Dodgy petroleum deal covers up gross and treasonous negligence by the Morrison govt

[Power Raid]

OPEC/Russia have hammered US oil.
China has hammered every other part of the US economy with CoVid.
Trump is voluntarily giving up US control of international institutions.

New World Order?

the US will dominate the globe for another century and come out of this down turn setting themselves up for the next generation of two. So don't worry too much about world order in our life time.

Let's remember china can't survive with a weak US but the US can survive without china. Russia will definitely be hurt and down turns like this can topple presidents. Iran, Iraq, Russia, Saudi and China will all feel social unrest. Whether that translates to a change in leader as we see in Oz, UK and US at some stage, only time will tell.

 

[Power Raid]

I'm still trying to work out what the "gross and treasonous negligence" refers to?

gross is something that is yucky

and treasonous is a tree that loses its leaves

negligence is bras, underwear and other girlie stuff

 

[Number37]

the US will dominate the globe for another century and come out of this down turn setting themselves up for the next generation of two. So don't worry too much about world order in our life time.

Let's remember china can't survive with a weak US but the US can survive without china. Russia will definitely be hurt and down turns like this can topple presidents. Iran, Iraq, Russia, Saudi and China will all feel social unrest. Whether that translates to a change in leader as we see in Oz, UK and US at some stage, only time will tell.

You reckon Americans (or anyone) will pay $5000 for a Iphone?

 

[Power Raid]

You reckon Americans (or anyone) will pay $5000 for a Iphone?

no

but it is easy to find another manufacturing base be it vietnam, indo, india etc who have already been taking business from china due to being lower cost bases to operate. further the increase in privacy laws will see china a "no go" for western business, due to the china govt controlled internet.

So iphones will be cheaper as production leaves china

 

[HairyO]

You reckon Americans (or anyone) will pay $5000 for a Iphone?

Is China the only place which can make cheap goods and everywhere else is 5 times as expensive?

If the net outcome is people buy new mobile phones half as often but pay twice as much does it really impact on the global economy?

I seem to recall the world surviving for most of my life without having to buy a new mobile phone every 18 months.

 

[Number37]

Is China the only place which can make cheap goods and everywhere else is 5 times as expensive?

If the net outcome is people buy new mobile phones half as often but pay twice as much does it really impact on the global economy?

I seem to recall the world surviving for most of my life without having to buy a new mobile phone every 18 months.

Yes.
Yes.

 

[HairyO]

Yes.
Yes.

You really need your slave labour eh?

 

[Bollox]

I learnt a new word today. Mega-contango.

Apparently Goldman Sachs are saying that oil prices will continue to fall. That's a pretty good buy signal for me. The oil companies are 'too big to fail'. It will be another area that governments throw billions of dollars at.

yeah analysts and academics luv fancy terms. Simply means the spot price goes way below the next contract. Not uncommon across all markets. People forget this is the way virtually all major commodities around the world have been traded since the ancient greeks sold their sardines forward at an agreed price. When there's a huge glut of sardines and no one can store them, the price goes to stupid low levels for v short periods at the contract expiry.
Happens occasionally in Interest Rate rollovers (Jun Sept Dec Mar) as well as commodities.

The big thing (perhaps only thing) it may be signalling is that the world is now completely FULL. Noone could take the risk of going to delivery on that May contract because there is simply nowhere to store it anymore. All markets warehouse for price stabilisation, but when you have no way to store it anymore it will cost more for the storage than to buy it. Oil producing countries have avoided screwing off the taps as much as possible, but time is marching on and wont be long now I reckon before they get TRULY serious instead of playing around with reduced supply.

Its nothing we haven't seen before even in relatively recent times, and the price will stabilise. Has been a fairly orderly fall in price, but the open market is now putting its foot down. You cannot keep producing lots of band aids if no one ever gets a cut.

Most think in terms of the oil companies, but they will be fine in the long haul and experienced at it....its the nations relying upon revenue from oil that get screwed. Small oil co's/producers will cop a big shakeout and many go to the wall if they have high production costs, and exploration halts will be announced. We are ok in Oz, though the Gas price will of course cause us a drop in revenue somewhat.

