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Friday, January 11, 2019, 4:48 PM
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For several decades now the US has been getting its energy policy very badly wrong. It's so short-sighted, and rely so heavily on techno-optimism, that it barely deserves to be called a 'policy' at all.
Which is why we predict that in the not-too-distant future, this failure to plan will attack like a hungry wolfpack to bite down hard on the US economy’s hamstrings and drag it to the ground.
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Saturday, October 13, 2018, 4:39 PM
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Friday, December 29, 2017, 8:55 PM
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In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:
Charles and Chris discuss the implications to anticipate should interest rates indeed start rising. The quick summary? It will change everything…
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Saturday, August 26, 2017, 1:21 AM
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If you have not yet read Part 1: Why The Shale "Miracle" Is Becoming A "Debacle" available free to all readers, please click here to read it first.
Okay, here’s the summary so far. The shale companies are burning cash and they’ve done so every year. At every oil price point. And there’s nothing in the data to suggest that will change this year, or next.
So the first question to ask is: When will investors wake up and stop funding these companies?
This should be immediately followed by: How much financial and economic damage will then result? And how soon afterwards?
Well, if the companies stop drilling because their funding dries up, the decline rates of the various shale basins would translate into the immediate and sudden loss of a huge amount of oil production.
How much?
According to the EIA the decline rates each month for the three biggest shale fields would be between 53,000 and 158,000 barrels per month.
Taken together, one month of not bringing any new wells online for these three fields would result in a drop in oil output of -314,000 barrels. And a similar (but slightly smaller) drop the next month. And the month after that, the same thing. And so on.
After just 3 months the US would be down more than -1,000,000 barrels per day when all the other shale fields are taken into account.
Now that’s extreme, and it’s very unlikely that drilling would just suddenly stop one day. But the point here is that…
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Saturday, August 26, 2017, 1:21 AM
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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".
Monday, August 7, 2017, 6:42 PM
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“The rates we’ve had in recent years, including right now, are the lowest in history. The book that I co-authored on the history of interest rates traces back to the code of Hammurabi, Babylonian civilization, Greek and Roman civilization, the Middle Ages, the Renaissance, and early modern history right up to the present. And I can assure our listeners that the rates that they’re experiencing right now are the lowest in human history.”
So says Richard Sylla, Professor Emeritus of Economics and the Former Henry Kaufman Professor of the History of Financial Institutions and Markets at New York University’s Stern School of Business. He is also co-author of the book A History Of Interest Rates.
We invited Professor Sylla onto the podcast after hearing his work favorably referenced by the panel convened at the recent hearing held by the US Congress titled: “The Federal Reserve’s Impact on Main Street, Retirees and Savings.”
Based on his deep study across the scope of millennia of human history, Sylla warns we are at a dangerous moment in time.
Sunday, July 3, 2016, 1:47 PM
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In spite of the recent low prices for oil and natural gas, an energy supply crunch is looming warns geological consultant Arthur Berman.
Berman's perspective should not be lightly dismissed: he has 37 years of experience in petroleum exploration and production with 20 of those years at Amoco (now known as BP). He has published more than 100 articles and reports on geology, technology and the petroleum industry during the past five years –more than 20 of those focused on the shale industry including the Barnett, Fayetteville, Haynesville, Bakken and Eagleford plays.
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Monday, October 19, 2015, 8:12 PM
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Sometimes it helps to examine one narrow slice of the pie as a means to understanding the entire pie. In the case of the shale oil Ponzi scheme, we can both wrap our minds around the scale of the predicament and also answer the question of who the losses will be foisted on.
Once we’ve done that, you should be able to simply apply the same logic and learning to other sectors of the financial universe. Learn one sub-bubble, learn them all; like a fractal foam of misadventure.
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Monday, August 17, 2015, 7:58 PM
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There’s really nothing much more important than knowing where we are in the oil story…but if you follow the hypesters from Wall Street or the technology lovers, you're likely to be misled. A particularly wrong piece of analysis was recently released by John Mauldin, who has both bought into the hype and loves technology.
He even singled out our friend James Howard Kunstler for being wrong, yet then goes on to be spectacularly wrong himself.
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Wednesday, December 17, 2014, 3:30 AM
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If you have not yet read Part 1:The Dangerous Economics of Shale Oil available free to all readers, please click here to read it first.
Now we expand our focus from one hypothetical producer, to one actual shale region: the Bakken, located in North Dakota. My key source of information about the Bakken region is the Department of Mineral Resources in North Dakota. Every month the Director (Lynn Helms) produces the “Director's Cut”, a just-the-facts summary of oil production in North Dakota. Yes, it really is called the Director's Cut.
Regional data provided by EIA is smoothed and massaged and – less useful for seeing what is going on at the point of the spear. So knowing now about how all the parts of the shale operation works, we can use the Director's Cut stats to track all the stages of producing oil. We have, in order of execution:
drilling permits
rig counts
wells awaiting completion
well counts
monthly production
In other words, before you can drill, you need …
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