Covid-19 and Russia collusion to kill shale! Film at 11.

Guest “Russia collusion” by David Middleton

As the Democrat-media-fueled Covid-19 panic continues to batter the global economy, Russia thinks they see an opportunity to kill the evil capitalist “shale” players…

Mar 7, 2020, 09:58am EST
Russia Yanks A Leg From U.S. Shale’s Three-Legged Stool

David Blackmon Contributor
Energy

For the last two-plus years, the U.S. shale industry has been able to continue its oil boom thanks to the existence of a figurative 3-legged stool of support. Those three legs have been easily identifiable:

*The ability to legally export crude oil to other countries;
*An ongoing license to build pipelines and conduct fracking operations; and
*The continuation of the OPEC+ deal limiting exports by other oil producing nations.


So long as all three legs of that stool remained in place, crude prices have remained healthy enough to allow shale operators to continue drilling wells, increase overall U.S. production and for the most part remain fairly profitable. But, as with any stool, the removal of any one of the legs upsets an undeniably delicate balance, potentially spelling disaster for anyone sitting atop it.

On Friday, Moscow yanked one of the three legs from the stool by refusing to agree to additional export cuts that had been unilaterally proposed by the OPEC member nations on Thursday without Russian representatives in the room. Crude prices immediately collapsed, experiencing their worst day in more than 5 years with a drop of 10%.

[…]

On Thursday the OPEC nations proposed additional cuts that would have taken an additional 1.5 million barrels of oil per day off of the market, 1 million of which would have been born by the OPEC members, with the remaining 500,000 in cuts obligated to Russia and its fellow non-OPEC participants. On Friday, though, Russian Energy Minister Alexander Novak returned to Vienna and informed the group that his country would not agree to any further cuts.

[…]

Forbes

Since trading opened this morning, both Brent and WTI are down another ~$9/bbl. As of 0700 CDT, Brent is at ~$35.50/bbl and WTI is at ~$32.10/bbl. Unfortunately for Russia, this Communist plot is unlikely to accomplish much of anything beyond devastating the Russian economy, even more than it’s already been devastated.

[…]

Manish Raj, chief financial officer at Velandera Energy, told Marketwatch that “Russia is certainly betting that price crash will cause U.S. production to crash, helping restore its dominance.” If that is really Moscow’s thought process, it is likely to be disappointed. Saudi Arabia already attempted a similar strategy to kill U.S. shale, flooding the market with crude in 2014 to create an enormous glut and drive down prices in an effort to reclaim market share.

Such a strategy demonstrates a misunderstanding of American bankruptcy laws. While the crash in oil prices that began in late 2014 did ultimately result in hundreds of shale producers declaring Chapter 11 bankruptcy, the net result of that process is that most of those companies reorganize themselves and come back with far less debt load. The strategy also fails to recognize that most producers have already put hedges in place for most of their equity production through the remainder of 2020 and beyond.

[…]

David Blackmon is an independent energy analyst/consultant based in Mansfield, TX. David has enjoyed a 39-year career in the oil and gas industry, the last 23 years of which were spent in the public policy arena, managing regulatory and legislative issues for various companies, including Burlington Resources, Shell, El Paso Corporation, FTI Consulting and LINN Energy.

Forbes

When Saudi Arabia tried this stunt in 2014, it did force hundreds of U.S. oil companies into bankruptcy, some of which never recovered. However, most of those companies emerged from bankruptcy with their debt effectively erased. While U.S. crude oil production declined by about 1 million bbl/d from July 2015 through October 2016, by the time OPEC initiated talks with Russia about coordinated production cuts in August 2017, U.S. crude oil production had recovered to its July 2015 level of about 9.5 million bbl/d.

Furthermore, most U.S. producers layered on hedge positions when oil was around $60/bbl. Hedges effectively lock in prices. As of February 2020, U.S. oil production hedge positions were near an all-time high:

Swap dealer positions: Short positions held by swap dealers accounted for 32% of the open interest for the WTI futures contract as of January 21, 2020, slightly less than the all-time high of 33%, reached in 2018 (Figure 4). Initiating a short position, or selling a futures contract, enables the holder to lock in a price today for the physical delivery of a commodity at some future date. Oil producers commonly use swap dealers to hedge their future production. Swap dealer short positions increased to 30% of the WTI open interest in mid-December, when WTI prices increased to more than $60/b. This price level, according to a survey of U.S. exploration and production companies conducted by the Federal Reserve Bank of Dallas, is sufficient to generate enough cash flow from operations for the majority of firms to cover capital expenditures. The increase in swap dealer short may have increased, in part, because U.S. producers hedged some of their expected 2020 production at about $60/b.

U.S. EIA
Figure 1. Hedge positions and WTI oil price. Source: U.S. EIA

While a protracted Russian price war to gain market share will hurt the U.S. oil industry, cause many bankruptcies, destroy a ton of equity, wipe out 10’s (if not 100’s) of thousands of jobs and possibly even cause Permian Basin oil production to decline long enough for idiots to declare it dead… It will fail. Russia won’t gain market share and U.S. oil production will quickly recover, even if many of the oil companies won’t.

The self-inflicted damage has already begun:

Russian Ruble Plummets Amid Oil Market Chaos
The ruble hit a four-year low against the U.S. dollar as oil prices crashed 30% overnight.

The Russian ruble plummeted almost 10% overnight, falling to its lowest level in more than four years, as oil prices crashed following the breakdown of the Russia-Saudi Arabia pact to limit production.

The ruble was trading at a low of 74.9 to $1 on Monday morning, after another wild start to the week for financial markets. Russia’s rejection of a renewed round of oil production cuts in the OPEC+ format at a crunch meeting in Vienna on Friday shocked the global energy markets and has prompted analysts to talk of an “oil price war” between two of the world’s largest energy suppliers.

Benchmark Brent crude fell 30% to $33 a barrel when trading opened on Asian markets following the weekend, the sharpest one-day loss in almost three decades.

Falling oil prices put the Russian ruble under pressure, as Moscow still relies on energy exports for a large portion of its budget. The so-called budget breakeven rate is $50, while profits on oil sold about $42 a barrel are funnelled into Russia’s swelling National Welfare Fund (NWF).

With prices below those levels, Russia will either have to run into its substantial coffers to fund day-to-day government spending or borrow more. 

[…]

The Moscow Times

Russia, the country, needs oil prices above $50/bbl to breakeven. These tangentially United States, the country, don’t have a breakeven price. Our economy isn’t dependent on oil export revenue. And U.S. oil producers now have much lower breakeven prices than we did in 2014.

RYSTAD ENERGY RANKS THE CHEAPEST SOURCES OF SUPPLY IN THE OIL INDUSTRY

May 9, 2019

In a major turnaround, North American tight oil is emerging as the second cheapest source of new oil volumes globally, just shy of the Middle East onshore market.

[…]

Tight oil – such as onshore shale oil in the US – has witnessed an impressive turnaround over the last few years. In 2015, North American shale ranked as the second most expensive resource according to Rystad Energy’s global liquids cost curve, with an average breakeven price of $68 per barrel. The average Brent breakeven price for tight oil is now estimated at $46 per barrel, just four dollars behind the giant onshore fields in Saudi Arabia and other Middle Eastern countries.

[…]

Rystad Energy
Figure 2. Breakeven prices and resource bases. Source: Rystad Energy (Click to enlarge)

Russia’s average operational breakeven price is $13/bbl higher than U.S. “shale”. Furthermore, their resource base (width of the bars in Figure 2) is much smaller than the Middle East and U.S. “shale”.

Russia just brought a knife to a gunfight… A dull knife. So… Why is Russia doing this?

The Tell
OPEC price war one of three worst things that could hit virus-wracked markets, JPMorgan strategist says

Published: March 9, 2020 at 11:39 a.m. ET
By Steve Goldstein

In these coronavirus-wracked markets, there would be three, hypothetical really bad events, according to John Normand, head of cross-asset fundamental strategy at JPMorgan.

*One would be a large-scale shutdown of the U.S.

*Another would a second wave of virus infections in the China.

*And the third would be an OPEC+ price war.

Oops. That price war led to a 1800-point, or over 7%, drop in the Dow Jones Industrial Average in opening trade.

Normand said “the timing of this weekend’s shift seems somewhat random except to those who view it as President Putin’s attempt to complicate the U.S. economic outlook ahead of 2020 elections.’

[…]

MarketWatch

Vladimir Putin may be evil, but he isn’t stupid. He has to know that Russia can’t win this price war… But he can use it to interfere in our elections, hence: Covid-19 and Russia collusion to kill shale! Film at 11.

Film at 11

To those unfamiliar with American idiomatic expressions and/or too young to remember when the news cycle wasn’t 24/7…

Film at 11: Back in the “old” days, a breaking news story would be reported on the 7:00 PM (Eastern Time) news broadcast and would often be accompanied with the phrase “film at 11.” The film of the news story was still being processed and would be shown on the 11:00 PM news broadcast. At 7:00 PM, you would get a breathless CNN-style headline, hooking you into watching the 11:00 PM news to see the film of the event, usually a CNN-style nothing-burger.

While Covid-19 is far from a CNN-style nothing-burger, the panic is wholly unjustified. The Democrat-media complex continue to report that Covid-19 is 20 times as deadly as the common flu and far more contagious.

On the basis of a case definition requiring a diagnosis of pneumonia, the currently reported case fatality rate is approximately 2%.4 In another article in the Journal, Guan et al.5 report mortality of 1.4% among 1099 patients with laboratory-confirmed Covid-19; these patients had a wide spectrum of disease severity. If one assumes that the number of asymptomatic or minimally symptomatic cases is several times as high as the number of reported cases, the case fatality rate may be considerably less than 1%. This suggests that the overall clinical consequences of Covid-19 may ultimately be more akin to those of a severe seasonal influenza (which has a case fatality rate of approximately 0.1%) or a pandemic influenza (similar to those in 1957 and 1968) rather than a disease similar to SARS or MERS, which have had case fatality rates of 9 to 10% and 36%, respectively.2

The efficiency of transmission for any respiratory virus has important implications for containment and mitigation strategies. The current study indicates an estimated basic reproduction number (R0) of 2.2, which means that, on average, each infected person spreads the infection to an additional two persons. As the authors note, until this number falls below 1.0, it is likely that the outbreak will continue to spread. Recent reports of high titers of virus in the oropharynx early in the course of disease arouse concern about increased infectivity during the period of minimal symptoms.6,7

Fauci et al., 2020

Epidemiologists measure contagion with a statistic called the reproduction number, denoted as “R0.” It estimates the number of people each patient is likely to infect. Bloomberg rounded up R0 estimates for the coronavirus and other infectious diseases from the WHO and CDC and found that while the coronavirus’s R0 of 2.8 makes it more contagious than the seasonal flu (1.3) or Ebola (1.9), it is much less contagious than smallpox (4.8) or the measles (15.0). A separate New York Times analysis estimates it is also far less contagious than chickenpox.

Yet even these comparisons may overstate the transmission risk. As WHO Director-General Tedros Adhanom Ghebreyesus explained on Monday: “We don’t even talk about containment for seasonal flu – it’s just not possible. But it is possible for Covid-19.” He elaborated: “We have never seen before a respiratory pathogen that’s capable of community transmission but at the same time which can also be contained with the right measures. If this was an influenza epidemic, we would have expected to see widespread community transmission across the globe by now and efforts to slow it down or contain it would not be feasible.” WHO officials have also observed that the coronavirus appears to be much less contagious than the flu in their respective incubation periods, i.e., before symptoms appear.

Fisher Investments

When the dust settles, Covid-19 may turn out to be comparable to the seasonal flu, which annually kills 12,000 to 61,000 Americans, but doesn’t trigger market panics.

And… There are already indications that Red China’s economy is starting to rebound.

It is too soon to know exactly how the coronavirus will impact economic growth. There will almost certainly be some kind of hit, with most forecasts suggesting slowing growth. But, and this is key, it looks to be temporary. Already, various purchasing managers’ indexes hint at inventories falling while order backlogs rise—fuel for a rebound. In China, there are already signs of this. One Chinese online travel agency noted hotel bookings soared 40% in the week ending 3/1 from the prior, while flight demand skyrocketed. In a hard-to-refute sign the country is getting back to work, nitrogen dioxide pollution is back. The gas, a byproduct of utility output and factory emissions, largely vanished amid the twin impact of the Lunar New Year holiday and coronavirus-related shutdowns—which NASA captured in a recent image of the week. We aren’t cheering pollution, but it seems a pretty tangible sign of a rebound. Of course, there are many other pollutants—and China’s economy is mostly services these days, not factories. But it still seems relevant to note, in our view.

Fisher Investments

Nearly 2 weeks ago, Apple CEO Tim Cook said that they were already reopening factories in Red China.

As New Coronavirus Cases Slow In China, Factories Start Reopening
February 29, 2020

As new cases of coronavirus infection slow in China, the country is gradually getting back to work. Authorities and businesses are taking a range of measures: Local governments are chartering buses for workers. Some companies are buying out entire hotels to house quarantined staff. A temporarily shuttered movie studio is even loaning employees to factories that are short on labor.

[…]

NPR

Good news in China: Factories reopen as new coronavirus cases drop
By JOE MCDONALD
ASSOCIATED PRESS |
MAR 05, 2020

Factories are gradually reopening in China months after the new coronavirus that first emerged there upended daily routines.

The country, after many arduous weeks, appeared to be winning its epic, costly battle against the new virus. The World Health Organization said there are about 17 times as many new cases outside China as in it.

[…]

Shanghai-traded stocks have rallied nearly 12% since hitting a bottom on Feb. 3. They’re just 1.6% away from wiping out the last of the losses they’ve sustained since the new virus began to spread late last year.

[…]

Chicago Tribune

Reference

Fauci Anthony S., Lane H. Clifford, Redfield Robert R.. (2020) Covid-19 — Navigating the Uncharted. N Engl J Med DOI: 10.1056/NEJMe2002387. 

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283 thoughts on “Covid-19 and Russia collusion to kill shale! Film at 11.

  1. One of the talking heads on CNBC this morning said, the cure for low oil prices is low oil prices. I think he’s right, but we’ll see after the crash.

        • Unfortunately for Russia, this Communist plot is unlikely to …

          You may not have noticed in the world of geology where you start counting at 10k years BP. but Russia has not been communist for some time now.

