Daily Podcast: Sitting Shiva

by Robert Farago

Published: June 21st, 2008

Man, am I getting old. I surfed onto The Incredible Hulk on the SciFi channel last night to find David Banner getting all Gamma rayed-up. The Hulk burst through the front of a house. All I could think was, oh my Lord, that's going to cost a fortune to fix. (My neighbor's house was recently pulverized by a large green… tree.) Maybe it's because I'm happily married, or perhaps it has something to do with the WWF, or it could be that episode of House involving hypogonadism, but steroids-run-amok homoerotic imagery just doesn't do it for me. Sure I understand the appeal of watching someone or something getting mad and busting up the joint. Call it the Shiva the Destroyer Complex. But I want to assure you this site in general and myself in particular take no joy in what's happening to The Big 2.8. That said, I've come to terms with TTAC's bearer of bad tidings nature a long time ago. While I will endeavor to add some levity to the mix, the U.S. automotive market is going to get a LOT worse before it gets better. And TTAC will be there every step of the way, no-holds-barred. The truth hurts.

Robert Farago

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4 of 12 comments

Psarhjinian on Jun 22, 2008

Now, when I saw the title, I was expecting some witty pun on Shiva being the Hindu god of death-and-subsequent-renewal.

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Quasimondo on Jun 22, 2008

I take it this means you're not a fan of Dragonball Z either, are you?

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Macca on Jun 22, 2008
romanjetfighter "I think the oil companies are intentionally jacking up the prices so people will demand more off-shore drilling and ANWAR and Montana and the government doesn’t care because the higher the profit for the oil companies and the higher the cost of gas, the more tax is paid to the government. Makes sense, really." I really hope you're kidding. I can't help but find this line of thinking terribly misinformed. I've said it before and I'll mention it again, I happen to be a geologist for a 'mid-major' oil company. We, in no uncertain circumstances, do not have any control on the price of oil. We work within the price environment. If the price is high (as it is now) it allows us to drill more wells (mind you, I work for a domestic, on-shore, natural gas-focused producer). When times were lean, as they were not that long ago, this particular company (and countless others) didn't do as much drilling. Wells don't get drilled without a certain amount of confidence that they'll turn a profit. The primary criterion for deciding whether a well gets drilled is the rate of return. In other words, is the anticipated amount of hydrocarbons producible from this particular wellbore capable of paying off the drilling, completion, and production costs? A typical mid-con natural gas well can easily exceed $1M to drill (yes, drilling companies have jacked their prices accordingly - everyone wants a piece of the pie) and $1M to complete, and if a particular prospect doesn't have the anticipated recoverable volume (today's technologies allow for roughly 70% to 80% recovery from most natural gas reservoirs - expect less with low permeability/low porosity tight-gas formations) to pay that off within a reasonable amount of time (remember, we play with the time-value of money - we don't instantly extract the hydrocarbons. It may take a decade or more to reach the EUR [estimated ultimate recovery] for a particular well) then the well doesn't get drilled. Why go to all the expense on a venture that doesn't offer the same ROR as a wise (and easier) investment elsewhere? The irony is that higher commodity prices make marginal wells profitable - and thus hydrocarbons that would have otherwise stayed in place are produced. Every company is in existence for profit, mind you - why why drill the wells if there's no profit to be made? Sorry for the lengthy rant - I just get in a tizzy when I think about the uneducated opinion the masses hold regarding the oil and gas industry.

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GS650G on Jun 23, 2008

Just wait until they nationalize the oil refineries, then the feces will hit the impeller.

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