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Peak Cheap Energy

Fighting MSM disinformation and oversimplifications about cost of shale oil and other energy related topics:
as Arthur Berman noted "Shale oil is not a revolution, it is a retirement party"

News Casino Capitalism Recommended Links Secular Stagnation Gas wars Oil glut fallacy Subprime oil: Deflation of the USA shale oil bubble
Paper oil, Minsky financial instability hypothesis and casino capitalism Slightly skeptical view of oil price forecasts Paper oil and record oil futures trading volumes MSM propagated myth about Saudis defending this market share Russia oil production Iran return to western oil markets fear mongering Oil Burden: amount on money spend on energy vs. global GDP
Energy returned on energy invested (ERoEI) Energy Geopolitics Great condensate con A note of ERoEI decline Cushing is filling up hysteria Plato Oil as Hubert Peak in condition of rising oil prices Media disinformation about Plato oil and Hubert peak
Energy disinformation agency and friends Big Fukushima Debate Oil consumption growth The fiasco of suburbia US military energy consumption Media-Military-Industrial Complex Neoconservatism
Neocolonialism as Financial Imperialism  All wars are bankers wars Predator state Bakken Reality Check Junk bond bubble Debt enslavement Neoliberalism as a New Form of Corporatism
IMF as the key institution for neoliberal debt enslavement Media disinformation about Plato oil and Hubert peak Fiat money, gold and petrodollar Energy Bookshelf Financial Quotes Financial Humor Etc
80 years ago the Nobel Prize winning chemist explained where oil DOES come into the picture:

Though it was not understood a century ago, and though as yet the applications of the knowledge to the economics of life are not generally realized, life in its physical aspect is fundamentally a struggle for energy, …

Soddy, Frederick M.A., F.R.S.. Wealth, Virtual Wealth and Debt (Kindle Locations 1089-1091). Distributed Proofreaders Canada.

The ‘backing’ for the petrodollar now includes the monetized value of Chinese and third world labor and natural resources as well as OPEC oil. But controlling the outcome of life’s “struggle for energy” is still the crumbling cornerstone of both US foreign and domestic economic policies:

  • control the world’s access to energy and it has no choice but submitting to the hegemon’s will
  • the U.S. political system is now owned lock, stock and barrel by a financial / military industrial / fossil fuels complex (am I forgetting anybody?). The powers that be are trying to preserve the existing status quo by insuring that life remains a “struggle for energy”.

The denizens of Wall Street and Washington can perhaps be forgiven for believing they were the “masters of the universe” at the conclusion of WWII. What they can NOT be forgiven is their belief – then or now – is that “the end of history” had arrived (unless they cause it).

Steven comment on Michael Klare Delusional Thinking in Washington, The Desperate Plight of a Declining Superpower


Nemesis eventually catches hubris.

"Shale oil is not a revolution, it is a retirement party"
Arthur Berman

When oil is traded too cheaply, the victim of such trades is always the future generations. The drop in oil prices in 2014-2017 might have been a curse, not the blessing as it slowed down or stopped the adaptation processes to the "end of cheap oil". The process that was already in place with $4 per gallon ($1 per liter) gas in the USA, when sales of large SUV dropped considerably and used large SUV could be  bought for a half of its usual price.  The reality is a harsh mistress: the situation in 2018 with depletion of existing oil deposits and new discoveries is now worse than in, say, 2000.  Technology an and will prolong the agony so so far there is no viable solution to "hydrocarbon age".

As of 2018 in the USA consumer still continue to do the same things as before 2008. Such as buying large SUVs. Which fits Albert Einstein definition of insanity ("doing the same thing over and over again and expecting different results"). As one NYT commenter noted (Moscow on the Brazos):

I don't get it. We're supposed to be running out of oil, right? Or has that changed? $2 gas and we've gone past the Bell Curve of supply and use? And now we're all drunk on cheap gas. I'm happy to see new innovative efficient technology, new electric and hybrid cars but now they're selling boatloads of SUVs and pickup trucks. They are back in big style. They are better now, instead of 11 mpg they're 15 mpg.

As IEA )which is a noted chaierleader of position "do not worry, be happy" as for the end of chep oil) noted in

In a Low Oil Price Scenario, longer payback periods mean that the world misses out on almost 15% of the energy savings seen in our central scenario, foregoing around $800 billion-worth of efficiency improvements in cars, trucks, aircraft and other end-use equipment, holding back the much-needed energy transition.

At the same time, the current slump in oil prices proved to be pretty long (started in Sept 2018)  and defy all expectations. That means that any person who tried to predict commodities price in the current environment is suspect ;-).  In a "very long run" the supply/demand dynamic is at work, but market for the period less then a year prices can be pretty arbitrary and completely disconnected with the cost of producing oil and supply and remand ration. This is a side effect of financialization when the volume of "paper oil" traded is the order of magnitude larger then the volume of actual oil expected for any given period.  That is another proof that neoliberalism is an unstable system with a built-in positive feedback loop. As such neoliberalism is quite capable of dragging us through shortages, depressions, environmental disasters, and even wars on the way from one equilibrium to another. So all those general considerations that are provided below are nothing but an educated guess. As John Kenneth Galbraith aptly said: "The only function of economic forecasting is to make astrology look respectable." Readers beware...

This is a skeptical page that was created due to strong doubts about MSM coverage of the current oil prices slump. Especially the idea of oil glut (which in the USA for some strange reason coincide with rising imports of oil.

in this sense MSM cries about getting close to self-sufficency look strange. Yes some tipes of oil-like products produced by shale wells are not very desirable (condensate) and they are stored distorting the whole picture but with rising imports thee can be not "oil glut". But not for the US MSMs. This looks like a phenomenon which came directly from  Geroge Orwell's novel 1984  where it was called "doublespeak". 

The first thing to understand is that at a given stage of developing of drilling and other related technologies there is a minimal price of oil below which production can be continued only at a loss. This price point is different for different types of oil, and slightly varies between different regions but it does exist. For example, a shale/tight oil well often costs around $6-8 million, which needs to be amortized over the life of a well which in the case of shale/tight oil is approximately five-six years. To make things worse unlike conventional wells that can produce approximately at the same rate for a decade, those wells experience a steep decline after two first years. With more half of oil extracted in the first two years. The cost is much higher for non-conventional oil producers than for conventional producers and that means that at prices below, say, $70-$80 per barrel production of shale oil leaves the trail of junk bonds production as well. One is impossible without the other. 

Canadian tar sand production is even more expensive. Deep water drilling is somewhere in between conventional and non-conventional oil, pricewise.

There are different estimates, but most analysts agree that the US shale/tight oil producers need around $70-$80 per barrel to be able to pay their debts and around $60-$70 to break even. Those numbers are slightly less for deep water oil ($40-$50) and slightly higher for Canadian tar sands. The picture below illustrated difference prices to produce different types of oil ( see below) is reproduced from What Me Worry About Peak Oil  by Art Berman (December 27, 2015 ):

This means that production of light oil from tight zones need the price of $70-80 per barrel to pay the debt.  The same applies to extra heavy, deep water, and EOR projects. Offshore arctic and ultra deep water are extremely expensive and with their own special environmental risks as BP recently discovered. The implication seems to be that "non-conventional" oil projects do require prices in $80-$100 range to continue pump oil at the same rate (Red Queen's race - Wikipedia) and this implies continued drilling of new wells.

In this sense 2010-2013 were gold age for oil production worldwide, as prices were close or above $100 and billions were invested in high cost oil resources

All-in-all it looks that "Shale oil is not a revolution, it is a retirement party" as aptly observed Arthur Berman).

Now prices dropped below $33 (as of Jan 6, 2015) and at this level of prices all tight oil producers  are losing money  on each barrel of oil they produce. Debt fueled boom in the shale space will most likely never return. Most shale players managed to survive 2015 (some due to hedges; some due to junk bond dent they accumulate and still did not put into capex). But to survive in 2016 will be more difficult and they are in danger of defaulting on their bonds. Mass extinction might well be in the cards, if low prices persist for the whole year.

 when the almighty money almagamations like the Carlyle Group swoop in and buy up all the distressed assets, we just might see oil prices rebound. The vultures won’t have the motive to short the heck out of oil, like they are now.

Junk bonds has duration around five-seven years, so bonds taken in 2010 will be due soon and refinancing them now is very difficult. That means weaker non-conventional oil producers will probably be bankrupt if not in 2016, then in 2017, if prices stay low. This process already stated with something like a dozen bankruptcies in 2015. According to more expected in 2016:

At the same time world demand for oil will continues to grow and will grow in 2016 probably by 1.3 Mb/d or more.  In 2015 it rose from 92.45 to 93.82 Mb/d. The only country that has additional capacities now is Iran but how quickly it can expand production in low price regime and whether it will be willing to sell additional oil at such low prices to get currency is difficult to predict. Some think that Iran will be able to add another 0.5 Mb/d in 2016 which can only compensate for the drop of US production and nothing else. Production in all other countries will be iether stable or slightly declining due to natural decline of wells with age and lack of capital investments in new drilling. Typical estimate is 1% decline or around 1MB/d of lost supply. Natural rate of decline of most conventional wells is around 6% and non-conventional around 20 (not evenly distributed; the first year production can even rise).  It it doubtful that remaining capital investments will be able to offset everything but 1% of decline. Real decline from non-OPEC members in 2016 can be more.

Actually even Saudis managed only marginally increase their exports in 2015; they just exported slightly more oil  (around  +0.3Mb/d more) at very low prices which supports the current low oil price regime, but not their economy which ended 2015 with a record deficit around $100 billions by Saudis estimates ($150 by IMF estimates). What is Saudis motivation of doing this (and depleting both their coffers and oil reserves) is a difficult question to answer but probably this is an economic war with Iran. The second important source of support of low prices is Wall Street games with futures.

The key problem here is that shale and tight oil producers were not that profitable at above $100 per barrel oil price range that existed in 2010-2013 and accumulated large amount of debt (several hundreds of billions, mostly in junk bonds) during those "good times" . The debt that now needs to be serviced so they have an albatross around their necks.

The destruction of oil supply while very gradual already started albeit slowly, as decline of wells is still compensated by hedging, new drilling and projects that have been started in the "good old days" are still coming online. This decline might well accelerate toward the middle of 2016, if prices do not recover. In any case hedges will expire somewhere in 2016 and after that it will be clear who is swimming naked.

In other words the current oil prices are IMHO not sustainable (too low) even in one-two year timeframe. When most hedges expire and the number of bankruptcies start to increase, Wall Street might be unable to press oil futures down anymore so push back in prices can be pretty violent. .

BTW Saudis lost around $100 billions this year and their foreign reserves shrunk to around $600 billions. Projected loss for 2016 is around $85 billions. So they need around one decade to deplete their foreign currency reserves.

Some suspicious consistency in the US MSM stories about oil price slump

“Where ideas are concerned, America can be counted on to do one of two things: take a good idea and run it completely into the ground, or take a bad idea and run it completely into the ground.”

—George Carlin

Oh what a tangled web we weave, When first we practice to deceive!"

Walter Scott, Marmion, Canto vi, Stanza 17


To make the story short current MSM behaviour is highly irresponsible and suggests that all of them are in the pockets of Wall Street or worse. After all oil is a irreplaceable commodity that will eventually run out. Low oil prices from this point of view are the last thing we need. It's like drinking party on the deck of Titanic. What should be done is creating the infrastructure for living with much less oil available. Which is possible only with high prices for this commodity. also the destruction of oil patch that now is happening should be get so much cheerleading. It is a tragedy for many people. The ability to fill gas tank for less then 2 dollars is not everything in this life. 

Economist Herbert Stein (1916-1999) wrote in 1986: "if it can’t go on forever it will stop." Despite this self-evident truth there is interesting, highly correlated bias, in coverage of oil prices slump for most of the US MSM: all predict essentially that current low oil prices will stay if nor forever, then for a very long time. And that what happened in 2015 is not anomaly, despite clear indicators that at this price most US producers sell their barrels at loss.  They salivate that this situation will continue in the first half of 2016 and well into 2017. They also completely discard negative externalities of this event.  As oil has crashed to $33 levels there is  a lot of MSM talk that the current price is really the long term historical average price, that 2005-2014 was an anomaly (bubble) and that we will stay in this range (say, $20-$40) for years to come.  Actually you can bet that at any price point MSM will claim that the cost of extraction is 20% lower, no matter what the price level is.

You can bet that at any price point MSM will claim that the cost of extraction is 20% lower, no matter what the price level is.

Yes, there are few places in the Middle East and Russia from which oil can be profitably extracted at this price range. But those countries depend on oil for revenue to balance the budget so even in those places this situation is unsustainable.  More then 80% sources of oil are unprofitable at those prices. That includes all shale/tight oil and all deep offshore anywhere in the world.

Still for some unknown to me reason in MSM low oil prices (below the cost of production) and depletion of valuable natural resource are now considered to be a universal good. While at best this is nothing more then initiated by Saudis "Hail Mary pass" to save Western civilization from secular stagnation. Externalities be damned, full speed ahead. Shale oil industry and destruction of its workforce, junk bond market troubles are just collateral damage. Does not matter one bit. Give us cheap oil brother and all will be fine.

For some unknown to me reason in MSM low oil prices (below the cost of production) and depletion of valuable natural resource are now considered to be a universal good. While at best this is nothing more then initiated by Saudis "Hail Mary pass" to save Western civilization from secular stagnation. Externalities be damned, full speed ahead. Shale oil industry and destruction of its workforce, junk bond market troubles are just collateral damage. Does not matter one bit. Give us cheap oil brother and all will be fine.

But at the same time never try to catch falling oil barrel ;-). Market can stay irrational longer than you can stay solvent.

Also strange and suspicious is that most MSM peruse suspiciously similar and questionable, or outright false, if we look at the facts, stories:

  1. Quicker depletion of a valuable and irreplaceable national resource due to low prices does not matter.  Existing wells deplete 5-8% per year (tight oil more that that) so you need to discover, drill and put on line at least the same amount in order to maintains the same volume of oil production. That costs money, and if money are not here nobody will drill. So natural tendency of production at low oil price (which now man below $70-$80 per barrel) is down, not up. 
  2. Saudis are fighting for their market share and flooding the world with oil.  This hypothesis is advanced despite the fact that their exports are stagnant and had grown in 2015 only by around 0.2-0.3 Mb/d (see Saudi Arabia oil production and forecast for 2016). Which is a miserable amount. What fight for market share: they can sell all theoil they produce.  In 2014 they exported around 7.1 Mb/d and in 2015 around 7.3 Mb/d. Plus/minus 0.1 Mb/d. So nothing essentially changed as for the level of their exports taking into account that the growth of world consumption for 2015 is over 1 Mb/d.   Their real strategy is dumping their exports at low price undercutting other producers to bring the price down.  In other words they are using what is called "predatory pricing" and to achieve that they tapped into their currency reserves to the tune of $100 billion a year. They are burning their currency reserves at the speed at which they can exhaust them from six years to decade, losing the investment grade in three.  Also most of their fields are old and semi-exhausted, so maintaining high production might even damage them, cutting short their useful life and the total amount of oil Saudis can recover from them. 

    Saudi shipments rose to 7.364 million barrels a day in October, 2015, according to the latest figures from the Joint Organizations Data Initiative (JODI).  Shipments averaged 7.11 million barrels a day in 2014, down from an 11-year high of 7.54 million barrels a day in 2013 and the lowest in three previous years. So Saudis failed even match their 2013 exports in 2015.

  3. Iran is able and willing to throw on the market another 0.5-0.7 Mb/d in 2016 further depressing prices. This hypothesis is advanced despite explicit statements from the Iran leadership that they will not give any future customer additional discounts above those that exist today.  while Iran leadership is definitely irrational, blocking the temporary freeze agreement, and willing to hurt the county future by increasing oil production as much as they can in low oil price environment (hurting their ally Russia in the process), they are not completely stupid and they do not have much money to drill anyway.  As they now have access to their previously frozen foreign reserves they definitely can wait a year or two before coming to the market with the new supply.  also increase of supply is not instant, it requires time and money, even taking into account that Iran has some underdeveloped fields that can be profitably put into production even at low prices that exist to today. This is a better strategy then coming with new supply at the point of ridiculously low prices. Although everything can happen. Middle Eastern nations are unpredictable.
  4. A very conservative estimate of the decline of non-OPEC production for the next year. Most assume that it will be limited to roughly 0.5 Mb/d. But the rate of natural decline of existing conventional oil wells is 3-6% and reduced capital expenses mean less new production is coming online in 2016 and 2017. Assuming 1% depletion that's around 1MB/d that should disappear in 2016. Add to this hard crash that is possible for the US shale producers and the estimate 1.5 Mb/d drop does not look outrageously high. But those consideration somehow disappeared from all considerations from MSM and they operate under assumption that supply from existing wells is indefinite and decline is a rounding error.  Only increase in supply is material and eminent (again Iran supply story get the most prominence). 
  5. The US MSM propagate the following bogus narrative: "there is an oil glut in the USA market in particular despite the fact that the USA increasing their import of oil. To cry about glut on oil in the country which imports each month in 2015 more and more oil is something new to me.  This is something from Orwell novel Nineteen Eighty-Four and is called doublespeak. If you are an oil producer, you don’t pump oil unless you have orders for it.  If you pump oil without orders, then you need your own storage to store it. In no way you ship it to Cushing, Oklahoma with their 80 Mb storage capacity as your customers can be in completely different part of the USA and it's you who need to pay for storage. That's the privilege used by refineries to regulate their input in case of maintenance, seasonal peaks, etc.  You don’t ship any oil without getting paid for it. So oil glut theory claim that they are producers which have oil shipped to customers and customers did not use it. Putting it in storage instead. And this bogus "theory" is propagated by MSM for more then 18 month now. It' time for MSM to stop to propagate this nonsense. 
  6. Cheap oil is here to stay and current situation will last to 2017 in worst case or to 2020-2040 in the best. IEA forecasts are viewed as facts, despite clear interest in lower oil prices.  In reality just cutting capital investment along with depletion of  existing fields (almost 6% for conventional wells, around 20% per year but very unevenly spread for shale/tight oil wells) guarantee diminishing supply. To compensate for 5% depletion the world now needs to find and put into production approximately 5 Mb/d of oil. In other words the world is losing approximately 1 Mb/s of supply per quarter. This loss a very difficult to stop, although it was possible for the last several years because huge capital investments in oil industry caused by high oil prices. 2010-2014 has shown that with high oil prices the decline can be stopped and reversed.  The problem is that adequate capital investments are thing in the past and now most oil companies need to adapt to starvation mode as for capital investment in the oil industry. That spells huge trouble for Norway, Russia, GB,  and other nations with mostly conventional wells.  It will be a miracle if they can maintain they level of production at prices below $40 for more then one-two years (there is some inertia here and new projects are continuing to come online for around 18 months since the start of the price drop; that means till mid, or last quarter of 2016, depending were you put the start of oil price drop). 
  7. MSM instantly forgot about previous concerns and the reversal of efficiency of the US car fleet. In 2015 SUVs again became the most popular category of personal car with sales of large SUVs booming. This deterioration of the US fleet efficiency happens along with slow down of sales of hybrids and, especially, electrical cars.
  8. Growth of demand during the current period of below $2 per gallon gas for some, unexplained reason will be slower then the explosive growth of demand in 2015. for some reason is is expected to be  limited to around 1% or 1.3-1.4 Mb/d worldwide.
  9. China slowed down and her oil consumption will be stagnant or down despite boom in car sales, as if the number of cars of the road is disconnected with oil use. In reality transportation is around 60% of country oil use. Right, but China oil consumption is still growing and will continue to grow in 2016. Those trends can co-exist for a while. So electrical consumption decline does not mean that the oil consumption decline is eminent.

    The same situation can exist in other countries such as the USA - slowing of the economy along with growth of oil consumption. All those new SUVs on the road need fuel to run.
  10. The assumption that the destruction of shale/tight oil companies with excessive debt loads in the USA  will be gradual and slow. Despite the fact that they currently produce at a loss  each barrel of oil they sell.  Also it will be orderly without major disruption of production -- just a gradual decline despite dramatically lower capital expenses. The assumption of most US MSM is that US production will stay close to current levels due to Gulf production or due to by waiving some magic wand by Obama administration.
  11. Junk bond problem does not exist or is of minor importance despite the fact that there are over 100 billions of shale oil book related junk bonds on the market. Similarly losses of financial sector from hedges in 2015 are non-existent as well (only Mexicans got several billions or additional revenue due to hedges).

The question is from where all those MSM deceptive and false  "talking points" originate.

The end of cheap oil hypothesis

The "end of cheap oil" hypothesis can be simplified to several postulates:

  1. Mankind demand for oil will continues to grow, although the pace of growth slows down with the increase of the price of oil as well as due to stagnation of world economy caused by high oil prices. That does not exclude temporary (often multiyear) oil price slumps or highs: instability is the nature of financial system under neoliberalism. 
  2. The supply of oil profitably extractable at any given price point below $100 (such $40, $50, $60 per barrel) will continue to shrink. Total extractable supply of oil can grow only by adding more and more expensive source of oil, sources with lower EROEI. New technology of extraction (especially horizontal drilling) can somewhat offset decline of EROEI but can't reverse it.  Simple calculation by dividing "proven world reserves" by annual consumption suggest that at prices below $100 in 2014 dollars they will be exhausted in approximately half a century (assuming $50 a barrel price point), comment 12/11/2015 at 7:34 am)
    Proved oil reserves at 1700.1 billion barrels, 52.5 years of supply.


    At 50 USD per barrel, the value is 50×1,700,100,000,000=85,005,000,000,000 usd

    Not enough, 100 USD per barrel will be better. 85 trillion dollars to spend so 1700.1 billion barrels of oil can be extracted and burned in 52.5 years. An absolute bargain. Current consumption at 32.85 billion per year, 365×90,000,000, 1700.1/32.85=51.75 years.

  3. The search for new sources of hydrocarbons by G7 countries will intensify over time and will likely generate resources wars. At least two resource wars already happened: Iraq and Libya. Wars are fought over access to and control of oil resources with high EROEI as well as other vital natural resources. With rising human population, competition for these resources might increase triggering conflicts, large and small. Industrialized nations already started to invade weaker countries to secure access to oil which is essential to the survival of modern industrial civilization (Iraq and Libya, and if we think about pipelines to Europe, Syria). 
  4. Very high price of oil (let's say above $100 per barrel)  leads to stagnation in all major industrialized countries and first of all the USA as well as eventual debt collapse of neoliberal economies and slow down or reverse of neoliberal globalization.
  5. The current "Race to burn what's left" is irrational.  Low oil prices destroy and delay investment in new supplies, slow down efficiency gains, encourage consumption and sow the seeds of the next big boom in prices.  If we assume that at each price point only a finite amount of oil can be profitably extracted from Earth (which is a planet, that is now well researched for oil), the current year and a half slump in oil prices looks extremely suspicious. It means robbing future generations, as conservation efforts are now derailed. Sales of SUVs and small trucks in the USA are up.  Trillions in equity and bond losses, hundred thousands of ruined retirement accounts and there is a severe recession knocking on the door for the US economy. The US are selling their last drops of oil at prices below production cost. In my opinion it would be wiser to save the oil that is currently  produce in strategic reserves and sell it when prices are much higher.

Please note that the US government patiently observes the current situation and does not try to influence the price by buying oil for their strategic oil reserve, although in the past it used to do such things. MSM coverage of oil also suggests strong establishment bias toward lower prices. As if this is the last "Heil Mary" pass in geostrategic game for the USA dominance.  So there are higher priorities in play here then the destiny of the US shale industry and more rapid exhaustion of national oil reserves. At the same time oil price slum is equivalent to a huge stimulus  to the USA economy, but it does have some significant side affects. If we assume $93.17-49.08=44.09 price drop for 2015 and the daily consumption of around  19.58 Mb/s that comes to 222 billions a year.

The current drop of oil prices also represent huge stimulus to EU,  China, Japan and other all other industrialized countries without or with little own oil reserves. If this were organized as a part of Russian sanctions package, this was a brilliant strategy. All industrialized countries in which own consumption far exceeds own production, are essentially isolated from negative affect of countersanctions   by the low price of oil.  In other worlds this is a huge global economic stimulus to the "masters of the universe" and at the same time stern warning to one of the last "resource nationalists" which try to pursue independence from Washington foreign policy.

The key question here: was it engineered by neoliberal strategists in Washington, DC and their masters in major Wall Street banks (in this case this was a really brilliant move)? Or is this ugly side effect of unhinged capitalism known as neoliberalism where oil companies overinvested in new projects due to greed and many new projects are coming simultaneously  online, while demand for oil grows more slowly then they expected. In any case at one point Saudi Arabia decided to dump its oil on the market and fun started. Was it the order from Washington or thier own initiave is unclear.

In recent years oil consumption was growing at slower pace dur to high oil prices. Per Michael Klare 2005 projection of oil consumption in 2015 was 105 Mb/d (millions of barrels per day); actual in 2015 was around 93 Mb/d as high price of oil stimulated investment in energy saving technologies. That includes not only small and hybrid cars (which actually did not improve much from, say, 1990 level, as the size of small car in the USA had grown considerably, but also cars and trucks working on natural gas, blending gas with alcohol (up to 10%), tax breaks for electrical cars ($7500 currently on many "pure electrical" models of small passenger cars, half of that on hybrids). Now this positive trend is partially reversed.  

But there were other signs of introduction of energy saving technologies which indirectly cut oil consumption, especially in chemical industry which will stay:     

For example the energy cost to major chemicals of running their plants is significant in the united states this about 6% of the national energy consumption. Since 1994, Dow has reduced its energy intensity by 22 percent through a structured program targeting process improvements. This has saved 1.6 quadrillion BTUs, equivalent to the energy required to generate all of the residential electricity used in California for one year. The savings have totaled $8.6 billion on an investment of $1 billion.

Note on the term "conspiracy theories"

Conspiracy theory was the term invented by CIA to whitewash their participation in JFK assassination, which got a wider use and became a common term in English language.  Here is how the term is defined in Wikipedia:

A conspiracy theory is an explanatory hypothesis that suggests that two or more persons, a group, or an organization of having caused or covered up, through secret planning and deliberate action, an event or situation which is typically taken to be illegal or harmful. Although the existence of a proven conspiracy involving United States President Richard Nixon and his aides in the Watergate scandal of the 1970s has been claimed as validation of conspiracy theories in general,[1] the term "conspiracy theory" has acquired a derogatory meaning and is often used to dismiss or ridicule beliefs in conspiracies.[2]

Such things as the current oil slump probably could never happen purely due to market forces (and notion of "free market" is another neoliberal lie; neoliberal markets are neither free nor fair). Oil is not a regular commodity. Oil is a strategic resource. So I think it is naïve to analyze it strictly in supply-demand terms.  Geopolitics plays very important role in oil prices and always was. Remember how the USSR was brought to its knees by dropping the oil prices in late 80th.

Remember Iraq war with one million of Iraqis dead. Was not this a blatant attempt to secure oil resources for the USA majors? Remember Libyan color revolution and Hillary reaction to the horrible death of poor colonel. Is not this about collision of French desire to secure oil supplies and Washington desire to get rid on a dictator who was an obstacle to neoliberal agenda?

And Syria war unleashed to achieve what ? It all about remapping Middle East by toppling "not friendly enough" to Washington regimes. It took longer then "seven countries in five years"  as Rumsfeld promised ( but it looks like the plan itself is still current: 

“We’re going to take out seven countries in 5 years, starting with Iraq, and then Syria, Lebanon, Libya, Somalia, Sudan and, finishing off, Iran”

General Wesley Clark. Retired 4-star U.S. Army general,
Supreme Allied Commander of NATO during the 1999 War on Yugoslavia .

It is clear that recent "petro wars" in the Middle East were about execution of a  US strategy which was not only about globalism and the USA world dominance, but also about oil.

The oil market has always been driven by geopolitics, and it was a factor that contributed to unleashing both WWI and WWII. Or, if you want, geopolitics has been very strongly influenced by the supply and distribution of crude oil for at least a century. To talk in pure supply/demand terms about such a strategic, vital for human civilization commodity is absurd.
and the whole idea the Kingdom of  Saudi Arabia, a vassal state completely dependent in its survival on the USA unleashes a price war against the USA shale production looks very suspect. nevertheless it is propagated by major MSM like 100% true.

In other words oil was and is a major weapon of economic war. And dumping oil prices is especially potent weapon against countries with significant oil exports such as Russia, Venezuela, Iran, Iraq, etc.  You can kill several birds with one stone.

The key question here is classic cue bono ? Which country is the major beneficiary of the current oil prices crash. The answer is -- the USA (despite some troubles of shale producers which started in late 2015 when most hedges expired). So  it is plausible to suggest that the USA elite including Wall Street banks played an important role in slamming oil prices to reach some important geopolitical goal, significance of which supersede the value of destruction of the USA shale industry.  After all the US financial industry can for a short time distort price of any commodity to any desired level.  HFT is a perfect tool for that and that was explicitly mentioned on Aleynikov trial  by Goldman officials.

It might well be that the current low price is playing double role: to stimulate Western economies and simultaneously serve as the most important part of package of sanctions against Russia. Obama actually hinted that this is true. And Saudi Arabia did play similar role in the past -- crash of oil prices did  facilitated the dissolution of the USSR, which lost the major part of its export revenue).

I would like to stress it again that the idea that Saudi Arabia is engaged in price war against the USA to defend its market share is extremely questionable. By all measures KSA is a satellite state, vassal of the USA if you like. How vassal state can act in such a way without the USA blessing ?  Economic conditions are now not equal to 2008 so the current drop of oil prices can't be explained by panic.  And without using the power of US-controlled financial markets it id doubful that it is possible to accomplish such a quick and sustained drop. 

The USA has long history of using oil as a geopolitical tool. Not only to crash the USSR but also to lure Japan into WWII. Oil embargo against imperial Japan served essentially as a declaration of war and it was read by Imperial Japan leadership exactly this way  (the leadership, which actually has little or no illusions that Japan will lose, but decided not to surrender without armed struggle). There is some evidence that Perl Harbor was not defended specifically to make entrance into the war with Japan more dramatic and more acceptable to the population of the USA, as a reaction on the clear act of aggression by Japan (although air carriers were sent to sea to save them).

And population of Earth still grow, as well as the number of cars and, especially tracks on the road. Similarly the number of airplanes and ships.  Until that trend stops the "long term"  trend for oil price should be up as chances of finding large deposit of "cheap oil" are not close to zero.  Of course "In a long run we all are dead" maxim applies.

But as of 2015 the planet is pretty well explored for this vital commodity. That means that the cost of oil extraction rises with time because the cheapest to extract oil is removed first. Actually this is now true for most commodities, including metals.

To get oil now deeper wells are needed, or fracking equipment and fracking sand and liquids, or you get oil that is too heavy or oil which contains too much sulfur. That means that  special refineries need to be build. In any case more resources are need to produce the same amount of petrol and diesel for transportation and other purposes. It is natural to think that price will gradually rise due to diminishing returns on capital used for extraction.  According to Barclays Capital (cited by  Steven Kopits),  the costs of extracting oil began increasing by 10.9% per year, since 1999 from $5 to almost $25 per barrel.  Add to this transportation cost to refineries, interest on debt, etc and we are probably talking about "magic" figure of $60 per barrel.  So in 2015 any price below it is strongly suspect and probably is temporary. Although the4 rule is "never to say never" and for investors in oil ETNs (such USO, OIL, etc) Keyes saying that market can be irrational longer the you can stay solvent fully applies.  The same saying is now looming over the heads of shale companies executives. As of December 2015 bloodbath has began.

So the question is really about how long the current low oil prices (oil slump) will last. One year is definitely enough to eliminate hedges. And in December of 2015 they are mostly gone (two year hedges do exist but are a rarety)  Capital expenses are now slashed to the bones, but project that take several years to complete will still come into production and that will support the level of oil production at least for one year till Jan 2017. We also can probably see some consolidation of the oil industry. Weak players start being eliminated.

Three years are enough to eliminate most new capital investment and to finish projects which started before slump. Capital investment goes to a screeching halt. After that much depends on the speed of decline of existing wells and pace on increasing of global consumption. that actually includes growth of internal consumption in three major oil producing nations such as USA, Russia and Saudi Arabia. Of those three Saudi Arabia experiences especially quick rise in internal oil demand.

In any case since mid 2015 the price of oil on spot market dropped almost to one third of max price previously achieved. As of Aug 8, 2015 the spot price for October, 2015 delivery was around $44 per barrel. This is a dramatic drop from over $100 per barrel price peak achieved earlier. 

"Cheap oil" is the cornerstone of the current neoliberal world order; it's end means end of US dominated world

We need to understand that "cheap oil" is the cornerstone of the current neoliberal social system including the level of neoliberal globalization that is underway since late 80th. So for the USA elite a lot is in stake if price of oil consistently stays, say, over $100. The USA world domination which is so cherished by neocons and for which they are ready to fight endless wars is in stake.  Also countries that "do not deserve it in view of neoliberal elite (and are only partially controlled by the USA), such as Iran and Russia, can became fabulously rich. And they understand that "the end of cheap oil" might bring great socio-economic changes within the USA itself as neolibel fairy tale about "tricke down" prosperity will be exposed as a fraud. and American people can became rightfully angry, despite all efforts to brainwash them and to fond external target for their anger. In this sense we can view the current oil slump as a brave attempt, "The Last Hurrah" attack of the old neoliberal guard  which came to power in 1980th to postpone inevitable social changes (and first of all demise of neoliberalism and by extension the USA role as a global hegemon). the important of oil for the US as the center or global neoliberal empire was well described in 2002 article by Bill Christison (Oil and the Middle East)

April 5, 2002

Back in March CounterPunch published Christison's devastating critique of the strategies and conduct of the US war of terrorism. (See our archive by scrolling down to "Search CounterPunch.)) These new remarks, which he has made available to CounterPunch were delivered to various peace groups in Santa Fe, New Mexico on early April.Bill Christison joined the CIA in 1950, and served on the analysis side of the Agency for 28 years. From the early 1970s he served as National Intelligence Officer (principal adviser to the Director of Central Intelligence on certain areas) for, at various times, Southeast Asia, South Asia and Africa. Before he retired in 1979 he was Director of the CIA's Office of Regional and Political Analysis, a 250-person unit His wife Kathy also worked in the CIA, retiring in 1979.Since then she has been mainly preoccupied by the issue of Palestine.

I've been asked to talk today about the topic, "U.S. Oil Policy as a Juggernaut in U.S. Foreign Policy." That's a great title. When you hear the word "juggernaut," what you think of--at least what I think of--is a monster machine of some sort, maybe the heaviest heavy tank you can imagine, rumbling down a city street, unstoppable, crushing everything in its way, and even destroying the paving of the street as it goes. Well, that comes pretty close to describing what I believe about the long-term effects of our oil, and other, foreign policies in the Middle East. But if we look ahead, rather than at the past or the present, my hope is that, by changing some of our own foreign policies, U.S. oil policy will in the future no longer be a destructive juggernaut.

It's worth spending a minute to talk about why oil is so important to the United States. The world's total use of energy from all sources--from petroleum, natural gas, coal, wood, hydropower, nuclear, geothermal, solar, and wind power--has increased in recent years roughly as the global population has also increased. Petroleum contributes the greatest single amount -- about two-fifths of the world's total energy output, and natural gas (which is in some ways related to oil) more than another one-fifth. The United States alone uses about one-quarter of the world's total energy output, but has less than five percent of the world's population. The U.S. itself does not produce anywhere near the amount of energy that it consumes. According to statistics of the U.S. Department of Energy, the United States used in the year 2000 almost 100 quadrillion Btu's--or British Thermal Units--of energy. But of those 100 quadrillion Btu's, the U.S. had to import close to 30 percent. The United States is, hands down, the most profligate user of energy, by far, on this whole globe.

With respect to oil alone, the U.S. imported in the year 2000 almost two-thirds of the oil that it used. The importance of Saudi Arabia as a supplier of the U.S., needs to be emphasized, but not just because the Saudis hold the largest known but still untapped oil reserves in the world. What is even more important to the U.S. at the moment is that Saudi Arabia has the largest installed but unused rapid production capacity--that is, oil wells, pumping equipment and so forth already there but not used to meet current, or "normal," production needs. In any emergency that cut off oil supplies from anywhere else in the world, Saudi Arabia would one of very few, and maybe the only, nation that could easily and quickly increase its oil production without a waiting period measured in months rather than a few days. This obviously adds to what any general or admiral would call the strategic value of Saudi Arabia to the United States.

There is another characteristic of the global oil industry that we should all understand. It is an industry dominated by a half-dozen extremely large, global corporations--including ExxonMobil (these two firms merged in 1999), British Petroleum, Shell, Texaco, Gulf and Socal. Fifty to 75 years ago these companies might have been swashbuckling, unregulated corporations seeking to maximize profits and avoid the controls of any governments by all means fair or foul. Today, however, these companies by no means have the same personalities that they had years ago. In the Middle East, at least, the governments of the area have nationalized practically all oil production, and the companies or their subsidiaries have gradually worked out mutually supportive relationships with the local governments, under which the companies continue to manage most of the oil production and global oil trade, while the governments, and OPEC, make the basic decisions on how much oil to produce. The companies continue to make large profits, which keep them happy enough.

In their relations with the U.S. and other advanced nations, the companies no longer shun government regulation, because most of the regulations imposed on them are supportive of, and increase the profits of, the companies themselves. The regulations fall more into the area of corporate welfare than into the area of inducing the corporations to become better citizens. In the U.S., the ties of the oil companies with both of the major political parties are close and mutually profitable. Up to a few months ago, these same comments would have applied to Enron, which was clearly one of the world's largest energy companies, even though it was not one of the largest global oil companies.

I started out by comparing the long-term effects of U.S. oil policies to a juggernaut. To show you why, I want to go back almost 60 years, to February 1945. In that month, President Franklin D. Roosevelt, while returning from the Yalta Conference, met with King Ibn Saud of Saudi Arabia on a U.S. warship in the middle of the Suez Canal. Two months later, Roosevelt was dead, but this meeting was probably one of his most important acts as a world leader The actual records of the conversations between these two men have never been released by either of their governments, but it is quite clear that an agreement was reached under which the United States guaranteed for the indefinite future the security and stability of the Saudi monarchy. In return, the Saudi King guaranteed U.S. access to, and joint development of, the massive Saudi oil reserves, also for the indefinite future. These mutual guarantees were later, implicitly at least, extended to apply to the other, and smaller, Gulf state monarchies, from the Arab Emirates to Bahrain and Kuwait. All of these guarantees were reinforced by the U.S. war against Iraq in 1990-1991, and these guarantees still today form the basis of U.S. oil policies in the Middle East.

So for close to 60 years now, the U.S. has continued to prop up and support these authoritarian governments. I'd like to give you an example of how this has worked in the case of Saudi Arabia. This is from an article that appeared in The Nation magazine last November, written by a British expert on world security affairs. Here are a few lines from this article. "To protect the Saudi regime against its external enemies, the United States has steadily expanded its military presence in the region. [T]o protect the royal family against its internal enemies, US personnel have become deeply involved in the regime's internal security apparatus. At the same time, the vast and highly conspicuous accumulation of wealth by the royal family has alienated it from the larger Saudi population and led to charges of systemic corruption. In response, the regime has outlawed all forms of political debate in the kingdom (there is no parliament, no free speech, no political party, no right of assembly) and used its US-trained security forces to quash overt expressions of dissent. All these effects have generated covert opposition to the regime and occasional acts of violence"

The United States pursued policies like these not only in Saudi Arabia and the smaller Gulf States, but elsewhere in the Middle East as well. When the U.S. overthrew Mossadegh in Iran in 1953, and reinstalled the Shah in power, Washington began carrying out precisely the same policies in Iran as it employed in Saudi Arabia. The Shah's secret police, known as SAVAK, and the Iranian military forces both grew markedly stronger. For 26 years the Shah's repressive regime succeeded in smothering internal dissent. In 1979, however, major internal dissent did erupt, supported by radical Islamic clerics who wanted all U.S. influence out of their land. The Shah was quickly overthrown. U.S. experiences in Iran since that date should have suggested to people in Washington that just perhaps the strong U.S. support for repressive regimes in the Middle East was not the ideal long-term policy for us to pursue. No reexamination of U.S. foreign policy ever got started, however, because the United States was immediately consumed by the horrible insult Iranians imposed on us when they held over 50 Americans from the U.S. Embassy hostage for more than a year.

Then, in the 1980s, the U.S. spent the decade quietly cozying up to Saddam Hussein, the dictatorial ruler of Iraq, which was and is another big oil producer of the Middle East. Since Iran was now a U.S. enemy, the U.S. supported Iraq in its war against Iran. The U.S. did not criticize Saddam Hussein even when he employed chemical warfare to gas sizable numbers of Kurdish people in his own country. The United States only abandoned him in 1990, when he crossed the U.S. over Kuwait. Even here, the diplomatic signals Saddam received from the U.S. until shortly before he invaded Kuwait were very unclear. Once again, when the break finally came, the U.S. administration gave no thought to reappraising its own policies throughout the region. A decision was made in favor of going to war to end this threat to U.S. hegemony and U.S. access to oil, and that was that.

Now, in the year 2002, this almost-60-year-old Middle East oil policy of the United States is showing signs of even more fraying at the edges. Beyond any question in my opinion, one of the root causes behind the terrorism of September 11 was this very U.S. policy of supporting for the past half-century and more these authoritarian and often corrupt Arab and Muslim governments. There exists a high degree of anger among many Muslims with their own governments, which have for so long been supported by the U.S.

Osama bin Laden is a good example of this particular root cause behind the September 11 terrorism. His wrath was directed as much against the Saudi government, for example, as it was against the United States. His opposition to what used to be his own government was probably the main reason why he had the support of a majority of the young men under 25 in Saudi Arabia. He received similar support from many young men in other Arab and Muslim states as well. Right now these groups of angry young men obviously no longer have a viable leader in Osama bin Laden, but other extremist leaders are almost sure to arise. In addition, the next generation of leaders in at least some of these states may well emerge from among these young men. If any of them do come into power, their future governments will likely be more anti-American than the present governments, which Washington likes to call "moderate," but which are really nothing of the sort. If we have not reduced our energy dependence on oil in the meantime, we may face serious trouble.

The U.S. should therefore adopt quite draconian measures immediately to reduce its overall energy usage, including its dependence on Mideast oil. It is unlikely, for the near future at least, that the U.S. will solve a future energy crunch through alternative power sources or by "clean" coal, nuclear power, or Alaskan oil usage. The U.S. also should not count on oil supplies from Central Asia as a way to ignore the need for conservation.

The U.S. should also, over time and gradually, reduce its ties with the present governments in many Muslim states, and try to develop improved relations with opposition elements there, actively seeking out democratically inclined groups. Such steps will be necessary if there is to be any hope of reducing support for future Osama bin Ladens that arises from the anger of Arabs and Muslims with their own governments.

I want to turn now to another foreign policy problem that the U.S. faces in the Middle East, one that has become more tightly intertwined with U.S. oil policies since September 11. Ever since shortly after World War II, the U.S. has had not one but two fundamental foreign policies in the Middle East. The first policy, which I've already talked about, has been to support authoritarian and undemocratic governments in the oil nations in an effort to guarantee the long-term easy access to Middle East oil at "reasonable" prices. The other policy, equally important, has been to provide strong support to Israel and to guarantee the security of Israel as a Jewish state, also for the long term.

Over the last fifty-plus years, there has been a fair amount of tension and conflict between these two policies. The United States under President Harry Truman was, as I'm sure you all know, instrumental in helping to establish the state of Israel in 1948. But even then, one of the reasons for the opposition to Truman's desires by many other U.S. officials, including the Secretary of State, General George Marshall, was that it might endanger the west's access to oil from the Arab nations.

As it has turned out, for most of the period since World War II, the U.S. has managed to keep its two basic policies in the Middle East pretty much apart from each other--in separate boxes so to speak--and to keep the tensions between them in check. The very existence of the Cold War, which provided the bogey-man of a common enemy, helped in this regard. The one obvious time when the U.S. proved unable to keep the tensions between its two policies under control was the OPEC oil embargo against the west in late 1973 and early 1974. The Arab-Israeli war of 1973, and specifically the U.S. response of resupplying Israel with large amounts of new military equipment, precipitated the embargo, and many of us here can remember the gas lines that resulted in this country. But the gas lines only lasted a few months, and then we all went back to normal. But we should remember those months as a perfect example of the fact that there are indeed real conflicting interests involved in the two basic U.S. foreign policies in the Middle East.

Overall, though, because the United States has been able to hold these conflicting interests in check for most of the past half century, I think that Washington has allowed the tensions to grow, more or less ignored by U.S. policymakers, to a point where they are going to be exceedingly difficult to deal with in the future. Since September 11, a number of things have happened that make it more impossible than ever to separate the effects of the Israel-Palestine problem from the effects of the continuing U.S. support for most authoritarian governments of the oil nations in the area.

In Saudi Arabia and most of the small Gulf States, the position of the monarchies has become more precarious, as these monarchies have been subjected to more criticism since September 11 from public opinion in the United States than has been the case for years. In normal circumstances, when these monarchies are confident that the U.S. guarantee of their security is strong and unbreakable, most of them will not worry too much about other issues that might further weaken their domestic position. The George W. Bush administration is undoubtedly reassuring them that the U.S. security guarantee is still in effect, but they cannot help but be worried about its permanence when they see public opinion in this country changing. This puts pressure on the monarchies to pay more attention to the opinion of their own Arab "street." And the opinion of this Arab "street" is today more intensely critical than ever of Israel's policies on Palestine and the continued occupation of the West Bank and Gaza.

The U.S. government, from September 11 right up to the present, has made it clearer than ever to the world at large that it will unilaterally decide what actions around the world constitute "terrorism," and what actions do not. Specifically, in the minds of Arabs and Muslims everywhere, the U.S. seems to have accepted all actions by Palestinians against Israelis, including acts against Israeli soldiers as well as those against innocent civilians, as being terrorism. At the same time, however, the U.S. appears to believe that no acts by Israelis against Palestinians constitute terrorism. Arabs see this as a double standard. When, also at the same time, Arabs see their own rulers expressing support for the "war on terrorism" as it is defined by the U.S., their antagonism toward their own rulers intensifies. And the rulers themselves, recognizing this antagonism, feel greater concern for their own positions.

I'd like to express a note of caution here. I certainly do not know for sure whether any, or some, or all of the governments in Arab oil nations--the dictatorial governments whose stability and security the U.S. has guaranteed for almost 60 years--will collapse in the near future. Of course change can happen rapidly and without warning. The best minds in the U.S. government had no inkling that the Shah of Iran was going to be ousted a week before it happened in 1979. But even governments that seem to be falling apart can sometimes last for years, until some totally unforeseen shove comes along that pushes them over the edge.

What I am more sure of is that these Arab oil governments are now under greater pressure to change than they have been for years, because of developments since September 11. Therefore the U.S. should be actively encouraging--though never using military force to do so--a gradual movement toward greater political democracy in these nations. And in order to reduce the importance of one major factor leading to greater instability in the region, the U.S. should immediately begin to play a far more active role than it has recently in pressing for a solution to the Israel-Palestine problem based on two truly sovereign nations, with strong treaty guarantees from the United States of the future security of both of these nations.

Simultaneously,  wars for access to cheap oil (Iraq, Libya) can  be viewed as desperate attempts to find a way out of "secular stagnation", in which advanced economies found themselves after 2008 (or, more correctly, after 2000). And history proves that war is not always necessary. Sometimes other mechanisms work as well. So lowering of oil price for a considerable perios can also be viewed as a  clever "Hail Mary" pass to save Western economies which suffer from stagnation (aka "new normal") characterized by low economic growth, high level of debt,  and high unemployment rate --  along with deflationary tendencies at the end of debt expansion super cycle. 

And this precious product then is by-and-large wasted. In most Western countries population uses a lot more energy than they absolutely have to use, burning lion share of it in personal transportation.  Industries produce a lot of unnecessary or outright harmful crap, which sell only by the power of marketing.  Some industries produce crap exclusively and can be eliminated ;-). Most people in the USA could probably cut their private gas consumption by 50% or more with little or no harful effects (less car trips, sharing of cars, use of hybrid and electrical cars for commute, telecommuting, etc).

But this is not true of major industries, air and sea transport.  Those are areas where the limits set by "end of cheap oil" strike hard. At $4 per gallon and higher some (heavy/bulky) goods produced in China are already uneconomic to ship to the USA. That already started to affect  furniture industry. And we need get serious about planning, and the subsequent modifications in our energy usage pattern. Transition to the world with less "cheap oil" takes a lot of time and money to implement.

It might well be possible to replace around 20% of today’s oil consumption with renewable. Hybrid and electrical cars don't save much energy (lithium battery production consumes a lot of energy and rare metals which are very expensive to mine and refine) but they allow to substitute burning of oil to burning coal to produce electricity. 

Just the fact that oil industry now resorted to two  ecologically dangerous methods of extraction of shale oil and tar sands oil indirectly proves "top cheap oil" hypothesis. Why bother if cheap oil is plentiful? It's simply stupid to invest money in such extraction schemes unless you really believe in the "end of cheap oil".  If you object to this that means that you can't think clearly an dispassionately.

In both cases the size of ecological damage will be certain only decades later. it might be something like destroying America to save it. IMHO in no way the US shale production could be the decisive factor in spot prices drop of this magnitude (to closer $30 in 2015 dollars which so 30/2.4 in 1983 dollars ). And in 2014-2015 economic contraction did not reached 2008 levels to justify it from this point of view. EROEI of shale oil is way too low for shale oil to be competitive at current prices:  it is a complex and not very efficient process of conversion of energy and junk bonds into oil. It is far from just drilling a hole  and collecting oil which  flows under internal pressure  like in old good times.  Horizontal drilling greatly helps (and is the essence of most new methods of oil extraction with one (upper) well used to inject stream or chemicals and the other below it to collect oil) , but does not change the whole picture or lower EROEI of those methods. According to Wikipedia:

A 1984 study estimated the EROEI of the various known oil-shale deposits as varying between 0.7–13.3[75] although known oil-shale extraction development projects assert an EROEI between 3 to 10. According to the World Energy Outlook 2010, the EROEI of ex-situ processing is typically 4 to 5 while of in-situ processing it may be even as low as 2. However, according to the EIA most of used energy can be provided by burning the spent shale or oil-shale gas.[76]

Same problem of low EROEI is true about tar sands. Simplifying you can think about extraction of oil from tar sands as the industrial process of converting energy of  natural gas and junk bonds into oil. Approximately  280–350 kWh of energy is needed to extract a barrel of bitumen and upgrade it to synthetic crude. Most of this energy is produced by burning natural gas. Assuming $.1 per kilowatt we will get energy cost alone around 28-$35 a barrel. You probably should double this number to account for capital expenses and other costs.  

Is oil commodity or under neoliberalism this is another currency subject to standard currency attacks

A commodity currency is a name given to currencies of countries which depend heavily on the export of certain raw materials for income. These countries are typically developing countries, e.g. countries like Burundi, Tanzania, Papua New Guinea; but also include developed countries like Canada and Australia.

Befor assendance of neoliberalism in 1980th world oil prices were determined largely by real daily supply and demand. It was the province of oil buyers and oil sellers. Then Goldman Sachs decided to buy the small Wall Street commodity brokerage, J. Aron in the 1980th They had their eye set on transforming how oil is traded in world markets.

It was the advent of “paper oil,” oil traded in futures, contracts independent of delivery of physical crude, easier for the large banks to manipulate based on rumors and derivative market skullduggery, as a handful of Wall Street banks dominated oil futures trades and knew just who held what positions, a convenient insider role that is rarely mentioned inn polite company. It was the beginning of transforming oil trading into a casino where Goldman Sachs, Morgan Stanley, JP MorganChase and a few other giant Wall Street banks ran the crap tables. Essentially they invented another commodity currency. In the foreign exchange market, commodity currencies generally refer to the Australian dollar, Canadian dollar, New Zealand dollar, Norwegian krone, South African rand, Brazilian real, Russian ruble and the Chilean peso.

It looks like oil also became not pure commodity, but a new commodity currency. New York really trades overwhelmingly on a non-physical oil basis these days. Nobody checks if sellers of the futures have actual oil to settle. All settmenta are in dollar. In other words oil was virtualized.

In addtionan there are multiple oil ETFs (which are prefect way to rob lemmings -- naive investors who decided that oil is more reliable store of value then stocks)

Symbol  Name  Assets*  Avg Vol  YTD  1 Year  3 Year  5 Year  Inception  ER  ETF Home Page  Liquidity  Expenses 
USO United States Oil Fund $2,578,400.00 25,967,785 -28.05% -57.77% -59.14% -56.62% 2006-04-10 0.45% View A+ A+
OIL S&P GSCI Crude Oil Tot Ret Idx ETN $866,760.90 4,389,938 -33.41% -63.17% -64.50% -62.10% 2006-08-15 0.75% View A B
DBO DB Oil Fund $513,040.00 331,095 -27.39% -58.67% -58.24% -53.53% 2007-01-05 0.78% View A B-
BNO United States Brent Oil Fund $91,324.50 128,165 -26.08% -57.43% -59.34% -35.66% 2010-06-02 0.90% View A- C+
USL United States 12 Month Oil $70,752.00 84,619 -22.71%

As with futures, several questions arise about OIL ETFs. In any case as dollar finance is unlimited (via printing press) that creates completely new environment for commodities, when the price can be completely detached from reality.  In a way, oil ETFs are not that different then gold EFT which became pure "virtual currency" called "gold"  -- yet another financial speculation vehicle (Something Just Snapped At The Comex Zero Hedge):

As of Friday the comex gold "coverage" or amount of paper claims on every ounce of physical, was literally off the chart, soaring to a mindblowing 207 ounces of paper gold claims for every ounce of deliverable gold. This also means that the dilution ratio between physical gold and paper gold has hit a new all-time low of just 0.48%!

Similarly to games with gold we see "naked" shorting of oil:

United States Oil Fund LP (ETF) Short Interest Down 6.7% in July (USO) by Max Byerly

Aug 18th, 2015 | Ticker Report

Shares of United States Oil Fund LP (ETF) (NYSE:USO) were the target of a significant decline in short interest in the month of July. As of July 31st, there was short interest totalling 45,855,306 shares, a decline of 6.7% from the July 15th total of 49,139,106 shares, AnalystRatings.NET reports. Based on an average trading volume of 23,230,679 shares, the short-interest ratio is currently 2.0 days.

United States Oil Fund LP (NYSE:USO) opened at 13.89 on Tuesday. United States Oil Fund LP has a 52 week low of $13.86 and a 52 week high of $35.83. The company’s 50-day moving average is $16.41 and its 200 day moving average is $18.44.

United States Oil Fund, LP (NYSE:USO) is a commodity pool that issues limited partnership interests (shares) traded on the NYSE Arca, Inc. The investment objective of USO is for changes in percentage terms of its shares’ per share net asset value (NAV) to reflect the changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in the price of the futures contract for light, sweet crude oil traded on the New York Mercantile Exchange (the NYMEX). The Company’s general partner is United States Commodity Funds LLC. The net assets of USO consist primarily of investments in futures contracts for light, sweet crude oil, other types of crude oil, diesel-heating oil, gasoline, natural gas and other petroleum-based fuels that are traded on the NYMEX, ICE Futures or other the United States and foreign exchanges.

Here is an interesting graph of money manager positions on NYMEX WTI (only NYMEX and only WTI):

The key question here is: "To what extent oil is still a commodity, and to what extent it is now yet another "virtual currency" subject to standard currency attacks ?" Naked selling of oil futures via shorting of OIL ETFs is not only possible, but highly profitable path for such attacks (4 Ways to Short Oil with ETFs - May 16, 2013 -  All those tricks are possible due to free convertibility to US dollars, which unlike oil do not have any Earth-based limitations as for quantity and, what is more important, quality (gas liquids and shale oil are not equivalent to "classic' oil and refining of them produce mainly gasoline, instead of full spectrum of products; they should be considered "oil substitutes" and counted separately). And small amount injected in ETF can move spot oil market vary efficiently. So tail can wag the dog.

Who finance such attacks as losses can be substantial is an interesting question the answer on which I do not know, but recent behaviour of oil prices is typical for a currency attack as data about real oil extraction does not produce any optimism as for elimination of "peal cheap oil" phenomenon. But for speculators and gulling retail investors this does not matter. Casino is a casino. What is interesting the US MSM produce highly deceptive and well coordinated picture suggesting that there is government involvement in the whole scheme ( see below Russia sanctions section).

All those talks about crisis of overproduction are suspect. To a certain extent this might be a factor  due to slowing down of China economy and perma recession in the USA along with better small cars efficiency. But it is impossible to hide the fact that it was Saudi Arabia that decided to lower the oil prices and started to move in this direction ( An Oil Price 'Cold War' With Saudi Arabia Experts Disagree - US News) much like that did to economically crash the USSR in late 80th, early 90th.  I think that talk about attack on the USA shale industry does not make much sense, as Saudi Arabia is a vassal state and such move is punishable for a vassal:

Some experts declared it the start of a “cold war” with Saudi Arabia, as described by two University of Texas professors in an op-ed in the Dallas Morning News. Other analysts, however, contend that the Saudis are merely trying to defend against other exporters to the U.S.