          The commies are much closer to home now. They will soon be the ones promising “free oil”.

          As for trying to twist this schist into yet another “Putin is messing with our elections” story. You don’t seem to have worked why and in which camp this is supposed to help.

          Maybe you think “communist” Russia is helping Sanders to win this time.

          • Putin knows that the best way to get better prices for Russian oil is to get other countries to cut their output.

            This is precisely what all of the Democrats are promising to do.
            If economic uncertainty hurts Trump, then Putin is for it.

          • Greg, what makes you think Putin is in either “Camp”? Putin wants to sow discord, he’s not rooting for either “side”, he’s rooting for chaos in the US. Unfortunately many of our politicians (as well as folks like you) play into his hand by pretending he’s actually on their opponent’s side.

          • This is nice in theory, but Urals Crude is currently selling for $48.15. Sometimes it would be nice if the American oil industry could act as a coordinated unit like OPEC or Russia and just say nyet to selling our oil at far less than the global average. We’re playing by free market rules while at the same time being hamstrung by useful idiots that prevent growth in exports and constrain our market which causes our resources to be sold for $10-30 less than OPEC and Russia.

        • I am old enough to remember when driving my Pontiac flathead straight 8 filling up with “super” at Scott Gas in Wilmington Delaware for $0.10 a gallon ( ten $ cents )

          • You are a bit older that me. My first was a ’68 Galaxie 500. Gas was 25 to 33 US cents and I didn’t have to fill the tank myself. That changed first with the embargo and later with Carter ;p.

  2. Chinese and the EU will be the main beneficiaries. The EU economy is on the edge of recession, low oil price and the prospect of negative interest rates might prevent it.

  3. I’m a free market guy. Hard for me to believe that the fracking revolution was based on the assumption that counties we have no control over would painfully keep crude oil prices high for our benefit.

    • They tried to keep them high for their benefit… And that opened the door to the frac’ing “revolution.”

      • The problem for OPEC and Russia is the fracking/horizontal drilling/tight oil technology that matured in 2007-2010 can’t be “un-invented”. And the resources in the Permian, Bakken and elsewhere are still there. US and Western investment will pour in to those two realities once OPEC and Russia finally declare a Truce and try to move oil back above $60/bbl.
        The only thing Putin can hope for is Democrat in the White House like Commie Bernie who would try to use the power of Executive to stop Texas drillers from surging their drilling again on State and Private lands. Good Luck with that.

  4. So, suppose a price war forces all the US players into bankruptcy. What happens to the wells? I assume the pipes aren’t filled with concrete. yes/no?

    The oil is still there and people know where it is. How much does it cost to bring a well back into production?

    If you force a manufacturer into bankruptcy, the assets and knowledge might be dispersed and would be hard to re-assemble. That manufacturer’s production could be off the market forever. As far as I can tell, that’s not the case with most commodities (in the technical sense of the word).

    • Production will decline because less wells will be drilled. When oil prices recover, the rig count will rise, more wells will get drilled and production will rise again.

      • So the bankrupt company reorganizes and the wells continue to produce. If I’d read what you wrote more carefully …

        • The bankrupt company will typically continue operating its existing production as whats called a “Debtor in Possession”. The oil and gas it produces will continue to flow. It will typically receive some form of DIP financing which will allow it to operate similarly to pre-filing. Lenders are willing to lend DIP financing because they receive a super priority in bankruptcy and are assured of being repaid. Drilling new wells will typically cease or slow dramatically. So to answer your question- things don’t suddenly grind to a halt when they file. On the other end the company will emerge from bankruptcy with most of the debt having been turned into equity in the new emerged post bankruptcy entity.

      • Quite correct David. And the Russians know that too. For Russia right now, fracking is peripheral and proximate, Saudi domestic politics and the on-going jenga-game relating to the US petrodollar and banking system/liquidity are ultimate. As I stated, their (and the Chinese) long game – via BRICS and the SCO – is open and a matter of public record for those prepared to do the work.

        It’s striking how soon many of the commentators here can’t seem to resist the urge to engage in projection and flag-waving when ever the issue of “Russia”! arises. Rather Pavlovian, frankly, and not a little bemusing.

        Seemingly blinded by ideology, few are prepared to rationally assess and acknowledge the level of Russian preparedness for what can quite accurately be described as the “Great Post WW2 Unraveling” – both geo-politically and monetarily. Russia now has close to the lowest national and foreign debt in the world (especially USD denominated), an admittedly modest but nevertheless relatively mixed economy but, more importantly, the highest level of autarky of any major economy – right at the time when we’re “discovering” the pitfalls of (big-G) Globalism. The prime-time TV and think-tank pundit used to pejoratively call it a “gas station with nuclear weapons”. At one time that was accurate, but no more, as perfectly evidence by the game of chicken they’ve just triggered. It’s strategic – but its also a signal. Whatever anyone may or may not think of this reality, the plain fact is that you cannot navigate properly in the world without acknowledging it.

        Best to you, keep the articles coming

        • 1. Putin is still a Commie… of the Stalinist variety.

          3. Russia was only able to prepare for this because they benefited from their participation in OPEC+.

          2. I think this is aimed squarely at the US economy right before our elections. They won’t win a price war with Saudi Arabia, because only the Saudis maintain sufficient excess production capacity to control prices. They won’t gain much market share and what little they might gain in the short term will be temporary. They won’t kill “shale”, but this will kill a lot of companies. The only thing that makes sense is that they did this to stir the already boiling pot of economic uncertainty in a US election year. Although, I don’t think Putin expected Saudi Arabia to hit back this hard, this quickly.

          • Maybe. But a too-parochial US-centric view on these developments is at odds with the historical evidence and the much broader game being played. I’ve gotten to know the US quite well over many years of travelling and doing business there (the US DoD counts as a customer).

            I have to ask: have you never been curious about why the US tends to miscalculate so often, and so badly of late, in geo-strategic matters? The evidence seems clear and consistent: far too many issues are framed through the prism of your internal political landscape, which dictates your choice of leadership and their advisers. Not to mention their corporate sponsors.

            As far as “Putin!” is concerned – sorry, never met the man, and so all I can do is judge his performance on behalf of those who elected him – meaning Russian citizens, not Americans. Though that prism his record is pretty impressive considering the swamp that country had to crawl out from after Yeltsin; a tough guy in a tough neighborhood, and no shortage of enemies without and within.

            You’ve proven yourself as a reasonable, data-driven man David. It’ll take no more than a few minutes to Google how the lives of ordinary Russians – and Russia’s stature in the (non-Anglosphere/non-“5-Eyes”) world – has improved too.

            Where I come from you tend to do better by respecting your opponent’s strengths. Low-resolution, inductive reasoning and name calling can be fun, but tends to be sub-optimal when playing chess.

            Best

          • Maybe. But a too-parochial US-centric view on these developments is at odds with the historical evidence and the much broader game being played. I’ve gotten to know the US quite well over many years of travelling and doing business there (the US DoD counts as a customer).

            I like to think of myself as Texas-centric.

            I have to ask: have you never been curious about why the US tends to miscalculate so often, and so badly of late, in geo-strategic matters?

            In this particular geo-strategic matter, the US government doesn’t really have a “dog in this fight”. The Federal government doesn’t control US oil production.

            Regarding miscalculations… That’s why we keep these antiques flying:

  5. Four observations. Two on oil:
    1. Glad to see a true supply curve. Many moons ago I helped invent them at BCG. Used the tool to ‘crack’ the plywood conundrum for Georgia Pacific—answer was to buy aspen mills in Canada.
    2. Neither Saudi Arabia nor Russia can ‘hold their breath’ as long as the US can. Agree, they lose. Probably a good market buy after bottom is hit.

    Two on coronavirus:
    R0 now estimated to be about 2.5-3. Current WHO is 2.6-2.8. Bad, because flu (depending on how good the annual vaccine is) is 1.2-1.4. Means US will see a lot more cases than now despite effectiveness of individual quarantine (like in South Korea with massive individual testing). General Quarantine of Lombardy in Italy just means a lot more of those about 17 million are going to get sick.

    Case mortality is running about 3.4-3.6 depending on the daily JHU.CSSE.edu data. I figured out a ‘solid’ way to calculate this now. You cannot use total cases because of the outcome time lag. Median incubation 5-7 days to symptom onset, 10 days to either recovery or slide to serious/ critical and then possible death within days. You have to use outcomes: deaths/ recoveries. Problem is recoveries are severely understated because of mild/asymptomatic unreported cases that also ‘recovered’.
    BUT we have the Diamond Princess lab experiment just last week fully reported by Japan now that the ‘experiment’ is over. All ~3700 passengers and crew tested by PCR, some more than once. In the end, 705 infected, 392 with symptoms (fever >100F), 313 ‘symptomless’. That allows a gross up correction to the global recovered denominator (divide recovered by 0.556). Is only a first order approximation because passengers skewed to older reportedly more susceptible than 18 and under, , and some symptomless later did develop symptoms back in US. But the only non-guesstimate currently available. Based on the Diamond Princess ‘correction’ reported mortality is running about 3.5%. VERY BAD. Flu is about 0.1%.

    • Russia can’t hold its breath as long as Saudi Arabia. The US, as a nation, doesn’t have to hold its breath. The oil industry will take a big hit and adjust to whatever the price is.

      Based on Dr. Anthony Fauci, the head of infectious diseases at NIH, the mortality rate is probably less than 1%. We won’t know until we have a better estimate of the number of asymptomatic and mildly symptomatic infections. Right now, the denominator is unknown.

      • David,
        An unknown that I haven’t seen mentioned is the role that severe air pollution and large numbers of male, Chinese smokers may have on the susceptibility to the COVID virus and the severity of the infection in lungs already challenged by the environment. Thus, the numbers we are seeing may not apply to those in the US.

        However, as of today, the CDC has announced that the the death toll from conventional flues in the US stands at 20,000 for the year 2020, while COVID stands at 20! All things considered, it appears that seasonal flues have had a greater impact (1,000X), despite COVID being on the loose since the beginning of 2020. COVID has the potential for becoming serious because there is no immunity conferred from previous exposures. However, to compensate for that, every country is using an abundance of caution to try to contain it. But, I agree with you that the Media, and those infected with TDS, are probably over-reacting — certainly over-reacting to all the bad things that Trump has supposedly done.

          • Interestingly, 73% of the patients were male and 85% of those who needed ICU care were male. However, the sample of 41 is a rather small sample from which to be drawing conclusions.

          • “Interestingly, 73% of the patients were male and 85% of those who needed ICU care were male.”

            If I remember correctly, over 70% of deaths in Italy so far are male.

            As for smokers, it seems extremely unlikely that most deaths in China would be non-smokers when most deaths were male and most Chinese men smoke. Particularly when smoking is known to be a serious risk for those who contract viral pneumonia.

        • Clyde Spencer: “ . . . while COVID stands at 20!
          That is death in the USA.

          Meanwhile from Washington State:
          4 folks died today, bringing the State total to “at least 23.”

          Most of the dead in Washington State are from one elder-care facility, Life Care Center of Kirkland. With 3 to 7 deaths a month on a regular basis, this new virus was not recognized until the deaths spiked above 7.

          At the moment, and for the next few weeks the multi-calculations being done and reported are not worth much.

          • Meanwhile, every day in the US, over 100 people die in motor vehicle accidents, and there are probably ten who wind up injured in critical condition for ever death.
            That is two per state per day, average.
            Five times that many die every day in other sorts of accidents.
            Almost 1700 per day from heart disease (many of these succumb after getting some infection or another).
            ~1640 from cancer…every dang day, US alone.
            (all of these numbers are per day in the US in 2017)
            Chronic lower respiratory diseases kills 439 per day. Per day!
            Over 400 die every day from stroke.
            332 a day from Alzheimer’s.
            Influenza and Pneumonia, over 152 a day.
            Nephritis and related kidney diseases kills 139 people a day in the US.
            And “intentional self-harm”…another 129+ people a day make this decision. Not sure if this includes drug overdoses…I think not, as most drug addicts do not mean to kill themselves on any particular day, just slowly over time.
            https://www.cdc.gov/nchs/fastats/deaths.htm

            Interestingly, the CDC has a separate category for influenza mortality on another page in which they give a number of 6,515.
            Hmmm…
            https://www.cdc.gov/nchs/fastats/flu.htm

            Another stat that is interesting is, that death rate from flu and pneumonia seems rather variable from year to year, although it is in a long down trend from 1950 when it was 48.1/100,000 people (although 1960 was higher at 53.7) to recent years when it has been in a range of about 13 to 15 per 100,000 people.
            And although the rate from any particular cause can vary widely, all cause mortality has been chopped in half since 1950, from 1446/100,000 in 1950 to 731.9/100,000 in 2017.
            Looked at against overall death rates, a year in which far more people than usual die of flu and pneumonia has no discernable effect on the overall death rate for the country.

            https://www.cdc.gov/nchs/data/hus/2018/005.pdf

            Certain conditions predispose a person to a bad outcome in the case of a serious infectious disease, and several common conditions, along with advanced age, do so for respiratory infections.
            Looking carefully across various groups of statistics, it appears there is a strong likelihood that such causes of death have little effect on average longevity or the risk of dying for any particular person in any particular year.
            Maybe this will be the one that changes that, but I am somewhat concerned that this panic could be like when the weatherman warns of a blizzard that never arrives, and then when the next one comes and actually hits, no one pays attention.
            It could go either way, no matter how bad it is or it isn’t.

          • No no Peter, its all about “evil” Vlad and his Democrat sympathisers being mean to our Donald.

            The irony is that there is nothing Putin would like to see more than Trump re-elected. How could he be not be happy with a divisive, anti-science, ignoramous in the Whitehouse?

          • Loydope sez:
            The irony is that there is nothing Putin would like to see more than Trump re-elected.

            I don’t know how a statement could be more wrong than that one. Your ignorance is astonishing.

          • Putin had all of that back when Obama was president, to continue the trend is why he supported Hillary.

