Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Free Market

Latest Drop in Oil Prices Puts OPEC in a Bind

This article appeared online at TheNewAmerican.com on Wednesday, May 30, 2018:

Within minutes of comments made by Saudi Arabia’s oil minister on Friday, crude oil prices for present and future delivery dropped like a stone. By the end of trading on Tuesday, crude oil had lost more than six percent of its value, ending just above $65 a barrel, down from over $70.

What spooked the markets were these comments from energy minister Khalid Al-Falih, made during a panel discussion on energy on Friday:

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Merrill Lynch Sees “Risk” of $100 Oil in 2019, Thanks to Iran Sanctions

This article appeared online at TheNewAmerican.com on Friday, May 11, 2018: 

Francisco Blanch, a commodity expert at Bank of America’s Merrill Lynch, wrote Wednesday that his team of prognosticators “see a risk of $100 a barrel of oil next year,” adding that it could happen sooner: “We are concerned that these market dynamics could unfold over a shorter time-frame.”

Those “market dynamics” no doubt cause forecasters such as Blanch many sleepless nights, trying to sort them all out in time to write about them for his clients. First, of course, is President Trump’s cancelling of the Obama-era nuclear deal and promising not only to reapply the previous sanctions (which took one million barrels of oil off the world market every day) but to ramp them up.

Next is global economic growth, which is estimated to increase world demand for oil and its derivatives by at least 1.5 million bpd next year. Then there’s Venezuela, under the control of Marxist Nicolas Maduro, who has decimated his country’s oil production, with further reductions of 500,000 barrels a day likely next year.

Despite higher gas prices in the United States, the average increase in cost of a family’s summer vacation is estimated to be around $200, not likely to impact most Americans’ plans.

Next are the bottlenecks in the Permian Basin, where production has outstripped pipeline capacity, at least for the moment.

One market dynamic that might lead to less oil being used is

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Citigroup: U.S. Will Be World’s Largest Oil Exporter by Next Year

This article appeared online at TheNewAmerican.com on Wednesday, May 9, 2018: 

Citigroup announced last week that exports of crude and finished oil products from the United States would overtake Saudi Arabia’s by next year. Last week, the U.S. exported 8.3 million barrels per day (bpd) of crude and finished petroleum products. While Saudi Arabia exported 9.3 million bpd of crude and refined products in January, the kingdom plans to cut crude exports to under seven million bpd in May.

With the coming sanctions against Iran thanks to the president’s termination of the Iranian “nuclear deal” on Tuesday, up to another million bpd of crude could be removed from global supply, tilting further the advantage to U.S. producers.

Those sanctions set up the U.S. oil industry to continue to fill the vacuum just as quickly as it can find skilled roughnecks to put up idled rigs and complete wells that were drilled just waiting for an opportunity such as this. Those DUCs — drilled but uncompleted — wells number above 4,000 and are being brought online as quickly as possible. Labor and material bottlenecks are being resolved, and with oil in the high 60s and lifting costs in the low 30s, the boom in U.S. production will continue to set records. All at OPEC’s expense.

OPEC’s problems are largely self-inflicted.

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Job Market Remains Strong; Unemployment Rate at 50-year Low

This article appeared online at TheNewAmerican.com on Thursday, April 26, 2018:  

Unemployment claims for the week ending April 21 fell to new lows, according to the Department of Labor. On Thursday it reported that new claims fell to 209,000, far below forecasters’ expectations of 230,000. It also was the 24th week of jobless claims fewer than 250,000 and the 164th straight week of claims below 300,000.

Even more remarkable is that the last time jobless claims were this low was during the first term of President Richard Nixon, nearly 50 years ago, when the country’s labor force was just 153 million, compared to today’s work force of 162 million. Translation:

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IEA Declares OPEC Has Accomplished Its Mission: Oil Is Now “Balanced”

This article appeared online at TheNewAmerican.com on Monday, April 23, 2018:

“It’s not for us to declare on behalf of the Vienna agreement [the OPEC production-cut agreement in force since January 2017] that it is ‘mission accomplished’, but if our outlook is accurate, it certainly looks very much like it,” said the International Energy Agency (IEA) last week. Those production cuts, aided by the rolling disaster in Venezuela that continues to take crude oil production off the world market, have, according to the IEA, brought down the world’s crude oil stocks within shouting distance of OPEC’s goal: the five-year average of those stocks.

Compliance among members of the OPEC cartel and its friends (including Russia) has been extraordinarily high, with Saudi Arabia helping things along by cutting its own production far more deeply than the agreement called for.

U.S. production, estimated to approach 11 million barrels a day by the end of the year (twice what it was just seven years ago), has been unable to match the production cuts and worldwide demand, which has greatly surprised to the upside.