Its actually a benefit for the world coming out of this. Over the last 20yrs many nations have put extraordinary monies into infrastucture to assist delivery to market. Competition has never been fiercer and they have been fighting and muscling up for market access. Cheaper oil (cheaper energy overall) can only be good as we come out the other side of this unexpected downturn.

Bizarre isn't it...doesn't seem long ago when some "experts" told us we would run out of oil. Many even predicted by NOW. Not even close, and Natural Gas looks a good energy source for another 50-100yrs as we transition to next generation sources whatever they might be.

Should remain bearish for quite awhile to come, but watch the more distant months on the curve to see what the world is truly expecting.
Hard to believe the way the worlds media deliberately ignored the reality of a whacko contract expiry to promote a clickbait version of it. Looks great doesn't it …"OMG NEGATIVE OIL PRICE !".

 

[Power Raid]

yeah analysts and academics luv fancy terms. Simply means the spot price goes way below the next contract. Not uncommon across all markets. People forget this is the way virtually all major commodities around the world have been traded since the ancient greeks sold their sardines forward at an agreed price. When there's a huge glut of sardines and no one can store them, the price goes to stupid low levels for v short periods at the contract expiry.
Happens occasionally in Interest Rate rollovers (Jun Sept Dec Mar) as well as commodities.

The big thing (perhaps only thing) it may be signalling is that the world is now completely FULL. Noone could take the risk of going to delivery on that May contract because there is simply nowhere to store it anymore. All markets warehouse for price stabilisation, but when you have no way to store it anymore it will cost more for the storage than to buy it. Oil producing countries have avoided screwing off the taps as much as possible, but time is marching on and wont be long now I reckon before they get TRULY serious instead of playing around with reduced supply.

Its nothing we haven't seen before even in relatively recent times, and the price will stabilise. Has been a fairly orderly fall in price, but the open market is now putting its foot down. You cannot keep producing lots of band aids if no one ever gets a cut.

Most think in terms of the oil companies, but they will be fine in the long haul and experienced at it....its the nations relying upon revenue from oil that get screwed. Small oil co's/producers will cop a big shakeout and many go to the wall if they have high production costs, and exploration halts will be announced. We are ok in Oz, though the Gas price will of course cause us a drop in revenue somewhat.

Its actually a benefit for the world coming out of this. Over the last 20yrs many nations have put extraordinary monies into infrastucture to assist delivery to market. Competition has never been fiercer and they have been fighting and muscling up for market access. Cheaper oil (cheaper energy overall) can only be good as we come out the other side of this unexpected downturn.

Bizarre isn't it...doesn't seem long ago when some "experts" told us we would run out of oil. Many even predicted by NOW. Not even close, and Natural Gas looks a good energy source for another 50-100yrs as we transition to next generation sources whatever they might be.

Should remain bearish for quite awhile to come, but watch the more distant months on the curve to see what the world is truly expecting.
Hard to believe the way the worlds media deliberately ignored the reality of a whacko contract expiry to promote a clickbait version of it. Looks great doesn't it …"OMG NEGATIVE OIL PRICE !".

yep re the sales contracts and your reference to sardines

A mining company can't secure the capital to build plant and development costs without a long term forward contract. No capital means no supply, so it is a necesssary evil. These contracts vary in terms from set prices, minimum prices, premiums and discounts to spot prices, past and future market prices (ie I will deliver the commodity today but agree on the market price in 90 days) etc etc.

Banks and traders often enter in forward contracts to make the most of discounts to then sell into the market to avoid delivery. These guys are the ones being caught out the most at the moment.

Banks and traders also buy on market, package up volumes to sell into forward contracts. These guys will make the most on the upswing.


I don't know the % of traders in the oil market but I will suggest it will be 10 to 300 times larger than the actual physical delivery market (if you add up all the futures and options trading). This high volume makes for a very efficient pricing market.





oh and if they go bust, this is a very efficient market so govt intervention is not required other than for geopolitical reasons and war.

 

[Mofra]

Let's remember china can't survive with a weak US but the US can survive without china. Russia will definitely be hurt and down turns like this can topple presidents. Iran, Iraq, Russia, Saudi and China will all feel social unrest. Whether that translates to a change in leader as we see in Oz, UK and US at some stage, only time will tell.

