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From Reuters:

OCTOBER 13, 2019 / 4:34 AM / UPDATED 3 HOURS AGO
‘Broken system’ starves U.S. oil boom of immigrant workers
Andrew Hay

HOBBS, N.M. (Reuters) – New Mexico oil man Johnny Vega laid out his predicament as his crew hoisted pipes from a well during the biggest oil boom in U.S. history.

The son of a Mexican guestworker, Vega cannot find enough legal workers to meet demand for his oil well service rigs.

There is no shortage of Hispanic and Latino immigrant workers without work permits he could hire in Lea County, New Mexico – the No.2 oil-producing county in the United States.

But Vega says he wants to play by the rules, not least because of a heightened risk of company audits by U.S. Immigration and Customs Enforcement (ICE) under President Donald Trump. As a result, he has equipment that could be generating $700,000 a month standing idle in his yard.

“They’re demanding more rigs, more swabbing units, but you don’t have enough employees,” said Vega, who runs Mico Services with around $17 million in annual revenues. “It’s a lack of a system to get legal workers, to have more of a workforce to pull from.”

But from Bloomberg 9 days earlier:

Shale Jobs Are Drying Up in the Permian Basin
By David Wethe and Catarina Saraiva
October 4, 2019, 3:00 AM PDT

Radio ads touting Permian Basin jobs have all but disappeared
Ripples from downturn in drilling hurts oil-support industries

Barry Marks can hear the Permian Basin slowing down.

It’s right there on country-music station 96.1 FM in Odessa, Texas, where commercials for shale-patch jobs used to fill the airways. Those kinds of radio ads have fallen by two-thirds, said Marks, the general manager for ICA Broadcasting LLC, which runs five stations in the area.

“A lot of those people working in the Permian Basin do not reside here,” Marks said. “So they’re heading home every two weeks. And they may just be staying home.”

It’s almost as if the energy biz has a history of booms and busts, and it’s not a good idea to let in random foreigners during the booms, because many will manage to stay through the busts.

 
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  1. Steve,

    Zero Hedge has always been suspicious of the purported shale oil/gas “boom”. Only time will tell if it’s a shale boom, boomlet or boomnot (pardoning the boompuns)!

    • Replies: @Redneck farmer
    Zero Hedge tends to be blackpill economic porn. I seriously expect to see articles explaining how mass cannibalism is the only way to get enough food for the population any day now.
    , @Intelligent Dasein

    Zero Hedge has always been suspicious of the purported shale oil/gas “boom”.
     
    And not just them. Most real oil industry analysts have always known that shale was a money loser. It's being kept alive by cheap credit and artificially low interest rates, just like almost everything else in our zombie economy. This was widely discussed on the old Oil Drum website, c. 2005.
    , @AnotherDad

    Zero Hedge has always been suspicious of the purported shale oil/gas “boom”. Only time will tell if it’s a shale boom, boomlet or boomnot (pardoning the boompuns)!
     
    Zero Hedge can be "suspicious" all it wants ... the real world cares not.

    Back in the real world, the US was the first nation to meaningfully turn around its 10m b/d Hubert peak--some 40 years old in the early 70s!--in the 2010s and is producing more oil in 2019--12m b/d--than it any previous year in its history.

    Of course this too will fade--on some timeline i doubt ZeroHedge has any great insight upon. But here and now oil is coming up out of shale and helping power our world.

  2. Shale oil has never penciled out and never will, even if you offset the sheer amount of cheap/free frack water and pollution that’s far beyond conventional drilling. Retconning this as a human rights issue is just the beginning. Enviros will peel away on this, public lands protection, and anything else – like they have with population- once the powers realize how malleable they are. Bet on it.

    • Replies: @Anonymous
    Natural gas for vehicles pencils out ok once you get past the chicken-and-the-egg last mile infrastructure issue, but enviros oppose it, on the grounds they don't want any more hydrocarbons being burned.

    They support electric cars, but they really don't like more hydro and hate, hate, hate nuclear so where do they expect the electricity to come from? Well, wind and solar, which of course don't really work.

    So they know it's coming from natural gas.

    So they will support just burning the natural gas in the car and saving all those conversion losses, right? Well, no.

    I suspect there is a ((why not)) there, but I'm not sure.

    Our energy policy makes no sense from any angle but one: keeping us mired in the Middle East.
    Whether you blame the usual suspects, their God-Damned Rapture Bunny fundie sycophants, the Saudis and their corrupting oil money, the defense contractors, or any combination thereof, is another issue. Vehicular natural gas requires less infrastructure well-to-pump than gasoline, burns cleaner, is amenable to utilizing gas now capped or flared off by local process and fill, etc, etc.
  3. Right now the confected UAW strike is strangling downstream suppliers. The good news is that more and more putative Democrats will never vote Democrat again.

    • Replies: @216
    Public sympathy towards unions is much higher than its recession-era nadir. The public is not all that inclined to sympathize with the upper-middle class UAW, but they will sympathize with converting lower-wage temps into permanent employees. Further, GM management is loathsome and feminist, but might be making the correct move on electric cars.

    There isn't any clear winner or loser here, but the Dems have loudly supported the UAW, Trump has been neutral.

    The ongoing UAW corruption scandal has also been sort of a, meh, reaction.

    A better question is if Ford and Chrysler negotiate a deal before GM.

    , @Alden
    They still make cars in America? Didn’t realize.
  4. Anybody know if this is true? Was thinking about heading out that way to look for work…..

    • Replies: @FPD72
    Well servicing crews work from sunup to sundown, not counting time riding to and from the yard to the rig, six or seven days a week. They are outside most of the time, in all sorts of weather. They can rest or eat lunch for brief periods in the doghouse, a small trailer pulled behind the pickup that transports the crew and is not air conditioned. The only extended rest is lunch and occasionally when they are waiting for equipment to be transported to the rig or when they move the rig from one well site to another. Their work is filthy; at the end of the day they are covered in dirt, crude oil, grease, water, etc.

    If this sounds good to you, then yeah, give it a shot.

    If you are interested in something other than working on a pulling unit (another term for well servicing rigs), then get a commercial drivers license before heading to the Permian Basin. The pay is better, the hours limited somewhat by DOT regulations, and the work isn’t as physically demanding.

    I don’t know about Hobbs, but housing in Midland and Odessa is hard to find and very expensive.
    , @Twodees Partain
    Don't bother unless you're a legal immigrant. That's what the one guy looking for workers is begging for, according to the article.
  5. Curse Donald Trump!
    By employing just, ahem, ‘guestworkers’ (wink wink) in the entire US oil/petroleum sector, it stands to reason it would lead to cheaper prices at the pump, and Mr Sailer in California could fill up his old Honda Accord for just $4.99 a gallon- instead of the $5 he currently has to pay.

    PS: I have two tickets to Johnny Vega’s next concert. Is any iSteve reader interested in going with me?

    • Replies: @Mr McKenna

    I have two tickets to Johnny Vega’s next concert. Is any iSteve reader interested in going with me?
     
    https://media.giphy.com/media/XYCHHBtZxfmAU/giphy.gif
    , @Father O'Hara
    Count me in! Does Johnny still end his show with the theme from "Man of La Mancha?"
  6. Here in Ohio, the complaining was about out of state workers taking jobs during the boom. I’m sure Texans and Louisianans can drive to New Mexico.

    • Replies: @216
    I remember that, there was also a humorous ancedote where then-Gov Kasich told the oil companies to hire blacks.

    Left unsaid is that locals were marginalized in employment because they failed drug tests.

    The local paper ran an article recently where employers complained about lacking workers, but 80% surveyed didn't use the government-funded matching and training programs. Talk about chutzpah.
  7. @Dan Hayes
    Steve,

    Zero Hedge has always been suspicious of the purported shale oil/gas "boom". Only time will tell if it's a shale boom, boomlet or boomnot (pardoning the boompuns)!

    Zero Hedge tends to be blackpill economic porn. I seriously expect to see articles explaining how mass cannibalism is the only way to get enough food for the population any day now.

    • Agree: Dave Pinsen, Lot
    • Disagree: Dan Hayes
    • Replies: @Ian Smith
    Zero Hedge has predicted eight of the last two recessions!
    , @Clifford Brown
    Zerohedge launched shortly after the start of the 2008 financial crisis so much of its doom and gloom prognosis was exceptionally prescient during that period. The commentariat on the early Zerohedge was filled with recently unemployed and pissed off financial types which made for extremely informed comments from a few industry insiders. This all quickly dried up when people started getting jobs again. To its credit, Zerohedge did some great reporting on high frequency trading.

    Politically, Zerohedge never got beyond late 2000's hypercapitalist libertarianism. It's kind of a broken record and politically stuck in neutral, but not a bad place to peruse for the occasional contrarian take.
    , @The Alarmist

    Zero Hedge tends to be blackpill economic porn.
     
    Zero Hedge is better described as Doom Porn, but they're right on shale and fracking.

    It would be better left as-is as a strategic reserve for when oil really becomes difficult to get, like when we're booted out of the ME.

  8. I’ve got a solution! Deport all the shitholers back to their shithole countries! Let wages rise to attract more legal American workers from the ranks of the unemployed or from other industries. Problem solved. You’re welcome.

  9. Noticeably missing from the Reuters report is the wage that Mr. Vega offers his hires. If Lea County New Mexico is the #2 oil-producing county in the US then Mr. Vega’s Mico Services has competition. What are his competitors offering and do they suffer from the same staffing problems? Most reporters arrive with a headline and go looking for copy to back it up. In this case the headline is, “We need more cheap labor”.

  10. The son of a Mexican guestworker, Vega cannot find enough legal workers to meet demand for his oil well service rigs.

    You always need to add “at the wage he wants to pay.”

    • Agree: Rob McX
    • Replies: @Bill Jones
    "You always need to add “at the wage he wants to pay.”"

    I think you understate his position.

    “at the wage he feels entitled to pay.”

    Is probably closer to the truth.
  11. There is no economic case for demographically annihilating the WORKING CLASS NATIVE BORN WHITE AMERICAN WORKING CLASS MAJORITY across America…Street by Street..Town by Town…..County by County….State by State…..This is the rock bottom Demographic Axiom for Our People…..There is no econ0mic debate….It all begins with racial demographics….and ends with racial demographics……

    Engage in a policy wonk economic debate with the Enemy about immigrati0n and labor markets…and you legitimize the economic argument for race-replacing the White Working Class…..

    Do you understand this very simple point that I am making?

  12. @Redneck farmer
    Zero Hedge tends to be blackpill economic porn. I seriously expect to see articles explaining how mass cannibalism is the only way to get enough food for the population any day now.

    Zero Hedge has predicted eight of the last two recessions!

  13. @Dan Hayes
    Steve,

    Zero Hedge has always been suspicious of the purported shale oil/gas "boom". Only time will tell if it's a shale boom, boomlet or boomnot (pardoning the boompuns)!

    Zero Hedge has always been suspicious of the purported shale oil/gas “boom”.

    And not just them. Most real oil industry analysts have always known that shale was a money loser. It’s being kept alive by cheap credit and artificially low interest rates, just like almost everything else in our zombie economy. This was widely discussed on the old Oil Drum website, c. 2005.

    • Agree: The Alarmist, Hail
  14. @Redneck farmer
    Zero Hedge tends to be blackpill economic porn. I seriously expect to see articles explaining how mass cannibalism is the only way to get enough food for the population any day now.

    Zerohedge launched shortly after the start of the 2008 financial crisis so much of its doom and gloom prognosis was exceptionally prescient during that period. The commentariat on the early Zerohedge was filled with recently unemployed and pissed off financial types which made for extremely informed comments from a few industry insiders. This all quickly dried up when people started getting jobs again. To its credit, Zerohedge did some great reporting on high frequency trading.

