Chicago has a budget deficit of nearly $1 billion. Tack on another $2.9 billion for a proposed teachers’ contract plus an unknown amount for firefighters.
Chicago’s Budget Gap
CBS News reports Chicago Faces $982 Million Budget Shortfall for 2025
Mayor Brandon Johnson is projecting a $982 million city budget shortfall for 2025, nearly double the spending gap he faced in his first year in office, thanks to rising personnel costs, drops in some key tax revenues, and expiring one-time budget solutions he relied on to balance the 2024 budget.
Johnson declined to say if he would raise property taxes, authorize legalizing video gambling in Chicago, or approve placing slot machines at the city’s airports as ways to raise new revenue to balance the budget for 2025. He also would not rule out the possibility of layoffs or a hiring freeze.
“The chickens have come home to roost. It is time to get busy,” said Joe Ferguson, president of the Civic Federation, a nonpartisan public finance watchdog group.
“Springfield is not coming to the aid of the city anytime soon. Springfield has its own issues that it has to deal with. Springfield also needs to see that the city is actually taking care of its own house before it’s going to come with any additional help,” Ferguson said.
Soft Landing Hoot of the Day
“We’re working to provide as soft of a landing as possible,” said Johnson.
Expenses Up, Revenues Down
- Budget Director Annette Guzman said the city is expecting continued drop in revenue from the personal property replacement tax – a tax on corporations collected by the state and passed on to local governments. The city saw a drop of $169 million in revenue from that tax in 2024, and is expecting an even bigger drop in 2025.
- The Chicago Board of Education also recently approved a Chicago Public Schools budget plan that does not include a $175 million payment for pensions for nonteaching staff at the district, a cost the city once covered, but that CPS had paid for over the last four years until now, and Johnson’s budget team isn’t expecting the district to cover that cost for 2025.
- Another factor putting pressure on the city’s budget for next year is ongoing contract talks with the union for the city’s firefighters and paramedics, who have gone more than three years without a new contract.
Chicago Teachers Union $2.9 billion Deficit
In addition to the above, please note the CTU’s Proposed Contract would tack on another $2.9 billion.
Chicago Public Schools officials said Tuesday that the Chicago Teachers Union’s contract proposals would result in a deficit of at least $2.9 billion for the 2025-26 school year, a hole more than five times the current projection and growing as large as $4 billion by 2028.
They also threw cold water on the idea of borrowing to pay for the additional costs, noting the district is already weighed down by a ton of debt, much of it taken out at moments of crisis. That marked the first time CPS had publicly addressed a private proposal by Mayor Brandon Johnson for district officials to take out a short-term, high-interest loan to pay for a CTU contract as well as a pension payment that his office is demanding be covered by the district. CPS officials had pushed back on that idea privately.
The union, which in recent weeks has grown increasingly critical of CPS CEO Pedro Martinez and his approach to the budget, is reportedly asking for 9% annual raises for teachers, plus promises that every school will have a baseline of staff that will allow for small class sizes and a variety of arts, music and physical education classes. The CTU also has made proposals around more preparation time for elementary school teachers, housing for homeless students and support for migrant children.
The union pointed to revenue initiatives that the city and state could explore, like more heavily taxing millionaires and corporations — which would require changes to state law — or seeking federal funding for school building improvements.
Give Credit Where Credit Is Due
Johnson proposes a “short-term, high-interest loan to pay for a CTU contract .”
Then what?
Let’s give credit where credit is due. No matter how stupid you think Chicago’s mayor is, every election the city manages to find someone worse.
Even Lori Lightfoot was better than this.
However, any thinking person knew this in advance. Johnson was hand picked by the CTU to screw the city, screw the taxpayers, screw the corporations, and screw the kids.
March 13: Chicago Teachers’ Union Seeks $50 Billion Despite $700 Million City Deficit
March 15: Congratulations to NY, IL, LA, and CA for Losing the Most Population
August 11: Net Zero Climate Policies Could Leave the Midwest in the Dark
July 2: In Chicago There’s Under a 50 Percent Chance Police Show Up If You are Shot
Brandon Johnson is the worst mayor in Chicago history, and that’s saying quite a bit.
If you live in Illinois, get the hell out before unions take every penny you have.
By the way, if you want to vote for a Chicago bailout and massive tax increases to pay for it (even if you don’t live in Chicago), then vote for Kamala Harris.
Chicago was already going to go under prior the the COVID bioweapon release.and the final “CIA” takeover of the US Government. The literal spewing of trillions of dollars in money creation in “aid” after the “CIA” then shut the world and destroyed perhaps the lives of a billion people or more all over the world delayed the denouement.
Well here we are again. Our family left Chicago 11 years ago. Best decision we ever made.
Liberal states with underwater public pensions were a problem before the current spate of inflation. Pension debt have eclipsed their state’s yearly budget. The inane thinking was, the problem could be inflated away. A devalued dollar would reduce the debt, relative to inflated higher tax revenue. This solution may work in a closed economy. But, higher inflated salaries and benefits result in higher new pension debt. Plus, a decade of historic low rates hyper inflated homeowners net worth, and allowed workers to retire early in record numbers. Which reduced high salaried worker’s contributions to pensions, while their inflated final salaries increased the size of their yearly pension pay. To top it off, retirees flee their s-hole state, to spend their pension tax dollars in another location.
The voters are getting exactly what they voted for.
Mish any chance for probation on a trial basis for Truthseeker? My rehab has been going very well.Please at least tell me I haven’t crossed the Rubicon ok?
The Blues Brothers paid the property taxes and saved the orphanage. Jake, Elwood, we need you!