      • David, your work is always pretty cogent and, at the very least, entertaining. But in this instance you (and several others) are making a category error. The Russians didn’t “do” anything – they simply elected to do nothing when the Saudi’s came calling cap in hand. To those more familiar with geopolitical/geo-strategic analysis it is quite evident that their refusal everything to do with moving a chess pieces a) in the Middle East, where Saudi’s have been a destabilizing force for decades and the House of Saud’s grip on power looks ever more shaky and b) the on-going (and well documented) strategic effort by the SCO and BRICS partners to undermine US Dollar hegemony in the long term. It is ultimately a move against the “Petro-Dollar” and in this case Russia simply elected to take opportunistic advantage of the growing brittleness of the banking and monetary-policy architecture in the West (and the US in particular). The fate of US shale would only be of passing interest here.

    • What information do you have that the passengers represent an analog of any national population? I see no way to argue it being a random or stratified random sample.

      • Kevin, in my comment I pointed out two reasons the Diamond Princess is not a good sample—only that it is all we have.

        David, as for Dr Fauci’s VERY educated guess, I worked with him personally July-August 2009 on swine flu as explained in a previous post. Nothing but the greatest respect. But, the closest analog here is SARS out of China in 2003. Its mortality was about 10%. The 1% is a 3+x mild/ asymptomatic denominator SWAG not supported by the Diamond Princess facts. Time will tell. Hope I am wrong, but at least I showed my work.

      • No joke. How bout we calculate the mortality rate of the nursing home in Seattle and apply that to the entire population. That aught to scare the schist out of everybody.

        I am actually amazed at how casually the media types refer to the flu and it’s 20K + deaths per year, but somehow that’s ok since we have a vaccine (that doesn’t work half the time). Yet no market crash, and no oil crash. I wonder if the Flu is getting jealous over all the media hype Comoran is getting.

        • The CDC lists deaths as “Pneumonia and Influenza.”
          It does not separate them out.
          Plus everyone who knows very much about this agrees that those people die WITH flu, not necessarily OF flu.
          And since they do not seem to have a separate stat for just flu in their lists of causes of death, I for one am left wondering if whenever anyone cites flu deaths, they are citing the stat on pneumonia and flu, and leaving out the parts about all-cause pneumonia being part of that number, and that many if not most of these people that were one sore throat away from giving up the ghost even if they had not happened to get the flu right then.
          Almost every cause of death is being fought hard, new treatments and medications and tests devised, etc…and yet no matter what they do, all of us are gonna kick the bucket sooner or later.
          In the overwhelming majority of cases, those people are dying from something they would have either shrugged off or just had a miserable week from when they were a little younger and/or healthier and more robust.
          It is very likely that this new disease will have the net effect in the medium and long run of ending some lives a little sooner.

          • Thanks Nicholas, that is exactly my take on this latest headline grabbing end of the world story, too.

          • Do you know if there are any anti-viral drugs that can be tolerated long term? I’m wondering if these might be more effective against flu than vaccines.

          • It depends on what you mean by long term, and what you mean by “tolerated”.
            HIV drugs are generally thought of as being needed to be taken continuously for the life of the patient, unless Gilead or some other company is successful in finding a cure. Gilead is working on it.
            HVC drugs prior the DAA’s that became available starting with Harvoni, were taken for anywhere from 24-48 weeks.
            Some of them had absolutely awful side effects.
            Many people could not tolerate them at all. Some had suicidal ideation listed as a side effect, if that helps get an idea of how bad they made someone feel.
            So, yes there are ones that can be taken long term.
            Whether anyone without a virus or some specific reason to think they have been exposed or are at high risk of being exposed, would ever want to or be able to afford to take one or more of them is an open question. I am doubtful, particularly given the cost of them. Insurance paying for some of them can be very difficult to get in a timely fashion. Some insurance companies will pay for some and not others for a given condition.
            Anyone needing to pay cash out of pocket on a “just in case I might someday get exposed” basis may have trouble finding a doctor willing to write a prescription for this usage, and be unable to ever afford the drugs if they could, unless they were very wealthy.
            Then there is the side effects.
            The standard for what is tolerable is different for someone with a deadly virus like HIV, than it is for someone who is kind of worried they might get sick someday in the future.

      • A sister-in-law is on the Grand Princess cruise ship, now docked at Oakland, CA. Today they took the sick, interior cabin folks, and Canadians. The Canadians will be taken to Canadian Forces Base Trenton, east of Toronto
        Getting all off is expected to take 3 days.
        She will likely be sent to Travis Air Force Base for 2 weeks. Travis AFB is 40 miles NE of San Francisco.

        Aggressive action is being taken in Washington State (Seattle area) and with the Grand Princess.
        With these cases, and similar, clarity will improve in 15 days.

    • Here are the numbers for the Diamond Princess: total cases 696 total deaths 7 total recovered 245 active cases 444 serious, critical 32

      Also, globally the death rate as compared to those recovered has been in a free fall since sunday february 2:
      2/02 41.8%
      2/09 21.5%
      2/16 13.9%
      2/23 9.5%
      3/01 6.3%
      3/08 5.8%
      (the daily data forms a nice hyperbolic curve)

      You would think that they could get a random sampling, say here in the u.s., send it over to rasmussen and have them figure it out. (just like they nailed the last election… 👍) At any rate, as the weeks go by we’ll all get a better feel for just how this is shaking out.

      Question for Rud: how might the Diamond Princess differ from the world populace at large?

      Note for DM: the fed can in large part be blamed for the panic. We’re more or less teetering on a recession with growth as slow as it’s been anyhow and that should be factored into investors’ jitters. If trade talks a year ago w/ china could cause a near collapse, then investors are already weary. Everyone else always gets the rap, but never the fed. (and, no, trump tweeting that powell is a bonehead is not the equivalent of getting the rap)…

      • Fonzie, I tried to answer your excellent questions in my main comment. To be even clearer. There are at least two known Significant differences between Diamond Princess and, say, northern Italy.
        1. The population sample is skewed elderly by the passengers. The Japan final report gives the actual age distribution including crew. The China data says younger people have milder symptoms, and also that ( for unknown reasons), people under 18 are less infected, period. Both skew the infection rate AND the symptomless rate in favor of alarm and higher mortality.
        2. Diamond Princess is an artificial situation where true quarantine was a joke. So ‘symptomless’ could be an artifact of incubation period—and that was shown true by the eventual US evacuees.

        I said those ‘experimental’ numbers were shaky. BUT they are the only experimental numbers we yet have from anywhere. I am not into ‘educated guesses’. That’s a climate Change thing. There are three end argument conditions: you verified know (general relativity), you know you don’t know, you suspect based on checkable logic and fact. This comment is category three. Bring alternative logic and facts, we can debate.

      • Average age of people taking ocean cruises is far higher than the general population.
        Numbers taken from a brief scan of internet search queries on the question are like this:
        – Average age ~55.
        -Age range on cruises 25-85, percentage of people below 55 is about 20%. (gen.pop. in US, ~72% of people are under 55.)
        -Average age about 70
        -97% over 25 years of age
        -One cruise line specializes in geriatric cruises.
        -River cruises appear to be targeted at older folks.
        -Norwegian Cruise Line passengers were on average 52.5 years old, and even family-friendly Costa Cruises had an average age of 52.2. For cruise lines that targetted families with children, the average age was noticeably lower; Carnival had an average age of 44.9, and Royal Caribbean passengers had an average age of 48.8.
        -Jan 08, 2020 · Keep in mind, the more expensive a voyage or the smaller the cruise ship, the more likely you are to find a passenger demographic of 55 and older. Best Cruises for Young Adults …

        Cruise ships tend to attract people with plenty of money, who are married, and who have lots of time to get where they are going the slow way.

          • I have mentioned that elsewhere.
            Those things have recirculated forced air and have thousands of people crammed into close contact for weeks at a time.
            This question was only regarding demographics.
            I can recall numerous instances over the years where a cruise turned into a cauldron of disease.
            There was one not too long ago that made headlines for days and days when a large number, maybe everyone, had some very unfortunate G.I. thing with very nasty symptoms of a very yucky nature.

            Here it is:
            https://www.nbcnews.com/news/us-news/nearly-500-people-are-now-sick-royal-caribbean-cruise-ship-n957821

            It was only a year ago in January.

    • You did not account for the demographics of the passengers on the Diamond Princess. My understanding is that the age of the passengers was clearly skewed towards the elderly, who are much more vulnerable to the coronavirus. The mortality adjusted for age distribution is probably much lower than your estimate.

    • But Ryan, must also factor in age and health conditions of the people that actually succumb on the ship.
      Mortality may be greater than 30% for those over 70 or with severe underlying health conditions, yet only 0.1% for those under 60 and otherwise in very good health. The Cruise ship passengers are not automatically a good number to use for the general population.

    • Rud, your analysis of the Diamond Princess mortality seems solid to me. It does contrast somewhat with the South Korea experience so far. Their much higher rate of testing seems to be identifying an infected population with a high percentage of milder cases resulting in a much lower mortality. Of course, as you say, the time lag factor between symptom appearance and mortality creates uncertainty, although the Koreans are reporting far fewer serious cases, so far.

      I’m wondering if one difference in these two populations could be the initial infectious dose. There is some evidence that the 1918 influenza mortality correlated with intensity of the initial infectious exposure. Maybe the close quarters of a cruise ship led to higher initial exposures.

      • Probably in many cases with ongoing inoculation from whoever was spreading it around.
        Cruise ships are not designed to be infectious disease quarantine facilities.
        It has long been commonplace to hear about cruises where a huge number of people came down with some ailment.

        • “It has long been commonplace to hear about cruises where a huge number of people came down with some ailment.”

          Noro virus and Legionnaires Disease come to mind.

    • IMO, South Korea’s statistics are more reliable than Red China’s. RoK figures show deaths so far under one percent.

      https://www.worldometers.info/coronavirus/country/south-korea/

      Still early days, but with likely underreporting of mild cases, I think fatality is liable come in less than three percent. The cruise ship figures are skewed by age, IMO. And possible repeat infection in close quarters.

  6. Subject: Coincidences?
    SARS – 2004
    AVIAN — 2008
    SWINE — 2010
    MERS — 2012
    EBOLA 2014
    ZIKA 2016
    EBOLA 2018
    CORONA 2020

    What makes anyone think that this attack on US oil is simply a shot from only the Russians?
    Does anyone really believe that Corona and the attack on US oil are coincidences?
    Does anyone think that China isn’t very pissed about being much, much more than simply humiliated during the “Trade War”?
    Is it possible that we may be witnessing the beginning of WWIII? –China, Russia and Saudi Arabia versus The United States of America?

    Who benefits the most if The United States is brought to her knees prior to the most historical election in United States History?

    • Saudi Arabia and Russia may both be dictatorial states but they make unlikely allies

    • Everything is interconnected in some manner. It’s not likely that China, Russia or Saudi Arabia could predict the outcome of release of a manufactured virus and all three, like us, are producers than need customers. It’s not a good business model to kill your customers, and oil markets are international. Certainly, frackers are getting hurt, but others are too.

      That said, trade wars are real and on-going. Even Corona beer sales are down. A lot of what is quickly happening is irrational. Of the countries in question, Russia has the fewest COVID-19 cases. Suspicious? Probably not and besides, many U.S. sectors like low oil prices, just like hospitals and drug companies like patients.

    • That Russia may be using the confusion caused by the over reaction to covid-19 is always possible.
      The idea that they had anything to do with the covid-19 virus itself is the stuff of paranoid fantasies.

      The idea that China, Russia and Saudi Arabia all working together in secret is to bizarre for even paranoid fantasies.

      • Toss in Evil British Bankers into that cabal, and I know of one poster whose paranoid fantasies would quickly accept it as believable. But for the rest of us, you are indeed correct in labeling such fantasies as “too bizarre”

    • Codetrader,
      Did you bother to check on those dates before you passed on this crapolla?

      The real dates:
      -SARS, November 2002 to July 2003.
      After the election, cleared up by the next one. Vast majority of deaths no where near the US. US, 27 cases, zero deaths. Golly, how awful.
      – Avian Flu, Disease called bird flu first identified in 1878. Strain H5N1 first isolated in a goose in China. First human infection in Hong Kong a year later. Since then about 700 human cases of the high pathogenicity strain have been documented in over 60 countries, almost none in the US. There is a low pathogenicity strain in North America.
      This is a virus endemic in birds, and there are actually many strains. H5N1 is the most concerning, as it is very deadly for people who get it, CFR ~ 60%.
      But there are no documented instances of human to human spread, except for one possible spread in Sumatra within a single family. People get it from birds, birds have been known to die now and then in large numbers. It is only a worry that it might one day mutate or combine with human transmitted strain and cause a pandemic.
      The again flu outbreak in 2008 was confined to West Bengal in about a dozen districts. It was being spread from poultry to people sporadically, and the populace resisted efforts to cull the flocks. Nothing to do with the US whatsoever. Only bird flu here is low pathogenicity strain, but birds have long been know to harbor influenza type A.
      -Swine around the world harbor many known strains of flu…always have. In 2009(not 2010), a strain appeared that is a mixture of three known strains. It is known where it came from. It has burned out by 2010, with the pandemic mostly tapered of by Number 2009, very sporadic in May of 2010, and no known cases and declared over by August. It came from Mexico, near Veracruz. Are they in on this conspiracy too? BTW, that flu was no more serious than any regular flu, statistically.

      – MERS, Did have the first case in 2012, but almost everyone who got it that year was on the Arabian peninsula. A strain found in London is identical to Egyptian tomb bat flu. Cases have occurred sporadically since 2012… It has never been a U.S. problem or disease, it comes from camels, and has never been an issue here in any election. I bet few Americans ever heard anything about until this year.
      -Ebola, There had been at least 24 outbreaks since the 1970s until 2013, and several since then.
      The worst began in 2013 and was almost exclusively confined to West Africa. There has never been a case of community spread Ebola in the US. The 2013 outbreak lasted until 2016. March of 2016. I recall zero times it affected an election in the US. The only US cases were from people brought here for treatment after being infected while volunteering to help in West Africa, and a few health care workers who got it from them. It spread to no one else. Never a campaign issue, there were exactly two cases here that where not caught elsewhere. Both were nurses, both recovered and are fine. One of the nine people who came here with it ( 7 evacuees, two who were found to be infected after arrival) died, the rest recovered.
      – Zika, This disease was discovered in the late 1940’s. The recent outbreak started in 2015, not 2016, and it was mostly in Brazil and other tropical countries.This disease has been travelling around the tropics since it was discovered in Africa in 1947.
      It is a minor concern in the US, although many may have first heard of it in 2016.
      So what?
      It never went away. Mosquito spraying in Florida has been stepped up. Yay! There are way led than there used to be. That no event did me a big favor. The are many diseases spread by mosquitos, often far worse than Zika…like Eastern Equine Encephalitis.
      -Ebola, Again? Seriously?
      There have been overlapping outbreaks in Africa since it was discovered almost 50 years ago. I read several books about it in the 1990s. Ebola 2018 is not a thing, unless you want to snatch one year out of a three year long outbreak. Just inane, obtuse, contrived, mostly wrong, and irrelevant to the US.
      – Corona, Have you ever checked out the CDC ongoing publication called Emerging Infectious Diseases?
      Probably not.
      At any given time, dozens of awful diseases are killing large numbers of people all around the world.