    Politically, Zerohedge never got beyond late 2000’s hypercapitalist libertarianism. It’s kind of a broken record and politically stuck in neutral, but not a bad place to peruse for the occasional contrarian take.

    • Agree: Jesse
    • Replies: @Lot
    I agree ZH was interesting during the financial crisis. More because it posted leaked docs than the commentary.

    “ the occasional contrarian take.”

    “Buy gold, sell stocks, dollar’s gonna crash” non-stop for 10 years running. Worse than a broken record, telling people (mostly on my side of the Cold Civil War) to miss out on a generational bull market in stocks, bonds, and real estate.

    The odd but good thing is that the paranoid goldbugs I know IRL don’t actually invest their paranoid goldbug beliefs, but usually have a balanced and wise investment mix of stocks and real estate.

    Dave Pinsen, you have a bigger sample size. Is it a real trend to have a gloomy “dollar crash” type mindset but nonetheless have a completely normal to bullish portfolio?

  15. I like that it is some sort of sacrificial virtue that no compassionate person would wish upon anyone to “play by the rules.”

  16. @J.Ross
    Right now the confected UAW strike is strangling downstream suppliers. The good news is that more and more putative Democrats will never vote Democrat again.

    Public sympathy towards unions is much higher than its recession-era nadir. The public is not all that inclined to sympathize with the upper-middle class UAW, but they will sympathize with converting lower-wage temps into permanent employees. Further, GM management is loathsome and feminist, but might be making the correct move on electric cars.

    There isn’t any clear winner or loser here, but the Dems have loudly supported the UAW, Trump has been neutral.

    The ongoing UAW corruption scandal has also been sort of a, meh, reaction.

    A better question is if Ford and Chrysler negotiate a deal before GM.

    • Replies: @Steve Sailer
    A GM strike sounds like the Good Old Days.
  17. @Ano
    Curse Donald Trump!
    By employing just, ahem, 'guestworkers' (wink wink) in the entire US oil/petroleum sector, it stands to reason it would lead to cheaper prices at the pump, and Mr Sailer in California could fill up his old Honda Accord for just $4.99 a gallon- instead of the $5 he currently has to pay.

    PS: I have two tickets to Johnny Vega's next concert. Is any iSteve reader interested in going with me?

    I have two tickets to Johnny Vega’s next concert. Is any iSteve reader interested in going with me?

  18. Quick, somebody tell the enviros the way to keep all that oil in the ground is by blocking the supply of Central Americans! Then we’ll know how green they really are.

  19. @Redneck farmer
    Here in Ohio, the complaining was about out of state workers taking jobs during the boom. I'm sure Texans and Louisianans can drive to New Mexico.

    I remember that, there was also a humorous ancedote where then-Gov Kasich told the oil companies to hire blacks.

    Left unsaid is that locals were marginalized in employment because they failed drug tests.

    The local paper ran an article recently where employers complained about lacking workers, but 80% surveyed didn’t use the government-funded matching and training programs. Talk about chutzpah.

  20. Anonymous[427] • Disclaimer says:
    @kanye's doppelganger
    Shale oil has never penciled out and never will, even if you offset the sheer amount of cheap/free frack water and pollution that's far beyond conventional drilling. Retconning this as a human rights issue is just the beginning. Enviros will peel away on this, public lands protection, and anything else - like they have with population- once the powers realize how malleable they are. Bet on it.

    Natural gas for vehicles pencils out ok once you get past the chicken-and-the-egg last mile infrastructure issue, but enviros oppose it, on the grounds they don’t want any more hydrocarbons being burned.

    They support electric cars, but they really don’t like more hydro and hate, hate, hate nuclear so where do they expect the electricity to come from? Well, wind and solar, which of course don’t really work.

    So they know it’s coming from natural gas.

    So they will support just burning the natural gas in the car and saving all those conversion losses, right? Well, no.

    I suspect there is a ((why not)) there, but I’m not sure.

    Our energy policy makes no sense from any angle but one: keeping us mired in the Middle East.
    Whether you blame the usual suspects, their God-Damned Rapture Bunny fundie sycophants, the Saudis and their corrupting oil money, the defense contractors, or any combination thereof, is another issue. Vehicular natural gas requires less infrastructure well-to-pump than gasoline, burns cleaner, is amenable to utilizing gas now capped or flared off by local process and fill, etc, etc.

  21. They dont care. You rubes will pay for their schooling, medical care, law enforcement, environmental degradation. Traffic sprawl etc ad infinitum. Hell if they knock up a chiquita they can drag the whole clan over and the Waltons will sell more shit paper.

    What’s the issue ?

    # mass immigration

  22. Of course it would be no problem to make sure that guest workers leave if the country were serious about it.

  23. The son of a Mexican guestworker, Vega cannot find enough legal workers to meet demand for his oil well service rigs.

    It’s almost as if the propagandists journalists have never taken econ 101 and learned the basic law of supply and demand.

    There may be a shortage of workers at a low wage. But as wage increases the supply of willing workers increases too.

    Conspicuously absent from the story is the wage Mr. Vega is paying, and how that wage compares to other oil and gas wages.

    Let me fix the statement:

    The son of a Mexican guestworker, Vega cannot find enough legal workers willing to work for pennies he’s offering to pay to meet demand to fill dangerous jobs on his oil well service rigs.

    Much better.

  24. “The son of a Mexican guest worker, Vega…”

    See that is the problem with these “guests”. Not only do they stay and have sons, but the sons stay, too.

  25. The son of a Mexican guestworker, Vega cannot find enough legal workers to meet demand for his oil well service rigs.

    Yes, he can. He just doesn’t want to.

  26. @Ano
    Curse Donald Trump!
    By employing just, ahem, 'guestworkers' (wink wink) in the entire US oil/petroleum sector, it stands to reason it would lead to cheaper prices at the pump, and Mr Sailer in California could fill up his old Honda Accord for just $4.99 a gallon- instead of the $5 he currently has to pay.

    PS: I have two tickets to Johnny Vega's next concert. Is any iSteve reader interested in going with me?

    Count me in! Does Johnny still end his show with the theme from “Man of La Mancha?”

  27. @Dan Hayes
    Steve,

    Zero Hedge has always been suspicious of the purported shale oil/gas "boom". Only time will tell if it's a shale boom, boomlet or boomnot (pardoning the boompuns)!

    Zero Hedge has always been suspicious of the purported shale oil/gas “boom”. Only time will tell if it’s a shale boom, boomlet or boomnot (pardoning the boompuns)!

    Zero Hedge can be “suspicious” all it wants … the real world cares not.

    Back in the real world, the US was the first nation to meaningfully turn around its 10m b/d Hubert peak–some 40 years old in the early 70s!–in the 2010s and is producing more oil in 2019–12m b/d–than it any previous year in its history.

    Of course this too will fade–on some timeline i doubt ZeroHedge has any great insight upon. But here and now oil is coming up out of shale and helping power our world.

    • Disagree: Dan Hayes
    • Replies: @Intelligent Dasein

    But here and now oil is coming up out of shale and helping power our world.
     
    No, not really. What's coming up out of the shale is a whole lot of natural gas and ultralight hydrocarbons---basically cigarette lighter fluid. This stuff cannot be refined into usable gasoline without first being blended with some heavy, heavy fuel (apologies, Mr. Knopfler), hence the need for Alberta tar sands and Venezuelan crude (neither of which are very reliable, by the way).

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    The reason the gas is so overproduced is because it now takes a gigantic amount of drilling and fracking to coax up the liquid hydrocarbons which were the main objective. Judging by the cash burn rate of the fracking industry as a whole, it costs more to produce this oil than the oil can be sold for, outside of a few very select sweet spots. On an industry-wide accounting, shale loses money.

    But here is the kicker. Since energy is fungible and is reflected in the price of everything else, the money that shale loses actually represents energy that was already harvested and consumed, and is now being put to no good use and essentially wasted on money-losing boondoggles. The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We've gone catabolic; a society in this condition cannot help but do the very things that are destroying it.
  28. @Clifford Brown
    Zerohedge launched shortly after the start of the 2008 financial crisis so much of its doom and gloom prognosis was exceptionally prescient during that period. The commentariat on the early Zerohedge was filled with recently unemployed and pissed off financial types which made for extremely informed comments from a few industry insiders. This all quickly dried up when people started getting jobs again. To its credit, Zerohedge did some great reporting on high frequency trading.

    Politically, Zerohedge never got beyond late 2000's hypercapitalist libertarianism. It's kind of a broken record and politically stuck in neutral, but not a bad place to peruse for the occasional contrarian take.

    I agree ZH was interesting during the financial crisis. More because it posted leaked docs than the commentary.

    “ the occasional contrarian take.”

    “Buy gold, sell stocks, dollar’s gonna crash” non-stop for 10 years running. Worse than a broken record, telling people (mostly on my side of the Cold Civil War) to miss out on a generational bull market in stocks, bonds, and real estate.

    The odd but good thing is that the paranoid goldbugs I know IRL don’t actually invest their paranoid goldbug beliefs, but usually have a balanced and wise investment mix of stocks and real estate.

    Dave Pinsen, you have a bigger sample size. Is it a real trend to have a gloomy “dollar crash” type mindset but nonetheless have a completely normal to bullish portfolio?

    • Replies: @anon
    It's more "inflation is going to ruin financial assets".

    Everyone expected blowback from Fed liquidity and screwing around. Which hasn't happened.

    As far as goldbugs vs more moderate cash hoarders, the later has been m ore popular. With investors saving themselves with TINA and FOMO. There Is No Alternative. and Fear of Missing Out

    So no real damage. Warren Buffett is #1 example of post 2008 cash hoarding. He keeps an extra $100 B. Just in case.

    The real question is what happened to inflation. The answer is Foreign Workers for labor inflation and technology for commodity inflation. And the deflationary influence of technology. Like software which has a marginal cost of production approaching zero.

    But it still isn't clear how deflationary pressures have kept costs in relative equilibrium. It's a mystery. As well as the limits of stimulus. IE deficit spending.

    The come to Jesus moment for boomers wasn't 2008, but the Volker induced bond collapse of late Carter early Reagan.

    Nobody can really get their arms around Euopean Soverign's negative interest rates.

    Fracking has been great for the country's economy and hell for investors. But that is what everybody already knows about capital intensive investments in commodities and commodity like products (eg automobiles). It's a feature, not a bug.
  29. Great! Every drop of oil not pumped now is a drop that will still be there for our great grandchildren, assuming we can hold the continent. And I’m going to guess that the marginal barrel, for them, will be much more valuable than the marginal barrel for us. I’m not interested in leaving them a mined-out dump.

    • Replies: @anon
    That was peak oil 1.0. Peak supply. The cost would be ruinous.

    Peak oil 2.0 will be peak demand. People just want something else. Even if gas is cheaper.

    The developed world have seen peak coal. And not because coal got expensive.
  30. Everybody knows illegals are all valedictorians!

    Illegals are where the next generation of brain surgeons, astronauts, elite scientists, symphony conductors, etc., will come from.

    They don’t do manual labor on oil rigs and supply trucks.

    Illegal Aliens are all geniuses. Jeb! and Mitt and their buddy Elizabeth Warren said so.

    So Johnny Vega will have to settle for dullard, lazy Americans.

    • Replies: @Paleo Liberal
    I remember some years back, NPR did a sob story piece about a Mexicana illegal alien girl they dug up who really was a valedictorian. She worked her way through college illegally, and graduated. She was thinking about med school but — break out your hankies — she was worried she wouldn’t be able to get a job afterwards. What is the point?

