Last night, following the second round of feasting, I took a minute to flip open my phone to see how the OPEC meeting went. Looking at the price of oil, I hit a sudden case of indigestion. That was when I knew how bad today would be.

And it hasn’t disappointed. My entire book is down 10% right now. I’m down almost 15% for the year. The energy & gas sectors are solely responsible for this slaughter, taking me from +25% to -15% in a quarter.

Jim Cramer wins, folks. This is brutal. But I’m going to hold fast through it.

I can’t believe that Saudi Arabia is actually waging a price war against the USA. Why the hell would they? We don’t even export, and don’t use barely any of their oil.

If I were Russia or Venezuela or an Iran puppet nation, I’d be looking at the Saudi’s with crazed, lunatic fringe conspiracies ringing in my ears. I don’t know who Saudi Arabia is trying to kill off, exactly. But the most prescient answer may just be “tomorrow’s oil and gas projects”.

The projects that are online now are set for a few years. Hedging has been erected to support them. None of my positions have seen any change in business – that’s the only thing keeping me sane and focused right now. I want to panic, but I just can’t yet.

Check out this report on oil in the Permian Basin (page 14). Average cost per barrel has declined to $55 per barrel. The $80-90 number only applies to new projects.

The average cost per barrel of the Bakken, Eagle Ford, and Permian formations together is estimated at $60 per barrel.

Business Insider posted this graphic awhile back (by Morgan Stanley) that breaks down the extraction cost per barrel (presumably as of 2013-2014, BI is notoriously horrible about leaving off critical information). You can see the first victims of the oil price decline are Arctic drilling and oil sands (read Canada).

You will also notice that North American shale is not so different from so much oil and gas production elsewhere in the world. Yes, the “average” cost of production is higher. But look at the band; it is contained inside the same maximum range as so much else of the world’s oil and gas production. After Arctic and oil sands plays get cut in half, the next round of production cuts will presumably fall fairly even handed, across the highest cost developments, globally. That hardly spells the end times of the USA fracking boom.

Here’s a supporting set of data from Business Insider, provided by Citi. This post is more interesting, because there is a second graphic that shows the cost of every international oil and gas project, by location.

All this trouble for what really isn’t even a problem in the first place. The EIA short term outlook for crude consumption vs. production shows what can hardly be called an issue – a million barrel a day surplus in historical context. The largest gains in the oil supply surplus came from the first two quarters of 2014. You can hardly call those unprecedented; we experienced a much worse supply shock back in the first half of 2012.

Also look at the historic unplanned crude shortages from the Middle Eastern countries (page 15). In the past year alone, half a million barrels a day came back online after having been unexpectedly dropped off. You can see the effect of two separate war times breaking out in Libya. Saudi Arabia is suddenly popping up. Add another country to the mix, or an expansion in lost production from one of those already on this list, and pretty quickly the million barrel global surplus is absorbed.

But the best blessing of all may just be the effects of low oil prices themselves. Globally growth has been terrible and Europe has been our poster child. But with the euro so low and cheap energy prices coming, we may just finally see old mother Europe do something…anything.

This is going to hurt very badly. I was too quick to add back to positions and far to willing to take on margin. But I’m going to stay calm, and wait to see what comes up next.

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Over the past week or so, I raised cash to 25%. This was good fortune, as HCLP, my mantelpiece position, has dropped 8% since I let up.

Today, I repurchased half of those shares, which I sold at $64.19 each, for $59.39.

It seems like good enough of a bet to me. HCLP is growing so fast… it’s trading at just over 17x Q3 2014 earnings estimates. I have no good way to guess what HCLP’s earning’s potential is over time; but 17x doesn’t seem unreasonable, particularly with a steady announcement of 5 year supply agreements being announced and 200% revenue growth last year. When you’ve managed to get in on the ground floor of such a high flying position, it just makes sense to hold long a core stake, and ride the waves.

This 8% drop is just another opportunity to make extra money, until such time as that logic is challenged. For the moment, HCLP just managed to touch its 20 day moving average for the first time since early June.

Next earnings announcement is in August. So tell me, who wants to stand in the way of this thing?

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Short term cautions not withstanding, we are on the precipice of something great.

The entire structure of the global economy is shifting, slightly and slowly. But like all great change, the most striking of the movement comes all at once, at the end.

The United States is driving this assault of the balances of power, globally, as the energy revolution progresses on our shores. This country is set to become the biggest oil producer in the world – and we are now slowly removing the export restrictions that are the last remaining barrier to this end.

This isn’t just about US trade balances and deficits. Those numbers games matter, but they always matter less than you think.

This game is about power. Oil has been the source of power to our enemies for too long. Russia and the Middle East have fed well on global consumption of this product, erecting their cartels around the flow oil to global industry. It has made them powerful and a threat.

The move by the US to become the world’s largest producer of oil and gas can be viewed through a different lens than financial gain alone: this is also going to completely upend our adversaries. What wars and weapons and diplomacy and cooperation could not possibly have accomplished, given the entrenched interests we faced, this one mighty push on our part will quickly bring about.

This is a once in a lifetime opportunity. You must get invested in it, and stay invested in it. All US leadership sees the goal, and no one objects to it. The days of getting beat about by monarchies in Saudi Arabia, needing to cut backroom deals that undermine our own morals with foreign militant groups, having to sit through endless meetings while Russian oligarchs threaten our allies with gas supply shortages…these days are coming to an end.

