'As Russia and Saudi Arabia Retreat, U.S. Oil Industry Avoids the Worst' diff viewer (18/19)

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As Russia and Saudi Arabia Retreat, U.S. Oil Industry Avoids the Worst	As Russia and Saudi Arabia Retreat, U.S. Oil Industry Avoids the Worst
2020-07-09 17:44:27 UTC	2020-07-16 13:20:15 UTC (7 days later)
HOUSTON — The American oil industry may have dodged a bullet.	HOUSTON — The American oil industry may have dodged a bullet.
Russia and Saudi Arabia — which only a month ago hoped to undercut American producers — have retreated from threats to pump more oil into the already-saturated market. Acknowledging that the gamble was hurting themselves as well, they instead announced this past week that they had tentatively agreed to cut production.	Russia and Saudi Arabia — which only a month ago hoped to undercut American producers — have retreated from threats to pump more oil into the already-saturated market. Acknowledging that the gamble was hurting themselves as well, they instead announced this past week that they had tentatively agreed to cut production.
The change in course would give American companies room to gradually reduce production on their own terms, without government or regulatory mandates, as they invest far less in exploration and production.	The change in course would give American companies room to gradually reduce production on their own terms, without government or regulatory mandates, as they invest far less in exploration and production.
“Hopefully, the American oil industry has avoided a worst-case scenario,” said Amy Myers Jaffe, an energy and Middle East expert at the Council on Foreign Relations. “There still will be bankruptcies, but for the time being, the fears that there would be a wholesale destruction of the industry can now be put aside, because the worst of the price war has passed.”	“Hopefully, the American oil industry has avoided a worst-case scenario,” said Amy Myers Jaffe, an energy and Middle East expert at the Council on Foreign Relations. “There still will be bankruptcies, but for the time being, the fears that there would be a wholesale destruction of the industry can now be put aside, because the worst of the price war has passed.”
What happened in recent days may support an industry that directly and indirectly employs nearly 10 million Americans. The surge in U.S. production in recent years has reduced dependence on foreign oil, and lowered prices at the gas pump for consumers.	What happened in recent days may support an industry that directly and indirectly employs nearly 10 million Americans. The surge in U.S. production in recent years has reduced dependence on foreign oil, and lowered prices at the gas pump for consumers.
Uncertainties remain for the industry. Virtual summits of oil-producing nations and Group of 20 energy ministers on Thursday and Friday ended with some ambiguity, when Mexico balked at an agreement fashioned by Russia and Saudi Arabia to collectively reduce production by 10 million barrels a day. But Russia and other oil producers appeared ready to give Mexico a pass, after President Trump made a vague promise that the United States would make the cuts its southern neighbor refused to make.	Uncertainties remain for the industry. Virtual summits of oil-producing nations and Group of 20 energy ministers on Thursday and Friday ended with some ambiguity, when Mexico balked at an agreement fashioned by Russia and Saudi Arabia to collectively reduce production by 10 million barrels a day. But Russia and other oil producers appeared ready to give Mexico a pass, after President Trump made a vague promise that the United States would make the cuts its southern neighbor refused to make.
With Saudi Arabia insisting that Mexico agree to cut more, and Moscow and Washington pressing for a definitive agreement to bolster the oil markets, talks continued through the weekend.	With Saudi Arabia insisting that Mexico agree to cut more, and Moscow and Washington pressing for a definitive agreement to bolster the oil markets, talks continued through the weekend.
Members of the Saudi-led Organization of the Petroleum Exporting Countries had entered talks hoping that the United States, Canada and other western producers would agree to explicit cuts, adding up to another 4 million or 5 million barrels a day. Instead, American officials just made assurances that crude output would be reduced over time, on top of voluntary reductions that have already begun at some U.S. companies.	Members of the Saudi-led Organization of the Petroleum Exporting Countries had entered talks hoping that the United States, Canada and other western producers would agree to explicit cuts, adding up to another 4 million or 5 million barrels a day. Instead, American officials just made assurances that crude output would be reduced over time, on top of voluntary reductions that have already begun at some U.S. companies.
The global oil industry still has many problems. The collapse in economic activity caused by the coronavirus has reduced demand by an estimated 30 million to 35 million barrels a day, according to international energy agencies and oil consultants.	The global oil industry still has many problems. The collapse in economic activity caused by the coronavirus has reduced demand by an estimated 30 million to 35 million barrels a day, according to international energy agencies and oil consultants.
