Showing posts with label oil. Show all posts
Showing posts with label oil. Show all posts

Saturday, September 5, 2015

Rejecting Keystone Will Hurt Obama Legacy

(Sue Ogrocki/AP)

A single action can define a legacy. If President Barack Obama rejects the Keystone XL pipeline in the next few weeks, as appears likely, it will solidify the impression that the administration is fully committed to action on climate change and generally opposed to domestic energy production. While this legacy may charm some on the left, it perpetuates a false choice between abundance and sustainability, sacrificing a unique opportunity to depolarize the energy and climate debate. It also happens to be at odds with the president's actual record on energy policy.
Obama's term has been marked by a profound resurgence in domestic energy production. Since he took office, domestic oil production has risen 75 percent and natural gas production increased by 25 percent. America has gone from being an energy weakling worried about rising dependence to an energy superpower fighting over whether to allow crude oil exports.
The president's energy production stance has been evident in his support for natural gas production despite progressives' opposition to drilling and fracking. In his 2013 State of the Union Address, Obama asserted, "The natural gas boom has led to cleaner power and greater energy independence. We need to encourage that. And that's why my administration will keep cutting red tape and speeding up new oil and gas permits." Consistent with this pledge, the Department of Energy has worked to speed up the permitting of liquefied natural gas export facilities enabling increased gas production to serve a global market. While the administration recently strengthened air pollution requirements for future oil and gas wells, it opted not to regulate existing production, which is where the bulk of emissions and compliance costs lie.
The administration is also employing creative statutory interpretations to avoid adding the lesser prairie chicken and sage grouse to the endangered species list – a move that would greatly complicate energy development in the West. Despite the worst environmental accident in U.S. history, the administration worked aggressively to restart offshore oil production in the Gulf of Mexico. And just this month, the Interior Department gave the go-ahead to allow oil exploration in the Arctic.
Of course, the administration has not always been in the oil industry's corner. The president rarely misses a rhetorical opportunity to beat up on "subsidies to big oil." The administration has adopted strict drilling regulations on federal land, and many in the industry believe more aggressive air quality standards will come. Moreover, administration critics rightly point out virtually all the recent increases in energy production have occurred on private lands. However, the administration's decision to stay out of the way was a choice that should not be lightly dismissed.
Some see contradictions in the president's actions to reduce greenhouse gas emissions while supporting domestic energy production. But far from contradictory, efforts to embrace both the present and the future is the essence of sound energy policy. Those who believe we can accelerate the global transition away from fossil fuels by blocking critical pipeline infrastructure and market opportunities like the export of U.S. oil are simply wrong. It doesn't work.

Thursday, August 20, 2015

Wall Street set to sell off as oil holds near lows

U.S. stock index futures indicated a sharply lower open on Thursday, with Dow futures down as much as 160 points, as oil prices extended losses and investors digested Wednesday's Fed minutes and more volatility in Chinese markets.
Wednesday's Fed minutes left the markets wanting, with enough nuance to keep Wall Street divided over whether the first rate hike comes in September or later.
That means the scrutiny of each piece of data, and particularly job-related or inflation data, will be intense.
Initial claims data came in at 277,000, but remained consistent with an improving labor market trend that could support a rate hike this year.
The U.S. 2-year Treasury note yield near 0.66 percent, while the 10-year yield trimmed losses to trade near 2.11 percent.
The U.S. dollar traded slightly lower against major world currencies, with the euro above $1.11.
Existing home sales, the Philadelphia Fed survey and leading indicators are all released at 10 a.m. ET.
The Philly Fed survey will be key, after the Empire State survey earlier in the week plunged to a 2009 low.
In oil markets, Brent crude traded at just under $47, down more than 1 percent, while U.S. crude hovered near $41 a barrel, recovering from a fresh six-and-a-half-year low near $40. 
Traders were also keeping an eye on a range of U.S. jobs data and China's continuing rollercoaster ride, with the benchmark Shanghai Composite closing 3.4 percent lower, down 128.53 points. 
On the earnings front, Madison Square GardenSears Holdings and The Buckle were scheduled to report before the bell. 
Sears lost an adjusted 67 cents per share for its latest quarter, smaller than the loss of $2.50 estimated by the lone analyst providing an estimate. Profit margins improved at both the Sears and Kmart chains, but same-store sales declined.
Walt Disney—Bernstein downgraded Disney to "market perform" from "outperform," saying valuations for media stocks need to be adjusted because of an increased risk premium regarding affiliate fees.
Hewlett PackardGapIntuitMarvell TechRoss Stores, and Fresh Market are all due after the bell.
In Europe, the pan-European Stoxx 600 index was 1.3 percent lower, with investors taking in the latest Fed minutes and concerns over Chinese growth continuing.

