US Crude Oil Production Plunged Most Ever, Natural Gas Followed: The Great American Oil & Gas Bust, Phase 2  

Precisely what’s needed to end the price collapse. But last time, it wasn’t long before Wall Street liquidity surged back into shale, starting the cycle all over again.

By Wolf Richter for WOLF STREET.

US crude oil production in May plunged by 1.99 million barrels per day, from 12 million b/d in April to 10 million b/d, the largest monthly drop since at least 1980, and the sixth monthly drop in a row, according to the EIA.

This comes after the collapse in demand for transportation fuels – especially gasoline and jet fuel – that started in March and exacerbated the oil glut and a downward spiral of the already depressed prices for crude oil. Amid a torrent of bankruptcy filings by oil-and-gas companies, drillers cut drilling activity and production. This trend restarted last year, after having subsided somewhat following phase 1 of the Great American Oil Bust in 2015-2016, but took on record proportions during the Pandemic. From the peak in November 2019 of 12.86 million b/d, production has now plunged by 22.2%:

In the chart above, note how production doubled between mid-2012 and November 2019, despite the drop in production in 2015-2016.

The chart below shows the the price of benchmark crude oil grade West Texas Intermediate. Note how the price recovery from late 2016 ended in the fall of 2018 and then reversed, as production surged. The price decline bottomed out on April 20, when for a brief period the price of WTI plunged below zero, a bizarre moment in the history of crude oil:

Texas, the state with by far the largest production in the US and the epicenter of the oil-and-gas bankruptcy filings, was also the state with the largest production cuts, in terms of million b/d. Peak production occurred in March 2020 at 5.44 million b/d. By May production had plunged 19% to 4.39 million b/d.

In the federal offshore Gulf of Mexico, the second largest producing area, production peaked in November 2019 at 2.0 million b/d. By May, production was at 1.6 million b/d, down 19%. Texas and the offshore Gulf of Mexico account for about 60% of US crude oil production.

The table shows the top 19 producing states and the federal offshore Gulf of Mexico, with April and May production, and the percent change in May, month-over-month and year-over-year. Three states, all smaller producers, actually booked month-over-month increases in production:

Crude Oil Production, thousand b/d
April May %  MoM % YoY
US total 11,990 10,001 -16.6 -17.8
1 Texas 5,159 4,395 -14.8 -12
2 Gulf of Mexico 1,913 1,613 -15.7 -15.7
3 New Mexico 1,053 885 -15.9 -0.7
4 North Dakota 1,215 862 -29.1 -37.4
5 Colorado 494 471 -4.7 -8.3
6 Alaska 463 404 -12.7 -14.8
7 California 409 392 -4.2 -13.1
8 Oklahoma 495 363 -26.7 -40.2
9 Wyoming 245 165 -32.7 -40.7
10 Louisiana 100 76 -24.4 -39.9
11 Utah 86 73 -14.9 -30.8
12 Kansas 76 66 -12.2 -26.3
13 Ohio 60 60 0.1 -15.2
14 Montana 54 41 -24.2 -39.4
15 West Virginia 42 41 -2.1 7.6
16 Mississippi 37 24 -34.1 -47.1
17 Pennsylvania 14 14 1.6 -24.9
18 Illinois 15 11 -28.8 -52.3
19 Arkansas 11 10 -11.8 -25.8
20 Kentucky 6 7 10.6 -1.7

Natural gas production also dropped.

Natural gas is part of the mix of hydrocarbons produced from shale wells. In some producing regions, hydrocarbon liquids, such as crude oil, are dominant but with some associated natural gas. Others, such as the Marcellus Shale (Pennsylvania, West Virginia, eastern Ohio, western New York), produce large amounts of natural gas and fewer liquids. In areas were insufficient infrastructure exists to process and take away natural gas, it is flared (burned off). So when oil production booms, natural gas production booms too; and when oil production gets cut, natural gas production gets cut too – but not in lockstep.

Production of natural gas peaked in November 2019 at 116.6 billion cubic feet per day and has since then dropped 8.7%, including 5.3% from April to May. In terms of cubic feet, the 5.9 million cf/d drop in May was the second largest drop ever:

The US has become a net exporter of natural gas. For reasons related to the lack of pipelines to producing regions in the US, some areas in the US import natural gas from Canada; and other regions in Canada import natural gas from the US. The US exports natural gas via pipelines to Mexico, and it exports natural gas as LNG to the rest of the world. But the price of LNG in global markets has also plunged.

Texas and Pennsylvania are the two largest natural gas producing states, accounting for 43% of total US production. These are the top 16 states and the federal offshore Gulf of Mexico, with April and May production, and the percent change in May, month-over-month and year-over-year:

Natural Gas Production, million cf/d
April May % MoM % YoY
US total
112,438 106,506 -5.3 -2.7
1 Texas 28,715 26,393 -8.1 -3.2
2 Pennsylvania 19,997 19,298 -3.5 2.5
3 Alaska 9,277 9,088 -2 -1.4
4 Louisiana 8,767 8,836 0.8 9.8
5 Oklahoma 7,853 6,999 -10.9 -19.5
6 West Virginia 6,711 6,920 3.1 22.7
7 Ohio 6,465 6,697 3.6 -0.5
8 Colorado 5,727 5,414 -5.5 0.9
9 New Mexico 5,410 4,945 -8.6 -0.5
10 Wyoming 3,936 3,657 -7.1 -15.2
11 Gulf of Mexico 2,630 2,073 -21.2 -26.1
12 North Dakota 2,749 1,962 -28.6 -30.3
13 Arkansas 1,337 1,338 0 -8.5
14 Utah 686 633 -7.7 -17.4
15 Kansas 520 506 -2.7 1.8
16 California 490 482 -1.5 -9.4
17 Montana 116 95 -18.5 -30.6

The industry hopes that the sharp decline in production of US crude oil and natural gas, along with the production cuts by producers around the world, will alleviate the glut that was first caused by surging production in the US, and then by the collapse in global demand during the Pandemic.

The bankruptcy filings of oil and gas companies in the US are now a routine occurrence. The industry has run out of money as crushed investors have stopped feeding it. And now the assets are getting redistributed in bankruptcy court, from shareholders to creditors, at cents on the dollar.

But one thing has become abundantly clear over the past few years: If there is enough money, the shale oil-and-gas business can ramp up production at lightening speed, which is what happened in late 2016 after phase 1 of the Great American Oil Bust, when Wall Street unleashed the opportunity seekers as crude oil prices were rising again. This newly resurging production then led to the next glut and phase 2 of the Great American Oil Bust, with prices heading lower again starting in the fall of 2018. And as this was playing out, it ran into the collapse of demand during the Pandemic.

