Despite a soft market oil is ripping higher…WTI that is.
Comments »The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump
“(CBS/AP) WASHINGTON – It’s the political cure-all for high gas prices: Drill here, drill now. But more U.S. drilling has not changed how deeply the gas pump drills into your wallet, math and history show.
A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.
If more domestic oil drilling worked as politicians say, you’d now be paying about $2 a gallon for gasoline. Instead, you’re paying the highest prices ever for March.
Political rhetoric about the blame over gas prices and the power to change them — whether Republican claims now or Democrats’ charges four years ago — is not supported by cold, hard figures. And that’s especially true about oil drilling in the U.S. More oil production in the United States does not mean consistently lower prices at the pump….”
Comments »CITI: The US Energy Industry Is Going To Grow So Fast, It Will Spark A New ‘Industrial Revolution’
“Oil and gas production in the United States and North America is going to skyrocket in the next 8 years due to strides in natural resource extraction, write Citi analysts in a report published yesterday. In fact, they went so far as to call North America “the new Middle East,” at least in terms of oil production.
This—as well as a trend towards declining U.S. energy consumption—will completely transform both the domestic economy and the threats the U.S. will face in the future,
Indeed, Citi economists expect total liquids production to as much as double for the continent in the next decade, and predict that the U.S. could overtake both Russia and Saudi Arabia in oil production by 2020:
That’s because there is incredible potential to extract and refine energy products on domestic soil:
Citi Investment Research and Analysis
This energy boom would have a transformative effect on the domestic economy. Here are just a few of the most astonishing consequences in a “good-case” scenario:
- Citi analysts expect real GDP to increase by 2.0 to 3.3 percent—$370 to $624 billion—as a consequence of new production, a decline in energy consumption, and the economic activity generated along with this.
- 3.6 million new jobs could be created by 2020 as a consequence of increased energy production. Of those new jobs, some 600,000 would probably be devoted to oil and gas extraction while 1.1 million would be generated to meet demand in related industrial and manufacturing sectors. National unemployment could subsequently decline by up to 1.1 percent.
- The current account deficit could shrink by 80 to 90 percent due to energy exports at an already low level of production. Citi analysts predict that the current account balance could move from -3.0 percent of GDP to -0.6 percent of GDP by 2020.
- The value of the dollar could jump by 1.6 to 5.4 percent, primarily based on changes in the current account balance.
- What’s more, risks to the U.S.—in particular, geopolitical risks—would dramatically decrease. A domestic or continental energy boom would diminish the importance of conflict within and tensions involving the Middle East, as the U.S. would become significantly more energy independent.
- Finally, Citi analysts note that this could lead to a considerable decline in oil prices.
While they qualify that this growth depends the realization of their “good-case” assumptions, Citi economists emphasize that the energy sector provides an almost inconceivable opportunity for economic growth:
It is difficult to square these rosy visions with the current reality of a nation still struggling to shake off the aftermath of the 2008 Great Recession, with millions still unemployed, economic recovery still uncertain, worries over ballooning fiscal debts, a hollowing out and loss of manufacturing competitiveness, tremendous angst and hand-wringing over volatile oil prices and dependence on oil imports, deep social divisions, and political paralysis. But if our analysis is accurate, then in only eight short years, this situation may be turned upside-down and economists, policymakers and the nation as a whole may confront new “problems” around managing a vast hydrocarbon windfall and preventing “Dutch Disease.”
The coming generation of Americans and its leaders may be privileged to witness a remarkable resurgence of the American economy and industry, led by its energy sector, but spreading to the rest of the manufacturing sector and beyond, a potential minor Industrial Revolution.”
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Australian Government Forecaster Expects Iron Ore to Fall 8.5% on a Slowing China
“Iron ore may decline 8.5 percent this year as global output increases and growth in Asian steel production slows, according to a government forecaster in Australia, the world’s biggest exporter.
