Economy 52,842 Posted April 11, 2020 Share Posted April 11, 2020 https://www.google.ca/amp/s/mobile.reuters.com/article/amp/idUSKCN21R3JI Many investors and creditors were already loosing patience with many US Shale Oil companies that consistently have failed to turn profitable and keep drowning in even more debt For years companies promised better fracking technology and lower production costs and higher productivity would finally get companies out of the red, but the goal has still elluded the majority of companies Now with another Oil price crash collapse banks are not willing to take more delayed payments and are starting to seize assets. Banks know if many companies were running losses with Oil at $50/barrel they certainly aren't going to run profits with Oil at $25/barrel and instead of paying off loans would only need to borrow even more to survive While a handful of energy giants like Exxon Mobil for example have done alright, the US Oil industry as a whole is estimated to have as much as $200 Billion in bad loans, a lot of which that may never be repaid Link to post Share on other sites More sharing options...
Snorlax 6,366 Posted April 11, 2020 Share Posted April 11, 2020 Does this mean gas is gonna drop even more Link to post Share on other sites More sharing options...
Economy 52,842 Posted April 11, 2020 Author Share Posted April 11, 2020 Just now, Snorlax said: Does this mean gas is gonna drop even more Ummm no. Has nothing to do with that it just means banks will take over some of the assets and run them until they can sell them off to someone else. If anything, should the banks turn some pumping off after taking over assets if they don't wanna run or operate something that's loosing money right now that would only raises prices cuz of less production Also OPEC talked temporarily cutting 10M barrels a day from production to end the overflow of oil so if that does go thru that will probably raise prices a bit Tho I don't expect a surge cuz demand has taken such a hit we will still be oversipplied. Oil will probably go up but not by a huge amount, at least not for long (some excited traders may cause a short term surge or rally but because we will still be in oversupply, any sustainable rally will have to be more modest) Link to post Share on other sites More sharing options...
Economy 52,842 Posted April 11, 2020 Author Share Posted April 11, 2020 The amount of money that went into this venture honestly. A decade of energy boom fueled by borrowing on a promise of profitable returns that never happened US Shale started the boom when oil prices will around $100/barrel which did not last (even then many lost money) and the technology advancements were insufficient to fully make up for the lower prices since 2014 A few companies that have their sh*t more together and diversified assets will survive but the Shale Industry as a whole is gonna get a real beating and investors and banks I don't think are gonna give them funding so easily again in the future even if oil prices recover Clearly fracking cannot compete with lower cost producers elsewhere And fracking is worse for envinment than most types of production anyway Link to post Share on other sites More sharing options...
Maleficent 6 Posted April 11, 2020 Share Posted April 11, 2020 this is what they should’ve done with the airline industry imo Link to post Share on other sites More sharing options...
Lord Temptation 11,209 Posted April 11, 2020 Share Posted April 11, 2020 I’m okay with this Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted April 11, 2020 Share Posted April 11, 2020 8 hours ago, Economy said: The amount of money that went into this venture honestly. A decade of energy boom fueled by borrowing on a promise of profitable returns that never happened US Shale started the boom when oil prices will around $100/barrel which did not last (even then many lost money) and the technology advancements were insufficient to fully make up for the lower prices since 2014 A few companies that have their sh*t more together and diversified assets will survive but the Shale Industry as a whole is gonna get a real beating and investors and banks I don't think are gonna give them funding so easily again in the future even if oil prices recover Clearly fracking cannot compete with lower cost producers elsewhere And fracking is worse for envinment than most types of production anyway ExxonMobil, BP will profit from this... plus capping some of the shale will keep a giant reserve in the ground . as a hedge against future attempts to boycott the US... It's a difficult situation, with silver lining. like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 52,842 Posted April 11, 2020 Author Share Posted April 11, 2020 37 minutes ago, Woolfsmck said: ExxonMobil, BP will profit from this... plus capping some of the shale will keep a giant reserve in the ground . as a hedge against future attempts to boycott the US... It's a difficult situation, with silver lining. Exxon and BP aren't living paycheck to paycheck so yeah they will be fine But of the nearly 6000 shale operators in US companies like Exxon doing Mobil doing ok are just one of a few dozen Same sh*t here in Canada. Only the best companies like Suncor are chugging along without an immediate threat of bankruptcy Even some of the larger companies like Cenovus are really struggling so size alone isn't a garantee. If their cost structure and debt is in a bad place they too are vulnerable... One of the US giants was also in trouble I can't remember now if it was Pioneer or EOG Resources or something like that Link to post Share on other sites More sharing options...