So now the production cuts are serious. Assets are getting redistributed and debts wiped out in bankruptcy court. At the same time, demand for transportation fuels is recovering. This combination of sharply reduced production and recovering demand would indicate that eventually prices would rise to a level where the industry can survive.

But there is a huge amount of liquidity in the market, and yields are repressed and investors are on a crazy chase for yield, and there is the risk that at the first sign of opportunity in oil and gas, some of that liquidity will surge back into shale, unleashing in practically no time a torrent of production, and then the cycle starts all over again.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  119 comments for “US Crude Oil Production Plunged Most Ever, Natural Gas Followed: The Great American Oil & Gas Bust, Phase 2  

  1. Joe Saba says:

    what collapse in prices
    gas is $2.49 TODAY

    same as it was in JANUARY
    please name GRIFTERS

    • c1ue says:

      That’s because it is summer.
      If the supply drop holds true into the winter months, that’s when price increases will occur.

    • happy_man says:

      crude is back over $40! Party on!

    • Anthony A. says:

      I just filled up at Costco an hour ago. RUG was $1.58/9. This is Texas, of course.

      If you are in California, you can thank your Governor for the high taxes on gasoline.

      • Zantetsu says:

        I do thank the governor for that. Just wish they were higher, here and everywhere, to discourage use of greenhouse producing over consumption.

        • MCH says:

          Yep, let’s stick with EVs instead where we don’t need to know about where the energy comes from and where the actual cost is cheaper.

          Before you complain I am being sarcastic, I am not, because in that case I wouldn’t have to pay the gas tax to support the road work. +1 for the EV owner.

          Raise those gas taxes I say, let’s the peasants eat cake. ?

        • Zantetsu says:

          Nobody is suggesting ‘the peasants should eat cake’. Only that they should stop driving lifted 4x4s and monster SUVs. If you think that’s too cruel a sacrifice, well, I don’t care.

        • Jdog says:

          LOL dream on…

        • Happy1 says:

          I’m happy you are in CA

        • polecat says:

          Come on, say it .. ‘Muskmelon’ … SAAAY Ittt! .. for the up-grade in EV virtue + Youtility…

          It’s like what one sees in the advert – a utilitarian E-conveyance .. ‘It can Do It ALL!’ … but what one really gets, is a ramshackle wooden cart, plus an obstinate mule …

          When hydrocarbons become unaffordatanium, costing more to extract then it’s worth to do so, with solar + wind not living up the hype … then it will be a return to human/animal muscle power, and maybe steam – plus a smattering of the rest, to keep some sort of society going.

          But contemporary humans think that what we’ve had, what with the 300+year gift of liquid sunlit hydrocarbons plus coal, will be around, forever. The externalities, limitations, and toxicities .. with regard to solar/wind, hydro .. not mention nuclear, will not allow for billions of humans to ‘enjoy’ a western consumptive ‘lifestyle’, certainly long-term. We’ll be coming to terms with our collective energy realities sooner or later .. at which point, those bright, shiny progress shades will get yanked away thusly – to hopefully whistle only up to the front of the Graveyard’s Gate, having learning from our mistakes .. rather than traipsing unwittingly past it!

        • MarMar says:

          “let’s stick with EVs instead where we don’t need to know about where the energy comes from”

          We have detailed information about our electricity; in California more than half (and growing) is from non-fossil fuel sources.

        • MCH says:

          Yep, great, and the other half of the sources come from where again? And what’s the exact costs involved? Remember, energy is fungible, once it goes onto the grid, you can’t easily distinguish where it comes from no matter what some politician tell you.

          As far as the higher gas taxes go… consider this. It isn’t the guys that can afford the EV that anyone would worry about. He doesn’t give a crap about higher gas taxes.

          You see the guy with his pick up truck that has a lawnmower in the back. He is hustling around from one city to the next, busting his ass to feed his family. Ever think about him? Don’t think there is an EV option for him, or the infrastructure that could support him. And if there was, economics might not make it affordable. So, yeah, let’s wish for higher gas taxes, and stick it to the ones who could least afford it.

          But perhaps those who could least afford it could take mass transit in the current C19 world. Cause you know what, it’s good for the environment, right? Fewer cars, all of the that Covid 19 stuff is just made up.

          But it’s all good. It’ll discourage the use of greenhouse producing over consumption. And hey, guess what, we can compensate for those people who can’t drive around with more government handouts.

          Isn’t that just perfect?

        • rhodium says:

          Polecat, you are far too pessimistic about renewable energy. The technology is maturing and getting cheap quite quickly. If anything we will eventually run out of the raw resources for all technology, but even that though could be largely mitigated by technological advances. I’m personally not worried about it.

          Advanced technology is not for simpletons or those who are daft though, or societies for whom such adjectives are apt. The growing complexity of it all makes us increasingly the victims of entropy, and whatever happens in the future, we will still always have that force of nature pulling us back down to the soil. So it’s not impossible you will be right.

        • MarMar says:


          The fact is that those uses of gasoline are already not economically viable – they only survive by borrowing, at very heavy interest rates, from the future.

        • Russell says:

          Gasoline taxes are the most regressive form of all taxes. Let’s stick the poor guy who can barely afford to feed his family, much less buy an EV, with maintaining our infrastructure.

          And no, clean fuel is not clean. Where do you think the E in EV comes from. Solar panels and the batteries use more exotic metals than we can mine in America. More debt to the Chinese, 80% produced in their wonderful, humanitarian country. Where do the used batteries go? Haven’t figured that one out yet.

          Wind farms kill more birds per BTU than the worst oil slick you can imagine; it just isn’t newsworthy. What do you think they do to their flight patterns? What do you think the windmills are made from; high polymer resins? They don’t grow on trees.

          There is no such thing as a free lunch! You just temporarily shift the costs.

      • Gandalf says:

        Texas has essentially zero regulation of the oil and gas production and refining industries.

        California has lots of regulations, which increased costs and long long ago drove out a lot of the oil and gas producers and refineries until only a minimum number were left, which means zero competition and they can charge whatever price they wantin California.

        Houston has a city named Pasadena on its East side, just like Los Angeles. But the two are polar opposites. SoCal Pasadena is hilly and green and a nice, pleasant expensive suburb with the Rose Bowl Parade every New Year.

