Oil's Collapse Is a Geopolitical Reset in Disguise • Hacker News Board

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#201

Post by quintushoratius » Sun, May 03, 2020, 7:44 PM UTC

fyfy18 wrote: post #115

rckoepke wrote: post #25

Earlier quoted context omitted.

Iran's oil is not expensive to extract. These aren't marginal break-even prices on each barrel of oil...rather they're how much their current oil production would have to be sold for in order to balance their national budget, which includes defense and healthcare and whatnot. 79% of Iran's exports are unrefined crude oil: https://commons.wikimedia.org/wiki/File:Islamic_Republic_of_... (edited to 2017) Countries typic…

Why can't they just take loans like most Western countries do to balance their budget? The UK has been running at a deficit (£55 billion in the last budget) since 2002. Based on my back of the napkin math, the UK would need to export it's oil (yes, the UK is a net exporter of oil) at $350/barrel to cover that.

> Why can't they just take loans like most Western countries do to balance their budget?

Who, exactly, is going to loan them money?

If Iran were a person they'd have a sub-600 credit score while seeking a no-documentation car loan. Nobody in their right mind is going to loan them money for non-predatory rates.

When we talk about a country taking out loans, we're frequently talking about bonds and, if you're not the US, actually talking to banks via the IMF.

Are you going to buy Iranian bonds? Consider the following:

- Which asset(s) do you think Iran will use to pay you back? Keep in mind that their largest asset - oil - has a rocky track record.

- Loans are more likely to be paid back by a stable government. How stable do you expect Iran to be over the next 10-30 years? How likely is another Arab Spring?

- Taking the above into account, what kind of interest rate would be adequate? Is it higher than the Iranians are likely to pay? How much higher is it than they can afford right now?

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#202

Post by Scoundreller » Sun, May 03, 2020, 8:03 PM UTC

bladegash wrote: post #187

Scoundreller wrote: post #84

Earlier quoted context omitted.

But what happens when your opex and capex crater? How much cheaper is a drilling rig now vs. 12 months ago? How about an electrician?

I don’t know this for certain, but I have a feeling much of the price of extraction comes from accrued debt. Most of these companies - especially the smaller ones with less liquidity - probably financed significant portions of their operating expenses.

I agree. There’ll be a lot of bankruptcies and burned investors, but could be plenty of ongoing production after that all gets wiped out in a chapter 7/11.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#203

Post by demosito666 » Sun, May 03, 2020, 8:14 PM UTC

jariel wrote: post #188

twomoretime wrote: post #186

Earlier quoted context omitted.

The entire global economy is grinding to a halt and we may be sitting on top of a global depression for years to come. Those 5 billion are going to have to wait. Also, it may be harsh but if history is any indication, these people are unlikely to gain access to oil themselves - which means they're dependent on probably their neighbors (developing countries probably are sensitive to shipping/deliver charges) which mea…

No, they will get the oil, and low prices will only expedite that. Nobody, not the entire EU/West and certainly not anyone else is going to say to poor Africa and Asia: 'you can't use Oil', moreover, nobody is going to send troops to Nigeria to stop exports, or embargo Indonesia and Pakistan or wherever from receiving oil. It's like telling 5 billion people they can't use tapped water or water wells that they have to…

> It's a non-starter.

If half a year ago someone would tell me that the entire world will be shut down because of some kind of a flu, I wouldn't even consider this: it's a non-starter. And yet here we are.

I can easily imagine a mind shift amongst current world powers that will be strong enough to reduce fossils usage to half of existing levels. And since they have all means to enforce this on developing world, I wouldn't dismiss this possibility.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#204

Post by boomboomsubban » Sun, May 03, 2020, 9:01 PM UTC

jeffdavis wrote: post #198

boomboomsubban wrote: post #196

Earlier quoted context omitted.

The program started in 2003.

