Tag Archives: Oil Industry

Vulture Funds are Saving American oil

Thursday, 14 January 2016 06:52

This article was published by The McAlvany Intelligence Advisor on Wednesday, January 13, 2016:

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Over time vultures have gotten a bad rap. Some refuse even to admit that the American Bald Eagle is a vulture, preferring to think of it as a magnificent example of strong individualism and pride. In fact they are birds of prey, scavenging the carcasses of dead animals or, in the case of the Bald eagle, swooping down to snatch an unsuspecting fish from the water with its powerful talons.

Vulture funds work in somewhat the same way. To put it crudely, they

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Oil Prices Down, Oil Bankruptcies Up, Industry Safe

Wednesday, 13 January 2016 02:22

This article appeared online at TheNewAmerican.com on Tuesday, January 12, 2016:

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Just before Christmas Bruce Richards, CEO of Marathon Asset Management, predicted that not only would the price of a barrel of crude oil drop into the $20s but that it would take a third of America’s energy companies with it. As head of a vulture capitalist fund, described as “focused on opportunistic investing,” he was expressing more hope than despair.

Managing more than $13 billion, Richards is waiting for

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Oil Price Rebound Not Likely to Last, Says the IEA

Wednesday, 14 October 2015 15:03

This article was published by The McAlvany Intelligence Advisor on Wednesday, October 14, 2015:

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Since early August the price of crude has jumped almost 20 percent, moving some, including those in OPEC’s cartel, to conclude that its strategy is working: Flood the market to force prices so low that marginal producers, especially in the United States, will go out of business. With the resultant decrease in supply, prices will rebound, hopefully to levels where the cartel’s countries can continue to fund their welfare/warfare states.

Said the cartel last week:

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OPEC’s Strategy Appears to be Working: U.S. Layoffs Slowing Oil Production

Wednesday, 14 October 2015 04:29

This article appeared online at TheNewAmerican.com on Tuesday, October 13, 2015:

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On the surface, OPEC’s gamble appears to be paying off. As the oil cartel continues to pump at near maximum capacity, American energy producers are stacking rigs and laying off workers.

According to the U.S. Energy Information Administration (EIA), there were an estimated 700,000 workers involved in oil and gas development and production prior to the decline in oil prices. Since then, some 200,000 of those jobs no longer exist, rig count is down to record lows, and, if the EIA is correct, U.S. oil output next year will decline for the first time in eight years.

OPEC itself has estimated that

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Little Old Lady About to Make History in the Oil Patch

Friday, 03 April 2015 05:16

This article first appeared at The McAlvany Intelligence Advisor on Thursday, April 2, 2015:

Historians like people who make history. People like Rosa Parks (the “first lady of civil rights”), and Suzette Kelo (see Kelo v. City of New London). So much so that Laurel Thatcher Ulrich made herself known by writing “Well-Behaved Women Seldom Make History,” in which she said:

Some history-making is intentional; much of it is accidental. People make history when they scale a mountain, ignite a bomb, or refuse to move to the back of the bus.

It may be that historians will someday add Sandra Ladra to that list.

Sandra Ladra was sitting in her recliner in her home in Prague, Oklahoma, on the evening of November 5, 2011, when

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Oil Production Still Increasing — Confounding Experts

Monday, 16 March 2015 09:50

This article first appeared online at TheNewAmerican.com on Monday, March 16, 2015:

A month ago the International Energy Agency (IEA) began hedging its bet that declining oil prices would cut production: “U.S. supply [of crude oil] so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations.”

This is how economists say “Oops!”

On Friday the IEA was still astonished at the resilience of the oil industry as it continued to produce at record levels, despite predictions that declining rig counts would force production cuts. Instead, total U.S. crude oil production hit a high of 9.4 million barrels a day during the week ending March 6.

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Will this be OPEC’s Final Failed Gamble?

Wednesday, 18 February 2015 15:50

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, February 18, 2015:

Six years ago historian Daniel Yergin wrote in The Prize about OPEC’s failed gamble in 1986. The cartel tried to secure its preeminent place among the world’s oil producers by forcing crude oil prices down:

Was the price now poised for a great fall? Most of the exporters [primarily OPEC] thought so, but they expected no more than a drop [from more than $30 a barrel] to $18 or $20 a barrel, below which, they thought, production … would not be economical….

Actually, operating costs – the cash costs to extract oil – were only $6 per barrel [at the time], so there would be no reason to shut down production at any price above that.