      Every word of this unhinged rant is ignorant babble flavored with paranoid conspiracy mongering and fever dream imagined significance.
      Get a grip.
      Read a book.
      Do some checking next time.

      Not a good look to be a dupe for dumb ass made up internet BS.
      I mean seriously…did it ever occur to you to verify a word of that crap?

      • Typo’s! Dang.
        Kindle Fire agin.
        This, “The again flu outbreak in 2008…” should say, “The Avian flu outbreak in 2008…”

      • Thank you Mr. McGinley for correcting the dates. Your personal attack on me was and is not warranted; unless of coarse you’re God. Thinking you’re better than another is not a good look on you, sir!

        My post attracted your attention and like a Jack in the Box, you pooped up. (popped). So, Jack, how would you answer the questions I asked in that post if you had been able to get past the lead in to them? Thank you in advance for your next reply.

        Hint for one of the questions:
        “Opec bid to kill off US shale sends oil price down to 2009 low

        Oil falls by $2 a barrel with energy shares as Opec refusal to stop flooding the market with cheap oil and likely US rate hike sends Brent crude tumbling

        Oil prices have slumped by 5% after the latest attempt by Saudi Arabia to kill off the threat from the US shale industry sent crude to its lowest level since the depths of the global recession almost seven years ago.

        Signs of disarray in the Opec oil cartel prompted fears of a global glut of oil, wiping $2 off the price of a barrel of crude on Monday and leading to speculation that energy costs could continue tumbling over the coming weeks.

        Shares in energy companies lost ground as the impact of the drop in oil prices rippled through European stock markets. Prices of other commodities also weakened following disappointment among traders that Opec had decided late last week to keep flooding the global market with cheap oil.”
        From an article more than 4 years ago at:
        https://www.theguardian.com/business/2015/dec/07/opec-plan-kill-us-shale-oil-price-down-seven-year-low

        Just so you understand, Jack, The Saudi’s have been here done that before…..and blaming it on the Russians today doesn’t change the fact that US Shale in once again under attack in 2020 at the same time The United States of America is under attack from a Pandemic Virus exactly at the very same time.

  7. My prediction 2 cents worth by November 2020 the USA stock market will be ~32000 this virus will have spread throughout the world with virtually no mortality anywhere with natural resistance everywhere similar to the normal flu and Trump will win both the House and Senate with huge majorities. Aka Im saying this will kick back really bad on the Democrats if they are trying to blame trump for this at this moment and BTY temperatures will be normal cheers enjoy your life while you can

    • Eliza,
      I personally do not know of, and can barely conceive of, even one single human being deciding to change their vote from Trump to Bernie, Joe, or whoever they throw out there on the other side, over a virus or anything else.
      And I also think it is more likely for public ire to fall hard upon anyone trying to demagogue a public health issue which leads to a stock market correction/bear market, which includes trying to blame it on whoever happens to be sitting in the White House,
      The one part of all that I am fairly certain of myself.
      Predictions are hard, eckspecially about the future.

      Oh, and the House and Senate, definite majorities in both, but not sure what counts as huge in the House. Winning back the 30 some seats that Trump won in 2016 but Dems stole in 2018 seems likely at the very least.
      We have an outside longshot chance at 60 in the Senate, which would be incredibly yuuuuge-mongous.
      Because it means budget issues would not be subject to Democratic filibuster.
      Personally I have no idea why Mitch has not ended that rule for budget related issues, etc.
      The Dems have stated flatly they are gonna the very next time they have a majority, plus stack the Supreme Court, institute litmus tests for judicial appointments (At this point in time an actual litmus test for judges and justices has always been about the one no-no that has not been overtly violated.
      As far as I am concerned…one side saying they are gonna do it is just as good as them doing it, and then it is fair game to spring it on them first.

      • “I personally do not know of, and can barely conceive of, even one single human being deciding to change their vote from Trump to Bernie, Joe, or whoever they throw out there on the other side, over a virus or anything else.

        And I also think it is more likely for public ire to fall hard upon anyone trying to demagogue a public health issue which leads to a stock market correction/bear market, which includes trying to blame it on whoever happens to be sitting in the White House,”

        I agree. I think the Democrats are harming themselves when they try to take advantage of the situation to try to blame Trump. Everyone can see Trump is not to blame for the virus or the stock market decline. Everyone not vulnerable to leftwing brainwashing, that is.

        Trump’s 63+ million voters are not going to be blaming Trump.

  8. The stupidity of humans is much worse than a occassional coronavirus which is THE flu virus. The real virus is human stupidity enhanced by social medias and computers. It will be all over in 4 weeks billions will be lost due to human stupidity read Einstein re human stupidity

    • Eliza
      “The stupidity of humans is much worse than a occassional coronavirus which is THE flu virus.”
      This is the funniest thing I have read in a while. I’ll give you a clue why…. Covid-19 is “not” a flu virus, so the word “stupidity” being used to describe others, is, well, just so humorous.

      • Very humorous… It’s a coronavirus that increasingly appears to be looking like a flu virus, walking like a flu virus and quacking like a flu virus

        • Sorry, but saying it will not make it true. They are different virus’s that have some similarities. But they are not the same, which is why we can’t treat them the same. We know a lot about the flu and it’s variances, but there is a whole lot more we don’t know about covid-19. What we do know is it seems to spread faster and kill more people, and that is enough to scare the people who know about this stuff. And I will take the word of the virologists on this, over a mouthy president who says he has a “gut feeling” and misleads the public…. “cases are falling in the US.”

        • The corona virus in question is gray and has little red features like broccoli stalks sticking out of its surface. I’m told that influenza viruses look quite different and don’t quack or have legs.

          • *Nick munches popcorn and does the tennis fan swivel-head thing*
            -Point and set to scissor. No feathers on a virus is my read too 🙂
            But thought those red thingies were croutons with red wine vinegar on ’em.
            And there are a few little daisies sprouting around the base of them croutons.

        • Dave, nope. As posted before, based on hard earned real knowledge.

          Influenza spreads mainly via inhaled aspirate. Those (in cold winter exhaled ‘smoke’ particles) are very fine. In winter they dry out in dry indoor air and can remain airborne for hours. In summer humidity they don’t, sink to where cannot be inhaled, and that is why influenza is seasonal.

          Corona viruses ( including Wuhan and the four causing common colds) spread mainly by either physical contact (hand face) or very close personal proximity (cough droplets).

          The R0 of Wuhan ( yes, I know the official PC name is SARS-CoV-2 and the disease is CoViD-19) is somewhere between 2.5 and 3. The R0 of influenza depends on vaccine effectiveness but is usually between 1.2 and 1.4. So Wuhan is much more,infective even tho the transmission route is much more amenable to individual quarantine.

          We have agreed to disagree about mortality. Fauci guesses maybe 1. I presented a hard experimental based analysis for about 3.5%. Flu is about 0.1%. We dunno. But no way is this just a ‘flu’.

    • Try reading the post before making moronic comments. Russia refused to cut production, triggering a price war with Saudi Arabia.

      From the post…

      The Russian ruble plummeted almost 10% overnight, falling to its lowest level in more than four years, as oil prices crashed following the breakdown of the Russia-Saudi Arabia pact to limit production.

      The ruble was trading at a low of 74.9 to $1 on Monday morning, after another wild start to the week for financial markets. Russia’s rejection of a renewed round of oil production cuts in the OPEC+ format at a crunch meeting in Vienna on Friday shocked the global energy markets and has prompted analysts to talk of an “oil price war” between two of the world’s largest energy suppliers.

      https://www.themoscowtimes.com/2020/03/09/russian-ruble-plummets-amid-oil-market-chaos-a69562

      Russia won’t win the price war with Saudi Arabia. Putin has to realize this. Russia won’t gain market share. Putin has to realize this. The only things he had to gain were 1) tanking the US oil industry 2) worsening economic turmoil ahead of the US elections.

      • Try taking a course in econ 101. The Saudi price cut was the proximate cause of the collapse of crude prices. Russia’s refusal to cut production did not cause world crude prices to fall.

        • Try reading a little actual news. The reason why the Saudi’s started this oil war was because Russia refused to cut their production.
          Even the Saudi’s have admitted as much.

          • Apparently Russia was miffed that there was an agreement made before they were in the room and they were basically “told” what they were gonna have to cut.
            They were offended, perhaps rightly so.
            No one would like to be treated that way.
            That is not how deals get made…it was very undiplomatic and in fact rude and may have been calculated to cause them to refuse.
            Maybe it is Machiavellian machinations thought ahead umpteen moves in advance…or maybe it was just hard headed meets rude and impolitic and the result is they all get far less money for their oil than if they had agreed to some cuts in the face of reduced demand.
            The price was already falling for quite a while for several reasons.
            On January 8th the price for /CL on the futures market topped out at just over $65 a barrel, about a dollar shy of the April 2019 peak of $66.6.

            Since January 8th, the price had fallen precipitously all the way to the lowest price since 2016, even prior to the Friday meeting, in the low mid $40s range.

            The funny thing is, I recall when most people were very happy when the price of oil and gasoline were very low.

          • “The funny thing is, I recall when most people were very happy when the price of oil and gasoline were very low.”

            The stock market talking heads get all exercised over falling oil prices because they look at it from the perspective of the Fat Cat investors. And sometimes falling oil prices mean slowing economic activity, but that doesn’t apply to the United States currently.

            For most people, lower gasoline prices are a good thing. And they are a good thing for the U.S. economy. The lower, the better.

          • Falling oil prices hit companies in the oil industry immediately and hit hard.
            Low prices benefit people first, and then this extra money slowly trickles up to companies, which then trickle up to other companies over time.

            The stock market does and always will react to stuff that is happening now in preference over stuff that will happen in the coming months and years.

          • Conventional trader wisdom has long been that the market looks ahead six months.
            But there are other aspects.
            One of the biggest has always been uncertainty.
            Markets hate uncertainty.
            No one can say what earnings will be in six months, so what is the correct price for a stock?
            So now with no fundamentals to trade on, the market is trading on technicals.
            Plus the market was at the top of a parabolic move up that was incredibly monotonic.
            Even now a lot of the biggest companies are only back to where they were less than 6 months ago.
            Prior to yesterday AAPL, MSFT, and many others, had retraced to October stock price, which at the time were records and was thought by many to be lofty and unsupportable even then.
            Price channel on the S&P 500 index going back to 1930 has only been breached on the high side in the late 1990s, and a couple weeks ago it was edging above that long term top of the channel again. Bottom of the channel is around 40-45% lower than where the index is now. That represents a worst case scenario.

      • Russia’s position was to maintain the existing production limits, no to increase or decrease them. Hardly an attempt to start a trade war.

        I seems the arab countries tried to force a new outcome on Russia with the threat of a trade was if they did not comply.

        You know that if every time someone laughs in the street you assume they must be laughing at you, it’s a sign of paranoia. The same goes for thinking everything which happens in the world is aimed “interfering” in your elections.

      • You posted: “oil prices crashed following the breakdown of the Russia-Saudi Arabia pact to limit production.”
        ……
        No they did not, they crashed when Saudi Arabia lowered the price on existing export contracts.
        ….
        You may know how to drill a hole in the ground, but you don’t know squat about economics. Ditto for epidemiology.

        • The Saudi’s lowered prices because of the breakdown of the Russia/Saudi pact.
          It’s been in all the papers.

          • If I had more clearly laid out the chain of events of the past 24 hours, I wouldn’t have provided an opening for trolls

          • If the Saudis did not cut prices, the Russian move would not have had any effect on crude prices.

          • This article is much like your previous article about the market and COVID-19……a total failure: https://wattsupwiththat.com/2020/02/26/the-covid-19-stock-market-crash-deja-vu-all-over-again/


            The “market” is a lot smarter than you, and based on it’s performance since you published the above mentioned article…….you know nothing about economics, finance or epidemiology.
            ….
            Guess the “market” knows much more about crude oil than a hole digger.

          • Henry, how much are the Russians paying you.
            Nobody is as dumb as you have been for free.
            The Soviets do something that the whole world knows the Saudi’s will have to respond to, and in your mind the Russians have nothing to do with anything that happens next.
            Really.

            The fact that you failed to read and understand the article on covid-19 is only evidence how desperate you are, it says nothing about David or the article.

          • I did, and the refusal of Russia to cut production did not cause the price of oil to crater. The cause was Saudi Arabia’s price cut. The crude market did not react to Russia, it reacted to Saudi Arabia.

          • I can’t help you on this. If you are too stupid to look at “A” before “B” and “C”… 🙄

          • PS Middleton, your mind reading abilities suck. You seem to be projecting your belief system onto Russia, and erroneously ascribing to them motivations, of which you have no evidence. Did it ever cross your mind that it might be that Russia is attempting to protect it’s market share, and not attacking the US fracking industry? Too bad you are infected with a bizarre and conspiratorial view of Russia. Your MAGA hero wants to improve relations with them.

          • Good fracking grief! Read the fracking post! I specifically stated that this was clearly a Russian effort to capture market share.

          • The Saudi’s did not cut prices, they increased production.
            The fact that you can’t get even the basics of the story right is just more evidence that you have no idea what you are talking about.

          • Technically, they discounted prices to specific markets. It will take at least a few weeks to crank up production.

    • In a desperate attempt to confuse the issue Henry Pool manages to miss all the news except that which satisfies his desire to divert blame from the Russians.

