Black Gold Falling
April 20, 2020 9:33 AM Subscribe
On the 10th anniversary of the Deepwater Horizon disaster, crude oil prices have dipped below $10/barrel, the lowest inflation adjusted price in memory. If coronavirus stimulus money will be wasted on fossil fuels maybe climate activists should just buy the wells.
No milkshake jokes pls.
No milkshake jokes pls.
The Kalamazoo River spill, the most expensive pipeline spill in the US is 10 years coming up in June.
Man, that was a crazy summer.
posted by bonehead at 10:08 AM on April 20, 2020 [4 favorites]
Man, that was a crazy summer.
posted by bonehead at 10:08 AM on April 20, 2020 [4 favorites]
The price of Western Canadian Select oil actually went negative. The premier of Alberta thinks pipelines will solve this, missing the obvious love of just putting it back.
posted by rodlymight at 10:10 AM on April 20, 2020 [16 favorites]
posted by rodlymight at 10:10 AM on April 20, 2020 [16 favorites]
Now would be the time to implement MASSIVE oil and gas taxes to suppress demand after this crisis passes... just saying...
posted by Automocar at 10:13 AM on April 20, 2020 [23 favorites]
posted by Automocar at 10:13 AM on April 20, 2020 [23 favorites]
That howmuchisoil link ("$10/barrel") parked oil at $0.00. Bloomberg at sub $5 as of this moment.
posted by JoeXIII007 at 10:14 AM on April 20, 2020 [3 favorites]
posted by JoeXIII007 at 10:14 AM on April 20, 2020 [3 favorites]
From CNN Business
Oil hasn't been this cheap since at least the Reagan administration.
US crude crashed to as low as $4.04 a barrel on Monday -- the weakest level since NYMEX opened oil futures trading in 1983.
That marks a stunning one-day decline of 78% from Friday's close of $18.27 a barrel.
More mind-blowing oil stats:
Oil hasn't been this cheap since at least the Reagan administration.
US crude crashed to as low as $4.04 a barrel on Monday -- the weakest level since NYMEX opened oil futures trading in 1983.
That marks a stunning one-day decline of 78% from Friday's close of $18.27 a barrel.
More mind-blowing oil stats:
- Down 94% since January peak
- Down 86% since April 3
- The lowest all-time close is $10.42 in March 1986
Man, I sure hope the next time we see hot dads dot com Justin he'll announce a few billion dollars in energy sector transformation with enormous taxes for carbon and correspondingly enormous incentives for solar/wind because that's about the only thing that's going to keep the prairies from simply cratering.
posted by seanmpuckett at 10:21 AM on April 20, 2020 [10 favorites]
posted by seanmpuckett at 10:21 AM on April 20, 2020 [10 favorites]
For those without an interest in the business (and I don't blame you if you aren't) it should be pointed out that the much touted US "energy supremacy" (they really love that word, don't they?) was founded on fracking reservoirs previously inaccessible. Unfortunately fracked wells tend to drop in production by over 50% over the first year and then the decline curve gets steeper. So you have to keep drilling to keep up and wells cost money and, as a result, every medium to small oil company in the country has been running in massively increasing debt on the assumption that one day oil prices would rise enough to justify the whole scam.
They were wrong. They should be allowed to go bust.
posted by thatwhichfalls at 10:21 AM on April 20, 2020 [76 favorites]
They were wrong. They should be allowed to go bust.
posted by thatwhichfalls at 10:21 AM on April 20, 2020 [76 favorites]
Now would be the time to implement MASSIVE oil and gas taxes to suppress demand after this crisis passes... just saying...
Ginned up anger about gasoline taxes is the only thing the CA GOP has used for the last two cycles to get Republicans to the polls in California. "MASSIVE" taxes would make that anger real and would probably be the absolute best way to see McCarthy as Speaker of the House instead of Pelosi.
posted by sideshow at 10:22 AM on April 20, 2020 [5 favorites]
Ginned up anger about gasoline taxes is the only thing the CA GOP has used for the last two cycles to get Republicans to the polls in California. "MASSIVE" taxes would make that anger real and would probably be the absolute best way to see McCarthy as Speaker of the House instead of Pelosi.
posted by sideshow at 10:22 AM on April 20, 2020 [5 favorites]
incentives for solar/wind because that's about the only thing that's going to keep the prairies from simply cratering
WSJ reporter @russellgold:
WSJ reporter @russellgold:
Couple years back, Arkansas' U.S. Senators fought tooth & nail against a transmission line. If built, the line would've meant new wind farms.posted by gwint at 10:29 AM on April 20, 2020 [15 favorites]
They helped defeat the line.
This week, a wind turbine factory in Little Rock, Ark., closed.
470 jobs lost.
Also .
Not for oil prices. But because I imagine this chaos results in a whole lot of innocent people ending up dead/suffering, as countries that depend on oil revenue get closer to/ go further over the edge.
posted by inflatablekiwi at 10:31 AM on April 20, 2020 [6 favorites]
Not for oil prices. But because I imagine this chaos results in a whole lot of innocent people ending up dead/suffering, as countries that depend on oil revenue get closer to/ go further over the edge.
posted by inflatablekiwi at 10:31 AM on April 20, 2020 [6 favorites]
Yeah, my comment above was specifically about the US. My LinkedIn feed is full of folks in the industry in petroleum dependent states who are clearly scared not just for their jobs but for their societies.
posted by thatwhichfalls at 10:35 AM on April 20, 2020 [3 favorites]
posted by thatwhichfalls at 10:35 AM on April 20, 2020 [3 favorites]
Just checked. The US price down to $1.31.
posted by dances_with_sneetches at 10:48 AM on April 20, 2020 [2 favorites]
posted by dances_with_sneetches at 10:48 AM on April 20, 2020 [2 favorites]
Oil's certainly beaten up but it's hardly out.
The front month contract -- now under $1 -- reflects short-term storage issues. June is $22.31, July is $22.76, and a year out is $35.12 - actually up on the day and up over 15% from the lows last month.
posted by MattD at 10:55 AM on April 20, 2020 [13 favorites]
The front month contract -- now under $1 -- reflects short-term storage issues. June is $22.31, July is $22.76, and a year out is $35.12 - actually up on the day and up over 15% from the lows last month.
posted by MattD at 10:55 AM on April 20, 2020 [13 favorites]
June WTI quote is still in the $20s. This is just people getting jammed on the current contract.
posted by Heywood Mogroot III at 10:56 AM on April 20, 2020 [8 favorites]
posted by Heywood Mogroot III at 10:56 AM on April 20, 2020 [8 favorites]
Considering Canada needs something like $50* to make the tar sands profitable, AB/SK is going to be in the shitter for a while.
*: someone who actually knows Canadian oil prices please correct me. The $50 figure was one that stuck with me in the late 200xs
posted by scruss at 11:00 AM on April 20, 2020
*: someone who actually knows Canadian oil prices please correct me. The $50 figure was one that stuck with me in the late 200xs
posted by scruss at 11:00 AM on April 20, 2020
When an Eastern sage was desired by his sultan to inscribe on a ring the sentiment which, amidst the perpetual change of human affairs, was most descriptive of their real tendency, he engraved on it the words : — "And this, too, shall pass away."
It works for cheap gas and COVID.
posted by Splunge at 11:03 AM on April 20, 2020 [2 favorites]
It works for cheap gas and COVID.
posted by Splunge at 11:03 AM on April 20, 2020 [2 favorites]
I find the idea that futures prices mean anything at all in the present climate pretty hilarious.
posted by thatwhichfalls at 11:06 AM on April 20, 2020 [18 favorites]
posted by thatwhichfalls at 11:06 AM on April 20, 2020 [18 favorites]
I don't want to sound like a market ticker but: US crude crashed to as low as a penny a barrel on Monday -- the weakest level since NYMEX opened oil futures trading in 1983.
posted by inflatablekiwi at 11:06 AM on April 20, 2020 [2 favorites]
posted by inflatablekiwi at 11:06 AM on April 20, 2020 [2 favorites]
Speaking of Trudeau...
Trudeau unveils $1.7 Billion for Abandoned Wells
"Prime Minister Justin Trudeau has unveiled C$1.7 billion in new funding to clean up abandoned oil and gas wells and another $750 million to combat methane leakage, part of a $4-billion package for sectors affected by the coronavirus crash, while rejecting fossil industry calls to suspend climate action and regulations during the pandemic.
The statement earned praise across most of the Canadian climate community, with one veteran campaigner calling it a “major turning point for oil and gas politics in Canada”. Organizations expressed support for the orphan well spending, while pledging a watchful eye on the government’s promise of financial support through Business Development Canada (BDC) and Export Development Canada (EDC). [...]
