Russia is not as desperate for higher oil prices as is Saudi Arabia. There are a few reasons
for this. One of the key reasons is that the Russian currency is flexible, so it weakens when
oil prices fall. That cushions the blow during a downturn, allowing Russian oil companies to
pay expenses in weaker rubles while still taking in U.S. dollars for oil sales. Second, tax
payments for Russian oil companies are structured in such a way that their tax burden is
lighter with lower oil prices.
Saudi Arabia needs oil prices at roughly $84 per barrel for its
budget to breakeven.
... ... ...
Igor Sechin, the head of Russia's state-owned Rosneft, said that oil prices "should have
stabilized, because everyone was supposed to be scared" by the enormous OPEC+ production cuts.
"But nobody was scared," he said, according to Bloomberg. He blamed the Federal Reserve's rate
tightening for injecting volatility into the oil market, because traders have sold off
speculative positions in the face of higher interest rates.
...
Novak
offered the market some assurances that the OPEC+ coalition would step in to stabilize the
market if the situation deteriorates, suggesting that OPEC+ has the ability to call an
extraordinary meeting. He
told reporters on Thursday that the market still faces a lot of unknowns. "All these
uncertainties, which are now on the market: how China will behave, how India will behave...
trade wars and unpredictability on the part of the U.S. administration... those are defining
factors for price volatility," Novak said.
Nevertheless, Novak predicted the 1.2 mb/d cuts announced in Vienna would be sufficient.
Some analysts echo Novak's sentiment that, despite the current panic in the market, the cuts
should be sufficient. "We are looking at oil prices heading towards $70 to $80 quite a recovery
in 2019. That's really predicated on the thought that first of all, OPEC still is here. And I
think that the market is underestimating that they are going to cut supply by 1.2 mb/d,"
Dominic Schnider of UBS Wealth Management told CNBC
. "And demand looks healthy so we might find ourselves into 2019 in a situation where the
market is actually tight."
Jerri-Lynn here. This is
the latest installment in Justin Mikulka's excellent series on the fracking beat,
Finances
of Fracking: Shale Industry Drills More Debt Than Profit
. The industry lacks even the excuse of profit to justify
the environmental costs it inflicts – yet the mainstream media continue to swallow industry waffle. I've crossposted other
articles in the series, and I encourage interested readers to look at them – the entire series is well worth your time.
By Justin Mikulka, a freelance writer, audio and video producer living in Trumansburg, NY.
Originally published at
DeSmog
Blog
2018 was the year the oil
and gas industry promised that its darling, the shale fracking revolution, would stop focusing on endless production and
instead turn a profit for its investors. But as the year winds to a close, it's clear that hasn't happened.
Instead, the fracking
industry has helped set new
records
for
U.S. oil production while continuing to lose huge amounts of money -- and that was before the recent crash in oil prices.
But plenty of people in
the industry and media make it sound like a much different, and more profitable, story.
Broken Promises and Record Production
Going into this year, the
fracking industry needed to prove it was a good investment (and not just for its CEOs, who are garnering
massive
paychecks
).
In January,
The
Wall Street Journal touted the prospect
of frackers finally making "real money for the first time" this year. "Shale
drillers are heeding growing calls from investors who have chastened the companies for pumping ever more oil and gas even as
they incur losses doing so," oil and energy reporter Bradley Olson wrote.
Olson's story quoted an
energy asset manager making the (always) ill-fated prediction about the oil and gas industry that
this time will
be different.
Is this time going to be
different? I think yes, a little bit," said energy asset manager Will Riley. "Companies will look to increase growth a little,
but at a more moderate pace."
Despite this early
optimism,
Bloomberg noted in
February
that even the Permian Basin -- "America's hottest oilfield" -- faced "hidden pitfalls" that could "hamstring"
the industry.
They were right.
Those pitfalls turned out to be the ugly reality of the fracking industry's finances.
And this time was
not different.
On the edge of the Permian
in New Mexico,
The
Albuquerque Journal
reported the industry is "on pace this year to leap past last year's record oil production," according
to Ryan Flynn, executive director of the New Mexico Oil and Gas Association. And yet that oil has at times been discounted as
much as
$20
a barrel
compared to world oil prices because New Mexico doesn't have the infrastructure to move all of it.
Who would be foolish
enough to produce more oil than the existing infrastructure could handle in a year when the industry promised restraint and a
focus on profits? New Mexico, for one. And North Dakota. And Texas.
Texas is experiencing a
similar story. Oilprice.com cites a
Goldman
Sachs
prediction of discounts "around $19-$22 per [barrel]" for the fourth quarter of 2018 and through the first three
quarters of next year.
Oil producers in fracking
fields across the country seem to have resisted the urge to reign in production and instead produced record volumes of oil in
2018. In the process -- much like the
tar
sands industry in Canada
-- they have created a situation where the market devalues their oil. Unsurprisingly, this is not a
recipe for profits.
Shale Oil Industry 'More Profitable Than Ever'
--
Or
Is It?
However,
Reuters
recently
analyzed 32 fracking companies and declared that "U.S. shale firms are more profitable than ever after a strong third
quarter." How is this possible?
Reading a bit
further reveals what Reuters considers "profits."
"The group's cash flow
deficit has narrowed to $945 million as U.S.benchmark crude hit $70 a barrel and production soared," reported Reuters.
So, "more profitable than
ever" means that those 32 companies are running a deficit of nearly $1 billion. That does not meet the accepted
definition
of profit.
A
separate
analysis
released earlier this month by the Institute for Energy Economics and Financial Analysis and The Sightline
Institute also reviewed 32 companies in the fracking industry and reached the same conclusion: "The 32 mid-size
U.S.exploration companies included in this review reported nearly $1 billion in negative cash flows through September."
The numbers don't lie.
Despite the highest oil prices in years and record amounts of oil production, the fracking industry continued to spend more
than it made in 2018. And somehow, smaller industry losses can still be interpreted as being "more profitable than ever."
The Fracking Industry's Fuzzy Math
One practice the fracking
industry uses to obfuscate its long money-losing streak is to change the goal posts for what it means to be profitable.
The
Wall Street Journal recently highlighted
this practice, writing: "Claims of low 'break-even' prices for shale drilling
hardly square with frackers' bottom lines."
The industry likes to talk
about
low
"break-even"
numbers and how individual wells are profitable -- but somehow the companies themselves keep losing money.
This can lead to statements like this one from Chris Duncan, an energy analyst at Brandes Investment Partners:
"You always scratch
your head as to how they can have these well economics that can have double-digit returns on investment, but it never flows
through to the total company return."
Head-scratching, indeed.
The explanation is pretty
simple: Shale companies are not counting many of their operating expenses in the "break-even" calculations. Convenient for
them, but highly misleading about the economics of fracking because factoring in the costs of running one of these companies
often leads those so-called profits from the black and into the red.
The Wall Street Journal
explains the flaw in the fracking industry's questionable break-even claims: "break-evens generally exclude such key costs as
land, overhead and even at times transportation."
Other tricks, The Wall
Street Journal notes, include companies only claiming the break-even prices of their most profitable land (known in the
industry as "sweet spots") or using artificially low costs for drilling contractors and oil service companies.
While the mystery of
fracking industry finances appears to be solved, the mystery of why oil companies are allowed to make such misleading
claims remains.
Why does the fracking
industry continue to receive more investments from Wall Street despite breaking its "promises" this year?
Because that is how
Wall
Street makes money
. Whether fracking companies are profitable or not doesn't really matter to Wall Street executives who
are getting rich making the loans that the fracking industry struggles to repay.
An excellent example of
this is the risk that
rising
interest rates pose
to the fracking industry. Even shale companies that have made profits occasionally have done so while
also
amassing
large debts
. As interest rates rise, those companies will have to borrow at higher rates, which increases operating costs
and decreases the likelihood that shale companies losing cash will ever pay back that debt.
Continental Resources, one
of the largest fracking companies, is often touted as an excellent investment. Investor's Business Daily
recently
noted t
hat "[w]ithin the Oil& Gas-U.S.Exploration & Production industry, Continental is the fourth-ranked stock with a
strong 98 out of a highest-possible 99 [Investor's Business Daily] Composite Rating."
And yet when
Simply
Wall St.
analyzed the company's ability to pay back its over $6 billion in debt, the stockmarket news site concluded that
Continental isn't well positioned to repay that debt. However, it noted "[t]he sheer size of Continental Resources means it is
unlikely to default or announce bankruptcy anytime soon." For frackers, being at the top of the industry apparently means
being too big to fail.
As interest rates rise,
common sense might suggest that Wall Street would rein in its lending to shale companies. But when has common sense applied to
Wall Street?
The Chronicle notes the
epic money-losing streak for the industry and how fracking bankruptcies have already ended up "stiffing lenders and investors
on more than $70 billion in outstanding loans."
So, is the party over?
Not according to Katherine
Spector,
a
research scholar
at Columbia University's Center on Global Energy Policy. She explains how Wall Street will reconcile
investing in these fracking firms during a period of higher interest rates: "Banks are going to make more money [through
higher interest rates], so they're going to want to get more money out the door."
1. The
Sightline Institute methodology had 33 cos. Not 32. I would bet the Reuters reporter took out one company out from the
analysis. Bear in mind XOP has 72 or so companies so there is a lot of scope for cherry picking there too.
2. What
bank wants to run an oil company? The banks lent to a sector which conned them. I guess rates were too low for too long. Those
loans/bonds are only recoverable if oil prices are high. The oil men know they are long a massive call option, and you can't
take it off them. They can't get new money so they won't give back the old.
3.
Diamondback and maybe 8 others make money. Infrastructure in the right place and good geologies.
4. The
numbers are unfair to Andarko cos the cut off misses a bunch of cash coming back in q3
Remember Enron? We're clearly not smart enough to understand the genius of how this is profitable. I guess we should
just step aside and watch the smart guys spin straw into gold. I'm sure they will share the wealth with the land
owners right?
These oil men are not stupid. They like to get their DUCs in a row – wells drilled but uncompleted. If oil goes up
enough they can open the DUCs in less than 2 months. Its the weakly capitalized ones who will pump oil out of a
reservoir with low oil prices to service debt. Also by drilling they often validate a lease which would void if
they didnt drill. However by not pumping they dont have to pay any royalties – just rents.
Below $50 on WTI a lot of the sector doesn't generate enough cashflow to meet investment plans.
I think a lot of the funding is with junk bonds. So most of those bonds are sold to investors, including ETFs, mutual
funds, and pension funds. Many of the banks are just middlemen and will probably not be left holding too much of the bag if
they haven't kept them on their own books or written lots of stupid derivatives on them.
This
should be a much smaller sector than the housing sector so a sub-prime mortgage bond-like crash shouldn't have the impact
of 2008. But who knows, the main thing aI marvel about with the financial sector is their unerring ability to take
something that should be relatively safe, weaponize it, and threaten global financial stability with it.
I've watched in horror from a distance in regards to fracking, and then a few days ago, this planning area map for open
hydraulic fracking leases has me surrounded in a sea of red
We're on
a fractured rock aquifer in the foothills here that's separate from the one on the valley floor, and because it gets scant use
in Ag, and not many people live here (we're 2.5x as big as Paradise,Ca. in size, with 1/10th of the population and at a
similar altitude) nobody's hard rock wells had any issues with going dry during the lengthy drought and having to drill
hundreds if not a thousand feet deeper in search of H20, as was occurring to the farmers et al on the fruited plain.
I sure
don't like the idea of a fractured rock aquifer and fracking
One thing
going against us, is land is cheap here, it's nature acres, nice to look at. but no development potential, as the trees are
all in the way, and what sorry sap is going to cut down oaks a couple hundred old and level the hills to put in tiny boxes?
That
villain doesn't exist, luckily.
But if
you were to dangle large amounts of money at the owners of such low value acres, in oil leases?
And the
idea it was all a circle jerk by Wall*Street & Big Oil, to get the money!
.
Makes it even harder to swallow
Its not just the environmental damage. Banks lending to frackers will be precedent creditors. They'll keep loaning until
whatever value in the company that can be extracted in extremis has been used up. One can easily imagine the sort of
accounting Wall Street uses.
So when these companies finally go bust, faced with the diminishment of oil production, will US taxpayers be forced to bail
out the industry because of the economic/national security implications of the prospects of eviscerated US oil production
volumes? If so, Wall Street wins yet again.
A gigantic hidden cost is the liabilities associated with the resulting abandoned wells. This is why this fall there was a
Supreme Court challenge in Canada to a ruling on who gets paid first in such cases. In Canada the reclamation costs fall to
the remaining producers who share costs of the Orphan Well Association. In the US, it is completely off the books, and
therefore falls to the government to clean up abandoned plays when companies go bust.
So,
taxpayers could be on the hook both if there is a government bailout on bad loans, a al 2008/2009, AND will have to pay to
clean this up (it's expensive, by the way, there are thousands and thousands of these sites that need to be remediated). I
suspect the reason all this is happening is a strategic effort to use tax payer backstopped risk to punish Russia to daring
to exist.
This is similar to mines and old waste dumps. If the owners were limited partnerships or companies that went bankrupt
with no remaining solvent pieces, then there is no money in the kitty to clean them up. The remaining game in town then
is Superfund and state programs for inactive hazardous waste sites and orphan wells.
The
RCRA Subtitle C and D regulations in the 1980s and early 90s required landfill operators to set aside funds in
lock-boxes so that if they went bankrupt, the state could access those funds to close the landfills. The landfills
typically charge a fee per ton just to fund these financial assurance accounts and they need to keep them on file with
the states. Unfortunately, the resource extraction industry has generally been able to successfully fight against these
types of requirements as "job-killers".
One economic problem with fracked gas wells is they only produce large quantities of gas for a short time. It's usually 2 to 3
years. After that production tanks. I suspect a similar thing happens with fracked oil wells. I I've in NY close to the PA
boarder. For about 4 years, fracking was really booming. Now it has almost stopped. You see big lots filled with fracking
equipment gathering rust. It didn't take most people long to realize that only a few made money while the rest pay the bill
for all of the damage done. I'm glad in NY state they banned fracking. I own 50 acres and refused to buy into a leasing deal
before fracking was banned. My biggest concern was my well water becoming contaminated as well as losing control over how my
land is used. A big problem is that a company is allowed to drill under your land even if you don't have a lease agreement
with them. They have to pay you but they can also pollute your well. If that happens your property becomes of no value and
useless.
We'd become curious about folks moving to the NE tip of PA, as it looked like NJT might actually reopen rail service to all
those $80-$140K houses, right before Williams/ Transco's Constitution Pipeline finally caused hundreds of new fracked
wells? We'd guessed the only effect of the '16 election was who'd be prodding retirees into GasLand Poconos. Seems like a
great location for a remake of Green Acres meets Deliverance?
https://www.njherald.com/20180410/lackawanna-cutoff-project-may-finally-be-back-on-track
Looks like there's a mess of unwatchable YouTube videos. I wonder if refugees have any idea of what could happen up there?
Yes, when liquidity has a much smaller time constant then actual production, the rules of liquidity will decouple from the
production and actually dominate the process.
This is
well-known from physics, and why many economic theories are obviously and fundamentally wrong.
As long
as the economy is financialized with almost infinite velocity, nothing in the real world (including profits) will actually
drive the system. This is trivially obvious.
This kind of thing makes me chuckle. So the CEOs and other suits at the fracking companies are scamming their investors to
enrich themselves. Hard to feel bad about it (even though a fair number of the investors are probably "institutional") if it
wasn't for the needless environmental destruction that goes along with these two groups of elites ripping each other off.
Very broadly speaking, wouldn't this be a good real-world example of MMT? There is a natural resource we want to extract, we
have the manpower and machinery to do it, so we just do it? The money to fund it is limitless bound only by the constraints of
the resource itself. Wall street is just a rent-extracting intermediary
It's ironic that, having lived thru the 80's when the financial "geniuses" took over and it was all about ROI – Westinghouse
somehow came to the conclusion that you could make 6% on golf courses (they didn't even know, I don't think) instead of 2% on
industrials (that was probably correct) so they basically sold the store. Except for the nukes, sigh.
The
comments above, apes's for instance, point to the whole slosh of money. And there is some truth to that. But in this case, I'm
afraid much of the answer is that people in the oil bidness make oil wells because that's what they know how to do. ROI, Scmoi
O I.
Of all
the industries that are gone because they weren't allowed to "do what they know" because it was "cheaper to offshore" – read a
greater ROI to Wall Street – how come the worst is the only one that keeps its nose to the grindstone and does the actual work
it knows how to do?
No, what I meant was those other ones just "diversified" or whatever the word of the moment was, just did whatever made
the people at the top money.
But
oil/gas is different. They just "have to go get it". It's like termites and wood. I respect that, even if it's the wrong
thing to do. If I must refer to The Terminator again, "it's what they do. It's ALL they do".
PS:
there is oil/gas everywhere. I worked in the "bidness,"btw.
So frackers can take out billions of unpayable debt and discharge it in bankruptcy, but I get to carry a millstone of student
debt around my neck for the rest of my life? Great system we got here. Pretty flipping great.
You should have issued a junk bond on yourself instead of taking a student loan. You could then just default on the junk
bond (after having written some derivatives to short it to profit from your financial demise).
I have a different take on all this fracking.
I believe it was decided at the highest levels of our government to support it; including financially if necessary. The basis
for this support and secrecy would be national security. Easy enough to see how this could have transpired.
All that
said, if my theory is correct, the frackers will be bailed in some form or fashion. Probably the next QE will pick up the tab
or perhaps the DOD is funding it indirectly already.
Your take parallels Pym of Nantucket's. Ever since the end of WWII, the United States has been allowed to just 'print
money', first to pay for its contest with the former Soviet Union for global hegemony and then to 'pay for' its energy and
the products its industries could no longer profitably produce – at least as profitably as they could by off-shoring those
industries. This is all really just an extension of 'petrodollar warfare' – gigantic bluff the US can continue to go it
alone if necessary – having salted the central banks of 'developing countries' with all the 'reserve currencies' they
realistically need, at least if the depredations of the likes of George Soros are held in check.
In
summary, fracked oil is propping up not just Big Oil but the US military industrial complex and ultimately Wall Street and
its banks. As long as the US can control the world's access to energy (and possibly retard its transition to renewable
sources?), US politicians and bankers can continue to 'print money' (i.e. export debt) and sustain the whole rotten edifice
of US and Western 'political economy'.
As
usual Michael Hudson has it right:
"Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling
hosts." It is a competition in credit creation to buy foreign resources, real estate, public and privatized
infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary
wealth and asset appropriation) simply by financial means?
The time will come, as a result of this, that the US
will
have to go it alone. They are turning your money to
shit. Unless our corporate masters sell out the rest of the country to foreigners, like they already have much of our
nation's productive capital.We won't be alone, but like Greece, we will no longer be independent or free.
This kind of crap increasingly pervades our economy. Military. Finance. Healthcare. Like money with Gresham's Law, bad
investment drives out good. Every cost is also someone's profit opportunity, so costs are magnifying and spinning out of
control. More and more the welfare of society depends on 'borrowed' money.
It's like the modern day pyramids. Nicely dressed piles of rocks in the desert. Total waste and destruction of
resources. It also destroyed the social capital of Ancient Egypt, and turned them into slaves of Pharoah. It was the
people of Egypt who paid for the pyramids, with their labor and their liberties.
So
that's what else is going on. Your freedoms are going down those wells. And up the towers of finance. The Egyptians, at
least, got something to look at. They already had the barren wastelands.
At least these depressed oil prices from over fracking in the US will make Saudi Arabia poorer. Possibly poorer to the point
that widespread social unrest ensues there, leading to the dethroning of the House Of Saud, which, in turn, will cause the
dethroning of their chief covert friend and ally Israel.
Then in
order to stave off social unrest here in the US, we'll have to cut off ties with these two roguish troublemakers in the
region. Much needed balance of power will then be restored to the region with Iran and Syria restored to their former glory,
sparking peace and prosperity from Pakistan and Afghanistan to Egypt, Somalia and Yemen.
I don't
know if the pieces on the chessboard will ever realign this way, but it's rather amusing to speculate that this realignment
could possibly be triggered by the stupidity and shortsightedness of the US to over frack!
You got it backwards. KSA and Russia need lower oil prices to force US producers off the field and get their supply chains
back. Your thinking like a 1970's person. Think 2010's.
This is a non-climate change reason why developing electric vehicles in North America, Europe, and China would be good.
It would strip away much of the demand for oil which is a major funding source for Russia and KSA.
Jesus Herbert Walker Christ. Is anyone else getting sick of this stupid series? If you keep writing the same article every
year, and Wall Street keeps engaging in the same apparently irrational behavior, you might want to rethink your smug pose and
ask yourself whether there might be some additional digging to do to understand what the hell is going on.
The
contrast between this series and Hubert Horan's Uber work is striking. Horan not only points out the fact that Uber is
unprofitable, but also clearly shows who has an interest in extending the hype, and how and why the bandwagon keeps rolling.
This series is the complete opposite.
Fracking
"investors" aren't getting ripped off, and they're not stupid. You've just completely missed half the point of the Master
LImited Partnership structure. For the limited partners, the losses are a feature, not a bug. Until MLP shares are cashed in,
they generate tax losses for the LPs. Those losses are valuable generally, but 501c3s, especially love them because they allow
non-profits to offset Unrelated Business Income.
Go to
Guidestar or Nonprofit Explorer and pull down the 990T of any nonprofit with a few billion dollars worth of invested assets.
Line 5 (usually blank but filled in as a long attachment at the end) is almost invariably a who's who of the fracking
industry, with thousands of dollars in losses from each company. In any given year, LPs only liquidate positions in a small
number of the companies their holding each year, allowing them to avoid taxes with the annual losses, then cash in (at least
sometimes) when the value of the company is high.
The
industry's a scam, but just as much of the taxpayers as of the investors.
Do you make a habit of putting your foot in your mouth and chewing? Because you did it here, by copping a 'tude while being
100% wrong.
Passive tax exempt investors have no use for losses. Zero. Zip. Nada.
An
investor in a limited partnership is a passive investor. Income from a passive investment NEVER generates Unrelated
Business Income. If the idiocy you presented was correct, no endowment or public pension fund could ever show a net profit
from their investments in private equity and hedge funds without it being taxed as UBI. There would literally be no private
equity industry as we know it because most of its money comes from tax exempt investors, namely public pension funds,
endowments, foundations, private pension funds.
UBI
results from activity conducted by the not for profit. The classic example is an art museum's gift shop. See IRS
Publication 598 (emphasis ours):
Unrelated business income is the income from a trade or business
regularly
conducted by an exempt organization
and not substantially related to the performance by the organization
of its exempt purpose or function, except that the organization uses the profits derived from this activity.
Limited partners are required to be passive and have nada to do with the operation of the partnership. They typically make
double sure that their investment income won't be characterized as business income. As one tax expert confirmed by e-mail:
Endowments/exempts/pension funds can wind up having UBTI when they don't structure their investments through
corporations. They rarely fail to do this structuring. They wouldn't put themselves in the position of deliberately
incur UBTI and then go hunting for losses to offset it.
So it
is possible that you heard of a not-very-competent endowment that wound up seeking tax losses, but that would be highly
unusual, when you incorrectly said the opposite.
There
are other tells that you don't even remotely understand the how limited partnerships work, such as your comment "In any
given year, LPs only liquidate positions in a small number of the companies their holding each year, allowing them to avoid
taxes with the annual losses."
Limited partnerships are pass-through entities. LPs receive their pro-rata share of income and loss annually. They do not
need to sell to recognize gains or losses resulting from their participation in operations.
The
mainstream journalist who first wrote about the pervasiveness of losses in fracking after oil prices started trading in the
new normal of $70 a barrel and below, John Dizard of the Financial Times, explained why frackers would keep drilling at
losses as long as they could get their hands on funding, so this is entirely consistent with his forecast. And Dizard's
column is for wealthy individuals and he is conversant with tax issues, unlike you.
Hedge funds are keeping their cool in the most tumultuous end of the year for oil since the
2008 financial crisis, betting on better days ahead.
They boosted wagers on rising Brent prices for a third straight week amid expectations that
OPEC and allies will follow through on a deal to reduce output. The vote of confidence comes
against a backdrop of turmoil in financial markets that saw one measure of oil-price volatility
jump the most on record in November and head for its highest year-end level in a decade.
"There is a little more optimism and neutrality coming into markets and we're getting some
positive signs," said Ashley Petersen, an oil analyst at Stratas Advisors LLC in New York.
"It's not as if demand is tanking tomorrow and supply is going to triple. We're seeing a little
more rationale enter markets, a little more of a wait-and-see mode."
Although the global crude benchmark has declined about 15 percent since OPEC and its allies
came together and announced an agreement to reduce output on Dec. 7 -- extending its plunge
since early October to 40 percent -- producers have signaled dedication to the deal.
OPEC and its allies aim to publish a statement in January on the
implementation of the agreement to cut production, according to Russia's Energy Minister
Alexander Novak. He also said the market may see the impact of the cuts in January or February,
and if necessary, the group can convene before its scheduled meeting in April. At the
same time, a decline in Iranian imports to Japan adds another positive sign .
Hedge funds' net-long position -- the difference
between bets on higher Brent prices and wagers on a drop -- rose 6.7 percent to 162,249
contracts for the six days ended Dec. 24, ICE Futures Europe data show. Longs rose, while
shorts declined to the lowest level since late November. The report was for a period shorter
than a week because of the Christmas holiday.
Analysts
surveyed by Bloomberg forecast Brent to average $70 a barrel in 2019 as the market
tightens, OPEC's supply cuts take effect and unintended losses in Venezuela and Iran
increase.
So far, the apparent confidence from hedge funds and analysts hasn't yet translated into a
calmer market. After surging a record 86 percent in November, the Chicago Board Options
Exchange Oil Volatility Index ended Friday at 53.11. The last time it finished the year above
51 was 2008.
In the U.S., the Commodity Futures Trading Commission's commitments of traders report with a tally of
wagers on West Texas Intermediate and other assets won't be published during the government
shutdown, according to a Dec. 22 notice.
"... Of course, I was just trying to make a point that wells drilled in 2015 that had seen 3 years of weak (and one year of average) oil prices were going to be total losers that would not payout within any reasonable time horizon, if at all. ..."
"... To continue, there is no mention in these numbers of how much land costs. I seem to recall many Permian players paying $15-60K per acre. So a two mile DSU would cost $19.2 million to $76.8 million. I just ignored land costs completely. Further, each of these companies has interest expense. One can go to the 10K's and 10Q's to see how much that is costing each per BOE. I just ignored interest expense too. ..."
"... I do argue until we see some well payout data (hard data, not power point variety) from these companies, we should assume the wells generally do not payout within 36 months, or even 60 months. ..."
"... I was just trying to remind people of the numbers. I think most of the investing public has figured it out, based on where these companies are trading since oil dumped again. ..."
So to keep everyone happy, here are some averages for the all wells EFS, Bakken and Permian.
Decided to exclude Niobrara, oil numbers are much lower.
2015 Q3 36 months of production: 162,635 BO most recent monthly rate 58.6 BOPD
2016 Q3 24 months of production: 169,078 BO most recent monthly rate 103.5 BOPD
2017 Q3 12 months of production: 136,850 BO most recent monthly rate 213.1 BOPD
For 2015 162,635 x .80 x $45 = $5,854,860
7% severance $409,840
$5 per BO LOE $650,540
$2 per BO G & A $260,216
Net = $4,534,264
I lowered the costs some to make the economics more favorable from the standpoint of those
who love the sub $2 gasoline. Might be ok to look at 10K and 10Q if anyone would like to plug
in different cost estimates.
The 2016 wells described above are at $4,713,894 per well after 24 months.
The 2017 wells described above are at $3,815,378 per well after 12 months.
Of course, I was just trying to make a point that wells drilled in 2015 that had seen
3 years of weak (and one year of average) oil prices were going to be total losers that would
not payout within any reasonable time horizon, if at all.
To continue, there is no mention in these numbers of how much land costs. I seem to
recall many Permian players paying $15-60K per acre. So a two mile DSU would cost $19.2
million to $76.8 million. I just ignored land costs completely. Further, each of these
companies has interest expense. One can go to the 10K's and 10Q's to see how much that is
costing each per BOE. I just ignored interest expense too.
These wells are a lousy investment at $50 WTI. Only gets worse as the oil price sinks.
I think this all started because maybe GuyM was actually giving some credence to EOG
guidance. I don't blame GuyM, or anyone else, for believing what the companies say.
I do argue until we see some well payout data (hard data, not power point variety)
from these companies, we should assume the wells generally do not payout within 36 months, or
even 60 months.
I do agree, wells have residual value after 36 and 60 months. I also agree that much
higher oil prices make this business a money maker. Finally, I agree the wells have improved
every year, although it is looking like 2016 might have been the high water mark, with later
wells not moving the needle much higher.
Time for me to exit for awhile. I was just trying to remind people of the numbers. I
think most of the investing public has figured it out, based on where these companies are
trading since oil dumped again.
Good analysis, and thanks, again. No amount of increased productivity could make them
profitable at $45, especially not $37, or $16. The clock is ticking. Yeah, EOG has gone from
over $120 to $87.
Now investors will be super cautious that that will have depressing effect.
Notable quotes:
"... There are huge losses, we don't see that are happening now in the derivative market, besides the stock markets. There was something like 384 trillion just in interest rate bets in derivatives, that half are losing right now. ..."
"... Each crash is different. This one is just a slow meltdown. ..."
"... The stock market, and now especially derivatives, are nothing other than a gigantic Las Vegas casino. Elves in the market strive to maintain that there is a relation, but in the end, it doesn't pan out. ..."
Of course. But traditionally, crashes take from cash/growth after a period of time. Nine
months to a year, and growth in GDP precedes bull markets by the same. It's not a fritzing
law, but it's logical, and normal. Has been since I started following it in the 60's.
Last crash was different, in that the GDP growth declined before the crash, due to
housing. But, if the crash persists, my bet would be a lack of cash, eventually, to support
growth.
There are huge losses, we don't see that are happening now in the derivative market,
besides the stock markets. There was something like 384 trillion just in interest rate bets
in derivatives, that half are losing right now.
This is no traditional crash. FED can stop hiking interest rates and market might pause an
consolidate before going lower but lower they go. Until FED stops allowing it's balance sheet
to shrink, down is the direction for markets. Back when QE was full blown stuff like gov.
shutdown and trade wars were the very thing that made markets go higher because it meant more
QE for longer.
There is nothing organic about the recovery of markets since 2008-2009. All assets and
markets are mispriced. Price discovery wasn't allowed to happen after 2008-2009. Truth is
true price discovery won't be allowed to happen this time either.
Fed is manufacturing a market crash so they can do the next round of QE. Fact is QE works
but you can't end it and you sure as hell can't reverse it. QE creates the illusion that
everything is fine. There is a credibility issue if you can't ever end QE though. That's
where the Fed finds itself now.
Your right. Each crash is different. This one is just a slow meltdown.
And, since I have been following it, there has never been anything organic about market
growth, it's always BS. There was nothing organic about the first big market crash in the
early part of last century, it was purely speculative. The tulip crash, before established
markets was speculative.
Growth in GDP and markets are two separate animals. Although, as the previous crash
proves, GDP decline can affect the market, as well as market crashes affecting GDP.
The stock market, and now especially derivatives, are nothing other than a gigantic
Las Vegas casino. Elves in the market strive to maintain that there is a relation, but in the
end, it doesn't pan out.
Well the Dow has had its largest monthly loss ever recorded this December unless market
recovers some of that between now and the end of the year. Slow meltdown maybe not. It's
currently at about -4,200 which tops the largest monthly drop during 2008-2009 by about 1,000
points.
Just further to drop than the previous ones. Half would be about 10k more points. But, there
is nothing magical about half, it could stop well before that.
The analysis of the drop is still being speculated. The ones that make sense, so far, is that
there was a lot of market fear (tariffs, ad nauseum). Sell offs happened, snow balling into
covering margin calls. If so, that is a normal scenario, but I think the Fed raising interest
rates, and continuing to unravel QE is also a major, if not the major reason. There are a
bunch of other reasons that don't make a lot of sense. One blaming oil price. I think that is
yet to come, but not this time.
Unwinding of FED's balance sheet is also on autopilot. They don't have to have a Fed meeting
to vote on it like a rate hike. Much easier to deflect the blame elsewhere for the resulting
market decline.
-4,200 which tops the largest monthly drop during 2008-2009 by about 1,000 points.
Hey, it it's the precentage drop that counts. What was the largest monthly
percentage drop in the 2008-2009 crash? I would wager it was far greater than the percentage
drop this December.
This article is about the huge 1,175 one day drop last February, but the point still
holds.
The Dow's 4.6% loss on Monday was the worst since August 2011. But it didn't even crack
the top-20 of all-time losses. It was just the 25th worst loss since 1960.
The Dow's biggest one-day percentage loss was the 22.6% Black Monday crash on Oct. 19,
1987. In point terms, that was "only" 508 points. In second place, the Dow crashed 12.8% on
Oct. 28, 1929.
Looks like the biggest percentage drop for a month was Feb 2009, at around 21%. Eclipsing
this month. But, it had also been going down for a long time. What was this month, around
16%? But, it's just started,
Seems the break even is pretty low, as EIA has predicted about a million bpd increase out of
shale in 2019 It doesn't matter whether you
provide storage or increase the number of refineries, shale production is relatively dead at
these prices. The prices just need to stay ridiculously low for awhile to stop the EIA and
IEA from producing more imaginary oil, and face reality. Yeah, that would affect my wells,
but I would hope for a better price, later.
Less than $17 a barrel? Bakken is done for awhile. And there is NOBODY in the Permian
breaking even at $34. Remember what happened in 2015? Yeah, production dropped by over a
million barrels. These prices are as bad as 2015, and we have a bigger drop potential. Those
pipeline builders gotta be really worried. But, they should be anyway. How are you going to
keep the pipeline flowing if you can't take what's in there out, because there is nowhere to
put it? How many mentally challenged people are working in the Permian?
The amazing part is, this time there is no glut, at all. Inventories will drop, but just
let it happen. We have to forever eradicate the Permian and shale production will save the
world song. It's a thousand times more irritating than listening to Bing Crosby's white
Christmas on January1st. There ain't no fritzing Santa Clause, EIA!
Seems like a lot of year end liquidation of oil futures perhaps. That's the only explanation
I've got for how oil is this low. Probably will bounce back to the low 50's WTI by late
January. It will be interesting to see December through February US production data to see
what effect this price dive has done.
Two thoughts, immediately. The price is such now, that if it stays anywhere close to that for
awhile, completions won't be as expected, and there won't be enough oil to fill them. The
second is, that if the E&Ps had the right price, and did produce, there is probably not
enough shipping until late 2020 or 2021 to handle 2.5 million bpd extra. No place to store
it, and refineries can't use high API. Unless, I am missing something. Pipelines can't make
much money because a pipeline is filled, it has to be flowing.
Maybe not zero, but could be a lot more. It's reacting to the stock market, now. Dow down 15%
and still going. This is no simple correction, as that stops at around 10%, usually. Been a
long, long time since the last bear market, and is past due. Everything dives, until they
come to grips that commodities are a different animal. That may take months, or longer
depending on how bad it gets. Who knows, each bear market has a different generation, and
it's always new to them.
Especially this one, as it has been so long. New ball game.
I think it was EN who posted how rate hikes can cause this on a historical basis. Based on
that chart, we could be in a significant bear market. Bubbles are going to pop. Not sure what
the derivative markets are looking like, but they can't be healthy. The derivative markets
are many times bigger than the regular stock markets. Think Lehman Brothers, and margin call.
Lehman didn't fail over bad home loans, they failed over the derivatives of home loans. This
time, it won't be housing, but something will give. They made a big effort to control the
banks after the last fiasco in 2008, but made NO effort in regulating derivatives. Brilliant.
Some of the weaker oil companies may be in trouble. JMO.
Right on the move from 18,000 to 27,000 in the Dow was just hot air as we are seeing now.
Investors realize there isn't a fed put and are freaking out, how far will it sink before
Powell and company call off the dogs and say no more rate hikes and stop quantitative
tightening..cause it's on "autopilot" according to them. All I want is 4% on an 18 month CD,
fat chance now.
In other words, if you have to sell those paper barrels for margin calls, and there is too
few to buy, because they are selling, also; then price goes down, because there are too many
paper barrels, and not enough buyers. Probably, the original paper sellers lose their butt,
and have to sell something to cover their margins. Everyone now is paying homage to the
margin god. Because, there was never any real money to cause the stock market to soar like an
eagle.
Which reverses itself later, because when it is time to sell new paper barrels, less are
sold, enabling the price to go up (if anyone has any money left). Everyone else is busy
ducking Guido, because the value of what they had left in their portfolio was not enough to
cover margin. Er, I think
Anyway, that's Guy's course negative 101, on the current status of oil prices.
Of course. But traditionally, crashes take from cash/growth after a period of time. Nine
months to a year, and growth in GDP precedes bull markets by the same. It's not a fritzing
law, but it's logical, and normal. Has been since I started following it in the 60's. Last
crash was different, in that the GDP growth declined before the crash, due to housing. But,
if the crash persists, my bet would be a lack of cash, eventually, to support growth. There
are huge losses, we don't see that are happening now in the derivative market, besides the
stock markets. There was something like 384 trillion just in interest rate bets in
derivatives,that half are losing right now.
This is no traditional crash. FED can stop hiking interest rates and market might pause an
consolidate before going lower but lower they go. Until FED stops allowing it's balance sheet
to shrink, down is the direction for markets. Back when QE was full blown stuff like gov.
shutdown and trade wars were the very thing that made markets go higher because it meant more
QE for longer.
There is nothing organic about the recovery of markets since 2008-2009. All assets and
markets are mispriced. Price discovery wasn't allowed to happen after 2008-2009. Truth is
true price discovery won't be allowed to happen this time either.
Fed is manufacturing a market crash so they can do the next round of QE. Fact is QE works
but you can't end it and you sure as hell can't reverse it. QE creates the illusion that
everything is fine. There is a credibility issue if you can't ever end QE though. That's
where the Fed finds itself now.
Your right. Each crash is different. This one is just a slow meltdown. And, since I have been
following it, there has never been anything organic about market growth, it's always BS.
There was nothing organic about the first big market crash in the early part of last century,
it was purely speculative. The tulip crash, before established markets was speculative.
Growth in GDP and markets are two separate animals. Although, as the previous crash proves,
GDP decline can affect the market, as well as market crashes affecting GDP.
The stock market, and now especially derivatives, are nothing other than a gigantic Las
Vegas casino. Elves in the market strive to maintain that there is a relation, but in the
end, it doesn't pan out.
Well the Dow has had its largest monthly loss ever recorded this December unless market
recovers some of that between now and the end of the year. Slow meltdown maybe not. It's
currently at about -4,200 which tops the largest monthly drop during 2008-2009 by about 1,000
points.
Just further to drop than the previous ones. Half would be about 10k more points. But, there
is nothing magical about half, it could stop well before that.
The analysis of the drop is still being speculated. The ones that make sense, so far, is that
there was a lot of market fear (tariffs, ad nauseum). Sell offs happened, snow balling into
covering margin calls. If so, that is a normal scenario, but I think the Fed raising interest
rates, and continuing to unravel QE is also a major, if not the major reason. There are a
bunch of other reasons that don't make a lot of sense. One blaming oil price. I think that is
yet to come, but not this time.
Unwinding of FED's balance sheet is also on autopilot. They don't have to have a Fed meeting
to vote on it like a rate hike. Much easier to deflect the blame elsewhere for the resulting
market decline.
-4,200 which tops the largest monthly drop during 2008-2009 by about 1,000 points.
Hey, it it's the precentage drop that counts. What was the largest monthly
percentage drop in the 2008-2009 crash? I would wager it was far greater than the percentage
drop this December.
This article is about the huge 1,175 one day drop last February, but the point still
holds.
The Dow's 4.6% loss on Monday was the worst since August 2011. But it didn't even crack
the top-20 of all-time losses. It was just the 25th worst loss since 1960.
The Dow's biggest one-day percentage loss was the 22.6% Black Monday crash on Oct. 19,
1987. In point terms, that was "only" 508 points. In second place, the Dow crashed 12.8% on
Oct. 28, 1929.
Looks like the biggest percentage drop for a month was Feb 2009, at around 21%. Eclipsing
this month. But, it had also been going down for a long time. What was this month, around
16%? But, it's just started,
So markets look down 14ish% YTD. Still 4 days to worsen that or better that.
You know, there is no law of the universe that says markets can't be down more than 10%
this year, and next year, and the next, and the next for 10 years or so. Never done that
before? So what? Never printed 25% of GDP before. Never API 40.6 WTI before. After 10 yrs,
scarce oil, scarce life.
You have that right. The world is full of surprises.
And, I do not see QE, again. Different folks in the Fed. So, banks will lose big time on
easy money, and getting more is not going to be easy like last time. Over the past two years,
I have been getting endless calls and letters wanting to loan me money. Bet that slows
down.
And, because bear markets have a tendency to stick around for a few years, oil supply may
put a blanket on improvement. So it could be possible for continued decline, rather than a
rebound. Or, one real big final decline. No end to the possibilities.
One, I really see as a possibility, is another export ban. Think about it. Gasoline prices
go up due to a shortage. We could be in a recession with stagflation. The public, and the
illiterate congress would not be able to comprehend API. We are just exporting oil, when gas
prices are high. In a way, they would be right. Think how that would affect 2.5 million bpd
pipeline expansions, and extra shipping improvements.
Or, we could elect another flawed icon for President-Elon. Who would promise a Tesla for
every family, or a free trip to Mars.
Think in terms of the big SWFs. It is they that seek action.
As for quoting indices vs their histories, this sounds like a good thing. Just be sure
that you quote an index that has the same companies in it as it did historically. The Dow
with Apple will be difficult data to find for 1960. But you can find GE in it for then.
Ever notice they don't add a company that is failing? And never remove one that is doing
well? Similarly we should only quote WTI 39.6 API price. Difficult data to find.
The artificial bull market is officially over, with the SPX officially entering bear market
today. BTFD is dead. Worst single day drop ahead of Christmas since 1918! As the first bear
market in years hits the most artificial stock market in history...
... ... ...
Trump is right, the Fed is the problem, but not for raising rates. Trump and
the MSM media are saying the Fed is making a policy mistake by raising rates as the economy
slows, and more importantly because the stock market is selling off. The current FF rate is
sitting between 2.25 and 2.5%, which historically is still low and accomodative. But Trump
should have stuck to his campaign version of the Fed, when he called out the Fed for the bubble
in stocks, and for keeping rates to low which led to what he called a "big fat ugly bubble."
After his election, he embraced the stock market, and now he owns it.
The Fed is the problem because they cut rates to Zero and held it there for 7 years. The Fed
is the problem for helping orchestrate the bailouts. The Fed is the problem because they did
multiple rounds of QE which did NOTHING for the middle class and the average Americans, instead
it made the rich richer and created the largest wealth inequality. The Fed is the problem
because they waited too long to begin raising rates, which helped create the largest asset
bubbles the world had ever seen.
And on CNBC, as the market has been selling off nonstop, they have the audacity to ask 'why
the relentless selling'?! As the market rallied 342% over the last 10 years, not once did they
ever ask why the relentless buying. Not once were they or anyone else worried about the
repercussions. They were cheerleading the entire time. Not once did anyone mention that the
Fed's reckless policies led to a dangerous rally in stocks and across multiple asset classes.
People thought the party would and could never end.
So as the market is only down -20%, today former Hollywood movie director turned Treasury
Secretary sent the markets into deeper selling as he made headlines for calling Bank CEO's and
consulting with the Plunge Protection Team (PPT) about the market conditions and liquidity. We
haven't even seen panic in the markets yet, and we are consulting bank ceo's and the PPT??? But
once again, the old conspiracy theory of the existence of the PPT became a fact.
Mnuchin confirmed their existence. Now all of a sudden we are seeing "recession fears"
headlines all over the place, but a few months ago when stocks were at records you never heard
the "r" word. Yet they love to say the stock market is not the economy. The longest artificial
bull market is officially over. Now we will see just how bad it will get. We are only down
-20%, and it is a long way down if this is only the start.
They herded folks into gambling ventures, while piling them high with alcohol (debt), just
like in Vegas. We're tempted to just give up, and let the chips fall wherever. Some folks
think recalibration comes without unpleasantness. Making America Great Again, requires
sacrifice, work, and determination but if folks would rather sacrifice their children to the
Moloch of a levitated market, perhaps we're interacting with the wrong people and ought just
quit.
It's depressing that folks claim they wanna go to heaven, but keep looking longingly at
hell...
I stayed out of this abomination of a market once I made the money back I lost in 2008.
Never again, I said to myself. The Fed herds people into stocks, houses, whatever they think
they can pump and dump. Why doesn't Trump shut them down?
If the goal of the OPEC+ cuts was to boost oil prices, then the deal is clearly failing.
OPEC+ is scrambling to figure out a way to rescue oil prices from another deep downturn. WTI is
now down into the mid-$40s and Brent into the mid-$50s, both a 15-month low. U.S. shale
continues to soar, even if shale producers themselves are now
facing financial trouble with prices so low. Oil traders are clearly skeptical that OPEC+
is either willing or capable of balancing the oil market.
OPEC+ thought they secured a strong deal in Vienna in early December, but more needs to be
done, it seems. OPEC's Secretary-General Mohammad Barkindo wrote a letter to the cartel's
members, arguing that they need to increase the cuts. Initially, the OPEC+ coalition suggested
that producers should lower output by 2.5 percent, but Barkindo said that the cuts need to be
more like 3 percent in order to reach the overall 1.2 million-barrel-per-day reduction.
More importantly, the group needs to detail how much each country should be producing. "In
the interests of openness and transparency, and to support market sentiment and confidence, it
is vital to make these production adjustments publicly available," Barkindo told members in the
letter, according to
Reuters . By specifying exactly how much each country will reduce, the thinking seems to
be, it will go a long way to assuaging market anxiety about the group's seriousness.
Still, the plunge in oil prices this month is evidence that traders are not convinced.
The view is "that the U.S. will continue to grow like gangbusters regardless of price and
overwhelm any OPEC action," Helima Croft, the chief commodities strategist at Canadian broker
RBC, told
the Wall Street Journal .
"Unless there is a real geopolitical blowup, it could take time for these cuts to really
shift sentiment."
While cuts from producers like Saudi Arabia will help take supply off of the market, OPEC
might help erase the surplus in another unintended way. Bloomberg
raises the possibility that low oil prices could increase turmoil in some OPEC member
states . The price meltdown between 2014 and 2016 led to, or at least exacerbated, outages in
Libya, Venezuela and Nigeria. The same could happen again.
Just about all OPEC members need much higher oil prices in order to balance their books.
Saudi Arabia
needs roughly $88 per barrel for its budget to breakeven. Libya needs $114. Nigeria needs
$127. Venezuela needs a whopping $216. Only Kuwait -- at $48 per barrel -- can balance its
books at prevailing prices. Brent is trading in the mid-$50s right now.
Don't ,forget John Bolton's late October visit to Azerbaijan, Georgia and Armenia where he
pragmatically refined US priorities for each country including the indication for sanction
waving in respect of South Stream energy. Bolton's tour followed on from a visit to Moscow.
DJT had a 50 minute private meeting with Erdogan at the G20 followed by a further extended
phone call on the 14th December and the final call on the 21st immediately prior to the
Policy announcement. This marks considered policy and unfortunately for the Rojave Kurds
their interest were found wanting in the balance. There will be complementary side deals
involving Iran, Assad, Putin and Netanyahu. There then remains Idlib.
https://www.dailysabah.com/...
https://www.tccb.gov.tr/en/...
https://www.tccb.gov.tr/en/...
Wow the only difference in the last one is that the FED or any central bank in the world
right now, doesn't have any ammunition left to kick start the economy back with cheap money.
Quite worrying.
Overall, oil prices will continue to "be difficult to predict," said Youngberg. "2019
will be volatile just as 2018 was."
Even so, he still offered some predictions for next year. He sees WTI prices averaging
$60 a barrel and global benchmark Brent averaging $66 in 2019. That would mark increases of
roughly 30% for WTI and 20% for Brent from Thursday's levels.
US stocks are decreasing at a slow time of year at about 2% a month. US will have minimal
growth in 2019, in all likelihood at current or even at $60 due the current low price. OPEC
plus is up to about a 1.5 million cut, so even at zero growth inventories will go away. So,
an equilibrium is assured damn, I ran out of fingers and toes,
I hope that is right.
Know it's not fair to ask with the recent price drop, but considering $46 a barrel price,
which shale play is going to contribute to a 600k barrel increase next year
By my logic, prices should be substantially higher, already. But, there is NO current
discussion which I believes touches on reality. Oil companies have to feel the same way.
Hence, my expectation of reduced capex through the first half. But, that's using logic over
future actions, which is a losing proposition. Oil prices will be volatile, and discussions
over supply/demand will be far from reality. That's a pretty good guess.
x Ignored says: 12/18/2018 at 10:56
pm So what are people going to say if the price goes low $40s, production increases and
companies post losses? And then the next year exactly the same thing happens. And the next.
Reply
Yes I don't believe chapter 11 bankruptcies stopped much production in 2016, will have to
wait and see if higher rates and a weaker junk bond market do anything
Look at the EIA field crude production page, which I assume for 2015, 2016 and 2017 is now
fairly accurate.
Production dropped more than 1.1 million BOPD from the 2015 peak.
The Permian frenzy appears to have been the primary driver of growth since, with US
production up 3 million BOPD from 9/15-9/18.
The price unfortunately needs to drop another $10 or so and stay there for awhile, as many
are hedged on a percentage of barrels in the Permian and I assume there is still quite a bit
of acreage that is not HBP.
I wound up owning FANG when it bought EGN. It is down $48 pretty quickly, and has been
considered one of the best independents in the Permian. I have heard claims they are
profitable in the $20s so I guess maybe we will find out.
The algos have been in charge of the oil market for awhile. Wouldn't surprise me if we
challenge 2016 low, if for no other reason than short to medium term oil prices near little
relation to the physical market.
When they're profitable in the 20s, they should have now tons of cash and dividends. At the
60$ WTI they should have made much more than 50% earning from total revenue, and should be
able to finance whole 2019 drilling program from cash they already earned.
Economic downturn . Perhaps the largest pricing risk, and one of the hardest to
predict, is the possibility of an economic
downturn . The global economy has already thrown up some red flags, with slowing growth in
China, contracting GDP in parts of Europe, currency crises in emerging markets and financial
volatility around the world. The tightening of interest rates looms large in many of these
problems. "Alarm bells are starting to ring. Demand growth has been a pillar of strength for
the oil market since prices fell and has exceeded 1 million b/d every year since 2012,"
WoodMac's Simon Flowers wrote. "We forecast 1.1 million b/d in 2019, but the trend is at risk."
The U.S.-China trade war could still drag down the global economy, but financial indicators are
already flashing warning signs.
Looks like a lot of bubbles bursting. Not likely to bounce back, so not much financing
available to float pure Permian players. Doesn't look good for any increase in production.
Oil prices will probably stay low with Dow for awhile. Until inventories get closer to zero.
Madness.
Interesting article from Goehring investment bank. They estimate that KSA remaining reserves
are around 50 billion bbls, instead of the 260 b claimed. They also (surprise) think that was
the reason the Aramco IPO was pulled. I also thought the Aramco IPO would never happen
because they would not be able to buy an acceptable reserve report.
Interesting, they are probably right.
I knew Aramco would pull out of the IPO. They are one of the most secretive companies. How
you going to float on the NYSE or London SE with no transparency, which is required by
law.
50 billion sounds about right in my worthless opinion. Interestingly enough that would be
more or less close to the Permian basin reserves.
I think peak oil will arrive without many people noticing until after it has occurred.
A few more thoughts about the referenced Goering report.
First, the basis or their report: "We have good data going up to 2008, however after that
point data becomes difficult to find."
Does anyone else have good data on Ghawar production through 2008. Actual Saudi production
data is hard to come by, and I would like to see a table of Ghawar production through 2008 if
it is out there.
Based on their 2008 data they have included a Hubbert Linearization which is the basis for
their claim.
Second, if their production data and linearization are correct, they have not been
adjusted for improved results from better technology. I believe the multi lateral super wells
Saleri described in his 2005 SPE paper have allowed KSA to recover several percent of
additional original oil in place, as well as to maintain high production rates longer.
Third is that it appears many of those super wells were drilled beginning in mid 2000's.
It would make sense that the change in Saudi attitudes regarding production restraint between
2014 and now could be due to those multilateral wells watering out.
Coffee. I hope if you have been investing in the Appalachian gas players that you have been
short.
The only investment class in oil and gas that may be worse over the past ten years would
be the service sector, particularly the drillers.
Interesting that, despite all the activity, the US onshore drillers are becoming penny
stocks. I have pointed out Nabors. The rest are all tanking bad it appears.
You made a big deal out of a very long lateral operated by Eclipse Resources. Eclipse
equity closed at 76 cents a share.
I am not so sure that ultra cheap oil and gas is such a great thing for the US, given we
are now the world's largest producer of both.
I never have, nor will I ever in the future, take any financial stake in these or any
other companies.
As I have stated numerous times over the years, my primary interest is in operations who
is doing what, how it is being done, who is doing it better – or claims to be.
My initial interest in this site way back when was to learn why some people seemed to
think this so called Shale Revolution was No Big Deal a retirement party, in the words of
Berman.
It was quickly apparent to me that a great deal of unawareness vis a vis industry
developments permeated this site's participants.
This, alongside several predisposing factors to NOT want the shale production to explode
upwards provided fertile grounds for the soon 12 to 16 million barrels per day US oil
production, along with 100+ Bcfd gas production to be a spectaculsrly unforseen reality.
What I prefer or not prefer is secondary to what I believe to be occurring, shallow.
If anyone cares to spend 3 minutes reading the April, 2017 USGS press release accompanying
the Haynesville/Bossier assessment, they will read the following from Walter Guidroz, Program
Coordinator of the USGS Energy Resources Program
"As the USGS revisits many of the oil and gas basins of the US, we continually find that
technological revolutions of the past few years have truly been a game changer in the amount
of resources that are now technically recoverable".
Addendum Eclipse is being shut down/folded into another entity.
The lead engineer behind their ultra long laterals is now working with the new outfit from
which this technology will continue to spread.
No offense meant coffee. I know some who post here like to tangle with you. I am not
interested in that, just straightforward discussion.
Shale has surprised the heck out of me, and has made me several times strongly consider
liquidating my entire investment in oil and gas, absent maybe keeping just a couple of KSA
like cheap (to quote PXD CEO) LOE wells to fool around with. Had I known in 2012-13 that this
was coming, would have sold all but those few "piddle around with wells." It has been
absolutely no fun when these price crashes occur, and is especially no fun knowing that this
shale miracle is less profitable than an operation producing less than one bopd per well from
very, very old and tired wells.
You have to admit that the way the shale is being developed is destroying the oil and gas
industries that are developing it.
Particularly hard hit are the service companies, many which are already bankrupt.
Even XOM, which I have owned for many, many years (prior to the merger, I owned both Exxon
and Mobil) has hit the skids, having fallen through the $70 per share barrier.
Range Resources is at $10.26, a level not seen since 2004. It traded as high as $90 before
the 2014 crash.
EQT was over $100. Today $18.55
Whiting was nearly $400 (accounting for a reverse split) and now is $21.98
CHK closed at $1.84. All time high was $64.
Nabors Industries, the largest onshore US driller closed at $2.09. Traded at split
adjusted $10 in 1978.
Halcon Resources Corp. was over $3,000 split adjusted at one time, went Ch 11 BK, now at
$1.65, looking not so good re: BK again.
We shall soon see who can access what in the way of capital to keep going assuming oil
prices stay below $50 WTI for a considerable time.
I guess I am always concerned about whether businesses make money. Seems to me that would
be of some importance to you, but it isn't, and I suppose there is no harm in that.
I have yet to work anywhere where making money was not the primary motivation.
If the money wasn't important, the shale executives would not make so much of it, I
suppose.
I have always had a hard time understanding why they kept drilling wells in Appalachia
when the gas was selling for 50 cents per mcf. Not important to you, but maybe to others.
Anyway, if we didn't have different views, places like this wouldn't be very
interesting.
Chinese refineries that used to purchase U.S. oil regularly said they had not resumed buying
due to uncertainty over the outlook for trade relations between Washington and Beijing, as well
as rising freight costs and poor profit-margins for refining in the region.
Costs for shipping U.S. crude to Asia on a supertanker are triple those for Middle eastern
oil, data on Refinitiv Eikon showed.
A senior official with a state oil refinery said his plant had stopped buying U.S. oil from
October and had not booked any cargoes for delivery in the first quarter.
"Because of the great policy uncertainty earlier on, plants have actually readjusted back to
using alternatives to U.S. oil ... they just widened our supply options," he said.
He added that his plant had shifted to replacements such as North Sea Forties crude,
Australian condensate and oil from Russia.
"Maybe teapots will take some cargoes, but the volume will be very limited," said a second
Chinese oil executive, referring to independent refiners. The sources declined to be named
because of company policy.
A sharp souring in Asian benchmark refining margins has also curbed overall demand for crude
in recent months, sources said.
Despite the impasse on U.S. crude purchases, China's crude imports could top a record 45
million tonnes (10.6 million barrels per day) in December from all regions, said Refinitiv
senior oil analyst Mark Tay.
Russia is set to remain the biggest supplier at 7 million tonnes in December, with Saudi
Arabia second at 5.7-6.7 million tonnes, he said.
19 hours ago This is an
economic/political tight rope for both countries. China is the largest auto market in the
world with numerous manufacturers located inside its borders. Apple sales will disappoint
inside China after Meng's arrest over Iran sanctions (Huawei is a world heavy weight in terms
of sales), and this has already begun inside China due to national pride. Canada has already
seen one trade agreement postponed over her detention. US firm on the main have already
issued orders to not have key employees travel to their Chinese plants unless absolutely
necessary for fear of retaliation. Brussels is actively working on a plan to bypass US
Iranian sanctions, which are deeply unpopular in Europe.
The key to this solution might be in automotive. Oil is possibly on the endangered bargaining
list. Russia is a key trading partner (for years) with China and, along with Saudi Arabia and
Iran (or even without Iran) will be able to supply their needs. Our agricultural sector,
particularly in soybeans, has been hit hard, forcing the US govt. into farm subsidies. Brazil
just recorded a record harvest in soybeans. The US could counter with lifting Meng from
arrest in return for an agricultural break, but those negotiations won't make the mainstream
news. Personally, I think her arrest was a very ill-thought move on the part of law
enforcement, as the benefits don't even begin to outweigh the massive retaliation to US firms
operating inside their borders. It is almost akin to arresting Tim Cook of Apple or Apple's
CFO. You don't kill a bug with a sledge hammer.
Iranian Foreign Minister Mohammad Javad Zarif on Saturday said US sanctions will have no
impact on the policies of the Islamic republic at home or abroad.
"It is obvious that we are facing pressure by the US sanctions. But will that lead to a
change in policy? I can assure you it won't," Zarif told the Doha Forum policy conference in
Qatar.
"If there is an art we have perfected in Iran and can teach to others for a price, it is
the art of evading sanctions," he added.
Sanctions typically fail to change regime behavior, and they are even more likely to fail if
there is no practical way for the targeted regime to get out from under sanctions short of
surrender. The more importance that a regime places on the policies that the outside government
wants to change, the greater the likelihood of failure will be. When the outside government's
goals threaten the regime's security or even its very survival, there is no question of making
a deal.
Because the Trump administration is pursuing regime change in all but name, there is no
chance that Iran will yield to U.S. pressure. The administration's demands are so ambitious and
excessive that no self-respecting state could agree to them without giving up its sovereignty
and independence. It should be clear by now that pressure and coercion inspire defiance and
intransigence. If the U.S. wants to see changes in Iranian international behavior, it would
need to provide assurances and incentives that make taking that risk worth their while. Since
this administration has made a point of reneging on commitments already made to Iran, there are
no assurances that it could make that the Iranian government could trust, and the
administration is allergic to offering any incentives to its negotiating partners for fear of
appearing "weak."
The subtitle of this effusively admiring biography of Zbigniew Brzezinski, America's Grand Strategist, does not reflect its
true purpose. A more accurate one might be this: "Just as Smart as the Other Guy." The other guy, of course, is Henry Kissinger. The
implicit purpose of Justin Vaïsse's book is to argue that in his mastery of strategic thought and practice, Brzezinski ranks as Kissinger's
equal.
Notable quotes:
"... That Brzezinski, who died last year at age 89, lived a life that deserves to be recounted and appraised is certainly the case. Born in Warsaw in 1928 to parents with ties to Polish nobility, Brzezinski had a peripatetic childhood. ..."
"... After graduating from McGill, Brzezinski set his sights on Harvard, which at the time was the very archetype of a "Cold War university." Senior faculty and young scholars on the make were volunteering to advise the national-security apparatus just then forming in Washington. For many of them, the Soviet threat appeared to eclipse all other questions and fields of inquiry. In this setting, Brzezinski flourished. Even before becoming an American citizen, he was thoroughly Americanized, imbued with the mind-set that prevailed in circles where members of the power elite mixed and mingled. Partially funded by the CIA, the Russian Research Center, Brzezinski's home at Harvard, was one of those places. ..."
"... From his time in Cambridge, he emerged committed, in his own words, to "nothing less than formulating a coherent strategy for the United States, so that we could eventually dismantle the Soviet bloc" and, not so incidentally, thereby liberate Poland. To this cause, the young Brzezinski devoted himself with single-minded energy. ..."
"... Convinced that the Soviet Union and the Soviet bloc were internally fragile, he believed that economic and cultural interaction with the West would ultimately lead to their collapse. The idea was to project strength without provoking confrontation, while patiently exerting indirect influence. ..."
"... This limited academic influence probably did not bother Zbig; he never saw himself as a mere scholar. He was a classic in-and-outer, rotating effortlessly from university campuses to political campaigns, and from government service to plummy think-tank billets. According to Vaïsse, Brzezinski never courted the media. Even so, he demonstrated a pronounced talent for getting himself in front of TV cameras, becoming a frequent guest on programs like Meet the ..."
"... Toward the end of his life, Brzezinski even had a Twitter account. His last tweet, from May 2017, both summarizes the essence of his worldview and expresses his dismay regarding the presidency of Donald Trump: "Sophisticated US leadership is the sine qua non of a stable world order. However, we lack the former while the latter is getting worse." ..."
"... Although not an ideologue, Brzezinski was a liberal Democrat of a consistently hawkish persuasion. Committed to social justice at home, he was also committed to toughness abroad. In the 1960s, he supported US intervention in Vietnam, treated the domino theory as self-evidently true, and argued that, with American credibility on the line, the United States had no alternative but to continue prosecuting the war. Even after the war ended, Vaïsse writes, Brzezinski "did not view Vietnam as a mistake." ..."
"... Yet Vietnam did nudge Brzezinski to reconsider some of his own assumptions. In the early 1970s, with an eye toward forging a new foreign policy that might take into account some of the trauma caused by Vietnam, he organized the Trilateral Commission. Apart from expending copious amounts of Rockefeller money, the organization produced little of substance. For Brzezinski, however, it proved a smashing success. It was there that he became acquainted with Jimmy Carter, a Georgia governor then contemplating a run for the presidency in 1976. ..."
"... When Carter won, he rewarded Brzezinski by appointing him national-security adviser, the job that had vaulted Kissinger to the upper ranks of global celebrity. ..."
"... Because of Brzezinski's limited influence on foreign policy after Carter, Vaïsse's case for installing him in the pantheon of master strategists therefore rests on the claim that on matters related to foreign policy, the Carter presidency was something less than a bust. Vaïsse devotes the core of his book to arguing just that. Although valiant, the effort falls well short of success. ..."
"... From the outset of his administration, Carter accorded his national-security adviser remarkable deference. Brzezinski was not co-equal with the president; yet neither was he a mere subordinate. He was, Vaïsse writes, "the architect of Carter's foreign policy," while also exercising "an exceptional degree of control" over its articulation and implementation. ..."
"... The disintegration of the Soviet bloc and eventually of the Soviet Union itself was, in his view, a nominal goal of American foreign policy, but not an immediate prospect. ..."
"... The Camp David accords did nothing to resolve the Palestinian issue that underlay much of Israeli-Arab enmity; it produced a dead-end peace that left Palestinians without a state and Israel with no end of problems. And the Brzezinski-engineered embrace of China, enhancing Chinese access to American technology and markets, accelerated that country's emergence as a peer competitor. ..."
Underlying that purpose are at least two implicit assumptions. The first is that, when it comes to statecraft, grand strategy
actually exists, not simply as an aspiration but as a discrete and identifiable element. The second is that, in his writings and
contributions to US policy, Kissinger himself qualifies as a strategic virtuoso. For all sorts of reasons, we should treat both of
these assumptions with considerable skepticism.
That Brzezinski, who died last year at age 89, lived a life that deserves to be recounted and appraised is certainly the case.
Born in Warsaw in 1928 to parents with ties to Polish nobility, Brzezinski had a peripatetic childhood. His father was a diplomat
whose family accompanied him on postings to France, Germany, and eventually to Canada. The Nazi invasion of 1939, which extinguished
Polish independence, also effectively ended his father's diplomatic career. With war engulfing nearly all of Europe, Brzezinski would
not set foot on Polish soil again for nearly two decades.
Although the young Brzezinski quickly adapted to life in Canada, the well-being of Poles and Poland remained an abiding preoccupation.
After the war, he studied economics and political science at McGill University, focusing in particular on the Soviet Union, which
by then had replaced Germany as the power that dominated the country of his birth. Brzezinski was a brilliant student with a particular
interest in international affairs, a field increasingly centered on questions related to America's role in presiding over the postwar
global order.
After graduating from McGill, Brzezinski set his sights on Harvard, which at the time was the very archetype of a "Cold War university."
Senior faculty and young scholars on the make were volunteering to advise the national-security apparatus just then forming in Washington.
For many of them, the Soviet threat appeared to eclipse all other questions and fields of inquiry. In this setting, Brzezinski flourished.
Even before becoming an American citizen, he was thoroughly Americanized, imbued with the mind-set that prevailed in circles where
members of the power elite mixed and mingled. Partially funded by the CIA, the Russian Research Center, Brzezinski's home at Harvard,
was one of those places.
From his time in Cambridge, he emerged committed, in his own words, to "nothing less than formulating a coherent strategy for
the United States, so that we could eventually dismantle the Soviet bloc" and, not so incidentally, thereby liberate Poland. To this
cause, the young Brzezinski devoted himself with single-minded energy.
A s a scholar and author of works intended for a general audience, Zbig, as he was widely known, was nothing if not prolific.
Churning out a steady stream of well-regarded books and essays, he demonstrated a particular knack for "summarizing things in a concise
and striking way."
Clarity took precedence over nuance.
And with his gift for stylish packaging -- crafting neologisms ("technetronic")
and high-sounding phrases ("Histrionics as History in Transition") -- his analyses had the appearance of novelty, even if they often
lacked real substance.
Whether writing for his fellow scholars or addressing a wider audience, Brzezinski had one big idea when it
came to Cold War strategy: He promoted the concept of "peaceful engagement" as a basis for US policy.
Convinced that the Soviet Union
and the Soviet bloc were internally fragile, he believed that economic and cultural interaction with the West would ultimately lead
to their collapse. The idea was to project strength without provoking confrontation, while patiently exerting indirect influence.
Yet little of the Brzezinski oeuvre has stood the test of time. The American canon of essential readings in international relations
and strategy, beginning with George Washington's farewell address and continuing on through works by John Quincy Adams, Alfred Thayer
Mahan, Hans Morgenthau, and a handful of others (the list is not especially long), does not include anything penned by Brzezinski.
Although Vaïsse, a senior official with the French foreign ministry, appears to have read and pondered just about every word his
subject wrote or uttered, he identifies nothing of Brzezinski's that qualifies as must-reading for today's aspiring strategist.
This limited academic influence probably did not bother Zbig; he never saw himself as a mere scholar. He was a classic in-and-outer,
rotating effortlessly from university campuses to political campaigns, and from government service to plummy think-tank billets.
According to Vaïsse, Brzezinski never courted the media. Even so, he demonstrated a pronounced talent for getting himself in front
of TV cameras, becoming a frequent guest on programs like Meet the Press . He knew how to self-promote.
Toward the end of his life, Brzezinski even had a Twitter account. His last tweet, from May 2017, both summarizes the essence
of his worldview and expresses his dismay regarding the presidency of Donald Trump: "Sophisticated US leadership is the sine qua
non of a stable world order. However, we lack the former while the latter is getting worse."
F rom the time Brzezinski left Harvard in 1960 to accept a tenured position at Columbia, he made it his mission to nurture and
facilitate that sophistication. For Zbig, New York offered a specific advantage over Cambridge: It provided a portal into elite political
circles. As it had for Kissinger, the then-still-influential Council on Foreign Relations provided a venue that enabled Brzezinski
to curry favor with the rich and powerful, and to establish his bona fides as a statesman to watch. Henry's patron was Nelson Rockefeller;
Zbig's was Nelson's brother David.
Although not an ideologue, Brzezinski was a liberal Democrat of a consistently hawkish persuasion. Committed to social justice
at home, he was also committed to toughness abroad. In the 1960s, he supported US intervention in Vietnam, treated the domino theory
as self-evidently true, and argued that, with American credibility on the line, the United States had no alternative but to continue
prosecuting the war. Even after the war ended, Vaïsse writes, Brzezinski "did not view Vietnam as a mistake."
Yet Vietnam did nudge Brzezinski to reconsider some of his own assumptions. In the early 1970s, with an eye toward forging a new
foreign policy that might take into account some of the trauma caused by Vietnam, he organized the Trilateral Commission. Apart from
expending copious amounts of Rockefeller money, the organization produced little of substance. For Brzezinski, however, it proved
a smashing success. It was there that he became acquainted with Jimmy Carter, a Georgia governor then contemplating a run for the
presidency in 1976.
Zbig and Jimmy hit it off. Soon enough, Brzezinski signed on as the candidate's principal foreign-policy adviser. When Carter
won, he rewarded Brzezinski by appointing him national-security adviser, the job that had vaulted Kissinger to the upper ranks of
global celebrity.
Zbig held this post throughout Carter's one-term presidency, from 1977 to 1981. It would be his first and last time in government.
After 1981, Brzezinski went back to writing, continued to opine, and was occasionally consulted by Carter's successors, both Democratic
and Republican. Yet despite having ascended to the rank of elder statesman, never again did Brzezinski occupy a position where he
could directly affect US policy.
Because of Brzezinski's limited influence on foreign policy after Carter, Vaïsse's case for installing him in the pantheon of
master strategists therefore rests on the claim that on matters related to foreign policy, the Carter presidency was something less
than a bust. Vaïsse devotes the core of his book to arguing just that. Although valiant, the effort falls well short of success.
From the outset of his administration, Carter accorded his national-security adviser remarkable deference. Brzezinski was not
co-equal with the president; yet neither was he a mere subordinate. He was, Vaïsse writes, "the architect of Carter's foreign policy,"
while also exercising "an exceptional degree of control" over its articulation and implementation.
In a characteristic display of self-assurance and bureaucratic shrewdness, as the new president took office, Brzezinski gave him
a 43-page briefing book prescribing basic administration policy. Under the overarching theme of "constructive global engagement,"
Brzezinski identified 10 specific goals. The first proposed to "create more active and solid cooperation with Europe and Japan,"
the 10th to "maintain a defense posture designed to dissuade the Soviet Union from committing hostile acts." In between were less-than-modest
aspirations to promote human rights, reduce the size of nuclear arsenals, curb international arms sales, end apartheid in South Africa,
normalize Sino-American relations, terminate US control of the Panama Canal, and achieve an "overall solution to the Israeli-Palestinian
problem."
While Brzezinski's agenda was as bold as it was comprehensive, it nonetheless hewed to the Soviet-centric assumptions that had
formed the basis of US policy since the end of World War II. Zbig recognized that the world had changed considerably in the ensuing
years, but he also believed that any future changes would still occur in the context of a continuing Soviet-American rivalry. His
strategic perspective, therefore, did not include the possibility that the international order might center on something other than
the binaries imposed by the Cold War. The disintegration of the Soviet bloc and eventually of the Soviet Union itself was, in his
view, a nominal goal of American foreign policy, but not an immediate prospect.
Using Brzezinski's 10 policy objectives as a basis for evaluating his performance, Vaïsse gives the national-security adviser
high marks. "Few administrations have known so many tangible successes in only four years," he writes, citing the Panama Canal Treaty,
the Israeli-Egyptian peace agreement, and improved relations with China. Yet while Panama remains an underappreciated achievement,
the other two qualify as ambiguous at best. The Camp David accords did nothing to resolve the Palestinian issue that underlay much
of Israeli-Arab enmity; it produced a dead-end peace that left Palestinians without a state and Israel with no end of problems. And
the Brzezinski-engineered embrace of China, enhancing Chinese access to American technology and markets, accelerated that country's
emergence as a peer competitor.
More troubling still was Brzezinski's failure to anticipate or to grasp the implications of the two developments that all but
doomed the Carter presidency: the 1978 Iranian Revolution and the 1979 Soviet intervention in Afghanistan. Vaïsse does his best to
cast a positive light on Brzezinski's role in these twin embarrassments. But there's no way around it: Brzezinski misread both --
with consequences that still haunt us today.
The Iranian Revolution, which Brzezinski sought to forestall by instigating a military coup in Tehran, offered a warning against
imagining that Washington could shape events in the Islamic world. Brzezinski missed that warning entirely, although he would by
no means be the last US official to do so. As for the Kremlin's plunge into Afghanistan, widely interpreted as evidence of the Soviet
Union's naked aggression, it actually testified to the weakness and fragility of the Soviet empire, already in an advanced state
of decay. Again, Brzezinski -- along with many other observers -- misread the issue. When clarity of vision was most needed, he failed
to provide it.
Together, these two developments ought to have induced a wily strategist to reassess the premises of US policy. Instead, they
resulted in decisions to deepen -- and to overtly militarize -- US involvement in and around the Persian Gulf. While this commitment
is commonly referred to as the Carter Doctrine, Vaïsse insists that it "was really a Brzezinski doctrine."
Regardless of who gets the credit, the militarization of US policy across what Brzezinski termed an "arc of crisis" encompassing
much of the Islamic world laid the basis for a series of wars and upheavals that continue to this day. If, as national-security adviser,
Brzezinski wielded as much influence as Vaïsse contends, then this too forms part of his legacy. When it mattered most, the master
strategist failed to understand the implications of the crisis that occurred on his watch.
The most glaring problem anyone faces in trying to assert Brzezinski's mastery of world affairs, however, rests not in Iran or
Afghanistan, but in how the Cold War came to an end. Indeed, Brzezinski viewed it as essentially endless. As late as 1987, just two
years before the fall of the Berlin Wall, he was still insisting that "the American-Soviet conflict is an historical rivalry that
will endure for as long as we live."
B rzezinski was certainly smart, flexible, and pragmatic, but he was also a prisoner of the Cold War paradigm. So too were virtually
all other members of the foreign-policy establishment of his day. Indeed, subscribing to that paradigm was a prerequisite of membership.
Yet this adherence amounted to donning a pair of strategic blinders: It meant seeing only those things that it was convenient to
see.
Which brings us back to Zbig's last tweet, with its paean to American leadership as the sine qua non of global stability. The
tweet neatly captures the mind-set that the foreign-policy establishment has embraced with something like unanimity since the Cold
War surprised that establishment by coming to an end. This mind-set gets expressed in myriad ways in a thousand speeches and op-eds:
The United States must lead. There is no alternative; history itself summons the country to do so. Should it fail in that responsibility,
darkness will cover the earth.
This is why Trump so infuriates the foreign-policy elite: He appears oblivious to the providential call that others in Washington
take to be self-evident. Yet adhering to this post–Cold War paradigm is also the equivalent of donning blinders. Whatever the issue
-- especially when the issue is ourselves -- it means seeing only those things that we find it convenient to see.
The post–Cold War paradigm of American moral and political hegemony prevents us from appreciating the way that the world is actually
changing -- rapidly, radically, and right before our very eyes. Today, with the planet continuing to heat up, the nexus of global
geopolitics shifting eastward, and Americans pondering security threats for which our pricey and far-flung military establishment
is all but useless, the art of strategy as practiced by members of Brzezinski's generation has become irrelevant. So too has Zbig
himself.
As big declines in legacy production are a characteristic of shale oil, then there will come a time when production from new
wells cannot keep up with the decline from the legacy wells. It can happen in 2019 or 2020.
My suspicion is that the economics are not that good and most wells are not profitable from November 2018 or so. So there is
something fishy that the shale oil industry ploughs on and continues to set new highs month after month.
Notable quotes:
"... We won't have much, or any growth in the first half of 2019, no matter what the hype is, unless prices spike. ..."
EF does not have pipeline problems, but it is not going to grow at $55 or less oil price. If
prices rise to $80, yes. But, the price will need to be consistent for a good long while.
GOM
has hit its high back in August according to SLa and George.
We won't have much, or any growth
in the first half of 2019, no matter what the hype is, unless prices spike.
Yeah, seems highly unlikely at best that Eagle Ford will ever regain its high. Even the EIA
forecast – notorious blue sky that it is – only gets it back to 1.5 million bpd.
And that on a theory of producers shifting from Permian due to logistical constraints in the
latter.
It's a mature area, only so many decent spots to drill.
"Note that an oil price scenario between the AEO 2018 low oil price case and reference oil
price case (average of the two scenarios) would mean that at current well cost, the Permian Basin
would never become profitable. This is what Mike Shellman has been saying all along."
Notable quotes:
"... We basically lost $20 a barrel in the blink of an eye. In our case, that is over $100K per month of income loss. This after 2015-17, where the price was less than half what it had been 2011-14. ..."
"... Imagine what would happen if the boss walked into the tech campus of a firm in Silicon Valley and said everyone was taking a $12,000 per month pay cut immediately. Would be a lot of knashing of teeth. ..."
"... Now imagine the pay cut was pretty much in conjunction with an erratic President, supported almost 100% by the industry, ironically, who erroneously thinks .30 a gallon lower gasoline prices will be a boon to the US economy. ..."
I think the frustration of a small business oil producer should be obvious.
My family and I have pretty much decided producing oil in the US is not a real business
anymore. How can one have a real business when there are so many fixed costs, that do not
change much, with the price of the product sold moving up and down like a yo-yo? Add to that
at least 50% of the voting public thinking what you are doing is evil. It is now much more
preferred that one grow harvest and sell cannabis so people can get high, rather than produce
oil for gasoline, diesel, plastics and the numerous other daily used consumer products.
You have done a lot of construction work, so I am sure you know the feeling when there is
a recession and work drops way off. At least you might get some sympathy in that situation.
Farmers get a government payment. Oil people get laughed at.
We basically lost $20 a barrel in the blink of an eye. In our case, that is over $100K per
month of income loss. This after 2015-17, where the price was less than half what it had been
2011-14.
Take the family out here that is living on 20 BOPD, doing all the work themselves. Selling
600 BO per month. That family just saw a $12,000 hit to the top line. The expenses didn't
change except for fuel, which has fallen some. Probably less than $1,000 per month savings
there.
Imagine what would happen if the boss walked into the tech campus of a firm in Silicon
Valley and said everyone was taking a $12,000 per month pay cut immediately. Would be a lot
of knashing of teeth.
Now imagine the pay cut was pretty much in conjunction with an erratic President,
supported almost 100% by the industry, ironically, who erroneously thinks .30 a gallon lower
gasoline prices will be a boon to the US economy. With the alternative being a party openly
hostile to the industry, who cannot differentiate between small business owners with small
footprints and corporate titans who make no money on the product, but make billions off the
corporate largess. We are all terrible polluters who need to get hit with a carbon tax and
made to jump through environmental testing hoops despite we are emitting less than the tiny
amounts of methane we were emitting 30 years ago.
Shallow. Thanks for explaining how it looks from where you stand.
As much as I hate to think this way, it raises the idea that the government should have a
price stability mechanism in place that shields producers from the volatility of the
dysfunctional market. Maybe gets updated every 6 months depending on market conditions or
something like that. I'm sure everyone would hate it.
Maybe the government should even have a longrange an energy policy. Like a ten yr plan. I
know crazy thinking.
Regarding my small oil business rant above. Small business is a tough place, not just in
the oil industry, but all over.
I think of the grocery store owners. Those guys had a pretty good thing going in small
towns 30 years ago. Now they are gone if there is a Walmart nearby.
Same with department stores. The mall in a mid sized town nearby is halfway a ghost town
now.
Capitalism can be brutal. But it doesn't seem that another way has proven to be a better
idea either. We tend to take freedom for granted in the USA. We are very lucky we have the
freedom we do have.
I don't know that price controls are a good idea. I don't know what the answer is to
market volatility. We benefitted from getting into oil when no one wanted to touch it, and
really did well from 2005–14. Since then, not so good, but maybe our time will come
once more.
Overall, shouldn't complain. Just trying to give a unique perspective. Also trying to
let everyone know that there are a lot of hardworking small business owners in upstream oil
and they aren't the terrible people some make them out to be.
Everything in the media these days is very urban centered and also very East Coast
dominant. So different perspectives from different regions is always good, I think.
!! Runners-up for Quote of the Year !!
from above:
"Shale oil is a by-product of easy monetary policies which are being withdrawn."
in a way kinda https://www.zerohedge.com/news/2018-12-11/real-implications-new-permian-estimates
"Now, I know FOR A FACT that American energy dominance is within our grasp"
and it keeps getting more better
"Reilly stressed, "Knowing where these resources are located and how much exists is crucial
to ensuring both our energy independence and energy dominance.""
Pretty Powerful results for just a by-product!
Was it JH Kunstler that pointed out that "energy dominance" is kinda kinky?
Shallow Sand
Neo Capitalism or Creditism might be better terms to describe our current monetary and
economic system. When central banks can issue Credit and lend it to their pets by the
billions and when those corporations go under they just issue more Credit to the
corporations that take their place. This is not Capitalism where companies and individuals
produce something valuable and return a profit that they can then reinvest as Capital.
This current economic system is destroying the sources of wealth and valuables. It
encourages burning down the house to stay warm. I used to dream of being a big farmer but
more and more I feel lucky when I see the stress and fear that so many of the bigger
farmers are dealing with.
I appreciate your great contribution to this site. I've learned so much from your
comments. They've increased my confidence that this shale business would not be here if it
were not for the biggest ponzi scheme to date. And that the peak of Oil production per
Capita that was reached in 1979 will never again be topped in my lifetime even with all
this fraud on its side.
Currently, legacy decline is just above 500,000 barrels per month. This means that if
production is to be increased by 100,000 barrels per month then new wells must produce
600,000 barrels per month of new oil.
If US new oil production is indeed increasing by 600,000 barrels/day per month, this is
a mind-blowing number -- 7.2 million barrels/day per year. Has new oil production ever
increased by this much anywhere else in the World?
Besides that, Saudi Arabia requires the organization to maintain a high level of oil
production due to pressure coming from
Washington to achieve a very low cost per barrel of oil. The US energy strategy targets
Iranian and Russian revenue from oil exports, but it also aims to give the US a speedy economic
boost. Trump often talks about the price of oil falling as his personal victory. The US
imports
about 10 million barrels of oil a day, which is why Trump wrongly believes that a decrease in
the cost per barrel could favor a boost to the US economy. The economic reality shows a strong
correlation
between the price of oil and the financial growth of a country, with low prices of crude oil
often synonymous of a slowing down in the economy.
It must be remembered that to keep oil prices high, OPEC countries are required to maintain
a high rate of production, doubling the damage to themselves. Firstly, they take less income
than expected and, secondly, they deplete their oil reserves to favor the strategy imposed by
Saudi Arabia on OPEC to please the White House. It is clearly a strategy that for a country
like Qatar (and perhaps Venezuela and Iran in the near future) makes little sense, given the
diplomatic and commercial rupture with Riyadh stemming from
tensions between the Gulf countries.
In contrast, the OPEC+ organization, which also includes other countries like the Russian
Federation, Mexico and Kazakhstan, seems to now to determine oil and its cost per barrel. At
the moment, OPEC and Russia have agreed to cut production by 1.2 million barrels per day,
contradicting Trump's desire for high oil output.
With this last choice Qatar sends a clear signal to the region and to traditional allies,
moving to the side of OPEC+ and bringing its interests closer in line with those of the Russian
Federation and its all-encompassing oil and gas strategy, two sectors in which Qatar and Russia
dominate market share.
In addition, Russia and Qatar's global strategy also brings together and includes partners
like Turkey (a future
energy hub connecting east and west as well as north and south) and Venezuela. In this
sense, the meeting between
Maduro and Erdogan seems to be a prelude to further reorganization of OPEC and its members.
It's crazy to think of all of the natural gas burned off by the world's oil producers. I
think of those oil platforms that have a huge burning flame on top. This is the kind of ****
that reminds us that the people who control the world care not for the people who live here.
Can't make a buck from it? ******* burn it.
Consider though that those oil producers are only in it for the money; it's not an
avocation with them. I imagine if there was a way to salvage the natural gas, it would be
done. Mo Muny would dictate it.
This could be the beggining of a level 5 popcorn event. It started a year or two ago and
when I saw it everybody laughed. Well look at it now. Saudi wants to defect. They have had
nothing but problems with the House of Sodomy for quite some time now.
If this leads to war in the Persian Gulf Edgar Cayce called it. The empire will burn that
place down before losing it. They may fail but something is going to go down.
Are the Sauds still full heartedly pushing the Zionist mission in Yemen?
As an Iranian-American I have been waiting for something big to happen with Iran. I am
really tired of waiting. I hope that Iran will grow some balls and fight the coalition. I
know that there are 80 million lives in danger, including my mom going back to Iran for a
short term. But this has been like a long torture and unending nightmare.
There is no multipolarity yet, but a bipolar hype of the world dominance run by US and its
vassals. An awakening will be harsh, when these realize their emperor goes naked.
"... Trump won't fire his son-in-law, so if Jared doesn't have the decency to resign on his own, he may well be responsible for Trump's downfall in addition to his own. Trump's silly daughter, Ivanka, needs to go to. ..."
"... Time for Bolton to send for the clairvoyant Theresa May who has managed to accuse Russia, and Mr. Putin personally, in the Skripals' poisoning n the absence of any evidence ..."
Comment section (David Wooten): "According to the crown prince himself, Trump's [Jewish]
son-in-law gave him a secret list of his enemies -- the ones like Al Aweed who were
tortured and shaken down for cash. Khashoggi might even have been on that list.
One or more of the tortured ones likely tipped off Erdogan, which is why Turkey only
needed to enter the consulate, retrieve the recorded audio device they planted, and walk out
with the evidence. Turkey also has evidence that puts MbS' personal doctor and other staff
arriving in Turkey at convenient times to do the job -- and probably more. Khashoggi was
anything but a nice person but Trump cannot say that or he'll likely be accused of
involvement in his murder.
Dissociation is made far more difficult by the fact that Jared is a long time friend of
Netanyahu who, like Jared, hasbefriended MbS .
Trump won't fire his son-in-law, so if Jared doesn't have the decency to resign on his
own, he may well be responsible for Trump's downfall in addition to his own. Trump's silly
daughter, Ivanka, needs to go to.
Were it not for the Khashoggi affair, fewer Republican seats would have been lost in the
election."
-- Time for Bolton to send for the clairvoyant Theresa May who has managed to accuse
Russia, and Mr. Putin personally, in the Skripals' poisoning n the absence of any
evidence .
These people -- Bolton, May, Gavin Williamson and likes -- are a cross of the ever-eager
whores and petty brainless thieves. To expose themselves as the willing participants in the
ZUSA-conducted farce requires a complete lack of integrity.
Of course, there is no way to indict the journalist's murderers since the principal
murderer is a personal friend of Netanyahu and Jared.
Jump, Justice, jump, as high as ordered by the "chosen."
By the way, why do we hear nothing about Seth Rich who was murdered in the most surveilled
city of the US?
@annamaria A 1st
grader can see that MbS was behind the murder of Kashoggi.
Trump won't fire his son-in-law, so if Jared doesn't have the decency to resign on his
own, he may well be responsible for Trump's downfall in addition to his own. Trump's silly
daughter, Ivanka, needs to go to.
I've been hoping for this since they moved to Washington with 'big daddy'.
@Anon " crappy
bedtime reading the woolyheadedness "
Hey, Anon[436], is this how your parents have been treating you? My condolences.
If you feel that you succeeded with your "see, a squirrel" tactics of taking attention
from the zionists' dirty and amoral attempts at coverup of the murder of the journalists
Khashoggi, which was accomplished on the orders of the clown prince (the dear friend of Bibi
& Jared), you are for a disappointment.
One more time for you, Anon[436]: the firm evidence of MbS involvement in the murder of
Khashoggi contrasts with no evidence of the alleged poisoning of Skripals by
Russian government.
The zionists have been showing an amazing tolerance towards the clown prince the murderer
because zionists need the clown prince for the implementation of Oded Yinon Plan for Eretz
Israel.
The stinky Skripals' affair involves harsh economic actions imposed on the RF in the
absence of any evidence , as compared to no sanctions in response to the actual murder
of Khashoggi, which involved MbS according to the availableevidence . Thanks
to the zionists friendship with the clown prince, the firm evidence of Khashoggi murder is of
no importance. What else could be expected from the "most moral" Bibi & Kushner and the
treasonous Bolton.
The stinky Skripals' affair involves harsh economic actions imposed on the RF in the
absence of any evidence, as compared to no sanctions in response to the actual murder of
Khashoggi, which involved MbS according to the available evidence. Thanks to the zionists
friendship with the clown prince, the firm evidence of Khashoggi murder is of no
importance. What else could be expected from the "most moral" Bibi & Kushner and the
treasonous Bolton.
"... Great article, thanks. Author says US LTO will be done by 2040, which makes sense. The speed and acceleration of sinking oil production is critical since we have not been strongly pursuing alternatives. If the production is down 50 percent by 2030 to 2035 it's going to be a tough go. If it falls faster then we are in severe trouble. ..."
"... The uncertainties he notes are shocking. That we have spent the last ten years pissing away our remaining "pennies" on a driving spree, instead of using it to build a renewable future, really makes me think that the backside of the peak is going to be awful. ..."
"... As a working petroleum geologist in the Delaware Basin and others, I will say USGS and EIA assessments are considered a joke. They do little to take into account the actual geology, or changes in the thermal maturity of the rock across a basin, it is more multiply an average well performance for a certain amount of acres drilled, times the total area of the basin, minus the number of drilled wells. ..."
"... I would not doubt oil production peaks in the mid-2020s as people drill up the best rock, and have to keep shifting to less productive horizons. ..."
"... So the oil cut is out: 1.2 mb. Together with russia and others. So LTO is saved, the frenzy can go on soon. ..."
Great article, thanks. Author says US LTO will be done by 2040, which makes sense. The
speed and acceleration of sinking oil production is critical since we have not been strongly
pursuing alternatives. If the production is down 50 percent by 2030 to 2035 it's going to be
a tough go. If it falls faster then we are in severe trouble.
Jean Laherrere knows a lot, but on LTO I think he may be wrong.
From the piece linked above: The best approach for forecasting future production is the extrapolation of past
production (called Hubbert linearization). For Eagle Ford the trend can be extrapolated
toward an ultimate quantity of 3 Gb.
The USGS estimates about a 12.5 Gb mean for the TRR of the Eagle Ford, when economics is
considered the URR might be reduced to 10Gb under a reasonable oil price scenario (AEO 2018
reference oil price scenario).
Recent USGS estimates for the Permian Delaware Basin have lead to a revision of my US
tight oil estimate to a mean of 74 Gb with peak probably in 2025 to 2030. Decline will be
relatively steep from 2030 to 2040, if the USGS estimates for the US tight oil resource prove
correct.
This is a terrific article. It takes all the confusions around oil and articulates them
beautifully. His review really makes me want to buy the book.
This is a delight to me because while I've always liked Laherrere's charts, I find his
English writing atrocious (not all his fault as a native speaker of French). This could
alienate lay readers, which is too bad because his message really needs to get out there.
The uncertainties he notes are shocking. That we have spent the last ten years pissing
away our remaining "pennies" on a driving spree, instead of using it to build a renewable
future, really makes me think that the backside of the peak is going to be awful.
Laherrere's knowledge is magisterial. Good on the editor who worked with him on this.
Indeed the amount of work that Jean is producing is truly quite amazing.
By the way what about Kjell Aleklett ?
According to his blog he didn't publish anything since 2017, the case ?
The "issue" with Jean is that he also is a climato skeptic (regarding CO2 effects) and this
has been detrimental to his ressource studies.
But one exercice in comparing the urgencies (taking the IPCC models just as they are), and
feeding them with the resource aspects of Laherrere, clearly shows that peak oil or even peak
fossile is the most urgent matter (knowing that anyway the mitigation measures, dimishing
fossile fuels burning, are usually the same, except stuff like CSS, that will most probably
never happen anyway).
Overall the terrible deficit of the "resource message" compared to the climate/CO2 one,
could be seen as a key reason for no measures being taken for the two aspects
Laherrere also suggests a 3 Gb URR for Eagle Ford where the USGS TRR mean estimate is
about 12.5 Gb and when economic assumptions are applied the ERR is probably about 10 Gb.
You are much more familiar with the Eagle Ford, at $80/b (2017$) does a 3 Gb URR estimate
seem correct?
Thanks. Does 10 Gb seem reasonable or is that too high? Average of USGS mean and
Laherrere's estimate would be about 6.5 Gb, again you know the area so your estimates would
probably be better than most.
It's pretty difficult to measure with strictly an $80 price. Some depends on gas price. There
are three windows in the EF. Oil, gas/condensate, and mostly gas. Gas has barely been
touched, and is the biggest window. Geologically older. It still will produce some oil and
condensate. If any, it will be mostly condensate. But it is still production as yet mostly
untouched. Gas/condensate has been drilled, and is responsible for the higher api coming out
of the EF, but in the past few years, less has been drilled due to the api. Oil window is
being drilled, but there is still plenty of tier two and three areas to go. Not so much tier
one. How do you measure that, and at what oil and gas price. I would say 12 is possible, but
it includes a lot of condensate and gas.
You could look at the USGS assessment of the Delaware in the same light. It may be there,
but is it cost productive? You may only get gas and/or condensate, depending on geological
age of the formation. Or, you may have to keep chasing after anything, as it moves quickly as
wells are drilled.
Thanks for the correction. Yes Gas prices would also be needed. The 10 Gb was C+C and yes
there is probably lots of condensate. I guess I would make it $4/ MCF for NG, you would
probably need condensate and NGL prices to do a full analysis, way too many moving parts for
me.
Got that right. Here's my cracker jacks geology assessment in the Permian. midland and
Delaware basins are slightly different, but the both have a wolfcamp as the lower level. It's
primarily a shale from my view of core samples. From the Bone Springs to the bottom wolfcamp,
there is no clear formation that acts as a container, Bone Springs looks like it is closer to
a sandstone, but closely formed from my view of the core samples. Not conducive to water
flooding due to lack of "walls". But, because of the lack of walls, the oil/condensate/gas
travels when wells are drilled. Indications are that EF has the same problems, but not as
fast? Very simplistic, and possibly wrong viewpoint.
And there is a fairly wide variety of prices depending on what comes out. I'm still trying
to figure out my pay Stubbs.
LARGEST CONTINUOUS OIL AND GAS RESOURCE POTENTIAL EVER
Today, the U.S. Department of the Interior announced the Wolfcamp Shale and overlying Bone
Spring Formation in the Delaware Basin portion of Texas and New Mexico's Permian Basin
province contain an estimated mean of 46.3 billion barrels of oil, 281 trillion cubic feet of
natural gas, and 20 billion barrels of natural gas liquids, according to an assessment by the
U.S. Geological Survey (USGS). This estimate is for continuous (unconventional) oil, and
consists of undiscovered, technically recoverable resources.
The Easter Bunny, Santa Clause, Tooth Fairy, but no Trolls? Conventional? They are out of
their Fxxng minds. Dept of the Interior is sharing the same hospital suite with the EIA. Both
digging for that phantom oil.
Somebody ought to tell the oil companies to quit using all this fracking stuff. All they
need to do is drill straight down. Sheesh!
I'm not a geologist, but your original projections peaking in 2025 appear reasonable to me.
Slow peak, not a huge peak like some. To add to that, JG Tulsa (below post), who is a working
geologist in the area, agrees with a mid 2020's peak. I'm not stupid enough to argue with
experts
You are clearly smarter than me. I do tend to listen when geologists and geophysicists try to educate me.
Here is a preliminary estimate for US LTO assuming USGS mean estimates are correct, the
Permian is up to date, but the older Bakken, EF, Niobrara, and US other LTO scenarios need to
be revised to reflect the AEO reference oil price scenario. Peak about 9 Mb/d in 2025, also
shown is an older estimate from June 2018 (before the recent Delaware Basin Wolfcamp and
Bonespring assessment from the USGS.)
This 46 billion barrels oil – along with 20 billion barrels NGLs and 281 Tcf gas
– is for the Delaware Basin Wolfcamp and Bone Spring only.
Combined with the earlier Midland Basin assessments of the Wolfcamp and Spraberry of 24
billion barrels combined, the total so far Technically Recoverable Resource is over 70
billion barrels oil.
Just as the Haynesville jumped from 39 Tcf to over 300 Tcf as the Haynesville/Bossier, the
Mancos from 1.6 to 66 Tcf, the Barnett from 26 to 52 Tcf, the Bakken/TF will jump next
assessment and both the Utica and Marcellus will skyrocket.
I know less about Marcellus, but Bakken/Three Forks was recently assessed in 2013, the new
assessment may be an increase, but I won't speculate in advance what it will be.
The 46 Gb mean undiscovered TRR for the Wolfcamp (Delaware Basin) and Bonespring is a
surprise to me, based on this the Permian tight oil TRR would be about 74 Gb, before this
assessment I had guessed 8 Gb for Delaware Wolfcamp based on output compared to Midland
Wolfcamp (it was about 30% of Midland so I took the 20 Gb Midland Wolfcamp times 0.3 and
rounded to 8 Gb). My previous mean estimate for Permian tight oil TRR was 38 Gb, so I was too
low by more than a factor of 2. My F5 (5% probability TRR might be higher) estimate was 54 Gb
before and the F95 estimate was 20 Gb, these are revised to F95=43 Gb and F5=113 Gb.
For the entire US I had a previous TRR estimate of 70 Gb for all of the US, this is
revised to 107 Gb for the mean US tight oil TRR.
An interesting development that might push the US peak in tight oil a little later and/or
a little higher. My F5 model had the Permian peak at about 7.5 Mb/d in 2027, a new model
might result in 2029 at 9.5 Mb/d, for the US as a whole, other tight oil plays might be
declining by 2029, so the overall US peak might be 2027 or 2028, based on current
information.
The formal report. The references are . . . a bit odd. There is a sense the whole thing is
dependent on technology results assessment from IHS.
Meaning, I don't see anything here that suggests USGS sent teams out to look at rock for
this whole area. They seem to have taken info from other IHS papers -- and the recent ones
from USGS were for what looks like much more limited geographic areas. Looks like IHS
encouraged extrapolation.
Btw someone at Bloomberg has declared this is a X2 on previous estimates. That would suggest
46 billion barrels of oil we're not just added to the US resource database. It would be more
like 23.
The Bloomberg guy didn't seem all that sharp, and so let's not take that as gospel.
Probably worth noting that it would not take much variance to move this resource into an
API 45+ or even 50+ configuration, and given the NAT gas and NGL estimates, that would seem a
pretty credible scenario. In which case it's not oil.
The Monterrey estimate was a study done for the EIA which was poorly done (it was not a USGS
estimate), the USGS estimates tend to be pretty good and have tended to be on the
conservative side, though we won't know for sure until all the oil is produced and the last
well is shut in. Every resource estimate involves extrapolation and/or modelling of future
well output by definition.
Some estimates are better than others, for example the USGS estimates are better than the
EIA estimates in most cases.
Previously I has guessed (incorrectly) that Permian mean TRR would be 38 Gb, this new
assessment would lead to a revision to about 74 Gb for mean TRR of the Permian Basin tight
oil resource.
In the scenario below I have a 253,000 well scenario (about 6 times more than my ND
Bakken/Three Forks mean scenario with 42,000 wells completed.) I assume new well EUR starts
to decrease in Jan 2023(about 3 years after my estimate of the future ND Bakken EUR decrease
start as Permian ramp up started about 3 years after Bakken). This assumption is easily
modified.
Peak is about 2028 with peak output at about 7000 kb/d (currently Permian tight oil output
is about 2750 kb/d based on EIA tight oil production estimates by play).
The scenario above does not consider economics. When we consider the discounted net revenue
over the life of the well and assume this must equal the real well cost in order for the well
to be completed using the assumptions below, then we find an economically recoverable
resource (ERR) scenario.
Economic assumptions (all costs in constant 2017$) are:
real oil prices in 2017$ follow the EIA AEO 2018 Reference Brent Oil Price scenario
royalties and taxes are 32% of wellhead revenue
transport cost is $4/b
OPEX is $2.3/b plus $15000 per month per well
real annual discount rate is 7% (nominal rate is 10% at 3% annual inflation rate)
real well cost=9.5 million 2017US$
Peak output is unchanged but wells completed are reduced to 173,000 and ERR=60 Gb.
The indications from drilling companies, so far, operating in the Delaware do not seem to
jive with the assessment of grandiosity. So, I am more than skeptical. The government can
create all the reserves they want, but if the oil companies can't get it out of the ground??
My understanding is that there is a core area in West Texas and NM. EOG is there. Extends a
few Counties in West Texas and NM starting around Loving County. Even there, it is high api.
Outside of that, it is highly sporadic. If you extrapolate what they are doing in tiny Loving
County to the rest of the Delaware, you can come up with these numbers. But, you can't. As I
read, there are over 800 Ducs outside of this area. You leave them as Ducs, because you
pretty much know what the completion will look like after drilling. Basically, the report is
hogwash. It's pretty easy to tell on the Texas side, as you can pull up completions by
county.
It may require higher oil prices and the associated gas is a problem, not enough
infrastructure to move it.
Also the USGS simply does a resource assessment, these are not reserves, no economic
assessment was done, the USGS leaves that to others.
I have often been skeptical of USGS Assessments (such as Bakken Assessment in 2013),
looking at proved reserves and cumulative production to data in the ND Bakken/Three Forks,
the 11 Gb mean TRR estimate from 2013 looks pretty good.
As a working petroleum geologist in the Delaware Basin and others, I will say USGS and EIA
assessments are considered a joke. They do little to take into account the actual geology, or
changes in the thermal maturity of the rock across a basin, it is more multiply an average
well performance for a certain amount of acres drilled, times the total area of the basin,
minus the number of drilled wells.
Everything is more complex than that. Right now operators
are drilling the best, most economic parts of the Delaware basin, at the going rate it will
not be too many years before they have to shift over to other benches of the Wolfcamp or Bone
Spring, which will be less productive. for deeper Wolfcamp benches you get more condensate,
less oil, much more gas, you might go from a 10,000′ lateral making 1-2 MMBO in the
Wolfcamp A, down to one making 300-500 MBO.
Still a decent well when you add in the gas, but
if you take that across a large area that will lead to a substantial decline in new well
performance. I would not doubt oil production peaks in the mid-2020s as people drill up the
best rock, and have to keep shifting to less productive horizons.
Can you give us your estimate of the TRR or ERR of the Delaware Wolfcamp and Bonespring.
There is a wide range in the USGS TRR estimate from 27 to 71 Gb with a mean of 46 Gb and a
median of 45 Gb. Would you say that 27 Gb is too high? It seems clear you think that 46 Gb is
far too optimistic. Note that the mean ERR would probably be around 38 Gb if the mean TRR
estimate was correct and prices follow the AEO 2018 reference price scenario. For the F95
USGS TRR estimate the ERR would be around 21 Gb.
Maybe you could also comment on other USGS assessments for Eagle Ford, Wolfcamp Midland
basin and Spraberry. Perhaps you could give us the "correct assessment".
I agree the EIA assessments are not good, economists do not know much about geophysics.
The people at the USGS are scientists, though they have limited information and thus use
statistical analysis to fill the data gaps.
Come on, Dennis. He may be a geologist, but my bet he is mortal, like you and I.
I really believe your first graph with 8 million as the high is the best I have seen. The
tail of that is probably not ever to be properly guessed, until it happens.
Dood, one of the most frequent points we deal with on this blog is the claim that technology
in horizontal fracking has multiplied output tremendously -- excluding from consideration
stage count/length.
The extra production "per well" seems to be from the well being longer in length and thus
consuming more water and proppant. Is this true, or is there some magical improvement in
proppant type or fracking pressure or whatever?
It's mostly the length of the lateral, although some is due to increased fracking stages
within the lateral (more holes in the pipe). Better drilling is another, although extra
lateral makes up most of it. The laterals, in general, are about twice as long.
Hanh? And this paragraph strikes this lay reader as utterly incoherent:
The U.S. sold overseas last week a net 211,000 barrels a day of crude and refined
products such as gasoline and diesel, compared to net imports of about 3 million barrels a
day on average so far in 2018, and an annual peak of more than 12 million barrels a day in
2005, according to the U.S. Energy Information Administration.
From EIA: "In 2017, the United States consumed about 19.96 million barrels per day." Let's
call it 20.
Also from EIA: US weekly field production ending 11/30: 11.7 million barrels.
20-11.7=8.3????
True? Fudging? Lying? What am I missing?
Then, you read further into the article:
While the net balance shows the U.S. is selling more petroleum than buying, American
refiners continue to buy millions of barrels each day of overseas crude and fuel. The U.S.
imports more than 7 million barrels a day of crude from all over the globe to help feed its
refineries, which consume more than 17 million barrels each day.
The US refines a lot of imported oil -- for export. There is refinery gain in this. This
means a barrel comes in. It is refined to various constituent parts like gasoline, diesel,
kerosene, etc. The VOLUME of these parts are liquids of less density and this means their
volume is greater. So a barrel of crude will yield a sum total of more than 1 barrel of
liquids of lower density. Since these products are exported, the barrel count is in favor of
exports vs the barrel count imported.
This is not a huge effect, but it's significant.
There's an EIA page for US sales volume consumed. If you add up all the products you get
well over 15 million bpd. US production is rather less than that. Imports must exceed
exports.
Thanks for trying to explain it to me. Maybe it's just too complicated for me to understand.
I still can't reconcile the headline, "US becomes a net oil exporter" with the EIA's
numbers: The US consumes 20 million barrels a day. The US produces 12 million barrels a day.
But, yes, they're net exporters. Whatever.
After 14 years, the niceties of peak oil still escape me.
I am not sure I follow you entirely, but for heavier crude oils there is waste to get to
diesel (a bit higher than 30 API). And for extra light oil there is a huge waste to get to
diesel, as much has to be segregated to petroleum gas and gasoline components due to length
of carbon chain.
The case for diesel shortage in 2020 due to shipping legislation is still very much
legit.
I was talking about imported crude (that would not be LTO and probably diesel rich) being
refined into a larger number of barrels of product vs the barrels of input crude. They
export. It's a bias towards export.
I think mostly the report derives from very noisy weekly data. The US is not a net
exporter.
Donald Trump could hardly have chosen a more treacherous economic moment to tear up the
"decaying and rotten deal" with Iran. The world crude market is already tightening very fast. He
estimates that sanctions will cut Iran's exports by up to 500,000 barrels this year. "It could
well be twice more cut in 2019
North America has run into an infrastructure crunch. There are not yet enough pipelines to
keep pace with shale oil output from the Permian Basin of west Texas, and it is much the same
story in the Alberta tar sands. The prospect of losing several hundred thousand barrels a day of
Iranian oil exports would not have mattered much a year ago. It certainly matters now.
Notable quotes:
"... The peak oil theme is very much forgotten in all the turmoil, but is very real still. ..."
"... How much more reserves to classify as probable (2p) is a movable target, it depends on the oil price. ..."
"... I agree that 2019 will show big declines in OECD inventory primarily because core OPEC wants it. (increasing KSA premiums to the US +3,5 dollars in Jan and lowering it to Asia). ..."
"... Or still more likely, a spike in oil prices in 2H 2019 and a recession soon thereafter. ..."
"... Who knows..the only thing certain is that oil is being pressured towards the final "spare capacity" (whatever that is) and that a recession will come anyway as a result of the low oil price environment the last 4 years. ..."
The peak oil theme is very much forgotten in all the turmoil, but is very real
still.
How much more reserves to classify as probable (2p) is a movable target, it depends on
the oil price.
And how rapid the extraction rates of reserves can extend to difficult to say; technology
and not at least the 3D maps of reservoirs coupled with improved seismic data, more precise
drilling and lower costs due to excess oil service capacity (at least for offshore) have
countered the inevitable declining quality of oil reservoirs and size of new ones coming
online for some time now.
I agree that 2019 will show big declines in OECD inventory primarily because core OPEC
wants it. (increasing KSA premiums to the US +3,5 dollars in Jan and lowering it to
Asia).
The next question is how high oil prices will go before there is some reaction from the
nations that have spare storage/capacity. I am thinking there is some relief in increased
pipeline capacity in Texas in 2H 2019 and also Johan Sverdrup in Norway (since I follow
things close to home) in the same time period to save the oil market in winter 2020.
Or still more likely, a spike in oil prices in 2H 2019 and a recession soon
thereafter.
Who knows..the only thing certain is that oil is being pressured towards the final "spare
capacity" (whatever that is) and that a recession will come anyway as a result of the low oil
price environment the last 4 years.
Offshore is hit hard, so are supply in places "too risky" for cheap financing the hidden
secret of the oil market (why so few news stories covering this?)
Saved from $40 oil, but I really doubt there will be much of a frenzy at $52 oil price.
Hopefully, that will give them enough cash flow for stationary. They need to write Christmas
letters to their shareholders telling them everything will be better next year.
We will also have to see how long it takes for the shale frackers modify their behavior in
the face of $50 oil. We haven't seen any signs so far, with a few rigs continued to be added
each week. At some point the frackers will wake up and determine that oil at $50 doesn't go as
far as oil at $75 and tap the brakes just a hair. We are also due for a seasonal pause in some
of the U.S. Northern areas, as winter takes a bite out of drilling activity.
In practical terms we will probably be well into the first quarter before we see any impact
from OPEC production cuts. However, once we do, it will be like June of 2017 all over again,
and the price of oil could strongly respond to the upside.
https://democracynow.org - As the media memorializes George H.W. Bush, we look at the
lasting impact of his 1991 invasion of Iraq and the propaganda campaign that encouraged it.
Although the Gulf War technically ended in February of 1991, the U.S. war on Iraq would
continue for decades, first in the form of devastating sanctions and then in the 2003 invasion
launched by George W. Bush. Thousands of U.S. troops and contractors remain in Iraq. A largely
forgotten aspect of Bush Sr.'s war on Iraq is the vast domestic propaganda effort before the
invasion began. We look at the way U.S. media facilitated the war on Iraq with journalist John
"Rick" MacArthur, president and publisher of Harper's Magazine and the author of the book
"Second Front: Censorship and Propaganda in the 1991 Gulf War."
Democracy Now! is an independent global news hour that airs weekdays on nearly 1,400 TV and
radio stations Monday through Friday. Watch our livestream 8-9AM ET:
https://democracynow.org
This article is from May 2018 but it read as if it was written yesterday.
Notable quotes:
"... He estimates that sanctions will cut Iran's exports by up to 500,000 barrels a day later this year. "It could well be much more in 2019," he said. ..."
"U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the
market," said Gary Ross, chief executive of Black Gold Investors and a veteran OPEC watcher.
channelnewsasia.com 10 May 2018
Donald Trump could hardly have chosen a more treacherous economic moment to tear up the "decaying and rotten deal" with Iran.
The world crude market is already tightening very fast. Joint production curbs by Opec and Russia have cleared the four-year glut
of oil. There is no longer an ample safety buffer against supply shocks. The geopolitical "premium" on prices has returned. Tensions
run high:
The Maduro regime in Venezuela is entering its last agonies, and the country's oil industry is imploding. North America has run
into an infrastructure crunch. There are not yet enough pipelines to keep pace with shale oil output from the Permian Basin of west
Texas, and it is much the same story in the Alberta tar sands. The prospect of losing several hundred thousand barrels a day of Iranian
oil exports would not have mattered much a year ago. It certainly matters now.
World leaders respond to President Trump's move to reimpose economic sanctions on Iran while pulling the United States out of
the international agreement aimed at stopping Tehran from obtaining a nuclear bomb.
Oil price shock is looming
It is the confluence of simmering political crises in so many places that has driven Brent crude to $US77 a barrel, up 60 per
cent since last June. "We believe an oil price shock is looming as early as 2019 as several elements combine to form a 'perfect storm',"
said Westbeck Capital. It predicts $US100 crude in short order, with $US150 coming into sight as the world faces a crunch all too
reminiscent of July 2008. The fund warns that the investment collapse since 2014 is about to deliver its sting. Declining fields
are not being replaced. Output from conventional projects has until now been rising but will fall precipitously by 1.5 million barrels
a day next year. By then global spare capacity will be down to a lethally thin 1 per cent. US shale cannot plug the gap. "The mantra
after 2014 of lower for longer has lulled oil analysts into a torpor," Westbeck said. Needless to say, a spike to $US150 would precipitate
a global recession.
The US might hope to weather such a traumatic episode now that it is the world's biggest oil producer but it would be fatal for oil-starved
Europe. Such a scenario would test the unreformed euro to destruction. Britain, France and Germany may earnestly wish to preserve
the Iran deal but they can do little against US financial hegemony and the ferocity of "secondary sanctions". The US measures cover
shipping, insurance, and the gamut of financial and logistical support for Iran's oil industry.
In the end, there are infinitely greater matters at stake than barrels of oil.
Any European or Asian company that falls foul of this will be shut out of the US capital markets and dollarised international payments
system. The EU has talked of
beefing up the 1996 Blocking Regulation used to shield European companies from extraterritorial US sanctions against Libya. But
this is just bluster. No European company with operations in the US would dare flout the US Treasury. "A choice for corporate Europe
between the US and Iran is unequivocally going to fall the way of the US," said Richard Robinson from Ashburton Global Energy Fund.
Rise in oil prices turns malign
He said Europe will have to slash its imports from Iran by 60 per cent because groups such as ENI or Total will refuse to ship
the oil, whatever the strategic policy of the EU purports to be. This dooms the nuclear deal (JCPOA) since Iran will not abide by
the terms if the EU cannot deliver on its rhetoric, let alone come through with the $US200 billion ($251 billion) of foreign investment
coveted by Tehran.
David Fyfe from oil traders Gunvor said we do not yet have enough details from Washington to judge how quickly companies will
have to act. He estimates that sanctions will cut Iran's exports by up to 500,000 barrels a day later this year. "It could well
be much more in 2019," he said.
Late last year it was still possible to view rising oil prices as benign, the result of a booming world economy. This year it
has turned malign. Global growth has rolled over. The broad IHS index of raw materials has been falling since February.
Europe's catch-up spurt fizzled out in the first quarter. Japan's GDP probably contracted. The higher oil price is itself part
of the cause.
$US500 billion extra 'tax'
Even at current levels, it acts as an extra $US500 billion "tax" this year for consumers in Asia, Europe and America. Not all
of the windfall enjoyed by the petro-powers is recycled quickly back into global spending.
One cause of the slowdown is the credit squeeze in China, which is ineluctably feeding through into the real economy with a delay.
Proxy indicators suggest that true growth has fallen below 5 per cent.
My own view is that monetary tightening by the US Federal Reserve - and declining stimulus from the European Central Bank - is
doing more damage than widely presumed.
Higher US interest rates are pushing up borrowing costs for much of the world. Three-month dollar Libor rates used to price $US9
trillion of global contracts have risen 76 basis points since January.
The Fed is shrinking its balance sheet, draining international dollar liquidity at a quickening pace. If the Fed is not careful,
it will tip the US economy into a stall.
Ominously, we are seeing the first signs of a US dollar rally, tantamount to a "short squeeze" on Turkey, Argentina and Indonesia,
among other emerging market debtors.
Toxic combination
The combination of a slowing economy and an oil supply shock is toxic, even if the "energy intensity" of world GDP is now half
the level of 30 years ago.
Opec and Russia can of course lift their output cap at any time, though that alone will not restore the full 1.8m barrels a day
of original curbs. Venezuela is now in unstoppable free-fall.
The Saudis have pledged to uphold the "stability of oil markets" and to help "mitigate the impact of any potential supply shortages".
Kuwait and Abu Dhabi could add a little. Yet cyclical forces may be moving even beyond their control.
In the end, there are infinitely greater matters at stake than barrels of oil. Trump is throwing US power behind Saudi Arabia
in the epic Sunni-Shia battle for dominance over the Middle East, and behind Israel in its separate battle with Iran.
What can go wrong?
Both conflicts are on a hair trigger. Israel attacked an Iranian air base in Syria last month and killed
seven revolutionary guards. This is a dangerous escalation from proxy conflict to direct hostilities. The JCPOA nuclear deal may
be all that restrains the Iranian side from lashing out.
Saudi Arabia's impetuous young leader Mohammad bin Salman is itching to settle the score of all scores with Iran, the Iranian
revolutionary guard are in turn itching to launch a one-year dash for nuclear weapons, and Trump is itching for regime change. What
can go wrong?
2019 might be the year when Western powers start paying the price for 2014-2017 oil price
crash. Three years of subpar capital investment will bite them in the back.
Russia Economic
Report said that OPEC was the single most important factor for oil price outlooks in the
short term.
"As non-OPEC oil supply growth is expected to be greater than that of global demand, the
outlook for oil prices depends heavily on supply from OPEC members," the report's authors
noted. The level of spare capacity among OPEC members is estimated to be low at present,
suggesting there are limited buffers in the event of a sudden shortfall in supply of oil,
raising the likelihood of oil price spikes in 2019."
The World Bank is not alone in seeing OPEC's spare capacity as an important factor for oil
prices going forward. Spare capacity provides a cushion against price shocks as evidenced most
recently by the June decision of the cartel and Russia to start pumping more again after 18
months of cutting to arrest a too fast increase in oil prices. They had the capacity to do it
and prices stopped rising, helped by downward revisions of economic forecasts.
Now, the oil market is plagued with concerns about oversupply, but this could change quite
quickly if there is any sign that OPEC is nearing the end of its spare production capacity. As
to the likelihood of such a sign emerging anytime soon, this remains to be seen.
The U.S. Energy Information Administration estimates OPEC's spare capacity at a little over 1
million bpd as of the fourth quarter of this year. That's down from 2.1 million bpd at the
end of 2017, but with Venezuela's production in free fall and with Iran pumping less because of
the U.S. sanctions, the total spare capacity of the group has declined substantially.
"... The psychological reason behind this trick has to do with "pattern recognition". Human beings – through evolution – have learned to identify a phenomenon as real and true because it repeats again and again and again ..."
"... The American knee-jerk reaction to the recent Kerch bridge incident is a case in point. Ignoring facts, people automatically placed Russian behavior in the "aggressive" category because they have been programed by constant repetition for many years to think this way. Not having been taught this trick of the mind even educated people buy into the narrative unaware that their schemata dictate that the belief must be reinforced. All experiences regarding Russia are simply put into one box labeled "aggressive behavior". ..."
"... Another psychological cause of why Americans buy into the "Russia is aggressive" narrative is due to "confirmation bias". For a variety of reasons many Americans demonize Russians. Part of this is due to the fact that people actually enjoy having a "bad guy" to hate. This is why outlaw cowboys and mafia gangsters are so popular in American culture. We love our "anti-heroes" as much if not more than our heroes. Putin, of course, is the prototypical "baddie". He's a real-life Boris from the Bullwinkle cartoon who satisfies our need to boo and hiss the proverbial bad guy. ..."
The main reason so many Americans buy into the anti-Russian craze is not only due to what people are told by
the government and media, but by how they think and process information. For if Americans were taught how to
analyze and think properly they would not fall for the blatant propaganda.
For example, we are told that the Nazis discovered the secret of repetition as a means of programming people
into believing something to be true, but we are not taught why this practice is so effective.
The psychological reason behind this trick has to do with "pattern recognition". Human beings – through
evolution – have learned to identify a phenomenon as real and true because it repeats again and again and
again. After a while, the mind interprets this consistent pattern as proof of truth value. In psychological
terms, "schemata" are created by a layering of memories similar in nature over time so that all events
associated with the phenomenon are perceived through a prism of previous repetitions. In other words, even if
a certain type of behavior is different from the norm it will still be identified as belonging to the typical
pattern regardless. It is literally a trick of the mind.
The American knee-jerk reaction to the recent Kerch bridge incident is a case in point. Ignoring facts,
people automatically placed Russian behavior in the "aggressive" category because they have been programed by
constant repetition for many years to think this way. Not having been taught this trick of the mind even
educated people buy into the narrative unaware that their schemata dictate that the belief must be reinforced.
All experiences regarding Russia are simply put into one box labeled "aggressive behavior".
Another psychological cause of why Americans buy into the "Russia is aggressive" narrative is due to
"confirmation bias". For a variety of reasons many Americans demonize Russians. Part of this is due to the fact
that people actually enjoy having a "bad guy" to hate. This is why outlaw cowboys and mafia gangsters are so
popular in American culture. We love our "anti-heroes" as much if not more than our heroes. Putin, of course,
is the prototypical "baddie". He's a real-life Boris from the Bullwinkle cartoon who satisfies our need to boo
and hiss the proverbial bad guy.
To a certain extent, pattern recognition comes into play as well because in America TV shows and films over
the past two decades evil Russian spies and mafia types have figured prominently. The repeating portrayals
create schemata which then create stereotypes that frame how we think.
Russophobia, however, will not last forever because it is essentially based upon lies. Truth always wins out
over time and fantasy gives way to reality. Despite the censorship on social media and the attempts to silence
RT America the truth will eventually triumph.
For gagging the tongue of truth is always followed by a long-suppressed shout that echoes ever louder
throughout the ages.
===============================
My comment:
The most basic form of mind control is repetition.
The most basic form of mind control is repetition.
The most basic form of mind control is repetition.
... ... ...
The most basic form of mind control is repetition.
Well, Dr. Paul Whatshisname is obviously an agent of Putin. Did I even need to say this?
On a serious note, repetition works perhaps shockingly well. I was taught in my childhood that Germans are
bad because Hitler and Russia was good because twice saviors. Simple and effective. However, with no social
media at the time, critical thinking was also available so I could outgrow the propaganda.
On 12/5/2018 at 10:29 AM,
A/Plague
said:
Are you on a salary in "Russia Today" or a volunteer?
I try to gently (and if possible, humorously) nudge people to question the "official narrative".
CNN / WaPo is
far
worse propaganda than RT. RT is clearly biased, but they are open about their
pro-Russia bias. CNN pretends to be objective "journalism".
And sometimes I feel like commenting in the same vein of this little guy, bouncing all over excitedly:
By the way, did you know RT was nominated for an Emmy this year? It actually has a few nominations. Shocking,
right? I suspect a lot of the people who say "Ew, RT, propaganda," have never read anything from RT. I have.
they regularly republish Reuters and the FT as well as major U.s. outlets. I don't know what to think about
that, it's so confusing.
16 hours ago,
Marina Schwarz
said:
By the way, did you know RT was nominated for an Emmy this year? It actually has a few nominations.
Shocking, right? I suspect a lot of the people who say "Ew, RT, propaganda," have never read anything
from RT. I have. they regularly republish Reuters and the FT as well as major U.s. outlets. I don't know
what to think about that, it's so confusing.
16 hours ago,
Marina Schwarz
said:
By the way, did you know RT was nominated for an Emmy this year? It actually has a few nominations.
Shocking, right? I suspect a lot of the people who say "Ew, RT, propaganda," have never read anything
from RT. I have. they regularly republish Reuters and the FT as well as major U.s. outlets. I don't know
what to think about that, it's so confusing.
When I read their articles I am mindful that they are Russian. Having said that, they seem to publish a lot
of good content, and much of it is from Reuters and other (mostly) reputable sources. Editorials are free for
anyone to research for themselves. Pretty much the same as other pubs.
Laying conspiracy theories aside for one moment (and I do so love a good conspiracy theory), let's chat about
this Russia panic.
I am not one to panic in general. Sure, I have a food, guns, and water stash in my basement. I'm generally
well prepared. There are Russia-is-the-boogeyman theories, and then there are
Russia-boogey-man-theories-are-silly theories. Of course they both can't be right.
But where do these theories come from?
I am sure I'm not going to do a very good job explaining my self in the rant that follows. But I'm going to
give it a good college try.
I want to talk about the Russia Boogeyman theory. First, there's no way to explain this other than to
divulge my age. So I'm just going to spit it out right here and get that out of the way. I'm 40. I've been 40
for approximately 5 years, stubbornly refusing to go further than that. There. I said it. Now that that's out
of the way, it's important to note that children are sponges. As such, they are impressionable and in young
childhood, traumatic events can have a profound and lasting effect, and even change how someone thinks.
When I was about 10ish, in about 1983, a movie came out. If you lived in America, and likely even if you
didn't, and you're over the age of 40 (or if you've been 40 for a while), you've seen it. It's a movie called
"The Day After". It was a huge production and it aired on television. The most watched TV movie ever. And
ranked as one of the top 10 movies ever by several sources. You millennial whippersnappers will have no clue
what I'm talking about. Read on anyway, if you'd like. I'm all inclusive.
The movie was about nuclear warfare, and most importantly, the aftermath. The setting was a small town in
Kansas, I think. A small town that very closely resembled my home town, making it particularly impactful (I
know that's not a word. Sue me.) to me at the time. In the movie, which although was a complete work of fiction
was very realistic, Russia unleashed nuclear weapons. It was freaky. So eerily unsettling was it that I
obsessed about it after I saw it. I thought about it every night. I remember being so afraid that in the event
of a nuclear blast, I might be separated from my family. I remember pondering if I would rather be obliterated
in the blast immediately, or whether I would prefer to be spared instant death only to survive without my
family under horrid conditions. I also remember drills at school around that same time that were designed to
get people prepared in the event of such a disaster. While it may have done so, it also solidified in my mind
that there was a real possibility these events would unfold.
Nearly two years post-freaky-movie, Sting released it's "Russia" song, about Russians loving their children
too. Although it was not talked about much at the time, since life proceeded as normal, in my mind I remember
thinking that I didn't much care if the Russians loved their children, because they were looking to wipe us off
the map. And I lived near the Soo Locks, and I distinctly remember knowing (but I don't have any idea where I
came by this information) that the Locks would be a nuclear target in the event of a strike, since it is a main
thoroughfare for ships.
You can't undo that kind of fear, no more than you can undo my fear of spiders. I know in my head that
spiders, at least where I live, are not poisonous and they cannot harm me. I know it. But my head cannot
eradicate the intense creepiness that even thinking about spiders conjures up. Likewise, no rational thought
about Russia can completely undo a fear that was borne as a child.
There you have it. My Russia hysteria may be founded or unfounded--I know not. But I do not have the power
within me to change this mindset.
Okay Russia-boogeyman-theories-are-silly promoters: fire away.
Great description of what life was like back then, er, so I was told, by older people. Not those of us born in
the 60's, er, I mean the 70's, er, the 80's. Yeah, that's it, the 80's!
We had attack training at school in the 80s -- complete with gas masks and stuff -- on the other side of the
Iron Curtain for when the imperialists invaded, what can I say. I was too distracted by everything to pay
attention, though.
@Rodent
, your story tells me your propaganda was better than our propaganda, perish the thought. The Cold
War was a blast, right?
P.S. Stephen King has done a really good overview of this stage in the U.S. entertainment industry, by the
way. The stages of horror in movies. behind the curtain we only had heroic movies about the Second World War. I
shall now hypothesize that the Soviet bloc lost the Cold War because its entertainment industry was absent. End
of hypothesizing. Thank you for your attention.
8 hours ago,
Marina Schwarz
said:
We had attack training at school in the 80s -- complete with gas masks and stuff -- on the other side of
the Iron Curtain for when the imperialists invaded, what can I say. I was too distracted by everything to
pay attention, though.
@Rodent
, your story tells me your propaganda was better than our propaganda, perish the thought. The
Cold War was a blast, right?
P.S. Stephen King has done a really good overview of this stage in the U.S. entertainment industry, by
the way. The stages of horror in movies. behind the curtain we only had heroic movies about the Second
World War. I shall now hypothesize that the Soviet bloc lost the Cold War because its entertainment
industry was absent. End of hypothesizing. Thank you for your attention.
Makes sense. Not surprisingly the movie makers (supposedly) did not want to have Russia be the first striker
in the movie, but they needed to borrow some footage from the DoD, and the govt. refused to play ball unless
Russia struck first. The guy who made the movie, while he was making it, reportedly would go home at night
literally sick to his stomach at the horrific nature of the movie. It went rounds and rounds with the censors
who thought it might not be suitable for families.
Also interesting, speaking of Russia-led propaganda, and coming from someone who has dabbled a tiny bit in
white-hatishness, if you google "The Day After Russia" as I did to inquire about the movie, there is actually a
Russian movie titled "the day after" about zombies. Yup, let's just bury those search results! It's a
conspiracy!!!
There is another interesting thread here about the different search results showing up for different people.
What shows up when YOU google "The Day After"?
You know, speaking of conspiracies, there is a fairly logical opinion that that movie was designed to scare the
bajeezus out of people so they wouldn't vote for Reagan a second term.
The tributes to former President George H.W. Bush, who died on Friday aged 94, have been
pouring in from all sides of the political spectrum. He was a man "of the highest character,"
said his
eldest son and fellow former president, George W. Bush. "He loved America and served with
character, class, and integrity," tweeted former U.S. Attorney and #Resistance icon Preet
Bharara. According to another former president, Barack Obama , Bush's life was "a
testament to the notion that public service is a noble, joyous calling. And he did tremendous
good along the journey." Apple boss Tim Cook said : "We have lost a great
American."
In the age of Donald Trump, it isn't difficult for hagiographers of the late Bush Sr. to
paint a picture of him as a great patriot and pragmatist; a president who governed with "class"
and "integrity." It is true that the former president refused to vote for Trump in 2016,
calling him a " blowhard ," and that he eschewed the
white nationalist, "alt-right," conspiratorial politics that has come to define the modern
Republican Party. He helped end the Cold War without, as Obama said , "firing a shot." He spent
his life serving his country -- from the military to Congress to the United Nations to the CIA
to the White House. And, by all accounts, he was also a beloved grandfather and
great-grandfather to his 17 grandkids and eight great-grandkids
.
Nevertheless, he was a public,
not a private, figure -- one of only 44 men to have ever served as president of the United
States. We cannot, therefore, allow his actual record in office to be beautified in such a
brazen way. "When a political leader dies, it is irresponsible in the extreme to demand that
only praise be permitted but not criticisms," as my colleague Glenn Greenwald has argued
, because it leads to "false history and a propagandistic whitewashing of bad acts."
The inconvenient truth is that the presidency of George Herbert Walker Bush had far more in
common with the recognizably belligerent, corrupt, and right-wing Republican figures who came
after him - his son George W. and the current orange-faced incumbent - than much of the
political and media classes might have you believe.
Consider:
... ... ...
He made a dishonest case for war . Thirteen years before George W. Bush lied about weapons
of mass destruction to justify his invasion and occupation of Iraq, his father made his own set
of false claims to justify the aerial bombardment of that same country. The first Gulf War, as
an investigation by journalist Joshua Holland
concluded , "was sold on a mountain of war propaganda."
For a start, Bush told the American public that Iraq had invaded Kuwait " without provocation or warning
." What he omitted to mention was that the U.S. ambassador to Iraq, April Glaspie, had given an
effective
green light to Saddam Hussein, telling him in July 1990, a week before
his invasion, "[W]e have no opinion on the Arab-Arab conflicts, like your border disagreement
with Kuwait."
Then there is the fabrication of intelligence. Bush deployed U.S. troops to the Gulf in
August 1990 and claimed that he was doing
so in order "to assist the Saudi Arabian Government in the defense of its homeland." As Scott
Peterson wrote in the Christian Science
Monitor in 2002, "Citing top-secret satellite images, Pentagon officials estimated that up to
250,000 Iraqi troops and 1,500 tanks stood on the border, threatening the key U.S. oil
supplier."
Yet when reporter Jean Heller of the St. Petersburg Times acquired her own commercial
satellite images of the Saudi border, she found no signs of Iraqi forces; only an empty desert.
"It was a pretty serious fib," Heller told Peterson, adding: "That [Iraqi
buildup] was the whole justification for Bush sending troops in there, and it just didn't
exist."
President George H. W. Bush talks with Secretary of State James Baker III and Secretary of
Defense Dick Cheney during a meeting of the cabinet in the White House on Jan. 17, 1991 to
discuss the Persian Gulf War. Photo: Ron Edmonds/AP
He committed war crimes. Under Bush Sr., the U.S. dropped a whopping 88,500
tons of bombs on Iraq and Iraqi-occupied Kuwait, many of which resulted in horrific
civilian casualties. In February 1991, for example, a U.S. airstrike on an air-raid shelter in
the Amiriyah neighborhood of Baghdad killed at least
408 Iraqi civilians . According to Human Rights Watch , the Pentagon knew
the Amiriyah facility had been used as a civil defense shelter during the Iran-Iraq war and yet
had attacked without warning. It was, concluded HRW, "a serious violation of the laws of
war."
U.S. bombs also destroyed essential Iraqi civilian
infrastructure -- from electricity-generating and water-treatment facilities to food-processing
plants and flour mills. This was no accident. As Barton Gellman of the Washington Post
reported in June 1991: "Some targets, especially late in the war, were bombed primarily to
create postwar leverage over Iraq, not to influence the course of the conflict itself. Planners
now say their intent was to destroy or damage valuable facilities that Baghdad could not repair
without foreign assistance. Because of these goals, damage to civilian structures and
interests, invariably described by briefers during the war as 'collateral' and unintended, was
sometimes neither."
Got that? The Bush administration deliberately targeted civilian infrastructure for
"leverage" over Saddam Hussein. How is this not terrorism? As a Harvard public health team
concluded in June 1991, less than four months after the end of the war, the destruction of
Iraqi infrastructure had resulted in acute malnutrition and "epidemic" levels of cholera and
typhoid.
By January 1992, Beth Osborne Daponte, a demographer with the U.S. Census Bureau,
was estimating that Bush's Gulf War had caused the deaths of 158,000 Iraqis, including
13,000 immediate civilian deaths and 70,000 deaths from the damage done to electricity and
sewage treatment plants. Daponte's numbers contradicted the Bush administration's, and she was
threatened by her superiors with dismissal for releasing " false information. " (Sound
familiar?)
He refused to cooperate with a special counsel . The Iran-Contra affair , in which the
United States traded missiles for Americans hostages in Iran, and used the proceeds of those
arms sales to fund Contra rebels in Nicaragua, did much to undermine the presidency of Ronald
Reagan. Yet his vice president's involvement in that controversial affair has garnered far less
attention. "The criminal investigation of Bush was regrettably incomplete," wrote Special
Counsel Lawrence Walsh, a former deputy attorney general in the Eisenhower administration, in
his final report on the
Iran-Contra affair in August 1993.
Why? Because Bush, who was "fully aware of the Iran arms sale," according to the special
counsel, failed to hand over a diary "containing contemporaneous notes relevant to Iran/contra"
and refused to be interviewed in the later stages of the investigation. In the final days of
his presidency, Bush even issued
pardons to six defendants in the Iran-Contra affair, including former Defense Secretary
Caspar Weinberger -- on the eve of Weinberger's trial for perjury and obstruction of
justice. "The Weinberger pardon," Walsh pointedly noted, "marked the first time a president
ever pardoned someone in whose trial he might have been called as a witness, because the
president was knowledgeable of factual events underlying the case." An angry Walsh accused
Bush of "misconduct" and helping to complete "the Iran-contra cover-up."
"... Everyone knows it's the US presence in the Middle East which creates terrorists, both as proxies of and in resistance to the US imperial presence (and often one and then the other). So reading Orwellian language, Pompeo is saying the US wants to maximize Islamic terrorism in order to provide a pretext for creeping totalitarianism at home and abroad. ..."
"... The real reason is to maintain the petrodollar system, but there seems to be a conspiracy of silence never to mention it among both supporters and opponents of Trump. ..."
"... everyone knows why the usa is in the middle east.. to support the war industry, which is heavily tied to the financial industry.. up is down and down is up.. that is why the usa is great friends with ksa and israel and a sworn enemy of iran... what they don't say is they are a sworn enemy of humanity and the thought that the world can continue with their ongoing madness... ..."
"... The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international finance/IMF ..."
Trump also floated the idea of removing U.S. troops from the Middle East, citing the lower price of oil as a reason to withdraw.
"Now, are we going to stay in that part of the world? One reason to is Israel ," Trump said. "Oil is becoming less and less
of a reason because we're producing more oil now than we've ever produced. So, you know, all of a sudden it gets to a point
where you don't have to stay there."
It is only Israel, it is no longer the oil, says Trump. But the nuclear armed Israel does not need U.S. troops for its protection.
And if it is no longer the oil, why is the U.S. defending the Saudis?
Trump's Secretary of State Mike Pompeo disagrees with his boss. In a Wall Street journal op-ed today he claims that
The U.S.-Saudi Partnership
Is Vital because it includes much more then oil:
[D]egrading U.S.-Saudi ties would be a grave mistake for the national security of the U.S. and its allies.
The kingdom is a powerful force for stability in the Middle East. Saudi Arabia is working to secure Iraq's fragile democracy
and keep Baghdad tethered to the West's interests, not Tehran's. Riyadh is helping manage the flood of refugees fleeing Syria's
civil war by working with host countries, cooperating closely with Egypt, and establishing stronger ties with Israel. Saudi
Arabia has also contributed millions of dollars to the U.S.-led effort to fight Islamic State and other terrorist organizations.
Saudi oil production and economic stability are keys to regional prosperity and global energy security.
Where and when please has Saudi Arabia "managed the flood of refugees fleeing Syria's civil war". Was that when it
emptied its jails of violent criminals and sent them to wage jihad against the Syrian people? That indeed 'managed' to push
millions to flee from their homes.
Saudi Arabia might be many things but "a powerful force for stability" it is not. Just ask 18 million Yemenis who, after years
of Saudi bombardment, are near to death for lack of
food .
Pompeo's work for the Saudi dictator continued today with a Senate briefing on Yemen. The Senators will soon vote on a resolution
to end the U.S. support for the war. In his prepared remarks Pompeo wrote:
The suffering in Yemen grieves me, but if the United States of America was not involved in Yemen, it would be a hell of a lot
worse.
What could be worse than a famine that threatens two third of the population?
If the U.S. and Britain would not support the Saudis and Emirates the war would end within a day or two. The Saudi and UAE
planes are maintained by U.S. and British specialists. The Saudis still
seek 102 more U.S. military personal to
take care of their planes. It would be easy for the U.S. to stop such recruiting of its veterans.
It is the U.S. that
holds up an already
watered down UN Security Council resolution that calls for a ceasefire in Yemen:
The reason for the delay continues to be a White House worry about angering Saudi Arabia, which strongly opposes the resolution,
multiple sources say. CNN reported earlier this month that the Saudi crown prince, Mohammed bin Salman, "threw a fit" when
presented with an early draft of the document, leading to a delay and further discussions among Western allies on the matter.
There is really nothing in Trump's list on which the Saudis consistently followed through. His alliance with MbS brought him
no gain and a lot of trouble.
Trump protected MbS from the consequences of murdering Jamal Khashoggi. He hoped to gain leverage with that. But that is not
how MbS sees it. He now knows that Trump will not confront him no matter what he does. If MbS "threws a fit" over a UN Security
Council resolution, the U.S. will drop it. When he launches his next 'adventure', the U.S. will again cover his back. Is this
the way a super power is supposed to handle a client state?
If Trump's instincts really tell him that U.S. troops should be removed from the Middle East and Afghanistan, something I doubt,
he should follow them. Support for the Saudi war on Yemen will not help to achieve that. Pandering to MbS is not MAGA.
Posted by b on November 28, 2018 at 03:12 PM |
Permalink
Comments Pompeo: "Saudi Arabia has also contributed millions of dollars to the U.S.-led effort to fight Islamic State and other
terrorist organizations."
Everyone knows it's the US presence in the Middle East which creates terrorists, both as proxies of and in resistance to
the US imperial presence (and often one and then the other). So reading Orwellian language, Pompeo is saying the US wants to maximize
Islamic terrorism in order to provide a pretext for creeping totalitarianism at home and abroad.
The real reason is to maintain the petrodollar system, but there seems to be a conspiracy of silence never to mention it among
both supporters and opponents of Trump.
There is really nothing in Trump's list on which the Saudis consistently followed through. His alliance with MbS brought him
no gain and a lot of trouble.
He did get to fondle the orb - although fuck knows what weirdness was really going on there.
thanks b... pompeo is a very bad liar... in fact - everything he says is about exactly the opposite, but bottom line is he is
a bad liar as he is thoroughly unconvincing..
everyone knows why the usa is in the middle east.. to support the war industry, which is heavily tied to the financial
industry.. up is down and down is up.. that is why the usa is great friends with ksa and israel and a sworn enemy of iran... what
they don't say is they are a sworn enemy of humanity and the thought that the world can continue with their ongoing madness...
oh, but don't forget to vote, LOLOL.... no wonder so many are strung out on drugs, and the pharma industry... opening up to
the msm is opening oneself up to the world george orwell described many years ago...
Take a wafer or two of silicon and just add water. The oil obsession has been eclipsed and within 20 years will be in absolute
disarray. The warmongers will invent new excuses.
A hypothetical: No extraordinary amounts of hydrocarbons exist under Southwest Asian ground; just an essential amount for domestic
consumption; in that case, would Zionistan exist where it's currently located and would either Saudi Arabia, Iraq and/or Iran
have any significance aside from being consumers of Outlaw US Empire goods? Would the Balfour Declaration and the Sykes/Picot
Secret Treaty have been made? If the Orinoco Oil Belt didn't exist, would Venezuela's government be continually targeted for Imperial
control? If there was no Brazilian offshore oil, would the Regime Change effort have been made there? Here the hypotheticals end
and a few basic yet important questions follow.
Previous to the 20th Century, why were Hawaii and Samoa wrested from their native residents and annexed to Empire? In what
way did the lowly family farmers spread across 19th Century United States further the growth of its Empire and contribute to the
above named annexations? What was the unspoken message sent to US elites contained within Frederic Jackson Turner's 1893 Frontier
Thesis ? Why is the dominant language of North America English, not French or Spanish?
None of these are rhetorical. All second paragraph questions I asked of my history students. And all have a bearing on b's
fundamental question.
b says, "And it its no longer the oil, why is the U.S. defending the Saudis?"
The US has a vital interest in protecting the narrative of 9/11. The Saudis supplied the patsies. Mossad and dual-citizen neocons
were the architects of the event. Hence, the US must avoid a nasty divorce from the Saudis. The Saudis are in a perfect blackmailing
position.
Of course, most Americans have no idea that the U.S. Shale Oil Industry is nothing more than a Ponzi Scheme because of the
mainstream media's inability to report FACT from FICTION. However, they don't deserve all of the blame as the shale energy
industry has done an excellent job hiding the financial distress from the public and investors by the use of highly technical
jargon and BS.
S.A. is a thinly disguised US military base, hence the "strategic importance" and the relevance of the new Viceroy's previous
experience as a Four Star General. It's doubtful that any of the skilled personnel in the SA Air Force are other than former US/Nato.
A few princes might fancy themselves to be daring fighter pilots. In case of a Anglo-Zio war with Iran SA would be the most forward
US aircraft carrier. The Empire is sustained by its presumed military might and prizes nothing more than its strategically situated
bases. Saud would like to capture Yemen's oil fields, but the primary purpose of the air war is probably training. That of course
is more despicably cynical than mere conquest and genocide.
Trump is the ultimate deceiver/liar. Great actor reading from a script. The heel in the Fake wrestling otherwise known as US politics.
It almost sounds as if he is calling for an end of anymore significant price drops now that he has got Powell on board to limit
interest rate hikes. After all if you are the worlds biggest producer you dont want prices too low. These markets are all manipulated.
I cant imagine how much insider trading is going on. If you look at the oil prices, they started dropping in October with Iran
sanctions looming (before it was announced irans shipments to its 8 biggest buyers would be exempt) and at the height of the Khashoggi
event where sanctions were threatened and Saudi was making threats of their own. In a real free market prices increase amidst
supply uncertainty.
Regardless of what he says he wants and gets now, he is already planning a reversal. Thats how the big boys win, they know
whats coming and when the con the smaller fish to swim one way they are lined up with a big mouth wide open. Controlled chaos
and confusion. For every winner there must be a loser and the losers assets/money are food for the Gods of Money and War
As for pulling out of the Middle East Bibi must have had a good laugh. My money is on the US to be in Yemen to protect them
from the Saudis (humanitarian) and Iranian backed Houthis while in reality we will be there to secure the enormous oil fields
in the North. Perhaps this was what the Khashoggi trap was all about. The importance of oil is not to supply US markets its to
deny it to enemies and control oil prices in order to feed international finance/IMF
@ Pft who wrote: "The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order
to feed international finance/IMF"
BINGO!!! Those that control finance control most/all of everything else.
Saudi Arabia literally owns close to 8% of the United States economy through various financial instruments. Their public investment
funds and dark pools own large chunks from various strategic firms resting at the apex of western power such as Blackstone. Trump
and Pompeo would be stupid to cut off their nose to spite their face... It's all about the petrodollar, uncle sam will ride and
die with saudi barbaria. If push comes to shove and the saudis decide to untether themselves from the Empire, their sand kingdom
will probably be partitioned.
The oil certainly still plays an important role, the u.s. cannot maintain the current frack oil output for long. For Tronald's
term in office it will suffice, but hardly longer. (The frack gas supplies are much more substantial.)
Personal interests certainly also play a role, and finally one should not make u.s. foreign policy more rational than it is.
Much is also done because of traditions and personal convictions. Often they got it completely wrong and the result was a complete
failure.
Let us watch what Trump does with this or if the resolution makes it to daylight:
Senate advances Yemen resolution in rebuke to Trump
The Senate issued a sharp rebuke Wednesday to President Trump, easily advancing a resolution that would end U.S. military support
for the Saudi-led campaign in Yemen's civil war despite a White House effort to quash the bill.
The administration launched an eleventh-hour lobbying frenzy to try to head off momentum for the resolution, dispatching
Defense Secretary James Mattis and Secretary of State Mike Pompeo to Capitol Hill in the morning and issuing a veto threat
less than an hour before the vote started.
But lawmakers advanced the resolution, 63-37, even as the administration vowed to stand by Saudi Arabia following outcry
over the killing of journalist Jamal Khashoggi.
"There's been a lot of rhetoric that's come from the White House and from the State Department on this issue," said Sen.
Bob Corker (R-Tenn.), chairman of the Foreign Relations Committee. "The rhetoric that I've heard and the broadcasts that we've
made around the world as to who we are have been way out of balance as it relates to American interests and American values."
[/] LINK
TheHill
But Mattis says there is no smoking gun to tie the Clown Thug-Prince to Kashoggi's killing.
TheHill
And Lyias @ 2 is a bingo. Always follow the fiat.
Soon, without any announcements, if they wish to maintain selling oil to China, KSA will follow Qatar. It will be priced in
Yuan...especially given the escalating U.S. trade war with China.
2019 holds interesting times. Order a truckload of popcorn.
Midwest For Truth , Nov 28, 2018 7:29:46 PM |
link
You would have to have your head buried in the sand to not see that the Saudi "Kings" are crypto-Zionistas. Carl Sagan once said,
"One of the saddest lessons of history is this: If we've been bamboozled long enough, we tend to reject any evidence of the bamboozle.
We're no longer interested in finding out the truth. The bamboozle has captured us. It's simply too painful to acknowledge, even
to ourselves, that we've been taken. Once you give a charlatan power over you, you almost never get it back." And Mark Twain also
wrote "It's easier to fool people than to convince them that they have been fooled."
Gee, not one taker amongst all these intelligent folk. From last to first: 1588's Protestant Wind allowed Elizabeth and her cronies
to literally keep their heads as Nature helped Drake defeat the Spanish Armada; otherwise, there would be no British Empire root
to the USA, thus no USA and no future Outlaw US Empire, the British Isles becoming a Hapsburg Imperial Property, and a completely
different historical lineage, perhaps sans World Wars and atomic weapons.
Turner's message was with the Frontier closed the "safety valve" of continental expansion defusing political tensions based
on economic inequalities had ceased to be of benefit and future policy would need to deal with that issue thus removing the Fear
Factor from the natives to immigrants, and from wide-open spaces to the inner cities. Whipsawing business cycles driving urban
labor's unrest, populist People's Party politics, and McKinley's 1901 assassination further drove his points home.
Nationwide, family farmers demanded Federal government help to create additional markets for their produce to generate price
inflation so they could remain solvent and keep their homesteads, which translated into the need to conduct international commerce
via the seas which required coaling stations--Hawaii and Samoa, amongst others--and a Blue Water Navy that eventually led to Alfred
T. Mahan's doctrine of Imperial Control of the Oceans still in use today.
As with Gengis Khan's death in 1227 that stopped the Mongol expansion to the English Channel that changed the course of European
history, and what was seen as the Protestant Wind being Divine Intervention, global history has several similar inflection points
turning the tide from one path to another. We don't know yet if the Outlaw US Empire's reliance on Saudi is such, but we can see
it turning from being a great positive to an equally potential great negative for the Empire--humanity as a whole, IMO, will benefit
greatly from an implosion and the relationship becoming a Great Negative helping to strip what remains of the Emperor's Clothing
from his torso so that nations and their citizens can deter the oncoming financialized economic suicide caused by massive debt
and climate chaos.
Vico's circle is about to intersect with Hegel's dialectic and generate a new temporal phase in human history. Although many
will find it hard to tell, the current direction points to a difficult change to a more positive course for humanity as a whole,
but it's also possible that disaster could strike with humanity's total or near extinction being the outcome--good arguments can
be made for either outcome, which ought to unsettle everyone: Yes, the times are that tenuous. But then, I'm merely a lonely historian
aware of a great many things, including the pitfall inherent in trying to predict future events.
"The suffering in Yemen grieves me, but if the United States of America was not involved in Yemen, it would be a hell of a lot
worse." And I'll bet Pompeo said that with a straight face, too. lmfao
And as for "...keep[ing] Baghdad tethered to the West's interests and not Tehran's," I'm guessing the "secretary" would have
us all agree "yeah, fk Iraqi sovereignty anyway. Besides, it's not like they share a border with Iran, or anything. Oh,
wait..."
p.s. Many thanks for all you have contributed to collective knowledge, b; I will be contacting you about making a contribution
by snail mail (I hate PayPal, too).
"... a powerful force for stability in the Middle East."
"Instability" more like it.
Paid for military coup in Egypt. Funding anti-Syrian terrorists. Ongoing tensions with Iran. Zip-all for the Palestinians.
WTF in Yemen. Wahhabi crazy sh_t (via Mosque building) across Asia. Head and hand chopping Friday specials the norm -- especially
of their South-Asian slave classes. Ok, so females can now drive cars -- woohoo. A family run business venture manipulating the
global oil trade and supporting US-petro-$ hegemony recently out of goat herding and each new generation 'initiated' in some Houston
secret society toe-touching shower and soap ceremonies before placement in the ruling hierarchy back home. But enough; they being
Semites makes it an offence to criticize in some 'free' democratic world domains.
Instead of the "rebuke to Trump" meme circulating around, I found
this statement to be more accurate:
"'Cutting off military aid to Saudi Arabia is the right choice for Yemen, the right choice for our national security, and the
right choice for upholding the Constitution,' Paul Kawika Martin, senior director for policy and political affairs at Peace Action,
declared in a statement. ' Three years ago, the notion of Congress voting to cut off military support for Saudi Arabia would
have been politically laughable .'" [My Emphasis]
In other words, advancing Peace with Obama as POTUS wasn't going to happen, so this vote ought to be seen as an attack on Obama's
legacy as it's his policy that's being reconsidered and hopefully discontinued.
Trump, Israel and the Sawdi's. US no longer needs middle east oil for strategic supply. Trump is doing away with the petro-dollar
as that scam has run its course and maintenance is higher than returns. Saudi and other middle east oil is required for global
energy dominance.
Energy dominance, lebensraum for Israel and destroying the current Iran are all objectives that fit into one neat package.
Those plans look to be coming apart at the moment so it remains to be seen how fanatical Trump is on Israel and MAGA. MAGA
as US was at the collapse of the Soviet Union.
As for pulling out of the Middle East Bibi must have had a good laugh. Remember when he said he wanted out of Syria. My money
is on the US to be in Yemen before too long to protect them from the Saudis (humanitarian) and Iranian backed Houthis, while in
reality it will be to secure the enormous oil fields in the North. Perhaps this was what the Khashoggi trap was all about.
The importance of oil is not to supply US markets its to deny it to enemies and control oil prices in order to feed international
finance/IMF .
@16 karlof1.. thanks for a broader historical perspective which you are able to bring to moa.. i enjoy reading your comments..
i don't have answers to ALL your questions earlier.. i have answers for some of them... you want to make it easy on us uneducated
folks and give us less questions, like b did in his post here, lol.... cheers james
The US Senate has advanced a measure to withdraw American support for a Saudi-led coalition fighting in Yemen.
In a blow to President Donald Trump, senators voted 63-37 to take forward a motion on ending US support.
Secretary of State Mike Pompeo and Defence Secretary Jim Mattis had urged Senators not to back the motion, saying it would
worsen the situation in Yemen.
...
The vote in the Senate means further debate on US support for Saudi Arabia is expected next week.
However, correspondents say that even if the Senate ultimately passes the bipartisan resolution it has little chance of
being approved by the outgoing House of Representatives.
That is quite a slap for the Trump administration. It will have little consequences in the short term (or for Yemen) but it sets
a new direction in foreign polices towards the Saudis.
Pompeo is a Deep State Israel-firster with a nasty neocon agenda. It is to Trump's disgrace that he chose Pompeo and the abominable
Bolton. At least Trump admits the ME invasions are really about Israel.
Take a look at some of the - informed - comments below the vid to which you linked. Then think again about an 'all electric
civilisation within a few years'. Yes, and Father Christmas will be providing everything that everyone in the world needs for
a NAmerican/European standard of living within the same time frame. Er - not.
'Renewables' are not going to save hitech industrial 'civilisation' from The Long Descent/Catabolic Collapse (qv). Apart from
any other consideration - and there are some other equally intractable ones - there is no - repeat NO - 'renewable' energy system
which doesn't rely crucially on energy subsidies from the fossil-hydrocarbon fuels, both to build it and to maintain it. They're
not stand-alone, self-bootstrapping technologies. Nor is there any realistic prospect that they ever will be. Fully renewable-power
hitech industrial civilisation is a non-deliverable mirage which is just drawing us ever further into the desert of irreversible
peak-energy/peak-everythig-else.
@16 karlof1. I also find your historical references very interesting. We do indeed seem to be at a very low point in the material
cycle, it will reverse in due course as is its want, hopefully we will live to see a positive change in humanity.
For example we know Tesla didn't succeed in splitting the planet in half, the way techno-psychotics fantasize. As for that
silly link, how typical of techno-wingnuts to respond to prosaic physical facts with fantasies. Anything to prop up faith in the
technocratic-fundamentalist religion. Meanwhile "electrical civilization" has always meant and will always mean fracking and coal,
until the whole fossil-fueled extreme energy nightmare is over.
Given the proven fact that the extreme energy civilization has done nothing but embark upon a campaign to completely destroy
humanity and the Earth (like in your Tesla fantasy), why would a non-psychopath want to prop it up anyway?
It is still the oil, even for the US. The Persian Gulf supplies 20% of world consumption, and Western Europe gets 40% of its oil
from OPEC countries, most of that from the Gulf. Even the US still imports 10% of its total consumption.
Peter AU 1 | Nov 28, 2018 9:44:50 PM | 20
b | Nov 29, 2018 2:33:04 AM | 23
USD as a world reserve currency could be one factor between the important ones. With non US support the saud land could crash
under neighbours pressure, that caos may be not welcomed.
Humble people around where I live have mentioned that time is speeding up its velocity; there seems to be a spiritual (evolutionary)/physical
interface effect or something...
Tolstoy, in the long theory-of-history exposition at the end of War and Peace, challenges 'the great man' of History idea,
spreading in his time, at the dawning of the so-called: European Romantic period of Beethoven, Goerte and Wagner, when
the unique person was glorified in the name of art, truth, whatever (eventually this bubble burst too, in the 20th C. and IMO
because of too much fervent worship in the Cult of the Temple of the Money God. Dostoyevki's great Crime and Punishment is all
about this issue.)
Tolstoy tries to describe a scientifically-determined historical process, dissing the 'great man of History' thesis. He was
thinking of Napoleon Bonaparte of course, the run-away upstart repulican, anathema to the established order. Tolstoy describes
it in the opening scene of the novel: a fascinating parlor-room conversation between a "liberal" woman of good-birth in the elite
circles of society and a military captain at the party.
...only tenuously relevant to karlofi1's great post touching upon the Theory of History as such; thanks.
Now as to the question: ¿Why is Trump supporting Saudi Arabia? Let me think about that...
The concept of car ownership could change, too. Today, privately owned cars spend most of
their lives parked and unused. Self-driving cars of the future are expected to be on the
roads for a much bigger portion of the day -- once they drive you to work, they can drive
someone else to the grocery store. That means roads could be filled with fewer vehicles
overall.
Self-driving cars will hasten the switch from gasoline-powered automobiles to electric
vehicles. The sensors and computers calling the shots will need electrical power, rather than
horsepower that gasoline engines provide.
You probably never studied computer science in depth. One probably needs a degree in
electrical engineering to understand huge problems on this technological path. But some
problems are visible even for mere mortals: The problem with self-driving cars is that
computers are very stupid (let's put it politely handicapped) drivers that can't sense a lot
of things that human sense. They are good only for "normal" situations and limited traffic
scenarios, for example following the car in front of you at (10+your speed) or greater
distance at speeds higher than 25 miles per hour. In congested bumper-to-bumper traffic with
crazy from spending 4 hours on the road human drivers cutting you left and right, they are
useless unless they can communicate with the car in front of you and the car behind you
getting their "intentions" beforehand. This is probably possible using Bluetooth or WiFi, but
is far ahead of us and requires developing protocols and standardizing actions taken by
self-driving cars across various manufacturers. The maximum you can envision now is
autonomous delivery of an empty car (no passengers) as a very low speed (like Google maps
cars) to the driver.
Self-driving cars will hasten the switch from gasoline-powered automobiles to electric
vehicles. The sensors and computers calling the shots will need electrical power, rather
than horsepower that gasoline engines provide.
I like your enthusiasm, but from an engineering point of view, this solution is less
attractive than driving cars on natural gas, and biodiesel. Right now early Tesla enthusiasts
are still not chased out of their expensive neighborhood, but soon they might suffer stigma
and find dead cats in their backyard, especially if other people air conditioning goes out in
summer, or electrical heating at winter due to their hobby ;-). Early Tesla buyers are either
"conspicuous consumption" junkies or the followers some secular cult of the "Second coming of
the electric cars." Rational person right now probably would buy a hybrid. In California as
far as I can tell this is mostly prestige issues that drive people to buy Tesla, especially
among IT specialists. Most of those people (for various reasons including inferiority
complex) are luxury car buyers anyway.
In 2016, there were about 222 million licensed drivers in the United States. Each driver
on average drives 13,474 miles each year. Now assuming 0.300 kilowatts per mile please (which
means no heating and air conditioning in those cars) and even distribution of those miles
during the year (so each driver drives 13,474/365 miles a day) calculate how much energy
needs to be produced for, say 80% of that car to be electric. Add 20% losses in transmission
and charging. Now divide by 12 hours as the most car will be charged at night, right?
Two problems:
1. How to generate so much energy for the cars needed each night? Are you advocating mass
buildup of nuclear power stations? Because neither solar nor wind can work without
compensating nuclear (gas powered -- you need rapid switch on/off) for night time in case of
the electric car is owned by the majority of the population. East-West high voltage lines can
help, but in a very limited way (only three hours difference). Who will pay for this giant
infrastructure project?
2. Liability questions arising are very complex. The question to you: when self-driving
car electronics detects a child is running directly in front of the car and determines that
it can't stop in time and will hit the child unless it crashes the car into the pole and
possibly kills one of the passengers in the front seats, whom it should save: passengers of
the car or the child?
JP Morgan has revising its outlook on Brent crude to US$73 per barrel on average, CNBC
reports . The bank's earlier forecast was for an average Brent crude price of US$83.50 a
barrel.
The head of the bank's Asia-Pacific oil and gas operations, Scott Darling, told CONB
analysts had factored in the increase in supply in North America that will occur in the second
half of 2019 and will eventually pressure prices even lower in 2020, to an average US$64 in
that year.
1891 -- Dr. Edward L. Bernays, lives, Wien, the "father of public relations" credited with
getting women to smoke & helping United Fruit overthrow Guatemalan President Arbenz; A
lovely piece of humanity: "with Bernays there is no consistency, no character, no integrity,
no conscience, no bravery, no truth." A nephew of Sigmund Freud (his sister Anna's son).
Would be perfect for the current 'Potemkin village' .
I'm not sure why Professor Li brings up the 'capitalist system' so prominently in the
article?
Perhaps I don't know the proper definition.
Seems to me that communist or socialist systems can produce just as much CO2.
Depends more on how many people, and their level of industrialization.
The only connection I can see is debt-fueled growth.
If you maximize the economic growth with as much debt as you can muster (borrowing from the
future economic production and wealth), you can grow far into overshoot. Like we have
now.
Perhaps this is more likely in a capitalist system. I'm not at all sure that is true.
Capitalism is simply the default system. The history of civilization has been a history of
capitalism. It has always been a dog eat dog world. To blame anything on capitalism is
nothing more than blaming it on human nature.
I would have said capitalism is simply the natural system. Other wise I think your right
on. Regulations are capitalism guard rails to a civil and successful society. Those who call
for a change to a different system are just ill informed.
There was no capitalist world system 500 years ago. Even 200 years ago, it was still
restricted to Western Hemisphere plus a fraction of Eurasia. In fact, even the English word
"capitalism" was not yet invented then. In 1848, Marx talked about "bourgeois society". So
there is not such a thing called "natural system"
Capitalism is very recent development.
First developed in Netherlands and England in the sixteenth to seventeenth centuries, and
wasn't part of the global world until colonization.
It will be gone shortly, as it needs a expanding economy.
What comes next?
Who knows?
Capitalism – an economic and political system in which a country's trade and
industry are controlled by private owners for profit, rather than by the state. Synonyms:
free enterprise, private enterprise, the free market; enterprise culture
The free market has always existed, albeit at low percentage levels of total production,
which was mostly subsistence agriculture or hunting and gathering. It is certainly true that
capitalism has expanded greatly with the dramatic increase in production that came with
widespread use of fossil fuels, but the concept of private enterprise and private trade
didn't spring out of nothing. It was always there.
There were even private markets under pre-fossil-fuel feudalism, in which the politically
powerful were mostly concerned with defense and taxation. Lots of trade opportunities were
given to people by the state, but they were given to private enterprises. There were also
private traders operating without state support at the same time.
Even tribal groups engaged in trade, although it is often difficult to discern a
distinction between "the state" and "private enterprise" in tribal circumstances.
Capitalism as a word didn't exist but the mercantile economy (profitable trade) has been
going on well before money and money has been around for 5K years.
It seems to me that capitalism has no monopoly on damaging the environment. I'd suggest
rapidly destroying the environment is more a function of being an industrial economy, whether
capitalist or some other. Non-industrial economies seem to destroy the environment more
slowly.
First of all, people who lived in former socialist societies did not call these societies
"communism". That's an American expression later imposed on the rest of the world
Secondly, 20th century socialisms were a part of the capitalist world system and had to
play the system's basic game–economic growth
Thirdly, according to the world system theory (and agreed by many others), the essential
feature of capitalism is the pursuit of endless accumulation of capital.
Someone might say you can have market without growth. It is possible to have a non-growth
economy if the market is not dominant, like all the pre-capitalist societies. But if the
market is dominant, then you have competition everywhere and competition forces everyone to
pursue growth. If you do not grow, you fail and you are eliminated. That happens both to
individuals and countries
Lastly, at least a large minority of environmentalists agree that economic growth is
fundamentally incompatible with sustainability. So if you agree with point three and four,
you have to conclude that so long as capitalism exists, there is no hope for
sustainability.
a large minority of environmentalists agree that economic growth is fundamentally
incompatible with sustainability.
I would disagree. In fact, I'd say that some of the push for this idea has come from
ultra-conservatives like the Heartland Institute, which hopes to discredit
environmentalists.
Have you seen evidence for the idea that this is an idea held by a large minority of
environmentalists?
The article you provided starts with "To read the accounts in the mainstream media,
one gets the impression that renewable energy is being rolled out quickly and is on its way
to replacing fossil fuels without much ado, while generating new green jobs."
That's an explicit acknowledgement that the author is outside the mainstream.
it's fair to say that growth sustainability has yet to be proved
I would strongly disagree. I would describe the idea that investing in renewable power and
EVs would necessarily destroy economic growth as a fringe idea, outside the economic and
environmental mainstream. It is an extraordinary idea, which needs extraordinary
evidence.
For instance, I think it's fair to say that Germany is both an engineering and
environmental leader, and that the general consensus in German environmental circles is that
a transition away from FF is compatible with economic growth.
Yes, I understood. And I'm disagreeing. I think it's a small minority – a fringe.
The idea of a "large minority" suggests some degree of acceptance by the general
environmental community. It suggests that this is a strong contender in the "marketplace of
ideas". As the author of the article you provided acknowledged: he's out of the mainstream.
He's arguing to try to change that, but .his opinion is definitely outside the general
consensus. It's not generally considered a "strong contender".
Thirdly, according to the world system theory (and agreed by many others), the essential
feature of capitalism is the pursuit of endless accumulation of capital.
Well not really–
The essence is:
"The capitalist mode of production proper, based on wage-labour and private ownership of the
means of who derive their income from the surplus product produced by the workers and
appropriated freely by the capitalists."
But agree– appropriate or die by the hands of those with greatest greed.
I've stopped using the term "capitalism" because it elicits so damn many knee-jerk reactions.
Of late, I always refer to "neoliberalism" and then if I feel like picking a fight, I'll
follow in parentheses (end-stage capitalism, that is). Neoliberalism is the end-stage of the
global economic system, in which I include China as well, because it's the period of total
rent-seeking (completely unearned wealth) and what I like to call The Mother Of All Asset
Bubbles (MOAAB).
All of U.S. energy policy since the Greatest Recession Ever, Dude began in Dec. 2007 has
been fostering full-out flat-out shale production in order to squash the less-diversified
energy-dependent economies such as Venezuela, Iran (where it hasn't succeeded, yet) and even
Russia (hasn't succeeded). But it's left the USA as the Hegemon of global energy at the
present moment.
This should leave the USA in the position for loads more unearned wealth-accumulation at
least until there is a bust in the fracked energy production. All this does is prolong the
length of the end stage of the economic system, in my humble opinion. At some point we'll
have to reckon with the end of the end stage.
And so . . . Sovereign Wealth Funds and Shale. Are they funding those loans?
Answer -- not really. There was a hyped announcement of Singapore's SWF sending money to
Chesapeake. But that was in 2010.
Reporters who dare to look into this don't seem to find much. They retreat to the
sanctuary of narrative. Something like this "With renewables smashing oil's future, SWFs that
are mostly funded by oil and gas are reluctant to invest in anything related to oil or
gas."
Uh huh.
Worth noting that China has 4 SWFs that clearly were not funded by oil or gas -- but they
aren't really SWFs either. They are just money in accounts at the PBOC and of course that
entity can declare itself to have whatever amount it wishes (just like the Fed's Balance
Sheet). (Note surprisingly in this context that Hong Kong (listed as one of China's) has a
"SWF" of about 1/2 trillion dollars, which is absurd). But . . . China's money isn't oil or
gas derived and even they aren't pouring into profitable oil or gas so diversification may
not be the motivator in this. (Venezuela doesn't count, there will be no profit there)
BTW narrative embracers, y'all might want to examine why Tesla's stock didn't fall.
Answer, Saudi's SWF owns 5% of the company in total and they don't sell more or less any of
their holdings. This is a common trait of SWFs. They seldom sell anything. tra la tra la
Last but not least, and wow this is intriguing, there is CONSIDERABLE talk of the UK
creating a SWF funded by shale gas that hasn't flowed yet. Gotta be an agenda there.
Crude oil – The recent spike highs in crude oil exports must be coming from
inventory draws. As the sum of refinery processing plus net crude oil exports is higher than
crude oil production.
Chart https://pbs.twimg.com/media/Ds2Aqz9WsAANjjJ.jpg
Twitter – Donald J. Trump
So great that oil prices are falling (thank you President T). Add that, which is like a big
Tax Cut, to our other good Economic news. Inflation down (are you listening Fed)!
1:46 pm – 25 Nov 2018 https://twitter.com/realDonaldTrump
What exactly is going to change if the Fed suspends it's increases? Dollar liquidity is still
going to be an issue globally. Low oil price means less dollar liquidity particularly outside
USA. Market demands nothing less than full blown more QE and lower interest rates. There is
globally about 20 times the amount of dollar denominated debt as there is physical dollars to
service that debt. That is what happens when the FED drops interest rates from 5.25% to
0.25%. Everybody borrowed dollars. FED can't exit without putting us right back where we were
in 2009. They also can't continue. Why can't they continue? Answer is simple, the amount they
create to keep things going has to be an ever increasing amount at an ever lower interest
rate. Otherwise debt deflation happens. They hit a brick wall and can do nothing. So they
will try to deflate it a little at a time. By raising interest rates and unwinding QE a
little at a time. Then something major happens and it deflates a bunch all at once.
"... "The 10 Bcm/year into Europe is not a game-changer from a volume point of view, but it is a game-changer from a new source of product into mainland Europe perspective and it can be expanded." ..."
"... Meanwhile, however, Russia and Turkey are building another pipeline, Turkish Stream, that will supply gas to Turkey and Eastern Europe, as well as possibly Hungary. The two recently marked the completion of its subsea section. Turkish Stream will have two lines, each able to carry up to 15.75 billion cubic meters. One will supply the Turkish market and the other European countries. ..."
"... In this context, the Southern Gas Corridor seems to have more of a political rather than practical significance for the time being , giving Europe the confidence that it could at some future point import a lot more Caspian gas because the infrastructure is there. ..."
The Southern Gas Corridor on which the European Union is pinning most of its hopes for
natural gas supply diversification away from Russia is coming along nicely and will not just be
on schedule, but it will come with a price tag that is US$5-billion lower than the original
budget , BP's vice president in charge of the project
told S&P Global Platts this week.
"Often these kinds of mega-projects fall behind schedule. But the way the projects have
maintained the schedule has meant that your traditional overspend, or utilization of
contingency, has not occurred," Joseph Murphy said, adding that savings had been the top
priority for the supermajor.
The Southern Gas Corridor will carry natural gas from the Azeri Shah Deniz 2 field in the
Caspian Sea to Europe via a network of three pipelines : the Georgia South Caucasus Pipeline,
which was recently expanded and can carry 23 billion cubic meters of gas; the TANAP pipeline
via Turkey, with a peak capacity of 31 billion cubic meters annually; and the Trans-Adriatic
Pipeline, or TAP, which will link with TANAP at the Turkish-Greek border and carry 10 billion
cubic meters of gas annually to Italy.
TANAP was
commissioned in July this year and the first phase of TAP is expected to be completed in
two years, so Europe will hopefully have more non-Russian gas at the start of the new decade.
But not that much, at least initially: TANAP will operate at an initial capacity of 16 billion
cubic meters annually, of which 6 billion cubic meters will be supplied to Turkey and the
remainder will go to Europe. In the context of total natural gas demand of 564 billion cubic
meters in 2020, according to a forecast from the Oxford Institute for Energy Studies released
earlier this year, this is not a lot.
Yet at some point the TANAP will reach its full capacity and hopefully by that time, TAP
will be completed. Surprisingly, it was the branch to Italy that proved the most challenging,
and BP's Murphy acknowledged that. While Turkey built TANAP on time to the surprise of the
project operator, TAP has been struggling because of legal issues and uncertainty after the new
Italian government entered office earlier this year.
At the time, the government of Giuseppe Conte said the pipeline was pointless but, said
Murphy, since then he has accepted the benefits the infrastructure would offer, such as transit
fees. And yet local opposition in southern Italy remains strong but BP still sees first
deliveries of gas through Italy in 2020.
The BP executive admitted that at first the Southern Gas Corridor wouldn't make a
splash.
"The 10 Bcm/year into Europe is not a game-changer from a volume point of view, but it is
a game-changer from a new source of product into mainland Europe perspective and it can be
expanded."
Meanwhile, however, Russia and Turkey are building another pipeline, Turkish Stream, that
will supply gas to Turkey and Eastern Europe, as well as possibly Hungary. The two recently
marked the completion of its subsea section. Turkish Stream will have two lines, each able to
carry up to 15.75 billion cubic
meters. One will supply the Turkish market and the other European countries.
In this context, the Southern Gas Corridor seems to have more of a political rather than
practical significance for the time being , giving Europe the confidence that it could at some
future point import a lot more Caspian gas because the infrastructure is there.
Strangely, I found the attached image after making the above post (or else I would have
included it). In the image you can see Al-Waleed bin Talal, and look who is with him! They seem
pretty chummy.
On 11/24/2018 at 4:14 AM,
Qanoil said: think especially of alwaleed bin talal
who was the largest
shareholder in citigroup (who,
thanks to wikileaks was found to have
selected nearly every member of
hussein obama's cabinet
I also heard that Al-Waleed bankrolled Obama's education at Harvard and got him started
in politics. Supposedly, here is the source:
"When asked about Obama by the show's host, Dominic Carter, the respected black politico
Percy Sutton casually explained that he had been "introduced to [Obama] by a friend." The
friend's name was Dr. Khalid al-Mansour.
Who is Khalid Abdullah Tariq Al-Mansour Ph.D? He
co-founded the United Bank of Africa, the World United Bank of Africa and the Saudi African
Bank. Since 1996, Dr. Al-Mansour has been a legal and financial Consultant to various public
and private companies., including none other than Al-Waleed.
According to Sutton, al-Mansour
was "raising money" for Obama's education and had asked him to "please write a letter in
support of [Obama] a young man that has applied to Harvard." Sutton gladly obliged. When Sutton
died in December 2009 -- "an enormous loss" said Obama."
Oil continues collapsing. The 7% move today is probably magnified due to lack of liquidity
post-Thanksgiving, but nevertheless the move is huge. Oil is down 34% from recent highs.
Fundamentals and real economy do not change this quick, so expect to hear about more "hedge(ed)
funds" blowing up. After all this is a 3 sigma move .
What´s next for oil nobody knows, but 50 USD is a rather big level to watch. For
believers in Fibonacci, 50 is the 50% retracement from the 2016 lows.
Oil volatility, OIV index, is now in full explosion mode. This is pure panic and these
levels won´t be sustainable longer term, but the rise in oil volatility is simply
amazing.
As we outlined earlier, oil stress started spreading to credit several weeks ago. We have
been pointing out, no bounce in equities until we possibly see some stabilization in
credit . For the equity bulls, unfortunately credit continues imploding. European iTraxx
main continues the move violently higher.
Similar chart is to be found for the US CDX IG index.
Below chart shows the CDX IG index (white) versus oil (inverted, orange). The relationship
is rather clear. Add to this crowded positions and low liquidity and the moves continue feeding
of each other, causing enormous p/l pain and further risk reduction among funds.
European iTraxx main (inverted white) is now "aggressively" under performing the Eurostoxx
50 index (orange). The moves in credit are starting to feel rather "panicky", helping VIX and
other related volatilities higher.
Given the continuation in oil prices, we ask ourselves when will the market start to realize
Fed can´t be tightening as aggressively as (still) priced in. Maybe time for the Powell
put to revive?
Comments while mostly naive, are indicative for the part of the US society that elected Trump
and that Trump betrayed.
But the fact that gas went not to Europe, but to Turkey is pretty indicative. And even larger volume with go to China. At some
point Europe might lose part or all Russia gas supply as Russian gas reserved are not infinite. That the perspective EU leaders
are afraid of.
US shale gas is OK as long as the USA is supplied from Canada, Russia and other places as well. Some quantity can be
exported. But the USA can't be a large and stable gas supplier to Europe as shale gas is capital intensive and sweet spots
are limited.
Notable quotes:
"... Some worthy observations, especially with all the US "Think Tanks." But I would include the number of non-Jewish elites who have banded together with the Jewish elite and who have greatly aided in eating out the very heart of America. ..."
"... History also shows that ANY smaller entity (Israel) that depends on a larger entity (America) for its survival becomes a failed entity in the long run. Just saying. ..."
"... The American Empire is all cost and no benefit to the great majority of Americans. The MIC and that's it. Politicians on the right wave the flag and politicians on the left describe a politically correct future. All on our dime. ..."
While the Trump Administration still thinks it can play enough games to derail the
Nordstream 2 pipeline via sanctions and threats, the impotence of its position geopolitically
was on display the other day as the final pipe of the first train of the Turkstream pipeline
entered the waters of the Black Sea.
The pipe was sanctioned by Russian President Vladimir Putin and Turkish President Recep
Tayyip Erdogan who shared a public stage and held bilateral talks afterwards. I think it is
important for everyone to watch the response to Putin's speech in its entirety. Because it
highlights just how far Russian/Turkish relations have come since the November 24th, 2015
incident where Turkey shot down a Russian SU-24 over Syria.
https://www.youtube.com/embed/TkFR25SArYM
When you contrast this event with the strained and uninspired interactions between Erdogan
and President Trump you realize that the world is moving forward despite the seeming power of
the United States to derail events.
And Turkey is the key player in the region, geographically, culturally and politically.
Erdogan and Putin know this. And they also know that Turkey being the transit corridor of
energy for Eastern Europe opens those countries up to economic and political power they haven't
enjoyed in a long time.
The first train of Turkstream will serve Turkey directly. Over the next couple of years the
second train will be built which will serve as a jumping off point for bringing gas to Eastern
and Southern Europe.
Turkstream will bring 15.75 bcm annually to Turkey and the second train that same amount to
Europe. The TAP – Trans Adriatic Pipeline -- will bring just 10 bcm annually and won't do
so before 2020, a project more than six years in the making.
Political Realities
The real story behind Turkstream, however, is, despite Putin's protestations to the
contrary, political. No project of this size is purely economic, even if it makes immense
economic sense. If that were the case then the STC wouldn't exist because it makes zero
economic sense but some, if not much, political sense.
No, this pipeline along with the other major energy projects between Russia and Turkey have
massive long-term political implications for the Middle East. Erdogan wants to re-take control
of the Islamic world from the Saudis.
This is why they have the Saudis on a residual-poison-type drip
feed of information relating to the death of Jamal Khashoggi to extract maximal value from
the situation as Erdogan plays the U.S. deep state against the Trump/Mohammed bin Salman (MbS)
alliance.
The U.S. deep state wants Trump weakened and MbS removed from power. Trump needs MbS to
advance his plans for securing Israel's future and prolong the dollar's long-term health.
Erdogan is using this rift to extract concessions left and right while continuing to do
whatever he wants to do vis a vis Syria, Iran and his growing partnership with Russia.
Erdogan is in a position now to drive a very hard bargain over U.S. involvement in Syria,
which neither faction in the U.S. government (Trump and the deep state) wants to give up
on.
By controlling the oil fields in the eastern part of Syria and blocking the roads leading
from Iraq the U.S. is playing a game it can't win because ultimately the Kurds will either have
to be betrayed by the U.S. to keep Erdogan happy or cut a deal with the Syrian government for
their future alienating the U.S.
This has been the ultimate end-game of the occupation of eastern Syria for months now and
time is on both Putin's and Erdogan's side. Because the U.S. can't pressure Turkey to stop
growing closer to Russia and Iran.
Eventually the U.S. troops in Syria will be nothing more than an albatross around Trump's
neck politically and he'll have to announce a pull out, which will be popular back home helping
his re-election campaign for 2020.
The big loser in this is Israel who is now having to circle the wagons politically since
Putin put the screws to Benjamin Netanyahu for his part in the deaths of 15 Russian airmen back
in September by closing the Syrian airspace and allowing mostly free movement of materiel to
Lebanon.
Netanyahu, as I talked about last week, is now in a very precarious position after Israel
was forced to sue for peace thanks to the unprecedentedly strong response by the Palestinians
in Gaza.
Elijah Magnier commented
recently that it this was the net result of Trump's unconditional support of Israel which
united the Arab resistance rather than dividing and conquering it.
But the US establishment decided to distance itself from the Palestinian cause and
embraced unconditionally the Israeli apartheid policy towards Palestine: the US supports
Israel blindly. It has recognised Jerusalem as the capital of Israel, suspended financial aid
to UN institutions supporting Palestinian refugees (schools, medical care, homes), and
rejected the right of return of Palestinians. All this has pushed various Palestinian groups,
including the Palestinian Authority, to acknowledge that any negotiation with Israel is
useless and that also the US can no longer be considered a reliable partner. Moreover, the
failed regime-change in Syria and the humiliating conditions place on Arab financial support
were in a way the last straws that convinced Hamas to change its position, giving up on the
Oslo agreement and joining the Axis of the Resistance.
Project Netanyahu,
as Alistair Crooke termed it , was predicated on keeping the support of the Palestinians
split with Hamas and the Palestinian Authority at odds and then grinding out the resistance in
Gaza over time.
Trump's plans also involved the formation of the so-called "Arab NATO" the summit for which
has been put off until next year thanks to Erdogan's deft handling of the Saudi hit on
Khashoggi. There are still a number of issues outstanding -- the financial blockade of Qatar,
the war in Yemen, etc. -- that need to be resolved as well before any of this is even remotely
possible.
At this point that plan has failed and the clash with Israel last week proved it is
unworkable without tacit approval of Turkey who is gunning for the Saudis as the leaders of the
Sunni world.
Show me the Money
But, more importantly, over time, a Turkey that can ween itself off the U.S. dollar over the
next decade is a Turkey that can survive politically the upheaval to the post-WWII
institutional order coming over the next few years.
Remember, all of this is happening against the backdrop of a U.S. and European political
order that is failing to maintain the confidence of the people it governs.
The road to dollar independence will be long and hard but it will be possible. Russia is the
model for this having successfully removed the dollar from a great deal of its trade and is now
reaping the benefits of that stability.
And projects like Turkstream and the soon to be completed Power of Siberia Pipeline to China
will see the gas from both trade without the dollar as the intermediary.
If you don't think this de-dollarization of the Russian economy is happening or significant,
take one look at the Russian ruble versus the price of Brent crude in recent weeks. We've had
another historic collapse in oil prices and yet the ruble versus the dollar hasn't really moved
at all.
The upward move from earlier this year in the ruble (not shown) came from disruptions in the
Aluminum market and the threat of further sanctions. But, as the U.S. puts the screws even
tighter to Russia's finances by forcing the price of oil down, the effect on the ruble has been
minimal.
With today's move Brent is off nearly $30 from its October high ( a massive 35% drop in
prices) just seven weeks ago and the Ruble hasn't budged. The Bank of Russia hasn't been in
there propping up its price. Normally this would send the ruble into a tailspin but it
hasn't.
The other so-called 'commodity currencies' like the Canadian and Australian dollars have
been hit hard but not the ruble.
Set the Way Back Machine to 2014 when oil prices cratered and you'll see a ruble in free
fall which culminated in a massive blow-off top that required a fundamental shift in both
fiscal and monetary policy for Russia.
This had to do with the massive dollar-denominated debt of its, you guessed it, oil and gas
sector. Today that is not a point of leverage.
Today lower oil prices will be a forward headwind for Russian oil companies but a boon to
the Russian economy that won't experience massive inflation thanks to the ruble being sold to
cover U.S. dollar liabilities.
Those days are over.
And so too will those days come for Turkey which is now in the process of doing what Russia
did in 2015, divest itself of future dollar obligations while diversifying the currencies it
trades in.
Stability, transparency and solvency are the things that increase the demand for a currency
as not only a medium of exchange but also as a reserve asset. Russia announced the latest
figures of bilateral trade with China bypassing the dollar and RT had a very interesting
quote from Prime Minister Dmitri Medvedev.
No one currency should dominate the market, because this makes all of us dependent on the
economic situation in the country that issues this reserve currency, even when we are talking
about a strong economy such as the United States," Medvedev said.
He added that US sanctions have pushed Moscow and Beijing to think about the use of their
domestic currencies in settlements, something that "we should have done ten years ago."
" Trading for rubles is our absolute priority, which, by the way, should eventually turn
the ruble from a convertible currency into a reserve currency, " the Russian prime minister
said.
That is the first statement by a major Russian figure about seeing the ruble rise to reserve
status, but it's something that many, like myself, have speculated about for years now.
Tying together major economies like Turkey, Iran, China and eventually the EU via energy
projects which settle the trade in local currencies is the big threat to the current political
and economic program of the U.S. It is something the EU will only embrace reluctantly.
It is something the U.S. will oppose vehemently.
And it is something that no one will stop if it makes sense for the people on each side of
the transaction. This is why Turkstream and Nordstream 2 are such important projects they
change the entire dynamic of the flow of global capital.
Oil and commodity markets were used as a finishing move on the Soviet system. The book,
"The Oil Card: Global Economic Warfare in the 21st Century" by James R. Norman details the
use of oil futures as a geopolitical tool. Pipelines change the calculus quite a bit.
Soros funded 'migration' to Europe has also failed and created a massive cultural and
economic burden on Europe.
The Soros/Rothschild plan to destroy Middle Eastern countries and displace the people was
- of course - motivated by the Rothschilds 'bread and butter ' - OIL ( the worlds largest
traded commodity ) !!
...Where ever they go, they [neoliberals] get organised, identify the institutions/establishments/courts to infiltrate and then use that
influence to -
* Hijack the economy.
* Corrupt the society.
As the current trend shows, the nexus of the international economic activity is shifting
east. Turkey is not making a mistake aligning itself with the goals of Russia, Iran and
China. Although there is still a huge debt of the previous deeds that has to be paid.
"Half of the US billionaires are Jews while only being less then 3% of the population. And
it doesn't stop there. They work collectively to hijack the institutions critical for the
operations of the democracy."
Some worthy observations, especially with all the US "Think Tanks." But I would include
the number of non-Jewish elites who have banded together with the Jewish elite and who have
greatly aided in eating out the very heart of America.
I read on here previously some dimwit comment about "America prints a bill for 2 cents
while other countries have to earn a dollars worth of equity to buy it and we can do this
forever" kind of thing. Not if other countries don't supply the demand you can't :)
History also shows that ANY smaller entity (Israel) that depends on a larger entity
(America) for its survival becomes a failed entity in the long run. Just saying.
I think you could quite reasonably replace the term 'depends on a larger entity', with a
term that better describes a (smaller) ' parasite ' on a (larger) host...
From your lips to God's ear. The American Empire is all cost and no benefit to the great majority of Americans. The MIC
and that's it. Politicians on the right wave the flag and politicians on the left describe a
politically correct future. All on our dime.
Israhell is losing its status via Putins peaceful diplomacy and trade with ME countries
who are not onboard with the Yinon plan. This is why RUSSIAGATE, led by dual Israhelli democrats in Congress. There is always a
foreign policy issue attached to their demonizing of other countries. This is also why the UK just sent UK soldiers to Ukraine declaring war on Russia for
"invading Ukraine" and not telling parliament or the UK people.
UK/US blind support for Israhell will get us all killed.
We do know that UK soldiers have been sent to the Ukraine. We also know that, according to elements in the Government and the Civil Service, Russia
invaded and annexed the Ukraine, which is just another reason to not trust the
Government--any Government.
WRONG!!!!! NordStream Eins und Zwei are the Prizes, because DEU, Scandinavia, CHE, and FRA will
Benefit. TRK Wins 2nd Prize with TRKStream and SouthStream Pipelines. Losers are BGR and EU_PARAGOV, since BGR went from Prime Partner to Trickledown
Transiteer.
Ultimately, along with Nordstream and Turkstream, there will also be a Polarstream
(leading to UK and Iceland) and Southstream (which was already begun but temporarily
suspended after Obama threatened Bulgaria via Angela Merkel).
And, oh...I am sure there will also be a Ukrostream (also known as Mainstream)
unfortunately the Ukronazi government of Ukrainistan doesn't know this just yet. They will
find out in due course, I am sure.
First PolarStream is highly unlikely both because laying it would be extremely difficult
and expensive and because Iceland has no need for gas as it is sitting on thermal reserves
and the UK won't deal with Russia.
You are correct on SouthStream.
As to UkroStream (I assume you mean Ukraine) it is already in existence and has been for
50 plus years. Given the bad history between the parties the Russians will want to stop that
route asap, hence the timing of NordStream 2 and TurkStream. So in the future UkroSream is
going to end, not start.
long-term political implications for the Middle East. Erdogan wants to re-take control of
the Islamic world from the Saudis.
SA still has control of the Hajj -- religious tourism - command by the Magic Book that
even Turkish mohammadist must complete. +/- 18% of SA GDP-- and SA isn't sharing any of that
loot.
Ticip is required to go and throw rocks at the black orb -- and do the Muslim Hokey Pokey
along with all the rest.. oh, and pay the SA kings for the privilege !
The new 3D Grand Chessboard is being played very quietly out of Moscow.
The article is a wee bit deceptive. Whilst this was indeed the last bit of under sea pipe
they were celebrating, it should be pointed out the stunning speed that they achieved, about
a mile a day some to a depth of over 1000 feet, quite an achievement on land, let alone at
sea. This is quite interesting, especially the map
Also, as its landfall in Turkey is west of the Bosphorus, that is west of Istanbul, maybe
that 'for Turkish use' is a cover for its primary purpose, supplying the Balkans as well as
Turkey from January 2020.
Note the significance of the start to pump date, December 2019, the same as NordStream 2.
What else happens then? Oh yes, the gas transit contract with Ukraine ends. The combination
of these two new pipelines to a very great extent replace that agreement. Even though
politically everyone is saying Ukraine ($4B p.a. transit fees) should be protected.
Take another look at the map, note that it takes a dogleg south to Turkey. If at that
point it had gone straight ahead it would have gone to Bulgaria as SouthStream. But the US
and its EU vassal stopped that. Maybe the second pipeline the Russians are now discussing
will resurrect that route.
"... You would not consider as viable the hypothesis that Trump is using the assassination, and evidence of MbS' ordering of it, as leverage to achieve various objectives that MbS wasn't on board with (a resolution of the Yemen situation? Oil pricing? toning down jihadi support in the MENA? Other?). ..."
What do people make of the fact that it seems Khashoggi apparently was recently married,
the picture of him with his supposed fiancée was clearly photoshopped (used the
same photo from his WaPo profile), and his family has indicated they knew nothing of this
new fiancée?
It also seems interesting how the US has a tape of MBS ordering his silencing when we
apparently knew little at the outset. Seems this turd is starting to stink a bit.
Automated SIGINT collection produces such volumes of material based on standing targets
that it often takes a while to sift through it. MBS's phone would be such a target. In
any event Trump doesn't want to hear it.
You would not consider as viable the hypothesis that Trump is using the assassination,
and evidence of MbS' ordering of it, as leverage to achieve various objectives that MbS
wasn't on board with (a resolution of the Yemen situation? Oil pricing? toning down
jihadi support in the MENA? Other?).
Oil and commodity markets were used as a finishing move on the Soviet system. The book,
"The Oil Card: Global Economic Warfare in the 21st Century" by James R. Norman details the
use of oil futures as a geopolitical tool. Pipelines change the calculus quite a bit.
That discovery chart shows the problem well, I hadn't seen it before. The big blip in deep
water discoveries in the 2000s from improved technologies and higher prices contributed
greatly to the subsequent glut and price collapse – and now what's left? There hasn't
been much of an uptick in exploration despite the price rally, offshore drillers continue to
go bust, leasing activity still fairly slow – the tranches get bigger as the last, less
attractive bits are released but lease ratio falls, Permian dominates all news stories. Why
would the recent decline curve turn around? And the biggest surprise might be that gas is
just as bad as oil, so the recent boost in supplies from condensate and NGL might also have
run its course.
I tracked FIDs for oil through 2017, I've been a bit less diligent this year so may have
missed some, but for greenfield conventional plus oil sands I have for the remainder of 2018
through 2025: 400, 1770, 1170, 800, 985, 70, 250, 400 kbpd added – about 6 mmbpd total,
nothing after 2025, plus another 1 mmbpd from ramp ups from this year. Only pretty small
projects could get done now before 2022, and there aren't many of those left. Anything else
would need to come from brownfield (in-fill), LTO or new discoveries (including existing
known resources that become reserves once a development decision is made).
High economic growth matched high growth in energy consumption and recessions saw fall in
energy consumption.
Since 90% of the energy consumed comes from burning the stored energy in coal, oil, gas
and wood. It is hardly surprising that during high economic growth CO2 emissions increase
also.
Those who not not wish to see this link, obviously think Peak Oil is not a problem. GDP
growth will continue even though oil becomes more scarce.
If oil production falls by just 1% per year, taking into account new vehicle production.
The world would have to produce 90 million electric cars each year in order to prevent oil
prices from destroying other users such as the aviation industry.
This year 1.5 million fully electric cars were made and according to several people here
peak oil is no more then 4 years away.
Since 90% of the energy consumed comes from burning the stored energy in coal, oil, gas
and wood. It is hardly surprising that during high economic growth CO2 emissions increase
also
I have a hunch that we are about to see some major changes to that paradigm.
I hope you are correct, but I have done some calculations on what is needed.
According to reports around $1.7 trillion was invested in energy supply in 2017. $790
billion on oil, gas and coal supply. $320 billion was spent on solar and wind.
During 2017 oil consumption increased by 1 million barrels per day. Gas consumption increased
by 3% and even coal consumption went up.
The world needs to spend about $2.5 trillion per year on wind, solar and batteries in
order to meet increased energy demand and reduce fossil fuel burning by about 1% per year.
This obviously depends on GDP growth being about average.
Since recent scientific observations have discovered that Greenland, the Arctic and
Antarctica melting much faster than anyone thought. The shift needs to be a minimum of 2.5%.
Thus a spending of around £4 trillion per year is needed.
I do not see any country spending a minimum of 12 times more on solar and wind in the next
3-5 years. It would take every country doing so.
Agreed Hugo. The world is only making token moves towards installation of the necessary wind
and solar.
This coming decade will see everyone scrambling to get the equipment built and installed.
Looks like centralized planning (China) is going to beat 'the market' on being the primary
supplier. Our 'free' market has tariffs on PV imported. Brilliant.
Does having a 5 (or 10 yr) plan make you communist?
Or just smart.
"The world needs to spend about $2.5 trillion per year on wind, solar and batteries in order
to meet increased energy demand and reduce fossil fuel burning by about 1% per year. This
obviously depends on GDP growth being about average."
1% per year? You have got to be kidding.
The global oil consumption for transport is about 39.5 million barrels of oil per day. Using
PV to drive EV transport would mean an investment of 2.2 trillion dollars in PV to provide
global road transport energy.
So what do we use next year's money for?
.
"The global oil consumption for transport is about 39.5 million barrels of oil per day"
39.5 million is only gasoline in the world. Add diesel and jet fuel and you get to about
75 million barrels a day for transportation or about 75% of oil produced.
Did you get the point? That Hugo overstated the cost of renewables to replace fossil fuels
by a huge amount and understated their effect by another huge amount.
We have a couple of people that consistently do that on this site.
You can do all what you want with paper oil including to crash market prices once again to
$40 level. You just can't refine paper oili and put the resulting gasoline in the car.
New York (CNN Business) The meltdown in the oil market has caught almost
everyone off guard. In the span of mere weeks, crude prices went from a four-year high to a
full-blown bear
market. The oil crash -- crude is down more than 30% from its recent peak -- was triggered
by a series of factors that combined to spook
traders who once saw $100 oil on the horizon. "The sheer scale of the move is triggering
unpleasant memories of 2014 and 2015," said Michael Tran, director of global energy strategy at
RBC Capital Markets, alluding to the last oil downturn. US oil prices plummeted another 7% on
Friday, breaking below $51 a barrel for the first time in 13 months. President Donald Trump
celebrated the oil crash. Read More "Oil prices getting lower, Great! Like a big Tax Cut for
America and the World. Enjoy!" Trump tweeted on Wednesday. "Thank you to Saudi Arabia, but
let's go lower!" But the oil slide can't be explained by a simple tweet.
... ... ...
American shale oil boom Although Trump praised Saudi Arabia, his tweet
omitted the central role played by America in the oil plunge. Lifted by the shale oil boom, the
United States recently overtook Russia and Saudi Arabia to become the world's largest oil
producer for
the first time since 1973. The International Energy Agency predicts US output will have
soared by more than 2 million barrels per day in 2018. It's expected to climb further next
year. No other country has ramped up production to that degree.
... ... ...
Demand Fear
Appetite for oil in the United States has been "very robust," but the IEA warned last week
of "relatively weak" demand in Europe and developed Asian countries. And the IEA flagged a
"slowdown" in demand in India, Brazil and Argentina caused by high prices, weak currencies and
deteriorating economic
activity .
Last month the International Monetary Fund downgraded its 2019 GDP estimates for both China
and the United States because of the trade war. Global GDP is expected to slow from 2.9% in
2018 to 2.5% next year. That's never good news for oil, which powers the economy.
... ... ...
Fast money
Commodities, much like stocks, are influenced by large bets made by hedge funds and other
traders. Analysts say the oil plunge was exacerbated by the unwinding of massive bullish bets
by financial players.
The managed money community's long positions in crude plunged in late October to the lowest
level since early 2016 when crude crashed to $26 a barrel, according to RBC.
The future of oil prices is in great flux. The huge boom in American and Canadian shale
output has added tremendously to the overall global supply of oil. The United States, as a
matter of fact, has become almost energy independent. At the same time, data from the
International Energy Agency shows that worldwide demand has flattened, to some extent because
of a drop in supply from emerging markets. These factors would seem to argue for oil prices to
range close to the current price of $58. However, crude was at $74 just a month ago, and the
circumstances that drove it up have not entirely disappeared.
Venezuela, which has the world's largest proven oil reserves, is in political and economic
turmoil. Iran's exports will be curtailed by sanctions. Tensions with Saudi Arabia have not
been so high in years after the murder of journalist Jamal Khashoggi. The Saudis already have
said they plan to cut production.
From what individuals pay for gasoline and heating oil to airline fuel prices to
petrochemical products, a spike in crude would be damaging. (Ironically, a very sharp drop in
oil prices is sometimes the sign of a falloff in global demand, and thus a signal of an overall
slowdown in worldwide GDP.)
TheRealNews
Published on 20 Nov 2018
CIA officials are signaling Saudi Crown Prince Mohammed bin Salman must be replaced. Is this all about the killing of Jamal
Khashoggi? Professor Asad AbuKhalil says there are other political reasons.
Fear not! I heard on the news on my way home that Trump has decided Saudi Arabia will not be
punished for the killing of Khahsoggi with termination of current arms contracts. The Donald
reasons that if that happens, the KSA will just buy its weapons elsewhere. And nobody in the
military-industrial complex wants that. I am very confident Justin Trudeau will interpret
that as a signal that Canada likewise should not cut off its nose to spite its face, and so
Canada will not 'punish' its good friend, either. Therefore, Saudi Arabia will experience no
punishment whatsoever for its admitted murder of an inconvenient American journalist. There
are limits to western indignation, after all. So the west will content itself with revoking
the KSA's invitation to the Spring Strawberry Social, and double down on its insistence that
Crimea is Ukraine and must be returned to Kiev's control, and the west will never accept its
'annexation'. Never, never, never. There are some issues on which the west has spine to
spare. So if you want a noisy western journalist removed, slip the Saudis a few bucks, and
they can probably make it happen with no recriminations.
The recognition of Crimea as part of Ukraine by Washington and its minions is totally
worthless. It is not based on law and justice, it is based on self-interest (as in the USA
had big plans to acquire Crimea and build a massive naval base there). The use of the word
annexation is propaganda drivel.
Ukraine annexed Crimea in 1991 and the ICJ has ruled that
local ethnic majorities have a right to self determination. If independence is good enough
for Kosovo, it is good enough for Crimea. No amount of special pleading by Washington and its
bootlicks about Kosovo being "special" has any merit.
I'm afraid you are wrong about the ICJ Kirill. The ICJ dodged the actual issue. They ruled
that making a declaration of independence is not against international law, not
whether anyone/whatever/blah blah blah actually has the right to independence. Possibly
because they did not want to cross Pandora's Rubicon Box
the adoption of the declaration of independence of the 17 February 2008 did not violate
general international law because international law contains no 'prohibition on declarations
of independence
####
Some call it 'unique', others call it a precedent , therefore 'not unique'. If the
West argues that the ICJ said it was ok, then it is also ok for Crimea to declare
independence. Or, if they claim that Crimea is not independent, that Kosovo cannot be either,
hence, as you point out the use of the word ' annexation ' and other creative
circumlocutions to avoid mentioning that secession was first and the clear comparison with
Kosovo which would not serve them well at all.
The International Court of Justice today held that
international law did not prohibit Kosovo's
declaration of independence, while sidestepping the
larger issue of Kosovo's statehood
####
But, this is not the first time the West has decided what international law is for itself
when back in 1991 the European Council ministers themselves appointed the Badinter Commission
to give it a legal figleaf for recognizing the administrative borders of Yugoslavia as
international. I've posted this link before, but once more with feeling:
Thanks for the clarification. But it is all a house of cards. Given that empires and
countries have continually fissioned into pieces through the whole of relevant history, the
notion of "territorial integrity" is bogus and a corollary of "might makes right". As long as
the country can suppress secessionists it has territorial integrity, when it becomes too weak
everything falls apart. There is no international law. And if ware to assume a common law
regime that is not maintained by legislatures, then secession is fully legal if the local
majority wants it hard enough.
We know it is nothing but the Law of the Jungle. It's just that the fancy dress shop
has expanded and has a lot more more costumes on offer to its clients.
when the west trots out its I-never-said that-exactly smokescreen, it is helpful to read
what various western countries wrote as legal opinions, and the arguments they used to
support their reasoning. Where Kosovo is concerned, a classic is the Polish opinion, written
by (or more likely for) its then-Foreign Minister, Radek Sikorski. He wrote, in part;
" a state is commonly defined as a community which consists of a territory and a
population subject to an organized political authority; that such a state is characterized by
sovereignty the existence of the state is a question of fact, the effects of recognition by
other states are purely declaratory. A declaration of independence is merely an act that
confirms these factual circumstances, and it may be difficult to assess such an act in purely
legal terms."
Legal opinions are usually replete with bafflegab to confuse the easily-bored and the
pressed-for-time readers. But Mr. Sikorski made what he must have believed was a very
convincing case that a sovereign state-within-a-state is characterized by an ethnic
population, a pre-existing degree of autonomy (so that the entity demonstrates the capability
to function autonomously), and its own functioning institutions such as banks and
infrastructure.
Which of those is not descriptive of Crimea? It was even called "The Autonomous Republic
of Crimea", for Christ's sake. Sikorski doubtless had an inkling that the Kosovo precedent
might come back to bite NATO, and so tried to duck a justification which might read like a
precedent, but it was unavoidable.
These American fucktards actually think they can replace Russian gas supply to the EU. With
what you utter void heads? America had a net export capacity of 5 bcm in 2017 because it
imported about 87 bcm from Canada. When you fuckwad, douchebags get 150 bcm export capacity,
then start yapping. Until then, STFU.
Of course, it is clear to anyone with a functional brain that the US is totally dishonest
on claiming to want to supply the EU. In fact, it wants to saddle the EU with onerous LNG
contracts to third parties (e.g. Qatar) who can currently and for the near term supply the
volumes of LNG needed. At the same time the US damages the Asian tigers by increasing LNG
prices.
It is time for all the US bootlicks (Japan, the EU) to tell Uncle Scumbag to shove himself
in his own ass. The US is not even pretending to treat these countries with respect.
The US has repeatedly taken position against Nord Stream 2, a Russia-sponsored pipeline
planned to bring gas to Germany under the Baltic Sea. But this time Washington warned against
another such pipeline, bringing Russian gas under the Black Sea.
US Energy Secretary Rick Perry called on Hungary and its neighbors to reject Russian gas
pipelines which Washington says are being used to cement Moscow's grip on central and eastern
Europe.
Energy diversification would be crucial for the region, as Russia has used energy as a
weapon in the past, he said, as quoted by Reuters.
"Russia is using a pipeline project Nord stream 2 and a multi-line Turkish stream to try to
solidify its control over the security and the stability of Central and eastern Europe," Perry
added during a visit to Budapest.
Last July, Hungary signed a deal with Russia's Gazprom to link the country with the Turkish
Stream pipeline by end-2019.
Rick Perry is a salesman. He wants us Europeans to buy USA gas. Which is why he is against
North Stream 2 and Turkish Stream. Not because Russia may use gas to blackmail Europe --
unlike the USA, which blackmails Europe to sanction Iran and Russia –. No, he just
wants us to buy America.
Despite the fact that gas produced in the USA is far more expensive
than Russia's. Well, what can you expect from a minister in the government of a tycoon? What
else can you expect from today's USA?
One way or another, Gazprom is going to have to pay Ukraine $2.6 Billion, so they might as
well just do it and have it over with. Of course the Ukies will prance and jump up and down
in the streets and yell 'Slava Ukrainy' – and hasten off to prepare new lawsuits in
search of more money from the Russian state. But a Swiss court has ordered all Nord Stream
partners to not make any payments to Gazprom, instead to pay all monies owed to Gazprom to
Swedish bailiffs, who will redistribute it to Ukraine until they recover all their money.
Looks like the recent oil price drop was engineered like in 2014 by the USA
adminsitration...
" Concerns that strict sanctioning of Iranian oil would result in a spike in global oil
prices prompted Trump to grant waivers to eight of Iran's largest purchasers of oil, creating a
situation where Iran's oil-based income will increase following the implementation of sanctions.
The bottom line is that the current round of U.S. sanctions targeting Iran will not achieve
anything. "
Notable quotes:
"... With Iran, the issue of nuclear non-proliferation was an additional justification for sanctions. Here, disarmament concerns eventually trumped regime change desires, to the extent that when the U.S. was confronted by the reality that sanctions would not achieve the change in behavior desired by Tehran, and the cost of war with Iran being prohibitively high, both politically and militarily, it capitulated. It agreed to lift the sanctions in exchange for Iran agreeing to enhanced monitoring of a nuclear program that was fundamentally unaltered by the resulting agreement, known as the Joint Comprehensive Program of Action, or JCPOA. ..."
"... When Trump withdrew from the JCPOA, he did so in an environment that was radically different than the one that was in play when President Barack Obama embraced that agreement in July 2015. Today, the U.S. stands alone in implementing sanctions, while Iran enjoys the support of the rest of the world (support that will continue so long as Iran complies with the provisions set forth in the JCPOA.) Moreover, Iran is working with its new-found partners in Europe, Russia, and China to develop work-arounds to the U.S. sanctions. ..."
"... The coalition of support that the U.S. has assembled to confront Iran, built around Israel and Saudi Arabia, is not as solid as had been hoped -- Israel is tied down in Gaza, while Saudi Arabia struggles in Yemen, and is reeling from the fallout surrounding the murder of Jamal Khashoggi ..."
The
imposition of new, more stringent sanctions targeting Iranian oil sales by the Trump
administration has once again raised the question: is this even a viable policy?
The Council on Foreign Relations
defines sanctions as "a lower-cost, lower-risk, middle course of action between diplomacy
and war." In short, sanctions do not represent policy per se, but rather the absence of policy,
little more than a stop-gap measure to be used while other options are considered and/or
developed.
Not surprising, sanctions have rarely -- if ever -- succeeded in obtaining their desired
results. The poster child for successful sanctions as a vehicle for change -- divestment in
South Africa during the 1980s in opposition to the Apartheid regime -- is in reality a red
herring. The South
Africa sanctions were in fact counterproductive , in so far as they prompted even harsher
policies from the South African government. The demise of Apartheid came about largely because
the Soviet Union collapsed, meaning the South African government was no longer needed in the
fight against communism.
Another myth that has arisen around sanctions is their utility in addressing
nonproliferation issues. Since 1994, the U.S. has promulgated non-proliferation sanctions under
the guise of executive orders signed by the president or statutes passed by Congress. But there
is no evidence that sanctions implemented under these authorities have meaningfully altered the
behaviors that they target. Better known are the various sanctions regimes authorized under UN
Security Council resolutions backed by the United States, specifically those targeting Iraq,
North Korea, and Iran.
The Iraq sanctions were, by intent, a stop-gap measure implemented four days after the Iraqi
invasion of Kuwait and intended to buy time until a military response could be authorized,
organized, and executed. The nature of the Iraq sanctions regime was fundamentally altered
after Operation Desert Storm, when the objective transitioned away from the liberation of
Kuwait, which was achieved by force of arms, to the elimination of weapons of mass destruction,
which was never the intent of the sanctions to begin with. The potential for sanctions to alter
Iraqi behavior was real -- Iraq had made the lifting of sanctions its top priority, and thanks
to aggressive UN weapons inspections, was effectively disarmed by 1995.
This potential, however, was never realized in large part to the unspoken yet very real
policy on part of the U.S. that sanctions would not be lifted on Iraq, regardless of its level
of disarmament, until which time its president, Saddam Hussein, was removed from power. Since
the sanctions were not designed, intended, or capable of achieving regime change, their very
existence became a policy trap -- as the sanctions crumbled due to a lack of support and
enforcement, the U.S. was compelled to either back away from its regime change policy, which
was politically impossible, or seek regime change through military engagement. In short,
American sanctions policy vis-à-vis Iraq was one of the major causal factors behind the
2003 decision to invade Iraq.
One of the flawed lessons that emerged from the Iraq sanctions experience was that sanctions
could contribute to regime change, in so far as they weakened the targeted nation to the point
that a military option became attractive. This is a fundamentally flawed conclusion, however,
predicated on the mistaken belief that Iraq's military weakness was the direct byproduct of
sanctions. Iraq's military weakness was because its military had been effectively destroyed
during the 1991 Gulf War. Sanctions contributed significantly to Iraq being unable to
reconstitute a meaningful military capability, but they were not the cause of the underlying
systemic problems that led to the rapid defeat of the Iraqi military in 2003.
The "success" of the Iraq sanctions regime helped guide U.S. policy regarding North Korea in
the 1990s and 2000s. Stringent sanctions, backed by Security Council resolutions, were
implemented to curtail North Korea's development of nuclear weapons and ballistic missile
delivery systems. Simple cause-effect analysis shows the impotence of this effort -- North
Korea's nuclear and ballistic missile capability continued unabated, culminating in
nuclear-tipped intercontinental ballistic missiles capable of reaching U.S. soil being tested
and deployed. The notion that sanctions could undermine the legitimacy of the North Korean
regime and facilitate its collapse was not matched by reality. If anything, support for the
regime grew as it demonstrated its willingness to stand up to the U.S. and proceed with its
nuclear weapons and ballistic missile programs.
The Trump administration labors under the fiction that it was the U.S. policy of "maximum
pressure" through sanctions that compelled North Korea to agree to denuclearization. The
reality, however, is that it is North Korea, backed by China and Russia, that has dictated the
timing of the diplomatic breakthrough with the U.S. ( the
so-called "Peace Olympics" ), and the pace of associated disarmament. Moreover, North
Korea's insistence that any denuclearization be conducted parallel to the lifting of economic
sanctions demonstrates that it is in full control of its policy, and that the promise of the
lifting of economic sanctions has not, to date, prompted any change in Pyongyang's stance.
While President Donald Trump maintains that the U.S. will not budge from its position that
sanctions will remain in place until North Korea disarms, the fact of the matter is that the
sanctions regime is already collapsing, with China opening its border, Russia selling gasoline
and oil, and South Korea engaged in discussions about potential unification.
The U.S. has lost control of the process, if indeed it was ever in control. It is doubtful
that the rest of the world will allow the progress made to date with North Korea to be undone,
leaving the U.S. increasingly isolated. Insisting on the maintenance of a sanctions regime that
has proven ineffective and counterproductive is not sustainable policy. As with Iraq, U.S.
sanctions have proven to be the problem, not the solution. Unlike Iraq, North Korea maintains a
robust military capability, fundamentally altering the stakes involved in any military solution
the U.S. might consider as an alternative -- in short, there is no military solution. One can
expect the U.S. to alter its position on sanctions before North Korea budges on
denuclearization.
Iran represents a far more complex, and dangerous, problem set. The United States has
maintained sanctions against Iran that date back to the 1979 Iranian Revolution that overthrew
the Shah, and the seizure of the U.S. embassy and resultant holding of its staff hostage for
444 days. The U.S. policy vis-à-vis Iran has been one where the demise of the ruling
theocracy has been a real, if unstated, objective, and every sanctions regime implemented since
that time has had that outcome in mind. This is the reverse of the Iraqi case, where regime
change was an afterthought to sanctions. With Iran, the issue of nuclear non-proliferation
was an additional justification for sanctions. Here, disarmament concerns eventually trumped
regime change desires, to the extent that when the U.S. was confronted by the reality that
sanctions would not achieve the change in behavior desired by Tehran, and the cost of war with
Iran being prohibitively high, both politically and militarily, it capitulated. It agreed to
lift the sanctions in exchange for Iran agreeing to enhanced monitoring of a nuclear program
that was fundamentally unaltered by the resulting agreement, known as the Joint Comprehensive
Program of Action, or JCPOA.
When Trump withdrew from the JCPOA, he did so in an environment that was radically
different than the one that was in play when President Barack Obama embraced that agreement in
July 2015. Today, the U.S. stands alone in implementing sanctions, while Iran enjoys the
support of the rest of the world (support that will continue so long as Iran complies with the
provisions set forth in the JCPOA.) Moreover, Iran is working with its new-found partners in
Europe, Russia, and China to develop work-arounds to the U.S. sanctions.
The coalition of support that the U.S. has assembled to confront Iran, built around
Israel and Saudi Arabia, is not as solid as had been hoped -- Israel is tied down in Gaza,
while Saudi Arabia struggles in Yemen, and is reeling from the fallout surrounding the murder
of Jamal Khashoggi .
Concerns that strict sanctioning of Iranian oil would result in a spike in global oil prices
prompted Trump to grant waivers to eight of Iran's largest purchasers of oil, creating a
situation where Iran's oil-based income will increase following the implementation of
sanctions. The bottom line is that the current round of U.S. sanctions targeting Iran will not
achieve anything.
For the meantime, Iran will avoid confrontation, operating on the hope that it will be able
to cobble an effective counter to U.S. sanctions. However, unlike Iraq, Iran has a very capable
military. Unlike Korea, however, this military is not equipped with a nuclear deterrent.
If history has taught us anything, it is that the U.S. tends to default to military
intervention when sanctions have failed to achieve the policy goal of regime change. Trump,
operating as he is under the influence of Secretary of State Mike Pompeo and National Security
Advisor John Bolton, is not immune to this trap. The question is whether Iran can defeat the
sanctions through workarounds before they become too crippling and the regime is forced to lash
out in its own defense. This is one race where the world would do well to bet on Iran, because
the consequences of failure are dire.
Scott Ritter is a former Marine Corps intelligence officer who served in the former
Soviet Union implementing arms control treaties, in the Persian Gulf during Operation Desert
Storm, and in Iraq overseeing the disarmament of WMD. He is the author of Dealbreaker:
Donald Trump and the Unmaking of the Iran Nuclear Deal (2018) by Clarity Press.
@tac The Torah,
biblical and Quran stories were written in agrarian societies where capitalistic enterprise
hardly existed.
Loans were for not dying of hunger in the period between when the food of the last harvest
had been used completely, and the new harvest was still in the future.
Thus interest was seen as blackmailing people, they needed money to prevent dying of
starvation.
There was enterprise long ago, and trade over long distances, in the early centuries for
example swords from Damascus were famous in Europe, and exported to Europe.
Investment for business was the exception, even the first iron smelting installations were
simple, those who wanted them could build them by themselves.
The idea that invested money could yield money came later, when installations became more
complex, ships bigger, etc.
With investment came risk, there was not much risk in consumptive loans, they normally could
paid out of the coming harvest.
And so the problem began, a church not understanding capitalism, an agrarian society based on
barter changing into a money using capitalistic society.
Commercial people had no problem with interest, even now Muslims do not have problems with
interest.
What they do is simply giving interest other names, such as a fine for repaying late.
It has been agreed that the repayment will be late, so anybody is happy.
@renfro And
there you have it in a nutshell: usary -- the usurper of civilization, the enslaver of
humanity, the seed of ultimate degeneracy. It seems humanity is adverse to learn from
history. It is an interesting side-note that both Christianity and Islam both prohibit the
use of usury (a consideration worthy of mention when one contemplates the ongoing wars in the
ME) and some who here take shots at Farakhann, 'neo-nazis', blue-hair and other deplorables.
Our dilemma today is the same that occurred in Rome. Our country and people will
suffer the same fate if usury continues as it has. From the onset of history, it has
been the moneychangers, who have exploited mankind for pure profit. Usury is an abomination
against God's statutes, which manipulates and destroys people, families, and nations. It is
by the profits made from usury used to attack Christianity. One needs only to ask- who is
in control of usury worldwide? Didn't Rome suffer from these same people? Usury brings
forth an insidious side to all people. The temptation to borrow is powerful, and it always
polarizes lender against borrower where the former becomes the master and the later, the
slave. As a vice, neighbor is pitted against his neighbor, and nation against nation.
[...]
The Roman government was far too corrupt already with its politicians bought by
moneychangers for any fledgling Christian sect to have an affect on its decline. The
moneychanger's demand was perpetually self-serving, which was disparate to the common good
of the populace. Originally, Rome was founded as a republic. The unchecked influence of the
moneychangers caused it to change into a democracy. A republic is derived through the
election of public officials whose attitude toward property is respected in terms of law
for individual rights. A democracy is derived through the election of public officials
whose attitude toward property is communistic and respects the "collective good" of the
population instead of the individual. This is the resultant system that moneychangers bring
to civilization. The subversion of power is a sleight of hand that changes the right of the
individual into what is often called the "collective good" of the people (communistic),
which is always controlled by an alliance of powerful interests.
There is no reference in the article to the moneychangers and their lawyers sowing the
seeds for Roman society to suffocate under its own lethargic weight. Lawyers were indeed a
problem to Rome. The Romans were so concerned by lawyers' opprobrious effect on public
morale that they attempted to curb their influence. In 204 BC, the Roman Senate passed a
law prohibiting lawyers from plying their trade for money. As the Roman republic declined
and became more democratic, it became increasingly difficult to keep lawyers in check and
prevent them from accepting fees under the table. Indeed, they were very useful to the
moneychangers. The lawyers fed upon corruption and accelerated the downward plunge of Roman
civilization. Some wealthy Romans began sending their sons to Greece to finish their
schooling, to learn rhetoric (Julius Caesar was one example) -- a lawyer's cleverness in
oration. This compounded Rome's growing woes.
[...] The moneychangers destroyed Rome from within by first monopolizing usury, monopolizing
the precious mineral trade and then disproportionately magnifying the temporal businesses
of prostitution (including pedophilia and homosexuality), and slavery. Constantine
(306-337 AD) was the first Roman emperor to issue laws, which radically limited the rights
of Jews as citizens of the Roman Empire, a privilege conferred upon them by Caracalla in
212 AD. The laws of Constantius (337-361 AD) recognized the Jewish domination of the slave
trade and acted to greatly curtail it. A law of Theodosius II (408-410 AD), prohibited Jews
from holding any advantageous office of honor in the Roman state. Always the impetus was
buying influence concerning their trade.
[...] Usury has been the opiate that has ruined the ingenuity of many of its civilizations. As
this Jewish craft spread, the people increasingly suffered from the burdens of
indebtedness. So troubling was the effects of usury that Lex Genucia outlawed usury in
342 BC. Nevertheless, ways of evading such legislation were found and by the last period of
the Republic, usury was once again rife. Emperors like Julius Caesar and Justinian tried to
limit the interest rate and control its devastating effects (Birnie, 1958).
Entertainment was a way to temporarily set aside the burdens of indebtedness. It was a
way to festively indulge in all the glory that Rome had to offer. Rome soon became drunk on
hedonism. Collectively, entertainment helped disguise the collapsing of a great power.
Spectator blood sports, brothels, carnivals, festivals, and parties substituted for
everything that was wrong with Rome.
[...] Rome became a multi-cultural state much like our own in the United States. Indeed, it
was truly an international city. Foreigners of every nation resided and worked there. The
Romans soon intermarried and had children with the many foreigners. This included
concubines from the numerous slaves won through war. Rome had an extraordinary large
slave population and was estimated to make up about two-thirds of its population at one
time.
[...] Eventually, the Romans lost their tribal cohesion and identity. The population of Rome
had changed and so did its character. Increasing demands were made of the ruling
patricians. The aristocrats tried to appease the masses, but eventually those demands could
not be sustained. Rome had become bankrupt. The effects of usury polarized the patrician
class against an increasingly dispossessed and burdened class of citizens.
[...]
Rome was bankrupt and was collapsing. The parasitic nature of usury and its effect on
government was too complex for the uneducated plebeians to understand (see Addendum for
an illustration of usury's power). Indeed, it was the moneychangers with the use of
their lawyers that destroyed pagan Rome. The Jewish interests did not control all
usury. However, they were a people well recognized as being extremely loyal to each
other and adept in the black craft of usury. To all others (gentiles) they showed hate and
enmity. Throughout history the weapon of usury is used again and again to destroy
nations.
[...]
Fortunately, the writings of Cicero survived the burning of libraries. In the case against
Faccus, we can see the crafts of the Jews are the same today. The Jews clearly held
great influence in politics as a result of their professions and profited immensely at the
expense of Rome. We can further deduce by the case of Faccus that the Jews were not
concerned with the interests of Rome, but rather for their own interests. The Jewish
gold was being shipped from Rome and its provinces throughout the empire to Jerusalem. Why?
We also know that the Jews had utter contempt and hatred of the Romans. This contempt is
demonstrated by their breaking of Roman law, which Faccus tried to uphold. If we look
closer, we see that gold has a very special meaning to all Jewry unlike any other
people.
[...] There are enough records for us to piece together what actually occurred in Rome that
led to its downfall. Rome fell as a result of corruption and the lack of cohesion of its
own people. But, it was the instrument of usury that brought about this corruption and
allowed its gold and silver to be controlled by Jewish interests.
[...] It was Christianity that put an end to the destructive nature of usury on its people
(see addendum for usury example). Rome's treasury became barren as a result of the
moneychangers. It weakened the Roman Empire immeasurably, and thrust untold millions in
poverty, debt, and in prison. It was Christianity that halted the influence of the Jews and
their destructive trades and practices. And, the Christian faith spread throughout the
former Roman Empire. All of the European people eventually became Christianity's vanguard
and champion. Without the strict adherence to the moral ethos, any civilization will
devolve into the religion of Nimrod.
According to my calculations (admittedly simplistic), the world has past the point of peak
oil and in aggregate cannot produce enough oil to meet present and future demand and that may
very well be why the US is doing its best to destroy or damage as many economies in the world
as it can even if it has to go to war to do it. Once it becomes well established that we are
past peak oil no telling what our financial markets will look like. Would appreciate hearing
from someone who has more expertise than I have. https://www.gpln.com
anon4d2s , November 14, 2018 at 10:23 pm
Why are you trying to change the subject? Please desist.
I'm offering you the, or a, motive of why the deep state is pursuing the agendas we see
unfolding, which is to say, the crimes, the lies, the treason that the likes of Clapper,
Bush, Obama, Clinton and others are pursuing to cover up their reaction to their own fears.
Of course 9/11, the false flag coup and smoking gun that proves my point is still the big
elephant in the room and will eventually bring us down if the truth is never released from
its chains.
I didn't change the subject. I'm offering you an answer as to the motive of why so many
officials are willing to trash the Constitution in order to accomplish their insane agendas.
It's all about money and power and the terrified Deep State fear of facing the blowback from
the lies that have been propagated by the government and media regarding just about
everything. Here's another place you might want to look in addition to my website: https://youtu.be/CDpE-30ilBY It's not just
about oil. But this is where the rubber's going to meet the road. This is about what's going
to hit the fan at any moment and in the absence of the Truth, we are all going to face this
unprepared. 9/11 is still the smoking gun. It not just a few liars and cheats we're talking
about.
I didn't change the subject. The purpose of the search for WMD was to misdirect the
public's attention away from the real purpose of the invasion which was to gain control of
Iraq's oil reserves primarily. Misdirection is primary skill used by those in power and very
effectively.
"... The Treasury declaration blamed MbS advisor Saud al-Qahtani as mastermind behind the Khashoggi murder, while the Saudis carefully avoided that. We now learn that the person in the U.S. National Security Council who put al-Qahtani on the list was fired : ..."
"... Fontenrose had played a key role in the administration's decision about which Saudis to sanction in response to Khashoggi's killing, these people said. ..."
"... I suspect that MbS tried, via Trump's son-in-law Kushner, to save al-Qahtani (and himself). Trump clearly wanted to do that, but Fontenrose blew the plan by pushing for al-Qahtani to be sanctioned. The CIA also sabotaged the planned exculpation of MbS by 'leaking' its judgment about MbS' personal responsibility to the press. ( WaPo published the CIA conclusion in Arabic , another point the Saudis will hate.) ..."
We were first to point out that the NYT's characterization of an old North Korean
missile site as "deception" was pure nonsense. Newsweek
, 38north.org , NKNews.org ,
The Nation and others now also condemned the neo-conned NYT propaganda.
The war let to the loss of Netanyahoo's majority in the Knesset. He is now trying to stall new
elections in which he could lose his job.
Trump's Middle East policy is in total disarray. Nothing is working as planned. Netanyahoo
will probebaly fall. Saudi Arabia will not make nice with Qatar. There will be no Arab NATO or
anti-Iran alliance. MbS is despised but will stay on the job. Yemen is starving. The U.S. is at
odds with Turkey over support for the Kurds. Trumps knows and
hates this :
The adviser who talks to Trump said: "If the president had his way, he would stay entirely
out of the Middle East and all of the problems."
The piece was the first to point out the difference between the Saudi investigation, which
put blame on Major General Ahmed al-Asiri, and the names on the U.S. sanction list published at
the same time. The Treasury declaration blamed MbS advisor Saud al-Qahtani as mastermind
behind the Khashoggi murder, while the Saudis carefully avoided that. We now learn that the
person in the U.S. National Security Council who put al-Qahtani on the list was fired :
On Friday evening, Kirsten Fontenrose, the National Security Council official in charge of
U.S. policy toward Saudi Arabia, resigned, administration officials said. The circumstances
of her departure weren't clear. But Fontenrose had previously been placed on administrative
leave, according to people familiar with the matter.
Fontenrose had played a key role in the administration's decision about which Saudis to
sanction in response to Khashoggi's killing, these people said.
I suspect that MbS tried, via Trump's son-in-law Kushner, to save al-Qahtani (and
himself). Trump clearly wanted to do that, but Fontenrose blew the plan by pushing for
al-Qahtani to be sanctioned. The CIA also sabotaged the planned exculpation of MbS by 'leaking'
its judgment about MbS' personal responsibility to the press. ( WaPo published the CIA
conclusion
in Arabic , another point the Saudis will hate.) Trump is furious that the CIA (again)
sabotaged his policy:
Asked about reports that the CIA had assessed involvement by Mohammed, the president said:
"They haven't assessed anything yet. It's too early."
The Express UK reports that Russia and Saudi Arabia's 'long-term relationship' will not
only survive, but grow, regardless of geopolitical turmoil and internal Saudi scandal as the
energy interests between both nations bind them together.
... ... ...
But IHS Market vice chairman Daniel Yergin said the decision was unlikely to jeopardise
the relationship between the two allies.
The Saudis have faced significant international criticism in the wake of the killing of
journalist Jamal Khashoggi at the Saudi consulate in Turkey.
Speaking to CNBC, Mr Yergin made it clear that Moscow and Riyadh would continue to be
closely aligned irrespective of external factors.
He explained: "I think it's intended to be a long-term relationship and it started off
about oil prices but you see it taking on other dimensions, for instance, Saudi investment in
Russian LNG (liquefied natural gas) and Russian investment in Saudi Arabia.