Money Manager David Kotok: Plunging Oil Could Fall to $15

Image: Money Manager David Kotok: Plunging Oil Could Fall to $15

Tumbling Oil Prices have hit six-year lows, and Cumberland Advisors' David Kotok predicts that could plunge even lower.

"We could go back to $15 or $20, this is a downward slope, we don't know a bottom," the influential money manager told Bloomberg TV. A year ago, oil was about $100.

U.S. oil prices hit their lowest in almost six and a half years on Wednesday after U.S. data showed an unexpected rise in crude stockpiles.

U.S. crude oil futures, also known as West Texas Intermediate (WTI), were down $1.20 at $41.42 a barrel by 1450 GMT, after touching a low of $41.18. The front-month, September, U.S. crude oil contract is due to expire on Thursday. North Sea Brent crude was down 90 cents at $47.91 a barrel.
Oil has tumbled more than 30 percent since this year’s peak close in June amid signs that producers are maintaining output even after a surplus pushed prices into a bear market.

A further decline to $15 a barrel would be huge. Oil hasn't traded that low since early 1999, when gasoline at the pump was selling for under $1 a gallon, CNNMoney reported.

The Organization of Petroleum Exporting Countries has pumped above its 30 million-barrel-a-day quota for more than a year, according to data compiled by Bloomberg. Angola plans to ship 1.83 million barrels a day in October, the most since November 2011, according to a preliminary loading program obtained by Bloomberg. That compares with 1.77 million barrels a day from Africa’s second-largest crude producer in September.

Meanwhile, Iraq must increase oil output to meet the needs of its growing population and provide services, Prime Minister Haidar Al-Abadi said on his website. The nation’s production climbed to a record 4.18 million barrels a day in July, according to the International Energy Agency.

Via: Newsmax

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Tuesday, August 18, 2015

[VIDEO] CBS and NBC Fail to Cover IRS Data Breach, Feds Approving Drilling in the Arctic

In Monday evening’s edition of network bias by omission, CBS and NBC neglected to stories concerning a data breach of American taxpayers at the scandal-ridden IRS and the Obama administration finally giving approval for a major oil company to begin oil drilling in the Arctic off Alaska’s coast. Surprisingly, ABC’s World News Tonight picked up the pieces and provided their viewers with coverage of a full segment on the IRS breach and a brief on the future of drilling in the Arctic. 

On the subject of the IRS, anchor David Muir described the information as “a troubling new development in the case of computer hacking at the IRS” as “far more taxpayers’ documents could have been compromised than we first knew.” 
Speaking with Muir, senior Justice correspondent Pierre Thomas reported that “three times as many taxpayers [were] affected” as “[t]he number jump[ed] from 114,000 identified in May to roughly 334,000 possibly targeted.”
Thomas further explained in the time remaining how the information that the IRS has on Americans includes their salary, address, and date of birth to name a few that all could easily enable thieves to “assume your identity” and make hundreds of thousands of people victims of identity theft.
While Telemundo kept their viewers in the dark on this story, Univision’s Noticiero Univision had an 18-second news brief from co-anchor Jorge Ramos on the data breach and the growing number of Americans potentially affected.
Concerning the oil drilling, Muir dedicated a 14-second brief to the long-awaited decision by the Obama administration: 
Tonight, oil drilling set to begin again in the Arctic Ocean. The U.S. government giving Royal Dutch Shell the final permit to drill off Alaska’s northwest coast. The first drilling there in more two decades. Shell bringing in special equipment to comply with environmental regulations.
On the Spanish-language network front, Telemundo and Univision ignored it while the PBS NewsHour and FNC’s Special Report joined ABC in covering this development regarding the future of drilling in the Arctic.
Instead of mentioning either one of these stories, CBS Evening News fill-in anchor Charlie Rose promoted viral video of a dump truck driver in Saudi Arabia driving with the container up when it crashed into a highway sign.