    Of course nobody mentioned that Mexico has some fine medical schools, in places like Mexico City and Guadalajara, where they train some wonderful Mexican doctors. I guess that would mean giving up her “American Dream TM”, which apparently only immigrants and illegal aliens are permitted to have.

    While listening to the NPR sob story, a snippet from a song kept running through my head:

    “Oh, no,
    Guadalajara won’t do”

  31. Although well servicing rigs are involved in well completions after drilling (fracking, perforating, running production tubing, etc.), most of their utilization is for well repair, work over, redrilling, setting packers, replacing downhole pumps, replacing worn or parted tubing and sucker rods, and various other jobs that are necessary to keep wells producing long after they were brought into service.

    Ergo, it’s possible for demand for well servicing rig hands to remain high even when the need for drilling rig roughnecks and fracking crews is going down. And the workers are not interchangeable; the skill sets are somewhat different. Working on a drilling rig, where long periods of rig maintenance are punctuated by intense work tripping drill pipe out and then back into the hole, is very different from working on a servicing rig, where the tubing and rod handling equipment is completely different and a much higher percentage of the time is spent tripping rods and tubing.

    This doesn’t justify bringing in foreign workers, but it puts a strain on employers who are trying to obey the law and have to compete against contractors who don’t. I thought as early as the 1980s that half of the well servicing rigs would be stacked if “La Migra” ever did its job.

    Another difficulty is finding employees who can pass initial and random drug tests, which are required by the oil companies for which well servicing contractors work. Hobbs is the crack and meth capital of the Permian Basin, so I’m sure it’s especially difficult to staff rigs in that area.

  32. @AnotherDad

    Zero Hedge has always been suspicious of the purported shale oil/gas “boom”. Only time will tell if it’s a shale boom, boomlet or boomnot (pardoning the boompuns)!
     
    Zero Hedge can be "suspicious" all it wants ... the real world cares not.

    Back in the real world, the US was the first nation to meaningfully turn around its 10m b/d Hubert peak--some 40 years old in the early 70s!--in the 2010s and is producing more oil in 2019--12m b/d--than it any previous year in its history.

    Of course this too will fade--on some timeline i doubt ZeroHedge has any great insight upon. But here and now oil is coming up out of shale and helping power our world.

    But here and now oil is coming up out of shale and helping power our world.

    No, not really. What’s coming up out of the shale is a whole lot of natural gas and ultralight hydrocarbons—basically cigarette lighter fluid. This stuff cannot be refined into usable gasoline without first being blended with some heavy, heavy fuel (apologies, Mr. Knopfler), hence the need for Alberta tar sands and Venezuelan crude (neither of which are very reliable, by the way).

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    The reason the gas is so overproduced is because it now takes a gigantic amount of drilling and fracking to coax up the liquid hydrocarbons which were the main objective. Judging by the cash burn rate of the fracking industry as a whole, it costs more to produce this oil than the oil can be sold for, outside of a few very select sweet spots. On an industry-wide accounting, shale loses money.

    But here is the kicker. Since energy is fungible and is reflected in the price of everything else, the money that shale loses actually represents energy that was already harvested and consumed, and is now being put to no good use and essentially wasted on money-losing boondoggles. The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We’ve gone catabolic; a society in this condition cannot help but do the very things that are destroying it.

    • Replies: @Anonymous

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

     

    So why aren't we using it to run cars?
    , @FPD72
    The low wellhead price of natural gas is not the primary reason for gas flaring; it’s the lack of infrastructure (gathering systems, pipelines, natural gas plants, compressor stations, etc.). Although a case could be made that a higher gas price would help to speed up the infrastructure, much of the delay is regulatory.

    In Texas, the Railroad Commission is responsible for regulating the oil and gas industry. The RRC allows an operator to flare gas while drilling a well and for up to 10 days after a well’s completion to conduct well potential testing. The majority of flaring permit requests received by the Commission are for flaring cashinghead gas from oil wells. Permits to flare from gas wells are not typically issued as natural gas is the main product of a gas well.

    Flaring of casinghead gas for extended periods of time may be necessary if the well is drilled in areas new to exploration. In new areas of exploration, pipeline connections are not typically constructed until after a well is completed and a determination is made about the well's productive capability. Other reasons for flaring include: gas plant shutdowns; repairing a compressor or gas line or well; or other maintenance. In existing production areas, flaring also may be necessary because existing pipelines may have reached capacity. Commission staff issue flare permits administratively for 45 days at a time, for a maximum limit of 180 days. Extensions beyond 180 days must be granted through a Commission Final Order.

    You seem to think that the shale revolution is all about oil and natural gas liquids. It started as a means of extracting natural gas. The Barnett Shale around Ft. Worth, the Haynesville Shale in Louisiana, the southern part of the Eagle Ford Shale in South Texas, and the Marcellous Shale in Pennsylvania were all being drilled and developed before the Wolfberry Shale revolution in the Permian Basin. Yes, in West Texas and SE New Mexico, the emphasis is on oil, but natural gas facilities are being built, just not fast enough to prevent flaring for longer than 45 days.
    , @AnotherDad

    The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We’ve gone catabolic; a society in this condition cannot help but do the very things that are destroying it.
     
    As usual so much noise.

    First off there is a free enough market. This is not USG energy. A lot of small firms are involved across the drilling industry. If they can't sell their oil+gas stream to cover their costs--bankrupt.

    Secondly, "we have to pursue them" is just ridiculous. What shale production has replaced is imports. Precisely what we were using and would continue to be using if they were cheaper. Domestic shale could have been a boondoggle that did not pan out in energy terms, but in no way was it required. People did it for the age old reason--making money. I.e. they thought it would pencil out.

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.
     
    Do you think it is 1910?

    Drillers flared off gas in the early days when there was no market or where there is no infrastructure. You see it in the middle east, because of the transport issue--the LNG thing has not been able to take off.

    But the American shale projects are specifically designed to get at the gas--make no sense otherwise--and are hooked up to our natural gas pipeline network.

    Hearing an American describe natural gas as "crap" is bizarre. Natural gas is almost the perfect energy source. It's energy density is in a sweet spot. It transports easily. It burns cleanly. It is perfect for heating (dominates US home heating). Perfect for electric power generation--it has far surpassed coal and accounts for over a third of US power generation now. Perfect for industrial heating and processing. Easy to use for vehicle transport. The only--minor--difficulty is the need to do some chemistry to build longer hydrocarbon chains for aircraft fuel.

    I'm a big proponent of nuclear energy, including pursuing the next generation technologies --breeder and thorium cycle. But if we had an inexhaustible source of natural gas ... there would be no need. It's the ideal energy. You'd run your economy on natural gas, no problem.


    All your comment amounts to is the reality that the fracking guys have been *so successful* hitting these (easiest, best) shale formations that they've driven down the price of gas tremendously, driving down financial return--not energy return--and bankrupting a bunch of players.

    Is chipmaking a failure too, because prices per gigaflop have tumbled? Are farmers a failure when there is a bumper crop and prices tumble?

    We have these amazingly low energy prices--yes for natural gas prices and gasoline at the pump--comparable in real terms to when i was a kid in the 60s, then have "intelligent" people claim that the last decade's big energy effort is real a net energy burning failure. LOL.
    , @RandoSockPuppet
    The horizon of West Texas is illuminated by the light of 1000s of flares at night.

    Earlier this year I was involved in the final implementation of a massive NGL pipeline going into Mexico. They paid $$$$$$.

    Right now, however, I'm unemployed. Tons of lays offs, few jobs out there are so flooded you can't get a call back.

    There is no labor shortage. Ethnocentric Mexican just wants to import more of his kin.
  33. @Dallas
    Anybody know if this is true? Was thinking about heading out that way to look for work.....

    Well servicing crews work from sunup to sundown, not counting time riding to and from the yard to the rig, six or seven days a week. They are outside most of the time, in all sorts of weather. They can rest or eat lunch for brief periods in the doghouse, a small trailer pulled behind the pickup that transports the crew and is not air conditioned. The only extended rest is lunch and occasionally when they are waiting for equipment to be transported to the rig or when they move the rig from one well site to another. Their work is filthy; at the end of the day they are covered in dirt, crude oil, grease, water, etc.

    If this sounds good to you, then yeah, give it a shot.

    If you are interested in something other than working on a pulling unit (another term for well servicing rigs), then get a commercial drivers license before heading to the Permian Basin. The pay is better, the hours limited somewhat by DOT regulations, and the work isn’t as physically demanding.

    I don’t know about Hobbs, but housing in Midland and Odessa is hard to find and very expensive.

  34. Anonymous[427] • Disclaimer says:
    @Intelligent Dasein

    But here and now oil is coming up out of shale and helping power our world.
     
    No, not really. What's coming up out of the shale is a whole lot of natural gas and ultralight hydrocarbons---basically cigarette lighter fluid. This stuff cannot be refined into usable gasoline without first being blended with some heavy, heavy fuel (apologies, Mr. Knopfler), hence the need for Alberta tar sands and Venezuelan crude (neither of which are very reliable, by the way).

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    The reason the gas is so overproduced is because it now takes a gigantic amount of drilling and fracking to coax up the liquid hydrocarbons which were the main objective. Judging by the cash burn rate of the fracking industry as a whole, it costs more to produce this oil than the oil can be sold for, outside of a few very select sweet spots. On an industry-wide accounting, shale loses money.

    But here is the kicker. Since energy is fungible and is reflected in the price of everything else, the money that shale loses actually represents energy that was already harvested and consumed, and is now being put to no good use and essentially wasted on money-losing boondoggles. The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We've gone catabolic; a society in this condition cannot help but do the very things that are destroying it.

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    So why aren’t we using it to run cars?

    • Replies: @donvonburg
    Natural gas is an excellent piston engine fuel. It has to be stored in a vehicle, though, and there are two options: as a gas in a high pressure cylinder or as a cryoliquid in a dewar or vacuum insulated tank. It then has to be cooled to -300 Fahrenheit or compressed to 3500-5000 psi to fill the tank.

    Either way the tank is expensive, and the fueling equipment is too.

    With gasoline in the midwestern US at

    https://www.gasbuddy.com/GasPrices/Missouri/St%20Louis

    https://www.gasbuddy.com/GasPrices/Nebraska/Omaha

    https://www.gasbuddy.com/GasPrices/Texas/Dallas


    these kind of levels, CNG or LNG is like "you must be joking".

    However, look at:
    https://www.gasbuddy.com/GasPrices/California/Los%20Angeles

    Even there, alt fuels are not compelling at these prices. More attractive, certainly.

    The problem is that we are now flaring off or burning cheap huge amounts of natural gas, that once gone are gone forever. When oil skyrockets again, there will no longer be this big surplus.

    We should set a minimum retail price for gasoline that makes building the natural gas infrastructure out cost effective. However, natgas fuel has no constituency unlike corn ethanol.

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.

    The whackos want electric cars but there are two problems. One is that electric cars demand extensive use of rare earth metals and the other is that without drastic regulation, most people will charge their electric cars on-peak rather than off-peak, increasing rather than reducing the huge crest factor our utilities have to deal with.

    The bottom line is 1) there is no magic solution and 2) letting "the free market" decide energy policy is like going away for a week and locking your dog in the kitchen with a week's worth of food and water. The dog will eat it all, crap all over the place and then starve for four or five days. On the other hand, governments do an even worse job and there are huge constituencies for almost every policy but the ones that will provide long term stability.
  35. @216
    Public sympathy towards unions is much higher than its recession-era nadir. The public is not all that inclined to sympathize with the upper-middle class UAW, but they will sympathize with converting lower-wage temps into permanent employees. Further, GM management is loathsome and feminist, but might be making the correct move on electric cars.