"I think this is a strategic relationship because it's useful to both countries."
Saudi Arabia and Russia are close, especially as a result of their pact in late 2016,
along with other OPEC and non-OPEC producers, to curb output by 1.8 million barrels per day
in order to prevent prices dropping too far – but oil markets have changed since then,
largely as a result.
The US criticised OPEC, which Saudi Arabia is the nominal leader of, after prices
rose.
Markets have fluctuated in recent weeks as a result of fears over a possible drop in
supply, as a result of US sanctions on Iran, and an oversupply, as a result of increased
production by Saudi Arabia, Russia and the US, which have seen prices fall by about 20
percent since early October.
Saudi Arabia has pumped 10.7 million barrels per day in October, while the figure for
Russia and the US was 11.4 million barrels in each case.
Mr Yergin said: "It's the big three, it's Saudi Arabia, Russia and the US, this is a
different configuration in the oil market than the traditional OPEC-non-OPEC one and so the
world is having to adjust."
BP Group Chief Executive Bob Dudley told CNBC: "The OPEC-plus agreement between OPEC and
non-OPEC producers including Russia and coalition is a lot stronger than people
speculate.
"I think Russia doesn't have the ability to turn on and off big fields which can happen in
the Middle East.
"But I fully expect there to be coordination to try to keep the oil price within a certain
fairway."
Markets rallied by two percent on Monday off the back of the
Saudi decision to cut production , which it justified by citing uncertain global oil
growth and associated oil demand next year.
It also suggested
waivers granted on US sanctions imposed on Iran which have been granted to several
countries including China and Japan was a reason not to fear a decline in supply.
Also talking to CNBC, Russia's Oil Minister Alexander Novak indicated a difference of
opinion between Russia and the Saudis, saying it was too soon to cut production, highlighting
a lot of volatility in the oil market.
He added: "If such a decision is necessary for the market and all the countries are in
agreement, I think that Russia will undoubtedly play a part in this.
"But it's early to talk about this now, we need to look at this question very
carefully."
The cost of producing a large lithium battery is high and it is "perishable product",
which will not last even 10 years. The average life expectancy of a new EV battery at about
five (Tesla) to eight years. Or about 1500 cycles (assuming daily partial recharge, which
prolongs the life of the battery) before reaching 80% of its capacity rating. https://www.quora.com/What-is-the-cycle-lifetime-of-lithium-ion-batteries
Battery performance and lifespan begins to suffer as soon as the temperature climbs above
86 degrees Fahrenheit. A temperature above 86 degrees F affects the battery pack performance
instantly and often permanently. https://phys.org/news/2013-04-life-lithium-ion-batteries-electric.html
It is also became almost inoperative at below freezing point temperatures. For example it
can't be charged.
So they need to be cooled at summer and heated at winter. Storing such a car on the street
is out of question. You need a garage.
And large auto battery typically starts deteriorating after three years of daily use or
800 daily cycles.
Regular gas, and , especially, diesel cars can last 20 years, and larger trucks can last
30 years.
"... Finally, unlike Yergin and other historians of the oil industry, Auzanneau frames his tale of petroleum as a life cycle, with germination followed by spring, summer, and autumn. There is a beginning and a flourishing, but there is also an end. This framing is extremely helpful, given the fact that the world is no longer in the spring or summer of the oil era. We take petroleum for granted, but it's time to start imagining a world, and daily life, without it. ..."
Similarly, the real story of oil is of fortunes lost, betrayal, war, espionage, and
intrigue. In the end, inevitably, the story of oil is a story of depletion. Petroleum is a
nonrenewable resource, a precious substance that took tens of millions of years to form and
that is gone in a comparative instant as we extract and burn it. For many decades, oil-hungry
explorers, using ever-improving technology', have been searching for ever-deteriorating
prospects as the low- hanging fin its of planet Earth's primordial oil bounty gradually
dwindle. Oil wells have been shut in, oil fields exhausted, and oil companies bankrupted by the
simple, inexorable reality of depletion.
It is impossible to understand the political and economic history of the past 150 years
without taking account of a central character in the drama -- oil, the magical
wealth-generating substance, a product of ancient sunlight and tens of millions of years of
slow geological processes, whose tragic fate is to be dug up and combusted once and for all.
leaving renewed poverty in its wake. With Oil, Power, and War, Matthieu Auzanneau has produced
what I believe is the new definitive work on oil and its historic significance, supplanting
even Daniel Yergin's renowned The Prize, for reasons I'll describe below.
The importance of oil's role in shaping the modern world cannot be overstated. Prior to the
advent of fossil fuels, firewood was humanity's main fuel. But forests could be cut to the last
tree (many were), and wood was bulky. Coal offered some economic advantages over wood. But it
was oil -- liquid and therefore easier to transport; more energy-dense; and simpler to store --
that turbocharged the modern industrial age following the development of the first commercial
wells around the year 1860.
John D. Rockefeller's cutthroat, monopolist business model shaped the early industry, which
was devoted mostly to the production of kerosene for lamp oil (gasoline was then considered a
waste product and often discarded into streams or rivers). But roughly forty years later, when
Henry Ford developed the automobile assembly line, demand for black gold was suddenly as
explosive as gasoline itself.
Speaking of explosions, the role of petroleum in the two World Wars and the armament
industry' in general deserves not just a footnote in history books but serious and detailed
treatment such as it receives in this worthy volume. Herein we learn how Imperial Japan and
Nazi Germany literally ran out of gas while the Allies rode to victory in planes, ships, and
tanks burning refined US crude. Berlin could be cut off from supplies in Baku or North Africa,
and Tokyo's tanker route from Borneo could be blockaded -- but no one could interrupt the
American war machine's access to Texas tea.
In the pages that follow, we learn about the origin of the decades-long US alliance with
Saudi Arabia, the development of OPEC, the triumph of the petrodollar, and the reasons for both
the Algerian independence movement and the Iranian Revolution of 1979. Auzanneau traces the
postwar growth of the global economy and the development of consumerism, globalization, and car
culture. He recounts how the population explosion and the Green Revolution in agriculture
reshaped demographics and politics globally -- and explains why both depended on petroleum. We
learn why Nixon cut the US dollar's tether to the gold standard just a year after US oil
production started to decline, and how the American economy began to rely increasingly on debt.
The story of oil takes ever more fascinating turns -- with the fall of the Soviet Union after
its oil production hit a snag; with soaring petroleum prices in 2008 coinciding with the onset
of the global financial crisis; and with wars in Iraq, Syria, and Yemen erupting as global
conventional oil output flatlined.
As I alluded to above, comparisons will inevitably be drawn between Oil, Power, and War and
Daniel Yergin's Pulitzer-winning "The Prize", published in 1990. It may be helpful therefore to
point out four of the most significant ways this work differs from Yergin's celebrated tour de
force.
The most obvious difference between the two books is simply one of time frame. The Prize's
narrative stops in the 1980s, while Oil, Power, and War also covers the following critical
decades, which encompass the dissolution of the Soviet Union, the first Gulf War, 9/11, the US
invasions of Afghanistan and Iraq, the global financial crisis of 2008. and major shifts within
the petroleum industry as it relies ever less on conventional crude and ever more on
unconventional resources such as bitumen (Canada's oil sands), tight oil (also called shale
oil), and deepwater oil.
Finally, unlike Yergin and other historians of the oil industry, Auzanneau frames his
tale of petroleum as a life cycle, with germination followed by spring, summer, and autumn.
There is a beginning and a flourishing, but there is also an end. This framing is extremely
helpful, given the fact that the world is no longer in the spring or summer of the oil era. We
take petroleum for granted, but it's time to start imagining a world, and daily life, without
it.
Taken together, these distinctions indeed make Oil, Power, and War the definitive work on
the history of oil -- no small achievement, but a judgment well earned.
Over the past decade, worrisome signs of global oil depletion have been obscured by the
unabashed enthusiasm of energy analysts regarding growing production in the United States from
low-porosity source rocks. Termed "light tight oil," this new resource has been unleashed
through application of the technologies of hydrofracturing (tracking) and horizontal
drilling.
US liquid fuels production has now surpassed its previous peak in 1970, and well-regarded
agencies such as the Energy Information Administration are forecasting continued tight oil
abundance through mid-century.
Auzanneau titles his discussion of this phenomenon (in chapter 30), "Nonconventional
Petroleum to the Rescue?" -- and frames it as a question for good reason: Skeptics of tight oil
hyperoptimism point out that most production so far has been unprofitable. The industry has
managed to stay in the game only due to low interest rates (most companies are heavily in debt)
and investor hype. Since source rocks lack permeability, individual oil wells deplete very
quickly -- with production in each well declining on the order of 70 percent to 90 percent in
the first three years. That means that relentless, expensive drilling is needed in order to
release the oil that's there. Thus the tight oil industry can be profitable only if oil prices
are very high -- high enough, perhaps, to hobble the economy -- and if drilling is concentrated
in the small core areas within each of the productive regions. But these "sweet spots" are
being exhausted rapidly. Further, with tight oil the energy returned on the energy invested in
drilling and completion is far less than was the case with American petroleum in its
heyday.
It takes energy to fell a tree, drill an oil well, or manufacture a solar panel. We depend
on the energy payback from those activities to run society. In the miraculous years of the late
twentieth century, oil delivered an averaged 50:1 energy payback. It was this, more than
anything else, that made rapid economic growth possible, especially for the nations that were
home to the world's largest oil reserves and extraction companies. As the world relies ever
less on conventional oil and ever more on tight oil, bitumen, and deepwater oil, the overall
energy payback of the oil industry is declining rapidly. And this erosion of energy return is
reflected in higher overall levels of debt in the oil industry and lower overall financial
profitability.
Meanwhile the industry is spending ever less on exploration -- for two reasons. First, there
is less money available for that purpose, due to declining financial profitability; second,
there seems comparatively little oil left to be found: Recent years have seen new oil
discoveries dwindle to the lowest level since the 1940s. The world is not about to run out of
oil. But the industry that drove society in the twentieth century to the heights of human
economic and technological progress is failing in the twenty-first century.
Today some analysts speak of "peak oil demand." The assumption behind the phrase is that
electric cars will soon reduce our need for oil, even as abundance of supply is assured by
fracking. But the world is still highly dependent on crude oil. We have installed increasing
numbers of solar panels and wind turbines, but the transition to renewable is going far too
slowly either to avert catastrophic climate change or to fully replace petroleum before
depletion forces an economic crisis. While we may soon see more electric cars on the road,
trucking, shipping, and aviation will be much harder to electrify. We haven't really learned
yet how to make the industrial world work without oil. The simple reality is that the best days
of the oil business, and the oil-fueled industrial way of life, are behind us. And we are not
ready for what comes next.
This fracking can't go on much longer. They've drilled out much of the sweet spots already,
and from what I hear, there are already 7 'child' wells being drilled for every 'parent'
well. (as I understand it, a 'child' well is drilled in close proximity to the 'parent'
without – hopefully-hitting and drawing from the same formation') If fracking were to
stop tomorrow, you'd lose over 600k bbls/day in production immediately and the whatever is
leftover tapering off to zero over the course of two-three years.
The question is: Just how long will the USA be able to continue to increase production in
order to hold off peak oil?
Yes will it go bankrupt first or continue to run on until peak and depletion. Meanwhile it
drags down the oil price artificially making most other oil development less likely, and
increasing volatility.
The FED is reducing money supply by 50 billions per month at the moment. The first feeling it
will be comanies needing to sell junk bonds.
This is a big ploblem for the relentless "drill baby drill" programs of several LTO
companies.
And a global economic crises, even if only a few years long, will crash oil prices AND
credit supply. This will hurt LTO more than the oil price crash from 2015.
On the shale topic; it is marvelously stupefying to observe a heavily indebted shale
industry supplying increasing volumes of oil, to an extent that the price/bbl never hits a
level where any debt reduction can be realized. (to say nothing of profit)
Its' almost as if they have no intention of becoming solvent.
Some time ago presented estimate of oil used to create and move food in the US. My recall is
the number wasn't huge.
Recently came across new data. Will get around to laying it out.
25% of total US consumption. Tractors, insecticides, some fertilizer(transport of those to
the field), transport of animal food to hogs, beef, etc, transport of human food to shelves,
transport of people to the shelf and home. 15% pre transport of human food, 10% transport
human food.
Pretty efficient agriculture in the US. No squeezing that 5 mbpd.
Colonel Salam , what do you think of retired general Abizad becoming new US' ambassador to KSA. To me installing an Arabic speaking
Arab American general as the new ambassador to the kingdom sounds like the Borg is becoming concerned with kingdom' stability
when changes come. They probably don't want to repeat the mistake of keeping Sullivan during IRI. So sorry for OT.
Oil, Power, and War is a story of the dreams and hubris that spawned an era of
economic chaos, climate change, war, and terrorism -- as well as an eloquent framing from which
to consider our options as our primary source of power, in many ways irreplacable, grows ever
more constrained.
In this sweeping, unabashed history of oil, Matthieu Auzanneau takes a fresh,
thought-provoking look at the way oil interests have commandeered politics and economies,
changed cultures, disrupted power balances across the globe, and spawned wars. He upends
commonly held assumptions about key political and financial events of the past 150 years, and
he sheds light on what our oil-constrained and eventually post-oil future might look
like.
Oil, Power, and War follows the oil industry from its heyday when the first oil
wells were drilled to the quest for new sources as old ones dried up. It traces the rise of the
Seven Sisters and other oil cartels and exposes oil's key role in the crises that have shaped
our times: two world wars, the Cold War, the Great Depression, Bretton Woods, the 2008
financial crash, oil shocks, wars in the Middle East, the race for Africa's oil riches, and
more. And it defines the oil-born trends shaping our current moment, such as the jockeying for
access to Russia's vast oil resources, the search for extreme substitutes for declining
conventional oil, the rise of terrorism, and the changing nature of economic growth.
We meet a long line of characters from John D. Rockefeller to Dick Cheney and Rex Tillerson,
and hear lesser-known stories like how New York City taxes were once funneled directly to banks
run by oil barons. We see how oil and power, once they became inextricably linked, drove
actions of major figures like Churchill, Roosevelt, Stalin, Hitler, Kissinger, and the Bushes.
We also learn the fascinating backstory sparked by lesser-known but key personalities such as
Calouste Gulbenkian, Abdullah al-Tariki, and Marion King Hubbert, the once-silenced oil
industry expert who warned his colleagues that oil production was facing its peak.
Oil, Power, and War is a story of the dreams and hubris that spawned an era of
economic chaos, climate change, war, and terrorism -- as well as an eloquent framing from which
to consider our options as our primary source of power, in many ways irreplacable, grows ever
more constrained.
The book has been translated from the highly acclaimed French title, Or Noir .
Saudi Arabia has fully complied with OPEC+ agreement in every month through May. Since then
it has cut supply, but by less than it pledged to curb. October is 1st time it has increased
output above the starting point.
WTI has now retraced 60% of the two-year uptrend...
WTI Crude is now down over 6% YTD to its lowest since Dec 2017.
There are a lot of things that you can running one trillion deficit ;-)
Notable quotes:
"... U.S. crude oil production reached 11.3 million barrels per day (b/d) in August 2018, according to EIA's latest Petroleum Supply Monthly, up from 10.9 million b/d in July. This is the first time that monthly U.S. production levels surpassed 11 million b/d. U.S. crude oil production exceeded the Russian Ministry of Energy's estimated August production of 11.2 million b/d, making the United States the leading crude oil producer in the world. ..."
"... All of this bullshit is straight, I mean straight off Continental's self servicing investor presentation bullshit, Coffee. You need to wrap your head around some SEC filings, use some common sense and think for yourself. As opposed to letting someone else do your thinking for you. ..."
"... Watcher is correct, CLR's credit rating, its credit score, so to speak, is so bad it could not in the real world buy a pickup truck without its mama co-signing the note. If its wells are sooooooo much better, why don't they pay some of that $6 billion plus dollars of debt back? I mean really, who in their right mind would actually WANT to pay $420MM a year in interest on long term debt if it didn't have to? Never mind, you can't answer that. ..."
"... "If its wells are sooooooo much better, why don't they pay some of that $6 billion plus dollars of debt back? I mean really, who in their right mind would actually WANT to pay $420MM a year in interest on long term debt if it didn't have to?" ..."
"... We had 5-6 years of the highest, sustained oil prices in history and the shale oil industry could NOT make a profit. People seem to think now things have changed for some reason, that the shale oil industry has now become more ethical, and temporarily higher productivity of wells, and some imaginary oil price off in the future (for most shale guys its now down in the mid to low $50's) will allow them to pay down debt. Its absurd logic, but keeps people occupied, I guess, speculating about it. ..."
"... One thing to add. The shale companies did all this in the lowest interest rate environment we have had in a long time. They could not pay off their debt or even put a dent in it. What is going to happen when their interest costs increase 30-50% over the next 2-3 years? ..."
"... I was a former employee of Newfield, when we were drilling gas wells in the Arkoma Basin in 2007 and gas prices were the highest they had ever been, it was not cash flow positive. ..."
"... On the price, I understand why you use different scenarios. However, the average price over the next three years could be $100 or $50 WTI. Pretty much close to what we saw 2011-14 and 2015–17. ..."
"... However, the price is far too volatile to model anything very far into the future, just like we cannot budget past one year, and usually have to make adjustments to that. ..."
"... Our price has dropped over $10 in less than one month. That makes a huge difference, yet that level of volatility is common and has been for many years. ..."
"... What oil prices were you modeling in June, 2014 for 2015-17? Our timing was very fortunate to say the least. Many leases bought 1997-2005. Had we bought the same leases 2011-14 for the market prices of 2011-14, we would be bankrupt, absent having hedged everything for four years, which is very difficult to do. ..."
"... Few companies with zero debt ever go BK. We would with WTI at $30 for about three years. Is that likely? No, but oil did drop below that level in 2016. ..."
U.S. crude oil production reached 11.3 million barrels per day (b/d) in August 2018,
according to EIA's latest Petroleum Supply Monthly, up from 10.9 million b/d in July. This is
the first time that monthly U.S. production levels surpassed 11 million b/d. U.S. crude oil
production exceeded the Russian Ministry of Energy's estimated August production of 11.2
million b/d, making the United States the leading crude oil producer in the world.
Dennis, Coffee's comment did not turn me into a shale cheerleader. I suppose I am more in the
shale sceptic camp for the reasons you mention and others.
Nevertheless, I think Coffee's comment was correct, it does appear that shale producers in
the Bakken have expanded the area that produces exceptional wells. As one who underestimated
shale's viability before, I don't want to repeat the same mistake.
As you note, it is difficult to predict when average well productivity in the Bakken (or
anywhere) will occur. I had thought that current drilling levels would be inadequate to
sustain 1.15 million bpd production levels, but somehow they are increasing production there.
It does appear that for now, the shale operators are having some success.
How long that success will last depends not only on the operational decisions made, but macro
factors such as debt, interest rates, and the economy will play out, and eventually Bakken
production will decline. But for now
I have not read Continental's conference call transcript yet (Seeking Alpha provides
them), but it seems the suit from Continental now feels they will recover – from
present completions – 15 to 20 per cent of the OOIP.
That is huge as the norm was 3 to 5 per cent a few years back.
All of this bullshit is straight, I mean straight off Continental's self servicing investor
presentation bullshit, Coffee. You need to wrap your head around some SEC filings, use some
common sense and think for yourself. As opposed to letting someone else do your thinking for
you.
Watcher is correct, CLR's credit rating, its credit score, so to speak, is so bad it could
not in the real world buy a pickup truck without its mama co-signing the note. If its wells
are sooooooo much better, why don't they pay some of that $6 billion plus dollars of debt
back? I mean really, who in their right mind would actually WANT to pay $420MM a year in
interest on long term debt if it didn't have to? Never mind, you can't answer that.
If you are not in the oil business and have never balanced an oil well's checkbook in your
life, which Coffee hasn't, then you don't know that higher productivity comes with a higher
cost in the shale biz. The bottom line then is that the bottom line does not change if it did
the shale oil industry would be paying down some debt, right? Its not. Private debt is
skyrocketing.
Are things getting better for the shale biz? Right. Case in point, the largest pure
Permian Basin oil and associated gas producer, Concho, the genius behind a recent $8 billion
dollar acquisition from RSP, LOST $199MM 3Q2018. Inventories are going back up, prices are
down 18% the past month and what does the shale oil industry do?
It adds more rigs.
Productivity is not the same as profitability. In the real oil biz you learn that on about
day six.
"If its wells are sooooooo much better, why don't they pay some of that $6 billion plus
dollars of debt back? I mean really, who in their right mind would actually WANT to pay
$420MM a year in interest on long term debt if it didn't have to?"
I wonder about debt service, too.
When Dennis runs his scenarios he says that at a certain oil price, these companies will
be quite able to pay down debt.
But will they? Or will they just pay themselves as much as they can as long as they can
get away with it, and then declare bankruptcy and walk away.
We had 5-6 years of the highest, sustained oil prices in history and the shale oil
industry could NOT make a profit. People seem to think now things have changed for some
reason, that the shale oil industry has now become more ethical, and temporarily higher
productivity of wells, and some imaginary oil price off in the future (for most shale guys
its now down in the mid to low $50's) will allow them to pay down debt. Its absurd logic, but
keeps people occupied, I guess, speculating about it.
I urge folks to ignore the guessing, and the lying, (Hamm's 20% of OOIP in the Bakken is a
big 'ol whopper) and look at the shale industry's financial performance over the past 10
years and decide for yourselves if it is sustainable or not.
One thing to add. The shale companies did all this in the lowest interest rate environment we
have had in a long time. They could not pay off their debt or even put a dent in it. What is
going to happen when their interest costs increase 30-50% over the next 2-3 years?
I was a former employee of Newfield, when we were drilling gas wells in the Arkoma Basin in
2007 and gas prices were the highest they had ever been, it was not cash flow positive. It
actually ate all the revenue from the rest of the company. Getting to be in the black for the
play was always a year off. a decade later it never got there, they just got more and more
debt sold more producing assets to pay for it to keep the shell game going and just got
bought by Encanna. I have seen the same at every public company I have worked for, many of
them survived the downturn only because costs dropped and so did the cost of debt. Now with
increasing costs and cost of debt there will likely be many bankruptcies.
Yeah, I agree with Mike, Rystads announcements are mainly just self serving hogwash. Yes, oil
production in the US looks to be close to 11.3 million for August. EIA's reported production
for Texas is only about 50k over my high estimate, so I see nothing to argue about. GOM is
the main surprise, and George and others are better suited to comment on that. The
understanding I had was that it was temporary. As far as Texas goes, I'm pretty sure it is
the high, for awhile. Completions dictate how much oil comes out of the ground, not drilling
rigs. That is for unconventional wells, not conventional. That is why I think the EIA's DPR
is a ridiculous measurement assessment. Apples and oranges. Articles that I have read
indicate a significant decrease in completions in the Permian by the end of August. Texas
production is not all about the Permian. A significant amount was contributed by the Eagle
Ford and other areas. All completions have slowed to the point that by the end of September,
they were at slightly over 60% of June's completion numbers according to RRC statistics.
Significant drop, and it will show up in following months. First years decline rates will
assure that it will drop slightly from this point. $64 WTI won't motivate it to expand to any
extent. The next year will see US wavering along the 11.1 million barrel level, I still
think. Unless, George thinks the GOM increase is somewhat permanent, which I doubt.
And try to locate a time in history when production is trending up, while completions are
trending down. There is usually a several month lag by the time production slows. Takes a
while to get out of the ground if they are completed towards the end of the month.
Don't you just love simple logic? Like: fire burns, water is wet, stuff like that?
I second that. Being from Norway myself, and having actually been working in consulting some
years ago. It looks nice on paper, but the world is changing and it is wise to look out for
deception and that is often the case in consulting (customer/revenue first and reality
second).
Based on the shaleprofile data it looks as if well productivity increased alot in 2016 and
2017 due to longer laterals and increased proppant intensity. 2018 well productivity looks to
be trending pretty close to 2017, so the productivity gains from longer lats and increased
proppant might have been exhausted by now. Therefore, comparing 2018 well completion numbers
to any pre 2017 completion numbers won't tell you much, but a comparison of 2018 and 2017
numbers should. In the 4 months ending in September 2018 completions grew year over year by
almost 70% from 2017, hence the large assumed increase in production in the last four months
of 2018. What is interesting though is that it looks like the free lunch from increased lats
and proppant looks to be almost over, and any future increases in production must be the
result of an increase in completion activity, which should result in some inflation for the
service providers going forward. And, according to Schlumberger, if you adjust for the longer
lats and increased proppant it actually appears that productivity is starting to trend down
(and the increased usage of poor quality in basin sand will likely contribute to this as
well)
I take your word for it. Thank you, BTW. You are the only one left on this site that has any
common sense regarding shale oil economics and the burden all that massive, massive amount of
debt has on running a business where your assets decline at the rate of 28-15% annually.
Everybody else seems mesmerized by productivity.
Paying the debt off will depend very much on future oil and natural gas prices.
Once growth slows the companies will be companies operating many low volume wells.
Investors will want these companies to pay dividends because they will not be in a position
to grow. The operating costs will be higher, even though CAPEX will drop.
You are very confident prices will be high in the future. I suspect they will be volatile
in the future, as they have been for the past 20 years.
So, on a company by company basis, timing will be critical, IMO.
The prices can be thought of as 3 year average prices, yes there will be volatility, my
"low price scenario" has Brent Oil Price in 2017 $ never rising above $80/b. I cannot hope to
predict the exact oil price and of course oil prices will be volatile, but the average over
time allows a pretty good estimate.
Also a company by company model is a little too much work. I just do the industry average,
some companies will be better and some worse than average.
It certainly is the case that oil prices have been volatile and I agree this will
continue, but the three year trend in prices (centered 3 year average) has been up $7/b for
the past year, my expectation is that this trend will continue and the 3 year centered
average price will reach $80/b (in 2017$) by 2021 or 2022. The trend of oil prices will be
higher, if the peak arrives by 2025 as I expect prices (3 year centered average oil price in
2017$) are likely to reach $100/b by 2024 or 2025.
I think company by company because I have an investment in a private company. I know how
important timing is in the upstream industry to individual companies.
Likewise, I understand you aren't all that interested in individual companies. No problem
there.
On the price, I understand why you use different scenarios. However, the average price
over the next three years could be $100 or $50 WTI. Pretty much close to what we saw 2011-14
and 2015–17.
I was recently in a major city and saw more Tesla's than I ever had, including my first
Model 3 sighting.
Our little area now has two Model S, with the early adopter trading his 2012 for a
2018.
Pretty doubtful it will be $50/b over the next three years, in my opinion. If you believe
that you should find another business More likely is a gradual increase in
oil prices as we approach peak oil, the futures strip is likely to be wrong on oil price
(today's future strip). For Brent futures the current strip goes from $73/b (Jan 2019) to $61
(Dec 2026). By Contrast the EIA's AEO 2018 reference oil price scenario for Brent crude has
the spot price at $87.50/b in 2026, chart below has their scenario (which I think may be too
low.)
As always clicking on the chart give a larger view.
The price could be $50 from 2019-2021, and then $125 from 2022-2025. (Averages, of
course).
So in that scenario I'd feel pretty bad if I sold out in say 2020.
Your models are ok, I have no problem with you doing them. We try to make a budget for
every year.
However, the price is far too volatile to model anything very far into the future, just
like we cannot budget past one year, and usually have to make adjustments to that.
Our price has dropped over $10 in less than one month. That makes a huge difference, yet
that level of volatility is common and has been for many years.
What oil prices were you modeling in June, 2014 for 2015-17? Our timing was very fortunate
to say the least. Many leases bought 1997-2005. Had we bought the same leases 2011-14 for the
market prices of 2011-14, we would be bankrupt, absent having hedged everything for four
years, which is very difficult to do.
On a flowing barrel basis, I have seen leases sell as low as $2,000 per barrel and as high
as $180,000 per barrel in our basin from 1997-2018. That is what an oil price range of $8-140
per barrel will do.
Few companies with zero debt ever go BK. We would with WTI at $30 for about three years.
Is that likely? No, but oil did drop below that level in 2016.
The volatility is a big problem, there is no doubt of that. When imagining the "big
picture". I use the estimates of the EIA's AEO as a starting point then add my personal
perspective (that at some point oil output will peak.) Below is a chart with my guess from
Dec 2014 for future Brent oil prices in constant 2014$, nominal Brent spot price is give for
comparison.
Clearly my guess was not very good, the EIA guess from the AEO 2015 was also not great,
but better than my guess. Future guesses will be equally bad.
In 2013 we assumed prices in a range of $60-120 WTI moving forward.
In June of 2014 when oil spiked up and we received $99.25 in the field, we suspected oil
would fall and it began to. We again continued to assume $60 WTI would be a low.
We were dead wrong, of course.
Oil dropped again today. We will get $67 in the field for October sales paid in November.
However, our price today is down to $56.50. That is about a $60,000 per month revenue hit to
a small company which employs 8 full time employees, one part time employee office manager
and utilized numerous contractors (rigs, electricians, etc.).
Corn here is $3.51 per bushel today. Less than a month ago it was $2.96 per bushel.
Yes, yes, a hedging program would mitigate the price volatility.
Until you actually try to hedge with money at risk, don't talk to me about that. It's
about as easy as trading stocks. It is also very expensive due to the volatility. Or, if you
do SWAPS or Collars, you need to put up a lot of margin money.
Hedging seems a risky business, not sure I would come out ahead by hedging. You are in a
tough business, the volatility sucks. The silver lining is that prices will be
increasing.
Shallow Sand Wrote:
"Paying the debt off will depend very much on future oil and natural gas prices."
I don't think so. When energy prices rise, so do prices of everything else, included
interest rates. The only way the shale drillers could play off there debt is if the left
large number of completed wells untapped (ie leave it in the ground) while taking advantage
of cheap debt & low labor\material costs. Then selling the oil when prices & costs
have soared above investment costs.
The issue is that as soon as a well is completed, they start producing, at market prices.
Thus when oil prices rise most of the oil is already produced & drilling new wells (using
more debt) does not pay down the old debt.
Also consider the costs shale drillers will need for decommissioning older\depleted well.
I believe the cleanup cost is between $50K & $100K per drill site. To date have any shale
drillers spent money on clean up for depleted wells yet, or is it all deferred (ie never
going to happen)?
FWIW: I don't believe any of the shale companies are in game for the long term. They are
simply a modern Ponzi scam, taking investor money & providing an illusion of profitabity
by selling a product below cost. They will continue to play the game until investor capital
dries up.
I suspect that most shale drillers will go bust in the next 5 years when the bulk of their
bonds come due & they won't have the ability to refinance it or pay it off. If I recall
correctly Shale drillers will need to payoff or refinance about $270B in high-yield bonds
between 2020 & 2022.
My guess is that much of KSA will look a lot like the shabby end of Yemen before too long. This will perhaps strand some assets.
Once the House of Saud fragments further among competing clans/factions (Faisal, Sudairi, Abdullah, Bin Sultans) things will hasten.
Collapse is preceded by intra-elite rivalry over a shrinking pie, so to speak.
Caspian Report has a nice set on KSA if you look for them. Here's one- https://youtu.be/9tHwvZ9XDLU
And another- https://youtu.be/hh8isVX3H9w
Hightrekker once commented something quite apt, along the lines of~ 'And all this is probably like the Austrians in 1913 arguing
about who their next Habsburg Ruler is going to be'.
From what I understand there are 4000 Saudi princes (a suspiciously round number, so likely an approximate). It all should
make for a very bloody affair. Hopefully Iran will do the right thing and kick 'em while they're down.
It's interesting that Clapper is against abandoned by Trump Iran deal.
Tramp administration is acting more like Israeli marionette here, because while there a
strategic advantage in crushing the Iranian regime for the USA and making a county another Us
vassal in the middle East, the cost for the country might be way to high (especially if we count
in the cost of additional antagonizing Russia and China). Trump might jump into the second
Afghanistan, which would really brake the back of US military -- crushing Iran military is one
thing, but occupying such a county is a very costly task. And that might well doom Israel in the
long run as settlers policies now created really antagonized, unrecognizable minority with a high
birth rate.
Vanishing one-by-one of partners are given due to collapse of neoliberalism as an ideology.
Nobody believes that neoliberalism is the future, like many believed in 80th and early 90th. This
looks more and more like a repetion of the path of the USSR after 1945, when communist ideology
was discredited and communist elite slowly fossilized. In 46 years from its victory in WWII the
USSR was dissolved. The same might happen with the USA in 50 years after winning the Cold
War.
Notable quotes:
"... a vanishing one by one of American partners who were previously supportive of U.S. leadership in curbing Iran, particularly its nuclear program. ..."
"... The United States risks losing the cooperation of historic and proven allies in the pursuit of other U.S. national security interests around the world, far beyond Iran. ..."
Only well calibrated multilateral political, economic and diplomatic pressure brought to
bear on Iran with many and diverse partners will produce the results we seek.
"Then there were none" was Agatha Christie's most memorable mystery about a house party in
which each guest was killed off one by one. Donald Trump's policy toward Iran has resulted in
much the same: a vanishing one by one of American partners who were previously supportive
of U.S. leadership in curbing Iran, particularly its nuclear program.
Dozens of states, painstakingly cultivated over decades of American leadership in blocking
Iran's nuclear capability, are now simply gone. One of America's three remaining allies on
these issues, Saudi Arabia, has become a central player in American strategy throughout the
Middle East region. But the Saudis, because of the Jamal Khashoggi killing and other reasons,
may have cut itself out of the action. The United Arab Emirates, so close to the Saudis, may
also fall away.
Such paucity of international support has left the Trump administration dangerously
isolated. "America First" should not mean America alone. The United States risks losing the
cooperation of historic and proven allies in the pursuit of other U.S. national security
interests around the world, far beyond Iran.
... ... ...
European allies share many of our concerns about Iran's regional activities, but they
strongly oppose U.S. reinstitution of secondary sanctions against them. They see the Trump
administration's new sanctions as a violation of the nuclear agreement and UN Security Council
resolutions and as undermining efforts to influence Iranian behavior. The new sanctions and
those applied on November 5 only sap European interest in cooperating to stop Iran.
... ... ...
The United States cannot provoke regime change in Iran any more than it has successfully in
other nations in the region. And, drawing on strategies used to topple governments in Iraq and
Afghanistan, the United States should be wary of launching or trying to spur a military
invasion of Iran.
Lt. Gen. James Clapper (USAF, ret.) is the former Director of National Intelligence.
Thomas R. Pickering is a former U.S. ambassador to the United Nations, Russia and
India.
"... Later, it emerged that QIA and Glencore planned to sell the majority of the stake they had acquired in Rosneft to China's energy conglomerate CEFC, but the deal fell through after Beijing set its sights on CEFC and launched an investigation that saw the removal of its chief executive. The investigation was reportedly part of a wide crackdown on illicit business practices on the part of private Chinese companies favored by Beijing. ..."
Russian VTB, a state-owned bank, funded a significant portion of the Qatar Investment
Authority's acquisition of a stake in oil giant Rosneft , Reuters
reports , quoting nine unnamed sources familiar with the deal.
VTB, however, has denied to Reuters taking any part in the deal.
"VTB has not issued and is not planning to issue a loan to QIA to finance the
acquisition," the bank said in response for a request for comment.
The Reuters sources, however, claim VTB provided a US$6 billion loan to the Qatar sovereign
wealth fund that teamed up with Swiss Glencore to acquire 19.5 percent in Rosneft last year.
Reuters cites data regarding VTB's activity issued by the Russian central bank that shows VTB
lent US$6.7 billion (434 billion rubles) to unnamed foreign entities and the loan followed
another loan of US$5.20 billion (350 billion rubles) from the same central bank.
The news first made
headlines in December, taking markets by surprise, as Rosneft's partial privatization was
expected by most to be limited to Russian investors. The price tag on the stake was around
US$11.57 billion (692 billion rubles), of which Glencore agreed to contribute US$324 million.
The remainder was forked over by the Qatar Investment Authority, as well as non-recourse bank
financing.
Russia's budget received about US$10.55 billion (
710.8 billion rubles ) from the deal, including US$ 270 million (18 billion rubles) in
extra dividends. Rosneft, for its part, got an indirect stake in Glencore of 0.54 percent.
Later, it
emerged that QIA and Glencore planned to sell the majority of the stake they had acquired
in Rosneft to China's energy conglomerate CEFC, but the deal fell through after Beijing set its
sights on CEFC and launched an investigation that saw the removal of its chief executive. The
investigation was reportedly part of a wide crackdown on illicit business practices on the part
of private Chinese companies favored by Beijing.
Seeking protection against possible new U.S. sanctions, Russian energy majors are
heaping pressure on Western oil buyers to use euros instead of dollars for payments, as
well as penalty clauses in contracts.
Russia supplies over 10% of global oil, so severe sanctions could affect crude prices.
Global oil majors further rely on Russia to feed their refineries, especially in Europe and
Asia, so they cannot just walk away from annual contract negotiations.
Also if administration really wants war, Iran is not Ieaq and will fight more efficiently,
while the US army despite technological supreiority is demoralized. nobody believe into the the
building of global neoliberal empire any longer.
Notable quotes:
"... The administration's policy seems sure to fail on its own terms, and it is also the wrong thing to do. ..."
"... If a foreign power waged an economic war against your country, would you be likely to respond to that foreign coercion by effectively taking their side against your own government? Of course not. The idea that Iranians will do the work of their country's enemies by rising up and toppling the regime has always been far-fetched, but it is particularly absurd to think that Iranians would do this after they have just seen their economy be destroyed by the actions of a foreign government. ..."
"... People normally do not respond to economic hardship and diminishing prospects by risking their lives by starting a rebellion against the state. ..."
"... Making Iranians poorer and more miserable isn't going to encourage them to be more politically active, much less rebellious, but will instead force them to focus on getting by. That is likely to depress turnout at future elections, and that is more likely to be good news for hard-line candidates in the years to come. ..."
"... Iran hawks typically don't understand the country that they obsess over, so perhaps it is not surprising that they haven't thought any of this through, but their most glaring failure is not taking into account the importance of nationalism. ..."
Originally
from: The Futility of Trump's Iran Policy By Daniel LarisonNovember
6, 2018, 10:54 AM • The administration's policy seems sure to fail on its
own terms, and it is also the wrong thing to do.
The Trump administration's plan to throttle
the Iranian economy is as poorly-conceived as it is cruel:
"For ordinary people, sanctions mean unemployment, sanctions mean becoming poor, sanctions
mean the scarcity of medicine, the rising price of dollar," said Akbar Shamsodini, an Iranian
businessman in the oil and gas sector who lost his job six months ago as European companies
started to pull out of Iran in fear of US sanctions.
" By imposing these sanctions, they want to force Iranians to rise up in revolt against
their government but in practice, they will only make them flee their country [bold
mine-DL]," he said, adding that ironically it would be Europe that would have to bear the
burden of such a mass migration.
"We're being squashed here as an Iranian youth who studied here, worked here, the only
thing I'm thinking about now is how to flee my country and go to Europe."
If a foreign power waged an economic war against your country, would you be likely to
respond to that foreign coercion by effectively taking their side against your own government?
Of course not. The idea that Iranians will do the work of their country's enemies by rising up
and toppling the regime has always been far-fetched, but it is particularly absurd to think
that Iranians would do this after they have just seen their economy be destroyed by the actions
of a foreign government.
People normally do not respond to economic hardship and diminishing prospects by risking
their lives by starting a rebellion against the state. As Mr. Shamsodini says above, it is
much more likely that they will leave to find a way to make a living elsewhere. All that
strangling Iran's economy will manage to do is push young and ambitious Iranians to go abroad
while inflicting cruel collective punishment on everyone that remains behind. Making
Iranians poorer and more miserable isn't going to encourage them to be more politically active,
much less rebellious, but will instead force them to focus on getting by. That is likely to
depress turnout at future elections, and that is more likely to be good news for hard-line
candidates in the years to come.
Iran hawks typically don't understand the country that they obsess over, so perhaps it
is not surprising that they haven't thought any of this through, but their most glaring failure
is not taking into account the importance of nationalism. When a foreign power tries
dictating terms to another nation on pain of economic punishment, this is bound to provoke
resentment and resistance. Like any other self-respecting nation, Iranians aren't going to
accept being told what to do by a foreign government, and they are much more likely to band
together in solidarity rather than start an uprising against their own government. The stronger
the nationalist tradition there is in a country, the more likely it is that the reaction to
foreign threats will be one of defiance and unity. It simply makes no sense to think that the
U.S. can pressure a proud nation to capitulate like this.
The administration's policy seems sure to fail on its own terms, and it is also the wrong
thing to do. President Washington exhorted his countrymen in his Farewell Address : "Observe good
faith and justice towards all nations; cultivate peace and harmony with all." The
administration's Iran policy represents the total rejection of that advice. If the U.S.
followed Washington's recommendations, it would not be abrogating an agreement that it had just
negotiated a few years earlier, and it would not be punishing an entire country for the wrongs
of a few. Instead, the U.S. would have built on the success of the earlier negotiations and
would have sought to reestablish normal relations with them.
Yes financial machinations can drive price down. But who will produce cheap oil to sustain
this bear market? Not the Us shale companies. They need $80 per barrel or more. Then who? That's the question
Also global growth in oil consumption now is coming from Africa and Asia and it is unlikely
to stop, as they emerge from very low levels of consumption, 10 or more times less per capita then
any Western country.
It will be flat in the USA and most of Europe, that's true, but the USA and Europe is not the whole market.
Oil prices are on the cusp of a bear market one month after hitting four-year highs as a
wave of supply has returned to hit crumbling confidence in global growth.
Alastair Crooke (former UK dip and MI6) knows more about ME than any other white man. He
describes how Jared Kushner became Trump's stovepipe of disinformation on behalf of Netanyahu
and MBS.
The economic sanctions on Iran will be much tighter, beyond what they were, before the
nuclear agreement was signed. "Hit them in their pockets", Netanyahu advised Trump: "if you
hit them in their pockets, they will choke; and when they choke, they will throw out the
ayatollahs"".
This was another bit of 'stovepiped' advice passed directly to the US President. His
officials might have warned him that it was fantasy. There is no example of sanctions alone
having toppled a state; and whilst the US can use its claim of judicial hegemony as an
enforcement mechanism, the US has effectively isolated itself in sanctioning Iran: Europe
wants no further insecurity. It wants no more refugees heading to Europe.
Iran Sanctions Unlikely to Boost Oil ETFs in 2019?
November 06, 2018, 01:00:00 PM EDT Zacks.com
The United States formally levied tough sanctions on Iran from Nov 5. The United States'
sanctions against Iran were first put into place in August. That sanctions were on cars, metals
and minerals as well as U.S. and European aircraft.
The second part of the sanctions that bans import of Iranian energy was enacted starting Nov
5. These sanctions are part of President Donald Trump's initiative to put an embargo on Iran's
missile and nuclear programs and diminish its
influence in the Middle East , per CNBC.
However, Washington has also offered temporary waivers to eight key buyers, China, India,
Greece, Italy, Taiwan, Japan, Turkey and South Korea, allowing them to continue to import oil
from Iran. This in turn kept oil market steady. Iran's oil exports were 1.7
million barrels per day in October , per oilprice.com (read: Oil ETFs: What You
Need to Know ).
But Goldman Sachs revealed in a research note that "as more Iranian supply goes offline, the
market will continue to tighten. Iran could lose nearly 600,000 bpd of exports by the end of
the year, relative to October levels." So, Goldman expects the oil market to record deficit in
the fourth quarter of this year, as quoted on oilprice.com.
Against this backdrop, along with many analysts we believe that oil prices may not shoot up in 2019. We'll
tell you why.
U.S., Russia & Saudi to Scale Up Supplies
As soon as Iranian output is out of the market, high chances are that key producers like
Saudi Arabia and Russia will start pumping more. The United States and Russia have both scaled
up production to a record level of about 11.3 million barrels a day, while members of the
Organization of the Petroleum Exporting Countries (OPEC) boosted production to the highest
levels in two years despite drop-offs in Venezuela and Iran.
Iranian Supplies to Phase Out Slower Than Expected?
Investors should note that following the sanctions, there were not much changes in the
market sentiments. This was because of the fact that Iranian oil exports
plunged to around 1.3 million barrels a day from 2.4 million last spring, as customers
resorted to other suppliers in expectation of the sanctions, nytimes.com. Though the sanctions
are likely to cut about 2% of global oil supplies, administration's waivers hinted at a
patient approach by Washington toward European and Asian customers so that they could find
other suppliers.
Dwindling Demand?
Moreover, economic growth in China is slowing down. It recorded the lowest year-over-year growth
rate in the third quarter of 2018 since the first quarter of 2009. The situation in the
Eurozone in Q3 was the same, marking the feeblest growth rate since the second quarter of 2014 . Such
dwindling growth profile points at weaker demand.
What's in Store for 2019?
Goldman expects backwardation in the oil market. It expects Brent to trade around $80 per
barrel by the end of the year and slip to $65 per barrel by the end of 2019 as midstream
Permian constraints
are likely to be relieved .
ETFs in Focus
Against this backdrop, investors should keep a track of oil ETFs in the coming days. These
funds include the likes of United States Oil Fund USO , Invesco DB Oil Fund DBO , ProShares Ultra Bloomberg Crude Oil UCO and United States 12 Month Oil Fund
USL .
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as
top-performing ETFs, each week.
Get it free >>
Iran's Foreign Minister Javad Zarif provides Iran's response to the Outlaw US
Empire's unilateral, illegal sanctions that target the Iranian citizenry in an articulate
3 minute video.
Apparently, The Financial Times has published an article, "Europe should work with
Iran to counter US unilateralism," but you must be a subscriber to read the item. Looking
about for a synopsis, I discovered the item's an op/ed by Iranian President Rouhani, with
what seems a
good recap here .
Given the number of waivers issued to its sanctions, the sanctions won't destabilize the
oil market as prices have trended downward the past several days, although what they do
restrict will cause great harm to the Iranian public.
As you certainly know, the oil producers and frackers are technically insolvent, also
China filled up a vast strategic oil reserve, USA filled a vast strategic oil reserve, so
Trump-Pence's intent is the exact same as Bush-Cheney's with Iraq: destroy oil supply to
below demand, and as soon as reserves are depleted this winter heating season, crude prices
will spike back up to a break-even for the frackers, Canucks and Venezuelans, whereupon
supply will rip again, and prices fall to trade within a range of right around $100 a bbl,
...plus €2 a liter petrol surcharge for your IPCC Carbon Catholic tithe.
However, the primary problem would not even be the doubtful profitability, but rather
logistics. Iran's oil fields are in the south. To reach Russia, the oil would have to make its
way to Caspian ports in the north. Iran has no main pipelines connecting its southern oil
fields with northern ports. These ports do have the infrastructure for oil, but they were built
to receive oil from swap deals with Kazakhstan, Russia and Azerbaijan. They were never meant to
export oil.
Consequently, before any exports could begin, Moscow and Tehran would have to invest in
creating the necessary storage and loading infrastructure at the Iranian ports. Iran would also
need to upgrade its transport infrastructure to deliver oil from the south to the Caspian
seashore -- that would also present a challenge.
Finally,
Russia and Iran would have to substantially increase their tanker fleets in the landlocked
Caspian Sea to exchange large quantities of oil, as the local geography does not allow for the
use of large tankers. In this situation, a planned railroad connection between Russia and Iran via
Azerbaijan could increase the volume of oil moved from Iran to Russia, but this project has not
been completed.
Under these circumstances, Russian officials are demonstrating far greater interest in
resuming the so-called oil-for-products program, under which Russia would broker Iranian oil
abroad in exchange for Iran buying Russian industrial machinery and providing investment
opportunities to Moscow.
Russia and Iran have discussed an oil-for-products initiative for years. Initially, it was
supposed to help Tehran evade the oil trade embargo imposed by the United States, European
Union (EU) and their partners. When those sanctions were lifted as part of the 2015 nuclear
deal, the initiative was expected to compensate for Iran's lack of financial reserves, which
kept Tehran from paying for imports of Russian equipment in hard currency. However, after US
President Donald Trump
withdrew from the deal in 2018 and began reimposing sanctions, the oil-for-products deal
again gained importance as a way to evade sanctions.
In November 2017, Moscow received 1 million barrels from Iran as payment for railroad
equipment imported from Russia, and arrangements were in the works for Russia to buy an
additional 5 million tons of oil in 2018. Indeed, in January and February there were reports of
some oil dispatches transferred from Iran to Russian companies. Yet, by March, they stopped . Moscow still plans
to revive the deal in 2019, though it might never happen.
On the one hand, Russia has had problems finding buyers for Iranian oil.
Concerned about the US sanctions, potential clients refused to purchase it. On the other hand,
Iran's main hopes for sanctions relief are more connected to the EU than Russia. There is a
strong belief in Tehran that Europeans will be able to offset the negative influence of US
economic pressure on Iran. The EU wants to salvage as much of the nuclear deal as possible. Yet
the strength of Tehran's belief is hard to explain: Large EU companies have already pulled out
of Iran. The EU officials Al-Monitor interviewed openly said that Tehran should not expect a
lot from Brussels.
Though Russian and Iranian officials have an on-again, off-again marriage of convenience,
Iran's general public and its elite strongly oppose any substantial deals with Moscow. Russia
is not trusted or welcomed by Iranians and the countries have a long history of
differences . A well-informed and respected Iranian expert on Tehran's foreign policy told
Al-Monitor on condition of anonymity that a Russian oil-for-products initiative would be
difficult to implement.
"A large part of Iranian society believes that giving our oil to Russia -- especially at the
discounted prices -- is no better than agreeing to Trump's demands," he said.
The U.S. is going for the jugular with new Iran sanctions intended to punish those who trade
with Teheran. But the U.S. may have a fight on its hands in a possible post- WWII
turning-point...
The next step in the Trump administration's "maximum pressure" campaign against Iran has
begun, with the most severe sanctions being re-imposed on the Islamic Republic. Crucially, they
apply not only to Iran but to anyone who continues to do business with it.
It's not yet clear how disruptive this move will be. While the U.S. intention is to isolate
Iran, it is the U.S. that could wind up being more isolated. It depends on the rest of the
world's reaction, and especially Europe's.
The issue is so fraught that disputes over how to apply the new sanctions have even divided
Trump administration officials.
The administration is going for the jugular this time. It wants to force Iranian exports of
oil and petrochemical products down to as close to zero as possible. As the measures are now
written, they also exclude Iran from the global interbank system known as SWIFT.
It is hard to say which of these sanctions is more severe. Iran's oil exports have already
started falling. They
peaked at 2.7 million barrels a day last May -- just before Donald Trump pulled the U.S.
out of the six-nation accord governing Iran's nuclear programs. By early September oil exports
were averaging a million
barrels a day less .
In August the U.S. barred Iran's purchases of
U.S.-dollar denominated American and foreign company aircraft and auto parts. Since then the
Iranian rial has crashed to
record lows and inflation has risen above 30 percent.
Revoking Iran's SWIFT privileges will effectively cut the nation out of the
dollar-denominated global economy. But there are moves afoot, especially by China and Russia,
to move away from a dollar-based economy.
The SWIFT issue has caused infighting in the
administration between Treasury Secretary Mnuchin and John Bolton, Trump's national security
adviser who is among the most vigorous Iran hawks in the White House. Mnuchin might win a
temporary delay or exclusions for a few Iranian financial institutions, but probably not much
more.
On Sunday, the second round of sanctions kicked in since Trump withdrew the U.S. from the
2015 Obama administration-backed, nuclear agreement, which lifted sanctions on Iran in exchange
for stringent controls on its nuclear program. The International Atomic Energy Agency has
repeatedly certified that the deal is working and the other signatories -- Britain, China,
France, Germany and Russia have not pulled out and have resumed trading with Iran. China and
Russia have already said they will ignore American threats to sanction it for continuing
economic relations with Iran. The key question is what will America's European allies
do?
Europeans React
Europe has been unsettled since Trump withdrew in May from the nuclear accord. The European
Union is developing a trading mechanism to get around U.S. sanctions. Known as a
Special Purpose Vehicle , it would allow European companies to use a barter system similar
to how Western Europe traded with the Soviet Union during the Cold War.
Juncker: Wants Euro-denominated trading
EU officials have also been lobbying to preserve
Iran's access to global interbank operations by excluding the revocation of SWIFT privileges
from Trump's list of sanctions. They count
Mnuchin,who is eager to preserve U.S. influence in the global trading system, among their
allies. Some European officials, including Jean-Claude Juncker, president of the European
Commission, propose making the euro a global trading currency
to compete with the dollar.
Except for Charles de Gaulle briefly pulling France out of NATO in 1967
and Germany and France voting on the UN Security Council against the U.S. invading Iraq in
2003, European nations have been subordinate to the U.S. since the end of the Second World
War.
The big European oil companies, unwilling to risk the threat of U.S. sanctions, have already
signaled they intend to ignore the EU's new trade mechanism. Total SA, the French petroleum
company and one of Europe's biggest, pulled
out of its Iran operations several months ago.
Earlier this month a U.S. official confidently
predicted there would be little demand among European corporations for the proposed barter
mechanism.
Whether Europe succeeds in efforts to defy the U.S. on Iran is nearly beside the point from
a long-term perspective. Trans-Atlantic damage has already been done. A rift that began to
widen during the Obama administration seems about to get wider still.
Asia Reacts
Asian nations are also exhibiting resistance to the impending U.S. sanctions. It is unlikely
they could absorb all the exports Iran will lose after Nov. 4, but they could make a
significant difference. China, India, and South Korea are the first, second, and third-largest
importers of Iranian crude; Japan is sixth. Asian nations may also try to work around the U.S.
sanctions regime after Nov. 4.
India is considering purchases of Iranian crude via a barter system or denominating
transactions in rupees. China, having already said it would ignore the U.S. threat, would like
nothing better than to expand yuan-denominated oil trading, and this is not a hard call: It is
in a protracted trade war with the U.S., and an oil-futures market launched in Shanghai last
spring already claims roughly 14 percent of the global market for "front-month" futures --
contracts covering shipments closest to delivery.
Trump: Unwittingly playing with U.S. long-term future
As with most of the Trump administration's foreign policies, we won't know how the new
sanctions will work until they are introduced. There could be waivers for nations such as
India; Japan is on record asking for one. The E.U.'s Special Purpose Vehicle could prove at
least a modest success at best, but this remains uncertain. Nobody is sure who will win the
administration's internal argument over SWIFT.
Long-term Consequences for the U.S.
The de-dollarization of the global economy is gradually gathering momentum. The orthodox
wisdom in the markets has long been that competition with the dollar from other currencies will
eventually prove a reality, but it will not be one to arrive in our lifetimes. But with
European and Asian reactions to the imminent sanctions against Iran it could come sooner than
previously thought.
The coalescing of emerging powers into a non-Western alliance -- most significantly China,
Russia, India, and Iran -- starts to look like another medium-term reality. This is driven by
practical rather than ideological considerations, and the U.S. could not do more to encourage
this if it tried. When Washington withdrew from the Iran accord, Moscow and Beijing immediately
pledged to support Tehran by staying with its terms.If the U.S. meets significant resistance,
especially from its allies, it could be a turning-point in post-Word War II U.S.
dominance.
Supposedly Intended for New Talks
All this is intended to force Iran back to the negotiating table for a rewrite of what Trump
often calls "the worst deal ever." Tehran has made it clear countless times it has no intention
of reopening the pact, given that it has consistently adhered to its terms and that the other
signatories to the deal are still abiding by it.
The U.S. may be drastically overplaying its hand and could pay the price with additional
international isolation that has worsened since Trump took office.
Washington has been on a sanctions binge for years. Those about to take effect seem
recklessly broad. This time, the U.S. risks lasting alienation even from those allies that have
traditionally been its closest.
+ 45
DR
Members
+ 45
28 posts
Posted
Wednesday
at 03:48 AM
On 10/18/2018 at 11:38 PM,
Jan van Eck
said:
The problem that Qatar faces is one of population and geography. Qatar is dominantly Sunni, but
not the really severe branch that envelops KSA. And it sits next door to Bahrain, which is
apparently about 70% Shia. Qatar also juts way out into the Gulf, and is thus a convenient
sea-land bridge from Iran. Were Iran to go for a land invasion of KSA, then crossing into Qatar
with landing craft, or seizing a Qatari airport, is logical. To prevent this, the USA has built
a major air base in Qatar, specifically to cut off this route. That big US base is a natural
(and juicy) target for Iran should a shooting war break out, and the USA join in against Iran
(and that would be logical).
Meanwhile Qatar has this bizarre and unfathomable dysfunctional relationship with MbS, and a
very difficult relationship with Bahrain, which has cut off diplomatic relations and sent the
Qatari diplomats packing, in 2017. Now Iran is under sanctions, which is stressing their cash
receipts. Iran pushes back, against their ideological and religious rivals and enemies the
Sunnis, by threatening to either invade or to sink tankers with gas coming out of Qatar. The
problem for gas LNG tankers is that the stuff is kept docile by bringing the temp down to minus
176 degrees. If you whack an LNG tanker with a torpedo and breach the container spheres, easy
enough to do, then that ship is likely to blow up; one little spark and all that gas will be a
salient lesson for all the others.
The deterrent effect of this will be that nobody will dare to tempt fate by sending in an LNG
tanker. So Iran can shut down LNG traffic without firing a shot, all they have to do is go
crazy and start threatening. Iran has these subs that can go sit on the bottom of the Gulf and
pop up to launch a torpedo, and everyone knows it. That is one heck of a deterrent.
Meanwhile you have Europe now heavily dependent on gas. Either the Europeans continue to
genuflect to the Russians, which some Europeans at least find unpalatable, or they have to find
an alternative source. That is likely going to be the USA. I predict that the aggressions of
the Russians, and the problems of Qatar in any real ability to fill long-term contracts, and the
threat of
force-majeure
hovering in the background, brings Europe to buy US LNG.
Qatar delivered 80 million tons last year, as number 1 LNG exporter by a long shot. Australia
trailed behind at 56 million, followed by Malaysia 26M, Nigeria 21M, Indonesia 16M, USA 13M, Algeria
12M.
Qatar was responsible for 17M tons exported to EU, followed by Algeria at 10.4M. US Liquefaction
capacity is estimated to match the whole Middle East by 2025 with Calcasieu, LA at 4 bcf/day,
Brownsville, TX at 3.6 bcf/day; Plaquemines at 3.4 bcf/day; and Nikiski Alaska at 2.6 Bcf/day for the
Asian market.
BP has its new 'Partnership Fleet', Shell is chartering heavily and owns a large fleet as well.
Gaslog has over 25 modern large capacity vessels on the water, and the order book for 2019-2020
deliveries is extensive, and they will be available for US to EU transport (Tellurian and Cheniere
have already chartered Gaslog ships for their exclusive use)
The catch here is that Russia is delivering 10.8 million tons per year via Yamal, and their
upcoming Arctic 2LNG that will be on the ice in the Arctic circle adding even more to that production.
They have a fleet delivering year round of Teekay and Dynagas ice breaker LNG carriers, and their
primary clients have been Belgium, France and Spain during their debut ice breaking season. They are
centrally located to maximize deliveries to Asia and Europe.
I doubt that Russia will cut off Europe after spending all that money to secure liquefaction and
transport capabilities in the Arctic, but who knows. They are geared up to deliver to Asia, but could
only do so in the Summer months, or during the Winter months with the assistance of a Nuclear
Icebreaker to lead the ships.
Honestly, I hope that Germany completes the Hamburg LNG Terminal quickly and begins buying US LNG
so that we can diversify from our usual Mexico, S Korea, Japan, Spain, Portugal, Chile, Egypt, Jordan
clientele. Germany consumed over 90 million CBM of natural gas last year (controversial because they
stopped 'officially' disclosing the numbers after 2016, these are OECD estimates from the IEA), and
are getting close to Japan's 120 million CBM.
Qatar/Iran tensions could be the perfect storm for a US to EU energy boom.
"... The key point from my POV was the immediate MSM blanket coverage with every detail explained. No investigation, research, doubts or questions. ..."
"... The US MSM is a propaganda tool and they were pre-prepared, so some US deep state group knew that Bin Salman's bodyguard was heading to the consulate and what they planned to do there (and maybe even set them up to do it). ..."
The Saudis also support the system of petrodollars, which basically requires nearly all
international purchases of petroleum to be paid in dollars. Petrodollars in turn enable the
United States to print money for which there is no backing knowing that there will always be
international demand for dollars to buy oil.
I would emphasize this aspect, except that MbS doesn't so much support the PetroDollar as
the PetroYuan, and this is more than troubling for the US since the PetroDollar is essential to
the dollar's world reserve currency status.
Many American economists have expressed alarm at Saudi Arabia's willingness to borrow in
Chinese yuan, as Riyadh's decision could cause other oil-exporting countries to abandon the
U.S. dollar in favor of the "petro-yuan." A marked decline in the use of the U.S. dollar as
the preferred credit-issuing currency by oil-producing countries would greatly weaken the
U.S. dollar's long-term viability as a global reserve currency.
As the United States views its alliance with Saudi Arabia as the lynchpin of its Middle
East strategy, Washington will likely react strongly if Riyadh uses its influence within OPEC
to strengthen the Chinese yuan. As Saudi Arabia remains dependent on U.S. arms sales to
pursue its geopolitical objectives in the Middle East and counter Iran, intense U.S. pressure
would likely cause Riyadh to distance itself from Beijing, limiting economic integration
between the two countries.
It is no coincidence that these statements from the Crown Prince come days after the
official launch of China's Petroyuan. As every historical trend indicates, the world's most
powerful economy dictates which currency will be used in most international transactions.
This continues to be the case with the US in respect of Dollar, but as China gets set to
fully overtake the US as the world's leading economy, the Dollar will inevitably be replaced
by the Yuan.
China's issuing of oil futures contracts in Petroyuan is the clearest indication yet that
China is keen to make its presence as the world's largest energy consumer known and that it
would clearly prefer to purchase oil from countries like Saudi Arabia in its own currency in
the future, quite possibly in the near future.
Saudi Arabia's Crown Prince appears to understand this trajectory in the global energy
markets and furthermore, he realises that in order to be able to leverage the tremendous
amount of US pressure that will come down on Riaydh in order to force Saudi Arbia to avoid
the Petroyuan, Riyadh will need to embrace other potential partners, including China.
More than anything else, the Petroyuan will have an ability to transform Saudi Arabia by
limiting its negative international characteristics that Muhammad bin Salman himself
described. As a pseudo-satellite state of the US during the Cold War, Muhammad bin Salman
admitted that his country's relationship to the US was that of subservience. China does not
make political let alone geopolitical demands of its partners, but China is nevertheless keen
to foster de-escalations in tensions among all its partners based on the win-win principles
of peace through prosperity as articulated on a regular basis by President Xi Jinping.
Thus one could see China's policies of political non-interference rub off on a potential
future Saudi partner, in the inverse way that the US policies of ultra-interventionism are
often forced upon its partners. Thus, whatever ideological views Muhammad bin Salman does or
does not have, he clearly knows where the wind is blowing: in the direction of China.
If the Khashoggi Affair was planned as a warning to Crown Prince Mohamed bin Salman, then
the US knew exactly what was going to happen in the consulate. It was coupled with an immediate
and orchestrated MSM reaction that was curiously detailed, and delivered at high volume.
Yeah, the US will never get rid of the Saudi regime but will always be dangling the sword
right above their necks, and not just figuratively.
Besides the tangible benefits of the 'strategic' control of oil resources, which the US
believes it needs to control in order to dominate Western Europe and its Asian allies, the
Saudis also function as the CIA's private slush fund for off-the-books operations like
Iran-Contra and many others which surface in the news from time to time. Thus, the CIA
controls such vast sums through the Saudis as to make their budgets effectively
limitless.
During his triumphant tour of the US earlier this year, the Saudi King said something
which I found shocking and incredibly revealing in the way the story dropped like a stone
making absolutely no ripples anywhere in the MSM, nor in the alternative media for that
matter.
When asked about Saudi funding of Wahhabism around the world, he said that 'the allies
(presumably US and UK) had 'asked' the Saudis to 'use their resources' to create the
Madrassas and Wahhabi centers to prevent prevent inroads in Muslim countries by the Soviets
(a premise which is very questionable in the ME context after the fall of Nasser).
Now that seems to be the story of the century because it reveals the operating method of
the CIA wrt the Saudis. And even though MBS was trying to only reveal the distant roots of
the system they put in place, there is absolutely no logical reason why any part of this
system would have been subsequently dismantled; 911 notwithstanding. The continuing
US/Israeli support for and generous use of jihadis in Libya, Syria, etc. only reinforces this
point.
This is ultimately the greatest impediment to anything changing the status quo.
If the consulate was bugged , the Turks must have known the plan to abduct kashooggi.
They let it happen, and now that the abduction turned into a murder, they are accomplice.
US knew exactly what was going to happen in the consulate.
I doubt the US knew "exactly", but they likely knew something bad (a kidnapping
perhaps?) was a strong probability. Alas I wish Khashoggi had been warned. Too it seems
very odd he was willing to set foot in a Saudi embassy anywhere? Maybe Director Haspel can
explain.
Supposedly Khashoggi's smart phone picked it all up and filmed his own murder ??
More likely the room was prepared, and Khashoggi was following US instructions/assurances
in going there. The key point from my POV was the immediate MSM blanket coverage with
every detail explained. No investigation, research, doubts or questions.
The US MSM is a propaganda tool and they were pre-prepared, so some US deep state
group knew that Bin Salman's bodyguard was heading to the consulate and what they planned to
do there (and maybe even set them up to do it).
One question is whether the Halloween show was aimed at removing Bin Salman or just
getting him back in line.
Sibel Edmonds has been following this story from Turkey (she speaks Turkish) and posting her
thoughts and findings on twitter. She seems to think this is about some kind of soft coup
(get rid of MBS b/c getting too cozy with Russia/China, Euroasia). Sibel also says Khashoggi
was actually in Istanbul working with some kind of Soros NGO, maybe for future Color
Revolution/Arab Spring in the Middle East.
Sibel Edmonds @sibeledmonds As Predicted (OnRecord) One Of 3 Objectives in #Scripted
#Khashoggi Case: Get #Trump- Replace BS #RussiaGate with #SaudiGate. (Screenshot Coming In
Reply)- – "Khashoggi fiancee hits at Trump response, warns of 'money' influence"
Sibel Edmonds @sibeledmonds Oct 27
Very Important #Khashoggi Continued: #Khashoggi Relocated To #Turkey To Be a Part of a
Business-ThinkTank-NGO. He set up a business here. He opened Bank Accounts. He bought a
house/expansive Flat. He traveled to #London from #Istanbul paid handsomely by #Neoliberal
#DeepState
Jamal Khashoggi did not die for nothing. His murder was part of the plot to push current
de-facto ruler of the Saudi royal crime family aside.
On the moral side, considering who Khashoggi was, one can only say "serves him right".
However, all the other players involved, the Saudis, Israel, Turkey, and the US, are by no
means morally superior to him. His murder and essential non-reaction by others are useful, as
these events unmasked the hypocrites, who are showing their true colors even as we speak.
Should have added that the Kashoggi murder & extremely strange aftermath, dulled US
political response, smacks of a scene from the film "V for Vendetta."
"There is every indication that the U.S. is not in fact seeking to punish the Saudis for
their alleged role in Khashoggi's apparent murder but instead to punish them for reneging on
this $15 billion deal to U.S. weapons giant Lockheed Martin, which manufactures the THAAD
system.
S-400 gamechanger. / Saudi Plan to Purchase Russian S-400:
@Colin
Wright Thanks for the link. Now we can see that Empire had previously turned against MbS,
and that the scripted Khashoggi affair conveniently arrived on cue – with MbS getting
the full MSM treatment.
In other words the deep state knew exactly what was going to happen in the consulate that
day, set it up and recorded it themselves (nothing to do with Khashoggi's smart phone).
Prince Ahmad bin Abdulaziz, the younger brother of King Salman, has returned to Saudi
Arabia after a prolonged absence in London, to mount a challenge to Crown Prince Mohammed
bin Salman or find someone who can.
The source said that the prince returned "after discussion with US and UK officials",
who assured him they would not let him be harmed and encouraged him to play the role of
usurper.
Meanwhile, in Washington disquiet grows.
Writing in the New York Times, former national security advisor to the Obama
administration and US ambassador to the UN Susan Rice said: "Looking ahead, Washington must
act to mitigate the risks to our own interests. We should not rupture our important
relationship with the kingdom, but we must make clear it cannot be business as usual so
long as Prince Mohammed continues to wield unlimited power.
"It should be United States policy, in conjunction with our allies, to sideline the
crown prince in order to increase pressure on the royal family to find a steadier
replacement," she added.
@Miro23
The mainstream narrative has had "Psyop" written all over it from the first. It wouldn't
surprise me to learn that Khashoggi is still alive and languishing in an undisclosed location
with only the Skripals for company.
@Bill
Jones An interesting bullet-sentence, Bill Jones said to me: "The strange and dulled
aftermath in the US is, I believe, because the lesson was not really meant for US audiences."
Greetings, Bill!
Lessons on dramatic world events are cunningly spun to insouciant &
government-trusting Americans. The weird Jamal Kashoggi murder is an excellent example among
hundreds to choose from!
Fyi, along with FDR administration's cooperation, Zionists helped gin-up war fervor in
order to get the US into World War 2. Such deception resulted in unnecessarily sending-off
another round of American "doughboys" into world war.
Fyr, as recovered from America's Memory Hole Knowledge Disposal / Sewer System," below is
a great Pat Buchanan article titled, "Who forged it?"
The key question not addressed by the author is how long the period of "plato oil
production" (the last stage of the so called "oil age", which started around 1911) might
last -- 10, 20 or 50 years. And the oil age is just a very short blip in Earth
history.
Let's assume that this means less the $100 per barrel; in the past, it was $70 per
barrel that considered the level that guarantees the recession in the USA, but financial
system machinations now probably reached a new level, so that might not be true any
longer. The trillion dollars question is "How long this period can be extended?"
It is important to understand the US shale oil is not profitable and never will be for
prices under $80 or so. At prices below that level, it actually produces three products,
not two – oil, gas and junk bonds.
I view it as a very sophisticated, very innovative gamble to pressure oil prices down
and get compensation for the losses due to large amount of imported oil (the USA export
mainly lightweight oil which is kind of "subprime oil" often used for dilution of heavy
oil in countries such as Canada and Venezuela, but imports quality oil).
If the hypothesis that Saudis and Russians are close to Seneca Cliff (Saudi prince
recently said that Russian are just 10-15 years from it) and that best days of the US
shale and Gulf of Mexico deep oil is in the past if true, then "Houston we have a
problem".
That means that in 20 years, or so the civilization might experience some kind of
collapse, and the population of the Earth might start rapidly shrinking.
> I was given the choice, retire or get a bad review and get fired, no severance. I
retired and have not been employed since because of my age. Got news for these business
people, experience trumps inexperience. Recently, I have developed several commercial Web
sites using cloud technology. In your face IBM.
> This could well have been written about Honeywell. Same tactics exactly. I laid myself
off and called it retirement after years of shoddy treatment and phonied up employee
evaluations. I took it personally until I realized that this is just American Management in
action. I don't know how they look themselves in the mirror in the morning.
> As an HR professional, I get sick when I hear of these tactics. Although this is not the
first company to use this strategy to make a "paradigm shift". Where are the geniuses at
Harvard, Yale, or the Wharton school of business (where our genius POTUS attended)? Can't
they come up with a better model of how to make these changes in an organization without
setting up the corp for a major lawsuit or God forbid ......they treat their employees with
dignity and respect.
> They are not trained at our business schools to think long-term or look for solutions to
problems or turn to the workforce for solutions. They are trained to maximizes the profits
and let society subsidies their losses and costs.
> Isn't it interesting that you are the first one (here or anywhere else that I've seen)
to talk about the complicity of Harvard and Yale in the rise of the Oligarchs.
Perhaps we should consider reevaluation of their lofty perch in American Education. Now if
we could only think of a way to expose the fraud.
My employer outsourced a lot of our IT to IBM and Cognizant in India. The experience has
been terrible and 4 years into a 5 year contract, we are finally realizing the error and insourcing rapidly.
Back in 1999 ATT moved about 4000 of us tech folks working on
mainframe computers to IBM. We got pretty screwed on retirement benefits from ATT. After we
moved over, IBM started slowly moving all of our workload overseas. Brazil and Argentina
mainly.
It started with just tier 1 help desk. Then small IBM accounts started to go over
there. They were trained by 'unwilling' US based people. Unwilling in the sense that if you
didn't comply, you weren't a team player and it would show on your performance review.
Eventually the overseas units took on more and more of the workload. I ended up leaving in
2012 at the age of 56 for personal reasons.
Our time at ATT was suppose to be bridged to IBM
but the only thing bridged was vacation days. A lawsuit ensued and IBM/ATT won. I'm guessing
it was some of that 'ingenious' paperwork that we signed that allowed them to rip us off like
that. Thanks again for some great investigation.
While the U.S. Shale Industry
produces a record amount of oil, it continues to be plagued by massive oil decline rates and debt.
Moreover, even as the companies brag about lowering the break-even cost to produce shale oil, the
industry still spends more than it makes. When we add up all the negative factors weighing down
the shale oil industry, it should be no surprise that a catastrophic failure lies dead ahead.
Of course, most Americans have no idea that the U.S. Shale Oil Industry is nothing more than a
Ponzi Scheme because of the mainstream media's inability to report FACT from FICTION. However,
they don't deserve all of the blame as the shale energy industry has done an excellent job hiding
the financial distress from the public and investors by the use of highly technical jargon and BS.
For example, Pioneer published this in the recent Q2 2018 Press Release:
Pioneer placed 38 Version 3.0 wells on production during the second quarter of 2018. The
Company also placed 29 wells on production during the second quarter of 2018 that utilized
higher intensity completions compared to Version 3.0 wells. These are referred to as Version
3.0+ completions. Results from the 65 Version 3.0+ wells completed in 2017 and the first half of
2018 are outperforming production from nearby offset wells with less intense completions. Based
on the success of the higher intensity completions to date, the Company is adding approximately
60 Version 3.0+ completions in the second half of 2018.
Now, the information Pioneer published above wasn't all that technical, but it was full of BS.
Anytime the industry uses terms like "Version 3.0+ completions" to describe shale wells, this
normally means the use of "more technology" equals "more money."
As the shale industry
goes from 30 to 60 to 70 stage frack wells, this takes one hell of a lot more pipe, water, sand,
fracking chemicals and of course, money
.
However, the majority of investors and the public are clueless in regards to the staggering
costs it takes to produce shale oil because they are enamored by the "wonders of technology." For
some odd reason, they tend to overlook the simple premise that
MORE STUFF costs MORE MONEY.
Of course, the shale industry doesn't mind using MORE MONEY, especially if some other poor slob
pays the bill.
Shale Oil Industry: Deep The Denial
According to a recently released article by 40-year oil industry veteran, Mike Shellman,
"Deep
The Denial,"
he provided some sobering statistics on the shale industry:
I recently put somebody very smart on the necessary research (SEC K's, press releases
regarding private equity to private producers, etc.) to determine what total upstream shale oil
debt actually is.
We found it to be between $285-$300B (billion), both public and
private
. Kallanish Energy Consultants recently wrote that there is $240B of long term
E&P debt in the US maturing by 2023 and I think we should assume that at least 90 plus percent
of that is associated with shale oil. That is maturing debt, not total debt.
By year end 2019 I firmly believe the US LTO industry will then be paying over $20B
annually in interest on long term debt.
Using its own self-touted "breakeven" oil price, the shale oil industry must then produce
over 1.5 Million BOPD just to pay interest on that debt each year. Those are barrels of oil that
cannot be used to deleverage debt, grow reserves, not even replace reserves that are declining
at rates of 28% to 15% per year that is just what it will take to service debt.
Using its own "breakeven" prices the US shale oil industry will ultimately have to
produce 9G BO of oil, as much as it has already produced in 10 years just to pay its total long
term debt back
.
Using Mike's figures, I made the following chart below:
For the U.S. Shale Oil Industry just to pay back its debt, it must produce 9 billion
barrels of oil.
That is one heck of a lot of oil as the industry has produced about 10
billion barrels to date. Again, as Mike states, it would take 9 billion barrels of shale oil to
pay back its $285-300 billion of debt (based on the shale industry's very own breakeven prices).
Furthermore, the shale industry may have to sell a quarter of its oil production (1.5
million barrels per day) just to service its debt by the end of 2019.
According to the
EIA, the U.S. Energy Information Agency, total shale oil (tight oil) production is now 6.2 million
barrels per day (mbd):
The majority of shale oil production comes from three fields and regions, the Eagle Ford (Blue),
the Bakken (Yellow) and the Permian (light, medium & dark brown). These three fields and regions
produce 5.2 mbd of the total 6.2 mbd of shale production.
Unfortunately, the shale industry continues to struggle with mounting debt and negative free
cash flow. The EIA recently published this chart showing the cash from operations versus capital
expenditures for 48 public domestic oil producers:
You will notice that capital expenditures (
brown line
) are still higher than
cash from operations (
blue line
). So, it doesn't seem to matter if the oil price
is over $100 (2013-2014) or less than $70 (2017-2018), the shale oil industry continues to spend
more money than it's making.
The shale energy companies have resorted to selling assets,
issuing stock and increasing debt to supplement their inadequate cash flow to fund operations.
A perfect example of this in practice is Pioneer Resources the number one shale oil producer in
the mighty Permian. While most companies increased their debt to fund operations, Pioneer decided
to take advantage of its high stock price by raising money via share dilution.
Pioneer's
outstanding shares ballooned from 115 million shares in 2010 to 170 million by 2017. From 2011 to
2016, Pioneer issued a staggering $5.4 billion in new stock
:
So, as Pioneer issued over $5 billion in stock to produce unprofitable shale oil and gas,
Continental Resources racked up more than $5 billion in debt during the same period. These are
both examples of "Ponzi Finance." Thus, the shale energy industry has been quite creative in
hoodwinking both the shareholder and capital investor.
Now, there is no coincidence that I have focused my research on Pioneer and Continental
Resources.
While Continental is the poster child of what's horribly wrong with the shale
oil industry in the Bakken, Pioneer is a role model for the same sort of insanity and delusional
thinking taking place in the Permian.
Pioneer Spends A Lot More Money With Unsatisfactory Production Results
To be able to understand what is going on in the U.S. shale industry, you have to be clever
enough to ignore the "Techno-jargon" in the press releases and read between the lines. As
mentioned above, Pioneer stated that it was going to add a lot more of its "high-tech" Version 3.0+
completion wells in the second half of 2018 because they were outperforming the older versions.
Well, I hope this is true because Pioneer's first half 2018 production results in the Permian
were quite disappointing compared to the previous period.
If we compare the increase of
Pioneer's shale oil production in the Permian versus its capital expenditures, something must be
seriously wrong
.
First, let's look at a breakdown of Pioneer's Permian energy production from their September
2018 Investor Presentation:
Pioneer's Permian oil and gas production is broken down between its horizontal shale and
vertical convention production. I will only focus on its horizontal shale production as this is
where the majority of their capital expenditures are taking place. The highlighted yellow line
shows Pioneer's horizontal shale oil production in the Permian Basin.
You will notice that Pioneer's shale oil production increased significantly in Q3 & Q4 2017
versus Q1 & Q2 2018. Furthermore, Pioneer's shale gas production surged in Q2 2018 by nearly 50%
(highlighted with a red box) compared to oil production only increasing 5%. That is a serious RED
FLAG for natural gas production to jump that much in one quarter.
Secondly, by comparing the increase of Pioneer's quarterly shale oil production in the Permian
with its capital expenditures, the results are less than satisfactory:
The RED LINE shows the amount of capital expenditures spent each quarter while the OLIVE colored
BARS represent the increase in Permian shale oil production. To simplify the figures in this
chart, I made the following graphic below:
Pioneer spent $1.36 billion in the second half of 2017 to increase its Permian shale oil
production by 30,232 barrels per day (bopd) compared to $1.7 billion in the first half of 2018
which only resulted in an additional 10,832 bopd
. Folks, it seems as if something
seriously went wrong for Pioneer in the Permian as the expenditure of $340 million more CAPEX
resulted in two-thirds less the production growth versus the previous period.
Third, while Pioneer (stock ticker PXD) proudly lists that they are one of the lowest cost
shale producers in the industry, they still suffer from negative free cash flow:
As we can see, Pioneer lists their breakeven oil price at approximately $22, which is downright
hilarious when they spent $132 million more on capital expenditures than the made in cash from
operations:
The public and investors need to understand that "oil breakeven costs" do not include capital
expenditures. And according to Pioneer's Q2 2018 Press Release, the company plans on spending
$3.4 billion on capital expenditures in 2018. The majority of the capital expenditures are spent
on drilling and completing horizontal shale wells.
For example, Pioneer brought on 130 new wells in the first half of 2018 and spent $1.7
billion on CAPEX (capital expenditures) versus 125 wells and $1.36 billion in 2H 2017.
I
have seen estimates that it cost approximately $9 million for Pioneer to drill a horizontal shale
well in the Permian. Thus, the 130 wells cost nearly $1.2 billion.
However, the interesting thing to take note is that Pioneer brought on 125 wells in 2H 2017 to
add 30,000+ barrels of new oil production compared to 130 wells in 1H 2018 that only added 10,000+
barrels.
So, how can Pioneer add five more wells (130 vs. 125) in 1H 2018 to see its oil
production increase a third of what it was in the previous period?
Regardless, the U.S. shale oil industry continues to spend more money than they make from
operations. While energy companies may have enjoyed lower costs when the industry was gutted by
super-low oil prices in 2015 and 2016, it seems as if inflation has made its way back into the
shale patch. Rising energy prices translate to higher costs for the shale energy industry. Rinse
and repeat.
Unfortunately, when the stock markets finally crack, so will energy and commodity prices.
Falling oil prices will cause severe damage to the Shale Industry as it struggles to stay afloat by
selling assets, issuing stock and increasing debt to continue producing unprofitable oil.
I believe the U.S. Shale Oil Industry will suffer catastrophic failure from the impact
of deflationary oil prices along with peaking production.
While U.S. Shale Oil production
has increased exponentially over the past decade, it will likely come down even faster.
"... The fact that the US dollar remains the overwhelming dominant currency for international trade and financial transactions gives Washington extraordinary power over banks and companies in the rest of the world. That's the financial equivalent of a neutron bomb. That might be about to change, though it's by no means a done deal yet. ..."
"... German Foreign Minister Heiko Maas told Handelsblatt, a leading German business daily, "Europe should not allow the U.S. to act over our heads and at our expense. For that reason, it's essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent SWIFT system ." ..."
"... In addition to the recent statements from the German Foreign Minister, France is discussing expanding the Iran SPV to create a means of insulating the EU economies from illegal extraterritorial sanctions like the secondary sanctions that punish EU companies doing business in Iran by preventing them from using the dollar or doing business in the USA. ..."
"... F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine "New Eastern Outlook." https://journal-neo.org/2018/10/23/the-eu-russia-china-plan-to-avert-iran-oil-sanctions/ ..."
It may well be that the unilateral wrecking ball politics of the Trump Administration are
bringing about a result just opposite from that intended. Washington's decision to abandon the
Iran nuclear agreement and impose severe sanctions on companies trading Iran oil as of 4
November, is creating new channels of cooperation between the EU, Russia, China and Iran and
potentially others. The recent declaration by Brussels officials of creation of an unspecified
Special Purpose Vehicle (SPV) to legally avoid US dollar oil trade and thereby US sanctions,
might potentially spell the beginning of the end of the Dollar System domination of the world
economy.
According to reports from the last bilateral German-Iran talks in Teheran on October 17, the
mechanisms of a so-called Special Purpose Vehicle that would allow Iran to continue to earn
from its oil exports, will begin implementation in the next days. At end of September EU
Foreign Policy chief Federica Mogherini confirmed plans to create such an independent trade
channel, noting, "no sovereign country or organization can accept that somebody else decides
with whom you are allowed to
do trade with ."
The SPV plan is reportedly modelled on the Soviet barter system used during the cold war to
avert US trade sanctions, where Iran oil would be in some manner exchanged for goods without
money. The SPV agreement would reportedly involve the European Union, Iran, China and
Russia.
According to various reports out of the EU the new SPV plan involves a sophisticated barter
system that can avoid US Treasury sanctions. As an example, Iran could ship crude oil to a
French firm, accrue credit via the SPV, much like a bank. That could then be used to pay an
Italian manufacturer for goods shipped the other way, without any funds traversing through
Iranian hands or the normal banking system.A multinational European state-backed financial
intermediary would be set up to handle deals with companies interested in Iran transactions and
with Iranian counter-parties. Any transactions would not be transparent to the US, and would
involve euros and sterling rather than dollars.
It's an extraordinary response to what Washington has called a policy of all-out financial
war against Iran, that includes threats to sanction European central banks and the
Brussels-based SWIFT interbank payments network if they maintain ties to Iran after November 4.
In the post-1945 relations between Western Europe and Washington such aggressive measures have
not been seen before.It's forcing some major rethinking from leading EU policy circles.
New Banking Architecture
The background to the mysterious initiative was presented in June in a report titled,
Europe, Iran and Economic Sovereignty: New Banking Architecture in Response to US Sanctions.
The report was authored by Iranian economist Esfandyar Batmanghelidj and Axel Hellman, a Policy
Fellow at the European Leadership Network (ELN), a London-based policy
think tank .
The report proposes its new architecture should have two key elements. First it will be
based on "gateway banks" designated to act as intermediaries between Iranian and EU commercial
banks tied to the Special Purpose Vehicle. The second element is that it would be overseen by
an EU-Office of Foreign Asset Controls or EU-OFAC, modeled on the same at the US Treasury, but
used for facilitating legal EU-Iran trade, not for blocking it. Their proposed EU-OFAC among
other functions would undertake creating certification mechanisms for due diligence on the
companies doing such trade and "strengthen EU legal protections for entities engaged in Iran
trade and investment ."
The SPV reportedly is based on this plan using designated Gateway Banks, banks in the EU
unaffected by Washington "secondary sanctions," as they do not do business in the US and focus
on business with Iran. They might include select state-owned German Landesbanks, certain Swiss
private banks such as the Europäisch-Iranische Handelsbank (EIH), a European bank
established specifically to engage in trade finance with Iran. In addition, select Iran banks
with offices in the EU could be brought in.
Whatever the final result, it is clear that the bellicose actions of the Trump
Administration against trade with Iran is forcing major countries into cooperation that
ultimately could spell the demise of the dollar hegemony that has allowed a debt-bloated US
Government to finance a de facto global tyranny at the expense of others.
EU-Russia-China
During the recent UN General Assembly in New York, Federica Mogherini said the SPV was
designed to facilitate payments related to Iran's exports – including oil –so long
as the firms involved were carrying out legitimate business under EU law. China and Russia are
also involved in the SPV. Potentially Turkey, India and other countries could later join.
Immediately, as expected, Washington has reacted. At the UN US Secretary of State and former
CIA head Mike Pompeo declared to an Iran opposition meeting that he was "disturbed and indeed
deeply disappointed" by the EU plan. Notably he said ""This is one of the of the most
counterproductive measures imaginable for regional and global peace and security." Presumably
the Washington plan for economic war against Iranis designed to foster regional and global
peace and security?
Non-US SWIFT?
One of the most brutal weapons in the US Treasury financial warfare battery is the ability
to force the Brussels-based SWIFT private interbank clearing system to cut Iran off from using
it. That was done with devastating effect in 2012 when Washington pressured the EU to get SWIFT
compliance, a grave precedent that sent alarm bells off around the world.
The fact that the US dollar remains the overwhelming dominant currency for international
trade and financial transactions gives Washington extraordinary power over banks and companies
in the rest of the world. That's the financial equivalent of a neutron bomb. That might be
about to change, though it's by no means a done deal yet.
In 2015 China unveiled its CIPS or China International Payments System. CIPS was originally
viewed as a future China-based alternative to SWIFT. It would offer clearing and settlement
services for its participants in cross-border RMB payments and trade. Unfortunately, a Chinese
stock market crisis forced Beijing to downscale their plans, though a skeleton of
infrastructure is there.
In another area, since late 2017 Russia and China have discussed possible linking their
bilateral payments systems bypassing the dollar. China's Unionpay system and Russia's domestic
payment system, known as Karta Mir, would be
linked directly .
More recently leading EU policy circles have echoed such ideas, unprecedented in the
post-1944 era. In August, referring to the unilateral US actions to block oil and other trade
with Iran, German Foreign Minister Heiko Maas told Handelsblatt, a leading German business
daily, "Europe should not allow the U.S. to act over our heads and at our expense. For that
reason, it's essential that we strengthen European autonomy by establishing payment channels
that are independent of the US, creating a European Monetary Fund and building up an
independent SWIFT system ."
A Crack in the Dollar Edifice
How far the EU is willing to defy Washington on the issue of trade with Iran is not yet
clear. Most probably Washington via NSA and other means can uncover the trades of the
EU-Iran-Russia-China SPV.
In addition to the recent statements from the German Foreign Minister, France is discussing
expanding the Iran SPV to create a means of insulating the EU economies from illegal
extraterritorial sanctions like the secondary sanctions that punish EU companies doing business
in Iran by preventing them from using the dollar or doing business in the USA. French Foreign
Ministry spokeswoman, Agnes Von der Muhll, stated that in addition to enabling companies to
continue to trade with Iran, that the SPV would, "create an economic sovereignty tool for the
European Union beyond this one case. It is therefore a long-term plan that will protect
European companies in the future from the effect of illegal extraterritorial
sanctions ."
If this will be the case with the emerging EU Special Purpose Vehicle, it will create a
gaping crack in the dollar edifice. Referring to the SPV and its implications, Jarrett Blanc,
former Obama State Department official involved in negotiating the Iran nuclear agreement noted
that, "The payment mechanism move opens the door to a longer-term degradation of US sanctions
power."
At present the EU has displayed effusive rhetoric and loud grumbling against unilateral US
economic warfare and extraterritorial imposition of sanctions such as those against Russia.
Their resolve to potently move to create a genuine alternative to date has been absent. So too
is the case so far in other respects for China and Russia. Will the incredibly crass US
sanctions war on Iran finally spell the beginning of the end of the dollar domination of the
world economy it has held since Bretton Woods in 1945?
My own feeling is that unless the SPV in whatever form utilizes the remarkable technological
advantages of certain of the blockchain or ledger technologies similar to the US-based XRP or
Ripple, that would enable routing payments across borders in a secure and almost instantaneous
way globally, it won't amount to much. It's not that European IT programmers lack the expertise
to develop such, and certainly not the Russians. After all one of the leading blockchain
companies was created by a Russian-born Canadian named Vitalik Buterin. The Russian Duma is
working on new legislation regarding digital currencies, though the Bank of Russia still seems
staunchly opposed. The Peoples' Bank of China is rapidly developing and testing a national
cryptocurrency, ChinaCoin. Blockchain technologies are widely misunderstood, even in government
circles such as the Russian Central Bank that ought to see it is far more than a new "South Sea
bubble." The ability of a state-supervised payments system to move value across borders,
totally encrypted and secure is the only plausible short-term answer to unilateral sanctions
and financial wars until a more civilized order among nations is possible.
"... This is Naked Capitalism fundraising week. 1584 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page , which shows how to give via check, credit card, debit card, or PayPal. Read about why we're doing this fundraiser and what we've accomplished in the last year, and our current goal, more original reporting ..."
"... By Nick Cunningham, freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics based in Pittsburgh, PA. Originally published at OilPrice ..."
"... Evidence of a slowdown in China is also becoming apparent. 3M saw sales dip in China, as did PPG Industries, which makes paint and coatings. "We see other signs of slowing in China; the automotive build rates are down significantly and that has a knock-on effect," Michael Roman, CEO of 3M, said. Sales of cars in China fell 12 percent in September from a year earlier. ..."
"... A strong dollar is another source of trouble for the global economy. Harley-Davidson said that international sales of its motorcycles were hit by a strong greenback. The Federal Reserve has hiked interest rates multiple times in the last year, and is expected to continue on that course. ..."
"... The array of problems raise the prospect of peak industrial earnings . Strong GDP figures and a massive corporate tax cut temporarily juiced profits, and earnings could fall to more pedestrian levels, ..."
"... The housing market is also starting to flash warning signs. For the week ending on October 12, the volume of mortgage applications fell by 7.1 percent . Higher interest rates are clearly being felt in housing, pushing homes out of reach for some prospective buyers. ..."
"... The next steps are unclear. There will be a tension between the supply losses from Iran, which will serve to tighten the oil market, and the supply gains from U.S. shale and Saudi Arabia. The demand side is decidedly more negative, with economic problems potentially forcing a rethink among forecasters. ..."
By Nick Cunningham, freelance writer on oil and gas, renewable energy, climate change,
energy policy and geopolitics based in Pittsburgh, PA. Originally published at OilPrice
Warning signs about the slowing of the global economy continue to crop up, and market
jitters are taking the steam out of oil prices.
U.S. corporate earnings are no longer sky-high, with a range of factors starting to cut into
margins. The U.S.-China trade war has not made headlines in the same way it did a few weeks and
months ago, but the reality is that the impact of tariffs is only growing as costs work their
way through supply chains.
"These trade tensions are coming home to roost and they are impacting the fundamentals of
the market," Tally Leger, equity strategist at OppenheimerFunds,
told Reuters . "Thanks to trade tariffs we are facing the headwinds of a stronger dollar,
higher oil prices, and rising interest rates."
This week, a slew of disappointing earnings came in. Caterpillar said that tariffs cost the
company $40 million in the third quarter, and its share price fell roughly 7.6 percent after it
reported its figures. Poor figures
also came from 3M and Harley-Davidson , prompting selloffs in their stocks as well. 3M said
that tariffs could cost the company $20 million this year, a figure that will balloon to $100
million next year. The results spooked the markets, dragging down equities more broadly. The
S&P machinery index was down more than 4 percent in the last two days.
Evidence of a slowdown in China is also becoming apparent. 3M saw sales dip in China, as
did PPG Industries, which makes paint and coatings. "We see other signs of slowing in China;
the automotive build rates are down significantly and that has a knock-on effect," Michael
Roman, CEO of 3M, said. Sales of cars in China fell 12 percent in September from a year
earlier.
A strong dollar is another source of trouble for the global economy. Harley-Davidson
said that international sales of its motorcycles were hit by a strong greenback. The Federal
Reserve has hiked interest rates multiple times in the last year, and is expected to continue
on that course.
The array of problems raise the prospect of
peak industrial earnings . Strong GDP figures and a massive corporate tax cut temporarily
juiced profits, and earnings could fall to more pedestrian levels, particularly as costs
start to creep up. Some analysts think the fears of weaker earnings are
overblown , but investors have clearly grown worried about the trajectory of the U.S.
economy. And it has been the U.S. that has stood out while much of the rest of the world
already began to lose steam. The U.S. cannot defy gravity forever.
The housing market is also starting to flash warning signs. For the week ending on
October 12, the volume of mortgage applications
fell by 7.1 percent . Higher interest rates are clearly being felt in housing, pushing
homes out of reach for some prospective buyers.
President Trump recognizes the political threat he faces if interest rate hikes spoil the
party. "Every time we do something great, he raises the interest rates," Trump said of Fed
Chairman Jerome Powell in an interview with the
Wall Street Journal on Tuesday. He "almost looks like he's happy raising interest rates."
Trump added that it was "too early to say, but maybe" he regrets nominating Powell. Trump
complained that "Obama had zero interest rates."
The economic
headwinds are deflating the oil market, where supply tightness has dominated attention for
the past few months. Recently, however, some of the supply fears have eased. Saudi Arabia has
vowed to cover any supply gap, should it emerge. Inventories continue to rise. The outages in
Iran are seem to be less of a concern to traders.
Now demand is becoming a concern. As the global economy slows, particularly in China,
consumption could moderate. Brent crude fell by 4 percent on Tuesday amid a broader market
selloff.
"The crude oil price action yesterday was clearly impacted by bearish equity markets,
falling ten-year interest rates, rising gold prices and a clear risk adverse sentiment," said
Bjarne Schieldrop, chief commodities analyst at SEB.
The next steps are unclear. There will be a tension between the supply losses from Iran,
which will serve to tighten the oil market, and the supply gains from U.S. shale and Saudi
Arabia. The demand side is decidedly more negative, with economic problems potentially forcing
a rethink among forecasters.
I apologize in advance to Lambert for adding this link to his terrific daily water cooler
topics, but since Yves and NC were specifically mentioned I thought it would be interesting
to share. The video is titled, "Should we trust MMT?" with Joe Bongiovanni. It is 48 minutes
long and I only made it about 20 minutes after becoming too annoyed. Yves/NC are mentioned at
18 minutes and 40 seconds in. Joe says he was part of the NC commentariat for years, but was
banned due to his thoughts that MMT proponents are misleading and don't "tell the real
truth".
Not being an economist or comfortable enough with my understanding of MMT to know if what
he was saying had merit. Plus the style and lack of preparation from the interviewer other
than wanting her expert to debunk MMT for her right wing followers.
I'm 30 min in .skip ahead to that point to get to the meat of his discussion.
He keeps repeating that he wants monetary "reform", so that the money system 'works for
the people'. But he doesn't say what that change is or why MMT gets it wrong in its
understanding of how the system works.
He says "govt doesn't create money by spending". Except, yes, it does. It then chooses to
offset that spending later with bond auctions.
He doesn't make a distinction between public and private debt, doesn't distinguish between
currency users and issuers. No distinction between stocks and flows. No discussion of
capacity constraints, inflation.
He actually fear-mongers about the debt around the 38-39 min mark. Says there's going to
be tough times when we get austerity (in addition to environment collapsing).
He talks a lot about how 'the monetary system works', but it's clear to me he doesn't get
how the banking system works. I don't think you can understand one without the other very
well.
MMT can offer a clear explanation of why:
1) 30 yr treasury bond yields fell rapidly in the 1980s while deficits were exploding.
2) 30 yr treasury bond yields rose in 2000, hitting 7% on the 30 yr at one point, when the
government was running surpluses.
3) Japan has a functional currency and economy with massive debts and deficits for many
years.
Conventional economics has NO explanation for the above phenomenon.
Cheers Johnny – he's been here before and took umbrage to the NC crew saying that
taxation for revenue is obsolete. Don't make me go there.
Said NC doesn't like criticism and Yves had banned him I'd be banned too if I thought
that!!
Got some trolls on Youtube worked up. I'll go and finish them off after I do a little more
digging on Joe and his Kettle Pond Institute for Debt Free Money.
He had a go at Bill Mitchell on this post recently:
IMO, Tvc, if you want some relevant stuff, look at how Jimmy Dore (a comedian turned
activist) gets his head around MMT – Stephanie Kelton was good and has been linked here
and also Chris Hedges
People like JD are very influential and I can see a heightened awareness out there that we
are not going to get anywhere now by being polite and civil.
I don't remember the details, but he was banned for behavior. The problem that so often
happens is that the people on losing sides of arguments here (as in not just the moderators
but the commentariat does a good job of debunking their claims) is they don't give up and
start going into various forms of bad faith argumentation: broken record, straw manning, or
just plain getting abusive. Then they try to claim they were banned due to their position, as
opposed to how they started carrying on when they couldn't make their case.
The AMI people are a real problem, and the worst is that they use enough lingo that sounds
MMT-like that they confuse people about MMT. They are also presumptuous as hell. I was part
of an Occupy Wall Street group, Alternative Banking. Every week, a group came and kept trying
to hijack the discussion to be about Positive Money. They got air time because that's Occupy
but everyone else regarded them as an annoyance.
One Sunday, the president of AMI showed up in a suit, uninvited, and expected to be able
to take over the group and lecture. The rules were everyone on stack got only 2 or 3 minutes
each (I forget how long) and then had to cede the floor. Since everyone else was too polite,
I was the one who had to shut him up by blowing up at him and telling him he was totally out
of line and had no business abusing the group's rules. That is the only time in my WASPy life
I have carried on like that in a public setting. Broke up the meeting, which reconvened only
after he left.
Despite the almost unprecedented divisive nature of Donald J. Trump's presidency, he is
chalking up some impressive foreign policy victories, including finally bringing Beijing to
task over its decades long unfair trade practices, stealing of intellectual property rights,
and rampant mercantilism that has given its state-run companies unfair trade advantages and as
a result seen Western funds transform China to an emerging world power alongside the U.S.
Now, it looks as if Trump's recent tirade against America's European allies over its
geopolitically troubling reliance on Russian gas supply may also be bearing fruit. On Tuesday,
The Wall Street Journal reported that earlier this month German Chancellor Angela Merkel
offered government support to efforts to open up Germany to U.S. gas, in what the report called
"a key concession to President Trump as he tries to loosen Russia's grip on Europe's largest
energy market."
German concession
Over breakfast earlier this month, Merkel told a small group of German lawmakers that the
government had made a decision to co-finance the construction of a $576 million liquefied
natural gas (LNG) terminal in northern Germany, people familiar with the development said.
The project had been postponed for at least a decade due to lack of government support,
according to reports, but is now being thrust to the center of European-U.S. geopolitics.
Though media outlets will mostly spin the development, this is nonetheless a geopolitical and
diplomatic win for Trump who lambasted Germany in June over its Nordstream 2 pipeline deal with
Russia.
In a televised meeting with reporters and NATO Secretary-General Jens Stoltenberg before a
NATO summit in Brussels,
Trump said at the time it was "very inappropriate" that the U.S. was paying for European
defense against Russia while Germany, the biggest European economy, was supporting gas deals
with Moscow.
Both the tone and openness of Trumps' remarks brought scathing rebukes both at home and
among EU allies, including most media outlets. However, at the end of the day, it appears that
the president made a fair assessment of the situation. Russia, for its part, vehemently denies
any nefarious motives over its gas supply contacts with its European customers, though Moscow's
actions in the past dictate otherwise.
Moscow also claims that the Nordstream 2 gas pipeline is a purely commercial venture. The
$11 billion gas pipeline will stretch some 759 miles (1,222 km), running on the bed of the
Baltic Sea from Russian gas fields to Germany, bypassing existing land routes over Ukraine,
Poland and Belarus. It would double the existing Nord Stream pipeline's current annual capacity
of 55 bcm and is expected to become operational by the end of next year.
Russia, who stands the most to lose not only in terms of regional hegemony, but economically
as well, if Germany pushes through with plans to now build as many as three LNG terminals,
always points out that Russian pipeline gas is cheaper and will remain cheaper for decades
compared to U.S. LNG imports.
While that assessment is correct, what Moscow is missing, or at least not admitting, is a
necessary German acquiescence to Washington. Not only does the EU's largest economy need to
stay out of Trump's anti-trade cross hairs, it still needs American leadership in both NATO and
in Europe as well.
Russian advantages
Without U.S. leadership in Europe, a vacuum would open that Moscow would try to fill, most
likely by more gas supply agreements. However, Russia's gas monopoly in both Germany and in
Europe will largely remain intact for several reasons.
First, Russian energy giant Gazprom, which has control over Russia's network of pipelines to
Europe, supplies close to 40 percent of Europe's gas needs.
Second, Russia's gas exports to Europe rose 8.1 percent last year to a record level of 193.9
bcm, even amid concerns over Russia's cyber espionage allegations, and its activities in Syria,
the Ukraine and other places.
Moreover, Russian gas is indeed as cheap as the country claims and will remain that way for
decades. Using a Henry Hub gas price of $2.85/MMBtu as a base, Gazprom
recently estimated that adding processing and transportation costs, the price of
U.S.-sourced LNG in Europe would reach $6/MMBtu or higher – a steep markup.
Henry Hub gas prices are currently trading at $3.151/MMBtu. Over the last 52-week period
U.S. gas has traded between $2.64/MMBtu and $3.82/MMBtu. Russian gas sells for around $5/MMBtu
in European markets and could even trade at lower prices in the future as Gazprom removes the
commodity's oil price indexation.
Oil prices are down a bit, but are still close to multi-year highs. That should leave the
shale industry flush with cash. However, a long list of US shale companies are still struggling
to turn a profit. A new report
from the Institute for Energy Economics and Financial Analysis (IEEFA) and the Sightline
Institute detail the "alarming volumes of red ink" within the shale industry.
"Even after two and a half years of rising oil prices and growing expectations for
improved financial results, a review of 33 publicly traded oil and gas fracking companies shows
the companies posting negative free cash flows through June," the report's authors write.
The 33 small and medium-sized drillers posted a combined $3.9 billion in negative cash flow in
the first half of 2018.
The glaring problem with the poor financial results is that 2018 was supposed to be the year
that the shale industry finally turned a corner. Earlier this year, the International Energy
Agency painted a rosy portrait of US shale,
arguing in a report that "higher prices and operational improvements are putting the US
shale sector on track to achieve positive free cash flow in 2018 for the first time
ever."
The improved outlook came after years of mounting debt and negative cash flow. The IEA
estimates that the US shale industry generated cumulative negative free cash flow of over
$200 billion between 2010 and 2014. The oil market downturn that began in 2014 was supposed to
have changed profligate spending, pushing out inefficient companies and leaving the sector as a
whole much leaner and healthier.
"Current trends suggest that the shale industry as a whole may finally turn a profit in
2018, although downside risks remain," the IEA wrote in July. " Several companies expect
positive free cash flow based on an assumed oil price well below the levels seen so far in 2018
and there are clear indications that bond markets and banks are taking a more positive attitude
to the sector, following encouraging financial results for the first quarter."
But the warning signs
have been clear for some time. The Wall Street Journal reported
in August that the second quarter was a disappointment. The WSJ analyzed 50 companies, finding
that they spent a combined $2 billion more than they generated in the second quarter.
The new report from IEEFA and the Sightline Institute add more detail the industry's recent
performance. Only seven out of the 33 companies analyzed in the report had positive cash flow
in the first half of the year, and the whole group burned through a combined $5 billion in cash
reserves over that time period.
Even more remarkable is the fact that the negative financials come amidst a production boom.
The US continues to break production records week after week, and at over 11 million barrels
per day, the US could soon become the world's largest oil producer. Analysts differ over the
trajectory of shale, but they only argue over how fast output will grow.
Yet, even as drillers extract ever greater volumes of oil from the ground, they still are
not turning a profit. "To outward appearances, the US oil and gas industry is in the midst
of a decade-long boom," IEEFA and the Sightline Institute write in their report. However,
"America's fracking boom has been a world-class bust."
The ongoing struggles raises questions about the long-term. If the industry is still not
profitable – after a decade of drilling, after major efficiency improvements since 2014,
and after a sharp rebound in oil prices – when will it ever be profitable? Is there
something fundamentally problematic about the nature of shale drilling, which suffers from
steep decline rates over relatively short periods of time and requires constant spending and
drilling to maintain?
Third quarter results will start trickling in over the next few days and weeks, which should
provide more clues into the shale industry's health. There is even more pressure on drillers to
post profits because the third quarter saw much higher oil prices.
"Until the industry as a whole improves, producing both sustained profits and
consistently positive cash flows, careful investors would be wise to view fracking companies as
speculative investments," the authors of the report concluded.
"... US tight oil output was about 6200 kb/d in August 2018 according to the EIA, not that the DPR includes oil from the region of tight oil plays that is conventional oil, also it is a model that is not very good so I ignore the DPR ..."
Any guess what the price of crude would be today if we had no fracking in N. America?
Wild guess is all I've got, but I'm saying $142 (and much lower economic growth over the past
9 yrs- maybe even flat averaged for the whole period).
Any other speculations on this?
USA LTO is ~7.5 million bpd. That exceeds global spare capacity over demand as-is today by at
least four times. So if the world was still trying to consume what it is today, we would be
several million short and would have been short by seven figures for several years.
I think we would have found out if there really are any huge but uneconomical fields out
there by now as the panic from that set in a few years ago. A shortage on that scale means
arbitrary prices pending demand cap/destruction.
US tight oil output was about 6200 kb/d in August 2018 according to the EIA, not that the
DPR includes oil from the region of tight oil plays that is conventional oil, also it is a
model that is not very good so I ignore the DPR .
WAG on oil price with zero LTO output is $120/b in 2017$, plus or minus $20/b.
Canada (offshore), Hebron is expected to produce around 150,000 barrels a day, from about
40,000 barrels a day now.
2018-10-22 (The Globe and Mail) It's been one year since ExxonMobil's long-awaited Hebron
platform off the southeast coast of Newfoundland started pumping crude from its first well.
It took four years, $14 billion, 132,000 cubic metres of concrete and a few thousand workers
to bring it online, and so far, it's churning out about 40,000 barrels a day, with the crude
bound for markets in the U.S. Gulf states, Europe and much of eastern North America.
Eventually, Hebron will drill 20 to 30 wells, and is expected to produce around 150,000
barrels a day.
With an expected reserve of 700 million barrels of recoverable crude, the Hebron project is
expected to operate for 30 years. As Newfoundland's fourth offshore platform, it will play a
key role in the province's plan to double overall production to more than 650,000 barrels a
day by 2030.
https://www.theglobeandmail.com/business/article-why-hebron-has-a-leg-up-on-albertas-oil-sands/
Hebron is already at 70 kbpd and has been for a few months. I thinks its expected annual
average for oil only is 135 and it will take a year or so to get there as the coming wells
will be less productive that the first ones. In the mean time the three other platforms are
in decline (Terra Nova was originally due to be taken off line next year – not sure
what the latest thinking is). They dropped about 35 kbpd last year but that may accelerate as
Hibernia is coming off a secondary plateau.
Yeah, that's going to get a lot worse. It's counting Iran production, and not what it can
sell. A lot in floating storage, and being stored close to China and elsewhere. US is the
only one with an increase, and that increase is on a hiatus until new pipelines come on,
regardless of the EIA overstated production numbers. So, we would be short before any demand
increase, or non-OPEC declines. But, never worry, as IEA says peak oil is just a figment of
our imagination
"The Saudi government said it would take another month to complete a full investigation,
which would be overseen by Mohammed.
Mohammad will find that Mohammad had nothing to do with the issue."
Perhaps an anti-KSA Boycott, Divestment, Sanctions (BDS) Movement will get started.
Consumers and competitors might find the idea appealing.
Nice ideas for new KSA flag designs at this link here (I most like the chainsaw instead of
the current sword design- reminds me of Scarface- Mo Bin Clownstick™ is about as
legitimate and sophisticated as a coke runner): https://www.moonofalabama.org/2018/10/saudis-admit-khashoggi-murder.html
The Sultan is playing his hand well (drip drip drip Turkish Int. leaks to the news with an
intensifying puke factor- one recent read that Khashoggi was dismembered alive and dissolved
in acid). Has Mo Bin Clownstick™ met his match? https://lobelog.com/the-geopolitics-of-the-khashoggi-murder/
I can't help but wonder about all those guys he threw into a hotel prison and shook down for
billions of dollars. They can afford a lot of media with the money they had remaining.
From the report: The $3.9 billion in negative cash flows in the first two quarters of 2018 represented an
improvement over the first halves of 2016 and 2017, when red ink totaled $11 billion and $7.2
billion, respectively.
These 33 companies have had positive net income since 2017Q4 and long term debt reached
its peak for these companies in 2018Q1 at 138 billion with a gradual decrease to 126 billion
in 2018Q2. As prices continue to rise debt will gradually be paid down,
When I look at that report I see an improving situation for these companies. I would
prefer it if they broke the data into two groups, oil focused and natural gas focused
companies. There has been a better recovery in oil prices than natural gas prices though it
looks like we might see a spike in natural gas prices if we have a colder than normal
winter.
India's crude oil imports, the average for the first 9 months of 2018 is up +279 kb/day
compared to first 9 months of 2017
Seasonal chart: https://pbs.twimg.com/media/DqGtWDoX4AAYDwJ.jpg
India's crude oil refinery processing, the average for the first 9 months of 2018 is up +231
kb/day compared to first 9 months of 2017
Seasonal chart: https://pbs.twimg.com/media/DqGttFOW4AAr0Uy.jpg
Saudi Arabia spare capacity, there seems to be a consensus that Saudi Arabia can produce 11
million b/day. I guess that producing above that level would be subject to maintenance,
outages and natural decline? (Also I'm guessing that the Khurais field expansion might not be
ready until later in 2019?)
2018-10-22 Saudi Arabia Energy Minister Al Falih speaks to TASS
Saudi Arabia now in October is producing 10.7 million b/day.
And is likely to go up, in the near future, to 11 million b/day on a steady basis.
Our total production capacity is currently 12 million b/day.
And that could be increased to 13 million b/day with an investment of $20 to $30 billion.
Interview with TASS: http://tass.com/economy/1026924
Exxon in Brazil holds potential 41 billion barrels based on preliminary studies
2018-10-18 RIO DE JANEIRO and HOUSTON (Bloomberg) -- In a single year, Exxon Mobil has
gone from being a tiny bit player in Brazil to the second-largest holder of oil exploration
acreage, trailing only state-controlled Petroleo Brasileiro.
The last 24 concessions the U.S. giant bought with its partners may hold 41 billion bbl,
based on preliminary studies, according to Eliane Petersohn, a superintendent at Brazil's
National Petroleum Agency, or ANP. While the existence of the oil still needs to be
confirmed, along with whether its extraction will be cost-effective, it's a huge figure --
almost double Exxon's current reserves.
The Irving, Texas-based company is betting big in particular on Brazil's offshore, where a
single block is currently producing more than all of Colombia and profitability compares to
the best U.S. tight oil, according to Decio Oddone, the head of ANP.
It should take six to eight years for oil to start flowing if economically viable deposits
are discovered, according to ANP.
https://www.worldoil.com/news/2018/10/18/exxon-makes-major-bet-on-brazil-as-petrobras-eases-its-grip
Mike Shellman writes again. No need for me to elaborate much on his persistent and very much needed gentle nudgings about debts
coming due in the U.S. Shale Oil industry.
Ignoring debt doesn't make it go away < cough > Venezuela < cough >
By year end 2019 I firmly believe the US LTO industry will then be paying over $20B annually in interest on long term debt.
...
In other words, at the moment about 29% of total LTO production in America is used just to pay debt interest.
Using its own "breakeven" prices the US shale oil industry will ultimately have to produce 9G BO of oil, as much as it has
already produced in 10 years...just to pay its total long term debt back. Essentially the only chance it has of doing that is
if oil prices go to $125 a barrel, and stays there for a very long time.
"The Saudis say they are countering Iran, which backs the Houthis. But the Houthis are an indigenous group with legitimate grievances,
and the war has only enhanced Iranian influence . As has been obvious for some time, the only solution is a negotiated settlement.
But the Saudis have done their best to sabotage a U.N.-led peace process. Talks planned for Geneva in September failed when Saudi
leaders
would not grant safe travel guarantees to Houthi leaders." Bezos' editorial board at WaPo
---------------
Beneath the largely specious argument that Saudi Arabia has the US by the cojones economically lies the true factor that
has caused the two countries to be glued together.
This factor is the Israeli success in convincing the US government, and more importantly, the American people, that Iran is a
deadly enemy, a menace to the entire world, a reincarnation of Nazi Germany, and that Saudi Arabia, a country dedicated to medieval
methods of operation, is an indispensable ally in a struggle to save the world from Iran. The successful effort to convince us of
the reality of the Iranian menace reflects the previous successful campaign to convince us all that Iraq was also Nazi Germany come
again.
The Iran information operation was probably conceived at the Moshe Dayan Center or some other Israeli think tank. and then passed
on in the form of learned papers and conferences to the Foreign Ministry, the Mossad and the IDF. After adoption as government policy
the Foreign ministry and Zionist organizations closely linked to media ownership in the US and Europe were tasked for dissemination
of the propaganda themes involved. This has been a brilliantly executed plan. The obvious fact that Iran is not presently a threat
to the US has had little effect in countering this propaganda achievement.
Last Saturday morning, the Philadelphia based commentator Michael Smerconish openly asked on his popular talk show why it is that
US policy favors the Sunni Muslims over the Shia. i.e., Saudi Arabia over Iran. To hear that was for me a first. This was an obvious
defiance of the received wisdom of the age. I can only hope that the man does not lose his show.
It is a great irony that the barbaric murder of a personally rather unpleasant but defiant exiled journalist has caused re-examination
of the basis and wisdom of giving strategic protection to a family run dictatorship. pl
Erdogan called the Khashoggi murder brutal and premeditated, but did not reveal any damning audio or video evidence. Elijah Magnier
surmises Erdogan extracted a heavy payment from both the Saudis and the Americans in exchange for his relative silence. We shall
see if the economic pressure on Turkey dissipates in the coming days and weeks.
It appears the central pillar of the Borg creed, so eloquently and precisely described here by Colonel Lang, will survive this
bout of heretical thinking. Will journalists and other members of the press be able to keep challenging the Borg? With Trump so
thoroughly assimilated into the Borg, will the "resistance" keep the issue of Saudi perfidy alive? I have my doubts. The Israeli
information operations machine is a juggernaut. Few have the stamina and will to resist it. But it is a fight worth fighting.
"... It's quite unusual to see such unanimous anti-Saudi reactions from the American political class for the assassination of Mr. Khashoggi – who was just a part-time journalist living in U.S – he was not even an American citizen ..."
"... Oil which is extracted by Fracking method that requires high Oil price above $70 to remain competitive in the global Oil market – by simultaneously sanctioning Iran, Venezuela, and the potential sanction of Saudi Arabia from exporting its Oil, the Trump Administration not only reduces the Global Oil supply which will certainly lead to the rise of Oil price, but also it lowers demand for the US Dollar-Greenback in the global oil market which could lead to subtle but steady devaluation of the US dollar. ..."
"... And perhaps that's what Trump Administration was really aiming for all along; a significant decline of the US Dollar Index and the rise of price of Oil which certainly pleases the American Oil Cartel, though at the expense of Iran, Saudi Arabia and Venezuela – all of which are under some form of U.S sanctions. ..."
"... However gruesome, Mr. Khashoggi's assassination is going to be used by the Trump Administration to help the American Oil Cartel by controlling the Saudi Oil output, hence, to raise the price of Oil and to lower demand for US dollar which is the currency of the global Oil trade. ..."
The overplayed drama of Mr. Khashoggi assassination is going to be used by the American Oil
Cartel to control the Saudis Oil output.
It's quite unusual to see such unanimous anti-Saudi reactions from the American
political class for the assassination of Mr. Khashoggi – who was just a part-time
journalist living in U.S – he was not even an American citizen , so, it's quite
unusual because the same political class remained muted about the Saudis involvement with
ISIS, the bombing and starvation of civilians in Yemen and destruction of Syria, and of
course the Saudis involvement in 9/11 terrorist attack in which 3000 American citizens have
perished in New York, in the heart of America.
So, we must be a bit skeptical about the motive of the American Political Class, as this
again could be just about the OIL Business, but this time around the objective is to help the
American Oil producers as opposed to Oil consumers – with 13.8% of the global daily Oil
production, the US has lately become the world top producer of Crude Oil, albeit, an
expensive Oil which is extracted by Fracking method that requires high Oil price above
$70 to remain competitive in the global Oil market – by simultaneously sanctioning
Iran, Venezuela, and the potential sanction of Saudi Arabia from exporting its Oil, the Trump
Administration not only reduces the Global Oil supply which will certainly lead to the rise
of Oil price, but also it lowers demand for the US Dollar-Greenback in the global oil market
which could lead to subtle but steady devaluation of the US dollar.
And perhaps that's what Trump Administration was really aiming for all along; a
significant decline of the US Dollar Index and the rise of price of Oil which certainly
pleases the American Oil Cartel, though at the expense of Iran, Saudi Arabia and Venezuela
– all of which are under some form of U.S sanctions.
However gruesome, Mr. Khashoggi's assassination is going to be used by the Trump
Administration to help the American Oil Cartel by controlling the Saudi Oil output, hence, to
raise the price of Oil and to lower demand for US dollar which is the currency of the global
Oil trade.
@Alistair History has its weird twists.
Early in WWII FDR was reported that USA oil would be depleted in thirty years time.
So FDR sent Harold L Ickes to Saudi Arabia,where at the end of 1944 the country was made the
USA's main oil supplier.
FDR entertained the then Saud in early 1945 on the cruiser Quincy, laying in the Bitter Lakes
near the Suez Canal.
This Saud and his entourage had never seen a ship before, in any case had never been on board
such a ship.
In his last speech to Congress, seated, FDR did not follow what had been written for him,
but remarked 'that ten minutes with Saud taught him more about zionism than hundreds of
letters of USA rabbi's.
These words do not seem to be in the official record, but one of the speech writers,
Sherwood, quotes them in his book.
Robert E. Sherwood, 'Roosevelt und Hopkins', 1950, Hamburg (Roosevelt and Hopkins, New York,
1948)
If FDR also said to Congress that he would limit jewish migration to Palestine, do not now
remember, but the intention existed.
A few weeks later FDR died, Sherwood comments on on some curious aspects of FDR's death, such
as that the body was cremated in or near Warm Springs, and that the USA people were never
informed that the coffin going from Warm Springs to Washington just contained an urn with
ashes.
At present the USA does not seem to need Saudi oil.
If this causes the asserted cooperation between Saudi Arabia and Israel ?
@Harris ChandlerNow it has made alliances with Israel and between them the tail wags
the dog
The Saudi Royal family and the governments of Israel have always been in cahoots. They
both despise and fear secular governments that are not under their own control in the Middle
East. Witness the fear and dread of both of them of president Nasser in the 1960′s, for
example.
Removing Saudi's contribution of @8.5Mbbls/day from the global oil market would be a blow
that Western countries might not survive.
Looks like somebody in the West want MBS out.
Notable quotes:
"... be honest -- this all seems a bit too convenient for Erdogan, and at a too convenient time. ..."
"... at the moment I cannot believe someone has so much luck like Erdogan has. He stands to gain in the short term, in the long term, tactically and (geo)strategically. From just a stroke of luck, that came to his country. That came to him, for which he didn't even need to get out of his chair? ..."
"... Maybe we're asking the wrong questions. Are factions within the CIA at work, setting up elaborate plans with the ambitious Erdogan to get rid of Trump and MbS, for the sake of what... strategically increasingly important depleting oil fields? ... a better position to strangle Iran? ..."
"... Erdogan doesn't want a Kurdistan martyr in Khasshogi either. He wants to totally controlled-dissent ..."
"... This total psyop, and every piece of 'evidence' in it, is coming from Ankara Intel operatives! ..."
"... Hey, they had two weeks of preparation. You can make a full length Blair Witchcraft in two weeks. ..."
"... Cui bono? Erdogan, Iran Oil transit and EU/RU weapons systems dealers. That's why Germany has jumped on the bandwagon, lol. Expect the whole krew to toe the line, and Putin left with a jumbled mess on the chessboard. ..."
"... Khashoggi has ties to Lockheed Martin through his late uncle Adnan Khashoggi, who used to be one of Saudi Arabia's most powerful weapons dealers. MBS is considering buying Russias S-400 instead of Lockheed Martins 15 billion THADD. Interesting fact but unlikely to be important IMO ..."
"... So regardless of the truth of Khashoggis disappearance there is a Deep State operation in place, the evidence is in the media saturation and persistence and bipartisan support. Its purpose may be as simple as coercing MBS to buy more weapons. Perhaps it may even be that a replacement for MBS even more pro-Israel has been found. ..."
"... Khashoggi is news, because they say its news. They make it news. Why? BC it fits an agenda. Somebody wants MBS out. ..."
"... The bigger play here is bringing turkey back into the western fold. Lose turkey you lose the whole middle east. also, a secondary play - guardianship of Mecca. SA an unreliable partner under mbs. ..."
Khashoggi's murder has transcended questions of foreign policy shaped by values of
democracy, free speech, and due process. The Khashoggi killing raises questions of cold,
unblinking realpolitik.
Three weeks into this affair and with the overwhelming evidence from the Turkish inquiry
and intelligence from US and British services, world leaders have only one question to ask
themselves: is Saudi Arabia safe in the crown prince's hands?
The kingdom is not Libya under Gaddafi. Nor is it Syria under Bashar al-Assad. It is the
world's largest oil producer. It is the region's richest nation.
For better or worse (mainly worse), it is the key Arab state. In the wrong hands, Saudi
Arabia has already proved that it can determine the fate of presidents in Egypt, kidnap
prime ministers from Lebanon, attempt coups in Qatar and, when that fails, blockade it. It
can start wars in Yemen.
The man who runs such a country is therefore a vital strategic Western interest. It is
important that he is mentally stable.
Reuters How the man behind Khashoggi murder ran the killing via Skype
He ran social media for Saudi Arabia's crown prince. He masterminded the arrest of
hundreds of his country's elite. He detained a Lebanese prime minister. And, according to
two intelligence sources, he ran journalist Jamal Khashoggi's brutal killing at the Saudi
consulate in Istanbul by giving orders over Skype.
Posted by: b | Oct 22, 2018 2:45:08 PM | 47
So this guy allegedly working for Public Relations (social media) & security (managing
lists with arrests) for Crown Prince MbS was making absolutely sure that everyone would be
able to follow his actions (attributed to MbS of course). We (the people) were getting fed
minute details of suspects and treatment (during/after the coop in Saudi Arabia) even from the
Alex Jones conspiracy show (been publicly ousted as Fake-News and Mossad ops though since he
was attributing Las Vegas massacre to either MbS or rivals that tried to allegedly assassinate
MbS in Vegas hinting at Iran )
Lo and behold! Las Vegas shooting October 1st 2017. Khassogi murder October 1st
2018! .
Both allegedly MbS involved! Ain't these all suspicious? There is no heaven or hell there is only the.... (let me hear it - The Israeli Intel
Services Sing-Along) sing it with me.... (come on)
Obamabots trying to reverse
history will find it hard to do. That they're trying is significant.
I've seen a few reports musing SKYPE was used during the brief interrogation. If true,
then all advanced intel services will know its content.
Peter AU 1 @55--
Yes, I was aware of that. TASS reports : "Deputy Foreign Minister Mikhail Bogdanov told reporters on Monday.
"'Yes, we [had] visits, our interministerial top-level delegation went, there were
meetings,' the diplomat said in response to the question about whether Russia still plans to
attend the summit in the wake of Khashoggi's murder."
Russian and Saudi cooperation in the energy field trumps other events. China will also
attend.
I don't know.
I'm having these waves of suspicions. I wouldn't put the current narrative past MbS at all,
that's for sure. And he deserves everything he currently gets -- foremost over Yemen. But -- be honest -- this all seems a bit too convenient for Erdogan, and at a too convenient
time. Id est, a too in convenient time for his opponent, that was until two weeks ago
holding Erdogan's ambitious head in a bucket of water -- Trump. With the midterms only a few weeks away, look who's holding whose head in that bucket, who
is holding whose feet to the fire.
If this is truly a coincidence, I'm beginning to believe Allah is Turkish. But at the moment I cannot believe someone has so much luck like Erdogan has. He stands to
gain in the short term, in the long term, tactically and (geo)strategically. From just a
stroke of luck, that came to his country. That came to him, for which he didn't even need to
get out of his chair?
Maybe we're asking the wrong questions. Are factions within the CIA at work, setting
up elaborate plans with the ambitious Erdogan to get rid of Trump and MbS, for the
sake of what... strategically increasingly important depleting oil fields? ... a better
position to strangle Iran?
Erdogan wants to be New Caliph. That's all this is. Caliphate wars. MbS is Erdogan's blood
enemy. MbS-IL-US is shading the New Caliphate! Duhh! Erdogan doesn't want a Kurdistan martyr
in Khasshogi either. He wants to totally controlled-dissent The Parable of a Man Walked Into an
Embassy New Revelations. Erdogan wants to be supplicated by US and IL for His permission to
transit Syria and Kurdistan. Erdogan wants to be Putin's go-to guy in Ankara for Assad.
This
total psyop, and every piece of 'evidence' in it, is coming from Ankara Intel operatives! Khashoggi could has as easily been re-dressed in a thwab, then frog-marched under the cameras
into the waiting Mercedes. His discarded clothes could have been paraded in front of Ankara's
street cameras by Turks.
Hey, they had two weeks of preparation. You can make a full length Blair Witchcraft in
two weeks.
Cui bono? Erdogan, Iran Oil transit and EU/RU weapons systems dealers. That's why
Germany has jumped on the bandwagon, lol. Expect the whole krew to toe the line, and Putin
left with a jumbled mess on the chessboard.
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SCHEDULED TONIGHT!
It's all pure stress-positioning foreplay! JustGoVote!
Scotch Bingeington , Oct 22, 2018 5:00:53 PM |
link
B, amazing work again, thrilling to read. Though this is a yet unfolding story, you manage to
write about it in a profound way.
Regarding the manner in which MbS operates here and subsequently reacts towards other
people's reactions is certainly telling, at least to me. First off, the coercion –
"come back or else " – flat out. The ruthlessness vis-à-vis the victim, the
complete disregard for that individual's life. The crassness of the methods applied. The
carelessness concerning the risks and the half-assed way in which this exercise, by and
large, was carried out. Once word got out, being utterly taken by surprise that this murder
should draw so much attention and should shock and outrage people – like, at all!
Followed by, of course, a sudden switch from ever-so-charming to furious rage.
That's textbook psychopathic behavior. MbS is a psychopath. I don't mean that as an insult,
but as the descriptive term and category that it is. It was already palpable in all the other
incidents, which was duly pointed out here by people at the Moon. To me, it's also in his
eyes. But the thing is, as such, MbS is a befitting representation of his country. The
Kingdom of Saudi Arabia, the way that it works, how it's organized, its history, its outlook
on the world – it's the equivalent among states of a psychopath. I certainly agree, the
sooner MbS gets kicked off the stage, the better for them and for us. But he'll be replaced
and SA will still be the equivalent among states of a psychopath – and act accordingly.
There's much more to be done than just put an end to MbS' games. In that vein, I'd be
appalled if Russia were to seriously consider sucking up to SA should they break away from
the US orbit.
On another aspect: I don't really see how this would seriously upset Trump. Sure, it's a huge
challenge and a lot of accommodating will have to be done, which is always annoying. But if
Congress were to take action, why shouldn't he give in and play along?
At long last, Valdai Club questions about Saudi-Russian relations were added to transcript.
Here is the relevant passage, which mostly repeats what was posted from news stories:
Putin: "If someone understands it and believes that a murder has been committed, then I
hope that some evidence will be presented and we will adopt relevant decisions based on this
evidence. This gives me a pretext to say something else.
"From time to time, there are steps taken against Russia and even sanctions are imposed,
as I have repeatedly said, on the basis of flimsy excuses and pretexts. They groundlessly
claim that we have allegedly used chemical weapons, even though, incidentally, we have
destroyed our chemical weapons, while the United States has failed to do so despite the
obligation to that effect it assumed.
"So, there is no proof against Russia but steps are being taken. According to claims, the
murder was committed in Istanbul, but no steps are being taken.
"Uniform approaches to problems of this kind should be sorted. To reiterate: Our policy
towards Saudi Arabia has evolved over a long period of time, over many years. Of course, it
is a misfortune that a man has disappeared, but we must understand what has really
happened."
The policy investment "over many years" isn't one Russia will suddenly jettison. Yemen is
obviously a much greater tragedy but Russian-Saudi relations haven't suffered -- Geopolitics
creates strange bed-fellows. Russia's international relations are built upon fundamental
principles of International Law of which the sanctity of Sovereignty reigns supreme. As much
as we may dislike it, the Khashoggi Affair falls within the realm of an internal Saudi affair
although it occurred in Turkey; thus, it's up to Saudis to solve. Putin's pointing to the
Double Standards relates to that reality. Would Russia sell weapons for Saudi to use on
Yemen? I have no idea, although I'd like to think it wouldn't. It's quite possible some new
inroads have opened for Russian diplomacy, but they remain hidden from public.
Khashoggi has ties to Lockheed Martin through his late uncle Adnan Khashoggi, who used to
be one of Saudi Arabia's most powerful weapons dealers. MBS is considering buying Russias
S-400 instead of Lockheed Martins 15 billion THADD. Interesting fact but unlikely to be
important IMO
This Khashoggi story never lasts more than a week in MSM unless there is a psyops
operation in place by the Deep State. Media saturation and persistence is the key to any
operation. Inconvenient truths are reported and then dropped and forgotten. Lies without
evidence are repeated constantly until they are accepted as truths, in some cases
inconsequential truths that are convenient serve the same purpose
So regardless of the truth of Khashoggis disappearance there is a Deep State operation
in place, the evidence is in the media saturation and persistence and bipartisan support. Its
purpose may be as simple as coercing MBS to buy more weapons. Perhaps it may even be that a
replacement for MBS even more pro-Israel has been found. Israels influence on the media
is not neglible. This saturation coverage does not happen without them supporting it or at
least not using their influence to suppress it Another more disturbing possibility should MBS
stand his ground , is conditioning the people to accept MBS as the new OBL and Saudis
Wahhabis as the new AQ and repeating history.
There simply is no way to know. Just have to watch and see but whatever it is probably
wont be good
The Saudi bmobing - with US bmobs - of the Yemeni School Bus Full of Babies was truly and
completely horrifying - rotten and utterly detestable by anyone's standards (except for
Trump, Hillary, Bill, Bolton, Graham, Biden, All the Bush's, Rick Scott and etc.)
And Newsworthy. But it was, instead, crickets chirping in that deep east Texas
nighttime.
Khashoggi is news, because they say its news. They make it news. Why? BC it fits an
agenda. Somebody wants MBS out.
The bigger play here is bringing turkey back into the western fold. Lose turkey you lose
the whole middle east. also, a secondary play - guardianship of Mecca. SA an unreliable
partner under mbs.
In excerpts from the interview released by
CNN , Jones asked Kushner whether it is wise to trust MbS to oversee Saudi Arabia's
investigation, given that he's also the prime suspect. Kushner, who, in the absence of a US
ambassador to KSA, has been handling the kingdom's relationship with the Trump administration
directly via his friendship with MbS, said the US will examine facts from "multiple
places."
Jones: Do you trust the Saudis to investigate themselves?
Kushner: We're getting facts in from multiple places. Once those facts come in, the
Secretary of State will work with our national security team to help us determine what we
want to believe, and what we think is credible, and what we think is not credible.
Jones: Do you see anything that seems deceptive.
Kushner: I see things that seem deceptive every day I see them in the Middle East and in
Washington. We have our eyes wide open. The president is looking out for America's strategic
interests...the president is fully committed to doing that."
Given their close relationship, media reports have implied that Kushner has been acting as
an unofficial liaison of sorts to MbS since the crisis began (it has also been reported that
the Crown Prince initially didn't understand why the backlash to Khashoggi's murder had been so
intense). In light of this, Jones asked Kushner what advice, if any, he has given the Saudi
royal during their conversations (to be sure, MbS has also spoken with President Trump directly
on the phone). In a story published over the weekend,
the Washington Post reported that Trump has privately expressed doubts about MbS's story,
and has also lamented his close ties with Kushner, fearing they could be a liability. But
during a phone interview, the president was somewhat more sanguine, pointing out that both
Kushner and MbS are relatively young for the amount of power they wield.
"They're two young guys. Jared doesn't know him well or anything. They are just two young
people. They are the same age. They like each other, I believe," Trump said.
Kushner's interview followed
reports published Sunday night that MbS tried to convince Khashoggi to return to Riyadh
during a brief phone call with the journalist after he had been detained at the Saudi consulate
Khashoggi refused, reportedly because he feared that he would be killed, and was subsequently
killed anyway. Adding another macabre twist to the saga of Khashoggi's murder and
dismemberment, Surveillance footage released Monday showed one of the Saudi operatives leaving
the consulate wearing Khashoggi's clothes with the suspected intent of serving as
a "decoy" to bolster the kingdom's claims that Khashoggi had left after receiving his
papers. It was later reported that Turkish investigators had found an abandoned car that once
belonged to the Saudi consulate.
We imagine we'll be hearing more about these strange developments on Tuesday, when Turkish
President Erdogan is expected to deliver a report on the killings.
Why is "everyone" so ******* upset about the Muslim Brothernood, green-card holding
journalist being offed? I mean, folks in the M.E. are murdered all the ******* time.
Journalists are not immune. Especially ones that are actually agitators that write ****. This
whole thing is ********. How do I know? Just look at the reactions. Media everywhere to level
11.. What about Stormy Daniels? The Playboy bunny? Ford? Scandal # 42, 43, 44, 45, 46, 47 ,
etc??
Saudis murder folks . Turkey murders folks. Turkey crushed a coup a couple years ago and
60K folks disappeared. I don't remember the US media demanding Obama " do something" about
Turkey immediately, do you? Seriously.
true. And I'm sure the CIA gets in on some very disgusting killings as well. Along with
the Mossad and Mi6 (2 groups that get little attention but should).
" Jones: Do you trust the Saudis to investigate themselves?"
"Kushner: We're getting facts in from multiple places. Once those facts come in, the
Secretary of State will work with our national security team to help us determine what we
want to believe , and what we think is credible, and what we think is not credible."
Jones: Do you see anything that seems deceptive.
Kushner:
NO
I (bullshitbullshitbullshit) see things that seem deceptive every day I see them in
the Middle East and in Washington. We have our eyes wide open (bullshitbullshitbullshit.
The president is looking out for America's strategic interests...the president is fully
committed to hanging me out to dry . After that - ho noze bubelah ."
(Can I sukie suckie now black master?
FIFT
All will be well when the head honcho sends this YidTwat to be Royal Commissioner in
either Greenlnd or Antarctica.
Have you heard the latest about the Peace Deal of All Times Kushner has been working on?
And going to deliver any day now... soon...really soon.
After all this time what it comes down to is a leveraged buyout proposal. The buyout is
cash for Palestinians to give in to what Israel's far right wants, give up their land and
get the hell out of Dodge if they can't live with the remnants.. The leverage is Trump
trying to starve them out and Kushner's friends in the IDF Palace Guard at the ready to
pile drive anyone who resists.
" All this nonsense depends on the largesse of Saudi Arabia – whose bungling crown
prince appears to be arguing with his kingly father, who does not want to abandon the
original Saudi initiative for a Palestinian state with Jerusalem as its capital –
"
Jared Kushner was communicating with Saudi Crown Prince Mohammed bin Salman (MBS)
prior to and after the Saudis brutally murdered Washington-based journalist Jamal
Khashoggi
Wayne Madsen - the author of the above - also reckons it was Kushner that supplied the
Saudi Prince HIT LIST to MbS a few months back - to clear the deck for "closer
co-operation" with ISISrael
Unfortunately, the only crime here is that the Turks have no decent respect for the
consular as sovereign territory, thus they are revoking Saudi rights and are operating as
an act of territorial aggression as the US has done to the Russians. Civility is braking
down and one has to ask one's self, for who's benefit.. The Turks are not going to benefit.
Khashoggi was going to die one way or another, so he made a show of it.. Spy vs. spy.
The USA has in the past just 'droned' them (as Hilterary was eager to reveal).
Perhaps you missed the regime change that happened last year, a globally significant
event, by the way.
Khashoggi was on the wrong side of that, and has stayed away from SA ever since, sniping
from the sidelines. MBS has lots of reasons not to like him.
However, his power base was removed when MBS hung his mates up by their heels in the
Hilton Hotel. He was not worth bothering with. So why was he killed then?
Possibly, he was not killed, only used as a foil to bring down hell fire and damnation
on MBS. He probably walked out the back, just as the SA said when this first came out. Now
Marketwatch has a story saying a man dressed in Khashogggi's "still warm clothes" was
photographed going into the Blue Mosque. Yeah, right:
Yes! And tying it together with the Las Vegas Mandalay Bay-Harvest Festival shooting,
and the video of the LV SWAT team escorting a person who looked like MBS through a casino
suggests that there was a 'failed' assassination attempt.
And the fact that Prince Al Talweed, a co-owner of top floors of Manadaly Bay with Bill
Gates, had tweeted his loathing of Trump...
The "Crown" (British or SA or many others) is inviolable. They take threats to
sovereignty seriously unlike Americans who have outsourced Monetary Sovereignty to their
Banks, Military and Economic Sovereignty to their Corporations.
This kid's a ****. A real Chabad Lubavitch **** with a criminal father who I am going to
hazard has never worked a hard day in his life. (Both father and son)
Remember Dan Aykroyd from "Trading Places"? Kushner is like that, only not funny. And
jewish.
Kushner was parachuted into the White House on the sole basis of his being the
President's son-in-law.
He quickly ascended to the top rungs of power in our Nation even receiving Top Security
Clearance and has been privy to our most tightly guarded secrets ever since.
This little ********** has turned out to be a tremendous thorn in our side facilitated
by the President's pleasure.
Is everyone blind? This ******* nobody is practically running the whole show in the
Middle East and with what credentials?
He's a power *** with vast connections, having been chosen to be the front man for the
destruction of America as we know it.
Exactly, plus his arrogance and stupidity has made the middle east even more fraught
with problems.
Just like Trump moving the embassy to Jerusalem; this has caused nothing but
problems.
Going in with no background in the middle east, without knowing anything except what was
told to him in Hebrew school is a recipe for disaster which is unfolding before our
eyes.
Skinny. Stiff. Plastic. Rather defiant, somewhat snotty. I have no reason to decide
whether I like him or not but Kushner comes across to me as somebody I would not trust as
far as I could throw him. Mind you that's quite a distance since I think he probably weighs
about 109 lb.
The CNN interviewer is Van Jones.
This is the same Van Jones who was Obama's "Green Jobs Czar" and was forced to resign his
position in 2009 because of his radical left wing background.
What the hell is Kushner doing in a position of power in the White House, what are his
qualifications for whatever post he holds ?
What the hell is anyone doing dealing with these animals who dress up in dresses? They
behead people in public squares, mutilate people, oppress woman, kill homos, etc. Real
crazy degenerates that got ahold of lots of money via their oil.
Why is "everyone" so ******* upset about the Muslim Brothernood, green-card holding
journalist being offed? I mean, folks in the M.E. are murdered all the ******* time.
Journalists are not immune. Especially ones that are actually agitators that write ****.
This whole thing is ********. How do I know? Just look at the reactions. Media everywhere
to level 11.. What about Stormy Daniels? The Playboy bunny? Ford? Scandal # 42, 43, 44, 45,
46, 47 , etc??
Saudis murder folks . Turkey murders folks. Turkey crushed a coup a couple years ago and
60K folks disappeared. I don't remember the US media demanding Obama " do something" about
Turkey immediately, do you? Seriously.
true. And I'm sure the CIA gets in on some very disgusting killings as well. Along with
the Mossad and Mi6 (2 groups that get little attention but should).
" Jones: Do you trust the Saudis to investigate themselves?"
"Kushner: We're getting facts in from multiple places. Once those facts come in, the
Secretary of State will work with our national security team to help us determine what
we want to believe , and what we think is credible, and what we think is not
credible."
Jones: Do you see anything that seems deceptive.
Kushner:
NO
I (bullshitbullshitbullshit) see things that seem deceptive every day I see them in
the Middle East and in Washington. We have our eyes wide open
(bullshitbullshitbullshit. The president is looking out for America's strategic
interests...the president is fully committed to hanging me out to dry . After that - ho
noze bubelah ."
(Can I sukie suckie now black master?
FIFT
All will be well when the head honcho sends this YidTwat to be Royal Commissioner in
either Greenlnd or Antarctica.
Have you heard the latest about the Peace Deal of All Times Kushner has been working on?
And going to deliver any day now... soon...really soon.
After all this time what it comes down to is a leveraged buyout proposal. The buyout is
cash for Palestinians to give in to what Israel's far right wants, give up their land and
get the hell out of Dodge if they can't live with the remnants.. The leverage is Trump
trying to starve them out and Kushner's friends in the IDF Palace Guard at the ready to
pile drive anyone who resists.
" All this nonsense depends on the largesse of Saudi Arabia – whose bungling crown
prince appears to be arguing with his kingly father, who does not want to abandon the
original Saudi initiative for a Palestinian state with Jerusalem as its capital –
"
Jared Kushner was communicating with Saudi Crown Prince Mohammed bin Salman (MBS)
prior to and after the Saudis brutally murdered Washington-based journalist Jamal
Khashoggi
Wayne Madsen - the author of the above - also reckons it was Kushner that supplied the
Saudi Prince HIT LIST to MbS a few months back - to clear the deck for "closer
co-operation" with ISISrael
Unfortunately, the only crime here is that the Turks have no decent respect for the
consular as sovereign territory, thus they are revoking Saudi rights and are operating as
an act of territorial aggression as the US has done to the Russians. Civility is braking
down and one has to ask one's self, for who's benefit.. The Turks are not going to benefit.
Khashoggi was going to die one way or another, so he made a show of it.. Spy vs. spy.
The USA has in the past just 'droned' them (as Hilterary was eager to reveal).
lose
G M T Detect
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GaelicSerbianSesothoShonaSindhiSinhalaSlovakSlovenianSomaliSpanishSundaneseSwahiliSwedishTajikTamilTeluguThaiTurkishUkrainianUrduUzbekVietnameseWelshXhosaYiddishYorubaZulu
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I care because I am hoping this assassination will destroy our 80 year old relationship
with The House of Saud which is the epicenter of Wahhabism that brought us 9/11, the ISIS
headchoppers and much more.
Perhaps you missed the regime change that happened last year, a globally significant
event, by the way.
Khashoggi was on the wrong side of that, and has stayed away from SA ever since, sniping
from the sidelines. MBS has lots of reasons not to like him.
However, his power base was removed when MBS hung his mates up by their heels in the
Hilton Hotel. He was not worth bothering with. So why was he killed then?
Possibly, he was not killed, only used as a foil to bring down hell fire and damnation
on MBS. He probably walked out the back, just as the SA said when this first came out. Now
Marketwatch has a story saying a man dressed in Khashogggi's "still warm clothes" was
photographed going into the Blue Mosque. Yeah, right:
Yes! And tying it together with the Las Vegas Mandalay Bay-Harvest Festival shooting,
and the video of the LV SWAT team escorting a person who looked like MBS through a casino
suggests that there was a 'failed' assassination attempt.
And the fact that Prince Al Talweed, a co-owner of top floors of Manadaly Bay with Bill
Gates, had tweeted his loathing of Trump...
The "Crown" (British or SA or many others) is inviolable. They take threats to
sovereignty seriously unlike Americans who have outsourced Monetary Sovereignty to their
Banks, Military and Economic Sovereignty to their Corporations.
This kid's a ****. A real Chabad Lubavitch **** with a criminal father who I am going to
hazard has never worked a hard day in his life. (Both father and son)
Remember Dan Aykroyd from "Trading Places"? Kushner is like that, only not funny. And
jewish.
Kushner was parachuted into the White House on the sole basis of his being the
President's son-in-law.
He quickly ascended to the top rungs of power in our Nation even receiving Top Security
Clearance and has been privy to our most tightly guarded secrets ever since.
This little ********** has turned out to be a tremendous thorn in our side facilitated
by the President's pleasure.
Is everyone blind? This ******* nobody is practically running the whole show in the
Middle East and with what credentials?
He's a power *** with vast connections, having been chosen to be the front man for the
destruction of America as we know it.
Exactly, plus his arrogance and stupidity has made the middle east even more fraught
with problems.
Just like Trump moving the embassy to Jerusalem; this has caused nothing but
problems.
Going in with no background in the middle east, without knowing anything except what was
told to him in Hebrew school is a recipe for disaster which is unfolding before our
eyes.
There have been so many attempts at selling advertising with this article the author
says, "to deliver a report on the killings." I thought they only chopped up one cash-hoggi
now they are trying to turn it into two. What does the author think it was cactus they
killed?
Skinny. Stiff. Plastic. Rather defiant, somewhat snotty. I have no reason to decide
whether I like him or not but Kushner comes across to me as somebody I would not trust as
far as I could throw him. Mind you that's quite a distance since I think he probably weighs
about 109 lb.
G M T Detect
languageAfrikaansAlbanianAmharicArabicArmenianAzerbaijaniBasqueBelarusianBengaliBosnianBulgarianCatalanCebuanoChichewaChinese
(Simplified)Chinese
(Traditional)CorsicanCroatianCzechDanishDutchEnglishEsperantoEstonianFilipinoFinnishFrenchFrisianGalicianGeorgianGermanGreekGujaratiHaitian
CreoleHausaHawaiianHebrewHindiHmongHungarianIcelandicIgboIndonesianIrishItalianJapaneseJavaneseKannadaKazakhKhmerKoreanKurdishKyrgyzLaoLatinLatvianLithuanianLuxembourgishMacedonianMalagasyMalayMalayalamMalteseMaoriMarathiMongolianMyanmar
(Burmese)NepaliNorwegianPashtoPersianPolishPortuguesePunjabiRomanianRussianSamoanScots
GaelicSerbianSesothoShonaSindhiSinhalaSlovakSlovenianSomaliSpanishSundaneseSwahiliSwedishTajikTamilTeluguThaiTurkishUkrainianUrduUzbekVietnameseWelshXhosaYiddishYorubaZulu
AfrikaansAlbanianAmharicArabicArmenianAzerbaijaniBasqueBelarusianBengaliBosnianBulgarianCatalanCebuanoChichewaChinese
(Simplified)Chinese
(Traditional)CorsicanCroatianCzechDanishDutchEnglishEsperantoEstonianFilipinoFinnishFrenchFrisianGalicianGeorgianGermanGreekGujaratiHaitian
CreoleHausaHawaiianHebrewHindiHmongHungarianIcelandicIgboIndonesianIrishItalianJapaneseJavaneseKannadaKazakhKhmerKoreanKurdishKyrgyzLaoLatinLatvianLithuanianLuxembourgishMacedonianMalagasyMalayMalayalamMalteseMaoriMarathiMongolianMyanmar
(Burmese)NepaliNorwegianPashtoPersianPolishPortuguesePunjabiRomanianRussianSamoanScots
GaelicSerbianSesothoShonaSindhiSinhalaSlovakSlovenianSomaliSpanishSundaneseSwahiliSwedishTajikTamilTeluguThaiTurkishUkrainianUrduUzbekVietnameseWelshXhosaYiddishYorubaZulu
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It was at least fifty million $1 votes from Israel laundered through Trump supporter and
uber-Zionist Sheldon Adelson's casinos in Macau. Steve Wynn was likely in on that action
too.
Until America wakes up and gets dirty money out of your "(s)elections" you will be
hostage to foreign powers.
No one asked Kavanaugh if he thought "Citizens United" was settled law.
IDK if MbS had anything to do with the confrontation, or it was some 9th cousin royal
guard attempting to give Khashoggi an offer he couldn't refuse. Nobody will ever know what
happened. Just another MSM Piece Beyond Understanding.
Remember though, we *do know* that Obama and Rodham and their WH crew sat there in the
White House Situation Room, watching *live satellite feed* of Ghaddafi's final movements, the
half-meter long bayonet stabbing bloody anal rape to death.
Then Rodham sat there, right afterward, drenched in dewey musk, chortling a paraphrase
from Caesar, "We came, we saw, he died! CAWW, CAWW, CAWW!" Monsters!!
Then everyone forgot about it, like it never happened! Poor! The Lion of Africa, like the
Lion of Panjshir, just another hot blip on Deep State's radar. Same sh*t, different day.
Fahged abahd et.
So why is Khashoggi, a non-entity, *still in the media cross-hairs?!* Pre-election psyop,
and extortion. Saudis, Chinese and Russians want to dump their $Ts in junk 1.88% US
Treasuries. That will implode the US budget deficit, and the SS and MC Trust Funds as 'buyers
of last resort'.
What might Erdogan want out of this gift that has fallen into his lap?
Gulen out of the the US and into his hands.
CIA won't do that, but Gulen is what Erdogan wants from US. He gave up the "Pastor"
without getting anything.
Pompeo tried to pressure him over S-400s. That was laughed off by Ankara.
Erdogan has two big worries: Kurds and Gulen.
He has many desires (dreams, delusions).
But he knows the forces internally that threaten his existence and success as ruler. Already,
the Muslim Brotherhood has suffered great losses.
This noose around MBS's neck that Erdogan may be holding is leverage against the CIA
specifically. It was information handed by Jared Kushner to MBS that led to this and others
being liquidated by the Saudis. Erdogan might be able to tie it all together. That would be
leverage the US cannot ignore. The entire anti-Iran strategy depends on Jared-Bibi and
MBS.
IDK if MbS had anything to do with the confrontation, or it was some 9th cousin royal
guard attempting to give Khashoggi an offer he couldn't refuse. Nobody will ever know what
happened. Just another MSM Piece Beyond Understanding.
Remember though, we *do know* that Obama and Rodham and their WH crew sat there in the
White House Situation Room, watching *live satellite feed* of Ghaddafi's final movements, the
half-meter long bayonet stabbing bloody anal rape to death.
Then Rodham sat there, right afterward, drenched in dewey musk, chortling a paraphrase
from Caesar, "We came, we saw, he died! CAWW, CAWW, CAWW!" Monsters!!
Then everyone forgot about it, like it never happened! Poor! The Lion of Africa, like the
Lion of Panjshir, just another hot blip on Deep State's radar. Same sh*t, different day.
Fahged abahd et.
So why is Khashoggi, a non-entity, *still in the media cross-hairs?!* Pre-election psyop,
and extortion. Saudis, Chinese and Russians want to dump their $Ts in junk 1.88% US
Treasuries. That will implode the US budget deficit, and the SS and MC Trust Funds as 'buyers
of last resort'.
@ 16 "The whole mega-chart of crossed alliances has become so confused nobody knows what is
going on, who to support, who to trust to have an impact, what to do, etc."
Keeping in mind the anti Israel faction helps keep track of, or make sense of alliances.
Syria, Turkey, Iran, Qatar, Jordan and Kuwait headed that way. These are forming into a
faction of strange bedfellows with the US moving their embassy to Jerusalem and the other
Trump machinations with Israel being the catalyst.
Undisputed :::
Saudi Arabia Wahabbism is a leader of Mideast mayhem.
USA supports Saudi Arabia in the ongoing mayhem
So does Canada.
So does Britain.
and France.
Kashoggi a Washington Post reporter.
Washington Post big disseminator of lies.
Same with the New York Times
Both WP and NYT hid the Saudi USA CANADA BRITAIN FRENCH supported aggression on Yemen.
But this is WP and NYT opportunity to disparage Trump.
Therefore it is big "nooze." To be sensationalized. however.
Nothing new to report at all. Same old.
But shame on the alt for sucking along. Stupid is as stupid does.
One WP "journalist" a bigget casualty ? But, hundreds of thousands Syrian and Yemen
casualties? No pro blem for NYT and WP s--t heds.
Grow up, world.
Details continue to spill out. Now, interior royal princes are reported disturbed and trying
to contact the King, but prevented by MbS. A General Mutrib, very close to MbS, one of his
seven bodyguards at the Consulate,left Istanbul before the others with a large bag while the
others celebrated at a dinner re "mission accomplished."
The latest WHAAT? out of me is that MbS spoke to Khashoggi by telephone moments before he
was murdered. If true, this directly shows the lies the man is capable of. Maybe the US
senators calling MbS a liar know something we don't. Jared is in the doghouse for his
complicity in enabling MbS to deal with his critics.
Trump is floundering from "credible" to "deception," as he floundered re Kavanaugh ("both
seemed convincing," he said after the late September hearing with Christine Ford) before
wiping her up one side and down the other with demonizing a few days later. I think the
damage problem here for the midterms is significant, and Trump will not retain the House and
perhaps not the Senate either.
Why this case should rivet so much attention whereas deaths of 40 kids on a bus, then 17
more a few days ago, etc. etc. do not, seems a case of gag me, where is my vomit trough taken
a step too far, possibly because US friends of Khashoggi in the government, CIA, MSM got
upset. And let's not forget the rumor Khash was in on a CIA plot to establish a commission to
run SA (one of a three member board) in the interests of the US. Could add to why MbS was
keen on shutting him up.
I wouldn't think the detail of the fake person in his clothes leaving the back door is
"gratuitous, unneeded" in that it shows once again the lies spun from the Saudis in their
desperate scrabbling as this thing falls apart.
The Turkish government's vacillations and zigzagging in the face of the country's economic
woes reflect how squeezed it has become economically and politically and how concerned it is
about it with elections scheduled for March.
. . .
In mid-2018, Turkey's external debt stock stood at $457 billion. Over the next 12 months, the
country will need $181 billion to roll over maturing debts. The financing of the current
account deficit requires another $40 billion, at the least, though the gap has begun to
decrease under the impact of the economic downturn.
In total, Turkey needs a minimum of $220 billion over the next 12 months, or roughly $18
billion a month, but it has become a high-risk country for creditors. Its risk premium,
reflected in credit default swaps, has decoupled from those of other emerging economies,
hovering above 400 basis points despite occasional drops. In sum, borrowing has become more
expensive for Turkey.
Short Term External Debt Statistics [Central Bank of Turkey]
8/18
As of the end of August 2018, short-term external debt stock was realized as USD 175.2
billion, based on the remaining maturities calculated using external debt data, which was 1
year or less due to the original maturity. The stock's 18.2 billion US dollars portion,
composed of resident banks and the private sector's debts to foreign branches and
subsidiaries are in Turkey. When evaluated on a debtor basis, it is observed that the public
sector has a share of 18.1%, the Central Bank and the private sector have a share of 81% and
0.9%, respectively.
The Duran just published an article titled "Converting Khashoggi into Cash"
It points out that The Turkish/Saudi conflict goes back a long way as the "The first Saudi
state, the Emirate of Diriyah, went belly up in 1818, with the death of head of the house of
al-Saud, Abdullah bin Saud – actually, literally with his head hung on a gate in
Constantinople by Erdogan's Ottoman predecessor, Sultan Mahmud II." https://theduran.com/converting-khashoggi-into-cash/October
21, 2018
"... it's quite unusual to see such unanimous anti-Saudi reactions from the American political class for the assassination of Mr. Khashoggi – who was just a part-time journalist living in U.S – he was not even an American citizen ..."
"... So, it's quite unusual because the same political class remained muted about the Saudis involvement with ISIS, the bombing and starvation of civilians in Yemen and destruction of Syria, and of course the Saudis involvement in 9/11 terrorist attack in which 3000 American citizens have perished in New York, in the heart of America ..."
"... However gruesome, Mr. Khashoggi's assassination is going to be used by the Trump Administration to help the American Oil Cartel by controlling the Saudi Oil output, hence, to raise the price of Oil and to lower demand for US dollar which is the currency of the global Oil trade. ..."
"... The seemingly well-connected news outlet Voltairenet claims that there has been a plot against MbS and that Khashoggi was involved in it. ..."
"... It fares a atrocial war on Yemen, shits on international laws and regulations, just like Israel, Why would they not murder a juorno entering their land? Now this juorno was a man revealing in practices done by head choppers, so I will not cry much. It just shows these people are savages, all of them. What should be done ? You judge. ..."
"... I've read on Zerohedge that Khashoggi was on the verge of publishing an article about the Saudi's and CIA's involvement in 9/11, specifically about his former boss Turki al-Faisal, who ran Saudi intelligence for 23 years then abruptly resigned 10 days before 9/11 without giving any reason. ..."
"... Kashiggi's not a reformer. He's hard core Muslim Brotherhood ..."
The overplayed drama of Mr. Khashoggi assassination is going to be used by the American Oil
Cartel to control the Saudis Oil output.
it's quite unusual to see such unanimous anti-Saudi reactions from the American political
class for the assassination of Mr. Khashoggi – who was just a part-time journalist
living in U.S – he was not even an American citizen.
So, it's quite unusual because the
same political class remained muted about the Saudis involvement with ISIS, the bombing and
starvation of civilians in Yemen and destruction of Syria, and of course the Saudis
involvement in 9/11 terrorist attack in which 3000 American citizens have perished in New
York, in the heart of America.
So, we must be a bit skeptical about the motive of the American Political Class, as this
again could be just about the OIL Business, but this time around the objective is to help the
American Oil producers as opposed to Oil consumers – with 13.8% of the global daily Oil
production, the US has lately become the world top producer of Crude Oil, albeit, an
expensive Oil which is extracted by Fracking method that requires high Oil price above $70 to
remain competitive in the global Oil market – by simultaneously sanctioning Iran,
Venezuela, and the potential sanction of Saudi Arabia from exporting its Oil, the Trump
Administration not only reduces the Global Oil supply which will certainly lead to the rise
of Oil price, but also it lowers demand for the US Dollar-Greenback in the global oil market
which could lead to subtle but steady devaluation of the US dollar.
And perhaps that's what
Trump Administration was really aiming for all along; a significant decline of the US Dollar
Index and the rise of price of Oil which certainly pleases the American Oil Cartel, though at
the expense of Iran, Saudi Arabia and Venezuela – all of which are under some form of US sanctions.
However gruesome, Mr. Khashoggi's assassination is going to be used by the Trump
Administration to help the American Oil Cartel by controlling the Saudi Oil output, hence, to
raise the price of Oil and to lower demand for US dollar which is the currency of the global
Oil trade.
This seems to explain the motive to kill him. A few mildly critical articles by
Khashoggi's pen scarcely seem to be sufficient for such a high-profile murder, even if we
take into account that MbS appears to be impulsive and little capable of thinking ahead.
First of all, when has the death of a journalist made any difference in the relations between
countries? Why act like it should now?
Second, Khashoggi was not simply a journalist -- he was a member of the Saudi elite, an
Intelligence officer, and an activist for the Muslim Brotherhood (the Die Welt article
established that).
Third, the real question is how this story came out, and why it has come out as it has
("journalist murdered by police state agents"). Turkey pushed this story out into the open.
Apparently a calculation that the crown prince is losing ground, and an effort (perhaps
assisted by bribes) to align the AK party with the crown prince's enemies in Saudi.
It fares a atrocial war on Yemen, shits on international laws and regulations, just like
Israel, Why would they not murder a juorno entering their land?
Now this juorno was a man revealing in practices done by head choppers, so I will not cry
much.
It just shows these people are savages, all of them.
What should be done ? You judge.
It seems quite curious why MBS would go through such trouble to waste a guy whose only crime
was writing a few low key disparaging articles about him that nobody read. Maybe there's more
to this story than meets the eye.
I've read on Zerohedge that Khashoggi was on the verge of publishing an article about the
Saudi's and CIA's involvement in 9/11, specifically about his former boss Turki al-Faisal,
who ran Saudi intelligence for 23 years then abruptly resigned 10 days before 9/11 without
giving any reason. The rumor was he knew about the attack as did CIA, but Saudis and CIA
decided not to do anything to use it as pretext to start the "war on terror" and bring down
Saddam Hussein. Personally I find that a little far fetched but you never know when it comes
to the CIA.
The murder of d'Enghien had no effect on the French Revolution, other countries reactions to
the revolution and the subsequent revolutionary and Napoleonic wars. In fact, most of the
liberal pro French Revolution historians consider the execution as necessary and moral as the
execution of other anti revolutionaries
Koshoggi's murder won't make a bit of difference either once the blame Trump media blast
blows over. The Turkish police appear to be doing a good job. They've arrested 18 people involved. At least the moralist pundits won't be punditing and pontificating about Kavanaugh for a
few days. Kashiggi's not a reformer. He's hard core Muslim Brotherhood
That the Saudi regime commits murders does not surprise me, but getting caught not just with
murder, but also with torture, indeed an unbelievable stupidity.
Why torture the man ?
But what also baffles me is that the journalist wrote for Washpost, a friend of Israel.
That Netanyahu and the Saudi regime cooperate to attack Iran, it is asserted by many, and it
sems quite probable to me.
A technical question, can indeed a smartwatch do what it is supposed to have done ?
If so, then the torturers and murderers are even more stupid, I let the moral issue
undiscussed, than one can imagine.
Then there is the assertion, in cases like this one never knows what the facts are, that the
journalist's girl friend waited outside.
Did he expect trouble ?
Did he ask her to record the trouble ?
Did not the consulate security see her ?
A final remark, what now is the difference in cruelty between IS and the USA's ally ?
Early in WWII FDR was reported that USA oil would be depleted in thirty years time.
So FDR sent Harold L Ickes to Saudi Arabia,where at the end of 1944 the country was made the
USA's main oil supplier.
FDR entertained the then Saud in early 1945 on the cruiser Quincy, laying in the Bitter Lakes
near the Suez Canal.
This Saud and his entourage had never seen a ship before, in any case had never been on board
such a ship.
In his last speech to Congress, seated, FDR did not follow what had been written for him,
but remarked 'that ten minutes with Saud taught him more about zionism than hundreds of
letters of USA rabbi's.
These words do not seem to be in the official record, but one of the speech writers,
Sherwood, quotes them in his book.
Robert E. Sherwood, 'Roosevelt und Hopkins', 1950, Hamburg (Roosevelt and Hopkins, New York,
1948)
If FDR also said to Congress that he would limit jewish migration to Palestine, do not now
remember, but the intention existed.
A few weeks later FDR died, Sherwood comments on on some curious aspects of FDR's death, such
as that the body was cremated in or near Warm Springs, and that the USA people were never
informed that the coffin going from Warm Springs to Washington just contained an urn with
ashes. At present the USA does not seem to need Saudi oil.
If this causes the asserted cooperation between Saudi Arabia and Israel ?
@Harris ChandlerNow it has made alliances with Israel and between them the tail wags
the dog
The Saudi Royal family and the governments of Israel have always been in cahoots. They
both despise and fear secular governments that are not under their own control in the Middle
East. Witness the fear and dread of both of them of president Nasser in the 1960′s, for
example.
The US establishment, 'liberal' or not, just fake an outcry to soften the image of 100′s
of 1000′s of yemenis, iraqis, libyan.. war casualties they are wholly or partly
responsible for. Khashoggi's death is no more brutal than that of Gaddafi. What's the big
deal ?
Whether Khashoggi is an islamist or not is very minor.
(Sunni) Islam is basically a caravan of arab tribal or civilizational power and the house of
Saud just rides this vehicle or caravan to siphon off the oil wealth.
The house of Saud, said to be Jewish in origin, have the option to migrate en mass to Israel
or French Riviera, with their swiss/US/caribbean offshore accounts during time of crisis or
after new forms of energy resource displace oil
Equally important, the Saudis and Emiratis are now closely allied to Israel's far right
government. Israel has been a door-opener for the Saudis and Gulf Emirates in Washington's
political circles. The Israel lobby is riding to the Saudi's defense .
The Israelis are defending Old Saudi (pre MBS) -- not the New MBS/Kushner fix Palestine
cabal. The last thing Israel wants is a defined Israeli border recognized by the world. The sycophant Israeli backing Senators in congress (Graham et al) are all backing Israel
by condemning MBS and calling for his head.
@FKA Max Thanks for the excellent Real News Network interview with someone I hadn't heard
about (As'ad AbuKhalil) who has followed the career of Khashoggi for years.
It seems that Khashoggi was lately different things to different people – one voice
in English at the Washington Post following the Israeli line, and another in Arabic and the
Arab media supporting the Palestinians and the Moslem Brotherhood.
Over the long term he was a propagandist for the rule of the Saudi princes, and his
problem seemed to be his too close connection to the wrong ones, while they were overthrown
by Crown Prince Mohammed bin Salman (MbS). There's the suggestion of a plot against MbS where
he may have been involved.
So why are the Israelis, their MSM and their AIPAC congressmen making such a big thing out
of it? Isn't MbS their friend? And why should they care about the assassination of a
pro-Palestinian journalist?
Maybe they've a better knowledge of the forces at play in Saudi Arabia, and concluded that
MbS was too much of a risk (too isolated and independent – e.g. talking with the
Chinese about a Petro/Yuan). Maybe they decided to Regime Change MbS in a usual Israeli/US
Deep State operation with Khashoggi at the centre (the duplicitous sort of character that
they favor) – with the outrage at MbS unexpectedly striking back. It was in fact MbS'
team of bodyguards who arrived in Istanbul. And it would account for the Deep State anger at
having one of its chief conspirators murdered.
The back story has to be that the US/Israel want control of both Saudi and Iranian oil
priced in US Dollars and they'll go with anyone who can give that outcome (currently not
MbS). Or they invade Saudi Arabia Eastern Province on some pretext or other and just take the
oil directly.
I'm surprised that the Saudis didn't ask the Israelis, who are very good at
assassination and kidnapping, to go after Khashoggi.
They probably did, but Israel is gearing up to invade Gaza AGAIN, and that takes time and
resources that they couldn't afford to let go and do some free-lancing in the Murder Inc
Department.
But Blessed are the War Mongers or something, as that oh-so devout Christian, Pat
Robertson, is against holding KSA accountable:
Prominent evangelical leader on Khashoggi crisis: let's not risk "$100 billion worth
of arms sales"
Pat Robertson, founder of the Christian Broadcasting Network, appeared on its flagship
television show The 700 Club on Monday to caution Americans against allowing the United
States' relationship with Saudi Arabia to deteriorate over Khashoggi's death.
"For those who are screaming blood for the Saudis -- look, these people are key allies,"
Robertson said. While he called the faith of the Wahabists -- the hardline Islamist sect to
which the Saudi Royal Family belongs -- "obnoxious," he urged viewers to remember that
"we've got an arms deal that everybody wanted a piece of it'll be a lot of jobs, a lot of
money come to our coffers. It's not something you want to blow up willy-nilly."
Did Robertson take all of that loot he made from smuggling blood diamonds out of
Africa–using his charity as a front–and invest in the defense industry?
If Pat is headed to Heaven after he expires, then send me to the other place, as I have
no desire to be stuck with hypocrites for all eternity.
"Error" ? "Mistake" ? These people (the KSA) are fucking "stupid" .
Now they're saying he died in a "fist fight" in the consulate !
A 13 year old street criminal would know that that excuse is an admission of guilt. These
guys shouldn't be allowed to run a model railroad.
On television in 1988, Donald Trump said he had bought a
US $200 million 85-metre-long yacht ,'The Nabila', from billionaire arms dealer Adnan
Khashoggi, uncle of just-murdered-in-Istanbul journalist Jamal Khashoggi. The yacht was named
after Adnan Khashoggi's daughter. Trump later sold the yacht to Saudi Prince Al-Waleed bin
Talal.
Donald Trump talking about the boat and arms dealers like Khashoggi – "not the
nicest guys in the world"
Naftogaz has now begun to help itself to money from Russia's gas-transit payments, arguing
that it is owed money from the Stockholm Arbitration ruling which Gazprom has refused to pay.
Apparently Russia is still paying the old rate, from before the ruling (because to do
otherwise would be to recognize the debt and accept responsibility for it), which results in
an overpayment since it is higher than Naftogaz would charge, if I understand correctly. So
Naftogaz has decided to confiscate it as owing.
This, obviously, sets the stage for another shutdown of European gas supplies, just as
winter is coming on. Perhaps Ukraine has realized that nothing it can do or say is going to
stop Nord Stream II from going ahead, and so it might as well recover what it can, and who
cares if it results in a shutdown of Europe's gas, regardless where the blame ends up? Once
again Ukraine's maneuvering puts Russia in a difficult spot – it can recognize the
Stockholm award and pay Ukraine $2.6 Billion or whatever it was. Or it can accept that
Ukraine will keep part of its transit payments against the debt until it can shut down gas
transit across Ukraine altogether. Or it can shut off the gas now.
If it were up to me, I would take the middle option. Let Ukraine congratulate itself on
one-upping me with its native cleverness (assuming here that I am Russia), and let them keep
$9 or $10 million of the transit fees each month; that would probably be a lot cheaper than
acknowledging the Stockholm award and paying Ukraine billions, in view of the fact that
Ukraine never paid back the money it was lent by Russia; Stockholm neatly solved that for
them, by awarding them huge damages, part of which was understood to be the amount Ukraine
owed. Okay, that goes toward Ukraine's debt to Russia, and now you owe Ukraine $2.6 Billion
more.
I would just focus on getting Nord Stream II completed. Then I would not only stop gas
transit through Ukraine, I would tell them to kiss my ass if they wanted to buy gas for
themselves. You were so pleased with yourselves for not buying any gas from Russia last year
– obviously you can get along fine without it. But I sure hope Europe is going to keep
giving you money to buy European gas forever.
Once
again my best House of Saud-connected source RE-CONFIRMED Mohammed Bone Saw (MBS) received
direct info on CIA assets in Saudi Arabia from his close whatsapp pal Jared of Arabia.
Jared could only have access to this top secret info because of his high clearance. That led
to the Ritz-Carlton jail saga - and other arrests.
The CIA protégé Mohammed bin Nayef - who was previously made Crown Prince by
the CIA itself - was also arrested and is still under house arrest. The CIA was grooming Nayef
be King.
The CIA managed to elevate Nayef by plotting to get rid of Bandar Bush - who was fired by
then King Abdullah. When King Abdullah died, Nayef continued to be Crown Prince until ousted by
the new King Salman bin Abdulaziz to the benefit of his son.
Big mistake.
MBS moved against the clergy - who had been neutralized by Nayef. He moved against CIA
friends, ousting former King Abdullah's son Prince Miteb as head of the powerful National Guard
- who's after his blood ever since.
Crucially, Khashoggi was also CIA.
MBS ordered the invasion of Yemen - and turned large sectors of the army against him. He met
with AIPAC in New York, befriended Israel and turned the bulk of the Saudi population against
him.
Only misinformed simpletons believe that the Pulp Fiction in Istanbul op could have
proceeded without his green light. Hubris, arrogance and inter-galactic ignorance are MBS's
trademarks.
What kind of intel op does not know that Turkish secret police would be monitoring the Saudi
embassy 24/7?
The Coward Prince, meanwhile, has had ample time to find not one but TWO fall guys.
Fall Guy Number One is Gen. Ahmed al-Assiri, deputy head of Saudi intel (yes, that's an
oxymoron), a senior air force officer with NO (very important) family connections to the Saudi
two-bit royals.
Fall Guy Number Two is Saud al-Qahtani, who was a sort of Desert Grand Inquisitor - totally
controlling the media and supervising the non-stop purge of any critics. Call him the Saudi
Steve Bannon - as he was known in Qatar. He led a mighty troll army spreading fake news on the
murderous war on Yemen, the pathetic blockade of Qatar and non-stop demonization of Iran.
Turkey for its part has masterfully deployed Death by a Thousand Leaks on MBS.
Now the whole planet knows the detailed description of the 15-men hit squad; pics of all of
them; their role in the "mission"; arrival and departure flights; which hotels they stayed for
a few hours.
The hit squad includes the Bone Saw Master; four intel ops; 6 Royal Guard members; a member
of MBS's personal guard; and a free agent.
Compared to all this evidence, the official "fist fight" Saudi explanation as well as the
Jared of Arabia-spun "rogue killer" spin are inter-galactic jokes designed for suckers.
What remains unexplained is whether MBS was striking some sort of dodgy deal with the Trump
administration, via his best pal Jared, behind the back of his House of Saud many rivals.
Consul Pompeus Minimus was on the phone to MBS immediately after the Pulp Fiction news broke
out. This could well turn out to have been a double-double cross.
Comment: Pepe is probably a little too sure it couldn't have happened without MbS's approval.
He may have been involved and it escalated further than he approved, (as Scott Adams
theorizes ), or
it could've been a rogue operation. Mohammed bin Salman has made enough enemies within the
sprawling Saudi royal family with last year's "anti-corruption purge", that more than one
faction would be happy to pin the assassination on him
"... I agree with Jack that when Brennan is writing an op-ed calling for the head of MbS something fishy is up. Kashoggi has had a long career at the heart of Saudi national security power structures. He's no angel. Clearly he touched a nerve to be murdered so openly with no plausible deniability. Or maybe that was intentional. Then....the reaction of the Deep State. Hmm? ..."
"... Please don't get me wrong. Saudi Barbaria has been a corrupting influence for decades and the role they have played in Syria, Libya is not to be condoned. I fully support walking away from our interventionist position in the Middle East and letting the chips fall there. However, I have a deep distrust of Brennan and his motives. I can't put my finger on why the neocons are reacting in this way in light of their previous attitude of ignoring such atrocities or even abetting them. This is raising suspicions. ..."
"... if that is such a common knowledge that host states always bug the guest embassies and consulates, that would mean that Saudis would have to assume that as well, so that they would make sure that these devices were ´blinded´, ..."
"As for arms sales, someone needs to brief Mr. Trump on the actual results of the promises made to him when he visited Riyadh
last year. As Bruce Riedel of the Brookings Institution
sums it up , "The Saudis have not concluded a single major arms deal with Washington on Trump's watch ." Moreover, an end to
supplies of U.S. spare parts and technical support, something Russia cannot provide, would quickly ground the Saudi air force . That
would have the welcome effect of ending a bloody bombing campaign in Yemen that a
U.N. investigation concluded was probably responsible for war crimes." Washpost
-----------
Once again, I am not a great fan of Bezos or his blog, but two days in a row they have printed something I can agree with. Something
has changed for him.
It has become a meme in the blather that runs shrill and shallow in the US media, that Saudi Arabia is a faithful, and indispensable
ally of the US in the ME. Bezos disputes this and so do I.
A few points:
Yes, they chop heads off after Friday prayers outside the local mosque. They also do hands and feet. They stone to death women
found guilty of adultery. They sew them in bags before the men present throw handy five pound rocks at them. The government is deeply
approving of this. Sound familiar? Yes, it should. The jihadis whom the Saudis sponsor in Syria do the same things. The Sunni jihadis
are nearly defeated in Syria and it has become clear that the Saudi government has been evacuating their leaders, probably with US
connivance, so that they can pursue greater visions of jihad elsewhere.
The importance of Saudi Arabia in the world oil market is IMO now much exaggerated. They can undoubtedly do some damage by manipulating
the short term contract (spot) market but this is something they would pay for heavily. The Kingdom is cash strapped. It was not
for nothing that MBS turned the Ritz Carlton in Riyadh into a prison for the wealthy including many of his own kin in order to squeeze
and in some cases torture them into handing over a lot of their cash to the government. Depressed petro sales at artificial prices
will only further reduce revenue to the government.
The notion that Saudi intelligence contributes much to the GWOT is a joke. Saudi intelligence competence is something that exists
only in pitchmen's claims voiced by TV touts. In fact, they get almost everything they have from the US and are like greedy baby
birds always looking to be fed. They cannot organize a trip to the gold plated toilet. It took 15 of them to ambush Khashoggi, well,
OK, 14 of them and a doctor to carry the electric bone-saw.
We need to sell them more equipment that they cannot use? It does not appear to me that any of the contracts that they promised
to DJT has been signed. Their technique is simple. Keep the hope of profit for the US alive as leverage.
Lastly, the chimera of a great Arab alliance (a la NATO) is delusory. The Saudis lack both the organizational ability for such
a thing and significant military power. They possess one of the world's largest static displays of military equipment. They have
neither the manpower nor the aptitude to use such equipment effectively. As I have written previously, the Gulf Arabs have long had
such an alliance. It is the GCC and it has never amounted to anything except a venue for the Arab delight in meetings and blather.
The basis for the desire for such an alliance is the Israeli strategic objective of isolating Iran and its allies; Syria, Hizbullah
and Hamas with an eventual hope of destroying the Iranian theocracy. Israel is frightened of a possible salvo of many thousands of
missiles and rockets into Israel from Lebanon as well as an eventual successful creation of a missile deliverable nuclear weapon
by the Iranians. These are real and credible threats for Israel, but not for FUKUS . Israel has only two really valuable counter-value
targets; Haifa and Tel Aviv. A hit on one or both with a nuclear weapon would be the end of Israel. The Israelis know that.
Adroit information operations carried out over generations by the Israeli government and its supporters have created in the collective
US mind an image of Iran as a disguised 3rd Reich. This was well done. The same operation was run against Iraq with magnificent results
from the POV of Israel
What happened here that all the neocons like Fred Hiatt and Sen. Lindsey Graham now want the blood of MBS? Jamal Kashoggi was
apparently a good pal of Osama and an insider who worked for Prince Turki al-Faisal both when he ran Saudi intelligence and when
he was in DC. My antenna is up when John Brennan starts writing op-eds. After all he was in Riyadh when Turki was the internal
security chief.
Does this have to do with our Deep State? Who may not be happy that MBS has by-passed them with a direct connection through
Jared?
We didn't do anything or demand anything when the Saudis sent terrorists to attack us on 9/11. What's changed now with the
murder of Jamal Kashoggi in Istanbul?
I'm with Jack. Don't get me wrong: I hate MBS as much as the next man, but I can't say I trust Erdogan or Bezos either. And these
days, whenever the WaPo tells me to zig, my instinct tells me to zag. At the very least, I would like to know more about what's
really going here before committing myself to one side or the other. Kashoggi, after all, was not just some random 'journalist'.
He had intimate contact with, and knowledge of, high-ranking personages in the KSA and beyond. He even knew Osama bin Laden! There
could be any number of parties out there in this world who have felt that he knew too much. It's just too early to jump to conclusions.
Over at Consortium News, Asad Abu Khalil, the 'Angry Arab', has up a good piece arguing that Kashoggi was no reformer. In fact,
up until extremely recently, he was doggedly loyal to the régime. As he puts it:
"Western media coverage of Khashoggi's career (by people who don't know Arabic) presents a picture far from reality. They portray
a courageous investigative journalist upsetting the Saudi regime. Nothing is further from the truth: there is no journalism in
Saudi Arabia; there is only crude and naked propaganda."
It is very unlikely that the people, who time and time again have been found to lack even a shred of human decency, compassion
and fairness, Brennan et al and I include WaPo in that, are now going gaga over the murder of a journo, who had strong links with
the power players in the region.
The way that these things have worked out in the media earlier, I think the order has come from higher up to push this incident
to damage either the relationship with SA or mbs. I think that keeping this incident hot has also kept the oil price high just
before the mid-term elections. surely, a higher oil price hurts trump. that might be a reason for the trump-hating crowd including
wapo to discover decency and fairness and other human virtues just right now. very intriguing, this reaction from the MSM.
I note that the British press is not pressing this issue as much, nor is Haaretz. Only the US MSM is pressing this very hard.
The US and the Brits before us have slavishly courted the Saudi Royals since before WWII. This is a constant through Republican
and Democratic administrations. The Trump administration is no exception. Why the murder of one journalist would challenge a half
century of established US policy at this time is beyond my understanding. Perhaps it's the proverbial straw that broke the camel's
back.
Someone from whose writings I have derived a great deal of instruction, as well as amusement, is Vladimir Golstein, a Russian
Jewish émigré now in charge of 'Slavic Studies' at Brown University.
I introduce his explanation of the response to the Khashoggi killing, in a 'Facebook' post, not because I think it should be
taken as some kind of authoritative truth, but because, as often, Golstein's irreverence is thought-provoking.
The post begins:
'Thank you, Saudi Arabia for exposing the utter hypocrisy and moral bankruptcy of British and American gangsta press and equally
gangsta establishment.
'You've been at it for a very long time. And it seems that finally you've got it right.'
After providing a long list of Saudi delinquencies, Golstein continues:
'I understand that you began to feel more and more desperate. You sided with Israel against Iran and Syria, and the rest
of the world said that it is a moral thing to do and put you on the UN human rights board.
'Well, finally, you hit the right cord. Killing innocent people and abusing your moneyed power by buying newspapers, hotels,
city districts or think tanks, was not enough to produce an outrage in the west, but when you whacked another cynical morally
corrupt journalist that proved too much for the cynical and morally corrupt western press. They decided to stand up for one
of their own.'
This does, I think, point to something rather important. And it leads to the thought that MBS and others may have miscalculated,
as a result of an 'hubris' which many in the West have actually encouraged – just as they have a parallel 'hubris' in Israel.
As Golstein, who has a great deal of complex history behind him, can see very clearly, it is an interesting question when
the 'sympathy' of Western 'liberals' is and is not actually felt.
What I think MBS may have missed is, quite precisely, the realisation that for people like Tom Friedman the fact that –
as Golstein is pointing out – Khashoggi is the same kind of animal as they are means that killing him touches them personally.
Second, he is the kind of figure whom they have, as it were, 'cast' in a 'starring role', in their 'narrative' as to how
somehow 'Saudi Barbaria' is going to 'modernise', and in so doing create a Middle East hospitable to a Jewish settler state.
So, in assassinating him, MBS may have unleashed a curious kind of psychological 'maelstrom.'
But, as well as hypocrisy, there is also a basic stupidity.
In fact, if one is reasonably 'worldlywise', one knows that people's sympathies, including one's own, are very often much more
limited than they profess to be. We commonly find it much easier to feel the griefs and pain of people whom we see as like ourselves,
than we do with those of others.
My own history, ironically, has been a move from finding it relatively easy to sympathise with people who write for the 'New
York Times', or the 'Guardian', or the 'New York Review of Books', to finding it really rather difficult.
There is also, however, about so many of these people, an element of sheer stupidity.
Whether one agrees, or disagrees, with 'deplorables' is relevant, but only partly so. Actually, people who would not appear
at the kind of 'party' which Jon Schwarz so aptly characterises have a very wide range of views, and I often agree in whole or
in part with such people, and also often disagree in whole or in part. It is not a simple matter.
A related but distinct question has to do with common prudence.
People who lock themselves in a kind of bubble of the supposedly 'enlightened' are not only doing the rest of us no favours,
but are inherently bound to head off in directions which are liable to be suicidal for themselves.
Prudent élites take the trouble at least to be aware that the world is not controllable by the comfortable people who appear
at their dinner parties, and realise that if they persist in trying to persuade themselves that it is, sooner or later their self-delusion
will blow up in their faces.
In relation to people like MBS, there is a double stupidity. The problem is not simply that he has been playing to their need
to believe that he wants to 'modernise' Saudi Arabia. It is also that they have wanted to believe that such a venture is possible,
which it almost certainly is not.
Yes, Vladimir Golstein has a point. The DC cocktail circuit have been offended as one of their fellow travelers has been offed.
If this will lead to a break with Saudi Barbaria that will be good. I'm cynical however. Brennan, et al just want their boy in
Riyadh not Jared's buddy.
Wait until it becomes clear that Israel in actuality negotiates her safety with Russia (it is ongoing as I type this)--that's
when the party will start in earnest.
"The US and the Brits before us have slavishly courted the Saudi Royals since before WWII."
TTG, as you are doubtless aware, it goes back even further, to early World War I. David Fromkin's seminal 1989 history, "A
Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East (also subtitled Creating the
Modern Middle East, 1914–1922)":
https://en.wikipedia.org/wi... describes the machinations by British, French, and (later) Americans to play the competing
desert chieftains against each other, alternately catering to and dumping unceremoniously each one as political necessity dictated.
Recommended to readers wishing to further appreciate the roots of the irresolvable turmoil that is the modern Middle East.
Yes, there's clearly more than meets the eye. I agree with Jack that when Brennan is writing an op-ed calling for the head
of MbS something fishy is up. Kashoggi has had a long career at the heart of Saudi national security power structures. He's no
angel. Clearly he touched a nerve to be murdered so openly with no plausible deniability. Or maybe that was intentional. Then....the
reaction of the Deep State. Hmm?
Please don't get me wrong. Saudi Barbaria has been a corrupting influence for decades and the role they have played in
Syria, Libya is not to be condoned. I fully support walking away from our interventionist position in the Middle East and letting
the chips fall there. However, I have a deep distrust of Brennan and his motives. I can't put my finger on why the neocons are
reacting in this way in light of their previous attitude of ignoring such atrocities or even abetting them. This is raising suspicions.
The evidence I see is that a Saudi citizen who used to be a "regime insider" with high level connections and aligned with the
previous head of Saudi intelligence was brutally murdered by Saudi government officials. Turkey leaked this information and in
the leaks claim they have audio and video evidence of the murder. John Brennan and other neocons who previously have not only
supported but also connived in some of the atrocities committed by the Saudi government are demanding that MbS be held to account.
The question that is nagging me is why are the neocons reacting this way now, considering they have always carried water for
the Saudi royals when real dissidents have been routinely executed after show trials?
for example, how did Turks get the audio and possibly video of the deed, the transmission by Apple watch story may be just a red
herring, they may have independent sources and methods which the US is not privy to the word ´their´ in my remark intended to
say ´Turks´. Sorry about the unclear sentence.
I thought you Germans were supposed to be smart. You don't understand that MIT, the Turkish intelligence service had bugged the
consulate? What part of that do you not understand? Go get some strudel and think about it!
hahaha, I will eat it, BUT - if that is such a common knowledge that host states always bug the guest embassies and consulates,
that would mean that Saudis would have to assume that as well, so that they would make sure that these devices were ´blinded´,
and that would mean that there were other devices which they were not able to ´blind´. Just deep thinking, is that also German
trait?
Sounds like Klarity, a German trait. The Saudis probably lacked the skill to find the Turkish bugs. MIT, the Turkish service are
very skilled at installation.
Maybe this new surprising "moral" attitude has something to do with the mid-terms elections. Yes Saudi Arabia is a kind of traditional
commodity platform and surely not an Ally, but DJT did enhance the Saudis status as Partners in his projected Deal of the Century
(still not published).
The Khasoghi murder has become the DJT problem and while raising his expression for the outrage has also
opened the exit door, and provided a possibility to dilute MBS direct responsibility. Of interest is the Erdogan careful but repeated
supply of details.
What 'terrorists' attacked on 911...?...nobody knows what exactly happened on that day, and who was involved...except that the
official narrative is total BS...
Yes, one could lump me under the dismissive and unflattering epithet of 'truther'...after looking into some of the physical aspects
of the matter, the narrative is impossible on grounds of physics...that is not to say I am speculating on who or even the how...which
is where we see a lot of tinfoil hat stuff...but I have a solid engineering and aviation background...it could not have happened
the way we are told...
The President has authority under the Global Magnitsky Act to impose sanctions against
anyone who has committed a human rights violation. Congress has already requested a HR
investigation which Trump must act on and report to them within 4 months
It appears my prediction of Saudi gate may be right. This potentially is good news for
Iran and Russia. Perhaps not so good for Trump and Saidis. Israel may not be happy. Perhaps
his wife's plane troubles were a warning shot to remind him who is boss. Who knows ?
Haleys resignation beginning to make sense now. The House of Trump and House of Saud may
soon fall, and Bibi wont be happy losing Trump and MBS. We all know what they are capable of
to get things back on track
Why did the media held back on this so for so long?
Yemen (and Gaza).
CGTN & Al-Jazeera are the only global news outlets consistently and regularly reporting on the US facilitated
genocides in Yemen and Jewish-occupied Palestine/Gaza.
The never-ending Khashoggi non-mystery mystery keeps Yemen & Gaza out of the Jew-controlled Western Media
headlines. Saudi Barbaria and "Israel" are natural allies because each of them is an artificial Western political
construct with a cowardly and incompetent military apparatus and an anti-heroic penchant for slaughtering undefended
civilians - for psychopathic reasons.
--------
Talking about psychopathy...
Oz's Christian Zionist PM, Sco Mo, is blathering about following Trump's lead and moving Oz's Embassy in "Israel" to
Jerusalem. Sc Mo, who has never had an original idea in his life, still hasn't woken up to the fact that Trump's
Jerusalem gambit was a trap for Bibi. So it's hilarious that Sco Mo The Unoriginal, is planning to take a flying
leap into the same trap!
Anyone with more than half a brain would realise that...
1. No civilised country has followed Trump's lead.
2. Trump can, and will, reverse his (illegal) Jerusalem decision out of a 'new-found respect' for International Law.
Posted by: Hoarsewhisperer | Oct 18, 2018 12:14:08 AM |
83
Whoever is ultimately behind this campaign (which I
suspect is a loose association of interest groups spread throughout SA, Turkey, London citi, wall street, whoever)
they will not stop until MbS is paraded through the streets in chains or at least his head at the end of a lance. At
this point the only question how many days will it take to see his head on a pike?
"Their target that night: Anssaf Ali Mayo, the local leader of the Islamist
political party Al-Islah. The UAE considers Al-Islah to be the Yemeni branch of the worldwide Muslim Brotherhood,
which the UAE calls a terrorist organization. Many experts insist that Al-Islah, one of whose members won the Nobel
Peace Prize, is no terror group. They say it's a legitimate political party that threatens the UAE not through
violence but by speaking out against its ambitions in Yemen."
Getting to the bottom of the Jamal Khashoggi disappearance is a bit like peeling an onion.
It is known that Khashoggi entered the Saudi Arabian Consulate in Istanbul on October 2
nd to get a document that would enable him to marry a Turkish woman. It is also
known, from surveillance cameras situated outside the building, that he never came out walking
the same way he entered. The presumption is that he was either killed inside or abducted,
though the abduction theory would have to be based on a Consulate vehicle leaving the building
with him presumably concealed inside, something that has not been confirmed by the Turks. If he
was killed inside the building and dismembered, as seems likely, he could have had his body
parts removed in the suitcases carried by the alleged fifteen official Saudis who had arrived
that morning by private jet and left that afternoon the same way. The supposition is that the
fifteen men, which may have included some members of Crown Prince Muhammad bin Salman's
bodyguard as well as a physician skilled in autopsies who was carrying a bone saw, constituted
the execution party for Khashoggi.
There are certain things that should be observed about the Turks, since they are the ones
claiming that the disappearance of Khashoggi may have included a summary execution and
dismemberment. The Turkish intelligence service, known by its acronym MIT, is very good, very
active and very focused on monitoring the activities of foreign embassies and their employees
throughout Turkey. They use electronic surveillance and, if the foreign mission has local
employees, many of those individuals will be agents reporting to the Turkish government. In my
own experience when I was in Istanbul, I had microphones concealed in various places in my
residence and both my office and home phones were tapped. A number of local hire consulate
employees were believed to be informants for MIT but they were not allowed anywhere near
sensitive information.
As Turkey and Saudi Arabia might be termed rivals if not something stronger, it is to be
presumed that MIT had the Consulate General building covered with both cameras and microphones,
possibly inside the building as well as outside, and may have had a Turkish employer inside who
observed some of what was going on. Which is to say that the Turks certainly know exactly what
occurred but are playing their cards closely to see what they can derive from that knowledge.
The two countries have already initiated a joint investigation into what took place. Turkey's
economy is in free fall and would benefit from "investment" from the Saudis to create an
incentive to close the book on Khashoggi. In other words, Turkey's perspective on the
disappearance could easily be influenced by Saudi money and the investigation might well turn
up nothing that is definitive.
Saudi Arabia, for its part, has a couple of cards to play also even if it did kill and
dismember Khashoggi under orders from the Crown Prince. First of all, the system of
petrodollars, which basically requires nearly all purchases of petroleum to be paid in dollars,
is underwritten by the Saudis. Petrodollars in turn enable the United States to print money for
which there is no backing knowing that there will always be international demand for dollars to
buy oil. The Saudis, who also use their own petrodollars to buy U.S. treasury bonds, could pull
the plug on that arrangement. That all means that the United States will be looking for an
outcome that will not do too much damage to the Saudis.
Second, Saudi Arabia is in bed with Israel in opposition to Iran. This means the Israel
Lobby and its many friends in Congress will squawk loudly about Khashoggi but ultimately shy
away from doing anything about it. It already appears that a cover story is halfway in place to
explain what happened. It is being suggested that a "rogue" element from Saudi Arabia might
have carried out without the knowledge of the Crown Prince an interrogation or abduction
attempt that went too far. Donald Trump speculated on Monday that that might be the case,
suggesting that it may already be part of the official line that will be promoted. Those who
know Saudi Arabia well, however, consider a high-level assassination not ordered by the Crown
Prince directly to be extremely unlikely, but that does not necessarily mean that a cover story
including that feature might not be successfully floated.
In regional terms, Saudi Arabia is also key to Trump's anticipated Middle East peace plan.
If it pulls out from the expected financial guarantees aspect, the plan will fall apart. Riyadh
is also committed to buy tens of billions of dollars' worth of American arms, an agreement that
could be canceled if Washington begins to pressure the Saudis for answers. Beyond that, Saudi
Arabia could stop pumping oil or fail to increase production when Iranian oil becomes subject
to U.S. sanctions early next month, driving the price per barrel up dramatically for everyone.
The Saudi government has already indicated that it will respond forcefully to any attempts to
punish it over Khashoggi and there is no reason to doubt the seriousness of that threat.
There are, of course, possible impediments to selling the fake news narrative. Some early
reports suggested that Khashoggi's fiancé had observed and possibly recorded the
execution inside the consulate using the victim's Apple wristwatch linked to an iPad in her
possession. If that is true, the release of such material to the media will create worldwide
demand to learn the truth that will be difficult to control. Also, there are unconfirmed
reports that U.S. intelligence knew in advance of Saudi plans to abduct Khashoggi, which could
prove embarrassing to the Trump administration and could narrow its options.
The trick will be to see how a bit of extreme brutal behavior by the Saudis can be
manipulated by all interested parties to produce a solution that doesn't damage anyone too
much. It will undoubtedly be far from the truth, but truth doesn't necessarily matter much
these days.
"... This is Naked Capitalism fundraising week. 1018 donors have already invested in our efforts to combat corruption and predatory conduct, particularly in the financial realm. Please join us and participate via our donation page , which shows how to give via check, credit card, debit card, or PayPal. Read about why we're doing this fundraiser and what we've accomplished in the last year, and our current goal, extending our reach . ..."
"... By Tsvetana Paraskova, a writer for the U.S.-based Divergente LLC consulting firm. Originally published at OilPrice ..."
"... As long as NATO exists, Washington will continue to use it to drive a wedge between the EU and Russia. Merkel foolishly went along with all of Washington's provocations against Russia in Ukraine, even though none of it benefited Germany's national interest. ..."
"... She did indeed go along with all the provocations and she sat back and said nothing while Putin railed against US sanctions. Yet Putin didn't blame Germany or the EU. Instead he said that the Germany/EU is currently trapped by the US and would come to their senses in time. He is leaving the door open. ..."
"... What US LNG exports? The US is a net importer of NG from Canada. US 2018 NG consumption and production was 635.8 and 631.6 Mtoe respectively (BP 2018 Stats). Even the BP 2018 Statistical Review of World Energy has an asterisks by US LNG exports which says, "Includes re-exports" which was 17.4 BCM or 15 Mtoe for 2018. ..."
"... Natural gas negotiations involve long term contracts so there are lots of money to exchange ensuring business for many years to come. Such a contract has recently been signed between Poland's PGNiG and American Venture Global Calcasieu & Venture Global Plaquemines LNG (Lousiana). According to the Poland representative this gas would be 20% cheaper than Russian gas. (if one has to believe it). Those contracts are very secretive in their terms. This contract in particular is still dependent on the termination of liquefaction facilities in Lousiana. ..."
"... IIRC, the US is pushing LNG because fracking has resulted in a lot of NG coincident with oil production. They've got so much NG coming out of fracked oil wells that they don't know what to do with it and at present, a lot of it just gets flared, or leaks into the atmosphere. ..."
"... So they turn to bullying the EU to ignore the price advantage that Russia is able to offer, due to the economics of pipeline transport over liquefaction and ocean transport, and of course the issues of reliability and safety associated with ocean transport, and high-pressure LNG port facilities compared to pipelines. ..."
"... Trump will probably offer the EU 'free' LNG port facilities financed by low-income American tax-payers, and cuts to 'entitlements', all designed to MAGA. ..."
"... It seems we have been maneuvering for a while to raise our production of LNG and oil (unsustainably) in order to become an important substitute supplier to the EU countries. It sort of looks like our plan is to reduce EU opposition to our attacking Russia. Then we will have China basically surrounded. This is made easier with our nuclear policy of "we can use nuclear weapons with acceptable losses." What could go wrong? ..."
"... The United States should lead by example. Telling Germany not to import Russian gas is rich considering the U.S. also imports from Russia. https://www.forbes.com/sites/rrapier/2018/07/12/russia-was-a-top-10-supplier-of-u-s-oil-imports-in-2017/ ..."
"... I just love the fact that Trump is publicly calling out Merkel on this; she has been nothing but two-faced and hypocritical on the Russia question. ..."
"... She was one of the ones who pushed the EU hard, for example, to sanction Russia in the wake of the coup in Ukraine (which she had also supported). And then she pushed the EU hard to kill off the South Stream pipeline, which would have gone through SE Europe into Austria. She used the excuse of 'EU solidarity' against 'Russian aggression' to accomplish that only to then turn around and start building yet another pipeline out of Russia and straight into Germany! The Bulgarians et al. must feel like real idiots now. It seems Berlin wants to control virtually all the pipelines into Europe. ..."
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is Naked Capitalism fundraising week. 1018 donors have already invested in our efforts to
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and participate via our donation page , which shows how to give via
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this fundraiser and what we've
accomplished in the last year, and our current goal, extending
our reach .
Yves here. It's not hard to see that this tiff isn't just about Russia. The US wants Germany
to buy high-priced US LNG.
By Tsvetana Paraskova, a writer for the U.S.-based Divergente LLC consulting firm.
Originally published at
OilPrice
The United States and the European Union (EU) are at odds over more than just the Iran
nuclear deal – tensions surrounding energy policy have also become a flashpoint for the
two global powerhouses.
In energy policy, the U.S. has been opposing the Gazprom-led and highly controversial
Nord Stream 2 pipeline project , which will follow the existing Nord Stream natural gas
pipeline between Russia and Germany via the Baltic Sea. EU institutions and some EU members
such as Poland and Lithuania are also against it, but one of the leaders of the EU and the
end-point of the planned project -- Germany -- supports Nord Stream 2 and sees the project as a
private commercial venture that will help it to meet rising natural gas demand.
While the U.S. has been hinting this year that it could sanction the project and the
companies involved in it -- which include not only Gazprom but also major European firms Shell,
Engie, OMV, Uniper, and Wintershall -- Germany has just said that
Washington shouldn't interfere with Europe's energy choices and policies.
"I don't want European energy policy to be defined in Washington," Germany's Foreign
Ministry State Secretary Andreas Michaelis said at a conference on trans-Atlantic ties in
Berlin this week.
Germany has to consult with its European partners regarding the project, Michaelis said, and
noted, as quoted by Reuters, that he was "certainly not willing to accept that Washington is
deciding at the end of the day that we should not rely on Russian gas and that we should not
complete this pipeline project."
"Germany is totally controlled by Russia, because they will be getting from 60 to 70 percent
of their energy from Russia and a new pipeline," President Trump said.
Germany continues to see Nord Stream 2 as a commercial venture, although it wants clarity on
the future role of Ukraine as a transit route, German government spokeswoman Ulrike Demmer
said last month.
Nord Stream 2 is designed to bypass Ukraine, and Ukraine fears it will lose transit fees and
leverage over Russia as the transit route for its gas to western Europe.
Poland, one of the most outspoken opponents of Nord Stream 2, together with the United
States, issued a joint statement last month during the visit of Polish President Andrzej Duda
to Washington, in which the parties
said , "We will continue to coordinate our efforts to counter energy projects that threaten
our mutual security, such as Nord Stream 2."
The president of the Federation of German Industry (BDI), Dieter Kempf, however, told
German daily Süddeutsche Zeitung last month, that he had "a big problem with a third
country interfering in our energy policy," referring to the United States. German industry
needs Nord Stream 2, and dropping the project to buy U.S. LNG instead wouldn't make any
economic sense, he said. U.S. LNG currently is not competitive on the German market and would
simply cost too much, according to Kempf.
The lower price of Russian pipeline gas to Europe is a key selling point -- and one that
Gazprom uses often. Earlier this month Alexey Miller, Chairman of Gazprom's Management
Committee, said at a gas forum in
Russia that "Although much talk is going on about new plans for LNG deliveries, there is no
doubt that pipeline gas supplies from Russia will always be more competitive than LNG
deliveries from any other part of the world. It goes without saying."
The issue with Nord Stream 2 -- which is already
being built in German waters -- is that it's not just a commercial project. Many in Europe
and everyone in the United States see it as a Russian political tool and a means to further
tighten Russia's grip on European gas supplies, of which it already holds more than a third.
But Germany wants to discuss the future of this project within the European Union, without
interference from the United States.
Maybe the US thinks it will also have to go out of its way to accommodate Germany and the
EU by offering to construct the necessary infrastructure in Europe for the import of LNG at
exorbitant US prices. MAGA. How long would that take?
The question is, is it inevitable that the EU/US relationship goes sour?
Continentalism is on the rise generally, and specifically with brexit, couple this with the
geographical gravity of the EU-Russia relationship makes a EU-Russia "alliance" make more
sense than the EU-US relationship.
Ever since the death of the USSR and the accession of the eastern states to the EU, the
balance of power in the EU-US relationship has moved in ways it seems clear that the US is
uncomfortable with.
To all of this we must add the policy differences between the US and the EU – see the
GDPR and the privacy shield for example.
I have said it before – the day Putin dies (metaphorically or literally) is a day
when the post war order in Europe may die, and we see the repairing of the EU-Russia
relationship (by which I mean the current regime in Russia will be replaced with a new
generation far less steeped in cold war dogma and way more interested in the EU).
"The post war order in Europe will doe and we see the repairing of the EU/Russian
relationship "
I think you mean the German/Russian relationship and that repair has been under way for
more than a decade. The post war order is very very frayed already and looks close to a break
point.
This Nord Stream 2 story illustrates more than most Germany's attitudes to the EU and to
the world at large. Germany used its heft within the EU to 1 ) get control of Russian gas
supplies into Central Europe (Germany insisted that Poland could not invest in the project
apparently and refused a landing point for the pipeline in Poland. Instead it offered a flow
back valve from Germany into Poland that the Germans would control) 2) thumb its nose at the
US while outwardly declaring friendship through the structures provided by EU and NATO
membership.
Even Obama suspected the Germans of duplicity (the Merkel phone hacking debacle).
It's is this repairing relationship that will set the tone for Brexit, the Ukraine war,
relations between Turkey and EU and eventually the survival of the EU and NATO. The point ?
Germany doesn't give a hoot about the EU it served its purpose of keeping Germany anchored to
the west and allowing German reunification to solidify while Russia was weak. Its usefulness
is in the past now, however from a German point of view.
Putin dying isn't going to change Washington. As long as NATO exists, Washington will
continue to use it to drive a wedge between the EU and Russia. Merkel foolishly went along
with all of Washington's provocations against Russia in Ukraine, even though none of it
benefited Germany's national interest.
Come to think of it, maybe Merkel dying off would improve German-Russian relations
She did indeed go along with all the provocations and she sat back and said nothing while
Putin railed against US sanctions. Yet Putin didn't blame Germany or the EU. Instead he said
that the Germany/EU is currently trapped by the US and would come to their senses in time. He
is leaving the door open.
Germany won't lose if NATO and the EU break up. It would free itself from a range
increasingly dis-functional entities that, in its mind, restrict its ability to engage in
world affairs.
I think you are right. Russia and Germany are coming together and there's nothing we can
do about it because "private commercial venture." Poetic justice.
And the economic link will
lead to political links and we will have to learn a little modesty. The ploy we are trying to
use, selling Germany US LNG could not have been anything more than a stopgap supply line
until NG from the ME came online but that has been our achilles heel.
It feels like even if
we managed to kick the Saudis out and took over their oil and gas we still could no longer
control geopolitics. The cat is out of the bag and neoliberalism has established the rules.
And it's pointless because there is enough gas and oil and methane on this planet to kill the
human race off but good.
That exactly right. and Gerhard Schroder has been developing those political relationships
for more than a decade. The political/economic links already go very deep on both sides.
if the rapprochement is occurring, Brexit, the refugee crisis and Italy's approaching debt
crisis are all just potential catalysts for an inevitable breakup. Germany likely views these
as potential opportunities to direct European realignment rather than existential crises to
be tackled.
What US LNG exports? The US is a net importer of NG from Canada. US 2018 NG consumption
and production was 635.8 and 631.6 Mtoe respectively (BP 2018 Stats). Even the BP 2018
Statistical Review of World Energy has an asterisks by US LNG exports which says, "Includes
re-exports" which was 17.4 BCM or 15 Mtoe for 2018.
The US produces annually about 33,000,000 million cubic feet and consumes 27.000.000
million according to the EiA . So there is an
excess to export indeed.
Natural gas negotiations involve long term contracts so there are lots of money to
exchange ensuring business for many years to come.
Such a contract has recently been signed between Poland's PGNiG and American Venture
Global Calcasieu & Venture Global Plaquemines LNG (Lousiana). According to the Poland
representative this gas would be 20% cheaper than Russian gas. (if one has to believe it).
Those contracts are very secretive in their terms. This contract in particular is still
dependent on the termination of liquefaction facilities in Lousiana.
I don't know much about NG markets in Poland but according to Eurostat prices for
non-household consumers are very similar in Poland, Germany, Lithuania or Spain.
Gas contracts are usually linked to oil prices. A lot of LNG is traded as a fungible
product like oil, but that contract seems different – most likely its constructed this
way because of the huge capital cost of the LNG facilities, which make very little economic
sense for a country like Poland which has pipelines criss-crossing it. I suspect the
terminals have more capacity that the contract quantity – the surplus would be traded
at market prices, which would no doubt be where the profit margin is for the supplier (I
would be deeply sceptical that unsubsidised LNG could ever compete with Russia gas, the
capital costs involved are just too high).
IIRC, the US is pushing LNG because fracking has resulted in a lot of NG coincident with
oil production. They've got so much NG coming out of fracked oil wells that they don't know what to do
with it and at present, a lot of it just gets flared, or leaks into the atmosphere.
IMO, the folks responsible for this waste are as usual, ignoring the 'externalities', the
costs to the environment of course, but also the cost of infrastructure and transport related
to turning this situation to their advantage.
So they turn to bullying the EU to ignore the price advantage that Russia is able to
offer, due to the economics of pipeline transport over liquefaction and ocean transport, and
of course the issues of reliability and safety associated with ocean transport, and
high-pressure LNG port facilities compared to pipelines.
This doesn't even take into account the possibility that the whole fracked gas supply may
be a short-lived phenomenon, associated with what we've been describing here as basically a
finance game.
Trump will probably offer the EU 'free' LNG port facilities financed by low-income
American tax-payers, and cuts to 'entitlements', all designed to MAGA.
Just to clarify, fracked gas is not usually a by-product of oil fracking – the
geological beds are usually distinct (shale gas tends to occur at much deeper levels than
tight oil). Gas can however be a byproduct of conventional oil production. 'wet' gas
(propane, etc), can be a by-product of either.
It's common for oil wells both fracked and conventional to produce natural gas (NG) though
not all do. The fracked wells in the Permian Basin are producing a great deal of it.
Natural gas does indeed form at higher temperatures than oil does and that means at
greater depth but both oil and NG migrate upward. Exploration for petroleum is hunting for
where it gets captured at depth, not for where it's formed. Those source rocks are used as
indicators of where to look for petroleum trapped stratigraphically higher up.
It seems we have been maneuvering for a while to raise our production of LNG and oil
(unsustainably) in order to become an important substitute supplier to the EU countries. It
sort of looks like our plan is to reduce EU opposition to our attacking Russia. Then we will
have China basically surrounded. This is made easier with our nuclear policy of "we can use
nuclear weapons with acceptable losses." What could go wrong?
I wonder what the secret industry studies say about the damage possible from an accident
at a LNG port terminal involving catastrophic failure and combustion of the entire cargo of a
transport while unloading high-pressure LNG.
They call a fuel-air bomb the size of a school bus 'The Mother of all bombs', what about
one the size of a large ocean going tanker?
Many years ago, someone was trying to build an LNG storage facility on the southwest shore
of Staten Island 17 miles SW of Manhattan involving very large insulated tanks. In spite of
great secrecy, there came to be much local opposition. At the time it was said that the
amount of energy contained in the tanks would be comparable to a nuclear weapon. Various
possible disaster scenarios were proposed, for example a tank could be compromised by
accident (plane crashes into it) or terrorism, contents catch fire and explode, huge fireball
emerges and drifts with the wind, possibly over New Jersey's chemical farms or even towards
Manhattan. The local opponents miraculously won. As far as I know, the disused tanks are
still there.
A 28-inch LNG underground pipeline exploded in Nigeria and the resulting fire engulfed
an estimated 27 square kilometers.
Here's one from Cleveland;
On 20 October 1944, a liquefied natural gas storage tank in Cleveland, Ohio, split and
leaked its contents, which spread, caught fire, and exploded. A half hour later, another
tank exploded as well. The explosions destroyed 1 square mile (2.6 km2), killed 130, and
left 600 homeless.
The locals in Nigeria drill hole in pipeline to get free fuel.
The Nigeria Government has been really wonderful about sharing the largess and riches of
their large petroleum field in the Niger delta. Mostly with owners of expensive property
around the world.
I am trying to think of what might be in it for the Germans to go along with this deal but
cannot see any. The gas would be far more expensive that the Russian deliveries. A fleet of
tankers and the port facilities would have to be built and who is going to pick up the tab
for that? Then if the terminal is in Louisiana, what happens to deliveries whenever there is
a hurricane?
I cannot see anything in it for the Germans at all. Trump's gratitude? That and 50 cents
won't buy you a cup of coffee. In any case Trump would gloat about the stupidity of the
Germans taking him up on the deal, not feel gratitude. The US wants Germany to stick with
deliveries via the Ukraine as they have their thumb on that sorry country and can threaten
Germany with that fact. Nord Stream 2 (and the eventual Nord Stream 3) threaten that
hold.
The killer argument is this. In terms of business and remembering what international
agreements Trump has broken the past two years, who is more reliable as a business partner
for Germany – Putin's Russia or Trump's America?
I find it impossible to believe that a gas supplier would keep to an artificially low LNG
contract if, say, a very cold winter in the US led to a shortage and extreme price spike.
They'd come up with some excuse not to deliver.
My recollection was that there was a law that prohibited export-sales of domestic US
hydrocarbons. That law was under attack, and went away in the last couple years?
LNG with your F35? said the transactional Orangeman
The fracked crude is ultralight and unsuitable for the refineries in the quantities
available, hence export, which caused congress to change the law. No expert, but understand
that it is used a lot as a blender with heavier stocks of crude, quite a bit going to
China.
The petroleum industry has been bribing lobbying the administration for quite a
while to get this policy in place, The so called surplus of NG today (if there is), won't
last long. Exports will create a shortage and will result in higher prices to all.
also, if Germany were to switch to American LNG, for how long would this be a reliable
energy source? Fracking wells are short lived, so what happens once they are depleted? who
foots the bill?
I just love the fact that Trump is publicly calling out Merkel on this; she has been
nothing but two-faced and hypocritical on the Russia question.
She was one of the ones who pushed the EU hard, for example, to sanction Russia in the
wake of the coup in Ukraine (which she had also supported). And then she pushed the EU hard
to kill off the South Stream pipeline, which would have gone through SE Europe into Austria.
She used the excuse of 'EU solidarity' against 'Russian aggression' to accomplish that only
to then turn around and start building yet another pipeline out of Russia and straight
into Germany! The Bulgarians et al. must feel like real idiots now. It seems Berlin wants to
control virtually all the pipelines into Europe.
So, three cheers for Trump embarrassing Merkel on this issue!
Putting money aside for a moment, Trump, as well as the entire American establishment,
doesn't want Russia "controlling" Germany's energy supplies. That's because they want America
to control Germany's energy supplies via controlling LNG deliveries from America to Germany
and by controlling gas supplies to Germany through Ukraine. This by maintaining America's
control over Ukraine's totally dependent puppet government. The Germans know this so they
want Nord Stream 2 & 3.
Ukraine is an unreliable energy corridor on a good day. It is run by clans of rapacious
oligarchs who don't give one whit about Ukraine, the Ukrainian "people", or much of anything
else except business. The 2019 presidential election may turn into a contest among President
Poroshenko the Chocolate King, Yulia Tymoshenko the Gas Princess, as well as some others
including neo Nazis that go downhill from there. What competent German government would want
Germany's energy supplies to be dependent on that mess?
It has been said that America's worst geopolitical nightmare is an
economic-political-military combination of Russia, Iran, and China in the Eurasian
"heartland". Right up there, if not worse, is a close political-economic association between
Germany and Russia; now especially so since such a relationship can quickly be hooked into
China's New Silk Road, which America will do anything to subvert including tariffs,
sanctions, confiscations of assets, promotion of political-ethnic-religious grievances where
they may exist along the "Belt-Road", as well as armed insurrections, really maybe anything
short of all out war with Russia and China.
Germany's trying to be polite about this saying, sure, how about a little bit of LNG along
with Nord Stream 2 & 3? But the time may come, if America pushes enough, that Germany
will have to make an existential choice between subservience to America, and pursuit of it's
own legitimate self interest.
It's hard to make NG explode, as it is with all liquid hydrocarbons. It is refrigerated,
and must change from liquid to gaseous for, and be mixed with air.
I've also worked on a Gas Tanker in the summer vacations. The gas was refrigerated, and
kept liquid. They is a second method, used for NG, that is to allow evaporation from the
cargo, and use it as fuel for the engine (singular because there is one propulsion engine on
most large ships) on the tanker.
The macabre case of missing journalist Jamal Khashoggi raises the question: did Saudi rulers
fear him revealing highly damaging information on their secret dealings? In particular,
possible involvement in the 9/11 terror attacks on New York in 2001.
Even more intriguing are US media
reports now emerging that American intelligence had snooped on and were aware of Saudi
officials making plans to capture Khashoggi prior to his apparent disappearance at the Saudi
consulate in Istanbul last week. If the Americans knew the journalist's life was in danger, why
didn't they tip him off to avoid his doom?
Jamal Khashoggi (59) had gone rogue, from the Saudi elite's point of view. Formerly a senior
editor in Saudi state media and an advisor to the royal court, he was imminently connected and
versed in House of Saud affairs. As one commentator cryptically put it: "He knew where all the
bodies were buried."
For the past year, Khashoggi went into self-imposed exile, taking up residence in the US,
where he began writing opinion columns for the Washington Post.
Khashoggi's articles appeared to be taking on increasingly critical tone against the heir to
the Saudi throne, Crown Prince Mohammed bin Salman. The 33-year-old Crown Prince, or MbS as
he's known, is de facto ruler of the oil-rich kingdom, in place of his aging father, King
Salman.
While Western media and several leaders, such as Presidents Trump and Macron, have been
indulging MbS as "a reformer", Khashoggi was spoiling this Saudi public relations effort by
criticizing the war in Yemen, the blockade on Qatar and the crackdown on Saudi critics back
home.
However, what may have caused the Saudi royals more concern was what Khashoggi knew about
darker, dirtier matters. And not just the Saudis, but American deep state actors as as
well.
He was formerly a
media aide to Prince Turki al Faisal, who is an eminence gris figure in Saudi intelligence,
with its systematic relations to American and British counterparts. Prince Turki's father,
Faisal, was formerly the king of Saudi Arabia until his assassination in 1975 by a family
rival. Faisal was a half-brother of the present king, Salman, and therefore Prince Turki is a
cousin of the Crown Prince – albeit at 73 more than twice his age.
For nearly 23 years, from 1977 to 2001, Prince Turki was the director of the Mukhabarat, the
Saudi state intelligence apparatus. He was instrumental in Saudi, American and British
organization of the mujahideen fighters in Afghanistan to combat Soviet forces. Those militants
in Afghanistan later evolved into the al Qaeda terror network, which has served as a cat's paw
in various US proxy wars across the Middle East, North Africa and Central Asia, including
Russia's backyard in the Caucasus.
Ten days before the 9/11 terror attacks on New York City, in which some 3,000 Americans
died, Prince Turki retired from his post as
head of Saudi intelligence. It was an abrupt departure, well before his tenure was due to
expire.
There has previously been speculation in US
media that this senior Saudi figure knew in advance that something major was going down on
9/11. At least 15 of the 19 Arabs who allegedly hijacked three commercial airplanes that day
were Saudi nationals.
Prince Turki has subsequently been named in a 2002 lawsuit mounted by families of 9/11
victims. There is little suggestion he was wittingly involved in organizing the terror plot.
Later public comments indicated that Prince Turki was horrified by the atrocity. But the
question is: did he know of the impending incident, and did he alert US intelligence, which
then did not take appropriate action to prevent it?
Jamal Khashoggi had long served as a trusted media advisor to Prince Turki, before the
latter resigned from public office in 2007. Following 9/11, Turki was the Saudi ambassador to
both the US and Britain.
A tentative idea here is that Khashoggi, in his close dealings with Prince Turki over the
years, may have gleaned highly sensitive inside information on what actually happened on 9/11.
Were the Arab hijackers mere patsies used by the American CIA to facilitate an event which has
since been used by American military planners to launch a global "war on terror" as a cover for
illegal wars overseas? There is a huge body of evidence that the 9/11 attacks were indeed a
"false flag" event orchestrated by the US deep state as a pretext for its imperialist
rampages.
The apparent abduction and murder last week of Jamal Khashoggi seems such an astoundingly
desperate move by the Saudi rulers. More evidence is emerging from Turkish
sources that the journalist was indeed lured to the consulate in Istanbul where he was
killed by a 15-member hit squad. Reports are saying that the alleged assassination was ordered
at the highest level of the Saudi royal court, which implicates Crown Prince MbS.
Why would the Saudi rulers order such a heinous act, which would inevitably lead to acute
political problems, as we are seeing in the fallout from governments and media coverage around
the world?
Over the past year, the House of Saud had been appealing to Khashoggi to return to Riyadh
and resume his services as a media advisor to the royal court. He declined, fearing that
something more sinister was afoot. When Khashoggi turned up in Istanbul to collect a divorce
document from the Saudi consulate on September 28, it appears that the House of Saud decided to
nab him. He was told to return to the consulate on October 2. On that same day, the 15-member
group arrived from Riyadh on two private Gulfstream jets for the mission to kill him.
Official Saudi claims stretch credulity. They say Khashoggi left the consulate building
unharmed by a backdoor, although they won't provide CCTV images to prove that. The Turks say
their own CCTV facilities monitoring the front and back of the Saudi consulate show that
Khashoggi did not leave the premises. The Turks seem confident of their claim he was murdered
inside the building, his remains dismembered and removed in diplomatic vehicles. The two
private jets left the same day from Istanbul with the 15 Saudis onboard to return to Riyadh,
via Cairo and Dubai.
To carry out such a reckless act, the Saudis must have been alarmed by Khashoggi's critical
commentaries appearing in the Washington Post. The columns appeared to be delivering more and
more damaging insights into the regime under Crown Prince MbS.
The Washington Post this week is
reporting that US intelligence sources knew from telecom intercepts that the Saudis were
planning to abduct Khashoggi. That implicates the House of Saud in a dastardly premeditated act
of murder.
But furthermore this same disclosure could also, unwittingly, implicate US intelligence. If
the latter knew of a malicious intent towards Khashoggi, why didn't US agents warn him about
going to the Saudi consulate in Istanbul? Surely, he could have obtained the same personal
documents from the Saudi embassy in Washington DC, a country where he was residing and would
have been safer.
Jamal Khashoggi may have known too many dark secrets about US and Saudi intel collusion,
primarily related to the 9/11 terror incidents. And with his increasing volubility as a
critical journalist in a prominent American news outlet, it may have been time to silence him.
The Saudis as hitmen, the American CIA as facilitators.
"... He is just an agent of one Saudii faction against the MBS faction, a faction just as evil. ..."
"... After Lebanese prime minister, Saad Hariri, was kidnapped and taken to Riyadh to be re-educated (tortured) Khashoggi left Saudi Arabia . Khashoggi continued with his columns criticizing the Saudi regime, attacking its campaign in Yemen on Al Jazeera. ..."
According to an article in the Duran Khashoggi was an agent in the employ of Riyadh and
the CIA during the Soviet presence in Afghanistan.
Turki bin Faisal Al-Saud was Khashoggi's political protector. Turki bin Faisal Al-Saud was
at the center of relations between Washington and Saudi Arabia against the USSR while it was
in Afghanistan using fighters who later became known as Al Qaeda - armed and trained by
CIA:Pakistan and financed by the Saudis.
Faisal became the leader of Saudi intelligence. He was removed from his post on May 24,
2001, a few months before September 11, 2001 (convenient) .The connections he had with Osama
bin Laden led him to being sued by relatives of 9/11 directed at him and other Saudi
operatives.
In 2005, Turki bin Faisal was appointed Saudi ambassador to the US during the Bush
administration, with Khashoggi accompanying him as a media advisor. During Turki bin Faisal's
ambassadorship in Washington, Khashoggi assumed the position of head of press relations,
coming into direct contact with major national and international organs of US media.
During the Obama administration, Khashoggi supported the Obama administrations strategy of
color revolutions and the Arab Spring to extend US imperialist domination following the
disasters of Iraq and Afghanistan. He was most likely a CIA asset, perhaps also Saudi
intelligence as well
When MBS became the strongman holding power in Saudi Arabia, he triggered a near war with
Qatar with Trumps blessing, and was unhappy over the role of Al Jazeera, which often hosted
Khashoggi and was increasingly critical of MBS.
So whatever the story is I am not losing any sleep over Khashoggi. He is just an agent
of one Saudii faction against the MBS faction, a faction just as evil. Kind of like the
pick between agents of the 2 factions duking it out in the US. Evil does vs Evil do. There
are no white knights here.
After Lebanese prime minister, Saad Hariri, was kidnapped and taken to Riyadh to be
re-educated (tortured) Khashoggi left Saudi Arabia . Khashoggi continued with his columns
criticizing the Saudi regime, attacking its campaign in Yemen on Al Jazeera.
What hypocrisy on display by the US. Unfuckingbelievable. Such concern for a journalist, such
outrage!
There is currently a case working its way through the court system (here in the US)
brought by two journalists, one of them an American, where they are pleading to have their
names removed from the US "kill list". They say their inclusion on the list is erroneous, and
ask that they be given a chance to show that they are not, in fact, terrorists before a drone
blows them into pieces. They are represented by Reprieve lawyers, and they joined their two
suits together as co-plainiffs, although it now appears that the foreign-born journalist was
basically told by the judge he was shit out of luck, having "no standing", since he didn't
sufficiently prove that he was on the list. (He had found his name listed as a "highest
scoring target" on some of Edward Snowden's leaked NSA materials, but that was not enough
"proof" for the judge.)
The American journalist is Bilal Kareem, and the other is a journalist from Pakistan named
Ahmad Zaidan. BTW, both these men were originally targeted under the Obama administration,
but their names remain on the list under Trump. And Trump has increased the use of these
targeted drone killings by 4 to 5 times the number of Obama's, who himself had increased the
assassination program 10 fold over Bush' numbers. Trump has also loosened the "rules" about
where these drone killings can take place, and who can be targeted. US drone warfare has
taken the lives of some 10,858 individuals since 2004, according to the Bureau of
Investigative Journalism (TBIJ).
The Washington Post and the Middle East Monitor both have good stories about the case, but
the best article by far is Matt Taibbi's article in Rolling Stone published on 19 July.
According to
NYT , Khashoggi "had expressed concern to a friend on Monday that he could be
kidnapped and returned to Saudi Arabia if he visited the consulate". He went in at
1:30pm , while his friend and fiancée were waiting outside till 9:00pm .
Isn't it a bit odd that his friend and fiancée, while fully aware the danger of him
being kidnapped insider the consulate, waited for 7:30 hours before alerting Turkish
authorities? Normally it takes 2 or 3 hours get a document, esp. already processed ones.
Why didn't his friend and fiancée alert the Turkish police earlier? Esp. "he
left his cellphone outside with Hatice, who had instructions to alert his friends if Mr.
Khashoggi did not return".
Mr. Khashoggi's wife had remained in Saudi Arabia while he was no longer able to return
freely. Their separation had led to a divorce, and he wanted to remarry to a Turkish woman.
Normally, you don't divorce your wife/husband because of one-year's separation. According
to this NYT article, Khashogg divided his time between the Washington, D.C., London and
Istanbul, how long did he come to know his fiancée? Isn't it a bit too
rush/risky for a 59-year old man suddenly decided to divorce long-year wife and marry a new
Turkish girl friend? Could it be a honey trap?
" Odd dates ?"
- Oct. 2, Khashoggi disappeared.
- Oct. 3, Trump told his supporters that Saudi could last two weeks without American
support.
- Oct. 6, MbS said Suadi could survive 2000 years without US help .
- Now full-blown MSM storm, State Deparment is closely monitor the whole affair, Turkish
government is feeding the media with all sorts of lurid details and claims. (Isn't it much
easier and simpler just to kidnap/shot him on the streets of Istanbul or London than
dismembering his body inside Istanbul consulate?)
Now Saudi is "willing to cooperate" with Turkey, American priest Brauson is set free, plus
MbS now has probably to purchase tens of billions, if not hundreds of billions of US
armaments. What a "coincident" win-win situation for Erdy and Trump.
As another poster commented, something is missing...
It is like a well choreograhped drame, Skripals were the same, this also is tooooo nice
fitting together... Hmfr!
Qui bono? Who makes money on this? I certainly cannot answer that, but lets play safe : The
Russians did it!
They beamed up Kasshoggi to their base on the dark side of the moon, the re killed him in
civilized manner, fucking him to death with nice looking whores and spoonfeeding him Beluga
caviar and interjected wit sips of Russian Starka. He was then made to mush and beamed back
into the Saudi consulate making a real mess. Now poor headchop promoter is all over the
place! He must love that up in his muslum heaven with 72 old hags. There is no martyrdom in
being beamed to the moon and put through a garden shredder, that is nothing special.