Alberta Premier Jason Kenney and Saskatchewan Premier Scott Moe welcomed Trudeau’s announcement, with Kenney calling it a lifeline for blue collar workers in western Canada’s oilfield services sector.
“That can’t go to things like bonuses or dividends, or anything except actually doing the work,” he told media Friday. “This will allow for a surge of well reclamation and completion work, all across the province, we hope starting immediately.”
Climate and energy campaigners were nearly unanimous in declaring a win.
“Today, Prime Minister Trudeau made clear that Canada’s bailout package will prioritize addressing the climate crisis and building the cleaner, safer economy we need,” said Stand.earth International Program Director Tzeporah Berman. “This is the kind of leadership the world needs. This bailout announcement is a major turning point for oil and gas politics in Canada.”"
posted by Emmy Rae at 11:08 AM on April 20, 2020 [12 favorites]
Trudeau unveils $1.7 Billion for Abandoned Wells
"Prime Minister Justin Trudeau has unveiled C$1.7 billion in new funding to clean up abandoned oil and gas wells and another $750 million to combat methane leakage, part of a $4-billion package for sectors affected by the coronavirus crash, while rejecting fossil industry calls to suspend climate action and regulations during the pandemic.
The statement earned praise across most of the Canadian climate community, with one veteran campaigner calling it a “major turning point for oil and gas politics in Canada”. Organizations expressed support for the orphan well spending, while pledging a watchful eye on the government’s promise of financial support through Business Development Canada (BDC) and Export Development Canada (EDC). [...]
Alberta Premier Jason Kenney and Saskatchewan Premier Scott Moe welcomed Trudeau’s announcement, with Kenney calling it a lifeline for blue collar workers in western Canada’s oilfield services sector.
“That can’t go to things like bonuses or dividends, or anything except actually doing the work,” he told media Friday. “This will allow for a surge of well reclamation and completion work, all across the province, we hope starting immediately.”
Climate and energy campaigners were nearly unanimous in declaring a win.
“Today, Prime Minister Trudeau made clear that Canada’s bailout package will prioritize addressing the climate crisis and building the cleaner, safer economy we need,” said Stand.earth International Program Director Tzeporah Berman. “This is the kind of leadership the world needs. This bailout announcement is a major turning point for oil and gas politics in Canada.”"
posted by Emmy Rae at 11:08 AM on April 20, 2020 [12 favorites]
Looks like ol' Jed had the right idea to cash out early and move to Beverly (Hills, that is. Swimming pools, movie stars)
posted by ckape at 11:09 AM on April 20, 2020 [12 favorites]
posted by ckape at 11:09 AM on April 20, 2020 [12 favorites]
I always wondered if they ever visited their old hometown after the oil companies got to do their thing to it. Oil towns are about the most blighted places on Earth, even when the industry is doing well. Do you think they built a library there? Our did they just put some money into local machine politics?
posted by thatwhichfalls at 11:15 AM on April 20, 2020 [4 favorites]
posted by thatwhichfalls at 11:15 AM on April 20, 2020 [4 favorites]
how can i trading places this situation
posted by poffin boffin at 11:17 AM on April 20, 2020 [14 favorites]
posted by poffin boffin at 11:17 AM on April 20, 2020 [14 favorites]
We need a prepaid gas card that measures gasoline units and such commoidities, instead of money, to take advantage of the dip.
posted by Brian B. at 11:24 AM on April 20, 2020 [2 favorites]
posted by Brian B. at 11:24 AM on April 20, 2020 [2 favorites]
how can i trading places this situation
Step 1: be in possession of an unused tanker
posted by PMdixon at 11:27 AM on April 20, 2020 [10 favorites]
Step 1: be in possession of an unused tanker
posted by PMdixon at 11:27 AM on April 20, 2020 [10 favorites]
i have some empty talenti gelato containers
a lot of them actually
posted by poffin boffin at 11:28 AM on April 20, 2020 [13 favorites]
a lot of them actually
posted by poffin boffin at 11:28 AM on April 20, 2020 [13 favorites]
alas
posted by poffin boffin at 11:28 AM on April 20, 2020 [12 favorites]
posted by poffin boffin at 11:28 AM on April 20, 2020 [12 favorites]
My favorite meme these days continues to be "Kinda feels like the Earth sent us all to our rooms to think about what we've done."
posted by Melismata at 11:29 AM on April 20, 2020 [27 favorites]
posted by Melismata at 11:29 AM on April 20, 2020 [27 favorites]
Trudeau unveils $1.7 Billion for Abandoned Wells
Yeah the orphan well/cleanup issue is this looming long-term liability so its good that the feds are going to support getting this done. It would be better if we knew the oil and gas companies would take care of it themselves but if we're going to spend money in the sector then reclamation sounds like the way to go.
posted by any portmanteau in a storm at 11:29 AM on April 20, 2020 [6 favorites]
Yeah the orphan well/cleanup issue is this looming long-term liability so its good that the feds are going to support getting this done. It would be better if we knew the oil and gas companies would take care of it themselves but if we're going to spend money in the sector then reclamation sounds like the way to go.
posted by any portmanteau in a storm at 11:29 AM on April 20, 2020 [6 favorites]
It's worth repeating what MattD and Heywood Mogroot III wrote above: this is with regard to the May contracts, which close tomorrow. June is still over $20.
Because of the combination of the Saudi/Russia thing and Covid-19, there is presently a huge glut of oil right now, so much so that refiners have no more storage capacity. So the people selling May contracts are desperate.
With demand continuing to collapse, as I think it will for a host of reasons, oil is going to be cheap and it may continue to drop. But the argument between Saudi Arabia and Russia caused SA to ramp up production a few million barrels higher when OPEC was trying to agree to lower it. So this was an exceptional glut independent of the coronavirus. With the coronavirus, as well, and contracts closing tomorrow, you have a unique situation today.
A few minutes ago, West Texas Intermediate contracts for May were negative.
posted by Ivan Fyodorovich at 11:31 AM on April 20, 2020 [9 favorites]
Because of the combination of the Saudi/Russia thing and Covid-19, there is presently a huge glut of oil right now, so much so that refiners have no more storage capacity. So the people selling May contracts are desperate.
With demand continuing to collapse, as I think it will for a host of reasons, oil is going to be cheap and it may continue to drop. But the argument between Saudi Arabia and Russia caused SA to ramp up production a few million barrels higher when OPEC was trying to agree to lower it. So this was an exceptional glut independent of the coronavirus. With the coronavirus, as well, and contracts closing tomorrow, you have a unique situation today.
A few minutes ago, West Texas Intermediate contracts for May were negative.
posted by Ivan Fyodorovich at 11:31 AM on April 20, 2020 [9 favorites]
Step 2: Drive the tanker down state highway 33 to Cushing, Oklahoma.
posted by Huffy Puffy at 11:32 AM on April 20, 2020 [2 favorites]
posted by Huffy Puffy at 11:32 AM on April 20, 2020 [2 favorites]
US crude crashed to as low as a penny a barrel on Monday
Seems to have been updated: "US crude crashed on Monday, falling below $0 to $-1.43"
Prices subsequently rose to the +$4 range, but.
posted by Not A Thing at 11:33 AM on April 20, 2020 [1 favorite]
Seems to have been updated: "US crude crashed on Monday, falling below $0 to $-1.43"
Prices subsequently rose to the +$4 range, but.
posted by Not A Thing at 11:33 AM on April 20, 2020 [1 favorite]
scruss: *: someone who actually knows Canadian oil prices please correct me. The $50 figure was one that stuck with me in the late 200xs
As of 2019, Suncor, for example was reporting the following:
Suncor's expected Oil Sands operations cash operating costs per barrel are $24.00 - $26.50 (US $18.25 - $20.15) reflecting lower 2020 planned maintenance. Fort Hills cash operating costs per barrel are expected to be $23.00 - $27.00 (US $17.50 - $20.50). Syncrude cash operating costs per barrel are expected to be $35.00 - $38.00 (US $26.60 - $28.90).
Saudi Aramco's conventional oil production costs, by contrast, are under $3.00 USD per barrel.
posted by mandolin conspiracy at 11:34 AM on April 20, 2020 [11 favorites]
As of 2019, Suncor, for example was reporting the following:
Suncor's expected Oil Sands operations cash operating costs per barrel are $24.00 - $26.50 (US $18.25 - $20.15) reflecting lower 2020 planned maintenance. Fort Hills cash operating costs per barrel are expected to be $23.00 - $27.00 (US $17.50 - $20.50). Syncrude cash operating costs per barrel are expected to be $35.00 - $38.00 (US $26.60 - $28.90).
