Overall, oil prices are responsible for 101,383 job cuts so far in 2015. A number of companies, including Chevron Corp. (NYSE: CVX), Halliburton Co. (NYSE: HAL), Baker Hughes Inc. (NYSE: BHI), and Schlumberger Ltd. (NYSE: SLB), have experienced multiple layoff events this year. OK, those are some serious numbers. I think, by now, everyone has given up - since we all capitulated, I'd like to use this opportunity and ring a bell, the downturn is officially over.
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Who said it is over? This information told us it was far from over...
I am an economist. I am usually paid to give the bear side of things. I live in Houston and work for a number of folks in this business. My specialty is global commodities and trade. I have family in the petrol chemical business. I know your anxiety.
So here is what is going on.
The bad:
1. The collapse in oil prices is Geo-political. As soon as Russia & Iran ponies up to the table, the Saudis will turn the flow down and the price will rebound. This is engineered by Dollar Inc. This is just like 1986 all over again. It has nothing to do with market share and fracking. The Saudis know those wells poof out quickly and are costly and no threat to them. $87 per barrel cost VS. $6 per barrel cost? North America is no threat to them.
Who is Dollar, Inc? These folks here: http://www.cfr.org/ & here: https://www.chathamhouse.org/ & http://www.bis.org/
These are the people that caused all this. You can vent your frustration at them. They own 96% of your politicians.
This could take years to work itself out. Putin is like a pissed off girlfriend right now. However, the Saudis can't go on forever like this as they are spending money hand over fist and need $100+ oil or face their own collapse. So who can hold out the longest? It could be years. Saudis have about 7 years of reserves just in dollars. The Russians are pretty resilient and have other things to sell besides oil and gas (rare earth metals, ores, timber, and natural resources). They all ready know how to hurry up and wait.
http://www.bloomberg.com/news/articles/2015-08-10/russian-economy-shrinks-4-6-as-oil-slump-risks-deeper-recession
http://www.nationmultimedia.com/opinion/Are-the-Saudis-and-the-US-conspiring-to-keep-oil-p-30248305.html
2. Going forward, the business of petrol Chemical extraction etc is going to become much more cost conscience and automated. It will be be very sticky for North America and any other high cost areas for many years to come. Many of SLM's recent purchases reflect this and where they see themselves going in the future. SLM purchase of that German company that makes automated oil rigs was a good move. Cameron's purchase was proof that SLM see's North America as a desolate wasteland for years to come. The money is overseas and in ocean drilling and maintaining what you got.
http://www.zerohedge.com/news/2015-04-30/we-are-witnessing-fundamental-change-oil-sector
http://www.zerohedge.com/news/2015-03-19/how-many-shale-oil-plays-make-money-37-barrel-spoiler-alert-none
3 Demand is down globally as China's economic engine has blown a piston. Despite what you hear on the propaganda outlets, the fact remains that electrical demand inside China is down 25%, oil consumption is down on oil and fuels, and they are sending over 250,000 less containers PER MONTH. You can also rent a container for about $350 bucks, when they used to rent for $3,000.
http://www.zerohedge.com/news/2015-08-23/global-trade-freefall-container-freight-rates-asia-europe-crash-60-three-weeks
It's bad. It 1974 bad. Remember the 1970's? People are broke. The only savings going forward in any economy is increased efficiency. That means less jobs and more mechanization.
The Good:
By mid 2017, the North American folks will have to spend money if they wish to keep on pumping. So if you can eek out until then, there should be a little stabilization in the business, even at these depressed oil prices.
That's about it.
Hope Putin's plane crashes or Saudis oil infrastructure mysteriously catches fire, because apart from that, the pickins will be thin for sometime.
PS Don't buy that truck. Pay down debt and simplify. Look for steady increased inflation in everything.
YEAH it is over! Lets celebrate Team Lunch on Monday!
Where do you live fantasy land?