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Archive for the ‘Oil’ Category

Oil Approaching $100 per Barrel

Posted by Steve Markowitz on August 23, 2012

The price of oil is skyrocketing, approaching $100 per barrel as shown in the graph.  The reason for the increase is not only due to supply and demand.  This increase is mainly due to the market’s belief that the Federal Reserve (Fed) will announce yet another round of Quantitative Easing (QE).  QE, where the Fed purchases Treasury bonds, is the monetizing of the Country’s debt.  History has shown that QE always leads to inflation and sometimes hyper inflation.

In advance the next round of QE markets are running up the price of many commodities including oil.  This will increase the cost of many goods, including food due to increasing fertilizer costs.  The effect on third world countries could be devastating.

As the Fed continues to intervene and manipulated markets there will be many unforeseen consequences.  Often the negative consequences have and will continue to outstrip the supposed benefits of these actions.  Yet the Fed and the US government continued down failed paths.

Posted in Federal Reserve, Oil | Tagged: , , , , | Leave a Comment »

U.S. Oil Production Beginning to Boom

Posted by Steve Markowitz on June 27, 2012

Since the late 1960s the mantra from politicians government bureaucrats, particularly those on the Left, has been that the world with the United States in particular is running out of fossil fuels.  This claim, like so many other dire warnings of Progressives, was dead wrong.

One of the earlier manifestations of the United States depleted energy claims came from Pres. Jimmy Carter in the 1970s.  Carter claimed that the United States would run out of natural gas in 10 years.  Approximately 35 years later not only has the United States not run out of the gas, but we are in the midst of a natural gas glut with prices dropping significantly.

Another of Carter’s infamous calls was for the creation of the US Department of Energy created specifically to lessen America’s dependence on foreign oil, specifically oil from the Middle East.  When the Department of Energy was created, the United States imported less than 35% of its oil annually.  Three decades later the US imported over 60% of its oil per year.  Along the way, Department of Energy wasted tens of billions of dollars and is larger today than ever.

Now, the US is turning the corner on its reliance on imported oil.  This has is not occurred due to any action of the Department of Energy, but instead came from advancing technologies that includes fracking, which has unlocked huge reserves of oil and natural gas.  For example, these newer technologies have turned North Dakota into a major oil producer, now surpassing Alaska.

The Wall Street Journal published an article about America’s resurgent position in world energy production that reviews the following:

  • America’s reliance on Middle Eastern oil will be cut in half by 2020 and may completely end by 2035.
  • By the end of this decade half of America’s crude oil needs will be produced in the United States with over 80% coming from the side of the Atlantic.  Canada alone has the world’s third largest proven oil reserves.  Money spent within the Hemisphere is better for America’s security and economy.
  • America currently imports 4 million barrels of oil a day from the Middle East.  That amount will decrease to about 2.5 million barrels by the end of the decade.
  • During 2011 the United States became a net exporter of refined energy products.  Experts predict this will continue for at least another 10 years.
  • Between October 2011 and March 2012, US oil production rose by 6% to more than 6 million barrels per day for the first time in 14 years.  This remarkable increase occurred after a nearly 40 year decline.

While advancing technologies played a large role in increasing America’s oil and gas production, the action of the free market also played a substantial role.  As energy prices skyrocketed in the late 1990s, liberal politicians screamed foul and attacked suppliers suggesting regulating profits to address increasing energy prices.  Such regulations would have been exactly the wrong approach and ultimately would have hurt consumers.  Instead, the increasing prices made Canada’s oil sands-reserves profitable with investment in extracting this oil skyrocketing.  In addition, worldwide investments in oil and gas exploration jumped due to the increase prices.  In North America, this investment surged to 48% of global oil investment to $320 billion, up from only 39% of the worldwide investment in 2003.  Similar examples can be shown in other Western Hemisphere countries including Brazil.

The increased energy prices that began in the late 1990s is beginning to cause production increases and lower energy prices.  Raymond James has recently forecasted 2013 crude prices at $65 per barrel, down from its current $83.  Lower demand only explains part of this decrease.  Increasing production is a significant issue.