Analysts expect oil prices, which soared above $100 a barrel only six years ago, to remain below $40 for the foreseeable future. The American oil benchmark price was just under $23 a barrel on Thursday.	Analysts expect oil prices, which soared above $100 a barrel only six years ago, to remain below $40 for the foreseeable future. The American oil benchmark price was just under $23 a barrel on Thursday.
But a complete free-fall of oil prices into the single digits — something not seen in two decades — appears to have been avoided. President Trump’s recent public lobbying of Russia and Saudi Arabia to lower production helped raise prices several dollars a barrel, allowing many American companies to reduce their exposure to dropping prices by hedging. By fixing their sale prices at a higher level that was closer to break-even for shale wells, they were able to limit their losses.	But a complete free-fall of oil prices into the single digits — something not seen in two decades — appears to have been avoided. President Trump’s recent public lobbying of Russia and Saudi Arabia to lower production helped raise prices several dollars a barrel, allowing many American companies to reduce their exposure to dropping prices by hedging. By fixing their sale prices at a higher level that was closer to break-even for shale wells, they were able to limit their losses.
American oil companies are already eliminating thousands of jobs, plugging old wells and decommissioning rigs and fracking equipment in preparation for the worst downturn in more than a generation. Oil-producing states like Texas, Oklahoma and North Dakota are expecting deep losses in jobs and tax revenue.	American oil companies are already eliminating thousands of jobs, plugging old wells and decommissioning rigs and fracking equipment in preparation for the worst downturn in more than a generation. Oil-producing states like Texas, Oklahoma and North Dakota are expecting deep losses in jobs and tax revenue.
Falling demand for oil around the world may cause American oil exports, which reached more than 3 million barrels a day last year, to dry up almost completely. Concerns about climate change will continue to dog the industry and scare away investors.	Falling demand for oil around the world may cause American oil exports, which reached more than 3 million barrels a day last year, to dry up almost completely. Concerns about climate change will continue to dog the industry and scare away investors.
But industry executives predict consolidation, in which small, indebted companies are either bought by larger ones or merge. Drops in production will come as market conditions of supply and demand dictate. American oil production has already fallen several thousand barrels a day over the last two months and will probably decline another 2 million barrels a day through the end of the year, according to the Energy Department.	But industry executives predict consolidation, in which small, indebted companies are either bought by larger ones or merge. Drops in production will come as market conditions of supply and demand dictate. American oil production has already fallen several thousand barrels a day over the last two months and will probably decline another 2 million barrels a day through the end of the year, according to the Energy Department.
”There will be some companies that won’t survive,” said Trent Latshaw, president of Latshaw Drilling, an oil service company active in Texas and Oklahoma. “But the industry in general will survive and come out of this stronger. We will have to make hard decisions, innovate, and we’ll become smarter because of this.”	”There will be some companies that won’t survive,” said Trent Latshaw, president of Latshaw Drilling, an oil service company active in Texas and Oklahoma. “But the industry in general will survive and come out of this stronger. We will have to make hard decisions, innovate, and we’ll become smarter because of this.”
The scenario is similar to the last time Saudi Arabia and its OPEC allies flooded the market with oil in 2014 in an effort to undercut American shale producers who were taking market share away from them. Prices crashed and hundreds of American companies went out of business, and 170,000 jobs were lost. While American production briefly dropped, it quickly recovered and grew.	The scenario is similar to the last time Saudi Arabia and its OPEC allies flooded the market with oil in 2014 in an effort to undercut American shale producers who were taking market share away from them. Prices crashed and hundreds of American companies went out of business, and 170,000 jobs were lost. While American production briefly dropped, it quickly recovered and grew.
The coronavirus is a new and bigger challenge to the industry, and that challenge was briefly magnified when Russia last month refused to go along with Saudi Arabia in cutting supplies. Russian oil executives said they were tired of losing market share to American producers. Saudi Arabia retaliated by promising to pour more oil on the market, taking prices to roughly $20 a barrel for a time, less than half the level at the beginning of the year.	The coronavirus is a new and bigger challenge to the industry, and that challenge was briefly magnified when Russia last month refused to go along with Saudi Arabia in cutting supplies. Russian oil executives said they were tired of losing market share to American producers. Saudi Arabia retaliated by promising to pour more oil on the market, taking prices to roughly $20 a barrel for a time, less than half the level at the beginning of the year.
