OPEC’s “Weaponized” Oil Prices

Posted: January 12, 2015 by ShortTimer in Economics, Energy, Middle East

Despite discussing the potential for a bust a couple days ago, I’m not worried about the sky falling yet:

If there ever was doubt about the strategy of the Organization of Petroleum Exporting Countries, its wealthiest members are putting that issue to rest.

Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won’t curb output to halt the biggest drop in crude since 2008. Qatar’s estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.

See, there’s also the fact that Russia was their primary target:

Vladimir Putin faces a catastrophic shortfall of at least $80bn (£51bn) in oil export revenue over the next year, after Opec kingpin Saudi Arabia signalled there will be no easing in the price war it has launched to recapture market share.

According to US Energy Information Administration (EIA) figures, oil and gas shipments accounted for 68pc of Russia’s total $527bn of gross exports in 2013, when Brent crude – comparable to Russian Urals – traded at an average of $108 per barrel.

US frackers are the secondary target.

And it will take a while to crush them all.

breakeven oil prices bus insdr

Those are older breakeven prices.  There are other figures that say numbers are closer to $50 for Bakken and Permian, and as low as $28 for Marcellus.  Technology has gotten better, American ingenuity has made this development possible (in spite of the current administration), and provided investors don’t totally lose their minds, it would be possible to ease off production while letting the Saudis basically support broader US economic interests due to reduced energy costs.

OPEC thought it had a monopoly.  It didn’t, and now it’s cutting prices to force out the upstart.  Except the upstart doesn’t have to stop, it can just hold those resources as a threat that will ultimately drive the price down for everyone.

I think the only way there will be a true bust is if the US government gets involved.  If it leaves US energy interests alone, they’ll reallocate capital for a while (there will be regional busts where rigs are mothballed), but those rigs will go back active any time the Saudis start getting sad that they can’t buy a new Rolls every month.  They’ll also be there to come back online if the Saudi’s export of Wahhabism that eventually spawned ISIS comes back to bite them in the ass, as the world will look for a more reliable source of oil.

FOX 10 Phoenix, from Legal Insurrection & Jawa Report:

After shooting an unarmed man in a use of force scenario:

“It’s hard to make that call.  It shakes you up.”

Learning has occurred.  Hopefully it will stick with him.

Hopefully just a leveling off and not a bust, but rigs are shutting down and going idle:

After six straight months of plunging oil prices, U.S. shale drillers have sent the clearest signal to date that they’re retreating.

Thirty-five horizontal rigs, their weapon of choice for reaching oil deposits in tight-rock formations such as North Dakota’s Bakken shale and Texas’s Permian Basin, were idled last week alone. It was the biggest single-week drop since a drilling boom touched off six years ago that propelled domestic production to the highest level in three decades and eventually helped trigger the global price war that the U.S. and OPEC find themselves in today.

The decline, the largest in a decade and the seventh in a row, threatens to halt U.S. oil production growth by slowing drilling in tight-oil plays that make up virtually all of the nation’s new output. Bending to the pressure of crude below $50 a barrel, the country’s explorers idled the most rigs last quarter since 2009.

“The message from the market, that drillers need to start changing their behavior, has now been received by the big boys in the shale plays,” Harold York, vice president of integrated energy at consulting company Wood Mackenzie Ltd., said yesterday by telephone from New York. “The tight-oil players have received the message, and they’re taking action.”

Horizontal rigs made up more than half of this week’s decline in the U.S. oil count, which fell by 61 to 1,421, Baker Hughes Inc. (BHI) said on its website yesterday. The 61-rig drop was the largest since February 1991, which also followed a tumble in prices before the start of the Persian Gulf War.

This is quite potentially the oil boom starting to go bust.  The Saudis have this as their secondary objective (behind harming Russian economic interests), and the EPA has shutting down oil rigs as their primary objective.

Gas prices are going to go back up, and idiot Republicans are arguing over how best to sneak in a gas tax and justify acting like Democrats.