    There isn't any clear winner or loser here, but the Dems have loudly supported the UAW, Trump has been neutral.

    The ongoing UAW corruption scandal has also been sort of a, meh, reaction.

    A better question is if Ford and Chrysler negotiate a deal before GM.

    A GM strike sounds like the Good Old Days.

  36. @Anonymous

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

     

    So why aren't we using it to run cars?

    Natural gas is an excellent piston engine fuel. It has to be stored in a vehicle, though, and there are two options: as a gas in a high pressure cylinder or as a cryoliquid in a dewar or vacuum insulated tank. It then has to be cooled to -300 Fahrenheit or compressed to 3500-5000 psi to fill the tank.

    Either way the tank is expensive, and the fueling equipment is too.

    With gasoline in the midwestern US at

    https://www.gasbuddy.com/GasPrices/Missouri/St%20Louis

    https://www.gasbuddy.com/GasPrices/Nebraska/Omaha

    https://www.gasbuddy.com/GasPrices/Texas/Dallas

    these kind of levels, CNG or LNG is like “you must be joking”.

    However, look at:
    https://www.gasbuddy.com/GasPrices/California/Los%20Angeles

    Even there, alt fuels are not compelling at these prices. More attractive, certainly.

    The problem is that we are now flaring off or burning cheap huge amounts of natural gas, that once gone are gone forever. When oil skyrockets again, there will no longer be this big surplus.

    We should set a minimum retail price for gasoline that makes building the natural gas infrastructure out cost effective. However, natgas fuel has no constituency unlike corn ethanol.

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.

    The whackos want electric cars but there are two problems. One is that electric cars demand extensive use of rare earth metals and the other is that without drastic regulation, most people will charge their electric cars on-peak rather than off-peak, increasing rather than reducing the huge crest factor our utilities have to deal with.

    The bottom line is 1) there is no magic solution and 2) letting “the free market” decide energy policy is like going away for a week and locking your dog in the kitchen with a week’s worth of food and water. The dog will eat it all, crap all over the place and then starve for four or five days. On the other hand, governments do an even worse job and there are huge constituencies for almost every policy but the ones that will provide long term stability.

    • Replies: @AnotherDad

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.
     
    This is the solution.

    We have a liquid fuel infrastructure in place. The cost to have new cars capable of burning methanol, ethanol or gasoline is--i've read--pretty trivial. (Basically more stainless steel and a bit of tweaking of the software running the fuel injection.) I believe there can be a startup issue with straight methanol (or ethanol), but you sell something like M85 so there's some gasoline there for startup.

    Basically apply some regulation on the vehicle side to enable the competition on the fuel side, then the market will easily sort out and provide gasoline, ethanol or methanol based on costs and availability from the wells or biofuel sources.
  37. The US Geological Survey recently estimated that the Permian Basin (and tributaries) contained more recoverable oil than what Saudi Arabia has as known reserves. We will never run out of oil.

    As an aside; in her verbose dystopian novel Ayn Rand had Galt’s Gulch be energy independent by way of tapping oil from shale. Huh.

  38. @Redneck farmer
    Zero Hedge tends to be blackpill economic porn. I seriously expect to see articles explaining how mass cannibalism is the only way to get enough food for the population any day now.

    Zero Hedge tends to be blackpill economic porn.

    Zero Hedge is better described as Doom Porn, but they’re right on shale and fracking.

    It would be better left as-is as a strategic reserve for when oil really becomes difficult to get, like when we’re booted out of the ME.

  39. @Intelligent Dasein

    But here and now oil is coming up out of shale and helping power our world.
     
    No, not really. What's coming up out of the shale is a whole lot of natural gas and ultralight hydrocarbons---basically cigarette lighter fluid. This stuff cannot be refined into usable gasoline without first being blended with some heavy, heavy fuel (apologies, Mr. Knopfler), hence the need for Alberta tar sands and Venezuelan crude (neither of which are very reliable, by the way).

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    The reason the gas is so overproduced is because it now takes a gigantic amount of drilling and fracking to coax up the liquid hydrocarbons which were the main objective. Judging by the cash burn rate of the fracking industry as a whole, it costs more to produce this oil than the oil can be sold for, outside of a few very select sweet spots. On an industry-wide accounting, shale loses money.

    But here is the kicker. Since energy is fungible and is reflected in the price of everything else, the money that shale loses actually represents energy that was already harvested and consumed, and is now being put to no good use and essentially wasted on money-losing boondoggles. The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We've gone catabolic; a society in this condition cannot help but do the very things that are destroying it.

    The low wellhead price of natural gas is not the primary reason for gas flaring; it’s the lack of infrastructure (gathering systems, pipelines, natural gas plants, compressor stations, etc.). Although a case could be made that a higher gas price would help to speed up the infrastructure, much of the delay is regulatory.

    In Texas, the Railroad Commission is responsible for regulating the oil and gas industry. The RRC allows an operator to flare gas while drilling a well and for up to 10 days after a well’s completion to conduct well potential testing. The majority of flaring permit requests received by the Commission are for flaring cashinghead gas from oil wells. Permits to flare from gas wells are not typically issued as natural gas is the main product of a gas well.

    Flaring of casinghead gas for extended periods of time may be necessary if the well is drilled in areas new to exploration. In new areas of exploration, pipeline connections are not typically constructed until after a well is completed and a determination is made about the well’s productive capability. Other reasons for flaring include: gas plant shutdowns; repairing a compressor or gas line or well; or other maintenance. In existing production areas, flaring also may be necessary because existing pipelines may have reached capacity. Commission staff issue flare permits administratively for 45 days at a time, for a maximum limit of 180 days. Extensions beyond 180 days must be granted through a Commission Final Order.

    You seem to think that the shale revolution is all about oil and natural gas liquids. It started as a means of extracting natural gas. The Barnett Shale around Ft. Worth, the Haynesville Shale in Louisiana, the southern part of the Eagle Ford Shale in South Texas, and the Marcellous Shale in Pennsylvania were all being drilled and developed before the Wolfberry Shale revolution in the Permian Basin. Yes, in West Texas and SE New Mexico, the emphasis is on oil, but natural gas facilities are being built, just not fast enough to prevent flaring for longer than 45 days.

    • Replies: @AnotherDad
    FPD72, thanks for the knowledgeable, fact based comment.

    As a layman your first paragraph captured and added to my understanding of the gas price issue:

    The low wellhead price of natural gas is not the primary reason for gas flaring; it’s the lack of infrastructure (gathering systems, pipelines, natural gas plants, compressor stations, etc.). Although a case could be made that a higher gas price would help to speed up the infrastructure, much of the delay is regulatory.
     
    Basically the existing pipeline infrastructure is not sufficient and has not grown fast enough to keep up with how *successful* the drillers have been in brining up shale gas.

    This is not some "failure" of the shale revolution as some commenters bizarrely would have it. My furnace is burning the stuff, my electricity is coming from it. And i'd be happy to try a bit of M15 gas in my cars or buy a car capable of M85 if it was available.
  40. I worked with a guy who is a naturalized citizen from Mexico. Earlier he worked in the New Mexico oil industry. The safety standards were low. He related one day a wire rope cable broke springing out, it wrapping around a worker like a python and killed him. Illegals are fodder.

  41. @Nachos 'n Beer
    Everybody knows illegals are all valedictorians!

    Illegals are where the next generation of brain surgeons, astronauts, elite scientists, symphony conductors, etc., will come from.

    They don't do manual labor on oil rigs and supply trucks.

    Illegal Aliens are all geniuses. Jeb! and Mitt and their buddy Elizabeth Warren said so.

    So Johnny Vega will have to settle for dullard, lazy Americans.

    I remember some years back, NPR did a sob story piece about a Mexicana illegal alien girl they dug up who really was a valedictorian. She worked her way through college illegally, and graduated. She was thinking about med school but — break out your hankies — she was worried she wouldn’t be able to get a job afterwards. What is the point?

    Of course nobody mentioned that Mexico has some fine medical schools, in places like Mexico City and Guadalajara, where they train some wonderful Mexican doctors. I guess that would mean giving up her “American Dream TM”, which apparently only immigrants and illegal aliens are permitted to have.

    While listening to the NPR sob story, a snippet from a song kept running through my head:

    “Oh, no,
    Guadalajara won’t do”

  42. @Flip

    The son of a Mexican guestworker, Vega cannot find enough legal workers to meet demand for his oil well service rigs.
     
    You always need to add "at the wage he wants to pay."

    “You always need to add “at the wage he wants to pay.””

    I think you understate his position.

    “at the wage he feels entitled to pay.”

    Is probably closer to the truth.

  43. There is no such thing as a labor shortage — only a shortage of employers willing to pay a market clearing wage. Journalists should be required to take at least one economics course.

  44. @Intelligent Dasein

    But here and now oil is coming up out of shale and helping power our world.
     
    No, not really. What's coming up out of the shale is a whole lot of natural gas and ultralight hydrocarbons---basically cigarette lighter fluid. This stuff cannot be refined into usable gasoline without first being blended with some heavy, heavy fuel (apologies, Mr. Knopfler), hence the need for Alberta tar sands and Venezuelan crude (neither of which are very reliable, by the way).

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    The reason the gas is so overproduced is because it now takes a gigantic amount of drilling and fracking to coax up the liquid hydrocarbons which were the main objective. Judging by the cash burn rate of the fracking industry as a whole, it costs more to produce this oil than the oil can be sold for, outside of a few very select sweet spots. On an industry-wide accounting, shale loses money.

    But here is the kicker. Since energy is fungible and is reflected in the price of everything else, the money that shale loses actually represents energy that was already harvested and consumed, and is now being put to no good use and essentially wasted on money-losing boondoggles. The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We've gone catabolic; a society in this condition cannot help but do the very things that are destroying it.

    The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We’ve gone catabolic; a society in this condition cannot help but do the very things that are destroying it.

    As usual so much noise.

    First off there is a free enough market. This is not USG energy. A lot of small firms are involved across the drilling industry. If they can’t sell their oil+gas stream to cover their costs–bankrupt.

    Secondly, “we have to pursue them” is just ridiculous. What shale production has replaced is imports. Precisely what we were using and would continue to be using if they were cheaper. Domestic shale could have been a boondoggle that did not pan out in energy terms, but in no way was it required. People did it for the age old reason–making money. I.e. they thought it would pencil out.

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    Do you think it is 1910?

    Drillers flared off gas in the early days when there was no market or where there is no infrastructure. You see it in the middle east, because of the transport issue–the LNG thing has not been able to take off.

    But the American shale projects are specifically designed to get at the gas–make no sense otherwise–and are hooked up to our natural gas pipeline network.

    Hearing an American describe natural gas as “crap” is bizarre. Natural gas is almost the perfect energy source. It’s energy density is in a sweet spot. It transports easily. It burns cleanly. It is perfect for heating (dominates US home heating). Perfect for electric power generation–it has far surpassed coal and accounts for over a third of US power generation now. Perfect for industrial heating and processing. Easy to use for vehicle transport. The only–minor–difficulty is the need to do some chemistry to build longer hydrocarbon chains for aircraft fuel.

    I’m a big proponent of nuclear energy, including pursuing the next generation technologies –breeder and thorium cycle. But if we had an inexhaustible source of natural gas … there would be no need. It’s the ideal energy. You’d run your economy on natural gas, no problem.

    All your comment amounts to is the reality that the fracking guys have been *so successful* hitting these (easiest, best) shale formations that they’ve driven down the price of gas tremendously, driving down financial return–not energy return–and bankrupting a bunch of players.

    Is chipmaking a failure too, because prices per gigaflop have tumbled? Are farmers a failure when there is a bumper crop and prices tumble?