“There’s another conflict brewing in the Middle East — the intensifying oil battle between Saudi Arabia and Texas,” Isaac Barchas and Michael Webber, who teach at the University of Texas at Austin, wrote in the op-ed.

As Webber, deputy director of the university's Energy Institute, describes to U.S. News, "Ford versus GM, Dell versus Apple: these are big companies duking it out for market share. Why would it be any different for oil. Is it a military war? No. But it's a market share war."

There are three main parts to his and Barchas' argument:

  1. Hydraulic fracturing, or fracking, has unleashed an energy boom here in the U.S., reducing net crude oil and petroleum product imports to their lowest levels since 1987.
  2. With more oil now available on the market, combined with a sluggish global economy that’s reduced demand in Europe and China, benchmark Brent crude oil prices have fallen by roughly 27 percent since June – their lowest point in four years.
  3. Saudi Arabia, the U.S's.second-largest source of imported oil behind Canada, is trying to retain its market share by undercutting American producers. The goal: drive down prices far enough to scare away Wall Street investors or simply make fracking unprofitable, forcing U.S. companies to take their drill rigs offline to reduce supply and clearing the way for more Saudi oil imports.

As Chip Register, managing director of consulting firm Sapient Global Markets asserted in a blog post on Forbes, “The Saudis have put a bull’s-eye on the U.S. shale industry.”

Other experts, however, expressed strong skepticism with this view.

“It’s not a personalized attack,” Steven Kopits, managing director of the consulting firm Princeton Energy Advisors, says of the Saudi discount. “Saudi Arabia is looking out for its own interests, not trying to undermine other people’s interests.” 

Jan Kalicki, public policy scholar and energy lead at The Wilson Center, a nonpartisan think tank, agrees.

“Any real impact on shale in the U.S. is going to require more than a price adjustment of this kind," he says.

U.S. shale fields can start and stop production relatively quickly. Technological advances, meanwhile, have sharply lowered the break-even point – no longer does fracking rank as one of the most expensive forms of oil production. It can still turn a profit at current prices of $80 a barrel, but depending on the type of well, fracking operations might even be able make money at prices as low as $55 a barrel.

Hence, “trying to apply predatory pricing in the oil business will only work in the very short run, if at all,” says Paul Sullivan, economics professor at National Defense University.

I think here the target is probably Russia. Telegraph reported  that Saudis offer Russia secret oil deal if it drops Syria - Telegraph

The revelations come amid high tension in the Middle East, with US, British, and French warship poised for missile strikes in Syria. Iran has threatened to retaliate.

The strategic jitters pushed Brent crude prices to a five-month high of $112 a barrel. “We are only one incident away from a serious oil spike. The market is a lot tighter than people think,” said Chris Skrebowski, editor of Petroleum Review.

Leaked transcripts of a closed-door meeting between Russia’s Vladimir Putin and Saudi Prince Bandar bin Sultan shed an extraordinary light on the hard-nosed Realpolitik of the two sides.

Prince Bandar, head of Saudi intelligence, allegedly confronted the Kremlin with a mix of inducements and threats in a bid to break the deadlock over Syria. “Let us examine how to put together a unified Russian-Saudi strategy on the subject of oil. The aim is to agree on the price of oil and production quantities that keep the price stable in global oil markets,” he said at the four-hour meeting with Mr Putin. They met at Mr Putin’s dacha outside Moscow three weeks ago.

“We understand Russia’s great interest in the oil and gas in the Mediterranean from Israel to Cyprus. And we understand the importance of the Russian gas pipeline to Europe. We are not interested in competing with that. We can cooperate in this area,” he said, purporting to speak with the full backing of the US.

Oil futures

Oil ETNs such USO or OIL does not have any intrinsic value. They are based on oil futures. Like is that case with currency future contracts, empirical studies suggest, not only is the oil futures price a biased estimate of the future spot price, but more often  it even gets the direction wrong. If the futures price suggests the oil will depreciate, it can well appreciate instead. In addition you can buy or sell options on oil making this commodity a real paradise for speculators.

Speculators definitely have expectations about the future oil spot price.  But often they demonstrate herd behavior driving the price to extremes as trading futures is trading "virtual oil" (futures are settled in dollars, never in actual commodity). This is especially true about short selling which can drive oil to really unprofitable for all major producers price. Recently they manage to drive it to less then $40 a barrel, the price at which only selected low cost producers can get the oil form the ground (to say nothing to invest in additional exploration or pay the cost of infrastructure and such). You ability to see oil short via specialized ETF or other means is limited only by your dollar reserves and the availability of counter party (and you can play certain games with this counterparty issue). 

Here is example of prices on Aug 31, 2015 (which also is a nice demonstration of dramatic dynamics that is possible in a single day) :

Chart Current Session Prior Day Opt's
Open Time Set Chg Vol Set Op Int
Oct'15 45.00 19:28
Aug 31
3.98 719704 45.22 440212 Call Put
Nov'15 45.69 19:28
Aug 31
3.95 137067 45.98 215025 Call Put
Dec'15 46.57 19:29
Aug 31
3.91 162736 46.86 243840 Call Put
Jan'16 47.50 19:28
Aug 31
3.91 57430 47.72 102471 Call Put
Feb'16 47.50 19:28
Aug 31
3.93 38475 48.45 50167 Call Put
Mar'16 48.25 19:29
Aug 31
3.92 38170 49.06 73615 Call Put
Apr'16 48.75 19:29
Aug 31
3.86 14106 49.61 25925 Call Put
May'16 48.99 19:28
Aug 31
3.76 7934 50.09 23357 Call Put
Jun'16 49.86 19:28
Aug 31
3.64 44230 50.52 103798 Call Put
Jul'16 50.29 19:28
Aug 31
3.53 3938 50.85 21832 Call Put
Aug'16 50.03 19:28
Aug 31
3.42 2511 51.19 16337 Call Put
Sep'16 50.72 19:28
Aug 31
3.31 8091 51.56 42572 Call Put
Aug 31
3.20 1164 51.96 17226 Call Put
Aug 31
3.11 1038 52.37 17809 Call Put
Dec'16 52.59 19:28
Aug 31
3.02 56618 52.79 133005 Call Put
Aug 31
2.94 598 53.11 14894 Call Put
Aug 31
2.87 277 53.44 8034 Call Put
Mar'17 55.45 19:29
Aug 31
2.81 988 53.78 9195 Call Put
Aug 31
2.75 465 54.10 3543 Call Put
Aug 31
2.69 435 54.39 2930 Call Put
Jun'17 53.69 19:29
Aug 31
2.64 5669 54.70 21475 Call Put
Jul'17 56.32 19:28
Aug 31
2.60 143 54.95 3120 Call Put
Aug 31
2.57 48 55.24 1760 Call Put
Aug 31
2.56 71 55.55 3982 Call Put
Aug 31
2.54 15 55.87 1184 Call Put
Aug 31
2.53 15 56.20 1270 Call Put
Dec'17 55.75 19:28
Aug 31
2.51 9588 56.54 44135 Call Put
Aug 31
56.72 1532 Call Put
Aug 31
56.92 312 Call Put
Aug 31
57.14 2688 Call Put
Aug 31
57.37 63 Call Put
Aug 31
57.61 516 Call Put
Aug 31
2.34 226 57.87 3700 Call Put
Aug 31
58.05 296 Call Put
Aug 31
58.25 61 Call Put
Aug 31
58.46 461 Call Put
Aug 31
58.67 61 Call Put
Aug 31
58.89 311 Call Put
Dec'18 58.54 19:28
Aug 31
2.12 2002 59.12 19416 Call Put
Aug 31
59.25 204 Call Put
Aug 31
59.40 4 Call Put
Aug 31
59.56 454 Call Put
Aug 31
59.74 4 Call Put
Aug 31
59.94 4 Call Put
Aug 31
60.15 1185 Call Put
Aug 31
60.22 5 Call Put
Aug 31
60.33 4 Call Put
Aug 31
60.47 4 Call Put
Aug 31
60.63 4 Call Put
Aug 31
60.82 104 Call Put
Aug 31
1.88 158 61.05 6628 Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Aug 31
Call Put
Dec'20 64.00 19:28
Aug 31
1.64 14 62.50 1935 Call Put
Aug 31
Call Put
Aug 31
1.50 1 63.54 440 Call Put
Aug 31
Call Put
Aug 31
64.14 180 Call Put
Aug 31
Call Put

Is this  the mixture of overproduction crisis and intelligence operation with unforeseen side effects (blowback)

If we assume that the current event are a complex mixture of overproduction crisis, secular stagnation and intelligence operation with the goal to squeeze Russia (and as a side effect hurt Iran revenues)  that we should expect it lasting for several years, enough to destroy the opponents economically. So changes of recovering of oil prices in 2016 from this point of view are slip. For Russia this is a double blow as oil prices also affect natural gas prices. And it is true that Russian leadership were completely unprepared to this course of events, so the damage is great and real. As noted "Obama’s foreign policy goals get a boost from plunging oil prices" (Washingtonpost, Dec 23, 2015):

Plunging crude oil prices are diverting hundreds of billions of dollars away from the treasure chests of oil-exporting nations, putting some of the United States’ adversaries under greater stress.

After two years of falling prices, the effects have reverberated across the globe, fueling economic discontent in Venezuela, changing Russia’s economic and political calculations, and dampening Iranian leaders’ hopes of a financial windfall when sanctions linked to its nuclear program will be lifted next year.

At a time of tension for U.S. international relations, cheap oil has dovetailed with some of the Obama administration’s foreign policy goals: pressuring Russian President Vladi­mir Putin, undermining the popularity of Venezuelan President Nicolás Maduro and tempering the prospects for Iranian oil revenue. At the same time, it is pouring cash into the hands of consumers, boosting tepid economic recoveries in Europe, Japan and the United States.

But there are some visible side effect, with some probably not well anticipated:

All that means that dramatic drop in oil prices is a mixed blessing. Mike Whitney lists several other factors( Oil Price Blowback , Jan 6, 2015, Counterpunch)

Up to now, of course, Russia, Iran and Venezuela have taken the biggest hit, but that will probably change as time goes on. What the Obama administration should be worried about is the second-order effects that will eventually show up in terms of higher unemployment, market volatility, and wobbly bank balance sheets. That’s where the real damage is going to crop up because that’s where red ink and bad loans can metastasize into a full-blown financial crisis. Check out this blurb from Nick Cunningham at and you’ll see what I mean:

“According to an assessment from the Federal Reserve Bank of Dallas, an estimated 250,000 jobs across eight U.S. states could be lost in 2015 if oil prices don’t rise. More than 50 percent of those job losses would occur in Texas, which leads the nation in oil production.

There are some early signs that a slowdown in drilling could spread to the manufacturing sector in Texas… One executive at a metal manufacturing company said in the survey, “the drop in crude oil prices is going to make things ugly… quickly.” Another company that manufactures machinery told the Dallas Fed, “Low oil prices will drive reductions in U.S. drilling rigs, which will in turn reduce the market for our products.”

The sentiment was similar for a chemical manufacturer, who said “lower oil prices will adversely impact margins. Energy volatility will cause our customers to keep inventories tight.”

States like Texas, North Dakota, Oklahoma, and Louisiana have seen their economies boom over the last few years as oil production surged. But the sector is now deflating, leaving gashes in employment rolls and state budgets.” (Low Prices Lead To Layoffs In The Oil Patch, Nick Cunningham,

Of course industries lay-off workers all the time and it doesn’t always lead to a financial crisis. But unemployment is just one part of the picture, lower personal consumption is another. Take a look:

“Falling oil prices are a bigger drag on economic growth than the incremental “savings” received by the consumer…..Another way to show this graphically is to look at the annual changes in Personal Consumption Expenditures (PCE) in aggregate as compared to the subsection of PCE spent on energy and related products. This is shown in the chart below.

Lower Energy Prices To Lower PCE (Personal Consumption Expenditures):


(The Gasoline Price Myth, Lance Roberts,

See? So despite what you might have read in the MSM, lower gas prices do not translate into greater personal consumption or more robust growth. Quiet the contrary, they tend to intensify deflationary pressures and reduce activity which is a damper on growth.

Then there’s the knock-on effects that crashing prices and layoffs have on other industries like mining, manufacturing and chemical production. Here’s more from Oil Price:

“Oil and gas production makeup a hefty chunk of the “mining and manufacturing” component of the employment rolls. Since 2000, when the oil price boom gained traction, Texas has comprised more than 40% of all jobs in the country according to first quarter data from the Dallas Federal Reserve…

The majority of the jobs “created” since the financial crisis have been lower wage paying jobs in retail, healthcare and other service sectors of the economy. Conversely, the jobs created within the energy space are some of the highest wage paying opportunities available in engineering, technology, accounting, legal, etc. In fact, each job created in energy related areas has had a “ripple effect” of creating 2.8 jobs elsewhere in the economy from piping to coatings, trucking and transportation, restaurants and retail….

The obvious ramification of the plunge in oil prices is that eventually the loss of revenue will lead to cuts in production, declines in capital expenditure plans (which comprise almost 1/4th of all capex expenditures in the S&P 500), freezes and/or reductions in employment, and declines in revenue and profitability…

Simply put, lower oil and gasoline prices may have a bigger detraction on the economy than the “savings” provided to consumers.” (The Gasoline Price Myth, Lance Roberts,

None of this sounds very reassuring, does it? And yet, all we hear from the media is how the economy is going to reach “escape velocity” on the back of cheap oil. Nonsense. This is just more “green shoots” baloney wrapped in public relations hype. The fact is, the economy needs the good-paying jobs more than it needs low-priced energy. But now that prices are tumbling, those jobs are going to disappear which is going to be a drag on growth.

Now check out these headlines I picked up on Google News that help to show what’s going on off the radar:

Measuring oil production and consumption: BBL,  MMbbl and Mb/d

In a way the USA (along with Canada) is an exceptional (read backward) country which still was unable (or more correctly unwilling) to switch to metric system.  In the USA oil production and  consumption by volume is usually measured in  barrels (BBL). One BBL equals 42 US gallons  or approximately 159 liters; 6.29 barrels equal one cubic meter and (on average) 7.33 barrels weigh one metric ton (1000 kilograms). Energy-wise one barrel of crude approximately equals 5604 cubic-feet of natural gas, 1.45 barrels of liquefied natural gas (LNG), or about one barrel of gas condensate.

When converting volume measures into weight measures a coefficient based on so called API gravity  is used. The latter is a measure of how heavy or light a petroleum liquid is compared to water: if its API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is heavier and sinks. In other words this is a measure that is inverse of density. Although mathematically, API gravity is a dimensionless value,  for historical reasons it is measures in 'degrees' like angles. In this case this is degrees on a hydrometer instrument. API gravity values of most petroleum liquids fall between 10 and 70 degrees. From Wikipedia:

Crude oil is classified as light, medium, or heavy according to its measured API gravity.

Crude oil with API gravity less than 10° is referred to as extra heavy oil or bitumen. Bitumen derived from oil sands deposits in Alberta, Canada, has an API gravity of around 8°. It can be diluted with lighter hydrocarbons to produce diluted bitumen, which has an API gravity of less than 22.3°, or further "upgraded" to an API gravity of 31 to 33° as synthetic crude.[7]

Oil companies that are listed on American stock exchanges typically report their production in thousand or million barrels. Abbreviations like Mbbl (one thousand barrels), or MMbbl (one million barrels) are used. Often Mb/d is used instead of MMbbl per day.  This actually preferable notation that is used in this page.

As density of the oil varies it is not that easy to convert one metric into another for example volume into weight  as the following quote illustrates (Open Thread, Oil and Gas - Peak Oil Barrel ):

One problem is the estimate of Russian average barrels per metric ton, often it is assumed that this is 7.3 or 7.33 barrels per metric ton. If 7.33 barrels per ton is correct the average API gravity would be 33.4 degrees.

The Urals blend is about 31.7 degrees API or 7.25 barrels per metric ton.

On political motives for reporting less Russian output, possibly the US government wants the sanctions to affect Russian oil output and has some influence on what is reported by the EIA. Likewise the Russian government wants to show that sanctions are not affecting them and might influence the Russian oil ministry to report higher output.

Possibly this could happen or the average API gravity of Russian output may be different than we think, if API gravity is 31.7 degrees (Urals blend) then output in April would have been 10.55 Mb/d, JODI had about 10.1 Mb/d in April.

AlexS showed that the NGL numbers reported by the EIA and Jodi may be about 350 kb/d too high (perhaps some condensate is being included in NGL that should be part of C+C output). If we added 350 kb/d to JODI’s April 2015 estimate of C+C output we get about 10.45 Mb/d for Russia, now the difference is only 100 kb/d, take the average and call it 10.5 Mb/d+/- 50 kb/d. That is a better explanation than “politics” in my opinion.

Great Condensate Con: What liquids are counted as oil in statistical reports such as EIA

There are several different liquids that are usually counted as oil.  Three major are crude, condensate and Natural Gas Liquids. The total all three is often counted as would oil production which now is over 90 Mb/d. But by how much nobody knows. The EIA reports crude plus condensate  as "oil".  EIA has total world production of Crude Oil, NGPL, and Other Liquids at 93,770,000 barrels per day in June 2015.  This type of reporting provides oil traders with wrong data and was called "Great condensate con" :

Lease condensate consists of very light hydrocarbons which condense from gaseous into liquid form when they leave the high pressure of oil reservoirs and exit through the top of an oil well. This condensate is less dense than oil and can interfere with optimal refining if too much is mixed with actual crude oil. The oil industry's own engineers classify oil as hydrocarbons having an API gravity of less than 45--the higher the number, the lower the density and the "lighter" the substance. Lease condensate is defined as hydrocarbons having an API gravity between 45 and 70. (For a good discussion about condensates and their place in the marketplace, read "Neither Fish nor Fowl – Condensates Muscle in on NGL and Crude Markets.")

Refiners are already complaining that so-called "blended crudes" contain too much lease condensate, and they are seeking out better crudes straight from the wellhead. Brown has dubbed all of this the great condensate con.

Brown points out that U.S. net crude oil imports for December 2015 grew from the previous December, according to the U.S. Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy. U.S. statistics for crude oil imports include condensate, but don't break out condensate separately. Brown believes that with America already awash in condensate, almost all of those imports must have been crude oil proper.

Brown asks, "Why would refiners continue to import large--and increasing--volumes of actual crude oil, if they didn’t have to--even as we saw a huge build in [U.S.] C+C [crude oil plus condensate] inventories?"

Part of the answer is that U.S. production of crude oil has been declining since mid-2015. But another part of the answer is that what the EIA calls crude oil is actually crude plus lease condensate. With huge new amounts of lease condensate coming from America's condensate-rich tight oil fields -- the ones tapped by hydraulic fracturing or fracking -- the United States isn't producing quite as much actual crude oil as the raw numbers would lead us to believe. This EIA chart breaking down the API gravity of U.S. crude production supports this view.

Exactly how much of America's and the world's presumed crude oil production is actually condensate remains a mystery. The data just aren't sufficient to separate condensate production from crude oil in most instances.

Brown explains: "My premise is that U.S. (and probably global) refiners hit in late 2014 the upper limit of the volume of condensate that they could process" and still maintain the product mix they want to produce. That would imply that condensate inventories have been building faster than crude inventories and that the condensate is looking for an outlet.

That outlet has been in blended crudes, that is heavier crude oil that is blended with condensates to make it lighter and therefore something that fits the definition of light crude. Light crude is generally easier to refine and thus more valuable.

The trouble is, the blends lack the characteristics of nonblended crudes of comparable density (that is, the same API gravity), and refiners are discovering to their chagrin that the mix of products they can get out of blended crudes isn't what they expect.

So, now we can try to answer our questions. Brown believes that worldwide production of condensate "accounts for virtually all of the post-2005 increase in C+C [crude plus condensate] production." What this implies is that almost all of the 4 million-barrel-per-day increase in world "oil" production from 2005 through 2014 may actually be lease condensate. And that would mean crude oil production proper has been nearly flat during this period -- a conjecture supported by record and near record average daily prices for crude oil from 2011 through 2014. Only when demand softened in late 2014 did prices begin to drop.

Here it is worth mentioning that when oil companies talk about the price of oil, they are referring to the price quoted on popular futures exchanges -- prices which reflect only the price of crude oil itself. The exchanges do not allow other products such as condensates to be mixed with the oil that is delivered to holders of exchange contracts.

But when oil companies (and governments) talk about oil supply, they include all sorts of things that cannot be sold as oil on the world market including biofuels, refinery gains and natural gas plant liquids as well as lease condensate. Which leads to a simple rule coined by Brown: If what you're selling cannot be sold on the world market as crude oil, then it's not crude oil.

The glut that developed in 2015 may ultimately be tied to some increases in actual, honest-to-god crude oil production. The accepted story from 2005 through 2014 has been that crude oil production has been growing, albeit at a significantly slower rate than the previous nine-year period--15.7 percent from 1996 through 2005 versus 5.4 percent from 2005 through 2014 according to the EIA. If Brown is right, we have all been victims of the great condensate con which has lulled the world into a sense of complacency with regard to actual oil supplies--supplies he believes have been barely growing or stagnant since 2005.

"Oil traders are acting on fundamentally flawed data," Brown told me by phone. Often a contrarian, Brown added: "The time to invest is when there's blood in the streets. And, there's blood in the streets."

He explained: "Who of us in January of 2014 believed that prices would be below $30 in January of 2016? If the conventional wisdom was wrong in 2014, maybe it's similarly wrong in 2016" that prices will remain low for a long time.

Brown points out that it took trillions of dollars of investment from 2005 through today just to maintain what he believes is almost flat production in oil. With oil companies slashing exploration budgets in the face of low oil prices and production declining at an estimated 4.5 and 6.7 percent per year for existing wells worldwide, a recovery in oil demand might push oil prices much higher very quickly.

That possibility is being obscured by the supposed rise in crude oil production in recent years that may just turn out to be an artifact of the great condensate con.


But counting such a diverse group of liquids is impossible without substantial errors in each category. That mean that the error margin of and global production figure has margin or error around  +- 0.5% or even 1% or one Mb/d.  for example amount of oil produced and pumped to the surface at wellhead is different and greater that amount of oil that got to refineries (which along with chemical plants are major consumers) because of losses during transportation and evaporation or light fractions in case weather is hot during the period before oil is processed at refinery or chemical plant.  Also there are differences in reporting and errors in measuring oil density by various countries, difficulties of converting weight into volume and vice versa, etc.  There are also large differences in reporting between agencies (

Reporting of small producers (and small producer countries) is often very fuzzy and here various games can be and often are played with those report with compete impunity, if you have some agenda.  So any analyst who take published by agencies figures  as precise amount produced accuracy equal to five meaningful digits is iether idiot or crook. Only first three digits  probably can be countered as meaningful. In no way the forth digit is.  If the analyst is talking about "oil glut" based on those figures he/she is definitely a crook ;-). 

Now you understand that all talk about 1Mb/d glut is very suspect.

Que Bono and Wall Street HFT games with oil futures

Low oil prices are essentially a crime against humanity as oil is exhaustible resources and burning it now in oversized SUVs means depriving of fuel and extremely important important for chemical industry commodity future generations. So the question is "que bono"

From this point if view (which is a standard starting point of any crime investigation) the origin of low oil prices lies probably in Wall Street  which capitalized on the US government desire to hurt Russian economy, Saudi machinations (with Saudis as a partner in this crime ;-) related to thier declining market share in oil market.

It is not that difficult on the level of Wall street cguant to play the short game for a long time,  skillfully dropped the market prices by exploiting rumores, and with the help of MSM distorting statistics (just read a typical CNBC article to feel the level of crap they are trying to infuse in readers), exploiting Saudi desire to preserve market share combined with temporary oil overproduction. Temporary overproduction due to the period of oil prices over $100, when everybody and his brother in the USA were trying to discover and drill new shale well and convert junk bonds into flow of oil trying to get rich in such supposlydly lucrative market. 

World production at the same time stagnated. Russia exports are actually in decline for many years. After all Libya production now is off the market, due to destruction of their country and subsequent civil war caused by French intervention in alliance with the USA, Qatar and several other mid-eastern countries. If you analyze the US press the bias toward lower oil prices is  evident. 


Production by country and total world production

Estimated average world daily production of 95.71  Mb/d for 2015 ( (Jan 12, 2016 forecast) exceeds EIA’s Annual Energy Outlook 2015 forecast (April 2015) by 2.6 Mb/d! so much for EIA forecasting abilities.

For 2016 IEA predicts 95.93 (Jan 12, 2016 forecast) and for 2017 96.69 (also  Jan 12, 2016 forecast)

OPEC predictions were 94.5 Mb/d for 2015 (December 2015  forecast) with growth in 2020 to 97.6 (it presupposes investment of  around $250 billion each year in non OPEC countries and $40 billions annually by OPEC countries; money that with current oil prices are nowhere to come by):

In the downside supply scenario, 3.3 mb/d from non-OPEC supply is assumed to be lost by 2040 with respect to the Reference Case.

Oil production is highly concentrated.  The top dozen of out of 100 oil-producing countries accounted for over 73% of the world's oil production. The top three (Russia, Saudi Arabian and the USA) account for almost 40%. 

Here is a chart from  Bloomberg Business

Iraq and Iran are also large and important players but currently  they are definitely the second tier players.  That might change in the future.

Now what will (most probably) happen in 2016 with the major players

Now let's discuss Iran and Iraq

All three major oil producers (troika) are severely affected by the oil price slump, but for the USA as one of the largest world oil importers it is a mixed blessing (destruction of shale  industry and connected with it jobs is just a collateral damage for approximately $200 billion stimulus due to lower prices.

For the Russia and Saudis this is a huge negative development which  leads to unbalanced budgets (especially for Saudies who need $100 oil to balance the budget and  lost $100 billions of their foreign reserves in 2015) and depletion  of currency reserves (more for Saudis then Russia, but Saudis had bigger currency reserves and can benefit from being a vassal of the USA by commanding a higher prices for state assets in fire sale). 

All-in-all around 100 countries produce oil with top three producing around 40%,  and the top ten over 63% of the world's oil production.

According to International Energy Agency (EIA), in 2011 the top ten oil-producing countries accounted for over 63% of the world's oil production.[2] As of November 2012, Russia produced 10.9 million barrels of crude per day, while Saudi Arabia produced 9.9 million barrels.[3]

Top oil producers: According to EIA top 10 oil producer countries produced over 64 % of the world oil production in 2012. The top oil producers in 2012 were: Russia 544 Mt (13 %), Saudi Arabia 520 Mt (13 %), United States 387 Mt (9 %), China 206 Mt (5%), Iran 186 Mt (4 %), Canada 182 Mt (4 %), United Arab Emirates 163 Mt (4 %), Venezuela 162 Mt (4 %), Kuwait 152 Mt (4 %) and Iraq 148 Mt (4 %). In 2012 total oil production was 4,142 Mt. [4] In 2011 the world oil production was 4,011 Mt demonstrating an annually rising trend in oil production.[5]

  Country Production (bbl/day) Production (MT) Share of
World %
Date of
 World 84,951,200 10,194 100% 2014 est. Peak Production
1 Russia 10,107,000 1212 14.05% 3/2015.[6] 10,107,000 (3/2015)
2 Saudi Arabia 9,735,200 1168 13.09% 12/2014.[6] 9,900,000 (1/1980)
3 United States 9,373,000 1124 12.23% 4/2015.[6] 9,610,000 (6/2015)
4 China 4,189,000 502 5.15% 5/2015.[6] 4,189,000 (5/2015)
5 Canada 3,603,000   4.54% 12/2014.[6] 3,603,000 (1/2015)
6 Iraq 3,368,000   4.45% 5/2015.[6] 3,368,000 (5/2015)
7 Iran 3,113,000   4.14% 12/2014.[6] 6,060,000 (1/1974)
8 United Arab Emirates 2,820,000   3.32% 12/2014.[6] 2,820,000 (1/2013)
9 Kuwait 2,619,000   2.96% 12/2014.[6] 2,650,000 (1/2013)
10 Mexico 2,562,000   3.56% 12/2014.[6] 3,476,000 (1/2004)
11 Venezuela 2,501,000   3.56% 12/2014.[6] 3,280,000 (1/1997)
12 Nigeria 2,423,000   2.62% 12/2014.[6] 2,627,000 (1/2005)
13 Brazil 2,255,000   3.05% 12/2014.[6] 2,255,000 (1/2015)
14 Angola 1,831,000   2.31% 12/2014.[6] 1,946,000 (1/2008)
15 Kazakhstan 1,573,000   1.83% 12/2014.[6]
16 Qatar 1,553,000   1.44% 12/2014.[6]
17 Norway 1,539,000   2.79% 12/2014.[6]
18 Algeria 1,462,000   2.52% 12/2014.[6]
19 Colombia 1,003,000   1.19% 12/2014.[6]
20 Oman 940,000   0.95% 12/2014.[6]
21 Azerbaijan 871,000   1.20% 12/2014.[6]
22 Indonesia 828,000   1.66% 12/2014.[6]
23 United Kingdom 801,000   1.78% 12/2014.[6]
24 India 772,000   1.04% 12/2014.[6]
25 Malaysia 570,000   0.82% 12/2014.[6]
26 Argentina 540,000   0.93% 12/2014.[6]
27 Ecuador 526,000   0.58% 12/2014.[6]
28 Egypt 514,000   0.80% 12/2014.[6]
29 Libya 470,000   0.85% 5/2015.[6]
30 Australia 338,000   0.70% 12/2014.[6]
31 Vietnam 337,000   0.36% 12/2014.[6]
32 Equatorial Guinea 270,000   0.41% 12/2014.[6]
33 Congo, Republic of the 265,000   0.33% 12/2014.[6]
34 Sudan 259,000   0.13% 12/2014.[6]
35 Thailand 241,000   0.45% 12/2014.[6]
36 Gabon 239,000   0.29% 12/2014.[6]
37 Turkmenistan 229,000   0.22% 12/2014.[6]
38 Denmark 175,000   0.31% 12/2014.[6]
39 Yemen 131,000   0.34% 12/2014.[6]
40 Brunei 112,000   0.17% 12/2014.[6]
41 Italy 106,000   0.17% 12/2014.[6]
42 Ghana 105,000   0.01% 12/2014.[6]
43 Chad 98,000   0.13% 12/2014.[6]
44 Romania 85,000   0.14% 12/2014.[6]
45 Trinidad and Tobago 81,000   0.18% 12/2014.[6]
46 Pakistan 81,000   0.16% 12/2014.[6]
47 Cameroon 81,000   0.09% 12/2014.[6]
48 Timor-Leste 79,000   0.11% 12/2014.[6]
49 Peru 69,000   0.17% 12/2014.[6]
50 Uzbekistan 65,000   0.08% 12/2014.[6]
51 Tunisia 55,000   0.11% 12/2014.[6]
52 Germany 52,000   0.19% 12/2014.[6]
53 Bolivia 51,000   0.06% 12/2014.[6]
54 Bahrain 50,000   0.06% 12/2014.[6]
55 Cuba 50,000   0.06% 12/2014.[6]
56 Turkey 48,000   0.06% 12/2014.[6]
57 Ukraine 41,000   0.12% 12/2014.[6]
58 New Zealand 40,000   0.07% 12/2014.[6]
59 Ivory Coast 36,000   0.07% 12/2014.[6]
60 Papua New Guinea 34,000   0.04% 12/2014.[6]
61 Belarus 30,000   0.04% 12/2014.[6]
62 Netherlands 28,000   0.07% 12/2014.[6]
63 Syria 23,000   0.48% 12/2014.[6]
64 Philippines 21,000   0.02% 12/2014.[6]
65 Albania 21,000   0.01% 12/2014.[6]
66 Mongolia 21,000   0.01% 12/2014.[6]
67 Burma 20,000   0.02% 12/2014.[6]
68 Congo, Democratic Republic of the 20,000   0.02% 12/2014.[6]
69 Poland 19,000   0.04% 12/2014.[6]
70 Austria 17,000   0.03% 12/2014.[6]
71 France 15,000   0.08% 12/2014.[6]
72 Suriname 15,000   0.07% 12/2014.[6]
73 Serbia 12,000   0.01% 12/2014.[6]
74 Hungary 11,000   0.03% 12/2014.[6]
75 Guatemala 10,000   0.02% 12/2014.[6]
76 Croatia 10,000   0.03% 12/2014.[6]
77 Chile 7,000   0.01% 12/2014.[6]
78 Mauritania 7,000   0.02% 12/2014.[6]
79 Spain 6,000   0.03% 12/2014.[6]
80 Japan 5,000   0.16% 12/2014.[6]
81 South Africa 4,000   0.22% 12/2014.[6]
82 Bangladesh 4,000   0.01% 12/2014.[6]
83 Czech Republic 3,000   0.01% 12/2014.[6]
84 Lithuania 2,000   0.01% 12/2014.[6]
85 Belize 2,000   0.00% 12/2014.[6]
86 Bulgaria 1,000   0.00% 12/2014.[6]
87 Georgia 1,000   0.00% 12/2014.[6]
88 Kyrgyzstan 1,000   0.00% 12/2014.[6]
89 Barbados 1,000   0.00% 12/2014.[6]
90 Greece 1,000   0.00% 12/2014.[6]

Global oil production has been split into three geo-political categories: 1) USA and Canada, 2) OPEC and 3) the Rest of the World (RoW). RoW production bears the hallmarks of having peaked in the period 2005 to 2010 and this has consequences for oil prices, demand and prosperity in parts of the world, especially the OECD. Most of the growth in oil supply has been in the USA and Canada where the market has been flooded with expensive oil.

Here are the data for crude oil + condensate + natural gas liquids (C+C+NGL) and exclude biofuels and refinery gains that are included by the EIA in their total liquids number.

The 1.1 million bpd gain in US oil production was the largest year over year gain for any country in 2013, and the largest gain in US history. Mostly due to shale oil. The US remained the world’s third-largest oil producer at 10 million bpd in 2013, trailing Saudi Arabia’s 11.5 million bpd and Russia’s 10.8 million bpd. Rounding out the top five were China (4.2 million bpd) and Canada (3.9 million bpd).

Just to put the current US oil boom into further perspective, over the past five years global oil production has increased by 3.85 million bpd. During that same time span, US production increased by 3.22 million bpd — 83.6 percent of the total global increase.

If the current “low oil price crisis”  does indeed destroy high cost production capacity then this will raise the question if the high cost sources can  be brought back? And at what cost?  Especially interesting is the question: "Can the shale industry can come back from the near death experience?"

What MSM do not discuss: depletion rates

Low oil prices are suicidal for mankind in a long run. Oil is too valuable and irreplaceable resource  for chemical industry to be burned in excessive qualities in transport due to low prices, especially when hybrid and all electrical cars is a reality and price differential with ordinary cars for small card is not that great (less then twice). Electricity unlike oil can be produced from renewable resources such as nuclear (breeder reactors are a reality), wind and solar (solar panels improved dramatically in the last ten years).  At the same time in the USA (and probably elsewhere) sales of SUVs and light trucks are again booming.  That say something about level of intelligence of the USA government. 

With producers in the US and across the world pumping as much as they can, they are doing it at a cost of running into diminishing production rates (depletion) on those existing wells sooner. The 2008 IEA survey of ~800 major fields (including all giants and supergiants) which produced over 60% of that year crude showed an average annual decline rate of 5.1%.

Most countries in the world now face depletion of their reserves. Some face acute depletion (Indonesia, Mexico, etc), some still manage to maintain plato (Russia, Saudi Arabia) or even increase production (the USA, Canada, Iraq, Iran, in the future probably Libya and Syria),  But generally around 4% of total world capacity is depleted per year and without adequate investment can't be replaced. in 2008 IHS estimated global oil field decline rates to be around 4.5%. EIA did a study estimated the worldwide decline rates to be around 6.7%.

When peak oil has been discussed decades ago it was considered a 3% decline rate in production was manageable -- 5% would considered extremely difficult to deal with  (The Guardian)

Now depletion rates are higher (source: IHS, Deloitte & Touche and USGS databases; other industry sources; EIA estimates and analysis)

Outside a couple of countries such as Iran, Iraq and Venezuela offshore production grows faster the onshore production. Shale production growth in the past was the fastest, especially in the USA.  That means a switch to more expensive sources of oil.

Given the increasing decline rates, the oil industry needs considerable capex investments. In the absence of them it slide into irreversible decline.  New technologies greatly help but there are natural limits of what you can achieve with them. they are not substitute to finding new fields which is a very expensive activity.

US oil production and forecast for 2016

Among three major oil producing nations (USA, Russia and Saudi Arabia) the USA is the most dynamic nation, and the most difficult to predict due to large share of shale oil in the USA output. Gradual destruction of the US shale industry ability to pump oil  due to low prices is now established fact. That only discussable item is how quick it will proceed. The first 12 months were cushioned by hedges, but at the and of 2015 most companies are now  "swimming naked". 

Still there are signs that the US oil production peaked in 2015. Decimation of shale can't be compensated by offshore drilling. The sinking shale that could easily lose 1 Mb/d in 2016

At the same time in 2015 total US oil production remained remarkably stable, bank loans were extended or refinanced and bankruptcies were few and does not look like an epidemic. So forecaster of "doom and gloom" were wrong by at least one year. There are no signs of panic in view of drop of oil prices below the level of sustainable production. After all oil is the strategic industry and to leave to market forces is extremely unwise. Wall Street probably has other opinion. As John Kenneth Galbraith said “The sense of responsibility in the financial community for the community as a whole is not small. It is nearly nil.” (The Great Crash of 1929). They live by the next quarter results.

Dec 8, 2015 EIA data  can be found

EIA estimates that total U.S. crude oil production declined by about 60,000 b/d in November 2015 compared with October. That decline will accelerate in December. Crude oil production will probably gradually decrease through the third quarter of 2016 before growth resumes late in 2016, it higher oil prices (at least above $50) materialize. 

Projections of the U.S. crude oil production

Saudi Arabia oil production and forecast for 2016

Oil production

There are signs that Saudi Arabia oil production peaked or close to a peak. A terror attack in 2016 Saudi Arabia is not very likely. Shiite organizations have not resorted to terrorism in many years and they seem now focused on fighting ISIS. which although sponsored by Saudis is a distinct organization.

Saudi Arabia produced 10.28 million barrels a day in October, 2015,  up from 9.69Mb/done year ago.   Chances that production will reach 11 Mb/d are slim. There are strong signs that they have huge difficulties in increasing oil extraction volume.  All their efforts to increase production led to increase of less then 1Mb/d  increase in 2015 (7% increase in production). Which is partially offset by  increase in internal consumption (In 2015 Saudi Arabia oil demand rose by a notable 0.21 mb/d, which equates to a nearly 8% rise y-o-y, )  Here is relevant quote (, Dec 21, 2015)

Crude exports from Saudi Arabia rose from an average of 7.111 million barrels per day in September to 7.364 million per day in October, according to the latest data from the Joint Organizations Data Initiative (JODI), which monitors the oil industry. The report said this quantity was the most oil exported from Saudi Arabia since June and 7 percent higher than in October 2014.

And those doubts about Saudis ability to increase production exist for some time. When U.S. president George W. Bush asked the Saudis to raise production on a visit to Saudi Arabia in January 2008 they declined. After that Bush questioned whether they had the ability to raise production any more.

But they did managed to achieve temporary production peak: in April 2015, the Saudi oil minister Ali Al-Naimi said that Saudi Arabia produced 10.3 million barrels per day in March that year, which was the highest figure based on records since the early 1980s.  The previous peak in production was in August 2013 at 10.2 million barrels per day.

Theoretically as its own population and internal consumption is growing and depletion of its wells reached critical level, they should concentrate of providing the standard of living for future generations, not dump the oil at the lowest price.  In three decades if the current annual increase in internal consumption continues at, say, 5% and production stays flat Saudi Arabia paradoxically may became oil importing county.

Still Saudi are known to use the most advanced (and most expensive) technologies of boosting the extraction rate to counter the natural decline curve.   They now are exploring shale technology and reportedly are trying to hire workers from the USA who became unemployed during the downturn of shale industry started in mid 2014.


Contrary to MSM coverage about Saudis flooding world with their oil, year over year increase in exports is slim. Basically they are flat (due to rapidly increasing population and domestic consumption): 

Net exports were around 7.111 Mb/d (September, 2015). But with current low prices this is an economic suicide, even if this is an economic war against Iran -- attempt to hurt its major competitor when  sanctions are lifted.

The net revenue dropped more then a half and the country is burining its currency reserves (which are substantial and at current burn rate will last for more then three years)  So there is something fishy in this propagated by Western MSM idea of Saudis defending their market share. The cost of defending their market share proved to be in hundred billions of lost revenue, which far exceeds their losses from rise of the US shale oil production (if the prices remained above $100 per barrel).  Also the question arise, why now. Shale was a long story in the USA and reached present size around decade ago (2005).

This is definitely a declation of war. But if the target is not the USA (and it can't be the target as Saudis are the USA vassal state), then war of whom ?  The USA is actually a beneficially of this  war (like most wars in this region) and  got a half trillion subsidy due to lower price of oil.  And  "corrupt and atheistic" Western Europe also got similar subsidy.

Business Insider

A report by Citigroup has warned that Saudi Arabia could run out of oil to export by 2030, raising fears that oil prices may rise significantly in coming years.

... ... ...

Its export capacity could steadily reduce and, “if nothing changes, Saudi may have no available oil for export by 2030”, Citi analyst Heidy Rehman wrote.

Saudi Arabia consumes 25pc of its oil output and oil accounts for about 50pc of its electricity production. With peak power demand rising by about 8pc per year, the nation is aiming to more than double its power capacity by 2032 through new nuclear and solar instalations.

Internal consumption

Saudi Arabia produced 10.28 million barrels a day in October 2015 and exported  7.364 million barrels a day. the difference  is less then 3 Mb/d

In September figure were 10.28 and 7.111. The difference is above 3 Mb/d.

So we can assume that 2015 internal consumption is approximately 3 million barrel a day.  In 2015 Saudi Arabia oil demand rose by a notable 0.21 mb/d, which equates to a nearly 8% rise y-o-y, driven by transportation fuels such as jet/kerosene, gasoline and diesel oil, which grew at high rates. The higher consumption of jet fuel reflects the increase in travel activity towards the end of the summer vacation, which coincided with the Hajj season.

Internal consumptions rapidly growing year over year with some years (2009) close to 10% growth (Saudi Arabia Crude Oil Consumption by Year (Thousand Barrels per Day)):

2005 1,963.64 4.20 %
2006 2,020.02 2.87 %
2007 2,094.33 3.68 %
2008 2,236.99 6.81 %
2009 2,436.12 8.90 %
2010 2,579.73 5.90 %
2011 2,760.91 7.02 %
2012 2,861.00 3.63 %
2013 2,925.00 2.24 %

Russia oil production and forecast for 2016

Russian oil production considered to be at "over peak" stage with increases mainly due to offshore drilling. In 2014 total petroleum and other liquids production in 2014 were 10.8 Mb/d  (EIA). Russia crude oil production in late 2015 was around 10.20M, up from  10.08Mb/done year ago. That's was an unanticipated, even by Russian Ministry of Energy result of activities of small companies. which managed to increase of  production by  1.12% from one year ago, when most analysts expected a slight decline (Russia Crude Oil Production (Monthly, Barrels per Day).

Despite severe depreciation of ruble and sanctions, in 2015 Russia managed to reach the level of production that exceed the level of former USSR period. At the same time most of Russia's fields are mature fields and the production from them is declining for long time,  offset only by new more expensive projects with less total volume. Unless Arctic oil and other expensive oil are economical to produce (which requires over $100 bbl price) the national path for Russian production is iether long plato or down. 

Russian oil extraction (red) and oil exports (green) in metric tons


In 2015 Russia managed to increase exports the first time in six years, but that does not change general situation: internal consumption is growing pretty robustly with growth of car fleet and decline of production due to national depletion of oil conventional wells became more and more difficult to compensate with new discoveries. And new fields, even if such exist, can't be now tapped because capital expenditures by most Russian oil companies now are slashed to the bone (russia is more like the USA in this respect with over dozen of major oil companies producing   oil).

At current oil prices Arctic oil now is out of reach and only existing platforms will remain in production. All of them are losing money. conventional wells are still profitable with same remaining profitable up to $20 per barrel. Still for the next several years Russia probably will be able to keep the current level of production due to huge previous investments dome in 2010-2014 in a few new fields (Bloomberg Business, December 20, 2015):

The other big boosts to Russian production this year have come from a few mid-sized new fields like those of Severenergia in the Arctic Yamal region. Co-owners Novatek OJSC and Gazpromneft PJSC invested in the $9.2 billion project back when oil prices were high. With most of the capital already committed, operating costs now are relatively low and output of gas condensate, a light and especially valuable form of crude, is up five-fold this year.

One side effect of falling oil prices -- the 52 percent plunge in the ruble over the last two years -- has helped Russian oil producers, chopping their costs in dollar terms since between 80 and 90 percent of their spending comes in rubles.

... ... ...

To be sure, few in the industry expect Russia to be able to sustain the current performance for more than a few years. Tax hikes and lack of financing have cut deeply into exploration drilling, which is down 21 percent this year, and handicap the larger new projects that are needed to replace the country’s older fields as they run dry.

... ... ...

In some parts of the Russian oil patch, low prices are already causing pain. At $40 a barrel, “half of our fields could be stopped. Heavy oil, low horizons, mature horizons are all unprofitable at a price of $40-45. We are waiting for better times,” Russneft OJSC Board Chairman Mikhail Gutseriev said in an interview on state television early this month.

Unfortunately just before the oil prices crush Russia was engaged in several high cost drilling projects in Arctic and was caught naked when oil price dropped. ( see Petroleum industry in Russia - Wikipedia).  Timing can't be more bad as this is a really expensive oil, probably around $60 per barrel or higher at wellhead.  Which are now sold at a huge discount.  Igor Sechin proved to be a weak leader of the Russia major state owned oil company Rosneft.  Government refused to bail out the company which faces large external debt and it was saved by some "white knife" billionaire.

Moscow Exile, December 19, 2015 at 11:19 am

Undeterred by OPEC’s decision to keep pumping and drive out U.S. shale rivals, Russian oil output continued to grow, in October setting a new monthly record for the post-Soviet era. Explorers have remained profitable under a friendly tax system and low production costs.

Mystery Benefactor

Rosneft assuaged concerns over the sustainability of Russia’s biggest corporate debt load after the company received a $15 billion advance payment for oil supplies from a source the company didn’t identify, according to quarterly reports published Nov. 13. The inflow of cash will help Rosneft meet $2.5 billion in debt due in the fourth quarter, $13.7 billion in 2016 and $11.3 billion in 2017, according to a presentation on its website.

See: One Year Into New OPEC Era, You Made 12% Buying These Oil Bonds

It looks like the board is in denial of the blunder with overinvest they made:

18 December 2015
Rosneft Holds Board of Directors Meeting

On December 18, Rosneft Board of Directors considered in Vladivostok interim results of its 2015 operations, the business-plan for 2016-2017, the Long-term development program and the energy efficiency program of the Company.

The following decisions were taken:

1. The Board of Directors considered and acknowledged 2015 Rosneft interim results and the intermediate results of the implementation of the long-term development program of the Company. The Board of Directors welcomed the results of the implementation of programs aimed at raising efficiency in challenging economic environment: the Company maintained low levels of OPEX and eased its debt burden.

2. The Board of Directors considered and acknowledged the business-plan for 2016-2017, structured in accordance with a conservative macroeconomic scenario and focused on the implementation of the Long-term development program of the Company, approved by the Government of the Russian Federation.

Within the ambit of delivering strategic goals of boosting production, securing deliveries of oil and oil products, maintaining a market share (both in Russia and abroad), the Company plans to increase capital expenditures by a third (compared to 2015 levels). The investment development program envisages the achievement of strategic goals of hydrocarbon production growth by means of accelerated commencement of oil and gas greenfields whilst exercising a balanced external financing program. After the completion of transition to Euro-5 motor fuels production in December 2015, refineries’ modernization program will be focused on increasing processing depth. Also, the program of cutting operating costs and enhancing operating and financial efficiency will be continued. Hence the leadership in the industry by the operating costs and capital costs will be guaranteed.

... .... ...

Commenting on the results of the Board meeting, Rosneft Chairman of the Management Board Igor Sechin said: “Measures taken by the Company for strengthening its oilfield services business dimension in 2015 enabled Rosneft to increase production in order to guarantee supplies to its traditional markets while keeping operating and capital expenditures at the record-low levels. The Company consistently generates free cash flow, providing funding sources for its investment decisions in accordance with 2015-2016 business plan approved by the Board of Directors and the Long-term Development Program”.

In August 2014, it was announced that preparations by the Russian government to sell a 19.5 percent stake in the company were underway and would most likely be sold in two tranches. So far this chunk of the company was not sold, probably because of low oil prices. 

Russia oil internal consumption is generally more or less stable and growling at a very slow page outside several 'abnormal" years. In 2016 it will not probably grow much as the economy remain is conditions close to recession. Lukoil chairman has said that he  expects Russia to produce less oil  in 2016 than in 2015

Russia internal oil consumption is currently around 3.3 Mb/d, up from 3.2 Mb/d one year ago. This is a change of 3.15% from one year ago.

2005 2,785.14 1.25 %
2006 2,803.47 0.66 %
2007 2,885.10 2.91 %
2008 2,981.92 3.36 %
2009 2,888.53 -3.13 %
2010 3,081.82 6.69 %
2011 3,352.11 8.77 %
2012 3,395.11 1.28 %
2013 3,320.00 -2.21 %

It is expected that it will continue to grow by around 0.1 Mb/d per year as car fleet is rapidly growing.. Also Russia will process more raw oil in 2016 then in 2015 which also negatively influence export of raw oil

Oil producing countries with civil wars/sanctions/military conflicts  

This is a very complex topic that is beyond the scope of this analyses. But paradoxically such countries are the "last hurrah" for increasing the oil production, as they do have reserve that can't be tapped at reasonable costs now but at the same time represent the last spot of "cheap oil" deposits. Some facts:

Oil consumption

Mankind dependency on oil is hardwired into fabric of our civilization.  It is an irreplaceable product. But as much as  2/3 of this extremely valuable chemical industry resource is burned in transportation. That actually means that sales of cars and trucks are instrumental to predicting future demand at least one year ahead.  And they are growing especially fast in China and India. They also accelerated in the USA.

World oil consumption is often given in millions barrels per day (mbpd or Mb/d). BP stated that in 2014 global oil demand increased by 1.4 Mb/d over 2012 to 91.3 Mb/d.  Assuming on average $60 per barrel this is 5.5 trillion dollars a year of additional expenses on energy.   Here are actual figures of world consumption for the last decade ( World Crude Oil Consumption by Year (Thousand Barrels per Day))

2005 84,668.04 1.79 %
2006 85,586.39 1.08 %
2007 86,700.09 1.30 %
2008 86,027.86 -0.78 %
2009 84,953.36 -1.25 %
2010 87,839.10 3.40 %
2011 88,657.70 0.93 %
2012 89,668.91 1.14 %
2013 90,354.27 0.76 %

As BP noted in February 2015 "Global demand for energy is expected to rise by 37% from 2013 to 2035, or by an average of 1.4% a year".  So it is reasonable to assume that oil demand will rise approximately the same rate, which taking into account the current rate of consumption is above 1Mb/d.

The oil consumption proved to be extremely resilient  to economic conditions (that only drop in the last decade happened in 2009) and is growing globally each year by rate about 1 Mb/d due to increase of population and cars and trucks on the road. ( Peak oil - Wikipedia )

The table above does not contain data for 2014 and 205. Here they are:

As for the forecast of 2015, the growth of consumption is predicted in the range of 1.2-1.4 MB/d:

According to IEA "an annual $630 billion in worldwide upstream oil and gas investment – the total amount the industry spent on average each year for the past five years – is required just to compensate for declining production at existing fields and to keep future output flat at today’s levels" ( It is easy to see that such amount is difficult to come by when prices of oil are in $30-$40 range,  do the decline of world oil output might happen faster then growth of consumption.

OPEC forecast is usually more reliable then EIA but generally very similar, despite having different set of biases (G7 bias in case of IEA and Saudi Arabia bias for OPEC forecast) They predict higher growth of demand in 2015 and lower growth in 2016:

World oil demand is expected to grow by 1.50 mb/d in 2015 to average 92.86 mb/d, ...  In 2016, world oil demand growth is seen reaching 1.25 mb/d ...  to average 94.14 mb/d.

India is set to become the world’s third largest oil importer after the US and China before 2025, according to the International Energy Agency (IEA). India’s energy needs would overtake Japan as the third largest net importer of oil before 2025. EIA predict stable consumption level until 2040 only 1.1% growth on average (EIA)

The bulk of that demand growth is expected to come from developing countries in Asia. With U.S. supply falling, where are the new oil supplies coming from ? There simply isn’t enough to go around.

Double-digit percentage increases in oil consumption were recorded by Pakistan, Venezuela, and Azerbaijan from 2012 to 2013, and over the past five years double-digit percentage consumption increases were recorded by Central and South America (15.2 percent), the Middle East (18.3 percent), Africa (12 percent), Asia Pacific (17.4 percent), and the former Soviet Union (12.8 percent). World Sets New Oil Production and Consumption Records

Per country picture: not all countries are created equal

The most significant factor affecting petroleum demand has been human population growth. Large countries that previously were dirt poor and consumed minuscule amount of oil now now rapidly growing (India and China) are primary drivers of consumption. Arab countries also experience rapid population growth (Saudi Arabia is one example). The United States Census Bureau predicts that world population in 2030 will be almost double that of 1980. Oil production per capita peaked in 1979 at 5.5 Giga barrels/year but then declined to fluctuate around 4.5 Giga barrels/year since. In this regard, the decreasing population growth rate since the 1970s has somewhat ameliorated the per capita decline.

Not all consumers of oil are created equal.

Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of January 1, 2014

See also: Oil consumption per capita bar chart

Country Name Oil consumption per capita
 (bbl/day per 1000 people)
Year of Estimate
Singapore 202 2012
Nauru 139 2012
Kuwait 134 2012
Luxembourg 119 2012
Bahamas, The 111 2012
United Arab Emirates 103 2012
Saudi Arabia 100 2012
Falkland Islands (Islas Malvinas) 96 2008
Seychelles 89 2012
Qatar 85 2012
Greenland 69 2012
Canada 64 2012
United States 61 2012
Netherlands 60 2012
Belgium 60 2012
Cayman Islands 57 2012
Antigua and Barbuda 56 2012
Iceland 56 2012
New Caledonia 54 2012
Libya 51 2012
Norway 47 2012
Malta 46 2012
Oman 46 2012
Korea, South 45 2012
Australia 44 2012
Taiwan 43 2012
Hong Kong 42 2012
Brunei 42 2012
Finland 41 2012
Puerto Rico 41 2012
Saint Kitts and Nevis 39 2012
Sweden 39 2012
Bahrain 38 2012
Japan 35 2012
New Zealand 35 2012
Greece 34 2012
Austria 34 2012
Trinidad and Tobago 33 2012
Slovenia 32 2012
Israel 31 2010
Barbados 31 2012
Germany 31 2012
Spain 31 2012
Switzerland 31 2012
Ireland 30 2012
Macau 29 2012
France 28 2012
Panama 28 2012
Grenada 28 2012
Suriname 27 2012
Venezuela 27 2012
Portugal 26 2012
United Kingdom 26 2012
Lebanon 26 2012
Denmark 25 2012
Italy 25 2012
Turkmenistan 25 2012
Estonia 24 2012
Iran 23 2012
Iraq 22 2012
Jamaica 22 2012
Belize 21 2012
Saint Vincent and the Grenadines 19 2012
Czech Republic 19 2012
Malaysia 19 2012
Lithuania 19 2012
Saint Lucia 18 2012
Mexico 18 2012
Chile 18 2012
Mauritius 18 2012
Armenia 18 2012
Belarus 17 2012
Fiji 17 2012
Cuba 16 2012
Djibouti 15 2012
Russia 15 2012
Brazil 10 2012
Turkey 8 2012
China 7 2012
India 3 2012
Pakistan 2 2012
Bangladesh 1 2012

Consumption in net oil exporting countries is limited to the volume of production and price while consumption in net oil importing countries by the price of oil and the oil that is left for export after internal consumer got their share (which depends on price of oil).  In other words, to paraphrase “Animal Farm,”  all pigs are equal but some pigs are more equal then others.

Of course pigs with strong military (read G7) are also more equal then others and can change this equation in their favor by force and already started doing this (USA in Iraq, France in Libya).

While demand for oil continues to increase globally, oil producing countries also increase their internal consumption rapidly. For example increase in internal consumption of Saudi Arabia led to a situation when since 2005 their exports are essentially flat despite increase of production.

Having noted Steven Kopits’ continuing track record of being remarkably prescient regarding global oil supply and demand analysis, I do have one issue with global supply & demand analysis -– consumption in net oil exporting countries versus consumption in net oil importing countries, to -- wit, to paraphrase “Animal Farm,” in my opinion some consumers are more equal than others.

Let’s assume a scenario where all oil production and refining operations are in oil exporting countries and let’s ignore things like refinery gains. Total petroleum liquids production is 80 mbpd and consumption in the oil exporting countries is 40 mbpd, and they therefore net export 40 mbpd to oil importing countries.

Production rises by 2.5 mbpd in the oil exporting countries, so total supply increases from 80 mbpd to 82.5 mbpd. However, consumption in the oil exporting countries rose by 5 mbpd. So, Net Exports = Production – Consumption = 82.5 mbpd – 45 mbpd = 37.5 mbpd.