It would be really, really nice if the newly elected Republicans would actually listen to voters and stop raising taxes and reduce spending.  They control both houses but are acting like they can’t get anything done – and in this case, acting like they can’t resist the “THE TIME IS NOW” Democrat argument – an argument that is meant to shut up debate.  It’s like the Republicans have forgotten they’re in charge and that they don’t have to listen to Democrat orders to have a tax collector at every gas pump taking from the citizen’s wallet.

“Unless oil prices recover, absolutely, this is the end of the drilling boom,” James Williams, president of energy consulting company WTRG Economics in London, Arkansas, said by telephone yesterday. “The total rig count should hit 1,000 by March or April, and oil production growth should be flat or declining by mid-year.”

Now, as a counterpoint, this might not actually be a bust.  It can just be a leveling-off period as the market adjusts.  A lot of the US oil resources being exploited now are being produced at lower costs than before.  Plus with the infrastructure built and the technology developed, they’re more profitable and more efficient than before.

The problem is if government interferes… as usual.  One of the reasons we have horizontal drilling for oil to begin with is because offshore rigs are driven to deep-sea locations that are prohibitively expensive, and as shown by the BP Deepwater Horizon accident, are more difficult and dangerous to operate.  Another is the limited exploration for oil on federal lands, which take up huge percentages of western states where oil reserves are located.

Now government’s looking to raise gas taxes.  The Republicans are telling us they’ll do us a favor by only raising it 12c to head the Democrats off… which is like saying “I’ll rob you for just your wallet so the carjacker won’t steal it, too.”

The bigger problem with this yet is the inability for Republicans to see that the increased growth in the last few months has been as a direct result of the fall of energy prices.  The Saudis being scared of competition (and targeting Russia) has allowed American consumers and business some immediate surplus of cash and thus productivity.  That increase in productivity also leads to an increase in tax revenue by volume.

5% growth is orders of magnitude more productive for both citizenry and government than a 12c gas tax on $2.50 gasoline, because that 12c gas tax will also reduce overall growth.

Idiotic Republicans and the Idiotic Gas Tax Hike

Posted: January 9, 2015 by ShortTimer in Energy, Republican, Tax, taxes

This could easily be titled “why I’m not a Republican”, but there are plenty of reasons for that.  This is just a big, bold, in-your-face reminder from the Republicans that they are shortsighted, inept, and not listening at all.  We tell them we’re electing them to do what the Democrats will never do – we’re electing them to stop raising taxes, to use the funds they’re already taking from us at gunpoint wisely, and to stop spending.  But they won’t.

I heard this over the weekend while listening to the news on the radio:

Sen. John Thune (R-S.D.) signaled Sunday that Republicans might be open to negotiating increasing the gas tax in order to pay for the highway infrastructure spending bill that expires in May.

In an interview on “Fox News Sunday,” Thune said that while he is opposed to increasing the gas tax, lawmakers will need to “keep all options” available when they return to Washington this week.

“I don’t favor increasing any tax,” Thune said. “But I think we have to look at all options.”

Sen. Bob Corker (R-Tenn.) had proposed cutting other taxes while raising the gas tax user fee $0.12.

The Republicans were not voted in in 2014 to raise taxes.  The entire discussion, which I heard, basically turned into Republicans saying they want a 12¢ gas tax hike.

This kind of behavior from Republicans is what drives voters apoplectic.  We said no.  We said no again.  We said a thousand times no.

And they say “more taxes”… and then hide it behind linguistic tricks and excuses.  They say the Democrats will make them do it (which is absurd as the Republicans control both houses), so it’s better to do it their way – we’re getting it anyway, may as well just boil that frog rather than toss it in the pot right away.

And now there are even more Republicans saying it:

Record-low gas prices across the U.S. have given rise to fresh talk in Washington of raising the federal gas tax for the first time in over 20 years, with leading Republicans now saying a hike must not be ruled out.

The GOP has long resisted calls from business leaders and others to boost the 18.4 cent-per-gallon tax as a way to pay for upgrades to the nation’s crumbling roads and bridges.

Yet in recent days, senior Senate Republicans have said they want to keep options open and that “nothing is off the table” when weighing the best mechanisms to pay to finance infrastructure projects.

