Oil Price Collapse –> Next Peak Oil Frenzy?

Guest “oil’s well that ends well” by David Middleton

The ChiCom-19 hostage crisis certainly makes strange bedfellows. Over the past few weeks I have been agreeing with Dallas County Commissioner John Wiley Price on the need to end the hostage crisis now. In the 35 years, Mr. Price has served as a county commissioner, I don’t think I’ve ever agreed with him before. Matt Egan, lead writer for CNN Business, actually wrote an article about the oil industry that made sense. His work is usually so awful, that it doesn’t even have ridicule value… But, like a “blind squirrel occasionally getting the nut”…

How negative oil prices could set the stage for the next price boom

By Matt Egan, CNN Business

Updated 10:41 AM ET, Thu April 23, 2020

New York (CNN Business)The boom-to-bust oil market is experiencing one of its darkest moments in history.Oil demand is collapsing because of the coronavirus crisis. Supply is shrinking — but not nearly fast enough.

The world is literally running out of room to store unneeded barrels of oil piling up during the coronavirus pandemic.

That storage problem is so dire that it caused oil prices to turn negative this week for the first time ever.

The crash is forcing a reckoning in the oil industry — a painful one. Many shale oil producers have canceled drilling plans. Others have been forced to shut down active wells. Some frackers won’t survive at all.

But the violent rebalancing in the oil market might be so overdone that it will set the stage for a spike in prices. When and if demand recovers, there might not be enough supply to meet it.

[…]

“We are in an epic bust. As hard as it may be to believe, the next step is a boom,” said Pavel Molchanov, energy analyst at Raymond James.

[…]

“When demand returns to something close to normal levels, it’s quite possible there will be a shortage situation in 2021,” Molchanov said.

[…]

“With ultimately a finite amount of storage left to fill, production will soon need to fall sizably to bring the market into balance,” Goldman’s Courvalin wrote, “finally setting the stage for higher prices once demand gradually recovers.”

[…]

“This inflection will play out in a matter of weeks, not months, with the market likely forced into balance before June,” Courvalin wrote.

Companies are cutting production in two ways. First, they are slashing their spending plans for drilling new and uncompleted wells. For instance, ExxonMobil (XOM) cut its 2020 spending by 30%, including a large focus on the Permian Basin shale oilfield in West Texas.

Secondly, and most importantly, oil companies are turning the taps off on active wells through a painful process known as “shut-ins.” And there is no guarantee those taps can or will get turned back on at full capacity.

“It will take time and money to turn it back on. It’s not like a light switch,” David Trainer, CEO of New Constructs, an investment research firm based in Nashville.

[…]

“When demand comes back online, there won’t be as many people there to make the oil,” said Trainer.

[…]

CNN Business

While we don’t technically “make the oil,” if and when demand recovers, the longer the downturn, the longer it will take to bring production back up. When supply growth lags behind demand growth, prices quickly rise.

Unless the Fire Marshal Gumps of the world intend on perpetuating the ChiCom-19 forever, oil demand will recover and the supply might not be readily available. The Peak Oilers, who haven’t read Hubbert and don’t even know what “peak oil” is, will likely start babbling about falling off a Seneca Cliff into Olduvai Gorge. They’ll be just as wrong as they were the last time demand exceeded supply and prices skyorocketed. So, the world faces two possible paths

And… there’s another silver lining to this very dark cloud:

The possibility that this may lead to increased emissions

Historically, low oil prices have created headaches for climate advocates. Cheap oil means cheaper gas at the pump, leading people to drive more and spend more on emissions-intensive consumer goods.

Today, with much of the world locked down, consumers aren’t consuming all that much or making big choices that drive up emissions, but businesses are still making those decisions, and low oil prices reduce the incentive to change. A delivery company purchasing a new van fleet would be less inclined to go electric, for example. A consumer food company considering switching its packaging away from oil-based plastic product may wait it out a few more years. “Oil is cheap. It’s very hard to transition away from oil when it’s very cheap,” says Lorne Stockman, senior research analyst at Oil Change International, which advocates for a transition away from fossil fuels. “And it’s particularly difficult when we don’t have a coherent policy on climate change.”

A key concern for many climate advocates is the possibility that natural gas—which in the U.S. is often produced alongside oil and remains cheap for many of the same reasons that oil does—will further solidify its position in the mix of electricity sources. Low natural gas prices may entice utilities and policymakers to continue to rely on the fossil fuel rather than looking to renewable alternatives, and, because of the long lifespan of natural gas infrastructure, that would lock in decades of emissions.

