Tag: Oil Industry

Restore Oil Flow Without Hormuz

The big deal these days is Donny and his delusional idea for the Strait of Hormuz but none of them will restore the flow of oil….is there answer to some sort of restoration?

This article covers the possibilities and god knows oil companies do not want to go without their money maker….

The largest global oil shock on record has catapulted U.S. gasoline prices above $4 a gallon, rekindled inflation and set the stage for November’s midterm elections.

It all traces to fighting in a narrow strip of water thousands of miles away. Iran’s near-closure of the Strait of Hormuz choked off a trade route responsible for about 20% of global oil supply, or nearly 21 million barrels of oil each day, according to the U.S. Energy Information Agency. A U.S. blockade of Iranian ships deepened the crude shortage.

On-again, off-again negotiations have shown little sign of a breakthrough, encouraging oil producers and Gulf nations to seek out other trade routes, some of which are already transporting millions of barrels each day.

Those alternatives, in theory, could eventually restore most of the lost oil flow and provide relief at the pump, some analysts told ABC News, but construction would take several years and require major investment. Still, they said, the approach may offer a durable fix, heading off future flareups in the Strait.

“You’ve already got some projects in the works. I don’t see any turning back,” Tom Seng, a professor of energy finance at Texas Christian University, told ABC News. “Nobody wants to get stung without a solution again.”

Shipping traffic in the Strait has declined sharply since the outbreak of war in Iran, according to oil data company Kpler. An average of about 13 ships crossed the Strait each day last week, the firm said in a post on X, down from more than 100 ships per day before the recent conflict.

https://abcnews.com/Business/gas-prices-fall-companies-build-oil-routes-bypass/story

The pipeline idea is a fanciful one….it will go through some unstable areas to make it to market….and then how will they secure the pipeline from attacks that will stymie oil flow?

Let me guess….the US military will provide security for these operations, right?

I think this is a bad idea….and if instigated would come back to bite us in the ass.

What do you guys think of this ‘plan’?

On a side note….there is talk of after the war with Iran that US would draw down its presence in the region….

The US military is considering reducing its military presence in the Persian Gulf, The Washington Post reported on Tuesday, as many of its bases in the region have been badly damaged by Iranian attacks.

Many of the US bases in the Gulf had been evacuated before the US and Israel launched the bombing campaign against Iran on February 28 due to their vulnerability, and some have been essentially abandoned following heavy Iranian attacks.

The Post report said that the damage to US bases in the Gulf has “prompted a once-in-a-generation chance for the Pentagon to reconsider its presence in the region” and that the Pentagon had already signaled it may not rebuild its Gulf bases to how they were before.

Sources told the paper that Adm. Brad Cooper, the head of US Central Command (CENTCOM), has been involved in discussions about the future of the US military presence in the region and supports holding deliberations on potentially moving troops west from the Persian Gulf.

Notably, a pullback of US troops from the Persian Gulf has been one of Iran’s conditions for a deal to end the conflict. Iranian officials have frequently said that they believe this war will lead to a US “retreat” from the region.

(antiwar.com)

Does anyone think oil companies will allow this to take place?

I don’t.

I Read, I Write, You Know

“lego ergo scribo”

WTF? A UAE Bailout?

This Donny move needs to be spotlighted.

I recently read that Donny is considering a taxpayer bailout of an oil rich country, the UAE….

President Trump said he is considering a financial bailout for the United Arab Emirates (UAE), an autocratic state experiencing an economic downturn due to the war in Iran. If the Trump administration does use public resources to rescue the UAE, it will be assisting a country that has partnered extensively with the Trump Organization and the Trump family.

On Sunday, the Wall Street Journal reported that UAE Central Bank Governor Khaled Mohamed Balama “raised the idea of a currency-swap line” during meetings in Washington, D.C., last week with Treasury Department and Federal Reserve officials, including Treasury Secretary Scott Bessent. Officials from the UAE said that they “had so far avoided the worst economic effects of the conflict but might still need a financial lifeline.” According to the Journal, a formal request has not yet been made.

