SLICK OIL : THE BOOM THAT WAS

yo!.. sick not slick... innit!

 

 

dig this man..

 

they want ta fill..

 

the great palookaville lake..

 

with something so crude..

 

it will kill alla fish..

 

this calls fo a mass debate..

 

 

THE GREAT OIL SPILL

 naked capitalism -

 

We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!

— Donald J. Trump (@realDonaldTrump) April 21, 2020

Also on Tuesday, the Texas Railroad Commission punted on the idea of mandating production cuts. Two of the three commissioners were uneasy with the idea of voting on the proposal. Ryan Sitton, the one commissioner in favor of requiring a 20 percent cut in the state’s production, argued that not voting was itself a decision, allowing the market to mete out production cuts in a disorderly fashion. “I don’t believe that inaction on our part is acceptable,” Sitton said.

Meanwhile, there are other ideas for government intervention. The oil and gas industry is lobbying the Federal Reserve to loosen its $600 billion lending facility to allow drillers to use funds to repay debt, according to Reuters.

In addition, the “Treasury [Department] could guarantee loans to distressed firms in return for equity stakes or senior debt, and Washington could use its voting shares to compel shut-ins (i.e., as part of a bargain with OPEC+),” ClearView Energy Partners wrote in a note to clients.

While the oil market drowns in oversupply, there also seems to be a glut of unusual policy responses coming from Washington aimed at bailing out the industry.

But in the face of demand destruction on the order of 25 to 30 million barrels per day (mb/d), there is very little that the U.S. government can do to head off steep production losses and bankruptcies.
 

mish -

My Plan

• Stop the bailouts.
• Let the oil speculators go bankrupt.
• Let the financers take it on the chin as well.

When Does the Crash Stop?

1. When producers stop drilling oil that is not needed.
2. When the speculators putting on "paper oil" trades get wiped out.

Paper Oil
Oil is another example of leveraged trades. Even more so than gold, speculators will not take delivery.
For discussion of delivery issues related to gold, please see Gold "What If?" Silliness
Only Plan We Need
It's time for personal responsibility, not bailouts of favored industries.
That's the only plan we need.
Mike "Mish" Shedlock

Sechel

comments on mish site

 

 Not that it would matter I think but those production cuts Trump negotiated don't take effect for a while. OPEC is meeting to enact them sooner.

Now for the silliness.

Trump wants to buy oil from U.S. producers that they keep in the ground and safe keep for the U.S. Good luck keeping track of that. 

 Seems like a cash gift

Trump is also toying with the idea of an embargo on Saudi oil purchases.

There won't be any demand until world economies start opening up again. 

We're talking a few months but it won't be like before. 

Silly for governments, our government to try and stand in front of this. 

We need to let this play out. 

Market will address it. 

High cost sites will cap wells. 

If some firms go out of business, the oil will still be there or creditors take over the company. 

We don't need to bail out hedge funds and stock holders.

Market is projecting prices recover somewhat in a few months. 

 Politicians should make note of that

 of two minds -

Being honest is painful but freeing. Once all the ugliness is exposed to sunlight, then healing becomes possible. As long as reality is cloaked, hidden, explained away, etc., the destruction only deepens until complete collapse of the masquerade is the only possible outcome.

We've reached that point: we can no longer deny the U.S. economy is little more than a grab-bag of skims, scams, fraud and corruption. Even if Covid-19 vanished from the Earth tomorrow, or the entire economy opened tomorrow, the collapsing of the fraud bubble cannot be reversed, any more than the addict can be "cured" with some makeup to mask the devastation and clean clothing to hide all the tracks.

Let's start with the most risible fraud: "value." Every skim and scam claims to be "creating value" for shareholders, customers, the planet, etc. But it's all fraud and lies. No value is being created; what's really happening is entrenched insiders have established corrupt relationships that funnel income streams into their own pockets at the expense of everyone else, who must be kept in the dark about how the skim/scam actually works.

 

We don't just have financial bubbles that are popping; we have bubbles in trust and credibility that are popping, too. All the lies, skims, scams, excuses, frauds, bezzles, artifices, profiteering, promotional schemes and rackets are unraveling, not because the virus shut down the economy but because the enormity of all the corruption, lies and fraud is now so great that the entire status quo is collapsing under its own weight.

 

THE CENTRAL SCRUTINIZER

 heh heh heh..

 so ya see..

here in palookaville..

we got alla bases covered..

heads we win..

 tales you lose..

innit!