Here Comes The Double Dip Pt. 3

[Daniel_Plainview]

Dallas Fed Plunges Negative. Biggest Miss In 10 Months

The index turned negative for the first time this year, dropped to its lowest level in 7 months and missed expectations by the largest amount in 10 months. The drop from +10.8 to -3.4 is also the largest sequential drop in 11 months. Only the inventories sub-index rose (hardly a bright spot) as Production, Number of Employees, New Orders, and Capacity Utilization all plunged and the average workweek fell for the first time in months. The US decoupling myth continues to come apart at the seams and the likelihood of more easing (extreme or not) seems to be rising by the day - because that has worked so well in the past.

Buckle up bitches, things are heading back down now that the gov't viagra is wearing off

Well, those green shoots sure were nice while they lasted ...

[Daniel_Plainview]

Chicago PMI Plunges To Lowest Since November 2009, Biggest Miss To Expectations Since September 2009

... the headline number was the worst since November 2009, the miss was the biggest since September 2009, Production of 57.1 was the lowest since September 2009, New Orders slide to 57.4 from 63.3, Supplier deliveries lowest since September 2011, and so on.... "Despite all of the rhetoric to the contrary, it looks like the air got let out of the balloon."

So we've regressed back to depressive levels not seen since the autumn of 2009 ... OUCH!

[Plantagenet]

The reason most of the world is in trouble is for ideological reasons

The reason the world is in trouble is peak oil and high energy prices.

High energy costs have pushed much of the EU into a double dip recession, the US is foundering now, and even India and China are slowing down.

[Daniel_Plainview]

Interactive Map Of Europe's Recessionary Tide

As noted earlier, and in the aftermath of both the UK and Spain officially double dipping, very soon a majority of Europe will be submerged under the latest recessionary tide which has already engulfed Spain, UK, Greece, Italy, Portugal, Ireland, Belgium, Denmark, Holland, Czech Republic, and Slovenia. The primary wildcard remains Germany, although there is a more than 50% chance that following some very weak PMI data, the country will follow up its already negative Q4 GDP print with another decline, officially pushing the European growth dynamo into recession as well (as for France which reps and warrants that everything is great, it is not as if anyone actually believes those numbers, especially after Hollande becomes president in one week). For everyone who wants to track the European double dip tsunami in real time, the following interactive chart from Reuters is just for you.


(click on map to engage the interactive features )

For those curious about the relevance of this Euro-recessionary-tsunami to the USA ... well, wonder no longer:

You can see that the long-term correlation between US & Eurozone industrial production is virtually 1:1.

Moreover, as we all know, the US's current GDP bump due to fracking is only a very short-term phenomenon, given that 60-80% of all fracking production nosedives and becomes fully depleted after ONLY ONE YEAR ...

[Daniel_Plainview]

Spain Officially Double Dips, Joins 10 Other Western Countries In Recession

The good news: Spanish Q1 GDP printed -0.3% on expectations of a -0.4% Q/Q decline. Unfortunately this is hardly encouraging for the nearly 25% of the labor force which is unemployed, and for consumers whose purchasing habits imploded following record plunges in retail sales as observed last week. The bad news: Spain now joins at least 10 other Western countries which have (re) entered a recession. Per DB: "Spain will today likely join a growing list of Western Developed world countries in recession. Last week the UK was added to a recession roll call that includes Greece, Italy, Portugal, Ireland, Belgium, Denmark, Holland, Czech Republic, and Slovenia. Debt ladened countries with interest rates close to zero have limited flexibility to fight the business cycle and this impotency will continue for many years." Alas, the abovementioned good news won't last: from Evelyn Hermman, economist at BNP - "The Pace of Spain’s economic contraction may increase in coming quarters as austerity measures bite more sharply." Of course, it is the "good news" that sets the pace each and every day, as the bad news is merely a further catalyst to buy, buy, buy as the ECB will allegedly have no choice but to do just that when the time comes. And something quite surprising from DB's morning comment: "If it were us in charge we would allow more defaults which would speed up the cleansing out of the system thus encouraging a more efficient resource allocation in the economy at an earlier stage." Wait, this is Deustche Bank, with assets which are nearly on par with German GDP, saying this? Wow...

The sorry state of affairs visually:

[OilFinder2]

So we've regressed back to depressive levels not seen since the autumn of 2009 ... OUCH!

