Oil & The Economy

[Terrel L. Shields]

Have I been tuned to $5/gallon as the new normal?

There is no "normal" for oil. Oil is varying wildly and dependent upon supply and geopolitical pressures. And although storage and supply is actually dropping, so is demand. And consumption is a measure of economic activity. China's use of oil has fallen off a cliff. They are in full recession as is Germany and France is slowing as well.

Oil companies are deer in the headlight. Trump promised to increasing drilling which only drives prices down below costs - which are not going to fall much. OTOH, a Harris administration will certainly add enormous regulation upon them but almost certainly drive the price of oil up, up, and away. It's a choice. A glut or a shortage.

And that means Wall Street doesn't matter. Main Street is imploding. In the year ending June 2024, there were 486,613 bankruptcy filings, a 16.2% increase from the previous year. Store closures include a lot of restaurants and even Walgreens Drugs, etc.

Bankruptcies announced

Tupperware
Big Lots
Lumber Liquidators (aka LL)
Paramount
Sunpower
Fisker Group
Red Lobster
Applegate
The Philadelphia Real Estate Investment Trust
Genesis Global Capital
SVB Banking
David's Bridal
Bed, Bath & Beyond
Jenny Craig
Compass Medical Group
Core Scientific
Yellow Trucking Co.
Back Yard Burgers
Evergrande Group
The Roman Catholic Archdiocese of San Francisco
Barretts Minerals (& Barretts related chemical company)

 

[Fernando]

There is no "normal" for oil. Oil is varying wildly and dependent upon supply and geopolitical pressures. And although storage and supply is actually dropping, so is demand. And consumption is a measure of economic activity. China's use of oil has fallen off a cliff. They are in full recession as is Germany and France is slowing as well.

Oil companies are deer in the headlight. Trump promised to increasing drilling which only drives prices down below costs - which are not going to fall much. OTOH, a Harris administration will certainly add enormous regulation upon them but almost certainly drive the price of oil up, up, and away. It's a choice. A glut or a shortage.

And that means Wall Street doesn't matter. Main Street is imploding. In the year ending June 2024, there were 486,613 bankruptcy filings, a 16.2% increase from the previous year. Store closures include a lot of restaurants and even Walgreens Drugs, etc.

Bankruptcies announced

Tupperware
Big Lots
Lumber Liquidators (aka LL)
Paramount
Sunpower
Fisker Group
Red Lobster
Applegate
The Philadelphia Real Estate Investment Trust
Genesis Global Capital
SVB Banking
David's Bridal
Bed, Bath & Beyond
Jenny Craig
Compass Medical Group
Core Scientific
Yellow Trucking Co.
Back Yard Burgers
Evergrande Group
The Roman Catholic Archdiocese of San Francisco
Barretts Minerals (& Barretts related chemical company)

Companies like appraisers have to adapt to the changes or else they won't survive.
Inevitable that some go bankrupt (business model obsolete) and new business take over with new way of selling.

 

[Carnivore]

​

https://finance.yahoo.com/news/stock-market-today-asian-shares-050821711.html

NEW YORK (AP) — Wall Street pulled back from its records on Tuesday after the price of crude oil tumbled and technology stocks faltered.

The S&P 500 fell 0.8%, a day after setting an all-time high for the 46th time this year. The Dow Jones Industrial Average dropped 324 points, or 0.8%, and the Nasdaq composite sank 1%.


Exxon Mobil dropped 3%, and energy stocks fell to some of Wall Street’s sharpest losses after oil prices tumbled more than 4%. A barrel of Brent crude, the international standard, has fallen back below $75 from more than $80 last week.

Crude prices have been weakening as China’s flagging economic growth raises concerns about demand for oil. At the same time, worries have receded about Israel possibly attacking Iranian oil facilities as part of its retaliation against Iran’s missile attack early this month. Iran is a major producer of crude, and a strike could upend its exports to China and elsewhere.

Nvidia was the heaviest weight on the S&P 500 and fell 4.5%. It’s a cooldown for the chip company, whose stock is still up 166.2% for the year so far on euphoria about the profits created by the boom around artificial-intelligence technology.

 

[Charles West]

The oil industry estimates that gasoline prices will rise by about $.50 per gallon after Newsom signed the bill to reduce gasoline prices in California. The Air Resources Board says prices will increase by about $.05 to $.10 per gallon. Phillips Petroleum is leaving the state as a result of the bill and other bone-headed decisions by the legislature and governor. I would imagine the oil industry has a better bead on reality than the liberals in government do, so this could signal the end of the lower middle classes and working poor in the Central Valley and other impacted areas of the state.

 

[Terrel L. Shields]

Phillips Petroleum is leaving the state as a result

They are better off moving the refining offshore to another country and then selling California gasoline to them from there. And they will have to import it. California of all states runs on gasoline.

 

[Terrel L. Shields]

 

[Elliott]

Record Breaking Output in the Lea County Oil Patch
Oil and gas output in Lea County with an estimated 75,000 residents is expanding faster than in any county in the United States. Eddy County’s output is not far behind. According to an article posted at ttnews.com, data collected by the oil and gas research firm Enverus shows that in 2023 Lea County became “… the first [U.S. county] to ever produce more than 1 million barrels per day.” The article continues that Novi Labs predicts “neighboring Eddy County will hit the million-barrel-a-day milestone by September next year.” Data shows that Lea and Eddy counties “…accounted for 17% of all onshore oil output in the contiguous U.S. last year, and before the next decade, they’re expected to pump more oil than the next five biggest counties combined.”

Bringing even more light to the health of the New Mexico oil and gas industry is the fact that the southwest portion of Lea County and the southeast portion of Eddy County “…produce approximately 1.9 MM BOPD, or 33% of total Permian Basin tight oil production,” states an article posted at OilyStuff.com. “These two counties have had more than 45% of the total Permian rig count running in them for three years now. New Mexico is now growing oil production faster than any other state in the nation….”
........
Fracking
Fracking is pivotal to the current success of the Permian Basin’s oil and gas industry. Petroleum industry economist Jeff Barron, a spokesman for the independent federal agency Energy Information Administration, states in an article posted at TheHill.com, “The bulk of our [U.S.] oil production [approximately 2/3rds] is from tight oil formations, which basically comes from fracking.”
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Record Breaking Output in the Lea County Oil Patch

Oil and gas output in Lea County with an estimated 75,000 residents is expanding faster than in any county in the United States. Eddy County’s output is not far behind. According to an article posted at ttnews.com, data collected by the oil and gas research firm Enverus shows that in 2023 Lea...

www.leacountytribune.com

 

[Terrel L. Shields]

The Permian Basin is the area where over 50% of rigs are running. I worked that area, living in Carlsbad for a Midland, Tx company. And it long has had potential. You can make $150k a year as a truck driver with a DOT license.

 

[Terrel L. Shields]

 

[Tom D]

I miss the local gas wars when i was in college in the 70's. 25 cents a gallon.