UAE officials argued that the war between the U.S. and Iran could damage the country’s economy and harm its global financial standing. The war has already damaged the country’s oil and gas infrastructure, and Iran’s closure of the Strait of Hormuz has cut off oil shipments that are a key source of dollar revenue.

https://popular.info/p/trump-floats-taxpayer-bailout-for

I say bollocks to that!

Donny will do anything for his oil buddies….including throwing taxpayer money at them to preserve his standing with the wealthy.

Let them learn what it is like.

Then after ranting about this situation I read that the UAE is considering leaving OPEC….

The United Arab Emirates said Tuesday that it will leave the oil cartel OPEC and its wider OPEC+ group effective Friday, a move rumored for some time as the Emirates chafed under production restrictions and increasingly had frostier relations with neighboring Saudi Arabia. The UAE has been a longtime member of OPEC, first through its emirate of Abu Dhabi in 1967 and later when the UAE became its own country in 1971, reports the AP. But the UAE has been increasingly trying to leverage its own foreign policy in the Middle East, which has contradicted some positions of Riyadh over time—particularly as Saudi Arabia began to directly challenge the Emirates in trying to draw foreign investment as the kingdom opened up under assertive Crown Prince Mohammed bin Salman.

“This decision reflects the UAE’s long-term strategic and economic vision and evolving energy profile, including accelerated investment in domestic energy production, and reinforces its commitment to a responsible, reliable, and forward-looking role in global energy markets,” the UAE said via its state-run WAM news agency. “Following its exit, the UAE will continue to act responsibly, bringing additional production to market in a gradual and measured manner, aligned with demand and market conditions.”

Saudi Arabia long has been considered a heavyweight of OPEC, an oil cartel based in Vienna that has seen some of its market power wane as the United States increased its production of crude oil in recent years. Saudi Arabia and the UAE increasingly have competed over economic issues and regional politics, particularly in the Red Sea area. The two countries had joined together in a coalition to fight against Yemen’s Iran-backed Houthi rebels in 2015. However, that coalition broke down into recriminations in late December, when Saudi Arabia bombed what it described as a weapons shipment bound for Yemeni separatists backed by the UAE. Saudi broadcasters long based in Dubai, the economic hub of the UAE, have pulled back to the kingdom in recent months as tensions rose.

Come Friday the UAE will be an independent oil producer…..what will that mean?

OPEC just lost a cornerstone member at the worst possible time. The United Arab Emirates’ decision to walk away from the producers’ group strips OPEC of about 13% of its capacity and one of its few members able to quickly pump more oil—right as war in Iran has shut the Strait of Hormuz and scrambled Middle East alliances, reports the Wall Street Journal. “It’s the hardest blow ever,” Homayoun Falakshahi, a senior oil analyst at commodities data company Kpler tells the newspaper. “It raises the question about whether OPEC can survive.” The sentiment is widespread:

  • It’s “the beginning of the end” for the alliance, Saul Kavonic of MST Financial tells the BBC. The UAE is OPEC’s fourth-largest producer behind Saudi Arabia, Iraq, and Iran, accounting for about 3.6 million barrels a day, or 3% of the global supply, per the New York Times.
  • The effect on prices will be minimal in the short term because of the war, but the longer-term effect is harder to gauge. Greater volatility is one likelihood, per the Times. “But beyond the oil market implications, a deeper fault line is at play,” per Semafor. “The UAE’s move is the latest sign that it is no longer willing to go along with historic alliances it views as unnecessary purely for the sake of harmony.”
  • The nation has been signaling a break with OPEC for a while as its ties with Saudi Arabia in particular have frayed, per Reuters. The UAE no longer wants to be constrained by OPEC quotas, and it “would have both the incentive and the ability to increase production, raising broader questions about the sustainability of Saudi Arabia’s role as the market’s central stabilizer,” analyst Jorge Leon of Rystad tells the outlet.
  • One other common refrain is that the move is seen as a win for President Trump, who has previously complained that OPEC was “ripping off the rest of the world” with inflated prices, per Reuters. The BBC sees the move as opening the door to closer ties between the US and the UAE.
  • The break leaves 11 core members at OPEC, notes the Washington Post: Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, and Venezuela.

