Glenn Hegar bemoans the oil price catastrophe; still no Abbott call for a special session

For years, I've bemoaned one of Texas' quieter GOP lying sacks o shit, Comptroller Glenn Hegar. He's been basically a one-note liar, and that lie has been that the Texas economy is not oil-dependent. And, to the degree many Dems in Texas have played along, this is a duopoly lie.

Well, Monday evening, after the May futures contract for West Texas Intermediate went negative and punched him in the face, Glenn's lying chickens came home to roost and he pumped out this presser:

(AUSTIN) — “Today’s market activity was unprecedented and likely indicative of very limited storage capacity. May contracts traded well into negative territory as the market prepares to shift focus to June contracts. While down somewhat, June contracts traded in a relatively stable range. While this unprecedented volatility is concerning, the greater impact to Texas will come if demand remains historically low for a prolonged period of time and supply gluts continue to strain storage capacity.

“Severance tax reductions would primarily affect the state’s Rainy Day Fund and State Highway Fund, and to a lesser extent general revenue available to meet budget needs. Contraction in the energy industry also will affect other sources of tax revenue, including sales and franchise taxes.

“The Texas budget is based on the average price of oil in each year of the biennium, thus daily market activity doesn’t significantly affect revenues, which are forecast based on average prices rather than spot prices or prices for specific futures contracts. That being said, given the historic nature of today’s market moves, we are carefully monitoring trading as June contracts come into focus. Should prices remain depressed over a long period of time, we anticipate the impact will be reflected in a reduction in the revenue forecast we'll be releasing in July." 

OK, let's look under the hood.

The first sentence is a "no shit Sherlock."

The last sentence of the first paragraph is the start of hand-waving. That is because traders, as well as the general public, weren't looking at June futures. It's hand-waving in another way. As I blogged six whole weeks ago, already seeing the oil economy blowing up from both the early coronavirus news AND the OPEC+ disintegration — disintegration happening in part due to a global oil surplus, the surplus is going to get bigger. Already a month ago, OilPrice.com, per that blog post, predicted 3 million barrels a day by the end of June.

At that same link, I called you out as a lying sack o shite then for claiming "the fundamentals of the Texas economy remain strong."

And, the fundamentals were weak then and abysmal now.

First, the OPEC+ cuts. They've already been at least partially priced in the market, per this piece. It also notes that OPEC, Russia and Mexico can no more achieve a 20 percent cut in a matter of days than the US can. It will take weeks to safely shut down that many wells. Also per that piece, the 20 percent cut includes previously pledged cuts and other things.

Reality? The global trim will be 1/3 the projections.

First, part 2. That same piece notes that producers right here in my and Glenn Hegar's Tex-ass are refusing to budge on making big cuts today, tomorrow or weeks from now. That's because the independents have their backs against the wall and even small cuts on marginal wells, on either fracked or conventional oil, will kill them. (Also, per the "hot oil" days of the 1930s, I do agree that it would be "interesting" to see the Railroad Commission try to enforce any cuts.

Third, you have the "energy independence" bullshitters like this retired Army colonel who should know better.

Second paragraph? Standard government presser pablum. But, here in Tex-ass, it's also being used as a "marker" for next time Democrats in the Lege want to tap the Rainy Day Fund.

Third paragraph.

May futures contract prices as of end
of day, Monday, April 20.

Average prices? Many people are predicting the spot market will regularly have $15 oil next month. I expect June futures to be below $20 well before the late-May call. And, Chicago Merc has July and August futures below $30. Indeed, as of noon Tuesday, the June futures had dropped below $15.

And worse yet as the day wore on. By the end of day Tuesday, the June crude oil option was $13 and change and ALL 2020 MONTHLY OPTIONS were below $30.

Dude? You need to release an updated revenue forecast before the end of May, NOT July. Look west to New Mexico.

Speaking of, Gov. Strangeabbott needs to look west, too, and call a special session of the Texas Legislature. With the two-year budget cycle, no off-year short session unlike NM, and with the Lege not having the constitutional power to call itself into session, there WILL be blood for oil — blood of the people who will be most hurt when the Lege whacks away in 2021.

Meanwhile, a bigger bag of wind, and a big bigot, Railroad Commission Chairman Wayne Christian (name fits as in Religious Right wingnut, hates #TehGay, etc.) has appointed a capitalized Blue Ribbon Task Force for Oil Economic Recovery. It's an entirely industry-led group. It will surely refuse to address the main problems with drilling even before the coronavirus, namely, as reported here before, that many wells:
1. Are producing something closer to condensate than oil;
2. Are cannibalizing other wells;
3. Have an increasing water cut.

But, it's not just oil. As Wall Street on Parade notes, commodities futures of all sorts are collapsing. Notably, ag prices. I've read about Californians plowing under lettuce. Now Floridians are plowing under truck farm crops. Which means that Texans surely are.