        • Even CNN can get the sequence of events right…

          The kingdom and Russia came together to form the so-called OPEC+ alliance in 2016 after oil prices plunged to $30 a barrel. Since then, the two leading exporters have orchestrated supply cuts of 2.1 million barrels per day. Saudi Arabia wanted to increase that number to 3.6 million barrels through 2020 to take account of weaker consumption.
          _
          But Russian President Vladimir Putin, worried about ceding too much ground to American oil producers, refused to go along with the plan and his energy minister, Alexander Novak on Friday signaled a fierce battle to come for market share when he said countries could produce as much as they please from April 1.
          _
          Why did Saudi launch a price war?
          _
          Simmering differences over how best to manage global oil markets spilled into the open at a meeting between OPEC and Russia in Vienna on Friday. After Russia said it was ditching the alliance, Saudi Arabia warned it would live to regret the decision, sources who attended the meeting told CNN Business.

          https://www.cnn.com/2020/03/09/business/oil-price-crash-explainer/index.html

          • According to some, no matter what the Russians do, it’s always the fault of other people for reacting to the Russian actions.

        • Henry, do you actually live in a world where actions have no consequences?

          How much are the Russians paying you to make a fool of yourself?

  9. The Russians refused to cooperate with OPEC to attempt to destabilize the US Government and our allies. Whether it will be good for them is unknown, but they are willing to take the risk. They are the KAOS of now, for those who remember Maxwell Smart. The only organization I know of that does this as well or better than the Russians is the Democratic Party.

  10. Wyoming has spent itself into using reserves celebrating building schools, fluff projects that look pretty and the usual over-abundance of housing. Time for oil to fail…..

  11. So the virus isn’t the cause of the low market, its a excuse to attack america? And make millions if not billions for those who know how to play the stock market, As oil dictates the markets flow?

    I’m totally new to stock markets, but I read a comment about trump, and he tweeted that influenza kills more people yearly then the current virus, and the world carries on as normal.

    If so, did sars or any other virus cause the markets to fall?

      • Dave middleton

        the virus really is just a excuse to attack the dollar? Poor timing, yet if the greens get their way, what would happen to the markets with no oil/gas? No world trade due to no transport?

        Typical how the news media hypes every thing up, while people get anxiety and depression.

        • “yet if the greens get their way, what would happen to the markets with no oil/gas? No world trade due to no transport?”

          If the Democrats were to gain the presidency and outlaw oil and gas, the rest of the world would continue on about their business, while the U.S. went bankrupt. The rest of the world is not going to give up oil and gas. Democrats are the only ones foolish enough to suggest doing that.

    • influenza kills more people yearly then the current virus, and the world carries on as normal.

      True. Think about that.

    • Low oil prices can actually cushion the effects of the virus, it totally depends on the economy of a particular country. Even within a country different segments of the market will react differently.

  12. If everyone was separated for about 10-14 days, there would be no further transmission outside the home. Infected people in the home could be isolated from the uninflected. This is what Korea did. They solved the problem in 2 weeks. We’re going about this all wrong.

    This is the message of Professor Yaneer Bar Yam, key figure in complex systems research. Listened to him on Jolly Swagman podcast.

    https://mobile.twitter.com/JosephNWalker/status/1236927375889199105

    • If everyone is separated for 14 days, we all run out of food and many other essentials.

      It will definitely get rid of the virus, but also most people. Definitely a socialist solution!

      • Oh, stop. If you are not prepared to hive at home for at least 2 weeks, then you are not prepared for the many unpredictable emergencies that come our way. For California, the betting is on (relatively) large earthquakes. Get real. Consider the truths of Darwin and evolution. Your choice — for good survival or not.

        • I was without power for over two weeks back after Irma.
          No where to go, nothing to do…

  13. in a normal flue year- “illlnesses range from mild to severe and even death. Hospitalization and death occur mainly among high risk groups. Worldwide, these annual epidemics are estimated to result in about 3 to 5 million cases of severe illness, and about 290 000 to 650 000 respiratory deaths”

    so an average of 20- 60,000 deaths a month.

    hmmm, a few months in on corona and we are talking in the hundreds. Really give me a break. This is full on stupid.

  14. There were Black Swans flying all over the place today.

    They blackened the sky…same forecast for tomorrow is likely.

    It’s not often that I get to sit comfortably at home while loosing over a few year’s worth of income in just a few days…and none of the reasons existed a few months ago. And none were the reasons we’ve all been keeping our eyes on for decades.

    Cheap oil and a foreign virus were not on my radar as threats that long ago.

    Too many unknowns floating around and apparently even more unknown unknowns.

    • First Murphy’s Law: Everything that can go wrong will go wrong.
      Commentary on the First Law: Murphy was an optimist.

    • Tomorrow will be different (or not) I guarantee it. Eliza’s prediction might be off to a good start (or not).

      Since I bought some USMV at the close, a bounce would be nice.

  15. Russia is a complex country like the United States. The Russian State department wants to cut oil production in order to make the Saudis happy with the Russian oil companies wanting to let market forces work and do not believe in cutting production. My understanding is that the Russians believe that the Corona recession is temporary therefore there is no need to cut production. Lower oil prices will force the exit of marginal oil producers in both the US and Russia.

  16. “There are already indications that Red China’s economy is starting to rebound.”

    I have a very close friend who runs a company that manage supply chhains into China. He forwarded the report from his VP-HR today. Their China based employees are back to work. Their suppliers are functioning at 90% in the upper part of the chain and 80% in the base.

    I think this thing will blow over, It was 62 here today. Forecast upper 50s lower 60s here for the rest of the week. I don’t expect spring until mid April hereabouts. But, the warm weather will kill the epidemic. it always does.

    • Let’s hope Covid-19 also has a flu-like seasonal aspect… It would complete the “walks like a duck” analogy.

      • I wonder about that. Rud says the flu virus is airborne and can stay that way for long periods of time in an environment where there is low humidity such as during the winter, and when things warm up this also increases the moisture in the air which causes the flu virus to no longer be airborne.

        Whereas the coronavirus is passed by hand to face contact or by close contact to someone infected who coughs out droplets close enough to another to get them infected.

        So it would seem that warm weather would not have the same effect on the coronavirus as it does on the flu virus.

        Which brings up a question: Are room humidifiers an effective way to combat the flu virus during the winter? Would this “wash” the flu virus from the air in the room?

        • I am not so sure its the humidity, i have heard this before but the infection rate in mid latitudes starts dropping well before the humidity rises. Typically in April, I am wondering if its Pollen has something to do with it. There is a huge increase in air born particles around the same time the flu start subsiding, the particles could be scrubbing the air but also cover everything in sight as well.

          • Winter weather forces people to stay inside and be in contact with infected people. In warmer weather, people can go outside. Are your chances of being infected higher in a gym or running in the park?

          • Walter

            however the flu season starts ending even before the weather turns to the point where are outside all the time. I know the humidity argument, I know the confinement argument and the UV argument just not sure the evidence supports any of them, it may but I don’t think so.

  17. In 2019 Russian oil and gas account for 57% of total exports and about 45% of federal government revenues. It is 15% of their GDP. That is down from 2012 at 70% and 55% respectively. They must feel that they can survive this because they survived 2014 when they were in a much weaker position. They have stated that they can go 5-10 years with oil at $25 to $30. We shall see.

    The Saudi government needs $80+ to break even for their spending but Russia is $50+ but Russia just pushed through some major pension reforms. Interesting times to be sure.

    The crash is solely caused by Saudi Arabia trying to punish Russia for not accepting their deal. The Russians were okay with staying where they were production wise but refused any further cuts.

    I think this will hit tar sands the worst and shale oil second.

  18. 1. Covid-19 is neither the Spanish Flu nor a seasonal flu. Unlike SARS, it doesn’t kill aggressively. It can be deadly, but for the most part, the real worry is about the duration of the illness.

    2. 4 out of 5 cases lie somewhere between a cold and seasonal influenza, lasting 2 weeks, give or take. It’s the 20% that can’t just power though it that have the medical community worried. Those unfortunately develop something more analogous to a 3-6 week case of viral pneumonia. Not often deadly, but it needs lots of attention and care. Our health system hasn’t had this sort of shock since the polio outbreaks of years long past.

    3. Don’t panic, but don’t be stupidly optimistic either. Have contingencies in place for the hiccups bound to occur, such as school closures or parts shortages.

    4. Our goal is to slow the progress of the disease. Fortunately it doesn’t mutate like HIV, and a vaccine is 12 to 18 months away.

    • There are a lot of interesting things about this virus. It was reported that the most serious cases involve patients with high blood pressure, which also correlates with age.

      Remdesivir does appear to reduce symptoms and mortality and may even have a preventative effect.

      • Then I am doomed… 61, asthmatic since I was 4, high blood pressure and a petroleum geologist… 😎

        • I don’t know about Wuhan Flu, but asthma isn’t considered a significant risk in cases of common viral pneumonia. High blood pressure is a moderate risk, though.

          On the bright side, the median age of deaths in Italy as of a couple of days ago was 81, so you’re probably not even close to doomed.

        • HA! We all have our problems, David. Along with being a metallurgical engineer, mine other problems are too long to list…. None the less, I say Carpe the hell out of the Diem!

          There are just too many unknowns associated with the Wuhan virus, as of yet. We are left with the admonition from a country veterinarian, about the cat’s hair balls “This too shall pass!

        • If you have the lungs of a 4 year old, then apparently you have nothing to worry about.

          You might want to do something about the high blood pressure though. On the other hand, not many petroleum geologists have died from the illness, so that’s either good or bad.

    • 12 to 18 months would be a miracle.
      On average, it takes about 12 years for a new drug to go from the lab to being available with a prescription.
      And about 5 or so out of every 5000 drugs that begin the process pass the initial safety screening and are ever given to a single human volunteer in a Phase I trial. About one of those five, on average, will make it through the process to apply for FDA approval…and that aint no sure bet neither. Just ask any biotech investor.
      The poor house is filled with them.
      Toss in a Presidential candidate screaming bloody murder if the end product is not given out to the whole world for free, and one might have to try hard to think of any reason why any company will spend the billion or more dollars required to get a drug through clinical trials. One billion would be unheard of level cheap, too.
      So yeah…let’s all be very hopeful, but keep in mind that neither of the two most hyped vaccine makers have ever actually made a grand total of zero actual approved vaccines to date.

    • “Our goal is to slow the progress of the disease.”

      Yes.

      Slowing its spread down as much as possible will give us more time to develop treatments and ramp up production of medical supplies and get our supply chains in order. I heard yesterday it is being proposed to designate drug production as a national security interest and the Defense Department is going to lead on this and make sure the U.S. has all the medicines it needs.

      • Slowing the spread also decreases the number of new cases hitting the medical system. Which lessens the chances of the medical system being totally swamped.

  19. You did not account for the demographics of the passengers on the Diamond Princess. My understanding is that the age of the passengers was clearly skewed towards the elderly, who are much more vulnerable to the coronavirus. The mortality adjusted for age distribution is probably much lower than your estimate.

  20. “if there is anything we can learn is that the fall in oil prices responds to the forces of supply and demand. On the demand side, lower economic activity throughout the world, specially in China, has lowered the price of oil.

    OPEC is an organization of civil governments that seeks to keep out competitors. Then it seeks to impose production quotas on its members and avoid “cheating,” i.e., secret price cutting by members in order to sell more oil than their respective quotas allow.

    OPEC needed to do something drastic to remind everyone how important they are.

    All of them have a massive welfare state which need to be fed.”

    • Yep. And Russia’s participation in OPEC+ was kind of like being “a little bit pregnant”… Either you are, or you’re not.

      • Unless you’re pregnancy non-binary – hey if you can be gender non-binary than why can’t you be pregnancy non-binary too. /sarc

  21. Blackmon’s Forbes piece, assuming that Russia INTENDED to spark an oil price war instead of hoped to get away with breaking its OPEC quota so it could raise more money, is ludicrous.

    If Blackmon wants to make an argument for that possibility, sure. It’s a stupid argument given that a price war hurts Russia a lot more than it hurts us, but Blackmon doesn’t even present it as an argument.

    He pretends to report that this is what Russia is doing while studiously not mentioning the fact that 99% of the time the reason for breaking cartel quotas is to raise more money, gambling that the other cartel members will not retaliate by following suit.

    Fake News, and just as fake is the idea that the collapse of OPEC’s monopoly pricing scheme, substantially reducing oil prices, would cause stock prices to fall. This is a POSITIVE real shock to the world economy.

    The expansion of the U.S. economy under Trump and the concomitant rise in The Dow are largely attributable to Trump’s uncorking of our fossil energy supplies.

    Gee, is there anything else going on in the world that might cause economic prospects to be downgraded??

    • The only hole in your argument is the definition of “us,” Once all the uncertainty settles down, lower oil prices will be an economic stimulus.

      And the other hole is that Russia gambled and lost badly in less than 24 hours, in a war that may last for months, if not years.

      • I made mention of that in a earlier comment that I think went to moderation, Dave.
        Remember when it was regarded as great news when the price of oil fell?
        The price has been cut in half in about two months, and so every drive to work, every plane trip, every thing that uses oil, will be cheaper, at least for some period of time.
        This is disinflationary, and the money saved by many people is a real time automatic tax cut.
        For people that drive a lot, or businesses with fleets of vehicles, this will be a wallet full of cash every week.
        Imagine you are the owner of a medium sized service company with 80 trucks out on the road five days a week driving all around from every large city in Florida, with a monthly fuel bill for those trucks (and a bunch of cars for the sales team) of somewhere north of let’s see, each truck using about 10-20 gallons a day at what was $2.50 a gallon, 20 days a month…15 x $2.50 x 20 x 80…
        That’s about 60k a month on fuel. For some it could be far more, some much less.
        If the price of crude every gets down to the retail price level for gasoline, that small business owner just saved $30,000 a month over the past two months. In 11 months, a third of a million dollars.
        That same math goes for everyone who uses gas, diesel, or jet fuel.
        Or who makes plastic products.
        And here is another eventuality from all of this: If you were on the fence last December about whether or not to move production out of China or even all the way out of Asia and returning production here to the US…how might the events of the past two months affect that decision-making process?

        • Yep someone said it above, the cure for low oil prices is low oil prices. The market dictates over the long run, especially when supply is flexible, woe to those who try to buck the market gods

          • And supply is flexible because Saudi Arabia maintains a 2-3 million bbl/d excess production capacity.

