Oil Prices Drop Below Zero, and Not Because of SB-181

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by: Colorado Pols

Anybody got extra room in their backyard?

It was a bizarre day for oil traders, owing largely to a quirk in the way that oil prices are set. Oil that is scheduled to be delivered next month fell 12 percent Monday to about $22 a barrel, but at the same time a key benchmark for oil to be delivered Tuesday was essentially deemed to be worthless by investors. It actually fell into negative territory, meaning people who had oil to sell were willing to pay people to take it off their hands. [Pols emphasis]

The problem is that the United States is running out of places to store its oil.

Oil is already being stockpiled on barges out at sea, and in any nook and cranny companies can find in their storage facilities. Now, traders are worrying that even this space is running out. Under futures contracts, West Texas Intermediate — the American oil-price benchmark — is delivered to Cushing, Okla., but investors are worried that there will be no place to put it there.

At one point today, a barrel of oil was trading at -$1.43, as Julia Horowitz writes for CNN Business. We won’t pretend we really understand how something can have a negative price, but apparently this is a thing that happened.

This news will put a serious wrinkle in ongoing efforts by local oil and gas groups and their Colorado Republican friends to continue complaining that regulatory efforts — such as SB-181, passed in 2019 — are stifling energy production in our state. This is also a complication for the Bureau of Land Management (BLM), which is pushing to open up new plots of public land for drilling in Colorado.

Anyway, the next time you hear someone say that state regulations are killing the oil and gas industry in Colorado…just smile politely and keep on walking. That narrative is officially dead.

13 thoughts on “Oil Prices Drop Below Zero, and Not Because of SB-181”

itlduso says:

April 20, 2020 at 12:40 pm

It closed at about negative -$24/barrel. And, there is still another day to go on the May contracts. The realistic price is June which is about $21, but dropping. It's too expensive for the wells to be closed down, and closing them may destroy the well forever.

What will this do to the supposedly diversified Denver/CO economy? How many O&G companies will go under and take jobs with them? How cheap will condos go?

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1. The realist says:
  
  April 20, 2020 at 1:37 pm
  
  And most importantly, what will fracking fluid taste like then?!
  
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2. Duke Cox says:
  
  April 20, 2020 at 1:44 pm
  
  How many will ask Hick to give their money back? That's what I wanna know.
  
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  1. Diogenesdemar says:
    
    April 20, 2020 at 2:44 pm
    
    He’ll be in a much better position to pay them back if they get him in the Senate . . .
    
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    1. kwtree says:
      
      April 20, 2020 at 3:14 pm
      
      That was the same argument Trump’s creditors made about his Presidency. Wonder how that’s working out?
      
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  2. Gilpin Guy says:
    
    April 20, 2020 at 4:46 pm
    
    Slaps palm to forehead again. Please June Primary, make it obvious who Colorado Democrats want to take on that wretch of human being called Cory Gardner. May our collective torment from crabbiness be relieved by a crystal clear result.
    
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3. MichaelBowman says:
  
  April 20, 2020 at 2:34 pm
  
  This is a peculiar moment in history for the industrial revolution. Oil companies will theoretically pay anyone who would take delivery of oil $37.63 per barrel. Slightly better than free as it would probably pay for the transportation to you. "WTI crude oil futures settle at -$37.63 per barrel – Down $55.90 on the day, some 305.97%" Oilprice.com
  
  It's only peculiar because the next industrial revolution won't be based on fossil fuel extraction. But I repeat myself.
  
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  1. MADCO says:
    
    April 20, 2020 at 2:43 pm
    
    Just in case –
    https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude_contractSpecs_futures.html
    
    To my knowledge and based on cursory research, it's never happened. But if the accepted delivery methods referenced above are not available when the contracts expire – the buyer will be screwed.
    I mean, 'Rockefeller' or no other anti free-market monopolist doens't own all the rail or shipping capacity anymore – but still it's gonna get expensive.
    
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MADCO says:

April 20, 2020 at 2:11 pm

US Constitution

Amendment 14

Section 3.

No person shall be a Senator or Representative in Congress, or elector of President and Vice President, or hold any office, civil or military, under the United States, or under any state, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any state legislature, or as an executive or judicial officer of any state, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Section 4.

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any state shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5.

The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

Trump is not going to be impeached
The R Senate is too … (insert body part)

But he should be ineligible for "liberate"

And he cannot default the debt.
So buh-bye Medicaid, Medicare, SSA OAI

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1. kickshot says:
  
  April 20, 2020 at 4:20 pm
  
  In the next administration it will be buh-bye billionaire safety net.
  
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  1. MADCO says:
    
    April 20, 2020 at 5:36 pm
    
    Ha. I wish.
    
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Gilpin Guy says:

April 20, 2020 at 4:54 pm

This is going to ding Weld County Republicans. They going to have to start scrambling to figure out how to secede on their own with their prized industry knocked to it’s knees. On the plus side, they’ll have chance to trim their local government of unnecessary services. Hopefully the food bank will be spared but who knows with these prosperity Christians in charge.

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1. MADCO says:
  
  April 20, 2020 at 5:38 pm
  
  hmph
  
  in this inversion – the sellers are paying the buyers. Could Weld afford to pay the buyers to accept them?
  
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