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22 April 2020

Munch's Spaniel

I’ve never really liked Edvard Munch’s The Scream; I don’t know why - somebody else thought it was worth $120 million a short while ago - but it doesn’t do anything for me. Or, perhaps more accurately, it’s a very disturbing piece of art, but I wouldn’t give it houseroom; perhaps because it is so disturbing.

Right now, though, for the first time, I can understand it. The silent scream into the hollow darkness of the current madness of an alien, even maybe inimical world. Or is it the other way round: humanity made alien by the world?

Pondering on that alienation between man and world made me reconsider what I wrote a couple of weeks ago about the elevation of the NHS in the UK to the status of quasi-religion; I was not wrong in the beatification or the worship, but I was wrong in that it doesn’t hold what I think must be one of the central requirements of a religion. That is the promise of an afterlife. The bargain that says if you are a good boy or girl in this life, if you suffer and accept the slings and arrows of outrageous fortune, then your reward will come in the next. That seems a basic tenet of religions, from the heaven/hell/purgatory of Christianity, to the graduated re-incarnation of Buddhism, to the paradise of Islam. And that, of course, is the secret of success. After all, how comforting would it be to be able to believe that that ghastly time when you saw your parents/spouse/child, even, die in front of you on a hospital bed was not the end, that all that was left was not the beginning of the time when there was nothing but the memory of all things that you hadn’t got round to saying? 

Will this period of enforced reflection that humanity is going through result in a resurgence of religious belief? It’s an interesting question, one that, of course, requires the ability to squash scientific knowledge in the pursuit of spiritual comfort. Difficult. I have no answer to the question, but in terms of religion, it’s not the NHS.

Anyway, enough of God, if indeed such there is; let’s get back to mammon. For some time now, quite a lot of people - me included - have been predicting that WTI would go to zero. Well, it’s now happened, and in fact it dropped actually into negative territory, so oil producers have paid to dispose of their product. So should we assume that the Saudis and the Russians - that bizarre pair of feuding co-conspirators - have achieved their (unstated but obvious) aim of crippling the might of the US oil industry? Mmmm… well, first, it’s a slap in the face for those cretinous enough to have peddled over the years the “Peak oil! We’re going to run out!” fallacy. That was never going to happen; instead, what we have probably seen is peak oil demand as fossil fuel usage winds down and alternatives take an ever-increasing share of the market. Of course, why this happened so precipitately - global pandemic - was not predicted as the cause……

The easiest production to curtail is, I believe, the fracked stuff, because that is effectively an engineering process, with an on and off switch. Traditional wells are much more difficult to deal with. There is, though, a problem layered on top of that, in the form of the heavy indebtedness of the shale (fracking) producers. That, causing a reluctance to stop producing, even at below break-even, has focussed the problem of oversupply firmly on the shoulders of the land-locked producers of Texas/Oklahoma, and, of course, the particular delivery requirements of the WTI contract. For the Gulf, Nigeria, the North Sea, the other Gulf, the issue is not quite so problematic, since theoretically at least, you can always whistle up another ship. But if your offtake goes by pipeline straight to storage tanks and refineries, then when they are full, you have nowhere left to go. That’s why the real price hit was on spot month WTI, while Brent, for example, although weak, remained significantly higher. So have the Saudis and the Russians got what they want? The jury is still out, I think, and what happens to the frackers and their financing banks will probably provide the answer.

Some of us will remember a well-known, highly respected German industrial company having a ‘moment’ in the oil business in the early 90s. The oil trading group there had convinced themselves oil could be held in a backwardation; then, as now, they discovered that if you can’t find storage, the spot price has no way of being sustained. I’m tempted to say that the storage issues that the non-ferrous metal business has suffered are a drop in the ocean in comparison - at least you can put your aluminium in a field, where it won’t soak away and pollute the ground…….

So why is this entitled “Munch’s Spaniel”? Well, put everything you think you know of The Scream out of your mind, and approach it anew. It’s not a screaming person, it is the head of a spaniel, and what you thought were the raised hands are the floppy ears. If I think of it like that, the head of a dog, perhaps I could put it on the wall (not at $120m, though); no, not even then - I’ll stay with Cezanne, Pissarro, Monet, van Gogh…….but not The Scream. 


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