west Texas would form the bulk of Y240bn of charges for the fiscal year to March 2015.

(Source)

Hmmmm. I guess Sumitomo just failed to use enough smart technology or something, because otherwise how is it possible to lose $1.6 billion at a time when oil was solidly priced in the $100 range?

Sarcasm aside, the truth is that it’s all too easy to lose money in the shale plays, something I believe is already completely indicated by the negative free cash flows of the industry. 

In fact, that negative free cash flow evidence tells me that... » Read more

Insider

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Off the Cuff: Market Mayhem

After the recent carnage, what's next?
Thursday, October 16, 2014, 9:12 PM

In this week's Off the Cuff podcast, Chris and Alasdair MacLeod discuss:

  • The Market Meltdown
    • What the heck just happened?
  • The Next Round of Bailouts
    • If you hate the problem, wait till you see the solutions
  • Gold
    • Ready for a return to the limelight?
  • Ebola
    • Is the media selling us too much fear?
Daily Digest

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Daily Digest 8/6 - Chicago Sees Imminent Pension Crisis, The Energy Cost Of Food

Tuesday, August 6, 2013, 11:30 AM
  • How did Estonia become a leader in technology?
  • Worth Less, Yet Not Worthless
  • Global Gold’s Quarterly Outlook – Has Gold Exited The Bull Market?
  • Obama to Outline Plans for Fannie Mae and Freddie Mac
  • Polls Open in Detroit’s Mayoral Primary 
  • Chicago Sees Pension Crisis Drawing Near
  • Children Banned from Talking about Fracking as Reign of Silence Spreads
  • George Monbiot: Why humans should back off and let nature heal itself
  • The Energy Cost Of Food
  • Risks to Global Food Supply and Impacts to Investors – Steve Yuzpe
Blog

A Tale of Two Forecasts

Where has our objectivity gone?
Wednesday, December 19, 2012, 8:04 PM

It was the best of times; it was the worst of times for the American public over the past month, as it was treated to two high-profile, but deeply conflicting, economic forecasts.

Despite declaring in 2008 that the age of cheap oil was over, the International Energy Agency (IEA) surprisingly announced last week that the United States would become the largest oil producer in the world by 2020. Hooray! This superlative declaration titillated U.S. media organizations, who understand quite well that Americans love to secure a #1 ranking in just about any category (save for prison incarceration, divorce rates, and obesity). As I explained to the Keiser Report, however, the IEA has done little more than produce an attention grabbing headline here. Simply ranking the 'top oil producer' in 2020 may mean much less than the public currently understands. » Read more

Insider

The March to $200+ Oil

Expected over the next 2-4 years
Thursday, September 6, 2012, 7:03 PM

Executive Summary

  • Why pressures to the downside have less impact when the global economy is weak
  • Why oil's new floor is $80
  • The 'upside risk' story for oil prices
  • Why prices will march up to the $150-175 range over the next 2-4 years (with increasing sensitivity to spikes of over $200+ per barrel)

If you have not yet read Part I: The Repricing of Oil, available free to all readers, please click here to read it first.

I encourage others to read the entire recent paper on Nominal GDP (NGDP) Targeting by Michael Woodford (recently delivered at Jackson Hole) or to simply read its coverage, either by Joe Weisenthal at Business Insider or Paul Krugman at the New York Times. In short, I take the appearance of the Woodford paper (link opens to PDF) as the inevitable next-step solution to the problem of unpayable debt and scarce resources. By loudly and flagrantly voicing a policy pursuit of inflation, Nominal GDP Targeting (which has been discussed for some time in economic circles) would be the next iteration of behavioral prodding in Western economies.

More importantly, the growing acceptance of NGDP targeting in policy circles simplifies the battle that began a decade ago: the struggle to counter emerging scarcity of natural resources with the provision of greater and greater amounts of cheap credit. Within the contours of this battle lies the answer as to whether oil’s next major move is downward, in a deflationary collapse, as global demand vanishes in a new economic crisis; or whether oil’s next major move is higher, as the five billion people in the developing world pull the OECD along in a new expansion.

Modeling the next move in oil prices is, of course, a very different task than it was ten years ago... » Read more

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The Repricing of Oil

Traditional pricing dynamics no longer apply
Thursday, September 6, 2012, 7:01 PM

Now that oil’s price revolution – a process that took ten years to complete – is self-evident, it is possible once again to start anew and ask: When will the next re-pricing phase begin?

Most of the structural changes that carried oil from the old equilibrium price of $25 to the new equilibrium price of $100 (average of Brent and WTIC) unfolded in the 2002-2008 period. During that time, both the difficult realities of geology and a paradigm shift in awareness worked their way into the market, as a new tranche of oil resources, entirely different in cost and structure than the old oil resources, came online. The mismatch between the old price and the emergent price was resolved incrementally at first, and finally by a super-spike in 2008.

However, once the dust settled on the ensuing global recession and financial crisis, oil then found its way to its new range between $90 and $110. Here, supply from a new set of resources and the continuance of less-elastic demand from the developing world have created moderate price stability. Prices above $90 are enough to bring on new supply, thus keeping production levels slightly flat. And yet those same prices roughly balance the continued decline of oil consumption in the OECD, which offsets the continued advance of consumption in the non-OECD.

If oil prices can’t fall that much because of the cost of marginal supply and overall flat global production, and if oil prices can’t rise that much because of restrained Western economies, what set of factors will take the oil price outside of its current envelope? » Read more