US Politics Mega-thread - Page 427

On September 12 2013 15:00 sam!zdat wrote:
when you say 'subtracting' you mean holding in cash right?

On September 12 2013 14:39 JonnyBNoHo wrote:

All oil wells face production declines as time goes on. Solar panel output declines over time too. Really all capital goods deteriorate over time. It's not a big deal. Math can handle it.

I don't know what you mean by "subsidized by wall st". Direct government subsidies are relatively small (compared to clean energy subsidies). Pollution can be viewed as a subsidy of sorts, though I'm not sure how much internalizing those costs would amount to compared to what current subsidies and regulations already achieve.

To give an example, Chesapeake Energy announced the sale of assets and a notes offering last February. Bank of America/Merrill Lynch, Morgan Stanley, Deutsche Bank, Goldman Sachs, Jeffries and Royal Bank of Scotland were the banks involved in the deals.In the days and weeks leading up to the announcements, these same banks issued recommendations on Chesapeake Energy.

They were as follows:
Bank of America/Merrill Lynch
Buy

Jeffries and Co.
Buy

Morgan Stanley
Overweight

Goldman Sachs
Hold

Deutsche Bank
Neutral

Royal Bank of Scotland
N/A

At the same time of this announcement, other analysts at institutions which did not stand to gain fees from these transactions had an opposite view of the prospects for Chesapeake Energy. On February 15, 2012, an analyst in Deal Pipeline stated, “Chesapeake is in serious trouble...Its Enron style of media hype, off-balance sheet accounting and excessive leverage has finally caught up with them. The end appears to be close.”

Zacks Equity Research placed Chesapeake Energy on bankruptcy watch with an Altman Z score of .84. Anything below 1.80 is considered to be at high risk for bankruptcy.

On September 12 2013 15:19 sam!zdat wrote:
oh, you mean the private sector is destroying money it has already created.

so what you are saying is that the amount of money being printed is equal to the amount of credit being destroyed. So we are paying banks to tighten credit?

On September 12 2013 15:19 IgnE wrote:


Oil wells don't face a 69% reduction after only 12 months. 90% reduction after 3-4 years. If you don't understand how increased drilling rates just to maintain current production is problematic, given the lower EROI and the ever-increasing demand for energy in an economy that requires constant growth, you are just drinking the Kool-Aid. People in the industry call it the "drilling treadmill." The recovery efficiency for the five major shale gas plays averages 6.5% and ranges from 4.7% to 10%. This is way way less than the 75-80% recovery efficiency for conventional gas fields.

As for wall street subsidies, I know that you don't know much about shale gas, but just throwing up a blind pass for a Hail Mary, saying that "direct government subsidies are relatively small" (since when did wall street = government for you?) isn't very confident.

In 2011 shale mergers and acquisitions accounted for $46.5B in deals, becoming one of the biggest profit centers for wall street investment banks. Banks essentially have been promoting massive overproduction the last 5 or so years to drive down the price and open the door for significant transactional deals worth billions of dollars in fees for the banks. Wall street led the mania in creating the production boom we've been seeing to drive the market in shale gas into a frenzy, even if the boom in shale oil is unsustainable for all the reasons I've discussed. This includes overseas investors driving up the prices for rights to oilfields here, all while the banks keep promoting these deals in order to rake in the accompanying fees.

From the _Shale and Wall Street_ report by Deborah Rogers from the EnergyPolicyForum:



U.S. shale gas and shale oil reserves have been overestimated by a minimum of 100% and by as much as 400-500% by operators according to actual well production data filed in various states. Due to extreme levels of debt in shale companies, stated, proved undeveloped reserves may not have been in compliance with SEC rules because of the threat of collateral default for those companies.

There was also a $24 billion dollar subsidy in Canada for tar sands oil this year, amounting to essentially a $30/bbl subsidy to make sure the oil is competitive in the US market.

There's more where this came from.

On September 12 2013 15:28 JonnyBNoHo wrote:
The opposite is intended to happen

On September 12 2013 15:42 JonnyBNoHo wrote:
What Wall St subsidies are you referring to anyways? You still haven't told me.

Quickly declining production rates are an issue, sure. But that's just one issue. Is the cash flow bad? If it's bad is it just a matter of nat gas prices? Give me something substantial here. Analyst sound bites don't count as substantial.

On September 12 2013 14:12 IgnE wrote:



The only reason shale production is booming right now is because it's massively subsidized by wall street. Of course wall street and the media want you to think that there's an unlimited amount of shale oil and gas in the US. They are heavily invested in it.

Shale wells lose something like 90% of their capacity with a couple years. Thousands of new wells have to be drilled every year just to continue current production at a current cost of $42 billion a year, just in well drilling, and all subsidized. An extra snag is that quality oil "plays" are pretty rare, and most of the currently known quality oil plays are already being drilled, with rapid rates of depletion.

Not to mention that shale gas is extremely low EROI (energy return on investment). It's not like oil, which is basically liquid gold, since it costs so little in energy resources to get it out of the ground (i.e. oil spouts that you see in movies like _There Will Be Blood_ where oil literally shoots out of the ground). When you are spending a lot of energy to get a diminishing return back, you can't sustain production.

On top of all of that, the companies that are pulling up shale gas privatize the profits while distributing the costs of production, including environmental damage, to the rest of society. It's a temporary bubble at best, as you will see over the next decade.

On September 13 2013 00:10 xDaunt wrote:


This is all bullshit. I have no idea where you are getting these numbers from, but the existence of the Bakken and what's going on up there in terms of sheer production disproves all of this. Post some sources.