        • Right now the airlines are taking a beating because travel is down, but in the longer run they will benefit enormously from lower fuel prices, which can make up 60% or more of operating costs.

  22. Did a 1981 book ‘The Eyes of Darkness’ predicted coronavirus outbreak – Dean Koontz

    A theory widely shared on social media claims that American author Dean Koontz predicted the 2019-2020 Coronavirus outbreak in 1981. Posts featuring the cover of “The Eyes of Darkness” book and a page in which Koontz allegedly describes the coronavirus in his novel have at least 39,000 shares and at least 2,000 retweets on Twitter as of February 27, 2020.
    Most of the claims circulating on social media show the book’s cover and a page in the book mentioning a virus called “Wuhan-400”.

    The widely circulated photo of Koontz’s book page includes some highlighted text reading: “They call the stuff ‘Wuhan-400’ because it was developed in their RDNA labs outside of the city of Wuhan, and It was the four-hundredth viable strain of man-made microorganisms created at that reaserch center”.

    Some claims circulating also include an additional page that mentions the year 2020 and the outbreak of a “severe pneumonia-like illness”.

    This is partly false. While it is true that Koontz wrote about a fictional virus in his novel and that its name “Wuhan-400” refers the Chinese city in which the 2019 Coronavirus outbreak (COVID-19) actually started, the illness in his book doesn’t share more traits with COVID-19.

    In his novel, Koontz described “Wuhan-400” as “China’s most important and dangerous: new biological weapon in a decade”. He also wrote it was developed by labs outside of the city of Wuhan.

    There is no proof that the new coronavirus was created in a lab. The virus is believed to have originated late last year in a food market in Wuhan that was illegally selling wildlife. Health experts think it may have originated in bats and then passed to humans, possibly via another species.

    Reuters looked at further references of “Wuhan-400” in Koontz’s book.

    The symptoms and behavior of Koontz’s “Wuhan-400” are very different to COVID-19. In the novel, the virus has an incubation period of “only four hours”. COVID-19’s incubation period is between 1-14 days. According to World Health Organization , the most common incubation time is around five days.

    Koontz also describes “Wuhan-400” as a disease with a “kill-rate” of a 100%. “Once infected, no one lives more than twenty-four hours. Most die in twelve”, he writes. COVID-19’s death rate is far from this, according to the WHO, the case-fatality rate is between 2% and 4% in Wuhan and 0.7% outside Wuhan.

    The symptoms described by Koontz are different to COVID-19. In his novel, “Wuhan-400” causes the secretion of a “toxin that literally eats away brain tissue” causing loss of control of bodily function.

    “The victim simply ceases to have a pulse, functioning organs, or any urge to breathe”, writes Koontz. Meanwhile COVID-19 infections have a wide range of symptoms, including fever, coughing, shortness of breath and breathing difficulties. Mild cases can cause cold-like symptoms, while severe cases can cause pneumonia, severe acute respiratory illness, kidney failure and death.

    In the novel, “Wuhan-400” is described to be “infinitely worse” than Ebola (EVD), but COVID-19 is less threatening than EVD. According to the WHO, the average EVD case fatality rate is around 50%, while case fatality rates have varied from 25% to 90% in past outbreaks. The new coronavirus death-rate is between 2% and 4% in Wuhan and 0.7% outside Wuhan.

    It is worth noting that in the first edition of “The Eyes of Darkness” in 1981, the fictional virus was not named after the Chinese city, but after a Russian locality named “Gorki” (Gorki-400). In the original version of the novel, the virus was developed outside of “Gorki” and it was meant to be the “Soviet’s most important, dangerous new biological weapon in the decade”. This is confirmed by a Google Books’ search of the word “Wuhan” in the 1981 edition. In this edition “Wuhan-400” brings no results.

    According to the South China Morning Post, the name of the virus was changed on the re-release of the book in 1989, toward the end of the Cold War. Their article here includes photographs of the previous edition that references “Gorki-400”). In this edition, Koontz also published his novel under his real name instead of using his pseudonym “Leigh Nichols”.

    Reuters tried to contact the author and the publisher but is yet to receive an answer.

    Some of the posts on social media also share a third image of a book page without any attribution, wrongly suggesting it is part of the same book. This page reads: “In around 2020 a severe pneumonia-like illness will spread throughout the globe, attacking the lungs and the bronchial tubes and resisting all known treatments”.

    This page does not belong to “The Eyes of Darkness”. It comes from the 2008 book “End Of Days: Predictions and prophecies about the end of the world Paperback” by Sylvia Brown, an American author who claimed to be a psychic.

    This claim is therefore partly false. Dean Koontz did write about a fictional virus called “Wuhan-400” in the 1989 re-release of his 1981 novel “The Eyes of Darkness”, but symptoms and effects of the disease do not match the official description of COVID-19. The additional page present in some claims suggesting an outbreak “around 2020” is from a different book.

    VERDICT

    Partly false: Dean Kootz wrote about a fictional virus called “Wuhan-400”, but its description has nothing to do with the new coronavirus.
    Partly false claim: 1981 book ‘The Eyes of Darkness’ predicted coronavirus outbreak

  23. It may have already been asked & answered; where’s the price point of production?

    How much does it cost a barrel to pump shale oil in Texas?

    Hopefully for the industry, this will clear and the market will rise to healthy levels.

    Shale oil is a significant contributor to U.S. economic dynamism.

      • Thank you, Mr. Middleton, the market needs to know that.

        Hopefully, volatility will decrease and market stability will increase, allowing markets to find their investment floors, and thus easier to predict, which will keep the oil flowing.

        For the stout of heart.

        But that’s always been the oil business.

      • Dave, how much do you think that cost can come down? It amazes me how much service companies can cut their price when the option is work or sit idle.

        Back in one of the 1980 price drops I hired a small seismic crew that was always available for small fill-in jobs. They had been running with 15 people, but when hard times hit kept it going with five. When the shooting was over, the recorder locked up his truck and went out to pick up geophones. I also started as a jug hustler, so I had a good evening walking the lines and racking jugs with him.

        It seems that when the Saudis took the first swipe at the shale production, the economic threshold was in the $80 range, and those resilient oil patch folks became more efficient in a hurry.

      • Based on my experience oil has two prices:
        – The price necessary to justify new exploration and drilling
        – The price necessary to keep the lights on.

        The second is much lower than the first. I was working in the Permian (West Texas) in the 80’s when the price of oil crashed from $30 to $10/bbl. The lift price of oil in the field was $1.50/bbl, so even at an oil price of $10/bbl the field generated significant free cash flow. The company decimated the exploration department and considerably reduced drilling at the time. Those of us in operations survived quite nicely. Field operations remained the same; maximize production against the Texas Railroad Commission production limits.

        Which goes to David’s prior point. Many companies will go bankrupt if these prices persist. This is a debt service problem. The existing wells will still be produced because even at these prices they generate free cash flow. Production will drop along the decline curve until the price of oil rises high enough to justify drilling and completions. And in the meantime the survivors will figure out how to drill wells at an even lower cost. All the Russians and Saudi’s are doing is making their competition tougher.

  24. All,

    The South Koreans are the only country that has executed a comprehensive testing regime for Covid-19 (190,000 tests), resulting in a calculated mortality rate of 0.7% – which in itself is a likely over-report.
    I have read a “best estimate” of a mortality rate of 0.56%. This is still ~5x’s higher than the flu, but by the time a Covid 19 vaccination is developed it is likely that mortality rates will have fallen further. What is most concerning is the proportion of Covid 19 infections requiring high level care (~25%) and mechanical ventilation (10%). We need to focus on making sure there are plenty of beds in ICU available.

    • Vaccine for this or any corona virus is a long shot at best.
      There is a reason why there are, to date, exactly zero vaccines for any of the strains of coronavirus that have sickened tens of millions every year since forever years ago.
      Wanting very badly to have a vaccine, and coming up with some molecules to test and see if they work, are in no way a guarantee that one will be found that passes safety testing and actually confers immunity.
      Best chance are antivirals at this point.
      Sure, one of these start up companies that have found a brand new way to make something they are hoping will be a vaccine, may in fact be successful.
      But saying it as if there is a schedule for it seems naïve to me.
      As it is, if they have something passed through clinical trials a year and a half from now, it will be by far a record for not just a new vaccine, but for any new drug getting FDA approval. Many years and billions of dollars is more common, as is many failures for every new drug that works and is safe.

    • That last comment of mine was poorly phrased.
      I only meant to caution anyone against being overly hopeful for anything that might treat this anytime soon.
      I did not mean to call anyone naïve.
      I was actually thinking of the language I have heard many politicians and TV talking heads using.
      Even remdesivir is considered by many a longshot, even though it is already proven safe enough, already is known to kill many viruses including some very similar to this one in vitro, in cell cultures, and in animals.
      I am trying to think of any way it could NOT work, given the above, and yet there is really no way to be sure.
      The search for anti-virals against many diseases, including HCV, has had very many promising candidates get to advanced stages of clinical trials before proving not to be very effective.
      And some things work in the very carefully monitored clinical trials, in which the patients are carefully screened and get the very best full time care and attention, and confounding factors and other drugs taken by the patients is eliminated or held to a minimum, and the drugs are administered by experts who are highly motivated to do everything possible to get a good result…but then turn out to not work very well at all in a regular care setting, in which people are not carefully selected and screened.
      This turned out to be the case with Vertex’s protease inhibitor telaprevir.
      It was far less effective and had far worse side effects that shown by the clinical trials, and eventually wound up with at least one black box warning and was then withdrawn, years after being approved to much fanfare as the first direct acting antiviral against HCV.
      There are very good reasons for taking many years for clinical trials, although it is also true that every trial and every success and every failure helps guide and streamline the process.

  25. David,
    Thanks for another interesting post on the world of “climate destroyers!” If the alarmists aren’t careful we could end up with a planet that is marginally warmer with widespread freedom and prosperity! Oh, the horrors!
    Hopefully the panic over Wuhan virus will die down in the coming weeks; I pray that the media receives credit for trying to panic the public instead of informing them. It couldn’t happen to a nicer bunch!
    My condolences for having to deal with the lunatics and liars but don’t be so gentle with them. Half of the fun of your posts is watching you b*slap the DemoKKKrats and ignorati around! But I repeat myself!

  26. I think I enjoy the Guest “xyz……” (i.e guest “Russia Collusion”) phrases as much as the articles. Thanks for keeping it light yet informative David.

  27. Break even costs for shale are nowhere near $40/bbl once infrastructure, overheads and debt are taken account of. They are around $60/bbl. Hedging will cushion the blow, but the shale Ponzi scheme is ending in its current form.

  28. The problem with coronavirus is not the number of deaths, for as many have pointed out it hits those closest to death who don’t have that long to go.

    Instead the problem is the number of hospital beds that will be occupied by coronavirus patients so that for a significant period of time the US like most other countries will be without a health service (all resources being devoted to CV).

    As s a result, if you have a heart attack, or sprain an ankle, are undertaking cancer treatment, or just want to see a doctor …. forget it during the peak weeks of the outbreak. And don’t imagine that if you have some expensive health plan that will save you … because thousands of others with expensive health plans suffering from CV will be in the beds before you … and on on the trollies, and on camp beds, and probably on mattresses on the floor and the rest gasping for breath at home becasue the hospitals are COMPLETELY full.

    Italy is already looking like a war zone in their hospitals, and it is nowhere near the peak which could be 10x, 100x or 1000x the present scale. And what do I see here? Stupid americans on WUWT imagining it won’t happen to you. It will! Just as it will happen to every country in the world no matter how poor or advanced your healthcare system, because no health system no matter how advanced it is, can cope.

    • There are just under 700 active cases in the US, all but 8 cases are listed as in “mild” condition. Of the 27 deaths, 19 were in one nursing home in Kirkland, Washington.

      https://www.worldometers.info/coronavirus/country/us/
      https://www.livescience.com/coronavirus-updates-united-states.html
      https://q13fox.com/2020/03/09/coronavirus-new-test-results-find-31-positive-cases-at-life-care-center-in-kirkland/

      The US isn’t Italy. For that matter, neither are France, Germany or the UK. In Red China and South Korea, the number of cases peaked after about 1 month of spreading. Unlike the common flu, containment measures have proven to be somewhat effective against Covid-19. While the US hasn’t peaked yet, it’s unlikely to overwhelm any medical facilities other than the Life Care Center in Kirkland.

      • Based on current trend and assuming
        1) No action take to reduce spred
        2) That death rate remains as low when health service is hit by the tsunami of cases (which it won’t)

        Date Reported Deaths
        Wed 11 Mar 1339 40
        Thu 12 Mar 1920 58
        Fri 13 Mar 2752 83
        Sat 14 Mar 3944 118
        Sun 15 Mar 5653 170
        Mon 16 Mar 8103 243
        Tue 17 Mar 11613 348
        Wed 18 Mar 16645 499
        Thu 19 Mar 23856 716
        Fri 20 Mar 34191 1026
        Sat 21 Mar 49002 1470
        Sun 22 Mar 70224 2107
        Mon 23 Mar 100629 3019
        Tue 24 Mar 144185 4326
        Wed 25 Mar 206562 6197
        Thu 26 Mar 295860 8876
        Fri 27 Mar 423632 12709
        Sat 28 Mar 606316 18189
        Sun 29 Mar 867229 26017
        Mon 30 Mar 1239292 37179
        Tue 31 Mar 1768677 53060
        Wed 1 Apr 2519496 75585
        Thu 2 Apr 3579478 107384
        Fri 3 Apr 5066023 151981
        Sat 4 Apr 7130882 213926
        Sun 5 Apr 9959403 298782
        Mon 6 Apr 13756194 412686
        Tue 7 Apr 18702993 561090
        Wed 8 Apr 24868510 746055
        Thu 9 Apr 32053485 961605
        Fri 10 Apr 39592134 1187764
        Sat 11 Apr 46247102 1387413
        Sun 12 Apr 50534304 1516029

        • It hasn’t grown exponentially anywhere. In China and South Korea, where the outbreak has already peaked, the growth in total cases and deaths was logarithmic.

