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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


Introduction

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 iea.org

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 OilPrice.com 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) peakoilbarrel.com, comment 12/11/2015 at 7:34 am)
    Proved oil reserves at 1700.1 billion barrels, 52.5 years of supply.

    Reference:

    http://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/oil-review-by-energy-type/oil-reserves.html

    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 (https://www.youtube.com/watch?v=9RC1Mepk_Sw) 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 - Zacks.com).  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
49.20
3.98 719704 45.22 440212 Call Put
Nov'15 45.69 19:28
Aug 31
49.93
3.95 137067 45.98 215025 Call Put
Dec'15 46.57 19:29
Aug 31
50.77
3.91 162736 46.86 243840 Call Put
Jan'16 47.50 19:28
Aug 31
51.63
3.91 57430 47.72 102471 Call Put
Feb'16 47.50 19:28
Aug 31
52.38
3.93 38475 48.45 50167 Call Put
Mar'16 48.25 19:29
Aug 31
52.98
3.92 38170 49.06 73615 Call Put
Apr'16 48.75 19:29
Aug 31
53.47
3.86 14106 49.61 25925 Call Put
May'16 48.99 19:28
Aug 31
53.85
3.76 7934 50.09 23357 Call Put
Jun'16 49.86 19:28
Aug 31
54.16
3.64 44230 50.52 103798 Call Put
Jul'16 50.29 19:28
Aug 31
54.38
3.53 3938 50.85 21832 Call Put
Aug'16 50.03 19:28
Aug 31
54.61
3.42 2511 51.19 16337 Call Put
Sep'16 50.72 19:28
Aug 31
54.87
3.31 8091 51.56 42572 Call Put
Oct'16
-
19:28
Aug 31
55.16
3.20 1164 51.96 17226 Call Put
Nov'16
-
19:28
Aug 31
55.48
3.11 1038 52.37 17809 Call Put
Dec'16 52.59 19:28
Aug 31
55.81
3.02 56618 52.79 133005 Call Put
Jan'17
-
19:28
Aug 31
56.05
2.94 598 53.11 14894 Call Put
Feb'17
-
19:29
Aug 31
56.31
2.87 277 53.44 8034 Call Put
Mar'17 55.45 19:29
Aug 31
56.59
2.81 988 53.78 9195 Call Put
Apr'17
-
19:28
Aug 31
56.85
2.75 465 54.10 3543 Call Put
May'17
-
19:29
Aug 31
57.08
2.69 435 54.39 2930 Call Put
Jun'17 53.69 19:29
Aug 31
57.34
2.64 5669 54.70 21475 Call Put
Jul'17 56.32 19:28
Aug 31
57.55
2.60 143 54.95 3120 Call Put
Aug'17
-
19:29
Aug 31
57.81
2.57 48 55.24 1760 Call Put
Sep'17
-
19:28
Aug 31
58.11
2.56 71 55.55 3982 Call Put
Oct'17
-
19:28
Aug 31
58.41
2.54 15 55.87 1184 Call Put
Nov'17
-
19:28
Aug 31
58.73
2.53 15 56.20 1270 Call Put
Dec'17 55.75 19:28
Aug 31
59.05
2.51 9588 56.54 44135 Call Put
Jan'18
-
19:28
Aug 31
59.21
2.49
-
56.72 1532 Call Put
Feb'18
-
19:28
Aug 31
59.38
2.46
-
56.92 312 Call Put
Mar'18
-
19:28
Aug 31
59.57
2.43
-
57.14 2688 Call Put
Apr'18
-
19:29
Aug 31
59.77
2.40
-
57.37 63 Call Put
May'18
-
19:28
Aug 31
59.98
2.37
-
57.61 516 Call Put
Jun'18
-
19:29
Aug 31
60.21
2.34 226 57.87 3700 Call Put
Jul'18
-
19:28
Aug 31
60.35
2.30
-
58.05 296 Call Put
Aug'18
-
19:28
Aug 31
60.52
2.27
-
58.25 61 Call Put
Sep'18
-
19:28
Aug 31
60.69
2.23
-
58.46 461 Call Put
Oct'18
-
19:28
Aug 31
60.87
2.20
-
58.67 61 Call Put
Nov'18
-
19:28
Aug 31
61.05
2.16
-
58.89 311 Call Put
Dec'18 58.54 19:28
Aug 31
61.24
2.12 2002 59.12 19416 Call Put
Jan'19
-
19:28
Aug 31
61.35
2.10
-
59.25 204 Call Put
Feb'19
-
19:28
Aug 31
61.48
2.08
-
59.40 4 Call Put
Mar'19
-
19:28
Aug 31
61.62
2.06
-
59.56 454 Call Put
Apr'19
-
19:28
Aug 31
61.78
2.04
-
59.74 4 Call Put
May'19
-
19:28
Aug 31
61.96
2.02
-
59.94 4 Call Put
Jun'19
-
19:28
Aug 31
62.15
2.00
-
60.15 1185 Call Put
Jul'19
-
19:28
Aug 31
62.20
1.98
-
60.22 5 Call Put
Aug'19
-
19:28
Aug 31
62.29
1.96
-
60.33 4 Call Put
Sep'19
-
19:28
Aug 31
62.41
1.94
-
60.47 4 Call Put
Oct'19
-
19:28
Aug 31
62.55
1.92
-
60.63 4 Call Put
Nov'19
-
19:28
Aug 31
62.72
1.90
-
60.82 104 Call Put
Dec'19
-
19:28
Aug 31
62.93
1.88 158 61.05 6628 Call Put
Jan'20
-
19:29
Aug 31
63.00
1.86
-
61.14
-
Call Put
Feb'20
-
19:29
Aug 31
63.08
1.84
-
61.24
-
Call Put
Mar'20
-
19:28
Aug 31
63.17
1.82
-
61.35
-
Call Put
Apr'20
-
19:28
Aug 31
63.28
1.80
-
61.48
-
Call Put
May'20
-
19:28
Aug 31
63.41
1.78
-
61.63
-
Call Put
Jun'20
-
19:28
Aug 31
63.56
1.76
-
61.80
-
Call Put
Jul'20
-
19:28
Aug 31
63.57
1.74
-
61.83
-
Call Put
Aug'20
-
19:28
Aug 31
63.62
1.72
-
61.90
-
Call Put
Sep'20
-
19:29
Aug 31
63.70
1.70
-
62.00
-
Call Put
Oct'20
-
19:29
Aug 31
63.83
1.68
-
62.15
-
Call Put
Nov'20
-
19:28
Aug 31
63.97
1.66
-
62.31
-
Call Put
Dec'20 64.00 19:28
Aug 31
64.14
1.64 14 62.50 1935 Call Put
Jun'21
-
19:28
Aug 31
64.59
1.57
-
63.02
-
Call Put
Dec'21
-
19:28
Aug 31
65.04
1.50 1 63.54 440 Call Put
Jun'22
-
19:28
Aug 31
65.34
1.50
-
63.84
-
Call Put
Dec'22
-
19:28
Aug 31
65.64
1.50
-
64.14 180 Call Put
Jun'23
-
19:29
Aug 31
65.64
1.50
-
64.14
-
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.

https://www.washingtonpost.com/business/economy/as-crude-oil-prices-plunge-so-do-oil-exporters-revenue-hopes/2015/12/23/ed552372-a900-11e5-8058-480b572b4aae_story.html?hpid=hp_hp-top-table-main_oil-910pm%3Ahomepage%2Fstory

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 Oilprice.com 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, Oilprice.com)

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):

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(The Gasoline Price Myth, Lance Roberts, oilprice.com)

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, oilprice.com)

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 ( aspofrance.viabloga.com)

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
Information
 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 http://www.eia.gov/forecasts/steo/tables/?tableNumber=29#

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 (OilPrice.com, 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.

Exports

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" (iea.org). 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 (eia.gov):

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
Watcher

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

http://www.indexmundi.com/map/?v=91000

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
2012
55.296
Quadrillion Btu
3
Total Primary Energy Consumption
2012
31.522
Quadrillion Btu
3
Dry Natural Gas Production
2011
22,213
Billion Cubic Feet
2
Total Petroleum and Other Liquids Production
2014
10,853
Thousand Barrels Per Day
3
Total Primary Coal Production
2013
388,013
Thousand Short Tons
6

Compare that with the USA

United States' Key Energy Statistics world rank
Total Primary Energy Production
2012
79.212
Quadrillion Btu
2
Total Primary Energy Consumption
2012
95.058
Quadrillion Btu
2
Dry Natural Gas Production
2011
22,902
Billion Cubic Feet
1
Total Petroleum and Other Liquids Production
2014
13,973
Thousand Barrels Per Day
1
Total Primary Coal Production
2013
984,842
Thousand Short Tons
2

India

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 OilPrice.com?).

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 www.TheBushAgenda.net

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 (OilPrice.com, 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.

Si

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 peakoilbarrel.com 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 (dmr.nd.gov )

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 (WSJ.com)

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.  http://www.bloomberg.com/news/articles/2012-09-23/how-high-oil-prices-will-permanently-cap-economic-growth

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.  http://www.EIA.org/textbase/npsum/high_oil04sum.pdf

BUT WE NEED HIGH OIL PRICES:  Marginal oil production costs are heading towards $100/barrel http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/

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.  http://ftalphaville.ft.com/2012/05/02/983171/marginal-oil-production-costs-are-heading-towards-100barrel/

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 http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11024845/Oil-and-gas-company-debt-soars-to-danger-levels-to-cover-shortfall-in-cash.html

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.   http://www.ft.com/intl/cms/s/0/ec3bb622-c794-11e2-9c52-00144feab7de.html#axzz3T4sTXDB5

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.

OilPrice.com 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: http://link.reuters.com/tef25w 

... ... ...

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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[Oct 24, 2020] The blockage of Nordstream 2 is about The Dark Heart of Europe not Russia

Oct 24, 2020 | www.unz.com

A123 , says: October 23, 2020 at 3:35 pm GMT

@MLK

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...

PEACE

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 | www.zerohedge.com

Submitted by OilPrice.com

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 | www.zerohedge.com

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:

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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 | www.moonofalabama.org

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 | www.moonofalabama.org

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 | www.theamericanconservative.com


WilliamRD
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 | www.zerohedge.com

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 InfoBrics.org,

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.

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

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.

me name=


[Oct 11, 2020] MARK CHAPMAN

Oct 11, 2020 | thenewkremlinstooge.wordpress.com

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).

http://johnhelmer.net/i-am-russia-navalny-story-collapses-in-self-contradiction/

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 | thenewkremlinstooge.wordpress.com

MOSCOW EXILE October 10, 2020 at 6:28 am

RT
В МИД России назвали "Новичок" западным брендом
14:44

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."

Note:

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 | www.rt.com

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.

Think your friends would be interested? Share this story! 16

[Oct 05, 2020] Russian subsides for Easter Europe are now much less then in the past

Oct 05, 2020 | www.moonofalabama.org

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 | www.unz.com

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 | thenewkremlinstooge.wordpress.com

PATIENT OBSERVER September 28, 2020 at 4:33 am

This is a threat?

https://www.rt.com/usa/501883-iraq-embassy-baghdad-closure-attacks/

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.'

* https://www.businessinsider.com/750-million-united-states-embassy-iraq-baghdad-2013-3

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."

https://www.vanityfair.com/news/2007/11/langewiesche200711

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 | peakoilbarrel.com

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.

NON OPEC W/O US PRODUCTION

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 | www.zerohedge.com

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 OneWorld.press,

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.

Germany

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.

Belarus

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".

Bulgaria

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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;

http://thesaker.is/the-world-has-gone-absolutely-insane/

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.

https://www.politico.eu/article/why-germany-cant-say-no-to-nord-stream/

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 | www.unz.com

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 | www.moonofalabama.org

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 | www.rt.com

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

Like this story? Share it with a friend!