Also, the fact that you are talking about shale oil receiving "subsidies" from Wall Street is a joke. So what are you saying? That it is illegitimate for private persons to invest money where they want? Or are you simply jealous that the people with money are too smart to sink it into money and capital burning engine that is renewable energy?

On September 13 2013 00:13 nunez wrote:


is hydro-electric power still renewable energy in american?

On September 13 2013 00:15 xDaunt wrote:

No, not really. "Renewable energy" in America basically means just wind solar. Frankly, I think it is going to mean strictly solar before long. The environmentalists won't tolerate dams, windmills, or anything else that might hurt an animal.

On September 12 2013 16:08 IgnE wrote:


The wall street subsidies largely consist in making it easier for shale oil gas companies to obtain capital by overselling their long-term value to investors and reaping the benefits in fees. Or encouraging over-reporting of assets to avoid default on massive debts that shale oil companies have racked up in the boom. Or in some cases, simply hyping up companies that are already on the verge of bankruptcy, allowing the CEO of said companies to trade the very commodities they are producing, before writing off massive assets. If you are looking for a direct check signed by everyone on wall street to the shale oil industry at large I guess I don't have that for you. But you understand that "subsidies" can take many forms, including artificially lowering the price of a good below its production cost.

-So the production rate requires more and more resources to extract the same amount of energy from the ground, which is already at an appalling efficiency.
-Many of the known reserves are in poor quality plays that are even harder to extract.
-The price has been artificially lowered below production levels.
-The industry itself is abandoning pipelines, IPOs, and further shale investment on its own
-Damaged roads, polluted water, volatile airborne pollutants are all extra costs that will unlikely be borne by the industry directly, but will be borne by the rest of the economy

Sounds like a bubble that's going to pop to me.


This doesn't even touch the issue of climate change. Who cares if we have 100 years of fossil fuels buried in our ground, if it's going to cost almost as much fossil fuel to get at it. We were already on pace to way overshoot conservative estimates for "safe" maximum global temperature increase.

On September 12 2013 14:12 IgnE wrote:



The only reason shale production is booming right now is because it's massively subsidized by wall street. Of course wall street and the media want you to think that there's an unlimited amount of shale oil and gas in the US. They are heavily invested in it.

Shale wells lose something like 90% of their capacity with a couple years. Thousands of new wells have to be drilled every year just to continue current production at a current cost of $42 billion a year, just in well drilling, and all subsidized. An extra snag is that quality oil "plays" are pretty rare, and most of the currently known quality oil plays are already being drilled, with rapid rates of depletion.

Not to mention that shale gas is extremely low EROI (energy return on investment). It's not like oil, which is basically liquid gold, since it costs so little in energy resources to get it out of the ground (i.e. oil spouts that you see in movies like _There Will Be Blood_ where oil literally shoots out of the ground). When you are spending a lot of energy to get a diminishing return back, you can't sustain production.

On top of all of that, the companies that are pulling up shale gas privatize the profits while distributing the costs of production, including environmental damage, to the rest of society. It's a temporary bubble at best, as you will see over the next decade.

Granted, today’s low price of $4.30 per thousand cubic feet is so low that drillers have literally thousands of wells that have been bored and completed but that are not yet hooked up to pipelines because they’re waiting higher prices.

Mr. Urbina and Adam Bryant, a deputy national editor, said the focus was not on the major companies but on the “independents” that focus on shale gas, because these firms have been the most vocal boosters of shale gas, have benefited most from federal rules changes regarding reserves and are most vulnerable to sharp financial swings. The independents, in industry parlance, are a diverse group that are smaller than major companies like Exxon Mobil and don’t operate major-brand gas stations.

In order to persuade conservatives lawmakers to vote to keep the federal government funded past Sept. 30, House Republican leaders are proposing to stare down President Barack Obama over the debt ceiling by seeking a one-year delay of Obamacare.

At a closed-door meeting Tuesday, House Majority Leader Eric Cantor (R-VA) floated a strategy to delay the rollout of Obamacare for one year in exchange for lifting the debt ceiling. The meeting was focused on pitching a plan that lets Republicans vote to defund Obamacare without risking a government shutdown if the Senate rejects the idea, a move that is meeting fierce resistance on their right flank, which wants to go further.

A senior Republican aide familiar with Cantor’s remarks said he was essentially trying to persuade his members that the debt limit, which the federal government is expected to hit in mid-October, provides a better opportunity than a threatened government shutdown to undermine Obamacare.

“He didn’t draw any red lines,” said the GOP aide. “He said it’s a better opportunity than [the continuing resolution] and a delay there is very doable.” The aide added that the concession wouldn’t necessarily just involve Obamacare; there could be other reforms. The aide admitted that it depends in part on what the president is willing to give up.

It all sounds far-fetched. After all, trading a government shutdown for default would be like trading a common cold for cancer. And it remains to be seen whether GOP leaders would let the economy collapse if they don’t get their way, or if they’re merely saying what they have to say to get through the shutdown crisis.

On September 13 2013 02:30 sam!zdat wrote:
liquidate their interests.

that's what you do in a ponzi scheme also. If what igne is saying is true and it's simply overvalued, than what you say would also be true and so it proves nothing

On September 13 2013 02:30 sam!zdat wrote:
liquidate their interests.

that's what you do in a ponzi scheme also. If what igne is saying is true and it's simply overvalued, than what you say would also be true and so it proves nothing