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.
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.
Why aren’t we seeing new Dow numbers today? Did I miss something?