Hey, let’s bail out all the oil speculators. They voted for me, didn’t they?
If that’s not the general idea, then what is?
Please note U.S. Weighs Paying Drillers to Leave Oil in Ground Amid Glut.
The Energy Department has drafted a plan to compensate companies for sitting on as much as 365 million barrels worth of oil reserves by effectively making that untapped crude part of the U.S. government’s emergency stockpile, said senior administration officials, who asked not to be identified describing deliberations prior to a decision and announcement.
The keep-it-in-the-ground plan would require billions of dollars in appropriations from Congress — and the administration just recently lost a bid in Congress to spend $3 billion buying oil for the government’s strategic reserve. A deal like this could be unprecedented and reflects a Trump administration push to help domestic drillers battered by a surge of oil production and a collapse of demand tied to the coronavirus.
Analysts, including experts at Wood Mackenzie and IHS Markit, expect storage tanks to fill by summer, if not sooner. Whenever that happens, oil producers with no place to put their crude would be forced to halt production and lay off workers.
To prevent layoffs due to storage capacity filling, the proposal is to pay workers to do nothing.
The theory is the US would buy oil at these prices and profit. In practice the strategic reserves are full or nearly so.
What About Zombification?
I am sick of bailouts. Some claim it will Zombify the industry.
This is not bullish for crude at all. It’s just going to zombify an entire industry… https://t.co/wkKpYCO1ny
— Michael Norinsberg (@Mnorinsberg) April 15, 2020
And whatever happened to Kudlow’s idea?
In case you forgot, please consider Lower Oil Prices Are Unambiguously Good by Larry Kudlow, now Trump’s top economic advisor.
Basically, the fracking revolution has delivered a powerful and positive supply shock to the economy. It means that more output increases real growth and reduces inflation for any given increase in nominal GDP — the exact opposite of what we saw in the 1970s.
Falling energy prices are so good for the economy that a new Republican Congress, in its first 90 days, should put a bill on President Obama’s desk authorizing the Keystone Pipeline, opening federal lands to energy development, and ending oil export restrictions. Totally pro-growth.
Hmm.
What’s Larry saying now?
Art of a Failed Oil Deal
Two days ago, the Wall Street Journal bragged about Trump’s fabulous deal to save the US oil industry.
Following a ridiculous spike on the announcement, oil then plunged to an 18-year low.
For details, please see The Art of a Failed Oil Deal
This new bailout proposal is an admission Trump’s deal failed.
Mike “Mish” Shedlock
Printing money and paying drillers to keep oil in the ground is quantitative easing for the planet!
The unintended consequences of covert 19 is quantitative easing for the planet. Yes printing money and paying drillers to keep oil in the ground is an idea that has been around for a while to save the planet.
Not that it’s right to do this, but it would be par for the course in today’s world of crony “print and grift”. I’m jealous – I ain’t getting nuttin.
Delusional: Investors are underestimating the economic shock the world is facing
“The third one burned down, fell over, and then sank into the swamp”
So you are saying It’s Not a Normal Recession (TradeMark).
“Investors” don’t give a crap. They’ve got the Fed at their back.
That article can also be rewritten as:
Delusional: Non investors are overestimating the chance that the Fed has run out of bullets.
This is madness! We are hell bent on propping up a dying industry, meanwhile where are the checks for main Street workers?
Awaiting the Holy Signature of Dear Leader upon their memo fields.
Most went DD this week, liberal MSM talking point. If the filer was that stupid and an illiterate banking fool that requested a paper copy last year…then they can wait like morons.
A View From The (unemployed) Person In The Street:
Hhmm, this will make what I pay at the pump higher … and, much more importantly, this money could be going to me or my former employer (for restart).
“Lower Oil Prices Are Unambiguously Good” – Kudlow
False. Lower oil prices are beneficial if they are caused by a glut in production. But if oil prices fall due a drop in demand, it’s a clear sign of a declining economy in the near future. The latter is clearly occurring now whether or not there is any glut.
Oil is one of those things (interest rates another) that “experts” always have TWO envelopes –
Lower price at the pump puts more $$s in your pocket to spend elsewhere … therefore, bullish for economy (stocks) … buy buy buy.
Higher price at the pump reflects strength / demand in economy … therefore, bullish for the economy (stocks) … buy buy buy.
Same with stocks. Nasdaq is green for the year.
This is America. Always buy buy buy.
Only one envelope … no matter what happens the Fed will (try to) prop up stocks for the benefit of the oligarchy it serves, and is a part of.
There are a lot of oil drilling leases on public land. Just revoke the leases and save a few billion dollars. Sure, you’re going to lose the revenue from production, but this idiotic idea will keep the “revenue” from the leases coming in.
“I am sick of bailouts”
I have been sick of bailouts since 2009. Scoundrels one and all. And the audacity to tell us it is for main street, for saving capitalism, having courage to act blah blah blah. When lawlessness becomes the law of the land, it shows depravity and nothing else. If people do not wake up now and take up the pitchforks god knows when it is gonna happen. God only can save us from such self-appointed protectors in wolf’s clothing.
God hasn’t done anything about it since 2009 what makes you think he’ll start now. Socialism with a huge, impoverished underclass is clearly The Plan.
the rich have to be saved to save the poor — it’s a well regarded, highly touted, and time tested axiom which can’t possibly be wrong.
