The Etp Model Has Been Empirically Confirmed

[brucep]

This time, you will be surprised.

When the low-quality oil ((shale oil, ultra-deep oil, artic oil, heavy crude oil...)) supply dissappears after getting hammered by months and years of low oil prices, the demand will be gone along it.

I will try to explain it. It takes more and more energy to extract oil and produce its by-products. The oil industry is very energy-intensive, and this energy mostly comes from the same "oil": You need to use oil almost for everything if you want to run the Oil industry through its life-cycle (I can set a few examples: You need oil to power the mining industry that extracts the materials required for assembling a drilling rig, you need oil to transport the materials required for assembling this rig, you need oil to assemble this rig, you need oil to ship the oil barrels to a distant harbor, you need oil to build the refineries, you need oil to pave the roads that will be used by the trucks to transport gasoline, diesel, fuel-oil, kerosene..., you need oil to transport the oil workers from their home to their workplace, you need oil to power the pumps that will inject water into the oil-field and will transport/desalinate it from the sea/aquifer, you need oil to build these pumps... I think you already figured out what I meant some examples ago...).

This time, when the Oil supply from a determined shale field ((or even the Oil supply from a Future and imaginary shale field, this is occurring right now)) goes out the market ... the Oil demand required by the mining industry, by the ships, by the refineries, by the field... will be gone FOREVER. Nowadays, Oil is used to power the Oil-sector and the other economic sectors (bussiness, industry, services...) of the economy. If you use more oil in the Oil-sector, you have less Oil available for the other economic sectors of the economy. Only the other economic sectors have the ability to pay BOTH for the Oil used for the oil-sector and for the Oil used for the same economic sectors. If the other economic sectors are getting less Energy by this ongoing process, a point is reached where their ability to pay for the oil is reduced (Energy Half-Way point) The development of this situation includes ever-increasing oil inventories storing oil that cannot be absorbed by the economy and a long-term price decline...

The world is not running out of oil... is running out of economy to pay for the oil that remains in the Earth's crust - Or we could also say that the oil that is able to produce economic growth after its extraction/processing/distribution has almost been depleted...

Get a clue. You don't know jack shit about how the oil industry operates it's business. The only part of the refining process which is oil intensive is unit feedstock. The energy source that will shutdown the process is electrical energy. The plant won't shutdown because the forklift ran out of gas. That would be your car.

 

[brucep]

There are at least three things wrong with this reasoning.

First, there is no reason to think that the energy demand of oil exploration itself is that large compared to the energy content of the oil produced from it. This paper : http://psi.org.uk/pdf/Energy Working Paper - June 2005.pdf

indicates that for the UK, offshore oil & gas exploration was deemed to be responsible for around 8% of the CO2 emissions of the UK economy. Call it 10% for a round number. So ~90% of the CO2 - and hence 90% of the energy - was liberated by burning the oil and gas in the general economy.

Second, there is no reason to think that a fracking operation that is shut down is gone "forever". As soon as oil and gas become sufficiently scarce the price will rise (in accordance with the laws of supply and demand) and business will return to exploit these higher cost wells. As for the negative effect of the decline of fracking on the total economy, the fraction of it represented by the fracking industry is a tiny part of the total economy of the world. Furthermore, as we all know, when one class of business declines, economic resources switch elsewhere. People do not just sit on their arses, they get other jobs. Economies are dynamic: some businesses are always fading and others always growing. There is no reason to think the fortunes of the fracking business are in any way special in this regard.

Third, there is no reason to think energy available to economies is somehow being throttled and this will prevent them being able to afford the cost of oil. The opposite is true. We have a glut of oil. That is why the price is low. Economies can have more than they need, not less.

Very informative. Especially emphasizing 'glut'.

