Oil negative for first time in history

[Aseahawkfan]

If we don't get this economy going again, we are screwed.

We will have economic destruction like we've never seen before if we don't get this thing back up and running. The food lines, homelessness, and unemployment will make 2008 look like nothing.

This is an unprecedented economic event in modern history. All these governors and The Fed looking to save lives are going to destroy the modern economy to do it. Unbelievable.

Just to add some data:
1. Unemployment applicants at 22 million. Literally an unprecedented level of unemployment, especially this quickly.

2. Flight traffic in the United States reduced by 90%. Airline industry decimated including production.

3. Oil prices went negative for the first time in history. This will decimate the oil industry.

4. Hotels, resorts, and casinos closed. Industry decimated.

5. Rent deferments at historical levels for businesses and homeowners. Income from rent and leasing reduced by as yet unknown levels.

6. Deficit increased and money printing leading to a huge increase in money supply that isn't doing much to blunt the downturn.

7. Auto industry demand at an all time low. Dealerships closed. Auto industry hammered.

All of this is building up to a massive economic downturn of an unprecedented level. If we don't get this economy moving again, we will see an economic depression of an unprecedented nature with dominoes falling as industry after industry fails. It won't just be mortgages or banks like it was in 2008, it will be a large number of industries and associated companies falling which will hit people across the board. I know big oil is a huge percentage of retirement accounts, pension funds, and the like.

https://whoownsbigoil.com/

The level of economic destruction this lock down is causing is going to hit so hard that we might not get back on our feet for ten plus years if we don't get this going soon. We're bleeding cash, tax revenues are causing cities and states to furlough employees, the dominoes are falling and we're acting like America and the world can shutdown and get back to normal quickly. It's been shut down just over a month and we're already at historical levels of economic damage. In a month of lock down, the above has taken place. We do not have sufficient capital in place to continue this, not the government and not companies, not even for a few more months as some say.

The dominoes are falling and we seem unprepared to halt it. The Fed and State governments better get their heads out of their asses and get this thing going. Their political infighting in public during a global pandemic is going to lead us down a path to economic suffering on a level we've haven't seen since The Great Depression.

[RiverDog]

If we don't get this economy going again, we are screwed.

We will have economic destruction like we've never seen before if we don't get this thing back up and running. The food lines, homelessness, and unemployment will make 2008 look like nothing.

This is an unprecedented economic event in modern history. All these governors and The Fed looking to save lives are going to destroy the modern economy to do it. Unbelievable.

Don't panic, for crying out loud. The economy can handle a couple months of shut down. They have to make sure that we have the proper testing program in place so we can identify where the next hot spot will pop up. Several states, like Texas and Florida, have already announced some relaxing of their restrictions. I see no reason why most construction work can't resume so long as they're smart about it, make their employees wear masks, take their temperatures each morning, send anyone displaying symptoms in for immediate testing, etc. Most parks should be able to re-open so long as they're not hosting large parties or group activities. Golf course should re-open, one player per cart.

But it's going to be awhile before restaurants, bars, baseball games, church services, any gathering of over 50 people, can re-open. I'd be surprised if they hold football games in packed stadiums this season. 2020 is pretty much toast.

[Aseahawkfan]

Don't panic, for crying out loud. The economy can handle a couple months of shut down. They have to make sure that we have the proper testing program in place so we can identify where the next hot spot will pop up. Several states, like Texas and Florida, have already announced some relaxing of their restrictions. I see no reason why most construction work can't resume so long as they're smart about it, make their employees wear masks, take their temperatures each morning, send anyone displaying symptoms in for immediate testing, etc. Most parks should be able to re-open so long as they're not hosting large parties or group activities. Golf course should re-open, one player per cart.

But it's going to be awhile before restaurants, bars, baseball games, church services, any gathering of over 50 people, can re-open. I'd be surprised if they hold football games in packed stadiums this season. 2020 is pretty much toast.

Do you know this for certain? I doubt you do.

Negative oil has never happened. How many people are in the oil industry that make money? Do you have any idea of the ripple effect of a decimated oil industry? We're already over a month of shut down. They need to get things going again.

Did you watch the LA Mayor furloughing a huge number of city workers? Airline industry is decimated.

Restaurant and entertainment industries decimated.

