patrick.net

Perfect depiction of why it is dumb as fuck to "grow" your business with a ton of debt. Especially when your revenues are tied to a product that has such elastic price capability.

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West Texas Intermediate from March 2011 to July 2014 was over $100 a barrel

What people forget, or maybe never even knew because it was so long ago and something not in the general public's knowledge, but through the end of 1973 oil was $2.25 a barrel, practically free, regulated by the Railroad Commission, at least in Texas. Every month, producers would receive the next month's allowable that would support that price. Oil hasn't been stored in barrels since the early 20th century, but it's a measure everyone understood, so it remained intact. It was just another reason for the huge post-war economic boom. That's also the reason you hear that the great expansion ended in 1973 because all of a sudden oil cost $30 a barrel which translated to over 50 cents a gallon at the pump from the previous 25-35 cents. For the next 35 years there were various prices below which oil would not be economically feasible to search for and produce and for a long time that was $100 a barrel! Amazing how quickly things change.

I'm thinking there will be a rise in oil and natural gas prices with all these bankruptcies, as supply drops. Saudis want to return to +$50 a barrel for oil.

Combine this with the Federal Reserve policies that will drive up commodity prices like was with gold, silver and oil back in 2010 to 2015.