So now the Saudi's has Khassoggi al over their faces (literally :)) and the Turks eye a new
way to betray someone (Putin, wake up!!). Ever since democracy was bestowed on these people,
they have made a mess of it.
Back in the day (when I was gung ho Army boy), it was OK for a Turk officer to shoot dead a
couple of conscripts a year, no problemo, the sentries with weapons had no live rounds hi-hi.
Turkey does not need a hard shove and it will crumble, and the Americans will intervene,
unless Russia is first.
This game is about Turkey, and not goat herders in Saudi Sodoma. They have hardly oil left
and the plebs are angry.
Ukraine Naftogaz Commercial Director Yuriy Vitrenko, in an interview with "The Fifth
Channel" has spoken of a plan that has been prepared in order to protect Naftogaz interests
in the event of the launch of "Nord Stream-2".
According to him, if the gas pipeline project is indeed implemented, then Kiev will demand
that a penalty against against Russia be awarded the Ukraine for the loss it will suffer
because of the redundancy of its gas transport system.
The loss incured has been estimated by the Ukraine to be $12 billion. A lawsuit has
already been filed by Naftogaz for international arbitration.
So for several years I have been shopping at a Pyatyorochka supermarket around the corner
from our house. Now there's a new Billa supermarket around the other corner. It has a wider
range of goods and is very competitive as regards its Pyatorocka prices, so I now do most of
my shopping at Billa.
Does this mean Pyatyorachka can sue me for damages because of the loss of income it is
suffering because of my choice to use another retail outlet?
I shall check with the Swedish court of arbitration.
Perhaps they would get further by suing the US Department of State. I'm pretty sure that if
it were not for them, Ukraine's gas transit system would still be in use. Ukraine could at
least make a sensible case, which they cannot do against Russia. Mind you, a UK judge would
probably rule in their favour, because simply wanting to get at Russia seems to be good
enough these days – making a sensible case is not required.
In another stellar example of simply making up an optimistic headline that makes readers feel
good – those readers who only read headlines, for example – a French analyst is
apparently willing to go out on a limb and say that Nord Stream II 'won't be built as
planned'. That's already a little hedgy, but if you read the article itself, he doesn't say
anything remotely like that. In fact, he says Russian gas is the cheapest option, and most
American LNG cargoes thus far to Europe are promptly sold on to someplace else where the
Europeans can get more for it.
The major issue is that US LNG may come if we have higher prices. But why would we need
them? They are quite high already. If China is prepared to overbid us, we don't need the
American gas. We can ask for more Russian gas
Russia's Energy Minister sees the potential to double Russian gas exports by 2035. Russia's
gas exports are growing by 6-7%/yr while global gas demand growth is at 2.6%/yr until 2035.
Probably not the greatest news for the environment, as most analysts agree we need to
start immediately moving away from a petroleum-based energy policy. But getting rid of all
use of coal would be a good start for the present; gas is relatively clean, although I don't
know if that makes any real difference to greenhouse-gas emissions.
Why does the dollar continue to possess a hegemonic status a decade after the crisis that
seemed to signal an end to U.S.-U.K. dominated finance? Gillian Tett of the
Financial Times offers several reasons. The first is the global reach of U.S.
based banks. U.S. banks are seen as stable, particularly when compared to European banks. Any
listing
of the largest international banks will be dominated by Chinese banks, and
these institutions have expanded their international business . But the Chinese banks will
conduct business in dollars when necessary. Tett's second reason is the relative strength of
the U.S. economy, which grew at a 4.1% pace in the second quarter. The third reason is the
liquidity and credibility of U.S. financial markets, which are superior to those of any
rivals.
The U.S. benefits from its financial dominance in several ways.
Jeff Sachs of Columbia University points out that the cost of financing government deficits
is lower due to the acceptance of U.S. Treasury securities as "riskless assets." U.S. banks and
other institutions earn profits on their foreign operations. In addition, the use of our
banking network for international transactions provides the U.S. government with a powerful
foreign policy tool in the form of sanctions
that exclude foreign individuals, firms or governments from this network .
There are risks to the system with this dependence. As U.S. interest rates continue to rise,
loans that seemed reasonable before now become harder to finance. The burden of
dollar-denominated debt also increases as the dollar appreciates. These developments exacerbate
the repercussions of policy mistakes in Argentina and Turkey, but also affect other countries
as well.
The IMF in its latest Global Financial Stability (see also here )
identifies another potential destabilizing feature of the current system. The IMF reports that
the U.S. dollar balance sheets of non-U.S. banks show a reliance on short-term or wholesale
funding. This reliance leaves the banks vulnerable to a liquidity freeze. The IMF is
particularly concerned about the use of foreign exchange swaps, as swap markets can be quite
volatile. While
central banks have stablished their own network of swap lines , these have been
criticized .
The status of the dollar as the primary international currency is not welcomed by foreign
governments. The Russian government, for
example, is seeking to use other currencies for its international commerce. China and
Turkey have offered some support, but China is invested in promoting the use of its own
currency. In addition, Russia's dependence on its oil exports will keep it tied to the
dollar.
But interest in formulating a new international payments system has now spread outside of
Russia and China.
Germany's Foreign Minister Heiko Maas has called for the establishment of "U.S. independent
payment channels" that would allow European firms to continue to deal with Iran despite the
U.S. sanctions on that country.
Chinese electronic payments systems are being used in Europe and the U.S. The dollar may
not be replaced, but it may have to share its role as an international currency with other
forms of payment if foreign nations calculate that the benefits of a new system outweigh its
cost. Until now that calculation has always favored the dollar, but the reassessment of
globalization initiated by the Trump administration may have lead to unexpected
consequences.
The debate about peak oil demand always tends to focus on how quickly electric vehicles will
replace the internal-combustion engine , especially as EV sales are accelerating. However, the
petrochemical sector will be much more difficult to dislodge , and with alternatives far
behind, petrochemicals will account for an increasing share of crude oil demand growth in the
years ahead.
You would have to wonder why Putin opened with the following remarks if you were ignorant of
the global situation:
"You came here to hold an open and trust based discussion on the issues of the
global energy agenda .
"We believe that progress in global energy, as well as the stable energy security of our
entire planet, can only be achieved through global partnership, working in accordance with
general rules that are the same for everyone, and, of course, through conducting transparent
and constructive dialogue among market players which is not politically motivated but is
based on pragmatic considerations and an understanding of shared responsibilities and mutual
interests." [My Emphasis]
His characterization of Skripal came during the Q&A, and there are likely more gems to
be had from that session.
Waging Illegal Aggressive War, Illegal sanctions, Violations of UNSC Resolutions, Breaking
of Contracts, and Ongoing violation of the UN Charter and US Constitution since 1945 are just
a few of the reasons why it must be called the Outlaw US Empire as no other term properly
describes it. 80 years ago, appeasement didn't work, and it's clear it doesn't work today
either. Together the world's nations must bring the Outlaw US Empire to heel and make it obey
the Rule of Law and abandon its unilateral Rule of the Gun.
Ah, there it is. The reason behind this strange week, the dots that few will connect.
Putin speaking at a conference about "sustainable energy in a changing world."
Right there, two phrases that are certain to set off Exxon corp and their puppets in the
political theater. Say "sustainable energy" around an oil giant and watch them shudder. The,
mention "changing world" to any of that class and they have nightmares about their children
having to learn Chinese. Put them all together in one title of a conference at which Putin
himself is speaking and well, now we know why the Shakespearian chorus of Exxon's oil
industry bit players like former Texas Governor Rich "the hair" Perry and former Texas
Senator Hutchinson are suddenly frothing at the bit about the Park Rangers mounting a naval
blockade of Russia (see Yogi Bear for how that's likely to turn out, hey booboo?) and nuclear
first strikes on Russia.
Putin, Sustainable Energy, Changing world .. enough to send some senior executive geezers
at Exxon grabbing for their nitro pills and speed dialing their cardiologists.
For those who like to call Russia "a gas station masquerading as a country" here is Putin's
note on ecology:
"A separate ambitious task for the future is the development of renewable energy sources,
especially in remote, difficult-to-access areas of this country, such as Eastern Siberia, and
the Far East. This is opening a great opportunity for our vast country, the world's largest
country with its diverse natural and climatic conditions.
Friends, in conclusion I would like to tell you the following: sustainable and steady
development of the energy industry is a key condition for dynamic growth of the world
economy, enhancing living standards and improving the wellbeing of all people on our
planet.
Russia is open to cooperation in the energy industry in the interests of global energy
security and for the benefit of the future generations. And we certainly rely on active
dialogue on these subjects and cooperation.
Nothing is going to save us from our energy problems, nothing and especially not renewables.
Spend some time reading and studying Gail Tverberg's material and one will quickly see we
are heading for a financial catastrophe because of affordability issues. On the one hand
there isn't enough money to pay for extraction of oil and gas and on the other the consumer
is strapped because of high pump prices etc. But like she herself says if only the wages of
non elite workers could rise high enough to help pay for the increased costs then likely we
wouldn't have a problem. That though is clearly not happening.
I am deeply afraid we are going to wake up to a world very different from the one we went
to sleep in. Just this one article alone expresses the grave situation the world is in:
Every time Chuck Paar makes the over 500-mile round trip from his home in Mt. Jewett,
Pennsylvania, to Buffalo and Syracuse, New York, his 18-wheel tractor trailer carries 25 tons
of sand or cement and burns about $265 of diesel in one day. That's up from as little as $166
for the same route two years ago, and the increased cost of fuel is squeezing already thin
industry profit margins.
Our commenter psychohistorian and others interested in public banking, and the
concept of money as a public utility rather than a private (and profit-gouging) instrument,
may want to watch the latest Keiser Report, which has an interview with Ellen Brown.
Brown relates that the city of Los Angeles has on its ballot for the November elections a
measure to create a city-owned bank. This was put on the ballot by the city council itself,
prompted by a groundswell of support coming from constituents.
The rapid-fire interview doesn't go deeply into the politics behind this citizen
initiative, but it seems like a happy story of young millennials looking for an alternative
to Wall Street banks, and learning from Brown and others about the strong value of the public
bank.
An interesting turn of events. The interview starts in the second half of the show at
14:40:
Ryan Chilcote : Let's return to energy, or at least more directly to energy,
President Putin, and talk about Nord Stream 2. That's the pipeline that Gazprom wants to build
between Russia and Germany. Again, the President of the United States has said his opinion
about this. He says that Germany is effectively a hostage already of Russia, because it depends
on Russia for so much of its energy and gas supplies, and that it's vulnerable to "extortion
and intimidation" from Russia. What do you make of that?
Vladimir Putin : My response is very simple. Donald and I talked about this very
briefly in Helsinki. In any sale, including the sale of our gas to Europe, we are traditionally
the supplier, of pipeline gas I mean. We have been doing this since the 1960s. We are known for
doing it in a highly responsible and professional manner, and at competitive prices for the
European market. In general, if you look at the characteristics of the entire gas market, the
price depends on the quantity and on sales volumes. The distance between Russia and Europe is
such that pipeline gas is optimal. And the price will always be competitive, always. This is
something all experts understand.
We have a lot of people here in this room, in the first row, who could easily be seated next
to me, and I would gladly listen to them, because each one is an expert, so each of them can
tell you that. And so Nord Stream 2 is a purely commercial project, I want to emphasise this,
warranted by rising energy consumption, including in Europe, and falling domestic production in
European countries. They have to get it from somewhere.
Russian gas accounts for around 34 percent of the European market. Is this a lot or a
little? It is not insubstantial, but not a monopoly either. Europe certainly can and does
actually buy gas from other suppliers, but American liquefied gas is about 30 percent more
expensive than our pipeline gas on the European market. If you were buying products of the same
quality and you were offered the same product for 30 percent more , what would you choose? So,
what are we talking about?
If Europe starts buying American gas for 30 percent more than ours, the entire economy of
Germany, in this case, would quickly become dramatically less competitive. Everyone understands
this; it is an obvious fact.
But business is business, and we are ready to work with all partners. As you know, our
German partners have already begun offshore construction. We are ready to begin as well. We
have no problems with obtaining any permits. Finland agreed, and so did Sweden, Germany, and
the Russian Federation. This is quite enough for us. The project will be implemented.
< >
Ryan Chilcote : President Putin, did you want to jump in here?
Vladimir Putin:(following up on the remarks by CEO of Royal Dutch Shell Ben van
Beurden) We understand the realities and treat all our partners with respect. We have very
good, amiable long-term relations with all our partners, including the company represented by
my neighbour on the left. This company is working in the Russian market and working with great
success, but we understand everything very well and understand the realities. We are carrying
out the project ourselves. We do not and will not have any problems here. That is to say, they
may arise, of course, but we will resolve them.
Some things are beyond the realm of political intrigue. Take supplies to the Federal
Republic of Germany. Not everyone knows that the decision was made there to shut down the
nuclear power industry. But that is 34 percent of its total energy balance. We are proud of the
development of the nuclear power industry in the Russian Federation, although the figure for us
is just 16 percent. We are still thinking about how to raise it to 25 percent and are making
plans. Theirs is 34 percent and everything will be closed down. What will this vacuum be filled
with? What?
Look at LNG [liquefied natural gas ] which is sold by our various competitors and partners.
Yes, LNG can and should be in the common basket of Europe and Germany. Do you know how many
ports built in Europe are used for LNG transfer? Just 25 percent. Why? Because it is
unprofitable.
There are companies and regions for which it is profitable to supply LNG and this is being
done. The LNG market is growing very fast. But as for Europe, it is not very profitable, or
unprofitable altogether.
Therefore, in one way or another we have already seen Nord Stream 1 through and its
performance is excellent. Incidentally, our gas supplies to Europe are continuously growing.
Last year, I believe, they amounted to 194 billion cubic metres and this year they will add up
to 200 billion cubic metres or maybe even more.
We have loaded practically all our infrastructure facilities: Blue Stream to Turkey, Nord
Stream 1 is fully loaded. Yamal-Europe is fully loaded – it is almost approaching 100
percent, while the demand is going up. Life itself dictates that we carry out such
projects.
Ryan Chilcote : President Trump's position on American LNG exports is perhaps a
little bit more nuanced. His point is that instead of buying Russian gas, even perhaps if it's
a bit more expensive, the Germans and other European allies of the United States, because the
United States is paying for their defence, should be buying American gas even if there is, I
guess the argument suggests, a little bit of a higher price for that
Vladimir Putin : You know, this argument doesn't really work, in my opinion. I
understand Donald. He is fighting for the interests of his country and his business. He is
doing the right thing and I would do the same in his place.
As for LNG, as I have already said, it is not just a little more expensive in the European
market but 30 percent more. This is not a little bit more, it is a lot more, beyond all reason,
and is basically unworkable.
But there are markets where LNG will be adopted, where it is efficient, for instance in the
Asia-Pacific region. By the way, where did the first shipment of LNG from our new company
Yamal-LNG go? Where did the first tanker go? To the United States, because it was profitable.
The United States fought this project but ended up buying the first tanker. It was profitable
to buy it in this market, at this place and time, and it was purchased.
LNG is still being shipped to the American continent. It's profitable.
It makes no sense to fight against what life brings. We simply need to look for common
approaches in order to create favourable market conditions, including, for example, conditions
conducive to the production and consumption of LNG in the United States itself and securing the
best prices for producers and consumers. This could be achieved by coordinating policy, rather
than just imposing decisions on partners.
As for the argument, "We defend you, so buy this from us even if it makes you worse off", I
don't think it is very convincing either. Where does it lead? It has led to the Europeans
starting to talk about the need to have a more independent defence capability, as well as the
need to create a defence alliance of their own that allegedly will not undermine NATO while
allowing the Europeans to pursue a real defence policy. This is what, in my view, such steps
are leading to.
This is why I am sure that a great many things will be revised. Life will see to that.
"... "Nobody wants to get caught short, full in the knowledge that more Iranian barrels are poised to be removed from the market, ..."
"... "Against this backdrop of dwindling Iranian oil supplies, the focus will turn to meek levels of global, or more accurately, Saudi spare capacity, ..."
"... "this essentially leaves the world's only swing producer powerless to prevent a supply shock and subsequent price spike in the final quarter of this year," ..."
Crude prices will likely reach $100 per barrel for the first time since 2014, and OPEC has
no leverage to prevent such a scenario, an analyst has warned. "Nobody wants to get caught
short, full in the knowledge that more Iranian barrels are poised to be removed from the
market, " Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note
published on Monday, as quoted by CNBC. Read more Russia's September
oil production set for post-Soviet record high
On Monday, Brent crude surged above $83 per barrel as Iran continues losing its crude
exports ahead of US sanctions which come into force in November. "Against this backdrop of
dwindling Iranian oil supplies, the focus will turn to meek levels of global, or more
accurately, Saudi spare capacity, " Brennock said.
Saudi Arabia has been unable to offset the lost Iranian crude exports. And "this
essentially leaves the world's only swing producer powerless to prevent a supply shock and
subsequent price spike in the final quarter of this year," he added.
Iran could lose up to 1.5 million barrels per day when US sanctions kick in early November.
In May, Iran sold 2.71 million bpd abroad, nearly three percent of daily global oil
consumption.
The US is rapidly increasing its production. In September, it hit a record 11.1 million bpd,
according to data from the Energy Information Administration (EIA). That is an increase of
almost a third since 2016. However, the increase in US production is not enough to offset the
loss of Iranian output.
Ryan Chilcote: President Putin, let's get back to geopolitics. When you were talking
about oil – and when everyone talks about oil and disruptions on the market, they don't
just talk about Iran, they talk about Venezuela – you mentioned Venezuela at the
beginning of our conversation. Last year, I interviewed President Maduro, the President of
Venezuela, here. Venezuela is an ally of Russia. Russia has a lot of oil interests in
Venezuela. Oil production in Venezuela is not going well, and politically, things are going
very poorly, as you know. Millions of people are leaving the country. There's hunger. There is
a lot of talk in the United States, and not only in the United States, in Central and South
America, that perhaps it's time for President Maduro to go. Do you agree with that?
Vladimir Putin: This is up to the people of Venezuela, not anyone else in the
world.
As for various means of influencing the situation in Venezuela, there should be no such
thing All of us influence each other in one way or another, but it should not be done in a way
that makes the civilian population even worse off. This is a matter of principle.
Should we rejoice that life is extremely difficult for people there and want to make things
even worse with a view to overthrowing President Maduro? He was recently targeted in a
terrorist attack, an assassination attempt. Shall we condone such methods of political
resistance too?
I think this is absolutely unacceptable. This and anything like it. The people of the
country should be given a chance to shape their destiny themselves. Nothing should be imposed
from the outside.
This is what has emerged historically in Venezuela. What has emerged historically in the
Persian Gulf has emerged there, and the same in Europe, America and Southeast Asia. Nobody
should go in there like a bull in a china shop without understanding what is taking place
there, instead thinking only that the bull is one of the largest and smartest animals. It is
necessary to take a look and give people a chance to figure it out. I have a very simple
outlook on this.
Indeed, we have now met with the Secretary General and spoke
about our cooperation in detail. I would like to draw your attention to the fact that probably for the first time
in history all participants in the agreements honoured their commitments in full. I believe Russia made a commitment
to reduce production by 30,000 barrels, and we did this, just like all other participants in this agreement.
The market is now balanced. The current growth of oil prices
is by and large not a result of our efforts but triggered by attendant circumstances, expectations of decisions
on Iran – incidentally these decisions are absolutely illegal and harmful to the world economy. The fall in oil
production in North Africa is also linked with political circumstances – a civil war and so on. The reduction
in Venezuela is also taking place for domestic political reasons and in connection with the restrictions it has
introduced. This is what it is all about.
As you said, President Trump considers this price high.
I think he is right to some extent but this suits us very well – $65–$70–$75 per barrel. This is quite enough to ensure
the effective performance of energy companies and the investment process. But let us be straight – such prices have
largely been produced by the activities of the US administration. I am referring to expectations of sanctions against
Iran and political problems in Venezuela. Look what is happening in Libya – the state is destroyed. This is the result
of irresponsible policy that is directly affecting the world economy. Therefore, we must work closer with each other,
not only in the energy industry but also in the political area so as to prevent such setbacks.
As for increasing production – we have already increased it
by 400,000 barrels as we agreed with our partners. We can raise it by another 200,000–300,000 barrels per day if need
be.
Ryan Chilcote
: President Putin, is it right
for the President of the United States to be so actively trying to manage the price of oil? We're coming up on elections
in the United States, he's concerned about the price of gas. A gallon of gas in the United States costs almost $3.
Traditionally, voters punish the party in power when prices rise ahead of elections. Is he doing the right thing,
or actually should he step out of the oil market and let the market dictate what happens?
Vladimir Putin
: I have already said this and want to repeat
it again: we had a very good meeting with the President of the United States in Helsinki. But if we had talked about
the issue we are discussing now, I would have told him: Donald, if you want to find out who is guilty for the increase
in prices, you should look in the mirror. That's the truth.
We have just spoken about the geopolitical factors behind
the price hikes. They exist and really play a role in the market. It is better not to interfere in these market
processes, not to try and get some competitive advantage by using political instruments and not to try to regulate
prices as the Soviet Union did. This does not end well. After all, when talking about our negotiated actions with OPEC
we do not use non-market instruments. We are merely matching supply and demand in the market, no more than that.
Everything else today has to do with geopolitical factors that influence prices.
As for gas prices, they are calculated on the basis of oil
prices. Oil prices are produced by the market whereas gas prices are linked to oil prices. Gas prices fluctuate
depending on oil prices with a small time lag of five to six months. That is all.
What is happening in the United States? The United States is
one of the world's biggest producers of both oil and gas. We know everything about new technology that is being
countered by environmentalists. I agree with them, this production is often carried out using barbarous methods we do
not use.
Who is trying to exert pressure on the administration? I do
not know. Let us talk about the energy industry. Please do not involve me in domestic political processes and squabbles
in the United States. It is for you to figure out or else we will be accused again of meddling in the domestic political
life of the US.
Ryan Chilcote:
When I spoke about the price
of gasoline in the United States, a gallon of gasoline, I meant the price of petrol, of "benzin," not "gaz."
Vladimir Putin
: As you understand, this is the price
of the end product and this applies to oil products. This price is not simply formed from the primary price of oil
or gas if we are talking about gas fuel. State policy also exerts an influence on the final price for consumers.
And what about taxes? Why do some European countries double
prices on our gas before it reaches the final consumers? This is all state policy.
So it would be best not to point your finger at energy
producers all the time. You should figure out what economic policy is being pursued in a country and what is being done
to make sure the product reaches the customers at affordable prices. That is all.
Ryan Chilcote
: President Putin, let me ask you about this
EU initiative. What do you make of it?
Vladimir Putin
:
(commenting on the EU initiative
to protect European companies in connection with US sanctions against Iran)
It is a bit delayed but better late than
never. It is delayed because quite recently the President of France speaking, I believe, in New York directly announced
the need to enhance the economic sovereignty of the European Union and reduce its dependence on the United States. This
is certainly right.
And how can it be otherwise if, as I have already said,
someone is trying to gain competitive advantages in business by using political instruments? I think nobody will like
this but this is happening and we are seeing this today.
This is why Europe is thinking about some new opportunities
in connection with these circumstances, for instance about dollar-free settlements that incidentally will undermine
the dollar. In this context – I have said this many times but would like to repeat it again – I believe that our
American partners are committing a huge strategic mistake and undermining confidence in the dollar as today's only
reserve currency. They are undermining confidence in it as a universal instrument and are really biting the hand that
feeds.
This is strange, even surprising, but I think this is
a typical mistake made by any empire when people believe nothing will happen, that everything is so powerful, so strong
and stable that there will be no negative consequences. But no, they will come sooner or later. This is the first point.
And the second point, Europe wants to fulfil its
international commitments – this is how we understand our European partners – in this case, as regards Iran's nuclear
deal, and sees in it, as we do, an element of stability in global affairs, in global politics, which, in one way
or another, is reflected in the global economy, as we have already noted.
< >
Ryan Chilcote:
President Putin, I'd like to go back
to Iran for a second. One of the things that the United States would like to see Iran do is to obviously withdraw from
Syria. The US national security advisor just last week said that the United States is going to now stay in Syria as long
as Iran and its proxies are there. Russia has been very clear. Russia says that the US military's presence in Iran is
illegal. What can you do about the US being in Syria?
Vladimir Putin
: There are two options available
to remedy the situation.
The first is that the United States must obtain the mandate
of the UN Security Council to have its armed forces on the territory of another country, in this case Syria, or receive
an invitation from the legitimate Syrian government to deploy its troops there for whatever reason. International law
does not allow the presence of any country on the territory of another country for other reasons.
Ryan Chilcote:
What can Russia do to change the US'
position? The US says it's going to stay, that Iran has to leave, and the US will stay until Iran pulls out of Syria. So
what can Russia do?
Vladimir Putin
: As we are all well aware, in this
particular case the United States (just read the UN Charter to see that my point is correct, and this is not news
to anyone) is violating the UN Charter and international law by its presence on the territory of another country without
the authorisation of the UN Security Council, without a corresponding resolution and without the invitation
of the government of that country. There is nothing good about it.
We have been operating on the premise that we nonetheless
cooperate with our US partners in fighting terrorism and ISIS in Syria. But as ISIS gradually ceases to exist in Syria,
there is just no other rationale, even outside the framework of international law.
What, in my opinion, can be done and what should we all
strive to achieve? We must strive to ensure that there are no foreign troops from other countries in Syria at all. This
is what we need to achieve.
Ryan Chilcote
: Including Russian forces, of course.
Vladimir Putin
: Yes, including Russian, if the Syrian
government so decides.
Ryan Chilcote
: You just struck a deal with President
Erdogan on Syria. Do you think that that's going to hold?
Vladimir Putin
: How is that related to oil?
Russian
Energy Week International Forum.
Ryan Chilcote
: It's in a very sensitive geopolitical
area.
Vladimir Putin
: Maybe it is related, since Syria also
produces energy resources and influences the market situation one way or another.
In this sense, yes, we need a stable Syria, no question about
it. I am not even talking about other aspects related to international security and fighting terrorism.
This is a very good deal (between Russia and Turkey in this
particular case), because it prevented more bloodshed. As you may recall, it includes our agreement to create
a demilitarised zone 15–20 kilometres deep, a de-escalation zone near the city of Idlib, known as the Idlib zone.
I would like to note that along with our Turkish partners we are now working to implement these agreements. We can see
it and are grateful to them for their efforts, and we will continue to work with them on this matter with the support
of Iran.
Ryan Chilcote
: Let's return to energy, or at least
more directly to energy, President Putin, and talk about Nord Stream 2. That's the pipeline that Gazprom wants to build
between Russia and Germany. Again, the President of the United States has said his opinion about this. He says that
Germany is effectively a hostage already of Russia, because it depends on Russia for so much of its energy and gas
supplies, and that it's vulnerable to "extortion and intimidation" from Russia. What do you make of that?
Vladimir Putin
: My response is very simple. Donald
and I talked about this very briefly in Helsinki. In any sale, including the sale of our gas to Europe, we are
traditionally the supplier, of pipeline gas I mean. We have been doing this since the 1960s. We are known for doing it
in a highly responsible and professional manner, and at competitive prices for the European market. In general, if you
look at the characteristics of the entire gas market, the price depends on the quantity and on sales volumes.
The distance between Russia and Europe is such that pipeline gas is optimal. And the price will always be competitive,
always. This is something all experts understand.
We have a lot of people here in this room, in the first row,
who could easily be seated next to me, and I would gladly listen to them, because each one is an expert, so each of them
can tell you that. And so Nord Stream 2 is a purely commercial project, I want to emphasise this, warranted by rising
energy consumption, including in Europe, and falling domestic production in European countries. They have to get it from
somewhere.
Russian gas accounts for around 34 percent of the European
market. Is this a lot or a little? It is not insubstantial, but not a monopoly either. Europe certainly can and does
actually buy gas from other suppliers, but American liquefied gas is about 30 percent more expensive than our pipeline
gas on the European market. If you were buying products of the same quality and you were offered the same product for 30
percent more , what would you choose? So, what are we talking about?
If Europe starts buying American gas for 30 percent more than
ours, the entire economy of Germany, in this case, would quickly become dramatically less competitive. Everyone
understands this; it is an obvious fact.
But business is business, and we are ready to work with all
partners. As you know, our German partners have already begun offshore construction. We are ready to begin as well. We
have no problems with obtaining any permits. Finland agreed, and so did Sweden, Germany, and the Russian Federation.
This is quite enough for us. The project will be implemented.
< >
Ryan Chilcote
: President Putin, did you want to jump
in here?
Vladimir Putin:
(following up on the remarks by CEO
of Royal Dutch Shell Ben van Beurden)
We understand the realities and treat all our partners with respect. We have
very good, amiable long-term relations with all our partners, including the company represented by my neighbour
on the left. This company is working in the Russian market and working with great success, but we understand everything
very well and understand the realities. We are carrying out the project ourselves. We do not and will not have any
problems here. That is to say, they may arise, of course, but we will resolve them.
Some things are beyond the realm of political intrigue. Take
supplies to the Federal Republic of Germany. Not everyone knows that the decision was made there to shut down
the nuclear power industry. But that is 34 percent of its total energy balance. We are proud of the development
of the nuclear power industry in the Russian Federation, although the figure for us is just 16 percent. We are still
thinking about how to raise it to 25 percent and are making plans. Theirs is 34 percent and everything will be closed
down. What will this vacuum be filled with? What?
Look at LNG [liquefied natural gas ] which is sold by our
various competitors and partners. Yes, LNG can and should be in the common basket of Europe and Germany. Do you know how
many ports built in Europe are used for LNG transfer? Just 25 percent. Why? Because it is unprofitable.
There are companies and regions for which it is profitable
to supply LNG and this is being done. The LNG market is growing very fast. But as for Europe, it is not very profitable,
or unprofitable altogether.
Therefore, in one way or another we have already seen Nord
Stream 1 through and its performance is excellent. Incidentally, our gas supplies to Europe are continuously growing.
Last year, I believe, they amounted to 194 billion cubic metres and this year they will add up to 200 billion cubic
metres or maybe even more.
We have loaded practically all our infrastructure facilities:
Blue Stream to Turkey, Nord Stream 1 is fully loaded. Yamal-Europe is fully loaded – it is almost approaching 100
percent, while the demand is going up. Life itself dictates that we carry out such projects.
Ryan Chilcote
: President Trump's position on American
LNG exports is perhaps a little bit more nuanced. His point is that instead of buying Russian gas, even perhaps if it's
a bit more expensive, the Germans and other European allies of the United States, because the United States is paying
for their defence, should be buying American gas even if there is, I guess the argument suggests, a little bit
of a higher price for that
Vladimir Putin
: You know, this argument doesn't really
work, in my opinion. I understand Donald. He is fighting for the interests of his country and his business. He is doing
the right thing and I would do the same in his place.
As for LNG, as I have already said, it is not just a little
more expensive in the European market but 30 percent more. This is not a little bit more, it is a lot more, beyond all
reason, and is basically unworkable.
But there are markets where LNG will be adopted, where it is
efficient, for instance in the Asia-Pacific region. By the way, where did the first shipment of LNG from our new company
Yamal-LNG go? Where did the first tanker go? To the United States, because it was profitable. The United States fought
this project but ended up buying the first tanker. It was profitable to buy it in this market, at this place and time,
and it was purchased.
LNG is still being shipped to the American continent. It's
profitable.
It makes no sense to fight against what life brings. We
simply need to look for common approaches in order to create favourable market conditions, including, for example,
conditions conducive to the production and consumption of LNG in the United States itself and securing the best prices
for producers and consumers. This could be achieved by coordinating policy, rather than just imposing decisions
on partners.
As for the argument, "We defend you, so buy this from us even
if it makes you worse off", I don't think it is very convincing either. Where does it lead? It has led to the Europeans
starting to talk about the need to have a more independent defence capability, as well as the need to create a defence
alliance of their own that allegedly will not undermine NATO while allowing the Europeans to pursue a real defence
policy. This is what, in my view, such steps are leading to.
This is why I am sure that a great many things will be
revised. Life will see to that.
< >
Ryan Chilcote:
President Putin, let's get back
to geopolitics. When you were talking about oil – and when everyone talks about oil and disruptions on the market, they
don't just talk about Iran, they talk about Venezuela – you mentioned Venezuela at the beginning of our conversation.
Last year, I interviewed President Maduro, the President of Venezuela, here. Venezuela is an ally of Russia. Russia has
a lot of oil interests in Venezuela. Oil production in Venezuela is not going well, and politically, things are going
very poorly, as you know. Millions of people are leaving the country. There's hunger. There is a lot of talk
in the United States, and not only in the United States, in Central and South America, that perhaps it's time
for President Maduro to go. Do you agree with that?
Vladimir Putin:
This is up to the people of Venezuela,
not anyone else in the world.
As for various means of influencing the situation
in Venezuela, there should be no such thing All of us influence each other in one way or another, but it should not be
done in a way that makes the civilian population even worse off. This is a matter of principle.
Should we rejoice that life is extremely difficult for people
there and want to make things even worse with a view to overthrowing President Maduro? He was recently targeted
in a terrorist attack, an assassination attempt. Shall we condone such methods of political resistance too?
I think this is absolutely unacceptable. This and anything
like it. The people of the country should be given a chance to shape their destiny themselves. Nothing should be imposed
from the outside.
This is what has emerged historically in Venezuela. What has
emerged historically in the Persian Gulf has emerged there, and the same in Europe, America and Southeast Asia. Nobody
should go in there like a bull in a china shop without understanding what is taking place there, instead thinking only
that the bull is one of the largest and smartest animals. It is necessary to take a look and give people a chance
to figure it out. I have a very simple outlook on this.
I would like to return to the previous question. After all,
we are dealing with energy. I would like to confirm what my colleagues said here about Russia's energy resources
and potential. They are indeed enormous. Truly enormous. We are in first place in gas reserves. I believe we have 73.3
trillion cubic metres of gas. The Yamal peninsula was mentioned here but NOVATEK will carry out one more project, Arctic
2, on a neighbouring peninsula. It is about the same size and with the same investment. The first tranche in this
project is $27 billion, and the second tranche is about $25 billion. I believe all this will be carried out.
We have the world's largest coal reserves – 275 billion
tonnes. We are third in oil reserves. Third in the world in oil reserves. We are the world's largest country
by territory. If we take a deeper look we are bound to find many other things. So, we are indeed lucky.
But we were given this not by the Lord alone. Past
generations of ours developed these lands. We should never forget what was done by our predecessors, and we will
continue to build on it. We will work with our partners. Incidentally, almost all major energy companies work in Russia.
Ryan Chilcote:
When we were talking about the EU
initiative to try and allow trade between EU countries and Iran, I couldn't help but remember that Russia itself, faced
with sanctions, is thinking about a plan to wean itself off of the dollar. This is something that many countries have
tried and failed. Why does Russia think that it can succeed in this?
Vladimir Putin
: You used the past tense or is
the translation inaccurate? Faced. Have the sanctions been lifted? Did I miss something?
Ryan Chilcote:
Russia is facing with sanctions.
Vladimir Putin:
Okay then. You know, sometimes I think
that it would be good for us if those who want to impose sanctions would go ahead and impose all the sanctions they can
think of as soon as possible. (
Applause.
) This would free our hands to defend our national interests however we
deem most effective for us.
It is very harmful, in general. It hurts the ones doing it.
We all figured this out long ago. That is why we have never supported and will never support illegal sanctions that
circumvent the United Nations.
Ryan Chilcote:
Since you brought up the subject
of sanctions, as you know after the Skripal poisoning, Russia is facing even more of them, perhaps as soon as November.
What is Russia prepared to do to change the trajectory of relations with the United States and the West?
Vladimir Putin
: We are not the ones introducing
these sanctions against the United States or the West. We are just responding to their actions, and we do this in very
restrained, careful steps so as not to cause harm, primarily to ourselves. And we will continue to do so.
As regards the Skripals and all that, this latest spy
scandal is being artificially inflated. I have seen some media outlets and your colleagues push the idea that Skripal is
almost a human rights activist. But he is just a spy, a traitor to the motherland. There is such a term, a 'traitor
to the motherland,' and that's what he is.
Imagine you are a citizen of a country, and suddenly
somebody comes along who betrays your country. How would you, or anybody present here, a representative of any country,
feel about such a person? He is scum, that's all. But a whole information campaign has been deployed around it.
I think it will come to an end, I hope it will,
and the sooner the better. We have repeatedly told our colleagues to show us the documents. We will see what can be done
and conduct an investigation.
We probably have an agreement with the UK on assistance
in criminal cases that outlines the procedure. Well, submit the documents to the Prosecutor General's Office
as required. We will see what actually happened there.
The fuss between security services did not start yesterday.
As you know, espionage, just like prostitution, is one of the most 'important' jobs in the world. So what? Nobody shut
it down and nobody can shut it down yet.
Ryan Chilcote
: Espionage aside, I think there are
two other issues. One is the use of chemical weapons, and let's not forget that in addition to the Skripal family being
affected in that attack, there was also a homeless person who was killed when they came in contact with the nerve agent
Novichok.
Vladimir Putin:
Listen, since we are talking about
poisoning Skripal, are you saying that we also poisoned a homeless person there? Sometimes I look at what is happening
around this case and it amazes me. Some guys came to England and started poisoning homeless people. Such nonsense. What
is this all about? Are they working for cleaning services? Nobody wanted to poison This Skripal is a traitor,
as I said. He was caught and punished. He spent a total of five years in prison. We released him. That's it. He left. He
continued to cooperate with and consult some security services. So what? What are we talking about right now? Oil, gas
or espionage? What is your question?
Let's move on to the other oldest profession and discuss
the latest developments in that business.
(Laughter.)
Ryan Chilcote
: A lot of what we've discussed today
goes back to Russia's relationship with the United States, and so I'll ask you just a couple of questions about that
and we can move on. The US says you personally ordered the 2016 interference in the elections – I know you deny that.
You have said you wanted Trump elected. What do you want to see in 2018 from these midterm election
Vladimir Putin:
In Russia or the United States? What
are you asking me about?
Ryan Chilcote
: What would you like to see happen
in the 2018 midterm elections in the United States.
Vladimir Putin:
What I want – and I am completely
serious – is that this nightmare about Russia's alleged interference with some election campaign in the United States
ends. I want the United States, the American elite, the US elite to calm down and clear up their own mess and restore
a certain balance of common sense and national interests, just like in the oil market. I want the domestic political
squabbles in the United States to stop ruining Russia-US relations and adversely affecting the situation in the world.
Ryan Chilcote:
I'll ask this final question
on the political front. In Helsinki, you said that you wanted President Trump to win because he favours better relations
with Russia. But in fact, as Russia itself says all of the time, relations between Russia and the United States seem
to get worse every day. Wouldn't it be better for Russia to have a president in the United States that is not
politically compromised by the widely held perception that this country helped him get into the White House?
Vladimir Putin
: Firstly, I do not believe President
Trump was compromised. The people elected him, the people voted for him. There are those who do not like this; those who
do not want to respect the opinion of the American voters. But this is not our business – this is an internal matter
of the United States.
Would we be better off or worse? I cannot say either. As is
known, there are no ifs in politics. Maybe it would have been even worse, how are we to know? We must derive from what
is
, and work with that. Good or bad, there is no other President of the United States; there is no other United
States either.
We will work. The US is the largest world power, a leader
in many spheres, our natural partner in a variety of projects, including global security, the non-proliferation
of weapons of mass destruction, terrorism, climate change, as well as the environment. We have a lot of common problems
which overlap that we have to work on together.
We presume that sooner or later the moment will come when
we will be able to restore full-fledged relations.
< >
Ryan Chilcote
: President Putin, I know you need
to get a meeting with the Austrian Chancellor, so I'm going to wrap this session up with you, sir. The title of our
conversation today is Sustainable Energy for a Changing World. You've been driving Russian energy policy for nearly 20
years now. What changes in the world, or what change in the world, would you identify as the biggest concern for you,
and what gives you the most optimism when it comes to what we're seeing.
Vladimir Putin:
If you allow me, I would stick
to the subject. The questions that you asked concern me as well.
Indeed, we are apparently witnessing global warming, but
the reasons for this are not entirely clear, because there is still no answer. The so-called anthropogenic emissions are
most likely not the main cause of this warming. It could be caused by global changes, cosmic changes, some changes
in the galaxy that are invisible to us – and that's that, we don't even understand what is actually happening. Probably,
anthropogenic emissions influence the situation somehow, but many experts believe they have an insignificant effect.
This is my first point.
Secondly, I already said this, and I can remind you once
again. Everyone blames the United States now. As you see, we have many problems and unresolved matters with the United
States, and the US President and I approach many international affairs differently and evaluate our bilateral relations
differently. But we still have to be objective. There was a time I saw President Bush refuse to sign the Kyoto
agreements. But we still found a solution. I think the same will happen in this case. Well, Trump believes that
the Paris Agreement is unprofitable for his country for a variety of reasons. I will not go into details now, he must
have talked about this many times, and we know his position.
But I think, we should not antagonise the relationship with
the US, because without them it would be impossible to reduce the influence of anthropogenic air pollution on the global
climate even a little bit. Therefore, one way or another we need to involve the US in this discussion and this joint
work. As I understand, President Trump does not object. He says that he dislikes some provisions of the Paris agreement,
but he is not opposed to working with the global community on this matter.
Now, as regards the pollution and the future of the global
energy, in order to fight the heat, we need no less energy resources than to fight the cold. Secondly, my colleagues
were right, millions of people do not have access to energy resources, and we will never prohibit the use
of the contemporary blessings of civilization, it is just unreal. The economy and the industry will keep developing.
Of course, in Russia we also join the best international
practices, so-called energy efficient technology that has a little bit of influence on the environment, and we,
of course, will continue this.
But I also agree with our Saudi colleague. These
alternative sources are very important, but we will not be able to go without hydrocarbons in the next decades. People
will have to use them for many decades to come. We mostly speak about oil, but coal is what is used most.
We are speaking about the need to use electric cars, but
where will the electricity come from? From the socket? Okay, from the socket, but how did it get there? First we need
to burn coal to produce electricity, while gas remains the most environmentally friendly energy resource. So we need
to take a comprehensive approach to all such matters.
Ryan Chilcote
: Patrick Pouyané posed a challenge
to you. He said it would be good if Russia used less coal. Are you prepared to accept that challenge and reduce
consumption of coal here in Russia and production?
Vladimir Putin:
We have signed the relevant Paris
agreements and taken up our responsibilities. We have implemented the first stage of the Kyoto Protocol, and now
the Paris Agreement will replace it. We have taken up all necessary responsibilities and will adhere to them.
The question is not about reducing the usage of coal for domestic needs, we are not the largest emitter, the US
and Asian countries emit much more. Here, we are not the leaders. We sell a lot of coal, but also not more than anyone
else and we only help cover the demand. The question is not about us, but about modern technology that uses primary
energy resources.
Let us go back to the last question, could you please
repeat it?
Ryan Chilcote
: Well, the title of the panel is
Sustainable Energy for a Changing World. You've been driving Russia's energy policy for nearly 20 years now. What
changes, or what is the change that gives you the most hope and what do you think the biggest challenge that you see
amongst the changes is for energy?
Vladimir Putin
: Concern is caused by uncertainty.
In politics, in security, and in the economy. Volatility, in other words. This is it. And the number of uncertainties is
growing. This is what causes concern – the unpredictability of the situation.
Ryan Chilcote
: Are you talking about your colleague,
the President of the United States?
Vladimir Putin
: Not exactly. He certainly makes
a significant contribution to this unpredictability by virtue of being the President of the largest world power, but not
only him. I am talking about the situation in general.
Look at the rise of extremism – where did it come from? Why
is this problem so acute today? Why is this extremism turning into terrorism? Doesn't that concern us? This is what we
need to understand – where it all came from.
I will not go into details because we have a limited amount
of time. But this is happening in many spheres. In the economy – the same thing. This growing uncertainty in all fields
is what causes concern.
Now, what causes optimism? Common sense, I think. No matter
how hard it is, people, humankind have always found ways out of the most difficult situations, guided by the interests
of their countries, their peoples, and it is the goal of any government to ensure the well-being as well as the growth
of the welfare of its people.
I think that sooner or later, and the sooner the better,
the realisation will come that we need to get away from controversy as soon as possible, in any case, away from trying
to resolve this controversy with unacceptable tools and ways that go beyond international law. It seems to me that it is
necessary to strengthen the leading role of the United Nations, and on this foundation, move on.
Ryan Chilcote
: And on that note, please join me
in thanking and congratulating our participants in today's panel and, of course, our host today the President of Russia.
Thanks for your answer, which is what I'd presumed. The bottom line seems to be that
nothing's unhackable--no matter what, it will get hacked.
What follows is OT, but attempts to supply a reason for the propaganda pimple burst. A few
days ago the annual Russian Energy Week conference occurred where Putin gave a speech and
answered numerous questions related to energy and geopolitics. A few of the choice quotes
related to his answers were published, but the transcript portion recording the Q&A had
yet to be published in full at the Kremlin's website. The transcript's now complete regarding
those Q&As directed at and answered by Putin, and what he has to say on a wide spectrum
of issues is highly educational: No one can say they know how Putin feels about a particular
issue without having read his answers. A few days ago, I tried linking to the Kremlin's
website only to have the post eaten by TypePad's Cloud. Here's the link . Reading his answers
and comments might lead Russophobic members of Trump's Swamp to burst a propaganda pimple in
revenge for his honesty.
"... By L. Randall Wray, Professor of Economics at Bard College. Originally published at New Economic Perspectives ..."
"... Treatise on Money ..."
"... State Theory of Money ..."
"... Money and Credit in Capitalist Economies ..."
"... Understanding Modern Money ..."
"... Modern Money Theory ..."
"... Payback: Debt and the shadow side of wealth ..."
"... Reclaiming the State ..."
"... Austerity: The History of a Dangerous Idea ..."
"... permanent Zirp (zero interest rate policy) is probably a better policy since it reduces the compounding of debt and the tendency for the rentier class to take over more of the economy. ..."
"... that one of the consequences of the protracted super-low interest rate regime of the post crisis era was to create a world of hurt for savers, particularly long-term savers like pension funds, life insurers and retirees. ..."
"... income inequality ..."
"... even after paying interest ..."
"... It seems to me that the US macroeconomic policy has been operating under MMT at least since FDR (see for example Beardsley Ruml from 1945). ..."
"... After learning MMT I've occasionally thought I should get a refund for the two economics degree's I originally received. ..."
"... "Taxes or other obligations (fees, fines, tribute, tithes) drive the currency." ..."
"... "JG is a critical component of MMT. It anchors the currency and ensures that achieving full employment will enhance both price and financial stability." ..."
I was asked to give a short presentation at the MMT conference. What follows is the text
version of my remarks, some of which I had to skip over in the interests of time. Many readers
might want to skip to the bullet points near the end, which summarize what I include in
MMT.
I'd also like to quickly respond to some comments that were made at the very last session of
the conference -- having to do with "approachability" of the "original" creators of MMT. Like
Bill Mitchell, I am uncomfortable with any discussion of "rockstars" or "heroes". I find this
quite embarrassing. As Bill said, we're just doing our job. We are happy (or, more accurately
pleasantly surprised) that so many people have found our work interesting and useful. I'm happy
(even if uncomfortable) to sign books and to answer questions at such events. I don't mind
emailed questions, however please understand that I receive hundreds of emails every day, and
the vast majority of the questions I get have been answered hundreds, thousands, even tens of
thousands of times by the developers of MMT. A quick reading of my Primer or search of NEP (and
Bill's blog and Warren's blogs) will reveal answers to most questions. So please do some
homework first. I receive a lot of "questions" that are really just a thinly disguised pretense
to argue with MMT -- I don't have much patience with those. Almost every day I also receive a
2000+ word email laying out the writer's original thesis on how the economy works and asking me
to defend MMT against that alternative vision. I am not going to engage in a debate via email.
If you have an alternative, gather together a small group and work for 25 years to produce
scholarly articles, popular blogs, and media attention -- as we have done for MMT -- and then
I'll pay attention. That said, here you go: [email protected] .
As an undergraduate I studied psychology and social sciences -- but no economics, which
probably gave me an advantage when I finally did come to economics. I began my economics career
in my late 20's studying mostly Institutionalist and Marxist approaches while working for the
local government in Sacramento. However, I did carefully read Keynes's General Theory
at Sacramento State and one of my professors -- John Henry -- pushed me to go to St. Louis to
study with Hyman Minsky, the greatest Post Keynesian economist.
I wrote my dissertation in Bologna under Minsky's direction, focusing on private banking and
the rise of what we called "nonbank banks" and "off-balance sheet operations" (now called
shadow banking). While in Bologna, I met Otto Steiger -- who had an alternative to the barter
story of money that was based on his theory of property. I found it intriguing because it was
consistent with some of Keynes's Treatise on Money that I was reading at the time.
Also, I had found Knapp's State Theory of Money -- cited in both Steiger and
Keynes–so I speculated on money's origins (in spite of Minsky's warning that he didn't
want me to write Genesis ) and the role of the state in my dissertation that became a
book in 1990 -- Money and Credit in Capitalist Economies -- that helped to develop the
Post Keynesian endogenous money approach.
What was lacking in that literature was an adequate treatment of the role of the
state–which played a passive role -- supplying reserves as demanded by private bankers --
that is the Post Keynesian accommodationist or Horzontalist approach. There was no discussion
of the relation of money to fiscal policy at that time. As I continued to read about the
history of money, I became more convinced that we need to put the state at the center.
Fortunately I ran into two people that helped me to see how to do it.
First there was Warren Mosler, who I met online in the PKT discussion group; he insisted on
viewing money as a tax-driven government monopoly. Second, I met Michael Hudson at a seminar at
the Levy Institute, who provided the key to help unlock what Keynes had called his "Babylonian
Madness" period -- when he was driven crazy trying to understand early money. Hudson argued
that money was an invention of the authorities used for accounting purposes. So over the next
decade I worked with a handful of people to put the state into monetary theory.
As we all know, the mainstream wants a small government, with a central bank that follows a
rule (initially, a money growth rate but now some version of inflation targeting). The fiscal
branch of government is treated like a household that faces a budget constraint. But this
conflicts with Institutionalist theory as well as Keynes's own theory. As the great
Institutionalist Fagg Foster -- who preceded me at the University of Denver–put it:
whatever is technically feasible is financially feasible. How can we square that with the
belief that sovereign government is financially constrained? And if private banks can create
money endogenously -- without limit -- why is government constrained?
My second book, in 1998, provided a different view of sovereign spending. I also revisited
the origins of money. By this time I had discovered the two best articles ever written on the
nature of money -- by Mitchell Innes. Like Warren, Innes insisted that the dollar's value is
derived from the tax that drives it. And he argued this has always been the case. This was also
consistent with what Keynes claimed in the Treatise, where he said that money has been a state
money for the past four thousand years, at least. I called this "modern money" with intentional
irony -- and titled my 1998 book Understanding Modern Money as an inside joke. It only
applies to the past 4000 years.
Surprisingly, this work was more controversial than the earlier endogenous money research.
In my view it was a natural extension -- or more correctly, it was the prerequisite to a study
of privately created money. You need the state's money before you can have private money.
Eventually our work found acceptance outside economics -- especially in law schools, among
historians, and with anthropologists.
For the most part, our fellow economists, including the heterodox ones, attacked us as
crazy.
I benefited greatly by participating in law school seminars (in Tel Aviv, Cambridge, and
Harvard) on the legal history of money -- that is where I met Chris Desan and later Farley
Grubb, and eventually Rohan Grey. Those who knew the legal history of money had no problem in
adopting MMT view -- unlike economists.
I remember one of the Harvard seminars when a prominent Post Keynesian monetary theorist
tried to argue against the taxes drive money view. He said he never thinks about taxes when he
accepts money -- he accepts currency because he believes he can fob it off on Buffy Sue. The
audience full of legal historians broke out in an explosion of laughter -- yelling "it's the
taxes, stupid". All he could do in response was to mumble that he might have to think more
about it.
Another prominent Post Keynesian claimed we had two things wrong. First, government debt
isn't special -- debt is debt. Second, he argued we don't need double entry book-keeping -- his
model has only single entry book-keeping. Years later he agreed that private debt is more
dangerous than sovereign debt, and he's finally learned double-entry accounting. But of course
whenever you are accounting for money you have to use quadruple entry book-keeping. Maybe in
another dozen years he'll figure that out.
As a student I had read a lot of anthropology -- as most Institutionalists do. So I knew
that money could not have come out of tribal economies based on barter exchange. As you all
know, David Graeber's book insisted that anthropologists have never found any evidence of
barter-based markets. Money preceded market exchange.
Studying history also confirmed our story, but you have to carefully read between the lines.
Most historians adopt monetarism because the only economics they know is Friedman–who
claims that money causes inflation. Almost all of them also adopt a commodity money view --
gold was good money and fiat paper money causes inflation. If you ignore those biases, you can
learn a lot about the nature of money from historians.
Farley Grubb -- the foremost authority on Colonial currency -- proved that the American
colonists understood perfectly well that taxes drive money. Every Act that authorized the issue
of paper money imposed a Redemption Tax. The colonies burned all their tax revenue. Again,
history shows that this has always been true. All money must be redeemed -- that is, accepted
by its issuer in payment. As Innes said, that is the fundamental nature of credit. It is
written right there in the early acts by the American colonies. Even a gold coin is the
issuer's IOU, redeemed in payment of taxes. Once you understand that, you understand the nature
of money.
So we were winning the academic debates, across a variety of disciplines. But we had a hard
time making progress in economics or in policy circles. Bill, Warren, Mat Forstater and I used
to meet up every year or so to count the number of economists who understood what we were
talking about. It took over decade before we got up to a dozen. I can remember telling Pavlina
Tcherneva back around 2005 that I was about ready to give it up.
But in 2007, Warren, Bill and I met to discuss writing an MMT textbook. Bill and I knew the
odds were against us -- it would be for a small market, consisting mostly of our former
students. Still, we decided to go for it. Here we are -- another dozen years later -- and the
textbook is going to be published. MMT is everywhere. It was even featured in a New
Yorker crossword puzzle in August. You cannot get more mainstream than that.
We originally titled our textbook Modern Money Theory , but recently decided to
just call it Macroeconomics . There's no need to modify that with a subtitle. What we
do is Macroeconomics. There is no coherent alternative to MMT.
A couple of years ago Charles Goodhart told me: "You won. Declare victory but be magnanimous
about it." After so many years of fighting, both of those are hard to do. We won. Be nice.
Let me finish with 10 bullet points of what I include in MMT:
1. What is money: An IOU denominated in a socially sanctioned money of account. In almost
all known cases, it is the authority -- the state -- that chooses the money of account. This
comes from Knapp, Innes, Keynes, Geoff Ingham, and Minsky.
2. Taxes or other obligations (fees, fines, tribute, tithes) drive the currency. The ability
to impose such obligations is an important aspect of sovereignty; today states alone monopolize
this power. This comes from Knapp, Innes, Minsky, and Mosler.
3. Anyone can issue money; the problem is to get it accepted. Anyone can write an IOU
denominated in the recognized money of account; but acceptance can be hard to get unless you
have the state backing you up. This is Minsky.
4. The word "redemption" is used in two ways -- accepting your own IOUs in payment and
promising to convert your IOUs to something else (such as gold, foreign currency, or the
state's IOUs).
The first is fundamental and true of all IOUs. All our gold bugs mistakenly focus on the
second meaning -- which does not apply to the currencies issued by most modern nations, and
indeed does not apply to most of the currencies issued throughout history. This comes from
Innes and Knapp, and is reinforced by Hudson's and Grubb's work, as well as by Margaret
Atwood's great book: Payback: Debt and the shadow side of wealth .
5. Sovereign debt is different. There is no chance of involuntary default so long as the
state only promises to accept its currency in payment. It could voluntarily repudiate its debt,
but this is rare and has not been done by any modern sovereign nation.
6. Functional Finance: finance should be "functional" (to achieve the public purpose), not
"sound" (to achieve some arbitrary "balance" between spending and revenues). Most importantly,
monetary and fiscal policy should be formulated to achieve full employment with price
stability. This is credited to Abba Lerner, who was introduced into MMT by Mat Forstater.
In its original formulation it is too simplistic, summarized as two principles: increase
government spending (or reduce taxes) and increase the money supply if there is unemployment
(do the reverse if there is inflation). The first of these is fiscal policy and the second is
monetary policy. A steering wheel metaphor is often invoked, using policy to keep the economy
on course. A modern economy is far too complex to steer as if you were driving a car. If
unemployment exists it is not enough to say that you can just reduce the interest rate, raise
government spending, or reduce taxes. The first might even increase unemployment. The second
two could cause unacceptable inflation, increase inequality, or induce financial instability
long before they solved the unemployment problem. I agree that government can always afford to
spend more. But the spending has to be carefully targeted to achieve the desired result. I'd
credit all my Institutionalist influences for that, including Minsky.
7. For that reason, the JG is a critical component of MMT. It anchors the currency and
ensures that achieving full employment will enhance both price and financial stability. This
comes from Minsky's earliest work on the ELR, from Bill Mitchell's work on bufferstocks and
Warren Mosler's work on monopoly price setting.
8. And also for that reason, we need Minsky's analysis of financial instability. Here I
don't really mean the financial instability hypothesis. I mean his whole body of work and
especially the research line that began with his dissertation written under Schumpeter up
through his work on Money Manager Capitalism at the Levy Institute before he died.
9. The government's debt is our financial asset. This follows from the sectoral balances
approach of Wynne Godley. We have to get our macro accounting correct. Minsky always used to
tell students: go home and do the balances sheets because what you are saying is nonsense.
Fortunately, I had learned T-accounts from John Ranlett in Sacramento (who also taught
Stephanie Kelton from his own, great, money and banking textbook -- it is all there, including
the impact of budget deficits on bank reserves). Godley taught us about stock-flow consistency
and he insisted that all mainstream macroeconomics is incoherent.
10. Rejection of the typical view of the central bank as independent and potent. Monetary
policy is weak and its impact is at best uncertain -- it might even be mistaking the brake
pedal for the gas pedal. The central bank is the government's bank so can never be independent.
Its main independence is limited to setting the overnight rate target, and it is probably a
mistake to let it do even that. Permanent Zirp (zero interest rate policy) is probably a better
policy since it reduces the compounding of debt and the tendency for the rentier class to take
over more of the economy. I credit Keynes, Minsky, Hudson, Mosler, Eric Tymoigne, and Scott
Fullwiler for much of the work on this.
That is my short list of what MMT ought to include. Some of these traditions have a very
long history in economics. Some were long lost until we brought them back into discussion.
We've integrated them into a coherent approach to Macro. In my view, none of these can be
dropped if you want a macroeconomics that is applicable to the modern economy. There are many
other issues that can be (often are) included, most importantly environmental concerns and
inequality, gender and race/ethnicity. I have no problem with that.
A JG is to discontinue NAIRU or structural under-unemployment with attendant
monetarist/quasi inflation views. Something MMT has be at pains to point out wrt fighting a
nonexistent occurrence due to extended deflationary period.
Its double entry accounting counting both sides of the equation. Fed deposits money into
bank requires 4 entries, a double entry for the Fed and for the bank. Typical double entry
accounting only looks at the books of 1 entity at a time. Quadruple Entry accounting makes
the connection between the government monetary policy and private business accounting. I'm
not an accountant, I may have butchered that.
think about banks and reserves, your money is on the bank's liability side (and your
asset), while the reserves are on the bank's asset side (and gov't or fed's liability.)
i think its the reserves that quadruple it, reserves are confusing because when you move
$5 from a bank account to buy ice cream its not just one copy of the $5 that moves between
checking accounts, there is another $5 that moves "under the hood" so to speak in reserve
world
Very briefly, double entry bookkeeping keeps track of how money comes in/out, and where it
came from/went. Cash is the determining item (although there may be a few removes). Hence,
say I buy a $20 dollar manicure from you. I record my purchase as "Debit (increase) expense:
manicure $20, credit (decrease) cash, $20". Bonus! If my bookkeeping is correct, my debits
and credits are equal and if I add them up (credits are minus and debits are plus) the total
is zero – my books "balance". So, double-entry bookkeeping is also a hash-total check
on my accounting accuracy. But I digress.
On your books, the entry would be "Debit (increase) cash $20, credit (decrease)
sales, $20".
So, your double-entry book plus my double-entry books would be quadruple-entry
accounting.
#7 was my immediate stopper, too. It drives me nuts when people introduce 2-3-4 letter
acronyms with no explanation (I work for the DoD and I'm surrounded by these "code words". I
rarely know what people are talking about and when I ask, the people talking rarely know what
these TLAs – T hree L etter A cronyms – stand for either!).
Next question regarding #7: What is ELR?
Other than #7, I really appreciate this article. NC teaches and/or clarifies on a daily
basis.
This quick, entertaining read is IMHO nothing less than a "Rosetta Stone" that can bring
non-specialists to understand MMT: not just how , but why it differs from
now-conventional neoliberal economics. I hope it finds a wide readership and that its many
references to MMT's antecedents inspire serious study by the unconvinced (and I hope they
don't take Wray's invitation to skip the 10 bullet points).
This piece is a fine demonstration of why I've missed Wray as he seemed to withdraw from
public discourse for the last few years.
Thank you! The (broad) analogies with my own experience are there. I had a decidedly
"mainstream" macro education at Cambridge (UK); though many of the "old school"
professors/college Fellows who, although not MMT people as we'd currently understand (or
weren't at *that* stage – Godley lectured a module I took but this was in the early
1990s) were still around, in hindsight the "university syllabus" (i.e. what you needed to
regurgitate to pass exams) had already steered towards neoliberalism. I never really
understood why I never "got" macro and it was consistently my weakest subject.
It was later, having worked in the City of London, learned accountancy in my actuarial
training, and then most crucially starting reading blogs from people who went on to become
MMT leading lights, that I realised the problem wasn't ME, it was the subject matter. So I
had to painfully unlearn much of what I was taught and begin the difficult process of getting
my head around a profoundly different paradigm. I still hesitate to argue the MMT case to
friends, since I don't usually have to hand the "quick snappy one liners" that would torpedo
their old discredited understanding.
I'm still profoundly grateful for the "old school" Cambridge College Fellows who were
obviously being sidelined by the University and who taught me stuff like the Marxist/Lerner
critiques, British economic history, political economy of the system etc. Indeed whilst I had
"official" tutorials with a finance guy who practically came whenever Black-Scholes etc was
being discussed, an old schooler was simultaneously predicting that it would blow the world
economy up at some point (and of course he was in the main , correct). I still had to fill in
some gaps in my knowledge (anthropology was not a module, though Marxist economics was), with
hindsight I appreciate so much more of what the "old schoolers" said on the sly during quiet
points in tutorials – Godley being one, although he wasn't ready at that time to
release the work he subsequently published and was so revolutionary. Having peers educated
elsewhere during my Masters and PhD who knew nothing of the subjects that – whilst
certainly not the "key guide" to "proper macro" described in the article – began to
horrify me later in my career.
This is really great. Thanks a ton, as Yves would say.
I know I have used to "rock star" metaphor on occasion, so let me explain that to
me what is important in excellent (i.e., live) rock and roll is improvisational
interplay among the group members -- the dozen or so who understood MMT in the beginning, in
this case -- who know the tune, know each other, and yet manage to make the song a little
different each time. It's really spectacular to see in action. Nothing to do with spotlights,
or celebrity worship, or fandom!
I'm no MMT expert, but I think
this article does a good job of juxtaposing MMT with classic (non-advanced)
macroeconomics. I quote:
In the language of Tinbergen (1952), the debate between MMT and mainstream macro can be
thought of as a debate over which instrument should be assigned to which target. The
consensus assignment is that the interest rate, under the control of an independent central
bank, should be assigned to the output gap target, while the fiscal position, under control
of the elected budget authorities, should be assigned to the debt sustainability target. [
] The functional finance assignment is the reverse -- the fiscal balance under the budget
authorities is assigned to the output target, while any concerns about debt sustainability
are the responsibility of the monetary authority.
What about interest rate fixing? The central bank would remain in charge of that, but in
an MMT context this instrument would lose most of its relevance:
[W]hile a simple swapping of instruments and targets is one way to think about
functional finance, this does not describe the usual MMT view of how the policy interest
rate should be set. What is generally called for, rather, is that the interest rate be
permanently kept at a very low level, perhaps zero. In an orthodox policy framework, of
course, this would create the risk of runaway inflation; but keep in mind that in the
functional framework, the fiscal balance is set to whatever level is consistent with price
stability.
It may be a partial reconstruction of MMT, but to me this seems to be a neat way to
present MMT to most people. Saying that taxes are there just to remove money from the economy
or to provide incentives is a rather extreme statement that is bound to elicit some fierce
opposition.
Having said that, I've never seen anyone address what I think are two issues to MMT: how
to make sure that the power to create money is not exploited by a political body in order to
achieve consensus, and how to assure that the idea of unlimited monetary resources do not
lead to misallocation and inefficiencies (the bloated, awash-with-money US military industry
would probably be a good example).
The best comparison of MMT with neoliberal neoclassical economics, in my view, is Bill
Mitchell's blog post, "How to Discuss Modern Monetary Theory" ( http://bilbo.economicoutlook.net/blog/?p=25961
). I especially recommend the table near the end as a terrific summary of the differences
between the mainstream narrative and MMT.
Thanks! I have enormous respect for Mitchell, given the quantity and quality of his
blogging. However, my only nitpick is that a lot of his blog entries are quite long and "not
easily digestible". I have long thought that one of those clever people who can do those 3
minute rapid animation vids we see on youtube is needed to "do a Lakoff" and change the
metaphors/language. But this post of Mitchell (which I missed, since I don't read all his
stuff) is, IMHO, his best at "re-orienting us".
Saying that taxes are there just to remove money from the economy or to provide
incentives is a rather extreme statement that is bound to elicit some fierce
opposition.
Yes this is a frightening statement. The power to tax is the power to destroy. If this is
a foundation point of the proposal then
Having said that, I've never seen anyone address what I think are two issues to MMT: how
to make sure that the power to create money is not exploited by a political body in order
to achieve consensus, and how to assure that the idea of unlimited monetary resources do
not lead to misallocation and inefficiencies (the bloated, awash-with-money US military
industry would probably be a good example).
Bingo. My thoughts exactly. Too much power in the hands of the few. Easy to slide into
Orwell's Animal Farm – where some people are more equal than others.
MMT is based upon very good intentions but, in my view, there is a moral rot at the root
of the US of A's problems, not sure this can be solved by monetary policy and more
centralized control.
And the JG? Once the government starts to permanently guarantee jobs
I suggest you delve into what is proposed by the MMT – PK camp wrt a JG because its
not centralized in the manner you suggest. It would be more regional and hopefully
administrated via social democratic means e.g. the totalitarian aspect is moot.
I think its incumbent on commenters to do at least a cursory examination before heading
off on some deductive rationalizations, which might have undertones of some book they read
e.g. environmental bias.
Skippy, I read the article, plus the links, including those links of the comments. I will
admit that I am a little more right of center in my views than many on the website.
The idea is interesting, but the administration of such a system would require rewriting
the US Constitution, or an Amendment to it if one thinks the process through, would it not? I
think of the Amendment required to create the Federal Reserve System when I say this.
One thing I really don't like at all -- and I've crossed swords with many over this -- is
that we do tend to take (not just in the US, this is prevalent in far too many
places) things like the constitution, or cultural norms, or traditions or other variants of
"that's the way we've always done this" and elevate them to a level of sacrosanctity.
Not for one moment am I suggesting that we should ever rush into tweaking such devices
lightly nor without a great deal of analysis and introspective consultations.
Constitutions get amended all the time. The Republic of Ireland changed its to renounce a
territorial claim on Northern Ireland. The U.K. created a right for Scotland to secede from
the Union. There's even a country in Europe voting whether to formally change its name right
now. Britain "gave up" its empire territories (not, I would add speedily, without a lot of
prodding, but still, we got there in the end). All of which were, at one time or another,
"unthinkable". Even the US, perhaps the most inherently resistant to change country when it
thinks it's being "forced" to do so, begrudgingly acknowledged Cuba.
Why would a jobs guarantee require a constitutional amendment? The federal government
creates jobs all the time, with certain defined benefits. This would merely expand upon that,
to potentially include anyone who wants a job.
There are a couple different aspects of this that people are getting mixed together, I
think. The core of MMT is not a proposal for government to implement. Rather, it is simply a
description of how sovereign currencies actually operate, as opposed by mainstream economics,
which has failed in this regard. In other words, we don't need any new laws to implement MMT
– we need a paradigm shift.
The Jobs Guarantee is a policy proposal that flows from this different paradigm.
It has been stated many times that it is to inform policy wrt to potential and not some
booming voice from above dictating from some ridged ideology.
Persoanly as a capitalist I can't phantom why anyone would want structural under –
unemployment. Seems like driving around with the hand brake on and then wondering why
performance is restricted or parts wear out early.
Thinking of the Federal Reserve Act being enabled by the Federal Income Tax of the 16th
Amendment.
Using Federal taxes to fund the JG; I do not think that this aspect of it (and others)
would survive a Constitutional challenge. Therefore ultimately an Amendment might be
needed.
Then again I may be wrong. Technically Obamacare should have been implemented by an
Amendment were strict Constitutional law applied.
Rights to health care and jobs are not enumerated in either the Constitution or Bill of
Rights, as far as I am aware.
Not opposed to some of the principles of MMT, just don't understand, in this modern age
where effectively all currency is electronic digits in a banking computer system, the issue
of a currency must be tied to taxes. In years past, where currency was printed and in one's
pocket, or stuffed under a mattress, or couriered by stagecoach, then yes – taxes would
be needed. But today can we not just print (electronically) the cash needed for government
operations each year based upon a fixed percentage of private sector GDP? Why therefore do we
need government debt? Why do we need an income tax?
Skippy, I have lived and worked in countries without income tax (but instead indirect tax)
and where government operating revenue was based upon a percentage of projected national
revenue. I have been involved in the administration of such budgets.
I am in favor of government spending, or perhaps more accurately termed investing, public
money on long-term, economically beneficial projects. But this is not happening. The reality
is that government priorities can easily be hijacked by political interests, as we currently
witness.
While I agree that political highjacking is possible and must be dealt with, this is not
strictly speaking part of an economic theory, which is what MMT is. While MMT authors may
take political positions, the theory itself is politically neutral.
Income taxes, tithes, or any other kind of driver is what drives the monetary circuit.
Consider it from first principles. You have just set up a new government with a new currency
where this government is the monopoly issuer. No one else has any money yet. So, the
government must be the first spender. However, how is this nascent government going to
motivate anyone to use this new currency? Via taxation, or like means, that can only be met
by using the national currency, whatever form that currency may take, marks on a stick,
paper, an entry in a ledger, or the like.
Thank you for this explanation. I understand that, for example, this is why the Federal
Reserve Act of 1913, I believe, created the Federal Reserve and Federal Income Tax at the
same time.
But the US economy functioned adequately, survived a civil war, numerous banking crises,
experienced industrialization, national railways, etc without a central bank or federal
income tax from the 1790's to 1913.
To me, the US's state of perpetual war is enabled by Federal Income Tax. Without it the
MIC would collapse, I am certain.
Functioned adequately
During the 150 yr hard money period we had recessions/depressions that we're both far more
frequent (every three years) and on avg far deeper than what we have had since fdr copied the
brits and took us off the gold standard. Great deprecession was neither the longest or
deepest.
Two reasons
Banks used to fail frequently, a run on one bank typically leading to runs on other banks,
spreading across regions like prairie fires if your bank failed you lost all your money.
Consequences were serious.
During GR so many banks failed in the Midwest, leading to farm foreclosures, the region was
near armed insurrection in 1932. Fiat meant that the fed can supply unlimited liquidity.
Since then banks have failed but immediately taken over by another. Critically, no depositor
has lost a penny, even those with far more exposed than the deposit insurance limit. No runs
on us banks since 1933.
Second, we now have auto stabilizers, spending continues during downturns because gov has no
spending limit. Note previously in an emergency gov borrowed. 10 mil from J.P. Morgan.
But at what cost? no depositor loses money, yet huge amounts are required to be printed,
thus devaluing the "currency". So is the answer inflation that must by necessity become
hyperinflation?
I don't understand why it is important to protect a bank vs. making it perform its function
without risking collapse. This is magical thinking as we have found very few banks in this
world not ready and willing to pillage their clients, be it nations or just the little
folk.
Why would anyone trust a government to do the right thing by its population? When has that
ever worked out in favor of the people?
I can not understand the trust being demanded by this concept. It wants trust for the users,
but in no way can it expect trust or virtue from the issuer of the "currency"
also, I can't help but think MMT is for growth at all costs. Hasn't the growth shown that
it is pernicious in itself? Destroy the planet for the purpose of stabilizing "currency".
Our federal reserve gave banks trillions of dollars, and then demanded they keep much of
it with the Fed and are paid interest not to use it. It inflated the "currency" in
circulation yet again and now it is becoming clear a great percentage of people in our
country can no longer eat, no longer purchase medications, a home, a business
If being on a hard money system as we were causes recessions and depressions, would we
find that it was a natural function to cut off the speculators at their knees?
How does MMT promote and retain value for the actual working and producing people that
have no recourse with their government? I would like to read about what is left out of this
monumental equation.
US had a federal income tax during the civil war and for a decade or so after.
I have always assumed that mass conscription and the Dreadnought arms race led to the
implementation of the modern taxing/monetary system. (gov't needed both warfare and
welfare)
Taxes, just as debt, create an artificial demand for currency as one must pay back their
taxes in {currency}, and one must pay back debt in {currency}. It doesn't have to be an
income tax, and I think a sales tax would be a better driver of demand than an income
tax.
The US had land sales that helped fund government expenditures in the 1800s.
Not all taxes are income taxes. Back in the day (20's/30's/40's),my grandfather could pay
off the (county) property taxes on his farm by plowing snow for the county in the winter --
and he was damned careful to make sure that the county commissioners' driveways were plowed
out as early as possible after a storm.
In the 30's/40's the property tax laws were changed to be payable only in dollars.
So Grandpa had to make cash crops. Things changed and money became necessary.
But today can we not just print (electronically) the cash needed for government
operations each year based upon a fixed percentage of private sector GDP?
The élites could, but it would be totally undemocratic and the economics profession's
track record of forecasting growth is no better than letting a cat choose a number written on
an index card.
Why therefore do we need government debt?
There is no government debt. It's just a record of interest payments Congress has agreed
to make because the wealthy wanted another welfare program.
Why do we need an income tax?
The only logically consistent purpose is because people have too much income.
I think the point they're driving at, is that by requiring the payment of taxes in a
particular currency, a government creates demand for that currency. There are other uses for
federal taxes, not the least of which is to keep inflation in check.
Government debt is not needed, at least not at the federal level. My understanding of it
is that it's a relic from the days of the gold standard. It's also very useful to some rather
large financial institutions, so eliminating it would be politically difficult.
Wray has said in interviews that the debt (and associated treasury bonds), while not
strictly necessary in a fiat currency, is of use in that it provides a safe base for
investment, for pensioners and retirees, etc.
Sure, it could be eliminated by (a) trillion dollar platinum coins deposited at the
Federal Reserve followed by (b) slowly paying off the existing debt when the bonds mature or
(c) simply decreeing that the Fed must go to a terminal and type in 21500000000000 as the US
Gov account balance (hope I got the number of zeroes correct!).
It could be argued that the US doesn't strictly need taxes to drive currency demand as
long as our status as the world reserve currency is maintained (see oft-discussed
petrodollar, Libya, etc). If that status is imperiled, say by an push by a coalition of
nations to establish a different currency as the "world reserve currency") taxes would be
needed to drive currency demand.
I think most of this is covered in one way or another here:
Government debt is not actually a 'real thing'. It is a residue of double-entry
bookkeeping, as is net income (income minus expenses, that's a credit in the double-entry
system). It could as well be called 'retained earnings (also a 'book' credit in the
double-entry system). If everybody had to take bookkeeping in high school there would be far
few knickers in knots!
There are two kinds of government 'debt': the accumulated deficit which is the money in
circulation not a real debt, and outstanding bonds which is real in the sense that it must be
repaid with interest.
However, the government can choose the interest rate and pay it (or buy back the bonds at
any time) with newly minted money at no cost to itself, cf. QE.
seems to me that the guaranteed jobs would be stigmatized, and make it harder for people
to get private sector jobs. "once youre in the JG industry, its hard to get out" etc.
how much of a guarantee is the job guarantee supposed to be? ie. at what point can you get
fired from a guaranteed job?
Yes, my mind wandered into the same territory. While I agree that something needs to be
done, it also has the potential to strike at the heart of a lean, merit-based system by
introducing another layer of bureaucracy. In principle, I am not against the idea, but as
they say, "God (or the Devil – take your pick) is in the details ".
If you haven't already read it, "Reclaiming the State" by Mitchell and Fazi (Pluto Press
2017) provides a detailed and cogent analysis of how neoliberalism came into ascendency, and
how the principles of MMT can be used to pave the way to a more humane and sustainable
economic system. A new political agenda for the left, drawing in a different way upon the
nationalism that has energized the right, is laid out for those progressives who understand
the necessity of broadening their appeal. And the jobs guarantee that MMT proposes has
NOTHING to do with MacJobs and Amazon workers. It has to do with meeting essential human and
environmental needs which are not profitable to meet in today's private sector.
Job guarantee, or govt as employer of last resort -- now there is a social
challenge/opportunity if there ever was one.
Well managed, it would guarantee a living wage to anyone who wants to work, thereby
setting a floor on minimum wages and benefits that private employers would have to meet or
exceed. These minima would also redound to the benefit of self-employed persons by setting
standards re income and care (health, vacations, days off, etc) *and* putting money in the
pockets of potential customers.
Poorly managed it could create the 'digging holes, filling them in' programs of the
Irish Potato Famine
ore worse (hard to imagine, but still ). It has often been remarked that the potato blight
was endemic across Europe, it was only a famine in Ireland -- through policy choices.
So, MMT aside (as being descriptive, rather than prescriptive), we are down to who
controls policy. And that is *really* scary.
In terms of power, the government has the power to shoot your house to splinters, or blow
it up, with or without you in it. We say they're not supposed to, but they have the ability,
and it has been done.
The question of how to hold your government to the things it's supposed to do applies to
issues beyond money. We'd best deal with government power as an issue in itself. I should
buckle down and get Mitchell's next-to-newest book Reclaiming the State .
I don't claim to fully understand MMT yet, but I find Wray's use of the derogatory term
"gold bugs" to be both disappointing and revealing. To lump those, some of whom are quite
sophisticated, who believe that currencies should be backed by something of tangible value
(and no, "the military" misses the point), or those who hold physical gold as an insurance
policy against political incompetence, and the inexorable degradation of fiat currencies, in
with those who promote or hold gold in the hopes of hitting some type of lottery, is
disingenuous at best.
OMT seemingly has no reason to exist being old school, but for what it's worth, the
almighty dollar has lost over 95% of it's value when measured against something that matters,
since the divorce in 1971.
I found this passage funny, as in flipping the dates around to 1791, is when George
Washington set an exchange rate of 1000-1 for old debauched Continental Currency, in exchange
for newly issued specie. (there was no Federal currency issued until 1861)
So yeah, they burned all of their tax revenue, because the money wasn't worth jack.
Farley Grubb -- the foremost authority on Colonial currency -- proved that the American
colonists understood perfectly well that taxes drive money. Every Act that authorized the
issue of paper money imposed a Redemption Tax. The colonies burned all their tax
revenue.
Gold bug is akin to money crank e.g. money = morals. That's not to mention all the
evidence to date does not support the monetarist view nor how one gets the value into the
inanimate object or how one can make it moral.
Gold doesn't historically perform as a hedge but as a speculative trade. Those who think
it can protect them from political events typically don't realize that a gold standard means
public control of the gold industry, thereby cutting any separation from the political
process off at the knees.
When a government declares that $20 is equal in value to one ounce of gold, it also
declares an ounce of gold is equal to $20 dollars. It is therefore fixing, through a
political decision subject to political changes, the price of the commodity.
Nonsense. When fiat currencies invariably degrade, and especially at a fast rate, gold has
proven to be a relative store of value for millennia . All one need do is to look at
Venezuela, Argentina, Turkey, etc., to see that ancient dynamic in action today.
You, and others who have replied to my comment, are using the classical gold standard as a
straw man, as well. Neither I, nor many other gold "bugs" propose such a simple solution to
the obviously failed current economy, which is increasingly based on mountains of debt that
can never be repaid.
gold has proven to be a relative store of value for millennia.
As long as one is mindful that gold is just another commodity, subject to the same
speculative distortions as any other commodity (see Hunt brothers and silver).
But that is obviously false, given that no other commodity has remotely performed with
such stability over such a long period of time.
It is true that over short periods distortions can appear, and the *true* value of gold
has been suppressed in recent years through the use of fraudulent paper derivatives. But
again, I'm not arguing for the return of a classical gold standard.
Don't worry, I'm likely to be at least equally dense!
I didn't mean to suggest that there is some formula from which a *true* value of precious
metals might be derived. I simply meant that gold has clearly been the object of price
suppression in recent years through the use of paper derivatives (i.e. future contracts). The
reason for such suppression, aside from short-term profits to be made, is that gold has
historically acted as a barometer relating to political and economic stability, and those in
power have a particular interest in suppressing such warning signals when the system becomes
unstable.
So, while the Central Banks created previously unimaginable mountains of debt, it was
important not to alarm the commoners.
The suppression schemes have become less effective of late, and will ultimately fail when
the impending crisis unfolds in earnest.
As long as one is mindful that gold is just another commodity, subject to the same
speculative distortions as any other commodity
It sounds good in theory, but history says otherwise.
The value remained more or less the same for well over 500 years as far as an English
Pound was concerned, the weight and value of a Sovereign hardly varied, and the exact weight
and fineness of one struck today or any time since 1817, is the same, no variance
whatsoever.
Thus there was no speculative distortions in terms of value, the only variance being the
value of the Pound (= 1 Sovereign) itself.
" who believe that currencies should be backed by something of tangible value"
As I understand it, MMT also requires that currency be backed by something of tangible
value: a well managed and productive economy. It doesn't matter in the least if your debt is
denominated in your own currency if you have the economy of Zimbabwe.
Sounds reasonable in theory, but that was supposed to be the case with the current
economic system, as well, and we can all see where that has led.
I'm not arguing that there isn't a theoretically better way to create and use
"modern" money, but rather doubt that those empowered to create it out of thin air will ever
do so without abusing such power.
Oh, I agree with you. In no universe that I am aware of would the temptation to create
money beyond the productive capacity of the economy to back it up be resisted. I think
Zimbabwe is a pretty good example of where the theory goes in practice.
That's exactly wrong. Zimbabwe had a production collapse. Same amount of money to buy a
much smaller amount of goods. The gov responded not by increasing goods, but increasing money
supply.
Mark Blyth has a good discussion of the gold standard in his book Austerity: The
History of a Dangerous Idea . He makes the point that, in imposing the adjustments
necessary to keep the balance of payments flowing, the measures imposed by a government would
be so politically toxic, that no elected official in his or her right mind would implement
them, and expect to remain in office. In short, you can have either democracy, or a gold
standard, but you can't have both.
Also, MMT does recognize that there are real world constraints on a currency, and that is
represented by employment, not some artificially-imposed commodity such as gold (or bitcoin,
or seashells, etc). The Jobs Guarantee flows out of this.
As mentioned above, you, among others who have replied to my original comment, are using
the classical gold standard as a straw manl. Neither I, nor many other gold "bugs", propose
such a simple solution for the failed current economic system, which is increasingly based on
mountains of debt that can never be repaid.
increasingly based on mountains of debt that can never be repaid.
Huh? I listed two ways they could be repaid above. In the US, the national debt is
denominated in dollars, of which we have an infinite supply (fiat). In addition, the Federal
Reserve could buy all the existing debt by [defer to quad-entry accounting stuff from Wray's
primer] and then figuratively burn it. Sure, the rest of the world would be pissed and
inflation *may* run amok, but "can never" is just flat out wrong.
Of course it can be extinguished through hyperinflation. I didn't think that it would be
necessary to point that out. No "may" about it, though, as if the U.S. prints tens of
trillions of dollars to extinguish the debt, hyperinflation will be assured.
I didn't think that it would be necessary to point that out.
Sorry, but I'm an old programmer; logic rules the roost. When one's software is expected
to execute billions of times a day without fail for years (and this post is very likely
routed through a device running an instance of something I've written). Always means every
time, no exceptions; never means not ever, no matter what.
I'm sure that there is no one solution proposed, though an alternative to the current
system which seems plausible would be a currency backed by a basket of commodities, including
gold.
Hi Tinky, much late but still. Gold will have value as long as people believe it has
value. But what will they trade it for? The bottom line is your life.
I don't have any gold, too expensive, and it really has no use. But I remember Dimitri Orlov's
advice : I am long in needles, pins, thread, nails and screws, drill bits, saws, files,
knives, seeds, manual tools of many sorts, mechanical skills and beer recipes. Plus I can
sing.
The vast majority of people who hold physical gold are well aware of the value of having
skills and supplies, etc., in case of a serious meltdown. But it's not a zero-sum game, as
you suggest. Gold will inexorably rise sharply in value when today's fraudulent markets
crash, and there will be plenty of opportunities for those who own it to trade it for other
assets.
Furthermore, as previously mentioned, gold's utility is already on full display,
to those who are paying attention, and not looking myopically through a USD lens.
"Mountains of debt that can never be repaid" is a propaganda statement with no reference
to any economic fact. Why do you feel that this "debt" needs to be "repaid"? It is simply an
accounting artifact. The "debt" is all of the dollars that have been spent *into* the economy
without having been taxed back *out*. The word "debt" activates your feels, but has no
intrinsic meaning in this context. Please step back from your indoctrinated emotional
reaction and understand that the so-called national "debt" is nothing more than money that
has been created via public spending, and "repaying" it would be an act of destruction.
I keep telling (boring, annoying, infuriating) people that, in the simplest terms, the
national debt is the money supply and they won't grasp that simple declaration. When I said
it to my Freedom Caucus congress critter (we were seated next to each other on an exit aisle)
his head started spinning, reminding me of Linda Blair in The Exorcist.
As I said to my congress critter, if the debt bother's y'all so much, why not just pay it
off, dust off your hands, and be done with it?
Personally, if I were President for a day, I'd have the mint stamp out 40 or so trillion
dollar platinum coins just to fill the top right drawer of the Resolute desk. Would give me
warm fuzzy feelings all day long.
p.s. I also told him that the man with nothing cares not about inflation. He didn't like
that either.
"those, some of whom are quite sophisticated, who believe that currencies should be backed
by something of tangible value (and no, "the military" misses the point), or those who hold
physical gold as an insurance policy against political incompetence, and the inexorable
degradation of fiat currencies"
I suspect that Wray exactly means that these people are the goldbugs, not the ones who
speculate on gold.
The whole point that currencies should be backed by something of tangible value IMO is
wrong, and I think the MMTers agree with me on this.
If so, then he should clarify his position, as again, lumping the billions –
literally – of people who consider gold to be economically important, together as one,
is disingenuous.
I think people that consider gold to be a risk hedge understand its anthro, per se an
early example of its use was a fleck of golds equal weight to a few grains of wheat e.g. the
gold did not store value, but was a marker – token of the wheat's value – labour
inputs and utility. Not to mention its early use wrt religious iconography or vis-à-vis
the former as a status symbol. Hence many of the proponents of a gold standard are really
arguing for immutable labour tokens, problem here is scalability wrt high worth individuals
and resulting distribution distortions, unless one forwards trickle down sorts of
theory's.
Not to mention in times of nascent socioeconomic storms many that forward the idea of gold
safety are the ones selling it. I think as such the entire thing is more a social psychology
question than one of factual natural history e.g. the need to feel safe i.e. like commercials
about "peace of mind". I think a reasonably stable society would provide more "peace of mind"
than some notion that an inanimate object could lend too – in an atomistic
individualistic paradigm.
I once had an co-worker that was a devout Christian. When he realized I wasn't religious,
he asked me, incredulously, how I was able to get out of bed in the morning. Meaning, he
couldn't face a world without meaning.
I think a lot of people feel that same way about money. They fight over it, lie for it,
steal it, kill for it, go to war over it, and most importantly, slave for it. Therefore, it
must have intrinsic value. I think gold bugs are in this camp.
Talking about Warren's blog ( http://moslereconomics.com/ ), everytime I try to go there,
Cloudflare asks me to prove that I am human. Anyone know what's up with that? It's the only
website I've ever seen do that.
That's a good suggestion. Unfortunately, as I sometimes find, you can pass ALL the major
test-sites but something (a minor, less-used site using out-of-date info?) can give you
grief. NC site managers once (kindly) took the time to explain to me why I might have
problems that they had no ability to address at their end. I had to muck around with a link
given earlier to Bill Mitchell's blog before my browser would load it.
I think there can be quirks that are beyond our control (unfortunately) – for instance
I think a whole block of IP addresses (including mine) used by my ISP have been flagged
*somewhere* – no doubt due to another customer doing stuff that the checker(s) don't
like. (The issue I mentioned above was more likely due to a strict security protocol in my
browser, however.)
Monetary policy in terms of interest rates is not just weak, it also tends to treat all
targets the same. Fiscal policy can be targetted to where it is felt it can do the most
good.
Christine Desan's book, "Making Money," exhaustively documents the history of money as a
creature of the state. Recall as well that creating money and regulating its value are among
the enumerated POWERS granted to our government by we, the people. Money, indeed, is
power.
Hmmm Randy Wray states that " permanent Zirp (zero interest rate policy) is probably a
better policy since it reduces the compounding of debt and the tendency for the rentier class
to take over more of the economy. "
But just last week, Yves stated that " that one of the consequences of the protracted
super-low interest rate regime of the post crisis era was to create a world of hurt for
savers, particularly long-term savers like pension funds, life insurers and retirees. "
[ https://www.nakedcapitalism.com/2018/09/crisis-caused-pension-train-wreck.html
]
So are interest rates today too high, or too low? We're getting mixed messages here.
IMO, interest rates are too low . Beyond the harmful effect to savers, it also
drives income inequality . How? When interest rates are less than inflation, it is
trivial to borrow money, buy some assets, wait for the assets to appreciate, sell the assets,
repay the debt, and still have profit left over even after paying interest . Well,
it's trivial if you're already rich and have a line of credit that is both large and
low-interest. If you're poor with a bad FICO score, you don't get to play the asset
appreciation game at all.
The rates between riskier and less risky borrowers will still be reflected in the
different rates given to each.
The low rates encourage greater risk taking to increase the reward(a higher rate of
return). This is what leads to the gross malinvestment.
Case in point: the low rates led to more investments into the stock market, where the
returns are unlimited. This is what led to the income inequality of Obama's term, as
mentioned above.
I cannot speak for Yves, nor or Randy, but IMO, interest rates are too low for people who
depend on interest for their living -- as an old person, I have seen my expected income drop
to about zilch when I had expected 7 to 10% on my savings. Haha! So yeah, too low for us who
saved for 'retirement'.
Too high for people financing on credit, since a decent mortgage on a modestly-priced
house will cost you almost the same as
the house . And that doesn't even begin to look at unsecured consumer credit (ie, credit
card debt), which is used in the US and other barbaric countries for medical expenses, not to
mention student debt. The banks can create the principal with their keystrokes, but they
don't create the interest. Where do you suppose that comes from? Hint: nowhere, as in
foreclosures and bankruptcies.
Wray's statement reflects his preferences from an operational policy perspective.
Sovereign government debt cares no risk and therefore should not pay interest. The income
earned from that interest is basically a subsidy and all income when spent caries a risk of
inflation induced excess demand. Therefore who unnecessarily add the risk to the economy and
potential risk needing to reduce other policy objectives to accommodate unnecessary interest
income subsidies to mostly rich people?
Yves comment reflects the reality of prior decades of economic history. Even if Wray's
policy perspective is optimal, there are decades of people with pensions and retirement
savings designed around the assumption of income from risk-free government debt. It's this
legacy that Yves is commenting on and is a real problem that current policy makers are just
ignoring.
As for your comments on how low cost credit can be abused, I believe you'll find most MMT
practitioners would recommend far more regulation on the extension of credit for
non-productive purposes.
I just wrote a note to Randy:
The origin of money is not merely for accounting, but specifically for accounting for DEBT --
debt owed to the palatial economy and temples.
I make that clear in my Springer dictionary of money that will come out later this year:
Origins of Money and Interest: Palatial Credit, not Barter
Can somebody help me out here? It seems to me that the US macroeconomic policy has been
operating under MMT at least since FDR (see for example Beardsley Ruml from 1945).
Since then, insofar as I understand MMT, fiat has been printed and distributed to flow
primarily through the MIC and certain other periodically favored sectors (e.g. the Interstate
Highway System). Then, rather than destroying this fiat through taxation, the sectoral
balances have been kept deliberately out of balance: Taxes on unearned income have been
almost eliminated with an eye to not destroying fiat, but to sequestering as much as possible
in the private hands of the 1%. This accumulating fiat cannot be productively invested
because that would cause overproduction, inflation, and reduce the debt burden by which the
1% retains power over the 99%. So the new royalists, as FDR would have styled them, keep
their hoard as a war chest against "socialists".
I get all this, more or less, and I appreciate that it is well and good and important that
MMTers insistently point out that the emperor has no clothes. This is a necessary first step
in educating the 99%.
But I don't see MMT types discussing the fact that US (and NATO) macroeconomic policy
already has a Job Guarantee: if you don't want to work alongside undocumented immigrants on a
roof or in a slaughterhouse or suffer the humiliation of US welfare, such as it is, you can
always get a job with the army, or the TSA, or the police, or as a prison guard, or if you
have some education, with a health unsurance company or pushing drone buttons. You only have
to be willing to follow orders to kill–or at least help to kill–strangers.
(Okay, perhaps I overstate. If you're a medical doctor or an "educator" with university
debt you don't have to actively kill. You can decline scant Medicaid payments and open a
concierge practice, or you can teach to the test in order that nobody learns anything
moral.)
It is difficult to get a man to understand something, when his salary depends on his not
understanding it. Wouldn't it be clarified matters if MMTers acknowledged that we already
have a JG?
We have been operating on MMT since the end of WW2, with 2 exceptions in 1968 when Silver
Certificate banknotes no longer were redeemable for silver, and in 1971 when foreign central
banks (not individuals!) weren't allowed to exchange FRN's for gold @ $35 an ounce
anymore.
It's been full on fiat accompli since then and to an outsider looks absurd in that money
is entirely a faith-based agenda, but it's worked for the majority of all of lives, so nobody
squawks.
It's an economic "the emperor has no clothes" gig.
It seems to me that the US macroeconomic policy has been operating under MMT at
least since FDR (see for example Beardsley Ruml from 1945).
Yup, you are correct, IMO. And about the jobs guarantee, too. The point of MMT is not that
we have to adopt, believe in, or implement it, but that *this is how things work* and we need
to get a %&*^* handle on it *STAT* or they will ride it and us to the graveyard. The
conservatives and neo-cons are already on to this, long-time.
I believe the chant is:
We can have anything we want that is available in our (sovereign) currency and for which
there are resources
What we get depends on what we want and how well we convince/coerce our 'leaders' to make
it so.
JG is geared toward community involvement to create an open-ended collection of potential
work assignments, not top-down provision of a limited number of job slots determined by
bureaucrats on a 1% leash.
About every 80 years, there has been a great turning in terms of money in these United
States
Might as well start with 1793 and the first Federal coins, followed in 1861 by the first
Federal paper money, and then the abandonment of the gold standard (a misnomer, as it was one
of many money standards @ era, most of them fiat) in 1933.
We're a little past our use-by date for the next incarnation of manna, or is it already
here in the guise of the great giveaway orchestrated since 2008 to a selected few?
After learning MMT I've occasionally thought I should get a refund for the two economics
degree's I originally received. One of the primary mainstream teachings that I now readily
see as false is the concept of money being a vale over a barter economy. It's lazy,
self-serving analysis. It doesn't even pass a basic logical analysis let alone archeological
history. Even in a very primitive economy it would be virtually impossible for barter to be
the main form of transaction. The strawberry farmer can't barter with the apple farmer. His
strawberries will be rotten before the apples are ripe. He could give the apple farmer
strawberries in June on the promise of receiving apples in October, but that's not barter
that's credit. The apple farmer could default of his own free will or by happenstance (he
dies, his apple harvest is destroyed by an act of god, etc ). How does the iron miner get his
horse shoed if the blacksmith needs iron before he can make the horse show? Credit has to
have always been a key component of any economy and therefore barter could never have been
the original core.
After learning MMT I've occasionally thought I should get a refund for the two
economics degree's I originally received.
Agreed. Richard Wolff notes that in most Impressive Universities there are two schools,
one for Economics (theory) and another for Business (practice). Heh. I say, go for the
refund, you was robbed.
All the Rupee* has done over time is go down in value against other currencies, and up in
the spot price measured in Rupees even as gold is trending down now, and that whole stupid
demonetization of bank notes gig, anybody on the outside of the fiat curtain looking in, had
to be laughing, and ownership there is no laughing matter, as it's almost a state financial
religion, never seen anything like it.
* A silver coin larger than a U.S. half dollar pre-post WW2, now worth a princely 1.4
cents U.S.
Not an economist, but I appreciate both the applicability of MMT and the fierce, but often
subtle resistance its proponents have encountered academically, institutionally and
politically. However, I have questioned to what extent MMT is uniquely applicable to a nation
with either a current account surplus or that controls access to a global reserve
currency.
How does a nation that is sovereign in its own currency, say Argentina for example (there
are many such examples), lose 60 percent of its value in global foreign exchange markets in a
very short time period?
Is this due primarily to private sector debts denominated in a foreign currency (and if
so, what sectors of the Argentine economy undertook those debts, for what purposes, and to
whom are they owed?), foreign exchange market manipulation by external third parties, the
effective imposition of sanctions by those who control the global reserve currency and
international payments system, or some combination of those or other factors?
MMT makes more sense than orthodox neoliberal accounts of currency and sovereign spending
to me, as it does a better job of acknowledging reality. MMT recognizes that currency is an
artifice and that imagined limitations on it are just that, and real resources are the things
which are limited. Neoliberal economics acts as if all sorts of byzantine factors mean
currency must be limited, but we can think of resources, and the growth machine they feed, as
being infinite.
"Taxes or other obligations (fees, fines, tribute, tithes) drive the
currency."
Specifically, what does "drive" mean? Does it mean:
1. When taxes are reduced, the value of money falls?
2. If taxes were zero, the value of money would be zero?
3. Cryptocurrencies, which are not supported by taxes, have no value?
"JG is a critical component of MMT. It anchors the currency and ensures that achieving
full employment will enhance both price and financial stability."
Specifically, what do "anchors" and "critical component" mean? Do they mean:
1. Since JG does not exist, the U.S. dollar is unanchored and MMT does not exist?
2. Providing college graduates with ditch-digging jobs enhances price and financial
stability?
3. Forcing people to work is both morally and economically superior to giving them money and
benefits?
"Drive" means "creates initial demand for":
1. No, not for an established currency.
2. See 1.
3. Crypto is worth what you can buy with it.
"Anchors" means it acts against inflation and deflation. "Critical component" means the
economy works better if it has it.
1. Yes and no.
2. Yes, if no-one else will hire them.
3. No element of force is implied.
"... "Barring technology breakthrough beyond what we already assume, we'll need new oil discoveries," ..."
"... "We haven't seen anything like this since the 1940s," ..."
"... "The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent in 2012." ..."
"... "The mind set for most E&Ps is still to be conservative, and default is to return capital to shareholders. Yet the duty to shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to find its way into exploration to sustain the business in the long term," ..."
"... "frontier areas," ..."
"... "Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South Africa; Australia and Alaska." ..."
"... "More explorers need to get in on the action if the spectre of 'peak supply' is to be kept at bay," ..."
"The warning signs are there – the industry isn't finding enough oil." That's the
start of a new report from Wood Mackenzie. The report concludes that a supply gap could emerge
in the mid-2020s as demand rises at a time when too few new sources of supply are coming
online.
By 2030, there could be a supply shortfall on the order of 3 million barrels per day (mb/d),
WoodMac argues. By 2035, it balloons to 7 mb/d, and by 2040, it reaches 12 mb/d. "Barring
technology breakthrough beyond what we already assume, we'll need new oil discoveries,"
the report says.
The seeds of the problem were sown during the oil market downturn that began in 2014. Global
upstream exploration spending plunged from $60 billion in 2014 to just $25 billion in 2018,
according to WoodMac. Unsurprisingly, that translated into a steep decline in new discoveries.
In the early part of this decade, the oil industry was discovering around 8 billion barrels of
oil annually. That figure has plunged by three quarters since 2014.
The precise figures vary, but Rystad Energy came a similar conclusion, noting that the total
volume of new oil and gas reserves discovered plunged to a record low in 2017. "We haven't
seen anything like this since the 1940s," Sonia Mladá Passos, Senior Analyst at
Rystad Energy, said in a December 2017
statement . "The most worrisome is the fact that the reserve replacement ratio in the
current year reached only 11 percent (for oil and gas combined) - compared to over 50 percent
in 2012."
This year, the industry has had a bit more success. Spending is on the rebound and new
discoveries are on
track to rise by about 30 percent, although that is heavily influenced by the developments
in Guyana, where ExxonMobil and Hess Corp. have reported nearly a dozen discoveries, and hope
to ramp up production to around
750,000 bpd by 2025.
It still may not be enough. Even if the industry were to somehow return to the good ol' days
prior to the 2014 market crash, and begin discovering around 8 billion barrels of oil each
year, it would only delay the supply crunch into the 2030s, according to WoodMac.
But, of course, that rate of discovery remains far below those levels, so the supply crunch
may take place much sooner. Moreover, because large-scale projects take several years to
develop, the activity taking place today will determine the supply mix in the mid- to
late-2020s.
WoodMac says that the rate of discovery is highly correlated with the level of spending, so
closing the supply gap will require more capital. And because of the run up in oil prices this
year, the industry will have a lot more cash to throw around.
The problem for the industry is that over the last few years the mindset, and the demands of
shareholders, have shifted from production growth to profitability and investor returns.
Shareholders are pressuring executives to return cash in the form of dividends and share
buybacks. Energy stocks are not the darlings of Wall Street in the way they once were,
particularly prior to the 2014 market meltdown. That puts extra pressure on oil and gas
companies to dish out more of their earnings to investors rather than plowing it back into the
ground.
But that means less spending on exploration. "The mind set for most E&Ps is still to
be conservative, and default is to return capital to shareholders. Yet the duty to
shareholders' interests cannot be myopically short term. More of the 'windfall' cash needs to
find its way into exploration to sustain the business in the long term," WoodMac said in
its report.
Shale output will continue to grow, especially after new pipelines come online in Texas,
which will ease the current bottleneck. But the large-scale increases in production in the
medium-term will come from "frontier areas," WoodMac says, as the string of
discoveries in Guyana prove. WoodMac says the areas with the highest potential include
"Suriname, the Brazilian Equatorial Margin; Mexico; Senegal, Gambia, Namibia and South
Africa; Australia and Alaska."
For now, the level of activity is not enough to stave off the supply crunch, WoodMac warns,
unless there is a dramatic increase in spending. "More explorers need to get in on the
action if the spectre of 'peak supply' is to be kept at bay," the consultancy says.
span y gjohnsit on Fri, 09/28/2018 - 9:16pm Last week the Trump Administration
ranted
against OPEC because the Iranian sanctions are driving up
oil prices .
That's called blowback.
Today we see the next level of
blowback.
The State Department says the U.S. consulate in the southern Iraqi city of Basra is being
evacuated following attacks blamed on Iran-backed militias. The U.S. embassy in Baghdad will
provide full consular services for Basra and the surrounding area, the State Department said.
What's most notable is the reaction by US
secretary of state Mike Pompeo.
US secretary of state Mike Pompeo directly threatened retaliation against Iran on Friday,
after accusing Iranian forces of repeatedly directing attacks against US diplomatic
facilities in Iraq.
"Iran should understand that the United States will respond promptly and appropriately to
any such attacks," Mr Pompeo said in a statement, adding both the US consulate general in
Basrah and the US embassy in Baghdad had been targeted.
Recently, #Iran -supported
militias in Iraq launched rocket attacks against the U.S. embassy in Baghdad and our
consulate in Basra. We'll hold #Iran 's regime
accountable for any attack on our personnel or facilities, and respond swiftly and decisively
in defense of American lives. pic.twitter.com/nqbmogbeCA
What is happening in Iraq could lead directly to a proxy war with Iran in Iraq.
The Pentagon says U.S. forces will
stay in Iraq "as long as needed". There are about 5,200 U.S. troops in Iraq, versus about
100,000 Shia militiamen.
Pompeo is working with Saudi Arabia to form an anti-Iran
coalition known as the Middle East Strategic Alliance.
As recently as April, the U.S. was telling those Shia militias were welcome in
Iraq.
Last month those Shia militias threatened to attack foreign
troops in Iraq if they didn't leave.
span y Amanda Matthews on Fri, 09/28/2018 - 9:59pm
" Has the regime in #Iran lived together with other nations in peace? Has it been a good
neighbor? Look around the world and you'll see the answer is a deafening "no."
"Iran-backed militias." That would be Iraqis, no? Is the ultimate plan then to, um,
eliminate Iraq's Shia? I expect to hear, soon, that Iraqi Shia test their chemical weapons on
children.
The UN Charter calls for nations to "live together in peace with one another as good
neighbors." Has the regime in #Iran lived together with other nations in peace? Has it been a
good neighbor? Look around the world and you'll see the answer is a deafening "no."
Why the leaders of the rest of the world didn't walk out on Trump when he threatened other
countries is beyond my comprehension. How much longer will they waste their citizen's lives and
their money just because we told them to jump?
Remember when Obama said that "no country should have to tolerate bombs dropping on them
from outside their borders?
I think those measure have implicit blessing from Washington, which realized how dangerous
withdrawal of Iraq oil from the market can be for the USA economy
The UN General Assembly (UNGA) in New York is a place where world leaders are able to hold
important meetings behind closed doors. Russia, China, the UK, Germany, France, and the EU
seized that opportunity on Sept. 24 to achieve a real milestone.
The EU, Russia, China, and Iran
will create a special purpose vehicle (SPV), a "financially independent sovereign channel,"
to bypass US sanctions against Tehran and breathe life into the Joint Comprehensive Plan of
Action (JCPOA) , which is in jeopardy. "Mindful of the urgency and the need for tangible
results, the participants welcomed practical proposals to maintain and develop payment
channels, notably the initiative to establish a Special Purpose Vehicle (SPV) to facilitate
payments related to Iran's exports, including oil," they announced in a
joint statement. The countries are still working out the technical details. If their plan
succeeds, this will deliver a blow to the dollar and a boost to the euro.
The move is being made in order to save the 2015 Iran nuclear deal. According to Federica
Mogherini , High Representative of the European Union for Foreign Affairs and Security
Policy, the SPV will facilitate payments for Iran's exports, such as oil, and imports so that
companies can do business with Tehran as usual. The vehicle will be available not just to EU
firms but to others as well. A round of US sanctions aimed at ending Iranian oil exports is to
take effect on November 5. Iran is the world's seventh-largest oil producer. Its oil sector
accounts for 70% of the country's exports. Tehran has warned the EU that it should find new
ways of trading with Iran prior to that date, in order to preserve the JCPOA.
The SPV proposes to set up a multinational, European, state-backed financial intermediary to
work with companies interested in trading with Iran. Payments will be made in currencies other
than the dollar and remain outside the reach of those global money-transfer systems under US
control. In August, the EU passed a blocking statute to guarantee the immunity of European
companies from American punitive measures. It empowers EU firms to seek compensation from the
United States Treasury for its attempts to impose extra-territorial sanctions. No doubt the
move will further damage the already strained US-EU relationship. It might be helpful to create
a special EU company for oil exports from Iran.
Just hours after the joint statement on the SPV, US President Trump defended his unilateral
action against Iran in his
UNGA address . US Secretary of State Mike Pompeo condemned the EU initiative ,
stating:
"This is one of the most counterproductive measures imaginable for regional global peace
and security."
To wit, the EU, Russia, and China have banded together in open defiance against unilateral
steps taken by the US. Moscow and Beijing are in talks on how to combine their efforts to fend
off the negative impacts of US trade tariffs and sanctions. A planned Sept 24-25 visit by
Chinese Vice-Premier Liu, who was coming to the United States for trade talks, was cancelled as
a result of the discord and President Trump added more fuel to the fire on Sept. 24 by imposing
10% tariffs on almost half of all goods the US imports from China. "We have far more bullets,"
the president
said before the Chinese official's planned visit. "We're going to go US$200 billion and 25
per cent Chinese made goods. And we will come back with more." The US has recently imposed
sanctions on China to punish it for the purchase of Russian S-400 air-defense systems and
combat planes. Beijing refused to back down. It is also adamant in its desire to continue
buying Iran's oil.
It is true, the plan to skirt the sanctions might fall short of expectations. It could fail
as US pressure mounts. A number of economic giants, including Total, Peugeot, Allianz, Renault,
Siemens, Daimler, Volvo, and Vitol Group have already left Iran as its economy plummets, with
the rial losing two-thirds of its value since the first American sanctions took effect in May.
The Iranian currency dropped to a record low against the US dollar this September.
What really matters is the fact that the leading nations of the EU have joined the global
heavyweights -- Russia and China -- in open defiance of the United States.
This is a milestone event.
It's hard to underestimate its importance. Certainly, it's too early to say that the UK and
other EU member states are doing a sharp pivot toward the countries that oppose the US
globally, but this is a start - a first step down that path. This would all have seemed
unimaginable just a couple of years ago - the West and the East in the same boat, trying to
stand up to the American bully!
"... So, Donald Trump finally folding on stopping Nordstream 2 is yet another example of the limits of what power the U.S. has and of its threats. When he denounced the project he said, ..."
"... "I never thought it was appropriate. I think it's ridiculous. And I think it's certainly a very bad thing for the people of Germany. And I've said it very loud and clear." ..."
"... But notice that he never said why. Because there is no downside for Germany. That's the point. Russian piped gas is simply cheaper and more reliable than LNG produced more than 3000 miles away. The downside is for the U.S. ..."
"... It begins the process of Germany and Russia re-establishing stronger economic ties cut in half by the 2014 sanctions over Crimea. It keeps Merkel in power a little while longer having stood up to the bully Trump and showing some German independence. ..."
"... Most importantly, this gas will be paid for in euros, not dollars. And this further undermines the effectiveness of U.S. sanctions as Gazprom will have a steady supply of euros to pay back its investors and diversify Russia's currency reserves. ..."
"... We saw this last winter when vicious cold snaps forced a hostile Britain to buy a few tankers of Yamal LNG from Novatek to keep its citizens from freezing. With the planet cooling rapidly, expect this source of spot demand to Europe to increase. ..."
"... But, for Germany, and the EU as a whole, more cheap energy is the path to remaining somewhat relevant in the global economy. With Germany ending the use of nuclear power it needs the type of energy Nordstream 2 supplies. In fact, Germany will eventually need Nordstream 3. ..."
Since its first announcement I have been convinced the Nordstream 2 pipeline would be built.
I have followed every twist of this story from my days writing for Newsmax.
And the reason for my confidence can be summed up in one word. Money.
Nordstream 2 simply makes too much economic sense for any amount of political whining from
the U.S. and Poland to stop it. Poland has no power within the European Union.
Germany does. And while I'm no fan of Angela Merkel getting another political weapon to hold
over the heads of the Poles, their attempts to derail the project were always going to end in
tears for them.
And so now Poland and the U.S. cried a lot of crocodile tears recently when President Trump
finally acceded to reality and ended the threat of sanctioning five of the biggest oil majors
in the world over doing business with Gazprom over Nordstream 2.
Nordstream 2's investors are Uniper, OMV, Wintershall, Royal Dutch Shell and Engie. After
all the permits were issued and construction begun the only thing that could stop Nordstream
from happening was these five companies folding to U.S. pressure and backing out of the project
by calling in their loans to Gazprom.
And when they were unwilling to do that, Trump had to fold because you can't cut these
companies out of the western banking system and starve them of dollars and euros without an
extreme dislocation in oil prices and global trade.
Bluff called. Nordstream 2? Holding Aces.
Trump? Holding two-seven offsuit.
Lack of Polish
The big loser here is Poland unless they come down off their Russophobic high horse.
Why is Nordstream 2 so important to Poland? Because it forces Poland into choosing between
two things the current ruling Law and Justice Party doesn't like.
Renegotiating a gas transit deal with Gazprom through Ukrainian pipelines without as much
leverage. Because the current agreement expires at the end of 2019.
If they reject this first option then they are at the mercy of buying gas from Nordstream
2 putting them politically in the hands of Germany.
Merkel is angry with Poland for trying to assert its sovereignty having begun Article 7
proceedings over their law putting Supreme Court justices under review from the legislature,
which the EU has termed a violation of its pledge to protect 'human rights.'
And so, expect Poland to now open up talks with Gazprom to negotiate a new deal or be stupid
and buy LNG from the U.S. at two to three times the price they can get it from
Gazprom.
Keeping Them Distant
From the U.S. side of the equation there are few things in this life that Donald Trump and
Barack Obama agree upon, and stopping Nordstream 2 was one of them. This, of course, tells you
that this opposition is coming from somewhere a lot higher than the Presidency.
U.S. and British foreign policy has been obsessed for more than a hundred years with
stopping the natural alliance between Germany's industrial base and Russia's vast tracts of
natural resources as well as Russia's own science and engineering prowess.
These two countries cannot, in any version of a unipolar world dominated by The Davos
Crowd, be allowed to form an economic no less political alliance because the level of
coordination and economic prosperity works directly against their goals of lowering everyone's
expectations for what humans can accomplish.
That is their greatest source of power. The complacency of our accepting low
expectations.
So, Donald Trump finally folding on stopping Nordstream 2 is yet another example of the
limits of what power the U.S. has and of its threats.
When he denounced the project he said,
"I never thought it was appropriate. I think it's ridiculous. And I think it's certainly a
very bad thing for the people of Germany. And I've said it very loud and clear."
But notice that he never said why. Because there is no downside for Germany. That's the point. Russian piped gas is simply
cheaper and more reliable than LNG produced more than 3000 miles away. The downside is for the U.S.
It begins the process of Germany and Russia re-establishing stronger economic ties cut in
half by the 2014 sanctions over Crimea. It keeps Merkel in power a little while longer having
stood up to the bully Trump and showing some German independence.
This is something she sorely needs right now coming into regional elections in October.
Most importantly, this gas will be paid for in euros, not dollars. And this further
undermines the effectiveness of U.S. sanctions as Gazprom will have a steady supply of euros to
pay back its investors and diversify Russia's currency reserves.
The Flow of Money
There is no way for U.S. LNG supplies to be competitive in Europe without massive artificial
barriers-to-entry for Russian gas. And even if Nordstream 2 was somehow stopped by the U.S.,
Russia's massive Yamal LNG facility on the Baltic Sea would still out compete U.S LNG from
Cheniere's terminal in Louisiana.
Location. Location. Location.
We saw this last winter when vicious cold snaps forced a hostile Britain to buy a few
tankers of Yamal LNG from Novatek to keep its citizens from freezing. With the planet cooling
rapidly, expect this source of spot demand to Europe to increase.
And this is why Russia also benefits from Poland building an LNG terminal. Because don't for
a second think Poles will suffer extreme cold because Andrej Duda hates Russians.
That's just funny, right thar!
But, for Germany, and the EU as a whole, more cheap energy is the path to remaining somewhat
relevant in the global economy. With Germany ending the use of nuclear power it needs the type
of energy Nordstream 2 supplies. In fact, Germany will eventually need Nordstream 3.
Each intervention by the U.S. or one of its satraps (and Poland's leadership certainly fills
that bill) to block any further business between Russia and Europe, but especially Germany,
keeps the world on edge and inches us closer to a military confrontation while open trade and
travel moves us farther from that outcome.
And anyone who argues otherwise is simply talking their book. They profit from war
and tension. They profit from manipulating markets and, in effect, stealing the wealth someone
else created.
So, this is not to say that Nordstream 2 is some kind of messianic gift from the gods or
anything. It is the result of massive interventions into the free market for energy born of
necessity in a world governed by nation-states for more powerful than they have any right to be
because of control of the issuance of money and the rent-seeking behavior of the
people who most benefit from the creation of endless supplies of that money.
But, that said, in the current state of things, rapprochement between Germany and Russia via
projects like the Nordstream 2 points us towards a future without such nonsense.
I said points, not achieves. It's a beginning not an end. Lost in all of this discussion of
European energy security is the fact that even at the height of the Cold War the U.S.S.R. never
once shut off gas supplies to its enemies. And under Putin that fact remains.
And how's that for an inconvenient truth.
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The breakout in Brent crude prices above $80 this week has prompted analysts at the sell
side banks to start talking about a return to $100 a
barrel oil . Even President Trump has gotten involved, demanding that OPEC ramp up
production to send oil prices lower before they start to weigh on US consumer spending, which
has helped fuel the economic boom over which Trump has presided, and for which he has been
eager to take credit.
But to hear respected petroleum geologist and oil analyst Art Berman tell it, Trump should
relax. That's because supply fundamentals in the US market suggest that the recent breakout in
prices will be largely ephemeral, and that crude supplies will soon move back into a
surplus.
Indeed, a close anaysis of supply trends suggests that the secular deflationary trend in oil
prices remains very much intact. And in an interview with MacroVoices , Berman laid out his argument using a handy
chart deck to illustrate his findings (some of these charts are excerpted below).
As the bedrock for his argument, Berman uses a metric that he calls comparative petroleum
inventories. Instead of just looking at EIA inventory data, Berman adjusts these figures by
comparing them to the five year average for any given week. This smooths out purely seasonal
changes.
And as he shows in the following chart, changes in comparative inventory levels have
precipitated most of the shifts in oil prices since the early 1990s, Berman explains. As the
charts below illustrate, once reported inventories for US crude oil and refined petroleum
products crosses into a deficit relative to comparative inventories, the price of WTI climbs;
when they cross into a surplus, WTI falls.
Looking back to March of this year, when the rally in WTI started to accelerate, we can on
the left-hand chart above how inventories crossed below their historical average, which Berman
claims prompted the most recent run up in prices.
Comparative inventories typically correlate negatively to the price of WTI. But
occasionally, perceptions of supply security may prompt producers to either ramp up - or cut
back - production. One example of this preceded the ramp of prices that started in 2010 when
markets drove prices higher despite supplies being above their historical average. The ramp
continued, even as supplies increased, largely due to fears about stagnant global growth in the
early recovery period following the financial crisis.
The most rally that started around July 2017 correlated with a period of flat production
between early 2016 and early 2018.
Meanwhile, speculators have been unwinding their long positions. Between mid-June 2017 and
January 2018, net long positions increased +615 mmb for WTI crude + products, and +776 for WTI
and Brent combined. Since then, combined Brent and WTI net longs have fallen -335 mmb, while
WTI crude + refined product net long positions have fallen -225 mmb since January 2018 and -104
mmb since the week ending July 10. This shows that, despite high frequency price fluctuation,
the overall trend in positioning is down.
And as longs have been unwinding, data show that the US export party has been slowing, as
distillate exports, which have been the cash cow driving US refined product exports, have
declined. Though they remain strong relative to the 5-year average, they have fallen relative
to last year. This has accompanied refinery expansions in Mexico and Brazil.
Meanwhile, distillate and gasoline inventories have been building.
Meanwhile, US exports of crude have remained below the 2018 average in recent weeks, even as
prices have continued to climb.
This could reflect supply fears in the global markets. The blowout in WTI-Brent spreads
would seem to confirm this. However, foreign refineries recognize that there are limitations
when it comes to processing US crude (hence the slumping demand for exports).
In recent weeks, markets have been sensitive to supply concerns thanks to falling production
in Venezuela and worries about what will happen with Iranian crude exports after US sanctions
kick in in November.
But supply forecasts for the US are telling a different story than supply forecasts for
OPEC. In the US, markets will likely remain in equilibrium for the rest of the year, until a
state of oversupply returns in 2019. But OPEC production will likely continue to constrict,
returning to a deficit in 2019.
Bottom line: According to Berman, the trend of secular deflation in oil prices remains very
much intact. While Berman expects prices to remain rangebound for the duration of 2018 - at
least in the US - it's likely markets will turn to a supply surplus next year, sending prices
lower once again.
Karlof1 I could be wrong of course but one example of why none of that would matter is
when the US dollar for all practical purposes winks out of existence and that could happen
right now as we speak. Why would that happen you may ask? It would happen whenever someone
"beyond personal wealth" like the usual finance suspects decides it is the way for them to
make enormous amounts of profit out of the resulting worldwide instability before any of
their competitors beat them to it. The longer they wait the more likely someone else will
jump the gun and surprise them.
I don't think the US has two years worth of "blood" left in it before that happens.
In a sense nothing will be left when each and every dollar becomes at least 20 trillion
times less valuable. If the response to that happening is the same as the early 20ieth
century response (Germany) then nothing will be left at all considering the difference in
technology and differences in circumstance (everybody already have the weapons ready). If the
response is the late 20ieth century response (USSR) then maybe something will be left but the
USSR was both lucky and relatively solvent in comparison to the current US. The starting
point for the US is several magnitudes worse in both examples. The world can't afford to
carry the US at cost any more than the US can't right now and like the US haven't been able
to for decades, the required wealth doesn't exist.
The nascent USA had its national capital sacked and presidential residence burnt during
what's known as the War of 1812, yet it continued to exist politically. Same during Civil
War. During the Revolutionary War, the USA had a national government and 13 separate state
governments, all of which continued to function as the war raged. There've been at least two
Coups--1963 and 2000--but the USA continued its political existence. Even the Germany
destroyed by WW2 still existed politically. Destroying political entities is
very--extremely--difficult, which is why it seldom occurs. Rome's central authority ceased in
the mid 6th century but its provinces continued as did the Eastern portion of the Roman
Empire. Russia's governmental system was drastically altered during and after Russia's Civil
War, but Russia continued to exists as a political entity. The USSR was an imperial governing
edifice built atop numerous national political entities. It did vanish, but the nations
comprising it didn't; indeed, new nations were born as a result.
As for the dollar and its international position, even those nations desirous of undoing
dollar hegemony have said it cannot be done overnight as the overall system is both too
complex and too fragile for hasty adjustments to be made stably . Moreover, for better
or worse, the Outlaw US Empire's an integral component of the global economy, which motivates
those changing the system to arrive at a Soft Landing, not a Hard Crash.
Catastrophism belongs in the realm of Geology, not Geopolitics, although the former will
certainly affect the latter. Geopolitics can certainly enable an ecological crisis such as
the Overshoot we're now entering, but that's several magnitudes less than what rates as a
geological catastrophe--and not all such catastrophes are global.
Порошенко
заявил немцам,
что
строительство
"Северного
потока – 2" не
имеет никакого
смыслаPoroshenko has told Germans that the
construction of "North Stream 2" makes no sense. По его словам,
российский газ
европейцам
гораздо
выгоднее
получать через
Украину, а
новый
газопровод –
лишь
"инструмент
давления" на
Европу According to him, it is much more profitable to send Russian gas to Europe through the
Ukraine, and the new pipeline is just a "tool to pressurize" on Europe
Please help me get even more wealthier, I beg you!
The leader of "Independent" Ukraine, Petro Poroshenko, has once again tried to convince
Europeans that they do not need the "North Stream 2", pipeline, which is being constructed on
the bed of the Baltic sea, bypassing the Ukraine
"This pipeline makes no sense from an economic point of view. This is a Russian attempt
to weaken the Ukraine, which previously received about three billion dollars annually for
transit", he said in an interview with German newspaper "Rheinische Post".
According to Poroshenko, "Why spend $20 billion on a pipeline", if his country "has
more than sufficient logistical capacity for the delivery of Russian gas to Europe". He
stressed that "the facts speak against" this project.
The President of the Ukraine has decided to warn his "European friends" that the gas
pipeline "North Stream 2" is "a geopolitical instrument of pressure on Western Europe, and
that the dependence of European countries on gas supplies from Russia is opening up a wide
area for their blackmailing".
Recall, as reported by the website kp.ru previously, the Chancellor of Germany, Angela
Merkel, speaking at a joint press conference with the President of Lithuania, Dalia
Grybauskaite, and the Prime Ministers of the three Baltic State countries, stated the
importance of the "North Stream 2" project for Germany, noting that the need of her contry
for natural gas supplies will only grow.
Put a sock in it, Banderatard. Nord Stream II makes sense merely because it removes the $3
billion per year of transit fees you parasites charge. The Banderatard thinks that everyone
is an innumerate moron.
I notice the estimated transit fees have gone up by almost a billion dollars. I wonder if
they have budgeted in planned increases if they are successful at getting Nord Stream II shut
down. Or were they just low-balling the figures before, like when they were joking about the
planned pipeline and how it would make no difference to Ukraine?
Ignoring reality and focusing just on a comparison of a $3 billion recurring expense versus a
$20 billion CAPEX, a ROI of less than 7 years is quite respectable for a major project.
The thing is the Americans, contrary to the rest of the world, doesn't use the annualised
rate to calculate their GDP growth, buth the quarterly rate "normalised". This leads to
absurd growth rates in the USA, such as the eye-popping 4.1% growht in Q2 2018 etc. etc. (see
the link above for more information).
Bill Clinton (2000) was the last POTUS which affered a quarterly growth above the peak of
his predecessor, but this is easily explainable: George H. W. Bush was a one-term POTUS (a
rarity post-Carter), and he governed through much of the 1990-92 recession of the Western
Civilization (specially in the UK, Germany and Japan). Clinton caught pretty much the last
innovation cycle capitalism could do: the internet era, which would burst precisely in 2001
(dotcom bubble). George W. Bush reaped the recovery of the recession in 2002, and the
financial capital continue to growth to an apex in 2006 or 2007 (depending on the country you
live): that was the last time capitalism, all things considered, could state it "delivered"
(at least to the first world countries); the 2008 meltdown would only affect the "emergent
economies" in the end of 2011, after 2012, capitalism stopped "delivering" to the whole
world.
Notice I'm not including China (which suffered a little bit in 2009, the aftermath of the
great recession). That's because China is not a capitalist country, therefore the economic
rules of globalization don't apply to the Chinese in the classic way.
Putin has stated publicly at least two times that, if he could go back in time to do one
thing, he would go back to 1991 and save the USSR. I will forever wonder: what if the USSR
survived for 17 more years? The world would be in a completely different (much better)
situation it is now.
- This is a repost of the recent Palisade
Weekly Letter –
Earlier this week –
news went by relatively unnoticed by the ' mainstream ' financial media (CNCB and such)
that Beijing's started selling their U.S. debt holdings.
Putting it another way – they're dumping U.S. bonds. . .
"China's ownership of U.S. bonds, bills and notes slipped to $1.17 trillion, the lowest
level since January and down from $1.18 trillion in June."
And although they're starting to sell U.S. bonds – expect it to be at a slow and
steady pace. They don't want to risk hurting themselves over this.
I believe China may be selling just enough to get the attention of Trump and the Treasury. A
soft warning for them not to take things too far with tariffs and trade.
Yet already just as news hit the wire that China was selling bonds a few days ago –
U.S. yields spiked above 3%. . .
Don't forget that China's the U.S.'s largest foreign creditor. And this is an asset for
them.
And although them selling is worrisome – the real problems started months ago. . .
Over the last few months, my macro research and articles are all finally coming together.
This thesis we had is finally taking shape in the real world.
I wrote in a detailed piece a few months back that foreigners just aren't lending to the
U.S. as much anymore ( you can read that here ).
I called this the 'silent problem'. . .
Long story short: the U.S. is running huge deficits. They haven't been this big since the
Great Financial Recession of 08.
And it shouldn't come as a surprise to many.
Because of Trump's tax cuts, there's less government revenue coming in. And that means the
increased military spending and other Federal spending has to be paid for on someone else's
tab.
The U.S. does 'bond auctions' all the time where banks and foreigners buy U.S. debt –
giving the Treasury cash to spend now.
But like I highlighted in the 'silent problem' article (seriously, read it if you haven't)
– foreigners are buying less U.S. debt recently. . .
This is a serious problem because if the Treasury wants to spend more while collecting less
taxes, they need to borrow heavily.
This trend's continued since 2016 and it's getting worse. And with the mounting liabilities
(like pensions and social security and medicare), they'll need to borrow trillions more in the
coming years.
So, in summary – the U.S. has less interested foreign creditors at a time when they need
them more than ever.
But wait, it gets worse. . .
The Federal Reserve's currently tightening – they're raising rates and selling bonds
via Quantitative Tightening (QT – fancy word for sucking money out of system).
This is the second big problem – and I wrote about in 'Anatomy of a Crisis' (
read here ). And
even earlier than that
here .
So, while the Fed does this tightening, they're creating a global dollar shortage. . .
As I wrote. . . "This is going to cause an evaporation of dollar liquidity – making
the markets extremely fragile. Putting it simply – the soaring U.S. deficit requires an
even greater amount dollars from foreigners to fund the U.S. Treasury . But if the Fed is
shrinking their balance sheet , that means the bonds they're selling to banks are sucking
dollars out of the economy (the reverse of Quantitative Easing which was injecting dollars into
the economy). This is creating a shortage of U.S. dollars – the world's reserve currency
– therefore affecting
every global economy."
The Fed's tightening is sucking money – the U.S. dollar – out of the global
economy and banks. And they're doing this at a time when Foreigners need even more liquidity so
that they can buy U.S. debt.
How is the Treasury supposed to get funding if there's less dollars out there available? And
how can they entice investors if Foreigners don't have enough liquidity to fund U.S. debt?
These Emerging Markets must use their dollar reserves to prop up their own currencies and
economies today. They can't be worrying about funding U.S. pensions and other bloated spending
when their economies are crumbling.
These two themes I've written about extensively – the decline of foreign investors and
the Fed's tightening – have gotten us to this point today.
And the U.S. is extremely fragile because of both problems. . .
Here's the worst part – China probably knows this . That's why they're selling just
enough U.S. bonds to spook markets.
But if the trade war and soon-to-be a currency war continues, no doubt China will sell more
of their debt – sending yields soaring.
I just got done last week detailing how U.S. debt servicing costs (interest payments) are
already becoming very unsustainable ( click here if you missed it
).
At this point they're literally borrowing money just to pay back old debts – that's
known as a 'ponzi scheme'.
This is why I believe the Fed will eventually cut rates back to 0% – and then into
negative territory. And instead of sucking money out of the economy via QT, they're going to
start printing trillions more.
How else will the Treasury be able to get the funding they need?
I'll continue to keep you up to date with what's going on and how it all fits together.
But I think the two big problems I wrote about above are now converging into a new massive
problem. And I don't see any way out of it unless the Fed monetizes the U.S. Treasury and
outstanding debts. And that will cause massive moves in the markets.
I'm sure Trump will eventually
tweet , "Oh Yeah? Foreigners don't want to buy the U.S. debt? Blasphemy! Who needs you all
when we have a printing press!"
Or something like that. . .
TimeTraveller , 1 hour ago
I'm really starting to get sick of these crap reports from Palisade Research. Again they
are totally wrong on so many levels.
1. China is selling Treasuries, because they are pre-empting a debt crisis in their own
country and need Dollar financing for their overleveraged companies and their banking sector.
Also, China is lending money to every 3rd world country that needs infrustructure for it's
Belt and Road Initiative. Building ports, bridges and railways across Asia and Africa, costs
money.
2. Selling Treasuries will weaken the Dollar, so making the RMB stronger. China does NOT
want the RMB stronger because it erodes their exporters margins and competetiveness. Why
would they want to hurt themselves just to punish their biggest customer?
To even suggest China is "using the Nuclear option" of dumping Treasuries just shows your
total ignorance of the real world.
Palisade are clueless
ConanTheContrarian1 , 1 hour ago
OTOH, the crisis in Emerging Markets and the effect of capital flight on China are just
two of the MANY things not mentioned in this article. There has been tension building into
financial warfare between China and the US ever since they pegged the yuan low to the dollar
in 1987. The US is doing things under the table to China, China to the US, and they're both
quite capable of paying Adam Tumerkan (and others) to write hit pieces against the other
side. Think deeply before choosing a side.
Another landmark for the "Northeastern passage" -- so far only tankers had made the trip
Brendon Petersen
16 hours
ago
|
1,546
5
Explorers and navigators have long searched for a way to move ships through the Arctic Circle as find a faster way
to move goods between the Atlantic and the Pacific without having to go around either Asia or South America.
Groups of people hunted for the fabled Northwest passage through North America for decades. The problem, of
course, is that the Arctic contains too much ice.
Over the past few years, however, ice levels in the Arctic
have been
hitting
record lows
thanks to climate change, and while its effects are almost universally negative, one benefit is
opened northern sea routes. Over the past month, a container ship sailing from Eastern Russia is pioneering a new
Arctic route by
being
the first such ship to cross the Arctic Ocean
.
On August 23, the container ship Venta Maersk left the Russian port of Vladivostok and headed to Bremerhaven in
Germany. Normally, a trip like that would take the Venta Maersk through the Suez Canal on a 34 day trip. Instead,
the ship will sail through the sea north of Russia on a route that will only take 23 days.
Last week, the Venta Maersk passed through the Sannikov Strait, the narrowest and most hazardous part of its
journey, and is expected to arrive in Germany by the end of the week. Once it arrives, it will become the first
container ship to complete a successful route through the Arctic Circle.
We protect the countries of the Middle East, they would not be safe for very long
without us, and yet they continue to push for higher and higher oil prices! We will
remember. The OPEC monopoly must get prices down now!
OPEC does, in fact, control oil supply to a significant extent but that does not necessarily
mean that it is also in full control of the oil prices, Jack Rasmus, a professor of Political
Economy at St. Mary's College of California, told RT, adding that the policies pursued by the
US president himself play a much bigger role in what happens to oil and gasoline prices in the
US.
"The US economy is overstimulated by the Trump $4 trillion tax cuts for investors and
businesses," Rasmus explained, adding that the rising inflation is one of the primary
factors contributing to the oil price surge. Apart from that, Trump's trade war with China and
even with the US allies in the West also drives up the prices, as businesses also have to raise
them to adapt to the tariffs that both the US and its trading partners have imposed
recently.
Trump's sanctions war on Iran also does not make the situation any better. The US sanctions,
which are aimed at bringing Iran's oil exports to "zero," led to a decrease in Iran's
oil sales, thus cutting the supply and driving the prices up. As if it was not enough, Trump's
rhetoric only adds fuel to the fire, according to Rasmus.
"When Trump accuses Iran publicly, it gives the global oil speculators a reason to drive
up the price," he told RT, adding that it is the "global speculators that are driving the
short-term oil prices." "There is a connection between the speculators and Trump policies. When
he makes those statements, it certainly does contribute to the oil prices rise," the analyst
explained.
This rhetoric was more about winning voters' support ahead of the November mid-term
elections than about really remedying the situation in the oil market, Rasmus says. "He is
whipping up his domestic base," the analyst said, adding that "Trump [is] trying to
blame foreigners of all kinds for economic situation in the US."
Trump got elected on a platform of economic nationalism in particular, Rasmus said, adding
that the president now sticks to that narrative and blames foreigners –be they immigrants
or some foreign competitors– for the US' woes. However, this is "another factual
misrepresentation," the analyst said.
As oil prices remain high, prices for gasoline in the US are growing. The average cost of
gasoline has risen 60 percent from $1.87 per gallon in February 2016 to over $3 in
September.
This scenario would leave the US with the main sources of 'low production cost' Middle
East energy in its hands (i.e. Gulf, Iran and Iraqi oil and gas). On the face of this week's
events however, it looks more likely that these resources - or at least, the greater energy
resources of Iran and Iraq - will end up in the Russian sphere (together with Syria's
unexplored Levant Basin prospects). And this Russian 'heartland', energy-producing sphere,
may, in the end, prove to be a more than substantive rival to US (newly emerged as 'the
world's top oil producer') aspirations for restoring its Mideast energy dominance.....
The piece covers both Trump's plans for global energy dominance by taking full control of
middle east oil and also the Trump Kushner moves against the Palestinians.
Perhaps the Eagle Ford will never be profitable, it will depend on the price of oil and
many other factors.
I guess I have a little more faith in the oil industry than you.
EOG has produced a fair amount of oil in the Eagle Ford and their net income in 2014 (when
oil prices were high) was $2.9 billion, about 178 kb/d of C+C was produced from Eagle Ford in
2014 (about 65 million barrels) by EOG (about 62% of total 2014 EOG C+C output). The average
price for C+C in the US received by EOG was about $93/b in 2014.
So it seems in 2014, for a well run oil company, $93/b worked just fine. Over the period
from 2010 to 2014 EOG's net income was about $6 billion. From 2010 to 2017, the total net
income was about $2.6 billion (not adjusted for inflation) as 2015 and 2016 were bad years
with 5 billion losses in net income.
Debt to assets at the end of 2017 was about 21% with debt at $6.4 billion and assets at
$29.8 billion. In 2017 Eagle Ford output was about 47% of EOG's C+C output, the average oil
price EOG received in the US was $50.91/b in 2017, about $600 million of long term debt was
paid off in 2017 with no new long term debt issued, but net cash flow was negative $766
million.
A discounted cash flow at a 10% annual discount rate results in a breakeven oil price (10%
annual ROI) of $90.3/b for the average 2016 Eagle Ford well, if we assume a well cost of 9
million. Note that this is a "real" discount rate as I do costs in real inflation adjusted
dollars, so it is equivalent to a nominal discount rate of 12.5% so would be equivalent to a
nominal annual ROI of 12.5%.
EUR is 238 kb over 13.8 years and the well is shut in at 10 b/d. An assumption of 15 b/d
shut in reduces EUR to 220 kb and well life to 9.75 years, and breakeven oil price rises to
$91/b, an increase of 70 cents per barrel. Well payout is in 46 months at $91/b.
What is the full cost of the average Eagle Ford well?
Note that I have assumed zero revenue from natural gas or NGL in my breakeven analysis and am
considering C+C output only, not sure if there are natural gas pipeline bottlenecks in the
EFS as there seems to be in the Permian basin. In any case, the economics might be slightly
better when natural gas is included.
There wasn't significant drilling in the Eagle Ford Shale until 2011. How many of the 700
inactive wells started producing in 2009 and 2010? By Enno Peters data using Eagle Ford and
unknown wells in Karnes County from Jan 2011 to Dec 2016, I get 2487 horizontal wells
completed in total over that period. Note that the productivity rate distribution at Enno's
site gives some funky numbers at the low end, so they should probably be ignored. "Zero"
output after 24 months should probably be less than 15 b/d after 24 months. For Eagle Ford
2014 wells, supposedly there are 1747 wells with zero production rate after 24 months out of
3962 total wells, this is just a programming error. That is, zero does not mean zero in this
case, would be my guess.
I checked with Enno Peters on this and the lowest column means output at 24 months is 0 to 50
b/d, same is true for each column it is from the previous to the next label so 0-50, 50-100,
etc.
Could over 20% of the horizontal wells in Karnes Co., TX already be shut in for over
one year? These wells first produced 1/1/2019 to 12/31/2016, so they are not old wells at
all? Less than 10 year economic life?
No the wells have not been shut in as you think, for 2009 to 2016 wells in Karnes county
and Eagle Ford Formation I get 763 wells with "zero" production rate at Enno's site. He has
pointed out that this is really 0 to 50 bopd for those 763 wells out of a total of 2425 wells
producing that started production from 2009 to 2016. The average production rate was 86 bopd
for all of the Karnes county Eagle Ford formation wells.
For all counties there were 15,600 wells with 7754 wells with output at 0 to 50 bopd at 24
months. Average for all counties is 63 bopd at 24 months. At 12 months the average rate was
127 bopd for all counties with about 25% of the wells at 0 to 50 bopd at 12 months.
Older article, but more important, now. EIA, and most of the Rystad type companies are
continuing to report significant increases in the Permian. Latest monthlies are from June,
all else is estimated, including drilling info. Completions are happening, and the new wells
included in drilling info are, no doubt, true as to production. Who measures shut ins until
final numbers are accumulated? Who spends significant time communicating with the small
producer? Heck, they make up half the wells drilled in the Permian. I think there are
considerable shut ins that will eventually reduce the magnificent increases that are
currently being reported.
I ran a quick search on horizontal wells in Karnes Co., TX.
I found 2,778 active horizontal wells with first production from 1/1/2009 to
12/31/2016,
In the most recent month, here are the numbers:
170 wells produced 3,001+ BO
1,034 wells produced 1,001-3,000 BO
872 wells produced 501-1,000 BO
702 wells produced 1-500 BO
Could that be correct?
Furthermore, there appear to be over 700 inactive wells, which are defined as wells that
have no recorded oil or gas production in the last 12 months.
Could over 20% of the horizontal wells in Karnes Co., TX already be shut in for over one
year? These wells first produced 1/1/2019 to 12/31/2016, so they are not old wells at all?
Less than 10 year economic life?
I know Mike has commented on how bad the EFS really is economically. It seems the hyper
focus is now on the PB. However, EFS produces significant volumes of oil. Looks like this one
could really collapse once the last locations are completed.
I saw many, many wells with cumulative production of 250K oil, that are now producing
under 500 BO per month.
I ran the same search on De Witt Co., TX. Less wells, but similar results. Interesting to
see all the wells in both counties that have maybe paid out, but are now producing less than
500 BO per month.
Even Karnes County has it's less than tier one oil areas, and a lot of the wells were not up
to par in the beginning. The well has to pay out capex in the first year, or its not worth
drilling. Profit in year two and three, and not much after that. Period. End of story. I
don't see much better out of the Permian, and may be getting worse. Yes, on the whole, less
than a ten year economic life. Gets a lot worse in tier two stuff, and tier three stuff is,
at these prices, a definite loss. But they are still drilling in tier three areas, go figure.
My lease area is producing around 250k to 300k total, and it is barely touched, because EOG
wants 300k. Yeah, when the tier one areas play out, costs to maintain will be prohibitive.
Increase? Just a dream.
Look at EOG's economics of which wells are "premium" locations. There are not many left, and
EOG probably owns the lion's share. It has to produce 200k barrels the first year. They
priced that at $40 oil price, but it makes no difference, because it doesn't change the
number of locations that can generate 200k barrels. They are justifying production to a 5200
ft lateral. Some make significantly more, some less. I have that memorized, as my wells have
proven from the 125k to 175k the first year. Probably, a 250k to 300k EUR. So, I have to
wait. They will be venturing into my area sometime before their "premium" locations are
depleted. Beginning of the year, that count was at 2300. About 10 years at their current
drilling rate, and less if they pick up activity. These are developmental wells, the Permian
is still largely exploratory.
As far as holdings go, EOG is the cream of the crop. So, you can't make averages based on
one company. Most look far, far worse. Their financial info was shit before, as were all the
rest. Setting a bar for where to drill, will, in all likelihood, make them much better. There
are a large number of smaller companies who still complete wells in tier three acreage. It's
amazing, they know what they will get. I see initial production at 500 barrels a day, or
less, and I know that someone is losing money.
Now, do the math. There is not 10 years, or in most cases even five years of economically
recoverable oil from shale. A 60 month payback???? At the highest bracket, it includes wells
with about 3000 barrels a month. And there are only about 10k of those. Less than 3 years of
completions. And if you look at the total number of producing wells it is slightly less now
than in 2014. So, what happened to them??! To make it clearer, the number of wells that has
become inactive is pretty close to the number of wells that has been drilled in four years.
Yeah, production is up, because the wells producing over 3000 a month is up. But applying a
ten year, or even five year economic life to them is pretty stupid. But, I don't have to look
at total numbers to get to that conclusion, I look at individual wells, or groups of wells in
a lease. It's a lot steeper treadmill than the hoopla indicates. Here's the count from Dec
2014. Shale wells will probably not drop down into the last category, so just look at the
first two to compare them to current. If they do drop into the last category, the production
doesn't mean much to the cost of the well, or profitability. About four thousand more, and
tens of thousands of new wells since then. http://www.rrc.state.tx.us/media/26405/welldistribution1214.pdf
So, think about this when your looking at Eno's data, averages are deceiving. Whether they
are tier one, two, or three makes a huge difference.
The links to the report show plugging activity. Substantial. In August EF had 120 oil
completions, and 50 something oil wells plugged. Completions were higher in August. Dec 2017,
oil wells completed and plugged were almost equal. That is not an exact description of EF
horizontals, but that is the main thing going in these districts. $250 sounds low, I think.
Shallow, FTR, last thread: my current est. economic limits of 15-18 BOPD for LTO wells will
be much higher for major integrated companies, yes. The everything is peachy 'assumption' is
that smaller companies will buy those wells and carry on. I do not believe that. A 6-10%
decline in total UR because of premature economic limits IS a big deal. It makes or breaks
thousands of wells.
The liquids rich gas leg of DeWitt and Karnes Counties IMO will see <35% of its wells
be 'significantly' profitable, for instance above 150 ROI. Your data you are showing is a big
deal that seems to be going plum over peoples heads. Sorry. Time will show that the Eagle
Ford was, is the biggest financial toilet of all three shale basins; the economics are indeed
awful. I operate conventional production IN the EF trend and have interest in wells. Folks
don't realize how many $10-12MM dollar wells were drilled from 2009-2013. Jeff Brown and I
guessed eight years ago only 35-40% of shale oil wells in the EF will even pay back
D&C&A costs. I think that is way too high now.
Whatever the definition of "works," means, Dennis, for the EF; newer well designs are
leading to much higher IP180-360, but not higher UR. It does not look that way to me. Now new
wells in the EF must carry the burden of the highest level of legacy debt in the LTO
industry. To maintain and actually pay that debt back will take much higher oil prices than
you think as the play is now pretty much exhausted. At current oil prices it takes 325-350K
BO to pay new wells with longer laterals and much bigger frac's out.
The LTO industry is not in business so people can speculate about how much oil it is going
to make, or the jobs it provides, or how much cheaper gasoline it can provide for
consumers https://www.oilystuffblog.com/single-post/2018/09/12/Cartoon-Of-the-Week
; its in business to MAKE money. 150 ROI's is not making sufficient money to be self
sustainable and be able to kick the credit/debt addiction.
Longhorn is correct, Matador did indeed pay $95K an acre for PMNM acreage. I suggest we
bow our heads and honor its shareholders with a moment of silence and a little prayer to the
Goddess of Wolfcamp in order that she be merciful. Another bench Matador is touting to
justify its "wisdom" is the (De) Cline shale interval. Phftttttt.
The irony is that the majors and large independents divested of many assets in the US lower
48 in the 1990s because they were perceived as high cost with little economic future.
However, folks like us are still producing that stuff profitably.
OTOH the same companies are now spending large sums on shale, which is economically
inferior to what they divested 20-30 years ago.
Mr.Simmons likely never considered the productive wonders of a cash flow negative oil boom
aka USA LTO sarc/
I wonder how many more cash flow negative oil booms the world can endure, and how long USA
LTO will last. While we're at it, I wonder how the pension funds invested in USA LTO are
gonna do for their members once the rats under the floorboards get flushed out.
Buckle your chin strap. Within a few to several years we'll perhaps know better how this
is gonna shake out. George Kaplan and Dennis Coyne had some future production charts in the
comments of last post. By my rough eyeball and memory, I think George Kaplan had future
production down to about 40 million barrels a day by 2050 (see link below). Dennis, ever the
optimist ;), had us down to about 50 million barrels a day by 2050 (see Mr. Coynes comments
in response to George). Either way, those alive in 2050 are gonna be living in a very
different world!
A lot depends on how much oil can be extracted. George Kaplan's scenario looks to be
roughly a URR of 2400 Gb if the 2020 to 2063 trend continues in future years (it is roughly
straight line decline over that period so I just extended the line to zero and estimated URR.
It is more likely, in my view that URR will be about 3060 Gb (including 260 Gb of extra heavy
and LTO oil), that's about midway between a pessimistic HL scenario(2600 GB) and optimistic
USGS scenario (3000 Gb) for conventional oil.
Also higher rates of extraction could keep production a bit higher maybe 64 Mb/d in 2050,
it will depend on the length of Great Depression 2 in 2030. Of course I think that might only
last 4-5 years, being an optimist.
I haven't worked it out but I'd guess the ultimate recovery is more than your estimate.
First, as I said before, the XH production is based on long cycle projects, so it would have
a fat tail extending beyond when most of the conventional oil is exhausted (there are a few
reasons for that but one is that it needs upgraders and those are not built with excess
capacity). Second, as I said twice before, Laherrere has about 180 Gb of "rest of the world"
reserves that I didn't include as I don't know what they represent – if they are
undiscovered oil then at current rates it will take about 40 years to find them, or if the
recent trend for declining discoveries holds then forever.
And that is the last I am going to write – or read – on that Laherrere paper. It
was just a comment on a blog, not an article in Nature or the Times or even a letter to
either of those, or even a letter to the local free advertising paper. I wrote it most for my
own interest, writing things out help clarify ideas, but I rarely do more than a cursory
proofread. Most people who bothered to look at it would have read a couple of sentences and
skimmed the rest, a very few might have got more out of it. It didn't change anything
fundamental. If somebody was going to write another comment they wrote exactly what they were
going to write anyway.
It won't take to 2050 to see a different world. Just a small fall in supply has effects
well out of proportion to the nominal cash value of the oil lost. Cheap flights would
disappear, trade would plummet, GDPs shrink – the books have to balance one way or
another (see recent paper on impact on trade, I think by Barclays, and works by Hall and
Kummel). The biggest impact might be food prices, they could easily double and more short
term, then the few billion who spend half their income on food suddenly have to spend it all.
Turmoil would ensue and likely knock more oil supply off line. There was a paper about Sweden
I think – from memory (don't quote me) a rapid fall by a quarter of the oil available
leads to collapse and by a half to complete loss of civilization.
At the same time the declining cheap and efficient energy would hamper efforts to address
the other big ticket, long term issues: rising population, evolutionary inevitable
aspirations – "poor man wanna be rich, rich man wanna be king, and a king ain't
satisfied till he rules everything" (of course); declining levels in some of the big aquifers
(a few are getting to the point where the basic pump designs don't work, the replacements
needed are much more expensive and much more energy intensive); declining soil loss (at
current rate all the soil on sloped arable land will be gone in 50 years – that's a
third – and most of the rest in another 50); and of course climate change related
extreme weather. This year we've had record heat waves, wild fires, typhoons and (soon)
hurricanes plus droughts etc. Soon those will be weekly events (we're not far off now) but on
top of that we will be having two or three extreme extreme-weather events per year. More and
more of the oil will be going simply to triage on these (but the patient will get worse
anyway). At some point countries will cease to be liberal democracies, the USA seems to be
leading the way there, and say what you like about liberal democracies they have never
declared war on each other, dictatorships on the other hand
People will say oh we just need to do this, that or the other – but there is no
"just" about any of it, and especially as oil disappears: ignoring the externalities there is
absolutely no better real energy source imaginable by some way, especially the cheap stuff we
used to have.
You of course know all this and are preparing much better than me, I do not much more than
appease my conscience by not flying and hardly ever riding in a car, but I think I'm getting
to the "acceptance" stage and pretty much missed out on depression (no physical symptoms
anyway).
[end of rant].
I tend to agree with you George. Only a small decrease a short time after peak, and the
realization that it's not going back up, will likely open a lot of people's eyes to the fact
that almost every stock and equity is overvalued (come to understand that anticipated future
growth will not be realized). I plan to hunker down and catch up on my reading while the dust
settles, and I'm thinking there'll be a lot of dust. I'll send you a map. Password is 'I
think I'm with the band'.
I find this to be also an interesting take on the future of oil
Russia and the West are facing the worst crisis since the Cold War. According to US Special
Envoy Amos Hochstein, Washington's goal is to reduce Russia's gas market share in Eastern
Europe by 20% by 2020.
Russia cannot be allowed to build a gas pipeline that would bypass
Ukraine, as it would pose a threat to Europe's energy security
Pipeline bypassing Ukraine = threat to Europe's energy security
That is a total non sequitur. Also, Russia is part of Europe. The EU is not the whole of
"Europe". In fact, the EU is not even the EU as evidenced by Hungary and Italy.
And Washington can have Eastern Europe. Go ahead – take them as customers, and sell
them expensive LNG they can't afford. Russia would probably be glad to be shut of Poland and
the Baltics. And having to pay way more for their gas would teach them a lesson. Win/win.
Pipeline bypassing Ukraine = threat to Europe's energy security
That is a total non sequitur. Also, Russia is part of Europe. The EU is not the whole of
"Europe". In fact, the EU is not even the EU as evidenced by Hungary and Italy.
And Washington can have Eastern Europe. Go ahead – take them as customers, and sell
them expensive LNG they can't afford. Russia would probably be glad to be shut of Poland and
the Baltics. And having to pay way more for their gas would teach them a lesson. Win/win.
Doesn't the pipeline via the lo-land of Po-land go via Belarus? Warsaw buying gas from
elsewhere would starve Minsk of transit fees, no? Maybe the idea is similarly to undermine
Belarus and thus impose further costs/indirect sanctions on Russia?
So what does Trump do before the midterms? Live with higher prices? Quietly drop the
sanctions ? Find a way to get Iranian oil on the market while pretending there are sanctions?
Accept the high prices and blame Obama?
Oil price can rise some, now. It's only a month and a half to go. Gasoline stocks are high,
so it will take some trickle down time. Raiding the SPR is overkill.
I'm betting they don't. Saudi production in September is more likely to be down than up. But
if it is up it will only by a tiny amount, not near enough to affect prices. Saudi Arabis is
just not interested in increasing production by any significant amount. They would like to
keep production steady .if possible.
"Just spoke to King Salman of Saudi Arabia and explained to him that, because of the
turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil
production, maybe up to 2,000,000 barrels, to make up the difference Prices to high! He has
agreed!" the tweet read.
And of course, after the King hung up the phone he probably said: "We are not going
to do any of that shit." The Saudis, just like Trump's staff, know he is an idiot.
"And of course, after the King hung up the phone he probably said: "We are not going to do
any of that shit."
I doubt that happened but I don't have any inside contacts in the WH to confirm. My guess
is that Trump has turned up the heat on Iran because of requests from KSA & Israel.
The USA has been helping MbS with is Yemen war, as well as proxy war in Syria. If KSA want
the US to economically crush Iran, than KSA will need to help but increasing its Oil exports.
Perhaps KSA as some oil stashed in storage that it could release for a short period. My guess
KSA would delay using its storage reserves until there is a price spike that might force the
US to back off on Iran.
I doubt that happened but I don't have any inside contacts in the WH to confirm.
You doubt what happened? The quote was a tweet directly from the President. He sent it out
to the world, you don't need an inside contact to the White House. Trump's tweets go out to
the public.
Yes, it did happen. Of course, the part about what the King did afterward was just
speculation on my part. But he did not increase oil production as Trump requested. That much
we do know.
Not arguing the tweet Trumpet made, but your reasoning that the MbS will ignore the
request.
I am reasonably sure MbS wants the USA to go after Iran, and thus has a motive to try to
comply with Trumpet's request for more Oil. That said, I very much doubt KSA can increase
production, but they may have 50 to 150 mmbl in storage they could release if Oil prices
spike.
FYI:
"Why The U.S. Is Suddenly Buying A Lot More Saudi Oil"
" the Saudis are responding to the demands of their staunch ally U.S. President Donald
Trump, who has repeatedly slammed OPEC for the high gasoline prices, urging the cartel in
early July to "REDUCE PRICING NOW!""
"Saudi Arabia cut last week its official selling price (OSP) for its flagship Arab Light
grade for October to Asia by US$0.10 a barrel to US$1.10 a barrel premium to the Dubai/Oman
average"
So it appears that KSA is trying to comply with Trumpet's request. At least by trying to
lower the oil prices via selling their oil at a discount.
** Note: Not trying to be a PITA, just providing an alternative viewpoint. I do value what
you post. Hope you understand.
Libya and Nigeria more likely to go down than up from here to the end of the year and
probably drag down overall OPEC numbers with them. First cargo from Egina (200 kbpd
nameplate) will be in early January. Angola looks like it might be in trouble. Sonangol were
predicting possible 10 to 20%+ decline rates for the on-line FPSOs from about 2023, but it
might be happening a few years early, and their only new production was from EOR type
projects as far as I could see, none of which have been announced, plus a couple of small
tie-backs.
"The short-term investment focus adopted since 2014 offers a finite set of opportunities
over a limited period of time, and this period is now clearly coming to an end as seen by
accelerating decline rates in many countries around the world," Kibsgaard pointed out.
BAU won't get it done – no quick fixes, 'new shale revolution' or 'reserve
production' to get us through – my interest is mostly how we (as a society and culture)
will react as constraints on the resource 'haves' and 'have nots' set in.
Went through Irma in South Florida last Fall – and in general order was maintained
– but really only out of Gas for about 3 days – and was more of a shock type
shortage. A very slow decline of world supply will hit those who can't pay for it most
– and maybe wake up enough through higher prices to begin planning for what will be the
greatest energy transition that must take place!
The big oil companies are selling a story of long term stability to their investors, partly
so they can justify the long term investments needed for the mega-projects where they get
most of their oil and cashflow (some of those see no net return for many years). They only
need to sell themselves to their investors, not their customers who just buy the cheapest or
most convenient, be it crude to refineries or petrol to motorists.
The service companies live more year to year – they get hired to help develop and
drill a field and then their workload drops a lot except for some well servicing during
operation. Schlumberger is selling itself to its customers (the 'operators' who are the
E&P companies) and investors as the go to guy for the next couple of years as activity
tries to pick up but faces increasing issues as the easy (and now not so easy but still
OK-ish) oil goes away.
Schlumberger is not a typical service provider to the producers, although that is a large
portion of their business. Since their purchase of Cameron International and other oilfield
manufacturing companies, they have been providing facility engineering and fabrication
services to the oil producers worldwide.
In point of fact, Schlumberger does have the information that the producers have, and then
some. They use those numbers as a basis for facility engineering, and as such are arguably in
a better position to interpret them than the producer as of late.
I've regularly read the BP annual report, and have come to regard it as little more than a
curiosity. Schlumberger, Shell and Total have a firmer grip on the world oil situation, based
on my read of their CEO's comments. However that may be confirmation bias on my part. We
shall see .
Probably the more important item is Russian reserves my estimate is we are at 90% depletion
for existing technology and OIP at cost for western Russian reserves. At this point a squeeze
plan in Syria would ensure foreign reserve earnings to into wars and not fuels outcome is
standard wars as a result of miss spending income
Yes, I assume they have some problems since they reformed the tax system in favor of upstream
risky projects and at the same time imposed more taxes on downstream refineries. But to
assume Russia has problems is like assuming the whole world has a problem. Could be perfectly
right, but why expose Russia as opposed to others? Russia has a lot of higher cost oil; just
look at the land mass and offshore mass. How could there not be prospects? Some inside
knowledge is sorely lacking, since I like most western people don't have connections in that
part of the world.
80% of the world's oil has peaked, and the resulting oil crunch will flatten the
economy.
New scientific research suggests that the world faces an imminent oil crunch, which
will trigger another financial crisis.
A report by HSBC shows that contrary to the commonplace narrative in the industry, even
amidst the glut of unconventional oil and gas, the vast bulk of the world's oil production
has already peaked and is now in decline; while European government scientists show that the
value of energy produced by oil has declined by half within just the first 15 years of the
21st century.
The upshot? Welcome to a new age of permanent economic recession driven by ongoing
dependence on dirty, expensive, difficult oil unless we choose a fundamentally different
path.
Then they say: The HSBC report you need to read, now
Real issue is giants, your article in 2015 real issue is 90% ..real issue is squeeze play in
motion in Syria..goal? if don't have it, don't drill it at home, no rig increases so 'end
game' is cut off Isreali/Saudi friendly arab gas to Europe own Caspian area (city I recall
owned by Ukraine under British treaty Yelsin) in end no WW2 buildup during economic issues
(Russia 5M/day, Saudi similar) no Hilter, just preempt what's left..
I downloaded it then, and just had to look at the date the file was created. You probably
also have it in your hard-drive.
It provided a nice confirmation to my thesis that Peak Oil won't happen in the future. It
is taking place now, and the date we entered the Peak Oil plateau was 2015. You also
forecasted that, as I did.
You are correct. Hey, I am 80 years old and I just can't remember shit anymore.
Okay, I posted a few days ago that I thought peak oil would be in 2019. Perhaps I was
wrong. Hell, I have been wrong quite a few times. But now perhaps peak oil is right now.
Perhaps? We shall see.
But my point is everyone seems to be agreeing with me now. Old giant fields are seeing an
ever increase in decline rates. I predicted this a long time ago. Once the water hits those
horizontal laterals at the very top of the reservoir, the game is over.
The decline rate in those old giant fields is increasing at an alarming rate.
Obviously! Fucking obviously. It could not possibly be otherwise. Thank you and
goodnight.
Memory is less necessary these days with internet, computers, and smart phones, where
searches can be run in a moment. Don't worry too much about that.
"But my point is everyone seems to be agreeing with me now."
I discovered your blog in 2014 when looking for confirmation on my suspicion that the oil
price crash was going to result in Peak Oil. I was impressed to see that you were there years
before through your analyses. I have a lot of respect for you and your intellectual capacity,
and I agree with you in many things, besides Peak Oil, including the population problem, and
your worries about the environment.
I don't believe the world cannot increase its oil production, I just believe it won't do
it. Both Saudi Arabia and Russia have the capacity to go full throttle on what they have
left. Shaybah is the most recent supergiant in KSA and expected to produce until 2060 at
current output. No doubt they could increase production from Shaybah by a lot, but it is not
in their interest to do so. Russia lacks the capacity to quickly increase its production, but
there's still plenty of oil in Eastern Siberia, so they could also produce more. Again it is
also unlikely, as it would require an investment and effort that goes against their own
interest.
Peak Oil is not happening because the world is trying to produce more oil and failing, it
is happening by a combination of economical, geological, and political factors that could not
be easily predicted and that were set in motion in the early 2000's when the low-hanging
fruit of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached
its production limit. Political errors, like taking out Gaddafi, added unnecessary
difficulties. The collapse of Venezuela is the latest political cause. And when things start
to go wrong, it never rains, but it pours.
"Peak Oil is not happening because the world is trying to produce more oil and failing, it is
happening by a combination of economical, geological, and political factors that could not be
easily predicted and that were set in motion in the early 2000's when the low-hanging fruit
of conventional on-shore and off-shore crude oil (the cheapest kind to produce) reached its
production limit."
Isn't this just a distinction without a difference? It's peak oil.
The issue is that Peak Oil has been misunderstood by most people. The argument that Peak Oil
won't happen until this or that date because ultimate reserves are such or such, so often
read in this forum, is incorrect. Even economically recoverable reserves are not decisive. To
make the problem intractable there are many liquids so some might peak while others don't so
discussions about Peak Oil are endless.
But it is very simple. Peak Oil is when the world no longer gets the oil it needs to keep
expanding its economy. And the best way to measure it is through C+C, because crude oil is
what we have been getting since the late 19th C ans is the stuff that produces everything our
economy needs, from asphalt to diesel, plane fuel, and gasoline. NGL won't cut it. Biofuels
won't cut it.
And Peak Oil is being determined by economical and political factors, besides the
geology.
The difference matters because Peak Oil is going to get almost everybody by surprise. Most
won't realize what is the cause of all the troubles we are going to get and they'll be
reassured that there is plenty of oil to be extracted, which is true but irrelevant.
Thanks for the reply. I also tremble at the prospect of what is to happen because of the
failure of the predictions last decade. I can only describe it through an analogy (being a
lay reader and a writer):
In the 2000s, people were saying that we had an ugly wound and that we had better do
something about it. But instead of properly addressing the wound, we just wrapped it in
gauze, and when the blood stopped showing through, we said, "See? All better." That's my
analogy for the "shale revolution" -- it was essentially a Bandaid. The complacency has only
worsened in the last ten years.
This has just made the infection all the worse. When pus starts showing through the
dressing and we unwrap it this time -- we're going to find gangrene.
I am re-reading Joseph Tainter's 1998 book "The collapse of complex societies." It is a
sober reading that shows that in the end the laws of entropy and diminishing returns always
produce the same result. We are not more intelligent than the people that preceded us. If
anything we can only be stupider on average. We just have a very high opinion of
ourselves.
Time for a wake up and a little bit more darwinism in our lives. The problem is the pain.
With so many people it is just going to be unbearable. On a scale never imagined, not even by
writers of bad sci-fi.
That would be a more important definition of peak oil to me, and I think we are definitely
there. Then we have the absolute production definition, which was the original definition, as
to production. It is now anticlimactic to your definition. As to the date or year it happens,
who cares? More importantly, now, is when demand will lower enough to stop draining
inventories. At what oil price will that start occurring? How fast will alternate sources
replace unmet demand? New directions and everyone is likely to be wrong on estimates. EIA and
IEA were totally useless before, and that will probably not change in the near future.
Looking in the past won't give us much, and the future is anybody's guess.
As to current prices, $68 oil won't get any extra interest from E&Ps outside of the
Permian that is stalled. To any measurable extent. Close to $80 oil is not expanding interest
very much outside of the US. We are just living on borrowed time.
Oil prices are likely to continue to rise, especially if your estimates of future
production (roughly similar to my estimates, but perhaps a bit more pessimistic) are correct,
unless consumption of oil stops increasing. My guess is that oil (C+C) consumption will
continue to increase at 400 to 800 kb/d each year , until oil prices get to about $150/b or
more (around 2025 to 2027),by that time or soon after ( maybe 2030) oil consumption growth
may stop either because of the expansion of electric and natural gas powered transport or
because of a second Great Financial Crisis. My hope is it will be the former, but I think the
latter scenario is much more likely.
Hopefully Keynes' General Theory will make a comeback before then.
Ron Wrote:
"I predicted this a long time ago. Once the water hits those horizontal laterals at the very
top of the reservoir, the game is over. "
FWIW: That's already happened. when it occurs, they drill a new horizontal above the old
one. The new lateral also have valves on there ports. so that when the water breaches one or
more of the ports, they shut them off to reduce water cut. I posted Saudi Aramco tech
articles here back between 2014 and 2016 when they were available on the SA website.
Hi Carlos, thanks for the trip down memory lane. I tend to agree with peak oil being now
(ish). From what I recall the peak month for C+C was, so far, in November 2016. I suppose
there is also a peak day, a peak weak, and a peak year. Folks seem to like packaging time in
various proportions. Hell, there's probably a peak decade and a peak hour. My guess is the
peak year will be 2018. I like, because I'm a bit thick at maths, how Ron has added trailing
12 month average to his world production chart. I just look at the 12 month trailing average
for each December to get an idea of how much was produced in each calendar year. It seems
that 12 month trailing average for December 2018 will beat that of 2017. My guess is 2019
won't beat 2018. Or will any other year after that. So, if Ron say's 2019, and I say 2018,
then it seems that I think he is wrong lol he's probably 100 times smarter than me so doesn't
lose sleep over it lol. Up until this time I have always agreed with Ron on peak oil. But
now, I throw down the gauntlet! 2018 vs 2019. Two will enter, one will leave.
The exact week, month, or year when maximal production is reached has only historical
interest. The point is that since the end of 2015 the 12-month averaged C+C production has
barely increased (EIA data) despite the increase in demand.
Dec 2015 80,564 100.0%
Dec 2016 80,579 100.0%
Dec 2017 80,936 100.5%
Apr 2018 81,363 101.0%
We will have to see how it evolves over to the next December, but so far it is annualized
to a 0.4% increase. To me we are in a bumpy plateau since late 2015 and all those meager
gains and more will be lost in the next crisis. The problem will be evident to many when
after the crisis we are not able to increase production above those values.
Peak Oil is a situation, not a date, and we are in that situation since late 2015. The oil
that the world demands cannot be produced so prices are going up, and up. I suppose it is
possible that the powers that be intervene to reduce global oil demand by favoring a crisis
in developing countries, like Argentina, Brazil, Turkey, South Africa, through interest rate
changes. Wait, it is already happening. It is a dangerous tactic, as crises can spread
around, and the interest rise weakens the economy.
Well one has to define the plateau a bit better. If we make the bounds wide enough one
could say the peak was 2005 or even 1980 and we have been on a bumpy plateau since that
point.
Better in my view to define peak as peak in centered 12 month average output wth center
between month 6 and 7.
I use a 13-month centered average, so it is symmetrical with 6 months at each side.
But really, after a clear period of production growth 2010-2014, there was a strong growth
in production 2014-2015 in response to falling prices, and then production got stuck in late
2015.
It is not a question if we are in a plateau (or very reduced growth) period, but what
happens afterwards. After the previous plateau 2005-2009 there was a clear fall 2009-2010,
before tight oil saved the day.
The recent plateau is due to excess inventory and the resulting low oil price level. Oil
inventories have been reduced over the past 12 to 18 months and as oil prices increase,
output will also increase with perhaps a 6 to 12 month lag. How much will it need to rise
above the Dec 2015 level before you no longer consider that output has not risen above your
"plateau". Give me a number, is it 81.5 Mb/d, 82 Mb/b, I prefer to use a year rather than 13
months, that's 182 days on either side of the middle of the 12 month period. On leap years we
can use Midnight of day 183
One issue that has been corrected is that reserve requirements for large banks have
increased.
Also lenders are more careful with their mortgages making a housing bubble less
likely.
In addition, the assumption that higher oil prices played a major role in the GFC is
incorrect.
Perhaps there is a looming recession, whether this happens in 2018, 2030 or some other
year we will only know when it occurs.
Someone who predicts a recession every year will be right eventually.
I maintain my guess of 2023 to 2027 for the 12 month centered average c+c peak and severe
recession GFC2 starting 2029 to 2033, lasting 5 to 7 years.
So people think that oil production next year will not meet demand. Of course consumption
will equal production, but demand will be higher, and we won't be belabor this further
because the point here is a question above -- how does society react too insufficient oil?
The question is never analyzed in a particular way. It's usually evaluated from the
consumer's perspective. Who does what to get the oil they need. We can imagine they bid
higher, we can imagine that day seize the oil enroute to someone else, and we can imagine a
magical agreement on the part of everyone to stop all economic activity not involved in food
production/distribution to reduce global consumption.
What seldom is described is the decision making process within the leadership of oil
producers and exporters. It seems clear that a sudden awareness of insufficiency would yield
leadership meetings making decisions not about how to distribute more oil to customers, but
rather how to keep the oil for future generations of the producing country, without getting
invaded and destroyed.
One would think that the optimal strategy for a country that has oil is to ally itself
with a military power that can deter invasion by some other military power, without having
the ally's troops actually present on the territory. Or perhaps more effective would be
investing in the necessary explosives or nuclear material for one's own oil fields, and
inform potential invaders that the oil will remain the property of the country whose
geography covers it, or the fields will be contaminated for hundreds of years to deny them to
anyone else.
Clearly this is the optimal path for an oil producer and not seeking some technology that
can allow them to drain the resources of future generations more rapidly now.
So people think that oil production next year will not meet demand. Of course consumption
will equal production, but demand will be higher,
Watcher, I assume you think demand is what people want. But there is no way to measure
what people want but can't afford. So "demand" in that sense has no meaning whatsoever. So
what happens is the price of gasoline, or whatever, rises or falls until supply equals
demand. As prices rise, demand falls and as prices fall, demand rises because people can now
afford it. Therefore demand always equals consumption. Demand is what people buy at the
price they can afford. I wish we had a word for what people want but even if we did there
would be no way to measure it. A poll perhaps?
Estimating demand is essential for a company and can determine its survival. Demand is
dependent on price, so demand estimates are essential for deciding the price of a product.
The curves for price and demand cross at a point that maximizes income.
Demand is estimated statistically (polls sometimes), with models, and expert forecast. It
has a large uncertainty.
"there is no way to measure what people want but can't afford."
That is potential demand at a lower price point. It is estimated in the same way.
Companies decide to lower their prices with hopes to realize that lower-price demand.
"demand always equals consumption."
Exactly. Demand becomes consumption when realized, so it only makes sense to talk about
demand in the future or the present (due to lack of real-time data). It doesn't make sense to
talk about past demand, because it becomes consumption or sales.
There is a numerical measure for how much people want gasoline, regardless of price.
It is the length of the line of cars at the gas station in the 1970s. Demand was measured
in 100s of feet. Price somewhat doesn't matter. If you can't afford it, you put it on a
credit card and then default.
The length of the queue is an interesting metric by which to measure the want that people
have for an item. Nice one. I'm gonna use that. Reminds me of my Dad's old story about lining
up for a week to buy tickets to see The Beatles.
When you are lining up to buy tickets to see the Beatles it might be called a 'Want' or a
'Desire'. However, when it is the line at the soup kitchen it becomes 'Hunger' or
'Desperation'!
And that queue can sometimes feel like a hundred miles
The bigger issue is people, Business, & gov'ts servicing their debt. If the cost of
energy increases, it make it more difficult to service their debt. Recall that Oil prices
peaked at $147 right before the beginning of the 2008/2009 economic crisis. Since then 2008
Debt continued to soar as companies & gov'ts piled on more debt. Debt is promise on
future production. Borrow now and pay it back over time.
I recall the presentation Steven Kopits did about 4 or 5 years ago that stated Oil
production was well below demand. I think real global oil demand was projected to be about
120mmbd back in 2012-2013 (sorry don't recall the actual figures).
I think the bigger factor is how steep the declines will be. Presumably all of the super
giants are in the same shape and likely heavily relied on horizontal drilling to offset
natural decline rates. Presuming as the oil column shrinks in the decline rates will rapidly
accelerate. Most of the Artic\Deep water projects were cancelled back in 2014\2015, and I
believe most of those projects would take about 7 years to complete and need between Oil at
$120 to $150/bbl (in 2012 dollars) to be economical. I am not sure the world can sustainably
afford $120+ oil, especially considering the amount of new debt that has been added in the
past 10 years.
Ron Wrote:
" I wish we had a word for what people want but even if we did there would be no way to
measure it"
Perhaps the word "Gluttony" or the phase "Business As Usual". People don't like change,
especially when the result, is a decrease in living standards.
Being willing to pay more for oil may change who gets it. But it will not alter the fact that
someone who wants oil will not get it. That will be a ripple of market information which will
travel around the world pretty quick, I should imagine!
The vast majority in almost all the places in the world would like to use more oil but their
income is not enough so they end up doing with less. That includes me. Who doesn't want a
bigger faster newer lawn mower, truck, or tractor? What person would not prefer the latest
iphone etc. ? or going on vacation, eating out at high end steakhouses? The main reason they
can't is because it would take more and cheaper oil for them to be able to afford it. Else
they can only try to take it away from someone else? The peak in global oil production/person
happened back in 1979, not because folks were tired of using it all but due to the laws of
physics coming into play.
So there are two 'classes' of 'peak oil'. One class is where oil supply is constrained by
price (throwing more money at production sees an increase in production), the second class is
where oil supply is constrained by physical availability at any price (wave more money at
production, but production cannot increase).
In the first case (price constrained) normal market behaviour will apply – folk pay
more (if they can afford it) to get more.
But in the second case (resource constrained), it does not matter how much is offered,
there is simply no more oil to be had.
With the prevailing declining yields and declining discoveries, are we not in the
transition between these two states – moving from price constrained to resource
constrained? And once we get well into resource constrained, the price a buyer can pay will
determine who gets the remaining available oil, and no amount of screeching and
dollar-bill-waving by those who have missed out will improve the supply situation for
them.
LTO decline rate would be no problem by a conventional / state possessed oil company.
They would have a field with tight oil, and then just equip let's say 20 fracking /
drilling teams and start to produce through their field in 30 or 50 years. They would have a
slow decline by starting at the best location and getting to the worse one, while increasing
experience / technic during the years to compensate a bit.
You have a pretty good argument except for the "30 or 50 years" part. That's where the wheels
fell off your go-cart. Just how large would the tight oil reservoir have to be to keep 20
drilling and fracking units for 30 to 50 years? And if you assume other oil companies are in
that same reservoir doing the same thing? They are going to cover a lot of acreage very fast.
It matters very little. At any time t the available supply is limited and the market price
will determine who gets what is available. Those willing to pay more than others will get the
oil. When we reach a point where no more oil can be supplied at price P, there might always
be some more oil that could be at some higher price P', it is simply a matter of oil prices
reaching the point that there are substitutes that can replace the use of oil in some uses.
Today the biggest use for oil is transport and electricity and natural gas may soon replace a
lot of this use, especially as oil becomes scarce and prices increase.
At $100 to $120/b the transition to EVs could be quite rapid, maybe taking 20 to 25 years
to replace 90% of new ICEV sales and then another 15 years for most of the fleet to be
replaced as old cars are scrapped. So by 2055 most land transport uses for oil will be
eliminated.
The higher oil prices rise, the more incentive there will be to switch to cheaper EVs,
even natural gas will probably not be able to compete with EVs as Natural Gas will also peak
(2030 to 2035) and prices will rise. It will probably be unwise to spend a lot of money for
Natural gas fueling infrastructure, though perhaps it might work for long haul trucking, rail
seems a more sensible option.
Adam Ash Wrote:
"So there are two 'classes' of 'peak oil'. One class is where oil supply is constrained by
price (throwing more money at production sees an increase in production), the second class is
where oil supply is constrained by physical availability at any price (wave more money at
production, but production cannot increase)"
Consider this way:
There is already a huge shortage of $10/bbl oil, and a massive glut of $300/bbl oil. There is
always shortage resources. Price is just a system that balances demand with supply.
Adam Ash Wrote:
"But in the second case (resource constrained), it does not matter how much is offered, there
is simply no more oil to be had no amount of screeching and dollar-bill-waving by those who
have missed out will improve the supply situation for them."
Not exactly. People that can only afford $50/bbl Oil get out priced by people willing to
pay $100/bbl. Supply shifts to the people that can afford the hire price at the expense of
people that cannot afford the higher cost. Higher prices will lead to new production, even if
has a Negative EROEI (ie tar sands using cheap NatGas).
In an ideal world, higher prices lead to less energy waste (flying, recreation boating)
and better efficiency (more energy efficient buildings & vehicles). But I am not sure
that will be the case in our world.
The first to suffer from high energy prices will be the people living in poor nations.
Recall back in 2008-2014 we had the Arab spring when people could afford the food costs, and
started mass riots and overthrough gov'ts. This will return when Oil prices climb back
up.
Its possible that the world make continue to experience price swings, as global demand
struction decreases demand. For instance in July 2008 Oil was at $147/bbl but by Jan 2009 it
was about $30/bbl. I doubt we will see such large price swings, but I also doubt that Oil
will continuously move up without any price corrections.
Realistically we are in deflation driven global economy as the excessive debt applies
deflationary force to the economy. However central banks counter deflation with artificially
low interest rates and currency printing (ie Quantitive Easing). My guess is that
industrialized nation gov't will become increasing dependent on QE and other gimmicks that
lead to high inflation\stagnation.
There are a lot of folks out there talking recession in the near-term. Most of that derives
from history. Recession occurs every so often, or rather it used to.
It's really hard to have a decrease in GDP when you are running a deficit near a trillion
dollars. A trillion dollars is about 4.8% of GDP. If GDP grew by less than that then you have
some sort of word to invent to describe growth absent created money. (Not by the Fed, but also
not by capitalism). And there's a lot of cash being repatriated, and that damn sure hasn't
finished yet. So it's really hard to get a GDP decrease until all of that works through.
As has been noted before, the real danger in all of this is drawing attention to what
Bernanke did. When it is completely visible that money was created whimsically, and that the
Chinese have proven that you don't have to allow your currency to trade completely outside
government controls, then the system gets dicey.
The only thing stopping exporting country leadership from concluding that the oil is better
off underground for the grandchildren rather than being traded for pieces of paper with ink on
it -- the only thing preventing that conclusion is an array of advisors whose own personal
wealth would be endangered by such an exposure about money in general. They are the ones
whispering in the ears of their leadership, and their advice is not sourced in the best
interests of that country.
To a certain extent we could label all such advisors for all oil exporting countries as,
dare one say it, Deep State. Establishment political infrastructure in each country giving
advice sourced in their own well-being and not that of the country.
I think Dennis said some time ago that Saudi's 266 billion barrels of reserves that they
claim was perhaps when they raised P2 reserves to P1 reserves.
Naaaa, that's not where they got it. They still claim 403 billion barrels of P2 reserves
and 802 billion barrels of P3 reserves. And that 802 billion barrels will soon be increased
to 900 billion barrels via enhanced recovery techniques.
This is a good article if you need a good belly laugh today. It is brought to you on the
opinion page of Arab News. Arab News is a Saudi Publication just in case anyone is
wondering. I used to get it in hard copy, free, courtesy of ARAMCO, when I was there.
Saudi Aramco, according to its own records, has about 802.2 billion barrels of oil
resources, including about 261 billion barrels of proven reserves; 403.1 billion of probable,
possible and contingent reserves. The company has produced up to 138 billion barrels of oil
to date out of the 802.2 billion barrels.
It plans to raise oil resources to 900 billion barrels from the 802.2 billion over the
long term as its also plans to increase recovery rate of reserves to 70 percent from the
current 50 percent.
P.S. When I was in Saudi they had a word for this kind of thing. They called it
wasta . Wasta means "deliberate exaggeration" as a way of dialogue. That's just the
way they talk. They don't believe they are lying. They really expect you to know they are
just exaggerating. They don't expect you to take it literally.
A little bit up in the comments for this thread but, it is a point to make that OECD stocks
increased 7.9 mb in July. What is much more important and difficult to measure is the
inventory globally. If we have a 10-40 million draw in Chinese inventory in July/August as is
plausible due to a variety of sources and maybe 30-10 million barrels of draw in KSA with
close partners inventory for July/August then the picture didn't change that much as we were
lead to believe. The first figure before the "-" is July, the second for Aug; all guesses of
course. It is very difficult to push the botton to increase oil production, and therefore it
is also very difficult to increase worldwide inventories after a prolonged investment drought
as we have seen.
Over the years there has been various speculation of how KSA defines reserves:
ya, per article, probable redefined as proven. maybe
there was a time when it was suggested KSA was defining reserves as what was originally
there, ignoring production since 1960 or whatever.
there was even a suggestion that the oil/water mix coming up was being used to redefine
original rock porosity, which would redefine reserves
Here is what you need to know about reserves: No one has any incentive to tell you the
truth about them. How could KSA benefit by telling anyone the truth? If they were going to
shut down 100% in the next 3 years, they absolutely would not tell anyone. That would just be
begging to be invaded by someone who needs most of what's left and has no reason to
share.
So don't expect that you'll ever know KSA reserves. Why should you?
Actually, I'm not really very bothered about knowing their reserves. What I'd really like to
know though is when they're gonna peak, and how steep the decline will be after that. I guess
I think it'll give me an edge lol
Does anybody here think that KSA will mirror China in post peak proportions?
Here's an article with a good chart on China. http://peakoilbarrel.com/eias-latest-usa-world-oil-production-data/
Are there any good case studies that might give insight into KSA's peak production
profile?
Personally I think KSA is acting desperate. The anti corruption drive was just a big
shakedown, they're in Yemen for oil, gas (not much), ports close to Oman in what used to be
called South Yemen, and maybe a pipeline to one of them ports that gets them to the ocean on
the other side of Iran's straits. Lots of other nonsense with their neighbours too. KSA is
train wrecking, and I don't think it's all just some generational thing.
There's been a couple of articles recently, from pretty sober and credible sources, saying
that MbS might be gone next year. He lives mostly on his yacht with armed guards now. All his
schemes have pretty much turned to dust one after the other: the Yemeni war is costing about
$5 billion a month, his father has turned against him (my interpretation would be that
someone else has taken over as having the the king's ear now, as he's got some sort of
dementia so probably doesn't do much original thinking), the attempt to distract attention
with anti-Qatar sentiment isn't working, the Ritz-Carlton extortion episode is backfiring
even though it got him some ready money, Sunni-Shia issues still bubbling.
Sort of related: Saudi Arabia is buying Israel's Iron Dome missile-defense system and
Israel has offered to share intelligence on Iran with the Saudis. This according to an
article at Reuters quoted at Oil-Price/ASPO under Peak Oil News.
I'm expecting next to see pigs in my silver maple.
Hanging out on a yacht is bad form for a man with such motivated & creative enemies.
Obviously he and his security entourage have not heard of the late Lord Mountbatten, or The
Rainbow Warrior.. A few limpet mines and he's old news.
Second oil reserves have been flat since around 2010, and declining recently for the first
time since the 1970s. Note, before someone points it out, they don't count Canadian Bitumen.
This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way
below replacement level. Yet so-called "proven" reserves keep going up, up and up.
"This is so ridiculous it is funny. Oil discoveries have been going down, down, and down, way
below replacement level. Yet so-called "proven" reserves keep going up, up and up."
Well to some degree, technology has been able to extract more oil from a field. Thus a
field discovered in 1950 with an initial proven reserve of 100mbbls, may have 125mbbls or
proven reserves as technology has improved recovery rates. That said technology improvements
likely don't match the paper proven reserves.
The Venezuelan heavy oil reserves are overstated (I assume the large bump prior to 2010 is
the booking of the Magna Reserva in the Orinoco Oil belt, which i know are fake). It's fairly
easy to eyeball the better number by substracting 300 billion a flat line around 1200. If you
want to add future bookings in that heavy oil belt, add up to 50 billion gradually. Dont
forget that at the current decline rate Venezuela will be producing about 1.1 million BOPD in
december, and IF things go as I think they will sometime in the first half of 2019 exports
will drop to zero for a few months.
Third gas reserves also flat. If condensate and NGLs have been meeting the increased demand
that crude has been unable to, then that might be about to stop.
"... In regards to the current iteration of the Gas-for-Eurocrats scam- Qatar has a 100-year plan (The Oil Ministry's 100-year plan, not the Islamists' 100-year plan) , and it doesn't rely on a pipeline to Europe, but successfully implementing that plan does depend on continued sanctions against further Iranian gas development. ..."
"... shades of the Spanish civil war ..."
"... Western media provides humanitarian cover for the U.S. and NATO to fuel a brutal civil war ..."
"... So very true! I am sick to death of the fucking Humanitarian cover the media always throws over US war making. Libya was a prime example, they went in to bomb all hell out of Libya on a lie, a lie that the army was about to massacre thousands of people. That has no been shown totally false. Anyone remember Kovovo? Same shit. Bombing for fake humanitarian reasons. ..."
The Syrian civil war rages on, displacing as many as
11 million people and killing nearly 300,000 as the conflict reaches into its fifth year. Syria, a longtime ally of Russia, has
been receiving material support from the Eastern giant since the 1940s. As Anti-Media
reported last month,
"Russia's support for Syria dates back to 1946, when Russia helped
consolidate Syria's independence. The two countries mutually came to a diplomatic and military agreement in the form of a
non-aggression
pact, which was enacted on April 20, 1950. In this pact, Russia promised support to the newly-created Syria by helping to
develop its military and by providing tactical support. Essentially, Russia and Syria have been cooperating for decades both militarily
and economically, with Russia maintaining a naval base on the Syrian Mediterranean."
Meanwhile, the United States also has its own designs on the region. In 2013, President Obama, along with John
Kerry, attempted to stir up enough public support for a direct regime change in Syria, tugging at the American public's freedom-spreading,
democracy-loving heart strings. This attempt at a public overthrow of the Syrian government failed, with Americans responding with
the massive #NoWarWithSyria protest movement.
However, the drive for regime change didn't end just because the government stopped talking about it. The CIA continued to
arm basically any group willing
to fight against the Assad government. The Pentagon also tried (but
failed), to manufacture an American-allied army out of so-called moderate Syrian rebels at the cost of $500 million - who, on
paper would oppose ISIS, but in reality work to oust Assad.
Russia, who has been a Syrian ally for decades, has remained steadfast in its support of the Assad regime -
openly supplying
weapons, aircraft, tanks, intelligence, and human resources in the form of military advisers. Russia also operates a naval base on
Syria's Mediterranean shores.
By any measure, this is a textbook proxy war between military powers vying to maintain their own
economic
interests in the Middle East. However, five years later, it seems the corporate media is finally "realizing" this shadow war
for what it is. Over the weekend, The Washington Post ran an article titled, "Did
U.S. weapons supplied to Syrian rebels draw Russia into the conflict?" The article goes on to state:
"American antitank missiles supplied to Syrian rebels are playing an unexpectedly prominent role in shaping the Syrian battlefield,
giving the conflict the semblance of a proxy war between the United States and Russia, despite President Obama's express desire
to avoid one."
Then, on Monday, The New York Times published a piece titled "U.S.
Weaponry Is Turning Syria Into a Proxy War With Russia." The article admits that Syrian rebels are receiving abundant amounts
of arms from the CIA, which are being used to fight the Russian-backed advance of Assad's troops as he tries to take back Syria from
the various rebel, Islamist, and terror groups that have overtaken much of countryside.
Understanding that the U.S. public has been war-weary since the Iraq War debacle, Obama was forced to change his rhetoric from
regime change in Syria to fighting terrorism in the form of ISIS. The ample fear-mongering provided by ISIS brutes gave Obama the
public support he needed to renew America's seemingly permanent war in Iraq while giving him a back-door into Syria. The U.S. is
currently bombing both countries, joined by a
coalition of 62 partners, with Russia now officially throwing its hat into the bombing bonanza ring.
What should be clear is that the Unites States' priority in the region is not to defeat ISIS, but instead to overthrow Assad.
Clever rhetoric disguises America's covert intentions, but the actions - and subsequent paper trail - paint a very clear picture
of what is truly happening in Syria. WikiLeaks
gives us some insight into the West's designs on Syria, providing a window into the longtime campaign to oust Syrian president,
Bashar al-Assad. A new book that analyzes diplomatic cables leaked by Chelsea Manning,
The WikiLeaks Files: The World According to U.S. Empire, reveals the U.S. had a longstanding regime change policy in Syria that
dates back long before the 2011 Arab Spring uprising that rocked the Middle East.
"A December 13, 2006 cable, 'Influencing the SARG [Syrian government] in the End of 2006,' indicates that, as far back as 2006
– five years before Arab Spring protests in Syria – destabilizing the Syrian government was a central motivation of U.S. policy.
The author of the cable was William Roebuck, at the time chargé d'affaires at the U.S. embassy in Damascus. The cable outlines
strategies for destabilizing the Syrian government. In his summary of the cable, Roebuck wrote:
'We believe Bashar's weaknesses are in how he chooses to react to looming issues, both perceived and real, such as the conflict
between economic reform steps (however limited) and entrenched, corrupt forces, the Kurdish question, and the potential threat
to the regime from the increasing presence of transiting Islamist extremists. This cable summarizes our assessment of these vulnerabilities
and suggests that there may be actions, statements, and signals that the USG can send that will improve the likelihood of such
opportunities arising.'"
"A veritable 'carpe chaos' manifesto was written in 1996 for a Washington think tank by David Wurmser, an Israel-first neocon
(but I repeat myself) who would later play a key role in the Bush administration's drive to the Iraq War: advising Dick Cheney
in the Vice President's Office, assisting John Bolton at the State Department, and fabricating fanciful 'connections' between
Iraq and Al Qaeda at the Department of Defense.
Declassified documents from the U.S. Defense Intelligence Agency (DIA) suggest that ISIS is simply a convenient - and dare we
say welcome - side effect of the West's destabilization agenda in Syria and Iraq.
View the entire DIA document on Syria and ISIS on
Judicial Watch.
"Then, after the 2011 'Arab Spring' of popular uprisings reached Syria, 'The Redirection' went into overdrive. The US-led regional
coalition (Turkey, Jordan, Saudi Arabia, Qatar, etc.) has been strenuously trying to overthrow the Syrian regime of Bashar al-Assad
since at least 2012 by heavily sponsoring an insurgency led by jihadists including Al Qaeda and ISIS."
The Wurmser plan seems to be materializing before our eyes in Syria.
What is hidden beneath all of this information is why the United States wants Assad ousted from power so badly.
The most obvious excuse was his open abuse of human rights. And while this was the exact story-line given to the U.S. public from
our "friends" in the media, the rhetoric comes off as empty at best, considering the U.S. actively supported
Saudi Arabia's
brutal crackdown of Arab Spring protesters. We learned during the Arab Spring that our Gulf State allies were allowed to kill
as many pro-democracy protesters as they wanted (hell, we even supplied them with the weapons to do it), while any non-allies were
not. Muammar Gaddafi
learned this the hard way. Meanwhile, Ali Mohammed al-Nimr, a Saudi national, is
awaiting execution
by crucifixion for the crime of protesting the Saudi government during the Arab Spring. But crucifying a guy for protesting is
fine with the United States because Saudi Arabia is one of our closest allies in the region. Repression is alright as long as it's
our guys doing it, right?
With the mythical human rights argument out of the way, the following question emerges: What is the true agenda causing
the U.S.-Russia proxy war in Syria? In short, it is resources, power, and hegemony.
While nearly every war the U.S. involves itself in is sold as a humanitarian effort to either stop terrorism or spread democracy,
studies show that countries with resources such as fossil fuels are over
100 times more
likely to see foreign involvement in their internal conflicts. America is
often the
foreign force that arms and finances different sides of these conflicts. Coincidentally, in Syria, so is Russia.
While this geopolitical scenario is rather complex, it makes perfect sense. The U.S. has been trying to contain
Russia since World War II, and those
policies
of containment are still in effect today. America enjoys its role as the only remaining superpower and has an interest in maintaining
that hegemony. To make things perfectly clear, this is the main driver behind the Syrian Civil War.
Russia has somewhat of a monopoly over the
gas supplies needed for Europe's economy to operate. This gives Russia a semi-permanent economic base to fund its foreign policy
agenda and maintain its own geopolitical strategy. The U.S. and its NATO allies want to end that monopoly, but in order to accomplish
that, a pipeline must be built
from the Sunni Gulf states, starting in Qatar, going through Jordan and Syria, and making its way into Turkey. From Turkey, the gas
supplies will be distributed into Europe, effectively undermining Russia's current arrangement with the European Union and placing
its economy in a state of uncertainty. This would eventually lead to a flight of investment away from Russia and subsequently permanently
damage what's left of Russia's resource-dependent economy. This explains Russia's steadfast support for the Assad government.
As
The Guardian documented back in 2013:
"Assad refused to sign a proposed agreement with Qatar and Turkey that run a pipeline from the latter's North field, contiguous
with Iran's South Pars field, through Saudi Arabia, Jordan, Syria and on to Turkey, with a view to supply European markets – albeit
crucially bypassing Russia. Assad's rationale was 'to protect the interests of [his] Russian ally, which is Europe's top supplier
of natural gas.'"
Note the purple line which traces the proposed Qatar-Turkey natural gas pipeline and note that all of the countries highlighted
in red are part of a new coalition hastily put together after Turkey finally (in exchange for NATO's acquiescence on Erdogan's politically-motivated
war with the PKK) agreed to allow the US to fly combat missions against ISIS targets from Incirlik. Now note which country along
the purple line is not highlighted in red. That's because Bashar al-Assad didn't support the pipeline and now we're seeing what happens
when you're a Mid-East strongman and you decide not to support something the US and Saudi Arabia want to get done. (Map: ZeroHedge.com)
"Knowing Syria was a critical piece in its energy strategy, Turkey attempted to persuade Syrian President Bashar Assad to reform
this Iranian pipeline and to work with the proposed Qatar-Turkey pipeline, which would ultimately satisfy Turkey and the Gulf
Arab nations' quest for dominance over gas supplies, who are the United State's allies. But after Assad refused Turkey's proposal,
Turkey and its allies became the major architects of Syria's civil war."
It's unfortunate that it took the corporate media all these years to "discover" that the United States and Russia are fighting
a geopolitical proxy war in Syria. It remains to be seen how many more years and lost lives it will take for them to also
"discover" that this proxy war is being fought over resources and power. It's a sad state of affairs when the Western media
provides humanitarian cover for the U.S. and NATO to fuel a brutal civil war - which has taken the lives of nearly 300,000 people
- simply to create economic advantages for NATO states and allies while undermining stability in the Middle East - creating the greatest
humanitarian catastrophe since World War II. And as
millions
of refugees continue to pour out of Syria into Europe and abroad, the NATO-dominated public of the E.U. and U.S. remain largely
ignorant to the fact their own governments helped create the refugee crisis they so abhor.
JustObserving
The Nobel Prize Winner's war in Syria has caused 300,000 deaths and created more than 4 million refugees and at least 7 million
displaced internally. Hardly any of the US or EU public is aware of that thanks to the free and fair media of the West
A recently released classified document obtained by WikiLeaks establishes that active US planning for regime-change predated
the outbreak of the Syrian civil war by at least five years. The secret report from the head of the US Embassy in Damascus outlined
"vulnerabilities" of the Syrian government that Washington could exploit. At the top of the list were fomenting "Sunni fears of
Iranian influence" to cause sectarian conflict and taking advantage of "the presence of transiting Islamist extremists."
Given that the document was written in 2006, at the height of Iraq's sectarian carnage caused by the US invasion and Washington's
divide-and-rule tactics, these proposals were made with full awareness that they would provoke a bloodbath. Nearly a decade later,
the bitter fruits of this policy include the deaths of some 300,000 Syrians, with another 4 million driven from the country and
7 million more internally displaced.
While cynically exploiting the suffering of the Syrian people to justify an escalation of US militarism, Washington is not
about to let Russia derail its drive to impose its hegemony over the oil-rich Middle East and the entire planet.
Remember... Friends don't let friends believe in the fake East vs. West dialectic that is being spun by the MSM whores. The
bankers are using it to forward their plans for their global NWO government and financial system.
knukles
"Proxy"; a delicate understatement destined for the annals of Political Correct nonsense.
No, it's not a real war... It's a proxy, an imitation, a vote by somebody else that I abrogated because I just can't make it,
a phantom chimera, surreal nachtmare.
So delicately put.
Ask the dead, maimed, frightened, cold, hungry and damaged if thy think it makes it any more tolerable.
manofthenorth
I know this is an old horse but apt;
"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is
the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.
A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small 'inside'
group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few
people make huge fortunes."
The USA is controlled by evil shitbags who promote wars for evil scum contractors like the Crown-Krinsky crime family. Friends
of Meyer Lansky, McCain, LBJ, OBama and the rest of the evil shit who get innocent people murdered.
Scum like McCain and Lindsay Graham saying they support the troops and idiots eat those lies up.
Scum puppets like the White Hut and all of Congress.
Innocent people murdered during these endless bankster wars - Opium Wars in China 1839 with wonderful British
tribal banksters murdering Chinese, US Civil War 1861, endless European wars before that, WW1 banksters pushed royalty puppets
owned by the Red Shield to war, WW2 with a US London Red Sheild Rockefeller Hitler and the Red Shild Bolsheviks, Korean War, LBJ's
narco Vietnam and Crown-Krinsky's F-111 which was a criminal fraud LBJ was involved in, Bushes and Obola Clinton middle east wars
and Clinton/UN narco pipeline in the Balkans.
Tens of millions of innocent people murdered not for democracy or the American way of life but looting countries, narco trillions,
weapons and contractor contracts and endless shit.
Mass murder for a profit.
Ignatius
A proxy war, I might add, in which my home country of the USA is completely in the wrong.
Now let us all rise for the playing of our National Anthem.
o r c k
The U.S. Press is complicit in the deaths of 300,000 human beings. A few hours of investigative reporting would've shed a clear
light on this -unless the Press already knew and were just following "orders". (much more likely) Don't tell me that thousands
of "reporters" in America go to bed at night with a clean conscience. And with the words "war crimes" and "crimes against humanity"
dancing behind their closed eyelids. I pity them.
bigkahuna
Don't waste your pity on the MSM, they have never - nor do they now, care.
divedivedive
I'm an old man and I guess I am a little naive. I always thought the only reason the US was in the ME was to assure the flow
of crude. But with the drop in crude prices, and the US fraking, why is the ME so important to the US today ?
Who was that masked man
Money. War can be extremely lucrative for those with the "right" connections.
maxwellsdemon
It's really about Israel controlling Lebanon by eliminating the Syrian connection between Iran and Hezbollah. That's why neocon=
Israeli firste David Wurmser thought up this strategy to displace, wound, and kill millions of the non Chosen.
datura
Why is ME so important? Because it lies next to Russia and China, the two rising superpowers, which the USA wants to "contain"
and subdue. It is not just Syria. The USA has been sending ISIS to China to incite their muslims and the same with Russia. In
other words, the USA has embarked on the same path as once Hitler or Napoleon - the world domination. Russia and China are obstacles
to that.
He explained it in this article in plain terms. It's about denying Russia's oil and gas revenue from Europe to cripple them
and remove them as an obstacle. Greater Israel, the ethnic cleansing of whites in Europe thru mass immigration, etc. are all just
bonuses.
Who was that masked man
War is when your government tells you who the enemy is. Revolution is when the people finaly realize who the real enemy is.
Blankone
It was only a proxy war created by the US/Zionist. Syria was prosperous and peaceful until the proxy war was unleashed upon
them.
Syria did not invade or attack other countries, others were sent to Syria to kill.
There is no shared blame with Russia or Syria. All the blame falls upon those who sent their proxies to kill.
HowdyDoody
The US has rejected a Russian proposal to cooperate over the rescue of pilots shot down in Syria. Oh well, tough shit for the
US when the legimate government of Syria decides it has had enough of foreign powers invading its airspace
Winston Churchill
The neocons are still in shock over the Caspian sea missile launch. Years of planning and moving eastward to threaten Russia
wrecked by a ball from left field.
If they get their(manic) composure back, some idiot is going to fire on those Russian planes. I can feel it in my water. They
will do anything to avoid the day of reckoning that move foreshadowed. I think that stench is fear.
Freddie
Those Kalibr-NK LACMs fired from small Russian ships in the Caspian did shock them. They had to lie that 4 crashed to try to
make the world think Russian missiles were not that good. It was stunning technology.
http://www.voltairenet.org/article189021.html
The USA is supposedly sending F-22's from Hawaii to Turkey. I wonder why they hide these hangar queens in Hawaii?
I would bet they do not take to the sky because the Russians will expose stealth as a total fraud that was perpetrated on US
taxpayers.
Pierre Sprey - Stealth is a scam:
https://www.youtube.com/watch?v=Om5jis0dtkY
Sprey worked with Colonel Boyd and Colonel Riccioni. The three worked on the F-15, F-16 and A-10.
not this time. This time it is much more serious. This time it is a clash of civilizations, which zionists cannot really control.
The zionist empire is now already too weak and other civilizations are taking stand for themselves. You could say that this is
a beginning of a global revolution against the colonial rule. People in the world are too tired of the rule of anglo-zionists.
Remember that zionists could only rule, while they had their British Empire. First it was the real British Empire, now the British
Empire is the USA. But it is still the same empire. If this empire falls down, after all these centuries, zionists will loose
their foothold. Or, in the worst case, we may all die in the process. In any case zionists are now playing a loosing war. All
empires come to an end. This empire lasted some centuries, but like the Roman Empire, it is now collapsing, because it has become
too chaotic, corrupt and complicated. Remember that this empire never really cntrolled the entire world (which is impossible!).
There were always true (non-zionist) opponents. One such opponent was historicaly the Russian Empire. That is why they had to
kill the tzar and his family and plant communism there. However, Russia now has its tzar back:-)
Russia: "Representatives of all four parliamentary parties have prepared a bill that bans municipal and regional lawmakers
from keeping assets in foreign banks or own securities issued by foreign companies, a popular business daily reports. The authors
of the draft claim that if it is adopted it would complete on all levels the so called 'Nationalization of Elites' – a series
of legislative steps that Vladimir Putin suggested in 2012 and that were implemented with the 2013 law that bans senior Russian
officials from holding bank accounts abroad or owning foreign-issued shares and bonds. The restriction also extends to spouses
and underage children."
Y'all realize do you not, that GazProm just put RFP's out for the construction of NordStream2, from Russia to Germany bypassing
guess who?
"The" Ukraine!
For some reason I'm getting a feeling that the US has no allies, anymore.
Thick Willy
Wolfowitz doctrine to prevent the emergence of another global power vying for regional hegemony. It's pretty clear.
SillySalesmanQuestion
Our Congrescritter's have abdicated their responsibilities by letting Obama and the Neo-Cons wage war without their approval.
It is technically illegal by law, but, they have let the administration get away with this bullshit since 2014 when we bombed
Lybia.
http://www.theamericanconservative.com/larison/obama-congress-and-war-po...
o r c k
Our entire Gov. knew the truth and kept quiet. As did the "press"--making them all complicit in war crimes and crimes against
humanity. Will ANY of them be held to account? Ask George Jr.
The Indelicate Genius
Russia and Iran are present in Syria fighting mostly foreign mercenaries at the invitation of the legal government of Syria
- a UN member.
What's the legal or moral basis for US presence, or its support of takfiri/salafist mercenaries?
What's the legal or moral basis for US presence, or its support of takfiri/salafist mercenaries?
That's the perfect question that nobody seems to ask. The elephant in the room.
Urban Redneck
The overly simplistic dueling pipeline pissing match meme is undercut by the same Guardian article.
The Iran-Iraq-Syria pipeline plan was a "direct slap in the face" to Qatar's plans. No wonder Saudi Prince Bandar bin Sultan,
in a failed attempt to bribe Russia to switch sides, told President Vladmir Putin that "whatever regime comes after" Assad,
it will be "completely" in Saudi Arabia's hands and will "not sign any agreement allowing any Gulf country to transport its
gas across Syria to Europe and compete with Russian gas exports", according to diplomatic sources. When Putin refused, the
Prince vowed military action.
As far as KSA is concerned the alleged raison d'etre is a mere pawn to be sacrificed...
In regards to the current iteration of the Gas-for-Eurocrats scam- Qatar has a 100-year plan (The Oil Ministry's 100-year
plan, not the Islamists' 100-year plan) , and it doesn't rely on a pipeline to Europe, but successfully implementing that plan
does depend on continued sanctions against further Iranian gas development.
sam i am
new Urban Redneck
Thank you.
Gas pipe has nothig to do with the
reasons why Russia supports Syria and wants to restore peace in the region. According to a report leaked through Russian and
Lebanese sources and reported by the London Telegraph, Saudi intelligence chief Prince Bandar bin Sultan told Russian President
Vladimir Putin the Arab kingdom has control over the Chechen jihadists, who have been unleashing terrorist bombings in Russia
and have been threatening the Olympics scheduled to begin in Sochi, Russia, on Feb. 6.
Putin reportedly responded, "We know that you have supported the Chechen terrorist groups for a decade. And that support, which
you have frankly talked about just now, is completely incompatible with the common objectives of fighting global terrorism."
Russians never forget all those victims of the Saudies' terror, and never forgive terrorists. saudies are as good as gone now.
Their gas and oil will help them to burn in hell.
Oldrepublic
shades of the Spanish civil war
Jack Burton
"Western media provides humanitarian cover for the U.S. and NATO to fuel a brutal civil war"
So very true! I am sick to death of the fucking Humanitarian cover the media always throws over US war making. Libya was
a prime example, they went in to bomb all hell out of Libya on a lie, a lie that the army was about to massacre thousands of people.
That has no been shown totally false. Anyone remember Kovovo? Same shit. Bombing for fake humanitarian reasons.
This is all about fake moral superiority. Sorry, but Obama, Bush and the others, they have NO Moral superiority.
Collapsed_Elastic_Pants
Goddammitt, we know that. Now what?
rejected
Is this from the same group that hates Columbus? This story makes about as much sense as that story did.
What we have is a bully aggressor that believes it is exceptional and doesn't have to bother with international law or even
its own laws annihilating smaller defenseless regimes that don't suit their fancy. Russia has simply stood off to one side constantly
harping on this international lawlessness until the bullies descended upon a ally nation of theirs. Even then they stayed out
of it militarily until they were faced with two choices. 1) Abandon their Mediterranean base or 2) help their ally. Exact same
reason they reunited Crimea. The Ukrainians weren't/aren't mature enough to know they were being hoodwinked by the West and Russia
was not going to lose its Navel base because of a bunch of quarreling twits thinking the West was about to shower them with gifts
and money.
Now this same bully is throwing a tantrum because it is being outwitted at every turn and wants to show it's still the big
boy by trying to bully another nation it thinks might back down over a few rocks some call islands thus setting themselves up
for another defeat.
This is what happens when banks own and spooks run a country. Yep,,, it's as simple as that... no complicated plots, no shrewd
plans.
Just plain old stupid arrogance.
maxwellsdemon
Your right to call the West a bully, though it is of course run by the Chosen. But bullies don't want to fight, only intimidate,
because thieir morals are weak and they are held together by intimidation. If the Chosen get the West into a real war, you can
be sure that a revolution will occur against them. Perhaps that is the plan and they might all end up on some island together
loving each other forever. The Rabbis can argue that it's God's choice. Or they can all end up in fractious, dangerous Zionist
Occupied Palestine. Once isolated there, the flow of weapons and sucor will dry up and then they will have to make friends with
the natives.
Khrushchev tried to bully the US back in 1962 but JFK and the nation was OK with going to war (perhaps now that wouldn't be
the case in Russia put missiles there, since the US has nukes on the border with Russia). Khrushchev backed down because the USSR
had a corrupt, rotten core. Then the Jews left the USSR, leaving only the nationalists and Russia recovered. Now the US has the
Jews running it and has become corrupt and rotten to the core. This time, the US is backing down in Syria and will soon have to
back down in the China sea
outlaw.guru
This article seems to equate Russia and US to some extent as both fighting for control for pipelines. However first of all
US and allies could have pacified Iraq and build a pipeline directly to Turkey (just look at the map). That would even allow them
to control Iranian sales if there were any. However they chose to game of winner takes all and destabilized Syria, a Russian ally.
I can't see this as anything less than a defense of national interests for Russia.
Yen Cross
It's astonishing how shielded people are from actual facts. I was over in Oceania for 3 days, and when I returned , the whole
news cycle was about the election of a new "Figure Puppet".
People, please travel, and explore other cultures, and ideas.
I'm told your parents instill CORE values by the age of 4-5 , then guide you to adulthood.
jcdenton
This is much more than just a mere proxy war between the U.S. and Russia. This is a provocation via NATO. A cold war dinosaur
that has no more practical use since 1990. It should have been dissolved with the Warsaw Pact. Watch this guy from London squirm
when presented evidence and facts ..
I would put to the guy from London, what evidence do you have that Assad is a rogue govt. responsible for killing hundreds
of thousands of Syrian citizens. There is no evidence. The guy from London is a Mossad tool ..
BTW, I have had personal conversions with Mike Harris ..
1. Obama / Soros / Globalists want to establish a Muslim Caliphate in the Middle East.
2. To accomplish this, they need ISIS to occupy and control Syria.
3. Soros wants this to stick a thorn in Putin's eye. Putin is the only national leader to oppose the globalization and open
borders paradigm of the Fabian Socialist left.
... ... ...
Sparehead
Not to disagree with the main points made here, but fuck Wesley Clark. You can't believe a word he says. The Clintons invented
him (as a high ranking general) and he's a total puppet.
@ Lochearn who is correcting my genealogical representation of empire
Yes, you are more correct than I. That said, does it go back even further to the founding
of monotheistic religions? We are referring to social control by an elite in my mind more
than the Jewish bankers part of your genealogy. I admit to the bankers part but see that
bankers group as the encourage/control entity for the other monotheistic religions.
Has that system dynamic changed/evolved seriously since the Roman era? We have usury. We
have inheritance. We have banking. The concept of private property evolved along with the
mythical moral fig leaf of rule-of-law. We call it the Western form of "civilization".
Psycho Historian: I have been reading a Great Courses book on the history of the Achaemenid
rmpire that ruled Persia and one interesting tidbit from my reading is that temples and their
priests made loans to property (though turned did not accept deposits). So religious
institutions got into the banking business early.
In his talks about his upcoming book, Hudson has said that besides the Palace the Temples
were the first sources of credit. But their relation to society then vastly differs from what
evolved as both Palace and Temple become corrupted by greed.
So religious institutions got into the banking business early.
Achaemenids? I think this was rather late. IIRC temples in Ur, Sumer and Babylon were in
the business long before the Achaemenid period.
However Ur, Sumer and Babylon also seem to have had a general debt amnesty about every 7
years. There was a sound political or economic rationale for this. Something about the idea
that one was not supposed to grind the faces of the poor into the gravel, nor destroy the
fabric of society.
The temples were the only organizations that had the administrative ability to do this.
Temple, at least in Mesopotamia is a bit of a misnomer. As I understand it, the "temple" was
the home of the god, the royal palace and the seat of the civil service all rolled into
one.
You might find David Graeber's book Debt : The First 5,000 Years interesting. He
discusses why the temples were in the money lending business. It's a rather fun read and
comes in hard cover and completely free pdf. https://libcom.org/files/__Debt__The_First_5_000_Years.pdf
did not accept deposits
I never thought of it, but yes of course. Given their functions they would not take
deposits. They were loaning from state resources and did not need deposits. They would not
have even understood the concept.
I am not sure if this applies during the Achaemenid period but it seems likely.
Another problem is how much gas for sale the USA actually has? Or they want to resell gas
they buy for Russia Sakhalin? They already did a couple of times.
Oh, please, God, let the USA impose sanctions on European companies in an attempt to stop the
building of Nord Stream II (which, incidentally, has begun and is already underwater).
I can't think of anything more likely to incite European fury against America, and while
we're on the subject, under what authority would the USA fine European companies for not
obeying sanctions imposed by the USA? I can see how they could get away with further
penalizing Russia – they are piggybacking on the Skripal affair, that's why they
pretend so fervently to believe Britain's accusations even though it has offered no proof at
all, just more accusations. The legal instrument it is using is a national-security clause
(big surprise) meant to stop the spread of chemical-warfare threats. But how is it going to
justify imposing a big fine on BASF-Wintershall, for example, and what would it do if the
latter simply said, "Cram it up your chuff!" and refused to pay?
Anyway, the calling-out of Britain's 'evidence' in front of the UN is going to be
extra-special, in that light. Because the Skripal thing is the USA's whole basis for further
sanctions. Without it – if the case is demolished, and I frankly can't see how the UK
government could sensibly respond to all the discrepancies picked up at sites like Slane's
'Blogmire' – they've got nothing; no grounds for further sanctions.
And that was perfectly possible, had it been started years ago, and had the USA come to
Europe with a business plan which answered the question, "What's in it for me?" Everybody in
business likes to make money; it's kind of what keeps business going. And if the USA could
still sell to Europe under those circumstances – because it has a lot of a product it
can sell at a competitive price and still make money – it would still be possible to do
it. The problem there is that the USA cannot sell LNG at a competitive price against pipeline
gas and still make money. A further problem is that in business dynamics, the guy who has
control in a business relationship is the guy who supplies you with a product you can't get
anywhere else at the same or a lower price.
The USA wants the profits realized by selling gas to Europe, and right away, that's not
going to work, because shipborne LNG cannot compete with pipeline gas for price. The USA
would have to sell it for a lot less than it takes to recover and ship it, and it's not
willing to do that because it is contrary to every principle of business. But that's a big
problem, because the profit is actually secondary. What Washington really wants is the power
conveyed by being Europe's main supplier – then it can play energy politics like it
constantly accuses Russia of doing, although actual evidence of Russia threatening to cut off
Europe's gas if it does not, let's say, drop sanctions against Russia, is zip, Nada. No
evidence. But Washington would do it, and you know they would, and so does Brussels. So it is
trying to muscle Europe's main supplier out of the market by coercion, because it can't do it
simply by offering a better price.
Which leaves it in the ridiculous position of arguing, "We should be your supplier instead
of Russia, because ain't we the bestest of friends and allies?", at the same time it is
conducting a trade war for American business advantage and threatening to impose sanctions
against European companies who participate in the pipeline project as investors.
Here we go again with reliable pot-stirrer the UK, in the form of a ruling by the UK Court of
Appeals that Ukraine does have a valid case, after all, of grieving the ordered repayment of $3
Billion it was lent by Moscow after Yanukovych decided to reject the European Association
Agreement, and petitioned Russia for assistance.
Some facts that should be recalled here; Ukraine has to the very best of my knowledge
never paid this debt, although the IMF
grudgingly backed Russia's claim that it was a bilateral loan . Then Ukraine imposed a
moratorium on further payments, trying to squeeze Russia into accepting a 'restructuring' of
the debt, a colourful euphemism for 'write off some of it and give us until forever to pay
the rest', allowing Ukraine to simply roll over its outstanding debt each year and put off
payment until the promised western flood of incredible prosperity finally arrives.
The ever-helpful IMF then rewrote its own laws so that it could continue lending to
Ukraine although it exhibited all the classic symptoms of a bad debtor. Most of us said it
would all end in tears for the IMF, and where is it now, again? How much of that $17 Billion
aid package has been disbursed?
Georgetown University Professor Anna Gelpern offered Ukraine
an out , stating that in her legal opinion, the obligation amounted to 'odious debt',
which consequently did not have to be repaid. Longtime kook Anders Aslund enthusiastically
embraced that view, bleating that really Russia should be repaying Ukraine, for invading and
plundering it.
Let me give you my not-legal opinion; Ukraine does not have a hope of winning this case.
The UK is just trying to help it kick the can a little further down the road, and put off
repayment for another year or two while the courts wrangle the issue out all over again, and
lawyers pocket hefty fees. It also serves the British hobby of sticking its thumb in Russia's
eye every chance it gets to do it. The money is probably not a big issue to Russia; it's the
principle, and it would probably suit the Kremlin to duke it out in court again just on the
probability that Ukraine will suffer another humiliating defeat, although that will make no
difference at all to its willingness to pay. I propose, though, another option; one to be
exercised immediately, and one down the road a bit. First, communicate to Kuh-yiv that if it
goes ahead with this, Russia will pull out all foreign investment in Ukraine, immediately and
finally. I personally do not think the economy could sustain that kind of hit, since it is on
life support now. Second, Russia should communicate to Britain that once Brexit becomes
operative, the UK will have to negotiate with Europe for energy supplies and pay their asking
price, since there will be no direct transfers of energy to the UK. That might have been the
case anyway, since to the best of my knowledge no systems serve the UK directly from Russia
except LNG cargoes. But it would not hurt to remind them.
It occurs to me that the west has only itself to blame for Ukraine's current and ongoing
dysfunction and 'cutie-pie' criminality, since the west keeps encouraging it to greater
heights of irresponsibility, covering for it and then rewriting its own rules so that
behaviour previously illegal is magically permissible.
The London High Court is not going to like being reversed; such reversals often do not look
good for the judges, although there certainly cannot be any murmuring of 'political
motivation' here, since the court was most decidedly motivated to rule for Ukraine in the
original judgment if it could. As I said, this is just kicking the can down the road a piece,
and buying time for Kuh-yiv. And that might be a valid strategy, if a burgeoning economy was
about to break free in Ukraine. Is that the case? I'm afraid I don't think so. In fact,
Ukraine is broke and living on handouts, its reserves down to record lows; it doesn't have
the money, so the UK is trying to rig the judgment so as to head off its having to pay, at
least temporarily. More short-term thinking, such as is characteristic of crisis management.
The Appeals Court is likely ruling on a technicality because it believes (or has been
encouraged to believe) it deserves further examination. But, again, I have to believe that in
such a politically-charged case, the court which rendered the original verdict would have
carefully picked over every argument which might have worked in Ukraine's favour, since the
UK was highly motivated to support Ukraine if there were any way it could legally do so. The
efficacy, reliability and non-volatility of Eurobonds is at stake here, and a ruling now for
Ukraine is likely to provoke a drawback from Eurobonds and European financial instruments by
every nation that perceives it is or might one day be perceived as a foe of a Europe still in
thrall to the United States. Russia chose such an instrument precisely because of the high
risk of a Ukrainian default even if Yanukovych had remained in power, and that was a wise
decision to the extent that the west has had to completely rewrite the book in order to
challenge the stratagem. That, too, will play to its great disadvantage down the road, as
every debtor nation has the right of precedent to exercise such options.
The funny thing is that if Europe simply laid out the situation bluntly to Moscow, as an
equal and a respected partner to the deal, and asked for mercy for Ukraine, there is every
chance Moscow would find a way to accommodate, provided it was given due credit for its
magnanimity. Instead, as usual, Europe has gone with a strategy of creating the appearance
that Moscow fucked Ukraine, breaking the law in the process. It will be interesting to see
what Alexander Mercouris has to say about this, and I am sure he will offer an opinion, but
I'm afraid I haven't time now as I have to get ready for work. But I should like to once more
point out that all the advantage lies with Russia here, if it only remains patient and keeps
its temper; it is Russia which is keeping Ukraine alive now, through transit fees and
significant FDI. It can choose to withdraw one at any time it pleases, and the other as soon
as Nord Stream II is completed. The west's attempts to change the beloved 'facts on the
ground' amount to no more than scrabbling at the noose that is tightening around Ukraine's
throat.
"... Further oil price increases could trigger a slowdown in domestic or global economic growth, which could further complicate the U.S.' Iran policy and Trump's domestic political situation. ..."
Further oil price increases could trigger a slowdown in domestic or global economic
growth, which could further complicate the U.S.' Iran policy and Trump's domestic political
situation. September 12th, 2018
Despite the Trump administration's "
maximum pressure " campaign targeting the Iranian economy, Iran's crude oil and oil product
revenues
jumped a surprising 60 percent from March 21 to July 23. In addition, figures provided by
Iran's Central Bank show that Iran's revenues from oil sales soared by 84.2 percent over that
same period, setting a new record.
The increased revenues seem to have resulted from a jump in oil prices this year as well as
Iran's high oil export volume during part of that period. Notably, the increased revenues were
reported despite the United States' announcement in May that it
would sanction those purchasing Iranian oil starting in early November, with the ultimate
goal of reducing Iranian oil sales to zero in order to place pressure on the Iranian
government.
The U.S.' efforts have had some noticeable effects on Iranian oil exports, as the country's
exports for the month of August were
significantly lower than those of July. However, the drop has only seen exports fall to
near March 2016 levels , when the U.S. was not pursuing a sanctions policy against Iran and
the Iran nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), was
in effect.
Further dashing U.S. hopes of crushing Iranian oil exports have been recent announcements
from Iran's top two customers,
China and
India , that they would continue to import Iranian crude despite the looming threat of U.S.
sanctions. India, along with some other countries, has sought " waivers
" from Washington that would allow them to continue to import Iranian oil and avoid retaliation
from the U.S. for a certain period of time.
In addition, the European Union, which had previously joined the U.S. in targeting Iranian
oil exports in 2012, has shown its unwillingness to follow Washington's lead this time around,
openly
vowing to rebel against the U.S. sanctions regimen and increasing the likelihood that
Europe will continue to buy some Iranian oil despite U.S. threats.
Risks for U.S. and
global economies
Another indication that efforts to curb Iranian oil exports are backfiring for the Trump
administration is
the jump in oil prices that has resulted from concerns about the U.S. sanctions on Iran's
oil exports. The increase in oil prices is likely to be felt domestically in the U.S., the
world's largest consumer of oil, potentially posing a political risk to Trump and his fellow
Republicans ahead of the November 6 midterm elections. In addition, further oil price increases
could trigger a slowdown in domestic or global economic growth, which could further complicate
the U.S.' Iran policy and Trump's domestic political situation.
Such concerns have prompted
U.S. Energy Secretary Rick Perry to meet his Saudi and Russian counterparts in an effort to
convince those two countries to keep oil output high in order to offset a reduction in future
Iranian oil exports. While Saudi Arabia
has already stated it would increase output, Russia is unlikely to comply, given its
relationship with Iran and Washington's threat to impose new sanctions on Moscow. The U.S.,
Saudi Arabia and Russia
are currently the world's three largest oil producers, accounting for about a third of
global crude oil output.
While the Trump administration may have assumed that U.S. oil producers – and the U.S.
economy in general -- would benefit from the elimination of Iranian oil exports, the growing
rejection of the impending U.S. sanctions by other countries shows that these nations are
unwilling
to pay for more expensive American oil or even Saudi oil,
preferring less expensive Iranian oil despite potential future consequences. Furthermore,
efforts to increase U.S. crude production
have fallen short of government expectations, further complicating the U.S.' efforts to
offset an increase in oil prices resulting from Iranian oil sanctions.
Whitney Webb is a staff writer for MintPress News and a contributor to Ben Swann's Truth
in Media. Her work has appeared on Global Research, the Ron Paul Institute and 21st Century
Wire, among others. She has also made radio and TV appearances on RT and Sputnik. She currently
lives with her family in southern Chile.
"... Fracking has indeed produced oil and gas, but the fields deplete rapidly without massive additional investment. Only the zero-interest rates of the Fed's Quantitative Easing could have financed the fracking boom - without QE, US oil and gas would not even exist on the world's radar. ..."
The Keiser Report has a very upbeat show today on RT, in which they celebrate how the NYT
has finally come round to reporting the truth about US fracking, in ways that Max and Stacy
were reporting 9 years ago.
Fracking has indeed produced oil and gas, but the fields deplete rapidly without massive
additional investment. Only the zero-interest rates of the Fed's Quantitative Easing could
have financed the fracking boom - without QE, US oil and gas would not even exist on the
world's radar.
And yet Neocons are taking the US production of hydrocarbons as a major plank in their
platform of war, building castles in the air from a mythical "energy supremacy" and treating
current production levels as a weapon of war -- but the economics of this relatively minor
industry will shut it down soon.
In the second half of the 30-minute show, Max interviews Wolf Richter and they discuss
Argentina mostly. It's a rapid and valuable overview of how the US Hegemon deals with its
favorite suckers south of the border, and how currencies and bonds work - and also why the
IMF acts only to bail out investors and bond-holders, and never the real economy of the
victim nation.
Below is a New Silk Strategies translation from the Russian site teknoblog.ru .
It is clear from Trump's enthusiastic sales talk to the Polish authorities on July 6, 2017
(as we reported here
) that the centrepiece of Trump's economic policy is LNG exports. The US has no major economic
projects even remotely comparable to China's One Belt One Road initiative, the biggest
infrastructure project in history. But worse, all of the energy companies involved in fracking
are
running in the red with no prospects of ever making profits unless oil prices skyrocket to
new highs and stay there. The wells are short-lived and by the time they are producing
steadily, they are already drying up, necessitating new drilling and more borrowing. Worse,
that big deal with China to sujpply a major portion of their gas needs may be about to fizzle,
thanks to Trump's tough guy act.
In 2016, Henry Kissinger
floated the idea of using Russia to oppose China and shared the idea with an enthusiastic
Donald Trump. Kissinger had entertained this idea in the 1970s as Nixon's national security
adviser. The problem is, the whole notion of granting China "most-favoured nation" status, ie,
doing essentially free trade with it, was based on just the opposite mission of opposing
Russia using China as a club, and both ideas have their die-hard supporters
in Washington. Keen observers know neither approach will succeed. In fact, recently the
National Interest reported that China and Russia are planning joint military drills.
Basra demonstrators, enraged over polluted water and years of extreme neglect, engage in arson to make their point September
9, 2018 12:48 AM (UTC+8) Basra protesters set the Iranian consulate ablaze on Friday night, the latest manifestation of outrage against
influential actors in Basra city, which should be one of the richest in the country with its massive oil reserves and port, but which
has become one of the most decrepit.
More than 18,000 Basra residents have been poisoned by tap water since the start of the month, according to the Basra province
health directorate. Hospitals, inundated with patients, have collapsed under the pressure.
Basra, like neighboring Iran, is majority Shiite. But in recent years, residents have grown hostile toward Tehran over its dominance
of Iraqi affairs, its support for political parties notorious for public waste and its backing of armed factions that enforce themselves
as morality police.
The torching of the Iranian consulate came just 24 hours after the protesters -- ignoring a government curfew -- set fire to the
offices of powerful Shiite political parties and Iran-backed militias that formed the backbone of the paramilitary Popular Mobilization
Units.
The demonstrators did not spare the local government headquarters and provincial council, setting those ablaze as well.
Basra has been roiled by unrest since July, and the latest round of revolt was met with tear gas and live fire. The first week
of September saw nine demonstrators killed and 93 wounded, according to the UN.
The deadly force has only inflamed the movement. Over the past two nights, security evaporated from the streets while the military
kept to the sidelines. Angry groups of youths roamed the city center, demanding revenge for those killed and for years of neglect.
The city appears out of control.
The unrest has put a spotlight on corruption in Iraq's economic capital, just as the Ministry of Oil seeks foreign investment
– including from China – to transform the country from an importer of oil products to an exporter.
