For a concise, readable summary of iTulip concepts developed over the past 16 years and a vision of a challenging next decade and how to navigate it, read Eric Janszen's book "Post Catastrophe Economy".
Join the discussion of today's events with a wide range of professionals with an interest in economics and finance.
Register to join our 50,000 plus member registered community from 78 countries today.
Subscribe to iTulip Select for access to the longest running, deep, accurate, and unvarnished macro economic trends analysis and forecasting available, since 1998.
If this is your first visit, be sure to
check out the FAQ by clicking the
link above. You may have to register
before you can post: click the register link above to proceed. To start viewing messages,
select the forum that you want to visit from the selection below.
It does not matter if the sanctions are lifted. There is absolutely no possibility of Iran adding 1 mm bbls/d of export oil to world markets in a "few months", and perhaps not even in a few years. Sanctions or access to money aren't the issues - in an era of abundant, nearly free money, the Chinese would long ago have already flooded Iran with cash in exchange for oil projects.
In addition to gobs of money it also takes a secure, stable, enforcable legal structure for foreign investment. The internal politics of Iran all by itself is a huge impediment; it will take years to negotiate a contract to be allowed to invest in any of their petroleum developments.
Fits alongside the same sort of oil announcement nonsense I wrote about here:
In in terms of Iran, do you reckon they are effectively long-gaming it?
When it comes to the Persians versus the Saudis, it's no contest. Just look at their respective histories.
Saudi is viewed contemptuously even by parts of the Arab community. They have only on thing they can use to solve a problem - money. Iran has far, far more to draw on.
When it comes to the Persians versus the Saudis, it's no contest. Just look at their respective histories.
Saudi is viewed contemptuously even by parts of the Arab community. They have only on thing they can use to solve a problem - money. Iran has far, far more to draw on.
Please, for those of us interested in your views; elaborate?
8 months after the above post lots of PE money moving in to acquire upstream oil assets - they have the advantage they don't have to go through the quarterly results reporting nonsense to the market and can take a longer term view.
And despite the fall in the Loonie and Canada's significant petroleum technology track record, the fundamentally uncompetitive post-GFC Canadian economy is headed south led by a still collapsing oil patch.
Do you think the PE money is a bit early to start acquiring things? While there have been a lot of layoffs, I haven't seen a bloodbath in the paper markets yet. I'm wondering if paper assets are still priced quite a bit higher than they should be due to the buy-the-dip mentality caused by multiple rounds of QE and over seven years of ZIRP.
When the crude oil price dropped below $60/bbl, I thought for certain that even the IOCs would take a very serious hit, say 40%, on their stock prices. Stuff like Chesapeake Energy stock has been hit pretty hard but I was expecting the stock to go to zero. To date, I am unaware of any company of size going bust or seek shelter in a fire-sale acquisition, which I thought would happen.
Please, for those of us interested in your views; elaborate?
I believe he (not to answer for GRG) is referring to the historical nature of the Persian civilization vs. the very short "Saudi nation" civilization. Saudi Arabia was always and will always be a collection of tribes that internally fight.
Persia on the other hand has a cultural and historical "Persian" identity that has not been conquered in 2700 years even though they have existed in many many other empires (Greek, Mongol, Muslim-Arab etc).
Many Persians to this day, while religiously Shia Muslim still continue to wear this Zoroastarian symbol, the Faravahar:
The Faravahar stands for Good Deeds, Good Words, Good Thoughts; There is only one way in the world and that way is truth.
You may recognize a common car company name today in the accompanying article "Mazda." The god in Zoroastrianism is named Ahura Mazda. The Japanese man who started the Mazda car company was basically an omnist of religion and named his car company after Ahura Mazda. The Mazda symbol is a representation of the Faravahar.
We can assert that what we know of as the Saudi Kingdom may not exist in another hundred years but we can safely assume that the unique cultural and ethnic identity of Persians will.
Do you think the PE money is a bit early to start acquiring things? While there have been a lot of layoffs, I haven't seen a bloodbath in the paper markets yet. I'm wondering if paper assets are still priced quite a bit higher than they should be due to the buy-the-dip mentality caused by multiple rounds of QE and over seven years of ZIRP.
When the crude oil price dropped below $60/bbl, I thought for certain that even the IOCs would take a very serious hit, say 40%, on their stock prices. Stuff like Chesapeake Energy stock has been hit pretty hard but I was expecting the stock to go to zero. To date, I am unaware of any company of size going bust or seek shelter in a fire-sale acquisition, which I thought would happen.
I believe he (not to answer for GRG) is referring to the historical nature of the Persian civilization vs. the very short "Saudi nation" civilization. Saudi Arabia was always and will always be a collection of tribes that internally fight.
