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As Oil Prices Fall Below $0 Per Barrel, Climate Advocates Urge Against Fossil Fuel Industry Bailout

Originally published at http://www.commondreams.org/news/2020/04/20/oil-prices-fall-below-0-barrel-climate-advocates-urge-against-fossil-fuel-industry

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You are about to see the Mother of All Bailouts.

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These people at common dreams do not seem to understand economics, politics, or psychology. People are not paying others to buy oil. All that happened is the Aprils futures contracts expired and anyone left speculating just lost their shirt.

If you want to get rid of oil as an energy source nationalizing the oil industry is the worse thing you could do. First it costs you money unless you want to go communist and just take it. 2nd once it becomes part of the government there will be vested interests to keep it going as the employees are now government employees. Corporations having to raise debt for deficit spending are more likely to cut then any government. Green Norway has not shut down their oil industry.

Part two what prevents any new startup from capitalizing a new oil company? Unless you change the laws and say that energy companies from now on are illegal, you need an entire new format.

Lastly oil is a international commodity. Oil will exist regardless if the United States has a national oil company like Saudi Arabia or not. The only way you will see a migration from carbon energy sources is when the alternative is viewed superior by the market. To force anything else will require a distortion. Distortions have consequences as you are no longer doing what is most efficient. High energy prices in California are of no consequence to the rich who can afford 75K Tesla’s. Its a drag if you are one of the working poor.

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Yep. And I thought the Health Insurance indstry bail out that is coming was going toe the a Mutha
We are also about to see the mother of all great depressions.
There won’t be a nickle for MainStreet or individuals when this is over.

Welcome to the Second Republican Great Depression.
I suggest, start acting accordingly - NOW.
Don’ t know how? ask you grand parents or Great Grand parents how. They know

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meanwhile my local gas stations still charging $2.99 per gallon. damn them all!

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On Friday April 17, WCS dropped to $2.86/bbl, less than the cost of a cup of coffee. This morning WCS dropped to -0.01/bbl. Tar Sands bitumen is now worth less than nothing. WTI sits at -37.45/bbl, a nearly 300%, $56/bbl drop in one day. COVID-19 has shown the world’s fossil fuel industry what is going to happen when demand is destroyed for crude. There will be fratricidal competition for the demand that remains. The worst quality, highest production cost crudes will be abandoned first.

Alberta.ca posts financials of all 120 tar sands projects. As of 2018 the accumulated losses stood at more than $122 billion. Several projects are more than $15 billion in debt. Of 24 companies only Syncrude posted consistent profits. Koch and CNOOC (the Chinese at Long Lake) haven’t produced a barrel for years. By the Province’s AER ST98 (2019) report break even prices for mining operations need $80/bbl WTI, and insitu SAGD operations need WTI $50/bbl. This means Tar Sands operations are worthless. A fact the SEC forced Exxon/Mobil to acknowledge in 2016.

No one outside the US considers Alberta a reliable supplier of crude. They know Alberta will cut them off with the slightest hint from Houston. Alberta can expect no loyalty from Houston who will throw Alberta production under a VLCC tanker in an effort to cut supply and increase demand and prices for Texas crude.

Renewables have destroyed coal, and crushed natural gas, (google 'Lazard LCOE), and will now destroy the worst-quality, most expensive crude on the planet.
The oil industry, after quacking for 100 years about the nobility of ‘free enterprise’, and the utility of the ‘market’, now hope Washington and the rest of the World, will shout ‘Mommy’s coming’. This is hysterically funny, and contemptibly hypocritical, but not a rational basis for energy investment or economic development. I hope ‘creative destruction’ takes the hindmost.

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Yes, I was wondering if or how long it will take this to be reflected at the pumps.

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‘when the alternative is viewed superior by the market’ … actually, it will happen when the
congress critters are separated from the carbon lobbyist. When tens of billions in annual subsides go to zero and depletion allowances are collected for oil removed from public commons. When environment is protected and oil companies pay to clean up their mess instead of the masses.

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Oil is still way too expensive. Maybe it will be fairly priced at -$20 per barrel.