Let's also not forget that with storage facilities near full, Iran's threats to shut down the Stright of Hormuz are nowhere near as effective as they once were.
There is every chance that the US can emerge stronger than before, depending on how they navigate this crisis. I'd expect a lot of the shale oil plays in and around Texas are being mothballed as we speak so the US will have the reserve capacity to become a net oil exporter in the future if and when it so chooses.

 

[Frank Bunn]

yeah analysts and academics luv fancy terms. Simply means the spot price goes way below the next contract. Not uncommon across all markets. People forget this is the way virtually all major commodities around the world have been traded since the ancient greeks sold their sardines forward at an agreed price. When there's a huge glut of sardines and no one can store them, the price goes to stupid low levels for v short periods at the contract expiry.

Would love to be a fly on the wall when a futures trader couldn't get out of a contract and gets a call from the oil company, "hey, where do want these 10,000 barrels of oil delivered to?"

Bizarre isn't it...doesn't seem long ago when some "experts" told us we would run out of oil. Many even predicted by NOW. Not even close, and Natural Gas looks a good energy source for another 50-100yrs as we transition to next generation sources whatever they might be..

Peak oil and running out of oil predictions continue to be proved wrong. Also, I remember John Howard saying that petrol would never go under a dollar a litre again. At the time I thought - never say never.

 

[Number37]

yeah analysts and academics luv fancy terms. Simply means the spot price goes way below the next contract. Not uncommon across all markets. People forget this is the way virtually all major commodities around the world have been traded since the ancient greeks sold their sardines forward at an agreed price. When there's a huge glut of sardines and no one can store them, the price goes to stupid low levels for v short periods at the contract expiry.
Happens occasionally in Interest Rate rollovers (Jun Sept Dec Mar) as well as commodities.

The big thing (perhaps only thing) it may be signalling is that the world is now completely FULL. Noone could take the risk of going to delivery on that May contract because there is simply nowhere to store it anymore. All markets warehouse for price stabilisation, but when you have no way to store it anymore it will cost more for the storage than to buy it. Oil producing countries have avoided screwing off the taps as much as possible, but time is marching on and wont be long now I reckon before they get TRULY serious instead of playing around with reduced supply.

Its nothing we haven't seen before even in relatively recent times, and the price will stabilise. Has been a fairly orderly fall in price, but the open market is now putting its foot down. You cannot keep producing lots of band aids if no one ever gets a cut.

Most think in terms of the oil companies, but they will be fine in the long haul and experienced at it....its the nations relying upon revenue from oil that get screwed. Small oil co's/producers will cop a big shakeout and many go to the wall if they have high production costs, and exploration halts will be announced. We are ok in Oz, though the Gas price will of course cause us a drop in revenue somewhat.

Its actually a benefit for the world coming out of this. Over the last 20yrs many nations have put extraordinary monies into infrastucture to assist delivery to market. Competition has never been fiercer and they have been fighting and muscling up for market access. Cheaper oil (cheaper energy overall) can only be good as we come out the other side of this unexpected downturn.

Bizarre isn't it...doesn't seem long ago when some "experts" told us we would run out of oil. Many even predicted by NOW. Not even close, and Natural Gas looks a good energy source for another 50-100yrs as we transition to next generation sources whatever they might be.

Should remain bearish for quite awhile to come, but watch the more distant months on the curve to see what the world is truly expecting.
Hard to believe the way the worlds media deliberately ignored the reality of a whacko contract expiry to promote a clickbait version of it. Looks great doesn't it …"OMG NEGATIVE OIL PRICE !".

Futures, when they become due, are paid in oil not $$$$.

 

[Elroo]

‘Don’t laugh’: MP scoffs at reporter

Australia is taking advantage of historically low fuel prices around the world by spending $94 million to establish a strategic fuel reserve, but there’s a catch — it won’t be stored in Australia.

www.news.com.au

Energy Minister announces $94m fuel deal but reserve won’t be held in Australia

Energy Minister Angus Taylor’s big announcement that Australia is spending $94m to boost fuel reserves left reporters asking one key question.

Australia is taking advantage of historically low fuel prices around the world by spending $94 million to establish a strategic fuel reserve, but there’s a catch — it won’t be stored in Australia.