Bet prices go up.

Why is no one talking about a taxpayer bailout for a foreign country?

This is going to bite the US in the ass in several ways.

Need I say more?

I Read, I Write, You Know

“lego ergo scribo”

Defeat Russia At All Costs

Hit them hard with everything you have…..but not like that.

Ever since Russia invaded Ukraine the US and the NATO nations have imposed heavy sanctions (something I serious doubt) on the invader….financial sanctions mostly economic sanctions all in an attempt to weaken the Russian economy and its war machine….and this included sanctions on their oil industry where they derive a lot of their working capital.

If the West can cripple the oil industry then they, Russia, would most likely try to find a way to end this conflict, right?

So hit them hard and often…..but not like that.

If so then the latest move by the US is a bit confusing….

US officials are losing patience as Kiev fails to heed American demands to stop attacking Russian energy infrastructure. The White House fears the attacks will lead to an increase in oil prices and trigger reprisals by Moscow.

According to the Financial Times, “The White House had grown increasingly frustrated by brazen Ukrainian drone attacks that have struck oil refineries, terminals, depots, and storage facilities across western Russia, hurting its oil production capacity,” adding that US officials are concerned with “driving up global oil prices and provoking retaliation.”

The demands to halt attacks on Russian oil facilities may appear confounding to Kiev after NATO chief Jens Stoltenberg green-lit Ukrainian attacks inside Russia last month. Additionally, President Joe Biden has vowed to cripple the Russian economy, and the West has used sanctions and price caps in an effort to curb Moscow’s energy exports.

The White House may see increasing gas prices at home as a primary concern with the 2024 election on the horizon. Bob McNally, a former White House energy adviser, said, “Nothing terrifies a sitting American president more than a surge in pump prices during an election year,” as cited by FT.

As Ukrainian losses on the battlefield have continued in recent weeks, Kiev has conducted more attacks on Russian soil. This has led the Kremlin to evacuate thousands of children from a border region. Ukrainian forces also successfully attacked seven energy targets in Russia last week.

Washington’s fear that attacks on Moscow’s energy infrastructure will prompt retaliatory strikes on Ukrainian energy seems to have materialized. On Friday, the BBC reported, “A million people are without power across Ukraine after Russian missiles targeted energy infrastructure,” with Kiev’s Energy Minister German Galushchenko saying Moscow aimed to cause “a large-scale failure of the country’s energy system.”

(antiwar.com)

Is it win at all costs or is it just a geopolitical game of Risk?

Biden is really good, like most politicians, of speaking out of both sides of his mouth.

And the game goes on….

I Read, I Write, You Know

“lego ergo scribo”

Climate Summit–2023

As I type this post there is a conference going on and the world is in attendance…..found it interesting that it would be held in a country that sole purpose in existence is to pump oil.

I have been skeptical of these conferences ever since they have been called and that was back in the 1970s (yes I am old I remember them)….and this newest ‘Summit’ is No different….

For the past two weeks, the world’s best and brightest have been meeting in Dubai — under a glittering, color-changing dome built to resemble Islamic geometric art — as the petrostate hosts the United Nations’ latest climate change conference.

And experts are calling bull. In interviews with The Guardian, climate scientists and advocates said the “solutions” offered at the COP28 conference, which include such goofiness as a panel on “responsible yachting,” are “distractions” at best and “frightening” at worst.

Troublingly, the conference is presided over by Dubai’s Sultan Ahmed Al Jaber, who also runs the United Arab Emirates’ national oil company in what seems very much like a massive conflict of interest.