How well do you think we will do with 20% plus unemployment? How do you think those dominoes will fall? No, this needs to get going again and soon or dominoes are going to fall like you haven't seen before. This is going be a historical level of economic damage and you thinking it's going to be ok is about as right as people saying the coronavirus is going to be fine. I"m watching business after business take giant hits that aren't even the beginning of how bad this is going to be given the first two quarters of 2020 weren't shutdown. Now we're going to see an entire quarter shutdown. It's going to be like a sledgehammer to an ice sculpture as far as the economy goes.

[RiverDog]

Don't panic, for crying out loud. The economy can handle a couple months of shut down. They have to make sure that we have the proper testing program in place so we can identify where the next hot spot will pop up. Several states, like Texas and Florida, have already announced some relaxing of their restrictions. I see no reason why most construction work can't resume so long as they're smart about it, make their employees wear masks, take their temperatures each morning, send anyone displaying symptoms in for immediate testing, etc. Most parks should be able to re-open so long as they're not hosting large parties or group activities. Golf course should re-open, one player per cart.

But it's going to be awhile before restaurants, bars, baseball games, church services, any gathering of over 50 people, can re-open. I'd be surprised if they hold football games in packed stadiums this season. 2020 is pretty much toast.

Do you know this for certain? I doubt you do.

Coming from a person that a few weeks ago regarded this crisis as nothing more than a huge buying opportunity, I find that remark to be a bit hypocritical. Of course, I don't know what the future holds, but as you have proven, neither do you.

Negative oil has never happened. How many people are in the oil industry that make money? Do you have any idea of the ripple effect of a decimated oil industry? We're already over a month of shut down. They need to get things going again.

The stock market doesn't seem hugely concerned about it. It's down as one would expect on news like that, but it hasn't crashed as you would expect if Wall Street shared your gloom and doom assessment.

Did you watch the LA Mayor furloughing a huge number of city workers? Airline industry is decimated.

Restaurant and entertainment industries decimated.

How well do you think we will do with 20% plus unemployment? How do you think those dominoes will fall? No, this needs to get going again and soon or dominoes are going to fall like you haven't seen before. This is going be a historical level of economic damage and you thinking it's going to be ok is about as right as people saying the coronavirus is going to be fine. I"m watching business after business take giant hits that aren't even the beginning of how bad this is going to be given the first two quarters of 2020 weren't shutdown. Now we're going to see an entire quarter shutdown. It's going to be like a sledgehammer to an ice sculpture as far as the economy goes.

I might have mentioned where I saw a forecast where 20% of all restaurants would never reopen. You could be right, we could be heading for a pretty severe recession, but unless this crisis lasts a lot longer than a few months, I sincerely doubt that you'll see us enter into conditions similar to that of the Great Depression that lasted for a decade.

[c_hawkbob]

The oil industry has made plenty of profits over the years, it's not gonna kill 'em to go negative during the pandemic lockdown. Besides, this may just kick start inevitable changes anyway. It won't be long until our fuel demand is at these level as a normal course of business. They will have to adjust to the worlds new demands in the era of electric vehicles and green power the same as the my industry has had to adjust to changes over my lifetime. No sympathy for big oil.

[RiverDog]

Here locally, we have a meat packing plant that employs around 1300. The plant is about 20 miles out of town, meaning that a lot of workers commute in crowded carpools. They work shoulder-to-shoulder and break rooms and hallways are typically very crowded. There are at least 47 positive cases associated with this one plant. Since they are a food producer, they are considered essential and have been exempted from restrictions that have shut down other businesses across the state. There are calls to shut down the plant as a petition with several thousand signatures has been forwarded to the governor and a number of other officials. Indeed, there are reports of similar plants across the country that are having to shut down.

My advice is better stock up on those steaks and chicken breasts you like to BBQ during the summer as there's going to be shortages, and once that fear spreads, the same hoarders that bought up every roll of TP in the country will be carting basket loads of meat and chicken to their freezers.

Meat and poultry processing is a business that, due to the large amounts of acreage required for operations and the fact that the byproducts of their process (manure) generates an unpleasant odor, are located in rural areas. The top 3 beef producing states in the country are Texas, Nebraska, and Kansas, while Georgia, Arkansas, and North Carolina lead the nation in poultry processing. In other words, red states that have in general been more dismissive of the threat.

So we'll see. Rural areas have, in general, been exempt from this virus and has helped foster this sense of denial. It's very possible that a few weeks after some states like Georgia and Texas re-open that we'll be reading about some church that gets wiped out like the one in Mt. Vernon did last month.

