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: Fracking

IEA: United States to Dominate World Energy Market Within Eight Years

This article appeared online at TheNewAmerican.com on Wednesday, November 15, 2017:

According to the International Energy Agency (IEA), the growth of energy production in the United States, doubling as it has in just the last eight years, is expected to double again in the next eight. Authors of the IEA’s annual World Energy Outlook report released on Tuesday could hardly contain their surprise: “A remarkable ability to unlock new resources cost-effectively pushes combined United States oil and gas output to a level 50% higher than any other country ever managed; already a net exporter of [natural] gas, the U.S. becomes a net exporter of oil in the late 2020s. In our projections … the rise in US tight oil output [fracking] from 2010 to 2025 would match the highest maintained period of oil output growth by a single country in the history of oil markets.”

The U.S. production increase makes up an astonishing

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What if Your Customer Can’t Buy Your Product, but Wants to?

This article was published by The McAlvany Intelligence Advisor on Monday, October 16, 2017:

There are two basic rules of economics. The first is: if prices go down, more will be demanded. The second is: both sides of any economic transaction must benefit or there’s no deal.

The fracking revolution in the United States has pushed the price of crude oil down to the point where it is threatening the very existence of the OPEC cartel. Consumers are saving at the pump and the energy industry in the U.S. employs more than 10 million people, making up eight percent of the country’s gross domestic product.

But there’s been an all but invisible transformation taking place in natural gas. At least two of the Big Oil companies sell more natural gas than they do crude oil.

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U.S. Natural Gas Exports to Add 500,000 Jobs, $73 Billion to Economy

This article appeared online at TheNewAmerican.com on Monday, October 16, 2017:

Liquefied natural gas (LNG) tanker, section vi...

Liquefied natural gas (LNG) tanker, section view from side.

The latest estimate from API, the energy trade group, is that increased exports of LNG (liquefied natural gas) over the next 20 years will add nearly 500,000 jobs to the American economy and $73 billion to the country’s gross domestic product (GDP). Marty Durbin, API’s chief strategy officer, stated, “This report confirms that increasing U.S. LNG exports would bring great benefits to American workers and consumers and [to] the U.S. economy. Increasing the use of U.S. natural gas throughout the world means more production here at home, cleaner air, and increased energy security for our nation and our allies.”

The revolution taking place in natural gas has been almost completely overlooked.

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EV Revolution to Drive Oil to $10 a Barrel, Says Forecaster

This article appeared online at TheNewAmerican.com on Monday, October 16, 2017:

Shell Oil Company

Chris Watling, the CEO of Longview Economics, told CNBC on Friday that Saudi Arabia should hasten the sale of part of its Aramco oil company while the price of crude is still high: “I think they need to get it away quick before oil goes to $10 [per barrel].” Added Watling: “We forget, don’t we? 120 years ago the world didn’t live on oil. Oil hasn’t always driven the global economy. The point is, alternative energy in some form is gathering speed.… Things are changing.”

Watling’s views coincide with those of Bloomberg New Energy Finance (BNEF) in their just-released 2017 Long Term Electric Vehicle Outlook, which concluded that by 2040

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OPEC is Textbook Example of Classic Cartel

This article was published by The McAlvany Intelligence Advisor on Wednesday, October 11, 2017:

the new OPEC headquarters in Vienna Español: S...

OPEC headquarters in Vienna

Free market economists have long considered OPEC as a textbook example of the anti-free market cartel. Its mission statement confirms it:

To coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets, in order to secure an efficient, economic, and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry.

This is of course the “siren song” of every cartel:

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OPEC Asks U.S. Oil Industry to Join Its Cartel

This article appeared online at TheNewAmerican.com on Tuesday, October 10, 2017:

At a speech in New Delhi on Sunday, OPEC’s Secretary General Mohammed Barkindo offered an olive branch to the American oil industry: Come join our cartel and together we’ll keep prices up and everyone profitable. These are his exact words:

We urge our friends [we’re all friends, now] in the shale basins of North America to take this shared responsibility with all [the] seriousness it deserves, as one of the key lessons learned from the current unique supply-driven cycle.

Translation:

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Another Nail in OPEC’s Coffin: Fracking Old Wells Dropping U.S. Breakeven Points Further

This article appeared online at TheNewAmerican.com on Monday, August 21, 2017:

Ed Morse, Citigroup’s head of commodity research, told a Bloomberg television audience last week that OPEC’s position “is not sustainable over a long period. In the end, the markets are going to win, and [the winner] is going to be shale. If we’re in a $40 to $45 world, we’ll have enough drilling to add to the [world’s] surplus.”

Morse is reiterating the mantra sung for years: OPEC has long since run out of options and has all but lost its monopoly influence over world crude oil prices. If it reduces supply, prices go up, making U.S. frackers more profitable and inviting more capital in to expand production. If it increases supply, the lower prices cut further into each member’s cash flow, forcing them to continue to deficit spend without gaining any advantage over the Americans.

The breakeven point for U.S. frackers has been estimated to be between $40 and $50 a barrel. On Friday U.S. crude oil closed at $49 a barrel on the New York Mercantile Exchange (NYMEX – see floor photo above).