My point is that a global supply and demand analysis would not accurately represent the situation in the net oil importing countries, i.e., a 6.25% decline in the supply available to net importers (40 mbpd to 37.5 mbpd), although global supply is up by 3.125%, 80 mbpd to 82.5 mbpd.

Of course, the crux of what I call “Export Land Model” or ELM, is that for a number of reasons (subsidies, proximity to production, legal restrictions, etc.), consumption in oil exporting countries tends to be satisfied before oil is exported.

Interesting enough, the case histories tend to show that regardless of how oil exporters treat internal consumption, given an ongoing production decline, the net export decline rate tends to exceed the production decline rate and the net export decline rate tends to accelerate with time.

For example, Indonesia subsidizes petroleum consumption and the UK heavily taxes petroleum consumption, but both former net oil exporters showed accelerating rates of decline in their net exports (in excess of their respective production decline rates).

Here are the ELM Mathematical Facts of Life:

Given an ongoing production decline in a net oil exporting country, unless they cut their domestic oil consumption at the same rate as the rate of decline in production or at a faster rate, the resulting net export decline rate will exceed the production decline rate and the net export decline rate will accelerate with time. Furthermore, a net oil exporter can become a net oil importer, even with rising production, if the rate of increase in consumption exceeds the rate of increase in production, e.g., the US and China.

The (2005) Top 33 net exporters showed a slight increase in production from 2005 to 2013, from about 62 mbpd to 63 mbpd (total petroleum liquids + other liquids, EIA), but their rate of increase in consumption exceed their rate of increase in production and their combined net exports (what I call Global Net Exports, or GNE) fell from 46 mbpd in 2005 to 43 mbpd in 2013.

Furthermore, China and India (“Chindia”) consumed an increasing share of a post-2005 declining volume of GNE. What I call Available Net Exports (ANE, or GNE less Chinidia’s Net Imports, CNI) fell from 41 mbpd in 2005 to 34 mbpd in 2013.

Here’s the Available Net Exports problem:

Given an ongoing decline in GNE–and it’s when, not if–then unless the Chindia region cuts their oil consumption at the same rate as the rate of decline in GNE, or at a faster rate, the resulting rate of decline in ANE will exceed the GNE decline rate and the ANE decline rate will accelerate with time.

From 2005 to 2013, GNE fell at 0.8%year. From 2005 to 2013, ANE -- the supply of Global Net Exports of oil available to importers other than China & India -- fell at 2.3%/year.

The USA consumption

The United States remains the world's largest consumer of petroleum. The United States uses most of oil per capita in the world.  Between 1995 and 2005, US consumption grew from 17.7 Mb/d (2,810,000 m3/d) to 20.7 Mb/d (3,290,000 m3/d), a 3,000,000 barrels per day (480,000 m3/d) increase. According to EIA Jan 12, 2016 report (

In other words the USA consumption is approximately equal to total Saudi export capacity. 

The U.S. Energy Information Administration (EIA) includes volumes of biofuels in data on total petroleum consumption. Per capita consumption of oil in the USA is one of the highest in the worlds and exceeds, for example, Russian per capita consumption four times.

Looking forward, both the EIA and the EIA project that U.S. oil demand will oscillate around 20 Mb/d mark. That might change if oil price stays low for several years.

The USA consumption is highly concentrated on transportation sector and in private cars sector is quite wasteful. The same population in Germany, Great Britain, France, Poland, the low countries and Scandinavia use 10 Mb/d.

Peter, 12/21/2015 at 4:33 pm

1)US consumption is besides a couple of small countries the highest in the world.

compared to other western industrial countries it’s consumption is totally unjustifiable.

2) Driving a Ford F150 or an ampera to work has nothing to do with GDP and everything to do with needless oil consumption. So stop saying things which even an 8 year old would find obvious

US consumers will not cut consumption out of the goodness of their hearts, they will be forced to do so when prices make cuts necessary.

China consumption

China, by comparison, increased consumption from 3,400,000 barrels per day (540,000 m3/d) to 7,000,000 barrels per day (1,100,000 m3/d), an increase of 3,600,000 barrels per day (570,000 m3/d), in the same time frame.

China surpassed the United States as the world’s largest crude oil importer in 2015. As China’s economic growth is predicted to decrease from the high rates of the early part of the 21st Century that level might grow more slowly, but still China is so far behind the USA in consumption of gasoline per capita the trend toward more equal consumption clearly will increase china figures dramatically. Much depends how quickly china will grow middle class, which owns individual cars.

India consumption

India is burning over 4 mbpd now. India's oil imports are expected to more than triple from 2005 levels by 2020, rising to 5 million barrels per day.  Look at Energy Export Databrowser to see the consumption line for each country. 45 degree slope for India, just a few degrees less than China’s slope. KSA’s slope looks early exponential. No reason why it shouldn’t be. It’s their oil.

Russian consumption

Russian internal consumption grows rapidly and that means that in the future Russia will export less oils. Russian leadership have found itself unprepared to the dramatic drop of oil prices and now will take moves to refine more oil at home, and selling less raw oil. The fact that Russia sells mostly unprocessed oil was a blunder that costs Russia billions and Putin had shown ability to learn from mistakes. 

Russia's Key Energy Statistics world rank
Total Primary Energy Production
Quadrillion Btu
Total Primary Energy Consumption
Quadrillion Btu
Dry Natural Gas Production
Billion Cubic Feet
Total Petroleum and Other Liquids Production
Thousand Barrels Per Day
Total Primary Coal Production
Thousand Short Tons

Compare that with the USA

United States' Key Energy Statistics world rank
Total Primary Energy Production
Quadrillion Btu
Total Primary Energy Consumption
Quadrillion Btu
Dry Natural Gas Production
Billion Cubic Feet
Total Petroleum and Other Liquids Production
Thousand Barrels Per Day
Total Primary Coal Production
Thousand Short Tons


India's existing domestic production of about 0.86 Mb/d is only about 25% of its current consumption of 3,47 Mb/d.  According to the EIA, its production peaked at 996,000 barrels per day in 2011. Energy consumption in India is likely double by 2031.   The CAGR (compound annual growth rate) for the ten years ending in March 2014 is above 3.5%.

Domestic production of  oil is relatively stable. The EIA (US Energy Information Administration) estimates that India had close to 5.7 billion barrels of proven oil reserves at the beginning of 2014. About 44% of the reserves are onshore resource.

 Imports is likely to rise  from current 75 percent to 80 percent by the end of the 12th five year plan (2016-17). According to the Directorate General of Commercial Intelligence and Statistics, crude oil and refined products made up over 28 percent and 30 percent of India's import of principal commodities in 2010-11 and first half of 2011-12 respectively.

India is a major crude oil refiner. India petroleum refining capacity has outstripped demand consistently. Since 2002, the country's export of petroleum products has risen from 10 million tones to around 60 million tones in 2011-12, an average annual growth of over 20%.

Analyzing India’s oil consumption

According to IES (International Energy Statistics) presented by the EIA (US Energy Information Administration), the CAGR for total petroleum consumption for the world was 0.8% from 2005 to 2013. This consumption has been measured in thousand barrels per day. In the same period, China saw its consumption increase by 5.1%. In CAGR terms, India’s consumption increased by 4.1%. In contrast, the US saw its consumption decrease by 1.2%.

Per sector consumption

Oil consumption is distributed amongst four broad sectors: transportation, residential, commercial, and industrial. In terms of oil consumption, transportation is the largest sector and the one that has seen the largest growth in demand in recent decades. This growth has largely come from new demand for personal cars. In the USA it accounts for approximately 68.9% of all the oil used. Globally it is close to 55%

There are also "shadow" consumers of oil. For example military is important but often underreported or unreported consumer. So in no way published figured of consumption can be taken at face value. 

Consumption by transportation sector

Approximately two-thirds of U.S. oil consumption is due to the transportation sector. Slightly less for the world. 

In the USA consumption is depicted on the following picture

Private transportation is gradually became more efficient in miles per gallon metric (so energy consumption is shifted to the production of battery and electrical motors).  Most of the efficiently is already obtained on cars such as Toyota Prius which averages probably 40 miles per gallon and can run on electrical engine at low speeds/city traffic which is killing regular car efficiency.  Further substantial improvement is unlikely as traffic jams are the most important feature of morning commute in the USA. Traffic congestion, especially at rush hour, is a problem in most of the USA large cities. A 2009 study found that traffic congestion costs the United States almost $87.2 billion. The economic costs of traffic congestion have increased 63% over the past decade, and despite the declining traffic volumes caused by the economic downturn, Americans still waste more than 2.8 billion US gallons (11,000,000 m3) of fuel each year as a result of traffic congestion. Motorists also waste 4.2 billion hours annually, or one full workweek per traveler.

Private transportation sector oil consultation with gradually rise with the growth of population.

It's not only car and trucks burn fuel on the roads. Maintaining road surface is pretty fuel-intensive activity as well. With the development of the  Eisenhower Interstate Highway System in the 1950s, the road system in the USA, as of 2010, has a total length of 47,182 miles (75,932 km), making it the world's second longest after China's, and the largest public works project in US history. A large number of multilane roads while improving peak hours traffic is considerably more expensive to maintain. A Federal Highway Administration report saying the number of roads in good condition each year is going up.  As the same time roads and surface transportation will only get about half their projected $1.7 trillion need for capital projects.  The high cost of America's bad roads and bridges - Feb. 12, 2013

Industrial transportation use efficient diesel engines and improving efficiently on such engines is a very difficult task. So it will approximately consume the same amount of fuel per ton per mile of transported goods as now. Some improvement are possible by increasing of usage of railways. for maritime transportation saving are possible by lowing the speed of vessels, which was already done when price of oil was high.

In air transportation larger planes, more efficient engines can improve fuel efficiency. Between 1960 and 2000 there was a 55% overall fuel efficiency gain. Optimal amount of passengers/cargo  and fuel are also important factors. As over 80% of the fully laden take-off weight of a modern aircraft such as the Airbus A380 is craft and fuel (Fuel economy in aircraft - Wikipedia )

Pilots of turbine airplanes actually have less control over the fuel efficiency of their flights because there are so many variables, first among them being air traffic control. Turbine engines are at their least efficient down low where the air is dense. As the airplane climbs up and the air thins, the turbine produces less power and thus consumes less fuel, but the drag of the thinning air on the airplane decreases faster than the power from the engine drops, so the airplane speeds up and the fuel flow goes down. Takeoff delays really cut into fuel efficiency in a jet compared to a piston engine.

Military aviation also consumes large amount of fuel and is known for very low fuel efficiency.

Chemical industry consumption

Chemical industry consumes approximately 30% of oil.

Residual Fuel Oil Consumption By Chemical Industry - By Country - Data from Quandl

Military consumption

Also we should not forget that one of the largest consumer of oil is military which will get oil at any price. And we have the recent trend in re-armament. So the consumption of oil by military grows again. Here are some 2007 data (US military energy consumption- facts and figures)

As the saying goes, facts are many but the truth is one. The truth is that the U.S. military is the single largest consumer of energy in the world. But as a wise man once said, don't confuse facts with reality. The reality is that even U.S. Department of Defense (DoD) does not know precisely where and how much energy it consumes. This is my Fact Zero.

Below I give some facts and figures on U.S. military oil consumption based mostly on official statistics.[1] If you want to reproduce them make sure you read every footnote even if you need to put on your glasses. Also read the footnotes in this article.

According to the DoD's Federal Energy Management Report for FY2006, the DoD spent approximately $3.5 billion on facility energy and $16.5 billion on energy for tactical vehicles. To this we should add 238 million spent on non-tactical vehicles.[6] Overall, total actual cost[7] for DoD energy consumption is over $20 billion. By the way, remember that a billion has nine zeros.

According to Pentagon spokesman Chris Isleib a $10 increase per barrel of oil increases Defense Department costs by $1.3 billion per year.

Hurting Russian economy

Oil is a strategic resource using which countries pursue geostrategic interest. So manipulation on oil price is a war by other means. As Patrick J. Buchanan  noted in his article America Regains the Oil Weapon The American Conservative in American Conservative (Nov 14, 2014)  "...price, Adam Smith notwithstanding, is something we can control and manipulate"  although strangely enough he consider Saudis to be an independent player, as if they are not a vassal state dependent on Washington:

In July of 1941, after Japan occupied French Indochina, the Roosevelt administration froze Japan’s assets in the United States. Denied hard cash, Japan could not buy the U.S. oil upon which the empire depended for survival. Seeing the Dutch East Indies as her only other source, Japan prepared to invade.

But first she had to eliminate the sole strategic threat to her occupation of the East Indies—the U.S. battle fleet at Pearl Harbor. FDR’s cutoff of oil to Japan was thus a primary cause of WWII in the Pacific, which led to hundreds of thousands of U.S. war dead, the destruction of Japan, Mao’s triumph in China and a U.S. war in Korea.

A second stunning use of the oil weapon came in 1973. Arab members of OPEC imposed an embargo in retaliation for Nixon’s rescue of Israel with an airlift in the Yom Kippur war. Long gas lines helped to bring Nixon down.

Now the oil weapon appears to be back in America’s hand.

Due to the substitution of natural gas for oil in heating homes and buildings, horizontal drilling, and hydraulic fracking, which enables us to bring oil and gas out of shale rock in places like North Dakota, U.S. production has exploded. We now produce more oil than Saudi Arabia and the benefits are not only economic, but geostrategic.

... ... ...

What is Riyadh’s game?

Is the Saudi strategy to let prices fall to where it is no longer profitable for Americans to begin new fracking? Are the Saudis thinking of doing to the new oil-producing champion, USA, what we are doing to Venezuela, Russia, and Iran? Riyadh may want to let the price of oil sink below where it makes sense for energy companies to prospect for new sources of oil or invest more billions in expanding production.

Are the Saudis out to cripple us with an oil glut?

Today, not only are Iran and Iraq producing below potential, so, too, is Libya. And we have been bombing ISIS’ oil facilities in Syria.

A contrarian’s question: Would we not be better off if these countries not only restored oil production, but also expanded production and put more oil on the market than they do today? Demand creates supply, and a world oil market where there is more supply than demand would seem to be to America’s benefit. For we remain the world’s largest consumer of petroleum products. And surely it is to our benefit to enlarge both the reserves and production of oil and gas in North America.

Price pays a huge role in creating, and shrinking, supply. And price, Adam Smith notwithstanding, is something we can control and manipulate, even as China manipulates its currency.

In “America’s New Oil Weapon” in National Review, Arthur Herman of the Hudson Institute urges the United States to take bold steps to increase our supplies of oil and gas.

We should relax the rules on drilling in Alaska’s Arctic National Wildlife Refuge, which has 10 billion barrels of oil locked up. We should use as an economic weapon against OPEC the 700 million barrels in the Strategic Petroleum Reserve. We should allow the export of oil from the United States to enable us to cope with OPEC cutbacks. We should build the Keystone XL pipeline, and the other oil and gas pipelines between us and Canada now sitting in limbo.

What Herman is urging upon us is a new nationalism, a new way of thinking about international economics that puts the U.S. and its allies first, and uses our economic leverage to advance national rather than global interests.

High oil prices pressured the US economy and its perennially-undercapitalized banking system. US economy health depends on low oil prices.   But there is geopolitical dimension of the current drop of oil prices. In is not unconceivable to think that Washington reused Reagan plan of hurting Russian economy (which catalyzed dissolution of the USSR) by pushing down oil prices.

Among the many threats facing Russia’s economy, cheap oil could be the biggest of all. Low crude are depressing the ruble (at some point in early 2015 ruble  dropped to 69 per dollar from 30-35 or so; in August 24, 2015 it reached 69.96) and knocking export on which Russia depends due to its integration in the global economy: the direction Russian neoliberal pushed for since 1991. And Russian elite was taking high oil prices for granted. For example,  Russia’s draft budget for 2015 was based on $100-a-barrel oil (Oil Prices Are Hurting Russia's Economy - Businessweek, October 13, 2014)

Because of Russia’s outsize dependence on oil and gas, which account for more than two-thirds of its exports, lower energy prices can easily tip its $2 trillion economy into recession. “Growth is likely to remain positive only with oil prices above $92 to $93 a barrel,” says economist Charles Robertson of Renaissance Capital. At $90 a barrel, the economy would contract 0.4 percent next year, and at $80 a barrel it would shrink 1.7 percent, he predicts.

Do the US tried to subdue Russia the second time via decimating oil prices and thus cutting dramatically the stream of revenue from oil exports?  It is difficult to say.   But now this strategy is better understood by Russians, which created certain difficulties in its implementation despite the huge power of the US financial sector. The sector which can allow itself to play with oil futures the way it wants due to unlimited supply of the US dollars -- the world reserve currency.  The Fed remains a monetary superpower controlling the world's main reserve currency and xUSSR  and emerging countries currencies are formally or informally pegged to dollar. Therefore, its monetary policy is exported across the globe. The Fed was exporting its easy monetary policy to the rest of the world in the early-to-mid 2000s. Now  the attempt of normalization of monetary policy creating huge tightening of monetary conditions for the rest of the world.  It also dramatically devalue large export oriented Russian companies:

How Russian energy giant Gazprom lost $300bn  Justin Burke for  the New East network

Aug 07, 2015  |  The Guardian

annamarinja airman23 8 Aug 2015 09:09

Poor airman23. Have you ever heard about Dick Cheney? Have you ever looked at the Wolfowitz Doctrine? If not, then you are very much behind the nowadays understanding of fascism and fascists. On the other hand, you are such a concrete success of Mrs. Nuland-Kagan' (and likes) travails.

yemrajesh  -> psygone 8 Aug 2015 07:36

Difficult to say. If the costs are true'ly low it would have reflected at the Pump. But it hasn't. Another flaw is how can oil pumped from deeper well ( Fracked Oil) is cheaper than conventional oil. It looks more like US flexing its muscles to subdue Russia. Besides its not Just Gazprom , shell, BP, Exxon , Gulf, Mobil etc also many of US vassal states are affected. It would be interesting to see how long this artificial price drop continue with zero benefit to the customers.

Kaiama 8 Aug 2015 06:07

Since the Russians haven't rolled over the first time, the US is trying again. These days, the price of oil is determined by activity in the futures market impacting the spot price. Likewise, I expect for shares and wouldn't be surprised if someone is shorting the stock. Any oil and gas not pumped today is available to be pumped tomorrow - possibly at higher prices. Gazprom isn't going bankrupt. Neither are any of the other major oil companies.

AlbertEU  -> alpamysh 7 Aug 2015 17:09

The crisis of one industry necessarily will hurt other sectors. Hard-hit banking sector, which is credited US shale industry. The effect can be like an avalanche. Especially if it is strengthened by additional steps. I think for anybody is not a secret the existence of a huge number of empty weight of the dollar, which is produced by running the printing press. Oil trade is in the dollar, which in turn keeps the volume of the empty weight of the dollar. Now imagine a situation where part of the oil market has not traded more in dollars. It is equally affected, the USA and Russia.

But there is one important detail. Russia has never in its history, was a rich country (if you count all the inhabitants of Russia, not individuals). In the country there is no cult of consumption. The traditional religions of Russia, that is, those that have always existed in Russia (Orthodox Christianity, Islam and Buddhism) did not contribute to the emergence of such a cult.

Orthodoxy says plainly that material wealth is not important for a man. Wealth is only supplied in addition to achieve the main goal in the life of an Orthodox Christian. Therefore, to be poor in Russia is not a problem. This is a normal way of life. Hence the stoic resistance to any hardship, challenges, wars and so on. Expectations of great social upheaval in Russia, caused by the lowering of the standard of living is a little naive. Russia used to run in the marathon. Who would have more strength, intelligence and endurance is a big question. Geopolitics is a very strange science...

If this is a deliberate maneuver, an economic war on Russia, it can became very costly and might have made sense only on a short or medium-term basis (three-five years), to shock Russian elite into submission and depose Putin and his faction of "resource nationalists" which are like a bone in the throat of US multinationals.  This time Washington managed to catch  Putin's government completely  unprepared to such development of event, which increased the chances of success.

And they really took Russian elite by surprise. That's why the USA oil Blitzkrieg initially enjoyed such a huge success and immediately crashed the ruble (100% devaluation happened) as well as put Russian economy in recession. But Russians quickly realized what's going on and the game in the second part of  2015 became more complicated as those futures and shale industry junk bonds now also weight on the USA financial sector.  It this was a deliberate maneuver, it does has unanticipated side effects.

Those who sell futures for 2017 for $58 can be hit with $30 loss per barrel, if the game turn bad.  So the current low oil price movements should be viewed as  yet another neoliberal financial casino gambling session, in which stakes are really high.  It is completely counter productive from the point of view of future of mankind, but the last thing the USA elite care about is the future of mankind. They are preoccupied with the desire to preserve and enhance their global neoliberal empire and that requires crashing all potential competitors, including Russia and China. The paradox is that while they weaken Russia they really strengthen China (although they try to compensate this with playing Chinese stock market to their advantage). But Putin severely underestimated the damage West can inflict to Russian economy:

Opportunities for the West to hurt the Russian economy are limited, President Vladimir Putin said Thursday. Europe cannot stop buying Russian gas without inflicting pain on itself, and if the US tries to lower oil prices, the dollar will suffer.

If the West tries to damage Russia’s influence in the world energy market, efforts will likely backfire, the Russian President said during his twelfth annual televised question and answer session.

To really influence the world oil market a country would need to increase production and cut prices, which currently only Saudi Arabia could afford, Putin said.

The president added he didn’t expect Saudi Arabia, which has “very kind relations” with Russia, will choose to cut prices, that could also damage its own economy.

If world oil production increases, the price could go down to about $85 per barrel. “For us the price fall from $90 to $85 per barrel isn’t critical,” Putin said, adding that for Saudi Arabia it would be more sensitive.

Also the President said that being an OPEC member, Saudi Arabia would need to coordinate its action with the organization, which “is very complicated.”

Meanwhile, Russia supplies about a third of Europe's energy needs, said Putin. Finland, for example, is close to Russia economically, as it receives 70 percent of its gas from Russia.

“Can Europe stop buying Russian gas? I think it's impossible…Will they make themselves bleed? That's hard to imagine,” the Russian president said.

Since oil is sold internationally on global markets cutting the price would mean lower dollar circulation, diminishing its value in the global currency market.

"If prices decrease in the global market, the emerging shale industry will die,” Putin said.

The US shale industry has boosted domestic production, but President said that the so-called "shale revolution" was expensive and not quick to come.

Russia’s economy largely relies on energy. In 2013 more than 50 percent of the national budget was funded by gas and oil revenues. The main revenue comes from oil, as last year, oil revenues reached $191 billion, and gas $28 billion.

“Oil and gas revenues are a big contribution to the Russian budget, a big part for us when we decide on our government programs, and of course, meeting our social obligations,” the president said.

As Reuters reported:

“The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world…

The Department of Commerce on Tuesday ended a year-long silence on a contentious, four-decade ban on oil exports, saying it had begun approving a backlog of requests to sell processed light oil abroad.

The action comes at a critical juncture for the global oil market. World prices have halved to less than $60 a barrel since the summer as top exporter Saudi Arabia, once a staunch defender of $100 oil, refused to cut production in the face of surging U.S. shale output and tempered global demand…

With global oil markets in flux, it is far from clear how much U.S. condensate will find a market overseas.”
(Analysis – U.S. opening of oil export tap widens battle for global market, Reuters)

Why would the oil producers, who have over the years raised the price of oil  suddenly agree to drop the price from roughly $120 a barrel to lower then $60  a barrel (Want To Hurt Russia Lower The Price Of Oil

Let us look first at who the major oil producers are today: Saudi Arabia, Qatar, the United Arab Emirates and the United States, as well as Russia, Iran and the Islamic State.

Of those, we can make a clear distinction between the first four countries who have solid economies and ample amounts of cash reserves and who can sustain a sharp drop in revenue when oil is sold at a lower price...

The big losers in this case will clearly be the last three countries on that list: Russia, Iran and the Islamic State.

Coincidentally, these countries are currently engaged in highly controversial conflicts and are facing opposition from the United States and the West.

Russia is involved in Ukraine’s civil war, supporting the separatists in a highly criticized move condemned by the United States and its Western allies. In response, the allies began to impose sanctions as punishment and, given the ruble’s recent downturn, Russia’s credit rating being slashed and desperate gas deals in the Asian markets, it seems that the sanctions have, thus far, been highly successful.

CNN reported that Russian is Russia losing $140 billions from sanctions and low oil price according to estimates from Russia's finance minister Anton Siluanov. For every $10 drop in the per-barrel price of oil, Russia loses up to $14.6 billion a year in revenues, according to Alfa Bank. This is a real economic war (Russia has just lost the economic war with the west Business The Guardian)

The phrase “perfect storm” is over-used, but the combination of a collapsing currency, a collapsing economy and punitive interest rates make it apposite. The question now is how Putin responds. If he softens his line over Ukraine, the west’s gamble will have paid off and it will be mission accomplished. But there are hardliners in Moscow who will argue that the response to the crisis should be a siege economy and the ratcheting up of military pressure on Ukraine. If economic agony makes a wounded Russian bear more belligerent, it will prove a hollow victory.

Here’s a clip from an NPR interview with the president just last week. About halfway through the interview, NPR’s Steve Inskeep asks Obama: “Are you just lucky that the price of oil went down and therefore their currency collapsed or …is it something that you did?

“Are you just lucky that the price of oil went down and therefore their currency collapsed or …is it something that you did?

Barack Obama:

If you’ll recall, their (Russia) economy was already contracting and capital was fleeing even before oil collapsed. And part of our rationale in this process was that the only thing keeping that economy afloat was the price of oil. And if, in fact, we were steady in applying sanction pressure, which we have been, that over time it would make the economy of Russia sufficiently vulnerable that if and when there were disruptions with respect to the price of oil — which, inevitably, there are going to be sometime, if not this year then next year or the year after — that they’d have enormous difficulty managing it.” (Transcript: President Obama’s Full NPR Interview)

Obama just admit that he wanted “disruptions” in the “price of oil” because he figured Putin would have “enormous difficulty managing it”?

Isn’t that the same as saying that it was all part of Washington’s plan; that plunging prices were just the icing on the cake for their asymmetrical attack on the Russian economy? It sure sounds like it. And that would also explain why Obama decided to allow domestic producers to dump more oil on the market even though it’s going to send prices lower. Apparently, none of that matters as long as the policy hurts Russia.

So maybe the US-Saudi oil collusion theory isn’t so far fetched after all. Maybe Salon’s Patrick L. Smith was right when he said:

“Less than a week after the Minsk Protocol was signed, Kerry made a little-noted trip to Jeddah to see King Abdullah at his summer residence. When it was reported at all, this was put across as part of Kerry’s campaign to secure Arab support in the fight against the Islamic State.

Stop right there. That is not all there was to the visit, my trustworthy sources tell me. The other half of the visit had to do with Washington’s unabated desire to ruin the Russian economy. To do this, Kerry told the Saudis 1) to raise production and 2) to cut its crude price. Keep in mind these pertinent numbers: The Saudis produce a barrel of oil for less than $30 as break-even in the national budget; the Russians need $105.

Shortly after Kerry’s visit, the Saudis began increasing production, sure enough — by more than 100,000 barrels daily during the rest of September, more apparently to come…

Think about this. Winter is coming, there are serious production outages now in Iraq, Nigeria, Venezuela and Libya, other OPEC members are screaming for relief, and the Saudis make back-to-back moves certain to push falling prices still lower?

You do the math, with Kerry’s unreported itinerary in mind, and to help you along I offer this from an extremely well-positioned source in the commodities markets: “There are very big hands pushing oil into global supply now,” this source wrote in an e-mail note the other day.” (“What Really Happened in Beijing: Putin, Obama, Xi And The Back Story The Media Won’t Tell You”, Patrick L. Smith, Salon)

As New York Post tabloid, a mousepiece of Rupert Murdock,   gleefully reported

The price collapse could not have come at a worse time for Bad Vlad Putin. The Russian president needs an oil price around $100 a barrel to prop up what’s become a wartime economy. Oil and gas provide up to a third of budget revenue and compose two-thirds of exports.

Sanctions imposed over Putin’s aggression have gnawed at Russia’s economy, but this price drop bites deep: The ruble has crashed, Russian bonds are pathetic, and foreign reserves are bleeding.

While Russians will put up with harder times than Westerners will, Putin’s made extravagant commitments (bet he’d like to have back the $50 billion he squandered on corrupt Olympic construction). The world’s fave bare-chested bully had embarked on a massive arms buildup, with a hi-tech $5 billion command center just unveiled. But Putin’s visions of military resurgence are becoming unaffordable. He also made election promises to improve Russia’s wretched health-care system. Instead, he’s firing health-care workers and shuttering hospitals.

He promised higher living standards, but now the average Ivan’s feeling squeezed. And Putin faces enormous costs in Crimea and eastern Ukraine, two booby-prize welfare states, with the latter shot to ruins. Putin’s popularity remains high. For now. The gravest worry is that, with his back to the wall, he’ll play the Mother Russia card and attack again.

Iraq war was a war for oil

Oil, the U.S.-Middle East Free Trade Area and the Bush Agenda By Antonia Juhasz,

 Antonia Juhasz, a visiting scholar at the Institute for Policy Studies, is the author of The Bush Agenda: Invading the World, One Economy at a Time, on which part of this article is based. She is working on a new book that will make the case for the break-up of the largest American oil companies. Learn more at

Remember oil? That thing we didn’t go to war in Iraq for? Now with his war under attack, even President George W. Bush has gone public, telling reporters last August, “[a] failed Iraq … would give the terrorists and extremists an additional tool besides safe haven, and that is revenues from oil sales.” Of course, Bush not only wants to keep oil out of his enemies’ hands, he also wants to put it into the hands of his friends. 

The President’s concern over Iraq’s oil is shared by the Iraq Study Group, which on December 6 released its much-anticipated report. While the mainstream press focused on the report’s criticism of Bush’s handling of the war and the report’s call for (potential) removal of (most) U.S. troops (maybe) by 2008, ignored was the report’s focus on Iraq’s oil. Page 1, chapter 1 laid out in no uncertain terms Iraq’s importance to the Middle East, the United States and the world with this reminder: “It has the world’s second-largest known oil reserves.” The group then proceeds to give very specific and radical recommendations as to what should be done to secure those reserves. 

Guaranteeing access to Iraq’s oil, however isn’t the whole story. Despite the lives lost and the utter ruin that the war has brought, the overarching economic agenda that the administration is successfully pursuing in the Middle East might be the most enduring legacy of the war—and the most ignored.  Just two months after declaring “mission accomplished” in Iraq, Bush announced his plans for a U.S.-Middle East Free Trade Area to spread the economic invasion well-underway in Iraq to the rest of the region by 2013. Negotiations have progressed rapidly as countries seek to prove that they are with the United States, not against it.

The Bush Agenda

Within days of the 9/11 terrorist attacks, then-U.S. Trade Representative Robert Zoellick announced that the Bush administration would be “countering terror with trade.” Bush reiterated that pledge four years later when he told the United Nations, “By expanding trade, we spread hope and opportunity to the corners of the world, and we strike a blow against the terrorists. Our agenda for freer trade is part of our agenda for a freer world.” In the case of the March 2003 invasion and ongoing occupation of Iraq, these “free trade”—or corporate globalization—policies have been applied in tandem with America’s military forces.

The Bush administration used the military invasion of Iraq to oust its leader, replace its government, implement new economic and political laws, and write a new constitution. The new economic laws have transformed Iraq’s economy, applying some of the most radical—and sought-after—corporate globalization policies in the world and locking in sweeping advantages to U.S. corporations. Through the ongoing occupation, the Bush administration seeks to ensure that both Iraq’s new government and this new economic structure stay firmly in place. The ultimate goal—opening Iraq to U.S. oil companies—is reaching fruition.

In 2004, Michael Scheuer—the CIA’s senior expert on al-Qaeda until he quit in disgust with the Bush administration—wrote, “The U.S. invasion of Iraq was not preemption; it was … an avaricious, premeditated, unprovoked war against a foe who posed no immediate threat but whose defeat did offer economic advantages.”  How right he was. For it is an absolute fallacy that the Bush administration had no post-invasion plan for Iraq. The administration had a very clear economic plan that has contributed significantly to the disastrous results of the war. The plan was prepared at least two months prior to the war by the U.S. consultancy firm, Bearing Point, Inc., which then received a $250 million contract to remake Iraq’s economic infrastructure.

L. Paul Bremer III—the head of the U.S. occupation government of Iraq, the Coalition Provisional Authority (CPA)—followed Bearing Point’s plan to the letter. From May 6, 2003 until June 28, 2004, Bremer implemented his “100 Orders” with the force of law, all but a handful of which remain in place today. As the preamble to many of the orders state, they are intended to “transition [Iraq] from a … centrally planned economy to a market economy” virtually overnight and by U.S. fiat.  Bremer’s orders included firing the entire Iraqi military—some half a million men—in the first weeks of the occupation. Suddenly jobless, many of these men took their guns with them and joined the violent insurgency. Bremer also fired 120,000 of Iraq’s senior bureaucrats from every government ministry, hospital and school. {By removing the Sumi bureaucracy, they removed opposition to globalization.  The U.S. could now shop for support from what would soon be a newly elected factionalized parliament—jk.}  His laws allowed for the privatization of Iraq’s state-owned enterprises (excluding oil) and for American companies to receive preferential treatment over Iraqis in the awarding of reconstruction contracts. The laws reduced taxes on all corporations by 25 percent and opened every sector of the Iraqi economy to private foreign investment. The laws allowed foreign firms to own 100 percent of Iraqi businesses (as opposed to partnering with Iraqi firms) and to send their profits home without having to invest a cent in the struggling Iraqi economy. Iraqi laws governing banking, foreign investment, patents, copyrights, business ownership, taxes, the media, agriculture and trade were all changed to conform to U.S. goals. 

After the U.S. corporate invasion of Iraq

More than 150 U.S. companies were awarded contracts for post-war work totaling more than $50 billion.  The American companies were hired, even though Iraqi companies had successfully rebuilt the country after the previous U.S. invasion. And, because the American companies did not have to hire Iraqis, many imported foreign workers instead. The Iraqis were, of course, well aware that American firms had received billions of dollars for reconstruction, that Iraqi companies and workers had been rejected and that the country was still without basic services. The result: increasing hostility, acts of sabotage targeted directly at foreign contractors and their work, and a rising insurgency.

Halliburton received the largest contract, worth more than $12 billion, while 13 other U.S. companies received contracts worth more than $1.5 billion each. The seven largest reconstruction contracts went to the Parsons Corporation of Pasadena, Calif. ($5.3 billion); Fluor Corporation of Aliso Viejo, Calif. ($3.75 billion); Washington Group International of Boise, Idaho ($3.1 billion); Shaw Group of Baton Rouge, La. ($3 billion); Bechtel Corporation of San Francisco ($2.8 billion); Perini Corporation of Framingham, Mass. ($2.5 billion); and Contrack International, Inc. of Arlington, Va. ($2.3 billion). These companies are responsible for virtually all reconstruction in Iraq, including water, bridges, roads, hospitals, and sewers and, most significantly, electricity.

U.S. Air Force Colonel Sam Gardiner, author of a 2002 U.S. government study on the likely effect that U.S. bombardment would have on Iraq’s power system, said, “frankly, if we had just given the Iraqis some baling wire and a little bit of space to keep things running, it would have been better. But instead we’ve let big U.S. companies go in with plans for major overhauls.”

Many companies had their sights set on years-long privatization in Iraq, which helps explain their interest in “major overhauls” rather than getting the systems up and running. Cliff Mumm, head of Bechtel’s Iraq operation, put it this way: “[Iraq] has two rivers, it’s fertile, it’s sitting on an ocean of oil. Iraq ought to be a major player in the world. And we want to be working for them long term.”

And, since many U.S. contracts guaranteed that all of the companies’ costs would be covered, plus a set rate of profit (known as cost-plus contracts), they took their time, building expensive new facilities that showcased their skills and would serve their own needs should they be runing the systems one day.

Mismanagement, waste, abuse and criminality have also characterized U.S. corporations in Iraq—leading to a series of U.S. contract cancellations. For example, a $243 million contract held by the Parsons Corporation for the construction of 150 health care centers was cancelled after more than two years of work and $186 million yielded just six centers, only two of which are serving patients. Parsons was also dropped from two different contracts to build prisons, one in Mosul and the other in Nasiriyah. The Bechtel Corporation was dropped from a $50 million contract for the construction of a children’s hospital in Basra after it went $90 million over budget and a year-and-a-half behind schedule. These contracts have since been turned over to Iraqi companies.

Halliburton’s subsidiary KBR is currently being investigated by government agencies and facing dozens of charges for waste, fraud and abuse. Most significantly, in 2006, the U.S. Army cancelled Halliburton’s largest government contract, the Logistics Civil Augmentation Program (LOGCAP), which was for worldwide logistical support to U.S. troops. Halliburton will continue its current Iraq contract, but this year the LOGCAP will be broken into smaller parts and competitively bid out to other companies.

The Special Inspector General for Iraq Reconstruction (SIGIR), a congressionally-mandated independent auditing and oversight body, has opened 256 investigations into criminal fraud, four of which have resulted in convictions. SIGIR has provided critical oversight of the U.S. reconstruction, but this fall it nearly fell prey to a GOP attempt to shut down its activities well ahead of schedule. Fortunately, it survived.

SIGIR’s October 2006 report to Congress reveals the failure of U.S. corporations in Iraq. In the electricity sector, less than half of all planned projects in Iraq have been completed, while 21 percent have yet to even begin. Even the term “complete” can be misleading as, for example, SIGIR has found that contractors have failed to build transmission and distribution lines to connect new generators to homes and businesses. Thus, nationally, Iraqis have on average just 11 hours of electricity a day, and in Baghdad, the heart of instability in Iraq, there are between four and eight hours on average per day. Before the war, Baghdad averaged 24 hours per day of electricity.

While there has been greater success in finishing water and sewage projects, the fact that 80 percent of potable water projects are reported complete does little good if there is no electricity to pump the water into homes, hospitals or businesses. Meanwhile, the health care sector is truly a tragedy. Just 36 percent of planned projects are reported as complete. Of 20 planned hospitals, 12 are finished and only six of 150 planned public health centers are serving patients today.

Overall, the economy is languishing, with high inflation, low growth, and unemployment rates estimated at 30 to 50 percent {being part of a militia is providing employment} for the nation and as high as 70 percent in some areas. The International Monetary Fund has enforced a structural adjustment program on Iraq that mirrors much of Bush’s corporate globalization agenda, and the administration continues to push for Iraq’s admission into the World Trade Organization.

Iraq has not, therefore, emerged as the wealthy free market haven that Bush & Co. had hoped for. Several U.S. companies are now preparing to pack up, head home and take their billions of dollars with them, their work in Iraq left undone.  The Bush administration is likely to follow a dual strategy: continuing to pursue a corporate free-trade haven in Iraq, while helping U.S. corporations extricate themselves without consequence. The administration will also focus on the big prize: Iraq’s oil.

Winning Iraq’s oil prize: 

The Bush Agenda does have supporters, especially those corporate allies that have both shaped and benefited from the administration’s economic and military policies.  In the 2000 election cycle, the oil and gas industry donated 13 times more money to Bush’s campaign than to Al Gore’s. The Bush administration is the first in history in which the president, vice president and secretary of state are all former energy company officials. In fact, the only other U.S. president to come from the oil and gas industry was Bush’s father. Moreover, both George W. Bush and Condoleezza Rice have more experience running oil companies than they do working for the government.

Planning to secure Iraq’s oil for U.S. companies began on the tenth day of the Bush presidency, when Vice President Dick Cheney established the National Energy Policy Development Group—widely referred to as “Cheney’s Energy Task Force.” It produced two lists, titled “Foreign Suitors for Iraqi Oilfield Contracts as of 5 March 2001,” which named more than 60 companies from some 30 countries with contracts for oil and gas projects across Iraq—none of which were with American firms. However, because sanctions were imposed on Iraq at this time, none of the contracts could come into force. If the sanctions were removed—which was becoming increasingly likely as public opinion turned against the sanctions and Hussein remained in power—the contracts would go to all of those foreign oil companies and the U.S. oil industry would be shut out.

As the Bush administration stepped up its war planning, the State Department began preparations for post-invasion Iraq. Meeting four times between December 2002 and April 2003, members of the State Department’s Oil and Energy Working Group mapped out Iraq’s oil future. They agreed that Iraq “should be opened to international oil companies as quickly as possible after the war” and that the best method for doing so was through Production Sharing Agreements (PSAs).

PSAs are considered “privatization lite” in the oil business and, as such, are the favorite of international oil companies and the worst-case scenario for oil-rich states. With PSAs, oil ownership ultimately rests with the government, but the most profitable aspects of the industry—exploration and production—are contracted to the private companies under highly favorable terms. None of the top oil producers in the Middle East use PSAs, because they favor private companies at the expense of the exporting governments. In fact, PSAs are only used in respect to about 12 percent of world oil reserves {such as Nigeria}. 


Weakness of the propagated by MSM hypothesis about Saudi Arabia fighting for its market share

In 2013 before oil prices slump started Saudies shipped 7.54 million barrels a day on average up from 7.41 million barrels a day in 2012 (JODI website ). Saudi Arabia exported 5.49 million barrels a day in 2002, when the group began collecting oil data. Saudi monthly exports in 2013 peaked at 7.84 million barrels a day in August, the most since April and May of 2003. North Sea Brent, the benchmark for more than half of the world’s oil, averaged $110.82 a barrel during the 2010-2013.

Saudi Arabia produced 10.28 million barrels a day in October, 2015,  up from 9.69Mb/done year ago.   Chances that production will reach 11 Mb/d are slim. There are strong signs that they have huge difficulties in increasing oil extraction volume.  All their efforts to increase production led to increase of less then 1Mb/d  increase in 2015. Which is partially offset by  increase in internal consumption (In 2015 Saudi Arabia oil demand rose by a notable 0.21 mb/d, a nearly 8% annual rise)  Here is relevant quote (, Dec 21, 2015). All they can achieve is 7% increase of exports.

Crude exports from Saudi Arabia rose from an average of 7.111 million barrels per day in September to 7.364 million per day in October, according to the latest data from the Joint Organizations Data Initiative (JODI), which monitors the oil industry. The report said this quantity was the most oil exported from Saudi Arabia since June and 7 percent higher than in October 2014.

The key question about propagated by MSM hypothesis about Saudi Arabia fighting for its market share is "Why piss yourself without any need?". 

That means that if Saudis withdraw one Mb/s from the market in 2015 and exported the same 7 Mb/d (instead of 7.5 Mb/d, saving around 0.5 Mb/d of their oil reserves, not counting rise in internal consumption)  their revenue would be  125 billions.  While after increasing oil production to maximum (no spare capacities) they got oil revenue $118 billions.  Less money for more effort.  Their proven oil reserves are only 268 billion barrels (EIA)  which at current rate of production (which is around 3.6 billion barrels per year) get them less then a hundred years.

Moreover they need approximately $100 oil to balance budget, so low oil prices mean depletion of their currency reserves, which if prices say on the current level will last less then 10 years.  Saudi Arabia’s record deficit of  $98 billion in 2015 At the end of October, its reserves fell to $644 billion from $732 billion at the end of last year.  The finance ministry has issued bonds worth $20 billion for the domestic market. projected means that dumping oil on the market was a self-destructive action.

The only reasonable explanation for such suicidal actions is that they launched "all-out" economic war against their arch-enemy Iran depriving it of oil revenue after lifting sanctions, hitting simultaneously Russia, Venezuela and couple of other countries they do not like.  In any case such an action should be approved by Washington as Saudis are a vassal state completely dependent on Washington for survival of their monarchic regime.

And it is easy to see huge benefits for Washington from such Saudis-Iran oil war.  Moreover may be lifting sanction itself was a gentle push for Saudis to unleash this war.

Not everybody buy MSM propagated version of Saudis behaviour. For example here is a comment from Yahoo (Saudi to diversify economy away from oil King Salman)

brian  Dec 30, 2015

This oil collapse is engineered by Saudi with the Western media. As the analysts are saying the daily over production is 1.5 million barrels. 1.5 out of 100 million daily production is ONLY 1.5% percent. Why did Saudi keep on over producing and with the media bombarding over production, the future's market is easily manipulated as oil collapsed to $36 per barrel.

This just does not make sense and not fair to the commodity producing nations. If you look at the U.S., Euro, Japan, China all they are doing is QE, printing money to supercharge their economy. On the other hand, the commodity nations are contracting.


Saudi Arabia is in a conundrum, it has propped up its Clergy and kept majority of its population illiterate. This was done to keep the Kingdom under full control of its population, their women folk are even further worst off. The country is run by expatriates from around the world, mostly from Egypt, Pakistan, India, Bangladesh and Malaysia. According to Saudi rules these expatriates can not ever become citizens, even after many generations. Unlike Iran whose population is highly educated (Men and Women), Saudi administrators are afraid if Saudi gets educated there will be a revolution and that will affect how Saudi Arabia is ruled. My bet is Saudi Arabia can not progress beyond oil based economy.


And in another Yahoo thread Oil down 3 percent; Brent near 11-year low as oversupply worries return
Old Midwest Geezer
Saudi Arabia is fighting a financial war against Iran, its mortal enemy. Iran's main source of income is oil and SA is putting the screws to them and their Russian buddies. They picked up a perk by squeezing the US shale oil producers.

Hedging and junk debt: shale oil as subprime oil

"There are too many ugly balance sheets," warns one energy industry analyst, adding simply that "the group is not positioned for this downturn." While the mainstream media continues to chant the happy-clappy side of lower oil prices, spewing various 'statistics' about how the down-side of low oil prices is 'contained' and the huge colossal massive tax cut means 'everything is awesome' for America, the data - and now actions - do not bear this out.

Zero Hedge

Shale oil companies were not making as bandits when prices were $100. They operated in a very risky and rather unstable environment and mot of them took substantial amoount of debt.  Many used hedges regularly to make the environment more stable which is double edge sword -- it helps if price drop but deprive you of profits if price surge. Those who did were in better shape in 2015 when oil prices dropped to $35 per barrel (WTI).  Here is a good explanation of hedging from a post in blog:

shallow sand, 12/20/2015 at 8:56 am
Donn. Companies hedge with counter parties. Those are usually large banks. The there are 3 basic types of hedges.
  1. SWAP. The producer and counter party agree to a fixed price, say $70 per barrel. If the price goes above $70, the producer pays the counterparty the difference. If it goes below $70, the counterparty pays the producer.
  2. Cost less collars. These are like SWAPS, but in a range. Say the parties agree to a collar of $60-80. No money changes hands unless the price goes outside the range.
  3. The third is a floor, or put. The producer pays a premium to the counterparty. Say the producer buys $60 puts. If the price falls below $60, the counterparty pays the producer.

There are various hybrids and modifications of the above.

The price levels and cost of puts are based on the futures market. It is now impossible to hedge anything remotely profitable for the shale industry and a good portion of US conventional.

Furthermore, it is difficult to hedge production past 24 months. This is especially true for shale, with the high declines.

One concern with SWAPS or collars is in the event of a price spike, the producer produces less barrels than that hedged. That can wind of costing the producer a lot of $$. Also, theses types of hedges can result in very large margin requirements of the producers, but they commonly avoid those by allowing a first lien on production.

Another problem with hedges is giving up upside. If it were possible, someone who hedged in 2003 for the next ten years at $30 a barrel would be BK, as the price rocketed up, which caused OPEX to also skyrocket.

Most companies do not hedge past 24 months. Also, they do it in layers so that not as many barrels are hedged n the later years.

Many companies had significant hedge gains in 2015. There will be much less in 2016 and almost none in 2017.

Shale companies debt was typically rated as junk which means that chances for repayment of the load are low.  Just due to this fact the current talk about profitability of certain parts of shale at below then $50 prices looks a little bit suspicious even with some technology advances which were sped up by the price slum as well as lower service companies costs.   To many observers $60-$75 per barrel looks like a more reasonable minimal price for shale oil sustainable extraction, if the amount of junk bond debt is counted.

The current talk about profitability of certain parts of shale at below then $50 prices looks a little bit suspicious.   To many observers $60-$75 per barrel looks like more a reasonable minimal price for shale oil sustainable extraction, if the amount of junk bond debt is counted. 

Some technological improvements can cut costs. Neglecting ecological concerns can cut costs. The strong dollar and crash of other commodities can cut some costs (as steel and some equipment, can be bought at much lower prices). But whether all three factors mentioned can cut 50% of costs is a big multibillion question.   Gail Tverberg, a well known commentator on "end of cheap oil" problem,  thinks that the current drop of prices looks more like a harbinger of the collapse of financial system then oversupply problem on world markets (Deflationary Collapse Ahead?  Aug 28, 2015  Our Finite World )

The entire shale oil industry in America is complex mix of new technological methods and new schemes of creation of  junk bonds by Wall Street (200 billion of this debt might also be securitized like subprime mortgages). There also might be some complex derivative bets  (including but not limited to related to hedging of oil prices by shale producers, airlines, etc).

Shale oil is impossible to understand without  proper context which is the existence of  sophisticated financial system and complex financial products under neoliberalism. Wall Street can be trusted as for its ability to produce exotic financial instrument tailored for particular purpose, which can blow in your face in case of any Black Swan event.  In this case this might be securitization of debt of shale oil companies that could play a role somewhat similar to subprime mortgages but on much smaller scale as the amount of dent is miniscular in comparison with subprime mortgages.  Still, in this sense, we can call shale oil subprime oil (Broken Energy Markets and the Downside of Hubbert’s Peak Energy Matters): 

The second example of a broken energy market I want to explore is the US shale industry.  This shares certain characteristics with the wind industry in that it is a high cost but potentially very large resource. But the mechanism for integration of this resource into the market is rather different. The problem with shale gas is that over-supply has resulted in the US gas price being dumped below the level where many shale operators can make a profit. Consumers in this case benefit through getting both secure and low priced gas. But the shale operators have reportedly racked up large losses that have been covered by expanding debt. These losses may yet come home to roost with the consumer if debt defaults result in a new credit crunch where the debts are socialised via government bailouts of the banking sector.

If it were possible to produce shale gas at $1 / million btus then everyone would be happy. Consumers would be getting secure and cheap energy and producers would be making handsome profits to distribute to shareholders. That is how capitalism is supposed to work. The system as it has operated seems broken.

US Light tight oil (LTO) production appears now to have created the same problem for the liquids plays where the entrance of expensive liquids in the market have contributed to the crash in the oil price. This has created risks for the LTO operators. It remains to be seen if the LTO sector sees mass insolvencies and default on loans that may socialise these losses. The introduction of high cost LTO has also undermined the whole of the higher cost component of the conventional oil sector. If LTO could be produced in large quantities for $20 / bbl then there would be no problem since this source would  go on to substitute for the higher cost conventional sources of supply. But with costs closer to $60-$80 this is not going to happen. The conundrum for capitalism is the introduction of large quantities of higher cost energy to the system.

At this point I have to admit that nuclear power may be subject to similar limitations. It is difficult to view the Hinkley Point new nuclear build in the UK as a triumph for the consumer or the country. A better way to manage such enormous capital expenditure on vital infrastructure is via the state. The costs may eventually be socialised to the tax payer, but at least the energy is reliable and amongst the safest forms of power generation ever developed and the taxation system distributes costs in an equitable way.

A form of society could undoubtedly exist powered by nuclear, wind and shale gas. But it would be a society supported by the state with far larger numbers working in the energy industries than now, producing lower surpluses, the energy production part perhaps running at a perennial loss. Those losses have to be covered by either higher price or via the taxation system. Either way, the brave new world that awaits us will be characterized as the time of less that will be in stark contrast to the time of plenty many of us enjoyed during the 20th Century.

The so-called “shale revolution” in the U.S. was partially powered by innovation in horizontal drilling but  its cornerstone is the junk bond market. Which questions boom’s the long-term sustainability.  As The Wall Street Journal  reported total debt is   almost $200 billion. At 7% that's 14 billion of interest a year. Or at $40 per barrel 350 million barrels per year are needed just to service the debt. That's almost million barrels per day or almost total production of Bakken field ( )

And now,  the bankruptcies have begun as financing costs are not just prohibitive, there is no liquidity available at any price for many...

American oil and gas companies have gone heavily into debt during the energy boom, increasing their borrowings by 55% since 2010, to almost $200 billion.

Their need to service that debt helps explain why U.S. producers plan to continue pumping oil even as crude trades for less than $50 a barrel, down 55% since last June.

But signs of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million. Neither the Austin-based company nor its lawyers responded to requests for comment.

Energy analysts warn defaults could be coming. “The group is not positioned for this downturn,” said Daniel Katzenberg, an analyst at Robert W. Baird & Co. “There are too many ugly balance sheets.”


In 2010, U.S. companies focused on producing oil and gas had $128 billion in combined total debt, according to financial data collected by S&P Capital IQ.

As of their latest quarter, such companies had $199 billion of combined total debt.

Even is "good times", before the start of current oil price slump,  the whole shale industry was financed only via junk bond market:  75 of the 97 energy E&P companies were rated by S&P below investment grade (Shale Boom Built on ‘Junk’ - GE Reports Ideas, May 19, 2014)

Although share prices for most U.S. exploration and production (E&P) companies are at all-time highs, the elephant in the room is an industry financed by the high-yield debt market, better known as “junk bonds.” The S&P says that 75 of the 97 energy E&P companies it rates are below investment grade.

The report cites a recent analysis by Energy Aspects, a commodity research consultancy, of 35 independent companies that shows a steadily worsening financial picture across the last six years. The analysis showed the companies spent as much as they brought in and “net cash flow is becoming negative while debt keeps rising.”

Many of the oil-drilling newcomers set up shop in order to take advantage of the low rates and easy money available in the bond market. Now that oil prices have crashed, investors are avoiding energy-related junk bonds. Moreover the whole US bond market started to turn south (in correlation with stocks) in anticipation of rate hikes. Which is making it impossible for the smaller companies to roll over their debt or attract fresh capital. The most indebted companies from Here Are America's Most Levered Energy Companies Zero Hedge are:

Source: CapIQ

When these companies need to refinance their bond they are forced to default or, if they have valuable properties, be acquired by larger companies. The whole situation with junk bonds from shale companies has some analogy with subprime loads and while lesser in scale still can serve as a catalyst for another financial meltdown (

Energy companies, the fastest-growing segment of the high-yield bond market in recent years, account for nearly 18% of all outstanding high-yield bonds, up from 9% in 2009, according to J.P. Morgan.

Mr. Hamid says that the 40% possible default rate is the upper limit over the next few years, and that energy companies will take steps to avoid falling into bankruptcy, including cutting spending and selling assets.

Still even if companies make smart moves to cut costs, with oil at $65 per barrel or below for the next three years, he estimates that default rates high-yield bonds from the energy sector could still hover around 20% to 25%. “It would become a very dire scenario,” Mr. Hamid said.

After a steep plunge in oil prices last week, WTI crude, the U.S. benchmark, was recently up 3% to $68.14 a barrel in Monday morning trading.

He predicts that not that many companies will default in 2015 because many companies have hedged their exposure. But he expects that energy companies will run into trouble in 2016 as even the most conservative energy companies will see most of their hedges run off.

Energy companies are the largest sector in the high-yield universe by a wide margin. The next largest sector, J.P. Morgan estimates, is the healthcare sector, which accounts for 7.1%.

The total size of shale companies junk bond debt is estimated at 200 billions out of which at least 20 billions are not recoverable.

The additional huge problem is that the banks again have bundled a lot of shale companies debt into financially-engineered products like Collateralized Loan Obligations (CLOs) and Collateralized Debt Obligations (CDOs), which much like subprime CLO and CDO are overrated and might fail when borrowers are no longer able to service the loans. The rot can be concealed for a while (may be two-three years -- as long as existing well produce oil in quantity to pay the debt), but eventually, if oil prices don’t recover, a significant number of these companies are going to go under

Vultures start circling shale companies

If low prices persist for all 2016 many shale oil companies are doomed. And vultures already started circling them:

Clueless, 12/19/2015 at 10:40 pm
I would guess that by now, most can see what is happening and therefore, what is going to happen in the future since the model has been established. The banks are not going to take serious hits. Re: Magnum Hunter and New Gulf Resources.

I remember seeing some vulture investor discussions back in 2009. They were stating that they would never buy equity in failing companies: they would take control thru the debt. Much more upside possible. So, a company with $1 billion in debt has its bonds trading at say 70 cents on the $ and it is rated junk. The bond funds that hold the debt [their covenants prohibit them from holding “bankrupt” rated debt] sells to novice speculators. Then the debt plunges to 10- 30 cents on the dollar. The investment/hedge funds step in. They can buy $1 billion of debt for $300 million or less, and the are praying that the company does go belly up. If it does, they get 100% of the equity, and agree to put in another $200 million to ride out the storm. A totally non-contested, prearranged bankruptcy. If things come back [even partially], they might own a company worth $2 billion for their $500 million investment. 

shallow sand, 12/19/2015 at 11:20 pm
Clueless. You are correct. I might add that the vultures do not appear to be just purchasing the debt. They are trading unsecured debt for second lien debt. I am not sure how this works, but from what I have read, the unsecured bonds have very weak covenants. The vultures give the unsecured bond holders the option of taking pennies on the dollar or becoming subordinate the vultures on all the debt the vultures are able to trade out.