Saudi Aramco's conventional oil production costs, by contrast, are under $3.00 USD per barrel.
posted by mandolin conspiracy at 11:34 AM on April 20, 2020 [11 favorites]
May WTI crude futures close at NEGATIVE $37.63/barrel.
These are interesting times.
posted by RobotVoodooPower at 11:46 AM on April 20, 2020 [3 favorites]
These are interesting times.
posted by RobotVoodooPower at 11:46 AM on April 20, 2020 [3 favorites]
Things get weird when the paper traders who often prop up the price are worried they might be forced to deal with actual product. Usually they plan ahead well enough to not get stuck like this, but they were probably hanging on to contracts longer than usual hoping for a spike in price once the argument about production was resolved.
posted by wierdo at 11:47 AM on April 20, 2020 [7 favorites]
posted by wierdo at 11:47 AM on April 20, 2020 [7 favorites]
Oil sands products typically also face a transportation cost and a discount, so they need about USD40/bbl to hit their break-even.
posted by bonehead at 11:47 AM on April 20, 2020 [4 favorites]
posted by bonehead at 11:47 AM on April 20, 2020 [4 favorites]
Never thought about how running out of storage can make oil prices go negative. Crazy! But makes sense. Can't dump excess crude like you can excess food (I hope).
posted by cosmac at 11:52 AM on April 20, 2020 [4 favorites]
posted by cosmac at 11:52 AM on April 20, 2020 [4 favorites]
What does a negative price mean? That you will pay someone to take the oil from you?
posted by Automocar at 11:52 AM on April 20, 2020
posted by Automocar at 11:52 AM on April 20, 2020
thatwhichfalls: "I find the idea that futures prices mean anything at all in the present climate pretty hilarious."
"Futures prices are no guarantee of present performance"
posted by chavenet at 11:56 AM on April 20, 2020 [4 favorites]
"Futures prices are no guarantee of present performance"
posted by chavenet at 11:56 AM on April 20, 2020 [4 favorites]
LOUISE, DUMP THE MILK! THE CAT DRINKS UNLEADED FROM NOW ON!
posted by entropicamericana at 11:59 AM on April 20, 2020 [36 favorites]
posted by entropicamericana at 11:59 AM on April 20, 2020 [36 favorites]
Now, I'm no economist but my layman's assessment is that—at the end of the day—one group of rich people are going to be slightly less rich while another group of rich people are going to be slightly more rich.
posted by Atom Eyes at 12:08 PM on April 20, 2020 [19 favorites]
posted by Atom Eyes at 12:08 PM on April 20, 2020 [19 favorites]
Remember when peak oil was all the rage on Metafilter? I want to go back in time and post in those threads that people will literally be paying you to take the oil in 2020 and see what happens. I bet name calling is involved.
posted by Justinian at 12:23 PM on April 20, 2020 [31 favorites]
posted by Justinian at 12:23 PM on April 20, 2020 [31 favorites]
What does a negative price mean? That you will pay someone to take the oil from you?
Yes.
If you have an empty oil tank, you can get someone to pay you $37/barrel - almost 70 cents/gallon - to fill it with oil.
Right now, nobody has an empty oil tank.
posted by Hatashran at 12:25 PM on April 20, 2020 [11 favorites]
Reminds me of the story of the energy trader who accidentally got a boat of coal delivered through a trade.
posted by Carillon at 12:26 PM on April 20, 2020 [7 favorites]
posted by Carillon at 12:26 PM on April 20, 2020 [7 favorites]
Western Flag
(Spindletop, Texas) , 2017 by John Gerrard
(thanks to the Twitter account of madamejujujive)
posted by thatwhichfalls at 12:28 PM on April 20, 2020 [2 favorites]
(Spindletop, Texas) , 2017 by John Gerrard
(thanks to the Twitter account of madamejujujive)
posted by thatwhichfalls at 12:28 PM on April 20, 2020 [2 favorites]
What does a negative price mean? That you will pay someone to take the oil from you?
Exactly this.
These are futures contracts, which is a contract you engage in that basically says "I will (buy/sell) a million barrels of oil from you on (May/June/...) 1st, for the price of $x". People engage in these contracts for a bunch of reasons. An oil producer might make a contract to protect themselves against the price of oil going down. An airline or trucking company might make a contract to protect themselves against fuel prices going up unexpectedly. A lot of Wall Street types make them because it's a way that they can make money.
Normally, what happens is that as the contract that says you'll buy a million barrels of oil in May comes due, you'll sell it and buy one that says you'll buy a million barrels in June. And normally the price isn't all that different. (And the difference is the cost of protecting yourself or making money.) But what's happening now is a combination of a few things; in particular, Russia and the Saudis turned open the taps a few months ago in a price war over geopolitical concerns, and a certain pandemic happened to stop an awful lot of oil consuming stuff -- international and domestic travel, local commuting, but also a lot of factories and other businesses that need oil products.
So what's happening is that the oil storage facilities are filling up. Even with the global production dropping after a recent international agreement, it's hard to turn oil production on a dime; wells just sort of pump, refineries expect a continuous flow of ins and outs, and so on. At this point, companies are hiring supertankers not to transport oil, just to hold it.
And all these contracts are expiring for May, which means a bunch of airlines and Wall Streeters own contracts that say "I agree to take delivery of a million barrels of oil", which they don't actually want to happen. Oil is smelly and takes a lot of room to store, and a Wall Streeter can't actually take delivery of it. Even an airline doesn't want oil; they actually need jet fuel, whose price generally tracks oil (and probably their jet fuel storage is also full, since they've been grounding flights).
If you're a Wall Street trader, unless you unload your May contract, a tanker full of oil will in the very near future pull up to Pier 11 in New York, and demand you unload it into your (nonexisting) storage facilities, or they'll charge you their (exorbitant) daily rate for holding oil.
So a lot of people are getting real desperate to not have a shitload of actual oil show up on their doorstep next week, and they're starting to pay people to take the oil from them.
(See also Matt Levine's column which will teach you the word contango.)
posted by Homeboy Trouble at 12:32 PM on April 20, 2020 [41 favorites]
Exactly this.
These are futures contracts, which is a contract you engage in that basically says "I will (buy/sell) a million barrels of oil from you on (May/June/...) 1st, for the price of $x". People engage in these contracts for a bunch of reasons. An oil producer might make a contract to protect themselves against the price of oil going down. An airline or trucking company might make a contract to protect themselves against fuel prices going up unexpectedly. A lot of Wall Street types make them because it's a way that they can make money.
Normally, what happens is that as the contract that says you'll buy a million barrels of oil in May comes due, you'll sell it and buy one that says you'll buy a million barrels in June. And normally the price isn't all that different. (And the difference is the cost of protecting yourself or making money.) But what's happening now is a combination of a few things; in particular, Russia and the Saudis turned open the taps a few months ago in a price war over geopolitical concerns, and a certain pandemic happened to stop an awful lot of oil consuming stuff -- international and domestic travel, local commuting, but also a lot of factories and other businesses that need oil products.
So what's happening is that the oil storage facilities are filling up. Even with the global production dropping after a recent international agreement, it's hard to turn oil production on a dime; wells just sort of pump, refineries expect a continuous flow of ins and outs, and so on. At this point, companies are hiring supertankers not to transport oil, just to hold it.
And all these contracts are expiring for May, which means a bunch of airlines and Wall Streeters own contracts that say "I agree to take delivery of a million barrels of oil", which they don't actually want to happen. Oil is smelly and takes a lot of room to store, and a Wall Streeter can't actually take delivery of it. Even an airline doesn't want oil; they actually need jet fuel, whose price generally tracks oil (and probably their jet fuel storage is also full, since they've been grounding flights).
If you're a Wall Street trader, unless you unload your May contract, a tanker full of oil will in the very near future pull up to Pier 11 in New York, and demand you unload it into your (nonexisting) storage facilities, or they'll charge you their (exorbitant) daily rate for holding oil.
So a lot of people are getting real desperate to not have a shitload of actual oil show up on their doorstep next week, and they're starting to pay people to take the oil from them.
(See also Matt Levine's column which will teach you the word contango.)
posted by Homeboy Trouble at 12:32 PM on April 20, 2020 [41 favorites]
If you have an empty oil tank, you can get someone to pay you $37/barrel - almost 70 cents/gallon - to fill it with oil.
