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>This is a classic "that never works" maneuver Funny how this argument starts to fall apart when you look at all the failing oil & fracking companies in the US

by krisdol 11y ago

>This is a classic "that never works" maneuver Funny how this argument starts to fall apart when you look at all the failing oil & fracking companies in the US, which were run by people who knew what they were doing and had no socialist petro regime to be loyal to and no activist investors.

clock_tower 11y ago
They're only failing because it costs them $35 to produce a barrel of oil, and the price of oil is currently well below that. If it recovers, they'll recover.
- SilasX 11y ago
  An economy that can fail because of a lower price of oil is itself a failure. It's like saying, "yeah, our high traffic e-commerce site is only failing because an intern tripped over a server power cord". No, failure is when tripping over a power cord is enough to make you fail.
  - clock_tower 11y ago
    Not an economy, but individual businesses. The better analogy in computer services would be if your e-commerce site made $100 per hour and took 1 kilowatt to run, but then the price of electricity rose to $101 per kilowatt-hour. As soon as the price fell back below $100, you'd be back in business -- the same is true of the fracking companies as soon as the price of oil rises.
    - SilasX 11y ago
      $101/kWh is a black swan event that would take down your competitors and customers just the same, "falling to the lower end of historical norms for oil prices" is not. Even so, if your business depends on some resource staying at a certain price, and you do not wish to couple your profitability to that price, you should buy options or forward contracts, as that's the benefit of modern financial instruments. Oil-intense businesses (like airlines) tend to hedge against big fluctuations like this.
nitrogen 11y ago
It seems to show that their boom/bust is caused by oil, not politics. Fortunately the US doesn't have a majority of its income dependent on a single state-owned company, so "creative destruction" can happen safely as long as there's a proper social safety net.
cbr 11y ago
Aren't they failing because of low prices, not because of technical incompetence?
- protomyth 11y ago
  The frackers have stopped drilling new wells, but the way fracking works actually lends itself to this. They are not long term wells like you typically see, but more of a burst and drill again. When the prices go up, they will put the equipment back in the field. Now would be a good time to schedule some of those infrastructure projects that need truckers, welders, and such.
- krisdol 11y ago
  Yes, that's my counter-point. Depending fully on oil has many negative repercussions for any country. Unlike private entities in the USA, you can't just downsize a country to maintain profits.
AnimalMuppet 11y ago
First, those are companies, not countries. Second, those companies are failing economically, but they aren't failing in their ability to pump oil out of the ground. Whereas Venezuela got rid of the people who actually knew how to pump oil out of the ground, so they got less oil at the same time as falling oil prices.
- krisdol 11y ago
  Where's the evidence of that? Why do you think venezuela should be able to solve all their problems by pumping more oil but don't expect failing companies to do the same?
  - AnimalMuppet 11y ago
    You seem to be confused. api's claim was that getting rid of people who know what they're doing, and expecting success, never works. You seem to be arguing that other things can fail to work. That's true; nobody claimed otherwise. Your replies therefore seem to be aimed at strawmen; nobody here has expressed the position you are arguing against.
    - krisdol 11y ago
      You're right, I was taking issue with the article quote that api embedded, and the notion that getting rid of people who knew what they were doing, assuming it's true, was the cause of VZ's current catastrophe. I think they could have had the most well-oiled oil-pumping machine and they would still be in financial ruin, as has happened to countless corporate oil companies in the US.
      - AnimalMuppet 11y ago
        True. If you set your expenses to match your expected income, and your income is from oil, and the price of oil falls spectacularly, you're in deep trouble. It doesn't matter whether your expenses are social programs (Venezuela) or loan payments (frackers), you're just about doomed either way.

by krisdol 11y ago

clock_tower 11y ago

They're only failing because it costs them $35 to produce a barrel of oil, and the price of oil is currently well below that. If it recovers, they'll recover.

SilasX 11y ago
An economy that can fail because of a lower price of oil is itself a failure. It's like saying, "yeah, our high traffic e-commerce site is only failing because an intern tripped over a server power cord". No, failure is when tripping over a power cord is enough to make you fail.
- clock_tower 11y ago
  Not an economy, but individual businesses. The better analogy in computer services would be if your e-commerce site made $100 per hour and took 1 kilowatt to run, but then the price of electricity rose to $101 per kilowatt-hour. As soon as the price fell back below $100, you'd be back in business -- the same is true of the fracking companies as soon as the price of oil rises.
  - SilasX 11y ago
    $101/kWh is a black swan event that would take down your competitors and customers just the same, "falling to the lower end of historical norms for oil prices" is not. Even so, if your business depends on some resource staying at a certain price, and you do not wish to couple your profitability to that price, you should buy options or forward contracts, as that's the benefit of modern financial instruments. Oil-intense businesses (like airlines) tend to hedge against big fluctuations like this.

nitrogen 11y ago

It seems to show that their boom/bust is caused by oil, not politics. Fortunately the US doesn't have a majority of its income dependent on a single state-owned company, so "creative destruction" can happen safely as long as there's a proper social safety net.

cbr 11y ago

Aren't they failing because of low prices, not because of technical incompetence?

protomyth 11y ago
The frackers have stopped drilling new wells, but the way fracking works actually lends itself to this. They are not long term wells like you typically see, but more of a burst and drill again. When the prices go up, they will put the equipment back in the field. Now would be a good time to schedule some of those infrastructure projects that need truckers, welders, and such.
krisdol 11y ago
Yes, that's my counter-point. Depending fully on oil has many negative repercussions for any country. Unlike private entities in the USA, you can't just downsize a country to maintain profits.

AnimalMuppet 11y ago

First, those are companies, not countries. Second, those companies are failing economically, but they aren't failing in their ability to pump oil out of the ground. Whereas Venezuela got rid of the people who actually knew how to pump oil out of the ground, so they got less oil at the same time as falling oil prices.

krisdol 11y ago
Where's the evidence of that? Why do you think venezuela should be able to solve all their problems by pumping more oil but don't expect failing companies to do the same?
- AnimalMuppet 11y ago
  You seem to be confused. api's claim was that getting rid of people who know what they're doing, and expecting success, never works. You seem to be arguing that other things can fail to work. That's true; nobody claimed otherwise. Your replies therefore seem to be aimed at strawmen; nobody here has expressed the position you are arguing against.
  - krisdol 11y ago
    You're right, I was taking issue with the article quote that api embedded, and the notion that getting rid of people who knew what they were doing, assuming it's true, was the cause of VZ's current catastrophe. I think they could have had the most well-oiled oil-pumping machine and they would still be in financial ruin, as has happened to countless corporate oil companies in the US.
    - AnimalMuppet 11y ago
      True. If you set your expenses to match your expected income, and your income is from oil, and the price of oil falls spectacularly, you're in deep trouble. It doesn't matter whether your expenses are social programs (Venezuela) or loan payments (frackers), you're just about doomed either way.