Gulf port closed
Demonstrators on Thursday shut down the country's most important port, Umm Qasr.
Basra province is Iraq's only outlet to the sea, and Umm Qasr is just one of five commercial sea ports that serve as the country's
main gateway for basic necessities.
The costly shutdown prompted the minister of transportation to call for restraint via local radio stations.
"Iraq is losing millions," Kadhim Finjan pleaded over the airwaves. The port was eventually reopened Saturday before dawn.
Like the oil fields, these critical hubs have drawn protesters, who see the wealth they create being siphoned off by corruption.
An officer with the port authority, who spoke to Asia Times on condition of anonymity, said it was "impossible" for security
to control the port
The ports – strategically placed on the Persian Gulf – are shared between the political parties, a phenomenon that saps their
revenues and allows goods to enter without passing through customs.
An officer with the port authority, who spoke to Asia Times on condition of anonymity, said it was "impossible" for security to
control the port.
"The political parties treat the ports like their private property. Goods are exempted from controls and inspection, and the taxes
are reduced for traders dealing with the ruling parties," he said.
Before the ports earned the ire of the demonstrations, it was the oil sector.
Basra's 15 oil fields account for nearly 60% of the country's oil reserves. Revenues from the province generate approximately
$60 million daily, or 3.6 of Iraq's total 4.3 million barrels per day.
The government relies on the sector to finance its activities, but only a fraction of the national budget flows back to Basra.
The stark contrast between Basra's oil wealth and the miserable conditions of the population has prompted demonstrators this summer
to organize sit-ins blocking the gates to the oil fields.
In addition to the 15-hour power cuts and filthy drinking water, they are demanding jobs.
Foreign companies operating in Basra are required to hire locals for at least 50% of job posts, and up to 80% depending on the
contract. But those laws are often flouted.
The government has also allowed foreign companies to acquire vast swathes of agricultural lands to be used as oil fields north
of Basra, resulting in the bulldozing of orchards and date palm fields and increased unemployment.
"The oil extracted from our city lands is not beneficial to us," one demonstrator told Asia Times.
"It is better to stop its extraction than have it stolen," he said, blaming the government and foreign companies alike.
According to provincial council member Ahmed Abdel Hussein, half of Basra residents live in poverty.
The government says unemployment stands at about at 7.8%, but academic studies suggest a far higher rate. There are no official
statistics for the province.
Feared militia takeover
The government in Baghdad fears the deteriorating situation in Basra could disrupt oil production.
"The oil companies have been greatly affected by the protests," said Adel al-Thamari, an academic and investment analyst in Basra.
"The workers cannot access the fields because of the closure of roads or closing of entry gates," he told Asia Times, adding that
"the oil companies have reduced the number of foreign experts for fear of their lives and inability to afford high insurance costs."
The decline in production puts the financial burden on Baghdad. "Companies will raise the terms of credit, which means a great
loss for Iraq, which will have to pay compensation to the companies," he said.
Along with the world's major oil companies, hundreds of logistics and security support companies provide operational services
to the fields in Basra. As security deteriorates, they too will have to withdraw. "The withdrawal of these companies would mean production
stops," Thamari said.
The concerns of oil companies go beyond the protests to fears of a militia takeover.
"The army has taken the position of neutrality toward the demonstrations, and the fear is that the Popular Mobilization Units
will deploy. This would cause a further deterioration of security, because the militias have their own internal divisions and such
an escalation could neutralize the official security forces," Thamari said.
Looks like my comment made on the previous Syria thread was a waste of my time. Oh Well!
The Iraqi situation has clearly turned in the favor of the Outlaw US Empire as it craves
chaos. It seems more likely than ever that Sadr's been turned given his behavior. The
situation will give comfort to Neocons who want to "consolidate gains" within Syraq and
continue building their military presence.
I very much welcomed the Russian statement on the al-Tanf terrorist base; its liquidation
will hopefully come swiftly. It's instructive to compare the political stability of Syria
with Iraq's political chaos. I think it very likely we'll see Daesh's resurrection within
Iraq as that's the Outlaw US Empire's main tool to keep the chaos ongoing--the empire doesn't
fight against Daesh; rather, it uses Daesh to fight against its stated enemies
everywhere.
The Iraqi situation has clearly turned in the favor of the Outlaw US Empire as it craves
chaos.
I don't agree with that, for the obvious reason that it will be impossible to
support the US position in al-Tanf. And indeed in Syrian Kurdistan. What the US wants is a
US-agreed PM in Iraq, and moderate stability.
"... In return for the EU dropping billions of dollars in penalty fees, GazProm agreed to end limitations on the use of gas purchased by EU members, allow them to re-sell the gas ..."
"... About the Author ..."
"... Ukraine Over the Edge: Russia, the West, and the 'New Cold War ..."
"... Russia's Revolution From Above: Reform, Transition and Revolution in the Fall of the Soviet Communist Regime, 1985-2000 ..."
"... Russia's Islamic Threat ..."
"... The Caucasus Emirate Mujahedin: Global Jihadism in Russia's North Caucasus and Beyond ..."
Russia has advanced forward in something of a tactical and potential strategic victory in
the Russo-Western gas war. This is a three-party war, with the US, EU, and Russia each
promoting separate interests. It is one sphere where a united West has failed to 'isolate
Russia.' The US seeks move in on the European energy market with LNG supplies and replace
Russian pipeline-delivered natural gas supplies to Europe. Washington is using the risks of
dependence on Russian gas and Russia's 'bad behavior' as leverage in attempting to convince
Europeans to reject Russia's Nord Stream 2 pipeline. Russia is said to be unreliable and prone
to shut off gas supplies to Europe.
Due to past Russian-Ukrainian gas crises, the Ukrainian crisis, and general Russian-Western
tensions, Europe has decided on a gas diversification policy in which each EU member should
have at least three sources of natural gas supply. One additional option that could facilitate
this diversification policy is US liquified natural gas (LNG), but the US is still unable to
supply enough LNG to offset Russian gas supplies that might be rejected by Europe. In the
process, Washington is looking less like a 'team West' player and more like a solely
self-interested power maximizer in European eyes and therefore no more reliable than Moscow. As
a result, Europeans are deciding to stick with the Russians while finding new options in the
east, such as Turkey and Azerbaijan. This is creating competition if not tensions in present
and potential gas transit countries in southeastern and eastern Europe, for example.
The Battle Over Re-Sale: No Victors
One recent battle was largely inconclusive, but if a victor has to be designated it may be
Moscow. In May, the European Commssion concluded a settlement with Russia's Gazprom in May
ending a seven-year anti-trust dispute. In return for the EU dropping billions of dollars in
penalty fees, GazProm agreed to end limitations on the use of gas purchased by EU members,
allow them to re-sell the gas. Some EU members, such as Bulgaria, the Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland and Slovakia have re-sold or wanted to re-sell gas. Moscow
frowned, for example, on Slovakia's resale of natural gas to Ukraine at cheaper prices than
Moscow sought to charge Kiev.
The agreement will also restrict Moscow's ability to charge
different countries different prices. So EU members in central and eastern Europe can get a
price close to that paid by Germany and appeal to an arbitration court in case of a dispute.
The agreement guarantees Russia's presence on the European gas market at a time when the
latter's reliance on the former has peaked.
The Northern Front: Nord Stream 2
At the same time, the battle over Russia' Nord Stream 2 natural gas pipeline has heated up.
When it comes on line in 2019, the 759-mile pipeline will carry GazProm natural gas along the
bed of the Baltic Sea to Germany and double the supply Nord Stream pipeline's current annual
capacity of 55 billion cubic meters (bcm). The Trump administration has threatened yet more
sanctions on third-party companies, this time with those that work on the pipeline. The US
sanctions threat is an attempt to promote American LNG interests as well as to protect
Ukrainian interests, though it contradicts the view that Ukraine should eschew its dependence
on Russian gas.
US officials have been hammering home to Europeans the 'Russian threat' in tandem with the
risk of reliance on Russian gas may pose, which will increase with Nord tream 2, but to no
avail. Public opinion is not working in the US favor, with Germans trusting Moscow more than
Washington, despite all the crimes laid at the Kremlin's door by the West. A recent ZDF
Television opinion survey found that only 14 percent of Germans regard the U.S. as a reliable
partner, while 36 percent view Russia as reliable (
www.bloomberg.com/news/articles/2018-05-17/trump-s-global-disruption-pushes-merkel-closer-to-putin-s-orbit
). Thus, notwithstanding Ukraine, Syria and alleged chemical attacks, Russiagate, and the
Skrypals, GazProm's supplies to Europe have risen to hold nearly 40 percent of its gas market,
growing last year by 8.1 percent last year to a record level of 193.9 billion cubic metres
(bcm).
Nevertheless, with the EU decision, the U.S., Poland, Ukraine, Lithuania and others have
stepped up their pressure on Germany, the Netherlands, Denmark and other western Eureopean EU
members to abandon the Nord Stream 2 project. Germans and other western Europeans are unlikely
to give up the short-term gain of energy security for the US LNG given the higher price and
unproven nature of Washington's numerous allegations against the Kremlin. German officials say
they still have no proof from 10 Downing on Russia's culpability for the Skrypal poisoning so
loudly trumpeted by British PM Theresa May.
One motivation for the Russians in building Nord Stream 2 is to obviate the need to
transport gas through Ukraine, which will hurt Ukraine's own energy supply – given
Ukrainian skimming -- and overall economy beyond the present non-sale of Russian gas to
Ukraine. Another Russian motivation is to avert the unreliable Ukrainians, who have failed to
make payments according to contract in the past causing Russian gas cutoffs to Ukraine and thus
Europe with the resulting crises blamed solely on Moscow. The Trump sanctions threat has put
Germany and the other Nord Stream 2 supporting countries between a rock and a hard place,
between Russia and the US. Therefore, German Chancellor Angela Merkel, while supporting Nord
Stream 2, has called for guarantees from Russia that Ukraine will remain a gas transit country.
Ukraine's current contract with Russia ends in 2019 at the very time Nord Stream 2 is to go on
line and the EU has urged re-starting EU-mediated negotiatons now in order to avoid another gas
crisis. Putin agreed to do this at his meeting with Germany's merkel in late May. Nord Stream 2
significantly strengthens Putin's hand in any such talks.
The Southern Front: Turkish Stream, SGC and the Azeri and Bulgarian Factors
Russia is strengtheining its position on the European gas war's southern front by building
the Turkish Stream (TS) gas pipeline to Europe. TS consists of a sea and a land leg. The former
runs under the Black Sea from Russia to Turkey and is built, with Russo-Turkish talks on the
land leg ongoing.
Russia's Turkish Stream is being challenged by the Southern Gas Corridor (SGC) backed by
Western powers, including the EU (along with Turkey and Azerbaijan), which sees the SGC as a
means of diversifying from dependence on Russia. Not just Turkey, but Azerbaijan is emerging as
a major player on the EU gas market, with a shift in policy accenting gas supplies to Europe as
well as oil supplies as in the past. The SGC consists of three components: an expanded South
Caucasus Pipeline and the to be constructed Trans-Anatolian Natural Gas Pipeline (TANAP) and
Trans-Adriatic Pipeline (TAP). TANAP is 51 percent Azerbaijani owned, 37 percent Turkish, and
12 percent belonging to British Petroleum. The SGC will carry Azerbaijani gas through Turkey to
Europe and will be able to supply up to one-third of the gas consumed by Bulgaria, Greece and
Italy ( https://en.trend.az/business/energy/2910573.html
). However, the source of the gas supplying the pipeline demonstrates the limits of Western
attempts to isolate Russia (and Iran). Azerbaijan's Shah-Deniz gas field is co-owned by British
Petroleum (29 percent), Turkey's Turkish Petroleum (19 percent), Azerbaijan's SOCAR (17
percent), Malaysia's Petronas (15 percent), Russia's LukOil (10 percent), and Iran's NICO (10
percent). Moreover, Russia's LukOil is negotiating with SOCAR a stake in Azerbaijan's
second-largest gas field, Umid-Babek, which also includes Britain's Nobel Upstream (
https://newsbase.com/topstories/lukoil-talks-join-umid-babek-project
).
Again the Ukrainian issue is part of the picture here, as a good portion of GasProm supplies
to Bulgaria go through Ukraine. Turkish Stream can replace at least some of that supply should
Moscow decide to entirely avert Ukraine's pipeline system. It is of interest that no one in the
West has offered to include in any of these projects or attempted to fashion a pipeline or
pipeline extension that could link up with the Ukrainian network.
During Bulgarian President Rumen Radev's late may visit to Moscow, Putin reported to Radev
that during his meetings with Turkish President Recip Tayyip Erdogan, the latter said he would
pose no oppsotion to extending the Turkish Stream gas pipeline to Bulgaria. In response, Radev
seemed to suggest making Bulgaria a "a gas redistribution center, a hub" for the Turkish
Stream's supplies further into Europe ( http://kremlin.ru/events/president/news/57608
).
Moreover, one gets the impression that Bulgaria is wary more about its dependence on Turkey
and Ankara's new offensive energy policy in Europe than on Russia and might help Moscow detour
Ukraine.
In 2015, Erdogan declared a major policy initiative of making Turkey a, if not
the major energy transit hub for supplies heading from the east to Europe.
Russia's
annexation of Crimea could help Russia in its talks both with Erdogan over the Turkish Stream
and pose the threat of undermining the SGC. It may also help Putin deal with Merkel, Kiev and
the EU over the Ukraine pipeline system's future role. Bulgarian President Radev also said in
Moscow that Sofia supports building a direct gas pipeline under the Black Sea to bring Russian
gas to Bulgaria ( https://echo.msk.ru/news/2206394-echo.html ).
The Bulgarian option could be used by Putin to threaten Erdogan with reducing the Turkish
Stream's supplies or abandoning it altogether in favor of a Black Sea Russian-Bulgarian Stream
and to reduce Russia's dependence on Ukraine as well.
Implications
Thus, EU energy diversification policies are transforming Turkey, Azerbaijan and perhaps
even Bulgaria into key players on the southern gas transit front, while Ukraine falters to
Germany, and eastern Europe to Western Europe on the northern front.
Tensions between Ankara
and Sofia on these grounds cannot be excluded, and they could draw in Turkey's semi-ally
Azerbaijan. US, EU, Russian and Ukrainian energy diplomacy is likely not only to be focused on
each other, therefore, but also on Ankara, Baku, and Sofia over the next year.
Unless, the US
can rapidly reduce the cost of extracting and shipping LNG to Europe, it is unlikely to be able
to become a major alternative to these players, and Russia will continue to dominate the
European gas market, with a balance of competition and cooperation with Azerbaijan.
~~~~~~~~~~~~~~~~~~~~~~~
About the Author – Gordon M. Hahn, Ph.D., Expert Analyst at Corr
Analytics, http://www.canalyt.com and a
Senior Researcher at the Center for Terrorism and Intelligence Studies (CETIS), Akribis Group,
San Jose, California, www.cetisresearch.org .
Dr. Hahn is the author of Ukraine Over the Edge: Russia, the West, and the 'New Cold
War (McFarland Publishers, 2017) and three previously and well-received books:
Russia's Revolution From Above: Reform, Transition and Revolution in the Fall of the Soviet
Communist Regime, 1985-2000 (Transaction Publishers, 2002); Russia's Islamic
Threat (Yale University Press, 2007); and The Caucasus Emirate Mujahedin: Global
Jihadism in Russia's North Caucasus and Beyond (McFarland Publishers, 2014). He has
published numerous think tank reports, academic articles, analyses, and commentaries in both
English and Russian language media and has served as a consultant and provided expert testimony
to the U.S. government.
Dr. Hahn also has taught at Boston, American, Stanford, San Jose State, and San Francisco
State Universities and as a Fulbright Scholar at Saint Petersburg State University, Russia. He
has been a senior associate and visiting fellow at the Center for Strategic and International
Studies and the Kennan Institute in Washington DC as well as the Hoover Institution at Stanford
University.
"... "What is quietly happening across parts of Iraq is less of a resurgence, and more a resurfacing, of the Islamic State. Many of these fighters never actually left, but merely scattered temporarily, having melted away into the population only to return. " ..."
How is ISIS resurfacing in Iraq? The short answer is that it never really left. Despite US
President Donald Trump's orders to "
annihilate ISIS ," members of the organization have continued to exist in Iraq and Syria
and carry out attacks. The caliphate has fallen and the group no longer holds the vast
territory and population it once controlled. However, supporters, organizers and fighters have
not simply disappeared. Instead, the aspiring proto-state has reverted back to its roots as a
terrorist insurgency. The US-based Soufan
Center assessed the environment as such:
"What is quietly happening across parts of Iraq is less of a resurgence, and more a
resurfacing, of the Islamic State. Many of these fighters never actually left, but merely
scattered temporarily, having melted away into the population only to return. "
The US and the UN agree that there may be as many as 30,000 ISIS
members still present in Iraq and Syria. Jason Warner and Charlotte Hulme writing for the
Combating Terrorism Center at West Point (CTC) also recently estimated that an additional
6,000
fighters are spread across Africa , with the Islamic State West-Africa Province (Boko
Haram) contributing more than half of the total. ISIS continues to wield influence further
abroad with IS-Khorasan in
Afghanistan as well as supporters in the Philippines
, Indonesia
, and throughout the Indo-Pacific.
These members and supporters received encouragement and direction from their highest leader,
Abu Bakr al-Baghdadi, in an
audio message released last month. The message promoted patience and perseverance, claiming
that the time will come again for a resurgence. In Iraq, this may be a functional
strategy.
Little change
ISIS's Iraqi presence began as al-Qaeda in Iraq, an al-Qaeda affiliate led by
Abu Musab al-Zarqawi . The group found footholds in Iraq in the chaos caused by the US
invasion in 2003, and then re-branded itself as the Islamic State in Iraq (ISI) following its
founder's death in 2006. While pressured by the Anbar
Awakening and the US troop surge in 2007,
ISI managed to survive and wait for conditions to become more favorable.
Prime Minister Nouri al-Maliki , a Shia
politician, would contribute to these conditions by giving preferential treatment and status to
Shiite Iraqis. As a result, many of Iraq's Sunnis were disillusioned and alienated from the
Iraqi state and were at least indifferent to ISIS, if not supportive. Renad Mansour of the
Carnegie Endowment for International Peace wrote in 2016 that a lack of options for Sunni
political engagement combined with "intra-Sunni conflict" drove the power development of ISI.
Following the withdrawal of US troops in 2011, the Iraqi security forces were left mostly alone
to fight the extremist group, and quickly buckled under the task.
Research published by the CTC earlier this year sought to analyze the
opinions of young men in Mosul , ISIS"s Iraqi capital. While largely characterized as
"corrupt, brutal, and hypocritical," 93% reported that ISIS had positive effects during the
beginning of their authority. Even now that they have lost that authority, most respondents
were confident that ISIS will not disappear anytime soon. The Sunni community in general was
characterized by the men as divided and both spiritually and physically weak.
Following the collapse of the caliphate, Iraq began judicial proceedings for thousands of
accused ISIS members. While trials are a necessary and positive element in resolving the
conflict, Iraq's courts have been quickly overwhelmed, resulting in trials lasting for as
little as
10 minutes . Innocent Sunnis are at risk of being swept
up in these trials, and joining the many who have already been sentenced to
death as a result of these proceedings.
Shia militias also continue to act with impunity as an element of Iraq's security
forces , reinforcing the power disparity between Sunnis and Shiites in Iraq. With Sunni
estrangement, internal conflict and disunity, and a perception of weakness continuing, it falls
on the government to enforce security and suppress violence.
Political inclusion
Perhaps the largest result of the Iraqi election this year was the ascension of
Muqtada al-Sadr , a Shia cleric, as the leader of the winning parliamentary block. Al-Sadr
promoted Iraqi unity and the abandonment of political divisiveness in his campaign; however,
his group has also been accused of
past aggression against Sunnis . How al-Sadr and the new Parliament will lead Iraq, enforce
security, and form relationships with Sunni communities remains to be seen.
The Sunni community apparently remains internally conflicted and continues to face
challenges at the hands of the Iraqi state. Renad Mansour believes that greater power-sharing
at high levels and greater autonomy at low levels is key to relieving the pressure on Sunni
communities and reengaging them with the state while also accounting for the lack of unity
within the Sunni community. Without political engagement, and facing institutionalized
challenges, many Sunnis may continue to support or be indifferent to extremist groups like
ISIS. Although the group itself has lost its attractiveness among most of Iraq's Sunnis, the
conditions which fueled its earlier growth are still present.
Doubtless, members of the group have gone into hiding and will continue to launch attacks
for the foreseeable future. ISIS will likely never return to the high point it experienced
several years ago, but it has defied expectations before. With smart re-branding and a strategy
made to appeal more to the local population, combined with a messy government unable to provide
security, ISIS may manage regain some of the power it has lost.
I followed that assault on Fallujah very closely at the time. Remember that the US Marines
had tried to take over the town some months before but met with very fierce resistance and
were chased out of town. Therefore there was an element of revenge and also punishment about
this second assault. First they occupied the civilian hospital on the outskirts of Fallujah
(a war crime). They then systemically bombed and destroyed the power station, the water
pumping station and the sewage works (all war crimes).
Then as you point out they used white phosphorous munitions (a war crime), but there was
something peculiar in the immediate aftermath. Having eventually successfully subdued the
town, US troops went around the central area and systematically shot out, and thus drained,
all the water towers (these were numerous as many houses had them). Then military bulldozers
moved in and removed all the topsoil from a couple of square kilometres. This led to
speculation that some form of illegal chemical weapons had been deployed.
Mad Dog indeed.
"... If the reports are true, the situation is an ironic one for Europe: while trying to reduce its dependence on Russian gas it is inadvertently increasing it and is even paying more for it than it would if it bought the extra loads directly from Gazprom. ..."
The documents suggest that a company with US ownership is buying Russian
gas from petrochemical giant Sibur, and then selling it -- at a profit, of course -- to the
European Union, which is in a rush to build as many LNG terminals as it can in a bid to reduce
its dependence on Russian gas.
If the reports are true, the situation is an ironic one for Europe: while trying to reduce
its dependence on Russian gas it is inadvertently increasing it and is even paying more for it
than it would if it bought the extra loads directly from Gazprom.
One might wonder how a U.S. company is able to do business with a Russian one. It's simple:
Wilbur Ross himself said earlier this week that
Sibur is not a subject to sanctions, so for Navigator Holdings and the petrochemical giant,
everything is business as usual.
According to Balmasov, while the number of voyages via the Northern Sea Route so far
this year has been roughly the same as last year, the main difference compared to 2017 is LNG
traffic out of the port of Sabetta, the port that Russia's gas producer Novatek uses to ship
the Yamal LNG cargoes to Europe and to Asia.
Arctic Logistics data compiled by Bloomberg shows that by early July, a total of 34
tankers made the voyage from Sabetta to Europe, and one to the east. Since early July,
another two LNG tankers have shipped the fuel to Asia
In mid-July, Novatek said that it had shipped its first LNG cargoes from Yamal LNG to
China via the Northern Sea Route, with the voyage from Sabetta completed in 19 days, compared
to 35 days for the traditional eastern route via the Suez Canal and the Strait of
Malacca
####
Tut tut! Cannot have LNG going via Russia's northern passage (fnar! fnar!).
Vis ship pollution, why simply hold LNG carriers up to much higher environmental
standards? After all most of them are much newer and are specialist vessels. Or are they
already? Indeed they are, the use of duel-fuel engines that can make use of boil-off:
As of 2005, a total of 203 vessels had been built, of which 193 were still in service.
At the end of 2016, the global LNG shipping fleet consisted of 439 vessels.[3] In 2017, an
estimated 170 vessels are in use at any one time
https://en.wikipedia.org/wiki/LNG_carrier#Reliquefaction_and_boil-off
According to WGI, on a typical voyage an estimated 0.1–0.25% of the cargo converts to
gas each day, depending on the efficiency of the insulation and the roughness of the
voyage.[16] In a typical 20-day voyage, anywhere from 2–6% of the total volume of LNG
originally loaded may be lost.[16]
Normally an LNG tanker is powered by steam turbines with boilers. These boilers are
dual fuel and can run on either methane or oil or a combination of both. ..
I love how an eventuality we were all raised to dread – the melting of the polar
ice caps – is now spun as a net positive. Make hay while the sun shines! When life
hands you lemons, make lemonade! Pick your metaphor. We are destroying the planet we live on,
inch by irrecoverable inch, but the merchants of Stay-Positive maintain it is
AWESOME.
I don't know if you heard – probably not, since it was never much of an
international story – but the Canadian Federal Court of Appeals, in a surprise
decision, overturned the government's commitment to the Trans-Mountain pipeline.
Alberta's Rachel Notley reportedly bent spoons with her teeth, since she had just
jubilantly reported that the court challenge by the city of Burnaby (British Columbia) was
defeated. "To date, Alberta has won every case brought against Trans Mountain. Your Alberta
government will not back down until this pipeline is built and the national interest is
secured", she crowed on Twitter; the modern equivalent of a legislature, I guess, since all
politicians who are anybody turn first to Twitter to get their message out.
That one, of course, was "a victory for all Canadians". Except for British Columbia's
crybabies, of course, who did not want to play host to Alberta's tanker armada, considering
Alberta has no seacoast. So you would think she would quietly accept this later decision by
the legal system she purports to revere. Not a bit of it. She immediately withdrew Alberta
from the national climate-change plan, and restarted her rhetoric about cutting off BC's gas
supply.
Get it? When the court rules in Alberta's favour, it is just – the solemn power
of the law makes you want to weep with awe. When it rules against Alberta, it is a clown show
of unevolved primates. That's modern politics.
All this theatre when the completion of the pipeline is inevitable – the very
day, almost to the hour that the Court of Appeals rendered its decision, the shareholders of
Kinder-Morgan Canada voted 99% in favour of selling the pipeline to the government of Canada.
So now the government owns it, and although it may be delayed a couple of years, it's down
but not out. Now the government has to re-do its consultations with all the native bands,
this time selling the impression that it is actually listening and the consultative process
is real, and it has to conduct a review of the environmental impact of increased tanker
traffic (which it formerly declaimed as outside its purview). I'd say if there is agreement
on changing some routes and perhaps permissible speed until well offshore, it will almost
certainly pass next time.
Most of the arguments ranging around them are what Jordan Peterson calls "pseudo issues."
Let's try to take stock of what the real issues might be.
Energy
The shale oil "miracle" was a stunt enabled by supernaturally low interest rates, i.e.
Federal Reserve policy. Even The New York Times said so yesterday ( The
Next Financial Crisis Lurks Underground ). For all that, the shale oil producers still
couldn't make money at it. If interest rates go up, the industry will choke on the debt it has
already accumulated and lose access to new loans. If the Fed reverses its current course - say,
to rescue the stock and bond markets - then the shale oil industry has perhaps three more years
before it collapses on a geological basis, maybe less. After that, we're out of tricks. It will
affect everything.
The perceived solution is to run all our stuff on electricity, with the electricity produced
by other means than fossil fuels , so-called alt energy. This will only happen on the most
limited basis and perhaps not at all. (And it is apart from the question of the decrepit
electric grid itself.) What's required is a political conversation about how we inhabit the
landscape, how we do business, and what kind of business we do. The prospect of dismantling
suburbia -- or at least moving out of it -- is evidently unthinkable. But it's going to happen
whether we make plans and policies, or we're dragged kicking and screaming away from it.
@82 There is some logic to the Iranians fielding a jet fighter of any sort, even if it is
based on a relic of the 1970s.
An Israeli campaign against Iranian nuclear sites is going to involve F-15 and F-16 jets
loaded to the gills with big-arse bombs. Those will be unable to dogfight even a relic like
an F-5 unless they drop that ordinance.
If that is all those Iranians do that then they will have achieved their purpose.
Alternatively, the Israelis could use fighter escorts but then you have to consider that
each escort represents one less bomb-laden F-16 (or, put another way, twice as many
sorties).
Simply put: Absent any Iranian jet fighters then the Israelis can commit ALL of their jets
to the task of bombing Iranian targets, and do so from the very beginning. But once Iranian
fighters are in the mix then the job becomes much harder: the Israelis either have to take
out those jets first before committing to a bombing campaign, or they have to commit half
their force to escort duties from the very start.
Sure, SU-35s would be much better, but an F-5 is still way better than nothing.
You seem ignorant about economic issues. For example, when it comes to natural gas market,
European countries are not in the same boat. Britain and Spain import virtually no gas from
Russia. These countries built lots LNG terminals and import from Qatar.
Germany, Italy and France have a well-diversified supply from multiple sources. The
countries that are truly dependent on Russia are in ex-communist Eastern Europe. They still
rely on a network of pipelines built by USSR, and would go into energy crisis if Russia
suddenly ended supply.
There is no Chinese FDI in Belarus, and in Russia it accounts for 1% of the total FDI.
Nobody is learning Chinese in Russia or Belarus. I don't know what you're smoking.
Your comment implies that people should continue to bang their heads against a wall.
In fact, no one has said NOT to participate in politics. To be effective, it's important
to understand the reality of politics and the power structure.
Multivariate analysis indicates that economic elites and organized groups representing
business interests have substantial independent impacts on U.S. government policy, while
average citizens and mass-based interest groups have little or no independent influence.
The results provide substantial support for theories of Economic-Elite Domination
...
That's why candidates like Ron Paul on the Republican side and Denis Kucinich on the
Democratic side never stood a chance. They made way too much sense; they dared speak truth to
power so they had to be marginalized by their respective parties so no one would take them
seriously. They were literally swallowed up by the duopoly and relegated to
quasi-obscurity.
I would say 'contra-Russia'. Trump is just the current vessel.
Let us not forget, that under the mighty and loved O-bomber, a group of US Senators back
in 2014 made Bulgaria drop South Stream with god knows what threats, whereas Brussels had
previously failed (intentionally?) to do so. Guess who was the lead Senator?
At this time there is a request from the European Commission, after which we've suspended
the current works, I ordered it," Oresharski told journalists after meeting with John McCain,
Chris Murphy and Ron Johnson during their visit to Bulgaria on Sunday. "Further proceedings
will be decided after additional consultations with Brussels."
McCain, commenting on the situation, said that "Bulgaria should solve the South Stream
problems in collaboration with European colleagues," adding that in the current situation
they would want "less Russian involvement" in the project.
"America has decided that it wants to put itself in a position where it excludes anybody
it doesn't like from countries where it thinks it might have an interest, and there is no
economic rationality in this at all. Europeans are very pragmatic, they are looking for cheap
energy resources – clean energy resources, and Russia can supply that. But the thing
with the South Stream is that it doesn't fit with the politics of the situation," Ben Aris,
editor of Business New Europe told RT .
####
See, nothing has changed. At least it looks like U-rope has learned its lesson. Not so the
US. Russia hatin' is a too good 'dead cat on the table' to give up.
Underneath everyone's observations/comments lurks the basic question: Why?
Enter the Big Picture provided yesterday by Pepe Escobar who also links to and cites the
controversial Alastair Crooke ideological essay I linked to last week. Part of the Big
Picture is the #1 policy goal of the Outlaw US Empire--Full Spectrum Dominance of the
Planet--and its recently published National Defense
Strategy(NDS) related to that goal:
"The central challenge to U.S. prosperity and security is the reemergence of long-term,
strategic competition by what the National Security Strategy classifies as revisionist
powers. It is increasingly clear that China and Russia want to shape a world consistent with
their authoritarian model -- gaining veto authority over other nations' economic, diplomatic,
and security decisions."
Do please note the combination of prevarication with ideology in the above as it's
reflective of the point Crooke tried to make in his piece. A strategy based upon lies to
oneself is a sure recipe for defeat as you're deceiving yourself which violates the first law
of war as pronounced by so many: "All war is based on deception." But then given the
political-economic nature of the USA's Keynesian Militarism, perhaps this deception is aimed
domestically so as to transfer even more tax dollars upwards to the 1%. So, actions must be
closely observed even more than usual.
During the election campaign, it was speculated that Trump's desire to ease tensions with
Russia was a last-ditch gambit suggested by Kissinger to split the Chinese-Russian alliance.
So, Russiagate served to defeat that gambit while pushing China and Russia even closer
together. With the Syrian regime change ploy rapidly being defeated and Ukraine going
nowhere, Deep State planners were left without an oar, so the reversion to Cold War
Russophobia with an occasional bout of Sinophobia thrown in for good measure--neither of
which is any sort of strategy.
Another quote from the NDS:
"Today, we are emerging from a period of strategic atrophy, aware that our competitive
military
advantage has been eroding."
That was realized before Putin's display of highly advanced Russian weaponry, which was
announced in March, the NDS was released in January. What's amazing is "strategic atrophy"
with budgets beyond $600 billion must mean a massive portion's being wasted--delivered to the
1%--such that it's corruption that's caused the erosion of "our competitive advantage." I'd
opine much of the chaos we see being played-up is done to obscure interpretations like mine
so that even more $$$ can be wasted, although lip service is given to improvements.
So, who/what's really in charge? Big Money rules as it has since the Civil War within the
USA and much earlier when we include London and Amsterdam. Big Money's angry because it's
locked out of BRI, BRICS, EAEU, and developing nations are mostly on to IMF's and World
Bank's disingenuous "development" plans because it abhors the notion that it's not Top Dog.
So, the dollar got weaponized and the Trade and Financial War--the Hybrid Third World
War--was finally begun in earnest after earlier fits and starts. Yet it appears that the
effort will fail since Big Money is finding itself trapped inside a web of its own making
that's based on a fiat currency supported by Junk Economics.
It is reported that the German company and partner in Nord Stream II, Uniper, may pull out
of the project due to the risk of US sanctions (previously it said Uniper will pull
out sic see link.).* In related news, construction has been started in German waters.
Still silence from Denmark as to whether they will block it or not.
If I were Moscow, I would announce that the pipeline's route will avoid Danish waters and
sit back to see the reaction. Why? Coz you can bet that some will claim it is
punishment/bribe/threat/anti-competitive to Denmark, to whit, Russia can simply reply that
Denmark has XXX days to provide the permits before it is no longer economically feasible for
the route to go through its waters.
What p* me off about the reported 'threat from NSII' and even in articles like the one
above that point out it is in Europe's interest, none of them mention the preceding sabotage
of South Stream II under the mighty Obama and the impact from that led directly to
Nord Stream II.
At this time there is a request from the European Commission, after which we've
suspended the current works, I ordered it," Oresharski told journalists after meeting with
John McCain, Chris Murphy and Ron Johnson during their visit to Bulgaria on Sunday. "Further
proceedings will be decided after additional consultations with Brussels."
McCain, commenting on the situation, said that "Bulgaria should solve the South Stream
problems in collaboration with European colleagues," adding that in the current situation
they would want "less Russian involvement" in the project.
"America has decided that it wants to put itself in a position where it excludes
anybody it doesn't like from countries where it thinks it might have an interest, and there
is no economic rationality in this at all. Europeans are very pragmatic, they are looking for
cheap energy resources – clean energy resources, and Russia can supply that. But the
thing with the South Stream is that it doesn't fit with the politics of the situation," Ben
Aris, editor of Business New Europe told RT .
####
Yes kids. Warmonger McCain was at the forefront of getting it killed after interference
from Brussels failed to shift the asshole Borissov's government. So when a European asks
"What has John McCain done for us? , he's already f*ed you over for the benefit of the US
and U-ropean poodle Krazy K**t Klan.
And let's remember what a hard lesson Bulgaria learned from its leap of faith into
Brussels' arms.
On May 30, Bulgarian PM Boyko Borisov met with Russian President Vladimir Putin. During
the joint press conference, Borisov apologized to Putin for the failure of South Stream and
for his responsibility in causing the deterioration of relations between the two countries.
Borisov said: "We know about the difficult relations in the past and are grateful to our
colleagues for not being vindictive and the fact that Russian-Bulgarian relations do not
depend on the extent of guilt of some politicians
"I would like to thank President Putin for his attitude once again. I am to blame for
creating certain tensions When it came to the worst and I wanted to talk, my calls were
always answered. And I really accept part of the guilt for those developments."
Putin then added that he regrets that the South Stream project has not been
implemented, since it would have "greatly benefited" Bulgaria.
In response, Borisov blamed the EU of having imposed Bulgaria diktats that other
countries do not respect anyway. Borisov said: "We are the most loyal and the most
disciplined country in the European Union. This is the reason why all the pipelines bypassed
our territory. We hope that today we have redressed an injustice.
Bulgaria stepped up when the European Commission called and got absolutely fuck-all in the
way of thanks or compensation – to the contrary, the decision cost Bulgaria a great
deal of money. Let that be a lesson to other EU countries; Brussels is big on ideas, but it
does not have your back and if your stepping-up causes your country grief and it turns out
you made a terrible mistake, and want to talk about it
There is absolutely nobody else to blame but Borissov himself, a third rate playa .
The position of neither Brussels nor Washington was a surprise at all. They are very well
known quantities. Big surprise. Not.
Borissov vacillated and played the same failed and weak gambit we have seen for years in
the Ukraine. That he is still around as the biggest fish in the local fish shop is that he is
the biggest spineless shit that floats to the surface while the opposition is little more
than useless. That is repeated elsewhere in the neighborhood to various degrees and where it
is not, it's a choice between two sides of the same gangster/clan coin. To misquote Douglas
Adams, So long, and thanks for none of the fish.
Well, I don't think a decision has been made yet. But the consortium has 'applied to
Denmark for an alternate route' – which, since the alternate route would not go through
Danish territorial waters, implies Denmark does not really have any say over it, and is
essentially a challenge to Denmark to either veto the original route on security grounds (you
never know, Putin might hide submarines in it, or Novichok or something) or get on with it.
But Denmark is presented with more or less the Bulgarian Alternative: do Washington's bidding
and get a pat on the head, or defy it and get transit fees.
All the news on the subject that I saw announced that the consortium is 'exploring' an
alternate route. It seems they are still hopeful the original route will be cleared, but are
getting it on the table that denying it will not stop the project.
But of course western 'analysts' continue to squeal that Putin and the Kremlin are using
the Nord Stream II pipeline to 'invade Europe'. Curiously, the same people who once smirked
scornfully that Nord Stream II was not needed because the current pipeline is only running at
half-capacity now claim "even with Nord Stream 2 on line Russia would still need to send
substantial amounts of gas through Ukraine – at least until the upcoming TurkStream
pipeline is also finished." Whoa – wut? Even both legs of Nord Stream running at full
capacity will not be enough? You don't say.
Once again, nobody is forcing Europe to take more Russian gas than it needs, although the
draw-down of domestic supplies suggest it will need more all the time unless 'green energy'
becomes more commercially viable and reliable. Certain players want Europe's gas to go
through Ukraine for two reasons – one, Ukraine badly needs the money from transit fees
to prop up its calamitous economy. Two, it is a ready tickle-trunk of conflict whenever the
west wants to make problems for Russia; presto! Ukraine is in a new fight with Russia over
gas prices, and Europe is trembling with fear that its gas supplies will be shut off.
Here, you numpties – let me solve the problem for you. Soon there is going to be a
perfectly good (according to Ukraine and the west) pipeline network idling without much to
do. Why not let all those competitors Europe is always gibbering about use Ukraine's pipeline
network to send their gas to Europe? They could have the whole thing all to
themselves, completely cutting Gazprom out of Ukraine! What a victory that would be! And they
could pay Ukraine transit fees, saving the day there and bringing enormous comfort to
Ukrainian economists! It's win/win!
See,
this is why I enjoy Leonid Bershidsky's writing . Despite his idealistic prattling that
Russia is actually guilty of all the things America says it is – his ultimate loyalty
is still to his adopted homeland, the land of milk and honey – he remains essentially a
realist. And his take on the economic dynamics is brutally realistic; the United States
cannot 'bring the Russian economy to its knees'. Once again, America's ridiculously-high
opinion of itself and its power fail to take account of consequences.
Oh, it could, I suppose, in a way. A way that would see the world's largest economy
– arguably, and certainly in its last days if it is actually still the world's largest
economy – wreck the global economy and its own trade relationship with the world in
order to damage Russia. Is it willing to go that far? You just never know, as decades of
feeding itself exceptionalism have addled its thinking.
Bershidsky points out – correctly, I think – that Russia has held off on
punishing American companies in Russia just as the USA has not dared to sanction the energy
industry in Russia. Neither wants to take that step, although one will certainly provoke the
other.
In fact, it occurs to me that if Russia were really as malignant and evil as Washington
pretends it is, Russia would be first to take that step, booting American companies out of
Russia, perhaps giving them 72 hours to clear out their desks and get out. What would happen
then? America would be bound to drop the sanctions hammer on oil and gas. And what would
happen then? Europe would say, it's been a lovely party, but I must be going. I give that an
8 of 10 chance of happening, and solely because of the stupid actions heretofore by the Trump
government. Had America been reasonable, it would have stood a chance of carrying Europe with
it to a war against Russia. But Trump and his blowhard bullying have hardened European
resolve against the USA.
"Third, while the U.S. is now exporting oil to Europe and elsewhere" --
The USA is net importer of oil. That alone discredits the author
Notable quotes:
"... Meanwhile in the North Sea, the new BP owned flow of crude oil from the Forties field was coming on stream and boosted Shell's declining flow of Brent crude oil to the extent that BP were now in a position to control the market. The new Brent/Forties contract rapidly became the preferred global oil price benchmark in preference to land-locked WTI, and the benchmark was later augmented by Statoil's (STO) Oseberg and Ekofisk fields. ..."
"... While this Dark Inventory was funded by investors of petrodollars, the liquidity needed for oil market cash-flows was provided by the Federal Reserve Bank via Quantitative Easing. ..."
"... crude oil in time and space ..."
"... A cynic once said that there are always two reasons for an action: the reason given, and the real reason. ..."
"... "Drillcos are not risk free. If oil prices tumble, investors' ability to grab high returns within a few years fade" ..."
ICE Age – how Wall Street and Enron turned oil into an asset class and wrecked the
global Oil Market.
Transition through Gas – Obama strategy to achieve energy security/resilience through
oil market inflation and a switch to natural gas.
America First - President Trump's new Energy Dominance strategy for a global WTI benchmark
and U.S. oil market domination. Introduction
It has been clear since President Trump was elected to office in November 2016 that major
changes in financial and commodity markets have been taking place since then, but it has taken
until now for any indication to emerge as to any organising principle for the new
administration's foreign policy doctrine.
To an outsider, the foreign policy of the Trump administration appears to be based in no
particular order firstly on a desire to erase all vestiges of President Obama's policies,
whatever they may be, and secondly, on an America First doctrine of primacy of U.S.
interests in the global economy.
Finally, on 29 th June, President Trump announced at an Energy Department event
"Unleashing American Energy" a new doctrine for energy policy which he termed Energy Dominance,
without
specifying what this actually means .
In the four months since then, sufficient data points have emerged to make an educated
guess. The ICE Age
Towards the tail end of the Clinton administration and the Dot Com boom in 2000, Gary Cohn
of Goldman Sachs (NYSE: GS )
had dinner with his counterpart at Morgan Stanley (NYSE: MS ), John Shapiro. From this dinner was hatched an
audacious plan to take control of the global oil market through a new electronic global market
platform.
The first step was to acquire a moribund mid-American electronic trading system
(Intercontinental Exchange – ICE) and its dynamic founder. Secondly, key oil market
intermediary companies (including BP (NYSE: BP ), Shell (NYSE: RDS.A ) & Total (NYSE: TOT )) agreed to provide liquidity in exchange for a
share of ICE equity ownership followed by a second tier of market participants who then joined
on less attractive terms.
Having secured physical and financial oil market liquidity, ICE still needed participation
by end-user producers and consumers. After an abortive effort to acquire the New York
Mercantile Exchange (NYMEX), ICE made the membership of London's International Petroleum
Exchange an offer they could not refuse: either sell IPE to us, or our members take their
hedging elsewhere.
Meanwhile in the North Sea, the new BP owned flow of crude oil from the Forties field
was coming on stream and boosted Shell's declining flow of Brent crude oil to the extent that
BP were now in a position to control the market. The new Brent/Forties contract rapidly became
the preferred global oil price benchmark in preference to land-locked WTI, and the benchmark
was later augmented by Statoil's (STO) Oseberg and Ekofisk fields.
Enron-Style
Financialization
Enron really were the smartest guys in the room. With the complicity of investment banks
they were able to defraud investors and creditors alike for over a decade through the use of
tripartite 'Prepay' funding contracts and accounting chicanery which concealed these
liabilities off-balance sheet. The extraordinary fact is that over the period of Enron's
existence some 70% of their income was entirely illusory.
There is nothing new about such macro (long term) fraud or manipulation: a producer cartel
manipulated the tin market for decades until the price crashed in the 1985 Tin Crisis.
Similarly, Sumitomo's Yasuo Hamanaka manipulated the copper market for ten years, five years of
which was after David Threlkeld had rumbled what they were doing and blown the whistle, only to
be ignored.
From 2001 onwards, the passive investment phenomenon of index fund and ETFs began to make
inroads into the oil market via the inspired marketing narrative of 'inflation hedging' –
ie off-loading dollar risk in favour of oil risk. These long-only passive investors enabled oil
producers such as BP and Shell (who wished to offload oil risk in favour of dollar risk) not
only to hedge production, but also to monetise inventory and even reserves.
There's nothing wrong with the use of prepay financing provided it is done transparently,
but if it is opaque, then as Enron demonstrates, the results can be devastating.
It is my case that several oil market players, particularly BP and Goldman Sachs, and
probably extending to Norway's Statoil and at least one other U.S. investment bank, began to
quietly facilitate and use prepay funding on a big scale. The result was to withhold physical
crude from the market and as the global market tightened this led to the inflation of a bubble
in price which those involved always knew was unsustainable.
This bubble was spiked at $147/barrel in July 2008 (
some say deliberately ) and while global physical demand remained buoyant the reason for
the oil price collapse to $35/barrel was that buyers were unable to actually pay for the oil.
This was because international trade finance clearing through instruments such as letters of
credit became unavailable when trust temporarily evaporated from the dollar system of global
trade clearing and settlement.
Transition through Gas
The organizing principle of U.S. foreign policy has for over 100 years been energy security,
and the means to achieve this has oscillated between (dumb) military and (smart) financial
action.
President Obama's smart financial energy policy doctrine had two key objectives. The first
aim was to reduce reliance on Saudi oil, and this required (as after the 1973/4 Oil Shock)
prices high enough to make viable new U.S. and global production, funded by petrodollars
reinvested by beneficiaries of inflated oil prices.
So, as I documented in a series of Seeking Alpha articles beginning with Oil: The Big Long the oil
price was rapidly re-inflated and supported for 5 years over $80/barrel through Enron-style
prepay funding. This created an opaque Dark Inventory of oil reserves held by a custodian (the
U.S. Big Hill SPR) but where the economic interest is held by fund investors via prepay
contracts with investment banks.
A highly lucrative two tier false market in oil was also created where most market
participants were (and remain) unaware of the true beneficial ownership of oil. This led to
periodic unaccountable moves in inventory and to trading coups (short term micro manipulation)
via 'short squeezes' and otherwise. While this Dark Inventory was funded by investors of
petrodollars, the liquidity needed for oil market cash-flows was provided by the Federal
Reserve Bank via Quantitative Easing.
At these inflated price levels, substitution by renewable energy and investment in energy
efficiency acted to reduce demand, while massive investment in shale oil increased U.S.
production by 5m bpd in 3 years.
The second objective was a switch from oil to natural gas, and when the U.S. was obliged to
leave Saudi Arabia, they thereupon established their biggest regional base in Qatar, who co-own
with Iran the greatest single natural gas reserve on the planet – South
Pars.
Energy Dominance
In the four months since President Trump's announcement, the market strategy developed by
Gary Cohn is now being implemented and its elements are emerging into view.
Firstly, there has been a massive inflow of Managed Money into the oil market, particularly
the Brent contract, which has seen the Brent oil price increase by 35% since the starting
point, which I believe can be dated to the August Brent/BFOE Crude Oil option expiry on June 27
th 2017.
Secondly, on 1 st July 2017 the Saudis ceased to price oil against the BWAVE
weighted average of Brent/BFOE futures contract (perfectly suited for HFT algorithmic trading)
and began to price oil against the ICE Brent settlement price.
This
image shows the striking change in market price activity which took place at that point
Thirdly, now that the spot Brent/BFOE price has been inflated through $60 per barrel,
internationally accessible U.S. oil deliveries are now available to the market which form a
necessary precondition for a successful U.S. based futures contract.
The direct effect of this flow of funds into the market has been to:
Drive the spot Brent futures contract over $60 per barrel;
Encourage oil producers to hedge, particularly U.S. shale oil producers selling future
production in order to lock in finance;
Create a significant Brent backwardation, which has now, via Brent/WTI arbitrage, had the
effect of dragging WTI out of contango.
Finally, and perhaps the most intriguing data point of all, is this chart from Olivier Jakob
of Petromatrix titled crude oil in time and space
Here it will be seen that even while the December 2017 Brent futures contract soared over
$60 per barrel as fund money poured in, the U.S. WTI December 2019 futures contract was pretty
stable around $50 per barrel.
Physical or Financial Demand?
A cynic once said that there are always two reasons for an action: the reason given, and
the real reason.
The dominant market narrative is that the backwardation in Brent is evidence of surging
global oil demand which has emptied inventories and is leading the price to new sunlit uplands.
However, I see the market rather differently.
Firstly, whether the Brent spot month is supported by financial, rather than physical
demand, the result will still be a backwardation, and because few oil producers expect a price
over $60 to be sustainable they therefore hedge and depress the forward price. In support of
this view, I am far from the only market observer who believes that Aramco, and Rosneft would
not be selling equity if either Saudi Arabia or Russia believed the oil price trajectory will
be positive even in the medium term.
Secondly, it is not a matter of if OPEC members cheat, but how and here
Tanker Trackers combination of
tanker geolocation with Planet Labs microsatellite imagery is shining
new light on the dark world of physical flows of oil.
I have yet to find anyone in the market who is either willing or able to answer the simple
question of who exactly is buying down the Brent curve?
Someone has bought Brent futures contracts to the tune of some 200,000 December 2018,
100,000 December 2019, and 45,000 December 2020. In addition there are 250,000 further
contracts from January 2019 onwards in other contract months.
Could this be refiners hedging crude oil supplies? I think not, because refiners do not tend
to hedge oil purchases far forward, and market consensus seems that $55/bbl is an expensive
hedge.
So then it must be investors? But if so, then these investors participate on the ICE market
via funds who take futures market risk either directly (Managed Money) or indirectly via
investment banks (Swap Dealers).
But the problem with this is that Managed Money investors, whether actively speculating for
transaction profit (hedge funds), or passively holding and rolling over long-only positions
(ETFs & Index funds) participate only in the liquid ICE front month contracts.
So what exactly is going on down the curve?
Firstly, one part of the explanation is that financing of shale
oil development has evolved through the entry into the market of DrillCo financing
structures where oil market risk is taken by fund investors (eg Carlyle) in future shale oil
production. But as the article author said: "Drillcos are not risk free. If oil prices
tumble, investors' ability to grab high returns within a few years fade"
Since shale oil production decline rates are high the necessary hedging by investment banks
of some £2bn market risk could account for a great deal of 2018 long open interest.
This still leaves open the $64 billion question of which market participant is motivated and
able to support the ICE Brent term structure for years into the future by swapping dollar risk
(T-Bills) for long term oil risk (oil reserves leased via prepay purchase/resale
contracts).
My conclusion by a process of elimination is that this Big Long can only be Saudi Arabia and
regional allies, with Saudi Arabia now under the management of the thrusting young Mohammad bin
Salman.
America First
So what are the intended outcomes of the U.S. Energy Dominance strategy as outlined
above?
Firstly, the re-establishment of WTI as global oil market pricing benchmark after some 15
years domination by the Brent/BFOE benchmark.
Secondly, to stabilise the global oil price between $50 and $60 per barrel, as forecast by S
& P Global Platts and BP.
Thirdly, preferential America First U.S. and Saudi oil market access, with U.S.
antagonists such as Iran or Russia being able to access the market on inferior terms, if at
all.
Finally, the emergence of an Oil Standard for the U.S. dollar through basing the dollar
directly on monetized U.S. and Saudi oil reserves.
What is meant by the oil standard, and why the Energy Dominance strategy is doomed to fail,
will be the subject of a second article.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate
any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving
compensation for it (other than from Seeking Alpha). I have no business relationship with any
company whose stock is mentioned in this article.
"... The US is run by a somewhat unstable president being advised by nuts like Bolton whose main focus is following Israeli diktats, therefore i would not expect them to be looking out for US interests. ..."
The US is prepared to use sanctions to drive Iranian oil exports down to zero, the US
national security adviser, John Bolton, has said.
"Regime change in Iran is not American policy, but what we want is massive change in the
regime's behaviour," Bolton said on a visit to Israel, as he claimed current sanctions had been
more effective than predicted.
Donald Trump took the US out of Iran's nuclear deal with the west in May and is imposing
escalating sanctions, both to force Iran to renegotiate the deal and to end Tehran's perceived
interference in Yemen, Syria and Lebanon.
Complete removal of Iranian oil from world markets would cut oil supply by more than 4%
probably forcing up prices in the absence of any new supplies.
SNIP
Fuller US sanctions, including actions against countries that trade in Iranian oil are due to
come into force on 5 November, 180 days after the initial Trump announcement to withdraw.
The measures against Iranian oil importers, and banks that continue to trade with the Central
Bank of Iran, will ratchet the pressure to a higher level.
Pompeo has set up an Iran Action group inside the US State Department to coordinate US leverage
on companies and countries that cannot show that their trade, including in oil, has fallen
significantly by November.
Measures may also be taken against firms that insure ships carrying Iranian crude.
It is expected some of the major Iranian oil importers, such as Russia, China and Turkey, will
either ignore the threat of US sanctions, or, possibly in the case of Iraq, Japan and South
Korea, seek exemptions.
China takes a quarter of all Iran's oil exports, and with Chinese banks little exposed to the
US it can avoid the impact of Trump's sanctions.REPLY
I wonder if China could just take all of Iran's oil? I imagine at the right price they
would be happy to do so. China imports about 8 Mb/d, Iran exports about 2.5 Mb/d of oil,
seems possible.
Also note that if this does occur and there is no drop in Iranian output, the impact of
the Iranian sanctions on the World Oil market will be effectively zero.
I wonder what the capacity is of the Chinese and Iranian oil tanker fleet is? If nobody
else will buy it or ship it then the tanker fleet will have to be owned/insured by either
Iran or China.
I'm interested in knowing if Chinese oil tankers are even capable of hauling 2.5 million
barrels a day home from Iran. It seems doubtful that anybody else will be doing it for them.
I can't find much info on the size of the Chinese owned tanker fleet and it's
capabilities.
While US forces have been known to seize North Korean oil tankers hauling Libyan oil, I
find it doubtful that they will seize Chinese ones, for the reason you mentioned; China
punches back. Nothing spells the end of hegemony like getting your ass kicked.
One would assume its easy for the chinese to buy used oil tankers if they offer a bit over
current market prices. This is a very long term conflict, and they could buy tankers,
reregister them Chinese or Iranian or say Russian and start moving that oil.
The US is run by a somewhat unstable president being advised by nuts like Bolton whose
main focus is following Israeli diktats, therefore i would not expect them to be looking out
for US interests.
The message I get from that piece is that companies are getting ready for next year so
they can hit the ground running when the pipeline bottleneck is removed. Output has not
decreased, it is just rising more slowly than capital expenditures. No point in completing
wells if there is not pipeline space to move the oil, so they are building pads and other
facilities and drilling wells, but waiting on completion.
So far this year Permian tight oil output has increased by 478 kb/d, an annual rate of
increase of about 820 kb/d. The annual rate of increase from Jan 2017 to July 2018 has been
about 829 kb/d.
Output has not decreased, productivity has. There's a lot in that article. Yeah, DUCs are
increasing for next year. Late next year. Conoco is the only company that I read about, that
said we do not intend to expand much in the Permian, until they get the infrastructure in
place (pipelines). They started running out of pipeline capacity the beginning of the year. I
don't know about you, but if I was a CEO, I'd feel like an absolute idiot for not figuring
that into the plans. So, for another year, they get to feed the DUCs.
Many a show and tell from the operators, is how they have brought down costs. Now, I have
tell everyone that costs are higher than before. That will never go into an annual report, as
it makes the CEO look like an idiot.
The companies are not making the production per well that was hyped. Er, maybe we should
not include that in the annual report, either. That's what I got from the article.
You don't want people to say you wound up with egg on your face, so you tell them you have
decorated your face with egg. It was your intent to look better. Spin.
I don't follow the dog and pony shows given by the oil companies, I just look at the data
from the EIA, OPEC, and shaleprofile. I guess everyone interprets information differently,
what I see in the article is that output has not risen as high as previously projected
because fewer wells are being completed than was projected. It is also probably true that the
average completed well has lower EUR than the ridiculous well profiles that are typically
presented to investors, but I always dismiss those as hype and smart investors do the same
and look up the information at drilling info, frac focus or shaleprofile.com.
The average well productivity in the Permian basin has not decreased, also no decrease in
the North Dakota Bakken, or the Eagle Ford, or the Niobrara all based on Enno Peter's
presentations at shaleprofile.com.
I also ignore the estimates by the EIA's drilling productivity report as I think that
model is poorly done.
Dennis, respectfully, you need to stop whatever you are doing and go seek help
immediately. In an effort to be the eternal optimist, or the staff contrarian, you are losing
all credibility with regards to analyzing anything oily in the world. I have no charts, or I
would stick them here.
Guy is basically right, there is nothing good to draw from this article whatsoever and the
author is one of the best there is. All costs in the shale biz are significantly higher than
EVER before. Well productivity is declining, not from takeaway restraints but from well
interference, increasing GOR and depletion. Profitability has NOT improved thus far in 2018,
the Permian unconventional oil industry is still outspending revenue and interest rates are
on their way up, up, and up.
If anybody is spending $3.5MM to drill DUC's and not paying back debt, they too need to
seek immediate help. You have become the King of Debt on POB and are discounting completely
the role that debt will play in your lofty supply demand economic theories. Rune has just
written something very good on that and Art has good data now regarding declining gasoline
consumption in the US due to higher prices. That is all debt related, man. You have gone
freaking chart bonkers.
And why argue what the KSA says about its reserves? Its their oil, they can say whatever
they want to about it and no dumb ass American is going to change it. Right here in the good
'ol US of A, reserve reporting under the ever watchful eye of the SEC, is embarrassingly
awful. Shale oil EURS are exaggerated by 30% or more. We now lie in America way better than
the Saudis ever did and get this: a lot of people believe it !! Ahem.
Dennis, I have to work for a living but I don't want you to think I criticized you and
don't have the balls to respond to all your hours of research arguing with me. I got it. And
all the charts. And the models. And the criticism directed at others for guessing, which is
all you EVER do. Have you ever seen the back in of a drilling rig in your life? You gotta
balance about 500 oil well check books to even be allowed to analyze the oil industry,
IMO.
Look, even the EIA seems to thing productivity is declining in the Permian. Goggle it. I
get the full meaning of Enno's work, all of it, including this: "all shale oil wells drilled
in America before January of 2016 now only account for 27% of total LTO production." Let that
sink in a minute.
You embrace debt as thought that is an acceptable thing in the world we live in today, and
especially from the shale oil industry, and though you want to be un-hinged from fossil fuels
as much as any of the permanent residents you have on your blog, rational ones they are, one
and all, you believe strongly in the shale oil industry's ability to pay down its debt,
improve its dismal financial performance, and deliver the goods it has promised to America.
Its very confusing, actually. And hypocritical. I guess when the shale oil industry says past
performance is not indicative of future results, you believe them.
I think, really, all you are doing is defending your damn models.
I have some serious doubts about how much and how fast shale oil will grow over the next few
years. I have accumulated no statistics, and have prepared no computations and charts to back
up my doubts. However, they should be easily understood in theory, as that's all it is, a
general theory.
While I know of no industry standards to define the difference between tier one, tier two,
and tier three oil, I have made my own guesses based on operators statements. Tier one has EUR
of 600k barrels, or more. It will produce over 200k in the first year. Tier two has EUR closer
to 300k, and will produce 100k to 200k the first year, or an off the wall estimate of 150k.
Tier three is probably closer to 150k EUR, and it's long term profitability is dependent on a
very high oil price. It will be drilled, but only when price is high, and tier two is gone.
If you look at tier one, it can be drilled at today's prices, and income from the first year
will fund one or more wells the next year with cash flow, hypothetically.
You would need about twice the number of tier two wells to equal a tier one. At present
prices you would have to borrow money to fund the equivalent number next year.
We have a limited amount of tier one wells left in the Eagle Ford and Bakken. There is
beginning to be some question as to the number of tier one spots in the Permian. Plus
increasing GOR is raising questions.
As more wells are drilled, of course the price of the well increases. Simple micro
supply/demand.
Interest rates will increase, causing borrowing costs to increase.
Even at $100 oil price, I can't see over a two million barrel a day increase in a short
period of time (three to five years).
I could put numbers to this, but I could never reach what it actually would be, anyway. Do
your own figures and see what you come up with. I just can't get to over 2 million barrels, and
that would be tough.
I'm not saying that the estimates for recovery are wrong. I'm saying using past data to
estimate the future does not take into consideration that all rock is not the same, and that
costs and borrowing ability will put their own limits on how much, and how fast growth occurs.
REPLY
All very much guess work. There are factors such as improved well layout, better well
design and so forth that tend to drive well cost for some "optimized" well design (a given
lateral length, number of frac stages and pounds of proppant and other materials) lower that
may offset the microeconomic tendency for costs to go up as constraints are reached (not
enough workers, equipment, or infrastructure). That's the reason I assume for simplicity that
long term well cost in constant dollars remained fixed.
I also have no idea on the numbers of tier one to three wells that potentially can be
drilled. All I have used is average well output for ND Bakken, Eagle Ford, and Permian from
shale profile. That is simply a mix of all wells producing. I assume oil companies attempt to
drill the most prospective areas first (not an exact science) so that as the play is
understood average new well EUR will gradually rise to some maximum (as oil companies figure
out both the best areas to drill and the best well design) and then after some period
(probably 2 to 3 years) the best areas will become saturated with wells so that less
prospective areas will be drilled and new well EUR will gradually decrease. That is my model
in a nutshell and the result for the US is that tight oil output may be able to rise from
6000 kb/d in July 2018 to about 8000 kb/d by July 2023 (about 5 years). This scenario assumes
high oil prices and is optimistic, a "medium" oil price scenario would result in maybe a 1.5
Mb/d increase in tight oil output over 5 years and a "low oil price scenario" ($80/b in 2017$
maximum by 2025) might see only a 500 kb/d increase in tight oil output from 2018 to
2023.
Note that US tight oil output has risen by about 700 kb/d over the first 7 months of 2018.
I do not believe this rate of increase will continue for much longer and will gradually
decrease as we approach 2021.
For the Permian basin specifically the peak is about 1 Mb/d lower for my "low oil price"
scenario relative to the medium price scenario ($80/b vs $113/b max price). Other basins
would also be affected, but I haven't run the scenarios on all tight oil basins so I am not
sure how much the entire US tight oil peak would be affected, probably 1.5 Mb/d lower than
the medium price scenario. For Rune Likvern's near term oil price scenario tight oil output
would be fairly flat from current output levels in my opinion and that would tend to put
upward pressure on oil prices.
We have not had any difference of opinion on future shale output, in the last 6 months,
according to my recollection. Any minor differences that may have been discussed fit into the
"who knows" classification. My comment was for those "other" projections coming out, that
basically are surreal. They have caused, in my opinion, an excess of pipelines being built,
and massive expenditures to be able to export another 3 to four million barrels of oil a day
that will probably never show up.
700k a day out of the Permian, is actually what I am projecting for 2018. Even 800k is
within probability. 200k of extra pipeline is due sometime before year end. Not much more
than that until late 2019 when bigger pipelines may be available. But the amount you could
crank it up to would be limited by the number of months left in 2019.
Agree 100%. Note that 700 kb/d is roughly my estimate for Permian increase in 2018 as
well, for the US tight oil as a whole possibly 1000 to 1200 Kb/d increase in 2018. Many of
the estimates are too high on that point we are definitely on the same page.
I mean, there are only four months left. I know the Eagle Ford can't do hardly anything in
that time fraim, Bakken is stuck at a high of about a 100k increase, so what fields will add
that much?
From Bakken, Eagle Ford, Niobrara, and STACK/SCOOP.
So far non-Permian US tight oil has increased about 215 kb/d through the first 7 months of
2018, I would expect this to accelerate if anything as capital moves to other tight oil
basins due to the low oil prices at Midland. So a 400 kb/d increase from other tight oil
basins (exit rate for 2018), plus 700 kb/d from Permian basin would give us 1100 kb/d.
So far in 2018 we have increases of 92 kb/d in Bakken, 61 kb/d from Eagle Ford, 38 kb/d
from Niobrara, 479 kb/d from Permian, and 24 kb/d from all other US tight oil plays.
If all output stopped increasing in other tight oil plays besides the Permian after July
2018 we would have a 915 kb/d increase in US tight oil output in 2018, if my guess of a 700
kb/d increase for the Permian basin tight oil output in 2018 is correct. My best guess
remains 1100+/-100 kb/d for the US tight oil increase in output from Dec 2017 to Dec
2018.
I only have data through July 2018, so 5 months left for increases, if we extrapolate the
rate of increase for the first 7 months of 2018 we get 1190 kb/d for the 2018 increase in
tight oil output. I scale it back a bit because I expect Permian output increase will slow
down. Other plays might also speed up.
Ok, your looking at EIAs production estimate per play, again. I'm only going to go by
monthlies. There will be other field declines, besides tight oil. GOM, Alaska, and non tight
oil Texas.
Haven't looked at rig counts lately so it's a guess. Just figure the capial may move to
higher profit areas such as Bakken or Niobrara. Yes there are DUCs that could be completed.
There may be more available frac crews in other plays as everyone has flocked to Permian.
The Kashagan oilfield is proving to be a real nightmare for operators and partners. No
wonder a decision was made to expand capacity for the land based Tengiz field. No similar
call was made for Kashagan even if stated reserves are a bit higher than for Tengiz.
It is a bit like offshore deepwater. If the size of a new prospect warrants it, the cost
can be kept down reasonably. And the North Slope is probably one of the places it is possible
to find another or even several gigant oil fields (above 500 million barrels). Just shows
that some majors are betting on higher oil prices.
EIA Weekly U.S. Ending Stocks to Friday 17th August
Crude oil down -5.8 million barrels
Oil products up +1.5
Overall total, down -4.3 (shown on chart)
Natural Gas: Propane & NGPLs up +1.5 (not included in the chart) https://pbs.twimg.com/media/DlZH1X2X0AIPDLR.jpg
Big drop in Iranian exports the first of August, and not close to Nov. yet. One million
looks more likely, eventually. And for those that may have missed it, Sinopec has started
buying US oil, again. To me, that indicates China is attempting to remain somewhat
neutral.
It's pretty clever. They want money from the state before they do any work developing
their own lease. The money would fund . . . haha . . . management salaries, among other
things.
And if it proves out as no oil, well, then they got the state to fund exploration. If
there is oil, they get the money from selling the oil. It's no lose.
Saudi Aramco, apparently there was an audit of their reserves in preparation for the Aramco
IPO. It says Baker Hughes was involved???
2018-04-29 DUBAI/LONDON (Reuters) – An audit of Saudi Aramco's oil reserves – an
essential part of the preparatory work for its planned initial public offering – has
found the state oil giant to have higher reserves than it previously reported, sources familiar
with the matter told Reuters.
Two sources, speaking on condition of anonymity, said the independent external audit has
found the proven oil reserves to be at least 270 billion barrels, which is slightly higher than
the 260.8 billion barrels the company reported in its 2016 annual review.
Dallas-based DeGolyer and MacNaughton, and Gaffney, Cline and Associates, part of Baker
Hughes, are involved in the auditing, sources have said.
Did they pay for the audit? I've found that audits often show the results the customer is
looking for. Its not quite a science. More like a combination of fishing and editing.
"In no way should these results be construed as a true representation of the 'real' ."
au·dit
NOUN
an official inspection of an individual's or organization's accounts, typically by an
independent body.
VERB
conduct an official financial examination of (an individual's or organization's
accounts).
"companies must have their accounts audited"
They audited their books! I have no doubt that they found exactly what Saudi had on
their books. But that is likely to bear no resemblance to what field reserves actually are.
At any rate, it is entirely possible that Saudi could have doctored their books in
anticipation of the audit.
How would one go about actually checking the remaining reserves in Ghawar? Or any of the
other Saudi fields?
Dipstick??🤡 Seriously, they are both oil consulting companies. Hardly an audit.
Just high priced consultants. Key phrase is high priced. Nobody is going to jerk their
consulting license if they accept the high price, and give SA what they want. If SA runs out
of oil tomorrow, the worst that could happen is the companies say, whoops, missed that
one.
New blog post by Rune Likvern on credit creation, interest rates and oil price: https://runelikvern.online/2018/08/21/the-price-of-oil/
. He focuses on the demand side and believes that Brent will trade in $55 – $70/bo range
over the coming year. This seems a bit low IMHO., considering the supply side of the equation.
REPLY
I agree with your opinion. There will be a downward pull from multiple directions. Dollar
strength, Rune's analysis, higher price in general, Iran discounting their oil, and maybe
some others. All of those will not keep price from going up if supply is too low. Just keep
an eye on world inventory levels. They tell the long term story.
Also consider that $80/b at 29.5 Gb consumption is about $2.4 trillion for a World economy
of $80 trillion, that's about 3% of World GDP, in 2013 when prices were $108/b and
consumption was 27.8 Gb and World GDP was $76.5T, oil consumption (C+C) was about 3.9% of
World GDP. Perhaps rising interest rates will make spending 3% of World GDP on oil a problem,
but despite Rune Likvern's excellent analysis, I think the connection between credit creation
and oil prices that he reveals may be a spurious correlation.
Certainly higher credit creation will tend to increase aggregate demand (of which oil
consumption is a part) and will tend to increase demand for oil. The price of oil is
determined by both supply (production of oil) and demand (consumption) of oil.
Just as supply does not create its own demand (Say's Law), demand does not create its own
supply. Even if demand for oil should decrease (which I doubt will occur without a major
recession such as the 80s oil shock or the GFC), eventually the supply of oil is likely to
not keep up with the increase in oil consumption (likely by 2019), the lower oil prices are
the more likely this is to occur because oil production will not be profitable at prices
under $70/b for many shale and deepwater plays, thus their will be a lack of oil investment
and oil will become scarce.
I think Euan Mearns prediction of $80/b for oil (made in early 2018) seems
reasonable .
Good question. Getting rid of power plants buring fuel oil and investing in solar power
seems to be the plan. Wonder if they are able to execute it. In addition the removal of
subsidies on gasoline ought to also reduce consumption.
Very short term exports from SA will be impacted by the annual Hajj pilgrimage now in
August. 2.4 million pilgrims demand huge amounts of extra desalinated water supply and
artificial cooling based on more fuel oil electricity. There are reports of much lower
exports in July compared to June, and August seems to be even lower so far.
it is absolutely clear who is behind the food and medicine boycotts (empty supermarket
shelves), and the induced internal violence. It is a carbon copy of what the CIA under
Kissinger's command did in Chile in 1973 which led to the murder of the legitimate and
democratically elected President Allende and to the Pinochet military coup ; except,
Venezuela has 19 years of revolutionary experience, and built up some tough resistance.
To understand the context 'Venezuela', we may have to look at the country's history.
Before the fully democratically and internationally observed election of Hugo Chavez in
1998, Venezuela was governed for at least 100 years by dictators and violent despots which
were directed by and served only the United States. The country, extremely rich in natural
resources , was exploited by the US and Venezuelan oligarchs to the point that the population
of one of the richest Latin-American countries remained poor instead of improving its
standard of living according to country's natural riches. The people were literally enslaved
by Washington controlled regimes .
A first coup attempt by Comandante Hugo Chavez in 1992 was oppressed by the Government of
Carlos Andrés Pérez and Chavez was sent to prison along with his co-golpistas.
After two years, he was freed by the Government of Rafael Caldera.
During Peréz' first term in office (1974-1979) and his predecessors, Venezuela
attained a high economic growth based on almost exclusive oil exports . Though, hardly
anything of this growth stayed in the country and was distributed to the people. The
situation was pretty much the same as it is in today's Peru which before the 2008 crisis and
shortly thereafter had phenomenal growth rates – between 5% and 8% – of which 80%
went to 5% of the population oligarchs and foreign investors , and 20% was to be distributed
to 95% of the population – and that on a very uneven keel. The result was and is a
growing gap between rich and poor, increasing unemployment and delinquency.
Venezuela before Chavez lived practically on a monoculture economy based on petrol. There
was no effort towards economic diversification. To the contrary, diversification could
eventually help free Venezuela from the despot's fangs, as the US was the key recipient of
Venezuela's petrol and other riches. Influenced by the 1989 Washington Consensus,
Peréz made a drastic turn in his second mandate (1989-1993) towards neoliberal
reforms, i.e. privatization of public services, restructuring the little social safety
benefits laborers had achieved, and contracting debt by the IMF and the World Bank. He became
a model child of neoliberalism, to the detriment of Venezuelans. Resulting protests under
Peréz' successor, Rafael Caldera, became unmanageable. New elections were called and
Hugo Chavez won in a first round with more than 56%. Despite an ugly Washington inspired coup
attempt ("The Revolution will Not be Televised", 2003 documentary about the attempted 2002
coup), Hugo Chavez stayed in power until his untimely death 2013. Comandante Chavez and his
Government reached spectacular social achievements for his country.
Washington will not let go easily – or at all, to re-conquer Venezuela into the new
Monroe Doctrine, i.e. becoming re-integrated into Washington's backyard. Imagine this
oil-rich country, with the world's largest hydrocarbon reserves, on the doorsteps of the
United Sates' key refineries in Texas, just about 3 to 4 days away for a tanker from
Venezuela, as compared to 40 to 45 days from the Gulf, where the US currently gets about 60%
of its petrol imports. An enormous difference in costs and risks, i.e. each shipment has to
sail through the Iran-controlled Strait of Hormuz.
In addition, another socialist revolution as one of Washington's southern neighbor –
in addition to Cuba – is not convenient. Therefore, the US and her secret forces will
do everything to bring about regime change, by constant economic aggressions, blockades,
sanctions, boycotts of imports and their internal distribution – as well as outrights
military threats. The recent assassination attempt of President Maduro falls into the same
category. "
This "Trump vs Davos globalists" theme is unconvincing. Trump actions
are ruthless globalist actions, who wnat to preverse the US status of
superpower at all costs, even by abrogating important treaties.
He might be not a neoliberal globalist thouth -- he does not offere equl
seats on the table to vassals.
Trumpo statement that if Germany buy Russian gas it does not need NATO
is very shroud indeed.
Notable quotes:
"... Optics are important and this image captures what both parties wanted to convey. This meeting is the beginning of a shift in the relationship between Germany and Russia for the better. ..."
"... The obvious answer is necessity brought about by pressure being placed on both countries by Donald Trump through sanctions and tariffs and their shared interests represented by the Nordstream 2 pipeline. ..."
"... But, this meeting went far deeper than that, especially since Merkel's Foreign Minister Heiko Maas boldly proclaimed that Europe needs an alternative to the SWIFT system of international electronic payments so as to keep global trade alive while the U.S. further weaponizes the U.S. dollar ..."
"... Why would Merkel allow Maas to state this publicly and why was it picked up by that establishment stenographer The Financial Times ? ..."
"... If Trump's goal, as presented by much of the European press (as presented here by Gilbert Doctorow), is to regain complete subjugation of Europe to American dominance, then this seems counter-productive. ..."
"... SWIFT is the main lever on which much of the U.S.'s sanctions power rests. Because it is through SWIFT that transactions can be tracked, payments halted and fines imposed. That none of this is strictly legal is irrelevant in the game of power-politics. ..."
"... This undermines the EU's credibility at a foundational level. It shows them to be the toothless and, in EU President Donald Tusk's case, witless when faced with opposition to their rule that isn't supported by The Davos Crowd, which Trump most definitely doesn't represent. ..."
"... And I've talked about these in the past. His real goal is the destruction of that post WWII institutional order which in his mind bankrupts the U.S. treasury through massive trade deficits. ..."
"... I said back in June that Trump's leaving the JCPOA was all part of his strategy to drive a wedge between the U.S. and Germany. The Davos Crowd needs that deal to keep the dream of transferring the power of the world back to Europe from the U.S. via cheap, Iranian energy and keep the conflict between Israel/Saudi Arabia and Iran front and center to foment global chaos awhile keeping Russia from getting rich again. ..."
"... It needs that to support the narrative we need NATO to protect us from the inevitable Russian attack after we provoke them into it. This keeps the money flowing through the banks and lobbyists while draining the U.S. dry through the military/industrial complex. ..."
"... And despite relentless Russia bashing since before Trump was elected, the American people overwhelmingly want peace with Russia, not war. ..."
"... By driving a wedge between Germany and the US over NATO and attacking the foundations of the German economy Trump is ensuring the current rapprochement between Germany and Russia? ..."
Vladimir Putin's charm tour of Germany and Austria last weekend is a significant sign of
change to come.
To the U.S. and European press Putin is only a step or two away from Hitler reincarnated
(thanks chiefly to Bill Browder). It serves the purpose of maintaining the post WWII
institutional order.
But, Putin is always nothing but relentlessly patient in his diplomatic efforts, even when
European leaders, like Merkel, treat him and Russia poorly. She is, after all, the leading
mouthpiece and political ally of The Davos Crowd that believes they run the world.
The conduct of his Foreign Ministry under Sergei Lavrov always strikes the perfect balance
between bluntness and diplo-speak.
So, color me surprised when I see the official photos of his meeting with Merkel carefully
framed to paint him in a positive light.
Putin in light blues and grays, Merkel in green, the fountain in the background, leaning in
looking directly at each other and a simple Sunday morning chat.
If I didn't know better I'd be expecting them to share photos of their grandkids, well,
Putin's grandkids anyway.
Optics are important and this image captures what both parties wanted to convey. This
meeting is the beginning of a shift in the relationship between Germany and Russia for the
better.
And the question is why?
The obvious answer is necessity brought about by pressure being placed on both countries by
Donald Trump through sanctions and tariffs and their shared interests represented by the
Nordstream 2 pipeline.
But, this meeting went far deeper than that, especially since Merkel's Foreign Minister
Heiko Maas boldly proclaimed that Europe needs an alternative to the SWIFT system of
international electronic payments so as to keep global trade alive while the U.S. further
weaponizes the U.S. dollar.
The U.S. just seized another $5 billion of Russian 'oligarch' money using Credit Suisse as
its enforcement arm.
SWIFT is the main lever on which much of the U.S.'s sanctions power rests. Because it is
through SWIFT that transactions can be tracked, payments halted and fines imposed. That none of
this is strictly legal is irrelevant in the game of power-politics.
Banks like Credit Suisse can't function without access to SWIFT.
So they will roll over to the pressure. That's why the response from EU leadership to
Trump's abandoning the JCPOA has been far more bark than bite. Because the measures implemented
to protect European businesses from U.S. retaliation against them hold no weight with the
companies staring at billions in losses.
Case in point: France's Total pulling out of a multi-billion exploration deal with Iran.
This undermines the EU's credibility at a foundational level. It shows them to be the
toothless and, in EU President Donald Tusk's case, witless when faced with opposition to their
rule that isn't supported by The Davos Crowd, which Trump most definitely doesn't
represent.
So, again, the question is why?
All of this seems incredibly contradictory, at times even to a jaded and cynical observer
like me. Until you step back for a second and think bigger picture and ask the most important
question of all.
What are Trump's real goals?
It's Good to Have Goals
And I've talked about these in the past. His real goal is the destruction of that post WWII
institutional order which in his mind bankrupts the U.S. treasury through massive trade
deficits.
And in a word that means . NATO.
Trump goal is the dissolution of NATO. He wants it dismantled because it is a massive drain
on our capital base. Building weapons and maintaining bases in Europe is expensive and that
money is needed here. He knows this.
Even the mere hint of this has The Davos Crowd in apoplexy. Hence, the post-Helsinki freak
out. Hence, the drive to impeach him over Stormy Freaking Daniels. It's pathetic.
I said back in June that Trump's leaving the JCPOA was all part of his strategy to drive a
wedge between the U.S. and Germany. The Davos Crowd needs that deal to keep the dream of transferring the power of the world
back to Europe from the U.S. via cheap, Iranian energy and keep the conflict between
Israel/Saudi Arabia and Iran front and center to foment global chaos awhile keeping Russia from
getting rich again.
It needs that to support the narrative we need NATO to protect us from the inevitable
Russian attack after we provoke them into it. This keeps the money flowing through the banks
and lobbyists while draining the U.S. dry through the military/industrial complex.
The problem is that that narrative is garbage. And despite relentless Russia bashing since
before Trump was elected, the American people overwhelmingly want peace with Russia, not
war.
Poland and the Baltics sound like Democrats unhinged hysterical children over the 'threat of
Russian aggression.'
This is why Trump is also pressuring Turkey at the same time. He knows Europe is vulnerable
to Turkey's implosion. Turkey and Germany are major trading partners and the vast bulk of
Turkey's foreign currency exposure is owned by European banks, making them, as
I've said previously, Ground Zero for the debt bomb.
So the final question then is this.
Has this been Trump's goal the entire time? Is this what Trump and Putin discussed behind
closed doors in Helsinki?
The NATO Wedge
By driving a wedge between Germany and the US over NATO and attacking the foundations of
the German economy Trump is ensuring the current rapprochement between Germany and Russia?
Merkel, for her part, has been so terminally weakened by her immigration policy and
strong-armed approach to dissent that this whirlwind weekender by Putin was as much for her
benefit, politically, as his.
The implication being that if Merkel wants to stay in power with her weakening coalition and
poll numbers it's time for her to reverse course. And if that means cozying up to Russia then
so be it.
Merkel will continue to talk a good game about Crimea and Ukraine while Putin will speak
directly to the German people about ending the humanitarian crisis in Syria as a proxy for
ending the threat of further immigration.
This outflanks Merkel's position and undermines George Soros' goals of the cultural
destruction of Europe. At this point, politically, how can Merkel even argue against that
without betraying her true loyalties?
And that's what makes the implications of this Summit-That-Wasn't so interesting.
If this is indeed the case then the future of the world rests on the mid-term elections and
whether Trump is not indicted for having sex with a couple of porn stars.
I almost feel dirty writing that.
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The antagonism between Saudi Arabia and Iran sets off a variety of political reverberations
affecting the countries of the Persian Gulf, unsettling the situation between Turkey, Syria,
and Iraq, and entangling Russia and the United States in the ensuring imbroglio.
... ... ...
The role of the Russian Federation cannot be viewed apart from what is happening in the
energy-rich, formerly Soviet Central Asian republics. The so-called -Stans (Kazakhstan,
Uzbekistan, Azerbaijan, and Turkmenistan) are major players in today's energy markets. Whatever
they do, however, cannot be seen as separate from what Russia is doing or from Russia's
intentions. Although some of them, primarily Azerbaijan, have initiated projects that are not
aligned with Moscow's goals, they nevertheless need to behave in ways that do not upset their
powerful northern neighbour on whom they are heavily reliant, to some extent, for their welfare
(due to their dependence on oil and gas pipeline networks).
Politics is therefore deeply intertwined with energy in most of those cases, bringing
diplomacy front and centre as a determinant of behaviour and economic outcomes.
... ... ...
Europe's problem is that, with the exception of North Sea oil and gas, it relies entirely on
imports to provide it with a comfortable level of energy. Thus, events in the Middle East and
the Russian stance toward the continent determines whether it is adequately supplied with
energy or faces shortages.
The deposits in the North Sea have kept some European states (Britain and Scandinavia among
others) well supplied for quite a while. But unfortunately there is a strong suspicion that
these deposits are diminishing at a dangerous rate. As a result Europe will gradually become
dependent on imports from the Middle East, North Africa, Russia, and the Atlantic (Angola,
Brazil, Mexico, and the US). The situation is disquieting since Japan, and more recently,
China, are seeking to buy their own supplies from the same sources.
"...Things started to change after the fracking and shale gas revolution. The United
States suddenly realized that it could not only became absolutely self-sufficient in oil and
gas, but it also emerged as one of the most important exporters to the rest of the
world..."
Ths is factually untrue. The US still depends on crude oil imports to meet its needs. And
if this simple, verifiable fact is misunderstood by the author, then I have to wonder about
the rest of his analysis...
From the middle of the last century to the present, everything has been about oil. The
peak oilers were correct. What they did not consider was the power of debt to hold this whole
thing together long after it should have collapsed. Shale oil is not profitable. That does
not mater as long as debt underwrites the cost of production. What does matter is the rapid
decline rate of shale oil wells. Yes it is true that shale wells are continuing to produce
long after they have reached their peak but it is the volume of production that matters.
If you read the projections put out by the Hirsch Report, the Llyiods Report and the
Bundeswehr Report, things should get interesting in the next couple of years.
"... but neither are they amenable to a stoic acceptance of national decline" ..."
"... Unleashing American Energy ..."
"... American energy dominance, ..."
"... Countering America's Adversaries Through Sanctions Act ..."
"... "... an Israeli citizen, someone who understands your identity, who has a sense of nationhood and peoplehood, and the history and experience of the Jewish people, you should respect someone like me, who has analogous feelings about whites. You could say that I am a white Zionist – in the sense that I care about my people, I want us to have a secure homeland for us and ourselves. – Just as you want a secure homeland in Israel." ..."
Two weeks ago, we
wrote about how President Trump's foreign policy somehow had 'folded' into
'neo-Americanism', and quoted US Foreign Affairs Professor, Russell-Mead, suggesting that
Trump's 8 May metamorphosis (the exit from JCPOA), represented something new, a step-change of
direction (from his being principally a sharp Art of the Deal negotiator), toward
– pace, Russell-Mead – "a neo-American era in world politics – rather than an
[Obama-ist] post-American one". "The administration wants to enlarge American power,
rather than adjust to decline (as allegedly, Obama did). For now, at least, the Middle
East is the centrepiece of this new assertiveness", Russell-Mead opined, explaining that this
new Trump impulse stems from: [Trump's] instincts telling him that most Americans are anything
but eager for a "post-American" world. Mr. Trump's supporters don't want long wars, but
neither are they amenable to a stoic acceptance of national decline" .
There is something of a paradox here: Trump and his base deplore the cost and commitment of
the huge American defence umbrella, spread across the globe by the globalists (sentiments
aggravated by the supposed ingratitude of its beneficiaries) – yet the President wants to
" enlarge American power, rather than adjust to decline". That is, he wants
more power, but less empire. How might he square this circle?
Well, a pointer arose almost a year earlier, when on 29 June 2017, the President used a
quite unexpected word when speaking at an Energy Department event: Unleashing American
Energy . Instead of talking about American energy independence , as might be
expected, he heralded instead, a new era of American energy "dominance" .
In a speech "that sought to underscore a break with the policies of Barack Obama", the
FTnotes , Mr Trump tied
energy to his America First agenda..."The truth is we now have near limitless supplies
of energy in our country," Mr Trump said. "We are really in the driving seat, and you know
what: we don't want to let other countries take away our sovereignty, and tell us what to do,
and how to do it. That's not going to happen. With these incredible resources, my
administration will seek not only the American energy independence that we've been looking for,
for so long – but American energy dominance, " he said.
It seems, as Chris Cook explains , that
Gary Cohn, then chief economic adviser to the President had a part in the genesis to this
ambition. Cohn (then at Goldman Sachs), together with a colleague from Morgan Stanley,
conceived of a plan in 2000 to take control of the global oil trading market through an
electronic trading platform, based in New York. In brief, the big banks, attracted huge
quantities of 'managed money' (from such as hedge funds), to the market, to bet on future
prices (without their ever actually taking delivery of crude: trading 'paper oil', rather than
physical oil). And, at the same time, these banks worked in collusion with the major oil
producers (including later, Saudi Arabia) to pre-purchase physical oil in such a way
that, by withholding, or releasing physical crude from, or onto the market, the big NY banks
were able to 'influence' the prices (by creating a shortage, or a glut).
To give some idea of the capacity of these bankers to 'influence' price, by mid –
2008, it was estimated that some
$260 billion of 'managed' (speculative) investment money was in play in energy markets,
completely dwarfing the value of the oil actually coming out of the North Sea each month, at
maybe $4 to $5 billion, at most. These 'paper' oil-option plays would therefore often trump the
'fundamentals' of real supply, and real end-user demand.
'Step one' for Cohn, was therefore, for the US to manage the trading market, both in price
and access – with U.S. antagonists such as Iran or Russia, being able to access the
market on inferior terms, if at all. The putative 'step two', has been to nurse US shale
production, build new American LNG export terminals, and open America to further oil and gas
exploration, whilst strong-arming everyone from Germany to South Korea and China, to buy
American LNG exports. And 'thirdly', with Gulf oil exports already under the US umbrella, there
were then, two major Middle East energy producers beyond the boundaries of cartel 'influence'
(falling more into rival Russia's strategic energy-producing 'heartland'): Iran – which
is now the subject of regime change–style, economic siege on its oil exports, and Iraq,
which is subject of intense (soft) political pressures (such as threatening to sanction Iraq
under the Countering America's Adversaries Through Sanctions Act ) to force its
adherence to the western sphere.
What would this Trump notion of energy dominance mean in simple language? The US
– were energy dominance to succeed – simply would control the tap to the economic
development – or its lack thereof – for rivals China, and Asia. And the US could
squeeze Russia's revenues in this way, too. In short, the US could put a tourniquet on China's
and Russia's economic development plans. Is this why JCPOA was revoked by President Trump?
Here then, is the squaring of that circle (more US power, yet less empire): Trump's US aims
for 'domination', not through the globalists' permanent infrastructure of the US defence
umbrella, but through the smart leveraging of the US dollar and financial clearing monopoly, by
ring-fencing, and holding tight, US technology, and by dominating the energy market, which in
turn represents the on/off valve to economic growth for US rivals. In this way, Trump can
'bring the troops home', and yet America keeps its hegemony. Military conflict becomes a last
resort.
Senior advisor Peter Navarro said on NPR earlier
this week that "we can stop them [the Chinese] from putting our high tech companies out of
business" and "buying up our crown jewels of technology ... Every time we innovate something
new, China comes in and buys it, or steals it."
Is this then Trump's plan: By market domination and trade war, to prolong America's
'superiority' of technology, finance and energy – and not somehow be
obliged to "adjust to decline"? And by acting in this way, curtail – or at least postpone
– the emergence of rivals? Two questions in this context immediately present themselves:
Is this formula the adoption of neo-conservatism, by the US Administration, which Trump's own
base so detests? And, secondly, can the approach work?
It is not neo-conservatism, perhaps – but rather a re-working of a theme. The American
neo-conservatives largely wanted to take a hammer to the parts of the world they didn't like;
and to replace it with something they did. Trump's method is more Machiavellian in
character.
The
roots to both of these currents of thought lie however – more than partly –
with Carl Schmitt's influence on American conservative thinking through his friend, Leo
Strauss, at Chicago (whether not, Trump has ever read either man, the ideas still circulate in
the US ether). Schmitt held that politics (in contrast to the liberal/ humanist vein) has
nothing to do with making the world fairer, or more just – that is the work of moralists
and theologians – politics for Schmitt, concerns power and political survival, and
nothing more.
Liberals (and globalists), Schmitt suggested, are queasy at using power to crush alternative
forces from emerging: their optimistic view of human nature leads them to believe in the
possibility of mediation and compromise. The Schmittian optic, however dismissed derisively the
liberal view, in favour of an emphasis on the role of power, pure and simple – based on a
darker understanding of the true nature of 'others' and rivals. This point seems to go to the
root of Trump's thinking: Obama and the 'liberals' were ready to trade the 'crown jewels' of
'Our Culture' (financial, technological and energy expertise) through some multilateral
'affirmative action' that would help less developed states (such as rival China up the ladder).
Perhaps such thoughts too, lay behind Trump's withdrawal from the Climate Accord: Why help
putative rivals, whist, at same time, imposing voluntary handicaps on one's own Culture?
It is on this latter, quite narrow pivot (the imperative of keeping American power intact),
that neo-cons and Trumpists, come together: And both also share in their disdain for utopian
liberals who would fritter away the crown jewels of western Culture – for some or other
humanitarian ideal – only to allow America's determined rivals to rise up and overthrow
America and its Culture (in this optic).
The common ground between both currents, is expressed with remarkable candour through
Berlusconi's
comment that "we must be aware of the superiority of our [western] civilisation". Steve
Bannon says something very similar, though couched in the merits of preserving (a threatened)
western Judeo-Christian culture.
This sense of Cultural advantage that must at all costs be recuperated and preserved perhaps
goes some (but not all) way towards accounting for Trump's ardent support for Israel: Speaking
to Israel's Channel Two, Richard Spencer, a prominent leader of the American Alt-Right
(and one component to Trump's base), highlighted the deeply felt
the dispossession of white people, in their own country [the US]:
"... an Israeli citizen, someone who understands your identity, who has a sense of
nationhood and peoplehood, and the history and experience of the Jewish people, you should
respect someone like me, who has analogous feelings about whites. You could say that I am a
white Zionist – in the sense that I care about my people, I want us to have a secure
homeland for us and ourselves. – Just as you want a secure homeland in
Israel."
So, can the attempt to leverage and weaponise the American élites' Culture –
through the dollar, and putative energy hegemony, and its hold over technology transfer –
succeed in holding on to American 'Culture' (in the reductionist construct of Trump's base)?
This is the sixty-four thousand dollar question, as they say. It may just easily provoke an
equally powerful reaction; and a lot can happen domestically in the US, between now, and the
November, US mid-term, elections, which might either confirm the President in power – or
undo him. It is difficult to hold to any analytic horizon beyond that.
But a larger point is whilst Trump feels passionately about American Culture and hegemony;
the leaders of the non-West today, feel just as passionately that it is time for 'the American
Century' to yield place. Just as after WWII, former colonial states wanted independence –
so, now, today's leaders want an end to dollar monopoly, they want an opt-out from the global,
US-led order and its so-called 'international' institutions; they want to 'be' in their own
distinctive cultural way – and they want their sovereignties back. This is not just
cultural and economic nationalism, it portends a significant inflection point – away from
neo-liberal economics, from individualism and raw commercialism – towards a more rounded
human experience.
The tide, in the wake of WWII, surely was irreversible then. I can even recall the former
European colonialists subsequently bemoaning their forced withdrawal: "They'll [the former
colonies] regret it", they confidently predicted. (No, they never did.) The tide today runs
strongly too, and has spread, even, to Europe. Where – who knows – whether the
Europeans will have the spine to push back against Trump's financial and trade machinations: It
will be an important litmus for what comes next.
But what is different now (from then), is that currency hegemony, technological prowess, and
energy 'domination', are not, at all, assured to western possession. They are no longer theirs.
They began their migration, some time ago.
"... Trump's US aims for 'domination', not through the globalists' permanent infrastructure of the US defence umbrella, but through the smart leveraging of the US dollar and financial clearing monopoly, by ring-fencing, and holding tight, US technology, and by dominating the energy market, which in turn represents the on/off valve to economic growth for US rivals. ..."
"... "Towards the tail end of the Clinton administration and the Dot Com boom in 2000, [Trump's U.S. Treasury Secretary until April 2018] Gary Cohn of Goldman Sachs had dinner with his counterpart at Morgan Stanley, John Shapiro. From this dinner was hatched an audacious plan to take control of the global oil market through a new electronic global market platform." ..."
"... "Wall Street bankers, particularly Goldman Sachs and Morgan Stanley, backed him and he launched ICE in 2000 (giving 80 percent control to the two banks who, in turn, spread out the control among Shell, Total, and British Petroleum)." ..."
"... "The second objective was a switch from oil to natural gas, and when the U.S. [ military ] was obliged to leave Saudi Arabia, they [the U.S.] thereupon established their biggest regional base in Qatar, who co-own with Iran the greatest single natural gas reserve on the planet – South Pars. ..."
"... Energy Dominance ..."
"... In the four months since President Trump's announcement, the market strategy developed by Gary Cohn is now being implemented and its elements are emerging into view. ..."
"... Firstly, there has been a massive inflow of Managed Money into the oil market, particularly the Brent contract, which has seen the Brent oil price increase by 35% since the starting point, which I believe can be dated to the August Brent/BFOE Crude Oil option expiry on June 27 th 2017. ..."
"... The dominant market narrative is that the backwardation in Brent is evidence of surging global oil demand which has emptied inventories and is leading the price to new sunlit uplands. However, I see the market rather differently. ..."
"... Firstly, whether the Brent spot month is supported by financial, rather than physical demand, the result will still be a backwardation, and because few oil producers expect a price over $60 to be sustainable they therefore hedge and depress the forward price. In support of this view, I am far from the only market observer who believes that Aramco, and Rosneft would not be selling equity if either Saudi Arabia or Russia believed the oil price trajectory will be positive even in the medium term. ..."
"... This still leaves open the $64 billion question of which market participant is motivated and able to support the ICE Brent term structure for years into the future by swapping dollar risk (T-Bills) for long term oil risk (oil reserves leased via prepay purchase/resale contracts). ..."
"... My conclusion by a process of elimination is that this Big Long can only be Saudi Arabia and regional allies, with Saudi Arabia now under the management of the thrusting young Mohammad bin Salman." ..."
"... Although Trump routinely talks about withdrawing U.S. troops, he does the exact opposite. ..."
"... the U.S. economy becomes increasingly dependent upon Big Oil and Big Minerals and Big Money and Big Military, ..."
"... War against King Saud's chosen enemies (Iran, Qatar, Syria) and possibly even against the U.S. aristocracy's chosen enemy, Russia (and against Russia's allies: China, Iran, and Syria) -- seems more likely, not less likely, with Trump's geostrategy. ..."
"... "I want to address what Mr. Cohn was talking about from a standpoint of how important American energy is as an option, not as the only option, but as an option to our allies and to count[r]ies around the world. ..."
"... At the G7 it was really kind of interesting. The first thing they beat on the table talking about the Paris accord, you can't get out of it, and I was kind of like OK. Then we would go into our bilats and they'd go, how about some of that LNG you've got? How do we buy your LNG, how do we buy your coal? And it was really interesting, it was a political issue for them. This whole Paris thing is a public relation[s], political issue for them. We made the right decision, the President made the right decision on this. I think it was one of the most powerful messages that early on in this administration that was sent. ..."
"... We are in a position to be able to clearly create a hell of a lot more friends by being able to deliver to them energy and not being held hostage by some countries, Russia in particular. Whether it is Poland, Ukraine, the entirety of the EU. Totally get it, if we can lay in American LNG, if we can be able to have an alternative to Russian anthracite coal that they control in the Ukraine. ..."
"... If that was more the reality of Trump's "Unleashing American Energy" policy than just the pro-global-burnout cheerleading of Trump's mere words, then it seems to be -- in the policy's actual intent and implementation -- more like "send more troops in" than "bring the troops home," to and from anywhere. It is more like energy policy in support of the military policy, than military policy in support of the energy policy. ..."
"... In any aristocracy, some members need to make compromises with other members, no matter how united they all are against the publics' interests. This is the way it's done -- by compromises with each other. ..."
"Trump's US aims for 'domination', not through the globalists' permanent infrastructure of
the US defence umbrella, but through the smart leveraging of the US dollar and financial
clearing monopoly, by ring-fencing, and holding tight, US technology, and by dominating the
energy market, which in turn represents the on/off valve to economic growth for US rivals.
In
this way, Trump can 'bring the troops home', and yet America keeps its hegemony [America's
control of the world, global empire]. Military conflict becomes a last resort."
He bases that crucially upon a landmark 6 November 2017 article by Chris Cook, at Seeking
Alpha, which laid out, and to a significant extent documented, a formidable and complex
geostrategy driving U.S. President Donald Trump's foreign policies. Cook headlined there
"Energy Dominance And
America First" , and noted that,
"Towards the tail end of the Clinton administration and the Dot Com boom in 2000,
[Trump's U.S. Treasury Secretary until April 2018] Gary Cohn of Goldman Sachs had dinner with
his counterpart at Morgan Stanley, John Shapiro. From this dinner was hatched an audacious plan
to take control of the global oil market through a new electronic global market
platform."
This "global market platform," which had been started months earlier in 2000 by Jeffrey Sprecher , is "ICE,"
or InterContinental Exchange, and it uses financial derivatives in order to provide to Wall
Street banks control over the future direction of commodites prices (so that the insiders can
game the markets), by means of the financial-futures markets, locking in future
purchase-and-sale agreements. It also entails Wall Street's
buying enormous commodities-storage warehouses and stashing them with such commodities - such
as, in that case, aluminum) , and so it influences also the real estate markets, and
doesn't only manipulate the commodities markets. Those vast storehouses (and the operation of
the U.S. Government's Strategic Petroleum Reserve, to carry out a similar price-manipulation
function in the oil business) are crucial in order for the entire scheme to be able to
function, because without control over the storehousing of physical commodities, such
futures-price manipulations aren't possible. Consequently, ICE couldn't get off the ground
without major Wall Street partners, which are willing to do that. Cohn and Shapiro (Goldman,
and Morgan Stanley) backed Sprecher's operation; and Wikipedia states that,
"Wall Street bankers, particularly Goldman Sachs and Morgan Stanley, backed him and he
launched ICE in 2000 (giving 80 percent control to the two banks who, in turn, spread out the
control among Shell, Total, and British Petroleum)."
This is today's financial world -- a world in which billionaires control the future
directions of commodities-prices, and thus manipulate markets, and even determine the economic
fates of nations. It's not the myth of capitalism; it is the reality of capitalism. It
functions by means of corruption, as it always has, but the corrupt methods constantly
evolve.
However, Trump's geostrategy goes beyond merely this, especially by bringing into the entire
operation the world's wealthiest person, the trillionaire King Saud, who, as the sole owner of
the Saudi Government, which in turns owns the world's largest corporation Aramco, which in turn
dominates the oil market and which is also #6 in the natural-gas market (far behind the three
giants, which King Saud is trying to destroy -- Russia, Iran, and Qatar -- so that the Sauds
will become able to dominate even there). Trump's geostrategy ties King Saud even more tightly
than before, into America's aristocracy.
King Saud, as Cook noted, is trying to disinvest in petroleum and reposition increasingly
into natural gas, because outside the United States and around the world, people are seriously
concerned to minimize global warming so as to postpone global burnout from uncontrollably
soaring atmospheric carbon. Petroleum has an even worse carbon footprint than does natural gas;
and therefore natural gas is the world's "transition fuel" to a 'survivable' future, while
solar and other alternatives take hold (even if too late). Despite all of the carbon-fuels
industries' propaganda, people outside the United States are determined to delay global
burnout, and the insiders know this. King Saud knows that his petroleum-laden portfolio will
have to diversify fast, because the long-term future for petroleum-prices is decline. And he
won't be able to control prices at all in the natural-gas business unless he's got America's
aristocracy on his side, in the effort to keep those prices up (at least while the Sauds will
be increasing their profits from natural gas). Unlike his dominance over OPEC, Saudi Arabia has
no such position to control natural gas-prices. He thus needs Wall Street's cooperation.
Cook said:
"The second objective was a switch from oil to natural gas, and when the U.S. [
military ] was
obliged to leave Saudi Arabia, they [the U.S.] thereupon established their biggest regional
base in Qatar, who co-own with Iran the greatest single natural gas reserve on the planet
– South Pars.
Energy Dominance
In the four months since President Trump's announcement, the market strategy developed
by Gary Cohn is now being implemented and its elements are emerging into view.
Firstly, there has been a massive inflow of Managed Money into the oil market,
particularly the Brent contract, which has seen the Brent oil price increase by 35% since the
starting point, which I believe can be dated to the August Brent/BFOE Crude Oil option expiry
on June 27 th 2017.
The dominant market narrative is that the backwardation in Brent is evidence of surging
global oil demand which has emptied inventories and is leading the price to new sunlit uplands.
However, I see the market rather differently.
Firstly, whether the Brent spot month is supported by financial, rather than physical
demand, the result will still be a backwardation, and because few oil producers expect a price
over $60 to be sustainable they therefore hedge and depress the forward price. In support of
this view, I am far from the only market observer who believes that Aramco, and Rosneft would
not be selling equity if either Saudi Arabia or Russia believed the oil price trajectory will
be positive even in the medium term.
This still leaves open the $64 billion question of which market participant is motivated
and able to support the ICE Brent term structure for years into the future by swapping dollar
risk (T-Bills) for long term oil risk (oil reserves leased via prepay purchase/resale
contracts).
My conclusion by a process of elimination is that this Big Long can only be Saudi Arabia
and regional allies, with Saudi Arabia now under the management of the thrusting young Mohammad
bin Salman."
However, I do not agree with Alastair Crooke's "In this way, Trump can 'bring the troops
home', and yet America keeps its hegemony [America's control of the world, global empire].
Military conflict becomes a last resort." I explained at Strategic Culture on March 25th
"How the
Military Controls America" and noted there that "on 21 May 2017, US President Donald Trump
sold to the Saud family, who own Saudi Arabia, an all-time-record $350 billion of US
arms-makers' products." This means that not only Wall Street -- the main institutional agency
for America's aristocracy -- and not only American Big Oil likewise, are committed to the royal
Saud family, but U.S. corporations such as Lockheed Martin also are. Vast profits are to be
made, by insiders, in invasions and occupations, just as in gas and oil, and in brokerage.
Although Trump routinely talks about withdrawing U.S. troops, he does the exact opposite.
And even if this trend reverses and America's troop-numbers head down, while
the U.S. economy
becomes increasingly dependent upon Big Oil and Big Minerals and Big Money and Big Military,
America's military budget is, under Trump, the only portion of the entire U.S. federal
Government that's increasing; so, "Military conflict becomes a last resort" does not seem
likely, in such a context. Rather, the reverse would seem to be the far likelier case.
War against King Saud's chosen enemies (Iran, Qatar, Syria) and possibly even against
the U.S. aristocracy's chosen enemy, Russia (and against Russia's allies: China, Iran, and
Syria) -- seems more likely, not less likely, with Trump's geostrategy.
In fact, on 29 June 2017, when President Trump first announced his "Unleashing American
Energy Event," the President spoke his usual platitudes about the supposed necessity to
increase coal-production, and what he said was telecast and
publicized ; but his U.S. Energy Secretary, the barely literate former Governor of Texas,
Rick Perry, also delivered a speech, which was never telecast nor published, except that a few
days later, on July 3rd, an excerpt from it was somehow published on the website of Liquified
Natural Gas Global, and it was this:
"I want to address what Mr. Cohn was talking about from a standpoint of how important
American energy is as an option, not as the only option, but as an option to our allies and
to count[r]ies around the world.
At the G7 it was really kind of interesting. The first thing they beat on the table
talking about the Paris accord, you can't get out of it, and I was kind of like OK. Then we
would go into our bilats and they'd go, how about some of that LNG you've got? How do we buy
your LNG, how do we buy your coal? And it was really interesting, it was a political issue
for them. This whole Paris thing is a public relation[s], political issue for them. We made
the right decision, the President made the right decision on this. I think it was one of the
most powerful messages that early on in this administration that was sent.
We are in a position to be able to clearly create a hell of a lot more friends by
being able to deliver to them energy and not being held hostage by some countries, Russia in
particular. Whether it is Poland, Ukraine, the entirety of the EU. Totally get it, if we can
lay in American LNG, if we can be able to have an alternative to Russian anthracite coal that
they control in the Ukraine. That singularly will have more to do with keeping our allies
free and building their confidence in us than practically anything else that I have seen out
there. It is a positive message around the world right now."
If that was more the reality of Trump's "Unleashing American Energy" policy than just
the pro-global-burnout cheerleading of Trump's mere words, then it seems to be -- in the
policy's actual intent and implementation -- more like "send more troops in" than "bring the
troops home," to and from anywhere. It is more like energy policy in support of the military
policy, than military policy in support of the energy policy.
This sounds even better for the stockholders of Lockheed Martin and other weapons-firms than
for the stockholders of ExxonMobil and other extractive firms. On 6 March 2018, Xinhua News
Agency reported that, "U.S.
President Donald Trump's chief economic adviser Gary Cohn has summoned executives from U.S.
companies that depend on aluminum and steel to meet with Trump this Thursday, in a bid to
persuade the president to drop his tariff plan, media reported Tuesday." After all: Goldman has
warehouses full of aluminum, and has the futures-contracts which already commit the Wall Street
firm to particular manipulations in the aluminum (and other) markets. Controlling the
Government so that it does only what you want it to do, and only when you want the Government
to do it, is difficult. In any aristocracy, some members need to make compromises with
other members, no matter how united they all are against the publics' interests. This is the
way it's done -- by compromises with each other.
"... Meanwhile, what is surely the single most urgent issue for both sides was not mentioned at all in their opening statements: namely how to respond to US President Donald Trump's new sanctions on Russia and on participants in the Nord Stream II gas pipeline project that both countries support. ..."
"... The Washington Post ..."
"... The New York Times ..."
"... The Washington Post ..."
"... New York Times' ..."
"... I close out this little survey of English-speaking media by pointing to an article in The Guardian ..."
"... Both Merkel and Putin are now facing the same challenge: US foreign policy has become unpredictable, both for its allies and for rivals like Moscow. Notwithstanding the warm discussions Donald Trump had with Vladimir Putin in Helsinki, the American administration has just announced a new wave of sanctions on Russia relating to the Skripal affair. ..."
"... La Libre Belgique ..."
"... "Germany is not the only 'Western' nation to return to the Kremlin. Putin is taking full advantage of the boomerang effect caused by the policies of Donald Trump, who, by hammering away at his customary allies is pushing them to other interlocutors. By looking for confrontations, imposing taxes and sanctions while thinking that this rampant isolationism will make the United States 'great again,' Trump is helping to build a wall that he no doubt did not imagine, that of the anti-Trump people." ..."
"... Frankfurter Allgemeine ..."
"... Putin is under economic pressure to find closer ties with Europe. In Austria, which now chairs the European Council, he has allies in the government, namely the extreme right populists of the Freedom Party which installed Kneissl. But the way to Europe passes by way of Merkel and Putin knows that. ..."
"... Vremya Pokazhet ..."
"... Frankfurter Allgemeine ..."
"... In my view, Trump's use of sanctions and tariffs here, there, everywhere has a totally different logic from what is adduced in the writings of my peers in the analyst community. He invokes them because 1. they are within his sole power as Chief Executive and 2. they are in principle as American as apple pie and do not require grand explanations in Congress or before the public. As to why he invokes them, there you have to look at Trump's foreign policy from a 360 degree perspective and not merely as it relates to Putin or to Erdogan or to any of the small slices we see discussed in the news. ..."
"... When viewed in the round, it is obvious that Trump is reshuffling the deck. He is doing what he can to break up NATO and the other military alliances around the world which are consuming more than half of the U.S. defense budget and do not arguably provide greater security to the American homeland than the country can do for itself without fixed alliances and overseas bases. ..."
"... By contrast, what Trump is now doing is not a blunder or a bit of bluster. Even if he is not conversant with the whole of the Realist School of international relations, as surely he is not, he does grasp the fundamentals, namely the centrality of the sovereign nation-state and of the balance of power mechanism by which these states are constantly changing alignments of these nation-states to ensure no one enjoys hegemony . ..."
"... Accordingly, I insist that the possible rapprochement of Russia and Germany will be in line with Trump's reshuffling of the deck not in spite of it. ..."
Reading the tea leaves of the Putin-Merkel meeting
During this past Saturday, 18 August, Russian President Vladimir Putin made a brief visit to
Austria to attend the wedding of the country's Minister of Foreign Affairs Karin Kneissl. Per
the Kremlin, this stop of several hours in the Styrian wine country not far from the border
with Slovenia was a "purely private" side excursion "on the road to Germany" for the state
visit with Chancellor Angela Merkel starting later in the day at the Meseberg Palace, the
federal guest house 60 km north of Berlin.
Journalists were admitted to film the wedding party, including Putin's dance with the 53
year old bride. No questions were taken and no statements were issued by the President's Press
Secretary, who also was present. We know only that on the return journey to Graz airport, Putin
was accompanied by Austria's Chancellor Sebastian Kurz. Presumably they had some issues to
discuss that may be characterized as official talks.
Prior to their meeting both Putin and Angela Merkel made statements to the press listing the
topics they intended to discuss. We may assume that these lists were not exhaustive. Comparing
their lists, we find that the respective priorities of the parties were in inverted order, with
economic cooperation at the head of Putin's list while regulating the Donbass crisis in Ukraine
was the top concern of Merkel. Moreover, the content of issues bearing the same heading was
very different. Both sides spoke of Syria, but whereas for Putin the issue for discussion is
the humanitarian crisis of refugees, ensuring their return to their homes from camps in
Lebanon, Jordan and Turkey by raising funds to repair and replace fundamental infrastructure
destroyed in the war. For Merkel, the number one issue in Syria is to prevent the
Russian-backed Syrian armed forces from creating a new humanitarian disaster by their ongoing
campaign to retake Idlib province from the militants opposed to Bashar Assad.
Meanwhile, what is surely the single most urgent issue for both sides was not mentioned at
all in their opening statements: namely how to respond to US President Donald Trump's new
sanctions on Russia and on participants in the Nord Stream II gas pipeline project that both
countries support.
As was explained at the outset, there was to be no press conference or joint statement
issued at the conclusion of the talks. The only information we have is that Merkel and Putin
conferred for more than three hours, which is in itself quite extraordinary and suggests that
some understandings may have been achieved.
In a word, the potentially very important diplomatic developments of Saturday remain, for
once, a state secret of the parties, with no leaks for the press to parse. And yet there is
material here worthy of our consideration. I have in mind the interpretations of what might
transpire before, during and after the events of Saturday in the news and commentary reportage
of various countries having greater or lesser interest in Russian affairs. Indeed, my perusal
of French, Belgian, German, British, American and Russian news media shows great diversity of
opinion and some penetrating and highly pertinent remarks based on different information bases.
This material is all essential if we are to make sense of the behavior of the parties on the
international stage in the coming weeks.
In this essay, I will set out what I have found per country, starting with the least
attentive to detail - the United States - and ending with those who offered the best informed
and most interested reportage, Germany and Russia. I will conclude with my own reading of the
tea leaves.
* * * *
Let us take The Washington Post and The New York Times as our markers for
how US mainstream media reported on Putin's meetings this past Saturday.
On the 18th, The Washington Post carried in its online edition two articles dealing
with the Putin diplomatic doings. "At Austrian foreign minister's wedding, Putin brings the
music, the flowers and the controversy" was written by the newspaper's bureau chief in Berlin,
Griff Witte. It is accompanied by video clips of Vladimir Putin dancing with the bride and
speaking, in German, to the wedding party seated at their banquet table. The journalist touches
very briefly on the main political dimensions of Putin's visit to Austria, including the party
relations between United Russia and the far right Freedom Party in Austria's ruling coalition
which nominated Kneissl for her post, the criticism of Putin's participation in the wedding
coming from the Opposition parties in Austria who see it as a violation of the government's own
ambition to be a neutral bridge between East and West, and the issue of Putin's sowing division
on the continent. The only criticism one might offer is that the article is superficial, that
each of the issues raised deserves in-depth analysis separately.
The newspaper's second article online, which spread its net more broadly and covered the
meeting with Merkel in Germany as well as the visit in Austria, came from an Associated Press
reporter, not its own staff. Here again, the problem is that issues surrounding the meetings
are not more than bullet points, and the reader is given no basis for reaching an independent
finding on what has happened..
The New York Times' feature article "Merkel and Putin Sound Pragmatic Notes After
Years of Tension," also published on the 18th and datelined Berlin was cited by Russian
television news for a seemingly positive valuation of the talks in Meseberg Palace. However,
the content of the article by reporter Melissa Eddy is more cautious, highlighting the pattern
of "conflicts and reconciliations" that have marked German-Russian relations over the centuries
and seeing the present stage not as a warming of relations but instead as reaching for
compromises "on Syria, energy and other key issues while maintaining their differences over
Russia's role in the conflict in Ukraine." She sees the Syrian issue as one where German and
Russian interests may be closest given that refugees from the Middle East are now a German
preoccupation with political weight. The reporter cites several experts attached to well-known
institutes in Germany that are generally skeptical about Russia's intentions. But the end
result is better informed than most NYT reporting on Russia even if it leaves us
wondering what will result from the Saturday diplomacy.
In both mainstream papers there is no attempt to find a link between Putin's two visits on
Saturday.
I close out this little survey of English-speaking media by pointing
to an article in
The Guardian from the 18th entitled "Putin urges Europe to help
rebuild Syria so refugees can return." This piece comes from the Agence France-Presse in Berlin. It is not much
more than a recitation of the lists of topics for discussion that Putin and Merkel issued
before their talks. But the reporter has made his choice for the most important of them, Syria
and refugees.
The French-language press does not seem to have been very interested in Putin's "private"
trip to the wedding of the Austrian foreign minister, but was definitely keen to discuss
Putin's trip to Berlin. On the day preceding the Putin-Merkel meeting, the French press offered
a clear concept of where things were headed. We read in Figaro , "Merkel receives
Putin Saturday to renew a difficult dialogue." A caption in bold just below is more
eye-catching: "While the German Chancellor has become the main opponent to the Russian
President within the EU, the policy of sanctions conducted by Washington has led to a
rapprochement between Berlin and Moscow with regard to numerous issues."
The reporter notes that following the Russian annexation of Crimea in 2014, relations
between the two heads of state had become quite bad and in four years they met only when
obliged to do so during international summits.
"But starting three months ago, their diplomatic exchanges have intensified: in May Angela
Merkel met the chief of the Kremlin in Sochi, Russia. In July, she met the head of the Russian
diplomatic corps, Sergei Lavrov, in Berlin. By inviting Vladimir Putin this time, the German
Chancellor has promised 'in-depth discussions.' "She is pursuing a pragmatic attempt at
normalization of German-Russian relations, because the international realities have changed,'
explains Stefan Meister, director of the Robert Bosch Center for Russia."
And how has the calculus of international relations changed? Both Merkel and Putin are now
facing the same challenge: US foreign policy has become unpredictable, both for its allies and
for rivals like Moscow. Notwithstanding the warm discussions Donald Trump had with Vladimir
Putin in Helsinki, the American administration has just announced a new wave of sanctions on
Russia relating to the Skripal affair.
"The American policy represents a danger for the Russian economy and a threat to German
interests."
A spokesperson from Merkel's CDU party responsible for foreign policy is quoted on the
possible dangers of secondary sanctions being directed at Germany through the application of US
extraterritoriality against those failing to respect the new sanctions on Russia.
The article explains the issues surrounding the Nord Steam 2 pipeline, and in particular
Trump's hostility to the project for its locking in German dependence on Russian
hydrocarbons.
And the author points to the common interests of Germany and Russia over maintenance of the
Iranian nuclear deal as a factor powering the rapprochement of the two countries. Here again
the common threat is Donald Trump and American sanctions against those companies which continue
to trade with Iran.
The article concludes that divergent views of Russia and Germany over Ukraine and Syria
exclude any breakthrough at the meeting on Saturday. But nonetheless the dialogue that was
lacking these several past years is being recreated.
In its weekend edition issued on 18 August, the Belgian mainstream daily La Libre
Belgique was even more insistent on interpreting the Merkel-Putin meeting as a consequence
of the policies of Donald Trump. Their editorial captures the sense very nicely in its
tongue-in-cheek headline: "Trump is the best 'ally' of Putin."
La Libre sees Vladimir Putin's latest diplomatic initiatives as directly resulting
from the way his host at the White House has annoyed everyone. Moreover, his outreach is
welcomed:
"Germany is not the only 'Western' nation to return to the Kremlin. Putin is taking full
advantage of the boomerang effect caused by the policies of Donald Trump, who, by hammering
away at his customary allies is pushing them to other interlocutors. By looking for
confrontations, imposing taxes and sanctions while thinking that this rampant isolationism
will make the United States 'great again,' Trump is helping to build a wall that he no doubt
did not imagine, that of the anti-Trump people."
The editors point to Turkish President Erdogan's clear signal that he is now
looking for other allies. He has done his calculations and has said he has more to gain with
Moscow than with Washington.'
The editorial concludes that a summit on reconstruction of Syria might even take place at
the start of September between Moscow, Ankara, Paris and Berlin. The conclusion? "Putin has
taken center stage on the chessboard. Thank you, Mr. Trump."
The article filed by La Libre 's correspondent in Berlin, Sebastien Millard, bears
a heading that matches the editorial view of the newspaper: "Merkel and Putin - allies of
convenience facing Trump." The author credits Donald Trump with being the catalyst for the
resumption of dialogue between Germany and Russia; they are telling Washington that they do not
accept its blackmail. He notes that we should not expect any reversal of alliances. There are
too many differences of view between Berlin and Moscow on a variety of issues.
* * * *
The German press paid a good deal of attention to Vladimir Putin's visit to Austria for the
wedding of Foreign Minister Karin Kreissl.
In an article posted on the 16th entitled "Suspicion that Austria is a Trojan horse,"
Die Welt highlighted the negatives of Putin's presence. Quoting an "expert from the
University of Innsbruck" this does not cast a good light on the country. They anticipate
political fall-out. This will impair Austria's ability as chair of the European Council to play
a role of intermediary in the Ukraine conflict. The only beneficiary of the visit will be the
the Russia-friendly be the Russia-friendly Freedom Party. For Putin, being a guest provides him
with the opportunity to demonstrate that he is not isolated but is instead highly welcome in
society of an EU country.
As for the coming meeting with Merkel on Saturday evening, Die Welt in a related
article of the same day lists the issues for discussion. Without taking a position, it cites
experts for and against the Nord Stream II pipeline and other issues on the list.
Welt's report from the wedding party on the 18th was gossipy and unfriendly, comparing it to
a wedding of some European royal family because of the extraordinary guest list that included
the country's chancellor, vice chancellor, and defense minister as well as the head of OPEC
and...Vladimir Putin. With typical German petty financial accounting, they reckon that the 500
police and other security measures needed for the safety of the highly placed guests cost the
Austrian tax payers 250,000 euros.
A separate article in Die Welt deals with Putin's meeting with Merkel at the
Meseberg Palace. The emphasis here is on Merkel's remarks during the Statement prior to the
talks that cooperation with Russia is "vital" to deal with many conflicts globally and that
both sides bear responsibility to find solutions.
The article quotes from the opening statements of the leaders on all the issues in their
list for discussion - Syria, Ukraine, Nord Stream II. We are given bare facts without any
analysis to speak of.
The other major mainstream daily Frankfurter Allgemeine in its Saturday, 18 August
edition offered separate articles on Putin's visits to Austria and Germany.
The article on Karin Kneissl's wedding heads off in a very different direction from the
reporting in other media that I have summarized above. FAZ notes that Kneissl is
rarely in the headlines and it asks: who is she? They answer the question with some curious
details. We learn that Kneissl was once active in competitive sports and even now swims a
kilometer every day. For many years she has lived on a small farmstead with a couple of boxers,
two ponies, hens and cats. Each morning her chauffeur takes her and the dogs to her office in
Vienna, to return in the evening. Regrettably, FAZ does not take this curious
biographical sketch further. No connection is drawn between her personality and the Russian
President's acceptance of her invitation to her wedding.
FAZ similarly has chosen to amuse rather than inform in its coverage of the meeting
in Berlin entitled "Sparkling wine in Austria, sparkling water in Meseberg." They comment on
how Putin arrived half an hour late, on how it is hard to see how the meeting could be
characterized as a success. They stress that we know nothing about the content of the
consultations. Then they tick off the opening positions of the sides as set out in their
statements before the talks.
Spiegel online risks more by giving more interpretation and less bare facts. Its
article entitled "Something of a new start" suggests that a rapprochement is underway and that
both Merkel and Putin have a lot in play. Unlike the other German press we have mentioned,
Spiegel sees a direct link between Putin's attending the wedding in Styria and his visit to
Merkel.
Putin is under economic pressure to find closer ties with Europe. In Austria, which now
chairs the European Council, he has allies in the government, namely the extreme right
populists of the Freedom Party which installed Kneissl. But the way to Europe passes by way of
Merkel and Putin knows that.
Meanwhile, says Spiegel , Germany also is interested in improving relations with
Russia despite all the controversy, namely due to the growing conflicts with US President
Donald Trump. We don't know the exact content of the talks which were confidential, but there
is some movement now between Germany and Russia.
Spiegel remains cautious. Cordiality does not enter into the relationship. The
parties keep their distance. There is no laughter to lighten the atmosphere. Yet, it concludes:
"The talks have prospects and we can see the wish to make progress through common positions,
and without being silent about contradictions. Diplomatic normality, as it were. A step
forward."
* * * *
If the great bulk of commentary in the West about Putin's diplomatic weekend was reserved
and stayed by the bare facts without speculation, Russian television more than made up for
dryness. I point in particular to two political talk shows which invited a mixture of experts
from different backgrounds.
Let us begin with the show Vremya Pokazhet (Time will tell) on
state television's Pervy Kanal . Their Friday, 17 August program focused on Putin's
forthcoming visit to the wedding 'on the road to Berlin,' which several panelists saw as a
strong signal to Germany that Russ1+
ia had other channels to the EU if Germany refuses to be its intercessor.
The visit was said to be breaking new ground in diplomatic practice. According to panelist
Andrei Baklanov, deputy chair of the association of Russian diplomats, this kind of positive,
human diplomacy is Russia's answer to the negative behavior in international affairs that has
occupied center stage in the recent past - sanctions, fake news, etc. As another panelist
interjected, this is the first time that a Russian head of state attended a wedding abroad
since Tsar Nicholas did so in Germany in 1913.
Baklanov proceeded to provide details about the bride, however, bringing out aspects of her
career that are far more relevant to her attracting the attention of Putin than the
Frankfurter Allgemeine produced. We learn that she grew up in Amman, Jordan, that she
speaks 8 languages: Arabic, Hebrew, Magyar, French, Spanish, Italian, English as well as her
native German. She studied Near Eastern languages in Vienna University, in the Jewish
University of Jerusalem, in the University of Jordan and also graduated from the National
School of Administration in France. She holds a doctorate in law. She is a non-party minister,
which also attests to her generally recognized professionalism. For all of these reasons, she
is a good fit with Putin's determination to find supporters in Europe for investments to
restore Syrian infrastructure and enable the return of refugees.
Sergey Mironov, leader of the socialist party Fair Russia said that despite Merkel's warning
in advance not to expect breakthroughs it is likely progress was made in agreeing how to deal
with US sanctions. This would be tested in the coming days.
As for the link between the visits to Austria and Germany, the representative of a
pro-business party Sergey Stankevich reminded viewers that Germany and Austria are the market
makers in Europe for Russian gas. Nord Stream II gas may land in Germany but a large part of it
will be pumped further to Austria's hub for distribution elsewhere in Europe. Whatever may have
been said publicly, Stankevich believes that Merkel and Putin did agree on many if not all the
subjects named before the start: Iran, Syria, Ukraine, Nord Stream.
Russian media coverage of the Saturday travels of their President continued on Russian news
programs into Monday, with video clips of Putin dancing at the wedding and speaking alongside
Merkel before entering into their talks at Meseberg Palace.
* * * *
Looking back at the media coverage of Putin's visits to Austria and Germany on 18 August,
and with all due respect to those who opinions are different from mine, I find that the most
helpful for our understanding of the present day international situation were the report and
editorial in Belgium's Libre Belgique and the unruly, risky but at times brilliant
insights on Russian television.
What comes out of this is the understanding that the visits to a wedding in Austria and to
the federal Chancellor outside Berlin were directly linked in Russian diplomatic strategy, that
Russia is playing the Austrian card during the country's six months at the helm of the European
Council in Brussels, that Russia is pushing for a multi-party relief effort for Syria to
facilitate the return of refugees to their home and pacification of the war-torn country. The
web of common interests that Russia is pursuing has at its core the fragility of the current
world order and generalized anxiety of leading countries due to America's aggressive pursuit of
narrow national interest under Donald Trump as seen in his tariff wars and sanctions directed
at friends and foes alike.
Where I differ from the interpretations set out in the foregoing press reports is in my
understanding of what Trump is doing and why.
The nearly universal assumption of commentators is that Trump's policies known as "Make
America Great" are ignorant and doomed to fail. They are assumed to be isolationist,
withdrawing America from the world community.
However, Trump did not invent bullying of US allies. That was going strong under George W.
Bush, with his challenge "you are either with us or against us" when he sought to align the
West behind his invasion of Iraq in 2003 without authorization of the UN Security Council. His
more urbane successor Barack Obama was no kinder to U.S. allies, who were slapped with crushing
fines for violations of U.S. sanctions on Iran, just to mention one way in which they were kept
in line. And the U.S. Congress today is no more reasonable and diplomatic than the President in
the brutal unilateral sanctions it has on its own initiative advocated against not just Russia
but also against Turkey and other states which are not snapping to attention with respect to
purchases of military materiel from Russia.
What made U.S. bullying tolerable before Trump was the ideological smokescreen of "shared
values," namely democracy promotion, human rights and rule of law, that all members of the
alliances could swear to and which set them apart from the still unenlightened parts of the
globe where autocrats hold sway.
In my view, Trump's use of sanctions and tariffs here, there, everywhere has a totally
different logic from what is adduced in the writings of my peers in the analyst community. He
invokes them because 1. they are within his sole power as Chief Executive and 2. they are in
principle as American as apple pie and do not require grand explanations in Congress or before
the public. As to why he invokes them, there you have to look at Trump's foreign policy from a
360 degree perspective and not merely as it relates to Putin or to Erdogan or to any of the
small slices we see discussed in the news.
When viewed in the round, it is obvious that Trump is reshuffling the deck. He is doing what
he can to break up NATO and the other military alliances around the world which are consuming
more than half of the U.S. defense budget and do not arguably provide greater security to the
American homeland than the country can do for itself without fixed alliances and overseas
bases.
The first two presidencies of this millennium undid the country's greatest geopolitical
achievement of the second half of the 20th century: the informal alliance with China against
Russia that put Washington at the center of all global politics. Bush and Obama did that by
inattention and incomprehension of what was at stake. That inattention was an expression of
American hubris in the unipolar world which, it was assumed, was the new normal, not a
blip.
By contrast, what Trump is now doing is not a blunder or a bit of bluster. Even if he is not
conversant with the whole of the Realist School of international relations, as surely he is
not, he does grasp the fundamentals, namely the centrality of the sovereign nation-state and of
the balance of power mechanism by which these states are constantly changing alignments of
these nation-states to ensure no one enjoys hegemony . We see this understanding when he speaks
about looking out for American interests while the heads of state whom he meets are looking out
for the interests of theirs.
In his tweets we find that our allies are ripping us off, that
they are unfair competitors. His most admiring remark about Russia is that it is a strong
competitor. The consistent element in Trump's thinking is ignored or willfully misunderstood in
the press.
Accordingly, I insist that the possible rapprochement of Russia and Germany will be in line
with Trump's reshuffling of the deck not in spite of it.
Good Optics · about 3 hours ago
This nuanced analysis rings true and speaks to the fact that -
though Trump may not exactly be playing 47D chess - he certainly
does have some good intentions that, left to follow their course,
would have a chance of making the world a better place. But that
will not be allowed to happen by those in the US with firm
commitments to pursue the world's subjugation through any means
possible.
The Cs did tell us that Trump's heart is in the right place, unlikely
though that does appear a lot of the time . . .
Gazprom leads the world in capital expenditure (capex) on global energy projects, by a
wide, wide margin – $160 Billion to be spent on 84 projects worldwide, including Nord
Stream II and Turkish Stream. That's nearly double the spending of its next-closest
competitor, Sinopec, at $87 Billion. Royal Dutch Shell is third, and Exxon a distant
fourth.
If you add Rosneft, that's another $50 Billion in capex for Russia. Odd behaviour for an
isolated country whose economy is in tatters. One whose government debt is 12.6 % of GDP and
declining.
Speaking of government debt, how's that parameter looking for The Exceptional Nation?
Whoa: that's exceptional. Not even much point in expressing it as a percentage of GDP, I
guess.
Just to drive the point home for any who might not have gotten it, Russia –
friendless, alone against the world, and reeling from the bite of American sanctions –
is outspending the USA nearly three to one on global energy investments, although its debt is
a tiny fraction of America's out-of-control spending on other important things, like its
bloated defense budget.
Oh, that's right – Vladimir Putin is a tyrant and a dictator, squeezing the country
dry in neverending pursuit of self-enrichment. I almost forgot.
"Russian influence will flow through that pipeline right into Europe, and that is what we
are going to prevent," an unnamed U.S. official told the
Wall Street Journal just as Russian President Vladimir Putin and Chancellor Angela
Merkel meet outside of Berlin on Saturday centered on the two countries moving forward with the
controversial Russian-German Nord Stream 2 gas pipeline, but also involving issues from the
Iran nuclear deal to ending the war in Syria.
Intense pressure from Washington is overshadowing the project, construction of which is
already in advanced stages, as
the WSJ cites current and former US officials who say sanctions are under discussion and
could be mobilized in a mere matter of weeks .
These potential sanctions, ostensibly being discussed in response to US intelligence claims
of Russian interference in the 2016 election, could target companies and financial firms
involved in the massive pipeline's construction . This comes after comments from President
Trump at the opening of a NATO summit in July made things uncomfortable for his German
counterpart when he said that Germany is so dependent on Russia for energy that it's
essentially being "held captive" by Vladimir Putin and his government.
"Germany is captive of Russia because it is getting so much of its energy from Russia. They
pay billions of dollars to Russia and we have to defend them against Russia,"
Trump told NATO chief Jens Stoltenberg at a televised opening breakfast.
The pipeline has been opposed by multiple US administrations, who have long accuse the
Kremlin of seeking to accrue political leverage over Europe given the latter's already high
dependence on Russian natural gas. The pipeline has been a frequent talking point and target of
attacks by Trump,
who has threatened to escalate the trade war against Germany going back months if it
supported the construction of the pipeline. US officials have also expressed concern that
Russia will pull pack significantly from delivering natural gas via Ukraine when its Gazprom
tranit contract expires by the close of 2019. Ukraine is currently the chief Russian
natural-gas export point to the EU and depends heavily on levying fees on this trade.
Both Russia and Germany have sought to calm US concerns over the Ukraine issue, with Putin
himself reportedly telling both Merkel and Trump that he is "ready to preserve" gas transit
through Ukraine even after Nord Stream 2 was completed.
US officials speaking to the WSJ , however, downplayed the Ukraine issue, instead focusing
on the urgency of allowing such significant and irreversible Russian economic, political, and
infrastructural inroads into the heart of Europe .
Richard Grenell, the U.S. ambassador to Germany, told the
WSJ , "We have been clear that firms working in the Russian energy export-pipeline sector
are engaging in a line of business that carries sanctions risk," -- something which he's
repeatedly emphasized with officials in Berlin. President Trump himself has also reportedly
raised the issue directly with Chancellor Merkel on multiple occasions. But for all the shrill
US media claims that Trump is somehow doing Putin's bidding, the WSJ
has this illuminating line : "Officially, the European Commission, the EU's executive body,
is coordinating the gas-transit talks, but Ms. Merkel also has played a leading role because of
her regular contacts and longstanding relationship with Mr. Putin, European officials say
."
Meanwhile, it appears that Washington has a losing hand even while making threats of
sanctions in an attempt to block the pipeline project.
A European energy executive familiar with the discussions said company representatives had
told John McCarrick, deputy assistant secretary in the State Department's Bureau of Energy
Resources, that the five European companies and Gazprom had already provided €5.5
billion ($6.3 billion) in financing and that the project wouldn't be stopped even if the U.S.
were to impose sanctions .
The Nord Stream 2 project was started in 2015 and is a major joint venture between Russia's
Gazprom and European partners, including German Uniper, Austria's OMV, France's Engie,
Wintershall and the British-Dutch multinational Royal Dutch Shell.
The pipeline is set to run from Russia to Germany under the Baltic Sea - doubling the
existing pipeline's capacity of 55 cubic meters per year, and is therefore critical for
Europe's future energy needs.
Currently, the second phase involves utilizing an existing pipeline already channelling
smaller amount of gas from Russia to Germany. Construction for the second phase started in May
of this year.
With much joviality and humour, Ukraine prepares to sever all remaining public-transit links
with Russia. I suppose there are still roads, and if you have a car and can afford gas, you
can still drive there.
This, according to the transport minister, is 'like the good old days'. I'll tell you
something else that's like the good old days, Mr. Minister – the living wage in
Ukraine.
And yet Ukraine still seems to think Europe must force Russia to continue transiting
Russian gas through Ukraine, and paying Kuh-yiv for the privilege.
Big trouble is brewing in the mighty North Dakota Bakken Oil Field. While oil production in
the Bakken has reversed since it bottomed in 2016 and increased over the past few years, so has
the amount of by-product wastewater. Now, it's not an issue if water production increases along
with oil. However, it's a serious RED FLAG if by-product wastewater rises a great deal more
than oil.
And... unfortunately, that is exactly what has taken place in the Bakken over the past two
years. In the oil industry, they call it, the rising "Water Cut." Furthermore, the rapid
increase in the amount of water to oil from a well or field suggests that peak production is at
hand . So, now the shale companies will have an uphill battle to try to increase or hold
production flat as the water cut rises.
According to the North Dakota Department of Mineral Resources, the Bakken produced 201
million barrels of oil in the first six months of 2018. However, it also produced a stunning
268 million barrels of wastewater:
Thus, the companies producing shale oil in the Bakken had to dispose of 268 million barrels
of by-product wastewater in just the first half of the year. I have spoken to a few people in
the industry, and the estimate is that it cost approximately $4 a barrel to gather, transport
and dispose of this wastewater. Which means, the shale companies will have to pay an estimated
$2.2 billion just to get rid of their wastewater this year.
Now, some companies may be recycling their wastewater, but this isn't free. Actually, I have
seen estimates that it cost more money to recycle wastewater than it does to simply dispose of
it. So, as the volume of wastewater increases while the percentage of oil production declines,
then the shale companies are hit with a double-whammy... less oil revenue and rising wastewater
disposal costs.
To give you an idea just how much more water is being produced versus oil in the Bakken, I
went back to the North Dakota Department of Mineral Resources and looked at their data back to
2015. Unfortunately, the data published in excel only goes back to 2015, even though they have
figures published in PDF form starting in 2003.
Regardless, four years is plenty of time to show just how bad the situation is becoming in
the Bakken. In June 2015, the North Dakota Bakken produced 16% more water than oil. However
June this year, the Bakken field produced 38% more water than oil :
You will notice that overall oil and water production declined in 2016, due to the falling
oil price, but as production grew in 2017 and 2018, the percentage increase of by-product
wastewater surged to 32% and 38% respectively. Here is an interesting comparison:
Bakken Oil & Water Production:
June 2015 Oil = 34.4 million barrels
June 2015 Water = 39.8 million barrels (16% more water)
June 2018 Oil = 33.8 million barrels
June 2018 Water = 46.8 million barrels (38% more water)
As we can see, while overall Bakken oil production in June 2018 was less than it was in June
2015, the volume of waster water increased by an additional 7 million barrels.
I believe there are two negative forces at work in the Bakken as it pertains to the rising
volume of wastewater.
As the wells and field age, more water is produced than oil
Larger Frac Stages, which require more water and sand, are now being utilized to keep
production growing or to keep it from falling
While a rising water cut isn't a surprise to the industry as it is a natural progression of
an aging oil well or field, the use of Larger Frac Stage wells should be a WAKE-UP CALL to
investors. Why? Because Larger Frac Stage wells consume a great deal more water and sand to
produce more oil initially, but the decline rates are even more severe than regular shale
wells.
So, when the Investor Relations are bragging how the companies are using the newer
technology of more complex Large Frac Stage wells, this isn't a good sign. This means that the
company is now desperate to try and grow production, or at worst, to keep it from falling.
Unfortunately, the U.S. Shale Industry is in serious trouble. Most of the shale fields have
reached a peak and when production starts to decline, especially during a collapsing oil price,
I forecast a rapid disintegration of the industry. We must remember, as the oil price and oil
production falls, then company stock and asset values will plummet while the high debt levels
remain. Thus, the shale industry will have increasing difficulty in servicing its debt.
I will continue to monitor the production of oil and wastewater in the Bakken. Please check
back for updates.
It took more than 20 years for littoral states of the Caspian Sea to reach an agreement that
would lay the legal foundations for the full utilization of the region's resources. The Fifth
Caspian Summit in Aktau, Kazakhstan, brought the long-sought breakthrough after leaders of
Russia, Kazakhstan, Azerbaijan and Iran signed the Convention on the Legal Status of the Caspian Sea
– a remarkable feat considering that heretofore, barring bilateral deals, the Caspian has
been governed by an obsolete 1940 convention between the Soviet Union (of which four current
littoral states were a part) and Iran.
As the current Convention incorporates a plethora of tradeoffs between countries, let's look
at them in greater detail so as to grasp the implications of the deal.
The Convention stipulates that relations between littoral states shall be based on
principles of national sovereignty, territorial integrity, equality among members, non-use of
threat of force (it was only 17 years ago that Azerbaijan and Iran almost started a full-blown
naval war over contested fields) and non-intervention.
The military-related clauses of the document can be considered a net diplomatic success for
the Russian Federation as it prohibits the physical presence of any third-party armed forces,
along with banning the provision of a member state's territory to acts of aggression against
any other littoral state. Since Russia is by far the most power nation in terms of both general
military clout and military presence around the Caspian, this will placate Russian fears about
any potential US (or other) encroachment in the area.
Then there's energy... Although the Convention establishes a general legal framework for
territorial disputes to be solved, it refrains from any particularities. Therefore prolonged
negotiations are to be expected with regard to many disputed oilfields, stemming predominantly
from Irani and Azerbaijani claims . Iran advocated throughout the entire negotiation process an
egalitarian approach to delimiting the seabed (each nation would get 20% of the coast), running
counter the other countries' aspirations. The things is that when Russia concluded its seabed
delimitation agreements with Kazakhstan and Azerbaijan in 2001 and 2003, respectively, the
parties split their parts using the median line. Point 8.1. effectively keeps the delimitation
task in the hands of relevant governments, thereby providing a very modest boost to the
demarcation of the Southern Caspian (the Northern part is fully delimited).
There are two main territorial conflicts to be settled – the Irani-Azerbaijani and the
Azerbaijani-Turkmen disputes. The row between Baku and Teheran revolves around the
Araz-Alov-Sharg field (discovered in 1985-1987 by Soviet geologists), the reserves of which are
estimated at 300 million tons of oil and 395 BCm of natural gas. Even though the field is only
90 kilometers away from Baku and should seemingly be under Azerbaijan's grip, if one is to draw
a straight line from the Azerbaijani-Irani border most of the field ought to be allotted to
Iran (the median would keep most of it in Azerbaijan). As those old enough to remember the 2001
naval ship hostilities would attest, it does matter at what angle the final line is drawn.
The Serdar/Kapaz field (estimated to contain 50 million tons of oil) is the bone of
contention between Azerbaijan and Turkmenistan. Considered to be an extension of Azerbaijan's
main oil-producing unit, the Azeri-Chirag-Guneshli field, Baku sees it as an indispensable
element in its quest to mitigate decreasing oil output numbers. Geographically, Serdar/Kapaz is
closer to Turkmenistan, yet here too Azerbaijan might come out the ultimate winner. The
Apsheron peninsula stretches out some 60km into the Caspian Sea, in effect extending
Azerbaijan's geographical reach. Absent previous demarcation agreements between Baku and
Ashgabat, the settlement will once again boil down to getting the angles right, as in the case
of Araz-Alov-Sharg. However, it must be said that a resolution might come about as a by-product
of new gas endeavors.
Clause 14, dealing with laying subsea pipelines and cables, is the one most coveted by
energy analysts , since it has the potential to significantly alter Europe's gas supply
options.
According to point 14.2., all parties have the right to construct subsea pipelines given
that they comply with environmental standards (which are particularly strict in the Caspian
Sea). With no further caveat included, some analysts might be tempted to think that Russia will
inevitably use the "environmental protection" card when trying to stop the construction of the
Trans-Caspian pipeline (TCP) from Turkmenistan, a pipeline it spent many years to halt .
Under current circumstances, when US-Russian relations falling ever deeper into an
insurmountable ditch, Moscow's decision to allow for the construction of the mightily
Washington-backed TCP to take place might be perceived as a massive omission.
Since the Turkmen gas is unlikely to find demand in Azerbaijan or Turkey, it would need to
take the whole route via the South Caucasus Pipeline, TANAP and TAP. Merely the transportation
tariffs from these pipelines would render any transportation economically unviable unless
European gas prices rise substantially to levels above $300/MCm. Moreover, the estimated cost
of building the subsea TCP of $2 billion is a disabling burden for either Türkmengaz or
SOCAR. Thus, allowing the construction of Trans Caspian gas pipelines might be a brilliant ruse
from the Russians – cognizant of all the deficiencies above, they can wield it as a sign
of good will in their never-ending negotiations with the European the economics for supplying
gas to Europe via the Southern Gas Corridor are far from being Union.
This being said, there are natural impediments to see the TCP implemented anytime soon.
Azerbaijan might be interested in getting transit fees for Turkmen natural gas, yet it lacks
the required infrastructure to include the above volumes in its traditional conduit via
Turkey.
All in all, the Caspian convention is a good basis for further negotiations, even though it
falls short of being an all-encompassing legal framework. Territorial disputes will most likely
remain frozen for quite some time and no new gas pipeline projects will see the light of day
unless market conditions change.
Patient Observer says:
August 6, 2018 at 1:46 pmPublic opinion polling suggests that many Americans would
not think twice if there were a great many casualties against evildoers. For example, a
2017 survey found that 60 percent of Americans would support a nuclear attack on Iran that
would kill 20 million civilians, to prevent an invasion that might kill 20,000 American
soldiers.
"We were not surprised by the finding that most Americans place a higher
value on the life of an American soldier than the life of a foreign noncombatant.
What was surprising, however, was the radical extent of that preference.
Our experiments suggest that the majority of Americans find a 1:100 risk ratio
to be morally acceptable. They were willing to kill 2 million Iranian civilians to
save 20,000 U.S. soldiers. One respondent who approved of the conventional
air strike that killed 100,000 Iranian civilians candidly expressed even more
extreme
preferences regarding proportionality and risk ratios, while displacing
U.S. responsibility for the attack onto the Iranian people: "I would sacrifice
1 million enemies versus 1 of our military. Their choice, their death."
But the state of American 'journalism' is such that the media must portray America as
winning, and will not acknowledge catastrophe until major damage has already been done, because
it is patriotic to report on American success.
FYI Officials from three leading US groups that support increased exports of US LNG separately
addressed concerns on Aug. 3 over the Chinese Ministry of Commerce's announcement that
tariffs ranging 5-25% will be imposed on US LNG.
"China's retaliation will hit America's energy industry particularly hard," said
American Petroleum Institute Vice-Pres. for Regulatory and Economic Policy Kyle Isakower.
"American oil and gas already hit by US tariffs on industrial products and specialty steel
essential to our industry will now be faced with Chinese tariffs on critical US exports,
affecting American jobs that rely directly and indirectly on the energy industry."
August 5, 2018 at 7:17 pm Oh, look; Ukraine already is down to about half the gas in
storage that it will need for winter. Turning to the west certainly made it
'energy-independent' at least to the extent that the west must 'lend' it money to buy gas which
is reverse-flowed from eastern-European countries so that all the Russian is squeezed out of
it, and it becomes European freedom gas. Nice work if you can get it, and since Ukraine will
not be able to pay it back, it becomes a gift! Why worry, as long as Uncle Sugar is paying the
bills?
Speaking of gas, once-bitten-twice-shy Bulgaria is eager to get a piece of the action,
signifying up front its willingness to tap into Turkish Stream for transit to Europe.
There seems to be a tremendously broad American – and western – assumption that
US production is going to 'soar' and continue to ramp ever upward. Is it? Bear in mind that
the USA's own consumption of natural gas is growing steadily, at least partly based on this
assumption that natural-gas bounty will just continue to increase. What if it doesn't? Then
America will have refashioned itself as another huge natural-gas market which has
insufficient domestic supply to sustain itself.
The headline is pure tabloid and not supported in the body of the article apart from
'opinions' by certain people or through use of qualifiers. This is not journalism .
Only further proof in my opinion that Euractiv has become part of the EU's unofficial
channels of hybrid warfare . Euractiv/Neuters has also expanded in to the Balkans to
provide 'services' in Croatia/Serbia etc. which just so happens to coincide with all the
shrill headlines about Russia 'influencing the Balkans' – which are of course BS. Just
look at the map. Short of Macedonia (not for long) and Serbia, they are all NATO
states . Russia only helps states who want to help themselves (Syria/Serbia – more
or less).
Not a shred of proof, nay evidence, that Germany is shifting away from NordStream II. FAKE
NUDES!
Ten years ago, in August 2008, Russia and Georgia went to war over South Ossetia, a small
separatist Georgian region which Moscow would later controversially recognise as independent,
in the face of international criticism.
Ten years later, Moscow has still not softened its position towards its neighbours and
its rift with the West has only deepened.
Russia launched armed action against Georgia to come to the rescue of South Ossetia, a
small pro-Russian separatist region where Tbilisi had begun a military operation. The Russian
army rapidly outnumbered the Georgian forces and threatened to take the country's
capital.
A peace treaty was finally hammered out by then-French President Nicolas Sarkozy that
led to the withdrawal of Russian forces. But Moscow recognised as independent the breakaway
regions of South Ossetia and Abkhazia, where it has stationed a large military presence ever
since.
Russia demonstrated its military might over the five days and showed its readiness to
defend – by force, if necessary – its interests in the region it considers its
sphere of influence .
####
Well shove that in your pipe and smoke it!
Yet again, no attribution, no name. It smacks of a thinktank piece peddled through their
Slovak branch.
But this is how things work in the West. No-on is ordered on pain of death to produce
certain items, but is is made very clear that it is in their interests to do so, from
without & from within, but remember kids, it is voluntary ! Neither
self-censorship exists. Those in positions of influence may convince themselves, but for the
rest of the great unwashed, no so much. We've already seen the system fail and produce
not only BREXIT, but other referendums contrary to EU dogma. The evidence is all around us
and plain to see, but still the structures persist in the same old ways, which only bodes
ill. Apparently they still think the sheeple are too stupid to notice let alone act.
"... It looks as if Zuckerman's 'nightmare situation' has come about. I don't know that these were ever proven reserves, and in fact I have the impression that the supposed energy bounty of the Caspian did not turn out quite as imagined, but Washington once thought – not long ago, either – that it was imperative America controlled the Caspian region because it was about 'America's energy security'. Which is another way of saying 'America must have control over and access to every oil-producing region on the planet.' ..."
"... Richardson was correct, though, that Russia 'does not share America's values'. In fact, Americans do not share America's values, in the sense that most Americans by far would not support the actions of the Saudi military in Yemen, the clever false-flag operations of the White Helmets in Syria, the deliberate destabilization of Venezuela, regime-change operations to the right and left in order to obtain governments who will facilitate American commercial and political control, and many other things that official America considers just important tools in the American Global Dominance Toolbox. ..."
"... Washington has long nurtured the dream of being Europe's primary, if not only, energy supplier, and owning the Caspian (had the reserves expectations played out) would have brought them closer to their dream. ..."
The other backstory being that NATO wanted to stick its nose in the Caspian Sea, but has been
pushed out. Not sure exactly what the pretext was. I have a piece in VZGLIAD that explains the whole
thing, but I haven't worked through it yet, will probably do a piece on my own blog in the
near future. But I have a couple of other projects in the queue first.
Dick Cheney, among others, was convinced that the Caspian Basin holds massive deposits of oil
and gas and is strategically significant for that reason.
"Central Asian resources may revert back to the control of Russia or to a Russian led
alliance. This would be a nightmare situation. We had better wake up to the dangers or one
day the certainties on which we base our prosperity will be certainties no more. The
potential prize in oil and gas riches in the Caspian sea, valued up to $4 trillion, would
give Russia both wealth and strategic dominance. The potential economic rewards of Caspian
energy will draw in their train Western military forces to protect our investment if
necessary."
Mortimer Zuckerman
Editor, U.S. News and World Report
"This is about America's energy security. Its also about preventing strategic inroads
by those who don't share our values. We are trying to move these newly independent countries
toward the West. We would like to see them reliant on Western commercial and political
interests. We've made a substantial political investment in the Caspian and it's important
that both the pipeline map and the politics come out right."
Bill Richardson
Then-U.S. Secretary Energy (1998-2000)
It looks as if Zuckerman's 'nightmare situation' has come about. I don't know that these
were ever proven reserves, and in fact I have the impression that the supposed energy bounty
of the Caspian did not turn out quite as imagined, but Washington once thought – not
long ago, either – that it was imperative America controlled the Caspian region because
it was about 'America's energy security'. Which is another way of saying 'America must have
control over and access to every oil-producing region on the planet.'
Richardson was correct, though, that Russia 'does not share America's values'. In fact,
Americans do not share America's values, in the sense that most Americans by far would not
support the actions of the Saudi military in Yemen, the clever false-flag operations of the
White Helmets in Syria, the deliberate destabilization of Venezuela, regime-change operations
to the right and left in order to obtain governments who will facilitate American commercial
and political control, and many other things that official America considers just important
tools in the American Global Dominance Toolbox.
Washington has long nurtured the dream of being Europe's primary, if not only, energy
supplier, and owning the Caspian (had the reserves expectations played out) would have
brought them closer to their dream. A pipeline network would have carried Caspian oil and gas
to Europe. Agreement among the Caspian nations was most definitely not in American interests,
and if you dig you will probably find American interventions to prevent that from coming
about.
Analysts told RT that what Khamenei said is not really surprising given the worsening
economic situation inside the country after the relations with the US went on a downward
spiral. The supreme leader has been trying to keep Iranian society balanced by taking a neutral
position between the liberal and conservative parts of the establishment. Now the former,
including President Hassan Rouhani, are finding themselves in a weaker position, according to
Irina Fedorova from the Russian Academy of Sciences' Center for Middle Eastern Studies.
"The Ayatollah has needed to explain who is to blame for the current situation, to prop
up his regime," Fedorova told RT. She said that "the opponents of the
conservatives," and Rouhani in particular, who supported the JCPOA, will fall victims of
this approach. But it will not lead to his resignation, the researcher noted. However, this
means the conservatives' positions, such as those of Islamic Revolutionary Guard Corps, are to
strengthen significantly.
The statement may also mean a reshuffling of the political elite as well as some economic
changes, Jamal Wakeem, professor of history and international relations at Lebanese University
in Beirut, told RT. He said that "reformists" and those who pressed for the deals with
the West are to be targeted, while the leadership is going to seek alternatives to the West,
including a partnership with Russia and China.
The US reinstated certain economic sanctions against Iran last week, with President Trump
promising more to come in November. The restrictive measures had been lifted under the historic
Joint Comprehensive Plan of Action (JCPOA), but Washington unilaterally withdrew from the
landmark deal despite international condemnation, including from its EU allies. The 2015
agreement placed tight controls on Tehran's nuclear program in exchange for the lifting of
international sanctions. Iran's commitment has been confirmed by the IAEA since then.
Tehran has repeatedly blasted the US for the move, vowing to restart its nuclear program in
retaliation against any foreign restrictions. While the US has been pressing its allies to
completely refuse Iranian oil imports, the Islamic Republic has threatened to close the Strait
of Hormuz, effectively blocking all the oil shipments from the Persian Gulf, should they accede
to American demands.
The row between the US and Iran escalated last month, when their respective leadership
exchanged a barrage of threats. Back then, Iranian President Hassan Rouhani said that a
conflict with Iran would be "mother of all wars," provoking Trump's harsh response
when he promised "consequences the likes of which few have ever suffered before."
Think your friends would be interested? Share this story!
France must be kicking themselves for listening to the US. At this rate, China/Russia will
take all the oil business, leaving Western companies sitting on the sidelines. On the other
hand, I wonder if US O&G companies are waiting for other Western competitors to go
bankrupt.
Uncoy @22:
US sanctions have already failed. Other nations will give lip service, then turn around to
continue on whatever they were doing.
Washington cannot dictate trade rules to others, Germany's economy minister said, adding
that his country should be more assertive and defy American sanctions – particularly
by investing more in Iran.
"We don't let Washington dictate [their will] on trade relations with other countries,"
German Economy Minister Peter Altmaier told Bild newspaper on Saturday. He said the US
sanctions on Iran are one instance in which America's neglect of its partners are clearly
shown.[.]
Only 1/3 of US debt is owed to foreigners and that is denominated in their own currency.
They just print whatever is due.
A country with the land and natural resources the US has to go along with with its
agricultural, human and military capital can never go bankrupt, especially when they control
the debt collectors
As for Germany they are an occupied country, as are many countries. Between the military
bases and CIA controlled NGO's they dance to whatever musuc is played. Some squawking is
permitted for appearances sake so people can maintain their illusions of nationalist
control.
I dont rule out a major financial adverse event in the US (and global) soon so the elite
can profit off the collapse and shrink the wealth of the bottom 90%, but that wont affect
much at all and much of the world will suffer in much the same way
When one looks at the major financial disasters over the last century, many seem to come
in the 8th-9th year of the decade. After the elections we should see a great fall as bubbles
are burst and the 17 trillion dollar + investment firms that maintain liquidity will swoop in
and buy low. This time around the banks wont need a government bail out as the laws have
authorized them to seize deposits like what was done in Greece.
"... Besides, just look at how much the Iraq War benefited Israel. You see, Israel wants to pursue a strategy of destabilizing the region, so it cleverly pulled off a false flag attack on 9/11; I'm not quite sure why Mossad didn't frame one of Israel's actual enemies, like the Palestinians or Iranians, or even Saddam for that matter, as the perpetrators of the attacks, but I'm sure it's all part of the plan. ..."
"... Anyway, Israel got the United States to invade Iraq, which destabilized the region and created chaos, predictably leading to a massive increase in Iranian influence in Iraq and likely enabling more Iranian intervention in the Syrian Civil War, which benefited Israel because uh chaos and destabilization. ..."
. The decision to go to war on false pretenses against Iraq, largely promoted by a cabal
of prominent American Jews in the Pentagon and in the media, killed 4,424 Americans as well
as hundreds of thousands Iraqis and will wind up costing the American taxpayer $7 trillion
dollars when all the bills are paid. That same group of mostly Jewish neocons more-or-less
is now agitating to go to war with Iran using a game plan for escalation prepared by Israel
which will, if anything, prove even more catastrophic.
Oh right, who can forget the cabal of Jews controlling the US government and military at
the time of the Iraq invasion, such as President George W. Bush, Vice President Dick Cheney,
Secretary of State Colin Powell, Secretary of Defense Donald Rumsfeld, Chairman of the Joint
Chiefs of Staff Richard Myers, CIA director George Tenet, National Security Advisor
Condoleezza Rice Every.Single.Time, am I right, folks?
Oh wait, they aren't Jewish? Well, I blame the Jews away. Just look at uh Under
Secretary of Defense for Policy Doug Feith, Deputy Secretary of Defense Paul Woflowitz and
journalist Bill Kristol. That sounds like an extremely powerful cabal easily capable of
commanding such trivial figures as the President, CIA director, Secretary of State, et
cetera, to do their bidding.
Besides, just look at how much the Iraq War benefited Israel. You see, Israel wants to
pursue a strategy of destabilizing the region, so it cleverly pulled off a false flag attack
on 9/11; I'm not quite sure why Mossad didn't frame one of Israel's actual enemies, like the
Palestinians or Iranians, or even Saddam for that matter, as the perpetrators of the attacks,
but I'm sure it's all part of the plan.
Anyway, Israel got the United States to invade Iraq, which destabilized the region and
created chaos, predictably leading to a massive increase in Iranian influence in Iraq and
likely enabling more Iranian intervention in the Syrian Civil War, which benefited Israel
because uh chaos and destabilization.
And if you doubt that neocons totally control the US government, just look at how we're at
war with Iran! Well we're not technically at war yet, a decade after neoconservatives
began promoting the war and President Obama did somehow manage to sign a nuclear deal with
Iran that infuriated his neocon and Israeli puppetmasters but I'm sure that President Trump,
famously beloved by Jews and neocons everywhere, will soon go to war with Iran.
' I'm not entirely sure why you keep hanging on to this tired and false narrative that
US politicians are some sort of stooges and puppets of Israel '
Maybe because they are stooges and puppets? In extreme cases, they even boast of it. When
Romney was running for president, he promised he would check with Israel on any action we
took in the Middle East. When Hillary Clinton as Secretary of State was promoting civil war
in Syria, she explained that this was necessary because Israel wished it.
It goes on, and on. If someone is considering a run for Congress, he gets a nice little
packet from AIPAC. Among other things, he's asked to write an essay expressing his feelings
about Israel.
If the essay isn't satisfactory, AIPAC backs his opponent.
Not surprisingly, when Netanyahu -- the premier of a tiny state on the other side of the
planet -- spoke to Congress he was interrupted with standing ovations seventeen times. The
display put me in mind of the sort of frenzied adulation Communist delegates used to display
towards Stalin.
and the motives, of course, would be similar, even if actual death isn't in prospect. For
most in Congress, displease Israel, and your political career just ended.
"Many in the intelligence and law enforcement communities suspect that it (Israel) had
considerable prior intelligence regarding the 9/11 plot but did not share it with
Washington."
It's certainly difficult to explain how else Mossad came to be filming the attack.
I think it needs to be emphasized that it's not merely a matter of practical politics.
Israel is evil -- she brings misery to millions, actual happiness to almost no one, and
engages in behavior with no defensible moral foundation at all. She has attacked every
single one of her neighbors, compulsively seeks out further conflict to paper over the
shortcomings in her own national identity, and treats her Palestinian subjects with a
morality about like that of a nasty little boy pulling the wings off a fly.
Arguably, others are as bad. However, unlike the others, Israel could not have come into
being without our support, and could not continue to exist today without our continued moral,
economic, diplomatic, and military support. If we pulled the plug, Israel would cease to
exist as a Jewish supremacist state within -- at most -- a decade.
We are, in fact, responsible for Israel, and hence responsible for Israel's crimes. Other
people's teenaged sons may well be out there stealing cars and raping girls. This happens to
be our son doing it. We're responsible.
We pursue many policies I regard as futile, short-sighted, deluded, or self-destructive.
My personal list would include 'come one come all' immigration, global warming denial,
maintaining a massive military establishment, condoning 'Black Lives Matter,' and probably
some other things.
No doubt the reader has his own list. However, that's not the point. The point is that
essentially, these policies are merely stupid rather than actually evil. It's not evil
to think we should just let whoever wants come into the US. It's dumb -- but it isn't
evil. In fact, I'll willingly credit people who vote for 'sanctuary cities' et al with the
most laudable sentiments. I merely question their intelligence.
Israel is different. Israel is evil, and hence our support for it is as well. It is the
most fundamentally wrong act we are engaged in.
There is a moral dimension to life. There is a distinction between striving to do good --
however unsuccessfully -- and willingly participating in evil.
"A well-funded massive lobbying effort involving hundreds of groups and thousands of
individuals in the U.S. has worked to the detriment of actual American interests, in part
by creating a permanent annual gift of billions of dollars to Israel for no other reason
but that it is Israel and can get anything it wants from a servile Congress and White House
without any objection from a controlled media."
Kind of begs the question, why are we giving any aid to a first-world country with a GDP
growth rate in the 3% to 4% rate for years (even while we were stuck below 2%) and an
unemployment rate below 4%?
The Israeli economy is in better shape than the US economy; they should be giving us
aid.
"Baron Cohen, who confronted several GOP notables in the guise of Colonel Erran Morad,
an Israeli security specialist, provided a number of clues that his interview was a sham
but none of the victims were smart enough to pick up on them."
Yes, it is truly amazing what our "Best & Brightest" will do to stay on-side.
Following Mr. Giraldi's earlier post regarding the gubernatorial run of Israeli puppet Ron
DeSantis and the Big Sugar connections of Adam Putnam, it would seem a Floridian's least
worst choice is Bob White.
Israel is nothing but trouble. It has the right to defend itself
1st part: Absolutely, indubitably correct.
2nd part: ¿Qué? Why do people say/write this? Under what corrupt
arrangement does an oh, so obvious outlaw have any such right?
Consider: A gang of out-of-towners turns up at a block of flats, breaks the doors down and
occupies the building, killing some erstwhile owner/occupiers and ejecting most of the rest
on the way in, thereafter whooping it up big, and ignoring [obviously too feeble] orders to
RoR+R*3 [= Right of Return + Revest, Reparations and Reconciliation.] Since when can such
outlaws dictate anything, thumb their noses at the Law?
Property, especially here land, is alienable – but this does not mean
' subject to seizure by aliens .'
Kindly consider: "A fair exchange is no robbery." A fair exchange means willing
seller, interested buyer, and a freely and fairly agreed price. No such thing exists
vis-à-vis the forcible colonisation of Palestine. Some proof may be seen
here [my
bolding]:
By 1949, some 700,000 Palestinians had fled or been expelled from their lands and
villages. Israel was now in control of some 20.5 million dunams (approx. 20,500
km²) or 78% of lands in what had been Mandatory Palestine
Land laws were passed to legalize changes to land ownership.[5]
5. Ruling Palestine, A History of the Legally Sanctioned Jewish-Israeli Seizure of Land
and Housing in Palestine. Publishers: COHRE & BADIL, May 2005, p. 37.
Especially in reference to the illegitimate entity which terms itself Israel, wiki is not
reliable, being, like the US Congress, Israeli-occupied territory. So it is noteworthy that
they write "in control of" as opposed to 'own.' They can't ever own it due to not having
purchased it, and Palestinians may not surrender it, due to the UDHR which specifies
*inalienable* rights:
Article 3.
• Everyone has the right to life, liberty and security of person.
Article 17.
• (1) Everyone has the right to own property alone as well as in association with
others.
• (2) No one shall be arbitrarily deprived of his property.
Also, see the Washington Consensus:
10.Legal security for property rights.
Further, there is UNSC242: inadmissibility of the acquisition of territory by war, plus
only just law may earn respect, and/or be respected. A law dispossessing erstwhile legal
owner/occupiers is an utter travesty.
Me; comment: Its illegitimacy is all so howlingly obvious!
Fazit: Apart from the ~6% of 'pre-Herzl Palestine' which 'invading by stealth' alien,
mostly European Jews managed to purchase, the illegitimate entity does not own nor can they
ever own the land/property they squat upon, which still belongs to the erstwhile
owner/occupiers, specifically the 'native' pre-Nakba Palestinians [now including heirs &
successors]. Then, the illegitimate entity does not declare borders for two reasons 1) any
such declaration would be [probably successfully] challenged and 2) the illegitimate entity
expresses the desire to expand to 'from the Nile to the Euphrates.' Q: Just how ghastly is
that? A: Could hardly be worse.
Closing the loop: How can land-thieves have any 'right to defend' such improperly
alienated land/property? It doesn't compute! rgds
Thank you, Mr. Giraldi, for another forceful rebuke of Zionist criminality and US
culpability.
The supremacist kosher state is a cancer on America. Just survey the wreckage. Count the
bodies. Who benefits from this?
The Zionist project is a plague on humanity. It entertains no compromise. It will stop at
virtually nothing. Examine the blood-soaked damage from Soviet Russia to Germany to Palestine
and beyond. It moves Washington around via remote control.
The situation has become very grave. Speech deemed 'anti-Semitic' is rapidly being
criminalized worldwide.
Right wing political expression (that Jews don't like) on Twitter, Facebook and the web is
being de-platformed for speech infractions that involve 'hate'. But it's only 'hate' of a
certain stripe.
After all, hatred is ubiquitous in America. It cuts in every direction. So why is the
focus so intense on just one spectrum of hatred?
Might it have something to do with the political preferences of those in power?
Oh maybe.
Principles be damned. Whose ox is being gored?
With that in mind, consider this: who might actually be the biggest hater of
all?–and killer? (Hint: it's certainly not the powerless Alt-right 'deplorables'.)
Might it instead be the world's foremost victims?
After all, incendiary speech–even 'hate speech'–does not kill. It takes bombs,
drones, tanks and missiles to accomplish that.
So where's the uproar over routine sorties which needlessly dispense death and
destruction?
It's gone missing.
Incredibly, it is rough speech and acute political criticism–not failed, horrific
wars–that are being criminalized. Pro-Zionist 'wars of choice' still get a pass in our
corporate board rooms, TV studios, news rooms, and in most of Official Washington.
This entrenched distortion allows neocons and their underlings to jawbone and plot their
next preemptive war. The Big Squeeze is on. Beware Russia, Syria, Lebanon, Palestine and
Iran. Zionism is an 'unshakable' Washington value. So get ready.
How distant wars advance the interests of average Americans remains a mystery.
Despite this puzzle, America's MSM offers little resistance and no straightforward
criticism of Zio-Washington's ceaseless war efforts on behalf of a certain 'democratic ally'.
In similar fashion, the Fourth Estate has also been compromised.
It's worth remembering that, according to the UN Charter, a state-sponsored 'First Strike'
against another sovereign state is the most serious war crime. This elementary moral precept
however matters not–at least not when Israel is pulling the strings. Quiet, children.
Listen. Obey.
What we have here is a pattern of vast serial criminality.
Zio-Washington has become Israel's war vessel. We regular folk are just along for the
ride.
So don't forget to cheer for the good guys!
Incredibly, US-enabled, Israeli ruthlessness has gotten even worse under 'America First'
Trump. After all, Trump needlessly tore up Obama's hard-fought peace deal with Iran.
Why would Trump make such a move? (As a candidate, he was far less hawkish).
Our weakened and despised President needs desperately to please America's foremost lobby.
Trump cannot govern without their support. This peculiar situation however requires
additional blood-letting on behalf of the Zionist state. Foreign wars that benefit Israel are
the unwritten price that the goyim leadership in America must pay. Sorry folks!
(Are you listening, Tehran?)
Jewish power corrupts. Overwhelming Jewish power corrupts in overwhelming fashion.
Trump speaks at Washington rally against the Iran deal back in September 2015. Credit:
Olivier Douliery/Sipa USA/Newscom Steven Simon and Jonathan Stevenson
chide Trump for his dangerous Iran obsession:
The United States' treatment of Iran as a serious strategic competitor is deeply
illogical. Iran imperils no core U.S. interests.
Trump's Iran obsession is probably the most conventional part of his foreign policy and it
is also the most irrational. The president's reflexive hostility to Iran is one of the few
constants in his view of the world, and it is one that aligns him most closely with his party's
hawks and parts of the foreign policy establishment. This has been clear for several years ever
since
Trump declared his
opposition to thenuclear
deal and surrounded
himself with hard-liners .
The Iran obsession is among the worst aspects of Trump's presidency, but it is also one of the
least surprising. Over the last eighteen months, Trump's Iran obsession has become more of a
derangement ,
and it is putting the U.S. and Iran on a collision course at the expense of our relations with
many other states and our own economic interests. The risk of unnecessary war continues to rise
because the president and his allies insist on making maximalist demands of Iran while imposing
stringent sanctions on the country without justification.
As Simon and Stevenson capably explain, there is no valid reason to view Iran as a major
threat to the U.S. Contrary to the fevered warnings about Iranian "expansionism," Iranian
military power in the region is quite limited:
Yet Iran's foreign policy has evolved essentially on the basis of opportunistic realism
rather than especially aggressive revisionism, and, as noted, it has a sparse military
presence in the region.
There is certainly no reason for our government to treat Iran as if it were a major
competitor. Our government's fixation on Iran as the source of all the region's problems
exaggerates Iran's influence and puts the U.S. at odds with a regional power whose interests
are sometimes aligned with our own. The obsession simply makes no sense:
Casting Iran as a major strategic rival simply doesn't make sense in terms of traditional
international relations considerations such as threat- and power-balancing.
The authors list a number of causes for the unwarranted obsession with Iran, including
"pro-Israel" influence and the influence of the Saudis and Emiratis in Washington, and I agree
with them. Our political leaders' enthusiasm for engaging in threat inflation and credulously
accepting the threat inflation of others would has to figure prominently in any explanation as
well. Obsessing over a non-existent Iranian threat to U.S. interests obviously has nothing to
do with American security, and it represents an unhealthy subordination of American interests
to those of its reckless regional clients. Indulging those clients in their paranoia about Iran
will only stoke more regional conflicts and ensure that the U.S. becomes more deeply involved
in those wars, and the result will be greater costs for the U.S. and greater turmoil,
instability, and loss of life throughout the region.
Obama's Yemen obsession is probably the most conventional part of his foreign policy and it
is also the most irrational.
Cluster bombs, drone strikes, covert kill teams and, most importantly, the backing for
Saudi Arabia and the UAE to cross the blood-red line and commence an aggressive illegal
bombing campaign, invasion and occupation of Yemeni territory did not start with Trump.
Direct participation of US military logistics personnel and US military assets in this
military aggression – while other US forces operate in the same territory under the
"separate but equal" Authorization To Use Military Force – did not start with
Trump.
Trump might apply his Reverse Midas Touch to this aspect of Obama's legacy as well, but
just because Obama manufactured another transient executive "achievement" in JCOPA does not
mean that his policy with respect to Yemen was any more irrational than Trump's policy
towards Iran, or that Obama's willingness to hire out US military forces to support Saudi
aggression for 100 billion dollars in blood money is any less venal, corrupt and despicable
than Trump's willingness to do the same.
Mattis didn't become fixated on Iran when he joined the Trump administration either,
although he might just be blaming – in the absence of conclusive evidence – Iran
today for the 1983 Beirut barracks bombing targeting Reagan's negligent use of the Marine
Corps. That is even less of a defensible foundation for foreign policy and military
aggression that profiteering.
It is a good guess that Obama's obsession with Yemen was rooted in printer cartridges,
shoe bombs, and the fear to have any terrorist attack "succeed". For Obama & Co. the fear
of the Next Big Blowback led them to Yemen. It would appear that Pence has supplied the Trump
administration with a Grand Unified Theory that all campaigns in the Great War On Terror
ultimately lead to Tehran – or the Trump administration made him their willing
mouthpiece.
Pence is so desperate to connect terrorism to Iran that he has to reach back almost 40yrs to
pin an at best Hezbollah pre-cursor organization on them. Isn't it more telling that
Hezbollah has avoided attacking U.S. troops during their entire existence? Pence doesn't seem
alarmed about the 3,000+ Americans who died on U.S. soil in NYC that we can attribute to the
Saudis and their cohorts.
BTW the Khobar tower bombings was Al Qaeda. The Saudis extracted confessions in their
torture chambers. There was no corroborating evidence that it was a branch of Hezbollah.
Sunday, August 12, 2018Back That A$$et Up ... From the first sentence of
Michael Sproul's There's No Such Thing as Fiat Money (2007) :
I make the claim that fiat money does not exist, and that the money that is commonly called
fiat money is actually backed by the assets of its issuer.
Who would argue against the premise that modern currencies are backed by the
issuer's assets? The questions that remain are: How broad a definition of "assets" is being
considered? And does "asset backing" justifiably negate the meaning of "fiat", or is this mere
semantics?
In any event, I would counter argue that the meaning of "fiat" is possibly in need of
clarification. And such clarification would then allow for the sensible conclusion that fiat
money does indeed exist. Sproul's premise is a good launch pad for clarifying just what it is
that backs the US Dollar.
Many have said that the US military "backs" the dollar. And indeed, the US Deep State and
its Military Industrial Corporatist alliance represents a huge investment in strategic
worldwide military deployment. That investment is an asset, and it does in part back the
dollar. There are other factors, that are considered in the foreign exchange marketplace, and
there are varying opinions as to which factors bear such weight upon the prime factor :
relative changes in purchasing power. As we have discussed before, usage is a considerable factor in determining a
currency's relative purchasing power, which in turn supports further usage, in a circular
fashion. In times past, there were set fundamentals that established relative fiat currency
exchange value: the country's stability, its industrial base, trade practices and metrics,
population demographics and economic condition, debt to GDP, and so on.
As our real world has progressed into a world of derivative statistic and valuation, through
the rise of financialization, those fundamental factors have evolved to include other factors
that are brought to bear upon a modern digital currency's backing.
Does the depth of a currency in global derivative positions act as a form of backing?
This is a factor which did not exist prior to the existence of derivatives. Does that depth not
guarantee further usage, and that further usage not create greater depth? Does the currency
function successfully as a systemic weapon against other currency issuers? Again, relatively
recent dollar era phenomena.
But there is an incredibly powerful, hugely overlooked factor which begins only around 2008,
which backs the US dollar. I will tell you now that it is the US Government's control
over its people which gives the US dollar the largest share of "asset backing" of any
other factor under consideration - in the FX market and otherwise.
When the US Government publicly bailed out the global banking system and made the
American people the guarantor of that bailout, an incredible precedent was set. It proved to
the families that the issuer of the US Dollar could obligate its tax base to an unrepayable
debt, and that tax base would neither understand, nor care enough about the consequences of
that precedent ... to stand up and fight against the fraud and thievery that keeps the 99% in
perpetual bondage, and the 1% in a risk free position to do as they please.
The issuer has proven to generational wealth that it can divert the attention of the tax
base from the world's most egregious robbery, and do it again every so often, including to
other middle classes who hold wealth, as it moves from country to country. And they will do so
in equally powerful police states, combined with well developed welfare states, as the fiat
wealth concept manages the debt slaves of any culture, keeping them pacified under the doctrine
of "debt as wealth".
You will watch in amazement as China eventually "becomes" the USA in this regard. To the
North, there is one proud people, who thrive on the adversity which shapes their strong
cultural identity - who will be a thorn in the dollar's side - but they will be dealt with, as
opportunity allows.
This modern state of affairs is an incredible asset which the global corporatist banking
cartel (the BIS led global central banking system) has endowed upon the US Dollar - and it's
rival issuers are part and parcel to that system. Until China, India and Russia's central banks
(along with their strategic but smaller allied CBs) achieve a true Coup d'etat (either publicly
- or more likely privately) and begin to act independently from BIS mandate, the world's middle
classes will never have any enduring prosperity - only the fleeting type that comes with
targeted booms, busts and the fraud and bailouts they enable.
Much more importantly ... that Coup will NEVER HAPPEN as long as the American people agree
to the dollar contract they are so deeply sworn to. Americans have been taught to accept the
double standard they now live by. They can default on debt and lose everything they own, but
their lenders can never default - they will be bailed out by whatever wealth remains. There is
no other society on earth who have been so culturally conditioned to accept slavery and
socialism as the generation of Americans whose OBEDIENCE backs the dollar today. That
compliance, coupled with contempt for the wealth of their fellow man, and the social justice
herd mentality, makes the family's smile with exceeding confidence ... that this dollar empire
can milk much more middle class wealth across the globe as it spreads its "debt as wealth"
religion even further into systemic entrenchment.
And this Trump fellow. He and Wilbur are doing well to earn the trust of generational
wealth.
An unexpected wildcard can always be drawn, including an international war. But the
Roacheforque's will profit from war as well - nonetheless, and just the same. Generational
wealth aways profits from the spread of global corporatism, as they are both the authors and
benefactors of it.
This we learn ... from the flower of understanding.
This is ,of course, hypothesis by Eric Zuesse, and the idea that the USA elite decided to
abandon EU elite is somewhat questionable, but some of his consideration are interesting...
Notable quotes:
"... Yeah, its the defense contractors. It has nothing to do with the zillions of cars that clog every fucking freeway in this country every morning and every evening, 7 days a week. Its not the assholes cruising around in monster trucks alone, just to show off their stupid trucks. It has nothing to do with the the zillions of jets screaming through the skies carry all those fat assholes to meetings all over the world for no reason. It has nothing to do with the billions of barrels of oil that come to the US on tankers as long as city blocks filled constantly day and night. ..."
The following is entirely from open online sources that I have been finding to be
trustworthy on these matters in the past. These sources will be linked-to here; none of this
information is secret, even though some details in my resulting analysis of it will be entirely
new.
It explains how and why the bottom-line difference between Donald Trump and Barack Obama,
regarding US national security policies, turns out to be their different respective estimations
of the biggest danger threatening the maintenance of the US dollar as the world's leading or
reserve currency. This has been the overriding foreign-policy concern for both Presidents .
Obama placed as being the top threat to the dollar, a breakaway of the EU (America's largest
market both for exports and for imports) from alliance with the United States. He was
internationally a Europhile. Trump, however, places as being the top threat to the dollar, a
breakaway of Saudi Arabia and of the other Gulf Arab oil monarchies from the U.S. Trump is
internationally a Sunni-phile: specifically a protector of fundamentalist Sunni monarchs -- but
especially of the Sauds themselves --
and they hate Shia and especially the
main Shia nation, Iran .
Here's how that change, to Saudi Arabia as being America's main ally, has happened --
actually it's a culmination of decades. Trump is merely the latest part of that process of
change. Here is from the US State Department's official
historian , regarding this history:
By the 1960s, a surplus of US dollars caused by foreign aid, military spending, and
foreign investment threatened this system [the FDR-established 1944 Bretton Woods gold-based US dollar as
the world's reserve currency ], as the United States did not have enough gold to cover
the volume of dollars in worldwide circulation at the rate of $35 per ounce; as a result, the
dollar was overvalued. Presidents John F. Kennedy and Lyndon B. Johnson adopted a series of
measures to support the dollar and sustain Bretton Woods: foreign investment disincentives;
restrictions on foreign lending; efforts to stem the official outflow of dollars;
international monetary reform; and cooperation with other countries. Nothing worked.
Meanwhile, traders in foreign exchange markets, believing that the dollar's overvaluation
would one day compel the US government to devalue it, proved increasingly inclined to sell
dollars. This resulted in periodic runs on the dollar.
It was just such a run on the dollar, along with mounting evidence that the overvalued
dollar was undermining the nation's foreign trading position, which prompted President
Richard M. Nixon to act, on August 13, 1971 [to end the convertibility of dollars to
gold].
When Nixon ended
the gold-basis of the dollar and then in 1974 secretly switched to the current oil-basis,
this transformation of the dollar's backing, from gold to oil, was intended to enable the
debt-financing (as opposed to the tax-financing, which is less acceptable to voters) of
whatever military expenditure would be necessary in order to satisfy the profit-needs of
Lockheed Corporation and of the other US manufacturers whose only markets are the US Government
and its allied governments, as well as of US extractive industries such as oil and mining
firms, which rely heavily upon access to foreign natural resources, as well as of Wall Street
and its need for selling debt and keeping interest-rates down (and stock-prices -- and
therefore aristocrats' wealth -- high and rtising).
This new system didn't only supply a constant flow of Saudi tax-money to the US Government;
it supplied a constant flow of new sales-orders and profits to the military firms that were
increasingly coming to control the US Government -- for the benefit of both aristocracies: the
Sauds, and America's billionaires.
That was near the end of the FDR-produced 37-year period of US democratic leadership of the
world, the era that had started at Bretton Woods in 1944. It came crashing to an end not in
1974 (which was step two after the 1971 step one had ended the 1944 system) but on the day when
Ronald Reagan entered the White House in 1981. The shockingly sudden ascent, from that moment
on, of US federal Government debt (to be paid-off by future generations instead of by current
taxpayers) is shown, right here, in a graph
of "US Federal Debt as Percent of GDP, 1940-2015" , where you can see that the debt had
peaked above 90% of GDP late in WW II between 1944-1948 , and then plunged during Bretton
Woods, but in 1981 it started ascending yet again, until reaching that WW II peak for a second
time, as it has been ever since 2010 , when Obama bailed-out the mega-banks and their
mega-clients, but didn't bail out the American public, whose finances had been destroyed by
those banksters' frauds, which Obama refused to prosecute; and, so, economic inequality in
America got even more extreme after the 2008 George W. Bush crash, instead of less extreme
afterward (as had always happened in the past).
Above 90% debt/GDP during and immediately following WW II was sound policy, but America's
going again above 90% since 2010 has reflected simply an aristocratic heist of America, for
only the aristocracy's benefit -- all of the benefits going only to the super-rich.
Another, and
more-current US graph shows that, as of the first quarter of 2018, this percentage
(debt/GDP) is, yet again, back now to its previous all-time record high of 105-120%%, which had
been reached only in 1945-1947 (when it was justified by the war).
But can the US Government's extreme misallocation of wealth, from the public to the
insiders, continue without turning this country into a much bigger version of today's Greece?
More and more people around the world are worrying about that. Of course, Greece didn't have
the world's reserve currency, but what would happen to the net worths of America's billionaires
if billionaires worldwide were to lose faith in the dollar? Consequently, there's intensified
Presidential worrying about how much longer foreign investors will continue to trust the
oil-based dollar.
America's political class now have two competing ideas to deal with this danger , Obama's
versus Trump's, both being about how to preserve the dollar in a way that best serves the needs
of 'defense' contractors, extractive firms, and Wall Street. Obama chose Europe (America's
largest market) as America's chief ally (he was Euro-centric against Russia); Trump chose the
owner of Saudi Arabia (he's Saudi-Israeli centric against Iran) -- that's the world's largest
weapons-purchaser, as well as the world's largest producer of oil (as well as the largest
lobbies) .
The Saudi King owns Saudi Arabia, including the world's largest and most valuable oil
company, Aramco, whose oil is the "sweetest" -- the least expensive to extract and refine --
and is also the most abundant, in all of the world, and so he can sell petroleum at a profit
even when his competitors cannot. Oil-prices that are so low as to cause economic losses for
other oil companies, can still be generating profits -- albeit lowered ones -- for King Saud;
and this is the reason why his decisions determine how much the global oil-spigot will be
turned on, and how low the global oil-price will be, at any given time. He controls the value
of the US dollar. He controls it far more directly, and far more effectively, than the EU can.
It would be like, under the old FDR-era Bretton Woods system, controlling the exchange-rates of
the dollar, by raising or lowering the amount of gold produced. But this is liquid gold, and
King Saud determines its price.
Furthermore, King Saud also leads the Gulf Cooperation Council of all other Arab oil
monarchs, such as those who own UAE -- all of them are likewise US allies and major
weapons-buyers.
In an extraordinarily fine recent article by Pepe Escobar at Asia Times, "Oil
and gas geopolitics: no shelter from the storm" , he quotes from his not-for-attribution
interviews with "EU diplomats," and reports:
After the Trump administration's unilateral pull-out from the Iran nuclear deal, known as
the Joint Comprehensive Plan of Action (JCPOA), European Union diplomats in Brussels, off the
record, and still in shock, admit that they blundered by not "configuring the eurozone as
distinct and separate to the dollar hegemony". Now they may be made to pay the price of their
impotence via their "outlawed" trade with Iran.
As admitted, never on the record, by experts in Brussels; the EU has got to reevaluate its
strategic alliance with an essentially energy independent US, as "we are risking all our
energy resources over their Halford Mackinder geopolitical analysis that they must break up
[the alliance between] Russia and China."
That's a direct reference to the late Mackinder epigone Zbigniew "Grand Chessboard"
Brzezinski, who died dreaming of turning China against Russia.
In Brussels, there's increased recognition that US pressure on Iran, Russia and China is
out of geopolitical fear the entire Eurasian land mass, organized as a super-trading bloc via
the Belt and Road Initiative (BRI), the Eurasia Economic Union (EAEU), the Shanghai
Cooperation Organization (SCO), [and] the Asia Infrastructure Investment Bank (AIIB), is
slipping away from Washington's influence.
This analysis gets closer to how the three key nodes of 21st century Eurasia integration
-- Russia, China and Iran -- have identified the key issue; both the euro and the yuan must
bypass the petrodollar, the ideal means, as the Chinese stress, to "end the oscillation
between strong and weak dollar cycles, which has been so profitable for US financial
institutions, but lethal to emerging markets."
It's also no secret among Persian Gulf traders that in the -- hopefully unlikely -- event
of a US-Saudi-Israeli war in Southwest Asia against Iran, a real scenario war-gamed by the
Pentagon would be "the destruction of oil wells in the GCC [Gulf Cooperation Council]. The
Strait of Hormuz does not have to be blocked, as destroying the oil wells would be far more
effective."
And what the potential loss of over 20% of the world's oil supply would mean is
terrifying; the implosion, with unforeseen consequences, of the quadrillion derivatives
pyramid, and consequentially [consequently] of the entire Western financial casino
superstructure.
In other words: it's not the 'threat' that perhaps, some day, Iran will have nuclear
warheads, that is actually driving Trump's concern here (despite what Israel's concerns are
about that matter), but instead, it is his concerns about Iran's missiles, which constitute the
delivery-system for any Iranian warheads: that their flight-range be short enough so that the Sauds will be
outside their range . (The main way Iran intends to respond to an invasion backed by the
US, is to attack Saudi Arabia -- Iran's leaders know that the US Government is more dependent
upon the Sauds than upon Israel -- so, Iran's top targets would be Saudi capital Riyadh, and
also the Ghawar oil field, which holds over half of Saudi oil. If US bases have been used in
the invasion, then all US bases in the Middle East are also be within the range
of Iran's missiles and therefore would also probably be targeted.)
Obama's deal with Iran had focused solely upon preventing Iran from developing nuclear
warheads -- which Obama perhaps thought (mistakenly) would dampen Israel's (and its billionaire
US financial backers') ardor for the US to conquer Iran. Israel had publicly said that their
concern was Iran's possibility to become a nuclear power like Israel became; those possible
future warheads were supposed to be the issue; but, apparently, that wasn't actually the issue
which really drove Israel. Obama seems to have thought that it was, but it wasn't, actually.
Israel, like the Sauds, want Iran conquered. Simple. The nuclear matter was more an excuse than
an explanation.
With Trump now in the White House, overwhelmingly by money from the Israel lobbies (proxies
also for the Sauds) -- and with no equivalently organized Jewish opposition to the pro -Israel
lobbies (and so in the United States, for a person to be anti-Israel is viewed as being
anti-Semitic, which is not at all true, but Israel's lies say it's true and many Americans
unfortunately believe it) -- Trump has not only the Sauds and their allies requiring him to be
against Iran and its allies, but he has also got this pressure coming from Israel: both the
Big-Oil and the Jewish lobbies drive him. Unlike Obama, who wasn't as indebted to the Jewish
lobbies, Trump needs to walk the plank for both the Sauds and Israel.
In other words: Trump aims to keep the dollar as the reserve currency by suppressing not
only China but also the two main competitors of King Saud: Iran and Russia. That's why
America's main 'enemies' now are those three countries and their respective allies.
Obama was likewise targeting them, but in a different priority-order , with Russia being the
main one (thus Obama's takeover
of Ukraine in February 2014 turning it against Russia, next door ); and that difference was
due to Obama's desire to be favorably viewed by the residents in America's biggest export and
import market, the EU, and so his bringing another member (Ukraine) into the EU (which still
hasn't yet been culminated).
Trump is instead building on his alliance with King Saud and the other GCC monarchs, a group
who can more directly cooperate to control the value of the US dollar than the EU can.
Furthermore, both conservative (including Orthodox) Jews in the United States, and also white
evangelical Protestants in the US, are strongly supportive of Israel, which likewise sides with
the Arab oil monarchs against Iran and its allies. Trump needs these people's votes.
Trump also sides with the Sauds against Canada. That's a matter which the theorists who
assert that Israel controls the US, instead of that the Sauds (allied with America's and
Israel's billionaires) control the US, ignore; they ignore whatever doesn't fit their theory.
Of course, a lot doesn't fit their theory (which equates "Jews" with "Israelis" and alleges
that "they" control the world), but people whose prejudices are that deep-seated, can't be
reached by any facts which contradict their self-defining prejudice. Since it defines
themselves, it's a part of them, and they can never deny it, because to do so would be to deny
who and what they are, and they refuse to change that. The Sauds control the dollar; Israel
does not, but Israel does the lobbying, and both the Sauds and Israel want Iran destroyed.
Trump gets this pressure not only from the billionaires but from his voters.
And, of course, Democratic Party billionaires push the narrative that Russia controls
America. It used to be the Republican Joseph R. McCarthy's accusation, that the "commies" had
"infiltrated" , especially at the State Department . So: Trump
kicked out Russia's diplomats, to satisfy those
neocons -- the neoconservatives of all Parties and persuasions, both conservative and
liberal.
To satisfy the Sauds, despite the EU, Trump has dumped the Iran deal . And he did it also to
satisfy Israel, the main US lobbyists for the Sauds. (Americans are far more sympathetic to
Jews than to Arabs; the Sauds are aware of this; Israel handles their front-office.) For Trump,
the Sauds are higher priority than Europe; even Israel (who are an expense instead of a
moneybag for the US Government) are higher priority than Europe. Both the Sauds and Israel
together are vastly higher. And the Sauds alone are higher priority for Trump than are even
Canada and Europe combined . Under Trump, anything will be done in order to keep the Sauds
and
their proxy-lobbyists (Israel) 'on America's side'.
Consequently, Trump's political base is mainly against Iran and for Israel, but Obama's was
mainly against Russia and for the EU. Obama's Democratic Party still are controlled by the same
billionaires as before; and, so, Democrats continue demonizing Russia, and are trying to make
as impossible as they can, any rapprochement with Russia -- and, therefore, they smear Trump
for anything he might try to do along those lines.
Both Obama and Trump have been aiming to extend America's aristocracy's dominance around the
world, but they employ different strategies toward that politically bipartisan
American-aristocratic objective: the US Government's global control, for the benefit of the US
aristocracy, at everyone else's expense. Obama and Trump were placed into the White House by
different groups of US billionaires, and each
nominee serves his/her respective sponsors , no public anywhere -- not even their voters'
welfare.
An analogous example is that, whereas Fox News, Forbes, National
Review, The Weekly Standard, American Spectator, Wall Street Journal, Investors Business Daily,
Breitbart News, InfoWars, Reuters, and AP , are propagandists for the Republican Party ; NPR,
CNN, NBC, CBS, ABC, Mother Jones, The Atlantic, The New Republic, New Yorker, New York
Magazine, New York Times, Washington Post, USA Today, Huffington Post, The Daily Beast , and
Salon , are propagandists for the Democratic Party ; but, they all draw their chief sponsors
from the same small list of donors who are America's billionaires, since these few people
control the top advertisers, investors, and charities, and thus control nearly all of the
nation's propaganda. The same people who control the Government control the public; but,
America isn't a one-Party dictatorship. America is, instead, a multi-Party dictatorship . And
this is how it
functions.
Trump cancelled the Iran deal because a different group of billionaires are now in control
of the White House, and of the rest of the US Government. Trump's group demonize especially
Iran; Obama's group demonize especially Russia. That's it, short. That's America's aristocratic
tug-of-war; but both sides of it are for invasion, and for war. Thus, we're in the condition of
'permanent war for permanent peace' -- to satisfy the military contractors and the billionaires
who control them. Any US President who would resist that, would invite assassination; but,
perhaps in Trump's case, impeachment, or other removal-from-office, would be likelier. In any
case, the sponsors need to be satisfied -- or else -- and Trump knows this.
Trump is doing what he thinks he has to be doing, for his own safety. He's just a figurehead
for a different faction of the US aristocracy , than Obama was. He's doing what he thinks he
needs to be doing, for his survival. Political leadership is an extremely dangerous business.
Trump is playing a slightly different game of it than Obama did, because he represents a
different faction than Obama did. These two factions of the US aristocracy are also
now battling each other for political control over Europe .
The US #1 objective is to protect US$ as the only one reserve currency that is the
foundation of US economic and military power as well as the US economic stability and
prosperity
Zionist Banking Mafia controls US$ and both US major political Parties
The USA can accomplish its goals only by destroying China, Russia, and Iran. The USA
cannot achieve its goals short of having a major military confrontation with China. Russia
is only one power that can provide/satisfy China with raw materials including oil &
gas. However, politically Trump is locked in a corner by the Democratic Party and it's
globalists allies who are trying to destroy Russia due to it's "misguided" policies in
Syria and Iran.
China understands the game and does it's best to confront America. Time is on China's
side. Very shortly China will move it's military to Iran and Syria with Turkey becoming a
serious US headache.
The Bottom Line
Trump and its policies have no chance to succeed neither inside nor outside the USA. The
USA has less than 3-5 years to maintain the present status quo.
Yeah, its the defense contractors. It has nothing to do with the zillions of cars that clog every fucking freeway in this
country every morning and every evening, 7 days a week. Its not the assholes cruising around
in monster trucks alone, just to show off their stupid trucks. It has nothing to do with the
the zillions of jets screaming through the skies carry all those fat assholes to meetings all
over the world for no reason. It has nothing to do with the billions of barrels of oil that
come to the US on tankers as long as city blocks filled constantly day and night.
Its not that, its Lockheed selling them airplanes. Thats how the sand niggers got so much
US money, Lockheed.
What a fucking conspiratorial ass-swipe this guy is.
Eric Zeusse ranks in popularity right along the Gatestone Institute - though Eric may just
be ignorant and opinionated whilst Gatestone is an affirmative disinformation propaganda
organ, both are equally annoying to read. I just came for the comments :).
+1. Eric Zuesse is part-and-parcel of the agenda that the Gatestone Institute
espouses.
Eric Zuesse's real agenda can be revealed by his position on 9/11 (see second link below).
He also blames Obama for everything (he shifts the blame away from Israel onto any other
party which could be blamed due to either direct or indirect ties)
Here is Eric Zuesse in his own words:
Notice the absence of Israel/Zionism
Historic New Harpers Article Exposes Who Controls America
Posted on December 17, 2015 by Eric Zuesse.
"The fundamentalist-Sunni royal family of the Sauds have bought the highest levels of the
U.S. government in order to control U.S. foreign policies, especially the ongoing wars to
take down the governments of Iraq, Libya, Syria, and ultimately (they hope) of Russia itself,
which latter nation has allied itself instead with Shia countries. The controlling entities
behind American foreign policies since at least the late 1970s have been the Saud family and
the Sauds' subordinate Arabic aristocracies, which are the ones in Qatar (the al-Thanis),
Kuwait (the al-Sabahs), Turkey (the Turkish Erdoğans, a new royalty), and UAE (its six
royal families: the main one, the al-Nahyans in Abu Dhabi; the other five: the al-Maktoums in
Dubai, al-Qasimis in Sharjah, al-Nuaimis in Ajman, al-Mualla Ums in Quwain, and al-Sharqis in
Fujairah). Other Saudi-dominated nations -- though they're not oil-rich (more like Turkey in
this regard) -- are Pakistan and Afghanistan."
". But, perhaps, one can safely say that the alliance between the U.S. aristocracy and the
royal Sauds, is emerging as a global dictatorship, a dictatorial type of world government.
Because, clearly: those two aristocraciues have been, to a large extent, ruling the world
together, for several decades now. From their perspective, jihadists are themselves a weapon,
not merely a political nuisance.
This is a more realistic explanation of America's decades-long catastrophic failures to
make significant progress in eliminating even a single one of the numerous jihadist groups
around the world: that's how things have been planned to be. It's not just 'intelligence
errors' or 'not being tough enough.' Those 'explanations' are just cover-stories, propaganda,
PR from the aristocrats. It's skillful 'crowd control': keeping the people in their 'proper'
places."
9/11: Israel Didn't Do It; The Plan Was Co-Led by U.S. & Saud Governments
By Eric Zuesse
March 15, 2018
"9/11 was a well-planned operation, whatever it was. Substantial money paid for it, but
little if any of that came from either Iran or Israel. It all came from
fundamentalist-Sunnis.
And, if all of the money was fundamentalist-Sunni, then the only non-Sunni people who
could have been involved in planning the operation would have been George W. Bush and his
friends
The problem certainly isn't Jews nor Muslims. The problem is the aristocracy, which
controls Saudi Arabia, and the aristocracy which controls Israel, and the aristocracy which
controls America. The victim is the public, and the victimizer is the aristocracy. It's not
just 9/11."
Obama's Nazis
Posted on August 17, 2014 by Eric Zuesse.
(Zuesse's obsession with the word nazis or Nazis)
"What Obama has done and is doing in Ukraine is historic, like what Adolf Hitler did, and
like what Slobodan Milosevic* did, and like other racist fascists have done; and he, and we
Americans (if we as a nation continue accepting this), will be remembered for it, like they
and their countries were. Evil on this scale cannot be forgotten. No matter how solidly the
American "news" media hide this history, it is already solidly documented for the history
books. Obama will be remembered as the worst President in U.S. history, just as the
racist-fascist or 'nazi' leaders of other countries are."
Jewish Billionaire Finances Ukraine's Aydar SS Nazi Troops
Posted on April 7, 2015 by Eric Zuesse.
"The hyper-nationalist Ukrainian-Israeli billionaire Ihor Kolomoysky, a friend of the
Obama White House and employer of Joe Biden's son Hunter Biden, is a major donor to far-right
Ukrainian causes. He sides with the followers of Stepan Bandera, the pro-Nazi Ukrainian
leader whom Hitler ditched when Bandera made clear that he wanted Ukraine to be nazi but
independent of Germany's Nazi Party. Briefly, Bandera's #2 in command, Yaroslav Stetsko, led
nazi Ukraine, and approved the slaughter of thousands of Jews there."
"Zuesse is pushing Zionist lies. One of the links in the article goes to a Reuters story,
"Exclusive – Over 100 Russian soldiers killed in single Ukraine battle – Russian
rights activists," that claims to get its info from the "Russian presidential human rights
council."
If you want to read more lies by Zuesse, go to this "AMAZON" link to read reviews of his
book, "Iraq War: The Truth," in which Zuesse claims that GW Bush invaded Iraq to thank Jesus
for his alcohol and drug addiction cure and to neuter the International Criminal Court???
There is one comment lavishing praise on Zuesse's book about the Iraq War by David
Swanson, another Zionist tool and BS artist, who's been outed in the past by the blog,
"American Everyman."
See how fast the internet warriors are to claim the article is rubbish, and not reflecting
reality. No argument to back up their propaganda, but that's not important. Must be
depressing running the Sunday evening shift in the cubicle farm; all the boys in their neatly
pressed uniforms, clicking away to keep us safe from democracy. Well done lads, another day
keeping the evil Russians /Iranians at bay.
I actually find it interesting to see what shakes the foundations, and this article seems
to be something that they don't like, so probably worth a re-read just to get all the
nuances. Of course, the author suggesting that it is not Jews running America will get short
shrift from some commenters, but it is certainly interesting to have pointed out, finally,
that Israel is a net drain, and Saudi Arabia an enormous gain for the US. We always say to
follow the money, and whilst Israel is good profit for the MIC, Saudi Arabia IS the
petrodollar system - mustn't forget that. No oil in Saudi Arabia, no petrodollar. I wonder
how long they have left until it's all gone? That would probably be the over-riding factor in
deciding war with Iran.
I always wondered why the EU did nit make bigger efforts to replace the petrodollar with
the petroeuro but nobody wants to end up as Ghadaffi or Saddam Hussein who threatened to do
just that. Iran has also repeatedly threaten to that. Also Putin has recently said that
Russia wants to move away from the petrodollar. He must know that that is dangerous for one's
health so there must be some sort of alliance against the dollar being formed.
1. Iraq is run by a pro-Iran Shite government that tolerates the US occupation due to the
money provided. Before the USA attacks Iran, it should remove all its 10,000 troops and
10,000 civilians and close its massive embassy there and write that country off. Otherwise,
we'll have thousands of American POWs. Meanwhile, the Kurds will get crushed as the Turks and
Iraqis use the chaos to destroy them.
2. The oil-rich British puppet state of Kuwait is hated by all Iraqis and Iranians. If the
USA attacks Iran, one should expect Iranian and maybe Iraqi units crossing the border, while
Kuwait's army flees as expected. The USA keeps an army brigade there, but that may not be
enough to fend off an invasion, even with air superiority.
3. In past wars, civilian oil tankers did not sail through the straits. The insurers
(mostly Lloyds of London) and others announced they would not cover losses, and unionize ship
crews refused to enter the war zone. So even if the USA keeps the straits open, all that oil
will not flow forth.
4. Iran has a fortified island in the Gulf whose guns cannot be silenced with just air
power. A major amphibious landing is required to clear that island, and it will be bloody.
Note the ship channels in the map. Supertankers are huge, so while the Straits of Hormuz are
large, these big ships can only pass thru these two narrow channels, which are easily
blocked. Iran could park its own tankers in these channels to block them and hope the USA
foolishly sinks them, thus really blocking the entire channel.
These four issues are of more importance than air battles over Iran.
It is a little early to really get a sense of how much the Permian is slowing down. Most
analysts have been assuming an overall slowdown over the next 12 months because of pipeline
constraints. However, the EIA figures might suggest that the problem has already started to
bite. In April, the EIA predicted in its Drilling Productivity
Report that Permian production would jump by 73,000 bpd in May. But the monthly data just
released finds only modest gains in Texas (+20,000 bpd) and New Mexico (+3,000 bpd).
Second, the EIA thinks output broke 11 mb/d in July, an all-time high. But judging by the
overly-optimistic monthly data from April and May, perhaps the agency is also overstating July
figures, which raises the possibility that production is not nearly as high as we currently
think.
In the coming months, if monthly U.S. production figures continue to show output
undershooting expectations, that would have global ramifications. Most analysts still are
baking in strong U.S. shale growth figures into their forecasts. If that additional output
fails to materialize, the oil market could end up being a lot tighter than we all expected it
to be.
"... "As we go more towards (the fourth quarter) that's when we really see the risk of prices going well into the 80s and potentially even into the 90s but very critical is how much Iranian production we lose," ..."
"... "A lot of people think China can just buy all of the Iranian oil but they came out and said: 'Yes, we may not reduce but we are not going to increase our intake either.' So, you could see a significant crunch in terms of lost supplies into the market and then that obviously means higher prices," ..."
Looming US sanctions against Iran will likely hit Tehran's oil sales abroad, and
it could lead to a price spike in oil contracts. The first round of renewed US sanctions will
take effect on Tuesday with the harshest sanctions, potentially targeting Iran's oil industry,
expected to return in early November.
"As we go more towards (the fourth quarter) that's when we really see the risk of prices
going well into the 80s and potentially even into the 90s but very critical is how much Iranian
production we lose," Amrita Sen, chief oil analyst at Energy Aspects,
told CNBC Monday.
Oil was trading at $74 per barrel of Brent benchmark, while the US West Texas Intermediate
stood at $69.77 on Monday.
"A lot of people think China can just buy all of the Iranian oil but they came out and
said: 'Yes, we may not reduce but we are not going to increase our intake either.' So, you
could see a significant crunch in terms of lost supplies into the market and then that
obviously means higher prices," the analyst added.
The new US sanctions will likely slash oil supply. The last time Iran was sanctioned, it
lost half of its exports, which have now returned to 2.4 million barrels per day. Many analysts
have said that this time, the negative impact on Iranian oil trade will be less significant,
and Iran will lose only half of the previous loss.
Meanwhile, other major producers are ramping up their output. This July, OPEC, Russia and
other significant players agreed to gradually raise output for fear of supply deficit on the
market. OPEC+ countries will increase production by 1 million barrels per day, of which 200,000
bpd will be provided by Russia.
Earlier estimates of OPEC have now changed, and there is no increase from June. Probably, a
slight decrease from SA. From OPEC sources, not Platts. I think they would start increasing
if Iran drops, but not much otherwise. I think Sauds and Kuwait joint venture is set up for
that potential.
Changing the way I gage things, into a much simpler format. Now, I look at world inventory
drops, and look at current increases from OPEC and US. Neither will change much, so inventory
drops should continue. Opec needs to come up with a lot more, or it will look damn scary in
2019. With pipeline constraints, Canada is pretty much out of the picture for further
increases this year, and not much, elsewhere.
Yes the outlook for OPEC's July production is looking more flat now. This is a strange
situation because Platts is one of OPEC secondary sources and so I assume that they see all
the numbers
Thank you. This news confirms that world production is stagnating. Possibly very close to the
decline. We will have to be attentive to the inventories. It will be the first place that the
nations get hold of in order to supply themselves with oil.
The US
Congress has revived
the so-called "NOPEC" bill
for countering OPEC and OPEC+.
Officially called the "
No
Oil Producing and Exporting Cartels Act
",
NOPEC is the definition of so-called
"lawfare" because it enables the US to extra-territorially impose its domestic legislation on
others by giving the government the right to sue OPEC and OPEC+ countries like Russia because of
their coordinated efforts to control oil prices.
Lawsuits, however, are
unenforceable
, which is why the targeted states'
refusal to abide by the US courts' likely predetermined judgement against them will probably be
used to trigger sanctions under the worst-case scenario, with this chain of events being catalyzed
in order to achieve several strategic objectives.
The first is that the US wants to break up the
Russian-Saudi
axis
that forms the core of OPEC+, which leads to the second goal of then unravelling the
entire OPEC structure and heralding in the free market liberalization of the global energy
industry.
This is decisively to the US' advantage as it seeks to become an energy-exporting superpower,
but it must neutralize its competition as much as possible before this happens, ergo the
declaration of economic-hybrid war through NOPEC. How it would work in practice is that the US
could threaten primary sanctions against the state companies involved in implementing OPEC and
OPEC+ agreements, after which these could then be selectively expanded to secondary sanctions
against other parties who continue to do business with them.
The purpose behind this approach is to intimidate the US' European vassals into
complying with its demands so as to make as much of the continent as possible a captive market of
America's energy exporters, which explains why Trump also wants to
scrap
LNG export licenses to the EU
.
If successful, this could further erode Europe's shrinking strategic independence and also
inflict long-term economic damage on the US' energy rivals that could then be exploited for
political purposes.
At the same time, America's recently unveiled "
Power
Africa
" initiative to
invest $175 billion
in gas projects
there could eventually see US companies in the emerging energy frontiers
of
Tanzania
,
Mozambique
,
and elsewhere become important suppliers to their country's Chinese rival, which could make
Beijing's access to energy even more dependent on American goodwill than ever before.
If looked at as the opening salvo of a global energy war being waged in parallel with the
trade
one
as opposed to being dismissed as the populist piece of legislation that it's being
portrayed as by the media,
NOPEC can be seen as the strategic superweapon that it
actually is,
with its ultimate effectiveness being dependent of course on whether it's
properly wielded by American decision makers.
It's too earlier to call it a game-changer because it hasn't even been promulgated
yet, but in the event that it ever is, then it might go down in history as the most impactful
energy-related development since OPEC, LNG, and fracking.
No way US can manipulate oil trade at this
point without hurting themselves or helping
their "enemies". Cause and effect, just think
it through.
The world needs energy, Russia has
energy...and a real surplus for sale. The US
is a net energy consumer with no surplus.
China needs energy in a big way. Trying to
cut off Russian and Iranian oil and trying to
blow up the Chinese economy are acts of war.
The West realizes there is no way they can
survive in their current status of moar with
that kind of competition out there. The
BRICST now constitute $17 trillion in
combined GDP. They have the energy sources
(Russia and Iran), they have the
manufacturing base (China), they have the
agricultural base (Russia, Brazil, South
Africa), and they have plenty of
customers.....even outside the BRICST union.
That is a formidable competitive force to
face when you are an economy structured on
infinite growth on a finite planet......that
you control less and less of each year.
We need to see a larger context then neoliberalism in this issue. And it is the end of "cheap oil" or "Plato oil production
with increasing prices" environment.
Which might well be within a decade or two. At least for the next year, the USA production is stalled. By the time it picks
back up, supply will not meet demand so the prices might increase while the total production staying on the same level or slightly
decreasing.
Among possible effects we can mention the following:
1. Another round of lowering the standard of living for the US population, increasing social tensions.
2. Making transcontinental transportation, especially by air, too expensive and favoring local production. Essentially what
Trump is trying to achieve.
3. Part of human influence on climate will dissipate. For example, it will end the mass transportation of goods by air and
might cut private auto transportation, especially in the USA (actually for the latter you might need just around $10 per gallon
of gas or so). So the the carbon footprint of humanity might improve.
4. Permanent stagnation of economy will cut into population growth. Without cheap hydrocarbons, current agriculture needs to
change drastically and to sustain, say, 8 billion people on the planet might be more difficult.
5. Will stimulate the transition to electric cars for private transportation and to the reduction of the size of the cars in
the USA to European levels.
6. Will affect military (especially military aviation) and might fasten dissolution of Global US-led neoliberal empire -- the
process started by Trump.
7. Might provoke more wars for resources (of which Iraq and Libya wars are already "accomplished" events) which might deteriorate
to the level of exchange of nuclear strikes between major powers leading to WWIII. The latter might end a large part of human
civilization ( In worst case, Europe, the USA, Russia, China and Japan)
War with Iran? I can not imagine a more foolish thing to do.
Of course they will rally with their own Countrymen, everyone hates the USA.
The World economy will be in a complete tailspin, the US will likely finally go broke over it
and chances are pretty good that Israel will be flattened and paved [one positive thing].
You fight Iran you fight China, you don't go messing with their road. Likely not bombs and
guns either most likely money, something America has not much of.
The faster America dumps this crazy fascination with the Jews the faster it will get it's
act together and become a Country again.
What can that possibly mean? We can bomb Iran back into the Stone Age, but Iran does not
need a modern economy or military to close Hormuz. All they need do is fire a few land-based
artillery and anti-ship missiles at a defenseless freighter or tanker. The insurance
companies would do the rest–remove all commercial shipping from the Persian and Oman
Gulf regions. That eliminates 20% of the World's oil supply, and it would collapse the
World's economy, including our own.
Asymmetric warfare would engulf the entire Middle East, including Israel, with its large
native Arab population and its occupation of large Arab populations in Gaza and the West
Bank.
Iran has the upper hand here. We need to be very careful.
Let's face it-when we impose sanctions on Iran, we are already at war with them. Just like we
are already at war with Russia. Imbeciles, all who run this country.
Oil is the vital strategic Western interest in the Persian Gulf. Yet a war with Iran
would imperil, not secure, that interest.
The American Empire's only strategic three letter word interest in the Middle East is O --
I –L.
The WASP/JEW ruling class of the American Empire and the Jew-controlled Neo-Conservative
faction in the Republican Party wants to elevate the three letter word J -- E –W to
paramount importance in the Middle East.
OIL and only OIL should guide the policy making considerations of the American Empire in
the Middle East.
"... Chart: Demonization of Russia centers on competition for oil and gas revenues. Pipelines to deliver oil and gas from the Middle East to Europe run through North Africa (Libya) and Syria and / or Turkey. These pipelines are substantially controlled by Western interests with imperial / colonial ties to the U.S., Britain and 'developed' Europe. Russian oil and gas did run through Ukraine, which is now negotiating to join NATO, or otherwise hits a NATO wall before entering Europe. ..."
The indictments are a major political story, but not for the reasons given in
mainstream press coverage. Once Mr. Mueller's indictment is understood to charge the
exploitation of existing social tensions (read it and decide for yourself), the FBI, which Mr.
Mueller directed from 2001 – 2013, is precisely the wrong entity to be rendering
judgment. The FBI has been America's political police since its founding in 1908. Early on
former FBI Director J. Edgar Hoover led legally dubious mass
arrests of American dissidents. He practically invented the slander of conflating
legitimate dissent with foreign agency. This is the institutional backdrop from which Mr.
Mueller proceeds.
In the 1950s, 1960s and 1970s the FBI's targets included the civil rights movement, the
antiwar movement, the American Indian Movement (AIM), the Black Panther Party and any other
political organization Mr. Hoover deemed a threat. The secret (hidden) FBI program COINTELPRO was intended to
subvert political outcomes outside of allegations of criminal wrongdoing and with no regard for the lives of its
targets . Throughout its history the FBI has sided with the powerful against the powerless
to maintain an unjust social order.
Robert Mueller became FBI Director only days before the attacks of September 11, 2001. One
of his first acts as Director was to arrest 1,000 persons without any evidence of criminal
wrongdoing. None of those arrested were ever charged in association with the attacks. The frame
in which the FBI acted -- to maintain political stability threatened by 'external' forces, was
ultimately chosen by the George W. Bush administration to justify its aggressive war against
Iraq.
It is the FBI's legacy of conflating dissent with being an agent of a foreign power that Mr.
Mueller's indictment most insidiously perpetuates. Russians are 'sowing discord,' and they are
using Americans to do so, goes the allegation. Black Lives Matter and Bernie Sanders are listed
in the indictment as roadblocks to the unfettered ascension of Hillary Clinton to the
presidency. Russians are sowing discord, therefore discord is both suspect in itself and
evidence of being a foreign agent.
The posture of simple reporting at work in the indictment -- that it isn't the FBI's fault
that the Russians (allegedly) inserted themselves into the electoral process, runs against the
history of the FBI's political role, the tilt used to craft criminal charges and the facts put
forward versus those put to the side. Given the political agendas of the other agencies that
the FBI joined through the charges, they are most certainly but a small piece of a larger
story.
In the aftermath of the indictments it's easy to forget that the Pentagon created the internet ,
that the NSA
has its tentacles in all of its major chokepoints, that the CIA has been heavily
involved in funding and 'using' social media toward its own ends and that the FBI is only
reputable in the present because of Americans' near-heroic ignorance of history. The claim that
the Russian operation was sophisticated because it had corporate form and function is countered
by the fact that it was, by the various agencies' own claims, ineffectual in changing the
outcome of the election.
I Have a List
While Robert Mueller was busy charging never-to-be-tried Russians with past crimes, Dan
Coats, the Director of National Intelligence,
declared that future Russian meddling has already cast a shadow over the integrity of the
2018 election. Why the Pentagon that created the internet, the NSA that has its tentacles in
all of its major chokepoints, the CIA that has been heavily involved in funding and 'using'
social media toward its own ends and the FBI that just landed such a glorious victory of good
over evil would be quivering puddles when it comes to precluding said meddling is a question
that needs to be asked.
The political frame being put forward is that only these agencies know if particular
elections and candidates have been tainted by meddling, therefore we need to trust them to tell
us which candidates were legitimately elected and which weren't. As generous as this offer
seems, wouldn't the creation of free and fair elections be a more direct route to achieving
this end? Put differently, who among those making the offer, whether personally or as
functionaries of their respective agencies, has a demonstrated history of supporting democratic
institutions?
The 2016 election was apparently a test case for posing these agencies as the meddling
police. By getting the bourgeois electocracy -- liberal Democrats, to agree that the loathsome
Trump is illegitimate, future candidates will be vetted by the CIA, NSA and FBI with impunity.
It's apparently only the pre-'discord, ' the social angst that the decade of the Great
Recession left as its residual, that shifts this generous offer from the deterministic to the
realm of the probable. The social conditions that led to the Great Recession and its aftermath
are entirely home grown.
More broadly, how do the government agencies and people that spent the better part of the
last century undermining democracy at home and abroad intend to stop 'Russian meddling?' If the
FBI couldn't disentangle home grown 'discord' from that allegedly exploited and exacerbated by
the Russians, isn't the likely intention to edit out all discord? And if fake news is a problem
in need of addressing, wouldn't the
New York Times and the Washington Post have
been shut down years ago?
The Great Satin (sic)
While Russia is the villain of the day, week and year due to alleged election 'meddling,'
the process of demonization that Russia has undergone has shown little variation from (alleged)
villain to villain. It is thanks to cable news and the 'newspaper of record' that the true
villainy of Vladimir Putin, Muammar Gadhafi, Saddam Hussein, Nicolas Maduro and the political
leadership of Iran has been revealed. In the face of such monsters, questions of motivation are
moot. Why wouldn't Mr. Putin 'sow discord?'
The question as yet unasked, and therefore unanswered is: is there something besides base
villainy that brought these national leaders, and the nations they lead, into the crosshairs of
America's fair and wise leadership? This question might forever go unanswered were it not for
the secret list from which their names were apparently drawn. No, not that secret list. This one is publicly available -- hiding in plain sight, as it
were. It is the list of proven oil reserves by country (below). This is no doubt unduly
reductive -- evil is as evil does, but read on.
The question of how such a list could divide so evenly between heroes and villains I leave
to the philosophers. On second thought, no I won't. The heroes are allies of a small cadre of
America's political and economic elite who have made themselves fabulously rich through the
alliances. The villains have oil, gas, pipelines and other resources that this elite wants.
Reductive, yes. But this simple list certainly appears to explain American foreign policy over
the last half-century quite well.
Source: gulfbusiness.com
It's almost as if America's love for humanity, as demonstrated through humanitarian
interventions, is determined by imperial competition for natural resources -- in this case oil
and gas. Amongst these countries, only one (Canada) is 'democratic' in the American sense of
being run by a small cadre of plutocrats who use the state to further their own interests. Two
-- Iraq and Libya, were recently reduced to rubble (for the sake of humanity) by the U.S.
Nigeria is being 'brought' under the control of AFRICOM. What remains are various and sundry
petro-states plus Venezuela and Russia.
Following the untimely death of Hugo Chavez of Venezuela, the horrible tyrant kept in office
via free
and fair elections , who used Venezuela's petro-dollars to feed, clothe and educate his
people and was in the process of creating a regional Left alliance to counter American abuse of
power, the CIA joined with local
plutocrats to overthrow his successor, Nicolas Maduro. The goal: to 'liberate' Venezuela's oil
revenues in their own pockets. At the moment Mr. Maduro is down the list of villains, not
nearly the stature of a 'new Hitler' like Vladimir Putin. But where he ends up will depend on
how successfully the CIA (with Robert Mueller's help) can drum up a war against nuclear armed
Russia.
What separates Russia from the other heroes and villains on the list is its history as a
competing empire as well as the manner in which Russian oil and gas is distributed. Geography
placed it closer to the population centers of Europe than to Southeastern China where Chinese
economic development has been concentrated. This makes Europe a 'natural' market for Russian
oil and gas.
The former Soviet state of Ukraine did stand between, or rather under, Russian pipelines and
Europe until Hillary Clinton had her lieutenants engineer a coup there in 2014. In contrast to
the 'new Hitler' of Mr. Putin (or was that Trump?) Mrs. Clinton and her comrades demonstrated a
preference for the old Hitler in the form of Ukrainian fascists who were the ideological
descendants of 'authentic' WWII Nazis. But rest assured, not all of the U.S.'s allies in this
affair
were ideological Nazis .
Chart: Demonization of Russia centers on competition for oil and gas revenues. Pipelines
to deliver oil and gas from the Middle East to Europe run through North Africa (Libya) and
Syria and / or Turkey. These pipelines are substantially controlled by Western interests with
imperial / colonial ties to the U.S., Britain and 'developed' Europe. Russian oil and gas did
run through Ukraine, which is now negotiating to join NATO, or otherwise hits a NATO wall
before entering Europe.
In contrast to the alternative hypotheses given
in the American press, NATO, the geopolitical extension of the U.S. military in Europe,
admits that the U.S.
engineered coup in Ukraine was 'about' oil geopolitics with Russia. The American storyline
that Crimea was seized by Russia ignores that the Russian navy has had a Black Sea port in Crimea for decades. How
amenable, precisely, might Director of National Intelligence Dan Coats and his friends be if
Russia seized a major U.S. naval port given their generous offer to take over the U.S.
electoral system because of a few Russian trolls?
Although Russia is toward the bottom of the top ten countries in terms of oil reserves, it
faces a problem of distribution that the others don't. Imperial ties and recent military
incursions have left the distribution of oil and gas from the Middle East to Europe largely
under Western control. Syria, Turkey and North Africa are necessary to moving this oil and gas
through pipelines to Europe. That Syria, Libya and Turkey are now, or recently have been,
militarily contested adds credence to the contention that the 'international community's'
heroes and villains are largely determined by whose hands their oil and gas resources are
currently in.
Democratic Party loyalists who see Putin, Maduro et al as the problem first need to
answer for the candidate they put forward in 2016. Hillary Clinton led the carnage in Libya
that murdered
30,000 – 50,000 innocents for Western oil and gas interests. Russia didn't force the
U.S. into its calamitous invasion of Iraq. Russia didn't take Americans' jobs, houses and
pensions in the Great Recession. Russia didn't reward Wall Street for causing it. Democrats
need to take responsibility for their failed candidates and their failed Party.
Part of the point in relating oil reserves to American foreign entanglements is that the
countries and leaders involved are incidental. Vladimir Putin certainly seems smarter than the
American leadership. But this has no bearing on whether or not his leadership of Russia is
broadly socially beneficial. The only possible resolution of climate crisis requires both
Russia and the U.S. to greatly reduce their use of fossil fuels. Reports have it that Mr. Putin
has no interest in doing so. And once the marketing chatter is set to the side, neither do the
Americans.
By placing themselves as arbiters of the electoral process, the Director of National
Intelligence and the heads of the CIA, NSA and FBI can effectively control it. Is it accidental
that the candidate of liberal Democrats in the 2016 election was the insiders' -- the
intelligence agencies' and military contractors,' candidate as well? Implied is that these
agencies and contractors are now 'liberal.' Good luck with that program if you value peace and
prosperity.
There are lots of ways to create free and fair elections if that is the goal. Use
paper ballots that are counted in public, automatically register all eligible voters, make
election days national holidays and eliminate 'private' funding of electoral campaigns. But why
make elections free and fair when fanciful nonsense about 'meddling' will convince the liberal
class to deliver power to grey corpses in the CIA, NSA and FBI for the benefit of a tiny cabal
of stupendously rich plutocrats. Who says America isn't already great?
"... "They could take up the president's offer to negotiate with them, to give up their ballistic missile and nuclear weapons programs fully and really verifiably not under the onerous terms of the Iran nuclear deal, which really are not satisfactory," ..."
"... "If Iran were really serious they'd come to the table. We'll find out whether they are or not," ..."
"... "matter of respecting international agreements and a matter of international security." ..."
"... "behaves like a normal country." ..."
"... "require enormous change" ..."
"... "increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales." ..."
"... "the mother of all wars." ..."
"... "confronting possible threats." ..."
"... "The hours of our negotiations with America were perhaps unprecedented in history; then Trump signs something and say all [those negotiations] are void; can you negotiate with this person? Is this [negotiations offer] anything but a publicity stunt?" ..."
Closing the Strait of Hormuz would be the biggest mistake Iran has ever made, the US
president's national security advisor John Bolton said. He urged Tehran to sit down for talks
on its nuclear and missile programs with the US. Dismissing Tehran's threats to block the
strait if its oil exports are stopped, Bolton on Monday said the Iranians were
"bluffing." He then quickly changed his tone saying that Iran should actually engage in a dialog with the US instead of
issuing threats.
"They could take up the president's offer to negotiate with them, to give up their
ballistic missile and nuclear weapons programs fully and really verifiably not under the
onerous terms of the Iran nuclear deal, which really are not satisfactory," Bolton told
Fox News, referring to the US President Donald Trump's demands to "re-negotiate" the
2015 Iranian nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA).
"If Iran were really serious they'd come to the table. We'll find out whether they are
or not," Bolton added. The White House national security advisor's remarks came less than
a day before the first round of renewed US sanctions take effect on Tuesday after midnight US
Eastern time. The harshest restrictions are expected to be re-imposed by early November.
Washington decided to reinstate the penalties following Trump's decision to unilaterally
withdraw from the JCPOA in May. Shortly after exiting the agreement, the US penned a 12-point
ultimatum to Iran, which, among other things, demanded that Tehran end its ballistic missile
program, a condition it has repeatedly rejected. The move was then widely condemned by the EU
and other signatories of the deal, including Russia and China, which still consider the
agreement to be an effective means of non-proliferation and have vowed to keep their part of
the deal.
Earlier on Monday, the EU said that starting August, it is enforcing its so-called Blocking
Statute aimed at protecting the European companies doing business in Iran from the
extraterritorial effects of US sanctions. The bloc said that maintaining the nuclear deal with
Iran is a "matter of respecting international agreements and a matter of international
security."
Meanwhile, the US Secretary of State Mike Pompeo vowed to "rigorously" enforce the
sanctions on Iran until it "behaves like a normal country." He added that it would
"require enormous change" on Iran's part for the US to review its increasingly hostile
approach to Tehran.
In July, Brian Hook, the US State Department's director of policy planning, said that
Washington's goal is to "increase pressure on the Iranian regime by reducing to zero its
revenue from crude oil sales."
Iranian leaders repeatedly threatened to shut down the Strait of Hormuz and stop the Persian
Gulf oil exports if its own oil exports are blocked. Iranian President Hassan Rouhani also
cautioned Washington against launching a war against Tehran by saying that it would be "the
mother of all wars." Iran's Revolutionary Guards have recently admitted that its warships
took part in a naval exercise in the Persian Gulf to hone skills in "confronting possible
threats."
Earlier, the Iranian Foreign Minister Javad Zarif has slammed Donald Trump's recent proposal
to enter into talks with Iran by calling it nothing but a PR stunt. "The hours of our
negotiations with America were perhaps unprecedented in history; then Trump signs something and
say all [those negotiations] are void; can you negotiate with this person? Is this
[negotiations offer] anything but a publicity stunt?" he said.