A personal complaint here that perhaps sheds some light on the problem at some level. During the 2008 crash Wisconsin state workers union agreed to a 5% pay cut. No one was holding a gun to the union’s head. I was in the union, I had an unpaid position (university, long story) so I would have been OK with a 100% pay cut!
Wisconsin has a somewhat socialist attitude (sometimes) in the Scandinavian way. People were having a hard time and rather than have cuts to worthwhile state programs (there were some) the union took one for the team. Under the circumstances I think that was the morally and financially correct thing to do. Sometimes, people do good things. I’m not saying this is the case for IL or other government unions. I’m just saying that the moral standards, if I can use that expression, of the citizens are what really count.
However, the governor wanted the union destroyed and he got his way, which surprise surprise, benefitted alot of his cronies. Too long to say more than that here. Pretty sure he has a nice pension, thanks to the union, when he should be in jail.
You can make a good case that government workers shouldn’t be unionized, of course, but given what the union had overwhelmingly voted to do I don’t think that was the time to crush it. Just my personal rant.
I taught at UW-Madison. One reason colleges have gotten to be so left wing and generally stupid is the vast increase of adjunct (temporary) professorships who have to toe the line, and the number of admins for useless stuff. If the UW union had had more power and organization I don’t think that would have happened. I never heard any underpaid scientist or professor or secretary say they thought more admins were a good idea.
I can’t feel sympathy for the Democrat taxpayers in Chicago. It’s annoying that the rest of us will be forced to pay for a bailout though.
If I were to run for office my primary platform thrust would be, “Unless the situation is extraordinarily dire, do NOT spend money you don’t have. You listenin,” CTU?
Of course, with a populace that’s never experienced economic conditions akin to the 30’s, more debt just seems innocuous/a non-issue – it’s “the American Way.”
I recently spoke with someone from India, who told me, “If an Indian earns a dollar, he saves fifty cents.”
I don’t know about you, be it seems painfully apparent that if the average American earns a dollar, they spend $1.10, and think that’s just fine because “everyone else is.”
Presently, we are faced with record debt levels in every category – governmental, mortgage, auto loan, student loan, credit card and personal that continue to increase.
Who’s to blame for this “mathematically impossible to repay debt levels?” Let’s face facts, folks – YOU and Me. WE allowed, in some cases even encouraged, our “leaders” to continue reckless spending instead of electing responsible government officials.
Are you ready to adopt the WEF’s planned future for this globe, “You will own nothing and you will be happy?” Give me one good reason why that will not be our future?
Where are the 21st century Patrick Henrys?
@Mish, off topic, but have a question about Chicago. Our daughter started medical school at Northwestern this year. My wife and I currently live in Maryland. We are considering moving to Chicago. I’m curious about the tax implications.
Where in MD? County income taxes vary alot there. Also, cost of living in Evanston is more reasonable than decent MD areas near DC, in my experience, although not cheap.
Frederick county
Hand writing on the Wall . . . A HIgh Interest Loan will never be paid Back . . . Game Over . . . No more kicking the Can down the Road . . .
@Mayor Brandon Johnson: “Let’s Go, Brandon!”
FedGuv will bail-out unions/pensions/Chicago.
Just another straw bale on the camel’s back… Red State secession is inevitable.
If they slapped a NO VACANCY banner accross every WELCOME to CHICAGO sign I would consider helping them. Until then there will be no way I’ll support a bailout.
Same goes for Milwaukee. PS: I live 50 miles from one and 40 miles from the other.
Ammo tax.
Amen, Brother.
Well,in the spirit of a federal court ruling it’s OK to ban Let’s Go Brandon shirts worn by high school students as FU foul language not subject to free speech rights on campus, everyone over 18 should start wearing Let’s Go Kamala shirts, especially when attending public school functions and games, parent teacher conferences, and especially those congressional town hall meetings during the current FU selections er. elections. Do it for the children.
surely they can crackdown on those corner drug dealers
they need to pay their fair share of taxes
Fire all the union workers and replace them with immigrants willing to work for peanuts.
I have yet to meet an immigrant willing to work for peanuts. They didnt come here to be homeless.
“However, any thinking person knew this in advance. Johnson was hand picked by the CTU to screw the city, screw the taxpayers, screw the corporations, and screw the kids.”
When are the Chicago voters going to return the favor to the Democrat Party?
Simple solution.
Send armed police to random homes and take 10% of whatever is available, chosen at police discretion.
Repeat until deficits are eliminated.
A straightforward approach would be better than fiddling with taxation.
Also, we can cure cancer by ripping people open and removing the diseased organ! Lisa, do you ever listen to yourself? I dont come here for nonsense.
…
Oh, where do you normally go? MSNBC? The DNC? or do you just talk to yourself?
Oh lighten up.
Sometimes all we have is levity.
And at the very least it doesn’t add to debt.
Very biblical…
Spending well beyond one’s means is the new American way. Government does it all levels and so does the vast majority of the citizenry. The average Joe/Jane spends a lifetime shackled to a job that they hate to buy shit and experiences, on credit, they simply do not need. Oh and don’t forget one or two storage units, paid for with credit, to store all that worthless junk that they can’t possibly utilize.
You are SO correct. After three houses, numerous cars, several motorcycles (best time, though), and RV’s and CRAP ALL PILED UP, we sold our last big home in the Silicon Valley and put it ALL in storage for 9 years and then simply gave it all away. In the meantime, we downsized, so to speak, to a 45 Prevost Bus (primary traveling unit), pulling a Tow Vehicle four wheels down and we have visited every state in the Union and it has been a blast.
The best part: GETTING RID OF NEEDLESS CRAP.