Economy 52,842 Posted April 11, 2020 Author Share Posted April 11, 2020 8 hours ago, Maleficent said: this is what they should’ve done with the airline industry imo But airlines are getting Government help so I guess they don't have to Besides, when crisis is over airlines should slowly recover so banks are more likely to show leniency and temporarily defer payments if they feel there is a good chance they will get the payments later Shale companies on the other hand have been testing creditors patience for years already with no clear path to profitability and now this crisis only increases prospects of even more lost money so... They are gonna be more likely to be more agressive with Oil companies. Not surprised Link to post Share on other sites More sharing options...
Maleficent 6 Posted April 11, 2020 Share Posted April 11, 2020 16 minutes ago, Economy said: But airlines are getting Government help so I guess they don't have to i still believe the best solution was to either let them go under, and lift the monopoly on American air travel (imagine LAX-JFK operated by Emirates) or nationalize the air industry in the US. Link to post Share on other sites More sharing options...
Economy 52,842 Posted April 11, 2020 Author Share Posted April 11, 2020 14 minutes ago, Maleficent said: i still believe the best solution was to either let them go under, and lift the monopoly on American air travel (imagine LAX-JFK operated by Emirates) or nationalize the air industry in the US. How would that help the monopoly? If the you let companies go under the ones that survive only monopolize even more Besides airlines have no fault in what happened. There's a lot of money being used to help economy not sure why airlines (among the most affected industries) should be excluded I understand letting oil go under because besides us needing to shift away from it, in the US most companies weren't even profitable anyway. Bailing out businesses that are chronically failing is not a good economic investment even without the environmental aspect to consider But airlines is a different story Nationalizing (if you mean full nationalization not just Government buying some shares) is also something I'd only consider for the most struggling airlines that are hopeless as a way to save them and perhaps sell them back to private sector later I don't think a mass nationalization for every company is the best thing because Governments tend to suck at running companies efficiently. It might be cheaper to just give them loans they can pay back later. Buying them all will end up costing more Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted April 11, 2020 Share Posted April 11, 2020 1 minute ago, Economy said: How would that help the monopoly? If the you let companies go under the ones that survive only monopolize even more Besides airlines have no fault in what happened. There's a lot of money being used to help economy not sure why airlines (among the most affected industries) should be excluded I understand letting oil go under because besides us needing to shift away from it, in the US most companies weren't even profitable anyway. Bailing out businesses that are chronically failing is not a good economic investment even without the environmental aspect to consider But airlines is a different story The airlines are an elite form of travel...but essential.... Because, the command structure (politicians, Corp. Executives, entertainers, pro athletes...and the like all have time centric schedules the cover thousands of miles.... Productivity of the entire economy is enhanced by the airlines....They are important... like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 52,842 Posted April 11, 2020 Author Share Posted April 11, 2020 1 minute ago, Woolfsmck said: The airlines are an elite form of travel...but essential.... Because, the command structure (politicians, Corp. Executives, entertainers, pro athletes...and the like all have time centric schedules the cover thousands of miles.... Productivity of the entire economy is enhanced by the airlines....They are important... Agreed One more thing I wanna point out... Oil as a global commodity with indexed pricing means monopolies in Oil doesn't matter as much. They cannot price gauge as easily so if many companies fail and a few giants like Exxon Mobil or BP take over a larger share of production long term... That won't affect oil prices that much really Not the case with airlines. They directly compete for each costomer. Letting some fail and letting survivors monopolize more would have a bigger harmful impact Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted April 11, 2020 Share Posted April 11, 2020 1 minute ago, Economy said: Agreed One more thing I wanna point out... Oil as a global commodity with indexed pricing means monopolies in Oil doesn't matter as much. They cannot price gauge as easily so if many companies fail and a few giants like Exxon Mobil or BP take over a larger share of production long term... That won't affect oil prices that much really Not the case with airlines. They directly compete for each costomer. Letting some fail and letting survivors monopolize more would have a bigger harmful impact Yeah, a competative market place helps give the consumers a better product and fair pricing... like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Economy 52,842 Posted April 11, 2020 Author Share Posted April 11, 2020 14 minutes ago, Woolfsmck said: Yeah, a competative market place helps give the consumers a better product and fair pricing... Hopefully ppl don't fight this too hard cuz they hate the idea of Corporate bailouts. Letting tolany airlines fail will not only cause permanent job losses but also higher prices later it's not in people's interests for Government not to help Besides the idea that taxpayers subsidize Corporate bailouts is completely false: #1 most Corporate bailouts are not given away money. They are either loans that get payed back, or bought shares that government sells back later after things stabalize often at a profit to the Government. Unlike benefits given to people like extended EI or stimulus checks, Corporate help is usually not free and must be payed back #2 the money the Government uses for bailout is borrowed not by raising taxes on people So when ppl say they don't wanna pay for corporate bailouts they need to stop worrying. They don't pay for them, bond investors pay for them, and then the Government recovers money later anyway Link to post Share on other sites More sharing options...
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