        Texas Pasadena is gritty and blue collar and the air is foul from the refinery and petrochemical pollution released from a huge number of plants located all over the eastern side of Houston down to the Gulf of Mexico.

        The only reason the nicer western parts of Houston don’t get all of this same foul air is that the wind usually blows eastward and pushes the pollution over the Gulf.

        I am 100% positive that this pollution causes higher levels of respiratory disease, cancer, birth defects, early deaths, etc., etc. in those eastern communities, But nobody ever studies this, nobody dares raise a fuss, and mostly nobody cares. There are no Erin Brockovich’s in eastern metro Houston

        Cheap gas! Jobs, jobs, jobs! Don’t let those commie socialists from Californication come in and take those away from you!

        That’s all that matters

        • Happy1 says:

          People who believe in science are not 100% positive about anything until they see data. And people are voting with their feet, TX is growing. I’m not in TX and don’t like it there but I understand why.

        • sierra7 says:

          And your comment would be my reply to MCH diatribe above about California gas taxes…such a fistful of strawmen MCH!!
          Some of us are very happy with the cleaner air; and not even care about the EV markets.
          Get a grip! (MCH)

    • c1ue says:

      US natural gas consumption, overall, is about 85 billion cubic feet BCF per day.
      Projected natural gas supply losses were 5-20 BCF per day, 3 months ago.
      This seems optimistic now.
      However, seasonal consumption varies considerably.
      May 2020 consumption was 66.8 BCF.
      December 2019 consumption was 101 BCF.

  2. 2banana says:

    Hopefully oil prices drop into the 20s…

    “US crude oil production in May plunged by 1.99 million barrels per day, from 12 million b/d in April to 10 million b/d, the largest monthly drop since at least 1980, and the sixth monthly drop in a row, according to the EIA.”

    • Wolf Richter says:

      It can drop to $20 but cannot stay there for long because the industry will shut down completely. And not much later, there will be a shortage of crude oil, and prices will surge.

      • 2banana says:

        Like the old saying.

        “The solution to low oil prices is…low oil prices.”

        • Wolf Richter says:

          Yes, but for the industry this has been a painfully long process that started in 2014 and continues to this day.

          What never ceases to amaze me is how investors bought all the oil industry hype and kept pouring money into it, despite the collapsed price, thereby disallowing the normal pricing-and-bankruptcy mechanism to solve the oversupply problem.

        • rhodium says:

          I could start a charity, call it an investment opportunity, and then sell stocks and bonds as the primary product.

  3. Just Some Random Guy says:

    May is ancient history. Looking at eia dot gov data, July 2020 is just slightly off from 2019.

    Thousands of barrels per day by week 2019 vs 2020.

    Week 1 July 2019: 12,200
    Week 1 July 2020: 11,000

    Week 2 July 2019: 12,000
    Week 2 July 2020: 11,000

    Week 3 July 2019: 11,300
    Week 3 July 2020: 11,000

    Week 4 July 2019: 12,200
    Week 4 July 2020: 11,100

    • Wolf Richter says:

      Just Some Random Guy,

      The EIA’s weekly data is totally unreliable as you can see from the weekly MAY estimates which were TOTALLY WRONG (thousand b/d):

      May week 1: 11,900
      May week 2: 11,600
      May week 3: 11,500
      May week 4: 11,400

      Reality in May was an average of 10,001 thousand b/d.

      But compare the July weekly estimates you cited to May’s weekly estimates, and you will see that in July, the weekly estimates were actually DOWN FROM MAY. So this would mean a further decline in July from May.

      Your comment is the kind of nonsense you get when you’re sloppy looking at data or when you have an agenda that you’re trying to promote by hook or crook.

      • Wisdom Seeker says:

        Strange: most nations built the infrastructure in a couple of months to count COVID tests and positive results almost-daily. Near realtime info for a process that didn’t even exist 8 months ago…

        … yet the US doesn’t have real-time accounting for actual industrial production of stuff that’s just as easy to measure, in industries that have been established for over a century!

        Imagine if the nation’s economic leaders were able to adjust based on daily or weekly tangible output numbers, instead of months-delayed quarterly data and leadership opinion surveys?

        • Wolf Richter says:

          There are something close to 1 million oil and gas wells in the US, with new ones coming on line all the time, and with older ones petering out. So measuring production relies on estimates, same as in manufacturing or retail sales or whatever. Early estimates — or “advance” estimates — as the Census calls them, are very inaccurate but are supposed to give a first glimpse.

          Even GDP is constantly being revised: after the advance estimate, there is the first revision, then the second revision, and then it’s being revised for years to come.

          The weekly estimates for oil production are known to be very unreliable. That’s why the monthly estimates lag so far behind… that’s how long it takes to get enough data together to come up with a reliable report.

          The EIA offers both with the caveat that you need to know what you’re looking at. In its own reports, the EIA only references the monthly data.

        • Wisdom Seeker says:

          I disagree with “measuring production relies on estimates”.

          Every well has a flow-meter, and that well’s owner absolutely knows what they’re producing and delivering so they can manage flows and get paid properly. At the technical level, it wouldn’t take an Apollo project effort to get that data reported in realtime. Since there isn’t a rush, governments could simply mandate such reporting as part of the permitting process for new wells, and the infrastructure would catch up over time.

          Same thing for auto factories – they have capability to report daily production numbers because they’re already tracking every VIN and outgoing delivery shipment.

    • Rodney says:

      They look like Convid reported numbers…. hardly any different from a normal year…

  4. MiTurn says:

    “…and then the cycle starts all over again.”

    Mania. Irrational. The fodder of the human condition.

    The new normal!

  5. RightNYer says:

    Even though the Fed has now tapered for over a month and a half, do you think they ever stop to wonder about what a monster they have created? They have ignited irrational exuberance and mania buying not seen in decades. What is their plan for when it collapses?

  6. Seneca's cliff says:

    I don’t think they will be ramping up so fast next time. My inbox has been flooded lately with equipment auctions ( machine tools that make specialty oilfield equipment) from closed down manufacturing facilities. These are large, expensive ,specialty machines that can take years to get , install, tool and train for and they come from Germany or Japan. This did not happen in the last two or three oil busts. If the demand does come back it will take a long time to get tooled up to make this stuff, or we will have to let the Chinese or the Russians do the drilling, fracking and pumping for us.

    • C Kulp says:

      Seneca, I disagree with your assessment that “This did not happen in the last two or three oil busts.” In the mid-80’s, many manufacturers of all sorts of specialty and non-specialty equipment shut down. And, to top it off, a DRASTIC reduction in the graduation of petroleum engineers and geologists that still persists to some degree.

