Oil

What does oil really cost to get out of the ground? $2/barrel. Where's peak oil? This is what the Iraqi oil service contracts have shown the world.

Under the service contracts, the companies would be paid a per barrel fee for any crude they produce in excess of a minimum production target. The Exxon Mobil-led consortium requested $4.8 per barrel for production over the minimum and BP wanted $3.99 per barrel, Oil Minister Hussain al-Shahristani said. The ministry was willing to pay $2 per barrel.

BP agreed to match the ministry's price and won the contract for Rumaila.

Peak oil is a scam. There's tons of the stuff out there. But on the other hand, it's not in the US, and it's not in a safe place. Still, 35X production costs is a steep margin.

In other news, Germany is losing control of the ECB. They were against the latest money pumping. The weaker nations of Europe are forcing the ECB to devalue the Euro against German opposition.

As judging by today's 100 point drop after disappointing consumer confidence #'s, it looks like the market is back to paying more attention to the bad news again. I might have to sell my oil position.

Mish has an article about Pilgrim's Pride, the chicken company that declared bankruptcy last year. Unfortunately for the town that was home to one of the closed factories, Pilgrim's Pride is loath to sell. With no pricing power, they don't want to have to compete against their own plant. This makes sense. It's also why they closed the plant in the first place.