The vultures better be pretty sharp, however. 1st, they better have a good handle on the assets they are trying to acquire. Second, they better have a good team put together to operate the assets. Third, they better have a better handle on future oil and gas prices than schmucks like me.

I saw something similar to this up close in the aftermath if the 1998-99 crash. An investor group bought the bad debt from a bank for pennies on the dollar, took assignment of the liens and foreclosed.

The investor group found out in a hurry that they didn’t quite know what they had bought, and that it wasn’t easy to manage from 1000+ miles away. They had a hell of a field superintendent, but of course they thought they were smarter than him, despite him having grown up in the middle of the field.

In any event, after burning several million dollars, the sold the assets and I am sure took a big loss. They also screwed up on timing the sale. Had they held on for about 3 more years they could have at least quintupled the sale proceeds. But they knew about as much as I, or really any of us, know about where oil prices are headed.

I am sure these distressed buyers are real sharks. But sharks can die too.

What is the sustainable minimal oil price with the current oil reserves depletion

As oil is important geopolitical resource there can be no definite answer to it. Still there is a probability that the peak "cheap oil" has already occurred, but we won’t know that until several years after the fact.  There is a large discrepancy in estimates ;-).  Much depends of the type of oil in question with shale, oil sands, as deep water oil as the most expensive.

Shale oil has a break even price around $70-75 / barrel for most shale producers and at below $50, every single well is losing money. There are also pretty expensive oil extracted from  deepwater (around 7 Mb/d). Which at current oil prices will shrink approximately 10% per year.  And there are around 20 MB/d in shallow water with higher staying power but also declining 10% due to lack of investments in current price situation.  Half of oil production from future developments is uneconomic at US$60/bbl (post of AlexS 01/29/2016 at 7:06 pm )

EIA projects that in 2030 the average real price of crude oil is projected to be $72 per barrel in 2006 dollars or about $113 per barrel in nominal dollars. Projected U.S. crude oil production averages 9.3 Mb/d in 2015 and 8.8 Mb/d in 2016.  Decline is 0.5 Mb/d.  EIA is always on optimists side (they were major cheerleaders of shale bubble, which makes them more of propaganda agency then statistical outlet)  so you can probably assume that 2020 prices of oil will be above, especially if low prices will last the whole 2016.  

Pricewise EIA projections are dropping all 2015 (Short-Term Energy Outlook)

EIA short term predictions as of December 3, 2015 suggest that low oil prices might continue to dominate the first quarter of 2016:

Previously common wisdom was around that price will return to $100 per barrel on average in 2016, which the following post from Zerohedge illustrates:

6344498 Magooo

HOW HIGH OIL PRICES WILL PERMANENTLY CAP ECONOMIC GROWTH For most of the last century, cheap oil powered global economic growth. But in the last decade, the price of oil production has quadrupled, and that shift will permanently shackle the growth potential of the world’s economies.

HIGH PRICED OIL DESTROYS GROWTH According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices.

BUT WE NEED HIGH OIL PRICES:  Marginal oil production costs are heading towards $100/barrel

The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth.

Steven Kopits from Douglas-Westwood said the productivity of new capital spending has fallen by a factor of five since 2000. “The vast majority of public oil and gas companies require oil prices of over $100 to achieve positive free cash flow under current capex and dividend programmes. Nearly half of the industry needs more than $120,” he said

Sanford C. Bernstein, the Wall Street research company, calls the rapid increase in production costs “the dark side of the golden age of shale”. In a recent analysis, it estimates that non-Opec marginal cost of production rose last year to $104.5 a barrel, up more than 13 per cent from $92.3 a barrel in 2011.

Now all those consideration looks far less plausible in a short term (one year) period. Here are some "post oil price slump" considerations (in 2013 dollars):

Wikipedia article gives a more wide range of prices at wellhead (without cost of servicing the debt and transportation costs) from $35 to $95 for shale oil (Oil shale economics - Wikipedia)

The United States Department of Energy estimates that the ex-situ processing would be economic at sustained average world oil prices above US $54 per barrel and in-situ processing would be economic at prices above $35 per barrel. These estimates assume a return rate of 15%.[6] The International Energy Agency estimates, based on the various pilot projects, that investment and operating costs would be similar to those of Canadian oil sands, that means would be economic at prices above $60 per barrel at current costs. This figure does not account carbon pricing, which will add additional cost.[4] According to the New Policies Scenario introduced in its World Energy Outlook 2010, a price of $50 per tonne of emitted CO2, expected by 2035, will add additional $7.50 per barrel cost of shale oil.[4]

According to a survey conducted by the RAND Corporation, the cost of producing a barrel of oil at a surface retorting complex in the United States (comprising a mine, retorting plant, upgrading plant, supporting utilities, and spent shale reclamation), would range between $70–95 ($440–600/m3, adjusted to 2005 values). This estimate considers varying levels of kerogen quality and extraction efficiency. In order for the operation to be profitable, the price of crude oil would need to remain above these levels. The analysis also discusses the expectation that processing costs would drop after the complex was established. The hypothetical unit would see a cost reduction of 35–70% after its first 500 million barrels (79×10^6 m3) were produced. Assuming an increase in output of 25 thousand barrels per day (4.0×10^3 m3/d) during each year after the start of commercial production, the costs would then be expected to decline to $35–48 per barrel ($220–300/m3) within 12 years. After achieving the milestone of 1 billion barrels (160×10^6 m3), its costs would decline further to $30–40 per barrel ($190–250/m3).[7]


Floor for oil prices for 2016

The only function of economic forecasting is to make astrology look respectable.
 ~John Kenneth Galbraith

The most common view is that most US shale producers are highly vulnerable if price falls below $60 and are losing money on each barrel of oil they produce  at prices below $50. With difficulties of junk bond re-financing this figure should be higher. Some Russian sources cite $75 per bbl as a breakeven price for US shale oil.  This estimate is supported by the following detailed report BAKKEN - Single Well Economics  (Jan 4, 2016).

Here is a pretty telling graph from  Scotiabank (they have way too optimistic price for Bakken I think: adding $10 to $47 we get $57 for Bakken, which is probably 10 to 20 dollars low):


Source Why oil prices keep falling — and throwing the world into turmoil - Vox

As you can see plausible minimum for shale oil wellhead costs is around $55( $45+$10) per barrel ( and that  does not include the cost of servicing of junk bond debt).  If prices in 2016 remain under $50/bbl (as many forecaster expect), shale oil production in the United States will likely see a substantial decline in output and many shale companies will face merger or pushed into bankruptcy. But as for total US output, this decline will be partially offset by Gulf oil coming into production so for the first six months of 2015 total decline probably will be around 0.5Mb/d or lower. 

In any case, as 2015 has shown low prices became sticky and self reinforcing via Wall Street financial mechanisms. So chances for quick reversal in 2016 are close to zero. That spells real trouble for the US shale oil industry as well as Canada oil sands production  (QE At Work Pouring Cheap Debt Into The Shale Ponzi David Stockman's Contra Corner) as well as speculators in oil futures who will be wiped out via EFN  (outside major banks and those who shorted oil):

There are two pieces of the economic puzzle when it comes to shale. First is that most shale oil deposits are not profitable to extract except at current high prices. This drilling/extraction method is not cheap. Breakeven prices vary by region but it is safe to say that no shale oil deposits are profitable below $50/barrel and most areas require much higher prices. An average might be in the range of $65 and there are plenty of areas where the price needs to be above $80 before anyone makes a nickel.

I would just note that oil traded, albeit briefly, at $34 in the last recession. Second is the production profile of shale wells; production drops off rather precipitously after the first year (in contrast with traditional wells which deplete over much longer time frames). Combine high extraction costs with rapid depletion and the economics of shale become not only dubious but frankly insane.

Usually forecasts of oil prices are not work the paper or electrons. but there are some exceptions to this rule. For example  Bill Connoly in his Oil Price Forecast 2015-2016 - Forbes was one of the few forecasters who proved to be right as for 2015; remains to be seen for 2016.

My price forecast is that today’s $60 price is likely to be the high end for the coming two years. There may be temporary market volatility higher, but don’t expect a higher price to be sustained. At the low end, $50 seems like a floor absent a global recession. analysts think that the bankruptcy of shale companies and drastic reduction of the number of new projects and capital expenditures will eventually move the oil price up to $70+ range. And that the production of shell oil in the USA will drop 1 Mb/d in 2016 or even more, while consumption rises as record number of cars was sold in 2015.  But this process in not immediate and can take more then one year as in 2015 oil production defied gloomy forecasts and remains relatively stable (Oil Price Scenarios For 2015 And 2016 OilPrice.com_

The spare capacity data suggests that demand/supply imbalance may last three years, requiring 18 months to work through to the mid-cycle point where over-supply turns to under-supply. It is by no means certain that the market will respond to the same time dynamic when we are now dependent upon natural production capacity wastage to occur as opposed to OPEC simply closing the spigot. But this is all I have to go on.

The downturn in the current price cycle began last July and we are therefore just 6 months in. Another year of pain to go for the producers, that is unless OPEC decides to intervene.

In we count start of mid cycle from December of 2014 then we can see some upward pressure in July of 2016 or so.

Low prices also might mean that only selected shale projects ("sweet spots") with continue to be explored, diminishing of flow of oil from this source to the market ( Oil under US$60 beyond 2016 suggests market rethinking shale - Channel NewsAsia). Those places will be exhausted in two-three years making extraction more expensive on average.

If U.S. shale drillers - the world's new 'swing' producers - can still turn a profit at below US$60 a barrel, then the fall in long-dated oil prices may be rational. If not, as some bullish market analysts worry, then lower prices could be choking off new supplies the world may need as soon as next year.

"If you take the curve at face value, it appears to be saying that U.S. shale can grow ... if WTI stays below US$60 for three years. That doesn’t seem very likely," Paul Horsnell, global head of commodities research at Standard Chartered, said, referring to West Texas Intermediate crude.

"One would guess that all those companies that had been holding back from cutting projects and jobs over the past few months are not going to hold on much longer, and another shakeout will start. And it probably won’t be long before U.S. rig counts start to dive again."

Link to chart: 

... ... ...

U.S. oil futures for December 2017 delivery have dropped by as much as US$5 a barrel, or 8 percent, in the past two days, an even deeper retreat than last November when OPEC's surprise decision to maintain oil output despite a global glut sent markets into a deepening tailspin.

CLZ17 Commodity Futures Price Chart for Crude Oil WTI December 2017

[Note that they are close to $58 as of July 24, 2015 -- NNB]

EIA forecasts change with market prices

Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)

In December 2015 EIA predicted average price of oil in 2016 much lower, around $51 a barrel, so EIA forecasts change really fast with future prices and as such are just educated guesses.

  2013 2014 2015 2016
WTI Crude Oila
(dollars per barrel)
97.98 93.17 49.08 50.89
Brent Crude Oil
(dollars per barrel)
108.56 98.89 52.93 55.78

Sustained low oil price will cut capital investment in oil dramatically

An extended period of lower oil prices would benefit consumers but would trigger energy-security concerns by heightening reliance on a small number of low-cost producers, or risk a sharp rebound in price if investment falls short, says the International Energy Agency (EIA) in the 2015 edition of its  World Energy Outlook publication (WEO-2015).We need to distinguish between oil as a chemical substance, a source used by chemical companies to produce all kind of useful things and oil as a source of motor fuel.  Oil is irreplaceable resource and burning it now deprive of oil future generations. As simple as that.

The US government policy of allowing (or, most probably, facilitating/engineering) very low oil prices is extremely unwise (I would use a stronger word) because at least for one segment of transportation (which is around 70% of total oil consumption in the USA) alternative does already exist. Small hybrid and electrical cars with prices of oil over $100 (and gasoline above $4 per gallon) are absolutely viable.

Instead now we have a huge jump in SUVs sales which became No.1 personal car category. To say nothing about light trucks. Which is the last thing we need.

Switch to natural gas in large vehicles such as buses (and small delivery trucks) also experiences a dramatic slow down (transit buses in Europe already are using this fuel on mass scale).

Again I think that it is the US government which is the culprit of destruction of the US shale industry which was build with such great effort and expense and is now on the verge of extinction. By really great people working in very difficult, challenging conditions.

The US government could buy excessive oil into strategic reserve or do something similar to keep prices at least above $70 dollars level. They could also prohibit short oil ETNs and other Wall Street machinations and for good effort jail couple of too aggressive traders for violation of some New Deal era laws(after all this is gambling, plain and simple) which are still on books after all this deregulation efforts by Clinton and Bush II administrations.

My point is that wind and solar might well be not the best choices. Other alternatives of renewable fuels exists. Meanwhile we need to save oil and the best way to do it is to ramp up oil price to above $100 level, which ensure the survival of frackers, which unfortunately became a collateral damage in some larger, possibly geopolitical play.

Actually EIA recognizes the danger of oil price spikes caused by sustained low oil prices and low capex investments Sustained low oil prices could reduce exploration and production investment - Today in Energy - U.S. Energy Information Adminis

Low oil prices, if sustained, could mark the beginning of a long-term drop in upstream oil and natural gas investment. Oil prices reflect supply and demand balances, with increasing prices often suggesting a need for greater supply. Greater supply, in turn, typically requires increased investment in exploration and production (E&P) activities. Lower prices reduce investment activity.

Overlaying annual averages of the domestic first purchase price (adjusted for inflation) on oil and natural gas investment reveals that upstream investment is highly sensitive to changes in oil prices. Given the fall in oil prices that began in mid-2014 and the relationship between oil prices and upstream investment, it is possible that investment levels over the next several years will be significantly lower than the previous 10-year annual average.

Oil production is a capital-intensive industry that requires management of existing production assets and evaluation of prospective projects often requiring years of upfront investment spending on exploration, appraisal, and development before reserves are developed and produced.

Previous investment cycles provide insights into how investment responds to crude oil price changes. In 1981 and 1982, after crude oil prices significantly increased, investment topped out at more than $100 billion (in 2014 dollars) and then averaged $30 billion to $40 billion per year into the early 2000s as crude oil prices fell and remained in the $20-$30 per barrel (b) range. From 2003 to 2014, investment spending increased from $56 billion to a high of $158 billion as crude oil prices increased from $34.53/b to $87.39/b, including several months of prices reaching more than $100/b. EIA's 2015 Annual Energy Outlook Reference case projects real domestic first purchase prices to average about $70/b in 2020. This price level could result in substantially lower annual oil and natural gas investment over the 2015-20 period than the annual average of $122 billion spent during the 2005-14 investment cycle crest period


Additional "end of cheap energy" readings

See also my introduction to the topic of "End of cheap energy":

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[Jan 19, 2021] US expands sanctions against Nord Stream 2 gas pipeline, targeting ships Russian firms working on vital pan-European projec

Jan 19, 2021 |

46 Follow RT on RT Outgoing US President Donald Trump has delivered his "parting gift" to the Moscow-led Nord Stream 2 gas pipeline, with newly announced sanctions targeting a pipe-laying vessel and companies involved in the multinational project.

The specialist ship concerned, named, 'Fortuna,' and oil tanker 'Maksim Gorky', as well as two Russian firms, KVT-Rus and Rustanker, were blacklisted on Tuesday under CAATSA (Countering America's Adversaries Through Sanctions Act) as part of Washington's economic war on Moscow. The same legislation had been previously used by the US to target numerous Russian officials and enterprises.

Russian energy giant Gazprom warned its investors earlier on Tuesday that Nord Stream 2 could be suspended or even canceled if more US restrictions are introduced.

ALSO ON RT.COM Gazprom warns investors that Nord Stream 2 could be canceled as Trump announces more US sanctions in 'parting gift'

However, Moscow has assured its partners that it intends to complete the project despite "harsh pressure on the part of Washington," according to Kremlin press secretary Dmitry Peskov. Reacting to the new package of sanctions on Tuesday, Peskov called them "unlawful."

Meanwhile, the EU said it is in no rush to join the Washington-led sanction war on Nord Stream 2. EU foreign affairs chief, Josep Borrell, said that the bloc is not going to resist the construction of the project.

"Because we're talking about a private project, we can't hamper the operations of those companies if the German government agrees to it," Borrell said Tuesday.

Nord Stream 2 is an offshore gas pipeline, linking Russia and Germany with aim of providing cheaper energy to Central European customers. Under the agreement between Moscow and Berlin, it was to be launched in mid-2020, but the construction has been delayed due to strong opposition from Washington.

ALSO ON RT.COM One more European firm caves to US pressure on Nord Stream 2 project – media

The US, which is hoping to sell its Liquified Natural Gas (LNG) to Europe, has hit the project with several rounds of sanctions over scarcely credible claims that it could undermine European energy security. Critics say the real intent is to force EU members to buy from American companies.

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Fatback33 4 hours ago 19 Jan, 2021 11:20 AM

The group that owns Washington makes the foreign policy. That policy is not for the benefit of the people.
DukeLeo Fatback33 1 hour ago 19 Jan, 2021 02:06 PM
That is correct. The private banks and corporations in the US are very upset about Nord Stream - 2, as they want Europe to buy US gas at double price. Washington thus introduces additional political gangsterism in the shape of new unilateral sanctions which have no merit in international law.
noremedy 4 hours ago 19 Jan, 2021 11:22 AM
Is the U.S. so stupid that they do not realize that they are isolating themselves? Russia has developed SPFS, China CIPS, together with Iran, China and Russia are further developing a payment transfer system. Once in place and functioning this system will replace the western SWIFT system for international payment transfers. It will be the death knell for the US dollar. 327 million Americans are no match for the rest of the billions of the world's population. The next decade will see the total debasement of the US monetary system and the fall from power of the decaying and crumbling in every way U.S.A.
Hanonymouse noremedy 2 hours ago 19 Jan, 2021 01:37 PM
They don't care. They have the most advanced military in the world. Might makes right, even today.
Shelbouy 3 hours ago 19 Jan, 2021 12:25 PM
Russia currently supplies over 50% of the natural gas consumed by The EU. Germany and Italy are the largest importers of Russian natural gas. What is the issue of sanctions stemming from and why are the Americans doing this? A no brainer question I suppose. It's to make more money than the other supplier, and exert political pressure and demand obedience from its lackey. Germany.
David R. Evans Shelbouy 2 hours ago 19 Jan, 2021 01:58 PM
Russia and Iran challenge perpetual US wars for Israel's Oded Yinon Plan. Washington is Israel-controlled territory.
Jewel Gyn 4 hours ago 19 Jan, 2021 11:34 AM
Sanctions work both ways. With the outgoing Trump administration desperately laying mines for Biden, we await how sleepy Joe is going to mend strayed ties with EU.
Count_Cash 4 hours ago 19 Jan, 2021 11:20 AM
The US mafia state continues with the same practices. The dog is barking but the caravan is going. The counter productiveness of sanctions always shows through in the end! I am sure with active efforts of Germany and Russia against US mafia oppression that a blowback will be felt by the US over time!
Dachaguy 4 hours ago 19 Jan, 2021 11:24 AM
This is an act of war against Germany. NATO should respond and act against the aggressor, America.
xyz47 Dachaguy 42 minutes ago 19 Jan, 2021 03:20 PM
NATO is run by the US...
lovethy Dachaguy 2 hours ago 19 Jan, 2021 01:04 PM
NATO has no separate existence. It's the USA's arm of aggression, suppression and domination. Germany after WWII is an occupied country of USA. Thousand of armed personnel stationed in Germany enforcing that occupation.
Chaz Dadkhah 3 hours ago 19 Jan, 2021 12:19 PM
Further proof that Trump is no friend of Russia and is in a rush to punish them while he still has power. If it was the swamp telling him to do that, like his supporters suggest, then they would have waited till their man Biden came in to power in less than 24 hours to do it. Wake up!
Mac Kio 3 hours ago 19 Jan, 2021 12:34 PM
USA hates fair competition. USA ignores all WTO rules.
Russkiy09 2 hours ago 19 Jan, 2021 01:33 PM
By whining and not completing in the face of US, Russia is losing credibility. They should not have delayed to mobilize the pipe laying vessel and other equipment for one whole year. They should have mobilized in three months and finished by now. Same happens when Jewtin does not shoot down Zio air force bombing Syria everyday. But best option should have been to tell European vassals that "if you can, take our gas. But we will charge the highest amount and sell as much as we want, exclude Russophobic Baltic countries and Poland and neo-vassal Ukraine. Pay us not in your ponzi paper money but real goods and services or precious metals or other commodities or our own currency Ruble." I so wish I could be the President of Russia. Russians deserve to be as wealthy as the Swiss or SIngapore etc., not what they are getting. Their leaders should stand up for their interest. And stop empowering the greedy merchantalist Chinese and brotherhood Erdogan.
BlackIntel 1 hour ago 19 Jan, 2021 02:27 PM
America i captured by private interest; this project threatens American private companies hence the government is forced to protect capitalism. This is illegal
Ohhho 3 hours ago 19 Jan, 2021 12:15 PM
That project was a mistake from the start: Russia should distance itself from the Evil empire, EU included! Stop wasting time and resources on trying to please the haters and keeping them more competitive with cheaper Russian natural gas: focus on real partners and potential allies elsewhere!
butterfly123 2 hours ago 19 Jan, 2021 01:58 PM
I have said it before that part of the problem is at the door of the policy-makers and politicians in Russia. Pipeline project didn't spring up in the minds of politicians in Russia one morning, presumably. There should have been foresight, detailed planning, and opportunity creation for firms in Russia to acquire the skill-set and resources to advance this project. Not doing so has come to bite Russia hard and painful. Lessons learnt I hope Mr President!
jakro 4 hours ago 19 Jan, 2021 11:37 AM
Good news. The swamp is getting deeper and bigger.
hermaflorissen 4 hours ago 19 Jan, 2021 11:49 AM
Trump finally severed my expectations for the past 4 years. He should indeed perish.
ariadnatheo 1 hour ago 19 Jan, 2021 03:06 PM
That is one Trump measure that will not be overturned by the Senile One. They will need to amplify the RussiaRussiaRussia barking and scratching to divert attention from their dealings with China
Neville52 2 hours ago 19 Jan, 2021 02:01 PM
Its time the other nations of the world turned their backs on the US. Its too risky if you are an international corporation to suddenly have large portions of your income cancelled due to some crazy politician in the US
5th Eye 2 hours ago 19 Jan, 2021 02:03 PM
From empire to the collapse of empire, US follows UK to the letters. Soon it will be irrelevant. The only thing that remains for UK is the language. Probably hotdog for the US.
VonnDuff1 1 hour ago 19 Jan, 2021 02:10 PM
The USA Congress and its corrupt foreign policy dictates work to the detriment of Europe and Russia, while providing no tangible benefits to US states or citizens. So globalist demands wrapped in the stars & stripes, should be laughed at, by all freedom loving nations.

[Jan 15, 2021] I'm not deep in the mechanics of this, but I've always assumed that the need for continual growth, after an economy could and should have turned steady-state, is a disease that can be laid squarely at the door of compound interest

Jan 15, 2021 |

psychohistorian , Jan 15 2021 5:07 utc | 69

@ Grieved | Jan 14 2021 23:05 utc | 47 who wrote
I'm not deep in the mechanics of this, but I've always assumed that the need for continual growth, after an economy could and should have turned steady-state, is a disease that can be laid squarely at the door of compound interest.
@ karlof1 | Jan 15 2021 0:39 utc | 57 who wrote
Yes, compound interest is part of that problem, but so is an expanding population or a shrinking resource base. Yes, we face all three of those problems and are certainly in an Overshoot situation few genuinely appreciate.

I think humanity needs a frontier more than growth. We need to keep chasing our ignorance.

We lack the common will to regulate our social interactions at a structural level that guarantees some level of equality and justice. Having the will I believe we have the ability.

[Jan 04, 2021] Byron Wien Releases 10 Surprises For 2021- MMT, Trump TV, A -Return To Normal- By Memorial Day

Jan 04, 2021 |
  1. The economy develops momentum on its own because of pent-up demand, and depressed hospitality and airline stocks become strong performers . Fiscal and monetary policy remain historically accommodative. Nominal economic growth for the full year exceeds 6% and the unemployment rate falls to 5%. We begin the longest economic cycle in history, surpassing the cycle that lasted from 2010 to 2020.

  2. The Federal Reserve and the Treasury openly embrace Modern Monetary Theory as their accommodative policies continue. As long as growth exceeds the rate of inflation, deficits don't seem to matter. Because inflation increases modestly, gold rallies and cryptocurrencies gain more respect during the year.

  3. Even as energy company executives cut estimates for long-term growth, near-term opportunities are increasing. The return to "normal" increases both industrial activity and mobility, and the price of West Texas Intermediate oil rises to $65/bbl. Rig counts increase and energy high yield bonds rally soundly. Energy stocks are among the best performers in 2021.

  4. The equity market broadens out. Stocks beyond health care and technology participate in the rise in prices. "Risk on" is not without risk and the market corrects almost 20% in the first half, but the S&P 500 trades at 4,500 later in the year. Cyclicals lead defensives, small caps beat large caps and the "K" shaped equity market recovery unwinds. Big cap tech is the source of liquidity, and the stocks are laggards for the year.

  5. The surge in economic growth causes the 10-year Treasury yield to rise to 2%. The yield curve steepens, but a concomitant increase in inflation keeps real rates near zero. The Fed wants the strength in housing and autos to continue. As a result, it extends the duration of bond purchases in order to prevent higher rates at the long end of the curve from choking off credit to consumers and businesses.

  6. The slide in the dollar turns around. The post-vaccine strength of the U.S. economy and financial markets attracts investors disenchanted with the rising debt and slower growth of Europe and Japan. Treasurys maintain a positive yield and the carry trade continues.

[Jan 02, 2021] Maidan, Navalny, Kastellorizo -- The Chaos Strategy by Dimitris Konstantakopoulos

Notable quotes:
"... Imagine for a while that Pompeo and Netanyahu were able to ignite the huge conflict with Iran which they have been trying to do for years. The wider Middle East would become a land of ruins, and on top of that we would have also the corona crisis. It would be the end for the Chinese project One belt One road and a very promising beginning for Trump’s programme of “decoupling” from China. The same could happen if we go to a Greek-Turkish war, the most probable result of which is enormous destruction in both states and also in Cyprus. Given the destructive capacity of the Greek and Turkish weapons and the impossibility of destroying them by a surprise first strike, the two countries, if they go to war, risk going back two or three hundred years. A conflict around Iran, or between Greece and Turkey would also put enormous pressure on Russia. ..."
"... Spreading Chaos is another way of staging world war when you cannot use ‘normal’, ‘frontal’ methods of war. The policy of Trump and his allies contributes greatly to preparing for world war by attacking the very institutions of bourgeois democracy, any kind of national or international rule, by attacking the very principles of Logic, Logos and Science, necessary in order to transform human societies into herds of wild animals, in a sui generis repetition of the Nazi experiment. ..."
"... The way to get Greece and Turkey to war is by sending them ‘false signals’, either encouraging and supporting them, or implying a threat from the other country. Somebody was able to persuade Ankara to down the Russian jet in 2015, which was a case of extreme miscalculation. It is easier to make a miscalculation regarding Greece and Turkey, and there is an enormity of contradictory signals emanating from the US and Israel towards the two capitals. ..."
"... PS. The above article provides a possible explanation of the present Greek-Turkish crisis. A second explanation is that big oil multinationals want to provoke a crisis in order to exploit the hydrocarbons of the region, but we have no serious indications that big reserves really exist and are exploitable economically. A third explanation, not mutually excluded from what we have analyzed, is that third forces are trying to provoke a war in order to overthrow Erdogan and also have all the other consequences we described. ..."
Sep 17, 2020 |

Twenty years ago, I was covering the Munich Security Forum as a journalist and I took an interview from Brent Scawcroft, National Security Adviser for President Bush (the father). I believe he was one of the men who played a huge role in pushing Boris Yeltsin to the crisis which culminated into the bombing of the Russian parliament in October 1993, thus opening the way to the biggest looting in the history of mankind, the so-called Russian privatisations. I asked Scawcroft what the US policy towards Russia and China should be . He answered: “We need to have better relations with Moscow and Beijing, than they can have between themselves”.

The way for the Empire to dominate in the Eastern Mediterranean, imposing its pax or pushing for war, is by having better relations with Athens and Ankara than they can have between themselves. Now they don’t have any at all.

Maidan Square, Kiev, 2014

The plane carrying the three EU Foreign Ministers, the French, the German and the Polish, had just taken off from Kiev when the agreement they had negotiated for a peaceful, negotiated settlement of the Ukrainian crisis collapsed and the carnage began in the Ukrainian capital. This was followed by the civil war and the unimaginable destruction of European-Russian relations.

The Ukrainian coup was a huge blow to Russia and the Ukraine, which is now in an extremely miserable state, a harbinger of Nazi militias and mafia groups, but also, indirectly, to Europe, which, destroying its relations with Russia at the behest of the Americans, is not only ridiculed, but has deprived itself of the possibility of an independent policy, an achievement which it is now going to ‘complete’ with the Navalny affair, if it leads to the cancelling of the strategic pipeline project NordStream II.

‘Fuck the EU’ was not only a phrase from Neocon Assistant Secretary of State Nuland to Ambassador Pyatt (then in Kiev, now in Athens); it was in reality one of the main purposes of the Maidan operation, that is the inauguration chapter of the new Cold War. Some weeks ago, Mike Pompeo repeated the Nuland coup, by using his influence on the Greek FM Dendias and on the Egyptian dictator Sissi to blow up the moratorium between Greece and Turkey the German chancellor Merkel had negotiated. ‘Fuck Germany and its moratoriums’!

The Coming War

The destruction of the Ukraine, Ukrainian-Russian and European-Russian relations was a very big step in the direction of preparing for world war against Russia and China. This is the central plan that defines many of the individual crises and episodes around the globe; and if one does not understand this, one cannot understand anything. As for Trump’s friendship with Russia, we are afraid that it is of no more value than Hitler’s friendship with Stalin or the Ribbentrop-Molotov pact.

The war with China and Russia is the main project of the extremist, radical wing of the Western capitalist establishment. But such a war cannot happen easily and it will not take a frontal form as WWI and WWII, because of the existence of nuclear weapons. But it will take all other possible forms.

Imagine for a while that Pompeo and Netanyahu were able to ignite the huge conflict with Iran which they have been trying to do for years. The wider Middle East would become a land of ruins, and on top of that we would have also the corona crisis. It would be the end for the Chinese project One belt One road and a very promising beginning for Trump’s programme of “decoupling” from China. The same could happen if we go to a Greek-Turkish war, the most probable result of which is enormous destruction in both states and also in Cyprus. Given the destructive capacity of the Greek and Turkish weapons and the impossibility of destroying them by a surprise first strike, the two countries, if they go to war, risk going back two or three hundred years. A conflict around Iran, or between Greece and Turkey would also put enormous pressure on Russia.

Spreading Chaos is another way of staging world war when you cannot use ‘normal’, ‘frontal’ methods of war. The policy of Trump and his allies contributes greatly to preparing for world war by attacking the very institutions of bourgeois democracy, any kind of national or international rule, by attacking the very principles of Logic, Logos and Science, necessary in order to transform human societies into herds of wild animals, in a sui generis repetition of the Nazi experiment.

You cannot wage war on Russia or China by any form of ‘liberal capitalism’. To wage such a huge war you need a totalitarian regime in the West, and this is the real programme, the historic mission of Trump, Pompeo, Thiel, Netanyahu etc.

The way to get Greece and Turkey to war is by sending them ‘false signals’, either encouraging and supporting them, or implying a threat from the other country. Somebody was able to persuade Ankara to down the Russian jet in 2015, which was a case of extreme miscalculation. It is easier to make a miscalculation regarding Greece and Turkey, and there is an enormity of contradictory signals emanating from the US and Israel towards the two capitals.

For example, a very strange article in the Foreign Affairs magazine states that the red line behind which Ankara will not be permitted to go is south of Crete. This red light is indirectly a green light for Turkey to go to the east or south-east of Crete. If Turkey sends its ships there the Greek government will be under tremendous pressure from both public opinion and the Armed Forces to react. This is not something Foreign Affairs can ignore, making us wonder if in fact some people want a war between Greece and Turkey to overthrow Erdogan, to weaken Turkey for decades, to attack Chinese projects and the EU. We could multiply such examples, including Trump’s encouragement of Erdogan. Insofar as the Turkish President does not want to go to a full rupture with the West, he is better prepared to accept as genuine any encouraging signals from Washington. But they can be a trap, as happened for example with Milosevich or Sadam.

Russia, NATO and a Greek-Turkish war

The other day a friend told me that a conflict between Greece and Turkey would only harm NATO: only the Russians would benefit, so it could not happen.

I replied that he was wrong. ‘If you are preparing for a world war, you do not even care so much about NATO. Instead you have to tear down all the institutions of bourgoies society and of the liberal capitalist order, including the EU, maybe even NATO itself, because they are not really made for such a war. They are certainly made to contain Russia, but not to play Russian roulette with the very existence of the world. A world war will not be decided by a Senate, no matter how oligarchic it will be. For such decisions you need Nero, Caligula, Heliogabalus. Such are Trump, Bolsonaro, Pompeo, Netanyahu and those behind them.

They would certainly prefer a Russia-Turkey conflict and have already tried to provoke it. But it is not easy.

A conflict with Greece is their second best alternative, because Greece has the means to destroy Turkey by destroying itself. A war between the two countries will destroy them and would set them back 200 or 300 years.

It is doubtful, after all, that Russia would benefit from such a development, even if it would be a blow to NATO. First, because Moscow would see the destruction of Hellenism, the main strategic ally of Russia in the Mediterranean for a thousand years. Governments and regimes can change, but losing a nation is another matter.

Second, Moscow will likely see, as a result of a war, a pro-Western dictatorship set up in Ankara. Having contributed to the destruction of a historic country like Greece, Turkey would not have the slightest future. It would be considered the outcast of all civilised nations, like Germany after World War II.

And of course, the big victims of the war will be China, with the One Belt, One Road plans and Europe itself.

This is the Chaos Strategy. It remains to be seen whether her opponents also have a strategy or not.

PS. The above article provides a possible explanation of the present Greek-Turkish crisis. A second explanation is that big oil multinationals want to provoke a crisis in order to exploit the hydrocarbons of the region, but we have no serious indications that big reserves really exist and are exploitable economically. A third explanation, not mutually excluded from what we have analyzed, is that third forces are trying to provoke a war in order to overthrow Erdogan and also have all the other consequences we described.

Also read

International consequences of a Greek – Turkish war. A way to avert it

[Jan 01, 2021] Military And Political Trends Of 2020 That Will Shape 2021 - ZeroHedge

Jan 01, 2021 |

The past year began with the assassination of the Iranian military genius General Qasem Soleimani by the United States, and it ended with the murder of the prominent scholar Mohsen Fakhrizadeh by the Israelis. In early January, Iran, expecting another aggressive action from the West, accidently shot down a Ukrainian civil aircraft that had inexplicably altered its course over Tehran without request nor authorization. Around the same time, Turkey confirmed the deployment of its military in Libya, beginning a new phase of confrontation in the region, and Egypt responding with airstrikes and additional shows of force. The situation in Yemen developed rapidly: taking advantage of the Sunni coalition's moral weakness, Ansar Allah achieved significant progress in forcing the Saudis out of the country in many regions. The state of warfare in northwestern Syria has significantly changed, transforming into the formal delineation of zones of influence of Turkey and the Russian-Iranian-Syrian coalition. This happened amid, and largely due to the weakening of U.S. influence in the region. Ankara is steadily increasing its military presence in the areas under its responsibility and along the contact line. It has taken measures to deter groups linked to Al-Qaeda and other radicals. As a result, the situation in the region is stabilizing, which has allowed Turkey to increasingly exert control over most of Greater Idlib.

ISIS cells remain active in the eastern and southern Syrian regions. Particular processes are taking place in Quneitra and Daraa provinces, where Russian peace initiatives were inconclusive by virtue of the direct destructive influence of Israel in these areas of Syria. In turn, the assassination of Qasem Soleimaniin resulted in a sharp increase in the targeting of American personnel, military and civil infrastructure in Iraq. The U.S. Army was forced to regroup its forces, effectively abandoning a number of its military installations and concentrating available forces at key bases. At the same time, Washington flatly rejected demands from Baghdad for a complete withdrawal of U.S. troops and promised to respond with full-fledged sanctions if Iraq continued to raise this issue. Afghanistan remains stable in its instability. Disturbing news comes from Latin America. Confrontation between China and India flared this year, resulting in sporadic border clashes. This situation seems far from over, as both countries have reinforced their military posture along the disputed border. The aggressive actions of the Trump administration against China deepen global crises, which has become obvious not only to specialists but also to the general public. The relationship between the collective West and the Russian Federation was re-enshrined in "the Cold War state", which seems to have been resurrected once again.

The turbulence of the first quarter of 2020 was overshadowed by a new socio-political process – the corona-crisis, the framework of which integrates various phenomena from the Sars-Cov2 epidemic itself and the subsequent exacerbation of the global economic crisis. The disclosure of substantial social differences that have accumulated in modern capitalist society, lead to a series of incessant protests across the globe. The year 2020 was accompanied by fierce clashes between protesters professing various causes and law enforcement forces in numerous countries. Although on the surface these societal clashes with the state appear disassociated, many share related root causes. A growing, immense wealth inequality, corruption of government at all levels, a lack of any meaningful input into political decision making, and the unmasking of massive censorship via big tech corporations and the main stream media all played a part in igniting societal unrest.

In late 2019 and early 2020 there was little reason for optimistic projections for the near future. However, hardly anyone could anticipate the number of crisis events and developments that had taken place during this year. These phenomena affected every region of the world to some extent.

Nevertheless, Middle East has remained the main source of instability, due to being an arena where global and regional power interests intertwine and clash. The most important line of confrontation is between US and Israel-led forces on the one hand, and Iran and its so called Axis of Resistance. The opposing sides have been locked in an endless spiral of mutual accusations, sanctions, military incidents, and proxy wars, and recently even crossed the threshold into a limited exchange of strikes due to the worsening state of regional confrontation. Russia and Turkey, the latter of which has been distancing itself from Washington due to growing disagreements with "NATO partners" and changes in global trends, also play an important role in the region without directly entering into the confrontation between pro-Israel forces and Iran.

As in the recent years, Syria and Iraq remain the greatest hot-spots. The destruction of ISIS as a terrorist state and the apparent killing of its leader Abu Bakr al-Baghdadi did not end its existence as a terror group. Many ISIS cells and supporting elements actively use regional instability as a chance to preserve the Khalifate's legacy. They remain active mainly along the Syria-Iraq border, and along the eastern bank of the Euphrates in Syria. Camps for the temporary displaced and for the families and relatives of ISIS militants on the territory controlled by the Syrian Democratic Forces (SDF) in north-eastern Syria are also breeding grounds for terrorist ideology. Remarkably, these regions are also where there is direct presence of US forces, or, as in the case of SDF camps, presence of forces supported by the US.

The fertile soil for radicalism also consists of the inability to reach a comprehensive diplomatic solution that would end the Syrian conflict in a way acceptable to all parties. Washington is not interesting in stabilizing Syria because even should Assad leave, it would strengthen the Damascus government that would naturally be allied to Russia and Iran. Opposing Iran and supporting Israel became the cornerstone of US policy during the Trump administration. Consequently, Washington is supporting separatist sentiments of the Kurdish SDF leadership and even allowed it to participate in the plunder of Syrian oil wells in US coalition zone of control in which US firms linked to the Pentagon and US intelligence services are participating. US intelligence also aids Israel in its information and psychological warfare operations, as well as military strikes aimed at undermining Syria and Iranian forces located in the country. In spite of propaganda victories, in practice Israeli efforts had limited success in 2020 as Iran continued to strengthen its positions and military capabilities on its ally's territory. Iran's success in establishing and supporting a land corridor linking Lebanon, Syria, Iraq, and Iraq, plays an important role. Constant expansion of Iran's military presence and infrastructure near the town of al-Bukamal, on the border of Iraq and Syria, demonstrates the importance of the project to Tehran. Tel-Aviv claims that Iran is using that corridor to equip pro-Iranian forces in southern Syria and Lebanon with modern weapons.



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The Palestinian question is also an important one for Israel's leadership and its lobby in Washington. The highly touted "deal of the century" turned out to be no more than an offer for the Palestinians to abandon their struggle for statehood. As expected, this initiative did not lead to a breakthrough in Israeli-Palestinian relations. Rather the opposite, it gave an additional stimulus to Palestinian resistance to the demands that were being imposed. At the same time, Trump administration scored a diplomatic success by forcing the UAE and Bahrain to normalize their relations with Israel, and Saudi Arabia to make its collaboration with Israel public. That was a historic victory for US-Israel policy in the Middle East. Public rapprochement of Arab monarchies and Israel strengthened the positions of Iran as the only country which not only declares itself as Palestine's and Islamic world's defender, but actually puts words into practice. Saudi Arabia's leadership will particularly suffer in terms of loss of popularity among its own population, already damaged by the failed war in Yemen and intensifying confrontation with UAE, both of which are already using their neighbor's weakness to lay a claim to leadership on the Arabian Peninsula.

The list of actors strengthening their positions in the Red Sea includes Russia. In late 2020 it became known that Russia reached an agreement with Sudan on establishing a naval support facility which has every possibility to become a full-blown naval base. This foothold will enable the Russian Navy to increase its presence on key maritime energy supply routes on the Red Sea itself and in the area between Aden and Oman straits. For Russia, which has not had naval infrastructure in that region since USSR's break-up, it is a significant diplomatic breakthrough. For its part. Sudan's leadership apparently views Russia's military presence as a security factor allowing it to balance potential harmful measures by the West.

During all of 2020, Moscow and Beijing continued collaboration on projects in Africa, gradually pushing out traditional post-colonial powers in several key areas. The presence of Russian military specialists in the Central African Republic where they assist the central government in strengthening its forces, escalation of local conflicts, and ensuring the security of Russian economic sectors, is now a universally known fact. Russian diplomacy and specialists are also active in Libya, where UAE and Egypt which support Field Marshal Khaftar, and Turkey which supports the Tripoli government, are clashing. Under the cover of declarations calling for peace and stability, foreign actors are busily carving up Libya's energy resources. For Egypt there's also the crucial matter of fighting terrorism and the presence of groups affiliated with Muslim Brotherhood which Cairo sees as a direct threat to national security.

The Sahel and the vicinity of Lake Chad remain areas where terror groups with links to al-Qaeda and ISIS remain highly active. France's limited military mission in the Sahara-Sahel region has been failure and could not ensure sufficient support for regional forces in order to stabilize the situation. ISIS and Boko-Haram continue to spread chaos in the border areas between Niger, Nigeria, Cameroun, and Chad. In spite of all the efforts by the region's governments, terrorists continue to control sizable territories and represent a significant threat to regional security. The renewed conflict in Ethiopia is a separate problem, in which the federal government was drawn into a civil war against the National Front for the Liberation of Tigray controlling that province. The ethno-feudal conflict between federal and regional elites threatens to destabilize the entire country if it continues.

The explosive situation in Africa shows that post-colonial European powers and the "Global Policeman" which dominated that continent for decades were not interested in addressing the continent's actual problem. Foreign actors were mainly focused on extracting resources and ensuring the interests of a narrow group of politicians and entities affiliated with foreign capitals. Now they are forced to compete with the informal China-Russia bloc which will use a different approach that may be a described as follows: Strengthening of regional stability to protect investments in economic projects. Thus it is no surprise that influential actors are gradually losing to new but more constructive forces.

Tensions within European countries have been on the rise during the past several years, due to both the crisis of the contemporary economic paradigm and to specific regional problems such as the migration crises and the failure of multiculturalism policies, with subsequent radicalization of society.

Unpleasant surprises included several countries' health care and social protection networks' inability to cope with the large number of COVID-19 patients. Entire systems of governance in a number of European countries proved incapable of coping with rapidly developing crises. This is true particularly for countries of southern Europe, such as Italy, Spain, Portugal, and Greece. Among eastern European countries, Hungary's and Romania's economies were particularly badly affected. At the same time, Poland's state institutions and economy showed considerable resilience in the face of crisis. While the Federal Republic of Germany suffered considerable economic damage in the second quarter of 2020, Merkel's government used the situation to inject huge sums of liquidity into the economy, enhanced Germany's position within Europe, and moreover Germany's health care and social protection institutions proved capable and sufficiently resilient.

Coronavirus and subsequent social developments led to the emergence of the so-called "Macron Doctrine" which amounts to an argument that EU must obtain strategic sovereignty. This is consistent with the aims of a significant portion of German national elites. Nevertheless, Berlin officially criticized Macron's statements and has shown willingness to enter into a strategic partnership with Biden Administration's United States as a junior partner. However, even FRG's current leadership understands the dangers of lack of strategic sovereignty in an era of America's decline as the world policeman. Against the backdrop of a global economic crisis, US-EU relations are ineluctably drifting from a state of partnership to one of competition or even rivalry. In general, the first half of 2020 demonstrated the vital necessity of further development of European institutions.

The second half of 2020 was marked by fierce mass protests in Germany, France, Great Britain, and other European countries. The level of violence employed by both the protesters and law enforcement was unprecedented and is not comparable to the level of violence seen during protests in Russia, Belarus, and even Kirgizstan. Mainstream media did their best to depreciate and conceal the scale of what was happening. If the situation continues to develop in the same vein, there is every chance that in the future, a reality that can be described as a digital concentration camp may form in Europe.

World media, for its part, paid particular attention to the situation in Belarus, where protests have entered their fourth month following the August 9, 2020 presidential elections. Belarusian protests have been characterized by their direction from outside the country and choreographed nature. The command center of protest activities is officially located in Poland. This fact is in and of itself unprecedented in Europe's contemporary history. Even during Ukraine's Euromaidan, external forces formally refused to act as puppetmasters.

Belarus' genuinely existing socio-economic problems have led to a rift within society that is now divided into two irreconcilable camps: proponents of reforms vs. adherents of the current government. Law enforcement forces which are recruited from among President Lukashenko's supporters, have acted forcefully and occasionally harshly. Still, the number of casualties is far lower than, for example, in protests in France or United States.

Ukraine itself, where Western-backed "democratic forces" have already won, remains the main point of instability in Eastern Europe. The Zelenskiy administration came to power under slogans about the need to end the conflict in eastern Ukraine and rebuild the country. In practice, the new government continued to pursue the policy aimed at maintaining military tension in the region in the interests of its external sponsors and personal enrichment.

For the United States, 2020 turned out to be a watershed year for both domestic and foreign policy. Events of this year were a reflection of Trump Administration's protectionist foreign policy and a national-oriented approach in domestic and economic policy, which ensured an intense clash with the majority of Washington Establishment acting in the interests of global capital.

In addition to the unresolved traditional problems, America's problems were made worse by two crises, COVID-19 spread and BLM movement protests. They ensured America's problems reached a state of critical mass.

One can and should have a critical attitude toward President Trump's actions, but one should not doubt the sincerity of his efforts to turn the slogan Make America Great Again into reality. One should likewise not doubt that his successor will adhere to other values. Whether it's Black Lives Matter or Make Global Moneymen Even Stronger, or Russia Must Be Destroyed, or something even more exotic, it will not change the fact America we've known in the last half century died in 2020. A telling sign of its death throes is the use of "orange revolution" technologies developed against inconvenient political regimes. This demonstrated that currently the United States is ruled not by national elites but by global investors to whom the interests of ordinary Americans are alien.

This puts the terrifying consequences of COVID-19 in a new light. The disease has struck the most vulnerable layers of US society. According to official statistics, United States has had about 20 million cases and over 330,000 deaths. The vast majority are low-income inhabitants of mega-cities. At the same time, the wealthiest Americans have greatly increased their wealth by exploiting the unfolding crisis for their own personal benefit. The level of polarization of US society has assumed frightening proportions. Conservatives against liberals, blacks against whites, LGBT against traditionalists, everything that used to be within the realm of public debate and peaceful protest has devolved into direct, often violent, clashes. One can observe unprecedented levels of aggression and violence from all sides.

In foreign policy, United States continued to undermine the international security system based on international treaties. There are now signs that one of the last legal bastions of international security, the New START treaty, is under attack. US international behavior has prompted criticism from NATO allies. There are growing differences of opinion on political matters with France and economic ones with Germany. The dialogue with Eastern Mediterranean's most powerful military actor Turkey periodically showed a sharp clash of interests.

Against that backdrop, United States spent 2020 continuously increasing its military presence in Eastern Europe and the Black Sea basin. Additional US forces and assets were deployed in direct proximity to Russia's borders. The number of offensive military exercises under US leadership or with US participation has considerably increased.

In the Arctic, the United States is acting as a spoiler, unhappy with the current state of affairs. It aims to extend its control over natural resources in the region, establish permanent presence in other countries' exclusive economic zones (EEZ) through the use of the so-called "freedom of navigation operations" (FONOPs), and continue to encircle Russia with ballistic missile defense (BMD) sites and platforms.

In view of the urgent and evident US preparations to be able to fight and prevail in a war against a nuclear adversary, by defeating the adversary's nuclear arsenal through the combination of precision non-nuclear strikes, Arctic becomes a key region in this military planning. The 2020 sortie by a force of US Navy BMD-capable AEGIS destroyers into the Barents Sea, the first such mission since the end of the Cold War over two decades ago, shows the interest United States has in projecting BMD capabilities into regions north of Russia's coastline, where they might be able to effect boost-phase interceptions of Russian ballistic missiles that would be launched in retaliatory strikes against the United States. US operational planning for the Arctic in all likelihood resembles that for South China Sea, with only a few corrections for climate.

In Latin America, the year of 2020 was marked by the intensification Washington efforts aimed at undermining the political regimes that it considered to be in the opposition to the existing world order.

Venezuela remained one of the main points of the US foreign policy agenda. During the entire year, the government of Nicolas Maduro was experiencing an increasing sanction, political and clandestine pressure. In May, Venezuelan security forces even neutralized a group of US mercenaries that sneaked into the country to stage the coup in the interests of the Washington-controlled opposition and its public leader Juan Guaido. However, despite the recognition of Guaido as the president of Venezuela by the US and its allies, regime-change attempts, and the deep economic crisis, the Maduro government survived.

This case demonstrated that the decisive leadership together having the support of a notable part of the population and working links with alternative global centers of power could allow any country to resist to globalists' attacks. The US leadership itself claims that instead of surrendering, Venezuela turned itself into a foothold of its geopolitical opponents: China, Russia, Iran and even Hezbollah. While this evaluation of the current situation in Venezuela is at least partly a propaganda exaggeration to demonize the 'anti-democratic regime' of Maduro, it highlights parts of the really existing situation.

The turbulence in Bolivia ended in a similar manner, when the right wing government that gained power as a result of the coup in 2019 demonstrated its inability to rule the country and lost power in 2020. The expelled president, Evo Morales, returned to the country and the Movement for Socialism secured their dominant position in Bolivia thanks to the wide-scale support from the indigenous population. Nonetheless, it is unlikely that these developments in Venezuela and Bolivia would allow to reverse the general trend towards the destabilization in South America.

The regional economic and social turbulence is strengthened by the high level of organized crime and the developing global crisis that sharpened the existing contradictions among key global and regional players. This creates conditions for the intensification of existing conflicts. For example, the peace process between the FARC and the federal government is on the brink of the collapse in Colombia. Local sources and media accuse the government and affiliated militias of detentions and killings of leaders of local communities and former FARC members in violation of the existing peace agreement. This violence undermine the fragile peace process and sets conditions for the resumption of the armed struggle by FARC and its supporters. Mexico remains the hub for illegal migration, drug and weapon trafficking just on the border with the United States. Large parts of the country are in the state of chaos and are in fact controlled by violent drug cartels and their mercenaries. Brazil is in the permanent state of political and economic crisis amid the rise of street crime.

These negative tendencies affect almost all states of the region. The deepening global economic crisis and the coronavirus panic add oil to the flame of instability.

Countries of South America are not the only one suffering from the crisis. It also shapes relations between global powers. Outcomes of the ongoing coronavirus outbreak and the global economic crisis contributed to the hardening of the standoff between the United States and China.

Washington and Beijing have insoluble contradictions. The main of them is that China has been slowly but steadily winning the race for the economic and technological dominance simultaneously boosting own military capabilities to defend the victory in the case of a military escalation. The sanction, tariff and diplomatic pressure campaign launched by the White House on China since the very start of the Trump Presidency is a result of the understanding of these contradictions by the Trump administration and its efforts to guarantee the leading US position in the face of the global economic recession. The US posture towards the South China Sea issues, the political situation in Hong Kong, human rights issues in Xinjiang, the unprecedented weapon sales to Taiwan, the support of the militarization of Japan and many other questions is a part of the ongoing standoff. Summing up, Washington has been seeking to isolate China through a network of local military alliances and contain its economic expansion through sanction, propaganda and clandestine operations.

The contradictions between Beijing and Washington regarding North Korea and its nuclear and ballistic missile programs are a part of the same chain of events. Despite the public rhetoric, the United States is not interested in the full settlement of the Korea conflict. Such a scenario that may include the reunion of the North and South will remove the formal justification of the US military buildup. This is why the White House opted to not fulfill its part of the deal with the North once again assuring the North Korean leadership that its decision to develop its nuclear and missile programs and further.

Statements of Chinese diplomats and top official demonstrate that Beijing fully understands the position of Washington. At the same time, China has proven that it is not going to abandon its policies aimed at gaining the position of the main leading power in the post-unipolar world. Therefore, the conflict between the sides will continue escalating in the coming years regardless the administration in the White House and the composition of the Senate and Congress. Joe Biden and forces behind his rigged victory in the presidential election will likely turn back from Trump's national-oriented economic policy and 'normalize' relations with China once again reconsidering Russia as Enemy #1. This will not help to remove the insoluble contradictions with China and reverse the trend towards the confrontation. However, the Biden administration with help from mainstream media will likely succeed in hiding this fact from the public by fueling the time-honored anti-Russian hysteria.

As to Russia itself, it ended the year of 2020 in its ordinary manner for the recent years: successful and relatively successful foreign policy actions amid the complicated economic, social and political situation inside the country. The sanction pressure, coronavirus-related restrictions and the global economic crisis slowed down the Russian economy and contributed to the dissatisfaction of the population with internal economic and social policies of the government. The crisis was also used by external actors that carried out a series of provocations and propaganda campaigns aimed at undermining the stability in the country ahead of the legislative election scheduled for September 2021. The trend on the increase of sanction pressure, including tapering large infrastructure projects like the Nord Stream 2, and expansion of public and clandestine destabilization efforts inside Russia was visible during the entire year and will likely increase in 2021. In the event of success, these efforts will not only reverse Russian foreign policy achievements of the previous years, but could also put in danger the existence of the Russian statehood in the current format.

Among the important foreign policy developments of 2020 underreported by mainstream media is the agreement on the creation of a Russian naval facility on the coast of the Red Sea in Sudan. If this project is fully implemented, this will contribute to the rapid growth of Russian influence in Africa. Russian naval forces will also be able to increase their presence in the Red Sea and in the area between the Gulf of Aden and the Gulf of Oman. Both of these areas are the core of the current maritime energy supply routes. The new base will also serve as a foothold of Russia in the case of a standoff with naval forces of NATO member states that actively use their military infrastructure in Djibouti to project power in the region. It is expected that the United States (regardless of the administration in the White House) will try to prevent the Russian expansion in the region at any cost. For an active foreign policy of Russia, the creation of the naval facility in Sudan surpasses all public and clandestine actions in Libya in recent years. From the point of view of protecting Russian national interests in the Global Oceans, this step is even more important than the creation of the permanent air and naval bases in Syria.

As well as its counterparts in Washington and Beijing, Moscow contributes notable efforts to the modernization of its military capabilities, with special attention to the strategic nuclear forces and hypersonic weapons. The Russians see their ability to inflict unacceptable damage on a potential enemy among the key factors preventing a full-scale military aggression against them from NATO. The United Sates, China and Russia are in fact now involved in the hypersonic weapon race that also includes the development of means and measures to counter a potential strike with hypersonic weapons.

The new war in Nagorno-Karabakh became an important factor shaping the balance of power in the South Caucasus. The Turkish-Azerbaijani bloc achieved a sweeping victory over Armenian forces and only the involvement of the Russian diplomacy the further deployment of the peacekeepers allowed to put an end to the violence and rescue the vestiges of the self-proclaimed Armenian Republic of Artsakh. Russia successfully played a role of mediator and officially established a military presence on the sovereign territory of Azerbaijan for the next 5 years. The new Karabakh war also gave an additional impulse in the Turkish-Azerbaijani economic and military cooperation, while the pro-Western regime in Armenia that expectedly led the Armenian nation to the tragedy is balancing on the brink of collapse.

The Central Asia traditionally remained one of the areas of instability around the world with the permanent threat of militancy and humanitarian crisis. Nonetheless, despite forecasts of some analysis, the year of 2020 did not become the year of the creation of ISIS' Caliphate 2.0 in the region. An important role in preventing this was played by the Taliban that additionally to securing its military victories over the US-led coalition and the US-backed Kabul government, was fiercely fighting ISIS cells appearing in Afghanistan. The Taliban, which controls a large part of Afghanistan, was also legalized on the international scene by direct talks with the United States. The role of the Taliban will grow and further with the reduction of the US military presence.