Add in concerns that on May 12 the president of the United States will decide

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The Economy is Booming. Why Should Anyone be Surprised?

This article was published by The McAlvany Intelligence Advisor on Friday, April 13, 2018:

For a small fee, anyone can download the Harvard Business School’s case study on Apple, Inc. In a nutshell, Apple began in April, 1976 with three employees, no customers, and no revenues. Today it has 123,000 employees, millions of customers, and revenues approaching a quarter of a trillion dollars.

This confounds Keynesians who believe, steadfastly and in the face of overwhelming evidence to the contrary, that it is consumers who drive the economy. On just about every business news show on evening television, one can hear something like “consumers, which are responsible for 70 percent of the economy,…” etc., etc. How do they explain the growth of Apple?

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New Weekly Unemployment Claims Remain Below 300,000, Longest Streak Since 1967

This article appeared online at TheNewAmerican.com on Thursday, April 12, 2018:

Unemployment claims fell last week to just 233,000, far below the historical average, cementing into place the longest streak below 300,000 jobless claims since 1967. A proxy for layoffs, those claims reflect not only an increasing reluctance on the part of employers to let their workers go, but an increasing need for them to bring more workers on in the face of an economic tsunami that’s just now starting to roll into the American economy.

This is just one of many indicators reflecting a growing economy, including an unemployment rate at 4.1 percent, the lowest level since 2000 (and expected to move much lower in the coming months) and employers adding to their payrolls for 90 straight months — the longest economic expansion in history.

Keynesian economists consider that consumers drive the economy, using their pay raises to drive spending on consumer goods and services. Common sense economics — aka Austrian School economics — claims that is putting the cart before the horse: It is capital investment that drives the economy, providing goods and services that consumers discover that they need and want and are willing to pay for.

The classic example is Apple’s iPhone, which

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Remington Arms Declares Bankruptcy, Will Continue Operating Under Chapter 11

This article appeared online at TheNewAmerican.com on Monday, March 26, 2018:

Remington Arms

Remington Arms

Remington Arms filed for bankruptcy protection under Chapter 11 in Delaware  on Sunday evening. Directors of the 200-year-old company — America’s oldest gun maker — threw in the towel: “Directors have determined that it is advisable and in the best interests of the Company that the Company file … a Voluntary Petition … for Chapter 11 [bankruptcy].”

Observers blamed the president and Adam Lanza for the filing. Remington’s sales of its iconic shotguns, rifles, and pistols were increasing during the 2016 presidential election as American gun owners, fearing that anti-gun Hillary Clinton would assume the presidency in November, went on a buying spree. When Donald Trump won, those gun buyers not only breathed a sigh of relief, they ended the spree, leaving gun shops with vast inventories and gun manufacturers such as Remington with falling sales and revenues.

Others blamed Adam Lanza for using one of Remington’s products, its Bushmaster AR-15, to kill 20 youngsters in Newtown, Connecticut, in December 2012. They note that the families of those victims filed a class-action wrongful-death lawsuit against Remington two years later, which lawsuit is presently before the Connecticut Supreme Court.

Those much more familiar with Remington’s recent history are blaming the company itself

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Saudi Arabia Once More Delays Plans to Sell Part of Its Oil Company

This article appeared online at TheNewAmerican.com on Tuesday, March 20, 2018: 

Coat of Arms of Saudi Arabia

Coat of Arms of Saudi Arabia

The chairman of Aramco, Saudi Arabia’s privately held oil producer, told avid listeners in Davos, Switzerland, in January that “we hope that 2018 will be the right time [to list shares of the company for sale], but ultimately we have to make sure the market is ready.”

There is increasing evidence that the market might never be ready.

When Saudi Arabia’s Crown Prince Mohammed bin Salman announced his plans in January 2016 for moving his country’s economy away from its dependence on oil (called Vision 2030), he guessed he could raise $100 billion from the sale of part of Aramco to help with the transition. He also felt that the sale of just five percent of the company would do the job nicely. In addition he thought that those shares might be offered as soon as 2017.

The year 2017 came and went, and Saudi Arabia’s oil minister Khalid Al-Falih said last week that the new deadline for the listing — in late 2018 — was now “artificial,” adding that the next target date is April 2019.

There are so many challenges facing the elites in Saudi Arabia that the deal might never take place.

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Hey, Prince! How Does it Feel to Have the Crude Oil Shoe on the Other Foot?

This article was published by The McAlvany Intelligence Advisor on Wednesday, March 21, 2018: 

English: Saudi Arabia

Saudi Arabia

Saudi Arabia’s Crown Prince Mohammed bin Salman is about to enjoy learning what the Old Testament teaches about the sins of his father:

The Lord is slow to anger and abounding in steadfast love, forgiving iniquity and transgression, but he will by no means clear the guilty, visiting the iniquity of the fathers on the children, to the third and the fourth generation.