Time Magazine

So it basically boils down to: The Fire Marshal Gumps of the world need a permanent ChiCom-19 hostage crisis in order to prevent the weather from changing… Sort of like if Stanley Kubrick directed a movie based on a George Orwell novel.

Day Forty-something of America Held Hostage by ChiCom-19

Local news, as of noon Friday…

4/25/2020
Dallas CountyCHICOM-19
PopulationCasesDeaths
2,637,7722,834772.7%
% of population with0.11%0.00%
% with, rounded0.1%0.00%
% without99.89%100.00%
% without, rounded99.9%100.0%
Menodoza Line (.200)2/27/2035           0.200

ChiCom-19?

In my never ending effort to eliminate political correctness, I refer to all things coronavirus as ChiCom-19.

Fire Marshal Gump?

County Judge Clay Jenkins is the chief executive of Dallas County and presides over the County Commissioners Court. He looks like the Jim Carrey character, Fire Marshal Bill from In Living Color and he talks like Forrest Gump. Gump appears to be hell-bent on perpetuating the ChiCom-19 hostage crisis forever.

117 thoughts on “Oil Price Collapse –> Next Peak Oil Frenzy?

  1. My thoughts turn NOT to the domestic frackers and producers, who I know are getting decimated by this. Many of those will enter bankruptcy, either re-org and shed debt and emerge leaner. Or they’ll go into liquidation bankruptcy where their assets and leases will be scooped at fire-sale prices by investors with deep pockets of cash to sit on it for a few years hoping for 10x fold return on investment as demand returns. Midland-Odessa has a long history of boom-bust cycles. But I don’t remember any Wars out in West Texas over it.

    My thoughts turn to what this must be doing to Russia’s foreign currency reserves being rapidly drained. Such an extended low oil price could implode Russia and Putin’s control there into chaos.

    • “Such an extended low oil price could implode Russia and Putin’s control there into chaos.”

      Another benefit to the globalists who want to push Putin, Trump and Xi out of power.

      • If Trump goes don’t expect to fill up you car with gas or have a job. Any Dimm today is a watermelon.

        • “What exactly is wrong with getting two dictators, Putin and Xi, out of power?”
          A high risk of political & societal turmoil.
          I would lose zero sleep if both their heads ended up on pikes but not at the cost of throwing their countries into chaos.

        • It’s the devil you know problem. As Bad as Putin and Xi are, their replacements could always be worse. Regime change doesn’t automatically result in a better regime. Sometimes you go from bad to worse.

    • I wouldn’t be concerned too much, the ordinary Russians see very little direct benefits as it is, they are used to frugal lifestyles. When the ruling clique runs out of money they’ll fall back on their foreign bank accounts held by ‘obliging’ oligarchs.

    • The way Russia has been stockpiling gold ( and I mean gold they hold not gold someone else says they’ll look after for them and refuses to give back when requested – no names mentioned ) they are well placed to weather out the storm.

      Day Forty-something of America Held Hostage by ChiCom-19

      The only thing holding anyone hostage is our own reactions the epidemic. You can blame China for the leak and for trying to hide it until it become so huge as to be unhideable but you can not blame them for the stupid self-immolation that western countries are imposing on themselves.

      Most of France does NOT have an epidemic, most of USA does NOT have an epidemic. Why then hell are we still crippling our own economies two months after this started affecting us?

      • I haven’t been blaming Red China for the hostage crisis. I’ve been blaming Fire Marshal Gump and his ilk.

          • So knowing this, and believing this, how would a mild mannered ‘Joe’ position his investments to rise from this oil ‘situation’?

            Inquiring Joe’s want to know…

    • You nailed it. Enough said. We can now produce all the oil we could ever need. Nothing to worry about from the consumer perspective!

  2. Right on, David! As an Exploration Geologist in the natural resources sector of the economy, I have often wondered why we (intelligent humans) can’t figure out how to stop the wild swings between boom and bust. Lucky for me I can claim to be an expert on either gold or copper, so economy booming its copper, things tighten up and we turn to gold for security, I’m your huckleberry! With oil it’s the same, just the monetary stakes are higher. Now comes the unintended consequences, some of which you mentioned. The big one may be reduction of CO2 production without a concomitant reduction in temperature, wait for it. Day 36 of the quarantine, dogs talking revolt, but I´m not with them yet. Stay sane and safe.

    • I am in the computer business, my economic indicator is memory prices, low slow economy, high booming economy. There is boom and bust cycles in everything, oil just a little more extreme.

