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Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 11:56:49
by BahamasEd
9 June 2019 update

The chart is from 2005 to 2021 showing the WTI eia weekly price overlayed with the ETP's Maximum Affordable Price. It's now been 20 months running with the WTI price above the MAP but WTI has only been able to make lower highs since 2008.

It does look like the marginal buyers are still in control of the price of energy as they stop buying when the price gets too high. I don't know if we will ever see $140, $110 or even $70 WTI prices again as it doesn't seem that the economy can function at those prices, no matter what the cost of getting the energy to the end user is.
MAP 9Jun19.png

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 14:27:25
by AdamB
Any reason the price of crude has been happily selling at near record production levels when pretty far above the MAXIMUM affordable price? Any reason why there appears to be zero relationship between the price of oil and the trend line expressed by the MAP? Other than the obvious,which is there is no relationship?

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 14:57:29
by Outcast_Searcher
Too bad you're still clueless re economic fundamentals, Ed.

Neither side is "in control". It's supply AND demand, same as it ever was.

Over time, both the supply and demand of crude oil continues to grow, as a trend. LOTS of extra tight oil available via fracking is helping keep the price down (AKA more supply). Lucky for buyers.

If the price were trending up over the past decade, would you say the producers were "in control"?

The MAP would be even further off, yet shorty would be shrieking even louder (and perhaps even a little convincingly) how "unaffordable" oil is.

Meanwhile, with each passing month, the randomness of ETP and the inaccuracy of the MAP predictions continues to be borne out.

BTW, the US and global economy functioned JUST FINE with WTI averaging nearly $100 per BBL from mid 2010 to mid 2014. Claiming the economy "couldn't function" with oil at $70 or even $100 is just completely laughable.

We've recently SEEN $70ish oil and sustained oil over $60 for months, and the economy just continued to grow.

So, just keep claiming the same nonsense, no matter what the data is? And that is what, anti-science?

In the real world, both the data and the economy show ETP = big fat fail.

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 15:01:04
by rockdoc123
I don't know if we will ever see $140, $110 or even $70 WTI prices again


The test for $140/bbl wasn't long enough but for $100 - $110 we had nearly 4 years at that level with no decline in demand and unemployment was higher and GDP lower.
The reason prices haven't been able to stay above $70/bbl is because there is more than enough oil to meet demand at those and higher levels. The unconventional gets ramped up very quickly at that price and the Russians and OPEC will only tolerate so much loss of market share. When it reached $70/bbl recently supply shot above demand and it became a buyers market, hence prices dropped. Not surprising.

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 15:17:42
by AdamB
Who manufactured this MAP stuff? Does anyone have a link to the thread where this now discredited idea was put forward? BahamasEd says it is based on Bedfords nonsense, so it obviously isn't underpinned by reality, but I am curious as to what additional crap was piled on top of that to create this new fictional metric.

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 15:39:49
by Outcast_Searcher
AdamB wrote:Who manufactured this MAP stuff? Does anyone have a link to the thread where this now discredited idea was put forward? BahamasEd says it is based on Bedfords nonsense, so it obviously isn't underpinned by reality, but I am curious as to what additional crap was piled on top of that to create this new fictional metric.

FWIW:

The only place I've seen it was in shorty's ETP "paper", V2, Dated March 1, 2015. I downloaded the PDF for that from some link years back, and refer to it time to time when pointing out some fundamental error he is making, referring to his own work. (Learning, adapting, etc. aren't in his list of skills, so he just keeps making the same errors, and never admits he's wrong, of course).

All I've ever gotten re ETP hits on Google searches are things like the Energy Transfer Partners stock symbol, etc.

He defines ETP as "total production energy" on pp 1-2 of his paper.

I don't seem to get good hits, in context, for his "total production energy" via Google searches either.

And of course, any serious discussion I've seen of his theory by an actual scientific type, using scientific language, was to dismiss it due to basic errors he was making.

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 18:41:55
by BahamasEd
Putting the ETP/MAP aside, it still stands that since 2008 the overall trend in the price of oil has be lower.

Until that trend changes it's looking like we will continue to have lower oil prices. So I guess you all are saying that the producers of oil end products are happy with the current low price and they will be happy if this trend continues into the $20s. As that will be a balance of supply and demand so all is good.

Back to the ETP, at least it did predict, back in 2014, that the trend going forward would be towards lower prices. Not 100% correct on the yearly price point but you can't expect any model of the future to be that correct.

