Oil Hits New Low

[tomahawk6]

This threatens everyone which I think is short sighted and certainly not good for SA if the western nations collapse. If they can do this then they can charge $50 a barrel after the western nations see the collapse of the old markets. A penny a barrel is crazy. The US government has been buying cheap oil for the national petroleum reserve. They are running out of places to store the oil.

https://www.foxbusiness.com/markets/us-stocks-april-20-2020

U.S. equity markets slid Monday as oil crashed toward its lowest close since recordkeeping began in March 1983.
The Dow Jones Industrial Average fell by as many as 489 points, or 2.02 percent, before paring its losses. The S&P 500 and Nasdaq Composite were down 1.53 percent and 1.01 percent, respectively, at their lows.

Ongoing concerns over swelling oil inventories pushed West Texas Intermediate crude for May delivery down by as much as 99 percent to 1 cent per barrel.

The plunge in crude prices pressured oil majors Exxon Mobil and Chevron, which were the biggest decliners among Dow components.
Elsewhere in the space, oil services provider Halliburton lost $1.02 billion in the first quarter and said it would cut costs by $1 billion as the crash in oil prices has decimated investment. Explorers Continental Resources and EOG Resources were among the other energy names in focus.

 

[suffolkowner]

T6 what's the problem/solution?

Fracking has changed the game and competition between the US/SA/Russia was driving the price down before the current events

 

[Navy_Pete]

Maybe a good time to seriously look at restructuring the economy around a source other than oil?  This just highlights how vulnerable governments are to price fluctuation, and if someone came in with a disruptive technology that replaced the internal combustion engine for transportation would have a similar impact, and the reserves are finite anyway.

Norway did it smart and built up a massive reserve fund with their oil wealth to cushion them against bad times, whereas (for example) Alberta went to zero income tax and depends on the price of oil being above a certain limit to make the budget.

 

[Infanteer]

Norway did it smart and built up a massive reserve fund with their oil wealth to cushion them against bad times, whereas (for example) Alberta went to zero income tax and depends on the price of oil being above a certain limit to make the budget.

I have little sympathy for Alberta (having lived there before) and its tax-free living.  That was failure to provide for the future....

 

[Blackadder1916]

Norway did it smart and built up a massive reserve fund with their oil wealth to cushion them against bad times, whereas (for example) Alberta went to zero income tax and depends on the price of oil being above a certain limit to make the budget.

A slight correction.  Alberta has a provincial "income" tax; what we don't have is a provincial sales tax.  While the AB provincial income rate may be low, it is not the lowest in Canada (for most taxpayers).  And I agree with your view about the idiocy of past AB governments not planning for lean times.  I don't think you will be hearing the provincial government crowing about "The Alberta Advantage" for some time to come.

 

[BeyondTheNow]

I have little sympathy for Alberta (having lived there before) and its tax-free living.  That was failure to provide for the future....

Not being a resident of AB and not being confidently familiar with the full scope of their politics, I don’t understand why they’re so against implementing any form of higher tax. Something as low as an additional few percentages could make such a difference and would have minimal impact. It’s clear that they can’t maintain such a low provincial income.

 

[midget-boyd91]

Oil apparently closed today at NEGATIVE $37 a barrel.
If gas follows suit will we start getting paid to fill up at the gas stations? *shrugs*

 

[ModlrMike]

What you're looking at is the May contract price. The price in Jun is still $22, but I expect that might drop as well. Supply is far outstripping demand with some producers storing oil offshore in tankers. On land storage facilities are full to the brim, so there's pressure on producers to shut down wells. There's going to be a painful rebound when we all start moving again.

 

[Navy_Pete]

A slight correction.  Alberta has a provincial "income" tax; what we don't have is a provincial sales tax.  While the AB provincial income rate may be low, it is not the lowest in Canada (for most taxpayers).  And I agree with your view about the idiocy of past AB governments not planning for lean times.  I don't think you will be hearing the provincial government crowing about "The Alberta Advantage" for some time to come.

Right, thanks for picking that up.

In general I think if any major company is looking for some kind of bailout it should either be a standard loan (with no forgiveness clauses), equity in the company, or something similar. Total BS for anyone to crow about free market capitalism and want free money from the govt when things go bad. If we're going to get stuck with the cleanup bill and give them billions when the going gets tough, we may as well just take it over all together and run it as a strategic national asset.