Sure, I kept my tools, and some clothes, and some electronics stuff, but all in all, we own VERY LITTLE in terms of small things.
The big one, THE BUS, is simply where we LIVE day to day and it is really a nice rig with a big rear engine diesel, diesel generator, Pneumatic Doors, rides like a dream and we get 9MPG in fuel “economy” which is a huge expense but remember, we have NO DEBTS, no upkeep of the houses any longer.
Sure, it was a $1 Million purchase, but we paid cash for a year-old unit that had depreciated.
So, the freedom from things is real in our case. The bus is the egregious part and we will eventually tire of travel and settle down somewhere (when we grow up, but for now, we are at play and enjoying our freedoms to travel).
That is 50% of our time (BUS) and the other 50% is overseas in Portugal and Spain where we winter.
Where in Portugal do you winter Woodsy Guy? The Algarve? My wife and I are thinking about possibly retiring to Portugal as we go to Lisbon and environs once a year. We are always looking for feedback from Americans who have jumped ship so to speak.
Um. I live in GA, and we have a balanced budget amendment. Every local county in GA is required by law to have a balanced budget amendment.
The problem is primarily with the Federal government & other state & local jurisdictions that don’t have balanced budget amendments.
It’s the EU way, and the Soviet way, and probably the Easter Island way too…
I never did understand long term storage units. I rented one for two months once, moving from out of state, had to stay in a hotel until I took posession of a house. That’s it. When I needed more space, I built a barn. Someone said that 90% of the stuff in a storage unit, no one looks at ever again. So just get rid of 90% of the stuff, and then find a place to store what you truly need. But you are right, I see more storage facilities being built every day. Only ones that “might” make sense are for RVs or Boats,….that actually get USED regularly.
It’s ALL for the Children though, don’t you know…
My older Bro lives outside of Chi-Town in the Burbs and his PROP TAXES ARE REALLY HIGH.
You start by bailing out student loans… you get an election high off of that,, next you move on to City bail outs… what a rush,,, I don’t think we’ll make it to the State level…
Buy GOLD…
https://heyjackass.com/
Adam Smith said “There is a lot of ruin in a city.”, meaning ruination could take a long time. But even Rome eventually declined and fell.
If laws were passed for cities and states to file for bankruptcy, would that help or hurt the US Dollar?
Many cities already can.
Cities, states, nations and international agencies can already go bankrupt. Bankruptcy law simply provides a way to resolve bankruptcy.
There will never be bankruptcy law for nations, because nations will not submit to the authority of a bankruptcy court. Instead those bankruptcies have to be resolved by negotiations between the parties involved. Out of this comes an important lesson = It is better not to lend to some parties in the first place than to try and get repayment later. The hard part is determining whether the party is a good credit risk.
Some cities have already declared bankruptcy in the past.
It’s always impressive when cities can’t balance their budgets in the midst of rising property values, full employment, rising incomes, record stock prices and surging GDP growth!
Evidently record prosperity causes so many problems that we have to raise tax rates to solve them!
I suppose that *is* one way get rid of the record prosperity and all its associated problems.
/snark
“….can’t balance their budgets in the midst of rising property values, full employment, rising incomes, record stock prices and surging GDP growth! Evidently record prosperity causes so many problems that we have to raise tax rates to solve them!”
Houses depreciate. There are no such thing as tooth fairies nor hard working wallmold which somehow generates value from them sitting there.
The levels of destructive interventions necessary to maintain the nominal toothfairy-and-magical-wall-mold delusion required to ensure net-negative dimwits can continue to cling to the trivially nonsensical drivel that things are not so, and that decaying houses instead somehow contributes to; of all obviously nonsensical things; _increasing_ “prosperity” while they sit there decaying; also completely negates any possibility of price discovery in every other sector of the economy.
With the entirely predictable consequence that even potentially value adding industries and activities, are mismanaged to the point where the value add of those actors, too, grossly depreciate.
Which is then “solved”, in the minds of well indoctrinated uncritical simpletons, by even further destructive interventions: This time to maintain the additional delusion that as many value-destroying activities and actors as possible, is becoming “more” valuable. Not by any improvement in their competitive ability hence standing. But instead solely by way of printing purchasing power for the dupes most likely to pliantly, gullibly and cluelessly buy whatever paper the no-longer-competitive-at-all trainwrecks are “issuing.”
Then, as a follow on to these destructive interventions, you end up with “incomes” derived not from anything productive, but instead simply from sitting there randomly buying and selling; suing and quarreling over; and lobbying and managing and regulating.Again: Not in order to comtribute to any increased productive activity. But simply from hope that maybe mee to! can get some of the loot.
Ultimately, though: Prosperity is waaaaay down, from what it was in 1971. Housing is barely improved at all, especially so in the locales which value has supposedly “surged” the most. Pelosi’s shack is the same old. Just a lot moldier and closer to falling down now, than it was back when hippies where using it as as hooting gallery. The real value is way lower now, than it was then. Any nominal deviation from that is all due to nothing other than debasement-transfer delusion. With this transfer of nominal “prosperity” to Pelosi in no way coming by way of her doing anything productive at all to it. Just sitting there. Whereas: Those the transfers are FROM, are specifically people, organizations, industry which could; absent having to fund her delusion increased “prosperity” from sitting there on her rear cackling nonsense and bombing Libyans; possibly have maintained costs low enough to be more competitive.