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Indeed. Considering that burning oil is one of the main contributors to CO2 emissions there should be a fine paid for each barrel sold.

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The Mother of all Bailouts - yeppers. And the easiest way to do it? Increase demand by going to war. War solves so many problems - props up the stock market, gets people back to work building bombs, kills millions of people (many more than will ever die from this covid hoax or any vaccine that Bill Gates will come up with), allows for ever more restrictions on our freedoms, and many other benefits that the .01% crave.

It’ll be interesting to watch what reason they come up with. What will be saddest to watch is how the sheeple will, once again, allow themselves to be fooled and will blindly follow their leader’s orders. Hell, we’re already allowing them to dictate what we can do and cannot do, where we can and cannot go, who we can and cannot talk to - all, of course, for the proverbial public good. And when war comes, it’ll be for the ‘public safety’ and the ‘preservation of life’. What a crock. All of it.

Maybe a world nuclear war is what the human species deserves. It’d certainly rid our Great Mother Earth of her greatest cancer. And She will recover from a nuclear war. Human species will not.

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Considering the previous one literally had trillions fed to the banks I will be shocked how they could manage to one up it. But never underestimate how much our government will sell out. And every Democrat will probably vote for it too.

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Chicago region refines Alberta tar sands oil. The Whiting Indiana BP refinery was built about 6 years ago for 3 to 4 billion dollars to process this nasty for diesel and jet fuel, as an example. Price is contract and less than !3.00 / barrel. I have read that it is $8.00 but doubt it.

2nd, The minus $37 is because Cushing Oklahoma has all their storage reserved. No room left for the traders holding contracts.

Previously, 7 years ago, WTI came north to Cushing OK and then to Pontiac, IL, over to Griffith, IN and thence to Sarnia, Ontarion. That pipeline was reversed to have Dakota crude flow south to Houston. Another pipeline now brings us our el cheapo, nasty alberta oil through Cushing.

BP sold the Alaska operations and pipeline within the past four months for about 6.5 billion dollars. They and royal dutch shell own Houston.

The time to nationalize BP was ten years ago when they killed 11 workers and destroyed our Gulf.

Yes, I would clawback from those britz plus criminal manslaughter against the managers who drilled when they knew from data that pressure was immense.

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You’ve hit the nail on the head, imho, implicitly recognizing the astonishing instability of the financial system this signifies. It gets to the point where the wheels have come off, and we’re so far beyond anything which could be called “bailing out” with a straight face. Everything’s underwater and there’s no place to bail.

Oil at negative $37.65 a barrel? That’s a domino falling near the foundation of the whole house of cards

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It’ll be a worldwide Depression. And the historical solution to economic depression? World War.

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You can add health care administration to that as well.

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That penultimate paragraph presupposes a competitive paradigm that has led us to the present point, envisioning a “clean energy” future fueled by the same alternately cutthroat and collusive strategies of the past.

To avoid the abyss, we have to not only change what we use to power our world

But also the profit system that pines to control it.

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A serious MOAB!

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You want to know what has more power then a bunch of carbon lobbyist, a block of employees representing 8% of your national GNP. There will be no politician who can risk that level wrath. I have no problems delegating capital gains tax breaks providing it is equitable across all companies. I have no problems letting oil companies go BK. I’m just pointing out that when something is part of the government it never goes away even if it should.

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If you choose to have some trader pay you $37 / barrel to physically take delivery of crude to be stored inside that 50,000 barrel tank in your backyard - surprise!

Traders sold buyers June contracts at $22 / barrel today. They did not pay anyone $37 to take the oil off their accounts.
Bait and switch?
Computer trading?
The trader holding the contract tomorrow must take physical possession.

Wringing hands because some wells need to be closed. The NYC experts on CNBC have never dirtied their hands, much less have skilled trades knowledge of oil, pipes and valves, pressure and flow, etc. So they come on camera and sell stupid remarks to spark fear. And sound professional and reasonable so that you and I will trust him with our hard earned money.

I’m enjoying the May contract snafu and the California pension losing one billion dollars and Illinois going backwards financially because of C-19. DC is not going to help democratic states.