 

[dapaterson]

I'm just throwing this out there - a national energy program from someone named Trudeau might not bring bad find memories in Alberta.

 

[Kirkhill]

Here's a thought.  Oil and coal are cheap.  Burn them.

You might even want to convert them into district heating systems, electricity generators and incinerators.  If the price is negative then the buyers can afford to install carbon capture systems and greenhouses while creating cheap electricity.

 

[suffolkowner]

Here's a thought.  Oil and coal are cheap.  Burn them.

You might even want to convert them into district heating systems, electricity generators and incinerators.  If the price is negative then the buyers can afford to install carbon capture systems and greenhouses while creating cheap electricity.

I don't think we could spool up quick enough if we even wanted to. We have the same problem with natural gas, something we already burning everywhere. The situation in Alberta is I think even worse because the cost of the dilutent is included in the cost and at some 30% I wonder when WCS actually hits negative value. Perhaps we could build storage (a national strategic storage much like the US) quick enough to ease some of the pain and kill three birds with one stone.

 

[kev994]

I’ve seen plenty of suggestions that investing in renewables is a great plan for economic recovery, here is one of many articles. #notaneconomist. https://www.theguardian.com/commentisfree/2020/apr/14/reckoning-with-climate-change-will-support-the-strongest-possible-economic-recovery-after-coronavirus?CMP=Share_iOSApp_Other.

 

[quadrapiper]

I don't think we could spool up quick enough if we even wanted to. We have the same problem with natural gas, something we already burning everywhere. The situation in Alberta is I think even worse because the cost of the dilutent is included in the cost and at some 30% I wonder when WCS actually hits negative value. Perhaps we could build storage (a national strategic storage much like the US) quick enough to ease some of the pain and kill three birds with one stone.

Storage, domestic distribution, and domestic processing might all be easier sells with various previously-opposed parts of civil society post trade-disruptive plague.

 

[Cloud Cover]

Where can we each order a few hundred barrels ??

 

[CBH99]

I'm not kidding here...does anybody here know how to invest in oil as a commodity?  At this rate, even oil at $3 a barrel will triple our money 

 

[tomahawk6]

Are you referring to oil futures ? Tues ends the contract month and other contracts show +$20 a contract. A better play might be to buy shares of Exxon. But at $20 a barrel that might be a good risk. Too much supply for me to gamble though.

 

[Kirkhill]

I don't think we could spool up quick enough if we even wanted to. We have the same problem with natural gas, something we already burning everywhere. The situation in Alberta is I think even worse because the cost of the dilutent is included in the cost and at some 30% I wonder when WCS actually hits negative value. Perhaps we could build storage (a national strategic storage much like the US) quick enough to ease some of the pain and kill three birds with one stone.

I don't think it is about doing this quick enough.  I think we are going to have a long time to consider how to manage with low oil and gas prices.

And, frankly, from a whole of the economy perspective, that is no bad thing.  With low oil prices, even with the additional burden of more pollution controls, many of which will generate saleable by-products like CO2, renewables will become less and less cost competitive.

How does an intermittent, small capacity, wind driven generator, stuck up on top of a 100 meter pole compete with a fuel that the vendor is willing to subsidize to take it off their hands?  Even if only for a short term.

 

[Blackadder1916]

With all this talk about the pro and con of negative (or low) priced crude, perhaps some perspective can be gained by looking at volume.  While the bid for contracts did "temporarily" dip below zero, the price had gone back into the positive.  As I write this the ticker is reading 12.25, though the important number should be the volume - at this moment only at 12k or approx 1.9% of the (65 day) average volume.  Oil may be cheap but traders are not taking advantage of it because they know it is not a good deal.  Though the numbers are going up as trading is ongoing.

https://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic



And just minutes later it's back down in the $9.00 range.

 

[stellarpanther]

I guarantee some people will disagree with me but I don't care how cheap oil gets or how bad the economy gets, we need to get away from burning oil and coal and continue investing in cleaner sources of energy.  I'm not knowledgeable enough on this subject to have in in depth debate on it but I know enough to say what we should be doing everything we can to get away from oil.