More Updates
Maybe the producers have the oil and gas price difficulties behind them. As I’ve stated before I’ve been at this for a while. As soon as things become somewhat reasonable in terms of the price of oil or natural gas the excessive drilling and chronic overproduction begins. These cycles of destruction seem to be getting shorter as time passes. Last week we learned that OPEC exceeded their production limits by a substantial percentage. Over 2.5 million barrels of oil were removed from the marketplace each day. On this side of the Atlantic we saw a 5.8 million barrel build in oil inventories. Drilling activity is also up to 1044 active rigs. It’s the nature of the bureaucrats business model that it’s culturally ingrained in the oil and gas industry to continue in their ways of overdrilling and overproduction, because that’s where the cash is. What’s to stop the producers from overproducing to the point where oil and gas prices fall into the territory that is lower than their recent history. Nothing. I’ll give it a 75% probability that’ll happen in the next couple of years, and a 25% probability that we’ll continue with at least what we have now. That leaves 0% of any upside from here. Either way this is clearly unacceptable to everyone other than the oil and gas bureaucrats. They’re fine by the way. Organizations in every industry are moving away from the manner in which they’ve functioned for the past number of decades. Now is the time for action in terms of developing the Preliminary Specification.
Action is necessary to defy the slow, steady and inevitable destruction of the oil and gas industry as a result of the issues that we see present here today. Creative destruction is the method of industrial renewal which is how People, Ideas & Objects seeks to change oil and gas.
OPEC and Russia to the rescue! Highlighting their concerns for the consumers pocketbook, particularly in China and India, Saudi Arabia and Russia are openly discussing curtailing much of their production cutbacks in their upcoming June meeting. They feel that they’re currently highly prosperous and can sit on these prices. We see trends in the industry reverse this quickly. If North American producers had been recognizing their capital costs in a more appropriate manner for the past number of decades. And had reduced their property, plant and equipment balances down to the appropriate sizes for viable producers then they too would be satisfied with today’s prices and be truly profitable. But they haven’t done that. Their balance sheets are stuffed full of the unrecognized capital costs of past production and therefore need the $141 we’ve calculated as necessary to capture these past costs and return the firms to “healthy” and “profitable” operations.
The decision is therefore necessary to be made by the investors. Are the unrecognized capital cost of past production a sunk cost that should be ignored in any future decision? If so the current producers can be written off as failed and defunct organizations. People, Ideas & Objects provide the alternative means in which to rebuild the industry in the vision of the Preliminary Specification. If the investors want to recapture that $1.6 trillion investment that sits on these producers “stellar” balance sheets, then the development of the Preliminary Specifications decentralized production models price maker strategy is required. The current producers only value rests in their unrecognized capital costs of past production. The rest of the organization is trash as it builds no value and incinerates cash. These past capital costs can be used to defer the reporting of future profits and justify the higher commodity prices needed from the consumers to recapture the amount that investors have had to subsidize consumers energy costs these past number of years.
People, Ideas & Objects maintain that the North American oil and gas producers have lost control of the financial, operational and political foundations of the industry. We see the political foundation being expertly handled by OPEC et al in their noted expression of concern for the consumer. They’re able to read the North American producers financial statements and have seen that their foundations have so eroded that they are not repairable at $60.00 or $70.00 or even $80.00. North American producers love to suggest that Saudi’s costs include the cost of their society and the Kingdom. However, Saudi’s oil and gas costs are as low as $10 / barrel and if we’re including the societal costs then the North American producers costs are far more significant than the $141.00 we’ve calculated them to be.
A few years ago it seemed that North American producers were catching on to the fact they were becoming the global swing producer. However with anything business related their attention span is counted in days and not years. The role of the high cost producer in business is appropriately the swing producer. Swing producers would entail the capacity flexibility to meet the market demands in terms of its surplus and deficit. Pulling production off and putting production on as required to maintain the prices necessary to support their profitable operations. With all the other global producers cost structures being lower they will always be profitable. This requires the North American producers to maintain a business perspective with respect to their operations and only produce what’s profitable. This is obtainable through People, Ideas & Objects Preliminary Specifications decentralized production models price maker strategy. We hear a variety of excuses as to why this can’t be done. “It’s operationally too difficult to do.” Recently we saw Ford shut down the production of all F-150’s. Which unquestionably must be easier than determining which wells are unprofitable and shutting the valves and pump jacks off.
Another great excuse is that the nature of the price maker strategy is illegal. It’s not illegal. We call it our price maker strategy based on the fact that oil and gas commodities are defined as “price makers” in terms of the economic terminology of price maker characteristics. The proof of which is in the OPEC production sharing agreement which saw 1.5% of the production removed from the marketplace that led to exactly 50% of Friday’s 11:00 am oil price in terms of increases. Price makers! If you took 1.5% of a price takers product off the market, such as bottled water, it would have exactly 0% difference on the price. What is needed is for the North American producer to get their head out of the sand frac and learn a few business principles. And do so before their investors make the decision that they’re sunk costs.