While some media already branded the year of 2020 as one of the worst in the modern history, there are no indications that the year of 2021 will be any brighter or the global crises and regional instability will magically disappear by themselves. Instead, most likely 2020 was just a prelude for the upcoming global shocks and the acute standoff for markets and resources in the environment of censorship, legalized total surveillance, violations of human rights under 'democratic' and 'social' slogans' and proxy wars.

The instability in Europe will likely be fueled by the increasing cultural-civilizational conflict and the new wave of newcomers that have acute ideological and cultural differences with the European civilization. The influx of newcomers is expected due to demographic factors and the complicated security, social situation in the Middle East and Africa. Europe will likely try to deal with the influx of newcomers by introducing new movement and border restrictions under the brand of fighting coronavirus. Nonetheless, the expected growth of the migration pressure will likely contribute to the negative tendencies that could blow up Europe from inside.

The collapse of the international security system, including key treaties limiting the development and deployment of strategic weapons, indicates that the new detente on the global scene will remain an improbable scenario. Instead, the world will likely move further towards the escalation scenario as at least a part of the current global leadership considers a large war a useful tool to overcome the economic crisis and capture new markets. Russia, with its large territories, rich resources, a relatively low population, seems to be a worthwhile target. At the same time, China will likely exploit the escalating conflict between Moscow and the US-led bloc to even further increase its global positions. In these conditions, many will depend on the new global order and main alliances within it that are appearing from the collapsing unipolar system. The United States has already lost its unconditional dominant role on the international scene, but the so-called multipolar world order has not appeared yet. The format of this new multipolar world will likely have a critical impact on the further developments around the globe and positions of key players involved in the never-ending Big Game.

* * *

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[Dec 05, 2020] Poland slaps huge fine on Russian gas pipeline that doesn't even cross its borders -- RT Business News

Dec 05, 2020 |

Poland slaps huge fine on Russian gas pipeline that doesn't even cross its borders 7 Oct, 2020 11:06 Get short URL Poland slaps huge fine on Russian gas pipeline that doesn't even cross its borders © Gazprom / Nord Stream 2 45 Follow RT on RT Poland's antitrust watchdog UOKiK said on Wednesday it has imposed a 29 billion-zloty ($7.6 billion) fine on Russia's Gazprom over the Nord Stream 2 gas pipeline, designed to boost gas supplies to the EU.

According to the regulator, the direct pipeline from Russia to Germany impedes competition on European Union energy markets and "violates the interests of consumers." The fine amounts to 10 percent of Gazprom's annual revenues – the maximum allowed penalty. Other companies participating in the construction of Nord Stream 2 have been fined $100 million. UOKiK gave Gazprom and its partners 30 days to terminate financing agreements and "restore" competition.

"The construction of Nord Stream 2 is a clear violation of market regulations," UOKiK head Tomasz Chróstny said in Warsaw on Wednesday, as cited by Bloomberg. Gas prices for consumers must be "the result of fair competition, and, once Nord Stream 2 is operational, it's likely that gas prices will increase and there'll be a risk of interruption to supplies," he said.

ALSO ON RT.COM Full stream ahead! Denmark removes final hurdle for Russian gas pipeline to Europe

Warsaw has long been opposing the expansion of the gas link directly connecting Russia with Germany, Europe's biggest market for the fuel, arguing it would deepen Europe's dependence on Russian energy. Meanwhile, many European nations have stressed that they want to diversify their energy sources, and Nord Stream 2 could be one of the ways to achieve that.

In 2019, Poland's President Andrzej Duda met US President Donald Trump to discuss the possibility of halting the implementation of the Nord Stream 2 project. Warsaw also inked several contracts with American companies to replace Russian supplies. The intention was to make Poland the future center for the re-export of US liquefied natural gas (LNG) in the region, according to US Ambassador to Poland Georgette Mosbacher.

ALSO ON RT.COM Washington & Warsaw make pact to obstruct Russia's Nord Stream 2 gas pipeline

The US administration has repeatedly criticized the Nord Stream 2 project, aiming to derail it in order to boost sales of American LNG to Europe.

The construction of the project's two pipelines, which will extend from the Russian coast to Germany and on to other European countries through the Baltic Sea, is nearing completion. It will have the capacity to deliver 55 billion cubic meters of gas per year, and Berlin has insisted it will help Germany meet its growing energy demand as it phases out coal and nuclear power.

[Nov 28, 2020] Deplorables, or Expendables

Notable quotes:
"... The Expendables: How the Middle Class got Screwed by Globalization ..."
"... The Innovation Illusion ..."
"... The Expendables ..."
"... Napoleon Linarthatos is a writer based in New York. ..."
Nov 28, 2020 |

Home / Articles / Economy / Deplorables, Or Expendables? ECONOMY Deplorables, Or Expendables?

Rubin offers some valuable, albeit well-known, critiques of globalized trade, but doesn't go far beyond that. (By momente/Shutterstock)

NOVEMBER 26, 2020


12:01 AM


Back in 2013 a group of Apple employees decided to sue the global behemoth. Every day, after they were clocking out, they were required to go through a corporate screening where their personal belongings were examined. It was a process required and administered by Apple. But Apple did not want to pay its employees for the time it had required them to spend. It could be anywhere from 40 to 80 hours a year that an employee spent going through that process. What made Apple so confident in brazenly nickel-and-diming its geniuses?

Jeff Rubin, author of The Expendables: How the Middle Class got Screwed by Globalization , has an answer to the above question that is easily deduced from the subtitle of his book. The socio-economic arrangements produced by globalization have made labor the most flexible and plentiful resource in the economic process. The pressure on the middle class, and all that falls below it, has been so persistent and powerful, that now " only 37 percent of Americans believe their children will be better off financially than they themselves are. Only 24 percent in Canada or Australia feel the same. And in France, that figure dips to only 9 percent." And "[i]n the mid-1980s it would have taken a typical middle-income family with two children less than seven years of income to save up to buy a home; it now takes more than ten years. At the same time, housing expenditures that accounted for a quarter of most middle-class household incomes in the 1990s now account for a third ."

The story of globalization is engraved in the " shuttered factories across North America, the boarded-up main streets, the empty union halls." Rubin does admit that there are benefits accrued from globalization, billions have been lifted up out of poverty in what was previously known as the third world, wealth has been created, certain efficiencies have been achieved. The question for someone in the western world is how much more of a price he's willing to pay to keep the whole thing going on, especially as we have entered a phase of diminishing returns for almost all involved.

As Joel Kotkin has written, "[e]ven in Asia, there are signs of social collapse. According to a recent survey by the Korea Institute for Health and Social Affairs, half of all Korean households have experienced some form of family crisis, many involving debt, job loss, or issues relating to child or elder care." And "[i]n "classless" China, a massive class of migrant workers -- over 280 million -- inhabit a netherworld of substandard housing, unsteady work, and miserable environmental conditions, all after leaving their offspring behind in villages. These new serfs vastly outnumber the Westernized, highly educated Chinese whom most Westerners encounter. " "Rather than replicating the middle-class growth of post–World War II America and Europe, notes researcher Nan Chen, 'China appears to have skipped that stage altogether and headed straight for a model of extraordinary productivity but disproportionately distributed wealth like the contemporary United States.'"

Although Rubin concedes to the globalist side higher GDP growth, even that does not seem to be so true for the western world in the last couple decades. Per Nicholas Eberstadt, in "Our Miserable 21st Century," "[b]etween late 2000 and late 2007, per capita GDP growth averaged less than 1.5 percent per annum." "With postwar, pre-21st-century rates for the years 2000–2016, per capita GDP in America would be more than 20 percent higher than it is today."

Stagnation seems to be a more apt characterization of the situation we are in. Fredrik Erixon in his superb The Innovation Illusion , argues that "[p]roductivity growth is going south, and has been doing so for several decades." "Between 1995 and 2009, Europe's labor productivity grew by just 1 percent annually." Noting that "[t]he four factors that have made Western capitalism dull and hidebound are gray capital, corporate managerialism, globalization, and complex regulation."

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Contrary to popular belief, globalization has functioned as a substitute for innovation and growth. With globalization on the march, the western ruling class could continue to indulge in its most preferred activities, regulation and taxation, in an environment where both of these political addictions appeared sustainable. Non-western elites could perpetuate their authoritarian regimes, garnering growth and legitimacy, from the access to the western markets. Their copy-and-paste method of "innovation" from western firms would fit well with an indigenous business class composed of mostly insiders and ex-regime apparatchiks.

There are plenty of criticisms that can be laid at the feet of globalization. The issue with Rubin's book is that is does not advance very much beyond some timeworn condemnations of it. One gets the sense that the value of this book is merely in its audacity to question the conventional wisdom on the issue at hand. Rubin, who is somewhat sympathetic to Donald Trump, seems to be much closer to someone like Bernie Sanders, especially an earlier version of Sanders that dared to talk about the debilitating effects of immigration on the working class.

Like Sanders, Rubin starts to get blurry as he goes from the condemnation phase to the programmatic offers available. What exactly would be his tariffs policy, how far he would go? What would be the tradeoffs of this policy? Where we could demarcate a reasonable fair environment for the worker and industry and where we would start to create another type of a stagnation trap for the whole economy? All these would be important questions for Rubin to grapple with and would give to his criticisms more gravitas.

It would have also been of value if he had dealt more deeply with the policies of the Trump administration. On the one hand, the Trump administration cracked down on illegal and legal immigration. It also started to use tariffs and other trade measures as a way to boost industry and employment. On the other hand, it reduced personal and corporate taxes and it deregulated to the utmost degree possible. It was a kind of 'walled' laisser-faire that seemed to work until Covid-19 hit. Real household income in the U.S. increased $4,379 in 2019 over 2018. It was "more income growth in one year than in the 8 years of Obama-Biden." And during Trump's time, the lowest paid workers started not to just be making gains, but making gains faster than the wealthy. "Low-wage workers are getting bigger raises than bosses" ran a CBS News headline .

Rubin seems to view tax cuts and deregulation as another giveaway to large corporations. But these large corporations are just fine with high taxation, since they have a choice as to when and where they get taxed. Regulation is also more of a tool than a burden for them. It's a very expedient means for eliminating competitors and competition, a useful barrier to entry for any upstart innovator that would upend the industry they are in. Besides, if high taxation and regulation were a kind of antidote to globalization, then France would be in a much better shape than it appears to be. But France seems to be doing worse than anybody else. In the aforementioned poll about if their "children will be better off financially than they themselves are" France was at the bottom in the group of countries that Rubin cited. The recent events with the yellow-vests movement indicate a very deep dissatisfaction and pessimism of its middle and working class.

Moreover, there does not seem to be much hostility or even much contention between government bureaucracies and the upper echelons of the corporate world. Something that Rubin's politics and economics would necessitate. And cultural and political like-mindedness between government bureaucracies and the managerial class of large corporations is not just limited to the mutual embrace of woke politics. It seems that there is a cross pollination of a much broader set of ideas and habits between bureaucrats and the managerial class. For instance, Erixon notes that "[c]orporate managers shy away from uncertainty but turn companies into bureaucratic entities free from entrepreneurial habits. They strive to make capitalism predictable." Striving for predictability is a very bureaucratic state of mind.

In Rubin's book, missed trends like that make his perspective to feel a bit dated. There is still valuable information in The Expendables . Rubin does know a lot about international trade deals. For instance, a point that is often ignored in the press about international trade agreements is that "[i]f you're designated a "developing" country, you get to protect your own industries with tariffs that are a multiple of those that developed economies are allowed to use to protect their workers." A rule that China exploits to the utmost.

Meanwhile, Apple, after its apparent lawsuit loss on the case with its employees in California, now seems committed to another fight with the expendables of another locale. The Washington Post reported that "Apple lobbyists are trying to weaken a bill aimed at preventing forced labor in China, according to two congressional staffers familiar with the matter, highlighting the clash between its business imperatives and its official stance on human rights." "The bill aims to end the use of forced Uighur labor in the Xinjiang region of China ." The war against the expendables never ends.

Napoleon Linarthatos is a writer based in New York.

[Nov 11, 2020] With or Without - Kunstler

Nov 11, 2020 |

Oil production, which stood just under 13 million barrels-a-day at its peak November, 2019, is down over 2 million barrels a day now, and will be sinking to about 7 million barrels-a-day in 2021, which is far short of what we use. Shale oil is a bust. It costs too much to get out of the ground and the companies that put their mojo into shale can't make any money at it, and can't pay off their loans, and won't get new loans to continue operations. So, the whole industry is going to shit. Oil is what has supported the US economy for a hundred years, and it's over. Our attempt to compensate for that quandary by borrowing more and more money at every level is also drawing to a close. It will break the bond markets, the dollar, and the banks. This is the essence of the long emergency and we're entering the heart of the storm now.

[Nov 07, 2020] Tramp role in Syria and Iraq

Nov 07, 2020 |

Jackrabbit , Nov 7 2020 15:08 utc | 56

RSH's warning that Trump could still start a war should be taken very seriously. Trump has vowed that he will never allow Iran to have a nuclear weapon. Will he leave office without ENSURING that they cannot?

Israel Warns Of Coming War With Iran If Biden Wins As Trump Calls

I don't think for a minute think that Zionist Biden will do anything to upset Israel. But the election of Biden is a convenient excuse for Trump to start a war (probably based on a false flag of some sort) that Biden (or Kamala-Hillary) will "inherit".


Don Bacon , Nov 7 2020 15:14 utc | 57

@ pnyx #43
. . .on Biden. Just think of the warmongering role he played for the Iraq war. The Neocons would have an easier time with Biden than with Tronald
Yes. Biden is a Clintonite, Trump was anti-Clinton.
The US war in Iraq - Operation Iraqi Freedom - with its death, destruction and displacement has been rightly called the worst US foreign policy move ever.
The Clintons started it, and then promoted it with Biden's assistance as Chair of the Senate Foreign Relations Committee.
President Clinton signed the Iraq Liberation Act into law on October 31, 1998.
On December 16, 1998, President Bill Clinton announces he has ordered air strikes against Iraq because it refused to cooperate with United Nations (U.N.) weapons inspectors.
David , Nov 7 2020 15:35 utc | 66

Trump's foreign policies were remarkably different? How? He assassinated an Iranian general, which nearly had the US enter into a hot war with Iran, bombed Syria twice, put additional sanctions on Iran, Venezuela, Russia and the DPRK. Trump's State Department has successfully enacted regime change in Zimbabwe, Sudan, El Salvador, Chile, Honduras, Bolivia (Mike Pompeo congratulating Luis Arce on his win -- very suspicious), and is trying regime change in Hong Kong, Belarus, Venezuela, Nicaragua, Iran, Eritrea, and Zimbabwe again, and as of late, Nigeria.

You could argue that Trump wants Iran to be somewhat stronger so he can sell more weapons to his MIC buddies and profit that way, therefore he pulled out of the Iran nuclear deal, and the weapons import/export sanctions on Iran expired. But that's a different and more brash method of managing Empire. It's different from Biden's "strategic de-escalation" policy with Iran via the Iran nuclear deal, but not that one that necessarily yields better results for Iran in the long term.

dave , Nov 7 2020 15:35 utc | 67

Calm down folks, the elected officials in the US have been puppets of the elite for the entire history of the country.
The problem we're facing is within the elite community and far above any government's control.

They didn't legalize drone striking "terrorists" any where on the globe by accident.
This means the elite are terrified of the fact that the internet and Trump both have exposed them for the morally bankrupt, greedy, mass murdering psychopaths they truly are.

The accidental presidency of Trump made them realize that their useful idiots(elected officials) where more idiots than useful and that they had to use the state sponsored monopolies in the press as well as their privately controlled publicly funded covert community to steer the narrative away from actual reality into their alternative commoditized version of reality.

Trump was never trying to defend America from the elite for the common man. He was trying to exploit the elite who had rejected him and his father for decades as well as cash in on their predicament in order to pay off his debts and start his own reality TV network.

I agree Trump was useful and informative but in the end he, like us is just along for the ride.

Don't do anything rash and don't for one second think a regime change in America is a rare occurrence. Remember the Kennedy's ?

The only way to win is to not become one of the elite's useful idiots by lashing out against another citizen. Poor and middle class only get the illusion they help decide policy.
The policy is decided and auctioned off within the billionaire funded think tanks and sent to the useful idiots in DC to be rubber stamped in order to trick you into thinking the legislative branch is legitimate. These people could f*ck up a two car parade and prove it over and over again.

Stay sane folks, the motives haven't changed in centuries and the elite are far more scared of us than they are the other elite's because they all know they're all cowards.

David , Nov 7 2020 15:37 utc | 69

In addition, considering Trump was supposedly a Russian puppet, Congress under his admin passed a bill which allowed the US to arm Ukraine against Russia even more.

GeorgeV , Nov 7 2020 15:39 utc | 70

Wonderful and thought provoking analysis of current political affairs b. However I would like to add that Biden and Trump are the products of political trends that have deep roots in modern US and world political affairs that have been ongoing for some 100 years or more. Biden and Trump did not occur in a vacuum. Both are products of the two world wars that were fought in the last century. More recently, the US since 1940 and continuing to the present day, has been actively preparing or fighting a major war somewhere on this planet. This development has in turn created a vast military and civilian bureaucracy that constantly needs to be fed a diet of real or imagined threats in order to survive.

[Nov 06, 2020] Did the Iraq War Cause the Great Recession?'

Highly recommended!
Iran war might be too much for the US economy
Apr 07, 2013 |

Moscow Exile ,

April 7, 2013 at 12:46 am
Western hypocrisy revealed 10 years after the event in today's Independent: "Tony Blair and Iraq: The damning evidence" . And they go on and on about those wicked, evil Russians and their tyrannical leader causing death and destruction Syria by their "support" of the Assad government whilst the West arms the "freedom fighters" there.

[Nov 06, 2020] USA Hegemony and Decline

Mar 01, 2010 |

Issue 3/2010 of the review of Geopolitics "Eurasia", entitled USA: HEGEMONY AND DECLINE , has been released. This 288-page volume contains 24 articles about the USA, a still-hegemonic power in decline, on the scene of the transition from unipolarism to the new multipolarist order. Here follows a list and a short synthesis of each article.

Tiberio Graziani, USA, Turkey and the crisis of the western system

After history put an end to the unipolar moment, the western system led by USA seems to have entered an irreversible crisis. The economic and financial downfall and the loss of a secure pillar of the western geopolitical scene like Turkey mark the end of the US driving force. The USA, today, have to take an epochal decision: either shelving the project of world supremacy, which means sharing decision-making regarding international politics and economics with other global actors, or insist on their supremacy plan and even risk their survival as nation. One or the other will be motivated by the relationships that will be built, on the middle and long term, between the lobbies which are conditioning American foreign policy and by the evolution of the multipolarist process.

T. Graziani is managing editor of "Eurasia".

Fabio Falchi, The mirror of knowledge. Giorgio Colli and Eurasianism

This essay aims to show, also through a short exposition of Giorgio Colli's theoretical philosophy, not only that he has the merit, thanks to his talent of "pondering philologist", to have caught the deep relation between mysticism and logic in the "Greek knowledge", but above all that the way he is interpreting the thought of the "pre-Socratic" – an interpretation characterized by several and meaningful references to the Indian philosophy – is extremely important for the Eurasianism, if it's true that "Eurasia" is in the first place a "spiritual concept". In this perspective, it's not important that Colli cannot be defined an "Eurasiatist" or the fact that probably he himself had refused to define himself this way. What matters is the path pointed out by his philosophical speech, so that it's possible to leave behind obsolete and "incapacitating" dichotomies.

F. Falchi is a contributor to "Eurasia".

Phil Kelly, Geopolitics of the United States

The scope of this essay is to identify the different and typical elements of the traditional US geopolitics. In its path is reflected on the most relevant spatial characteristics in order to delineate the traditional aspects of North American geopolitics, rather than focusing on current international affairs; in spite of this, it comes to conclusion with some observations about the present American and global geopolitics.

P. Kelly is teaching at the University of Emporia (Texas, USA) and member of the Scientific Committee of "Eurasia".

Daniele Scalea, How an "empire" has risen (and how it will crumble soon)

Today's United States, in origin, were an united group of colonies of a small underdeveloped island; nevertheless, in a few centuries, they have become the first and the only world superpower. In this essay are retraced the geopolitical and strategic reasons that led to the rise of the original thirteen colonies, to their independence and expansion in North America; the rise of the USA and their informal empire are analyzed and how the passage from isolationism to hegemonism, that was not ineluctable, is leading them to lose it.

D. Scalea is editor of "Eurasia".

F. William Engdahl, The USA's geopolitical position today

At the end of the first decade of the 21th century it's time to locate the United States in the political, economic and above all geopolitical world context. It's clear to every impartial observer that the emerging giant, proclaimed in 1941 by Henry Luce, "the Time-Life" publisher, as the dawn of the "American Century", is today, in 2010, a nation and a power whose foundations themselves crumble. In this short essay are analyzed the particular nature of this disintegration and its implications.

F.W. Engdahl is associate director of "Global Research" and member of the Scientific Committee of "Eurasia".

Fabio Mini, Projects and debts

The Americans are no more able to recognize their deficiencies and vulnerabilities: they act as if they still controlled the entire world, when in reality they have lost great part of their autonomy relating to multinationals which control the economy and to national or transnational bodies they are indebted to. To the debt financing must be added the political debts, acquired to nations which are not secure thanks to the US politics of force: Iraq, Afghanistan, Israel, Palestine, Somalia, Rwanda and even Europe. This essay explains how power is the destroying drug of the USA, and how the "New American Century" has come to an end before coming to life.

F. Mini is a retired Lieutenant General of the Italian Army, he led the KFOR and the NATO's Command Allied Forces Southern Europe".

Eleonora Peruccacci, The evolution of USA-Russia relationships after the downfall of the bipolar system

The idea – to which Keohane already drew attention – that power is now based on the influence of ideas, on using cleverly skills like persuasion and cooptation, on the ability to manipulate mass communication as well, rather than on the traditional attributes of military force and wealth, is useful for the analysis of this essay, in which it is tried to comprehend how, after the end of the bipolar system, the relationships between the two ex world superpowers, USA and Russia, developed and changed, going through the stages of 4 treaties on nuclear disarmament.

E. Peruccacci, MA in International Relations, contributes to "Eurasia".

Spartaco Alfredo Puttini, China, the sea and the United States: the Sino-American naval antagonism

The development of a modern military fleet in the People's Republic of China has given rise to serious concerns in Washington and adds an element of tension to their relations. On the horizon beckons the danger of a naval antagonism between the two giants that could represent one of the more serious and meaningful elements for the international order of the 21th century. In this essay is talked about the Chinese willingness to develop marine force, about the stages of the fleet modernization, about the importance that Sino-American naval antagonism can assume in the near future.

S.A. Puttini, MA in History.

Chiara Felli, A miracle for Obama's "new beginning"

Israeli-American relations seem to be at a crossroads again: new negotiations in order to achieve the much desired peace in Near East hold the balance of power. In Washington, the atmosphere is tense, in contemplation of twelve months of negotiations the danger of a possible immediate bankruptcy outcome is reduced but concerns about the current state of the international comparison raise. Will the USA be finally able to play on their strong position as influential mediators? Does Israeli regional isolation risk worsening following the blind pursuit of nationalistic strategies? Are we really close to the "great compromise" and to the calm after a decade-long storm?

C. Felli, MA in International relations, contributes to "Eurasia".

Francesco Brunello Zanitti, American Neoconservatism and Israeli Neo-revisionism: a comparison

The G.W Bush Jr. Presidency has been strongly influenced by a political movement, commonly known as Neoconservatism, which started at the beginning of the '60s and was already significant during the Ronald Reagan Presidency. The neoconservatives have inspired in particular the recent North American politics in the Near East. The last decade, concerning Israeli politics, has been characterized by the strengthening of the right-wing party, the Likud, which, since its origins, has been not prone to any form of compromise with the Arab world. This essay offers a comparison between American Neoconservatism and Israeli Neo-revisionism, identifying various similarities.

F.Brunello Zanitti, MA in History of society and contemporary culture.

Julien Mercille, The fight against drugs in Afghanistan: a critical interpretation

This article offers a critical interpretation of the "fight against drugs" waged by the United States in Afghanistan since 2001, in contrast to the conventional view proposed by some of the most representative authors. While the conventional interpretation takes for granted that the US are leading a fight in Afghanistan against drugs in order to reduce their consumption in the West and to weaken the Taliban, who are closely linked to narcotics traffic, in this article it's argued that in fact there are few signs from Washington of a real and concrete struggle against drugs . The rhetoric of the fight against drugs is largely motivated by the need to justify military intervention in Afghanistan and the fight against insurgent groups opposing to American hegemony in the region, rather than by a genuine concern about drugs themselves.

J. Mercille is Professor at the National University of Ireland.

Matías Magnasco, Geopolitics of the United States in the Southern Cone

The South American region is nowadays a geostrategic scenario of great importance and will grow in importance in the future because of the race for raw materials (oil, gas and drinking-water) and the rise of Brazil as a regional and world power. South America must look with concern to US withdrawal from those difficult regions, such as Iraq and Afghanistan, and from those where Russia and China have virtually overcome their influence, because this reopens the possibility of looking back at their "backyard" and their "mare nostrum" ( the Caribbean Sea).

M. Magnasco is Director of the Argentine Centre of International Studies.

Jean-Claude Paye, The euro crisis and the transatlantic market

The offensive against the euro, implemented by the financial markets during the months of April and May 2010, is not simply an episode in the economic war between the two continents. It is indeed the symptom of a geopolitical change.

The American initiative aimed to weaken the EU was led with the participation of European institutions themselves, that sacrificed euro in order to recover the Greek debt. This convergence confirms the choice of both protagonists which was already made to integrate the EU into a great future transatlantic market.

J.-C. Paye is a sociologist and essayist.

Ivan Marino, "Nabucco" versus "South Stream"

The US-backed Nabucco pipeline is a choice which sprang from political and economic reasons, and, in substance, aims to avoid the Russian territory and consequently to contrast the interests of Moscow; but the choice of "Nabucco" may be dangerous for the same energy safety of European Union.

Italy's choice of supporting the "South Stream" has a strategic and objective value. The essay evaluates the strategic importance of this option on the long-term in the dialogue between EU and Russia.

I. Marino coordinates the Observatory on the Constitutional Political System of the Russian Federation.

Fabrizio Di Ernesto, US and NATO bases in Europe

More than 60 years after the end of World War II, Europe struggles to regain its political and military autonomy. This is mainly due to the forced occupation set on by USA through NATO, the military alliance started in 1949 and that with the passing of time has become the real armed wing of the Pentagon. During the years of the Cold War Washington justified this presence with the need of defending its interests against possible attacks of the Red Army and of the Warsaw Pact. Now that this pretext is becoming ever more anachronistic, the White House continues to support the need for this forced militarization hiding behind the scarecrow represented by Islamic terrorism. This presence also leads to various problems, summarized in this essay.

F. Di Ernesto is a journalist and essayist.

Stefano Vernole, The strange story of the "International Money Orders"

According to some sources, during the first months of 1992 the U.S. government developed a sophisticated financial-economics operation, using US taxpayers' funds, for secret aims. The money, nominally allocated for a "humanitarian" operation in Bosnia and Herzegovina, would have been mainly used to finance Bill Clinton's election campaign and to pay debts acquired by the Saudi financier Adnan Kashoggi to the procurement office of the JNA (Yugoslav People's Army), but later it was put back in circulation to be used in the most various financial-economics operations.

S. Vernole is editor of "Eurasia".

Tomislav Sunic, In Yaweh we trust: the "divine" US foreign policy

The North American aspiration to "guarantee the democracy in the world " is above all originated by the biblical message. Whatever many European critics of US may say, US military interventions have never had as their sole purpose economic imperialism, rather the desire to spread the U.S. democracy all over the world. Anyone who dares to defy the US military, incurs the risk of being declared out of humankind, or at least of being branded as terrorist. Once someone is declared a terrorist or out of the human race, it's possible to dispose of a person or of a nation at one's pleasure. The ideological element in the history of US foreign policy is described in this essay, a revised version of a chapter, named after it, of the book Homo Americanus: Child of the Postmodern Age (2007).

T. Sunic was Croatian diplomat and University Professor in the USA.

Kees van der Pijl, Transatlantic ideology and neoliberal capitalism

In this essay we deal with three issues: the first concerns the origins of western ideology, an ideology marked by possessive individualism, free enterprise and intensive nature exploitation and that, with zeal of protestant missionary, claims universal validity for these principles. After that, we observe how neo-liberalism has emerged as the most radical western ideology and allowed capitalism to become a machine scam into which the world economy of the last thirty years has been drawn and that just now has suffered a setback.

Finally, some lines of development are drawn, through which Ukraine, and perhaps Russia, Belarus, Kazakhstan and others, could break with the present strategy of slavish adaptation to the neoliberal economy, which has damaged them so much, and stop to absorb the western ideology so different from their traditions, to implement a common strategy that combines their unique experience with the form of a multinational State and with elements of planned economy, whose strengths and weaknesses they know better than anybody else.

K. van der Pijl is Professor at the University of Sussex.

Paolo Bargiacchi, Is international law really law? A critique to John Bolton's negationism

In the US the (minority) idea that the international law does not exist and the (most common) one that customary international rules only bind States that accept them find a common root in the improper comparison between International context (and International law) and internal context (Internal law). This comparison, in turn, is direct consequence of the Austinian positivism, that, not catching the autonomy of the political and juridical international context compared to the domestic one, mistakenly uses logics, methodologies and categories of internal law to analyze the international law. An example of this modus procedendi comes from J. Bolton, who wonders if "Is There Really "Law" in International Affairs?" and concludes that "International law is not law". In this essay a general-theoretical and empirical critique of his thesis is developed.

P. Bargiacchi is Professor at the University Kore of Enna.

Alessandro Lattanzio, US nuclear forces

U.S. strategic forces, that since 1990 are no longer the backbone of US Army, a role now appertaining to the force projection (aircraft carrier, airborne troops and marine divisions, tactical air force) have undergone a significant downsizing in quality and above all quantities. But this reduction has been sold successfully at the table of international negotiations about nuclear disarmament. With the recent ratification of the START II Treaty, US strategic forces are kept on 500 ICBMs single-warheads, 14 SSBNs each carrying 24 SLBMs, and finally 96 strategic bombers. The budget deficit, the cost of Iraq and Afghanistan wars, the priorities for other programs, including the so-called theatre ballistic missile (THAAD), and the US financial-economic crisis will probably stop the last modernization programs of the U.S. strategic arsenal.

A. Lattanzio is editor of "Eurasia".

Claudio Mutti, Pietro Nenni against the Atlantic Pact

Interjecting into the parliamentary debate in accordance to the Italian democracy rules for enter the NATO, the secretary of the PSI (Italian Socialist Party) pointed put how the inclusion of Italy among the countries bordering the Atlantic was a violation of the basic elements of geography and history. He also contested the political justifications of this accession: partnering with the American superpower, Italy, which "compared to the US is like San Marino compared to Europe", instead of securing her independence would have further reduced her sovereignty, already harshly limited by the international treaties imposed by the winners of the Second World War.

C. Mutti is editor of "Eurasia".

Erika Morucci, 1991-2003: rehearsal of a superpower

In the twenty years since the first Gulf War to the present, different administrations came one after the other at the White House, giving different directions to American foreign policy. Apart from that, these were crucial years of a new historical course, that after the Cold War has opened up a reality whose facets were hidden for a long time and was fed by the iron curtain that divided the world. For the US widened its perspectives: they behaved as if they knew they can reach for primacy, pushing it to the manic search for global power. The multipolarity on the international scene has strongly emerged with the presence of other actors, including Russian, Chinese, European, and so the perspective is now to defend their lead and not lead the world.

E. Morucci, MA in International Relations.

Antonio Grego, Interview with Robert Pelo

Roberto Pelo is the director of the Moscow office of Italian Institute for Foreign Trade (ICE) and coordinator of the ICE office-network in Russia, Armenia, Belarus and Turkmenistan.

Antonio Grego, Interview with Livio Filippo Colasanto

Livio Filippo Colasanto is the first Director-General of RusEnergosbyt-Enel.

[Nov 02, 2020] Variant Perception Macro Chief Discusses The Reinflation Trade And Looming 'Commodity Supercycle' -

Nov 02, 2020 |

Variant Perception Macro Chief Discusses The Reinflation Trade And Looming 'Commodity Supercycle' by Tyler Durden Sun, 11/01/2020 - 14:30 Twitter Facebook Reddit Email Print

For weeks now, we've been been pointing to expectations that a Joe Biden victory, accompanied by a Democratic sweep of the Senate, could accelerate a "reflation" trade , as the world witnesses the shift toward fiscal policy in the form of massive fiscal stimulus supplant QE as the preferred vehicle for the central bank carrying out its monetary policy objectives.

This fusion between fiscal and monetary policy is an inevitable consequence of the Fed's shouldering the burden of promoting economic "equality", or at least combating "inequality" - a laughably ironic objective for the Fed, which has done more than any other single entity in blowing the equity asset bubble that's driven economic inequality in the US back to levels last seen during the Gilded Age.

Well, after having MMT pioneer Stephanie Kelton, best known as the go-to economic policy advisor for AOC and Bernie Sanders, on the show, MacroVoices this week followed up with an individual who has examined the potential blowback caused by this historic policy shift.

This week, MV host Erik Townsend interviewed Tian Yang, the head of macro at Variant Perception, an established research shop that frequently produces opinion columns in the financial press. During this week's interview, Yang outlines the findings from a slide deck that was provided free by MacroVoices to all members (membership is free)

After the historic drubbing endured by crude in the US earlier this year, Yang is among a group of strategists who have been warning about the reflationary blowback that the Fed is risking now that it has explicitly decided to allow inflation to run hot.

Yang outlines some of these concepts in the interview, which we have excerpted below:

* * *

Erik: And where do you see the inflation story coming into this?

Central Banks Must 'Play Their Part'

Tian : So I think we need to think about inflation both from a structural point of view and a cyclical point of view. So the thing to say is cyclically, when unemployment rates are still quite high, when there's still capacity in the economy, you don't expect to see kind of immediate pickup in core inflation. Headline could tick up a little bit when commodity prices industrial commodity, so forth, initiate pickup, so on the cyclical front, there's not necessarily as much inflation pressure right now.

But structurally, we've seen some truly seismic shifts in the kind of policy landscape and the structure of the economy actually just this year. When you see governments and developed market governments around the world start to run giant fiscal deficits funded by central banks, that's obviously a very dramatic shift away from independent central banking and the focus on inflation.

This is very much going back to the old Keynesian kind of playbook of essentially, fiscal led growth and at the same time, we've seen the US Federal Reserve do a number of quite dramatic shifts this year. Firstly, moving to average inflation targeting is obviously quite a big mission that they don't really know where the NAIRU (Non-accelerating inflation rate of unemployment) is, they don't really care what the NAIRU is, they are just going to run the economy and let it run hot.

And such a policy is also pretty timing consistent because it's not well defined, what's the period over which we're targeting average inflation. The incentive will always be as inflation picks up for policymakers to just run their heart because it's easier to kind of keep the party going.

So, both fiscal and monetary policy are starting to become a lot more expansionary and loose. And the historical precedents for this kind of price action would probably go back to World War 2 with a fair-trade record, that essentially meant fiscal deficits would be very large. But there was a moral imperative for the central banks to finance the government deficits, and that ended up creating a lot of inflation.

And this time around, the moral imperative is that the central bank's got to play their part with the pandemic. And going into the future, the central bank probably has to play their part was addressing inequality, climate change, or any of these big issues that essentially justifies why central banks should finance government deficits.

So that's quite dramatic policy shift, the other thing that's happened is that the Fed is now proactively kind of destroying the quality of its balance sheet. So again, as extreme, we could go back to when we were on the gold standard, if you look at central bank balance sheet, most currencies backed by gold, right.

So $1 is an asset for us but for the central bank $1 is a liability so previously they backed it on the asset side of their balance sheet with gold. Obviously, over time we abandoned the gold standard, so forth, the quality of assets on the central bank's balance sheet is getting worse and worse. And obviously, this year, the fact that they started buying corporate bonds, the fact that, they're willing to take on fallen angels, hide your debt and take on more credit risk is just another reflection of just the weakening central bank balance sheets.

It's not necessarily a immediate concern, but it lays the foundations for people to kind of increase inflation expectations and to really worry about what the value of the dollar is. And so when you have these kind of structural shifts in policy coming together in a couple ways to make a kind of deterioration in central bank balance sheets and government balance sheets. That's typically been the recipe for inflation expectations to become unhinged.

From A Lake To An Ocean

Erik: Tian, I love the picture on page five where you're talking about lake and ocean regimes of inflation. Needless to say, you're not talking about a necessarily a really calm easy day out on the ocean, but maybe a stormy day.

Now I want to go back to what you said because it seems to me that the game is very different this time around in that you drew an analogy to, okay, after World War 2 we move to a whole lot of deficit spending, which should be inflationary. The thing is, after World War 2 we were still, as you said, on a gold standard. And the big inflation didn't really get unleashed until we came after the gold standard with the breakdown of Bretton Woods in 1971.

Now, this time around, we're going to have I think the same if not a greater shift to a public policy emphasis on major spending programs with a lot of deficit spending. But we're already in a pure fiat environment, so nobody's pretending there's a constraint on how much money you can print in order to finance government spending.

I would think that means that the inflation is certainly not delayed by 20 years the way it was after World War 2, but is it immediate? Or is there still a lag of several years before that inflation really hits the system in terms of consumer price inflation after those pre generated factors like deficit spending kick in? How long does it take before we really see the inflation start to get away?

Tian: Yeah, I mean, that's a great question. I guess it's a little bit like when they think about how people go bankrupt, right, it happens very slowly and or all at once. I think this is kind of the analogy we're kind of drawing here because we're talking about a shift in inflation expectations, which is obviously predicated on just the general belief in the system.

These things are obviously inherently fairly hard to predict but what we can do is kind of position for when it already makes sense. So when markets are already not pricing in much inflation risk premiums and also as the economy cyclically picks up, those things are going to help just drive a more normal reflation cycle.

So right now, if you position for that, then when the tail comes through and potentially more inflation picks up later, you're kind of on the right side of it. In terms of the mechanism it could, as you say, potentially happen quickly or you could take a few years. I mean, if we're in this kind of 1960 style environment then what you need to do is go along for the excess capacity in the economy to be used up first, and then have inflation pick up.

And then you will need that to feed into shifting hecs inflation expectations higher, and then you should move into more of a wage price spiral. Then when people think inflation is going higher, they're going to demand higher wages and that's what really kicks off the more uncontrolled inflation right now.

Arguably right now for a lot of people, you know say live in the United States, the actual cost of living inflation is actually already been a lot higher than what CPI would be saying if you look at shadow stats, inflation and these kind of different projections. They would say inflation has be running a 4-5% annually for the past 20 years, if you get rid of a lot of the hedonic adjustments and so forth. And arguably, it's actually this mismatch between what official CPI says and what people feel is their true cost of living. That gap is also fueling a lot of the populism and the kind of general discontent that we have been seeing in society and, by the way, this isn't a new, it's just quite rare that we see it in developed markets.

If you take emerging market economies like Argentina or these places that have been known to have huge inflation's, this is typically what happens. The population doesn't believe in the CPI, they think their real cost of living is going up a lot higher, so when it comes to wage negotiations, they demand CPI plus 5-10%.

No more '60/40'?

Erik: Tian, let's talk about how this translates for portfolios, it sounds like we're very much in agreement that inflation is coming, but it's kind of hard to know exactly when and how it shows up. Probably when it does show up, it shows up in a big way, you don't want to be caught by surprise, but you don't know that it's happening right away. So what do you do in terms of your portfolio in order to be ready for that?



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Tian: Yeah, well that's kind of the million-dollar question at the moment isn't it? So the first thing to know is, I think I mentioned briefly at the start, clearly more traditional portfolio construction, the kind of 60/40 or the heavy allocation to fixed income, it's naturally kind of getting to the end of the road. I think most people recognize that as yields bump up against the zero bound, the ability for your fixed income portion to really offer a diversified impact or a hedge to equity risk is going to diminish.

So, going forward, what's very interesting about commodities is that one of the unique properties of commodities is typically when commodity volatility is high commodity prices actually tend to go up a lot. And this is quite different to equities because normally for equities only when equities are crashing that volatility picks up, whereas for commodities, the volatility tends to be to the upside. Now, the thing to say about commodities is that one of the big reasons why it tends to be very high volatility is that there tends to be quite prolonged periods of demand and supply mismatches for the industry. Just because typically supply responses can take a long time if you're going to build a new mine, or drill a new well, or build a new plant, it could sometimes you could take up to three to five years. Obviously, if it's like the super-efficient shell well, maybe it takes one year to get to get it going.

But for a lot of commodity sites if you're going to build a refinery or build a chemical plant or things like that, it's going to be three to five years. And because of that very delay supply response it is where you end up with this prolonged period of demand supply mismatches. And so that that's kind of what we're starting to see right now, where for a lot of commodity sectors are more capital scarce.

This being a prolonged period of a lack of investment, a lack of capex, and so these are sectors that we would expect to have quite explosive upside as the as the economy recovers and as demand comes back. So I think in the slide deck there's a section on page 15 where I mentioned the capital cycle. So, I think this is a very interesting framework to actually think about when we're trying to decide where to invest in.

So for the capital cycle I think that the best thing that I've read that's really inspired us on this was some pieces written by Marathon Asset Management. And it was basically collated together in a book called "Capital Returns: Investing Through the Capital Cycle", and the book was put together by Edward Chancellor. And so the basic idea is that, if there's a lot of money flowing to a particular industry or sector, then that inflow of money will cause a lot more competition within that industry which drives down returns and then as returns fall very low then nobody in the industry can make a profit.

Listen to the rest of the interview below:

[Nov 02, 2020] Oil investments are drying up as crude demand falters

In reality only passenger feet and commercial aviation consumption are highly elastic. Other pasts oil consumption, including consumption by military and commercial tracking are much less elastic.
And Amazon consumption partially compesates for drop is passenger car traffic :-)
In general oil consumption is a proxy of economic activity. As economic activity is resorting the same will happen with oil consumption.
Nov 02, 2020 |

Thirty-five percent: this is the size of the spending cuts oil and gas companies are likely to have made this year in response to the effects that the coronavirus pandemic is having on demand, according to the International Energy Agency. And this is just the spending slump in upstream oil and gas. This is just part of a wider trend of investment cuts in the energy industry, according to the IEA, which earlier this month published an update of its World Energy Investment report, first released in late spring.

At the time, some thought we were seeing the worst of the pandemic. They were, apparently, wrong.

ALSO ON RT.COM Oil prices hit 4-month low over fear new coronavirus lockdowns will crush demand

Demand for oil has certainly improved in some parts of the world, notably in Asia, where governments have been more successful in containing the spread of the coronavirus than their counterparts in Europe and North and South America. But even in China – the world's oil demand recovery driver –the rebound is slowing down. After all, even though its domestic demand may be improving, if regional and global demand is stalling, this will have a negative effect on China as well.

READ MORE OPEC in trouble as oil outlook worsens OPEC in trouble as oil outlook worsens

According to the IEA, the impact that the pandemic is having on investments in the oil industry will continue to be felt for years to come. This is hardly surprising: the agency noted a 45-percent cut in investments by US shale oil companies this year, combined with a 50-percent jump in financing costs .

The number of active drilling rigs in the US may be rising, suggesting the beginning of a recovery, but the total was still down 564 rigs on the year as of last week, so that recovery will take a while.

Meanwhile, fuel stock updates from the Energy Information Administration are offering mixed signals: last week, for instance, saw a major drawdown in distillate fuel stocks, which should be good news suggesting demand for distillates is improving. The problem is that it is likely that this improvement is a temporary occurrence rather than a trend. Air travel is still greatly constrained, and the chances of any change in the status quo are slim.

Uncertainty: this is the keyword for not just the oil industry but for all others affected by the pandemic to such a grave extent as to force changes in business models. Europe's Big Oil majors are doing just that with their push into renewables and plan to greatly reduce the contribution of their core business to overall earnings. USmajors are sticking with oil, and they may well have a good reason to do it.

There has been a lot of government and activist talk about a green recovery from the pandemic crisis. But the pandemic is still raging, and not only is it not abating, but it is gathering strength. This would mean more money needed for stimulus measures. This, in turn, would mean less money to spend on renewables, because despite the celebrated cost declines in solar and wind, financial and regulatory support from governments remains essential for their increased deployment.

ALSO ON RT.COM Central Bank of Russia does not rule out another pandemic wave & $25 oil price

The future remains marred in uncertainty that extends to the possibility of a rebound in oil investments. According to some, such as BP, we are already past peak oil demand, so that would mean less investment in oil production growth globally. Others, such as OPEC producers, hope things will sooner or later return to normal, and the world's appetite for more oil will continue to grow for at least a few more years before plateauing. And yet even OPEC is preparing for a worst-case scenario.

The extended cartel OPEC+ is considering a delay in the next relaxation of oil production cuts, from January 2021 to April, in response to the latest trends in Covid-19 infections. One thing seems relatively clear, however. The longer the surge in new infections continues, the longer it would take the industry to return on the path of recovery and growth.

This article was originally published on

[Oct 24, 2020] The blockage of Nordstream 2 is about The Dark Heart of Europe not Russia

Oct 24, 2020 |

A123 , says: October 23, 2020 at 3:35 pm GMT


Take Nord Stream II. If Trump hadn't taken the oath, it would have been up and running years ago. Would that it were so that this was a gift to Russia and Germany, but it's much worse than that. Why isn't anyone else curious as to who got what in return?

The blockage of Nordstream 2 is about The Dark Heart of Europe not Russia...

This is one of Putin's few serious errors. He would be much better off pushing gas projects that flowed east...


AriusArmenian , says: October 23, 2020 at 4:47 pm GMT

Europe is a glove on the US hand and is easily led around by its nose by the CIA and MI6 that infest the MSM and run one false flag after another.

Politicians in the EU are mediocre creatures that crave the dollars stuffed into their pockets by the US. They are enjoying the ride while it lasts until they go down with the US.

[Oct 23, 2020] Oil Production Cuts Could Be Extended- Putin -

Oct 23, 2020 |

Submitted by

Russia does not rule out the possibility that OPEC+ could extend its current 7.7 million barrels per day of production cuts into next year, according to Russian President Vladimir Putin .

The comments could be merely jawboning to a market that is desperately seeking reassurances that oil production will not ramp up too quickly beyond demand. But Russia has in the past been reluctant to keep up its end of the oil production cuts, so any mention that it is even thinking about a slower tapering of the cuts is noteworthy.

In fact, Russia had failed to bring its own oil production down to the level it agreed to for most of the period of cuts in 2019 and early 2020.

Russia also was the spark that ignited the oil price war between it and Saudi Arabia-and by default the United States, when it refused to agree to additional cuts using the argument that as OPEC decreases its production, it opens the door for U.S. producers to increase theirs.

Vladimir Putin has had several discussions with Saudi Arabia and the United States on the state of the oil markets. "We believe there is no need to change anything in our agreements," Putin said. "We will watch how the market is recovery. The consumption is on the rise."

Putin added, however, that they did not "rule out" the possibility that OPEC+ could keep the current production cuts instead of removing them at the pace it had initially agreed upon.

But Putin didn't stop there. "If need be, maybe, we can take other decisions on further reductions. But we don't see such a necessity now," Putin said, intimating that more cuts were at least possible.

Russia's willingness to even consider additional cuts or waiting longer to ease the cuts than planned will be viewed positively by the markets, which has been struggling to break out of a rut where oil prices have traded in a relatively tight band for months.

[Oct 22, 2020] Goldman Expects A Structural Bull Market For Commodities In 2021, Sees Gold Hitting $2300 -

Oct 22, 2020 |

A weaker U.S. dollar, rising inflation risks and demand driven by additional fiscal and monetary stimulus from major central banks will spur a bull market for commodities in 2021, Goldman's chief commodity strategist Jeffrey Currie said on Thursday, also predicting that "all commodity markets are in, or moving toward, a deficit with inventories drawing in all but cocoa, coffee and iron ore."

The bank, which notes that markets are increasingly concerned about the return of inflation, forecast a return of 28% over a 12-month period on the S&P/Goldman Sachs Commodity Index (GSCI), with a 17.9% return for precious metals, 42.6% for energy, 5.5% for industrial metals and a negative return of 0.8% for agriculture.

A key catalyst for the bank's bullish call is that "nearly all commodity markets are in, or moving toward, a deficit with inventories drawing in all but cocoa, coffee and iron ore."

As Currie adds, "such broad-based deficits are usually only seen late in the business cycle, underscoring the unique environment markets are in. Given that inventories are drawing this early in the cycle, we see a structural bull market for commodities emerging in 2021." In the strategist's view, the bull market will be driven by three major themes:

  1. structural under-investment in the old economy,
  2. policy driven demand and
  3. macro tailwinds from a weakening dollar and rising inflation risks. "These drivers remain consistent with the bank's bullish views from the start of this year, and have now been intensified by COVID-19 disruption and the subsequent global policy response."

Some more thoughts from Currie on the tightening in commodity markets:

Commodity markets have been mostly range bound since this summer, in our view caught between a longer-term bullish outlook for 2021 and near-term concerns around the timing of a vaccine amid rising COVID cases across Europe and the US Midwest (see Exhibit 4). However, it is important to emphasize that nearly all commodity markets are in, or moving toward, a global deficit with inventories drawing in all but cocoa, coffee and iron ore. Such broad-based deficits are usually only seen late in the business cycle,underscoring the unique environment markets are in.

As global demand remains tepid for consumer-related commodities like oil, the deficits further underscore how significant the drop in supply has been and how the supply response function has changed. For oil, the sharp drop in capex is now having an impact on non-OPEC decline rates, with capital markets refusing to fund shale drilling, only debt rollovers. In metals, we have seen a sharp drop in maintenance capex and supply disruptions dragging into 2021. This suggests that even if demand falters in coming weeks as winter exacerbates COVID-19, markets will likely continue to rebalance, barring an outright collapse in demand. In our view, base metals and agriculture have more near-term upside than oil, with smaller inventories to move through before prices begin to rise.

Goldman then shows the following chart which reveals the growing deficit across key commodities, as well as the key macro catalysts for higher commodity prices in coming months:



me title=

Hedging that even if demand falters in coming weeks as winter exacerbates COVID-19, Goldman still expect markets will continue to rebalance, "barring an outright collapse in demand." Goldman takes a more contained view on energy saying that while inventories of oil remain high, "upside in energy prices will likely come after winter." However, non-energy commodities face immediate upside as balances have tightened ahead of expectations, driven by large Chinese demand and adverse weather shocks, according to the Goldman strategist.

Focusing on Gold, Currie said that expansionary fiscal and monetary policies in developed market economies continue to drive interest rates lower and create demand for hedging the tail risks of inflation, lifting demand for precious metals. As a result, Goldman forecasts gold prices at an average of $1,836 per ounce in 2020 and $2,300 per ounce in 2021, and expects silver prices to be at around $22 per ounce in 2020 and $30 per ounce next year .

Non-energy commodities could see an "immediate upside" as the market balances tighten ahead of expectations on strong demand from China and weather-driven risks, the Goldman Sachs analysts said.

The bank maintained a "neutral" view on commodities in the near term and "overweight" in the medium term.

[Oct 19, 2020] A joke circulating Russia internets today

Oct 19, 2020 |

BG , Oct 17 2020 20:24 utc | 46

A joke circulating Russia internets today:

"German Foreign Minister Heiko Maas:

"North Stream 2 will be built 100%!"

A journalist asks:

"But what about Navalny?"

Maas replies:

"Well, unfortunately Navalny doesn't produce 55 billion cbm of natural gas per year..."


[Oct 19, 2020] The USA had more than doubled its oil imports from Russia last year and is now the world's second largest importer of Russian heavy oil

Notable quotes:
"... "Maas added that Germany takes decisions related to its energy policy and energy supply 'here in Europe', saying that Berlin accepts ' the fact that the US had more than doubled its oil imports from Russia last year and is now the world's second largest importer of Russian heavy oil .'" [My Emphasis] ..."
Oct 19, 2020 |

karlof1 , Oct 17 2020 17:50 utc | 14

Heavy oil is needed for the chemical industry (as opposed to transport). The three biggest producers of heavy oil are Iran, Venezuella and Russia.

The US produces mostly light oil, thus it needs to import the heavy oil. Since the US sanctioned Iran and Venezuella, the only significant option remaining is Russia. It would be ironic if they are buying iranian oil sold to Russia.

winston2 , Oct 17 2020 18:09 utc | 20

karlof1 , Oct 17 2020 17:50 utc | 14

It appears Lavrov's saying we'll just ignore the EU and its major components for awhile got quick results as Germany's FM just announced "Nord Stream 2 will be completed" ; but he also said this:

"Maas added that Germany takes decisions related to its energy policy and energy supply 'here in Europe', saying that Berlin accepts ' the fact that the US had more than doubled its oil imports from Russia last year and is now the world's second largest importer of Russian heavy oil .'" [My Emphasis]

Now isn't that the interesting bit of news!! The greatest fracking nation on the planet needs to import heavy oil (likely Iranian, unlikely Venezuelan) from its #1 adversary. As for the end game, I've written many times what I see as the goal and don't see any need to add more.

Passer by , Oct 17 2020 17:58 utc | 16

[Oct 16, 2020] Jacques Chirac President of France told Jr Bush if the United States finds WMDs in Iraq you put them there.

Oct 16, 2020 |

12 hours ago

Jacques Chirac President of France told Jr Bush if the United States finds WMDs in Iraq you put them there. The CIA and MI6 knew Iraq had no WMDs because Tariq Aziz Saddam's long time number 2 was a CIA asset. Back in the 1980s Aziz was a regular on the Washington cocktail party circuit and a frequent guest on CNNs Crossfire with Pat Buchanan, Robert Novak vs Tom Braden and Michael Kinsley. Finally Dick Armey Republican and House Majority leader was going to vote against authorizing the war in the fall of 2002. Cheney goes up to Capitol Hill pulls Armey into the Vice Presidents office in the Capitol and tells him that Iraq is close to having suitcase nukes and has very close ties to Osama bin Laden. Both lies of course.

On one occasion when Jr Bush was talking to Chirac he told him that the war on terror is Biblical prophecy. Needless to say Chirac was stunned. Yes the Republican establishment lied the country into one of the biggest foreign policy blunders in our history. Almost as bad as Woodrow Wilson taking us into World war 1 which led to the rise Bolshevik revolution and Nazi Germany

ekaneti WilliamRD 2 hours ago • edited

Vietnam was a bigger lie and worse than Iraq

WilliamRD ekaneti an hour ago

Vietnam was bad for sure and had a much larger death count, but the region or the domino theory never materialized. The Middle East has been in chaos ever since our invasion and occupation of Iraq

[Oct 14, 2020] European Oil Companies Will Not Tolerate Poland's Attempt To Cancel Nord Stream 2 -

Oct 14, 2020 |

European Oil Companies Will Not Tolerate Poland's Attempt To Cancel Nord Stream 2 by Tyler Durden Wed, 10/14/2020 - 06:10 Twitter Facebook Reddit Email Print

Authored by Paul Antonopoulos via,

By handing out a €6.5 billion fine against Gazprom, Warsaw has obviously and massively miscalculated because it did not only antagonize the Russian energy company as was intended, but also European partners of the Nord Stream 2 pipeline project , which the Polish government obviously had not considered.

Even leaders within the European Union were shocked at the huge fine that Poland is attempting to impose against Nord Stream 2.

It may very well be that the Polish Office of Competition and Consumer Protection (UOKiK) has lost itself when deciding on the price of the fine against Gazprom. But regardless of that, UOKiK has apparently also exceeded its jurisdiction . As the Düsseldorf-based energy supplier Uniper reports, the existing agreements on Nord Stream 2 have nothing to do with a joint venture, which is why the Polish laws on merger controls do not apply to them. The initial plans were to finance the construction of the Nord Stream 2 pipeline through the establishment of a joint venture. For this, however, the companies involved should have received a permit in all the countries in which they operate, as well as from Poland, the only EU state that blocked this decision. The decision for it not to be a joint venture was made without further ado so as not to waste time or money in a dispute with Polish authorities.

The pipeline partners designed an alternative financing model for Nord Stream 2 and instead of joining Nord Stream 2 AG (Company) as a co-partner, the European energy companies are participating in the project as lenders so that Polish antitrust laws do not apply to them. However, Gazprom, the majority shareholder of Nord Stream 2 AG, has given its European partners shares in the company as a mortgage for the financing provided. If the loans from the Russian side are not paid, the European corporations automatically become the owners of Nord Stream 2 AG. Referring to this fact, the Polish antitrust authorities have declared the European partner companies to be quasi-shareholders in the pipeline project.

With this UOKiK also justifies the exorbitant fine against Gazprom and the fines of around €55 million against Uniper (German), Wintershall (German), Engie (French), OMV (Austrian) and Shell (English-Dutch). Neither Gazprom nor Nord Stream 2 are financially at risk at the moment and the Russian group has already announced that it will take the fine to court.

Poland is of course now aware that their attempts to fine the Nord Stream 2 project will amount to nothing. The aim of the Polish government is not so much to force a large sum of money from Gazprom in the long term, but rather to bury the pipeline project entirely. And this is the part where Warsaw has grossly miscalculated, not only European reactions, but Russian determination.

