Wednesday, August 26, 2015

Why the oil price slump might not last as long as you think

I see where even that indefatigable optimist, Todd Hirsch, is crying "uncle" over low oil prices.

That's quite a climb-down for Todd. He's one of the greatest optimists I've ever run across. Todd has invented so much hilarious shit that he can single-handedly keep a reasonably competent satirist going for years.

Between the gig economy and unemployed lumberjacks reinventing pizza deliveries, this blog has grown rather fond of Todd.

So no offence to Todd, but just as he's bailing out, I'm bailing in.

In case you've not been following the MAKS 2015 Airshow, there's been a ton of interesting goings on going on over there. Seems there's been a steady flow of Arab potentates lining up to kiss the hand of Bad Vlad.

And while these Arab potentates have a number of differences with Mr. Putin, they also have a profoundly persuasive common interest.

None of them want to see $40/bbl oil.

Why would you want to deplete your God-given legacy for forty bucks a barrel when the world would be more than happy to pay you $100 plus?

The major problem is those countries that don't mind poisoning their fresh-water aquifers with willy-nilly fracking all over the place. That would be the US and a few satellite states who have agreed to bend over and spread 'em for a few short years of a fracking bonanza.

Those are the countries that have ramped up the supply and thereby driven down the price. The last nine months of OPEC's open taps have been a message telling the frackers that when push comes to shove, they'll let the upstarts drown in their own oil.

But that can't last forever.

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