“I just think that option is there, it’s clearly one of the options,” said Sen. Inhofe (R-Okla.), new chairman of the Senate Committee on Environment and Public Works.

Senate Finance Chairman Orrin Hatch (R-Utah) and Sen. John Thune (R-S.D.), the third-ranking Senate Republican, also said they were open to the possibility of raising the tax.

Democratic leaders in both chambers of Congress, meanwhile, declared this week that “now is the time” for an increase.

That Democrat argument “NOW IS THE TIME” is an imperative designed to shut off discussion, to end conversation, and to short-circuit reason by demanding an immediate response.  And Republicans, who now control the House and Senate, are willing to go along with it all because so many of them have the same problem Democrats do – they can’t stop spending taxpayer money.

They just refuse to stop taking money from your wallet to throw away.

The shortsightedness of this is astonishingly offensive.  Gas prices right now are low because Saudi Arabia is dumping oil on the market to hurt both Russian economic interests and to break oil & gas frackers in the United States.  The only reason gasoline is “cheap” right now is because of an artificial bubble engineered by the Saudis, and the only reason gas was on the decline before was because of frackers in the US being able to exploit resources that were opened to them 10 years ago.

Furthermore, the assertion that gas prices are “record low” is absurd.  Gas prices now are close to what gas prices were when George W. Bush was in office.  There is no “near-record” low, gas has just returned to where it would be if Obama weren’t actively trying to make energy prices “necessarily skyrocket”.  Remember, Obama’s EPA is fining oil companies for failing to adhere to a mandate to use a fuel additive that does not exist.

The Republicans who are saying they should raise the gas taxes on you the citizen because they think you won’t notice, and because it’s “cheap” right now are the kind of people I’d love to go camping with.  I’d love to get up early in the morning in the mountains where it’s cold, climb out of the tent and discuss policy with them.  I’d love to explain to them that by the same reasoning as gas taxes, that during the day since it’s “record high” temperatures, they should just get rid of their tents and blankets and sleeping bags.  Then when evening comes they can suffer from the same short-sighted asinine reasoning that’s going to be stabbing citizens in their wallets… they can freeze without cold weather gear because of believing “record high temperatures” at noon would continue and that no one would feel the loss of some material wealth during more pleasant times.

Not really much of a surprise:

LOS ANGELES (CBSLA.com) — The Department of Motor Vehicles expects big crowds on Friday, the first day undocumented immigrants in California can officially apply for a driver’s license.

The DMV has hired more than 1,000 workers and opened four new centers to handle the rush.

The new law allows undocumented immigrants to apply without the fear of being deported, which has long been a concern in the community.

They’re not “undocumented”, they’re illegal.  The “community” is a community of criminals who’ve broken the law and are now being aided by the state of California.

The whole state is in violation of federal immigration statutes 8 USC 1327 and 8 USC 1324.

Today I heard the argument repeated (Bob Beckel on The Five) that illegals should be granted driver’s licenses, because they’re driving illegally anyway, and that way if they just get driver’s licenses, supposedly they’ll get insurance, too.  Thus if you’re a legal US resident or US citizen and you get hit by an illegal alien in traffic, rather than have them be uninsured and have to deal with an uninsured illegal alien driver, they’ll be insured and that will make your life better.

The horrible fallacy in that is that if the law is enforced and they are deported, they won’t be there to hit you with their car in the first place.

It’s also one more trick to allow illegals to vote in US elections by giving them state-issued ID cards.  Of course, places they don’t check ID, they vote already anyway…

Merry Patrick Swayze Christmas

Posted: December 25, 2014 by ShortTimer in Humor, Music

It is a standard.

We’ve heard about the UN Arms Trade Treaty for months (if not years) by now, and it’s almost a given that it will never be ratified by the US Senate, because it includes plenty of rules that are anathema to the Second Amendment.  But it was passed through the UN and enacts at Christmas:

The U.N. Arms Trade Treaty is set to take effect on Christmas Eve. Though the United States delegation to the U.N. has supported the treaty, it has very little chance of being ratified by two-thirds of the Senate. But there is still reason for concern, said Catherine Mortensen, spokeswoman for the National Rifle Association.

