The people I feel for in this oil price crash is not the speculators in the put and call world holding options on margins. It is the little drillers and producers---and in the long run the consumers of energy. Drilling operations are being crushed by the price and the huge fall off in demand both world wide and in the US. Unit Drilling a long time stalwart out of Tulsa filed for bankruptcy this week. For decades they were a entity I played on the market due to their sh...rewd management reputation. That is how bad this hit is on the drillers. I have heard any of them with debt are already talking to bankruptcy attorneys about the best avenue. Producers are in their own conundrum. You can't shut a well in and just open it up. Some of the zones you have to be careful about even the concept of limiting production or they will close up. With no storage capacity or limited at best you can produce only so much before you have a hard choice. I think some misinterpreted my thought on allowing the private sector to store in the strategic reserve with a maximum price they would have to begin selling at as a "take care of the industry concept". Actually it is the consumers of energy---both industry and individuals---who are the biggest beneficiaries. If you force their stored reserves to be liquidated at $50 bbl it will put a cap on energy prices. The other alternative will be that the oil producers will be devastated and end up shutting in wells so there will be very limited capacity for supply to meet demand at some point. We have seen that in the past when oil ran up to a $100 bbl and the per pump price exceeded $4 a gallon.
from The people I feel for in this oil price crash is not the speculators in the put and call world holding options on margin...