[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. ..."
"... Dances with Bears: THE PEVCHIKH PLOT – NAVALNY BOTTLE, LONDON WITNESS FLEE THE SCENE OF THE CRIME, BERLIN TOO http://johnhelmer.net/the-pevchikh-plot-navalny-bottle-london-witness-flee-the-scene-of-the-crime-berlin-too/ ..."
"... 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 | thenewkremlinstooge.wordpress.com

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.

https://vedomosti-ru.turbopages.org/vedomosti.ru/s/society/news/2020/09/15/839918-o-planah-navalnogo?utm_source=yxnews&utm_medium=mobile

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:

VESTI RU

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.*

https://yandex.ru/turbo/vesti.ru/s/article/2457559?promo=navbar&utm_referrer=https%3A%2F%2Fzen.yandex.com%2F%3Ffrom%3Dspecial&utm_source=YandexZenSpecial

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:

https://www.instagram.com/p/CFJwV0Dly0Z/embed/captioned/?cr=1&v=12&wp=822&rd=https%3A%2F%2Fthenewkremlinstooge.wordpress.com&rp=%2F2020%2F07%2F31%2Fthe-ceaseless-lies-of-eva-bartlett-or-the-partisan-scrubbing-of-western-consciousness%2F#%7B%22ci%22%3A0%2C%22os%22%3A3146.465000000717%7D

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.

https://www.stalkerzone.org/lavrov-offered-merkel-a-choice-between-russia-navalny/

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'

https://www.rt.com/russia/500766-borrell-navalny-sanctions-russia/

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?

Source:

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

https://vz-ru.turbopages.org/vz.ru/s/news/2020/9/15/1060574.html?promo=navbar&utm_referrer=https%3A%2F%2Fzen.yandex.com

MARK CHAPMAN September 16, 2020 at 12:26 pm

Too late to get smart now.

MOSCOWEXILE September 16, 2020 at 10:51 pm

NAVALNY: HIDDEN AND OVERT SIGNALS
Stalker Zone
September 16, 2020

Staged???

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

Dances with Bears: THE PEVCHIKH PLOT – NAVALNY BOTTLE, LONDON WITNESS FLEE THE SCENE OF THE CRIME, BERLIN TOO
http://johnhelmer.net/the-pevchikh-plot-navalny-bottle-london-witness-flee-the-scene-of-the-crime-berlin-too/

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.

Like

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

https://yandex.ru/turbo/tass.ru/s/politika/9466401?sign=80f97b564d197b55161b94400f4ff187026d184af0581f365926a5271a89189a%3A1600204510&utm_source=yxnews&utm_medium=mobile&trbsrc=neo-news

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.

Like

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.

https://russian-rt-com.turbopages.org/russian.rt.com/s/business/news/783868-predlozhenie-frg-ssha?utm_source=yxnews&utm_medium=mobile

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

WHY IS IT SO DIFFICULT TO KILL THE "OPPOSITION" TORCH-BEARER NAVALNY?
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):

https://thesaker.is/us-deputy-secretary-of-state-was-afraid-to-eat-russian-soup-navalny-and-swift-ruslan-ostashko/

Contains a smidgeon of addled Navalny. Delish!

https://c0.pubmine.com/sf/0.0.3/html/safeframe.html 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

https://sputniknews.com/russia/202009171080484058-navalny-was-poisoned-by-water-bottle-in-his-hotel-room-his-team-claims/

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

gazeta.ru

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"
12:27

Expert comments on statements about the bottle with "Novichok"
12:27

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

kp.ru

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.

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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 | www.zerohedge.com

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.

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

Countries like Iraq and Nigeria have implemented more than 100% of their required cuts, helping give OPEC and Abdulaziz credibility.

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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 | www.globalresearch.ca

https://apis.google.com/u/0/se/0/_/+1/fastbutton?usegapi=1&size=medium&count=true&origin=https%3A%2F%2Fwww.globalresearch.ca&url=https%3A%2F%2Fwww.globalresearch.ca%2Fcontinued-german-support-nord-stream-2-completion%2F5724195&gsrc=3p&jsh=m%3B%2F_%2Fscs%2Fapps-static%2F_%2Fjs%2Fk%3Doz.gapi.en.myOGgYJo9ys.O%2Fam%3DwQE%2Fd%3D1%2Fct%3Dzgms%2Frs%3DAGLTcCMR2Cg_3Iqxcgmos-E9G6cjWQG_Kw%2Fm%3D__features__#_methods=onPlusOne%2C_ready%2C_close%2C_open%2C_resizeMe%2C_renderstart%2Concircled%2Cdrefresh%2Cerefresh&id=I0_1600401164093&_gfid=I0_1600401164093&parent=https%3A%2F%2Fwww.globalresearch.ca&pfname=&rpctoken=21838589 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."

*

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Award-winning author Stephen Lendman lives in Chicago. He can be reached at lendmanstephen@sbcglobal.net . 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."

http://www.claritypress.com/LendmanIII.html

Visit his blog site at sjlendman.blogspot.com .

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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 wsws.org ..."
Sep 10, 2020 | www.defenddemocracy.press

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 wsws.org

[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 | www.rt.com

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.

Think your friends would be interested? Share this story!


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 | thenewkremlinstooge.wordpress.com

MOSCOWEXILE September 3, 2020 at 7:02 pm

BBC

Alexei Navalny: Two hours that saved Russian opposition leader's life

https://www.bbc.co.uk/news/world-europe-54012278

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 | thenewkremlinstooge.wordpress.com

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 | thenewkremlinstooge.wordpress.com

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:

Goose
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

BBC

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:

https://www.independent.co.uk/independentpremium/voices/novichok-alexei-navalny-poison-russia-putin-germany-a9703756.html?r=10355

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

Sputnik:

Russian Doctors Suggest Setting up Joint Group With German Colleagues on Navalny Case
5 September 2020
18:56

https://sputniknews.com/world/202009051080376439-russian-doctors-suggest-setting-up-joint-group-with-german-colleagues-on-navalny-case/

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 | www.rt.com

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.

Think your friends would be interested? Share this story!

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 EU..in 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 | peakoilbarrel.com

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
https://www.youtube.com/watch?v=EYPapE-3FRw ). 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
http://www.math.univ-toulouse.fr/~schindle/articles/2020_oil_cycle_notes.pdf

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.

https://www.economicsonline.co.uk/Competitive_markets/Demand_curves.html

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: https://www.washingtonpost.com/opinions/economists-often-dont-know-what-theyre-talking-about/2019/05/12/f91517d4-7338-11e9-9eb4-0828f5389013_story.html?noredirect=on&utm_term=.dc651d463df7 .

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.

Schinzy,

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 | peakoilbarrel.com

Ovi Ignored says: 08/16/2020 AT 5:32 PM

Ron/Dennis

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

Ron

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 | peakoilbarrel.com

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

Ron.

$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

Ron,

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
https://www.youtube.com/watch?v=EYPapE-3FRw ). 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
http://www.math.univ-toulouse.fr/~schindle/articles/2020_oil_cycle_notes.pdf

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.

https://www.economicsonline.co.uk/Competitive_markets/Demand_curves.html

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 ^peakoil.com^ . 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

Hightrekker,

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 | peakoilbarrel.com

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.

NOTE:

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 https://www.youtube.com/watch?v=EYPapE-3FRw ). 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: http://www.math.univ-toulouse.fr/~schindle/articles/2020_oil_cycle_notes.pdf

alimbiquated , 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.

https://www.economicsonline.co.uk/Competitive_markets/Demand_curves.html

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 , 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: https://www.washingtonpost.com/opinions/economists-often-dont-know-what-theyre-talking-about/2019/05/12/f91517d4-7338-11e9-9eb4-0828f5389013_story.html?noredirect=on&utm_term=.dc651d463df7 .

Han Neumann , 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.

Schinzy,

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 oil production 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 19, 2020] American imperialism vs. EU imperialism: Pushed into the Ukrainian adventure by the US? Rubbish. The EU and its constituent members were attempting to play their own hand and were not merely following the US lead submissively.

Highly recommended!
Aug 19, 2020 | turcopolier.typepad.com

likbez , 17 August 2020 at 11:05 AM

IMO NATO should have ended with the fall of the USSR. It now "confronts" a largely imaginary threat, concocted for the purpose of maintaining the status quo in US government expenditures for defense and supporting the imperial dreams of the neocons.

Does anyone really think Russia is going to invade the Baltics? Really?


Hear! Hear!
blue peacock , 17 August 2020 at 11:20 AM

Col. Lang,

Isn't the western alliance for all intents & purposes already dead?

It is a shame as it could work together to counter the totalitarian CCP. But Mama Merkel it seems would rather get a few yuan from the communists and turn a blind eye to CCP authoritarianism until it becomes obvious that the CCP are ruthless and will be competing with Germany around the world for machine tools and autos by undercutting them on price and heavily subsidizing their companies until German industry is destroyed.

Barbara Ann , 17 August 2020 at 11:57 AM

I have heard of these elusive creatures called "Europeans", but have yet to meet one, so am not able to comment on their alleged "smug superiority". How many divisions do they have?

JohnH , 17 August 2020 at 01:13 PM

If anything drives the US and Europe apart, it will be trade, not security. Germany is clearly chafing under the US bit, which sacrifices European industry to US interests -- sanctions on Nordstream 2, trade with Russia, trade with Iran, and China and Huawei. The US clearly prioritizes it's own LNG , finance, technology and arms industries over European prosperity. It amazes me that it has taken Europe so long to wake up.

Biden will do nothing to change that dynamic, since he is beholden to the same interests as Trump.

james , 17 August 2020 at 01:36 PM

nato is an anachronism much like a lot of western type institutions today..

i am predicting a trump win via the astro...

srw , 17 August 2020 at 01:58 PM

Does anyone really think Russia is going to invade the Baltics? The Baltics and most likely the Poles do with past history in mind. I would like to see them and the Ukrainians transition into something like the Finns who acknowledge Russian power but maintain their independence. Right now they are looking at NATO as their guarantee of independence in the future. Who can blame them when looking at history.

Polish Janitor , 17 August 2020 at 03:28 PM

Col. Lang,

The Trump admin's (and for that matter, Trump's own instincts) are and have continuously been quite correct with regards to EU's defense expenditures agenda. The European 'humanists' take advantage of the American defense umbrella inside their own countries so they can afford to NOT spend on defense and instead spend more on domestic and economic development. So while America continues to pay for the EU's defense it cannot afford to invest in its own domestic programs (infrastructure, etc.) adequately. These Europeans then with the collaboration of their Atlanticist fellows on the other side of the pond do nation-building and democratization projects (call it endless wars) abroad, such as in Afghanistan. Just don't ask them about their track record in this department.

However, the thing is when their immediate interests are in danger they forget about America in a heartbeat. Examples, Germany's Nordstream pipeline with Russia, 5G infrastructure and development, trade with China, Paris climate accord, etc.

I tend to believe that EU knows best how to make an existential threat out of Russia. Anyone still remembers the novichok incident back in 2018? The thing with Russia is that from the POV of EU, they view their Eastern neighbor as a solid and stable illiberal system that is not within the ideological orbit of the western liberal democracy and thus they feel threatened by that ideologically, NOT a scenario in which from Tallinn to Toulouse is invaded and captured by Putin. In this endeavor they also have found willing partners in 'anti-authoritarian' hawks such as Bob Kagan, Hilary, Sam Power et.al that tow the same line and advocate for NATO expansion and other similar projects.

The EU in definitely terrified of a scenario in which the U.S. (under a nationalist conservative administration) starts de-funding NATO or withdraws its troops from Europe. In this case they need to cut public spending and allocate more on defense which has a clear impact on the 'democratic spirit' of EU's over-hyped social democracy.

In the past few years we have seen the rise of right-wing populsit nationalist parties in pretty much every single major EU country. I believe there are strong tendencies in the Trump admin-if DJT manages to stay in power for another 4 years- to do a little *something something* about EU's decades-long nefarious free-riding of U.S. defense umbrella and I don't think the effeminate EU leaders will gonna like it very much.

English Outsider , 17 August 2020 at 04:31 PM


Barbara Ann - You say "I have heard of these elusive creatures called "Europeans", but have yet to meet one, so am not able to comment on their alleged "smug superiority". How many divisions do they have?"

The term "European" has become disputed territory. As an Englishman I regard myself fully as "European" as any German or Frenchman but for many the term now seems to mean exclusively "Member of the European Union". Tricky, that one.

Me, I prefer the term "Westerner". It takes in the so-called "Anglosphere" as well and therefore covers all the ground without going into the fact that some parts have become considerably less powerful over the last century and others considerably more. Also accommodates without fuss the fact that the cultural centre of gravity, at some indeterminate time in that last century, moved across from Paris, Vienna and Berlin to New York and parts west.