    We have these amazingly low energy prices–yes for natural gas prices and gasoline at the pump–comparable in real terms to when i was a kid in the 60s, then have “intelligent” people claim that the last decade’s big energy effort is real a net energy burning failure. LOL.

    • Replies: @Intelligent Dasein
    You can "LOL" all you want to, Daddio, but there's something you need to be aware of.

    The shale industry loses money. This is a fact in evidence. It is not opinion, speculation, or conjecture on my part. Whatever else you want to say about it, this is the bottom line. What the frackers are doing cannot be done profitably.

    The reason it is being done at all is because of financial repression. Fracking companies currently borrow at interest rates that are unusually low in nominal terms and negative in real terms. There is all kinds of stuff you can do as long as you can borrow money and not really have to pay it back. It's like the proverbial extraction of gold from sea water.

    And if there were some compelling reason to get the gold above and beyond its monetary worth, then I would agree that maybe we should spend whatever it takes to go after it. But there is a reason why borrowing and spending on unprofitable ventures has not and can never be the royal road to wealth creation, and if you cannot see what that reason is then I'm not sure what to tell you.
  45. @Dallas
    Anybody know if this is true? Was thinking about heading out that way to look for work.....

    Don’t bother unless you’re a legal immigrant. That’s what the one guy looking for workers is begging for, according to the article.

  46. @donvonburg
    Natural gas is an excellent piston engine fuel. It has to be stored in a vehicle, though, and there are two options: as a gas in a high pressure cylinder or as a cryoliquid in a dewar or vacuum insulated tank. It then has to be cooled to -300 Fahrenheit or compressed to 3500-5000 psi to fill the tank.

    Either way the tank is expensive, and the fueling equipment is too.

    With gasoline in the midwestern US at

    https://www.gasbuddy.com/GasPrices/Missouri/St%20Louis

    https://www.gasbuddy.com/GasPrices/Nebraska/Omaha

    https://www.gasbuddy.com/GasPrices/Texas/Dallas


    these kind of levels, CNG or LNG is like "you must be joking".

    However, look at:
    https://www.gasbuddy.com/GasPrices/California/Los%20Angeles

    Even there, alt fuels are not compelling at these prices. More attractive, certainly.

    The problem is that we are now flaring off or burning cheap huge amounts of natural gas, that once gone are gone forever. When oil skyrockets again, there will no longer be this big surplus.

    We should set a minimum retail price for gasoline that makes building the natural gas infrastructure out cost effective. However, natgas fuel has no constituency unlike corn ethanol.

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.

    The whackos want electric cars but there are two problems. One is that electric cars demand extensive use of rare earth metals and the other is that without drastic regulation, most people will charge their electric cars on-peak rather than off-peak, increasing rather than reducing the huge crest factor our utilities have to deal with.

    The bottom line is 1) there is no magic solution and 2) letting "the free market" decide energy policy is like going away for a week and locking your dog in the kitchen with a week's worth of food and water. The dog will eat it all, crap all over the place and then starve for four or five days. On the other hand, governments do an even worse job and there are huge constituencies for almost every policy but the ones that will provide long term stability.

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.

    This is the solution.

    We have a liquid fuel infrastructure in place. The cost to have new cars capable of burning methanol, ethanol or gasoline is–i’ve read–pretty trivial. (Basically more stainless steel and a bit of tweaking of the software running the fuel injection.) I believe there can be a startup issue with straight methanol (or ethanol), but you sell something like M85 so there’s some gasoline there for startup.

    Basically apply some regulation on the vehicle side to enable the competition on the fuel side, then the market will easily sort out and provide gasoline, ethanol or methanol based on costs and availability from the wells or biofuel sources.

    • Replies: @DRA
    Agree, but I don't comment enough to just click on it!

    Robert Zubrin wrote a book, Energy Victory or some such, years ago. Well worth a read.
    , @anon
    It's interesting that there are solutions like burning NG in cars, that can't get traction. The latest generation of hybrid electrics is more or less perfected technology. But Toyota can't get consumers to pay an extra $1,000 per vehicle. They are about 1/2 the preferred green solution of BEVs. Available today cheap with proven technology.

    I've surmised that no one is serious about the problem as it has been framed. 5 years ago Larry David and his Hollywood bros were virtue signaling in Priuses. But now no one much cares.

    It's all riding on the fantasy of BEVs.

    Note that ATT did some really stupid things (Direct TV) and abandoned FTTH (fiber to the home). betting it all on something new (5g). 5g will take another decade to fully sort, but FTTH could have been wrapped up 5 years ago.

    Same pattern. Give up on proven technology for the next big thing.

    Two things:

    1. Once a solution is within grasp, its simple to see that it will be a snooze. While something 10 years in the future -- not so obvious.

    2. What they really see is that the the obvious solution won't prove "that" profitable, but they can't see that the 10 years out big thing will appear less profitable as soon as it is achievable.

    It's something that is perplexing to me. Why proven solutions are abandoned so frequently.
    , @anon
    Methanol is toxic in fairly small volumes, therefore it is more complicated to handle than ethanol. Just for a start, don't ever swallow any amount, nor get it into your eyes or even on your skin.

    https://infogalactic.com/info/Methanol#Toxicity

    Natural gas is a fine replacement for coal in baseload power plants for multiple reasons. It's not a very good vehicle fuel, though, which is why it's only seen in fleet vehicles such as buses.

    The full cost of lithium batteries is not discussed, because it's Green therefore emotionally satisfying. Of course, it's not so green lithium miners in South America. As with solar panels, there's more involved than most people realize. Lithium battery recycling is easier than solar panel recycling, for example, but both are needed to keep lead and other metals out of water tables.
  47. The obvious:

    The whole oil-rotting-in-the-shale idea is so obviously stupid. Unlike crops, the oil does not “rot”, is not lost if someone doesn’t drill their lease today. In fact, if prices aren’t high enough to justify the paychecks you need to entice young American men to the oil fields … then the oil is “supposed” to sit there until the prices can support those paychecks. It’s a good thing–save it for later.

    As with so many articles, we seem to have an entire generation of journalists so removed from any contact with real production, that their brains have no context to even attempt to think critically about some claim. Of course, logic and reason generally are in very short supply in journalistic output these days.

    • Replies: @Paleo Liberal
    There are big problems in journalism these days.

    Part of it is the jobs are mostly gone. The newspapers are dying out. Local coverage of city councils and even state legislatures is dying out.

    The online news sites are mostly clickbait articles with as little work done as possible. Often these articles are rehashing someone else’s article, or else a Twitter feed claiming to be an article.

    Not only do reporters forego investigative journalism, but fact checking is rapidly disappearing. In fact, even basic editing is quickly vanishing.

    That is one reason the SPLC is quoted so often. They have an easily accessible web page. One can look up the “hate “ organization, and the SPLC will have a page saying how bad they are. That is far less work for a journalist than actually investigating whether the group is a hate group or even if the group actually exists.
  48. @AnotherDad
    The obvious:

    The whole oil-rotting-in-the-shale idea is so obviously stupid. Unlike crops, the oil does not "rot", is not lost if someone doesn't drill their lease today. In fact, if prices aren't high enough to justify the paychecks you need to entice young American men to the oil fields ... then the oil is "supposed" to sit there until the prices can support those paychecks. It's a good thing--save it for later.

    As with so many articles, we seem to have an entire generation of journalists so removed from any contact with real production, that their brains have no context to even attempt to think critically about some claim. Of course, logic and reason generally are in very short supply in journalistic output these days.

    There are big problems in journalism these days.

    Part of it is the jobs are mostly gone. The newspapers are dying out. Local coverage of city councils and even state legislatures is dying out.

    The online news sites are mostly clickbait articles with as little work done as possible. Often these articles are rehashing someone else’s article, or else a Twitter feed claiming to be an article.

    Not only do reporters forego investigative journalism, but fact checking is rapidly disappearing. In fact, even basic editing is quickly vanishing.

    That is one reason the SPLC is quoted so often. They have an easily accessible web page. One can look up the “hate “ organization, and the SPLC will have a page saying how bad they are. That is far less work for a journalist than actually investigating whether the group is a hate group or even if the group actually exists.

    • Agree: Alden
  49. ‘Broken system’ starves U.S. oil boom of immigrant workers
    -Andrew Hay

    Better watch it, progressive journalist. Greta is watching.

    • Replies: @Alden
    She shouldn’t be wearing that bright colored top. True environmentalists wear only the natural colored cotton wool or linen not even bleached.

    Dingy unbleached white or ecru is the only acceptable color for an environmentalist.

    It’s a big deal among the true believers. First they came out against leather. Now they’re against their plastic shoes belts wallets and purses. Hemp and soy fabric is the latest fad.
  50. @AnotherDad

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.
     
    This is the solution.

    We have a liquid fuel infrastructure in place. The cost to have new cars capable of burning methanol, ethanol or gasoline is--i've read--pretty trivial. (Basically more stainless steel and a bit of tweaking of the software running the fuel injection.) I believe there can be a startup issue with straight methanol (or ethanol), but you sell something like M85 so there's some gasoline there for startup.

    Basically apply some regulation on the vehicle side to enable the competition on the fuel side, then the market will easily sort out and provide gasoline, ethanol or methanol based on costs and availability from the wells or biofuel sources.

    Agree, but I don’t comment enough to just click on it!

    Robert Zubrin wrote a book, Energy Victory or some such, years ago. Well worth a read.

  51. @FPD72
    The low wellhead price of natural gas is not the primary reason for gas flaring; it’s the lack of infrastructure (gathering systems, pipelines, natural gas plants, compressor stations, etc.). Although a case could be made that a higher gas price would help to speed up the infrastructure, much of the delay is regulatory.

    In Texas, the Railroad Commission is responsible for regulating the oil and gas industry. The RRC allows an operator to flare gas while drilling a well and for up to 10 days after a well’s completion to conduct well potential testing. The majority of flaring permit requests received by the Commission are for flaring cashinghead gas from oil wells. Permits to flare from gas wells are not typically issued as natural gas is the main product of a gas well.

    Flaring of casinghead gas for extended periods of time may be necessary if the well is drilled in areas new to exploration. In new areas of exploration, pipeline connections are not typically constructed until after a well is completed and a determination is made about the well's productive capability. Other reasons for flaring include: gas plant shutdowns; repairing a compressor or gas line or well; or other maintenance. In existing production areas, flaring also may be necessary because existing pipelines may have reached capacity. Commission staff issue flare permits administratively for 45 days at a time, for a maximum limit of 180 days. Extensions beyond 180 days must be granted through a Commission Final Order.

    You seem to think that the shale revolution is all about oil and natural gas liquids. It started as a means of extracting natural gas. The Barnett Shale around Ft. Worth, the Haynesville Shale in Louisiana, the southern part of the Eagle Ford Shale in South Texas, and the Marcellous Shale in Pennsylvania were all being drilled and developed before the Wolfberry Shale revolution in the Permian Basin. Yes, in West Texas and SE New Mexico, the emphasis is on oil, but natural gas facilities are being built, just not fast enough to prevent flaring for longer than 45 days.

    FPD72, thanks for the knowledgeable, fact based comment.

    As a layman your first paragraph captured and added to my understanding of the gas price issue:

    The low wellhead price of natural gas is not the primary reason for gas flaring; it’s the lack of infrastructure (gathering systems, pipelines, natural gas plants, compressor stations, etc.). Although a case could be made that a higher gas price would help to speed up the infrastructure, much of the delay is regulatory.

    Basically the existing pipeline infrastructure is not sufficient and has not grown fast enough to keep up with how *successful* the drillers have been in brining up shale gas.