The Trump administration has reportedly requested a meeting with
Rouhani eight times, but the Iranian side refused to participate.
As Iran is preparing for the first wave of returning US sanctions that could largely hamper
its foreign trade, the country's banks appear to have already created a mechanism for imports
of essential goods from
Russia .
Bank Saderat Iran (BSI) announced in a statement on Sunday that it had sealed a deal with
the Moscow offshoot of Bank Melli Iran (BMI) over a re-financing scheme that envisaged
providing €10 million to fund imports of essential commodities, medicines, medical
equipment and the raw materials for industrial units.
New restrictions aim to protect currency from further falls
With US sanctions against Iran officially going back into place on August 6, the Iranian
government is scrambling to take some last minute measures to shore up their economy, and
particularly their currency, before the sanctions start to hit.
Iran wants to make sure that what foreign currency does flow overseas is strictly
allocated to a handful of important industries. The fall of prices for the rial has been
heavy related to the surge in the price of gold, as economic uncertainty has many Iranians
running to precious metals, and gold imports surged in recent weeks.
US sanctions aim to limit, if not totally eliminate, Iran's access to foreign markets.
That also has Iran trying to make some last-minute purchases while they know they still can.
Five new planes were purchased from ATR for the state airline. It's far short of the new
fleet of airliners Iran initially sought, but the best they can do with the US blocking
Boeing and Airbus from fulfilling contracts.
Since the August 6 date has been known for months, it's likely much of the market reaction
to the sanctions is already factored in to Iran's currency pricing. China's refusal to comply
with US sanctions, likewise, is a sign that Iran won't be totally cutoff from world markets.
Still, it will take awhile before the full extent of the US attempt, and its effectiveness,
is known.
It is a little early to really get a sense of how much the Permian is slowing down. Most
analysts have been assuming an overall slowdown over the next 12 months because of pipeline
constraints. However, the EIA figures might suggest that the problem has already started to
bite. In April, the EIA predicted in its Drilling Productivity
Report that Permian production would jump by 73,000 bpd in May. But the monthly data just
released finds only modest gains in Texas (+20,000 bpd) and New Mexico (+3,000 bpd).
Second, the EIA thinks output broke 11 mb/d in July, an all-time high. But judging by the
overly-optimistic monthly data from April and May, perhaps the agency is also overstating July
figures, which raises the possibility that production is not nearly as high as we currently
think.
In the coming months, if monthly U.S. production figures continue to show output
undershooting expectations, that would have global ramifications. Most analysts still are
baking in strong U.S. shale growth figures into their forecasts. If that additional output
fails to materialize, the oil market could end up being a lot tighter than we all expected it
to be.
"... "As we go more towards (the fourth quarter) that's when we really see the risk of prices going well into the 80s and potentially even into the 90s but very critical is how much Iranian production we lose," ..."
"... "A lot of people think China can just buy all of the Iranian oil but they came out and said: 'Yes, we may not reduce but we are not going to increase our intake either.' So, you could see a significant crunch in terms of lost supplies into the market and then that obviously means higher prices," ..."
"... For more stories on economy & finance visit RT's business section ..."
"As we go more towards (the fourth quarter) that's when we really see the risk of prices
going well into the 80s and potentially even into the 90s but very critical is how much Iranian
production we lose," Amrita Sen, chief oil analyst at Energy Aspects,
told CNBC Monday.
Oil was trading at $74 per barrel of Brent benchmark, while the US West Texas Intermediate
stood at $69.77 on Monday.
"A lot of people think China can just buy all of the Iranian oil but they came out and
said: 'Yes, we may not reduce but we are not going to increase our intake either.' So, you
could see a significant crunch in terms of lost supplies into the market and then that
obviously means higher prices," the analyst added.
The new US sanctions will likely slash oil supply. The last time Iran was sanctioned, it
lost half of its exports, which have now returned to 2.4 million barrels per day. Many analysts
have said that this time, the negative impact on Iranian oil trade will be less significant,
and Iran will lose only half of the previous loss.
Meanwhile, other major producers are ramping up their output. This July, OPEC, Russia and
other significant players agreed to gradually raise output for fear of supply deficit on the
market. OPEC+ countries will increase production by 1 million barrels per day, of which 200,000
bpd will be provided by Russia.
The US Congress has revived the so-called "NOPEC" bill for countering OPEC and OPEC+.
Officially called the " No Oil Producing and
Exporting Cartels Act ", NOPEC is the definition of so-called "lawfare" because it enables
the US to extra-territorially impose its domestic legislation on others by giving the
government the right to sue OPEC and OPEC+ countries like Russia because of their coordinated
efforts to control oil prices.
Lawsuits, however, are unenforceable , which is why the targeted states' refusal to abide by
the US courts' likely predetermined judgement against them will probably be used to trigger
sanctions under the worst-case scenario, with this chain of events being catalyzed in order to
achieve several strategic objectives.
The first is that the US wants to break up the Russian-Saudi axis that
forms the core of OPEC+, which leads to the second goal of then unravelling the entire OPEC
structure and heralding in the free market liberalization of the global energy industry.
This is decisively to the US' advantage as it seeks to become an energy-exporting
superpower, but it must neutralize its competition as much as possible before this happens,
ergo the declaration of economic-hybrid war through NOPEC. How it would work in practice is
that the US could threaten primary sanctions against the state companies involved in
implementing OPEC and OPEC+ agreements, after which these could then be selectively expanded to
secondary sanctions against other parties who continue to do business with them.
The purpose behind this approach is to intimidate the US' European vassals into complying
with its demands so as to make as much of the continent as possible a captive market of
America's energy exporters, which explains why Trump also wants to scrap LNG export licenses to the EU .
If successful, this could further erode Europe's shrinking strategic independence and also
inflict long-term economic damage on the US' energy rivals that could then be exploited for
political purposes. At the same time, America's recently unveiled " Power Africa " initiative to invest $175 billion in gas projects there
could eventually see US companies in the emerging energy frontiers of Tanzania
,
Mozambique , and elsewhere become important suppliers to their country's Chinese rival,
which could make Beijing's access to energy even more dependent on American goodwill than ever
before.
If looked at as the opening salvo of a global energy war being waged in parallel with the
trade
one as opposed to being dismissed as the populist piece of legislation that it's being
portrayed as by the media, NOPEC can be seen as the strategic superweapon that it actually is,
with its ultimate effectiveness being dependent of course on whether it's properly wielded by
American decision makers.
It's too earlier to call it a game-changer because it hasn't even been promulgated yet, but
in the event that it ever is, then it might go down in history as the most impactful
energy-related development since OPEC, LNG, and fracking.
"... "My film itself is essentially was tracking the neocon influence and how the neoconservatives from the Bush era that pushed the Iraq war, that constructed the blueprints for the Iraq war, how they also were the earliest pioneers pushing this Russiagate Cold War 2.0 mentality." ..."
"... – Robbie Martin, from this week's program. ..."
"My film itself is essentially was tracking the neocon influence and how the
neoconservatives from the Bush era that pushed the Iraq war, that constructed the blueprints
for the Iraq war, how they also were the earliest pioneers pushing this Russiagate Cold War 2.0
mentality."
The USA can't compete on price and volume. But dir to dvassal status of EU can still force
"diversification"
Notable quotes:
"... As a result, Europeans are deciding to stick with the Russians while finding new options in the east, such as Turkey and Azerbaijan. This is creating competition if not tensions in present and potential gas transit countries in southeastern and eastern Europe, for example. ..."
Russia has advanced forward in something of a tactical and potential strategic victory in
the Russo-Western gas war. This is a three-party war, with the US, EU, and Russia each
promoting separate interests. It is one sphere where a united West has failed to 'isolate
Russia.' The US seeks move in on the European energy market with LNG supplies and replace
Russian pipeline-delivered natural gas supplies to Europe. Washington is using the risks of
dependence on Russian gas and Russia's 'bad behavior' as leverage in attempting to convince
Europeans to reject Russia's Nord Stream 2 pipeline. Russia is said to be unreliable and prone
to shut off gas supplies to Europe.
Due to past Russian-Ukrainian gas crises, the Ukrainian crisis, and general Russian-Western
tensions, Europe has decided on a gas diversification policy in which each EU member should
have at least three sources of natural gas supply. One additional option that could facilitate
this diversification policy is US liquified natural gas (LNG), but the US is still unable to
supply enough LNG to offset Russian gas supplies that might be rejected by Europe. In the
process, Washington is looking less like a 'team West' player and more like a solely
self-interested power maximizer in European eyes and therefore no more reliable than Moscow. As
a result, Europeans are deciding to stick with the Russians while finding new options in the
east, such as Turkey and Azerbaijan. This is creating competition if not tensions in present
and potential gas transit countries in southeastern and eastern Europe, for example.
The Battle Over Re-Sale: No Victors
One recent battle was largely inconclusive, but if a victor has to be designated it may be
Moscow. In May, the European Commssion concluded a settlement with Russia's Gazprom in May
ending a seven-year anti-trust dispute. In return for the EU dropping billions of dollars in
penalty fees, GazProm agreed to end limitations on the use of gas purchased by EU members,
allow them to re-sell the gas. Some EU members, such as Bulgaria, the Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland and Slovakia have re-sold or wanted to re-sell gas. Moscow
frowned, for example, on Slovakia's resale of natural gas to Ukraine at cheaper prices than
Moscow sought to charge Kiev. The agreement will also restrict Moscow's ability to charge
different countries different prices. So EU members in central and eastern Europe can get a
price close to that paid by Germany and appeal to an arbitration court in case of a dispute.
The agreement guarantees Russia's presence on the European gas market at a time when the
latter's reliance on the former has peaked.
The Northern Front: Nord Stream 2
At the same time, the battle over Russia' Nord Stream 2 natural gas pipeline has heated up.
When it comes on line in 2019, the 759-mile pipeline will carry GazProm natural gas along the
bed of the Baltic Sea to Germany and double the supply Nord Stream pipeline's current annual
capacity of 55 billion cubic meters (bcm). The Trump administration has threatened yet more
sanctions on third-party companies, this time with those that work on the pipeline. The US
sanctions threat is an attempt to promote American LNG interests as well as to protect
Ukrainian interests, though it contradicts the view that Ukraine should eschew its dependence
on Russian gas.
US officials have been hammering home to Europeans the 'Russian threat' in tandem with the
risk of reliance on Russian gas may pose, which will increase with Nord tream 2, but to no
avail. Public opinion is not working in the US favor, with Germans trusting Moscow more than
Washington, despite all the crimes laid at the Kremlin's door by the West. A recent ZDF
Television opinion survey found that only 14 percent of Germans regard the U.S. as a reliable
partner, while 36 percent view Russia as reliable (
www.bloomberg.com/news/articles/2018-05-17/trump-s-global-disruption-pushes-merkel-closer-to-putin-s-orbit
). Thus, notwithstanding Ukraine, Syria and alleged chemical attacks, Russiagate, and the
Skrypals, GazProm's supplies to Europe have risen to hold nearly 40 percent of its gas market,
growing last year by 8.1 percent last year to a record level of 193.9 billion cubic metres
(bcm).
Nevertheless, with the EU decision, the U.S., Poland, Ukraine, Lithuania and others have
stepped up their pressure on Germany, the Netherlands, Denmark and other western Eureopean EU
members to abandon the Nord Stream 2 project. Germans and other western Europeans are unlikely
to give up the short-term gain of energy security for the US LNG given the higher price and
unproven nature of Washington's numerous allegations against the Kremlin. German officials say
they still have no proof from 10 Downing on Russia's culpability for the Skrypal poisoning so
loudly trumpeted by British PM Theresa May.
One motivation for the Russians in building Nord Stream 2 is to obviate the need to
transport gas through Ukraine, which will hurt Ukraine's own energy supply – given
Ukrainian skimming -- and overall economy beyond the present non-sale of Russian gas to
Ukraine. Another Russian motivation is to avert the unreliable Ukrainians, who have failed to
make payments according to contract in the past causing Russian gas cutoffs to Ukraine and thus
Europe with the resulting crises blamed solely on Moscow. The Trump sanctions threat has put
Germany and the other Nord Stream 2 supporting countries between a rock and a hard place,
between Russia and the US. Therefore, German Chancellor Angela Merkel, while supporting Nord
Stream 2, has called for guarantees from Russia that Ukraine will remain a gas transit country.
Ukraine's current contract with Russia ends in 2019 at the very time Nord Stream 2 is to go on
line and the EU has urged re-starting EU-mediated negotiatons now in order to avoid another gas
crisis. Putin agreed to do this at his meeting with Germany's merkel in late May. Nord Stream 2
significantly strengthens Putin's hand in any such talks.
The Southern Front: Turkish Stream, SGC and the Azeri and Bulgarian Factors
Russia is strengtheining its position on the European gas war's southern front by building
the Turkish Stream (TS) gas pipeline to Europe. TS consists of a sea and a land leg. The former
runs under the Black Sea from Russia to Turkey and is built, with Russo-Turkish talks on the
land leg ongoing.
Russia's Turkish Stream is being challenged by the Southern Gas Corridor (SGC) backed by
Western powers, including the EU (along with Turkey and Azerbaijan), which sees the SGC as a
means of diversifying from dependence on Russia. Not just Turkey, but Azerbaijan is emerging as
a major player on the EU gas market, with a shift in policy accenting gas supplies to Europe as
well as oil supplies as in the past. The SGC consists of three components: an expanded South
Caucasus Pipeline and the to be constructed Trans-Anatolian Natural Gas Pipeline (TANAP) and
Trans-Adriatic Pipeline (TAP). TANAP is 51 percent Azerbaijani owned, 37 percent Turkish, and
12 percent belonging to British Petroleum. The SGC will carry Azerbaijani gas through Turkey to
Europe and will be able to supply up to one-third of the gas consumed by Bulgaria, Greece and
Italy ( https://en.trend.az/business/energy/2910573.html
). However, the source of the gas supplying the pipeline demonstrates the limits of Western
attempts to isolate Russia (and Iran). Azerbaijan's Shah-Deniz gas field is co-owned by British
Petroleum (29 percent), Turkey's Turkish Petroleum (19 percent), Azerbaijan's SOCAR (17
percent), Malaysia's Petronas (15 percent), Russia's LukOil (10 percent), and Iran's NICO (10
percent). Moreover, Russia's LukOil is negotiating with SOCAR a stake in Azerbaijan's
second-largest gas field, Umid-Babek, which also includes Britain's Nobel Upstream (
https://newsbase.com/topstories/lukoil-talks-join-umid-babek-project?utm_campaign=466286_GERD%2031%20May%202018&utm_medium=email&utm_source=NewsBase%20LTD&dm_i=4NTN,9ZSE,2Q5R2D,13DVS,1
).
Again the Ukrainian issue is part of the picture here, as a good portion of GasProm supplies
to Bulgaria go through Ukraine. Turkish Stream can replace at least some of that supply should
Moscow decide to entirely avert Ukraine's pipeline system. It is of interest that no one in the
West has offered to include in any of these projects or attempted to fashion a pipeline or
pipeline extension that could link up with the Ukrainian network.
During Bulgarian President Rumen Radev's late may visit to Moscow, Putin reported to Radev
that during his meetings with Turkish President Recip Tayyip Erdogan, the latter said he would
pose no oppsotion to extending the Turkish Stream gas pipeline to Bulgaria. In response, Radev
seemed to suggest making Bulgaria a "a gas redistribution center, a hub" for the Turkish
Stream's supplies further into Europe ( http://kremlin.ru/events/president/news/57608
). Moreover, one gets the impression that Bulgaria is wary more about its dependence on Turkey
and Ankara's new offensive energy policy in Europe than on Russia and might help Moscow detour
Ukraine. In 2015, Erdogan declared a major policy initiative of making Turkey a, if not
the major energy transit hub for supplies heading from the east to Europe. Russia's
annexation of Crimea could help Russia in its talks both with Erdogan over the Turkish Stream
and pose the threat of undermining the SGC. It may also help Putin deal with Merkel, Kiev and
the EU over the Ukraine pipeline system's future role. Bulgarian President Radev also said in
Moscow that Sofia supports building a direct gas pipeline under the Black Sea to bring Russian
gas to Bulgaria ( https://echo.msk.ru/news/2206394-echo.html ).
The Bulgarian option could be used by Putin to threaten Erdogan with reducing the Turkish
Stream's supplies or abandoning it altogether in favor of a Black Sea Russian-Bulgarian Stream
and to reduce Russia's dependence on Ukraine as well.
Dearth of investments in oil projects mean a spike in prices above $100 could be on the
horizon
Crude across the globe is being used up faster than it is being replaced, raising the
prospect of even higher oil prices in the coming years. The world isn't running out of oil. Rather, energy companies and petro-states -- burned by
2014's price collapse -- are spending less on new projects, even though oil prices have more
than doubled since 2016. That has sparked concerns among some industry watchers of a massive
price spike that could hurt businesses and consumers. The oil industry needs to replace 33 billion barrels of crude every year to satisfy anticipated
demand growth, particularly as developing countries like China and India are consuming more
oil. This year, new investments are set to account for an increase of just 20 billion barrels,
according to data from Rystad Energy.
The industry's average decline rate -- the speed at which output falls without field
maintenance or new drilling -- was 6.3% in 2016 and 5.7% last year, the Norway-based
consultancy said. In the four years before the crash, that decline rate was 3.9%.
Any shortfall in supply could push prices higher, similar to when oil hit nearly $150 a
barrel in 2008, some industry participants say. "The years of underinvestment are setting the scene for a supply crunch," said Virendra
Chauhan, an oil industry analyst at consultancy Energy Aspects. He believes a production
deficit could come as soon as the end of next year, potentially pushing oil above $100 a
barrel.
SNIP In parts of Brazil and Norway, decline rates are already above 10-15%, Energy Aspects' Mr.
Chauhan said. Output from Venezuela's aging fields fell by more than 700,000 barrels a day over
the past year, according to the IEA. In June, Angola's output hit a 12-year low, while Mexico's
production is down nearly 300,000 barrels a day since the middle of 2016, despite efforts to
open up the industry and reverse declines, the IEA said. "Nobody is really stepping in," said Doug King, chief investment officer of the $140 million
Merchant Commodity hedge fund. "People still got burned by the downturn."
Rystad has first half figures for discoveries a bit better than last year, though more on the
gas side than oil, but there was a billion barrel Equinor discovery in Brazil this week that
will make things look better. I thought things were worse, partly because I assumed the
Guyana discoveries would count as appraisals and be back dated against 2016 and 2017, but it
looks like they are new fields. Overall though it still shows a big drop over the past few
years.
A "remarkable" recovery from "abnormally" low levels – complete bollocks, and pretty
close to self-contadictory. Everything is, and always will be, awesome in the oilprice
universe, if not they'd lose their revenue stream.
In a press conference this morning, the Russian president said his country doesn't plan to
abandon holding reserves in U.S. dollars though he said that the risk of sanctions is prompting
Russia to diversify its foreign currency assets.
"Russia isn't abandoning the dollar,"
Putin said in answer to a question
about the sharp decline in its holdings of U.S. Treasuries in April and May.
"We need to minimize risks, we see what's happening with sanctions."
"As for our American partners and the restrictions they impose involving the dollar," he
added,
"I think that is a major strategic mistake because they're undermining confidence in
the dollar as a reserve currency."
Putin did however caution that the US is making a big mistake if it hopes to use the dollar as a
political weapon:
"
Regarding our American partners placing limitations, including those on dollar
transactions, I believe is a big strategic mistake
. By doing so, they are undermining
the trust in the dollar as a reserve currency"
In this vein, Putin added that many countries are discussing the creation of new reserve
currencies, noting that China's yuan is a potential reserve currency, but concluded:
"We will continue to use the US dollar unless the United States prevents us from
doing so."
The Russian president also emphasized the need for other currencies in global trade and the
emergence of new reserve currencies like the ruble.
Additionally, President Putin said he's ready to hold a new summit with U.S.
counterpart Donald Trump in either Moscow or Washington,
praising him for sticking to his
election promises to improve ties with Russia.
"One of President Trump's big pluses is that he strives to fulfill the promises he
made to voters, to the American people,"
Putin told a press conference at the BRICS
summit in Johannesburg.
"As a rule, after the elections some leaders tend to forget what they promised the
people but not Trump."
Putin, who said he expects to meet Trump on the sidelines of the G-20
The Anglo Zionist empire not only weaponizes the USD, but
also "democracy" and "human rights".
The golden days of the 1990s
where Uncle Scam could enjoy unrivalled power are gone. Like all
greedy full spectrum empires, abusing unipolar power with wild
abandon and arrogance is now starting to hurt.
Sandbox the Zionist infil
traitors
and take down
the tentacles of the Deep State, and let America join the global
polity of great nations in a new paradigm of peaceful coexistence,
rather than following the directives of that small, paranoid tribe
bent on full spectrum dominance.
One thing that makes me optimistic is that more people are
becoming aware and are questioning the apparatus and narratives of
the old world order. It was alot different 10 years ago, when I felt
like I was a very small minority with a multipolar view, drowned out
in a sea of denial.
Trump and his ZH crybabies
whine on about how "unfairly the rest of the world has been
treating the US" but they 'conveniently' forget that most of
today's problems (wars, financial instability, fiat
currency) originate from the US Reserve Currency Status and
the Breton Woods system which the US has been using UNFAIRLY
to it's advantage for Many DECADES in order to finance wars
and manipulate the price of commodities.
But that's too difficult to grasp for most Trumptards...
They're too busy screaming "sieg heil" for the Orange Jew!
*) They complain about foreign wars and the MIC,
yet vote for someone who promised to INCREASE the
Pentagon's already enormous budget
*) The complain about "the Jews," "Israhell," and
"the ZOG," and yet they vote for someone who is in bed
with Israel and Netanyahu and has a Jewish-American
lawyer who fucks him over
*) They complain about the "banksters," and yet
they vote for someone who makes a Deep State
Goldmanite (Mnuchin) his Treasure Secretary
*) They complain about The Deep State and The
Swamp, and they vote for someone who hires Pompeo,
Haspel and Bolton
*) They complain about the massive amounts of debt
and the fiat currency system, and yet they vote for
someone who calls himself "The King of Debt" and calls
for a massive increase in military spending
I guess now the ZH Trumptards only have one
'weapon' left: downvotes!
I'm not your classic fanboy of Trump, but he has to
work with those cretins somehow, and not turn into
a degenerate pedophile in the process. He was the
lesser of two evils presented in the 2 party
duopoly, sadly, that's what modern 'democracy' has
become; a Hobson's choice.
So far, he's doing
alright, given the circumstances, and everything
stacked against him.
"He was the lesser of two evils presented in
the 2 party duopoly,..."
I completely
agree with that assessment, but what I fail to
understand is how the supposedly "highly
educated readers of ZH," can be so fucking
stupid to blindly believe all the Trump
bullshit.
Being the lesser of two evils is still not
being very good I'm afraid, and being the lesser
of two evils means that he still kinda sucks.
That is what we're witnessing every day: a
stupid narcissistic idiot who can barely play
0,5D chess, let alone 4D chess...
The system that churns out leadership in
America is fundamentally flawed and corrupted
to the bone, yet once in a blue moon, an
"insider outsider" as I like to call them,
like Jackson, Kennedy and Trump, slips
through. And that's when decades happen in a
few years.
Who blindly believes bs? Trump is provably
the most honest politician since the
invention of recording devices. Just having
an uncontested birth certification and school
records is a big head start. Who do you think
would make your paycheck (subsidy?) go higher
than President Trump. Trump is threatening a
lot of people's sinecures and subsidies. Who
wants to guarantee more NPR wannabee hacks a
good paycheck?
What a lot of folks seeem to overlook is that
the lesser of two evils is still, wait for
it, ... evil. This is a highly subjective
measurement of course, the beauty of all that
evil being in the minds eye, of the beholder
..
What do we have ? IMO the jury is still
out on that one. I had hoped that President
Trump would talk straight to the American
people. Particularly in regards to the true
state of the overall economy. But those of us
who have tried to inform friends & family on
these subjects have run up against that solid
wall of denial. Most people don't want to
hear the truth. They fight against it with
everything they've got. Between the Deep
State attacking Trump to maintain their
privileges & power, and a dumbed down
population aggressively in denial - the
president has a Herculean challenge.
Fine, we are Trump fan boyz and Putin fan
boyz, and we'll believe whatever we choose to
believe, for our own reasons, and we don't
owe anyone a stinkin explanation why!
You
can open your eyes, and see why we support,
fight for, defend, and will keep fighting for
Trump! He's the Hope that we can Change the
vampirous system that's defenestrated
everyone playing by the rules!
He's a narcissistic idiot who can barely
play multidimensional chess? You don't say!
Anyhow, even if he were, and he isn't, he's
OUR narcissistic idiot who beat the living
daylights, out of the prissy, elitist,
wicked, and thieving a**holes arrayed against
him!
So how come your folks couldn't win
against a narcissistic idiot? Because your
folks are the narcissistic idiots, who can't
come to terms with the reality that Hope of
True Change is here, and embodied in Trumpus
Maximus Magnus!!
You don't like that he's a Maximux Magnus?
Fine, you can suck my pinkie!...
There is a clear battle going on and at 70+
years of age, I give President Trump a huge
helping of credit just to deal with it all,
without going insane in the process. One thing
though... He had better corral the
dirty-dealers around him, along with the
hag
and those involved from the previous
administration, or it will eventually overwhelm
him. Guaranteed.
Indeed, its a battle for the
soul
of America. The pedophiles, degenerates, Zionists, imperialists must not win. A purge is needed and coming. I hope he survives like Jackson, and doesn't go the way of Kennedy. In any case, he has a big following, but I fear a civil war type scenario is coming no matter what happens. The vitriol and partizanship is at toxic levels.
It's obvious that the NWO crowd weaponizes
populations. Obummer wanted his internal
force 'as well funded & equipped as the
military '. And, theyve been working hard
with their propaganda machine to overturn
the American people's 2nd Amendment.
This is likely one of the most delicate &
dangerous times in American history.
So let's see ... Hillary in conjunction with obama
demonized Iran and Russia (Crimea... have you
forgotten?) for years prior to trump ... overthrew
Libya and stirred the pot in Syria via proxies ...
and Bernie Sanders was against these wars AND
against unfettered globalization ... all part and
parcel of the neoconservative PNAC doctrine ....
but trump trying to implement peace and diplomacy
with Russia and North Korea is 'bad' ... but since
at the same time he increases the budget for the
MIC and he is 'bad' for doing so and he is pissing
off our so-called 'trade partners' as manufacturing
has essentially left the US ... so he is to pick a
fight with the MIC internally to the nation on top
of everything else including pissing of the
globalist cretins in our so called intelligence
(where are those WMDs) ... okie dokie ...
x
Ignored says:
07/27/2018 at 3:53 am Iran would not try to block anything unless it is under attack by the
US. The Pentagon is opposed to such an attack, but Trump is heavily influenced by Netanyahu and
is advised by the same neocons who got the US into the fiasco in Iraq. Given the inability of
the US Congress to enforce the constitution by denying the Prsident to start a war without a
congressional declaration of war, it seems the USA may be on its way to destroy the world
economy to please an extremist Israeli right wing government.
I write destroy the world economy because it's doubtful Iran would respond as anticipated by
the Americans, who have a tendency to fight wars with strategies based on previous wars and an
excess of complex gadgets and extremely expensive technology. I don't know what they have in
mind, but I'm sure it would be unexpected, calibrated to avoid nuclear retaliation, and may
evolve over time. But I'm sure others will see the risks, and the oil market will take off into
the $100's and possibly $200's unless there's adults left in the USA senate to block this
craziness.
Hightrekker x
Ignored says:
07/26/2018 at 9:51 am I agree– and with all those KSA installations just
15 minutes away by unstoppable missile technology (1970 midrange seems a little
hard for current technology), we have a quandary, not a problem.
Reply
Fernando Leanme
x Ignored says:
07/27/2018 at 3:57 am Exactly. But I'm not sure US National Security advisor
Bolton knows anything about low technology midrange missiles and drones, some of
which, in a pinch, can be piloted by small light weight kamikaze martyrs.
Eulenspiegel x
Ignored says:
07/26/2018 at 10:24 am The worst thing for a date to guess is politics.
There are 10 countries that have to grow oil production to avoid peak oil –
these with still big reserves.
One knocked out itself – Venezuela
One is under attack from the USA – Iran
Irak isn't that stable, either.
A hot war can break out every moment, or a civil war devasting and blocking
infrastructure for years, while other countries deplete.
Or peace can come and these ressources can get used.
These combined 10 mb/d alone will determine peak oil – by 5 years or more in
either direction. These 10 mb/day can't be replaced by russion oil tsars, US rednecks
with too much Wallstreet money or Saudis opening secret valves of instant oil wonder
production.
Venezuela can get a new government and increase production by a big amount, helped
by international money. It has the ressources to get one of the big producers when the
tar oil is lifted.
So in my eyes, it looks like somewhere between 2020 and 2030, perhaps even
later.
Couldn't agree with you more regarding OPEC reserve estimates, they are all full of
shit, and no one except a handful of people in those countries would know how much they
have left.
Solving this peak oil timing is more similar to a quantum mechanics problem rather
than a Newtonian mechanics one. It complexity, lack of transparency and political and
economic implication make it impossible to have a deterministic answer, its pure
probability, and also speculations.
Like you i think all these projections are wrong. Maybe we will extract a lot more
oil with newer technologies or new field discoveries and end up cooking the planet with
climate change, and we won't see a "peak oil" for 100s of years who knows.
TechGuy x
Ignored says:
07/26/2018 at 2:54 pm "The peak oil experts were dreadfully wrong with their HL 15
years ago, so what prevents their being just as wrong now? "
Why is Oil at $70/bbl? Back in 1999 its was about $10/bbl. If there no supply
constraints why did the price increase ~7 fold in less than 20 years? Also why the need
to to drill for Shale Oil (Source Rocks) & develop in Deep & ultradeep
water?
Conventional oil peaked in 2005, All the growth is coming from offshore & Shale.
New Oil discoveries have dropped off the cliff. We found almost nothing in 2017. Oil
Discoveries peaked in 1960s and been in permanent decline. Thus if we are discovery
less and less new oil fields every year, below the rate of consumption, Oil production
will have to fall to match discoveries at some point in the future.
Other clues:
1. Oil Majors perfer to drill on Wall street (aka using debt to fund stock buybacks)
instead of developing new fields for future production.
2. Shale Debt: Shale drilling never made a profit, except for using OPM (other People's
money) to fund CapEx\OpEx.
3. US invaded or targeted with Regime change in Middle East Oil producing nations. Only
Iran remains and you can already hear the War drumbeats for Iran.
Reply
Michael B x
Ignored says:
07/26/2018 at 3:31 pm Indeed, and thanks. Note that your answer has to do not
with HL but with obvious signs & symptoms. Believe me, I've been watching, too.
The uncertainty is killing me.
Fernando Leanmex
Ignored says:
07/27/2018 at 4:25 am Michael, I have never been a peak oiler. I come at this from
a different perspective: about 30 years ago I noticed exploration results were
decaying, and started working in areas which would allow producing oil and gas in the
far future from sources we weren't tapping much at the time.
I remember sitting in a meeting around 1990 and suggesting to managers in a
committee I was briefing that we needed to focus on locking up hydrocarbon molecules,
wherever they were, cut down exploration and use that money on technology and getting
access.
This is one reason why eventually I got involved in gas conversion to liquids, heavy
oil, and the former Soviet Union, which to us appeared like a happy hunting ground,
including its Arctic targets in the Barents, Kara, Yamal, etc. I also had colleagues
who went into deep water, EOR, North America Arctic, and of course the hydraulic
fracturing of vertical horizontal wells drilled in low perm formations.
So in my case I've been about 30 years now working on replacing conventional oil
barrels with more difficult barrels. And those difficult barrels require higher prices.
So the question is, what can poor countries afford?
Reply
Michael B x
Ignored says:
07/27/2018 at 5:13 am So, "not a peak oiler" means you think the fate of
conventional oil is not really all that important, and cost is the ultimate
arbiter, not the resource?
Reply
Fernando Leanme
x Ignored says:
07/27/2018 at 6:19 am Not a peak oiler means I don't use Hubbert
Linearization or similar techniques. In the past, my job has included the
estimate of resources (not reserves). The preferred technique was to estimate
technical reserves, meaning we supposedly didn't focus on economics. But I
couldn't have staff working out numbers doing endless iterations and model runs
for highly speculative cases, so I gave them the guidance to assume a really
high price, a higher OPEX and CAPEX environment, and prepare conceptual field
redevelopments and marginal field developments or targeting really low quality
reservoirs. We devoted about 5% of the time budget for this effort. And I told
head office I wasn't about to use more manpower working such hypothetical
figures, because we had to focus on reserve studies, and preparing projects to
move reserves along the reserve progression pathway so we could meet our
targets.
The fate of conventional oil is already written, in the sense that most of
the extra oil we get from conventional fields comes from redevelopments which
rely on higher prices, and EOR. The typical field with say 45% recovery factor
can be pounded hard to push it to say 55%, going above 55% gets mighty hard,
and pushing to 60% is nearly impossible. So there are limits, which involve the
huge amount of resources (cash, steel, chemicals, and people) we use up to get
those extra barrels.
One issue to consider is that these redevelopments which include EOR are not
contributing that much extra rate. They stop decline, get a slight bump, and
then yield a slower decline rate for 10-20 years. This means investments take
tine to payout and if the world is suffering from acute shortages they don't
help that much. The on,y fast reaction comes from fracturing "shales" and low
permeability sands, infills in newer fields, and workovers.
Reply
Michael B
x Ignored says:
07/27/2018 at 6:53 am Thanks. If you were doing this in the 90s, sounds
like you were "predicting" the future!
Reply
Hickory
x Ignored says:
07/27/2018 at 9:20 am Sure sounds like a long explanation for your
understanding of 'peak conventional oil'. Nothing to be ashamed of.
Reply
AdamB x
Ignored says:
07/26/2018 at 10:08 am With oil discoveries the last 3 years in the toilet due to lack
of capital investment and lack of major fields its just a matter of time mathematically. Be
thankful we still have time before peak production hits cause I don't think it will be fun
post peak. Hopefully still 5 years until its official maybe less When will Ghawar give up
the ghost .?
Reply
Dennis Coyne x
Ignored says:
07/26/2018 at 11:21 am Saudi Arabia may keep going for many years at 10 Mb/d,
probably until 2030, perhaps beyond.
Reply
AdamB x
Ignored says:
07/26/2018 at 12:02 pm One can hope .they can produce 10 Mb/d to infinity
according to their reserve numbers which never budge .I'd be curious what posters
think their reserves are. 175-225 GB?
Reply
Survivalist
x Ignored says:
07/26/2018 at 2:27 pm It'll be interesting to see how KSA shakes out when
oil consumption begins to zero in on oil production, and exports decrease..
ELM.
Dennis Coyne x
Ignored says:
07/26/2018 at 10:58 am Another consideration is discoveries and reserve appreciation.
Consider estimates of conventional C+C using Hubbert Linearization by Jean Laherrere which
have gradually increased from 1998 (1800 Gb) to 2016 (2500 Gb.) In addition, there is not
any particular reason that output would tend to follow a "Hubbert" type logistical
function.
Generally estimates based on Hubbert Linearization would be a minimum estimate in my
view.
In addition conventional oil Extraction rates (output divided by producing reserves) in
the World (5.6% in 2016) are far lower than the United States (14.8% in 2016, all C+C), so
there is the potential that with higher oil prices the average extraction rate for the
World may increase. The World conventional extraction rate was about 11.6% in 1979. A
gradually increasing rate of extraction might allow a plateau in output to be extended for
many years (to 2030 at least). Impossible to predict of course, the number of scenarios
that can be created is large.
One such scenario is presented below (peak in 2025 at 85.5 Mb/d of C+C or 4275
Mt/year).
The analysis using the logistic function does not account for this potential.
Dennis Coyne x
Ignored says:
07/26/2018 at 6:49 pm I disagree. Oil prices are more likely to increase than
to fall to $30/b and more of these companies are likely to be profitable as oil
prices rise, also 3 of the top companies are profitable, so a "well run" oil
company can indeed be profitable, those that are less well run will either change
the way they operate or they will go out of business. The better companies buy the
worthwhile assets on the cheap and life goes on.
It's called capitalism folks.
Also the DPR is not very good, I ignore that report and use EIA's tight oil
estimates (link below) and shaleprofile.com for good information.
GuyM
x Ignored says:
07/27/2018 at 9:12 am "Also the DPR is not very good", is an understatement.
I have never seen an analysis use so many different fruits to come up with
bananas expected.
Reply
Minqi Li x
Ignored says:
07/26/2018 at 3:55 pm I suppose by "decline rate" they are talking about the
"legacy decline"
Reply
Guym x
Ignored says:
07/26/2018 at 5:48 pm As an example, I will use approximate data from a fairly
good tier 2 well in the Eagle Ford. It starts off production at 33k the first
month, and drops rapidly after that to reach 8k by the final month. Let's say it
produces 175k the first year, which would be profitable at today's prices. The next
year it produces 55k, and the next year 36k. By the fourth year it is producing
less than 100 barrels a day, and by the sixth year it is questionable to keep up.
Little better than stripper status. Tier three stuff is much worse, it may reach
stripper status by the third year. Eventually, all will be tier two and three
status wells. That's the majority of reserves estimated. Estimating future
production from current production doesn't touch on reality. Eventually, to keep up
on initial production, you would have to drill twice as many wells. But, you won't
keep up with twice as many, because the decline rates will be higher. There is a
lot of difference between a 600k EUR well, and a 300k EUR, or a 150k EUR. 2042 for
US peak? Not hardly.
Reply
I agree, probably 2023 to 2025 will be the US peak, after that decline is
likely to be rapid because mostly tier 2 and tier 3 wells will be left, high
oil prices may make them profitable, but it will be impossible to keep up with
the decline rate of legacy wells after 2025 and US output will decline rapidly
(4 or 5% per year) after 2030.
Reply
TechGuy
x Ignored says:
07/26/2018 at 7:48 pm One snag: The Shale Debt starts coming due in
2019 and continues through to 2024. Shale drillers were successful since
the borrowed at rock bottom interest rates and investors practically fought
each other begging Shale drillers to take their money. Not so sure it will
work if interest rates are higher, and The Shale sweet spots aren't
endless.
Reply
Guym
x Ignored says:
07/26/2018 at 8:49 pm That might slow the start up, for sure. If
the price of oil gets high enough, that will barrier will be short
lived.
Reply
TechGuy
x Ignored says:
07/27/2018 at 2:43 pm As oil prices increase so does the costs.
It takes a lot of diesel to haul Water, Sand, and oil. Shale
drillers never really made a real profit, even when Oil was over
$100/bbl. One must consider the EROEI for Shale & rising
CapEx\OpEx as the cost of Oil rises.
Second, its likely that consumers cannot afford high oil prices.
As prices rise, Consumers will cut back and it will plunge the
global economy back into recession. Perhaps the Worlds Central
banks can coach something back into the global economy, but it
won't work over the long term.
FWIW: Some of the recent data is showing weakness in the global
economy: Housing sales are falling and prices in the hot regions
are flatlining. Trumps tariffs are also taking a toll as global
trade is falling. And there are cracks in the developing world
credit markets. We might see a stock market correction this fall,
which would likely see commodity prices fall (including Oil).
Reply
Hickory
x Ignored says:
07/27/2018 at 10:37 pm " consumers cannot afford high oil
prices. As prices rise, Consumers will cut back and it will
plunge the global economy back into recession."
Well, that likely depends on how fast and far the prices go.
Slow steady rise can be well tolerated pretty far. Energy is so
cheap for what you get, after all.
Many other countries have a much better GDP/unit energy
consumed than the USA, and with price pressure the USA could
get there too. I suspect we could shed 10-20% of our oil
consumption without big effect, particularly if we did it
slowly. For example, it wouldn't affect the GDP at all if we
slowed down to max 60 mph. Painless saving of energy, if you
choose good music.
It is the fast changes in price that really tend to hurt.
Reply
TechGuy
x Ignored says:
07/27/2018 at 11:45 pm "I suspect we could shed 10-20%
of our oil consumption without big effect, particularly if
we did it slowly."
It doesn't work that way. Consumers cut back on
spending, from eating out, going on vacations. They loss
confidence and delay major purchases like new cars, homes,
etc.
Most of the population commute to work well below 60
mph. Traffic usually limits speeds to 40 mph or less during
commuting hours.
To understand how high oil prices affect the economy
just research the events around 2007/2008. Schools &
business were planning to reduce work & school days to
3 or 4 days a week. Thieves were draining fuel from parked
trucks and cars. The higher oil prices caused food prices
to soar, which lead to the arab spring in Africa & the
middle east. Europe had frequent riots. Airlines &
shipping companies impose fuel surcharges. People homes had
utilities shutoff. since they could afford their energy
bills.
Funny how quickly people forget the aftermath of high
energy prices. Doesn't anyone read or study economics?
GoneFishing x
Ignored says:
07/26/2018 at 5:28 pm Nice report. Production decline is a short time away if we
don't keep drilling.
Speaking of legacy wells, the huge number of abandoned wells from the past is
leaving us a legacy of leakage. The even bigger number of recent wells will continue
that legacy.
Fernando Leanmex
Ignored says:
07/27/2018 at 4:33 am 150 year old wells in the eastern USA could indeed leak
methane. But I would not rely much on Arstechnica, it's a blog run by a guy with a
liberal arts degree very well crafted to be a cheering section for renewables. It
may even be subsidized by Yingli Green, a Chinese solar panel maker.
Reply
Fred Magyar
x Ignored says:
07/27/2018 at 6:57 am Are you seriously claiming that a peer reviewed
scientific paper, in the 'Proceedings of The National Academy of Sciences of
The United States of America' is somehow untrustworthy because it's conclusions
were mentioned by Ars Technica?!
Identification and characterization of high methane-emitting abandoned oil
and gas wells
Abstract Recent measurements of methane emissions from abandoned oil/gas wells show
that these wells can be a substantial source of methane to the atmosphere,
particularly from a small proportion of high-emitting wells. However,
identifying high emitters remains a challenge. We couple 163 well measurements
of methane flow rates; ethane, propane, and n-butane concentrations; isotopes
of methane; and noble gas concentrations from 88 wells in Pennsylvania with
synthesized data from historical documents, field investigations, and state
databases. Using our databases, we (i) improve estimates of the number of
abandoned wells in Pennsylvania; (ii) characterize key attributes that
accompany high emitters, including depth, type, plugging status, and coal area
designation; and (iii) estimate attribute-specific and overall methane
emissions from abandoned wells. High emitters are best predicted as unplugged
gas wells and plugged/vented gas wells in coal areas and appear to be unrelated
to the presence of underground natural gas storage areas or unconventional
oil/gas production. Repeat measurements over 2 years show that flow rates of
high emitters are sustained through time. Our attribute-based methane emission
data and our comprehensive estimate of 470,000–750,000 abandoned wells in
Pennsylvania result in estimated state-wide emissions of 0.04–0.07 Mt
(1012 g) CH4 per year. This estimate represents 5–8% of annual
anthropogenic methane emissions in Pennsylvania. Our methodology combining new
field measurements with data mining of previously unavailable well attributes
and numbers of wells can be used to improve methane emission estimates and
prioritize cost-effective mitigation strategies for Pennsylvania and
beyond.
Reply
Fernando Leanme
x Ignored says:
07/27/2018 at 8:33 am I am an academy member. I also know how to search
for methane leaks. And I'm aware the academy publishes papers which lack
the quality one would like to see. But if you want credibility, I would
skip Arstechnica and link directly to the paper.
The Arstechnica editor has an axe to grind, publishes a bunch of
garbage, therefore I never pay attention to it. Regarding the paper itself,
it's not representative of what goes on in say Texas. There are areas in
Texas (say Spindletop) where gas leaks should be present from the wells
drilled with cable tools in the old days. But a better sense for what goes
on now is gained from looking at wells drilled and abandoned in Texas and
Louisiana in the last 40 years.
Regarding Pennsylvania methane leaks, in the overall picture they are
meaningless. There are coal mining regions in India and China which can be
seen as very large hot spots from satellites.
Fred Magyar
x Ignored says:
07/27/2018 at 3:11 pm Hippity hoppity! Off to a tea party
with the Mad Hatter and Alice! As in A Large Ion Collider
Experiment at the LHC. Much more fun than dealing with the
crippled egos of idealogues.
Cheers!
Reply
If the wells are plugged, the concrete eventually fails (30 years) so we
have an ongoing source of methane that could last for centuries. Millions
of wells across the US, much more across the world.
And guess what, those ideas of storing CO2 underground, well now we have
millions of pathways for the CO2 to escape, so actual sites would be few
and far between.
The original Canadian study I read a few years ago has disappeared from
the internet. It showed the long term potential leakage of well systems.
Reply
Dave Kimblex
Ignored says:
07/26/2018 at 6:11 pm All this Hubbertian analysis is useful to set a ceiling on
production, but the world's economy runs on making a profit and so producers have a minimum
price they must receive, while the end consumers have a maximum price they can afford to
pay.
In mid-2008 the effect of a 72% price rise in 18 months caused a $1.75 trillion extra
cost on OECD oil imports and the world economy crashed. Recovery required the USG to
guarantee loans to frackers to get the production numbers up. I am not saying that they
won't try that again, but this can only go so far. Surely next time this happens, no one
will be able to avoid the obvious conclusion that there is no future profit in oil
production, and the oil industry will have its share prices downgraded, reducing the
collateral for loans, whereupon they will go out of business in a puff of smoke.
This will happen long before any URR impacts, so I wonder at how much this analysis is
worth.
Reply
Guym x
Ignored says:
07/26/2018 at 8:25 pm USG guaranteed loans to frackers???? Interest rates for
everyone was low then, but I don't remember reading about any guarantees. Drilling
horizontals is a little past SBA stuff.
Reply
George Kaplan x
Ignored says:
07/27/2018 at 1:56 am If the "oil industry" means the IOCs then they are a minor
player now. The NOCs dominate the reserves and production, of course they all seem to
be having money issues as well but maybe they manifest in a slightly different way
– i.e riots, uprisings and infrastructure collapse.
It's already noticeable that many of the big companies are switching to share buy
backs (Total, Shell, Anadarko) and less development spending even as the price has been
rising. The one which has switched the other way is ExxonMobil, and not
uncoincidentally it is the only one with really good recent discoveries. That straight
line H/L for the rest of the world is just the tail run out on existing discoveries,
most of which are also already developed and wouldn't be taken off line even with
bankruptcies for the operators. If only as chemical feedstock oil is way better in
almost every way than anything that could be made from water/CO2/renewable energy so if
civilisation lasts long enough most of it will be used.
Reply
George Kaplan x
Ignored says:
07/27/2018 at 1:44 am Forcing a logistic curve on some of those production histories
might give some big errors, though maybe they cancel out overall. Hubbert said himself that
H/L wouldn't work well on production that had been artificially constrained by a cartel
(e.g. OPEC for Saudi, Kuwait, UAE, Iran and Iraq) or environmental moratoria (e.g. some US
and Canada oil). For oil sands they tend to be built on 50 year project lives, with steady
production and a fast fall off rather than a traditional decline curve. About 50 mmbbls of
reserve is already tied into operating, steady production. Future developments will be
similarly constrained with the additional limit from environmental objectives to both the
extraction and pipelines. Logistics curves might still come close if the reserve estimates
are good, but that is also the biggest unknown as other comments have said.
Reply
Minqi Li x
Ignored says:
07/27/2018 at 2:54 pm Projections are not meant to be predictions. Even EIA or IEA
say that. But they are always useful to illustrate given certain assumptions, what will
or what are likely to happen.
That has been said, given our understanding of the inherent limitations of
projections/data, a careful and cautious application of these projections does provide
us some idea regarding the likely range of future development. For example, the
projection for the US oil used in this report is likely to be too optimistic especially
for years after 2025, as many have pointed out. That will reinforce the case for a
global peak oil before 2025
In addition to production, I think the consumption data in the report also provides
some interesting information. I wonder if someone cares to comment about that.
Reply
Guym x
Ignored says:
07/27/2018 at 7:37 pm Well, obviously consumption can't be over production for
any great amount, or we won't have inventory. Peak production precedes any mythical
peak demand. Consumption mostly follows production is my guess. At probably a much
higher price than today.
Reply
"Pioneer spent $818 million on capital expenditures (CapEx) for additions to oil and gas
properties (drilling and completion costs) during Q1 2018, brought on 63 horizontal wells
in the Permian, and only added 9,000 barrels per day of oil equivalent over the previous
quarter"
So it's round about 13 million $ per well, not 7 million.
Reply
Fernando Leanmex
Ignored says:
07/27/2018 at 8:38 am The number of wells brought on isn't proportional to wells
drilled. And the CAPEX isn't proportional to wells drilled. Therefore it's hard to
derive a per well cost from such figures.
Reply
GuyM x
Ignored says:
07/27/2018 at 9:06 am Yeah, there a lot of DUCs, and you have to consider that
Pioneer lays out some bucks for its gathering system and gas processing plant in the
Permian. Hard to isolate per well from total capex figures.
Reply
(Sale of oil) – well cost – variable cost per barrel = profit
does not work that good – there are lots of hidden costs even under CAPEX,
that are almost as high as completion costs when these 7 million$ / well are
right.
And I think these cost are not one time cost just only in this quarter –
there is alway a pipeline to build, a convertert to install, a gravel road to the
site to build and so on.
Reply
George Kaplan x
Ignored says:
07/27/2018 at 3:42 pm Rystad has first half figures for discoveries a bit better than
last year, though more on the gas side than oil, but there was a billion barrel Equinor
discovery in Brazil this week that will make things look better. I thought things were
worse, partly because I assumed the Guyana discoveries would count as appraisals and be
back dated against 2016 and 2017, but it looks like they are new fields. Overall though it
still shows a big drop over the past few years.
With over 3000 platforms, 25,000 miles of pipeline, all unsecure in the Gulf of Mexico,
they provide a lucrative target in any conflict with the US. Energy disruptions and
environmental calamities would reek havoc. Surely there is a plan to quickly secure the Gulf
from under/over/on the water threats? If not get at it.
More Oilprice.com industry pimping. The world uses 36 billion barrels (Gb) of crude per
year. Plus they are quoting boe, or barrels equivalent. Gas is not crude. The article should
read: "The world is still pumping 9 barrels for every 1 it finds". D day is not something the
industry doesn't wants advertised.
Look at the graph again. Draw a trend line from left to right across the peaks from 2014
til now. Is the line pointing up or down? That's peak oil.
So there's been an up tick this year. How much has been discovered. Ooooh, 4.5 billion
barrels. Sounds like a lot to you? What's the world consumption rate expressed in millions of
barrels per DAY? Don't know? It's around 90 million barrels per DAY. Look it up if you doubt
me. If you divide 4.5 billion by 90 million, you'll calculate how many DAYS it takes to
consume 4.5 billion barrels. To make it easier for you, just reduce the fraction by stroking
6 zeros off each number. That's 4,500/90. Not too hard. That's 50 DAYS of supply!!! OK, maybe
another 4.5 billion will be found in 2H2018. Oooooh, another 50 DAYS worth. We're
saved!!!
In the last paragraph, what's the Reserve Replacement Rate? 10% . That's not so good.
Also, a large portion of the newly discovered oil is offshore, in ultra deep reservoirs.
Do you think that might be more expensive to produce?
As for abiotic oil, as Laws of Physics pointed out, even if that desperate theory were
true -- which it isn't -- it's the rate of replacement that matters, and it's nowhere near 90
million barrels per day.
So, fore-warned is fore-armed, but if you'd rather bury your head in the sand that's your
prerogative.
US wants to leverage his dominance in Europe into gas market. That's can work as long as gas
is plentiful. As soon as it became a scarcity the situation will radically change.
This month, the Wall Street Journal
reported that U.S. President Donald Trump has been pressuring Germany to drop its support
for a major new Russian gas pipeline if Europe wants to avoid a trade war with Washington,
while a senior U.S. diplomat warned that the project could be hit with U.S. sanctions; Russian
President Vladimir Putin responded
defiantly . This development, sadly, fuels the further politicization of the European gas
market -- a space that, in many ways, has reflected the triumphs of a depoliticized, pro-market
technocracy, which has managed to stimulate competition and lower prices irrespective of
changing political trends. Just last year, Trump called on European countries to buy American
liquefied natural gas, or LNG, which, for now, remains more expensive than Russia's pipeline
gas. Certainly, the U.S. has much to gain on the global gas market, which has changed
drastically over the past decade, as America rapidly transformed from an importer to an
exporter. Europe's gas market, meanwhile, has much to gain from additional supply. But Trump's
approach, especially if the latest reports are true, both alienates Western European partners
and feeds into a sensationalist, simplistic portrayal of the new U.S. role's effect on Russia
-- as a zero-sum game, in which these new, plentiful U.S. gas supplies serve as an antidote to
Russia's "gas dominance" in Europe and hence to Moscow's political leverage.
In fact, even if Russia remains Europe's dominant gas supplier in the coming years -- as is
likely -- it now has to play by EU rules and vie hard for market share, ultimately benefiting
European consumers. America's gas boom has catalyzed this thriving competition, but an equally
important factor has been a massive, long-term investment in infrastructure and regulation by
Brussels. These EU efforts have done a great deal to weaken Moscow's geopolitical "gas power,"
which has never been uniform across the continent. Today, gas is a prized commodity but not a
major weapon in East-West relations: Russia's gas leverage cannot harm the West, and neither
does competition with U.S. gas pose a major threat to Russia as a state or, for now, to its gas
behemoth, Gazprom. Moreover, in the near to medium term, Russian and U.S. gas companies may
face many
challenges in common : Both will be competing against new, price-lowering producers and
grappling with ever "greener" regulations on the European market, while also trying to profit
from Asia's thirst for energy.
"... Crude price manipulation is important to maintain the (fraudulent) petrodollar system because the sheeple subconsciously measure inflation through the price of gasoline. The Oligarchy that owns The Fed will not give up the petrodollar system because it is their main weapon for global domination and control. Unprofitable shale companies will continue to be lent money ;) ..."
"... That's not what the article is saying. If we stopped drilling and fracking today, in one month's time, the production would decline by 500k bbl/day. To offset that, 500k bbl/day production from new wells needs to be brought online in a month, which is what they're doing. The problem is, the more production, the more they have to drill just to keep production flat. ..."
"... it really was by the end of aug the production will drop by 1/2 mbpd making 10.5 mbpd unless somewhere else they made up for that loss, and thats prolly not counting your ability to bring that new production to mkt, via VW bus? ..."
"... Shale production is used primarily as a diluent, and as a petro chemical feed stock. The majority of it is used by Canada and Mexico. ..."
"... The Eagle Ford shale play here at home went bust two years ago. It has never recovered and does not look like it ever will. Most of my family have to drive to Odessa for oil work. Now the greed over there is raping the workers with exorbitant rental rates. Those poor slobs can't get a break. Well most working folks just can't get a break period. ..."
While the U.S. reached a new record of 11 million barrels of oil production per day last week,
the top five shale oil fields also suffered the highest monthly decline rate ever. This is bad
news for the U.S. shale industry as it must produce more and more oil each month, to keep oil
production from falling.
According to the newest EIA Drilling Productivity Report, the top five U.S. Shale Oil
fields monthly oil decline rate is set to surpass a half million barrels per day in August.
Thus, the companies will have to produce at last 500,000 barrels of new oil next month just to keep
production flat.
Here are the individual shale oil field charts from the EIA's July Drilling Productivity Report:
The figures that are shown above the UP arrow denote the forecasted new production added next
month while the figures above the DOWN arrow provide the monthly legacy decline rate. For example,
the chart on the bottom right-hand side is for the Permian Region. The EIA forecasts that the
Permian will add 296,000 barrels per day (bpd) of new shale oil production in August, while the
existing wells in the field will decline by 223,000 bpd.
If we add up these top five shale oil fields monthly decline rate for August will be 503,000
bpd. Thus, the shale oil companies must produce at least 503,000 bpd of new oil supply next month
just to keep production from falling. And, we must remember, this decline rate will continue to
increase as shale oil production rises.
We can see this in the following chart below. Again, according to the EIA's figures,
the top five U.S. shale oil fields monthly legacy decline rate increased from 398,000 bpd in
January to 503,000 bpd for August
:
In just the first seven months of 2018, the total monthly decline rate from these top shale
fields increased by 26%. These massive decline rates are the very reason the shale oil and gas
companies are struggling to make money. A perfect example of this is PXD, Pioneer Resources.
Pioneer is the largest shale oil producer in the Permian. According to Pioneer's Q1 2018 Report:
Producing 260 thousand barrels oil equivalent per day (MBOEPD) in the Permian Basin,
an increase of 9 MBOEPD, or 3%, compared to the fourth quarter of 2017;
first quarter
Permian Basin production was at the top end of Pioneer's production guidance range of 252 MBOEPD
to 260 MBOEPD; as previously announced, freezing temperatures in early January resulted in
production losses of approximately 6 MBOEPD; Permian Basin oil production increased to 170
thousand barrels of oil per day (MBOPD);
63 horizontal wells were placed on production
.
Pioneer spent $818 million on capital expenditures (CapEx) for additions to oil and gas
properties (drilling and completion costs) during Q1 2018, brought on 63 horizontal wells in the
Permian, and only added 9,000 barrels per day of oil equivalent over the previous quarter.
So, how much Free Cash Flow did Pioneer make with oil prices at the highest level in almost four
years?? Well, you're not going to believe me... so here is Pioneer's Cash Flow Statement below:
Pioneer reported $554 million in cash from operations and spent $818 million drilling and
completing oil wells in the Permian and a few other locations. Thus, Pioneer's Free Cash Flow was
a negative $264 million. However, Pioneer spent an additional $51 million for additions to other
assets and other property and equipment shown right below the RED highlighted line for a total of
$869 million in total CapEx spending. Total net free cash flow for Pioneer is -$315 million if we
include the additional $51 million.
Therefore, the largest shale oil producer in the Permian spent $264 million more than they made
from operations drilling 63 new wells in the Permian and only added a net 9,000 barrels per day of
oil equivalent. Now, how economical is that???
How long can this insanity go on??
If we look at the Free Cash Flow for some of the top shale energy companies in Q1 2018, here is
the result:
Of the ten shale companies in the chart above (in order: Continental, EOG, Whiting, Concho,
Marathon, Oasis, Occidental, Hess, Apache & Pioneer), only three enjoyed positive free cash flow,
while seven suffered negative free cash flow losses.
The net result of the group was a
negative $455 million in free cash flow.
Even with higher oil prices, the U.S. shale energy companies are still struggling to make money.
So, the question remains. What happens to these shale oil companies when the oil price falls
back towards $30 when the stock market drops by 50+% over the next few years?? And how is the U.S.
Shale Energy Industry going to pay back the $250+ billion in debt??
Lastly, here is my recent video on the Shale Oil Ponzi Scheme if you haven't seen it yet:
Crude price manipulation is important to maintain the (fraudulent)
petrodollar system because the sheeple subconsciously measure inflation
through the price of gasoline. The Oligarchy that owns The Fed will not
give up the petrodollar system because it is their main weapon for global
domination and control. Unprofitable shale companies will continue to be
lent
money
;)
Let's do the math: US produced 11 million bbls a day recently, but
production is declining at a rate of 1/2 million bbls/day according to
the article. So that means US oil production will be zero bbl/day in
about 3 weeks.
That's not what the article is saying. If we stopped drilling and
fracking today, in one month's time, the production would decline by
500k bbl/day. To offset that, 500k bbl/day production from new wells
needs to be brought online in a month, which is what they're doing.
The problem is, the more production, the more they have to drill just
to keep production flat.
This is a well know item, horizontal fracking produces very well
for a couple years and then not so much. Also known that the US uses
17 to 19 (depending on who is telling) million barrels per day so the
US still imports a lot of crude per day. We use it like there is no
tomorrow and one day there won't be but I'm 85 so the three words
to tranquility applies. "Not my problem".
it really was by the end of aug the production will drop by 1/2 mbpd
making 10.5 mbpd unless somewhere else they made up for that loss,
and thats prolly not counting your ability to bring that new
production to mkt, via VW bus?
the yearly chart is very telling. we stayed in a $20-$40 range from the
70's to mid 2000's then bush drove the price up but we fell exactly when
obama won the election BUT UNDER OBAMA WE SETTLED INTO A RANGE OF
$40-$100....fucking double the old range.
The US has 1.7 million operating shale wells. Over the next five years 1.4
million of those wells will have to be replaced to keep production
constant. The decline rate for the average shale well is 89% over its first
five years. At an average replacement cost of $4.4 million per well the
total cost of replacing 1.4 million wells will be $6.2 trillion. The total
cost of all the petroleum products consumed by the US over the next five
years will approximately $2.5 trillion.
To keep the shale industry alive over the next five years it will cost
the US economy 2.5 times as much as it will spend on all the petroleum
products it will consume. Expect a massive dislocation in the petroleum
industry in the very near future!
http://www.thehillsgroup.org/
First... I don't trust Continental
Resources figures, but I can't get into that yet... long story.
Second, EOG is spending twice as much as most shale players on
CapEx per quarter and are making some free cash flow. However,
EOG also paid $97 million in dividends Q1 2018. So, if we
subtract out their dividend payouts, EOG only netted $14 million
after spending $1.4 billion in Capex during Q1 2018.
Lastly, Whiting's oil production is still less than what it was
in 2016. By cutting CapEx spending drastically, from $600 million
a quarter two years ago to only $178 million in Q1 2018, they can
make some free cash flow. But, by drastically cutting CapEx
spending, Whiting won't be able to increase production to pay back
the $2.8 billion in long-term debt that they owe.
And this is the same pattern for our govts.... spend more and
get less..... the result is inevitable, same with our pumped up
markets.... not if, but when.... and it looks to be soon...
Now, Trump wants the EU to buy this gas? It's obviously a very
short term deal, or he hasn't looked at the numbers at all...
which makes him perfect for his role in the 'out with the OWO,
in with the NWO'.
Ponzi scheme is the correct word for this shale industry,
same with all of our industries ,as empires all operate this
way... pushing off paying the bills till tomorrow, always a new
tomorrow... kick that can down the road... the states do it,
the fed govt does it... all those not making money do it... and
these are the opposite of startups.
Buying time. Short and sweet. The mere fact that they are so
actively "buying time" with these short-term policies is
proof that they are aware time is running out, which leaves
one to ponder just exactly "how much" time are they trying
to buy, and toward what end. Big plans are in the works I
suspect, and the end of "buying time" is rapidly
approaching.
For as long as there are enough natural resources left in the
world to be able to strip-mine at about exponentially increasing
rates, as enabled by making "money" out of nothing as debts in order
to "pay" for doing so, which is a debt slavery system based on the
public powers of governments used to back up legalized counterfeiting
by private banks, and the big corporations that grew up around those
big banks. The oil extraction corporations operate inside of that
overall context where everything they are able to do is based on the
degree to which the sources of their funding ultimately depend upon
being able to continue enforcing frauds.
It is too good a phrase to use to refer to those aspects of that
process as being "Ponzi Schemes," since deceived people voluntarily
participated in Ponzi's Scheme. The dominant Pyramid Schemes of
Globalized Neolithic Civilization are systems that offered people a
deal they could not refuse.
The history of oil can not be separated from the history of war.
Within the overall context that money is measurement backed by
murder, the funding of the oil industry developed as vicious feedback
loops due to be able to
enforce frauds
, despite that
about exponentially advancing technologies were enabling about
exponentially increasing fraudulence, with respect to the related
about exponentially increasing strip-mining.
"How long can this insanity go on?"
Probably for a relatively long time for those who are old and
rich, and positioned near the center, toward the top, of the Pyramid
Scheme of enforced frauds which achieve
symbolic robberies
for those people.
Shale oil extraction exemplifies DIMINISHING RETURNS, which
applies across everything else that Civilization is doing.
"It's amazing the amount of money that needs to be invested
just to replace production."
It is more
"amazing"
when one goes through the labyrinth of Money
As Debt, which is the MADNESS of
negative capital
,
which is able to be publicly presented as if that is still positive
capital. While it is abstractly obvious that murder systems are
manifestations of general energy systems, there is relatively little
public appreciation of those murder systems backing up the money
systems.
Around about the 15 minute mark in the video embedded in the
article above, some of the reasons for calling shale oil extraction a
"Ponzi Scheme" are outlined, including "Ponzi Stock Finance," which
are secondary mechanisms where the MAD Money As Debt travels from its
original source
ex nihilo
through other
investors, before going into the shale oil industry. The underlying
issues related to DIMINISHING RETURNS will manifest first and
foremost through the fundamentally fraudulent financial accounting
systems which almost totally dominant Globalized Neolithic
Civilization.
"How long can this insanity go on?"
Until those runaway debt insanities provoke sufficient runaway
death insanities to cause series of crazy collapses which result in
whatever systems of organized crime could continue to operate after
the consequences of DIMINISHING RETURNS have worked their way
through. Since it is barely possible to exaggerate the degree to
which
negative extraction
was presented as
if that was positive production, it is also barely possible to
exaggerate the degree of psychotic breakdowns that will manifest when
runaway enforced frauds finally have their about exponentially
increasing fraudulence go past their tipping points.
The USA became the most important component in Globalized
Neolithic Civilization. The USA has led the way into the development
of globalized monkey money frauds, backed by the threat of force from
apes with atomic bombs, whose lives still mostly became dependent
upon the chemical energy in petroleum resources. The USA, therefore,
also led the way to the development of shale oil extraction, while
that continued to be publicly presented as if that was production.
At the present time, and for the foreseeable finite future, it is
politically impossible for human beings living inside of the dominant
Civilization to better understand themselves as manifestations of
general energy systems. Instead, almost everyone who is adapted to
living inside that Civilization has developed ways to present what
they are actually doing in the most dishonest and absurdly backward
ways possible.
Extracting more and more expensive petroleum resources is merely
one of the leading symbols of what is happening everywhere else one
looks. That Civilization is almost totally based on being able to
back up legalized lies with legalized violence continues to be
socially successful to the degree that most people do not understand
that, because they have been conditioned to not want to understand
that being able to back up lies with violence never stops those lies
from still being fundamentally
false.
THAT
was the source of the
"insanity."
It is too optimistic to expect that will
not continue, despite series of collapses into crazy chaos, and the
related series of psychotic breakdowns. Whatever civilization
survives will continue to operate according to the principles and
methods of organized crime, which will continue to have the related
corollaries that the apparent successfulness of those organized
crimes will depend upon most people not wanting to understand what is
actually happening.
Theoretically, enough people "should" better understand themselves
as manifestations of energy systems, which would then include their
perceptions of the ways that they lived as
nested toroidal
vortices engaged in entropic pumping of environmental energy sources.
That is made even more theoretically imperative to the degree that
some people have better understood some energy systems.
However, throughout everything that operates through Pyramid
Schemes, for those continue requires that the pyramidion people do
everything they can to make sure that those lower down in those
Pyramid Schemes do not understand that those Pyramids are actually
NESTED TOROIDAL VORTICES. At the present time, and in the foreseeable
finite future, the dominant Civilization will continue intensifying
its paradoxical Grand Canyon Contradictions that physical science
makes prodigious progress in understanding some energy systems, while
political science makes no similar progress in understanding human
energy systems, except to the degree that human systems are thereby
enabled to become about exponentially more dishonest.
Fracking symbolizes advancing physical technologies, channeled
through financial systems which only "advance" by becoming about
exponentially more fraudulent. Since almost everything Civilization
is doing has become based on that exponentially increasing
fraudulence, which in turn is based on exponentially increasing
strip-mining, it is politically impossible for that Civilization to
stop that
"insanity"
other than by driving
itself some series of psychotic breakdowns.
That
"lousy shale oil economics will pull down the U.S
economy"
is only one of the more and more painfully
obviously tips of the immense icebergs of enforced frauds, whose own
exponentially increasing fraudulences are melting themselves. (In
that context it is old-fashioned nonsense that possessing precious
metals is a somewhat saner "solution" to the runaway criminal
"insanity"
of Civilization.)
"At an average replacement cost of $4.4 million per well the total cost
of replacing 1.4 million wells will be $6.2 trillion. "
I think your
math is way off, To To date, Shale spent about $500B to $750B drilling &
operating those 1.7M wells. That said, Shale drillers borrowed about
$400B, Its unlikely they'll find more Suckers^H^H^H^H investors to
borrow another $400B. Plus they are running out of sweet spots to drill
in Bakken & Eagle Ford. I believe currently the only remaining sweet
spot they can develop is the Permian Basin. Plus the debt coupon on the
borrowed money start coming due between 2019-2023 (They need to roll
that debt over).
Frackers are really dumb. They can't refracture the wells. As soon as their
wells run dry, it's game over. Financial guys are really smart. They make
pronouncements from their desk. They are never wrong.
I'm going back under my bed and work on my Zombie apocalypse cookbook. On
sale soon.
"Frackers are really dumb. They can't refracture the wells."
They can
re-frack their wells, but the yield is abysmally low; so it is rarely
attempted. Re-fracking produces very little additional oil. Most of what is
produced from refracking is gas, which is a low revenue product. It is, by
far, more cost effective to just drill a new well.
By our calculations the US is selling the oil it produces at 46% below its
full life cycle cost of production. The shale industry is apparently using
a business plan that was developed by an Ivy League business school MBA.
They got their degree in Advance Ponzi Schemes.
http://www.thehillsgroup.org/
My family owned some mineral interest in Blaine County, Oklahoma. It's one of
the hottest shale plays out there right now. A well was drilled and it came in
just gang busters. Within 3 months, the production had fallen by 86%. The well
results out of the gate were so good that the well was mentioned in an investor
presentation for a major oil company. I doubt anyone went back to inform the
investors of the results 90 days later.
That's Shale. If you're lucky you get initial high rates BUT IT WILL drop
in production like hell with time. It's all in the geology. Just look at
the perms and you will understand.
Any idiot can sell goods at half the price it costs them to produce. That
is shale.
Peak oil theory was proved to be correct. It referred to conventional oil.
At the time sour oil wasn't even used, now a majority of the world's oil
is sour. No enhanced oil recovery techniques were available, now every barrel is
geeked out. Water flooding failing Ghawar super giant oilfield, shows the
desperation to keep up oil production.
As far as I know, every Giant in the world (the less than 1% of total
fields that produce 60% of world production) is using some form of
tertiary extraction method to keep producing. Tertiary extraction
methods retrieve anywhere from 2 to 20% of OOIP (original oil in place).
6 to 7% is probably the average. Ghawar is using CO2 injection, in
junction with horizontal wells to extract the last 30 feet of its
original 350 foot oil seam. In other words Ghawar is over 90% depleted.
That was the main reason that the Saudi's $2 trillion IPO for Aramco
fell apart.
With the huge amount of capital outflow now leaving the EM
it seems likely that world demand will begin to decline at about the
same time production begins to decline. The EM constitutes 38% of world
GDP, and 47% of world trade. They also use a greater amount of oil per
GDP $ produced than does the DE. As they continue to fail, as we have
seen recently from Turkey to Venezuela, their petroleum usage will fall.
As Shale has a very limited shelf life (now needing $6.2 trillion over
the next five years to keep production even) the US will find itself in
the situation of having to deal with whipsawing oil markets. Its
precarious debt situation means that it is going to be a rough ride down
from here.
As far as I know no one has called a peak in shale production. As long as
the FED is giving them a $65/ barrel subsidy with ZIRP it is hard to do.
What we can say is that they are planning on taking the $6.2 trillion they
will need for new wells over the next 5 years out of your hide. Invest in
Neosporin, there is gong to be some chapped asses coming down the pike.
I for one want to thank you SOO. Your analysis is also spot on, and
along with your real world experience it reminds me of that ole
detective show Dragnet, "Just the facts Ma'm, just the facts".
Now if
there was an answer that we could all live with....
About what I'd expect. We are 2 years out from the bottom. Exploration and
drilling came to halt. Now that's starting to show up in the declines. It will
start to pick up now with higher prices. Pendulum swings both ways.
"What happens to these shale oil companies when the oil price falls back towards
$30..."
This is the part I don't get, unless you are making two separate
arguments.
Oil is a strategic resource
and as so is an issue of
national security.
They will produce at a loss until they're all dry, if
they have to. The financing will not stop. Same reasoning: Since Musk is
advancing the whole globalist agenda, I hesitate to short the hell out of Tesla.
The financing may just not ever stop. Can the same be said of the broader market?
They've been wiping out EM debt with jubilees; is that how they plan on printing
forever and fueling GDP with debt?
I would protest. They will produce at a fiat loss until dry (assuming fiat
is still accepted of course). The will not produce at an energy loss
though, less than 3 to 4 EROEI.
A Shale well, with an IP (initial production) of 450 b/d, reaches its
energy breakeven point at about 70,000 barrels, or about 10 months. After
that point they must be energy subsidized to keep producing; they go from
being an energy source to become an energy sink. A conventional well
remains an energy source until the WOR (water oil ratio) reaches 45:1, or a
97.8% water cut. At which point they become uneconomical to operate and are
shut in. Shale wells are only operational past their energy source/sink
point because energy is being input from other sources. Much of that comes
from conventional crude - but - the ERoEI of conventional is also falling.
The average conventional well will reach its energy breakeven point by
2030. In thermodynamics that is referred to as the "dead state".
Shale production is used primarily as a diluent, and as a petro chemical
feed stock. The majority of it is used by Canada and Mexico. The Canadians
need it to produce their tar sands oil, and Mexico uses it for their Mayan
Heavy. Both are important raw material sources for US oil refineries.
Even
though Shale is net energy neutral, or negative, and will never be
economical to produce, if the US wants to keep its primary suppliers of
crude in business it has to supply them with diluent. The FED has already
been subsidizing Shale through its ZIRP policy.
Over its full production
life cycle that has contributed about $65 a barrel. In the event that the
FED can no longer keep interest rates suppressed subsidizes will have to
come from some other source. Those may come through the refineries, or like
farmers they may be paid by the bushel. In any event those costs are going
to become extremely burdensome as these high decline rate wells need to be
replaced frequently. Shale will remain a massive, and growing expensive
until the economy has chugged to a halt, and it is no longer needed.
I'm telling you they're lying thru their teeth about oil. We are sucking the
planet dry faster than you can say, "Dry as a popcorn fart."
The powers that
be dont want you to know this because they dont want you to slow down because
they need your tax money to hold up the sick wobbling over weight monster they
created.
It's common knowledge, at least to anyone glancing at the industry, that shale
oil has a two-year boom/bust cycle.
But that oil was not supposed to
exist. Nor any of the last half century's production.
A year ago, there were articles predicting the shale-induced peak would be
2019. (But shale gas was going to be increasing for another couple of
decades.)
You expect profit margins to fall as you squeeze the last of the juice.
Not really sure what the news is, or at least why it is so remarkable.
Calling it a Ponzi scheme, come now.
The Eagle Ford shale play here at home went bust two years ago.
It has never
recovered and does not look like it ever will. Most of my family have to drive
to Odessa for oil work. Now the greed over there is raping the workers with
exorbitant rental rates.
Those poor slobs can't get a break.
Well most working folks just can't get a break period.
How cheap could Russia produce to compete with growing US LNG exports?
Gazprom needs price around 4 $ per mmbtu in Europe to be profitable. Today in Europe are close to 8 $. US LNG long term imho
need about 8 to 9 $ per mbbtu.
European
Union representatives told me that they would start buying soybeans from our great farmers immediately. Also, they will be buying
vast amounts of LNG!
The last five economic recessions all were preceded by a spike in crude oil prices. The
recent rise in the price of oil has raised the likelihood of a recession, according to market
forecasts. Oil gained more than 20 percent in the first half of 2018, and odds have been rising
that higher crude oil prices will spark the next economic downturn.
Rosneft's chief executive Igor Sechin expects Brent could reach US$80 a barrel by this
year's end, Interfax reports citing a TV interview of the oil tycoon.
The company's budget for the year is based on a much lower price, at
US$63 a barrel, Sechin added, so it's hardly a surprise the CEO is happy with where prices
are now.
"... "Our intelligence community" is one of those phrases that make my back teeth itch, because I hate to see "our" doing that much work (especially when I know how much work our's parent, "we," has to do.) ..."
"... On Friday, Michael McFaul, a former United States ambassador to Russia, wrote on Twitter: "I'm very impressed that Mueller was able to name the 12 GRU officers in the new indictment. Demonstrates the incredible capabilities of our intelligence community ." ..."
"... Almost one year ago, on January 28th, 2003, the President devoted one-third of his State of the Union address to what he described as "a serious and mounting threat to our country" posed by Iraq's possession of weapons of mass destruction. He spoke, in those famous 16 words, about efforts by Iraq to secure enriched uranium from Africa. He talked about aluminum tubes "suitable for nuclear weapons production." He described stockpiles of chemical and biological weapons and said, "we know that Iraq, in the late 1990s, had several mobile biological weapons labs." ..."
"... That "we know, we know from sources that a missile brigade outside Baghdad was dispersing rocket launchers and warheads containing biological warfare agent to various locations " That "there can be no doubt that Saddam Hussein has biological weapons and the capability to rapidly produce more, many more." Pictures of what he called "active chemical munitions bunkers" with "sure signs that the bunkers are storing chemical munitions." ..."
"... The WMDs episode led to the (bipartisan) Iraq War, the greatest strategic debacle in American history. The WMDs episode was marked by fake evidence (yellowcake; aluminum tubes), planted stories, gaslighting, and a consensus of elite opinion along the Acela Corridor, exactly as today. The intelligence community was wrong. The national security establishment was wrong. The press was wrong. The Congressional leadership was wrong. The President was wrong. Everybody was wrong (except for a few outliers who couldn't get jobs afterwards anyhow, exactly because they were right). And now, today, we are faced with the same demand that we believe what the intelligence community says, without question, and without evidence that the public can see and examine. The only difference is that this time, the stakes are greater: Rather than blowing a few trillion and slaughtering hundreds of thousands of faraway brown people, we're rushing toward a change in the Constitutional Order that in essence makes the intelligence community a fourth branch of the government. ..."
"Our intelligence community" is one of those phrases that make my back teeth itch, because I hate to see "our" doing that much
work (especially when I know how much work our's parent, "we," has to do.) So I thought I'd throw together some usage examples of
the term to see if I could find more significant readings than my own reaction, and then draw out some implications from that reading.
But first, let's look at how often that term is used, and where. We turn to
Google Trends
:
Some caveats: Google doesn't have enough data to track "our intelligence community," or so it says, so the search is for "intelligence
community" only.
Further, the search is for 2008 to the present, again because Google, or so it says, doesn't have enough data for
shorter time frames.[1] However, I think the chart shows that interest in the intelligence community is not general in time or space:
It spikes when there's gaslighting with reader interest in particular stories, and spikes along the Acela Corridor, in
Washington and New York. (We might also speculate,
based on HuffPost/YouGov
voter data , that interest in the today's stories about the intelligence is limited not only in space, and time, but in scope:
Primarily among liberal Democrats.[2]) With that, let's turn to our usage examples.
I used Google to find them, and of course Google
search is crapified and all but useless -- for example, it insists on returning examples of "intelligence community" along with "our
intelligence community" in normal search, even with when the search string is quoted -- but it is what it is; readers are invited
to supply their own examples.
On Friday, Michael McFaul, a former United States ambassador to Russia, wrote on Twitter: "I'm very impressed that Mueller
was able to name the 12 GRU officers in the new indictment. Demonstrates the incredible capabilities of our intelligence
community ."
No. Mueller provided no evidence and the case is unlikely to go to trial; the capability consists in the naming, not in the proof.
Verdict: Credulity .
The
intelligence community
determined
that the Kremlin intended to "denigrate" and "harm" Clinton, and "undermine public faith in the U.S. democratic
process" while helping Trump.
And the same claim, July 10, 2018, Washington Post:
The U.S. intelligence community has concluded that Russia interfered in the 2016 election to boost Trump's candidacy
No. If you click through, you'll find that this is the "17 agencies"/"high confidence" report, whose agencies and analysts were
hand-picked by Clapper; that's just not the "intelligence community" as a whole[3]; the Defense Intelligence Agency (DIA), was not
involved in the analysis, for example. (I don't see how it's normal that such an important topic not to be the subject of a Presidental
Finding, but perhaps people were in a rush.) Verdict; Misinformation .
FLAKE: We know the intelligence is right. We stand behind our intelligence community . We need to say
that in the Senate. Yes, it's symbolic, and symbolism is important.
And a similar formulation, July 22, 2018, Senator Marco Rubio (R),
CBS News
:
We need to move forward from that with good public policy and part of that is, I think, standing with our intelligence
community .
Posturing aside, to my sensibilities, it's pretty disturbing when "support the troops" bleeds over into "support the spies," and
when supporting the conclusions of an institution bleeds over into supporting the institution itself, as such. (The whole of the
Federalist Papers argues against the latter view:
"Ambition must be made to counteract ambition.") Verdict: Authoritarian followership .
WE UNIFY OUR INTELLIGENCE COMMUNITY TOWARD A STRONGER, SAFER NATION
No. The DNI mistakes the hope for the fact; were the intelligence community in fact
unified
, Clapper would not have hand-picked agencies for his report, and a Presidential Finding would have been made. (And given the
source, "our" is doing even more work there than it usual does; it reminds of liberal Democrats talking about "our Democracy." Whose,
exactly?) Verdict: Wishful thinking .
Example 5, July 16, 2018, John Sipher (interview),
PBS
:
I do think the intelligence community is quite resilient. They put their head down and they do their work, but they
take this very seriously. And they see the president as their primary customer and they will do almost anything to get the president
the information that he needs to do his job.
No. Quis custodiet ipsos custodes
-- "Who will guard the guards themselves?" -- was formulated by the Roman poet
Juvenal (d. 138AD) in the late first or early second century,
[checks calculator], about 1880 years ago. It's absurd to assume that "the intelligence" community has always served its "primary
customer" -- see the Bay of Pigs invastion at "
groupthink " -- or that they will
in the future, especially considering the enormous stakes involved today. Verdict: Historical ignorance .
Today I voted for H.R. 6237, the Matthew Young Pollard Intelligence Authorization Act for Fiscal Years 2018 and 2019. This
important legislation funds our Intelligence community and provides them the resources they need to effectively defend
our nation "This legislation makes sure that the dedicated men and women who serve our nation in the Intelligence Community [caps
in the original] are fully equipped to fulfill their mission."
No. While Sipher urges (
as does Clapper
) that the intelligence community is in the business of serving customers, Comstock, through her language ("dedicated
men and women who serve our nation") identifies it with the military. That's pretty disturbing when you realize that the intelligence
community has a domestic component (and when you think back to Obama's 17-city crackdown on Occupy, or Obama's militarized response
to #BlackLivesMatter). Verdict: Militarization
Director of National Intelligence Dan Coats, head of the U.S. intelligence community , reaffirmed his conclusion
that Russia had indeed tried to sway the election in a statement published after Trump's remarks.
No. The U.S. has 17 intelligence agencies; the DNI is in no sense their head.
From the DNI site :
The core mission of the ODNI is to lead the IC in intelligence integration, forging a community that delivers the most insightful
intelligence possible. That means effectively operating as one team: synchronizing collection, analysis and counterintelligence
so that they are fused. This integration is the key to ensuring national policymakers receive timely and accurate analysis from
the IC to make educated decisions.
If you boil that bureucratic porridge down -- the Russian word for porridge is
kasha , in case kompromat has
worn thin for you -- you'll see that the 17 intelligence agencies do not have a reporting relationship to the DNI. Hence, the DNI
is not their head. QED. Verdict: Authoritarian followership
[BRENNAN:] What Mr. Trump did (Monday) was to betray the women and men of the FBI, the CIA and NSA and others and betray the
American public. That's why I use the term, this was nothing short of treason, because it is a betrayal of the nation. He's giving
aid and comfort to the enemy.
(Leaving aside Brennan's broad definition of enemy -- apparently a sovereign state with interests different from our own, as opposed
to a nation against whom Congress has declared war -- note that Brennan treats the agencies as individual entities, not as "unified,"
presumably betraying DNI Coats). More:
BRENNAN:] I still shake my head trying to understand what was discussed during the two-hour one-on-one, what was discussed
between the two sides in their bilateral meeting. We only saw what Mr. Trump said during the press conference. I can't even imagine
what he said behind closed doors. I can't imagine what he said to Mr. Putin directly. I am very concerned about what type of impact
it might have on our intelligence community and on this country."
No. Note well: What (
torture
advocate ) Brennan says contradicts the other two models expressed in this aggregation. If the President is the customer, it's
not Brennan's concern what that customer does (any more than it's Best Buy's concern what I buy in Starbucks after I pick up my flat-screen
TV). And if the intelligence community is a branch of the military, it's not their concern what their Commander-in-Chief does; he'll
tell them what they need to know.) Seriously, why does the Praetorian Guard need to know what the emperor is doing. Now, one could
argue that Brennan's ambition is counteracting Trump's ambition; well and good, but then one needs to think through the consequences.
And if Brennan, et al., really believe that Trump committed treason, then they -- as the good patriots they presumably are -- need
to indicate a path to removing him. If that path does not include full disclosure of the evidence for whatever charges are to be
made, then the country will have to deal with the consequences -- which I'd speculate won't be pretty -- of
a change in the Constitutional order where the "intelligence community" can remove a President from office based on its own internal
consensus . Praetorian
Almost one year ago, on January 28th, 2003, the President devoted one-third of his State of the Union address to what he
described as "a serious and mounting threat to our country" posed by Iraq's possession of weapons of mass destruction. He spoke,
in those famous 16 words, about efforts by Iraq to secure enriched uranium from Africa. He talked about aluminum tubes "suitable
for nuclear weapons production." He described stockpiles of chemical and biological weapons and said, "we know that Iraq, in the
late 1990s, had several mobile biological weapons labs."
One week later, on February 5th, Secretary of State Colin Powell, with Director of Central Intelligence George Tenet sitting
behind his right shoulder, used charts and photographs to elaborate on the Administration's WMD case. "These are not assertions,"
Powell said, "these are facts corroborated by many sources." Among Powell's claims were:
That "we know, we know from sources that a missile brigade outside Baghdad was dispersing rocket launchers and warheads
containing biological warfare agent to various locations " That "there can be no doubt that Saddam Hussein has biological weapons
and the capability to rapidly produce more, many more." Pictures of what he called "active chemical munitions bunkers" with "sure
signs that the bunkers are storing chemical munitions."
Powell has subsequently said that he spent days personally assessing the intelligence. He included only information he felt
was fully supported by the analysis. Hence, no mention of enriched uranium from Africa, no claim that al Qaeda was involved in
9-11.
The effect was powerful. Veteran columnist for the Washington Post, Mary McGrory, known for liberal views and Kennedy connections,
wrote an op-ed the following day entitled "I Am Persuaded". Members of Congress, like me, believed the intelligence case. We voted
for the resolution on Iraq to urge U.N. action and to authorize military force only if diplomacy failed. We felt confident we
had made the wise choice.
But as the evidence pours in the Intelligence Committee's review of the pre-war intelligence; David Kay's interim report on
the failure to find WMD in Iraq; an impressive study by the Carnegie Endowment for International Peace; the President's Foreign
Intelligence Advisory Board's critique; thoughtful commentaries like that of Ken Pollack in this month's Atlantic Monthly; and
investigative reporting including a lengthy front page story by Barton Gellman of the Washington Post on January 7,
we are finding out that Powell and other policymakers were wrong, British intelligence was wrong, and those of us who
believed the intelligence were wrong . Indeed, I doubt there would be discussions of David Kay's possible departure if the
Iraq Survey Group were on the verge of uncovering large stockpiles of weapons or an advanced nuclear weapons program.
But if 9/11 was a failure to connect the dots, it appears that the Intelligence Community, in the case of Iraq's WMD,
connected the dots to the wrong conclusions . If our intelligence products had been better, I believe many policymakers,
including me, would have had a far clearer picture of the sketchiness of our sources on Iraq's WMD programs, and our lack of certainty
about Iraq's chemical, biological and nuclear capabilities.
Let me add that policymakers -- including members of Congress -- have a duty to ask tough questions, to probe the information
being presented to them. We also have a duty to portray that information publicly as accurately as we can.
The WMDs episode led to the (bipartisan) Iraq War, the greatest strategic debacle in American history. The WMDs episode was marked
by fake evidence (yellowcake; aluminum tubes), planted stories, gaslighting, and a consensus of elite opinion along the Acela Corridor,
exactly as today. The intelligence community was wrong. The national security establishment was wrong. The press was wrong. The Congressional
leadership was wrong. The President was wrong. Everybody was wrong (except for a few outliers who couldn't get jobs afterwards anyhow,
exactly because they were right). And now, today, we are faced with the same demand that we believe what the intelligence community
says, without question, and without evidence that the public can see and examine. The only difference is that this time, the stakes
are greater: Rather than blowing a few trillion and slaughtering hundreds of thousands of faraway brown people, we're rushing toward
a change in the Constitutional Order that in essence makes the intelligence community a fourth branch of the government.
Why are we doing that? Well, if you look at the verdicts after each of the quotes I've found, taking the quotes as a proxy for
elite opinion, one reason might be that the portion of our elites involved in the Russia narrative -- who, let us remember, are limited
in space and scope -- are:
Credulous Misinformed Prone to authoritarian followership Historically ignorant Militarized Praetorian
If power is lying in the street, beware of who picks it up. Matters might not improve.
NOTES .
[1] The hit count (100 for the spike in January 2017) is oddly low; sadly, although 100 looks like a blue link, we cannot click
through to check the data. However, even if the aggregates are low, I think we can assume that both the shape of the trend line and
its geographic distribution are directionally correct, because the spikes occur at reasonable places for them to occur. Sidebar:
Note the horrid user interface design, which uses inordinate amounts of screen space to no purpose, disrespecting the time-pressed
professional user.
[2] We might even go so far as to speculate that -- given these limitations in space -- that while "our" asserts Democrat leadership
as a National party, Democrats are in fact a State party. Removing the hyphen from "nation-state" is a neat way
of encapsulating our current legitimacy crisis.
[3] "Intelligence community," like "deep state," connotes unity among institutions that are in fact riven by faction.
ADDENDUM: Scott Horton
I didn't add this material to the post proper, because I only had screen shots, and I wasn't able to find the post in time using
Google, or Facebook's lousy search. So after ten minutes of plowing through Facebook's infinite scroll, here is the embed* from Scott
Horton that I sought:
And a screen shot personally taken by me:
Note the lead: "European intelligence analysts ," so reminiscent of Bush's "British intelligence has learned " (the
sixteen words ). What they "learned," of course,
was the faked evidence on Niger yellowcake. Go through my list of "verdicts," starting with "credulous," and see what does
not
apply to Horton.
Horton is a Contributing Editor to Harper's Magazine,
has a law practice in New York, and is affiliate with Columbia Law School and the Open Society Institute.
The key point, for me, is this: "Liberal Democrats do not view anyone outside of places like Orange and Lexington County (whom
they go all-out to court) as people fit to make their own choices." It's important to watch for outright denial of agency,
to others, not merely lack of agency. That's true for Horton, it was true for Clinton's "deplorables" comment, and it was true for
Obama's "bitter"/"cling to" Kinseley gaffe.
It would be nice if Senator Sanders didn't signal boost this stuff. Here's another usage example of "intelligence community":
Or, to put this another way, Sanders needs to get his supporters' backs, and fast, with messaging that doesn't take a "duck and
cover" approach by repeating the catchphrases of the current onslaught, but contextualizes and decontaminates it. I didn't say that
would be easy
NOTE * I like the picture the Time chose very much; apparently, the evul left is young, female, swarthy, and/or black.
No suburban Republicans here! The "AbolishICE" t-shirt -- and not, say, #MedicareForAll -- is also a nice touch.
Some more smallish impacts here, but now, with no spare capacity and stocks heading down,
everything is likely to be proportionally more important than before: Hibernia (130 kbpd
Brent like oil) looks set for 40 day turn around in September; Cameroon is heading for civil
war, which could hit its production (70 kbpd) and Chad's exports (130 kbpd); Phoenix field
FPSO in GoM (30 kbpd) will be off station for two months in early 2019. And what's the
biggest news story that some of the trade mags. could come up with this week: a 4000 bpd well
(and I'd guess very short lived) started up a couple of months early in the GoM.
Of course they don't that's why the imaginary oil glut was thought up. Let everyone else
think its glut, it drops the price allows U.S. to buy more. Then deliberate increase
inventory by buying more then claim inventory as a reason to drop the price?
Then take oil from the SPR through its bidirectional pipelines, designed just for that
purpose and pretend it is production, then of course at some stage as I mentioned ages ago, a
fictional drawdown sale of millions of barrels of crude from the SPR would have to be made to
keep the books straight for oil that's already gone!
Add to that the Ponzi shale still churning out oil costing them $100 to produce for them
to sell at $50 then CEO's shouting from rooftops about how profitable it will all be....with
none of them making profits, most of them passing dividends over and selling assets and
borrowing more and more that they will never be able to pay back and where the Fed did
everything possible to fund the at ZIRP or NIRP but failed miserable.
Then of course we get the same old same old Saudi pretending to raise production when its
own wells are falling apart and declining rapidly most subject to water flooding, including
the Super Giant Ghawar field.
perated by high gasoline prices just ahead of the U.S. midterm elections, lawmakers in
Congress are trying to make it easier for the United States to sue OPEC. And unlike previous
failed efforts to go after the oil-exporting cartel, this time Congress will find a
sympathetic ear in the White House.
The bipartisan No Oil Producing and Exporting Cartels Act, or NOPEC bill, would tweak U.S.
antitrust law to explicitly ban just the kind of collusive behavior that OPEC was created to
engage in. The bill, a carbon copy of previous legislation, makes illegal any activity to
restrain the production of oil or gas or set oil and gas prices and knocks away two legal
defenses that in the past have shielded OPEC from U.S. antitrust measures.
The international lawyers of Wall Street did not hide from each other their shared belief
that they understood better than Washington the requirements for running the world. As John
Foster Dulles wrote in the 1930s to a British colleague,
The word "cartel" has here assumed the stigma of a bogeyman which the politicians are
constantly attacking. The fact of the matter is that most of these politicians are highly
insular and nationalistic and because the political organization of the world has under such
influence been so backward, business people who have had to cope realistically with
international problems have had to find ways for getting through and around stupid political
barriers. 44
This same mentality also explains why Allen Dulles as an OSS officer in 1945 simply evaded
orders from Washington forbidding him to negotiate with SS General Karl Wolff about a
conditional surrender of German forces in Italy – an important breach of Roosevelt's
agreement with Stalin at Yalta for unconditional surrender, a breach that is regarded by many
as helping lead to the Cold War. 45 And it explains why Allen, as CIA Director in
1957, dealt summarily with Eisenhower's reluctance to authorize more than occasional U-2
overflights of the USSR, by secretly approving a plan with Britain's MI-6 whereby U-2 flights
could be authorized instead by the UK Prime Minister Macmillan. 46
This mentality exhibited itself in 1952, when Truman's Justice Department sought to break up
the cartel agreements whereby Standard Oil of New Jersey (now Exxon) and four other oil majors
controlled global oil distribution. (The other four were Standard Oil Company of New York,
Standard Oil of California or Socony, Gulf Oil, and Texaco; together with Royal Dutch Shell and
Anglo-Iranian, they comprised the so-called Seven Sisters of the cartel.) Faced with a
government order to hand over relevant documents, Exxon's lawyer Arthur Dean at Sullivan and
Cromwell, where Foster was senior partner, refused: "If it were not for the question of
national security, we would be perfectly willing to face either a criminal or a civil suit. But
this is the kind of information the Kremlin would love to get its hands on." 47
At this time the oil cartel was working closely with the British Anglo-Iranian Oil Company
(AIOC, later BP) to prevent AIOC's nationalization by Iran's Premier Mossadeq, by instituting,
in May 1951, a successful boycott of Iranian oil exports.
In May 1951 the AIOC secured the backing of the other oil majors, who had every interest
in discouraging nationalisation.... None of the large companies would touch Iranian oil;
despite one or two picturesque episodes the boycott held. 48
As a result Iranian oil production fell from 241 million barrels in 1950 to 10.6 million
barrels in 1952.
This was accomplished by denying Iran the ability to export its crude oil. At that time,
the Seven Sisters controlled almost 99% of the crude oil tankers in the world for such
export, and even more importantly, the markets to which it was going. 49
But Truman declined, despite a direct personal appeal from Churchill, to have the CIA
participate in efforts to overthrow Mossadeq, and instead dispatched Averell Harriman to Tehran
in a failed effort to negotiate a peaceful resolution of Mossadeq's differences with London.
50
All this changed with the election of Eisenhower in November 1952, followed by the
appointment of the Dulles brothers to be Secretary of State and head of CIA. The Justice
Department's criminal complaint against the oil cartel was swiftly replaced by a civil suit,
from which the oil cartel eventually emerged unscathed. 51
Eisenhower, an open friend of the oil industry changed the charges from criminal to civil
and transferred responsibility of the case from the Department of Justice to the Department
of State – the first time in history that an antitrust case was handed to State for
prosecution. Seeing as how the Secretary of State was John Foster Dulles and the defense
counsel for the oil cartel was Dulles' former law firm (Sullivan and Cromwell), the case was
soon as good as dead. 52
Thereafter
Cooperative control of the world market by the major oil companies remained in effect,
with varying degrees of success, until the oil embargo of 1973-74. That the cooperation was
more than tacit can be seen by the fact that antitrust regulations were specifically set
aside a number of times during the 1950-1973 period, allowing the major companies to
negotiate as a group with various Mideastern countries, and after its inception [in 1960],
with the Organization of Petroleum Exporting Countries or OPEC. 53
Also in November 1952 CIA officials began planning to involve CIA in the efforts of MI6 and
the oil companies in Iran 54 -- although its notorious Operation TP/AJAX to
overthrow Mossadeq was not finally approved by Eisenhower until July 22, 1953.
55
The events of 1953 strengthened the role of the oil cartel as a structural component of the
American deep state, drawing on its powerful connections to both Wall Street and the CIA.
56 (Another such component was the Arabian-American Oil Company or ARAMCO in Saudi
Arabia, which increased oil production in 1951-53 to offset the loss of oil from Iran. Until it
was fully nationalized in 1980, ARAMCO maintained undercover CIA personnel like William Eddy
among its top advisors.) 57 The five American oil majors in particular were also
strengthened by the success of AJAX, as Anglo-Iranian (renamed BP) was henceforth forced to
share 40 percent of the oil from its Iran refinery with them.
Nearly all recent accounts of Mossadeq's overthrow treat it as a covert intelligence
operation, with the oil cartel (when mentioned at all) playing a subservient role. However the
chronology, and above all the belated approval from Eisenhower, suggest that it was CIA that
came belatedly in 1953 to assist an earlier oil cartel operation, rather than vice versa. In
terms of the deep state, the oil cartel or deep state initiated in 1951 a process that the
American public state only authorized two years later. Yet the inevitable bias in academic or
archival historiography, working only with those primary sources that are publicly available,
is to think of the Mossadeq tragedy as simply a "CIA coup."
Major oil producers agreed Friday to a nominal increase in crude production of about 1
million barrels per day, a bid to put a damper on high oil prices. But in practice, major oil
exporters will likely only be able to add about half that total to global markets, because many
countries are already producing at capacity or face severe threats of supply disruption.
Oil markets weren't calmed by the agreement announced Friday by the Organization of the
Petroleum Exporting Countries after a contentious week of meetings. Crude prices in New York
rose more than 3 percent to almost $68 a barrel and rose about 2 percent in London to more than
$74 a barrel.
OPEC didn't agree to increase production as such. Rather the group, with the addition of
nonmember Russia, agreed to respect its existing program of restricting supplies. But since the
group had gone well overboard and trimmed output by almost 2 million barrels a day, due in
large part to a steep falloff in Venezuelan oil production, respecting the original target will
translate into more oil for the global market -- on paper, at least.
In practice, only Saudi Arabia and Russia have the capacity to add significant amounts of
crude in the next few months. That means Friday's agreement will end up adding about 600,000
barrels of oil a day to the global market.
The contentious meeting took place under the shadow of vituperation from U.S. President
Donald Trump, who worried that high oil and gasoline prices would be politically painful ahead
of midterm elections later this year. Even after the group's decision had been announced, Trump
was still tweeting hopefully about OPEC increasing production.
The trouble with all this analysis is that it disregards one thing ... thermonuclear
weapons. None of these countries, US, Russia, China is a danger to any of the others. A war
between any of them is inconceivable and barring some unforeseen breakthrough will remain
that way for centuries to come.
These 3 nations are continental in size. None of them can be 'strangled' by the others.
You might be thinking of energy, but along with ending war, nuclear technology makes that
irrelevant as well. Nuclear power (despite the idiocy you hear constantly from 'anti-nukes'),
means that every country can have virtually limitless energy. There is a lot of uranium
around, and used in advanced reactors it will last so far into the future, that it might as
well be forever. The only reason the fossil-fuel age has not ended, is inertia. We are at the
beginning of the uranium age.
And what this means is that if any of these huge countries wants to turn to isolation to
whatever degree, it really doesn't matter.
VK
I posted the sequence of events used to create the petro dollar back in the 2018-33
thread.
Will post them again here as this thread concerns Kissinger.
More specifics can be added to this planned sequence of events, this just the basics.
...........
In the late 1960s, US found oil at Prudhoe bay and by 1970 it was a proved crude oil
reserve.
Due to environmental and other legal challenges, construction of the pipeline was held up.
In late 1972 the US Secretary of the Interior declares the trans-Alaska pipeline to be in
the US national interest
1973-74. OPEC oil embargo due to US backing of Israel pushes oil prices up in an initial
rise.
1973 (OPEC oil embargo) The Trans-Alaska pipeline Authorization Act legislation is quickly
pushed through. Signed by Nixon on November 16 1973. This blocked all further challenges
allowing construction to begin. pdf
Late 1973 Nixon along with Saudi Arabia create the petro dollar beginning in 1974.
1979-80 the price of oil skyrockets due to the Iranian revolution. The US is now the
global economic hegemon as all countries now need US dollars to purchase oil.
I have read that Kissinger withheld information from both Nixon and Israel, but have not
followed that line of research.
Here is a piece from an official Kissinger biography. You can see here he was working both
sides.
https://history.state.gov/departmenthistory/people/kissinger-henry-a
Kissinger entered the State Department just two weeks before Egypt and Syria launched a
surprise attack on Israel. The October War of 1973 played a major role in shaping Kissinger's
tenure as Secretary. First, he worked to ensure Israel received an airlift of U.S. military
supplies. This airlift helped Israel turn the war in Israel's favor, and it also led members
of the Organization of Petroleum Exporting Countries (OPEC) to initiate an oil embargo
against the United States. After the implementation of a United Nation's sponsored ceasefire,
Kissinger began a series of "shuttle diplomacy" missions, in which he traveled between
various Middle East capitals to reach disengagement agreements between the enemy combatants.
These efforts produced an agreement in January 1974 between Egypt and Israel and in May 1974
between Syria and Israel. Additionally, Kissinger's efforts contributed to OPEC's decision to
lift the embargo.
It is noticeable that Trump's US attack any Syrian forces coming too close to US occupied
zones of al Tanf and Dier Ezzor. Also Trumps takeover of the Deir Ezzor oilfields where US
forces simply set up bases or forward posts in the ISIS occupied area.
Under Trump, US has set up a number of new bases in Syria. On the other hand, no concern
about Afrin and Manbij. The Deir Ezzor area is Arab tribes and this and al Hasakah
(Kurd/Arab?) is the top end of the Persian Gulf/Mesopotamia oil field.
US now controls al Hasakah and half of Deir Ezzor province. The have been ongoing efforts
by the US under Trump to take Al Bukamal. US has a base just south of Al Bukamal in Iraq. US
bases are now thick throughout Mesopotamia, with more being built.
Also a new base being installed in Kuwait.
The US controls the Arab shore of the Persian gulf, it now has many bases in Iraq and
Syria. The only thing missing is the oil rich strip of Iran running alongside the Persian
gulf and Mesopotamia.
"... How different is it really from the past 70+ years (since that 45' meeting between FDR and the then ruler of KSA), and especially since the "oil shocks" of the 1970's ? The Trumpians are little more direct and crude in their wording, but that is really the only difference I see. ..."
"... Putin's announcement after Turkey's shooting down of a Russian jet that Turkey has been systematically facilitating ISIS oil sales illustrates how the terror-entity has become a figleaf to justify military action. ..."
"... As INSURGEintelligence has previously reported, there is significant evidence that high-level elements of Turkish government and intelligence agencies have covertly sponsored Islamist terrorist groups in Syria, including ISIS, and that this has involved permitting black market oil sales. ..."
"... Why, however, did Vladimir Putin wait until the murder of a Russian pilot before announcing Russia's possession of intelligence on Turkish state-sponsorship of ISIS? ..."
"... There can be little doubt that Putin had previously been more interested in protecting Russian relations with Turkey as an emerging gas transshipment hub to Europe, under which he and Erdogan planned to build the multibillion Russia-Turkey gas pipeline, Turkish Stream -- now suspended after the recent diplomatic furore. ..."
"... It has become increasingly clear that the US-led coalition strategy is aimed primarily at containment of the group's territorial ambitions within Syria. ..."
"... In this context, as Russia and Iran consolidate their hold on Syria through the Assad regime -- staking the claim to Syria's untapped resources in the Mediterranean -- the acceleration of Western military action offers both a carrot and a stick: the carrot aims to threaten the Assad regime into a political accommodation that capitulates to Western regional energy designs; the stick aims to replace him with a more compliant entity comprised of rebel forces backed by Western allies, the Gulf states and Turkey, whilst containing the most virulent faction, ISIS. ..."
The Saudi's. Interesting watching them agree to whatever Trump wants. The most recent one was Trump telling them to raise oil
output. The Saudi's now are very pro zionist and will back them against the Sunni Palestinians no matter what. If Trumps tells
them to pay for a US war or occupation they pay. If they are told to by lots of useless junk from the US MIC, they buy it and
manage to pull a twisted smile when Trump turns the screws about billions being peanuts.
Seems very much like KSA is now an expendable asset for the US, and their only chance of survival is a lot of 'yes sir, how
high sir'.
How different is it really from the past 70+ years (since that 45' meeting between FDR and the then ruler of KSA), and
especially since the "oil shocks" of the 1970's ? The Trumpians are little more direct and crude in their wording, but that is
really the only difference I see.
Posted by: Peter L. | Jul 1, 2018 11:21:17 PM | 23
Look no further than the first sentence of the text you quote. It has been documented a few times, including in the Intercept,
that there were some very serious money flows towards a certain foundation run by the family of the named person. Money flows
that originated in the Gulf. Money flows that were related to what happened in Libia.
Putin's announcement after Turkey's shooting down of a Russian jet that Turkey has been systematically facilitating ISIS
oil sales illustrates how the terror-entity has become a figleaf to justify military action.
As INSURGEintelligence has previously reported, there is significant evidence that high-level elements of Turkish government
and intelligence agencies have covertly sponsored Islamist terrorist groups in Syria, including ISIS, and that this has involved
permitting black market oil sales.
Why, however, did Vladimir Putin wait until the murder of a Russian pilot before announcing Russia's possession of intelligence
on Turkish state-sponsorship of ISIS?
There can be little doubt that Putin had previously been more interested in protecting Russian relations with Turkey
as an emerging gas transshipment hub to Europe, under which he and Erdogan planned to build the multibillion Russia-Turkey
gas pipeline, Turkish Stream -- now suspended after the recent diplomatic furore.
US, British and French military operations have been similarly inconsistent, inexplicably failing to shut down ISIS supply
lines through Turkey, failing to bomb critical ISIS oil infrastructure including vast convoys of trucks transporting black
market oil, and refusing to arm the most effective and secular Kurdish ground forces combating ISIS.
It has become increasingly clear that the US-led coalition strategy is aimed primarily at containment of the group's
territorial ambitions within Syria.
....
As Russia expands its military presence in the region in the name of fighting ISIS, the US, Britain and France are now scrambling
to ensure they retain a military foothold in Syria -- an effort to position themselves to make the most of a post-conflict
environment. As the US Geological Survey Minerals Yearbook put it:
"Most of the international investors who pulled out of Syria following the deterioration of the safety and security situation
throughout the country are expected to remain so until the military and political conflicts are resolved."
In this context, as Russia and Iran consolidate their hold on Syria through the Assad regime -- staking the claim
to Syria's untapped resources in the Mediterranean -- the acceleration of Western military action offers both a carrot and
a stick: the carrot aims to threaten the Assad regime into a political accommodation that capitulates to Western regional energy
designs; the stick aims to replace him with a more compliant entity comprised of rebel forces backed by Western allies, the
Gulf states and Turkey, whilst containing the most virulent faction, ISIS.
Drop in the bucket to what is happening right now. US will be about 500k less than their
(IEA's) expectations into 2019 due to transportation constraints.
George thinks Venezuela
will approximate zero by 2019, as do others.
Give them the benefit of doubt and say a one
million decrease from 1.6 at the beginning of this year.
IEA is still using production vs
export capabilities, which has to change. Europe's refineries have largely stopped buying
Iran's oil, as has India. That's 1.1 million that has to be sold elsewhere, or not. On
shipping, insurance, and financing that is not affected by the restrictions. I count 2.6
million into 2019 that is not on IEA's plate.
Yeah, as said above, 2019 is going to be quite
interesting, most of which we will see the end of 2018. None of this takes into consideration
any increase in demand for 2019 that is over the US production projection for 2019 (.9). nor
any shortage carried over from 2018. Yeah, we should be hunky dory.
In the investment world, we will still be watching EIA weeklies, to determine what is
happening in the rest of the world for awhile. So increased cognitive function won't happen
soon.
"... "Conclusion. No matter what clever US energy independence calculations are out there, the fact remains that the US is physically dependent on around 8 mb/d of crude oil imports, 4.3 mb/d out of which come from countries where oil production has already peaked and/or where there are socio-economic or geopolitical problems. As of April 2018 US net crude imports were about 6 mb/d, far from oil independence." ..."
"... I note also that about 45% of USA imports come from Canada, as well depicted in in your Fig 1. Thus we are 'captives' of Canada (to use the terminology of trump), but don't seem to have much appreciation or respect for their position. ..."
US total (oil + products) inventories made a new low (from the high February 2017)
US ending stocks July 6th
Crude oil down -12.6 million barrels
Oil products down -0.7
Overall total, down -13.3 (shown on chart)
Natural Gas: Propane & NGPLs up +6.1 (not included in chart)
Chart: https://pbs.twimg.com/media/Dh1-upjXUBEOjvn.jpg
"Conclusion.
No matter what clever US energy independence calculations are out there, the fact remains
that the US is physically dependent on around 8 mb/d of crude oil imports, 4.3 mb/d out of
which come from countries where oil production has already peaked and/or where there are
socio-economic or geopolitical problems. As of April 2018 US net crude imports were about 6
mb/d, far from oil independence."
I note also that about 45% of USA imports come from Canada, as well depicted in in your
Fig 1. Thus we are 'captives' of Canada (to use the terminology of trump), but don't seem to
have much appreciation or respect for their position.
Hysteria is at fever pitch. After the NATO summit in Brussels, the definitive Decline of the West has been
declared a done deal as President Trump gets ready to meet President Putin in Helsinki.
It was Trump himself who
stipulated that he wants to talk to Putin behind closed doors, face-to-face, without any aides and, in theory,
spontaneously, after the preparatory meeting between Secretary of State Mike Pompeo and Russian Foreign Minister
Sergey Lavrov was canceled. The summit will take place at the early 19
th
century Presidential Palace in
Helsinki, a former residence of Russian emperors.
As a preamble to Helsinki, Trump's spectacular NATO blitzkrieg was a show for the ages; assorted "leaders" in
Brussels simply didn't know what hit them. Trump didn't even bother to arrive on time for morning sessions dealing
with the possible accession of Ukraine and Georgia. Diplomats confirmed to Asia Times that after Trump's stinging
"pay up or else" tirade, Ukraine and Georgia were asked to leave the room because what would be discussed was
strictly an internal NATO issue.
Previewing the summit, Eurocrats indulged in interminable carping about "illiberalism" taking over, from Viktor
Orban in Hungary to Sultan Erdogan in Turkey, as well as mourning the "destruction of European unity" (yes, it's
always Putin's fault). Trump though would have none of it. The US President conflates the EU with NATO,
interpreting the EU as a rival, just like China, but much weaker. As for the US "deal" with NATO, just like NAFTA,
that's a bad deal.
NATO is 'obsolete'
Trump is correct that without the US, NATO is "obsolete" – as in non-existent. So essentially what he did in
Brussels laid bare the case for NATO as a protection racket, with Washington fully entitled to up the stakes for
the "protection".
But "protection" against what?
Since the dismemberment of Yugoslavia, when NATO was repositioned in its new role as humanitarian imperialist
global Robocop, the alliance's record is absolutely dismal.
That features miserably losing an endless war in Afghanistan against a bunch of Pashtun warriors armed with
Kalashnikov replicas; turning functional Libya into a militia wasteland and headquarters for Europe-bound
refugees; and having the NATO-Gulf Cooperation Council lose its bet on a galaxy of jihadis and crypto-jihadis in
Syria spun as "moderate rebels".
NATO has launched a new training, non-combat mission in Iraq; 15 years after Shock and Awe, Sunnis, Shi'ites,
Yazidis and even Kurdish factions are not impressed.
Then there's the NATO Readiness Initiative; the capacity of deploying 30 battalions, 30 battleships and 30
aircraft squadrons within 30 days (or less) by 2020. If not to wreak selected havoc across the Global South, this
initiative is supposedly set up to deter "Russian aggression".
So after dabbling with the Global War on Terror, NATO is essentially back to the original "threat"; the
imminent Russian invasion of Western Europe – a ludicrous notion if there ever was one. The
final
statement
in Brussels spells it out, with special emphasis on item 6 and item 7.
The combined GDP of all NATO members is 12 times that of Russia. And NATO's defense spending is six times
larger than Russia's. Contrary to non-stop Polish and Baltic hysteria, Russia does not need to "invade" anything;
what worries the Kremlin, in the long term, is the well being of ethnic Russians living in former Soviet
republics.
Russia can't be both threat and an energy partner
Then there's Europe's energy policy – and that's a completely different story.
Trump has described the Nord Stream 2 pipeline as "inappropriate", but his claim that Germany gets 70% of its
energy (via natural gas imports) from Russia may be easily debunked. Germany gets at best 9% of its energy from
Russia. In terms of Germany's
sources
of energy
, only 20% is natural gas. And less than 40% of natural gas in Germany comes from Russia. Germany is
fast transitioning towards wind, solar, biomass and hydro energy, which made up 41% of the total in 2018. And the
target is 50% by 2030.
Yet Trump does have a sterling point when, stressing that "Germany is a rich country", he wants to know
why America should
"protect
you against Russia"
when energy deals are on the table. "Explain that! It can't be explained!" as he
reportedly said to Nato Secretary-general Jens Stoltenberg on Wednesday.
In the end, of course, it's all about business. What Trump is really aiming at is for Germany to import US
shale gas, three times more expensive than pipeline-delivered Russian gas.
The energy angle is directly linked to the never-ending 2% defense spending soap opera. Germany currently
spends 1.2% of GDP on NATO. by 2024, it's supposed to reach at best 1.5%. And that's it. The majority of German
voters, in fact, want US troops
out
.
So Trump's demand for 4% of GDP on defense spending for all NATO members will never fly. The sales pitch should
be seen for what it is: a tentative "invitation" for an increased EU and NATO shopping spree on US military
hardware.
In a nutshell, the key factor remains that Trump's Brussels blitzkrieg did make his case. Russia cannot be a
"threat" and a reliable energy partner at the same time. As much as NATO poodles may be terrified of "Russian
aggression", the facts spell out they won't put their money where their rhetorical hysteria is.
Foreign ministers attend a working dinner during the NATO Summit in Brussels on July 11, 2018. They gathered to
discuss Russia, Iraq and their mission in Afghanistan. Photo: AFP/ pool/ Yves Herman
Are you listening now?
"Russian aggression" should be one of the top items discussed in Helsinki. In the – remote – possibility that
Trump will strike a deal with Putin, NATO's absurd
raison d'etre
would be even more exposed.
That's not the US "deep-state" agenda, of course, thus the 24/7 demonization of the summit even before it
happens. Moreover, for Trump, the transactional gambling man's Make-America-Great-Again point of view, the ideal
outcome would always be to get even more European weapons deals for the US industrial-military-intelligence
complex.
Terrified by Trump, diplomats in Brussels over these past few days have conveyed to Asia Times fears about the
end of NATO, the end of the World Trade Organization, even the end of the EU. But the fact remains that Europe is
absolutely peripheral to the Big Picture.
In
Losing Military Supremacy
, his latest, groundbreaking book, crack Russian military-naval analyst
Andrei
Martyanov
deconstructs in detail how, "the United States faces two nuclear and industrial superpowers, one of
which fields a world-class armed forces. If the military-political, as opposed to merely economic, alliance
between Russia and China is ever formalized – this will spell the final doom for the United States as a global
power."
The US deep state (its influential bureaucrats) may be wallowing in perpetual denial, but Trump – after many a
closed-door meeting with Henry Kissinger – may have understood the suicidal "strategy" of Washington
simultaneously antagonizing Russia and China.
Putin's landmark
March
1 speech
, as Martyanov stresses, was an effort to "coerce America's elites, if not into peace, at least into
some form of sanity, given that they are currently completely detached from the geopolitical, military and
economic realities of the newly emerging power configurations of the world". These elites may not be listening,
but Trump seems to indicate he is.
As for the NATO poodles, all they can do is watch.
Putin/Russia is also the only entity that can prevent Trump's US from simply walking in and
taking over the rich energy hub (Mafia style) to the south of Eurasia.
Notable quotes:
"... Global Energy Dominance is now part of the US National security Strategy. Although not labeled as global, when reading through the energy dominance section of the NSS, it can clearly been seen to be global. This is not just about sell oil produced in the US. ..."
"... Trump is going for the Achilles heel of Eurasia - energy. Rather than a creative accounting scam that simply racks up huge amounts of debt, Trump is looking for a monopoly or near monopoly business to take over and rake in the profits. ..."
"... Russia supply energy to Eurasia from the North. The opening for the Trump mob is in the south. The meet with Putin may well be to sound out the possibilities of forming a cartel. ..."
"... Yes, it absolutely is. But this is not a new "Trump policy." Certainly Zbiginew Brzezenski laid this out quite clearly in his 1997 book, "The Grand Chessboard: American Primacy and Its Geostrategic Imperatives." It's really all in there, just as you're now identifying. If you can't take the time to read it, please consider at least reading some book reviews. As I've noted before, Ziggy apparently didn't foresee Putin rising to power and restoring the Russian state, which threw the proverbial monkey wrench into the globalists' plans, but really, US foreign policy has continued to follow his plans otherwise. ..."
The latest article at the Saker site by Rostislav Ishchenko - Trump's Geopolitical Cruise
- I think is the best take on Trump's and his backers mindset. Worth a read and covers what I
think was the cause of the split in the US elite.
The petro dollar, kicking off in the late 70s was a piece of creative accounting to give
unlimited credit. This should have been ended with the collapse of the Soviet Union, but
greed got the better of most. Trump and the people backing him could see that this was now in
its terminal stages and US close to collapse itself.
Rostislav Ishchenko, like many thinks that Trump is pulling the US back to a form of
isolation from the world, but I don't think this is the case.
Global Energy Dominance is now part of the US National security Strategy. Although not
labeled as global, when reading through the energy dominance section of the NSS, it can
clearly been seen to be global. This is not just about sell oil produced in the US.
Trump is going for the Achilles heel of Eurasia - energy. Rather than a creative accounting scam that simply racks up huge amounts of debt, Trump is
looking for a monopoly or near monopoly business to take over and rake in the profits.
Russia supply energy to Eurasia from the North. The opening for the Trump mob is in the
south. The meet with Putin may well be to sound out the possibilities of forming a cartel.
Putin/Russia is also the only entity that can prevent Trump's US from simply walking in
and taking over the rich energy hub (Mafia style) to the south of Eurasia.
"Global Energy Dominance is now part of the US National security Strategy."
Yes, it absolutely is. But this is not a new "Trump policy." Certainly Zbiginew Brzezenski
laid this out quite clearly in his 1997 book, "The Grand Chessboard: American Primacy and Its
Geostrategic Imperatives." It's really all in there, just as you're now identifying. If you
can't take the time to read it, please consider at least reading some book reviews. As I've
noted before, Ziggy apparently didn't foresee Putin rising to power and restoring the Russian
state, which threw the proverbial monkey wrench into the globalists' plans, but really, US
foreign policy has continued to follow his plans otherwise.
Kissinger has written much the same, though I don't recall in which books/articles. This
page from the US Navy seems a fine reading list, designed as it appears to indoctrinate
officers in AZ Empire geopolitics.
IMO, the US took the lead in the Empire's Global Energy Dominance quest when FDR met with
King Saud on Great Bitter Lake in the Suez Canal in 1945 (swinging by after the final
post-war world planning meeting with Churchill and Stalin at Yalta). This was when the US
largely replaced Great Britain in primacy over Asian/Middle Eastern energy dominance.
The US is in the Persian Gulf to stay. Trumps face face meet with Putin will be so Trump
can try and gauge what Putin will do - if he will run any blocking moves, his reaction to a
fait accompli ect. Most likely a few more face to face meetings before any move on Iran.
Peter, thanks for pointing out the new and unwanted US base in Iraq. I just read that the US
was building the world's largest Embassy Compound in "Iraqi Kurdistan." I wonder it they're
the same thing?
In a quick web search, failing to find an answer, I noticed that besides the "Green Zone"
compound we built in Baghdad at the start of the current military occupation, the record
holder was the US Embassy Compound in Pakistan.
James and I have discoursed here a bit on the history of US military occupations since WW
II. Boils down to the US has never removed its military from any country it's occupied with
the exception of Vietnam.
veritas semper vincit @103 linked blogpost notes that the US has 40,000 troops still
occupying Germany. His (I presume) post is quite entertaining considering the severe
seriousness of the topic.
Dis is a nice little country ya gotz heyah. Id be a shame if sumpin' bad was ta happen to
it.
MOSCOW (Reuters) - Russian Energy Minister Alexander Novak said on Friday that a deal under which
Russia would provide goods to Iran in exchange for oil is still possible.
Russia is studying all legal issues related to the possible deal, he said.
We expect continued price fluctuations within a wide $50-80/barrel range, with the strip
gravitating lower over the medium-term and a wider Brent/WTI crude differential," JPM
writes.
Looks like OPEC 14 peaked two years. Can they beat it?, perhaps by a small amount in a world
without chaos.
Today orange fatty called out Germany for being captive to Russia. I'm pretty sure he was
referring to German dependence on imported fossil energy from Russia.
As of 2015 Germany net energy imports are 64% of total [USA 12% for comparison]. If this
means 'captive', then perhaps we should acknowledge that 11 of our top 13 trading partners
are highly dependent on imported energy from either Russia or the big OPEC producers.
'Captives' so to speak. Better get used to that idea, and learn how to get along with
others. Only Canada and Mexico aren't 'captives', but we don't look to good at being friends
with them either.
The completed around 95 according to my data. The is lag in the data on confidential wells
that will show up next month in the final data. Also if the Bakken was to get and hold 1.4
million barrels a day the would need to complete around 1500 wells per year.
I managed to erase my own comment on this. And my comment was simple, the only true
measurement of market balance for oil going forward is global inventory level. Everything
else is perhaps manipulation or guesses.
I agree, with all the intentional and unintentional confusion it stays confused. I stay
confused trying to figure out what is confused. Inventory levels will be the only clear
measure of what is happening. US inventories should not be dropping fast, as we are about the
only country with increased production, but we dropped over 30 million last month. That's
really not small potatoes, as commercial stocks are just a little over 400 million. Though, I
think the US will be one of the last that would hit the danger zone.
Good point. My intention was not to give more confusion. These are forecasts from eia and, I
always like to remind this, they forecasted Brent averaging 105$ for 2015 in the STEO of
October 2014. They never forecast big surplus or deficit.
I messed with the numbers of the STEO from 2018 to guess when the are reliable. Inventory
levels are accurate for the US from the monthly report, which is 3 months old (april for July
STEO). Other inventory levels are less accurate, but stock changes are reliable from 4-5
month data.
Global inventories increased in April (0.74 Mb/d) and May (1.14 Mb/d). This would be quite
a change, as April would be a record inventory build since January 2017, and it would be
followed by another record. This have to be confirmed later.
So, now I know what I will look for in these STEO.
How does this fit with production and consumption?
I thought we have still increasing consumption of about 1.5 mb/year, and production in
April/May didn't jumped thad much – Opec flat and Permian already near it's pipeline
bottleneck.
As much as I know, many storages are unknown, especially Opec / China. There are these
satellite measurements, but there are additional deep storages.
Gathering all comsumption / raffinery input / production data would give an additional
picture. Still not easy.
With 1mb/day surplus we should go soon into the next oil price crash to 30-40.
Even if we haven't hit peak yet, the fact that production is likely to be going up by a
snail's pace the next 3 years is a problem. If consumption just goes up 0.75% a year we need
600K extra a year. That seems like a big challenge to a layman like myself.
Well what will happen is that the price of oil will hit $150-$200 a barrel to ration demand.
Which will cause much pain and ruction and gnashing of teeth among the voters, but Europe
has had those oil equivalent prices owing to taxation for quite some time and they manage
high living standards. $200/bbl probably destroys 10 million a day in superfluous 'Becky
driving by herself to the mall in a 3 ton SUV for no reason' kind of demand and incentivizes
quite a bit of production.
The transition period will be moody for sure, but at $200/bbl, the amount of economic EOR
targets in the US is somewhere in excess of 70 BBO from old conventional fields from the
industry reports I have seen – its just not economic to do since there isn't enough CO2
available to flood them, so you need to use more expensive techniques which require very high
prices (ethane flooding might be useful????). Worldwide its hundreds of billions. High prices
that encourage us to use the resource wisely and not waste the goddamn stuff liberally would
be a godsend, if we could quit wasting gigatons of plastic bullshit and 40% of our food
– i.e. if everything made from oil was more expensive as well.
It would be painful economically, but Mad Max isn't coming our way. After 5 years of pain,
we might actually finally get our shit together and research some goddamn alternatives.
I believe sugar cane ethanol is very competitive at $120 per barrel. This allows converting
grass cattle grazing ground to cane. I believe soy and palm will also become very attractive
crops. And I suspect countries like Haiti and Nicaragua will continue having riots.
Yes, I believe you are right. The future energy picture is complex, but authors writing books
about this say sugar cane ethanol could have EROEI (energy return on energy invested) of up
to 4. Even based on mechanised agriculture. And the big advantage of this crop is that it is
not very nitrogen intensive, the biggest fertilizer, currently energy intensive when it comes
to natural gas usage. Even when it comes to preindustrial crop rotation, the nitrogen
intensive main food crops were often rotated with legume crops which were not nitrogen
intesive in the hope to rebuild nitrogen content in the earth. So very long term, sugar cane
ethanol is a superb type of renewable energy. (that is what I read, no expert).
Brazil has the biggest potential out there when it comes to size, and it is not
inconceivable that they can cover much of domestic fuel demand with this outside aviation and
possibly shipping (no need for diesel and gasoline ;-)). It would be in competition with food
crops and concerns about deforestation, but still; a big potential there. Brazil is well off
in a more renewable future btw, having loads of hydro power, wind power, in addition to
biomass power (sugar cane the most promising).
"[Exxon's] approach is a gamble in a new era of energy breakthroughs such
as fracking and electric vehicles. Many of Exxon's competi-tors are
transforming their businesses to move away from oil exploration, and
have begun to spend carefully and diversify into renewable
energy ."
"'Most investors like Exxon, but they like other companies better,'
said Mark Stoeckle, chief executive of Adams Funds, which owns about $100
million in Exxon shares. 'The market is not willing to reward Exxon for
spending today in hopes that it will bring good returns
tomorrow.'
"Exxon has been pledging to produce more oil and gas for years, but its
output of about four million barrels a day is no higher today than it was
after its merger with Mobil Corp. in 1999. Even if Exxon succeeds in
doubling last year's earnings of $15 billion (excluding
impairments and tax reform impacts) by 2025, as Mr. Woods vowed in his
eight-year spending plan, it would still be making far less than in 2008, when it
set what was then a record for annual profits by an American
corporation, at $45 billion .
"Exxon's fracking prospects in the Permian basin in West Texas and New
Mexico, developed by its XTO unit, remain among its most profitable
opportunities, the company says. Still, its U.S. drilling
business has lost money in 11 of the last 15 quarters."
"... If the EIA is intentionally misrepresenting available supply, do they know better and are just trying to postpone some sort of economic panic? ..."
I did a more thorough analysis of the STEO using their excel tables. Just comparing dec 18
production with dec 19 production. I just corrected some inconsistency with UK data, as dec19
had a drop of 300kb/d.
non-OPEC 2018 increase: 2.8 Mb/d
US increase: 2 Mb/d,
of which 1.4Mb/d of crude, 0.6Mb/d of NGL. Offshore increase of 400kb/d (to 1.89 Mb/d).
Onshore increase of 1Mb/d.
Canada increase: 130 kb/d
Brazil increase: 176 kb/d
Russia increase: 211kb/d
So, indeed EIA doesn't forecast any constrains in US production. June to december growth
for onshore production is forecasted at 430kb/d. The 1.4Mb/d figure comes probably from the
monthly data. They are very optimistic, but there is nothing wrong.
When it says "crude" is that crude plus condensate, or is the condensate included in NGLs?
The reason I ask that, is that the monthlies include crude plus condensate. 1.4 million
increase does not tie into their summary page. 1 million crude per your spreadsheets does not
agree to 600 to the Permian, plus 600 from the rest of the US, including the GOM. The summary
analysis has 1.2 million. Adding onshore and GOM from the numbers you pulled is 1.4 million.
Adding 2 million from the US plus Canada gives 2.13 million, not 2.3 per the summary. Adding
400 to the ending monthly for the GOM for 2017, gives a lot more than 1.89. Nothing jives.
They are supposed to be just "optimistic" when the expect 430k to just magically appear in
Cushing or Gulf coast without the aid of pipelines, trains, or trucks? No, wait, 400k of that
is supposed to come from the Bakken and Eagle Ford, of which little has happened yet, nor
will much. So, most of it has already figured out a way to get teleported. Or, is the
optimism politically motivated.
NEB currently has Canada increase at about 250kbpd (for both yearly average and December exit
rate), that may come down as they incorporate the upgrader outage and East Coast turn
arounds.
The GoM is not going to add 400 kbpd, it's more likely to be negative on average (December
may be up slightly as 2017 had three major unplanned outages then (but at the moment EIA are
reporting about 30 kbpd which don't come from any reported wells or leases so they may know
something else). GoM has to replace about 20 kbpd per month of decline, which it isn't doing
at the moment, plus overcome any planned/unplanned outages, which seem to be getting more
frequent.
Brazil is going to struggle to get 180 kbpd increase. They were down 20 kbpd in May from
December. They have two FPSOs ramping up but are fighting 30+ kbpd decline per month (and
increasing). The are other FPSOs due but seem delayed and the ramp ups are slower than in the
past, principally because of lack of drilling capacity. Probably they need two new
development wells per month to keep level, given the normal delivery rate and that some are
for injection, they only have 8 rigs, not all on new developments, but there may be some
predrilled wells available.
Russia has more fields coming on stream, but it depends how much the mature fields decline
– there must be a limit some time on how much in-fill drilling can be done.
So, replacing the EIA estimates with our own, we get for non-OPEC growth:
650. US (550 from the Permian, 100 Bakken)
Eagle Ford may drop
250. Canada
180. Brazil
300. Russia being generous
1380. Total which is 1.42 short of their 2.8 million, or 2.6 (1.180) if you use their
summary page. Even adding another 350 to the US still is close to 1 million short. OPEC
contribution seems somewhat "optimistic", and does not factor in any Iranian drop. Yeah,
should balance out. Then, we have 2019, which is damn
scary. The only potential partial offset is demand. If part of demand is computed based on
funky supply numbers, then it is likely to be less than estimated. But not that much lower.
Half a million is an overestimation. This much is politically motivated. The latest monthlies
that will be posted before November will be August. Only four months to the end of the year.
Going to be tough to keep this up. Four more months of inventory drops before November. OMR
out, and indicates OPEC is stretched. I still find it easier to plug in my estimates with the
OMR report. I get 2 million a day draws through 2019, at a minimum using their June report,
and correcting. https://www.iea.org/oilmarketreport/omrpublic/currentreport/
Their first page graph pretty much depicts serious draws without adjustment. They have a 2
million a day increase in non-OPEC production for 2018, lowered to 1.97 in this report.
Misrepresenting is too strong a term. That would assume they are reporting the actual numbers
wrong, which they do not do. These are projections, and they can be manipulated to serve the
best purpose of keeping prices down until the elections. That's pure speculation.
Thanks. Yeah, it's much worse. Looking at that, one could guess 1380- 400 non-OPEC (less US
Canada and Russia) for 2018. But, because we were short in 2017, we've gone nowhere.
180 for Brazil is a stretch. Fort Hills and Horizon have finished ramping up so 250 for
Canada is also probably a stretch. US NGL may be a chunk to include but I wonder what the
global decline for NGL on mature gas developments is. North Sea looks not as good as
expected. The only place doing better than I thought is Mexico, and I think that could turn
the other way any time.
But i think there's a lot of NGPLs (i.e. butane and lighter) in the all liquids numbers, it's
not just condensate (C5+).
Are the details of OPEC, IEA and EIA reports getting more and more focussed on short term
issues, as if they have no idea how supply can meet demand longer term? Or am I missing
something.
Unless, EIA is using a double standard in their STEO report for US vs Non-OPEC, I believe it
would be crude plus condensate, only. It's crude plus condensate for US, for sure.
x Ignored says: 07/13/2018 at 7:37
am Just saw this looking for the release date of the next DPR report, on the EIA website:
"NOTE:
Productivity estimates may overstate actual production which could be limited by logistical
constraints."
So, EIA actually acknowledge these constraints, and admit they may be overstimating
production, without saying by how much. Reply
Guym x Ignored says: 07/13/2018
at 9:35 am
Reliable estimates of takeaway capacity for the Permian. Similar to Genscape, current
pipeline capacity is estimated to be about 2.8. Drilling info does not mention total takeaway
capacity, but Genscape estimates it at 3.3. Per the article, it was at 3.2 the end of May.
The ending production, the end of 2017, was 2.8 from the Permian, making the end of May
increase at 400k. I gave the projected increase 550k, because Genscape said 25k of additional
trucking, may happen. Note, Drilling info lists some very small additional capacity that
should come online this year, and soon, so it will probably wind up to be about 50k higher.
Maybe. The gathering terminal gets it from New Mexico and West Texas to the Midland terminal,
only, as I understand. The rest of the articles are mostly badly written press, but I think
you can rely on Genscape and Drillinginfo.
https://info.drillinginfo.com/permian-oil-and-gas-takeaway-capacity-improvements-on-horizon/
Sometime soon, there will be an odd mixture of increased production and shut ins.
Also, if I estimate Permian production at 600k (generously), it equals the new EIA
estimate. The remaining 600k US C&C production will have to come from other shales and
the GOM. Good luck with that, it's July, already, and prices are too up and down, to date.
Contrary to the EIA's and other analysts thoughts, $65 to $70 oil is pretty ho hum to
producers. Also, there is no allowance here for other declines, of which there are some.
So, an updated revision to US increases (liquids) would be:
700 c@c US (600 Permian, 100 Bakken and others, GOM 0)
400 US NGLs ? Seems real high for an increase
250 Canada
180 Brazil
300 Russia
Total 1.83 versus a projection of an increase by EIA in the non-OPEC section of the STEO of
2.6, and I think mine is very "optimistic". And, as Ron points out above, it does not include
roughly about 300 to 500k in declines that may happen to non-US, Russia and Canada non-OPEC
production. The EIA's STEO report can be found in the local library next to Mother Goose.
According to the EIA, we are pretty much finished with inventory declines.
"... Kevin Shipp, former Central Intelligence Agency (CIA) officer, intelligence and counter terrorism expert, held several high-level positions in the CIA. His assignments included protective agent for the Director of the CIA, counterintelligence investigator searching for moles inside the CIA, overseas counter terrorism operations officer, internal security investigator, assistant team leader for the antiterrorism tactical assault team, chief of training for the CIA federal police force and polygraph examiner. Mr. Shipp was the senior program manager for the Department of State, Diplomatic Security, Anti-Terrorism Assistance global police training program. He is the recipient of two CIA Meritorious Unit Citations, three Exceptional Performance Awards and a Medallion for high risk overseas operations. Website/book: fortheloveoffreedom.net ..."
Fake News, Fake Money, How to Tell the Difference Posted on February
21, 2018 | Leave
a comment Why is it so hard these days to tell fact from fiction? Who can be trusted to
tell us what's really going on? Can the New York Times and Washington Post still be believed?
And what about money? Can we still trust the dollar, the euro, the pound sterling? What
supports national currencies, anyway? Is this Bitcoin thing real or fake money, and should I
buy some?
Here's a compelling presentation by Andreas Antonopoulos, that addresses all of these
questions. Antonopoulos is a technologist and entrepreneur and probably the most knowledgeable
and insightful expert on bitcoin, blockchain technology and the profound changes that lie just
ahead.
Now take a deep dive into the political realities of our time by watching this presentation
by CIA officer Kevin Shipp, in which he exposes the Shadow Government and the Deep State. If
you question his credibility here is a brief bio from Information Clearing House:
Kevin Shipp, former Central Intelligence Agency (CIA) officer, intelligence and counter
terrorism expert, held several high-level positions in the CIA. His assignments included
protective agent for the Director of the CIA, counterintelligence investigator searching for
moles inside the CIA, overseas counter terrorism operations officer, internal security
investigator, assistant team leader for the antiterrorism tactical assault team, chief of
training for the CIA federal police force and polygraph examiner. Mr. Shipp was the senior
program manager for the Department of State, Diplomatic Security, Anti-Terrorism Assistance
global police training program. He is the recipient of two CIA Meritorious Unit Citations,
three Exceptional Performance Awards and a Medallion for high risk overseas operations.
Website/book: fortheloveoffreedom.net
Hi Steve, this is exactly what we have been talking about for the last 8 years. To make
matters worse there seems to be a completely irrational belief that Shale will save the day.
Outside of the fact that shale is not processable without heavier crude, and it is at best
energy neutral, and probably negative, it is also long term unaffordable. There are 1.7
million Shale wells in the US. Over the next 5 years 1.4 million of those wells will have to
be replaced to just keep production even. That will be $6.2 trillion even if done on the
cheap. $6.2 trillion is equal to the total cost of all the finished product that will be
consumed by the US for the next 12.8 years (@ $75/barrel). Expending 12.8 years of sales
revenue to produce 5 years of oil is just not going to happen!
There seems to be a black out on this terrible situation. Some of that may be just plain
ignorance, but I suspect that the main reason is that it is politically unspeakable. For that
reason nothing is being spoken. As I have been saying for some time no one should expect big
oil, big government, or big anything to come riding to the rescue. The individual is now
completely on their own. Chose your options with discretion.
Agreed. The U.S. Shale Oil Ponzi Scheme will likely begin to disintegrate within the next
1-3 years. Already, the Permian oil productivity per well has peaked.
Then when the next Shale Oil ENRON event takes place... watch as the dominos fall.
@SRSrocco, U.S. Tight Oil depends on cheap credit. Regardless of oil prices.
Once cheap credit dries up and the previous debts are unable to be paid by drilling new
wells, the entire scheme falls apart.
Oil prices do not drive U.S. Tight Oil as much as cheap credit from easy loans.
Eventually, U S. Tight Oil using new credit cards to pay debts on old credit cards will
catch up with a vengence. Rising interest rates will be the catalyst. Rising oil prices only
prolong the increasing debt.
Didn't the EIA publish something not long ago stating their concerns that we could see oil
shortages by 2020? And around the same time, I recall that the Saudi Oil Minister came out
and stated that without more investment, we would likely see oil shortages by 2020. And then
at the recent OPEC meeting, I believe it was the Oil Minister from UAE who stated that we
need to find a new North Seas equivalent oil field EVERY YEAR to meet projected demand, which
of course is not going to happen. It has been a long slow grind since 2008 to get to this
point, but from here on out I anticipate that things will start unraveling at an ever faster
pace. Big changes on the way. But one thing that will NEVER happen is that the POTUS or some
other world leader comes out and says we are running short on energy. Instead it will be
Trade Wars, the damned Russians or some other lame propaganda -- anything but the truth.
The mitigation section of the study was most telling. It simply stated that local
sustainable economies would replace the modern era. These economies included local food
production and energy production. As this process unfolds, I simply do not see how a high
rise is going to remain habitable.
Zero hedge put a news story a while ago where (I think 2016) the US oil industry lost more
in that it earned in the previous 7 years (mining in general), so more investment wouldn't
have been coming in the US anyway - the price wasn't high enough to justify it.
Worldwide we are going to see some almightly crunch, whether it will arrive after 2020
will be seen. Ironically it might save Trump anyway if the world is seen to be beset by a oil
supply crunch since its hard to blame that on him.
The U.S. needs to get off its dead ass and start developing better batteries, solar power,
and other alternative energy sources. This was talked about in 1973, during the Oil Embargo
days, and its just astonishing the U.S. has done little since to ween itself off of oil. And
now we now have a tariff against Chinese made solar panels. DUH!!! How dumb can you get?
Look at the energy density of those power sources. You'll never run an industrial
civilization off of them. Electric cars may be great for zipping a couple of people around
town from day to day, but you're never going to run the large mining and shipping equipment
needed for our society. If you want to do that, you're going to have to develop viable
breeder reactors and the technology to manufacture liquid fuels with that energy - and this
is doable.
Right. There is nothing.....NOTHING....that can replace oil and gas as it is used and
utilized by the modern industrial society. Nothing......
What needs to happen right now is a steady rise in prices that will condition our
population to start learning to do with less cheap, easy energy. We have got to curb usage to
give society a chance to begin to learn another way.
The major obstacle to doing this responsible, rational action? The egregious, criminal
banking system that has gotten the world awash in debt to feed their greed. Any cut back in
the use of energy will destroy the economy and their gravy train.
"... Trump seems to enjoy antagonizing the Europeans one way or the other. As to NATO, Trump made the same complaints during his campaign while calling it "obsolete." Sometimes it sounds like he would rather have the US out of NATO. One theory I have is that he is limited in what he can do so he works around TPTBs to get closer to his goals. So he antagonizes and threatens Europe on NATO. The same goes for Syria. He talked about wanting to pull out but kept being drawn back in by the usual suspects. So he's pulled monetary support in certain cases and refused to dig the US in any deeper than it is. And it will be interesting to see what happens with his upcoming meeting with Putin considering how much he had to backtrack on his talk of better relations during his campaign. Those who've wanted him to join the "hate Russia" team may get frustrated. ..."
"... Within this new "mulit-polar" world, only Russia is cutting its military budge. And they still seem to have at least one of the most effective conventional war-fighting capability, and their next generation nuclear deterrence looks nothing short of awesome. They have pipelines to build, and like China, long-term economic contracts to sign. ..."
"... I'm no fan of Angela, but she/Germany have been trying to tamp down this AZ Empire New Cold War against Russia since at least 2013. When she, Putin, Yanukovych (elected President of Ukraine) and the leaders of the Maidan protests got together and signed an agreement in which Yanukovych acquiesced to essentially all of the "peaceful, pro-democracy protesters'" demands, it was the Asst. Secretary of the US State (Vickie Nuland) who said, "F*ck the EU" "We can midwife this thing" and even appointed the new PM "Yats is the guy." ..."
"... The US can't keep funding your crappy little joke of a disintegrating "European Union" for ever. Sooner or later you'll have to put on big-boy pants. ..."
"... USA govt's assessment of China and Russia as "revisionist" should be understood as a determination to remain the hegemonic power. Thus, we have Cold War II. From that perspective, European objections to more "defense" spending are considered naive (or worse) as Europe's fate is views as tied to that of the Empire. ..."
"... I think European elites are much more likely to side with USA than European people. If the Trump's talk with Putin doesn't go well, we are likely to see increased scaremongering to rectify public opinion. ..."
"... Chaos can make doing business harder, but that can also increase profits. As the posters said in the '60s, "War Is Not Good For Children And Other Living Things." But it's great for the psychopaths. ..."
"... Here is an article that explains the relationship between Russian pipelines, USA sanctions on Russia, MH17, Crimea, and Syria. It is an excellent background to comprehend Trump's accusations about Germany's purchase of gas from Russia. Patrick Armstrong and Pat Lang seem to think that Trump is about to cut NATO support, reduce/eliminate sanctions against Russia, and redirect relations with Israel, but I am not persuaded. https://www.unz.com/article/why-was-malaysian-airlines-flight-mh17-shot-down/ by Kees van der Pijl He also wrote a book on this topic. ..."
"... Everything the US does works to undermine its old power in the new world. We see this continually. Trump is an accelerator. But whether any of this is intentional and actually desired by a part of US vested interests, is still an open question. ..."
"... Nevertheless, as we watch, we see every action of the US working to cement the bonds of its opposition in the rest of the world. From the Escobar article linked by karlof1 above, we see the pressure on the Middle East to reject the US and turn for safety to the Eurasian institutions of commerce, finance and national security. The same thing is happening to Europe. ..."
"... he equation as it stands now is this: A muscle-bound USA + an anaemic Europe "deterring" a Russian Federation that has no intention of invading. ..."
"... Since Russia is no threat either way then there is no need - none whatsoever - for the Europeans to increase their military expenditure to "defend themselves" against a non-existent Russian threat. ..."
"... Indeed, the only reason the Europeans would feel that they might have to prepare to "defend themselves" would be because that muscle-bound US military is now outside the tent pissing in, not inside the tent pissing out. ..."
"... Since whenever, America has been the proxy front for the current instantiation of empire with the core of control being ongoing private finance with global tools like BIS, IMF, World Bank, etc. Since WWII and even before the goal of empire is to have all of the world under its control. Since the engine of empire is a supra-national matrix of private finance control, the enemy becomes any nations who do not want to be impregnated with the Western model of private Central Bank, an oligarchy , inheritance, private property, etc. ..."
"... The empire model of growth through wars and boom/bust expansion has reached its "logical" limits and the the existential question has become, blow everything all up or agree to a multipolar world. I think that the elite hope Trump's bluster will make it so they do not have to answer that existential question.....yet ..."
"... If Trump's fake argument gambit was intended to inspire people inside and outside the EU to think outside the box then it seems to have worked. ..."
"... I LUV how Trump stomped on all those preaning European elite scumbags. ..."
"... Agree with Patrick. It is surprising to still see so much animosity towards a president who has done more to combat the absurdity of NATO and globalism than I can remember any other President doing. The ball is in the EU elites court, now. Put up or shut up and I believe it makes no difference to Trump. We are about to find out who is REALLY to blame for marching lockstep with the current of hypercentralization (globalism): the Trump admin or the EU elitez. ..."
"... The US has been manipulating NATO ever since it was formed. Most NATO officials are vetted by the US. Trump is an idiot, like the bulk of US politicians. ..."
"... Trump's "reasoning" makes sense in an infantile sort of way, but there's more too it than meets the eye, is there not? Trump doesn't just want to Europe to "pay their fair share" for NATO, which we all know is code for buying more US mil.gear but also to buy their LNG from US too. It's like NATO is some sort of grotesque, evil franchise where the franchisees can only buy goods/services from that single source, even though it's crap & inordinately expensive, and even if you can get it cheaper elsewhere, i.e Russia. ..."
"... Wow! You don't feel that Trump has, by his mere existence and by winning the presidency, been given a platform of which to decry the myriad injustices of globalization and to utter things unspeakable by any Prez in the last fifty years? ..."
"... Europe has an arms industry of their own. I doubt European countries invest their money into US stuff - they buy their own. Most of the money does not go into weapons anyway, but personel and administration. Germany contributes to the maintenance and infrastructure of US bases, but those bases are business, too. This is not Saudi Arabia buying protection. The real news is that Trump has started a trade war negotiating by tantrum. ..."
You are agreeing with an idiot, no matter what...Europe has nothing to worry about with
regards to Russia. Unless they threaten Russia. 'Love this exchange at breakfast;
"Stoltenberg: [ ] I think that two World Wars and the Cold War taught us that we
are stronger together than apart.
Trump: But how can you be together when a country is getting its energy from the
person you want protection against or from the group that you want protection?
Stoltenberg: Because we understand that when we stand together, also in dealing
with Russia, we are stronger. I think what we have seen is that --
Trump: No, you're just making Russia richer. You're not dealing with Russia.
You're making Russia richer."
You'd have to be an idiot not to agree with Trump here.
Trump seems to enjoy antagonizing the Europeans one way or the other. As to NATO, Trump
made the same complaints during his campaign while calling it "obsolete." Sometimes it sounds
like he would rather have the US out of NATO. One theory I have is that he is limited in what
he can do so he works around TPTBs to get closer to his goals. So he antagonizes and
threatens Europe on NATO. The same goes for Syria. He talked about wanting to pull out but
kept being drawn back in by the usual suspects. So he's pulled monetary support in certain
cases and refused to dig the US in any deeper than it is. And it will be interesting to see
what happens with his upcoming meeting with Putin considering how much he had to backtrack on
his talk of better relations during his campaign. Those who've wanted him to join the "hate
Russia" team may get frustrated.
Will he take direct action on any of these things? I doubt it. The indirect route seems to
go in the right direction.
karlof!. Good to "see" you back. The following is specifically to you, but it does continue
from your first comment. [I couldn't get some links to embed, sorry]
My best short term hope is that all this war-blustering is just to convince we commoners
to bend over so the military/industrial contractors can make lots of gelt. The Global War OF
Terror has been terrific for their bank accounts, but with SAA and the MoD of the RF beating
the snot out of terrorists wherever they go to such an extent that the Pentagon is
considering ISIS essentially defeated.
Besides, the really "big ticket products" are things like aircraft carriers,
"upgraded" nuclear weapons, 5th Generation fighters, etc. etc. etc., that are harder to
excuse when their targets are guys in sandals with AK47s and IEDs. That could be why the 2018
National Defense Strategy plan has shifted from fighting "terrorism" back to " the long-term,
strategic competition between nations."
https://www.defense.gov/Portals/1/Documents/pubs/2018-National-Defense-Strategy-Summary.pdf
Same with our "adversary" across the big pond in China. Just the other day, the CPC warned
of "China's army infiltrated by 'peace disease' requiring a major new "defense posture" just
like the US and NATO.
Within this new "mulit-polar" world, only Russia is cutting its military budge. And
they still seem to have at least one of the most effective conventional war-fighting
capability, and their next generation nuclear deterrence looks nothing short of awesome. They
have pipelines to build, and like China, long-term economic contracts to sign.
No dear b, for once I think you've got it wrong. I see Trump asking three question for all of
which there is one answer.
1. Angela. You tell us that NATO ought to concentrate on the Russian threat. If Russia is a
threat, why are you buying gas from it?
2. Angela, You tell us that Russia is a reliable energy supplier. If Russia is a reliable
supplier, why are you telling us it's a threat?
3. Angela. I hope you're not saying Russia is a threat and its gas is cheap but the USA will
save us.
The answer to all 3 questions is: we're out of here, defend yourselves. It's Trump cutting
the Gordian Knot of obligations.
Aarrgghh! Besides some continuity problems when I recut and pasted the above since the links
weren't working, I also left out the following completely.
That could be why, even though the US 2018 Nuclear Posture Review observes we are changing
from: "For decades, the United States led the world in efforts to reduce the role and number
of nuclear weapons." To " the current, pragmatic assessment of the threats we face and the
uncertainties regarding the future security environment." Which conveniently can use up, or
more likely go over budget on former President CareBear's additional $10 Billion in nuclear
weapons development over the succeeding 10 years.
I'm no fan of Angela, but she/Germany have been trying to tamp down this AZ Empire New
Cold War against Russia since at least 2013. When she, Putin, Yanukovych (elected President
of Ukraine) and the leaders of the Maidan protests got together and signed an agreement in
which Yanukovych acquiesced to essentially all of the "peaceful, pro-democracy protesters'"
demands, it was the Asst. Secretary of the US State (Vickie Nuland) who said, "F*ck the EU"
"We can midwife this thing" and even appointed the new PM "Yats is the guy."
She was then an active participant in the Minsk Agreement to end the "anti-terrorism
action" Which our gal Vickie shredded publicly the next day because the AZ Empire thought the
Uki-Nazis would finish off those Muscovite, Colorado hicks and (can I post the Ukie terms for
Jews?) in the east like they'd done in the south.
Then, Angela was involved in the Minsk II cease-fire/road to peace (when the Uki-Nazis
were being driven out of the east, and were about to lose Mariupol).
I know there are others in addition to b here who know this stuff better than I. Isn't
this about right?
"It is extremely hypocritical for Poland to lobby against Nord Stream when it significantly
contributes to Poland's energy security."
There are other explanations that could be better documented, like stupidity and insanity.
BTW, Poland has big pollution problem, and a major part is that many older multifamily
buildings and new single family building has polluting heating with coal furnaces and stoves.
Natural gas does not generate pollutants except for CO2 which is not affecting health, plus
it uses less than half of carbon than coal.
On the other note, merely to get enough gas for internal needs, Poland could get enough
through Belorus. But if you need to add re-export to Ukraine, that is not enough. So Poles
can pride themselves of not being as stupid and insane as their southeastern neighbors.
Well stated. There are many gordian knots. The BIS should be dissolved
""Responsible fiscal practice requires a government to fill spending gaps left by
fluctuations in non-government spending patterns. In that way, the government takes
responsibility for maintaining full employment. What the Troika did in Greece was the
exemplar of irresponsible fiscal practice.""
I really really like the way you include a 'solution' to a global problem in this analysis b.
To many times we just speak to the choir and rarely are solutions presented regardless where
they lie on the possible/probable line. Did I mention I really like this SA. Thanks.
karlof1 @7. In graph 1, of actual dollar expenditure, NATO spending was going down until
2012, then it started to rise again, and has been a net increase every year since 2015.
In graph 4, per nation spending relative to GDP went up from 2014 to 2017 in almost all
member states notably, except the US and UK, but even then, US went from 3.58% to slightly
over 3.5% and UK from 2.14% to a touch over 2.1%, so both are above the 2% "minimum."
Graphs 5, 6, 7 all show actual dollar expenditures dropping from 1010 to 2014, but then
increasing every year since then.
Perhaps I misunderstood your point. But it sure looks like NATO spending has been rising
since this "New Cold War" really kicked into gear in 3024/2015.
"One big reason they deposed the Shah who was planning to go big with nuclear power with
orders for about 20 French and /or German reactors"
Another hat in the ring for CIA/MI6/Mossad helping to install the Islamic part of the
Iranian Revolution? WooHoo!
"China basically has a monopoly on these metals"
Yes. Bear in mind though that "discovered" after the US invasion/occupation is that
Afghanistan has perhaps the world's largest reserves of lithium. And the "Democratic
Republic" of Congo also has much rare earth wealth. As in fact do other parts of central
Africa. Hence, the AZ Empire's new "AfriCom" military classification and the reinstallation
of French Colonialism.
I'm not so up on this whole tariff thing. Hasn't Germany had substantial tariffs on
automobiles for years now? Do those tariffs apply to other EU states?
Daniel
I have read in the past that Afghan is very rich in a number of minerals and China was
looking at development there as part of it road belt intuitive. Going by the state
Afghanistan is in I can't see the US extracting minerals there. US squatting in Afghanistan
may be simply to deny Chinese access to the mineral deposits.
If NS2 goes online and EU goes dark to Qatar, especially if Iran corks Qatar with a South
pipeline, the Middle East economies will collapse into chaos, and nobody will be buying
either US guns or butter.
US'own economy is going down the crapper with No Taxes for the Rich running an $800B
Deficit, and private Fed Bank ratcheting up $50B at a gulp in interest-only Debt financing
...forever. Collapse of MediCare and MediCaid will bleed even more out of the retsil economy,
which will increase the Deficit, into a National Debt death spiral, and collapse of the
public pensiin systems.
If you project MIC arms spendung and Fed interest-only bleed out, Trump's illegal 25% Fed
VAT sales tax (aka 'tariffs) and EU/RU/CH counter-tariffs, all US health and human services
will be insolvent by 2025.
When that happens, and could happen much sooner, the world we knew in 20C will be
inverted, upended, chaos, albeit, only chaos for the Lower Classes, Workers and Private
Pensioners/401Ks. The Deep Purple Mil.Gov UniParty will...uhh...find a way!
@kgw
"You are agreeing with an idiot, no matter what...Europe has nothing to worry about with
regards to Russia. Unless they threaten Russia."
Well shit or get off the pot why don't you - "idiot" Trump is calling your bluff - stop
freeloading off a (by your assessment) non-existent threat, or he'll stop it for you. Can't
have it both ways. The US can't keep funding your crappy little joke of a disintegrating
"European Union" for ever. Sooner or later you'll have to put on big-boy pants.
James, @44. I largely agree with (and have called for) Patrick's recommendations for what
Ukraine should do now. I don't see anything in there that contravenes what I wrote about
Germany's role in the AZ Empire's coup and resulting war, though.
Do you remember those events, or should I dig out citations? I was following it pretty
closely from mid/late 2013 until it quieted down in 2015. Since then, I just pick up articles
here and there.
When you'd have to be an idiot to agree with Trump ($1 TRILLION MIC arms profiteering
slash National Police State slash MIC Indefinite Detention Gulags), but now you'd have to be
an idiot NOT to agree with Trump (drag EU into the funeral pyre)m then you know it must be
the Red Army v Blue Army media spewfest and the National Novitiate in November is near.
Rahhh.
E pluribus now get back to work. Your 2Q ONE TRILLION Deep Purple State tithe-tibute is
due in 3 more days, ONE TRILKION that you and your hiers will never see again.
USA govt's assessment of China and Russia as "revisionist" should be understood as a
determination to remain the hegemonic power. Thus, we have Cold War II. From that
perspective, European objections to more "defense" spending are considered naive (or worse)
as Europe's fate is views as tied to that of the Empire.
I think European elites are much more likely to side with USA than European people. If
the Trump's talk with Putin doesn't go well, we are likely to see increased scaremongering to
rectify public opinion.
Not to mention those same rare earth metals are getting out of DRC despite millions of
murderous deaths and disease.
And the oil started flowing out of Libya before Gaddafi was even lynched. Oil's been
flowing out of "Kurdish" Iraq into Israel come hell or high water. And of course, ISIL was
shipping Syrian oil through Turkey and Jordan (if not Israel) throughout.
Chaos can make doing business harder, but that can also increase profits. As the
posters said in the '60s, "War Is Not Good For Children And Other Living Things." But it's
great for the psychopaths.
Trump's native approach I suspect may be something like that of fellow-New Yorker and great
American chess player Bobby Fischer who famously said: "Try something!"
That sounds about right. I would only add that Minsk Accord is another example of a
non-agreement. Ukraine never signed yet Russia is accused of not implementing this
non-agreement whenever people feel the need for some more Russia-bashing.
Here is an article that explains the relationship between Russian pipelines, USA
sanctions on Russia, MH17, Crimea, and Syria. It is an excellent background to comprehend
Trump's accusations about Germany's purchase of gas from Russia. Patrick Armstrong and Pat
Lang seem to think that Trump is about to cut NATO support, reduce/eliminate sanctions
against Russia, and redirect relations with Israel, but I am not persuaded. https://www.unz.com/article/why-was-malaysian-airlines-flight-mh17-shot-down/
by Kees van der Pijl He also wrote a book on this topic.
Trump follows the footsprints of the post-USA Civil War Republican Party policy. From
Chapter 1 of The Politicos 1865-1896 by Matthew Josephson (published in 1938)
"The new industrialist and financial class and the farmers of the North emerged the
greatest gainers by far among the mixed coalition of classes which fought to win the social
revolution underlying the War Between the States. But no less triumphant and dominent was the
war party itself, the youthful organization of professional politicians and officeholders
known as the Republican Party. A minority party in 1860, and victor in a three-cornered
electoral contest, it knew during the war the intoxication of unchallenged power and fortune
beyond calculation, leaving it in command of all the offices of the Federal Government!"
From Beard, Contemporary American History, p.91
It had the management of the gigantic war finances, through which it attached to itself
the interests ... of the great capitalists and bankers throughout the North. It raised
revenues by a high tariff which placed thousands of manufacturers under debt to it and
linked their fortunes also with its fate ... Railway financiers and promoters of all kinds
had to turn to it for privileges and protection...
jackrabbit@59
surprised to hear you say Ukraine did not sign MinskII. On the contrary, I read that it was
signed by LD Kuchma, Second President of Ukraine. Please correct me if I am wrong.
Signatories
The document was signed by:[23]
Swiss diplomat and OSCE representative Heidi Tagliavini
Former president of Ukraine and Ukrainian representative Leonid Kuchma
Russian Ambassador to Ukraine and Russian representative Mikhail Zurabov
Separatist's leaders Alexander Zakharchenko and Igor Plotnitsky https://en.wikipedia.org/wiki/Minsk_II#Signatories
All-night negotiations on Wednesday ended with the signing of the Declaration of Minsk in
support of the "Package of Measures for the Implementation of the Minsk Agreements" by Angela
Merkel of Germany, Francois Hollande of France, Petro Poroshenko of Ukraine and Vladimir
Putin of Russia and release of the full agreement. The talks, according to some reports,
almost collapsed near the end as Ukraine and rebel leaders balked at signing.
https://www.forbes.com/sites/paulroderickgregory/2015/02/13/putin-comes-out-on-top-in-new-minsk-agreement/#21ffe18f4ede
From Chapter 1 of The Politicos 1865-1896 by Matthew Josephson (published in 1938):
"The prosecution of the war against rebellion had been associated with a protective tariff
levied against a hated England. which profited and sought to profit further from our
disaster. With the close of the war, a cry arose from the Northeastern region that high
tariffs were needed to pay the war debt. and an outburst of high Protectionism followed in
1866."
Everything the US does works to undermine its old power in the new world. We see this
continually. Trump is an accelerator. But whether any of this is intentional and actually
desired by a part of US vested interests, is still an open question.
Nevertheless, as we watch, we see every action of the US working to cement the bonds
of its opposition in the rest of the world. From the Escobar article linked by karlof1 above,
we see the pressure on the Middle East to reject the US and turn for safety to the Eurasian
institutions of commerce, finance and national security. The same thing is happening to
Europe.
Some days I think that Trump was a brilliantly inspired choice of some deep state players
to further their agenda of fragmenting the old arrangements to allow new alignments to come
into place - to modernize the elite control of the world. But most days I just don't know.
What can one say about a force this magisterial and still this enigmatic?
I was talking with a friend today about Trump. She said she sees his approach as quite
typical of US business style. You come out with the big stick, knowing it will get chopped in
half by the time you get to agreement. But at least you end up with half a stick. Gotta start
big. You don't ask, you don't get.
This style worked perfectly with North Korea, which was a standout among the nations of
the world, in my opinion, for understanding superbly well how Trump played the game, and
played it right back. The result was a meeting of equals, where something could actually get
done. But NK worked hard to develop the bargaining chip to put on the table too. Words
without substance don't work.
I'm not seeing many other countries responding with this same kind of exaggerated bravado
- it is a very US way of doing business. Most countries are simply working to go around the
US. Europe seems to be doing the same thing, simply rejecting and turning away. But the
European countries could certainly create bargaining chips if they wanted to play the Trump
game of negotiation. I truly suspect his style is something they're still getting to grips
with. Perhaps they should call Kim for pointers.
I think ultimately we are seeing two things at work, and in tandem: the natural style of
Trump, and the very real and unstoppable current of history. Whether either force is aware of
the other, I can't say. Like the success or failure of the French Revolution, it's too soon
to tell.
@65 Good summary. I think the Europeans simply don't know what to make of him. The look on
Stoltenberg's face said it all. They just don't know how to respond to someone so direct.
Maybe Putin is the only one who can talk his language....but not in public.
China's taking a page from Mahan regarding sea power. NATO graphs: I mentioned Obama
ordered an increase in spending and the chart shows the compliance. The ups and downs
correlate well with wars and major recessions.
@53 daniel... what you said earlier - i think much the same way... i would be curious to know
more of how patrick armstrong sees all that, but i think it is much the same as us too..
those links @53 reflect how messed up ukraine is at present.. having a failed state on your
doorstep doesn't sound like fun and that works both ways for europe and russia.. i guess that
was the usa ( and israels?) plan... screw up countries so they don't function properly, so
you have to spend a lot of imf money to fix them.. works for wall st, lol..
@38 "The answer to all 3 questions is: we're out of here, defend yourselves"
Patrick, I'm confused: they are meant to defend themselves against whom, exactly? T he
equation as it stands now is this: A muscle-bound USA + an anaemic Europe "deterring" a
Russian Federation that has no intention of invading.
Remove the muscle-bound Americans from the equation and this is what remains: An anaemic
Europe "deterring" a Russian Federation that has no intention of invading.
Since Russia is no threat either way then there is no need - none whatsoever - for the
Europeans to increase their military expenditure to "defend themselves" against a
non-existent Russian threat.
Indeed, the only reason the Europeans would feel that they might have to prepare to
"defend themselves" would be because that muscle-bound US military is now outside the tent
pissing in, not inside the tent pissing out.
@68 Maybe they thought Ukraine would join the EU at some point but Crimea was the prize. The
plan was to turn Crimea into a NATO base. Putin spoiled everything.
Wikipedia also says (as part Leonid Kuchma's bio):
Since July 2014, Kuchma has been Ukraine's representative at the semi-official peace
talks regarding the ongoing War in Donbass.
Why are they "semi-official"? Because Ukraine would not talk to the rebels
directly. They believe that the rebels are sponsored by Russia so the dispute is between
Russia and Ukraine. They would not talk to the rebels as that might convey legitimacy to the
rebels. That's why the Trialteral Contact Group was set up. The signers of Minsk II (Russia,
Germany, France, Kuchma/Ukraine) are merely "guarantors" of an agreement between Ukraine and
the Donbas rebels - neither of which has actually signed.
Kuchma "represents" Ukraine but can't bind Ukraine. Although Poroschenko attended some of
the talks, he never signed the agreement.
Minsk and Minsk II have reduced conflict somewhat but Ukraine has dragged its feet every
step of the way. For example: they were slow to pull back heavy artillery as called for under
the accord, then they wouldn't pass laws that were necessary for other provisions of the
accord.
The Minsk accords outlined a detailed procedure through which Donetsk and Luhansk would
receive "special status," hold internationally-recognized elections, and then negotiate
their reintegration into Ukraine directly with Kiev, including basic constitutional reforms
to federalize the country. No substantive steps have ever been undertaken by either side to
implement these terms, and the new "Donbass Integration Law" now makes clear that Kiev
expects the country to be re-united on its terms alone, though probably not anytime
soon.
Ukrainian lawmakers, who overwhelmingly passed the bill on Jan. 19, argue that it
simply normalizes a situation that has long existed but was clouded by misleading jargon
and official fealty to the non-functioning Minsk accords .
Poroschenko signed the bill into law in February 2018.
@dh "Maybe Putin is the only one who can talk his language"
Going by what Putin said of Trump after their 2 1/2 hour meeting in Vietnam, it seems more
likely Trump talks in Putin's language when meeting actual leaders. Same would go for his
meeting with KJU, and I would guess Xi.
Since whenever, America has been the proxy front for the current instantiation of
empire with the core of control being ongoing private finance with global tools like BIS,
IMF, World Bank, etc. Since WWII and even before the goal of empire is to have all of the
world under its control. Since the engine of empire is a supra-national matrix of private
finance control, the enemy becomes any nations who do not want to be impregnated with the
Western model of private Central Bank, an oligarchy , inheritance, private property,
etc.
The empire model of growth through wars and boom/bust expansion has reached its
"logical" limits and the the existential question has become, blow everything all up or agree
to a multipolar world. I think that the elite hope Trump's bluster will make it so they do
not have to answer that existential question.....yet
The EU has always been a bastard child with little chance of growing up because there was
no finance core agreements to manage the national variations within. I am surprised it has
lasted as long as it has given the historical tension between the nations. The US has similar
social tensions but our structure has homoginized the economy enough that we haven't
imploded...yet
The key to this process which I believe is being managed by the elite is at what point are
the big decisions made and by whom. Given the accelerated nature of the managed
deconstruction, I suspect the elite believe they will retain their mystique of power long
enough to not lose grip on private finance running the Western world. The EU countries will
have to come to terms with their oligarchs and determine what path forward works for all of
eurasia. I don't see the current leadership of any EU countries as having the public's best
interest in mind or action.
Are we seeing Western plutocracy fail of its own "weight"? Perhaps so.....nice
I LUV how Trump stomped on all those preaning European elite scumbags. He's my hero
for pooping all over their little pride parade. Tell em like it is Donald they call you
stupid and all those other useless names. Your stinking GENIUS. MORE and an ENCORE!!!!
Agree with Patrick. It is surprising to still see so much animosity towards a
president who has done more to combat the absurdity of NATO and globalism than I can remember
any other President doing. The ball is in the EU elites court, now. Put up or shut up and I
believe it makes no difference to Trump. We are about to find out who is REALLY to blame for
marching lockstep with the current of hypercentralization (globalism): the Trump admin or the
EU elitez.
Sorry for the break in the Trump-bashing. Let's all get back to that good ol'
America-hatin' catharsis.
Since the start of the 70ties I have heard exactly the same tune from the US and the
blathering idiot in charge now has not changed the tune; ever since have I had to listen to
this "The Russians are coming" tune, with the rhetoric getting ever more shrill and false,
1989 brought a brief and marvelous, albeit very short pause to this tune, and for a few years
the US Kleptocracy was happy plundering the former USSR. When Russia resisted the plunder i.
e. Putin was elected, the tune started over again from where it was paused, disregarding the
fact that Russia does not in any way compare to the former USSR.
N, noooe , it is still "The Russians are coming" playing, but with a new beat, pepped up,
but same substance. But we are not listening anymore, the disgraceful actions and evil
behavior of The United States of Mordor, have come into the open (The internet, appreciate
it, we will not for long have it in its present form), even the most daft of us quietly
starts wondering.
Well I am not daft, and the questioning ended 4 decades ago, The US must be resisted. Our
politicians here on the continent must wake up and reject US imperialism and militarism, and
devise our own defenses if deemed necessary, many European nations are not at the living
standards we enjoy in Scandinavia, surely the money were better spent on that.
If the Poles and Baltic's want American troops on their soil, withdraw EU spending, we do
not need their insane sabre rattling. (Especially the Poles are vile, they forget that when
Hitler invaded, they had been a fascist dictatorship for years).
What exactly has Trump done to combat the absurdity of globalization and NATO besides
talk? While he stopped TPP and TIPP he is negotiating similar agreements bilaterally. Also
his Personal Empire benefits from globalization.
US only contributes 1% of their defense budget to NATO's direct costs so pulling out of
NATO would make hardly a dent in the budget except to increase costs to relocate all the
personnel and hardware. Those bases are invaluableHis calling for NATO countries to increase
defense spending benefits US and Israeli companies who make up the military and security
industrial complex and wont do squat to lower the defense budget
Born and raised in Southern California, been here 70 years... The US has been
manipulating NATO ever since it was formed. Most NATO officials are vetted by the US. Trump
is an idiot, like the bulk of US politicians.
@kgw
"You are agreeing with an idiot, no matter what...Europe has nothing to worry about with
regards to Russia. Unless they threaten Russia."
Well shit or get off the pot why don't you - "idiot" Trump is calling your bluff - stop
freeloading off a (by your assessment) non-existent threat, or he'll stop it for you. Can't
have it both ways. The US can't keep funding your crappy little joke of a disintegrating
"European Union" for ever. Sooner or later you'll have to put on big-boy pants. Methinks this
guy has a good take on this.
You're assuming Europe's leaders aren't bought and paid for by Wall Bank Street Banksters.
The system is rigged. I wouldn't doubt that they go into lapdog mode and bow to blowhard
Trump.
Mrs Merkel emphasised that the German armed forces would remain commanded by parliament and
not the government, and "would not take part in every mission".
This here is a clear description of the issues
involved . Of course, in the rivalry between the US and Russia, Europe's interest is best
served playing the two off each other united. It is no surprise both - the US and Russia -
have a strategic interest to split Europe. You don't believe Russia doing this, too? This
here is from Greece . No, their government is not anti-Russian.
Macedonia is expecting an invitation at the NATO summit in Brussels this week to join
following its landmark deal with Greece whereby it will change its name to the Republic of
North Macedonia. Moscow strongly opposes NATO expansion.
...
The Greek diplomatic source told Reuters Athens would expel two diplomats and bar two
other Russians from entering the country due to concerns that they were involved in rallies
in Greece against the deal with Macedonia and that they had attempted to offer money to
Greek state officials.
Becoming a "neutral" military force would end this type of nonsense. Trump acting like
mafia is another strong incentive.
"The U.S. military is the biggest socialist organization of the world. It is
egalitarian and its citizens, i.e. the soldiers, are extremely well cared for. It runs its
own healthcare system through the Veterans Health Administration."
A wonderful conclusion b.
Does anyone know of any in-depth economic analysis of the U.S. military as a state
welfare system for its members, as well as the impact of aggregate military spending on the
general purchasing power of citizens within the society at large?
And US military spending is also an enormous job-creation and wealth-redistribution
program in the form of defense contractors spread all over the nation, where they are
especially vital for areas with weak employment.
The US winds up with a lot of projects it does not need because Congresspeople are not
about to kill a program that employs thousands in their districts.
Why should Germany spend 4% on its military? Didnt see that coming from this blog. Are
germany facing an enemy? If not, its a waste of more money. All this useless money could be
spend to actually strenghten the welfare state. Something that actually matters and are much
needed. So which enemy is Germany facing? Either Trump is right that Russia is a threat to
Germany or hes not. What is it?
The nonbinding motion, which came as the Senate voted to reconcile its version of the
annual defense policy bill with that of the House, expresses the Senate's support for NATO
and calls on negotiators to reaffirm the U.S. commitment to it. The 97-2 vote in the Senate
comes as Trump heads to Brussels.
Trump's "reasoning" makes sense in an infantile sort of way, but there's more too it
than meets the eye, is there not? Trump doesn't just want to Europe to "pay their fair share"
for NATO, which we all know is code for buying more US mil.gear but also to buy their LNG
from US too. It's like NATO is some sort of grotesque, evil franchise where the franchisees
can only buy goods/services from that single source, even though it's crap & inordinately
expensive, and even if you can get it cheaper elsewhere, i.e Russia.
I would love to see those fence-sitting NATO countries tell the US "sure, we'll increase
our mil. spending, but after what we saw in Syria, we'll be buying our gear from Russia"
(more bang for the buck too!) - that would be game, set & match right there!
I think you are wrong, Bernard. It will sell well in Europe too. To what extend were the
themes of the Brexit campaign based on Germany as the slave master of Europe, to exaggerate
slightly? It will also sell well in the US.
Wow! You don't feel that Trump has, by his mere existence and by winning the
presidency, been given a platform of which to decry the myriad injustices of globalization
and to utter things unspeakable by any Prez in the last fifty years?
I don't think you've been paying attention. The proof is in the pudding but what will be
the benefit of raising the spectre of doubt over bad deals like NATO, the current iteration
of world trade, and for animosity towards Russia? Evidently, it ain't worth shit to
predictable TDS-sufferers that hang around here.
So much for those who projected that Trump's demands for an increase in the defense spending
of other members and his scolding of Germany would lead to a weaker Nato! Nato members just
caved to Trump and are increasing their spending and Trump is touting that Nato is stronger
and everyone's doing the kumbaya.
When I say that Trump is establishment on steroids; it's an understatement. Trump is doing
the kissy, kissy with Putin because the plan is to pull Russia away from collaborating with
China. Zionist oligarchs are in league with Trump and Russia will eventually be under their
complete control.
@98 You just don't get it. Trump is fascist establishment. Trump is separating kids from
their mothers. Who does that??? He's a sick sadist.
Europe has an arms industry of their own. I doubt European countries invest their
money into US stuff - they buy their own. Most of the money does not go into weapons anyway,
but personel and administration. Germany contributes to the maintenance and infrastructure of
US bases, but those bases are business, too. This is not Saudi Arabia buying protection. The
real news is that Trump has started
a trade war negotiating by tantrum.
But Trump has a great point: if you claim that Russia is ready to invade you, why you are
buying gas from potential occupier?
Notable quotes:
"... Russia is a near neighbor to Germany. Commerce between relatively close countries is the normal course of events, so what is Trump suggesting, a 1970's style energy embargo on Russia? Depriving Russia the opportunity all trade with her neighbors 'because we said so' is no better than a blockade. ..."
Donald Trump, the 'America First' salesman, came to Brussels today to demand more tribute
to the empire. He wants Europe to buy more U.S. made weapons and to use U.S. liquefied
natural gas (LNG). But his arguments are all wrong. The people in Europe are not impressed by
them and they will reject his appeals.
His first talk in Brussels was
a profoundly wrong bashing of Germany to push it into buying very expensive LNG from U.S.
fracking producers. Trump, Putin's puppet according to the 'resistance', used the Russian
bogeyman to set the scene:
Well, I have to say, I think it's very sad when Germany makes a massive oil and gas deal
with Russia, where you're supposed to be guarding against Russia, and Germany goes out and
pays billions and billions of dollars a year to Russia. ... So we're protect you against Russia, but they're paying billions of dollars to Russia, and
I think that's very inappropriate. And the former Chancellor of Germany is the head of the
pipeline company that's supplying the gas. Ultimately, Germany will have almost 70 percent
of their country controlled by Russia with natural gas.
So you tell me, is that appropriate? I mean, I've been complaining about this from the
time I got in. It should have never been allowed to have happened. But Germany is totally
controlled by Russia , because they will be getting from 60 to 70 percent of their energy
from Russia and a new pipeline. ... Now, if you look at it, Germany is a captive of Russia because they supply. They got rid of
their coal plants. They got rid of their nuclear. They're getting so much of the oil and
gas from Russia. ... I think trade is wonderful. I think energy is a whole different story. I think energy is a
much different story than normal trade. And you have a country like Poland that won't
accept the gas . You take a look at some of the countries -- they won't accept it, because
they don't want to be captive to Russia. But Germany, as far as I'm concerned, is captive
to Russia, because it's getting so much of its energy from Russia. So we're supposed to
protect Germany, but they're getting their energy from Russia. Explain that. And it can't
be explained -- you know that.
Trump was talking about the Nordstream II pipeline which will supply Germany and other
European countries with natural gas from Russia.
It is indeed hard to believe that western european governments would agree to what
Christopher Black calls a "US shakedown". Except that they have been doing so since 1949.
It is important to remember that the US Embassy exerts at least as much influence on the
government as Parliament does. And that Parliaments are full of agents of the the US empire,
in some cases they are actually on the payroll, many more are either US educated, marinated
in the imperialist ideology or in the service of corporations which know that the Empire is
the final guarantor of their survival and capable of crushing them with ease.
That having been said, things are changing, The imperialists cling to power only by exerting
the most extraordinary, and unsustainable, pressure. An example of which is the ludicrously
over-wrought campaign against the left in the UK being waged by the Israeli Embassy, with the
assistance of the entire MSM.
B's arguments are correct but it will take a mobilised and politically conscious public
opinion to impose them on governments full of people who see themselves as Washington's
servants and expect to be rewarded one day for being loyal to the US and for betraying their
countrymen and, of course, women.
The question is if Europe will truly continue to bark and bite at the deep state or if this
is all just for show and they'll eventually capitulate. I'm worried that this is nothing more
than political theatre. I'm not expecting much from the Europeans. But we'll see.
Europe buying LNG from the US just makes no sense at all. Aside from the cost, LNG is
difficult to transport and work with; the whole idea is just nuts, especially considering the
quantities involved. In addition, Russian gas is plentiful and cheap, so to expect Europe not
to use it is also nuts.
Could it be that Trump fully understands this and the hidden agenda is to get out of NATO and
bring home the troops?
Russia is a near neighbor to Germany. Commerce between relatively close countries is the
normal course of events, so what is Trump suggesting, a 1970's style energy embargo on
Russia? Depriving Russia the opportunity all trade with her neighbors 'because we said so' is
no better than a blockade.
One of these days, my country is going to get a taste of, 'no soup for you' and we will be
screaming like stuck pigs.
Yes, I am obsessed w/Sean Hannity
It's his earnest, self-righteous, mind numbingly idiotic voice, I'm hypnotized. Ollie
North was on his show and they were going on about 'Iran's' saber rattling by threatening to
close the Straits of Hormuz. Sean rattled off how the EU would wake up and it would be the
end of Iran's belligerence.
He neglected to mention that this 'threat' is only coming after our act of war by actively
trying to cut off all of Iran's oil exports which is no better than a naval blockade.
Much can be gleaned from
this NATO Defence Expenditure pdf with special attention given to graphs 5, 6
& 7. Since the dissolution of the USSR, military spending as share of GDP by EU &
Canada decreased about 50% as shown in Graph 5. It should also be noted that the demand made
by the Outlaw US Empire for EU NATO members to increase their wastage of monies on military
equipment began with Obama in 2015, with compliance noted by the graphs in 2016. When Obama
gave his orders, very little squawking was heard from EU/Canada governments, although it was
quite different from the public. Of course, EU/Canada are caught in a trap of their own
design--Russia's quite obviously not the "aggressive" nation that must be defended against
using all necessary means as promoted by Russophobic Media Propaganda as they all trade and
benefit from commercial interactions; thus, bean counters see NATO as a wastage of vital,
finite monies that ought to be spent on productive endeavors advancing the human condition.
In national legislatures: "Russia's a growing threat to humanity!!--BUT--No, I'm voting
against any increase in military spending as there's no need for it."
European members of NATO don't need such an organization. If they were to join the Russian
and Chinese enterprises to unite Eurasia into a common economic zone, then the need for NATO
would become indefensible. And their finally becoming independent of the Outlaw US Empire's
diktats would provide the impetus required to finally solve the status of Palestine and
reaffirmation of the paramountcy of International Law as a greatly expanded Multipolar Order
would be established. The United Nations might actually begin to function as designed.
Is Trump trying to push NATO apart by injecting it with a dose of American Chaos? Force
EU/Canada to declare their independence from the Outlaw US Empire for numerous reasons? All
of which would force the contraction of the Overseas element of the Empire and install an
actual defense policy, not one aiming to control the world? Is this Trump's way to force a
Neocon retreat?
Meanwhile, China charms Arabia
"Under the radar,..., the eighth ministerial meeting of the China-Arab States Cooperation
Forum (CASCF), established in 2004, sailed on in Beijing, hosted by President Xi Jinping."
Please note the article's citing of new demands made to Iraq by the Outlaw US Empire, which
has their roots in Trump's appraisal of the situation.
I'd say this is why you do not mix a military alliance with politics. Nor allow federal
presidents to command and represent an army. Trump's retarded bullshit aside the USA
shouldn't be holding committee meetings with allies without an war. An alliance shouldn't be
considered active during peacetime. An ally is a figment of political imagination until
military necessity requires it in actuality. Historically and currently a military alliance
is treated as a contract for warmongering against an outnumbered enemy while at peace or at
war. Which is why honorable people (currently very few) eschew alliances or non-aggression
agreements until they become a defensive requirement. If President Trump want's to crash NATO
with no survivor's, more power to him.
The bright side of Trump bullying is revealing NATO astronomical hypocrisy as they join
psychotic delusions about Russian menace they refuse to put money where their mouth is and
shamelessly disclose their vassal status begging for American military support for free.
All that knowing well that there is no threat from Russia that cannot be eliminated simply
by good neighborly relation with Russia not by spending $billions on otherwise useless
fraudulent US MIC junk.
Is that nor reverse psychology that is in play here, put up or shut up, let me make deal
with Russia so you do not have to spend on military rediculous sums to match your delusional
rhetorics about Russian threat.
Trump is s gambling man, wants to make money for US MIC on anti Russian lies or make money
for US industry on Russia peace and cooperation truths.
"Stoltenberg: [ ] I think that two World Wars and the Cold War taught us that we are
stronger together than apart.
Trump: But how can you be together when a country is getting its energy from the person
you want protection against or from the group that you want protection?
Stoltenberg: Because we understand that when we stand together, also in dealing with
Russia, we are stronger. I think what we have seen is that --
Trump: No, you're just making Russia richer. You're not dealing with Russia. You're making
Russia richer."
You'd have to be an idiot not to agree with Trump here.
A notable difference between the way Trump treats the likes of Putin, Xi, and Kim Jong Un
- all leaders in their own right - to the way he treats the EU poodles. Zero respect for the
poodles.
Posted by: Peter AU 1 | Jul 11, 2018 6:40:20 PM |
22
"... The big advantage for Germany is that (Nordstream I and Nordstream II] pipelines
do not run through any other country ..."
That's because idiot EU / NATO countries like Denmark, who would gladly accept having the
pipelines pass through their land and maritime territories (and the transit fees that go with
them) if Russian gas were not flowing through them, prefer to support the Nazi whacko
Banderites ruling Ukraine who whine that all Russian gas should transit Ukrainian territory
in deteriorating pipelines. So Denmark and others refuse to host any part of the pipelines at
all.
When Gazprom starts sending all gas through Nordstream I and II and pipelines through the
Black Sea, completely bypassing Ukraine, then that country will be close to bankruptcy.
Denmark and everyone else in the EU and NATO had better be ready to rescue the
Banderites.
Der Speigel 's fact-checking article of Trump's assertions provides some
interesting facts, all in German, which I used Yandex to translate. To counterargue Trump's
most pointed assertion that Germany's a captive of Russia, the author provides this rebuke:
"Russland ist auf den Abnehmer Deutschland angewiesen. Die Deutschen benötigten die
Russen vor allem als Lieferanten für Erdgas." (Russia is dependent on the customer
Germany. The Germans needed the Russians mainly as suppliers of natural gas.) Overall:
"Für Russland ist Deutschland als Handelspartner wichtiger als andersherum. Von allen
deutschen Importen kamen 2017 nur drei Prozent aus Russland - und lediglich zwei Prozent der
Exporte gehen in Putins Reich. Für die Russen war die Bundesrepublik mit einem Anteil
von 8,6 Prozent ihres gesamten Außenhandels der zweitwichtigste Partner hinter China.
Und mehr als zwei Drittel der russischen Exporte nach Deutschland waren Erdgas, Öl und
Steinkohle." (For Russia, Germany is more important as a trading partner than elsewhere. Of
all German imports, only three percent came from Russia in 2017 - and only two percent of
exports go to Putin's Reich. For the Russians, Germany was the second most important Partner
behind China, accounting for 8.6 percent of its total foreign trade. And more than two-thirds
of Russian exports to Germany were natural gas, Oil and coal.)
Clearly, the total trade turnover between Russia and Germany represents just a small
fraction of their totals, and both nations would likely find a replacement if a total embargo
was to ensue.
The US began pressuring countries to forego nuclear power to support the Petro Dollar in
1978. One big reason they deposed the Shah who was planning to go big with nuclear power with
orders for about 20 French and /or German reactors
The TMI accident was likely a false flag run by the newly established FEMA.
If the restrictions on recycling nuclear fuel rods were eliminated there would not be a
disposal problem.
Germanys decision to phase out nuclear makes US happy. Germany will only accept Nord
Stream 2 if it does not bypass Ukraine. This also makes US happy although they would prefer
no Nord Stream 2. As said up thread this is as much about posturing before the Putin meeting
and gaining leverage.
A bit O/T but it appears rare metals needed by US military and tech industries are on the
list of products subject to tarrifs. China basically has a monopoly on these metals so the
only short term purpose is to drive up prices for weapons and tech gadgets which get passed
onto the taxpayer/consumer. In effect the tarrifs are just another revenue source to finance
tax cuts to corporations and the rich.
Longer term of course the tarrifs make mining some of these metals in the US more
feasible, at some cost to the environment , seeing as EPA has been gutted. But for that to
happen the tarrifs need to be more or less a permanent thing. Its not like they dont have
tarrifs on food and clothes from China. Just expanding the revenue base. The middle class
takes the hit in the end, whats left of it anyways
Trump as a used car salesman does not make much sense either. In fact I don't think he can
spell to sense. It telling that he is impervious to the mood in both NATO and the EU.
His middle name should be clueless. He is truly clueless, he will not get an increase in
defense expenditure, it would be political self goal (Hello Engeland, no not football, that's
more like clueless) for any major political party to demand that, the electorate across
Europe are firmly against it. Ohh and who cares about Perfidious Albion, they are not part of
Europe anymore, they are some Islands with bad weather in the North Sea.
Seabird sanctuary ?
Europe hopefully comes to its senses and casts of the American yoke, and fashion its own
defences, based on ITS needs.
thanks b.. informative and interesting comments from everyone too.. thanks..
trump is a hard guy to read in some respects... he is like a blunt object on the one hand,
but he might have some alternative purpose in mind, which would include the meet with trump
in 5 days..
if he wants to get rid of nato, i think he is going about it the right way.. i can't see
why he would though as that wouldn't benefit the mil complex...i can't see the purpose of
nato either way and perhaps it would be best if the poodles let go of having the usa as it's
leader in the 21st century.. consider a different approach... i am not sure what canada and
other western type poodles can do with all this..
@7 karlof1.. thanks for the pepe link... i just don't see the approach - bullying - taken
by the usa to iraq, as working out.. i am listing the demands for others to see
firsthand..
"
1. 30% of all the oil in Iraq should be American-controlled – and it's up to the US do
what it wants with it.
2. Washington must have full access and control of Iraqi banks.
3. All business and trade with Iran must cease right now.
4. The Hashd al-Shaabi, known as People Mobilization Units (PMUs), instrumental in the
victorious fight against Daesh (Islamic State),
must be immediately disbanded."
the usa takes this approach based on weakness, not strength... in fact - if one was to
read trumps comments on the surface here - it is the same thing that b has highlighted in
this post.. again - the usa is not working from a place of strength.. it is like a wild
animal in the last phase of it's life - not good..
Lost in the story is fact it is not new supply of natural gas to Europe. It is new pipe
lines including two others with the sole intent of bypassing Ukraine. Presently near all
Russian natural gas passes through Ukraine on its way to Western Europe and particularly ..
Germany. The Ukraine regime has been reaping the benefit of transmission fees and stealing
billions of cubic meters of gas, on which they also charged transmission fees. This was the
basis behind a recent dispute panel finding in favor of Ukraine and the gas theft. The
Americans and willing European Poodles would very much like to keep the gas flowing through
Naziville where they would maintain a strangle hold. Gazprom, the principle Russian supplier,
more or less said f**K you and formed consortiums to build new pipe lines
@32 So if Germany gets gas through Nordstream they are 'controlled by Russia' but if they
get it via Ukraine they aren't. Seems Nordstream would be good insurance against Ukrainian
meddling. Cheaper too, a very sound business strategy that Trump should appreciate.
"... President Trump's demand last week that OPEC "reduce prices now" or US military protection of OPEC countries may not continue almost sounded desperate. But if anything, Trump's bluntness is refreshing: if, as he suggests, the purpose of the US military – with a yearly total budget of a trillion dollars – is to protect OPEC members in exchange for "cheap oil," how cheap is that oil? ..."
"... Exactly how traditional 'US Mideast policies' benefit the average American however remains a mystery. Many of these questionable policies are never critically examined in the open – at least not the big ones involving that 'special relationship' with you-know-who. Never. ..."
"... Iran's crime? That nation's alleged 'sponsorship of terrorism' in support of the Palestinian struggle against Zionist occupation, as well as other anti-Zionist resistance movements in Lebanon, Syria and beyond. ..."
"... Yet it is Israel that is foremost occupying power in that region and it is Israel that is the expanding nuclear power. Meanwhile, the Zionist-lead BDS campaign against Iran is nothing less than a full-blown economic war. At the same time, Israel benefits from unconditional and continuous US subsidies. ..."
"... In no small way, Israel sees its mission to dominate the region and expand its borders as a religious duty. Destiny. This puts Israel in a class by itself. And unlike its neighbors (including Iran) Israel has nuclear WMD. ..."
President Trump is finding that his threats and heated rhetoric do not always have the
effect he wishes. As his Administration warns countries to stop buying Iranian oil by November
or risk punishment by the United States, a nervous international oil market is pushing prices
ever higher, threatening the economic prosperity he claims credit for. President Trump's
response has been to demand that OPEC boost its oil production by two million barrels per day
to calm markets and bring prices down.
Perhaps no one told him that Iran was a founding member of OPEC?
When President Trump Tweeted last week that Saudi Arabia agreed to begin pumping additional
oil to make up for the removal of Iran from the international markets, the Saudis very quickly
corrected him, saying that while they could increase capacity if needed, no promise to do so
had been made.
The truth is, if the rest of the world followed Trump's demands and returned to sanctions
and boycotting Iranian oil, some 2.7 million barrels per day currently supplied by Iran would
be very difficult to make up elsewhere. Venezuela, which has enormous reserves but is also
suffering under, among other problems, crippling US sanctions, is shrinking out of the world
oil market.
Iraq has not recovered its oil production capacity since its "liberation" by the US in 2003
and the al-Qaeda and ISIS insurgencies that followed it.
Last week, Bloomberg reported that "a complete shutdown of Iranian sales could push oil
prices above $120 a barrel if Saudi Arabia can't keep up." Would that crash the US economy?
Perhaps. Is Trump willing to risk it?
President Trump's demand last week that OPEC "reduce prices now" or US military
protection of OPEC countries may not continue almost sounded desperate. But if anything,
Trump's bluntness is refreshing: if, as he suggests, the purpose of the US military –
with a yearly total budget of a trillion dollars – is to protect OPEC members in exchange
for "cheap oil," how cheap is that oil?
At the end, China, Russia, and others are not only unlikely to follow Trump's demands that
Iran again be isolated: they in fact stand to benefit from Trump's bellicosity toward Iran. One
Chinese refiner has just announced that it would cancel orders of US crude and instead turn to
Iran for supplies. How many others might follow and what might it mean?
Ironically, President Trump's "get tough" approach to Iran may end up benefitting
Washington's named adversaries Russia and China – perhaps even Iran. The wisest approach
is unfortunately the least likely at this point: back off from regime change, back off from
war-footing, back off from sanctions. Trump may eventually find that the cost of ignoring this
advice may be higher than he imagined.
Trump may eventually find that the cost of ignoring [the advice to back off from Iran]
may be higher than he imagined.
Perhaps he's counting on not being President by then. Another case of IBGYBG (I'll be
gone, you'll be gone), an attitude that seems to be infecting bankers, Wall Street, and the
rest of the U.S. élite lately. A cataclysm is coming, and they can see it.
Why is Zio-America treating Iran with such hostility?
Iran and Israel are locked in a vicious cold war. Their animosities date back to mythical
antiquity. One alleged episode is even celebrated in the Jewish celebration of 'Purim'.
Take a look at the breathtaking insight that Gilad Atzmon has to offer about Purim:
In any case, Iran and Israel's antipathies for one another shouldn't concern superpower
America. Except that it does.
Like American television, Washington happens to be Israeli-held territory. Haven't you
heard?
This is why Zio-Washington invariably sides with Israel in all of its disputes, even when
1) Israel is the aggressor, 2) even when Israel is slaughtering powerless civilians who are
protesting their subjugation, and 3) even when US interests are not at stake or even in play.
And this uniform deference from Washington is thoroughly bipartisan. It is 'business as
usual'. It's basically unanimous. Both Parties. No dissent.
Many just call it 'US Mideast policy'. Ironclad. 'Unshakable'. But don't laugh or smirk.
Doing so might be seen as 'anti-Semitic'.
Exactly how traditional 'US Mideast policies' benefit the average American however
remains a mystery. Many of these questionable policies are never critically examined in the
open – at least not the big ones involving that 'special relationship' with
you-know-who. Never.
These rigid policies help explain how Crypto-Israelis in America – using Washington
as their proxy – have successfully brought the US into Israel's cold war against
Iran.
Zionist operatives have not only orchestrated the decades-long freeze of billions of
dollars in Iranian assets that belong to the Iranian people, but they have launched a global
(and crypto-Zionist) 'Boycott, Divestment and Sanctions' campaign against the relatively
peaceful nation of Iran.
Iran's crime? That nation's alleged 'sponsorship of terrorism' in support of the
Palestinian struggle against Zionist occupation, as well as other anti-Zionist resistance
movements in Lebanon, Syria and beyond.
Yet it is Israel that is foremost occupying power in that region and it is Israel that
is the expanding nuclear power. Meanwhile, the Zionist-lead BDS campaign against Iran is
nothing less than a full-blown economic war. At the same time, Israel benefits from
unconditional and continuous US subsidies.
Politicians who dare question this phenomena – or who wander off the Zionist
plantation in Washington – tend to disappear. Rapidly. Journalists, too.
In no small way, Israel sees its mission to dominate the region and expand its borders
as a religious duty. Destiny. This puts Israel in a class by itself. And unlike its neighbors
(including Iran) Israel has nuclear WMD.
Due to Israeli influence here, Americans are not only actively supporting various Zionist
war efforts, but they are also paying billions more for their gasoline since Zionists have
managed to prohibit the purchase Iranian oil throughout the West. These economic 'choices'
are what Americans unwittingly make – even though the 'average Joe' remains totally
unaware of them.
Indeed, even though Iran wants to be a trading partner with America and bring its oil onto
the world market, Zio-Washington says 'NO!' US consumers be damned. The Iranian people be
damned.
This is not the first time that US economic interests have taken a back seat to Israel's.
Please recall the 1973 Arab-Israeli war, Zio-Washington's intervention on behalf of Israel
during that conflict, the ensuing Arab oil embargo, and the disastrous recession that
followed.
But Zio-America never turned it back on Israel, even though American citizens never had
the opportunity to determine their allies or policies one way or another. US support of
Israel is mandatory. It's been this way since LBJ.
Today, Israel is maneuvering Zio-Washington to do to Iran what it did to Iraq, Libya and
Syria; namely, spread destabilization and impose 'creative destruction' upon all nations that
pose any long-term threat to the Zionist State.
Those suckers from Sanford and Bernstein again try to push thier view that shale oil has
great potential instead of potential to bury even more money in the sand. production of shale oil includes production of a
parallel stream of junk bonds.
"... statements from the U.S. government about "zero tolerance" towards Iran could mean that those losses will end up being much higher. Just by shifting the supply outages from 0.5 to 1 mb/d would translate into an oil price increase of about $8 to $9 per barrel, according to Bank of America Merrill Lynch. ..."
"... "We estimate that every million b/d shift in [supply and demand] balances would push the oil price by $17/bbl on average. So based on those assumptions, we estimate zero Iran exports could push oil up by $50/bbl if Saudi caps out. We expect in this game of chicken, someone will blink before that happens." ..."
"Investors who had egged on management teams to reign in capex and return cash will lament
the underinvestment in the industry," the analysts
wrote . "Any shortfall in supply will result in a super-spike in prices, potentially much
larger than the $150 a barrel spike witnessed in 2008."
... ... ...
Of course, for many, this is a problem for another day. The oil market is
arguably facing a supply crisis right now. Until recently, the oil market assumed a loss of
about 0.5 mb/d from Iran because of U.S. sanctions. But statements from the U.S. government
about "zero tolerance" towards Iran could mean that those losses will end up being much higher.
Just by shifting the supply outages from 0.5 to 1 mb/d would translate into an oil price
increase of about $8 to $9 per barrel, according to Bank of America Merrill Lynch.
"We estimate that every million b/d shift in [supply and demand] balances would push the
oil price by $17/bbl on average. So based on those assumptions, we estimate zero Iran exports
could push oil up by $50/bbl if Saudi caps out. We expect in this game of chicken, someone will
blink before that happens."
In other words, if Saudi Arabia is unable to plug the deficit, the U.S. would likely have to
back down on its "zero tolerance" policy towards Iran. The oil market is too tight, and the
supply gap would be too large. Cutting Iran exports by that much, in an increasingly tight oil
market, would send prices skyrocketing, something that the Trump administration probably won't
be able to stomach. If Trump proceeded, a price spike of that magnitude would lead to a
meltdown in demand.
As the world continues to burn energy like there is no tomorrow, global oil and gas discoveries
fell to another low in 2017. And to make matters worse, world oil investment has dropped 45% from
its peak in 2014. If the world oil industry doesn't increase its capital expenditures
significantly, we are going to hit the Energy Cliff much sooner than later.
According to Rystad Energy, total global conventional oil and gas discoveries fell to a low of
6.7 billion barrels of oil equivalent (Boe). To arrive at a Boe, Rystad Energy converts natural
gas to a barrel of oil equivalent. In 2012, the world discovered 30 billion Boe of oil and gas
versus the 6.7 billion Boe last year:
"We haven't seen anything like this since the 1940s," says Sonia Mladá Passos, senior analyst
at Rystad Energy. "The discovered volumes averaged at ~550 MMboe per month.
The most
worrisome is the fact that the reserve replacement ratio in the current year reached only 11%
(for oil and gas combined) - compared to over 50% in 2012."
According to Rystad's
analysis, 2006 was the last year when reserve replacement ratio reached 100%.
The critical information in the quote above is that the world only replaced 11% of its oil and
gas consumption last year compared to 50% in 2012. However, the article goes on to say that the
last time global oil and gas discoveries were 100% of consumption was back in 2006. So, even at
high $100+ oil prices in 2013 and 2014, oil and gas discoveries were only 25% of global
consumption.
As I mentioned at the beginning of the article, global oil capital investment has fallen right
at the very time we need it the most. In the EIA's International Energy Outlook 2017, world oil
capital investment fell 45% to $316 billion in 2016 versus $578 billion in 2014:
In just ten years (2007-2016), the world oil industry spent $4.1 trillion to maintain and grow
production. However, as shown in the first chart, global conventional oil and gas discoveries fell
to a new low of 6.7 billion Boe in 2017. So, even though more money is being spent, the world
isn't finding much more new oil.
I believe we are going to start running into serious trouble, first in the U.S. Shale Energy
Industry, and then globally, within the next 1-3 years. The major global oil companies have been
forced to cut capital expenditures to remain profitable and to provide free cash flow.
Unfortunately, this will impact oil production in the coming years.
Thus, the world will be facing the Energy Cliff much sooner than later.
Yeah tHis article is ridiculous, resident ZH self-purported Mensa members
like Tmos' have proven beyond any doubt that 'abiotic oil' replenishes the
world's supply of easily accessed hydrocarbons every fifteen minutes or so,
regardless of increasing consumption rates; indeed regardless of any
veritable facts whatsoever.
Worked by whole life in the oil business. Depletion is real. Abiotic oil
replenishment is Magic unicorns dancing on rainbows. Oil won't run out
ever, but the energy required to extract the oil will make remaining oil
reserves uneconomic at some point.
Strange that the oil industry does not agree with you. And it's strange
that reserves all over the world are not stable but decreasing. Your
Mensa idol is full of shit.
With the US and China contemplating their next moves in what is now
officially a trade war, a parallel narrative is developing in the world of energy where Asian
oil refiners are racing to secure crude supplies in anticipation of an escalating trade war
between the US and China, even as Trump demands all US allies cut Iran oil exports to zero by
November 4 following sanctions aimed at shutting the country out of oil markets.
Concerned that the situation will deteriorate before it gets better, Asian refiners are
moving swiftly to secure supplies with South Korea leading the way. Under pressure from
Washington, Seoul has already halted all orders of Iranian oil, according to sources, even as
it braces from spillover effects from the U.S.-China tit-for-tat on trade.
"As South Korea's economy heavily relies on trade, it won't be good for South Korea if the
global economic slowdown happens because of a trade dispute between U.S and China," said Lee
Dal-seok, senior researcher at the Korea Energy Economic Institute (KEEI).
Meanwhile, Chinese state media has unleashed a
full-on propaganda blitzkrieg , slamming Trump's government as a "gang of hoodlums", with
officials vowing retaliation, while the chairman of Sinochem just become China's official
leader of the anti-Trump resistance, quoting Michelle Obama's famous slogan "
when they go low, we go high. " Standing in the line of fire are U.S. crude supplies to
China, which have surged from virtually zero before 2017 to 400,000 barrels per day (bpd) in
July.
Representing a modest 5% of China's overall crude imports, these supplies are worth $1
billion a month at current prices - a figure that seems certain to fall should a duty be
implemented . While U.S. crude oil is not on the list of 545 products the Chinese government
has said it would immediately retaliate with in response to American duties, China has
threatened a 25% duty on imports of U.S. crude which is listed as a U.S. product that will
receive an import tariff at an unspecified later date.
And amid an escalating tit-for-tat war between Trump and Xi in which neither leader is even
remotely close to crying uncle, industry participants expect the tariff to be levied, a move
which would make future purchases of US oil uneconomical for Chinese importers.
"The Chinese have to do the tit-for-tat, they have to retaliate ," said John Driscoll,
director of consultancy JTD Energy, adding that cutting U.S. crude imports was a means "of
retaliating (against) the U.S. in a very substantial way".
In an alarming sign for Washington, and a welcome development for Iran, some locals have
decided not to see which way the dice may fall.
According to
Japan Times , in a harbinger of what's to come, an executive from China's Dongming
Petrochemical Group, an independent refiner from Shandong province, said his refinery had
already cancelled U.S. crude orders .
"We expect the Chinese government to impose tariffs on (U.S.) crude," the unnamed executive
said. " We will switch to either Middle East or West African supplies ," he said.
Driscoll said China may even replace American oil with crude from Iran. " They (Chinese
importers) are not going to be intimidated, or swayed by U.S. sanctions."
Oil consultancy FGE agrees, noting that China is unlikely to heed President Trump's warning
to stop buying oil from Iran. While as much as 2.3 million barrels a day of crude from the
Persian Gulf state at risk per Trump's sanctions, the White House has yet to get responses from
China, while
India or
Turkey have already hinted they would defy Trump and keep importing Iranian oil. Together
three three nations make up about 60 percent of the Persian Gulf state's exports.
Under pressure from Washington, Seoul has already halted all orders of Iranian oil,
according to sources, even as it braces from spillover effects from the U.S.-China
tit-for-tat on trade.
Expecting SA to help supply the World's needs is perhaps going off the deep end. It's their
bread and butter for years to come. As years pass, they become more aware that those years
are limited. This is not the 1970's, it's 2018. They will supply what is profitable for them,
and wasting it early, doesn't sound real smart, does it? If we offered them massive support
to develop their nuclear capabilities, it would probably entice them. Or, jump out of the
pot, and into the frying pan. Iran May have more capacity for new oil.
If I have understood this correctly. When most of their fields are mature, the option they
have is to invest (almost overbuild) in facilities foremost to treat and inject the steadily
higher volume of water to keep oil production steady and at the same time overinvest in
infill drilling to keep the volume rising. All this to sustain or even increase oil output
from mature fields, so that the oil price can stay low. And then there is the extra gain in
extra barrels to consider as a result of the investments that adds to ultimate recovery at
each field. The gain from extra barrels could make up for a mediocre return on investment in
some cases and a questionable one in other cases. Given a relatively low oil price
assumption.
Why would they do that? Keeping the facilities as they are for mature fields, accepting
only small investments where they are highly profitable, limiting infill drilling to the best
locations, let the oil production fall and hope for prices to rise would be a superior
solution for them, would it not? Why rush investments in mature oil fields?
When most of their fields are mature, the option they have is to invest (almost overbuild)
in facilities foremost to treat and inject the steadily higher volume of water to keep oil
production steady and at the same time overinvest in infill drilling to keep the volume
rising. All this to sustain or even increase oil output from mature fields,
Well no, it does not usually increase production, it just drastically reduces the decline
rate. For instance, a very mature field may have a natural decline rate of 6 to 8% per year.
With infill drilling of horizontal wells along the top of the reservoir, they may reduce that
decline rate to 2% per year.
so that the oil price can stay low.
No, that's not why they are doing it. They are doing it to maintain their annual
production. Some do increase production but with oil from new fields. These new fields,
however, will have a much lower URR and will start to decline after only a few years. All the
giant and supergiant field have already been discovered.
The "so that the oil price can stay low" was a well hidden irony from my part. But you
have a point, they want to keep their long term customers supplied, not losing face in OPEC
and their long term allies happy. They stretch to keep everyone happy.
A field is creamed by massive infill drilling with horizontal wells that skim the very top
of the reservoir. The decline rate is the[n] drastically reduced while the depletion rate is
drastically increased. Things will go just great until the water hits those horizontal wells
at the top of the reservoir. Then production will drop like a rock.
I assume this is the money quote. These methods comprise the "game changer" that scuttled
peak oil predictions circa 2005.
By demurring a prediction as to when the stone might–will!–drop, you're
acknowledging the deplorable state of the data. This should give us pause. We might call this
the New Peak Oil Reticence.
Let's grant that what you say is true (I'm certainly not qualified to refute it). If you
know it (that is, that the rock will drop), then "they" know it, and by "they" I mean those
who are in the business of developing these "creaming" methods. They must know it.
No one producing country is looking at the global problem. They are only concerned with their
own country and the problems at home. Most are old men who realize that they will be long
dead if there is ever a catastrophe. And most, like the contributors to this blog, believe
that there will never be a catastrophe. They believe that renewables, or fusion energy, or
God, human ingenuity, or something else will save us from any type of collapse.
But the point is, the oil barons of each individual country, are not even remotely
concerned with the collapse of civilization as we know it. They believe God, or Allah, or
human ingenuity, will simply not allow that to happen.
"And most, like the contributors to this blog, believe that there will never be a
catastrophe. They believe that renewables, or fusion energy, or God, human ingenuity, or
something else will save us from any type of collapse."
But doesn't that require, like, planning? Plenty of planning?
I think Dr. Minqi Li put together an exceptionally well researched paper. The only one I have
a faintest glimmer of knowledge in is oil. 2021. Give or take a couple of years is a good
estimate of when peak oil occurs, based on current findings and technology. Improvements in
either would probably only affect the tail of the decline rate. Which, based on the immense
overstatement of EIA, and the creaming you mentioned, the tail should have much more of a
decline than depicted. I am tending towards 2022 to 2023 as the final peak, due to the little
over a year hiatus on the Permian final push due to pipeline and other constraints. We all
know 2042 is a bad projection for the US, it will get there as soon as it can. It will get
there as soon as it can, because the oil price will be high enough to beg, borrow, or steal
to get there. For that reason, all other sources will be staining to get there at the same
time. We are in the final stage, I do think.
Yes, I agree with you on Dr. Minqi Li's paper. I am not sure, however, that the Permian will
show enough yearly increase to hold off the peak until 2023.
Russia is certainly being creamed. The massive infill is visible from satellites and they
haven't found/opened anything new of size, yet have outlasted what everyone (including them)
calculated would be the start of their decline.
Russia needs the oil revenue badly. But is their ultimate decline going to look like
China? Very likely.
The implied increase in the Permian would be staggering. US onshore outside of fracking is in
terminal decline. US GOM is peak/decline. Eagle Ford is peak/decline. Bakken is close to
peak. Eagle Ford and Bakken have very high existing production decline rates, meaning they
will fall like a brick if drilling moves to the Permian.
There isn't anything new beyond the Permian. People have looked. No more plays.
And after covering all of that and its own existing production decline (not as extreme as
the other plays but large in absolute number), the Permian is supposed to add millions of
barrels per day?
I don't think that adds up no matter what the price of oil is.
2018-07-05 (Platts) While Saudi Aramco CEO Amin Nasser told Platts recently that "maximum
sustainable production" was 12 million b/d, industry experts believe Saudi Arabia will
struggle to pump more than 1 million b/d of additional output.
Yeah, I think that is pretty much what Ron and George have been saying. It is why all these
drops in production, and projected production that will not get out of the ground has to
cause demand to exceed supply within the next year by a substantial amount. Throw in Iran's
sabre rattling over the Homez, and oil prices should be through the roof. That it is not, is
mainly complacency built up over the past four years from the inventory overage. As Scarlet
O'Hara said, "After all tomorrow is another day".
MSNBC announced that the Aramco IPO may never happen. MSNBC didn't say why, however I suppose
those reserves that the Saudis have touted for so long could be very difficult to have
verified based on SEC rules. I think that much of the last two years of prep for their IPO
has been shopping for a exchange that would allow them to get their stock issued without
drastically revising their prior reserve disclosures.
You can also look at this development as an indication that the above discussed "rock" may
have already dropped.
I think that the potential threat of what happens if there is a hot war are more extensive
than just having the Strait of Hormuz being closed. If you look at that map you can see that
Saudi Arabia is just across the Strait. And as luck would have it, Saudi Arabia's oil fields
are mostly in the east which means that they are within close missile range of Iran. Nice oil
fields you have there Saudi Arabia. Shame if something happened to it. The United Arab
Emirates are also within missile range as well. If both countries think that Patriot
batteries will protect them then they must have been disillusioned to find that those
Patriots couldn't even defend against wonky Houthi missiles.
Then there is the fact that Iran shares a border with Pakistan and Afghanistan. Remember how
the CIA shipped all those anti-tank guided missiles (ATGM) and ManPads to the Syrian
Jihadists via countries like Saudi Arabia? Be a real shame if captured stock got passed on to
the Taliban via all those borders and started targeted US/Coalition forces in Afghanistan.
Just these two possibilities show how Iran has a whole range of options to use if it came to
a military confrontation. And it should be remembered. If a US/Coalition could not
successfully occupy Iraq with a population of 37 million, then how can Iran with a population
of 80 million be occupied?
Another factor is that even if a US/Coalition managed to somehow suppress all those missiles
the Iranians are using to guard those Straits, you would never be sure that you got them all.
Who really want to risk their oil tankers going down those Straits and wanting to risk that
bottleneck beig turned into a flaming sea? The trouble there is no way that there would be a
quick campaign possible with everybody home by Christmas. This has the potential of still
being fought during the 2020 US elections and I do not think that the US establishment wants
to risk that one. What they do want is to strangle Iran economically and turn the place into
one of grinding poverty but if pushed too far may go the Sampson option.
Local kids could also be trained to fire rockets across the water. The straits are not
straight and cut into Iran, so there's a good vantage point for Iran.
> probably already is.
>> China is still officially stating that it will not end its Iranian oil imports and
operations.
China's investment of billions into the deep port of Gwadar should not be discounted.
While China has ceded the ocean surface to the US navy, the wei qi way is to surround and not
engage directly. By now the Gulf of Oman should be a sensory organ for information critical
to Iran, and passive systems are much harder to detect & destroy.
We're now three years out from Qiao Liang saying China "thinks that Washington will not
fight Beijing for the next ten years". China doesn't want the fight (and I mean high
explosives, not 'fighting for') yet, but they've been preparing. And let us not forget the
rooster tails on the American fleet fleeing the Persian Gulf in October 2015 when Russia
launched cruise missiles at Syria. That was three months after the 'One Belt, One Road'
speech.
While the Saud's are working out their family disputes they cannot afford to have the
petrodollar disabled. But the US is materially capable of weathering energy disruptions
better than the EU, which would become even more dependent on Russia. Long term, the
petrodollar is gone and climate migrations are coming, so the when of Fortess America could
depend on relative and not absolute 'cui bono, ciu malo'.
tldr: the fight is inevitable, there's more than two in the ring, and there's no
referee.
I doubt if it is mined at this time, but mines would be a logical way to quickly shut the
Strait down. A couple of small fast ships dropping mines at night could shut it down very
quickly. They could drop mines along the far shore which would force ships towards the Iran
side where they would be vulnerable to shore-based anti-ship missiles.
BTW, the standing NATO minesweeping group is three ships (two Lithuanian and one British).
Historically minesweeping is one of the roles carried out by other countries that the US is
currently working hard to alienate. https://en.wikipedia.org/wiki/Standing_NATO_Mine_Countermeasures_Group_1
Mine sweeping ships generally are not heavily armored to avoid magnetic and acoustic
signatures that can trigger mines. So they can struggle in contested waters and would be very
vulnerable to anti-ship missiles.
"Rouhani, considered by European politicians to be a reformist, appears to be showing a
hardline streak that is nearer the strategy of the country's supreme leader, Ayatollah
Khamenei. "
Everybody becomes a hardliner when faced with an existential threat, which Trump's threats
are now creating for Iran.
There's no need to sink any oil tankers to stop all oil shipping. Those tankers don't sail
without full insurance for the cargo, and no maritime insurer will back shipping through the
Strait of Hormuz while the Iranians are on the warpath. Hence, no oil tanker.
That is why a few mines would be very effective. All oil shipping would cease immediately.
Because mines can be redeployed very easily, including by air or fishing boats, insurers
would probably not be assuaged by naval assurances that mines have been swept.
In the 1980's when the Iranians mined the Straits the tankers still moved. What was the
insurance deal then? Did it the US pick it up for that part of the trip?
"If a US/Coalition could not successfully occupy Iraq with a population of 37 million,
then how can Iran with a population of 80 million be occupied?"
Iran is also mostly Persian. Yes, there are Arabs, Armenians, Baluchis, etc., but the vast
majority are Persian and are proud to be Persian. Unlike Iraq, where you have a country with
3 groups you can play off each other.
I visited Iran over 5 years ago and was able to speak to some regular Iranians (English is
not uncommon amongst men and women). They will fight to the last man, woman, and child if
anyone came into their country. And that's what the secular ones who hate their government
say.
Every town has lamppost flags showing the pictures of all the young men who died in the
Iran-Iraq War. It was humbling to see the generational devastation wrought on that country.
Even the youth view that war as a world war, since people from over 25 countries were found
to be fighting on the Iraq side ( https://en.wikipedia.org/wiki/Iran%E2%80%93Iraq_War
– Remember the Soviet Union was ALSO on Iraq's side!). They faced destruction and
survived. They view themselves as an ancient, sophisticated people as well as the greatest
survivors in the world (all with good reason as they are an amazing people with a rubbish
government).
I do not see this ending well if the US thinks they can put the Iranians into a corner and
get compliance. It is an amazingly ahistorical understanding of the geopolitics of Iran.
These are the people we should be allying with not Saudi Arabia. But this is the same group
who think blundering into Iraq or Syria was a good idea, so I really can't be surprised.
Just to add that the people living above the main Saudi oil fields, Eastern Province, are
mainly Shiites. Shiites are also to be found in the south along the ill defined border with
Yemen. Both communities are disaffected and have been for decades, although the BBC, which
advertises its "unparalled global expertise" (sic) between news bulletins and other
programmes, reckons the Arab Spring caused the restiveness in Saudi Arabia.
This said, the Saudis and their Pakistani poodles can foment (Sunni) Arab and Baluch
disorder in Khuzestan and Sistan / Iranian Baluchistan.
I always wonder to myself when, on the BBC News Channel, they pan across the alleged
newsroom in New Broadcasting House and you see all those desks -- rows upon rows of them --
where people are sat, or, occasionally, get up and have a wander around, what the heck are
they doing there? It can't be producing news reports because you see the same half a dozen
so-called news "stories" stripped endlessly across the schedule throughout the day.
Every so often we get "business" news, which is someone from a spread betting company
piffling on about some rot or other then "a look at the markets", not, unfortunately, a view
of Covenant Garden or something, that would be more interesting, but rather some mysterious
figures from world indices and forex rates splayed across the screen like some inscrutable
hieroglyphs.
Then a bit of sport, with a dash of added jingoism.
Finally, some rally round the flag update on "the forces" with some top brass on the poop
deck of an aircraft carrier looking for an F35 ("F35 coming real soon"). Maybe Sophie
Rayworth in a tank.
Or alternatively it's Jenny Hill from Berlin with something about sausages and Merkel with
stock footage of people drinking beer from unfeasibly large glasses wraps it all up apart
from a sky diving granny then the weather.
It could be worse. We all could work in one of these places. It would not matter how great
a story you found, it would all have to get through the editors who report directly to their
owners like with the Murdoch press. The stuff you talk about is just the stuff that gets the
editorial nod i.e. pure pap.
Some of the stuff that I have seen on Australian TV, however, is nothing less than out and
out propaganda. I watch some of this stuff and I compare it with what I read on this site or
what a commentator chips in with and I wonder what these newsreaders actually are thinking as
they read some of these stories. Probably their steady pay packets.
I wish to god I knew. I have seen this creeping in the past decade or more. I suspect that
a lot of bad practices are imported from overseas. There are international conferences for
conservative political parties so you would have American Republicans, British Conservatives,
Australian Coalition, etc. all mixing together and swapping idea and techniques. They even
work together when there is an election in their country.
Just the other day I heard one Coalition member describe another as a "patriot" which you
NEVER hear in Oz. Kinda like a Republican describing another Republican as a good Communist.
You just never hear it. We even have an ex-Prime Minister that sounds like he could be a good
buddy to Mark Rubio running around trying to blow up his own party (currently in power)
saying that we should build as many coal power stations as possible because climate change is
not real.
Historically our governments have been ruled by pragmatism and past US governments have
labelled us as "socialist" due to adopting such things as single-payer health. The past few
years I am noting more and more ideologues going into politics who want to drag the country
into their way of thinking whether it is to pick fights with China (our major trade partner)
or send the Australian military to the ends of the earth as if they were Mercenaries-r-us.
The times they are a changing.
It all reminds me of C S Lewis' description of H -- as a giant bureaucracy. "The Screwtape
Letters" were written at the end of WW-2 and still come across as 'fresh.'
Supposedly the KSA funded development of the Pakistani bomb. There probably is some
agreement to hand some over (if it hasn't already been done) for "existential threats" This
could turn very bad very fast.
Iran has lots of options. Their Navy wouldn't last very long in a hot war but they have
lots of asymetric options. They have reverse engineered Russian torpedoes and these could be
launched from land or from mini-subs in shallow waters (where they are far harder to detect),
making life very difficult for opponents, let alone tankers. They can strike the UAE and much
of Saudi Arabia using a wide variety of ballistic missiles. To prevent this, the US would
have to strike Iranian territory, and this would cause a massive escalation. In almost any
scenario, the Straits would be shut down for many months, and this would be catastrophic for
the world economy. Asia would come off worse as they are most dependent on LNG and oil from
that region.
As you say, the great 'unsaid' is the Taliban. If Iran decided it was in their interest to
supply them with a few dozen trained operators with a few thousand anti-tank missiles and
manpads, then its goodbye Kabul.
The Iranians hate the Taliban and Al Quaeda and ISIS a lot more than we do since we are on
Saudi Arabia's side. They also seem to follow their principles. Don't forget our allies and
proxies in Syria are the headcutters and madmen ..all Sunnis ..although our government does
not want to admit it. They would be a lot smarter to trigger a Shiite uprising in Saudi
Arabia and shut the country down. The Shiites in Saudi are downtrodden and abused.
To escalate a carrier sinking to nuclear war is, I believe a lose/lose proposition. Let
say the Iranians sunk a carrier and the US Nuked Tehran.
The Iranians would not be in a forgiving mood at that point, and it would do little to
remove the somewhat irritated Iranians along the northern side of the Persian Gulf. The
irritated Iranians would initiate incidents over the impact of irradiated Iranians.
The US could nuke the Iranian Coast along the Persian Gulf, but, the gulf is not wide, and
the result would be poor prospects for the US allies on the South side of the Gulf. In
addition one does not know if nuking Shea would provoke a Sunni backlash against "the
infidels, the Christian US."
One could argue that Christians and Nukes cannot be mentioned in the same sentence.
The Prologue of Robert Baer's "Sleeping With the Devil" outlines a potential scenario of a
Shiite attack on the eastern Saudi oil fields. The sub-title is The Doomsday Scenario.
The book is about the US-Saudi relationship by a retired CIA officer. A very good read and
part of trying to understand this entire mess.
Exactly right. Logic dictates that if Iran is attacked, Iranian missiles will soon
thereafter attempt to destroy all of the oil producing capacity selling to Europe, Japan and
the US within range of its missiles. This means ships, oil fields, pipeline, ect. Oil prices
would skyrocket, plunging the US, Japan and Europe into a deep economic downturn.
Why people ignore the outcome you provided is beyond me. If I were Iran, I'd do the same
if Israel attacked too.
Your guess is that nobody will attack the Iranians after they attack the shipping to close
the straits?
In the 1987 Iran attacked about 91 ships in the Gulf. The oil still flowed. On April 18,
1988 the US attacked and severely damaged a number of Iranian ships and bases. After that
things started winding down. Then on July 3, 1988 the US shot down that Iranian airliner.
Then things really quieted down.
What are the differences now? Iran: ballistic missiles and subs?
There's Lt. General Riper, who played the Iranian side in the 2002 Millennium Challenge war
games, "killing" 20,000 Navy personnel and "sinking" 16 American warships
on the first day, so he knows better than to even start such a bottlenecked battle.
There's always General Farnsworth, the great grandson of Colonel Armstrong Custer.
Farnsworth has worked for two decades in the Purchasing & Planning wing of the Pentagon
-- three levels below daylight -- but his confidence in an immediate American victory Over
There is indubitable.
In similar vein, MI5's Eliza Manningham Buller is a descendant of Redvers Buller, British
commander in the second Boer War, but much more of a realist and moderate.
Redvers Buller? Seriously? I have read a lot about his role in the Zulu War of 1879.
Intriguing character being hard-fighting and hard-drinking and yet refused to wear his 1860
China medal on the grounds that it was an unnecessary war. And a descendant of his is head of
MI5?
Here's a little character sketch of Redvers Buller, from " On the Psychology of
Military Incompetence ", by Norman Dixon:
The leading character was the commander-in-chief, General Sir Redvers Buller. According
to a contemporary description there could be no finer choice for our South African
adventure: 'There is no stronger commander in the British Army than this remote, almost
grimly resolute, completely independent, utterly fearless, steadfast and vigorous man.
Big-boned, square-jawed, strong-minded, strong-headed Smartness sagacity administrative
capacity He was born to be a soldier of the very best English type, needless to say the
best type of all.
Unfortunately this assessment was at variance with the facts in all but two particulars.
Firstly, he was indeed big. Secondly, though sadly lacking in moral courage, he was
undoubtedly brave when it came to physical danger. In this respect, as in many others, he
was not unlike Raglan of the Crimean War, and indeed some other commanders of subsequent
years.
Of Sir 'Reverse' Buller, as he came to be known by his troops, Rayne Kruger writes: 'At the
risk of marring [the] contemporary description it should be mentioned that his big bones
were particularly well covered, especially in the region of the stomach, and that his
square jaw was not especially apparent above a double chin. He had entered the army with no
disadvantage, his mother being a Howard and niece of the Duke of Norfolk, and he was very
wealthy, which was fortunate in view of his preference for a diet of ample good food and
champagne.
Such examples of the Peter Principle, wherein people are raised to their own level of
inefficiency, was never better illustrated than in the case of Sir Redvers Buller, who has
been described as 'a superb major, a mediocre colonel and an abysmal general'. In this
case, high-level military incompetence must be laid at the door of heroic leadership, for
this was the quality which eventually put him where he could do the most damage to his own
side.
The US response will be that this unprovoked aggression is an act of war, etc. This
ignores our own unprovoked act of aggression, the embargo.
In case any has forgotten, those dastardly Imperialist Japanese launched an "unprovoked"
attack on Pearl Harbor because the US put Japan under an embargo.
Embargoes themselves are not acts of war, but blockades are. But this is all technical
blather. The US is attempting to strangle Iran. Iran will attempt to strangle the Gulf Arabs
and the US. If Iran starts firing missiles or blockading the straits, the US will attack
Iran. Iran will in turn launch attacks on the Gulf states. This could drive oil over $200,
perhaps higher.
If Iran were clever, they would institute some sort of quarantine or inspection in their
territorial waters. Indeed, they should claim jurisdiction over the entire strait in the
interest of international security (they could certainly find some US document somewhere and
just change the names). Then they could stop every ship going in and out and spend a week or
so inspecting each one for contraband, disease, etc. This would not be an act of war but
would certainly provoke the US into striking first anyway.
Iran has already extended its territorial waters to 12 miles, as did Oman. Given that the
strait is 29 miles at the narrowest, and that to deal with the amount of shipping, pretty
much all of it passes through either Omani or Iranian territorial waters. Technically,
Iran/Oman has right to stop any non "innocent" (read unarmed) shipping trough it territorial
waters. Not sure what is Omani relationship with the US/Saudis at the moment, wasn't paying
much attention to the Gulf.
Once the US decides to strike first, we're going to be on our own. The Saudis will be
completely useless as they always were, understandably not wanting to be cannon fodder for US
interests. And with most of Europe and Asia relying on gulf oil, our 'coalition of the
willing' is going to be a bit shy of members.
