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

Tag Archives: Cartel

Oil and Gas Prices Dropping in Anticipation of Trump Presidency

This article appeared online at TheNewAmerican.com on Monday, November 14, 2016:  

Even as prices for crude oil and natural gas were already declining thanks to continued overproduction by the OPEC cartel, the commitment of millions of dollars in new capital expenditures by major oil companies next year, and the stirring of recovery in the oil patch, last Tuesday’s election added additional impetus to the decline. The price for crude oil for December delivery has dropped more than $2 a barrel since the election, and Evan Kelly, writing at OilPrice.com, thinks it’s going to drop further, perhaps much further.

Reasons abound, mostly around Donald Trump’s promise to breathe new life into an industry hampered by overregulation driven by questionable concerns over global warming.  As Kelly wrote:

Keep Reading…

Crude Drops 10 Percent; Price Decline Just Beginning

This article appeared online at TheNewAmerican.com on Wednesday, November 2, 2016:

Midday last Thursday, the price of crude oil for delivery in December touched $50, and it’s been all downhill since then. At noon on Wednesday crude oil futures touched $45 a barrel on news that inventories soared last week by the most in 34 years.

The market wasn’t expecting that. It was bad enough that the American Petroleum Institute (API) reported a supply increase nine times greater than analysts and observers were expecting last week. Those market seers were betting on an increase of a million barrels. Instead the API reported the increase was 9.3 million — a miss of gigantic proportions.

On Wednesday, however, the Energy Information Administration (EIA) reported that the API’s estimate was far too low:

Keep Reading…

OPEC Fails to Agree as U.S. Energy Industry Ramps Up

This article appeared online at TheNewAmerican.com on Monday, October 31, 2016:

After 12 hours of effort to hash out an agreement to cut oil production that can be presented formally to the Organization of Petroleum Exporting Countries in November, 14 oil ministers meeting in Vienna over the weekend gave birth to — a goose egg. Without an agreement, the November 30 gathering is likely to be irrelevant, just as the cartel itself is becoming.

Every cartel eventually blows up due to members unwillingness to 

Keep Reading…

OPEC Continues to lose its game of Chicken with US Energy Producers

This article was published by The McAlvany Intelligence Advisor on Monday, October 31, 2016:

It is said that, in a game of chicken, the one who flinches first loses. Last week Saudi Arabia flinched.

It went to the global bond market, hat in hand, hoping to raise $10 billion to slow down its liquidation of its foreign reserves. Last year those reserves dropped by $100 billion. With the market stronger than anticipated (or perhaps because they knew it was the most they could raise for quite a while) they raised $18 billion.

That $18 billion will be gone in two months, leaving investors holding a piece of paper that might not be redeemable for face value at maturity. What will be left is the increasingly irrelevant cartel that Saudi Arabia has led for the last 55 years.

For proof,

Keep Reading…

Saudi Arabia to Sell $10 Billion in Bonds to Shore Up Its Finances

This article appeared online at TheNewAmerican.com on Wednesday, October 19, 2016:  

Coat of Arms of Saudi Arabia

Coat of Arms of Saudi Arabia

Oil ministers from Saudi Arabia have been traveling the world doing investment “roadshows” to promote their $10-billion bond offering that hits the markets this week. In so doing, they must disclose the risks investors could be taking, and then price the bonds according to those risks.

The Saudis appear to be paying the price for losing their bet about American oil producers. In November 2014 they made a massive wager that they could

Keep Reading…

Mexico’s Violence Teaches the Value of the Second Amendment

This article was published by The McAlvany Intelligence Advisor on Friday, October 14, 2016: 

Português: Jovem é morto com um tiro na cabeça...

On Monday, Mexico’s National Survey on Victimization and Perception of Public Security reported that three out of every four Mexican citizens don’t feel safe living there, thanks to the violent crime wracking the country. It went on to calculate the ratio of violent crimes per 100,000 population: an astounding 35,497! Translation: more than one out of three citizens is a victim of a violent crime, every year! Compare that to the US where the ratio is 369 per 100,000.

