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97% of fracking now operating at a loss at current oil prices

97% of fracking now operating at a loss at current oil prices thumbnail

 If the Saudis wanted to crush America’s shale oil industry they are certainly doing a good job of it.

 West Texas Intermediate reached a 2014 peak of $107.73 in June before dropping as low as $49.77 today on the New York Mercantile Exchange. The grade settled at $50.04 a barrel. That’s below the break-even price for 37 of 38 U.S. shale oilfields, according to Bloomberg New Energy Finance.

Shale oil fracking and Canadian tar sand is some of the most expensive (and dirty) oil production on the planet, while conventional Persian Gulf oil is the cheapest to produce.
Warren Henry, the spokesman for Continental, one of the frackers who have been spending money faster than they can make it, says that current oil prices are “not a sustainable long-term trend.”
However, Bob Tippee, Editor of Oil & Gas Journal, has a different take.

 “The Saudis have no incentive to lower supply to defend the price of crude oil, that is kind of a given right now, so the Saudis are not going to rescue the market,” said Bob Tippee, Editor of Oil & Gas Journal.

It won’t come from other major producers either. Both Russia and Iraq have boosted oil production to their highest levels in decades.
So it seems certain that low oil prices are here to stay. At least for now.
And that’s bad for the oil patches of red states like Texas and North Dakota.  Some are projecting 100,000 layoffs in the energy sector. Texas is certain to take some lumps.

 The slump may push Texas into a “painful regional recession,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, wrote in a Dec. 18 report.
Texas pumps 37 percent of U.S. oil output, EIA data show. The oil and gas industry accounts for 11 percent of the state’s economy, according to Feroli. The effects may extend to housing and other businesses, he wrote.

The majority of Texas energy production is still by conventional means. North Dakota, on the other hand, relies heavily on fracking, so they are looking at hard times.
Already oil rigs are being shut down at the fastest pace in six years.

 “At $50 oil, half the U.S. rig count is at risk,” R.T. Dukes, an upstream analyst at Wood Mackenzie Ltd., said by telephone from Houston. “What happened in the last quarter foreshadows what’s going to be a tough year for operators. It’s looking worse and worse by the day.”

Employment in the support services for oil and gas operations has risen 70% since mid-2009. Employment in oil and gas extraction has risen 34% over the same time period.  The thing to remember is that most job creation in the fracking industry comes up-front, so job losses will hit long before production falls.

 The most labor-intensive aspect of the oil-field industry is the construction and completion process for new wells, which requires the bulk of investment and provides the most income to the local economy.
He predicts ramifications of the oil slide to show up in three to six months, because companies will complete works in progress according to contract.

The price began crashing a couple months ago so the layoffs notices will really pick up on the oil patches any day.
The Dallas Federal Reserve projects Texas will lose 125,000 jobs by the middle of this year.  This slowdown is already projected to effect the state budgets of Texas, Wyoming, Louisiana, Oklahoma, North Dakota and Alaska.

Some will point out correctly that oil sales from production is sold months or years ahead of time, so a temporary drop, no matter how steep, doesn’t have an immediate effect.
That statement is true, but it comes with two big caveats.
First of all, there is now way of knowing when those oil futures were agreed to. They could expire tomorrow, or three years from now.
The other caveat is specific to the geology of fracking. Unlike traditional oil drilling, shale oil taps out very quickly. That is simple geology.

 the average decline of the world’s conventional oil fields is about 5 percent per year. By comparison, the average decline of oil wells in North Dakota’s booming Bakken shale oil field is 44 percent per year. Individual wells can see production declines of 70 percent or more in the first year.
Shale gas wells face similarly swift depletion rates, so drillers need to keep plumbing new wells to make up for the shortfall at those that have gone anemic.

The IEA states that the shale oil business needs to bring 2,500 new wells into production every year just to sustain production, and these shale fields will increasingly become more expensive to drill, “a rising percentage of supplies…require a higher breakeven price.”  With the current price of oil, almost none of the frackers will be sinking new wells. So if oil prices stay down, most of the frackers will simply be out of business in a year because they will have stopped producing enough oil for their business model.
This is a big reason why the Saudis, with their conventional oil production can wait out the frackers.

Of course, there is another factor that needs to be considered when it comes to the fracking industry, and that is high-yield debt.