The goal to cancel Nord Stream 2 also explains why Polish authorities published their decision last week. Relations between the EU and Russia are extra strained because of the Navalny case and the situation in Belarus. France and Germany are working on new sanctions against Russia for the Navalny case and continue to apply pressure against Belarus.

Another question is how effective these measures will be. Sanctions have long degenerated into ambiguity as it is the usual way the West deals with Moscow. Russia has learnt how to adjust their economy accordingly, meaning that sanctions have turned into a farce. The West is regularly expanding its blacklists of sanctioned companies and private individuals, but there has been no significant effect. Political forces with a keen interest in the failure of Nord Stream 2 are plentiful in the West and they are currently advancing the Navalny case in the hope that it will cut the EU from Russia more strongly or permanently. This will not occur as Europe desperately needs Russian energy, which is why Nord Stream 2 is such a critical project for all involved.

Poland plays the main role in trying to cancel Nord Stream 2 and the decision by UOKiK is just another push to finally get Europe to abandon the pipeline project. According to a joint declaration by France and Germany, measures are currently being prepared for those alleged to be responsible in the Navalny case and their participation in the so-called Novichok program.



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Despite these measures, Western Europe is bringing its energy project which is important for its own future out of the danger zone, while Poland is attracting even more displeasure from EU giants through its own operation. A penalty against Gazprom may be a Russian problem, but fines against leading corporations from Germany, France, the Netherlands, Great Britain and Austria are guaranteed to leave many of Europe's biggest capitalist angered. The effort Warsaw is making to thwart Nord Stream 2 is visibly turning opposite to what they expected as there is little doubt the Nord Stream 2 project will come to fruition and completion.

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[Oct 11, 2020] MARK CHAPMAN

Oct 11, 2020 |

October 10, 2020 at 3:30 am

Yes, I straightaway notified John Helmer to see if he is aware of these developments, and he says they are incorporated in this story, which I am just now reading myself (early morning on the MAYNE QUEEN for 'frontline workers' such as I).

Like Reply

JENNIFER HOR October 10, 2020 at 11:39 am

The French must be envious: while they have to tolerate Pavlensky with his arson stunts and sinister blackmailing of their politicians, the Germans only have to put up with Navalny who can't stop shooting his mouth off in a different direction every time he opens it. Although the day must be fast approaching when Berlin might wish Navalny silenced forever before he embarrasses his hosts even more. The irony would certainly be rich and furthermore, whatever transpires next against Navalny could parallel what happened to the Skripals in 2018. The difference is that Navalny may be walking into a trap with all eyes (and mouth) open. He will have only himself to blame if his hosts decide to get rid of him permanently.

ET AL October 10, 2020 at 11:17 am

Playing the devil's advocate, it could be that the bottle(s) were exfiltrated in another manner which in itself raises other questions.

But I would like to know the serial number of the bottle(s). That way they could be traced to whom the producers sold them to, so a) we can check whether in fact the hotel did purchase them whether directly or by an intermediary store, or not; b) whether they were bought elsewhere, i.e. the brand was noted at the hotel (during the recorded video 'discovery' performance) .

MARK CHAPMAN October 10, 2020 at 7:20 pm

I think you mean lot number.

MARK CHAPMAN October 10, 2020 at 2:48 pm

It kind of sounds like they are lawyering up, or getting legal advice about what Pevchikh's actions and movements prove. And so far, they're correct – a picture of her apparently buying a bottle of water or some other beverage from a machine proves nothing. She could have bought something entirely different, or just been standing in front of the machine. She also could have drunk the water on the plane and left the bottle there; that's quite true as well.

However, what do we have on their side? Video allegedly taken at the hotel in which they are seen bagging up empty water bottles. They must have been quote sure that was the piece of evidence they were looking for, since they took nothing else. And then what? There's no chain of custody, and nobody who was not there has any idea what happened to these bottles, or whether the ones allegedly delivered to the Bundeswehr or whoever are the same bottles allegedly taken from the hotel. There must have been no end of opportunities to open the bags – which are not proper custody envelopes, simply zip-loc bags which can be opened or closed any number of times without any indication that this has happened – and tamper with the contents. Nobody from Team Navalny other than The Bullshitter himself went into a coma or even showed any symptoms although they allegedly handled evidence which was liberally dusted with a weapons-grade nerve agent, and wore no personal protective equipment (PPE) other than rubber gloves. Detective Nick Bailey, who allegedly spent weeks in the hospital after touching a doorknob allegedly contaminated with the same nerve agent although he was wearing leather gloves, proved that gloves are no defense against Novichok.

Mind you, this latest iteration was apparently specially engineered to be slow-acting. So perhaps in a couple of weeks Pevchikh and/or Alburov will fall over jerking and drooling in the middle of a sentence. We'll just have to wait and see.

[Oct 11, 2020] The USA found new allies in gas war

Oct 11, 2020 |

MOSCOW EXILE October 10, 2020 at 6:28 am

В МИД России назвали "Новичок" западным брендом

The Russian Foreign Ministry has called "Novichok" a Western brand
The chemical warfare agent called Novichok is a "purely Western brand" that has been synthesized and is present in Western countries in about 140 variants, Russia does not have it. This has been announced by the Russian Ministry of Foreign Affairs.

"We officially confirm that all chemical weapons in Russia were destroyed under the strictest international control. This time-consuming process was completed on September 27, 2017″, the foreign ministry has said in a statement.

They recalled that on October 11, 2017, the General Director of the OPCW's technical secretariat certified the final destruction of chemical weapons in the Russian Federation.

"As for the chemical warfare agent called "Novichok" in the West, its structure and mass spectrum were first presented in 1998 in the spectral database of the American Standards Institute (NIST 98). It is indicative that information on this substance came there from the research centre of the US Department of Defense", the ministry has stressed.

The ministry has added that subsequently, on the basis of this compound, a whole family of toxic chemicals had been formed that did not fall under the control of the CWC.

"They worked with it along with the Americans in no less than 20 Western countries". the statement says.

The Ministry of Foreign Affairs has noted that the studies of Aleksei Navalny's biomaterials conducted in Omsk did not reveal the presence of traces of his poisoning with a chemical warfare agent.

"And the Charité doctors did not find them either. But the German military found them. Almost a week later", the department has said.

Earlier, the OPCW said that its experts had confirmed the presence of toxic substances in the samples of urine and blood taken from Navalny. According to the report, a substance had been found in his body, similar in characteristics to Novichok, but not on the list of prohibited chemicals.

The Russian diplomatic department has noted that this story has continued according to a pre-planned scenario, and promised to provide a chronology of "behind-the-scene manipulations of the main characters of this performance."


In 1997, the United States ratified the United Nations International Chemical Weapons Convention treaty. By participating in the treaty, the United States agreed to destroy its stockpile of aging chemical weapons -- principally mustard agent and nerve agents -- by April 29, 2007. However, the final destruction deadline was extended to April 29, 2012, at the Eleventh Session of the Conference of the States Parties to the Chemical Weapons Convention at The Hague on December 8, 2006 -- source .

The primary remaining chemical weapon storage facilities in the U.S. are Pueblo Chemical Depot in Colorado and Blue Grass Army Depot in Kentucky. These two facilities hold 10.25% of the U.S. 1997 declared stockpile and destruction operations are under the Program Executive Office, Assembled Chemical Weapons Alternatives. Other non-stockpile agents (usually test kits) or old buried munitions are occasionally found and are sometimes destroyed in place. Pueblo and Blue Grass are constructing pilot plans to test novel methods of disposal. The U.S. also uses mobile treatment systems to treat chemical test samples and individual shells without requiring transport from the artillery ranges and abandoned munitions depots where they are occasionally found. The destruction facility for Pueblo began disposal operations in March 2015. Completion at Pueblo is expected in 2019. Blue Grass is expected to complete operation by 2021 -- source .

MOSCOW EXILE October 10, 2020 at 6:42 am

Same story in Sputnik:

Moscow: Berlin Must Explain Situation With Navalny Under European Convention on Mutual Legal Aid
11:13 GMT 10.10.2020(updated 13:14 GMT 10.10.2020)

According to the ministry, the structure and mass spectrum of "Novichok," which is claimed to have been behind the poisoning of former double agent Sergei Skripal and opposition figure Alexey Navalny, were first revealed in the mass spectral database of the American Institute of Standards in 1998 (NIST 98).

And further:

The OPCW said on Tuesday that a substance similar to nerve agent Novichok, but not included on the lists of banned chemicals, had been found in Navalny's system. The German government believes the OPCW's statement actually confirmed the opposition activist's poisoning with a Novichok group substance but admits that the substance in question is not formally banned.

Russia has also said that the German Foreign Minister's address to lawmakers on the "Navalny case" shows that Moscow is still subject to propaganda attacks.

"As for Heiko Maas' thesis that Russia's claims against Germany and the OPCW are absurd, such remarks are outrageous and do not stand up to any criticism. All we want is to get legal, technical and organizational assistance both in the bilateral Russian-German format and via the OPCW in the interests of conducting a comprehensive, objective and unbiased investigation of all the circumstances of the incident that occurred with Alexey Navalny," the ministry said.

German Foreign Minister Heiko Maas said earlier that Berlin will discuss with its OPCW and EU partners a general reaction to the incident with Navalny, adding that the EU may "very quickly" impose sanctions against those people who they believe are involved in the development of chemical weapons in Russia.

Russian Foreign Ministry's spokeswoman, Maria Zakharova, said earlier this week that the incident with Russian opposition figure Navalny was used just as a pretext for introducing sanctions against Russia that had long been in the works.

MARK CHAPMAN October 10, 2020 at 7:18 pm

But, as I probably need not mention again, the provocation has served its purpose already. The German Foreign Minister, who was once quite bellicose on the USA's bullying ways and, if not a friend of Russia, was at least telling America "You are not the boss of us" on the issue of energy projects with Russian partners, is now fighting with Russia and saying things that cannot be taken back. All thanks to that otherwise-useless grifter, the German-Russian relationship has suffered a serious blow. Merkel, the eternal pragmatist, will not be around forever and I would not be surprised at all to see her declining health take her out of politics altogether by the end of 2021, if she does not suffer a medical event which kills her. She is not a well woman. With her gone, the Atlanticists in the German government – who still constitute a significant influence – could well prevail, and dump Germany right back into Uncle Sam's lap. At the very best, in such an eventuality, Nord Stream II would be allowed to complete but the Germans would demand so much control over it that it would be just as if Washington was running it.

Time to complete it is not unlimited.

[Oct 07, 2020] Germany, France UK to propose sanctions on Russia over alleged poisoning of opposition figure Navalny -- RT Russia Former Soviet Union

Oct 07, 2020 |

Germany, France and the UK will push for EU sanctions on Russian individuals over the alleged poisoning of Kremlin critic Alexey Navalny, saying they see no other "credible explanation" for the incident than Moscow's involvement.

The proposals will target "individuals deemed responsible for this crime and breach of international norms" as well as "an entity involved in the Novichok program," the French and German foreign ministries said in a joint statement on Wednesday.

"No credible explanation has been provided by Russia so far. In this context, we consider that there is no other plausible explanation for Mr Navalny's poisoning than a Russian involvement and responsibility," the statement reads. Berlin and Paris said they will share their proposals for sanctions with their EU partners shortly.

ALSO ON RT.COM UK says 'we haven't yet attributed' Navalny's alleged poisoning to Kremlin, but Moscow must 'ANSWER'

Later, British Foreign Secretary Dominic Raab added that the UK stands "side by side" with France and Germany, declaring that evidence against Moscow is "undeniable."

Navalny fell sick on a flight from the Siberian city of Tomsk to Moscow on August 20, forcing the plane to perform an emergency landing. The anti-corruption activist was put into an induced coma at a hospital in the city of Omsk and two days later was transferred to the prestigious Charité clinic in Berlin at the request of his family.

The German medics who treated Navalny said that their tests revealed that he had been poisoned with a substance from the Novichok group of nerve agents.

The Organization for the Prohibition of Chemical Weapons (OPCW) has also studied the samples provided by Berlin, confirming the presence of a toxic substance from the Novichok group in Navalny's blood and urine.

This contradicts the statements made by the Russian medics from Omsk, who insisted that they had discovered no traces of any known poison in the activist's system at the time of his admission to hospital.

ALSO ON RT.COM OPCW says it found traces of Novichok-class substance in blood & urine samples of Russian opposition figure Alexey Navalny

Navalny, who has since emerged from coma and been discharged from hospital, said that he blames Vladimir Putin for making an attempt on his life.

Moscow has repeatedly denied any involvement in Navalny's alleged poisoning and has accused Berlin of failing to provide samples that would prove the use of the nerve agent.

'Novichok' became a household name after the chemical poisoning of double agent Sergei Skripal and his daughter in the UK city of Salisbury in 2018. Western powers were also quick to blame Moscow in that instance, slapping sanctions on Russia, before offering any solid evidence of the country's involvement.

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[Oct 05, 2020] Russian subsides for Easter Europe are now much less then in the past

Oct 05, 2020 |

Kooshy , Oct 4 2020 19:41 utc | 36

Before the fall of USSR most Eastern Europe USSR dependencies energy and security was subsidized by Russians /USSR. After the fall of USSR most so called independent Eastern European former Soviet allies are reviving their energy from Russia but subsidized by EU/US in form of loans and capital investments and their security is total subsidized by US/NATO. This was understood as such and cleverly corrected by the Russians

[Sep 29, 2020] The USA can probably be energy independent but it requires $4 or higher price at the pump

Sep 29, 2020 |

JoaoAlfaiate , says: September 29, 2020 at 3:37 pm GMT

Trump said "I like being energy independent, don't you? I'm sure that most of you noticed when you go to fill up your tank in your car, oftentimes it's below two dollars "

But energy "independence" has got little to do with price at the pump. The marginal barrel sets the price. If the world price for crude goes to $100/barrel, West Texas Intermediate is going to the same level and gasoline will rise to $4.00.

Oil is at $40/barrel because the Gulf producers and Saudi Arabia want to insure a long term market for their one export product while making a lot of high cost production unsustainable and alternate energy sources less attractive.

[Sep 29, 2020] This is a threat? Washington is considering closing its embassy in Iraq

Sep 29, 2020 |

PATIENT OBSERVER September 28, 2020 at 4:33 am

This is a threat?

Washington is considering closing its embassy in Iraq, nine months after the US killing of an Iranian general on Iraqi soil led to protests over what Baghdad called a "violation" of its sovereignty, according to reports.

Multiple media outlets, including the Wall Street Journal, the Washington Post and Sky News, reported on Sunday that US officials told their Iraqi counterparts that Washington will shut down its operations unless there is an end to rocket attacks on the embassy, which is located in the heavily-fortified Green Zone in Baghdad.

Sounds more like a possible victory for Iraq and its people. I suspect that there is much more to the story and the US is pre-emptively seeking a face-saving exit excuse if it were to come to that.

However, it would be extremely unlikely for the US to abandon the embassy given that it serves as the headquarters for numerous nefarious operations in Iraq and Iran

ET AL September 28, 2020 at 6:11 am

The claim that I have read is that this is in response to the USA's assassination of General Solemani in Lebanon. More precisely the i-Ranian strategy is not per se to cause American casualties but carry out sustained attacks via proxies on American interest in i-Rack, i.e. psychological pressure, cost etc. the ultimate goal being the USA leaving i-Rack as a suitable price for the assassination.I

I've also read (Vinyard the Saker?)that the USA has so far closed some of its smaller and less defensible outposts but concentrated what remains in fewer better defended bases. The USA does not want to leave i-Rack militarily and will hang on until it is out of options. The US embassy leaving i-Rack will not be good enough for i-Ran, but maybe this is the beginning of some kind of behind the scenes bargaining, though this is hard to believe considering the US is still pushing for a gulf coalition (WAR!) against i-Ran as well as polically neutralizing any potential spoiler countries. Also the embassay was built at quite a significant cost $750 billion.* So, you are right PO, this is bluff by the big puff Plumpeo.

i-Rack has also being trying to get rid of American military presence even though they have bought F-16IQs from Washington but the latter is using the same figleaf excuse as in Syria that they are 'fighting terrorists.'


ET AL September 28, 2020 at 6:18 am

$750 million. Duh!

JRKRIDEAU September 28, 2020 at 6:47 am

$750 million. Duh
Given standard US contracting over-runs I was willg to believe "billions". The surprising thing is that it got built.

MARK CHAPMAN September 28, 2020 at 3:12 pm

The USA will never abandon its crown jewel in Iraq, and it would make little practical difference anyway, as it lies entirely within the American 'Green Zone', and they will surely not abandon that.

"But the location of the compound is well known in Baghdad anyway, where for several years it has been marked by large construction cranes and all-night work lights easily visible from the embattled neighborhoods across the river. It is reasonable to assume that insurgents will soon sit in the privacy of rooms overlooking the site, and use cell phones or radios to adjust the rocket and mortar fire of their companions. Meanwhile, however, they seem to have held off, lobbing most of their ordnance elsewhere into the Green Zone, as if reluctant to slow the completion of such an enticing target."

The Baghdad Embassy is the USA's most-expensive embassy in the world, and it costs far more to run it each year than the cost of building it, in excess of a Billion dollars a year. What America might do, and what Iraq does fear, is send its diplomats home for awhile, and use it as an excuse to open a military operation in Iraq against what it terms Iran-aligned militias.

[Sep 28, 2020] May Non-OPEC Oil Production drops to 2013 levels by Ovi

Images deleted: see the original for images
Sep 28, 2020 |

A post by Ovi on peakoilbarrel

Below are a number of oil (C + C ) production charts for Non-OPEC countries created from data provided by the EIA's International Energy Statistics and updated to May 2020. Information from other sources such as the OPEC and country specific sites is used to provide a short term outlook for future output and direction.

Non-OPEC production dropped slowly from a high of 52,638 kb/d in December 2019 to 52,396 kb/d in March 2020. In April that changed when we saw the first big drop in output from the Non-OPEC countries associated with Covid and with the drop in world oil prices. May output collapsed to 45,340 kb/d, which is close to the production level in September 2013.

The projection to September (red square) was made using the September STEO report. It projects that after the low of 45,350 kb/d in May, production will increase by close to 3,500 kb/d to just under 49,000 kb/d in September.

Above are listed the worldʼs 15th largest Non-OPEC producers. They produced 83.6% of the Non-OPEC output in May. On a YoY basis, Non-OPEC production was down by 5,011 kb/d. On a MoM basis, production was down by 5,282 kb/d. World oil production was down by 11,418 kb/d, MoM and 10,318 kb/d YoY.

May saw a drop in output to 2,765 kb/d but rebounded in June to 3,013 kb/d according to this source . Maintenance and extensive turnarounds planned between September and November could shave around 200,000 b/d from Brazil's output.

The EIA shows Canadian production was down in May by 658 kb/d by 248 kb/d to 3,694 kb/d. The CER data is higher because it includes NGPLs in their estimates and is close to 6% of total output.

Canadian oil exports by rail to the US fell from a high of 411,991 b/d in February to a new low of 48,820 kb/d in June.

April 156,242 kb/d May 58,048 kb/d June 48,820 kb/d

At the same time, according to this source , "The Trans Mountain pipeline carried a record-breaking amount of oil to British Columbia from Alberta in August, despite persistent price and demand woes gripping the energy sector as the COVID-19 pandemic drags on".

"We have been full every day during the COVID period. Demand for the pipeline has not softened at all," he told The Globe and Mail in an interview Tuesday.

Chinaʼs production peaked in June-15 at 4,408 kb/d and has been in a steady decline up to September 2018 where it reached an output low of 3,694 kb/d. According to this source, Chinaʼs August production increased by 2.6% over last August. Output increased by 59 kb/d to 3,899 kb/d (Red square). However August's output is still slightly lower than the June 2019 output of 3,918 kb/d even though Chinese oil companies have increased their spending to reduce the decline rate.

Kazakhstan production hit a new output high in February, 1,976 kb/d. For May, production dropped by 203 kb/d to 1,738 kb/d. OPEC expects their output to drop by an average 15 kb/d this year.

Mexicoʼs production decreased in May by 85 kb/d to 1,686 kb/d, according to the EIA. Data from Pemex shows that production dropped to 1,647 kb/d in July (red square). Under the OPEC + Declaration of Cooperation, Mexico committed to reduce output by 100 kb/d in May. Their target was almost met.

The EIA reported that Norway's May production was 1,775 kb/d, a decrease of 14 kb/d from April.

According to the Norwegian Petroleum Directorate, "average daily liquids production in July was: 1 739 000 barrels of oil, 296 000 barrels of NGL and 27 000 barrels of condensate. (Red lines)

On 29 April 2020, the Government decided to implement a cut in Norwegian oil production. The production figures for oil in July include this cut of 134 000 barrels per day in the second half of 2020."

In other words, if Norway hadn't made their commitment to reduce production, May's oil output would have been (1,739 + 134) 1,873 kb/d. This output level would have been very close to some earlier highs.

According to the Russian Ministry of energy, Russian production increased by 479 kb/d in August to 9,860 kb/d. July was revised up by 11 kb/d from 9,371 kb/d to 9,382 kb/d.

UKʼs production decreased by 63 kb/d in May to 1,004 kb/d. According to OPEC, crude production is expected to increase to 1,010 kb/d in June (Red square).

June's production rebounded from May's low by adding 420 kb/d according to the the EIA's August report. May's output was revised up by 15 kb/d in the EIA's September report.

US and Permian oil rigs decreased by 1 to 179 and 121 respectively in the week of September 18. As a percentage, Permian oil rigs represented 67.5% of the total for the week of Aug 21.

According to the September DPR, the 121 rigs operating in the Permian in September will be sufficient to raise production in September by 42 kb/d to 4,150 kb/d.

While WTI has remained close to $40/bbbl, there has been essentially no change in drilling activity since the week of July 17 in the US. There were 180 oil rigs in operation that week vs 179 for the week of September 18.

These five countries complete the list of Non-OPEC countries with annual production between 500 kb/d and 1,000 kb/d. All five are in overall decline. Their combined May production was 3,263 kb/d down 232 kb/d from April's output of 3,495 kb/d. Azerbaijan, Indonesia and India appear to be in a slow steady decline phase. Columbia's production began to drop in March as Brent prices began to drop.

According to Colombia's minister of energy, Maria Fernanda Suarez, ANH president Armando Zamora said if Brent oil prices hit around $35 a barrel national oil output could average around 850,000 barrels a day, down from a previous forecast of 900,000 barrels.

Guyana is a new oil producing country that started production in December 2019. According to this s ource , production was supposed to reach 120 kb/d by June. However gas re-injection issues have delayed its planned production rise. Output in June is expected to be close to 80 kb/d (red square). This new source for oil will offset some of the decline in other countries, which currently is close to 400 kb/d/yr.


This chart shows that oil production in Non-OPEC countries has only increased by 541 kb/d from December 2014 t0 December 2019. It is an indication that these countries as a whole are approaching an output plateau. April is the first month in which the large production drop associated with CV-19 and the plunge in oil prices shows up in this chart. In May 0utput from these countries dropped by 3,293 kb/d to 35,348 kb/d.

Using information from the September STEO, output from the Non OPEC countries W/O the US, is expected to rebound to 37,054 kb/d in September (red square). Looking further out to October 2021, output is predicted to reach 39,692 kb/d. (Blue graph). Note that the October 2021 high is currently expected to be 143 kb/d lower than the December 2019 peak. The 143 kb/d difference is probably well within the margin of error in making these projections.

World Oil Production

World oil production in May decreased by 11,417 kb/d to 71,374 kb/d. This chart also projects world production out to October 2020. It uses the September STEO along with the International Energy Statistics to make the projection. It projects that world production will recover by close to 5,000 kb/d in October 20202 to 76,019 kb/d.

This chart presents world oil production without the US. Note that the November 2016 peak is two years prior to all the worldʼs peak shown in the previous chart. May production was 61,372 kb/d, a decrease of 9,429 kb/d from April.

Using the STEO and the EIA international Energy Statistics, output for September is projected to be 63,768 kb/d, an increase of 2,396 kb/d higher than May.

[Sep 28, 2020] Washington's Hybrid War On Russian Energy Targets Germany, Belarus, And Bulgaria -

Sep 28, 2020 |

Washington's Hybrid War On Russian Energy Targets Germany, Belarus, And Bulgaria

by Tyler Durden Sun, 09/27/2020 - 08:10 Twitter Facebook Reddit Email Print

Authored by Andrew Korybko via,

The US is ruthlessly waging an intense Hybrid War on Russian energy interests in Europe by targeting the Eurasian Great Power's relevant projects in Germany, Belarus, and Bulgaria, banking on the fact that even the partial success of this strategy would greatly advance the scenario of an externally provoked "decoupling" between Moscow and Washington's transatlantic allies.

The Newest Front In The New Cold War

The New Cold War is heating up in Europe after the US intensified its Hybrid War on Russian interests there over the past two months. This proxy conflict is being simultaneously waged in Germany, Belarus, and Bulgaria, all three of which are key transit states for Russian energy exports to the continent, which enable it to maintain at least some influence there even during the worst of times. The US, however, wants to greatly advance the scenario of an externally provoked "decoupling" between Moscow and Washington's transatlantic allies which would allow America to reassert its unipolar hegemony there even if this campaign is only partially successful. This article aims to explore the broad contours of the US' contemporary Hybrid War strategy on Russian energy in Europe, pointing out how recent events in those three previously mentioned transit states are all part of this larger plan.


From north to south, the first and largest of these targets is Germany, which is nowadays treating Russian anti-corruption blogger Navalny. The author accurately predicted in late August that "intense pressure might be put upon the authorities by domestic politicians and their American patrons to politicize the final leg of Nord Stream II's construction by potentially delaying it as 'punishment to Putin'", which is exactly what's happening after Berlin signaled that it might rethink its commitment to this energy project. America isn't all to blame, however, since Germany ultimately takes responsibility for its provocative statements to this effect. Dmitri Trenin, Director of the Carnegie Moscow Center, published a thought-provoking piece titled " Russian-German Relations: Back To The Future " about how bilateral relations will drastically change in the aftermath of this incident. It's concise and well worth the read for those who are interested in this topic.


The next Hybrid War target is Belarus , which the author has been tracking for half a decade already. After failing to convince Lukashenko to break off ties with Russia after this summer's Wagner incident, a Color Revolution was then hatched to overthrow him so that his replacements can turn the country into another Ukraine insofar as it relates to holding Russian energy exports to Europe hostage. The end goal is to increase the costs of Russian resources so that the US' own become more competitive by comparison. Ultimately, it's planned that Russian pipelines will be phased out in the worst-case scenario, though this would happen gradually since Europe can't immediately replace such imports with American and other ones. "Losing" Belarus, whether on its own or together with Nord Stream II, would deal a heavy blow to Russia's geopolitical interests. Countries like Germany wouldn't have a need to maintain cordial relations with it, thus facilitating a possible "decoupling".




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That's where Bulgaria could become the proverbial "icing on the cake". Turkish Stream is expected to transit through this Balkan country en route to Europe, but the latest anti-government protests there threaten to topple the government, leading to worries that its replacement might either politicize or suspend this project. Azerbaijan's TANAP and the Eastern Mediterranean's GRISCY pipelines might help Southeastern Europe compensate for the loss of Russian resources, though the latter has yet to be constructed and is only in the planning stages right now. Nevertheless, eliminating Turkish Stream from the energy equation (or at the very least hamstringing the project prior to replacing/scrapping it) would deal a death blow to Russia's already very limited Balkan influence. Russia would then be practically pushed out of the region, becoming nothing more than a distant cultural-historical memory with close to no remaining political influence to speak of.

Economic Warfare

The overarching goal connecting these three Hybrid War fronts isn't just to weaken Russia's energy interests, but to replace its current role with American and other industry competitors. The US-backed and Polish-led " Three Seas Initiative " is vying to become a serious player in the strategic Central & Eastern European space, and it can achieve a lot of its ambitions through the construction of new LNG and oil terminals for facilitating America's plans. In addition, artificially increasing the costs of Russian energy imports through political means related to these Hybrid Wars could also reduce Russia's revenue from these sources, which presently account for 40% of its budget . Considering that Russia's in the midst of a systemic economic transition away from its disproportionate budgetary dependence on energy, this could hit Moscow where it hurts at a sensitive time.

The Ball's In Berlin's Court

The linchpin of Russia's defensive strategy is Germany, without whose support all of Moscow's energy plans stand zero chance of succeeding. If Germany submits to the US on one, some, or all three of these Hybrid War fronts in contravention of its natural economic interests, then it'll be much easier for America to provoke a comprehensive "decoupling" between Russia and Europe. It's only energy geopolitics that allows for both sides to maintain some sense of cooperation despite the US-encouraged sanctions regime against Russia after its reunification with Crimea and thus provides an opportunity for improving their relations sometime in the future. Sabotaging Russia's energy interests there would thus doom any realistic prospects for a rapprochement between them, but the ball's in Berlin's court since it has the chance to say no to the US and ensure that the German-Russian Strategic Partnership upholds Europe's strategic autonomy across the present century.



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Concluding Thoughts

For as much as cautiously optimistic as many in the Alt-Media Community might be that the US' Hybrid War on Russian energy in Europe will fail, the facts paint a much more sobering picture which suggests that at least one of these plots will succeed. Should that happen, then the era of energy geopolitics laying the foundation for Russian-European relations will soon draw to a close, thereby facilitating the US' hoped-for "decoupling" between them, causing budgetary difficulties for Moscow at the moment when it can least afford to experience such, and pushing the Eurasian Great Power's strategic attention even further towards Asia. The last-mentioned consequence will put more pressure on Russia to perfect its "balancing" act between China and India , which could potentially be a double-edged sword that makes it more relevant in Asian geopolitical affairs but also means that one wrong move might seriously complicate its 21st-century grand strategy .

Vegetius , 4 hours ago

If you look at the three countries mentioned Belarus will likely be absorbed by Russia sooner rather than later. The push for this is underway looking at meetings taking place. For Bulgaria the US is far away and has no power to stop the Turks. It is the Turks the Bulgarians fear, with a lot of reasons, their surest way of keeping out of the Turks clutches is to look to Russia for support. Unfortunately the USA has an appalling track record of betraying countries, ask Libya.

The Germans have no choice but take the Russian gas, economically, socially and for strategic reasons. The truly big fear for the US is a German/Russian bloc. German and Russian technology with unrivaled resources. That is the future super power if they are pushed together, something that is very likely if we see a major economic contraction in the next few years.

Mustahattu , 4 hours ago

The US fear of an Eurasian alliance. The US fear Europe will create a Silicon Valley of the future. The US fear the Euro will replace the dollar as a reserve currency. The US fear Russia will become a superpower. The US fear China. There's a lot to fear yankee dear...cos it's all gonna happen.

Hope Copy , 1 hour ago

RUSSIA is content with 45 and 25nm as it can be hardened.. 14 and especially 7nm is so that the **** will wear out..

Ace006 , 2 hours ago

Instead of fretting about how this or that country or bloc will become a/an _________ superpower the US could focus on regaining its former pre-eminence.

It's a crazy thought, I know, but

  1. moving a massive amount of industrial capacity to China and fueling the rise of a communist country just might have been a bad idea and
  2. thrashing about in the international arena like a rutting rhinoceros at huge expense makes us look foolish and, in the case of Syria, petty and vindictive.

Repairing the damage from the former and stopping the hemorrhage of money and reputation respectively would be a far better objective than playing Frankenstein in Libya, Afghanistan, Iraq, Syria, Ukraine, Georgia, Serbia, Iran, Poland, N. Korea, and Venezuela, inter alia . Mexico is a failed state right on our border that contributes mightily to our immigration, cultural, and political problems. But, no, the puffed up, prancing morons who make US policy can summon the imagination to figure out how to help our very own neighbors deal with their hideous problems. No. Let's engage in regime change and "nation building" in Afghanistan, Iraq, Syria, Libya, Ukraine, and Belarus.

The words of the great Marcus Aurelius are on point: "Within ten days thou wilt seem a god to those to whom thou art now a beast and an ape, if thou wilt return to thy principles and the worship of reason."

Herodotus , 1 hour ago

Bulgaria must return to the protection of the Ottoman Empire.

yerfej , 4 hours ago

Easy solution, end NATO. Just have all US forces told to leave the EU and let them determine their own destiny. Then do the same with US forces in the ME, Japan, Korea, etc. EVERYONE would be better off, including US taxpayers which get nothing out of the useless overseas deployment of resources which could be better spent at home.

yojimbo , 3 hours ago

5% budget deficit, 5% military spending. Leave the world, drop 4.5% of the spending and either save money, or build infrastructure. It's so simple, I am disappointed Trump doesn't at least state it. I get he is limited by the system, and can't be a Cincinnatus, even if he wanted to, but he has his First Amendment.. though I grant him a personal fear of being Kennedied!

Bac Si , 2 hours ago

Howdy Yerfej. It sounds like you are all for Isolationism.

But Isolationism means different things to different people. Pre WW2, Isolationism in the US meant selling our products to hostile countries. In the case of Japan, oil to help them kill Chinese people. In the case of Germany and Italy, food and vehicles to help them conquer all of Europe.

Considering the ridiculous education that the US gives its children, it's no wonder that most Americans don't know much about history (I say that in general terms, not to you specifically). Henry Ford senior not only received the 'Grand Cross of the German Eagle' from Adolf Hitler in 1938, he also received a 'Congressional Medal' from the US Congress shortly after WW2 – and for the same reason. Selling trucks to help the war effort.

Even after Pearl Harbor, there were politically powerful Isolationists that did not want the US to get involved in WW2. Why? Because a lot of money was at stake. It still is. These same people will continue to argue for Isolationism even after we are attacked.

Two months AFTER Pearl Harbor, FDR made a speech that included this:

"Those Americans who believed that we could live under the illusion of isolationism wanted the American eagle to imitate the tactics of the ostrich. Now, many of those same people, afraid that we may be sticking our necks out, want our national bird to be turned into a turtle. But we prefer to retain the eagle as it is – flying high and striking hard. I know that I speak for the mass of the American people when I say that we reject the turtle policy and will continue increasingly the policy of carrying the war to the enemy in distant lands and distant waters – as far away as possible from our own home grounds." – FDR

This radical change in our foreign policy has never been explained or even referred to in US history books. Powerful economic forces will always love the idea of "Open Trade Isolationism". But if Isolationism is ever suddenly defined by not doing business with any hostile government – those powerful forces will go ballistic. They will strongly lobby against 'Economic Warfare'. In other words, they will always want to make lots of money by selling their products to hostile governments, no matter how many people die.

Want a great example?

Right after Loral Corporation CEO Bernard L. Schwartz donated a million dollars to the DNC, President Clinton authorized the release of ballistic missile technology to China so Loral could get their satellites into space fast and at low cost. Those same missiles, and their nuclear warheads, are now pointed at the US.

The argument has always been that if we trade with hostile governments, they will grow to like us. Does anyone out there believe that if the UK and France gave pre WW2 Germany an extra $20 billion in trade, Germany wouldn't have started WW2? Anyone with a brain would tell you that Germany would have put those resources into their military (like China has been doing) and WW2 would have started earlier.

Yerfej, if we brought back the Cold War organization called the Coordinating Committee for Multilateral Export Controls (COCOM), I would be all for Isolationism. President Clinton got rid of it in his first year, and Western weapons technology has been threatening us ever since.

BaNNeD oN THe RuN , 5 hours ago

You have to love the dynamic duo of "lie, cheat and steal" Pompeo and his "mob boss" Trump. There is absolutely no subtlety in their obvious shakedown tactics.

PrivetHedge , 4 hours ago

The mob had far more honor, and better morals.

PrivetHedge , 4 hours ago

Washington's transatlantic allies...

Hahahah, occupied vassals.
Washington has cost Germany a massive slice of GDP.

you_do , 4 hours ago

Yankee has plenty of problems at home.

Rest of the world can decide their own energy policy.

They do not suffer from the 'Russia' propaganda.

geno-econ , 5 hours ago

Let Russia, the lowest cost energy producer win energy competition in Europe as China, the lowest cost manufacturing producer is winning in America. Only difference is retailers, shippers, assembly part importers such as auto, electronics and appliance makers are making a profit and consumer gets lower prices. We should let others decide for themselves and stop meddling----only result will be a bloody nose

you_do , 4 hours ago

Yankee has plenty of problems at home.

Rest of the world can decide their own energy policy.

They do not suffer from the 'Russia' propaganda.

geno-econ , 5 hours ago

Let Russia, the lowest cost energy producer win energy competition in Europe as China, the lowest cost manufacturing producer is winning in America. Only difference is retailers, shippers, assembly part importers such as auto, electronics and appliance makers are making a profit and consumer gets lower prices. We should let others decide for themselves and stop meddling----only result will be a bloody nose

free-energy , 4 hours ago

Notice how everything the US does around the world is a WAR. War on Energy, War on Drugs, War on Birth Control, War War War... America will fall after 2020 if nothing changes for the better. Every year the world grows more and more tired of the US bs and moves further away from it. Its so bad that they choose to deal with a communist country over us.

You reap what you've sowed.

Bobby Farrell Can Dance , 3 hours ago

The Anglo American parasite pirate gangsters keep barking on about Russia bad, China bad, but I look around and I see nothing but these trouble makers waging war on anything they cannot control. The US and UK are devil nations. They will deserve all the rot they have coming their way.

Unknown User , 5 hours ago

Trump wants a trade balance with all major economies like Germany and China. If they don't buy from us, he will have to raise tariffs. In case of Germany, they need nothing from us so he wants them to buy US LNG. Merkel's position is that "there is a cheap Russian gas", while Trump is telling her "no there isn't one".

Pumpinfe , 4 hours ago

So trump loves to deep throat Russia but give Germany a hard time to Nordstream 2? Wake up fanboys, your hero is a ******. I got so much money invested in gazprom. LNG is junk and gazprom (Russian owned) is gona crush LNG and trump and his idiot following can't do a damn thing. You trump idiots will believe anything. Let me enlighten you...gazprom is the lowest cost producer of natural gas in the world...go look at the difference between gazprom and LNG and then you will realize that orange dump is an idiot along with his army of empty heads. Oh and if you think China and Russia are not friendly, go look up the Power of Siberia pipeline. That will give you a good sense of the relationship between Russia and China. America is rotting from the inside and Russia and China are eating their popcorn watching it happen.

Dabooda , 3 hours ago

I don't see Trump deep-throating anyone but Netanyahu. Sans gratuitous insults, your comment about Gazprom is spot on

Lokiban , 5 hours ago

I doubt Merkel will give in. She would commit political suicide if she did that. She knows Navalny is a US effort to stop Nordstream 2.
What is the alternative? Buying gas from the US or US-controlled oilfields in Iraq and Syria? Putin might have a say in that.

Lokiban , 5 hours ago

I doubt Merkel will give in. She would commit political suicide if she did that. She knows Navalny is a US effort to stop Nordstream 2.
What is the alternative? Buying gas from the US or US-controlled oilfields in Iraq and Syria? Putin might have a say in that.

thurstjo63 , 3 hours ago

The main fault in Mr Korybko's thinking is that he believes that European countries will not just shoot themselves in the foot but in the head to appease the US. At a european and local level, those who wanted Nord Stream 2 to be suspended or killed have failed. The costs are way too high. For that we can thank, perversely, the agreements associated with protecting investments from political decisions pushed by the US itself!!! Given that there is no proof of Navalny being poisoned, Germany knows that there is no way that they could hope to win their case for stopping Nord Stream 2 in a tribunal with persons capable of rational thought. That is why they made the deal to buy some US liquified gas for a couple of billion dollars. Because that is the cheapest way of extricating themselves from this situation. Otherwise, they are looking at orders of magnitude more compensation to russian and european firms for stopping the pipeline.

As for Belarus, barring Lukashenko doing something profoundly stupid like reacting violently to protests, that ship has already sailed. Protests are smaller every week and mainly on the weekend as now the "opposition" has been publishing people's profiles accusing them of collaborating with the government without any proof, leading to innocent people and their families to be threatened. There will be a transition from Lukashenko over the next couple of years but you can be sure that the present "opposition" given their desire to break away from Russia will not be part of the group that comes to power in the future since their base of support diminishes every week.

Finally Bulgaria already shot themselves in the foot when they backed out of South Stream and had major problems securing energy resources to meet its needs during the intervening period. Radev as any politician wanting to stay in office knows, if he doesn't go through with connecting Turk Stream to the rest of Europe that he might as well resign. So unless the US has compromising information on him that can force him from office or the Radev's administration doesn't control the US attempts to create the conditions for a colour revolution in Bulgaria, it is definitely not going to happen.

I'm sorry but Mr. Korybko is wrong on all counts!

Savvy , 4 hours ago

When the US backed Georgia's violent incursion into S Ossetia it took Russia one day to send them back.

Russians are slow to saddle but ride fast.

Joiningupthedots , 2 hours ago

That was with the remnants of the old Soviet Army too.

The new Russian Army is an entirely different beast in both organisation, training, experience and equipment.

This guy has his finger on the pulse;

JeanTrejean , 5 hours ago

Are the USA really at war with Russia...and EU?

Decoupling Russia from EU, is re-enforcing the Eurasia bloc...where is the future of the world.

Russia belongs to Europa...not the USA.

BaNNeD oN THe RuN , 4 hours ago

Geographically Europe and Asia are one continent. It was "European exceptionalism" (the precursor to American Exceptionalism) that divided it as an ethno-cultural construct.

researchfix , 5 hours ago

Cancelling NS2 will chase the German industry into Russia. Cheap energy, moderate wages, Eurasian market at the front steps.

The sheep and their ex working places and Mutti will stay in Germany.

Bobby Farrell Can Dance , 3 hours ago

Do Germans want to be slaves of these abject Brits and Americans? Pffffft....gas from Russia is a NO BRAINER.

Only British and Americans rats do not like that idea. How un-selfish then, it is for these jealous, insecure morons to dictate to Germany how she should trade. That's called outright meddling. These imperialists are like entitled Karens, they think the world owes them favours at the snap of a finger.

Sandmann , 4 hours ago

Nordstream 2 has an add-on leg to UK. Germany is largest gas importer on earth and cannot run its industry without gas imports from Russia. LNG is simply too expensive unless US taxpayers subsidise it.

If US wants to destabilise Europe it will reap the consequences. Southern Europe depends on gas from North Africa - Portugal generates electricity from Maghreb Pipeline to Spain from Algeria via Morocco. Erdogan hopes to put Turkey in position of supplying gas to Europe.

Germany will not abandon Nordstream 2 but might abandon USA first.

Max21c , 3 hours ago

The US is ruthlessly waging an intense Hybrid War on Russian energy interests in Europe by targeting the Eurasian Great Power's relevant projects in Germany, Belarus, and Bulgaria, banking on the fact that even the partial success of this strategy would greatly advance the scenario of an externally provoked "decoupling" between Moscow and Washington's transatlantic allies.

It's a petty game and when it fails then the Washingtonians credibility and legitimacy just further erodes. The EU needs the energy supplies and the Russian Federation has the supplies. It's all just short term & small gain silliness by a pack of freaks in Washington DC and their freaks in the CIA, Thunk Tank freaks and freaks in the foreign policy establishment. It's just more of the Carnival sideshow/freakshow put on by Washingtonians. As usual if it's a Washingtonian (post Cold War) policy then there's little or no substance behind it and you can be sure it hasn't be thought through thoroughly and it'll eventually turn and boomerang back on the circus people in Washington, Ivy League circus people, and JudeoWASP elite circus people, CIA circus clowns and circus clowns in the Thunk Tonks and elites Fareign Poolicy ***-tablishment.

John Hansen , 3 hours ago

If all it takes is a Navaly hoax to cause this Europe isn't really worth dealing with.

propaganda_reaper , 3 hours ago

Once upon a time, a revolution occurred in a country through which passed a gas pipeline. The bad guys were vanquished. And the very good foreign guys who helped the local good guys defeat the tyrant said: "We got the same stuff, but liquid."

Any similarity with fictitious events or characters was purely coincidental.

_ConanTheLibertarian_ , 4 hours ago

Germany needs the gaz.

Obamanism666 , 49 minutes ago

Remember the Gas to Europe still flows through the Ukraine. Russia just needs to reduce the gas Pressure and blame the Ukraine and Europe goes cold and Dark.

German People will beg for Nordstream 2 to be switched on.

lucitanian , 31 minutes ago

That's not the way Russia works. But it's the kind of blackmail that the US uses. And that's why Russia is a more dependable partner for Europe for energy.

Hope Copy , 1 hour ago

This **** goes right back to the 'DeepState' pseudo-revolution that got the Nicky-the-weak killed ,because he financed his railroads and wanted to be rich as hell as he perceived the ENGLISH monarchy to be, with a parliamentary DUMA that he could over rule if need be. I have looked 'DeepState' right in the eyes when I was young and dumb and was told that I would never go to their masion.. Nicky had family enemies. and the Czech fighting force was never going to save him.. Stalin was also double-crossed, but was well informed.. it was in his sector if one reads and believes. Cunning fox Stalin was, always playing those under him to do his bidding.. and that lesson has been well learned by a couple of the world's leaders in this day-in-age...

Herodotus , 1 hour ago

German manufacturing costs must be driven higher to take the heat off of the UK as they emerge from the EU and attempt to become competitive.

novictim , 1 hour ago

When "War" is actually not war but trade policy and financial incentives then you know you are engaged in dangerous bloviations and hyperbole.

When the shooting starts, then you can talk of War.

SuperareDolo , 2 hours ago

Russia might not want to fight these attempts to isolate it from the western economy. The collateral damage will be that much less, once Babylon the great finally falls.

LoveTruth , 2 hours ago

And US claims to be a "Fair Player," caring for freedom and democracy, while twisting arms and supporting corrupted officials.

IronForge , 3 hours ago

PetroUSD, MIC, Colonial Control of Vassals. World Domination Play by the Hegemony.

Just like the Policies of NATO: Russians Out, Germans Down, Anglo-American-ZioMasons and Vatican_Vassals In.

Policies were like this - Sponsored by Anglo-ZioMasons from Pre-WWI, continued through WWII and the First Cold War, and onwards after the Collapse of the SUN and the ensuing NeoCon Wolfowitz Doctrine and PNAC7/Bush-Cheney PetroUSD Plans.

The Hegemony Control MENA Energy Producers. The IRQ-KWT War were mishandled; and KSA demanded for the USA to Smite IRQ. The Initial War and Occupation prompted Hussein to opt the EUR for Petroleum, which Brought about the End of Hussein through the 9-11/PNAC7 Long War.

LBY opted for the Au-Dinar for Petroleum; and were Fail-Stated. IRN and RUS remain the only Major Energy Producers not Controlled by the Hegemony.

IRN were Sanctioned since removing the Shackles of Hegemonic Occupancy via Shah Par Levi; and attempts for Energy Diversification via Nuclear means raised suspicions of Nuclear Weapons Development - prompting for heavier Sanctions and 5thColumn Regime Change Operations by the Hegemony. IRN circumvented Sanctions in part by selling their Petroleum via Major Currencies and Barter. Though many Countries have reduced or maintained their purchase of IRN Petroleum via Sanctions Protocols, CHN are involved in Purchasing IRN's Output.

RUS, another Target of Ruin, Plunder, and Occupational Exploitation by the Hegemony, were Too Large a Country with Standing Armed Forces for Direct Military Invasion by the Hegemony. After the Collapse of the SUN, The Harvard/Chicago led Economic Reforms ended in Plunder - which prompted the Selection and Rise of Putin, who drove out the Plunderers. The Hegemony continue their Geopolitical War of Influence Peddling around RUS while attempting Soft War NATO Membership Recruitment and Regime Change Coups within RUS, Ex-SUN Nation-States, and Trading Partners.

RUS have endured, became Militarily mightier, have become the Major Energy Producer for North/Western Europe and CHN. In addition to the Production, RUS now have begun Trading Petroleum+NatGas outside of the PetroUSD Exchange Mechanism, opting for Customer Currencies or RUB.

RUS and IRN are expected to be Key Providers of the PetroCNY-Au Exchange Mechanism.

The Hegemony and MENA Vassals can't Compete in Combined Petroleum+NatGas Volume and Price; and DEU - by Directly Importing from RUS - will most likely become more Independent from the Hegemon.

CHN, RUS, and DEU - Major Energy, Industrial, Natural Resource, and Military Powers Decoupling from the Influences of the Hegemony, with IND Slowly coming to their Own (IND are simply Too Large to remain Vassals to the Hegemon; and Vassal GBR did so much to Oppress them in the past).

Funny that the Anglo-American-ZioMasons and VAT have brought each of these 3 Powers to Ruin and Occupation in the Past 2 Centuries.

The Ironies being Played Out are that:

1) GBR Lost their Prime Colonies - America/USA, IND, and now Trade City Colony HKG - by their Oppressive and Exploitative Occupancy; and

2) USA, after Fighting Wars for Independence from such Occupations by GBR - Once Becoming a Major Military Power, Followed in the Anglo-ZioMason Tradition of Geopolitical Conquest and Control to the Scale of pursing not only in World Domination - but in Absolute Global Rule.

Maghreb2 , 2 hours ago

Problem is demographic shift . The previous modern system dominated by Zio-Masonry was GNP and GDP where currencies were measured against global output and floated against gold and each other. Now with high inflation and demographic decline knocking out the economy is easier leading to fights between zones of influence. Petro Ruble, Euro or dollar. Dangerous commodities like kilos of heroin, trafficked humans or weapons. Zio-Masonic system has fallen to gangsterism. Hybrid Warfare is the kind of thing we saw in Afghanistan or 80s Columbia . Militarized Russian mafia vs NATO backed militarized police forces.

Once the population reaches a certain age and consumption drops there isn't much to fight over besides social control systems of the young minority. Color revolutions in Central Europe are really only effecting the long term economy of the young . Hope would be Left wing Radicals stood up to the system and aligned with right wing groups to eliminate masonic and Zionist factions and take back the command and control systems before the continet is shut down permanently.

Precision strikes and hunting down their descendents . Easy to find because Hitler and Stalin had their ancestors massacred for loyalty to Rothschild. They won't bite the hands that feed.The Vatican vassal systems was built on knowing that a Zionist is Zionist and Masons is a Mason. They are cults simply teaching them the correct way to behave can avert these political problems.

In terms of Belarus and Russia they should consider the fact the birth rate rate rose after the Soviet collapse and exodus west means many of them shouldn't have even been born in Rothschilds plan. In their " system " economic planning starts at birth because color revolutions effect long term bond issuances they control.

Stalin and Hitler both knew this and used money linked to raw marterials and goods to beat the British gold standard system. If you knew what the Western Central banks were worth you would kill people for using their money.

[Sep 27, 2020] Looks like Washington is simply playing for time

Sep 27, 2020 |

Beckow , says: September 27, 2020 at 12:39 am GMT

@vot tak – Russia could stop transit through Ukraine tomorrow and switch to LNG and existing underwater pipelines. The fact that they have not done it and signed a limited 5-year deal for 2020-2024 suggests that either Russia doesn't want to do it or it is a political concession to its customers (Germany)

You are right that NS2 theatre by Washington is simply playing for time – they know that they can't really prevail. But it is larger than that: their whole strategy is to delay and postpone. They are trying to delay the inevitable or are hoping for a miracle. But strategically they have lost. Water flows downstream, it is only a question of how fast.

TG , says: September 26, 2020 at 3:01 pm GMT

A very interesting post. I might quibble with some of the finer points, but yes, the world has gone stark raving bonkers.

The Russians are NOT ten feet tall, and the Americans – for all of the idiocy of the ruling elites – still have many strengths, and no matter how badly employed, these strengths will not disappear in a day. Russia might yet get pulled down, if they are unlucky or the elites are corrupted by money.

But there is one difference between the Americans and the Russians that, long term, may be the single biggest factor: more than hypersonic missiles or all of that. It's that, for now at least, the Russian elites can learn from experience, and the Americans, can not (or will not, but same thing).

Consider: after the Soviet Union fell, Russian forces got their tails whipped by the Chechens. The Russians rethought their approach, and in a rematch Russia scored not just a military victory, but an enduring strategic victory: they accomplished their policy goals! A goal that was not just spreading chaos and instability! When was the last time the United States did something like that? Maybe Korea in the 1950's.

Realist , says: September 26, 2020 at 3:09 pm GMT
@Ann Nonny Mouse

I'm waiting impatiently for the collapse of the US dollar, hope to live to see it.

Me too the price of gold will go through the roof.

The Spirit of Enoch Powell , says: September 26, 2020 at 3:13 pm GMT
@Mustapha Mond

The Taliban in Afghanistan and the 'rag-tag' North Vietnamese who successfully fought the Vietnam War might disagree with you .

You can't really use those examples as a way of finalising the inferiority of the Western armed forces vis-à-vis Russia as the latter also did not manage to defeat the Afghans and would likely have been made a mincemeat of by the VC as well.

Russia's performance in Chechnya was also not that great considering the power differential.

[Sep 26, 2020] I see that the German Parliament has NOT TAKEN its red pills these days and is reluctant to swallow the BS.

Notable quotes:
"... On rules based disorder and the capitulation of Merkel and her BND lapdogs to the 'hate Russia' fulminations of the UKUSA morons. I see that the German Parliament has NOT TAKEN its red pills these days and is reluctant to swallow the BS. ..."
Sep 26, 2020 |

uncle tungsten , Sep 22 2020 22:53 utc | 36

On rules based disorder and the capitulation of Merkel and her BND lapdogs to the 'hate Russia' fulminations of the UKUSA morons. I see that the German Parliament has NOT TAKEN its red pills these days and is reluctant to swallow the BS. It would be satisfying to see the collective wisdom of the Parliament to exceed that of the BND. But then that is a low bar.

[Sep 24, 2020] Washington using Navalny situation as excuse to block Russian-German Nord Stream 2 gas pipeline, Russian intelligence chief says by Jonny Tickle

Notable quotes:
"... Discussion about ending Nord Stream 2 resumed last month, when EU politicians debated further sanctions, following the suspected poisoning of Navalny. Naryshkin believes that the US is using the accusations of poisoning as a pretext to sell more LNG to Europe. On Thursday, MEPs demanded that Germany cancel construction of the pipeline. ..."
Sep 22, 2020 |

The US is working hard to keep the spotlight on the case of Alexey Navalny as a way to help block construction of the Nord Stream 2 pipeline, according to Sergey Naryshkin, head of Russia's Foreign Intelligence Service (the SVR).

Naryshkin believes that Washington wants to block Nord Stream 2 so it can prevent Moscow from efficiently providing gas to the continent, thereby increasing demand for American liquefied natural gas (LNG) in other European states. As things stand, Russia delivers a large percentage of the continent's gas, and the pipeline would connect the country's gas supply directly to Germany, under the Baltic Sea. The project is more than 90 percent complete.

READ MORE: German FM links Nord Stream 2 to Navalny, threatens sanctions as Moscow accuses Berlin of dragging feet on alleged poisoning probe

"It is extremely important for Washington to end this project," Naryshkin said, explaining that the alleged poisoning of opposition figure Navalny has become an excuse to stop Nord Stream 2's construction.

The United States has long been opposed to the project, somewhat incredibly claiming that it would "undermine Europe's overall energy security and stability," but many believe that Washington's true motivations are economic.

Discussion about ending Nord Stream 2 resumed last month, when EU politicians debated further sanctions, following the suspected poisoning of Navalny. Naryshkin believes that the US is using the accusations of poisoning as a pretext to sell more LNG to Europe. On Thursday, MEPs demanded that Germany cancel construction of the pipeline.

Despite US pressure, Naryshkin has expressed hope that the EU will rely on common sense before the "cold winter" and likened the proposed halting of Nord Stream 2 to "cutting off the nose to spite the face."

Late last month, Russian anti-corruption activist Navalny was hospitalized in the Siberian city of Omsk after he became ill on a flight from Tomsk to Moscow. Two days later, after a request from his family and associates, he was flown to Berlin for treatment at that city's Charité clinic. Following tests, German authorities announced that Navalny was poisoned with a substance from the Novichok group of nerve agents. After the diagnosis, Heiko Maas, the German Foreign Minister, told Berlin tabloid Bild that he hopes "the Russians don't force [the Germans] to change [their] stance on Nord Stream 2."

US aims for gas domination in Europe, Ukrainian MP says. Nord Stream 2 is 1st target, then existing European pipeline system

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[Sep 19, 2020] Who organized this provocation? Is this a part of gas war?