Not always to your advantage, to you as an American that is, because a fair chunk of the Frankfurt mob moved over your way with it. You caught from Old Europe the destructive and vacuous tenets of "Progressivism" and are now sharing the disease in its full vigour with us.

I mention that last because the violent TDS you see across the Atlantic isn't specifically European. It's merely that it's natural for progressives to detest Trump or rather, not the man himself but the "populist" forces he is taken to represent. It's garlic to the vampire for the progressive, the Little House on the Prairie or its various European equivalents, and the allergic reaction will become stronger yet. That "smug superiority" you will therefore find in the States as readily as you will find it here. America or here we live on sufferance in occupied territory, if we are not progressives ourselves, and should not the occupiers always be superior and smug?

I went hunting for the Telegraph article the Colonel discusses above. I didn't like that article at all. It gets the "freeloading" part right but in the context of a Russophobia that's seemingly set in stone. And the Telegraph is not so much a progressive newspaper as one that, while throwing a few token bones to its mainly Conservative readership, buys the progressive Weltanschauung just as much as the Guardian or New York Times.

"How many divisions do they have?" A few more than the pope but maybe that's not the point. I recently tried to follow the twists and turns of Mrs May's negotiations with the EU as they related to defence. I got the impression that in the matter of defence the supply of divisions could safely be left to the Americans. It was the allocation of defence contracts that they were all concerned about.

Deap , 17 August 2020 at 04:46 PM

Residing in Europe in the late 1960's at a US joint NATO military attachment in Northern Italy, we mused were we there to keep our eye on the Russians, or in fact keep our eyes on the Germans. One still saw in the back rooms, AXIS memorabilia.

As an aside: the only reason Michelle Obama chose as one of her FLOTUS projects - support of military families -- was so she could get Uncle Sam to jet her around to all those US military bases still in Europe for tea with the commander's wife and then on to her real purpose - shopping and having fun with friends and families she was able to drag along. On our dime.

Deap , 17 August 2020 at 04:53 PM

My last visit to Europe found there are now more Turks, than former "Europeans; except in France where they were more Algerians, than native French. And of course UK has long been little more than the entrenched polyglot of their vast far flung Empire.

Indeed, who is a "European" today. Birth rate demographics from the former colonies, boat people or import of cheap labor has now taken over anything we used to call "European". Can a resident Turk really serve up a perfect plate of raclette in Switzerland? One word answer: no. And that is a sad loss. One must instead shift their tastes to shwarma, if one wants European food today.

Diana Croissant , 17 August 2020 at 06:19 PM

In regard to Europeans--and perhaps some Australians whom I've met--I have often felt that they in some ways did feel a bit superior to Americans.

Their sense of superiority, however, seemed more rooted in a sense of cultural superiority. Those on the blog who viewed the comic rendition of the Three Little Pigs that was recently posted here might think of that and its wonderful ending about the house that was "American made." it was a wonderful ending for that well-known tale and a great defense of our culture's current limited and plain vocabulary in some groups.

As an English major and English teacher, so much of the great literature that we taught did come from England. I took three Comps when I earned my Masters: English literature from Beowulf (which I read in Old English) to Chaucer's Catterbury Tales (which I read in Middle English) and then to Virginia Woolf.

For my comp in American literature, I read from Washington Irving to the modern American writers at the time I was in college.

My third comp was in Modern Linguistic Theory.

Of course we taught Shakespeare and Dickens---English writers--to our junior high and high school classes. We studied mostly American writers in regard to short stories, as short stories are considered the American genre. Our teaching of poetry covered both English and American poets. As far as novels go, we taught both English and American novels.

Russian and German novelists were also on our list of reading for our comps. (We read them in English translation.)

In summary, American culture was often overshadowed by the many longer centureies of European culture in much of my college career.

What the Europeans can't deny, though they may want to, is that the tehcology and innovation in things like automobile production, electricity, telephones, and into space expoloration ---many things like that--is where we can indeed be quite proud.

They can continue to feel culturally superior to us if it makes them feel better. I defy them, however, to minimize our importance in World War II.

Babak makkinejad , 17 August 2020 at 11:24 PM

Deap

A European was understood, in Iran, to be a Christian. A Turk in Germany or and Algerian in France is just that, a Turk, an Algerian, i.e. another Muslim.

There are professional and managerial middle class French Muslims in Paris and elsewhere, but are they French? I do not know how assimilated they are.

Mathias Alexander , 18 August 2020 at 03:01 AM

" he will follow some Trump-era objectives, because that is what American interests demand, thus showing that Trump was no extremist on China."
So if Biden and Trump both want something, that shows that it isn't extreme. How does that work again?
The drive for confrontation with Russia contradicts Europe's desire to do buisness with her. Hence the end of the Western Alliance.

Mathias Alexander , 18 August 2020 at 04:18 AM

"The US faces a rapidly escalating political crisis. The losing party in November will undoubtedly go to the federal courts to claim that their opponents cheated in the process."
They all went along with electronic voting and postal ballots. Now they're all going to complain about the consequences.

Paco , 18 August 2020 at 04:43 AM

Of course NATO should have disappeared together with the Berlin Wall, but it is alive, kicking and ever looking for trouble, Belarus comes to mind.
The problem with propaganda is that the emitter ends up believing it, Europe does not need any protection, we have the means to protect ourselves.
The US is an occupation force, and on top of it demands payment for it. Pick up your gear and go home, and by the way, Europe should worry about countries armed to their teeth by the US, I'm thinking about Morocco for instance, since I live in Spain. The beautiful line of the Sierra that I contemplate every morning while stretching has been contaminated with a radar station of the Aegis system, and that means we in our quite and beautiful Andalusian town are a target for the biggies. Stop believing your propaganda, pick up your gear and let everybody take care of themselves, the benefits will be for the US population in the first place, and the world will rejoice.

A.I.S. , 18 August 2020 at 06:20 AM

The reason German military contribution to the "western alliance" is what it is is very simple.
It is according to the incentives that threats that German leadership perceives.

First: Objective strategic things:
Essentially, noone is going to invade Germany. This removes one major reason to have a large army. Secondly, Germany is not going to productively (in terms of return of investment) invade anyone else. This removes the second major reason to have a large army. There is something to be said to have a cadre army that can be surged into a real army if conditions change.

Second: Incentives of German political leaders.
While the degree of German vassal stateness concerning the USA is up to a degree of debate, that the USA has a lot of influence over Germany is in my view not. Schröder got elite regime changed over his Iraq war opposition (it was amazing that literally all the newspaper were against him, had a big impact on me growing up during this time).
Essentially, if you are in Nato, at some point, Uncle Sam will invite you to some adventure. If you say yes to this adventure you commit your armed forces to some confrontation in the middle east if you are lucky, or against Russia in Eastern Europe if you are unlucky. Your population is not going to like this, and you may face losing elections over this. It is also expensive in terms of life and material (although not very expensive compared to actual wars against competent enemies).
If you say no, Uncle Sam will be displeased with you and will make this known for example by sicking the entire "Transatlantic leadership networks" on you, which can also make you lose the next election.

Essentially, if Uncle Sam comes asking, you lose the next election if you say yes, and you also lose if you say no. Saying no is on balance cheaper, because you dont incurr the financial and human costs of joing a random US adventure on top of the risk of losing the next election.
The winning play is to get your army in such a state that Uncle Sam will not even ask.

Germany basically did create condition that enabled this.
Its a reasonably happy state for Germany to be in.

We are basically doing Brave Soldier Schweijk on the national level.

Solutions from a US pov:

1: Do less military adventures. If you do less adventures, people will fear being shanghaied along less. This will decrease the drawbacks associated with having a reasonable military as a Nato state.

2: Dont soft regime change governments that say no to your foreign adventures. Instead, maybe listen to them. Had the US listend to French and German criticism regarding the wisdom of going to war with Iraq, the US and also a lot of others would have been much better off.

3: Make it clear that particpation in foreign adventures is actually voluntary instead of "voluntary", make also clear that participation in defensive operations is not voluntary and is what Nato was created for and that you expect a considerable contribution towards this. Also, do some actual exercises. For example, if Germany claims that its military expenditure is sufficient, stress test this premise by having a realistic exercise in which a German divisions goes up against an American one. Yes, do some division size exercizes pretty please. Heck, after ensuring that this exercize wont be a failfest, have some Indian be the referee.

Barbara Ann , 18 August 2020 at 08:03 AM

Territoriality European Outsider

Now we are getting to the heart of the matter. My jest about never having met a European was of course designed to illustrate that "Europe" is a secondary construct. Never has a person, upon meeting me, introduced themselves as a "European".

Europe is a moveable feast and even territorial definitions are slippery. "Europeans" I think, must be characterized by short memories, for was it not less than 25 years ago that European NATO planes bombed their fellow Europeans in Bosnia? It can't have been an accident either, as I understand the op. was called "Operation Deliberate Force".

If Europe is synonymous with the EU it has precisely zero divisions and though you yourself may remain "Western", you are as a consequence of Brexit no longer "European". No, I think you and Polish Janitor are close by identifying "European" as a progressive/liberal, democratic (read "globalist") value system. An insufficiency of "European-ness" can thus be used to justify NATO involvement across various geographies - from Bosnia to Afghanistan (& shortly Belarus?).

But of course the "European" members of NATO are hardly on the same page. It looks not at all unlikely that two of its members may go to war in the Eastern Mediterranean.

I agree with you re the Telegraph article btw. "European" smugness is well represented in that organ.

nbsp; turcopolier , 18 August 2020 at 08:21 AM

Mathias Alexander

No. They did NOT all go along with "electronic voting and postal ballots." The 50 states each run federal elections in any way they please. The US Constitution requires that. There are a wide variety of voting machines in use and only a few states use mailed in ballots. the Republican Party particularly opposes mail in voting.

Barbara Ann , 18 August 2020 at 09:28 AM

Darn spellchecker "Territorially" of course EO.

I should also have added that "European" by the above definition is pretty much synonymous with "Atlanticist".

Jack , 18 August 2020 at 12:54 PM

Paco,

You should be complaining to the politicians you elect. They're the ones requesting US military protection. Prior to Trump, our governments were quite happy to provide that protection. He's now asking for some cost sharing.

Be careful though, before you know it Spain could become a vassal of the Chinese communists as many countries in Africa are finding out now. Hopefully you can continue to extract euros from the Germans and Dutch while battling the separatists in Catalonia. There's a thin veneer between stability & strife.

Deap , 18 August 2020 at 01:01 PM

Paco, with a huge cost of lives and treasure the US was twice asked to clean up Europe's self-inflicted messes in the past century. Promise you won't call on us again, and we can talk. I know, past is not necessarily prologue but do at least meet us half way. It is only good manners.

English Outsider , 18 August 2020 at 01:17 PM


Barbara Ann - Lots of Europes of course. "My" Europe may no longer be on the active list. Traces here and there. Few green shoots that are visible to me. Many rank growths overlaying it.

Also many "European Unions". They exist all right, in uneasy company.

So many "EU's". A ramshackle Northern European trading empire - I think that's too unstable to be long for this world but I could be wrong. A nascent superpower, that denied by many but for some their central aim.

A bureaucratic growth. A handy market place for all. A Holocaust memorial centre; when the EU politicians find themselves in a tight spot they can always call on Auschwitz and all fall back in line. I saw Mrs Merkel pull that trick at the last but one Munich Security Conference and all there, because Mrs Merkel was at that time in a very tight spot, applauded with relief.

A Progressive Shangri-La, all the more enticing for never being defined. Those adherents of that "EU" do actually call themselves "EU citizens" and I see the term is becoming more common usage. Maybe those are the self proclaimed "European citizens" you have not met.

And the producer of reams of lifeless prescription that seek to force all into the same mould and tough on the poor devils who can't fit the model. And on their families.

Lots of "EU's". I like none of them. While we wait for that edifice of delusion to collapse I hope the damage it does to "My" Europe is not irreparable.

Artemesia , 18 August 2020 at 02:26 PM

@ Diana Croissant: "They can continue to feel culturally superior to us if it makes them feel better. I defy them, however, to minimize our importance in World War II."

What an unfortunate conclusion to your essay.