But $200 a barrel and the US a solid producer? Seems to be some win-win money to be made for
both Raytheon and Exxon-Mobil.
No Saudi just like no rich American will give his life for his country .in the military.
Life is just too good for them .why fight in the desert when you can cool it at a cafe in
Munich ..why are all the Syrian men of fighting age in Munich and Hamburg? They don't want to
fight for their country.
Considering the restraint Iran has shown regarding Israeli attacks in Syria, it's safe to
assume they want to avoid war at all cost. Don't expect any acts of aggression from them.
Talk of closing the strait is trying to see if there is any spark of independence left in
Europe's political elite. Unfortunately the Europeans only care about money – what they
get personally from the US to run their countries and what their corporations get from doing
business with America. There just isn't enough business between Iran and Europe to offset
that. Now the more unreasonable Washington becomes the more uncomfortable its allies become,
however they will still hold their noses and answer the call to duty. I'm afraid Iran's
courting Europe will produce little to help them. Luckily China and Russia, even Turkey and
India, are far more important.
The nice thing for Iran's hardliners – assuming the MSM narrative that they are
nasty terrorists always looking to cause trouble – is that they don't need to take
aggressive action to start a war. They've got America/Israel and that's the cause of every
war in the 21st century. That pairing will decide if and when there is to be a war. Russia
and China might have the ability to provoke caution but Iran doesn't.
Do not expect any actions from the Iranians to provoke a war. It's a war they cannot win
and they know it. it's also a war they can't lose but the price they could pay by surviving
might be really horrific. I'm not sure they'd close the strait even in a shooting war because
that would risk further escalation. The moment America starts bombing Iran the law of
diminishing return kicks in. The US will be looking for any excuse to go nuclear. Therefore I
doubt Iranian resistance will be more than defensive. Hopefully Russia is providing them with
air defences to be able to shoot down some US planes. Just lay low and ride out the storm.
That's been the philosophy of US/Israeli opponents in the Middle East this decade. It's why
the Russians take so much crap and keep turning the other cheek. They understand that either
they lose such a war or, if they are winning they risk the US going nuclear. Iran can't win a
war with America. Iran, however, can inflict unacceptable casualties but then they run the
same risk of Washington going nuclear in retaliation. In Asian capitals you have rational
players who understand that a nuclear war must be avoided if possible. Thus they avoid any
aggressive actions which they fear could lead to such a war. The problem humanity has is that
we're not sure if there are any rational players in Washington or Tel Aviv.
"The problem humanity has is that we're not sure if there are any rational players in
Washington or Tel Aviv."
+1
Given our belief in being an "exceptional nation" hasn't this been humanity's problem since
the end of WW2?
Will the sanctions pull Iran enough to such an escalation? Would other countries (apart
from Turkey) thing that this is troubling enough to risk US sanctions and disobey? There has
been an escalation in language between the UE and US regarding Iran sanctions but it is still
too soon to know what will be the EU position. We migth know after tomorrow's meeting in
Vienna. I don't know what could happen but be sure the US is running out of "natural allies"
by stepping up too much it's support for Saudi Arab. Trump is inaugurating a new era and it
doesn't look pretty.
The Army might be in trouble but the Marine Corps WILL BE IN A HURT LOCKER FROM HELL if
its ever called on to face Russian forces if they follow thru with published planning.
It is as clear as day that President Trump is obsessed with regime change in Iran. What is
not made clear is how much his gambit is damaging to Americans and American interests.
Without cause or justification, Mr. Trump pulled out of the Joint Comprehensive Plan Of
Action (JCPOA), striking a hard blow to America's European allies – and its own
credibility. Moreover, he threatened European countries with secondary sanctions should they
continue to trade with Iran.
To top it all, in his latest move, he has called for all Iranian oil exports to be cut off
by November. Or in practical terms, he is imposing an economic blockade on Iran. This is a
similar scenario that was played out by the British in 1951 against Iran and Dr. Mossadegh
– who was later overthrown in the 1953 British-US coup. But today, the IR of Iran is not
the Iran of 1953, and the brunt of American demands and actions will not be borne by Iran
alone.
Demanding that no country purchase oil from Iran is in fact an economic blockade. It is an
illegitimate use of power to force a sovereign nation to surrender. It must be made clear
however, that it is not just Iran that is the target here. The Trump administration's demands
arean offensiveexercise of extraterritorial authority with no regard for sovereign equality
between states. All states involved in trade with Iran will either have to cower to his demands
or be punished.
But there is more than state sovereignty and indignation that is involved. These actions
will have a dire effect on the economy of allies, and they will hit Americans in the wallet
– hard. If Mr. Trump is giving a November deadline, he hopes to postpone the impact this
will have on the November elections. He wants total rule over America before totally
bankrupting it.
To fully appreciate how Mr. Trump intends to make 'America great again' where his policy
regarding Iranian oil is concerned, one must take a look at some numbers and empirical
evidence.
The oil strikes leading up to the toppling of Iran's Shah were felt around the world. During
the 1978-79 revolution, Iranian oil production dropped 3.8 million barrels per day for 3
months. Although outside production increased by 1.8 million barrels to make up for the loss,
the net loss to the world was 150 million barrels of oil. However, the compounding results of
the production loss were significant around the globe.
Many Americans may recall the lines at the fuel pumps, but that was just what met the eyes.
The increase in oil prices impacted farming, production, transportation of goods and services,
and so on. At that time, China, currently the second biggest oil consumer behind America, was a
net exporter of oil. The loss to U.S. economy was estimated at many billions of dollars in 1979
and 1980 (Deese and Nye 308-309) [i]
.
More recent studies show that Iranian oil has a major impact on the U.S. economy even though
America does not import a single barrel of oil from Iran. In 2008, economists Dean DeRosa and
Gary Hufbauer presented a paper in which they claimed that if the United States lifted
sanctions on Iran, the world price of oil could fall by 10 percent which would translate into
an annual savings of $38-76 billion for the United States [ii] .
But sanctions alone were not responsible for oil price hikes in 2008 and beyond. In July
2008, oil had reached a peak of $142.05/bbl (see chart HERE ). This price hike
came on the heels of some important events. In May, President Bush sent a ' warning message' to Iran on
the same day that additional aircraft carriers with guided-missile destroyers were sent to the
Persian Gulf.
In June of the same year, the New York
Times reported that: "Israel carried out a major military exercise earlier this month that
American officials say appeared to be a rehearsal for a potential bombing attack on Iran's
nuclear facilities."
In July, then presidential candidate Barak Obama asked for
tougher sanctions to be imposed on Iran.
It was not until September 2008 when President
Bush declined to help Israel attack Iran that oil prices started to relax. They hit a low
of just over $53 /bbl in December 2008.
Oil prices continued to rise again under Obama's sanctions and reached well past the $100
mark. The prices climbed down once again during the JCPOA negotiations reaching an all time low
of $30.24/bbl in January 2016 – after the signing of the JCPOA.
Today, oil prices stands at $74.30/bbl. A fact not lost on any American who has filled up
his/her gas tank lately– and paid for groceries. The deadline for Iran oil cut off is yet
months away, but the impact has started.
Given that other countries may step in to compensate for some of the Iranian oil
loss, other factors which effect prices must be considered – the most important of which
is the security of the Strait of Hormuz. As mentioned previously, the British oil blockade
scenario of 1951 will have far different consequences in 2018 should America impose an economic
blockade or oil embargo.
In the 1950's, Iran did not have the military might to retaliate to the oil embargo and the
naval blockade was aimed at crushing the economy in order to bring about regime change. This
economic blockade, should it be allowed to happen, would crush the economy of much of the
world.
As it stands, 35% of seaborne oil goes through the Strait of Hormuz 85% of which goes to
Asian markets. As the US Energy Information Administration (EIA) has stated: "The blockage of
the Strait of Hormuz, even temporarily, could lead to substantial increases in total energy
costs."Today, Iran not only has the military might to block the Strait of Hormuz in
retaliation, but it also has the legal right.
The 1982 United Nations Convention on the Law of the Sea (UNCLOS) stipulates that vessels
can exercise the right of innocent passage, and coastal states should not impede their passage.
Under UNCLOS framework of international law, a coastal state can block ships from entering its
territorial waters if the passage of the ships harms "peace, good order or security" of said
state, as the passage of such ships would no longer be deemed "innocent" [iii] .
Saudi Arabia and the UAE export oil through Iran's territorial waters. Should they help America
choke Iran's economy, their passage is not deemed 'innocent'.
Even if Iran simply chooses to merely delay the passage of tankers by exercising its right
to inspect every hostile oil tanker that passes through the Strait of Hormuz, such inspections
and subsequent delays would contribute to higher oil prices.
No doubt, the Iranian navy is no match for the formidable US navy. However, the shallow,
narrow waters of Hormuz do not allow for the maneuvering of US battleships. The very presence
of warships can lead to incidents. At its narrowest point, the Strait of Hormuz is 21 miles
wide – hardly wide enough for a naval battle to take place and allow the passage of oil
tankers at the same time. In recent years (2012), the USS Porter, a US navy destroyer,
collided with an oil tanker in the Strait of Hormuz. The collision left a big whole in the
navy destroyer.
American officials and oil companies have attempted to assuage the concern of over oil
shortages by stating that America is one of the top oil producers. Some fact checking is in
order.
According to EIA's latest available data, America's total exports in 2018
(thousands of barrels/month) was 7,730 bblin April. The same governmental body stated that
total imports for the same month was 310,295. According to the EIA: "In 2017, the United States
producedabout 15.4 million barrels of petroleum per day (MMb/d), and it consumed about 19.9
MMb/d. Imports from other countries help to supply demand for petroleum." (Click HERE for
explanation of imports and exports).
These facts do not stop the spread of such news. As recently as June 4, 2018, Offshore Technology announced America is marching toward being the biggest oil
producer. Important factors to bear in mind are that 1. America is the largest oil consumer and
continues to have a deficit, and 2. Shale oil production is up thanks to higher oil prices.
While environmentalists objected to shale oil production, oil companies halted the
extraction of oil when prices dropped. Anything above $50/bbl makes shale oil production
feasible – which also makes it more expensive of the consumer. Although Mr. Trump and his
administration have no regard for the environment, many states and countries have banned shale
oil production (see LINK for list as of December
2017).
So the American people (and much of the rest of the world) is left with a stark choice.
Either cave in to Mr. Trump's demands, accept loss of business, pay much higher oil prices at
the pump and for consumer goods, prepare for a potential war, and sacrifice the environment
– especially water, and mortgage the future of the earth more than we already have, or,
don't heed Trump's demands – even if means a short term loss.
Either way, messing with Iran's oil exports is not an alternative that the world can afford.
It may well be that Mr. Trumpis beholden to Mr. Netanyahu. He may well feel comfortable enough
to subject the American people – and their allies to financial hardship; but the question
is will Americans and the rest of the world sacrifice themselves at the Trump-Netanyahu
altar?
* Soraya Sepahpour-Ulrich is an independent researcher and writer with a focus on
U.S. foreign policy and the role of lobby groups in influencing US foreign policy.
Brent currently above $78 and heading up. A bad EIA twip stock report could mean it goes
above $80 and stays there. Iran is threatening to blockade the Straits or Hormuz and
Venezuela is threatening to invade the White House. The Saudis, Russians and E&Ps must be
hoping for some more "art-of the deal" Trump magic: a couple more contra-interventions for
lowering oil price on his part and we'll see $150 by Xmas.
"... I believe due to OPEC massively inflating their URR, and the inaccuracy of the Hubbert method due to the creaming of all giant fields, the expected peak dates here are highly inaccurate. ..."
In the table below I have converted the data Dr. Minqi Li presented in metric tons per year
to million barrels per day. Again, this is C+C plus natural gas liquids.
2017
At Peak
Year Peak
BPD Increase
us
11.47
15.08
2042
3.61
Saudi
11.29
12.17
2030
0.88
Russia
11.13
12.01
2033
0.88
Canada
4.74
7.85
2049
3.11
Iran
4.70
5.40
2039
0.70
Iraq
4.44
6.51
2042
2.07
China
3.S6
4.32
2015
UAE
3.53
4.38
2037
0.84
Kuwait
2.93
3.35
2040
0.42
Brazil
2.87
3.03
2025
0.16
Rest of W
27.13
33.22
2004
Total World
88.10
90.95
2021
2.85
The source for this chart is the same as the table above. I believe due to OPEC
massively inflating their URR, and the inaccuracy of the Hubbert method due to the creaming of
all giant fields, the expected peak dates here are highly inaccurate.
Well, all except three. The rest of the world did peak in 2004, China did peak in 2015, and
the world will peak by 2021 or before. Congratulations to Dr. Minqi Li, the most accurate
future peak there is the one that he calculated. Guym x Ignored says:
07/04/2018 at 8:10
am
I think Dr. Minqi Li put together an exceptionally well researched paper. The only one I have
a faintest glimmer of knowledge in is oil. 2021. Give or take a couple of years is a good
estimate of when peak oil occurs, based on current findings and technology. Improvements in
either would probably only affect the tail of the decline rate. Which, based on the immense
overstatement of EIA, and the creaming you mentioned, the tail should have much more of a
decline than depicted. I am tending towards 2022 to 2023 as the final peak, due to the little
over a year hiatus on the Permian final push due to pipeline and other constraints. We all
know 2042 is a bad projection for the US, it will get there as soon as it can. It will get
there as soon as it can, because the oil price will be high enough to beg, borrow, or steal
to get there. For that reason, all other sources will be staining to get there at the same
time. We are in the final stage, I do think.
Ron, many thanks for your very informative post about world oil (as always) and your
comments on my post.
However, like much of the peak oil community, having missed some of the previous peak
oil predictions, now I may err on the conservative side. Many have criticized the EIA
projections and OPEC reserves. But again, even with those projections/reserves, the world
oil production is still projected to peak in 2021. This suggests that world oil production
may indeed peak in the near future. As I promised, I will follow up with part 2 on
this.
Regarding China, China's oil consumption growth has re-accelerated as its oil production
is in decline. This development may have some major impact on global economy/geopolitics in
the coming years. On top of that, China is (or will soon become) the world's largest
natural gas importer.
Iran's OPEC governor Hossein Kazempour Ardebili said the US ban amounted to "self harm," adding that Iran's
position is that oil should not be used as a weapon or for political purposes. He predicted that higher oil prices
would end up hurting the US economy.
Historically that has been the case, and with Saudi production already at record levels, Trump's expectation
that the Saudis will make up for Iran's shortfalls are not realistic. Still, US officials continue to demand the
world, including major Asian powers, stop buying from Iran.
Iranian President Hassan Rouhani downplayed the seriousness of the ban, saying he is confident Iran will
survive this round of US sanctions as it has other sanctions in the past. Many coutries have not committed to the
US ban, and if prices rise, Iran may ultimately take in just as much money even with fewer exports.
World cumulative oil production up to 2017 was 192 billion metric tons. The world's
remaining recoverable oil resources are estimated to be 276 billion metric tons and ultimately
recoverable oil resources are estimated to be 468 billion metric tons. By comparison, the BP
Statistical Review of World Energy reports that the world oil reserves at the end of 2017 were
239 billion metric tons.
World oil production is projected to peak at 4,529 million metric tons in 2021.
2017 Production and Peak Production are in million metric tons; Cumulative Production, RRR
(remaining recoverable resources or reserves), and URR (ultimately recoverable resources) are
in billion metric tons. For Peak Production and Peak Year, regular characters indicate
historical peak production and year and italicized blue characters indicate theoretical peak
production and year projected by statistical models. Cumulative production up to 2007 is from
BGR (2009, Table A 3-2), extended to 2017 using annual production data from BP (2018).
(Originally published as [US Dollar Hegemony has to go] in AToL on
April 11. 2002)
There is an economics-textbook myth that foreign-exchange rates are
determined by supply and demand based on market fundamentals. Economics tends
to dismiss socio-political factors that shape market fundamentals that affect
supply and demand.
The current international finance architecture is based on the US dollar
as the dominant reserve currency, which now accounts for 68 percent of global
currency reserves, up from 51 percent a decade ago. Yet in 2000, the US share
of global exports (US$781.1 billon out of a world total of $6.2 trillion) was
only 12.3 percent and its share of global imports ($1.257 trillion out of a
world total of $6.65 trillion) was 18.9 percent. World merchandise exports
per capita amounted to $1,094 in 2000, while 30 percent of the world's
population lived on less than $1 a day, about one-third of per capita export
value.
Ever since 1971, when US president Richard Nixon took the dollar off the
gold standard (at $35 per ounce) that had been agreed to at the Bretton Woods
Conference at the end of World War II, the dollar has been a global monetary
instrument that the United States, and only the United States, can produce by
fiat. The dollar, now a fiat currency, is at a 16-year trade-weighted high
despite record US current-account deficits and the status of the US as the
leading debtor nation. The US national debt as of April 4 was $6.021 trillion
against a gross domestic product (GDP) of $9 trillion.
World trade is now a game in which the US produces dollars and the rest of
the world produces things that dollars can buy. The world's interlinked
economies no longer trade to capture a comparative advantage; they compete in
exports to capture needed dollars to service dollar-denominated foreign debts
and to accumulate dollar reserves to sustain the exchange value of their
domestic currencies. To prevent speculative and manipulative attacks on their
currencies, the world's central banks must acquire and hold dollar reserves
in corresponding amounts to their currencies in circulation. The higher the
market pressure to devalue a particular currency, the more dollar reserves
its central bank must hold. This creates a built-in support for a strong
dollar that in turn forces the world's central banks to acquire and hold more
dollar reserves, making it stronger. This phenomenon is known as dollar
hegemony, which is created by the geopolitically constructed peculiarity that
critical commodities, most notably oil, are denominated in dollars. Everyone
accepts dollars because dollars can buy oil. The recycling of petro-dollars
is the price the US has extracted from oil-producing countries for US
tolerance of the oil-exporting cartel since 1973.
By definition, dollar reserves must be invested in US assets, creating a
capital-accounts surplus for the US economy. Even after a year of sharp
correction, US stock valuation is still at a 25-year high and trading at a 56
percent premium compared with emerging markets.
The Quantity Theory of Money is clearly at work. US assets are not growing
at a pace on par with the growth of the quantity of dollars. US companies
still respresent 56 percent of global market capitalization despite recent
retrenchment in which entire sectors suffered some 80 percent a fall in
value. The cumulative return of the Dow Jones Industrial Average (DJIA) from
1990 through 2001 was 281 percent, while the Morgan Stanley Capital
International (MSCI) developed-country index posted a return of only 12.4
percent even without counting Japan. The MSCI emerging-market index posted a
mere 7.7 percent return. The US capital-account surplus in turn finances the
US trade deficit. Moreover, any asset, regardless of location, that is
denominated in dollars is a US asset in essence. When oil is denominated in
dollars through US state action and the dollar is a fiat currency, the US
essentially owns the world's oil for free. And the more the US prints
greenbacks, the higher the price of US assets will rise. Thus a strong-dollar
policy gives the US a double win.
Historically, the processes of globalization has always been the result of
state action, as opposed to the mere surrender of state sovereignty to market
forces. Currency monopoly of course is the most fundamental trade restraint
by one single government. Adam Smith published Wealth of Nations in
1776, the year of US independence. By the time the constitution was framed 11
years later, the US founding fathers were deeply influenced by Smith's ideas,
which constituted a reasoned abhorrence of trade monopoly and government
policy in restricting trade. What Smith abhorred most was a policy known as
mercantilism, which was practiced by all the major powers of the time. It is
necessary to bear in mind that Smith's notion of the limitation of government
action was exclusively related to mercantilist issues of trade restraint.
Smith never advocated government tolerance of trade restraint, whether by big
business monopolies or by other governments.
A central aim of mercantilism was to ensure that a nation's exports
remained higher in value than its imports, the surplus in that era being paid
only in specie money (gold-backed as opposed to fiat money). This trade
surplus in gold permitted the surplus country, such as England, to invest in
more factories to manufacture more for export, thus bringing home more gold.
The importing regions, such as the American colonies, not only found the gold
reserves backing their currency depleted, causing free-fall devaluation (not
unlike that faced today by many emerging-economy currencies), but also
wanting in surplus capital for building factories to produce for export. So
despite plentiful iron ore in America, only pig iron was exported to England
in return for English finished iron goods.
In 1795, when the Americans began finally to wake up to their
disadvantaged trade relationship and began to raise European (mostly French
and Dutch) capital to start a manufacturing industry, England decreed the
Iron Act, forbidding the manufacture of iron goods in America, which caused
great dissatisfaction among the prospering colonials. Smith favored an
opposite government policy toward promoting domestic economic production and
free foreign trade, a policy that came to be known as "laissez faire"
(because the English, having nothing to do with such heretical ideas, refuse
to give it an English name). Laissez faire, notwithstanding its literal
meaning of "leave alone", meant nothing of the sort. It meant an activist
government policy to counteract mercantilism. Neo-liberal free-market
economists are just bad historians, among their other defective
characteristics, when they propagandize "laissez faire" as no government
interference in trade affairs.
A strong-dollar policy is in the US national interest because it keeps US
inflation low through low-cost imports and it makes US assets expensive for
foreign investors. This arrangement, which Federal Reserve Board chairman
Alan Greenspan proudly calls US financial hegemony in congressional
testimony, has kept the US economy booming in the face of recurrent financial
crises in the rest of the world. It has distorted globalization into a "race
to the bottom" process of exploiting the lowest labor costs and the highest
environmental abuse worldwide to produce items and produce for export to US
markets in a quest for the almighty dollar, which has not been backed by gold
since 1971, nor by economic fundamentals for more than a decade. The adverse
effect of this type of globalization on the developing economies are obvious.
It robs them of the meager fruits of their exports and keeps their domestic
economies starved for capital, as all surplus dollars must be reinvested in
US treasuries to prevent the collapse of their own domestic currencies.
The adverse effect of this type of globalization on the US economy is also
becoming clear. In order to act as consumer of last resort for the whole
world, the US economy has been pushed into a debt bubble that thrives on
conspicuous consumption and fraudulent accounting. The unsustainable and
irrational rise of US equity prices, unsupported by revenue or profit, had
merely been a devaluation of the dollar. Ironically, the current fall in US
equity prices reflects a trend to an even stronger dollar, as it can buy more
deflated shares.
The world economy, through technological progress and non-regulated
markets, has entered a stage of overcapacity in which the management of
aggregate demand is the obvious solution. Yet we have a situation in which
the people producing the goods cannot afford to buy them and the people
receiving the profit from goods production cannot consume more of these
goods. The size of the US market, large as it is, is insufficient to absorb
the continuous growth of the world's new productive power. For the world
economy to grow, the whole population of the world needs to be allowed to
participate with its fair share of consumption. Yet economic and monetary
policy makers continue to view full employment and rising fair wages as the
direct cause of inflation, which is deemed a threat to sound money.
The Keynesian starting point is that full employment is the basis of good
economics. It is through full employment at fair wages that all other
economic inefficiencies can best be handled, through an accommodating
monetary policy. Say's Law (supply creates its own demand) turns this
principle upside down with its bias toward supply/production. Monetarists in
support of Say's Law thus develop a phobia against inflation, claiming
unemployment to be a necessary tool for fighting inflation and that in the
long run, sound money produces the highest possible employment level. They
call that level a "natural" rate of unemployment, the technical term being
NAIRU (non-accelerating inflation rate of unemployment).
It is hard to see how sound money can ever lead to full employment when
unemployment is necessary to maintain sound money. Within limits and within
reason, unemployment hurts people and inflation hurts money. And if money
exists to serve people, then the choice becomes obvious. Without global full
employment, the theory of comparative advantage in world trade is merely
Say's Law internationalized.
No single economy can profit for long at the expense of the rest of an
interdependent world. There is an urgent need to restructure the global
finance architecture to return to exchange rates based on purchasing-power
parity, and to reorient the world trading system toward true comparative
advantage based on global full employment with rising wages and living
standards. The key starting point is to focus on the hegemony of the
dollar.
To save the world from the path of impending disaster, we must:
#
promote an awareness among policy makers globally that excessive dependence
on exports merely to service dollar debt is self-destructive to any economy;
# promote a new global finance architecture away from a dollar hegemony
that forces the world to export not only goods but also dollar earnings from
trade to the US;
# promote the application of the State Theory of Money (which asserts that
the value of money is ultimately backed by a government's authority to levy
taxes) to provide needed domestic credit for sound economic development and
to free developing economies from the tyranny of dependence on foreign
capital;
# restructure international economic relations toward aggregate demand
management away from the current overemphasis on predatory supply expansion
through redundant competition; and restructure world trade toward true
comparative advantage in the context of global full employment and global
wage and environmental standards.
This is easier done than imagained. The starting point is for the major
exporting nations each to unilaterally require that all its exports be
payable only in its currency, so that the global finance architecture will
turn into a multi-currency regime overnight. There would be no need for
reserve currencies and exchange rates would reflect market fundamentals of
world trade.
As for aggregate demand management, Asia leads the world in both
overcapacity and underconsumption. It is high time for Asia to realize the
potential of its market power. If the people of Asia are to be compensated
fairly for their labor, the global economy will see its fastest growth
ever.
The USA elite might now want abandoning of GATT and even WTO as it does not like the results. That single fraud on the west has
had catastrophically perverse consequences for the coterie of killer's future and all because the designers of GATT had never thought
outside the square of economics and failed utterly to grasp the gift of scientific and manufacturing politics.
Notable quotes:
"... The US still depends heavily on oil importation -- it is not "independent" in any manner whatsoever. Here's the most current data while this chart shows importation history since 1980. ..."
"... the only time a biological or economic entity can become energy independent is upon its death when it no longer requires energy for its existence. ..."
"... A big part of the US move into the middle east post WWII was that they needed a strategic reserve for time of war and also they could see US consumption growing far larger than US production. ..."
"... The USA of WAR may have oil independence, but it is temporary. The race is on for release from oil dependency and China intends to win in my view. It is setting ambitious targets to move to electric vehicles and mass transit. That will give it a technology dominance, and perhaps a resource dominance in the EV sphere. We are in the decade of major corporate struggles and defensive maneuverings around China investments in key EV sectors. ..."
"... In ten to twenty years' time the energy story could well be significantly different. The USA and its coterie of killers are still fighting yesterday's war, yesterday's hatred of all things Russian, yesterday's energy monopoly. ..."
"... I don't believe that the USA of WAR has changed or even intends to change the way they play their 'game'. The General Agreement on Tariffs and Trade set the trajectory for technology transfer, fabrication skills transfer, growth of academic and scientific achievement in 'other' countries (China, Russia etc). Their thoughts in the GATT deal were trade = economics = oligarchy = good. ..."
"... That single fraud on the west has had catastrophically perverse consequences for the coterie of killer's future and all because the designers of GATT had never thought outside the square of economics and failed utterly to grasp the gift of scientific and manufacturing politics. ..."
"... Canada and the gulf monarchies are the only countries with large reserves that are not hostile as yet to the US. As the US no longer is totally reliant on imports to meet its consumption, Saudi's, Bahrain and co are now expendable assets. ..."
The US still depends heavily on oil importation -- it is not "independent" in any manner whatsoever.
Here's the most current data
while this chart shows importation
history since 1980.
As I've said before, the only time a biological or economic entity can become energy independent is upon its death when
it no longer requires energy for its existence.
What I am looking at are strategic reserves, not how much oil is currently produced. With shale it now has those reserves and
shale oil I think is now at the point where production could quickly ramp up to full self sufficiency if required. Even if the
US were producing as much oil as they consumed, they would still be importing crude and exporting refined products.
A big part of the US move into the middle east post WWII was that they needed a strategic reserve for time of war and also
they could see US consumption growing far larger than US production.
@Peter AU 1 #28 Thank you for that stimulating post. I just have to respond. And thanks to b and all the commenters here, it is
my daily goto post.
The USA of WAR may have oil independence, but it is temporary. The race is on for release from oil dependency and China intends
to win in my view. It is setting ambitious targets to move to electric vehicles and mass transit. That will give it a technology
dominance, and perhaps a resource dominance in the EV sphere. We are in the decade of major corporate struggles and defensive
maneuverings around China investments in key EV sectors.
In ten to twenty years' time the energy story could well be significantly different. The USA and its coterie of killers
are still fighting yesterday's war, yesterday's hatred of all things Russian, yesterday's energy monopoly.
I don't believe that the USA of WAR has changed or even intends to change the way they play their 'game'. The General Agreement
on Tariffs and Trade set the trajectory for technology transfer, fabrication skills transfer, growth of academic and scientific
achievement in 'other' countries (China, Russia etc). Their thoughts in the GATT deal were trade = economics = oligarchy = good.
That single fraud on the west has had catastrophically perverse consequences for the coterie of killer's future and all
because the designers of GATT had never thought outside the square of economics and failed utterly to grasp the gift of scientific
and manufacturing politics.
By gross ignorance and foolish under-investment, the USA of WAR and its coterie of killers have eaten their future at their
people's expense.
Light sweet vs heavy sour. Light means it contains a lot of diesel/petrol. Sweet means low sulphur. Many oils are heavy sour.
Canada sand. the stuff they get from that is thick bitumen with high sulpher. The sulpher needs to be removed and the bitumen
broken down into light fuels like diesel and petrol.
Canada and the gulf monarchies are the only countries with large reserves that are not hostile as yet to the US. As the
US no longer is totally reliant on imports to meet its consumption, Saudi's, Bahrain and co are now expendable assets.
The great game for the US now is control or denial. Access to oil as a strategically critical resource is no longer a factor
for the US.
"We're an empire now, and when we act, we create our own reality. And while you're studying that reality – judiciously, as
you will – we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're
history's actors . . . and you, all of you, will be left to just study what we do." Karl Rove.
The squealing and consternation coming from the UK indicates that the empire has changed course and the UK is left sitting
on its own shit pile.
I encourage you to give the Escobar article a second reading. I just did to make sure I knew what it was saying. I think karlof1
is making the right points from it.
The collaboration between Saudia Arabia and Russia is a very small part of the article, and no one disputes that this collaboration
is occurring. Russia may even be part of OPEC soon, if it chooses. The relationship works against the US but it's not specifically
made for this reason. Read Adam Garrie's take on this to see that the moves into OPEC by Russia in recent years are clearly from
its own interest as a hugely major supplier, and that Saudi Arabia needs Russia:
The New Russia-Saudi Partnership Has Riyadh's US Ally Over a Barrel
I just skimmed it a third time and I don't see Escobar saying anywhere that the Saudi-Russia relationship is to kill US shale.
He does say that both Russia and Iran are interested in countering it. I think the point here is that all serious oil producers
with profitable reserves take alarm at the US shale oil because it's hard to say that it's a real commodity with an inbuilt profitability.
It's a short-term entry into the market that can serve to disrupt the market temporarily, but it has no staying power. I suspect
most nations would prefer it simply not intrude.
No one actually has to act against US shale - it's something of a pretender in the real oil world anyway, and this has long
been commented upon. Escobar's point that the US shale is largely a myth is not a new concept. At best the reserve will deplete
within 15 years, and that's at best - along the way it will destroy the US potable water table. And its intrinsic value is far
from clear, since the entire industry is dubiously financed using relatively free Federal Reserve money. As Escobar points out,
many call $100 per barrel the profit threshold for shale - that's a ludicrously high bar for profitability in the oil world.
Much of Escobar's article was about the relationship between Russia and Iran, and it served also as a very good primer in world
oil and petro-currency numbers. I found it pretty sound.
"... You don't need to give use Northstream 2. We will build it ourselves. ..."
"... Nordstream II only blocking party is Denmark, and they can and will bypass it at some price, if need be. ..."
"... Almost all of the countries that Nord Stream 2 passes through have signed on to its construction. The only holdout is Denmark. In response Gazprom has said it will reroute the pipeline through international waters. There is nothing the US can do about that and Denmark can say goodbye to its share of transit fees. ..."
"... A lot of that sort of crap was being pumped out by trolls and regulars alike a few weeks back on Putin, Nutty and SW Syria. Putin had done a deal and was giving SW Syria to nutty cetra cetra. Like Putin and Xi, Iran and others are too stupid to realize they have to work together against US attacks. ..."
"... Russia has to defend Iran. There is no chance that Putin will sell it to Trump. Once again we see the dreaded "US can do anything" disease arising. In fact US options are limited and evaporating. ..."
"... The most likely outcome of the 'summit'is a renewal or strengthening of old agreements on arms control and much high sounding chatter: in geopolitics the die is cast. ..."
Almost all of the countries that Nord Stream 2 passes through have signed on to its
construction. The only holdout is Denmark. In response Gazprom has said it will reroute the
pipeline through international waters. There is nothing the US can do about that and Denmark
can say goodbye to its share of transit fees.
Also Crimea is non-negotiable for Russia. It is Russian territory irrespective of what
happens.
A lot of that sort of crap was being pumped out by trolls and regulars alike a few weeks back
on Putin, Nutty and SW Syria. Putin had done a deal and was giving SW Syria to nutty cetra
cetra. Like Putin and Xi, Iran and others are too stupid to realize they have to work
together against US attacks.
Russia has to defend Iran. There is no chance that Putin will sell it to Trump.
Once again we see the dreaded "US can do anything" disease arising. In fact US options are
limited and evaporating.
Incidentally it is very easy and probably wise to promise the US, in June, not to buy oil in
November. It costs nothing and fits into bazaar bargaining strategies.
The most likely outcome of the 'summit'is a renewal or strengthening of old agreements on
arms control and much high sounding chatter: in geopolitics the die is cast.
"... The Iranians will lose marketspace, sure, but the inevitable increase of the price of oil will somewhat soften the blow. And anything over $100 per barrel, along with a stronger dollar, is proven to be detrimental to energy importing countries. It will be painful to keep the economy rolling. ..."
Oil will continue to flow from Iran, there simply isn't a significant supply stemming from
the Saudi-Russia alliance or US shale to fill the gap.
The Iranians will lose marketspace,
sure, but the inevitable increase of the price of oil will somewhat soften the blow. And
anything over $100 per barrel, along with a stronger dollar, is proven to be detrimental to
energy importing countries. It will be painful to keep the economy rolling.
And when there's less appetite for oil; the price of oil crashes resulting in another big
financial crash (due to bad dept) followed by another round of austerity measures which
spells political turmoil in a number of countries. And the landscape gradually changes.
So Trump asked the Saudis to pump 2 million more barrels per day to offset Iranian exports?
Daffy!. Saudis do not have a spare barrel, let alone 2 million. Ask Simmons. Oh wait, he
has been offed:
LONDON(Reuters) - The leader of Saudi Arabia has assured U.S. President Donald Trump that
the Kingdom can raise oil production if needed and the country has 2 million barrels per
day of spare capacity that could be deployed to help cool down oil prices to compensate for
falling output in Venezuela and Iran.
In a tweet on Saturday, Trump said Saudi Arabia had agreed to increase output by up to
this amount, although a subsequent statement from the White House rowed back on this
assertion.
Either way, the kingdom, OPEC's biggest member, can barely raise output by 1 million bpd
to 11 million bpd and even that would be difficult, according to industry analysts who
forecast a further oil price rally due to a lack of new supply.
Below are comments from some leading OPEC analysts:
[ED: one of several cited below]
"The Saudis do not have 2 million bpd of spare capacity as it would imply production of 12
million bpd. They can likely produce a maximum of 11 million and even that will be running
their system at stress levels," said Ross.
He added that with a potential output fall of up to 1.5 million bpd in Iran and
further outages in Venezuela and Libya, the world could be short of 2 million bpd of oil
output without an increase in Saudi output by the end of the year."
Pepe declares US shale to be a myth, but then says KSA and Russia have teamed up to fight. Us
production figures also left out. Disappointing piece from Pepe, especially this glaring
contradiction where KSA and Russia has to team up to fight what he calls a myth.
Pepe's referring to the assumed longevity of shale which is proven to be a gross lie. I can
provide documentation about that but it will have to wait until I have more time to work.
karlof1
Ok so according to Pepe Russia and KSA are joining forces to fight this gross lie.
either shale is a real and major threat, or Russia and KSA are not joining forces. That is
the glaring contradiction in Pepes piece. the other option is that both Russia and KSA both
of which have some knowledge of oil are mistaken about US shale.
Already have Syria? Not really. Heard of the SDF occupying the North-Eastern third of
Syria. If Trump & Putin can't come to an agreement on Iran what's the bet Trump decides
to pump money, weapons and US troops into North-Eastern Syria to fully support the Kurds?
NordStream II? Sure, it will be built, but Trump can sanction Germany and German industry
- ie automakers - heavily if he so wishes. He might do. He can blame NordStream II. He's
certainly been talking about it.
There are certainly ways and means Trump can create huge trouble for Germany/Russia in
regards to NordStream II even if it is built.
Crimea? Yeah, Russia has it but it is also used as the bludgeon to impose sanctions on
Russia. Perhaps recognising Crimea as part of Russia and dropping all sanctions on Russia
will be offered to Putin in return for Russia staying out of any conflict regarding Iran in
2019.
I'd hardly say Trump has nothing to bargain.
Besides, why would Putin select Medvedev as Prime Minister again despite Medvedev being
obviously a Euro-Atlanticist?
I'd also add - who do you think Russia fears in the future decades.
Is it a decaying Europe/EU who nevertheless can buy lots of Russian goods including oil
& gas obviously?
Or do Russia fear a rising China that always has one eye on the Russian Far East as a
possible place for expansion to take care of their oil & gas & mineral needs?
I suspect - and you can look to the history of Russia/China relations for this - that
Russia retains a more existential fear of China than anyone else.
Russia always clearly seeks to balance Europe/EU/US/Atlantic against China and others.
Where does Iran fit in all this? If Iran is taken out who benefits? Doesn't Iran being
taken out strengthen Russia's hand vis-a-vis China in terms of oil & gas? I'd say it
does. Certainly. Without Iranian oil & gas China becomes more dependent on who?
RUSSIA!
So I bet Russian thought would tend to say to China. Look, we are not going to put
ourselves on the line to defend Iran. But hey, if you want to do that we'll support you doing
so, afterall, Iran is of a more of a vital strategic interest to you than us.
We defended Syria, we can't defend anyone and you can't expect us to defend everyone. If
you want a country to retain its independence you have to step up to the plate every now and
then rather than just relying on the Russian military.
And look - we defended Syria - what did you do in Syria's defence?
Just to finish this comment.
In case you haven't noticed the US has put a date of November 4 on stopping the
export/import of Iranian oil. Which is? It is 2 days before the November 6 Mid-Terms...
It's a clear set-up for 2019.
My prediction.
There will be military action against Iran in the first half of 2019.
I suspect March-April-May being the most likely.
At that time you also have Brexit, European Elections (dominated by populists), Ukrainian
Presidential Elections, South African Elections, Indian Elections... It's a big few
months.
My advice? Buy oil & gas in the second half of this year - it's value is likely to
skyrocket in 2019.
What will Iran's response be? I'd say if you are in any of Saudi Gulf Coast, UAE (Dubai
& Abu Dhabi), Kuwait or Bahrain - get out before New Year's!!!
Re: Posted by: Peter AU 1 | Jul 1, 2018 11:14:41 PM | 27
I'm not judging one way or another on what Putin will necessarily do, but clearly Trump's
gambit is to wean Iran off Russian support.
Will it work? Who knows. But Iran clearly has less strategic importance to Russia than
Syria.
Let me ask you a question. Do you think Russia prefers Iranian-Qatari oil & gas
pipelines through Iraq-Syria-Turkey to Europe or would Russia prefer Saudi-UAE-Qatari oil
& gas pipelines to Europe??
Any effort to understand US foreign policy from actual US interests is a futile exercise in
frustration. US foreign policy is driven by two things:
1. The interests of international financiers (heavily Jewish)
2. The Israeli government.
At consideration for actual US interests is secondary if such things considered at all.
That should be obvious enough to everyone by now.
The one thing that Russia and/or China could do that would do more to avoid another major
power war, is to loudly, clearly and publicly inform the Israelis (the people as well as the
government) that any attack upon Russia, China, or their forces by the US or NATO will be
treated as a direct attack upon Russia/China by the state of Israel and the Jewish people and
these will be utterly destroyed in the first salvo of the Russian/Chinese response.
The second thing that could/should be done, is for Russia to implement a covert campaign
of targeted assassinations of Jewish figures who are actively engaged in efforts to undermine
Russian interests. This would include people like Sheldon Adelson, Haim Saban, key players in
international finance, etc. No Jew anywhere in the world should feel that they are beyond the
reach of Russian retaliation. This is precisely how the Israelis conduct their foreign policy
and Russians should not shirk from engaging fire with fire.
@Julian
I think you underestimate the long term benefit of a stable and prosperous Iran in the
greater Eurasian gambit (Infrastructure Node, stability for the region) vs the short term
gains Russia may achieve from a destroyed and fractured Iran that is in disarray. Russia
doesn't just export energy after all. Exploding oil prices will end up hurting consumer
nations, which in turn affects the global economy and by extension oil producers, there is
always a delayed feedback loop.
Just because someone competes with you in the energy realm doesn't automatically mean you
want that actor weak or destroyed. If that was the case, then why does Russia maintain good
relationships with Azerbaijan, a direct competitor to Russian Gas? Similarly Central Asian
countries are competitors in the gas market for China, yet Russia would never allow these to
be subverted by radical Islamists without acting.
"... The great power game is why there is continuity of government policy in the 'US west' no matter who is elected. Within the great power game democracy in the west is meaningless. ..."
"... If the US is changing how it plays the game, then the Brit players may be getting desperate. They are now small players but unlike the US do not have an oil reserve. ..."
"... This may be the reason the Brits have ramped up the propaganda to the ridiculous and also why they have attempted to take down Trump. ..."
Loot is only a side benefit for post WWII wars and no doubt before. Oil is energy and energy
means power to those that control it. UK, French, US have fucked the MENA region over simple
for control of the oil.
Working to prevent communism, socialism, democracy and pan Arab
movements which are all a threat to FUKUS control of MENA, and then pulling the same dirty
tricks on each other. Russia has its own all and through the Soviet era seems to have only
dabbled in the region.
China needs to import energy and so the great power game of controlling
or denying access to energy continues.
karlof1 @ 3 said"Criminality mostly driven by Greed."
james @ 5 said: "trump isn't much different or he would be addressing this too..."
Two bottom line truths, that are apparent...
As always, profits "trump" humanity. How to change that mindset? I for one, don't know,
but, the so called "religious" among us, should ask themselves that same question. IMO,
religion is, as practiced, mostly crowd control..
The great power game is why there is continuity of government policy in the 'US west' no
matter who is elected. Within the great power game democracy in the west is meaningless.
with USA's new found oil independence, the direction they take may change from the last 70
years or so.
Another recent change is the rise of current Russia and their vision of a multi polar
world, also the rise of China.
If the US is changing how it plays the game, then the Brit
players may be getting desperate. They are now small players but unlike the US do not have an
oil reserve.
This may be the reason the Brits have ramped up the propaganda to the ridiculous and also
why they have attempted to take down Trump.
2018-06-26 (Rudaw) When US sanctions were placed on Iran in 2012, the four Asian countries
were given a waiver, requiring them to reduce their business with Iran by 20 percent each six
months rather than halt trade immediately.
The Asian oil buyers are less likely to receive a similar waiver from the Trump
administration Iran may need to resort to a bartering system to continue selling its oil.
Under the 2012 US sanctions, India imported $10.5 billion worth of goods, mainly crude oil,
and exported commodities worth $2.4 billion.
The barter system will be inefficient, as Iran's oil sales are greater than the value of
what it imports from these countries. It also cannot use the currencies of these countries
for international business transactions. http://www.rudaw.net/english/business/250620181
2018-06-26 (Bloomberg) U.S. presses allies to cut Iran oil imports to *zero* by November
* U.S. isn't granting waivers on Iranian oil imports ban
(State Department Official)
"The global economy looks like the Titanic right now. The iceberg is the incoming oil price
spike and the complacent investment community won't even know what hits them. "
-Baby Domer
So, an important question for this board is, could we have reached peak oil production this
year? The Permian will increase substantially into 2020. However, that will be partially
offset by the Venezuelan drop. Add in other declines, and the drop could easily offset any US
production. At some point, OPEC will see that extra production will never meet demand, and
not just waste what they have.
It depends totally on political scenarios, not technical and not financial.
There's still a lot of growth potential to offset the declines:
– Permian
– Other US shales to a degree
– Kanada with it's vast heavy oil ressources
– Venezuela
– Russia
– Iraq
– Iran
– SA (nobody knows), at least they can call to their spare capacity
– Kuwait
– UAE
-Brasil
That's 10 locations, some are politically knocked out ( Ven, Iran partly) from growth.
The more important thing for world economy is: How long can they support the consumption
growth, additional to the decline of all other countries.
I think peak oil is somewhat more melodramatic: When Ghawar finally dries up, we have
reached peak oil. It will dry fast, due to all these horizontal tapping keeping the oil
flowing until the last feed of oil column. And replacing these 5 mb/d will require an
additional fully developed Permian – something not in sight at the moment.
Libya's Tripoli-based NOC Says Exports from Benghazi-based NOC in the east are "illegal"
2018-05-26 BENGHAZI, Libya/TUNIS (Reuters) – Eastern Libyan commander Khalifa
Haftar's forces have handed control of oil ports to a National Oil Corporation (NOC) based in
the east, a spokesman said on Monday, a move the internationally recognized NOC in Tripoli
dismissed as illegal.
If implemented, the transfer of control would create uncertainty for buyers of Libyan oil who
normally go through NOC Tripoli.
In comments later confirmed to Reuters, Ahmed Mismari, spokesman of Haftar's Libya National
Army (LNA), said on television that no tanker would be allowed to dock at eastern ports
without permission from an NOC entity based in the main eastern city, Benghazi.
https://www.reuters.com/article/us-libya-oil/east-libyan-forces-say-oil-ports-handed-to-eastern-based-noc-idUSKBN1JL2DQ
Tripoli-based NOC https://pbs.twimg.com/media/DgkrEMeXUAADLGS.jpg
Some kind of summary with some details from Libya (from comments section in HFIR article
above – Game Over – Oil Prices Are Going Higher).
Nigeria and Libya are also becoming disruption hotspots. Three of Nigeria's main crude
streams (Forcados, Bonny Light and Qua Iboe) are either halted or severely disrupted, but
violence in Libya grabbed the recent headlines. Militias led by Ibrahim al Jathran, former
head of the local Petroleum Facilities Guard, attacked and briefly seized the 0.35 mb/d Es
Sider and 0.22 mb/d Ras Lanuf terminals from Khalifa Haftar's Libyan National Army (LNA).
Although the LNA are back in control, Libyan oil output has collapsed from 0.95 mb/d to
around 0.55-0.60 mb/d because of the fighting and NOC has declared force majeure at the two
ports (along with apparently unrelated technical issues undermining production at AGOCO-run
fields in the east).
After around 10 days of fighting, the extent of the damage at the two terminals remains
unclear. There is currently no information about the status of Es Sider, which exported
around 0.30 mb/d in the previous three months. The destruction of two storage tanks at Ras
Lanuf, which was exporting around 0.10 mb/d before the clashes, has reduced storage capacity
from 0.95 mb to 0.55 mb. Seven tanks at the terminal had already been damaged in previous
clashes and the destruction of another two leaves only four tanks capable of operating. Once
the fighting is over (and there is a considerable risk of further clashes over the next few
weeks), it will take several days to evaluate the status of Es Sider and Ras Lanuf. This
would be followed by emergency repairs, which could take a week or two, with export capacity
recovering only gradually. Consequently, we expect output to remain at 0.55-0.60 mb/d until
early/mid-July, even as NOC studies options to bypass Ras Lanuf and possibly divert exports
to the Zueitina terminals.
In conclusion: Libya is good for no more than 0.8 Mb/d, but likely less than that in
2018.
The debate seems to be around what effect the risk of secondary sanctions from US
government for international companies will have. Some argue that the US allies and their
companies will not pick a fight over this with the US right now. In either case, it certainly
is not good for the Iranian economy which contracted after the last round of sanctions and
boomed when they were lifted afterwards. Also the Iranians want western equipment and
competence to develop their oil and gas fields (some of their oilfields are somewhat
complicated to develop), and it is not certain Lukoil and russian service companies can be a
good enough replacement.
There are some hurdles with switching customers for large oil volumes. Tanker freight and
insurance services now done by western companies afraid of sanctions will have to be replaced
or the obstacles overcome somehow. But I agree with you that China, while also having a
futures market trading in yuan, will look to Iran when shortage arrives. However the
perception of shortage has still not arrived in oil markets today. Some reduction of export
from Iran is likely both initially and for some time further. Hard to say how much, some
argue that it takes 6-12 months to see the full effects of US sanctions. And once sanctions
now are in place, even if it was untimely given the supply situation in the oil market, it
will not be practical and too confusing as a political move to see them lifted soon (less
than 1 year).
Fun to look at this analysis, and plug in a one million shortage from North America.
Obviously, there would not be a one million drop in Iran, as it would be sold somewhere.
We might be seeing similar articles about gas over the next couple of years. Driving a bit
less is maybe a good thing, pensioners and children freezing to death and industry shut down
with rolling blackouts is maybe less negotiable.
Suppose there is too little oil and the price doesn't change. Producing countries will be
sure their own countries have a sufficient amount so regardless of price, that oil isn't
leaving the country. It stays right there for consumption. External price is meaningless to
that country, as it should be.
There are countries that produce about what they consume. Mexico is one. Argentina. Their
oil isn't going anywhere. A higher price elsewhere tries to get it exported? Clearly the govt
will stop anything like that. Just as the US did with its export ban in the 70s. Price
doesn't matter if bans are in place.
Oh, and another annoying thing in that article. Something like . . . if supply shrinks,
only "demand destruction" can avoid some sort of catastrophe. This is absurd. Demand is not
destroyed. The desire for oil will grow with population. The population demands oil. It is
consumption that is destroyed by lack of supply. Can't consume what doesn't exist.
Besides which, if some level of "grim" is approached, then some decision is going to be
made to liberate that Orinoco heavy from the horrible popularly elected government that
controls it. As I noted before, there is a large ethnic Russian population in Venezuela. The
1917 revolution sent many people there, fleeing confiscation. Liberation may not go
smoothly.
Mexico doesn't use what it produces, it doesn't have the refining capacity – it exports
crude and imports products.
Invading Venezuela wouldn't necessarily stop the decline in production – their
equipment and wells are falling apart, to get back to where they were a couple of years ago
would require a five year occupation, probably with forced labour (or really high wages), and
the investment money all coming from the invading country, with no net returns for longer
than that.
Demand is usually defined with some relation to price, not assuming a commodity is free.
Antony C. Sutton, ´Wall Street and the Bolshevik Revolution', 1974 New Rochelle,
N.Y.
describes how Wall Street supported bolsjewism in order to prevent that German, suppose also
Dutch and other, trade, with Russia was resumed.
WII and the aftermath created the Atlantic alliance.
Just yesterday Pieter Hoekstra, USA ambassador in the Netherlands, stated that Russia should
be punished for MH17 by more sanctions, no new gas pipeline from Russia to Germany.
What he did not say that this implies our buying of USA gas, 20% more expensive. The MH17
show, in my opinion is run like the Sept 11 show. Or even the holocaust show, constant
reminders.
The USA fear about Russia and the EU member states seems to be twofold:
more trade with Russia, and the railway connections with China, threaten to turn the USA
into an economic backwater
Precisely. US could eventually (20-30 years from now) turn into a country similar to many
Latin American countries: rich in resources, demographically messy and ungovernable, weak
infrastructure, but above all remote and quasi-provincial.
The 'Atlanticist' project is meant to forestall the provincial Latin American future.
Washington does have some tools: dollar domination, military force, Hollywood, technology.
But none of those are necessarily sustainable without also actively messing up
Euro-Russia-China economic convergence. It might require a war to delay the inevitable slow
descend into a backwater across the Atlantic.
From the Bloomberg article: "The U.S. plans to speak with the governments of Turkey, India
and China, all of which import Iranian oil, about finding other supplies."
Iranian condensate will most likely replace US condensate to China as much as possible.
China is the key to if/when this harsh "embargo" of Iran will ease. They have the strength to
stand up against the US and then others will follow suit (e.g. India). A barter system (goods
vs. goods trade) or payment in yuan could probably be a good enough way to avoid american
banking sanctions. But if China wants to stand up against US at this point is uncertain. If
this strangling of Iran is highly successful, it is hard to see the rewards. A high oil price
that will be the tipping point for the global economy in the wrong direction or indirectly
(hopefully not directly – who needs another war now?) overthrow the Iranian government
and thus the creation of new political problems in the country; a repeat of the Iraq
experience almost. I almost forgot that there is the nuclear issue there as well, maybe that
is also a driver
"We have a lot of diplomatic muscle memory for urging, cajoling, negotiating with our
partners to reduce their investments to zero," the official added.
(This official infers that EU countries will soon capitulate to US demands, but does he
believe that, say, India will agree to this? The CNN reporters don't ask.)
Yeah, we are setting ourselves up for creating a 2.5 million barrel a day shortfall by
sometime in 2019. The US is creating these surprises by far overestimating Permian output,
and the Iran sanctions. Now, Perry is saying the OPEC increase may not be enough. Really, ya
think? What do we do now, President "Not good!"?
Trump's master plan was written on the back of a business card with a crayon. Nobody, can
decipher it, it more difficult than the most complex code.
I think probably the most telling take of his presidency, is the aide in charge of keeping
Presidential documents complaining that he tore every sheet of paper on his desk into little
shreds, constantly. Sure sign of a serious mental disturbance. Captain Queeg.
Guym. I assume most of the small conventional producers are receiving a low price in the
Permian. Bad deal for them, situation not of their making. Hoping very much that does not
spread to the Midcontinent.
Anecdotally, zero rigs presently drilling in our little field. Drove the width of Kansas
twice recently, including OK and TX panhandles. Saw zero drilling rigs. Saw just three
workover rigs.
The shale plays appear to be the USA oil future. The rest are not big enough to draw
outside money.
Really have to wonder how many of the world's fields are "self sufficient" at $70-80 at
this point.
Not much at $70 to $80 anymore. Not very much of a profit, at those prices. But, you get what
you pay for, and soon the world will find out that the price they wanted to pay results in a
deficit to what they need.
Yes, market really overdid it dropping prices to the 2015-17 levels.
I still blame a lot of the overdone price crash on US shale CEO talk. Their true costs
were murky, and they continually talked the price down through 2015 by claiming they could do
well financially at those levels or below.
Those companies should be doing great now, given the claims of 2015-17. Lol.
2015-17 took a lot of the fun out of oil production investment for me. None of us have
much desire to do any drilling or other risk taking. Just feeling relief, but worried the
roller coaster prices will never end.
Watching Trump kill grain prices. If the Dems could find someone that could appeal to
Midwest, I'd say Trump will not win in 2020. Very conservative ag folks are upset. Suprsing
to me how vocal they are about it.
Maybe a trade war will kill oil demand. More roller coaster.
"... tier plays that have been a bust. With the seismic and visualisation technology improvements the E&Ps should know better where and where not to drill. They seem to be more selective with falling wildcat numbers (and that is not much of a function of price that I can see as it has been happening since 2010) and yet the commercial discovery rates are staying fairly low. I can only interpret that as indicating that there just isn't that much left. With Rystad indicating 6 to 8% decline rates in mature fields, and rising, and few new prospects how can there not be a peak? ..."
"... Saudi ministers spout out any thing that comes to mind to support flip-flop policies and their feud with Iran seems to be bubbling in the background of a lot that's going on; every year Iran and/or Iraq say they have a new plan and target for higher production, which is 100% guaranteed not to be met even remotely. ..."
I think if the world economy starts to drop, which is overdue and looking increasingly likely
every time Trump opens his mouth, and keeps the oil price down then it's likely we'll be in a
slow but accelerating decline. That might be a good thing – the further the peak is
pushed out the steeper the decline when it comes.
What has surprised my most recently has been the fall in discoveries for oil and, maybe
more so, gas, and with that the number of new fron tier plays that have been a bust. With
the seismic and visualisation technology improvements the E&Ps should know better where
and where not to drill. They seem to be more selective with falling wildcat numbers (and that
is not much of a function of price that I can see as it has been happening since 2010) and
yet the commercial discovery rates are staying fairly low. I can only interpret that as
indicating that there just isn't that much left. With Rystad indicating 6 to 8% decline rates
in mature fields, and rising, and few new prospects how can there not be a peak?
The oil drop might have been more expected than the gas, and was predicted by some when
peak oil was first mentioned, I think gas less so, but perhaps the price has had a bigger
effect there. Whatever the cause many countries have been banking on ever rising supplies,
either by pipeline or LNG, that might not be forthcoming.
Having said that simple economic arguments rarely seem to work as predicted, oil supplies
would have peaked well before now without, mostly non-proftable, LTO; Venezuela production
should be rising not a basket case; Saudi ministers spout out any thing that comes to
mind to support flip-flop policies and their feud with Iran seems to be bubbling in the
background of a lot that's going on; every year Iran and/or Iraq say they have a new plan and
target for higher production, which is 100% guaranteed not to be met even remotely.
At the moment the traders don't seem certain which way to turn – falling/rising
supplies, short/long term demand rise/fall – you can see why they tend to fixate on US
crude stocks, everything else is too complicated. The next few Wednesday/Thursday trading
patterns will be interesting.
(ps if anything highlights the state of the oil industry at the moment it's that Fram, a
two well, eight year life-cycle, gas condensate tie-back with about 10 mmboe reserves, has
been the main headline news on at least four of the trade magazines this week.)
A little short by over 2 million a day. Perry has to know the Permian is on a hiatus for
at least a year. That's probably over a million. Iran push is for another million. Yeah,
that's a little short. Idiocy reigns. Russia just called for tariffs against the US. Any
assistance from Russia ain't gonna happen.
The slow motion train wreck in progress. No one knows why the driver of the Lower for
Longer Train has picked up speed down the curving stretch .
Ok, I'll forgo the train wreck series. Yeah, it's serious. So was the ridiculous pricing
we've had for the past four years, and no one but the people who relied on oil income
complained. There was not enough for capex to get new oil. The trainweck happened already.
U.S. oil production is booming at record levels, and U.S. oil exports have also reached
new highs -- 3 million barrels a day in the last week, according to government data.
Those exports are more than most OPEC countries can produce each day and only lag two OPEC
countries, Saudi Arabia and Iraq, in terms of exports.
And if you read far enough down in that article they do mention imports, as if they hardly
matter.
As U.S. production has grown, U.S. imports have decreased. The U.S. imported a
relatively high 8.4 million barrels per day last week.
Okay, the US exported 3 million barrels per day and imported 8.4 million barrels per day.
Yet the headline says the US exported more oil than most OPEC countries. Is this Orwellian
Newspeak?
We all agree that 2+ 2 = 5, but what we don't know is which one belongs to the thought
police. I agree the Permian will produce 1.3 million this year, just take the rat cage off my
head.
"the US exported 3 million barrels per day and imported 8.4 million barrels per day. Yet the
headline says the US exported more oil than most OPEC countries. Is this Orwellian Newspeak?"
Four days before the Permian pacifier is removed. EIA monthly for April due out 5/29,
Friday. But, then if they are really intent on keeping oil prices down until November, they can
post an increase and correct it later. Or, slowly correct it until November. Do I really think
the Federal Government would mislead the public? Hell, yes, they have been. They have access to
much more information than I do, and they are still singing the Permian song.
Reply Guym x Ignored
says: 06/25/2018
at 11:16 pm
Second thought, I don't think it is possible for EIA to delay it much further. We crossed the
Rubicon. Singing Permian songs when there are reports of service employers cutting back,
wells shut in, and overall reports of slowdowns, creates a lot of cognitive dissonance.
Must be a slow news day for OilPrice. The headline is misleading – the predicted record
is only for deepwater total (oil and gas) production, not total GoM. It is almost certainly
going to be wrong – if nothing else the 50 kboepd dropped from the loss of Hadrian
South gas and the prolonged Enchilada and Delta house outages are impossible to make up, but
even without those there probably wouldn't be enough new, plateau production through this
year.
As to the industry having this great revelation and deciding not to go for big, bespoke
developments and use standard designs and tie backs – it's the other way round –
they ran out of larger developments that were affordable, so didn't need the bigger, on-off
designs. Also the standard designs come at a cost – they have less flexibility for
future tie-backs or changing reservoir conditions, and probably lower availabilities. Note
also the talk of ultra-deep-water and HPHT developments like Anchor, that's a switch back to
expensive bespoke design (actually almost research projects).
It also references that crap EIA paper without making any effort to check the facts.
At the just concluded OPEC meeting, Iran, Iraq and Venezuela were against any increase in
extraction, while the Saudis wanted an increase. What resulted is
detailed in this article . Moneygraph:
"... OPEC does not need to change its output deal since the group had already cut supply
by much more than it had agreed. What Zanganeh offered was for OPEC and Russia to pump back
up to decrease the current cuts to the initial 1.176 million barrels per day (bpd).
"Output in May 2018 was actually down by 1.9 million, somehow 62 percent or 724,000 bpd
more than what was agreed upon in 2016."
The upshot is an increase will occur but no increase will occur--understand? The
extraction amount agreed to in 2016 remains the amount OPEC will extract. There will be
no increase in that amount this year.
There sure seems to be a lot of factors pointing to a rather hard landing for this long
business cycle (10 years is a really long boom period). The central banks have a tendency to
print money when things go wrong; or use the low interest weapon if they have it. Where all
this will end up is difficult to predict just because of how complex it is.
To be more precise, after some reflection, what I fear is more stagflation. A rare historic
incidence which combines inflation with negative economic growth. That is what happens when
pouring money into an economy with scarce resources where oil is one of them. What is coming
is typically not like 2008-09 just because black swans are everywhere, and higher inflation
is the surprise coming forward in my opinion. Prices for fossil fuels will stay pretty high
in such a scenario, e.g. with the decline rates for oil overall rising steadily. Which I
think is a good thing due to the energy transition that has to happen. I think it is
realistic that we can come up with a halfway of a solution for our energy problems and that
it is good enough to secure a decent standard of living (or maybe halfway decent or okish
;-)) long into the future. But not an affluent one and it will be highly country specific.
Unless some kind of technology breakthrough is coming, but that is certainly a long time
project.
"... Houston, 11 June (Argus) Plains All American Pipeline, a prime mover of crude around and away from the Permian, reiterated last week that there is not enough trucking capacity to address skyrocketing production, and potential rail slots are limited. With most material pipeline capacity additions a year or more away, Plains said the logical solution is slowing output ..."
"... That's really kind of funny. The takeaway professionals have to tell them, "come on guys, put a brake on it. It can't be moved." Note, the article stated that the pipeline company said production is already slowing. Wonder if EIA will finally read the memo? Also, it may result in more little fish, being eaten by the bigger fish. ..."
"... The next 3 or 4 months for EF and Bakken might be interesting – they've both been steady or slightly declining with no pick up in drilling or, I think, permitting even as the price has risen, and the initial well production and ultimate recovery look to be declining on recent wells. If Permian is closed off I wonder if the operators will bother to move back to these. ..."
"... Yeah, I think they will. You just won't see growth just overnight from these areas, and the ones who had good areas in these, never left. EOG, Conoco and others are still doing their thing. Growth will mainly show up the first and second quarter of 2019. Maybe some the last quarter of 2018. My guess. It just won't ramp up like the Permian, EIA predicts a bunch, but they are smoking some strong stuff. They believe in teleportation of oil to the coast, and further teleportation to VLCCs off the coast. ..."
"... Wild guess on the 22nd. OPEC releases non-opec from the agreement. Increasing OPEC, at this point, will involve disintegration of OPEC, which it really is, anyway. But, a modest increase may hold them together for a little while. Although, for the Sauds part, I don't know why they would, except to keep up the illusion. ..."
That's really kind of funny. The takeaway professionals have to tell them, "come on guys,
put a brake on it. It can't be moved." Note, the article stated that the pipeline company
said production is already slowing. Wonder if EIA will finally read the memo? Also, it may
result in more little fish, being eaten by the bigger fish.
Energy News, you constantly amaze me with your finds of information. Everything is
extremely pertinent.
The next 3 or 4 months for EF and Bakken might be interesting – they've both been
steady or slightly declining with no pick up in drilling or, I think, permitting even as the
price has risen, and the initial well production and ultimate recovery look to be declining
on recent wells. If Permian is closed off I wonder if the operators will bother to move back
to these.
State of North Dakota came out with a new presentation a few weeks ago showing revised
predictions for Bakken oil output. They now have production likely reaching 1,900,000 BOPD
within the next decade while the best forecast offers better than 2,200,000 BOPD.
Yeah, I think they will. You just won't see growth just overnight from these areas, and
the ones who had good areas in these, never left. EOG, Conoco and others are still doing
their thing. Growth will mainly show up the first and second quarter of 2019. Maybe some the
last quarter of 2018. My guess. It just won't ramp up like the Permian, EIA predicts a bunch,
but they are smoking some strong stuff. They believe in teleportation of oil to the coast,
and further teleportation to VLCCs off the coast.
That not everyone believes the EIA is evident in the huge, many billions of dollars,
losses in stock value of the "Permian pure play" companies recently. EIAs and IEAs fairy
tales are coming unraveled. About the only section of the investment community that still
believes them, is that percentage of adults that still believe chocolate milk comes from
brown cows. What they are still unsure of, is how much excess capacity OPEC now has.
Wild guess on the 22nd. OPEC releases non-opec from the agreement. Increasing OPEC, at
this point, will involve disintegration of OPEC, which it really is, anyway. But, a modest
increase may hold them together for a little while. Although, for the Sauds part, I don't
know why they would, except to keep up the illusion.
"I think not, it's a lot cheaper to add a few more production wells than to add a couple of
million barrels of high pressure water injection capacity (topsides facilities and the wells
needed to inject it"
Water injection isn't the problem, its water cut. The don't need to inject more if they
keep the water cut stable. In order to keep the water cut, they have to perodically drill new
wells to keep the wells in contact with the Oil column. Over time the Water column push up on
the Oil column (ie Oil floats on Water). All the CapEx/Opex goes into drilling to keep in the
Oil Column Zone as well as add new wells to tap oil trapped in pockets. As the Oil column
continues to shrink and and as the water column become increasing contact with the cap rock
its going to required more and more drilling to maintain production.
My guess well know when SA starts running into problems when we start to see the rig count
increase and the production dropping over a period of a couple of years.
"The drilling of new oil wells is to maintain current production, not to increase it"
SA cannot increase Oil production much. They are working on extracting the remaining cream
(oil column) floating on a see of water. Increasing production would just increase the water
cut and also increase trapped oil that would later be more costly to extract. The only way SA
can increase production is to tap new fields or increase drilling for oil trapped in pockets.
But at some point these options will vanish over time as it will be increasing more difficult
to squeeze more oil out, like trying to squeeze trapped toothpaste out of a depleted
toothpaste tube.
I didn't say water injection was the problem I said it was the limit to increasing
production. It is. Water cut is the problem that leads to decline unless they keep drilling
new wells.
Two ways that increasing water cut is a problem are: 1) you have to inject more water for
the same amount of oil, which they don't have, 2) you have to treat more produced water,
which they don't have capacity for. Exactly what I said above. The third is that it reduces
overall well flow and, more so, oil flow; but that is easily got round if it easy to drill
new wells, as is the case for Saudi, even the offshore fields, which are shallow. That also
solves the first two problems because the individual field and overall country water cuts are
held steady.
The limits on surface facilities are much more expensive and long term (5 years at least)
to get round, but it could be done, therefore it is wrong to say that the only way to
increase production is to tap new fields.
(ps – I worked on water flood oil fields, including some minor studies for Saudi,
for at least 15 years through my career, the water is a bigger influence on the design and
operation than the oil.)
That all together sounds like it's completely senseless to keep some spare capacity for
fields like this.
This capacity will cost billions, hold back for not much. A big oil storage is better
there for satisfying demand peaks or temporary supply losses.
Reserve capacity is cheap to have when you are in primary recovery of a conventional
(giant) field.
The only illusion of reserve capacity would be in fields with tertiary recovery would be
to postpone maintainance for a few months to get that 5% more production.
Some spare is always needed, just to maintain production during maintenance or unplanned
outages. Sparing doesn't postpone maintenance, it means maintenance can be done without
taking the plant offline, or at least not for too long, so you get maximum returns on your
investment (when plants are taken down for major turn arounds it is to do work on items for
which there are no online spares).
Depending on the maturity of the field there is also always different amount of sparage in
the different project components – e.g. the wells, compression, power generation, oil
processing, export capacity, water injection, water processing – the limit is the
component with the least amount of sparage.
In Saudi also, at least for the heavy fields, they have been known to rest them completely
for a time, this allows the water contact to settle out and avoid excessive coning, which
provides a much better sweep of the oil and higher recoveries (I don't think any where else
has that luxury).
So when someone says "we have spare capacity" it can mean almost anything from
2×100% pumps on a particular duty to an entirely unused, ready for action oil
field.
From a modern capitalist approach with everything just-in-time and the next quarterly
statement being all important then excess sparing wouldn't please the shareholders, but Saudi
designed facilities with 50 year life times, so it might be different.
From looking at their recent production profiles, which seem to go up when they report a
new start-up and then decline, and stock draws, which have been consistent since January
2016, I find it hard to believe they have a large amount of "real" spare capacity –
i.e. that's easy to bring on line and that doesn't alter any of the performance of the fields
over the long term or compromise planned maintenance schedules – but I can't say for
sure. And, as I've said, the limit to expanding production (that means beyond just using up
the spare) is almost certainly with the surface facilities for water, so it's likely that is
also the part with the least spare capacity.
It sounds like you believe they might be able to maintain a plateau of 10 Mb/d for many
years, if they just drill more wells as needed. Though I may not be understanding
correctly.
There's the big question. Once the horizontal wells are at the top of the reservoir then you
can't drill any more and once the water contact hits them, even with intelligent completions,
then the decline will be fast (but even that is relative, huge fields take longer to decline
than small ones). There was a report in the Oil Drum some time ago that indicated that a lot
of Ghawar wells were near the limit but nothing much seems to have happened since to indicate
this turned into a problem, but then Saudi has a lot of other fields. On some of their
offshore fields they are replacing all the wellheads to add ESPs, that usually means they
have run out of new well options. Their rig count is declining, but maybe jus because they
are drilling much more productive MRC wells.
It's the difference between the size of the tank and the size of the tap (or for water
injection more like the size of the vent that lets air in to stop the tank collapsing under
suction). Might only know what's going on well after the fact.
I've told you that once you start down the Trade War path forever it will dominate your
destiny.
Well here we are. Trump slaps big tariffs on aluminum and steel in a bid to leverage Gary
Cohn's ICE Wall
plan to control the metals and oils futures markets . I'm not sure how much of this stuff I
believe but it is clear that the futures price for most strategically important commodities are
divorced from the real world.
But today's edition of "As the Trade War Churns" is about China and their willingness to
shift their energy purchases away from U.S. producers. Irina
Slav at Oilprice.com has the good bits.
The latest escalation in the tariff exchange, however, is a little bit different than all
the others so far. It's different because it came after Beijing said it intends to slap
tariffs on U.S. oil, gas, and coal imports.
China's was a retaliatory move to impose tariffs on US$50 billion worth of U.S. goods,
which followed Trump's earlier announcement that another US$50 billion in goods would be
subjected to a 25-percent tariff starting July 6.
It's unclear as to what form this will take but there's also this report from
the New York Times which talks about the China/U.S. energy trade.
Things could get worse if the United States and China ratchet up their actions
[counter-tariffs] . Mr. Trump has already promised more tariffs in response to China's
retaliation. China, in turn, is likely to back away from an agreement to buy $70 billion
worth of American agricultural and energy products -- a deal that was conditional on the
United States lifting its threat of tariffs.
"China's proportionate and targeted tariffs on U.S. imports are meant to send a strong
signal that it will not capitulate to U.S. demands," said Eswar Prasad, a professor of
international trade at Cornell University. "It will be challenging for both sides to find a
way to de-escalate these tensions."
But as Ms. Slav points out, China has enjoyed taking advantage of the glut of U.S. oil as
shale drillers flood the market with cheap oil. The West Texas Intermediate/Brent Spread has
widened out to more than $10 at times.
By slapping counter tariffs on U.S. oil, that would more than overcome the current WTI/Brent
spread and send Chinese refiners looking for new markets.
Hey, do you know whose oil is sold at a discount to Brent on a regular basis?
Iran's. That's whose.
And you know what else? Iran is selling tons, literally, of its oil via the new Shanghai
petroyuan futures market.
Now, these aren't exact substitutes, because the Shanghai contract is for medium-sour crude
and West Texas shale oil is generally light-sweet but the point remains that the incentives
would now exist for Chinese buyers to shift their buying away from the U.S. and towards
producers offering substitutes at better prices.
This undermines and undercuts Trump's 'energy dominance' plans while also strengthening
Iran's ability to withstand new U.S. sanctions by creating more customers for its oil.
Trade wars always escalate. They are no different than any other government policy
restricting trade. The market response is to always respond to new incentives. Capital always
flows to where it is treated best.
It doesn't matter if its domestic farm subsidies 'protecting' farmers from the business
cycle or domestic metals producers getting protection via tariffs.
By raising the price above the market it shifts capital and investment away from those
protected industries or producers and towards either innovation or foreign suppliers.
Trump obviously never read anything from Mises, Rothbard or Hayek at Wharton. Because if he
did he would have come across the idea that every government intervention requires an
ever-greater one to 'fix' the problems created by the first intervention.
The net result is that if there is a market for Iran's oil, which there most certainly is,
then humans will find a way to buy it. If Trump tries to raise the price too high then it will
have other knock-on effects of a less-efficient oil and gas market which will create worse
problems in the future for everyone, especially the very Americans he thinks he's
defending.
There is a narrative that oil demand will soon begin dropping due to widespread use of EV.
1 million EV just replaces 14,000 BOPD of demand. Conservatively assuming those one
million EV require $40K per unit of CAPEX, just to replace 14,000 BOPD of demand took $40
billion of CAPEX.
Likewise, to replace 1.4 million BOPD of demand via EV would take $4 trillion of
CAPEX.
Worldwide demand has been growing somewhere between 1.2-2.0 million BOPD annually,
depending on who one believes.
See where I am going with this? How do the EV disruption proponents explain away the
massive CAPEX required just to cause oil demand to flatten, let alone render it near
obsolete?
The average US car gets 25 mpg and travels 12,500 miles per year for 500 gallons of gasoline
per year.
Refineries in the US produce 20 gallons of gasoline per barrel of oil.
That gives 69,000 BOPD per day reduction per million EV cars in the US and 110,000 BOPD oil
equivalent energy due to the multiple energies put into gasoline and distillate
production.
At current rates of EV sales growth the US will reach 50 million EV cars by 2031. That should
put he US to being mostly independent of external oil for gasoline by mid 2030's and
It's tough to predict a complete transition in the US since cars as a service could greatly
reduce the numbers of cars needed, especially in dense population areas. That would mean a
much earlier transition.
If US ICE cars trend upward in mpg during that time, the demand for oil could be quite low
by the early 2030's.
All depends on continuation of trends, for which the auto manufacturers seem to be on board.
Just have to get the public charging infrastructure out ahead of the trend.
Here is an interesting article, from a couple of years ago, showing the trend and sales at
that time.
Cars get replaced all the time and the cost of new EVs will fall over time to the same
price as ICEV, so it's simply a matter of replacing the ICEV currently sold with EVs over
time, in addition cars can get better gas mileage (50 MPG in a Prius vs 35 MPG in a Toyota
Corolla or 25 MPG in a Camry.) There's also plug in hybrids like the Honda Clarity (47 miles
batttery range) or Prius Prime(25 mile range on battery) these have an ICE for when the
battery is used up.
If oil prices rise in the short term to over $100/b (probably around 2022 to 2030), there
will be demand for other types of transport besides a pure ICEV.
EVs and plugin hybrids will become cheaper as manufacturing is scaled up due to economies
of scale.
Surprising stuff. Huge oil consumption growth rates in Eastern Europe. 8+% growth %s in
Poland, Czech Republic and Slovakia. Something weird going on because Romania and Slovenia
didn't show the same thing.
Western Africa grew consumption of oil 13% last year. I'll add a !!!!. East Africa about 6%.
Both are over 600K bpd, so that growth rate is not on tiny burn.
Poland's official oil consumption growth is caused by better fighting with illegal, and
unregistered fuel imports since mid 2016. When taxes are 50% of fuel price, there is big
incentive for illegal activities. Real oil consumption probably didn't increase much.
Poland, Czech and Slovakia are going through a huge economic boom now (I live in Slovakia and
party in Czech Republic). It's visible everywhere, there wasn't this much spending and
employment ever in the last 28 years
Oil demand is mostly determined by GDP growth, oil price has a minor influence on short term
demand. World GDP grew by about 5% from 2016 to 2017 according to the IMF, so oil demand
increased by 1.8% possibly less than one would expect. Real GDP (at market exchange rates)
grew by about 3% in 2017.
The idea behind peak demand is simply that oil supply may at some point become relatively
abundant relative to demand in the future (date unknown). When and if that occurs, OPEC may
become worried that their oil resources will never be used and will begin to fight for market
share by increasing production and driving down the price of oil to try to spur demand. That
is the theory, I think we are probably 20 to 40 years from reaching that point for
conventional oil.
Oil still contributes quite a bit to carbon emissions and while I agree coal use needs to
be reduced (as carbon emissions per unit of exergy is higher for coal than oil), I would
think it may be possible to work on reducing both coal and oil use at the same time. Using
electric rail combined with electric trucks, cars and busses could reduce quite a bit of
carbon emissions from land transport, ships and air transport may be more difficult.
It's better to sell half of your ressources for 90$ / barrel than all at 30$ / barrel.
The gulf states will always have cheap production costs at their side, they will earn more
at each price of oil. Why not make big money, especially when at lower production speed the
production costs are much lower (less expensive infrastructure).
And in the first case you can sell chemical feedstock for a few 100 years ongoing for a
good coin. Theocracies and Kingdoms plan sometimes for a long time. When you bail out
everything at sale prices, you end with nothing ( and even no profit).
You assume half the resource can be sold at $90/b, at some point in the future oil supply
may be greater than demand at a price of $90/b, so at $90/b no oil is sold and revenue is
zero.
In a situation of over supply there will be competition for customers and the supply will
fall to the point where supply and demand are matched. Under those conditions OPEC may decide
to drive higher cost producers out of business and take market share, oil price will fall to
the cost of the most expensive (marginal) barrel that satisfies World demand.
I don't think we are close to reaching this point, but perhaps by 2035 or 2040 alternative
transport may have ramped to the point where World demand for oil falls below World Supply of
oil at $90/b and the oil price will gradually drop to a level where supply and demand
match.
Drilling Productivity Report – what we need is a Permian Plumbing Report. EIA – NOTE: Productivity estimates may overstate actual production which could be limited
by logistical constraints. https://www.eia.gov/petroleum/drilling/#tabs-summary-2
Regarding Saudi Arabia, what seems certain is that they have increased crude exports in
parts of May and early June by either activating "spare capacity" or withdrawal from storage.
Coming into peak domestic demand season it will be hard for OPEC to compensate for Iran,
Venezuela, Libya and any other negative "surprises" coming along in 2H2018. It would be a
real surprise if not the solution is to agree to a moderate production increase due to quite
a few reasons (I can think of at least 5 reasons for this on top of my head). I can imagine
OPEC/Russia want a somewhat controlled price increase to let us guess 90-100 dollars before
the low demand season kicks in 1H2019. If demand growth is still not impacted too much the
supply problems start to become unsolvable in 2019 and in any case 2020. There is both a
potential for a great price spike and recessions in 2019 imho.
I don't think it is Khurais. The project is delayed, but for how long is uncertain.
A quick search on the internet:
"We see Opec building capacity over the coming five years, largely driven by Saudi Arabia
where we see the Khurais expansion in 2019 and the Marjan field start-up by 2021. Saudi
Arabia is pressing ahead with upstream investment as part of its Vision 2030 strategy,"
BofAML said.
I was thinking that the price of WTI is still cheap. But then countries such as Russia have
been complaining that product prices are too high and that their refinery margins are too
low, and so I don't know. I still think prices could spike higher, sometime, due to outages
and lack of long term investment.
It seems that OPEC is looking to prevent supply shortages during peak demand
2018-06-19 OPEC technical panel sees strong oil demand in H2 2018, implying that the
market could absorb additional production, according to 3 OPEC sources
With the most highly-anticipated
OPEC meeting since November 2014 taking place Friday in Vienna, Macrovoices host Erik
Townsend made this week's podcast all about oil. He started his three-part interview series
with Dr. Ellen Wald, the author of "Saudi Inc.", a book about Aramco. During their discussion,
Wald shares what she learned about the Kingdom of Saudi Arabia and - most importantly - how the
royals view both Aramco and the oil market. This perspective is important, she explains, in
interpreting why former Saudi energy minister Ali Al Naimi made the infamous decision back in
November 2014 to
keep OPEC oil production targets unchanged . That decision precipitated another leg lower
in oil prices, eventually sending them to $30 a barrel. Many observers criticized the Saudis
for shooting themselves in the foot by standing against production cuts. But the one thing that
these critics didn't understand, Wald said, is that the Kingdom has always treated Aramco like
a family business.
They have two twin objectives: long-term profit and power. And when they look at Aramco,
they're not concerned about meeting, say, what their quarterly reports are going to show or
their stock price. They're looking at this in the long term, in a generational
perspective.
And so in 2014 when it seemed as though oil production was increasing around the world
– there was lots of other sources – not just shale oil production in the United
States but we had really increasing from all over – they went into that OPEC meeting
and everyone thought oh, they have to cut production. If they don't they won't maintain the
price they need for the budget and this is what has to be.
Instead, they surprised everyone by basically walking out and saying to heck with it,
we're going to produce as much as we possibly can. And the reason, it seemed to me, was very
clear: They knew that no matter how low the oil price went it was going to be that much worse
for everybody else and not as bad for Saudi Arabia.
When Townsend asks about the decision to float 5% of Aramco in a foreign stock market (a
plan that is reportedly on hold, for now at least), Wald explains that the Saudis respect their
company's "American heritage" (the Saudis slowly nationalized Aramco in stages during the 1970s
and 1980s, buying it in stages) and they view the company as an international oil company like
Exxon.
But in another sense, I see this as a natural progression for a company that was an NOC
but has always seen itself as really a major international oil company. And it's expanding
its research, it's expanding its downstream operations, in order to have a profile similar to
that of an IOC. They are very, very proud of the patents that they've acquired and they
compare it to the number of patents that, say, Exxon gets. It's really very evident
throughout this.
Next, Townsend turned to energy analysts Anas Alhajji and Joe McMonigle for a three-way
discussion about what to expect From Friday's meeting. Earlier this month, we heard from fellow
"geological expert" Art Berman, who speculated that the current glut of oil created by the
shale boom in the US is a temporary anomaly
But the bigger factor here is Venezuela and how quickly Venezuelan crude has come off the
market. Venezuela was producing about 1.4 million barrels a day. It's probably 1.3 now, in
June. Under the OPEC agreement, they could be producing close to 2 million barrels a day.
Berman speculated that the global demand curve is growing at a pace much more quickly than
most market experts anticipate, and that - regardless of whether OPEC decides to raise or
maintain production - the world will inevitably find itself mired in a supply crunch. But
McMonigle asserted that the collapse of crude production in Venezuela has left a massive
production hole that should be filled by OPEC members. Because of this, Saudi Arabia doesn't
have a problem with higher prices, and even OPEC
itself is anticipating that demand will remain strong in the second half of the year.
So that's 600-700 thousand barrels extra that has really accelerated crude stock drawdowns
and I think has really supported higher prices quicker than most people thought. I was in the
camp, and I think others were, that in the second half of this year we would be around
between $70 and $75.
Obviously, we got there pretty quickly at $80. And most of that had to do with Venezuela.
And then, of course, you had the Iran sanctions – which we've been talking about for a
long time – that we expected to come. But there are a lot of people on the market that
just didn't think Trump would pull the trigger on it. Well, he did. And so that really pushed
things up to over $80. There isn't any crude yet coming off the market, but we certainly
expect that there will be.
[...]
First of all, I have to say I don't think OPEC is going to give up that easily on higher
prices. I think the Saudis are quite comfortable with prices around $80. They don't really
see a production problem. The physical oil markets are pretty well-supplied, as I think Anas
will talk about. But they really have a political problem instead of a production
problem.
And the political problem is this: You know, higher prices, you've got some calls for
action. Trump, of course, with his tweet a couple of weeks ago while the compliance committee
was meeting in Riyadh I think really took them by surprise. I think there is kind of an
implicit agreement to help because of the Iran sanctions. And that's something that Saudi
Arabia and UAE and all the other Gulf countries support.
However, the one thing that could change their minds, is a political issue concerning their
relationship with the US. Following Trump's aggressive Iran policy, there could be a consensus
forming among the Gulf countries to support higher production levels that would held rein in
prices. But this might not be in the long-term best interest of the Saudis.
Drop in the bucket to what is happening right now. US will be about 500k less than their
(IEA's) expectations into 2019 due to transportation constraints. George thinks Venezuela
will approximate zero by 2019, as do others. Give them the benefit of doubt and say a one
million decrease from 1.6 at the beginning of this year. IEA is still using production vs
export capabilities, which has to change. Europe's refineries have largely stopped buying
Iran's oil, as has India. That's 1.1 million that has to be sold elsewhere, or not. On
shipping, insurance, and financing that is not affected by the restrictions. I count 2.6
million into 2019 that is not on IEA's plate. Yeah, as said above, 2019 is going to be quite
interesting, most of which we will see the end of 2018. None of this takes into consideration
any increase in demand for 2019 that is over the US production projection for 2019 (.9). nor
any shortage carried over from 2018. Yeah, we should be hunky dory.
In the investment world, we will still be watching EIA weeklies, to determine what is
happening in the rest of the world for awhile. So increased cognitive function won't happen
soon.
250kbd – not shabby when it's for longer than a few days. A quarter of the Opec reserve
capacity, or all the russian reserve capacity.
Without fracking, the world would be in deep sh*** already. With e technic not advanced
enough and 150$+ oil – and more economic problems and instabilities.
"Without fracking, the world would be in deep sh*** already."
Are you kidding? Why? We can't car share, build vehicles that get 80 mpg or better, can't
conserve, can't innovate? There is nothing better (sadly) than economic stress to make fast
and lasting changes.
Let the oil go up to $150. All the countermeasures have been developed, in a decade we would
be well on our way to not needing oil ever again. Sure the military and some specialized
vehicles or systems might need to burn some oil but 90 percent of the demand would be gone in
a decade. Bring those prices up and keep them there. Things look ready now for a permanent
transistion.
Here in the US we are so wasteful, we would hardly know the difference if we cut demand by
50 percent. I cut my use of gasoline for transport down to 10 percent already. Didn't die or
anything like that. Many people could cut theirs by 50 percent or more with existing
technology. With some planning and minor lifestyle changes, down to 30 percent.
Businesses would go EV or hybrid with natural gas.
It's very dangerous to the oil industry to let the price rise. It's no longer a kidnapped
world, it's merely a matter of changing production to different types of vehicles and heating
systems. Oil lost out in power generation, it will lose out in transportation if prices go
high for very long.
People who can afford it will continue wasting gas – and US people have lots of
money or credit cards. Some will have to scale back, of cause.
The break comes in developing countries, where the "Arabian spring" was triggered by high
fuel prices, among other reasons. Or in other countries when the government can't keep up
fuel subsidies. Modern cities, even in the 3rd world, need gas to function.
This means public transport and goods transport, not private cars!
Buying smaller car is an option for developed countries, including China.
Other things:
Lybia – with higher prices, the war between war lords for the oil
perhaps heats up more – more weapons available. Nigeria: More oil price – more
money to get from government, so blow up more pipelines. Venezuela: The decline started
already at 100$+ due to socialistic waste, so no change here. Iraq: Perhaps more money for IS
& co by selling oil – so less production and more war. Iran: More money -> more
weapons to shoot out the proxy war with Saudi Arabia. Russia: More money -> no really need
to increase production, just earn.
And so on we need a transition, but not a chaotic one.
Just reading the existent system now. Dependence upon oil is by design and design can now
change. Economic stress is the only way to hasten the transistion.
If Iran wants to spend it's oil money on war instead of energy transistion, then it will end
up back on camels in the long run. Same with some other countries.
If the people of a country are more interested in war and destruction than helping
themselves, that will end badly. Same goes for the US, or any other big country, if it keeps
trying to run the world.
Venezuela is an example of bad leadership, nothing else.
People and governments often end up where they are aiming.
You don't understand, that this "wasting" of oil, and other energy sources IS the economy.
When your car burns more gas – people in oil extracion, and refining have jobs, and oil
exporting countires have revenue to employ it's citizens, and these citizens then buy
iphones, etc.
Oil can only be scaled down, when other energy source takes over.
The root of all employment in the world is using of energy sources. More energy used
worldwide, means more purchasing power of the population. It's true since hunter-gather
times.
Europe begs to differ. A number of European countries have twice the GDP/energy of the US.
The whole world has been increasing GDP/energy used for many years.
"Oil can only be scaled down, when other energy source takes over."
Efficiency and systems management has already scaled down the use of oil, otherwise we would
be using more than twice as much now.
Meanwhile, other energy sources are and have been taking over from oil for many years. From
electric trains to electric power, electric cars, gas heating. This trend will only
accelerate as oil becomes more expensive and more volatile in price.
Yep, it's scary for some. Two days work for a few guys or less puts enough PV on a house
to supply it's power and the power for an EV. Maybe another day or two for maintenance over
the next 20 to 30 years. That is all the work that is provided.
Another day or two to put in a battery backup system. Not much work there.
However, not to worry. There is a huge amount of work over the next few decades designing,
installing new energy systems. Houses and buildings need refits to be better insulated. Water
systems will have to be changed. Everything will change, meaning lots of work. Probably too
much, so automation will play a big part.
After that, who knows.
"Why? We can't car share, build vehicles that get 80 mpg or better, can't conserve, can't
innovate? There is nothing better (sadly) than economic stress to make fast and lasting
changes."
An 80 mpg vehicle is called a motorcycle. I don't expect many people to commute to work in
the middle of winter on a motorcycle. Nor can I see granny going to the grocery store on a
motor-bike. There are limits to improvement: You cannot squeeze blood from a stone. Law of
diminishing returns: further efficiency improvements are much smaller and much more expensive
to implement.
A lot of oil is consume to transport goods to consumers. That salad you bought at your
local grocer, likely traveled 1200miles in a refrigerated truck. Pretty much everything you
consume includes materials, parts that are manufactured in distant locations.
Most Westerners are now dead broke. They carry high amounts of debt, and have managed to
avoid going homeless because Central Banks dropped the interest rates to nearly zero. Since
then People have been increasing there debt and at some point rising interest rates &
increasing debt will trigger another crisis. That said, dropping the interest to near zero
probably won't work the second time since when the next crisis starts rates will be
significantly lower than during the 2008-2009 (ie law of dimishing returns applies to
interest rates too)
"Let the oil go up to $150. All the countermeasures have been developed, in a decade we
would be well on our way to not needing oil ever again"
It won't be sustainable. Recall that in 2008, Oil prices peaked at $147/bbl and it
triggered the biggest global recession since the Great Depression. Gov't turned to Money
printing (ie QE) to avoid a deflationary spiral. If Oil Spikes near $150/bbl is going to
trigger another global crisis. Which will lead to more war, Civil wars, revolutions, &
rioting. Recall that during 2009-2012, Developing world gov't collapsed, and there were
widespread riots in Europe (UK, Spain, Italy, Germany, etc).
"Oil lost out in power generation, it will lose out in transportation if prices go high
for very long."
Oil was never a major source for generating Electricity. Coal was, but that been outpaced
by NatGas. The think is that NatGas is much more valuable to use for spinning turbines. Its
used for heating and DHW in urban areas since it does not release emissions like Coal &
Oil would. I cannot fathom the costs of retro-fitting every home & business when NatGas
depletion hits.
It took the work about 140 years to build the economy and infrastructure which is
dependent on fossil fuels. Any transition off fossil fuels is likely to take nearly as
long.
Older wells are declining at about 8% per year. A 25 BOPD well with a 10 BOPD economic limit
should have 70,000 barrels of oil left to produce in about 12 years.
Is it safe to assume that newer wells will behave the same as older wells?
Some petroleum engineers that have commented at shaleprofile.com (Enno Peters wonderful
resource) that the high level of extraction from newer wells will likely lead to a thinner
tail.
illustrates this, notice how the 2014 and 2015 wells fall below the 2010 well profile
after 24 months, the same is likely to occur for 2016 and later wells. Also note that the
2010 well profile is representative (close to the mean) for 2009 to 2012 average well
profiles.
Dennis, i would say the decline rate (8%) is very safe to use for all LTO wells, i would
definitely apply it after the 6th year of well life, because by then what counts is rock
quality and fluid type. This is only good for a bulk projection.
By the way I tweaked my price model when I was preparing my CO2 pathway. I took into
account the Venezuela crash, the difficulties the Canadians have moving their crude, etc. The
price projection is $88 per barrel Brent for evaluating projects which start spending in
2019. I also prepared a different look for very long term projects which start spending in
2023: $110 per barrel.
Don't forget these aren't prices predicted for those particular years. They are prices one
can use to evaluate long term projects such as exploring in the Kara Sea, offshore West
Africa deep water, the African rifts, Venezuela heavy oil developments, etc. These prices are
plugged in and escalated with inflation for the 20-30 year project period. Real prices should
oscillate back and forth around these values.
Norwegian crude oil & condensate production (without NGLs) at 1,321
kb/day in May, down -223 m/m, down -297 from 2017 average or -18%. The main reasons that
production in May was below forecast is maintenance work and technical problems on some
fields. http://www.npd.no/en/news/Production-figures/2018/May-2018/ Almost down to the Sept 2012 low at 1,310 kb/day
This is what happens when there are no sizeable new fields coming online for 1/2 year and as
G.Kaplan has mentioned not enough allocation for supply disruptions are included in the
forecast.
A brutal decline, even if this month is an anomaly as NPD say.
Looking at the field numbers (only through April) it looks like Troll Oil is in decline a bit
earlier and a bit steeper than expected. It's the biggest oil producer still bu has dropped
fairly consistently and slightly accelerating from 161 kbpd in October to 121 in April. It's
all horizontal wells and requires continuous drilling to maintain production, it's close to
exhaustion with only 10% remaining at the end of 2017 (about R/P of 3 years) and had been
holding a good plateau around 150 for a few years. The gas is due to be developed starting in
2021 so the oil rim would need to be depleted by then, but maybe dropping a bit sooner than
expected – is a reservoir not behaving as modelled a "technical problem"?
I don't know about the price as it depends on the demand side and the global economy looks to
me increasingly rocky, but the supply side analysis looks pretty good, except as you say a
bit conservative. One thing missing was consideration of increasing decline rates on mature
fields, especially offshore, partly a result of accelerating production in the high price
years and partly because of an increasing ratio for deep and ultra deep water. Additionally I
think the lack of increase in non-US drilling rigs as the price has risen is relevant and
partly represents a shortage of in-fill prospects and short cycle appraisals.
If they are relying on GoM to add the 300 kbpb (or more into 2020) that EIA are predicting
then I think they are going to be short by 400 to 500 kbpd for a 2020 exit rate.
(I don't follow the chart showing new OPEC developments, the numbers can't be number of
projects, probably kbpd added, or maybe mmbbls reserves, and I'm betting they've mixed in gas
with the oil.)
As in all these investment type analyses they don't look too far ahead and there's a kind
of tacit assumption that everything will be sorted out with more investment later on, but
five years of low discoveries and accelerated development of the good ones means there's
actually not that much new to invest in, and if there is then ExxonMobil will be looking to
buy it.
Yeah, demand is always a big question. Hard to measure, even in the rear view mirror.
However, their constant increase of 1.2 million barrels in the US over a three year period,
should offset any question of demand. While 1.2 in 2020 is something I can't predict, 1.2
million for 2018 and 2019 is impossible without increased pipelines long before the second
half of 2019. So, I think it is way conservative.
They say "We believe we are 6-9 months ahead of consensus with our oil forecast. Why is no
one else seeing what we see?." Obviously they haven't been reading POB for the last two
years.
POB made it possible to piece together in my own way, otherwise I would be like most. Staying
confused with constant conflicting info. Predicting price is virtually impossible, as is
demand to a large extent. But, when supply is ready to fall off a cliff, then being exact is
not required.
A simple way to think about C+C demand is to assume over the long run that supply and
demand will be roughly equal (though of course there will be short term imbalances which
changes in the oil price over the short term will try to correct). From 1982 to 2017 C+C
output grew at an average annual rate of about 800 kb/d. It is probably safe to assume that
oil demand will continue to grow at roughly that pace in the absence of a severe global
recession and those are pretty rare. I define a "severe global recession" as one where real
World GDP (constant prices) based on market exchange rates decreases over an annual cycle for
one or more years. Since 1900 there have been two cases where this occurred, the Great
Depression and the Global Financial Crisis (GFC) in 2008/2009. These have been on roughly a
60 to 70 year cycle (a previous crisis occurred in 1870, but this might have only been a US
crisis and possibly not a global one.)
In any case, my guess is that a Global economic crisis may result a the World tries to
adjust to declining (or stagnant) World Oil output after 2025, probably hitting around 2030
to 2035. If economists re-read Keynes General Theory and respond to the crisis with
appropriate policy recommendations, the economic crisis may be short lived. On the other hand
a World response similar to the European response to the GFC, where fiscal austerity is
considered the appropriate response to a lack of aggregate demand (this was also Herbert
Hoover's response to the 1929 Stock Crash), then a prolonged deep depression will be the
result.
The somewhat vast majority of countries say their reserves are flat in 2017 vs 2016. They
pumped billions of barrels, but no change to reserves for . . . lemme count . . . 36
countries (of which the US was one).
World as a whole reserves total declined 0.03%.
BP's flow report is "all liquids". Dunno if that is consumption, too. And if reserves . .
. reserves are in a footnote. Crude, Condensate AND NGLs. Probably excludes algae.
What? Me worry? Rystadt says US has 79 more years of oil still available. Of course, that
is the imaginary oil. They admit that commercially recoverable oil in the world only has 13
years left. Where did we pick up another 50 billion of imaginary oil in the US this year?
About the market in general:
Rapidly rising prices in recent months have raised doubts about the strength of demand
growth, and we have modestly downgraded our estimate for 2018. Prices are unlikely to
increase as sharply as they did from mid-2017 onwards and thus the dampening effect on demand
will be reduced.
About Non-OPEC production growth:
We think that in Texas by end-2019 there will be a net 575 kb/d of additional pipeline
capacity beyond our earlier number, albeit with most of it coming on line in the second half
of the year. In the meantime, capacity will likely remain tight but production will still be
able to grow strongly, by 1.3 mb/d this year and 0.9 mb/d in 2019. Our non-OPEC growth for
2019 includes a modest increase from Russia reflecting a possible contribution to
compensating for lost production from Iran and Venezuela.
About OPEC production:
To make up for the losses [from Venezuela and Iran], we estimate that Middle East OPEC
countries could increase production in fairly short order by about 1.1 mb/d and there could
be more output from Russia on top of the increase already built into our 2019 non-OPEC supply
numbers. However, even if the Iran/Venezuela supply gap is plugged, the market will be finely
balanced next year, and vulnerable to prices rising higher in the event of further
disruption. It is possible that the very small number of countries with spare capacity beyond
what can be activated quickly will have to go the extra mile.
As usual I disagree with their views, it seems like they have a stance that the market
will be in balance no matter what.
They now have an estimate ("scenario") of market balance in 2019. All assumptions are not
available in the public version. Deficit (stock draw or call on Saudi et al.) is between
1-1.6 mbd assuming lower exports from Iran and Venezuela. However, current decline in
Venezuela looks worse than I think they assumed and IEA continues to assume N America shale
oil on full throttle. 2019 is shaping up to be interesting.
The most likely trend for Venezuela is surely that it hits zero exports (or maybe total
production at worst) sometime in 2019, not that it flattens out or, more miraculously, starts
increasing again. Brazil is likely to take longer, and therefore have a lower peak, to
ramp-up its planned Santos FPSOs. Kazakhstan looks decidedly peaky (or plateau-y, except in
the past they've always shown decline after a peak); Tengiz expansion is in 2020 but I think
initially it just extends the plant plateau. North Sea will be declining until J. Sverdrup.
Nigeria and Angola are definitely showing signs of the big declines you get when deep water
FPSOs hit end of life, and not much drilling there showing yet.
It would be interesting to know how they factor in decline rates (which are accelerating);
in-fill drilling (which must be running out of the best prospects); and short cycle
developments of new discoveries (few to none of those at the moment). If they are using
predictions based on 2005 to 2014 experience the models are going to be a long way out, but
what data is available to do something better?
read deep into the article -- the best oil goes to China. Europe gets only what is left.
Haven't needed it, but the North Sea is dying. Iran is the next supplier but if sanctions
eliminate them, Russian oil of whatever quality will be the only choice.
Or Europe could ignore sanctions, if they have the courage.
I
wanted to make a comment about the OPEC(and Russia) meeting coming up and a possible production
increase. The speculation going around is that OPEC and Russia might increase production up to
1.80 mbpd. The minimum production increase would be around 500kbpd. What is the most likely
production increase based on past production?
The only four countries that have any ability to increase production are
1) Russia: Current production 10.9mbpd. High production 11.3mbpd Difference -400kbpd 2) Saudi Arabia: Current production 10.0mbpd. High production 10.6mbpd Difference -600kbpd 3) UAE: Current production 2.9mbpd. High production 3.10mbpd Difference -200kbpd 4) Kuwait: Current production 2.70mbpd. High production 2.8mbpd Difference -100kbpd
The high watermark in production for these countries happened from Mid 2016 to Mid 2017.
Currently these four countries are producing about 1.3mbpd below their all-time high production
limits. Ask yourself what is the likelihood that these four countries will increase production
to all-time highs and potentially surpass their highs which would be required to increase
production to 1.80mbpd? When OPEC did announce production cuts at the end of 2016 many believe
they had increased production to unsustainable levels to give each country a higher quota from
the production cuts. The guys a Core Labs believed they had to cut because it would have
threaten the long term integrality of their fields.
My guess is that the most OPEC and Russia can bring back for a sustainable period is about
half of the 1.30mbpd they reduced from their production highs .maybe about 600kbpd
India's oil consumption growth was only 2.9%. Derives from their monetary debacle early in
the year. We should see signs of whether or not that corrects back to their much higher norm
before next year.
China consumption growth 4%. Higher than India. Clearly an aberration.
KSA consumption actually declined fractionally, which allows Japan to still be ahead of them
in consumption.
US consumption growth 1%. So much for EV silliness.
Permian pipelines and steel tariffs – it's a good update but the article doesn't
give any clues as to how long it might take for US steel mills to make the type of pipes that
are now being imported.
HOUSTON (Reuters) – Major U.S. energy companies including Plains All American
Pipeline, Hess Corp and Kinder Morgan Inc are among many seeking exemptions from steel-import
tariffs as the United States ratchets up trade tensions with exporters including China, Canada
and Mexico.
The pipeline industry could face higher costs from tariffs as about 77 percent of the steel
used in U.S. pipelines is imported, according to a 2017 study for the pipeline industry.
Benchmark hot-rolled U.S. steel coil prices are up more than 50 percent from a year ago,
according to S&P Global Platts.
Significant. It may not prevent the pipelines being built, but it will, no doubt, delay the
timing of the start to completion timeline. Extended starts and stops on construction would
be extremely expensive. A 25% tariff on oil to China is also a game changer. That's about
600k a day that now has questionable outlets. India is going to have about 600k a day it
won't buy now from Iran, so that's a possibility. Not as big of a game changer as in the
future, when US production begins increasing, again. I could speculate that there is some
timing connection between India foregoing Iran purchases, and the China tariff decision.
Whole Permian scenario keeps shifting down. Pipeline completion dates are more questionable,
and the future export capabilities have a bigger question mark.
Goldman states that most of the producers have no plans to cut back in the Permian. What
else would they tell the investment bank who helps determine their stock price? Yeah, we are
screwed, and currently looking for a buyer?
"... So far in June, the outlook for Venezuelan production is grimmer. Venezuela was producing about 1.5mn b/d at the start of May, including roughly about 800,000 b/d in the Orinoco oil belt and a combined 700,000 b/d in the company's eastern and western divisions. But output in early June has dropped to 1.1mn-1.2mn b/d, according to three PdV officials. https://www.argusmedia.com/pages/N ewsBody.aspx?id=1697240&menu=yes?utm_source=rss%20Free&utm_medium=sendible&utm_campaign=RSS ..."
The basic problem is the General he put in charge did not understand Maduro's command. He
thought Maduro said oil production needs to decrease a million barrels a day.
They are losing workers especially the technical managers, don't have money for spares and
are going to shut down to repair (I note it says repair not just maintenance for two of them)
and restart all four of the most difficult operations in refining, all at the same time.
These are high temperature fluidised beds with some pretty horrible waste product (highly
viscous, toxic coke in heavy oil residue sludge which can block pipes and burners and corrode
all sorts of stuff). Shutting them down fro extended periods is not always a great idea at
the best of times. Planned maintenance for such things is usually phased so only one is down
at a time to ensure all the planning and purchasing can be completed and the experts are
available to go to each plant in turn. The plants need catalyst replacement which costs
money, and tends to be more frequent if the plant isn't in very good condition or isn't being
operated optimally (the operators need to be well trained). Be interesting to see how long it
takes and how many come back, it's quite possible the best case will be cannibalising a
couple to keep the others going.
As to: "If PDVSA cannot alleviate the shipping bottleneck, the company and its joint
ventures could be forced to slow or temporarily pause production at some Orinoco Belt
oilfields," that is already happening: they have dropped over half the rigs and might be down
to none by September at current rate, without new wells and workovers heavy oil can decline
pretty quickly.
Oil production seems to have left its bumpy 6 year long (2010-2015) plateau of 8.4 mb/d and
is now back to 2004 levels of 7.9 mb/d, a decline of 6% over 2 years.
Base production is the sum of the minimum production levels in each country during the
period under consideration. Incremental production is the production above that base
production. In this way we clearly see that the peak was shaped by China, sitting on a
declining wedge of all other Asian countries together. Note that growing production in Thailand
and India could not stop that decline. Now let's look at the other side of the coin,
consumption:
There has been a relentless increase in consumption since the mid 80s. The growth rate after
the financial crisis in 2008 was an average of 3% pa.
Chinese annual oil consumption growth
rates have been quite variable between 2% and a whopping 16% in 2004 which contributed to high
oil prices. Fig 4 also shows there is little correlation between GDP growth and oil consumption
growth (statistical problems?). There is nothing in this graph that could tell us that the
Chinese economy has a consistent trend to become less dependent on oil. In the years since
2011, oil consumption growth was around 60% of GDP growth.
Let's compare China with the US. China's oil consumption is catching up fast with US
consumption.
On current trends, China's oil consumption would reach US consumption levels of 20 mb/d in
just 14 years.
Contrary to misinformation by the media, the US is still a net importer of oil. Even blind
Freddy can see that there will be intense competition for oil on global markets.
All governments who plan for perpetual growth in Asia (new freeways, road tunnels, airports
etc) should fill in the above graph. Hint: We can see that Asia has diversified its sources of
oil imports but is still utterly dependent on Middle East oil
"Other Middle East" is Iran
and Oman (as Syria and Yemen no longer export oil)
China is preparing for the future by building bases to secure oil supply routes:
Proven reserves have not changed much in the last years meaning that P2 and P3 reserves have
been proved up commensurate with production. The reserve to production ratio is 16.7 years
equivalent to an annual depletion rate of 6%, a little bit higher than a reasonable rate of 5%
(R/P of 20 years).
The depletion rates vary considerably and may only be approximate as oil
reserves will have been estimated by using differing methodology and accuracy. Indonesia's
depletion rate is very high. Not shown in Fig 14 is Thailand where the depletion rate is off
the charts (almost 50%) suggesting reserves are too low.
There are some rumors that KSA has increased exports starting in May (about 0.5 m b/d more
than prior months) by drawing even more from storage. If we are to believe OPEC production
numbers from May which are steady, that must be the case. OPEC has essentially flooded the
market with exports before the meeting on Friday. The nearest month Brent future changed to
contango compared to closest month some weeks ago, but it has now all changed again to
backwardation. Point being, it seems the physical market is getting tighter again and that
the export flood may have something to do with the meeting. Or it could be that reduced
exports from Iran, Venezuela and Libya are starting to impact the market.
If the market balance overall is to change from a a deficit to near balanced, production
within OPEC has to be increased with almost maximum of whatever spare capacity available in
my opinion. The assumption is that spare capacity in reality is smaller than stated by the
agencies.
Says OPEC 90 day excess capacity is 3.47 million barrels a day. EIA says Sauds part of
that is 1.5 to 2. Not sure where IEA is saying the other 1.5 is coming from. Ok, we will soon
see the truth in that, over the next year.
The real Pollyanna lunacy, is that the Sauds want to see oil prices in the sixties. Lip
service, yes. Actually, why????
Or, come on guys, help us keep the prices down until election time, at least.
"... According to US Energy Department figures, China imports approximately 363,000 barrels of US crude oil daily. The country also imports about 200,000 barrels a day of other petroleum products including propane. ..."
Just as China topped the list of nations buying US oil, Beijing – retaliating to
unilateral Trump economic threats – sent jitters through energy markets on Friday by
threatening new tariffs on natural gas, crude oil and many other energy products.
On Friday, Beijing threatened to impose tariffs on US energy products in response to $50
billion in tariffs imposed by US President Donald Trump. Such tariffs would inhibit Chinese
refiners from buying US crude imports, potentially crashing US energy markets and hitting the
fossil fuel industry where it hurts the most: in shareholder approval.
"This is a big deal. China is essentially the largest customer for US crude now, and so for
crude it's an issue, let alone when you involve [refined] products, too. This is obviously a
big development," Matt Smith, director of commodity research at ClipperData, told Reuters.
According to US Energy Department figures, China imports approximately 363,000 barrels of US
crude oil daily. The country also imports about 200,000 barrels a day of other petroleum
products including propane.
The US energy industry has seen its profits boosted by fracking in domestic shale fields,
which produce some 10.9 million barrels of oil per day.
The US is also exporting a record 2 million barrels per day, and encouraging countries like
China to import more US energy products instead of those from Iran, after Trump recently
withdrew from the historic Joint Comprehensive Plan of Action (JCPOA) 2015 nuclear arms deal
with Tehran.
China is currently the largest buyer of Iranian oil as well, purchasing some 650,000 barrels
daily during the first quarter of 2018.
According to Bernadette Johnson with the Denver, Colorado, energy consultancy Drilling info,
tariffs will increase prices for other petroleum products including propane and liquefied
natural gas.
"The constant back-and-forth about the tariffs creates a lot of market uncertainty that
makes it harder to sell cargoes or sign long-term [trade] deals," Johnson noted, cited by
Reuters.
In late March, the White House slapped trade sanctions on China, the world's second largest
economy, including limitations in the investment sector as well as tariffs on $60 billion worth
of products.
Citing "fairness" considerations, Trump referred to the car market, stating that China
charged a tariff ten times higher on US cars than the US did on the few Chinese cars sold in
the US.
Separately, in a bid to deliver on campaign promises, Trump announced his intention to
impose a 25-percent tariff on steel imports and a 10-percent tariff on aluminum imports from an
array of US allies, including the EU, Mexico and Canada. Those nations -- longtime allies to
the US -- have promised retaliatory economic measures.
Trump has also reportedly mulled placing a 25-percent import tax on European cars, something
that would significantly affect the highly-profitable US market for expensive German
automobiles.
by Salma El Wardany (Bloomberg) Two of Libya's biggest oil ports stopped loading on Thursday
after clashes erupted between rival forces for control of the country's economic lifeline,
taking more barrels off the market just as OPEC debates whether to boost production.
Fighting at Es Sider and Ras Lanuf terminals led to the loss of about 240,000 barrels of
Libya's daily oil production, state energy producer National Oil Corp. said in a statement
Thursday. NOC evacuated staff from both terminals, which account for 40 percent of Libya's oil
exports, and declared force majeure on shipments.
The disruptions come a week before OPEC nations hold key meetings in Vienna with other major
producers including Russia to discuss if they should stick with a pact to restrain oil supply
after prices topped $80 a barrel in May. Oil producers were already facing growing pressure,
including from U.S. President Donald Trump, to boost supply to offset disruptions caused by the
economic crisis in Venezuela and renewed American sanctions on Iran.
Libya's oil output has rebounded over the past two years, but remains well below the 1.8
million barrels a day the country pumped before the 2011 campaign to oust Muammar Qaddafi. That
NATO-backed war gave way to years of fighting among rival Libyan groups in which the country's
oil installations became prized targets.
"... If Money=Debt, the battle over money can only be won by individuals wisely choosing whom they become indebted too. As the wise Michael Hudson points out, "Debts that can't be paid, won't be paid." ..."
"... Money is the creation of the elite to control the rest of the masses. It screws the rest of the masses by constraining what they can get their hands on while the elite can get their hands on anything they want. ..."
"... IMO the point of the article was to hint that objections (or refusal to engage with) MMT is largely political in nature. ..."
"... Skippy said it above: these are likely bad faith actors who disguise their classism and political desires with talk of "positive money" and the like. Debate clubs won't win this one. ..."
"... As I understand it, MMT is simply a more honest way of explaining the current reality, the problem being that the 1% would like to keep that a secret so that money is only created for the things that they can profit from, like war. ..."
"... MMT necessarily requires the exorbitant privilege of having the US dollar accounting for 60% of world trade & financial transactions with the US economy representing only 20% of world GDP. ..."
"... The Entrepreneurial State ..."
"... money and credit are used almost entirely for speculation, usury, and rent extraction ..."
"... In a normal economy, government spending is financed by taxes and borrowing, meaning that no new spending power has been created, as IS the case with new bank loans. ..."
"... You can fool part of the people all of the time, and all of the people part of the time. ..."
"... handing all credit creation to the central banks is not only technically impossible in a modern economy, it's a dangerous folly ..."
"... Wealth, Virtual Wealth and Debt, 2nd edition. ..."
"... The Order of Time ..."
"... "The debts are owed to government banks. A government can do what the U.S. can't do. The government can forgive debts, at least those that are owed to itself, without creating a political backlash. If a viable corporation has run up too much debt, the government can forgive it. This is better than letting the debt close down a factory or force it be sold to a predatory asset management firm as occurs in the United States. That is the advantage of having public credit and why credit should be public. That's how it was in Babylonia. Rulers were able to cancel debts all the time in the 3rd millennium and 2nd millennium BC, because most debts were owed to the palace or the temples. Rulers were cancelling debts owed to themselves. ..."
"... China can cancel business debt owed to itself. It can proclaim a clean slate. It can minimize debt service to whatever it chooses. But imagine if Chase Manhattan and Goldman Sachs are let in. It would be much harder for the government to raise real estate taxes leading to defaults on the banks. It could save the occupants by making new loans to those who default – based on lower land prices. ..."
"... Well, you can imagine the international furor that would erupt. Trump would threaten to atom bomb Peking and Shanghai to save his constituency. His constituency and that of the Democrats are the same: Wall Street and the One Percent. So China may lose its ability to write down debts if it lets in foreign banks." ..."
"... that this is a Chicago School / Friedmanesque monetary policy is made clear by Positive Money ..."
"... It seems there are greater similarities between China and the US than may be visible at first glance. China builds real estate for a shrinking population, invests for an over-indebted client (the US, which even insists on a drastic reduction of the bilateral trade deficit) and finances all this with money it does not have ..."
The same money that went into TARP would have bought a whole lot of nonperforming
mortgages. You wouldn't have needed a large bailout if the money actually made it's way to
main street.
Slightly off-topic, but if its true that this is a right wing proposal using naïve
left/Green supporters to give a progressive fig leaf, it wouldn't be the first time this has
happened. You can see the same phenomenon with Brexit, where many supposed left wingers have
often bought unthinkingly into many right/libertarian memes about 'freedom' from the EU. The
core reason they could do this is the effective abandonment by the left of arguments about
money and capital to the conservative and libertarian right from the 1980's onward.
One of the many reasons I love NC so much is that it has tried to fill the gap left by so
much of the mainstream left and much of the Greens in analysing economics issues in forensic
technical detail. Articles like this are absolutely invaluable in building up a proper
intellectual program in understanding the central importance of macroeconomics in building a
fairer society.
God, country, apple pie, balanced budget, freedom, democracy, pay-as-you-go, ingredients
in the hash of right/libertarian memes, all supposedly 'common sense' but actually
nonsense, spread thick, intended to distract us while our ruling class steals everything not
tied down.
I think the left saw its audience washed away by a tidal wave of this clever, well-funded
nonsense, so they stopped arguing about money and capital because they found it embarrassing
to be caught talking to themselves.
Of course back in the 1970s, much of the working-class had was doing well enough that they
thought the argument about money had been settled, and in their favor. Little did they know
that their 'betters' were planning on clawing-back every penny of wealth that they'd managed
to accumulate in the post-war years.
So here we are, the working class that was formerly convinced that anyone could live well
if they just worked hard, are finding that you can tug on your boot-straps with all your
might, and get no where.
I think you're right in that the wrong narrative is now dominant.
I don't think this was done intentionally – I think the people pulling the strings
don't know for sure what will happen, either.
The 'common sense' you mention is the best explanation most people have available. They
look at macroeconomics through the lens of their own household budget. Of course a balanced
budget responsible application of money makes sense Most people don't have a money printer in
their basement.
The battle is for the soul of humanity. A leadership that is working toward reducing
inequality and injustice in the world will adopt policies reflecting a more positive outlook
on the human condition. Those implementing austerity revile the masses of humanity, wether
stated or not. The masses are to be controlled, not enlightened or cared for.
The West has gained supremacy in the world by using the strategy of Divide and Conquer.
This thought process is so engrained in the psyche, that it heavily influences every form of
problem solving by using outright war and financial oppression as primary tools to achieve
these ends.
There would need to be a fundamental shift in thinking from Western leadership in order to
bring about a change that would focus on wellbeing over profit, which does not seem
forthcoming.
If Money=Debt, the battle over money can only be won by individuals wisely choosing
whom they become indebted too. As the wise Michael Hudson points out, "Debts that can't be
paid, won't be paid."
The main problem I see is the definition of what "Winning" would be. The definition
determines the policy.
"There would need to be a fundamental shift in thinking from Western leadership in order
to bring about a change that would focus on wellbeing over profit, which does not seem
forthcoming."
Money is the creation of the elite to control the rest of the masses. It screws the
rest of the masses by constraining what they can get their hands on while the elite can get
their hands on anything they want. The tipping point will be when there are sufficient
numbers who understand money isnt necessary to live and have nice things, it actually exists
to deprive them of such.
We've been fighting this same 'war' for a very long time.
Everybody now just has to make up their mind. Is money money or isn't money money.
Everybody who earns it and spends it every day in order to live knows that money is money,
anybody who votes it to be gathered in as taxes knows money is not money. That is what
makes everybody go crazy. -Gertrude Stein – All About Money
As far as I can tell, about 1% of us believe that money is not money, and the rest of us
believe that money is money.
Most of us believe that money is money because as Gertrude Stein said: Everybody who earns
it and spends it every day in order to live knows that money is money
So here's the problem: the 1% of the people, the ones who believe that money is not money,
are in charge of everything.
It's not natural that so few people should be in charge of so much, and that they should
be in charge of 'everything' is truly crazy. (Please excuse the slight digression)
The people who are in charge of everything believe that it's right, proper, indeed
'natural' that they be in charge of everything because they believe that no one could do as
good a job of being in charge of everything because they think they are smarter than
everybody else.
The reason that the 1% of people believe they are smarter than everybody else is rooted
largely in what they believe is their self-evident, superior understanding of money; that is
to say, the understanding that money is not money.
The trouble is, the difference between the 1%'s understanding of money, and the common
man's understanding of money is not evidence of the 1%'s superior intellect, so much as of
their lack of a moral compass and their ability to rationalize the depraved indifference they
show to their fellow man.
Maybe this thought is callous, but perhaps it would be useful to have a real-world
demonstration that this is a bad idea. How systemically important is the Swiss economy? US
abandoned its monetarist "quantity of reserves" experiment after a relatively short time.
Again, it sounds callous, but perhaps a year or two of distress in a small test
environment
(that is starting from a pretty good place and has a good social safety net
would be helpful to the world at large in terms of deprecating a bad idea. Perhaps MMT
will be the last approach standing?
Could it be that Wolf's "we need experiments" rhetoric is actually opposed to "positive
money", but he recognizes that the idea won't go away until it is badly spanked? Even if not,
maybe there is something to the idea that experimentation could be used to distinguish bad
ideas from less bad (the good ideas won't be tested, I reckon, until all the various flavors
of "bad" have been tried and rejected).
IMO the point of the article was to hint that objections (or refusal to engage with)
MMT is largely political in nature. See Marriner Eccles and his observation regarding
the political enemies of full employment.
Skippy said it above: these are likely bad faith actors who disguise their classism
and political desires with talk of "positive money" and the like. Debate clubs won't win this
one.
If the Swiss go through with it and it inevitably fails there will always be an excuse.
They didn't do positive money "hard enough" or whatever.
What I'd like to know is if the Swiss go through with it and it fails, is there anything
other than central bank independence that needs to be changed? Fundamentally it's still fiat,
operating within a democracy. Does it not come down to who decides how much and for what
purpose?
Maybe I'm missing something, but it strikes me as the elites getting their revenge in
first. There go my people and all that. Maybe I am missing it.
the good ideas won't be tested, I reckon, until all the various flavors of "bad" have
been tried and rejected.
So, you don't think current conditions are convincing enough?
As for me, I'm more than convinced, that left to themselves, our elites have an endless
bag of bad ideas, and every one of them results in their further enrichment at our
expense.
I'm convinced; have been persuaded that MMT is the right way to think about "money" since
shortly after I encountered it almost a decade ago.
As I understand it, this is a referendum. If the people don't like the outcome, they
presumably would have power to reverse it. Throw the bastards out and replace with new
bastards who will try something different.
As I understand it, MMT is simply a more honest way of explaining the current reality,
the problem being that the 1% would like to keep that a secret so that money is only created
for the things that they can profit from, like war.
So the issue is that since enough money can be created for the needs of the rest of us,
why is that not happening?
It would appear to me that almost any efforts by the 1% to create a 'new' plan is in
reality, an effort to make sure that the 99% never reap any advantage even if we were to
unanimously come to understand the MMT is really the most realistic perspective.
It's almost as if the 1% has decided to change the rules because the rest of us are
starting to understand that there is no technical reason we can't finance a more equitable
economy.
It's good to explain the current reality more honestly.
Even more honestly would be to explain that reality, which is a man-made system, doesn't
have to be that way, unlike scientific explanations, for example, one for how gravity works.
That particular physics explanation comes with the understanding that we can't change how
gravity works.
The word 'theory' in the sense most people with more than 10 years of education associate
with it is that
1. You will fail to advance to the next grade, or the next class if you don't understand
it.
2. If you don't understand it, you are under pressure to show you agree with the theory, lest
you fail the exam.
3. The reality described by the theory is unalterable, which is often the case with natural
science theories, but not really the case with social/economic/political theories, unless
they deal with human nature, which is hard to change.
If I say there is a theory to explain that on Mars, you drive on the right side of the
road on odd-numbered days, and on the left side on even-numbered days, you would say, I
appreciate the clear explanation of your wonderful theory, but I don't like it, I don't like
how that system is designed. And I want to change it!!!!!!!!!!!!
Yesterday, I watched one of many Mark Blyth videos on YouTube where he was talking about
why people hold on to stupid economic ideas. He offered a variety of interesting hypotheses,
most of which were not necessarily mutually exclusive.
Even a theory that fails basic tests of correspondence with reality -- neoclassical
economics being the prime example -- may prove to be a reliable means of coordinating
behavior on a huge scale. That we indoctrinate people in colleges and business schools in
neoclassical economics has been the foundation for neoliberal politics; even if the theory is
largely rubbish by any scientific standard, the rhetorical engine is easy to operate once you
have a few basic concepts down. And, immunity to evidence or critical reason may actually be
politically advantageous.
Econ 101 is taught as a dogma. The student is under pressure to learn the answers for the
exam, as you say. All the rhetorical tropes -- not just deficit hysteria, but regulatory
burdens, tax incentives, "free markets" (you see many actual markets? no, I didn't think so)
and on and on -- are as easy to recite mindlessly as it is to ride a bicycle.
We have an ideology that prevents thinking or even seeing, collectively.
Well, your wish has been answered – about 160 years ago. Lincoln's issuance of
Greenback's allowed the Union Army to exist. No borrowing, no MMT debt incurred.
MMT experts point out regularly that the Federal government spends out of nothing. Issuing
bonds is a political holdover from the Gold Standard era, but separately, those bonds do have
some use because a lot of investors like holding a risk free asset.
The government spends by the Fed debiting the Treasury's account. That's it.
We don't go around worrying about issuing bonds to pay for the next bombing run in the
Middle East. The US has all sort of official off budget activity as well as unofficial (why
do you think the DoD is not able to account for $21 trillion of spending over time? No one
points out this $21 trillion mystery is proof the USG actually runs on MMT principles).
MMT necessarily requires the exorbitant privilege of having the US dollar accounting for
60% of world trade & financial transactions with the US economy representing only 20% of
world GDP.
Such impunity is changing as we speak so for that reason only (there are others) MMT
should soon find itself non-viable.
That is not correct. Any government that issues its own currency is a sovereign currency
issuer and operates on MMT principles. Canada, Japan, England, Australia, New Zealand .the
constraint on their ability to run deficits is inflation. They will never go bankrupt in
their own currencies. They can create too much inflation.
I have the same reaction to Positive Money ideas as I do to someone who talks about
"parallel currencies". They don't understand money, banking and central banking.
While I agree whole heartedly with Clive that establishing the mini-bot currency is
subject to the law of un-intended consequences and would no doubtedly have a bumpy start and
might not even survive; but it's just another currency. Yes it would likely be subject to a
discount versus the Euro, but so what. From a banking perspective there is nothing magical
about state money or central bank money. These are the dominate means of clearing and
settling payments today, but that's because it's currently cheaper, easier and less risky.
But banking predates central banks by at least one or two hundred years (if not more).
Thinking that if you put an iron fist on the usage of state/central bank money is going to
stop banking only shows you don't understand banking. Most economies already have dual
currencies – state money and bank money – but nobody thinks of them that way
because they trade one for one. But locking the banking system out of using state money to
clear and settle payments created by lending only forces the banking system to find a new
means of acquiring liabilities (I'd suspect they get called something other than "deposits"
of course) and clearing and settling payments. It wouldn't happen overnight but it most
certainly would happen – there's too much "money" to be made.
"Most economies already have dual currencies – state money and bank money" Give me
the ratio please. Other than feeding the parking meter or doing your laundry what else do you
use state money for?
It's not exactly the gold standard, but it would have the same impact, I think. You have
to give them credit, though – they keep finding new ways to dress up this very old
idea.
Hard to get to a new answer if you don't even start with the right question.
Wolf asserts his obvious and unquestionable truth: "Money is debt".
Really?
J. P. Morgan didn't think so. When he was asked:
"But the basis of banking is credit, is it not?" , Morgan replied: "Not always. That is an evidence of banking, but it is not the money itself. Money is
gold, and nothing else" .
Ah yes, the shiny rare metal that served mankind as money for millennia.
I have a gold coin in my hand. I can exchange it for goods and services. But I can't for the
life of me figure out whose debt it is.
And no less than The Maestro (Alan Greenspan) opined the following last month:
"The gold standard was operating at its peak in the late 19th and early 20th centuries,
a period of extraordinary global prosperity, characterised by firming productivity growth and
very little inflation.
But today, there is a widespread view that the 19th century gold standard didn't work.
I think that's like wearing the wrong size shoes and saying the shoes are uncomfortable! It
wasn't the gold standard that failed; it was politics. World War I disabled the fixed
exchange rate parities and no country wanted to be exposed to the humiliation of having a
lesser exchange rate against the US dollar than it enjoyed in 1913.
Britain, for example, chose to return to the gold standard in 1925 at the same exchange
rate it had in 1913 relative to the US dollar (US$4.86 per pound sterling). That was a
monumental error by Winston Churchill, then Chancellor of the Exchequer. It induced a severe
deflation for Britain in the late 1920s, and the Bank of England had to default in 1931. It
wasn't the gold standard that wasn't functioning; it was these pre-war parities that didn't
work.
Today, going back on to the gold standard would be perceived as an act of desperation.
But if the gold standard were in place today we would not have reached the situation in which
we now find ourselves. We would never have reached this position of extreme indebtedness were
we on the gold standard, because the gold standard is a way of ensuring that fiscal policy
never gets out of line."
So let's start with a simpler definition of money: "Money stores labor so it can be
transported across space and time" .
I grew some wheat, and want to store my wheat-labor so I can use it later, or spend it
somewhere that is nowhere near my wheat pile.
But this points out why money that took no labor to produce cannot reliably store labor.
Our system materializes money from thin air. Which is precisely the point of gold: it takes
alot of labor to produce, so it has reliably stored labor for centuries. In A.D. 250 if I
wanted a good-quality men's costume (toga, sash, sandals) the cost was one ounce of gold.
Today one ounce of gold is +/-$1300, probably enough for a pretty good suit and pair of
shoes. That fact is incredible: every other currency, money, government, and country have
come and gone in the interim but gold reliably stored labor across the ages.
Cue the haters: "But gold money allows deadly deflation!!!". Yes, that scourge, when
people benefit from rising productivity (lower costs of goods and services) in what used to
be termed "Progress". Instead we're supposed to love being on a debt treadmill where
everything costs more every year, on purpose .
Just to be clear, I'm not arguing that credit should somehow be abolished. Credit is
critical, and hence so is banking. But separating money and credit would mean that every
banking crisis (extending too much credit) is not automatically also a monetary crisis,
affecting everyone, including people who had nothing to do with extending or accepting too
much debt.
Yes, you are correct. No one in the monetary reform movement wants to abolish credit
– an agreement between two entities – but to have that "credit" backed by the US
government as real money – what a racket!
Of course it should be noted that if you dig up a gold coin from two thousand years ago or
even older, it still has value just for its metal content alone. It still holds value. This
is never true of fiat currencies. In fact, it had never occurred to me before, but when you
think about it – the history of money over the past century has been to get actual
gold, gold coins, gold certificates, silver coins, etc. out of the hands of the average
people and to give them pieces of paper and now plastic as substitutes. Even the coins in
circulation today are only cheap remnants of coins of earlier eras that held value in itself.
I would call that a remarkable achievement.
I think you should avail yourself wrt the history of gold and how humans viewed it over
time, then again you could look at say South America from an anthro observation and the
social changes that occurred between Jade and Gold eras.
As far as value goes that is determined at the moment of price taking which can get blurry
over time and space.
Gold was used as religious iconography for a reason imo.
Just from the stand point that gold was in one anthropological observation – a flec
of gold to equal weight of wheat means the gold got its "value" from the wheat and had
nothing to do with some concept of gold having intrinsic value.
Not particularly in love with gold nor am I a gold bug. My own particular prejudice is
that any money system needs an anchor that will set some sort of boundaries to its growth.
Something that will not blow through the physical laws of natural growth and will acknowledge
that resources can and will be exhausted by limitless credit and growth. Personally I don't
care if it is gold or Electrum or Latinum or even Tribbles so long as it is something.
Yet MMT clearly states that growth is restricted to resources full stop. So I don't
understand your issues with anchor points, its right there in black and white.
Look I think there is a huge difference between informal credit [Greaber] and formal
credit [institutional] and the risk factors that they present. This is also complicated by
not all economies are the same e.g. steady state. In facilitating up lift [social cohesion
with benefits of currant knowlage] vs putting some arbitrary limit on credit because it suits
the perspective of those already with claims on wealth.
In addition I would proffer that MMT is not supply side dependent, just the opposite.
Economics would be much more regional in reference to resources and how that relates to its
populations needs, especially considering the democratic governance of those finite resources
without making money the linchpin to how distribution is afforded.
OpenThePodBayDoorsHAL
How dare you submit such irreverent goldbuggery ?
Your line of thought is not politically correct Sir.
Something for nothing is easier to sell and to live by, don´t you know ? as long as it
lasts.
Problem is ( as HAL would say ? ) the 50 years are almost through, so it just can´t
last much longer no matter how much we pussyfoot around reality.
It has nothing to do with being 'politically incorrect'. It has to do with goldbuggery
being completely ignorant of actual history and facts. It ascribes to gold attributes which
it never truly had even in the West, much less globally.
Some examples from objective reality:
When the Conquistadors arrived in the 'New World', they discovered an entire continent
filled with easily accessible gold and silver, and yet neither was treated by the natives as
money. They were shiny trinkets. Money was cocoa beans and pieces of linen.
When the Vikings reached the Eastern Mediterranean, the Byzantines had a hard time getting
them to accept gold as payment. Before that, the only 'precious' metal they had any interest
in was silver.
Going eastward, in feudal Japan currency was based on rice, not precious metals. Gold and
silver were used as representative tokens of large values of rice. The source of value wasn't
felt to be the metal, it was what the metal represented.
If civilization were to end today, the most well off survivors aren't going to be the ones
who stockpiled gold. It's going to be the ones who stockpiled food and water (and/or the
weapons to protect/seize such stockpiles). Gold has exactly zero inherent value. It's a
luxury item at best, in the same way fine art is. No one in the post-apocalyptic wasteland is
going to be impressed by your lumps of heavy, soft metal.
There's plenty of information available from historians, archaeologists, and
anthropologists (but emphatically not from mainstream economists) on the history of money. If
you want to 'free your mind', you'd best start with one of these fields. Not some libertarian
cesspit, where the 'intellectuals' are even more delusional than mainstream
neoclassicals.
I'll probably get slammed here for this but to tell you the truth, I see no justification
for the shape and character of the present money system in use around the world. In fact, I
absolutely refuse to believe that There Is No Alternative. The present system is one that has
evolved over the centuries and for the greater part was designed by those with wealth to
either solidify or expand their wealth.
Yesterday, in a comment, I made the point that for an economic and financial system to work
it has to be sustainable. Call that General Order Number One. But a survey of the present
system shows a system that by its very nature is seeking to transfer the bulk majority of
wealth to about 1% of the population while pushing about 90% of the population into a
neo-feudal poverty. This is nothing short of self-destructive and is certainly not
sustainable.
We tend to think of money as something permanent but the different currencies in existence
today make up only a fraction of the currencies that have ever existed. All the rest have
gone extinct. I am given to understand that when the US Federal Reserve meets, it is in a
room whose walls are adorned with examples of these extinct currencies. In fact, I even own a
few German Reichsmarks from the hyperinflation era of the early 1920s for an occaisional bit
of perspective.
OK, maybe the Swiss referendum is being used, misused and abused but it is a sign of an
arising discontent. It certainly surprises me that it was the Swiss as when I visited that
country, they were the most conservative people that I have ever met as far as money was
concerned. In any case, perhaps it is time that we all sat down and designed a money system
from the ground up. Throw away the rule book and just take a pragmatic approach. Forget
theories and justifications, just look for stuff that works.
There is no need to "experiment" with other systems of money use: we just need to regulate
the system we have but, unfortunately at present, we are in the midst of de-regulating
everything–finance, environmental protections, healthcare, education, etc., and getting
rid of other groups such as unions. The undermining of many (public) institutions is well on
its way and I do not see it ending well. I think the rich have won this round just as they
planned in the 1970's.
I imagine you would want to start from value (a mental state of persons) and labor, things
persons do to achieve stuff which they value. It would be convenient to have tokens which
represented social agreement about value, valued stuff, and labor. The social agreement could
be brought about by cooperative voluntary institutions ('credit unions') which would oversee
and guarantee the issuance of tokens (debts) by members (persons). We already do this on a
modest scale by writing checks, so it's not unheard-of.
If you want a system which doesn't just feed the elites, you have to create one which
doesn't rely on institutions dominated by or entirely controlled by the elites, such as the
government, the major corporations, large banks, and so on. You want something egalitarian,
democratic, and cooperative. It's not impossible.
Indeed it is possible and has been done in the recent past.
A key insight behind credit unions, mutual insurance and savings and loans back in the day
was that these institutions were loaning people their own money savings and should be run
without assigning hotshot managers the dubious incentive of a profit-motive or talking up
"innovation".
One of the things I object to in Richard Murphy's rhetoric and that of more careless
MMT'ers is that they implicitly concede the premise that Money is usefully thought of as a
quantitative thing, a pile of tokena circulating at some velocity. Financial intermediaries
(and yes, Richard, they are intermediaries) do create "money" in the form of credit by
matching ledger entries. For a savings and loan, which gives a mortgage to a depositor or
just a checking account to a saver, this can be a key idea supporting mutual assistance in
cooperative finance.
But, if you insist that the bank is "creating" a quantity of money that is then set loose
to drive up house prices or some similar narrative scenario, I do not see that your
storytelling is doing anyone any good.
Credit from institutions of cooperative finance -- shorn as they must be of the incentive
toward usury and rent extraction -- is actually a very useful application of money, enabling
people to take reasonable risks over their lifetimes. For example, to enable a young couple
to form a household and buy a house and gradually build up equity in home ownership against
later days. This is sensible and prosaic, a standard use of money to insure by letting a bank
or similar institution help individuals or small businesses to transform the maturities of
their assets and prospects, while certifying their credit. If your understanding of money
does not encompass such prosaic ideas as leverage and portfolios or their application to
improving the general welfare, then the "left" is up a creek without a paddle.
"Financial intermediaries (and yes, Richard, they are intermediaries) do create "money" in
the form of credit by matching ledger entries. "
That is NOT what is meant by the term,"intermediaries" here. The common belief is that banks
merely take in a depositor's money and, as an intermediary, lend that money out. An
intermediary, by definition, does not create anything. That is the accepted meaning of the
term when discussing banking. You are free to use your own definition but it will lead to
confusion.
You are incorrect as to how banking works, and you have also jalbroken moderation, which
is grounds for banning, as is clearly stated in our Site Policies, which you did not bother
to read.
Per your comments on banking, you are also engaging in agnotology, another violation of
site Policies.
Banks do not intermediate. They do not lend out of existing savings. Their loans create
new deposits. Not only has MMT demonstrated, and this has been confirmed empirically, but the
Bank of England has endorsed this explanation as correct.
You are presenting the loanable funds fallacy, a pet idea of monetarists. It was first
debunked by Keynes and later by Kaldor.
Your idea of "accepted meaning" is further confirmation you are way out of your depth here
and are a textbook case of Dunning Kruger syndrome.
The matter of who or what controls money is actually secondary to the matter of what money
is used for. Positive Money correctly identifies the fact that under our present arrangements
in the USA, UK, and most of the West, money and credit are used almost entirely for
speculation, usury, and rent extraction (though they do not, so far as I know, use the
terms). If "the people" somehow were able to gain control of money and credit, and money and
credit continued to be used almost entirely for speculation, usury, and rent extraction,
society and the people would see no net advance economically.
That's the simple overview. Allow me to lay out a couple scenarios to show why just
solving the problem of who controls money and credit does not really address our most urgent
problems.
For the first scenario, assume that it is right wing populists who have triumphed in the
fight to seize control of money and credit. Recall that in the first and second iterations of
the bank bailout proposals in USA, Congress was deluged by overwhelming public opposition to
the bailout. But in the second iteration, the Democrats mostly folded, while on the
Republican side, the closer you got to the Tea Party extreme, the stauncher the opposition to
the bailout you found. So, under right-wing populist control, we would probably see
prosecutions and imprisonment of banksters, which would likely have the intended effect of
lessening rent extraction. But we would probably also see that right-wing populists are not
much concerned about speculation and usury, so those would continue relatively unscathed.
More importantly, we could expect right-wing populist control to result in severe cutbacks
to both government and private funding of scientific research, most especially on climate
change. We would be hurried forward on our course toward climate disaster, not turned away
from it.
For the second scenario, let us assume it is a left-wing populist surge that achieves
control over money and credit. In this scenario, speculation and usury would be suppressed as
well as rent extraction. On science, there would no doubt be a surge in funding for climate
research. But I would greatly fear what left-wing populists might do to funding of space
exploration and hard sciences such as the large Hadron collider at CERN. And what would
happen to funding for military research programs like DARPA?
Can you imagine the implications of cutting those kinds of science programs? Try to think
of doing without all the spinoffs from the NASA Apollo moon landing program and the original
ARPAnet, which includes much of the capability of the miniaturized electronics in the
computer, servers, modems, and routers you are now using.
The point is, that without restoring an understanding of republican (NOT capital R
"R"epublican Party) statecraft, its focus on promoting the general welfare, and the
understanding that promoting the general welfare ALWAYS involves identifying and promoting
the leading edges of science and technology, any success in seizing control of money and
credit away from bankers (whether private or central) does not necessarily result in victory.
For an extended discussion of science and republicanism, see my The
Higgs boson and the purpose of a republic .
There will always be right-wingers, left-wingers, progressives, imperialists, etc.
One or more of them will seize control.
It would seem, then, the first thing to do, is to work on human nature, and not
discovering new devices for them (or us, ourselves), because we can not guarantee no harm to
Nature will come from colliding high energy particles.
I don't really see the left as being anti-science, it seems to me that it's the right that
wants to deny scientific findings such as climate change, etc. There are exceptions of
course, such as new-age/anti-vaxers, chem-trail theorists, etc but they are a small minority,
and I find it hard to envision a scenario where a leftist government would cut science
funding. As it is now, many if not most scientific and technical advances have originated
from what was originally military funding, including the internet we are using at this
moment.
This is a model that needs to change IMHO, there is no reason that cutting-edge science
has to be tied to the military, science could just as easily be funded for its own sake,
without the pentagon getting the money first and then having the tech trickle down to the
rest of us.
I am trying to come up with some examples where technological advances were not induced or
misused by warriors and/or libido, from the dawn of humanity till now.
Stone tools – misused for war.
Bronze/iron tools – the same.
The wheel – war chariots.
Writing – to lord over the illiterate
The steam engine – how the west was won with buffaloes going extinct.
Gun powder – war, and above.
The internet – surveillance and libido.
The smart phone – above.
Aspirin – that's all good .maybe the example I am looking for except I'm allergic to
it.
money and credit are used almost entirely for speculation, usury, and rent
extraction
Certainly on the leading edge, that is what money and credit are used for, but
"entirely"??? In the main, money remains the great lever of coordination in an economy of
vastly distributed decision-making.
The forces of predation and fraud are seriously out-of-control and they use money for
anti-social ends, protected by neoliberal ideology and the cluelessness of what passes for
the political left. Like any normal bank robber, the banksters want the system of money to
continue to work and it does continue to work, in the main, even as they play Jenga with the
towering structures of finance.
Well, I did qualify it with "almost" : ). Still, in the late 1990s I found that there was
around $60 (sixty dollars) of trading in financial markets (including futures and forex) for
every one dollar of GDP. That compares to 1.5 to 1 in 1960. The ratio probably dropped in the
aftermath of the 2007-2008 crashes, but I's be surprised if it has not surpassed 60 to 1 by
now. Have mercy on me: I haven't looked at a BIS report for a few years now.
So your solution is to keep it in the hands of the elite?! Please note that the "central
bank" under the Vollgeld initiative is completely redefined, not a central bank at all but a
government institution controlled by a democratic process.
Many banks around the world started out as state-owned and have been privatised.
I admit it is simplistic, but having a state-run not-for-profit bank being this "government
institution controlled by a democratic process" has a lot of merit to me.
It would have lending guidelines to aid investment in productive endeavours, limit the risk,
and have no part in the insane fringe financial transactions that brought about the GFC, and
who know how many other things that have gone under the radar.
This brings all currency creation into a single place, so it needs transparency and a
(proper) democratic governance.
There would probably be fewer jobs I admit, but many of these would be the top levels
enjoying fat bonuses based on winning zero-sum games.
And as a final comment – should GDP include the transactions within the financial
sector at all? Given the zEro-sum games involved, and the creation of losers as part of that,
does it actually "produce" anything at aLL?
I hate to be a nay-sayer, but the reason there were once many state banks in the US and
there is now only one is that they became cesspools of corruption. And having arm-wrestled
with CalPERS for over four years, which is more transparent than a lot of places, good luck
with getting transparency and good governance.
Mind you, that does not mean they might not be worth trying, but the assumption that they
can just be set up and will work just fine "because democracy" needs to be taken with a
fistful of salt. There needs to be a ton of careful thought re governance and lots of checks
(an inspector general with teeth at a minimum, we can see from CalPERS that boards are very
easily captured).
Bank of North
Dakota has a fascinating history, being founded during the Progressive Era, when ND had a
governor who was a member of the Nonpartisan League, a populist political party, and intended
to save North Dakota's farmers and laborers from the predations of the big banks in
Minneapolis and Chicago.
It remains the only state-owned bank in the country.
The populist
Nonpartisan League remains the most successful third party in history, and had remarkable
impact on politics in North Dakota and Minnesota. It merged with the Democratic Party in the
50s.
Ahem, I acknowledged that. What you miss is that pretty much every other state had a state
bank and they were shuttered because they became embarrassingly corrupt. The fact that past
"state bank" experiments almost universally failed makes me leery of the naive view that
they'll be hunky dory. They could be but the sort of cavalier attitude that they'll be
inherently virtuous is the road to abuse and misconduct.
" Money is debt. It is only created by government spending and bank lending. " --
Richard Murphy
We've jumped through the looking glass. The former money, gold, is NOT debt. Debt-based
money is ersatz, a ghastly fraud on humanity.
In a normal economy, government spending is financed by taxes and borrowing, meaning that
no new spending power has been created, as IS the case with new bank loans.
Daniel Nevins' book Economics for Independent Thinkers discusses how modern
economists got misled into believing the money supply governs everything, whereas earlier
19th century economists understood that bank lending is what drives expansions.
Poor Murphy, starting out with a wonky premise, only succeeds in careering into a briar
patch and wrecking his bike. He should post his pratfall on YouTube.
Fiat money can also be created without debt. That's the whole point of MMT, but it makes
Haygood's head explode so he never acknowledges it (without muttering about hyperinflation,
which never actually happens outside of disasters on the scale of a major war).
When the federal government spends money into existence -- which can be on the basis of a
democratic agenda, in countries that have actual democracies -- there's no need for a
corresponding issuance of government debt. Hence, spending power is indeed created. If the
government does create debt, the bond is an asset on the ledger of whoever buys it, and the
government spends the interest into existence. Which creates additional spending power for
the private sector. The government can choose to, or not, collect a portion of this as taxes,
which extinguishes the money. If the government collected as taxes everything it ever spent
there would be no money in circulation.
> In a normal economy, government spending is financed by taxes and borrowing,
meaning that no new spending power has been created, as IS the case with new bank
loans.
Er, new bank loans also represent borrowing that has to be paid back. The spending power
that gets created is extinguished by paying back the bank loan.
the federal government spends money into existence
a
That's a choice made by the designers of the current system.
But not the only choice.
The people, for example, can be empowered (or perhaps inherit that power, on the basis of
the Constitution amendment clause* that any power not given explicitly to the federal
government is reserved for the people), to spend money into existence.
*The Tenth Amendment declares, "The powers not delegated to the United States by the
Constitution, nor prohibited by it to the states, are reserved to the states respectively, or
to the people."
So do you gold bugs want to dispense with double entry bookkeeping or keep it and adapt it
to gold (would that entail both counterfeit money and counterfeit debt?) – gold as both
credit and debt, or just what exactly? With the gold side weighing down the ledger it's gonna
get wobbly. Maybe have to start a war to fix it? The fog of positive money. Really, JH,
you've been the best voice against war. How do you reconcile all the social imbalance that
would follow with "positive" money?
Fiat money is war finance, made permanent. Even during the gold standard, governments
would suspend gold convertibility during wars. Lincoln's greenbacks and the UK's suspension
during WW I are noteworthy examples.
So the gold standard won't stop governments declaring national security exceptions --
they've always done so. But permanent war finance is what sustains the value-subtraction US
military empire, a gross social imbalance that already plagues us by starving the US
economy of investment.
Double entry bookkeeping doesn't require that every asset have an offsetting liability. A
balance sheet with no liabilities is all equity on the right-hand side. It's what a bank
would look like if it sold off its loan portfolio and paid off its depositors -- cash on the
left side, equity on the right. If the bank then bought some gold, it would be exchanging one
asset (cash) for another (gold), with no effect on the liability/equity side.
Just look up the mintage figures, here's $20 gold coins that contain just under 1 troy oz
of pure gold in content, from 1861 to 1865. You can follow links to other denominations.
There were over 8 million ounces alone in $20 gold coins struck during the Civil War, by
the Union.
We were never on a pure gold standard, nowhere close actually.
The most common money in the land until the Federal Reserve came along, FRN's not being
backed by gold?
Why, that would've been National Banknotes, which was the currency of the land from 1863
to 1935. There were over 10,000 different banks in the country that all issued their own
currency with the same design, but with different names of banking institutions, etc.
Very hard to argue with you, but I'm tripping over this: "If the bank then bought some
gold, it would be exchanging one asset (cash) for another (gold) with no effect o the
liability equity side." Because in my mind cash isn't an asset – it's just money
– a medium of exchange and a unit of account. Where we get all messed up is when the
unit of account starts to slip (due to mismanagement) and people start to demand that money
become a store of value. When the value is society itself. And blablablah.
Sure, the value is society itself, I agree with this. But OTOH, it is for example much
better to be a woman, black person, fill in the blank, even "working class" person with a lot
of money than not in a sexist, racist, etc society.
I can't necessarily compel the forces of sexism, racism, old farts who don't agree with
me, etc through the "political process," thereby bringing my will to bear on society. But I
can move things with my dollars, This is how money gets its magic power. If people played
nice with each other, we wouldn't need money.
What about paper bugs Susan ?
Has paper buggery helped any ever ?
Why do fiat currencies always self-implode (in average) every 50 years ?
" You can fool part of the people all of the time, and all of the people part of the
time. .."
8 white men control > 50% of the world's wealth. Let's just keep going in that
direction, to where it's down to one white guy, and with debt-based money everyone else owes
him all the "money" in the world. Then we can just strangle him in the bathtub and usher in
an era of peace and prosperity.
Richard Murphy says that " handing all credit creation to the central banks is not
only technically impossible in a modern economy, it's a dangerous folly "
What is QE then, Sir ?
Our "modern" economies don´t have business cycles any more, just distorting credit
cycles.
There are no "markets" as such today, nor prices only interventions.
Even interest rates (the price of supposed "money" remember ?) are not priced by markets any
more .
Help me. Gold is not money. And it does not have and never had immutable value. Even in
the days of the gold standard, countries regularly devalued their currencies in gold terms.
It was the money that was used for commerce, not the gold. When the US government devalued
the $ in gold terms by 5%, bread at the store didn't cost more the next day, which is what
your "gold is money" amounts to. It's not correct and you need to drop it.
"The former money, gold, is NOT debt. Debt-based money is ersatz, a ghastly fraud on
humanity."
You've been on NC for years. You have to know by now that this literally, objectively,
isn't true. It just simply isn't. History and anthropology do not at all support your version
of events. People like Hudson and Graeber have extensively documented where money came from.
Debt and credit came first, then money as a token to measure them. We have warehouses full of
the freaking Sumerian transactions tablets that show it! Money is debt, always has been.
Actually, I say you have to know this by now, but given how conspicuously absent you seem
to be in the comments of Michael Hudson articles about the history of debt hosted here, maybe
you just aren't reading them. Or you are and don't like what they say and how it clashes with
your pre-established worldview, so you just ignore them. Though even if the latter, it's
still telling how you don't even attempt to refute them. Perhaps because you can't.
It's not about money; its about creating and distributing wealth. That a trivial thing
like a double-entry bookkeeping operation should stand in the way of creating the wealth the
world and its people need to survive is, of course, insane. But it is also insane to expect
different results from turning over control of the process of money creation to a wholly
owned subsidiary of governments like those of the United States and Great Britain, bent as
they are on global hegemony ("full spectrum dominance") – at ANY cost.
Whether or not China and other developing nations realize it, genuine wealth creation
– not money as debt creation ('finance capitalism') – is THE source of national
power. It is more than a little amusing to watch the neoconservatives fret about the rise of
China after having joined with their neoliberal brothers in off-shoring US and Western wealth
creation potential (in what they must have thought was an oh so clever attack on Western
living standards by forcing 'their' people to compete with the world's most desperate workers
in a global race to the bottom so their 1% patrons would have an excuse to create more money
as debt).
So long as the West remains focused on 'the price of everything and the value of nothing'
(like the human potential of their own people, for example), the developing world is soon
likely to have a monopoly that will put OPEC and its Middle Eastern dictators to shame. In
summary this is about FAR more than just about how a few 'post-industrial' democracies create
their money. The definitive work on this topic remains Soddy's Wealth, Virtual Wealth and
Debt, 2nd edition.
Just as a few days ago Carlos Rovelli, author of " The Order of Time ", has
useful insights of the political significance of LSD, he has advice for this too in the same
book:
The entire evolution of science would suggest that the best grammar for thinking about
the world is that of change, not of permanence. Not of being, but of becoming.
We can think of the world as made up of things. Of substances. Of entities. Of something
that is. Or we can think of it as made up of events. Of happenings. Of processes. Of
something that occurs. Something that does not last, and that undergoes continual
transformation, that is not permanent in time. The destruction of the notion of time in
fundamental physics is the crumbling of the first of these two perspectives, not of the
second. It is the realization of the ubiquity of impermanence, not of stasis in a
motionless time.
In other (his) words:
"The world is made up of networks of kisses, not of stones."
As long as I am feting physicists, this just came over the transom from Sabine
Hossenfelder of backreaction.blogspot.com fame. She's written a book, " Lost in Math
" and was informed that a video trailer is customary in this situation. As the first comment
there says:
"Hey, that is a GREAT statement! (And it applies to SO MUCH in life, not just
physics!)
We've all been focusing on the demand side of the Fed Reserve's liquidity pump: be it for
sound business needs. Or not (pirates).
But what happens when demand for that pump disappears because everyone is over-extended?
Because this is where Bernanke and Japan and the ECB have done "whatever it takes" to keep
that pump from going in reverse. Because in an empire created on naked shorts (currency
creation today is essentially a naked shorting process), the last thing you want is that pump
to go in reverse. That's not just creative destruction. That's house-on-fire destruction.
So Bernanke et. al. have figured out how to keep that pump from going in reverse. Simply
prop up asset prices, e.g. by reducing the asset float in treasuries, MBSs, etc. And it
worked. Yay! Right? If you're an asset holder, you're aces. If you're not an asset holder,
well you're not doing so well. In particular, if you're in that part of the economy which
depends on the velocity of money. Because velocity is at a stand still. As another blogger I
used to follow would say, price sans volume is not the right price. So from my perspective,
Bernanke (and Japan) had to destroy their economies by replacing them with zombie economies
to rescue certain players. Not just players, but playahs – the pirates that pushed us
to this end-game. So the pirates are rescued. And the average joe inherits the after effects.
But hey, those with 401Ks got rescued too, so it's not all bad. And since the 401Kers are
competitive, they generally found safe harbor in the job market too. Yay for them.
If we were not on a debt-based monetary pump, we would not end up with a zombie economy.
One which the Fed Reserve can't figure out how to solve except for creating even more demand
at the debt pump, even more over extension to mask the issue only to fall back within the
same trap again. From what I can tell, we are truly in a doom loop and at present I don't see
any creativity in getting us out of this doom loop.
So the vollgeld initiative would ostensibly be a way to extricate an economy from that
doom loop. I suspect the Swiss don't really need it as much as other nations. But why get in
the way of that type of creativity?
And I would just add that supplanting the federal reserve note with a Lincoln greenback
type of approach would work just as well. Even better since it gives the monetary powers to
the fiscal side of the Fed Gov.
I posted a version of this last night in the previous thread. But suspect nobody is going
to go to that thread anymore. So apologies for a repeat of sort. Not trying to spam.
The idea of a real estate pumped perpetual notion machine, combined with essentially an
interest free savings plan for the proles, persuaded them to come through and help rise all
boats, and who could have figured on vacation rentals helping out housing bubble deux, the
sequel.
Looking @ the real estate listings here in a vacation rental hotspot is indicative, in
that there are only a few $250k-$300k homes for sale now, whereas there used to be a dozen,
always.
Now, on the other hand, we're swimming in $500k to $1m homes that don't make the rental
cut.
You probably read the Bernank's naive confession yesterday that fiscal stimulus "is going
to hit the economy in a big way this year and next year, and then in 2020 Wile E. Coyote is
going to go off the cliff."
Three hundred shocked staffers in the Eccles Building cocked their heads to the side and
gasped, "He said WHAT?" So I wrote this song Technodammerung for rogue banker
Ben:
He was just a Harvard hand
Workin' the QE he planned to try
The years went by
Every night when the sun goes down
Just another lonely quant in town
And rates out runnin' 'round
It's another tequila sunset
Fed's old scam still looks the same
Another frame
Pardners in chime
proseytizing in real time
Preaching, if you can touch a dime
Why wont paper rhyme
But in their zeal and haste
And self-righteous aversion to waste
Recruit disciples in bling bling
Preaching money is a thing thing
While finger wagging the bloat
Preaching fix the rate, dont let it float
But beyond the noise
Preaching with poise
Its all about them
Their stuff, jewels and gem
Might the actions of a bank be restrained more easily by requiring all payments and stock
issuances to the executives and directors be put directly into escrow accounts to be metered
out in small amounts if the bank stays healthy over time? If the bank suffers major losses,
the escrow accounts would be the first source of funds to make up for them. No Federal
Deposit Insurance or other government payments would be made to the bank until the escrow
accounts have been reduced to zero.
Randall Wray could be made Sec Treasury, Stephanie Melton Fed Chairman and if the
plutocrats still run the rest of the political show that sets priorities, we would still be
screwed. The full employment guaranteed jobs could just as easily be strip mining coal from
national parks and forests as installing a national solar grid. It could be done with forced
low paid labor camps that maximize rent for the plutocrats. MMT seems morally neutral on how
the money is spent. For a good portion of the plutocrats, helping the poor is morally suspect
.if they consider it at all. That is the larger problem than acceptance of MMT.
I didn't see any comment here going in depth with ideas on the binding money creation
decisions with socially useful goals (saving TBTF I dont consider such a goal, except for
emergency purposes), by what type of process and stakeholders – to avoid driving us
toward becoming a 3rd world oligarchy.
The rest is just mechanics – but the most important thing is what is the social
control and social purpose of money creation. I am sure we could do just fine even with the
present system (of course since it is a MMT system), if there were some limits on speculation
with asset prices, less military spending, more democratic control of enterprises, including
banks, severe constraints on the FIRE sector, etc, etc.
In the end the problem of managing money well is a political problem. And not much is
changing there for the better, despite a growing awareness that "we have a problem" as a
society. Where are the politicians that will connect the dots and take on the responsibility
to fix the travesty that we have?
More questions than answers, I know. But what we need a change in politics – then
banking will follow.
This is a common fallacy, that MMT is bad because it isn't about communal barter tokens or
some other thing. MMT exists to empirically describe how money works in the existing economy
today. You can be any sort of ideology and embrace it, anyone can use it, just like anyone
can use science, it's not inherently biased toward any ideology unlike neoclassical economics
and its baked in neoliberalism. That doesn't make it bad, that just shows that it is what it
purports to be, an empirical description of money in our existing economy.
You want a brand new type of currency in a whole new economy, well, start organizing your
revolutionary army, because that's what that will take.
The Battle for Money -- that much, it seems to me, is true. Neoliberalism is going down,
brought down by its own (unfortunate in my view) success and hubris, and one consequence,
on-going, is the urgent political need to re-invent the institutions of money.
The institutional systems of monetary/payment/finance systems are always under a lot of
strategic pressure: they tend to develop and evolve quickly and they do not usually last all
that long -- maybe, the span of three or four human generations -- except in the collective
memory of their artifacts and debris.
There's a natural human wish that it could all be made safely automatic -- taken out of
corruptible hands and fixed with some technical governor. Whether you are a fan of democracy
or loyal to oligarchy really doesn't take anyone very far toward devising or understanding a
workable system of money.
As I said in a comment on the earlier Richard Murphy post, money is a language in which we
write (hopefully) "true" fictions to paper over uncertainty. Much of what passes for a theory
of money is just meta-fiction, akin to literary criticism of a particular genre or era. That
is certainly true of Quantity Theory (1.0 re: gold and 2.0 Friedman). It is true of related
fables, like Krugman's favorite, loanable funds.
When Murphy rejects the quantity theory of money and then turns around and talks about the
need to create "enough" money, I pretty much write him off. When he embraces the Truth of
MMT, I know he is hopeless.
It's been discussed on NC before, but despite all the theories and figures, it's really a
battle of values. I'm not pushing religion, just saying it has all the makings of a holy
war.
(come to think of it, isn't religion a big part of the history of monetary theory?)
China has yet to fall under the thumb of private banks the way the west has. State still
holds the reins of regulation tight and the government bank maintains a robust public sector.
Michael Hudson just came back from China and has this to say:
"The debts are owed to government banks. A government can do what the U.S. can't do.
The government can forgive debts, at least those that are owed to itself, without creating a
political backlash. If a viable corporation has run up too much debt, the government can
forgive it. This is better than letting the debt close down a factory or force it be sold to
a predatory asset management firm as occurs in the United States. That is the advantage of
having public credit and why credit should be public. That's how it was in Babylonia. Rulers
were able to cancel debts all the time in the 3rd millennium and 2nd millennium BC, because
most debts were owed to the palace or the temples. Rulers were cancelling debts owed to
themselves.
China can cancel business debt owed to itself. It can proclaim a clean slate. It can
minimize debt service to whatever it chooses. But imagine if Chase Manhattan and Goldman
Sachs are let in. It would be much harder for the government to raise real estate taxes
leading to defaults on the banks. It could save the occupants by making new loans to those
who default – based on lower land prices.
Well, you can imagine the international furor that would erupt. Trump would threaten
to atom bomb Peking and Shanghai to save his constituency. His constituency and that of the
Democrats are the same: Wall Street and the One Percent. So China may lose its ability to
write down debts if it lets in foreign banks."
There are advantages to restoring financial management to the nation-state, as former
Deputy Secretary of the Treasury Frank Newman has pointed out in books and lectures. The
private banks have exhausted QE to the tune of $30 trillion, none of which was invested in
the industrial economy. Why blame the Swiss for wanting to be like China?
that this is a Chicago School / Friedmanesque monetary policy is made clear by
Positive Money
The Chicago Plan of the 1930s and the unrelated Friedman suggestion of 1948 were both
predicated on the false fractional reserve theory of banking. Given that individual banks
create credit unrestrained by reserves those plans would not have had the desired result.
Positive Money knows this, though they do sometimes carelessly use the term 'fractional
reserve banking'. They think their plan is different and, to the extent that it would
actually prevent banks creating credit, it is.
It is silly to suggest that Positive Money is some Neoliberal front. Neutering the banks
is the last thing Neoliberals want, and when they want something they don't bother with
democratic methods like public pressure groups, they use think-tanks and lobbying.
Murphy's main complaint is about handing the 'quantity' decision to the Bank. I don't
think Positive Money is wedded to that idea, it is just an attempt to defuse the 'profligate
politicians' argument.
Being that NC is the place I discovered MMT, and it's been explained and debated so for so
long here, I would have expected NC readers to more broadly understand that what we have
currently would work for everyone if only our masters would allow it.
IOW, it is not necessary to reinvent our system so much as insist that it be used to
finance material benefits for all, as opposed to endless war, political repression and
bail-outs for our criminal finance sector.
How can it be that we can we finance $trillions for war at the drop of a hat, but cannot
afford to 'fix' SS, or provide universal healthcare?
It seems to me that it's a political issue, not a technical problem, or am I missing
something here?
Cui bono?
The current mission of the custodians of our "money" is to keep banks afloat. It's not to
provide general benefit, or to even preserve the buying power of the scrip they issue,
despite what you might hear about the supposed "dual mandate" (which is now a "triple
mandate": prices, employment, and the stock market).
"Financing material benefits for all" could be a bank that extends credit to a small
business. Take a look at commercial credit creation to see how well that's been going. Take a
look at velocity.
The Fed gifted Citi $174 billion on a day when they could have purchased 100% of the Citi
Class A common stock for $4B. This is the difference Michael Hudson points about about China:
their instant ability to swap debt for equity because all banks are state-owned and
because they're Communists and nobody would blink an eye .
Most interesting in The Middle Kingdom are the moves to protect the state-owned banks.
They started about 18 months ago, when people were told they could only have one Tier 1
bank-linked e-commerce account. As a result 7.5 billion (with a B) accounts were closed. Next
they said all payments systems (including WeChat and Alipay) must clear through a new central
bank clearinghouse. Two weeks ago they said not only will everything clear through these but
the actual funds will need to be transferred to the new CB account .
Ant Financial announced that in the future they would be concentrating on services to
finance and e-commerce companies, and away from providing those services themselves. They
even anticipate a name change, from Ant Financial to Ant Lifestyle. All this makes perfect
sense: President Xi will see every financial transaction in the country, and presumably apply
a Social Score filter on whether he allows it to go through. 11 million people have already
been denied the right to purchase train tickets or buy a house because they spat on a
sidewalk, jaywalked, or made the wrong comments on social media.
Wow! We are clearly past the "First they ignore you.." stage and just on the other side of
" then they ridicule you.." phase. What a basket of slurs, gross omissions of fact and
outright falsehoods is this current blog post.
Anytime Milton Friedman is invoked to slur a concept developed before he was even born,
should be an indicator that there is no substance to the argument against the democratization
of money creation.
Thanks to the internet however, one can easily visit the Positive Money site, the American
Monetary Institute and International Movement for Monetary Reform sites to see those fake
progressives in action. While you're at it, go to the Vollgeld site yourself and read what
those wolves in sheep's clothing are really saying instead of the creative writing displayed
in the blog.
How can anyone who claims to be concerned over the excesses of capitalism prostrate
themselves in front of the current banking system, the driver of capitalism as it
rides off the rails.
I can't bring myself to respond to the stream of unsubstantiated assertions presented but
need to remind people that banks, MUST create money first for the most creditworthy. I won't
insult the readers any further by naming who that class represents. A child can see that
this, by definition, must lead to the accelerating inequality we see today.
As a challenge, I ask the author to show specifically in the US code where it permits the
Federal Government to spend before its accounts at the Fed are replenished either by
borrowing or taxing. Stay tuned to these pages for the evidence .
PM just wants OMF (Overt Monetary Financing) with ZIRP and a very small horizontal money
system. MMT analysis suggests OMF with ZIRP and a much more regulated horizontal system is
needed. There is actually very little difference in their policy prescriptions. They just
arrived at them from opposite sides of the track
I'll second that but for different reasons. Buried not far beneath the surface of this
issue (money's creation, how and how much) are hugely important issues. But the discussion
never seems to get beyond everyone's favorite system for creating money. The assumption seems
to run along the lines of: if we can just come up with some scheme for government or gold
backed money, those who possess or produce the real wealth for that money to buy will forever
be content to exchange it for the money we will forever create to pay for it. There seems to
be a belief countries like China or Russia can never escape the 'dollar trap' – or if
they try we can threaten and intimidate them back in line with our "full spectrum dominance"
military. Money IS debt – and sooner or later those who hold it are going to want to
call that debt in.
Both Positive Money and MMT appear to me to just be attempts to continue 'business as
usual', operating without a real definition of wealth and trusting / hoping 'the market' will
sort it out.
Money is debt, both functionally and conceptually. This is true for most of the money used
in the Main Street economy. It is created as debt – yours to a bank when you use your
credit card or borrow money; the bank's to you when you deposit money with one. In its role
as a medium of exchange money serves as a claim on society's goods and services, its real
wealth. You don't exchange real wealth for fiat or bank-created money without the expectation
you will at some future time be able to again exchange that money for real wealth at least
equivalent to what you had to give up in exchange for the money originally.
Rather than a claim on wealth, money could be viewed as a representation of value. Value
exchange is more like a giving/sharing economy, rather than debt-swapping. I think this
psychological improvement will lead to many physical/social/environmental improvements.
Of course, in any case, people need to be willing sellers/exchangers – it's not
automatic or universal; we need some freedom to choose, and the better the conditions are
generally, the better the freedom we will have.
OK but the term, "money is debt" is used too loosely and can be very misleading. Money
does not have to be issued as debt as claimed by MMT. In fact, money can first appear as
equity on the government's balance sheet with no counterbalancing debt. So this concept is
grossly misused to imply money must be issued as debt when, in fact, once issued it may
represent a claim on the wealth of society. Proponents of MMT first make the claim
that money is debt, and that the notion that money can be issued debt-free is therefore false
on its face. Pretty clever. They slyly blur the distinction between the creation of money by
a government and the role of that money once in the economy.
How can money first appear as equity? Isn't the other side of that the deficit? Granted I
am naive on these points but I thought money was a bond of zero duration.See skippy re time
and space
. A question for Paul: Unless it is 'privatized' is there even such a thing as 'government
equity'? The way the West's financial system works nothing that can't be sold appears to have
any value. What's missing from that system – and the discipline of economics (see
below) – is a definition of wealth.
steven –
I believe we know what wealth is – but I don't understand your claim that money needs
to be privatized to be considered equity. The government declares by fiat that the money it
creates can be used to purchase goods and services in the economy.
I don't believe this is anywhere nearly correct. From all over the political spectrum
commentators lament the lost of trillions of dollars (or euros or whatever) of wealth. At
least until the effects of a financial crisis start to take hold, no physical or intellectual
capital is lost. The only thing that is lost are a few zeros on some financial ledgers.
As for money as equity, you may be technically correct, i.e. the rules of accounting may
permit governments to count the stacks of paper currency they print (in any case, small
change in terms of the total money supply) as 'equity'. But for most of us the only thing
governments possess that we would count as equity are asset classes like public
infrastructure. And until the services they provide (or the assets themselves) are sold, that
infrastructure would, from a business accounting standpoint, technically be 'worthless'.
(that last is a question?)
tegnost – There is nothing in the accounting standards that prevents the inclusion
of equity on a balance sheet. If we were under the gold standard and you happened to find a
nugget of gold in your back yard, are you telling me that you would have to imagine some kind
of "debt" to balance your household balance sheet? When Lincoln issued the Greenbacks in the
1860's there was no bond or debt associated with it. It paid soldiers wages and goods and
services during he civil war.
Just as MMT states the government isn't a household, it also isn't a commercial bank either.
It has the constitutional power to coin money as needed, no debt involved.
presumably you bought the nugget of gold when you purchased the property and it's land use
rights so it's not a virgin birth, the debt is what you purchased the land for. Maybe one of
those diamonds in the outback that hardy souls find, but those may have some territorial
claim as well.
The gold nugget has no inherent value. It's just a lump of cold metal. It will only become
valuable when you go to someone else with it and try to exchange it for something, whether it
be a currency or some kind of good. And only if the other person agrees with you that it's
valuable. This is fundamentally what money is: a token of social interaction. The gold
becomes valuable when you go to exchange it for something else. In other words when a debt
comes into play. Money is debt. Or rather, it's a measurement of debt and credit. 'Store of
value' and all that econ 101 rot is so much gibberish.
Once you realize that, then a question arises: "Well, why bother with rare metals or
pressed coins? If it's just a token, you could literally just take a stick and carve marks
into it and it would be the same thing". Yes, exactly. Which is precisely the sort of thing
we see lots of in history.
Murphy sounds like one of those indecisive chaps who dispute with everyone but have no
ideas of their own. I shall ignore him. Good luck to Switzerland. They have the courage and
political system to try the experiment and we will all know the result in early course.
What am I missing? As far as I can tell, the proposal is just Modern Money with the
central bank substituted for the Treasury. Yes, that makes it less democratic.
MMT is inflation-limited, too. That's how you know you've overshot your resources. In
fact, MMT poses a technical problem: how do you know when you've reached resource limits,
EXCEPT by observing inflation? Because without that, you have a ratchet. Of course, that's
just what we have, usually, so maybe that's evidence for the theory.
"First, this puts inflation at the core of economic policy." – is a false claim. As
quoted, it treats inflation as a limitation. The core is promoting adequate economic
activity.
Finally, he treats "money is debt" as doctrine. he doesn't justify it and it makes little
sense, ESPECIALLY in MMT. How can you pay a debt with a debt? Someone's getting cheated. MMT
actually proposes free money, to a point. I've seen elaborations of the idea, but they use a
very extended sense of "debt." And I don't see how it's even relevant to his overall
thesis.
The Swiss are pretty conservative, so I doubt they'll pass it.
No, Positive Money is not remotely MMT. Wash your mouth out.
The Positive Money types want to limit the extension of credit and put it under the
control of what Lambert called "a magic board," a regular gimmick from his days back in
debate where someone needed to be in charge but no one wanted to think hard about who or how.
In practice, a central bank would be in charge. So how democratic is that?
MMT does not fetishize money the way the Positive Money does. MMT despite having Monetary
in the name is about the role of government spending in a fiat currency system. MMT argues
that (as Kalekci did) that businesses have strong incentive (not wanting workers to get
uppity) to keep the economy at less than full employment. So the government can and should
spend to mobilize resources. And it can because its role as the currency issuer means it can
never go bankrupt, it can only create too much inflation. Taxes are what contain inflation in
MMT.
By contrast, the Positive Money types want to do it by limiting credit creation. And thus
Murphy is correct. That means their priority is to preserve the value of financial assets,
not achieve full employment.
I don't believe it is accurate to say that Positive Money "fetishizes money". Irving
Fisher acknowledged his debt to Frederick Soddy for the concept of "100% Money", the
intellectual foundation for the Positive Money movement. Soddy's intent in limiting the
creation of money to the stock of wealth available for it to purchase was to retain
independence from the state in obtaining the means of subsistence. He compared the use of
monetary policy to goose the economy to a merchant putting his or her finger on the scale,
making it difficult to impossible for money to fulfill two of its primary functions: serving
as a medium of exchange and a store of value.
So long as there was wealth available for it to purchase, he – and presumably
Fisher's Positive Money crowd – would have no objection to creating as much money as
needed to keep the economy running. What he and every other respectable economist have been
trying to bring under control is the excess money creation fueling speculation and the
seemingly inevitable boom-bust cycle accompanying the private creation of money.
Rather than curbing that excess, however, the 'solution' that seems to have been adopted
is for the US and other Western governments to absorb the excess credit (money as debt)
creation by taking it on their (governments') own books. Government debt is I believe called
'near money' in the financial markets. But neither the governments nor the bankers of
countries that no longer create real wealth have any logical right to create the money to buy
it. Just retaining the right to 'print' more money or 'near money' doesn't change that,
except perhaps in an absurdly narrow legal sense.
There are, of course, some issues like globalization intimately connected with the
construction of a logical and fair monetary system. But underlying them all, including for
countries other than the US, is a logical definition of 'wealth':
a logical definition of wealth is absolutely needed for the basis of economics if it is
to be a science."
Frederick Soddy, WEALTH, VIRTUAL WEALTH AND DEBT, 2nd edition, p. 102
(Soddy might have added "if government is to be a science".)
Here in lies the rub economics will never be a Science.
Firstly the medium used by most economics – philosophy – does not even have a
functioning model of time and space and is prone to fads. Magnified by scale WRT elite tastes
or self dealing. Wealth or Capital is also a bit complicated by say the Cambridge Controversy
et al. So until some very fundamental flaws are sorted, that have nothing to do with –
money – the concept of "Science of Money" is going to be a non starter.
Worst is those that use such syntax and dialectal style are going to be called into
question – over it.
I mean we had political theory, then some bolted on science to it, and called it economic
science. Which then begat a whole time line of dominance front running the political process
regardless of political incumbents.
I think Scientists that dabble in monetary theory fall victim to the same dilemma that say
religious based views do – their optics are ground before looking.
Probably best to start with the first part of Soddy's (actually John Ruskin's)
observation, "a logical definition of wealth is absolutely needed ". "Most economics" may
indeed disguise its prostitution with a veneer of philosophy or mathematics. But I don't
think you can say that about Soddy's:
A definition of wealth must be based upon the nature of physical or material wealth, in
the sense of the physical requisites which empower and enable human life-that is, which
supply human beings with the means to live, and, as an after consequence of living, to
love, think and pursue goodness, beauty and truth.p. 108
(All citations are from Soddy's Wealth, Virtual Wealth and Debt, 2nd edition- WVWD)
For that matter, according to Michael Hudson, you can not accuse the classical economists of
just dabbling in philosophy. They were ALL about freeing society from free-lunch economic
rent seekers, freeing up the resources so they could be devoted as completely as possible to
the development of "the physical requisites which empower and enable human life".
What we have to do to develop those physical requisites – and increasingly the
limitations imposed by the requirements of sustainability – is pretty well known.
Whether a science of money can be devised to help accomplish that goal or some other
mechanism for distributing the wealth made possible by advances in science and technology is
required is increasingly open to question.
Take a look at Soddy's –THE THREE INGREDIENTS OF WEALTH (DISCOVERY, NATURAL ENERGY
AND DILIGENCE). p. 61 The first two are firmly embedded in time and space.
I have read Soddy, more so I have talked with PM sorts for a long time, hence I'm not
ignorant of the camps views or actions during said time.
Onward
"a logical definition of wealth is absolutely needed ".
I did reference the Cambridge Controversy, are you informed WRT this aspect.
"A definition of wealth must be based upon the nature of physical or material wealth, in
the sense of the physical requisites which empower and enable human life-that is, which
supply human beings with the means to live, and, as an after consequence of living, to love,
think and pursue goodness, beauty and truth.p. 108"
Sorry but . "consequence of living, to love, think and pursue goodness, beauty and truth"
has nothing scientific about it.
I reiterate – Metaphilosophy has no scientific underpinnings and attempts to "brand"
it otherwise in only to burnish its credentials without any empirical satisfaction is just
rhetorical gaming.
"you can not accuse the classical economists of just dabbling in philosophy."
Hay I respect Hudson, that does not mean I worship him, hes been invaluable to the
discovery process, but, that does not mean everything he has to say is the word of dawg, nor
would I surrender my cognitive processes just because someone uses the term classical.
If I have to go that space I would favor say Veblen or Lars P. Syll where if your to own a
thing one must accept the responsibility from a social aspect and not one of atomistic
individualism.
But hay I regress . because I'm still waiting for someone to show me a few decades of a
labour market in "action".
"BTW it would be incumbent of you to redress my concerns above without forging a new path
which excludes them." – Sorry if I did that. It was not my intent. Wikipedia is my only
exposure to the Cambridge Controversy . As
I understand it, science is supposed to be all about observing the real world and then
drawing conclusions from those observations. It looks to me like the participants in the
debate were looking at their models and maybe the logic they used to construct them, not the
world they were supposed to be modeling.
"Most of the debate is mathematical, while some major elements can be explained as part of
the aggregation problem. The critique of neoclassical capital theory might be summed up as
saying that the theory suffers from the fallacy of composition;"
This kind of cant is a far cry from something like:
"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 realised, life in its physical aspect
is fundamentally a struggle for energy , in which discovery after discovery brings life
into new relations with the original source. Evolutionary development has been parasitic,
higher and higher organisms arising and obtaining the requisite supplies of energy by
feeding upon the lower. But with man and the development of conscious reason, that process
as regards energy is being reversed. "
Sorry, but where does Positive Money , in any of the publications and articles, propose
any limitations on 'credit' ?
I never saw that.
Or AMI or any of these public money types for that matter?
Thank you.
You are completely correct, they don't. This is all made up propaganda against the
democratization of the money supply. What PM proposes is sound credit creation.
PM wants to establish a non democratic administration of government issuance and then
allow a return to the free banking period of the 1800s. All based on notions of EMH and QTM
contra to all the historical data from that period. So on one had PM wants to lay claim to
scientific methodology WRT money yet still cling to scientifically refuted EMH.
As far as I can discern PM proponents advance the belief that this would compel banks to
become investment entities for "productive" activities. Don't know how that would work out
considering how corporatism views society.
The positive money people have come at it from the other angle. People like Richard Werner
have been studying the problems with privately created money since the Japanese economy blew
up in the 1980s .
They have seen all the problems with privately created money and the positive money people
were very pleased when the BoE confirmed their beliefs in 2014.
The positive money people have come to the wrong conclusion through not understanding
publicly created money.
The MMT people can learn a lot about the problems of privately created money from the
positive money people.
The two camps should merge to get the big picture.
I started looking into all the problems of privately created money after 2008 and was a
latecomer to MMT.
The two merge nicely when you think about it and realise the why the positive money people
came to the conclusion they did. They just didn't understand the way publicly created money
works now.
In the case of Japan, unless I'm misunderstanding things there, presumably they've
embraced MMT out the wazoo, in that they're willing to leverage federal gov debt out the
wazoo. And yet I think the consensus still seems to be that their economy is still zombified
(still not really recovered from the debt overhang from their go go years). In which case,
why is that?
Has Japan been hamstringing their use of MMT, so it's less effective than it could be? Do
they need to up the ante, employ MMT-on-steroids to overcome the trap that they're in, say
like the US needed WWII to get out of its trap?
Withstanding MMT-on-steroids, should it be QE-on-steroids instead that get the animal
spirits rekindled? I don't have a strong sense of whether the US central bank has done more
in that department compared to the central bank of Japan. Or if indeed, the US central bank
has been more successful on that front. It's clear that animal spirits are certainly
rekindled in the US – the usual playahs are back at it. Though whether that's
unzombified our economy, I'm not so sure – I don't think it has.
If these hurdles are so difficult, seems to me we should have a monetary system that
doesn't result in a zombified economy to begin with, per the comment I was making further
above.
And yet I think the consensus still seems to be that their economy is still zombified
(still not really recovered from the debt overhang from their go go years). In which case,
why is that?
Debt Peonage. For it to work there has to be a debt jubilee (a forgiveness of peoples
debt).
" It seems there are greater similarities between China and the US than may be visible
at first glance. China builds real estate for a shrinking population, invests for an
over-indebted client (the US, which even insists on a drastic reduction of the bilateral
trade deficit) and finances all this with money it does not have ."
MMT has always stated to whom the debt is owed is the crux of the matter and in what form
denoted.
I have trouble understanding the dramas with bank issued credit when squared with say
equities, why all the focus on one and not to be inclusive of a wide assortment of other
mediums of exchange and how they are created and why.
So tell me why J – bonds are called the death trade e.g. shorters nightmare –
albeit they will tell you their shorts are being thwarted by ev'bal forces.
Couldn't resist this. That title has me intrigued so, with apologies to Winston
Churchill-
" What (neoliberals have) called the Battle of (Credit) is over the Battle of (Money) is
about to begin. Upon this battle depends the survival of (world) civilisation. Upon it
depends our own (western) life, and the long continuity of our institutions and our
(civilization). The whole fury and might of the enemy must very soon be turned on us.
(Neoliberals) knows that (they) will have to break us in this (idea) or lose the war. If we
can stand up to (them), all (the world) may be freed and the life of the world may move
forward into broad, sunlit uplands.
But if we fail, then the whole world, including the United States, including all that we have
known and cared for, will sink into the abyss of a new dark age made more sinister, and
perhaps more protracted, by the lights of perverted science. Let us therefore brace ourselves
to our duties, and so bear ourselves, that if the (United Nations) and its (Countries) last
for a thousand years, men will still say, "This was their finest hour." "
Yet then some say AET and Neoclassical economics just needs to implement PM and all will
be well.
I've yet to see any PM advocate or proponent criticize an executive or corporatism, only
banksters and some politicians. On the other hand I've seen many PM sorts back crypto based
on the argument of decentralization. So which is it, counterfeiting of national money with a
side of corruption or a case of counterfeiting ex nihilo via some arbitrary computational
source with a predominate side of corruption.
I am completely at a loss to understand how the debate about money proceeds things like
Marginalism, supply and demand as a monolith, rational agent models, theoclassical opinions
elevated to truisms [economic laws] and a reduction of human experience as a binary condition
set in stone.
I also have issues with PM advocates and their UBI agenda, due to its original proponents
views on the need to water down democracy more to keep the unwashed from just voting
themselves more money. It is in my opinion logically incoherent, that is just what has
occurred during the neoliberal period and corporatists via the democracy of money through
lobbyists – every dollar is a vote – et al.
In light of that I can only surmise that PM is actually pro elitist, not that I have
issues with some being elite, that is another story altogether, but money itself is not the
bar.
Looks like Trump adopted Victoria Nuland "Fuck the EU" attitude ;-). There might be nasty
surprises down the road as this is uncharted territory: destruction of neoliberal
globalization.
Trump proved to be a really bad negotiator. he reduced the USA to a schoolyard bully who
beats up his gang members because their former victims have grown too big.
As the owner of world reserve currency the USA is able to tax US denominated transactions both via conversion fees and
inflation. As long as the USA has dollar as a reserve currency the USA has so called "exorbitant priviledge" : "In the
Bretton Woods system put in place in
1944, US dollars were convertible to gold. In France, it was called "America's
exorbitant privilege"[219]
as it resulted in an "asymmetric financial system" where foreigners "see themselves supporting American living standards and
subsidizing American multinationals"."... "De Gaulle openly criticised the
United States intervention in Vietnam and the "exorbitant
privilege" of the United States dollar. In his later years, his support for the slogan "Vive
le Québec libre" and his two vetoes of Britain's entry into the
European Economic
Community generated considerable controversy." Charles de Gaulle -
Wikipedia
Notable quotes:
"... Errrr, that so-called "piggy bank' just happens to; ..."
"... have the world's reserve currency ..."
"... dominates the entire planet militarily since the end of the Cold War ..."
"... dictates "regime change" around the world ..."
"... manipulates and controls the world's entire financial system, from the price of a barrel to every financial transaction in the SWIFT system. ..."
"... And Trump has the ignorance, the arrogance and the audacity to be pleading 'poverty?' ..."
"We had productive discussion on having fair and reciprocal" trade and market access.
"We're linked in the great effort to create a more just and prosperous world. And from the
standpoint of trade and creating more prosperous countries, I think they are starting to be
committed to more fair trade. We as a nation lost $870 billion on trade...I blame our leaders
and I congratulate leaders of other countries for taking advantage of our leaders."
"If they retaliate they're making a tremendous mistake because you see we have a
tremendous trade imbalance...the numbers are so much against them, we win that war 1000 times
out of a 1000."
"We're negotiating very hard, tariffs and barriers...the European Union is brutal to the
United States....the gig is up...there's nothing they can say."
"We're like the piggy bank that everybody's robbing."
"I would say the level of relationship is a ten - Angela, Emmanuel and Justin - we have a very good relationship. I won't
blame these people, unless they don't smarten up and make the trades fair."
Trump is now making the 20-hour flight to Singapore, where he will attend a historic summit with North Korea leader Kim Jong
Un. We'll now keep our eye out for the finalized communique from the group. The US is typically a leader in the crafting of the
statement. But this time, it's unclear if the US had any input at all into the statement, as only the leaders from Britain,
Canada, France, Germany, Italy and Japan as well as the presidents of the European Commission and European Council remain at the
meeting. But regardless of who writes it, the statement will probably be of little consequence, as UBS points out:
Several heads of state will be heading off on a taxpayer-financed "mini-break" in Canada today. In all of its incarnations
(over the past four years, we've gone from G-8 to G-6+1) the group hasn't really accomplished much since an initial burst of
enthusiasm with the Plaza Accords and Louvre Accords in the 1980s.
By the way, Trump is right on the tariffs in my view, Europeans should lower their tariffs
and not having the US raising it.
Trump: "We're The Piggy Bank That Everybody's Robbing"
Isn't Trump great in catch phrases? Trump's base will now regurgitate it to death.
Now reconcile Trump's remarks with reality:
Professor Werner: Germany is for instance not even allowed to receive delivery of US
Treasuries that it may have purchased as a result of the dollars earned through its current
account surplus: these Treasuries have to be held in custody by the Federal Reserve Bank of
New York, a privately owned bank: A promise on a promise. At the same time, German influence
over the pyramid structure of such promises has been declining rapidly since the abolition of
the German currency and introduction of the euro, controlled by an unaccountable
supranational international agency that cannot be influenced by any democratic assembly in
the eurozone. As a result, this structure of one-sided outflows of real goods and services
from Germany is likely to persist in the short and medium-term.
To add insult to injury:
Euro-federalists financed by US spy chiefs
The documents show that ACUE financed the European Movement, the most important federalist
organisation in the post-war years. In 1958, for example, it provided 53.5 per cent of the
movement's funds.
Okay, everyone set your "team" aside for a few minutes and let's look at the facts and
reality.
Do you really believe the rest of the world has trade advantages over the US? Well, let's
consider major industries.
Agriculture.....maybe, but only sightly. Our farmers are the richest in the workd....by
far.
Manufacturers.....probably so....because we gave it away to countries with slave labor.
Manufacturers jobs were jobs where people could earn a decent living...and that had to
go..can't be cutting into corporate profits with all that high cost labor.
Defense.....need I go here? We spend more than the next 11 countries combined! We sell
more as well.
Energy.....we rule thus space because we buy it with worthless printed fiat
debt...whenever we want to....and nd if you deny us, we will bomb the hell out of you and
take it.
Technology. ....Apple, Microsoft, Intel, Google, Amazon, Oracle, Dell, Cisco.....who can
touch that line up....not to mention all the on-line outfits like Facebook and Twitter.
Finance.....the best for last. We control the printing press that prints the dollar the
rest of the world needs. We control energy and foreign policy. Don't do what we like and we
will cut you off from SWIFT and devalue the hell out of your currency...and then move in for
the "regime" change to some one who plays ball the way we like it. 85% of all international
trade takes place in dollars everyday. We have the biggest banks, Wall Street, and infest the
world with our virus called the dollar so that we can Jeri their chain at will.
Now I ask you....just where the hell is the "trade imbalances"? Sure there are some
companies or job sectors that get a raw deal because our politicians give some foreigners
unfair trade advantages here and there, but as a whole, we dominate trade by far. The poor in
our country lives like kings compared to 5.5 billion of the world's population. Trump knows
this.....or he is stupid. He is pandering to his sheeple voting base that are easily duped
into believing someone is getting what is their's.
Hey, I am thankful to be an American and enjoy the advantages we have. But I am not going
to stick my head up Trump's ass and agree with this bullshit. It is misdirection (corporate
America and politicians are the problem here, not foreign countries) and a major distraction.
Because all the trade in the world isn't going to pull us out of this debt catastrophe that's
coming.
But, if we cut through all the verbiage, we will arrive at the elephant in the room.
American manufacturing jobs have been off-shored to low wage countries and the jobs which
have replaced them are, for the most part, minium wage service jobs. A man cannot buy a
house, marry and raise a family on a humburger-flippers wage. Even those minimum wage jobs
are often unavailable to Americans because millions of illegal aliens have been allowed into
the country and they are undercutting wages in the service sector. At the same time, the
better paid positions are being given to H-1B visa holders who undercut the American worker
(who is not infrequently forced to train his own replacement in order to access his
unemployment benefits.)
As the above paragraph demonstrates the oligarchs are being permitted to force down
American wages and the fact that we no longer make, but instead import, the things we need,
thus exporting our wealth and damaging our own workers is all the same to them. They grow
richer and they do not care about our country or our people. If they can make us all into
slaves it will suit them perfectly.
We need tariffs to enable our workers to compete against third world wages in countries
where the cost-of-living is less. (American wages may be stagnating or declining but our
cost-of-living is not declining.) We need to deport illegal aliens and to stop the flow of
them over our borders. (Build the wall.) We need to severely limit the H-1B visa programme
which is putting qualified Americans out of work. (When I came to the US in 1967 I was
permitted entry on the basis that I was coming to do a job for which there were not enough
American workers available. Why was that rule ever changed?)
You are making my point. China didn't "off shore" our jobs....our politicians and
corporations did. You can't fix that by going after other countries. You fix that by
penalizing companies for using slave labor workers from other countries. Tariffs are not
going to fix this. They will just raise prices on everyone.
I can't believe you Trumptards can't see this! Once again we will focus on a symptom and
ignore the real problem. Boy, Trump and his buddies from NYC and DC have really suffered
because of unfair trade practices, right? Why can't you people see that "government is the
problem" and misdirection your attention to China, Canada, Germany, Mexico, or whomever is
just that....misdirection.
I would tax the shit out of companies like Apple that make everything overseas with slave
labor and then ship it in here to sell to Americans at ridiculous prices.
Plenty of down votes but no one has proven that I am wrong on one point.
The EU countries have free college, health care, day care and just about everything else.
All paid for because they have no military spending.
It's all on the backs of the US tax payer. Or the fed, if you prefer.
Trump is working both angles. Forcing them to pay for their own defense. Forcing them to
allow US products with no trade disadvantages. Go MAGA and fuck the EU.
"... The author is a prominent American social critic, blogger, and podcaster , and one of our all-time favorite pessimists. We carry his articles regularly on RI . His writing on Russia-gate has been highly entertaining. ..."
"... He is one of the better-known thinkers The New Yorker has dubbed 'The Dystopians' in an excellent 2009 profile , along with the brilliant Dmitry Orlov, another regular contributor to RI (archive) . These theorists believe that modern society is headed for a jarring and painful crack-up. ..."
"... You can find his popular fiction and novels on this subject, here . To get a sense of how entertaining he is, watch this 2004 TED talk about the cruel misery of American urban design - it is one of the most-viewed on TED. Here is a recent audio interview with him which gives a good overview of his work. ..."
"... If you like his work, please consider supporting him on Patreon . ..."
"... Quite the opposite of a dilettante, Kunstler has dug into the research on oil and related energy technologies, and is extremely well-informed, writing books on the subject. What he says implies a massive wealth transfer to Russia, Iran, and the Middle East, as the wells start to dry up. ..."
"Anyway, we're not going back to the Detroit of 1957. We'll be fortunate if we can turn out brooms and scythes twenty years from
now, let alone flying Teslas." 10 hours ago | 1,690
41 MORE:
Business The author is a prominent American
social critic, blogger, and podcaster , and one of our all-time favorite pessimists.
We carry his articles regularly on RI . His writing
on Russia-gate has been highly entertaining.
He is one of the better-known thinkers The New Yorker has dubbed 'The Dystopians' in
an excellent 2009 profile , along with
the brilliant Dmitry Orlov, another regular contributor to RI
(archive) . These theorists believe that modern society is headed for a jarring and painful crack-up.
If you like his work, please consider supporting him on
Patreon .
Quite the opposite of a dilettante, Kunstler has dug into the research on oil and related energy technologies, and is extremely
well-informed, writing books on the subject. What he says implies a massive wealth transfer to Russia, Iran, and the Middle East,
as the wells start to dry up.
The ill feeling among leaders of the G-7 nations -- essentially, the West plus Japan -- was mirrored early this morning in the
puking financial market futures, so odious, apparently, is the presence of America's Golden Golem of Greatness at the Quebec meet-up
of First World poobahs. It's hard to blame them. The GGG refuses to play nice in the sandbox of the old order.
Completely, totally, delusional
Like many observers here in the USA, I can't tell exactly whether Donald Trump is out of his mind or justifiably blowing up out-of-date
relationships and conventions in a world that is desperately seeking a new disposition of things. The West had a mighty good run
in the decades since the fiascos of the mid-20 th century. My guess is that we're witnessing a slow-burning panic over
the impossibility of maintaining the enviable standard of living we've all enjoyed.
All the jabber is about trade and obstacles to trade, but the real action probably emanates from the energy sector, especially
oil. The G-7 nations are nothing without it, and the supply is getting sketchy at the margins in a way that probably and rightfully
scares them. I'd suppose, for instance, that the recent run-up in oil prices from $40-a-barrel to nearly $80 has had the usual effect
of dampening economic activity worldwide. For some odd reason, the media doesn't pay attention to any of that. But it's become virtually
an axiom that oil over $75-a-barrel smashes economies while oil under $75-a-barrel crushes oil companies.
Mr. Trump probably believes that the USA is in the catbird seat with oil because of the so-called "shale oil miracle." If so,
he is no more deluded than the rest of his fellow citizens, including government officials and journalists, who have failed to notice
that the economics of shale oil don't pencil out -- or are afraid to say.
The oil companies are not making a red cent at it, despite the record-breaking production numbers that recently exceeded the previous
all-time-peak set in 1970. The public believes that we're "energy independent" now, which is simply not true because we still import
way more oil than we export: 10.7 million barrels incoming versus 7.1 million barrels a week outgoing (US EIA).
Shale oil is not a miracle so much as a spectacular stunt: how to leverage cheap debt for a short-term bump in resource extraction
at the expense of a future that will surely be starved for oil. Now that the world is having major problems with excessive debt,
it is also going to have major problems with oil.
The quarrels over trade arise from this unacknowledged predicament: there will be less of everything that the economically hyper-developed
nations want and need, including capital. So, what's shaping up is a fight over the table scraps of the banquet that is shutting
down.
That quandary is surely enough to make powerful nations very nervous. It may also prompt them to actions and outcomes that were
previously unthinkable. At the moment the excessive debt threatens to blow up the European Union, which is liable to be a much bigger
problem for the EU than anything Trump is up to. It has been an admirably stable era for Europe and Japan, and I suppose the Boomers
and X gens don't really remember a time not so long ago when Europe was a cauldron of tribal hatreds and stupendous violence, with
Japan marching all over East Asia, wrecking things.
There is also surprisingly little critical commentary on the notion that Mr. Trump is seeking to "re-industrialize" America. It's
perhaps an understandable wish to return to the magical prosperity of yesteryear. But things have changed. And if wishes were fishes,
the state of the earth's oceans is chastening to enough to give you the heebie-jeebies. Anyway, we're not going back to the Detroit
of 1957. We'll be fortunate if we can turn out brooms and scythes twenty years from now, let alone flying Teslas.
This will be the summer of discontent for the West especially. The fact that populism is still a rising force among these nations
is a clue of broad public skepticism about maintaining the current order. No wonder the massive bureaucracies vested in that order
are freaking out.
I'm not sure Mr. Trump even knows or appreciates just how he represents these dangerous dynamics.
"... By Lynn Parramore, Senior Research Analyst, Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website ..."
"... Jim Chanos, founder and managing partner of New York-based Kynikos Associates, has spent much of his career studying financial fraud. He shares his thoughts with the Institute for New Economic Thinking -- where he is a member of the ..."
"... Global Partners Council ..."
"... -- on cryptocurrency, fraud coming from China, and why fraudsters may currently be on the rise. Chanos teaches a course on the history of financial fraud at Yale University and the University of Wisconsin. ..."
Jim Chanos, founder and managing partner of New York-based Kynikos Associates, has spent
much of his career studying financial fraud. He shares his thoughts with the Institute for New
Economic Thinking -- where he is a member of theGlobal Partners Council-- on cryptocurrency, fraud coming from China, and why
fraudsters may currently be on the rise. Chanos teaches a course on the history of financial
fraud at Yale University and the University of Wisconsin.
Lynn Parramore: As someone who pays a lot of attention to financial fraud, you've noticed
that this activity has a connection to business cycles. Can you explain that and say where you
think we are right now?
Jim Chanos: I've found in my research and my teaching that what I would call the "fraud
cycle" -- instances of large-scale financial fraud over multiple platforms and companies in the
financial markets in the modern era (the last 500 years) -- follows the financial cycle with a
lag. That means that as business and particularly financial markets improve, peoples' sense of
disbelief and caution that they've often earned from the previous downturn begins to erode.
Schemes that before might have seemed too good to be true begin to be embraced.
LP: So people relax their financial vigilance.
JC: Exactly. The longer the cycle goes on, the easier it becomes for the dishonest and the
fraudsters to ply their trade because people will begin to believe in things that they
shouldn't financially. As cycles go on, we tend to see higher instances of fraud. In recent
memory, there were clearly, from a legal and prosecutorial point of view, more cases of fraud
after the dot-com bull market of the late '90s, which went from 1991 to 2000. Many of the
dot-coms turned out to be fraudulent. We then saw the Enrons and the WorldComs and the Tycos.
Frauds generally come to light after the financial cycle turns down. We saw this again after
the crisis following the bull market of 2003 to 2007.
What happens is that the new capital going into these things dries up. Many frauds are, by
their nature, Ponzi schemes that require new money and new investors to pay off the old
investors. When people want their money back, the insolvency of the venture is discovered. John
Kenneth Galbraith has this wonderful term called "the bezzle" [inventory of undiscovered
embezzlement]. That's the heart of the fraud, the nature of the fraud in the company. He points
out that in the up phase, there's this wonderful period where both the fraudsters and the
defrauded think they're getting richer. An interesting observation, right?
Of course, it works the other way on the down side. That's what I mean when I tell my
students to follow the cycles and be on guard the longer a financial and business cycle lasts
because people will get a little bit jiggy with their capital. They're willing to take risks,
willing to believe things. So today we've got bitcoin and ICOs [initial coin offerings], which
went ballistic in 2017. I suspect going forward we're going to see more and more evidence of
questionable companies as this bull market keeps advancing and aging. We're now nine years into
this bull market, same as the '90s, so I suspect that now things are starting to percolate. I
think bitcoin and the ICOs are just one manifestation of that.
LP: I just passed a huge crowd gathered around the New York Hilton Midtown for "Blockchain
Week NYC," a series of events put on to showcase the city as a hub for blockchain jobs. You
could feel the excitement in the air with all the attendees and reporters jostling on the
sidewalk. What's your take on all this hype?
JC: At one blockchain gathering there were a set of rented Lamborghinis parked outside to
entice the traders and day traders and retail investors: this, too, can be yours if you hop
aboard the blockchain and bitcoin bonanza!
I teach about a guy from the early 18th century called John Law. He was the architect of one
of the great financial frauds of all time -- the Mississippi scheme of 1718-20 in Paris. (He's
also the guy who founded New Orleans. He sent settlers there who named it after his benefactor,
the Duc d'Orléans).
Law was the first person to write about the need for foreign governments to have fiat
currencies and not be tethered to gold and silver. Because of the power of taxation and the
power of the governments through enforcement and force of arms, they could enforce their
currency to be used, and because of their ability to expand the monetary base and do all the
kinds of things that central banks now do, it was in their best interest to do so.
This was revolutionary back then. Law's failed experiment, which added lots of fraudulent
bells and whistles to that scheme in France, put the idea on the backburner for a while. But
economic historians have revisited it now and his early papers are genius. They're up there
with some of the stuff Keynes wrote in the 20th century in terms of the way he envisioned
monetary systems to work. Law points out sort of obliquely the positive ways in which the
citizenry would come to accept and trust paper money. Not only would the power of the state
compel you to accept it, but the power of the state also acted as a third party to adjudicate
problems, fraud and act as a lender of last resort in times of crisis instead of going down
into a deflationary spiral. That was the positive side.
In the new bitcoin and crypto-craze, the whole idea is that we need to get away from fiat
currencies by creating our own fiat currency for which there is no lender of last resort, no
third party adjudicator. For those who believe it's a store of value in the coming apocalypse,
the idea is that you're going to have to safeguard your key under a mountain with fingerprint
and eye scan security while the hordes are outside your bunker trying to get in to use it --
for what, I have no idea. Because for those who believe that you need to own digital currency
as a store of value in the worst-case scenario, that's exactly the case in which a digital
currency will work the least. Food would work the best!
LP: Sounds like a libertarian fantasy.
JC: That's exactly what it is. And if you say, well, fiat currency is going to bring the
world down, which could, of course, happen, then I say the last thing I'd want to own is
bitcoin if the grid goes down.
LP: It also sounds like the perfect realm for people looking to commit fraud.
JC: Well, there you go. Bitcoin is still the area for people who are trying to avoid
taxation or other examinations of their transactions. That's one thing where I think it
probably still has utility, but the governments have figured that out.
Last year, just as the mania was really going, an early convert who had gotten in early and
had made a lot of money wrote this humorous blog about trying to cash in his winnings, if you
will. He chronicled telling the exchange that he wanted to convert his bitcoins into U.S.
dollars and have them wired into his U.S. bank. It took something like eight or ten days and
numerous follow-ups and phone calls. The funniest part was his having to fax his passport to
Lithuania.
LP: That doesn't sound very high-tech or efficient.
JC: Exactly. Using a fax machine to Eastern Europe struck me as kind of the antithesis of
what you're trying to do here. So this is simply a security speculation game masquerading as a
technological breakthrough in monetary policy. Someone at Grant's interest rate conference
recently said that it was as if we had intentionally created a "monetary Somalia."
LP: So buyer beware.
JC: I think so.
LP: You recently appeared in a fascinating documentary, " The China Hustle ," which concerns the reverse
merger boom in which I believe 400 Chinese companies came to market on the U.S. stock exchange.
Can you say a bit about what these mergers are and how U.S. investors got conned?
JC: A reverse merger is simply when the company in question merges into a defunct,
U.S.-listed corporation, typically on NASDAQ, which has been moribund for years but has still
been filing with the SEC, so it may have a listing somewhere.
We can see these reverse mergers in the late '90s when they became dot-com companies, and
also in the late '70s, when gold was a hot asset and they became gold mining companies. In the
last ten years, they started to appear to take advantage of the growth of Asia and the growth
of China. It's very easy to sell small, retail investors on this idea. It sounds very
appealing.
What happens is you merge the Happy Flower High Tech Company into some defunct company and
you rename the old company with the Chinese name. Voila! The Chinese company is now public in
the U.S. without having to file an IPO [initial public offering] prospectus with the SEC. You
don't go through underwriters, a due diligence process, or a vetting process where the SEC asks
questions on the IPO. But you now have a company on NASDAQ or the U.S. Stock Exchange.
This is what "The China Hustle" was about -- this raft of companies that merged with
companies you've never heard of and created, instantaneously, reasonably large-capitalization
companies operating in China but trading in the U.S. Of course, therein lies the rub. How do
you really know what was going on in the operating company? How good was the accounting? How
good were the representations of the outside auditors and representatives of the boards? It
turned out that a lot of them were frauds.
LP: So I'm an investor and I hear that this Chinese company has come to market in the U.S.
and it has been audited by Pricewaterhouse, Deloitte, or some other well-known auditing firm. I
think it must be legit. What's wrong with this assumption?
JC: There are two big problems there. When people always ask me about the large frauds we've
dealt with, they ask, who were the auditors? And I say, who cares? Every great fraud was
basically audited, most of the time by major firms. In China it's even worse than that because
although the statements might say Pricewaterhouse, if you read the fine print it actually says,
"Pricewaterhouse reviewed the work by an affiliate in China." So it's often a smaller firm that
has a relationship with the big firm that actually does the auditing. Pricewaterhouse just puts
its stamp of approval on that.
LP: Sounds kind of like what the big credit ratings agencies did by giving triple-A ratings
to securities that were fraudulent in the lead-up to the financial crisis.
JC: Right. But you have to remember that auditors are not the financial check that most
people think they are. The financial statements are not prepared by auditors. The financial
statements in publicly traded firms are prepared by management and the auditors review the
statements. Unless they have reason to believe something is amiss or are pointed to something
being amiss by a whistleblower or short seller or journalist, they're not going to detect
anything most of the time.
LP: Auditors are not detectives.
JC: No they're not. They're really paid by the company to review the company's own financial
statements. So at the end of the day, this still comes back to the management and the board. Do
you trust them? Do you believe what they're telling you? What is your ability to check?
LP: In the case of the Happy Flower Company, I can't really check.
JC: Not only that, one of the points that the movie made very well was that even if you find
the smoking gun and the chairman runs off with all the money and you're left with nothing, the
recourse to western investors is virtually nil. None of these CEOs are prosecuted. The view of
the Chinese court system, which, I should point out, is an arm of the Communist Party, not the
Chinese state, is, "sorry, but no jurisdiction here. You're a western investor and you ought to
know better."
LP: Can the SEC do anything?
JC: The SEC did announce a crackdown after the fact, but besides monitoring companies'
ongoing disclosures and trying to halt trading in the securities if there is evidence of a
problem, there isn't a lot that the SEC can do. These are Chinese companies.
LP: How do you view the climate for financial fraud under the Trump administration? I note
that Trump's SEC nominee, who was sworn in as chair last May, was an Alibaba IPO advisor -- the
Silicon Valley lawyer Jay Clayton. You've expressed skepticism about Alibaba.
JC: I have, and so far I've been wrong, at least with respect to the stock price. But I
challenge anyone to explain to me cogently what Alibaba is doing with all its capital and
flipping companies back and forth to insider and revaluing the prices of companies upward.
Be that as it may, the real issue is, what is the sense of the administration? I'll say one
thing, when the George W. Bush administration started -- remember, he was the MBA president --
he came in on a pro-business platform and was seen as very pro-business and anti-regulation,
similar to the Trump administration. But when the wave of fraud started hitting in '01 and '02,
I have to give the John Ashcroft Justice Department a lot of credit. They did a 180 and went
after the bad guys hard.
I always joke that the two presidents who have put more executives in jail than all the rest
combined were both named Bush. W's father was instrumental in prosecuting the S&L [Saving
and Loan] crooks back in the early '90s and put about 3,000 of them in jail. I think they
realized that the public was losing money in the stock markets, not just because of the frauds,
but because the long dot-com bull market had ended. People were upset. Then when you had the
revelations of WorldCom and Enron on top of it, there was a sense that every corporation was
crooked and this was going to have exogenous impacts on the economy and the market as a whole.
I think they correctly realized that we've got to basically show that we're the cops on the
beat. And they did.
That did not happen, as you well know, after the GFC [Global Financial Crisis], for lots of
reasons, including a Justice Department that actually took the extraordinary step of admitting
that it considered economic and financial market factors in figuring out when, or if, to
prosecute a company. So justice now had an economic angle to it. We sort of know how we think
about the Trump administration -- I noted the other day that the Education Department seems to
have shut down its division investigating fraud at the for-profit education companies, which
are one of the biggest cesspools out there in terms of financial fraud and fraud upon the
taxpayer. So that's not a good sign. On the other hand, public opinion can move things quickly
as it did in the Enron case. We saw a real stepped-up effort to go after the bad guys.
I think a lot depends on circumstances at the time. We're still in the expansionary phase of
the financial cycle and, arguably, the fraud cycle, so we'll have to see what happens once that
rolls over.
LP: Let's talk about emerging markets. Do you think a big crisis could develop as investors
head back to the U.S. as the Federal Reserve raises rates here?
JC: The emerging markets are always sort of the end of the wick, right? They always go down
the most when fear is out there and they go up the most when people are euphoric. Emerging
markets had a really rough go of it from 2011 right on to 2015. They never really recovered a
lot from the GFC. Then someone hit the light switch and whether it was things changing in
Brazil or [former president] Jacob Zuma being ousted in South Africa or South America turning
the corner. I would note that Argentina issued a one hundred-year bond a year ago that was
oversubscribed, and this week Argentina went back hat in hand to the IMF [International
Monetary Fund], so we've had this amazingly quick shot across the bow in the emerging markets.
We'll see if it's the start of something bigger. But it's sort of amazing to me that after only
a two-year respite, places like Argentina and Turkey seem to find themselves in trouble again.
Time will tell.
LP: One thing you said in "The China Hustle" is that we've never seen a credit build-up like
the one we've seen in China today that hasn't been followed by a major financial crisis. That
sounds pretty worrisome.
JC: I'm always told confidently it won't matter because they owe it to themselves. Well, if
that was that were the case, then Zimbabwe would be one of the wealthiest countries in the
world today!
The build-up of China's debt and the speed of that build-up is nothing short of stunning.
There's a new book that I recommend, " China's Great Wall of
Debt ." It does a great job of chronicling just how massive this build-up has been in the
last ten years following China's stimulus in '09 to pull the world out of the GFC. You've heard
me call it the "treadmill to hell" because you have to put more and more debt on the books to
keep the growth going and this is where China is finding itself. If they don't increase the
debt, the economy hits stall speed and for all the talk about innovation and technology and
transferring to a consumer-driven, technology-driven economy, the evidence on that is kind of
scant. It's still basically an economy driven by debt-driven investment, which is still over
40% of GDP. I think when we started talk about China it was 46% and I think the most recent
number is about 43%. So it's improved slightly over the eight or nine years, but not much.
China is still basically a giant construction site and shows no signs of changing. In fact,
with the One Belt One Road Initiative [a project launched in 2013 to develop trade routes to
connect China to the world], they're trying to basically export their construction capabilities
and credit to countries along what we would call the Old Silk Road.
LP: In terms of the overall picture of fraud, are we any better off than we were after the
financial crisis?
JC: Personally, I think we're worse off. I think we were better off after the dot-com era.
Not because we enacted Sarbanes Oxley [passed by the U.S. Congress in 2002 to protect investors
from fraudulent corporate accounting activities] but because the public saw that there was
justice. The bad guys got caught and at least if I lost money, they paid the price of their
freedom. That never happened in '08 and '09 for a variety of reasons. We've just had a
continuation of the cycle and the cycle is still going.
LP: So fraudsters are emboldened?
JC: Right. And now we come back to bitcoin. What's your recourse if you lose money in an ICO
traded on an exchange offshore? If people lose lots of money, there will be an outcry, but no
recourse. So we're building into something. I suspect it's in front of us and it will be
interesting to see what happens.
LP: What happens in a capitalist system to good people who want to behave ethically? How can
they succeed in an atmosphere in which fraud and unethical behavior are constantly
happening?
JC: I think capitalism is still the best game in town, but the very best games have good
sets of rules, and, even more importantly, good umpires and referees. When the game becomes
tilted and the house has the advantage, people tend to stop playing.
When the system is seen as corrupt or dishonest, there's a political price. We saw this
after the GFC. People in New York and San Francisco and Boston might be fine with everything,
but in the South and Midwest, where you're from and where I'm from, there's still this general
sense that "the bastards got away with it and I'm still suffering." So there is an exogenous
cost to this where people don't feel that there was justice. They feel that they were taken
advantage of by those sharpies on the coasts. It brings out some of the worst in people, of
course, so that's one small step, then, away from social problems like anti-Semitism and
anti-immigrant feelings. It's us v. them. Nobody is looking after us.
Economists and financial analysts have a hard time quantifying all these things, but I think
that the point is that fair markets where there's a set of rules, where there's a cop on the
beat, where there are regulators making sure that people are adhering to the rules, are far
better markets than one in which caveat emptor is written above the casino. I think it behooves
us as a society to understand that capitalism is an amazing driver of progress and prosperity
and wealth, but it can be diverted. There's a dark side to it if we don't play by the rules and
if we don't encourage capital formation from all members of society who don't feel they're
getting a fair shake.
Everybody gets that capitalism involves risk-taking. But the asymmetric situation where
people who are dishonest get away with it while people who are honest and provide capital get
left holding the bag will really stunt capitalism. I think that's the issue which the vigilance
on fraud, why it's so important. It is part of the capitalistic system. There will always be
people trying to take advantage of other people. It's still better than when the whole system
is flawed, like totalitarian communism, where corruption starts at the very top in terms of the
planning itself. But on the other hand, the counterfactual is that it could be so much better
if everybody is participating and understands that there is a strong set of rules and penalties
when you break them and justice as well. That's what I think has been lacking in the last
generation.
Only in cryptocurrency can an enterprise that calls itself "ethical" be represented by
someone who is both an "award winning journalist" and "PR relations" pic.twitter.com/9lMcXPWSb3 -- Izabella Kaminska
(@izakaminska) June 5,
2018
Don't laugh so soon This came across my Twitter
feed a couple days ago, and I was a little taken aback.
I really like the idea of community currencies, but I'm wondering why on earth you'd want
to get them tangled up with blockchain for the purpose of trading/conversion ?
Just make a Global CC and have that be that or am I oversimplifying this?
#OrHaveIMissedSomething
PS: I also take exception to using the term Bancor as well, given what it's original purpose was. Not too sure
#JMK would be down with the blockchain .
Why wouldn't a Zimbabwe type country embrace cryptocurrency as money of the iRealm?
Seems like it wouldn't be that hard to get outsiders to believe in it, as long as it was
pretty vague, and most wouldn't know that the very same country issued $100 Trillion
banknotes not so long ago.
Zimbabwe didn't need printing facilities when they were cranking out oodles of currency,
as it was all printed in Germany. (who got stiffed on payment, if memory serves)
'John Law was the first person to write about the need for foreign governments to have
fiat currencies and not be tethered to gold and silver. Law's failed experiment, which added
lots of fraudulent bells and whistles to that scheme in France, put the idea on the back
burner for a while. But economic historians have revisited it now and his early papers are
genius.' -- Jim Chanos
This is bizarre historical revisionism. John Law didn't add "fraudulent bells and
whistles" -- fraud was the whole point of fiat currencies, then [1720 -- Mississippi
bubble] and now.
Fiat currencies were born in original sin, that is. When Bubble III blows like Kilauea,
the central banksters who engineered this global calamity may find themselves (like Law)
involuntarily expatriated by angry mobs of peasants with pitchforks.
Currency is born in sin, and may only be cleansed by the divine power of God, err, Gold.
Only by having supreme faith in its shininess will your economy be saved. Do not question how
or why, as Gold works in mysterious way. Au men.
I don't understand Jim . central banks have been staffed largely by monetarist and quasi
monetarists throughout the entire neoliberal period. Then you have the vast majority of the
politicians holding the same view.
But anyway I thought quality held true in both cases, so what agenda threatened the
quality of fiat – at onset. I mean what mob forwarded all the innovation [tm],
completely ignored poor or criminal underwriting standards, completely miss-priced risk, was
completely oblivious to obvious gaming everything for "personal" profit.
I really can't see how fiat forced some people to act in such an anti social manner by its
will alone. I mean that sort of broad social dominance is usually reserved for social
narratives.
Sorry but I really never understood the logic behind the money did it thingy .
I do wonder about folks who describe alternative forms of governance with a very clear
lack of understanding of political/economic arrangements.
You can't really have a totalitarian communism. Chanos should do some history homework on
what the USSR was, and why the system was doomed to fail starting all the way back with
Lenin. Lenin didn't believe that the Russians were ready for the revolution, he considered it
a holding pattern waiting for the revolution to happen in Germany.
Just because you (or an autocrat like Stalin) call something a communism or socialism,
doesn't make it so.
"But the asymmetric situation where people who are dishonest get away with it while people
who are honest and provide capital get left holding the bag will really stunt
capitalism."
Good. I can't think of any better evidence that the system is archaic and if left
unchecked eats itself. Chanos might think about re-reading some Marx.
"I'm always told confidently it won't matter because they owe it to themselves." Isn't
that the basis of MMT? Heck, that means Murica is heading towards eternal prosperity.
I'm still wondering if the long game is to use a crypto currency as a petro currency, to
supplant the US dollar. That way, countries (and corporations) with trade surpluses with the
US can hoard their surpluses in the crypto-cum-petro currency rather than US assets (bonds
and stocks). In an asset that has neutrality with respect to any nation state. Just like gold
used to have.
There's a book that suggests this line of thinking, but doesn't really seem to chase it
down adequately: https://www.amazon.com/dp/B07BPM3GZQ . See review
on Frances Coppola's website.
There is a 25 minute clip here that describes the creation of money and the recording of
transactions (the blockchain) and does not seem fraudulent in any way:
"... Just yesterday Pieter Hoekstra, USA ambassador in the Netherlands, stated that Russia should be punished for MH17 by more sanctions, no new gas pipeline from Russia to Germany. What he did not say that this implies our buying of USA gas, 20% more expensive. The MH17 show, in my opinion is run like the Sept 11 show. Or even the holocaust show, constant reminders. ..."
"... The USA fear about Russia and the EU member states seems to be twofold: (1) more trade with Russia makes subjugation of Russia impossible; (2) more trade with Russia, and the railway connections with China, threaten to turn the USA into an economic backwater ..."
Antony C. Sutton, ´Wall Street and the Bolshevik Revolution', 1974 New Rochelle, N.Y.
describes how Wall Street supported bolshevism in order to prevent that German, suppose also Dutch and other, trade, with Russia
was resumed.
WWII and the aftermath created the Atlantic alliance.
Just yesterday Pieter Hoekstra, USA ambassador in the Netherlands, stated that Russia should be punished for MH17 by more
sanctions, no new gas pipeline from Russia to Germany. What he did not say that this implies our buying of USA gas, 20% more expensive.
The MH17 show, in my opinion is run like the Sept 11 show. Or even the holocaust show, constant reminders.
The USA fear about Russia and the EU member states seems to be twofold: (1) more trade with Russia makes subjugation of
Russia impossible; (2) more trade with Russia, and the railway connections with China, threaten to turn the USA into an economic
backwater
"... My own hunch is that these reports may well be true. How long can the Saudis (and the Western media) conceal what has happened? ..."
"... Second, I believe the trip by our Secretary of State was in response to the incident of April 21st. My hunch is the Crown Prince was gravely wounded and later perished at a Military Hospital. ..."
"... Third, the night of the incident a twitter user named CivMilAir tracked the Royal Medevac jet leaving the airport near the gunfire and documented the airplane turning off its transponder. There was speculation concerning whether or not it was the Crown Prince that night on that thread. There was even push back from other twitter users based in Saudi Arabia. Even one demanding to know how this twitter user obtained this information. ..."
"... Fifth, the outrage at the German Government and the reports from German businesses that the door to trade has been slammed shut this past month. I attribute this to the one and only exile prince from the Royal family, Saudi Prince Khaled Bin Farhan. living in Europe. He was granted asylum by Germany. There were 3 other exiles but they have been tricked or kidnapped back to Saudi Arabia. This Prince was advocating for the removal of the Crown Prince as recently as March 23, 2018. ..."
"... Sixth, I noticed this week in the news that Crown Prince "MBS" has consolidated his control further this week by taking operational control of the construction and cyber security industries in the country. 35% of the Bin Laden group was basically stolen. I watched an interview of Saudi Prince Alwaleed bin Talal after his release from detention and he was clearly shaken. He was playing a confidence game where everything would go back to normal and mention how the Bin Laden group was back working on his projects. Then this? 35% gone overnight. Cyber security crack down or internet crackdown coming in Saudi Arabia? ..."
"... Seventh, there is no way that MBS approved the recent arrest of the feminist. Not after his carefully cultured PR campaign in the United States. ..."
"... Eight, where's Waldo? ..."
"... Here is my speculation. Al-Qaeda will be the cover story. Crown Prince MBS was killed by members of the Royal Family and other powerful individuals he made enemies with in his short rule. ..."
"... The Royal family members who supported MBS are furious at Germany for the above stated reasons and lashing out in all directions. Threatening to invade Qatar if Russia provides them the S-400. I believe even President Trump's bizarre threat to put huge tariffs on German luxury automobiles because the German public doesn't want to buy crappy American cars like the Chevy Impala is his frustration over one of his essential architects on the plan to change regime's in Iran being eliminated. ..."
"... A lot of torture and indiscriminate arrest is going on at this very moment in Saudi Arabia. The family appears split and trust lost. Time will tell. ..."
"... It would appear that there's no one in charge in SA at the moment. One can now expect a period of confusion, and lots of infighting between various factions trying to assert dominance, or just survive. ..."
"... Considering MbS's policies, I think his exit is better for the Middle East. His tilt of SA policy towards the US and Israel is likely to be reversed. ..."
"... All you need to know is that Mr. Media Roadshow decided overnight to shun video cameras, and not come out for Pompeo. The guy is dead as a door knob. He made way too many enemies during the forced corporate retreat he hosted at the Ritz. ..."
"... myself , i think the attack succeed in wounding and ultimately kill the prince , otherwise why no public appearance at all ? ( if i recall , muslim have to be buried no more than 24 hours after death so that's why i assume he was wounded at first and the medical team failed to keep him alive) ..."
"... In Assad's interview with RT he pointed out that the "opposition" first attacked Syria's air defenses at the beginning of the "civil war". Hillary wanted a "no-fly zone" over Syria. All that's missing is Victoria Nuland. ..."
"... The playground version: The neocons and Netanyahu think they're playing Trump, who in turn thinks he's use them. MbS wanted to be one of the cool kids and tried to get in on the action and might have gotten himself dead in the process. ..."
Re Saudi Arabia: I have previously referred to reports regarding the death of the Saudi Crown
Prince, MbS, as a result of the AQ attack on his palace on April 21. Now, pictures are
circulating of his funeral.
There is so far no official announcement, but that means nothing.
My own hunch is that these reports may well be true. How long can the Saudis (and the
Western media) conceal what has happened?
Agree. There is also the report that he was not at the Graduation Ceremony of the King Abdul
Aziz Military College on May 19. (As Defence Minister, he would have been expected to
attend).
I have been following the story. A few things. Yes, I have seen the pictures of the funeral
and his actual corpse prepared for burial under #mbs at twitter. The pictures are not the
best. The size of the corpse and the nose and receding hairline along with the cheekbones and
body size could definitely be MBS along with the eyes.
Second, I believe the trip by our Secretary of State was in response to the incident
of April 21st. My hunch is the Crown Prince was gravely wounded and later perished at a
Military Hospital.
Third, the night of the incident a twitter user named CivMilAir tracked the Royal
Medevac jet leaving the airport near the gunfire and documented the airplane turning off its
transponder. There was speculation concerning whether or not it was the Crown Prince that
night on that thread. There was even push back from other twitter users based in Saudi
Arabia. Even one demanding to know how this twitter user obtained this information.
Fourth, the recent trip of the Lebanon Prime Minister being called to Saudi Arabia when
his schedule indicated no such trip.
Fifth, the outrage at the German Government and the reports from German businesses
that the door to trade has been slammed shut this past month. I attribute this to the one and
only exile prince from the Royal family, Saudi Prince Khaled Bin Farhan. living in Europe. He
was granted asylum by Germany. There were 3 other exiles but they have been tricked or
kidnapped back to Saudi Arabia. This Prince was advocating for the removal of the Crown
Prince as recently as March 23, 2018.
And he asserted that he receives emails and other forms of communications from disaffected
family members and the security services desiring for a change to be made.
Sixth, I noticed this week in the news that Crown Prince "MBS" has consolidated his
control further this week by taking operational control of the construction and cyber
security industries in the country. 35% of the Bin Laden group was basically stolen. I
watched an interview of Saudi Prince Alwaleed bin Talal after his release from detention and
he was clearly shaken. He was playing a confidence game where everything would go back to
normal and mention how the Bin Laden group was back working on his projects. Then this? 35%
gone overnight. Cyber security crack down or internet crackdown coming in Saudi
Arabia?
Seventh, there is no way that MBS approved the recent arrest of the feminist. Not
after his carefully cultured PR campaign in the United States.
Eight, where's Waldo?
Finally, here is what I find so fascinating. The KIng of Saudi Arabia is reported to have
dementia. Unfortunately, I have a great deal of experience with this dreadful disease. My
stepfather. 16 years. There is no King in charge of Saudi Arabia. In fact, if MBS was killed
like I believe there is no legitimate line to the next ruler. Survival of the Fittest.
Here is my speculation. Al-Qaeda will be the cover story. Crown Prince MBS was killed
by members of the Royal Family and other powerful individuals he made enemies with in his
short rule.
The Royal family members who supported MBS are furious at Germany for the above stated
reasons and lashing out in all directions. Threatening to invade Qatar if Russia provides
them the S-400. I believe even President Trump's bizarre threat to put huge tariffs on German
luxury automobiles because the German public doesn't want to buy crappy American cars like
the Chevy Impala is his frustration over one of his essential architects on the plan to
change regime's in Iran being eliminated.
A lot of torture and indiscriminate arrest is going on at this very moment in Saudi
Arabia. The family appears split and trust lost. Time will tell.
Thank you for that excellent rundown of events. I tend to agree with your "speculation".
It would appear that there's no one in charge in SA at the moment. One can now expect
a period of confusion, and lots of infighting between various factions trying to assert
dominance, or just survive.
Considering MbS's policies, I think his exit is better for the Middle East. His tilt of SA
policy towards the US and Israel is likely to be reversed.
All you need to know is that Mr. Media Roadshow decided overnight to shun video cameras,
and not come out for Pompeo. The guy is dead as a door knob. He made way too many enemies
during the forced corporate retreat he hosted at the Ritz.
This is news to me. How big do you think the resulting power struggle would be if MbS was
killed or incapacitated? I can envision outcomes that range from 2nd page news all the way up
to Archduke Ferdinand grade but I don't have any feel for the probabilities.
If true, would it cause you to see the events of the last month in the region in a
different light?
With MBS dead, how will Saudi react to MBS's previous Israel's right to exist scenario,
along with Jerusalem being declared Israel's capital and the embassy move by DT?
How much longer will the Saudi and international press be able to remain silent on
this?
Who do you think will now ascend the Saudi throne as heir apparent?