Al Jaber sparked controversy last week when he publicly expressed pessimism about a gradual fossil fuel phase-out and said there was “no science” behind it, which is categorically false given that the vast majority of scientists — not to mention the UN’s secretary-general — say that eliminating fossil fuel pollution is absolutely the biggest and most important way to turn back the tide on the worst of what climate change has in store.

https://futurism.com/dubai-climate-conference-warning

I expecting nothing better than crap….there is never anything coming out of these waste of time other than false promises and unfilled deadlines.

As long as we are writing about the environment…how about the Green New Deal that has been offered up by Dems?

You would be right if you think that I have had something to say about this ‘Deal’…..most are sitting around either scratching their ass or their head and could possibly do both since both are in the same location.

How About A “Green New Deal”?

Some think that the real ‘opiate of the masses’ is the green new deal….because it let’s too many off the hook for the problem they are feeding…..

What kinds of measures are you taking, personally, to prevent global warming? Have you bought a reusable shopping bag to reduce your reliance on disposable plastic ones? Do you carry a thermos so you don’t end up buying drinks in plastic bottles? Did you buy an electric car?

Let me make one thing clear: These good deeds are meaningless. They can even cause more harm than good.

Simply thinking that such actions are effective countermeasures can prevent us from taking part in the larger actions that are actually necessary to combat climate change. They function like Catholic indulgences, allowing us to escape the pangs of our conscience via consumerism and to look away from the danger around us, allowing the forces of capital to swaddle our concerns in environmental impact statements and tuck them away beneath the form of deception known as greenwashing.

https://www.thenation.com/article/economy/degrowth-communism-green-new-deal/

Few people are truly committed to preserving the environment….but it is fun to rattle on at gatherings and parties…..

I Read, I Write, You Know

“lego ergo scribo”

Closing Thought–09Aug22

In these days of high inflation we all have been jammed up at the pump….those damn gas prices are just too damn high…..but not to worry they have started their slow drop……but will they ever return to the days of yore when gas was affordable?

The answer to that question is….probably not!

Nothing can make or break a president’s political fortunes like the price of gasoline. As Ben Lefebvre reports for Politico, President Biden is trying to ease the pain by tapping the Strategic Petroleum Reserves, easing rules on ethanol sales, and proposing a temporary gas tax cut. Such bandages might bring temporary economic and political reprieve, but they’re not likely to last, according to Lefebvre. Others may disagree. For example, Republicans blame Biden’s climate agenda and are apt to call for more drilling. Environmentalists and transportation analysts say oil prices are bound to fall amid rising demand for electric vehicles and renewable fuels. That may be true, eventually, but US demand for gasoline will remain high for the foreseeable future, and there’s not much anyone can do about it, writes Lefebvre.

The problem boils down to the nation’s refining capacity, which has fallen steadily in recent years, not because of political directives or decreased demand but—in several ways—as a result of climate change. First, there’s the physical threat posed by intensifying storms along the Gulf Coast. That’s why Phillips 66 closed a Louisiana refinery damaged by Hurricane Ida last year, and it’s also why insurance rates are skyrocketing. Meanwhile, Shell shuttered a Louisiana refinery as part of its “strategic shift to shrink its fossil fuel asset portfolio.” It’s being converted to produce biodiesel. Others are following suit as executives and investors adapt to the economic and politic realities of climate change. Nobody plans to build new refineries, and those that remain are old and getting older. And that’s why any future presidents should expect to feel Biden’s pain. Read Lefebvre’s analysis here.

Sorry to be a bummer and pee on the parade….but I thought you needed to know before you got too excited.

You see they, oil industry, will keep a tight control on supply so they can maximize their profits.

I Read, I Write, You Know

“lego ergo scribo”

They Go Up And Seldom Come Down

WE all get sticker shock when we fill our cars with gas…..the prices just keep rising and we keep feeding the problem that is causing this situation…..with out some relief this will be a major issue in the elections…..

The average gas price in the US hit an eye-watering $5 a gallon Saturday, and analysts say the record-breaking price is a massive problem for President Biden and his admnistration ahead of the midterm elections—especially since relief could be a long time away. Recent polls show that an overwhelming majority of voters consider inflation a very serious problem and almost half of them say Biden has “a lot” of responsibilty for it, the Hill reports. Energy Secretary Jennifer Granholm recently said that with “such a demand and supply mismatch on the global market for oil,” it could be fall or winter before prices return to $4 a gallon or less.