In a sure sign of how completely desperate the doomers have become, a PMI reading of 56.2 is now labeled as "depressive." Never mind that in reality, a PMI reading of 56.2 is actually quite good, and so this Chicago PMI has simply gone from "red hot" to merely "very good." The new orders sub-index of 57.4 is even better even though it went down, and mysteriously (not!) omitted from the copy-and-paste of Zerohedge's usual spin is the fact that the employment sub-index rose from 56.3 to an even healthier 58.7, not to mention the order backlog increased from 54.4 to 56.8. Inventories also went down, and you can be sure that if they went up, that also would have been mentioned by Zerohedge as some portent of doom, with vivid images of unsold merchandise piling up in warehouses being painted by Tyler Turden.

But noooo ... none of that matters to a doomer. The doomer is so completely addicted to his hopes of imminent economic doomsday, that nothing can shake him from his belief hope that things are just about to fall apart. When they don't fall apart when expected, just like a crack addict desperate to get his next fix, any and every hope of Economic Armageddon, buried deep within any economic report anywhere, is fished out and quickly consumed no matter how pitifully small and inconsequential the crumbs may be. Quite sad, actually.

[OilFinder2]

Moreover, as we all know, the US's current GDP bump due to fracking is only a very short-term phenomenon, given that 60-80% of all fracking production nosedives and becomes fully depleted after ONLY ONE YEAR ...

Poor, poor doomers. They're going to have to wait a very, very long time to get this doomsday hope to come true. Their "short term" will turn into years, then decades, to the point where they'll forget they ever predicted it in the first place. Just like all those other failed predictions from the past 2 or 3 years.

[Lore]

North Dekota is at about 500K bpd which is about half the requirement to keep up with the present rate of depletion for the national consumption.

[OilFinder2]

Shale May Spur $30 Billion of Chemical Plants, Chevron Phillips Chemical Says

Chevron Phillips Chemical Co. said its industry may spend $30 billion to build U.S. factories that convert natural gas into plastics because shale gas has made American production the cheapest outside the Middle East.

Output from shale formations will yield enough natural-gas liquids such as ethane to support about five new plants that produce ethylene and related plastics, said Mark Lashier, an executive vice president at Chevron Phillips. Each facility will cost $5 billion to $6 billion and will be built over more than a decade, he said today in an interview in Houston.

The company, a joint venture of Chevron Corp. and ConocoPhillips, is spending $5 billion to build a new ethylene plant in Baytown, Texas, by 2017 as well as two polyethylene plants and related infrastructure, Lashier said. Dow Chemical Co., Sasol Ltd., Formosa Plastics Corp. and Royal Dutch Shell Plc also are studying plans to build new plants, known as crackers, to use the relatively inexpensive gas.

“It’s tens of billions of dollars that the industry will have to invest to take advantage of that,” Lashier said at CERAWeek, a Houston conference held by IHS Cambridge Energy Research Associates.

Cheap gas is doubly advantageous to chemical makers because it’s used as a raw material and to power factories. U.S. gas is at a record low relative to oil, which is used to make petrochemicals in Europe and Asia.

[...]

[Lore]

The defining word here is "may". Which is analogues to a Nigerian email asking for a small investment in promise of a big return.

[OilFinder2]

Two or three of those plants are already "done deals," which leaves just another two or three in the actual "may" category.

[Daniel_Plainview]

Moreover, as we all know, the US's current GDP bump due to fracking is only a very short-term phenomenon, given that 60-80% of all fracking production nosedives and becomes fully depleted after ONLY ONE YEAR ...

Poor, poor doomers. They're going to have to wait a very, very long time to get this doomsday hope to come true. Their "short term" will turn into years, then decades, to the point where they'll forget they ever predicted it in the first place. Just like all those other failed predictions from the past 2 or 3 years.

Richard Heinberg: "a new well drilled in the Bakken may lose 80 percent of its production rate by the end of the first year ..."

Paul Santos: "shale [fracking] shows a production profile with steeply decreasing production in the first few years. Indeed, the production after the first year can drop by almost 80%, so if for some reason the drilling of new wells slows down enough in one year, this can already have profound implications as early as the next year."



Dave Hughes: "the depletion rate on fracking wells is 63-85 percent in the first year according to Dave Hughes of the Geological Survey of Canada. This can mean fruitless drilling down the slippery slope of diminishing marginal returns."

Frank Clemente (prof at Penn State): "Decline rates in shale gas wells can approach 70 percent the first year, creating a constant treadmill to find additional resources and drill new wells. ... The impact of the fracturing process is a matter of growing concern, particularly in New York and Pennsylvania regarding the Marcellus shale play. The Congressional Research Service, for example, recently reported, “The hydraulic fracturing treatments used to stimulate gas production from shale have stirred environmental concerns over excessive water consumption, drinking water well contamination, and surface water contamination from both drilling activities and fracturing fluid disposal.” In the Marcellus shale region, for example, the Delaware River Basin Commission, responsible for a watershed that serves more than 10 million people, has identified three major areas of concern: reduction of stream flow, pollution of ground and surface water and proper disposal of 'frac water.'”