“We are worried about an end-run around Congress,”  Mortensen told TheBlaze. “Barack Obama or a future anti-gun president could use ATT and international norms compliance to rationalize enacting gun control policies through executive actions, especially in the import and export realms.”

“Even now, with an existing appropriations rider prohibiting action to implement the treaty unless it is approved by Congress, administration officials are publicly professing support for international efforts to bring the treaty into effect. That’s outrageous,” she added.

The U.N. General Assembly adopted the treaty in April 2013 with a vote of 154 to 3. The State Department points out that only Iran, Syria and North Korea opposed it.

That thing about Iran, Syria, and North Korea opposing it is used by the current administration to portray those who object to it as extreme.  Except there are plenty of nations who are “for” it who later didn’t sign it, didn’t ratify it, or will ignore it just like other treaties.

The better news on the treaty is more recent, via CNS News:

(CNSNews.com) – As United Nations officials welcome the Christmas Eve entry into force of the U.N. Arms Trade Treaty (ATT), its progress in the U.S. remains hampered by significant Senate opposition and funding prohibitions included in appropriations legislation.

Most recently, the omnibus government funding bill passed by the Congress earlier this month contained new prohibitions on the administration using any funds to implement the conventional arms treaty. Under U.N. procedures the U.S. would be liable for 22 percent of the budget for the ATT secretariat, the body that will oversee its implementation.

It’s nice to know we’re at least not paying for it.

It’s especially nice since the UN’s attempts at gun control usually end up murdering lots of people.

And like was suspected about those who opposed the treaty – the question is who else didn’t sign or didn’t care – note the story says “among the non-signatories”, not “this is a comprehensive list of all the non-signatories”.

When the U.N. General Assembly adopted the ATT in April 2013 only three member-states voted against it: Iran, Syria and North Korea.

But the list of nations that have not signed the treaty is far longer, and includes some of the world’s more controversial regimes. Among the non-signatories are Russia (the world’s second biggest arms exporter, after the U.S.), China (the fifth biggest), Cuba, Ecuador, India, Iran, Iraq, Nicaragua, North Korea, Pakistan, Qatar, Saudi Arabia, Syria, Venezuela and Vietnam.

The effect of active and powerful restriction on small arms trade could mean major problems for recreational shooters in any free state as imported ammunition tends to be cheaper than domestic.  Banning importation of cheap foreign ammunition through auspices of the ATT would be a way to impose a financial burden and barrier to entry into recreational shooting, and thus to harm gun culture.  For those who believe in citizen disarmament, it’s a feature.

Meanwhile, the EPA found itself blocked from banning lead ammunition.  Again, lead ammo is cheaper, and with regards to hunting ammunition, it performs very well and replacement ammunition is often very expensive.

A federal appeals court denied a lawsuit Tuesday by environmental groups that the EPA must use the Toxic Substances Control Act regulate lead used in shells and cartridges.

“We agree with EPA that it lacks statutory authority to regulate the type of spent bullets and shot identified in the environmental groups’ petition,” Judge David Tatel wrote for the U.S. Court of Appeals for the District of Columbia Circuit.

Note who’s suing and how.  Environmental groups are suing the EPA to act (often environmental groups getting money from the EPA or other part of govt).  This is something the environmental movement has done for quite a while, and often hand-in-hand with the EPA.  They sue the EPA for the new rule they want, the EPA settles with the group, or gets a judge to rule in favor of the new regulation, and the EPA can just go out and make it happen.

And finally, the Obama amnesty was ruled an overreach by a federal judge in PA.  I’ve been writing about how Obama will push for amnesty for illegal aliens for a long time, and since he just up and did it with his “executive actions”, that’s about when I stopped posting so much.  Doesn’t feel critical to write about this stuff when it’s all over the news everywhere.  If you’ve been reading here, or you’re remotely paying attention, you’ve seen it, heard it, and you’re mad about it.  I yelled “fire!” for a long time, and now there’s a massive conflagration.