Now OPEC is faced with another challenge from the American oil industry:

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Fracking’s Vicious Cycle Making Bondholders Nervous

This article appeared online at TheNewAmerican.com on Thursday, July 20, 2017:

King Abdullah ibn Abdul Aziz in 2002

King Abdullah ibn Abdul Aziz

Investors in high-yield bonds issued by small fracking companies are getting nervous. Last year those bonds, according to Bloomberg, gained some 38 percent as they rebounded from lows set earlier. In June they slipped two percent. In the bond business, that’s enough to make bond fund managers and individual investors nervous. It’s bad enough that the S&P 500 Energy Sector Index of energy stocks has lost 16 percent so far this year. What’s worse is the vicious cycle that frackers find themselves in.

For instance,

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Crude Oil’s Bear Market Is Crushing OPEC

This article appeared online at TheNewAmerican.com on Monday, July 3, 2017: 

Map of the territory and area covered by prese...

Map of the territory and area covered by present-day Saudi Arabia.

The world’s price of crude oil fell farther in the first six months of 2017 than in any six-month period in the last 19 years. From its peak in January it dropped by more than 21 percent by the middle of June, qualifying it in Wall Street jargon as a “bear market.”

This isn’t part of OPEC’s plan. The once-influential cartel was sure that by taking 1.8 million barrels a day of crude oil production off the world markets, the world price of oil would shortly hit its target of $60. And it almost made it, rising to $57 a barrel before beginning its long and crushing decline.

OPEC was sabotaged not only by noncompliance among its members and production from those to which it gave a pass (Libya and Nigeria), who produced more than was expected, but also by

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Enjoying Record Low Gas Prices? Thank a Fracker!

This article appeared online at TheNewAmerican.com on Tuesday, June 27, 2017:  

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

Of the estimated 44 million Americans who will travel over the upcoming Independence Day holiday weekend (a record, by the way), 37.5 million of them will drive to their destinations. Along the way they will not only spend nearly a dollar a gallon less for gas than they have over the last 10 years on average, they will spend less on gas than any Independence Day since AAA has been keeping records. In addition, this will be the first time in nearly two decades that they will be spending less for gas in July than they did in January. On average over the last decade gas prices have been 47 cents a gallon higher on the Fourth of July than on New Year’s Day.

Consumers are always the ultimate beneficiaries of improved technologies, as producers are

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Oil Expert Yardeni: OPEC Should Break Agreement, Produce All It Can

This article appeared online at TheNewAmerican.com on Wednesday, June 21, 2017: 

In Dr. Ed’s Blog, Ed Yardeni, for 25 years one of the industry’s leading energy strategists, proposed on Wednesday that OPEC should consider going back to Plan A to fund members’ treasuries as Plan B clearly isn’t working:

Rather than [attempting to prop] up the price [of crude oil], maybe OPEC should sell as much of their oil as they can at lower prices to slow down the pace of technological innovation that may eventually put them out of business.

Plan A, it will be remembered,

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Alaska’s North Slope Oil Reserves Are “Open for Business”

This article appeared online at TheNewAmerican.com on Thursday, June 1, 2017:  

Map of northern Alaska showing location of , A...

Map of northern Alaska showing location of , ANWR-1002 area, and the National Petroleum Reserve-Alaska (NPRA).

Following a six-day trip to northern Alaska, Trump’s Interior Secretary Ryan Zinke signed an order on Wednesday in Anchorage that reverses a 2013 Obama administration executive order. That 2013 order removed half of the immense National Petroleum Reserve-Alaska (NPRA) on Alaska’s North Slope from consideration for energy development. Said Zinke:

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OPEC to Extend Oil Production Cuts Another Nine Months

This article appeared online at TheNewAmerican.com on Wednesday, May 24, 2017: 

Now that “everyone is on board” with a nine-month extension of last November’s agreement to cut production by OPEC, tomorrow’s meeting of the cartel in Vienna is expected to rubber-stamp that extension. Saudi Arabia’s oil minister, Khalid al-Falih, upon returning from Iraq on Monday, said, “We think we have everybody on board. Everybody I’ve talked to indicated that nine months [is] a wise decision.”

Iraq was the most egregious cheater under the November agreement, first complaining that the production numbers upon which its “participation” was based were too high, and then being very slow in implementing those cuts. The slack was picked up by Saudi Arabia, which cut more than it agreed to.

The overall goal of the cuts is to

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North Dakota Oil Production Jumps as Access Pipeline Nears Completion

This article appeared online at TheNewAmerican.com on Monday, May 15, 2017:

The latest report from North Dakota’s state oil and gas division showed that crude oil production for March is back up over a million barrels a day, an increase of nearly nine percent since December and almost double what the state produced five years ago.

The boom is back.

In Bismarck there are hundreds more jobs being offered than takers, according to the Associated Press (AP), with “for hire” signs appearing once again in stores, shops, and restaurants downtown. In Williston there are 500 more job listings today than there were a year ago. Williston Republican state senator Brad Bekkedahl, whose district sits on top of the massive Bakken oil shale deposits, told the AP, “There is a long-term optimism that was not here a year ago.”