Right now, nobody has an empty oil tank.
brb shopping for oil tanks
posted by Automocar at 12:32 PM on April 20, 2020 [2 favorites]
Right now, nobody has an empty oil tank.
brb shopping for oil tanks
posted by Automocar at 12:32 PM on April 20, 2020 [2 favorites]
So, if someone wanted to receive a million barrels and dump them in the ocean, someone would pay them $37 million to do that?
posted by dances_with_sneetches at 12:34 PM on April 20, 2020 [3 favorites]
posted by dances_with_sneetches at 12:34 PM on April 20, 2020 [3 favorites]
NEWS UPDATE: Organisation of Oil Tank Exporting Countries to control world
posted by thatwhichfalls at 12:35 PM on April 20, 2020 [7 favorites]
posted by thatwhichfalls at 12:35 PM on April 20, 2020 [7 favorites]
Amateur hour question: Doesn't the strategic petroleum reserve have some capacity available as of Friday (635m barrels on a ~790m barrel capacity). Totally appreciate they store different types of crude in different facilities so not necessarily as simple as that.
posted by inflatablekiwi at 12:35 PM on April 20, 2020 [3 favorites]
posted by inflatablekiwi at 12:35 PM on April 20, 2020 [3 favorites]
Even an airline doesn't want oil; they actually need jet fuel, whose price generally tracks oil (and probably their jet fuel storage is also full, since they've been grounding flights).
See also: 3:2:1 crack spread.
*giggles immaturely*
posted by mandolin conspiracy at 12:42 PM on April 20, 2020 [4 favorites]
See also: 3:2:1 crack spread.
*giggles immaturely*
posted by mandolin conspiracy at 12:42 PM on April 20, 2020 [4 favorites]
Remember when peak oil was all the rage on Metafilter?
Reading the trade pages now (Oilprice.com among others), they're talking about the Other kind of Peak Oil, the maximum demand for oil, rather than maximum consumption. The thinking is that there are two kinds of peak oil, running out, when demand outstrips supply (at least reasonably priced supply), oil prices rise and CO2 level skyrocket, and moving on, when the world switches energy supply to non-hydrocarbon sources.
I've seen speculation that the Saudis are concerned that the world will move on, rather than run out. In Move On scenarios, demand collapses, the oil price is ever low and ever falling. There is also a key total future sales number, adding up all the oil to be sold in the future, a demand-limited amount of oil that can be sold from the present.
The Kingdom of Saudi Arabia wants to sell all its oil. It has a quantity it can drill at a certain price point, discussed above. When the amount in the reserves approaches the amount of oil that likely could be sold in the future, the KSA becomes concerned. It wants to sell all its oil. Prices will continuously fall. They have the lowest production cost in the world.
So what do they do? They drop the price of oil as low as possible. They drive all their competitors out of business, including other low cost producers like Mexico and Russia. Perhaps cheap oil will also cause a demand spike, which might allow the price to come up again for a time.
KSA will try to sell all the oil they have left. A barrel left in the ground is a wasted profit.
This may be the new reality of the other kind of peak oil: a lasting artificial glut while low cost producers compete for ever shrinking demand.
posted by bonehead at 12:43 PM on April 20, 2020 [20 favorites]
Reading the trade pages now (Oilprice.com among others), they're talking about the Other kind of Peak Oil, the maximum demand for oil, rather than maximum consumption. The thinking is that there are two kinds of peak oil, running out, when demand outstrips supply (at least reasonably priced supply), oil prices rise and CO2 level skyrocket, and moving on, when the world switches energy supply to non-hydrocarbon sources.
I've seen speculation that the Saudis are concerned that the world will move on, rather than run out. In Move On scenarios, demand collapses, the oil price is ever low and ever falling. There is also a key total future sales number, adding up all the oil to be sold in the future, a demand-limited amount of oil that can be sold from the present.
The Kingdom of Saudi Arabia wants to sell all its oil. It has a quantity it can drill at a certain price point, discussed above. When the amount in the reserves approaches the amount of oil that likely could be sold in the future, the KSA becomes concerned. It wants to sell all its oil. Prices will continuously fall. They have the lowest production cost in the world.
So what do they do? They drop the price of oil as low as possible. They drive all their competitors out of business, including other low cost producers like Mexico and Russia. Perhaps cheap oil will also cause a demand spike, which might allow the price to come up again for a time.
KSA will try to sell all the oil they have left. A barrel left in the ground is a wasted profit.
This may be the new reality of the other kind of peak oil: a lasting artificial glut while low cost producers compete for ever shrinking demand.
posted by bonehead at 12:43 PM on April 20, 2020 [20 favorites]
dear ask metafilter I filled my swimming pool with oil now what
posted by Huffy Puffy at 12:44 PM on April 20, 2020 [18 favorites]
posted by Huffy Puffy at 12:44 PM on April 20, 2020 [18 favorites]
NEWS UPDATE: Organisation of Oil Tank Exporting Countries to control world
You just know somewhere in a Cruise Line operator right now, someone has drawn up a wildly impractical "our idle cruise ships can hold X amount of oil if we flood them on May 1st" plan. I mean the two US Navy Hospital ships (USNS Mercy and USNS Comfort) are converted oil tankers...or maybe I shouldn't give this administration any ideas.
posted by inflatablekiwi at 12:49 PM on April 20, 2020 [1 favorite]
You just know somewhere in a Cruise Line operator right now, someone has drawn up a wildly impractical "our idle cruise ships can hold X amount of oil if we flood them on May 1st" plan. I mean the two US Navy Hospital ships (USNS Mercy and USNS Comfort) are converted oil tankers...or maybe I shouldn't give this administration any ideas.
posted by inflatablekiwi at 12:49 PM on April 20, 2020 [1 favorite]
Seems to be a good time to go all-in on renewable energy and related products (electric cars, etc.), if you want to be in a business that turns a profit.
posted by They sucked his brains out! at 12:50 PM on April 20, 2020
posted by They sucked his brains out! at 12:50 PM on April 20, 2020
Remember when peak oil was all the rage on Metafilter? I want to go back in time and post in those threads that people will literally be paying you to take the oil in 2020 and see what happens. I bet name calling is involved.
Silly environmentalists, infinite resources are hella possible on a finite planet!
posted by entropicamericana at 12:51 PM on April 20, 2020 [7 favorites]
Silly environmentalists, infinite resources are hella possible on a finite planet!
posted by entropicamericana at 12:51 PM on April 20, 2020 [7 favorites]
The first wave of this glut out the market strategy was in 2016, when oil prices collapsed from $100/bbl to their current level. This effectively killed Canada (and Venezuela and most new unconventional sources) as a source of future expansion, though the US shale producers were able to continue.
I think we were just starting the next ratchet in the game of chicken between Saudi and Russia, when the COVID-19 demand collapse happened, driving prices down even further. How much of this is new normal is hard to say, but I think $40/bbl oil is unlikely to be back any time soon.
posted by bonehead at 12:53 PM on April 20, 2020 [1 favorite]
I think we were just starting the next ratchet in the game of chicken between Saudi and Russia, when the COVID-19 demand collapse happened, driving prices down even further. How much of this is new normal is hard to say, but I think $40/bbl oil is unlikely to be back any time soon.
posted by bonehead at 12:53 PM on April 20, 2020 [1 favorite]
Seems to be a good time to go all-in on renewable energy and related products (electric cars, etc.), if you want to be in a business that turns a profit.
I'd think a big reason countries like Canada and the US are pretty bad at moving to renewables is because of their domestic production of fossil fuels. If those aren't viable any longer then it makes no sense not to go all-in on renewables.
posted by any portmanteau in a storm at 12:55 PM on April 20, 2020 [2 favorites]
I'd think a big reason countries like Canada and the US are pretty bad at moving to renewables is because of their domestic production of fossil fuels. If those aren't viable any longer then it makes no sense not to go all-in on renewables.
posted by any portmanteau in a storm at 12:55 PM on April 20, 2020 [2 favorites]
Seems to be a good time to go all-in on renewable energy and related products (electric cars, etc.), if you want to be in a business that turns a profit.
Aren't the low oil prices an unfortunate disincentive from going all-in on renewables?
Also: Obviously this is not great for oil exporting countries like Norway, but our economy is propably diverse enough to pull through. I'm wondering how it affects small Gulf states like the UAE though. Aren't they almost entirely dependent on oil revenues, tourism and stock market investments? The worst hit areas?
posted by Dumsnill at 12:57 PM on April 20, 2020 [1 favorite]
Aren't the low oil prices an unfortunate disincentive from going all-in on renewables?