Prices may average about $140 a metric ton in 2012 from $153 last year, the Bureau of Resources and Energy Economics said in a report today. Shipments from Australia may climb 12 percent to 493 million tons in 2012, it said.
Steel output growth in China has slowed as the fastest- growing major economy puts greater focus on consumers rather than building projects, BHP Billiton Ltd. (BHP), the world’s biggest mining company, said yesterday. Shares in Vale SA (VALE3), the largest iron-ore producer, fell the most in a week after BHP’s comments. While China’s near-term growth is slowing, iron-ore output significantly lags consumption, Rio Tinto Group (RIO) said yesterday.
“Over the remainder of 2012, iron-ore prices are forecast to ease as production increases from new projects in Australia and growth in Asian steel production weakens,” the Canberra- based bureau said. “Further price decreases are expected to be limited by an expected reduction in exports from India.”
Shares in Melbourne-based BHP dropped for a second day, losing 1.7 percent to A$34.70 in Sydney. Rio Tinto, the second- largest iron-ore exporter, dropped 0.4 percent to A$65.34. Vale, the biggest shipper, fell 0.8 percent yesterday…”
Comments »Oil Rebounds From a Two Day Sell Off
This is the Reason Why Gasoline is So Expensive
Report: BHP Issues a Warning on China
Oil Takes a Break Falling Nearly 1% Overnight
“Oil dropped from the highest price in almost three weeks in New York on signs U.S. crude supply is rising and speculation that Saudi Arabia may boost output.
Futures fell as much as 0.9 percent, their first decline in three days. A government report tomorrow may show that U.S. stockpiles rose to the highest level in six months last week, according to a Bloomberg News survey. Saudi Arabia’s cabinet will work with crude consumers and producers to restore “fair” prices, according to the state news agency. Prices may be boosted as much as 30 percent by a European embargo on Iranian oil to take effect in July, saidChristine Lagarde, managing director of the International Monetary Fund.
“The market is currently well-supplied with oil but supply disruptions and looming supply shortage from Iran is keeping uncertainty high,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG (RBI) in Vienna who predicts U.S. futures will average $104 this year. “Without an intensifying Iran conflict, further price gains aren’t justified.”
Comments »Saudi Arabia Moves to Calm Oil Market
By Javier Blas in London
Saudi Arabia is taking steps to cool the overheating global energy market, boosting its exports to the US and re-opening old oilfields to expand production, as the world’s largest oil producer tries to prevent damage to the global economic recovery.
The Saudi cabinet on Monday said the kingdom would work “individually” and with others for the “return [of] oil prices to fair levels”. Riyadh recently said it aimed to keep oil prices at $100.
Read the rest here.
Comments »Strategic Petroleum Reserve to the Rescue?
Gold: $1,525 revisitable?
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Comments »Since October, it has been nothing but up for the U.S. stock market, an uptrend that’s been especially unrelenting over the past 3 months. But while this rally has put a lot of money into people’s pockets, it has also served as a painful, relative reminder of how poorly gold has done at the same time.
But if you are thinking gold’s $250 giveback in the past 7 months is enough of a haircut to revisit the yellow metal, Rich Ilcyzsyzn, Founder of iiTrader.com would disagree.
“If we close below $1600 you can probably bank on $1525,” Ilcyzsyzn says, adding that, down there, he would “probably start to get a little bit long.”
As he sees it, the trouble really picked up with Bernanke. “The verbage that he said (a couple weeks ago) that I keyed off of is that he’s gonna keep rates low through 2013-ish,” says Ilczyszyn, adding, “we had all been playing 2014.” It was then, when gold had a chance to break $1800, that it faltered.
Ilczyszyn is also expecting volatility to stick around, arguing that $100 swings will be the norm and not the exception. “This is how the market is going to move from now on. We have such a high price, $100 is going to be the normal.”
Fukashima disaster 1 year later: uranium demand mostly unchanged
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Comments »After a tsunami caused an accident at a nuclear plant in Fukishima, Japan last year, there was a lot of discussion regarding the future of nuclear power in the world.