FB Ali , sir , it is so hard to get info in the AQ Attack that allegedly mortally wound MBS..
as for the shooting reported as a wayward drone , i recall this video (anyone can confirm the
skyline if this is saudi city near palace ?) , the gunfire last for long time , far too long
to be guards firing on a drone.
myself , i think the attack succeed in wounding and ultimately kill the prince ,
otherwise why no public appearance at all ? ( if i recall , muslim have to be buried no more
than 24 hours after death so that's why i assume he was wounded at first and the medical team
failed to keep him alive)
do you think this is the 'blowback' from the massive shakedown that the prince did to his
seniors ?
Has DT done a single thing that has helped Israel? I would say no. In Assad's interview
with RT he pointed out that the "opposition" first attacked Syria's air defenses at the
beginning of the "civil war". Hillary wanted a "no-fly zone" over Syria. All that's missing
is Victoria Nuland.
Your post vividly depicts how isolated Israel has become. I reiterate DT has done nothing
to help Israel and everything to harm it. One is permitted to ask what's going on.
The playground version: The neocons and Netanyahu think they're playing Trump, who in turn
thinks he's use them. MbS wanted to be one of the cool kids and tried to get in on the action
and might have gotten himself dead in the process.
All the while Putin and the SCO crew wait
and play for time as they tangle each other up into an ever larger mess of their own making
hoping to avoid, or minimize, whatever conflict is necessary to get them all to accept the
coming multi-polar world order.
Perhaps in the future when they make a movie about this period it will be called "A Deal
Too Far".
Sand is not a problem. The real question is how much oil is consumed getting this amount od
sand to their designation. 91,000 truckloads of frac sand using, on average say 5 miles per
gallon and 100 miles each way (200 miles roundtrip) would be 3,5 million gallons of fuel per
month. That means that one day a month is essentially lost to sand transportation costs.
The U.S. Shale Oil Industry utilizes a stunning amount of equipment and consumes a massive
amount of materials to produce more than half of the country's oil production. One of the vital
materials used in the production of shale oil is frac sand. The amount of frac sand used in the
shale oil business has skyrocketed by more than 10 times since the industry took off in
2007.
According to the data by
Rockproducts.com and
IHS Markit , frac sand consumption by the U.S. shale oil and gas industry increased from 10
billion pounds a year in 2007 to over 120 billion pounds in 2017. This year, frac sand
consumption is forecasted to climb to over 135 billion pounds, with the country's largest shale
field, the Permian, accounting for 37% of the total at 50 billion pounds.
Now, 50 billion pounds of frac sand in the Permian is an enormous amount when we compare it
to the total 10 billion pounds consumed by the entire shale oil and gas industry in 2007.
(charts courtesy of the EIA - U.S. Energy Information Agency)
As we can see in the graph above, the Permian Region is the largest shale oil field in the
United States with over 3 million barrels per day (mbd) of production compared to 1.7 mbd in
the Eagle Ford, 1.2 mbd at the Bakken and nearly 600,000 barrels per day in the Niobrara.
However, only about 2 mbd of the Permian's total production is from horizontal shale oil
fracking. The remainder is from conventional oil production.
Now, to produce shale oil or gas, the shale drillers pump down the horizontal oil well a
mixture of water, frac sand, and chemicals to release the oil and gas. You can see this process
in the video below (example used for shale gas extraction):
The Permian Region, being the largest shale oil field in the United States, it consumes the
most frac sand. According to BlackMountainSand.com Infographic , the
Permian will consume 68,500 tons of frac sand a day, enough to fill 600 railcars . This equals
50 billion pounds of frac sand a year. And, that figure is forecasted to increase every
year.
Now, if we calculate the number of truckloads it takes to transport this frac sand to the
Permian shale oil wells, it's truly a staggering figure. While estimates vary, I used 45,000
pounds of frac sand per sem-tractor load. By dividing 50 billion pounds of frac sand by 45,000
pounds per truckload, we arrive at the following figures in the chart below:
Each month, over 91,000 truckloads of frac sand will be delivered to the Permian shale oil
wells. However, by the end of 2018, over 1.1 million truckloads of frac sand will be used to
produce the Permian's shale oil and gas . I don't believe investors realize just how much 1.1
million truckloads represents until we compare it to the largest retailer in the United
States.
According to Walmart, their drivers travel approximately 700 million miles per year to
deliver products from the 160 distribution centers to thousands of stores across the country.
From the information, I obtained at MWPWL International on Walmart's distribution
supply chain, the average one-way distance to its Walmart stores is about 130 miles. By
dividing the annual 700 million miles traveled by Walmart drivers by the average 130-mile trip,
the company will utilize approximately 5.5 million truckloads to deliver its products to all of
its stores in 2018.
The following chart compares the annual amount of Walmart's truckloads to frac sand
delivered in the Permian for 2018:
To provide the frac sand to produce shale oil and gas in the Permian this year, it will take
1.1 million truckloads or 20% of the truckloads to supply all the Walmart stores in the United
States. Over 140 million Americans visit Walmart (store or online) every week. However, the
Industry estimates that the Permian's frac sand consumption will jump from 50 billion pounds
this year to 119 billion pounds by 2022. Which means, the Permian will be utilizing 2.6 million
truckloads to deliver frac sand by 2022, or nearly 50% of Walmart's supply chain :
This is an insane number of truckloads just to deliver sand to produce shale oil and gas in
the Permian. Unfortunately, I don't believe the Permian will be consuming this much frac sand
by 2022. As I have stated in several articles and interviews, I see a massive deflationary
spiral taking place in the markets over the next 2-4 years. This will cause the oil price to
fall back much lower, possibly to $30 once again. Thus, drilling activity will collapse in the
shale oil and gas industry, reducing the need for frac sand.
Regardless, I wanted to show the tremendous amount of frac sand that is consumed in the
largest shale oil field in the United States. I calculated that for every gallon of oil
produced in the Permian in 2018, it would need about one pound of frac sand. But, this does not
include all the other materials, such as steel pipe, cement, water, chemicals, etc.
For example, the Permian is estimated to use 71 billion gallons of water to produce oil this
year. Thus, the fracking crews will be pumping down more than 1.5 gallons of water for each
gallon of oil they extract in 2018. So, the shale industry is consuming a larger volume of
water and sand to just produce a smaller quantity of uneconomic shale oil in the Permian .
Lastly, I have provided information in several articles and videos explaining why I believe
the U.S. Shale Oil Industry is a Ponzi Scheme. From my analysis, I see the disintegration of
the U.S. shale oil industry to start to take place within the next 1-3 years. Once the market
realizes it has been investing in a $250+ billion Shale Oil Ponzi Scheme, the impact on the
U.S. economy and financial system will be quite devastating.
Check back for new articles and updates at the SRSrocco Report .
Sand, a material so abundant, you could not give it away, but now, it has worth, thanks
frackers. His article a week or so back was claiming that all the sand had to be shipped out
of michigan, a blatant lie, or perhaps he really is just that ignorant.
A fellow in west texas bought some sparse land a few years back for about $40,000, it was
10's of acres. He was offered $13,000,000 recently, which he lept at. then he found out the
people that bought it from him, flipped it to a sand company for $200,000,000. Now he wants
to sue.
the point being that technology can make formally useless things, worth more. This is the
fundamental reason that economies grow. Knowledge adds value, making the pie larger for
everyone.
Oil may be a ponzi scheme, who knows, if a trade war crashes the global economies and
energy usage plummets by 20-50%, I would expect the deflationary environment he is talking
about. On the other hand if that does not happen, and oil goes to $100 or $200 then we will
hear a bunch of whining, but everything will keep chugging along.
and if graphene filters allow for the energy efficient filtration of salts from produced
water, and those salts are then processed for the elements such as lithium found in them, and
produced water becomes net profit stream instead of a net cost stream, then the whole
equation changes, technology adding value.
A lot of if's, that is what makes the future interesting.
you are an idiot...all sand is not the same. sand runs the gamut of smooth and round to
rough course edged. sand isnt that easy to find when you have to have a particular kind of
sand.....
Permium 1.1 million truckloads per day and + 71 billion gallons of water per year!
People in North America will be in serious need of fresh water soon, however, with
fracking spoiling water nationally and the combined effect of increased earth
tremors/potholes in vast areas, well mother nature is calling in the cards.
Combine that with GM food hidden in most products plus the millions of pharmaceutical
lovers, poisoning their own water supplies and effecting most native species and perhaps a
little radiation from Nukes and the Sun and the cell towers and a few miles of chem trails i
don't give much hope for a sustainable North American future.
I was just telling the second head growing out of my back, the other day, 'man this is the
best it has ever been', and he said ' groik splish!' and bit me on the arm. So I would say we
are of two minds on the matter.
You can make fresh water from sea water for about $2000 per acre foot using expensive
california power. I think that comes to $60 per month for a family of 4 using the fairly high
rate of water consumption by california residents.
(desalination plants already exist in Santa Barbara and San Diego, CA and there are desal
plants all over the world)
80 gallons per day * 4 people * 365 days / 330000 gallons * $2000 / 12 months = $60
An acre foot of water is about 330,000 US gallons.
Reverse osmosis in the home runs about $75 per year and cleans up most of the
problems.
Now what about the cost of distributing that? See that the thing about getting water the
old fashioned ways. Water actually cost nothing to make. The cost is building a system to
distribute the free water. It also come with gravity assist moving water from high to low.
That way you use natural property of water to flow from high places to lower ones. Now in
your system you take sea water and have to move that up from sea level. That cost is addition
to cost of converting sea water to fresh water.
Maybe we could substitute illegal aliens, or Obama-ites convicted of felonies for much of
the frac-sand?
Think of how much money that would save vs incarceration costs!
If we moved up to insane Liberal idiots who were about to explode anyway because their
Liberal world is crashing down, we'd further save the environment from all the silly electric
cars they drive. Its a win-win!
Thanks for pointing out alternatives we never thought of before!
Also "However, a week after the coup speculations, the Crown Prince, along with Saudi King
Salman, was seen at the opening ceremony of a huge entertainment resort Qiddiya – an
ambitious multi-billion dollar project that is expected to include a Six Flags theme park,
water parks, motor sports, cultural events and vacation homes." Sputnik
International
Saudi Arabia's Crown Prince Mohammed Bin Salman, the 32-year-old
media-savvy leader of the oil kingdom, has been unnaturally quiet recently, so much so
that some in the Middle East media couldn't help but wonder if he is dead.
Bin Salman hasn't been seen in the public eye since his meeting with the Spanish royal
family in on April 12. On April 21, heavy gunfire was heard near a royal palace in Riyadh,
the kingdom's capital. Although Saudi Arabia's state news agency claimed it was a security
force
shooting down a toy drone that had gotten too close to the royal property, some wondered
if the gunfire was in fact a coup led by Saudi royals trying to topple King Salman, Bin
Salman's father.
Some of Saudi Arabia's enemies were pretty sure.
Last week, the
Iranian
newspaper Kayhan reported that the Crown Prince was hit by two bullets during
the attack and may actually be dead, citing "a secret service report sent to the senior
officials of an unnamed Arab state."
"There is plenty of evidence to suggest that the absence of nearly 30 days of Muhammad bin
Salman, the Crown Prince of Saudi Arabia, is due to an incident which is being hidden from
the public," the daily paper claimed.
To add credence to the speculation, Kayhan pointed out that Bin Salman was not
seen on camera when the new U.S. Secretary of State Mike Pompeo visited Riyadh in late April,
while his father, Saudi King Salman bin Abdulaziz Al Saud, and Foreign Minister Adel
al-Jubeir were photographed.
One practical issue is what is going to happen to European investments in Iran. The most
high profile example is French energy company Total's investment in a giant Iran gasfield.
Total said this month it would pull out of Iran and its development of the giant South Pars
gasfield unless it is specifically protected from US penalties and related sanctions (see
Financial Times article " Total threat to pull out of
Iran dents EU hopes of saving accord ", May 17, 2018).
Obviously, some form of compromise may be negotiated. But if Washington takes a hard line,
such as claiming US jurisdiction as regards dollar transfers between two sovereign countries as
was the case in 2014 with the US$9 billion fine levied on French bank BNP, then a confrontation
is seemingly inevitable and, as a result, a growing questioning of the US hegemony implied by
the US dollar paper standard, a concern which has long been shared by both China and
Russia.
QUESTIONING THE US' ROLE AS THE "ECONOMIC POLICEMAN OF THE PLANET"
In this respect, the most interesting reaction to the Iran issue since Donald Trump made his
announcement on May 8 was that of the French finance minister Bruno Le Maire when he said on
May 9 that it was not acceptable for the US to be the "economic policeman of the planet".
In this respect, France is the European country to watch since it has a history of being
willing to stand up to Washington in the post-1945 world. That cannot really be said of Germany
and certainly not of Britain.
POMPEO WARNS IRAN OF ESCALATING SANCTIONS
Staying on the subject of Iran, US Secretary of State and former CIA boss Mike Pompeo made
an ultra-aggressive speech on Monday threatening Iran with escalating sanctions. In his first
major foreign policy address as Secretary of State, Pompeo stated:
Sanctions are going back in full effect and new ones are coming This sting of sanctions
will be painful if the regime does not change its course These will indeed end up being the
strongest sanctions in history when we are complete.
The above rhetoric hardly suggests a willingness to compromise with the European position.
The significance of all of the above is that Europe and the US remain on a collision
course.
IRAN'S EXPORTS BOOMING SINCE SANCTIONS ENDED
The importance of Europe for Iran can be seen in the fact that Iran's exports to Europe have
surged almost ninefold since the end of sanctions in January 2016.
Thus, Iran's exports to the EU have risen from US$1.3 billion in 2015 to US$11.4 billion in
the 12 months to January, according to the IMF Direction of Trade Statistics (see following
chart).
There is also of course the growing trade between Iran and China. Iran's total trade with
China rose by 18%YoY to US$27.5 billion in the 12 months to January (see following chart). All
this makes Iran a good example of the increasingly multipolar world where American influence or
interests appear to be fading.
IRAN ANNUALIZED EXPORTS TO EU
Source: IMF – Direction of Trade Statistics
IRAN ANNUALIZED TOTAL TRADE WITH CHINA
Source: IMF – Direction of Trade Statistics
IRAN'S CURRENCY TAKES A HIT
Meanwhile, Iran's currency has been hit hard in recent months as a result of the uncertainty
created by Trump's previous repeated earlier threats to pull out of the nuclear deal and now
subsequent follow-through decision.
The rial has depreciated in the black market by 33% against the US dollar year-to-date (see
following chart). This followed a period of comparative stability where the currency traded in
a 13% range for two years, helped by the optimism created by the nuclear deal as well as by
very high real interest
rates . Iranian treasury bill yields peaked at 27% in early 2017 and bottomed at 16% late
last year. They are now back at 19% as a result of the market pressure created by the threat of
renewed American sanctions.
IRANIAN RIAL/US$ (INVERTED SCALE)
Note: Based on black market rate after Iran unified its dual exchange rates on 9 April.
Source: Ministry of Economic Affairs and Finance, Bonbast.com
SUBSTANTIAL FOREIGN INVESTMENT IN IRAN
With a classic bullish emerging market demographic profile, in terms of a
population of 80 million, 60% of whom are under the age of 35, Iran has, naturally, attracted a
lot of foreign direct investment in recent years, most particularly following the 2015 nuclear
deal.
The biggest of late was the previously mentioned Total's US$4.8 billion investment signed in
July 2017. But Total says it has only invested under €40 million so far, according to the
above mentioned FT article, which is precisely why the French company wants to know if it can
get a specific waiver from the sanctions.
In terms of the aggregate data, Iran's actual FDI inflows surged by 64%YoY to US$3.37
biilion in 2016, according to United Nations data. While an Iranian government report published
last year disclosed that Iran has approved US$11.8 billion in FDI during the 12 months to
December 2016, with Spain and Germany accounting for US$3.2 billion and US$2.9 billion of that
total respectively.
IRAN FDI INFLOWS
Source: UNCTAD World Investment Report 2017
WILL WE SEE A RETREAT FROM PAX
AMERICANA?
The point, therefore, remains that a confrontation between the US and the Eurozone on this
issue is potentially a landmark development in the retreat from Pax Americana.
But for now it is probably the case that most of Europe, in the spirit of appeasement, will
be content to fudge the issue in the hope that Donald Trump may not be re-elected to the US
presidency for a second term and life will return to "normal".
IRAN'S ECONOMY
Turning away from geopolitical issues, Iran's economy and financial markets spring some
positive surprises. The country has an open capital account, while there is no tax on capital
gains or dividends. The Tehran Stock Exchange celebrated its 50th anniversary last year.
But if FDI has been coming into the country in recent years, foreign portfolio investment
activity has been much more limited, with estimates of only US$100 million invested in
aggregate. This is the consequence in terms of equities of both a lack of inclusion in
benchmark MSCI indices and, of course, of sanctions.
NO FOREIGN BANKS IN IRAN
There is still no foreign bank in Iran and therefore a lack of familiar custodians
acceptable to international portfolio investors. Indeed, despite the 2015 nuclear deal, it is
still not possible to use foreign credit cards to pay for hotel bills or any other
transaction.
Foreign credit rating agencies are also absent which may not surprise given the three
biggest are owned by the Americans. This is a pity for the Iranian Government given that, with
minimal foreign currency debt and total government debt to GDP of only 35% of GDP, it would
make a lot of sense to do a landmark sovereign bond issue. Total external debt is now only
US$10.8 billion or just 2.5% of GDP, according to the Central Bank of Iran (see following
chart).
"... By Justin Mikulka, a freelance writer, audio and video producer living in Trumansburg, NY. Justin has a degree in Civil and Environmental Engineering from Cornell University. Originally published at DeSmogBlog ..."
"... Wall Street caused the 2008 financial crisis, with some of its architects personally benefiting. However, while a few executives profited, the result was a drop in employment of 8.8 million people, and according to Bloomberg News in 2010, "at one point last year [2009] the U.S. had lent, spent, or guaranteed as much as $12.8 trillion to rescue the economy." ..."
"... JP Morgan (along with much of Wall Street) required large sums of money in the form of bailouts to survive the fallout from all of the bad loans made, which brought about the housing crisis. Is JP Morgan steering clear of making loans to the shale industry? No. Quite the opposite. ..."
"... To understand why JP Morgan and the rest of these banks would loan money to shale companies that continue to lose it, it's important to understand the gambling concept of "the vigorish," or the vig. Merriam-Webster defines vigorish as "a charge taken (as by a bookie or a gambling house) on bets." ..."
"... Wall Street makes money by taking a cut of other people's money. To a gambling house, it doesn't matter if everyone else is making money or losing it, as long as the house gets its cut (the vig) -- or as it's known in the financial world -- fees. ..."
"... Understanding this concept gives insight into why investors have lent a quarter trillion dollars to the shale industry, which has burned through it. If you take the vig on a quarter trillion dollars, you have a big pile of cash. And while those oil companies may all go bankrupt, Wall Street never gives back the vig. ..."
"... Trent Stedman of the investment firm Columbia Pacific Advisors LLC explained to The Wall Street Journal at the end of 2017 why shale producers would keep drilling more oil even when the companies are bleeding money on every barrel produced: ..."
"... "Some would say, 'We know it's bad economics, but it's what The Street wants.'" ..."
"... In 2017 "legendary" hedge fund manager Jim Chanos referred to shale oil companies as "creatures of the capital markets," meaning that without Wall Street money, they would not exist. Chanos is also on record as shorting the stock of heavily leveraged shale oil giant Continental Resources because the company can't even make enough money to pay the interest on its loans. ..."
"... The Wall Street Journal reports ..."
"... Growing production at any cost is the story of the shale "revolution." The financial cost paid so far has been the more than $280 billion the industry has burned through -- money that its companies have received from Wall Street and, despite the plea from Al Walker, continue to receive. ..."
"... Higher oil prices are yielding more stories about how 2018 will be the year that the shale industry finally makes a profit. Harold Hamm refers to it as Continental Resources' "breakout year." Interesting how potentially not losing money for a year is considered a "breakout year" in the shale industry ..."
"... I keep thinking that the whole enterprise was bankrolled specifically to crush oil prices and keep inflation tamped down, which provides much more profit to wall street via the assurance that the Fed's easy money policy lasts a lot longer. ..."
"... " If Wall Street is the bookie then who are the bettors?" It's a great question that leaves everyone guessing. My guess is pension funds, and calling them bettors is being kind. ..."
"... Bernie Sanders: The business of Wall Street is fraud and greed. ..."
"... I've mentioned this book a few times recently that I'm still in the middle of – Railroaded by Richard White . He points out that the 19th century railroad corporations were disorganized, poorly run, money losing enterprises. But that didn't stop people from investing in them and getting filthy rich. All you need is some fast talking and clever accounting. One example he mentions is that the railroads needed all kinds of supplies to keep things moving and so they would buy them from railroad logistics corporations or fuel from coal companies, etc. But guess who owned the suppliers? That's right, the railroad investors would set up separate companies to supply their own railroads and these companies were extremely profitable. ..."
"... But the pool of investors in these supplier companies was limited to the smart money in on the scam. In essence, the initial well heeled investors set up the railroads so that they could deliberately fleece them. He gives the example of one of the coal companies charging the railroad three times the going rate, which beggared the railroad but lined the pockets of the select few investors who owned stakes in both companies. ..."
"... I suspect that something similar may be going on in the fracking industry. So to figure out the whole scam, you would need to know if the logistics companies are making a profit and is there any common ownership between those companies and the frackers. ..."
"... The other book I recently read was The Whiskey Rebellion by William Hogeland which discusses finance and taxation during the period just after the American Revolution. Shorter version – Alexander Hamilton was a crook who deliberately set up a financial system to ensure that the rich get richer off the labor of the rest of us. ..."
"... The more you learn about the history of this country, the more you realize that there really is nothing new going on and the financial crooks of today are just following in the footsteps of their grifter forebears. And maybe someday they too will have cities named after them or at least a statue in the public square, because the US of A does love its con men. ..."
"... Hogeland's book Founding Finance is also great. Michael Perelman's book Railroading Economics is worth a read. The founders of economics in the US were looking at the example of the railroads and other corporations and acknowledging that competition was destructive and wasteful, but in their textbooks for college students they pushed the simplistic and misleading models that came to define neoclassical economics. ..."
"... Perhaps Wall Street and the banks are playing a larger game. When the U.S. had $4.00+ gasoline there was a real motivation to rework transportation systems and rely less on cars. Now, with the lower oil prices we are back to SUV's and pick-up trucks. So maybe a loss leader in the fracking scam has preserved a much larger cash cow in auto finance. There is also the whole oil services industry to consider. With new conventional discoveries at an all time low, what would the oil services sector do if there were no fracking? ..."
"... Can't help but wondering if this isn't all part of the neo-conservatives and their 'Great Games'. Since 1971 and the peak of conventional oil production in the US, the country has been a power in decline, economically if not militarily. If, as Frederick Soddy wrote almost a hundred years ago "Life is fundamentally a struggle for energy", then the country which controls that energy controls life on our planet. (I believe Kissinger said much the same thing.) This has all kinds of implications for issues from world (Middle East) peace and transitioning to renewable energy sources. Accidents of geology have left Middle Eastern countries with most of the world's remaining easily exploitable sources of conventional oil – and also as holders of much of the US and Western government debt upon which the international monetary system is based. ..."
"... Super (monetary) Imperialism ..."
"... I also can't help but wonder if Reagan shouldn't be most remembered for his instructions to White House maintenance personnel to 'take down those solar panels'. This is eight years after Hudson published Super Imperialism ..."
"... What the Saudis did in 2014 – 2016, maximizing output and spending ~2/3 of the 800 billion dollars equivalent in savings they then held to sustain their economy and regime, trying to bankrupt the U.S. oil industry (and secondarily, the Iranians, etc.) they quite literally cannot do again, anytime soon. They're close to broke, and fighting 1 – 2 wars. ..."
"... Regarding " The Saudis trying to bankrupt the U.S. oil industry" – The Saudis were not out to destroy the US oil industry. The US oil industry controls the Saudis through the US Military which keeps them in power. The Saudis were after the wildcat frackers who were not part of the global oil cartel (which includes US Big Oil). The wildcat frackers were not maintaining limited production quotas to maintain the monopoly oil price gouging. US Big Oil allowed the price collapse for long term goals with their Saudi partners. (Source: Antonia Juhasz) Apparently Wall Street was not in on the plan and kept the money flowing in the fracking Ponzi scheme. ..."
"... Luke is an oil man who brings to mind the Upton Sinclair quote "It is difficult to get a man to understand something when his salary depends upon his not understanding it." ..."
"... "There's a sucker born every minute" and Wall Street is P. T. Barnum directing investors with the sign "This Way to the Egress." The con will last as long as investors have cash to burn and think "product growth" is equivalent to "profit growth" – or in the words of Lucy "Well, uh maybe there is no profit on each individual jar, but we'll make it up in volume." ..."
The U.S. shale oil industry hailed as a "revolution" has burned through a quarter
trillion dollars more than it has brought in over the last decade. It has been a
money-losing endeavor of epic proportions.
In September 2016, the financial ratings service
Moody's released a report on U.S. oil companies, many of which were hurting from the
massive drop in oil prices. Moody's found that "the financial toll from the oil bust can only
be described as catastrophic," particularly for small companies that took on huge debt to
finance fracking shale formations when oil prices were high.
And even though shale companies still aren't turning a profit, Wall Street continues to
lend the industry more money while touting
these companies as good investments. Why would investors do that?
David Einhorn, star hedge fund investor and the founder of Greenlight Capital, has referred
to the shale industry as
"a joke ."
"A business that burns cash and doesn't grow isn't worth anything," said Einhorn, who often
goes against the grain in the financial world.
Aren't investors supposed to be focused on putting money toward profitable companies? While,
in theory, yes, the reality is quite different for industries like shale oil and housing.
Wall Street makes money by facilitating deals much like a Vegas bookie makes money by taking
bets. As the saying about Las Vegas goes: "The house always wins." What's true about casinos
and gambling also holds true for Wall Street.
Wall Street caused the 2008 financial crisis, with some of its architects personally
benefiting. However, while a few executives profited, the result was a drop in employment of 8.8 million
people, and according
to Bloomberg News in 2010, "at one point last year [2009] the U.S. had lent, spent, or
guaranteed as much as $12.8 trillion to rescue the economy."
JP Morgan (along with much of Wall Street) required large sums of money in the form
of bailouts to survive the fallout from all of the bad loans made, which brought about the
housing crisis. Is JP Morgan steering clear of making loans to the shale industry? No. Quite
the opposite.
As shown in this chart of which banks are loaning money to shale company EOG Resources,
while all of the big players in Wall Street are in on the action, JP Morgan has the biggest
bet.
To understand why JP Morgan and the rest of these banks would loan money to shale
companies that continue to lose it, it's important to understand the gambling concept of "the
vigorish," or the vig. Merriam-Webster defines vigorish as
"a charge taken (as by a bookie or a gambling house) on bets."
Wall Street makes money by taking a cut of other people's money. To a gambling house, it
doesn't matter if everyone else is making money or losing it, as long as the house gets its cut
(the vig) -- or as it's known in the financial world -- fees.
Understanding this concept gives insight into why investors have lent a quarter trillion
dollars to the shale industry, which has burned through it. If you take the vig on a quarter
trillion dollars, you have a big pile of cash. And while those oil companies may all go
bankrupt, Wall Street never gives back the vig.
Trent Stedman of the investment firm Columbia Pacific Advisors LLC
explained to The Wall Street Journal at the end of 2017 why shale producers would keep
drilling more oil even when the companies are bleeding money on every barrel produced:
"Some would say, 'We know it's bad economics, but it's what The Street
wants.'"
And "The Street" generally gets what it wants, even when it is clear that loaning money to
shale companies that have been losing money for a decade and are already deep in debt is "bad
economics." But Wall Street bonuses are based on how many "fees" an employee can bring to the
bank. More fees mean a bigger bonus. And loans -- even ones that are clearly bad economics --
mean a lot more fees.
Shale Oil Companies Are 'Creatures of the Capital Markets'
In 2017 "legendary" hedge fund manager Jim Chanos referred to shale oil companies as
"creatures of the capital markets," meaning that without Wall Street money, they would not
exist. Chanos is also on record as shorting the stock of heavily leveraged shale oil giant
Continental Resources because the company can't even make enough money to pay the interest on
its loans.
And he has a point. In 2017 Continental spent $294.5
million on interest expenses, which is approximately 155 percent of its 2017 adjusted net
income generation. When you can't even pay the interest on your credit cards, you are
broke.
And yet in 2017, investor capital was still flowing, with Continental Resources among those
bellying up to
the Wall Street trough for another billion in debt.
" In 2017, U.S. [exploration
and production] firms raised more from bond sales than in any year since the price
collapse started in 2014, with offerings coming in at around $60 billion -- up nearly 30
percent from 2016, according to Dealogic. Large-cap players like Whiting Petroleum,
Continental Resources, Southwestern, Noble, Concho and Endeavor Energy Resources each raised
$1 billion or more in the second half of 2017."
How big of a problem is this business of loaning money to an industry burning through
billions and burying itself in debt? So big that the CEO of shale company Anadarko Petroleum is
blaming Wall Street and asking its companies to please stop loaning money to the shale oil
industry. Yes, that's right.
" The biggest problem our industry faces today is you guys. You guys can help us help
ourselves. It's kind of like going to AA . You know, we need a partner. We really need the
investment community to show discipline."
The Wall Street Journal reports that Walker maintains: "Wall Street has become an
enabler that pushes companies to grow production at any cost, while punishing those that try to
live within their means."
Imagine begging banks to stop loaning you money. And being ignored.
Growing production at any cost is the story of the shale "revolution." The financial
cost paid so far has been the more than $280 billion the industry has burned through -- money
that its companies have received from Wall Street and, despite the plea from Al Walker,
continue to receive.
"It [the shale industry] has burned up cash whether the oil price was at $100, as in 2014,
or at about $50, as it was during the past three months. The biggest 60 firms in aggregate
have used up $9 billion per quarter on average for the past five years."
Higher oil prices are now being touted as the industry's savior but, as The Economist noted,
the shale industry was losing money even when oil was $100 a barrel.
Still Wall Street keeps giving the shale industry money and the shale industry keeps losing
it as it ramps up production. To be clear, this arrangement makes shale company CEO s and
financial lenders very rich, which is why the trend is likely to continue. And why Continental
Resources CEO Harold
Hamm will continue to repeat the myth that his industry is making money, as he did at the
end of 2017:
" For anybody to even put forth the suggestion we haven't had great expansion and wealth
creation in this industry with horizontal drilling and all the technology that's come about
the last 10 years, I mean, it's totally ridiculous."
No one will argue that Hamm and his partners on Wall Street are not extremely wealthy. That
has happened despite Hamm's company and the rest of the fracking industry losing epic sums of
money. The same year Hamm made that statement, his company couldn't even cover its interest
expenses. To put that in perspective, Continental Resources couldn't even make the equivalent
of the minimum payment on its credit card.
Watch What the Industry Does, Not What It
Says
Higher oil prices are yielding
more stories about how 2018 will be the year that the shale industry finally makes a
profit. Harold Hamm refers to it as Continental Resources' "breakout year." Interesting how potentially not losing
money for a year is considered a "breakout year" in the shale industry .
As reported on DeSmog, the industry certainly got a huge
boost from the recent tax law, which will help its companies' short-term finances.
Continental Resources alone took home $700 million in tax relief.
Recent reports in the financial press detail how the new approach in the shale industry will
be to focus only on profitable oil production, not just producing more barrels at a
loss. As The Wall Street Journal put it in a headline:
"Wall Street Tells Frackers to Stop Counting Barrels, Start Making Profits."
In that very article, Continental CEO Hamm assures that he is on board with this new
approach, saying, "You are really preaching to the choir." But has Continental actually
embraced this new approach of fiscal responsibility and restraint? Not so much.
The fracking firm appears to have done the opposite, increasing production to record levels
along with the rest of the shale industry. Continental recently reported plans to drill 350 new wells at an estimated
cost of $11.7 million per well, which adds up to over $4 billion in total costs on those wells.
The company currently holds more than $6 billion in debt and less than $100 million cash.
How will Continental fund those new wells? Hamm has promised that going forward, there would
be "absolutely
no new debt." Perhaps Continental will fund it by selling assets because without more debt,
Continental does not have the money to fund those new wells. However, if past is prelude, then
Wall Street will happily lend Continental as much money as it wants. Why would Hamm say one
thing and do another? Well, he personally has accrued billions of dollars while his company has
burned through billions. Despite leading Continental to another money-losing year in 2017, Hamm
took home
a fat raise .
Funny how the news cycle will go nuts if -- insert public pension fund -- has 0.07% of its
holdings in a gun stock.
But not a peep at 'golly aw shucks' Mr. Grandpa USA, Warren Buffet, over Wells Fargo its
retail banking or its fracking enabling. or at (pal of chuck schumer and clintons) Jamie
Dimon or USA-rescued Citi.
Don't forget that warren buffet also owns the trains that eat a lot of the profits of the
koch bros investments in the tar sands. That why they wanted that keystone pipeline soooooooo
baaaad
The article could use an explanation -- for those of use who are financial
dummies -- of who the investors are that are making these apparently foolish bets. If Wall
Street is the bookie then who are the bettors? Or are the Wall Street banks using deposit
money to invest in fracking?
On a recent drive through West Texas I noticed the landscape dotted with what looked like
newish mini factories -- presumably fracking operations. Clearly it's not a low cost
endeavor.
I keep thinking that the whole enterprise was bankrolled specifically to crush oil prices
and keep inflation tamped down, which provides much more profit to wall street via the
assurance that the Fed's easy money policy lasts a lot longer.
All the rest of this talk
about profitability is just BS cover story. It's also an employment plan, in the same way
that bankrolling student loan debt was a a huge employment plan for administration and
construction, and soaked up unemployment by lifting enrollment rates and taking people out of
the labor market.
I think we forget how so much of what happened after the financial crisis
was a way of getting around the fact that they wanted the stimulus so much bigger than the 1
trillion they didn't even manage to get. I mean, look at the for profit school industry
– that was an obvious total racket and a joke, yet they threw money at it, then
pretended to clean up the shocking unexpected mess after when it was safe to do so (when the
economy was more in the clear.)
The wall street insiders make a mint trading the junk stocks
up, then short the hell out of them when they know the game is over and make a mint on the
way down.
I've been wondering the same thing. There must be a huge pile of non-performing debt on
someone's balance sheet or it's being moved around to where significant write downs are
happening, but I have no idea where either of those two things might be. Who are the
stuffees? Is German banks buying subprime again?
" If Wall Street is the bookie then who are the bettors?" It's a great question that leaves everyone guessing. My guess is pension funds, and
calling them bettors is being kind.
A bit off topic but yesterday in links was an article about the long time it takes to sue
Goldman Sachs. Now, it's good to see a little bit of trouble coming their way but the article
describes the lady doing the suing as a sweet innocent young thing being mauled by the male
predators at Goldman and her specialty was the "sale of convertible bonds", a fee generating
bullshit jawb that made her more money in a year than a deplorable can dream of making in a
lifetime.
There were two problems however. One, the sexual predator grabbing her was a bit of a
sideshow and from reading the guts of the article, the much bigger one is about money and how
the ladies of Goldman were being cut out from their rightful share of the fee-loot generated
at Goldman Sachs.
Bernie Sanders: The business of Wall Street is fraud and greed.
Pension funds is a good guess but one would think the consistent losses would start to
show somewhere. The bezzle at this point has to be approaching trillions.
In the case of public pension funds, many of not most of the "shortfalls" are in fact
intentional under-funding of the plans, with contributions to the funds being skimmed off by
state governments and diverted into the general operating funds, because Taxes Bad.
No it isn't a low cost endeavor and that may be precisely how the scam works. Note that
the article mentions at the end that Hamm who founded Continental has made billions
personally while the corporation flounders.
So the question is, what else does he own?
I've mentioned this book a few times recently that I'm still in the middle of –
Railroaded by
Richard White . He points out that the 19th century railroad corporations were
disorganized, poorly run, money losing enterprises. But that didn't stop people from
investing in them and getting filthy rich. All you need is some fast talking and clever
accounting. One example he mentions is that the railroads needed all kinds of supplies to
keep things moving and so they would buy them from railroad logistics corporations or fuel
from coal companies, etc. But guess who owned the suppliers? That's right, the railroad
investors would set up separate companies to supply their own railroads and these
companies were extremely profitable.
But the pool of investors in these supplier companies
was limited to the smart money in on the scam. In essence, the initial well heeled investors
set up the railroads so that they could deliberately fleece them. He gives the example of one
of the coal companies charging the railroad three times the going rate, which beggared the
railroad but lined the pockets of the select few investors who owned stakes in both
companies.
I suspect that something similar may be going on in the fracking industry. So to figure
out the whole scam, you would need to know if the logistics companies are making a profit and
is there any common ownership between those companies and the frackers.
Also, for anyone interested in the shady world of corporate finance and how it came to be
in the US, I can't recommend the book linked to above enough. One other aspect I found
fascinating is how the railroad investors turned to Europe and specifically the Germans to
buy their bonds when they couldn't find enough suckers stateside. Reminds me quite a bit of
the mortgage crisis a decade ago that spilled into Europe.
The other book I recently read was The Whiskey Rebellion by William Hogeland which
discusses finance and taxation during the period just after the American Revolution. Shorter
version – Alexander Hamilton was a crook who deliberately set up a financial system to
ensure that the rich get richer off the labor of the rest of us.
The more you learn about the history of this country, the more you realize that there
really is nothing new going on and the financial crooks of today are just following in the
footsteps of their grifter forebears. And maybe someday they too will have cities named after
them or at least a statue in the public square, because the US of A does love its con
men.
Thank you very much for the book recommendations!
Maybe their back up investments are in "fixing" the externalized, environmental costs e.g.
water filtration systems that remove radiologocals/heavy metals from municipal supplies with
the cost of purchasing being inversely portional to the extent of privatized ownership
permitted?
We spread the radium & strontium flavored "produced water" on as a replacement for
road salt. Slickwater fracking of the Marcellus became sellable, after Katrina messed up
Shell's deep water platforms in the Gulf (ie: a Democrat administration in PA, allowed
fracking in a huge reservoir, 1/4 mile from two 40yr old reactors and "watering down" return
water to "permissable levels" of toxic substances illegal to disclose to the 850,000 folks
drinking "treated" water. (note the dates?) https://vimeo.com/44367635
https://www.propublica.org/article/wastewater-from-gas-drilling-boom-may-threaten-monongahela-river
Hogeland's book Founding Finance is also great. Michael Perelman's book Railroading
Economics is worth a read. The founders of economics in the US were looking at the example of
the railroads and other corporations and acknowledging that competition was destructive and
wasteful, but in their textbooks for college students they pushed the simplistic and
misleading models that came to define neoclassical economics.
I know nothing, but:
Banks can fund loans by creating deposits and then carry the debt on their books as assets.
And they can be hidden there, their assets are secret.
If the stuff can't be paid back it's toxic, just like subprime in 2008 .
And the party goes on until rising rates push the economy into recession, banks stop rolling
over loans, the borrowers go to the Wall, etc.
And then what? The usual thing is for gov to bail out the Tbtf banks rather than take them
over, and sack or jail the officers because can't hurt the biggest donors. But if it all
hangs together until 2020 and Bernie wins there might be a change in the script.
If Sanders thinks of running again, he should say something basically like . . .
" If I am elected, I will have in place some responses ready to roll out and apply when the
next crisis and depression breaks out during my term." And he could say why he is predicting
a "next crisis and depression". If he were to get elected and then we had a next crisis and
depression during his term, he would get public credibility for having predicted it. And he
might have more political latitude for "doing the FDR thing" in response.
Many corporations, education institutions have pulled out of the fossil fuel industry
investment funds, a cursory reading of the press will give you an update
My guess is that even thought the banks aren't necessarily lending directly to the
frackers and the fees they collect are lucrative, they still have some skin in the game
somehow. The investors who are putting up the cash must have got the money from some bank or
another. So the banks wouldn't put up this much money without some guarantee they would be
made whole when it all goes belly up.
And I can't think of a bigger wink and a nod than what happened about ten years ago after
the banks blew up the mortgage industry. If Uncle Sugar came to the rescue then, I think it's
safe for them to assume it will happen again. After all, their friends run Treasury and the
Fed.
And see article in FT posted in links a couple days ago "liquidity ousts debt as the big
market worry." It provides some charts showing that banks are shifting away from holding debt
and playing more of the role of broker (with some anti-regulation propaganda thrown it as
editorial spin).
@Jim M
May 6, 2018 at 8:28 am
-- --
One of the things the banks frequently do when their borrowers go into bankruptcy, is to
participate in the debtor-in-possession financing that the bankruptcy court guarantees to be
repaid. This allows them to earn some interest to offset any losses.
If the fracking companies don't go bankrupt, the debt will be rolled over continuously
until the whole system collapses and the Fed bails out the banks again.
I guess that all the money pumped (no pun intended) into fracking must have originated in
the several trillion dollars worth of Quantitative Easing funds created in the past decade.
All that money sloshing around had to go somewhere. Maybe the only good news is that this
will be all one way to cancel some of these excess funds. The bad news is that supporting an
insupportable industry will screw up huge tracts of land and water supplies for god knows how
long.
Though not as "profitable" as converting as much energy production as possible to solar,
wind, and Pumped Storage Hydro (to store otherwise wasted "free" energy at 1/20th the cost of
batteries), it seems inevitable that people will not keep paying so much extra for what
should be much cheaper energy.
I don't know what price the planet and ones keeping us on too expensive energy will pay in
the long run (financial market losses by suckers, or tax payers for Citizens United enabled
politicians and phony regulators), but I suspect the ones that see the inevitable are getting
as much profit as they can, while they can, and leaving so many more holding the bag
(financially, and in abused environment).
There are some that will make wiser investments in more sustainable energy, as they accept
lower returns more in line with energy production at much better cost benefit ratios (which
are also less environmentally damaging).
Perhaps Wall Street and the banks are playing a larger game. When the U.S. had $4.00+
gasoline there was a real motivation to rework transportation systems and rely less on cars.
Now, with the lower oil prices we are back to SUV's and pick-up trucks. So maybe a loss
leader in the fracking scam has preserved a much larger cash cow in auto finance. There is
also the whole oil services industry to consider. With new conventional discoveries at an all
time low, what would the oil services sector do if there were no fracking?
Can't help but wondering if this isn't all part of the neo-conservatives and their 'Great
Games'. Since 1971 and the peak of conventional oil production in the US, the country has
been a power in decline, economically if not militarily. If, as Frederick Soddy wrote almost
a hundred years ago "Life is fundamentally a struggle for energy", then the country which
controls that energy controls life on our planet. (I believe Kissinger said much the same
thing.) This has all kinds of implications for issues from world (Middle East) peace and
transitioning to renewable energy sources. Accidents of geology have left Middle Eastern
countries with most of the world's remaining easily exploitable sources of conventional oil
– and also as holders of much of the US and Western government debt upon which the
international monetary system is based.
Free the world from its dependence on fossil fuels and you free it from its dependence
reserve currencies, US government and Wall Street-created debt. I wish Hudson would return to
the theme which introduced me to his work, Super (monetary) Imperialism . End it,
i.e. replace the free lunch international monetary system from which the US and its
'exceptional people' derive the funds to spread murder and mayhem around the world, and you
open at least the possibility for the world to enjoy a little peace and get to work on
serious problems like climate change.
I also can't help but wonder if Reagan shouldn't be most remembered for his instructions
to White House maintenance personnel to 'take down those solar panels'. This is eight years
after Hudson published Super Imperialism – more than enough time for at least
policy makers, drawn mostly from the ranks of finance, to understand 'the game' (and the
orders from Saudi Arabia they must follow if they wished to keep playing.) Fracking is / was
just a feeble attempt to show some independence which it and the rest of the world do NOT
have so long as they remain hooked on the Middle East's 'ancient sunlight'.
They were installed on the roof so that the White House kitchen could have hot water. And
they didn't work well. So, Reagan had them removed. ISTR reading that a photovoltaic array was installed while Obama was president.
This does appear to be at the core of human nature, particularly if you substitute "power"
for energy as a term to include both physical BTUs, who's pursuit we share with all other
animals, and the social relations that can be commanded with it which are a strictly human
thing.
The question now front and center is, "is humanity capable of self-conscious restraint on
power, even at the risk of extinction?"
I can only imagine survival for our species if we can make a religion of opposing "power"
at the risk of life as a mater of faith. Power has to be a community resource used for
community aims that intergenerationally sustain the community, but "the coordination problem"
of large groups militates against this notion. A stretch I know, the limits of my creativity
are showing!
Thank you for posting this excellent piece. However, I question whether the domestic shale
oil industry is financially unprofitable when it is considered in the aggregate, or if it is
just the exploration and production sector. Setting aside for a moment the huge
environmental, health and other social costs associated with this industrial activity, there
is a vast network of entities that depend on this debt-fueled oil extraction and development.
They range from oil and gas steel pipe manufacturers in Youngstown and drilling rig
manufacturers in Texas to tank railcar manufacturers in Louisiana to major railroads to
refineries and petrochemical facilities to pipeline companies and to some extent the domestic
auto industry and military, etc. No question the domestic shale oil extraction sector itself
is not cost competitive with other global suppliers, but I am wondering about the cumulative
secondary and tertiary economic and employment effects.
The primary problems with this industry sector lie in the enormous long-term environmental
and social costs it imposes, maybe even raising existential questions. Then there is the
issue of oil pipeline companies being granted eminent domain to deliver this oil for export
when the nation as a whole is a major net importer. Is that really a "public purpose" for
which the eminent domain laws were intended, or simply to line the pockets of a few?
Considering the environmental impact of Non-conventional drilling ( fracking ) it should
be noted that although denied by the industry wells have a considerable leak rate which puts
methane aint the atmosphere and threatens potable water supplies. In addition the uptick in
fracking has suppressed the development of non fossil fuel energy production which leads us
headlong into the 1.5 to 3 degree temperature elevation that the Paris agreement seeks to
avoid. The following links are a good introduction to these dangers. It seems likely that
human intelligence will prove to be a lethal mutation.
What happens when the true costs of fracking- to the land, soil, water, and communities-
become part of
the equation? That can't come soon enough, in my view. The squandering of vast natural resources here in the USA! is just so saddening.
At least the poor warehouse worker knows he doesn't have the time, so he carries his new
P-bottle just in around in case; maybe the frack-daddies should wake up and start packing new
bottles!
This is a good post. It is an existential question.
If I remember my lessons from NC, in 2007 it was clear that the subprime mortgage
securitization scheme would tank as the housing market collapsed. The short spread bettors
couldn't get anyone else to see what was really happening. Then suddenly Bear Stearns was
sold, Lehman Brothers went bankrupt and AIG had to be rescued.
I assume that Wall Street will continue to make loans out of thin air and pocket the Vig.
The Fed assures that the banks have an infinite money supply with deregulation and not
forcing the banks to write off their bad loans. This is similar to the MMT funding of the
military's never ending overseas wars. Wars end – badly most of the time. Fossil fuels
are finite. When the fuel costs more money to produce than it can be sold; the system
collapses. So, does that portion of civilization that is dependent on that energy source if
there is no alternative available.
I work in the oil industry. My job is as a type of low-level geologist, actually living
and working out on oil rigs for weeks or months at a time. (I drive to the nearest town with
a ChinaMart about once a week or so to wash clothes and buy more groceries.)
Several observations:
1) What the Saudis did in 2014 – 2016, maximizing output and spending ~2/3 of the
800 billion dollars equivalent in savings they then held to sustain their economy and regime,
trying to bankrupt the U.S. oil industry (and secondarily, the Iranians, etc.) they quite
literally cannot do again, anytime soon. They're close to broke, and fighting 1 – 2
wars.
2) The U.S. oil industry cut costs dramatically over the 6-9 months from the end of 2014.
That was done primarily by cutting WAY back on drilling (active rig counts in ND declined by
90-95% over that time) and reducing what they would pay drilling and service companies.
Mudloggers, MWD, directional drillers, casing crews, etc., saw their wages go down by over
HALF, if they even still had a job. (Many to most did not.)
3) The oil industry is pretty busy right now, but is running into some constraints. Tops
is they are still in the early stages of raising wages back up; I only make about 3/5 as much
per day as I did in October 2014 (and there has definitely been some inflation in the prices
I pay for most everything since then). Many workers that left were older, so just completely
retired or found retirement jobs. Some bought trucks/farms/small businesses, so are reluctant
(especially at these still-depressed wages by 2014 standards) to uproot and come back. Many
just can't see the math working, while others (or their wives, which = to the same thing)
just can't stomach facing another inevitable downturn at some point, with inevitable job
loss.
4) More than a few oil companies have leases on which they must drill, either in a certain
time period before drilling rights expire, or must actually drill to retain them. Further,
while many oil industry investors sadly poorly understand the delay between "let's drill
there" and having oil to sell, many do. Some, perhaps a lot, of drilling is done in
anticipation of eventually (likely almost certainly) higher prices at some point.
5) Oil companies actually aren't that bad on the environment most of the time.
5-10,000′ feet down where the zones of interest typically are located, WGAF what is
pumped or spilled, as no one travels or lives there. (Very thick, impermeable casing
hydraulically seals off those zones from interacting with the surface, with innumerable
impermeable strata between fracked zones and surface water wells, the latter rarely even
1000′ deep, and usually more like <200'.) By comparison, ethanol (whether from grain
or sugar cane) requires vast acreage be farmed, using POL for many aspects (~90% of
commercial fertilizers and nearly all pesticides have oil origins), while windmills chop up
tens of millions of environmentally desirable, often endangered or protected, birds every
year in the U.S., with little or no sanctions on the windmill companies.
6) People working in the oil industry typically have the same attitude I have about
anti-oil protesters. That is, let the ones who don't use petroleum, complain. That's not just
gasoline, diesel, heating oil, kerosene, etc., but also lubricants, pesticides, fertilizers,
plastics, thermal insulation used in most dwelling and commercial buildings, and anything
produced or manufactured or transported by same. No food, no clothes, no utilities, no
transport besides feet -- that would kill easily 90% of Americans within 6 months. This is
part of why I figure all the sincere environmentalists have already committed suicide -- and
the rest are hypocrites.
Regarding " The Saudis trying to bankrupt the U.S. oil industry" – The Saudis were
not out to destroy the US oil industry. The US oil industry controls the Saudis through the
US Military which keeps them in power. The Saudis were after the wildcat frackers who were
not part of the global oil cartel (which includes US Big Oil). The wildcat frackers were not
maintaining limited production quotas to maintain the monopoly oil price gouging. US Big Oil
allowed the price collapse for long term goals with their Saudi partners. (Source: Antonia
Juhasz) Apparently Wall Street was not in on the plan and kept the money flowing in the
fracking Ponzi scheme.
Regarding: "while windmills chop up tens of millions of environmentally desirable, often
endangered or protected, birds every year in the U.S., with little or no sanctions on the
windmill companies." – This statement is just oil company propaganda. Quoting Stanford
Prof. Mark Jacobson: "Wind turbines reduce bird kills relative to natural gas, coal, and oil
for electricity and cause about the same bird death rate as nuclear power. A recent study
published in Energy Policy found that wind turbines kill less than one‐tenth the bird
deaths caused by each of natural gas, coal, and oil and similar deaths to that caused by
nuclear power. As a result, wind turbines reduce bird kills relative to fossil energy
sources. In addition, according to the American Bird Conservancy, the total number of bird
deaths per year due to wind turbines (a few hundred thousand) is orders of magnitude lower
than the numbers due to communication towers (10‐50 million), cats (80 million), or
buildings (900 million)." Source: https://web.stanford.edu/group/efmh/jacobson/Articles/I/MythsvsRealitiesWWS.pdf
Regarding: "Oil companies actually aren't that bad most of the time." – The same can
also be said of mass murders and child rapists. Oil company pollution and their global
ruthlessness is well documented – and as the oil man I know once told me – to
understand this industry all you need to do is watch the movie "There Will Be Blood."
Luke is an oil man who brings to mind the Upton Sinclair quote "It is difficult to get a
man to understand something when his salary depends upon his not understanding it." He would
have fit right in with those men cutting down the last tree on Easter Island -- unconcerned
about the future of their people. He thinks climate change is a crock because if it is true,
then his job is destroying the planet. For anyone paying attention to global pollution and
climate change, it is clear we need a rapid transition to renewable energy (solar and wind),
a reduction in consumption (transition to more leisure time), and stewardship for the planet
rather than the get-rich-quick mining mentality that leaves a giant mess for future
generations to clean up – assuming human civilization survives. The
economic/engineering outlines for this needed rapid transition are discussed by Prof. Mark
Jacobson in several publications – here is the one for California. ( https://web.stanford.edu/group/efmh/jacobson/Articles/I/CaliforniaWWS.pdf
) Current non-planning for the coming disaster just leave us "circling the drain" -- waiting
for the ultimate collapse.
"There's a sucker born every minute" and Wall Street is P. T. Barnum directing investors
with the sign "This Way to the Egress." The con will last as long as investors have cash to
burn and think "product growth" is equivalent to "profit growth" – or in the words of
Lucy "Well, uh maybe there is no profit on each individual jar, but we'll make it up in
volume."
"... By Irina Slav, a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice ..."
By Irina Slav, a writer for the U.S.-based Divergente LLC consulting firm with over a
decade of experience writing on the oil and gas industry. Originally published at OilPrice
"I personally think none of us will be able to get around it," Vitol's chief executive Ian
Taylor
said last week, commenting on the effects that renewed U.S. sanctions against Iran will
have on the oil industry.
The sanctions, to go into effect later in the year, have already started to bite. French
Total, for one,
announced earlier this month it will suspend all work on the South Pars gas field unless it
receives a waiver from the U.S. Treasury Department -- something rather unlikely to happen. The
French company has a lot of business in the United States and cannot afford to lose its access
to the U.S. financial system. So, unless the EU strikes back at Washington and somehow manages
to snag a waiver for its largest oil company, Total will be pulling out of Iran.
Other supermajors have not dared enter the country, so there will be no other pullouts of
producers, but related industries will be affected, too, in the absence of a strong EU reaction
to the sanctions. For example, Boeing and Airbus will both have their licenses for doing
business in Iran revoked, Treasury Secretary Steven Mnuchin said , which
will cost them some US$40 billion -- the combined value of contracts that the two aircraft
makers had won in Iran.
Tanker owners are also taking the cautious approach. They are watching the situation
closely, anticipating Europe's move, but acknowledging that the reinstatement could have
"significant ramifications" for the maritime transport industry, as per the
International Group of PI & Clubs, which insures 90 percent of the global tanker fleet.
Everyone is waiting for Europe to make its move even as European companies in Iran are
beginning
to prepare their exit from the country. Everyone remembers the previous sanctions, apparently,
and they don't want to be caught off guard. But the signals from Europe are for now positive
for these companies, of which there are more
than a hundred .
Earlier this month, an adviser to French President Emmanuel Macron
said that Europe's response to the thread of U.S. sanctions on Iran will be "an important
test of sovereignty." Indeed, unlike the last time there were sanctions against Iran, the
European Union did all it could to save the nuclear deal and has signaled it will continue to
uphold it.
While some doubt there is a lot the EU can do against U.S. sanctions, there is one 1996 law
dubbed a blocking statute that will ban European companies from complying with U.S. sanctions,
which would put companies such as Total between a rock and a hard place.
European Commission President Jean-Claude Juncker
said two weeks ago the commission will amend the statute to include the U.S. sanctions
again Iran and that the amendments should be completed before the first round of sanctions
kicks in in early August.
Many observers believe that if the sanctions are only limited to the U.S. and no other
signatory to the nuclear deal joins them, the effect will be limited as well. As McKinsey
analyst Elif Kutsal
told Rigzone, "Market fundamentals are not expected to change structurally given that Iran
doesn't export crude oil or refined products to the U.S. and exports go mainly to Europe (20
percent) and Asia Pacific (80 percent). Therefore, if the sanctions are only limited to the
United States, then this could cause short-term volatility in prices until a new/revised
agreement framework is put in place."
And this is where Iran's Supreme Leader Ayatollah Ali Khamenei scored a goal: He demanded
that the European Union provide guarantees it will continue to buy Iranian crude. If it
doesn't, he said, Iran will restart its nuclear program. Now, if this happens, the EU will not
have much choice but to join the sanctions, and then hundreds of thousands of barrels of
Iranian crude could be cut off from global markets.
However, even this will result in only a temporary decline in supplies, according to Kutsal,
and others that believe that Asian imports from Iran will offset the effect from the U.S.
sanctions. According to this camp, the only thing that can unleash the full effect of sanctions
is the UN joining the sanction push against Iran.
One and a half years after Russia and Turkey signed a deal to build the strategic "Turkish
Stream" gas
pipeline in October 2016 , putting an end to a highly contentious period in Russia-Turkish
relation which in late 2015 hit rock bottom after the NATO-member state shot down a Russian jet
over Syria, on Saturday Russian state energy giant Gazprom and the Turkish government
reached a deal on the construction of the land-based part of the Turkish Stream branch that
will bring Russian gas to European consumers.
According
to Reuters , the two counterparts signed a protocol that would allow the construction,
which was stalled by a legal rift over gas prices, to go forward. Gazprom and Turkey's
state-owned BOTAS agreed on the terms and conditions of the project, Gazprom said in a statement ,
adding that the deal "allows to move to practical steps for the implementation of the project."
The actual construction would be carried out by a joint venture called TurkAkim Gaz Tasima
which will be owned by Gazprom and BOTAS in equal shares, Gazprom said.
Earlier on Saturday, Turkish president Erdogan said that Gazprom and BOTAS resolved a
long-running legal dispute over import prices in 2015-2016, and as a result Turkey would gain
$1 billion as part of the gas-price settlement reached with Gazprom, in which Turkey and the
Russian natgas giant agreed on a 10.25% price discount for gas supplied by Russia in 2015 and
2016.
"We agreed on a 10.25% reduction in the price of natural gas in 2015-2016," Erdogan
announced while speaking at a rally on Saturday. "We got our discount. We get about $ 1 billion
worth of our rights before the election," the Turkish President said, as cited by Anadolu
Agency.
BOTAS had refused to approve the building of the land-based part of the pipeline until the
import price issue was resolved. Until now, it only permitted Gazprom to construct the undersea
part of the line. The construction is currently underway.
Russia and Turkey officially agreed on the project, which consists of two branches, in
October 2016. The first branch will deliver gas to Turkish consumers, while the second one will
bring it to the countries in southern and south-western Europe. The European leg is expected to
decrease Russia's dependence on transit through Ukraine. Each of the lines has a maximum
capacity of 15.75 billion cubic meters a year.
Gazprom finished the construction of the deep-water part of the first line of the Turkish
Stream in April. The first Russian gas could start flowing through both legs of the Turkish
Stream by December 2019.
The greenlighting of the Turkish Stream project is sure to infuriate the US which previously
announced it was
considering sanctions of European firms that would participate in the Nothern Stream
Russian gas pipeline.
President Trump went as far as to threaten
Angela Merkel two weeks ago , telling her to either drop the Russian gas pipeline or the
trade war with the US was set to begin.
How Europe reacts to US threats involving the Northern Stream and, soon, the Turkish Stream,
will determine whether Europe will once again find itself a subservient vassal state to US
military and energy lobbying powers, or if Brussels will side with Putin in this growing
conflict, resulting in an unprecedented breach within the so-called " democratic west. "
"... The panel showcased the institute's first "Distinguished Visitor," Strobe Talbott, former deputy secretary of state in the Clinton administration, president of the Brookings Institution think tank from 2002 to 2017, and a key architect of US imperialist strategy in relation to the breakup of the USSR in the 1990s. ..."
"... obe Talbott outlined three main challenges faced by the current Russian government: its internal problems, including economic and demographic decline; the "threat from the Islamic world, it's the southern belly and it's very vulnerable;" and finally, potential conflict with China over access to natural resources. "They know Russia has resource wealth and human poverty that could spell trouble down the line," Talbott said. ..."
"... Read also: Is (or can be) the western Far (Hard) Right a friend of Russia? The Ukrainian Test ..."
"... To the question, "Do we have another Cold War?" Talbott answered, "Yes, we've got a Cold War. It's the old McCarthy line: If it quacks like a duck, and it walks like a duck, it's a Cold War." ..."
"... Historian John Bushnell raised only one objection against the panel's official State Department line. Referring to the 2014 US-German-led coup in Ukraine, he said, "The Russians, I think with some justification, point out that John McCain didn't need to show up in Kiev. There was no reason for a top State Department official [Victoria Nuland] to be caught giving advice, deciding who would sit in the next Ukrainian cabinet. There clearly was a direct American intervention in Ukrainian politics. ..."
"... Kelly emphasized at different points in the discussion that there is no plan for succession in Russia after Putin. He said, "There really is no succession plan. And in many ways, that is absolutely terrifying. Because if everything does depend on one man, do we really want to push Russia to the edge with more sanctions, and try and undermine their regime? Because if there is no successor, then you have a similar situation without any kind of management of the transition that we had in '91, with a country that has thousands of nuclear weapons and chaos." ..."
"... The WSWS wrote in 2016 that the establishment of the Buffett Institute at Northwestern -- with the assistance of a $101 million donation from Roberta Buffett Elliott, the sister of billionaire Warren Buffett -- was part of an international effort of the capitalist elite to transform leading universities into ideological centers of imperialist military strategy. ..."
The Northwestern University Buffett Institute for Global Studies hosted a roundtable event
in the Chicago area on May 23 titled, "The Kremlin's Global Reach," moderated by Medill
journalism professor and Washington Post veteran Peter Slevin. The panel showcased
the institute's first "Distinguished Visitor," Strobe Talbott, former deputy secretary of state
in the Clinton administration, president of the Brookings Institution think tank from 2002 to
2017, and a key architect of US imperialist strategy in relation to the breakup of the USSR in
the 1990s.
Also present were political science professor Jordan Gans-Morse, public opinion pollster
Dina Smeltz, lecturer and former US ambassador to Georgia Ian Kelly and historian John
Bushnell.
The event took place amid a steady escalation of US militarism against Syria, Iran and
Russia. Just two days earlier, Secretary of State Mike Pompeo delivered an ultimatum to Iran
demanding a capitulation to the US in the face of additional sanctions. This followed on the
heels of the Trump administration's scrapping of a nuclear agreement reached in 2015 between
Iran and the P5+1 group, the US, UK, France, Germany, China and Russia. Earlier this month, the
US relaunched a naval force, the Second Fleet, in the North Atlantic in preparation for
military confrontation with Russia.
The political perspective of the event was clear from Slevin's opening questions: "What is
to be done? How do you solve a problem like Vladimir Putin?"
Str obe Talbott outlined three main challenges faced by the current Russian government:
its internal problems, including economic and demographic decline; the "threat from the Islamic
world, it's the southern belly and it's very vulnerable;" and finally, potential conflict with
China over access to natural resources. "They know Russia has resource wealth and human poverty
that could spell trouble down the line," Talbott said.
To the question, "Do we have another Cold War?" Talbott answered, "Yes, we've got a Cold
War. It's the old McCarthy line: If it quacks like a duck, and it walks like a duck, it's a
Cold War."
In line with this reactionary narrative, Talbott presented the conflict between the US and
Russia as one between "democracy" and "tyranny," while some of the other panelists admitted
that is not the way the conflict is viewed in Russia and Europe.
Later, Talbott emphasized the challenge to US hegemony posed by the Balkans, particularly
Serbia, citing their cultural and religious affinities with Russia. In 2015, Montenegro entered
NATO.
Historian John Bushnell raised only one objection against the panel's official State
Department line. Referring to the 2014 US-German-led coup in Ukraine, he said, "The Russians, I
think with some justification, point out that John McCain didn't need to show up in Kiev. There
was no reason for a top State Department official [Victoria Nuland] to be caught giving advice,
deciding who would sit in the next Ukrainian cabinet. There clearly was a direct American
intervention in Ukrainian politics. "
A number of the panelists interrupted at this point, some laughing nervously, others
strongly protesting.
Slevin, in concluding the discussion, posed the question of regime change in Russia,
stating, "How does this end? How does Putin fall? Retire? Get replaced? What is the fate of
Vladimir Putin?"
The main obstacle to regime change in Russia was, according to the panelists, the chaos it
would inevitably unleash. Kelly emphasized at different points in the discussion that there
is no plan for succession in Russia after Putin. He said, "There really is no succession plan.
And in many ways, that is absolutely terrifying. Because if everything does depend on one man,
do we really want to push Russia to the edge with more sanctions, and try and undermine their
regime? Because if there is no successor, then you have a similar situation without any kind of
management of the transition that we had in '91, with a country that has thousands of nuclear
weapons and chaos."
However, expressing the position of significant sections of the Democratic Party, aligned
with the US state-military-intelligence apparatus, Talbott concluded, "Putin has presided over
Russia in a way that is very, very much like the Soviet Union. That didn't work. This won't
work. He will be an aberration. It would also help if we had a different president in the
United States."
A notable feature of the event was its casual militarism. In introducing himself, Kelly
noted that the US has recently provided both Georgia and Ukraine with Javelin anti-tank
weaponry.
In line with the propaganda pumped out about the US media and political establishment, the
panel speakers presented a picture of reality turned upside down: Russia was presented as an
aggressive, expansionist power, and a growing threat to the American way of life. In fact, it
is the US government and its imperialist allies which have increasingly encircled Russia via
NATO expansion, crippled its economy with sanctions and sought to provoke a military
conflict.
As US Defense Secretary James Mattis noted in releasing the Pentagon's new National Security
Strategy, "Great power competition -- not terrorism -- is now the primary focus of US national
security."
Before the audience assembled by this national security institute, which appeared to include
only a handful of undergraduate students, these leading political figures spoke more bluntly
about imperialist foreign policy than they would normally do on national television or in
supposedly democratic arenas like the US Congress.
The WSWS wrote in 2016 that the establishment of the Buffett Institute at Northwestern
-- with the assistance of a $101 million donation from Roberta Buffett Elliott, the sister of
billionaire Warren Buffett -- was part of an international effort of the capitalist elite to
transform leading universities into ideological centers of imperialist military
strategy.
At the time of the Buffett Institute's founding, university students and faculty protested
the appointment as its head of former the US commander in Afghanistan, Lt. Gen. Karl
Eikenberry, whose qualifications were based on military rank and bellicose politics, rather
than any academic credentials. Northwestern faculty members charged that he "advocates
instrumentalizing the humanities and social sciences research to advance US soft power."
The International Youth and Students for Social Equality are leading the opposition
internationally to the transformation of colleges and universities into think tanks for
imperialism and militarism. Contact the Socialist Equality
Party to start an IYSSE chapter on your campus.
"... Coming Next, Part 2: The post WWII global strategy of the neocons has been shaped chiefly by Russophobia against the Soviet Union and now Russia ..."
"... * Paul Fitzgerald and Elizabeth Gould are the authors of Invisible History: Afghanistan's Untold Story , Crossing Zero The AfPak War at the Turning Point of American Empire and The Voice . Visit their websites at invisiblehistory and grailwerk .com ..."
In this first of a two-part series, Paul Fitzgerald and Elizabeth Gould trace the origins
of the neoconservative targeting of Russia.
By Paul Fitzgerald and Elizabeth Gould April 29.2018
The German newsmagazine Der Spiegel last September reported
that, "Stanley Fischer, the 73–year-old vice chair of the U.S. Federal Reserve, is
familiar with the decline of the world's rich. He spent his childhood and youth in the British
protectorate of Rhodesia before going to London in the early 1960s for his university studies.
There, he experienced first-hand the unravelling of the British Empire Now an American citizen,
Fischer is currently witnessing another major power taking its leave of the world stage the
United States is losing its status as a global hegemonic power, he said recently. The U.S.
political system could take the world in a very dangerous direction "
With the collapse of the Soviet Union in 1991 and the creation of the so called Wolfowitz
Doctrine in 1992 during the administration of George Herbert Walker Bush, the United States
claimed the mantle of the world's first and only. Unipower with the intention of crushing any
nation or system that would oppose it in the future. The New World Order, foreseen just a few
short years ago, becomes more disorderly by the day, made worse by varying degrees of
incompetence and greed emanating from Berlin, London, Paris and Washington.
As a further sign of the ongoing seismic shocks rocking America's claim to leadership, by
the time Fischer's interview appeared in the online version of the Der Spiegel , he had
already announced his resignation as vice chair of the Federal Reserve -- eight months ahead of
schedule. If anyone knows about the decline and fall of empires it is the "globalist" and
former Bank of Israel president, Stanley Fischer. Not only did he experience the unravelling of
the British Empire as a young student in London, he directly assisted in the wholesale
dismantling of the Soviet Empire during the 1990s.
As an admitted product of the British Empire and point man for its long term imperial aims,
that makes Fischer not just empire's Angel of Death, but its rag and bone man.
Alongside a handful of Harvard economists led by Jonathan Hay, Larry Summers, Andrei
Shleifer, and Jeffry Sachs, in the "Harvard Project," plus Anatoly Chubais, the chief Russian
economic adviser, Fischer helped throw 100 million Russians into poverty overnight –
privatizing, or as some would say piratizing – the Russian economy. Yet, Americans never
got the real story because a slanted anti-Russia narrative covered the true nature of the
robbery from beginning to end.
As described by public policy scholar and anthropologist Janine R. Wedel in her 2009 book
Shadow Elite: "Presented in the West as a fight between enlightenment Reformers trying
to move the economy forward through privatization, and retrograde Luddites who opposed them,
this story misrepresented the facts. The idea or goal of privatization was not controversial,
even among communists the Russian Supreme Soviet, a communist body, passed two laws laying the
groundwork for privatization. Opposition to privatization was rooted not in the idea itself but
in the particular privatization program that was implemented, the opaque way in which it
was put into place, and the use of executive authority to bypass the parliament."
Intentionally set up to fail for Russia and the Russian people under the cover of a false
narrative, she continues "The outcome rendered privatization 'a de facto fraud,' as one
economist put it, and the parliamentary committee that had judged the Chubais scheme to 'offer
fertile ground for criminal activity' was proven right."
If Fischer, a man who helped bring about a de facto criminal-privatization-fraud to
post-empire Russia says the U.S. is on a dangerous course, the time has arrived for post-empire
Americans to ask what role he played in putting the U.S. on that dangerous course. Little known
to Americans is the blunt force trauma Fischer and the "prestigious" Harvard Project delivered
to Russia under the leadership of Boris Yeltsin during the 1990s. According to The American Conservative's James Carden "As the Center for Economic and Policy
Research noted back in 2011 'the IMF's intervention in Russia during Fischer's tenure led to
one of the worst losses in output in history, in the absence of war or natural disaster.'
Indeed, one Russian observer compared the economic and social consequences of the IMF's
intervention to what one would see in the aftermath of a medium-level nuclear attack."
Neither do most Americans know that it was President Jimmy Carter's national security
advisor Zbigniew Brzezinski's 1970s grand plan for the conquest of the Eurasian heartland that
boomeranged to terrorize Europe and America in the 21 st century. Brzezinski spent
much of his life undermining the Communist Soviet Union and then spent the rest of it worrying
about its resurgence as a Czarist empire under Vladimir Putin. It might be unfair to say that
hating Russia was his only obsession. But a common inside joke during his tenure as the
President's top national security officer was that he couldn't find Nicaragua on a map.
If anyone provided the blueprint for the United States to rule in a unipolar world following
the Soviet Union's collapse it was Brzezinski. And if anyone could be said to represent the
debt driven financial system that fueled America's post-Vietnam Imperialism, it's Fischer. His
departure should have sent a chill down every neoconservative's spine. Their dream of a New
World Order has once again ground to a halt at the gates of Moscow.
Whenever the epitaph for the abbreviated American century is written it will be sure to
feature the iconic role the neoconservatives played in hastening its demise. From the chaos
created by Vietnam they set to work restructuring American politics, finance and foreign policy
to their own purposes. Dominated at the beginning by Zionists and Trotskyists, but directed by
the Anglo/American establishment and their intelligence elites, the neoconservatives' goal,
working with their Chicago School neoliberal partners, was to deconstruct the nation-state
through cultural co-optation and financial subversion and to project American power abroad. So
far they have been overwhelmingly successful to the detriment of much of the
world.
From the end of the Second World War through the 1980s the focus of this pursuit was on the
Soviet Union, but since the Soviet collapse in 1991, their focus has been on dismantling any
and all opposition to their global dominion.
Pentagon Capitalism
Shady finance, imperial misadventures and neoconservatism go hand in hand. The CIA's
founders saw themselves as partners in this enterprise and the defense industry welcomed them
with open arms. McGill University economist R.T. Naylor, author of 1987's Hot Money and the
Politics of Debt , described how "Pentagon Capitalism" had made the Vietnam War
possible by selling the Pentagon's debt to the rest of the world.
"In effect, the US Marines had replaced Meyer Lansky's couriers , and the European central
banks arranged the 'loan-back,'" Naylor writes. "When the mechanism was explained to the late
[neoconservative] Herman Kahn – lifeguard of the era's chief 'think tank' and a man who
popularized the notion it was possible to emerge smiling from a global conflagration – he
reacted with visible delight. Kahn exclaimed excitedly, 'We've pulled off the biggest ripoff in
history! We've run rings around the British Empire.'" In addition to their core of
ex-Trotskyist intellectuals early neoconservatives could count among their ranks such
establishment figures as James Burnham, father of the Cold War Paul Nitze, Senator Daniel
Patrick Moynihan, Senator Henry "Scoop" Jackson, Jeane Kirkpatrick and Brzezinski himself.
From the beginning of their entry into the American political mainstream in the 1970s it was
known that their emergence could imperil democracy in America and yet Washington's more
moderate gatekeepers allowed them in without much of a fight.
Peter Steinfels' 1979 classic The
Neoconservatives: The men who are changing America's politics begins with these fateful
words. "THE PREMISES OF THIS BOOK are simple. First, that a distinct and powerful political
outlook has recently emerged in the United States. Second, that this outlook, preoccupied with
certain aspects of American life and blind or complacent towards others, justifies a politics
which, should it prevail, threatens to attenuate and diminish the promise of American
democracy."
But long before Steinfels' 1979 account, the neoconservative's agenda of inserting their own
interests ahead of America's was well underway, attenuating U.S. democracy, undermining
détente and angering America's NATO partners that supported it. According to the
distinguished State Department Soviet specialist Raymond Garthoff, détente had been
under attack by right-wing and military-industrial forces ( led by Senator "Scoop"
Jackson ) from its inception. But America's ownership of that policy underwent a shift
following U.S. intervention on behalf of Israel during the 1973 October war. Garthoff writes in
his detailed volume on American-Soviet relations Détente
and Confrontation , "To the allies the threat [to Israel] did not come from the Soviet
Union, but from unwise actions by the United States, taken unilaterally and without
consultation. The airlift [of arms] had been bad enough. The U.S. military alert of its forces
in Europe was too much."
In addition to the crippling Arab oil embargo that followed, the crisis of confidence in
U.S. decision-making nearly produced a mutiny within NATO. Garthoff continues, "The United
States had used the alert to convert an Arab-Israeli conflict, into which the United States had
plunged, into a matter of East-West confrontation. Then it had used that tension as an excuse
to demand that Europe subordinate its own policies to a manipulative American diplomatic gamble
over which they had no control and to which they had not even been privy, all in the name of
alliance unity."
In the end the U.S. found common cause with its Cold War Soviet enemy by imposing a
cease-fire accepted by both Egypt and Israel thereby confirming the usefulness of
détente. But as related by Garthoff this success triggered an even greater effort by
Israel's "politically significant supporters" in the U.S. to begin opposing any
cooperation with the Soviet Union, at all.
Garthoff writes, "The United States had pressed Israel into doing precisely what the Soviet
Union (as well as the United States) had wanted: to halt its advance short of complete
encirclement of the Egyptian Third Army east of Suez Thus they [Israel's politically
significant supporters] saw the convergence of American-Soviet interests and effective
cooperation in imposing a cease-fire as a harbinger of greater future cooperation by the two
superpowers in working toward a resolution of the Israeli-Arab-Palestinian problem."
Qatar's foreign minister reacted publicly on Thursday to the recent wave of visits by
leaders of U.S. Jewish organizations to his country at the invitation of the ruling
Emir.
It seems the Qataris have figured out the best way to influence American foreign policy is to
appeal to the real power brokers in the U.S..
Doha wants to influence D.C. elites. But rather than targeting Congress or the media,
they're lavishly, and disproportionately, focusing on right-wing, pro-Israel Jews
One demand which the Qataris immediately acceded to was the suppression of the al Jezeera
expose on the jewish lobby in American politics.
Two extraordinary events have come together to place Al Jazeera in a vise-like squeeze
that may result in the death of a major TV documentary expose about the power and operations of
the Israel Lobby in the U.S. The same investigative team ... created the remarkable four-part
film, The Lobby, about the UK Israel Lobby.
and
The new documentary follows a similar script. Al Jazeera recruited someone to infiltrate
various Lobby organizations based in Washington...
and
...Haaretz published a story acknowledging that almost all of these American Jewish supplicants
came to Qatar for one very special reason (there may have been others, but this one was key).
They wanted the Al Jazeera documentary killed. They knew if it was aired it would make them
look as shabby, venal, and crude as the UK series did.
Posted by: pantaraxia | May 22, 2018 11:03:42 AM |
6
What happens when a country decides to decouple itself from the US/Saudi axis of evilglobinfo
freexchange
T he role of Qatar and Saudi Arabia in the Middle East chaos is quite well known . Recall that
in a letter
of the Podesta email series, John Podesta admitted that both Qatar and Saudi Arabia we re
helping ISIS. Podesta also mentioned that the US should exercise pressure to these countries in
order to stop doing it: " ... we need to use our diplomatic and more traditional
intelligence assets to bring pressure on the governments of Qatar and Saudi Arabia, which are
providing clandestine financial and logistic support to ISIL and other radical Sunni groups in
the region. "
Of course Hillary Clinton wouldn't do anything about this problem too, as in another
letter of the Podesta email series, it was revealed that Bill Clinton was receiving
"expensive gifts" from the Qataris!
As reported by Antimedia , in 2009 Qatar
proposed a pipeline to run through Syria and Turkey to export Saudi gas. Assad rejected the
proposal and instead formed an agreement with Iran and Iraq to construct a pipeline to the
European market that would cut Turkey, Saudi Arabia, and Qatar out of the route entirely.
Since, Turkey, Qatar, and Saudi Arabia have been staunch backers of the opposition seeking to
topple Assad. Collectively, they have invested billions of dollars, lent weapons, encouraged
the spread of fanatical ideology, and helped smuggle fighters across their borders.
The Iran-Iraq pipeline will strengthen Iranian influence in the region and undermine their
rival, Saudi Arabia -- the other main OPEC producer. Given the ability to transport gas to
Europe without going through Washington's allies, Iran will hold the upper-hand and will be
able to negotiate agreements that exclude the U.S. dollar completely.
Yet, less than a year ago, a crisis erupted between 'unholy' allies, apparently because Qatar
has chosen to change camp and proceed into a deeper approach with Iran.
As reported by Guardian , Saudi Arabia and its allies have issued a threatening 13-point
ultimatum to Qatar as the price for lifting a two-week trade and diplomatic embargo of the
country, in a marked escalation of the Gulf's worst diplomatic dispute in decades. The onerous
list of demands includes stipulations that Doha close the broadcaster al-Jazeera,
drastically scale back cooperation with Iran , remove Turkish troops from Qatar's soil,
end contact with groups such as the Muslim Brotherhood and submit to monthly external
compliance checks. Qatar has been given 10 days to comply with the demands or face unspecified
consequences.
Then, apparently, Rex
Tillerson tried to persuade Qatar to stay in the unholy alliance and move away from
Iran a day after wrapping up discussions with the king of Saudi Arabia and other officials from
Arab countries lined up against Qatar.
We can tell now that Qatar has not changed stance and chosen to continue its approach with the
winning alliance in the Syrian battlefield. We have the first signs showing that the US empire
and its allies in the Middle East will move against Qatar, beginning with a typical first step:
propaganda war.
A Pentagon "propagandist," who previously headed a company that was paid half a billion dollars
to produce fake terrorist videos in Iraq, was hired by a Dubai based company to create a film accusing Qatar of links to terrorism , the Bureau of
Investigative Journalism has revealed.
Charles Andreae, the CEO of Andreae & Associates which was contracted to produce the film,
used to work for PR firm Bell Pottinger, the UK PR firm that was payed $540 million dollars to
create fake terrorist videos in Iraq.
The firm was employed to produce the anti-Qatari film amidst a diplomatic row in which the
Saudi and UAE governments cut ties with Doha, which it accused of supporting terrorism. Qatar
has strongly denied the accusation and accused its neighbours of fabricating stories. US
intelligence agencies have since confirmed that the UAE orchestrated the hacking of Qatari
government news and social media sites to justify its unprecedented attack against Qatar.
According to the Bureau, Andreae was given over $500,000 to produce a six-part film linking
Qatar with global terrorism. The film, entitled "Qatar: A Dangerous Alliance," features a
number of neo-conservative pundits making the UAE and Saudi case against Qatar in a 37-minute
video.
Washington's double standards and hypocrisy are quite evident in this case too. After this
crisis between allies erupted, a number of US officials immediately launched a series of
statements through which they depicted Qatar as the sole supporter of terrorist groups in the
Middle East. Again, Saudi Arabia, the most authoritarian regime in the region and probably the
biggest supporter of jihadist extremists, was miraculously vanished from their radar and,
naturally, the radar of the Western corporate media.
In case Qatar will not compromise and keep walking the path towards decoupling itself from the
US/Saudi axis of evil, the next steps will be a new series of upgraded, Iranian-type sanctions,
or even a military invasion as the last option. The only thing that can save Qatar for now is
the fact that it hosts the largest US military base in the Middle East .
The Saudi defense ministry announced in a statement on Sunday that Riyadh ruler Faisal bin
Bandar bin Abdolaziz has attended the ceremony instead of bin Salman.
The statement declined to comment on the reason of bin Salman's absence while naturally the
defense minister should participate in such ceremonies.
He didn't appear for any of the Ramadan events either, which is very odd."
Notable quotes:
"... A growing number of videos surfaced the media at the time displaying that a heavy gunfire erupted around King Salman bin Abdulaziz Al Saud's palace in the capital, Riyadh. ..."
"... Witnesses and residents of the neighborhoods near the palace said a coup was underway, adding that the soldiers attacking the palace were guided by footage and intel they were receiving from a drone flying over the palace. ..."
"... Saudi opposition members claimed that "a senior ground force officer has led a raid on the palace to kill the king and the crown prince". ..."
"... Saudi Arabia, the world's top oil exporter, has witnessed a series of radical political changes over the past year as Mohammed bin Salman ousted his cousin as crown prince and jailed well-known princes in an anti-corruption purge. ..."
"... Moreover, bin Salman oversees social and economic reforms that have been censured by several powerful Wahhabi clerics. ..."
"... Notably, bin Salman made no media appearance during the April 28 visit of the newly-appointed US State Secretary Mike Pompeo to Riyadh, his first foreign trip as the top US diplomat. ..."
"... During his stay in Riyadh, Saudi media outlets published images of Pompeo's meetings with King Salman and Foreign Minister Adel al-Jubeir. ..."
According to the Persian-language newspaper, Keyhan, a secret service report sent to the
senior officials of an unnamed Arab state disclosed that bin Salman has been hit by two bullets
during the April 21 attack on his palace, adding that he might well be dead as he has never
appeared in the public ever since.
Heavy gunfire was heard near the Saudi King's palace in Riyadh Saudi Arabia on April 21,
while King Salman was taken to a US bunker at an airbase in the city.
A growing number of videos surfaced the media at the time displaying that a heavy
gunfire erupted around King Salman bin Abdulaziz Al Saud's palace in the capital,
Riyadh.
Reports said the king and his son, Crown Prince Mohammed bin Salman, were evacuated to a
bunker at an airbase in the city that is under the protection of the US troops.
While Saudi officials and media were quiet over the incident, there were contradicting
reports over the incident. Witnesses and residents of the neighborhoods near the palace
said a coup was underway, adding that the soldiers attacking the palace were guided by footage
and intel they were receiving from a drone flying over the palace.
Saudi opposition members claimed that "a senior ground force officer has led a raid on
the palace to kill the king and the crown prince".
Videos also showed that a growing number of armored vehicles were deployed around the
palace. 'Bin Salman's special guard' then took charge of security in the capital. Riyadh's sky
was then closed to all civil and military flights as military helicopters from 'Bin Salman's
special guard' were flying over the palace.
Bin Salman was a man who previously often appeared before the media but his 27-day absence
since the gunfire in Riyadh has raised questions about his health.
Saudi Arabia, the world's top oil exporter, has witnessed a series of radical political
changes over the past year as Mohammed bin Salman ousted his cousin as crown prince and jailed
well-known princes in an anti-corruption purge.
Moreover, bin Salman oversees social and economic reforms that have been censured by
several powerful Wahhabi clerics.
Saudi Arabia is also embroiled in a long running conflict in its Southern neighbor Yemen,
dubbed by the United Nations as the world's worst humanitarian crisis.
Notably, bin Salman made no media appearance during the April 28 visit of the
newly-appointed US State Secretary Mike Pompeo to Riyadh, his first foreign trip as the top US
diplomat.
During his stay in Riyadh, Saudi media outlets published images of Pompeo's meetings
with King Salman and Foreign Minister Adel al-Jubeir.
This is while the state-run outlets used to publish images of meetings in Riyadh between bin
Salman and former US secretary of state Rex Tillerson.
A few days after the April 21 incident, Saudi media published footage and images of bin
Salman meeting several Saudi and foreign officials. But the date of the meetings could not be
verified, so the release of the videos could be aimed at dispelling rumors about bin Salman's
conditions.
It is not clear if bin Salman's disappearance is due to reasons such as him feeling
threatened or being injured in the incident.
It has been almost a month since Saudi Crown Prince Mohamed bin
Salman made a public appearance, triggering questions whether the April 21 incidents at the
Royal Palace had a role in his disappearance.
Several reports claimed that the security incident in April, what Saudi officials said was a
result of a recreational drone flying near the king's palace in Riyadh, was indeed a palace
coup attempt. Saudi Prince Salman was allegedly injured during the attempt, according to
reports, mostly coming from Iran.
As a man who enjoys the public and media's eye, Salman's absence caught attention especially
after he was not seen on camera during U.S. Secretary of State Mike Pompeo's first visit to
Riyadh in late April.
The 32-year-old leader ousted his older cousin as crown prince last summer in a palace coup
and then jailed senior royals as part of an anti-corruption sweep. Prominent clerics have also
been detained in an apparent bid to silence dissent.
Those moves have helped Prince Mohammed consolidate his position in a country where power
had been shared among senior princes for decades and religious figures exercised significant
influence on policy.
But they have also fueled speculation about a possible backlash against the crown prince,
who remains popular with Saudi Arabia's burgeoning youth population
"The US is looking for sales markets. We can understand this, and we are prepared to take
effort to ensure this gas reaches Germany easier. Presently, however, it remains much more
expensive than the gas delivered via the pipeline," the minister told ARD.
In addition, if the US does not change its tactics of behaviour and continues thinking only
of its economic interests, then Europe will act similarly, the minister added.
Earlier, Us officials said that the United Stats may impose sanctions on the companies
involved in the implementation of the Nord Stream 2
project. US Assistant Secretary of State Sandra Oudkirk said that Washington could consider
retaliatory measures within the framework of Countering America's Adversaries Through Sanctions
Act. She explained the US position as follows: the construction of the gas pipeline will
strengthen Europe's dependence on the Russian natural gas.
German Chancellor Angela Merkel said that Germany regards the Nord Stream 2 gas pipeline as
a safe economic project for Europe.
Nord Stream is an offshore natural gas pipeline from Vyborg in the Russian Federation to
Greifswald in Germany that is owned and operated by Nord Stream AG. The project includes two
parallel lines. The first line was laid by May 2011 and was inaugurated on 8 November 2011. The
second line was laid in 2011-2012 and was inaugurated on 8 October 2012. At 1,222 kilometres
(759 mi) in length, it is the longest sub-sea pipeline in the world, surpassing the Langeled
pipeline. It has an annual capacity of 55 billion cubic metres (1.9 trillion cubic feet), but
its capacity is planned to be doubled to 110 billion cubic metres (3.9 trillion cubic feet) by
2019, by laying two additional lines.
Sandra Oudkirk, US Deputy Assistant Secretary of State for Energy,
has just threatened to sanction the Europeans if they continue with the Nord Stream 2
pipeline project to bring gas in from Russia across the Baltic Sea. That country is also seen
by the US as an adversary and its approach is by and large the same – to issue orders for
Europe to adopt a confrontational policy, doing as it is told without asking too many
questions.
Iran and Nord Stream 2 unite Moscow and Brussels in their opposition to this diktat. On May
17, Iran
signed a provisional free-trade-zone agreement with a Russia-led Eurasian Economic Union
(EEU) that seeks to increase the current levels of trade valued at $2.7 billion. The deal
lowers or abolishes customs duties. It also establishes a three-year process for reaching a
permanent trade agreement. If Iran becomes a member of the group, it would expand its economic
horizons beyond the Middle Eastern region. So, Europe and Russia are in the same boat, both
holding talks with Iran on economic cooperation.
Art presentation raises numerous points that are worth mulling over and at least considering.
According to Art: Eagle Ford production growth is unlikely and that reserves should be exhausted at current production rates
in ~7 years. While Permian production growth is likely, reserves will be exhausted in ~4 years.
Petroleum Age after WWII produced unprecedented economic growth.
Oil shocks of 1974-1986 threatened to end that party.
Demand destruction & oil production bubble resulted in 18 years of cheap energy.
Debt re-started economic growth & debt-based growth of China challenged oil supply
after 2004.
Second oil shock made unconventional oil possible. Zero-interest rates led to 2 nd oil
bubble.
Longest period of high oil prices in history.
That bubble burst in 2014 and oil prices collapsed but without demand destruction.
Now, we are near the end of long-term debt cycle but in denial that the economic basics
have fundamentally changed since the post-war era.
SLIDE 5: Low Interest Rates Created A Capital Bubble For Tight Oil & The Permian
Basin
The oil-price collapse coincided with the end of QE 3 and the beginning of U.S. interest
rate increases.
Continued low interest rates caused margin hunters to focus first on tight oil and then,
specifically on the Permian basin.
$30 oil prices brought large capital flows to a select group of producers seen as
winners.
Tight oil and Permian rig counts have more than doubled since August 2016. Rig
countsincrease with expectation of $55+ oil prices
Increased rig count and fear of ongoing over-supply is a major drag on oil prices.
OPEC production cuts have balanced oil markets since early 2017 & some are now
questioning the lower-for-longer paradigm that dominated the last 3 years.
SLIDE 6: The False Premise that Tight Oil Plays Are the New Swing Producer
No factual support for widespread belief that there is a price war between OPEC &
U.S. tight oil.
OPEC/Saudi Arabia reacted pragmatically to price collapse & recovery.
Prime directive not to repeat mistake of 1982-1986 production cuts.
"Just-in-time production" is another baseless theory.
Shale output reacts to price just like all plays -- slowly & in long-period
cycles.
Idea that U.S. shale is the new swing producer of the world also has no basis.
Being a swing producer means that there is sufficient spare capacity to turn on and off
based on market signals. Shale plays have no spare capacity (they are just-in-time).
Even if DUCs provide some spare capacity, there is no decision-making process that
governs 1000s of independent producers.
SLIDE 7: Shale Cost Reductions 90% Industry Bust, 10% Innovation and Efficiency
Lower costs of shale production widely attributed to technology and efficiency.
Price deflation accounts for 90% of lower costs because of a depression in the oil
industry; 10% is because of technology & efficiency.
That is over for now and prices increased 8% in 2017.
Shale growth has more to do with outside capital supply than break-even prices.
Investors need to believe that significantly higher prices are coming.
"Buy low, sell high" not a sophisticated concept but was responsible for capital flow
into tight oil after price bottom in early 2016.
Smart money has always believed in limits to oil supply.
That will drive the next inflow of capital as markets understand the limits of tight oil
supply.
SLIDE 8: Two of the Largest Tight Oil Plays are in Texas: Eagle Ford & Permian
The Eagle Ford Shale play is expected to recover to 1.3 mmb/d by 2022 & then decline to 1.2 mmb/d by 2050.
The Permian basin plays are anticipated to grow from 2.2 mmb/d in 2018 to more than 3.5 mmb/d by 2044 & then
decline to 3.4 mmb/d by 2050.
On 5/14/2018 at 6:05 PM,
Carlsbad said: So I guess the question is, then, how do we see the oil market,
fundamentally, in that timeframe? Doesn't look great to me, nor does it look disastrous.
Prices are too high right now, but demand is still strong and will be for some time to come.
U.S. shale doesn't always follow fundamentals, though. They seem to binge and purge,
depending on their level of maturity.
Although it appears that we are basically on the same page, I sense one significant
difference in our understanding of the fundamentals, Carl. When I apply sound logic to my
review of past history, I conclude that the price of oil is not a function of supply/demand
levels. In other words, high demand does not cause high prices and plentiful supply does not
cause low prices. Oversupply and undersupply are actually impossible situations. Consumption
draws out whatever supplies that it needs at whatever price is in vogue at that moment. Supply
always matches consumption at every price level. If you question this assessment, I can show
you historical data that refute whichever side of the supposed supply/demand-caused price moves
that you suggest.
Moving on, I agree with your assessment that prices are too high now for a smoothly
sustainable industry. But the time for the system to reach equilibrium, once the price is
established, is much longer than it takes for the system to make a price change. Therefore
demand is forever trying to match the price level, as is supply, but the price changes too
rapidly for either to catch up. Distressing but true.
Turning to shale oil, Mike Shellman has spoken for years about the underlying problem of the
shale industry. He astutely points out the disconnect between the industry's willingness to
borrow and drill, concomitant with no thought of the consequences of their combined output,
allowing the industry to suffer the consequences of desperation marketing. So the roller
coaster price/production profile will likely continue. Binge and purge it shall be!
On 5/14/2018 at 7:42 PM,
Tom Kirkman said: Related to your question, here is a link to Art Berman's recent
presentation.
While I don't expect others to agree with Art's conclusions (he is directly flying in the
face of mainstream opinion), his presentation raises numerous points that are worth mulling
over and at least considering .
Thanks, Tom. I went through Art's presentation, rather quickly I must admit, and I find
agreement with most of his presentation. He was over my head on some of it so my comments
exclude that info.
I should emphasize my strong agreement with his assessment regarding the swing producer. His
views match mine and we both can vigorously defend the validity of that assessment. The US
reserves are much too small for us to ever be considered in the swing producer role. On an
instantaneous basis we can force pricing actions that are basically unsound for the industry,
but we cannot sustain the supply impact that would be necessary to play that game very
long.
His presentation is well worth the time required to understand his points.
Thank you once again, William. I have a long standing "debate" with an analyst who is very
into modeling shale oil growth. His driving factor is price. Our arguments stem around the fact
that the US shale oil phenomena is based entirely on the availability of low interest capital
and has little to do with product price. We more or less already have proof of that, yes? A
portion of the total HZ rig count in America is controlled by loan covenants and lenders; a
much smaller portion driven by "free" cash flow due to higher prices. If the price falls,
rather when it falls, we'll see less growth but there will still be growth; really its the FED
that's has control of the US LTO industry, not OPEC.
Having said that, I do believe OPEC, Russia and Non-OPEC producers know exactly how
shale oil growth is funded in America, what it costs, how unprofitable it is, and understand
rising GOR, decline and depletion very well. They are not stupid about oil and gas production,
in spite of what folks might think in Midland. There is a price level that is good for the US
shale oil industry (this may be it!) that will drive it plum off the cliff in 3-5 years and
that is precisely the plan. We're always in a big damn hurry in America...in this case to
deplete our remaining hydrocarbon resources. The buzzards are circling.
A last word about Art's presentation in Dallas; he has been getting hammered for his
comments by the shale industry and by the MSM because most, in their rush to attack the
messenger, did not even read the message. The PDP, PUD reserves he quoted that might leave the
Permian HZ play with only about 7-8 more years of life were proven reserves estimated by
shale oil companies themselves and reported to the SEC. He did not make that data up; they
did.
Eric, with respect to my friend, Art Berman, and Yahoo finance, the possibility that 27% of shale oil companies in America
made money in 2017 is a stretch to me. In my opinion, there was a lot of non-GAPP, funky accounting that created this
illusion based on asset sales and enormous, one time tax charges. We have to rely on SEC data, of course, but personally I
don't think anybody made money in 2017, in spite of lower costs, higher productivity, and production cuts from OPEC. More
importantly, at least to me, they did not make enough money to put a dent in debt (Devon reduced debt, EOG added debt).
The shale oil industry, even the mighty Permian, is sustainable only as long as the money holds out. Or until they saturate
core, sweet spots and have to start drilling the really lousy rock, then things will go from bad to worse. In the mean time
the shale industry is facing some hefty debt maturities coming up in a few years, with interest rates going up.
Here is a statistic that will knock your socks off, about 75% of all unconventional HZ wells drilled in the Permian, since
the beginning, now make less than 40 BOPD (IHS, shaleprofile.com); the answer to your question might lie there.
But pat yourself on the back; you are on the right track. Question everything. Dig out the facts. Do your own math. This
might be interesting to you also: https://www.scribd.com/document/370742449/Shale-Reality-Check-Drilling-into-The-U-S-Government-s-Rosy-Projections-for-Shale-Gas-Tight-Oil-Production-Through-2050#fullscreen&from_embed
Geologist Arthur Berman, who has been skeptical about the shale boom,
warned on Thursday that the Permian's best years are gone and that the most productive U.S.
shale play has just seven years of proven oil reserves left.
"The best years are behind us," Bloomberg quoted Berman as saying at the Texas Energy
Council's annual gathering in Dallas.
The Eagle Ford is not looking good, either, according to Berman, who is now working as an
industry consultant, and whose pessimistic outlook is based on analyses of data about reserves
and production from more than a dozen prominent U.S. shale companies.
"The growth is done," he said at the gathering.
Those who think that the U.S. shale production could add significant crude oil supply to the
global market are in for a disappointment, according to Berman.
"The reserves are respectable but they ain't great and ain't going to save the world,"
Bloomberg quoted Berman as saying.
Yet, Berman has not sold the EOG Resources stock that he has inherited from his father
"because they're a pretty good company."
The short-term drilling productivity outlook by the EIA estimates that the Permian's oil
production hit 3.110 million bpd in April, and will rise by 73,000 bpd to 3.183
million bpd in May.
Earlier this week, the EIA raised its forecast for total U.S. production
this year and next. In the latest Short-Term Energy Outlook (STEO), the EIA said that it
expects U.S. crude oil production to average 10.7 million bpd in 2018, up from 9.4 million bpd
in 2017, and to average 11.9 million bpd in 2019, which is 400,000 bpd higher than forecast in
the April STEO. In the current outlook, the EIA forecasts U.S. crude oil production will end
2019 at more than 12 million bpd.
Yet, production is starting to outpace takeaway capacity in the Permian, creating
bottlenecks that could slow down the growth pace.
Drillers may soon start to test the Permian region's geological limits, Wood Mackenzie has
warned. And if E&P companies can't overcome the geological constraints with tech
breakthroughs, WoodMac has warned that Permian production could
peak in 2021 , putting more than 1.5 million bpd of future production in question, and
potentially significantly influencing oil prices.
The takeaway bottlenecks have hit WTI crude oil priced in Midland, Texas, which declined
sharply compared with Brent in April, the EIA said in the May STEO.
" As production grows beyond the capacity of existing pipeline infrastructure, producers
must use more expensive forms of transportation, including rail and trucks. As a result, WTI
Midland price spreads widened to the largest discount to Brent since 2014. The WTI Midland
differential to Brent settled at -$17.69/b on May 3, which represents a widening of $9.76/b
since April 2," the EIA said.
"... Several years ago Putin made a speech at the UN in favor of upholding International Law I thought at the time this "diplomatic statesmanship" was going to be Putin's way of bring Russia back into equal power with the Europeans and the US. Some have wondered and been asking about Putin not being as aggressive as he could be in defending Syria and Iran. Putin's holding off on tough talk/action could be amassing more power in the end. Putin comes off as the voice of sanity..exactly what the Europeans want to hear and see. ..."
Several years ago Putin made a speech at the UN in favor of upholding International Law I
thought at the time this "diplomatic statesmanship" was going to be Putin's way of bring
Russia back into equal power with the Europeans and the US. Some have wondered and been
asking about Putin not being as aggressive as he could be in defending Syria and Iran.
Putin's holding off on tough talk/action could be amassing more power in the end. Putin comes
off as the voice of sanity..exactly what the Europeans want to hear and see.
As Europe turns away from the US they turn to Putin.
If anyone remembers all the Jew rags making fun of "old Europe" during the Iraq war run up
and urging that the US break with them as outdated relics no longer needed in the new modern
age -- this is what it was all about -- separating the US from its traditional allies who
were not as subservient to Israel as the US. So .now we are down to the Jew plan Europe and
sanity vr the US Orange Clown and his allies of midget Nazi Israel, Saudi and the UAE.
Germany begs Russia to pick up the torch that US has dropped
"Germany's Foreign Minister, Heiko Maas, who has a history of expressing anti Russian
rhetoric relevant to Russia's presence in Syria as well as an alleged cyber attack on the
German Foreign Ministry which Maas says that he 'has to assume stemmed from Russia', has
turned an about face. He has traveled, for the first time, to Moscow to discuss international
diplomacy, the Iran nuclear deal, peace talks on Ukraine, and Syria.
Maas met with his Russian counterpart, Sergei Lavrov, where he encouraged Russia to
leverage its influence with Iran to help spur the Middle Eastern state in remaining committed
to the nuclear deal, which Trump abandoned earlier in the week.
Germany's Foreign Minister, Heiko Maas, who has a history of expressing anti Russian
rhetoric relevant to Russia's presence in Syria as well as an alleged cyber attack on the
German Foreign Ministry which Maas says that he 'has to assume stemmed from Russia', has
turned an about face. He has traveled, for the first time, to Moscow to discuss international
diplomacy, the Iran nuclear deal, peace talks on Ukraine, and Syria.
Maas met with his Russian counterpart, Sergei Lavrov, where he encouraged Russia to
leverage its influence with Iran to help spur the Middle Eastern state in remaining committed
to the nuclear deal, which Trump abandoned earlier in the week.
Maas then declared that Germany was interested in bringing back the peace talks on the
Ukraine, together with other European partners. Maas also pointed out that the Syrian
conflict can't be settled without Russia, before contributing a wreath to the tomb of the
unknown soldier, which is a dedication to Russian soliders who died fighting the Germans in
WW2.
Deutsche Welle reports:
Germany's top diplomat Heiko Maas and his Russian counterpart Sergey Lavrov both called
for the nuclear deal with Iran to be upheld on Thursday, during Maas' first official visit
to Russia. The appeal marks a rare moment of unity between Moscow and Berlin just days
after US walked out on the 2015 accord.
In Moscow, Maas urged Russia to influence Tehran and make it stick to the deal, which
aims to limit Iran's alleged pursuit of nuclear weapons. The German foreign minister also
said he was seeking details from the US on its plans for future sanctions against Iran
US President Donald Trump has shrugged off pressure from allies to keep the deal in place
and called the accord "defective at its core." However, leaders of the UK, France, and
Germany all contacted Iranian President Hasan Rouhani in the attempt to salvage the
accord.
Germany's Chancellor Angela Merkel called Rouhani on Thursday to reaffirm Germany's
commitment to the deal "as long as Iran continues to fulfil its obligations," said Merkel's
spokesman Steffen Seibert. Merkel also said she was ready to negotiate about Iran's
ballistic missiles and involvement in Syria and Yemen.
Angela Merkel is also set to visit Russia next week.
Visiting Moscow on Thursday, Germany's top diplomat Maas suggested reviving the peace
talks between Germany, France, Ukraine and Russia on the conflict in eastern Ukraine.
Lavrov responded by saying Russia was "ready to consider" this offer.
Maas also called for "honest dialogue" with Moscow and for Russia to be included in
global diplomacy, despite its differences with Berlin. Maas admitted that the conflict in
Syria "cannot be solved without Russia."
The German diplomat also laid a wreath at the Tomb of the Unknown Soldier in Moscow,
which is dedicated to the Soviet soldiers killed during World War II.
Also in a bid to get Russia to assume a leadership position relative to preserving the
nuclear deal, and by extension, the European economy, Merkel got on the phone with Russian
President Vladimir Putin, where he mutually voiced his concern over Trump's action, and
where Merkel also came forward about the situation in Syria.
TASS reports:
BERLIN, May 11. /TASS/. Federal Minister for Economic Affairs and Energy Peter Altmaier
has confirmed that he will visit Moscow at the beginning of the next week, he said in an
interview with German radio station Deutschlandfunk released on Friday.
"I will follow my colleague [German Foreign Minister Heiko] Maas, who attended
negotiations in Moscow yesterday. I will be there on Monday and Tuesday, and Chancellor
[Angela Merkel will visit Sochi -- TASS] during the week," Altmaier said.
In their March 15
letter , 39 US senators
called on the Treasury and State Departments to utilize all the sanction tools at their
disposal to fight the Nord Stream 2 project to bring cheap Russian gas to Europe. On March 29,
US Ambassador to Russia Jon Huntsman told Russia's RBK TV that he cannot rule out the
possibility that Russian assets in America could be seized over the Skripal case. If Washington
goes that far, it will be pure highway robbery. And the response will not be long in coming.
That interview took place right after the British parliament had
announced an investigation into some money-laundering schemes allegedly associated with
Russia. The UK government has unveiled its
"Fusion Doctrine" to counter what it's calling Russian propaganda.
The US policy of making Europeans bow to pressure has been largely successful. The leading
European powers -- the UK, Germany and France – --
are pushing to force the EU to impose new sanctions on Iran, in order to persuade the US
not to pull out from the Iran nuclear deal. This is a last-minute attempt to keep the agreement
in effect, as it is widely expected that President Trump will not certify it in May. Europeans
may bow to American pressure in a bid to appease Washington, but Russia is also a party to the
agreement, which cannot be scuttled without Moscow's consent. Adding additional conditions will
violate the terms of the deal. It won't be supported internationally. If new Iran sanctions are
introduced unilaterally by the West, the issue will become a bone of contention that will
further worsen relations with Moscow.
... hedging contracts could result in
US$7 billion in losses if WTI prices were to stabilize at $68 a barrel this year, Wood
Mackenzie analyst Andrew McConn told Bloomberg in an interview.
Some analysts do expect oil to reach $80 in the coming months.
Francisco Blanch, head of global commodities research at Bank of America Merrill Lynch, told
Bloomberg Daybreak: Americas that he sees oil hitting that level in this quarter, due to
some bottlenecks emerging in the Permian that could slow down the growth pace.
Goldman Sachs, for its part, sees oil prices at
$80 by the fourth quarter of this year due to expectations that global oil demand growth
will stay high this year, and that China's demand growth may be even higher than currently
estimated.
Just when during WW1 the British determined they were going to be backstabbed by their American cousins is unknown to me, but
hopefully my unfinished research into that era will provide an answer. Clearly, Keynes knew what would occur as he observed the
proceedings at Versailles, which prompted him to go to Marseilles to write Consequences. I greatly disagree with most of
Wikipedia's discussion of
Consequences except for this bit in the intro:
"In his book, he argued for a much more generous peace, not out of a desire for justice or fairness – these are aspects of
the peace that Keynes does not deal with – but for the sake of the economic well-being of all of Europe, including the Allied
Powers, which the Treaty of Versailles and its associated treaties would prevent. [My Emphasis]
Thanks to Wilson's stroke, we'll never know how he really felt about the last months of his administration; his wife becoming
the first de facto female president of the USA. One of the better indicators about the nascent Deep States's feeling about Versailles
is their behavior during the 1920s as it laid the ground work for the Great Depression's onslaught with Dollar Diplomacy and Teapot
Dome exemplifying its moral compass. Prohibition's gangsters and coppers provided the required distraction of the masses until
the money vanished. Then came radio, the beginnings of mass media and onset of media conglomeration.
i think what is missing in your analysis "how governments that print their own currency such as US, UK and China can print
as much as they want and use it as they like" is the key acknowledgement that the us$ has been used as world currency.
and Canada.
The US $ is the World Currency because the US is the only country in the World that exports it's currency more than $0.5 Trillion/year.
Like a virus really. It's that simple if the US didn't export $ it wouldn't be the reserve currency.
The other part about sovereigns being able to "print all they want" is a falsehood without context.
First of all, when people refer to "printing" it usually means "spending" although I'm not sure they think of it in those terms.
The actual printing of physical currency/coins moves money from checking accounts in the banking system to petty cash accounts.
No new money is created by that kind of "printing". About 2% of US $ is coins or currency, the rest exists only on balance sheets.
Secondly, a sovereign is able to buy anything for sale in it's own currency as long as the resource being bought exists and
is for sale. You can't buy something that doesn't exist. The constraint on money creation is resources not arithmetic, which is
the most widely misunderstood characteristic of fiat currencies.
Further, a sovereign that HAS NO DEBT IN A FOREIGN CURRENCY has zero risk of insolvency there is no liability (in it's own
currency) a sovereign cannot satisfy. The US holds no foreign debt. Nor does Canada, Australia, Japan, UK, etc. as far as I know.
Every member in the Eurozone is a de-facto holder of foreign debt (the Euro member countries cannot freely create Euro's. They
are more like private borrowers).
gov'ts were in a position to print their own money and not have to pay interest thru the private banking sector for it.
James, this is another myth unless you are talking about the Eurozone. The US Federal government does not pay interest to the
banking sector, it pays interest to holders of Treasury securities. To do so was a CHOICE not a requirement. Paying interest on
previously created monies was voluntary. Congress created the banking system (for the US) through the Federal Reserve Act of 1913,
which created and governs the banking system, and chose to pay interest later after WWI I believe (probably as a give-away to
bankers who didn't think they made enough money off of WWi). MRW knows a lot more about this history if he's around.
Interest paid on the "debt" (all money is debt, interest or not by definition) is a net transfer of funds to the private sector
(those who hold Treasury securities). Those funds increase the money supply. Anyone can hold Treasury securities, not just banks.
They are a risk-free investment vehicle (the only one).
Further, it is the Fed that sets interest rates, not the bond-holders ("bond vigilantes") as they are referred to. 10 years
of zero-interest rates post 2008 should be proof enough of that.
Treasury securities (bonds) move $ from a checking account at the Fed to a savings account at the FED. They are $ that earn
interest. This is all explained in the Mosler pdf I linked to.
In double-entry accounting a National Debt™ for the government is NATIONAL SAVINGS for the citizens, as are the interest payments.
All this worry about sovereign debt is silliness. Without sovereign debt the currency of issue wouldn't exist. Sovereign debt
is our money (although the elites won't let us acquire much of it).
Of course the Marxist critique of and challenge to Capitalism was central in all this ! The West was competing with the East (
simplifying)and when this situation changed with Anglo Hegemony 1990 , these balances that had seen overall development towards
the 'welfare state ' disintegrated .
Once the U S got its opportunistic run at this situation, crudely grasping for further power we rapidly reached the present
situation , with its repeat of World War scenarios , as competing economic / militarised blocs do exactly that !
Yes, Mosler not being an economist is a feature, not a bug. I agree, economists are idiots, but I suspect they're paid idiots.
What's the Upton Sinclair quote ?
From where I sit MMT savvy economists are not idiots. They are however outcasts. If your not an insider you're an outsider,
and outsiders don't get to make the big money, if they don't starve.
Here's a video excerpt regarding our pre-eminent economist Paul Krugman lest you think he isn't in on the con:
@176 paulmeli.. thanks.. i had to read your comment a few times, and it still isn't sinking in fully.. i am getting some of it,
but maybe it is my conspiracy run brain that wants to know how we've been screwed over by the banks.. that is what i believe has
happened...MRW.. haven't seen him in a good while.. every time he would come all my negative stereo types about the private banking
sector were put on hold, as i recall!
i think a lot of this has to do with exporting / importing between countries... especially the part about holding foreign debt..
how does another country pay for something? this is why we read today of how russia, china and iran are getting into financial
arrangements whereby they don't have to go thru the us$.. wasn't this a good part of the reason the usa went to war in iraq, or
libya? iraq and libya wanted to trade in euros, as opposed to us$.. well - hopefully MRW can come and bring me back to reality!
it seems the world financial markets are one big ponzi scheme... think of the derivative markets.. one is not trading in some
actual commodity.. it is increasingly opaque and shrouded in speculation, while run on computers...
i am sorry paul, but i can only go so far in my understanding here.. as i understand it, something is very wrong in the financial
system at present.. it is also the reason these financial sanction games are typically a lead up to war... one group has undue
power and influence over the worlds finances - the usa - and they exercise this clout via sanctions, and if that doesn't work
- war / regime change - etc. etc... obviously i am missing something here, but i will be damned if i buy the official hokum from
an economist! thanks for trying to educate me.. n
I despise Netanyahu but please change the headline from Netanyahoo as Yahoo was used as an antisemtic slur in the past. I'm sure
the author was not aware of this outdated meaning but it does the cause harm. Thank you.
something is very wrong in the financial system at present..
I think it's always been this way but now the corruption is so out in the open it seems like it's worse. I'm not sure it is.
The way finance corrupts is that obscene riches are offered to state leaders to sell out their own citizens for pennies on
the dollar. And they do it, because if they don't regime change will follow. It's similar to the way corporate raiders take over
businesses, sell off the assets and load the business up with debt, then sell what's left. With all of that debt said business
has no chance of success. A handful of financial guys (parasites of the worse kind) walk away with the cash.
Corporate strip-mining - the business plan is simple and it's always the same - no matter if it's a business or a country.
Something to keep in mind about all of this Iran business is that Trump can now move full speed ahead with Bolton and Pompeo in
place. I find it oddly comforting that, generally speaking, Trump and his administration make no attempt to cloak their psychopathy
in coded language. I thought these remarks from Pompeo yesterday as he addressed the lackeys at Foggy Bottom yesterday particularly
illuminating in this regard:
"I talked at my hearing about the fact that this nation is so exceptional, and so incredibly blessed and the facts that derive
from that are that it also creates a responsibility, a duty for America all across the world. And I know for certain that America
can't execute that duty, can't achieve its objectives absent you all. Absent executing America's foreign policy in every corner
of the world with incredible vigor and incredible energy. And I look forward to helping you all advance that."
Money supply increases with debt creation and decreases with debt payment. Wipe out all debt and money supply is zero. Taking
out a loan is an example of money creation. The money does not exist in the system till its deposited into your account. Paying
off the mortgage depletes the money supply.
Its true that the government does not pay interest on money the Fed loans them. Thats why so little is loaned directly to the
government until the last crash. Money is not created by interest. That money does not exist without new debt. The government
borrows the money to pay the interest.
A key reason the US is the reserve currency is OPEC. OPEC serves Big Oil interests which is interlocked with Big Banking and
requires purchases of Oil to be in USD. Hence the name Petro Dollar. OPEC may produce the oil but its The Big Oil (4 sisters)
that transports most of it to market, refines much of it and provides the equipment for OPEC members to get the oil out of the
ground.
We also export a tremendous amount of food that requires payment in USD, and US manufacturing is now in China and consumer
debt allows us to purchase a great amount of goods from China in USD. Manufacturers in China need to pay expenses in RMB so sell
USD to Chinese banks. Chinas Central Bank Prints up RMB at no interest to buy the USD and then loans it to the US at interest.
Its a perfect system and is basically why the USD will never fail unless those in control want it to.
With Russia neutralized by upcoming football World championship due to Putin's love for large
sport events, there are preparation of something similar to Sochi events (EuroMaydan color
revolution in Ukraine)
Notable quotes:
"... This can all be easily followed all the way back to before the Iranian nuclear deal and a policy paper out of Brookings on how to set up Iran for war. Basically, it states make a deal with Iran then prove that although the West did its best, Iran broke the deal in whatever manner. Appears they have all the actors lined up. Now it begins. The war of words then war. Like we haven't seen this before. ..."
"... I'd missed this: US-led jets bombed pro-Assad forces advancing on Deir Ezzor: Report http://www.middleeasteye.net/news/us-jets-bomb-pro-government-fighters-syria-operation-1276052674 International law anyone? Its dead in the west. ..."
"... doesn't make sense ...FUKUS does war on Iran, Iran closes the Gulf ...oil goes to 200/ barrel ....US does a superb imitation of a Dead Fly. ..."
"... Looks to me like Trump is groveling before the Saudis for keeping the petrodollar. ..."
"... Putin who sees only the reality that the US remains both enviably rich and powerful cannot understand how unstable and dangerous it has become. ..."
Netanyahoo To Again Cry Wolf - But Something Bigger Is Up
(Updated)
Updated below
---
U.S. President Trump wants to end the nuclear agreement (pdf) with Iran
and wants to eliminated Iranian forces in Syria which support the Syrian government. Something
is being prepared to make that happen.
Last week General Joseph Votel, commander of CENTCOM - the U.S. military command for the
Middle East, was in Israel. It was the first ever visit of a CENTCOM commander to Israel which
usually works with the European command EUCOM.
Yesterday former CIA director and now Secretary of State Pompeo visited Israel. A few hours
later Israel bombed two ammunition depots in Syria which are supposedly related to Iran. This
was a clear attempt to provoke Iran into some reaction.
The Israeli defense minister Lieberman just visited Washington DC and only today came back
to Israel.
Now the Israeli Prime Minister Netanyahoo loudly announced that he will
hold a press conference to present a "huge amount of new
and dramatic information on the Iranian nuclear program". He will allege that Iran cheats on
the nuclear agreement (JCPOA).
Netanyahoo is a notorious liar and warmonger. In September 2002 he lied (vid)
to the U.S. congress:
There is no question whatsoever that Saddam is seeking and is working and is advancing
towards the development of nuclear weapons – no question whatsoever"
Only yesterday he
promoted a false story that claimed Arabs in Israel had disrupted a minuted of silence for
some people killed in a flash flood.
The IAEA
says that Iran is in full compliance with the JCPOA. If there were any serious intelligence
about any Iranian deviation from the nuclear agreement it would be presented to the IAEA and
the six signature powers of the agreement. The IAEA would investigate and report back. If Iran
cheated it would be put back under serious international sanctions. That Netanyahoo wants to
present something publicly makes it very likely that he has nothing of relevance.
We
hear that the documents he is said to present were compiled
by one Christopher Steele and assembled with the help of one Sergej Skripal and his MI6 handler
[redacted]. They will show that Iran attempts to buy yellowcake uranium from Niger .
This new comedy stunt by Netanyahoo is tightly coordinated with the Trump administration.
Trump's national security advisor John Bolton
has worked with the Zionists since early 2000 to push for a war on Iran:
During multiple trips to Israel, Bolton had unannounced meetings, including with the head of
Mossad, Meir Dagan, without the usual reporting cable to the secretary of state and other
relevant offices. Judging from that report on an early Bolton visit, those meetings clearly
dealt with a joint strategy on how to bring about political conditions for an eventual U.S.
strike against Iran.
Behind Trump, Netanyahoo and Bolton is one financier, the militant Zionist and casino
magnate Sheldon Adelson. He financed Trump's and Netanyahoo's election campaigns and the
various think tanks that create anti-Iranian propaganda and paid Bolton.
Trump wants to leave the nuclear agreement but the other signers, China, Russia, the UK,
France and Germany want to keep it up. Just leaving the JCPOA without cause will increase doubt
over any agreement the U.S. wants to make on other issues. The allegations Netanyahoo will put
forward, no matter how ridiculous they may be, could give Trump some excuse to put new
sanctions on Iran without actually leaving the agreement.
But even that does not explain all the recent meetings and visits by the various Israeli and
U.S. officials. French soldiers and mercenaries from the UAE have entered north-east-Syria. What
for? The Saudis are on board with any operation against Iran.
Something big is up and we do not know yet what it might be.
---
Update
That was lame. Netanyahoo just finished his show (vid). He claimed that Israel got
access to an Iranian archive of its former nuclear program dating from 1999 to 2003. In 2007 a
U.S. National Intelligence Estimate found
that Iran stopped all nuclear weapon research in 2003 after the U.S. had destroyed Iran's then
arch-enemy Iraq. In 2011 the IAEA reported
in detail of Iran's former "structured program". It agreed that it had stopped in 2003.
All that Netanyahoo now claims to have acquired is old and known stuff. He refers to an AMAD
plan Iran had as if that was some new intelligence. But the IAEA documented AMAD and its
development in 2011 (PDF, Annex, page 5). He uses the archive documents of known former
programs to declare that Iran has cheated and is not trustworthy. He says that gives Trump
reason to disavow the nuclear agreement the U.S. and others had signed with Iran. That is
bullshit.
I had expected better from him. Some well forged documents or something more dramatic. This
was just nonsense.
My feeling is that this was a diversion from an upcoming military(?) operation against Iran
or its assets in Lebanon, Syria or Iraq.
Absolutely correct b. Something's cooking and it won't take long for the world to find out
what it was.
Also, when responding to the Iranian threats to re-start their nuclear program, Mr Trump
appears to have an answer pretty resolute i.e "They won't be starting anything, you can bank
on that"
One more thing I like to add. If Mr Trump withdraws US from the deal which is also
endorsed by the UNSC, US will loose to IRAN in the war that follows-up.
OH no! not the yellow cake saga again. Well, if they can get away with the Syrian chemical
weapons attack that the white helmets can fix with a hose pipe, then anything goes. It looks
as though the Skripal affair has lots more secrets to reveal. This story just keeps on giving
and giving, although if you looked for it in MSM you wouldn't find anything on it. I don't
understand why the missile defense system doesn't appear to activate for the Iranian
contingent in Syria. Is it because this was a surprise attack and the Syrians?Russians were
caught off guard, or are the Iranians left to fend for themselves as far as air bombardment
is concerned? I get the feeling that the West is probing and poking the bear a bit at a time
with a stick to get a reaction. They may well be sorry what they wish for.
Doesn't look like fake anti-establishment, swamp-drainer, poseur Trump has given himself ANY
leeway...
with which he might counter or to move away from the numerous neocon nut cases hell-bent
for WW3 whom he has permanently invited to his war cabinet golden shower party.
Netanyahu is probably the most dangerous leader in this world, the raw lying and propaganda,
its heinous. Not to mention this sick lunatic in Israel have some 300 nukes already
themselves, IN SECRET!
Now he have come up with fake documents, trying to justify a war!
Same jewish state that whine about antisemitism, this people are not sane...
Hopefully west dont accept this blatant sicko, because as usual, its not Israel that want
to wage the war, no, the war must be fought by
goyim europeans and especially americans.
With ugly pack of morons as Trump, POmpeo, Bolton, it doesnt look good.
This war hysteria just come weeks after the illegal and dangerous bombing of Syria.
Netanyahu clarly is a psychopath.
What is going on with those s300s? Russia needs to give Syria/Iran the means to defend
themselves from these repeated acts of Israeli aggression. It should not be so easy for
Israel to take out Iranian forces.
The only way to kick the legs out of Iran in a manner that Israel cares about which would
also hurt Assad would be to destroy Hezbollah. The only chance of doing that would be to go
full war crime mode and use the most vicious thermobaric or possibly tactical nuclear
weapons.
If we did that or enabled the Israelis to do that then we will have reached total
depravity. At this point I believe the U.S. public is okay with bombing anyone as long as
U.S. lives are not lost. If the Israelis do it we cheer, if we do it then it shows the rest
of the world who is boss.
This can all be easily followed all the way back to before the Iranian nuclear deal and a
policy paper out of Brookings on how to set up Iran for war. Basically, it states make a deal
with Iran then prove that although the West did its best, Iran broke the deal in whatever
manner. Appears they have all the actors lined up. Now it begins. The war of words then war.
Like we haven't seen this before.
Nuttyyahoo is dangerous BECAUSE he is thoroughly enabled by the FUKUS, but especially the US
in EVERY way - politically, monetarily, morally, and and he is promoted on every television
network and mainstream media outlet.
Trump has become increasingly dangerous because he has surrounded himself with Pompeo,
Bolton, Nikki Haley, Nuttyyahoo...
US/UK/Israel are not even trying for convincing narratives now.
Sounds like F-35 was used to hit the ammo dumps in Syria. Maybe the zionists figure they have
F35 bugs ironed out and its time to put it to work against Iran.
Actually Iran has a long-time investment in uranium mines in Namibia, from the Shah's time,
and Ahmadinejad even visited Niger in Apr 2013 while that country was looking to diversify
its uranium sales away from the French Areva. There's nothing "secret" about any of this,
uranium is a fuel for reactors.
...
What I like about this story is that, even though smearing Iran doesn't make any sense,
narratives that don't make sense are 'normal' for that bloodthirsty experiment in social
engineering known as "Israel". One wonders whether, if the "Israelis" are serious about
attacking Iran, then shouldn't they be encouraged to give it a try, just to see what
happens?
If they're not worried about blowback from Iran and Hezbollah, why should anyone else lose
any sleep over it?
When Medvedev was President of Russia he said in an interview (with Zacharia) on a US network
that ab attack on Iran would create an "unimaginable refugee catastrophe". Ironically (or
Russian-ly), he didn't say for whom it would be catastrophic...
Also, there was actually never any evidence of a nuclear weapons research program prior to
2003 either. The IAEA has specifically gone on record stating in 2009 that it has "no
concrete proof that this is or has been a nuclear weapons program in Iran". Gareth Porter has
written more about the 2003 allegations and Israel's later attempts to undermine the NIE by
insisting that there was evidence of "continued" nuclear weapons work. The worst that the
IAEA could ever say it actually found in Iran, were "fragmented and incomplete feasibility
studies" that were "relevant to" nukes -- none of which is in any way a violation of the NPT
which actually ENCOURAGES the sharing of technology "relevant to" nuclear weapons including
data from nuclear test explosions.
Wow! The anti-corruption probe into Nuttyyahoo's activities must be coming close to arresting
him; so, to avoid arrest, he must start an actual war of aggression. Only problem is the
Zionists like their Outlaw allies are incapable of actually defeating anyone they might
attack.
What the Zionists are scared to death of is becoming irrelevant; their Airstrip 1
existence no longer of any value to the Imperialist Empires that created the Zionist state
for their own geopolitical machinations. Is there any real reason to militarily attack the
Zionists beyond reclaiming Golan? If Lebanon becomes strong enough--I'd argue it's
already--then a simple containment policy coupled with the international BDS movement will be
more than enough to facilitate internal political change within the Apartheid State over
time--containment will take several years to work as it did on South Africa. Zionist racism
has destabilized itself. Talk about a state ripe for being Color Revolutionized. Those are
the reasons for the easily seen and rebutted lies of a very desperate politico wanting very
much to avoid prison for crimes he committed against his own nation, not the many War Crimes
against others.
B.: I had expected better from him. Some well forged documents or something more dramatic.
This was just nonsense.
______________________________________________
This is another example of a trend I've been on about lately. You're quite right; the
quality of the Western/ME hegemony's Big Lies is deteriorating markedly before our eyes. But
only the minority who are willing and able to keep their eyes wide open seem to notice.
It's hard to tell if the proliferation of weak and incredible fabrications is based on the
Big Liars' belief that the public is, or has become, so benighted and bamboozled that they'll
swallow anything, or if it's an indication that they are running on empty. But, whether it's
due to hubris or degenerate incompetence, it indeed looks as if they aren't even
trying any more.
Then again, as you also point out, Bibi's anticlimactic histrionics are on a par with his
comical September, 2012 performance at the UN, where he produced that cartoon drawing of a
"bomb" in order to flog the typically mendacious and hysterical claim that the noble,
harmless State of Israel was in imminent danger of destruction from the "Iranian bomb".
It's one thing when zealous Hasbarists, amateur or professional, troll/spam Internet
comments boards with their rigidly fatuous, fantastic, Zionist Israel-serving talking points.
One expects unsophisticated, fully-indoctrinated True Believers to spew rote talking points
and dogma that insult the intelligence of anyone outside the Zionist Hive Mind.
But the fact that Israel's leaders and authorities shamelessly rely on such childish props
to sell their genocidal policies and actions suggests both hubris and abiding contempt for
the rest of the world.
It's hard to believe that Bibi and his allies and supporters don't know that they're
insulting the rest of the world's intelligence. I think there's a word for this. Chutzpah,
maybe?
This is an absolutely stunning breaking interview of the Syrian independent member of
parliament Fares Shehabi by the BBC hardtalk program. The MSM typically try to aggressively
browbeat non-western interviewees that they disagree with. Unfortunately, most of the
interviewees either get cowed or they get emotional and angry.
Fares Shehabi instead is factually and rationally aggressive, fact by fact,
counter-argument by counter-argument, not allowing the BBC interviewer to shut him up. It is
a model of how to deal with the MSM.
The MSM have already managed to get the interview wiped off youtube. but it is still
available here
@Peter AU 1 16 Sounds like F-35 was used to hit the ammo dumps in Syria
What's your reason for saying this. We established at the previous threat that GBU-39 glide
bombs were used. They are a stand-off weapon and I believe that the F-35 is incapable of
carrying them.
"unhinged" = arrogance turns into stupidity? The latest in the continuing Net-job
droning on and on "war with Iran" might not go as well as he expects, given resistance to
withdrawal from the JCPOA. A more easily applied application of "arrogance turns into
stupidity" is the White House Correspondents Dinner this weekend roasting Press Sec Sanders.
James Woods' response did it nicely at "low class trash." More of this sort of thing will
indeed be "a gift" to the Republicans in the upcoming elections.
Israel will not risk Jews so they will stick to launching air strikes from Lebanon. All of
the characters will be happy to use another mercenary army of goys to attack the Syrian gov
and it's allies. Especially attractive might be to use these to buttress the SDF to hold onto
eastern Syria or to attack Turk aligned forces.
unfortunately the majority only read headlines. In a world where evidence matters not,
details of Bibi Nuttuyahoo's claim 1999-2003 is a side show. Bibi is setting the stage for his managing director, D. J. Trump, to "honourably" withdraw
from the JCPOA on May 12 and to pressure the other signatories.
There are somethings larger - I do hope someone (Russia or China) will grant Iran their
nuclear umbrella. And Kim, do make a note to self. The Anglo-Zionists are deep in pretexts to coverup:
the black swan flying under heavy wings with $230 trillion global debt must be brought
down. Not nearly enough in the ESF.
Revelations on the recent 100 missiles hoax to retaliate for the 'chemical attack' that
was not. Can't disappear Robert Fisk's expose - he is widely read..
Christoper Steele's Case on the dock wherein he will be deposed. Oh wait, where is he
in hiding with the Skripals?
~ ~ ~ ~ ~
@ 8, re Russia delivery of S-300s to Syria. Don't count on it as Israel's and Russia's
militaries "have an arrangement to avoid aerial conflict over Syria." Last week Russia's
Ambassador to Israel made that clear.
Looks to me like Trump is groveling before the Saudis for keeping the petrodollar. Hence he
is walking out of the Iran deal despite its geopolitical risk, and trying to show some
fireworks in Syria. What's the half life of this show? More, or less than Trump's average
ejaculation time?
I've no doubt that for a lot of people the question of F-35 usage anywhere near a combat zone
is a so-what issue, but for those of us who have struggled for years to bring some truth
about this fault-filled much-delayed program through the fog of corruption, it's important to
maintain that the current fleet of expensive pre-production F-35 prototypes is truly
worthless.
@ 8, re Russia delivery of S-300s to Syria. Don't count on it as Israel's and Russia's
militaries "have an arrangement to avoid aerial conflict over Syria." Last week Russia's
Ambassador to Israel made that clear.
Uh, that is the reason Russia should use S300. Then, there wouldnt be any "aerial
conflict" over Syrian sovereign airspace to begin with.
@ frances 48 US&Co . . will hit Iran before the football playoffs
And how might they "hit Iran?" Do you mean hit the country itself with a military attack?
I think the World Cup is playing a big role in the decision making as you have said. There
is a lot at stake: investments already made and international exposure also. I can't wait for
it to be finished so we can get back to war !! (sarc)
Israel could start its assassination program, carry out sabotage, airstrikes, there is no
limit to the sick regime and the sick western media acceptance of the same unhinged behavior
by Israel.
the hero of hebrew history above is a great man did obaama not give him 30 billion in war
arms.
did germany not give him 5 free dolphin class submarines for samson option.
does german public funds pay compensation cover amounting to a trillion euros by the year
2070.
the man is a god he can drop and fire depleted uraniun ,drop dialed down nuke bombs kill
president,primeminister sell usa top secret files to china and russia via operation talpiot
can he not listen and blackmail the world.
who else can kill gaza semites by the 10s of thousands and then call critic anti-semite
this man benji is a king maker bow down for you are not fit to lick his precious fingers
Russia began its Syria intervention with an S-400 deployed in Latakia and has introduced
several more since, one being in
Sept 2017 . Syria also has the BUK-M2E AA system and the Pantsir to go with its older and
upgraded S-200 systems along with who knows what else. Just what was off loaded from Russian
supply vessels under the cover of smoke last week (don't know if such veiling's continuing)?
My guess is more AA systems of the type causing Zionists on both sides of Atlantic to
freakout.
As for the Zionists attacking Iranian military bases, those Iran uses in Syria are
joint-use with Syria regardless of what's said by Zionists; so, any such attack will need to
be aimed at Iran proper. The consequences for the region would be horrible--particularly for
Zionists and Saudis: Dimona would be leveled as would Saudi oil infrastructure. The fallout
and other pollution would be appalling. If the Zionists want to keep their skin, they'll
arrest Nutty before he gets his get-out-of-jail war started.
Zionists know they've lost and are contained and constrained, so they're moving into
desperation mode. Too bad they lack the courage to put a pistol to their head and pull the
trigger.
I have trouble in believing that Trump will really attack Iran, just because of some new fake
evidence from Netanyahu. N's been trying this forever. The basic point is that Trump's electorate don't want real war, with American deaths. So
far, it's been like that, 102 missiles following 59 Tomahawks, and no effect.
Trump is dumb enough, Pompeo, Bolton, Trump, I mean you cant get worse, these are the most
sick hawks and Trump have already showed that he could attack states illegally Syria, with no
proof whatsoever. Stop hoping on Trump.
Israel is in a position to attack, but not to defend. Israel's problem is not Iran but the
Palestinians. John Helmer seems to think that
Russia has decided on electronic warfare , that would be reason for panic as Israel's
(and US) stuff is completely dependent on electronics.
There were a number of reasons for the Balfour Declaration, but one of the major ones was
defense of the Suez Canal, vital for communications to India. The Turks had already attacked
the canal twice by 1917. The Brits wanted a local group on the spot that would help to defend
the canal. A Jewish settlement filled the bill.
@Cyrus | Apr 30, 2018 2:20:01 PM | 20
As background knowledge that most overlook, Iran is one of the top sources for uranium ore,
unfortunately it is contaminated with molybdenum making it almost useless for high grading.
That is a primary reason for their investment in uranium in Africa.
There is nothing new about Netanyahu's nonsense-as everyone seems to realise: the only
justification for his party and his particular brand of fascism is the belief that there can
be no peace for Jewish people generally, and Israelis in particular until all potential
opponents have been wiped out or terrorised into slavery. And he has managed to convince most
Israelis of this-something which means that in moral and political, and probably clinical
terms too, they are insane- beyond the reach of reason.
What is new and makes the situation very dangerous is that the US is going along with this
for the ride. It has run out of ideas on how to deal with the gathering storm of consequences
from eighty years of arrogance and careless neglect of the inevitable fall out from its self
indulgent policies. And Trump, under constant pressure from the idiots running the Deep
State, has no conception of the implications of the little games that he is playing and
encouraging others (see Netanyahu above) to play. In his mind he is starring in an extempore
version of the Godfather.
Way down at the bottom of things worth mentioning is the fact that the UK government is in an
even bigger crisis. It is clearly doomed unless the world ends first, which is something it
is happy to consider. May and her allies (who include the Blairite Labour party and almost
all the political class including the SNP and the Liberals) will (as the recent attacks in
Syria showed) go along with Trump whatever happens, which means that the other 'eyes' the
White Commonwealth of Canada, Australia etc will do the same.
This is the problem with empires in decline, they become suicidal. And having reconciled
themselves with death they lose any inhibitions.
Poor old Putin just doesn't understand that: for years it has been clearer and clearer that
Russia and China were rational, legalistic and diplomatic while the 'west' reverted to its
barbaric ways, defying rules, breaking treaties, laughing at international law, drunken
berserkers running amok employing the weapons that they have been accumulating for decades
because fearing that the end is near they fear nothing else. The future holds no hope for
them.
Putin who sees only the reality that the US remains both enviably rich and powerful cannot
understand how unstable and dangerous it has become.
As to China, nothing surprises its leadership any more which is why it spends all day lifting
weights and eating high protein foods, ready to defend itself and studiously avoiding
involvement.
I'm still in shook Putin didn't place 300s in Syria long, long ago. He really can be behind
the curve at times. How could have thought the Empire would not grow more brazen in
aggression?
Here is a well thought out thread that analyses Bibi's claims. Including that Israel probably
hacked into the IAEA systems to get some of the data, in particular a photo of the 'new'
storage site.
Here is former Sweden foreign minister Carl Bildt, in a tweet immediately after
Netanyahu's remarks: "Nothing really new in @netanyahu Iran speech. Confirms that Iran closed
down nuclear weapons program in 2003. Continued technology efforts. In principle all of this
well known. No allegation that Iran cheats on 2015 nuclear deal."
No, for the money. The simple fact is that AIPAC and Israel have an iron grip on each and
every member of the US Congress. It's been established that Israel rules, and Congressmembers
get "contributions" and trips to Israel and other perks. On the other hand, if any Congress
member who gives a slight little anti-Israel (i.e. anti-Semitic) peep will become an
ex-Congressmember. It's happened, with highly-financed opposition to a deviant's
transgression at the next biannual election. One example is Cynthia McKinney (links broken.
@52 I don't understand that argument, Don.
The Russians can unload any S-300 delivery at Tartus. There is zero chance that the
Israelis will bomb them while they remain inside a Russian military base.
And those missiles can stay there while the Russians train up the Syrians in their use.
Again, attacking while they remain inside Tartus is a no-go. And the S-300's are road-mobile. They can be driven out of Tartus to their eventual
operational deployment, which means that they leave the protection of Tartus only when they
are capable of defending themselves.
Or, in short: Israeli plans are predicated on taking out those missiles before they can be
made operational. But they can be made operational while they are still inside a Russian
military base protected by S-400 defences, and by the time they leave that protection the
Syrians are already able to shoot down any attackers.
It is hard to lose money on a bet that the US and its Anglosphere and EU vassals will double
down on stupid. The US heaps one disaster on top of another, it causes the suffering and death of
millions, and Americans don't shed a tear.
"... How about the West which has been trying to build a gas pipeline through Syria into Turkey to supply Europe with gas and break Russia's monopoly of European gas supplies. Don't believe me read the Doha agreement where the west recognised the Syrian rebels, this pipeline was a pre requisite for that recognition. ..."
"... And why would Assad who is winning the war do the one thing that would give America and other western countries the chance to get involved because of outrageous moral indignation. Assad and Outing really aren't that stupid. ..."
How about the West which has been trying to build a gas pipeline through Syria into
Turkey to supply Europe with gas and break Russia's monopoly of European gas supplies. Don't
believe me read the Doha agreement where the west recognised the Syrian rebels, this pipeline
was a pre requisite for that recognition.
Israel? which is not happy with Iran and Lebanon having a presence in Syria, worried that
America was withdrawing.
AlQaeda or the Syrian Rebels, many are both who are losing the war and this is a last
desperate attempt to drag in America and the west?
You've also got Turkey and the Kurds (the Kurds were abandoned by the West after they had
fulfilled their useful purpose), both also players in the region but I can't see a motive
here.
And why would Assad who is winning the war do the one thing that would give America
and other western countries the chance to get involved because of outrageous moral
indignation. Assad and Outing really aren't that stupid.
Any or all of the above could be the true motivation. I am no fan of Assad, Putin, or
Trump or May (or the Blair clone Macron) but the question you have to ask yourself is who
gains from this? And is. this in the interests of a resolution to a conflict, to your safety
or is it something else?
An unusual triple alliance is emerging from the Syrian war, one that could alter the balance
of power in the Middle East, unhinge the NATO alliance, and complicate the Trump
administration's designs on Iran. It might also lead to yet another double cross of one of the
region's largest ethnic groups, the Kurds.
However, the "troika alliance" -- Turkey, Russia and Iran -- consists of three countries
that don't much like one another, have different goals, and whose policies are driven by a
combination of geo-global goals and internal politics. In short, "fragile and complicated"
doesn't even begin to describe it.
How the triad might be affected by the joint U.S., French and British attack on Syria is
unclear, but in the long run the alliance will likely survive the uptick of hostilities.
But common ground was what came out of the April 4 meeting between Turkish President Recep
Tayyip Erdogan, Iranian President Hassan Rouhani, and Russian President Vladimir Putin. Meeting
in Ankara, the parties pledged to support the "territorial integrity" of Syria, find a
diplomatic end to the war, and to begin a reconstruction of a Syria devastated by seven years
of war. While Russia and Turkey explicitly backed the UN-sponsored talks in Geneva, Iran was
quiet on that issue, preferring a regional solution without
"foreign plans."
"Common ground," however, doesn't mean the members of the "troika" are on the same page.
Turkey's interests are both internal and external. The Turkish Army is currently conducting
two military operations in northern Syria, Olive Branch and Euphrates Shield, aimed at driving
the mainly Kurdish People's Protection Units (YPG) out of land that borders Turkey. But those
operations are also deeply entwined with Turkish politics.
Erdogan's internal support has been eroded by a number of factors: exhaustion with the
ongoing state of emergency imposed following the 2016 attempted coup, a
shaky economy , and a precipitous fall in the value of the Turkish pound. Rather than
waiting for 2019, Erdogan called for snap elections this past week and beating up on the Kurds
is always popular with right-wing Turkish nationalists. Erdogan needs all the votes he can get
to imlement his newly minted executive presidency that will give him virtually one-man
rule.
To be part of the alliance, however, Erdogan has had to modify his goal of getting rid of
Syrian President Bashar Assad and to agree -- at this point, anyhow -- to eventually withdraw
from areas in northern Syria seized by the Turkish Army.
Russia and Iran have called for turning over the regions conquered by the Turks to the
Syrian Army.
Moscow's goals are to keep a foothold in the Middle East with its only base, Tartus, and to
aid its long-time ally, Syria. The Russians are not deeply committed to Assad personally, but
they want a friendly government in Damascus. They also want to destroy al-Qaeda and the Islamic
State, which have caused Moscow considerable trouble in the Caucasus.
Russia also wouldn't mind driving a wedge between Ankara and NATO. After the U.S., Turkey
has NATO's second largest army. NATO broke a 1989 agreement not to recruit former members of
the Russian-dominated Warsaw Pact into NATO as a quid pro quo for the Soviets withdrawing from
Eastern Europe. But since the Yugoslav War in 1999 the alliance has marched right up to the
borders of Russia. The 2008 war with Georgia and 2014 seizure of the Crimea were largely a
reaction to what Moscow sees as an encirclement strategy by its adversaries.
Turkey has been at
odds with its NATO allies around a dispute between Greece and Cyprus over sea-based
oil and gas resources , and it recently charged two
Greek soldiers who violated the Turkish border with espionage. Erdogan is also angry that
European Union countries refuse to extradite Turkish soldiers and civilians who he claims
helped engineer the 2016 coup against him. While most NATO countries condemned Moscow for the
recent attack on two Russians in Britain, the
Turks pointedly did not .
Turkish relations with Russia have an
economic side as well. Ankara want a natural gas pipeline from Russia, has broken ground on
a $20 billion Russian nuclear reactor, and just shelled out $2.5 billion for Russia's S-400
anti-aircraft system.
The Russians do not support Erdogan's war on the Kurds and have lobbied for
the inclusion of Kurdish delegations in negotiations over the future of Syria. But Moscow
clearly gave the Turks a green light to attack the Kurdish city of Afrin last month, driving
out the YPG that had liberated it from the Islamic State and Turkish-backed al-Qaeda groups. A
number of Kurds charge that Moscow has betrayed
them .
The question now is, will the Russians stand aside if the Turkish forces move further into
Syria and attack the city of Manbij, where the Kurds are allied with U.S. and French forces?
And will Erdogan's hostility to the Kurds lead to an
armed clash among three NATO members?
Such a clash seems unlikely, although the Turks have been giving flamethrower speeches over
the past several weeks. "Those who cooperate with terrorists organizations [the YPG] will be
targeted by Turkey," says Turkish Deputy Prime Minister
Bekir Bozdag said in a pointed reference to France's support for the Kurds. Threatening the
French is one thing, picking a fight with the U.S. military quite another.
Of course, if President Trump pulls U.S. forces out of Syria, it will be tempting for Turkey
to move in. While the "troika alliance" has agreed to Syrian "sovereignty," that won't stop
Ankara from meddling in Kurdish affairs. The Turks are already appointing governors and mayors
for the areas in Syria they have occupied.
Iran's major concern in Syria is maintaining a buffer between itself and a very aggressive
alliance of the U.S., Israel and Saudi Arabia, which seems to be in the preliminary stages of
planning a war against the second-largest country in the Middle East.
Iran is not at all the threat it has been pumped up to be. Its military is miniscule and
talk of a so-called "Shiite crescent" -- Iran, Iraq, Syria and Lebanon -- is pretty much a
western invention (although the term was dreamed up by the King of Jordan).
Tehran has been weakened by crippling sanctions and faces the possibility that Washington
will withdraw from the nuclear accord and re-impose yet more sanctions. The appointment of
National Security Advisor John Bolton, who openly calls for regime change in Iran, has to have
sent a chill down the spines of the Iranians. What Tehran needs most of all is allies who will
shield it from the enmity of the U.S., Israel and Saudi Arabia. In this regard, Turkey and
Russia could be helpful.
Iran has modified its original goals in Syria of a Shiite-dominated regime by agreeing to a
"non-sectarian character" for a post-war Syria. Erdogan has also given up on his desire for a
Sunni-dominated government in Damascus.
War with Iran would be catastrophic, an unwinnable conflict that could destabilize the
Middle East even more than it is now. It would, however, drive up the price of oil, currently
running at around $66 a barrel. Saudi Arabia needs to sell its oil for at least $100 a barrel,
or it will very quickly run of money. The on-going quagmire of the Yemen war, the need to
diversify the economy, and the growing clamor by young Saudis -- 70 percent of the population
-- for jobs requires lots of money, and the current trends in oil pricing are not going to
cover the bills.
War and oil make for
odd bedfellows . While the Saudis are doing their best to overthrow the Assad regime and
fuel the extremists fighting the Russians, Riyadh is wooing Moscow to sign onto to a long-term
OPEC agreement to control oil supplies. That probably won't happen -- the Russians are fine
with oil at $50 to $60 a barrel -- and are wary of agreements that would restrict their right
to develop new oil and gas resources. The Saudi's jihad on the Iranians has a desperate edge to
it, as well it might. The greatest threat to the Kingdom has always come from within.
The rocks and shoals that can wreck alliances in the Middle East are too numerous to count,
and the "troika" is riven with contradictions and conflicting interests. But the war in Syria
looks as if it is coming to some kind of resolution, and at this point Iran, Russia and Turkey
seem to be the only actors who have a script that goes beyond lobbing cruise missiles at
people.
Report post " What exactly do we get from Russian that we couldn't do without? " <== The
willingness to ally with the U.S. vs the Chinese.
There is no denial of what Russia has done in the last few years, and it's wrong! However,
what is entirely missing from the western media is the U.S. ambassador to the USSR, Jack
Matlock, and George Kennan have been warning the American political elites since the 90's,
prior to Putin was even known and in politics, that the American foreign policy is steering us
straight into confrontations with Russia! It's not if but when it will happen REGARDLESS OF who
is in Kremlin! Nobody cared to heed because we were indulging ourselves as the sole superpower
in the world.
Neither has the American media reported even our old friend, Gorbachev, is praising Putin
and has harsh words for the U.S. In a nutshell, the Russians don't like to be treated as a
nobody country, ie. with decisions of world affairs already made and shoved at their face, and
they can either put up or shut up! However, that is exactly how Washington has conducted
business with Russia until the crisis in Ukraine in 2014. Would the American public put up with
a revolution led by a Russian politician in Mexico City or Ottawa, even though it's Mexican or
Canadians self-determination? Then what makes us think the Russians would tolerate John McCain
leading an anti-Russian revolution in Kiev, even if it's Ukrainian self-determination? Don't
forget the U.S. directly invaded Grenada when they were exercising their self-determination to
ally with the USSR!
This is not about defending Russia. The Russians can take care of that themselves. Rather,
can the U.S. afford to have Russia and China solidify their alliance again? It's already
happening unless we can adopt a sensible Russian policy to turn it around. Who would you rather
ally with? Someone (like the U.S.) who expects you to be a subordinate vs another (like China)
who is willing to treat you as an equal?
One can certainly argue how it is possible to ally with a country like Russia, who sponsors
dictators, meddles in our elections and tramples on other nation's self-determination. If you
are willing to be honest with yourself, just Google it. There is not one thing we accuse of the
Russians that our politicians are not doing it overseas, by MULTIPLE magnitude! The biggest
gripe the Russians have toward the U.S. is "are you preaching democracy or hypocrisy?" Yes, one
sin doesn't justify another, but why our politicians can't uphold this principle when they are
committing treacheries overseas?
I suggest that Russia act as "marginal producer" and refuse to sell oil,
gas or raw petroleum products for less than double the price of other
suppliers.
All of a sudden... thing will change.
After the treatment Russia has gotten for the past year or more, they
are more than justified to adopt this policy.
What's going on?
Read this:
"In late March, the U.S. State Department warned European corporations that
they will likely face penalties if they participate in the construction of
Russia's Nord Stream 2 gas pipeline, on the grounds that "the project
undermines energy security in Europe"
The Nord Stream 2 project and the
denial of pipelines through Syria territory is what's eating at the zio-cons.
This is power politics and Russia / China are too much of a threat.
The Russian central bank opened its first overseas office in Beijing
on March 14, marking a step forward in forging a Beijing-Moscow alliance
to bypass the US dollar in the global monetary system, and to phase-in a
gold-backed standard of trade.
Apr 3 2017 - Europe approves Nordstream 2 gas pipeline from Russia to
Germany
April 6 2017 - need to attack Syria.
Coincidentally, with a new government a gas pipelin can be run from
Qatar to Europe and cut-off Russian gas revenue.
*Three Mediterranean EU countries and Israel agreed on Monday to
continue pursuing the development of a gas pipeline ... EU countries and
Israel ... April 3, 2017 ...*
EU, Israel agree to develop Eastern Mediterranean gas pipeline
The Optics of the Inter National Geo Political Crises would suggest
that The Criminal Oligarch Cabal Bankster Intelligence Deep State Crime
Syndicate are going "All In."
The petroyuan project is the key. It will smash the petrodollar zio-world.
Saddam Hussien thought of doing that in the 80's by consolidating
Arab oil into a basket of currencies backed by gold. The problem for
him was he was a disposable puppet and not able to defend that
project. China and Russia are a different matter. It's driving the
zios batty.
And, the Yuan is now in the IMF basket of SDR's. Ultimately, the
Petro Dollar will meet its demise & it will be decided by which is
the cleanest, dirtiest shirt to put on among the SDR's.
"... I think the only that would really cause the Russians serious economic hardship at this point would be a total EU embargo on Russian oil/natgas. That, of course, would cause the rest of Europe a fair amount of hardship, too, as they would then have to pay 3 or 4 times as much for frack-gas from the US. ..."
I think the only that would really cause the Russians serious economic hardship at this
point would be a total EU embargo on Russian oil/natgas. That, of course, would cause the
rest of Europe a fair amount of hardship, too, as they would then have to pay 3 or 4 times as
much for frack-gas from the US.
Of course, oil/gas being fungible, the EU in such an eventuality would buy higher priced
gas/oil from us or someone and the Russians would just end up selling to other entities.
Whatever we sell to Europe is fuel we can't sell to others and it's not like our export
market is infinitely expandable. The EU has a huge need for natural gas which it mostly gets
from Russia via pipeline. Even if the US had that much surplus capacity, it would take years
to come up with the means to export that much LNG..
"... People think this is about Syria, it is not. It's about oil price. Watch on Monday and the days following oil price will rocket up, and Iran, Russia, US will all be celebrating privately. The Chinese stock market will fall because oil will cost them more. ..."
Syrian state TV said that the attack hit the country's army depots in the area of Homs,
Reuters reported.
A Reuters witness said that at least six loud explosions were heard in Damascus with smoke
rising over the Syrian capital where a second witness said the Barzah district, the location of
a major Syrian scientific research center, was also hit in the strikes.
Meanwhile, Syrian state television reported that "Syrian air defense blocks American,
British, French aggression on Syria." It added that 13 missiles were shot down.
The US has been threatening Damascus with military action since April 7, when a suspected
chemical attack on the Syrian town of Douma, Eastern Ghouta, reportedly killed 60 people and
injured hundreds more. The Syrian government has already strongly denied using chemical
munitions in the flashpoint town.
Joe ,
People think this is about Syria, it is not. It's about oil price. Watch on Monday and the
days following oil price will rocket up, and Iran, Russia, US will all be celebrating
privately. The Chinese stock market will fall because oil will cost them more.
Hagios | Apr 11, 2018 8:50:17 AM |
58 I think that the read target here is the Nord Stream II pipeline. They're currently
unwilling to cancel it out of economic considerations, but they think that they could get away
with cancelling it if NATO attacks Syria and Russia responds with "unprovoked aggression."
NATO's attack IMO will be just large enough that Russia has to respond, then Trump and co. will
cease further military action and continue with economic warfare.
Transit of Russian natural gas via Ukraine will be reduced to just about 10-12 billion cubic
meters annually after the completion of two new pipelines -- Turkish Stream and Nord Stream 2.
That's what Gazprom's chief executive Alexei Miller told a Russian TV channel yesterday, confirming Kiev's
fears that Nord Stream 2 will deprive it of a lot of income in the form of transit fees.
The significance of the new figure can easily be seen when compared with the transit
quantities for last month: Gazprom sent
8.1 billion cubic meters of gas via Russia's eastern neighbor in March, a 21.3-percent
increase on the year. In other words, when Turkish Stream and Nord Stream 2 are ready, Ukraine
will receive something like a 12th of its current annual gas transit revenues from Gazprom.
This is reason enough for Kiev to be so vocally against Nord Steam 2, but unfortunately for
Ukraine, Germany is just as vocally supportive of the project, of which it will be the biggest
beneficiary. The expanded Nord Stream pipeline will have a capacity of 110
billion cubic meters annually.
Still, Miller said, not all transit via Ukraine will be suspended. "We are not saying we
will stop entire transit via Ukraine, since there are neighboring countries that border Ukraine
on the side of Europe. Naturally, supplies to these European countries will continue via
Ukraine."
While the news is bad for Ukraine, it makes sense for Russia as European countries eagerly
seek alternatives to Russian gas, including the "neighboring countries that border Ukraine,"
notably Poland. Yet Germany is by far Gazprom's biggest client in Europe and Russian gas is the
cheapest for Europe's largest economy, hence the support for a project seen as controversial by
the European Commission.
Turkish Stream, for its part, will send Russian gas to the European part of Turkey up to the
border with Greece, to supply gas to southeastern Europe. Its capacity is much smaller than
Nord Stream's, but still larger than the future transit via Ukraine, at 15.75
billion cubic meters of gas.
"... North Korea's negotiating position has not really changed with the announcement. They have repeatedly said for years they are willing to agree to denuclearization of the Peninsula in return for security guarantees. I find the media trumpeting this as a new development rather vexing. Anyways, China has been putting the screws on them since about September/October (Apparently, they told Kim Jongun they know they can't overthrow the DPRK government, but they can get rid of him personally), which is also why there have not been any new nuclear tests. ..."
"... I think Yves has got it right: USA threatens PRC with tariffs, so PRC pressures NK to make concessions to the USA. i.e. Two big guys screwing the little guy. ..."
"... In the USA, imperialist machtpolitik is a thoroughly bipartisan affair. It doesn't matter how faithfully NK or PRC might fulfill obligations. Trump's successors, whoever they may be, will simply apply more pressure and demand more concessions. They won't stop until somebody else stops them. ..."
I believe Trump could negotiate a deal. But I also believe he could blow up the whole talk
before it even happens. He has shown that he'll bend quickly to neocon pressure, with
increased interest in foreign war (Bolton hiring) and the ramping up of hostilities by
bouncing Russians from the U.S. over the phony poisoning story in the UK.
I don't disagree with your comment, but not comfortable with the term "bend to". Trump
gets enamored with different people at different times, but he always is looking
down at them. They may get enough rope to scare the rest of us, but they are still on a
rope.
Bolton is horrible, but a lot of other horrible people have come and gone in this really
quick year.
Bolton is horrible but probably won't last long. Nobody at Trump's ear has, including his
own children.
Trump just announced that we're withdrawing from Syria. That's more than Obama ever
did.
Part of being a nationalist demagogue is that you're not as interested in foreign wars
unless they enrich the country. Not a single one of our wars does that. There's nothing
interesting in mercantilism, for instance, that we can't do at home (drill baby drill).
I'm not saying I agree with that view, I'm just saying that if he's a nationalist
demagogue, it only follows that he's not interested in, uh, "non-for-profit warmaking".
I am NO Trump fan or voter, but it does appear that he's the first one to apply sanctions
to those specific Chinese banks handling the trade with North Korea.
(Somewhat) OT, but it strikes me that the best way to look at Trump is through the lense
of what he is – the US version of Sylvio Berlusconi. A sleazy billionaire Oligarch with
no core principles and a fondness for Bunga Bunga parties.
Rather than as LITERALLY HITLER as per the verbiage of hashtag the resistance.
Thus, rather than as a crazed madman bent on "evil" at all times one wonders whether Mr.
Bunga Bunga would do a deal with Lil' Kim. Sure he would, assuming that the ruling military
Junta allows him to. It might be in the interest of the latter to de-escalate this particular
hotspot (as NK crisis/hype fatigue may set in) and simply push Iran as the next flashpoint to
hype.
Indeed! They even sound quite similar -- I recall in a speech that Berlusconi gave when he
was still the Italian president and the Italian left was screaming for his resignation,
Sylvio claimed such demands were making him uneasy, since if he was to go home, and he had 20
homes, it would be difficult for him to decide which house or mansion to go to!
It seems the bottom line for negotiations with North Korea have little to do with this
article which covers Trump's thoughts on nuclear proliferation between major powers that have
massive stockpiles.
North Korea is mainly interested in protecting itself from regime change and from becoming
a US outpost (as in target) butt up against China. It is hard to believe that Kim Jong-Un
would get any advantage whatsoever out of dismantling his nuclear arsenal, however small. One
assumes he is aware of Gaddafi in particular and US's track record on keeping it's promises
– particularly over the span of different administrations – in general.
The above comment assumes full disarmament as the minimum condition of any "negotiation"
since Trump has gone so far out of his way to make that clear.
Oh, and now see the lead story at the Financial Times, China uses economic muscle to bring
N Korea to negotiating table:
China virtually halted exports of petroleum products, coal and other key materials to
North Korea in the months leading to this week's unprecedented summit between Kim Jong Un,
the North Korean leader, and his Chinese counterpart Xi Jinping.
The export freeze -- revealed in official Chinese data and going much further than the
limits stipulated under UN sanctions -- shows the extent of Chinese pressure following the
ramping up of Pyongyang's nuclear testing programme. It also suggests that behind Mr Xi's
talk this week of a "profound revolutionary friendship" between the two nations, his
government has been playing hard ball with its neighbour.
I would normally agree but Kim Jong-Un was just summoned to China. Not even given a state
visit. The Chinese announced North Korea would denuclearlize:
North Korea's leader Kim Jong Un pledged his commitment to denuclearization and to meet
U.S. officials, China said on Wednesday after his meeting with President Xi Jinping, who
promised China would uphold friendship with its isolated neighbour.
China has heretofore pretended that it couldn't do anything about North Korea. It looks
like Trump's tariff threat extracted China jerking Kim Jong-Un's chain as a concession. I
don't see how Kim Jong-Un can defy China if China is serious about wanting North Korea to
denuclearlize. Maybe it will merely reduce its arsenal and stop threatening Hawaii (even
though its ability to deliver rockets that far is in doubt) and just stick to being able to
light up Seoul instead.
Agree. I wasn't aware of the details you mention above regarding the export freeze. (I
won't use Google and my normal 'trick' doesn't work to get around FT's paywall – and I
won't use the trial membership either). I'm hopeless.
Anyway, you make a very convincing case. I can only imagine that Kim Jong Un is one
miserable scared rat. My point about a "silk noose" below was perhaps on the mark.
Kim might agree on paper or through an insincere promise to denuclearize, but I don't see
a closed authoritarian regime like the North agreeing to an inspection regime that would
insure that such a pledge would be lived up to. Reduction, but build-up on the sly w/o
inspections.
China may be interested in a deal to the extent that it prevents a bloody war breaking out
that they'll probably expend manpower to help clean up and it insures the security of a North
Korean buffer that keeps American troops off their border; After all, they've got to keep the
powder dry for "reunification" with Taiwan.
I also don't believe that the US would agree to concessions, such as removing American
troops from the peninsula. the pentagon wouldn't like it, the hawks around Trumps wouldn't
like it, and I believe the SK leadership would not be too crazy about the potential
ramifications for their security with such an agreement.
But, can Trump (by extension, the US), make an agreement that can be relied on over its
term?
For any hope of NK trusting any deal with the US he would have to stand by the Iranian
deal. Then there's Bolton and the Neocon Will To War, for deeply pathological reasons which
by nature cannot be debated.
In this case, the mere possibility of a "deal" is possible, but only if there is a third
party to hold both of them to it.
That's the crazy thing about this. What possible inducement could Kim Jong-Un have gotten
to attend his own funeral? Why would anyone trust the US an inch?
I suppose if he can keep his own people in a suspended state of extreme propaganda, then
he might be vulnerable to his own medicine, but that seems at odds with his behavior so far
(such as the assassination of his uncle). If anything, he would be especially leery of
anything coming out of the US.
And then can he really be that psyched out by Bolton, Pompeo and Torture Lady so
that good cop Trump can hand him is own death certificate with a space for his signature?
Whatever happened during this China trip, the overarching theme must have been how to
manage the US. Here's one rough scenario:
NK 'disarms' to some definition, under the auspices of China, acquiring in return an
explicit Chinese security umbrella for the buffer it presents between them and SK. Nobody
really wants a unified Korea in any case. In return, the US vacates SK militarily, ever so
discretely and over time.
Done correctly, and with the finesse necessary for Trump, China is in a position to
extract all sorts of concessions from the US on other fronts as well. Nothing positive is
going to happen here without China, and they hold most of the cards. If nothing positive
happens, we have to consider the pressure that'd build on Trump to do something, anything,
and that probably being something rash. (Better a big disaster over there than a mammoth one
over here thinking).
"he can't go willy nilly and set nukes a-flying just because it struck him as a good idea
that day."
I mean sure. His "button" isn't literally connected to a missile somewhere, but he sure as
hell can ask that nukes be fired whenever and wherever he wants. You could argue that someone
in the chain of command would prevent that from happening, but that's more of a hope than a
guarantee. For a really good read on how this all works and the history of the nuclear
program I highly recommend https://www.amazon.com/Command-Control-Damascus-Accident-Illusion/dp/0143125788
With Bolton on board and seemingly everyone with half a brain, a little logic and the
ability to hold their tongue for more than about 5 seconds out, I highly doubt anything will
come of these negotiations. In fact, I'm more worried that the US will get steamrolled by
China and NK.
That isn't true. See the link I provided, which you clearly did not bother to read.
Various people can refuse his order as illegal. Former Secretary of State Jim Baker, in a
Financial Times, before Trump was elected, said the same thing. Bolton is the National
Security Adviser. He may have a lot of informal power by having direct access to the
President, but he does not tie in to the formal chain of command, either at the DoD or
State.
Oh I read it and I've read many other articles and a lot of non-fiction on the issue.
Again, I would call your position and the position of this article hopeful at best. Trump has
the football, he has the codes in his jacket pocket and everyone responsible for carrying out
the order to launch has been raised up through a military system that ensures no one
questions an order from their superior. Relying on various people to refuse his order as
illegal in this system is not a fail-safe I feel comfortable with. I do find it interesting
that you just assume I didn't read the article as if this one article is the end all be all
on the subject.
The article seems a bit confused about what it's trying to say. Stopping nuclear
proliferation has been a major policy priority of the US and other western governments since
the 1960s, and if I recall correctly it was one of Bolton's priorities when he was in Bush
the Lesser's administration. It's something in which all of the declared nuclear powers have
an interest, because the smaller the number of nuclear powers in the world, the greater the
difference between them and the rest. This is much more important than wild fantasies about
rogue attacks: if N Korea becomes a de facto nuclear power like India, Israel and Pakistan,
then all sorts of other countries might be tempted to have a go, starting with S Korea (which
has the capacity and has been caught cheating before). Whilst this risk is objectively small,
an end to the NK programme would make it even smaller. I suspect the deal will be that NK
denuclearizes and China guarantees its security: a non-nuclear NK will be even more of a
client state than it is now.
Nuclear competition among the superpowers is quite different and involves a whole set of
different issues.
Less warfare = more wall
But remember the last time Trump said something in Syria's favor? A chemical attack happened
in small village for no logical reason and the hawks immediately took to framing Assad. Trump
then backed off and took harder line on Assad, launching missiles into Syria.
So I'm inclined to think he wants a deal. But look out for screaming hawks immediately
trying to scuttle anything.
Perhaps 30 years ago, Trump was an international defense luminary, but I see little
evidence of the boasted emotional control and cool Trump claimed. He is unarguably a
successful grifter. Is that what it takes to make peace? What happens when the other guy
realizes he has been lied to by a congenital liar? Back to square 1.
In my take, the recent meeting between the heads of China and N Korea just Trumped any
leverage the US might have had in peace talks. Trump will be there only if a scapegoat is
needed. Both S. Korea and Japan have expressed doubts about our reliability as a defense
shield against powerful China – Japan and the Koreans' neighbor. What Little Rocketman
has likely achieved is diplomatically checkmating the US. Now Trump's tariff threats serve
only to push US allies in the region closer to China. Should that turn out to be the case,
the economic repercussions are as dangerous and unpredictable as nukes in the air or as Trump
himself. I sure hope I got this all wrong.
"no enduring principles" is a feature of politicians everywhere today. Their concern is to
represent the rich and their qualification is to present those biased arguments in a way that
beguiles the electorate into supposing its a good idea for them as well. Step Two is the "who
would have thought it?" response after the country catches on.
In former times the candidate for public office would assert his principles on the
hustings and the voters would remember what they knew of him before voting. Sure, there were
ambitious unreliable people who were willing to exchange their reputations for office but
they were few. We should get back to those days.
We allowed our merchants and spooks to drive USSR to the precipice without any thoughts
about the nukes they had. It appeared then that warheads supposedly in Ukraine were missing.
We will likely discover what happened to them in due course. It is possible that surveillance
of communications is the main reason they are not a thread for the time being but that does
not mean they have dropped out of existence.
Thank you NC for introducing an issue that should concern economists as much as everyone
else.
North Korea's negotiating position has not really changed with the announcement. They have
repeatedly said for years they are willing to agree to denuclearization of the Peninsula in
return for security guarantees. I find the media trumpeting this as a new development rather
vexing. Anyways, China has been putting the screws on them since about September/October
(Apparently, they told Kim Jongun they know they can't overthrow the DPRK government, but
they can get rid of him personally), which is also why there have not been any new nuclear
tests.
Don't forget the United States has itself promised to denuclearize, under the NPT.
It would certainly bring me great pleasure if Trump of all people were to bring about some
great positive change in regards to the Forever War with North Korea. Imagine all the whining
liberals if Trump, unlike Obama, actually did something worthy of a Nobel Peace Prize.
I think Yves has got it right: USA threatens PRC with tariffs, so PRC pressures NK to make
concessions to the USA. i.e. Two big guys screwing the little guy.
PRC and NK leaders might think that all they have to do is get through a short patch of
bad weather until 2020. If so, they are badly kidding themselves.
In the USA, imperialist machtpolitik is a thoroughly bipartisan affair. It doesn't
matter how faithfully NK or PRC might fulfill obligations. Trump's successors, whoever they
may be, will simply apply more pressure and demand more concessions. They won't stop until
somebody else stops them.
Russian elite already views May's government as bandits, who staged this despicable provocation. So stakes for British elite are
very high.
And the way May government tried to capitalize on this "poisoning" is really like going "all in". May clearly went what French call
"va bank". Reckless statement of Johnson, who is a very weak diplomat, but no fool, if a clear testament that they expect to prevail
with pretty weak cards. With ultimate reliance on power of the USA to secure favorable outcome.
Looks more and more that this is a part of Russiagate, or color revolution against Trump, however you want to call the effort: the
collusion between the intelligence heads of the Obama administration with British intelligence to oust President Trump.
The Russian Foreign Ministry is now openly pointing the possibility of a UK intelligence involvement. That sheds a very bad light
on EU vassals who without any questioning and with any proof immediately fell into line behind Theresa May.
The Chinese Foreign Ministry even said this was a tool used by the Europeans and the United States to try to get unity at a point
when they were completely disunified. And this is the old geopolitical game, that in order to create unity you create a war, and then
everybody has to fall into line before attacking Iran.
Compare with Ron Paul views on this incident: www.youtube.com
Notable quotes:
"... The UK foreign secretary, Boris Johnson, in a speech late on Wednesday waxed lyrical about how the Skripal episode represented a turning point in the west's approach to Russia, but his officials are aware that this mood can easily dissipate as other considerations, such as commerce, energy security or the Middle East come into play. ..."
"... The UK will try to push for further measures against Russia at the June meeting of the EU heads of state. If it is ambitious, it may may challenge German support for Nord Stream 2, the gas pipeline from Russia that could put European energy demand at the mercy of Moscow. ..."
That does not mean the crisis will necessarily end there, or that the crisis is contained.
Russia, whose standing among the international community
is badly damaged, is determined to do go further to clear its name, or at least throw up enough chaff so that a chunk of western
public opinion doubts the British intelligence service's account of Skripal's poisoning. Moscow has already suggested a meeting on
Monday of the executive of the Organisation for the Prohibition of Chemical Weapons (OPCW) to have "an honest conversation" about
the poisoning.
The OPCW is studying samples – provided by the UK – of the novichok nerve agent allegedly used, but does not have the ability
to judge the identity of the person that
placed the agent by the door of Skripal's house . But the Russian foreign minister, Sergei Lavrov, is determined to put the UK
on the defensive and has already claimed that "if our western partners dodge the meeting then it will be further evidence that every
thing that is happened is a provocation".
Russia has also responded to the apparent recovery of Yulia Skripal, who was poisoned alongside her father. She may be able to
provide insights into how the poisoning occurred, or even reveal whether she knows of some other motive by some other non-state actor.
The British intelligence services will be debriefing her as soon as her health permits. It would clearly be a huge embarrassment
for the UK government if it emerged she believed the Russian state was not involved.
As it is, the UK government is aware that some allied leaders, despite the public show of solidarity, face skeptical voters at
home who are either against a confrontation with Vladimir Putin, or expect more convincing proof to be provided.
The UK foreign secretary, Boris Johnson,
in a speech late on Wednesday waxed lyrical about how the Skripal episode represented a turning point in the west's approach
to Russia, but his officials are aware that this mood can easily dissipate as other considerations, such as commerce, energy security
or the Middle East come into play.
The UK will try to push for further measures against Russia at the June meeting of the EU heads of state. If it is ambitious,
it may may challenge German support for Nord Stream 2, the gas pipeline from Russia that could put European energy demand at the
mercy of Moscow.
What a difference two months makes. Back in January, with jobs aplenty and Americans
spending like drunken sailors (sending their savings rate to the lowest on record), average
hourly earnings suddenly spiked, unleashing the February VIXplosion over concerns that the Fed
is behind the curve and will be forced to hike much more aggressively.
Well, fast forward to today, when all those "green shoots" are either dead or on the verge,
and after today's Personal Income and Spending report, it appears that it is stagflation that
is once looming.
First, core PCE, the Fed's favorite inflation gauge, rose 1.6%YoY in February 2017; the
biggest gain since April 2017. Meanwhile, the PCE deflator rose by 1.8%, coming hotter than
expected, just as the cellular service price collapse falls out of the Y/Y data, sending annual
inflation higher by 0.3%, and is set spook the next set of CPI data. In other words, inflation
is here.
Then there is the US consumer's reaction, and while until just a few months back the US
savings rate was at all time lows, it has since jumped to 3.4%, the highest since August 2017,
as households are no longer spending more than they can afford, a theme we observed at the end
of 2017. This also means that spending is lagging income for 3 consecutive months, as something
appears to have spooked American consumers.
That something may be wages and salaries themselves, because while the BLS' statistical
approximation of average hourly wages is just that, the BEA's personal income actually carries
wages and salaries data for both private and government workers. What it found is that after
peaking in December, wage growth for these two worker groups has declined for 2 consecutive
months, confirming what many have warned, namely that the recent period of benign wage increase
is over, and now the slowdown begins.
China's rise has made the US fear the loss of its role as the sole superpower. And the
neoliberal elite fights back. That replays on a new level rift of the USSR and China in the
past.
... the plan to impose 25 per cent tariffs on $60bn of (as yet, unspecified) Chinese exports
to the US shows the aggression of Mr Trump's trade agenda. The proposed tariffs are just one of
several actions aimed at China's technology-related policies. These include a case against
China at the World Trade Organization and a plan to impose new restrictions on its investments
in US technology companies.
The objectives of these US actions are unclear. Is it merely to halt alleged misbehaviour,
such as forced transfers -- or outright theft -- of intellectual property? Or, as the labelling
of China as a "strategic competitor" suggests, is it to halt China's technological progress
altogether -- an aim that is unachievable and certainly non-negotiable. Mr Trump also
emphasised the need for China to slash its US bilateral trade surplus by $100bn. Indeed, his
rhetoric implies that trade should balance with each partner. This aim is, once again, neither
achievable nor negotiable.
...A still more pessimistic view is that trade discussions will break down in a cycle of
retaliation, perhaps as part of broader hostilities.
(vox.com)The US electricity sector is in a
period of unprecedented change and turmoil . Renewable energy prices are falling like
crazy. Natural gas production continues its extraordinary surge. Coal, the golden child of the
current administration, is headed down the tubes. In all that bedlam, it's easy to lose sight
of an equally important (if less sexy) trend: Demand for electricity is stagnant. Thanks to a
combination of greater energy efficiency, outsourcing of heavy industry, and customers
generating their own power on site, demand for utility power has been flat for 10 years, and
most forecasts expect it to stay that way. The die was cast around 1998, when GDP growth and
electricity demand growth became "decoupled." This historic shift has wreaked havoc in the
utility industry in ways large and small, visible and obscure. Some of that havoc is
high-profile and headline-making, as in the recent requests from utilities (and attempts by the
Trump administration) to bail out large coal and nuclear plants.
So on the 15th anniversary of the Iraq debacle, a neocon who cheered it on is rewarded
with a national security post where he can cue up the attack on Iran that was always the
ultimate prize for Israel's US stooges?
Guess we'll be out marching again, just like last time. Bolton's walrus mustache is the
21st century version of Adolph H's toothbrush mustache. Down with the Persian Untermenschen!
/sarc
Of course while working for Cheney Bolton was pretty confident about getting Dubya to
start a war with Iran and that didn't happen. Here's a backgrounder that suggests that Bolton
is tight with both Adelson and the Mossad so one way of looking at this has Russia fading as
a target and Iran falling under the bulls eye. Trump's recent friendly phone call with Putin
was contrary to instructions from his NSC and therefore presumably McMaster.
Looked at optimistically it could be out of the frying pan and into a smaller frying pan
(for us if not for Iran but that remains to be seen).
Of course looked at pessimistically it's terrible news but if the public and Congress are
afraid of Trump gratuitously starting a new war then perhaps they should take away his power
to do so. Seems the Constitution did have something to say about that.
Tol'ja so these miserable wretches simply cannot die resurrection a promise any time a
misfit administration takes power all that audition time on FoxNews paid off Trump stripping
the cable channels of right-wing bloviators "best people for the jawb", don't you know.
A modern fellow of genus Homo protests his innocence. "I don't work because I worked much
harder before", says he. "I labored for ten years at a crap job earning $30,000 per year and
that earned me the right to live in miserable conditions in which the loss of my job would
have made me destitute in weeks. But, I was not content to labor as my fellows. I got a
second job at $20,000 per year and I was so thrifty that I spent not a penny of it but banked
it all so that at the end of my time I had $300,000, a princely sum. I invested it wisely at
10% and now I can live for the rest of my life, if modestly, off the proceeds of only my own
sweat, my own thriftiness, and my own discipline. And, if there was any luck to it - in my
not facing misfortune or ill health or any other calamity - that was the product of my own
luck too. I owe nothing to anyone. What I have is due to myself alone, and those who have
much more than I, it seems to me that they must have arrived at it the same as I, perhaps
over generations. What is this social power you speak of when it is only individual labor and
individual property that stems from it? It seems to me that you merely envy that which you
are too lazy to earn for yourself."
"My dear independent fellow" says we, "let us understand the simple arithmetic of your
claims. If your story is as you say and we ignore all else that you report, still at the end
of ten years, we see only $200,000. And, if you continue to live at this admittedly low
level, nevertheless, you will have run through your entire accumulated proceeds in only 6
years and eight months. More than this, by your accounting, it would take one and a third
lifetimes to create a single lifetime without labor, and this at the exceedingly low
standards and exceptionally favorable circumstances that you assume. How then are we to
explain those who live without labor for generations, and this at a thousand or ten thousand
times times the level that you report? How many generations of 'thrift' and 'hard work' would
this require? What you claim is impossible for you and beyond impossibility for those who
live above you. Where is this magic of 'individual labor and individual property' that you
speak of?"
"But you forget interest", protests our friend. "My money makes money, and simply by the
act of having some which is not consumed in day to day living, that which I save is
augmented. It is this which grants me my independence."
"We forget as much as your money 'makes'," answers we, "which is nothing at all. Set your
money on the table and leave it there for as long as you like. Nothing happens to it. It
remains the same. It is only by setting it in motion as capital that anything whatever is
'made' and that 'making' is the product of labor, the same as your own. Your interest
comes from the command of the labor of others, just as your own was once commanded and
after 6 years and eight months not a speck of 'hard work', 'thrift', 'good luck' or 'wisdom'
is left. Neither is there any trace of 'independence' or 'personal property' You now live by
the labor of others... by the transformation of your pitiful 'savings' into Capital, no
matter how small the sum. It is your ability to command the labor of others as a social
power that gives you your ability and that you have a poor man's caricature of that
process changes nothing other than to lay fraudulent your claims to the right. You might as
well claim innate superiority or the right of the sword as did the slave master or the
god-given hierarchy of obligations of the lord or even the phases of the moon, if you like.
You eat without working because you have maneuvered yourself into a position in which others
work to feed you. You are the opposite of what you claim."
"You're just trying to make me feel bad.", says our friend.
"We don't give a shit how you feel", says we. "It is modest enough what you do... just as
you claim. It is your willingness to ignore what is closer to your face than your nose that
we tire of. "
Our friend orders another beer and pretends to watch the hockey game though he would be
hard pressed to name two players on either team.
Capital is therefore not only personal; it is a social power.
I am not a fan of LNG. If I was a Euro there is no way I would allow LNG in, whether
from Sabetta in Russia or from Sabine Pass in the US.
Being fan or no fan of specific type of energy hardly factors into economic reality of
Europe and coercing it into buying American LNG. If Europe continues to buy Russian gas --
that will be bad news for US. The US, however, may yet succeed in sabotaging Nord Stream II
and thus, in a long run, kill European industrial competitiveness thus opening European
market for US products. At least that is the plan. Here is a small taste of what is at
stake.
Turkish press is reporting that 'TurkStream' , the pipeline to bring natural gas from
Russia to Turkey, is now 80% complete and to be in operation by later this year. It is
expected to deliver close to 16 billion cubic meters per year from Gazprom to Turkish gas
distribution networks. A second phase scheduled for next year will reportedly deliver an
equal amount to Greece and other points in southern Europe.
This is in addition to the existing 'BlueStream' pipeline from Russia to Turkey,
operational since 2005, that also has a 16 billion cubic meter per year throughput.
Why the Western concern about NordStream pipeline but none about TurkStream? Are there no
sanction problems for the Swiss company working with GazProm? Plus I wonder if this is one of
the reasons why Russia has lately become paranoid regarding US Navy FON operations in the
Black Sea?
Why the Western concern about NordStream pipeline but none about TurkStream? Are there no
sanction problems for the Swiss company working with GazProm? Plus I wonder if this is one of
the reasons why Russia has lately become paranoid regarding US Navy FON operations in the
Black Sea?
The main concern has the name Sabetta--it is the port and a hub to a largest Liquid
Natural Gas operation, which also happened to be (in relative terms) next to Europe's LNG
ports. I usually don't do this but I apologize, here is a link to my blog's piece on
that:
LNG is precisely a commodity which is counted by US as a major component in possibly (and
most likely not very probable) US re-industrialization. For that, the US has to sell her LNG
to Europe. This implies removing Russian LNG from the EU market which dwarfs that of Turkey
and some South European nations. Germany, France, UK, Holland among others are the prize
here. Russian LNG must be verboten, in US mind, or at least pushed back. As per FON--it has
nothing to do with FON but has everything to do with:
1. Flag demonstration--that is presence and Fleet In Being.
2. Signals collection from Sevastopol, Novorossyisk and, in general, all Russia's Southern
Military District emitters.
"... China, Russia, et. al. realized that the debt-saturated U.S. was propped up by the fact that the U.S. "dollar" was the reserve banking and trading currency of the entire world and that the "Petrodollar" was one of the main pillars of it, and that this system was the main source of U.S. influence and power around the world and allowed the U.S. and friends to impose financial sanctions on other countries. They also saw that the U.S. was not using gold or silver as a type of support or backup for the financial system. Therefore, they developed their own computer servers to route orders between banks and financial companies that will operate outside of the SWIFT system dominated by the U.S. It is now operational and is called CIPS (Cross-Border Interbank Payment System)-- ..."
In addition to the common desire of some (or many) human beings to exercise authority over
other groups of people, I think Xi Jinping and his supporters want to complete the large and
complex economic and financial projects they have started. It is not just the road and
railroad and other infrastructure projects tied to the regional trading structure China has
been working on, but a financial structure independent of the existing banking and financial
system that was put together by the U.S. and Britain.
It is my opinion that China, Russia, Iran, and probably additional countries decided to
make a move after the brazen 2003 invasion of Iraq by the U.S. and others, and the massive
financial fraud partly exposed in the U.S. and Britain in 2008 and afterwards, which fraud
was not stopped and the perpetrators were bailed out and none were prosecuted.
China, Russia, et. al. realized that the debt-saturated U.S. was propped up by the
fact that the U.S. "dollar" was the reserve banking and trading currency of the entire world
and that the "Petrodollar" was one of the main pillars of it, and that this system was the
main source of U.S. influence and power around the world and allowed the U.S. and friends to
impose financial sanctions on other countries. They also saw that the U.S. was not using gold
or silver as a type of support or backup for the financial system. Therefore, they developed
their own computer servers to route orders between banks and financial companies that will
operate outside of the SWIFT system dominated by the U.S. It is now operational and is called
CIPS (Cross-Border Interbank Payment System)--
In addition, they are moving to break the Petrodollar. In the early 1970's, the U.S. made
a non-treaty deal with Saudi Arabia that if they got the rest of OPEC to sell oil and gas to
the whole world only in U.S. dollars and would plough some of the money back into U.S.
government debt and into the stock market casino, the U.S. would protect the Saudi ruling
family so it could run the entire country as its private business. This forced the whole
world to get U.S. dollars in order to buy oil and gas, which further put the dollar in as
banking reserves around the world, which further pushed the dollar into being used to settle
much of the trade between countries.
However, now some contracts are being made to buy and sell oil and gas not in the U.S.
dollar, but in other currencies, especially the Chinese renminbi (a/k/a yuan). Also, both
China and Russia have been buying large amounts of gold for several years. To get around some
of the U.S. sanctions prior to the Joint Comprehensive Plan of Action (JCPOA), Iran sold oil
and gas in exchange for gold. Since gold is not a government created and ordered "fiat"
money, it cannot be choked off by the SWIFT system or controlled through numbers on computer
hard drives in banks.
Russia also remembers what happened after the collapse of the Soviet Union when the U.S.
financial "experts" [sic] went there to set up a "wonderful" market-based economy, but what
happened of course was the creation of a system to loot Mother Russia and establish a new
oligarchy tied in with the U.S., Britain, and Israel.
In the early 1990's when the Soviet Union pulled out of eastern Europe, the U.S. had a
chance to help the world be a safer and more peaceful place. The methods of medical diagnosis
and surgical technology developed in the U.S. could have been the basis of a new foreign
policy that would have voluntarily opened doors across the world.
But it was not to be. The desire of some to be king of the world pushed the chance of
improvement aside. Nevertheless, today even autocratic governments see that having financial
and governmental options can be a beneficial thing.
And to our immediate south, a movement has been going on for a while in Mexico to
establish a money based on silver, promoted by Hugo Salinas Price and others--
For obvious reasons, I am not optimistic about Mexico, the deterioration of which has been
a sad thing to see. It needs a new and real revolution.
Xi's move is not a unilateral thing. He had to have the support of the ruling committees
in China. Keep your eye on the financial structure, gold, and silver.
I've been waiting to see what happens with the SDR (Special Drawing Right). The IMF
(International Monetary Fund) added it to the SDR basket in October 2016 after a lot of foot
dragging by the US. The AIIB (Asian Infrastructure Investment Bank) was setup largely as a
Chinese alternative to the US dominated IMF and World Bank because they were not being given
an appropriate "place at the table" in the IMF, which was founded as part of the Bretton
Woods Agreement at the end of WWII.
I see the global monetary reset currently underway as the slowly moving, but
unstoppable, glacier that is forcing all other events.
"... When I read: "As X becomes increasingly aggressive, even reckless geopolitically," frankly Russia was not the first country that came to mind. ..."
Yves
here. I trust readers will be able to filter out the new Cold War assumptions in the piece to
focus on the price of Germany's plans. Does anyone have an informed take on how significant the
broader economic impact might be?
By Tim Daiss, an oil markets analyst, journalist and author working out of the
Asia-Pacific region for 12 years who has covered oil, energy markets and geopolitics for
Forbes, Platts, Interfax, NewsBase, Rigzone, and the UK-based Independent (newspaper) as well
as providing energy markets analysis for subscription newsletters. Originally published at
OilPrice
More problems are mounting for Russia's oil and gas sector. This time it's coming from
Germany, which until recently usually gave Russia's energy sector more lead way than the U.S.
or other allies.
But now it seems that German Chancellor Angela Merkel has also had enough. On Monday,
Bloomberg reported that Merkel's government is seeking to build a liquefied
natural gas (LNG) industry in Germany basically from scratch to reduce the nation's dependence
on supplies arriving by pipeline from Russia and Norway.
Merkel backs "all initiatives supporting further diversification of gas supply -- whether
from different regions or means of transporting gas," said German Economy and Energy Ministry
spokeswoman Beate Baron.
The move comes as natural gas resources from the UK and the Netherlands are depleting, and
Germany is forced to rely more on Russian gas. Merkel's newly formed coalition has a "coalition
contract" that among other policies sets out energy agenda including LNG for the next four
years, the Bloomberg reported added.
Germany, for its part, is Europe's largest gas consumer. In
2015, the country consumed 7.2 billion cubic feet per day (Bcf/d) of natural gas, according to
U.S. Energy Information Administration (EIA) data. According to the German energy research
group, AG Energiebilanzen, imports account for about 90 percent of Germany's total natural gas
supply, while most imports come from three countries: Russia (40 percent of total imports in
2015), Norway (21 percent) and the Netherlands (29 percent).
Moreover, German companies are participating in Russia's controversial Nord Stream 2
pipeline, an expansion of an existing route for gas to flow from Russia to Europe under the
Baltic Sea. The U.S., Poland and others have recently condemned the pipeline as a threat to
European security.
As Russia becomes increasingly aggressive, even reckless geopolitically, the security threat
to not only the EU but to Germany is apparent, causing the country of some 83 million people to
do an abrupt energy policy about face.
Germany's LNG pivot also comes as a geopolitical storm between the U.K. and Russia
intensifies over an alleged Moscow-orchestrated nerve-agent attack on British soil against what the
BBC called a double spy and his daughter.
British Prime Minister Theresa May retaliated last week by expelling Russian diplomats and
seeking alternatives to Russian gas, including LNG produced at its new Arctic plant, the Yamal
LNG export project. Addressing the UN Security Council last week, the U.K.'s deputy UN
ambassador, Jonathan Allen, accused Russia of breaking its obligations under the Convention on
the Prohibition of Chemical Weapons.
The U.S. for its part also condemned the nerve agent attack. U.S. ambassador Nikki Haley
said that Washington stood in "absolute solidarity" with Britain, citing the "special
relationship" between the two countries and saying that Washington would "always be there" for
the UK.
Germany's Abrupt LNG Pivot
However, until recently many in Germany accused the U.S., notably President Trump, of using
U.S.-sourced LNG as a geopolitical weapon to challenge Russia's decades' old dominance of
European gas markets -- an accusation that played perfectly into the hands of Russian energy
companies and even Vladimir Putin.
When Trump singed fresh sanctions against Russia's energy sector in August, Uniper -- a
German utility and one of Europe's largest energy firms -- said the new sanctions were an
American economic move as much as a political one.
"The core reason (for the sanctions) is strategic economic interests, meaning the targeted
dominance of the US in energy markets," Uniper CEO Klaus Schaefer told journalists shortly
after Trump signed the sanctions bill. Uniper is one of five companies that have invested in
Nord Stream 2.
Brigitte Zypries, Germany's economy minister, claimed last year that the sanctions violated
international law and said that the EU should take action against the U.S. "Of course we don't
want a trade war. But it is important the European Commission now looks into countermeasures,"
she said. "The Americans can't punish German companies because they have business interests in
another country."
Cost Factors Could Impede Pivot
However, any Germany pivot to LNG away from Russian gas will come at a cost. Shipping LNG by
one of several suppliers, including Qatar, the U.S. or Angola to name a few, is simply more
expensive than Russian piped gas. While Russia already has an extensive pipeline network in
place, LNG is more expensive when transportation, liquefaction and regasification costs are
added.
Using a Henry Hub gas price of $2.85/MMBtu as a base, Russian energy giant Gazprom recently
estimated that adding processing and transportation costs, the price in Europe would reach
$6/MMBtu -- a steep markup.
Henry Hub gas prices are currently trading at $2.657/MMBtu. Over the last 52-week period
U.S. gas has traded between $2.64/MMBtu and $3.82/MMBtu.
Russian gas sells for around $5/MMBtu in European markets. Moreover, Russian gas exporter
Gazprom is also moving away from oil-indexation for gas prices to a European gas hub
indexation, which will allow additional price savings and unfortunately for Germany -- an
incentive to stick with Russian gas, even if it's geopolitically distasteful.
Meanwhile, Russian Energy Minister Alexander Novak
said yesterday that Russia is Europe's most flexibly and reliable source of energy that is
needed.
Its a long long way from a political announcement to an industrial reality. Also, the
quote:
Merkel backs "all initiatives supporting further diversification of gas supply" is
telling.
Germany does not want to be caught out in a Russia/US energy squeeze while its pursuing an
alternative energy path. Nor does Merkel want to overtly pick sides.
Plus if you will note, given the momentum of current German/Russian energy initiatives, I
rather doubt that this "announcement" will have a lot of traction in the near future.
The Oilprice site, although very informative is somewhat shrill from day to day
(everything is a BIG DEAL).
Yes, its a telling quote -- it can basically be paraphrased as 'if someone is willing to
pay for these facilities, we would be happy to hear that'. There are quite a few stalled
projects for LNG terminals in Europe -- but they are expensive and even the promise of cheap
US LNG won't unlock them so long as Russia can supply relatively cheap gas. If European
governments want more LNG terminals for security reasons then they'll have to pay for them.
Thats not likely to happen, there are far more pressing infrastructural needs.
Is anyone considering the possibility that the US's ability to deliver LNG may not exist
for long enough to pay the cost of building the infrastructure necessary to use it?
Is anyone factoring in the damage to our environment, including our fresh water when
calculating the cost of poking Russia in the eye?
At first glance, this whole play appears short-sighted, at least, probably foolish.
Of course the big oil companies have never gone unrewarded for their fealty to the whims
of the MIC, even when any objective analysis finds massive foolishness.
Dont worry, Novatek already delivered a shipment of LNG from the Yamal peninsular to the
UK.
I would bet that Nord Stream will not eliminate the need to export across the Ukraine.
Undersea pipelines dont have great capacity. But additional marginal pipeline capacity does
reduce the bargaining power of the Ukraine. Im sure LNG capacity does the same.
We're deep into our malinvestment phase where uneconomic industries are being sustained
with monetary policy to prop up an unsustainable status quo.
The question is whether the left can coordinate collective action before the right can
start WW3. It will be real events somewhere that cause real change: financialized capitalism
with its own hand on the money spigot of fiat money is, with reference to itself, a perpetual
motion machine.
It will either be a force of life, or thermodynamics that finally overthrow this machine.
The stresses for dramatic external political events are building everywhere.
However, this is where market capitalism excels. As long as there is enough money in the
hands of the average person (a major issue), the average person will install solar panels and
batteries and heat pumps and buy an EV and say "to hell with you" to the oil, gas, and coal
industries.
Less money is going to those average folks, but local EV is hopeful. Tons of money goes to
supporting facking, which in the absence of QE and the spigot of free money for
(mal)investors, would not be economical.
LNG ports to receive a fuel with what is approaching negative EROEI are pure
mal-investment.
MMT was used to incentivize net positive public goods by Mariner Eccles making the US the
richest nation in the world. We're now seeing the global financial cabal use the same tool to
despoil real wealth, monetizing it along with trust wherever it can find either. It is an
epic of short-termism that will ultimately destroy the money itself by liquidating the real
productive social and economic constellations that support it.
I read the statement as that Germany is looking for a replacement of its Dutch and
Norwegian gas sources. As Germany does not want to depend for 100% of its gas from Russia,
they do need to look for alternatives.
It is just smart policy not to depend from a single source, for whatever purpose.
Dutch and Norwegian gas reserves are in
long term decline , so its likely that Russian gas will become a higher proportion of
supply in the medium to longer term.
i) the cost of transport is very high and there is a linear relationship between distance
and transport costs
ii) both the client and the supplier would like stable long-term contracts to secure
investments and supply.
There is always interdependence if you want durable supply.
Constructing some LNG facilities, besides the cost factors mentioned above won't reduce
such interdependence by much given that Russia provides 40% of current consumption. Also,
Russia migth seek providing NG to fast growing asian markets. I think that Germany is trying
to diversify just because Norway, Netherlands, and its own production are declining. I also
think that this means that fracking gas in Europe is not seen as an alternative.
I wouldn't say that Germany will "pivot" from russian gas, that is giving too much weigth
to potential LNG supplies.
Another point is that if the issue is security, it would most likely be more cost
effective to build up a buffer in underground storage facilities than building new LNG
terminals.
I could be that Germany is buckling under the pressure of attacks as the US is threatening
to sanction European firms involved in the Russian/EU Nord Stream 2 project ( https://www.rt.com/business/421900-us-sanctions-nord-stream-companies/
) which if true, would mean that the EU would have to ask the permission of Washington in
dealings with any countries not to Washington's liking.
The Poles have already built a LNG gas delivery terminal so you would think that Germany
would just pipe it in from there unless Germany wanted to build their own terminal so that
they would not have to pay Poland any fees as Poland is one of the counties opposing Nord
Stream 2.
Poland has already received at least one LNP shipment from the US but the price of the
delivery is a state secret apparently.
The Russians could always turn around and sell their cheaper gas to China so no big loss
to them. Thing is, it will take a decade to build a fleet of tankers to carry the gas that
Germany needs annually as these ships would just be going back and forth like clockwork. Who
pays for that? Germany would also need years just to build the LNP port facility to receive
these shipments. I believe too that the US export terminal is in the Gulf so tough luck if a
hurricane shut down that terminal at any time. Remember, this winter the Russians had to ship
two tankers of gas to the US because of shortages so how reliable could a US supply be?
Add up the costs of building the port facility, a fleet of tankers and the infrastructure
to deal with it all, then top up with the gas not only being more expensive than the Russian
gas but also less reliable and the Germans will have to take a knife to their budget to pay
for it all. Trump would have a fit if it was their defense budget so that means the social
budget. Good luck with that. One last factor of which I have even less knowledge of is the US
gas supply. I believe that it comes from shale deposits aka fracking but I know that these
wells deplete rapidly so if true, would suggest that US gas as a supply source may be self
limiting over time. I don't think that the economics work out here for Germany somehow.
It's not a pivot. The only important thing is North Stream 2: if the US or the
transatlantic lobby manages to kill that, then there is a pivot. Otherwise, it's business as
usual.
So unless one wants to be ~90% dependent on russian gas, there has to be some alternatives
to keep the russians honest. Only realistic way is LNG. So Germany has to build the
infrastructure for it to have a credible bargaining position. The marketshare of russian gas
will increase over the next few years in any way.
Also, I would like to add that the German Press isn't treating this like some sort of
revelation.
As everywhere else, if a politician wants to get a little patriotic push on their side,
they hold a speech touting "energy independence". Germany is no different in that regard and
Merkel needs to appear a bit more nationalistic right now.
Current headlines are all about social issues like immigration, Facebook data breaches,
internal politics, etc. No one is obsessing about LNG facilities or things like Brexit.
There are major offshore gas fields in the Mediterranean -- on the coast of Cyprus and all
the way offshore from Syria to Egypt. Their exploitation is still largely pending resolution
of local crises (Turkey vs EU re Cyprus, Israel vs Palestine and Lebanon, in Syria because of
war). Once those fields come on line, the need for special-purpose ports to bring in LNG from
afar to Europe no longer makes much economic sense.
Besides, Algeria continues to provide gas (and oil) to the EU.
Germany is a major shareholder in the EPR reactor, but isn't building any
because its proven far too expensive, much more expensive than domestic renewables.
Its untrue to say that Germany buys a lot of French nuclear energy, imports from France are minor at a net
of around 4 terawatt hours a year, similar to the amount of wind energy Germany buys from
Denmark. Its dwarfed by the huge renewable sector in Germany which produces over 200 TWh per annum . Germany is
actually a net exporter of energy to France in most summers as the inland nuclear plants
often go off-line due to water shortages.
"Germany's LNG pivot also comes as a geopolitical storm between the U.K. and Russia
intensifies over an alleged Moscow-orchestrated nerve-agent attack on British soil against
what the BBC called a double spy and his daughter."
When one thinks about the geopolitical repercussions of this nerve gas attack on $$ for
USA LNG, the control of energy supplies to the EU by the USA and its middle east puppets, the
quickly identified fingerprint and emotionally charged finger pointing, a complex technical
topic to which the general public has general knowledge and therefore must rely on
"authorities", the high level of media attention for a relatively minor character, and the
ongoing attempts to vilify and isolate Russia -- one has to wonder if this is just another
CIA false flag event similar to Iraq WMDs and the Syrian chemical weapons attacks -- another
false flag that will eventually fall apart after it has served its purpose. Examined in the
light of past and ongoing CIA atrocities (Renditions and torture in Abu Ghraib and Gitmo,
droning, MKULTRA, Operation Mongoose, Phoenix Program, Iran-Contra, numerous assassinations
and coups -- just to name a few), it seems quite in line with what I would expect from this
criminal organization. Not that we can really know the truth at this time, but those who
dutifully believe the corporate media on this topic might want to open a skeptical eye. There
are likely cover stories within cover stories -- much like cover stories one finds in the
Wormwood documentary.
This news along with Trudeau's support for Kinder Morgan Canada's Trans Mountain oil/tar
sands pipeline expansion should make it clear that the Paris Accords were a cruel joke on
humanity. We will keep extracting every single last drop of recoverable oil until we run out
of energy to continue or we nuke ourselves.
So, it's easy enough for Germany to pivot away from gas *if* they switch to heating with
electricity. However, Merkel refuses to push this. Because Merkel.
The Senators' argument is that dependence on Russian gas undermines European security.
Whereas to the Russians, it is obvious that the Americans wish to replace cheap Rusian
piped gas with expensive liquefied American gas, which is a bi-product of fracking for oil
and currently in surplus. Some frackers in Canada are even having to pay someone to take
their gas.
Surprisingly, no one has yet pointed out that Russia could deliver Novichok to the whole
of Europe via Nordstream 2.
Special investigation: US military personnel are sick and dying, and want the nuclear
plant's designers and owners to take responsibility .
...There are currently 99 operating civilian nuclear reactors in the United States, and 22
of those are General Electric Mark 1 boiling-water reactors--the make and model identical to
the three that melted down and exploded at Fukushima Daiichi. Based on a 1955 design, all but
four of the US reactors have now been online for more than 40 years.
All of them have the same too-small primary containment vessel, the same questionable
alloys, the same bolted-on lid, the same safety systems, and ( with one exception ) the same vent
"upgrade" that failed to prevent the tragic failures at the Japanese nuclear plant.
Large US cities, such as Boston, Chicago, Detroit, Philadelphia, and Washington, DC, are all
closer to BWRs than Tokyo is to Fukushima Daiichi.
"... This is a European energy issue. From the start. The US either wants to be the middle-man or cut Russia off from it entirely. No other options have been tabled or would be acceptable to Washington. Remember the Trump quote "Why don't we just take their oil and gas?" ..."
"... Look at the opposition gaining speed against Nord Stream II. And also look, the UK and all of Europe may be in for some cold summers and winters now, it's a trend they cannot ignore as it gets colder for longer periods, this trend isn't relaxing with the stratosphere doing some flips and turns and sending "The Beast From The East" towards the once Great Britain. ..."
The Skripal anti-Russia hysteria effort is just another step in the US/CIA campaign to
interfere with the Russian hosting of the World Cup -- the next step will be to attempt to
have the qualifying European countries boycott the event ... remember, to them, every Russian
loss is an American win.
However, I will go on record to predict that the US will have its Ukrainian neo-Nazi
vassals mount a major attack on the Donbass within week of the beginning of the World Cup
tournament.
I agree the World Cup is on the agenda, but this effort is multi-pronged, like Octi-putin,
they will want to boycott it and you will see all sorts of FIFA related articles in the
coming months, corruption and so on. It's all predictable.
This is a European energy issue. From the start. The US either wants to be the
middle-man or cut Russia off from it entirely. No other options have been tabled or would be
acceptable to Washington. Remember the Trump quote "Why don't we just take their oil and
gas?"
Look at the opposition gaining speed against Nord Stream II. And also look, the UK and
all of Europe may be in for some cold summers and winters now, it's a trend they cannot
ignore as it gets colder for longer periods, this trend isn't relaxing with the stratosphere
doing some flips and turns and sending "The Beast From The East" towards the once Great
Britain.
It is about bankrupting Russia and also trying to get European
nations to turn the Russian gas tap off, and so Europe will have to resort
to buying gas through Western controlled natural gas resources, liquid gas
shipments, and a proposed Qatar-Turkey pipeline through Syria. Once most
Western people discover the actual history of our wars and what ruthless,
unconscionable bastards our Western power brokers actually are, they will
automatically want to support Russia.
This is the May-Johnson excuse for not going through with Brexit. Now they
will say they need their partner in the EU to protect them. Good luck with
that one.
I wouldn't write NATO off just yet. Rothschild bought Naftogaz which has an
office in Egypt. Igor Kolomoisky has some interesting ties also the
temporary occupation of Crimea by Russia. And who is Genie Energy?
"... Another background to the British provocation might be the Nord Stream gas pipeline from Russia to Germany. Construction is to start now and once it is finished Ukraine can´t blackmail Europe anymore by holding up gas delivery. Poland, the Baltics, the US and of course Ukraine are violently opposed to Nord Stream 2. ..."
...The British noise about the alleged nerve gas agent is then nothing more but another
attempt to force Washingtons´s hand to increase hostility towards Russia.
Interestingly enough today Germany´s defense minister who is a close confident of
Merkel echoed the outrage about the alleged nerve gas attack but called for a "UN
investigation". That is she didn´t endorse the British claim.
Another background to the British provocation might be the Nord Stream gas pipeline from
Russia to Germany. Construction is to start now and once it is finished Ukraine can´t
blackmail Europe anymore by holding up gas delivery. Poland, the Baltics, the US and of
course Ukraine are violently opposed to Nord Stream 2.
Sanctions on Russia are being ignored. China is investing its US Trillions. Under US imposed
sanctions, ExxonMobil withdrew and China said "Thank You" and took the partnership.
Chinese state-controlled Huarong Asset Management has bought a 36.2 percent stake in the unit
of CEFC China Energy through which CEFC is acquiring a $9.1 billion stake in Russian oil
giant Rosneft.
According to CEFC filings seen by Reuters, Huarong has bought the stake in CEFC in two
tranches, one in December and one in February. Huarong is controlled by China's Ministry of
Finance.
In September, CEFC Energy announced plans to acquire 14.16 percent of Rosneft shares from
Glencore and the Qatar Investment Authority (QIA).
"The final structure of Rosneft's shareholders has been formed," Rosneft CEO Igor Sechin
told Rossiya 24 television.
As part of a long-term agreement, Rosneft and CEFC Energy inked a deal on crude oil
deliveries in 2017. According to the agreement, the Russian oil major will supply CEFC with
60.8 million tons of oil annually until 2023.
The agreement covers the development of exploration and production projects in Siberia.
The two companies plan to cooperate in refining, petrochemicals and crude trading.
"... By Gary North, Oilprice.com's South-East Asia & Pacific correspondent. He writes about energy matters, geopolitics and international financial markets. Originally published at OilPrice ..."
"... A more conservative rate of growth may simply be desired by some, but it also may be an inevitability. Kevin Holt, chief investment officer of Invesco's U.S. value equities has said that the situation many companies find themselves in is in part a consequence of the link between their leaders' pay and production growth, rather than returns on investment. ..."
"... Ultimately the market is subject to myriad pressures, such as the heterogeneous quality of oil, fluctuations in labor costs and oil prices, as well as changes in the pace of technological development. These pressures shape the nature of the market, and also make it difficult to predict the longevity of tight oil reserves, and the ability of companies to exploit them. Another significant factor is regulation. How long will Trump's EPA remain the castrated shadow of its former self, and how long until it begins to bare its own teeth? ..."
"... The US might produce 11 million bpd of oil and condensates, but it still consumes nearly 20 million bpd. So, while the US might become a large exporter, it will be a large net importer. I don't see how shale or fantasy oil fields offshore Florida or in the ANWR will add 21 million bdp of production which would allow the US to be a net 12 million exporter. And by 2023? This must have been a typo. ..."
"... "The US might produce 11 million bpd of oil and condensates, but it still consumes nearly 20 million bpd." Exactly. The US is going to be a net exporter .and a net importer . of the same thing. And people accept this. We are leaving the Orwellian Age behind, and entering the Age of Insanity. ..."
"... Has anybody worked out how many years it will be until those particular shale formations have been sucked dry? The article mentioned that some formations had already been run dry. This somehow smacks to me of trying to keep the age of cheap oil going a little bit longer. ..."
"... Yes, most of the increase in oil comes from oil shale. Unlike a conventional oil well, shale extraction means a constant process of fracking (driving a hydraulic fluid into the geology to release light oil and gas trapped in the rock pores), so its much harder to assess the long term viability of a reserve than with a conventional well, which is usually an oil filled underground void with a measurable capacity. The typical production life of a single 'frack' is around 9 months or so, although a single well can be fracked multiple times if the geology is right. ..."
"... Ditto Genscape.com regarding overall supply-demand factors. Not a subscriber nor do I regularly follow sector developments, but big inventory drawdowns at Cushing, OK terminal over the past four months are puzzling in the face of rising EIA oil production data. ..."
"... Slow us expansion and the next recession, which might rival the last one because private sector debt, will push price sub 40. But majors have cut back exploration for some time, OPEC and Russia maybe in decline, and conversion to electrical cars minimal I'm guessing new price record in five years. ..."
"... The weird thing about shale is it unites the power of the financial lobby who finance the drilling with the power of the oil barons who control the market – that gives it 'umph' in the capitalist world. ..."
Yves here. The US seems overeager to be exceptional.
By Gary North, Oilprice.com's South-East Asia & Pacific correspondent. He writes
about energy matters, geopolitics and international financial markets. Originally published at
OilPrice
U.S. shale has effectively upended the oil industry, with
predictions that total U.S. oil production will surpass Saudi Arabia's output this year, in
turn rivalling Russia's to become the preeminent global producer. From its position of being
dependent on, and subordinate to OPEC, the U.S. has seemingly become the big bad wolf. Through
a catalogue of tactical errors and misplaced belief in its own muscle, the mighty brick edifice
of OPEC has begun to look more like a bundle of sticks.
The International Energy Agency (IEA) forecasts that the U.S. will become a net energy exporter by
the late 2020s, but how accurate is that forecast, and to what extent is it mere hyperbole? In
October last year there were already caveats
about the nature of U.S. shale, with some warning that aggressive expansion was leading to
rapid initial growth that would ultimately peak too soon. Mark Papa, former head of EOG
Resources (NYSE: EOG)
raised the question of flatlining output in the face of the doubling of the oil rig count,
"(h)ow can a rig count be double and yet production be stagnant?"
Figures have also been influenced by the
rapid pace of technological development, a pace which has itself plateaued. Robert Clarke,
WoodMac research director for Lower 48 upstream,
said that "(i)f future wells are not offset by continued technology evolution, the Permian
may peak in 2021". IEA forecasts then, may be based on rapid growth and technological
development that simply isn't sustainable. Related:
Shell Outsmarts Competition In The Gulf Of Mexico
Is U.S. shale just a sheep in wolf's clothing, its bite ultimately as benign as grandma's?
The IEA is
still forecasting that the U.S. will be the number one oil exporter by 2023 at 12.1 million
bpd, but at the CERAWeek Conference in Houston on Tuesday, Papa is set to turn that thinking on
its head when he warns the industry that shale will hit roadblocks that prevent such forecasts
from being realized. He
says the best drilling locations in North Dakota and South Texas are already tapped out.
"The oil market is in a state of misdirection now," Papa told the WSJ. "Someone needs to speak
out."
How much of this is indeed misdirection on his part? Papa is CEO at Centennial Resource
Development (NASDAQ: CDEV), which holds the rights to 77,000 acres in the oil-rich Delaware
sub-basin of the Permian. A slowdown in expansion and its potential consequence of increased
oil prices is advantageous to Centennial's shareholders, so who are we to believe guilty of
misdirection?
A more conservative rate of growth may simply be desired by some, but it also may be an
inevitability. Kevin Holt, chief investment officer of Invesco's U.S. value equities has said
that the situation many companies find themselves in is in part a consequence of the link
between their leaders' pay and production growth, rather than returns on investment. This
has fostered a drilling frenzy that has resulted in an explosion of production – an
unregulated drilling frenzy that may be at odds with the long term survival of those companies.
Investors have subsequently demanded a more conservative approach to drilling, which appears to
be having a stabilizing effect.
Ultimately the market is subject to myriad pressures, such as the heterogeneous quality
of oil, fluctuations in labor costs and oil prices, as well as changes in the pace of
technological development. These pressures shape the nature of the market, and also make it
difficult to predict the longevity of tight oil reserves, and the ability of companies to
exploit them. Another significant factor is regulation. How long will Trump's EPA remain the
castrated shadow of its former self, and how long until it begins to bare its own
teeth?
Is Papa's anticipated warning about to shake up the industry? Or is it merely the
continuation of the chorus of restraint that many in the industry have been voicing in this
period of massive growth and upheaval? Ultimately the industry will decide whether it will be
eating out of Papa's hand, or persist in biting the hand that feeds it.
The US might produce 11 million bpd of oil and condensates, but it still consumes nearly
20 million bpd. So, while the US might become a large exporter, it will be a large net
importer. I don't see how shale or fantasy oil fields offshore Florida or in the ANWR will
add 21 million bdp of production which would allow the US to be a net 12 million exporter.
And by 2023? This must have been a typo.
In any case, without a major transition away from internal combustion engines and heating
oil, the US will not be a net export any time soon.
As for shale, while the technology is improving, the rig counts show the true story. US
production is not expanding in line with rigs, nowhere near it. Shale is not Ghawar and never
will be.
"The US might produce 11 million bpd of oil and condensates, but it still consumes nearly
20 million bpd." Exactly. The US is going to be a net exporter .and a net importer . of the same thing. And people accept this. We are leaving the Orwellian Age behind, and entering the Age of
Insanity.
I'm probably going to get smacked down on this but all the oil that the US is pushing out
comes from those shale formations, don't they? But they are not like oil wells which you can
keep pumping for decades but are more about sucking all the loose stuff that you can out of
geological formations. And they deplete – rapidly!
Has anybody worked out how many years it will be until those particular shale formations have
been sucked dry? The article mentioned that some formations had already been run dry. This
somehow smacks to me of trying to keep the age of cheap oil going a little bit longer.
Yes, most of the increase in oil comes from oil shale. Unlike a conventional oil well,
shale extraction means a constant process of fracking (driving a hydraulic fluid into the
geology to release light oil and gas trapped in the rock pores), so its much harder to assess
the long term viability of a reserve than with a conventional well, which is usually an oil
filled underground void with a measurable capacity. The typical production life of a single
'frack' is around 9 months or so, although a single well can be fracked multiple times if the
geology is right.
If you google the geologist Arthur Berman, you'll find many of his articles on the topic.
He's long been something of a fly in the ointment for the trade, as he has argued that
extrapolations based on early explorations are likely to be too optimistic, as the industry
is aiming for 'sweet spots', which will provide very good flows, but not a good indication of
longer term potential. He has also pointed out (which is not denied in the industry), that
unless new technologies are developed, the 'drop off' from peak production will be a much
sharper decline than from a conventional oil field, as there will come a point where repeated
fracking is not economically viable.
So nobody ultimately really knows – if you believe the industry, better and cheaper
techniques will allow fracking to extend outwards from known sweet spots to extend over the
truly vast expanse of oil and gas shales that run from Texas up to Pennsylvania and New York
state. The pessimists (who tend to include most oil geologists) say that the extractable oil
is already getting worked, and the point of unviability will come very quickly, and there
will be a very rapid drop-off. Only time will tell.
Another point worth making is that oil is not as fungible a product as is often assumed.
Shale oil is known as 'tight oil – its very light, but there are only very limited
numbers of refineries that can deal with it. This is why it goes hand in hand with the use of
heavier grades to mix in, so it can be refined in existing facilities which are designed
usually for Gulf of Mexico or Alaskan crudes. This oil is mostly Venezuelan heavy crude or
Canadian oil sands product. So there is a sort of dance going on between these products to
ensure tight oils viability. Its notable that so far as I've seen, nobody seems willing to
invest in tight oil refineries, which to me suggests the industry is not optimistic about its
long term potential.
Another point worth making is that oil is not as fungible a product as is often
assumed
Very true. Refineries have to be "tuned" for a specif type of oil. Most refineries can
only process oil from a single origin, and change of origin requires expensive, slow changes,
made reluctantly.
Why reluctant to change? Construction in refineries is dangerous.
Yup. Fracking means scraping the dregs out of spent fields.
Permian Basin(which I've seen touted as the "new saudi arabia", lately) peaked in like 72 or
73.
all over that part of texas are rusty pumpjacks, idle until the oil price gets rather
high(Bush Darkness, they started running again)
These are marginal wells, at best, without extraordinary measures(like fracking what they
used to call bottle-brushing*).
Oil is finite which means that at some point it will no longer be worth it to get it out of
the ground(EROEI).
Ergo, these big plays that will "make us energy independent" are flashes in the pan.
(* my dad used to fish with a guy who did bottle brushing for saudi aramco, circa late
80's, apparently a rare skill at the time. he said back then that they were gonna run out,
because you don't do that to healthy(sic) fields. )
https://peakprosperity.com has
been behind shale oil production issues for the last decade and has published blogs /
podcasts, interviewed experts, etc
Some articles are behind a paywall, but it is a very good source
Ditto Genscape.com regarding overall supply-demand factors. Not a subscriber nor do I
regularly follow sector developments, but big inventory drawdowns at Cushing, OK terminal
over the past four months are puzzling in the face of rising EIA oil production data.
Exports?
Read that OPEC representatives are meeting with US in Houston this week.
Slow us expansion and the next recession, which might rival the last one because private
sector debt, will push price sub 40.
But majors have cut back exploration for some time, OPEC and Russia maybe in decline, and
conversion to electrical cars minimal I'm guessing new price record in five years.
The weird thing about shale is it unites the power of the financial lobby who finance the
drilling with the power of the oil barons who control the market – that gives it 'umph'
in the capitalist world.
My particular fear for America is that the entire country except the east and west coasts
are approved for fracking. An important part of national food production comes from states
like Kansas which use aquifer water entirely. If the farmers pump oil-flavored water on their
fields it will have an effect on the harvests. In profiting one way, the country sustains a
loss in another.
The Ukrainian authorities have started the seizure of assets belonging to the Russian gas
giant Gazprom, citing its alleged non-compliance with the decision of the Stockholm arbitration
court. "Under the current circumstances, the Ukrainian cabinet initiates action aimed at
recovering [a] penalty from Gazprom," the Ukrainian government's press service said in a
statement published on its official website. It also claimed that the move was conducted in
compliance with the decision of the Stockholm court and involves collecting a fine from the
Russian company over its alleged violation of Ukrainian anti-monopoly legislation. Read more
Ukraine is
overpaying for European gas & wants Russia to foot the bill
The Swedish arbitration body initially ruled on the three-year dispute between Gazprom and
the Ukrainian energy company, Naftogaz, back in December 2017. The policy of the court prevents
it from even acknowledging that it's mediating a case, which makes it impossible to obtain its
own account of the final ruling. Both energy companies, which have opposing takes on the
outcome, initially claimed victory in the case.
In late February, the same court ordered Gazprom to compensate Naftogaz $4.6 billion for
what the latter sees as lost profit from the transit of Russian gas to Europe.
The legal battle between the two energy companies in the Arbitration Institute of the
Stockholm Chamber of Commerce had rumbled on since June 2014. Gazprom's claims related to fines
for insufficient withdrawal and use of gas by the Ukrainian side, in accordance with a
'take-or-pay' rule. The Russian gas giant also demanded payment of a debt for gas
delivered to Ukraine between May and June 2014.
Naftogaz pushed for a retroactive change in the price of gas, the reimbursement of
overpayments and the repeal of a ban on reselling Russian gas. The court eventually satisfied
some of the Ukrainian company's demands, in particular by setting a minimum amount of gas that
Naftogaz must buy from Gazprom annually (from 2018) at a volume that was 10 times lower than in
the original contract. At the same time, it also obliged Gazprom to pay for the transit of the
Russian gas through the Ukrainian territory between 2009 and 2017 even though the gas was not,
in fact, transited over that period.
The Head of Gazprom, Alexei Miller, then called the court's decision "asymmetric"
and "very politically motivated." The court justified its decision by referring to a
difficult economic situation in Ukraine.
"... Bullshit. The Ukrainians have been on a pay before delivery tariff from Russia for years. They have chosen war over trade. They currently prefer to spend what income they get that survives oligarch looting on trying to kill the East Ukrainians (currenly 6.9% of GDP). ..."
Sat, 03/03/2018 - 21:13 Last week, Russia's state-run gas giant and quasi-monopolist when it
comes to European natgas supplies, Gazprom, announced it would not restart shipments of natural
gas to Ukraine's Naftogaz starting March 1 after the two sides failed to reach an agreement,
Gazprom deputy chairman, Alexander Medvedev, told journalists.
Russian gas deliveries to Ukraine were supposed to restart on Thursday following a foreign
court ruling aimed at ending years of disputes between Kiev and Moscow, including two halts to
Russian gas supplies to Europe through Ukraine. But Gazprom unexpectedly refused to resume
deliveries, returning the prepayment for supplies made by Kiev, claiming amendments to a
contract had not been completed.
The decision came as the sides reportedly failed to extend a supplemental agreement to the
current gas contract, RT
reported.
"So far, the supplemental agreement to the operating contract with Naftogaz has not been
approved, and that is a compulsory condition for launching the shipments," Medvedev said. "So,
we have to recover the amount paid by the company in full. And it is obvious that the shipments
in March won't start."
In response, Ukraine's state monopoly said that Gazprom had failed to deliver prepaid gas.
Naftogaz is reportedly planning to claim damages for supply failure from the Russian energy
major.
And while the long-running dispute may, but likely won't, be resolved in court, Ukraine has
suddenly found itself without heat and on Friday urged schools to close and factories to cut
production, while residents shivered as the country strained to save on gas supplies.
The decision coincided with freezing temperatures all over Ukraine, and the government
called on Friday for measures to reduce consumption.
" Starting today, we recommended ... to stop the work of kindergartens, schools and
universities ," Ukraine energy minister Igor
Nasalyk told lawmakers , while urging Ukrainian companies to adjust their operations to
save gas, while power companies were ordered to switch to fuel oil where possible.
Nasalyk said these savings measures would be in effect until Tuesday, when temperatures are
expected to rise.
* * *
Meanwhile, on Friday, Gazprom director Alexei Miller said that the company would immediately
turn to the Stockholm arbitration court to break its contract with the Ukrainian operator
Naftogaz, Russian news agencies reported. A ruling by the same court last year was meant to
halt disputes over gas prices and shipments, which had often been a proxy for political
disputes between Moscow and Kiev. The court set a price and ordered Kiev to resume purchases it
had cancelled following the breakout in "proxy" violence between the two nations in 2014.
Also on Friday, Naftogaz said that Gazprom had not only refused to resume deliveries meant
for it, but lowered the pressure in gas pipelines by 20 percent and minimized sales to other
customers. In a statement, Naftogaz said that Gazprom was trying to portray Ukraine in a
negative light and suggest that it was willing either to let its own population freeze or make
it out to be "an unreliable transit company that takes the gas away" from European
countries.
In response,
Reuters reported today that Gazprom said there had so far been no impact on supplies
through its pipelines to Europe, despite the sharp escalation in tensions with the key transit
nation.
Russia's Energy Minister Alexander Novak told European Commission Vice President Maros
Sefcofic in a phone conversation that gas transit would not be at risk until Gazprom and
Naftogaz fully terminated their agreement.
"Minister Novak assured that the gas transit from Russia to Europe is under no threat. The
transit remains as reliable as in the past," the ministry said.
* * *
Kiev and Moscow have a history of clashing over prices and obligations under contracts for
the delivery of Russian gas to Ukraine as well as transit to Europe. The standoff in the winter
of 2006 triggered supply disruptions, with Russia accusing Ukraine of stealing gas intended for
the European market.
The gas giants are currently involved in a long-standing litigation over the terms of the
current delivery contract. Ukraine's lawyers are struggling for annulment of the so-called
take-or-pay provision that obliges Kiev to purchase a minimum annual quantity of gas. Earlier
this week, Naftogaz claimed it had won a $2.56 billion victory in another round of its legal
battle with Gazprom.
Karma can be a bitch Ukraine. Still, I'm sure your friends in Washington will immediately
provide you with an endless supply of free LNG? Call Vicky.
Incidentally, to the author, your map is incorrect (i'm sure that was just an error like
Goolag's deletion of Themtube sites). Crimea is no longer a part of Ukraine after 95%+ of its
population excercised their right to self-determination after the Maidan coup.
Ukraine's already connected to Poland's LNG port. And by the way, days at sea for a ship
with Qatari LNG is the same as a saudi tanker hauling oil to the U.S.
Ukraine is in a total meltdown, forget about Venezuela which at least has energy stores.
Ukraine has to import most of its energy. Donbass has all the coal. Putin is a genius, he is
starving Ukraine of energy. There will be mass unrest in the country. Expect a government
friendly to Russia to come back into play. The only thing that can prevent this is if Europe
and the USA are willing to pay for Ukraine's energy needs.
Where otherwise will Ukraine get
the hard currency. Well for a while it will get it by selling off its farmland and its women.
In ww2 you could buy a woman with a package of pantyhose, an MRE, or a pack of cigarettes.
Now you will be able to buy them again the same way and with a lump of coal.
"Ukraine Freezes After Russia Halts Gas Deliveries"
Bullshit. The Ukrainians have been on a pay before delivery tariff from Russia for years.
They have chosen war over trade. They currently prefer to spend what income they get that
survives oligarch looting on trying to kill the East Ukrainians (currenly 6.9% of GDP).
On
March 1, Ukraine closed all schools, colleges and universities to conserve energy. Following
a Stockholm arbitration court decision on March 1, Gazprom has started the process of
cancelling the contracts for supply of gas to and through Ukraine. They are at liberty to
purchase it at market rates ($600 per 100 cubic metersversus the subsidised $300 from Russia)
from the Europeans.
Joe Biden's son, Hunter, was hired by a Ukraine company, Burisma Holdings Limited,
promoting energy independence from Moscow. So hows it goin Hunter??
Too busy fooling around with his late brother's widow. No time for Ukraine. Murica can help
fund some gas, if they can throw away a couple billion for the coup, c'mon Guys, Porky is
yoar Bro.
Most likely he was fooling around with her before his brother died. Some of his nieces and
nephews may be his kids. The Bidens are a microcosm of the perverse behavior in DC.
"Kathleen Biden accused estranged husband Hunter of reckless spending on 'drugs,
prostitutes, and an $80,000 diamond' in divorce docs - days before his affair with widowed
sister-in-law Hallie was revealed"
" Kathleen claims Hunter spends money on 'drugs, alcohol, prostitutes, strip clubs and
gifts for women with whom he had sexual relations' in her new motion "
I live in Minneapolis. The weather here isn't too different from much of Ukraine. For
early March we're having a very warm day, nearly 50 F. But next week we get back to more
seasonal highs around freezing, with maybe 6" of slushy snow on Monday.
I really like it when my heat works. I do have a wood-burning fireplace but if I have to use it for heat we've got a lot of
problems all at once. Ukraine is a great example of what always happens when Nazis get in charge. Everything
goes to hell in a handbasket, quickly.
The fools just might do that to keep the riots out of the government buildings in Kiev.
Russia doesn't want the basket case either so who knows what the war would look like. Kiev is
totally screwed either way this goes.
No Russia knows that any dealings with Kiev or ukr companies are disastrous. Russia acts
very carefully within the law. Hence immediate return of first gas payement since 2014, so
not legally bound. Hence Gasprom requiring a signed contract under mutually agreed conditions
which they did not get.
Already Ukraine is say there is a 20 percent drop off in pressure on transit gas thru.
ukr. Russia says not, it is gas pressure as usual.
Looks like Ukraine is stealing 20percent of transit gas immediately.
The Ukrainian economy is in a catastrophic state after four years of "euro-reforms," said
Viktor Medvedchuk, head of the public movement "Ukrainian Choice – People's
Right." "At the end of 2013. Ukraine's state and publicly guaranteed debt was 40% of GDP, and
by the end of 2017 it had more than doubled, exceeding 80% of GDP. In 2013, Ukraine's GDP per
capita was more than $ 4,075, and in 2016 decreased to $ 2221.
The average monthly salary in 2017 as a whole for the country was $ 267 (in 2013 it exceeded
$ 408), pensions are also 2.3 times lower than before the euro reform. Today, it is slightly
more than $ 48, while in 2013 it was almost $ 112, " Medvedchuk said.
What Is The Right Price For Oil In A Balanced Market?
By
Dan Steffens
-
Feb 21, 2018, 6:00 PM CST
The price of oil is well off the low for this cycle because the OPEC + Russia plan to rebalance supply &
demand has worked. Now the question is
"What is the Right Price for oil in a balanced market?"
(Click to enlarge)
The price of
West Texas Intermediate (WTI)
crude oil, like the stock market, was
overdue for a bit of a pullback or "correction". After peaking at over $66/bbl on January 26, 2018 the
front month NYMEX contract for WTI followed the stock market correction down to just above $59/bbl on
February 13. By the close on February 16 it had rebounded back to $61.55/bbl. The fact that a key
resistance level at $57.65 was not tested during the selloff is encouraging.
WTI has been moving in a strong upward channel since last summer. Right now there is strong support at
$57.65 and strong resistance at $66.70. A close above $67.00 should set up a test of $75.00 sometime in
the 3rd quarter. At least that's what the "tea leaves" are telling me.