Paco , 18 August 2020 at 05:47 PM

Jack, with all due respect, the politician who committed treason and gave away Spanish territory for a foreign power to install bases died in 1975, nobody voted for him, general Franco, an ally of Hitler, someone who sent over 50k troops to the siege of Leningrad, one of the greatest crimes in the history of mankind, a million casualties, mainly civilians, dead by hunger and disease, that fascist ally of Hitler we had to endure for 40 years, the price to close your eyes and your nose not to smell the stench were bases, an occupying force watching one of the strategic straights in Rota, close to Gibraltar, plus other bases inland. I could go on, and remind you of 4H bombs dropped over Palomares after a broken arrow incident, one of them broke and plutonium is still poisoning an area that your government is not willing to clean. So that is what foreign occupation looks like, if something goes wrong, well, we are protecting you . they say. History should be taught with a bit more detail in the USA.

English Outsider , 18 August 2020 at 06:35 PM

A.I.S

I'm afraid you're reading the dynamics of the European/US relationship quite incorrectly. Bluntly, you have the facts wrong.

This site, and particularly the Colonel's committee of correspondence, is packed with experts who have lived in this field and know their way around it. So I don't venture a comprehensive rebuttal myself - my knowledge is partial and I do not have the background to be sure of getting it dead right. But here -

"Essentially, if you are in Nato, at some point, Uncle Sam will invite you to some adventure. If you say yes to this adventure you commit your armed forces to some confrontation in the middle east if you are lucky, or against Russia in Eastern Europe if you are unlucky."

That is transparent nonsense.

Obama has stated that it was the Europeans, including the UK, who pushed him into some middle East interventions. I don't think he was shooting a line. The leaked Blumenthal emails confirm that and we merely have to look at the thrust of French military actions to understand that the French in particular push continually for intervention in the ME.

They are still doing so, and not for R2P purposes. They would see the ME and parts of Africa as part of the EU sphere of influence and their initial reaction to Trump's abortive attempt to withdraw from Syria shows they would be more than prepared to go it alone there if they could.

A squalid bunch, and here I must include my own country in that verdict. Reliant on US logistics and military strength they seek to pursue their own interests and could they but do so they would do so unassisted. Don't pretend that it's the Americans who force them into these genocidal adventures.


As for the Ukraine, we see from Sakwa's unflattering study of the EU adventure there that that was building up well before 2014. The dramatic rejection of the EU deal was the prelude to the coup. The Ashton tape shows an astonishing degree of EU intervention in Ukrainian internal affairs before that coup. And from the Nuland tape we get a glimpse of the EU regime change project that shows it was deeply implicated.

Pushed into the Ukrainian adventure by the US? Rubbish. The EU and its constituent members were attempting to play their own hand and were not merely following the US lead submissively.

We hear little of European neocon ventures. But what little has surfaced about them shows that your picture of peace loving Europeans dragged into these conflicts by an overbearing "Uncle Sam" is dishonest and misleading.

So I tell my German friends and relatives when they push the same line. They look at me with disbelief and go off and hunt around the internet themselves. And then come back and do not disagree. I suggest you do the same. The facts are all there, even for those of us without inside knowledge or who lack the requisite background.

[Aug 08, 2020] Saudi Arabia is insolvent- --- Foreign Affairs - Sic Semper Tyrannis

Aug 08, 2020 | turcopolier.typepad.com

Saudi Arabia is insolvent? --- Foreign Affairs

"An ambitious leader never lets a crisis go to waste, and MBS is nothing if not ambitious. During the early days of the pandemic, he increased the kingdom's value-added tax from five percent to 15 percent, and the government earmarked $1 billion in stimulus payments to Saudi businesses struggling with the economic downturn. MBS directed his sovereign wealth fund to shop for bargains on global stock markets. He even went nose to nose with Russian President Vladimir Putin on oil prices: when Russia refused to respect production limits set in 2017, Saudi Arabia opened the spigot, driving the price of oil down, very briefly, into negative territory . Even with oil prices back around $40 per barrel, the Saudis are left with only half the revenue they need to balance the government's books. " FA

--------------

Well pilgrims, Trumpy and Jared may love the Saudis and the murderer MBS, but I do not. I was the Defense Attaché there for three years. It was one of the most unpleasant experiences of my army career. The level of social and legal restriction imposed by the theocracy was stifling. Normal life was simply impossible. Even as a diplomat I felt imprisoned in the embassy. For a foreigner to speak Arabic in public was most unwise because the immediate suspicion, often voiced, was that the foreigner was a SPY!

The one thing the Saudis have historically had "going for them" was the money that flooded the country from the ever flowing oil and gas stream. Now, that is largely finito. Good! That means less money to use in spreading the Wahhabi cult, and less money to spend on futile fantasies like the war against the Zeidi mountaineers in Yemen.

A million gastarbeiters have left the country? Good! Perhaps the Saudis will learn how to do actual work. Perhaps. pl

https://www.foreignaffairs.com/articles/saudi-arabia/2020-08-04/end-saudi-arabias-ambitions


Jack , 07 August 2020 at 12:27 PM

Sir

What's your opinion on the dynamics that could lead to the fall of the House of Saud?

I'm sure in an insular country like that there must be much palace intrigue and suspicions on loyalty among those that bear arms. How does MbS insure his survival?

Linda , 07 August 2020 at 02:04 PM

It couldn't happen to better folks

BABAK MAKKINEJAD , 07 August 2020 at 03:37 PM

Col. Lang:

It will be decades before the identification of Salafi ideas as True Islam is discarded.

Decades of strife and bloodshed still lies ahead, in my opinion.

upstater , 07 August 2020 at 04:52 PM

With "friends" like KSA and Israel, who needs enemies? These two have driven US foreign policy for decades and the smouldering wreakage of MENA is the legacy of these miguided corrupt alliances. Between the fed and Treasury we'll be bailing out both of these monstrosities.

Unfortunately the 2 presidential candidates promise us of more of the same. I was so hopeful that Trump might make a break, but he seems to have been a weak leader with little follow through. Biden, of course, will put these misguided alliances on steroids administered by proven losers.

Richard Ong , 07 August 2020 at 07:14 PM

There's a positively classic scene at the beginning of the movie "A New Leaf." Walter Matthau's character is visited on the golf course by his accountant who's come to tell him that there's no more money in his trust account. Matthau is bewildered by this news uttering something along the lines of "But I still have plenty of checks." It's hilarious and someone in Saudi will also soon be visiting the Wahhabi loons to tell them the party is over. Life imitates art.

Polish Janitor , 07 August 2020 at 07:20 PM

Saudi Arabia has been in the news lately and none of them is good. One is WSJ's report on the quasi-secret China-Saudi nuclear cooperation and the 'Yellow-cake' production in a secret desert facility in the country's NW. I can already see the heat the Saudi's will be getting from this!

Two, is the story of the 'Tiger Squad' assassins who were ordered by MbS personally to pull off a Khashoggi on a former Saudi intelligence officer for his refusal to get back to the country.

The idea of the Saudi's march to nuclear weapons development is a terrifying idea, but the rumor is that they already have (at least) one in Pakistan. I particularly find it very strange that the Trump admin was positively 'nudging' the Saudis toward nuclear energy development until very recently, when Rick Perry was still in the administration! But a few days ago the official at the State Dep's arms control and non-proliferation desk poured cold water on Saudis and made it clear that the U.S. would not let them to do funny stuff wit uranium behind their backs.

Also of note is the part in the WSJ's report that caught my attention and where it mentions the involvement of an Argentinian energy firm that recently set up a nuclear reactor for the Saudis and that they were very keen on developing the enrichment cycle supposedly for 'research' purposes and under secrecy. This reminded me of the 'colorful' history of Israeli-Argentine secret nuclear weapons development cooperation in the 60's, in which Israel got its'yellow-cake' it needed from Argentina to develop its nukes. Which begs the question that are Saudis going the same route as Israel did back in the early 60s? Why not working with Japan, Germany, France, U.S. then if it is all peaceful?

I have had my fair share of interactions with the Saudi people. while the culture is pretty medieval with regards to social and religious matters, but when it comes to hospitality and alike they are welcoming, especially during the month of Ramadan and after Iftar, that is when they break their fasts at dusk. For the Saudis it is like a custom to be 'extra' generous and they donate free meals frequently to everyone.

nbsp; The Twisted Genius , 07 August 2020 at 09:09 PM

Years ago, I suggested a cyber operation to drain the royal family of their disposable wealth for the sole purpose of depriving the jihadists of further material support. Glad to see that the "invisible hand of capitalism" and the royal's own stupidity are doing just that. I don't want to see the royals toppled. Who knows what would replace them. But if they were weakened enough so that all their remaining resources and concentration are focused on keeping their people from rising up and ripping them to shreds, it would be fine by me. Let the jihadis be reduced to angry men in the mosque without the resources to turn their anger into meaningful action.

BTW, this idea of a cyber operation was from SST not from my time in DIA.

J , 08 August 2020 at 09:27 AM

While MBS's Tiger Squad assassins were denied entry into Canada to whack former Saudi Intel type/MBS critic Saad Aljabri, MBS succeeded in obtaining a fatwa directed against Saad Aljabri.

james , 08 August 2020 at 10:09 AM

pat - i think your personal experience of ksa reflects what most people in ksa probably feel on some level.. i can't know this for a fact, but i would say if there was any place where the usa was into doing a regime change, i would go along with this one.. anything would be better then what they have wrought.. the export of wahabbism - salafist ideology has also been a plague on the planet... at what point does this transfer of oil money into crazy religious ideology indoctrination bite the dust? it can't happen soon enough as i see it..

here is a link to one of the stories polish janitor refers to in their post above.. https://www.cbc.ca/player/play/1773116483748

Babak makkinejad , 08 August 2020 at 12:55 PM

James

The Salafist approach to Islam is not crazy, i.e. insane. It is very much like Protestanism in as much as it rejects even the theoretical possibility of a Legitimate Central Religious Authority, it rejects Tradition, it rejects the possibility of sainthood - Olya allah -, it posits that any fool can read and interpret the Scriptures, and it rejects Theoretical Reason.

I think behind both Salafism and Protestanism appeals is a yearning for a simple moral and intellectual order that does not put too much strain on the believers' cognitive faculties; live under these black tents, follow these rules, and you are granted redemption in this life as well as the next.

"No need to trouble your pretty little brains to grapple with the world as you find it and not as you think it ought to be."

nbsp; turcopolier , 08 August 2020 at 01:48 PM

Babak

By "theoretical reason" you mean Kalaam?

Babak makkinejad , 08 August 2020 at 02:44 PM

I meant Philosophy.

Babak makkinejad , 08 August 2020 at 02:47 PM

James:

I should have written:

"...read and understand...", rather than "read and interpret..."

nbsp; turcopolier , 08 August 2020 at 03:02 PM

Babak

Felsafa is not highly regarded among the Sunnis because of the ancient closure of the Gate of Ijtihad. Felsafa is much more highly regarded among you Shia because you still have widely and highly regarded mujtahideen. Khomeini was a philosopher.

james , 08 August 2020 at 03:06 PM

babak... thanks... i have a hard time understanding the distinctions... i don't know enough of protestant ideology to appreciate the comparison.. as i understand it salafist ideology adopts sharia and sharia is handed down from 'religious authorities'.. do you agree in general with the description wikpedia gives on the salafi movement?? or is this slanted too much from your point of view?
https://en.wikipedia.org/wiki/Salafi_movement

james , 08 August 2020 at 03:29 PM

is it too much to say that without philosophy there is just literalism? literalism seems to reflect the bare minimum of understanding when everything boils down to this...

nbsp; turcopolier , 08 August 2020 at 04:57 PM

james

Sunni Islam has been mostly about "literalism" since the defeat of the mu'tazila.

nbsp; turcopolier , 08 August 2020 at 05:03 PM

james

Sunni Islam does not admit of hierarchy except within consensus groups (Ijma'). Some are large and some are small. 12er Shiism effectively is hierarchical through mechanism of the "Hawza" schools of mujtahids (Ayatollahs). i will be surprised if you understand that. Ask for clarifications.

Babak makkinejad , 08 August 2020 at 06:22 PM

James

Sharia is just the Laws of Islam, the concept is common to all Muslim sects and schools, the content is common.

In my opinion, Seyyed Jamal Al Din Qazwini was not a Salafi as the worf is understood today. He was a Shia Muslim who was campaigning for a unified Muslim response to the ascendancy of the Western Diocletian civilization as well as the Russian Empire.