Joyce Nelson (pdf): "Now some geologists are saying that the use of horizontal drilling and fracking for shale gas production exhausts the well within a mere seven to eight years, with a decline in output of 75% in the first year alone. Some are even calling the sector 'a speculative bubble.'"

FACT: the productive capacity of ND wells depletes between 60%-80% in the FIRST YEAR. A depletion rate of 60-80% DURING THE FIRST YEAR is just plain crazy, and it's the most obvious sign yet as to how desperate the oil junkies have become to acquire their quick heroin fix.

As new wells are opened up, we can expect them to produce 80% of their capacity during the 1st year ... but then in the 2d & 3d years we're left with dribbles and trickles. So unless you're predicting that the entire surface of the US will be fracked (and we're confident that you would readily endorse such a scenario), then the Bakken bump is a limited, one-shot, short-term adrenaline rush. It's just a quick-fix for the fossil fuel junkie.

[Anvil]

I dont think i am a doomer.
Its only realistic to expect the fraud based western economies to collapse under the weight of there own socialist infinite debt based finical systems.
Causing a great depression and cement the power of the new world order lead by china.
The current western system of taxing more, regulating more and stimulating/printing more to achieve growth is insanity.

It doesn't take a genus to see that most western economies are not on a stainable path shifting wealth to the 1%.

[OilFinder2]

Oops! Just when the doomers were getting all excited at the regional Fed manufacturing surveys, along comes the national ISM manufacturing survey, and - WHAM! Doomer hopes get dashed!



ISM Manufacturing survey rises to 54.8% in April

The U.S. manufacturing sector expanded at a slightly faster pace in April, according to the closely followed ISM index. The index climbed to 54.8% last month from 53.4% in March, the Institute for Supply Management said Tuesday. Any reading over 50 indicates that more manufacturers are expanding instead of shrinking. Economists surveyed by MarketWatch had forecast the index to dip to 53.3%. The new-orders index rose to 58.2% from 54.5% in March, while the employment index edged up to 57.3% from 56.1%.

[Lore]

FACT: the productive capacity of ND wells depletes between 60%-80% in the FIRST YEAR. A depletion rate of 60-80% DURING THE FIRST YEAR is just plain crazy, and it's the most obvious sign yet as to how desperate the oil junkies have become to acquire their quick heroin fix.

As new wells are opened up, we can expect them to produce 80% of their capacity during the 1st year ... but then in the 2d & 3d years we're left with dribbles and trickles. So unless you're predicting that the entire surface of the US will be fracked (and we're confident that you would readily endorse such a scenario), then the Bakken bump is a limited, one-shot, short-term adrenaline rush. It's just a quick-fix for the fossil fuel junkie.

Not to mention an average cost per frack well is between 5 - 7 million dollars. Only to watch your investment tail off to nothing in a few short years. Given that they are now fracking the cream, how long will it really be before they hit the wall on EROEI?

[dsula]

Given that they are now fracking the cream, how long will it really be before they hit the wall on EROEI?

EROEI is not important. What is imporant is the price, or better, the PROFIT.

[radon]

Oops! Just when the doomers were getting all excited at the regional Fed manufacturing surveys, along comes the national ISM manufacturing survey, and - WHAM! Doomer hopes get dashed!

Why do you always label bears as "doomers"?

[pstarr]

Daniel/Lore, thanks for the tight-shale depletion overview. It is important to counter the constant drumbeat of lies and distractions from the drillers and their investment-scheme front men. It's almost a classic ponzi scheme. The bubble depends on a vast reservoir of constant new cash at the bottom to keep the scammers afloat. Watch your wallet.

[pstarr]

doomers

Why do you always label bears as "doomers"?

It is one of the practiced techniques OF uses to marginalize folks who don't agree with him. Another is his forced cheerfulness in the face of bitter derision. He hardly ever loses his temper even when your drag him through the rhetorical mud

If it makes you feel better radon, you can also turn derogatory insulting nicknames back on him. I often resort to OilLoser or just plain Oily

[Lore]

Given that they are now fracking the cream, how long will it really be before they hit the wall on EROEI?

EROEI is not important. What is imporant is the price, or better, the PROFIT.

In a sence it's the same thing. Translate the cost to drill, energy invested, on the amount you can make at profit. Factor in demand destruction and it becomes impossible to raise the routine earnings barrier to make a profitable return on that investment.