Pres. Barack Obama and the radical environmentalists have thrown many roadblocks in the way of developing America’s vast energy reserves.  A recent example is Obama’s decision to shelve the Keystone XL pipeline that would have brought more Canadian oil to the United States.  These roadblocks were made to further Progressives’ goal of promoting green energy.  They have failed on two fronts.  First, solar and wind energy are not ready for prime time and will not be major sources of energy for years to come.  The President’s failure to promote green energy over fossil fuels again proves the futility of politicians’ attempts to manipulate markets.

Incredibly, President Obama recently attempted to claim responsibility for America’s fossil fuel boom stating: “We’ve added enough new oil and gas pipeline to encircle the Earth and then some.”  Now that’s chutzpah!

Posted in Energy, Oil | Tagged: , , , , , , , , , | Leave a Comment »

Huge Energy Find in Gulf of Mexico

Posted by Steve Markowitz on June 26, 2011

Earlier this month Exxon Corporation announced significant energy discoveries in the Gulf of Mexico.  Two involved natural gas discovered in 2009 and 2010, but withheld until a nearby third well was completed that has since proven to contain significant oil reserves.  Together finds include about 700 million barrels of oil equivalent, one of the larger energy finds in the Gulf during the past decade.  It is estimated that these fields could produce over 200,000 barrels of oil equivalent per day when fully operational.

The new Gulf finds, together with significant other gas and oil discoveries worldwide, raise interesting issues.  It is evident that the world is not running out of fossil fuels, as the doom and gloom folks on the Left predicated in the 1970’s.  Remember when President Jimmy Carter announced in the late 1970’s that the United States would run out of natural gas within a decade?  That’s as bad as any of the many Carter wrong calls.

Carter’s false predictions concerning world energy supplies are eerily similar to more modern predictions of immanent doom from manmade global warming.  Both were/are based on junk or flawed science.  Both were/are proffered to allow Progressives redistribute wealth on a worldwide basis, the primary goal of this philosophy.  Both damage humanity.

Posted in Energy, Oil | Tagged: , , , , , , , | Leave a Comment »

Obama Tells Brazil to Drill Baby Drill

Posted by Steve Markowitz on March 23, 2011

President Obama has become infamous for policies with disjointed strategic goals.  Such is the case with Obama’s energy polices, as exhibited in his recent sojourn to Brazil.

Let’s start with the President’s policy relating to drilling for oil in the United States.  We are currently in the seven-year of an offshore drilling ban for both coasts of the United States, the Alaska’s continental shelf and much of the Gulf of Mexico, with a near moratorium on all other areas.  Team Obama is also stalling plans for a new pipeline to deliver Canada’s tar sands oil to the U.S.  So what does the President tell the Brazilians during his visit?

We want to help you with the technology and support to develop these oil reserves safely.  And when you’re ready to start selling, we want to be one of your best customers.”

He also stated in a USA Today op-ed: “Brazil holds recently discovered oil reserves that could be far larger than ours.  And as we seek to increase secure-energy supplies, we look forward to developing a strategic energy partnership.”

It is not comprehendible why the President has stopped drilling in the U.S while promoting it in Brazil.  Does Obama believe that the environmental dangers are any less in Brazil?  Whatever happened to our global environment, as expounded by Progressives with Global Warming gig?  Alternative explanations to Obama’s disjointed policies are even scarier.

Adding an explanation mark to the President’s illogic on energy, Obama has in the past railed against tax breaks for U.S. oil companies.  At the same time, his Administration supports the U.S. Export-Import Bank’s lending of $2 billion to Brazil’s Petrobras for further oil exploration.  This boggles the mind.

The United States is quickly heading towards a major energy crisis.  With the developing countries increased thirst for oil and the Middle East unrest, as well as the Japanese nuke accident and we have the makings of a perfect storm.  Instead of addressing this crucial problem while there is time, Obama promotes windmills and solar power, technologies that are years, if not decades, from putting a dent in our requirements of fossil fuels.