In the 1970s, many of us still remember the pain and suffering that Saudi Arabia’s kings inflicted on the United States and its citizenry in retaliation for U.S. support of Israel: long lines at gas stations, alternate days to fill up, double nickel highway speeds, daylight “savings” time, and other punishments.

The prince, born in 1985, won’t remember those days, but his father, King Salman bin Abdulaziz Al Saud, most certainly does. And during his two-week sales tour of the United States, the prince is going to learn about justice delayed. He now needs the help of the United States to keep his sand castle from falling into the sea or disappearing into the Arabian desert.

Specifically, the prince has a dream – Vision 2030 – but

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Nearly 3,000 Venezuelans Leaving Their Country Every Day

This article appeared online at TheNewAmerican.com on Monday, March 19, 2018: 

English: Logo of the Norwegian Refugee Council

The increasing flood of Venezuelan refugees is putting so much pressure on neighboring countries that the Norwegian Refugee Council (NRC) is calling for help. More than four million people have left Marxist Nicolas Maduro’s socialist “paradise” in just the last four years, and the numbers are increasing. They are finding temporary refuge in Brazil, Colombia, Ecuador, Peru, Chile, Argentina, Mexico, Costa Rica, Panama, Aruba, and Spain; however, those countries are being pushed to their limits.

The NRC stated that the “international community … must step up efforts immediately to provide much-needed protection and humanitarian assistance … a comprehensive and rapid response to food, education, documentation and health needs [is] vital throughout the region … [we are] requesting an immediate $2.5 million … particularly on the border areas between Colombia and Venezuela.”

But, as the NRC itself admits,

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Crude Oil Prices Fall Below $60, Traders Expect $55 or Lower

This article appeared online at TheNewAmerican.com on Monday, February 12, 2018: 

With the price of crude oil for March delivery falling below $60 a barrel last week on the New York Mercantile Exchange (NYMEX), half of OPEC’s worst nightmare is taking place: Higher oil prices sought by the cartel are bringing on American production at a faster rate than ever before. The other half of the nightmare would be a slowdown in global demand for the stuff.

A sell-off was triggered by an announcement last week from the Energy Information Agency (EIA) that U.S. crude oil production exceeded 10 million barrels per day (bpd) last month — the first time since 1970 — and would continue to set records into 2018. In addition, U.S. oil rig count jumped by 26, the largest jump in a year.

Helping along was the

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Fracking Revolution Pushes U.S. Daily Crude Oil Production Over 10 Million Barrels

This article appeared online at TheNewAmerican.com on Friday, February 2, 2018:  

English: Logo of the U.S. Energy Information A...

November’s production of crude oil in the United States, according to the U.S. Energy Information Agency (EIA), not only exceeded October’s by four percent, but rose to a level not seen in nearly 50 years: 10 million barrels a day. The agency went even further: At this rate daily U.S. crude oil production will exceed that of both Russia and Saudi Arabia by the end of next year.

If not sooner. The EIA’s forecast is that crude oil production will grow by 10 percent this year, but that could turn out to be much too low. As Todd Staples, head of the Texas Oil & Gas Association, noted:

American crude oil [production] is a game-changer in international trade, global politics and domestic energy security. Crude oil imports are down 20 percent from 2006 and, today, we are competing with the Middle East in the export market.

 

These outcomes were unthinkable a decade ago.

Indeed. As recently as 2011 the United States was only producing about

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Tax-Reform Ripple Effect: Hundreds of Companies Recalibrating, Raising Employee Benefits, Investing in New Projects

This article appeared online at TheNewAmerican.com on Friday, January 26, 2018: 

Workers at Camp Construction, the construction giant headquartered in Houston with sites all across the southern United States, received a note along with their last paycheck. Signed by the company’s president, Roger Camp, it read:

Because of the reduction in corporate taxes we, as will all businesses, benefit from this tax cut. We believe that YOU are the reason for our success. And now that we will be giving less of our hard earned income to the federal government, we can share some of it with you.

 

Please look for a $500 tax cut bonus in your next payroll run.

There are now more than 240 companies who are doing the same for their employees. At current count this will brighten the paydays of more than three million workers.

And the ripple effect of the tax reform law is just starting to be felt.

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Why Would Anyone Move from California to Sheridan, Wyoming?

This article was published by The McAlvany Intelligence Advisor on Friday, January 26, 2018: 

Specifically, from Paso Robles, California? It’s a pretty town of 30,000 people located in San Luis County a few miles north of San Luis Obispo, whose full name is El Paso de Robles(“The pass of the oaks”). It’s known for its hot springs, its abundance of wineries, its production of olive oil, its almond orchards, and is the home of Weatherby, Inc., the maker of high-end rifles, shotguns, and ammunition.