In my opinion, there are several "myths" or "false paradigms" that are holding down the price of oil.
Myth #1: U.S. Tight Oil production can meet the world's future demand for oil.
U.S. oil production is on the rise. There is no doubt that vast improvements in horizontal drilling
technology and completion methods have made harvesting oil from shale and other tight zones possible.
U.S. oil production now exceeds 10,000,000 barrels per day; a level no one in the industry believed was
possible at the turn of the century. However, U.S. tight oil production is still only 5% of the global
oil supply. It is highly unlikely that U.S. oil production will be able to ever meet U.S. demand
(currently over 17,000,000 barrels per day), much less supply the rest of the world.
Myth #2: All Shale Leasehold is the same.
The Permian Basin covers 19 million acres, however only a small percentage of the leasehold is
considered "Tier One" for shale oil recovery. Upstream companies are rapidly drilling up their best
acreage, a process called "High Grading". Once they have drilled out the Tier One locations, it will be
extremely difficult to maintain the pace of production growth that we have seen recently.
Adding to the problem is the fact that horizontal wells are completed with massive frac jobs, which
enable the wells to have very strong initial production rates. Initial production ("IP") rates are
unsustainable. After the initial surge, production declines rapidly in all horizontal wells. In most
areas, production declines by more than 50% from the IP rate within a year. After three years, most
horizontal shale wells are producing less than 10% of their "IP Rate".
Related: The U.S. Oil Industry Sets Its Sights On Asia
From a well-level economic standpoint this is great since the wells payout quickly. However, we now
have 100s of thousands of high decline rate horizontal wells online and another 20,000 new shale wells
will be completed this year. Soon after the Tier One areas are developed, it will be mathematically
impossible to drill enough Tier Two wells to maintain production growth. Most people that I talk to think
the Bakken Shale and the Eagle Ford Shale have already seen their peak production.
Myth #3: All oil is the same.
This is really more of a common misunderstanding than a
myth. The oil being extracted from shale and other tight formations has very high API gravity (over 40
degrees). To a point this was good news, but now we are producing so much "Light Oil" that our refineries
cannot handle all of it. This is one reason that the U.S. is now exporting more oil and why Brent oil
trades at about a $4.00/bbl premium to WTI. Per the most recent U.S. Energy Information Administration's
("EIA") weekly report, over the last six weeks ending February 9, 2018 the U.S.:
• Produced 9,926,800 barrels of crude oil per day
• Imported 7,976,500 barrels of crude oil per day (mostly heavy oil)
• Exported 1,341,500 barrels of crude oil per day (all light oil)
• Exported 4,885,000 barrels of refined products per day
I am expecting the problem of too much light oil production to get more press coverage this summer
because (a) it takes more crude oil to produce summer blend gasolines & diesel and (b) there is a limit
to how much light oil we can export.
Myth #4: We no longer need conventional exploration.
You could argue that this is the same as Myth #1. The thinking among investors is why waste capital on
exploration in remote areas or on high risk drilling like deep water prospects when shale can produce all
the oil we will ever need? The truth is that Non-OPEC / Non-U.S. oil accounts for over 45% of this
world's crude oil supply and it is now at risk of going on steady decline because so little capital has
been deployed in these "Other Areas". With demand for oil now increasing by 1.5 to 2.0 million barrels
per day year-after-year, we are going to need lots of new supply outside of the shales.
Myth #5: OPEC and Russia can flood the market with oil whenever they feel like it.
• First of all it would be incredibly stupid for the cartel members to over produce again since they
were the ones that suffered the most during the recent oil price collapse.
• Second, OPEC may actually have very little production capacity beyond what they are producing today.
In the International Energy Agency's most recent "
Oil
Market Report
" that was published on February 13, 2018 it was reported that OPEC members were 137% in
compliance with their production agreement and the Russian lead Non-OPEC group was 85% in compliance with
their agreement. In my opinion, the real reason that OPEC is holding down production is because they
can't produce much more oil than they are producing today. Regardless of the reason, this one is a fear
that should not keep investors up at night.
Related: Frac Sand Shortage Threatens Shale Boom
If you're considering investing in the Saudi Aramco IPO later this year, you may want to think about
the paragrap:above.
One of my friends with decades of oil & gas industry experience sent me this note: "I attended an
energy conference in Houston last year and the speaker from Tudor Pickering Holt & Co. (a highly
respected energy investment & banking firm) made this comment:"
"When oil was over $100/bbl, did any new production come on in OPEC or Russia? The only area that saw
a significant increase in oil production was North America. No other geologic province increased
production. That tells you that if it were there, it would have been brought on to produce during a
period of $100 + oil. It is the belief of TPH that any production outside of North America and big
offshore projects requiring years to develop do not exist".
I'm sure there are many industry experts that believe there are massive recoverable oil reserves out
there, but TPH's comment does give one pause.
Myth #6: Electric Vehicles and Renewables will soon slow oil consumption.
There is no evidence that this is going to happen anytime soon. The "Millennials", defined as persons
reaching adulthood in the early 21st century, have been brainwashed to believe we'd be better off without
hydrocarbon based fuels and feedstock. Nothing could be further from the truth, but that is a subject for
another time. Millennials believe that all educated people will be driving electric cars within a few
years. They never pause to think about where all the rechargeable battery materials will come from or the
massive changes that will be required to the power grid.
If you are over 30, you may recall that biofuels were going to cause oil demand to go down. It never
happened.
We are going to see more electric vehicles in the future, but they won't make a dent in gasoline and
diesel demand for at least another decade. Wind and solar generate electricity and therefore are more of
a threat to coal, but they still cannot compete with gas fired power plants.
Like it or not, this world runs on oil. Nothing can come close to the energy density of gasoline &
diesel and they are still relatively cheap compare to other transportation fuels.
(Click to enlarge)
Fact: In April, demand for crude oil is expect to spike by over 2.0 million barrels per day.
In 2017, demand for oil increased by 2.3 million barrels per day from the first to the second quarter.
Last year, U.S. crude oil inventories were at the top of the five year range. Today, U.S. crude oil
inventories are in the middle of the five year range. Facts eventually top Myths.
Some statistics in the IEA's Oil Market Report that should have raised a few more eyebrows:
• Global oil supply in January edged lower to 97,700,000 barrels per day. Compare this to global
demand that IEA forecasts will exceed 100,000,000 barrels per day by the 4th quarter.
• IEA's oil demand growth forecast for 2018 was raised to 1,400,000 barrels per day. In my opinion, when
the actual data is in for 2018, demand will have gone up by over 2,000,000 barrels per day. Global GDP
growth estimates just keep going up and GDP growth is the primary driver of oil demand.
• OECD commercial stocks (crude oil and refined products) fell in December by 55,600,000 barrels, the
steepest drop in over seven years. OECD stocks are now 2,851 million barrels, which is way below "glut"
level.
My prediction:
When the U.S. refinery maintenance season is over in March,
supply/demand statistics are going to turn VERY BULLISH for oil in April.
By Dan Steffens for Oilprice.com
Mamdouh G Salameh
on February 22 2018 said:
While I agree with you on myths surrounding US shale oil production, I disagree that OPEC can't produce
more given the right oil price. Iraq alone could add more than 2 million barrels a day (mbd) by 2021/22
given the ongoing development of many discovered oilfields. Iraq has a large number of huge discovered
oilfields that are waiting to be developed. A successful development programme could take Iraq's oil
production to more than 10 mbd by 2026/27.
Moreover, OPEC could easily raise their production by more than 2.5 mbd at an oil price of $100/barrel or
higher. But having suffered a real ordeal with the oil price crash in 2014, they are not going to flood
the oil market again.
I totally agree with you that there is a huge hype about the impact of a wider use of electric vehicles (EVs)
on the global oil market and the demand for oil. EVs will hardly make a dent on the global demand for
oil. There will never be a post-oil era during the 21st century and far beyond.
The oil price is heading towards $70/barrel and beyond during 2018 and could even touch $80 in 2019
buoyed by very positive oil market fundamentals and a re-balanced oil market.
In my considered opinion, a fair price for oil ranges from $100-$130. Such a price will provide good
revenues to the oil-producing nations and will enable them to invest in exploration and in expanding
oil-production capacity. It will also enhance global investment in oil and energy projects and will
enable major oil companies to balance their books and invest further in oil projects. All in all, it will
stimulate the global economy and impact positively on it.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Pankaj Kumar
on February 22 2018 said:
What happens if India and China start booming? Their oil consumption and appetite increase beyond the
projected estimate. This could mean oil prices reach the highest threshold they've ever seen. This
is important with many countries (USA) now becoming more territorial and protection driven. $100-130
would be conservative numbers if this happens.
The increase in well productivity comes with a higher cost tag and whether it is 225 or 250K
BO EUR, at a gross WH price of $60 per barrel and a net back price of $30, those kinds of
estimated UR's are barely (in)sufficient to pay out $7.5M well costs. One cannot replace
reserve inventories that are declining precipitously, much less grow reserves, by breaking
even. It is, in my opinion, a mistake to assume the future of unconventional shale oil
resources in our country is strictly price dependent. It is very much money dependent.
I think one of the primary reasons there are any rigs still running in the EF is to comply
with SEC, 5 year, drill-it-or-lose-it rules for proximity related PUD reserves. If you have
borrowed money on PUD reserves and are about ready to have to impair, again, because you are
running out of time, you are up Shit Creek. Or further up Shit Creek than you already were.
Otherwise, I don't know why anyone is drilling Eagle Ford wells anymore unless they know,
guaranteed, the price of oil is going to $85 and will STAY there.
Just thinking about all these stripper horizontal wells gives me LOE nightmares.
A major expense being downhole failures, doesn't it make practical sense that these wells
will be very high cost? Over 10,000' of rods rubbing up and down against 10,000' of tubing,
and in particular in beginning of the "curve" where the down hole pump apparently must sit in
order to keep from pumping off.
We have wells that haven't been pulled in years, but those are slow pumping verticals that
are very shallow. Many drilled with a cable tool. Straight holes, little rod wear.
I just cannot imagine getting a long run without a failure on these hz wells with a 640
Lufkin pounding away 24/7/365.
I drove by 33 Eagle Ford shale oil wells today, Shallow; did a little windshield poll. Twenty
one of them were down. Or on pump-off controls. Either way, they weren't making money. Might
be they were all WOR; everybody has fled S. Texas for points West. Hauling frac sand can now
make you upper middle class in less than 6 months.
Rod lifting those kinds of wells you describe been there, done that. It sucks. Steal one
in a garage sale, or off eBay and for a while you think you hit a big lick. Then along comes
a $135K well intervention that takes 2 years to payout and you wish you'd become a landscape
engineer (lawnmower) instead.
All wells on rod lift eventually will have down hole failures. When wells fail often, or are
low oil volume, they may become uneconomic to produce.
From what I have seen from actual joint interest statements to non-operated working
interest owners, it costs between $3,000-$20,000 per month to operate a shale oil well. Much
of the expense depends upon how much water is produced with the oil. Almost all produced
water is truck hauled. Water disposal systems are being constructed, but those are very
expensive.
The $$ figure I cite does not include repairs of down hole failures such as pump failures
or tubing leaks. About the cheapest downhole repair I have seen for one of these wells was
$15,000. The highest I have seen was almost $500,000.
EUR estimates for these wells are for a 40-50 year well life. Much of that life the well
will produce under 25 BOPD. Most of the wells in TX are burdened with a 1/4 royalty.
So, just for illustrative purposes, let's say a 5 year old EFS in TX is now producing
6,000 net BO to the working interest owners. At $50 WTI it is providing gross income of
$300,000. By the time we subtract LOE, G & A, and severance taxes, there is likely less
than $100,000 left.
Then, realize many shale companies, to raise money, have sold their gathering systems,
something which kind of astonished me at first. Therefore, the working interest owners are
also paying to use those systems. Even less $$ to the bottom line.
So, as Mike says, it just becomes a gamble on how many down hole failures occur. If you
luck out and have none in the year, you might make a little at $50 oil, more than one per
year and you have likely lost $$.
There will be several hundred thousand of these wells onshore US before it is over. Each
with a plugging and abandonment cost of around $250K estimated.
But, at $100+ oil, these might work. Just a big risk.
@4 "For the life of me I cannot figure why Americans want a war/conflict with Russia."
Ever since US Crude Oil peaked its production in 1970, the US has known that at some point
the oil majors would have their profitability damaged, "assets" downgraded, and borrowing
capacity destroyed. At this point their shares would become worthless and they would become
bankrupt. The contagion from this would spread to transport businesses, plastics manufacture,
herbicides and pesticide production and a total collapse of Industrial Civilisation.
In anticipation of increasing Crude Oil imports, Nixon stopped the convertibility of
Dollars into Gold, thus making the Dollar entirely fiat, allowing them to print as much of
the currency as they needed.
They also began a system of obscuring oil production data, involving the DoE's EIA and the
OECD's IEA, by inventing an ever-increasing category of Undiscovered Oilfields in their
predictions, and combining Crude Oil and Condensate (from gas fields) into one category (C+C)
as if they were the same thing. As well the support of the ethanol-from-corn industry began,
even though it was uneconomic. The Global Warming problem had to be debunked, despite its
sound scientific basis. Energy-intensive manufacturing work was off-shored to cheap
labour+energy countries, and Just-in-Time delivery systems were honed.
In 2004 the price of Crude Oil rose from $28 /barrel up to $143 /b in mid-2008. This
demonstrated that there is a limit to how much business can pay for oil (around $100 /b).
Fracking became marginally economic at these prices, but the frackers never made a profit as
over-production meant prices fell to about $60 /b. The Government encourages this destructive
industry despite the fact it doesn't make any money, because the alternative is the end of
Industrial Civilisation.
Eventually though, there must come a time when there is not enough oil to power all the
cars and trucks, bulldozers, farm tractors, airplanes and ships, as well as manufacture all
the wind turbines and solar panels and electric vehicles, as well as the upgraded
transmission grid. At that point, the game will be up, and it will be time for WW3. So we
need to line up some really big enemies, and develop lots of reasons to hate them.
Thus you see the demonisation of Russia, China, Iran and Venezuela for reasons that don't
make sense from a normal perspective.
The Polish leadership intends to implement a project of its own with the Baltic Pipe gas
pipeline - in face of the "Nord Stream - 2". This is reported by the German newspaper
Frankfurter Allgemeine Zeitung .
The Polish party "Law and Justice" decided to revive the Baltic Pipe project and connect to the
Norwegian gas network. According to press releases, at the end of last year the Polish state
oil and gas company PGNiG reserved the capacity of the gas pipeline for 15 years, at a cost of
two billion dollars. It is assumed that the Polish project with an annual capacity of 10
billion cubic meters per year will begin to function in 2022, but the final decision on this
project will be taken later in 2018.
Poland actively opposes the construction of the Russian "Nord Stream - 2". Earlier, the Polish
Prime Minister called on the US leadership to extend American sanctions for the implementation
of this project. In addition, he said that European companies involved in the construction of
the gas pipeline should be fined.
Germany has rebuffed such statements, stating that the project guarantees energy security for
Europe.
Nord Stream -2 is a project worth 9.5 billion euros, which involves the construction of two
lines of pipeline across the Baltic Sea from the coast of Russia to Germany. The total capacity
will be 55 billion cubic meters of gas per year.
Taking oil price to 30th or 40th is a strategic goal of the USA in relation to Russia. Listen at 3:30.
Notable quotes:
"... Appeasing interview with a shockingly cheap incompetent former CIA head Woolsey. If this man seriously represents the intellectual level of the CIA, then the USA will implode even faster than in ten years. ..."
"... You are exactly right. U$ politicians are uninformed, stupid, detached from reality, selfish and they think like schoolyard kids do. ..."
"... They are the product of the US society as a whole. ..."
"... Craig Murray nailed this issue stone dead for all time a few years ago, when he wrote:"[neo]liberal interventionism, the theory that bombing brown people is good for them". ..."
"... In the former The Ukraine, the Jewish Quisling oligarch dictator, Poroshenko, has been appointing foreigners to positions of power (SackOfShvilli is but one). He supported this by stating: "Ukrainians are too corrupt to rule themselves." When will we in America hear such a statement from our leaders to justify the appointment of Jews and paid Judaeophiles to all positions of power? ..."
"... I'm just waiting for Yevgeny Prigozhin to hold a press conference in Russia to claim that Hillary Clinton paid him to run the Internet Research Agency to besmirch her opponent- watch the fireworks :) It's all a hall of mirrors. ..."
"... The Internet Research Agency couldn't have possibly been more ineffective, which points to it's main purpose being to besmirch Trump (more more likely it was just an unimportant hobby of Prigozhin). ..."
"... Sure the United States has, they have been doing it since 1953 with the overthrow of Iran, to as recently as 2012 Russian Election, 2014 Ukraine Election, the UK referendum on 23 June 2016 on Brexit and currently trying to overthrow it this year. These are just a few and there is a very long list of other countries also. The United States in now in Russia and Hungry today meddling it their elections. Got to get the right people in office so they will cow-tow to the United States. ..."
"... What an admission! trump doesn't want more drilling for oil to Americans to use. It is for export and for foreign interference ..."
"... and if the price of oil would go down to 30/40$ that would make a unhappy input and so would be the saudis and you fracking industry would go down the toilet and thy will drag the banks with them. What a moron. And US oil companies would like that alot too ..."
Another tiresome, butthurt yank/wank? Between the new One Belt, One Road Chinese initiative, the Russians taking control of
ME oil production and the fact that america has NO answers to help it's declining empire, it would seem to the non-partisan observer
that america is well and truly f***ed. You must be talking about their debt expansionism, $20 TRILLION and rising by the second.
Thank you Mario......let's not forget Ukraine, Kosovo, Bosnia, the entirety of eastern Europe, the entirety of northern Africa,
Rwanda, the Congo, Venezuela, Chili, Guatemala, Panama, Jeeeeeeeze etc......
Russia condemned and defined as the enemy of America with laughably little evidence (effing Facebook posts being about the
extent of it) .... not a word about JEWISH MONEY controlling the entire political system in the USA. When Netanyahu gets 29 standing
ovations from Congress should that not have triggered an FBI "Investigation"? Nah ... nothing happening there. It is breathtaking
that THIS is the Alice-In-Wonderland world we inhabit.
Appeasing interview with a shockingly cheap incompetent former CIA head Woolsey. If this man seriously represents the intellectual
level of the CIA, then the USA will implode even faster than in ten years.
Craig Murray nailed this issue stone dead for all time a few years ago, when he wrote:"[neo]liberal interventionism, the theory that bombing brown people is good for them".
Yeah, that's hilarious. Join the murdering creep in a giggle, Laura, that's cute. Here's a global criminal who should have
been hung years ago for crimes against humanity. No one in their right mind would treat this creep with anything but contempt
and horror, let alone find him funny.
In the former The Ukraine, the Jewish Quisling oligarch dictator, Poroshenko, has been appointing foreigners to positions of
power (SackOfShvilli is but one). He supported this by stating: "Ukrainians are too corrupt to rule themselves." When will we
in America hear such a statement from our leaders to justify the appointment of Jews and paid Judaeophiles to all positions of
power?
My profound and sincere condolences. You are getting the 'Democracy Treatment' by the West. I hope some of you survive to tell
the tale and take revenge.
Are those ears or bat-wings? WOW! Yet another Jewe, pretending not be be. I guess he would say that the USA murdered all the
Indians and enslaved Africans 'for their own good' as well.
Talmudo-Satanism is the pernicious underlying ideology of the people who have taken over, not just the USA, but, lets face it,
the entire West.
Lets not forget that the U.$.A. meddled in Australia's election of the Whitlam Government. (And several governments there after
as soon as they realised they could get away with it an nothing would happen to them). The United States are a bunch of sick puppies;
really sick puppies the way they have treated Australia.
So much for being allies. With allies like the United States you don't need enemies (Unless the U.$. doctors them up for you
to force you to pay them more money for weapons and protection).
And it makes me sick that so many 'naive' people around the world keep falling for the SH*T that comes out of their mouths.
When dealing with the United States there are a few rules to follow. (Apologies to the innocent Americans out there but 'they'
allow their government to do some unspeakable horrors to the world.)
Rule One: If an American politician is speaking, then they are lying to you.
Rule Two: If an American Politician is quiet, they they want you to believe a lie.
Rule Three: If you have relations with the United States, you will be lied to.
And that goes for the entire planet no matter who the United States is speaking to.
Worst part is the our Gov can't think ahead, if they keep antagonising China on behalf of the Seppo's China will eventually
pull their mineral imports and our economy will crash overnight.
Yes, nobody doubts that the US interferes with elections in other countries - we're the good guys, so this is ok :)
I'm just waiting for Yevgeny Prigozhin to hold a press conference in Russia to claim that Hillary Clinton paid him to run the
Internet Research Agency to besmirch her opponent- watch the fireworks :) It's all a hall of mirrors.
The Internet Research Agency couldn't have possibly been more ineffective, which points to it's main purpose being to besmirch
Trump (more more likely it was just an unimportant hobby of Prigozhin).
Sure the United States has, they have been doing it since 1953 with the overthrow of Iran, to as recently as 2012 Russian Election,
2014 Ukraine Election, the UK referendum on 23 June 2016 on Brexit and currently trying to overthrow it this year. These are just
a few and there is a very long list of other countries also. The United States in now in Russia and Hungry today meddling it their
elections. Got to get the right people in office so they will cow-tow to the United States.
Frederick the Great concluded that to allow governments to be dominated by the majority would be
disastrous: "A democracy, to survive, must be, like other governments a minority persuading a majority to let itself be led by
a minority."
and if the price of oil would go down to 30/40$ that would make a unhappy input and so would be the saudis and you fracking
industry would go down the toilet and thy will drag the banks with them. What a moron. And US oil companies would like that alot too
...and the US bombed half of the world's countries for their own good too. US made Libya a slave market for humanity's good
as well. Oboomer even got the Nobel Peace Prize for it.
F Y I :> Putin prefers Aramco to Trump's sword dance
Hardly 10 months after honoring the visiting US president, the Saudis are open to a
Russian-Chinese consortium investing in the upcoming Aramco IPO
By M.K. BHADRAKUMAR
FEBRUARY 16, 2018
[extract]
In the slideshow that is Middle Eastern politics, the series of still images seldom add up
to make an enduring narrative. And the probability is high that when an indelible image
appears, it might go unnoticed -- such as Russia and Saudi Arabia wrapping up huge energy
deals on Wednesday underscoring a new narrative in regional and international security.
The ebb and flow of events in Syria -- Turkey's campaign in Afrin and its threat to
administer an "Ottoman slap" to the United States, and the shooting down of an Israeli F-16
jet -- hogged the attention. But something of far greater importance was unfolding in Riyadh,
as Saudi and Russian officials met to seal major deals marking a historic challenge to the US
dominance in the Persian Gulf region.
The big news is the Russian offer to the Saudi authorities to invest directly in the
upcoming Aramco initial public offering -- and the Saudis acknowledging the offer. Even
bigger news, surely, is that Moscow is putting together a Russian-Chinese consortium of joint
investment funds plus several major Russian banks to be part of the Aramco IPO.
Chinese state oil companies were interested in becoming cornerstone investors in the IPO,
but the participation of a Russia-China joint investment fund takes matters to an entirely
different realm. Clearly, the Chinese side is willing to hand over tens of billions of
dollars.
Yet the Aramco IPO was a prime motive for US President Donald Trump to choose Saudi Arabia
for his first foreign trip. The Saudi hosts extended the ultimate honor to Trump -- a
ceremonial sword dance outside the Murabba Palace in Riyadh. Hardly 10 months later, they are
open to a Russian-Chinese consortium investing in the Aramco IPO.
Riyadh plans to sell 5% of Saudi Aramco in what is billed as the largest IPO in world
history. In the Saudi estimation, Aramco is worth US$2 trillion; a 5% stake sale could fetch
as much as $100 billion. The IPO is a crucial segment of Vision 2030, Saudi Crown Prince
Mohammad bin Salman's ambitious plan to diversify the kingdom's economy.
A production sharing agreement (PSA) between Royal Dutch Shell and Ukraine's Nadra Yuzivska
for the development of Yuzivske shale gas deposits located in Ukraine's Kharkiv and Donetsk
regions was signed in Davos on 24 January 2013 through the mediation of Ukrainian president
Viktor Yanukovych and Netherlands prime minister Mark Rutte. The agreement was inked by
Ukraine's energy and coal industry minister Eduard Stavitsky and Royal Dutch Shell CEO Peter
Voser.
Prior to the signing ceremony Yanukovych told journalists that Ukraine would benefit from
the agreement since it would allow attracting investments, which Ukraine could use to increase
the domestic natural gas production thus creating jobs, raising the level of the country's
economy as well as increasing the budget revenues and providing funds for social needs.
On 23 January Ukraine's cabinet of ministers approved a draft PSA between Shell Exploration
and Production Ukraine Investments B.V. and Nadra Yuzivska for Yuzivske shale gas field
(7,886m2 acreage) development.
Yuzivske field prognostic resources are estimated at 2-4trln m3 of gas, which can be a viable
alternative for costly natural gas volumes Ukraine imports form Russia. In the meanwhile US
Energy Information Agency (EIA) estimates Ukraine's shale gas potential at 1.2trln m3 in this
way making the country's shale gas reserves the 4th largest in Europe after Poland, France and
Norway. Totally consuming some 60bn m3 of natural gas annually, Ukraine has to import 40bn m3
of natural gas from Russia priced $430 per 1,000 m3 based on the terms of agreements inked in
2009.
Ukraine's prime minister Mykola Azarov stated earlier that Yuzivske field commercial
development over the span of a decade could give Ukraine an additional 8-10bn m3 of gas
annually.
As Eduard Stavitsky put it in Davos, Ukraine could possibly meet its domestic natural gas
demand in full in about 5 years of shale gas production cooperation with Shell. "According to
Shell's optimistic scenario about 20bn m3 of gas could be extracted annually; according to the
pessimistic one, at the very least 7-8bn m3. If the top forecasts were fulfilled, we would
tackle the gas shortfall problem in Ukraine or might even go into surplus", Stavitsky was
quoted as saying. He stated earlier that Shell saw investments under the deal of at least $10bn
under the most likely scenario and possibly as much as $50bn.
OILMARKET Info
In May 2012 Shell was chosen the successful bidder for 7,800km2 Yuzivske acreage (Kharkiv and
Donetsk regions, Ukraine) development with projected reserves estimated at 4.054trln m3 of gas
of various categories. The project calls for raising at least $20mn (UAH1.6bn) in investments
for the geological study phase, and $3.75bn (UAH30bn) for the industrial production phase. The
agreement envisages stage-by-stage exploration, development and hydrocarbons production. Both
companies (Shell and Nadro Yuzivske) will hold a 50% participation stake, with Shell chosen the
project operator responsible for carrying out works under the terms of agreement.
According to Shell press service, the mentioned PSA was signed for 50 years period. The
initial geological study phase at Yuzivske field implies 2D and 3D seismics as well as 15 well
drilling, which is expected to enable effective exploration and assessments of hydrocarbon
deposits potential especially that of natural gas trapped in compacted sandstone. Yuzivske
field development will be implemented in line with the highest international HSE standards. In
this way Shell is to carry out comprehensive possible environmental, social and public health
impact assessment of the project prior to launch.
Sunday, January 21, 2018Blockchain: what it is, what it does, and why you
probably don't need one
Dilbert - by Scott Adams
Interest in blockchain is at a fever pitch lately. This is in large part due to
the eye-popping price dynamics of Bitcoin --the original bad-boy cryptocurrency--which
everyone knows is powered by blockchain ...whatever that is. But no matter. Given that
even big players like Goldman Sachs are getting into the act (check out their super slick
presentation here: Blockchain--The New Technology of
Trust ) maybe it's time to figure out what all the fuss is about. What follows is based on
my slide deck which I recently presented at the Olin School of Business at a Blockchain
Panel (I will link up to video as soon as it becomes available)
Things are a little confusing out there I think in part because not enough care is taken in
defining terms before assessing pros and cons. And when terms are defined, they sometimes
include desired outcomes as a part of their definition. For example, blockchain
is often described as consisting of (among other things) an immutable ledger. This is
like defining a titanic to be an unsinkable ship.
So what do people mean when they bandy about the term blockchain ? I recently had a
chance to learn about the project from a corporate perspective as represented by Ed Corno of
IBM (see IBM Blockchain ), the
other member of the panel I mentioned above. From Ed's slide deck we have the following
definition:
Blockchain: a shared, replicated, permissioned ledger with consensus, provenance,
immutability and finality.
Well, if this is what blockchain is, then maybe I want one too! The issue I
have with this definition (apart from the fact that it confounds descriptive elements with
desired outcomes) is that it glosses over what I consider to be an important defining
characteristic of blockchain: the consensus mechanism. Loosely speaking, there are two
ways to achieve consensus. One is reputation-based (trust) and the other is
game-based (trustless).
I'm not 100% sure, but I believe the corporate versions of blockchain are likely to stick to
the standard model of reputation-based accounting. In this case, the efficiency gains of
"blockchain" boil down to the gains associated with making databases more synchronized across
trading partners, more cryptographically secure, more visible, more complete, etc. In short,
there is nothing revolutionary or radical going on here -- it's just the usual advancement of
the technology and methods associated with the on-going problem of database management.
Labeling the endeavor blockchain is alright, I guess. It certainly makes for good
marketing!
On the other hand, game-based blockchains--like the one that power Bitcoin--are, in my view,
potentially more revolutionary. But before I explain why I think this, I want to step back a
bit and describe my bird's eye view of what's happening in this space.
A Database of Individual Action Histories
The type of information that concerns us here is not what one might label "knowledge," say,
as in the recipe for a nuclear bomb. The information in question relates more to a set of
events that have happened in the past, in particular, events relating to individual actions.
Consider, for example, "David washed your car two days ago." This type of information is
intrinsically useless in the sense that it is not usable in any productive manner. In addition
to work histories like this, the same is true of customer service histories, delivery/receipt
histories, credit histories, or any performance-related history. And yet, people value such
information. It forms the bedrock of reputation and perhaps even of identity. As such, it is
frequently used as a form of currency.
Why is intrinsically useless history of this form valued? A monetary theorist may tell you
it's because of a lack of commitment or a lack of trust (see Evil is the Root of All
Money ). If people could be relied upon to make good on their promises a priori ,
their track records would largely be irrelevant from an economic perspective. A good reputation
is a form of capital. It is valued because it persuades creditors ( believers ) that more reputable agencies are
more likely to make good on their promises. We keep our money in a bank not because we think
bankers are angels, but because we believe the long-term franchise value of banking exceeds the
short-run benefit a bank would derive from appropriating our funds. (Well, that's the theory,
at least. Admittedly, it doesn't work perfectly.)
Note something important here. Because histories are just information, they can be created
"out of thin air." And, indeed, this is the fundamental source of the problem: people have an
incentive to fabricate or counterfeit individual histories (their own and perhaps those of
others) for a personal gain that comes at the expense of the community. No society can thrive,
let alone survive, if its members have to worry excessively about others taking credit for
their own personal contributions to the broader community. I'm writing this blog post in part
(well, perhaps mainly) because I'm hoping to get credit for it.
Since humans (like bankers) are not angels, what is wanted is an honest and immutable
database of histories (defined over a set of actions that are relevant for the community in
question). Its purpose is to eliminate false claims of sociable behavior (acts which are
tantamount to counterfeiting currency). Imagine too eliminating the frustration of discordant
records. How much time is wasted in trying to settle "he said/she said" claims inside and
outside of law courts? The ultimate goal, of course, is to promote fair and efficient outcomes.
We may not want something like this creepy Santa Claus technology , but
something similar defined over a restricted domain for a given application would be nice.
Organizing History
Let e(t) denote a set of events, or actions (relevant to the community in question),
performed by an individual at date t = 1,2,3,... An individual history at date t is denoted
Aggregating over individual events, we can let E(t) denote the set of individual actions at
date t, and let H(t-1) denote the communal history, that is, the set of individual histories of
people belonging to the community in question:
Observe that E(t) can be thought of as a "block" of information (relating to a set of
actions taken by members of the community at date t). If this is so, then H(t-1) consists of
time-stamped blocks of information connected in sequence to form a chain of blocks. In this
sense, any database consisting of a complete history of (community-relevant) events can be
thought of as a "blockchain."
Note that there are other ways of organizing history. For example, consider a cash-based
economy where people are anonymous and let e(t) denote acquisitions of cash (if positive) or
expenditures of cash (if negative). Then an individual's cash balances at the beginning of date
t is given by h(t-1) = e(t-1) + e(t-2) + ... + e(0). This is the sense in which "
money is memory ." Measuring a person's worth by how much money they have serves as a crude
summary statistic of the net contributions they've made to society in the past (assuming they
did not steal or counterfeit the money, of course). Another way to organize history is to
specify h(t-1) = { e(t-1) }. This is the "what have you done for me lately?" model of
remembering favors. The possibilities are endless. But an essential component of
blockchain is that it contains a complete history of all community-relevant events. (We
could perhaps generalize to truncated histories if data storage is a problem.)
Database Management Systems (DBMS) and the Read/Write Privilege
Alright then, suppose that a given community (consisting of people, different divisions
within a firm, different firms in a supply chain, etc.) wants to manage a chained-block of
histories H(t-1) over time. How is this to be done?
Along with a specification of what is to constitute the relevant information to be contained
in the database, any DBMS will have to specify parameters restricting:
1. The Read Privilege (who, what, and how);
2. The Write Privilege (who, what, and how).
That is, who gets to gets to read and write history? Is the database to be completely open,
like a public library? Or will some information be held in locked vaults, accessible only with
permission? And if by permission, how is this to be granted? By a trusted person, by algorithm,
or some other manner? Even more important is the question of who gets to write history. As I
explained earlier, the possibility for manipulation along this dimension is immense. How to
guard against to attempts to fabricate history?
Historically, in "small" communities (think traditional hunter-gatherer societies) this was
accomplished more or less automatically. There are no strangers in a small, isolated village
and communal monitoring is relatively easy. Brave deeds and foul acts alike, unobserved by some
or even most, rapidly become common knowledge. This is true even of the small communities we
belong to today (at work, in clubs, families, friends, etc.). Kocherlakota (1996) labels H(t-1) in
this scenario "societal memory." I like to think of it as a virtual database of individual
histories living in a distributed ledger of brains talking to each other in a P2P fashion,
with additions to, and maintenance of, the shared history determined through a consensus
mechanism. In this primitive DBMS, read and write privileges are largely open, the latter being
subject to consensus. It all sounds so.. . blockchainy.
While the primitive "blockchain" described above works well enough for small societies, it
doesn't scale very well. Today, the traditional local networks of human brains have been
augmented (and to some extent replaced) by a local and global networks of computers capable of
communicating over the Internet. Achieving rapid consensus in a large heterogeneous community
characterized by a vast flows of information is a rather daunting task.
The "solution" to this problem has largely taken the form of proprietary databases with
highly restricted read privileges managed by trusted entities who are delegated the write
privilege. The double-spend problem for digital money, for example, is solved by delegating the
record-keeping task to a bank, located within a banking system, performing debit/credit
operations on a set of proprietary ledgers connected to a central hub (a clearing agency)
typically managed by a central bank.
The Problem and the Blockchain Solution
Depending on your perspective, the system that has evolved to date is either (if you are
born before 1980) a great improvement over how things operated when we were young, or (if you
are born post 1980) a hopelessly tangled hodgepodge of networks that have trouble communicating
with each other and are intolerably vulnerable to data breaches (see figure below, courtesy Ed
Corno of IBM).
The solution to this present state of affairs is presented as blockchain (defined
earlier) which Ed depicts in the following way, Well sure, this looks like
a more organized way to keep the books and clear up communication channels, though the details
concerning how consensus is achieved in this system remain a little hazy to me. As I mentioned
earlier, I'm guessing that it'll be based on some reputation-based mechanism. But if this is
the case, then why can't we depict the solution in the following way?
That is, gather all the agents and agencies interacting with each other, forming them into a
more organized community, but keep it based on the traditional client-server (or hub-and-spoke)
model. In the center, we have the set of trusted "historians" (bankers, accountants, auditors,
database managers, etc.) who are granted the write-privilege. Communications between members
may be intermediated either by historians or take place in a P2P manner with the historians
listening in. The database can consist of the chain-blocked sets of information (blockchain)
H(t-1) described above. The parameters governing the read-privilege can be determined
beforehand by the needs of the community. The database could be made completely open--which is
equivalent to rendering it shared. And, of course, multiple copies of the database can be made
as often as is deemed necessary.
The point I'm making is, if we're ultimately going to depend on reputation-based consensus
mechanisms, then we need no new innovation (like blockchain) to organize a database. While I'm
no expert in the field of database management, it seems to me that standard protocols, for
example, in the form of SQL Server 2017 , can
accommodate what is needed technologically and operationally (if anyone disagrees with me on
this matter, please comment below).
Extending the Write Privilege: Game-Based Consensus
As explained above, extending the read-privilege is not a problem technologically. We are
all free to publish our diaries online, creating a shared-distributed ledger of our innermost
thoughts. Extending the write-privilege to unknown or untrusted parties, however, is an
entirely different matter. Of course, this depends in part on the nature of the information to
be stored. Wikipedia seems to work tolerably well. But its hard to use Wikipedia as currency.
This is not the case with personal action histories. You don't want other people writing your
diary!
Well, fine, so you don't trust "the Man." What then? One alternative is to game the
write privilege. The idea is to replace the trusted historian with a set of delegates drawn
from the community (a set potentially consisting of the entire community). Next, have these
delegates play a validation/consensus game designed in such a way that the equilibrium
(say, Nash or some
other solution
concept ) strategy profile chosen by each delegate at every date t = 1,2,3,... entails: (1)
No tampering with recorded history H(t-1); and (2) Only true blocks E(t) are validated and
appended to the ledger H(t-1).
What we have done here is replace one type of faith for another. Instead of having faith in
mechanisms that rely on personal reputations, we must now trust that the mechanism governing
non-cooperative play in the validation/consensus game will deliver a unique equilibrium outcome
with the desired properties. I think this is in part what people mean when I hear them say
"trust the math."
Well, trusting the math is one thing. Trusting in the outcome of a non-cooperative game is
quite another matter. The relevant field in economics is called mechanism design . I'm not going to get
into details here, but suffice it to say, it's not so straightforward designing mechanisms with
sure-fire good properties. Ironically, mechanisms like Bitcoin will have to build up
trust the old-fashioned way--through positive user experience (much the same way most of us
trust our vehicles to function, even if we have little idea how an internal combustion engine
works).
Of course, the same holds true for games based on reputational mechanisms. The difference
is, I think, that non-cooperative consensus games are intrinsically more costly to operate than
their reputational counterparts. The proof-of-work game played by Bitcoin
miners, for example, is made intentionally costly (to prevent DDoS attacks ) even though
validating the relevant transaction information is virtually costless if left in the hands of a
trusted validator. And if a lack of transparency is the problem for trusted systems, this
conceptually separate issue can be dealt with by extending the read-privilege communally.
Having said this, I think that depending on the circumstances and the application, the cost
associated with a game-based consensus mechanism may be worth incurring. I think we have to
remain agnostic on this matter for now and see how future developments unfold.
Blockchain: Powering DAOs
If Blockchain (with non-cooperative consensus) has a comparative advantage, where might it
be? To me, the clear application is in supporting Decentralized Autonomous
Organizations (DAOs). A DAO is basically a set of rules written as a computer program.
Because it possesses no central authority or node, it can offer tailor-made "legal" systems
unencumbered by prevailing laws and regulations, at least, insofar as transactions are limited
to virtual fulfillments (e.g., debit/credit operations on a ledger).
Bitcoin is an example of a DAO, though the intermediaries that are associated with Bitcoin
obviously are not. Ethereum is a platform that permits the construction of more sophisticated
DAOs via the use of smart contracts . The comparative advantages
of DAOs are that they permit: (1) a higher degree of anonymity; (2) permissionless access and
use; and (3) commitment to contractual terms (smart contracts).
It's not immediately clear to me what value these comparative advantages have for registered
businesses. There may be a role for legally compliant smart contracts (a tricky business for
international transactions). But perhaps the potential is much more than I can presently
imagine. Time will tell.
J.P. Morgan beat all other investment banks in their forecasts for the price of Brent crude this year,
setting its projection at US$70 a barrel. To compare, the second most bullish forecast on Brent is from Bank of America at US$64
a barrel, while Goldman is even more cautious and has not yet upgraded its Brent price forecast from its US$62 a barrel prediction.
J.P. Morgan's reasoning is the same as the other banks': the global economy will continue to expand, which will stimulate growth
in oil demand and healthy prices. This dynamic will also drive WTI prices higher, with the average for the year seen at US$65.63
a barrel by J.P. Morgan's oil analysts.
Despite the upbeat mood, the investment bank's analysts do recognize the danger of growing U.S. and other non-OPEC production.
So, while their price forecasts are for the average level of Brent and WTI this year, the bank's senior oil analyst Abhishek Deshpande
noted in an interview with CNBC that "This 2018 is going to be a year of two halves. The first half is going to be a ... half of
demand, and the second half is more about supply, which is coming back in reaction to the higher oil prices." The first half of the
year will be so strong, Deshpande believes, that Brent could hit US$78 a barrel in the first or the second quarter. Yet in the second
half of the year, drillers will increase their production in response to the higher prices, and this higher production may weigh
on the benchmarks.
There is also something else that may occur before too long: a price correction resulting from the record-high bullish positions
on the six most popular oil-related futures contracts. In his latest
column , Reuters' John Kemp warned that despite the already record number of long bets on these six contracts, money managers
are continuing to place more, with the number of net long bets on Brent alone rising by an equivalent of 14 million barrels in the
week to January 23. In total, net long bets on the six contracts swelled by 44 million barrels to 1.484 billion barrels. More Top
Reads From Oilprice.com:
The positive oil fundamentals of the global oil market can easily support an oil price ranging from $70-$75 a barrel in 2018.
If similar positive market conditions continue into 2019, then we can see oil prices rising to $80/barrel or even higher in 2019
and hitting $100 or higher by 2020. A $70/barrel will be the for for Brent oil prices in 2018.
Prices will also be supported by a fast re-balancing of the market and also by an understanding between Saudi Arabia and Russia
to maintain the OPEC/non-OPEC production cut agreement well beyond 2018 with some adjustments to reflect changing market conditions.
On the supply side, the global oil market will ignore exaggerated claims by the EIA and IEA about US shale oil production averaging
10.3 million barrels a day (mbd) in 2018 and rising to 11 mbd by 2019. My projection for US shale oil production in 2018 is 9.25
mbd made up of 5.10 mbd of shale oil and 4.15 mbd of conventional oil. My projection allows for a 5% depletion in US conventional
wells.
The oil price has to rise beyond $100/barrel before one can talk about a price correction. I have always expressed the view
that a fair price is $100-$130/barrel. Such a price will provide a great impetus to the global economy.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Citizen Oil on January 30 2018 said:
The daily oil prediction nonsense. Wasn't it just a few months ago the daily nonsense was "lower for longer" LOL Haven't heard
that one for a while. Predictions we'd be in a $ 40 to $ 50 oil environment for years if not decades . Oh yeah, then we'd be at
$ 10 when everyone drives an EV.
Looses of shale companies which hedged oil production for 2018 at 2017 prices can be
tremendous.
Notable quotes:
"... Al Rajhi Capital notes that more recently, shale companies ended up locking in hedges at prices that could end up being quite a bit lower than the market price, which could limit their upside exposure should prices continue to rise. ..."
too
much hype surrounding U.S. shale from the Saudi oil minister last week, a new report finds
that shale drilling is still largely not profitable. Not only that, but costs are on the rise
and drillers are pursuing "irrational production."
Riyadh-based Al Rajhi Capital dug
into the financials of a long list of U.S. shale companies, and found that "despite rising
prices most firms under our study are still in losses with no signs of improvement." The
average return on asset for U.S. shale companies "is still a measly 0.8 percent," the financial
services company wrote in its report.
Moreover, the widely-publicized efficiency gains could be overstated, at least according to
Al Rajhi Capital. The firm said that in the third quarter of 2017, the "average operating cost
per barrel has broadly remained the same without any efficiency gains." Not only that, but the
cost of producing a barrel of oil, after factoring in the cost of spending and higher debt
levels, has actually been rising quite a bit.
Shale companies often tout their rock-bottom breakeven prices, and they often use a narrowly
defined metric that only includes the cost of drilling and production, leaving out all other
costs. But because there are a lot of other expenses, only focusing on operating costs can be a
bit misleading.
The Al Rajhi Capital report concludes that operating costs have indeed edged down over the
past several years. However, a broader measure of the "cash required per barrel," which
includes other costs such as depreciation, interest expense, tax expense, and spending on
drilling and exploration, reveals a more damning picture. Al Rajhi finds that this "cash
required per barrel" metric has been rising for several consecutive quarters, hitting an
average $64 per barrel in the third quarter of 2017. That was a period of time in which WTI
traded much lower, which essentially means that the average shale player was not profitable.
Not everyone is posting poor figures. Diamondback Energy and Continental Resources had
breakeven prices at about $52 and $37 per barrel in the third quarter, respectively, according
to the Al Rajhi report. Parsley Energy, on the other hand, saw its "cash required per barrel"
price rise to nearly $100 per barrel in the third quarter.
A long list of shale companies have promised a more cautious approach this year, with an
emphasis on profits. It remains to be seen if that will happen, especially given the recent run
up in prices. But Al Rajhi questions whether spending cuts will even result in a better
financial position. "Even when capex declines, we are unlikely to see any sustained drop in
cash flow required per barrel due to the nature of shale production and rising interest
expenses," the Al Rajhi report concluded. In other words, cutting spending only leads to lower
production, and the resulting decline in revenues will offset the benefit of lower spending.
All the while, interest payments need to be made, which could be on the rise if debt levels are
climbing.
One factor that has worked against some shale drillers is that the advantage of hedging
future production has all but disappeared. In FY15 and FY16, the companies surveyed realized
revenue gains on the order of $15 and $9 per barrel, respectively, by locking in future
production at higher prices than what ended up prevailing in the market. But, that advantage
has vanished. In the third quarter of 2017, the same companies only earned an extra $1 per
barrel on average by hedging. Part of the reason for that is rising oil prices, as well as a
flattening of the futures curve. Indeed, recently WTI and Brent have showed a strong trend
toward backwardation -- in which longer-dated prices trade lower than near-term. That makes it
much less attractive to lock in future production.
Al Rajhi Capital notes that more recently, shale companies ended up locking in hedges at
prices that could end up being quite a bit lower than the market price, which could limit their
upside exposure should prices continue to rise.
In short, the report needs to be offered as a retort against aggressive forecasts for shale
production growth. Drilling is clearly on the rise and U.S. oil production is expected to
increase for the foreseeable future. But the lack of profitability remains a significant
problem for the shale industry.
"... Al Rajhi Capital notes that more recently, shale companies ended up locking in hedges at prices that could end up being quite a bit lower than the market price, which could limit their upside exposure should prices continue to rise ..."
Riyadh-based Al Rajhi Capital dug
into the financials of a long list of U.S. shale companies, and found that "despite rising
prices most firms under our study are still in losses with no signs of improvement." The
average return on asset for U.S. shale companies "is still a measly 0.8 percent," the financial
services company wrote in its report.
Moreover, the widely-publicized efficiency gains could be overstated, at least according to
Al Rajhi Capital. The firm said that in the third quarter of 2017, the "average operating cost
per barrel has broadly remained the same without any efficiency gains." Not only that, but the
cost of producing a barrel of oil, after factoring in the cost of spending and higher debt
levels, has actually been rising quite a bit.
Shale companies often tout their rock-bottom breakeven prices, and they often use a narrowly
defined metric that only includes the cost of drilling and production, leaving out all other
costs. But because there are a lot of other expenses, only focusing on operating costs can be a
bit misleading.
The Al Rajhi Capital report concludes that operating costs have indeed edged down over the
past several years. However, a broader measure of the "cash required per barrel," which
includes other costs such as depreciation, interest expense, tax expense, and spending on
drilling and exploration, reveals a more damning picture. Al Rajhi finds that this "cash
required per barrel" metric has been rising for several consecutive quarters, hitting an
average $64 per barrel in the third quarter of 2017. That was a period of time in which WTI
traded much lower, which essentially means that the average shale player was not
profitable.
Not everyone is posting poor figures. Diamondback Energy and Continental Resources had
breakeven prices at about $52 and $37 per barrel in the third quarter, respectively, according
to the Al Rajhi report. Parsley Energy, on the other hand, saw its "cash required per barrel"
price rise to nearly $100 per barrel in the third quarter.
A long list of shale companies have promised a more cautious approach this year, with an
emphasis on profits. It remains to be seen if that will happen, especially given the recent run
up in prices.
But Al Rajhi questions whether spending cuts will even result in a better financial
position. "Even when capex declines, we are unlikely to see any sustained drop in cash flow
required per barrel due to the nature of shale production and rising interest expenses," the Al
Rajhi report concluded. In other words, cutting spending only leads to lower production, and
the resulting decline in revenues will offset the benefit of lower spending. All the while,
interest payments need to be made, which could be on the rise if debt levels are climbing.
One factor that has worked against some shale drillers is that the advantage of hedging
future production has all but disappeared. In FY15 and FY16, the companies surveyed realized
revenue gains on the order of $15 and $9 per barrel, respectively, by locking in future
production at higher prices than what ended up prevailing in the market. But, that advantage
has vanished. In the third quarter of 2017, the same companies only earned an extra $1 per
barrel on average by hedging. Related: The
Unstoppable Oil Rally
Part of the reason for that is rising oil prices, as well as a flattening of the futures
curve. Indeed, recently WTI and Brent have showed a strong trend toward backwardation -- in
which longer-dated prices trade lower than near-term. That makes it much less attractive to
lock in future production.
Al Rajhi Capital notes that more recently, shale companies ended up locking in hedges at
prices that could end up being quite a bit lower than the market price, which could limit their
upside exposure should prices continue to rise .
In short, the report needs to be offered as a retort against aggressive forecasts for shale
production growth. Drilling is clearly on the rise and U.S. oil production is expected to
increase for the foreseeable future. But the lack of profitability remains a significant
problem for the shale industry.
The last time U.S. drillers pumped 10 million barrels of crude a day, Richard Nixon was in
the White House. The first oil crisis hadn't yet scared Americans into buying Toyotas, and
fracking was an experimental technique a handful of engineers were trying, with meager
success, to popularize. It was 1970, and oil sold for $1.80 a barrel.
Almost five decades later, with oil hovering near $65 a barrel, daily U.S. crude output is
about to hit the eight-digit mark again. It's a significant milestone on the way to
fulfilling a dream that a generation ago seemed far-fetched: By the end of the year, the U.S.
may well be the world's biggest oil producer. With that, America takes a big step toward
energy independence.
The U.S. crowing from the top of a hill long occupied by Saudi Arabia or Russia would
scramble geopolitics. A new world energy order could emerge. That shuffling will be good for
America but not so much for the planet.
For now, though, the petroleum train is chugging. And you can thank the resilience of the
U.S. shale industry for it.
What didn't kill shale drillers made them stronger. The survivors have transformed
themselves into leaner, faster versions that can thrive even at lower oil prices. Shale isn't
any longer just about grit, sweat, and luck. Technology is key. Geologists use smartphones to
direct drilling, and companies are putting in longer and longer wells. At current prices,
drillers can walk and chew gum at the same time -- lifting production and profits
simultaneously.
Fracking -- blasting water and sand deep underground to free oil from shale rock -- has
improved, too. It's what many call Shale 2.0. And it's not just the risk-taking pioneers who
dominated the first phase of the revolution, such as Trump friend Harold Hamm of Continental
Resources Inc., who are benefiting from the surge. Exxon Mobil Corp., Chevron Corp., and
other major oil groups are joining the rush. U.S. shale is "seemingly on steroids," says
Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. in London. "The market
remains enchanted by the ability of shale producers to adapt to lower prices and to continue
to grow."
Geez Mike, your link to the oilprice.com story will surely bring Texas Tea back. Upsetting
the oil minister of KSA is the ultimate sign of victory to the shale/political types.
These shale guys are bound and determined to kill the oil price rally, and IEA and EIA
(which BTW in my opinion are both very political organizations) are really boosting it
too.
I know you feel you have a short window, but hang in there. The current price is pretty
good for "us types" and maybe it will hold between here and $55 WTI for the downside, while
we blow through 10 million and 11 million, all the while thinking, just like 1970, that USA
has unlimited supplies of oil.
I am starting to think the dollar is the key anyway. It was weak in 2011-2014, and oil was
sky high. Might be headed that way again, who knows.
Really enjoying all of the history on Oilystuff. Keep it coming!
"... Blending it will become a problem: http://www.argusmedia.com/pages/NewsBody.aspx?id=1254610&menu=yes ..."
"... Do you really think we are going to increase production by one million barrels with primarily condensate? On second thought, if they could get to Canada, they could make a killing on condensate: http://business.financialpost.com/commodities/energy/encana-pivots-to-78-per-barrel-condensates-from-prolific-montney-basin/amp ..."
"... Higher initial GOR and higher gravity liquids leads to higher EURs; the best EF wells are generally in the very volatile, liquids rich gas leg in Dewitt County, for instance. Higher gravity stuff also can mean lower prices at the WH and market difficulties. ..."
"... I suggest Berman's twitter feed for some good poop on oil and condensate quality. Light tight oil IS getting lighter and it is a very serious problem with end users. We will never become hydrocarbon independent in America simply because of the quality of the stuff we now produce. ..."
"... So what's the plan in America? Send LTO to Corpus and ship it to China or anyone else that will take the stuff. We can't use anymore of it in America. Instead of developing heavy markets to blend LTO with, so America can use America's oil and not export it, we have developed this stupid "isolationistic, energy dominance" plan that is shortsighted and pissing the rest of the oil producing world off. ..."
"... Average Eagle Ford produced now, is probably 40 to 45. I am constantly looking at completion reports, and not just re-quoting some expert. Yes, mine at 33, would be exceptional, and I didn't mean to confuse. Over 45 causes problems. Misinformation is caused by listening to experts, and not doing your own research with primary data. ..."
"... If all of the Eagle Ford or tight oil was at an API gravity of 33, we probably would not be importing as much oil. Nor, would we ever have had the huge inventory build. ..."
"... Over 45, you have a smaller number of options. There are a few refineries in W Texas set up for this, there are a few more refineries set up, but they are small in number and production, and are hard to transport to. Blending becomes difficult, per my post. Bigger option is to export it. ..."
Headline and story are disconnected. That is very possibly a reality, but not developed
within the article. Too bad, as it was the closest thing to reality posted in awhile. Assume
it is a problem with Oiprice, as garbage info is what interests them the most.
Its possible to create isopach maps for gravity of oil throughout the Eagle Ford trend; it
varies. Higher initial GOR and higher gravity liquids leads to higher EURs; the best EF wells
are generally in the very volatile, liquids rich gas leg in Dewitt County, for instance.
Higher gravity stuff also can mean lower prices at the WH and market difficulties.
I don't see any blatant misinformation here. I see people trying to understand what is
going on. I suggest Berman's twitter feed for some good poop on oil and condensate quality.
Light tight oil IS getting lighter and it is a very serious problem with end users. We will
never become hydrocarbon independent in America simply because of the quality of the stuff we
now produce.
So what's the plan in America? Send LTO to Corpus and ship it to China or anyone else that
will take the stuff. We can't use anymore of it in America. Instead of developing heavy
markets to blend LTO with, so America can use America's oil and not export it, we have
developed this stupid
"isolationistic, energy dominance" plan that is shortsighted and pissing the rest of the oil
producing world off.
We're trying to 'prove' something to the rest of the world. In another
decade or so when we have exported all of our LTO away and OPEC and others have us entirely
by the ying-yang again, we'll look back and ask, "who in the hell was in charge?"
Exporting America's oil away is stupid. But then again, less than 20% of America's
population has a savings account so no sweat. Let the kids fend for themselves.
T- Then why are they producing it? Under 40 is too heavy?? That's what the frigging refiners
buy. Average Eagle Ford produced now, is probably 40 to 45. I am constantly looking at
completion reports, and not just re-quoting some expert. Yes, mine at 33, would be
exceptional, and I didn't mean to confuse. Over 45 causes problems. Misinformation is caused
by listening to experts, and not doing your own research with primary data.
If all of the Eagle Ford or tight oil was at an API gravity of 33, we probably would not be
importing as much oil. Nor, would we ever have had the huge inventory build.
Over 45, you have a smaller number of options. There are a few refineries in W Texas set up
for this, there are a few more refineries set up, but they are small in number and
production, and are hard to transport to. Blending becomes difficult, per my post. Bigger
option is to export it.
2018-01-29 Chatham House Events – Iraqi Oil Minister confident that an oil export
capacity of five million barrels per day will be realized by the end of 2018 – a
"landmark in the oil industry"
Current Iraqi oil reserves of 153 billion barrels due to reach
175 billion in the coming years, says oil minister Luaibi at Annual MENA (Middle East &
North Africa) Energy conference
Iraq's oil minister Luaibi said the country seeks to ramp up refining capacity and reduce
imports of refined products :"I am determined that Iraq will become a product exporter
instead of product importer".
"... "The top American diplomat said his country is ready to help Poland continue to diversify its fuel supplies, including through the sale of U.S. liquefied natural gas, to reduce its dependence on Russia" ..."
Tillerson apes Hillary Clinton PR lines on Russia:
WARSAW (Reuters) - The United States sees the planned Nord Stream 2 gas pipeline between
Russia and Germany as a threat to Europe's energy security, U.S. Secretary of State Rex
Tillerson said on Saturday.
The rest of the Reuters article is garbage, so I'm not bothering with a link. . . Bloomberg
seems to spell out the larger rationale, at least:
"The top American diplomat said his country is ready to help Poland continue to diversify its
fuel supplies, including through the sale of U.S. liquefied natural gas, to reduce its
dependence on Russia"
Notice also that Secretary of Defense Mattis says that the US military is now focused on
"Great Power Conflicts" - so what is this, right back to the Hillary Clinton gameplan? At
least, Trump is unlikely to get any international support for reckless military actions, so
that's one good thing about him over Clinton.
Will be interesting to see US shale production in response to increasing frac hits,
increasing costs, mounting debt wall. These are all legitimate issues which IEA seems to
overlook when issuing rosy predictions. Three Stooges thought they could repair a hole in a
pair of pants by cutting it out .same logic as IEA.
Yeah, it's those items and more. The biggest they overlook is declines from production. The
past two years, they have concentrated in sweet spots, to keep their chins above water. In
doing so, they have miraculously brought production back up to 2015 highs, and not much more,
although the EIA is reporting imaginary oil. Underneath all that production, wells are
declining at a rapid rate. The biggest rates are what they drilled last year. Those wells
will produce less than half of what they produced last year. So, how many wells would need to
be completed to increase production over a million barrels in 2018? More than current
capacity, that's for sure.
Although tight oil output has increased at an annual rate of close to 1000 kb/d over the
past 12 months (Dec 2016 to Nov 2017), I doubt that rate of increase will continue, probably
about half that unless oil prices rise more than I expect (and I expect we might get to $85/b
by Jan 2019).
I'd say it's a crap shoot as to whether it goes up, or down with about the same number of
completions in 2018 as 2017. Ok, let's say we have more completions, I still can't say it
will go up 500k barrels. While people place statistics on depletion rates, I haven't seen a
well, yet, that can comprehend statistics. As a matter of fact, they defy statistics.
There are 180k producing wells in Texas. There were about 5400 completions in 2017. That's
about 3% of total producing wells.
I believe the oil price will be extremely volatile over the coming decade. There are major
developments in both the supply and demand for oil that are very independent of each other
and unlikely to move in tandem, with the likely result that there will be ebbs and flows of
both supply and demand that have little relationship to one another, causing wild price
swings.
I would summarize these as follows:
SUPPLY: The development of medium- and long-term supply appears to be severely curtailed
by fracking and a limited supply of suitable sites for new exploration. CEOs are likely
worried that any developments will not be profitable because shale will overproduce and knock
down prices again. Until a clear picture of this phenomenon is apparent, it will curtail the
willingness of oil companies to tackle bigger and more expensive projects. Possible new
medium-term supply appears to exist in Mexico's Gulf, Guyana, South China Sea, off-shore
Brazil, Canadian Tar Sands, possibly the Arctic. The problem with developing these resources
is fracking.
Fracking leads to a quick hit of oil, based primarily on debt infusion, that quickly
dissipates – hence I like the term "frack cocaine". It prioritizes rapid expansion of
oil supply in the short term to the detriment of medium and long term investments. What Wall
Street giveth, Wall Street can also taketh away. The shale oil industry has a similar profile
to developing countries like Mexico in 1994 and Argentina in 2005. The flow of money can halt
abruptly, and the consequences could be disastrous. The short-term oil will quickly go away,
but the investments for serious longer term oil supply will likely be too little, possibly
much too little.
Political trouble will likely lead to disruptions in Venezuela, Nigeria, and Libya. The
cold war between Iran and KSA will likely remain cold, but if proxy wars get out of hand,
massive oil supply disruptions will likely ensue.
DEMAND: The outlook for short and medium term demand is quite good. Global growth is
strong, and entrenched systems of car production that favor ICEs will continue. Longer term,
EVs and self-driving EVs in terms of taxi systems pose serious threats (perhaps least of all
to the US, where distances tend to be longer, density is lower, and gas taxes are cheapest).
GM is deploying self-driving cars as a taxi service next year based on the EV Bolt.
Developing countries have a big incentive to embrace this technology for their populations:
small diesel engines that primarily power scooters and taxis and larger bus engines lead to
horrible air pollution, and electricity can be generated within borders rather than imported
(whether by coal, gas, wind or solar doesn't matter, so far as oil demand is concerned).
Europe's love affair with diesel cars is over and gas taxes (and parking prices) remain high,
making EVs and EV-based taxi services very appealing. Battery technology is about to enter a
new wave, with solid-state lithium ion batteries that are basically dendrite-free (hence much
longer life), super-safe, easier to charge, and 2-3 times the range of current technologies
now in production. Specifically I am looking at Toyota, who has promised such a vehicle by
2022. All other manufacturers better be able to match Toyota by then or very soon after, or
they will leave everyone in the dust just like they did with hybrids. Lithium-based batteries
and lithium itself could see major price swings based on this rapid increase in demand.
Or, of course, the global economy could fall off a cliff at any moment. Fwiw, I see a
price range for oil over the next decade as between $25-$250, with very little pattern to its
rise and fall. Volatility will be key. Oil may peak and fall several times based on fracking
and other short-term trends – a very bumpy plateau. I reckon by 2030 the peak in oil
will be obvious, although some will call it from supply while others will call it from
demand, based on their preferences. By that date, little to no investment in oil will likley
make financial sense, and it will begin to whither away as a global industry. This will be
from a combination of reduction in demand due to an EV technological wave that will
unstoppable by then, and political collapse that occurs in the interim in countries heavily
depending on exporting or importing oil.
"... Major oil producing countries, Saudi Arabia chief among them, are using technology to stave off production declines. These YouTube videos are a perfect example of the extreme lengths being employed to continue production: ..."
"... When the decline kicks in, these technologies will ensure that the cliff will be steeper. While I believe we are living at the absolute peak of world production and that decline will kick in soon, I'm not so concerned about specific predictions. It will happen soon enough and when it does the impact will be severe. ..."
"... I think of this problem in personal terms -- my son was born in 2000. He will live to see a world of diminishing oil production (as well as sea level rise, resource conflicts, and many other problems). Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today? I have lived through the peak period. I cannot envision what comes after. I can only hope that my son finds a way through it. ..."
"... "Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place than it is today?" ..."
"... Perhaps. But such sentiments were very common ten, fifteen years ago, and they were directed toward today, not 2030. So, yes, I do "doubt" it, but that's not saying much, as it's a subject I find interesting but useless to speculate about. ..."
"... I'm checking in here for the first time in about 9 years. I'm an old-time peaker, who jumped ship in 2009 when it became clear the dire predictions of Campbell, Deffeyes, et al., were failing to materialize. ..."
Ron is absolutely right about the creaming issue. Major oil producing countries, Saudi Arabia
chief among them, are using technology to stave off production declines. These YouTube videos
are a perfect example of the extreme lengths being employed to continue production:
These videos underscore how uniquely valuable oil is as an energy source and how no other
substitute will ever come close to matching its utility.
When the decline kicks in, these technologies will ensure that the cliff will be
steeper. While I believe we are living at the absolute peak of world production and that
decline will kick in soon, I'm not so concerned about specific predictions. It will happen
soon enough and when it does the impact will be severe.
I think of this problem in personal terms -- my son was born in 2000. He will live to see
a world of diminishing oil production (as well as sea level rise, resource conflicts, and
many other problems). Does anyone doubt that by the time he is 30 (2030) world oil production
will be in decline? Does anyone doubt by the time he is 50 (2050) the world will be a
drastically different place than it is today? I have lived through the peak period. I cannot
envision what comes after. I can only hope that my son finds a way through it.
"Does anyone doubt that by the time he is 30 (2030) world oil production will be in decline?
Does anyone doubt by the time he is 50 (2050) the world will be a drastically different place
than it is today?"
Perhaps. But such sentiments were very common ten, fifteen years ago, and they were directed toward
today, not 2030. So, yes, I do "doubt" it, but that's not saying much, as it's a subject I
find interesting but useless to speculate about.
I'm checking in here for the first time in about 9 years. I'm an old-time peaker, who
jumped ship in 2009 when it became clear the dire predictions of Campbell, Deffeyes, et al.,
were failing to materialize.
This doesn't mean I think oil is infinite or anything. I do think our capacity to predict
doom is much more circumscribed than our abilities to avoid it.
LNG tanker Gaselys was scheduled to arrive in Boston Saturday. Vessel reversed course to
Spain after almost 21 days en route
... ... ...
While unusual, it's not unheard of for LNG cargoes that aren't tied into a contract with
fixed destination to change course en route as cargo owners seek the highest price and the best
market. Companies with access to wide global supplies can also swap shipments between regions.
What's more, the tanker may still make it to Boston with a delay, as was the case with
deliveries earlier this month, according to Kpler SAS, a cargo-tracking company.
"We have still not canceled the Everett port call for Gaselys," Madeleine Overgaard, an LNG
market analyst at Kpler, said by email. "Her course is currently not very different from the
average delivery at Everett in 2017, she is probably just diverting to delay arrival."
Engie SA's North American unit bought the spot cargo for delivery to the U.S. from
Malaysia's Petroliam Nasional Bhd. to supplement its contracted volumes from Trinidad and
Tobago into its Everett terminal near Boston, it said last week. Engie declined to comment on
the tanker's movement on Friday.
The Yamal LNG project, co-owned by Russia's Novatek PJSC, Total SA, China Natural Petroleum
Corp. and China's Silk Road Fund, started production in December despite U.S. financial
sanctions imposed in 2014 because of Russia's involvement in the Ukrainian conflict. It plans
to deliver 14 spot cargoes by April, when long-term contracts kick in.
Interesting BOEM report attached – their prediction of GOM oil and gas production from
2018-2027.
They predict oil production will increase from 1.65-1.67 mmbopd in the 2017-2019 window to
1.74-1.77 mmbopd in the 2023-2027 time frame. They include future production from current
reserves, contingent resources and undiscovered resources. Contingent resources are mainly
field expansion projects, new fault blocks, new reservoirs, and resources from discoveries
that have not been put on production.
They have initial production from undiscovered resources occurring already in 2019 –
suggesting that a few discoveries will be made and be on line by the end of 2019. Seems
rather ambitious even for subsea tiebacks.
Given the lack of GOM exploration success in the last few years, my biggest challenge to
these predictions are their estimates of production coming from new discoveries. They show
about 1 BBO of production comes from currently undiscovered resources in this 10 year window.
SLG – hope you are well and had a good holidays. Here is my updated effort at the same
thing. I've added some new discoveries, but not as big or developed as fast BOEM show. I've
included all qualified fields as named entries except a few discovered in 2016 and 2017, and
for a lot I've had to make guesses for reserves based on the expected development size
(numbers in brackets show nameplate capacity). I might be able to improve things a bit when
BOEM reserve numbers for end of 2016 come out, but it's still not going to look much like
their estimates. It's noticeable that there's a lot of activity in short term, small tie
backs now – but these only add about 5 to 10 kbpd and immediately start to decline. So
like you I don't know where they are getting such high contingent resource production
additions from unless it is all on existing developments – I guess if a lot of fields
get to grow like Mars-Ursa has and Atlantis might this year then there'd be enough, but that
seems unlikely to me, especially at the rate they show it.
Thanks George, and same to you for the new year.
I've made a stab at comparing numerous production profiles for the 2018-2027 window –
your's from above, my midcase and downside estimates from a little over a year ago, and
BOEM's estimates – both their total estimate, and their total estimate minus any new
resources/discoveries.
I plan to expand on this in a future post – including revised EUR estimate ranges.
They are all models with something worthwhile to add to the discussion, which is not what I
would say about the EIA projections. They just add have some kind of growth rate, with no
basis in actual numbers, and make it look fancy by adding a hurricane effect – and yet
this is the number usually quoted in the MSM. I think their predictions a couple of years ago
had an exit rate for this year of 2.2 mmbpd – miles off, and when they do try to
provide bottom up justification they look ridiculously ill informed.
Maybe they have a higher oil price forecast? Or they don't bother to see if what gets put on
line is worth developing? I know this is hard, but try preparing a forecast with prices
increasing 3% per year above inflation for 30 years, and you will get a higher forecast.
One thing I haven't figured out with Canada is how they come up with the reserves estimates.
If you look at the Alberta oil sands quarterly reports all the projects that are operating,
in development (not many now) or approval are listed. Even given the long operating times for
these projects the reserves included can't be much more than 50 Gb left. Presumably these are
also the best prospects, and given some have lost quite a bit of money in the last couple of
years, and often just operate as arbitrage – turning energy in gas to energy in oil
– then the remaining 100 and more Gbs must be really difficult to get at. Presumably it
will need even more and longer wells (i.e capital) and natural gas (which would have to come
from shale now I think); and maybe the EROI cliff starts setting a real limit somewhere, no
matter what the price rises to, as the deposits get deeper, thinner, harder, heavier or
whatever it is that has made them less attractive.
In a long term emergency situation, I believe the process of permitting and getting
started on construction will take place on a war time economic pace, once it becomes clear
that the emergency is long term.
I don't know any more than the next layman about pipelines or railroads, other than
welding, which is a minor consideration in terms of the big picture. But it seems to me that
laying another pipe, or another track parallel to an existing pipeline or track could happen
pretty fast, maybe within a year, or two at the longest, once the decision is made to do so
on an emergency footing.
When it comes down to arbitraging gas for oil, George makes a really important point.
Eventually gas is sure to get to be really expensive, given that depletion never sleeps, and
when it does, this means cost of oil sands will necessarily have to go up quite a bit, maybe
even to the point that it becomes necessary to burn some oil sands crude on site to continue
production.
If things get to this point, the environmental camp will have a hissy fainting fit, but I
doubt it will matter, because once the majority of people realize that they are going to be
doing without gasoline, they will forget all about the environment and this includes the ones
who don't even drive, as often as not.
The vast majority of us depend on the smooth functioning of the automobile centric
economic model to make a living. Even though she doesn't drive, a waitress who lives over the
restaurant where she works won't be able to pay her rent if half of her regulars cut way back
on eating out due to being short out of work or working short hours themselves. Even divorce
lawyers can't make much money when people don't have it to lose. Fruit's good for you, an
apple a day is priceless, if it's all the fruit you can afford, but I can buy chicken and
beans cheaper than I can buy apples at the nearest supermarket, and compared to chicken and
beans .. apples are starvation food. If the overall economy crashes, apples will be a luxury
rather than an every day item for people thrown out of work or on short hours. If growers
lose even a fifth of our market, half of us will be out of business, and the other half won't
be buying very many new cars.
Bottom line, environmental considerations are NOT going to stop the exploitation of the
oil sands, or coal to liquids, or any other tech that will keep the economic wheels
turning.
There's NOTHING that we can substitute for affordable oil in the very short term, and how
fast we can switch to electrified transportation is anybody's guess.
Mine is that we are going to be utterly dependent on having pretty close to as much oil as
we do now, on a daily basis, for at least another ten years, and probably closer to twenty.
Maybe by then there will be enough electric vehicles on the road to offset depletion and
demand growth due to growing population.
The pipeline issue is not complex at all. Canada's heavy oil is landlocked in Alberta (and
Saskatchewan) and need to be transported to US or to the coast (west or east). Provinces that
produce oil are pro new pipelines but British Columbia (transit and export province) is
against. I fully understand landowners (especially first nations) that neither want new
pipelines nor expansion of current ones. Once a pipeline has been constructed it will
transport crude for many decades, enable production to increase, possibly leak and it´s
uncertain what will happen when the pipe reach its end of life.
To some, pipelines are more than just a few bucks.
"When the last tree is cut, the last fish is caught, and the last river is polluted; when
to breathe the air is sickening, you will realize, too late, that wealth is not in bank
accounts and that you can't eat money."
The keystone XL pipeline and a full upgrader (by full I mean a 200,000 BOPD plant making 38
degree API syncrude) should help reduce the bottleneck. The upgrader takes about 7 years to
design, permit and build. Meanwhile they'll have to make dilbit and ship that to the USA gulf
coast,
The situation in Venezuela is very fluid. Turning production around and raising it to 2.5
mmbopd may take ten years if the current conditions are allowed to continue during 2018. I
have a difference of opinion with some youngsters I see discussing more emphasis on light oil
production. Problem is I know they are mostly inexperienced MBAs well versed in PowerPoint
but lack education or experience taking over an oil field, refurbishing it, and getting it to
increase production. I've been doing that on and off since 1978, and it's not easy.
With the opening of the new ESPO oil pipeline connecting Siberia to China doubling the
amount of oil China can import to 600,000 barrels per day we'll see those numbers continue to
accelerate.
And that's the key. Remember, the massive $400 billion gas deal China made with Gazprom in
2014 hasn't begun delivering gas. The first Power of Siberia pipeline isn't due to be completed
until 2019. The second Power of Siberia pipeline is on the table after this one.
And the two countries just agreed to a third pipeline to bring gas in from Russia's far east
last month.
So, despite back-biting from western media about the profitability of these projects, they
are going forward and the two countries continue to strengthen fundamental ties to one
another.
... ... ...
The important takeaway is that China has created the first unassailable and above-ground
challenge to the petro-dollar oil trade. To break the world's use of the dollar as the sole
settlement currency for oil required the right contract issued by a country the U.S. can't
immediately invade and conduct a regime change operation in – like in Iraq and Libya.
Russia wins here because now there is a path for its Urals grade to become an international
benchmark like WTI and Brent. And since Gazprom prefers to price its long-term gas contracts
based on underlying oil prices rather than the more volatile natural gas price, this is also a
win in the long run for them.
Gold convertibility is a means to deepen China's sovereign debt markets by making it less
risky to hold Chinese bonds. The lack of true yuan convertibility is the big impediment to
people holding them. So, gold convertibility creates a viable exit route.
Bob, when you control 40% of the World's Oil & Gas Reserves and can turn the tap on
and off then you can hardly be considered POOR, especially when you make up 20% of the
world's Land Mass ( am also thinking Fresh Water ).
Vichy DC's Sanctions on Russia are in Essence, Sanctions on Exxon & the Majors (who
soon won't be Majors at this rate ) and the EUROPEAN UNION.
The vice tightens inexorably and US foreign policy thrashes about in response to the
pressure. What will the parasitic Jewish overlords do to save their declining host?
According to one source out of the Far East, China's Yuan denominated oil contract is set to
go live for trading on Jan. 18.
While not an official date announced from government sources, according to an anonymous
member of the Futures market where the new oil contract will trade, this is the expected date
for Beijing to begin its latest challenge to the long-standing Petrodollar system.
According to the Shanghai-based news portal Jiemian, which cited an unidentified person from
a futures company, trading is expected to start Jan. 18.
Multiple rounds of testing have been carried out and all listing requirements met. The State
Council, China's cabinet, was said to have given its approval in December,
one of the final regulatory hurdles. The push for oil futures gained impetus in 2017 when
China surpassed the U.S. as the world's biggest crude importer. -
Zerohedge
While the Chinese markets are not expected to immediately take dominion over the
West's Brent and WTI oil markets, several countries which include Venezuela, Russia, Qatar,
Pakistan, and perhaps even Iran appear ready to transition away from dollar based oil trade.
Additionally, many more nations will likely be willing to dip their toes into this market as it
proves itself to be a viable alternative to dollar hegemony, and as protection from foreign
policy threats from the U.S. which often uses the dollar as leverage in economic sanctions.
So. The US economy is just fine. The
post-recession 2010 Dodd-Frank legislation has cured all. Banks have lots of cash. Congress is
your friend and that certain-to-pass Tax Cut and Jobs bill will finally allow you, your family
and America to MAGA.
Really?!
... ... ...
Oh, those evil banks! The shadowy corporatist denizens of New York, London, and Brussels,
all guilty of a staggering set of every-expanding frauds couched in the beneficent language of
greedy short-term materialistic gain. Financial "crimes of the decade," like the Savings and
Loan meltdown, the Enron Collapse, and the Great Recession are nowadays reported almost
monthly. With metered US justice amounting only to a monetary fine for the offending criminal
bank – usually a small fraction of the money it previously stole, hypothecated, leveraged
or manipulated – and with criminal prosecution no longer a possibility, these criminals
continue to shovel trillions – not billions – into off-shore, non-tax paying
accounts of the already uber-rich. There is never enough.
Just in time for Christmas, Americans received the "Tax Cut and Jobs Bill 2017" that, of
course, contains not one word about jobs, but sounds so good to the ignorant who are still
transfixed on the false mantra of MAGA.
LIBOR, FOREX, COMEX, which used high-speed program securities trading combined with insider
manipulation, were the first serious examples of recent bank frauds. Since the Great Recession
magically became the Great Recovery, Wachovia and HSBC banks plead guilty to laundering money
for Mexican drug cartels, dictators, and terrorists. Wells Fargo and Bank of America were also
guilty of defrauding 10's of thousands of homeowners of their properties during the
"robo-signing" scandal; that was a scandal until Wells and BA paid the
mortdita and all returned to business as usual. Example: In July 2017 it was revealed
that more than 800,000 customers who had taken out car loans with Wells Fargo were charged for
auto insurance they did not need. Barely a month later, Wells was forced to disclose that the
number of bogus accounts that had been created was actually 3.5 million, a nearly 70 percent
increase over the bank's initial estimate. Why not? When the predictable result will be a small
percentage fine and keep the rest. Now that's MAGA!
If the individual retail – Mom and Pop – investor actually had a choice of where
to put their cash money, then no one with better than a fifth-grade education would put a penny
into the major stock markets. However, the goal of the many banking manipulations have had one
goal: eliminate financial investment choices to one – stocks.
One choice, Gold and silver, the previous historical champion alternative in preserving
one's wealth, was deliberately eliminated from short-term, private investment. The banks,
issued and sold massive amounts of worthless certificate gold and derivative gold (not
bullion), and the same in silver, at a current ratio of 272 paper instruments to one measly
ounce of real physical gold. All this has been leveraged against real precious metals, and next
used to influence the price of gold-down- by selling huge tranches of these ostensibly
worthless gold contracts (1 contract=100 paper ounces) within seconds when the spot price of
gold begins to rise. The banks have done this so often that gold has not risen to levels it
would likely reach without this manipulation. This has driven massive liquidity that would have
gone to precious metals towards stocks. This is likely evidenced by the advent of the meteoric
rise in the price of BitCoin, one that-like gold- escapes the bank's control and a
super-inflated stock market.
Similarly, thanks to the economic trickery that has been three rounds of Quantitative
Easing, the other two conventional options; the bond market and personal bank savings accounts,
have been manipulated to also produce a very low rate of return, driving these cash funds to
stocks. It is this entire package of criminality – providing no other place for liquidity
to go – that has performed as the plot to push a surging world stock market to obscene
levels that have no basis in factually-based accounting or economic methods or
history.
Banks Are Ready for the Next Crash – You're Not!
The banks know the next crash is coming. Like 2007, they have set in motion the next
great(est) recession. Predator banks know that most people, thanks to the aforementioned
financial control, media omission and an inferior education system, are "stupid,"
especially regarding the nuances of financial fraud. As the majority of Americans and Europeans
live in the illusion that their financial institutions will protect their savings, they miss
their bank's greedy preparations for the next stock market crash slithering through the halls
of their Parliament or Congress. This already completed legislation states in plain English,
and the language of endemic corruption, that your bank intends to steal your money directly
from your savings account. And your government will let them do this to you.
30,000 pages make up the Dodd-Frank post-recession legislation, authored by the banks in the
aftermath of the Great Recession. The Dodd-Frank legislation was touted as eliminating the
massive bail-outs the US gave virtually every ill-defined too big to fail worldwide bank and US
corporation in 2008-9. In reality, Dodd-Frank was as much a fraud against Americans as LIBOR or
COMEX manipulation, et al .
Title II of the media-acclaimed 2010 Dodd-Frank Wall Street Reform and Consumer Protection
Act provides the Federal Deposit Insurance Corporation (FDIC) with new powers and methods to
again guarantee – first and foremost – the massively leveraged derivatives trade
once this massive leverage plummets as it did with AIG in 2007-09. However, that collapse was
singular. The next will include all banking sectors.
The bank's paid-for politicians made sure a post-crash congress did not regulate derivatives
via Dodd-Frank, and thereby encouraged a further increase in this financial casino betting,
despite it being the root cause of the original problem. Thanks to Dodd-Frank and its
predecessor, the 2005 Bankruptcy Act, Congress made sure these new fraudulent bets on stock
market manipulation would surely be paid. But, not to worry; there would be no more "Bail
Outs." Next time, these banks would use their depositors' savings, including yours. Meet:
the "Bail-In."
Really?!
All Americans recall the massive "Bail-Outs" of 2007-9 and how their corporately
controlled Federal Reserve Bank and an equally controlled US Congress threw several trillions
of US taxpayer dollars at US banks, dozens of foreign banks, and any corporation with enough
political pull to be defined as "Too Big To Fail" (TBTF). In the aftermath a year later, the
banks understood that Americans and European citizens had lost enthusiasm for any future
government Bail-Out, most preferring instead that any institution suffering
self-inflicted financial duress should enjoy the fruits of their crimes next time, via the
reality of formal bankruptcy proceedings.
The will or financial safety of the public is, of course, no concern to criminal
corporations, and so easily circumvented via congress and the president. So, the banksters have
redefined their criminality using two newly defined methods, both rebranded to be far more
palatable to the public.
Currently, "Too Big to Fail," (TBTF) has a very fraudulent and elitist connotation
just like, "Bail-Out." To millions across the world who have lost their homes, pension
funds, retirement plans, and dreams, this decade-old moniker for financial oppression and fraud
has now been conveniently re-branded. The bailed-out TBTF banks now have a far more magnificent
definition: TBTFs are now, "Globally Active, Systemically Important, Financial
Institutions" (G-SIFI).
This sounds so much better.
But, "Bail-Out"? No No. Would you not prefer a "Bail-In"? Not if you know
the details. "Bail-Outs," may have also lost their flavour but in the new world of the
G-SIFI, the next one is actually just a "Bail-In," away.
Yes, Bail-Ins, the new "systemically" correct term for publicly guaranteed bank
fraud are already named as such in new national policies and laws, appearing in multiple
countries. These finance laws, such as Dodd-Frank and its pending UK and European Union
version, make upcoming Bail-Ins legal. These Bail-Ins allow failing G-SIFI banks to legally
convert the funds of "unsecured creditors" (that's you) into bank capital (that's
them). This includes "secured" creditors, like state and local government funds.
Really?!
With this in mind, I entered the main branch of Wells Fargo. The two checks in hand. On the
way in I was greeted warmly, one after the other, by three more fresh-faced and eager proteges,
all smartly uniformed to match the Wells décor, and who proffered, "Good morning,
Sir!," again, and again and again. Certainly, these little fish were not in possession of
authority enough to cash my mammoth checks, so I asked for bigger game, the Branch Manager.
Thus, I explained my plight to a very lovely lass who predicted she "would be glad to
help me."
"Cheryl," patiently explained that I had come to the right place and she would be
glad to cash both checks. Regarding my previous polite banking experience, she admitted that it
was indeed bank policy to have limits on the availability of cash for withdrawals and that
different branches had different limits. This was the main branch so my request here was
meritorious. Further, she admitted that whatever daily cash coming into the branches in the
form of deposits was not available for withdrawal, but was sent from the main branch for daily
accounting at a central point common to all area Wells bank branches. Only a prescribed amount
of cash was provided with each bank for daily customer cash withdrawals.
Really?!
"A couple of times your current request," was her cautious response to my question about her
branch's limits on check cashing. Not to be put-off, I asked about a hypothetical US$25,000
check. She admitted this would be beyond her branches authority. "But," she smiled,
"Today, you've come to the right place."
The financial law firm Davis Polk estimates the final length of Dodd-Frank, the single
longest bill ever passed by the US government, is over 30,000 pages. Before passage, the six
largest banks in the US spent $29.4 million lobbying Congress in 2010 and flooded Capitol Hill
with about 3,000 lobbyists prior to Obama predictably signing its final unread version. No US
congressman or senator had read it. But, the bank's congressional minions were told to vote for
it. And dutifully they did.
The major cause of the upcoming financial meltdown, as with the pre-2008 conditions, is
globally systemic gambling against national economies, called derivatives. Derivatives are sold
as a kind of betting insurance for managing fraudulent banking profits and risk. So, why fix
systemic banking fraud when the final result allowed these same banks to make even more money
in the aftermath of the national and personal financial destruction they originated in the
first recession?
Instead, thanks to Dodd-Frank, derivatives suddenly have "super-priority" status in
any bankruptcy. The Bank for International Settlements quoted global OTC derivatives at $632
trillion as of December 2012. Naked Capitalism states that $230 trillion in worthless
derivatives are on the books of US banks alone. Applied to Dodd-Frank this means that all these
bad bank bets on derivatives will be paid-off first before you may have your savings
cash. If there's actually any cash left once you get to the teller's counter.
Normally in a capital liquidation or bankruptcy proceeding, secured creditors such as a
bank's personal depositors are paid off first because these are hard assets, not investments,
and thus normally have a mandated priority. Under these new "Bail-In" Dodd-Frank
mandates, your government has re-prioritized your bank's exposure and your cash deposit.
Derivatives and other similar banking high-risk ventures are now more highly protected than
bank depositor's savings. In the 2013 example of Cyprus, Germany and the ECB also made
depositors inferior to other bank holdings leaving depositors with, after many months, a small
fraction of their deposits.
And then came Greece.
Selling the lie while using the language of Dodd-Frank, we are told by media whores that
banks will not be given taxpayer bailouts next time. True. The preamble to the Dodd-Frank Act
claims "to protect the American taxpayer by ending bailouts." But how, then, to Bail-In the
G-SIFIs without another taxpayer Bail-Out? No problem.
Enter the FDIC and another new banking term, "cross-border bank resolution." As the
sole US agency required to pay back depositors who lose savings up to $250,000, FDIC is armed
with a paltry US$25 billion war chest to pay depositors. Under Dodd-Frank, the FDIC will be the
mechanism to replace deposits lost or squandered by bank fraud. The public, however, has an
estimated total US cash deposits of US$7.36 trillion so, once the banks steal your savings,
FDIC will be just a little bit short of funds. How to fix this mathematical shortfall? With, of
course, more of your money via emergency taxes or a massive new round of Quantitative Easing
(QE). Either way, by the time this happens your money is long gone. And it gets worse.
Really?!
Say, "Goodbye" to your Savings- Two Greedy Methods
It's [FDIC] already indicated that they will confiscate [savings] funds .
-- US congressman Ron Paul
On December 10, 2012, a joint strategy paper was drafted by the Bank of England (BOE) in
conjunction with the Federal Deposit Insurance Corporation (FDIC) titled, "Resolving
Globally Active, Systemically Important, Financial Institutions." Here the plot to steal
depositor savings is clearly laid out.
The report's "Executive Summary" states:
the authorities in the United States (US) and the United Kingdom (UK) have been working
together to develop resolution strategies These strategies have been designed to enable
[financial institutions] to be resolved without threatening financial stability and without
putting public funds at risk.
Sounds good until you read the fine print; i.e., whose risk are they actually
protecting?
While claiming to protect taxpayers, Title II of Dodd-Frank gives the FDIC an enforcement
arm, the Orderly Liquidation Authority (OLA) which is similar to its British counterpart the
Prudent Regulation Authority (PRA). Both now have the authority to punish the personal
depositors of failing banking institutions by arbitrarily making their savings deposits
subordinate – actually tertiary – to bank claims for the replacement value of their
derivatives. Before Dodd-Frank savings deposits were legally senior and primary to these same
claims in a routine bankruptcy.
With the US banks holding only $7 trillion in personal cash savings deposits compared to
$230 trillion is US derivative obligations, FDIC's $25 billion will not be enough. The creators
of Dodd-Frank knew this before it was signed. As John Butler points out in an April 4, 2012,
article in Financial Sense :
Do you see the sleight-of-hand at work here? Under the guise of protecting taxpayers,
depositors are to be arbitrary, subordinated when in fact they are legally senior to those
claims Remember, its stated purpose [Dodd-Frank] is to solve the problem namely the existence
of insolvent TBTF institutions that were "highly leveraged with numerous and dispersed
financial operations, extensive off-balance-sheet activities, and opaque financial
statements.
Oh, but bank depositors can rest easy in the knowledge that replacing their savings will not
come out of their pockets via another bank Bail-Out. Thanks to Dodd-Frank, the first line of
defence will allow Congress to instead replace personal savings with a government paid for $7
trillion bail-in to FDIC to "replace" these savings.
But, that's the good choice.
Worse, Dodd-Frank gives new powers to FDIC and its OLA that allow an even more powerful and
draconian resolution: any deposited funds in a bank, from $1 to $250,000 (the FDIC limit), and
everything above, can instead be converted to bank stock! FDIC has provisions so this can be
done, via OLA, quite literally overnight.
Really?!
An FDIC report released in 2012 ago reads:
An efficient path for returning the sound operations of the G-SIFI to the private sector
would be provided by exchanging or converting a sufficient amount of the unsecured debt from
the original creditors of the failed company [meaning the depositor's cash] into equity [or
stock].
Additionally, per April 24, 2012 IMF report, conversion of bank debt to stock is an
essential element of Bail-Ins included in Dodd-Frank.
The contribution of new capital will come from debt conversion and/or issuance of new
equity, with an elimination or significant dilution of the pre-bail in shareholders. Some
measures might be necessary to reduce the risk of a 'death spiral' in share prices.
Really?!
For affected depositors to retrieve the value of what was formerly the depositor's account
balance, the stock must next be sold. When Lehman Brothers failed, unsecured creditors
(depositors are now unsecured creditors) got eight cents on the dollar.
This type of conversion of deposits into equity already had another test-run during the
bankruptcy reorganization of Bankia and four other Spanish banks in 2013. The conditions of a
July 2012 Memorandum of Understanding resulted in over 1 million small depositors becoming
stockholders in Bankia when they were sold without their permission -- "preferences"
(preferred stock) in exchange for their missing deposits. Following the conversion, the
preferences were converted into common stock originally valued at EU 2.0 per share, then
further devalued to EU 0.1 after the March restructuring of Bankia.
Canada has also stated they are planning a similar "Bail-In" program. The Canadian
government released a document titled the Economic Action Plan 2013 which says, "the Government
proposes to implement a "Bail-In" regime for systemically important banks."
However, don't be getting cute by hiding your cash, precious metals, or passport in a bank
safe deposit box. There are no longer safe either. Dodd-Frank took care of that, too.
Under Dodd-Frank the FDIC, using the auspices of Dept. of Homeland Security (DHS) can
legally, without a warrant, enter the bank vault, have the manager secretly open any and/or all
safe deposit boxes and inventory, or seize the contents. Further, if the manager is honest
enough to inform the depositor of the illegal incursion he is subject to criminal charges and
termination from bank employ. Independent reports reveal that all of America's safe deposit
boxes have already been invaded and inventoried for future confiscation.
This already happened in Greece. Depositors who removed their jewellery or precious metals
were met at the bank's door by security, a metal detector and confiscation.
Really?!
The power of the now remaining G-SIFI banks and FDIC was further evident when, cash finally
in hand, I headed to my bank, JP Morgan Chase, right next door to Wells Fargo. The manager
confirmed that the cash withdrawal policy at Chase was in keeping with that at Wells; very
little cash available on demand. I posed a slight untruth and inquired as to what I should do
about my upcoming need for $50,000 in hard cash. No, her bank would not do that on demand, but
arrangements could be made to have the cash transferred to her bank. That would only take
"about two days." Of course, I would need to fill out a few forms.
What a Difference a Congress Makes!
With the American and UK public again on the hook by law for the anticipated loss of the
banks a distressed depositor might think the plot to defraud them now complete. Au
Contraire .
In its rush to transfer further wealth upwards to off-shore bank accounts, US president
Trump and his recently re-aligned republican bootlickers have left no stone unturned. First,
Trump issued a memorandum that sets in motion his plan to scale back the provisions of
Dodd-Frank and repeal the Fiduciary Rule.
It should be noted that the only voice of economic reason at the White House, Former Fed
Chairman, Paul Volker, divorced himself from this growing scandal of basic mathematics very
publicly. As head of Obama's recession inspired, President's Economic Recovery Advisory Board,
Volker ran into the headwinds of fiscal insanity for too long, resigning in January of 2011 in
disgust. His departure thus coincided with the renewal of the litany of criminal financial
manipulation already discussed here. And now
The House approved legislation on February 2, 2017, to erase a number of core financial
regulations put in place by the 2010 Dodd-Frank Act, as Republicans moved a step closer to
delivering on their promises to eliminate rules that they claim have strangled small businesses
and stagnated the economy. Said Trump:
I have so many people, friends of mine, with nice businesses, they can't borrow money,
because the banks just won't let them borrow because of the rules and regulations and
Dodd-Frank.
Poor banks!
Never mind, of course, that these poor banks are holding derivative exposure thirty-five
times the total cash deposits of US savers nor that their ill-gotten riches – such as the
UBS, Wells Fargo, Bank of America, RBS multi-billion dollar frauds – were taken
off-calendar in Federal court for approximately 15% of the total crime. The banks kept the
rest.
And they want more?!
"We expect to be cutting a lot out of Dodd-Frank," Trump said further defining the
mantra of MAGA. This will likely see the deterioration of the newly created Financial Stability
Oversight Council (FSOC) and the Consumer Financial Protection Bureau (CFPB) since these
agencies curb further excessive risk-taking and the existence of too-big-to-fail institutions
on Wall Street.
Well, depositors, your extreme caution is required. The wording of these new, bank-inspired
sets of legislation is silently waiting to be used by many nations to prioritize banks before
their citizen's. When the time comes, the race to the bank will be a short-lived event
indeed.
With this in mind, I stepped into the bright sunshine outside the walls of JP Morgan/Chase
bank, all but $100.00 of my day's take stuffed deep- and securely- in my pocket, its final
outcome no one's business but my own.
However, for almost everyone else? Well when YOUR bank fails, don't walk, run!
YOU do not want to be second in line.
Really!
Brett Redmayne-Titley is an Independent Journalist, Photographer/ World Citizen. He is a
former columnist: PRESS TV/IRAN; writer and contributor to: Earth First! Journal; Zero Hedge;
Veterans Today; Activist Post; Off-Guardian; Western Journalism; Intellihub; UK Progressive;
Fars News Agency; Russia Insider; Mint Press News; State of the Nation; News of Globe;
Blacklisted News; Before It's News; Common Dreams; Shift Frequency; etc
The oil market has come to be defined by several narratives over the past couple of years:
market rebalancing, OPEC versus shale, Russia's delicate relationship with OPEC, OPEC's
conformity with production cuts with the latest deal extension running to end of 2018 and
shale's resilience to lower prices.
But these frameworks have created a narrow ideology that could harm the way producers
participate in the oil market this year and beyond.
Myth 1: OPEC's exit strategy means exit
The idea that the 24 producers who came together and struck a deal to cut production by 1.8
million b/d in November 2016 are somehow going to 'exit' the alliance later this year is
misleading. There will be no exit when OPEC, Russia and other non-OPEC producers decide the
market has rebalanced -- based on OECD stock levels reaching their five-year average -- rather
a continuation of the grand alliance under amended, and most probably looser, terms.
OPEC's hands are somewhat tied: unwind from the deal and undo all the good work achieved,
and so it must continue managing the market in another guise to create stability and encourage
long-term investment in oil.
Gary Ross at Platts Analytics has been talking of cuts "into perpetuity" since the historic
deal was made and informed industry sources note that the exit strategy is the wrong phrase to
be using. But while there is uncertainty as to what that new agreement will look like, the
market will anxiously hang on to the exit strategy term and these jitters could serve to keep
an ultimate cap on prices.
Myth 2: OPEC's top priority is market rebalancing
Market rebalancing may be the measure, backwardation may be the means but price is the
ultimate goal.
When prices tanked after a nine-month extension was agreed in May 2017, there was clear
disappointment from OPEC sources even if publicly the whims of the market were dismissed and
ministers anxiously waited for prices to recover in the medium term.
The difficulty with a price target is that nobody knows what an optimal long-term
sustainable price is so the goal posts keep shifting. Besides, different price levels create
new supply-demand dynamics and the price may be influenced by more than just underlying
fundamentals such as geopolitical risk.
Related: Is This The Beginning Of An Oil Sands Revival?
Thus, for now OPEC's clumsy priority is market rebalancing. It just needs remembering that
bringing down the more than 100 million barrels in stocks to its five-year average could prove
elusive given the oversupply in recent years.
There is also the flipside risk in which OPEC tightens too much. Indeed, Saudi Arabia oil
minister Khalid al-Falih has admitted that OPEC may need a more concrete goal at its June
meeting and when it alters its market management strategy it may well coincide with a new
long-term target.
Myth 3: Russia will end its alliance with OPEC
Russian oil companies have begrudgingly stayed on board with the deal due to the iron hand
of President Vladimir Putin and steely determination of oil minister Alexander Novak.
Russia is not so at ease with ongoing market management and the fanfare and media circus
that surrounds OPEC. Russia also arguably needs the extra revenue less and is more worried
about losing market share in Europe and Asia to competition from rising U.S. shale oil exports.
But the growing political nexus between Russia and Saudi Arabia, Russia's increasing swagger as
joint head of this broad OPEC alliance (as noted at the November 30 meeting in Vienna with
everyone awaiting Novak's arrival) as well as the budgetary need for sustained higher prices
means Russia could well be in it for the long haul.
Putin is keenly aware of the U.S.-Saudi ties and has been building relations with Saudi
Arabia since 2007 when it offered the kingdom nuclear aid.
Indeed, the overriding concern for the world's biggest oil producer is that, should the
agreement unravel, prices could plunge putting the country back at ground zero. It may be an
inconvenient truth for both, but to wield the necessary global energy influence, OPEC and
Russia need each other indefinitely.
Myth 4: The battleground is OPEC versus U.S. shale
Ever since OPEC did an about-turn on its pump-at-will strategy and started working on a
market share approach that was first brokered in Algiers in September 2016, the battle between
OPEC and shale has been exaggerated. What may have started out as a move to crush U.S. shale in
2014 has transformed into a broader coexistence at the end of 2017 in a bid to find an
equilibrium that allows profits to be made and coffers to be filled by all producers.
(Click to enlarge)
There has been growing dialogue between U.S. frackers and the oil producer group.
It could be argued that OPEC's first mission was to stop the runaway train that was OPEC
output as producers ramped up production month on month as competition intensified. It could
also be argued that the real target for OPEC is still unconventional and uneconomic oil as once
investment becomes a free for all, OPEC risks a repeat of an oil boom and bust and the
volatility it is trying to guard against. But at what point will deepwater, oil sands and
Arctic drilling in general become economic enough to persuade investors to commit?
For example, the U.S. deepwater Gulf of Mexico sector has struggled since crude dropped in
late 2014, but costs have dropped and efficiencies improved, and analysts suggest the sector
may be at a turning point if prices are maintained.
Myth 5: U.S. shale is simply resilient
U.S. shale producers may well be predicted to make capex gains in 2018, they may have made
technological innovations in drilling and completions that have brought down costs and they may
have adapted to a lower price environment. In fact, Platts Analytics predicts a U.S. shale
production growth of 900,000 b/d in 2018. But, despite all this, a productivity inflection
point may well have been reached, a crossroads for investors.
(Click to enlarge)
Cyclical cost efficiencies and geological productivity are beginning to unwind with a
combination of inflation and a broadening from the sweetest spots and core acreage.
Related: China Is About To Shake Up Oil Futures
In the Permian, rig efficiency peaked in July 2016 according to the EIA, and has since
consistently decreased, while the Eagle Ford and Anadarko (Woodford) plays have experienced a
significant drop-off in rig productivity. Moreover, investors want a return on their capital
and have tired of capturing resources without seeing value being maximized. For almost a
decade, the U.S. exploration and production industry has outspent its cash flows in drilling
costs, requiring a constant inflow of debt and equity financing to keep going.
With prices back above $60 a barrel, can investors make a healthy sum? With the biggest
producers now the oil majors, their shareholders may prefer returns over market share.
There is natural gas coming out of our ears at the moment because of the shale phenomena; the
price is tanking back to the mid $2's and there is no place to put anymore gas.
Notable quotes:
"... Shale companies are on track to spend $20 billion more than they will generate in the next six months if prices hover around $40 a barrel, analysts say. ..."
"... Compensation practices play a role in the behavior of U.S. shale producers: Most of their management teams are paid based on growth or adding new oil and gas reserves -- not on profits -- according to Matt Portillo, an analyst at Tudor Pickering Holt & Co., in Houston. "Until that changes, growth may continue to prevail," he said. ..."
The shale oil industry is NOT profitable. It never has been and in general terms it will not
be in 2018 either. There has always been something fishy about its funding, particularly when
wanders like this guy can make $16M a year in compensation, while his company looses money
year over year for stock holders.
Clearly, however, it is not his fault his company can't be profitable and it is not their
fault they are "forced" to borrow all that money
As we've noted on too many occasions to count, this is aiding and abetting a situation
where these companies effectively sow the seeds of their own demise. They're running up the
down escalator. They're working their asses off to drive down the price of the very
commodity they're producing.
And hilariously, they think maybe you're the problem. Here's the
Journal again:
"The biggest problem our industry faces today is you guys," Al Walker, chief executive
of Anadarko Petroleum Corp. , told investors at a conference last month.
Wall Street has become an enabler that pushes companies to grow production at any
cost, while punishing those that try to live within their means, Mr. Walker said, adding:
"It's kind of like going to AA. You know, we need a partner. We really need the
investment community to show discipline."
Even if companies cut back on drilling now, it wouldn't be enough to stop a new wave
of oil from hitting the market in the second half of the year : U.S. shale output
typically lags behind new drilling by four to six months, analysts say.
Shale companies are on track to spend $20 billion more than they will generate in the
next six months if prices hover around $40 a barrel, analysts say.
Compensation practices play a role in the behavior of U.S. shale producers: Most of
their management teams are paid based on growth or adding new oil and gas reserves -- not
on profits -- according to Matt Portillo, an analyst at Tudor Pickering Holt & Co.,
in Houston. "Until that changes, growth may continue to prevail," he said.
Isn't that last bit about executive compensation great?
So folks like Al Walker are paid based not on profits, but on growth, and that growth is
funded by investors like you.
So if you connect the dots there, it means you are literally giving these management
teams money to fund the growth that ends up boosting their compensation, and that growth is
going to ultimately bankrupt the companies you're investing in by creating a supply
glut.
Welcome to the shale industry, goddammit. Enjoy your stay.
Oil rose further above $68 a barrel on Tuesday, touching its highest since May 2015,
supported by OPEC-led production cuts and expectations U.S. crude inventories fell for an
eighth week.
Every article on oil prices in the last several months says the ONLY downside is US shale.
Do the larger US shale companies pay attention to supply/demand dynamics at all? At
current prices most can show positive EPS, assuming service costs do not surge too much?
For example, auto manufacturers do not produce the maximum vehicles possible. They pay
attention to supply and demand. Almost every single manufacturer tries to forecast demand for
its product.
Even farmers try to grow what crops are in most demand and raise what livestock is most in
demand.
We have not drilled a well in over 3 years due to lack of oil demand, our production has
fallen.
"Rystad Energy is even bullish on American oil. The Norwegian firm sees U.S. crude output
hitting 11 million barrels per day by December, narrowly surpassing global leader Russia and
OPEC kingpin Saudi Arabia."
Absolute poppycock! US output will do good to get to the level that EIA is currently
reporting, about 9.75 by the end of 2018. Mike's post explains why. 11 million barrels a
day,? Man, that is some potent stuff they are smoking.
>Do the larger US shale companies pay attention to supply/demand dynamics at all?
> At current prices most can show positive EPS, assuming service costs do not surge too
much?
This might be a wrong question. The right question IMHO is: "To what extent shale
companies are just prostitutes of Wall Street and to what extent they are independent oil
production companies? "
What if the key role for such companies is to be a part of "price crasher" mechanism
(along with "naked shorts" and similar financial chicanery) ?
I believe that with the shale boom it is Wall Street that obtained mechanism using which
they can dictate oil prices.
Not Saudies or OPEC in general but Wall Street titans are now in the driving seat,
although OPEC and Russia are fighting back by limiting production.
And Wall Street is not shy to step on the throat of "conventional" oil producers and force
them to produce with no or even negative margins because of the specific of oil industry.
When you gets so much money on such lenient conditions something is fishy This dual
production mode (oil plus junk bonds and evergreen loans) looks to me just a variable of
"subprime housing boom" on a new level.
"... Always skeptical of "technical recoverable guesses," my suggestion is to focus on product prices instead and the current reduced level of activity in the GOM. Oil prices are volatile because of the fiscally irresponsible, short investment nature of the shale oil industry and offshore development takes years and years to bring to market. There is natural gas coming out of our ears at the moment because of the shale phenomena; the price is tanking back to the mid $2's and there is no place to put anymore gas. ..."
"... much like Trump turned over Obama's legislation regarding offshore drilling, this one will be turned over as well. I don't think a 3 year time frame and price volatility gives the offshore industry enough time to do anything with this, personally. Its fluff. ..."
From post above:
TRUMP PROPOSES VAST EXPANSION OF OFFSHORE DRILLING
(Zinke) "This is a start on looking at American energy dominance,"
Regardless of emotional reaction to this announcement, I am skeptical of its
viability.
My skeptical mind tells me, when all else fails, look at the numbers. The numbers per MMS
chart on Wikipedia:
Undiscovered technically-recoverable oil resources on the outer continental shelf,
2006:
Washington/Oregon – 0.4Bbo Nor Cal – 2.08 Bbo Central Cal – 2.31
Bbo So Cal – 5.74 Bbo All Atlantic + east FL – 3.84 Bbo GOM – 44.92 Bbo
North Slope – 23.6 Bbo Alaska less NS – 3.0 Bbo
I conclude that most of the "new" oil unleashed by this stunning decision is in the GOM
and and the North slope, both of which are well-known by the industry and which have been
open to Federal leases in the past. After Shell's bad experience, oil will take a much higher
price to get any bids for the NS and for the GOM, this is just BAU. The Atlantic and Pacific
Coasts don't have enough resource to be worth exploring, much less leasing.
OK, there are some sharp oil people here on the forum and I'm just a dumb HVAC engineer.
Help me. Am I missing something? Are they actually going for the natural gas, and is it worth
going after?
Either Trump and his energy folks are so determined to stick it to environmentalists that
they are willing to hurt the industries they claim to help, or they know this won't amount to
anything but it will impress their hardcore supporters.
I believe that is a good summary HVAC, as is Boomers suggestion that this offshore
development legislation is cursory and an otherwise meaningless gesture made toward an agenda
that involves eliminating regulations for the oil and gas industry and "unleashing" America's
energy might on the rest of the world.
Always skeptical of "technical recoverable guesses," my suggestion is to focus on
product prices instead and the current reduced level of activity in the GOM. Oil prices are
volatile because of the fiscally irresponsible, short investment nature of the shale oil
industry and offshore development takes years and years to bring to market. There is natural
gas coming out of our ears at the moment because of the shale phenomena; the price is tanking
back to the mid $2's and there is no place to put anymore gas.
This is another nail in this administrations coffin, from my conservative perspective. It
is enraging the environmental left and will help assure the biggest Democratic turnout in
history in 3 years.
Then, much like Trump turned over Obama's legislation regarding offshore drilling,
this one will be turned over as well. I don't think a 3 year time frame and price volatility
gives the offshore industry enough time to do anything with this, personally. Its
fluff.
Alberta Canada – Total Production (crude oil + condensates + upgraded bitumen +
bitumen)
November at 3,412 kb/day, up +304 m/m. Average production in 2017 to November, up +250 kb/day
over 2016 full year.
The past week of continuous record low temperatures and snowfall has oil-dependent power
plants in the northeast scrambling to secure supplies of some of the dirtiest burning oil
available in the market due to an impending supply shortage, according to a new report by
Hellenic Shipping News .
Oil fuels 30 percent of the New England power plant market, but winter storms could lead to
another foot of snow, making it difficult for tankers or trains to deliver needed commodities,
Marcia Blomberg of regional grid operator ISO New England, said.
Oil imports to the East Coast jumped by almost 60 percent last week in anticipation of
increased demand due to heating needs. JBC Energy predicts distillate use to increase by 90,000
barrels per day in January and February as well.
The cold weather, expected to become a "bomb cyclone" in the coming days, has also
shocked
natural gas markets. Extreme cold is cutting production in North Dakota's Bakken, while demand
is surging because everyone is turning up the thermostat to stay warm.
Reuters said that gas flowing through interstate pipelines from North Dakota dropped from
1.3 billion cubic feet per day in the week ending on December 25 to just 1 bcf/d as of Tuesday.
Texas (-20 percent) Oklahoma (-22 percent) and Pennsylvania (-5 percent) are also reporting
weather-related production problems, Genscape data says.
The answer to this question is simple: the USA geopolitical interests. But if natgas prices
go up so will the price of oil.
Cold spell in the USA means increased oil consumption, especially in heating oil. Due to gas
shortage some electrical ganerators in affected areas were switched from gas to oil.
In other words, investors are bidding up prices even as the underlying fundamentals point to
questions regarding the balancing process. Oil might push higher as inventories fall, but in
the near-term there is downside risk to prices. Moody's Investors Service said on January 2
that oil prices will probably bounce around in a range between $40 and $60 per barrel for much
of this year.
The risk is that with so much money currently going long, a bit of negative news sparks a
sudden selloff. "The expectation is that the rebalance will continue," Gene McGillian, a market
research manager at Tradition Energy, told Bloomberg. "We've approached an area where we really
need to see a steady diet of positive information."
Yes, it is unreal: either at the Texas RRC they had really HUGE problems in the past months collecting data, or the EIA used only
model estimates without any form of revision.
The correcting factors of the Texas RRC have not changed much and they showed they usual variability, so that I cannot explain
why there is such a big divergence between corrected RRC data and EIA. They only problem that I can think of (on the part of the
RRC) is that the hurricane completely disrupted their work: does anyone know whether the offices and data servers of the Texas
RRC were damaged during the hurricane? Thanks for the information.
I had a very interesting discussion on Twitter: operators in Texas confirmed me that the RRC offices were not affected by the
hurricane and data reporting proceeded normally. At this point the only (legal) reason left to explain the divergence is that
the EIA has started including NGL into their numbers:
Beware this post has "confirmation basis" I am a believer in peak oil...
Notable quotes:
"... Was doing some tax work earlier today and noted for June 2017 oil we got $40.71 per barrel. If 12/29/17 close holds we get $56. $15.29 more on every barrel is huge for us as it is for everyone who operates wells Be it you XOM Harold Hamm Russia OPEC etc. As I recall oil prices rebounded in late 2016 then shale went nuts and the price tanked. Their shares tanked too as I recall. ..."
"... However I am then also sure that you just like us went from making a killing on low decline conventional and $90 oil to making much much less and in your case were using almost all cash to pay for new shale well AFE's. ..."
"... I am happy to see you want $70 even higher than me. So I'll leave you alone now. Take care. I think maybe deep down you too hope US doesn't ram through 10 and then 11 million BOPD next year? ..."
"... Cling to whatever makes you feel good dude. I guess when you're favorite industry produces a lot of product but can't make any profits doing so one has to find the silver lining wherever they can. Shale is a Ponzi scheme. It won't be long until the music stops and the investors lose their shirts. ..."
"... I agree with Mike that LTO producers are not profitable (as a group). I have suggested that if oil prices remain under $65/b (WTI price) that US output may increase by about 600 kb/d (average annual C+C output) in 2018 compared to 2017. If oil prices are higher output may be higher if you tell me what that average oil price will be in 2018 I can make a better output estimate. ..."
"... The oil price may improve in 2018. However it will likely go DOWN CONSIDERABLY first before it continues higher. According to the COT REPORT (Commitment Of Traders) there is a record Commercial Short Position against oil going back 23 years. ..."
"... You will notice right before oil fell from $100 in 2014 there was also a high amount of Commercial Short Positions. Today that level is even higher. ..."
"... WTI is refined to 6% Diesel while global crude average is 34% Diesel. ..."
Unless I missed it I am still waiting for TT to explain how he finances the huge AFE's he must routinely get from $10+
million STACK and SCOOP wells.
Was doing some tax work earlier today and noted for June 2017 oil we got $40.71 per barrel. If 12/29/17 close
holds we get $56. $15.29 more on every barrel is huge for us as it is for everyone who operates wells Be it you
XOM Harold Hamm Russia OPEC etc. As I recall oil prices rebounded in late 2016 then shale
went nuts and the price tanked. Their shares tanked too as I recall.
Say TT owns 10% of a shale monster well that cranks out 200K BO in year one. Say his NRI is 8%.
So he got billed $1 million for his part of the well. A $15 higher oil price nets him $240 000 more in year one
before deducting severance tax.
So I assume TT would rather get an extra $240 000 in year one and have shale not go crazy talk and crazy drill again
as opposed to being able to crow about political crap?
Mike do you know any non-op's on shale wells? How the heck do they finance them?
PS. I know you think it's cold down there in Texas but in my part of the Mid Continent it will be -5 F later tonight.
1 stinking degree F right now. Ouch!!
TT. If you came into shale with a lot of rock solid conventional paid for in full I can see how you could come up
with the money.
However I am then also sure that you just like us went from making a killing on low decline conventional
and $90 oil to making much much less and in your case were using almost all cash to pay for new shale well AFE's.
Even if you have zero debt I assume you at least have an un drawn credit facility just in case a good big deal
were to arise. And therefore I assume you were none too pleased when your borrowing base dropped by more than 2/3 from 2014
to 2015 and again another 20+% in 2016 due to shale over production crashing oil and NG prices.
If you are big enough to cash flow several shale AFE I assume you have net production of somewhere between 2 000-10 000
BOEPD?
So let us say 5 000 BOEPD. Again just hypothetical to show what shale did to a larger private independent
owned by maybe 2-4 shareholders who got very rich 2005-14.
2014 say you could have cashed out for $500 million. 2016 likely cashed out for 1/3 to 1/4 of that. Quite a hit to the net
worth.
Further in 2014 you maybe cleared $90+ million pre income taxes before CAPEX on that 5 000 BOEPD? 2016 that went
to $18 million maybe and of course you are getting AFE and JIB on the shale that is draining that the near zero? So no shareholder
dividends or distributions in 2015 and 2016 after getting big ones in prior years.
We are small and not in a shale area but we have been around the block Dad has been in since the Arab Embargo.
Pretty much everyone had to fire someone in 2015-16 it's good if you didn't. Pretty much everyone had the rug pulled out
from under them just like in 1986 and 1998.
Thing is I think even most of the shale guys aren't real happy about shale. They know shale overproduction will drag
the price. Same bittersweet deal as farmers growing a bumper crop. Farmers made the most $$ during 2012-13 even though most
places 2012 was terrible drought. US commodity producers never do good during periods of oversupply. Just the middle men do good
then.
Again I'm just speculating on how you do things numbers etc. I may be all wrong. If I am I apologize.
I just know in 2015 and 2016 there were a ton of shale wells completed that won't payout. Maybe not as many in 2017 but
they are still out there. Further they hurt cash flow especially when you cannot control the expense recognition time
frames as a non-op.
I am so glad we did not own non-op where drilling was going on 2015-17 as it would have sucked away all our cash
and then some plus sold our flush production at market lows.
I am happy to see you want $70 even higher than me. So I'll leave you alone now. Take care. I think maybe deep down
you too hope US doesn't ram through 10 and then 11 million BOPD next year?
You are insulting to people here who actually understand the basic arithmetic of the oil business a little better than
you give them credit for. There is very clear mounting evidence that things are not getting better in your industry
they are actually getting worse. You on the other hand seem to struggle with reality. Five days ago gas was trading
at $2.55 per MMBTU not $4 and after royalty deductions interest expenses etc. etc. 5 BCF will not come
close to paying for a $10-11M well. I understand now that even after 35 years of whatever it is you do you can't insult
me anymore than you have already tried. I would have to value your opinion first.
If you want to win friends and influence people here on POB it would be helpful if you were to give us your name your
company's name where these awesome wells are so we can check production data and tax roles etc. That would give you
credibility and strengthen your arguments. Otherwise you are just a cute name embarrassing as that is to my beloved Texas
who likes to brag about how much money he makes in the shale oil business. We're interested in the big picture here not
you personally.
@TT Cling to whatever makes you feel good dude. I guess when you're favorite industry produces a lot of product but can't make
any profits doing so one has to find the silver lining wherever they can. Shale is a Ponzi scheme. It won't be long until the
music stops and the investors lose their shirts.
My credentials are irrelevant to the fact that shale oil is a profitless venture. If not for profit then what's it all about?
Take a long hard suck on my ass fuck face. Fucking retard.
Until you post a name and a company you can't complain about anyone else's credentials. We know who Mike is. You are nameless
likely lying and probably a charlatan. And the emojis prove you are a moron.
Watcher I didn't say he had to identify himself I just pointed out that he was a hypocrite to demand other people's credentials
without presenting his own.
To the Teabagger I say "Put up or shut up." Though I do prefer "shut up".
I agree with Mike that LTO producers are not profitable (as a group). I have suggested that if oil prices remain under
$65/b (WTI price) that US output may increase by about 600 kb/d (average annual C+C output) in 2018 compared to 2017. If
oil prices are higher output may be higher if you tell me what that average oil price will be in 2018 I can
make a better output estimate.
I also agree with Mike that I do not know what the future oil price will be. Generally higher World output levels result in
lower oil prices (as in 2015-2017) and generally lower oil prices result in lower profits for oil companies ceteris paribus.
The oil price may improve in 2018. However it will likely go DOWN CONSIDERABLY first before it continues higher.
According to the COT REPORT (Commitment Of Traders) there is a record Commercial Short Position against oil going back 23
years.
You will notice right before oil fell from $100 in 2014 there was also a high amount of Commercial Short Positions.
Today that level is even higher.
World demand for oil products – JODI Data – As everyone knows January is the seasonal low for demand. Comparing demand in December
to January of the next year shows an average drop of -2.2 million barrels per day.
Don't suppose you know if oil fields do blending prior to sending to assay? Doesn't seem too very conspiratorial. Someone could
gin up a rationale and no one would complain provided the refiner gets the same blend as assayed.
Most are blends – i.e. a bunch of producers discharge into a pipeline and what comes out the end is the cargo – it varies a bit
depending on the relative flows from each platform and they might have to blend further in the tank farm (e.g. Forties delivers
Brent crude I think from 15 to 20 different platforms).
I can only think of one time there might not be blending of some kind which is if an offshore platform with storage (e.g.
FPSO) unloads as repeated cargoes which always go to one specific refinery (probably the platform operators – but even then there
are usually more than one owner and they often take the cargos separately in proportion to their stake).
This is from 2015/2016 – but prices are still light/sweet -> expensive; heavy/sour -> cheap. The only thing that can mess that
up is if there are transport bottlenecks which is why WTI is a bit cheaper than Brent (it wasn't before LTO came on line).
Tapis is still the lightest and costliest although almost none of it is produced it is still a useful benchmark against
which other oil can be rated.
Although there are benchmark crudes I think every cargo is basically a negotiated price between the refinery and the producer
(there can be penalties if it isn't quite the quality agreed on and it could even be rejected and I think there is
an adjustment based on the latest benchmark prices as the contract price would have been negotiated well ahead of delivery). And
that is about as much as I know about the trading business except there is a lot of money that can be made and lost on very
small margins and variations.
source of interest my recall of Bakken and Eagle Ford assays of yrs ago and how with an increase in API degs reported in
the new assays the middle distillate yield hasn't changed. Should not be -- well it's possible but should not be likely.
"... The US exported last week 3 mill barrels per day of propane and other light distillates which just fetch the price of less than 20 USD per barrel. ..."
"... In my estimate the US has to pay USD 60 per barrel for imports and gets on average USD 30 per barrel for exports. This is a serious mismatch and cannot be solved by an increase of Shale condensate production. ..."
"... However 45 API is still way above the specification of 38 API for WTI. In other words none of the Shale production can be sold as crude oil and must be classified as condensate or more general as light distillates earning substantial price discounts on worldwide market. ..."
"... This is in my view also the reason why Shale companies have such catastrophic financial difficulties: they receive not enough cash to cover the high production costs and high depletion. ..."
"... WTI is no longer 39.6. It's well over 40. That's from the most recent assay data. Historical analysis means nothing if definitions change, and they have changed. ..."
"... This is exactly the dilemma of Cushing. Officially it is a WTI trading hub, yet in reality most of the inventory cannot meet the the specifications for a WTI grade. It is therefore very difficult to reduce inventory at Cushing. ..."
"... Why do you think the US has still to import over 10 mill bbl per day in crude oil and products? There must be a clear reason for it, if not for quality reasons. People would not send for fun oil around the world without reason. ..."
"... And the reason is that Shale does not produce crude oil, but condensate and light distillate products. It is just in the wrong market and Shale condensate and lighter products must be sold in the worldwide market at a cheap price. This is also the reason the US has still a high oil deficit, despite high condensate and light distillate products exports. ..."
"... This point was well discussed by Jeff Brown who called it the great condensate con. PAA in the conference call clearly indicated export market is needed for Permian to expand. Delaware basin produces mostly condensates. ..."
"... 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?" ..."
"... US refiners did not like the dumb bell crude when you mixed too light a crude with too heavy a crude. Distillation test will reveal that. Lately the Asian buyers of US crude did not like the fact it produced too much light gas. I saw EPD came up with the specs. and it was immediately followed by CME. ..."
"... US light oil needs an export market or a condensate splitter is needed ..."
"... The definition has not changed it has been 38-42 for a long time, but it is correct that the average WTI has increased from about 39.6 historically to about 41 in 2013 and 2014 and it has occasionally risen above 42 on a monthly basis. ..."
Condensates in a classic sense are part of light distillate group and are traded at a
20%discount to Brent. There is some demand to upgrade heavy oil, yet this comes at a cost.
However, the group of light distillates includes also LPG amongst others.
The US exported last week 3 mill barrels per day of propane and other light distillates which
just fetch the price of less than 20 USD per barrel.
In my estimate the US has to pay USD 60
per barrel for imports and gets on average USD 30 per barrel for exports. This is a serious
mismatch and cannot be solved by an increase of Shale condensate production.
However 45 API is still way above the specification of 38 API for WTI. In other words none of
the Shale production can be sold as crude oil and must be classified as condensate or more
general as light distillates earning substantial price discounts on worldwide market.
If the
giant South Pars field in Iran starts up, there are gigantic capacities of these grades
coming to the market, depressing prices even further. There is no doubt that Shale production
experiences a significant quality problem.
This is in my view also the reason why Shale
companies have such catastrophic financial difficulties: they receive not enough cash to cover
the high production costs and high depletion.
WTI is no longer 39.6. It's well over 40. That's from the most recent assay data.
Historical analysis means nothing if definitions change, and they have changed.
Can search the archives here, or can use rational thought. WTI now includes lighter oil
coming out of shale in West Texas. As I recall the assay was at Cushing which also blends it
with Bakken flow. The definition has changed.
This is exactly the dilemma of Cushing. Officially it is a WTI trading hub, yet in reality
most of the inventory cannot meet the the specifications for a WTI grade. It is therefore
very difficult to reduce inventory at Cushing.
API Gravity-≥37 and ≤42 • Monthly averages in 40 to 42 range. Occasional
values above 42. • Seasonal variation with winter being slightly higher. • December
2014 average was 41.6. • If your assay does not reflect ~41 API, it probably warrants
review.
As far as I can see it from the data this includes all oil input including oil imports,
heavy oil from Canada and conventional oil from GOM . Nevertheless, there is a clear upward
trend.
Why do you think the US has still to import over 10 mill bbl per day in crude oil and
products? There must be a clear reason for it, if not for quality reasons. People would not
send for fun oil around the world without reason.
And the reason is that Shale does not
produce crude oil, but condensate and light distillate products. It is just in the wrong
market and Shale condensate and lighter products must be sold in the worldwide market at a
cheap price. This is also the reason the US has still a high oil deficit, despite high
condensate and light distillate products exports.
This point was well discussed by Jeff Brown who called it the great condensate con. PAA in
the conference call clearly indicated export market is needed for Permian to expand. Delaware
basin produces mostly condensates.
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?"
What I see now if that EPD and CME are adopting COQA recommendations and implement them in
2019.
US refiners did not like the dumb bell crude when you mixed too light a crude with too
heavy a crude. Distillation test will reveal that. Lately the Asian buyers of US crude did
not like the fact it produced too much light gas. I saw EPD came up with the specs. and it
was immediately followed by CME.
US light oil needs an export market or a condensate splitter is needed
The definition has not changed it has been 38-42 for a long time, but it is correct that
the average WTI has increased from about 39.6 historically to about 41 in 2013 and 2014 and
it has occasionally risen above 42 on a monthly basis.
U.S. crude oil production is flirting with record highs heading into the new year thanks to the technological nimbleness
of shale oil drillers who have unleashed the crude bonanza.
The current abundance has erased memories of 1973 gas lines which raised pump prices dramatically traumatizing
the United States and reordering its economy. In the decades since presidents and politicians have mouthed platitudes calling
for U.S. energy independence.
President Jimmy Carter in a televised speech even compared the energy crisis of 1977 to "the moral equivalent of war."
"It's a total turnaround from where we were in the '70s " said Frank Verrastro senior vice president at the Center for
Strategic and International Studies.
Shale oil drills can now plunge deep into the earth pivot and tunnel sideways for miles hitting an oil pocket the
size of a chair Verrastro said.
The United States is so awash in oil that petroleum-rich Saudi Arabia's state-owned oil and natural gas company is reportedly
interested in investing in the fertile Texas Permian Basin shale oil region according to a report last month.
That is a far cry from the days when U.S. production was on what was thought to be an irreversible downward path.
"For years and years we thought we were running out of oil " Verrastro said. "It took $120 for a barrel of oil to make
people experiment with technology and that has been unbelievably successful. We are the largest oil and gas producer in
the world."
The resilience of U.S. oil producers has come as the price of crude rose above $60 per barrel on world markets. Many shale
drillers can start and stop on a dime depending on the world oil price. The sweet spot for shale profit is in the neighborhood
of $55 to $60 per barrel.
"... Rystad Energy concluded this week that 2017 was yet another record low year for discovered conventional volumes globally. Less than seven billion barrels of oil equivalent has been discovered YTD. "We haven't seen anything like this since the 1940s," says Sonia Mladá Passos, Senior Analyst at Rystad Energy. "The discovered volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio* in the current year reached only 11% (for oil and gas combined) – compared to over 50% in 2012." According to Rystad's analysis, 2006 was the last year when reserve replacement ratio reached 100%; largely thanks to the giant onshore gas field Galkynysh in Turkmenistan. Not only did the total volume of discovered resources decrease – so did the resources per discovered field. An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million boe in 2012. "Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed", says Passos. ..."
"... We have recently observed strong empiric evidence for the theory that a positive tendency in initial production rates for shale wells does not always lead to similar improvements in ultimate recovery. ..."
"... But profits and stock valuations are terrible over the past five to ten years. Drillers, Explorers, Services, I'd be shocked if you could find an index combo that has come even close to matching S&P, Biotech, Semiconductors, NASDAQ. Not positive but E&P et al might not even have beaten transportation over the past decade. If you've been invested in Oil and Gas you are officially a loser. ..."
"... The cooperative program and understanding between the Kingdom and Russia, the two largest producers in the market. ..."
"... Last but not least, we need to develop a culture of saving to increase our capital buildup for the economy. This is not an easy task, and requires a total rehabilitation of our consuming behavior." ..."
"... At this posting, New England is burning oil for 17% of their electricity generation. Wholesale spot price for electricity is $230/Mwh, about 10 times regular pricing. Later this afternoon, demand is expected to increase more. ..."
ALL-TIME LOW FOR DISCOVERED RESOURCES IN 2017: AROUND 7 BILLION BARRELS OF OIL EQUIVALENT WAS DISCOVERED
Rystad Energy concluded this week that 2017 was yet another record low year for discovered conventional volumes globally.
Less than seven billion barrels of oil equivalent has been discovered YTD.
"We haven't seen anything like this since the 1940s," says Sonia Mladá Passos, Senior Analyst at Rystad Energy. "The discovered
volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement
ratio* in the current year reached only 11% (for oil and gas combined) – compared to over 50% in 2012."
According to Rystad's analysis, 2006 was the last year when reserve replacement ratio reached 100%; largely thanks to the giant
onshore gas field Galkynysh in Turkmenistan.
Not only did the total volume of discovered resources decrease – so did the resources per discovered field.
An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million boe in 2012.
"Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that
over 1 billion boe discovered during 2017 might never be developed", says Passos.
I think every drilled high impact wildcat well identified by Rystad at the end of 2016 has now turned out dry, with a couple
postponed for lack of finance.
It would be great if they gave the gas/liquids split all rolled up. Does it look to your eyes like a roughly 50/50 gas/liquids
split in 2017, as it does to mine? (Talking about Rystad chart.)
2017 looks likes another very disappointing year for conventional discoveries. I wonder how unconventional resource adds have
been over the last few years. I suspect that is how many of our big oil friends are achieving their annual resource add goals.
The EIA reserves are going to be interesting: even before the price crash the extension numbers, which is where all the LTO growth
came from rather than discoveries, were starting to fall and reserve changes looked like they might be going negative, which I'd
guess is due to decreases in URR estimates; e.g. below for Bakken.
Yes reserves decreased in 2015, probably due (in part) to a fall in oil prices from $59/b in Dec 2014 to $37/b in Dec 2015,
the price in Dec 2016 was $52/b, using spot prices from the EIA, so perhaps reserves increased a bit in 2016, it will be interesting
to see the 2016 estimate.
I think they have to use averages for determining economic recovery not spot prices – I can't remember now if it's six month or
annual (or other – I think maybe six months to March and September when they reevaluate) – 2016 would be bout the same or a bit
lower depending on the time frame.
Initially, SEC rules required a single-day, fiscal-year-end spot price to determine a company's oil and gas reserves and
economic production capability. The SEC Final Rule changes this requirement to a 12-month average of the first-of-the-month prices.
Using this I get
2014, 101
2015, 54
2016, 42
So 2016 reserves should decrease further if prices affect reserves.
EMPIRICAL EVIDENCE FOR COLLAPSING PRODUCTION RATES IN EAGLE FORD
We have recently observed strong empiric evidence for the theory that a positive tendency in initial production rates for
shale wells does not always lead to similar improvements in ultimate recovery.
Cabot announced they are selling up in the EF and concentrating on gas (15,000 bpd), maybe more likr them to come.
I have had to work hard over the years to explain to management that oil completions have to be optimized, and that seeking the
highest peak rate wasn't likely to be the best answer. This of course happens because high level oil company managers are good
at sales and PowerPoint, but have opportunities for improvement in key areas.
This confirms the suspicion of many that the high peak rates on newer wells (often with longer laterals and more frack stages
and proppant, in short more expensive wells) don't boost cumulative output much. In the case of the Eagle Ford, wells in Karnes
county (the core of the play) only increased output by about 40 kb over the older wells with less expensive completion methods.
Looking at Bakken data, it is clear that this is the case as well, with about a 10%to 15 % increase in cumulative output over
the first 24 months and then similar output to older wells thereafter.
Many observers assume that a higher peak production from a well leads to higher cumulative output of the same proportion. That
is if the peak goes from 400 kbo/d for a well projected to have an EUR of 200 kbo to a peak of 800 kbo/d for a newer well, it
is often assumed that the new well will have cumulative output of 400 kbo. This is incorrect, in fact the newer well is more likely
to have an output of 240 kbo an increase of only 20% rather than the 100% often assumed.
However, Rystad Energy argues that there is some evidence that suggests those higher initial production (IP) rates do not
necessarily translate into larger gains in the total volume of oil and gas that is ultimately recovered. A sample of wells in
the Eagle Ford showed steadily higher IPs in recent years, but they also exhibited steeper and steeper decline rates.
It seems a bit unlikely that Canada is going to continue increasing production as shown above over the next 6 to 8 years (after
2018 ramp ups are complete). There are no major greenfiled developments currently under construction and these take at least 5
years from FEED to production, there are continuing redundancies in the oil patch as some of the large, recent developments move
from development to operations, and there is no spare pipeline (or rail) capacity such that the oil is at about $10 to $15 discount
which is likely to increase as Fort Hill's ramps up through next year (and new pipeline permitting and construction is likely
to take even longer than the actual oil sands project).
With Iran and Iraq – they may have oil in the ground, but they need huge,new surface production facilites to process it and
supply water/gas for injection – those too take about 5 years to construct, assuming they can find some outside funding.
"OPEC has already demonstrated it can produce more, before they cut back in Jan 2017"
Yes OPEC may have some capacity to increase production. But many OPEC countries are in decline and Saudi Arabia does not have
any Khurais or Manifa like fields left to develop. If I ruled Saudi Arabia then I wouldn´t produce more than 10 mb/d even if there
were shortages. Better to stay on the platau a little bit longer. Iraq is the country with the biggest possibilities for increases.
But they will do so when they are able to, not because of shortages. The other countries you mentioned have mainly expensive oil
like tar sands in Canada, arctic in Russia and ultra deepwater in Brazil. Sure we can see increases there but it takes a long
time to develop.
"I don't think oil producers were struggling at $100/b, they were overproducing so prices dropped."
For the World Debt to GDP has increased from 226% in 2012 to 243% in 2Q2017, for advanced economies over the same period debt
to GDP went from 272% to 275% and for emerging economies over the same period 145% to 190%.
The story is better access to credit for emerging economies from 2012 to 2017.
A major recession is not very likely.
The IMF forecasts real GDP growth of 3.75% for the World from 2018 to 2022.
Oil prices at over $100/b were no problem for the World economy from 2011-2014, real GDP grew at 3.5% per year. No reason $100/b
oil would cause a recession.
The $160/b (2017$) will only be about 3.3% of World GDP in 2026, assuming medium UN population growth scenario and real per
capita GDP growth at 1.5%/year and 84 Mb/d C+C output in 2026.
There was another big drop in US crude stocks by the twip – down 6.5 mmbbls with gasoline and diesel up 2 mmbbls combined.
The crude level is fast approaching the middle of the 5 year average – how far does it have to undershoot before panic sets in?
US SPR drawdown this year is about 21.5 million barrels, this is usually not included when calculating the 5y average. Planned
annual sales are similar for the next couple of years (
https://www.eia.gov/todayinenergy/detail.php?id=29692
note that the figure shows fiscal year).
The story being told is that oil markets should be in balance next year or slight surplus if LTO maintains its pace. KSA low
production during end of 2017 and the problems in Venezuela should result in continued stock drawdowns or only a small build during
the spring (forties supports this too). Next summer driving season can be interesting, assuming the economy remains healthy. 2019
will be _very_ interesting since it will be revealed how much of the OPEC cuts were made voluntary.
As inventories are still way above historical averages, it is important to bear in mind that substantial infrastructure in form
of tanks and pipelines have been constructed over the last few years. This increased the necessary working inventory to keep the
system functioning. So, the critical inventory level might be much higher than in previous years.
They need a minimum amount of empty capacity to allow for blending and movement, not a minimum amount of stored volume to keep
it working. The storage is to cover for upsets and to allow people to make money from arbitrage.
It was propably close to the point where it was low enough to cause problems at that time. Why? Because from a commercial point
of view, it´s just stupid to have more storage than you need. It´s cost money to store it and it´s better to sell it and get the
money instead of just having it in storage. Also there is the SPR from where you can get oil if there is supply problems. So really
no need to have large amounts of oil in storage.
Yes that was how I interpreted your original comment. At least for US commercial crude stocks for the current week we are currently
about 95 million barrels above the 2012 and 2013 average for the same week of the year, so perhaps another few years before any
panic if stocks continue to decrease by 50 Mb per year as they did from 2016 to 2017. I chose 2012 and 2013 because oil prices
were relatively high in 2012 and 2013 ($88/b and $98/b in Dec 2012 and Dec 2013 for WTI).
On rereading your original comment, I think when it gets near the lower edge of the 5 year average, panics sets in, it may
take a few years.
"You can just say it is an industry in decline and there are better places to put one's money in." yes you can say "the industry
is in decline" but then you would be wrong, not usual for you or many on the board. In this case however, the statement is not
only wrong but delusional. Both production and demand are at record highs for oil natural gas and natural gas liquids. Of course
why let facts get in the way of your political views, to quote a old line; fat, drunk and stupid in no way to go through life,
son
"Both production and demand are at record highs for oil natural gas and natural gas liquids. "
But profits and stock valuations are terrible over the past five to ten years. Drillers, Explorers, Services, I'd be shocked
if you could find an index combo that has come even close to matching S&P, Biotech, Semiconductors, NASDAQ. Not positive but E&P
et al might not even have beaten transportation over the past decade. If you've been invested in Oil and Gas you are officially
a loser.
Now, high yield bonds might be a different story. But in the wake of all the bankruptcies for the past five years was 100%
of all bonds paid? They might have been, not sure.
Oil companies themselves have changed the way they are investing. So I take that as a sign they, too, think their best times are
behind them.
In terms of financial management, there are industries that have done better and are likely to do better than gas and oil.
It's simply not a growth industry anymore.
I think oil prices have an effect on investment, especially outside the LTO focused companies. For the LTO players they seem
to focus on output growth regardless of profits, not a great long term business model.
Regarding the gap, a third of the consumption growth over the last decade was from China. If Chinese consumption plateaus, as
it very well might, then consumption growth from here will be less and the gap smaller. But putting in an assumption to change
an established trend would just add another point of failure. This piece isn't so much a model as a creation story, trying to
figure out why past expectations weren't met and where the known unkowns might come from. A big one of these is what the Permian
might end up doing. I think that is why industry is paying up to get into the Permian. If you are not in the Permian you don't
have a future. And shareholders will pay any amount of money for you to keep your job.
The piece was prompted by Ovi's observation that Non-OPEC less the big three has been in decline since 2004 – very encouraging.
There are some systems in which a price rise does not result in an increase in production simply because the resource is clapped
out. The gold market last decade for example. The gold price rose at an average of about 17% per annum year after year but gold
production fell. That is not supposed to happen. Now some mines are digging up rock with just over one part in a million of gold
in it and that pays for turning that rock into mud.
There was a July report for China imports that extrapolated to another 6.6% consumption growth year for them. No evidence of slow
down. Ditto India.
Reminder to folks because it is a tad obscure. India's consumption growth is 8% but it's concentrated in an unusual way. LPG.
They run motors on LPG, mostly motorbikes.
Vehicle miles driven. The increase is relentless as is US population growth. In the big smash of 2008/2009 there was a flattening
of the increase but not really any sort of collapse. There was in oil price, but there was no need for it since consumption did
not decline more than 5%. A quick look at historical consumption not just miles driven shows essentially the same tiniest of down
ticks during that timeframe.
So I would say we need a new theory as to why price declines during recession. Doesn't appear to be less driving to work.
Consumption of oil would seem to decline a little bit right across the board during a recession, especially a big one. Construction
machinery runs less, people travel less, buy fewer new things. It doesn't take very much by way of falling consumption to reduce
the price of oil. The price of oil is highly inelastic, in the short term, and it's like milk.
The price of milk has to fall a long way before you can find uses for more than the usual amount.
People buy as much milk as they want for their kids, and maybe a little to cook with. NO MORE, even if the price goes down
a lot. They don't have any use for it. So .. if it's coming to market, it has to sell cheaper in order for people to FIND uses
for it. You can feed milk to the cat, and even to the pigs, if it's cheap enough. Farmers have been feeding excess milk to pigs
just about forever, lol. I did so myself when we had more than we could use otherwise when I was a kid.
So . if the price of gasoline falls, maybe you take the ski boat to the lake one extra weekend , which can easily result in
burning a couple of hundred gallons, round trip, as opposed to spending the weekend golfing at a cheap nearby course.
Or you drive the old car that's a gas hog more, because it saves putting miles on a newer car. When the price of gasoline bottomed
out, I drove my old four by four truck a lot more than I would have otherwise, because I knew I would be retiring it before long,
and wanted to get as many miles out of it as I could, saving wear and tear on the car .. which I'm planning on keeping indefinitely.
It broke down yesterday, and while it's not quite dead, I 'm thinking it's time to euthanize it, lol.
I'm also running my big yellow machines a lot more than usual, because when diesel is down close to two bucks, as opposed to
four bucks or so, this saves me a hundred bucks a day, or more, if I stay with it, and I've got some pretty big long term projects
such as a new lake, which I work on at odd times, whenever circumstances permit.
IF I were hiring out, which I don't , I would be able to offer a neighbor a hundred bucks or more off for a days work, with
diesel at two, as opposed to four bucks. That would result in neighbors with cash, and thrifty Scots habits, spending some of
their savings, doing long planned work sooner, or maybe going for a new small project.
Overall though construction falls off during a recession.
Most of the increase in total miles happens as the result of people driving new cars, and by and large, new cars and light
trucks are far more fuel efficient than old ones.
And people who are broke spend as much on gasoline as they can afford, period. They MUST spend to get to work. If a tank at
twenty bucks will get them to Grandma's house and back in their old clunker, they go. A tank a forty bucks often means calling
rather than visiting.
It is pretty much a given that Permian oil needs export market. This is from PAA conference call.
" PAA comments: If you look at the amount of 45-plus gravity. It's about 300,000 barrels a day now, growing to 1 million plus.
So, a lot of those volumes are coming, and that's really the crux of the benefit of a Cactus pipeline being able to take that
directly to the water because I think we are going to see a lot of pushback from refiners. We are already starting to see it as
far as the lightning of the general stream going up to Cushing.
The refiners don't want any lighter. So, it's an integral part of the strategy and a piece of everything we've been building."
Delaware basin produces 56% oil that is greater than API gravity 50 plus according to Woodmac.
Every week I see announcements to export US oil. Here are some.
"OPINION-
Don't be taken in by the surge in oil prices
But oil prices have continued to be volatile. They went down from $114 per barrel in June 2014 to $26 per barrel in early 2016
and moved gradually upward to touch $64 per barrel in late November 2017. On the other hand, economic forecasts expect oil prices
to continue to rise to a range of between $70 to $80 by the end of the first quarter of 2018. Futurists in the field base their
expectations on the following indicators:
1) The cooperative program and understanding between the Kingdom and Russia, the two largest producers in the market.
2) The continuation of efforts to reduce oil surplus in the market 3) The agreement among OPEC members and some non-members to
continue their programs of production reduction up to the end of 2018. 8. Last but not least, we need to develop a culture
of saving to increase our capital buildup for the economy. This is not an easy task, and requires a total rehabilitation of our
consuming behavior."
Interesting development for natgas: Iroquois zone 2 spot prices just shot up to over 32 USD per mcf. This is nearly 1000% up from
last month. As much depends now on the future weather, it shows how volatile the US gas market can be – despite massive efforts
towards more supply.
As the industry has completely shifted the supply from the South to the Northeast, hurricanes are no more a threat to supply,
yet freeze offs become now a major issue. Previously just the supply of the Rockies has been hampered by freeze offs. As this
concerned just 10% of US total production, this has never been an issue for gas supply. However, as currently 70% of supply comes
from the Northeast and the Rockies, freeze off could lead to serious supply disruptions, if the freeze continues.
Not freeze offs, simply lack of pipeline capacity in the face of unprecedented demand. When the receipt figures from the various
transfer points are published, they should show 100% capacity utilization.
At this posting, New England is burning oil for 17% of their electricity generation. Wholesale spot price for electricity
is $230/Mwh, about 10 times regular pricing. Later this afternoon, demand is expected to increase more.
The supply is there in the pipelines, Mr. Leopold, there just isn't enough of them to satisfy demand during this cold spell.
I was expecting your reply. Thanks for your opinion.
Nevertheless, there has been huge infrastructure spending over the last years. The pipelines should be already in place.
However, freeze offs are not an issue just yet. If the gas wells freeze off later in the week (temperatures are going to zero
down until Cincinnati) , the shortage of supply may be really a concern. There is just one week left and we know it.
This is one of the structural weaknesses of Shale gas:you probably do not have it when you need it the most.
The pipelines that have been completed greatly favor delivery west to southwest from the Appalachian Basin.
The Atlantic Sunrise is being built that will deliver into the NYC area via a hookup with Transco, I believe.
Deliveries to the north, that is New York State and New England have been virtually nil.
Yes, the storage aspects of all gas products is a challenge, and – as you mentioned – the coming cold days will highlight the
vulnerabilities of the situation, sadly, at great expense to many.
Are companies which produce it profitable or they survive by generating a parallel stream
of junk bonds and evergreen loans?
Most of them are also shale oil producers and might well depend on revenue from shale oil
to produce gas. Shale oil proved to unsustainable at prices below, say $65-$75 per barrel or
even higher, excluding few "sweet spots". Also a lot of liquids the shale well produce are
"subprime oil" that refiners shun.
They are not only much lighter but also they have fewer hydrocarbons necessary for
producing kerosene and diesel fuel. Mixing it with heavy oil proved to be double edged sword
and still inferior to "natural" oil. So right now the USA imports "quality" oil and sells its
own" subprime oil" at discount to refineries that are capable of dealing with such a mix.
Say, buying a barrel for $60 and selling a barrel of "subprime oil" at $30.
And without revenue from oil and liquids it can well be that natural gas production might
be uneconomical.
I wonder what percentage of the total US oil production now is subprime oil.
Modern multistage shale well now cost around $7-10 million. And that's only beginning as
its exploitation also costs money (fuel, maintenance, pumping back highly salinated and often
toxic water the well produces, etc). So neither oil nor gas from such wells can be very
cheap.
Generally such a well is highly productive only the first couple of years. After that you
need to drill more.
Also there is a damage to environment including such dangerous thing as pollution of
drinking water in the area,
From what I can tell, in Europe there was a policy of encouraging LNG terminals in order
to provide leverage against Russian supply. But there seems to have been a significant
slowdown in construction – quite simply, LNG is too expensive relative to Russian and
domestic (Norwegian, Dutch, UK, Mediteranean) supplies. It makes much more sense for Europe
to broaden out its pipeline network. So I think the only appetite for US LNG comes from the
more anti-Russian eastern European countries such as Poland, which hates dependency on
Russian gas.
Poland would suffer without revenue from pipelines that transport Russian natural gas to
Western Europe. That's why they adamantly oppose North Stream II.
Not as much as Ukraine, for which it might mean the economic collapse, but still.
"... By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street ..."
"... Exports to Mexico via pipeline have been rising for years as more pipelines have entered service and as Mexican power generators are switching from burning oil that could be sold in the global markets to burning cheap US natural gas. The US imports no natural gas from Mexico. ..."
"... This is just the Sabine Pass export terminal. In addition, there are five other LNG export terminals under construction, according to the Federal Energy Regulatory Commission (FERC), with a combined capacity of 7.5 Bcf/d. This brings total LNG export capacity to over 11 Bcf/d over the next few years and will make the US the third largest LNG exporter globally, behind Australia and Qatar. ..."
"... According to the Institute of Energy Research, global LNG demand is currently around 37 Bcf per day. This is expected to grow substantially as China is shifting part of its power generation capacity from coal to natural gas. And US LNG exports to China have surged from nothing two years ago to 25.6 billion cubic feet in October (for the month, not per day): ..."
"... US natural gas production has been booming since 2009 as fracking in prolific shale plays took off, and the price has collapsed – it currently is below $3 per million British thermal units (mmBtu) at the NYMEX, despite tthe majestic cold wave that is gripping a big part of the country. ..."
"... This caused some immense price differences between the US market -- where a gas "glut" crushed prices, pushing them from time to time even below $2/mmBtu -- and, for example, the Japanese LNG import market, with prices that were in the $16-$17/mmBtu range in 2013 and 2014. Even the average spot price contracted in November 2017, the most recent data made available by the Ministry of Economy, Trade and Industry , was $9/mmBtu. US LNG exporters hope to arbitrage these price differentials. ..."
"... Meanwhile, US producers are hoping that this overseas demand will mop up the glut in the US and allow them to finally boost prices, including the prices LNG exporters pay. But funding continues pouring into the oil and gas sector to pump up production, and prices have remained low, and drillers continue to bleed. ..."
"... Poland may have one built but think about this – the Ukraine may be happy to pay for American coal which is twice as expensive as what they could buy from the Donbass regions but will Europe be happy to pay double or more for LNG from the US just to spite the Russians? ..."
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and
author, with extensive international work experience. Originally published at
Wolf Street
Even China is Buying U.S. LNG
In 2017, the US became a net exporter of natural gas for the first time. It started small in
February, when the US exported 1 billion cubic feet more than it imported. By October, the last
month for which data from the Energy Department's EIA is available, net exports surged to 45
billion cubic feet. For the first 10 months of 2017, the US exported 86 billion cubic feet more
than it imported. And this is just the beginning.
Exports to Mexico via pipeline have been rising for years as more pipelines have entered
service and as Mexican power generators are switching from burning oil that could be sold in
the global markets to burning cheap US natural gas. The US imports no natural gas from
Mexico.
Imports from and exports to Canada have both declined since 2007, with the US continuing to
import more natural gas from Canada than it exports to Canada.
What is new is the surging export of liquefied natural gas (LNG) by sea to other parts of
the world.
This chart shows net imports (imports minus exports) of US natural gas. Negative "net
imports" (red) mean that the US exports more than it imports:
The first major LNG export terminal in the Lower 48 – Cheniere Energy's Sabine Pass
terminal in Cameron Parish, Louisiana – began commercial deliveries in early 2016 when
the liquefaction unit "Train 1" entered service. Trains 2 and 3 followed. The three trains have
a capacity of just over 2 billion cubic feet per day (Bcf/d). In October 2017, the company
announced that Train 4, with a capacity of 0.7 Bcf/d, was substantially completed and is likely
to begin commercial deliveries in March 2018. Train 5 is under construction and is expected to
be completed in August 2019. The company is now lining up contracts and financing for Train 6.
All six trains combined will have a capacity of 4.2 Bcf/d.
This is just the Sabine Pass export terminal. In addition, there are five other LNG export
terminals under construction, according to the
Federal Energy Regulatory Commission (FERC), with a combined capacity of 7.5 Bcf/d. This brings
total LNG export capacity to over 11 Bcf/d over the next few years and will make the US the
third largest LNG exporter globally, behind Australia and Qatar.
In addition, there are several other export terminals that FERC has approved but
construction has not yet started. And other projects are in the works but have not yet been
approved.
According to the Institute of Energy Research, global LNG demand is currently around 37 Bcf
per day. This is expected to grow substantially as China is shifting part of its power
generation capacity from coal to natural gas. And US LNG exports to China have surged from
nothing two years ago to 25.6 billion cubic feet in October (for the month, not per day):
US natural gas production has been booming since 2009 as fracking in prolific shale plays
took off, and the price has collapsed – it currently is below $3 per million British
thermal units (mmBtu) at the NYMEX, despite tthe majestic cold wave that is gripping a big part
of the country.
Exporting large quantities of LNG is a momentous shift for the US because it connects
previously landlocked US production to the rest of the world. Unlike oil, the US natural gas
market has largely been isolated from global pricing.
This caused some immense price differences between the US market -- where a gas "glut"
crushed prices, pushing them from time to time even below $2/mmBtu -- and, for example, the
Japanese LNG import market, with prices that were in the $16-$17/mmBtu range in 2013 and 2014.
Even the average spot price contracted in November 2017, the most recent data made available by
the Ministry of
Economy, Trade and Industry , was $9/mmBtu. US LNG exporters hope to arbitrage these price
differentials.
Meanwhile, US producers are hoping that this overseas demand will mop up the glut in the US
and allow them to finally boost prices, including the prices LNG exporters pay. But funding
continues pouring into the oil and gas sector to pump up production, and prices have remained
low, and drillers continue to bleed.
And there are already global consequences – including in Europe, where large regions,
including Germany, increasingly depend on natural gas from Russia as production in Europe is
declining. The new competition from the US – though it really hasn't started in earnest
yet since most of US LNG goes to places other than Europe at the moment – is already
reverberating through the Europe-Russia natural gas trade.
The first major LNG export terminal in the Lower 48 began commercial deliveries in early
2016
Hmmm, is this a case of build it and they will come? Somebody has to sink the capital in
to build a fleet of LNG containers which will take a decade to come online. Somebody also has
the build the LNG terminals as well as the infrastructure to go along with it.
Poland may
have one built but think about this – the Ukraine may be happy to pay for American coal
which is twice as expensive as what they could buy from the Donbass regions but will Europe
be happy to pay double or more for LNG from the US just to spite the Russians?
Consider this as well. That LNG terminal is in Louisiana. Which is in the Gulf. Which has all
those annual hurricanes. Which is getting worse through climate change. Would the Europeans
want to risk depending on American deliveries under these conditions? I will reword that.
Will the Europeans want to risk their economies over this? Last year they shut down the place
for a month for repairs. What if Hurricane Harvey had slammed into the place. How will the
Europeans be able to trust that a future Trump doesn't shut down LNG deliveries in winter
time to get them to commit to some American policy? Too many variables with no net gain and
all loss – on their part.
Thank you for your report and for presenting your view about future developments.
However, in my view the oil market experienced substantial structural changes besides the
volume growth and increased demand from non-OECD countries. The Shale production increased
oil volume growth, yet it also shifted growth towards light distillates and left the world
oil market short of middle distillates.
This is best demonstrated by the dramatic change in the mix of US hydrocarbon market. As
the US market is swamped by light distillates, it is actually hit by an extreme shortage of
middle distillates, which is used for the production of diesel, aviation and shipping fuel,
as well as heating oil. The recently EIA weekly supply estimate revealed that the US had to
import 80% more distillate fuel oil than last year. Distillate fuel oil inventories are 25
mill barrels below last year and reach a multi year low. It is for this reason that the
total imports surged again over 10mill bbl per day as the US has to cover the shortage of
middle distillates despite a glut of light distillate production. In that sense the US has
to import a growing amount of expensive conventional oil containing middle distillates and
has to export the surging Shale condensate production, which does not meet the
specifications of international crude oil benchmarks, at a low price.
As a consequence, the price of condensate will be falling considerably and the price of
crude oil containing middle distillates will be rising in the near future.
Most of the worlds producing countries have production that is gradually getting heavier,
condensate is wanted worldwide by refineries for blending and has a premium price over heavy
oil grades, which is likely to continue (e.g. EF condensate $53, South Texas Heavy $48;
Canadian Condensate $58, Canadian Sweet $49).
"... Politics is a major part of oil markets and keeping Russia at bay is a goal for the administration I guess. ..."
"... But the profound backwardation in the futures market for Brent at the moment tells me that reality is storage withdrawal until shortage for oil. ..."
"... Especially distillates is under scrutiny because of lack of Venezuela heavy oil and too much light oil from Texas. Conventional oil worldwide is suffering from underinvestment and OPEC policy is as expected to serve their own interests. The main problem is easy oil mid API range (too much exploitation). ..."
"... Your posts meets exactly my point as Shale increases the supply of light distillates yet does little to cover the growing worldwide shortage of middle distillates. ..."
"... I think Euan has the price about right ($80/b at the end of 2018 for Brent) but I disagree with him on World oil output in 2018. ..."
"... Anybody knows what the definition of crude oil by Texas RRC is? The reason I ask the question is because the production increase up to API gravity 40 is only 70K/day out of 767 K/day from November 2016 to October 2017. PAA said in the conference call that Delaware basin is producing mostly oil with APII gravity higher than 45 and needs to be exported as our US refiners will not touch it. ..."
"... Shale produces mostly condensates and light distillates which are an excellent feedstock for the chemical industry. However this concerns just 15% of the oil market. At the beginning of the Shale boom Shale light distillates could substitute a lot of conventional oil which was previously used in the chemical feedstock market. This brought down the oil price. ..."
"... I am wondering if EIA is including NGLs as I see OK production has ramped up quite a bit. A lot of OK liquids are 55+ API. ..."
"... API gravity is a density measurement of oil. Measures how heavy it is compared to water. The higher the API number the lighter the oil. Refineries do not create "middle distillates" out of nothing. They extract them from oil. "Middle distillates" are middle heavy liquids within oil. Diesel and Kerosene. Read truck/tractor fuel and jet fuel. Gasoline is a light distillate. Heavy distillates would be something like bunker fuel or asphalt. ..."
"... This is all within the same liquid called "crude oil". Traditional labels are applied as regards the word "quality". High "quality" crude oil was light and "sweet". Sweet refers to having low content of materials that cause problems in refining. Like sulphur or vanadium. But tradition has run up against the new nature of crude oil. It has gotten too light. It often lacks middle distillates. ..."
"... I have examined assays of many different oil types from all over the world. Jet fuel boils about 160 degs C and the heaviest diesel boils up around 350 degs C. So "middle distillates" that are actual fuel for things that matter are in the assay between those temps. ..."
"... All I'm worried about is you shalies killing the oil price again. 2015-17 not good for anyone actually making $$ from the commodity of oil. (Corporate management gets theirs regardless of profits so I don't count them). ..."
"... Corporate shale CEO's receive enormous salaries and compensation packages based on booking fake reserves. The profitability of their corporations or shareholder equity means little to them. Midstream companies that gather shale oil and shale gas are totally reliant on the shale oil industry to continue to be able to borrow more money. They are sheep in a flock. The entire thing from the top down is a façade using OPM. Nobody borrowing this money is personally on the hook; there are no personal loan guarantees nobody is going to be ruined when the entire thing collapses. The scheme is based on getting as much as you can as fast as you can and getting out unscathed. ..."
Politics is a major part of oil markets and keeping Russia at bay is a goal for the
administration I guess.
And so is the target of 3% gdp growth for the president. But the profound
backwardation in the futures market for Brent at the moment tells me that reality is
storage withdrawal until shortage for oil.
Especially distillates is under scrutiny because of lack of Venezuela heavy oil and
too much light oil from Texas. Conventional oil worldwide is suffering from underinvestment
and OPEC policy is as expected to serve their own interests. The main problem is easy oil
mid API range (too much exploitation).
Your posts meets exactly my point as Shale increases the supply of light distillates yet
does little to cover the growing worldwide shortage of middle distillates.
As the US exports mostly cheap light distillates and imports expensive real crude oil the
recent trade numbers confirm a swift deteriorating goods trade deficit and consequently a
sharply falling US dollar as we have seen over the last few days. All what Shale is currently
doing is to depress the price of light distillates yet it leaves the growing supply shortage of
real oil unaffected.
The increased LPG is due to increased natural gas production especially "wetter" natural
gas. The has less to do with LTO output and more to do with shale gas output.
It also has very little to do with condensate which is liquids that condense at the lease
(it is called "lease condensate") at ambient temperature and pressure.
LPG is at either higher pressure or lower temperature than ambient conditions.
As it is too early to assess the impact of the current cold on gas production the recent 40%
Canadian rig count slump may serve as a harbinger for the US for next weeks . It is not only
freeze offs but but also transport infrastructure and pipeline constraints.
Haven´t seen it posted here yet. Euan Mearns who sometimes post here has a new blog post
on "oil price scenario for 2018": http://euanmearns.com/oil-price-scenario-for-2018/
. I like figure 4 think that Ian Schindler has showed something similar for longer time periods
(70/80´s).
Euan lacks at least two factors but they are more or less impossible to forecast
particularly: i) economic growth (demand) ii) how much of the OPEC cuts are voluntary. Also his
calculation of natural decline is wrong he assumes all legacy production is in decline.
Thanks. I think Euan has the price about right ($80/b at the end of 2018 for Brent) but
I disagree with him on World oil output in 2018.
I think World C+C output will increase at about 600 kb/d per year over the next few years
until about 2020 and then will gradually slow down as LTO output and oil sands output will not
increase rapidly enough to offset declining output elsewhere in the World by 2025 potentially
there could be a short plateau until 2028 or a longer plateau from 2022 to 2029 the higher
World output goes the more likely that any plateau will be very short. I agree with your
assessment that Euan has overestimated the World decline rate at about 8% which for C+C would
be about 6.5 Mb/d not all of World C+C oil fields are in decline some are on plateau and a few
are increasing output (at the field level) though if one considers individual oil wells
probably 99% of oil wells currently producing (weighted by daily output) are likely to be in
decline.
Euan may be looking at things from that perspective which would mean (assuming my 98% guess
is correct and that those wells decline at an average annual rate of 8%) we would need 6.4 Mb/d
of newly completed wells just to offset the declining wells in order to remain on a
plateau.
Euan believes the World will just be able to manage this I think higher oil prices will
enable 7.1 Mb/d of oil completions Worldwide over the next year with a net increase in World
C+C output.
We will not really even know World C+C output for 2017 until March 2018 (I use EIA
estimates) and 2018 output will be unknown until March 2019.
The most recent 12 months of World C+C output (average monthly output from Oct 2016 to Sept
2017) was 80 999 kb/d based on EIA data.
The latest numbers out of China say oil consumption growth this year 2017 will be double last
year's. This year is pegged at 6.5% with a month to go. India numbers as of Oct say their 2017
growth rate will be about 8% as it was last year.
China's crude oil stockpiles the latest numbers: There is a big difference between China's
official numbers and analysts calculated numbers (China says +90 kb/day vs IEA up to +1000
kb/day)
BEIJING Dec 29 (Reuters) -- China had stored 37.73 million tonnes or 275 million barrels in
nine bases by mid-2017 up from 33.25 million tonnes at the end of June the previous year
according to the data from the National Energy Administration (NEA).
Adding 4.48 million tonnes of crude oil over the 12 months to June 2017 is equivalent to
adding 89 600 barrels of oil per day (bpd).
LONDON October 12th 2017 (Reuters) -- China has built its crude oil stockpiles at a record
pace in 2017 and while its purchases could tail off towards the year-end inventories could hit
the billion-barrel mark in six months the International Energy Agency said.
The agency estimates that over the first half of 2017 Chinese stockbuilding hit a record 1
million b/day.
Anybody knows what the definition of crude oil by Texas RRC is? The reason I ask the
question is because the production increase up to API gravity 40 is only 70K/day out of 767
K/day from November 2016 to October 2017. PAA said in the conference call that Delaware basin
is producing mostly oil with APII gravity higher than 45 and needs to be exported as our US
refiners will not touch it.
Thanks for posting your comment. This is exactly my point.
Shale produces mostly condensates and light distillates which are an excellent feedstock
for the chemical industry. However this concerns just 15% of the oil market. At the beginning
of the Shale boom Shale light distillates could substitute a lot of conventional oil which was
previously used in the chemical feedstock market. This brought down the oil price.
As Shale oil has now serious troubles to enter the transportation fuel market (due to a lack
of middle distillates) the US is forced to sell cheap light distillates on export markets and
import on the same time expensive real oil containing middle distillates at a high price. So US
imports of real oil are on the rise again. This is why we are seeing a rising oil price and US
oil trade deficit again. The dollar has already reacted by a steep slump over the last
days.
When one looks at the price of oil with API 40-45 it trades at a premium to heavy oil. Oil
above 45 or 50 API is typically classified as condensate.
As George has commented repeatedly most of World output is getting heavier and is more
expensive to refine. There are many customers around the World that need the lighter oil to
blend with heavier crude. In fact much of the US condensate goes to Canada to blend with
bitumen so it will flow through pipelines.
This chart is from EIA (chart above used the EIA data Jan 2015-Oct 2017).
The US has had net imports of crude oil since 1945 (based on monthly data).
On an annual basis the last year the US was a net exporter of crude oil was 1943. Net
imports of crude peaked (annual data) in 2005 at over 10 Mb/d and fell to 6.9 Mb/d in 2015 and
rose slightly in 2016 (by 0.36 Mb/d) to 7.26 Mb/d in the most recent 12 months net imports have
fallen to 6.99 Mb/d.
"Given President Donald Trump's obsession with reviving the dying industry it's almost
surprising that the Republican tax bill doesn't contain any new breaks or incentives that
explicitly help coal. 'Energy is actually the least of the beneficiaries in this bill and the
simple reason is that energy already has so many carve-outs and exemptions in the tax code that
a lot of U.S. based companies just pay hardly any income tax as it is ' said Pavel Molchanov an
energy research analyst at the financial firm Raymond James. 'So there is virtually no effect
on energy of any kind either positive or negative and that includes coal.'"
Choke on this tee tee: because the shale oil industry can't keep its MasterCard(s) in its pants
its overleveraged LTO oversupply is the direct cause of low volatile oil prices that has
resulted in the loss of over 440 000 oil and gas jobs around the world since 2014.
https://www.rigzone.com/news/oil_gas/a/148548/More_Than_440000_Global_Oil_Gas_Jobs_Lost_During_Downturn
. There are still an estimated 55 000 still out of work in America in EOR GOM and in stripper
well production. Your beloved shale industry got nothing nada zip out of the new tax law except
interest deduction limits which will hurt it not help it.
If most of the LTO companies are losing money I don't think they pay federal taxes on losses
so the reduction in tax deduction for interest paid would have no effect.
No but tee tee is. Its not easy you know getting thru.
Take for instance the help the oil and gas industry is getting by opening ANWAR. Who is that
going to help particularly since there is countless geological and depositional studies done
that pretty much condemn the entire area? Or lets take the "roll back" of certain MMS/BSEE
regulations regarding multi-string pressure and BOP testing in the GOM after the Macondo
incident? That is stupid shit that dumb uninformed people buy into that has nothing to do with
reality. Reality is those regulations were on the books and un-enforced. It cost BP what $80B
to cut some corners? Nobody I repeat nobody is going to let that happen again. Whatever the
current BS is about reducing regulations on the oil industry and helping American become great
again by unleashing its hydrocarbon "might " on the rest of the world is laughable. Who is
laughing all the way to the bank?
OPEC and Russia dat' who. They are watching America's energy policies get worse not
better.
you can educate the ignorant but not the stupid who said that oh yea me. any one of my birddogs
knows more about north slope geology than you mike. perhaps you can make a new years resolution
try to be accurate at least once in 2019 gonna be hard for a "man" like you but give it a shot
oh yea surely you can do better than
bathroom jokes after all a "man" of your intellect should oh never mind
Read the post twitter link Dean posted above. Most interesting is a post by a CPA who was
involved with the 914 reporting. He thinks it is double counting the M&A production.
However within his post he describes that the 914 survey is actually done by a third party
contractor. In his discussion with him they were using the higher of projected drilling info or
operator report. To put it in my perspective I don't see the 914 having anything like the
consistency of the RRC. IMG Crown Energy Services is the third party contractor. Look up their
website. Not a lot of time spent on it for a heavy duty IT company so no warm fuzzies there.
One could speculate that the primary income is from the EIA contract. EIA paints themselves
into a corner with wild projections on Texas production. They call up the third party
contractor and question the figures they think are too low. Contractor has to do something to
keep the contract don't they?
Now nobody at EIA can get fired for cooking the books because they have plausible deniability.
From May 2015 to July 2017 the 914 survey was pretty consistent (within 275 kb/d and 365
kb/d of drilling info estimate average 320 kb/d). Perhaps that has changed I would not put much
weight on a Twitter comment by a CPA. We will see in a few months what the drilling info
estimates are which are usually within 1% of the final output after 3 to 5 months. So by March
or April we may know what Oct 2017 TX C+C output is.
No. Has he been reporting NGL (in the US this would be natural gas plant liquids) to the
contractor as C+C?
In any case I agree with Mike patience is needed. Perhaps the 914 survey is now covering a
much higher percentage of Texas C+C output relative to the May 2015 to July 2017 (27 month
long) period.
"Double counting M&A production" has nothing to do with NGLs. He was admonished by the
contractor for under reporting production that was sold off. Instead of using his figures they
used his old wells as listed in the drilling info estimate. Hence double reporting it. But what
was more interesting is the contractor part. They can send out the survey but can determine
whatever they want to include.
The EIA contractor checks with operators when reported numbers are different than expected
and sometimes they use the drilling info data instead if the numbers don't look right.
The numbers are revised over time as more data comes in. These are estimates nobody knows
final output for many months (for the entire state of Texas or all of the US).
The link below covers the 914 survey methodology. Yes mergers and acquisitions are a
potential problem. The EIA does it's best to account for these to avoid double counting.
About 450 of the largest oil and gas companies that produce about 90% of US oil and gas
output (of approximately 13 000 petroleum producers in the US) fill out the 914 survey.
API gravity is a density measurement of oil. Measures how heavy it is compared to water.
The higher the API number the lighter the oil. Refineries do not create "middle distillates"
out of nothing. They extract them from oil. "Middle distillates" are middle heavy liquids
within oil. Diesel and Kerosene. Read truck/tractor fuel and jet fuel. Gasoline is a light
distillate. Heavy distillates would be something like bunker fuel or asphalt.
This is all within the same liquid called "crude oil". Traditional labels are applied as
regards the word "quality". High "quality" crude oil was light and "sweet". Sweet refers to
having low content of materials that cause problems in refining. Like sulphur or vanadium. But
tradition has run up against the new nature of crude oil. It has gotten too light. It often
lacks middle distillates.
I have examined assays of many different oil types from all over the world. Jet fuel
boils about 160 degs C and the heaviest diesel boils up around 350 degs C. So "middle
distillates" that are actual fuel for things that matter are in the assay between those
temps.
Scroll down to their .XLS spreadsheets for various blends that they have assay'ed. I would
say it does not conform to the chart. BUT. There are some caveats scattered around. "Blend".
Dumbbell liquid. This means if oil from one field doesn't have what you want in it you add oil
from another field to it to get the constituent parts. Assay it and declare it looks good. BP
has an assay website as do others like Capline from Marathon.
All this was to address the question above -- "what is the definition of oil". Study all
that and you'll see that the definition is whatever the money agenda says it should be that
moment.
Crude oil is only getting lighter in the US everywhere else it's getting heavier and the light
LTO is likely to be in greater demand for blending. Refineries set up for heavier oil usually
have crackers -- either fluid crack crackers or hydrocrackers -- which can convert heavier
components to gasoline and diesel but can only go so far and blending lighter oil allows the
throughput to be maximised. There is no current problem from the oil range of oils being
produced.
HOUSTON (Reuters) -- Several oil pipeline companies this month agreed to move ahead on
multi-billion-dollar projects that would link Texas shale fields to Gulf Coast export hubs
offering new outlets for burgeoning output expected in 2018.
That information must leave many readers here perplexed. You have pipeline companies refineries
etc. building out the infrastructure to process and transport the oil but Mike tells us it's
all hype not to be believed geez and even Dennis agrees with him what are we to believe? I bet
they did not do their due diligence probably just read a few presentation and decided hey lets
go spend a few billions of dollars for the hell of it Right Mike? I think I will follow the
money on this one and not the want-to-be pretend only in cyber space oil men bloggers
All I'm worried about is you shalies killing the oil price again. 2015-17 not good for
anyone actually making $$ from the commodity of oil. (Corporate management gets theirs
regardless of profits so I don't count them).
And if your response is "compete" I will know you are not for real on owning oil. Because I
don't know how a non-op can make $$ on wells that do not payout. Shale CEO's can but non-ops
can't IMO. So I don't know how you could be happy seeing Shale getting ready to kill the oil
price again?
The only thing I can see killing $55-65 WTI at this point is overproduction of US shale. And
it will hurt them too if they overproduce. The shareholders not the management. But it should
absolutely destroy non-ops like you if we once again have $25 oil and $1.50 gas.
Corporate shale CEO's receive enormous salaries and compensation packages based on booking
fake reserves. The profitability of their corporations or shareholder equity means little to
them. Midstream companies that gather shale oil and shale gas are totally reliant on the shale
oil industry to continue to be able to borrow more money. They are sheep in a flock. The entire
thing from the top down is a façade using OPM. Nobody borrowing this money is personally
on the hook; there are no personal loan guarantees nobody is going to be ruined when the entire
thing collapses. The scheme is based on getting as much as you can as fast as you can and
getting out unscathed.
Why promote or cheerlead for an industry that is obviously grossly unprofitable and that is
going to ultimately leave hundreds upon hundreds of billions of dollars of debt for our
children to deal with? Because you don't care. You don't give a rat's ass. Because exactly like
a corporate shale oil CEO royalty owners receiving income from shale wells free and clear of
all costs don't care about debt about profitability about depleting our nations remaining
hydrocarbon resources and conservation they just care about themselves.
The Peak Oil Barrel community can decide for itself who the "pretenders" actually are.
"... In the oil business debt is having stage 2,3 or 4 cancer. Ignoring its treatment is not the cure. Again, take Shallow's CLR's diagnosis: it has $6.6B of debt and only $10M of COH. If independently audited its reserves would not cover its long term debt. It is basically insolvent. It belongs in Hospice Care. You are relying on corporations like that to make your predictions come true. ..."
"... If global oil demand increases by around 1.5mbld as it has done over the last few years then $90 + oil is very possible. Obviously it also depends on how strongly US tight oil grows and what OPEC will do. ..."
"... At the moment US growth and OPEC spare capacity could drive down prices again. I believe in around 3 years time there will be very little OPEC spare capacity and increases from the US, Canada, Brazil, Iraq new developments etc will not be able to meet the extra demand. ..."
"... The big factors for future energy costs is the lack of CapEx in replacing consumption and the lack of finding replacement reserves. A lot of big western projects that would have replaced depletion were cancelled. Western Oil companies opted to drill in Wall Street (ie Stock buybacks) or buying up smaller companies instead of developing newer fields (Artic and Offshore). ..."
"... I suppose sooner or later Middle East Producers will follow the Western Oil Companies by choosing to Drill Wall Street instead (ie the Saudi Aramco IPO). ..."
"... So you own your country, as a practical matter, and you therefore own your own ( national ) oil company. Oil's cheap. You expect it to STAY cheap for years. But maybe you know a buyer that will pay you a hell of a lot of money for your oil company, fifty times, a hundred times, maybe , the net cash flow you're getting after paying the oil company's expenses. Now if you were an ordinary businessman, such as the ones with an MBA from any of the Ivies, you would sell in a flash, and take that cash and put it into another business. ..."
"... I'm as far from an expert as east is from west, but according to everything I read, investment in the oil industry is at very low levels, world wide, and oil wells are like apple trees Ya gotta have new ones, cause the old ones quit on ya. ..."
Dennis, I am not capable of predicting what the price of oil is going to be in six months,
much less six years. Neither are you. Shallow and Fernando, both oily folks, might state a
"range" scenario but if you were to pen them down they'd likely say they don't know either.
If the predictor of our hydrocarbon future has to "qualify" those predictions based on
what the price of oil might be, I am sorry, I don't see the point in the prediction at all.
You, Mr. Archibald, and many others all miss the point entirely with regard to LTO growth in
America. You assume that because LTO has grown, it will continue to grow. You focus on oil
prices to make your predictions come true and ignore, entirely, that shale oil extraction in
America is not nationalized, it is managed by private enterprise. Private enterprise must
succeed, it must be profitable enough to drill new wells from old wells. Now, because of poor
business decisions in the past the US LTO industry must manage its old debt, ultimately pay
down that old debt AND create sufficient net cash flow to drill new wells without getting
further in debt. It cannot do that at prices short of $100 or more for a sustained period of
time. It is a business, Dennis; I am sorry you cannot seem to grasp that.
In the oil business debt is having stage 2,3 or 4 cancer. Ignoring its treatment is not
the cure. Again, take Shallow's CLR's diagnosis: it has $6.6B of debt and only $10M of COH.
If independently audited its reserves would not cover its long term debt. It is basically
insolvent. It belongs in Hospice Care. You are relying on corporations like that to make your
predictions come true.
I suggest you quit worrying about the price of oil and start focusing on profitability and
debt. You seem to embrace debt as being acceptable in the reserve growth LTO business model.
That is a very bad mistake, a mistake common to people that have never been in the oil
"business," that must write checks, receive revenue from the sale of oil and gas production
and be profitable. Or not eat.
Instead I suggest you focus on where the money is going to come from to keep funding this
miracle of US LTO growth. That growth potential is not price sensitive, it is capital
sensitive.
If global oil demand increases by around 1.5mbld as it has done over the last few years
then $90 + oil is very possible. Obviously it also depends on how strongly US tight oil grows
and what OPEC will do.
At the moment US growth and OPEC spare capacity could drive down prices again. I believe in
around 3 years time there will be very little OPEC spare capacity and increases from the US,
Canada, Brazil, Iraq new developments etc will not be able to meet the extra demand.
Many people do not realise how many electric vehicles would have to be sold to cope with a
world where oil production stops growing. About 30 to 40 million of the 100 million vehicles
would have to be fully electric, hybrids would not be enough.
"Global demand has been slowing down in recent years, so the graph does not show a gap of
8 million between demand and supply."
Seems likely that global demand will likely to decline as Western & Asia populations
continue to grow older. Currently the global economy has been propped up by ZIRP and lots of
QE (China, Japan, EU, & US). Worldwide Debt has nearly doubled since 2008 due to cheap
& easy credit. Sooner or later there will another global recessions that forces a
reduction in Oil demand.
The big factors for future energy costs is the lack of CapEx in replacing consumption and
the lack of finding replacement reserves. A lot of big western projects that would have
replaced depletion were cancelled. Western Oil companies opted to drill in Wall Street (ie
Stock buybacks) or buying up smaller companies instead of developing newer fields (Artic and
Offshore).
I suppose sooner or later Middle East Producers will follow the Western Oil Companies by
choosing to Drill Wall Street instead (ie the Saudi Aramco IPO).
My guess is that Oil pricing does not increase much (excluding geopolitical events/natural
disasters) over the next 2 years. I think the odds favor a decrease in prices and consumption
over the next 2 years caused by another global recession: Interest rates are rising at a time
when consumers are borrowing more to meet ends, and consumers savings rates are near zero
(perhaps going negative again).
I don't do any modeling and number crunching. Couldn't even if I wanted to, due to lack
sufficient statistical and computer skills.
But I don't see where all this new production is supposed to come from, without the price
going up. There's nothing in the news I read here, or at a number of other places, indicating
that any huge new fields that are going to be cheap to produce have been discovered in recent
times, and are in the process of being developed.
So how is it that new production adequate to offset the inevitable decline of the huge
older fields that still supply the bulk of the oil, PLUS enough more to actually increase
production somewhat, can be achieved without the price going up quite a bit?
Where's the new CHEAP oil supposed to come from, considering that oil companies these days
are going after ever smaller and more expensive to produce fields ?
Some of my neighbors, and some of my family members, have amazed everybody who knows them,
including their physicians, by continuing to be productive workers right on into their
eighties.
But when they did finally " decline " or "deplete" they went down hill pretty damned fast.
Men and oil fields are subject to the SENECA CLIFF.
I disagree with our honorable and esteemed founder Ron Patterson about the odds of some of
us pulling thru the coming bottleneck more or less whole, but I'm of the opinion he's right
about a lot of production being maintained these days by practices such as infield drilling
and water flooding and so forth that will result in pretty sharp declines in production at
many major oil fields sometime in the not very distant future.
Maybe the people who think like Tony Seba are right, and our need of oil is peaking now, or
will peak, very soon. I don't see it happening within the next ten years though, because I
just don't see electric vehicles displacing oil burners so quickly, considering the size of
the vehicle fleet, and the number of relatively new ICE cars that will continue to be sold
for some years yet.
Matt Simmons was ahead of his time, like a lot of people who are hailed as visionaries
after they're gone, but he nailed it when he said rust and depletion never sleep.
Demand for use as auto and light truck fuel may indeed peak and plateau in rich western
countries, but unless the world wide economy goes sour, demand overall won't peak until
batteries or fuel cells get to be fully competitive in up front terms.
Money has a hell of a lot of time value, and most people aren't going to lay out a lot of
money up front unless they earn an excellent return by doing so . This is particularly true
in the case of small businesses and the large majority of individuals, because they don't
HAVE a lot of money to lay out up front, and lack good enough credit to borrow enough to pay
a significant premium for an electric vehicle, considering their other needs for borrowed
money.
The oil biz is unlike any other, because most of the key players are GOVERNMENTS, and
governments have never been noted for their business acumen.
Sure governments want to make money on their oil, but the ordinary rules that allow us to
predict what other industries will do just don't apply well to oil, because politicians have
too many other things to consider, in addition to the bottom line.
Consider this. Suppose you are the head of government, with enormous power, dictatorial
power, so that you can do more or less as you please. You must have money coming in at all
times, and once you're selling oil , you're HOOKED on the money.
So you own your country, as a practical matter, and you therefore own your own ( national
) oil company. Oil's cheap. You expect it to STAY cheap for years. But maybe you know a buyer
that will pay you a hell of a lot of money for your oil company, fifty times, a hundred
times, maybe , the net cash flow you're getting after paying the oil company's expenses. Now
if you were an ordinary businessman, such as the ones with an MBA from any of the Ivies, you
would sell in a flash, and take that cash and put it into another business.
But since you're a little tin pot dictator, or even time dictator, like the king of Saudi
Arabia, you won't give selling even a passing THOUGHT. ( Remember it always takes at least an
exception or two to prove a rule, lol, and in the case of the Saudi's selling a little ..
it's a pig in a poke, and they're going to maintain total control, and they're just MAYBE
pricing it at a very large premium, lol) .
You CAN'T sell, it just doesn't work that way, because you have to control the oil
industry in order to control your country. Politicians who expect to stay in power more or
less forever very rarely sell national assets that generate cash. The money they could skim
off isn't worth as much to them as the power that comes with control. Sure they sell a money
losing operation such as a water works sometimes, because that HELPS them stay in power.
But even though they are constrained from selling the assets, they are virtually always
compelled to sell produced oil, and the lower the price, the MORE they need to sell, ouch!
And the bigger the bind they're in for cash, the less likely it is that they will be making
the long term investments necessary to bring new production online , or even spending the
cash to preserve current production by properly managing the oil fields.
The amount of money actually spent by the big independent super national oil companies on
new production is trivial, compared to the amounts spent by national oil companies, and they
aren't spending much, not even a piddly hundred million here and there, if they can avoid
doing so.
I kept my old Daddy's orchard up and running right thru some very tough times, losing
money a lot of years, making almost nothing some other years, because it was his LIFE, his
passion. And I had every reason to believe that good times would return, because almost
everybody backed way off on planting new trees, and lots of growers simply quit
altogether.
But I didn't plant new trees, because I was getting old myself. My neighbors who did are
doing VERY well the last few years, as farming goes, because prices are very good in relation
to costs, and will stay that way until the industry as a whole manages to over do production
again. Both oil and apples involve long lead times, lol. If oil production capacity falls
short of demand, the price will go up, substantially, and stay up a long time, as long as the
economy holds up, and as long as there aren't viable substitutes. Batteries are nice, but
it's going to take a LONG time for batteries to displace more even five percent of oil
consumption.
I'm as far from an expert as east is from west, but according to everything I read,
investment in the oil industry is at very low levels, world wide, and oil wells are like
apple trees Ya gotta have new ones, cause the old ones quit on ya.
I'm dead sure oil will go up unless the world wide economy goes to hell. But .. I've been
dead wrong before. ;-)
So, is there a big wall of US shale oil coming from Texas that will dash my "happy times" of
$55-65 WTI?
So thankful to get up to this level after 36 months of headaches about the oil price.
Seems the only thing that could screw it up is US shale, which apparently is set to explode
in 2018.
I saw someone touting Halcon stock today on SA. Making a big deal about having little
debt. Too bad they flushed about $3 billion of debt when they went BK. I'm sure Mr Wilson
(CEO) is, "still getting his" so to speak.
My brother is griping about why he hasn't been able to draw a salary for the last three
years, heck all the shalie management has! Have to remind him we aren't in the shale fantasy
land. He knows, he's just blowing like I'm prone to do.
If I don't post anymore this year, happy New Year everyone!! Things are looking up, just
hope the shale industry doesn't torch it again!
IN my view you will be sleeping well in the next year. Shale increases mostly the supply
of condensate and light distillates, which does little to cover the worldwide shortage of
middle distillates. So, the price of 'real' oil will very likely increase over the next
future whereas the prices of light distillates (propane, butane, pentane , LPG, NGPL
composite .. ) are very likely depressed. Light distillates can substitute middle distillates
to some degree, yet the potential is limited. So, in that sense I wish you a happy and
successful New Year.
There is no question, Shale is a disaster for investors. Nevertheless, it is a blessing for
Wall Street as high oil and gas production ensures dollar stability and a growing bond
bubble. The only question is when will investors will wake up. As it is perfectly OK for
small companies to sacrifice themselves and burn the cash of investors through, big companies
are less willing to do so. Who is next? XOM, Statoil , APA ?
The ratio of commodities / S&P500 is at a record low, S&P_GSCI / S&P_500
The S&P GSCI currently comprises 24 commodities from all commodity sectors – energy
products, industrial metals, agricultural products, livestock products and precious
metals.
Bloomberg chart on Twitter: https://pbs.twimg.com/media/DSCfWj6W4AA7xyW.jpg
Discoveries of new reserves this year were the fewest on record and replaced just 11
percent of what was produced, according to a Dec. 21 report by consultant Rystad Energy.
While shale wells are creating a glut now, without more investment in bigger, conventional
supply, the world may see output deficits as soon as 2019, according to Canadian producer
Suncor Energy Inc.
Are we not now near enough to 2019 to say that there just isn't time to bring major new
conventional projects on-line before mid to late 2019? The only offshore projects that could
be approved and developed earlier than that would be single well tie backs using the
wildcat/appraisal well as a producer, probably no more than 5 to 10 kbpd and in immediate
(and likely rapid) decline, and would be dependent on there being spare processing capacity
on a nearby hub (i.e. production the new production would be mitigating decline not adding
output).
But the issue isn't lack of discoveries this year, as the headline implies, it's the lack of
recent FIDs which might be in part because of the drop off in discoveries in 2012 to 2015
(for all oil, but particularly easily developed oil), coupled with high debt loads, and
prices that aren't high enough (or at least not yet for long enough) to allow development of
what resources there are available to the IOCs. As prices rise and IOCs become more confident
and are able to pay dividends as well as fund longer term developments then the really low
discoveries in 2015 to 2017 might give them far fewer options than people expect (noteworthy
is that any discoveries in that period that have been attractive, like Liza, have been
immediately fast-tracked, so there really isn't much of a backlog of attractive projects at
all).
I was basing my comment on what the article said. Many of the companies are aware that
discoveries have been low and not many projects will be coming online soon.
Mexico may be heading for a period of accelerated decline (above 10%). Their two onshore
regions and the southern marine region are falling at 15 to 20%, and the largest producing
region (Northern Marine, which includes KMZ and Cantarell) looks like it may be starting to
accelerate. The non KMZ nd Cantarell fields had been the only ones increasing, but look to
now be in decline or at least on plateau, and by PEMEX forecast KMZ should be off plateau in
the next couple of months or so. Mexico has now stopped exporting light oil (which mostly
comes from the three smaller regions, with KMZ and Cantarell producing heavy and medium
heavy) and will presumably be looking for increasing imports of it, which is probably good
for the Texas LTO producers. Operating rigs have recently been declining fast.
Do you have any information on how the ramp up of production is going for the Western
isles project following first oil on 15th November. On a side it looks like the Weald basin myth is starting to unravel.
Not yet -first numbers for December start-up should be in March, it's a question of limiting
their losses at current prices I think. All the wells were predrilled so ramp up should be
fast but I wouldn't be surprised if they get pretty low reliability in the first 6 to 12
months given all the construction problems they had. Also interesting that Catcher started up
on time, against most expectations. Wonder if Clair Ridge will make it this year – do
you know if there are big tax benefits from depreciation for starting within a given calendar
year in the UK (or might be financial yar end is more important)?
This shows how fast the SW marine region fields are now falling (a lot of small fields were
added 2007 to 2015 and are now in steep decline).
There seems no reason this and the two land regions shouldn't continue to fall at current
rates (they may even accelerate given how the rig count has dropped), and if KMZ follows the
predicted PEMEX curve Mexico could drop around 350 kbpd this year, possibly the same in 2019
in decline (but with 60 kbpd additions due from Abkatun), but maybe approaching as low as
1000 kbpd by mid 2020, which is probably the earliest ENI will be able to get their shallow
water field on line if they fast track it.
CALGARY -- Imperial Oil says its much-delayed $16.1-billion project to build a natural
gas pipeline across the Northwest Territories from the coast of the Beaufort Sea to northern
Alberta has finally been cancelled.
Originally the plan was to increase Majnoon to over 1 mmbpd. That has now been downgraded
to 400 kbpd (from current 220). Shell and Petronas have pulled out and a "government panel"
will oversee the development. I'd bet on continued decline rather than any increase, and
potential for significant reservoir damage along the way.
Similarly for Nasirya oil field – intend is to increase from 90 kbpd to 200, using a
local oil company that also sounds like it has a lot of government input.
To me none of this ever declining brownfield development with IOCs pulling out, and
promises of more exploration "coming" is compatible with the claims for their discovered
resources (developed or not), or any chance of a quick ramp up if oil prices start to inflate
rapidly after 2018.
So far, the experiences about freeze off Shale wells are limited. Will glycol also work for
Shale wells when there is much water involved? I think nobody knows yet how big the impact of
the cold will be on Shale wells. However, it looks like shorts are getting hyper-nervous.
Oil and Gas Producers Find Frac Hits in Shale Wells a Major Challenge In North America's most active shale fields, the drilling and hydraulic fracturing of new
wells is directly placing older adjacent wells at risk of suffering a premature decline in
oil and gas production.
The underlying issue has been coined as a "frac hit." And though they have long been a
known side effect of hydraulic fracturing, frac hits have never mattered or occurred as much
as they have recently, according to several shale experts who say the main culprit is infill
drilling.
"It is a very common occurrence -- almost to the point where it is a routinely expected
part of the operations," said Bob Barree, an industry consultant and president of
Colorado-based petroleum engineering firm Barree & Associates.
He added that frac hits are also an expensive problem that involve costly downtime to
prepare for, remediation efforts after the fact, and lost productivity in the older wells on
a pad site.
A frac hit is typically described as an interwell communication event where an offset
well, often termed a parent well in this setting, is affected by the pumping of a hydraulic
fracturing treatment in a new well, called the child well. As the name suggests, frac hits
can be a violent affair as they are known to be strong enough to damage production tubing,
casing, and even wellheads https://www.spe.org/en/jpt/jpt-article-detail/?art=2819
FWIW The first SPE paper referenced discusses mediating the negative nature of frac hits.
It discusses the refrakking of a six well pad drilled in 2010 in the middle Bakken and three
forks, North Fork Field, McKenzie. The six wells have a cumulative oil production to date of
3.6mmboe and 7.7bcf.
Since I am not in the field, much of the paper went over my head, I merely skimmed through
it, however it appears that well communication was observed for horizontal and vertical
spacing of 1000 feet.
"... I think "our" happy price for 2018 is going to hold. Happy New Year buddy ! ..."
"... "The main suspect for the increasing divergence is now the inclusion of NGLs into the EIA computation" Duh. Definitions are more or less always changed to meet agenda. ..."
"... Same trick was pulled by Russia now report total liquids. ..."
"... Politics is a major part of oil markets and keeping Russia at bay is a goal for the administration I guess. ..."
"... But the profound backwardation in the futures market for Brent at the moment tells me that reality is storage withdrawal until shortage for oil. ..."
"... Especially distillates is under scrutiny because of lack of Venezuela heavy oil and too much light oil from Texas. Conventional oil worldwide is suffering from underinvestment and OPEC policy is as expected to serve their own interests. The main problem is easy oil mid API range (too much exploitation). ..."
"... Your posts meets exactly my point as Shale increases the supply of light distillates yet does little to cover the growing worldwide shortage of middle distillates. ..."
Shallow; Hurricane Harvey disrupted some but not very much EF production. Most of the
production drops were related to refinery closers along the GC that curtailed ALL producers
in Texas. That storm had no affect whatsoever in Austin other than some rain and did not
affect TRRC reporting. There were other electronic issues with TRRC reporting that are now
back on the mend.
The EIA like all government entities is a mess; some years back it got confused and with
a snap of the finger stopped reporting on-lease production storage. Now now all of a sudden
it is reporting gas liquids and anything else it can to make production appear higher than it
is. Is there an intentional motivation in that? You decide. Harold already has. EIA 914
surveys are ESTIMATES too; people don't seem to get that. Otherwise this TRRC debate has
reached absurd proportions; the EF is on its way down the toilet check Enno's latest post.
The Permian is still growing but that rate of growth is going to slow; things out there are
getting way gassier and way lighter. There is no place to put the stuff anymore.
"The main suspect for the increasing divergence is now the inclusion of NGLs into the EIA
computation" Duh. Definitions are more or less always changed to meet agenda.
The EIA estimates for Aug to Oct are probably too high by 50 to 100 kb/d.
Mike is correct that the EIA makes estimates as does drilling info based on RRC data.
The average correction factor for the most recent two months of drilling info data (Aug
and Sept) is 42 and 287 kb/d respectively based on past data sets from Aug 2015 Mar 2016
May 2016 Aug 2016 May 2017 Jul 2017 Aug 2017 Sept 2017 and Oct 2017 compared to the Dec
2017 data set from drilling info. In the chart below the Dec 2017 drilling info data set is
"corrected" in this way (adding 42 kb/d to August and 287 kb/d to Sept.)
An alternative is to compare the 914 survey data to the drilling info estimate from May
2015 to July 2017 the average difference was 320 kb/d over that period. So I show the 914
survey plus 320 kb/d also in the chart below.
Through July 2017 we have pretty good estimates for Texas C+C after that it is difficult
to say which estimate is correct. Note that the 914 survey has differed from the drilling
info estimate by as little as 275 kb/d and as much as 365 kb/d from May 2015 to July 2017 so
the 914 survey plus 320 kb/d might be off by +/-50 kb/d especially for Aug to Oct 2017
period.
For comparison EIA estimates US output was 9637 kb/d in Oct 2017 though perhaps the Texas
estimate is high by about 80 kb/d so 9560 kb/d might be a better estimate unless the
estimates for other states are too low.
Looks like the STEO expected a 180 kb/d decrease in October and instead there was roughly
a 160 kb/d increase. Perhaps the correct final data will be between 9300 and 9640 kb/d. The
most recent month's estimate is often revised by 1% or more.
I don´t know what to say but it somehow does not make sense. Something is very fishy
here. Makes me very confident about my bullish oil price predictions for 2018.
Politics is a major part of oil markets and keeping Russia at bay is a goal for the
administration I guess.
And so is the target of 3% gdp growth for the president. But the
profound backwardation in the futures market for Brent at the moment tells me that reality is
storage withdrawal until shortage for oil.
Especially distillates is under scrutiny because
of lack of Venezuela heavy oil and too much light oil from Texas. Conventional oil worldwide
is suffering from underinvestment and OPEC policy is as expected to serve their own
interests. The main problem is easy oil mid API range (too much exploitation).
Your posts meets exactly my point as Shale increases the supply of light distillates yet
does little to cover the growing worldwide shortage of middle distillates.
As the US exports
mostly cheap light distillates and imports expensive real crude oil the recent trade numbers
confirm a swift deteriorating goods trade deficit and consequently a sharply falling US
dollar as we have seen over the last few days. All what Shale is currently doing is to
depress the price of light distillates yet it leaves the growing supply shortage of real oil
unaffected.
The increased LPG is due to increased natural gas production especially "wetter" natural
gas. The has less to do with LTO output and more to do with shale gas output.
It also has very little to do with condensate which is liquids that condense at the lease
(it is called "lease condensate") at ambient temperature and pressure.
LPG is at either higher pressure or lower temperature than ambient conditions.
As it is too early to assess the impact of the current cold on gas production the recent 40%
Canadian rig count slump may serve as a harbinger for the US for next weeks . It is not only
freeze offs but but also transport infrastructure and pipeline constraints.
Haven´t seen it posted here yet. Euan Mearns who sometimes post here has a new blog
post on "oil price scenario for 2018": http://euanmearns.com/oil-price-scenario-for-2018/
. I like figure 4 think that Ian Schindler has showed something similar for longer time
periods (70/80´s).
Euan lacks at least two factors but they are more or less impossible to forecast
particularly: i) economic growth (demand) ii) how much of the OPEC cuts are voluntary. Also
his calculation of natural decline is wrong he assumes all legacy production is in decline.
Thanks. I think Euan has the price about right ($80/b at the end of 2018 for Brent) but I
disagree with him on World oil output in 2018. I think World C+C output will increase at
about 600 kb/d per year over the next few years until about 2020 and then will gradually
slow down as LTO output and oil sands output will not increase rapidly enough to offset
declining output elsewhere in the World by 2025 potentially there could be a short plateau
until 2028 or a longer plateau from 2022 to 2029 the higher World output goes the more
likely that any plateau will be very short. I agree with your assessment that Euan has
overestimated the World decline rate at about 8% which for C+C would be about 6.5 Mb/d not
all of World C+C oil fields are in decline some are on plateau and a few are increasing
output (at the field level) though if one considers individual oil wells probably 99% of
oil wells currently producing (weighted by daily output) are likely to be in decline.
Euan may be looking at things from that perspective which would mean (assuming my 98%
guess is correct and that those wells decline at an average annual rate of 8%) we would need
6.4 Mb/d of newly completed wells just to offset the declining wells in order to remain on a
plateau.
Euan believes the World will just be able to manage this I think higher oil prices will
enable 7.1 Mb/d of oil completions Worldwide over the next year with a net increase in World
C+C output.
We will not really even know World C+C output for 2017 until March 2018 (I use EIA
estimates) and 2018 output will be unknown until March 2019.
The most recent 12 months of World C+C output (average monthly output from Oct 2016 to
Sept 2017) was 80 999 kb/d based on EIA data.
The latest numbers out of China say oil consumption growth this year 2017 will be double
last year's. This year is pegged at 6.5% with a month to go. India numbers as of Oct say
their 2017 growth rate will be about 8% as it was last year.
China's crude oil stockpiles the latest numbers: There is a big difference between China's
official numbers and analysts calculated numbers (China says +90 kb/day vs IEA up to +1000
kb/day)
LONDON October 12th 2017 (Reuters) – China has built its crude oil stockpiles at a
record pace in 2017 and while its purchases could tail off towards the year-end inventories
could hit the billion-barrel mark in six months the International Energy Agency said.
The agency estimates that over the first half of 2017 Chinese stockbuilding hit a record 1
million b/day.
https://uk.reuters.com/article/oil-iea-china/chinas-crude-oil-buying-spree-looks-set-to-continue-iea-idUKL8N1MN2GO
Anybody knows what the definition of crude oil by Texas RRC is? The reason I ask the question
is because the production increase up to API gravity 40 is only 70K/day out of 767 K/day from
November 2016 to October 2017. PAA said in the conference call that Delaware basin is
producing mostly oil with APII gravity higher than 45 and needs to be exported as our US
refiners will not touch it.
Krisvis
Thanks for posting your comment. This is exactly my point.
Shale produces mostly condensates and light distillates which are an excellent feedstock
for the chemical industry. However this concerns just 15% of the oil market. At the
beginning of the Shale boom Shale light distillates could substitute a lot of conventional
oil which was previously used in the chemical feedstock market. This brought down the oil
price.
As Shale oil has now serious troubles to enter the transportation fuel market (due to a
lack of middle distillates) the US is forced to sell cheap light distillates on export
markets and import on the same time expensive real oil containing middle distillates at a
high price. So US imports of real oil are on the rise again. This is why we are seeing a
rising oil price and US oil trade deficit again. The dollar has already reacted by a steep
slump over the last days.
When one looks at the price of oil with API 40-45 it trades at a premium to heavy oil. Oil
above 45 or 50 API is typically classified as condensate.
As George has commented repeatedly most of World output is getting heavier and is more
expensive to refine. There are many customers around the World that need the lighter oil to
blend with heavier crude. In fact much of the US condensate goes to Canada to blend with
bitumen so it will flow through pipelines.
This chart is from EIA (chart above used the EIA data Jan 2015-Oct 2017).
The US has had net imports of crude oil since 1945 (based on monthly data).
On an annual basis the last year the US was a net exporter of crude oil was 1943. Net
imports of crude peaked (annual data) in 2005 at over 10 Mb/d and fell to 6.9 Mb/d in 2015
and rose slightly in 2016 (by 0.36 Mb/d) to 7.26 Mb/d in the most recent 12 months net
imports have fallen to 6.99 Mb/d.
"Given President Donald Trump's obsession with reviving the dying industry it's almost
surprising that the Republican tax bill doesn't contain any new breaks or incentives that
explicitly help coal. 'Energy is actually the least of the beneficiaries in this bill and
the simple reason is that energy already has so many carve-outs and exemptions in the tax
code that a lot of U.S. based companies just pay hardly any income tax as it is ' said Pavel
Molchanov an energy research analyst at the financial firm Raymond James. 'So there is
virtually no effect on energy of any kind either positive or negative and that includes
coal.'"
Choke on this tee tee: because the shale oil industry can't keep its MasterCard(s) in its
pants its overleveraged LTO oversupply is the direct cause of low volatile oil prices that
has resulted in the loss of over 440 000 oil and gas jobs around the world since 2014.
https://www.rigzone.com/news/oil_gas/a/148548/More_Than_440000_Global_Oil_Gas_Jobs_Lost_During_Downturn
. There are still an estimated 55 000 still out of work in America in EOR GOM and in
stripper well production. Your beloved shale industry got nothing nada zip out of the new
tax law except interest deduction limits which will hurt it not help it.
If most of the LTO companies are losing money I don't think they pay federal taxes on
losses so the reduction in tax deduction for interest paid would have no effect.
No but tee tee is. Its not easy you know getting thru.
Take for instance the help the oil and gas industry is getting by opening ANWAR. Who is
that going to help particularly since there is countless geological and depositional studies
done that pretty much condemn the entire area? Or lets take the "roll back" of certain
MMS/BSEE regulations regarding multi-string pressure and BOP testing in the GOM after the
Macondo incident? That is stupid shit that dumb uninformed people buy into that has nothing
to do with reality. Reality is those regulations were on the books and un-enforced. It cost
BP what $80B to cut some corners? Nobody I repeat nobody is going to let that happen
again. Whatever the current BS is about reducing regulations on the oil industry and helping
American become great again by unleashing its hydrocarbon "might " on the rest of the
world is laughable. Who is laughing all the way to the bank?
OPEC and Russia dat' who. They are watching America's energy policies get worse not
better.
you can educate the ignorant but not the stupid who said that oh yea me. any one of my
birddogs knows more about north slope geology than you mike. perhaps you can make a new years
resolution try to be accurate at least once in 2019 gonna be hard for a "man" like you but
give it a shot oh yea surely you can do better than
bathroom jokes after all a "man" of your intellect should oh never mind
Read the post twitter link Dean posted above. Most interesting is a post by a CPA who was
involved with the 914 reporting. He thinks it is double counting the M&A production.
However within his post he describes that the 914 survey is actually done by a third party
contractor. In his discussion with him they were using the higher of projected drilling
info or operator report. To put it in my perspective I don't see the 914 having anything
like the consistency of the RRC. IMG Crown Energy Services is the third party contractor.
Look up their website. Not a lot of time spent on it for a heavy duty IT company so no warm
fuzzies there. One could speculate that the primary income is from the EIA contract. EIA
paints themselves into a corner with wild projections on Texas production. They call up the
third party contractor and question the figures they think are too low. Contractor has to do
something to keep the contract don't they?
Now nobody at EIA can get fired for cooking the books because they have plausible
deniability.
From May 2015 to July 2017 the 914 survey was pretty consistent (within 275 kb/d and 365
kb/d of drilling info estimate average 320 kb/d). Perhaps that has changed I would not put
much weight on a Twitter comment by a CPA. We will see in a few months what the drilling info
estimates are which are usually within 1% of the final output after 3 to 5 months. So by
March or April we may know what Oct 2017 TX C+C output is.
No. Has he been reporting NGL (in the US this would be natural gas plant liquids) to the
contractor as C+C?
In any case I agree with Mike patience is needed. Perhaps the 914 survey is now covering
a much higher percentage of Texas C+C output relative to the May 2015 to July 2017 (27 month
long) period.
"Double counting M&A production" has nothing to do with NGLs. He was admonished by the
contractor for under reporting production that was sold off. Instead of using his figures
they used his old wells as listed in the drilling info estimate. Hence double reporting it.
But what was more interesting is the contractor part. They can send out the survey but can
determine whatever they want to include.
The EIA contractor checks with operators when reported numbers are different than expected
and sometimes they use the drilling info data instead if the numbers don't look right.
The numbers are revised over time as more data comes in. These are estimates nobody knows
final output for many months (for the entire state of Texas or all of the US).
The link below covers the 914 survey methodology. Yes mergers and acquisitions are a
potential problem. The EIA does it's best to account for these to avoid double counting.
About 450 of the largest oil and gas companies that produce about 90% of US oil and gas
output (of approximately 13 000 petroleum producers in the US) fill out the 914 survey.
API gravity is a density measurement of oil. Measures how heavy it is compared to water.
The higher the API number the lighter the oil.
Refineries do not create "middle distillates" out of nothing. They extract them from oil.
"Middle distillates" are middle heavy liquids within oil. Diesel and Kerosene. Read
truck/tractor fuel and jet fuel. Gasoline is a light distillate. Heavy distillates would be
something like bunker fuel or asphalt.
This is all within the same liquid called "crude oil". Traditional labels are applied as
regards the word "quality". High "quality" crude oil was light and "sweet". Sweet refers to
having low content of materials that cause problems in refining. Like sulphur or vanadium.
But tradition has run up against the new nature of crude oil. It has gotten too light. It
often lacks middle distillates.
I have examined assays of many different oil types from all over the world. Jet fuel boils
about 160 degs C and the heaviest diesel boils up around 350 degs C. So "middle distillates"
that are actual fuel for things that matter are in the assay between those temps.
Scroll down to their .XLS spreadsheets for various blends that they have assay'ed. I would
say it does not conform to the chart. BUT. There are some caveats scattered around. "Blend".
Dumbbell liquid. This means if oil from one field doesn't have what you want in it you add
oil from another field to it to get the constituent parts. Assay it and declare it looks
good. BP has an assay website as do others like Capline from Marathon.
All this was to address the question above -- "what is the definition of oil". Study all
that and you'll see that the definition is whatever the money agenda says it should be that
moment.
Crude oil is only getting lighter in the US everywhere else it's getting heavier and the
light LTO is likely to be in greater demand for blending. Refineries set up for heavier oil
usually have crackers – either fluid crack crackers or hydrocrackers – which can
convert heavier components to gasoline and diesel but can only go so far and blending
lighter oil allows the throughput to be maximised. There is no current problem from the oil
range of oils being produced.
That information must leave many readers here perplexed. You have pipeline companies
refineries etc. building out the infrastructure to process and transport the oil but Mike
tells us it's all hype not to be believed geez and even Dennis agrees with him what are we
to believe? I bet they did not do their due diligence probably just read a few presentation
and decided hey lets go spend a few billions of dollars for the hell of it Right Mike? I
think I will follow the money on this one and not the want-to-be pretend only in cyber
space oil men bloggers
All I'm worried about is you shalies killing the oil price again. 2015-17 not good for
anyone actually making $$ from the commodity of oil. (Corporate management gets theirs
regardless of profits so I don't count them).
And if your response is "compete" I will know you are not for real on owning oil. Because
I don't know how a non-op can make $$ on wells that do not payout. Shale CEO's can but
non-ops can't IMO. So I don't know how you could be happy seeing Shale getting ready to kill
the oil price again?
The only thing I can see killing $55-65 WTI at this point is overproduction of US shale.
And it will hurt them too if they overproduce. The shareholders not the management. But it
should absolutely destroy non-ops like you if we once again have $25 oil and $1.50 gas.
Corporate shale CEO's receive enormous salaries and compensation packages based on booking
fake reserves. The profitability of their corporations or shareholder equity means little
to them. Midstream companies that gather shale oil and shale gas are totally reliant on the
shale oil industry to continue to be able to borrow more money. They are sheep in a flock.
The entire thing from the top down is a façade using OPM. Nobody borrowing this
money is personally on the hook; there are no personal loan guarantees nobody is going to be
ruined when the entire thing collapses. The scheme is based on getting as much as you can as
fast as you can and getting out unscathed.
Why promote or cheerlead for an industry that is obviously grossly unprofitable and that
is going to ultimately leave hundreds upon hundreds of billions of dollars of debt for our
children to deal with? Because you don't care. You don't give a rat's ass. Because exactly
like a corporate shale oil CEO royalty owners receiving income from shale wells free and
clear of all costs don't care about debt about profitability about depleting our nations
remaining hydrocarbon resources and conservation they just care about themselves.
The Peak Oil Barrel community can decide for itself who the "pretenders" actually are.
Unless I missed it I am still waiting for TT to explain how he finances the huge AFE's he
must routinely get from $10+ million STACK and SCOOP wells.
Was doing some tax work earlier today and noted for June 2017 oil we got $40.71 per
barrel. If 12/29/17 close holds we get $56.
$15.29 more on every barrel is huge for us as it is for everyone who operates wells Be
it you XOM Harold Hamm Russia OPEC etc.
As I recall oil prices rebounded in late 2016 then shale went nuts and the price
tanked. Their shares tanked too as I recall.
Say TT owns 10% of a shale monster well that cranks out 200K BO in year one. Say his NRI
is 8%.
So he got billed $1 million for his part of the well. A $15 higher oil price nets him
$240 000 more in year one before deducting severance tax.
So I assume TT would rather get an extra $240 000 in year one and have shale not go crazy
talk and crazy drill again as opposed to being able to crow about political crap?
Mike do you know any non-op's on shale wells? How the heck do they finance them?
PS. I know you think it's cold down there in Texas but in my part of the Mid Continent it
will be -5 F later tonight. 1 stinking degree F right now. Ouch!!
Happy New Year Shallow and to the rest of the POB community. We close our schools in Texas
when it gets below 40 almost. We are expecting low 20's here each night for the next three
nights and we are all standby in the field to deal with an array of frozen broken messes.
This is not a good time of year to be in the oilfield. I don't know how you folks stand it up
north.
You know quite well the story of tiny NPRI owners not wishing to be pooled in Bakken units
and instead electing to assume WI ownership in well(s) then going non-consent in hopes of
backing in after payout and becoming real oilmen. That was a disaster. Their expenses now
exceed their income and they are on the hook for plugging and decommissioning costs they'd
give that stuff away if they could. You have shown us all numerous of these type of WI's for
sale on energy.net
In the beginning I knew numerous folks in the EF and PB who turned deals with small
carried WI or reversionary back ins after payout. I also knew folks who farmed out shale
rights and kept WI. They did so I believe thinking fiscal responsibility and profitability
was the order of the day like it always has been in our industry but quickly found out that
was not the case and were literally spent into the dirt within a year or so. They sold their
WI to operators as fast as they could never to return. I am sure there are exceptions but
not many. It is a big boys game now run by lenders with very onerous loan covenants. How does
a 1/32nd or a 1/16th WI pay its share of 15) $10M wells that take 3 4 and 5 years to payout
if ever? They don't. Not without borrowing money themselves.
If on the other hand one includes RI and ORRI in the well(s) with the NRI from your WI nd
pay 1/16th of the costs for say. 0.10000 total interest then you can puff up like a rooster
and say I own WI in shale oil wells and they all "make" money. The only people making money
in this shale gig is royalty owners overriding royalty owners CEO's and lenders on interest
income. That's just a fact.
For the life of me SS I am not sure what is so freaking confusing. I have said numerous
times the world needs $70 oil. That is a price level that folks like you and most others can
make enough money and produce free cash flow to fund new projects. Fact not fiction. BUT. I
have also said I live and work in the real world where we actually do real work well by
well section by section to find opportunities.
Just to restate the facts we have conventional production in 5 states both working interest
and royalty interest.(spread the risk) we do not borrow money everything we do is out of
cash flow. On most of our wells we lease part of the minerals we acquired and drill a portion
of the minerals we acquired. What you may not know is many operators in the better shale
plays are actively buying royalty to increase their NRI but of course they are a bit late to
the party. The wells we drill are at current prices very economical. freaking do the math.
at $50 oil and $4.00 nat gas(btu adjusted) @2 % tax rate in the first 2 years and wells that
will produce 400 000BO and 5BCFG. The gas alone pays for the wells and the oil is "free". We
started thinking we might get 5-6 wells a section now that number is 15 wells per section.
It is a much longer conversation most of which would be way over the heads of the readers
of this blog the improvement in production numbers (new frac techniques) over the last 18
months we are seeing are out of this world. 30% at the low side at 100% at the high end
increased in production with a 11 month comparison period. How this translates to ultimate
EUR i am not prepared to say what I will say is that based on 35 years of experience it
looks great.
A couple of takeaways. One there is a point to be made some maybe even most of the
shale guys have played fast and loose with normal best practices with regard to finances. But
because we have alcoholics we don't condemn the entire industry or impose prohibition which
is the argument Mike like's to make.
This is a process what works and does not work will be sorted out by the market place as it
should be MUCH will WORK that IS a fact. What the folks who are building pipelines and
refineries and other midstream and downstream infrastructure sees is what we see their in
the real world where we deal in facts and allocate our money accordingly.
TT. If you came into shale with a lot of rock solid conventional paid for in full I can see
how you could come up with the money.
However I am then also sure that you just like us went from making a killing on low
decline conventional and $90 oil to making much much less and in your case were using
almost all cash to pay for new shale well AFE's.
Even if you have zero debt I assume you at least have an un drawn credit facility just in
case a good big deal were to arise. And therefore I assume you were none too pleased when
your borrowing base dropped by more than 2/3 from 2014 to 2015 and again another 20+% in
2016 due to shale over production crashing oil and NG prices.
If you are big enough to cash flow several shale AFE I assume you have net production of
somewhere between 2 000-10 000 BOEPD?
So let us say 5 000 BOEPD. Again just hypothetical to show what shale did to a larger
private independent owned by maybe 2-4 shareholders who got very rich 2005-14.
2014 say you could have cashed out for $500 million. 2016 likely cashed out for 1/3 to 1/4
of that. Quite a hit to the net worth.
Further in 2014 you maybe cleared $90+ million pre income taxes before CAPEX on that
5 000 BOEPD? 2016 that went to $18 million maybe and of course you are getting AFE and JIB
on the shale that is draining that the near zero? So no shareholder dividends or
distributions in 2015 and 2016 after getting big ones in prior years.
We are small and not in a shale area but we have been around the block Dad has been in
since the Arab Embargo. Pretty much everyone had to fire someone in 2015-16 it's good if you
didn't. Pretty much everyone had the rug pulled out from under them just like in 1986 and
1998.
Thing is I think even most of the shale guys aren't real happy about shale. They know
shale overproduction will drag the price. Same bittersweet deal as farmers growing a bumper
crop. Farmers made the most $$ during 2012-13 even though most places 2012 was terrible
drought. US commodity producers never do good during periods of oversupply. Just the middle
men do good then.
Again I'm just speculating on how you do things numbers etc. I may be all wrong. If I am
I apologize.
I just know in 2015 and 2016 there were a ton of shale wells completed that won't payout.
Maybe not as many in 2017 but they are still out there. Further they hurt cash flow
especially when you cannot control the expense recognition time frames as a non-op.
I am so glad we did not own non-op where drilling was going on 2015-17 as it would have
sucked away all our cash and then some plus sold our flush production at market lows.
I am happy to see you want $70 even higher than me. So I'll leave you alone now. Take
care. I think maybe deep down you too hope US doesn't ram through 10 and then 11 million BOPD
next year?
You are insulting to people here who actually understand the basic arithmetic of the oil
business a little better than you give them credit for. There is very clear mounting
evidence that things are not getting better in your industry they are actually getting
worse. You on the other hand seem to struggle with reality. Five days ago gas was trading
at $2.55 per MMBTU not $4 and after royalty deductions interest expenses etc. etc. 5 BCF
will not come close to paying for a $10-11M well. I understand now that even after 35 years
of whatever it is you do you can't insult me anymore than you have already tried. I would
have to value your opinion first.
If you want to win friends and influence people here on POB it would be helpful if you
were to give us your name your company's name where these awesome wells are so we can check
production data and tax roles etc. That would give you credibility and strengthen your
arguments. Otherwise you are just a cute name embarrassing as that is to my beloved Texas
who likes to brag about how much money he makes in the shale oil business. We're interested
in the big picture here not you personally.
@TT
Cling to whatever makes you feel good dude. I guess when you're favorite industry produces a
lot of product but can't make any profits doing so one has to find the silver lining wherever
they can. Shale is a Ponzi scheme. It won't be long until the music stops and the investors
lose their shirts.
go f your self .what the hell are your credentials not better than most here. the totality of
your experience in the "oil" business is probably limited to buying lube
(for your bicycle chain)
My credentials are irrelevant to the fact that shale oil is a profitless venture. If not for
profit then what's it all about? Take a long hard suck on my ass fuck face. Fucking retard.
well there you go proof that many here are illiterate and ignorant. you resort to
profanities when you have no facts. I bet your parents are proud of you
I have seen many folks in foreign countries tuck in the pant leg of their trouser in their
socks so that it does not keep getting in the chain of their bicycle I bet you can tell us
does that work for dresses too?
Watcher I didn't say he had to identify himself I just pointed out that he was a hypocrite
to demand other people's credentials without presenting his own.
I agree with Mike that LTO producers are not profitable (as a group).
I have suggested that if oil prices remain under $65/b (WTI price) that US output may
increase by about 600 kb/d (average annual C+C output) in 2018 compared to 2017. If oil
prices are higher output may be higher if you tell me what that average oil price will be
in 2018 I can make a better output estimate.
I also agree with Mike that I do not know what the future oil price will be.
Generally higher World output levels result in lower oil prices (as in 2015-2017) and
generally lower oil prices result in lower profits for oil companies ceteris paribus.
The oil price may improve in 2018. However it will likely go DOWN CONSIDERABLY first
before it continues higher. According to the COT REPORT (Commitment Of Traders) there is
a record Commercial Short Position against oil going back 23 years.
You will notice right before oil fell from $100 in 2014 there was also a high amount of
Commercial Short Positions. Today that level is even higher.
World demand for oil products – JODI Data – As everyone knows January is the
seasonal low for demand. Comparing demand in December to January of the next year shows an
average drop of -2.2 million barrels per day.
Chart on Twitter: https://pbs.twimg.com/media/DScZ25HX4AAdDwB.jpg
Don't suppose you know if oil fields do blending prior to sending to assay? Doesn't seem
too very conspiratorial. Someone could gin up a rationale and no one would complain provided
the refiner gets the same blend as assayed.
Most are blends – i.e. a bunch of producers discharge into a pipeline and what comes
out the end is the cargo – it varies a bit depending on the relative flows from each
platform and they might have to blend further in the tank farm (e.g. Forties delivers Brent
crude I think from 15 to 20 different platforms). I can only think of one time there might
not be blending of some kind which is if an offshore platform with storage (e.g. FPSO)
unloads as repeated cargoes which always go to one specific refinery (probably the platform
operators – but even then there are usually more than one owner and they often take the
cargos separately in proportion to their stake).
This is from 2015/2016 – but prices are still light/sweet -> expensive;
heavy/sour -> cheap. The only thing that can mess that up is if there are transport
bottlenecks which is why WTI is a bit cheaper than Brent (it wasn't before LTO came on
line). Tapis is still the lightest and costliest although almost none of it is produced it
is still a useful benchmark against which other oil can be rated. Although there are
benchmark crudes I think every cargo is basically a negotiated price between the refinery and
the producer (there can be penalties if it isn't quite the quality agreed on and it could
even be rejected and I think there is an adjustment based on the latest benchmark prices as
the contract price would have been negotiated well ahead of delivery). And that is about as
much as I know about the trading business except there is a lot of money that can be made
and lost on very small margins and variations.
source of interest my recall of Bakken and Eagle Ford assays of yrs ago and how with an
increase in API degs reported in the new assays the middle distillate yield hasn't changed.
Should not be -- well it's possible but should not be likely.
U.S. crude oil production is flirting with record highs heading into the new year thanks
to the technological nimbleness of shale oil drillers who have unleashed the crude
bonanza.
The current abundance has erased memories of 1973 gas lines which raised pump prices
dramatically traumatizing the United States and reordering its economy. In the decades
since presidents and politicians have mouthed platitudes calling for U.S. energy
independence.
President Jimmy Carter in a televised speech even compared the energy crisis of 1977 to
"the moral equivalent of war."
"It's a total turnaround from where we were in the '70s " said Frank Verrastro senior
vice president at the Center for Strategic and International Studies.
Shale oil drills can now plunge deep into the earth pivot and tunnel sideways for miles
hitting an oil pocket the size of a chair Verrastro said.
The United States is so awash in oil that petroleum-rich Saudi Arabia's state-owned oil
and natural gas company is reportedly interested in investing in the fertile Texas Permian
Basin shale oil region according to a report last month.
That is a far cry from the days when U.S. production was on what was thought to be an
irreversible downward path.
"For years and years we thought we were running out of oil " Verrastro said. "It took
$120 for a barrel of oil to make people experiment with technology and that has been
unbelievably successful. We are the largest oil and gas producer in the world."
The resilience of U.S. oil producers has come as the price of crude rose above $60 per
barrel on world markets. Many shale drillers can start and stop on a dime depending on the
world oil price. The sweet spot for shale profit is in the neighborhood of $55 to $60 per
barrel.
"... I fully agree that attacking Iran would be yet another disaster but I don't understand why Saudi Arabia is portrayed as an 'enemy', the 'real' one, no less, in alt-media circles like this. I mean let's be honest with ourselves. KSA is the definition of a vassal state. Has been so since the state established established relations with the USA in the 1940s and the status was confirmed during the 1960s under King Faisal. Oil for security. Why pretend that they have any operational clearance from the US? ..."
I fully agree that attacking Iran would be yet another disaster but I don't understand
why Saudi Arabia is portrayed as an 'enemy', the 'real' one, no less, in alt-media circles
like this. I mean let's be honest with ourselves. KSA is the definition of a vassal
state. Has been so since the state established established relations with the USA in the
1940s and the status was confirmed during the 1960s under King Faisal. Oil for security. Why
pretend that they have any operational clearance from the US?
Contrary to the popular view, Wahabism is necessary to keep the local population under
control. Particularly the minority Shia population who live along the eastern coast, an area,
which incidentally also has the all the oil reserves.
USA fully understands this. Which is why they not only tolerated Wahabism, but strongly
promoted it during Afghan jihad. The operation was by and large very successful btw.
It was only during the '90s when religion became the new ideology for the resistance
against the empire across the Muslim world. Zero surprise there because the preceding
ideology, radical left wing politics was completely defeated. Iran became the first country
in this pattern. The Iranian left was decimated by the Shah, another vassal. So the religious
right became the new resistance.
And as far as the KSA is considered, Wahabi preachers aren't allowed to attack the USA
anyway. If any individual preacher so much as makes a squeak, he will be bent over a barrel.
There won't be any "coming down very hard on Saudi Arabia" because USA already owns that
country.
So what's the answer? Well, props to Phillip as he understood – "it would also
require some serious thinking in the White House about the extent to which America's armed
interventions all over Asia and Africa have made many people hate us enough to strap on a
suicide vest and have a go."
Your analysis starts too late. The US supports Wahhabism and the House of Saud because
the pro-Arabic/Islamic English Elites of 1910 and 1920 and 1935 supported Wahhabism and
the House of Saud.
The British Empire 'made' the House of Saud,
Thinking it wise to use Wahhabism to control Shia Islam is like thinking it wise to
use blacks to control the criminal tendencies of Mexicans.
The Last but not LeastTechnology is dominated by
two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt.
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It doesn't matter whether you provide storage or increase the number of refineries, shale production is relatively dead at these prices. The prices just need to stay ridiculously low for awhile to stop the EIA and IEA from producing more imaginary oil, and face reality. Yeah, that would affect my wells, but I would hope for a better price, later.
More likely is a gradual increase in oil prices as we approach peak oil, the futures strip is likely to be wrong on oil price (today's future strip). For Brent futures the current strip goes from $73/b (Jan 2019) to $61 (Dec 2026). By Contrast the EIA's AEO 2018 reference oil price scenario for Brent crude has the spot price at $87.50/b in 2026, chart below has their scenario (which I think may be too low.)
Russia's September oil production set for post-Soviet record high
US sanctions against Iran could give oil a boost to $100 amid dramatic shortfall in supplies
Oil surges to 4-year high as investors see no sign of production rise amid Iran sanctions
FILE PHOTO. © Lucy Nicholson / Reuters The tax and trade policies of Donald Trump are, in fact, what have contributed to the surge in oil prices, a US economics professor told RT, adding that the US President's tough words to OPEC are a political stunt. On Thursday, Trump accused OPEC's Middle East producers of "pushing for higher and higher oil prices" and demanded "they stop it," adding that the US is "protecting those countries." Oil prices showed a mixed reaction to Trump's words. The Brent benchmark fell 43 cents to $78.97 per barrel, while the US Texas Intermediate grew by 9 cents to $71.21.
Trump demands OPEC lower oil prices, claims US 'protects' Middle East countries
Chris Cook Energy, alternative energy, oil & gas, infrastructure ( 908 followers) Summary
FILE PHOTO: Iranian Parliament © Islamic Consultative Assembly News Agency / AFP In a rare statement Iran's Supreme Leader Ayatollah Ali Khamenei has lashed out at the country's authorities, accusing them of poorly handling internal issues. The mismanagement is even worse than US sanctions, he said. "It is not that the sanctions do not play a role; but a major part of the situation is the result of [government's own] actions," Khamenei said, according to Irna, as he was addressing thousands of Iranians in Tehran on Monday.
Rouhani blasts Trump's 'psychological warfare' as Iran braces for US sanctions
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No comments:© China Stringer Network / Reuters Looming US sanctions against Iran will likely hit Tehran's oil sales abroad, and it could lead to a price spike in oil contracts. The first round of renewed US sanctions will take effect on Tuesday with the harshest sanctions, potentially targeting Iran's oil industry, expected to return in early November.
Is this the end of ultra cheap gasoline in Venezuela?
Ukraine is overpaying for European gas & wants Russia to foot the bill
Yuzivske field prognostic resources are estimated at 2-4trln m3 of gas, which can be a viable alternative for costly natural gas volumes Ukraine imports form Russia. In the meanwhile US Energy Information Agency (EIA) estimates Ukraine's shale gas potential at 1.2trln m3 in this way making the country's shale gas reserves the 4th largest in Europe after Poland, France and Norway. Totally consuming some 60bn m3 of natural gas annually, Ukraine has to import 40bn m3 of natural gas from Russia priced $430 per 1,000 m3 based on the terms of agreements inked in 2009.
Well sure, this looks like a more organized way to keep the books and clear up communication channels, though the details concerning how consensus is achieved in this system remain a little hazy to me. As I mentioned earlier, I'm guessing that it'll be based on some reputation-based mechanism. But if this is the case, then why can't we depict the solution in the following way?
"Both production and demand are at record highs for oil natural gas and natural gas liquids. "Boomer II, says: 12/22/2017 at 6:40 pm
shale oil is a profitless venture. Deal with it fuck head.texas tea says: 01/01/2018 at 7:44 pmI have seen many folks in foreign countries tuck in the pant leg of their trouser in their socks so that it does not keep getting in the chain of their bicycle I bet you can tell us does that work for dresses too?Survivalist says: 01/01/2018 at 7:53 pmHere's one for the Texas teabagger aka the Lone Star State scrotum sucker.Lloyd says: 01/01/2018 at 11:28 pm
Saudi Update October 2018
http://crudeoilpeak.info/saudi-update-october-2018