Day 1189 Wherein I Explain All

Day 1189 Wherein I Explain All

Tuesday April 21, 2020 

194 Days until the election on November 3^rd

274 Days until the Inauguration on January 20, 2021

A friend of mine called last night and asked me if I understood what was going on with oil. How could it go to minus for a barrel of crude?

This seemed laughable on its face, but that was the fact of the matter. They were giving away oil. Why?

I had no idea. I was half awake. 

But now I know. Yes, praise the lord, I know. Because I have seen the light.

This is just one of many things I will attempt to explain in this screed. But first let me explain a few terms:

TLA – Three Letter Acronym (e.g. “TLA”)

GDP – Gross Domestic Product

AGDP – A God Damn Pandemic (which would have been a TLA at GDP, but I didn’t want any confusion with GDP, which is a TLA, and this is an FLA, which is also taken but hopefully you get the idea.)

So before I get to oil let’s talk about Sweden. Yeah. Two weeks ago or less there were articles comparing Sweden’s response to the Corona Virus to that of its neighbor Norway. Sweden has AGDP; Norway does not. Why? Norway jumped on it early. Sweden took a “wait and see” approach. Similar to what England did with Boris Johnson at the controls. England has AGDP, while its neighbor Ireland does not. Ireland is run by a doctor, not an idiot as England is. The Irish got on it early and are now targeting the vestiges of where the virus is  now lurking – nursing homes. England has AGDP.

So Sweden has become a cause celebre on the American right, which is odd because usually the right is jumping up and down pointing fingers at Sweden and yelling, “Socialism!” but that was the old days. Now? It’s different. Now the right is asking, “Why don’t we do what Sweden is doing and open up everything?”

The reason is Sweden is in the middle of AGDP. That’s why. But for some reason (reason? Is that even the proper word to use here? That suggests a whiff of thinking and logic.) the right thinks that would be a swell idea. I think they should hop across the pond and check with their bud Boris and see what he thinks. 

Moving on.

Oil.

Why are they giving away oil? This has to do with the idea of spigots. Spigots are those things on the outside of your house that you attach your garden hose to and water your lawn. Now imagine you didn’t have them. What would happen? Well water would come out. Okay. Fine. Then what? Well, you’d water your lawn, water the garden, water your neighbor’s lawn and garden and finally you’d have nothing else to do with the water. In fact the water would start to flood your lawn, leak into your garage, up the steps into the house… You’d be drowning. Would you pay someone to take away the water? Damn right. Maybe, you’d swim upstream to try and stop the water.

Yeah. Well, that’s kind of the way it is with oil. It’s like the Trevi Fountain. Once you turn on the aqueduct you can’t really turn it off. Like Lucy in the Chocolate Factory. It just keeps coming. World oil production is based on roughly 400 sites. They produce 80% of the world’s oil. You don’t just turn a spigot to shut it down, or greatly reduce it. It takes time. Now that the demand for oil has greatly reduced there is nowhere left to store the oil that is still coming. Hence what was once valuable is no longer. You can’t give it away.

Let’s think about the implications of this on the world wide economy. Not just oil but demand for stuff and all that other stuff we buy. Economists like to call this goods and services. Are you using your car much? No. Bye bye demand for autos and trucks. What about commuting to work? No. Bye bye transportation stuff, and big real estate rentals in downtown wherever. What about restaurants? Nope. Bye bye. What about football games and music concerts? No, No, and no (wait there were only two mentioned. Yeah, I know. But “no-no” sounds like it refers to something else.)

How long will we be in this mode? Until we get a vaccine. How long will that take? Optimistically, 18 months to two years. How long has it taken in the past? Four years is the shortest time to develop a vaccine in the past. 

So if you’re smart and planning, look at an event horizon of one and a half to four years.

The world will be a much different place when we emerge. Many of our friends will no longer be with us. We will have met the great equalizer. 

194 Days until the election on November 3^rd

274 Days until the Inauguration on January 20, 2021

PS Close up of Corona Virus (Okay, maybe it is a bat. Maybe.)