The fracking boom is over

Friday, November 28, 2014

Good afternoon:

I write today to advise everyone that the oil shale extraction business (i.e., fracking) is in deep trouble. The Saudis and OPEC have voted to maintain current production levels despite a glut. The price of Brent crude, which is the highest grade of oil, has dropped below $80 per barrel to $78.33 per barrel. OPEC’s decision to maintain production levels despite the glut assures that the price will continue dropping.

I mentioned the $80 per barrel price because fracking is expensive and the companies that frack cannot make a profit unless they can sell their oil for more than $80 per barrel. That is no longer possible.

Saudi Arabia and OPEC have started a price war to drive the frackers out of business by shutting down the oil shale market.

This means that the price of gas at the pump will continue to drop and it provides an opportunity for solar and wind to take hold.

Meanwhile, the outrage against Robert McCulloch’s blatant abuse of the grand jury continues to grow as prosecutors and defense counsel have joined to condemn the process. Even Nancy Grace jumped on the bandwagon.

I am pleased to see the pushback. For awhile seemed like I was the only one.

Hope y’all had a good Thanksgiving.

21 Responses to The fracking boom is over

  1. Deborah says:

    does all this mean the prices will go back up again if the US is unable to frack competitively?

    • MDX says:

      Probably.

      Resource extraction is a problem wherein the law of supply and demand applies well.

      The barrel price of oil is dictated by the market, each barrel sold has an extraction cost.

      Saudi oil fields are loaded with cheap to extract oil. However, the total supply of cheap to extract oil can no longer meet total world demand.

      Assume for arguments sake that their extraction cost is $30.

      Sure, they could flood the market and reap a short term profit when the price is $80. But doing that drives the price down and they end up selling their declining stocks of cheap the extract oil at a prices heading below $50.

      Or they could control what they sell so that a lot of their stock gets sold at a high price over a long term.

      So what we have is a whip saw effect. The price of oil goes up to support selling hard to extract oil and the cheap to extract producers take a short term profit and the price back down till they decide to cut output.

      It is a tough business with a lot of Vegas bluffing going on.

      I remember when the paid liars in the press were loudly proclaiming that oil was running out and it would never be under $100 per barrel again. Soon thereafter, there was a small article in financial news that the Mexican Government had locked in a long term futures contract at $130 per barrel, After this news, the bubble burst.

      • Deborah says:

        Thanks for responding MDX. I remember hearing oil was running out and prices remained high for so long I never expected them to fall. Now let me see if I understand right: The lowering in prices is attributable to fracking so capitalism is running rampant with everyone trying to undercut the prices of the fracking companies to continue access to the valuable US market. Meanwhile the fracking companies are realizing that they are the ones who will suffer in the long run, if prices continue to fall. Such a tangled web…

        • MDX says:

          Not quite.

          Oil becomes plentiful, if the barrel price can stay above $80, long term. However, there is still a large amount of cheaper to extract oil that can be sold below $80. So there is a temptation on the part of those who hold a lot of cheap to extract oil to temporarily flood the market to take advantage of the high price to maximize profit. So the frakkers shut down and, because cheap to extract oil can not meet total world demand, the price goes back up.

          We are in an unstable transition from the end of cheap to extract oil to costly to extract oil or alternatives.

          So when someone yells we are running out of oil, they mean “cheap oil”.

          Sadly, these cheap gasoline phases also hurt the development of electric drive systems for automobiles.

          When cheap to extract oil runs out, it appears that there is a large supply of oil at about $100 per barrel, long term. So the predictions of $10 per gallon gasoline are not correct.

          Personally, I hope we transition to cleaner sources of power.

  2. Deborah says:

    dagnabit, let me try again. I am trying to make quotes but they disappear each time.:

    Frederick Leatherman, I am wondering about what you said here: “I mentioned the $80 per barrel price because fracking is expensive and the companies that frack cannot make a profit unless they can sell their oil for more than $80 per barrel. That is no longer possible.” This article seems to contradict that: http://www.bbc.com/news/business-29643612 ?

    “What’s more, the majority of US shale oil is far cheaper to produce than a lot of conventional crude. So in any long term price war, US producers would be likely to win.

    “Some 98% of crude oil and condensates from the United States have a break-even price of below $80, and 82% had a break-even price of $60 or lower,” ”

    I have been trying to figure out the causes and the geopolitical ramifications of the drop in oil prices and found your viewpoint interesting.

  3. Deborah says:

    dagnabit, let me try again:

    Frederick Leatherman, I am wondering about what you said here: This article seems to contradict that: http://www.bbc.com/news/business-29643612 ?

    I have been trying to figure out the causes and the geopolitical ramifications of the drop in oil prices and found your viewpoint interesting.

  4. Deborah says:

    Frederick Leatherman, I am wondering about what you said here: <> This article seems to contradict that: http://www.bbc.com/news/business-29643612 ?

    <>

    I have been trying to figure out the causes and the geopolitical ramifications of the drop in oil prices and found your viewpoint interesting.

  5. Greg Beasley says:

    I don’t agree with everything Nancy Grace talks about, but as a former prosecutor she should definitely have the knowledge to see that the grand jury process in Ferguson was a whitewash.

  6. Malisha says:

    Kathi Lynn Alizadeh
    Clayton, Missouri 63105
    Bar # 33113
    admitted to bar 10/11/1985, in good standing

    And the url to go to for filing complaints:

    http://www.mobar.org/forthepublic/ethics/

    Does anybody know how to start one of those petitions folks put up on FaceBook and Twitter around and so forth?