The cartel was hoping to squeeze out marginal producers, which would result in cuts in supply, allowing it to raise prices at will. It didn’t work then, and it isn’t working now. The Saudis apparently suffer from an appalling lack of understanding about how the free market works.

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Re-fracking Old Wells Is Extending the Fracking Revolution

Wednesday, 18 February 2015 05:49

This article first appeared online at TheNewAmerican.com on Tuesday, February 17, 2015:

English: A natural gas well (produces gas only...

A natural gas well

News that the oil industry is importing many of the new technologies developed by natural-gas producers, which led to steadily declining natural-gas prices, was greeted with great disappointment by at least one green group. Upon learning that fracking was not only a long way from disappearing in the face of declining oil prices but was actually on the verge of a resurgence, Sharon Wilson, a Texas organizer for Earthworks, told Bloomberg, “It’s terribly disappointing.”

It might be disappointing to Wilson, but

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Obama to Put Alaska’s Wildlife Refuge Off Limits to Drilling

Monday, 26 January 2015 12:02

This article first appeared online at TheNewAmerican.com on Monday, January 26, 2015:

On Sunday the White House released a 58-second-long YouTube video of President Obama announcing that his Interior Department was about to present a “comprehensive plan” to “make sure that this amazing wonder [the Arctic National Wildlife Refuge — ANWR] is preserved for future generations.” That designation concerns the 1.5-million acre coastal plain of the ANWR, precisely the area that has been the focus of controversy since the late 1970s. It is said to have more than 10 billion barrels of recoverable oil beneath its surface, and has served as a political football between the oil industry and environmentalists ever since.

The reaction by Alaska Republican Senator Lisa Murkowski was instant:

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Impacts of Lower Crude Oil Prices Continue to Spread

Tuesday, 13 January 2015 20:40

This article first appeared online at TheNewAmerican.com on Tuesday, January 13, 2015:

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After oil forecaster Jeremy Warner got lucky last year when he accurately called the top in oil prices, with a fall to at least $80 a barrel, he doubled down by predicting “that the oil price will remain low for a long time, sinking to perhaps as little as $20 a barrel over the coming year before recovering a little.”

Warner got lucky once again when Goldman Sachs confirmed his prognosis, setting off an eye-popping five percent decline in oil to $45 a barrel which continued into Tuesday. Tuesday’s low was $44.20. As Goldman Sachs noted,

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Oil Patch Activity Is Starting to Slow

Saturday, 10 January 2015 06:50

This article first appeared online at TheNewAmerican.com on Friday, January 9, 2015:

In a letter to his union workers at U.S. Steel’s pipe and tube plant in Lorain, Ohio, Tom McDermott, president of United Steelworkers local 1104, was blunt:

The company has suddenly lost a great deal of business because of the recent downturn in the oil industry. What appeared just a few short weeks ago as being a productive year … has most abruptly turned sour.

So sour that U.S. Steel is idling 614 or its 700 workers in Lorain, along with all 142 of its workers in its Houston, Texas plant.

This is likely to be just the beginning. Even as U.S. Steel poured hundreds of millions into its gamble that producing “oil country tubular goods,” or OCTG, would reverse years of losses, other steel makers have done the same:

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Crude Oil Prices: The Politics, Implications, and Backlash

Wednesday, 07 January 2015 05:36

This article first appeared online at TheNewAmerican.com on Tuesday, January 6, 2015:

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With the price of crude dropping significantly below $50 a barrel, prognosticators have come out of the woodwork predicting drops to $40, $30, $20 a barrel, and even lower before it rebounds.

Jon Ogg, writing at 247Wall St.com, noted that the precipitous drop in crude oil prices “has serious implications for consumers and companies alike,” and not all of them are unblemished blessings. On the surface the winners are

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Venezuela’s Welfare State Collapsing Along with Oil Prices

Tuesday, 30 December 2014 06:19

This article first appeared at The McAlvany Intelligence Advisor on Monday, December 29, 2014:

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As oil prices have dropped, so has Venezuela’s revenue stream that supports its welfare state. Ninety-five percent of Venezuela’s export earnings come from crude oil, and the industry makes up one quarter of the country’s gross domestic product. With oil prices setting new lows last week, Venezuela’s economy, already on the ropes, is set to descend into chaos, anarchy, and looting. The decision by Saudi Arabia to continue to pump in order to maintain its market share reveals not only the inherent inability of any cartel to maintain itself over time, but also the inability of a welfare state to sustain itself without outside help.