 “Anything that becomes a mania—it ends badly,” said Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management. “And this is a mania.”
“It’s been super cheap” for energy companies to obtain financing over the past five years, said Brian Gibbons, a senior analyst for oil and gas at CreditSights in New York. Now, companies with ratings of B or below are “virtually shut out of the market” and will have to “rely on a combination of asset sales” and their credit lines, he said.

Far too many fracking companies have managed to stay in business by virtue of cheap credit. Being shut out of the bond market for these companies has the same effect as a bullet in the head.
Gary C. Evans, chief executive officer of Magnum Hunter Resources Corp., calculates that the funding squeeze for the frackers will hit in March or April. 8:54 AM PT: A Canadian oil sands producer is going bankrupt, but Senate Republicans are still going to push through a vote on the Keystone pipeline.

dail kos

50 Comments on "97% of fracking now operating at a loss at current oil prices"

  1. dissident on Fri, 30th Jan 2015 8:10 pm 

    No problem, there is a glut of supply anyway. That’s what the media tells me.

  2. farmlad on Fri, 30th Jan 2015 8:20 pm 

    According to Baker Hughes in Dec the US still has in operation more than half of the whole worlds drilling rigs. That’s 5 times as many as the whole Middle East. While at the same time only producing a bit more than just SA, with little hopes of the production ever increasing.

    And all the time the news is full of concern for the economies of Russia and SA. Talk about some nonsense. And blame SA for not lowering production. What a Nation of Morons.
    The rig counts are dropping and with that also go the orders for casings, trucking, rail capacity. and last but not least is diesel. Which hurts the demand for crude. I think I’m finally understanding a bit of what The Hills Group has been predicting for quite some time.

  3. Go Speed Racer. on Fri, 30th Jan 2015 8:35 pm 

    It is like watching a movie. Entertaining. The Day The World Ran Out Of Oil. But I need more popcorn and my soda pop is running low.

  4. DMyers on Fri, 30th Jan 2015 8:42 pm 

    It was a good gamble that turned out badly. The oil price driver remains hidden in all the speculation. The oil glut theory is bogus. Demand destruction does not suffice. Saudi Arabia is acting on business sense and experience, not conspiratorially or with some aim to sink shale oil.

    The best explanation, to date, is the shortonoil depletion scenario. This holds that the energy content of oil sets the price. Profit to the end user moves in relation to the economic activity generated by fuel purchased, which acts as a limiting agent on affordability.

    The problem I have is picturing how this information reaches the market. We are not privy to this process or the matter would be clear, and it isn’t.

    The following is an example of how the information could possibly reach the market. Say J Co. buys oil to refine into gasoline. J Co. gets 10 gallons of gas per barrel. J Co. then finds it is only getting five gallons a barrel. That is all the oil it is buying yields. For that, J Co. now has to buy two barrels to get the same yield. To maintain its profit, it can only pay half the previous barrel price.

    Is that how it works?

  5. Plantagenet on Fri, 30th Jan 2015 9:21 pm 

    In an oil glut, oil producers cut back on oil production. The higher priced producers get hurt the most and cut the most.

    The oilcos who use fracking are cutting back. So are deep sea oil drillers, and Venezuela and a whole range of producers who can’t make money at these low levels.

    That will bring an end to the oil glut, and ultimately the price of oil will go up again.

  6. Perk Earl on Fri, 30th Jan 2015 9:25 pm

    Crude Oil (Brent) USD/bbl. 52.99 +3.86 +7.86% Mar 15 17:59:58

    Look at how much Brent went up today! I don’t know of any news that would cause the price to suddenly jump that much.

  7. Davy on Fri, 30th Jan 2015 9:29 pm 

    DM, I agree with you on Shorts ETP argument. For god’s sake this is a scientific look at the basics of oil and the economy. We have several others here that cover the various POD’s. Then there is Rock and some others that actually produce oil. I feel we got a good table of experts at least enough to be above the sheeples and MSM coverage. I am not naïve to the fact there is a deep dark state doing things behind the scenes. That none of us here are aware of.