      • It’s because oil is so critical to modern society and so much of it is controlled by bad state actors, activists babble about evil multinationals but they control only a small fraction

        Because it’s so crucial we may have no choice but to picket fence North America with oil and gas tariffs to protect our industry

        Goes against my free market beliefs but this isn’t milk, frozen concentrated OJ or hog futures; as Moore’s new movie shows, without it we see real societal collapse

        • The price of oil is also pretty inelastic. Small changes in demand or supply can result in large swings in price. This makes boom/bust cycles more likely.

    • No doubt there is lots of insider trading going on. If the Saudi’s are going to increase or decrease production you can bet someone has been told in advance.

  3. “Historically, low oil prices have created headaches for climate advocates. Cheap oil means cheaper gas at the pump”

    Well yes and no. HIstorically, there were no CARBON TAX ADVOCATES and no carbon tax.
    Now.. the ‘progressive’ governments will see their chance to pile large carbon taxes onto cheap dollars per gallon fuel and we will be used to those prices so we wont object. When the price of oil recovers, and pump prices rise, they can howl that ‘renewables’ are cheaper and paying for themselves.

    That’s my expectation anyhow.

  4. This is tangentially related to the topic of this thread, but I now must report how an economist at the school where I work (for the next three weeks at least) has calculated a $5.2 trillion benefit to the lock-down. In effect her group has run models with and without certain responses (social distancing) and, taking the number of lives saved, multiplies each by $10,000,000 and it’s money in the bank!

    This analysis is wrong and naive on many levels and in many ways, but I am afraid it is a harbinger of the sort of post crisis analyses we are likely to see often, and how they will lead to having learned nothing — the Fire Marshall Gumps of the world will make good use of these. By the way I now see that the WHO is maintaining that there is no evidence having been infected with the COVID-19 virus will confer any immunity, and so letting the virus run its course is not a viable plan to reopen society. Apparently lock-down is all we got…, but the good news is we will all be rich!

    • To be cold and brutally honest, in purely economic terms, the life of an elderly nursing home resident who will never return to the work force or produce anything of economic value to society and then dies in the COVID19 epidemic, that death is a benefit to society not a cost.
      But a young worker felled by influenza in their early 20’s (as happened in 1918 Spanish flu) imposes a huge future cost to the society in the lost productivity they would have provided over a 40+ year working life time.

      So that academic using a $10m cost figure for every COVID-19 death is easily shown to be not only way to high wrong, but the sign of the cost is wrong.

      The movie Soylent Green plot was driven by that dystopian future scenario. Many futurists see that gericide coming to pass as lifespans continue to increase in most of the world, yet productive working years are not increasing nearly as fast.

      • Joel
        I agree.
        This exact concept applies to climate change health damages due to extreme heat and cold.
        Related question to all.
        What value of statically life do climate damage models use?
        ( I think they use 100x GDP pp of the country – but not sure) thanks in advance

          • You go to the family of the 78th fatality in Dallas county and tell them their loss is a “rounding error.”

          • Right after you explain to all 26 million newly unemployed people why a rounding error cost them their jobs.

          • First of all, Dallas County doesn’t have 26 million unemployed people. Secondly, the 52,843 deaths (20:00 UTC) is the main cause of the unemployment, and that number is not a “rounding error.” Oh, and there are over 110,000 folks that “recovered” after going through a week of being really sick.

          • 53,000 / 330,000,000 = 0.00016 = 0.0%

            26,000,000 / 330,000,000 = 0.078787879 = 7.9%

            How many of the 53,000 died “with”, as opposed to due to ChiCom-19? In other words, would have died this year due to age and/or comorbidites.

            How many of the 26 million lost their jobs entirely due to the ChiCom-19 hostage crisis?

          • Furthermore, destroying the economy sooner would have prevented very few, if any, of the ~53,000 deaths.

          • “53,000 / 330,000,000 = 0.00016 = 0.0%”
            .
            I can see that you are exhibiting the results of your failure in math classes at SCSU.
            .
            0.00016 = 0.016% not 0.0%
            .
            If anyone you knows catches this virus and dies, do you consider that death a “rounding error?”

          • So Henry, you are actually arguing that it doesn’t matter how much it costs, so long as it saves one life?

          • Henry
            You go and tell any of the families of the 836 killed on on Texas roads this year, that covid 19 deaths are more important. ( I don’t really mean this – I’m just highlighting that the road toll is just as important)
            David may know better but I think Dallas makes up about 10% of Texas road fatalities, so maybe covid comparable to road toll.

          • I can see that you are exhibiting the results of your failure in math classes at SCSU.

