Posted on 01/18/2016 10:55:19 AM PST by Freelance Warrior
and so it begins.....
If supply exceeds demand, and supply is basically a waste product of creating other supply to meet demand, you very well may have to pay people to take it away. Kinda like “recycling”: I’ve got stuff that _could_ be used, but just dumping it costs me more than paying you to take it away for reuse.
We are watching the creation of a new “remember when” situation in America and the world.
I’m not sure where. I’m not sure what will happen. I’m not sure when.
But I am darned sure, there will be a (massive) rise in oil at some point.
Just saying.
No big deal, if they can buy a cheap low-value feedstock and make it into something of higher value, what’s wrong with that? Years ago, restaurants etc had to pay someone to come and pickup their “yellow grease” aka used cooking oil. Now, biodiesel refiners pay for it and there is a whole new market with strong demand for a very limited supply. That’s economics.
Pine Bend has always consumed heavy sour crude from Canada that was priced much less than WTI.
I am surprised at this discount, however.
It is not a waste product. This is oil from the wells.
by the way, this looks to be fake. The link below is to the real bulletin prices. Click on Jan 15 and the price shows as $1.5, not -$0.5.
https://www.fhr.com/refining/bulletins.aspx
I believe that type of crude is what is directly under us at the Spearfish formation. I also believe much of it goes to Canada for refining. Across the border the Canadians have many more wells pumping the same thing and lots of it is trucked up there for refining according to a Manitoba truck tanker truck driver.
Nonetheless, the boom is over.
If oil gets to $10 or less per barrel, there will be no use for biofuel, solar,wind or nuclear energy. It will be too expensive to keep them afloat even with taxpayer subsidies.
Bloomberg reports the same:
Copy and paste into your browser's address box:
http://www.bloomberg.com/news/articles/2016-01-18/the-north-dakota-crude-oil-that-s-worth-less-than-nothing
Oil is not uses to make electricity, so these things are not related. What is related is the price of coal an ng both are in competition with "renewables".
And yet, the bulletin they claim in their article, doesn’t exist where they claim the information is from.
In their article, they link to the same web site I posted. Click their words “said it would pay” and it takes you to the website “https://www.fhr.com/refining/bulletins.aspx";.
The price in the article doesn’t exist at the source they claim.
Someone got tricked and others are repeating it without bothering to check the facts.
Well, I agree on this, but Bloomberg still reports the same. Probably that was a technical mistake which they've corrected later.
And we will see blogs carrying the story for a couple weeks...
If it’s poor-quality “sour” crude oil in small quantities from an inconvenient location, not unlikely that nobody particularly wants it unless paid a modest sum to take it.
Looking at your link, I’m inclined to think the price was fluctuating thru the day.
A single train tanker car carries about 700 barrels. The refinery in question produces about 21 carloads of this stuff, selling for $0.50/barrel on 1/12 ... that’s $7500 gross revenue on one day’s production, or about $350 per carload. At that price, it’s a real short step from barely covering cost of selling the largely unwanted cargo, to paying someone the price of taking away what otherwise would be free (but for the relentless cost of removing that which can’t be viably stored).
Between this and the “no ships are moving” article, methinks Tyler Durden is doing everything he can to be first to call “the avalanche is starting!” - he’s sorta onto something, but reality isn’t what he’s trying to portray it as.
They post a daily price, not an hourly. It could have been a mistake as others suggested, or a fake. But I look at this site often. They don't vary it through the day.
This isn't produced at a refinery. It comes from wells. The refineries buy it to refine into fuels.
Also a fake claim from Zero Hedge. There were ships arriving in ports each day following that article. I posted links to the arrival dates for 3 US ports.
If it was a mistake, understandable that they fixed it.
If it was real, understandable they adjusted it when able to find a buyer.
I doubt it was “fake”. That’s pretty obscure to plant a fake with that little consequence.
Yes, it comes from wells. _What_ comes from that site is posted as 6 different kinds of oil. What we peanut gallery types colloquially call “oil” is really a range of black liquid, some kinds more desirable/useful than others. Some well(s) is pumping out some pretty nasty stuff, apparently almost unusable to the point that some days perhaps nobody wants it (at risk of having to pay someone to take it away).
As for the “no ships moving”, seems “Tyler” didn’t notice he was looking at a “docked ships only” data set. We both saw the thread on that, which died pretty quick. Like I said, he’s frantically looking for a “doomsday has arrived!” scenario.
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