 

[Futilitist]

The US market has the day off tomorrow, but the rest of the world is not off to a good start so far...

http://www.zerohedge.com/news/2016-...crashes-saudi-stocks-plunge-most-black-monday

Mid-East Massacre: Qatar Crashes, Saudi Stocks Plunge Most Since Black Monday

Submitted by Tyler Durden on 01/17/2016 12:41 -0500


Broad middle-east and african stock markets crashed over 5%, erasing any gains back to November 2008 as the carnage from last week continues. From Kuwait (-4.3%) to Qatar (-8%) it was a bloodbath as Saudi Arabia Tadawul Index plunged 5.4% - the most since Black Monday (now down over 50% from their 2014 highs). These losses are far in excess of US 'catch-up' moves and suggest a dark cloud over Asia this evening.


It's been a bloodbath in the Middle-East since the year began...




Africa/Middle-East Stocks crashed 5%...




Saudi Arabia's Tadawul Index is down 5.4% on the day - the worst since August's collapse and has lost over 50% since its exuberant peak in 2014...





---Futilitist

 

[krash661]

but the rest of the world is not off to a good start so far...

http://www.zerohedge.com/news/2016-...crashes-saudi-stocks-plunge-most-black-monday

first-- are the overseas markets even open yet?
and second-- OH MY you have no clue of or about zero hedge huh-- you are clueless of how this guy(i forgot his name) was incarcerated from the fraud and ponzi scheme they had initiated, and is now , only, simply, spewing on a webpage because by law he cannot even touch the markets due to his fraud. look it up-- it is publicly displayed.

 

[krash661]

just a little tidbit--
" The site posts nearly indecipherable analyses of multiple seemingly unrelated subjects to point towards a consistent theme of economic collapse any day now. Tyler seems to repeat The Economic Collapse Blog's idea of posting blog articles many times a day and encouraging people to post it as far and wide as humanly possible. Tyler moves away from the format of long lists to write insanely dense volumes[3] filled with (often contradicting) jargon that makes one wonder if the writers even know what the words actually mean.[4] The site first appeared in early 2009, meaning that (given Tyler's habit of taking a shit on each and every positive data point), anyone listening to him from the beginning missed the entire 2009-2014 rally in the equities market.
The only writer conclusively identified is Dan Ivandjiiski, who conducts public interviews on behalf of Zero Hedge.[5] The blog came online several days after he lost his job at Wexford Capital, a Connecticut-based hedge fund (run by a former Goldman trader). And chose his pen name from a nihilistic psychotic delusion.
Zero Hedge is not quite the NaturalNews of economics, but not for want of trying. "

" Accusations of plagiarism
Tyler has a habit of taking other people's research, sometimes adding a slant to it of economic doom if it isn't there already, and posting it on Zero Hedge.[12] This included a series of reports leaked from Merrill Lynch's chief economist David Rosenberg.[13] Lawyers were sent with takedown notices, and were not moved by his claims of censorshipabout publishing their copyrighted documents. Morgan Stanley had the same issue later, and is considering legal action in addition to demanding the material be taken down.[14] "

" Allegations of "pump and dump" involvement
Ironically, Zero Hedge has itself been accused of some of the manipulation it claims to expose "

" The law firm behind the suit describes Zero Hedge as "a portal for people to anonymously distribute derogatory information concerning public companies," giving the impression that Zero Hedge may well have arranged many such pay-to-defame schemes. "

 

[Futilitist]

Perhaps...

But, nevertheless, the story is completely accurate, as confirmed by Bloomberg.

http://www.bloomberg.com/news/artic...e-august-after-sanctions-relief?bpop=97992772

Mideast Stocks Plummet as Iran Plans to Boost Crude Exports

Stocks across the Middle East tumbled as the easing of sanctions against Iran raised the prospect of a surge in oil supplies to a market already reeling from the lowest prices in more than a decade. Shares in Tehran gained.

Saudi Arabia’s Tadawul All Share Index dropped 5.4 percent to its lowest level since March 2011. Abu Dhabi’s ADX General Index fell into a so-called bear market.

Oil's collapse has prompted investors to price the BGCC 200 Index at the deepest discount to emerging markets in almost five years.

Panicked Investors
Egyptian equities extended losses after their worst week since the Arab Spring. The EGX 30 Index fell 1.7 percent to the lowest level since October 2013.

“Local investors are panicking because of the selloff in Gulf markets after oil’s drop last week," said Tamer Ismail, the head of dealing at Cairo Capital Securities. "Low oil prices should be positive for us, but people are ignoring that rationale and exiting the market while they still can.”

