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: Energy

OPEC Close to Maxing Out

This article was published by The McAlvany Intelligence Advisor on Monday, July 16, 2018:

What’s becoming clearer all the time is that when OPEC agreed to reverse its oil production cut agreement back in June and add back a million barrels of oil a day to world supplies, it failed to consider the fact that many if not most of the cartel’s members were already close to being maxed out. Add to that various unexpected disruptions to supply, and the nakedness of OPEC has now been revealed for all the world to see.

It was Tuesday’s announcement by the Paris-based Energy Information Agency (IEA) that tore the cover off OPEC:

Keep reading…

EIA: U.S. Shortly to Become “the World’s Leading Producer of Crude Oil”

This article appeared online at TheNewAmerican.com on Wednesday, July 11, 2018:

The U.S. Energy Information Administration (EIA) proclaimed on Tuesday that, if its forecasts are correct, “the United States will average nearly 12 million barrels a day (mbd) … in 2019 … mak[ing] the U.S. the world’s leading producer of crude [oil].”

Those forecasts could understate the U.S. oil industry’s production, as it builds into its calculations the present bottlenecks of pipeline capacity, being experienced especially in the Permian Basin.

One month ago, IHS Markit, the global information marketplace, focused on what’s happening in the Permian Basin and concluded that, even with those bottlenecks currently slowing the flow of crude from wellheads to refineries along the Gulf Coast, it expects a “stunning” increase in production there between now and 2023. Total crude-oil production will nearly double over that time to 5.4 mbd once the 41,000 new wells and $308 billion in new investment have been completed. Said Daniel Yergin, IHS Markit’s vice chairman: “In the past 24 months, production from just this one region — the Permian — has grown far more than any other entire country in the world. Add in another 3 mbd by 2023 — more than the total present-day production of Kuwait — and you have a level of production that exceeds the current production of every OPEC nation, except Saudi Arabia.”

One key assumption IHS Markit is making is that oil prices will stay around $60 a barrel or higher. And its forecast is “far from a best case” scenario, according to Raoul LeBlanc, HIS Markit’s executive director, who added, “That the outlook still expects the Permian to exceed existing (and already lofty) expectations speaks to the region’s unique and growing prominence in the world’s oil market. The level of growth — from 0.92 mbd in 2010 to 5.4 mbd in 2023 — is truly stunning.

The New American made just such a prediction about the U.S. oil industry way back in 1990, as we noted in a 2015 article:

Keep reading…

U.S. Crude Oil Production Growing so Rapidly Even Insiders Can’t Keep Up

This article was published by The McAlvany Intelligence Advisor on Wednesday, July 4, 2018:  

Scott Sheffield, the Chairman of Pioneer Natural Resources, was interviewed by CNNMoney on June 20. At that moment in time, according to the U.S. Energy Information Administration (IEA), the U.S. oil industry was pumping 10.3 million barrels a day (bpd). By the time the interview ended and the article was published, the latest report for that week on U.S. crude oil production showed Sheffield and CNNMoney already dreadfully out of touch: U.S. production that week topped 10.9 million bpd, with little to keep new records from being set on a weekly basis going forward.

Sheffield, the head of an oil company with revenues exceeding $5 billion and assets in recoverable oil reserves approaching $20 billion, went on to say that he expects U.S. crude oil production to surpass 11 million bpd “within the next three or four months.” It looks like that milestone will be exceeded this month. He went on to predict that,

Keep reading…

OPEC is Losing Its MoJo

This article was published by The McAlvany Intelligence Advisor on Monday, June 25, 2018:  

It’s premature to consider the weekend meeting of OPEC in Vienna as the cartel’s final death rattle. However, it’s clear that its effort to end its production cut agreement amounted to little more than birthing a gnat.

The meeting was supposed to be contentious, with Iran, Libya, and Venezuela promising to scuttle any agreement to raise crude oil production. Oil ministers arrived in Vienna days before the official opening in order to quell that opposition and enlist support. Investors anxiously waited for the final announcement, ready to trade on the news.

Most expected the cartel to end the agreement by promising to raise production by a million barrels of oil a day, reversing the 1.8 million bpd production cut agreement that was installed in January 2017. But after all was said and done, the net “effective” increase is only about 600,000, and that agreement hadn’t been inked by the end of the meeting.

Call it a relief rally:

Keep reading…

Crude Oil Price Rise in Wake of OPEC Agreement Likely to be Short-lived

This article appeared online at TheNewAmerican.com on Sunday, June 24, 2018:  

Crude oil prices rose nearly five-percent in a single day Friday, when OPEC, meeting in Vienna, failed to raise production as much as many feared.

The last time the price of crude oil for future delivery jumped this much was when OPEC announced its decision in November 2016 to cut production. That agreement, met at the time with much skepticism that the cartel could enforce it, was to remove about 1.8 million barrels a day of world supplies. Trading at $50 a barrel in early November 2016, crude oil for future delivery jumped to $57 a barrel by January 1, 2016.

Then reality, helped along by U.S. share producers, set in, with new supplies pushing crude oil futures down to $45 a barrel by July 2016.

The same scenario could play out once again:

Keep reading…

Oil Ministers Gathering in Vienna for “Contentious” OPEC Meeting

This article appeared online at TheNewAmerican.com on Wednesday, June 20, 2018:  

Oil ministers from OPEC and non-OPEC producers are already gathering in Vienna, Austria, in advance of what is touted to be one of the most contentious meetings in recent memory. On Friday they will discuss current output levels, compliance, and the impact its agreement to cut production by 1.8 million barrels a day has had on world oil prices. On Saturday, the discussion will focus on the future.