Its climate varies little, allowing its residents to enjoy long, hot, dry summers, long-lasting autumns, and early springs, which also makes it perfect for growing grapes, olives, and almonds.

It’s expensive to live there, but, hey, it costs to live like this!

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High-end Gun Maker Quits California, Announces Move to Wyoming

This article appeared online at TheNewAmerican.com on Thursday, January 25, 2018: 

Adam Weatherby, grandson of the founder of Weatherby, Inc. and president of the high-end custom rifle and shotgun maker currently located in Paso Robles, California, made a big announcement on Tuesday in Las Vegas — the company is moving its operations to Wyoming:

We wanted a place where we could retain a great workforce, and where our employees could live an outdoor lifestyle.

 

We wanted to move to a state where we can grow into our brand. Wyoming means new opportunities.

Wyoming also means that it isn’t in California,

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U.S. Oil Production Will Soon Overtake Saudi Arabia’s

This article appeared online at TheNewAmerican.com on Monday, January 22, 2018:

Fatih Birol, head of the Paris-based International Energy Agency (IEA), told a congressional committee last week, “What we see is a result of the shale revolution [fracking]. The U.S. is becoming the undisputed leader of oil and gas production worldwide. [U.S.] oil production is growing very strongly and will continue to grow. We think that this growth is unprecedented [both in the] size of the growth and the pace of the growth.”

In 1973, Saudi Arabia punished U.S. citizens with an oil embargo in retaliation for the U.S. government’s support for Israel during the Yom Kippur War. It could do so because it held the biggest hammer: Saudi Arabia controlled the world’s largest reserves of crude oil and the kingdom. Within months, the price of oil quadrupled in the United States, resulting in shortages and rationing. Gas stations were closed, and when they reopened they were forced to restrict gasoline purchases to “odd” and “even” days depending upon their customers’ license plate numbers. The federal government imposed “double-nickel” (55 mph) speed limits on highways, and experimented with “daylight saving” time in order to reduce the impact of the embargo.

Those days are long gone and not likely ever to return. Saudi Arabia and its OPEC cartel are slowly being reduced to bit players in the global energy market. Saudi Crown Prince Mohammed bin Salman saw that coming more than two years ago when he announced

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Amazon Opens Its First “Just Walk Out” Store in Seattle

This article appeared online at TheNewAmerican.com on Monday, January 22, 2018: 

On Monday morning regular customers started shopping at Amazon’s no-lines walk-away store in Seattle. Some have said it feels like they’re shoplifting, until the bill shows up on their iPhone. Others feel like they’re just raiding the pantry, not worrying about price but just grabbing what they need.

Before Monday only Amazon employees could shop at the 1,800 square foot store on 7th Avenue — about the size of a 7-11 — using their experience to refine the software and hardware behind it. To get the technology right, which depends upon hundreds of hidden cameras in the ceiling trained on shoppers’ iPhones and the items on the shelves, it took four years before the store opened to the general public. For the moment, at least, those items are ordinary: groceries, sodas, ready-to-eat meals, potato chips, ketchup, toilet paper, toothpaste, and the like. But each item sports a dot similar to a barcode. When the item is moved into the customer’s bag, it moves it into his online shopping cart. When the customer leaves the store the software adds everything up, bills his account, and sends a receipt to his iPhone.

There are at least two things those new customers will notice:

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The Coming Avalanche of Repatriated Dollars

This article appeared online at TheNewAmerican.com on Friday, January 19, 2018: 

English: Historical GDP per capita for the Uni...

This is an old chart of US GDP. Get ready for the next leg up

On Thursday The New American speculated about the impact of Apple’s repatriation of its overseas profit hoard of some $250 billion and where Apple intends to invest some of it. It raised questions about the $2.5 trillion in profits that is still held overseas by American companies unwilling to subject those profits to the United States’ outrageously high income tax rates.

With Apple’s decision, and the repatriation tax rate of just 15.5 percent in the new tax law, some of those questions can be addressed.

First,

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Economy Beats Forecasters Again: Jobless Claims at 45-year Low

This article appeared online at TheNewAmerican.com on Friday, January 19, 2018: 

The seal of the United States Department of Labor

Economists polled by Reuters expected jobless claims filed during the week ending January 13 to be a little lower than the week before — 250,000 new claims compared to 261,000 new claims filed the first week in January. Once again, the economy surprised to the upside: Jobless claims fell to a 45-year low of 220,000. Any number below 300,000 in an economy as large as the United States’ reflects a healthy economy.

Excuses for the miss ranged from

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.