The most populous Arab country is a net importer of crude and stands to save on its fuel subsidies bill with lower oil prices. Stock losses prompted the bourse to urge companies on Thursday to expedite the release of their 2015 results to ease "unjustified panic."

first-- are the overseas markets even open yet?

Middle East Markets trade on Sunday (Sunday -Thursday). It is currently 1:05 AM, Monday, January 18, 2016 (GMT+3) in Saudi Arabia.



---Futilitist

 

[krash661]

Perhaps...

But, nevertheless, the story is completely accurate, as confirmed by Bloomberg.

http://www.bloomberg.com/news/artic...e-august-after-sanctions-relief?bpop=97992772

Mideast Stocks Plummet as Iran Plans to Boost Crude Exports

Stocks across the Middle East tumbled as the easing of sanctions against Iran raised the prospect of a surge in oil supplies to a market already reeling from the lowest prices in more than a decade. Shares in Tehran gained.

Saudi Arabia’s Tadawul All Share Index dropped 5.4 percent to its lowest level since March 2011. Abu Dhabi’s ADX General Index fell into a so-called bear market.

Oil's collapse has prompted investors to price the BGCC 200 Index at the deepest discount to emerging markets in almost five years.

Panicked Investors
Egyptian equities extended losses after their worst week since the Arab Spring. The EGX 30 Index fell 1.7 percent to the lowest level since October 2013.

“Local investors are panicking because of the selloff in Gulf markets after oil’s drop last week," said Tamer Ismail, the head of dealing at Cairo Capital Securities. "Low oil prices should be positive for us, but people are ignoring that rationale and exiting the market while they still can.”

The most populous Arab country is a net importer of crude and stands to save on its fuel subsidies bill with lower oil prices. Stock losses prompted the bourse to urge companies on Thursday to expedite the release of their 2015 results to ease "unjustified panic."


Middle East Markets trade on Sunday (Sunday -Thursday). It is currently 1:05 AM, Monday, January 18, 2016 (GMT+3) in Saudi Arabia.



---Futilitist

" first-- are the overseas markets even open yet? "
" January 16, 2016 — 9:56 PM PSTUpdated on January 17, 2016 — 6:43 AM PST "

" MIDDLE EAST TIME ZONES. In the Middle Eastfour different time zones are used. These timezones span from UTC (GMT) +2 hours to UTC (GMT) +4 hours. Iran sets their standard time as UTC (GMT) +3.5 hours. "

"
Middle East Current Times
Select Country From Menu Below to View Details

BahrainGaza StripIran
Monday
1/18/2016
1:24 AM
UTC+03:00Monday
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1:54 AM
UTC+03:30

IraqIsraelJordan
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1/18/2016
1:24 AM
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1/18/2016
12:24 AM
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1/18/2016
12:24 AM
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KuwaitLebanonOman
Monday
1/18/2016
1:24 AM
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1/18/2016
12:24 AM
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1/18/2016
2:24 AM
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QatarSaudi ArabiaSyria
Monday
1/18/2016
1:24 AM
UTC+03:00Monday
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1:24 AM
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1/18/2016
12:24 AM
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United Arab EmiratesWest BankYemen
Monday
1/18/2016
2:24 AM
UTC+04:00Monday
1/18/2016
12:24 AM
UTC+02:00Monday
1/18/2016
1:24 AM
UTC+03:00

 

[Futilitist]

Like I said, Middle East markets trade on Sunday.



---Futilitist

 

[Futilitist]

And oil drops another dollar.

Brent Crude Oil is now $28.30



---Futilitist

 

[exchemist]

And oil drops another dollar.

Brent Crude Oil is now $28.30



---Futilitist

For background on the factors driving this, read this, from the BBC: http://www.bbc.co.uk/news/business-35340893

So we have a glut of oil, caused mainly by oversupply, due to geopolitics (Saudi policy and now lifting of sanctions on Iran). This is, apparently, likely to continue for quite a while.