Analysts say inflation has played a major role in lowering Biden’s approval rating, which now stands at just 38%, according to a Marist poll released Thursday. Matt Bennett at the Third Way think tank tells the Hill that part of the problem is that many Americans don’t realize how little control the president has over day-to-day gas prices. “I think he needs to get caught trying to do everything possible,” Bennett says. “Haul the CEOs of the oil companies in to the White House and demand that they tell him exactly what they need to get production up in the short term.”

Biden toured the port of Los Angeles Friday and promised that his admnistration will continue to do “everything we can to lower the prices for the American people,” the AP reports. He blamed corporate profits for surging inflation and said ExxonMobil in particular should focus on boosting production instead of maximizing profits. “Exxon made more money than God this year,” he said.

Now the question remains to be asked….just who sets the gas prices?

If you haven’t been paying attention, gas prices are up. This has happened before, to the great detriment of every corner of the economy but gas prices, and it will happen again. Why, exactly, does this keep happening?

As YouTube analyst Climate Town explains, the answer is complicated. So complicated, in fact, that there is no single person you can point to, throwing a lever and setting prices absolutely. Quite the contrary. There is a cartel that throws a big lever to set gas prices, but even they face factors out of their control. Gas prices correlate most directly to the price of crude oil, so the biggest factor in that price is instead fluctuations in the geopolitical landscape and world economy that have an effect on both supply and demand.

That does not mean nobody has any direct hand in the price of oil, though. While the world’s general reliance on oil for just about everything mean that demand is almost entirely hard wired to the state of the world, supply is certainly open to manipulation. That leaves room for the people actually getting that oil out of the ground, both multi-national oil companies and the OPEC+ cartel that directly manipulates supply out of nations with nationalized oil reserves, to keep prices artificially high in order to maximize profit along that curve. OPEC should be familiar to any car audience. It was OPEC cutting off America from its supply of oil that triggered the gas crisis of 1973. OPEC+ now includes Russia as well, but it’s not like Russia has been doing anything big in the world of politics, war, or the control of oil lately!

https://www.roadandtrack.com/news/a40243822/so-who-actually-sets-gas-prices/

We are the culprits.  Our gas guzzlers are the problem.  If you will not change your habits then I say suck it up.

I Read, I Write, You Know

“lego ergo scribo”

Closing Thought–06Jul21

Oops! My bad!

A head honcho lobbyists at Exxon just revealed that he has 11 US Senators in his pocket and they will do as they are told in the law making process……

From an interview with Keith McCoy is a senior ExxonMobil lobbyist on Capitol Hill…

McCoy said he has 11 U.S. senators who are “crucial” in ExxonMobil’s efforts.

“Senator Shelley Moore Capito, Senator Joe Manchin, Senator Kyrsten Sinema, Senator Jon Tester, Senator Maggie Hassan, Senator John Barrasso, Senator John Cornyn, Senator Steve Daines, Senator Chris Coons, Senator Mark Kelly and Senator Marco Rubio,” were all cited.

He went on to explain that the last thing they want is to appear in a public hearing before Congress where the American people can see.

“We don’t want it to be us, to have these conversations, especially in a hearing. It’s getting our associations to step in and have those conversations and answer those tough questions and be for, the lack of a better term, the whipping boy for some of these members of congress,” McCoy confessed.

(rawstory.com)

There you have it…..I have always said that our elected officials care more about the cash they rake in than the country they have pledged to protect.

These gutless slugs are not alone….every major industry has an official in their pockets and controls the flow of issues in the Congress.

Time to shut down this pipeline and force the reps into working for the country and not some corporation.

Turn The Page!

I Read, I Write, You Know

“lego ergo scribo”

 

Trump Extends EO 13303

This is a Bush era Executive Order that Trump has extended…..what is 13303?

