2020, during the height of COVID-19, sothing interesting happened.
The so-called ‘negative oil price’ incident.
On April 20, 2020, WTI crude oil futures, which were set to expire, showed a crazy performance, dropping to -37 dollars per barrel.
Of course, the physical crude oil price didn’t fall that far; only the futures price plumted. But still, it was an extraordinary event—unprecedented in the history of the oil futures market.
Didn’t they even say there was an error because the system wasn’t designed to record a negative number? Anyway, it was sothing no one had expected.
The fundantal reason was simple: there wasn’t enough storage space for oil.
Because of COVID-19, global oil demand collapsed sharply, but OPEC maintained a production-increase policy rather than cutting output, and other oil-producing countries jumped into a chicken ga, boosting production too.
So gradually, storage space for oil ran out... and people realized:
‘We don’t have anywhere to store oil.’
What’s WTI? It’s short for West Texas Interdiate.
The English words at the end aren’t important right now—just look at the first two: ‘West Texas.’
That’s right, Texas oil. Unlike Brent from the North Sea oil fields, WTI isn’t produced from a specific oil field in Texas but rather refers to oil traded and delivered in Cushing, Oklahoma... but that’s not important. Oklahoma is right next to Texas, so it’s close enough.
‘You have to go pick it up.’
That’s what matters. Futures contracts are like that by nature.
The people who sat in front of their computers clicking away, playing with money, with no idea how the actual oil market worked and no storage space beyond their tiny apartnt... had to pick up Texas oil from storage tanks in Oklahoma.
This, at its core, was sothing caused by too much money flooding into the oil futures market. When supply overwhelmingly exceeds demand, buyers hold absolute power, but people didn’t really understand that. Normally, they only played around with oil futures ETFs.
COVID-19 and the unusual oil futures boom—two black swans happening at once—made it impossible for the market to endure.
...So, under normal circumstances in 1997, the chance of a negative oil price incident was close to zero.
The futures market wasn’t that big back then, and oil prices weren’t that low either.
If I hadn’t existed, it would’ve stayed that way.
[Shale Revolution Rapidly Changing WTI Futures Market...]
[August Oil Price at $13, Future Outlook Uncertain Despite Rebound. OPEC Maintains Production-Increase Policy]
[Russian Oil Dumping... European Pipelines at Risk of Paralysis. Nordic Countries Rapidly Expanding Pipeline Infrastructure]
There wouldn’t have been any shale revolution, which originally started in the 2010s. No ‘natural’ chicken ga caused by Russia’s oil companies after its capitalist reforms. And certainly no Alpha Fund, which had been continuously releasing innovative derivatives and blowing up the derivatives market.
***
The shale revolution was, quite literally, a revolution.
It was enough to patch up and end the Great Recession that began in 2008.
Although, in the process, it drastically fueled Arica’s anti-corporate sentint, anti-intellectualism, and political conflict... at least the U.S. maintained its status as a superpower.
-Tap, tap.
“Um, Miss. I... I don’t really understand this shale gas thing. May I ask ✪ Nоvеlіgһt ✪ (Official version) you a question?”
A new employee, scanning through a PDF on the computer, spoke up.
“Hm? Oh, sure, ask away.”
“Shale gas includes oil too, right?”
“Yeah. There’s gas, and there’s oil. The ‘gas’ in ‘shale gas’ doesn’t refer to natural gas; it’s shorthand for gasoline.”
“...Then oil reserves would increase dramatically, wouldn’t they? It’s a much greater technology than I thought.”
I smiled faintly, affirming his words.
“Exactly.”
Who knew how it would all turn out, but renewable energy developnt would probably be delayed quite a bit.
This was sothing I’d eventually have to handle personally, investing my own money if necessary. Unlike those old n who didn’t care about climate change, I planned to live on Earth for another hundred years.
Or maybe I should go all-in on nuclear fusion. Either way, that wasn’t sothing to worry about right now.
“The trend points toward falling oil prices, but... no one knows when the futures market anomalies will peak. That’s why you’re all sitting here, doing this job.”
“Ah, yes. I’ll do my best.”