  8. Plantagenet on Fri, 30th Jan 2015 9:40 pm 

    @Perk Earl

    There were TWO news items that caused oil to spike up today

    1. US oilcos announced they were shutting down about 100 rigs. Less drilling means less oil means higher oil prices

    2. The Caliphate started a big offensive in Iraq, targeting oil-rich areas near Mosul.

  9. Perk Earl on Fri, 30th Jan 2015 9:46 pm 

    Interesting developments, Plant.

    Here’s a link to a video that suggests lower oil price is due to reduced demand and higher oil production. Makes sense since price fell so far.

    Oil crash: ‘Drill, baby, drill’ loses momentum

  10. Go Speed Racer. on Sat, 31st Jan 2015 12:37 am 

    D Myers is interesting. Says the energy content of oil is dropping l. Can it be true? More sludge and paint thinner in the barrel?

    Thinking people too forgetful of EROEI. If they burn 4 barrels to bring 10 to market, the production is 6 barrels. But crooked lying govt dont wanna bookkeep honest. Cook the books to pretend BAU while EROEI plummets.

  11. Go Speed Racer. on Sat, 31st Jan 2015 12:43 am 

    It like this. Your wise and all knowing govt, sees oil shortfall. They say, not enough oil on Earth, launch rockets to Titan, bring back oil in rockets. All the sheeple go Baaaa! Contracts are awarded, the oil flows. Not very much oil for all the effort expended. Lousy EROEI. Meanwhile Saudi keeps pumping. After awhile the rockets stop flying and the creditors are defaulted on. During this cyrafion,

  12. Go Speed Racer. on Sat, 31st Jan 2015 12:46 am 

    During this gyration, the oil price went up. But when the rocket launches were cancelled, the oil price WENT DOWN. So isn’t that exactly what just happened with fracking? The problem was not that rocket launches are cool. The problem was lousy EROEI from the moment it was proposed as an energy solution.

  13. Northwest Resident on Sat, 31st Jan 2015 1:54 am 

    It doesn’t seem that long ago that there were a lot of people crowing about all the great technology and the bright production future of the shale oil industry. I wonder where those true believers are and what they’re thinking now.

    A number of very smart people are thinking that 2015 is THE year that we finally hit official peak oil. We already hit it with conventional oil, that’s an undeniable fact.

    The only thing that stretched out the ultimate official recognition of peak oil was the shale and other unconventional production, all of which was part of an elaborate buying-time strategy. Now that bought time has been spent. It’s over.

    Here’s a writer that thinks non-conventional oil production (American shale/Canadian tar sands) will go into decline toward the end of 2015. That jives with some other informed opinions and predictions that I have read.

    It is not looking good for the continuance of BAU. When everybody (even the dummies — perhaps, especially the dummies) realize we’re at peak oil and there is no denying it, there will probably be a long moment of collective silence as the masses and the elites and “the market” ponder and digest that fact. After that moment of silence, I imagine all hell will break loose.

    It is already starting to unravel, ever more quickly. Oil price drop, Swiss National Bank, Japanese version of QE — these are all major dominoes falling, relatively quickly as time goes, and that’s just naming a few. Many more are tipping over and on their way down.

    It will no doubt be a wild ride to the end of 2015. Beyond that, I suspect we’ll be experiencing very rapid descent. It’s just my opinion of course, but I can’t see how they hold it all together once the reality of peak oil becomes common knowledge. And that cat is climbing out of the bag right now.

  14. Northwest Resident on Sat, 31st Jan 2015 2:10 am 

    “Now that bought time has been spent. It’s over.”

    I should have also mentioned that the bought time was paid for with credit — mountains of debt. And we don’t have any way to pay it back. We burned up the bought time and all the oil that went with it. Now we’re stuck with a bill that we can’t repay. We are well and truly screwed.

  15. Perk Earl on Sat, 31st Jan 2015 2:27 am 

    “It’s just my opinion of course, but I can’t see how they hold it all together once the reality of peak oil becomes common knowledge.”

    You mean once the dummies actually look the beast in the eye, they’ll realize the jig is up and start acting even weirder? Or when TPTB along with the banks calculate impending hyper-inflation or some other end game, they’ll all run for their mansions in New Zealand?

    It is very strange comprehending a predicament that is unfolding while most of the autopilot minions rumble along unawares. On the one hand we know (red pill) the situation but on the other hand the blue pill people are enjoying the last of the oil age in blissful ignorance.

    Better to know you’re on the tracks and the train is coming, or on the tracks but not know it’s coming?