The police are of little help, either through corruption or incompetence. “Cifra negra” – unreported crime – is so widespread that

Keep Reading…

Mexican Senator Proposes Expanded Gun Rights

This article appeared online at TheNewAmerican.com on Thursday, October 13, 2016:  

On Tuesday, Senator Jorge Luis Preciado, a member of Mexico’s National Action Party (PAN), said he is backing a bill to amend his country’s constitution so that bus drivers, cabbies, truckers, and “other transportation drivers” can carry firearms to protect themselves, their cargo, and their passengers.

He said the constitution’s current provisions need to be expanded:

Keep Reading…

Saudi Energy Minister: Crude Oil at $60 Not “Unthinkable”

This article appeared online at TheNewAmerican.com on Tuesday, October 11, 2016: 

Saudi Arabia’s energy minister, Khalid al-Falih, asserted at the World Petroleum Congress in Istanbul on Monday that he is optimistic that members of the OPEC cartel will agree on production cuts at its meeting in late November, and that it isn’t “unthinkable” that, as a result, crude oil prices could hit $60 a barrel by the end of the year.

Following late September’s informal meeting when the cartel agreed to appoint a committee to come up with options in time for the Istanbul meeting, energy traders drove the price of crude above $50 a barrel. On Monday it nearly touched its highest level for the year, reacting to Russian President Vladimir Putin’s support for OPEC’s possible cut in crude oil production to “stabilize” the market.

Such a production cut, if it takes place (OPEC members are notoriously fickle about keeping solemnly-pledged agreements), would be designed to push crude oil prices higher, but still low enough to keep “rivals from raising their output,” according to OPEC’s secretary-general following the September meeting in Algeria.

That’s going to be a trick,

Keep Reading…

Court Upholds Freedom and the Fifth Amendment in Taxi Cartel Case

This article appeared online at TheNewAmerican.com on Monday, October 10, 2016:  

On the surface, Judge Richard Posner’s decisions, decided last Friday, appeared merely to expand the freedom of Uber, Lyft, and other ride-sharing services to operate more freely in Milwaukee and Chicago. Beneath the surface, however, Posner presents a refreshing and much-needed defense not only of freedom in general, but of the Fifth Amendment and the competitive free market as well.

Posner (shown above) is one of the most respected jurists in the country.

Keep Reading…

Reality Sets In: OPEC Ready to Cut Production to Raise Oil Prices

This article appeared at TheNewAmerican.com on Friday, September 30, 2016:  

Wednesday’s announcement from OPEC about an agreement to cut production to shore up crude oil prices was met with both delight and scorn by observers. Exuded Phil Flynn, senior energy analyst at Price Futures Group:

This is the first OPEC deal in eight years! The cartel proved that it still matters even in the age of shale. This is the end of the “production war” and OPEC claims victory.

Bunk, said David Petraeus, the former CIA director who was forced to resign under a cloud in November 2012 and who subsequently was hired by Wall Street firm Kohlberg Kravis Roberts to chair the firm’s newly created KKR Global Institute:

Keep Reading…

New North American Oil Discoveries Continue to Frustrate OPEC

This article appeared online at TheNewAmerican.com on Wednesday, September 7, 2016:  

Apache Corporation, the sixth-largest independent oil and gas producer in the United States, announced this week that it has found a new gargantuan reserve of oil and natural gas in West Texas that could be one of the largest energy finds in the last decade. At the low end, the new “Alpine High” field could contain two billion barrels of oil plus massive natural gas reserves. More importantly, especially to OPEC members gearing up to find ways to raise prices, the company’s estimated profit margin is 30 percent after taking in account all expected development costs, even with crude selling at below $50 a barrel.

Apache isn’t waiting around for higher prices but instead has already drilled 19 wells into the new field and has committed one-fourth of its capital budget this year to develop the field further. The profit potential for natural gas is nearly off the charts. So abundant is that energy source from the new field that the company’s breakeven point is just 10 cents per million British thermal units (BTUs) while the market price for natural gas closed Tuesday at $2.72. This is going to turn Apache, currently a $20 billion company, into a major player.