            I see that you are exhibiting the results of your failure in junior high math classes. By ninth grade most students have learned what “significant digits” are. You clearly don’t know what they are, hence you are either still in grade school, a junior high school drop out, or just plain stupid. Don’t bother telling us which one, we don’t care.

        • Looks like Henry doesn’t understand how significant digits work.
          Yet more evidence that he still hasn’t taken any high school level science courses.

          • 0.002921% still rounds to 0.00%. It’s more than an order of magnitude smaller than 0.0%

          • Dave goes to a banker and asks for a $1,000,000 loan. The banker quotes Dave an interest rate of 0.002921% per day. When Dave opens his statement he sees a charge of $29.21 each day on the outstanding balanace. Now should Dave go to the banker and ask why his 0.002921% rate should be 0.0% ?

          • Why are you using “rounding error” to lessen the significance of th fact that people are dying?

          • Now should Dave go to the banker and ask why his 0.002921% rate should be 0.0% ?

            I think Dave might want to avoid mentioning the interest rate at all, and instead ask for another $10M on top of the original $1M.

          • If the bank is paying me 0.002921% interest on a savings account, they are below the Dean Wormer line… 0.0%.

          • If the bank is paying me 0.002921% interest on a savings account, they are below the Dean Wormer line… 0.0%.

            If your bank is paying you 0.002921% interest on a savings account, you need to find a better bank. Even in the current low interest rate environment, you can do better than 0.002921%. There are banks out there than still have rates on savings accounts that don’t round to 0.0%

        • Henry
          I know what you are trying to say, but is just the virtue signalling ninny cop out that it’s worth it all if it saves one life.
          Of course that is false otherwise we wouldn’t have a health system here in Canada based on wait lists.
          Because even in caring sharing Canada we have to make a cost benefit analysis

          Saying collapsing the economy because the disease has the potential to kill 3 per 1,000,000 of otherwise young healthy people is not supportable in any society
          Lock down the old folks homes and long term care, those with underlying conditions isolate, everyone else get back out

          If the always right WHO says herd immunity cannot be achieved then there is no solution beside letting it run its course and finishing its cull

          Or, it’s function intended by Gaia in its campaign to eradicate us if that floats your boat

        • You would get a “F” over the course of this argument in my engineering courses. Have you ever heard of “BDL”? Below detection limit? We do not know whether the actual amount is zero exactly, or just near zero, but we can say it is below a detection limit. David has placed his detection limit at 3 significant figures. Your sense of exactitude we learn to leave behind in college, Henry.

          • Kevin, you only leave that sense of exactitude behind if your college involves technical courses.
            If you spent your college career doing something like Women’s Studies, your sense of both certitude and exactitude get exaggerated to extreme levels.

    • Some nursing home deaths, looks like government failed to lockdown most vulnerable but succeeded in locking down those who are not vulnerable.

        • It’s not just teenagers David, I have a relative in health care who’s worked on a Wuhan Flu ward and her opinion is as insistent and as lacking in objectivity as Henry’s; quoting the exceptions that prove the rule in favour of the hostage crisis (e.g. it’s not just old people at risk, because a few young healthy people have also been afflicted, herd immunity is impossible because there are a few cases of repeat infection, the death toll is being under-reported, because homeless people aren’t being properly diagnosed etc, and the argument is made oh so compelling by pointing out something as persuasive as ‘if you don’t agree with me and my policy demands, you must be brain damaged etc etc.)
          Perhaps the most curious supporting argument I’ve heard recently is hysterics who cite a reduction in Flu infections as further ‘proof’ that the hostage crisis is ‘working’; which begs the question, ‘why don’t we put the economy into an induced coma every autumn/fall ‘just in case’?
          Apparently we all need to ‘unlearn’ anything we’ve heard about As Low As Reasonably Practicable risk management and heartless cost/benefit analysis (you’se nasty, greedy capitalists!), because you know, people die. And the ex-spurts says it’s gunna be worser than we thought! It’s all so similar to the arguments made in support of action to tackle gullible warming and the over-reaching ‘solutions’ to that sacred cow.
          To be fair on Henry, his bitterness and name calling filters have higher threshold than some of the hysterical supporters of the hostage crisis. And might result from a bitter personal experience resulting from Wuhan Flu.

          • We could save thousands of lives lost in automobile accidents every year by staying home and not going to work.

            What we are seeing here is the full application of the Precautionary Principle. It’s actually much worse in practice than in theory.

  5. Suppose we mitigated enough so virus deaths got to same level as deaths caused by flu. Is that enough ? I have yet to have anyone answer the question as to what is the realistic acceptable number of deaths ? There is no honest discussion.