    I want to be here to see the collapse unfold. See the bewildered look in people’s faces. Hear the blame game. Take in the chaotic rush to hold on to vestiges of the oil age.

    Imagine how zealously someone will hold on to a big screen ultra high def. TV that have solar to power it post collapse to watch DVD’s, knowing that once it gets damaged by jealous neighbors or a nighttime raid, that level of visual entertainment will be gone forever.

    Somebody post collapse will hide a Ferrari in the hopes that some day they can fill it’s tank, roll out on to some deserted highway and put it through it’s paces. But also knowing there are no replacement parts – it’s something bought by the wealthy at the height of the oil age, but once it stops it will be nothing more than a fancy set of leather seats.

    Have some fun while you still can people, cause the wick is burning down fast.

  16. GregT on Sat, 31st Jan 2015 3:35 am 

    Plant said,

    “In an oil glut, oil producers cut back on oil production.”

    Absolutely correct Plant. There is no good reason for producers to oversupply the market, they would only end up cutting their own throats. If we were in an oil glut, producers would cut back on production to maintain prices. We are not in an oil glut, we are witnessing the beginning of the end of the oil age. Our economies cannot afford the high prices of the dregs that we have been running on for the last 6 years. The gig is up.

  17. Dredd on Sat, 31st Jan 2015 6:15 am 

    That’s below the break-even price for 37 of 38 U.S. shale oilfields, according to Bloomberg New Energy Finance.”

    What about subsidies?

  18. Davy on Sat, 31st Jan 2015 8:13 am 

    NR, you are good at finding cool sites. I like the Wolfstreet “howlin about business and finance”!!fun!!

    NR, it is not at all certain if this will be a long emergency or a quick collapse or both. I see a bumpy plateau entering a completely different paradigm of long term descent complete with new rules. Those who oppose Nature will be swept away by the flood of change. You cannot fight change and reality. PO found in the ETP POD we talk about daily is the brick wall for BAU but overpopulation is the greatest obstacle or predicament. Nothing will matter as long as population progresses as it is. It will likely be loss of complexity and its twin energy intensity that will bring population down in an ugly way. The population is to a point of being self-organizing and above human management.

    We will have to accept spiritually the new paradigm of descent that includes human numbers. It is best we spiritually accept Nature’s way of death and destruction as a way to adapt and mitigate. Forget the same old insanity of knowledge, technology, and energy intensity that got us here. There is a whole new path to follow and that is simplicity, humility, and tough existence. Expect less with less and in some cases none.

    2015 is likely the year of the wakening of spirit because that is what happened when reality baseball bats humans and especially humans at a group level. We will have no choice but to acknowledge growth is over and descent has begun. Traditions of exceptionalism and human exploitation will be seen as a failure. How else can that turn out. If something does not work no matter how brilliant it is a failure. Let us be a part of this spiritual awakening in progress. Choose reality over a failed message of MSM and TPTB. Reject plutocrat values and turn to our basic human nature. Except Nature’s way even if that means your death. There is nothing else you can do. Curl up in bed if you have to. Pull the sheets over your head. In many cases you have no choice depression and anxiety is as much chemical as psychological. Yet, some of this can dissipate like a hangover with a new direction and meaning.

  19. Pops on Sat, 31st Jan 2015 8:54 am 

    If producers cut back, the cash flow cut in half by speculation shorting the market is reduced even more. You need cash flow to keep the lights on. It would be like saying “I’m not making enough to pay the mortgage so I’m gonna get a SMALLER truck.”

    So instead of cutting production they stop drilling, which is where all the cost is. In the case of the manufactured sorta-oil, all the cost is in the mine and processing facilities, which is already sunk anyway. Much of the increase – 5mmbd – has been LTO and half or more of LTO will go away in 12 months without drilling. The question is, will there be anyone willing to lend to drill again so soon after getting burned?

  20. JuanP on Sat, 31st Jan 2015 9:17 am 

    Baker Hughes reports there are 94 less US oil rigs drilling for oil this week, this is a 7% drop, the largest ever recorded by them.

  21. rockman on Sat, 31st Jan 2015 9:28 am 

    97%??? Utter bullsh*t. I know for a fact it will reduce drilling by only 95.76%. LOL.