Sunday, July 26, 2015

Environmental groups raise concerns over Florida's new hunt for oil

Renewed hunts for oil in sensitive Florida ecosystems have environmental groups raising questions about the state's regulation of the oil and gas industry.
A Miami company, Kanter Real Estate LLC, has submitted a permit application to drill an exploratory oil well on the eastern edge of the Everglades.
Meanwhile, federal approval is pending for a seismic survey meant to locate new areas for drilling in the Big Cypress National Preserve, a freshwater swamp whose health is vital to the neighboring Everglades and to native wildlife, including the endangered Florida panther.
The state recently issued a wetlands activity permit to Fort Worth, Texas-based Burnett Oil Co. Inc. for the survey that would cover 110 square miles within the preserve. Florida and the National Park Service are requiring a number of steps to ensure minimal harm to wildlife and the environment, but the proposal worries critics who have complained that lax oversight of previous drilling operations left ecologically sensitive areas vulnerable to contamination.
From 2012 to 2014, Florida issued three environmental violations for oil and gas operations in the state, according to violations data analyzed by The Associated Press.
The three violations occurred in 2014 after Collier County officials raised concerns about another Texas oil company's use of a fracking-like oil recovery practice at a well near panther habitat.
The Department of Environmental Protection — the state's oil and gas regulator — say the number doesn't show lax law enforcement, but rather that Florida's strict inspections keep well operators in compliance.
"During the 2014 calendar year, DEP's inspectors conducted 2,472 inspections on the 160 active wells in the state. Due to the frequency of these inspections, potential problems are identified and remedied before a violation occurs or a compliance action is required," said DEP spokeswoman Lauren Engel said in a statement.
Environmental groups argue that Florida's regulations currently only cover conventional drilling methods, not the "acid stimulation" that prompted last year's violations or other advanced extraction techniques.
"We've learned that Florida's oil and gas laws are extremely antiquated and rudimentary and don't address new techniques such as fracking," said Jennifer Hecker, director of natural resource policy for the Conservancy of Southwest Florida.
Drilling has been a part of the Big Cypress since before it became a national preserve in 1974. The first wells were dug in the 1940s, and drilling continues to this day, as new technologies may improve the efficiency of extracting oil from deposits running underground from Fort Myers to Miami.
The Burnett survey would be scheduled for Florida's winter dry season and produce vibrations created by plates attached to thumper trucks driving across a grid.
The state has gone on record opposing some methods of seismic testing, but it has not objected to the Burnett project.
DEP sent a letter to the Obama administration opposing new rules allowing seismic surveys for oil and gas off the state's Atlantic coast because not enough was known about the surveys' effects on marine life. The seismic survey in the Big Cypress, however, has to comply with Florida laws, said Engel.
"With onshore seismic, we have regulatory authority through this permitting program," she said.
Burnett says it's prepared to address concerns about the survey's environmental impact. The wetlands activity permit issued by DEP requires the company to restore "using hand tools" any habitat damaged by the survey vehicles, and it encourages crews to remove any invasive plant species they encounter.
The survey trucks' wide, balloon tires will be less damaging than off-road vehicle tires, said Burnett spokesman Ryan Duffy.
The survey would cover an area between active well fields in the eastern and northwestern parts of the preserve, far from recreational areas. In addition to the state permit, the park service could impose additional stipulations on Burnett to mitigate any environmental damage, said Ron Clark, the preserve's chief resource manager.
Drilling has been a rarity east of the Big Cypress. In 1985, a Texas company drilled in western Broward County, but that well was plugged and abandoned the same year, according to DEP.
The Kanter permit application calls for a 5-acre operation to drill down 11,800 feet.
In a statement, John Kanter said the application is "one of the first steps in a long-term plan that includes proposed mining, as well as water storage and water quality improvement components that have the potential for assisting with Everglades Restoration."
His family has owned the Broward County property slated for exploratory drilling for over 50 years. "As stewards of this land, we are fully invested in ensuring this project provides maximum public benefit while also providing Florida with solutions for water storage and treatment in South Florida," he said.
Environmental groups and some local elected officials say any drilling expansion threatens the region's water supply and Everglades restoration plans.
"Florida law asks the driller to do the best job possible, but it doesn't say you can't drill for oil in wetlands, in the Everglades, in panther habitat," said Matt Schwartz, executive director of the South Florida Wildlands Association.
In Miramar, the city 5 miles from the where Kanter wants to drill, the mayor and city commission recently voted to oppose the plan because of the threat to their drinking water.
Bonita Springs is over 30 miles from the Big Cypress and hasn't been a target for drilling, but the city council last week unanimously approved an ordinance banning fracking within city limits.