Persia on the other hand has a cultural and historical "Persian" identity that has not been conquered in 2700 years even though they have existed in many many other empires (Greek, Mongol, Muslim-Arab etc).
Many Persians to this day, while religiously Shia Muslim still continue to wear this Zoroastarian symbol, the Faravahar:
The Faravahar stands for Good Deeds, Good Words, Good Thoughts; There is only one way in the world and that way is truth.
You may recognize a common car company name today in the accompanying article "Mazda." The god in Zoroastrianism is named Ahura Mazda. The Japanese man who started the Mazda car company was basically an omnist of religion and named his car company after Ahura Mazda. The Mazda symbol is a representation of the Faravahar.
We can assert that what we know of as the Saudi Kingdom may not exist in another hundred years but we can safely assume that the unique cultural and ethnic identity of Persians will.
Thank you, very helpful. A few years ago Channel 4 TV here in the UK produced a series on Iran that was also very informative. I take every chance to keep up to date with others opinion of their ongoing internal development. It is such a pity that the last few decades have created such a strong religious background to the principles you have illustrated here.
Thank you, very helpful. A few years ago Channel 4 TV here in the UK produced a series on Iran that was also very informative. I take every chance to keep up to date with others opinion of their ongoing internal development. It is such a pity that the last few decades have created such a strong religious background to the principles you have illustrated here.
Another POV: Iran makes it's own fighter jets, cars, and a lot of other things, aside, of course of nuclear technology. I can hardly recall Saudi Arabia producing anything except for managing it's oil industry.
Thanks. The gist of that article is echoing what I think which I'm not entirely certain is correct. The article is saying that 2016 could be the year that a lot of E&P companies finally start to go bust and that private equity has $100bn waiting to buy up things. It also states that Anadarko Petroleum has already been outbid in some asset sales by PE, possibly a sign of buy-the-dip mentality.
The article doesn't make clear what kind of assets were up for sale so it remains to be seen if PE is able to run the businesses or manage the leases they've acquired; or if they're just waiting to flip them. I do not believe that these businesses in E&P can be run by the typical PE-style playbook of asset stripping and then floating the carcass on the public markets. They actually have to develop the assets (assuming they are land leases) and I wonder if they have the expertise to successfully do so.
Thanks. The gist of that article is echoing what I think which I'm not entirely certain is correct. The article is saying that 2016 could be the year that a lot of E&P companies finally start to go bust and that private equity has $100bn waiting to buy up things. It also states that Anadarko Petroleum has already been outbid in some asset sales by PE, possibly a sign of buy-the-dip mentality.
The article doesn't make clear what kind of assets were up for sale so it remains to be seen if PE is able to run the businesses or manage the leases they've acquired; or if they're just waiting to flip them. I do not believe that these businesses in E&P can be run by the typical PE-style playbook of asset stripping and then floating the carcass on the public markets. They actually have to develop the assets (assuming they are land leases) and I wonder if they have the expertise to successfully do so.
The PE crowd are buying upstream production assets. They are outbidding (so far) companies such as Anadarko and Concho for three reasons: 1) There continues to be a lot of money looking for a return, and domestic energy is viewed by some investors as "cheap"; 2) PE doesn't have to deal with the quarterly earnings reporting cycle that publicly traded E&P is subject to, so any premium the pay won't attract the same scrutiny; and 3) PE is overinvested in now seriously underperforming (and illiquid) oil field service companies and one of the ways they are justifying the valuations they are paying for upstream assets is the usual synergy argument.
3) PE is overinvested in now seriously underperforming (and illiquid) oil field service companies and one of the ways they are justifying the valuations they are paying for upstream assets is the usual synergy argument.
isn't this usually described as throwing good money after bad?
Just to side track. I did a calculation on how much natural gas is required just to replace all the coal used by coal power stations in the US.
If my calculation is not wrong (please correct if I'm wrong, I'm not exactly an engineer), the current estimated total NG reserves of 10 trillion cubic meters or 350 trillion cubic feet will only last a couple of years.
1 year US coal consumption by power sector (2014) : 850,000,000 tons = 1.7 trillion pounds of coal
So the 350 trillion cubic feet of US NG reserves will last only20 years if all of it is used to generate electricity.
20 years is plenty of time to gear up more nuclear, solar and wind capacity, greatly improve efficiency, and potentially develop better energy storage.
20 years is plenty of time to gear up more nuclear, solar and wind capacity, greatly improve efficiency, and potentially develop better energy storage.
Also time to make meaningful strides in harnessing the power of hydrogen, (fuel cell technology). Toyota is completely committed to this direction. The Mirai is arriving in the US next year. Looks like a nice car.
Tweet
Comment