Peak Corporate Earnings (?)

Discussion of the latest Peak Oil news (please also check the Website News area below)

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raspberry-blower
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Post by raspberry-blower »

cubes wrote:
raspberry-blower wrote:If only there were a comparable job creation scheme in renewable energy, home insulation retrofit projects and the like.
There is, and the job title is usually "scammer" in a call-centre.
Why the "Green Deal" failed, in a nutshell

Meanwhile two oil companies either side of the pond have hit hard times:

Guardian: BP makes record loss

Bloomberg: Exxon Faces First Downgrade Since Depression

Couldn't have happened to two nicer companies :twisted:
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
johnhemming2
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Post by johnhemming2 »

not exactly news. Oil prices go down, oil companies have less money.
AutomaticEarth
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Post by AutomaticEarth »

9
johnhemming2 wrote:not exactly news. Oil prices go down, oil companies have less money.
Oil up $2.70. Due to weaker dollar and (maybe) OPEC and Russia doing a deal. Maybe the PPT might have something to say? :lol:

Got my new car today. 70mpg petrol on highway. Peak oil has been postponed today. :lol: But peak oil will not go away....
johnhemming2
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Post by johnhemming2 »

peak (conventional) oil has already happened.
ppt
The sad news for many conspiracy theories is that human beings are not that good at organising things.
AutomaticEarth
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Post by AutomaticEarth »

johnhemming2 wrote:peak (conventional) oil has already happened.
ppt
The sad news for many conspiracy theories is that human beings are not that good at organising things.
Peak oil is very subjective. I'm on the same page as you, but others beg to differ. Head on over to peakoil.com for an alternative view.
. :D

PPT? I was in jest. Human beings might not be that good at organising things, but computers may well be.
AutomaticEarth
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Post by AutomaticEarth »

johnhemming2 wrote:peak (conventional) oil has already happened.
ppt
The sad news for many conspiracy theories is that human beings are not that good at organising things.
John, you've stated that conventional oil has peaked (which I agree with). What do your peers (other MPs etc) think? Appreciate this should be on another thread but thought I'd ask the question.
johnhemming2
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Post by johnhemming2 »

Obviously non-conventional oil is now being extracted (as was always going to be the case). The next crunch is likely to be primarily economic (from cuts in investment) rather than geological.

i don't know the details of opinion.
raspberry-blower
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Post by raspberry-blower »

johnhemming2 wrote:not exactly news. Oil prices go down, oil companies have less money.
It is the scale of the oil price collapse that is the problem here, John, but that appears to have passed you by.

Different oil companies are, unsurprisingly, taking different options

During financial downturns there are Mergers and Acquisitions - particularly in the Energy sector. There are signs that Exxon is preparing to launch a takeover bid
Of course Exxon would also need to assume any debt carried by an acquisition target. But that wouldn’t be a problem — compared with the averaged overleveraged oil company, Exxon has modest gearing with $38 billion in debt outstanding.

Other than Royal Dutch Shell ’s $52 billion takeover of BG Group , we haven’t seen a landmark merger during this downturn. The last time things got this bad for the industry, back in 1998, BP bought Amoco for $48 billion and Exxon bought Mobil for $75 billion.
Who it will be we will find out in due course. BP looks vulnerable though.
However a mega merger is by no means a guarantee that future performance will live up to the hype. In fact it often disappoints.

Bottom line: if you believe in Peak Oil this is just one (albeit a highly significant one) of the signals that we have hit TLTG. Therefore, if this is correct, then we should see this translated into a slowdown in corporate earnings and stagnant/declining profits. That is why I started this thread.

Oh, by the way, the size of the collapse in the oil market? $100 Trillion
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
AutomaticEarth
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Post by AutomaticEarth »

Uber is complaining that they are up against a Chinese competitor that is making no money!

Are companies western companies operating in China this stupid? Of course China Cab will be more profitable! it's backed by the state.... :roll:

http://www.bbc.co.uk/news/business-35610147
johnhemming2
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Post by johnhemming2 »

raspberry-blower wrote: if you believe in Peak Oil
Peak Oil is a scientific fact. That there will at some stage be a maximum production. We had that for conventional crude oil in the last decade.

What is unclear is when this will happen with unconventional sources.

A second factor that needs to be taken into account is technological change which has the ability of automating a lot more jobs (including all the taxi drivers).

In the end a corporation that owns the robots can make a lot of profit.
johnhemming2
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Post by johnhemming2 »

Stop for a minute. Let that sink in. The total value of all the world’s oil reserves is over $100 trillion less than it was just a year and a half ago.
Which is irrelevant. The value will go up again with the price. What does matter is any insolvency related to borrowing against reserves. However, it is quite possible that people will hang on for the prices to come back up again at least to some extent.
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biffvernon
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Post by biffvernon »

johnhemming2 wrote: A second factor that needs to be taken into account is technological change which has the ability of automating a lot more jobs (including all the taxi drivers).
In the end a corporation that owns the robots can make a lot of profit.
Which is why the corporations need to be nationalised so that we all benefit from the robots and can spend more time listening to jazz quartets.

cf. Paul Mason the day before yesterday: http://www.theguardian.com/sustainable- ... -be-afraid
raspberry-blower
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Post by raspberry-blower »

johnhemming2 wrote:
raspberry-blower wrote: if you believe in Peak Oil
Peak Oil is a scientific fact. That there will at some stage be a maximum production. We had that for conventional crude oil in the last decade.

What is unclear is when this will happen with unconventional sources.

A second factor that needs to be taken into account is technological change which has the ability of automating a lot more jobs (including all the taxi drivers).

In the end a corporation that owns the robots can make a lot of profit.
A strawman argument here John that completely takes out of context my original post.

Whilst what you are saying is true, you are not answering the correct question here which makes your point irrelevant.

What this thread is all about is that at some point all this offshoring and technological advances will be subject to diminishing returns.
A tell-tale sign of this was the vast buy-backs that many large corporations have undertaken recently - as a result of QE policy. This is a major red flag that you ignored. If all this technological wizardry could improve the bottom line significantly than we would have seen this cash go into R & D. We did not. Therefore it is highly probable that we have reached a major inflection point.
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
raspberry-blower
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Post by raspberry-blower »

johnhemming2 wrote: Which is irrelevant.
No John, your comment is irrelevant.
johnhemming2 wrote: The value will go up again with the price. What does matter is any insolvency related to borrowing against reserves. However, it is quite possible that people will hang on for the prices to come back up again at least to some extent.
There is a major oversupply of oil in the market in case you hadn't noticed John. Short of a major black swan event the oil price is highly likely to be trading at the current trading range for some considerable time.

This could be construed as oil - along with most other commodities, beginning to find their true price discovery as the markets have not been distorted by the effects of QE. (the gold and silver markets would certainly NOT fall into this category though)

The only way we would see a recovery in the oil market in the long term would be a resumption of QE. Again, however, this would be subject to diminishing returns. Last time the oil price reached a zenith that was just shy of $110 (depends on which oil index used) In 2008 it was $147. Can you spot the trendline here? It is heading southwards - along the lines of what the likes of Heinberg was saying around ten years ago.
If QE is resumed it is probable that the next oil price peak could be around $80 - $90 a barrel mark. Therefore there will still be highly significant losses overall
A common mistake that people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools - Douglas Adams.
johnhemming2
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Post by johnhemming2 »

raspberry-blower wrote:Short of a major black swan event the oil price is highly likely to be trading at the current trading range for some considerable time.
How long is "some considerable time". I would expect to see production cuts within a year. The leeway is about 3% of production.
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