    • J4TMinATL says:

      Malisha

      Both her and sherri should be ashamed. I’m still reading through 4,000 pages. From the questions they asked witnesses, to the comments they made about what’s going on outside, racial undertones (pointed out when a witness was first interviewed in a church discussing if pastor had been in room), to encouraging jurors to watch the news and read things, to lying about laws and not explaining when questions were asked, to telling jurors that she knows they will make the right decision, and the list goes on.

      Also the grand juror questions indicate that they had distances memorized (body from sidewalk 40+ ft) and other things. They acted like the two prosecutors did when asking questions and internalized the women’s beliefs. Distances were only used to try to discredit every witness except Killson’s and the witnesses had no idea.

      SCOTUS has a summary up:

      http://www.scotusblog.com/2014/11/cases-and-controversies-not-your-typical-grand-jury-investigation/

  7. Malisha says:

    IDEA:

    Missouri Supreme Court Rules on the Ethics of attorneys:

    RULE 4-8.4: MISCONDUCT

    It is professional misconduct for a lawyer to:

    * * *

    (c) engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. …

    * * *

    (d) engage in conduct that is prejudicial to the administration of justice;

    (e) state or imply an ability to influence improperly a government agency or official or to achieve results by means that violate the Rules of Professional Conduct or other law;

    (f) knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law; or

    (Adopted Aug. 7, 1985, eff. Jan.1, 1986. Amended Nov. 21, 1995, eff. Jan. 1, 1996; Nov. 25, 2003, eff. Jan. 1, 2004; March 1, 2007, eff. July 1, 2007; June 28, 2011, eff. Jan. 1, 2012; April 27, 2012, eff. July 1, 2012).

    Now wouldn’t it be wonderful if ten, twenty, four hundred and seven, seventy-two thousand nine hundred and sixty, … whatever … citizens started sending in individual complaints about Kathy Alizadeh to the Mississippi Bar complaining about her misconduct (handing out a law that was off the books in 1985 and declared unconstitutional by the US Supreme Court!) so that she can lose her bar license?

    She’ll be sacrificed. What say? I’m going to send one in. Join me?

    • Eric says:

      Even though I agree with your sentiment, my concern is that she can still argue that it was an honest mistake (though, we know that it probably was intentional obfuscation.). Also, McCulloch could argue that he ‘reprimanded’ her for the mistake and therefore there is no need for action from the MO State Bar.

      • Malisha says:

        But we should do enough to cause some articles in the press because once Alizadeh is defensive, OUR attack becomes the focus of the report. She could NOT have made an honest mistake because the old laws, that are off the books by now, do NOT POP UP on the on-line databases used by the state agencies, so the prosecutor would have to go to the damn LAW LIBRARY to find a 1979 law that had been gutted in 1985. That in itself would cause a few more articles to be written. By the time we had her on the ropes there would be momentum to hurt other officials who were routinely doing this kind of thing.

        Look: If someone convened a grand jury this year and was indicting a Black man for moving away from St. Louis without permission from his white boss, and a prosecutor pulled up a law of slavery from 1862 and claimed that he had to be convicted and have 20 stripes of the lash and have his achilles heel cut, and she handed them the slave law on a piece of paper but at the end stated drily: “This doesn’t agree with some of the later Constitutional interpretations” and her side-kick said, “We are not trying to send you to law school here,” and then a juror asked, “but wasn’t slavery repealed?” and the prosecutor said, “Don’t think about that; you don’t have to worry about that” would it make the news?

        What we want is to damage these people’s careers so they lose power because once they lose power, this sucker will get indicted and tried and convicted and GO TO JAIL.

        The attack must be on his protectors, not on him. HE CAN WAIT. there is no statute of limitations on murder. If his protectors disable his protectors, one after another, we will get him.

        • MDX says:

          She has no excuse whatsoever.

          It is the duty of a prosecutor to educate a jury as the how the law is presently applied.

          I get ethics training every year and am appalled at what went on in this sham.

  8. Malisha says:

    McCullogh very clearly used the grand jury to alleviate, for himself, the burden of “deciding not to do a damn thing about the murder of this young demon.” That does not mean that he could not, RIGHT NOW, charge Killson with murder. HE CAN.

    I think we should try to ramp up the pressure on HIM to CHARGE.

    He should not be able to pass this false buck. He should not be able to pretend he’s not the one blessing the murder of Michael Brown. HE should be the one who stands there and says: I WILL NOT CHARGE THIS COP WITH A CRIME AND I AM THE DECIDER.

    Then if somebody goes off and “takes revenge,” they will not be “taking revenge” on the wrong party.

  9. Malisha says:

    I need to research whether the DOJ could exercise jurisdiction over McCullogh somehow.

  10. racerrodig says:

    I have to admit I’m in the race car / hot rod business and those are the cars that got 10 mpg downhill with a tailwind. BUT….I have developed quite a few tuning techniques that I perform that get the emissions well below what they were from the factory and improve the mileage a lot.

    So……I’m doing what I can to help the environment…..I guess ??

    Anyway, i just bought gas for $2.51 about an hour ago. I believe that’s the lowest in 10 years and I was told it’s going to drop even more.

  11. sonniq says:

    Someone needs to upset the apple cart. The status quo has to change. I work with a company that sells Green energy to the public. quick.energygoldrush.com ( excuse my using this to advertize myself. People need to know how they can switch and not have it cost more. ) They want another way to help other than recycle glass and plastic. When I hear of the damage that fracking has done to entire communities it makes me angry. I know I speak for everyone right now when we put gas in our cars and it is less expensive.

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