It’s exactly the same story wrt “stocks” and “bonds”: US companies have far, far less glossy prospects now, than they did back when US industry simultaneously created the Internet and walked on the moon without even needing it. And remember: Stocks and bonds are supposed to be about discounted future value streams……….Yet what the lightweights are being idoctrinated into uncritically falling for, effectively that the current gaggle of has-been outfits without any future; propped up and enabled to push out the ultinate reckoning by ever more printed up debt and NOTHING else; somehow have a brighter future than back when casually flying me to the moon was just another day another flight.
Man, that’s long winded. Point being,though:That there is no “paradox.” America IS poorer, a lot poorer, than it used to be.
Hence why individual Americans no longer have what they used to have: A home, a car, basic health care, decent enough schooling for kids, decent enough prospects for work/carreer, and some basic security that they would not starve to death within a week of retiring or otherwise losing their three night shift jobs bagging groceries andteaching their kids to fellate some “landlord” or “lender”. Compared to current US, as well as other third world country, standards: Having those requires a massive upgrade in prosperity compared to today. Americans used to enjoy that prosperity. They no longer do. Not even close.
And also: Hence why municipalities can no longer afford services which was once taken for granted. And still is in first and some second world countries.
Now: A major benefit free markets enjoy over arbitrary command economies, is price discovery. Since we now count among the latter, the US no longer enjoys any of that. Which, among other things, is why it is still common to hear madness such as “we are now; (of all trivially nonsensical things…); MORE prosperous than before.” Both from uncritical potential voters, but also from clueless municipal officials who fall for that drivel, and think “there’s got to be some way us more prosperous guys can do the same as before…..”
There’s not. BECAUSE WE ARE POORER NOW. A LOT. Poorer Americans, individuals nor munis, can not afford what their much more prosperous forebears could afford. That’s poverty. And the difference is only growing. And growing. One dollar of printed up, competitiveness destroying “home”, “stock” and “bond” appreciation driven transfer of wealth; from the competent and productive, to the clueless but connected; at a time.
This is still the land of opportunity. I have increased my wealth substantially every year for the last few decades.
Whatever you are doing, apparently isn’t working for you. Maybe you should stop whining and get your ass to work.
With all due respect, those with assets have done wonderfully with little work. To try and make up that wealth with asset prices at an all time high? “get your ass to work” is a whole lot different. Coming from a woman-loving divorce court victim…
Like most Americans, I started with nothing. No assets, other than myself. But I have worked hard, saved, and invested all my life. I have not stopped following that formula yet. And I don’t plan to. You have to build your assets over your lifetime.
Or, like many here, you can whine and complain instead. The choice is up to each individual.
I like working hard AND whining.
The squeaking wheel gets the grease.
Perhaps you do not understand that.
How about some examples? What have you achieved by whining on this blog or elsewhere?
“This is still the land of opportunity.”
…The oportunity to be handed wealth stolen from others by debasement. A, OK…
“I have increased my wealth substantially every year for the last few decades.”
YOUR personal wealth, I don’t doubt. As have I. As well as a meaningful, if declining, share of what I assume to be “our” generation(s). Including near everyone reading Mish.
I know nothing about you, so for all I know perhaps your means of increasing your personal wealth really has been purely by way of real value production. As in:Personally curing thousands of cancers at internationally competitive prices. Or personally building homes by the thousands; again at internationally competitive prices. But that would make you one heck of an outlier. Even wealth creators on the scale of Page and Brin: Currently owes far and away most of their current wealth, due simply to wealth transfers from others: Earnings from their famous algorithm (as well as other innovations and inputs) would have made their company valuable either way. But not nearly as nominally valuable as what the Fed pumping has made it.
And, again,and again,and again…..: Printing dead guys faces on paper notes, does NOT create value. Hence we; at least the ones of us who “believe in” basic algebra; can not help but recognize that every.single.penny of Page and Brins’s (and your’s and mine) wealth which is due to printing induced “asset appreciation”; by mathematical necessity has to have been taken from someone else: The printing did not oncrease total wealth. Hence if Page and Brin and You and Me ended up with more….,tah-dah, someone else must have ended up with less.
Furthermore: It doesn’t take Sherlock Holmes to sleuth out who those someone else’s are, since they are, visibly and obviously, all around us:
They are the 1) 90-95% of Americans who have NOT “increased their wealth” over the past 5 decades. Despite also working hard. At least as hard as me. And while you for all I know may still be pulling 100hr weeks curing those cancers: Even if so, they’re still working 50. While not “increasing their wealth” nearly in proportion to that, vis-a-vis you and me.
And also 2) the American companies,which used to be world leading, but is no longer able to compete at much of anything at all. Specifically due to having their REAL economic costs go through the roof, as a result of having to hand over value they added, to deadweights who has “increased their wealth” by way of debasement mediated “asset” supposed “appreciation,” whether that be stock, bond or “real estate” price increases. Or, higher order, by incomes derived from such “appreciation.”
And, for completeness: 3)The American “public sector”: Roadways, railways, safety nets etc. Which has also been trashed in the past 50 years. Not just potholes. But with a doubling in population and hardly any growth in the capacity of roads, their value per capita is; again; way down. All for the same reason: To facilitate the massive debasement Wealth Transfers to the 5-10, and decreasing, percent who still have “increased their wealth” as a result of it.
Again: For all I know, you may be some $1000 per cancer-cure guy who have made a billion by curing a million people. But that would make you very atypical. At least 99% of those who have “increased their wealth” every year since ’71, have done so at least partially; and for overwhelmingly most, mainly, or even entirely (or more-than-entirely); due to the “asset appreciation” which has artificially been driven by pure, no-real-value-added and hence, by mathematical necessity, nothing but 100% transfers-from-others printing/debasement.