He was, in the final analysis, only partly successful in his effort, in as much as they could only make sense among the Seljuk Muslims.

Salafi ideas, in my opinion, are best understood as a response of Non-Seljuk Muslims to the Western Diocletian civilization. It reminds me of the Deobandis, another Muslim response to the Western Diocletian civilization, exemplified by Great Britain, in India.

Both Salafis and Deobandis consider Shia Muslims to be heretics. The Wiki omits that.

nbsp; turcopolier , 08 August 2020 at 08:13 PM

babak
"the content is common" Untrue. There are many different collections of hadith and jurisprudence that make it obvious that the content is not common among the different sects.

james , 08 August 2020 at 10:15 PM

pat... thanks for the additional comments... yes, i am confused by it all and think i am in way over my head here! maybe i ought to just bow out of the conversation...

babak.. thank you as well...as i said to pat, i believe i am in over my head on the topic... i have a viewpoint - a very subjective one again - generally all religion - the orthodox kind anyway - have all struck me as not all that religious.. it is more like a system where the so called authorities or leaders get to dictate how it is and the followers have to go along with it... the whole spirit of religion seems overlooked or upside down.. i was naive and thought religion was about love and kindness to others and basic tenets like that, but i believe in the upper echelons of these religious systems, it is one big power game... i don't know that chrisitianity is all that different from islam in this regard.. i don't know enough about buddhism to comment, but i have heard similar stories in this religion as well... call me agnostic...

i hope for the best for everyone, but in the case of saudi arabia - i personally think the ksa-uae and etc leadership exporting wahabbism and really whacked out ideologies around to places like pakistan and etc have not done the world or themselves any favours.. i hope it ends soon.. it reminds me of the christian evangelicals exporting christianity to far off places round the globe... it is a lot like that and i don't think it does much of any good.. all the generousity has serious strings attached as i see it..

and finally - i agree with pats comment at the top and would like to repeat that.. i can't see any good coming out of ksa and think it would be better gone, or replaced with something more tolerant..

[Aug 08, 2020] Russia-China -Dedollarization- Reaches -Breakthrough Moment- As Countries Ditch Greenback For Bilateral Trade -

Aug 08, 2020 | www.zerohedge.com

Russia-China "Dedollarization" Reaches "Breakthrough Moment" As Countries Ditch Greenback For Bilateral Trade by Tyler Durden Thu, 08/06/2020 - 21:55 Twitter Facebook Reddit Email Print

Late last year, data released by the PBOC and the Russian Central Bank shone a light on a disturbing - at least, for the US - trend: As the Trump Administration ratcheted up sanctions pressure on Russia and China, both countries and their central banks have substantially "diversified" their foreign-currency reserves, dumping dollars and buying up gold and each other's currencies.

Back in September, we wrote about the PBOC and RCB building their reserves of gold bullion to levels not seen in years. The Russian Central Bank became one of the world's largest buyers of bullion last year (at least among the world's central banks). At the time, we also introduced this chart.

We've been writing about the impending demise of the greenback for years now, and of course we're not alone. Some well-regarded economists have theorized that the fall of the greenback could be a good thing for humanity - it could open the door to a multi-currency basket, or better yet, a global current (bitcoin perhaps?) - by allowing us to transition to a global monetary system with with less endemic instability.

Though, to be sure, the greenback is hardly the first "global currency".

Falling confidence in the greenback has been masked by the Fed's aggressive buying, as central bankers in the Eccles Building now fear that the asset bubbles they've blown are big enough to harm the real economy, so we must wait for exactly the right time to let the air out of these bubbles so they don't ruin people's lives and upset the global economic apple cart. As the coronavirus outbreak has taught us, that time may never come.

But all the while, Russia and China have been quietly weening off of the dollar, and instead using rubles and yuan to settle transnational trade.

Since we live in a world where commerce is directed by the whims of the free market (at least, in theory), the Kremlin can just make Russian and Chinese companies substitute yuan and rubles for dollars with the flip of a switch: as Russian President Vladimir Putin once exclaimed , the US's aggressive sanctions policy risks destroying the dollar's reserve status by forcing more companies from Russia and China to search for alternatives to transacting in dollars, if for no other reason than to keep costs down (international economic sanctions can make moving money abroad difficult).

In 2019, Putin gleefully revealed that Russia had reduced the dollar holdings of its central bank by $101 billion, cutting the total in half.

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

And according to new data from the Russian Central Bank and Federal Customs Service, the dollar's share of bilateral trade between Russia and China fell below 50% for the first time in modern history.

Businesses only used the greenback for roughly 46% of settlements between the two countries. Over the same period, the euro constituted an all-time high of 30%. While other national currencies accounted for 24%, also a new high.

As one 'expert' told the Nikkei Asian Review, it's just the latest sign that Russia and China are forming a "de-dollarization alliance" to diminish the economic heft of Washington's sanctions powers, and its de facto control of SWIFT, the primary inter-bank messaging service via which banks move money from country to country.

The shift is happening much more quickly than the US probably expected. As recently as 2015, more than 90% of bilateral trade between China and Russia was conducted in dollars.

Alexey Maslov, director of the Institute of Far Eastern Studies at the Russian Academy of Sciences, told the Nikkei Asian Review that the Russia-China "dedollarization" was approaching a "breakthrough moment" that could elevate their relationship to a de facto alliance.

"The collaboration between Russia and China in the financial sphere tells us that they are finally finding the parameters for a new alliance with each other," he said. "Many expected that this would be a military alliance or a trading alliance, but now the alliance is moving more in the banking and financial direction, and that is what can guarantee independence for both countries."

Dedollarization has been a priority for Russia and China since 2014, when they began expanding economic cooperation following Moscow's estrangement from the West over its annexation of Crimea. Replacing the dollar in trade settlements became a necessity to sidestep U.S. sanctions against Russia.

"Any wire transaction that takes place in the world involving U.S. dollars is at some point cleared through a U.S. bank," explained Dmitry Dolgin, ING Bank's chief economist for Russia. "That means that the U.S. government can tell that bank to freeze certain transactions."
The process gained further momentum after the Donald Trump administration imposed tariffs on hundreds of billions of dollars worth of Chinese goods. Whereas previously Moscow had taken the initiative on dedollarization, Beijing came to view it as critical, too.

"Only very recently did the Chinese state and major economic entities begin to feel that they might end up in a similar situation as our Russian counterparts: being the target of the sanctions and potentially even getting shut out of the SWIFT system," said Zhang Xin, a research fellow at the Center for Russian Studies at Shanghai's East China Normal University.

[Aug 01, 2020] Did MI6 created White Helmets?

Notable quotes:
"... Perhaps he was even the initiator of the White Helmets? My take away from those reports is that Cummings and Johnson have commenced a transition strategy within the UK and that the future of Integrity Initiative and its bogan crew may be limited. ..."
"... They have also restrained the MI6 manipulators that would conspire and contrive the overt 'Hate Russia' policy. Not that Bojo and Cummings will necessarily change anything other than a superficial rearrangement in their favour (for a month or two anyway). ..."
"... Caitlin Johnston has recently posted an astute analysis of the current distraction politics and why we should not be distracted by Covid19 rants from seeing the immediate rendition of the great game. ..."
"... I guess the UK will be less overt re Russia but expect the Libyan war to escalate as UKUSAI use Turkey in Libya to push back against Russia and even Sisi in Egypt. ..."
"... The UK could stage yet another 'Suez incident' with this mendacious confluence of opportunities. ..."
"... The USA has become the patsy for these thugs, when will they rise? ..."
Aug 01, 2020 | www.moonofalabama.org

uncle tungsten , Aug 1 2020 0:39 utc | 39

Jackrabbut #3

Thank you for those John Helmer reports. I note that the new head of MI6 is a lover of all fine Turkish things including Erdoghan. "Richard Moore, currently a third-ranking official of the Foreign Office, an ex-Ambassador to Turkey; an ex-MI6 agent; and a Harvard graduate".

Perhaps he was even the initiator of the White Helmets? My take away from those reports is that Cummings and Johnson have commenced a transition strategy within the UK and that the future of Integrity Initiative and its bogan crew may be limited.

They have also restrained the MI6 manipulators that would conspire and contrive the overt 'Hate Russia' policy. Not that Bojo and Cummings will necessarily change anything other than a superficial rearrangement in their favour (for a month or two anyway).

AtaBrit #9 includes an excellent link to a National Interest report on Turkey and is worth the read in this context of the rise and rise of Richard Moore. Thank you AtaBrit.

Caitlin Johnston has recently posted an astute analysis of the current distraction politics and why we should not be distracted by Covid19 rants from seeing the immediate rendition of the great game.

I guess the UK will be less overt re Russia but expect the Libyan war to escalate as UKUSAI use Turkey in Libya to push back against Russia and even Sisi in Egypt. They have a willing US president now and likely continuing in the next few years (be it Trump or Biden). The UK could stage yet another 'Suez incident' with this mendacious confluence of opportunities.

The USA has become the patsy for these thugs, when will they rise?

[Jul 30, 2020] USA threatens German Nord Stream 2 contractors

Jul 30, 2020 | thenewkremlinstooge.wordpress.com

MOSCOWEXILE July 27, 2020 at 2:17 am

USA drohen deutschen Auftragnehmern von Nord Stream 2
Stand: 08:32 Uhr

USA threatens German Nord Stream 2 contractors
Status: 08:32 a.m.

https://www.welt.de/wirtschaft/plus212234259/Nord-Stream-2-USA-drohen-deutschen-Auftragnehmern.html?cid=onsite.onsitesearch

Die Welt: США угрожают европейским подрядчикам "Северного потока -- 2"
26 июля 2020

https://yandex.ru/turbo/s/ria.ru/20200726/1574926306.html?promo=navbar&utm_referrer=https%3A%2F%2Fzen.yandex.com

MOSCOW, July 26 – RIA Novosti. The US authorities are increasing pressure on German and European companies involved in the construction of Nord Stream 2, Die Welt newspaper writes, citing sources.

The newspaper notes that the American side has held two videoconferences with gas pipeline contractors from Germany and other European countries to "indicate the far-reaching consequences of their further participation in the project". The conferences were attended by representatives of the US Department of State, Treasury and Department of Energy.

Sources told the newspaper that American officials "have made it very clear that they want to prevent the completion of Nord Stream 2".

The Empire hath spoken!

MARK CHAPMAN July 27, 2020 at 1:35 pm

I suppose the Germans could crumble like cheese, but I personally think it is very unlikely, since doing so would mean total dependence on the United States, with its whims and its 'loyalty tests'. Not necessarily in energy, because Europe would still have to rely heavily on Russia; the United States would be satisfied – for the moment – with Russia continuing to supply its present amounts, provided they went through Ukraine as they do now, so that Russia has to help finance Ukraine's slow development as a US project dedicated to Russia's undoing. But America knows it cannot ever replace Russian supply, although it would ideally like to take more and more market share as its own production (theoretically) continues to increase. It just adamantly does not want Ukraine taken out of the equation, because Ukraine is like a rheostat that Washington can turn up or down as necessary.

No, the USA cannot replace Russian gas, but if Germany gives in now, Washington will run it as a wholly-owned subsidiary for as far as the eye can see. And I believe Germany knows it.

MOSCOWEXILE July 27, 2020 at 11:46 pm

The German foreign minister was making suitable noises for the USA yesterday, saying that in order to rejoin G7, Russia must firstly clean up its relations with Banderastan -- read: stop its "aggression" towards the Ukraine and return the Crimea to its rightful "owner".

The Kremlin responded that it has no intention of rejoining G7.

No mention off the German minister about the Ukraine not complying with the Minsk agreement, about the Ukraine government waging war against its citizens, its stopping the water supply to the Crimea etc., etc. just Big Bad Russia the "Aggressor State" that must learn how to behave itself according "International Law".

MOSCOWEXILE July 27, 2020 at 3:34 am

RT

Russia beating United States in battle for China's huge energy market
July 27, 2020, 11:12 GMT

https://www.rt.com/business/495949-russia-outpaces-us-lng-china/

MOSCOWEXILE July 27, 2020 at 3:36 am

Unbelievable!

They're turning down "Freedom Molecules"?