  7. The Bob who cried Wolf says:

    I’m curious what industries, professions, and areas did the best after 1929 and 2008? Even if the economy comes roaring back it’s only going to be for some. A lot of these folks who lost their jobs as well as these business that closed are never coming back. It’ll take years re-employ most of the low skilled crowd.
    So, based on history, where should one be living? What should one be doing to make money? And what will hold it’s value the best?

    • Tim SE says:

      I don’t think history will be too good a guide.

      After 1929, conditions for growth were good, so there was a solid recovery, albeit gradual, and helped by rearmament. Banking & finance, too exuberant in the 1920s, took a hit that lasted for decades, but manufacturing did very well.

      After 2008, conditions for growth were not good, so we had a faked ‘recovery’, based on cheap debt and cheaper money. That’s why world economic problems now are about so much more than just the virus. Buying each $1 of “growth” with $3 of new debt is not sustainable, but that’s what the world has been doing since 2008.

      After the current crisis, we’ll no doubt try the fake recovery gag again, but it might not work.

      My view is that GFC II – the sequel to the 2008-09 GFC – could turn up as soon as early autumn. During 2Q, the US fiscal deficit was $2tn, and Fed additions to assets were $2tn (numbers almost identical). The 3Q need for support may be less, but that’s when the bill for interest and rent ‘holidays’ turns up.

      • c1ue says:

        I believe you’re referring to post 1941 recovery due to WW2?
        What about the decade plus in between the 1929 crash and the start of WW2?
        The worst of the Great Depression didn’t happen in 1929 – it happened in the mid-1930s.

        • VintageVNvet says:

          correct c1,,, but only about the bottom in mid 1930s…
          grandpa sold everything, including the house on the lake, and bought a 60′ north sea pilot ketch in 33 when there was no work at all for his company,,, sailed to the south pacific, etc.,,, then got a telegram in 37 that work was coming in and he needed to come back to work, which he did, after sailing to Honolulu and selling the boat there… heard that story many times

      • You’re right, conditions in 29′ were better. We had new technology, electricity, and the automobile. Now we generate growth from innovations of the telephone. The view of analysts is we are already past the worst of GFC II, (it’s priced in). The money pouring into markets, and main street is unprecedented, and gold is barely off the snide. The prospects for growth ex-US, are dubious. The fake “EM” recovery gag, again. Some of these EMs are going to bypass the capitalist phase and go right to socialism. I don’t worry about debt incurred in monetization schemes, it’s the folks with real skin in the game who get burned. You can borrow Treasury bonds, but never ever buy them.

      • The Bob who cried Wolf says:

        I’m thinking best thing for starters is to reduce debt load on most everything. If you’re counting on income to keep cash flow going that’s gonna be risky when the folks paying you stop.
        My nephew lives in west Texas and works on those fancy generators at the refineries and wells. He said things did really slow down for a few months but missy everyone is back to work. I’m not so sure about that but it’s what he said.

    • Seneca's cliff says:

      My two sense for booming professions after this bust bottoms out ( could take a while as the bottom might be a long way down) are , repo man, scrapper/dismantler, mule driver and night soil hauler. When it comes to geographic locations I would be looking towards places with ample water, proximity to hydro electric, good soil and water based transportation. Places that need imported or desal water, imported food or air conditioning might not work out well in the long run. I would avoid Phoenix, Vegas and Tampa and get in on the ground floor in Spokane, Buffalo and Longview Wa.

      • Xabier says:

        But – and this IS the true ‘Seneca’s Cliff’ – what have we done to the good soil, and water sources, since WW2?

        Regions which have sustained humans for thousands of years have been wrecked, in may cases irreparably -or at least not on a time scale that makes any sense or use to us as individuals.

      • VintageVNvet says:

        Nah sc,, too dismal in all of those places because they are too far north to live on the solar abundance that will be the most valuable ”commodity” for us peasants going forward..
        FL, in general, has killed the natural environment, no doubt about that along the coasts, and the aquifers are in bad shape, but the sun will power the cleansing/desal of the plentiful water and air there, and similar tech will make various other places with lots of sunshine livable.
        Longview, WA, is very nice and a relative just bought a small farm there, but the biggest problem other than latitude is attitude, and that appears to be getting worse by the hour. We drove through there in ’18, thought we were going to be mugged just getting gas, although driving out west from there to the 101 was really beautiful country side and lots of very good looking farms, etc.
        The area of TX east and around Houston, is a very bad mess, as mentioned by G above, and we just refused to accept allegedly ”organic” rice grown there, but, other areas of TX are still relatively clean, with abundant water, etc., and lots of sun.
        Main thing going forward IMO will be community, not as easy to establish as paying too much for the dirt is,,, but it can be done with good attitude and being willing to participate with local volunteer projects while keeping your mouth shut about, “this is how we do it up north (or wherever.)”

    • California Bob says:

      re: “I’m curious what industries, professions, and areas did the best after 1929 and 2008?”


      • Anthony A. says:


        • polecat says:

          Even better – the destructive creation of various and sundry Warlords ..
          Our uniquely ersatz versions of Conans, greaters and lessors!

          So your mission, mr. cliff … should you choose to except it … is to obtain that composted nightsoil, to grow the produce, to sell to the intermediary, who will provide The local or regional Big Swingin Dude .. or Dudett ( let’s not be sexist here), or both! .. in addition to his/her/their retinue, so they can all live in the comfort to which they are entitled. You of course, assuming you play your tarot cards right … will continue to avoid falling into any deep chasms …

        • polecat says:

          It also might behoove you to brew a fine hoppy beverage, as an offering, filled to the foamy brim .. in one of wolf’s exquisitely crooked-lined mugs!
          They most surely will become quite the collectors item by point in time.

  8. Paulo says:

    when Wall Street unleashed the opportunity seekers as crude oil prices were rising again.

    And that is the problem. If interest rates were even close to normal sober minded financing would exist, savers would enjoy some kind of sustainable earnings, and the stock market would be at realistic values where investors look for returns on a natural growth of products and services.

    Build a better mousetrap and they will come. Otherwise, just hype and force Market participation so the 1% can maintain power and control while everyone else loses out.

    Cheap energy has now been replaced with almost free debt, and the lack of return forces savers into the Market casino for some kind of profit. Furthermore, these super low rates have fueled every kind of boom, particularly in mortgage financing which has now forced home ownership out of the reach of middle class hopefuls.