That doesn’t scale. The fact that A has increased his wealth by robbing everyone else, does not imply that everyone can simultaneously increase their wealth if only everyone starts robbing everyone else as well. Similarly: The fact that Imelda Marcos managed to increase her wealth tremendously by way of the Philippine government robbing everyone else for hers and her husband’s benefit, in no way made the Marcos era Philippines some sort of great land of opportunity. Instead, it was a place where the opportunity to get fabulously wealthy, if you happened to be close to the wealth redistributors. But if you were not: It was just a place to get robbed into poverty. No different; at least not in kind; from the US since ’71.
You are correct. You know very little about me and how I created wealth over my lifetime.
You do not know what enterprises I started, what problems these enterprises addressed, how many people I employed, what patents I hold, what my royalty streams are and many other things.
I have only given you a tiny glimpse of myself through some posts on this blog.
What you do know, is that I now invest a portion of the wealth I created in stocks. Which itself is a productive activity. I am putting capital to work.
I invest a fair chunk of capital in oil and gas stocks. These companies then use that investment capital to drill oil and gas wells, which provides the energy that our society needs to grow the economy and our living standards. Because without abundant energy, we go back to a standard of living that existed a few hundred years ago.
Alternatively. I could choose to not put this capital to work, growing our economy. I could be like some here, who put their wealth into gold and crypto and let it sit there, doing nothing.
Here’s a budget saving idea:
Replace all union members with unpaid robots!
Until the robot installation and maintenance folks unionize.
The big squeeze is ON!
The exodus too.
Po folks know about this stuff.
They can give you some pointers.
When the Chicago city pensions fail and the union workers find out the cities cost of illegal immigration, the public unions will still vote Democrat.
Kamala to the rescue of Blue cities public pensions? Absolutely Comrade!
When Chicago city pensions fail; it will be a huge uproar. And all manners of grandstanding about no bailouts and “over my dead body.” Which will go on, until leeches from Goldman and Blackrock have bought most of the deeply discounted plans, with money The Fed debasement transferred their way from more productive people. Then, as is always the case in Idiotopia, “we” will “have to” “saaaave the syyyystem!!” Since, as all 100% idiots know: “Thiiiigz are diiiiiferent thiiiiiiz tiiiiiime.”
Slashing Gasoline Prices By Half With U.S. Shale Oil
https://www.oilystuff.com/forumstuff/forum-stuff/slashing-gasoline-prices-by-half-with-u-s-shale-oil
Not going to happen that way. Mike even explains why it won’t happen. There is no way to increase US oil production that much. US oil production is peaking in the 13-14 mbpd range.
However. If you do want to get US gasoline prices down, all you have to do is boost EV and PHEV sales dramatically. This would reduce gasoline DEMAND. Then keep oil production level at 13-14 mbpd. Every barrel gets refined and produces 20 gallons of gasoline. Same supply; less demand; lower prices.
We are paying the same amount today for a gallon of gas ($3.35) that we paid 11 years ago (chicagogasprices.com). There has been no gasoline/diesel/natgas overall inflation in 11+ years. The last frakking field left that is increasing production (in Texas) will start to disapppoint soon too.
Yes. Gasoline prices are helping to moderate inflation.
Yes. US oil production is peaking. But that doesn’t mean it will collapse anytime soon. Rather, it should stay in the 13-14 mbpd range for several years and then begin a slow decline.
Yet, some here talk about huge increases in production (not possible) or complete collapses. So much misinformation and extremism.
Same goes for reserves. The US has a lot of natural gas reserves. But not much left in oil reserves. In fact, we are over producing natural gas right now.
Market forces should push us to use more natural gas where possible and less oil. And to export more of it as LNG. Natural gas prices are the equivalent of $12-$13 WTI. Compare that to $70-$80 range for oil this year. We are exporting 13-14 bcf of LNG every day and building out another 5 bcf in LNG export facilities over the next 4 years.
Im not so sure you should put a lot of faith in natgas either. But as long as some people remain millionaires, someone will buy the gasoline at any price. We need to concentrate on the peaking of CHEAP oil/gasoline.
There’s no we about it… the strongest civilisation, economy, and military will get the cheapest energy, and exclude all rivals; ’twas ever thus.
“There is no way to increase US oil production that much.”
If we had to, we could go after the Green River Formation in Wyoming which contains the largest oil shale deposit in the world. It has been estimated that the oil shale reserves could equal up to 3 trillion barrels.
Now, this isn’t going to happen overnight. Agreed. But let’s not say never. The technology to bring this oil to market is available today or at least a really good start on it.
With that said, I do agree with the PHEVs point. I’m not a current fan of EVs due to their higher cost to buy, insure and propensity to burn my house down. For people that can afford them nowadays, absolutely GO GREEN. Now, in 3-5 years when SS batteries move towards mainstream, then I’ll jump on the EVs bandwagon.
But, I’m not in favor of unreasonable mandates pushed by Biden. The focus starting 4 years ago should have been 80% PHEVs and 20% EVs with a reasonable switchover as SS batteries come online.
My dad has a Hybrid Maverick and it’s downright spectacular, 45+ MPG.
I wouldn’t count on Green River shale anytime soon. It’s not even oil. It’s Kerogen; an oil precursor. But I agree that it has future potential. If it was viable today, we would already be using it. And again, our current production is satisfactory for the rest of this decade.
Regarding mandates. So many here go ballistic about “mandates”. I keep repeating that mandates are mostly empty words, and political talking points that will never happen.
And, I’ll go so far as to say that more than likely sometime in the next 7-10 years, the existing shale oil deposits will really begin to show they’re on their last legs, so the US will be forced to start moving into the Green River Formation. Certainly, this is conjecture on my part, but it’s a real possibility. I don’t see the Permian or other shale oil deposits getting us all the way through to the tipping point in an electrified transportation system that we don’t have to worry about developing “off limit” resources such as ANWR, Green River, etc.