Were Khodorkovsky or Browder among people involved? To what extent Trump administration and MI6 were involved? Looks more and more line a bad replay of Skripals poisoning
Notable quotes:
"... Germans and "the whole world", to quote Pompeo, know the truth: Russians simply deny the truth, and the more they deny, the more truthful the accusations appear. And the elephant in the room: Why isn't the poisoned by "Novichok" bullshitting bastard of a US agent dead? And the answer given by the Germans, that is ironic in the extreme: because Russian doctors saved his life in Omsk. ..."
"... There are undeniable advantages to accusations for which no substantiation is offered – as we saw with the Skripals, you can await public comment, identify where you went wrong from scornful rejections of the narrative, and then modify it so that it makes more sense. ..."
"... I hope Germany offers residency to the Navalnys, and that they accept. Russia can't really refuse to let him back in, he's a citizen. But as long as he is there he will cause trouble, and he'll be recharged with all the PR he has received from this latest caper. ..."
"... But it is suggested that Russia is bargaining for his return; the story also expands on Lavrov's recent statements, and introduces a villain in the woodpile I would not have personally suspected: Poland. ..."
"... I recall Lavrov querying the other day Pevchikh's presence in Germany, her refusal to be interviewed by investigators in Omsk and how come she managed to fly to Germany with Navalny? He also said that other supporters of Navalny had also turned up in Germany. ..."
"... I lay a pound to a pinch of shit that Pevchikh is a British agent. ..."
"... Looking good for almost a corpse. COVID-19, a flu virus, is a deadly killer, and Novichok, a deadly nerve agent, is not a killer. ..."
"... I reckon Khordokovsky has a hand in this. He has the same moral compass as dead Berezovsky. None. And he has refused to stick to agreements (keep out of politics). If the British or someone else get fingered for this cunning plan , would they serve him up on a silver platter? Almost certainly so. ..."
"... We certainly did well to focus on Maria Pevchikh as soon as we discovered that in addition to being the one who evaded questioning by Russian authorities by flying out to Germany, she also had British residency. She certainly has become a "person of interest" and could well be the major individual in the plot to incapacitate Navalny and use him to pressure Germany over NSII and Russia over the Belarus unrest. ..."
"... It is still unknown whether Pevchikh is a British citizen. I think she is and probably must be, in fact, for if she is only a visa holder or an applicant for UK citizenship, she could be told by the Home Office to go take a hike if it is proven that she was instrumental in the poisoning plot. ..."
"... Ask Pevchikh! Only she is now probably undergoing debriefing in London at UK Secret Intelligence Services HQ, 85 Albert Embankment. ..."
"... There was considerable risk involved in the deception. I doubt that Navalny went into the deception willingly. There was a very real risk that he could have suffered some brain damage going into the first coma and that's sure to compromise his health in the long term in other ways. ..."
"... More likely it seems a lot of the deception was planned behind Navalny's back and people were waiting for an opportunity to carry it out. It may have been planned years ago for someone else and then switched to Navalny once he was in the Omsk hospital. Julia Navalnaya may have been pushed into demanding that Navalny be transferred to Berlin and while the Omsk hospital doctors were stabilising him for the transfer, the deception then started going into action in Germany. ..."
"... Lavrov smelt a rat several days ago -- last week, I'm sure -- when he stated that suspicions had been aroused by one of Navalny's gang refusing to answer investigators' questions in Omsk and then scarpering off to Germany. ..."
"... I'm quite sure the FSB already knew of Pevchikh's comings and goings between London and Moscow (over 60 flights there and back I read somewhere) and her activities with the Navalny organization. ..."
"... if Washington thinks it can actually halt Nord Stream II – with the understanding that the Russians would probably give up after such a stinging second rebuke – then the sky is the limit, and they will scornfully reject any other solution. The one who stands to get hurt the most is Europe. But I don't think they realize it. ..."
Sep 19, 2020 |

MOSCOWEXILE September 14, 2020 at 11:07 pm

Russian librag Vedomosti reports NYT:

NYT сообщила о планах Навального вернуться в Россию
15 сентября 2020

NYT has announced Navalney's to return to Russia
15 September 2020

Founder of the Anti-Corruption Foundation, Alexei Navalny, who is undergoing treatment in Germany, has discussed his poisoning with the German prosecutor and announced that he plans to return to Russia, The New York Times has reported, citing a source in the German security forces.

According to the source, Navalny is fully aware of his condition, of what happened and where he is. In a conversation with the prosecutor, he refused that his case be jointly investigated by Germany and Russia. Navalny said he planned to return to Russia immediately after his recovery and continue his mission, the newspaper notes.

Mission accomplished.

I notice that the Navalny fake story has gone off the radar in the Western MSM.

Now there just remain the lies and innuendos fixed in the minds of the sheeple.

Only an investigation by the Germans.

No investigation by the Russians.

Germans and "the whole world", to quote Pompeo, know the truth: Russians simply deny the truth, and the more they deny, the more truthful the accusations appear. And the elephant in the room: Why isn't the poisoned by "Novichok" bullshitting bastard of a US agent dead? And the answer given by the Germans, that is ironic in the extreme: because Russian doctors saved his life in Omsk.

Other elephants lurking in the shadows:

Why hadn't everyone who had been in contact with the piece of shit, including fellow passengers on the Tomsk-Moscow flight died?

Where were the hazmat-suit-wearing specialists that should have detoxified the aeroplane on board of which the Bullshitter threw a wobbler?

So many elephants, all ignored.

Total fabrication.

When the liar returns here, how about arresting him for breach of his bail conditions?

Not technically but absolutely legally he was not allowed to leave the country.

How about arresting him for perverting the course of justice? You can get life for doing that in the UK!

He refuses to allow the Russian state to investigate his case but he and his controllers and supporters maintain that the Russian state attempted to murder him with the most deadly nerve agent known to man -- but it didn't work.

ET AL September 15, 2020 at 1:32 am

Jesus has Risen!

And on the plus side he can sell expensive 'blessed' trinkets to his hamsters help subsidize his interesting lifestyle. Think holy relics, think Medjigorje, Lourdes etc.

MARK CHAPMAN September 15, 2020 at 8:58 am

Having survived Novichok poisoning, is he now immune?

MOSCOWEXILE September 15, 2020 at 4:16 am

A long read:


Навальный, "Новичок" и "белая коробка"
13 сентября 2020

Navalny, "Novichok" and the "White Box"
13 September 2020

Why is not a single Berlin doctor ready to personally confirm the announced poisoning of Navalny?

A Russian patient is recovering in the "White Box" of the Charité hospital. During the three weeks of Navalny's stay within these walls, no one shouted at the doctors that they were murderers, no one demanded from them hourly reports on the patient's state of health. At the beginning of the week, the hospital's press service informs the press that the personal guest of the Federal Chancellor has been withdrawn from an artificial coma and is reacting to other people. A couple of days later, "Spiegel" magazine publishes encouraging information: "More progress has been made. If his health continues to improve, Navalny will begin to receive more visitors". According to "Bellingcat" and "Der Spiegel", Navalny can already speak and can probably recall the events that happened before he lost consciousness on an aeroplane flying from Tomsk to Moscow.

In general, the latest Charité press releases are in clear contradiction to the horror that the German press had been gathering all week. The already poisoned underpants have been forgotten, the newspaper "Die Zeit" returns the reader to a famous photograph: morning in a café at the Tomsk airport, a passenger for the flight to Moscow flight peers into a cup that he has raised in order to drink out of it. In it,, according to a "Die " source, is not just a chemical warfare agent from the "Novichok" group: in there is a "Novichok" on steroids.

"Before this assassination attempt, the world did not know about this poison, which is said to be even more deadly and dangerous than all known substances from the Novichok group. Scientists found corresponding traces on the Navalny's hands and on the neck of a bottle from which he had drunk. This "modified Novichok" allegedly acts more slowly than previous versions. The Germans assume that one of the FSB agents monitoring Navalny, or an undercover agent, added drops of poison to his tea or applied a substance to the surface of a cup. Navalny was supposed to die on board the aircraft", writes "Die Zeit".

Everything is just fine and dandy here: for example, about agents who had to perform the necessary manipulations with a super-poison in a crowded place. A remarkable and suddenly appeared bottle -- no bottle was seen in Omsk at all. The story goes on about the fact that, apart from tea, Navalny did not drink anything. It turns out that those accompanying the blogger took the bottle out of the plane, hid it, and then transported it to Germany and handed it to Bundeswehr chemists Concealing evidence is pure criminality. But the most interesting thing is the super-"Novichok".

After the poisoning of the Skripals in Salisbury (let us recount the usual version of events that happened there), about 50 more people sought medical help. Houses were taken apart, pets were destroyed. But here no one except Navalny was hurt: neither the people at Tomsk airport, nor the fellow travellers with whom he, having the terrible poison in his hands, took a selfie on a bus, nor the passengers on board the aircraft, and he also touched things there. Symptoms of poisoning should have appeared amongst the passengers, but they did not. This should raise questions from the authors of the serious newspaper "Die Zeit", but it does not. A weapon of mass destruction by any reasoning, but the longer the German press examines the Navalny case, the more mediaeval and grotesque it becomes. And it works -- you can see it even from the reaction of quite moderate politicians.

Already a week and a half ago, Merkel announced the results of a toxicological examination, allegedly carried out in a secret laboratory of the Bundeswehr (yes, Navalny was poisoned), opponents of the Nord Stream 2 gas pipeline have intensified their onslaught against the federal government in order to stop the construction, they say, this is the only way to punish Russia. At the head of the column are the party leaders of the Greens and those associates of Merkel who are friendly with Washington and have plans for higher party or administrative posts after the Chancellor leaves.

These voices were at least heard. In an evening talk show on ZDF, German Foreign Minister Heiko Maas made it clear that the shutdown of Nord Stream 2 could be one response.

"We cannot say that since the sanctions do not work, then there is no need to introduce any. Sometimes we have to put up with the risk of the consequences, thereby saying that we do not want to live in a world without rules", Maas said.

Now Herr Maas, along with many members of the government and administration and the Chancellor, lives in a world of very strange rules. Merkel's press secretary Seibert reiterated that Germany will interact with Russia exclusively at the site of the Organization for the Prohibition of Chemical Weapons (OPCW), where all the documents allegedly have already been sent.

The OPCW Technical Secretariat informed our permanent representative, Alexander Shulgin, that Berlin had only sent a notification about Navalny's poisoning, a sheet of A4 paper, but there is still nothing that the experts could work on. But the Germans had to formulate a response to the proposal of the Russian Prosecutor General's Office on exchange of information: any information about the state of Navalny can be transferred to Russia only with his permission.

This was the case in 2004. The Charité clinic then diagnosed the presidential candidate of the Ukraine Viktor Yushchenko with dioxin poisoning -- no one ever saw documentary evidence. Yushchenko then for 4 years, while he was of interest he was to the public, promised to show everything, but he never did.

This trick can be repeated again, the main thing is to find the answer to an urgent task: to inflate the level of confrontation between Russia and Germany, and therefore the entire West, in order to force the Russian authorities to be as cautious as possible in their domestic and foreign policy, for example, in the Belarusian direction.

However, the fact that Nord Stream 2, for which the German federal government was ready to support unto death, suddenly became an instrument of blackmail -- admit the poisoning, otherwise we can close it down -- openly outraged German business and regional elites.

"It seems that the verdict has already been given -- there are demands that construction of the pipeline be stopped. I strongly oppose such measures", said Michael Kretschmer, Prime Minister of Saxony.

"We have had absolutely trusting cooperation with Russia in the energy sector for 50 years. And even in the most difficult political times, which were probably even more difficult during the Cold War, we managed to maintain this trust", emphasized Michael Harms, executive director of Eastern Committee of the German economy.

Even a true transatlantist, the president of the Munich Security Conference Wolfgang Ischinger, stood up for Nord Stream 2 (and Denmark had joined the renewed US incitement against it the day before).

Political games will not pass themselves of as force majeure. Investors will go to the German government for their money. Here you need to think ten times, because along with the demands of multibillion-dollar compensation, there will definitely be asked unpleasant questions about the reasons that made the German authorities abandon a project that was profitable to all sides. So you can go to Navalny's analyses. In a normal court, bureaucratic excuses will not work. And, by the way, in Germany there are politician-lawyers who can professionally draw up a claim and conduct a case.

"I want to investigate this. One of the developers of Novichok is in the US. It is known that many special services have this poison. Of course, the Russian have it as well, but if Putin did it, then why give Navalny to Germany? So that we can establish all this here? A crime must have some logic", says Bundestag deputy Gregor Gizi.

The logic that we now see is somehow not German. One gets the impression that the compassion and humanism of the German politician, brought up on the lessons of the past, are now being tried out by smart and cynical people who know how to competently fabricate, substitute and cover their tracks. And not too far away, we already had Britain.

At the end of May 2003, the BBC released material that Prime Minister Blair and his cabinet had made a decision to enter the war in Iraq based on falsified intelligence. The person who passed on this information to reporters was David Kelly, a leading chemical weapons specialist at the British Department of Defence. His speech at the parliamentary hearings threatened the prime minister, the military and the secret services with big problems, Hiwever, on July 18, 2003, Kelly was found dead in the woods near his home. Suicide, the investigation stated, but in 2007, a group of parliamentarians conducted an unofficial investigation -- there were no legal consequences, but now all British people know that Kelly was murdered in cold blood.

In 2015, Blair was forced to admit that he lied to citizens about Iraq, and escaped trial only because no one wanted to get involved with it. Nevertheless, Blair has gone down in history with this lie. And history is important to remember in order to do it right. Russian Foreign Minister Sergei Lavrov calls on the Germans to leave emotions and turn on their brains.

"I hope that these absurd actions will be stopped and Germany, at least for the sake of the reputation of German punctuality, will fulfill its obligations under the agreement with the Russian Federation. Moreover, they are demanding an investigation from us, but it turns out that all those who accompanied Navalny are slowly moving to Germany too. this is very unpleasant and leads to serious thoughts. Therefore, it is in the interests of our German colleagues to protect their reputation and provide all the necessary information that would somehow shed light on their so far absolutely unfounded accusations", Lavrov said.

Another proposal has gone from Moscow to Berlin: to send a Russian investigation team to Germany in order to jointly study the circumstances of the case, the victim of which is a Russian citizen. So far, there is no reason to believe that Berlin will respond with consent.

Some German politicians and almost all the SMS likes to moralize against Russia, periodically recalling the Stalinist repressions and the GULAG. But now Germany itself behaves like an investigator during interrogation in the dungeons of the NKVD. Confession is the queen of proof.*

Yeah, we got a confession in the end!

That's all the bastards demand of Russia: Confess and then we'll be pals.

*Признание -- царица доказательств

"Confession is the Queen of proof."

From Latin: Сonfessio regina probationum est)

Roman legal principle of criminal procedural law.

Слава России!

MARK CHAPMAN September 15, 2020 at 10:04 am

There are undeniable advantages to accusations for which no substantiation is offered – as we saw with the Skripals, you can await public comment, identify where you went wrong from scornful rejections of the narrative, and then modify it so that it makes more sense.

In this case, people wonder why such a potent nerve agent did not fell Navalny instantly like a poleaxed ox, before he ever left the terminal, instead of 40 minutes or so into the flight. Ahhh but this, we later learn, was a specially-modified Novichok, engineered to be slow-acting. Just what you want in a nerve agent. Hint – no, it isn't. Just like you don't want it specially engineered to be 'persistent', like that chemical-warfare expert tit for Bellingcat claimed was the reason the poison daubed on Skripal's doorknob did not wash away in the rain and was still deadly weeks afterward. You want a nerve agent to quickly and efficiently kill enemy troops caught in the open and unprotected, and then as quickly degrade and disperse so your own forces can move in and occupy the objective. The last thing you want is it hanging about for weeks, or being 'slow-acting' so those troops can come in and wax your ass and then later fall down dead. One of the first casualties of these silly stories must be that the agent is 'military grade'. The military would say, if you want to use that useless shite, spread it yourself – we want nothing to do with it.

MOSCOWEXILE September 15, 2020 at 4:46 am

Just appeared, posted from Charité -- Bullshitter with statuesque wife and kiddie acolytes:

Another bungled FSB wet job!

MOSCOWEXILE September 15, 2020 at 4:56 am

It reads:

navalny Hi, this is Navalny. I miss you all 😍. I still can hardly do anything, but yesterday I was able to breathe on my own all day. Generally myself. I did not use any outside help, not even the simplest valve in my throat. I liked it very much. An amazing, underestimated by many thing. Would totally recommend.

What, no tracheotomy scar?

Why aren't you dead, you wanker?

Thinking about thanking the Omsk doctors who "saved your life" after you had taken a dose of salts in the aircraft shithouse?

MARK CHAPMAN September 15, 2020 at 10:07 am

"I still can hardly do anything "

I'm still waiting for the difference to become evident. Navalny does perhaps less than any man in Russia who enjoys such a leisurely lifestyle.

MOSCOWEXILE September 15, 2020 at 10:05 am

I take it that the kiddie Navalnyites in the above Instagram are all Russian citizens and part of the Bullshitter's entourage that turned up in Berlin, hot on the heels of their comatose hero.

So how did they get the documentation that enabled them to leave the Mafia State and enter Germany, the coronavirus shamdemic notwithstanding?

Are they all guests of Frau Kanzelerin Merkel?

MARK CHAPMAN September 15, 2020 at 10:34 am

I thought they were the Bullshitter's kids.

MOSCOWEXILE September 15, 2020 at 10:49 am

Yes, they are his children. Navalnaya clearly got permission for their son to travel to Germany. His daughter has flown in from the USA.

However, the question still remains as regards those Navalnyites who rolled up in Germany following their leader's private flight there: how did they get the appropriate documentation to do so at such short notice, not to mention Pevchikh, who flew with the comatose Navalny to Berlin -- and then vanished?.

Seibert was asked about this and said he knew nothing about her.

MARK CHAPMAN September 15, 2020 at 11:22 am

Ah, yes; that's a good point. I just assumed the hamsters were blathering from a distance, as in Russia. I did not realize some of them had turned up in Germany, except for the mysterious Masha.

I hope Germany offers residency to the Navalnys, and that they accept. Russia can't really refuse to let him back in, he's a citizen. But as long as he is there he will cause trouble, and he'll be recharged with all the PR he has received from this latest caper.

But it is suggested that Russia is bargaining for his return; the story also expands on Lavrov's recent statements, and introduces a villain in the woodpile I would not have personally suspected: Poland.

MOSCOWEXILE September 15, 2020 at 11:54 am

And get this:

Does he want to end his political ambitions? Top Eurocrat Borrell calls for Navalny's name to be attached to EU 'Magnitsky List'

MOSCOWEXILE September 15, 2020 at 12:03 pm

I recall Lavrov querying the other day Pevchikh's presence in Germany, her refusal to be interviewed by investigators in Omsk and how come she managed to fly to Germany with Navalny? He also said that other supporters of Navalny had also turned up in Germany.

I lay a pound to a pinch of shit that Pevchikh is a British agent.

MOSCOWEXILE September 16, 2020 at 11:35 am

Note how the monitor in the Navalny Instagram above has been censored.

It's because, they say, it displays personal data about Putin's intended Novichok victim, such as body temperature, pulse, blood pressure etc.

Wouldn't like the world to know that there is nothing wrong with him, would they?


Эксперт объяснил ретушь прикроватного экрана на фото Навального
15 сентября 2020

An expert has explained the retouching of the bedside monitor in the Navalny photo
15 September 2020

MARK CHAPMAN September 16, 2020 at 12:26 pm

Too late to get smart now.

MOSCOWEXILE September 16, 2020 at 10:51 pm

Stalker Zone
September 16, 2020


Why on earth should one think that?

MOSCOWEXILE September 16, 2020 at 10:54 pm

Comment to the above C/Z article:

anymouse • 8 hours ago

Looking good for almost a corpse. COVID-19, a flu virus, is a deadly killer, and Novichok, a deadly nerve agent, is not a killer.

ET AL September 15, 2020 at 11:36 am


British and other international toxicological experts say that without technical reporting by the laboratory of the spectrometric composition of the chemical, and without identifying the compound by the international naming protocol there is no evidence at all;..

the US Army had recently manufactured its own Novichok types: "A230, A232 and A234 A232 has a CAS number of 2308498-31-7. A230 and A234 have no known CAS numbers."

A lot more at the link.

ET AL September 15, 2020 at 11:40 am

I reckon Khordokovsky has a hand in this. He has the same moral compass as dead Berezovsky. None. And he has refused to stick to agreements (keep out of politics). If the British or someone else get fingered for this cunning plan , would they serve him up on a silver platter? Almost certainly so.

MARK CHAPMAN September 15, 2020 at 3:29 pm

Helmer always delivers. It looks very much as if the Germans have stepped in the shit.

JEN September 15, 2020 at 7:10 pm

We certainly did well to focus on Maria Pevchikh as soon as we discovered that in addition to being the one who evaded questioning by Russian authorities by flying out to Germany, she also had British residency. She certainly has become a "person of interest" and could well be the major individual in the plot to incapacitate Navalny and use him to pressure Germany over NSII and Russia over the Belarus unrest.

MARK CHAPMAN September 15, 2020 at 7:17 pm

Agreed; she does indeed look to have played a far bigger part in the operation than she lets on.

MOSCOWEXILE September 15, 2020 at 9:44 pm

It is still unknown whether Pevchikh is a British citizen. I think she is and probably must be, in fact, for if she is only a visa holder or an applicant for UK citizenship, she could be told by the Home Office to go take a hike if it is proven that she was instrumental in the poisoning plot.

When Berezovsky got cocky in the UK after a judge there had prevented his being forced to leave Misty Albion because Berzovsky had persuaded him that were he to return to Mordor, he would face an unfair trial and his life would be in danger -- the erstwhile "Godfather of the Kremlin" had arrived in the with a 6-month visitor's visa -- he started bragging to the "Guardian" that he was organizing with his chums still in the Evil Empire the overthrow of the tyrant Putin.

The Home Secretary at the time was none other than "Jack" Straw -- another odious pile of ordure -- who promptly summonsed Berezovsky to the Home Office for an official bollocking. He was told that if, while resident in the UK, he continued to engage himself with the overthrow of a foreign head of state, he was out.

Be that as it may, I am quite sure he was working with British state security, as was his once favoured acolyte Litvinenko.

Litvinenko was poisoned. Berezovsky committed suicide -- they say.


MOSCOWEXILE September 15, 2020 at 1:32 pm

Россия задала ЕС девять вопросов об обвинениях в ситуации с Навальным

Постоянное представительство России при Евросоюзе указало на ключевые нестыковки в версии об отравлении Алексея Навального
15 сентября 2020

Russia has asked the EU nine questions about accusations in the situation with Navalny

The Permanent Representative of Russia to the European Union has pointed out the key inconsistencies in the version about the poisoning of Alexei Navalny
15 September 2020

In the eighth question, Russian diplomats drew attention to a bottle of water, on which, according to Germany, traces of poison had been found: "Not a single surveillance camera recorded how Navalny drank from a similar bottle at the Tomsk airport [before departure]. from this bottle earlier or on board the plane, how did this bottle get to Berlin? "

Ask Pevchikh! Only she is now probably undergoing debriefing in London at UK Secret Intelligence Services HQ, 85 Albert Embankment.

PATIENT OBSERVER September 15, 2020 at 4:41 pm

Navalny, if indeed he was close to death, must now realize he was set up by one of his own benefactors. What would be his next move? Going back to Russia would make the most sense as the Russians may actually protect him from another show-assassination and he would have freedom to prance around to his heart's content.

MARK CHAPMAN September 15, 2020 at 6:54 pm

I don't believe he was ever 'close to death', rather that he was an active part of the deception. He is a grifting idiot who puffs up like a toad upon being flattered. He could never win power in Russia legitimately, as he is mostly a figure of contempt in Russia save for the perennially-discontented children of the liberal elite and the few Americaphiles who don't know enough to keep their heads down. I believe he played his role by taking something that would nauseate him but not seriously hurt him, rolling about and screaming, and that the introduction of the phony 'poison bottle' was with his full knowledge. I wish Russia would just disown him and tell the Germans they can have him.

However, I could be wrong. We will know from the tone of his remarks when he feels he is strong enough to once again assume his president-in-waiting role, and starts spouting off about what happened to him. He is the most likely candidate to be selected to get the water-bottle narrative back on track, so if he comes out with an explanation for how he drank from the bottle somewhere there were no surveillance cameras, and noticed a sketchy-looking guy in a leather jacket and a "Vote For Putin!" T-shirt standing nearby just before he drank, it will be a pretty good indication that he is as full of shit as ever.

JEN September 15, 2020 at 10:53 pm

There was considerable risk involved in the deception. I doubt that Navalny went into the deception willingly. There was a very real risk that he could have suffered some brain damage going into the first coma and that's sure to compromise his health in the long term in other ways.

More likely it seems a lot of the deception was planned behind Navalny's back and people were waiting for an opportunity to carry it out. It may have been planned years ago for someone else and then switched to Navalny once he was in the Omsk hospital. Julia Navalnaya may have been pushed into demanding that Navalny be transferred to Berlin and while the Omsk hospital doctors were stabilising him for the transfer, the deception then started going into action in Germany.

MOSCOWEXILE September 15, 2020 at 11:18 pm

Lavrov smelt a rat several days ago -- last week, I'm sure -- when he stated that suspicions had been aroused by one of Navalny's gang refusing to answer investigators' questions in Omsk and then scarpering off to Germany.

I'm quite sure the FSB already knew of Pevchikh's comings and goings between London and Moscow (over 60 flights there and back I read somewhere) and her activities with the Navalny organization.

Perhaps they allowed Navalny to leave for Germany -- with Pevchikh flying out with him, I may add -- because they knew what was afoot and would later expose the Germans for liars, or if not that, then for their falling to a sucker punch off the British secret service.

They certainly allowed Pevchikh to leave Russia: she didn't sneak on board Navalny's private flight.

Just Pevchikh, note, not Navalnaya, who is not a British agent, I'm sure.

MARK CHAPMAN September 16, 2020 at 8:49 am

Certainly possible – as I say, we will know more from his blabber once he starts giving interviews, which he lives to do. His tone will have changed considerably if he believes his erstwhile chums in politics intended to martyr him. Otherwise I read his expressed desire to return at once to Russia as simply remaining in character – the selfless hero risking all for freedom and democracy.

I wonder how he will thank the doctors in Omsk for saving his life, as it is generally acknowledged they did. He cannot go into transports of admiration for their professional skills, because they claimed to have found no trace of poisoning in his samples. He faces the choice, then, of simply passing over it without mention, or accusing the people who saved his life of 'being part of the machine'. Doing either will certainly not increase his popularity in Russia. And it makes no difference at all how popular he is in the west – something the west seemingly cannot be taught.


MOSCOWEXILE September 16, 2020 at 4:41 am

Die Zeit сообщила о предложении США от ФРГ по "Северному потоку -- 2"
RT на русском, 16 сентября 2020

Die Zeit announced the proposal of the USA from Germany for the "Nord Stream – 2
RT in Russian, September 16, 2020

The German government has offered the United States a deal in exchange for Washington's waiver of sanctions against Nord Stream 2.

This is reported by the newspaper Die Zeit, citing sources

It is noted that Berlin has expressed its readiness to invest up to € 1 billion in the construction of two terminals in Germany for receiving liquefied natural gas from the United States.

"In response, the United States will allow the unhindered completion and operation of Nord Stream 2", TASS quotes the text of a letter from German Finance Minister Olaf Scholz, which was sent on August 7 to the head of the US Treasury, Stephen Mnuchin.

In early August, US senators sent a letter to the operator of the German port of Sassnitz calling for an end to work to support the construction of Nord Stream 2.

PAULR September 16, 2020 at 5:07 am

This would suggest that the Germans are not planning to cancel North Stream 2 themselves in response to the Navalny case.

MOSCOWEXILE September 16, 2020 at 5:57 am

The USA won't like the offer. Zero-Win for them -- always.

Americans have to be winners -- expect to be winners: it's their birthright and what made America great. To be a loser is un-American.

In my experience, the worst thing ever for many US citizens is to be accused of being a "loser".

PATIENT OBSERVER September 16, 2020 at 9:05 am

Very true about the term "loser" being a harsh insult for Americans. The "loser" tag starts to be applied to kids in early grade school and only intensifies from that point. The glorification of success (defined by the level of conspicuous consumption) further sharpens the divide between losers and winners. Our "feel-good" stories are often about individuals who were able to transform themselves from "losers" to "winners". American culture is one-dimensional in that way.

PATIENT OBSERVER September 16, 2020 at 5:12 pm

Building an LNG terminal is one thing, buying US LNG is another thing. In addition, I believe that Russia could provide LNG to Germany as well and likely at a substantially lower price.

The US may settle for this gesture as it does hold the door open, however slightly, for future developments to be leveraged by the US to force Germany to reduce or stop gas purchases from Russia. Having the terminal in place could make a future change in suppliers more feasible and faster but nevertheless representing an economic disaster for Germany. Lets call it step 1 in Plan B.

MARK CHAPMAN September 16, 2020 at 10:49 pm

I'm pretty sure the Americans will not take this offer, but will instead – correctly – interpret it as weakness and increase their pressure.

ET AL September 16, 2020 at 11:56 pm

On the other hand any diplomatic/economic success plays well in this presidential erection year. So a) is it worth it?; b) can they reverse the decision the day after? I assume they can have their cake and eat it as Brussels is mostly spineless. Borrell can squeal about Russia, but that's because he can do f/k all about the USA's behavior, being spokeshole and all

MARK CHAPMAN September 17, 2020 at 8:51 am

That's what people seem not to get – the decision would not ever be 'reversible' once Nord Stream II is complete. That pipeline quad alone can carry all of Europe's gas supply that it receives from Russia. None through Ukraine, not a whiff, if that is Moscow's will, although the Russians have agreed to transit token amounts, which the Ukrainians say are not enough to make the system's continued operation viable – without the large volumes they are accustomed to handling, they will have to progressively begin shutting down, bypassing and dismantling sections they can no longer afford to maintain.

So long as the pipeline's future remains in doubt, Uncle Sam can sell the philosophical possibility of supplying Europe with large volumes of cheap LNG via tankers, made desirable – although it will cost a little more, no getting around that – for political reasons. Once Nord Stream II is complete, the reality of a reliable supply of cheap pipeline gas would have to be countered with a concrete offer from the USA; this many cubic meters times this many Euros. Any housewife can do a cost-benefit analysis at that level. Do you want to pay more for American gas just because it comes from America? Well, let me think about it – what are the benefits? Well, it comes from America! What, you mean, that's it? There would be no possibility the Americans would use their status as a major energy supplier as leverage to bring about economic or political changes in Europe that they desired, would there? Well I can't guarantee that.

You know what? I'm okay with Russian gas, thanks just the same. Maybe I'll use the money I save to buy a Ford – how's that?

MARK CHAPMAN September 16, 2020 at 9:20 am

Pathetic. After declaring forcefully that American extraterritorial sanctions are illegal – which, technically, they are, only America has a right to threaten to limit European trade in America if it wishes; although that, too is illegal under WTO rules – Germany is now cowering and trying to 'make a deal'. With Trump, in case anyone missed that, whose 'Art of the Deal' consists of destroying the opponent until he is happy to have escaped with his life, and will never publicly complain about a 'deal' which came out very much to his disadvantage. Put another way, offering America a 'deal' only highlights that you believe you are in a weak position, are looking for mercy, and are ripe for the plucking. Germany was already planning to build the heaviest concentration of LNG terminals in Europe; a far better strategy would have been to threaten to cancel them all if Uncle Sam did not back off. The Americans are certainly smart enough to figure out – in about 2.5 seconds – that more LNG terminals means diddly when Russia can also supply LNG far cheaper than the USA because it has teensy transport costs by comparison, being much closer. Two more LNG terminals buys America precisely zero advantage, but the willingness to 'deal' reveals vulnerability. The only American response to rolling on your back to expose your belly is to step on your head.

I swear, it is hard to recognize Germany as the country which once frightened the world.

A Trump counter-offer might be a commitment from Germany to buy X amount of American LNG at a locked-in price, said amount to be sufficient that extra Nord Stream capacity would not be utilized. It depends on whether the Americans really think they can actually stop Nord Stream II, because even that would ultimately be a loser strategy. Unless a term far into the future were specified, the Americans know that once the pipeline is finished, their product is no longer competitive and cannot ever be unless it is unprofitable to themselves. They could satisfy themselves with gutting the Germans for a year or two (if they accepted), but it would be short-term satisfaction at best. Might be enough to win Trump the election, though.

But if Washington thinks it can actually halt Nord Stream II – with the understanding that the Russians would probably give up after such a stinging second rebuke – then the sky is the limit, and they will scornfully reject any other solution. The one who stands to get hurt the most is Europe. But I don't think they realize it.

MOSCOWEXILE September 16, 2020 at 8:31 am

Stalker Zone
September 15, 2020

CORTES September 17, 2020 at 12:41 am

The Borgias are history. Well, obviously, they ARE history. But now they have been relegated to the Second Division/Championship (football joke) of Poisoners by Sergei Lavrov and his chef de cuisine:

Voici le mindfuck (pardon my French):

Contains a smidgeon of addled Navalny. Delish! REPORT THIS AD

MOSCOWEXILE September 17, 2020 at 12:53 am

Oh look! The Navalnyites have shown a video, shot in Tomsk, of Navalny drinking from the allegedly poisoned water bottle that earlier nobody had seen or made mention of before it turned up in Berlin and was sent to the Bundeswehr lab.

Recall that his loud-mouth spokeswoman had from the very start insisted that Navalny had been poisoned by laced-with-poison tea that he had drunk at Tomsk airport.

Change of story line -- as persistently happened in the Skripal fake.

Video Showing Water Bottle That 'Poisoned' Alexei Navalny Shared by His Team
17 September, 2020: 10:17

MOSCOWEXILE September 17, 2020 at 12:56 am

That Sputnik headline should read, I think, "shared with his team".

And if that is the case, why didn't his team also start howling and screaming and rolling around on the deck some time later on board the Tomsk-Moscow flight?

MOSCOW EXILE September 17, 2020 at 3:15 am

Соратники Навального сообщили, что забрали бутылки из номера в Томске
17.09.2020 | 10:57

Navalny's companions have reported that they took bottles from a hotel room in Tomsk

Alexei Navalny's companions have said that a bottle of mineral water, on which German experts had allegedly found traces of poison from the Novichok group, had been brought from a hotel room in Tomsk.

On an Instagram, they have posted a video in which, according to them, an hour after news of Navalny's deteriorating condition, they examine the room and seize all the items which he had been able to touch.

On August 20, the aeroplane in which Navalny was flying urgently landed in Omsk, from where the blogger was taken to hospital. On August 21, doctors announced that the main diagnosis was metabolic disorders.

At the moment, Navalny is in Germany, where he has been taken out of an artificial coma. German doctors announced that he had been poisoned with substances from the Novichok group, but did not provide any relevant evidence.

So why didn't the Navalny hamsters, who dutifully sought out the poison bottle and most certainly handled it, throw wobblers as did Navalny when performing what he thought were the effects of nerve agent poisoning?

And whom did the hamsters hand the bottle to -- Navalnaya or Pevchikh? And who handled the bottle after its arrival in Berlin and before the obliging Bundeswehr said it had been dosed with the most lethal nerve agent (weapons grade) known to man?

Why isn't there a trail of stiffs from Tomsk to Berlin and beyond?

Who's going to believe this shite?

"Why, the whole world knows it's true!" will Imperial Plenipotentiary Pompeus Fattus Arsus surely say.

MOSCOW EXILE September 17, 2020 at 3:36 am

One of the developers of Novichok, Leonid Rink, commented on reports that a bottle in the Tomsk hotel where Alexei Navalny had stayed could [have been] Novichok [contaminated] .

"This is a situation where no one would have been allowed to touch the bottle -- you would have died if you had done so. If this had really been the case, then there would have basically been a deceased person, and everyone who had carried this bottle without gloves and protection would also have died", he told RIA Novosti.

Ah, but . . . Rink is forgetting that it was a special, delayed action Novichok made to take effect on "Putin's Fiercest Critic" when he was on board the Tomsk-Moscow flight.

Rink's an old Soviet has-been and knows nothing about the latest developments in diabolical weaponry that issues forth from secret Orc laboratories.

Эксперт прокомментировал сообщения о бутылке с "Новичком"

Expert comments on statements about the bottle with "Novichok"

CORTES September 17, 2020 at 6:20 am

Maybe the cunning developers have produced a Novichok variant safe to those who have sinned but fatal (or liable, at least, to provoke a severe tummy upset, occasionally) to the purest of heart?

JENNIFER HOR September 17, 2020 at 12:43 pm

I like this idea of the special edition of Novichok with the delayed kick. Maybe we could call it Brawndo and speculate that the poison only goes into action when it does because the added electrolytes take time to work to release the poison.

MOSCOWEXILE September 17, 2020 at 7:56 am

Alexei Navalny's team immediately after his departure from Tomsk airport, went to the hotel room in that city where he had spent the night, and packed all the items (including water bottles) so as to deliver them for analysis (of course, not in Russia). A video about this was posted on the oppositionist's Instagram.

Everything in this story is beautiful. Navalny's supporters were collecting "evidence" on a case that had not yet happened -- but it was already supposed to have happened? Together with them, there went a lawyer to the hotel -- he was also at the ready. But why were none of the "trackers" hurt if on the "evidence", as is said, they found traces of the "Novichok" military poison? And how did the "people of Navalny" end up in a room where cleaning up should have been done after the guest's departure? There are other questions as well. Some of them "KP" asked FSB reserve general Alexander Mikhailov .

MARK CHAPMAN September 17, 2020 at 9:06 am

And the person shown handling the bottle is wearing gloves – they made sure to show that. But as others have pointed out, this was well before anyone knew 'an attempt had been made on the Opposition Leader's life'. What, all Lyosha's shit was still in his hotel room, towels on the floor, the next day, after he checked out? Pretty crappy service in those Russian hotels. He didn't even leave Russia for several days, and the first suggestions he had been poisoned came from his 'press agent', who claimed he had been poisoned with tea at the airport.

Skripals II.


MOSCOWEXILE September 17, 2020 at 7:26 am

Навального выдвинули на Нобелевскую премию мира

Navalny nominated for the Nobel Peace Prize

Russian opposition leader Alexei Navalny has been nominated for the Nobel Peace Prize. Sergei Yerofeyev, a professor at Rutgers University in New Jersey, USA, has spoken about this.

According to Yerofeyev, Navalny has been nominated for the prize by "a number of professors from recognized universities who deal with Russia". He did not give specific names, but noted that there are "great people" amongst the scientists who have nominated Navalny.

A professor of any university in the world can nominate a candidate for the Nobel Peace Prize: there are no specific requirements for a candidate. In addition, members of national governments and parliaments, heads of state and some other categories of persons can nominate candidates.

The oppositionist will have to fight for the main prize of the planet with venerable rivals.

This is, first of all, US President Donald Trump, who was nominated by Christian Tubring-Jedde, a member of the Norwegian parliament from the far-right Libertarian Progress Party. As the MP said in an interview with Fox News, Donald Trump should be awarded for his role in concluding an agreement on the full normalization of relations between Israel and the UAE.

And why not? O'Bummer was awarded the peace prize, wasn't he?

Same story in Yukie news:

Navalny nominated for Nobel Peace Prize

Navalny nominated for Nobel Peace Prize – Kyiv Post

MOSCOWEXILE September 17, 2020 at 7:42 am

I wonder how the Kiev Post evaluates Navalny's position on the Crimea?

The status of the Crimea is a problem that a new democratic Russia will inherit from its former government. The Russian position on this problem will be determined by the recognition of the right of the citizens of the Crimea to determine their own destiny -- Navalny 20!8

TIMOTHY HAGIOS September 17, 2020 at 8:26 am

I say give it to him. Let him join the prestigious ranks of Obama, the OPCW, the EU.

I also propose starting a Nobel War Prize, to be awarded to whatever individual or organization is responsible for the highest body count in a given year. Although that may be redundant, considering that it would probably be given to the same people as the Peace Prize.

MARK CHAPMAN September 17, 2020 at 9:13 am

Ha, ha!! And it all descends into farce, again. Navalny has arrived – he has gone global, beyond his wildest dreams. The nothing from Wherever He Is From who could not even break 5% in presidential election polling is now a major star, glittering in the western firmament. As Saint Lily Tomlin once remarked, no matter how cynical you get, you can never keep up.

All the west is going to be able to get out of this is the satisfaction of showing its ass to the neo-Soviets, the way it does when it re-names the street the Russian Embassy is – or was – located on after some prominent Russian dissident. Beavis and Butthead level, at best.

MOSCOWEXILE September 18, 2020 at 9:17 am

On Navalny, a Russian blogger writes:

That's it! This is a farewell article. A real goodbye to the topic. More precisely, parting with Navalny as a topic. His political role has been played to the end. And even lethal doses of Novichok have not caused a mass movement. Furgal's arrest caused an explosion of civil consciousness in Khabarovsk. The poisoning of Navalny, sending him abroad, the discovery of Novichok, official accusations from Germany did not cause any rally, no procession, no movement. No excitement in civic consciousness has occurred and will never happen.

[Sep 18, 2020] Saudi Prince Abdulaziz Warns Oil Short Sellers- -We Will Never Leave This Market Unattended

Paper oil sellers essentially dictate prices to real producers. So they are looting producers. That's hurt the process of replacement of old wells with new ones (and shale oil well live just several years, with only first two the most procductive) and as "paper oil" is Wall Street fiction, and at some point paper oil market might collapse and oil prices go to stratosphere.
Sep 18, 2020 |

As the price of oil begins to falter, Saudi Arabia has stepped up its rhetoric, even going as far as to warn short sellers not to bet against the price of the commodity.

Saudi Energy Minister Prince Abdulaziz bin Salman gave "clear hints" on Thursday that there could be a change of direction in production policy forthcoming as the price of oil continues its slide, according to Bloomberg .

He said Thursday: "We will never leave this market unattended. I want the guys in the trading floors to be as jumpy as possible. I'm going to make sure whoever gambles on this market will be ouching like hell."

At the same time, Brent was falling below $40 per barrel and the market continues to show signs of waning demand. OPEC and its allies said they would be "proactive and preemptive" in addressing the diminishing price, recommending "participating counties take further necessary measures".

Abdulaziz started a meeting on Thursday with what Bloomberg called a "forceful condemnation" of members who are pumping out too much supply. His ire may have been directed to UAE Energy Minister Suhail al Mazrouei, who attended the meeting. The UAE has been "one of the worst quota breakers" in OPEC+, only making 10% of its pledged cuts for August.

Abdulaziz said: "Using tactics to over-produce and hide non-compliance have been tried many times in the past, and always end in failure. They achieve nothing and bring harm to our reputation and credibility."

"Attempts to outsmart the market will not succeed and are counterproductive when we have the eyes, and the technology, of the world upon us," Prince Abdulaziz continued.

UAE was overproducing by about 520,000 barrels per day in August and the country will try to make additional cuts in October and November to make up for past month shortcomings.

Countries like Iraq and Nigeria have implemented more than 100% of their required cuts, helping give OPEC and Abdulaziz credibility.



Receive a daily recap featuring a curated list of must-read stories.

Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA, concluded: "You have to hand it to Prince Abdulaziz. Since he became Saudi oil minister, the kingdom has kept OPEC+ in line through his diplomatic and compelling powers of influence."

y_arrow Fabelhaft , 3 hours ago

If that were true, the energy world would be a lot better off. Producers want to contract; consumers, probably even China, like the market price. For it can be manipulated easier by consumers than by suppliers; because consumers control the intl banks and capitalist rules. Unless China is kept from the market table , then it might accept contracting. Tough racket, this sanctioning stuff is getting to be, eh?

[Sep 18, 2020] Continued German Support for Nord Stream 2 Completion -- Towards a Shift in Russia-Germany Relations by Stephen Lendman

Sep 17, 2020 | 1

Construction of Russia's Nord Stream 2 gas pipeline to Germany is about 94% completed.

The project is all about supplying Germany and other European countries with readily available low-cost Russian natural gas -- around 30% cheaper than US liquified natural gas (LNG).

Both right wings of the US one-party state want the pipeline halted to benefit US producers at Russia's expense.

US sanctions on the project breach international law, Germany's Angela Merkel earlier saying "(w)e oppose extraterritorial sanctions (W)e don't accept" them.

"We haven't backed down (on wanting Nord Stream 2 completed) nor do we intend to back down."

Last December, German Foreign Minister Heiko Mass said "European energy policy is decided in Europe, not the United States. We reject any outside interventions and extraterritorial sanctions."

Did the novichok poisoning of Putin critic Alexey Navalny hoax change things?

During a September 24 – 25 summit of EU leaders, the future of Nord Stream 2 will be discussed. Ahead of the summit, Merkel's government offered to invest around one billion euros (about $1.2 billion) in construction of two terminals in Germany for US LNG.

According to the German broadsheet Die Zeit, by letter to Trump regime Treasury Secretary Mnunchin in August, German Vice Chancellor and Finance Minister Olaf Scholz said the following:

"In exchange (for Berlin's proposed LNG investment), the US will allow unobstructed finalization and use of Nord Stream 2," adding:

"(E)xisting legal options for (challenging US) sanctions (on firms involved in the project) have not been exhausted yet."

The broadsheet added that Scholz first expressed Berlin's proposal verbally, confirming it by letter. Proposed German LNG terminals would be built in Brunsbuttel and Wilhelmshaven. Berlin's proposal also included a gas transit contract for Ukraine and financing of a terminal for Poland's use of US LNG.

Following the Navalny false flag, opinion on completing Nord Stream 2 in Germany is divided. Merkel still supports the project as evidenced by her government's offer to build two terminals for US LNG in exchange for dropping sanctions on the pipeline by the US.

Orchestrated Events Responsible for Alexey Navalny's Illness?

Last June, US Senate hardliners proposed legislation to expand Nord Stream 2 related sanctions.

It targets all nations and enterprises involved in the project, including underwriting, insurance and reinsurance companies.

At the time, Gazprom CEO Alexey Miller said Russia will complete construction of the project on its own -- expected to be operational in January or shortly thereafter. Last month, German Foreign Minister Heiko Mass expressed "displeasure" to Pompeo about US sanctions on the project. Last week, Polish government spokesman Piotr Muller was quoted saying the following:

"Poland has from the very beginning emphasized that European solidarity (on Nord Stream 2) should be unambiguous."

"Therefore, if such a need is expressed by the German side, Poland is open to the idea of using the infrastructure which it is building for its own energy security."

His remark followed German media reports that Merkel said a decision by her government on Nord Stream 2 has not been made in light of the Navalny incident. German officials supporting the project stressed that the country will be the main beneficiary of its completion economically, environmentally and strategically. Construction on the proposed 800 – 950 km Baltic Pipe gas pipeline from Norwegian North Sea waters to Poland hasn't begun.

If completed in October 2022 as proposed, it'll be able to deliver about 10 billion cubic meters of natural gas annually -- less than 20% of Nord Stream 2's 55 billion annual cubic meter capacity.

Berlin earlier was skeptical about the project because of environmental concerns. Days earlier, Polish energy expert Jakub Wiech called it "pointless" to compare Baltic Pipe to Nord Stream 2, given the latter project's far greater capacity and ability to provide gas to other Western European countries. A day after the Navalny incident last month, Merkel said Nord Stream 2 will be completed regardless of threatened new US sanctions on firms involved in the project.

Separately on Wednesday, Putin spokesman Dmitry Peskov said Nord Stream 2's completion should not be raised in discussing the Navalny incident.

"It should stop being mentioned in the context of any politicization."

"This is a commercial project that is absolutely in line with the interests of both Russia and European Union countries, and primarily Germany."

No evidence links Russia to Navalny's illness. Whatever caused it wasn't from a novichok nerve agent, the deadliest know substance able to kill exposed individuals in minutes. Over three weeks after falling ill, Navalny is very much alive, recuperating in a Berlin hospital, and able to be ambulatory for short periods.

A Final Comment

On September 14, CNBC reported the following:

"Experts say Berlin is unlikely to (abandon Nord Stream 2 that's) over 94% completed after almost a decade's construction, involv(ing) major German and European companies, and is necessary for the region's current and future energy needs," adding:

"In this case, economic and commercial interests could trump political pressure" against Russia.

Chief eurozone economist Carsten Brzeski said he doesn't see "Germany pulling out of the project Many (in the country) are still in favor of it."

CNBC noted that

"Germany has been reluctant to link the fate of its involvement with Nord Stream 2 to the Navalny incident so far, and (FM Heiko) Maas conceded that stopping the building of the pipeline would hurt not only Russia but German and European firms."

"(O)ver 100 companies from 12 European countries" are involved in the project about half of them from Germany."


Note to readers: please click the share buttons below. Forward this article to your email lists. Crosspost on your blog site, internet forums. etc.

Award-winning author Stephen Lendman lives in Chicago. He can be reached at . He is a Research Associate of the Centre for Research on Globalization (CRG)

His new book as editor and contributor is titled "Flashpoint in Ukraine: US Drive for Hegemony Risks WW III."

Visit his blog site at .

Featured image is from Asia Times

The original source of this article is Global Research Copyright © Stephen Lendman , Global Research, 2020

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[Sep 17, 2020] Lies in the Navalny case

Was it BZ toxin again: Lavrov- Swiss lab says 'BZ toxin' used in Salisbury, not produced in Russia, was in US & UK service
Notable quotes:
"... German Chancellor Angela Merkel personally announced at a press conference last week that a chemical weapons laboratory of the Bundeswehr (Armed Forces) had proved "beyond doubt" that Navalny was the victim of an attack using the Novichok nerve agent. She called on the Russian government to answer "very serious questions." ..."
"... At a special session of the Parliamentary Control Committee, which meets in secret, representatives of the German government and the secret services left no doubt, according to media reports, that the poisoning of Navalny had been carried out by Russian state authorities, with the approval of the Russian leadership. The poison was said to be a variant of the warfare agent -- one even more dangerous than that used in the Skripal case in Britain. It purportedly could enter the body simply through inhalation, and its production and use required skills possessed only by a state actor. ..."
"... Excerpt of an article by Peter Schwarz published by ..."
Sep 10, 2020 |

The relationship between Germany and Russia has reached its lowest point since Berlin supported the pro-Western coup in Ukraine six years ago and Russia subsequently annexed the Crimean Peninsula.

The German government is openly accusing the Russian state of poisoning opposition politician Alexei Navalny, who is currently in Berlin's Charité Clinic. He reportedly awoke from a coma on Monday.

German Chancellor Angela Merkel personally announced at a press conference last week that a chemical weapons laboratory of the Bundeswehr (Armed Forces) had proved "beyond doubt" that Navalny was the victim of an attack using the Novichok nerve agent. She called on the Russian government to answer "very serious questions."

At a special session of the Parliamentary Control Committee, which meets in secret, representatives of the German government and the secret services left no doubt, according to media reports, that the poisoning of Navalny had been carried out by Russian state authorities, with the approval of the Russian leadership. The poison was said to be a variant of the warfare agent -- one even more dangerous than that used in the Skripal case in Britain. It purportedly could enter the body simply through inhalation, and its production and use required skills possessed only by a state actor.

Germany and the European Union are threatening Russia with sanctions. The German government has even questioned the completion of the almost finished Nord Stream 2 natural gas pipeline, which it had categorically defended against pressure from the US and several Eastern European states.

The German media has gone into propaganda mode, repeating the accusations against Russian President Vladimir Putin with a thousand variations. Seventy-nine years after Hitler's invasion of the Soviet Union, which claimed more than 25 million lives, German journalists and politicians, in editorials, commentaries and on talk shows, speak with the arrogance of people who are already planning the next military campaign against Moscow.

Anyone who expresses doubts or contradicts the official narrative is branded a "conspiracy theorist." This is what happened to Left Party parliamentarian Sevim Dagdelen, among others, on Sunday evening's "Anne Will" talk show. The Christian Democratic Union (CDU) foreign policy expert Norbert Röttgen, the head of the Munich Security Conference Wolfang Ischinger and former Green Party Environment Minister Jürgen Trittin sought to outstrip one another in their accusations against the Russian government. When Dagdelen gently pointed out that, so far, no evidence whatsoever has been presented identifying the perpetrators, she was accused of "playing games of confusion" and "encouraging unspeakable conspiracy theories."

Read also: Russian Defense Minister held talks with Iran's Chief of Staff

The Russian government denies any responsibility in the Navalny case. It questions whether Navalny was poisoned at all and has called on the German government to "show its cards" and present evidence. Berlin, according to Moscow, is bluffing for dirty political reasons.

Contradictory and implausible

Evidence of the involvement of the Russian state is as contradictory as it is implausible.

For example, the German authorities have so far published no information or handed evidence to Russian investigators identifying the chemical with which Navalny was poisoned. Novichok is merely a generic term for several families of warfare agents.

No explanation has been given as to why no one else showed signs of poisoning from a nerve agent that is fatal even in the tiniest amounts, if touched or inhaled. Navalny had had contact with numerous people between the time he boarded the airplane on which he fainted, his entering the clinic in Omsk where he was first treated, and his transfer to the Charité hospital in Berlin.

This is only one of many unexplained anomalies in the German government's official story. Career diplomat Frank Elbe, who headed the office of German Foreign Minister Hans-Dietrich Genscher for five years and negotiated the Convention on the Prohibition of Chemical Weapons as head of the German delegation in Geneva from 1983 to 1986, wrote on Facebook on Friday: "I am surprised that the Federal Ministry of Defence concludes that the nerve agent Novichok was used against Navalny."

Novichok, he wrote, belongs "to the group of super-toxic lethal substances that cause immediate death." It made no sense, he argued, to modify a nerve poison that was supposed to kill instantly in such a way that it did not kill, but left traces behind allowing its identification as a nerve agent.

There was something strange about this case, Elbe said. "Either the perpetrators -- whoever they might be -- had a political interest in pointing to the use of nerve gas, or foreign laboratories were jumping to conclusions that are in line with the current general negative attitude towards Russia."

The assertion that only state actors can handle Novichok is also demonstrably false. The poison was sold in the 1990s for small sums of money to Western secret services and economic criminals, and the latter made use of it. For example, in 1995, the Russian banker Ivan Kiwelidi and his secretary were poisoned with it. The chemist Leonid Rink confessed at the time in court that he had sold quantities to criminals sufficient to kill hundreds of people. Since the binary poisons are very stable, they can last for decades.

Read also: UK psyops bigwig pushed plan to 'mine Sevastopol Bay' during 2014 Crimea crisis – leaked documents

The Navalny case is not the reason, but the pretext for a new stage in the escalation of German great power politics and militarism. The media hysteria over Navalny is reminiscent of the Ukrainian crisis of 2014, when the German press glorified a coup d'état carried out by armed fascist militias as a "democratic revolution."

Social Democrat Frank-Walter Steinmeier, then foreign minister and now German president, personally travelled to Kiev to persuade the pro-Russian president, Viktor Yanukovych, to resign.

He also met with the fascist politician Oleh Tyahnybok, whose Swoboda Party glorifies Nazi collaborators from World War II. Yanukovych's successor, Petro Poroshenko, one of the country's richest oligarchs, was even more corrupt than his predecessor. He terrorised his opponents with fascist militias, such as the infamous Azov regiment. But he brought Ukraine into NATO's sphere of influence, which was the real purpose of the coup.

In the weeks before the Ukrainian coup, leading German politicians (including then-President Joachim Gauck and Steinmeier) had announced a far-reaching reorientation of German foreign policy. The country was too big "to comment on world politics from the sidelines," they declared. Germany had to defend its global interests, including by military means.

NATO marched steadily eastward into Eastern Europe, breaking the agreements made at the time of German reunification in 1990. For the first time since 1945, German soldiers today patrol the border with Russia. With Ukraine's shift into the Western camp, Belarus is the only remaining buffer country between Russia and NATO.

Berlin now sees the protests against the Belarusian dictator Alexander Lukashenko as an opportunity to remove this hurdle as well. Unlike in Ukraine, where anti-Russian nationalists exerted considerable influence, especially in the west of the country, such forces are weaker in Belarus, where the majority speaks Russian. The working class is playing a greater role in the resistance to the Lukashenko regime than it did in Ukraine. But Berlin is making targeted efforts to steer the movement in a pro-Western direction. Forces that appeal for Western support, such as the presidential candidate Svetlana Tikhanovskaya, are being promoted.

Read also: Europe - "Green" Alliance with Russia or experimental field for genetic Monsters? Dispute over Nord Stream 2

The dispute over the construction of the Nord Stream 2 pipeline, whose discontinuation is being demanded by more and more German politicians, must also be seen in this context. It was a strategic project from the very beginning.

The natural gas pipeline, which will double the capacity of Nord Stream 1, which began operations in 2011, will make Germany independent of the pipelines that run through Ukraine, Poland and Belarus. These countries not only earn transit fees from the pipelines but have also used then as a political lever.

With a total capacity of 110 billion cubic metres per year, Nord Stream 1 and 2 together would carry almost all of Germany's annual gas imports. However, the gas is also to be transported from the German Baltic Sea coast to other countries.

In addition to Russia's Gazprom, German, Austrian, French and Dutch energy companies are participating in the financing of the project, which will cost almost €10 billion. The chairman of the board of directors is former German Chancellor Gerhard Schröder (Social Democratic Party), who is a friend of President Putin.

Nord Stream 2 is meeting with fierce opposition in Eastern Europe and the US. These countries fear a strategic alliance between Berlin and Moscow. In December of last year, the US Congress passed a law imposing severe sanctions on companies involved in the construction of the pipeline -- an unprecedented move against nominal allies. The nearly completed construction came to a standstill because the company operating the special ship for laying the pipes withdrew. Berlin and Moscow protested vehemently against the US sanctions and agreed to continue construction with Russian ships, which, however, will not be available until next year at the earliest.

Excerpt of an article by Peter Schwarz published by

[Sep 17, 2020] 'No evidence'- EU Parliament using Navalny's alleged poisoning to push for sanctions halt Nord Stream project German MEP

Germany in the past played important role is promoting Yushchenko's Poisoning false flag. Nothing new here.
If we ask "que bono?". it clearly looks like the USA ears protrude from the whole German part of Navalny poisoning saga.
Sep 17, 2020 |

That's according to Maximilian Krah, a member of the European Parliament from the Alternative for Germany (AfD) party. The "obscure" case involving the alleged poisoning of Navalny has been used by the EU establishment to launch another round of Moscow-bashing, he says.

