SCO short ETF on tomorrow's watchlist on Biden killing oil industry?

Overnight said:
Except as we have seen over the past few years, basic econ class doesn't always translate terribly well into understanding why CL prices move the way they do.
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On a macro level its done a pretty good job of explaining CL prices. Economy is doing great prior to 2008 so lots of demand, oil prices are high. Great recession in 2008, demand drops and oil prices drop. Worldwide economy recovers over the next several years, demand recovers and prices go up following demand. Fracking becomes ubiquitous and produces a lot of extra oil, extra supply meets extra demand and prices stay relatively level, then as fracking continues to accelerate prices went down. The Saudis and Russians get in a tiff and dump a bunch of extra supply along with softening demand from a COVID based recession, prices go down even more. No surprises at all really from a macro supply and demand level. Certainly if you're trading it, there are surprises aplenty. But if you're talking multi-year secular trends, it responds to supply and demand pretty much exactly as one would expect from basic micro econ.

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Nothing there says that removing demand would result in higher oil prices over time, quite the opposite.
 
Sig said:
On a macro level its done a pretty good job of explaining CL prices. Economy is doing great prior to 2008 so lots of demand, oil prices are high. Great recession in 2008, demand drops and oil prices drop. Worldwide economy recovers over the next several years, demand recovers and prices go up following demand. Fracking becomes ubiquitous and produces a lot of extra oil, extra supply meets extra demand and prices stay relatively level, then as fracking continues to accelerate prices went down. The Saudis and Russians get in a tiff and dump a bunch of extra supply along with softening demand from a COVID based recession, prices go down even more. No surprises at all really from a macro supply and demand level. Certainly if you're trading it, there are surprises aplenty. But if you're talking multi-year secular trends, it responds to supply and demand pretty much exactly as one would expect from basic micro econ.

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Nothing there says that removing demand would result in higher oil prices over time, quite the opposite.
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Not just the demand, but the supply. If in the near future Biden were to (ok, not kill fracking), but ban it (and I don't think he'd stop at just federal lands), the supply would drop a bit faster than one would expect, but demand would still be quite strong. Especially as the COVID is cleared and people start driving and flying more. And then there's that OPEC+ variable.
 
Overnight said:
Not just the demand, but the supply. If in the near future Biden were to (ok, not kill fracking), but ban it (and I don't think he'd stop at just federal lands), the supply would drop a bit faster than one would expect, but demand would still be quite strong. Especially as the COVID is cleared and people start driving and flying more. And then there's that OPEC+ variable.
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Yeah, I'm talking over the next decade. I think you're talking over the next year. To shift my conversation to the next year, I'd say there's very little fracking happening on federal land anyway. For example I know Marcellus Shale drilling is almost exclusively on private land (although I know also gas heavy vs oil). And there are thousands of fracking wells that are just dormant until prices go up, with probably millions more private acres that are in the same situation. OPEC is a wildcard we obviously can't predict, but their problem is that basically any Chuck with a truck and a couple of employees can start a fracking operation. The responsiveness of fracking supply to prices is incredibly high compared to the old days when you needed to drill deepwater wells or build massive pipelines in Alaska to open up supply. If there's any trading lesson to be learned there I think it's to short any spikes in price because that fracking supply will flow into meet those high prices in a heartbeat.
 
Overnight said:
I don't need to click your linked article. I know what fracking is and is not, how bad or good it is. Do away with it, and yer back to 5 bux per gallon gasoline. Enjoy your SUV!

Just remember where the power comes from, Boris.
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A good movie on the subject of fracking, it's called "Promised Land", with Matt Damon:

 
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