[RiverDog]

The oil industry has made plenty of profits over the years, it's not gonna kill 'em to go negative during the pandemic lockdown. Besides, this may just kick start inevitable changes anyway. It won't be long until our fuel demand is at these level as a normal course of business. They will have to adjust to the worlds new demands in the era of electric vehicles and green power the same as the my industry has had to adjust to changes over my lifetime. No sympathy for big oil.

Hopefully you have a little more sympathy for the millions of workers that may end up losing their jobs due to the oil glut that will occur due to the oil market crashing than you have for those evil "Big Oil" companies.

[c_hawkbob]

When I first started in the Power industry I worked at an 84 MW plant with a crew of 27 people. My second plant was 256 MW with a crew of 16. Then a 38 MW plant with a crew of 5. Now I work at a 120 MW plant with a crew of 2, and for 4 of the 10 years I've been here just myself. I don't run the plant anymore, computers do, I just run the computers and maintain the equipment. I know all about job loss to technology and changing market demands. It's a tough row to hoe for some, but a necessary evolution.

[RiverDog]

When I first started in the Power industry I worked at an 84 MW plant with a crew of 27 people. My second plant was 256 MW with a crew of 16. Then a 38 MW plant with a crew of 5. Now I work at a 120 MW plant with a crew of 2, and for 4 of the 10 years I've been here just myself. I don't run the plant anymore, computers do, I just run the computers and maintain the equipment. I know all about job loss to technology and changing market demands. It's a tough row to hoe for some, but a necessary evolution.

I understand and appreciate your comments regarding how your industry has changed over time. But it's been a gradual, decades long process, with an unemployment rate at historic lows that could easily absorb the changes you referred to.

The oil market crash is going to put hundreds of thousands of people out of work during a recession where there's already ten million unemployed and a rate that currently sits at around 12%. Similar to how the COVID crisis is overwhelming our hospitals with sick patients all at one time, the crash of the oil market will overwhelm our economy's ability to relocate those workers into other industries. That's not an evolution, it's more like the comet that killed the dinosaurs.

[c_hawkbob]

That's not an evolution, it's more like the comet that killed the dinosaurs.

I think that's a gross exaggeration. It'll be more sudden to be sure, but not nearly an extinction level event.

[RiverDog]

That's not an evolution, it's more like the comet that killed the dinosaurs.

I think that's a gross exaggeration. It'll be more sudden to be sure, but not nearly an extinction level event.

This isn't just "Big Oil" that's taking the hit. There's a lot of small businesses that depend on a healthy oil and gas market for their very existence, businesses that operate from one month to the next and can't afford a year long downturn in revenue, so this very well be an extinction event for them.

As a rule, when companies downsize, they do it in a piecemeal fashion. Those that get laid off are usually workers on the bottom of the totem pole seniority wise, younger workers that had probably just started working there with the past few years and with a lot more options. When an event this sudden and dramatic occurs, companies lay off workers at 3 or 4 times the rate they would do under normal economic conditions. This is going to cause people like you, that have worked in the industry for 30-40 years that know nothing else, to suddenly be out of work and blow to smithereens their retirement plans.

To be honest, I'm a bit surprised at your matter-of-factly, ho hum reaction to this event. You sound a lot like AOC, who said that you absolutely love to see it.’ Nothing differentiates me more from the liberal left than an ignorant statement like that.

Edit: I did not mean to suggest that 'you' know nothing else, only that you are close to retirement age.

[MackStrongIsMyHero]

Definitely going to start hurting in my neck of the woods. Several major refineries are located between Baton Rouge and New Orleans. They'll need less personnel working when demand is low and they avoid capital expenditures so suppliers for infrastructure improvement get hit, too. Also, they contract out a lot of their infrastructure design work to private consultants. I spent a little time working for one of those companies, and they work on very low overhead. They expect most things to be paid for by the client (e.g. my previous company tacked on a 3.1 multiplier to payroll rates to cover overhead and profit; these oil consultant firms use 1.6). When they don't have enough contracts to cover all their expenses, they start cutting people loose. They can't (and won't) carry people on the company dime. The ripple effect is these workers no longer have disposable income so other businesses suffer.