Saturday, July 25, 2015

California Consumer Advocates Complain About Record Oil Industry Profits

Consumer advocates said oil refineries are logging record profits as the state's drivers pay gas prices well above $4 a gallon.
Consumer Watchdog looked at refinery margins, which is the cost and profit calculated for every gallon of gas that's refined. The historical margin averages about 46 cents a gallon. The current margin is $1.17.
Oil industry officials said that number is misleading because it includes both cost and profit. They blame recent prices on refinery outages.
The issue is getting attention because California's average price is about $1.10 above the national average price. The difference is even sharper in Southern California where prices are nearly $1.40 higher.
Consumer Watchdog's Jamie Court said the state needs to step in to regulate prices.
"What's really outrageous is we're over $4 a gallon and the price of crude is more than half of what it was the last time we were over $4 a gallon. It's between $50 and $60 a barrel," Court said.
Current gas prices are uncomfortable for all California drivers, according to Tupper Hull of theWestern State's Petroleum Association. He said the soaring prices are linked to a series of refinery outages that create gas shortages.
"The market can react with a lot of volatility and you will see big swings in prices," Hull said. "Right now we're seeing truly one of the largest differentials between the national average and California prices than we've seen in a very long time."
San Diego's average price for a gallon of regular is a $1.44 above the national average.
Consumer Watchdog is asking the governor and state lawmakers to intervene with a windfall profit tax. They also hope the refining industry shares more information about their business.

Wednesday, July 22, 2015

Obama's Scorched Oil and Gas Policy

The clock is ticking on the Obama Administration. With only 18 months remaining in his final term, federal energy planners and agency regulators are working as quickly as possible to impose new rules on the oil and natural gas industry.
As one industry lobbyist told the Houston Chronicle, “The agencies are all in hyperdrive to get the rules across the finish line or have them well-positioned in the regulatory queue so that their path forward past Jan. 20, 2017, is clearly established.”
The rush to increase regulations on oil and natural gas is nothing but bad news for an industry that has already contracted because of a large drop in wellhead revenues. Ditto for consumers who need infrastructure investments today for affordable, plentiful energy tomorrow.
Oil and gas has been a rare bright spot in Obama's economy—and in spite of, not because of, his policies.
Ending four decades of concern over imported oil, the United States is now the largest oil and natural gas producer in the world. Advanced technologies, including hydraulic fracturing and directional drilling, have harvested an energy bounty that has lowered costs for consumers, created thousands of jobs, and nearly single-handedly lifted the nation from the depths of The Great Recession.
Punishing the good in the name of climate change (is there anything not related to climate change these days?) is a legacy issue for the President. Yet some measures in Obama's thicket of impositions could impede the fight against his so-called “greatest threat to future generations.”
By proposing new methane emission regulations, for example, the administration will hike drilling costs for natural gas. Even the EPA’s own data shows that methane emissions already have fallen dramatically due to the industry’s voluntary actions and rules already on the books.
The administration also has finalized new hydraulic fracturing regulations for wells drilled on public lands despite a new EPA report that found “no widespread, systemic impacts to drinking water sources.”
Of course, the administration’s fracking rules will not apply to this White House's new prohibitions on nearly 300 million acres of federal land. The Arctic National Wildlife Refuge, portions of the Arctic Ocean, and large tracts of several Western states are among the parcels the White House is preserving “for future generations.”
Moreover, the offshore leasing plan for 2017–2022, which the Interior Department hopes to complete soon, does not include leases in the energy-rich eastern Gulf of Mexico or along the Pacific Coast. Instead it proposes to allow the industry to pick over bones in the previously explored and developed western Gulf and possibly in a small portion of the Atlantic Outer Continental Shelf.
There also are new offshore drilling rules, including a regulation requiring Arctic drillers to have two rigs on hand—one to drill the well and a backup rig in case a relief well is needed. This, despite a National Petroleum Council report calling on the administration to encourage Alaskan offshore drilling now or become more dependent on foreign oil in the future.
All of these regulations, including tougher ground-level ozone standards, are moving forward in lock-step with the regulations on carbon dioxide from power plants. This drastic, controversial proposal combined with other regulations will shutter scores of coal-fired power plants andreduce electrical power by as much as 130 gigawatts, enough to serve the residential needs of more than 100 million Americans.
These new regulations are just a few of the counterproductive, top-down rules which will be proudly trumpeted at the next presidential library. They will be added to the plethora of similarly misguided edicts such as the ethanol mandate as well as the “sue and settle” rulemakings accomplished by collusion between administration officials and environmental groups.
Based on this record, it is abundantly clear that the administration’s final months of “hope and change” will be marked by continuing hostility toward natural gas, oil, and coal. The overriding goal—in addition to making electricity costs “necessarily skyrocket”—is to keep these fuels in the ground. This raft of regulations is the president’s workaround to his inability to push cap-and-trade legislation or a carbon tax through Congress.
The administration’s own energy analysts admit the economy runs primarily on natural gas, oil, and coal--and will for decades to come. As a result, Obama's vindictive energy agenda has become a rear-guard assault on neutralizing, if not reversing, one of the great industrial achievements of our time.

