Thursday, February 26, 2015

Houston, You Have a Fucking Problem

The stored supply of U.S. crude


The weekly production of U.S. crude
Highest level since 1973


This is demand (red line) with the price of West Texas Intermediate (black line)
This is for all of the denialists who have to believe that this isn't a demand problem

According to this chart, if exogenous demand hasn't fallen, then the U.S. elasticity of demand would have to be negative i.e. lower prices make people want to consume less. Which is total fucking bullshit.


So far, the effects of low oil prices has been to kill future oil exploration projects, measuring in the trillions of dollars. However, short-term, daily oil production has steadily increased as oil suppliers attempt to offset low prices with increased volume, to maintain overall revenue and "maintain market share". A strategy that works great when one entity tries it, but fails catastrophically when everyone tries it.

Kind of like outsourcing.