    This is not some “failure” of the shale revolution as some commenters bizarrely would have it. My furnace is burning the stuff, my electricity is coming from it. And i’d be happy to try a bit of M15 gas in my cars or buy a car capable of M85 if it was available.

  52. anon[219] • Disclaimer says:
    @Lot
    I agree ZH was interesting during the financial crisis. More because it posted leaked docs than the commentary.

    “ the occasional contrarian take.”

    “Buy gold, sell stocks, dollar’s gonna crash” non-stop for 10 years running. Worse than a broken record, telling people (mostly on my side of the Cold Civil War) to miss out on a generational bull market in stocks, bonds, and real estate.

    The odd but good thing is that the paranoid goldbugs I know IRL don’t actually invest their paranoid goldbug beliefs, but usually have a balanced and wise investment mix of stocks and real estate.

    Dave Pinsen, you have a bigger sample size. Is it a real trend to have a gloomy “dollar crash” type mindset but nonetheless have a completely normal to bullish portfolio?

    It’s more “inflation is going to ruin financial assets”.

    Everyone expected blowback from Fed liquidity and screwing around. Which hasn’t happened.

    As far as goldbugs vs more moderate cash hoarders, the later has been m ore popular. With investors saving themselves with TINA and FOMO. There Is No Alternative. and Fear of Missing Out

    So no real damage. Warren Buffett is #1 example of post 2008 cash hoarding. He keeps an extra $100 B. Just in case.

    The real question is what happened to inflation. The answer is Foreign Workers for labor inflation and technology for commodity inflation. And the deflationary influence of technology. Like software which has a marginal cost of production approaching zero.

    But it still isn’t clear how deflationary pressures have kept costs in relative equilibrium. It’s a mystery. As well as the limits of stimulus. IE deficit spending.

    The come to Jesus moment for boomers wasn’t 2008, but the Volker induced bond collapse of late Carter early Reagan.

    Nobody can really get their arms around Euopean Soverign’s negative interest rates.

    Fracking has been great for the country’s economy and hell for investors. But that is what everybody already knows about capital intensive investments in commodities and commodity like products (eg automobiles). It’s a feature, not a bug.

    • Agree: Lot
    • Replies: @res

    So no real damage. Warren Buffett is #1 example of post 2008 cash hoarding. He keeps an extra $100 B. Just in case.
     
    Yes. Note this recent article: https://www.ccn.com/warren-buffett-no-longer-at-the-top-of-his-game-slams-billion-dollar-money-manager/

    I remember seeing articles like that in the years leading up to the ~2001 tech crash.
  53. I know a bit about fracking in the West Virginia area. A family I know well had a well drilled on their farm about 10 years ago and for a while were getting some 6 figure checks. But when the price of gas went down, the well operator simply stopped producing. The gas is still there and will be sold when prices are better. These wells produce very little liquid.

    Another friend of mine works as a contractor for Shell which is building a huge cracking plant at Monaca (https://en.wikipedia.org/wiki/Shell_Pennsylvania_Petrochemicals_Complex) where the gas will be turned into plastic pellets. Her job is to assemble the right of way for a large pipeline to this plant. She has been doing this for five years; construction just started recently.

    The Saudis tried to bankrupt the frackers a few years ago by lowering the price of their oil. Some of the marginal frackers went under, but most figured out how to reduce their cost of production, and the Saudis lost.

    Increased energy independence means the USA has few to no reasons to keep spending blood and treasure f**king around in the Middle East. DJT seems to realize that, at least in Syria; the foreign policy establishment, which has been wrong about everything for a long time, hate him for it.

  54. When a business owner brays “I can’t find workers to hire”, I say “At what wage?”. Business owner, increase your wage offer until you get people pounding on your door.

    • Replies: @Jim Don Bob
    Speaking of wages, I went to a McDonalds near Columbus Circle in NYC on Saturday. A Big Mac was $9.87, small fries were $2.99, etc. I mentioned this to some of my liberal friends and said that perhaps the new $15/hour minimum wage had something to to with it. They pooh poohed the idea, blaming it on high rent, etc. I shut up after that.
  55. anon[219] • Disclaimer says:
    @AnotherDad

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.
     
    This is the solution.

    We have a liquid fuel infrastructure in place. The cost to have new cars capable of burning methanol, ethanol or gasoline is--i've read--pretty trivial. (Basically more stainless steel and a bit of tweaking of the software running the fuel injection.) I believe there can be a startup issue with straight methanol (or ethanol), but you sell something like M85 so there's some gasoline there for startup.

    Basically apply some regulation on the vehicle side to enable the competition on the fuel side, then the market will easily sort out and provide gasoline, ethanol or methanol based on costs and availability from the wells or biofuel sources.

    It’s interesting that there are solutions like burning NG in cars, that can’t get traction. The latest generation of hybrid electrics is more or less perfected technology. But Toyota can’t get consumers to pay an extra $1,000 per vehicle. They are about 1/2 the preferred green solution of BEVs. Available today cheap with proven technology.

    I’ve surmised that no one is serious about the problem as it has been framed. 5 years ago Larry David and his Hollywood bros were virtue signaling in Priuses. But now no one much cares.

    It’s all riding on the fantasy of BEVs.

    Note that ATT did some really stupid things (Direct TV) and abandoned FTTH (fiber to the home). betting it all on something new (5g). 5g will take another decade to fully sort, but FTTH could have been wrapped up 5 years ago.

    Same pattern. Give up on proven technology for the next big thing.

    Two things:

    1. Once a solution is within grasp, its simple to see that it will be a snooze. While something 10 years in the future — not so obvious.

    2. What they really see is that the the obvious solution won’t prove “that” profitable, but they can’t see that the 10 years out big thing will appear less profitable as soon as it is achievable.

    It’s something that is perplexing to me. Why proven solutions are abandoned so frequently.

  56. @SimpleSong
    Great! Every drop of oil not pumped now is a drop that will still be there for our great grandchildren, assuming we can hold the continent. And I'm going to guess that the marginal barrel, for them, will be much more valuable than the marginal barrel for us. I'm not interested in leaving them a mined-out dump.

    That was peak oil 1.0. Peak supply. The cost would be ruinous.

    Peak oil 2.0 will be peak demand. People just want something else. Even if gas is cheaper.

    The developed world have seen peak coal. And not because coal got expensive.

  57. anon[333] • Disclaimer says:
    @AnotherDad

    Making the natgas into methanol is possible but while cars are designed to all run on 10 percent ethanol now and many up to 85% , no cars on the road today are methanol ready.
     
    This is the solution.

    We have a liquid fuel infrastructure in place. The cost to have new cars capable of burning methanol, ethanol or gasoline is--i've read--pretty trivial. (Basically more stainless steel and a bit of tweaking of the software running the fuel injection.) I believe there can be a startup issue with straight methanol (or ethanol), but you sell something like M85 so there's some gasoline there for startup.

    Basically apply some regulation on the vehicle side to enable the competition on the fuel side, then the market will easily sort out and provide gasoline, ethanol or methanol based on costs and availability from the wells or biofuel sources.

    Methanol is toxic in fairly small volumes, therefore it is more complicated to handle than ethanol. Just for a start, don’t ever swallow any amount, nor get it into your eyes or even on your skin.

    https://infogalactic.com/info/Methanol#Toxicity

    Natural gas is a fine replacement for coal in baseload power plants for multiple reasons. It’s not a very good vehicle fuel, though, which is why it’s only seen in fleet vehicles such as buses.

    The full cost of lithium batteries is not discussed, because it’s Green therefore emotionally satisfying. Of course, it’s not so green lithium miners in South America. As with solar panels, there’s more involved than most people realize. Lithium battery recycling is easier than solar panel recycling, for example, but both are needed to keep lead and other metals out of water tables.

    • Replies: @anon
    Not to overstate the case for NG as a motor fuel, but it has competed with the heavily subsidized BEVs.
    Yet NG in most states is taxed as motor fuel.

    Honda made a NG version of Civic which worked well. And did make some inroads in TX/OK. https://www.avalara.com/us/en/learn/whitepapers/taxing-natural-gas-as-a-motor-fuel.html

    If burning 10,000,000 Bbl/day of oil for transportation fuel is a problem, NG with a little help could have made a difference.

    I think US fuel usage is excessive. And I'm hardly green. Just because it seems like too much.

    But TPTB aren't acting as if it is. So I'm not in favor of anything drastic. Just some minor, temporary subsidies to get it started.
    , @Anonymous
    Methanol is toxic but so is gasoline.

    NG is a great motor fuel but hard to store in vehicles. It burns clean and efficiently, producing less pollutants, etc. Gasoline is really not a great motor fuel, we use it because it's what is economically distillible from oil. Gasoline is not really one chemical, it describes a whole class of lighter hydrocarbons that vary widely whereas natural gas is methane, with other trace gases that are irrelevant as long as there aren't too many of them, many of which are valuable and are extracted from the gas and sold.

    Propane is a better vehicle fuel because it is a liquid at normal temperatures at much more manageble pressures, whereas methane needs to be stored as a cryofluid or as high pressure gas, which requires lot of volume and an expensive cylinder. But methane is what's available very cheaply and propane is a more valuable feedstock.
  58. anon[333] • Disclaimer says:

    The developed world have seen peak coal. And not because coal got expensive.

    Exactly. Just as the world reached Peak Whale Oil in the late 19th century.

    Not a lot of years ago, Wyoming open-pit coal mines were extremely competitive with the underground coal mines of West Virginia, Kentucky, etc. Safer for the miners, too. However as baseload electrical generation has switched from coal to natural gas, demand has dropped.

    https://trib.com/business/energy/two-wyoming-coal-mines-close-send-workers-home-after-bankruptcy/article_773100d1-b5b4-57d8-af49-842518b9e219.html

    At some point in the future, China will abandon coal also.

  59. anon[219] • Disclaimer says:
    @anon
    Methanol is toxic in fairly small volumes, therefore it is more complicated to handle than ethanol. Just for a start, don't ever swallow any amount, nor get it into your eyes or even on your skin.

    https://infogalactic.com/info/Methanol#Toxicity

    Natural gas is a fine replacement for coal in baseload power plants for multiple reasons. It's not a very good vehicle fuel, though, which is why it's only seen in fleet vehicles such as buses.

    The full cost of lithium batteries is not discussed, because it's Green therefore emotionally satisfying. Of course, it's not so green lithium miners in South America. As with solar panels, there's more involved than most people realize. Lithium battery recycling is easier than solar panel recycling, for example, but both are needed to keep lead and other metals out of water tables.

    Not to overstate the case for NG as a motor fuel, but it has competed with the heavily subsidized BEVs.
    Yet NG in most states is taxed as motor fuel.

    Honda made a NG version of Civic which worked well. And did make some inroads in TX/OK. https://www.avalara.com/us/en/learn/whitepapers/taxing-natural-gas-as-a-motor-fuel.html

    If burning 10,000,000 Bbl/day of oil for transportation fuel is a problem, NG with a little help could have made a difference.

    I think US fuel usage is excessive. And I’m hardly green. Just because it seems like too much.

    But TPTB aren’t acting as if it is. So I’m not in favor of anything drastic. Just some minor, temporary subsidies to get it started.

  60. I learn more about business and economics from UNZ commenters than from WSJ Forbes and Economist.

  61. @J1234

    ‘Broken system’ starves U.S. oil boom of immigrant workers
    -Andrew Hay
     
    Better watch it, progressive journalist. Greta is watching.

    https://www.youtube.com/watch?v=XhybAEYGnOc

    She shouldn’t be wearing that bright colored top. True environmentalists wear only the natural colored cotton wool or linen not even bleached.