Sunday, July 19, 2015

Can This Next Shale Hotspot Live Up To The Hype?

Despite the shale slowdown in the United States and disappointing results across Europe, largely caused by the recent dramatic decline in international oil prices, Argentina’s small but burgeoning shale industry still shows great potential. A unique convergence of geological, political and economic factors has placed the country on the cusp of impressive growth, although certain challenges remain.
Argentina is home to the world’s second largest shale gas and fourth largest shale oil deposits which, according to recent studies, are better or equal in quality to that found in the home of the shale revolution, the United States. Argentina’s world-class source rock is well located, largely situated in sparsely populated areas with good access to water sources necessary for fracking.
In addition, Argentina has a healthy domestic market demand for both oil and gas, as well as impressive export opportunities in the region, with an existing extensive pipeline system for conventional resources. In combination with a stable security environment, generally well-educated workforce and a growing pool of professional engineers, the country is an encouraging prospect.
Numerous global conglomerates have already commenced operations in Argentina including Chevron, Dow Chemical, Petronas, ExxonMobil, Shell, Total and Wintershall. Meanwhile, other international majors and midsize companies have followed their lead over the past few years, showing an increasing interest in investing in the country. These companies recognize that, despite widespread reports regarding the uncertain and at times unfavorable fiscal and regulatory environment in Argentina, shale is a long-term game; commercially viable oil and gas volumes are only likely to start being produced well after the end of the current government’s term in December 2015.
Latin America’s third-largest economy will go to the polls to elect a new president in October and the next administration is likely to take a new approach in order to attract much-needed foreign investment, including in the country’s promising unconventional resources. All three presidential frontrunners have publicly voiced their support for the shale industry and the need for increased foreign investment, particularly as a way to reduce the country’s crippling energy deficit. As such, in the coming years companies will find it easier to initiate and expand their operations, as well as repatriate profits.
In the meantime, although a number of domestic fiscal and regulatory hurdles remain, the current administration, led by Cristina Fernández de Kirchner, has introduced a few changes to help try to stimulate investment. Late last year, the government passed substantial reforms to the country’s federal Hydrocarbons Law in order to attract foreign investment by standardizing the rules and eliminating certain provincial taxes. While the new law represents a promising first step towards creating a more favorable regulatory environment for shale, it remains to be seen how the next administration will apply its provisions in practice.
However, despite the recent growth in interest from foreign companies, the exploration of shale in this South American nation will face several key challenges. In addition to environmental and social risks, the principal long-term threats to the industry’s successful development are geological and technical.