With the world’s largest oil reserves, surpassing those even of Saudi Arabia, an uninformed observer would be unable to explain how a country as richly blessed with natural resources as Venezuela could go broke,

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Collapse in Oil and Natural Gas Prices Hitting OPEC the Hardest

Monday, 29 December 2014 03:53

This article first appeared online at TheNewAmerican.com on Monday, December 29, 2014:

As prices for crude oil and natural gas continued their precipitous fall over the last five weeks, most commentators have been focusing on the impact — real or predicted — on the oil and gas industry in the United States. Little noticed, however, was the report from the U.S. Energy Information Administration (EIA) about how those declines are likely to affect OPEC.

OPEC’s total revenues, which hit an all-time high of $900 billion in 2012, are expected to decline by half next year, to just $446 billion. And that projection is based on the assumption that oil prices will average

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Pressure Building to Repeal Two Laws Keeping Oil and Gas Prices High

Monday, 17 November 2014 13:46

This article first appeared at TheNewAmerican.com on Monday, November 17, 2014:

Senator Lisa Murkowski

Alaska Senator Lisa Murkowski

Alaskan Republican Senator Lisa Murkowski, soon to chair the Senate Committee on Energy and Natural Resources, is already setting the table for a serious conversation about getting rid of at least one archaic law dating back to the mid-1970s: the Energy Policy and Conservation Act of 1975.

That law bans the export of crude oil (with some minor exceptions) and could endanger the oil shale boom as a result. Said Murkowski:

The price American drivers pay for gasoline at their local station is linked to the price of oil set by the global market.

Exporting U.S. oil to our friends and allies will not raise gasoline prices here at home and should, in fact, help drive down prices.

As the price of crude oil drops, it increases the chances that smaller marginal crude oil producers will be forced to close unless they are allowed to find buyers outside the United States willing to pay more for their product. One of the bottlenecks has already been opened:

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What’s Behind the Attack on Fracking?

Wednesday, 22 October 2014 04:48

The following is the text of a talk I made in September to some oil industry people in Nashville:

In the opening sequence of the movie Gasland, Josh Fox, the film’s producer, said:

One day I got a letter in the mail. It was from a natural gas company. The letter told me that my land was on top of a formation that was called the Marcellus Shale which stretched across Pennsylvania… New York… Ohio… and West Virginia… and that the Marcellus Shale was the “Saudi Arabia” of natural gas.

I could lease my land to this company and I would receive a signing bonus of $4750 an acre. Having 19.5 acres, that was nearly $100,000… Right there in my hand. Could it be that easy?

No, it couldn’t.

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The Keystone Pipeline Delay: Killing People; Saving the Environment

Monday, 20 October 2014 08:04

This article first appeared at The McAlvany Intelligence Advisor on Monday, October 20, 2014:

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Some contend that the Keystone pipeline delay is having consequences that were intended from the beginning. Others contend that those urging the president to delay approval of Keystone weren’t smart enough to anticipate the negative consequences that delay is having.

But there they are, nevertheless. In an ironic coincidence, the Manhattan Institute published its report claiming that pipelines are far safer for the transportation of oil and gas than railroads in June 2013, the same month of the tragic

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Government cuts California oil Reserve Estimates by 96 Percent

Friday, 23 May 2014 08:59

English: Monterey Formation, Gaviota State Par...

Monterey Formation, Gaviota State Park (Photo credit: Wikipedia)

A federal government agency reported on Tuesday that its previous estimate of the amount of recoverable oil from California deposits was way too optimistic. Its 2012 estimate that the Monterey formation contained 13.7 billion barrels of recoverable oil was cut to 600 million barrels, just 4 percent of its previous estimate. Adam Sieminski, head of the Energy Information Administration (EIA), said:

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Even Lower Gas Prices are Coming, says CNBC

Wednesday, 30 October 2013 12:09

On Friday Anthony Grisanti was jubilant. Writing for CNBC, he predicted that gas prices, down significantly from where they were in April, would continue to slide by at least another 10 cents per gallon, perhaps more. That would bring the average price, currently at $3.29 a gallon, closer to

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US oil output is up 25 percent from just one year ago

Tuesday, 15 October 2013 07:00

If the increase in US oil output continues to increase by 25% every year, as it did from September 2012 to September 2013, total US output would double every three years. It’s a simple case of mathematics, compound interest, and the Rule of 72.

The main thing working to keep that from happening is

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