>Lame Duck "Immigration Reform" - Amnesty

There’s only so many times I could post that pic from The People’s Cube.  And then he just did it.

Except that judge in Western Pennsylvania has said that he can’t do it:

A federal judge Tuesday ruled parts of President Obama’s deportation amnesty to be unconstitutional, with a scathing memo dismantling the White House’s legal reasoning and arguing that Mr. Obama tried to steal Congress’ lawmaking powers.

The ruling doesn’t invalidate the policy immediately because it was part of a case over a single illegal immigrant’s deportation, but it could serve as a road map for other federal judges who are considering direct challenges to the president’s policy.

Judge Arthur J. Schwab, sitting in the Western District of Pennsylvania, said Mr. Obama has some discretion in how to enforce laws, but by setting out a comprehensive system to grant tentative legal status to as many as 5 million illegal immigrants, the president has strayed into trying to write the laws, which is a power reserved for Congress.

Part of the issue was also that the method by which Obama did it was through “prosecutorial discretion”.  That’s supposed to mean that an individual prosecutor can look at an individual case and choose whether or not to go forward with charges.  It does not mean that 5-10 million crimes can simply be ignored and that an entire statute can be mandated to be ignored by the executive branch.

“President Obama’s unilateral legislative action violates the separation of powers provided for in the United States Constitution as well as the Take Care Clause, and therefore is unconstitutional,” Judge Schwab wrote.

Immigrant rights advocates said the ruling was a shocking overstep of the court’s authority. Indeed, the Obama administration has argued in federal court in Washington that judges have no power to review the president’s decision-making.

Illegal alien supporters, not “immigrant rights advocates”.  Every legal immigrant who sees 5-10 million people cutting in line is apoplectic over this.

The White House defends the policy as a reasonable use of Mr. Obama’s powers to set priorities for enforcing laws, and to stop the breakup of families because of deportation.

Meanwhile, there are millions of US citizens in prisons and jails for various reasons whose families are broken up.  There are millions of families broken up by government policies that favor broken homes as well.  No tears are shed for them, no hearts bleed for them.

Joyce R. Branda, the acting assistant attorney general who is leading the case, argued that Congress has provided too little money and the administration can deport fewer than 400,000 immigrants a year out of the total population of more than 11 million.

Ms. Branda said given that, it makes sense for Mr. Obama to set priorities, including proactively telling millions of illegal immigrants that they are in no danger of being kicked out. That policy allows immigration agents to focus on the other illegal immigrants whom the president deems serious cases, or on those crossing the border this year and beyond.

When Obama’s DACA amnesty crap started, there were rallies of illegal aliens in major cities.  Immigration officials could drive there with buses and start loading them up.

When the surge of illegal alien minors happened over this last year – because of Obama’s pro-illegal alien policies – immigration officials were driving buses into major cities and dropping off illegals downtown.  Those same illegals could’ve been handed back to the nation that facilitated their passage, but they weren’t.  They were dropped off with “walking papers” for court dates they would never attend, and told they wouldn’t be deported because “families”.

Branda is a lying shill.  In the years of the Obama administration, we’ve seen ICE agents called terrorists by the president, and ICE agents sue to be able to do their jobs because they’re told to break the law.

Obama’s banking on the idea that no one will ever do away with his illegal dictatorial unilateral executive amnesty.  The idea is that it would be politically horrible to “tear apart immigrant families”… which is sort of like waking up to find a family of criminals tearing open your Christmas presents and then them screaming how horrible it would be if you took your children’s presents that the illegals stole out of their children’s hands, and if you kicked them out of your house since it’s cold outside, or had them all arrested for breaking and entering.

To the mush-brained, it makes you seem heartless, but they’re just criminal invaders, thieves and criminal squatters in your house.

And the worst part is that all they would’ve had to do was ask if they wanted to come in.  America is not uninviting.

So anyway, Merry Christmas.  Despite all the lumps of coal we’ve gotten this year (including a crapton of new regulations for the new year we don’t know about), at least there are a few positives.