    Dingy unbleached white or ecru is the only acceptable color for an environmentalist.

    It’s a big deal among the true believers. First they came out against leather. Now they’re against their plastic shoes belts wallets and purses. Hemp and soy fabric is the latest fad.

  62. @J.Ross
    Right now the confected UAW strike is strangling downstream suppliers. The good news is that more and more putative Democrats will never vote Democrat again.

    They still make cars in America? Didn’t realize.

  63. Anonymous[427] • Disclaimer says:
    @anon
    Methanol is toxic in fairly small volumes, therefore it is more complicated to handle than ethanol. Just for a start, don't ever swallow any amount, nor get it into your eyes or even on your skin.

    https://infogalactic.com/info/Methanol#Toxicity

    Natural gas is a fine replacement for coal in baseload power plants for multiple reasons. It's not a very good vehicle fuel, though, which is why it's only seen in fleet vehicles such as buses.

    The full cost of lithium batteries is not discussed, because it's Green therefore emotionally satisfying. Of course, it's not so green lithium miners in South America. As with solar panels, there's more involved than most people realize. Lithium battery recycling is easier than solar panel recycling, for example, but both are needed to keep lead and other metals out of water tables.

    Methanol is toxic but so is gasoline.

    NG is a great motor fuel but hard to store in vehicles. It burns clean and efficiently, producing less pollutants, etc. Gasoline is really not a great motor fuel, we use it because it’s what is economically distillible from oil. Gasoline is not really one chemical, it describes a whole class of lighter hydrocarbons that vary widely whereas natural gas is methane, with other trace gases that are irrelevant as long as there aren’t too many of them, many of which are valuable and are extracted from the gas and sold.

    Propane is a better vehicle fuel because it is a liquid at normal temperatures at much more manageble pressures, whereas methane needs to be stored as a cryofluid or as high pressure gas, which requires lot of volume and an expensive cylinder. But methane is what’s available very cheaply and propane is a more valuable feedstock.

    • Replies: @anon
    Methanol is toxic but so is gasoline.

    One is quite a bit more toxic than the other. 10 to 15 milliliters is not a lot of liquid.

    . As little as 10 mL of pure methanol when drunk is metabolized into formic acid, which can cause permanent blindness by destruction of the optic nerve. 15 mL is potentially fatal.
     
  64. anon[320] • Disclaimer says:
    @Anonymous
    Methanol is toxic but so is gasoline.

    NG is a great motor fuel but hard to store in vehicles. It burns clean and efficiently, producing less pollutants, etc. Gasoline is really not a great motor fuel, we use it because it's what is economically distillible from oil. Gasoline is not really one chemical, it describes a whole class of lighter hydrocarbons that vary widely whereas natural gas is methane, with other trace gases that are irrelevant as long as there aren't too many of them, many of which are valuable and are extracted from the gas and sold.

    Propane is a better vehicle fuel because it is a liquid at normal temperatures at much more manageble pressures, whereas methane needs to be stored as a cryofluid or as high pressure gas, which requires lot of volume and an expensive cylinder. But methane is what's available very cheaply and propane is a more valuable feedstock.

    Methanol is toxic but so is gasoline.

    One is quite a bit more toxic than the other. 10 to 15 milliliters is not a lot of liquid.

    . As little as 10 mL of pure methanol when drunk is metabolized into formic acid, which can cause permanent blindness by destruction of the optic nerve. 15 mL is potentially fatal.

    • Replies: @Anonymous
    As every racing aficionado know methanol has a smell when burned that can be pleasant in small doses but gets oppressive at high levels. If a lot of cars were burning methanol on the street cities could get pretty rank, too. Nat gas and propane themselves are odorless when burned but the odorants in both have a distinctive and unpleasant smell. Propane burning engines smell like babyshit to me. But it isn't that strong.


    Old vintage racing cars usually had a distinctive smell because different engines and teams used different formulas for fuel in those classes that allowed it. Mercedes famously used nitrobenzine in its fuel mix in the 50s which made the GP cars smell like shoe polish. Castor oil had mostly been superceded by the 1950s for engine lube but some fuel mixes had a dollop of it too and the fumes would have the same effect as swallowing it. Most fuel mixes had methanol, acetone, aviation gasoline, nitromethane, and who knows what else with methanol and aviation gas comprising the main ingredients. Actually pump auto gas has higher base octane rating than avgas-which derives all of its antiknock qualities from the prodigal TEL levels used-but avgas was more consistent.
  65. Anonymous[427] • Disclaimer says:
    @anon
    Methanol is toxic but so is gasoline.

    One is quite a bit more toxic than the other. 10 to 15 milliliters is not a lot of liquid.

    . As little as 10 mL of pure methanol when drunk is metabolized into formic acid, which can cause permanent blindness by destruction of the optic nerve. 15 mL is potentially fatal.
     

    As every racing aficionado know methanol has a smell when burned that can be pleasant in small doses but gets oppressive at high levels. If a lot of cars were burning methanol on the street cities could get pretty rank, too. Nat gas and propane themselves are odorless when burned but the odorants in both have a distinctive and unpleasant smell. Propane burning engines smell like babyshit to me. But it isn’t that strong.

    Old vintage racing cars usually had a distinctive smell because different engines and teams used different formulas for fuel in those classes that allowed it. Mercedes famously used nitrobenzine in its fuel mix in the 50s which made the GP cars smell like shoe polish. Castor oil had mostly been superceded by the 1950s for engine lube but some fuel mixes had a dollop of it too and the fumes would have the same effect as swallowing it. Most fuel mixes had methanol, acetone, aviation gasoline, nitromethane, and who knows what else with methanol and aviation gas comprising the main ingredients. Actually pump auto gas has higher base octane rating than avgas-which derives all of its antiknock qualities from the prodigal TEL levels used-but avgas was more consistent.

  66. @AnotherDad

    The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We’ve gone catabolic; a society in this condition cannot help but do the very things that are destroying it.
     
    As usual so much noise.

    First off there is a free enough market. This is not USG energy. A lot of small firms are involved across the drilling industry. If they can't sell their oil+gas stream to cover their costs--bankrupt.

    Secondly, "we have to pursue them" is just ridiculous. What shale production has replaced is imports. Precisely what we were using and would continue to be using if they were cheaper. Domestic shale could have been a boondoggle that did not pan out in energy terms, but in no way was it required. People did it for the age old reason--making money. I.e. they thought it would pencil out.

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.
     
    Do you think it is 1910?

    Drillers flared off gas in the early days when there was no market or where there is no infrastructure. You see it in the middle east, because of the transport issue--the LNG thing has not been able to take off.

    But the American shale projects are specifically designed to get at the gas--make no sense otherwise--and are hooked up to our natural gas pipeline network.

    Hearing an American describe natural gas as "crap" is bizarre. Natural gas is almost the perfect energy source. It's energy density is in a sweet spot. It transports easily. It burns cleanly. It is perfect for heating (dominates US home heating). Perfect for electric power generation--it has far surpassed coal and accounts for over a third of US power generation now. Perfect for industrial heating and processing. Easy to use for vehicle transport. The only--minor--difficulty is the need to do some chemistry to build longer hydrocarbon chains for aircraft fuel.

    I'm a big proponent of nuclear energy, including pursuing the next generation technologies --breeder and thorium cycle. But if we had an inexhaustible source of natural gas ... there would be no need. It's the ideal energy. You'd run your economy on natural gas, no problem.


    All your comment amounts to is the reality that the fracking guys have been *so successful* hitting these (easiest, best) shale formations that they've driven down the price of gas tremendously, driving down financial return--not energy return--and bankrupting a bunch of players.

    Is chipmaking a failure too, because prices per gigaflop have tumbled? Are farmers a failure when there is a bumper crop and prices tumble?

    We have these amazingly low energy prices--yes for natural gas prices and gasoline at the pump--comparable in real terms to when i was a kid in the 60s, then have "intelligent" people claim that the last decade's big energy effort is real a net energy burning failure. LOL.

    You can “LOL” all you want to, Daddio, but there’s something you need to be aware of.

    The shale industry loses money. This is a fact in evidence. It is not opinion, speculation, or conjecture on my part. Whatever else you want to say about it, this is the bottom line. What the frackers are doing cannot be done profitably.

    The reason it is being done at all is because of financial repression. Fracking companies currently borrow at interest rates that are unusually low in nominal terms and negative in real terms. There is all kinds of stuff you can do as long as you can borrow money and not really have to pay it back. It’s like the proverbial extraction of gold from sea water.

    And if there were some compelling reason to get the gold above and beyond its monetary worth, then I would agree that maybe we should spend whatever it takes to go after it. But there is a reason why borrowing and spending on unprofitable ventures has not and can never be the royal road to wealth creation, and if you cannot see what that reason is then I’m not sure what to tell you.

    • Replies: @AnotherDad

    The shale industry loses money. This is a fact in evidence. It is not opinion, speculation, or conjecture on my part. Whatever else you want to say about it, this is the bottom line. What the frackers are doing cannot be done profitably.
     
    ID, running through your comments seems--to someone not inside your brain--to be this confusion between the financial profitability/efficiency and technical or energy profitability/feasability.

    They are simply not the same. A whole lot fracking ventures have gone bankrupt lost money, but this isn't because fracking "doesn't" work or "is energy negative". It is because fracking was so successful that energy prices have tumbled. (Made worse by the pipeline bottlenecks FPD72 notes.)

    Understanding this is not difficult. Saying "commodities" or "boom and bust" ought to cover it. Farming, where one's technical efforts can be excellent, and be rewarded with a bumper crop ... only to see everyone else having a bumper corp and prices tumble is the 10,000 year old example.

    A lot of people--me included--thought commodities, energy in particular would do well, in the "quantitative easing" cheap money environment you reference. But precisely because shale production has been so successful, this hasn't happened, but rather the reverse--more money, yet cheaper energy prices!

    This is obvious from prices at the pump and for natural gas, from conversion of power to natural gas, from the decline in US imports, from North Dakota's huge budget surplus, from the shuttering of higher cost alternatives like the Alberta tar sands or deep water. Shale is producing lots and lots of energy ... keeping prices down. That's been great for the US economy--lots of money left in people's pockets and on firm's balance sheets for dividends or reinvestment. But it's bankrupted lots of people in the oil patch. Boom and bust.
  67. @anon
    It's more "inflation is going to ruin financial assets".

    Everyone expected blowback from Fed liquidity and screwing around. Which hasn't happened.

    As far as goldbugs vs more moderate cash hoarders, the later has been m ore popular. With investors saving themselves with TINA and FOMO. There Is No Alternative. and Fear of Missing Out

    So no real damage. Warren Buffett is #1 example of post 2008 cash hoarding. He keeps an extra $100 B. Just in case.

    The real question is what happened to inflation. The answer is Foreign Workers for labor inflation and technology for commodity inflation. And the deflationary influence of technology. Like software which has a marginal cost of production approaching zero.

    But it still isn't clear how deflationary pressures have kept costs in relative equilibrium. It's a mystery. As well as the limits of stimulus. IE deficit spending.

    The come to Jesus moment for boomers wasn't 2008, but the Volker induced bond collapse of late Carter early Reagan.

    Nobody can really get their arms around Euopean Soverign's negative interest rates.

    Fracking has been great for the country's economy and hell for investors. But that is what everybody already knows about capital intensive investments in commodities and commodity like products (eg automobiles). It's a feature, not a bug.

    So no real damage. Warren Buffett is #1 example of post 2008 cash hoarding. He keeps an extra $100 B. Just in case.

    Yes. Note this recent article: https://www.ccn.com/warren-buffett-no-longer-at-the-top-of-his-game-slams-billion-dollar-money-manager/

    I remember seeing articles like that in the years leading up to the ~2001 tech crash.