          • It has grown exponentially EVERYWHERE up until the point where major controls were put in place to stop it. In China they started welding people into their flats. In Korea they systematically tested whole populations for CV, but even that did not stop the growth. It Italy they quarantined first one area then the whole of the country.

            Yet despite these measures it continues to grow.

            In contrast in the US, rather than seeking out CV cases as they have in S.Korea, or making it free to get tested as in the UK, you charge for testing and that is why you have one of the lowest rates of testing and almost certainly the reason for your high death rate is the vast majority of cases (I’d guess 90%) are not being detected.

            The ony country with a worse record that the US is Iran!! …. Correction, the only country that HAD a worse record was Iran as they have now halved their growth rate (although that may be by false stats).

            I estimate that the because you are testing so few people, current number of infected people in the US is closer to 6000 rather than 600. At this stage in Iran I described the epidemic in Iran as “out of control” and that’s how I’d desribe it in the US.

          • No doubt that there are probably 10 asymptomatic and mildly symptomatic cases for every confirmed test. This is why the death rate is probably less than 1%.

            Here’s total cases in South Korea:

            It’s a logarithmic function. A log plot of an exponential function would be a straight line.

            Here’s a log plot of total cases:

            It’s the opposite of an exponential function.

            Total deaths, linear…

            Total deaths, logarithmic…

            Once again, the opposite of an exponential function.

          • I am sure the number is far higher than has been reported.
            It has to be, as people are turning up all over the place and no one has any idea how they got it.
            And hardly anyone has been tested.
            Also, this from the CDC:
            “† CDC is no longer reporting the number of persons under investigation (PUIs) that have been tested, as well as PUIs that have tested negative. Now that states are testing and reporting their own results, CDC’s numbers are not representative of all testing being done nationwide.”
            https://www.cdc.gov/coronavirus/2019-ncov/cases-in-us.html

            The page also says the 647 number does not include people repatriated that already have the disease…such as all of the ones from the cruise ships, etc.

            Just as an example, patient 0 in Washington state had all of his known contacts traced and it appeared he had not infected anyone except his wife, but then weeks later the high school kid in a town 15 miles away, a passenger on the cruise ship that was sent to Oakland, the people at the nursing home…no one has any idea what the chain of transmission was, and it could have been an extensive chain of transmission, with many dozens of people spreading it around.
            It seem to only become known it is in an area when someone winds up in an emergency room.
            There are now 14 states with no known cases in the US.
            I would not bet a nickel that there is not disease transmission occurring in every one of those states.
            Partly this is good news…it means that most people getting it never even know it.
            But it also means there is a pig in the python coming, several weeks behind Korea and Italy, and only now showing up.
            The US now seems to be like Italy was a couple of weeks ago when it was becoming obvious it was widespread in one part of the country, and a week later it was showing up all over the country.
            If we assume that we will get the info if cases begin to pick up again in China, the next days to a week or two should be instructive, as China goes back to work.
            Obvious why cases diminish when they lock down a city and weld doors shut and warehouse anyone even suspected of being infected.
            But what happens when they attempts to go back to normal?
            It seem like we can expect a month from when a few people in an area have it, to when it has sickened enough people that some of them are high risk and then progress to pneumonia, because this is when begins to make the first people in that area sick enough to seek medical attention and the hotspot is even known about.
            I have no idea why anyone is still talking about containment.
            For it to be eliminated this way, every single person who has it would have to be locked in place with no contact with anyone for long enough to clear the virus from their body.
            Which is impossible because many people have no symptoms.

          • David, all you’ve done is prove my point that the rate of growth was linear when plotted on a log scale until the S.Korean government started proactive testing. In S.Korea the rate of growth is now on average 10fold increase every 26 days – which is good, but for how long can they sustain that?

            It’s also pretty obvious that the growth was very closely exponential for about a week after their fairly stringent clampdown – and that there is a very clear “knee” between the simple exponential growth and the more complex reduced growth (indicating that the growth rate was responding to a variety of measures). However S.Korea are one of the best examples at the moment and they are chalk and cheese compared to the US approach which seems to be “head in the sand and hope it goes away”.

            What you have also not factored in, is that S.Korea was not testing the entire population, but a sub-group and it is quite certain from what happened elsewhere that CV will have continued to grow outwith the original church going population in which it spread. I therefore expect it is likely at some point that we will see a rapid increase in cases as authorities realise the virus has spread to new populations.

            This is how the pandemic has been going. “Controls” are put in place which for a short time appear to reduce numbers – but then it is found to be “burning” out of control in a new place and more severely than before. The response by authorities has always been too little too late and reacting to outbreaks rather than pro-active.

            The reason why this is such a disaster for CV is that unlike SARS or Ebola, most people infected with coronavirus show very mild symptoms and are easily missed. So unlike SARS or Ebola, many of the infected individuals do not show up with severe symptoms and so go on to infect others. This is why we keep getting pockets of new outbreaks which are not noticed until we start getting deaths. Then, authorites REACT to the situation doing a lot more testing, finding a lot more cases which their previous testing had missed.

            There is no question that the virus will grow exponentially unless controls are put in place. The real questions are:

            1) how much of the population are sufficiently ill to self-report and be counted.
            2) to what extent can it be contained by what measures
            3) what is the “natural peak”

            The first is an extremely difficult question to answer. I estimate the figure is between 10 to 20%, but using one rather than the other doubles the scale of the peak. A lower figure is good in that it reduces the overall death rate, but not the rate of spread and it also makes it a lot harder to stop the growth without draconian quarantine measures.

            And remember, the crisis from CV is not the overall number of deaths or hospitalisations, but because of the extremely fast growth and the large number of people who end in hospital there is a very large wave or more accurately “tsunami” of cases that will completely swamp any healthcare system.

            The second question is also extremely difficult to answer, partly because we only have one country (China) which has taken stringent measures, partly because we don’t know whether these have temporarily slowed the epidemic or whether they have stopped it, and partly because the Chinese are not known for accurate information and may be making up data. So to put it simply – we have no idea if it really stopped in China or the gov just changed the data to make it appear to have stopped.

            The third question is the critical figure because it dictates the scale of the peak – and because we haven’t seen this peak we have no idea how big it will be. I have assumed only 10-20% show symptoms, so in effect CV is only seen in that percentage of the population. So the very maximum peak would be 10-20% of the population show with enough symptoms to seek medical care. Then of those around 20% seek hospitalisation and of those about 20% end up in intensive care.

            Usually it is assumed that at least some of the population have immunity to a new virus, but unfortunately, being a novel virus, there is no reason why any group would not get infected, so unless people are physically isolated it seems to me that they will get the virus. Therefore whether it is the “wild-fire” growth currently seen in the US, or a slower “contained” growth as in S.Korea, the growth rate will be exponential until sooner or later most people will be infected and the growth slows because there is no-one left to infect.

          • A logarithmic function flattens over time. Even in Italy, where it hasn’t peaked yet, the growth rate is slowing.

          • People here in the U.S. are applying self control. Trips, especially cruises, are being cancelled. Planes and shopping malls, except where there are shops selling toilet paper, are less crowded. The good thing about fear is that it drives behavior and at least some of the decisions that people are making are rational and helpful toward containing viral spread.

          • Here is one paper on the subject of the growth rates of infectious disease outbreaks.
            From the Results section:
            “Simulations indicate that the generalized-growth model supports different epidemic growth profiles, as the “deceleration” parameter (p) is varied between zero and one (Fig. 1). These profiles include linear incidence (i.e., p = 0.5), concave-up incidence (p > 0.5), and concave-down incidence (p < 0.5) patterns whereas the relative growth rates decline inversely with time (Fig. 1). Moreover, epidemic size is predicted to be highly sensitivity to small variations in the deceleration parameter p, as shown in Fig. 2."

            https://www.sciencedirect.com/science/article/pii/S1755436516000037

          • David Middleton March 10, 2020 at 11:57 am
            The growth is never exponential.

            Yes it is, most likely behavior is logistic growth which starts off as an exponential growth which later tails off showing an ‘S’-shaped curve.
            Like the beginning of the AIDS epidemic in the US
            http://www.nlreg.com/aids.jpg
            Up until today the number of COVID-19 cases in Italy has been showing an exponential growth since the first few days until now (from 79 cases to 12,500 in 3 weeks).
            The US has ~1300 cases today, about the number Italy had on Feb 29th, a week later it was over 5,000, I’d be surprised if the US has fewer than 5,000 cases in a week’s time. As of yesterday Italy was showing over 800 deaths.

          • David Middleton March 12, 2020 at 5:54 pm
            A logistic function isn’t an exponential function.

            Really!
            The logistic function is given by f(x)= 1/(1+e^-x)
            which shows exponential growth for negative values of x.

          • David Middleton March 12, 2020 at 7:46 pm
            Which is not an exponential function.

            Sure it is, learn some math!

          • Exponential, meet logistic…


            Technically, a logistic function is a type of exponential function… an inverse exponential function.

          • David Middleton March 14, 2020 at 4:26 am
            Technically, a logistic function is a type of exponential function… an inverse exponential function.

            Actually it’s an exponential function, as shown in the graph of AIDS cases I posted the early phase of the logistic curve is exponential growth. Just look at the US COVID cases from your source: Mar 2 100 cases, Mar 5 221, Mar 7 435, Mar 10 994, Mar 13 2247
            that is a doubling time of 2-3 days, just what you’d expect from an exponential function.
            Similarly with deaths: doubles every ~4 days.
            By the way another math lesson for you: 1/(e^-kx) = e^kx
            Since from the data we’re well short of the midpoint value that’s the behavior we’ll see.

          • Nice distraction David, as I pointed out the data shows that we’re still short of the midpoint, however you only show the value of the bounded exponential beyond the midpoint, not relevant to our present situation. Not sure where you get the 100 term from either?
            The curve you show is for a logistic curve with the parameters Lmax=10, k=1 & xo=5.
            So L(x)= 10/(1+ e^5*e^x) which for x=5 gives a value of 5
            near x=1 (more representative of where we are) L(x)= 10/(1+e^5*e^-x) since e^4 is greater than 1:
            L(x)≅ 10/(e^5*e^-x) = 10*e^x/e^5 i.e. an exponential.
            However looking at S Korea which is showing a virtually complete logistic curve the parameters are xo~15, Lmax ~ 8000.
            The US seems to behaving more like the Italian model so I expect that xo is more like 20
            Our results would not show a logistic curve because of the administration’s incompetent management of testing but I expect the underlying growth to be logistic with the parameter stated above.
            .

      • And certainly the US certainly is not France, Germany, or the UK, because you’ll be pleased to know the US are leading the pack!

        Death rate
        US 4%
        France 1.7%
        UK 1.6%
        Germany 0.16%

        Rate of growth (ten fold increase in days)
        US 6.4
        France 6.8
        UK 7.8
        Germany 8 days

        • The US has many multiples more population than any of those other countries, and is also a lot more closely economically tied to China.
          Not saying that there isn’t a problem, but showing relationships as absolute values when the underlying denominators are very different, is not productive.

        • Much of these “rates of growth” are not people just getting infected, but testing being done which reveals who is already infected.
          The disease has had many weeks of a head start over testing, which is only now ramping up in the US.
          It is very likely that new cases has in fact fallen sharply in recent days, since people have for a week or two been very cautious about contacts and such.
          As such, trying to analyze the statistics of numbers that do not mean what it sounds like they mean makes no sense at all.
          So rate of growth should say “Rate of success in testing people and finding new cases of infected individuals”, and should be given after the one labelled “Rate of growth of the number of people being tested per day.”

    • We have numerous emergency health care centers in the U.S. that serve on an outpatient basis, and which will be able to service those that do not need hospitalization, e.g. broken bones.

    • In the US we do not go to the hospital for the things you mention.
      Except the heart attack.
      We have hundreds of clinics and urgent care centers and imaging centers, and thousands of doctors office and labs, in every city and town, for all of that.
      No one with insurance goes to a hospital to see a doctor or for a broken bone, stitches, sprained ankle, or any thing like that.
      That is not how it is done here.
      And we are not a bunch of helpless ninnies and sissies in a crisis.
      You must be thinking of somewhere else.
      You sound a little overwrought dude.
      It is not the end of the world.
      The reason cases level off is because everyone stopped going outside and congregating in crowds.
      A silent stalker can sneak up on people who are unaware, but not so easily on people who know a stalker is on the loose.

    • Instead the problem is the number of hospital beds that will be occupied by coronavirus patients so that for a significant period of time the US like most other countries will be without a health service (all resources being devoted to CV).

      As s a result, if you have a heart attack, or sprain an ankle, are undertaking cancer treatment, or just want to see a doctor …. forget it during the peak weeks of the outbreak.

      No wonder those countries are “without a health service” and generally have such long wait lists if they have people with sprained ankles or just wanting to see a doctor as being the type that would normally be taking up Hospital beds!

      Here in America sprained ankles do not require hospitalization, nor does just wanting to see a doctor. Most cancer treatment don’t even require hospitalization. (Heart attacks, I’ll grant you do usually result in a stay in a hospital bed for a period of time). As Scissor pointed out we have a large variety and number of outpatient programs and clinics, urgent care centers, individual doctor’s offices, etc. such that only the most serious of issue require hospital stays of any significant length. The vast majority of coronavirus patients do not require lengthy hospital stays (just as most suffers of colds, flues, and other seasonal viral aliments don’t). The flu, resulted in more deaths and hospitalization each year in the US than coronavirus without ever overwhelming the health care system. Perhaps if those other countries stop giving precious hospital beds over to sprained ankle patients, they’d be able to cope better as well 😉

  29. David: Interesting an useful as always.

    Question: what effect will the Saudi/Russian oil war have on Venezuela and other S. American producers?

    Thanks.

    • That’s hard to say. Venezuela can’t become much more of a basket case than it already is. This is bad, in the short term, for all oil producers.

      In the long term, oil companies with good hedge positions and solid balance sheets will likely weather the storm and have lots of acquisition opportunities.

  30. Occidental Petroleum just slashed their dividend and cap ex.
    Div yield had been over 20% given the drop in the stock price, and is now around 3% with the shares near $13.
    The whole company is now worth a fraction of what they paid for Anadarko less than a year ago.
    Shocking.

    • OXY has been the worst run company for many decades going all the way back to the days of Armand Hammer (“When he was talking, he was lying. When he was quiet, he was stealing”).

