The global oil market is broken, drowning in crude nobody needs • Hacker News Board

Re: The global oil market is broken, drowning in crude nobody needs

#301

Post by blaser-waffle » Mon, Mar 30, 2020, 8:02 PM UTC

unlinked_dll wrote: post #259

csours wrote: post #134

It's easy to say "we live in a Just-In-Time Economy", but it's things like this that really demonstrate the implications. The supply chain is set up to flow, so when demand drops or spikes up you get a flood or a shortage. If there's a flood, some companies will go out of business, leaving the survivors with a bigger slice of the pie. If there's a shortage, companies will respond, and some will over-react and build o…

Is there any way to model a supply chain as a control system? Like what you're describing is why PID controllers exist and they do a pretty good job of preventing failure conditions.

PID controllers have a closed system -- the system is gonna do X, Y, or Z, but that's about it. Maybe expand out those options by an order of magnitude, but it's still fairly limited compared to all of the weird clusterfucks that happen in the real world.

Like, who foresaw COVID? Who foresaw fidget spinners? etc. How do you plan for a central supply system when a news story about kids eating Tide pods drops the demand (increasing the supply) by 20% overnight?

The soviets essentially tried to do this with a communist style-command economy -- and it didn't work well. Maybe modern tech can do it better but it would have to be able to predict the social, political, and logistical challenges enough to outperform the alternatives.

Re: The global oil market is broken, drowning in crude nobody needs

#302

Post by AnthonyMouse » Mon, Mar 30, 2020, 11:56 PM UTC

viklove wrote: post #300

AnthonyMouse wrote: post #297

Earlier quoted context omitted.

> It's an investment that the company can't afford to make at the moment. This is nonsense logic and the very reason not to use cash-based accounting for anything serious. They raised capital, therefore they have the money. Basically all companies start off "losing money" because most investments don't instantaneously produce their full return. How would anybody ever open a factory or a restaurant if they had to be p…

> They raised capital, therefore they have the money. Right, and as a result of this, the companies that have capital can always beat out the ones that don't. Who gets to decide which companies get capital? VCs. So that means that it's not the market that decides who wins and loses, it's VCs. Does that sound like the intention of capitalism to you? Having a better or more efficient idea is meaningless in today's econ…

> Right, and as a result of this, the companies that have capital can always beat out the ones that don't.

If your idea requires capital to execute and you don't have any then you can't execute it. How do you propose to change that?

> Who gets to decide which companies get capital? VCs. So that means that it's not the market that decides who wins and loses, it's VCs.

Who gets to decide which companies get capital? Venture capitalists. In other words, people with capital are the ones who decide which companies get capital. This is almost tautologically true.

But that is the market. The VCs fund the companies they think have the most promise. If you have a good idea but not capital then you convince some people with capital to fund you so you can execute it. That's what VC is.

What are you proposing as an alternative? One where raising capital is impossible and so you were either born with it or you're stuck working hand to mouth at a McJob forever because your idea takes more funding to execute that you can save in a lifetime as a wage slave?

Re: The global oil market is broken, drowning in crude nobody needs

#303

Post by IkmoIkmo » Tue, Mar 31, 2020, 12:32 AM UTC

whatshisface wrote: post #130

mordymoop wrote: post #103

Earlier quoted context omitted.

“ How much time will it be over $30 before the shale producers start up again?” I work in this field, and the answer to your question is “instantaneously.” The largest operators will not go out of business because they have sufficient exposure to non-shale assets; they will simply immediately drill the wells they had planned to drill when the crisis hit. Capital will rapidly find its way into the hands of the people…

To add to that, the wells they already have drilled are perfectly happy to sit around until someone goes out to frack them, and the wells they've already fracked are almost perfectly happy to sit around until someone produces them. The only investment that can't survive a year of unfavorable prices is the effort the business development guy put in to making phone calls.

To add to that, shale produces apparently hedged hard against price drops and are currently sitting on a big pile of money ready to be deployed.