Also: Obviously this is not great for oil exporting countries like Norway, but our economy is propably diverse enough to pull through. I'm wondering how it affects small Gulf states like the UAE though. Aren't they almost entirely dependent on oil revenues, tourism and stock market investments? The worst hit areas?
posted by Dumsnill at 12:57 PM on April 20, 2020 [1 favorite]
[KSA] wants to sell all its oil. Prices will continuously fall. They have the lowest production cost in the world.
Around $3/barrel IIRC.
However, it needs to see $80-$85/barrel to keep their social programs in place and avoid civil unrest. See a problem here?
posted by JoeZydeco at 12:59 PM on April 20, 2020 [11 favorites]
Around $3/barrel IIRC.
However, it needs to see $80-$85/barrel to keep their social programs in place and avoid civil unrest. See a problem here?
posted by JoeZydeco at 12:59 PM on April 20, 2020 [11 favorites]
one of my favorite lines: "Maybe the Fed needs to buy some oil futures. Seems like they are buying everything else to keep all the plates spinning."
This news is like hearing the iceberg tearing a hole in the Titanic. Nothing has gotten tippy just yet, and there’s an eerie calm....
posted by robbyrobs at 1:00 PM on April 20, 2020 [4 favorites]
This news is like hearing the iceberg tearing a hole in the Titanic. Nothing has gotten tippy just yet, and there’s an eerie calm....
posted by robbyrobs at 1:00 PM on April 20, 2020 [4 favorites]
Remember when peak oil was all the rage on Metafilter?
It took me a minute to look up James Howard Kunstler's name because it had been so long since anyone I pay attention to has paid attention to him; I went to his blog, looked at the latest entry, and suffered through a few lazy potshots at Biden before running across a transphobic slur and noping out.
The thing that makes me nervous about this is that, while we can dream that the fossil fuel industry becomes so badly broken as a result that renewables reach the tipping point, the much more likely result is that super-cheap fossil fuels will be irresistible; note the resurgence of the moribund SUV market when oil came down from its peak. Pray for the politician who argues for more electric cars rather than just sucking up all that $1/gallon gas.
posted by Halloween Jack at 1:02 PM on April 20, 2020 [6 favorites]
It took me a minute to look up James Howard Kunstler's name because it had been so long since anyone I pay attention to has paid attention to him; I went to his blog, looked at the latest entry, and suffered through a few lazy potshots at Biden before running across a transphobic slur and noping out.
The thing that makes me nervous about this is that, while we can dream that the fossil fuel industry becomes so badly broken as a result that renewables reach the tipping point, the much more likely result is that super-cheap fossil fuels will be irresistible; note the resurgence of the moribund SUV market when oil came down from its peak. Pray for the politician who argues for more electric cars rather than just sucking up all that $1/gallon gas.
posted by Halloween Jack at 1:02 PM on April 20, 2020 [6 favorites]
Yeah, I think that oil should be extremely expensive, but I realise that this might sound a bit self serving given my nationality.
posted by Dumsnill at 1:04 PM on April 20, 2020
posted by Dumsnill at 1:04 PM on April 20, 2020
Seems to be a good time to go all-in on renewable energy and related products (electric cars, etc.), if you want to be in a business that turns a profit.
Yep. Energy companies are accelerating investments in renewable energy at this point. Being in fossil fuels is a giant pain in the ass. They pour in billions in capital and they just end up with a commodity that's tied up with so much geopolitical shit that they make a net profit of like 5% on a good year. Yeah Shell makes 16 billion a year but it's taking $340b a year in revenue to do it. For the amounts of money they have to lay out they could make more money doing anything. Hell, they could literally make more money running an airline.
Renewables? What's the feedstock? Quartz rock and sand for solar. Other major commodities? Aluminium, steel, and copper. Rarer stuff? Indium, tin, molybdenum, boron, phosphorus. Apart from the indium there's nothing much there that costs an arm and a leg. Once you get the production setup, the marginal cost is cheap as chips. Even dinky little third rate manufactories make money off this stuff. Fossil fuel companies can come in with their insane market buying power for all their raw materials, the ability to scale up production to insane levels, and they can own the market. If you can make double the return on your money making wind turbines vs petrol wouldn't you want to do it asap?
Aren't the low oil prices an unfortunate disincentive from going all-in on renewables?
On the contrary, the low demand means everyone is trying to find a buyer for their products and everyone is losing boatloads of money handling the glut and making fuck all. Crude oil producers need to find refiners for their products or pay for storage. A refiner needs to get rid of their stock or pay for storage. The sudden disruption in demand isn't letting them sell more at these lower prices because it's inelastic. Nobody has anywhere to drive. Nobody has anywhere to fly.
posted by Your Childhood Pet Rock at 1:05 PM on April 20, 2020 [7 favorites]
Yep. Energy companies are accelerating investments in renewable energy at this point. Being in fossil fuels is a giant pain in the ass. They pour in billions in capital and they just end up with a commodity that's tied up with so much geopolitical shit that they make a net profit of like 5% on a good year. Yeah Shell makes 16 billion a year but it's taking $340b a year in revenue to do it. For the amounts of money they have to lay out they could make more money doing anything. Hell, they could literally make more money running an airline.
Renewables? What's the feedstock? Quartz rock and sand for solar. Other major commodities? Aluminium, steel, and copper. Rarer stuff? Indium, tin, molybdenum, boron, phosphorus. Apart from the indium there's nothing much there that costs an arm and a leg. Once you get the production setup, the marginal cost is cheap as chips. Even dinky little third rate manufactories make money off this stuff. Fossil fuel companies can come in with their insane market buying power for all their raw materials, the ability to scale up production to insane levels, and they can own the market. If you can make double the return on your money making wind turbines vs petrol wouldn't you want to do it asap?
Aren't the low oil prices an unfortunate disincentive from going all-in on renewables?
On the contrary, the low demand means everyone is trying to find a buyer for their products and everyone is losing boatloads of money handling the glut and making fuck all. Crude oil producers need to find refiners for their products or pay for storage. A refiner needs to get rid of their stock or pay for storage. The sudden disruption in demand isn't letting them sell more at these lower prices because it's inelastic. Nobody has anywhere to drive. Nobody has anywhere to fly.
posted by Your Childhood Pet Rock at 1:05 PM on April 20, 2020 [7 favorites]
Remember when peak oil was all the rage on Metafilter?
Oh man, those were the days. Week of weeks of people circle jerking themselves into thinking that people would continue to keep their same habits with their 12 mpg SUVs as gasoline climbed right on past $500 a gallon.
If I remember correctly, that was before natural gas fracking really got going, so the PEAK OIL! crowd was super wrong way before our current "demand has fallen off a cliff" situation.
posted by sideshow at 1:06 PM on April 20, 2020 [2 favorites]
Oh man, those were the days. Week of weeks of people circle jerking themselves into thinking that people would continue to keep their same habits with their 12 mpg SUVs as gasoline climbed right on past $500 a gallon.
If I remember correctly, that was before natural gas fracking really got going, so the PEAK OIL! crowd was super wrong way before our current "demand has fallen off a cliff" situation.
posted by sideshow at 1:06 PM on April 20, 2020 [2 favorites]
our idle cruise ships
Much of 2021 is selling out (at least at Princess), so contrary to Extremely Online folks, those ships are barely going to be idle at all.
posted by sideshow at 1:09 PM on April 20, 2020 [5 favorites]
Much of 2021 is selling out (at least at Princess), so contrary to Extremely Online folks, those ships are barely going to be idle at all.
posted by sideshow at 1:09 PM on April 20, 2020 [5 favorites]
Yeah, but it's surely a disincentive from the consumer perspective. Why buy an expensive electric vehicle when I can buy a cheap gas guzzler that costs me almost nothing in fuel?
posted by Dumsnill at 1:10 PM on April 20, 2020
posted by Dumsnill at 1:10 PM on April 20, 2020
This is a transient dip in the price because of a sudden demand shock. It's not going to last. In fact, as more and more smaller oil concerns fold we could even see a massive rebound in the price as the world comes out of hibernation.
We've had a buffer of production vs world demand that basically lets us hover at a nice place but that buffer might have disintegrated. In two years we might be looking at well over $100/barrel for oil and $4/gallon in the midwest simply because we can't get the production back online fast enough or we might just have plain lost the production necessary to satisfy nominal demand. It'll depend on a lot of factors in terms of how quickly the economy back online but if you were to flip the economy back to 100% we'd probably see a lot of the damage that has been done to our production chains reflected incredibly quickly in the oil and gas prices.
posted by Your Childhood Pet Rock at 1:16 PM on April 20, 2020 [4 favorites]
We've had a buffer of production vs world demand that basically lets us hover at a nice place but that buffer might have disintegrated. In two years we might be looking at well over $100/barrel for oil and $4/gallon in the midwest simply because we can't get the production back online fast enough or we might just have plain lost the production necessary to satisfy nominal demand. It'll depend on a lot of factors in terms of how quickly the economy back online but if you were to flip the economy back to 100% we'd probably see a lot of the damage that has been done to our production chains reflected incredibly quickly in the oil and gas prices.
posted by Your Childhood Pet Rock at 1:16 PM on April 20, 2020 [4 favorites]
Aren't the low oil prices an unfortunate disincentive from going all-in on renewables?