The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.
This is the way the world ends, not with a bang, but a whimper. - T. S. Eliot.
Action is necessary to defy the slow, steady and inevitable destruction of the oil and gas industry as a result of the issues that we see present here today. Creative destruction is the method of industrial renewal which is how People, Ideas & Objects seeks to change oil and gas.
OPEC and Russia to the rescue! Highlighting their concerns for the consumers pocketbook, particularly in China and India, Saudi Arabia and Russia are openly discussing curtailing much of their production cutbacks in their upcoming June meeting. They feel that they’re currently highly prosperous and can sit on these prices. We see trends in the industry reverse this quickly. If North American producers had been recognizing their capital costs in a more appropriate manner for the past number of decades. And had reduced their property, plant and equipment balances down to the appropriate sizes for viable producers then they too would be satisfied with today’s prices and be truly profitable. But they haven’t done that. Their balance sheets are stuffed full of the unrecognized capital costs of past production and therefore need the $141 we’ve calculated as necessary to capture these past costs and return the firms to “healthy” and “profitable” operations.
The decision is therefore necessary to be made by the investors. Are the unrecognized capital cost of past production a sunk cost that should be ignored in any future decision? If so the current producers can be written off as failed and defunct organizations. People, Ideas & Objects provide the alternative means in which to rebuild the industry in the vision of the Preliminary Specification. If the investors want to recapture that $1.6 trillion investment that sits on these producers “stellar” balance sheets, then the development of the Preliminary Specifications decentralized production models price maker strategy is required. The current producers only value rests in their unrecognized capital costs of past production. The rest of the organization is trash as it builds no value and incinerates cash. These past capital costs can be used to defer the reporting of future profits and justify the higher commodity prices needed from the consumers to recapture the amount that investors have had to subsidize consumers energy costs these past number of years.
People, Ideas & Objects maintain that the North American oil and gas producers have lost control of the financial, operational and political foundations of the industry. We see the political foundation being expertly handled by OPEC et al in their noted expression of concern for the consumer. They’re able to read the North American producers financial statements and have seen that their foundations have so eroded that they are not repairable at $60.00 or $70.00 or even $80.00. North American producers love to suggest that Saudi’s costs include the cost of their society and the Kingdom. However, Saudi’s oil and gas costs are as low as $10 / barrel and if we’re including the societal costs then the North American producers costs are far more significant than the $141.00 we’ve calculated them to be.
A few years ago it seemed that North American producers were catching on to the fact they were becoming the global swing producer. However with anything business related their attention span is counted in days and not years. The role of the high cost producer in business is appropriately the swing producer. Swing producers would entail the capacity flexibility to meet the market demands in terms of its surplus and deficit. Pulling production off and putting production on as required to maintain the prices necessary to support their profitable operations. With all the other global producers cost structures being lower they will always be profitable. This requires the North American producers to maintain a business perspective with respect to their operations and only produce what’s profitable. This is obtainable through People, Ideas & Objects Preliminary Specifications decentralized production models price maker strategy. We hear a variety of excuses as to why this can’t be done. “It’s operationally too difficult to do.” Recently we saw Ford shut down the production of all F-150’s. Which unquestionably must be easier than determining which wells are unprofitable and shutting the valves and pump jacks off.
Another great excuse is that the nature of the price maker strategy is illegal. It’s not illegal. We call it our price maker strategy based on the fact that oil and gas commodities are defined as “price makers” in terms of the economic terminology of price maker characteristics. The proof of which is in the OPEC production sharing agreement which saw 1.5% of the production removed from the marketplace that led to exactly 50% of Friday’s 11:00 am oil price in terms of increases. Price makers! If you took 1.5% of a price takers product off the market, such as bottled water, it would have exactly 0% difference on the price. What is needed is for the North American producer to get their head out of the sand frac and learn a few business principles. And do so before their investors make the decision that they’re sunk costs.
The Preliminary Specification, our user community and service providers provide for a dynamic, innovative, accountable and profitable oil and gas industry with the most profitable means of oil and gas operations. Setting the foundation for profitable North America’s energy independence. People, Ideas & Objects Revenue Model specifies the means in which investors can participate in our future Initial Coin Offering (ICO) that will fund these user defined software developments. It is through the process of issuing our ICO that we are leading the way in which creative destruction can be implemented within the oil and gas industry. Users are welcome to join me here. Together we can begin to meet the future demands for energy. And don’t forget to join our network on Twitter @piobiz anyone can contact me at 403-200-2302 or email here.
