Posted on 08/16/2022 8:35:53 PM PDT by BeauBo
“I remember waay back when the bad orange man was POTUS we had low energy prices and the best economy of our lifetimes.”
There were some golden months, but then Covid hit, our overproduction ran into Covid caused underconsumption, and suddenly we ran out of storage space for oil. The major storage in Cushing, Oklahoma was full and giant oil tankers were being used to store oil. [The once-in-a-century pandemic caused oil demand to collapse at an unfathomable pace. Supply swelled as Saudi Arabia and Russia engaged in a price war at the worst possible moment.]
[That toxic backdrop drove oil prices below zero — well below, in fact — for the first time in history. US crude finished April 20, 2020, at minus-$37 a barrel, blowing past the zero mark that few imagined would ever be crossed. Negative oil is the equivalent of getting paid by your local Starbucks to take coffee off its hands. “It was a dark and really scary time,” said Regina Mayor, KPMG’s global head of energy. “Nobody was driving. Everyone was hunkered down at their homes. We were all fighting over toilet paper.” https://www.cnn.com/2021/04/20/investing/oil-prices-negative/index.html]
I had planned to use a quote from this article below, but when I went back to copy some sentences it put up a pay wall so I had to use something from CNN, above. But I think this is well worth reading.
https://www.theguardian.com/world/2020/apr/20/oil-prices-sink-to-20-year-low-as-un-sounds-alarm-on-to-covid-19-relief-fund
FYI, Europe 9 weeks ahead of schedule storing natural gas for this Winter, and already has the minimum essential quantity in storage.
Putin gambled big and lost, playing the energy card on the EU.
Russia and Russians will be poorer for it, for a long time to come.
China? That assumes absolutely enormous infrastructure can be built, which will take time and a great deal of money. Much more money if the time is to be shortened appreciably.
Russia is unlikely to have the money. This war is very expensive, and their big potential customers for energy, China, India, etc., are NOT going to pay premium energy prices (and won’t need to as the global market stabilizes.)
My view is that extreme views of sanctions’ effects either way are incorrect: Most likely everybody gets dinged about equally overall, tho’ specifics vary. BUT, the West has 40x the wealth, vs. Russia, to cope with the stresses.
China has the money, and obviously the workforce too, but they presently seem to be determined to self-destruct over Covid AND an increasing turn to stronger authoritarianism, choking the goose, so to speak. They are dealing with some quite serious drought issues too. Pooty may bet on China, but it’s an increasingly risky bet.
Putin Stooges worst affected.
The Putinistas on this site will be devastated that European grannies will not freeze to death this winter. Good to see Europe moving towards energy independence.
Beat me to it by 19 minutes.
Falling oil prices are a devastating sign for the economy, an economy that will see no growth in the next year.
I thought high gasoline prices were partly responsible for the inflation and supply shocks we now face.
Haha! Putin didn’t even learn from Thatcher’s biggest victory (followed by a long term loss) there.
In the late 70s, the Soviet’s best friends in the pro-communist mineworker’s union leadership had the United Kingdom by the balls. Its leader, Arthur Scargill, thought that the National Union of Mineworkers would be able to use attrition and Solidarity to their benefit, to bring down the Tory government.
What he didn’t account for was, as soon as it was clear to Thatcher and her advisers that their policy was going to provoke an all-out strike by the NUM, the Tories stockpiled coal *before* provoking the Miner’s Strike in the 80s. They used “divide and conquer” to break Solidarity, so other industries that would normally have backed the miners, opted only to support the strikers through indirect action rather than starting a national strike.
Result? Our mining industry is less than 10% of what it used to be, and for 40 years we’ve been reducing our dependency on coal.
Of course, what Thatcher didn’t know was, unfettered free market capitalism without protectionism meant that we were buying coal from wherever it was cheapest instead of mining the good stuff under our feet - creating a problem that was further exacerbated by gas privatisation leading to a complex “just in time” supply chain.
On top of mothballing our own coal production, we’ve mothballed most of the big gas storage tanks that we used to have dotted around the UK. So, Reaganomics and Thatcherism have delivered some unintended consequences and we’re going to have to rethink it.
This war has exposed the folly of the UK relying on unstable, unreliable fossil fuel sources for what needs to be a consistent, and consistently priced, supply.
Translate to Ukraine - Putin overplayed his hand, expecting there’d be no appetite for a long fight. Like the National Union of Mineworkers did. And it’s a series of spectacular miscalculations.
He thought that cutting the supply off would blackmail Europe into staying out of the fight - but if anything it hardened their resolve. He really thought NATO would throw the Baltic states under a bus, but what actually happened is Finland and Sweden (and possibly Switzerland now!) chose to ditch their long standing neutrality.
He ignored the possibility that the Ukes always suspected Russia would invade them, and have been prepping for years.
Finally, on top of ignoring the lesson Scargill learned the hard way, he ignored Khodorkovsky’s insights. In the digital age - totalitarian control exists only in the parts of Russia which still don’t have indoor plumbing and have no access to the unfiltered internet, or smart phones with access to unregulated mobile internet sources.
Most of Ukraine (and most cities in Russia) had unfiltered access to camera phones and live-streams. One early military disaster was created by a Ukrainian kid with a cheap off-the-shelf drone and a camera spotting a column and reporting it to the resistance.
Some of their troops been broadcasting their war crimes (on Telegram and TikTok especially), and phone intercepts have captured end-to-end conversations where fighters on the Russian side have described their actions, as well as the actions of their own comrades, commanders, and mercenaries.
