Renewable Revolution

The Oil Industry's $26 Billion Life Raft
Bloomberg

Snippet 1
 
The swift decline in U.S. oil prices -- $107.26 on June 20, $46.39 seven months later -- caught market participants by surprise.

Agelbert NOTE: KARMA for MKing's hero, Harold Hamm (the father of the Fracking monstrocity in the USA).   

Harold Hamm, the billionaire founder of Continental Resources Inc., cashed out his company’s protection in October, betting on a rebound. Instead, crude kept falling.

Agelbert NOTE: See 1980's style GAMING DOWN of crude oil prices (to sucker the people back into buying "cheap" oil) BACKFIRING due to MASSIVE demand rejection by a people SICK of the wars, externalized pollution costs, lies AND Renewable Energy disruptive (to fossil fuelers but constructive to the biosphere ) technologies. 

Snippet 2
Counterparty Names

Other companies purchased insurance. The fair value of hedges held by 57 U.S. companies in the Bloomberg Intelligence North America Independent Explorers and Producers index rose to $26 billion as of Dec. 31, a fivefold increase from the end of September, according to data compiled by Bloomberg.

Though it’s difficult to determine who will ultimately lose money on the trades and how much, a handful of drillers do reveal the names of their counterparties, offering a glimpse of how the risk of falling oil prices moved through the financial system. More than a dozen energy companies say they buy hedges from their lenders, including JPMorgan, Wells Fargo, Citigroup and Bank of America.

Agelbert NOTE: No wonder politicians are trying to cook up a war, the banks need ANOTHER excuse to fleece we-the-people in the service of the fossil fuel welfare queen/polluters. 

Snippet 3

Energy Trading

These aren’t, of course, the kind of figures that would trigger any sort of systemic-risk concerns.  Commodities are generally smaller parts of banks’ businesses compared with lending and underwriting, and banks hedge their oil-price risk.

New York-based JPMorgan had $2.57 trillion in assets at the end of last year compared with net liabilities for commodity derivatives of $2.3 billion, not including cash from settled trades and physical commodity assets, according to regulatory filings. San Francisco-based Wells Fargo had $1.69 trillion in total assets compared with net commodity liabilities of $241 million.

Agelbert NOTE: The above statement is a large serving of BALONEY because it says NADA about the TRILLIONS of dollars in derivatives at risk HELD BY the five big bastard corporations we know as "banks" that are TOAST without Federal Reserve Counterfeiting.

It's ALL a part of our Fascist Fossil Fuel Government's mens rea MO. When they are making money off of us, they scold us about "fiscal responsibility" and "investing wisely" to the point (see MKing's prudent, measured, balanced, predatory capitalist advice.  ) of ACCEPTING the consequences of YOUR LOSSES from "not investing wisely" (i.e. making stupid decisions)  .  When they are losing money, they steal what they want from us so they can claim they are "profitable". 

Snippet 4

Still, $26 billion is $26 billion. 

U.S. oil companies already netted at least $2.4 billion in the fourth quarter of 2014 on their hedges, according to data compiled on 57 U.S. companies in the Bloomberg Intelligence index.

Oil companies would rather be losing money on the trades and making money selling crude at higher prices, Kilduff said.

“It’s like homeowners’ insurance,” he said. “You don’t buy it hoping the house burns down.”   


Offset Risk  

The $26 billion of protection won’t last forever. Most hedging contracts expire this year, according to company reports. Buying new insurance today means locking in prices below $60 a barrel. The alternative is following Hamm’s example and having no cushion if crude keeps falling.

Financial institutions act as a go-between, selling oil derivatives to one company and buying from another while pocketing fees and profiting on the spread, said Charles Peabody, an analyst at Portales Partners LLC in New York. The question is whether the banks were able to adequately offset their risk when the market took a nosedive, he said.

Agelbert NOTE: No it isn't!

“The banks always tell us that they try to lay off the risk,” Peabody said. “I know from history and practice that it’s great in concept, but it’s hard to do in reality.”

http://finance.yahoo.com/news/oil-industrys-26-billion-life-065303430.html

Agelbert NOTE: The banks ALWAYS LIE. They are part and parcel of the fossil fuel industry welfare queen, profit over planet, fascsist network that BS's us 24/7 while rigging absolutely everything for their benefit and out detriment.

THAT is why they are scheming to get another war going. The price drop in crude is driving them up a wall because they cannot control it like they always have done. We have been here before, people. 

ALL this happened in the decade from 1980 to 1990. The difference NOW is that Renewable Energy has not had its TEETH knocked out by the fossil fuel government(s), despite intense propaganda and regulatory hurdle skullduggery.

So, YEAH, expect a war.  That is their standard backup when all their other low life tricks do not work. Prison is too good for these fossil fuel/banking/Federal Reserve hypocritical elite criminals that claim to operate on a level business playing field.
Remember folks, the only way the planet wins    is if the fossil fuel/banking/Federal Reserve hypocritical elite criminals LOSE!

If the fossil fuel government is not dismantled and neutered, the biosphere will be destroyed by profit over planet insanity. Please pass this on. People need to know the truth.