Oh, now I see what you mean. I think this is splitting hairs over who gets credit. Remember that Congress needed to raise the money and the taxpayers needed to pay it. From a practical standpoint, usually some credit is given for leadship to the one who gets a program off the ground. It seems fair in this case that GWB gets credit for that. You can also look at later people over a longer span of time and give them cr…

I try not to remember war criminals for all the good things they did.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#205

Post by ThomPete » Sun, May 03, 2020, 9:02 PM UTC

cycomanic wrote: post #183

ThomPete wrote: post #174

Earlier quoted context omitted.

point is that they need backup from either nuclear, coal, oil or gas to be reliable, but the very people who want more renewable is normally against nuclear. Wind and solar is less than 1% of the worlds energy consumption and not expected to be more than 3-4% in 2030 exactly because its not reliable and the more renewable you build the more expensive it becomes as it need one of those or multiple backup sources menti…

It's funny how this is brought up again and again. Actually the one energy form that needs the most "backup" (a very imprecise word) is nuclear. Because nuclear is very slow to adjust you need either massive overproduction and somehow "dump" this when you don't need it (the reason why Belgium had all their highways brightly lit, I remember being amazed by this when we travelled during the night between countries) or…

Those studies are nothing but wishful thinking and I would challenge you to point to exactly where they prove it's possible in anything but theory. If it was that easy Germany or Denmark would have done them already.

There is a world of difference between being able to produce energy when you want it and then having to wait for the right conditions so it is being brought up again and again because it's a relevant difference. France has no problem making it work.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#206

Post by janee » Sun, May 03, 2020, 9:05 PM UTC

I haven't been able to find a nice breakdown of the reasons behind the price decrease that wasn't driven by reduced demand.

So my understanding is that SA increased production because it couldn't get Russia to limit its output? So they crashed the market with the hopes to bend them to their will. If so are they basically signalling that they can survive such conditions but Russia can't? Or what's going on here

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#207

Post by ThomPete » Sun, May 03, 2020, 9:08 PM UTC

majewsky wrote: post #181

ThomPete wrote: post #174

Earlier quoted context omitted.

point is that they need backup from either nuclear, coal, oil or gas to be reliable, but the very people who want more renewable is normally against nuclear. Wind and solar is less than 1% of the worlds energy consumption and not expected to be more than 3-4% in 2030 exactly because its not reliable and the more renewable you build the more expensive it becomes as it need one of those or multiple backup sources menti…

> they need backup from either nuclear, coal, oil, gas or storage to be reliable FTFY. That's a very significant omission.

Please point me to the storage technology that works at scale and economically. We are not even close to having anything that can do that. Furthermore the reason why oil, gas and coal and to a lesser extent nuclear are so crucial for a modern infrastructure is that they can transported and move around.

On top of that especially oil, but also gas and coal and to a lesser but extent but still important contribution the dual usage of those sources makes them superior and foundational to all the other things. You can't even make windmills or solar without the use of oil and coal.

So downvote me all you want. Renewables aren't even close to being serious contenders to anyone who want to live in modern society.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#208

Post by ashtonkem » Sun, May 03, 2020, 10:09 PM UTC

pinkfoot wrote: post #185

ashtonkem wrote: post #60

Earlier quoted context omitted.

Norway stands as an obvious counter example; they’ve invested a huge amount of their oil money into a sovereign fund, and have a fairly robust economy too.

And only 5,367,580 people to share it amongst. The city I live in has nearly twice the people and making more at an astonishing rate.

That’s a fair argument about the level of services that the Norwegian government can offer its citizens, but the size of the country has little to nothing to do with how wisely the use the proceeds of natural resources.

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#209

Post by [deleted] » Sun, May 03, 2020, 10:24 PM UTC

luckylion wrote: post #148

perl4ever wrote: post #129

Earlier quoted context omitted.

Isn't that practically poverty level on HN? That's like one person making $100K and a spouse making $68K. Don't entry level SWEs make as much by themselves these days? Plus stock options. And ping pong tables.

In SF, maybe. In most places, hardly. And keep in mind that entry level SWEs usually don't have kids that are at the age of heading off to Harvard, so they'd earn that income for a decade or two. That would probably put them somewhere in the range of the average income with their dividends alone.

[deleted]

Re: Oil's Collapse Is a Geopolitical Reset in Disguise

#210

Post by perl4ever » Sun, May 03, 2020, 10:27 PM UTC

luckylion wrote: post #148

perl4ever wrote: post #129

Earlier quoted context omitted.

Isn't that practically poverty level on HN? That's like one person making $100K and a spouse making $68K. Don't entry level SWEs make as much by themselves these days? Plus stock options. And ping pong tables.

In SF, maybe. In most places, hardly. And keep in mind that entry level SWEs usually don't have kids that are at the age of heading off to Harvard, so they'd earn that income for a decade or two. That would probably put them somewhere in the range of the average income with their dividends alone.

You seem to start with a tone of disagreement about something, but overall seem to be agreeing with what I said, that in context, around here, $168K is not very much, especially when it, on average, would be more than one earner.

Why do you tell me to "keep in mind" essentially the very point I was making?