Energy Minister Angus Taylor told reporters on Wednesday that the price of fuel has dropped to “very, very low” levels as a result of the global pandemic.
“I can announce today the Australian Government has made an initial allocation of $94 million to begin building a strategic fuel reserve,” he said.
“Initially, that reserve will be held in the United States, where there is spare storage. We have full storages here in Australia. But in time, we are exploring opportunities with the industry to establish local storage.
“We are moving with the storage we can access, which right now is in the United States.

He said that “in the event there is a global disruption that slows fuel supplies moving around the world, we will get access to the fuel we need to keep our country going”.

But reporters quizzed the minister on the logistics.

“How long do you anticipate the supply will be kept in the US?,” Mr Taylor was asked.

“It is going to take time for us to increase our storage capacity in Australia,” he said.

“So, those discussions are on going with the industry. We know that that is a priority. That’s an important piece of work that needs to be concluded as soon as it possibly can.”

Another reporter asked what might happen if Australia went to war and needed fuel urgently.

“How do you get the fuel here, though, if there is an enemy submarine … Don’t laugh! This is a serious question,” the reporter said.

“If you want to strangle the country’s fuel supply you put a submarine off Botany Bay and target nearby. How do you manage the issue of getting the fuel here when it’s not in the country in the time of a potential conflict?”

Mr Taylor did not respond to the question directly.

 

[Number37]

“Initially, that reserve will be held in the United States, where there is spare storage. We have full storages here in Australia. But in time, we are exploring opportunities with the industry to establish local storage.
“We are moving with the storage we can access, which right now is in the United States.

We are going to pay primo dollars for oil storage at this time, particularly in the US.

Something does not add up.

 

[QuietB]

How do you buy $100m of fuel when the cost of fuel is less than zero

 

[Number37]

How do buy $100m of fuel when the cost of fuel is less than zero

 

[Bollox]

Physical delivery contract,...…….

Noone could take the risk of going to delivery on that May contract because ......

then you type this

Futures, when they become due, are paid in oil not $$$$.

How on gods green earth could anyone come up with claiming the complete opposite.

It takes a special type to come up with the complete opposite, even when something is spelt out over and over.

If someone repeaedly says
"It costs $1"
"It costs $1"
"It costs $1"

Do you tell them
"No...you're wrong, it costs $1"

Bugger me

In any case you're wrong. There are cash settled oil contracts around as well. Even the old NYMEX contract on Globex can be cash settled on expiry (at great cost) if desperate.

 

[Sainteric]

Angus taylor just appointed Grant King to complete a feasibility study on SMRs. One site of many is Woomera.

With the military looking at te EV, the nuclear subs and civilians the electric car and mining the SMR. What purpose do we need oil in the medium term?

Military can fight for about a week if we are attacked. After that we can throw rocks.

 

[Power Raid]

then you type this



How on gods green earth could anyone come up with claiming the complete opposite.

It takes a special type to come up with the complete opposite, even when something is spelt out over and over.

If someone repeaedly says
"It costs $1"
"It costs $1"
"It costs $1"

Do you tell them
"No...you're wrong, it costs $1"

Bugger me

In any case you're wrong. There are cash settled oil contracts around as well. Even the old NYMEX contract on Globex can be cash settled on expiry (at great cost) if desperate.

This happens with just about every topic with Number37

He lacks basic understanding of just about every topic but still runs 100 miles an hour

At least he is good for a laugh

 

[Power Raid]

Military can fight for about a week if we are attacked. After that we can throw rocks.

I wish we could say that about every nation

I also wish we didn't waste so much money on our rock throwing organisation

 

[QuietB]

I wish we could say that about every nation

I also wish we didn't waste so much money on our rock throwing organisation

Australia does defence all wrong. We are never going to have air superiority over anyone significant. And we are never going to have a navy capable of doing much except patrols.

If the coronavirus has highlighted anything it is the natural advantage Australia has being an island state in the middle of nowhere.

Amphibious attacks are ******* hard and barely any nations in the world are even capable of them. All Australian defence has to do is make them harder - so hard no one would bother. And personally I don’t think anyone ever will bother. Who the hell is going to land in northern Australia and march to Sydney/Melbourne/Brisbane? No one.