    • Steve,
      Most of the time the answer to how many deaths are acceptable is 0. None. If you point out how many die of flu, or car accidents, or whatever, they just say it’s not the same thing. Then you get into arguments about the value of a human life and around and around it goes. For me it comes down to this: everybody’s life has value, but we can’t save everyone. Is a life saved now by the shutdown worth 100 lives lost later due to the economic damage done? You substitute whatever you want for that 100 figure, maybe it’s 5 or 5000, but at some point the damage to our economy will be so great that we will be unable to address the next great problem, like famine in Africa (due to the locust plague this year, perhaps). Later when millions are dying overseas from a disaster that we failed to prevent because we are in a deep recession of our own making, will we still be able to hold our heads high and say, “Yeah, but we saved thousands of American lives”?

        • Thanks. Unfortunately this won’t convince most people in dire fear of this virus. They have been fooled into believing that mere exposure to it is a death sentence. “You don’t have the right to spread death!” they scream. There’s really no reasoning with them.

  6. As pointed out before, South Korea provides a good Wuhan virus fact baseline. Thanks to aggressive contact tracing and PCR testing, it is almost certain that there are only a few undetected cases. As of yesterday, about 590,000 tested, 10708 positive, 240 fatalities. That might be skewed a little low because the early cases were younger adults in the religious sect. So infection attack rate is about 10708/590000 = 1.8% WITH mitigation (quarantine positives) and the CFR is about 240/10708 = 2.2% in a modern healthcare system that is not overwhelmed.

    The US has about 328 million people (not including illegals). So with full mitigation (we don’t yet have contact tracing), we would expect about 5.9 million cases and 130,000 deaths. We are nowhere near those Korea based numbers, in part because the country is big and the infection rate small in flyover country. So the sharp economic pain has some dividends in places like NYC, Detroit, and Chicago.

    The question is now about reopening, as the President has recognized. Looks like May is a biggie, because at least 14 states are starting To reopen or will next week. And we will have the apparently promising results from the properly designed U. Minn/McGill study by end May that will say whether we have a preventative and an effective therapy ‘off the shelf cheap’.

    • Looking forward to study results

      I would also like to see study that was HCQ plus zinc.

      Turns out HCQ has some positive effects for thrombosis caused by antibodies. These antibodies have been seen in covid patients. I believe science has just scratched the surface in this virus and the disease it causes.

      https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2844013/

    • Hi Rud,
      “it is almost certain that there are only a few undetected cases”.
      How do you square this with the antibody testing in New York State where NYC shows an infection rate on the order of 20% ? If that number is correct then for NYC the death rate is about 12,000 / 8,800,000 = .0013. If you factor in the economic cost over time, from a purely financial perspective, this will be a hugely negative investment especially if you factor in that of the people the died an enormous number were on the negative side of wealth production. I’m not making any moral judgments just an economic calculation.

  7. The recovery may be considerably slower than anticipated, if some of our socialist state Governors can keep their boots on the economic throats of their citizens. In the Peoples Republic of Virginia, (D) Governor Northam said “We cannot and will not lift restrictions the way you turn on a light switch”. Virginia State Health Commissioner Norman Oliver claimed the first phase could span two years. Phase One involves the reopening of certain businesses deemed “nonessential,” requiring them to comply with stringent safety guidelines. Oliver said he expected it to be in effect until “medical countermeasures” like a treatment or vaccine are rolled out broadly. “I, personally, think Phase One will be a two year affair”. This is the face of ‘command and control’ fascist socialism. “We know what’s good for you, because….science!”

    Non-essential businesses??? Jobs Are Essential! Paychecks Are Essential! Freedom Is Essential!

      • I’m with you there, David!

        Sunshine is breaking through the overcast – Time to go violate King County WA shut down diktats again and take a hike on a county trail! Fresh Air and Sunshine Are Essential!

    • Well let them stay closed forever. People will move to the open states for work and to avoid the massive tax increases that will come to pay for these lockdowns. That’s the beauty of the states, by having their own laws people vote with their feet. If you are out of work, come to Texas when it opens, just don’t vote Democrat.

      • But those states are looking to the Fed to bail them out. Which means the working taxpayers in the more sensible regions (IE non-blue states) picking up the tab.

    • “We cannot and will not lift restrictions the way you turn on a light switch”.

      That is probably sensible but it should be happening gradually and it should be happening NOW , not next week , next month or next year.