    It’s amazing how many folks think they understand something very well when in reality they’re fairly ignorant of the details. For instance:”That’s below the break-even price for 37 of 38 U.S. shale oilfields”. There is no such thing as a “break-even price” for any shale oilfield for a very obvious reason: there is no such thing as a shale “oilfield”. These are productive TRENDS…not fields. It’s more accurate (though not perfect) to describe each well as a separate field. There have been many hundreds of shale wells that would have been commercial failures at $120/bbl. And there were many wells that would make an acceptable profit at $40/bbl. Each remaining location will be evaluated separately and not as part of a “field”.

    Though they’ll won’t always be correct the companies have a pretty good idea which remaining locations can be justified at the current price and which ones won’t. Obviously less wells will be drilled at $50/bbl then $100/bbl. But companies (who know more about these plays then some hack who has never been on a drill site) don’t have a good handle on those economics of other companies. They are having enough trouble developing their own cull list.

    And remember that while the price of oil will limit how many more shale wells are drilled those economics will be helped by lower costs due to reduced competition. A 50% reduction in oil prices will cut the well count. OTOH a 25% to 50% reduction in well cost will help. Also remember much of the infrastructure (leases, equipment, pipelines, etc) is already in place and as such are “sunk costs” which won’t be used in go-forward economic analysis.

    And no: I don’t have guess of how many shale wells will be drilled in the next 12 months. Unlike some folks I know what I don’t know. LOL.

  22. Boat on Sat, 31st Jan 2015 9:57 am 

    It wouldn’t make much sense to drill any well that has a small chance of making a profit. The only well that will be drilled will be one that has a chance of making a decent profit. The price of oil simply adjusts the risk level of making a profit on a given location of a prospective well. Built out infrastructure is just another of many factors. Quality of available experianced help would be another. The best companies manage the risk of location according to the price of oil.
    The so called Ponzi scheme of financing seems mislabeled to me. Again it’s risk vrs location using experience to guess the price of oil now and in the future. It aint easy and wild price swings favors the companies with deep pockets. But here are plenty of billions of dollars in profits made over the last few years when oil was at $90 and above. I am no expert but I expect the price of oil will recover in less than a year and fracking will pick back up.

  23. Kenz300 on Sat, 31st Jan 2015 10:55 am 

    The sooner we transition away from fossil fuels….. the better…… for us and the planet……

    Pope Francis’s edict on climate change will anger deniers and US churches | World news | The Guardian

  24. Northwest Resident on Sat, 31st Jan 2015 11:11 am 

    ” I expect the price of oil will recover in less than a year and fracking will pick back up.”

    I wouldn’t count on that. Over on Ron Patterson’s blog/site, there was plenty of analysis indicating that the Bakken and other shale plays were on the verge of decline even when the price was high, the new debt was being burned through at the high pace ever and people were fully buying the hype.

    Now that the whole fracking scam has been exposed for what it is, and now that we’re stuck with trillion$ in unsustainable and unpayable debt, it is very doubtful that they’ll be able to ramp up fracking to any degree.

    And why would they? The whole “shale boom” was a one-time burst of financial mania. It wasn’t a big contributor to net energy which is what the economy needs — it was a financial play, a manufactured “boom” — the last one if you ask me.

    Even the Philly Fed’s Charles Plosser is now on record with his concerns that the economy is likely to violently unravel some time in the near future. Fracking doesn’t pay for itself — never did and never will. Without QE, ZIRP and legions of muppets, fracking is dead in the water. They’ll suck out what they’ve already got holes drilled for, then that is IT. Game over.

    “We Can’t Do This Forever,” Fed Admits “Market Will Overwhelm Us”

  25. Northwest Resident on Sat, 31st Jan 2015 11:43 am 

    Davy and Perk — Yeah, in my quest to find all the doom that’s fit to print, I leave no stone unturned.

    TPTB have done a remarkable job of maintaining the illusion of all is well. But “the market” cannot be continuously inflated with debt forever, or even for that much longer. Soon enough, real life physical realities will begin to intrude upon the serene illusion of all is well that so many people comfortably and ignorantly live their lives in. Pressures that have been building and mounting all these years will reach a point where they can no longer be contained. We’re seeing it happen already, and my guess is that the avalanche of financial destruction is about to really get started. Look out below!!!