Originally it was to help oil companies in Iraq in 2003….the lie is that the Extension order claims Iraq’s instability an ‘unusual and extraordinary threat’ ……

President Trump has issued a statement extending the May 22, 2003 National Emergency created by President Bush on the situation in Iraq. Trump’s statement cited the “unusual and extraordinary threat” posed by Iraqi instability.

The Bush emergency, Executive Order 13303, was meant to facilitate Iraqi reconstruction in theory. In practice, it gave US oil companies blanket immunity from lawsuits related to selling Iraqi oil.

This was criticized as Bush’s attempt to facilitate the US taking Iraqi oil after the invasion and occupation. That’s very on-brand for Trump too, so 17 years later he is just going to kick the state of emergency down the road.

Iraqi instability certainly means a very different thing in 2020 than it did in 2003, and trying to encourage Iraqi oil investment makes a lot less sense now than it did then. With the US pushing Iraq and other nations to cut oil production to shore up prices, its highly unlikely any company wants to invest heavily in Iraq, even if they get legal immunity.

(antiwar.com)

Back in 2007 I wrote about how the Iraqi people were being screwed by the oil companies and the Bush admin…..https://lobotero.com/2007/03/11/who-gets-iraqs-oil/

Now as then it is always about the Iraqi oil and the total screwing the people are getting….

Let Iraq handle their oil for themselves…..the money should go into the treasury and not the pockets of Big Oil….

I Read, I Write, You Know

“lego ergo scribo”

When The Oil Stops

Let’s look at the oil industry and Saudi Arabia…..the Saudis amass a fortune by the only resource….oil…..but what will KSA do if and when the oil stops?

Recently the oil futures dropped into negative territory….a place it has NEVER been in…..the Saudis were crying…..not to worry the US will do stuff to prop up a worthless regime on macho slugs.

Global Research took a look at the possibilities…..

Mohammed bin Salman can see for himself just how big a mistake that call was. The price of oil has collapsed, storage will rapidly run out, and oil companies face the real prospect of having to cap wells. The oil and gas sector accounts for up to 50 percent of the kingdom’s gross domestic product and 70 percent of its export earnings. This has just disappeared.

As anyone who has met Putin will tell you, you can bargain as hard as you like with the Russian president. You can even be on opposing sides of two regional wars, in Syria and Libya, and still maintain a working relationship, as the Turkish President Recep Tayyip Erdogan continues to do.

But what you must not do is back Putin into a corner. This is what the Saudi crown prince did by giving Putin ultimatums and shouting at him. Putin just shouts back, knowing that the Russian balance of payments is in better shape to play that game of poker than the Saudi one is.

MBS is finding out now how weak his cards are. To be fair, before he made that call, he took advice from someone as arrogant and unthinking as he is. US President Donald Trump’s son-in-law and Middle East advisor Jared Kushner listened to what the Saudi crown prince was about to do and did not object.

This explains why Trump’s first reaction was to welcome the oil crash. Trump thought for every cent cut from the price of oil, a billion dollars of consumer spending power would be released at home. That was until his attention turned to what the oil price collapse was doing to his own oil industry.

Saudi Arabia: What Happens When the Oil Stops

Best thing that could happen to the Middle East…..a KSA that cannot afford to flex its muscle in the region (but that is just my opinion)….

I Read, I Write, You Know

“lego ergo scribo”

Closing Thought–21Apr20

I remember the oil hysteria from the 1970s and 80s…..I can recall when I was young gas was 35 cents a gallon (I know…I am old)……and I have watched it go to $5 a gallon and more…..but I never thought that the oil markets would ever do what they did yesterday….