The discovery is also going to turn OPEC’s plans to cap production in order to drive prices higher upside down. It is planning to meet informally later this month in Algiers to plot ways that it can drive the price of crude higher in response to increasing pleas from members such as Venezuela and Algeria for higher prices.

As recently as a month ago, OPEC was hoping to drive prices back to $70 a barrel in order to reduce the financial pressures low crude oil prices have imposed on all of the cartel’s members. Now, however, it is hoping to drive prices up to $60. Last month Venezuela’s President Nicolas Maduro, under mounting pressure to solve his country’s self-imposed problems resulting in inflation and food riots, said last month that the “fair, balanced oil price must be set at $70 a barrel.” On Monday the head of Algeria’s state-owned oil company, Noureddine Boutarfa, exclaimed that oil prices “below $50 a barrel is not acceptable.”

Acceptable or not, oil prices are headed lower according to both Morgan Stanley and Bank of America. Earlier this year Morgan Stanley estimated that the price of crude would move higher, but just cut its third-quarter forecast from $50 a barrel to $45. On August 25, Bank of America estimated that demand for crude would decline further than expected.

What befuddled prognosticators was the failure of the oil market to “rebalance” during the summer when American drivers set a record, burning through nearly 10 million barrels of gasoline every day. Even though American drivers drove a record three trillion miles over the last 12 months, that failed to soak up much of the surplus overhanging the market. Now, with demand slackening after Labor Day, and an economy essentially flat-lined, there is little reason to believe that prices will move higher.

Catching OPEC by surprise was the news that U.S. frackers restarted eight oil rigs every week this summer despite the lower prices. This puts the cartel in a pickle of its own creation: If it cuts production in order to drive prices higher, this will only further encourage U.S. producers to bring more rigs online. If they continue to flood the market, their budget deficits will get even larger while still losing precious market share to the Americans.

One unnamed OPEC official told the Wall Street Journal that all of this has caught the cartel by surprise: “[The U.S. shale industry has] surprised us, and can surprise us again.”

A Bald-faced Daylight Robbery in Massachusetts

This article was published by The McAlvany Intelligence Advisor on Wednesday, August 24, 2016:  

One has to give Massachusetts Governor Charlie Baker credit: he has devised a plan to punish ride-sharing newcomers, save the state’s failing taxi cartel, and fund much-needed “infrastructure improvements,” all with free money: a new tax on ride-sharing customers that won’t be paid by either the driver or his customers. Instead, it will be levied on those evil newcomers – Uber, Lyft, and the like – who dared to innovate and take business away from the existing cartel.

Here’s how it works:

Keep Reading…

Big Taxi Wins Big in Massachusetts

This article appeared online at TheNewAmerican.com on Tuesday, August 23, 2016:  

Sign Taxi Zagreb, Croatia

Massachusetts is now the 35th state to regulate ride-sharing services such as Uber and Lyft, but with a vengeance not seen elsewhere: A portion of a new 20-cent tax per ride will be used to fund improvements for the old taxi cartel.

First, the new tax is not called a “tax” but a “fee.” Second, the tax won’t be charged either to the driver or to his customer, but to the ride-sharing company itself. Third,

Keep Reading…

Oil Price Rise Only Temporary; Could Drop Back to Low $20s

This article appeared online at TheNewAmerican.com on Wednesday, August 10, 2016:  

On November 17, gas prices had dropped to $1.9...

In light of record supplies of gasoline and crude oil, why are prices rising? After hitting a low of $26 a barrel in January, crude oil topped $52 a barrel in early June, only to drop below $40 a barrel last week. The recent rise back above $40 is a head fake, according to oil analyst Stephen Schork, editor of the daily subscription Schork Report. The recent bounce forced massive short covering by traders convinced oil was headed back down to the $20s and had nothing to do with the fundamentals.

The fundamentals, according to Schork, are bearish for oil (and gasoline) prices, and not likely to change any time soon. Even the Energy Information Administration (EIA), the government’s watchdog agency in charge of predicting the future, has been forced to

Keep Reading…

Production Freeze Main Topic at OPEC Late September Meeting

This article appeared online at TheNewAmerican.com on Monday, August 8, 2016: 

OPEC’s current president, Qatar’s energy minister Mohammed bin Saleh Al Sada (shown at center, above), announced Monday that the oil cartel will hold “informal” side meetings at the International Energy Forum in Algeria in late September. Not surprisingly, the topic will once again be “cooperation” among the disparate and increasingly desperate members to restrict production in efforts to force oil prices higher.