      Hammer’s successor, B. Ray Irani was an improvement only because it would impossible to be worse than Hammer.

      I wouldn’t put a dime into that company no matter the price.

      • Ray’s brother Barry was the Sr. VP of Reservoir Engineering for my first employer, Enserch Exploration. Barry was the “brains” behind the plan to lease every structure in East Texas, where the Travis Peak sandstone had at least 6% porosity and no more than 60% water saturation, because it would be productive. It’s almost impossible to find Travis Peak that doesn’t meet those criteria, productive or otherwise. There’s a reason they call it the “Tragic Peak”.

      • John,
        Yes, this stock is toxic for sure.
        I have jumped onto it for a trade a few times over the past year, including a bunch Monday morning that I dumped less than an hour later for a nice gain.
        Cannot hold these stocks overnight anymore.
        For a while it was possible to trade on technicals, and I have made as much on puts and on holding the stock briefly when it was oversold.
        Not now.
        Energy ETF is tempting for the yield, but there is so much movement everyday it is possible to make money far more safely than sticking out the neck while this is going on.
        I rate a roughly equal chance the Russians will be back to the table as that the price war escalates and prices take another major leg down.
        But prices for oil may drop no matter what happens re cuts in production, if economic news continues to worsen and the market overall takes another leg down.
        Some airlines have been reporting that bookings are far worse than after 911, which makes sense to me given why people are not flying this time vs back then.
        I personally am guessing, and it is a WAG, that if there is no good news with the antivirals that we are likely to see a feedback loop of reduced demand.
        As I type there is a guy talking about remdesivir and how there have actually been a bunch of cases of it being given on compassionate use basis, which is when an experimental drug is given outside of any clinical trial protocols.
        I have not heard anything negative yet, but maddeningly little to be encouraged about either, except for that one particular anecdotal account of patient 0 in Washington…who recovered basically overnight after getting Remdesivir.

  31. David,
    I think a number of the points you put forward are inaccurate.
    1) Russia budget set to break even at $42, not $50
    2) The source of the price cuts is Saudi Arabia, not Russia, prompted by the Russian refusal to agree to more cuts
    3) Russia refused to cut again because it said the US oil frackers aren’t sharing the pain

    Given that the US is now producing a much larger percentage of oil than before, this isn’t unreasonable.

    As for whether the US oil fracking industry can rebound like it did in 2014: that seems to be a finance question, not a production one.
    It does seem that loans today are a lot harder to come by than 2014, however.

    • Russia has no capacity to “pump and dump.” When OPEC (Saudi Arabia) put forward a plan to cut 1.5 million bbl/d of production, 2/3 of which would be on the Saudis, Russia bailed. So, the Saudis cut prices to certain markets by $8/bbl and intend to ramp up production. OPEC only works because Saudi Arabia generally maintains an excess production capacity of 2-3 million bbl/d.

      Putin spent the past 3 years benefiting from Russia’s participation in OPEC+. This stabilized oil prices, enabling Russia to build up some cash reserves. The ruble is also a floating currency. It’s already been devalued by 10% since Sunday.

      Both nations economies are dependent on oil export revenue and need $60-80/bbl to balance their budgets.

      Putin is not stupid enough to think that their cash reserves and floating currency are enough to outlast Saudi Arabia. He’s also not stupid enough to think that Russia can take market share from the Saudis. Russia doesn’t have significant excess production capacity and their operational breakeven prices is around $59/bbl, $13/bbl more than most shale plays. He may think that $35/bbl oil will kill US “shale”… It will kill quite a few companies, but it won’t kill “shale.” The only calculus that makes any sense is that Putin did this to “stir the pot” of already boiling economic uncertainty ahead of the US elections.

  32. A bit off the mark:

    “Running Out Of Resources”
    by Jeremy Grantham

    Getting Used to Lower Growth and Higher Prices

    … we are simply running out of everything at a dangerous rate. We apparently have trouble processing numeric issues of this kind, and this missing faculty will cause considerable grief. We do not understand the implications of exponential or compound growth rates: the main implication being that they are impossible to sustain.

    No better example of resource limitation in the face of both denial and strong efforts can be found than U.S. oil production. As is well known, we have been on the steep down slope of production since 1974 despite our best attempts to “Drill, baby, drill!” The largest oil discovery in the Gulf in the last 20 years will keep our engines running for a mere 41 days. Nothing we do can reverse the decline, and drilling our reserves faster has been described as “oil independence through more rapid exhaustion of our reserves!” Coal reserves of the highest quality – anthracite – are basically mined out everywhere, and the second choice – bituminous coal – has probably also passed its peak. All attempts to maintain the growth of total hydrocarbon output must now depend on sub-bituminous coal, lignite (which is a little bit better than burning rock, but not much), and tar sands, which are themselves increasingly energy- and water-intensive to exploit.

    Modern agriculture has been described as a way of turning hydrocarbons into food. Without cheap energy – a single gallon of gas is the energy equivalent of 100 hours of old fashioned labor – the world would certainly have trouble producing half of the current food supply, and that fraction could be substantially less. Hydrocarbons are not only critical to farm equipment and food distribution over very large distances, but also play a dominant role in fertilizer production. With sparse hydrocarbon usage, American agriculture would have to be totally and painfully restructured away from very large scale monoculture. Hydrocarbons are very efficient in the use of manpower but surprisingly inefficient with everything else, including output per acre and output per unit of energy…

    • Well, they (Club of Rome) have been hawking & predicting resource exhaustion for over 46 years and it hasn’t happened yet.

      Seems technology & ingenuity keep getting in the way of the doomsters’s paradise.

      That’s part of this whole AGW scam: they couldn’t sell the fear of scarcity, so they’ve gone to the opposite tack, abundance will hurt the planet (so “we” must control it).

      Keep whistling that lonely tune while the rest of us enjoy the abundance of life in the good ol’ U.S. of A.

  33. For those intelligent Americans who haven’t got their heads in the sand denying the exponential growth that forms the normal unrestricted growth in any epidemic, here is a video from someone who understands the global position and is usually fascinating watching:

    https://youtu.be/FZV9z0RVhy4

      • David, the data clearly shows that there is exponential growth. Come back in a fortnight when Trump is being asked to resign for his appalling failure to deal with Coronavirus and then tell me I’m wrong.

        But it’s really not my problem what the US do, living in Scotland I’m not the one who’s going to have to live with a demonrat president just because people like you led Trump to make a complete disaster out of coronavirus.

      • David, most reasonable people know that epidemics have an exponential growth. You don’t believe that, so I don’t think any amount of data or argument will change your mind when the data clearly shows that there is exponential growth.

        All I can say to you is come back in a fortnight when Trump is being asked to resign for his appalling failure to deal with Coronavirus and then tell me I’m wrong. And to be frank, it’s really not my problem what the US does. Living in Scotland I’m not the one who’s going to have to live with a demonrat president just because people like you led Trump to make a complete disaster out of coronavirus.

        • If epidemics exhibited exponential growth, every human being on Earth would contract every epidemic disease.

          An exponential function is asymptotic. approaches, but never reaches infinity.

          • Epidemics grow exponentially until they are limited by some other factor, usually the size of the susceptible population. As Coronavirus is a novel virus that means almost everyone is susceptible. Therefore the main limit is the extent of social connectivity, which in modern society means that most people will get the virus.

            Fortunately because most people get mild symptoms coronavirus will only be noticeable in a small group (20%). But of that 20% about 20% end in hospital and about 4% end up in intensive care. And because it spreads rapidly, whilst the total fraction is low, the demand on hospital beds will outstrip availability many times over.

            And because we live in an information age, with news media able to broadast from this “war zone” hospitals, any politician deemed to be responsible is almost certain to be ousted from power. I’d rather like Trump to get a second term – but clearly you couldn’t care less if he got back.

        • People on the left want Trump gone in any way possible, so you have that going for you, but realistically, what you say will happen in two weeks time is very unlikely. First, Trump created a task force under Pence that has the best qualified people in the U.S. working on it. Mistakes have occurred and will continue to occur because that’s what happens in battle situations.

          That task force insulates Trump. Nevertheless, the left will do what it does and will second guess and criticize, but the right knock on wood support him, so stalemate. Then, this virus will do what it will, which is to sicken mostly old and ill people in a logarithmic fashion.

        • Then “most reasonable people” are not only uneducated and clueless, then also utterly lack common sense. Might be the reason “most reasonable people” worship vaccines and mock people skeptical of any vaccine, while usually not being able to tell what they are vaccinated against.

    • I remember 40 or so years ago someone once saying that if you took everyone I knew and then everyone they knew and then everyone they and … out to 6 times from me then everyone in the world would be among “the known”.
      That’s a statistic, I guess. I didn’t believe it possible at first.
      Then I remembered that my Mom’s Uncle (I knew him.) was one of Patton’s translators.
      One of my Uncles during WW2 in the China/Burma theater had Ho Chi Min as a neighbor.
      I worked with a man who was a WW2 vet, an Italian army WW2 vet. He eventually ended up in Dachau.
      ETC. ETC.
      Go out 6 people from me and everyone is “known”?
      Statically possible? Maybe.
      A practical reality? Nah.
      Provable? No.
      Doubtful? Yes.
      (There are still tribes in places like the Amazon that have never had contact with “civilization”.)

      normal unrestricted growth in any epidemic

      I’d say, but the growth IS being restricted and not every victim of an epidemic dies or suffers any long term effects. Often the effects are only short term.

      • The math is compelling for this to be true, but interpersonal human relationships are not based on math.
        For one thing, what counts as “knowing” someone?
        Is it anyone that was in any class you were in from Kindergarten on, anyone you have worked with and met but did not know except for being introduced once, etc?
        If everyone knows 100 people, then 100 to the sixth power is a big number…many times the population of the Earth.
        If a anthropologist visits a village in the Amazon jungle, does he count as knowing them all, if they all walked up and greeted him, or he saw their faces?
        Of course, there is tremendous overlap in who knows who. So much double counting which is then multiplied in the math while in reality they should be dropped from the calculation

  34. I remember watching Dr. Zhivago once.
    The scene this reminds me of is when the people were the “liberated” reduced to burning scrap wood and furniture to keep warm.
    I’d much rather just turn up the thermostat.

  35. “When Saudi Arabia tried this stunt in 2014, it did force hundreds of U.S. oil companies into bankruptcy, some of which never recovered.”

    Funny that “foreign meddling in US politics” hysteria wasn’t a thing then.

    Might be because it’s 100% made up.

  36. I remember 40 or so years ago someone once saying that if you took everyone I knew and then everyone they knew and then everyone they and … out to 6 times from me then everyone in the world would be among “the known”.
    That’s a statistic, I guess. I didn’t believe it possible at first.
    Then I remembered that my Mom’s Uncle (I knew him.) was one of Patton’s translators.
    One of my Uncles during WW2 in the China/Burma theater had Ho Chi Min as a neighbor.
    I worked with a man who was a WW2 vet, an Italian army WW2 vet. He eventually ended up in Dachau.
    ETC. ETC.
    Go out 6 people from me and everyone is “known”?
    Statically possible? Maybe.
    A practical reality? Nah.
    Provable? No.
    Doubtful? Yes.
    (There are still tribes in places like the Amazon that have never had contact with “civilization”.)

    normal unrestricted growth in any epidemic

    I’d say, but the growth IS being restricted and not every victim of an epidemic dies or suffers any long term effects. Often the effects are only short term.

    • MODS!
      Sorry about the doubled comments.
      This is the “double”.
      Feel free to delete.

      PS The “original” ended up in the wrong spot but I’m not going to ask you to fix that!

  37. You spend the time to assemble something informative, and end up spending at least as much as much as again dealing with the leg biters.

    ‘Tragic Peak”.

    Worked for Oxy, at one point, after they bought Cities. (Even knew Vicki Hollub, back when she started at the Jackson, Ms. office.) Worked N. LA and E. Tex, some of it production. For every TP well that you’d have been happy to have, there were pounds and pounds of dogs. Really ugly ones. Investors dislike dry holes but go broke on dumb completion decisions.

    Didn’t know Irani had a brother, and would have never suspected – if I had – that he was as clueless as his sibling.

    • I know at least a few geo’s who worked for Cities Service back in the early 80’s. All of them spoke highly of the company.

      Barry Irani is (or was) a really good log analyst. He taught a well log interpretation class for Enserch. I learned a lot from him. But I just don’t think he had the right operational experience.

  38. Fond memories of Cities Service, Oxy was a grind that finally convinced me to leave – kept their stock long after I should have. No personal knowledge of Barry, other than the Travis Peak comment, and would assume he was pretty much as nice a guy as most I’ve worked with.

    I’ve no idea as to how the Anadarko bet would have worked out for Hollub, absent this, but do regret she may end up getting whacked by it. She did very, very well, for a U of Al grad that started out in that little outpost in Jackson. (Think she was U of Al, anyway…. most of them there were, including my wife.)

    Appreciate your posts, along with your attention to defending them.

  39. For those interested in why CV spreads at a “wildfire” speed of 10x in a week compared to SARS at 2.5x in a month, this article explains it: https://www.statnews.com/2020/03/09/people-shed-high-levels-of-coronavirus-study-finds-but-most-are-likely-not-infectious-after-recovery-begins/

    The key is that people are VERY infectous at a very early stage. So although they only infect on average about 2.5 other people, they do so within a couple of days of getting the infection and WELL BEFORE they would even consider going to a doctor (especially in the US where they charge because although CV testing is free – it can only be done after everything else is eliminated – which probably means people are only tested for CV AFTER they have stopped infecting others).

  40. David,

    Regarding Rystad estimate of shale breakeven at $46 Brent, a recent survey of Energy CEO’s by the Dallas Fed says that 41% of respondents put their breakeven at $50 and 40% put it at $55.

    That would suggest that CEO’s put the breakeven price $4-9 above the Rystad estimate – a significant difference.

    I agree that bankruptcy laws mean fraccers will re-appear in a different form after bankruptcy. It does suggest however that banks (the real losers here) may be less keen to provide new loans.

  41. David, You are a scholar and a gentleman finding and posting those Dallas Fed slides so quickly – well played.
    The one issue that would make the picture slightly darker, is that the question for each was what are the best 2 areas in your portfolio. If the portfolio includes others, then the overall picture is worse than this.

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