I'm not an economist, so my opinion is just that, but I think I've read that investors prefer putting money into businesses that turn higher profits.
Gas stations probably aren't going to pay people to drive in and fill up their tanks any time soon, but margins will be even thinner than ever. Not just fuel production and distribution, itself, but manufacturers looking to sell new vehicles or planes or boats etc. want to sell a value-added product that turns a profit.
From the consumer's perspective, if your new car isn't appreciably better than the car you have now, why would you buy a new one? Etc.
All the peak oil stuff is a bit silly, of course, in the larger picture. It has long been the case that Saudi Arabia and other major oil fields have been producing less over the decades, we're going after lower-quality crude oil from places that are normally very expensive to extract from, and global warming is going to force a come-to-Jesus moment on fossil fuels very soon — probably within the next five years, given how much faster the climate crisis has accelerated the last few years.
A pandemic is a terrible way to force cultural change on a mass scale, but history seems to suggest that crises force change on humanity. Maybe, hopefully, pushing us away from fossil fuels will be one outcome from this. I'm crossing my fingers.
posted by They sucked his brains out! at 1:22 PM on April 20, 2020 [2 favorites]
I'm not an economist, so my opinion is just that, but I think I've read that investors prefer putting money into businesses that turn higher profits.
Gas stations probably aren't going to pay people to drive in and fill up their tanks any time soon, but margins will be even thinner than ever. Not just fuel production and distribution, itself, but manufacturers looking to sell new vehicles or planes or boats etc. want to sell a value-added product that turns a profit.
From the consumer's perspective, if your new car isn't appreciably better than the car you have now, why would you buy a new one? Etc.
All the peak oil stuff is a bit silly, of course, in the larger picture. It has long been the case that Saudi Arabia and other major oil fields have been producing less over the decades, we're going after lower-quality crude oil from places that are normally very expensive to extract from, and global warming is going to force a come-to-Jesus moment on fossil fuels very soon — probably within the next five years, given how much faster the climate crisis has accelerated the last few years.
A pandemic is a terrible way to force cultural change on a mass scale, but history seems to suggest that crises force change on humanity. Maybe, hopefully, pushing us away from fossil fuels will be one outcome from this. I'm crossing my fingers.
posted by They sucked his brains out! at 1:22 PM on April 20, 2020 [2 favorites]
If you're a Wall Street trader, unless you unload your May contract, a tanker full of oil will in the very near future pull up to Pier 11 in New York, and demand you unload it into your (nonexisting) storage facilities, or they'll charge you their (exorbitant) daily rate for holding oil.
The CEO of a financial spread betting company I used to work for told me a (possibly apocryphal) story about a trader in the City who forgot to close out a futures contract and ended up with a large consignment of bananas showing up outside his office.
posted by kersplunk at 1:22 PM on April 20, 2020 [3 favorites]
The CEO of a financial spread betting company I used to work for told me a (possibly apocryphal) story about a trader in the City who forgot to close out a futures contract and ended up with a large consignment of bananas showing up outside his office.
posted by kersplunk at 1:22 PM on April 20, 2020 [3 favorites]
Gas stations probably aren't going to pay people to drive in and fill up their tanks any time soon, but margins will be even thinner than ever.
Gas stations don't make money off gas. They make it off soft drinks, candy bars, other forms of junk food, etc.
posted by Fukiyama at 1:27 PM on April 20, 2020 [2 favorites]
Gas stations don't make money off gas. They make it off soft drinks, candy bars, other forms of junk food, etc.
posted by Fukiyama at 1:27 PM on April 20, 2020 [2 favorites]
From the consumer's perspective, if your new car isn't appreciably better than the car you have now, why would you buy a new one?
Most of us can get an appreciably better new car at $10 000 or $80 000, so this is just nonsense sophistry.
posted by Dumsnill at 1:30 PM on April 20, 2020
Most of us can get an appreciably better new car at $10 000 or $80 000, so this is just nonsense sophistry.
posted by Dumsnill at 1:30 PM on April 20, 2020
So how many more people, in what countries, get furloughed, putting more stress on social safety nets? How much less money circulating in which local economies? And what are the longer term results of that?
posted by vrakatar at 1:33 PM on April 20, 2020
posted by vrakatar at 1:33 PM on April 20, 2020
Gas stations don't make money off gas. They make it off soft drinks, candy bars, other forms of junk food, etc.
In other words: they make most of their money from famous New York City art critics.
posted by Atom Eyes at 1:40 PM on April 20, 2020 [7 favorites]
In other words: they make most of their money from famous New York City art critics.
posted by Atom Eyes at 1:40 PM on April 20, 2020 [7 favorites]
Obviously this is not great for oil exporting countries like Norway, but our economy is propably diverse enough to pull through.
Luckily for Norwegians, its sovereign fund is divesting from fossil fuels. It seems their financiers had foresight here:
Luckily for Norwegians, its sovereign fund is divesting from fossil fuels. It seems their financiers had foresight here:
The Government Pension Fund Global (GPFG), whose assets exceed those of rival sovereign wealth funds such as China’s, said it would phase out oil exploration from its “investment universe”...posted by They sucked his brains out! at 1:44 PM on April 20, 2020 [2 favorites]
GPFG said the decision was motivated by a desire to protect the Norwegian economy by reducing exposure to oil price falls, rather than climate concerns...
“The objective is to reduce the vulnerability of our common wealth to a permanent oil price decline,” said Norway’s finance minister, Siv Jensen. “Hence, it is more accurate to sell companies which explore and produce oil and gas, rather than selling a broadly diversified energy sector.”
One of the odd (and in the great scheme of things, minor) effects of the price collapses of the last few years is the number of offshore rigs that have been scrapped (an industry that has it's own, awful, set of issues).
There are rigs that I worked on for cumulative years, and that felt like actual places to the people that worked on them, that have been dragged onto Indian beaches and dismantled. They were things, not places.
My favorite rig, the Henry Goodrich, had just been cold stacked, a sure sign that the scrappers are in it's future. I remember a long summer on there in '95, out on the eastern continental shelf of the Atlantic, watching whales from on deck when I was off shift. The safety people got bored at one point and started offering joy rides in the life boats. We ran an art exhibition of weird stuff people had made from rig junk in the mudlogging unit.
It's a peculiar feeling. It all needs to go though.
posted by thatwhichfalls at 1:48 PM on April 20, 2020 [33 favorites]
There are rigs that I worked on for cumulative years, and that felt like actual places to the people that worked on them, that have been dragged onto Indian beaches and dismantled. They were things, not places.
My favorite rig, the Henry Goodrich, had just been cold stacked, a sure sign that the scrappers are in it's future. I remember a long summer on there in '95, out on the eastern continental shelf of the Atlantic, watching whales from on deck when I was off shift. The safety people got bored at one point and started offering joy rides in the life boats. We ran an art exhibition of weird stuff people had made from rig junk in the mudlogging unit.
It's a peculiar feeling. It all needs to go though.
posted by thatwhichfalls at 1:48 PM on April 20, 2020 [33 favorites]
Oil's certainly beaten up but it's hardly out.
The front month contract -- now under $1 -- reflects short-term storage issues. June is $22.31, July is $22.76, and a year out is $35.12 - actually up on the day and up over 15% from the lows last month.
Oil frackers have a break even of about $40, so $35 oil for the the next year is very, very bad news for them. Most are highly leveraged with debt they have to service which means they have to keep pumping even as the prices go lower and lower. It's a death spiral.
posted by JackFlash at 2:01 PM on April 20, 2020 [4 favorites]
The front month contract -- now under $1 -- reflects short-term storage issues. June is $22.31, July is $22.76, and a year out is $35.12 - actually up on the day and up over 15% from the lows last month.
Oil frackers have a break even of about $40, so $35 oil for the the next year is very, very bad news for them. Most are highly leveraged with debt they have to service which means they have to keep pumping even as the prices go lower and lower. It's a death spiral.
posted by JackFlash at 2:01 PM on April 20, 2020 [4 favorites]
It's a death spiral.