Agree. 7-10 years before US oil production begins a significant decline. By then we will be substituting more natural gas wherever possible. And we will just import a little more from Canada, Venezuela, etc
Not sure if enough renewables will be built to make a difference by then. Particularly since demand for electricity is increasing big time (EVs, PHEVs, AI, Crypto, etc).
Why would I as a refiner continue the same production levels if demand falls?
Oh, I understand.
Socialism.
Nope. It has nothing to do with socialism. It’s just science (chemistry in this case) and engineering (of the refinery process).
That is the quandary that refiners are in. There is only so much leeway that refiners have when they refine a barrel of oil. They can tweak output a tiny bit, but in general, this is the refined output from a 42 gallon barrel of oil:
Gasoline: 19.5 gallons
Diesel: 12.5 gallons
Kerosene/Jet fuel: 4.4
Petroleum Coke: 2.1
Still Gas: 1.7
Hydrocarbon Gas Liquids: 1.6
Asphalt: 0.8
Residual Fuel Oil: 0.7
Lubricants: 0.4
Naphtha:0.34
And a few other miscellaneous products.
In total: 45 gallons of output because there are processing gains of around 3 gallons due to density differences.
Refiners need to process every barrel of oil they can because they profit from all the different outputs. And the demand for all the other products keeps going up.
But as demand for gasoline goes down, they will need to find ways to get rid of the excess gasoline. Exports are a possibility, if there are still markets elsewhere to sell it to.
When oil refining first began in the 1800s, they dumped the gasoline into rivers because there was no use for it at the time. But all the other products were useful. Regulations today prevent that type of pollution.
Interesting – thanks!
My Dear Papa, even with your vast knowledge and experience it is apparent that you are ignorant of modern petrochemistry, and not aware of catalytic cracking, or catalytic reforming, or alkylation, Are you familiar with hydrocracking? Or isomerizing low-octane straight-run gasoline? Refiners can modify yields to what they want within a wide range. (No doubt cracking asphalt would be expensivet, and messy too!)
Continuing to repeat some production breakdown snapshot you picked up somewhere along the way is not indicative of what can be produced in a modern refinery. Or even many older refineries.
Yep. I am very familiar with all aspects of this industry, including the processes you mentioned. As I said, refiners can tweak things somewhat. But if you are trying to imply that they can stop producing gasoline, you are full of sh*t.
Stop gasoline completely? Why would they? Gasoline will always be useful. But they will crack and squeeze a lot more of it.
Why would they attempt to squeeze out more gasoline as demand goes down?
Mea culpa.
I should have written alkylation or polymerization and not squeeze.
Easier way is to restrict the export of refined gas, natural gas and petroleum products.
I mentioned in a prior post, we’ve got notice our nat gas is going up almost 30% all the while the gas sitting under western PA gets exported for more corporate profits both from selling abroad and screwing the US. Next is electricity that’s driven by gas prices since they’re shutting down the coal plants.
One more, our local electric company sends 50% of the earnings (as owners) to an investment group in Singapore that always demand more returns.
Its called free markets. People believe in free markets until it hurts them financially. Then they suddenly want government control and intervention.
Yes, let’s support American farmers and businesses until prices go up. So please government, stop exports of oil, gas, wheat, corn, soybeans etc. even if American farmers and businesses can sell for twice the price elsewhere. Lets bankrupt them so prices can stay low for me.
I certainly don’t want energy producers to go bankrupt or our farmers who keep us full. But I do have concerns about us overproducing natural gas and then shipping too much around the world via LNG. While I don’t have access to the data to prove this, I do think the natural gas spike from two years ago was caused, in part, by so much LNG being exported at the exact wrong time, the US climbing out of COVID with enormous pent up demand.
I would much prefer the government and the natural gas industry coming together and ensuring we’re ALWAYS producing enough to meet our needs first and then let business to sell some extra at a higher profit to countries around the world who can afford to pay extra.
In fact, we should be doing this with all of our important resources and strategic needs. Like most Americans, I am very concerned with Chinese companies coming to the US to purchase our crop land, pig farms, etc. China doesn’t let US companies operate anywhere near what we do for them here in the US which is becoming increasingly dangerous for the US.
IMHO, we’ve entered into a period where the US needs to find smart & achievable ways to decouple from China. Granted on a broad scale, that’s going to be very difficult, put I think, for example, pharma is especially important that we take big steps ASAP with onshoring or friendly shoring and over time remove our dependence on China.
While I don’t want to paint China / Xi as this malevolent county, I am very concerned that their rise is going to come at our expense in many different ways. We cannot dismiss their alignment with Russia, Iran, and others and their intent to weaken the dollar. And I’m certainly not in favor the War in Ukraine, so the next president needs to stop pushing to have Ukraine join NATO. And I recognize that the US over the years has stuck our nose into other countries business. Bush lied about Iraq’s nuclear program, and we turned what should have been a six-month operation in Afghanistan into a 20-year war.
I know that I’ve gone off the deep end, but I know we both agree that energy is critical to the world functioning properly. I want to see renewables succeed just as much as I want to see a nuclear renaissance that over the next 30 years helps ensure the transition away from oil is possible without there being a global war that in some way is rooted in energy production & distribution.
Cheers!
The natural gas spike of two years ago was mainly caused by Russia invading Ukraine. Subsequently, Europe tried to reduce their use of Russian gas and substitute with LNG from anywhere they could find it, including the US. This forced up LNG prices worldwide.