No trickle down for xil today.
The workers won’t see a dime of that money.
What they all work for free and without a paycheck…SMH
The administration is acknowledging what you have been saying for a long time, the problem is deflation. They are simply injecting dollars into the economy to fill the deflationary hole. They will fail of course. But, simply insisting that the solution is to allow deflation is not realistic and will never be chosen by any current government anywhere.
The end of the road for gross monetization is a loss in confidence and a resulting revaluation of money. The dollar won’t go to zero as some define hyperinflation. I define hyperinflation as a rapid revaluation of money to a new equilibrium point that reflects the underlying macroeconomic fundamentals for the currency.
Energy and Food two things that we all need! And for this reason the Government has for decades supported Farmers with bailouts and price supports that other nonessential business do not have . NOW energy has hit a market condition that is unprecedented. Thus the government will rightly bail and support this vital industry. OR we can all enjoy walking and food lines.
Didn’t you read the post, there’s so much energy they’re running out of places to store it. If low prices are not factored into a producer’s business model, bankruptcy and reorganization are what they need. The assets and workers don’t disappear, just the wealth of the investors who made a bad investment. Low oil prices and a dispute between other leading producers are hardly unprecedented. The virus is just an excuse to hand money to the well connected.
Most of my family are farmers and I’ve also listened to that nonsense for decades. There will always be farmers, the ones crying the loudest for bailouts invariably paid ridiculous prices for the land they farm. Losing it in bankruptcy to a prudent farmer who isn’t willing to overpay is the correct economic message we need to send. Bailing out the imprudent is not the correct message.
He read the post, but he’s long oil and oil drillers, and also a Republican all in one.
In other words, only his pocket matters. Everything else does not matter.
I can’t count the number of farmers around here that are always saying they aren’t making money but get a brand new ford350 dually every couple years because the old one hit 30k. One down the road is continually crying yet his wife just got a brand new F250 so she could haul her 2 horses around. Whatever.
Clean,beautiful oil! It’s what’s for dinner!
Only after the depression did the government support producers–most people were still on the farm and had gardens to eat from–but in the city folks were in food lines and many still are. So after the NEW Deal Democrats again got busy and created the Great Society 1964 that subsidized women by having babies out of wedlock(70% in some ethic groups today) destroying the family but buying votes. So there are plenty of government subsides not just for food and possibly energy.
“NOW energy has hit a market condition that is unprecedented. “
…
Screw them.
Energy sector has been a major player in the dividend / stock buyback game. No way I want to bail out anyone who failed to prepare for a rainy day.
They can go thru the bankruptcy portal just like j6p.
Well get your bike out and candles for lighting and grow a garden–and if you have savings in a bank be ready to loose some to the banks when its energy loans go bad
The “if you don’t bail me out the system will crash (get your bike and candles out) or you’ll lose money (indirectly through banks making bad loans)” is not a winning argument in favor of bailouts. Help the workers in these industries, but not the investors and management who have reaped all the gains. If the industries are bankrupt but truly essential, then wipe out the shareholders and bondholders, fire management, and nationalize them until a private buyer with the capital and management skills comes along to try again. Paying to keep poor management in place and bad investments from going sour is not a winning economic strategy unless we want to follow Japan’s lead. We want investors to make sound investments, not speculate in reliance on a government backstop. Invest in CDs if you want a guarantee.
Sounds like Socialism to me.
The GOP could not possibly support socialist actions.
I mean, socialism causes Lindsay Graham to have the vapors.
It’s ok as long as it’s socialism for business.
now Linsay the clown is all about helping with the vapors…What a hypocrite.
The Fed can bail them out under the guise of maintaining employment.
Who’s going to stop them? No one.
The intent is not to save workers jobs it’s to save investors who gambled on a rising oil market. Its a rebate on mineral rights not extracted and profit not realized. Doesn’t every casino give you a free dinner when you lose thousands?
That’s always the case in Idiotopia: The gola is never to “save” those competent enough to do something useful.
But rather to “save” the connected clique of abject incompetent and intellectually sub mediocre illiterates, which The Fed and government have forcibly transferred near all wealth, ownership and control of US resources to. Not one single one of whom have “made” a single dollar of their wealth, based on anything they have done, designed, understood, figured out nor accomplished themselves. But rather by having the Fed and government steal it from their infinite betters, who are forced to subsidize this useless garbage. In splendor, to boot.
If Dimwit in Chief does nothing, the oil gets left in the ground. Simple as that. No change in outcome at all. This whole exercise, is solely , 100.000%, all about transferring wealth to sub mediocre, illiterate, incompetent, useless, worthless, dumber than any dishrag I would ever allow in my kitchen, utter morons. Who, being, to a person, too unintelligent and incompetent to do anything useful, are instead “managing” hedge funds, “investment banks”, private equity all all the other completely useless and entirely trivial to even a five year old obfuscations for simply collecting welfare off of the back of more competent and intelligent people doing real work, which have grown up around The Fed’s forced wealth transfers since at least the 1971.
Being well connected is more important than competent.
I will be filing paperwork today for “Petroleum Resource RecoveryLLC” and would like to know where I need to apply for the handout, err, bailout. Thank you.