  26. Ted Wilson on Sat, 31st Jan 2015 12:02 pm 

    In the last 15 years, vehicle population increased by 50%, but the Oil consumption increased by 10%.

    So where does the other 40% of the vehicles get their fuel.

    Biofuels, Natgas, & LPG has eaten Oil’s breakfast. Now plugins and hybrids have joined

    No wonder Saudis are cutting the Oil prices to reduce the shift from Oil.


  27. shortonoil on Sat, 31st Jan 2015 12:07 pm 

    Is that how it works?

    In 1929 Ford Motor Co. introduced the Model A Ford. Its mileage was 23 mpg on the road, which incidentally, is better than today’s US car, and small truck fleet. In 1930 the energy delivered from the average barrel of oil could have powered the gasoline engine of that Model A for 789 miles. If one had the same exact vehicle today, the energy delivered from the average barrel of oil would take it for 186 miles.

    The energy delivered from a barrel of oil to the end consumer has been declining since Drake drilled his well in 1859. Total energy delivered from petroleum has been increasing because the rate of production has historically gone up faster than the per unit energy delivered has gone down. About 2000 that changed, and the total energy delivered to the economy has been going down ever since. Production can no longer be increased sufficiently enough to compensate because of the thermodynamics of the process.

    Without an energy input from the outside any process eventually wears down, and stops. An example is an ice cube melting in a glass of water. The ice gets warmer, and the water, glass, and room that it is in gets cooler. When the system of ice, water, glass, and room come into thermal equilibrium the process stops. We say it has hit its “dead state”, and can not change its state without an energy input from the outside. It is the point were no additional work can be extracted from the system.

    The shale industry has obfuscated its true financial status with creative accounting, investor presentation information, and a massive PR campaign which often used embellishments that seem counter intuitive to common sense. Because of its self designed uncertainty we applied a thermodynamic model to evaluate it. That required only a few values that could be easily estimated, and the physical properties of the fluid; like its specific heat, density, temperature, and other fairly well know values. Using the Bakken as our test case, we determined that the average well in the Bakken hits its “dead state” in less than eight months.

    Shale may have some future as a source of feedstock. In the race as an energy provider it is dead at the gate. Our present liquid fuel crisis is an energy crisis, not a lack of volume problem. Shale, in its present form, is not likely to survive the situation for long.

  28. Davy on Sat, 31st Jan 2015 12:40 pm 

    Geeze Ted, where the hell did you get your numbers?????? Ted are you in a fantasy world of shiny green and AltE nirvana. Anyone with a brain can see right through your corn porn.

  29. Boat on Sat, 31st Jan 2015 12:54 pm 


    Debt backed by hundreds of billions made from the recent fracking success over the last decade? If I were an investor I would invest in drilling companies that deliver even when prices are low. Kind of like the stock market, hundreds of billions were snapping up stocks while even more dumped them. then much of the recovery returned and they made even more billions. Same with oil. Cream rises to the top and does quite well. Buffett bought trains and GE for an example when the market crashed. He did quite well

  30. shortonoil on Sat, 31st Jan 2015 1:26 pm 

    Same with oil. Cream rises to the top and does quite well.

    The cream has long since been scrapped off. The age of oil is ending, and the historic up, and down price swings that made easy fortunes are going with it. Oil is ever becoming a commodity that the economy can long longer afford:

    There are likely to be bumps on the way down, but the $60 swings are over. $100 oil today would soon translate into a complete collapse of what is left of the financial system. After that your pager gains would only be good for starting the wood stove on cold, raw mornings.

  31. GregT on Sat, 31st Jan 2015 1:59 pm 

    “Cream rises to the top and does quite well.”

    Cream = fat.


    The FAT rises to the top and does quite well. Fat is not good for us, and neither is cream.

  32. Mike999 on Sat, 31st Jan 2015 1:59 pm 

    TOO BAD these are Republican States, and they don’t really give a Damn about JOBS.

    Because now Solar and Wind are Cheaper then All Carbon Solutions, and if you’d want to fix JOBS the States could INVEST IN WIND ENERGY AND SOLAR.

    But, these are Republican state so you’re Screwed.