Germany, for example, planned a shutdown of all its reactors by 2022. (Whether this was a ploy by the Merkel government to garner populist support, we will never know, but in a time of austerity, mothballing 17% of your energy source is a pretty expensive). Germany accounts for only around 5% of total global nuclear generation, meaning that even if it goes through with its plans, it will not have much effect on the nuclear power industry.
Nevertheless, the anti-nuclear talk brought a lot of discussion regarding the future of nuclear power in the world, and a sharp drop in share prices for uranium mining companies.
One year after Fukushima, not much has changed in the global nuclear industry. We can see the minor effect the accident actually had on the existing, planned and proposed nuclear reactors around the world…
The number of total reactors in operations and in the development chain has not changed; 987 before the incident and 987 presently. This means that the long term demand for uranium has not diminished since last year, although short-term demand may have been affected by the minor decrease in reactors currently operating. Despite supply questions, the price of spot uranium has decreased by approximately 20 per cent since the Fukushima accident…
Oil Falls Slightly; BofA Increases 2012 Forecasts
Understanding the New Price of Oil
via Gregor.us
In the Spring of 2011, when Libyan oil production — over 1 million barrels a day (mpd) — was suddenly taken offline, the world received its first real-time test of the global pricing system for oil since the crash lows of 2009.
Oil prices, already at the $85 level for WTIC, bolted above $100, and eventually hit a high near $115 over the following two months.
More importantly, however, is that — save for a brief eight week period in the autumn — oil prices have stubbornly remained over the $85 pre-Libya level ever since. Even as the debt crisis in Europe has flared.
As usual, the mainstream view on the world’s ability to make up for the loss has been wrong. How could the removal of “only” 1.3% of total global production affect the oil price in any prolonged way?, was the universal view of “experts.”
Answering that question requires that we modernize, effectively, our understanding of how oil’s numerous price discovery mechanisms now operate. The past decade has seen a number of enormous shifts, not only in supply and demand, but in market perceptions about spare capacity. All these were very much at play last year.
And, they are at play right now as oil prices rise once again as the global economy tries to strengthen.
Read the rest here.
Comments »Wrong vs Early – Contrarians Bet on Natural Gas
Jeffrey Gundlach was buying gold with his own money in the early part of the aughts decade and he was “wrong” for five years. To hear him tell the story, he was happy to be wrong because it took him time to accumulate the position. And then when he became “right”, he became really right, all at once.
I bring this up because Gundlach is now talking about accumulating natural gas every now and again. He is emphatic about pointing out that he not buying in size or aggressively. Further, he is up front about the fact that he’ll be “wrong” for awhile before he is right.
I see the same thing in natural gas that he does – the historic discount of nat gas in relation to crude oil is an absurdity – an absurdity which can run on for a long time, but sooner or later God’ll strike it down. Yes, I was listening to Johnny Cash earlier today.
Read the rest here.
Comments »‘Drill Baby Drill’ Won’t Help the GOP Election or Wishful Thinking of $2.50 Gasoline
Yesterday’s Oil Spike is No Doubt the Result of an 8 to 6 Israeli Vote to Attack Iran
Oil Shoots Up $2 After Announcing the Release of The Strategic Oil Reserve
The media and gas prices: 2008 vs 2012
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Comments »It happens every spring. The players take their positions for the big game. The fans start screaming as the huge numbers on the board go up and up and up.
No, it’s not college basketball. It’s a madness of a different kind, as anchors and reporters manipulate coverage of one of the necessities of American life for maximum political gain.
It would be humorous if it weren’t so insane. But for the mainstream media it’s become almost a game. They scored points blaming Bush and now rack them up defending Obama. Nowhere is that more apparent than with gas prices.
So here we are again, with prices shooting skyward and a president and an energy secretary who have both previously said they supported high gas prices.