When General Motors was ready to go under, Obama said that without a bailout our economy would have dire consequences.  When auto sales tanked, we were told that we needed Cash for Clunkers to save the economy.  When housing market continued in the doldrums last year, we consumer rebates were required to save that market.  And if economic Armageddon was not enough, unless we stopped burning carbon-based fuel, the oceans will melt and swallow up our coastal cities.

It is amazing that with the many hypothetical threats of economic challenges that President Obama has used to pursue his Progressive agenda, he ignores real problems that are here today, such as the energy crisis.  It seems that Barack Obama is destined to displace Jimmy Carter as the most inept president of modern times.

 

Posted in Energy, Oil | Tagged: , , , , , , | 2 Comments »

Confluence of Events put Pressure on Energy Prices and the U.S. Dollar

Posted by Steve Markowitz on March 14, 2011

Enduringsense.com is temporarily modifying its format while the editor recuperates from rib injuries.  Snippets of stories from various news sources will be included with a bit less commentary than usual due to typing challenges.  In addition, guests’ postings may be included.

The two articles are from disconnected parts of the world with both having implications on oil prices and the U.S. dollar’s value.

The first article was just reported by the Wall Street Journal involves yet another explosion at one of Japan’s nuclear plants damaged by the earthquake and Tsunami.  This tragedy continues to grow.  It will impact energy prices long into the future as the world becomes even more wary of the safety of nuclear power generation.  Given tight supplies, oil prices will likely rise in the coming months.

In addition, Japan has historically been a large purchaser of U.S. Treasury Bonds.  The huge cost of reconstruction for Japan will likely force it to stop buying U.S. Treasuries and to even sell dollars so it has funds for the reconstruction.  This will put pressure on the value of the U.S. dollar as demand for it drops.  In order to attract Treasury buyers, interest paid on them will have to rise causing many interest rates in the U.S. to increase.

In another article, startfor.com has reports that Saudi Arabian troops have entered Bahrain to help its Sunni government put down the protest by mainly its Shiite population.  This intervention is the result of the Saudi government attempting to stop Shiite Iran, its long-term enemy, from becoming more influential in the region.  In addition, the Saudi government fears similar protest from its own population.

It remains to be seen if the Saudi efforts are successful in putting down protest in Bahrain or if leads to even more problems from its own population.  In either case, the Saudis will likely need more funds to spread amongst its potentially restive population, leaving less for U.S. Treasury purchases.  In addition, this ongoing turmoil in the Middle East can only push oil prices higher.

Unforeseen events of huge magnitudes have occurred throughout history and the world always finds a way to work through them.  That said the world has placed itself in a more precarious economic position at this time because of the huge build up of sovereign debt.  Many countries have already spent their reserves and reached their credit limits. That leaves little wiggle room for these evolving tragedies that continue to unfold.


 

Posted in Nuclear Power, Oil, Sovereign Debt | Tagged: , , , , , , , , , , , , | Leave a Comment »

Protests in Saudi Arabia Begin; Potential for Oil Crisis Grows

Posted by Steve Markowitz on March 10, 2011

Stratfor.com has issued a “Red Alert” on Saudi Arabia reporting that police used gunfire and stun grenades against protesters in the Shiite-populated city of Qatif in its eastern oil region. In addition, a “Day of Rage” protests have been called for tomorrow on Facebook by some Saudi dissident groups.

It is too early to determine if Saudi Arabia is catching a bad case of the Tunisian/Egyptian flu or merely sneezing.  However the signs are very troubling.  With Saudi Arabia being America’s largest supplier of oil, should it fall into turmoil there is no telling how high oil prices will go.

For years the West including the United States have allowed the radical environmentalist and Global Warming zealots to run wild as if there were no consequences to their radical agendas.  That willful dumbness will no longer pass the smell test.  While there are environmental dangers that may occur from the use of fossil fuels, the results of $200 per barrow oil is real and here now!  Not only will economies head south in such an economic environment, but people in third world countries will starve with the cost of food skyrockets up.

