Featured A seller has a tanker full of crude

Do i have to refine and pump it somewhere?

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From the title, I thought this was going to be one of those forms-of-government jokes: "You have one tanker full of crude. You sell half and put half in a salt mine ...."

 

Invest in old salt mines

 

Just put it in the Strategic Oil Reserve. As for keeping refineries in operation, mixing their output with the strategic reserve just makes it that much more valuable as future feedstock.

Bob Wilson

 

I've been wondering about creative oil storage solutions. Maybe a canning line for convenient 14oz servings?

Maybe light off the Canal Generating Plant in Massachusetts? I understand it's one of the largest oil-burning devices in the USA. At least some of it was converted to gas but I'm not sure. I think we are soon due to begin the first air conditioning season since they shut down the nearby Pilgrim nuclear generating station so they may need the power anyway.

They could earn a lot of money operating that thing.

 

That was earlier today. That inventory seems to be gone already, somebody scarfed it all up. (I would hope that it went to the Strategic Petroleum Reserve, but don't expect the speed of government to respond quick enough.) Tonight, it is back to you having to pay the seller. Not much, but not backwards as it was this morning.

And the inversion was for May only, not June or beyond. Yet.

 

...and if it in the positive again, that means our domestic producers may still avoid going belly-up.

Win-win.

 

The current plunge is going to put a lot of drillers/refineries out of business. The ones that survive will be looking to make up their financial losses. Expect gas prices to soar once the crisis passes and the economy starts to recover. The oil industry may not be able to control drops in demand, but they can sure manipulate the supply to get the price they want (see OPEC).

 

Oil is worth big bucks if you have a buyer.
Otherwise?

It's HAZMAT.
How much would Exxon have paid to get those 260,000 barrels on one of their tankers into storage in 1989 instead of having to pay a half a giga-buck (or more) to clean up a spill???
Oil is always gonna be worth SOMETHING (one way or the other) and yesterday's numbers are only statistics.

OPEC only has the power to influence oil prices below about $60 (probably more like $50) a barrel which in last years prices roughly translates to whatever you were paying for gas LAST year.....about $2.20 locally, for me.

"Today's" economy is on cruise control at 35mph through a hospital zone.
It's not in a coma, but it's FAAAAR from buzzing along interstate speeds.

Nobody is buying cars.
Gas, hybrid OR electric.
Planes are flying with 2-3 pax on board.
Schools are shut down....yada yada.

I'm thinking that a "middle road" prediction for the post-COVID-19 economy will land somewhere between the 2009 recession and the 1930's Depression for severity and this will make new car buyers more price sensitive than they were in 2019.
Slow economies mean soft energy demand, which in turn means that hybrids, PHEVs, and BEVs will be more expensive to buy (in roughly that order) AND the their energy savings will be attenuated by softer oil demands.

Remember the TWO things stat started this.....
The Covids and a spat between the Rooskies and the Ayrabs.

At least one of those ain't going away for a while, and meanwhile people are storing oil in every empty storage space that they can find.
THAT means that if the "players" try to shut off the spigot again then oil prices will only spike long enough for people to realize that we can turn up our domestic production rapidly enough to prevent another 1973.....
You can only use that trick soooooo many times before the customers get wise.

MY next car WILL be a hybrid or a PHEV but only because I live in hurricane country and can use one to turn petrol into electricity.
BUT.....my next car is probably 2-3 years away while i wait until I see if I still have a job in 2-3 years.....

22,000,000 people have been turned into the recently unemployed.
I'm betting that THEY are not going to be buying for a while either.

Oh....and we just got off of a major car buying glut over the last few years which is why some makes are offering interest free 84 month loans to buy one.

HOW LONG WILL IT BE before they start PAYING US to drive one off of their lot?

 

Are there going to be many 2021 cars? Plenty of assembly lines have stopped altogether, and once stopped they might stay that way for a while.

It's going to be a slow climb back up.

 

I'm old enough to remember car makers being important enough to bail out.

Funny metaphor ...that....
It never mentions plugging the leak..

 

What usually happens in this situation is one of our refineries has an "accident", and millions of gallons of crude is wasted away. However, for something like this to happen now, all refineries would have to have "accidents", and that would be too obvious/suspicous..............

 

where I work shortages extend into July

even if car makers want to make vehicles they likely couldn’t.

I expect used car prices to go up and new to depend on supply levels

thus far the used cars I follow haven’t changed in asking priced

 

cash for clunkers

 

Yeah kick em while we’re down

 

I realize lots of people won't want to hear it, but I'm very pessimistic about the economic end of this. I really think it'll be 30 years before anyone in the bottom 99% is back up to where they were in January.

And no, I'm not clamoring to restart things. I want it rebuilt properly with safety valves and other mechanisms to allow our next economy to be more resilient than the one we just killed.

There might be another bat.

 

I expect a depression after this and covid 21 in the fall

I am hoping we don’t spiral through a monetary failure

there were a huge number of businesses, larger than any time in our history
that were financially always 2 weeks from bankruptcy in recent decades, around here there is already a steady stream of break lease go bankrupt in the small business sector

our state says 80% of small businesses will fail in another 8 weeks.

Old rule of thumb is you need 6 months of resources on hand to be a healthy business.

the way we operate today nobody runs that way and is thus susceptible to fail due to any minor disruption

EVEN Amazon might fail in a year because 100% of their profit comes from businesses/ government paying to use their backbone infrastructure, most of their profit comes from small business accounts
most of which is likely to get terminated as these businesses fail.
If Amazon is forced to actually make money off Prime I doubt it would survive

the start of Amazons troubles is easily demonstrated by YouTubers income moving to zero, the lack of monetization will expand throughout the net affecting all companies.

no one is immune the longer this extends

 

Laughed at "might" be.....

It's like hurricanes.

I traveled to Biloxi some months after Katrina for a school on some gizzy-whopper or another, and a tech was crying.....LITERALLY crying that she could no longer afford insurance on her inherited family's home...a block from the beach without substantial modifications - like putting the structure on piers (for fed insurance.)
I tried to explain to her that elevating the home or perhaps.....JUST perhaps, NOT rebuilding a single-family detached dwelling 300' from salt water might be the more logical approach.
She actually ASKED...."What are the chances of another Hurricane as bad as the last one?"
I'm ashamed to admit that I might have had a less than Christianly response to that question that ended with me asking her how many times she expected ME as a TAX PAYER to keep fixing her house.
Not proud of that, but hey....that was almost 20 years ago.

As it turns out?
Pandemics happen like that too.

Neither, I fear, will be prevented....or CAN be.
Herculean efforts MIGHT mitigate them, but there will always be trade-offs.

For a homeowner?
It might be figuring out how to get a sofa up a 15' stairwell or how to pay for a $6,000 a year insurance tab for a 1400 square foot wood frame house.

If you're going to fight pandemics...or AGW?
You might need to suffer crippling taxation.....or embrace lifestyle changes.....or live with economies that don't clamp along with 3% year over year growth.

The ONLY constants are....more hurricanes, pandemics, housing bubbles, computer viruses....etc....

YMMV

 

I think it's too early to say whether the USD is done for over this. Still just in the opening of the pre-show. I'm not enough of an economist to make the call anyway, but I can certainly see the possibility as greater than it ever has been in my lifetime.

That said, I've tried to keep an appropriate balance of dollars and stuff that is useful or edible, just in case.