As the US increasingly becomes energy independent, the argument to even have relations with half these villains becomes non sequitur. We can marginalize them while circling around our true allies and real friends.

I can’t see everything that is going to come from this. Naturally US power will follow. And the North and South American continents should improve, swinging towards democracy and capitalism. Outside of that, while I think US energy independence is a good thing, I wouldn’t be surprised if war also follows. Revolutions surely, but also open war between foreign, former energy exporters who find themselves being boxed into a corner. The Saudi’s days are surely numbered, in particular.

My bet is that Russia will not change much, but they will also have to cut less lucrative deals with China to make it. So at least they will be a less powerful, less interfering Russia. Good riddance there.

Suffice to say, this is unpredictability at its best. While I think I see the theme, I do not yet hear the notes. But I’ll take my chances with it anyway. The old order of things was repulsive. I won’t be crying any tears for OPEC, or for Russia.

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HCLP just blew through $60, as analysts raise targets in response to the HAL announcement.

BAS is back above $27. I guess I could have held onto all of those shares, but I have no regrets. Retaining a 15% position in BAS is more than reasonable.

SLW is pushing its way to $26.

My only position that is down noticeably today is UEC. And that remains my smallest position at 5% of assets.

Fracking investments remain the place to be. Oil names are doing well by extension (and a high price per barrel). I’m telling you, coal will be the next thing to run.

Have a wonderful afternoon.

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I found the terminal position I want, but it has nothing to do with coal. I bought a half sized position in ETP for $56.64.

Energy Transfer Partners, LP is a storage and distribution partnership that specializes in a diverse number of business lines, including (1) midstream, interstate and intrastate transportation and storage natural gas operations, (2) gathering, compression, treating, conditioning and processing of natural gas, and (3) purchasing and marketing natural gas and NGLs.

They’ve been making a flurry of acquisitions, their cash flows seem proper, and they seem cheap relative to peers. They also are paying me 6% in annual distributions to hang out. I like their market position and think the next 10 years will be big for them (same as BAS, same as HCLP).

This is right where I want to be. I’ll refocus energy on coal later – for the moment, I have half assembled positions in NRP and BTU.

Of course, at this stage in the game, it’s going to be hard to hit the kind of returns I got for BAS and HCLP. The market was just so negative about those positions and now since September of last year, it’s getting so expensive. But this is still a good buy here.

I admit it is getting a little harder to find positions to buy. Price to book of companies certainly looks heated, although that’s not the only measure. There are certainly some positions out there priced to fail, like EPD. And coal companies in general look terrible. It wasn’t just tech that got bid up last year.

But there are still lots of positions that are growing revenues and earnings just fast enough to keep that risk threshold around a 10 year horizon. It’s not the 5 year break even points you could have picked up in ’08, but what do you want?

Some of these positions are going to be stealth winner. I think coal names are artificially expensive, but really quite cheap. You have to consider how much of the “expensiveness” is being driven by low coal prices forcing write downs on entire proven reserves. So is the company selling the whole operation for that price level? That’s the big question isn’t it. If you get a coal price recovery, suddenly these operations are all trading <1X book with robust earnings growth.

95% invested.

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If not for Basic Energy Services turning on a dime and sprinting away from the rest of the trash that comprises this trading session, I would be having a pretty bad day.

UEC is down over 50% since I bought it. Mind you, as I have stated repeatedly, it is a small position. At its peak, it was under 5% of my account. So I’m not panicked here. But damn it, that was my 5%.

Give me my money back.

The trouble with the uranium miners (and the reason I’ve been very adamant up until now to just keep it simple and avoid the smaller businesses) is pretty forwardly summed up in UEC’s latest filing. They sold $0.00 in revenue in the first three months of 2014.

That’s $0.00.

The 2014 YEAR OF URANIUM BLISS (or whatever the hell I called it) …has been cancelled. Uranium spot just nosedived this week and, even though I suspect this flash crash is nearer the end of the turmoil, that kind of godless price action can only portend one thing.

Somebody is about to get liquidated.

I just pray it isn’t UEC.

CCJ is treading water daily. It’s all she can do to hold the line, but one false move and it’s a quick list to the side and down she goes.

The rest of my positions are holding up fairly well, actually. The multifamily theme remains tantalizing, particularly now that the primary argument against them – a resurgence in homeownership rates and a drop in occupancy for rentals – is such obvious bunk. AEC and MAA should continue to perform.

NRP has held up decent enough, following the 25% washout it took this year. That’s probably been my worst idea so far in 2014. But they are getting things under control, I have a hunch coal may be a terrific investment here, and I get to collect 8% annually while I wait.

I’m definitely not +10% for the year anymore, but there’s another 8 months to make something happen yet. My fear isn’t my positions, it’s what consequence an entire index of investors getting their combined comeuppance will have on me.

The NASDAQ traders got stupid. Real stupid. Will that spill over to me? It’s looking likely.

Like it or not, the stock market tends to take on a real flare of the vineyard effect. You pop up five vineyards next to each other, they all do well. Plenty of room to visit each, for the patrons. In fact, it draws in more business.

But if one of those bastards let’s an infestation go unattended; suddenly you have nothing but tears and reek wine.

Tesla earnings are out after the bell. Let’s see what happens there.

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