America’s dependence on Middle East oil did not have to happen.  The environmental radicals who first stopped America from developing nuclear power and later shut down the Country’s oil and gas exportation caused this predicament.  They and their Progressive friends in Washington are responsible for the consequences of these irresponsible acts.

Now, we must react and take drastic corrective steps.  It takes five years or more to bring new nuke plants on line.  Fossil fuels are available in North America in shorter time periods and are therefore the only short to medium term solutions available to us.  Drill baby drill and now!

 

Posted in Middle East, Oil | Tagged: , , , , , , , , | Leave a Comment »

Middle East Turmoil Proves the Need “Drill Baby Drill”

Posted by Steve Markowitz on February 2, 2011

With the 24-hour news showing pictures of the Egyptian chaos continuously, many are focused on the lawlessness in that country.  Many are also concerned as to what form of government will emerge Egypt after the chaos subsides.  The outcome of these issues will have far-reaching effects on the Middle East and greater world.  This will play out in Egypt and the other countries that will be enveloped in similar situations with the Untied States being but a bystander.

The current Egyptian events again bring the forefront the issue of America’s dependence on oil from unstable regimes in the Middle East.  While Egypt is not an oil producer, the Suez Canal is important in the supply chain for oil.  In addition, the instability with other Middle Eastern countries increases the shipping risk at the chokepoint that is the Straits of Hormuz.

The danger of America’s oil dependence on risky sources should have been addressed years, if not decades ago. However, politicians, mainly on the Left, banded together with radical environmentalists to hinder America’s production in coal, oil and nuclear energy.

Besides the national security argument that clearly shows the insanity of America’s energy policy, there is also a strong economic argument.  Below are two charts; one showing crude oil spot prices and the other natural gas spot prices from January 4, 2010 to February 1, 2011.  While both commodities serve similar purposes, their pricing history during this period has been quite different.  Crude oil prices hit a record high for this period this week and will probably go higher . For the same period, natural gas prices have significantly decreased from its highs.  The reason for this discrepancy is simple: we are dependent on shaky governments for crude oil with natural gas coming from within United States.

If the United States was lacking in its own energy resources, our use of foreign oil could be justified.  However, given the massive amounts of energy resources in North America, there is no excuse for America to be dependent on foreign sources.  Environmentalists and their comrades have come up with all sorts of excuses and legal moves to stop America from developing its energy resources.  While some of their concerns are valid, there is no greater threat to the United States, both economically and for national security, than being dependent on energy supplies from countries that have disdain for our culture.

The United States must immediately embark on a strategic program towards real energy independence, a goal that is doable.  Unlike previous false efforts, this program must include a plan with mandated dates for achieving predetermined goals, such as amounts of new energy supplies discovered and putting  nuclear power plant production on the fast-track.  Such a program would be similar in size and scope of President Kennedy’s plan to put a man on the moon within the decade of the 1960s.  However, the program would require bold leadership, something our current President has shown little of during his first two years in office.  In fact, his tactical approach to energy issues has hamstrung energy development in United States, focusing excessively on green technologies that do little to cut America’s dependence on foreign energy and merely creates large for companies such as General Electric.

During the presidential campaign, Vice Presidential candidate Sarah Palin used the slogan; “drill, baby, drill”.  This should be a national rallying cry for what will should America’s most important program of this generation.

Posted in National Security, Oil | Tagged: , , , , , , , , , , , , , | Leave a Comment »

Castro Says “Drill Baby Drill”

Posted by Steve Markowitz on September 30, 2010

Showing arrogance and a lack of understanding of unintended consequences, the Obama Administration five months ago imposed a moratorium prohibiting deepwater drilling in American waters in the Gulf of Mexico.  Add to this a longstanding federal law banning drilling near the coast of Florida and we have effective stopped drilling for oil and gas in the southeastern waters off the United States.  Well, not exactly.  All we have done is stopped drilling in American-controlled territory.

Next year a Spanish company will begin drilling wells 50 miles from the Florida Keys in Cuban sovereign waters.  This will not only move jobs and money from the United States to Cuba, but also increase the risk of environmental damage in the future since Cuba and its partners do not have the safety rules or resources that drillers in the United States have access to.