  33. GregT on Sat, 31st Jan 2015 2:15 pm 

    “Because now Solar and Wind are Cheaper then All Carbon Solutions”

    We are not facing an electricity crisis, we are facing a liquid fuels crisis. Solar and wind could possibly make up for a percentage of electricity generated from fossil fuels, but they will do absolutely nothing to solve a liquid fuels crisis. Also, the world is not polarized between two political ideologies. Very few countries have limited their political systems to only two choices. The Earth is not limited to Red or Blue.

  34. Ted Wilson on Sat, 31st Jan 2015 2:40 pm 


    Looks like you are still in the 1970s.
    Check these links for hard #.
    And there are also 9 million Hybrids, 600,000 Plugins and Electric vehicles.

    There are 80 million vehicles which are running on Biofuels, Natgas & LPG.

  35. GregT on Sat, 31st Jan 2015 3:01 pm 


    Would you be responding to Davy?

    If so, Davy is absolutely correct. You are living in a fantasy world of shiny green and AltE nirvana. As of 2010 there were a reported 1 billion vehicles on the roads of the Earth. Your 80 million vehicles make up for only 8%. Flex fuel vehicles and hybrids make up the largest percentage of those 80 million vehicles. Both flex fuel vehicles and hybrids still consume gasoline. Your 40% number is completely out of line.

  36. Rodster on Sat, 31st Jan 2015 4:27 pm 

    Short- “In 1930 the energy delivered from the average barrel of oil could have powered the gasoline engine of that Model A for 789 miles. If one had the same exact vehicle today, the energy delivered from the average barrel of oil would take it for 186 miles.”

    Is that due to a lower quality of crude or more energy required to get it out?

  37. Ted Wilson on Sat, 31st Jan 2015 4:35 pm 

    Sorry Greg.

    Its meant for Davy.

    Yes the vehicle population increased from 700 million in Year-2000 to 1.1 billion in Year-2014.

    And the # of AFVs increased from 3 million to 80 million.

    Some people think that Flex fuels in USA just use gasolene, but at the same time all vehicles use E10 and also vehicles in Thailand, China, Germany use E20, E10, E10 respectively.

  38. dolanbaker on Sat, 31st Jan 2015 4:35 pm 

    “In the last 15 years, vehicle population increased by 50%, but the Oil consumption increased by 10%.

    So where does the other 40% of the vehicles get their fuel.”
    Well for starters, many of these additional vehicles are smaller and more fuel efficient than the older ones being replaced and secondly many are being bought in countries that don’t have a commuting by car history so they travel shorter distances and are used less frequently. Car usage in Western countries is also declining as the high price of fuel has forced a lot of people to give up unnecessary journeys.

  39. GregT on Sat, 31st Jan 2015 5:55 pm 

    “Car usage in Western countries is also declining as the high price of fuel has forced a lot of people to give up unnecessary journeys.”

    While ‘car’ usage may be declining in North America, it is not because of high fuel prices. The top selling vehicles in the last five years have been pick-up trucks, not cars. North American auto sales have reached all time records highs, with light trucks outselling cars 5 to 1.

  40. shortonoil on Sat, 31st Jan 2015 6:58 pm 

    Is that due to a lower quality of crude or more energy required to get it out?

    The lower quality crude that has hit the market in the last few years certainly hasn’t helped, but the main reason is that wells are getting deeper, water cut is increasing, permeability of fields has declined, and enhanced extraction methods have added to the cost. Also, lower quality crude, like high sulfur extra heavy, require a lot more energy to refine. Oil companies always take the best, and easiest to extract oil first. Its called depletion.

  41. Ted Wilson on Sat, 31st Jan 2015 8:16 pm 

    As per NADA Market Beat, light truck (CUVs, SUVS, Pickups and Vans) sales were 8.7 million vehicles and cars were 7.7 million vehicles which is somewhat like 53% : 47%.

    All vehicle models have become more fuel efficient today with 6-speed, 8-speed and CVT transmissions.

    Many cities like Houston, Dubai, Delhi have started Mass transit systems.

    Also many power plants & heating systems have moved from Oil to other sources which means more Oil is diverted to Transport. This trend will continue until all fuel oil is refined into Transport fuels.

    All this will ensure that World can survive with 1-2% increase in Oil supply even if the vehicle population grows by 5-10%.