While there have been some encouraging studies to date, companies are still engaged in conducting preliminary investigations of the country’s formations. As such, it remains unclear whether the sizeable deposits in the well-known Vaca Muerta formation in Neuquén Province in Argentina’s west, as well as other formations across the country, will be capable of eventually returning substantial profits. That being said, in a promising development, Argentina recently joined the ranks of a small number of elite of countries (the U.S., Canada and China) that are producing commercial volumes of crude oil from tight formations.
Argentina will also continue to face considerable technical challenges on the road to creating a profitable industry. Companies will need to import costly machinery – which will be particularly difficult until the end of 2015, given the current import restrictions on essential equipment – and keep up-to-date on ever-changing technologies specific to shale.
Moreover, until the end of the current administration, companies will have to overcome a number of fiscal risks, constraining their activities in the short term. More broadly, the recent fall in the international price of oil has led many to question the viability of shale operations around the world. While in the near term low oil prices will likely affect the local industry’s profitability, the current state of affairs is unlikely to affect shale’s long-term chances for success in Argentina, owing to both the likelihood of an eventual price rebound and broad political support for the industry.
The principal challenges outlined above, although significant, are surmountable. Moreover, regardless of which administration takes the reins at the end of this year, shale will be firmly on the political agenda. The key challenge for the next government will be to ensure that the overall business climate is capable of attracting the level of investment needed to make shale profitable.
With sufficient levels of investment and the right technological capabilities, Argentina’s shale industry could take off within the next decade.
By Louisa Richey for

Friday, July 10, 2015


The debate over whether to lift the ban on crude oil exports is picking up on Capitol Hill, and 
Rep. Kevin Cramer (R-ND)
 is pushing for removal. He explains exclusively to Breitbart News that repealing the ban would have a favorable impact on America’s agriculture and create 440,000 jobs.

On Thursday the Energy and Commerce Subcommittee will debate lifting the export ban on crude oil. The Agriculture Committee held a hearing Wednesday on the issue.
Cramer said critics argue, “Somehow lifting the oil export ban would cause the price of gasoline and fuel at the pump to also rise.” However, Cramer told Breitbart News that many independent studies show that lifting the crude oil export ban would more likely bring the price of fuel down:
Anytime you have a lot of a product – and we have a lot of oil…now that we’ve hit the wall, if we don’t have another place to sell the product, obviously production is going to stop or come down and when that happens, of course, price is going to spike again – that’s just the natural order of things, but if we can be competing in the global market place going up against Saudi Arabia – going up against Iran, that just keeps more and more production happening, creates more jobs.
Cramer pointed to recent studies that estimate there would be roughly 440,000 jobs created if the crude oil export ban were lifted.
IHS Energy estimated, “Total U.S. jobs increase due to free trade will be, on average, 394,000,” while “peak job creation in 2018 is nearly 1 million.”
The Brookings Institute adds, “Lifting the ban on crude oil exports from the United States will boost U.S. economic growth, wages, employment, trade, and overall welfare.”

Wednesday, July 8, 2015

CNBC: Cramer: $30 oil could be around the corner

While most investors are freaking out about Greece, Jim Cramer thinks it would be more prudent to take a closer look at the price of oil, which has much more of a direct impact to U.S. companies.
The price of oil has been hit hard lately, dropping to about $50 during the day on Tuesday from $59 a week ago. Cramer is still in shock, because when oil was hovering around $60 he was convinced that the independent oil companies might provide some real leadership in the market.
But after the latest session of crude being put through the meat grinder, Cramer's opinion has been thrown out the window.
So what could be next for oil prices?
To find out, Cramer turned to the help of Carley Garner, a technician and co-founder of DeCarley Trading, and a colleague of Cramer's a
"Now, if there is one thing you need to keep in mind as the price of oil tumbles, it is that this is very much an issue of excess supply," the "Mad Money" host said. (Tweet This)
"If you agree with Garner that oil could be headed lower here, you have to hold off on buying the oil stocks in order to wait for better prices"-Jim Cramer
Looking at the long-term chart of U.S. oil production going all the way back to the 1920s, Garner pointed out that the U.S. has doubled its monthly oil output since the lows of 2008 and is nearly back to its peak levels set back in the 1970s. Thus, unless some sort of unforeseen powerful even occurs, she believes that the oil market will be over-supplied for a long time.
But to really understand what is going on with oil means knowing what the big money dogs are doing with it. That is why Garner took a look at the Commodity Futures Trading Commission's weekly commitments of traders report, which tells investors how the big money is betting in the oil futures market.