Kondratieff was arguing that a shortage of oil would strangle the world economy. I shall be amused to see by what contorted argument a glut of cheap oil is going to strangle it.

But whatever that argument may be, it is fairly plain that thermodynamics is not preventing the Saudis and the Iranians from extracting and supplying far more than we all need.

 

[Futilitist]

For background on the factors driving this, read this, from the BBC: http://www.bbc.co.uk/news/business-35340893

So we have a glut of oil, caused mainly by oversupply, due to geopolitics (Saudi policy and now lifting of sanctions on Iran).

This is totally false. You are being very dishonest.

You linked a BBC article to bolster your stupid argument, but that article does not support your stupid argument.

http://www.bbc.co.uk/news/business-35340893

Here is what the BBC said was the cause of falling oil prices:

"The drop in the price of oil has been driven by oversupply, mainly due to US shale oil flooding the market."

At the same time, demand has fallen because of a slowdown in economic growth in China and Europe."

The oil price plunge of over 70% so far is certainly not "due to geopolitics". It is due to thermodynamics.



---Futilitist

 

[origin]

The oil price plunge of over 70% so far is certainly not "due to geopolitics". It is due to thermodynamics.

That doesn't even make any sense.

 

[exchemist]

This is totally false. You are being very dishonest.

You linked a BBC article to bolster your stupid argument, but that article does not support your stupid argument.

http://www.bbc.co.uk/news/business-35340893

Here is what the BBC said was the cause of falling oil prices:

"The drop in the price of oil has been driven by oversupply, mainly due to US shale oil flooding the market."

At the same time, demand has fallen because of a slowdown in economic growth in China and Europe."

The oil price plunge of over 70% so far is certainly not "due to geopolitics". It is due to thermodynamics.



---Futilitist

Nothing dishonest. I quote:

"Investors fear the lifting of Western sanctions on Iran could worsen the existing oversupply problem.
Iran's deputy oil minister Roknoddin Javadi has expressed confidence the country can produce an extra 500,000 barrels per day.

Phillip Futures analyst Daniel Ang said the earlier price drop was due to concerns about Iran. "This means we will be seeing a bigger oil glut with Iranian crude exports coming back to the market," he said."

But anyway it does not matter, oversupply is the issue, not lack of production due to some imbecilic thermodynamic argument in which the energy content of oil is ignored.

 

[krash661]

This is totally false. You are being very dishonest.

You linked a BBC article to bolster your stupid argument, but that article does not support your stupid argument.

http://www.bbc.co.uk/news/business-35340893

Here is what the BBC said was the cause of falling oil prices:

"The drop in the price of oil has been driven by oversupply, mainly due to US shale oil flooding the market."

At the same time, demand has fallen because of a slowdown in economic growth in China and Europe."

The oil price plunge of over 70% so far is certainly not "due to geopolitics". It is due to thermodynamics.



---Futilitist

(me)
" think about this-- what happens when supplies are restrained or cut?
the funny thing is no one has even mentioned such a thing as it is typically done-- for decades now. "

" Historically, Opec has cut production to support prices. But led by Saudi Arabia, by far the group's most powerful member, the group has resolutely refused to trim supply this time. "
i predict that this will change and that they will cut supply as they will see that they are ffucking themselves if they do not--as what is already shown.

" ge·o·pol·i·tics
ˌjēōˈpälədiks/
noun

1. politics, especially international relations, as influenced by geographical factors.
   • the study of geopolitics.
     noun: geopolitics; noun: geo-politics; plural noun: geo-politicses "

agian from ex's article: " Historically, Opec has cut production to support prices. But led by Saudi Arabia, by far the group's most powerful member, the group has resolutely refused to trim supply this time. "

 

[Futilitist]

But anyway it does not matter, oversupply is the issue, not lack of production due to some imbecilic thermodynamic argument.

"The drop in the price of oil has been driven by oversupply, mainly due to US shale oil flooding the market."
~BBC

We have a glut now, but the oil on the market is currently being sold at a price that is well below the cost of it's production. It was only easy credit that made all of this possible. This cannot be sustained. The world is running out of affordable oil. And that is due to thermodynamics.

That doesn't even make any sense.