Al Sada, who holds a Ph.D. from England’s University of Manchester’s Institute of Science and Technology, asserted,

Keep Reading…

Comeuppance in the Oil Patch

This article was published by The McAlvany Intelligence Advisor on Wednesday, August 3, 2016:  

Looking down from Heaven, George Mitchell must be pleased with what’s going on below: oil inventories are growing to the point where offshore tankers and railroad tank cars are having to be used for storage, oil and gas prices are dropping along with the costs of all the other 6,000 consumer products made from petroleum, rig counts are increasing, production costs are dropping, and, best of all, OPEC’s influence is waning daily.

The Economist called Mitchell the father of fracking in its eulogy following his death in July, 2013. They referred to him as

Keep Reading…

U.S. Oil Shale Producers Putting OPEC Into Financial Bind

This article appeared online at TheNewAmerican.com on Tuesday, August 2, 2016:  

This wasn’t supposed to happen. When OPEC decided in November 2014 to keep producing crude oil at or near maximum rates, it was following an unspoken strategy to force the U.S. oil shale industry to back off. That would allow prices to rise back to levels needed to fund the cartel’s military adventures and their welfare states.

Marginal producers in the United States did declare bankruptcy, while other producers stacked most of their oil rigs, cutting daily production in the country from 9.7 million barrels per day (mpd) to 8.5 mpd. This caused crude oil prices to rise from the low 30s to the mid 50s.

But then oil prices levelled off and began to decline,

Keep Reading…

$60 Oil “Very Possible” Says Saudi Arabia’s New Oil Minister

This article was published by TheNewAmerican.com on Friday, June 3, 2016:  

On November 17, gas prices had dropped to $1.9...

On November 17, gas prices had dropped to $1.99 in Bakersfield, California, due to falling Oil prices

Following the OPEC meeting on Thursday, Saudi Arabia’s new oil minister, Khalid Al Falin, told CNN that $60 a barrel oil is “very possible” by the end of the year, with even higher prices expected next year. He said that supply and demand in the oil market have “converged” without the OPEC cartel needing to curtail supply. In short, OPEC is celebrating its strategy of letting the lowest oil prices seen in years weed out the weak and marginal players in the United States, resulting in cuts in production. As Qatar’s oil minister exulted at a press conference in Vienna following the meeting, “The worst is over for oil.”

Translation:

Keep Reading…

Have Oil Prices Hit Bottom?

This article appeared online at TheNewAmerican.com on Thursday, April 21, 2016:  

The 40 percent increase in the price of crude oil just since the end of January prompts two questions: Have investors seen the bottom in oil prices, and have drivers seen the lows in gas prices?

Todd Garner, the managing partner at Protec Energy Partners hedge fund, thinks so:

Keep Reading…

Is $40 Oil the New Normal?

This article was published by The McAlvany Intelligence Advisor on Friday, April 22, 2016:  

To the consternation of traders short the market, crude has jumped from $30 a barrel in late January to over $40 currently, with many indicators pointing to still higher prices. Was $30 the bottom? What will be the new ceiling?

Every bull market rises from the ashes of fear, disgust and despair. Traders and investors reasonably expected oil to bottom at well below $30, perhaps in the 20s, with some heavyweights, including Goldman Sachs, suggesting even lower prices. Some took short positions, certain that their calculus was correct: OPEC had maxxed out, American production seemed impervious to precipitous declines in rig counts, China’s economy was faltering and signs of recession were continuing to expose themselves around the globe, including the U.S. What could go wrong?

A little energy company, Callon Petroleum, showed exactly what could go wrong. Three times in the last six months the company has sold new shares to raise equity, and three times the company’s stock has risen. Logic and experience would suggest that dilution of shares would reduce their price. But with Callon, shares jumped from $4.21 in the middle of January to nearly $10 currently.

Keep Reading…

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