    And perching on the end of this free money tree limb lies a population in pandemic, and all Govt and Fed policies are sawing the branches off to save the tree from dying.

    Unintended consequences abound. Add to this a debasement of currency by print, and the scenario looks worse by the day.

    This is a time for investors to look at fundamentals, the real kind; no debt, real wealth storage values whether it be PMs, land, a paid off rental, or a bolt hole in flyover. I read somewhere, a while ago, that a large percentage of the population buys weekly lottery tickets for their retirement plan. And some will buy Shale. Again.

    • Wisdom Seeker says:

      Just want to add that “interest rates close to normal” is mathematically equivalent to “credit is scarce enough that it needs to be allocated, reducing malinvestments”.

      The oversupply of credit is exactly what drives interest rates insanely low, and that oversupply is what drives the malinvestment of credit.

      The malinvestment in turn destroys the credit, forcing (in the current paradigm) more credit to be created to replace it, in a vicious cycle of “destructive creation” – the opposite of capitalism’s “creative destruction” process.

    • Skara says:

      So what will it take to trigger a reversion to the mean in risk assets? All the supposed wise investors have been saying the market is overvalued for at least two months ago. Many people are short, but the bubble keeps growing. Unemployment doesn’t seem to matter. Infections and deaths don’t seem to matter. Just stimulus and (maybe) vaccines that half the people won’t take anyway.

      I am curious what people think will trigger the correction at this point.

      • Bobber says:

        Watch the DXY. The problem is right in front of you.

        • Wisdom Seeker says:

          The DXY isn’t the problem. DXY is the US dollar index, a measure of current price of dollars against a weighted average of other world currencies. DXY isn’t the problem because all the other currencies are devaluing like crazy as well.

          In fact, DXY is actually midrange for its history over the past 30 years. And on other metrics the Yen and Euro are both farther down the fiat-currency rabbit hole.

          The world didn’t end (in the other direction) in early 2015 when DXY surged by 20%, and it won’t end now with DXY down 7% (so far). Actually, some people in USA would be thrilled to see DXY drop, since it increases export competitiveness and makes imports more expensive. Good for domestic industry.

        • Shiloh1 says:

          If another $3 trillion gets digitally! printed in next 3 months where will that take the DXY? Gold and silver?

        • Wisdom Seeker says:

          @Shiloh –

          Where DXY goes depends on who’s doing the printing. Will it be the ECB next time? Japan? China? If they all print together, DXY goes nowhere.

          As for gold and silver, which way they move will depend on WHY the printing is taking place. If the printing is to fill a gaping hole in the credit ecosystem due to mass defaults, gold and silver may go nowhere at all, or even down (like in March).

          It’s only when the printing is in excess of debt-default-destruction that net credit is created and gooses other prices.

      • Wisdom Seeker says:

        Reversion to the Mean requires a credit slowdown. But the only limit we have is the Federal Reserve, which is part of why Wolf watches the Fed so closely!

        The Fed’s legal mandate is maximum employment and price stability, and both metrics give them plenty of headroom to keep credit flowing.

    • Dennis says:

      Paulo, Well said!

  9. Implicit says:

    Great work. Mother earth is in charge.
    They should give up on shale production of anything. It is not efficient, especially with the cost of environmental considerations are considered along with the general excessive cost of production.
    It would nice to be all green using “inexhaustible” energy sources , however poor people cannot afford it. “Energy sources traditionally classified as renewable include solar, wind, ocean, and geothermal. In reality, these are inexhaustible. True renewables are biofuels such as wood, soy-derived biodiesel, andgrain-derived ethanol (Hill et al. 2006). Inexhaustibles will be present for the next five billion years.” From: International Journal of Green Energy, 5: 438–455, 2008

    It all has to do with the Joules and cost. It would be unfair to the poor to stop the ability to use natural gas. Stop deforestation every where. it would be a start; trees love CO2 and produce lots of O2.

    • VintageVNvet says:

      Good start I, but you leave out gravity, currently being used in form of tides or hydro, but likely to be increasingly used to produce energy in other ways also, as we get closer to completing Einstein’s General Theory.
      IMO, we should be encouraging and supporting ”to the max” the theoretical physicists who are working on that development.
      Planting trees by the gazillion absolutely is a GREAT idea, and, if done extensively and regularly, would likely end any excess CO2, as you mention.
      At the very least, USA could mandate and enforce replacement of trees being cut by loggers of all sizes, shapes, and political orientation, and not leave it to the caprices of politically driven agendas in guv mint agencies such as Forest Service and Bureau of Land Management…

      • c1ue says:

        Tidal is useable in a very few spots; the problem isn’t just that it is not a great source of significant energy – it is that the places that use a lot of energy are nowhere near the few optimal tidal locations.
        Ditto hydro: besides the fact that there are few really good, large hydro areas left – and that hydro is under attack by many enviros, it is better used for storage than primary generation.
        Lastly trees: Trees are doing just fine in the US. Tree growth has been uniformly up for the last 100+ years since we don’t burn much wood for primary energy anymore. If anything, the problem is too much growth and too many people living in the woods = big home destroying fires.

        • RightNYer says:

          Yes, that is exactly the problem in California. It’s not that the wildfires have gotten that much worse, but the cost of housing (in part due to the population growth, and in part due to building restrictions) have forced people farther and farther out, into areas that were previously unpopulated. So fires that in the past could be allowed to burn themselves out now endanger property and life.

      • 2banana says:


        America has dramatically more forests than it had 100 years ago.

        And they are continuing to expand new forests as lumber harvests are less than new plantings.

        Now, you can argue location and types, but no other country has had a more successful reforestation program.

      • MCH says:

        I don’t know too much about forestry policies, but 20 years ago, I drove up the Olympia peninsula, and what I saw what very interesting forest management. You go through a swath that has been just clear cut, immediately after, you have a swath that is fully grown trees, you get an idea just by the uniformity of their heights. Then the next swath, that’s a bit younger by appearance. Can’t remember how many segments there were until a section that was just saplings in the ground. Then it repeats a few times, It looked highly industrialized, the trees were in fairly uniform rows. Basically a tree farm

        Don’t know if that was site was owned by some logging company, but would not be surprised if it was. What that told me was that logging can be at least somewhat sustainable.

        I would bet that loggers probably know this better than most environmentalists, because they are literally eating into their own way of life every time they cut down the trees, if they don’t replenish, they die.

        One would think this is a rational approach especially if they find ways to collaborate with environmental scientists in some ways so as to optimize their work. More production, less environmental harm.