Wednesday, June 10, 2015

Four Reasons Oil Could Fall to $40 a Barrel

The OPEC oil cartel's meeting in Vienna on Friday went largely as expected. Production was maintained at 30 million barrels per day with unofficial production numbers about 1.5 million barrels above that as Saudi Arabia opens the spigots and redoubles its price war against U.S. shale oil producers who, for their part, are also increasing production. Moreover, if Iranian economic sanctions are dropped later this month as part of a nuclear deal, another million barrels per day would be pumped.
Long story short: While oil prices have held near the $60-a-barrel level thanks to a slight inventory drawdown associated with the start of the U.S. summer driving season, a combination of deepening oversupply, still high inventories, extended bullish positioning and the regular demand slowdown at the end of the summer suggests prices should start sliding again soon. Storage tank capacity could be tested as soon as September.
According to research by Credit Suisse, futures market positioning suggests downside price risk of about 30 percent — which would be enough to take West Texas Intermediate back toward $40 a barrel in a test of the March lows.
OPEC oil suppy/demand balance
The chart above puts OPEC's decision in the context of an epic supply glut. Remember also that while the U.S. drilling rig count is down about 60 percent from its peak, total production increased in the week of May 22 to a new all-time high of 9.6 million barrels per day.
Via: The Fiscal Times

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Monday, January 20, 2014


The biggest theft in world history is occurring right here, right now—literally, right under our feet. It’s a theft of wealth that measures in the 15-digits—wealth that’s being taken away from its rightful owners, the American people, and being sacrificed, in effect, to the Green Gods of Austerity and Sacrifice.

The exact size of the loot? It totals $128 trillion in recoverable oil and natural gas, according to the Washington, D.C.-based Institute for Energy Research (IER). To put that $128 trillion sum in perspective, we could use a mere 13 percent of it to pay off the entire US national debt. Indeed, that $128 trillion is almost 35 times greater than federal expenditures for fiscal year 2014, and more than seven times the annual US GDP.
We might note that IER’s $128 trillion estimate includes only oil and gas; no one has any real idea how much more wealth—in the form of coalrare earth elements, and who knows what else—is to be found in the the 28 percent of land in the US that’s owned by federal government.
At present, there’s no plan whatsoever to do anything to utilize this wealth as the Obama administration is seeking ever-tighter federal regulations, and, beyond the Keystone Pipeline, Republicans hardly ever raise the issue.
In fact, the IER study was released more than a year ago, and nobody seems to have noticed. Since then, we’ve had endless negotiations over some sort of “grand bargain” to raise taxes and cut earned senior entitlements—and in the meantime, we’ve been ignoring the grandest bargain of all: abundance.
Seems more than a little ridiculous, doesn’t it? That is, for the U.S. to be scraping along, fiscally and economically, while leaving fallow such gargantuan natural resources?
Moreover, to get at this wealth, we don’t need to drill in Yosemite or other National Parks; we simply need to access the vast federal lands on and offshore in the "Lower 48," Alaska, and the many overseas U.S. territories in the Caribbean and the Pacific.
So how did this wealth freeze-out happen? How did so much treasure get locked up and unused? Here’s how: in the early 19th century, the federal government sold off or gave away most of its lands in the east. Then, in 1862, came the first of a series of Homestead Acts, which led to the glorious privatization of much of the Midwest. Yet the mostly arid lands west of the Mississippi were generally not seen as viable property for homesteading, and so Uncle Sam continued to hold title. Then the environmentalists came along and realized that they could gain de facto control of more than a quarter of US territory. Congress repealed the Homestead Act in 1976, and after that, the environmentalists happily proceeded with their no-growth plans. 
However, the Green land-grabbing did provoke a pro-growth backlash in the West, the so-called “Sagebrush Rebellion,” dedicated to opposing enviro-liberalism. The Sagebrush Rebels helped Ronald Reagan carry every Western state, save Hawaii, in the 1980 presidential election; the hope was that Reagan would open the West to development. Unfortunately, their point man in Washington, Interior Secretary James G. Watt, turned out to be bit of a kook with a nasty sense of humor; he was forced out of office in 1983, and that was the end of the Sagebrushers as a force.
In the decades since, Green Democrats, joined by more than a few Green Republicans, have banned drilling everywhere they could. The bans on offshore drilling are a nice perk for rich people who treasure their ocean views, but it’s not so great for everyone else who needs money or a job.
Meanwhile, other countries have charged ahead. Norway, for example, eagerly drills in the waters outside of its scenic fjords; that’s why the Norwegian Sovereign Wealth Fund is worth $783 billion—not bad for a country of just five million people. When the oil is gone, the oil wells will be gone, and Norway will still be rich because of all that money in the bank.

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