But let’s go spend a small fortune on useless hardware

 

[Bollox]

This happens with just about every topic with Number37
He lacks basic understanding of just about every topic but still runs 100 miles an hour
At least he is good for a laugh

I popped in, saw that and just went WTF
I even went to the trouble of writing a damn essay about it coz I had the time. Mistakely thought someone might find it helpful or useful.
Just weird.
Anyway. You'd think I'd be accustomed to it in here after all this time.

 

[Power Raid]

Australia does defence all wrong. We are never going to have air superiority over anyone significant. And we are never going to have a navy capable of doing much except patrols.

If the coronavirus has highlighted anything it is the natural advantage Australia has being an island state in the middle of nowhere.

Amphibious attacks are ******* hard and barely any nations in the world are even capable of them. All Australian defence has to do is make them harder - so hard no one would bother. And personally I don’t think anyone ever will bother. Who the hell is going to land in northern Australia and march to Sydney/Melbourne/Brisbane? No one.

But let’s go spend a small fortune on useless hardware

We've designed our military for a range of scenarios from the cold war, the plan of Indonesia to create a super state (Malaysia, Singapore, Brunei) which would have cut our sea trade, terrorism, communism (including our unions assisting foreign threats) and now china.

The problem with an ever change threat is the capital cost and the time to change is massive. Especially when you can't or don't want to be seen increasing capabilities quickly. One example of that is the acquisition of busted arse ships in Manoora and Kanimbla, to enable a capabilities increase with the Canberra Class under the guise of replacement rather than increase.


The navy defense strategy for Indo has and always will be containment. Their armies are capable (note each General owned his own army like 1930s Germany rather than a unified force. This may have evolved in the last decade but Subianto's recent actions may suggest otherwise). Each of their armies buys their own equipment and open to bribes, meaning Australia can buy land conflict outcomes, as we did with General Wiranto in East Timor.

The landing in East Timor required almost 12 months worth of planning with lasers stuck on the bottom of Qantas aircraft to survey the beaches. 6 months of naval tension with Indo and Australian vessels on missile lock. Then a final hand held survey with MS and SAS swimming the proposed landing site at night. Australia got one beach landing right after 12 months of preparation and against an enemy they had paid off........but it does highlight we have Indo covered. Imagine though, the outcome of landings without preparation against a strong force that is ready but that for or against us.


I share your view re landings in the north but in reality that is not how we would be attacked. Shutting down our north west oil and iron ore supplies would be a priority target, carried out by subs and more likely unmanned subs. Our communication and warfare centers in WA and NT would be taken out by aircraft. Fleet base east and west taken out by divers and or picked off in the limited sea lanes. We don't have a great deal of manufacturing capability but power stations, factories, refineries and water are all targets to cease our ability to sustain war.

However if it came to that, it would be WW3 and we would all be dead. So who really cares about defending for that scenario.


The two big threats at hand are:
- Terrorism which requires a glorified international police force and civil unrest which ah again is policing will increase in importance over the next century.
- the rise of china and that seems to have already been won by trump's economic moves. These have proven effective and will be asserted by US war games in South China sea which will be designed to have as many nations participate as possible. Even China will be invited at some stage.

If I were building a military for this century, cheap, disposable and unmanned would be the weapons of choice. How else can you take on 1.6 billion chinese (population anticipated later this century).

 

[Number37]

then you type this



How on gods green earth could anyone come up with claiming the complete opposite.

It takes a special type to come up with the complete opposite, even when something is spelt out over and over.

If someone repeaedly says
"It costs $1"
"It costs $1"
"It costs $1"

Do you tell them
"No...you're wrong, it costs $1"

Bugger me

In any case you're wrong. There are cash settled oil contracts around as well. Even the old NYMEX contract on Globex can be cash settled on expiry (at great cost) if desperate.

Rant. Rant, Rant.

Nek minnit.

In any case you're wrong. There are cash settled oil contracts around as well. Even the old NYMEX contract on Globex can be cash settled on expiry (at great cost) if desperate.

"As well"...you got there eventually.

 

[Number37]

This happens with just about every topic with Number37

He lacks basic understanding of just about every topic but still runs 100 miles an hour

At least he is good for a laugh

Come on Bernie, don't be narky.

You gave us that fantastic tip to make $25,000 in 10 days on $100k of Myer shares during March when their share price went from 40c to 9c.