Sure it does.



---Futilitist

 

[krash661]

"The drop in the price of oil has been driven by oversupply, mainly due to US shale oil flooding the market."
~BBC

We have a glut now, but the oil on the market is currently being sold at a price that is well below the cost of it's production. It was only easy credit that made all of this possible. This cannot be sustained. The world is running out of affordable oil. And that is due to thermodynamics.


Sure it does.



---Futilitist

and yet the issue is still over supply. (shrugs)
also learn something of up-stream and down-stream-- also when supplies are bought and earmarked.
" The world is running out of affordable oil "
as you scream about the low price of oil in your previous sentences. as these articles tell you that opec/iran is only the 4th largest (shakes head)

 

[krash661]

in a sense the thoughts should be-- why is iran increasing production when they know very well it will cause prices to drop even further-- it is like why would they want the price to drop even further.

 

[exchemist]

"The drop in the price of oil has been driven by oversupply, mainly due to US shale oil flooding the market."
~BBC

We have a glut now, but the oil on the market is currently being sold at a price that is well below the cost of it's production. It was only easy credit that made all of this possible. This cannot be sustained. The world is running out of affordable oil. And that is due to thermodynamics.


Sure it does.



---Futilitist

Nope. Saudi Arabia and Iran can produce for ~$10/bbl. Read here: http://money.cnn.com/2015/11/24/news/oil-prices-production-costs/

So it's utter rubbish to say it is being produced below cost now. They have a lot of cheap oil, costing $10/bbl, to sell to the world. That is their competitive advantage compared to US shale, and they have decided to use it.

According to you, that is thermodynamically impossible! But of course it would seem so, if you persist in using an imbecile model that treats the thermodynamics the same as for extracting water, ignoring the energy content of the oil produced.

 

[Futilitist]

Nope. Saudi Arabia and Iran can produce for ~$10/bbl. Read here: http://money.cnn.com/2015/11/24/news/oil-prices-production-costs/

So it's utter rubbish to say it is being produced below cost now. They have a lot of cheap oil, costing $10/bbl, to sell to the world. That is their competitive advantage compared to US shale, and they have decided to use it.

According to you, that is thermodynamically impossible! But of course it would seem so, if you persist in using an imbecile model that treats the thermodynamics the same as for extracting water, ignoring the energy content of the oil produced.

I never said the Saudi's don't have some cheap oil. I said that we don't. US oil is currently being sold for less than the cost of it's production. But it's funny you should mention water. I think the Saudi water cut is around 90%. For every 10 barrels they pump, 9 are water and only 1 is oil.

Globally, oil wells produce about 220 million BWPD (barrels of water per day)—roughly three barrels of water for every barrel of oil. In older fields, the water "cut," or ratio-of-water-to-oil, can be 95% or higher. Managing this produced water is a great challenge for operators.

The Etp model deals with the lifting costs of the liquid that comes out of the ground. That cost is the same whether you pump oil or water. That is why the model treats the thermodynamics the same. Get it?



---Futilitist

 

[Billy T]

... The oil price plunge of over 70% so far is certainly not "due to geopolitics". It is due to thermodynamics. ---Futilitist

The three laws of thermodynamics are:

• • The first law, also known as Law of Conservation of Energy, states that energy cannot be created or destroyed in a chemical reaction.
  • The second law of thermodynamics states that the entropy of any isolated system not in thermal equilibrium almost always increases.
  • The third law of thermodynamics states that the entropy of a system approaches a constant value as the temperature approaches absolute zero.

Source: Boundless. “The Three Laws of Thermodynamics.” Boundless Chemistry. Boundless, 14 Oct. 2015. From https://www.boundless.com/chemistry...23/the-three-laws-of-thermodynamics-496-3601/

Which refer to the price of oil? As I told you before, Thermodynamics NEVER refers to any material substance or the cost of any. Price of anything, changes with supply and demand, but technology advances can change the supply* or with natural substances found in the earth, new discoveries can change the supply too.

* For example, before the Hall process, aluminum was much more expensive than gold - Why a tiny pyramid of it, instead of gold forms the top of the Washington Momentum.