Geysers in the Permain Basin

 12/26/2025

Geysers Arriving in the Basin

 

The Permian Basin, which includes West Texas and Eastern New Mexico, provides some 50% of US crude production. For every barrel of oil the Basin also produces five or six barrels of water.  The Basin is named after the Permian geologic period at the end of the Paleozoic era. It consists of several basins resulting from an ocean 250-290 million years ago. Hence, it produces a lot of salt water. Then the earth’s oceans rose and fell creating a vast but shallow Permian Sea. Today the sea is gone but we do have the beach sand.

Hydraulic fracking increases underground pressures. When those pressures exceed .5 pounds per square inch per foot, the water seeks a pathway upward. This is a threat to sources of drinking water.

These pressures now run as high as .7 pounds. In January 2022 the water found a pathway out of the ground.  The result was a geyser of water 100 feet high in Crane County. The original well had been plugged. But the pressure was great enough to escape the well bore.

 This is causing great concern among ranchers and those seeking a clean glass of water. Crude oil is a large component of the Texas economy. Don’t expect any scaling back of exploration. But a major incident not in isolated Crane County could change the calculus of the oil patch.

Oil prices have pulled back today. February 2026 crude is down 94 cents at $57.41. There is no lack of supply. Price did bounce off $55 which is a positive. Yet tanker seizures in the Caribbean have yet to push the price back above $60.

On my professorelam.blogspot.com blog I commented that when a market is in vertical condition, further analysis is not possible. The gold and silver markets are a case in point. February gold has rocketed another $80 today to $4,582.  Silver has reached $76.25 with a $4.50 daily gain. All measures of momentum for these markets are maxed out. A case in point is platinum which is up 10% or $241 today reaching $2,487. Palladium jumped $186. Red hot metals markets are rarely good news for the rest of the economy. Investors are clearly piling into the metals as an alternative to paper money. Governments take note.

The SPX is up a mere $4 and the Dow Industrials down 55. Metals and stocks are extended by any momentum measure. Investors should be writing call options against long positions for downside protection. As always during the Holiday season, volume has been light.

The bottom line is that metals and stocks have advanced in tandem. Both are over-extended. Remember that markets in parabolic formation near always retreat in the same fashion.

Dennis.elam@at.net