“If you do well, I’ll give you a generous bonus, so don’t worry too much. A promotion would be nice, wouldn’t it? In ten years, rank promotions will hit a massive bottleneck, so it’s better to build up achievents early.”
I spoke calmly, encouraging him.
It wasn’t difficult. When the chairwoman herself personally encouraged new hires, how could they not feel motivated?
Of course, whether people actually considered it encouragent varied, but everyone knew that the thicker the envelope they received, the thinner their walls of resistance beca.
.
.
.
-Rustle.
“Today’s newspapers, Miss.”
A staff mber wearing black sunglasses carefully approached my desk, pushing a tray piled high with newspapers.
“Oh, I’ll take them.”
An employee working nearby tried to help, but I waved him off.
“Hm? No, no, stay comfortable. Just relax. It’s my hobby, so I’ll do it myself.”
Well, even if soone ca in and out constantly, attending to while I worked, the staff probably wouldn’t feel that uncomfortable. After all, I told them to relax.
“Ah, is it uncomfortable for you if I stay here?”
“N-no! Not at all. It’s fine. Really.”
“Really? You’re sure? You’re okay with staying here?”
“Yes! You can stay as long as you want.”
“If you say so. I’ll be heading to Yukong later anyway, so I won’t be here long. Hm, the air feels a bit stuffy, though. We should probably get so ventilation... Oh, I didn’t an you had to do it.”
See?
They said they were fine.
There were a few employees glancing around nervously, but most n who t reacted like that, so I ignored it.
Of course, won reacted similarly, but that was understandable.
I’m pretty, after all.
And on top of that, I pay very well.
***
The Korea Oil Corporation.
Abbreviated as Yukong.
Aside from the difficulty of guessing the original na from its abbreviation, Yukong was once a highly promising and famous oil company, but now its reputation was all but gone.
Even when Yoo Jin-ha had childishly co to Yukong’s headquarters to openly pick a fight, they had responded indecisively—too timid to throw him out.
The reason, of course, was the unprecedented national crisis: the financial ltdown. Thanks to it, Yukong was extrely weakened.
“...Are you saying we should expand operations now, when oil demand is low?”
“Yes. Seongyeon Group has already been inford... I assu you haven’t heard?”
A middle-aged man, whose sharp eyes contrasted with his soft smile—likely a heartbreaker in his younger days—cornered Yukong’s president.
“Even BS Investnt can’t justify such reckless expansion...”
BS Investnt was in the process of acquiring Seongyeon Group.
It was a delicate situation. They were about to beco family, but no one knew how it would happen yet.
That was precisely why Yoo Ha-yeon had urgently dispatched Yoo Jin-ha. Seo Ji-yeon simply didn’t have the experience or reputation to handle this.
And... from Yoo Jin-ha’s perspective, this was manageable.
Naturally. Yoo Jin-ha had been around Chairman Yoo Seong-pil for a long ti. He had the justification, the benefits, and the money. There was no way he could fail.
“The decision isn’t yours, President. I make the decisions, and I take the responsibility. Understood?”
“....”
Of course, Yoo Jin-ha knew full well this was a crazy plan.
‘Right now, Korea is in its worst economic crisis since its founding, but it’ll recover soon. We’re buying gold at high prices through Daehwa Trading... If that’s not enough, we can pour money into industries other than IT.’
Whether she expected him to believe that or not, Yoo Ha-yeon casually talked about the post-crisis future.
As if Yukong’s severe demand shortage was actually a great opportunity because oil prices were cheap.
‘They’ll handle it sohow.’
Though a bit uneasy, Yoo Jin-ha passed along the ssage exactly as he heard it, pressuring the president.
Maximize oil storage capacity.
“Oh, and while we’re at it, expanding into the petrochemical industry would be good too. We should consider buying and operating a few oil tankers.”
“That’s easy to say, but will it be profitable?”
“It will.”
Answering firmly, Yoo Jin-ha smiled gently.
It wasn’t his money anyway, so failure didn’t matter much...
And more importantly, BS Investnt had been allocated far too much money to begin with.
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