  68. @Dagny
    When a business owner brays "I can't find workers to hire", I say "At what wage?". Business owner, increase your wage offer until you get people pounding on your door.

    Speaking of wages, I went to a McDonalds near Columbus Circle in NYC on Saturday. A Big Mac was $9.87, small fries were $2.99, etc. I mentioned this to some of my liberal friends and said that perhaps the new $15/hour minimum wage had something to to with it. They pooh poohed the idea, blaming it on high rent, etc. I shut up after that.

    • Replies: @donvonburg
    In a small town labor is a substantial fraction of the cost of running a McDonald's. In Manhattan, it is not-the 'nut' on the mortgage payment is the bigger cost. If anything $15/hr for a minimum wage is too low in Manhattan, if you accept the premise workers in a city or borough should be able to live there, or at least near by.

    On the other hand, in Keokuk, Iowa, $15 an hour makes it uneconomic to run most small businesses.
    You can still get an apartment for $400 a month out there. However, a new pickup is thirty grand wherever you go, because of chicken tax and federal economy, safety, emissions and CAFE regulations. You could buy a 1980s technology new pickup for ten thousand if they were allowed for sale, and the difference in emissions would not matter in Keokuk. Our church bought a new pickup truck for a congregation in Central America in Mexico for something like $8500 not very many years ago. The safety stuff arguably saves lives, but not really since what kills people in rural areas is transit time to the trauma center and/or abject jackass driving, which new cars with ABS actually encourage.
  69. @Intelligent Dasein
    You can "LOL" all you want to, Daddio, but there's something you need to be aware of.

    The shale industry loses money. This is a fact in evidence. It is not opinion, speculation, or conjecture on my part. Whatever else you want to say about it, this is the bottom line. What the frackers are doing cannot be done profitably.

    The reason it is being done at all is because of financial repression. Fracking companies currently borrow at interest rates that are unusually low in nominal terms and negative in real terms. There is all kinds of stuff you can do as long as you can borrow money and not really have to pay it back. It's like the proverbial extraction of gold from sea water.

    And if there were some compelling reason to get the gold above and beyond its monetary worth, then I would agree that maybe we should spend whatever it takes to go after it. But there is a reason why borrowing and spending on unprofitable ventures has not and can never be the royal road to wealth creation, and if you cannot see what that reason is then I'm not sure what to tell you.

    The shale industry loses money. This is a fact in evidence. It is not opinion, speculation, or conjecture on my part. Whatever else you want to say about it, this is the bottom line. What the frackers are doing cannot be done profitably.

    ID, running through your comments seems–to someone not inside your brain–to be this confusion between the financial profitability/efficiency and technical or energy profitability/feasability.

    They are simply not the same. A whole lot fracking ventures have gone bankrupt lost money, but this isn’t because fracking “doesn’t” work or “is energy negative”. It is because fracking was so successful that energy prices have tumbled. (Made worse by the pipeline bottlenecks FPD72 notes.)

    Understanding this is not difficult. Saying “commodities” or “boom and bust” ought to cover it. Farming, where one’s technical efforts can be excellent, and be rewarded with a bumper crop … only to see everyone else having a bumper corp and prices tumble is the 10,000 year old example.

    A lot of people–me included–thought commodities, energy in particular would do well, in the “quantitative easing” cheap money environment you reference. But precisely because shale production has been so successful, this hasn’t happened, but rather the reverse–more money, yet cheaper energy prices!

    This is obvious from prices at the pump and for natural gas, from conversion of power to natural gas, from the decline in US imports, from North Dakota’s huge budget surplus, from the shuttering of higher cost alternatives like the Alberta tar sands or deep water. Shale is producing lots and lots of energy … keeping prices down. That’s been great for the US economy–lots of money left in people’s pockets and on firm’s balance sheets for dividends or reinvestment. But it’s bankrupted lots of people in the oil patch. Boom and bust.

    • Replies: @Intelligent Dasein
    No, I'm not confused.

    Commodity prices always nosedive in a cheap money environment because you can build out more capacity than you ever would have done before. Using your 10,000 year old example, cheap money allows you to so some totally unprofitable and stupid farming like, for example, building a canal to irrigate a salt flat to rinse out all the salt and turn it into a wheat field. Then you can bring all the extra wheat to market and tank wheat prices and say, "Look at how successful these newfangled salt farmers have been in producing the wheat that's feeding our world!" The salt farmers aren't making any money but it doesn't matter because they just endlessly roll over their debt, and wheat prices are down so the consumer benefits and everybody wins, right?

    Wrong. The salt farm still consumes more energy and labor and resources than the equivalent of what it produces in wheat. It is a net energy loser for the society as a whole, as is fracking. The losses are not readily apparent because they manifest themselves in a very socialized and generalized decrease in the standard of living that progresses by slow increments. This is exactly the kind of economy we're living in today. We "pay" for shale oil not at the pump, but everywhere else.

    If borrowing to fund money-losing capacity expansions in order to lower consumer prices really worked, then we ought to just take it to the extreme. Let's build hydroponic wheat biodomes in Antarctica while we're at it. Just think of all that unused real estate, and look at how much we could grow with 6 months of uninterrupted sunlight. It's easy to see that in order for this to work, wheat prices would have to be many times what they are now and we would all be struggling to pay for food. Or you could do what the frackers do, sell the wheat below cost and socialize your financial losses. The end result is impoverishment just the same.
  70. @Jim Don Bob
    Speaking of wages, I went to a McDonalds near Columbus Circle in NYC on Saturday. A Big Mac was $9.87, small fries were $2.99, etc. I mentioned this to some of my liberal friends and said that perhaps the new $15/hour minimum wage had something to to with it. They pooh poohed the idea, blaming it on high rent, etc. I shut up after that.

    In a small town labor is a substantial fraction of the cost of running a McDonald’s. In Manhattan, it is not-the ‘nut’ on the mortgage payment is the bigger cost. If anything $15/hr for a minimum wage is too low in Manhattan, if you accept the premise workers in a city or borough should be able to live there, or at least near by.

    On the other hand, in Keokuk, Iowa, $15 an hour makes it uneconomic to run most small businesses.
    You can still get an apartment for $400 a month out there. However, a new pickup is thirty grand wherever you go, because of chicken tax and federal economy, safety, emissions and CAFE regulations. You could buy a 1980s technology new pickup for ten thousand if they were allowed for sale, and the difference in emissions would not matter in Keokuk. Our church bought a new pickup truck for a congregation in Central America in Mexico for something like $8500 not very many years ago. The safety stuff arguably saves lives, but not really since what kills people in rural areas is transit time to the trauma center and/or abject jackass driving, which new cars with ABS actually encourage.

  71. @AnotherDad

    The shale industry loses money. This is a fact in evidence. It is not opinion, speculation, or conjecture on my part. Whatever else you want to say about it, this is the bottom line. What the frackers are doing cannot be done profitably.
     
    ID, running through your comments seems--to someone not inside your brain--to be this confusion between the financial profitability/efficiency and technical or energy profitability/feasability.

    They are simply not the same. A whole lot fracking ventures have gone bankrupt lost money, but this isn't because fracking "doesn't" work or "is energy negative". It is because fracking was so successful that energy prices have tumbled. (Made worse by the pipeline bottlenecks FPD72 notes.)

    Understanding this is not difficult. Saying "commodities" or "boom and bust" ought to cover it. Farming, where one's technical efforts can be excellent, and be rewarded with a bumper crop ... only to see everyone else having a bumper corp and prices tumble is the 10,000 year old example.

    A lot of people--me included--thought commodities, energy in particular would do well, in the "quantitative easing" cheap money environment you reference. But precisely because shale production has been so successful, this hasn't happened, but rather the reverse--more money, yet cheaper energy prices!

    This is obvious from prices at the pump and for natural gas, from conversion of power to natural gas, from the decline in US imports, from North Dakota's huge budget surplus, from the shuttering of higher cost alternatives like the Alberta tar sands or deep water. Shale is producing lots and lots of energy ... keeping prices down. That's been great for the US economy--lots of money left in people's pockets and on firm's balance sheets for dividends or reinvestment. But it's bankrupted lots of people in the oil patch. Boom and bust.

    No, I’m not confused.

    Commodity prices always nosedive in a cheap money environment because you can build out more capacity than you ever would have done before. Using your 10,000 year old example, cheap money allows you to so some totally unprofitable and stupid farming like, for example, building a canal to irrigate a salt flat to rinse out all the salt and turn it into a wheat field. Then you can bring all the extra wheat to market and tank wheat prices and say, “Look at how successful these newfangled salt farmers have been in producing the wheat that’s feeding our world!” The salt farmers aren’t making any money but it doesn’t matter because they just endlessly roll over their debt, and wheat prices are down so the consumer benefits and everybody wins, right?

    Wrong. The salt farm still consumes more energy and labor and resources than the equivalent of what it produces in wheat. It is a net energy loser for the society as a whole, as is fracking. The losses are not readily apparent because they manifest themselves in a very socialized and generalized decrease in the standard of living that progresses by slow increments. This is exactly the kind of economy we’re living in today. We “pay” for shale oil not at the pump, but everywhere else.

    If borrowing to fund money-losing capacity expansions in order to lower consumer prices really worked, then we ought to just take it to the extreme. Let’s build hydroponic wheat biodomes in Antarctica while we’re at it. Just think of all that unused real estate, and look at how much we could grow with 6 months of uninterrupted sunlight. It’s easy to see that in order for this to work, wheat prices would have to be many times what they are now and we would all be struggling to pay for food. Or you could do what the frackers do, sell the wheat below cost and socialize your financial losses. The end result is impoverishment just the same.

  72. @Intelligent Dasein

    But here and now oil is coming up out of shale and helping power our world.
     
    No, not really. What's coming up out of the shale is a whole lot of natural gas and ultralight hydrocarbons---basically cigarette lighter fluid. This stuff cannot be refined into usable gasoline without first being blended with some heavy, heavy fuel (apologies, Mr. Knopfler), hence the need for Alberta tar sands and Venezuelan crude (neither of which are very reliable, by the way).

    The natural gas is so plentiful that it cannot be sold profitably. In fact, there was a strange moment last summer when the wholesale price of natural gas actually went negative, meaning producers were paying pipeline operators to take the crap off their hands. A lot of it is unwanted at any price and is simply vented into the atmosphere or flared off at the wellhead.

    The reason the gas is so overproduced is because it now takes a gigantic amount of drilling and fracking to coax up the liquid hydrocarbons which were the main objective. Judging by the cash burn rate of the fracking industry as a whole, it costs more to produce this oil than the oil can be sold for, outside of a few very select sweet spots. On an industry-wide accounting, shale loses money.

    But here is the kicker. Since energy is fungible and is reflected in the price of everything else, the money that shale loses actually represents energy that was already harvested and consumed, and is now being put to no good use and essentially wasted on money-losing boondoggles. The net result of this activity, after cancelling out all the like terms, is that shale is really de-powering the world. The energy and resources that went into shale production never would have been allocated there by the free market because their use there is senseless.

    But the necessity for liquid fuels to power our infrastructure means that we have to pursue them even if the end result is a loss. We've gone catabolic; a society in this condition cannot help but do the very things that are destroying it.

    The horizon of West Texas is illuminated by the light of 1000s of flares at night.

    Earlier this year I was involved in the final implementation of a massive NGL pipeline going into Mexico. They paid $$$$$$.

    Right now, however, I’m unemployed. Tons of lays offs, few jobs out there are so flooded you can’t get a call back.

    There is no labor shortage. Ethnocentric Mexican just wants to import more of his kin.

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