It is ironic that our socialist brothers in Cuba need to teach us some rules about supply and demand.

Posted in Oil, Supply and Demand | Tagged: , , , , , , , , | Leave a Comment »

Judge Overrules Obama’s Drilling Moratorium

Posted by Steve Markowitz on June 22, 2010

The New York Times reported that U.S. Federal Judge Martin Feldman axed Obama’s six month ban on deepwater drilling in the Gulf of Mexico.  The Judged agreed with the plaintiffs who argued that the Obama Administration wrongfully concluded that one oil rig failure means others are also unsafe stating:

”The Deepwater Horizon oil spill is an unprecedented, sad, ugly and inhuman disaster.  What seems clear is that the federal government has been pressed by what happened on the Deepwater Horizon into an otherwise sweeping confirmation that all Gulf deepwater drilling activities put us all in a universal threat of irreparable harm.”

Our Founding Fathers understood the dangers of too much power being given to any branch of the government.  It was that foresight that allowed Judge Feldman to conclude that President Obama overstepped his authority when he issued the broad drilling moratorium.

Barack Obama, the purported expert on Constitutional Law, just got a lesson on the Constitution.

Posted in Constitution, Oil, Oil Spill, President Obama | Tagged: , , , , , , , , | 1 Comment »

Oil Spill: Obama Using the Review Mirror

Posted by Steve Markowitz on May 15, 2010

The response to the oil spill in the Gulf of Mexico has been textbook Obama.  Using rhetoric and blame the President has deflected from the real issues and solutions to a real problem.

In recent comments President Obama has called responses to the accident a “ridiculous spectacle”, referring mainly to the oil industry.  Then he went after the “cozy relationship” between the government and oil industry.  To add strength to his superfluous comments, Obama sand: “I will not tolerate any more finger-pointing or irresponsibility.  “This is a responsibility that all of us share.”

The first issue is to stop the leak.  All of the blame and butt covering will not aid in this need.

The motivations behind Obama’s rhetoric are political.  Ever since the President opened up additional offshore drilling the radical environmentalists, an important alley of the Democrat Party, have been furious.  The oil spill now allows them to claim their position correct and Obama’s wrong, a political problem for the President.  This is exemplified by Kieran Suckling, executive director of the Center for Blocking Biological Diversity, who indicated that the steps announced by President Obama and the Interior Department do not ensure the safety of offshore drilling.  Suckling stated:

Ken Salazar came into office announcing, ‘There is a new sheriff in town,’ and promised to reform the deeply corrupt Minerals Management Service.  He took action regarding personal, criminal actions, but did absolutely nothing to address the agency’s dangerous practice of rubber-stamping offshore oil-drilling permits.”

Obama’s offshore drilling decision made a few months ago was the correct one.  We need American oil to prosper, period.  However, that reality does not mitigate the current political problem for the President who is using scapegoating and deflection in response.  It is too bad that he does not have the fortitude to back his previous decision instead of blowing in the wind due to current political circumstances.

Drilling for oil in oceans is risky, but so is nearly all other usage of natural resources for man’s benefit.  A few decades ago the radical Left stopped America from adding nuclear energy capabilities in the name of saving the environment.  So we ended up with greater usage of oil and coal that increased more global warming, so they say.  Now that same group tells us that drilling for oil in the oceans needs to be stopped to save the environment.  Whatever hardships or unintended consequences result from this position are of no concern to them.

Mr. President, the blame you now focus on is looking at the issues from the rearview mirror.  First, focus on the immediate problems with the spill in the Gulf.  Then it will be time to take steps to prevent future spills.  Should you continue to find the need to look for scapegoats, keep in mind that you have been in office for over a year and it was under your leadership that the “cozy relationships” were allowed?  What did Harry Truman say as to where the buck tops?

Posted in Energy, Environmentalists, Oil, President Obama | Tagged: , , , , , , , , , , , , , , | Leave a Comment »