Good. Frack them.
posted by Kirth Gerson at 2:05 PM on April 20, 2020 [1 favorite]
Good. Frack them.
posted by Kirth Gerson at 2:05 PM on April 20, 2020 [1 favorite]
By end of day, the price change was -172%. NYT has a good summary of what happened and why but it's basically all been laid out in the many comments above by knowledgable MeFites.
posted by gwint at 2:35 PM on April 20, 2020 [2 favorites]
posted by gwint at 2:35 PM on April 20, 2020 [2 favorites]
TECK has a lot of smart people projecting future pricing. They cancelled a huge oil sands project recently and despite all the regular oil boosters loosing their shit about how regulation was the cause it is really starting to look like that project just wasn't going to be viable long term.
Remember when peak oil was all the rage on Metafilter? I want to go back in time and post in those threads that people will literally be paying you to take the oil in 2020 and see what happens. I bet name calling is involved.
These sort of shocks are predicted by most peak oil supply models. As demand yoyos over the declining supply line it would alternatively get super cheap and super expensive and each cycle induces an economic shock on oil dependent and oil producing countries.
posted by Mitheral at 2:36 PM on April 20, 2020 [10 favorites]
Remember when peak oil was all the rage on Metafilter? I want to go back in time and post in those threads that people will literally be paying you to take the oil in 2020 and see what happens. I bet name calling is involved.
These sort of shocks are predicted by most peak oil supply models. As demand yoyos over the declining supply line it would alternatively get super cheap and super expensive and each cycle induces an economic shock on oil dependent and oil producing countries.
posted by Mitheral at 2:36 PM on April 20, 2020 [10 favorites]
Gosh, it's almost as if those oil pipelines taking shitty tar sands oil across sacred lands were a bad idea from every perspective. Who could have predicted...
(We can start by going back to Jimmy Carter. But his peanut farm!)
posted by fifteen schnitzengruben is my limit at 2:58 PM on April 20, 2020 [13 favorites]
(We can start by going back to Jimmy Carter. But his peanut farm!)
posted by fifteen schnitzengruben is my limit at 2:58 PM on April 20, 2020 [13 favorites]
Barrel of Monkeys now worth more than a barrel of oil
posted by mbo at 3:47 PM on April 20, 2020 [7 favorites]
posted by mbo at 3:47 PM on April 20, 2020 [7 favorites]
Not that I'm driving anywhere or anything, but I doubt anyones going to pay me to fill up my tank.
posted by sjswitzer at 5:52 PM on April 20, 2020
posted by sjswitzer at 5:52 PM on April 20, 2020
Silly environmentalists, infinite resources are hella possible on a finite planet!
This is both missing and proving the point.
It's not that Peak Oil is wrong because supplies are infinite, it's that factors other than supply matter. Oil producers don't just continuously pump out the maximum possible amount of oil, and consumers don't just use oil for fun. It could be that the circumstances of the world economy change such that demand no longer makes continued oil production desirable or even feasible, as outlined in several comments above.
It's hard to say what exactly is happening, but these simplistic Disco Stu projections are rarely helpful.
posted by star gentle uterus at 6:04 PM on April 20, 2020 [3 favorites]
This is both missing and proving the point.
It's not that Peak Oil is wrong because supplies are infinite, it's that factors other than supply matter. Oil producers don't just continuously pump out the maximum possible amount of oil, and consumers don't just use oil for fun. It could be that the circumstances of the world economy change such that demand no longer makes continued oil production desirable or even feasible, as outlined in several comments above.
It's hard to say what exactly is happening, but these simplistic Disco Stu projections are rarely helpful.
posted by star gentle uterus at 6:04 PM on April 20, 2020 [3 favorites]
neither is putting billions of tons of carbon in the atmosphere, yet here we are
posted by entropicamericana at 6:21 PM on April 20, 2020 [4 favorites]
posted by entropicamericana at 6:21 PM on April 20, 2020 [4 favorites]
Putting billions of tons of carbon into the atmosphere was actually super helpful. It's possible that you can't bootstrap yourself to our current levels of technology without easily accessible fossil fuels.
Not having already begun weaning ourselves off the stuff is obviously somewhat less helpful.
posted by Justinian at 7:04 PM on April 20, 2020 [2 favorites]
Not having already begun weaning ourselves off the stuff is obviously somewhat less helpful.
posted by Justinian at 7:04 PM on April 20, 2020 [2 favorites]
“On 4/20 Oil is $0.69 a barrel. We did it folks. We did it.”—@dunkman
posted by ob1quixote at 7:07 PM on April 20, 2020 [18 favorites]
posted by ob1quixote at 7:07 PM on April 20, 2020 [18 favorites]
The CEO of a financial spread betting company I used to work for told me a (possibly apocryphal) story about a trader in the City who forgot to close out a futures contract and ended up with a large consignment of bananas showing up outside his office.
Any chance he put them in the break room and then sent an company-wide email letting everyone know to help themselves to free bananas?
posted by azpenguin at 7:07 PM on April 20, 2020 [8 favorites]
Any chance he put them in the break room and then sent an company-wide email letting everyone know to help themselves to free bananas?
posted by azpenguin at 7:07 PM on April 20, 2020 [8 favorites]
How will Putin buy Trump a second term if he can’t even afford his own re-election at this point.
posted by interogative mood at 7:29 PM on April 20, 2020 [2 favorites]
posted by interogative mood at 7:29 PM on April 20, 2020 [2 favorites]
Amateur hour question: Doesn't the strategic petroleum reserve have some capacity available as of Friday (635m barrels on a ~790m barrel capacity). Totally appreciate they store different types of crude in different facilities so not necessarily as simple as that.
I'm curious myself, along the lines of ***now would be a great time to top off there***.
posted by JoeXIII007 at 7:53 PM on April 20, 2020
I'm curious myself, along the lines of ***now would be a great time to top off there***.
posted by JoeXIII007 at 7:53 PM on April 20, 2020
yup, 75 billion barrels on order.
comes with a ferret and lighted keychain.
posted by clavdivs at 7:59 PM on April 20, 2020
comes with a ferret and lighted keychain.
posted by clavdivs at 7:59 PM on April 20, 2020
liquid gold, as a noun, shall now be reserved for beer.
posted by clavdivs at 8:01 PM on April 20, 2020 [1 favorite]
posted by clavdivs at 8:01 PM on April 20, 2020 [1 favorite]
I just realized, oil divestment campaigns have saved universities and colleges millions of dollars. Which is cool. The global destabilization that comes out of this, less cool.
posted by Ignorantsavage at 11:11 PM on April 20, 2020 [2 favorites]
posted by Ignorantsavage at 11:11 PM on April 20, 2020 [2 favorites]
In Waterworld when Costner drops a flare into the tanker's oil reservoir and the old guy says "Oh, thank God". That's where I am right now.
posted by urbanwhaleshark at 11:23 PM on April 20, 2020 [3 favorites]
posted by urbanwhaleshark at 11:23 PM on April 20, 2020 [3 favorites]
Putting billions of tons of carbon into the atmosphere was actually super helpful. It's possible that you can't bootstrap yourself to our current levels of technology without easily accessible fossil fuels.
It's possible too that somewhere along that curve, well before the point on it that we're at now, we could have preemptively and collectively decided to transition to significantly less destructive energy sources. Obviously so much of the fact that we haven't comes down to moneyed interests having marshaled their power to prevent that outcome from early on, but I wonder how that would have worked out for them in an alternate universe where there weren't so many unaffected rubes thoughtlessly repeating this dictum that we couldn't possibly have reached "our" (who's?) level of technology without having destroyed so much.
posted by invitapriore at 11:54 PM on April 20, 2020 [4 favorites]
It's possible too that somewhere along that curve, well before the point on it that we're at now, we could have preemptively and collectively decided to transition to significantly less destructive energy sources. Obviously so much of the fact that we haven't comes down to moneyed interests having marshaled their power to prevent that outcome from early on, but I wonder how that would have worked out for them in an alternate universe where there weren't so many unaffected rubes thoughtlessly repeating this dictum that we couldn't possibly have reached "our" (who's?) level of technology without having destroyed so much.
posted by invitapriore at 11:54 PM on April 20, 2020 [4 favorites]
You just know somewhere in a Cruise Line operator right now, someone has drawn up a wildly impractical "our idle cruise ships can hold X amount of oil if we flood them on May 1st" plan. I mean the two US Navy Hospital ships (USNS Mercy and USNS Comfort) are converted oil tankers...or maybe I shouldn't give this administration any ideas.