MARK CHAPMAN July 27, 2020 at 3:37 pm

So it would appear. But it should not be at all surprising – except maybe to Washington – that you cannot shit on China day and night and call it all sorts of unpleasant names, and then expect the sun to come up on happy business partners China and the USA next day. China shares with Russia an imperative that it be respected; you don't have to like it, but you must speak respectfully and politely about it, and limit your accusations to what you can prove.

Washington likes to unload the mockery by the truckload, and then, when it's time to do business, say "Aw, shucks – I were just funnin'", and have business go forward as if the insults had never been voiced. Or, worse yet, insist that it is sticking to its positions, but you must do business with it anyway because it is the world leader and there is nowhere else to turn.

Natural Gas in the USA is at what is referred to as a 'messy bottom', and both production and sales are below year-over-year average. Yet it is plain – they say so, in so many words – that America expects sales growth to come from China and India.

"The International Energy Agency expects LNG, the main driver of international gas trade, to expand by 21% in 2019-2025, reaching 585 billion cubic meters annually. The growth will come from China and India, the IEA said in its Gas 2020 report published Wednesday. Trade will increase at a slower pace than liquefaction capacity additions, limiting the prospects of a tighter market, it said in the report."

https://www.msn.com/en-us/money/markets/shell-ceo-says-lng-market-will-recover-to-pre-virus-levels/ar-BB15imQu

I think he's probably right that the natural gas market will expand by a significant number. I'm just not sure the USA will play much of a part in it. And China is on solid ground, no matter how much America screams and roars; Russian gas is cheaper, and the logistics chain is short and reliable.

WARREN July 28, 2020 at 5:31 pm

https://platform.twitter.com/embed/index.html?dnt=true&embedId=twitter-widget-1&frame=false&hideCard=false&hideThread=false&id=1288112640493928449&lang=en&origin=https%3A%2F%2Fthenewkremlinstooge.wordpress.com%2F2020%2F07%2F05%2Fhow-to-make-a-brick-from-straw-and-bullshit%2F&siteScreenName=wordpressdotcom&theme=light&widgetsVersion=9066bb2%3A1593540614199&width=550px


MARK CHAPMAN July 28, 2020 at 6:06 pm

Obviously, for this group, 'bridging the gap' in 'threat perception' does NOT mean coaxing Poland and Lithuania to realize that Nord Stream II is just a commercial venture. It means coaxing France and Germany to accept and amplify Poland and Lithuania's paranoia and loathing of Russia. Equally obviously, America's determination to be Europe's Daddy with the LNG is just a commercial venture. Nothing political about it, and if the USA ever found itself in the position where it could leverage its energy sales to Europe to make Europe do things it otherwise would not do willingly, why, it would never use that power. Only the Russians weaponize energy.

The 'panel' is simply a parade of Atlanticists, a neoconservative wet dream. There are no realists there. Fortunately, US approval of the project is not required.


[Jul 28, 2020] Turkey On The Warpath

Putin decision to save Erdogan from the coup in retrospect looks like a blunder...
Jul 28, 2020 | www.zerohedge.com

Authored by Uzay Bulut via The Gatestone Institute,

Turkey is currently involved in quite a few international military conflicts -- both against its own neighbors such as Greece, Armenia, Iraq, Syria and Cyprus, and against other nations such as Libya and Yemen. These actions by Turkey suggest that Turkey's foreign policy is increasingly destabilizing not only several nations, but the region as well.

In addition, the Erdogan regime has been militarily targeting Syria and Iraq, sending its Syrian mercenaries to Libya to seize Libyan oil and continuing, as usual, to bully Greece. Turkey's regime is also now provoking ongoing violence between Armenia and Azerbaijan.

me title=

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https://imasdk.googleapis.com/js/core/bridge3.398.1_en.html#goog_1565758762 NOW PLAYING

Erdogan leads first Muslim prayer after Hagia Sophia mosque reconversion

Istanbul's Hagia Sophia reconversion to a mosque, 'provocation to civilised world', Greece says

Turkish top court revokes Hagia Sophia's museum status, 'tourists should still be allowed in'

Erdogan: Interference over Hagia Sophia 'direct attack on our sovereignty'

Libya's GNA says Egypt's warning on Sirte offensive a 'declaration of war'

Erdogan says 'agreements' reached with Trump on Libya

What Turkish Election Results Mean for the Lira

Erdogan Sparks Democracy Concerns in Push for Istanbul Vote Rerun

Since July 12, Azerbaijan has launched a series of cross-border attacks against Armenia's northern Tavush region in skirmishes that have resulted in the deaths of at least four Armenian soldiers and 12 Azerbaijani ones. After Azerbaijan threatened to launch missile attacks on Armenia's Metsamor nuclear plant on July 16, Turkey offered military assistance to Azerbaijan.

"Our armed unmanned aerial vehicles, ammunition and missiles with our experience, technology and capabilities are at Azerbaijan's service," said İsmail Demir, the head of Presidency of Defense Industries, an affiliate of the Turkish Presidency.

One of Turkey's main targets also seems to be Greece. The Turkish military is targeting Greek territorial waters yet again. The Greek newspaper Kathimerini reported :

"There have been concerns over a possible Turkish intervention in the East Med in a bid to prevent an agreement on the delineation of an exclusive economic zone (EEZ) between Greece and Egypt which is currently being discussed between officials of the two countries."

Turkey's choice of names for its gas exploration ships are also a giveaway. The name of the main ship that Turkey is using for seismic "surveys" of the Greek continental shelf is Oruç Reis , (1474-1518), an admiral of the Ottoman Empire who often raided the coasts of Italy and the islands of the Mediterranean that were still controlled by Christian powers. Other exploration and drilling vessels Turkey uses or is planning to use in Greece's territorial waters are named after Ottoman sultans who targeted Cyprus and Greece in bloody military invasions. These include the drilling ship Fatih "the conqueror" or Ottoman Sultan Mehmed II, who invaded Constantinople in 1453; the drilling ship Yavuz , "the resolute", or Sultan Selim I, who headed the Ottoman Empire during the invasion of Cyprus in 1571; and Kanuni , "the lawgiver" or Sultan Suleiman, who invaded parts of eastern Europe as well as the Greek island of Rhodes.

Turkey's move in the Eastern Mediterranean came in early July, shortly after the country had turned Hagia Sophia, once the world's greatest Greek Cathedral, into a mosque. Turkish President Recep Tayyip Erdogan then linked Hagia Sophia's conversion to a pledge to "liberate the Al-Aqsa Mosque" in Jerusalem.

https://lockerdome.com/lad/13084989113709670?pubid=ld-dfp-ad-13084989113709670-0&pubo=https%3A%2F%2Fwww.zerohedge.com&rid=www.zerohedge.com&width=890

On July 21, the tensions arose again following Turkey's announcement that it plans to conduct seismic research in parts of the Greek continental shelf in an area of sea between Cyprus and Crete in the Aegean and Eastern Mediterranean.

"Turkey's plan is seen in Athens as a dangerous escalation in the Eastern Mediterranean, prompting Prime Minister Kyriakos Mitsotakis to warn that European Union sanctions could follow if Ankara continues to challenge Greek sovereignty," Kathimerini reported on July 21.

Here is a short list of other countries where Turkey is also militarily involved:

In Libya , Turkey has been increasingly involved in the country's civil war. Associated Press reported on July 18:

"Turkey sent between 3,500 and 3,800 paid Syrian fighters to Libya over the first three months of the year, the U.S. Defense Department's inspector general concluded in a new report, its first to detail Turkish deployments that helped change the course of Libya's war.

"The report comes as the conflict in oil-rich Libya has escalated into a regional proxy war fueled by foreign powers pouring weapons and mercenaries into the country."

Libya has been in turmoil since 2011, when an armed revolt during the "Arab Spring" led to the ouster and murder of dictator Muammar Gaddafi. Political power in the country, the current population of which is around 6.5 million, has been split between two rival governments. The UN-backed Government of National Accord (GNA), has been led by Prime Minister Fayez al Sarraj. Its rival, the Libyan National Army (LNA), has been led by Libyan military officer, Khalifa Haftar.

Backed by Turkey, the GNA said on July 18 that it would recapture Sirte, a gateway to Libya's main oil terminals, as well as an LNA airbase at Jufra.

Egypt, which backs the LNA, announced , however, that if the GNA and Turkish forces tried to seize Sirte, it would send troops into Libya. On July 20, the Egyptian parliament gave approval to a possible deployment of troops beyond its borders "to defend Egyptian national security against criminal armed militias and foreign terrorist elements."

Yemen is another country on which Turkey has apparently set its sights. In a recent video , Turkey-backed Syrian mercenaries fighting on behalf of the GNA in Libya, and aided by local Islamist groups, are seen saying, "We are just getting started. The target is going to be Gaza." They also state that they want to take on Egyptian President Sisi and to go to Yemen.

"Turkey's growing presence in Yemen," The Arab Weekly reported on May 9, "especially in the restive southern region, is fuelling concern across the region over security in the Gulf of Aden and the Bab al-Mandeb.

"These concerns are further heightened by reports indicating that Turkey's agenda in Yemen is being financed and supported by Qatar via some Yemeni political and tribal figures affiliated with the Muslim Brotherhood."

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In Syria , Turkey-backed jihadists continue occupying the northern parts of the country. On July 21, Erdogan announced that Turkey's military presence in Syria would continue. "Nowadays they are holding an election, a so-called election," Erdogan said of a parliamentary election on July 19 in Syria's government-controlled regions, after nearly a decade of civil war. "Until the Syrian people are free, peaceful and safe, we will remain in this country."

Additionally, Turkey's incursion into the Syrian city of Afrin, created a particularly grim situation for the local Yazidi population:

"As a result of the Turkish incursion to Afrin," the Yazda organization reported on May 29, "thousands of Yazidis have fled from 22 villages they inhabited prior to the conflict into other parts of Syria, or have migrated to Lebanon, Europe, or the Kurdistan Region of Iraq... "

"Due to their religious identity, Yazidis in Afrin are suffering from targeted harassment and persecution by Turkish-backed militant groups. Crimes committed against Yazidis include forced conversion to Islam, rape of women and girls, humiliation and torture, arbitrary incarceration, and forced displacement. The United States Commission on International Religious Freedom (USCIRF) in its 2020 annual report confirmed that Yazidis and Christians face persecution and marginalization in Afrin.

"Additionally, nearly 80 percent of Yazidi religious sites in Syria have been looted, desecrated, or destroyed, and Yazidi cemeteries have been defiled and bulldozed."

In Iraq , Turkey has been carrying out military operations for years. The last one was started in mid-June. Turkey's Defense Ministry announced on June 17 that the country had "launched a military operation against the PKK" (Kurdistan Workers' Party) in northern Iraq after carrying out a series of airstrikes. Turkey has named its assaults "Operation Claw-Eagle" and "Operation Claw-Tiger".

The Yazidi, Assyrian Christian and Kurdish civilians have been terrorized by the bombings. At least five civilians have been killed in the air raids, according to media reports . Human Rights Watch has also issued a report , noting that a Turkish airstrike in Iraq "disregards civilian loss."

Given Turkey's military aggression in Syria, Iraq, Libya, and Armenia, among others, and its continued occupation of northern Cyprus, further aggression, especially against Greece, would not be unrealistic. Turkey's desire to invade Greece is not exactly a secret. Since at least 2018, both the Turkish government and opposition parties have openly been calling for capturing the Greek islands in the Aegean, which they falsely claim belong to Turkey.

If such an attack took place, would the West abandon Greece?


Gaius Konstantine , 10 hours ago

If such an attack took place, it will get real messy, real fast. The Turkish military is only partially adept at fighting irregular forces that lack heavy weaponry while Turkey has absolute control of the sky. Even then, the recent performance of Turkish forces has been lacklustre for "the 2nd largest Army in NATO".

Turkey should understand that a fight with Greece will mean that the advantages she enjoyed in her recent adventures will not be there. Nor should Turkey look to the past and expect an easy victory, the Greek Army will not be marching deep into Anatolia this time, (which was the wrong type of war for Greece).

So what happens if they actually take it to war?

The larger Greek islands are well defended, they won't be taken, but defending the smaller ones is hard and Turkey will probably grab some of those. The Greeks, who have absolute control and dominance in the Aegean will do several things. Turkish naval and air bases along the Aegean coastline will be attacked as will the bosphorus bridges, (those bridges WILL go down). The Greek army, which is positioned well, will blitz into eastern Thrace and stop outside Istanbul where they will dig in and shell the city, thereby causing the civilians to flee and clogging up the tunnels to restrict military re-enforcement.

