THE GREAT U.S. ENERGY DEBT WALL: It’s Going To Get Very Ugly….

Srsrocco Report ^ | 27 May 2017

[Lorianne]

While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices, there’s another huge problem just waiting around the corner. Yes, it’s true… the worst is yet to come for an industry that was supposed to make the United States, energy independent. So, grab your popcorn and watch as the U.S. oil and gas industry gets ready to hit the GREAT ENERGY DEBT WALL.

So, what is this “Debt Wall?” It’s the ever-increasing amount of debt that the U.S. oil and gas industry will need to pay back each year. Unfortunately, many misguided Americans thought these energy companies were making money hand over fist when the price of oil was above $100 from 2011 to the middle of 2014. They weren’t. Instead, they racked up a great deal of debt as they spent more money drilling for oil than the cash they received from operations.

As they continued to borrow more money than they made, the oil and gas companies pushed back the day of reckoning as far as they could. However, that day is approaching… and fast.

According to the data by Bloomberg, the amount of bonds below investment grade the U.S. energy companies need to pay back each year will surge to approximately $70 billion in 2017, up from $30 billion in 2016. That’s just the beginning…. it gets even worse each passing year:

[redgolum]

I don’t feel sorry for any company who forgets that commodities are very fluid things, and is swimming naked when the tide goes out.

Played to long and to hard in the energy industry. They are looking 1. Bail outs, and 2. Legislation to raise oil prices.

When oil was this cheap 20 years ago, gas was below $1.00. Now, oil is CHEAPER and gas is over $2.00 (and oil is cheaper now after inflation).

They all thought oil would go up forever, and forgot to ask the old hands about the last oil bust.

So while I feel sorry for the employees, the companies were stupid.

[Flick Lives]

Poor decisions were fueled by cheap money courtesy of the Feds ZIRP.

[dp0622]

Let em sink. No bail out.

But I dont get the “popcorn” ready to watch American companies fail.

Whoever wrote this is a ####.

[DuncanWaring]

Either the referenced oil companies will roll-over the bonds as they come due, or they’ll go bankrupt.

Either way, the wells will continue to produce.

[bert]

Not to worry. For ever five debt laden small timers, there is a giant ready to buy them out.

[AndyJackson]

I think people need to realize that an awful lot of that money was spent locking down leases on shale plays and investing in drilling. while over-investment has lead to the bust, as is the nature of commodities, Americans are the beneficiary from much reduced oil costs and the attendant easing of national security interests tied to the middle east. Oil Sheikhs and their playboy princes and princesses clogging up Mediterranean playlands are now longer calling the tune.

Yes there will be bankruptcies and adjustments, but it was all for a very good cause.

[RummyChick]

They can thank obama...and iran for what is happening

[freedumb2003]

Latest THE SKY IS FALLING!! by a bored reporter who needs some cred thought his “insightful analysis.”

[Farmer Dean]

Sounds like wishful thinking,commishioned by Arabs from OPEC.Their fate is sealed no matter what happens here.

[Dallas59]

All companies have gone this route. Make as much as you can for your investors and screw the employees and customers. No company expect to stay in business for over a decade nowadays.

[DoughtyOne]

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Just $794.00 to 63.00%

[EagleUSA]

“..While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices...”

Huh?? Low prices?? Where do you find those?? Certainly not where I live.

[Organic Panic]

The world needs oil. The world needs coal. The world needs gas. Until that changes ‘energy’ companies will be just fine.

[The_Media_never_lie]

You must live in a high tax state. $1.97.9 / gal. here.

[jdsteel]

Exactly. The article is nonsense and a much greater danger 2 years ago.

[Seruzawa]

Not to worry. They are too big to fail and wills simply get bailed out.

[AndyJackson]

It’s those horrible “Frackers” who have ruined the United States forever. The fiscal bankruptcy only evinces their moral bankruptcy. /Sarcasm.

[AndyJackson]

While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices

Prices are low because they are thriving and [over-]producing. The author of this article is an economic idiot.

[palmer]

When oil was this cheap 20 years ago, gas was below $1.00. Now, oil is CHEAPER and gas is over $2.00 (and oil is cheaper now after inflation).

Oil was 20 bucks 20 years ago. Gasoline (which I scaled in red) mainly tracks oil (dollars per barrel in blue) with a slight lag. Gasoline is a little high relative to oil right now. That might be an indication of an anticipated oil price rise.