Energy | timiacono.com

Oppenheimer & Co. senior oil and gas analyst Fadel Gheit neatly summarizes what’s currently going on in energy markets at about the 1:40 mark below:

I believe there is an agenda here that Saudi Arabia will not allow oil prices to recover until they take care of marginal producers in shale plays in the U.S. … also, to settle their score with the Iranians and Russians.

Of course, it doesn’t help that the price of money has been distorted for so long that it’s become nearly impossible to determine what the price of anything else should be.

Oil Prices and Junk Bonds

Amid the “uneasy calm” in financial markets, as detailed by the Bank for International Settlements the other day in their quarterly report, comes news of an even deeper plunge in oil prices (with calls for $20 a barrel or below) and more distress in high yield bonds (an outsize portion of which is energy related). One of the driving forces behind these developments is the graphic below via this item at the WSJ.

I’d never seen these two curves side-by-side, but it tells a pretty compelling story about the global game of chicken now being played by the Saudis and shale oil producers in the U.S., importantly, along with their Wall Street financiers. Of course, it doesn’t help that the China slowdown appears to be for real and that central banks continued to be viewed as “the only game in town” when it comes to restoring the global economy to its former glory…

John Oliver Does North Dakota

This Last Week Tonight piece on North Dakota covers a lot of ground – from Midwestern culture vs. New York manners to the unintentionally comic Blood & Oil TV series and, of course, the shale oil boom that is, for the moment at least, transforming the area.

Don’t forget, season two of Fargo debuts tonight! Ted Danson?!? Murder at a Waffle Hut?!?

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This Bloomberg story details the boom-turned-bust known as the surrounding communities to the shale oil fields in North Dakota, the “empty campers everywhere” comment above coming from one Tom Novak of TJ’s Autobody & Salvage who wakes up “and RVs are in my driveway”, that is, along with souped-up pickup trucks, presumably purchased by young men fresh out of high school who once drove a truck and made $100,000 a year.

There’s lots of fascinating (if unsurprising) detail in the report about the impact the boom-bust has had on the local economy (man-camp vacancy rates now as high as 70 percent) and the local government struggling to cope with it all (two-thirds of the $226 million of new debt issued by shale boom epicenter Williston, ND is outstanding).

Adding insult to injury, you have the recent debut of ABC’s “Blood and Oil”, set in North Dakota, that prompted this comment at IMDB:

Clueless

27 September 2015 | by rickmtbslag

Who ever wrote and produced this horrid show has never, ever been to North Dakota, spoke to a person from North Dakota or looked at a map to find out where North Dakota is located. They could have watched the movie “Fargo”, at the very least, in order to get an idea of the landscape and dialect of the region if they did not want to travel to find out for themselves. Here is a hint; There are no snow capped mountains in North Dakota. Its highest point is White Butte at 3508 feet. Not a single jagged peaked mountain in sight. A white moose? Really? All they had to do is a web search to find out that North Dakota is not part of the moose habitat. Takes less than a second.The producers should be embarrassed that this show made it to air. And fired.

Gold, Commodities Routed

Bloomberg puts together lots of opinions (none of them positive) about the recent plunge in the gold price and broader weakness in the natural resource sector.

One Gina Rinehart, Australia’s commodity queen and richest woman, has been smarting, losing nearly $20 billion in net worth recently, according to this story at the Telegraph.

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