That's Greece acting alone, a position will be achieved where any captured islands will be traded for eastern Thrace. Should the French intervene, (even if it's just air and naval forces), it gets a lot more interesting.

The mighty Turkish fleet was just met by the entire Greek navy in the latest stand-off, it was enough to cause Turkey to reconsider her options. There will be no Ottoman empire 2.0

OliverAnd , 9 hours ago

The Greeks need their navy for surgically precise attacks against Turkey's navy. Every island, especially the large ones are unsinkable aircraft carriers. No one has mentioned in any article that Turkey's navy is functioning with less than minimum required personnel. No one has mentioned that their air force is flying with Pakistani pilots. The only way Turks will land on Greek uninhabited islands is only if they are ship wrecked and that for a very very short period of time. Turkey's population is composed of 25% Kurds... that will also be very interesting to see once they awaken from their hibernation and realize their great and holy goal of Kurdistan. Egypt will not waste the opportunity to join in to devastate whatever Turkish navy remains. Serbian patriots will not allow the opportunity to go to waste and will attack Kosovo and indirectly Albania composed primarily of Turkish descendants... realize the coverage lately of how the US did wrong for supporting these degenerate Muslim Albanians.

I have no doubt Greeks will make it to Aghia Sophia but will not pass Bosporus. The result will be a Treaty that is a hybrid of the Treaty of Lausanne and the Treaty of Sevron. If the Albanians decide to support the Turks by attacking Greeks in the North and in Northern Epeirus they should expect annexation of Northern Epeirus to Greece. Erdogan bases his bullying on Trump's incompetences and false friendship. This is why America is non existent in any of these regions. If Trump wins the election it will be a long war and very destabilized for the region. If Trump loses the war will be much much quicker. The outcome will remain the same. The Russians will not allow Turkey to dictate in the area. Israel will not allow Turkey to dictate in the area. Egypt will not allow Turkey to dictate in the area. Not even European Union. UK is the questionable.

bobcatz , 2 hours ago

And the US in the Middle East is not????????

ALL MidEast terrorism, shenanigans, and warmongering are for APARTHEID Israhell.

Joy Division , 7 hours ago

The West has Turkey's back otherwise the Turkish currency the Turkish Lira would have collapsed by now under attacks from the City of London Freemasonic Talmudic bankers.

Remember what happened to the Russian Rouble when Russia annexed Crimea?

The Fed and the ECB in cahoots with the usual Talmudic interests, are supporting the Turkish Lira and propping up the Erdogan regime.

There is NO OTHER explanation.

The Turks have NO foreign currency reserves, no net positive euro nor dollar reserves. Their tourism industry and main hard currency generator has COLLAPSED (hotels are 95 percent empty). The Turkish central bank has resorted to STEALING Turkish citizens' dollar-denominated bank accounts via raising Turkish Banks' foreign currency reserve requirements which the Turkish central bank SPENDS upon receipt to buy TLs and prop up the Turkish Lira.

This is utter MADNESS and FRAUD and LARCENY.

London-based currency traders would be all over the Turkish Lira and/or Turkish bonds and stocks by now UNLESS they had been instructed by the Fed and the ECB or the Talmudic bankers that own and control both, to lay off the Turkish Lira.

Despite the noise on TV or the press,

BY DEFINITION,

Erdogan and the Turks are only doing the bidding of the TRIBE hence Erdogan has the blessing and the protection of the people ZH censors the name.

BUT

You know how those parasites treat their host and what the inevitable outcome is, right?

Indeed,

Erdogan and the Turks are being set up to be thrown under the proverbial bus at the appropriate time.

The Neo-Ottoman Sultan has inadvertently set up his (ill begotten) country for eventual destruction and partition. The Kurds will get a piece of it. Who knows, maybe even the Armenians will be able to recover some bits of their ancient homeland.

Greeks in Constantinople? Nothing is impossible thanks to the hubris and chutzpah of Erdogan who is purported to have "Amish" blood himself.

Know thyself , 5 hours ago

Good for the UK that they have left the EU.

Apart from the Greeks, who would be fighting for their lives and homeland, the only EU forces capable of acting are the French. German does not have an operative army or navy; Italy, Spain and Portugal have neglected their armed forces for many years, and the Baltic and Eastern Nations are unlikely to want to get involved. The Netherlands have very good forces but not many of them.

MPJones , 7 hours ago

We can live in hope. Erdogan certainly seems to need external enemies to hold the country together. Let us also hope that Erdogan's adventurism finally wakes up Europe to the reality of the ongoing Muslim invasion so that the necessary Muslim repatriation can get going without the bloodshed which Islam's current strategy in Europe will otherwise inevitably lead to.

Know thyself , 5 hours ago

The Turkish army is a conscript army. They will need to be whipped up with religious fervour to perform. Otherwise they will look after their own skins.

But remember that the Turks put up a good defence in the Dardanelles in the First World War.

HorseBuggy , 9 hours ago

What do you expect? He killed Russian fighter pilots and he survived, this empowers terrorists like him. Those pilots were the only ones at that time fighting ISIS. May they RIP.

Max.Power , 9 hours ago

Turkey is in a "proud" group of failed empires surrounded by nations they severely abused less than 100 years ago.

Other two are Germany and Japan. Any military aggression from their side will be met with rage by a coalition of nations.

US position will be irrelevant at this point, because local historical grievances will overweight anything else.

monty42 , 10 hours ago

"Libya has been in turmoil since 2011, when an armed revolt during the "Arab Spring" led to the ouster and murder of dictator Muammar Gaddafi. Political power in the country..."

Kinda gave yourself away there. The coordinated assault on Libya by the US, Britain, France, and their Al-CiA-da allies on the ground resulted in the torture, sodomizing, and murder of Gaddafi, as well as his son and grandchildren killed in bombings by the US.

Also, let's not forget that Turkey is still in NATO, and their actions in Syria were alongside the US regime and terrorist proxies labeled "moderate rebels". The same terrorists originally used in Libya, then shipped to destroy Syria, now flown back to Libya. The attempt to paint all of those things as Turkey's actions alone is not honest.

When Turkey isn't in NATO anymore, let me know.

TheZeitgeist , 10 hours ago

Don't forget that Hiftar guy Turks are fighting in Libya was a CIA toadie living in Virginia for a decade before they gave him his "chance" to among other things become a client of the Russians apparently. Flustercluck of the 1st order everywhere one looks.

monty42 , 10 hours ago

Then they put on this whole production where it's the CIA guy or the terrorist puppet regime they installed, so that the rulers win regardless of the outcome. The victims are those caught up in their sick game.

GalustGulbenkyan , 9 hours ago

Turkish population has been recently getting ****** due to the economic contractions and devaluation of the Lira. Once Turkey starts fighting against a real army the Turks will realize that they are going to be ****** by larger dildos. In 1990's they sent thousands of volunteers to Nagorno Karabagh to fight against irregular Armenian forces and we know how that ended for them. Greeks and Egyptians are not the Kurds. Erdogan is a lot of hot air and empty threats. You can't win wars with Modern drones which even Armenians have learned how to jam and shoot down with old 1970's soviet tech.

Guentzburgh , 5 hours ago

Greece should be aligned with Russia, EU and USA are a bad choice that Greece will regret.

Greece needs to pivot towards Russia which will open huge opportunities for both countries

KoalaWalla , 6 hours ago

Greeks are bitter and prideful - they would not only defend themselves if attacked but would counter attack to reclaim land they've lost. But, I don't know that Erdogan is clever enough to realize this.

60s Man , 9 hours ago

Turkey is America's Mini Me.

currency , 3 hours ago

Erdogan is in Trouble at home declining economy and his radical conservative/Thug type policies. Turks are moving away from him except the hard core radicals and conservatives. He and his family are Corrupt - they rule with threats and use of THUGS. Sense his constant wars may be over stretched Time for a Turkish Spring.

Time for US, Nato and etc. to say goodbye to this THUG

OrazioGentile , 7 hours ago

Turkey seems to be on a warpath to imploding from within. Erdogan looks like a desperate despot with a failing economy, failing political clout, and failing modernization of his Country. Like any despot, he has to rally the troops or he will literally be a dead man walking.

HorseBuggy , 9 hours ago

The world fears loud obnoxious tyrants and Erdogan is the loudest tyrant since Hitler. Remember how countries pandered to Hitler early on? Same thing is happening with Erdogan.

This terrorist will do a lot more damage than he has already before the world wakes up.

By the time Hitler was done, 70 million people were dead, what will Erdogan cause?

OliverAnd , 9 hours ago

Turkey is not Germany. Not by far. Erdogan may be a bigger lunatic than Hitler, but Turkey is not Germany of the 30's. Without military equipment/parts from Germany, Italy, Spain, France, USA, and UK he cannot even build a nail. Economies are very integrated; he will be disposed of very very quickly. He has been warned. He is running out of lives.

NewNeo , 9 hours ago

You should research a lot more. Turkey is a lot more power thank Nazi Germany of the 1930's. Turkey currently have brand new US made equipment. It even houses the nuclear arsenal of NATO.

You should probably look at information from stratfor and George Friedman to give you a better understanding.

The failed coupe a few years ago was because the lunatic had gone off the reservation and was seen as a threat to the region. Obviously the bankers thought it in their benefit to keep him going and tipped him off.

OliverAnd , 8 hours ago

Clearly the lockdown has hindered your already illiteracy. Turkey has modern US equipment. Germany did not need US equipment. They made their own equipment; in fact both the US and USSR used Grrman old tech to develop future tech.

The coup was designed by Erdogan to bring himself to full power. When this is all done he will be responsible for millions of Turkish lives; after all he is not a Turk but a Muslim Pontian.

[Jul 27, 2020] France-Turkey naval clash- Proxy war in Libya enters a new stage -- RT Op-ed

Notable quotes:
"... By Dr. Karin Kneissl , who works as an energy analyst and book author. She served as the Austrian minister of foreign affairs between 2017-2019. She is currently writing her book 'Die Mobilitätswende' (Mobility in transition), to be published this summer. ..."
"... "humanitarian corridor" ..."
"... "good opposition" ..."
"... "humanitarian war," ..."
"... "worst mistake." ..."
"... "geopolitical commission." ..."
"... "community of the good ones" ..."
"... "Friends of Libya," ..."
"... "good opposition" ..."
"... "exclusive economic zone" ..."
"... "other actors" ..."
"... "mare nostrum" ..."
"... Think your friends would be interested? Share this story! ..."
Jul 27, 2020 | www.rt.com

By Dr. Karin Kneissl , who works as an energy analyst and book author. She served as the Austrian minister of foreign affairs between 2017-2019. She is currently writing her book 'Die Mobilitätswende' (Mobility in transition), to be published this summer. A confrontation between the two NATO states France and Turkey continues to trouble the Mediterranean region; Egyptian forces are mobilizing. And many other military players are continuing operations there.

In March 2011, during a hectic weekend, the French delegation to the UN Security Council managed to convince all other member States of the Council to support Resolution 1973. It was all about a "humanitarian corridor" for Benghazi, which was considered the "good opposition" by the government of Nicolas Sarkozy. One of his whisperers was the controversial philosopher Bernard-Henri Levy, who supported a French intervention. Levy, fond of the "humanitarian war," found a congenial partner in Sarkozy.

France was at root of crisis

Muammar Gaddafi had been received generously with all his tents in the park of the Elysée, but suddenly he was coined the bad guy. The same had happened to Saddam Hussein in Iraq. It was not the Arab dictator who had changed; it was his usefulness to his allies. The Libyans had been distributing huge amounts of money in Europe, in particular in Rome and Paris at various levels. In certain cases they knew too much. Plus, the Libyans had been protecting the southern border of the Mediterranean for the European Union.

READ MORE Turkish media claims Egyptian military used fake photo to report on joint naval drills with France

So, the French started the war in 2011, took the British on board, which made the entire adventure look a bit like a replay of the Suez intervention of 1956, the official end of European colonial interventions. A humanitarian intervention changed into regime change on day two, which was March 20, 2011. Various UN Security Council members felt trapped by the French.

The US was asked to help, with then-Secretary of State Hillary Clinton and many other advisers in favor of joining that war. President Obama, however, was reluctant but, in the end, he gave in. In one of his last interviews while still in the White House, Obama stated that the aftermath of the war in Libya was his "worst mistake."