It’s been a historic day in the financial markets: Oil futures plunged below zero Monday for the first time as demand for energy collapsed amid the coronavirus pandemic. The plunge led to a drop in stocks, too: The Dow fell 592 points, or 2.4%, to 23,650; the S&P 500 fell 51 points, 1.7%, to 2,823; and the Nasdaq fell 89 points, 1%, to 8,560. But the market’s most dramatic action was by far in oil, where benchmark US crude for May delivery plummeted to negative $35.20 per barrel at 2:30pm Eastern, per the AP. It was nearly $60 at the start of the year. Much of the drop into negative territory was chalked up to technical reasons—the May delivery contract is close to expiring so it was seeing less trading volume, which can exacerbate swings. But prices for deliveries even further into the future, which were seeing larger trading volumes, also plunged.

Demand for oil has collapsed so much that facilities for storing crude are nearly full. Tanks could hit their limits within three weeks, according to Chris Midgley, head of analytics at S&P Global Platts. Benchmark US crude oil for June delivery, which shows a more ”normal” price, fell 14.8% to $21.32 per barrel, as factories and automobiles around the world remain idled. Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it’s not enough. “Basically, bears are out for blood,” analyst Naeem Aslam of Avatrade said in a report. “The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut.”

As an international relations geek it will be interesting to see how this effects geopolitics….especially nations that have nothing but oil to offer the world…like Saudi Arabia.

But not to worry we will NEVER return to the days when a dollar would fill the tank….sorry about that crappy news.

Further Reading:

https://uk.reuters.com/article/uk-global-oil/oil-price-crashes-into-negative-territory-for-the-first-time-in-history-amid-pandemic-idUKKBN2210VU

Some further views on this oil thingy……

Oil prices remained in turmoil in the US and the world on Tuesday, reports the Wall Street Journal. On Monday, the US benchmark dipped into negative territory for the first time, settling at -$37.63 per barrel. On Tuesday, the price improved, but remained in the red at -$6.30 per barrel. Meanwhile, the international benchmark (Brent crude futures) dropped 15% to $20.67 on Tuesday, the lowest figure in nearly 20 years. Coverage:

  • AOC’s revised tweet: When news of the historic slide into negative territory broke Monday, progressive Rep. Alexandria Ocasio-Cortez tweeted that “you absolutely love to see it,” but then deleted the tweet for what Business Insider calls a more “tempered” response. After calling this a “turning point in the climate movement,” the proponent of a Green New Deal wrote: “Fossil fuels are in long-term structural decline. This along w/ low interest rates means it‘s the right time to create millions of jobs transitioning to renewable and clean energy. A key opportunity.”
  • Not the ‘true’ price: In some ways, the negative price is an anomaly because of some financial “nuance”—it involves futures contracts, not the price of physical oil, writes Pippa Stevens at CNBC. How the AP explains it: “Trading of contracts for US oil to be delivered in May ends on Tuesday, meaning that the extreme drop does not accurately reflect the long-term view of the value of crude but rather investors’ ability to take delivery of it now. The next futures contract, for delivery in June, is considered to now be closer to the ‘true’ price of crude.” But that price is not so great, either: The June price was down to just $16.58 a barrel Tuesday morning.
  • Stop the spigots: The chief economist at commodities trader Trafigura puts it this way to the Journal: “This is the market signaling to producers that you need to cut off more production faster because we’re drowning in oil at this point.”
  • Gas pumps: Sorry, this does not mean you’ll be getting free gasoline, notes the Washington Post. The dip into red ink is “fleeting, and symbolic, more than anything, and it won’t have much effect on the price of gasoline at the pump,” writes Will Englund. “But it showed just how much the coronavirus pandemic has crushed the world’s energy markets—and how the global effort to stabilize them was failing.”
  • Quite a deal: At the New York Times, Neil Irwin writes about the “mind-bending” development. “If you happened to be in a position to take delivery of 1,000 barrels of oil in Cushing, Okla., in the month of May—the quantity quoted in the relevant futures contract—you could have been paid a cool $37,630 to do so.” And, yes, there’s a “technical” market explanation, “but the broader takeaway is that the COVID-19 crisis is an extraordinary deflationary shock to the economy, causing the idling of a vast share of the world’s productive resources.” And “the consequences will almost surely persist beyond the period of widespread lockdowns.”

I Read, I Write, You Know

“lego ergo scribo”