Cruise ships have in fact been taking the opportunity to top off their tanks with cheap fuel.
Aren't the low oil prices an unfortunate disincentive from going all-in on renewables?
Maybe, but price volatility is also a disincentive to invest in production. If I can get a 5% return with low volatility, that is better than 5% with high vol on a risk adjusted basis.
When you consider that in the UK 35% of the price of a litre of petrol covers the cost of the crude, the refining margin, all the transportation and distribution costs and everyone's profits and the rest is tax then you can see that the link between crude oil prices and prices faced by consumers is not that strong.
posted by atrazine at 5:08 AM on April 21, 2020 [2 favorites]
Cruise ships have in fact been taking the opportunity to top off their tanks with cheap fuel.
Aren't the low oil prices an unfortunate disincentive from going all-in on renewables?
Maybe, but price volatility is also a disincentive to invest in production. If I can get a 5% return with low volatility, that is better than 5% with high vol on a risk adjusted basis.
When you consider that in the UK 35% of the price of a litre of petrol covers the cost of the crude, the refining margin, all the transportation and distribution costs and everyone's profits and the rest is tax then you can see that the link between crude oil prices and prices faced by consumers is not that strong.
posted by atrazine at 5:08 AM on April 21, 2020 [2 favorites]
It's possible too that somewhere along that curve, well before the point on it that we're at now, we could have preemptively and collectively decided to transition to significantly less destructive energy sources.
Someone mentioned Jimmy Carter. There's an actual point on that timeline where the head of our government said we should make that transition, and took some small steps to do it. Then the idiot electorate chose Reagan.
posted by Kirth Gerson at 5:50 AM on April 21, 2020 [13 favorites]
Someone mentioned Jimmy Carter. There's an actual point on that timeline where the head of our government said we should make that transition, and took some small steps to do it. Then the idiot electorate chose Reagan.
posted by Kirth Gerson at 5:50 AM on April 21, 2020 [13 favorites]
Oil has been shit since 2014. Fracking is fundamentally financially unstable, and was already going to crash, precipitating the price war. It s too capital intensive, and the wells fail too soon and too often.
Communities in the US that run on oil have been impoverished since the 1980s. Nothing has changed, except that our lungs are weaker, making us more likely to die from COVID and the flu.
PeakOil was real and we passed it over a decade ago. Oil will require bigger bailouts more often into the future.
Of course the first bailouts are always regulatory.
Chevron ET AL owe the state of Louisiana roughly $200 billion in lost marshlands under the CZMA, and they have owed this since 1980. and orphan wells are now multipling across the landscape.
The business model has always been cut and run, but now, where are they going to run to?
Pandemic Crisis, Systemic Decline: Why Exploiting the COVID-19 Crisis Will Not Save the Oil, Gas, and Plastic Industries (April 2020)
https://www.ciel.org/reports/pandemic-crisis-systemic-decline/
posted by eustatic at 6:08 AM on April 21, 2020 [3 favorites]
Communities in the US that run on oil have been impoverished since the 1980s. Nothing has changed, except that our lungs are weaker, making us more likely to die from COVID and the flu.
PeakOil was real and we passed it over a decade ago. Oil will require bigger bailouts more often into the future.
Of course the first bailouts are always regulatory.
Chevron ET AL owe the state of Louisiana roughly $200 billion in lost marshlands under the CZMA, and they have owed this since 1980. and orphan wells are now multipling across the landscape.
The business model has always been cut and run, but now, where are they going to run to?
Pandemic Crisis, Systemic Decline: Why Exploiting the COVID-19 Crisis Will Not Save the Oil, Gas, and Plastic Industries (April 2020)
https://www.ciel.org/reports/pandemic-crisis-systemic-decline/
posted by eustatic at 6:08 AM on April 21, 2020 [3 favorites]
This seems like a good explainer if you want an explanation of what's going on. (I say "seems like" because I'm not in the oil biz so he may be wrong, idk!)
posted by Ghostride The Whip at 8:06 AM on April 21, 2020
posted by Ghostride The Whip at 8:06 AM on April 21, 2020
Can we just...put it back? Yes, let's put it back. We might want some later.
posted by amanda at 9:06 AM on April 21, 2020 [3 favorites]
posted by amanda at 9:06 AM on April 21, 2020 [3 favorites]
For all the speculation that this was limited to May futures because they were closing, June's oil futures are down at least 50% today (and dropping fast), and July's are down 20%. I think there's something going on here that's more widespread than traders getting jammed up on one month's contracts.
posted by Copronymus at 10:52 AM on April 21, 2020 [4 favorites]
posted by Copronymus at 10:52 AM on April 21, 2020 [4 favorites]
Someone mentioned Jimmy Carter. There's an actual point on that timeline where the head of our government said we should make that transition, and took some small steps to do it. Then the idiot electorate chose Reagan.
And we did the same thing with Obama followed by Trump. Obama’s Dept of Energy moonshot programs decreased the cost of solar, wind and batteries by 10x; CAFE standards were lowering emissions and tax subsidies were hastening electric car transition.
posted by interogative mood at 1:01 PM on April 21, 2020 [6 favorites]
And we did the same thing with Obama followed by Trump. Obama’s Dept of Energy moonshot programs decreased the cost of solar, wind and batteries by 10x; CAFE standards were lowering emissions and tax subsidies were hastening electric car transition.
posted by interogative mood at 1:01 PM on April 21, 2020 [6 favorites]
Doing more research I read somewhere that when retail investors buy the USO etf it has to buy front-month WTI contracts (and rotate them each month), providing an easy opportunity for traders to front-run its trades each month.
Lotsa weirdness with this futures contract!
posted by Heywood Mogroot III at 1:56 PM on April 21, 2020 [1 favorite]
Lotsa weirdness with this futures contract!
posted by Heywood Mogroot III at 1:56 PM on April 21, 2020 [1 favorite]
Can we just...put it back? Yes, let's put it back. We might want some later.
It's a dead-end technology. Either we end it or it ends us.
posted by They sucked his brains out! at 9:13 PM on April 21, 2020
It's a dead-end technology. Either we end it or it ends us.
posted by They sucked his brains out! at 9:13 PM on April 21, 2020
Trump just tweeted, "I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea."
I suppose that shows the shape of the current plan for dealing with the oil price collapse.
I'm ignoring the whole shooting "down" gunboats, because maybe Iran has those new flying gunboats?
posted by bcd at 5:35 AM on April 22, 2020 [1 favorite]
I suppose that shows the shape of the current plan for dealing with the oil price collapse.
I'm ignoring the whole shooting "down" gunboats, because maybe Iran has those new flying gunboats?
posted by bcd at 5:35 AM on April 22, 2020 [1 favorite]
Doing more research I read somewhere that when retail investors buy the USO etf it has to buy front-month WTI contracts (and rotate them each month), providing an easy opportunity for traders to front-run its trades each month.
Is there a Google Translate language I can select to know what this says?
posted by srboisvert at 7:17 AM on April 22, 2020 [2 favorites]
The price of Western Canadian Select oil actually went negative. The premier of Alberta thinks pipelines will solve this, missing the obvious love move of just putting it back.
Spoke too soon, now they actually are talking about putting it back in the ground.
posted by rodlymight at 11:46 AM on April 22, 2020 [4 favorites]
Spoke too soon, now they actually are talking about putting it back in the ground.
posted by rodlymight at 11:46 AM on April 22, 2020 [4 favorites]
If they do end up storing the oil in salt mines I wonder if they can claim carbon credits for whatever time period it's there.
posted by any portmanteau in a storm at 1:36 PM on April 22, 2020
posted by any portmanteau in a storm at 1:36 PM on April 22, 2020
If you’re looking for a broader interpretation of what’s happening in oil, see how Sarah Kendzior and Andrea Chalupa’s (from about 19:00) strikes you.
posted by progosk at 5:49 PM on April 23, 2020
posted by progosk at 5:49 PM on April 23, 2020
Inside the Biggest Oil
Meltdown in History - On April 20, chaos reigned in oil
markets. Here’s what happened. By Leah McGrath Goodman
Meltdown in History - On April 20, chaos reigned in oil
markets. Here’s what happened. By Leah McGrath Goodman
“I do still watch it every day,” he says. “I suppose old habits die hard. What I saw was very chaotic. I saw a lot of buying and selling toward the end. I am sure a lot of people thought, ‘If I buy at zero, what can I lose from that?’ Well, it turns out you can lose over $40 a barrel.”posted by the man of twists and turns at 6:05 PM on May 8, 2020
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posted by gwint at 9:35 AM on April 20, 2020 [12 favorites]