Libya ever since has mostly remained a dossier in the hands of administrative officials in Washington, but not on the top presidential agenda anymore. This practice has been slightly shifting in the past weeks. US President Donald Trump and France's Emmanuel Macron had a phone conversation on how to deescalate the situation there. Trump also spoke on that very topic with Turkish President Recep T. Erdogan. Paris supports General Haftar in his war against the Turkish-backed Government of National Accord, which is also supported by the European Union, in theory

The triggering momentum for the current rise in tensions was a naval clash between French- and Turkish-supported vessels. Both nations are NATO members, and an internal alliance investigation is underway. But France decided to pull out of the NATO naval operation that enforces the Libya arms embargo, set up during the high-level Berlin conference on Libya in mid-January 2020. Without the French vessels it will be even more toothless than its critics already deem it. This very initiative on Libya was the first test for the new European commission headed by Ursula von der Leyen and claiming to be a "geopolitical commission." The EU strives to speak the language of power but keeps failing in Libya, where two members, namely Italy and France, are pursuing very different goals. Rome is anxious about migration while Paris cares more about the terrorist threat. But both have an interest in commodities.

ALSO ON RT.COM France, Germany & Italy threaten 'sanctions' against countries that interfere in Libya It's about oil and gas

When Gaddafi was reintegrated in the "community of the good ones" in early 2004 after a curious British legal twisting on the Lockerbie attack of December 1988, a bonanza for oil and gas concessions started. The Italian energy company ENI and BP were among the first to have a big foot in the door. I studied some of those contracts and asked myself why companies were ready to accept such terms. The answer was maybe in the then rise in the oil price of oil and the proximity of Libya to the European market.

Interestingly, in September 2011, the very day of the opening ceremony of the Paris conference dubbed "Friends of Libya," a secret oil deal for the French company Total was published by the French daily Libération. The "good opposition" had promised the French an interesting range of oil concessions. Oil production continuously fell with the rise of the war, attracting sponsors, militias and smugglers from all horizons. The situation in Libya has since been called 'somalization,' but it would become even worse, since many more regional powers got involved in Libya than ever was the case in hunger-ridden Somalia.

READ MORE Turkey will be the death of NATO – its recent clash with fellow member France off the coast of Libya is an early symptom

In exchange for its military assistance, Turkey recently gained access to exploration fields off Libya's shores. Ankara had identified an "exclusive economic zone" with the government in Tripoli, which disregards the UN Convention on the Law of the Sea. Actually, Israel made the same bilateral demarcation with Cyprus about ten years ago, when Noble Energy started its delineation of blocs in the Levant Basin. So Turkey is infringing on Greek and Cypriot territorial waters, while President Macron keeps reminding his EU colleagues of the "other actors" in the Mediterranean Sea. Alas, it is nobody's "mare nostrum" as it was 2,000 years ago in the Roman era. In principle, all states which have ratified the UN Convention on the Law of the Sea should simply comply with their legal obligations.

The crucial question remains: who has which leverage to de-escalate? Is it the US President, who seemingly has acted more wisely on certain issues in recent times? Or will Russian and Turkish diplomacy be able to negotiate and implement a truce? The tightrope-walk diplomacy between these last two countries is a most interesting example of classical diplomacy: interest-based and focused; able to conduct hard-core relations even in times of direct military confrontation and assassinations (remember the Russian Ambassador Karlov, shot by his Turkish bodyguard in Ankara in December 2016?).

Meanwhile, yet another actor could move in to complicate everything even more. On July 20, the Egyptian parliament voted unanimously for the deployment of the national army outside its borders, thereby taking the risk of direct confrontation with Turkey in Libya. Egyptian troops would be mobilized in support of the eastern forces of General Khalifa Haftar. Furthermore, Cairo would thereby compete even more obviously with Algeria, spending a fortune on military control of its border with Libya. Algeria in the past could rely on US support in the region, but with the gradual decline in US engagement in that part of the world, the country faces a fairly existential crisis.

There are currently two powers, among those involved in Libya, that can still contain the next stage of a decade of proxy wars started by a French philosopher and various EU oil interests: Russia and the USA.

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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.


Quizblorg 48 minutes ago Does anything here make sense? No, because France this, Italy that is not how the world is run. The parties involved here go far beyond countries. Also no mention of Saudi-Arabia/Israel. Who engineered the "Arab Spring"?

[Jul 27, 2020] 25 YEARS OF CN- 'Iraq the Nuremberg Precedent' -- March 16, 2006 by Peter Dye

Notable quotes:
"... International law is simply a weapon for the empire when it is invoked by it, and it is a useless farce for those the empire opposes. ..."
"... Interesting, but how is it possible to prosecute the US when it already dominates the world? If Hitler and the Germans had won the war there wouldn't have been a Nuremberg Trial. ..."
Mar 16, 2006 | consortiumnews.com

Editor's Note: As the United States approaches the third anniversary of the Iraq invasion, much of the commentary is focusing on the Bush administration's "incompetence" in prosecuting the war -- the failure to coimnit enough troops, the decision to disband the old Iraqi army without adequate plans for training a new one, the highhandedness of the U.S. occupation.

But what about the legal and moral questions aiising from the unprovoked invasion of Iraq? Should George W. Bush and his top aides be held accountable for violating the laws against aggressive war that the United States and other Western nations promulgated in punishing senior Nazis after World War II? Do the Nuremberg precedents that prohibit one nation from invading another apply to Bush and American officials -- or are they somehow immune? Put bluntly, should Bush and his inner circle face a war-crimes tiibunal for the tens of thousands of deaths in Iraq?

Despite the present-day conventional wisdom in Washington that these are frivolous questions, they actually go to the heart of the American commitment to the rule of law and the concept that the law applies to everyone. In this guest essay, Peter Dyer looks at this larger issue:

Just over six decades ago, the first Nuremberg Trial began. On Nov. 21, 1945, U.S. Supreme Court Justice Robert Jackson opened the prosecution of 21 Germans for initiating a war of aggression and for the crimes which flowed from this act. Now is a good time to reconsider some of the history and issues involved in this momentous trial in the light of the invasion and occupation of Iraq.

The trial lasted for over a year, culminating in verdicts of guilty of one, some, or all of these crimes for 18 of the defendants. Eleven were sentenced to death.

While the Nuremberg trial is, these days, seldom invoked or discussed, it was, and still is, in the words of Tribunal President Sir Geoffrey Lawrence, "unique in the history of the jurisprudence of the world." Among the most groundbreaking aspects were the drive to formally criminalize the three categories of crimes, and to establish responsibility by individuals for these crimes.

These days, the Nuremberg Trial is chiefly remembered for the prosecution and punishment of individuals for genocide. Equally important at the time, however, was the focus on wars of aggression. Thus, the first sentence of Justice Jackson's opening statement: "The privilege of opening the first trial in history for crimes against the peace of the world imposes a grave responsibility."

Crimes against peace and the responsibility tor them were detined in Article 6, the heart of the Charter of the IMT: "The tribunal.. .shall have the power to try and punish persons who.. .whether as individuals or as members of organizations, committed any of the following crimes...(a) Crimes Against Peace, namely, planning, preparation, initiation or waging of a war of aggression or a war in violation of international treaties, agreements or assurances..

The desire was not only to punish individuals for crimes but to set an international moral and legal precedent for the future. Indeed, before the end of 1946, the United Nations General Assembly unanimously adopted Resolution 95 (1), affirming '4he principles of International Law recognized by the Charter of the Nuremberg Tribunal and the judgment of the Tribunal." And, of course, the United Nations Charter forbids armed aggression and violations of the sovereignty of any state by any other state, except in immediate self defense (Article 2, Sec. 4 and Articles 39 and 51).

Invoking the precedent set by the United States and its allies at the Nuremberg trial in 1946, there can be no doubt that the U.S.-led invasion of Iraq in 2003 was a war of aggression. There was no imminent threat to U.S. security nor to the security of the world. The invasion violated the U.N. Charter as well as U.N. Security Council Resolution #1441.

The Nuremberg precedent calls for no less than the arrest and prosecution of those individuals responsible for the invasion of Iraq, beginning with President George W. Bush, Vice President Dick Cheney, Secretary of Defense Donald Rumsfeld, Secretary of State Condoleeza Rice, former Secretary of State Colin Powell and former Deputy Secretary of Defense Paul Wolfowitz.

Those who still justify the invasion of Iraq would do well to remember the words of Justice Jackson: "Our position is that whatever grievances a nation may have, however objectionable it finds the status quo, aggressive warfare is an illegal means for settling these grievances or for altering these conditions."

And, for those who have difficulty visualizing American leaders as defendants in such a trial, Justice Jackson's words again: "...(L)et me make clear that while this law is first applied against German aggressors, the law includes, and if it is to serve a useful purpose it must condemn, aggression by any other nations, including those which sit here now in judgment...This trial represents mankind's desperate effort to apply the discipline of the law to statesmen who have used their powers of state to attack the foundations of the world's peace and to commit aggression against the rights of their neighbors."

Peter Dyer is a machinist who moved with his wife from California to New Zealand in 2004.


Aaron , July 26, 2020 at 20:17

Well, it would have been up to one person to call for an investigation and prosecute any illegal actions pertaining to the invasion – Barack Obama. Nobody in the Bush administration would have done it, and it was something that Obama talked about alot in his speeches in his campaign to be president.

Ana Márcia Vainsencher , July 25, 2020 at 17:47

Law is only applied to the USA "enemies", are they real, or no. Historically, the USA loves to create enemies. It's the king of wars.

frank scott , July 26, 2020 at 00:30

Sadly, we still entertain notions of war crimes, meaning that mass murders can be conducted in legal ways that's the disease right there: all we have to do is make rules for how to slaughter human beings according to a scholarly and civilized rule book written by our most gifted and trained in the humanities experts and then wipe out as many humans as we need to in a completely legal way hello?

How about a Geneva convention to write up rules of child rape, wife beating, or maybe the only thing to get "civilized" people upset: pet murdering?

Germany was only doing the politcal economic business of capital, as were its enemies, except for Russia which played the greater role in the defeat of "evil" nazi capitalism..anti-democratic capitalism is in the business of war and it will take democratic communism to bring about peace and global sanity before it destroys humanity.

Andrew Thomas , July 25, 2020 at 13:25

It has been clear for several decades that Nuremberg was not a precedent. It was -- and this is very difficult to actually write out -- victor's justice, which is exactly what the Nazis and their sympathizers said it was then. The US has been "projecting power" around the world ever since in violation of the spirit of the legal terms of the international order it was instrumental in creating post World War II; and its clear provisions at least since Reagan told the World Court to drop dead re: Nicaragua vs. US.

Other more informed readers may have much earlier examples. International law is simply a weapon for the empire when it is invoked by it, and it is a useless farce for those the empire opposes.

Robert Sinuhe , July 25, 2020 at 10:34

Interesting, but how is it possible to prosecute the US when it already dominates the world? If Hitler and the Germans had won the war there wouldn't have been a Nuremberg Trial. Principles are morals and just but power trumps all.

[Jul 26, 2020] 'Very serious threats'- US reportedly ramps up pressure on Nord Stream 2 contractors -- RT Business News

Jul 26, 2020 | www.rt.com

'Very serious threats': US reportedly ramps up pressure on Nord Stream 2 contractors 26 Jul, 2020 08:12 Get short URL © Nord Stream 2 / Axel Schmidt 123 Follow RT on RT The US government has made further attempts to force European firms to ditch the Russian-led Nord Stream 2 gas pipeline project, Welt am Sonntag reported, citing people familiar with talks on the issue.

According to the newspaper, officials from US Department of State, the Treasury Department, as well as the Department of Energy approached European contractors to make sure they fully understand the consequences of staying in the project. Up to a dozen officials reportedly held at least two online conferences with representatives of the firms in recent days.

ALSO ON RT.COM Russia's Nord Stream 2 pipeline will significantly cut gas prices in Europe, energy consultancy says

Speaking in a "friendly" manner, the US side stressed that it wanted to prevent completion of Nord Stream 2, observers of the online talks said. "I believe the threat is very, very serious," one of them revealed to the German outlet.

Those threats are consistent with comments by US Secretary of State Mike Pompeo last week, in which he warned that companies involved in the project had bett