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 19:14:51
by rockdoc123
Until that trend changes it's looking like we will continue to have lower oil prices. So I guess you all are saying that the producers of oil end products are happy with the current low price and they will be happy if this trend continues into the $20s. As that will be a balance of supply and demand so all is good.


Trendology is as useful as snowshoes in Florida.
The "trend" was down when production was very high and supply outpaced demand in 2014 through 2016 and then it bottomed out where most areas in the unconventional met break-even prices. That resulted in reduced activity and requisite reduced supply which in turn resulted in demand outpacing supply by 2017 and prices rising. By late 2018 supply was up once again due to renewed unconventional activity and that has driven down prices once again. This is the very nature of supply and demand.....nobody is "happy" with low prices but they are able to withstand them as long as they hover above the break-even price for the stage of E&P the company is at. This has been explained ad infinitum here but I guess you weren't paying attention. :roll:

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 20:17:37
by AdamB
Outcast_Searcher wrote:And of course, any serious discussion I've seen of his theory by an actual scientific type, using scientific language, was to dismiss it due to basic errors he was making.


The path my original look see over his idea took. It began with the obvious spurious relationship that just sits there and laughs at anyone who has taken a high school stats class. It began to get really suspicious when he wouldn't even provide the proper citation I was willing to use for the technical review, and then when he ducked that about as fast as someone would a hot potato, I moved on to reading the document and it didn't take but a page or two to begin giggling.

Re: Mid-Year ETP MAP Update

Unread postPosted: Sun 09 Jun 2019, 20:26:01
by AdamB
BahamasEd wrote:Putting the ETP/MAP aside, it still stands that since 2008 the overall trend in the price of oil has be lower.


Why put it aside? It is wrong on its face of the graph you presented, and represented as an update...for what? Something already proven wrong?

The price of oil since 2008 has been lower....just as the price of oil has been after ANY nominal high. Duh. Remember the US peak oil, and how oil production always had to be lower because...you know...it was once higher? Remember what happened with bell shaped curves created by a real scientist?

BahamasEd wrote:Until that trend changes it's looking like we will continue to have lower oil prices.


Look at nominal price since 2008. It isn't a trend. It is up, and down, and as I explained before, is just lower than the last nominal high, nothing more.

BahamasEd wrote: So I guess you all are saying that the producers of oil end products are happy with the current low price and they will be happy if this trend continues into the $20s.


Building strawmen for Shorty now? Go build yourself a modern supply based model and we'll talk.

BahamasEd wrote:
Back to the ETP, at least it did predict, back in 2014, that the trend going forward would be towards lower prices. Not 100% correct on the yearly price point but you can't expect any model of the future to be that correct.


Flipping a coin would "predict" if prices are higher or lower at any point in time in the future, no different in 2014 as today. Do you have any information on how well Short's technical review of his paper went? :lol:

Re: Mid-Year ETP MAP Update

Unread postPosted: Mon 10 Jun 2019, 00:49:24
by EdwinSm
rockdoc123 wrote:Trendology is as useful as snowshoes in Florida.


Image
Snow in Florida.


Back to the ETP model. It is interesting to note that prices have been above the maximum level for 20 months. For me that means the model is well and truly broken. We need a ETP mark 2 model :roll: , that doesn't send the prices dipping so fast.

Re: Mid-Year ETP MAP Update

Unread postPosted: Mon 10 Jun 2019, 06:13:34
by radon1
EdwinSm wrote: We need a ETP mark 2 model


No, we don't.

Re: Mid-Year ETP MAP Update

Unread postPosted: Mon 10 Jun 2019, 06:32:10
by Cog
The ETP model was completely discredited last year and I'm surprised anyone wants their name associated with it. Even Shorty has abandoned this thread.

Re: Mid-Year ETP MAP Update

Unread postPosted: Mon 10 Jun 2019, 09:44:24
by Yoshua
The WTI is still moving around the MAP curve...no matter what we say and do. That is the beauty and horror of physics.

Re: Mid-Year ETP MAP Update

Unread postPosted: Mon 10 Jun 2019, 11:51:51
by Outcast_Searcher
Yoshua wrote:The WTI is still moving around the MAP curve...no matter what we say and do. That is the beauty and horror of physics.

Ah, just what we need here. A weigh in from someone well versed in economics. /s

What do you mean, precisely by "moving around the MAP curve", when the MAP curve is generally much lower than the price, the map curve is moving sharply downward over time, and the price of oil is NOT moving downward, as a trend?