        One thing I don’t hear too much about is wild fires up in the Pacific Northwest, partly because it might be a little too wet. But I would also guess they have good forestry management there, unlike CA.

        As for managing wild fires, last I checked, wild fires was nature’s way of balancing things when people don’t manage the land well, and seems like CA has done a poor job of it, and instead of taking responsibility, just shoves it off onto whatever is convenient to the media. Climate change for one. (and no, I am not one of those, it’s obvious to me that climate change is real and humans have an impact, the exact degree can be debated, but that doesn’t negate the fact that CA government has been negligent in it land management)

        • robt says:

          I was in the pulp and paper business for years. Since the advent of large scale paper manufacturing over 150 years or so ago, companies have always ‘farmed’ trees, and planted new ones to replace the ones harvested, a summer job for local kids and itinerant workers. It’s just always been a necessary business decision – otherwise, you’d run out of input or you’d have to pay big bucks to ship in new feedstock from increasingly greater distances. In Canada for example, at least when we used to have a lot of pulp and paper mills, Crown land rights were granted for large areas to harvest (and replace) trees.
          Clear cutting is the best way to do it, to be more efficient and to promote better growth – selectively cutting trees and leaving some hinders growth of the new ones due to blocked sunlight, excess consumption of water by big trees that’s needed by the little ones, etc.

        • California Bob says:

          re: “Don’t know if that was site was owned by some logging company …”

          Most likely Weyerhaeuser.

      • Implicit says:

        Einstein’s relativity is trying to deal with the small laser or photon energy that it takes to transport an entangled atomic particle half way across the galaxy at the same time the energy source is applied. Now that is a cheap efficient non gravitational way of transportation. haha

    • wkevinw says:

      The markets will sort this out in the long run.

      Fracking costs will be discovered in the long run.

      Same as it ever was.

      Renewables are “dirty”- it goes in a succession- (dung- the real start for energy), wood, peat, coal (not renewable), etc.

      Nobody really knows the cost of solar or wind yet. There are also “hidden” environmental costs + high cost of production.

      Just as a reference, solar is about 10x better than it was about 10 years ago, which is an outstanding achievement.

      However, even with that, in order to supply the US with all electricity from solar cells, somewhere between the entirety of open land in the country to about 1/4 of the state of AZ, would need to have solar farms on it. (this is typical of emerging technologies- the actual technical facts are very uncertain).

      • Just Some Random Guy says:

        “about 1/4 of the state of AZ, would need to have solar farms on it.”

        Given that 90% of Arizona is uninhabited, that may work out nicely.

        • Happy1 says:

          Enviros would fight to the death over lizard displacement

        • polecat says:


          Are not lizards (amongst a plethora of other non-hominid lifeforms ..) denizens of this good Earth ?
          This is what I don’t get about people. They are a part of nature, but care not about the biological/biophysical commons of which they need for their long-term survival.
          Let’s just trash it All, right?


    • Anthony A. says:

      @Implicit: You stated,

      “It would be unfair to the poor to stop the ability to use natural gas.”

      While I see you are singing the praises of no more drilling and using renewables but then say the quoted above.

      Just where do you think the natural gas comes from?

      • Implicit says:

        I know but weighing all the variables is what leads me to this conclusion in an not-ideal world. Not hypocritical just practical.
        Examine the cost efficiency and affordability necessary for the transition to “green energy”. Natural gas’s worst by product is CO2 as long as you have enough oxygen. And if you have enough trees that takes care of the CO2. Methane doesn’t form unless NG is deprived of o2.
        For a rough metaphor: I don’t like killing baby seals and whales, but I don’t think the Inuit people should be prevented from doing it to survive.

        • ImplicitI says:

          ….analogy not metaphor, unless you consider the baby seal equivalent to natural gas then it is a simile

  10. According to EIA US crude exports to China were off the chart, biggest number going back to 93. China is also buying from Iran and has a complex way of bypassing US sanctions. (What do we care if they are buying US oil?) The Saudis are going to cut prices. Spike in NG prices this week is the tell, storage and distribution make fracking related supply crunch critical. LNG is not selling well overseas, while NG prices are low. A rise in LNG demand puts pressure on domestic NG. US oil traders got gamed in the bust, and regulators need to match short contracts to storage owners. “If there is enough money..” (and there is) will they will ramp up production? Reasons against. One investors will wait for more government subsidies and price controls. Regulators need to prevent another gaming of the futures. Two, Oil prices correlate to Gold, while the supply/demand constraints work inversely.

  11. Implicit says:

    Cheap stuff from china is cheap for them to make because of the dollars per joule and watts/cost 0f oil without taking into effect the disastrous environment costs
    Table 1 Energy density Source Joules per cubic meter
    Solar 0.0000015
    Oil 45,000,000,000
    Gasoline 10,000,000,000
    Natural gas 40,000
    Partial table
    from International Journal of Green Energy, 5: 438–455, 2008

    Solar is very productive at the equator, where as, wind does better further north. Geothermal is location specific.
    Not destroying the rain forest everywhere is a no brainer

    • Zantetsu says:

      What exactly is a cubic meter of sunlight?

      • Implicit says:

        …Look up the energy equivalents of the LEDs that are used to grow things like pot and tomatoes indoors, and you acquire a full understanding of the various intensity levels of light per sq meter. It is a good education

  12. robt says:

    Referencing an earlier article, and as guidance for any budding journalists, who are invariably math-challenged anyway, between April and May that’s a 200% annualized drop in US oil production.

    • Wolf Richter says:

      That woulda made a much better headline! Something like, “Oil production collapsed by 200%!” ?

      • c1ue says:

        Indeed – falling more than what exists, by double.
        Talk about dialing to ’11’…or 20 in this case.

    • Pelican says:

      on the extrapolation.. if the drop every month is 16%, wouldn’t the annual drop still be 16% (and not really 192%)?

  13. Rcohn says:

    We are entering a period of shortages of refined oil products if the trends in CA are any indication.
    Thus week the MRO refinery in Martinez CA announced that they were closing refinery operations and would be primarily a storage facility . It has been reported that the nearby CVX refinery in Benicia needs from $100-200m in upgrades , so it would not be a shock if that refinery also closed down.

    • Wolf Richter says:


      California — powered particularly by the refineries in the Bay Area — is a big exporter of gasoline and distillate, mainly to Mexico and South America. I see the tankers fully loaded going out all the time. So “shortage” should be seen in that light, meaning that California refines more gasoline than it consumes and exports the remainder.

