If You Are PLanning To Fill The Gas Tank....

[Hobbes]

there is so much subjectivity in these arguments. has anyone ever empirically compared the effect (on the entire economy) of putting money into the oil industry vs. putting it into other industries? that is, if the average person spends an extra $50 per week on gas (because of higher gas prices) , how does that differentially affect the entire economy compared to the average person spending that same $50/week on clothes, fancy food, hard goods, entertainment, etc. (because of lower gas prices)? this would be incredibly difficult to do, empirically, but well worth the understanding it would bring.

This is from 10 months ago so prices are lower now but the principles remain the same.

https://www.dallasfed.org/assets/documents/research/eclett/2015/el1503.pdf

 

[Shadowrider]

there is so much subjectivity in these arguments. has anyone ever empirically compared the effect (on the entire economy) of putting money into the oil industry vs. putting it into other industries? that is, if the average person spends an extra $50 per week on gas (because of higher gas prices) , how does that differentially affect the entire economy compared to the average person spending that same $50/week on clothes, fancy food, hard goods, entertainment, etc. (because of lower gas prices)? this would be incredibly difficult to do, empirically, but well worth the understanding it would bring.

I'm sure they have. Maybe it's that the data isn't supporting the PC talking points?

And low oil prices are good for growth, right?

Cheap oil means cheap gasoline, and the assumption throughout the oil price rout has been that for the U.S. economy, built on consumer spending, cheap gas is all good. In theory, yes. In practice, it's been tough to find the benefits in the economic data this year.

Goldman Sachs estimates that a decline in energy-related investment such as new drilling equipment, caused by low oil prices, subtracted about half a percentage point from economic growth during the first half. That's a pretty hefty bite out of a growth number that probably won't be much higher than 2.5 percent over the first six months of 2015. A note out from Goldman this week suggests that so far the negatives of inexpensive crude oil appear to have outweighed the spur to consumer spending. Goldman forecasts that the drop in oil prices will account for about 30 to 40 percent of the slowdown in economic growth from its annual pace at the end of last year.

Source

Edit: Note that 2015 is a typo and should be 2016. The article was published in July-2015

 

[JD8]

I'm sure they have. Maybe it's that the data isn't supporting the PC talking points?



Edit: Note that 2015 is a typo and should be 2016. The article was published in July-2015

FWIW, the link that Hobbes posted several pages ago stated that inventories were still very high via the ATA's cheif economist.

http://www.trucking.org/article.aspx?uid=5897732a-ea35-4369-a23a-57a3b764c8a8

“At the expense of sounding like a broken record, I remain concerned about the high level of inventories throughout the supply chain. The total business inventory-to-sales record is at the highest level in over a decade, excluding the Great Recession period. This will have a negative impact on truck freight volumes over the next few months at least. And, this inventory cycle is overriding any strength from consumer spending and housing at the moment” he said.

 

[Hobbes]

This just popped up on newsok:


SandRidge Energy Inc. last week borrowed almost $489 million, maxing out the credit line it secured early last year, the company said Monday.

The Oklahoma City-based oil and natural gas producer said it plans to use the money for general corporate purposes.

"Our cash is a valuable asset, and in this volatile market, having guaranteed liquidity provides the maximum operation and financial flexibility to SandRidge," spokesman David Kimmel said in a statement Monday. "By fully drawing on our revolver, we ensure that all of our liquidity is readily available to us."

Including the $11 million SandRidge withdrew previously, the company now owes nearly $500 million on the credit line and has $855 million in cash on hand.

SandRidge said it chose to borrow the money after consulting with legal adviser Kirkland & Ellis LLP and financial adviser Houlihan Lokey Inc.

"Over the last several quarters, we have taken several deliberate steps to improve our liquidity and reduce our liabilities," Kimmel said. "By managing and improving our balance sheet, we will be able to fully capitalize on the operational strengths of our company."

andRidge shares early Monday were down 1.4 cents, or 21 percent, to 5.3 cents a share. The stock moved to the over-the-counter market last month after the New York Stock Exchange removed it from the exchange because of its "abnormally low" share price.

The low share price has dropped SandRidge's market capitalization to about $31 million. The company has about $4 billion in debt.


http://newsok.com/sandridge-borrows-489-million/article/5474630

 

[Shadowrider]

This just popped up on newsok:


SandRidge Energy Inc. last week borrowed almost $489 million, maxing out the credit line it secured early last year, the company said Monday.

The Oklahoma City-based oil and natural gas producer said it plans to use the money for general corporate purposes.

"Our cash is a valuable asset, and in this volatile market, having guaranteed liquidity provides the maximum operation and financial flexibility to SandRidge," spokesman David Kimmel said in a statement Monday. "By fully drawing on our revolver, we ensure that all of our liquidity is readily available to us."

Including the $11 million SandRidge withdrew previously, the company now owes nearly $500 million on the credit line and has $855 million in cash on hand.

SandRidge said it chose to borrow the money after consulting with legal adviser Kirkland & Ellis LLP and financial adviser Houlihan Lokey Inc.

"Over the last several quarters, we have taken several deliberate steps to improve our liquidity and reduce our liabilities," Kimmel said. "By managing and improving our balance sheet, we will be able to fully capitalize on the operational strengths of our company."

andRidge shares early Monday were down 1.4 cents, or 21 percent, to 5.3 cents a share. The stock moved to the over-the-counter market last month after the New York Stock Exchange removed it from the exchange because of its "abnormally low" share price.

The low share price has dropped SandRidge's market capitalization to about $31 million. The company has about $4 billion in debt.


http://newsok.com/sandridge-borrows-489-million/article/5474630

I just saw an article published on seeking alpha that is forecasting SD to do a "pre-packaged" bankruptcy. If they have no credit left, they are just waiting on them to put the lid on their coffin and start hammering.

 

[Hobbes]

I just saw an article published on seeking alpha that is forecasting SD to do a "pre-packaged" bankruptcy. If they have no credit left, they are just waiting on them to put the lid on their coffin and start hammering.

Max out the credit card, declare bankruptcy, and reorganize?

 

[TedKennedy]

Max out the credit card, declare bankruptcy, and reorganize?

Deadbeat, overspending sociopathic behavior?

 

[SoonerP226]

Deadbeat, overspending sociopathic behavior?

Seems to me it's either a last gasp at avoiding bankruptcy or it's leverage--"hey, we owe you this whole pot of money, so it'd really be in your best interests if you'd come on board with financing the pre-pack bankruptcy."

 

[Hobbes]

Deadbeat, overspending sociopathic behavior?

"Corporations are people my friend".

 

[YukonGlocker]

This is from 10 months ago so prices are lower now but the principles remain the same.

https://www.dallasfed.org/assets/documents/research/eclett/2015/el1503.pdf

Interesting.