Debt Rattle Aug 1 2014: There is a Major Shift Afoot

 

Home Forums The Automatic Earth Forum Debt Rattle Aug 1 2014: There is a Major Shift Afoot

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  • #14363

    DPC Majestic Building from Detroit Opera House 1909 Oil prices are dropping as Exxon announces a -5.7% plunge in output. And as Shell, as I said yeste
    [See the full post at: Debt Rattle Aug 1 2014: There is a Major Shift Afoot]

    #14364
    jal
    Participant

    Please explain …
    “… the $110 billion that the shale industry comes up short every single year.”
    Are you saying that they are spending $110 billion more than what they are selling?
    When are they going to break even? When are they going to sell more than they are spending?
    At the end of the day who’s $110 billions has gone up in smoke?

    #14365
    rapier
    Participant

    RE jal

    From yesterday, a link,

    Where Money Goes to Die: How Fracking Blows Up Balance Sheets of Oil and Gas Companies

    This has been known sort of intuitively for several years but now we have numbers. The shortfall is made up with borrowed money or out of capital, mostly the former. The $110bn doesn’t go up in smoke as long as they can borrow more to keep old debt current. The same situation as Greece, Spain, now Ukraine and so many others.

    It strikes me that if Russian flows to Europe slow that prices especially of US crude and to a lesser extent NG will rise and above maybe$150/bbl will put the frackers in the green. I think this plays some part in the gambles going on with Russia. In addition a price spike would be the perfect excuse for recession, falling markets or most anything the elite might get blamed for. Much better to blame Putin.

    #14366
    Ken Barrows
    Participant

    Rapier,
    Maybe $150/bbl oil will put frackers in the green, but marginal cost YOY in the Bakken seems to be about $10B (1900 new wells x $6M apiece) while marginal revenue is $700M (at $100/bbl).

    #14367
    Professorlocknload
    Participant

    Another marginal process that is taking place is falling demand. And though the article linked below projects rising demand from developing nations, I believe it’s writers are using past economic performance as a misplaced guide to future expectations 😉

    https://www.scientificamerican.com/article/oil-petroleum-demand-developed-countries-alternative-fuel/

    Unless, of course, we should expect 10% growth rates among China and friends to continue from here?

    #14368
    Professorlocknload
    Participant

    “should rates spike on growth/inflation concern, the concurrent equity selloff will once again push rates lower, and so on ad inf. Ain’t central planning grand?”

    Folks are stuck on thinking Market Based rather than State Controlled Economies.

    It’s over. We aren’t going back.

    That said, it’s not a good idea to underestimate the lengths Empire will go to, to stay Empire.

    #14369
    Raleigh
    Participant

    “As far as the looting and drunken disrespect for the corpses of the victims; that’s all BS too. Sonne paints an entirely different picture of what took place on the ground. Just check out some of his description and see if it squares with Kerry’s breakdown.”

    And journalist Paul Sonne of the Wall Street Journal on access to the site:

    “The Organization for Security and Cooperation in Europe has actually gotten very good access to the site with the exception of the first day they showed up, which was the day after the crash where their time there was limited to 75 minutes, and they said that they weren’t given access to every piece of the crash site that they had wanted to see. So after the sort of first day standoff that they experienced with some of the rebel militants, it did seem like they were getting pretty full access to the crash site. The problem was that the investigation team, which is now being led by the Netherlands, wasn’t ready and didn’t, in fact, really arrive in Donetsk until a few days ago. And after they finally assembled in Donetsk, it took, you know, about a week or more. Then, fighting had already started to encompass the crash site. And the reason that they’re not getting access to the crash site now is not because the rebels are not allowing them to go to the crash site. It’s because the crash site has turned into an active, violent fighting zone.”

    The Unanswered Questions of MH17

    Netherlands gave Ukraine time to shell the crash site. I wonder if this was intentional.

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