      California imports much of the crude oil it refines. So this is a value-added industry. Import crude, refine it, consume part of the products locally, export the rest, or vice versa.

      • NoFreeLunch says:

        One key point on this is that exported gasoline is much more profitable to a US refiner than gasoline sold domestically since the exported gasoline does not have the mandated biofuels requirement.

    • blowout_bob says:

      This is a pretty small refinery as far as refineries go. It’s got 45 days until final shut down too. That’s 45 days for another company to swoop on those rare assets.

      I know I’ve made some “bets” on some somewhat questionable oil companies whose stocks are selling at a significant discount. They have made it through the worst quarter in their history, so maybe the’ll pull it off. I’m personally all for a bit of a shock shortage and a brief rally. That’s all I need.

  14. ANON says:

    What we are witnessing now is peak oil.

  15. Paul Franchie says:

    Wolf. Did you cover your US Equity Short? Mine is still on and I wanted to check in with you to see if you still feel strongly about this call? P

    • DeerInHeadlights says:

      El-Erian saying equities won’t revisit March lows. I tend to agree with him because there’s too much money waiting and honed in on the equities to let a substantial dip/crash slide. Everyone and their grandma would want to get in on a sale. But if the virus explodes in the winter which I think it is likely to do, all bets are off. If that happens, lockdowns will come back with a vengeance. In the short term though, I think a 5-10% correction is likely but I don’t know if that’s a dip to buy.

      Disclaimer: the above does not constitute investment advice. :)

      • RightNYer says:

        I’ve heard this, and I don’t agree. It’s simply not true that there is money waiting on the sidelines to rush in at any “discount.” The money on the sidelines is on the sidelines because it belongs to people who don’t buy in at extremely high valuations. A drop from “obscenely overvalued” to just “extremely overvalued” isn’t going to lure those people in. If someone thought the S&P was overpriced at 2,800, he’s not suddenly going to see 3,000 as a “bargain” simply because it was 3,300 previously. Remember, there were people conditioned to “buy the dip” for all of 2018 and 2019. But in the three week period from the end of February through the middle of March, there were far more sellers than buyers, and any “sell stops” were blown through.

        I tend to agree regarding the March lows, but not because of money on the sidelines.

        • DeerInHeadlights says:

          I wouldn’t disagree with what you’re saying but you underestimate FOMO… Only time will tell, hence the disclaimer. :)

      • Paul Frainchie says:

        Thanks. Makes sense. When the CBs buy Trillions of dollars of high yield and investment grade bonds they are trading cash, (and overpaying for the privilege). So investors who previously held a risky asset get paid out and made whole. It would make sense then that they should redeploy this money into the next asset class that might be targeted by the Fed. So I guess I will take my lumps and cover my shorts

        • RightNYer says:

          You think the Fed will buy stocks? I think that’ll be a bridge too far.

    • Wolf Richter says:

      Not covered yet. My time frame is “several months,” so at this point, I’m still good.

      • RightNYer says:

        The irrational exuberant posts I’m seeing throughout the web makes me think this blow off top is nearing its peak…

        • Wolf Richter says:

          It’s truly crazy out there.

        • RightNYer says:

          The crazy part is that no one even argues that growth will justify the stock prices anymore. It’s purely a “valuations will continue to climb because there is no alternative” argument. Is it possible to be true? Sure. But it never has been in history

  16. polecat says:

    Anyone for a self-licking condensed-under/over pressurized gas-cream con-e ??

    You’all can have seconds, add-un-infinitum if ya wants.
    I promise .. ‘pinky swear’.

    Someday, the party will .. um ..’alter’. We’ll all get to enjoy our energy slaves, while they’re still energized …..

  17. tom20 says:

    Jack up nat gas prices. We need to make coal king again.
    A lot build out needed to get back on the same lap as China.
    Just do like they do..and give lip service to the media every year.

    • MarMar says:

      Coal is never coming back. If natural gas gets more expensive than coal (not likely), solar and wind will pick up the slack; they are also cheaper than coal.

      • tom20 says:

        Yep, CCP keeps cranking out coal plants. Need that cheap energy
        to build and sell cheap solar panels.

        • JoeC100 says:

          Lately China is are back to building about a GW of new coal per week (on average, not every week). It is also not clear whther the state bank loans for building the PV “gigaplants” in China that cratered global PV prices will ever need to be paid back..

  18. Carlos Leiro says:

    The temporary shutting in of wells is the one thing that oil companies are trying to avoid at all costs. That’s because restarting production is expensive and wells are not guaranteed to return to their flow rate. The doubts are so great that some experts wonder whether the current round of shut downs, far from preserving the resource, won’t accelerate oil depletion instead. Some Russian engineers are even considering burning excess oil, rather than downsizing production.

    The COVID-19 crisis resulted in a quick and dramatic drop in demand for oil, estimated to be in the 25 to 30 per cent range in April. Much of this decline is expected to be reversed by the end of the year, but faced with a massive drop in oil prices and a lack of storage tanks, oil companies face a difficult dilemma: should they ride out this unprofitable streak or should they decrease production to cut their losses?

    To the lay person, the option to cut production seems obvious. But an oil well is not a tap with a flow that can be adjusted as needed. Either it operates at full capacity or not at all. Valves are installed, but they’re only used during brief maintenance periods or emergency stops. Oil companies know that the decision to shut down for an extended period has three serious consequences:

    reopened wells may never return to their previous production rate
    pumping equipment must be repaired and refitted at great cost
    other facilities, such as refineries and pipelines, cannot be kept in operation without some minimal level of production.
    Impact on wells

    An oil field is a complex structure, where different grades of oil have settled over time in a porous type of rock such as sandstone. Drilling and pumping releases this mixture of oil and gas. Any cessation of the extraction process may result in the clogging of this porous rock with sediment or paraffin, which means that production may permanently be reduced by half, or even stop completely, when pumping resumes. This loss of productivity does not always occur and it is sometimes possible to repair part of the damage by injecting chemicals into the well. But it’s easy to understand why oil companies would seek to avoid damage to their property and costly remediation work.

    In addition to the geological constraints, the shut down process is risky in and of itself. To close a well, a special drilling rig is used to inject a thick mud at the well head to block the flow of oil and gas. This blocks the pores of the rock to a lesser degree, alters the pressure inside the well and inevitably complicates any attempt to resume production. The well itself is also plugged by pouring cement into it.