        • Social strangulation is essential to crash the capitalist economy that had satisfied so many that they weren’t bowing to the green new wheeler-dealer authorities the likes of the ex-barmaid. Now hope and change will have its greater attraction to the burdened masses, don’t you know.

          What many of you won’t have reason to know is that a lot of left leaning physicians and degreed health care program graduates went into public health organizations and now represent another ‘deep state’ of their own in government bureaucracies right down to the county level. Does that help explain the one sided nature of advice that gives the virtuous appearance of caring so much for every infectious harm while setting up the conditions that hold some promise to overturn the whole order of things? Meanwhile there must be no criticism of the Chinese Communist Party and World Health Organization for abusing the people of the whole world for advantage while our own institutional epidemiology ‘experts’ are caught flat footed with neither early investigation or sound contagion control advice (indeed spouting its inverse in tune with a broadcast benign narrative until it was out of hand and the panic alarm could be pulled).

          Some of you are old enough to remember its predecessor 3 decades ago, “Anybody could get HIV” so we’re all at risk and there’s nothing special about those open bath houses. That worked out politically correctly ignoring the decimation of those engaged in truly risky behaviors under such cowardly supervision.

    • I believe more and more that the economic pain is what several Dems want. Then, with the election coming up, they will say “SEE! Trump ruined the economy!” The only problem is this COVID-19 nonsense will still be fresh on people’s minds. I’ve heard more than one person, unprompted, claim that the media is making this virus bad in an attempt to ruin Donald Trump.

      Of course, an election is coming, and the media will shift from non-stop half-truths of COVID-19 to non-stop hatred of all things Trump while glossing over all faults of Biden. That will replace COVID-19 anxiety with something else, which means people won’t be thinking that to get within 6 feet of someone is an automatic infection and therefore, an automatic death sentence. This means they won’t like stuff being closed. Therefore, the Democrat governors will be forced to open up. There is no way they will be able to keep stuff closed. Most especially when people see that the states that did open up did not have a wave of dead people. And this likely will make these Democrats very unpopular.

      I have noticed that the people screaming the loudest about staying home to save lives are the same people that will never be affect by an ultra-depressed economy. People that will always be fat and rich no matter what happens. What do they care if the peasants that they despise are poor and hungry?

      • The largely rural states that went Trump in 2016 will still go Trump in 2020 because the virus isn’t hitting them hard. The urban states with Democratic governors that are hit hard could go either way. Here in Michigan, which went Trump in ’16, the Democratic governor’s shut down was excessive. 90% of the cases were in Detroit and its suburbs. Yet the governor shut down the sale of flooring, paint and garden supplies in big box stores, statewide, in Spring! Protesters thronged to Lansing on April 15, creating a gridlock underplayed by the mainstream media. She’s now rescinded that order, but extended the shutdown until at least May 15. Michigan will go Trump again.

    • I live in Virginia and assure you it will not play out that way at least in most of the state. Virginia has shifted left recently due to the Dem majority in the DC suburbs and around Virginia Beach but the margin is narrow and much of the state remains conservative. The population here has gone along with the COVID restrictions so far, but folks are starting to get antsy. If Northam tries to extend restrictions beyond another month or so the response will be widespread non-compliance by individuals and businesses, and local officials in many counties and cities will just refuse to enforce his mandates. …

      • Looking at the numbers in November 2016, I noted that DJT would have WON Virginia – if Mullet Head hadn’t played his little ego games. Right now (this being only April and it will seem like years until November), the Bulwark Party candidates seem to have completely vanished from the face of the Earth. Not that any of them ever had the support that Mullet Head managed.

    • Blue state governors screaming for a bailout but I don’t think they are going to get it and if they don’t then they will be forced to open up.

      The simple fact is that NY, NJ, and IL were all running in the red long before Trump was even elected despite each having some of the highest state and local taxes in the country. It was their own state’s government policies and lack of fiscal responsibility that have gotten them to the place where eventually they would go insolvent if they weren’t bailed out even without the Covid-19 shutdowns. Taxing their residents and business more will merely drive more of them out of the state there by further shrinking their tax base and that has already been happening in all three of those states over the last decade. A big part of their problem is their state pension funds. None of them can be sustained with state revenue alone and that was the case long before even Obama was elected.

      It’s all catching up with them now. I can even see it in the condition of the I-90 NY throughway toll road. And a great example of why it’s condition is declining despite the tremendous revenue it generates is obvious even to a driver that pays attention. For over 15 years remote electronic tolling has been in use many places. But NY has persisted in keeping the vast majority of lanes filled with toll booth attendants. It runs against the DNA of leftists to cut the number of those on the state payroll. They equate those numbers to power.