You see, when talking about numbers with a theory, the numbers actually matter. :roll:

The ETP is predicting $27ish THIS YEAR, $13ish in 2020, and perhaps $2ish in 2021 (eyeballing the oft-cited 38% line on shorty's ETP graph, page 34 in his ETP paper, V2. dated 3/31/2015).

Whether I look at a 6 month, 1 year, 3, year, or 5 year crude oil chart, I see a WTI price averaging around $50ish, near enough. And no obvious trend (except perhaps flat-ish) for any meaningful length of time. And highly volatile, and therefore hard to predict.

But by all means, please share your math, along with your explanation of why WTI is likely to be a MAXIMUM AFFORDABLE PRICE of $27ish by the end of this year, much less $2ish in 2021.

If you can do that convincingly with more than hand waving or proclaiming doom in our face, I'll be truly impressed. Hint: In the real world, supply and demand matter, re prices of commodities.

Re: Mid-Year ETP MAP Update

Unread postPosted: Tue 11 Jun 2019, 08:59:54
by shortonoil
Back to the ETP model. It is interesting to note that prices have been above the maximum level for 20 months. For me that means the model is well and truly broken. We need a ETP mark 2 model


You are correct. The price of oil has disconnected from its 100 year correlation to petroleum production. The value of the dollar, and the price of oil are now being set by politically motivated, and influenced Central Bankers; who may, or may not know what they are doing. Knowing that such extreme capabilities are now completely in the hands of a few ivory towered bean counters should instill overwhelming confidence in the future of the economy?

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Re: Mid-Year ETP MAP Update

Unread postPosted: Tue 11 Jun 2019, 09:28:54
by shortonoil
Although the impact of declining deliverable energy from petroleum is instantaneous it requires an extended time period for the effect to be reflected in the economic data. By applying the needed seasonal adjustments by "always correct", and "always right minded" bureaucrats that period of time can be stretched until the store shelves have gone bare.

Morgan Stanley's Mike Wilson, already the most bearish of Wall Street's sellside research analysts, turned his bearishness up a notch today, when he slashed his EPS forecast for next year as a result of Morgan Stanley's economists changing their forecasts for global growth to a stagnation through year end rather than a continued recovery as a result of "sustained escalation and incremental tariffs further slowing growth projections to the point of recession", and now sees not only a further decline in earnings in 2019 but also unchanged earnings in 2020, downward revised from a prior forecast of a +5% increase in EPS, as corporate profit hit their plateau for this cycle, and obviously once the recession hits, it's only downhill from there.

https://www.zerohedge.com/news/2019-06- ... -recession

Tariffs are now the effect; not the cause.
http://www.thehillsgroup.org/

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Re: Mid-Year ETP MAP Update

Unread postPosted: Tue 11 Jun 2019, 09:34:02
by marmico
BahamasEd has moved from posting an ETP weekly MAP last year to an ETP semi-annually MAP this year. What a joke.

Then the ETP Bozo posts his weekly current* GDP/cumulative oil production graph. He might as well post a GDP/cumulative egg production graph.

Hey ETP Bozo, why can't you post 2017 GDP of $80,900 billion, while you wait for 2018 World Bank GDP? What a joke. In any event, the ETP Bozo will need to extend the x-axis to $85,000 billion for 2018. Make it simple ETP Bozo, chart in $trillions you moron.

* Because the ETP Bozo doesn't know the difference between current and constant dollars, he thinks that world GDP has risen 60 fold since 1960. What a moron.

Re: Mid-Year ETP MAP Update

Unread postPosted: Tue 11 Jun 2019, 09:44:12
by AdamB
EdwinSm wrote:Back to the ETP model. It is interesting to note that prices have been above the maximum level for 20 months. For me that means the model is well and truly broken. We need a ETP mark 2 model :roll: , that doesn't send the prices dipping so fast.


"We" (whoever we might be) need a model that works, sure. It should be based on first principles as opposed to the nonsense, cherry picked data and complete ignorance of basic oil field development and production that the ETP was based on.

Re: Mid-Year ETP MAP Update

Unread postPosted: Tue 11 Jun 2019, 09:46:37
by AdamB
Yoshua wrote:The WTI is still moving around the MAP curve...no matter what we say and do. That is the beauty and horror of physics.


What did the ETP have to do with physics? Oh, you mean you think it has physics in there because the carnival barker told you so, when you went in to see the bearded lady or the two headed boy?

The economy been happily exceeding the MAXIMUM allowable price for years. You know, in physics, when there is a maximum, it is actually, you know, a maximum?