The primary issue will be whether to

Keep reading…

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:

Keep reading…

Just How Strong Is the U.S. Economy? $3 Gas Won’t Even Slow It Down.

This article was published by The McAlvany Intelligence Advisor on Wednesday, May 16, 2018:  

The mainstream media has spent an inordinate amount of time, ink, and airtime over the rising cost of gas, blaming most of it on the president’s termination of the “horrible” Iranian nuclear deal. They grieve over the impact that termination will have on everything from bombs in the Middle East to the price of gas in Tuscaloosa. (For the record, it’s $2.51 a gallon, according to GasBuddy – see Sources below.)

Some states are higher, including California ($3.68), Hawaii ($3.63), Washington ($3.35), and Oregon ($3.23). Some states are lower, including Mississippi ($2.56), Arkansas ($2.57), South Carolina ($2.58), and Louisiana ($2.58).

But none of them seem to be dampening the spirits of the American consumer, who is planning his Memorial Day holiday and his summer vacation. Mark Jenkins, a spokesman for AAA, doesn’t expect higher prices at the pump to change many Americans’ plans to travel this summer:

Keep reading…

More Than 40 Million Americans to Travel on Memorial Day Despite Higher Gas Prices

This article appeared online at TheNewAmerican.com on Tuesday, May 15, 2018: 

Mark Jenkins, a spokesman for AAA, doesn’t expect higher prices at the pump to change many Americans’ plans to travel this summer:

 Gas prices are [at] their highest in years, yet that doesn’t seem to be slowing motorists down. The latest round of figures from the EIA [U.S. Energy Information Administration] shows that gasoline demand is significantly higher than this time last year.

 

A strong economy is helping to fuel motorists along, as we approach the most traveled Memorial Day in more than a dozen years.

Jenkins estimates that more than 41.5 million Americans will travel at least 50 miles or more over the Memorial Day weekend — from Thursday, May 24 to Monday, May 28 — the highest number since 2005 when 44 million hit the road or the air. This is five-percent higher than last Memorial Day, and an increase for the fourth straight year, said Jenkins.

Gas prices, according to GasBuddy, which tracks prices at 135,000 gas stations across the country, are closing in on $3 a gallon,

Keep reading…

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

Keep reading…

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.

Keep reading…

Vultures Gathering to Pick Maduro’s Bones

This article was published by The McAlvany Intelligence Advisor on Monday, May 7, 2018: 

Former British Prime Minister Margaret Thatcher’s flippant quote: “The problem with socialism is that eventually you run out of other people’s money” misses an essential point. Socialistic government policies destroy the price mechanism that causes the economy, and thus government’s revenues, to shrink. If the government continues spend as before, it must borrow, or print. Only when these strategies fail does the government run out of other people’s money.

But it always does, as Nicolas Maduro, no student of history, apparently, is learning the hard way. For a while there it looked like socialism in Venezuela might work after all.

Keep reading…

Creditors Gathering to Plan Seizures Following Venezuela’s Defaults

This article appeared online at TheNewAmerican.com on Monday, May 7, 2018:  

As Venezuela’s creditors are gathering to discuss how they may best protect their interests, additional pressure from former head of the country’s state-owned oil company, PdVSA, was applied on Saturday. Rafael Ramirez, the former head of the company under Chavez and Maduro, barely escaped with his life when Maduro arrested the top officials at the company last year for “engaging in corruption.” Maduro replaced Ramirez with Major General Manuel Quevedo, who is succeeding in even more rapidly running into the ground the once-prosperous and highly profitable energy producer.

In an 80-minute telephone call from an undisclosed location, Ramirez told Gulf News that oil production from his former company, already cut in half thanks to Maduro’s decisions and the company’s lack of capital to maintain it, will decline even further this year. He estimates that

Keep reading…

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

Keep reading…

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.

Keep reading…

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

Keep reading…

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,

Keep reading…

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

Keep reading…

With Venezuela’s Marxist Dictator Gone, the Country’s Oil Production Could Soar

This article was published by The McAlvany Intelligence Advisor on Monday, February 12, 2018: 

By every measure, Venezuela’s Marxist dictator Nicolas Maduro isn’t long for this world. His socialist regime is losing altitude and airspeed at a most satisfyingly horrific rate. His people are starving, as are many in his army. Citizens are fleeing into Colombia to buy food missing from shelves at home, and many are staying there. He’s in default on his estimated $150 billion national debt, and his lenders – China, Russia, and Cuba – appear to be increasingly reluctant to throw good money after bad. American refineries, which have been supporting Maduro through their purchases of his country’s sticky crude, have happily cut them by two-thirds, finding more reliable sources in Canada and Mexico, and as a result helping to starve Maduro into oblivion.

Finally, his precious oil company, PdVSA, which is essentially Maduro’s only oxygen hose, is failing as well. Its production is down to a little over a million barrels a day. In 2014 it produced more than three.

So it’s reasonable to assume, as economist Herb Stein expressed it, that “if something cannot continue, it will end.” And the end of Maduro won’t be lamented.

In a burst of perhaps unjustified optimism,

Keep reading…

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

Keep reading…

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