    To restart production, it is necessary to bring a new rig, drill the cement plug, and pump the sludge blocking the well head. The hope is that oil will start to flow again. If this fails, you have to drill a new well, inject chemicals or even perform hydraulic fracturation (fracking). These steps are costly and labour intensive. If all oil companies try to resume operations at the same time, there aren’t enough work teams around to handle the workload. At the end of the last similar crisis, some restoration work had to wait up to two years.

    • Wolf Richter says:

      Carlos Leiro,

      Agreed concerning the technical issues associated with turning off a producing well and restarting it.

      But in fracking, you need to drill a lot of wells all the time to keep production up (due to the decline rates). Production over the first few months is huge, but then it tapers off.

      So you can cut production by not drilling. You will lose all the production from those wells that would otherwise produce at their maximum output for a few months. That would be the first step to take.

      You can also not complete and frack already drilled wells. And these Drilled but Uncompleted Wells (DUCs) can stay there until you’re ready to complete them and frack them.

      So there are ways to cut production in fracking that don’t involve turning off a producing well. Those would be the first steps to take.

      And this has happened all year so far. The rig count plunged from 1,075 in early January to 251 currently, which is the lowest in the rig-count data going back to the 1970s.

      • NoFreeLunch says:

        Add to the technical issues that a lease usually specifies a minimum production over a fixed period of time (e.g. 6 months), or the lease is voided and the wells are forfeited to the mineral owner. This would obviously be avoided, and adds extra complexity.

        Along the lines of Wolf’s comments, if you read the earnings of E&P companies these days, the goal seems to be to keep production constant. That is, drill and produce just enough new wells to keep corporate production constant. These wells still may not be economic, but may avoid the bigger hit to the stock of obvious production decline vs. the lesser evil of losing some more money on a few wells.

        On the decline of wells, the shale wells are not exponential decline. Decline rates each year are constant for exponential decline. The decline rate for shale wells decreases every year. The decline may be dramatic the first year, but gets smaller every year. For example, 40% the first year, but 10% in the 5th year. But, older wells weren’t completed as well, so even though they decline slower, they started smaller. Such is life in the complex evaluation and management of these assets.

      • Steve says:

        Spot on, Wolf. Contrasting drilling technology today to drilling technology in 1975 is easy and reveals that oil and gas will be resilient. If hot flows of capital don’t arise, oil and gas will be part of the useful portfolio of energy sources. And, there is no need for the US to waste money on coal CO2 capture, switch to NG.

  19. Lee says:

    Isn’t the units label on your tables wrong?

    That should be thousands (000’s) of barrels per day, not millions of barrels per day.

    Texas produces 5.195 million barrels per day not 5195 million barrels per day……….

    Anyway, it is interesting to see that New Mexico of all places has overtaken North Dakota to be the seond largest producing state in the USA.

    Total production of states number 9 to 20 on the list don’t even come close to New Mexico or North Dakota. Makes one wonder what is going to happen to US oil production when the fracked wells run out of ‘steam’ in the next year or so given the price of oil.

    The other fact to remember about oil production in the USA is that there are thousands of wells that have been drilled, but not yet on production.

    EIA estimates that there are 7625 of them as of the the last report so if and when the price of oil increases, it is quite easy to ramp up production using these wells – you don’t have to start from scratch.

    The other interesting stat from the report also should increased production from newly drilled wells – both oil and NG.

    New wells drilled in the Bakken were producing 2147 barrels per day compared to those wells drilled in July at 1385 barrels per day. Maybe the producers aer going after more productive plays as the price of oil falls…………..

  20. DR DOOM says:

    Don’t need to fret too much. Yield curve engineering, negative interest rates ending with good old Nixon re-packaged price controls will do the trick and is in our future . The dollar is back to tanking again and the 10 year going into the crapper. There ain’t a Paul Volker type left in D.C. The Fed will lose control . The talking head wankers point to the Feds god like abilities all the time but in the end Gods creation gold may put fiat out of its misery before the story ends. It will be fun fun fun until daddy takes the t-bird away.

    • Implicit says:

      There is a direct correlation between energy consumption and GDP that was less variable before the introduction of Fake Money GDP Fuel (FMGF).
      This fuel has insidious long term effects on the human environment and condition that is like a slow killing disease for generations, much like a virus, except not as directly obvious.

  21. Insta says:

    Wolf, typo sentence in paragraph on natural gas reduction: “In ares were insufficient infrastructure exists to process and take…”

    Areas where

  22. ricardo2000 says:

    Alberta provincial government spreadsheets compiled on 139 tar sands projects from 2018 company data show 19 haven’t operated since before 2015. Koch and CNOOC (the Chinese at Long Lake) haven’t produced a barrel since 2015. Accumulated losses of the remaining 120 passed $122 billion in 2018. These losses will approach $140 billion by 2021. Of 24 companies, only Syncrude posted consistent profits.
    The Province’s AER ST98 report (June 2020) states break even prices for mining operations require US WTI prices of $80/bbl. In situ SAGD operations need WTI prices of US $50/bbl. Upgraders raise this cost significantly. This means Tar Sands operations are worthless. A fact the US Security and Exchanges Commission forced Exxon/Mobil to acknowledge in 2016 when Exxon/Mobil fairly valued their tar sands reserves as worthless.
    CME group is the world’s largest commodities and futures market with market cap and revenues equalling the New York Stock Exchange. Their Western Canada Select and Edmonton Sweet Synthetic futures/options prices have been negative since April 2020 and are negative until Dec 2024. There is NO OPEN INTEREST or trade volumes listed. This means the world’s energy traders have no interest in Alberta’s tar sands because its products have no future.
    In what business fantasy world does increasing the supply of toxic, high cost, poor-quality bitumen, in a world bloated with a surplus of low cost, highest quality, more convenient crude oil, lead to increased demand, and a higher price for tar sands bitumen?

  23. Lee says:


    Why in the world did you take down my post.

    I see you fixed the tables though.

    • Wolf Richter says:

      Nah, I didn’t take it down. It had a link in it and got stuck in moderation because of that, and I forgot about it after I fixed the table heading. It’s now there. The numbers were right, the table heading was wrong. Thanks for pointing it out.

  24. Augusto says:

    Very little capital is being put into oil and gas development right now. That spells higher prices in the not too distant future. Most oil and gas fields are 50 years + and need capital to maintain production or are of the new fracking variety which burn capital quickly for production. Oil and gas companies are not taking the risk of drilling right now, but when demand comes back they will take your money. Inflation is coming at the pump in the not too distant future….and to natural gas prices this winter……so enjoy the prices while you can.

Comments are closed.