You get that on the Uke side too - but really, there’s quite a difference of scale, e.g. most of the Uke atrocities are on the level of a looter being shrink-wrapped to a lamp post, and/or spanked, but at least they’re walking away with all their body parts still intact. On the other side, we’ve seen a prisoner getting a forced castration on camera, people being run over by tanks...
One remarkable example had a Russian soldier, clearly distressed by the war, describing in graphic detail an FSB torture manual to his folks back in Russia - which included a walkthrough of two of its particularly gruesome tactics that he said were being used in Bucha. That was before the war crimes inspectors even had an idea what to look for. If that guy has any sense at all, and if he’s still alive, he’d be better off surrendering to the Ukes than going back to Russia- because there’s every chance he’s described internal injuries created by forcing barbed wire up someone’s arse, creating injuries that could only ever be confirmed by a post-mortem. If that can be cooberated with bodies from Bucha having such injuries AND that alleged manual turns up, then that directly links crimes against humanity to the official chain of command.
Finally, as good as Russia can control the narrative domestically at home with just a blunt assertion that “this is the truth” and use static photos and very jumpy cuts to provide very lightweight cooberation, it doesn’t actually work when on-the-ground footage from multiple eyewitnesses provides a continuous video stream of the same incident, taken from multiple angles AND satellite footage can also back it up. There’s only so much you can claim was deep-faked by the enemy before it just starts to look desperate.
“Oil prices had a big drop today, down below $87 per barrel for West Texas Intermediate Grade.”
I figured this might happen. So I only half filled up my gas tank yesterday. The downside is that lower gasoline prices will help the Dems in the Midterm elections coming up in November.
Your dire predictions will be hosed when Europe has a warmer than usual winter. This just might happen. We cannot predict this winter's weather there. If Germany and Europe have a cold winter, then they can go tar and feather their Greenie saboteurs. EU Greenies are Vlad's best friends.
You have no idea what “full storage” of gas means. It doesn’t mean enough to last a winter.
“Oil prices had a big drop today, down below $87 per barrel for West Texas Intermediate Grade.”
The gold price should have gone down in tandem. But it didn’t. Very interesting. The au price is mostly up from three weeks ago.
“Europe will have to pay a heavy price: the cost of replenishing natural gas stocks is estimated at ... 10 times more than the historical average for filling up tanks ahead of winter.”
This stock will indeed probably see the elites (politicians, top government officials and celebrities) through the winter because at these prices no one else will be able to afford it.
Russian oil is going cheap to China and India.
True but it doesn’t invalidate my point. So, it wasn’t a lie and you’re not giving a rebuttal. Just spouting whataboutism.
While there clearly have been war crimes carried out by both sides in this war against COMBATANTS, the punishment of CIVILIANS by Ukrainians have mostly been against people with specific and highly emotional charges laid at them - like, they were caught looting, or have been actively supporting the Russian occupation, or were denouncing fellow citizens to the enemy, or giving the Russians intel on the resistance.
Even then their treatment is USUALLY not anywhere near as barbaric or prolific as the interrogation or punishment meted out by the Russians to civilians.
The key word there is USUALLY. Of course there are outliers.
Identified cases of Russian interrogation outliers have involved electrocution, burning, rape, castration, carving “roses” by peeling off the victim’s skin, shoving barbed wire up people’s back passages...
If the Ukrainian street punishments that don’t cause life-changing physical and mental damage are beyond the pale, then the Russian torture methods must also be unacceptable, surely.
“ Russian oil is going cheap to China and India”
It is, but the situation keeps changing. Price is volatile in the oil market - boom and bust is normal.
When there was a price boom to $120 per barrel, Russia made money no matter what. Now prices are back down around $90, which are still quite profitable, but not the big windfall. If prices get down to $60 (more of a normal long term average), the newly increased transaction and transportation costs, as well as the discounts they must offer, will really squeeze their revenue. Their cost to produce is in the fifties, on average - the highest of any major producer. When push comes to shove, other producers can discount more that Russia, to maintain or take market share. The Saudis can produce for less than $20 per barrel.
A recession in the major economies can possibly reduce total demand more than 10-15% - more than Russia’s total exports, even double Russia’s total exports. Russia can get dealt out of the market during demand drops, especially now that it is a pariah (the most heavily sanctioned country on Earth, taking the title from Iran).
They risk a total collapse in oil revenues if weak global demand brings prices down to $50-$60 dollar range - which is more normal, rather than low, according to long term norms.
When demand is high, supply constraints drive the price changes. But demand can fluctuate more than than the margin that exists for spare production capacity, and become what drives the price. Historically, demand routinely drops at times, where it can shut the marginal (high cost) producers out of the market.
Long term supply contracts at fixed prices buffer that risk. Russia is currently exceptionally exposed to spot market price fluctuations, because their long term contracts with Europe are being cancelled or not renewed, en masse. Their new India and China shipments have been spot market deals.
Russia depends more on oil and gas (half of GDP), than even Saudi Arabia (a third of GDP). If spot oil prices drop this Winter back to $60 or below, Russia’s finances will collapse, and they will be left having to print their currency like Argentina or Zimbabwe. They are already on an inflationary tear of money printing ( money supply up 50% in just six months).
“ have no idea what “full storage” of gas means. It doesn’t mean enough to last a winter”
In practice, it does.
Therefor, Russia is hosed.
Putin did that.
Putin is a GAY Clown, but the big joke is on the Russian people.
“If Germany and Europe have a cold winter, then they can go tar and feather their Greenie saboteurs. EU Greenies are Vlad’s best friends.”
Can’t argue any of that.
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