High prices are the cure for high prices. Nat gas companies drilled and produced as much as they could to meet demand. And as usual, they are now overproducing and prices have come crashing back down.
Its a familiar story in this industry.
Also. Remember that there is a difference between a companies goals and a countries goals. Imagine you ran a company that made widgets. You already were selling as many of them as possible in the US, and you could now sell double that amount overseas at triple the price. If you didn’t take advantage of that opportunity, your shareholders would abandon you, or try to bring in a new Board and Management. Because you are not acting in the best interest of the company.
Yes, you are mostly correct with the Ukraine War & the cascading events that lead to Nord Stream. If I were president, I would want to strike a balance which, of course, would allow companies to sell LNG abroad. I just don’t like the idea of over producing. I’m a conservationist at heart, and I do believe decoupling from China in strategic areas is very important.
On a side note, I would expect the transition to BEVs will push foreign automakers out of China. The CCP will push their consumers and industry to consolidate around domestic auto manufacturers. This is already happening and will make it harder for GM et al to be competitive here in the US.
For a variety of reasons, China is ascending rapidly, and America is declining. I hate this. And unfortunately, a lot of it has to do with the growing financial, political & social dislocations that are happening.
The window of opportunity to right the ship is closing. I read what appears to be an extremely well-informed article about de-dollarization recently. I firmly believe that by 2030 we’re going to see a Perfect Storm of many factors coming together that will create significant downside for the US.
Thanks for reminding me about Nord Stream, etc.
You’re welcome. And I certainly agree with some of what you are saying, including about China.
China is attempting to become dominant in many things, as it wants to replace the US as the world’s dominant power. And it is having “some” success in some areas.
It is the world leader in renewables. They produce 80% of the solar panels, and they continue to make huge strategic investments in wind, geothermal, hydrogen, batteries, rare earth minerals, nuclear and more. This has turned them into an export juggernaut in this area and our response has been to place tariffs on these exports as we cannot compete with them.
Their renewable strategy is also a matter of national security. They do not want to continue to be dependent on others for their energy supplies as they have in the past. The more renewable capacity they build out domestically, the less coal, oil and gas they need to import. They have reached their 2030 goal of 1200 GW of renewables already and they will continue to make massive investments in this area to reduce their dependence on fossil fuels.
They are also doing the same in the technology area. They see that the US is trying to prevent them from becoming the tech leader in the world and they are doubling down in this area to become self-sufficient and then to eventually dominate here as well.
They are employing the Gretzky strategy: be the first to get to where the puck is going. While in the US, there are far too many who would prefer to take us backwards to the 1950s, especially in energy.
Seriously?! You think that they would go belly-up if we said put the US first?
In your scenario, a free market would take the bankrupt assets and sell them to someone who could make a profit.
Lol! Of course. And they have. The oil industry is littered with companies that went bankrupt when prices dropped due to a supply/demand imbalance.
So again ,my point is that we can restrict industry (in this case to stop exporting fundamental resources we need in the US) to benefit US citizens, and if it doesn’t work for the current corps, then they go bankrupt and the assets go to companies that can operate with the new vision.
Ok. Lets ban all exports and allow some companies that depend on those exports to go bankrupt. Now, who wants to buy the bankrupt company that’s dependent on exports that are no longer allowed? We no longer need that company at all. Or it’s workers.
Yes, with proper free markets we can get all the gold eggs from the goose and get them right now. Why wait?
As long as the US main export of American dollars continues there won’t be any problems. At least as long as someone wants them.
You don’t like free markets Lisa? What do you prefer? Government controlled markets. You little Socialist!
I maintain as a Rational Anarchist.
The Chicago bailout. Oh, hell yes, Kackles has got this one covered.
It’s very difficult to find a way to make me feel better about the fiscal situation here in California but your periodic updates on Chicago never fail in that regard. Thanks Mish
I am a loan officer for 30+ years (don’t hate me). I escaped Illinois about 10 years ago and now do loans on the west coast of Florida. I have done loans for several Chicago teachers who are now retired. A few of them are husband and wife who have both retired. They are in their early 50s and have pensions of $150K EACH. So these couples are bringing in $300K a year to live in Florida and do whatever they like. Not work. They could each live until their 80s or 90s. Do the math. There are thousands of these people around doing the same thing. The Chicago Teachers Union is a mafia. It’s a criminal enterprise. Chicago is an absolute cesspool of corruption and crime.
But you almost have to admire the scale of the corruption!
It does take “Audacity” to waste public money like that… that’s what that teachers’ union boss said about her huge budget-busting proposal, wasn’t it?
My new local voting plan is to see who got endorsed by the teachers’ and other public workers unions … and then vote for the other candidate.
How many have a job with Chicago Streets and Sanitation or the Water Department while retired in Florida?
Just One Billion? .. pocket change for Pritzker; round off for Kam.
Look at Illinois as a whole, $111B shortfall for pensions currently.
https://www.thepolicycircle.org/minibrief/rundown-on-pension-crisis/
Illinois is my bet for the first state to declare default, miss bond payment, reneg pensions.See 1994: Orange County. Muni Bond default rate is 0.08% … gonna rise.
Agree
Surely the federal government can bail out the city.
It’s not one city.
Yep, there’s never just one cockroach… gonna be a long line at the bailout banquet
By Federal Government you mean you?
As I read this … I couldn’t help but think … how long until the fed takes my tax dollars to bail them out so that they don’t have to be fiscally sane. Just keep spending, promise more to the teachers, avoid school choice which could bring down costs, keep bringing in the illegal immigrants … and then put your hat out to the president (if it is KH) … get it all paid for … and continue to spend far more than you take in. Great lifecycle picture.