The decision by Saudi Arabia to put an additional 3 million barrels a day on the market was a huge gamble that backfired, and it is possible oil prices will sink again in the coming days if traders are not satisfied with the cuts announced by Saudi Arabia, Russia and their alliance partners. In fact, on Thursday, the last day that oil futures traded, the price fell sharply even though the producers were close to a deal.	The decision by Saudi Arabia to put an additional 3 million barrels a day on the market was a huge gamble that backfired, and it is possible oil prices will sink again in the coming days if traders are not satisfied with the cuts announced by Saudi Arabia, Russia and their alliance partners. In fact, on Thursday, the last day that oil futures traded, the price fell sharply even though the producers were close to a deal.
~~Updated July 7, 2020~~
The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles.
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
Behind all the blustery wheeling and dealing, Saudi Arabia did succeed in bringing Russia back into the fold of an alliance of producers called OPEC+. But caught off guard by the size of the price drop, both Saudi Arabia and Russia needed to reverse course and make supply cuts to prop up crude prices.	Behind all the blustery wheeling and dealing, Saudi Arabia did succeed in bringing Russia back into the fold of an alliance of producers called OPEC+. But caught off guard by the size of the price drop, both Saudi Arabia and Russia needed to reverse course and make supply cuts to prop up crude prices.
“There were miscalculations on both sides,” said Ben Cahill, a senior energy fellow at the Center for Strategic and International Studies. “The Russians miscalculated how sharp the Saudi response would be and they might have been taken aback by how deep the price drop was.”	“There were miscalculations on both sides,” said Ben Cahill, a senior energy fellow at the Center for Strategic and International Studies. “The Russians miscalculated how sharp the Saudi response would be and they might have been taken aback by how deep the price drop was.”
“Saudi Arabia will have big budget deficits, they’ll have to issue a lot more debt, they’ll need to run down their reserves, and the longer this cycle goes on, the more destructive it is,’’ Mr. Cahill added.	“Saudi Arabia will have big budget deficits, they’ll have to issue a lot more debt, they’ll need to run down their reserves, and the longer this cycle goes on, the more destructive it is,’’ Mr. Cahill added.
With the pandemic crushing economies around the world, few buyers were available in recent weeks to buy the cheap Saudi crude. The kingdom stored some oil in Egypt and was forced to let unsold crude sit in tankers along its coasts.	With the pandemic crushing economies around the world, few buyers were available in recent weeks to buy the cheap Saudi crude. The kingdom stored some oil in Egypt and was forced to let unsold crude sit in tankers along its coasts.
The mounting glut became a threat to Saudi government finances. At a projected average price of $34 a barrel this year, the Norwegian consultant Rystad Energy estimated, the kingdom’s revenues would be 50 percent lower than in 2019, a loss of $105 billion.	The mounting glut became a threat to Saudi government finances. At a projected average price of $34 a barrel this year, the Norwegian consultant Rystad Energy estimated, the kingdom’s revenues would be 50 percent lower than in 2019, a loss of $105 billion.
Saudi Arabia still has foreign reserves of $500 billion, but that has shrunk from $740 billion in 2013. Several years of depressed oil prices forced the kingdom to borrow money and reduce energy subsidies for its citizens. Crown Prince Mohammed bin Salman is now counting on his reserves to help diversify the Saudi economy for the future.	Saudi Arabia still has foreign reserves of $500 billion, but that has shrunk from $740 billion in 2013. Several years of depressed oil prices forced the kingdom to borrow money and reduce energy subsidies for its citizens. Crown Prince Mohammed bin Salman is now counting on his reserves to help diversify the Saudi economy for the future.
Russia is in far better shape financially than Saudi Arabia, especially with a flexible exchange rate — as the ruble depreciates, the value of its exports rises. While it would also lose billions of dollars in revenues with the drop in oil prices, the government has a much lower fiscal deficit than Saudi Arabia and has $550 billion in foreign reserves.	Russia is in far better shape financially than Saudi Arabia, especially with a flexible exchange rate — as the ruble depreciates, the value of its exports rises. While it would also lose billions of dollars in revenues with the drop in oil prices, the government has a much lower fiscal deficit than Saudi Arabia and has $550 billion in foreign reserves.
But Russia has other liabilities. It has limited processing capacity and its refineries have insufficient storage facilities. It relies on long pipelines to take its oil to European and Asian buyers. But European demand has collapsed, and Russia’s storage tanks are quickly filling. China is still buying oil, at bargain prices, but its storage will be filled up in another month or so, leaving Russian crude stranded.	But Russia has other liabilities. It has limited processing capacity and its refineries have insufficient storage facilities. It relies on long pipelines to take its oil to European and Asian buyers. But European demand has collapsed, and Russia’s storage tanks are quickly filling. China is still buying oil, at bargain prices, but its storage will be filled up in another month or so, leaving Russian crude stranded.