{"id":4638,"date":"2015-01-19T20:22:27","date_gmt":"2015-01-20T01:22:27","guid":{"rendered":"http:\/\/olduvai.ca\/?p=4638"},"modified":"2015-01-19T20:22:28","modified_gmt":"2015-01-20T01:22:28","slug":"a-solemn-pausekunstler","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=4638","title":{"rendered":"A Solemn Pause|Kunstler"},"content":{"rendered":"<h3><a href=\"http:\/\/kunstler.com\/clusterfuck-nation\/a-solemn-pause\/\" target=\"_blank\"><span class=\"dropcap\">A Solemn Pause|Kunstler<\/span><\/a><\/h3>\n<p><span class=\"dropcap\">E<\/span>vents are moving faster than brains now. Isn\u2019t it marvelous that gasoline at the pump is a buck cheaper than it was a year ago? A lot of short-sighted idiots are celebrating, unaware that the low oil price is destroying the capacity to deliver future oil at any price. The shale oil wells in North Dakota and Texas, the Tar Sand operations of Alberta, and the deep-water rigs here and abroad just don\u2019t pencil-out economically at $45-a-barrel. So the shale oil wells that are up-and-running will produce for a year and there will be no new ones drilled when they peter out \u2014 which is at least 50 percent the first year and all gone after four years.<\/p>\n<p>Anyway, the financial structure of the shale play was suicidal from the get-go. You finance the drilling and fracking with high-yield \u201cjunk bonds,\u201d that is, money borrowed from \u201cinvestors.\u201d You drill like mad and you produce a lot of oil, but even at $105-a-barrel you can\u2019t make profit, meaning you can\u2019t really pay back the investors who loaned you all that money, a lot of it obtained via Too Big To Fail bank carry-trades, levered-up on \u201dmargin,\u201d which allowed said investors to pretend they were risking more money than they had. And then all those levered-up investments \u2014 i.e. bets \u2014 get hedged in a ghostly underworld of unregulated derivatives contracts that pretend to act as insurance against bad bets with funny money, but in reality can never pay out because the money is not there (and never was.) And then come the margin calls. Uh Oh\u2026.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Solemn Pause|Kunstler Events are moving faster than brains now. Isn\u2019t it marvelous that gasoline at the pump is a buck cheaper than it was a year ago? A lot of short-sighted idiots are celebrating, unaware that the low oil price is destroying the capacity to deliver future oil at any price. The shale oil [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[1389,592,1775,661,2119,1939],"class_list":["post-4638","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-nirp","tag-oil-price","tag-oil-price-collapse","tag-qe","tag-tarp","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4638"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4638\/revisions"}],"predecessor-version":[{"id":4639,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/4638\/revisions\/4639"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}