      So now the governors of all of those states are demanding that the US tax payer bail them out. They admit no fault for the condition they’re in, except Cuomo did, in a moment of rare honestly, admit it a couple years ago. But now they claim that essential services will be cut drastically if they don’t get a massive infusion of federal money and try to imply it will be the Federal Governments fault if that happens. And of course they claim it’s all the because of the shut down. Unfortunately for them, there is a Republican in the Whitehouse and they control the Senate also.

      • The state and local pensions are a disaster. They came about because the public unions would ask for higher wages, but the politicians said back to them they can’t raise wages because taxes would have to increase and the electorate wouldn’t accept it. So the union then says just raise the pension benefits. The politicians say well we won’t see that cost come in until years and years later, long after the politicians have retired. The public would not see increase in taxes to years later. So that’s how the pension plans got so costly. Any deal with the states and feds will have to completely remove pension plans for new employees. For existing employees not sure what can be done except to freeze what plans they have. Any new retirement benefits will have to go through 401k type plans.

        Also new employees should have to go to the health care exchanges.

      • I think the Feds should offer them a bail out – with several conditions attached:
        1) no money goes to sanctuary states. You want the money, rescind your sanctuary state status and policies.
        2) Come up with a viable plan to reform your pension systems. No plan, no money.
        3) Trim your budgets to match your income (without raising your already sky-high taxes). You want the money, you need to start living within your means.

        Of course Nancy will never agree to that, so it’d never get passed, therefore there would be no bail out. So either it’s way win-win for the taxpayers.

  8. The hostage crack is misdirected. It was not Russians, Chinese, Iranians, or anyone else who put Americans in home detention. And it wasn’t the virus. That was all caused by the government.

    The same is true of the energy market volatility. The Fed kept adding liquidity which made its way to shale producers who were using more energy to develop a well than the energy content of the product that would be produced. The shale sector was destroying capital and burning through cash for an entire decade even when prices were higher. There was never any chance of energy independence or of any profit outside of a few small core areas where fracking did make a lot of sense.

  9. Central Washington gasoline is mostly $2-ish.
    I’ve been watching for the place that will pay me, but I’m still looking.
    – – – – –
    flatten the curve

    Most places have taken the “flatten” route, although a few want to wait out the completed demise of the virus within their boundary. (See AU & NZ – – An interesting future, worth watching.)
    However, where the curve has been flattened, and where there are not enough deaths (Zero, where we live) to plot a curve, mayors and governors (See Jay Inslee) continue with Panic 2020.
    Questions:
    Of all the hospitals in North America, how many are swamped with virus cases? How many are under utilized and going bankrupt? What did useless extra actions cost? Example: Soldiers from the 627th Hospital Center out of Fort Carson, Colorado, established a 250-bed hospital inside the Century Link Field Event Center in Seattle? Without serving a patient, the group was sent home. Army Times

    I have to use a drive-up window at various fast-food places, I guess because going inside is ..something?.. !
    I can go into a grocery store and walk to a deli, order, purchase, and carry out the meal, I guess because this is ..something else?.. !

    Panic 2020 is very confusing.

    • Here in Alberta, RV dealerships are deemed an essential service so they can remain open.

      Wrap your head around that one because I can’t.

      Our senior public health official is starting to think she is Mao, and SHE will decide when things get going, something the premier needs to disabuse her of. Her job is to give advice, and unfortunately that runs to every life is sacred

      It remains true that the outbreak in Canada is concentrated in Vancouver, Toronto, Montreal, and here in calgary, all the cities that still allow planes full of people to land

      Go figure, panic 2020 is insane

      • “Here in Alberta, RV dealerships are deemed an essential service so they can remain open.”

        Anyone who has read Leonard Reed’s, I Pencil, knows how insane it is for some idiot from the government to be allowed to determine what is and what is not essential.

    • How about this:
      Deaths from COVID-19 in Illinois :1795
      Deaths from COVID-19 in Chicago and immediate surrounding areas: 1538 (City of Chicago 697)
      The entire State is shutdown.
      Not confusing at all, simplistic one size fits all mentality.

    • You’re right…maybe the hyphen in it could be Chi-Com19, or even a double hyphen…Chi-Com-19
      But then the grammar Police would probably have me arrested.

      In old Chinese measuring, the Chi is a traditional Chinese unit of length. … In its ancient and modern forms, the chi is divided into 10 smaller units known as cun (the “Chinese inch”). 10 chi are equal to 1 zhàng. Almost metric.