[RiverDog]

Definitely going to start hurting in my neck of the woods. Several major refineries are located between Baton Rouge and New Orleans. They'll need less personnel working when demand is low and they avoid capital expenditures so suppliers for infrastructure improvement get hit, too. Also, they contract out a lot of their infrastructure design work to private consultants. I spent a little time working for one of those companies, and they work on very low overhead. They expect most things to be paid for by the client (e.g. my previous company tacked on a 3.1 multiplier to payroll rates to cover overhead and profit; these oil consultant firms use 1.6). When they don't have enough contracts to cover all their expenses, they start cutting people loose. They can't (and won't) carry people on the company dime. The ripple effect is these workers no longer have disposable income so other businesses suffer.

That's a great example, Mack!

Lots of big employers, particularly those in businesses that are subject to wild fluctuations in the market such as oil and gas, do exactly the same thing: They keep their overhead low by subcontracting a lot of work that would normally require a separate department. That way, when things get tough, they aren't confronted with the dilemma of laying people off or finding other work to maintain them.

My former company used to have their own fleet of semi trucks to haul raw product from the field or storage to the processing plants but the decision was made to contract it out to smaller, independent truckers. I used to work with our trucking fleet, and knew several of the "outsiders" as we used to call them. Many of them don't own their rigs outright as a new combination costs well over $100K. They depend on the income they get from us to pay off their loans. When the money quits flowing, for even a short period of time, they're subject to default.

I'm sure that there's a lot of small, independent truckers that are already getting hit hard by this crisis. Gasoline consumption goes down, no gas for them to haul. And there's not many products they can haul with a petroleum tanker.

[Aseahawkfan]

One industry taking a hit is not the problem. It is the dominoes falling right now. If it were just oil, I'd be shrugging it off as well. This is 22 million unemployed. Several industries decimated and starting to lay people off which will add to the 22 million unemployed. People standing in the unemployment lines right now are restaurant, retail in non-essential businesses, airline, entertainment industry, airline production, and now oil industry is about to start stacking people in the unemployment line. We also have rent and mortgage deferment. As soon as that starts to hit the banks and mortgage companies, they will start to stack people in the unemployment line.

I'm reading and watching these dominoes start to fall. All their jobs gone. All the income they spent on the economy gone or reduced heavily. How long can we sustain dominoes falling like this before we have a collapse? I cannot say. The longer we lockdown, the higher the chance of a major collapse.

[Aseahawkfan]

Coming from a person that a few weeks ago regarded this crisis as nothing more than a huge buying opportunity, I find that remark to be a bit hypocritical. Of course, I don't know what the future holds, but as you have proven, neither do you.

I wasn't seeing a time to panic back then. Now I'm seeing it. It isn't the money printing, it's all the dominoes falling right now. If you could see the economy as a network of various industries that interact with each other adding jobs and supply-demand power to an economy, then you can see so many parts of that network starting to collapse and now oil has joined that party in a very bad way. A lot is connected to oil. Some will benefit like power where cheap oil is welcome, but as c-bob stated, doesn't seem like you need many people to keep that running, so not many jobs gained from cutting the price of oil to fuel power.

Low fuel prices would have been great for airlines and cars, but they aren't in production. So oil getting hit isn't helping cars or airlines. Or trucking given the loss in demand in everything but food and essential industries.

Suffice it too say the amount of dominoes falling I can't even cover all of them. We're having major collapses in major industries and the unemployment line is growing with lost consumption and lost tax revenues to pay for unemployment dropping like a rock.

The stock market doesn't seem hugely concerned about it. It's down as one would expect on news like that, but it hasn't crashed as you would expect if Wall Street shared your gloom and doom assessment.

Stock market will learn soon enough. I know a lot of big investors are pulling cash from the market. Seems to be ruled by traders now.

I might have mentioned where I saw a forecast where 20% of all restaurants would never reopen. You could be right, we could be heading for a pretty severe recession, but unless this crisis lasts a lot longer than a few months, I sincerely doubt that you'll see us enter into conditions similar to that of the Great Depression that lasted for a decade.

It's looking like this is going to end up worse than originally thought if they don't get this thing going soon. These clowns in government arguing back and forth trying to make points for re-election are really slowing this crap up including the clown president. It's his job to organize all the states into a plan and he'd rather spend his time getting baited into interpersonal conflict with his governors during a global pandemic. I hate these parties. I even see the left with AOC and her group of clowns trying to take advantage of this crisis to push more leftist propaganda. I guess it is like they say never let a crisis go to waste when it comes to politics. Sheesh I despise politiicans.