In the oil business, “long-term” is measured in months, not years or decades. In March 2012 there were 6,954 oil wells producing 580,000 barrels of crude every day. In March this year 13,632 wells produced 1.025 million barrels daily.

And it’s not all due to the Dakota Access pipeline,

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Bakken is OPEC’s Elephant in Its Living Room

This article was published by The McAlvany Intelligence Advisor on Monday, May 15, 2017:

Setting the stage for the OPEC meeting on May 25, Saudi Arabias Oil Minister Khalid al-Falih, promised on Friday that OPEC will do whatever it takes to rebalance the global oil market. Whatever that means, and whatever comes out of that meeting, it wont be enough torebalance the oil market (rebalance: raise the price of oil sufficiently to reduce significantly the deficits the cartels members are currently running).

If the cartel repeats and extends the present agreement by six months, its likely to have the same impact: immeasurably small. The last agreement promised to cut 1.8 million barrels per day (bpd) from its overall production. It managed to cut production by less than half that, 800,000 bpd. In the grand scheme of things (world production of oil is just over 80 million bpd), this represents a one percent reduction in global production of crude. Wahoo.

What will be discussed in Vienna will no doubt include who is going to be doing the heavy lifting, and how much. Will there be exceptions to the extension as there is in the present one? Will there be failures to comply, as there were under the present one? Will there be sanctions applied to those who cheat? What about non-members? Will they somehow be persuaded to engage in the farcical extension? From here the meeting has all the makings of Shakespeares comedy “Much Ado About Nothing.”

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OPEC Increasingly Irrelevant as Cartel Seeks to Extend Output-cut Deal

This article appeared online at TheNewAmerican.com on Wednesday, May 3, 2017: 

English: Flag of the Organization of Petroleum...

Gregory Brew’s statement from Oilprice.com on Tuesday was spot on: “OPEC Begins to Unravel.” Except that the unraveling began years ago as entrepreneurs in the United States found a way to tap underground shale profitably.

OPEC faces an essentially insurmountable task. On May 25, oil ministers from all 13 of the cartel’s members will meet in Vienna to decide whether or not its present oil output cut agreement should be extended. Either way, OPEC’s doom as the prime determiner of world crude oil prices is likely sealed.

If they decide not to extend the output cut, the world will know that OPEC is finished. The ministers will depart Vienna and tell their governments that

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Fitch Knocks Saudi Arabia’s Credit Rating Down Another Notch

This article appeared online at TheNewAmerican.com on Wednesday, March 22, 2017:

Fitch Ratings downgraded Saudi Arabia’s credit rating again on Wednesday, bringing it perilously close to “speculative,” from “investment grade.” It dropped the country’s long-term credit rating from A+ to AA-, but with a “stable” outlook, noting that the reduction was due to the country’s “continued deterioration of public and external balance sheets.”

Fitch sees what both Moody’s and Standard and Poor’s, the other two global credit rating agencies, see: declining oil prices hurting a country that once enjoyed the highest investment grade ratings thanks to high oil prices that not only paid for extravagant welfare programs and subsidies to its citizens but allowed it to accumulate three-quarters of a trillion dollars in foreign reserves — more than ample to ride out any conceivable storm.

The rating agencies have seen that an inconceivable storm arrived in 2014 when

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OPEC: A Lesson in Why Cartels Fail

This article was published by The McAlvany Intelligence Advisor on Wednesday, March 15, 2017:

OPEC countries

OPEC countries

Every cartel comes together when individual members think they can obtain a greater economic benefit working together than they can alone. Every cartel breaks apart when members think they can do better alone. If a cartel is sanctioned by a government, it becomes a monopoly.

Since 1960, OPEC has largely stayed together with the collusion of governments and Big Oil interests around the world. But the fracking revolution, operating in the free market, is blowing up the model. Specifically,

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Crude Oil Shortage in Three Years?

This article appeared online at TheNewAmerican.com on Tuesday, March 7, 2017:

Worldwide demand for crude oil will exceed 100 million barrels per day (mbd) in two years, and exceed global supplies in three, according to the Paris-based intergovernmental group International Energy Agency (IEA). In its latest five-year forecast, Oil 2017, the agency says that demand growth will come primarily from developing countries such as India, while demand growth elsewhere, such as the United States, will be tepid at best. The only way the coming shortage can be overcome, said Dr. Fatih Birol, IEA’s executive director, is for massive new investments in exploration, discovery, and production to be made immediately:

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Interior Secretary Repeals Another Obama-era Second Amendment Infringement

This article appeared online at TheNewAmerican.com on Monday, March 6, 2017: 

On his first day in office as Secretary of the Interior, newly minted Secretary Ryan Zinke (shown) issued Secretarial Order 3345 which “revokes Director’s Order 219,” effective immediately.

It’s a small thing, really, but hugely important in confirming that President Trump not only is intent on keeping his campaign promises but is determined to surround himself with people of like mind to help him keep them.

Director’s Order 219 was a parting shot issued by then-President Obama at the very end of his presidency that required the phasing out of the use of lead ammunition for hunting on Federal land. Specifically, it required that the

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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.