Stephen Chu, you’ll recall, said, “somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” according to The Wall Street Journal. Now he’s backed off that position, at least “officially.” And then it was President Obama telling CNBC’s John Harwood “I think that I would have preferred a gradual adjustment” to gas prices.
So it’s not like the American public should feel confident that the folks running things “feel your pain,” as President Clinton used to say. And it’s not like the media deliver even vaguely consistent reporting.
Back in May, 2008, in the week before gas prices spiked to $3.80, the major networks did 57 separate stories and briefs on the issue. In 2012, under the same circumstances, the networks did just 26 stories – less than half.
But with a Republican president in the White House, ABC, CBS and NBC delivered stories on driving cars with vegetable oil instead of gas, so-called “hypermiling” (an ioditic way to maximize mileage by coasting while in traffic), and a gas giveaway to those who prayed at the pump.
Every story was hyped.
The gallons and gallons of coverage were laced with numerous customer complaints saying, with apologies to Jimmy McMillan, the gas price is too damn high.
On May 15, 2008, CBS “Evening News” did an “Eye on the Road” report that gas prices were forcing the city of Louisville to make cuts and “half the city’s public pools will be padlocked this summer leaving these little girls high and dry.” ABC News financial correspondent Bianna Golodryga even included a clip in her story from a protest song that complained about high gas prices. “♪♫ ♪ Price gouging, so we’re shouting, who’s jacking up the cost of fuel ♪♫ ♪,” sang Jay Weinberg in the video, who claimed to be fighting the cost of gas with his songs and Web site.
But the tune they’re singing this time around is definitely not the same in 2012.
Not only are the stories fewer, but now journalists are defending the president.
CBS’s Charlie Rose told viewers on March 13, 2012, that, “the president has a point, doesn’t he? There’s little that he can do necessarily to – in the short term – to affect gas prices, and gas prices hurts his political chances.” His colleague Bob Schieffer agreed, saying “Well, that’s right on all counts, Charlie.”
ABC’s “World News with Dianne Sawyer” ran an upbeat economic story comparing the economy to the patient in the game of “Operation.” Dan Harris mentioned how gas prices had held back the recovery before, but, added, “tonight, there is true optimism that our patient is healing.”
It’s not just the networks either.
Naturally, high gas prices always draw the left out to admit that they like it this way. Howard Gleckman, a resident fellow at The Urban-Brookings Tax Policy Center, wrote a piece for the Christian Science Monitor headlined: “Gas prices should be higher.” In it, he argued “we ought to be raising taxes on fossil fuels. A lot.”
He also cited others who felt the same way, including former Bush aide, now working as a Romney adviser, Gregory Mankiw, who recently wrote that “a tax exceeding $2 a gallon makes sense.” It’s now just 18.4 cents.
Politico’s Alex Burns went positively apoplectic about voters who might be upset with Obama’s anti-energy policies, calling them “Forrest Gump-like.” He added that, “to reassess a president’s performance in the context of a short-term increase in gas prices is more of a tantrum-like response to a new feeling of discomfort over which the president has relatively little control.”
That’s the true media spin of 2012 – high gas prices aren’t the president’s fault. Even though The Washington Post recently noted that candidate Obama was happy to blame then-President Bush for high gas prices. “And during the 2008 presidential race, Barack Obama said in a campaign speech that ‘here in Ohio, you’re paying nearly $3.70 a gallon for gas — 21/2 times what it cost when President Bush took office.’”
What all of this spin ignores is what Newt Gingrich tried to teach the media morons – that the president sets a tone and the markets follow.
If Obama pushed for more drilling, more exploration, opened the ANWR, approved the Keystone pipeline and more, he’d force speculators to react. Oil prices might not plummet, but the the market would look a lot different.
But the Obama administration is pro-high prices, pro-gas taxes, against new drilling, against the pipeline and more. And it’s about time for the media to Tell The Truth why you are paying nearly $4 a gallon. It’s time to end the madness.