  42. Rodster on Sat, 31st Jan 2015 8:35 pm 

    Short- “The lower quality crude that has hit the market in the last few years certainly hasn’t helped, but the main reason is that wells are getting deeper, water cut is increasing, permeability of fields has declined, and enhanced extraction methods have added to the cost. Also, lower quality crude, like high sulfur extra heavy, require a lot more energy to refine. Oil companies always take the best, and easiest to extract oil first. Its called depletion.”

    I had referred Shale oil as shit oil because of it’s lower grade quality and Plant said no, Shale oil isn’t shit oil.

  43. GregT on Sat, 31st Jan 2015 8:55 pm 

    Sorry, I should have written; With domestic manufacturers, light trucks are outselling cars 5 to 1.

    “All this will ensure that World can survive with 1-2% increase in Oil supply even if the vehicle population grows by 5-10%.”

    The biggest concern for the world surviving is the continuation of burning fossil fuels, not running out. We have already been informed that some 70% of remaining known reserves must stay in the ground, if we wish to avoid a 2 degree C global mean temperature rise. A two degree C rise gives us a 50/50 chance of triggering a catastrophic runaway greenhouse event.

  44. Ben Wilson on Sat, 31st Jan 2015 9:09 pm 

    Large oil companies like Shell, Exxon & BP have sales of 400 – 450 billion $ and their profits range between 20 – 40 billion $.

    This means their production cost is in the range of 380 – 420 billion $.

    If the oil sells for $50 instead of $100, then their sales should come to 200 – 230 billion $. But the production cost will still be the same.

    And they will suffer huge losses.
    How come the mainstream media does not cover this. Lets wait and see what happens.

  45. Ted Wilson on Sat, 31st Jan 2015 11:06 pm 

    In last 5 years, China’s NGV sales skyrocketed from less than 100,000 vehicles to nearly 4 million vehicles as per the NGVGroup.

    In the same way, now their electric vehicle sales is skyrocketing. Last year they sold 75,000 Electric and Plugin vehicles which is 350% more than in 2013.

    So saudis will try to keep the oil prices low.

  46. GregT on Sun, 1st Feb 2015 2:00 am 

    China is currently adding 30 million new vehicles to it’s fleet every year. 75,000 electric vehicles make up .2% of total vehicle sales. NG is also a fossil fuel, and is adding to the accumulation of CO2 into the environment.

    There is no relationship between the Saudi’s losing money on their main export, and 30 million new vehicles being added to the roads in China each year. If anything prices should be climbing.

  47. bobinget on Sun, 1st Feb 2015 8:21 am 

    Ethanol does in fact degrade GASOLINE’s energy.

    It takes 1000 gallons water to make 1 gallon ethanol.

    GregT: The Saudis, having the finest insider information available, have been shorting oil.

    Almost every auto maker has hedged with plug-in hybrids.

    shortonoil doesn’t tell us refining technology has advanced since 1929. This should be obvious.

    Government clean-air regs forced refiners to remove lead, MTB, minimize sulfur. The following link tells us what is permitted:
    List of additives;

    This year is 2015, not 2008.

    42 million new cars sold WW in 2014

    A single motorcycle maker, Honda, reached 300,000,000 in sales midway in 2014.

    One Month, December, China sold 2,100,000
    motorcycles. (down from December 2013’s 2,700,000 units)

    jet fuel along with diesel and gasoline consumption
    percentages higher in 2015.

    for the last three years, oil averaged $95.✓&

    The world is totally involved in undeclared wars
    over oil supplies. Naturally, it’s in no nation’s
    or oil companies interest to acknowledge this.

    Strange, when I post ‘week-end updates’ concerning escalating African, Middle East and European, soon, South American and Asian conflicts there is little if any feed-back.

    Shortonoil comes out with outlandish, unsupported statements and gets tons of comment.


    You guys are conflating geopolitically inspired motive with geological disorder.

  48. GregT on Sun, 1st Feb 2015 2:15 pm 

    “You guys are conflating geopolitically inspired motive with geological disorder.”

    In my view Bob they are two sides of the same coin. How do you see it differently?

  49. Kenz300 on Sun, 1st Feb 2015 2:45 pm 

    Tar sands from Canada?

    So why do we need the Keystone pipeline?

    RepubliCONS want it built before Tar Sands production goes broke from low oil prices…..

    Selling at less than the cost of production is not a good business model.

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