The lawmaker explained that his fellow MEPs had not, in fact, seen a single piece of evidence suggesting the Russian government might have had a hand in what happened to Navalny.

We don't have the evidence... none of the members of parliament who today voted in favor of sanctions has seen any evidence.

Krah said it was "unrealistic" to expect that Navalny's case would not be politicized, arguing that it was "absolutely clear" it was being used to push an anti-Moscow agenda.

On Thursday morning, the EU Parliament passed a resolution calling on member states to "isolate Russia in international forums," to "halt the Nord Stream 2 project" and to prioritize the approval of another round of sanctions against Moscow.

The MEP also expressed skepticism about the prospects of the broader public ever getting to see any evidence linking the opposition figure's sudden illness to Russian foul play.

"Evidence will only get published and provided to Russia if there is public pressure," he said, adding that he does not see any such pressure building anywhere in the EU. Until that changes, Berlin is likely to continue demanding "answers" from Moscow while holding off on requests by Russian for cooperation, Krah believes.

ALSO ON RT.COM European Parliament calls for international probe into alleged Navalny poisoning & suspension of Nord Stream 2 gas pipeline

The German MEP also weighed in on the fate of the Nord Stream 2 pipeline, suggesting that the alleged poisoning could work to Washington's benefit, given that the White House has been seeking to undermine the project, liking Russian gas to Germany, for months. Krah said it was "clear from the beginning" that the US would try to use the situation to scupper the project, which he says would make Germany "more independent from American influence."

The EU resolution, which is not legally binding but acts as an advisory for the bloc's leaders, was supported by 532 MEPs and opposed by 84, while 72 abstained. Fresh sanctions against Russia have been mulled by both the EU and US since news about Navalny's alleged poisoning was made public.

ALSO ON RT.COM Berlin struggles to answer RT's question on fate of mysterious Navalny aide who left Russia for Germany without being questioned

Moscow has repeatedly expressed its readiness to cooperate with Germany in the probe into the incident, while stressing that the Russian medics who first treated Navalny when he fell ill found no traces of any poison in his body. The Kremlin has also repeatedly approached Berlin for data possessed by the German side, but has so far received none.

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Dachaguy 8 hours ago 17 Sep, 2020 02:02 PM

Of course, the investigation is incomplete, but that doesn't stop the EU from levying "justice." We've seen this before in the Downing Street Memos, where the facts were, "being fixed around the policy. " Millions of innocent people died as a result. When will people learn?
Jeff_P 4 hours ago 17 Sep, 2020 06:01 PM
There should be an international commission to look into this false flag. It should be comprised of Russia and Germany, of course, but no other NATO or European countries and no US vassal states other than Germany. Other members could be Cuba, China, Venezuela, and maybe India. And, of course, the US playbook of assignment of guilt without the benefit of evidence and the exacting of penalties without proving guilt won't fly. Russia might just tell Europe to go FO and leave PACE and the other organizations that it supports but which insist on abusing it.
perikleous 6 hours ago 17 Sep, 2020 04:09 PM
If Russia was determined they would say you cannot delay NSII or we cut the Ukraine pipeline as well, its all or none! Tick Tock Tick Tok, winter is coming soon! Hopefully the Covid 19 won't delay the fuel ships your relying on or the workers who procure the fuel, you know a 2nd wave... is "Highly Likely" and its taking over in the rural areas where the fuel comes from! Present evidence to a poisoning directed by either the fuel company or the gov't and we will continue, or just tell your "handlers" go ***, because I do not recall the US severing weapons sales to Saudi Arabia after Admission to them Severing the head off of (J. Koshoggei) because the US profits/jobs are bigger than one WaPo Journalists life! Hypocracy in action!
Shelbouy 6 hours ago 17 Sep, 2020 03:46 PM
Germany has offered to help pay for the construction of two LNG terminals in Germany to the tune of 1 billion plus to the US. to receive US LNG. The US in turn has said then they would not interfere with the completion of Nord Stream 2 if this were to take place. I am suggesting that Germany then would have 30% cheaper Russian gas than US LNG, blend these two prices, hi cost US LNG and low cost Russian gas of Nord Stream 2, and sell to the EU consumers at a price which would likely be higher than the current rate today, and who would be the wiser, and who would consumers blame when the price of gas goes up instead of down. This may, at least temporarily, appease the US while at the same time ensure the completion of the cheaper Russian supply line, and prevent the diversion of Russian gas to other customer nations like China, and Germany laughs all the way to the bank. This is only speculation on my part because I do not know if it would work that way or not. If it did then Germany would have their cake and eat it. The offer of Germany to the US is however, a fact. The reasons behind this offer are speculative. After all, it's really all about money anyway.
perikleous Shelbouy 5 hours ago 17 Sep, 2020 04:16 PM
The US would demand a contract/commitment for the fuel based on your yearly usage currently, if you re neg, they still bill you for it! Then its handled in court while your bank accounts are frozen and none of the US debt to you is paid until this is resolved. You may win the hearing/court but the losses from not having access to that money will cost way more!
HimandI 4 hours ago 17 Sep, 2020 05:47 PM
Just more proof that the EU rulers are bought and paid prostitutes.
Jayeshkumar 6 minutes ago 17 Sep, 2020 10:03 PM
May be EU is indirectly suggesting to use the 2nd Pipeline to be used Exclusively for Transporting the Hydrogen, in the Future!
Congozebilu 2 hours ago 17 Sep, 2020 08:06 PM
From the first minute this Navalny story broke I knew it was aimed at Nordstream. Everyone who understands geopolitics and also US desperation to sell "freedom gas" knows that Nordstream was the intended target this Navalny clown show.
ivoivo 1 hour ago 17 Sep, 2020 09:00 PM
apparently there are evidence found in a trash can in his hotel room in omsk, they poisoned him with novichock in a water they gave it to him and discard a paper cup in a trash can, standard kremlins procedure, isn't it, what is happening to world intelligence, russians can't kill some dude that is actually not even important and americans can't stop russian hackers in meddling in us election

[Sep 12, 2020] Clearly abother case of Novichok poisoning

Sep 12, 2020 |

MOSCOWEXILE September 3, 2020 at 7:02 pm


Alexei Navalny: Two hours that saved Russian opposition leader's life

An open and shut case! Clearly Novichok poisoning, a deadly poison made only in Russia, and the Russians have already used it at least once. The most deadly nerve agent known to man and part of the brutal armament that Putin's thugs use on their murderous missions.

I rest my case, m'lud.

MOSCOWEXILE September 3, 2020 at 8:15 pm

Germany has denied allegation of falsification of the Navalny case
3 September 2020

MOSCOW, September 3 – RIA Novosti. The statement made by the President of Belarus, Alexander Lukashenko, about the falsification of data on the "poisoning" of Navalny is not true, the press service of the German Cabinet told RIA Novosti.
Earlier, at a meeting with Russian Prime Minister Mikhail Mishustin, Lukashenko said that Minsk had intercepted a conversation between Warsaw and Berlin, which denied allegations of the blogger's poisoning. He promised that he would give the Russian side a transcript of this "interesting dialogue, which clearly indicates that this is falsification".

"Of course, Mr. Lukashenko's statement does not correspond to reality. Yesterday the Federal Chancellor, the Foreign Minister and the Defence Minister expressed their views on the new circumstances in the Navalny poisoning case There is nothing to add", the cabinet told the agency.

In Moscow, they noted that they had not yet received this evidence.

"Lukashenko hast just announced this. He said that the material would be transferred to the FSB. There is no other information yet", Peskov told RIA Novosti.

What a duplicitous creep Lukashenko is!

Always jumping to one side of the fence to the other and thinking he is so smart in doing so.

Then again, perhaps he has such damning evidence, but even if he had, nobody would believe it, because Germany, being a vassal state of the USA, is on the side of freedom and democracy.

"Einigkeit und Recht und Freiheit für das deutsche Vaterland" as one sings there to a well known tune.

[Sep 12, 2020] Russia had jumped onboard the hydrogen train with a plan to use nuclear created hydrogen

Sep 12, 2020 |

ET AL September 3, 2020 at 10:27 am

A week or so ago it was reported that the EU's carbon tax would also apply to energy imports (Russian gas etc.) and in the Tass Press Review (?) 'shock' was apparently expressed, which is weird as de-carbonization (plus more recently a setting in place the necssary infrastcture for a hydrogen based economy) has been an open and long stated plan by Brussels. Norway has already invested significant resources in de-carbonizing its gas and is ready to go.

And in the last couple of days there was a report (RT?) that Russia had jumped onboard the hydrogen train with a plan to use nuclear created hydrogen (heat, innit?) and Norway style de-carbonization tech. Will post the links if I can re-find them. Still, interesting stuff.

[Sep 12, 2020] Novichok, Navalny, Nordstream, Nonsense

Sep 12, 2020 |

JAMES LAKE September 3, 2020 at 9:08 pm

Good article by ex Ambassador to Uzbekistan Craig Murray. Novichok, Navalny, Nordstream, Nonsense

" Once Navalny was in Berlin it was only a matter of time before it was declared that he was poisoned with Novichok. The Russophobes are delighted. This of course eliminates all vestiges of doubt about what happened to the Skripals, and proves that Russia must be isolated and sanctioned to death and we must spend untold billions on weapons and security services. We must also increase domestic surveillance, crack down on dissenting online opinion. It also proves that Donald Trump is a Russian puppet and Brexit is a Russian plot.

I am going to prove beyond all doubt that I am a Russian troll by asking the question Cui Bono?, brilliantly identified by the Integrity Initiative's Ben Nimmo as a sure sign of Russian influence.

I should state that I have no difficulty at all with the notion that a powerful oligarch or an organ of the Russian state may have tried to assassinate Navalny. He is a minor irritant, rather more famous here than in Russia, but not being a major threat does not protect you against political assassination in Russia.

What I do have difficulty with is the notion that if Putin, or other very powerful Russian actors, wanted Navalny dead, and had attacked him while he was in Siberia, he would not be alive in Germany today. If Putin wanted him dead, he would be dead.

Let us first take the weapon of attack. One thing we know about a "Novichok" for sure is that it appears not to be very good at assassination. Poor Dawn Sturgess is the only person ever to have allegedly died from "Novichok", accidentally according to the official narrative. "Novichok" did not kill the Skripals, the actual target. If Putin wanted Navalny dead, he would try something that works. Like a bullet to the head, or an actually deadly poison.

"Novichok" is not a specific chemical. It is a class of chemical weapon designed to be improvised in the field from common domestic or industrial precursors. It makes some sense to use on foreign soil as you are not carrying around the actual nerve agent, and may be able to buy the ingredients locally. But it makes no sense at all in your own country, where the FSB or GRU can swan around with any deadly weapon they wish, to be making homemade nerve agents in the sink. Why would you do that?

Further we are expected to believe that, the Russian state having poisoned Navalny, the Russian state then allowed the airplane he was traveling in, on a domestic flight, to divert to another airport, and make an emergency landing, so he could be rushed to hospital. If the Russian secret services had poisoned Navalny at the airport before takeoff as alleged, why would they not insist the plane stick to its original flight plan and let him die on the plane? They would have foreseen what would happen to the plane he was on.

Next, we are supposed to believe that the Russian state, having poisoned Navalny, was not able to contrive his death in the intensive care unit of a Russian state hospital. We are supposed to believe that the evil Russian state was able to falsify all his toxicology tests and prevent doctors telling the truth about his poisoning, but the evil Russian state lacked the power to switch off the ventilator for a few minutes or slip something into his drip. In a Russian state hospital.

Next we are supposed to believe that Putin, having poisoned Navalny with novichok, allowed him to be flown to Germany to be saved, making it certain the novichok would be discovered. And that Putin did this because he was worried Merkel was angry, not realising she might be still more angry when she discovered Putin had poisoned him with novichok

There are a whole stream of utterly unbelievable points there, every single one of which you have to believe to go along with the western narrative. Personally I do not buy a single one of them, but then I am a notorious Russophile traitor.

The United States is very keen indeed to stop Germany completing the Nord Stream 2 pipeline, which will supply Russian gas to Germany on a massive scale, sufficient for about 40% of its electricity generation. Personally I am opposed to Nord Stream 2 myself, on both environmental and strategic grounds. I would much rather Germany put its formidable industrial might into renewables and self-sufficiency. But my reasons are very different from those of the USA, which is concerned about the market for liquefied gas to Europe for US produces and for the Gulf allies of the US. Key decisions on the completion of Nord Stream 2 are now in train in Germany.

The US and Saudi Arabia have every reason to instigate a split between Germany and Russia at this time. Navalny is certainly a victim of international politics. That he is a victim of Putin I tend to doubt.

MOSCOWEXILE September 3, 2020 at 9:50 pm

I do hope that Murray was writing cynically when he penned the following words above about Navalny:

He is a minor irritant, rather more famous here than in Russia

His popularity here is minimal and his political base statistically zilch, the incessant swamping of the Russian blogosphere with his praise by his hamsters notwithstanding.

I saw one of such hamster's nonsense only the other week in which the retard wrote that Navalny is the most well-known person in Russia and another post of yet another hamster who presented a list of policies that the bullshitter would follow "when he becomes president".

MOSCOWEXILE September 3, 2020 at 10:13 pm

The whole crock of Navalny -- Novichok shite neatly summed up by a comment to Murray's article linked above:

September 4, 2020 at 00:28
We're being asked to believe by people calling themselves serious journalists, that the Kremlin's thought process was thus :

Let's poison this guy with Novichok. Nobody will know it was us and there'll be no diplomatic fallout.

Completely illogical.

Logic has no part in this machination, dear chap: the people to whom these lies are directed are fucking stupid: uneducated, brain-dead, browser surfing, soap opera and "Celebrity Come Dancing" and "Reality TV" and porn watching morons.

Oh yes! And in the UK they're daily fed pap about "The Royals": every day without fail the UK media presents page after page of "stories" concerning "Kate and Wills" and "Harry and Megan".

And much of the rest of the UK media is full of shite about "football" and its prima donnas -- that's "Associated Football" or "soccer" as they prefer to say in North America, and not "Rugby Football" -- better said: not "Rugby League Football".

MOSCOWEXILE September 4, 2020 at 9:28 pm


It gets worse and worse:

Alexei Navalny: Nato says Russia must disclose its Novichok programme
Published 13 hours ago

Nato has called for Russia to disclose its Novichok nerve agent programme to international monitors, following the poisoning of activist Alexei Navalny.

Secretary General Jens Stoltenberg said members were united in condemning the "horrific" attack.
He added there was "proof beyond doubt" that a Novichok nerve agent was used against Mr Navalny.

Where is the proof????????

You just say so or some "guy" at Porton Down or some Bundeswehr Scheißkerl laboratories?

Get fucked Stoltenberg!

And Peskov, a word of advice: Shut the fuck up and say nothing.

Don't believe that silence from you will be taken as proof of guilt!

You and the Russian state are guilty of everything as charged by the very nature of the fact that you are Russian, "the other"!

Sound familiar?

It's what the Nazis said about every Jew: guilty of all accusations because of their ethnicity -- not their religion, note: Christianized Jews were still "Jews". They were guilty of all charges from the moment of each and every one's birth as a "Jew".

And the sickening thing is that "woke" arseholes the world over condemn racism, but racism directed against Russians is fair game.

The West stinks!

It is a vile sump of festering shite.

Thank Woden I live in Russia!

MOSCOWEXILE September 4, 2020 at 9:38 pm

Trump the moron:

Trump says he's seen NO PROOF of Russian opposition activist Navalny's poisoning – but has no reason to doubt Germany's conclusion
5 Sep, 2020 00:30 / Updated 26 minutes ago

Trump the believer!

It's called blind faith.

MOSCOWEXILE September 4, 2020 at 9:41 pm

From the above linked RT article:

The US president has received heavy criticism for his reluctance to immediately join NATO allies in pressing Russia over the Navalny incident, which CNN called "the latest instance of Trump failing to speak out and call for answers from the Kremlin on issues ranging from election interference to possible bounties on US troops in Afghanistan."

I presume that the concept of "burden of proof" is now a dead letter in the Free West.

MARK CHAPMAN September 4, 2020 at 11:16 pm

I thought that whole Russia-offered-bounties-for-dead-US-troops thing had been 'debunked' for good. Several western sources which are sometimes not snapping-turtle crazy said there was nothing to it. So why are they still citing it?

MOSCOWEXILE September 4, 2020 at 10:17 pm

Editorial Independent [wall]:

Alexei Navalny is one of the most important leaders of what passes for political opposition in President Putin's Russia. Some say he is, in effect, "the" leader of the opposition in Russia. He has just been the subject of an assassination attempt, and lies in an induced coma in a German hospital. It's worth repeating: the leader of the opposition to Vladimir Putin has been poisoned, perhaps fatally, using novichok, a chemical weapon banned by international treaty. There is little doubt that, in one form or another, formal or informal agents of the Russian state would have been part of the plot, especially given the evidence of novichok, and that the highest circles of the Russian establishment would either have knowledge of the attack, or made it apparent to any shady blah, blah. blah ..

Now don't you folks go and forget, BoJo recently made Evgeny Lebedev, the owner of that rag and who penned the above shite, a Baronet.

Lebedev has dual Russian/British citizen and has lived in the UK since he arrived there as an 8-year-old with his KGB papa, who had landed a cushy number at the Soviet Embassy.

Papa Lebedev went back to Russia, where in the immediate post-Soviet years of Russia he made a mint and became an "oligarch", namely an extremely successful thief who had pillaged Russia. His son became a UK citizen in 2010.

Evgeny Lebedev is now a life peer and may now plonk his arse (and get paid for doing so!) in one of the chambers of the British legislature, the one whose members are unelected: they are there either through their aristocratic "birthright" or are appointees, such as is Lebedev.

When BoJo appointed Lebedev as a life peer, the moronic Russophobes in the UK accused that fool of a British PM of being under the Evil One's control.

Just shows you how they know shag all about Russia and Russians.

That's because they are all tossers.

MOSCOWEXILE September 4, 2020 at 10:33 pm

Опубликована запись разговора Берлина и Варшавы по делу Навального
20:40 04.09.2020 (обновлено: 05:19 05.09.2020)

Recording of conversation between Berlin and Warsaw on Navalny case published
20:40 09/04/2020 (updated: 05:19 09/05/2020)

MOSCOW, September 4 – RIA Novosti. The state Belarusian media has published a recording of the negotiations between Berlin and Warsaw on the situation with Alexei Navalny, intercepted by Minsk .
RIA Novosti is publishing a transcript of this dialogue.

– Hello, good afternoon, Nick. How are we getting on?

– Everything seems to be going according to plan. The materials about Navalny are ready. They'll be transferred to the Chancellor's office. We'll be waiting for her statement.

– Has the poisoning been definitely confirmed?

– Look, Mike, it's not that important in this case. There is a war going on. And during a war, all sorts of methods are good.

– I agree. It is necessary to discourage Putin from sticking his nose into the affairs of Belarus. The most effective way is to drown him with the problems in Russia, and there are many of them. Moreover, in the near future they will have elections, voting day in the Russian regions.

– This is what we are doing. How are you doing in Belarus?

– To be honest, not that well, really. President Lukashenko has turned out to be a tough nut to crack. They are professional and organized. It is clear that Russia supports them. The officials and the military are loyal to the president. We are working on it. The rest [of this conversation] we'll have when we meet and not on the 'phone.

– Yes, I understand. See you then, bye.

MARK CHAPMAN September 4, 2020 at 11:21 pm

I find it hard to believe this is real. Lukashenko is 'a tough nut to crack'? The Belarusian government is 'professional and organized'? Well, you never know with the Poles. But it seems so perfectly to confirm western perfidy that it must be made up. Who would be stupid enough to say things like that on the phone?

MOSCOWEXILE September 5, 2020 at 12:17 am

Who would be stupid enough to say things like that on the phone?

"Fuck the EU!" said on the 'phone by Noodles to Ambassador Pietwat.

JEN September 5, 2020 at 4:13 am

And "Yats is our man!" Victory Noodles crowed to Pie-whacked.

Don't forget also that Jens Stoltenberg was dumb enough to think he could drive a taxi around Oslo and pick up paying passengers without their recognising him and commenting on his poor driving skills and knowledge of Oslo streets.

MOSCOWEXILE September 5, 2020 at 5:43 am

And on hearing off a Latvian (?) politician, who had been observing the "Revolution of Dignity" and was involved in an investigation into the deaths of the "Heavenly Hundred", that there were good grounds to believe that those martyrs for Ukrainian freedom had been martyred by being shot in the back by their fellow countrymen who were of a fascist bent, Lady Ashton said: "Gosh!""

Now that really was a dumb utterance to make on the phone, considering the circumstances.

MOSCOWEXILE September 5, 2020 at 7:32 am

Dejevsky in today's Independent [wall]:

It is also worth underlining that the Russian pilot who decided to make an emergency landing in Omsk, rather than proceed to Moscow, may have saved Navalny's life, as may the doctors in Omsk who – despite their professed doubts about poison – administered atropine, the closest treatment there is to a novichok antidote, early on. The claim, made by some, that this was a brazen attack, with the Kremlin's fingerprints all over it, designed to be found out and interpreted as a "two fingers up" to the west, does not stack up.

But the German findings that probably the most influential Russian opposition leader was poisoned and that the substance used was the same as the one identified in the Skripal case – a military-grade nerve agent, moreover, that is associated with Russia, even though it was developed in the Soviet-era and can be found outside Russia – means that the Kremlin has a case to answer. Yes, everyone is innocent until proven guilty, and the Kremlin is all denials, but the onus is now squarely on Putin to make his case in the court of international opinion.

" the doctors in Omsk who – despite their professed doubts about poison – administered atropine, the closest treatment there is to a novichok antidote, early on."

That a fact, Doctor Dejevsky?

" everyone is innocent until proven guilty, and the Kremlin is all denials, but the onus is now squarely on Putin to make his case in the court of international opinion"

Burden of proof?

Russia has been accused! Russia is not obliged to prove its innocence, FFS!!!!

Where is the evidence to back up the accusation????

MOSCOWEXILE September 5, 2020 at 7:33 am

Link to above:

JENNIFER HOR September 5, 2020 at 1:19 pm

Of course the Omsk hospital doctors had to apply atropine because Navalny's groupies were squealing that he had been poisoned. They would have squealed again and accused the hospital of malpractice if the hospital had not used the drug.

MOSCOWEXILE September 5, 2020 at 9:42 am


Russian Doctors Suggest Setting up Joint Group With German Colleagues on Navalny Case
5 September 2020

Russian doctors have proposed to their German colleagues that they establish a joint group on the case of Russian opposition politician Alexei Navalny, the president of Russia's National Medical Chamber, noted paediatrician Leonid Roshal, told reporters on Saturday.

Will the Germans agree?

I shouldn't imagine so. They and the rest of the West have crossed the Rubicon:

Alea iacta est!

[Sep 11, 2020] Will the alleged Alexey Navalny poisoning sink the Nord Stream 2 pipeline- It might, but it shouldn t -- RT Op-ed

Sep 11, 2020 |

Will the alleged Alexey Navalny poisoning sink the Nord Stream 2 pipeline? It might, but it shouldn't 11 Sep, 2020 17:39 / Updated 4 hours ago Get short URL © REUTERS/Stine Jacobsen/File Photo; © AFP/Vasily MAXIMOV 11 Follow RT on RT

By Dr. Karin Kneissl , who works as an energy analyst and book author. She served as the Austrian minister of foreign affairs from 2017-2019. In June, she published her book on diplomacy 'Diplomatie Macht Geschichte' in Germany through Olms, and in early September her book 'Die Mobilitätswende', or 'Mobility in Transition', was released in Vienna by Braumüller. The cacophony of noise generated in the wake of the attack on the Russian opposition figure is drowning out the reality. As Angela Merkel has always maintained, the German-Russian gas deal is purely a commercial project.

Nord Stream has always had the ingredients to drive sober-minded Germans emotional. I remember energy conferences in Germany back in 2006 when already the idea of such a gas pipeline as a direct connection from Russia to Germany provoked deep political rows, not just in Berlin but across the EU.

Conservatives disliked it for the simple reason that it was a "Schröder thing," the legacy of social democrat Chancellor Gerhard Schröder, who lost the election of September 2005 to Angela Merkel. Schröder had negotiated the project with his good friend, President Vladimir Putin, and then chaired the company in charge of implementing it.

READ MORE Nord Stream 2 must be completed: Don't politicize Russian energy project over Navalny situation – Merkel Party politics and pipelines

Around that time, I was invited to an energy conference in Munich by the conservative think tank, the Hanns Seidel Foundation, managed by the Bavarian party CSU, the traditional junior partner of the ruling CDU in the government. The bottom-line of the debate on Nord Stream was negative, with the consensus being that the German-Russian pipeline would lead to the implosion of a European common foreign policy and damage the EU's energy ambitions.

I attended many other such events across Germany, from parliament to universities, and listened carefully to all the arguments. The feelings towards Nord Stream were much more benign at meetings held under the auspices of the SPD.

But over the years, the rift between different political parties evaporated, and a consensus emerged which supported enhanced energy cooperation between Berlin and Moscow. Politicians of all shades defended the first pipeline, Nord Stream 1, after it went operational in 2011, bringing Russian gas directly to Germany under the Baltic Sea.

They also enthusiastically supported the creation of the second, Nord Stream 2, better known by its acronym NS2. This $11bn (£8.4bn) 1,200km pipeline is almost finished and was due to go online next year.

But now, in the very final stage of construction, everything has been thrown in limbo thanks to the alleged poisoning of Russian opposition figure Alexey Navalny.

NS2 has always been controversial. Critics, such as the US and Poland, have argued that it makes Germany too reliant on energy from a politically unreliable partner. President Trump last year signed a law imposing sanctions on any firm that helps Russia's state-owned gas company, Gazprom, finish it. The White House fears NS2 will tighten Russia's grip over Europe's energy supply and reduce its own share of the lucrative European market for American liquefied natural gas.

These sanctions have caused delays to the project. A special ship owned by a Swiss company menaced with sanctions had to be replaced. And prior to that, various legal provisions were brought up by the European Commission that had to be fulfilled by the companies in retrospect.

Now the case of Navalny, currently being treated at a Berlin clinic after being awoken from a medically induced coma, has thrown everything up in the air again. It has triggered a political cacophony that threatens relations between Germany, the EU, Russia, and Washington. And at the center is the pipeline.

READ MORE 'Fraught with consequences for Russian-German relations': Moscow furious with Berlin over lack of cooperation on Navalny

Various German sources, among them laboratories of the armed forces, have alleged that Navalny had been poisoned with the nerve agent Novichok. Foreign Minister Heiko Maas (SPD) stated in an interview published on Sunday by Bild: " I hope the Russians don't force us to change our stance on Nord Stream 2 – we have high expectations of the Russian government that it will solve this serious crime ." He claimed to have seen " a lot of evidence " that the Russian state was behind the attack. " The deadly chemical weapon with which Navalny was poisoned was in the past in the possession of Russian authorities ," he insisted.

He conceded that stopping the almost-completed pipeline would harm German and broader European business interests, pointing out that the gas pipeline's construction involves "over 100 companies from 12 European countries, and about half of them come from Germany." Maas also threatened the Kremlin with broader EU sanctions if it did not help clarify what happened "in the coming days." Russian Foreign Minister Sergey Lavrov responded by labeling the accusations "groundless" and Moscow has staunchly denied any involvement in the affair.

The whole matter is complicated by domestic political considerations in Germany. CDU politician Norbert Röttgen, who heads up foreign affairs within the ruling party and has demanded that the pipeline should be stopped, is among those conservatives vying to lead the CDU in the run-up to Chancellor Angela Merkel's retirement next year. Meanwhile, Merkel is still trying to strike a balance between the country's legal commitments, her well-known mantra that NS2 is a " purely commercial project, " and what is now a major foreign policy crisis.

The chancellor had always focused on the business dimension. But most large energy projects also have a geopolitical dimension, and that certainly holds true with Nord Stream.

When I was Austria's foreign minister, I saw first-hand the recurring and very harsh criticism of the project by US politicians and officials. I remember the US secretary of state, Mike Pompeo, in a speech at the margins of the UN General Assembly in September 2018 that focused solely on NS2. I replied by pointing out to him that pipelines are not built to annoy others, but because there is demand. One thing was certain – the US opposition to Nord Stream would not wane and now the Navalny case has given it new impetus. What we are witnessing is a tremendous politicization of the pipeline with a wide range of people all shouting very loudly.

ALSO ON RT.COM Craig Murray: Opposition figure Navalny may possibly have been targeted by Russian state, but Western narrative doesn't add up Diplomatic confrontation instead of solution

So here we are, in a very poisoned atmosphere where it might be difficult to revise positions without losing face. The social democrat Maas, just like the conservative Röttgen and many others, have taken to the media for different reasons. In my observation, it might have to do with their respective desires to take a strong position in order to also mark their upcoming emancipation from the political giant Merkel (she is due to step down next year).

Due to her professional and empathetic handling of the pandemic, she is today much more popular than before the crisis. That makes it difficult for a junior partner, represented by Foreign Minister Maas, and for all those who wish to challenge her inside the party.

What is needed is to get the topic out of the media and out of the to-and-fro of daily petty politics. Noisy statements might serve some, but not the overall interests involved. And there are many at stake. It is not only about energy security in times of transition, namely moving away from nuclear, but much wider matters.

As a legal scholar, I deem the loss of trust in contracts. Vertragstreue, as we call it in German – loyalty to the contract – will be the biggest collateral damage if the pipeline is abandoned for political reasons. This fundamental principle of every civilization was coined as pacta sunt servanda by the Romans – agreements must be kept. Our legal system is based on this. Who would still conclude contracts of such volumes with German companies if politics can change the terms of trade overnight?

ALSO ON RT.COM German FM links Nord Stream 2 to Navalny, threatens sanctions as Moscow accuses Berlin of dragging feet on alleged poisoning probe Remember South Stream

In June 2014, construction sites on the coasts of the Black sea, both in Russia and Bulgaria, were ready for starting the gas pipeline South Stream. After pressure from the European Commission, the work never started. The political reason was the dispute on Ukraine – in particular, the annexation of the Crimea. However, the legal argument was that the tenders for the contracts were in contradiction with EU regulations on competition. Tens of thousands of work permits, which had been issued from Bulgaria to Serbia etc., were withdrawn. The economic consequence was the rise of China's influence in the region. South Stream was redirected to Turkey.

So here we are in the midst of a diplomatic standoff. It is a genuine dilemma, but it could also turn into a watershed. Will contracts be respected or will we move into a further cycle of uncertainty on all levels? Germany is built on contracts, norms (probably much too many) and not on arbitrariness.

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The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

silvermoon 5 hours ago

All these weeks have passed and Germany has still not shown shared actual evidence of their Navalny tests with Russia though. That is the same as saying we found the gun with your finger prints on it but never showing it.

Count_Cash silvermoon 3 hours ago

Correct, Germany has only since 10th September (if confirmed) shared any 'evidence'. That is sufficient intervening time to concoct any test result and associated materials that they want - another Diesel scandal. Indeed people will ask why when you had the patient on 22nd of august, it took you so long to send samples to the OPCW, despite almost immediately yelling Poison!

gainwmn silvermoon 5 hours ago

U stupid sheep: Germany did show it to the OPCW, i.e. the organization RF is the member of, and therefore the latter gets the full access to all the data provided by Germany, as well as any other of 192 members. Kremlin lies and demands in this regard is more than ridiculous, they completely destroy any shred of trust left to all RF governmental structures and regime itself.

Teodor Nitu gainwmn 3 hours ago

Riiight!...Those Russians...not only their chemical weapons are no longer working, but they are no longer capable to choose the proper time to use them, or so the story goes. Think about it; they 'used' novichok to kill the Skripals and they are still alive and well (supposedly), now they (Russians) 'used' novichok again to kill Navalny and he is alive and getting better.

Besides, they chose the absolutely wrong time to do it. With Skripals it was just before the opening of the World Cup in Russia and now, just before the finishing of the North Stream 2 pipeline.

It sounds that they are sabotaging their own interests, aren't they? Are they (Russians) that stup!d? Some 'smart' posters here seem to believe it. But lets get real, one has to be able to see beyond the length of his nose, in order to understand what is really going on.

silvermoon Teodor Nitu 2 hours ago

Russia had all their chemical weapons legally destroyed. Along with hundreds of countries. The US, UK and Israel never did. Navalny the innocent anti Putin. Can't win one way try another.

Pro_RussiaPole gainwmn 2 hours ago

So why is Russia still asking for it? Clearly, something is being withheld. As for the OPCW, their credibility has been shot for years with all their fake Syrian chem weapon attack reports.

seawolf 6 hours ago

Even if there was not Navalny's story, they could invent another to stop the project.

Abraxas79 seawolf 4 hours ago

Exactly. I hope Russia is the one that abandons it. Let Germany be the one that decides to cancel it and go along with it. Concentrate on supplying China and other Asian nations and internal consumption. Forget about Europe. You don't have to turn off the current supply, just charge more for it when the market allows. Looks like the next German leader according to this article is quite the Russophobe, which means relations will only get worse.

Pro_RussiaPole Abraxas79 2 hours ago

If this navalny farce does end up cancelling the NS2 project, Russia should stop all gas transit to western Europe through Poland and Ukraine by spring of next year. Tell those countries that will be cut off that Russia can either sell them LNG, or that they will have to connect to other sources of gas. Because if certain countries are so against Russian gas, then why are they not doing anything against Russian gas going through Poland and Ukraine, and why isn't Trump threatening sanctions on these countries for doing so?

Blue8ball713 RTjackanory 3 hours ago

Its a far longer list and it have the fingerprints of GB secret services all over it.

Reply Gabriel Delpino seawolf 46 seconds ago It is not in the interest of Germany to stop de project. Reply

magicmirror 6 hours ago

Europe should have nothing to do with the USA ....... proved time and time again they cannot be trusted. All they want is markets, resources and consumers. They lie, they cheat, they steal...... (quoting mr Pompeo, I think). A big opportunity to win Europe's independence.

SmellLaRata 5 hours ago

All due respect for Mr. Navalny but since when does an individual fate of one person dictates the fate for millions ? And c' mon Germany. Your hypocrisy is so utterly laughable. You ignore the Assange and Snowden cases, the slaughter of Kashoggi, the brutal beating of yellow vests, the brutal actions against the Catalans ... but Navalni. Not even a hint of a proof of government involvemen. But it fits the agenda, does it? The agenda which is dictated by the deep state agitators who so much flourished under Obama.

gainwmn SmellLaRata 4 hours ago

Even being not a fan (to say the least) of the US foreign and some of the domestic policy, I have to point out that tried by U analogy is largely out of balance: first, the issue in Navalny (as well as in Scripals' and others cases acted on with poisons) case is not so much the assassination attempt on a person's life, as the banned use of chemical weapons, the ban RF's signature has been under since 1993. And that conclusion (Russia's guilt) has not been made by the UK or Germany or any other country alone, but the OPCW - the organization not only RF is the member of, but also 191(!) other countries, out of which not a single country (except RF) rejected that conclusion!; second, the US did not made attempt on either Snowden's or Assange's life, with any kind of weapon, not already mentioning the weapons banned by the international agreements American government(s) signed. This is a large - I would say - decisive difference! As far as Kashoggi's case or other cases sited by U, RF did not react with sanctions against the respective perpetrators either, thus demonstrating the same disregard for the law and order as the US did... therefore making all lies about innocent RF and evil US, foolish, at the least.

Pro_RussiaPole gainwmn 2 hours ago

The US and its lackeys are killing Assange. They are doing it slowly. And many voices going along with a lie does not make the lie true. Because these poisoning allegations are lies. The accused were never allowed to see the evidence or challenge it. And there is the whole issue of politicized reports coming out of the OPCW that contradicted evidence and reality.

Nathi Sibbs 4 hours ago

After completing the pipe and it start running Russia must turn off all Ukraine pipes. No more gas for free from Russia, Ukraine must start importing LNG from thier reliable partner USA. I think imports from USA will be good for Ukrainian Nazi people

Abraxas79 Nathi Sibbs 4 hours ago

How are they going to pay for it? Ukraine's only exports these days are its women to various brothels across Europe and North America.

Hilarous 5 hours ago

The German leaders know very well that the case of Navalny will never be resolved and exists for no other reason than to seize a pretext to demonize Russia and to end Nord Stream 2 in exchange for US freedom gas

magicmirror Hilarous 4 hours ago

freedom gas and handsome presents .....

SandythePole 3 hours ago

This is an excellent account by Dr Karin Kneissl. It is a genuine dilemma for 'occupied' Europe. Its occupying master does NOT want NS2 and will do anything to stop it. Russia suffers sanctions upon sanctions, but still gallantly tries to maintain friendly and honourable business relations with its implacable neighbours. For how much longer is this to continue? Surely there must be some limit to the endless provocations of occupied Europe and its Western master. Perhaps it is time to shut off the oil and gas and leave Germany to sail under its own wind.

dunkie56 3 hours ago

Perhaps Russia should disengage with Germany/EU totally and forge ahead in partnership with China and India and whoever wants to do business. let the EU tie it's ship to the sinking US ship and drown along with it's protection racket partner! Then Russia should build a new iron curtain between itself and all countries who want to align with the the long run Russia has tried to forge a partnership with the West but it just has not born any fruit and even as pragmatic as Russia is they must be coming to the conclusion they are flogging a dead horse!

Blue8ball713 dunkie56 2 hours ago With 146 million citizen Russia is too small to be a real partner to anyone like China or India. Best fit is the EU, but the EU is controlled or better said occupied by the USA. Its part of their hegemonial system. So Russia is left out in the rain..

micktaketo 5 hours ago

I am not sure if it is the right thing to do but I think Russia should sue the German authorities if this deal is withdrawn and if it is have nothing to do with Germany again along with other corrupt countries that cannot prove or at the least bring forth their evidence to be seen, to be transparent to all even Russia the first, because Russia is the one being accused. These countries must think we the people are all completely stupid and Russia more so. This corruption stinks to high heaven and is obvious to all sane people who love fairness. You cannot trust an entity that believes in getting what they want by hook or by crook. Russia learn your lesson ! So you countries that love whats good for you and your people do not cheat them for they voted for you to help them. Germany do not kick yourself, it will hurt your people. Saying, There is more than one way to skin a cat, they say.

Mutlu Ozer 3 hours ago

There is a simple concept to investigate a crime to find the criminals: Just look at whose benefit the crime is? EU politicians are certainly smart people to know this basic concept of criminal investigation. However, now they are playing a new strategy about how to domesticate(!) not only Russia China as well... Germans are the main actors in the stage of the WW-I and WW-II. I surely claim that Germans would be the main architect of the last war, WW-III.

[Aug 24, 2020] Why neoclassical economics is a yet another secular religious doctrine, and not a science

Highly recommended!
In a sense the USA is a theocratic society with neoliberal religion as the state religion. Not that different from the USSR whioch also was a theocratic society with some perversion of Marxism as the state religion.
Aug 24, 2020 |

Hickory Ignored says: 08/15/2020 AT 9:35 AM

I capitulate. Ron you are correct, we are post peak.
Post Peak

OK, now what?
It is so strange to be post-peak and not have high prices for crude,
and food.
I guess that will be coming.

note- biofuels should not be counted in liquids tally. It is a different animal, with the source being dependent on farming and soil, not drilling and geology. Just because ethanol is used for propulsion shouldn't matter- electrons and batteries aren't counted either, and rightly so. Those belong in a different category- transportation energy.

Schinzy Ignored says: 08/15/2020 AT 12:02 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

The most overrated law in economics is that of supply and demand. This law suffers from what Richard Feynman called "vagueness" (see ). The problem is that it is always satisfied and hence gives absolutely no information about prices.

The latest iteration of our article on the oil cycle can be found at

alimbiquated Ignored says: 08/16/2020 AT 9:52 AM

Another problem with market theory (beyond vagueness) is that it lacks a time axis.

The theory states that the relationship between price and supply moves along the demand curve, but doesn't say how fast, just that "in the long run" the system will reach equilibrium. Being in equilibrium means being somewhere on the demand curve.

So for example, if prices go up, the demand quantity is expected to go down. The question is when.

Where does this go wrong? In classical market theory, for example, unemployment is impossible, because if labor supply outstrips demand prices (wages) should fall until until equilibrium is attained. This has been observed to be false on many occasions, including right now.

As Feymann states in the video, "If it disagrees with experiment, it's WRONG! That's all there is to it." Classical economics isn't just too vague, it is wrong.

Keynes joked about this that in the long term we'll all be dead. He meant equilibrium will never be reached, so we are never on the demand curve. He argued that "sticky prices", meaning the unwillingness to accept pay cuts, kept labor markets permanently out of equilibrium.

It's worth pondering whether oil prices are "sticky" as well. Saying yes is saying the law of supply and demand doesn't apply (in the short term). This year we have seen that both OPEC's politicking and panicky traders can cause wild swings in price unrelated to supply and demand.

Where market theory is vague is the shape of the demand curve. For example, if oil supply can't meet demand in the near future, as some here have posited, how high will prices go? Some claim it will go over $200, as people get desperate for it. Some claim that higher prices would increase efforts to find and drill more, putting a lid on prices. Some claim the shortage would crash the world economy, depressing prices. Some claim that faced with oil shortages, the world would simply switch to EVs, or stop wasting the gunk on poorly designed transportation systems, so prices would stay more or less the same.

Who is right? Nobody knows. So we don't know the shape of the demand curve. The theory is hopelessly vague.

Schinzy Ignored says: 08/16/2020 AT 12:25 PM

Good points. For all these reasons it is not surprising that the journalist Robert Samuelson noted last year that frequently economists don't know what they're talking about: .

Han Neumann Ignored says: 08/17/2020 AT 8:25 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.


The price of crude oil is only part of the Peakoil phenomenon. How much is left in the ground counts, however more important is at which velocity the remaining Gb can be extracted. I am not a geologist, but common sense says that when an oilfield is well depleted (50-70%) the most of the remaining barrels will be extracted at a much lower speed, even at very high oilprices. With secondary and tertiary EOR technology most conventional oilfields will not produce the same or close to the same amount of barrels/day as before for many more years. That's also my conclusion from what I have read more than a decade ago.
Of course with high oilprices new, relatively small, oil fields will come online and (more advanced) EOR will start in other fields, but no matter how you look at it: depletion never stops. With most oilfields in the world past-peak, only a tremendous amount of money (needed to develop EOR) can prevent world crude oilproduction from falling like a rock. And all those EOR technologies will deplete oilfields faster. Big gains in the beginning, more disappointments later.
Will there be significant amount of shale oil developed in the future in other countries than the U.S. ? If so, is that wise, regarding an already existing runaway climate change ?

[Aug 24, 2020] Oil price and the USA surge capacity

Aug 24, 2020 |

Ovi Ignored says: 08/16/2020 AT 5:32 PM


I do not consider Canada, Brazil and Russia to be in the same category as the US. The US has what I call "Sustained Surge Capacity". The other three don't. For a few years, starting in August 2016, the US increased production at rate of more than 1 Mb/d, forcing OPEC to cut back because the US, by itself was meeting annual world demand increases of 1 Mb/d to 1.3 Mb/d.

From August 2016 to November 2019, US increased production from 8,534 kb/d to 12,866 kb/d an increase of 4,333 kb/d or an average increase of close to 1330 kb/d/yr. No other country could or has done that. Does that capability still exist? I think that will be decided by the future price of oil along with demand.

From Ron's chart, from August 2016 to November 2019, there was an increase of approximately 6,000 kb/d. Russia, Canada and Brazil only contributed 1,567 kb/d of the 6,000 kb/d, slightly more than 1/3 of of what the US added.

In other words, I think that a world production minus the US chart is more useful in assessing the probability of exceeding the November 2018 peak. On a world minus US chart, the peak occurred in November 2016. That peak was exceeded in November 2018 because the US added 3,102 kb/d over those two years, offset partially by OPEC cutting back. Clearly the US will be a major player in determining whether the November 2018 peak will be exceeded.

The only other countries that have some short term surge capacity is Saudi Arabia, Kuwait and the UAE as shown in Ron's charts above. However their demonstrated surge capacity may be more related to wells that were drilled and oil coming out of inventory and could not be sustained for three years like the US did.

I think that there is a likelihood that the next peak oil will be lower than the November 2018 peak and it will be a question of whether increasing demand around 2023 to 2024 can be met by supply and whether the associated increasing world oil prices begin to strangle world economic growth.

Ron Patterson Ignored says: 08/16/2020 AT 8:11 PM

Thanks Ovi, I agree with almost everything you say. The one place where I disagree is here. You said: The US has what I call "Sustained Surge Capacity". I would make a slight change in that statement. I would say: "The US had what I call "Sustained Surge Capacity". Of course, we don't have that anymore.

That ended in December 2019 but the virus came along and disguised that point. Of course we can increase from where we are today, but not past that December 2019 point.

There was a reason the rig count was dropping during the last half of 2019. There was a reason crack spreads were being decommissioned and sold for scrap well before that peak.

All oil reservoirs contain a finite amount of oil. It is absolutely astonishing that some people simply cannot understand that simple fact.

Ovi Ignored says: 08/16/2020 AT 10:07 PM


I grappled with that statement for a while and then I put it in because I still think that the US has that sustained surge capacity. What I don't know is whether the remaining/dormant SSC is large enough to exceed the 12,866 kb/d reached in November 2019. At that time the STEO was projecting a small increase into 2020, indicating the US was getting close to peak capacity.

Ron Patterson Ignored says: 08/17/2020 AT 8:49 AM

I have no doubt that US production can increase from where it is today. My point was the glory days are over for so-called "Saudi America". We will never get back to the point we reached in November 2019. Therefore we will never be able to cause world oil production to reach new highs.

[Aug 24, 2020] OPEC July 2020 Production Charts " Peak Oil Barrel

Notable quotes:
"... $40s WTI and Brent are wholly unsustainable prices. I'd argue that $50s and $60s are also if growth is being sought outside of a few areas. ..."
"... SS, there is no doubt that the pandemic will hasten peak oil supply. Many shut-in wells will not re-open. Frac spreads are being sold for scrap. Rigs are being decommissioned. Plus we are still producing at 80 to 90% of former levels. That means depletion is still continuing. So when they do get around to producing flat out again, the oil will just not be there. ..."
"... close to 100,000 job losses in the oil industry, many folks in their 50s and 60s. Hard to see how they bring folks on for another boom with the loss of all that skilled labor. ..."
"... So, maybe $100 oil over a period of time could turn this tide, but sub-$50 WTI sure won't. ..."
"... Yes, the future is hard to predict. But absent some tremendous financial return potential, why would young people have any interest in making a career of US upstream E & P? ..."
Aug 24, 2020 |

Ron Patterson Ignored says: 08/15/2020 AT 8:15 AM

OPEC peaked in 2016, Russia peaked in 2019, and the USA very likely peaked in 2019 also. And the vast majority of all other nations have peaked also as evidenced by their continuing decline. That should be enough evidence for anyone.

shallow sand Ignored says: 08/15/2020 AT 8:33 AM


$40s WTI and Brent are wholly unsustainable prices. I'd argue that $50s and $60s are also if growth is being sought outside of a few areas.

The longer prices stay low due to the pandemic, the more likely the world has passed peak supply.

I don't see any sign that this pandemic will be over anytime soon.

Ron Patterson Ignored says: 08/15/2020 AT 8:46 AM

SS, there is no doubt that the pandemic will hasten peak oil supply. Many shut-in wells will not re-open. Frac spreads are being sold for scrap. Rigs are being decommissioned. Plus we are still producing at 80 to 90% of former levels. That means depletion is still continuing. So when they do get around to producing flat out again, the oil will just not be there.

As to the longevity of the pandemic, one can only guess. But things will never be back to the free and easy ways of the past. International travel will never be back to what it once was. There will be fewer travel vacations even within nations. The possibility of the virus returning will forever be on everyone's mind.

Stephen Hren Ignored says: 08/15/2020 AT 12:47 PM

Also close to 100,000 job losses in the oil industry, many folks in their 50s and 60s. Hard to see how they bring folks on for another boom with the loss of all that skilled labor.

Han Neumann Ignored says: 08/16/2020 AT 8:08 PM


Once that a, in most cases, curative combination of medicines is available and one or a few very effective vaccins are registered and rolled out, it remains to be seen how 'normal' life will get again.

I don't think the virus will be forever on everyone's mind. Already now many young people have started to party like before the pandemic, even in Europe (infections rising in almost all European countries, so a lot of 'Trumpites' and Bolsonarites' also in Europe).

When vaccines are widely available at least everyone who is planning to travel by plane will be going to get a vaccin.
A good chance that vacations and air travel is close to normal somewhere in 2022 or 2023.

Dennis Coyne Ignored says: 08/16/2020 AT 9:42 AM

Shallow sand,

The pandemic will eventually subside an the US and other nations that have responded poorly to the pandemic will eventually learn from nations that have responded relatively better, compare Europe and US.

If peak supply is reached, but demand resumes 1% annual growth, I expect we will soon see Brent at $65/bo+/-5 at minimum, by 2025 to 2030.

shallow sand Ignored says: 08/16/2020 AT 10:37 AM

Dennis. Brent $65 in 2025-30 is only helpful if one or both of the following happens:

1. Capital markets continue to the pattern of 2015-19 and fund drilling that provides marginal returns or losses, but has no hope of providing superior returns.

2. Some other new, economical supply source is discovered.

Low oil prices to 2025-2030 would seem to mean supply will be constrained unless one or both of the above occur.

Conventional oil pretty much peaked in 2005.

I look at $10K invested in a major oil company in 2010. I look at $10K invested in a shale company in 2010. I then compare that to the S&P 500 return since 2010, all other industry groups, specific companies, etc.

Investing in oil is like investing in tobacco. The only allure is yield. Upstream E & P will have to keep borrowing to pay the dividend even if oil returns to $50 Brent. Same with $60 Brent.

shallow sand Ignored says: 08/16/2020 AT 11:03 AM

Dennis. One thing that you are missing is just how poor the future of the upstream oil industry is.

When the shale boom started, EV's were a pipe dream.

When the shale boom started, there wasn't widespread sentiment against oil. Global warming/climate change was on the radar, but not like now.

BP is trying to remake itself in large part because they cannot find talented and skilled younger workers who want to work for a fossil fuel company.

We have been in this industry since the 1970s. We have some of the best leases in our field and have made more money in this industry than in our professions or in other investments. There is a third generation in our family ranging from late teens to mid twenties. None are interested at all in this family business/investment. Same for one of my best friends who makes his living at this. Same for another, whose engineer son started working with him out of college, but before oil crashed in 2014 left and took a job in a "Green Energy" field.

Mike is in the same boat.

I know all of the major players in our field. All companies are family owned. There are a total of four in all of those families working in oil and gas who are under the age of 50, and those four are at or nearing 40, and started working in their family oil companies at least over 15 years ago.

As I have posted before, our employees range from 47-61 years of age. The two we hired who were in their twenties have both long ago left, and no longer work in upstream E & P.

We have participated in some Zoom meetings with the National Stripper Well Association. Almost all on those meetings is old (50-80 years old).

We hope to sell out on the next recovery, if that ever comes. But we are concerned there will not be any buyers.

So, maybe $100 oil over a period of time could turn this tide, but sub-$50 WTI sure won't.

Yes, the future is hard to predict. But absent some tremendous financial return potential, why would young people have any interest in making a career of US upstream E & P?

Hickory Ignored says: 08/15/2020 AT 9:35 AM

I capitulate. Ron you are correct, we are post peak.
Post Peak

OK, now what?
It is so strange to be post-peak and not have high prices for crude,
and food.
I guess that will be coming.

note- biofuels should not be counted in liquids tally. It is a different animal, with the source being dependent on farming and soil, not drilling and geology. Just because ethanol is used for propulsion shouldn't matter- electrons and batteries aren't counted either, and rightly so. Those belong in a different category- transportation energy.

Schinzy Ignored says: 08/15/2020 AT 12:02 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

The most overrated law in economics is that of supply and demand. This law suffers from what Richard Feynman called "vagueness" (see ). The problem is that it is always satisfied and hence gives absolutely no information about prices.

The latest iteration of our article on the oil cycle can be found at

alimbiquated Ignored says: 08/16/2020 AT 9:52 AM

Another problem with market theory (beyond vagueness) is that it lacks a time axis.

The theory states that the relationship between price and supply moves along the demand curve, but doesn't say how fast, just that "in the long run" the system will reach equilibrium. Being in equilibrium means being somewhere on the demand curve.

So for example, if prices go up, the demand quantity is expected to go down. The question is when.

Where does this go wrong? In classical market theory, for example, unemployment is impossible, because if labor supply outstrips demand prices (wages) should fall until until equilibrium is attained. This has been observed to be false on many occasions, including right now.

As Feymann states in the video, "If it disagrees with experiment, it's WRONG! That's all there is to it." Classical economics isn't just too vague, it is wrong.

Keynes joked about this that in the long term we'll all be dead. He meant equilibrium will never be reached, so we are never on the demand curve. He argued that "sticky prices", meaning the unwillingness to accept pay cuts, kept labor markets permanently out of equilibrium.

It's worth pondering whether oil prices are "sticky" as well. Saying yes is saying the law of supply and demand doesn't apply (in the short term). This year we have seen that both OPEC's politicking and panicky traders can cause wild swings in price unrelated to supply and demand.

Where market theory is vague is the shape of the demand curve. For example, if oil supply can't meet demand in the near future, as some here have posited, how high will prices go? Some claim it will go over $200, as people get desperate for it. Some claim that higher prices would increase efforts to find and drill more, putting a lid on prices. Some claim the shortage would crash the world economy, depressing prices. Some claim that faced with oil shortages, the world would simply switch to EVs, or stop wasting the gunk on poorly designed transportation systems, so prices would stay more or less the same.

Who is right? Nobody knows. So we don't know the shape of the demand curve. The theory is hopelessly vague.

hole in head Ignored says: 08/16/2020 AT 1:48 PM

A comment posted on ^^ . Interesting .
"The price action of WTI shows it quite clearly that the non oil extracting part of the economy can't afford to pay a high enough price that would allow the extracting, processing and delivery of oil products to it.

It's that simple, most of the oil still in the ground will stay there unless somehow you find a way to pay $100++ per barrel. The last 12 years has shown that we can't!

The best yearly average weekly price of WTI was right around $100
Average weekly price of WTI for years 2008 thru 2013 was $88.
Average weekly price of WTI for years 2014 thru 2019 was $53.

The trend is what it is and it shows no signs of changing, the price of WTI is still hitting lower lows and lower high.

I have no idea what the future will bring but the next 3 years are going to be interesting and not in a good way.

Have fun everyone."

Dennis,repeating myself ,the price of oil is going to trend down . Supply and demand curves do not apply where the world^s economic system is now placed . Alimbiquated has done a very good job explaining that .

Ron Patterson Ignored says: 08/15/2020 AT 6:38 PM

Much of the fall in output of the other 9 is from Iran, Nigeria, Libya, and Venezuela, much of that decline is due to political problems

No doubt it was. But political upheaval is part of the story, and always will be. There will be political problems ongoing for decades. Dennis, if your model excludes political problems, then you are living in a dream world.

Anyway, in addition to the political problems that you point out in those four nations, which will most likely continue, we have the natural decline in the other five nations in the chart below.

Hightrekker Ignored says: 08/15/2020 AT 6:42 PM

Nov 2018 is getting further in the rear view mirror -- –

Dennis Coyne Ignored says: 08/16/2020 AT 9:03 AM


Yes and oil prices have been low from Nov 2018 until now, do you expect that to continue for the next 10 years? I do not, perhaps that's the difference. 2025 to 2030 there is likely to be a new peak for World C plus C centered 12 month average output probably 1 to 3 Mb per day higher than the Nov 2018 peak. This assumes oil prices reach $64/bo or higher in 2020$ by June 2030.

Hightrekker Ignored says: 08/16/2020 AT 9:51 AM

Yes, I do not think we will surpass Nov 2018.
But I'm a European Historian, viewing other factors.

Survivalist Ignored says: 08/18/2020 AT 1:54 AM

I seem to recall, not too long ago, various talking heads prattling on about how USA LTO is now the new "swing producer"/source of swing supply. I guess we'll now get to see how well it swings on and off, as swing producers are wont to do.
My WAG is that it doesn't swing back on so well, as the swing off phase seems to be damaging (not just a tap you see), and when demand recovers after COVID, circa 2023, we'll see a price run up. Perhaps it'll be a damaging price run up. 2023 will be in the middle of Biden's first term, presumably.

Westexasfanclub Ignored says: 08/16/2020 AT 3:57 AM

And: Nigeria and Venezuela could ramp up their production only very, very slowly. They could not stem the general trend. Lybia is too little to make any serious difference. The only real wildcard is Iran. And it's the less probable to be played.

[Aug 24, 2020] Why neoclassical economics is a yet another secular religious doctrine, and not a science

Aug 24, 2020 |

Hickory says: 08/15/2020 AT 9:35 AM

I capitulate. Ron you are correct, we are post peak. Post Peak

OK, now what? It is so strange to be post-peak and not have high prices for crude, and food. I guess that will be coming.


Schinzy , says: 08/15/2020 AT 12:02 PM

I have argued for several years that peak oil is a low price phenomenon, not a high priced phenomenon.

The most overrated law in economics is that of supply and demand. This law suffers from what Richard Feynman called "vagueness" (see ). The problem is that it is always satisfied and hence gives absolutely no in