They already did, that’s why there’s infkation
People who get laid off first get packages, and cities/states that go bankrupt first get bailed out. Just as Bush in a panic said “We had to suspend the free market in order to save it,” Chicago, and even California will dip into all our pockets to be saved, no matter who is President. National Security, you know. Count on it.
Pinkerton is on standby.
Better get out of some of these deep blue cities and States. Their budgets guarantee higher taxes. And with many fleeing already along with business, your home and business will not have a bid eventually. You must get trapped or have to take low-ball offers if you try and sell. The perfect economic storm is brewing in these locations.
Not to worry … if KH is elected … we will bail them out with our tax dollars and more federal debt.
Will she do that before or after covering the four war fronts the inane Neocons are building?
Im in Chicago. My building was just assessed at $1 mil for 2025. Property tax will be calculated next summer. 26% increase in my property value (was $780k) may or may not result in parallel 26% increase in property tax next summer. Already paying $16,000. They would get another $5000 from me (from where?). Last 5 re-assessments (in last 21 years) of property we averaged about a 14% increase in tax in the re-assessment years (instead of the usual 3-4% increases). Wrong again, Mish. 🙂 If they can get it, they will. And they will. Price you pay to have an ambulance and a hospital 2 minutes away.
You may not be looking at a 26% increase in property tax … that would be if tax rates stayed flat … it is unlikely that they will.
I agree. Like I said 3 of the re-assessments wound up as 14%/16% increases while another 3 resulted in just the usual 3-4% increase. Have to wait till summer. Point was tho .. they find the money. 🙂
Indiana saw a 37% increases in my property taxes – at both houses. Fortunately, They are somewhat “reasonable” but both properties assessed far above what I could expect to get in a sale.
You are paying $16,000? Is it worth it? Where does it end?
$100,000 a year cops, firemen, nurses and teachers plus benefits cost a lot of money.
The issue isn’t the cost. It is …what do you get for it? Are you treated well by the recipients of the price you pay?…….. Nothing is perfect but do they even try to treat you well?
They try but Ive been yelled at by way more cops than ones that have been sweet and nice. 🙂 If they find better deals in the burbs, they leave. THEN they become nice (except in Lincolnwood).
The cops are closer to $140K (with OT), the fireman are over $200K.
When the firemen get their new contract, my guess is a number of them will be pushing $250K to $300K.
According to the last budget I saw, the 30 year (patrolman) cops get almost $100k (sergeants and lieutenants more obviously), and Im sure the fireguys get the same. Whatever mandatory overtime they are living with now, I couldnt say.
I’m glad you have an ambulance and a hospital 2 minutes away as with those services you may survive the heart attack that will likely occur when you open your property tax bill……or perhaps not.
Maybe it wont be so bad … hhahahahahahahhahahahhahhh!!!
Some few years back I read an educated opinion that the lack of property sale-ability will imprison Chicagoans and Illinoisians, unable to escape the taxation. That claim is false. Things can get so bad that people flee with only the clothes on their backs, a la Cubans and Venezuelans. And people will stop having kids, and therefore no one to inherit their property. The population of Chicago and Illinois is declining. To be seen how bad things get within our lifetimes. Who owns the vacant lots in Detroit? As for the properties, many owners don’t pay the property tax. The city forecloses and tax sale. The previous owner makes a bid, which might be lower than the tax bill, sold! Which may result in a lower assessed value and lower property taxes. – A city that is very much on the wrong part of the Laffer curve.
As for “Price you pay to have an ambulance and a hospital 2 minutes away.” – Also very much the price you pay for random criminal gun fire that might put you in a hospital, and public services might get so bad that you are lucky if a rescue squad shows up in 30 minutes or an hour.
No real crime in this neighborhood in 21 years. And if the other places in the US think that cops and fireguys and teachers are gonna work for nothing like nuns forever, they got another thing coming. A cop in Tucson now makes as much as a cop in Chicago (and someone pays for them). Whatever low costs you think wait for you in retirement down south where they barely have working electricity, they wont last. Florida is already turning into an expensive state and Texas is right behind. When the water runs out and the temps hit 120 in Arizona, they’ll all come back.
Keep voting blue scott
Joy through Implosions
Your last point says it all. They are expecting Caballa to ‘win’ and then Barry will instruct her on how to bail out Chicago. And all the other blue cities that are also billions in debt.
As I mentioned when the MEPs got bailed out, it should be interesting to see if they manage to do a public pension bail out.
Because municipal bankruptcy is definitely an option for Chicago and similar “blue cities”… like Detroit. Remember how Obama didn’t get them bailed out? They had their “Grand Bargain” (aka holding some artwork hostage), but it still was a bankruptcy workout, and no massive federal funds were forthcoming.
Hi MPC – Thanks for stopping by!
Howdy Mish — I don’t often comment, but I do read most of your posts.
I guess we’re going to see Chicago back in junk territory and I do wonder if the state legislature will allow it to declare bankruptcy (which will be the nuclear option in Illinois, but it is still an option).
Others here in the comments section are unaware of muni bankruptcy, which is fair, and of course the conditions under which an entity can file differs by state. In Illinois, the legislature would have to give Chicago permission. In some states, like California, the towns can file without state permission. This has all sorts of consequences.
As I recall, in the Detroit bankruptcy, even the unlimited tax General Obligation (G.O.) bonds took a haircut. Property tax rates were already high in the city and it was not practical to raise them to levels high enough to cover the debt service on these bonds. Moral of the story: If you own Chicago G.O. bonds, you probably should get rid of them before the likely bankruptcy.