      Or Chi is a Chinese word meaning aliveness, life force energy, or life breath – also known as Ki, Qi or Prana. It also makes up part of the I-Ching…Book of Changes, which Mao and Xi have seemed to have forgotten. Neither have been worthy or had the attributes of being the Superior Man as described in the I Ching.

      The Definition of Chi: “Theories of traditional Chinese medicine assert that the body has natural patterns of qi associated with it that circulate in channels called meridians in English.

    • It really is nice to have a purpose to your life.
      Perhaps when the ChiCom-19 virus is but a distant memory, you will be able to find something else to give your life meaning.

  10. I imagine some around here would like to hear about the Ethanol plants here in Nebraska shutting down as well. Some have converted to making hand sanitizers. We aren’t in the total lockdown that most of the country is in however, the social distancing thing is happening and unemployment numbers are nowhere near the rest of the country. There are some other states here in flyover country that are doing the same. I’m curious to find out what the differences in the Kung Flu stats between states that lockdown and those that don’t. Here 1/ 38000.

    • The only place that the numbers are really bad is the New York City area.

      CDC provisional death statistics indicate that the only states with significantly elevated death rates from all causes are New York and New Jersey. New York City has approximately 170% of the expected number of deaths. Although the provisional data are incomplete, particularly for the most recent 3-4 weeks.

      • And their reporting of cause of death is also extremely questionable and almost certainly considerably inflated the numbers attributed to this virus.

  11. I would want to purposely get disease since I’m healthy and don’t want to pass it on to my parents or wife’s parrots. Both sets in 70s. Then I can quarantine and will feel reasonable sure I won’t spread it to them.

    My fear is unknowingly getting asymptotic infection and then unknowingly spreading it to them.

  12. Aren’t natural gas prices going to be going through the roof soon? As I recall, nearly 70% of our natual gas comes from fracking, and with fracking all but shut down and no coal plants… natural gas for electricity generation is about to go through the roof. We NEED to get rid of the CO2 endangerment finding and bring coal back on line.

    • Some people think natural gas prices will rise as associated gas production declines… I hope they’re right, but I tend to doubt that they are.

      • A big chunk of NG goes into home heating – which is cycling down. On the other hand, A/C use will soon be cycling up. Whether the consumption for cooking is higher or lower is anyone’s guess, with people staying home. (Although most restaurants use NG, so that might just be a wash.)

    • I don’t specifically know about Australia. Here in the US, pump prices tend to rise faster than they fall. Individual gas stations tend to increase prices based on the cost of their next tanker delivery and lower prices based on what nearby stations are doing.

    • My understanding is that negative WTI price reflects storage issues (chiefly at Cushing, Oklahoma) and oil futures longs paying people to take their oil contracts off their hands so they’re not obliged to take delivery.

      Brent (which reflects international prices) is still positive.

  13. Waza, as the volume drops, the gross profit drops on sales. Since the seller must live on net profits (and they can’t drop if he is to remain solvent and alive) he must increase his margin to pay the rent. You’re benefitting, but you have to share with the guy just upstream or it doesn’t work. You’re not being ripped off.

    No doubt, in many forms, it’s happening everywhere.

  14. Hi David
    Thank you for another interesting post.
    Post suggestion (starting with a bit of ironic humor)

    Splash: PEAK OIL FINALLY REACHED!

    Start with some graphs (follow me here…) and discussion. Punchline: Peak Oil Storage Reached….The post then goes into an informative discussion of how exactly oil is stored, by whom, for how long etc (tanks, ships, caverns, etc, etc). Tidbit: How much oil products can individuals store? (For example I have filled up 4 vehicles, 3 boats, and about 50 gallons of containers). How about all the gas stations, backup generators, etc. Curious minds (like me) have no idea..

    The discussion then morphs into how various oil/gas production facilities actually shutdown/cut production…I assume some are pretty simple, some are very complicated, some are “one way”? (ie shutdown severely impairs future well production?). How long to shutdown, vs how long to start back up?. What happens to a well that is owned or leased by a company that goes bust?

    Finally, how does this “negative” oil price actually work? If I own a large airline, is there any way I can lock in any of this “free” oil? Is the futures market saturated with the equivalent of $20/barrel product? How much future production can actually be hedged this way? The questions go on…

    I (and I assume many at WUWT) have lots of questions, and very little practical knowledge of how all this really works. The MSM is, of course, much worse than worthless in this regard.

    Like Rud Istvan, you are uniquely positioned to do a lot of worthwhile educating here….

    Thanks in advance!

    Regard,
    Ethan Brand

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