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: Oil Prices

Crude Oil Prices Resume Decline, Could Hit $20 a Barrel

This article appeared online at TheNewAmerican.com on Friday, September 11, 2015:  

Coming in just hours apart on Friday, two reports confirm that oil prices are likely to resume their decline and stay low well into 2016. In a note to its clients, Goldman Sachs said that supplies remained robust despite the decline in rig count, while demand increases failed to materialize as expected:

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Saudi Arabia’s Cash Reserves Dwindling, Forcing It to Borrow

This article appeared online at TheNewAmerican.com on Friday, August 7, 2015:  

English: Saudi Arabia

In an astonishing admission that the Saudis have gambled with a bet that is now going sour, the Saudi Arabia Monetary Agency (the country’s central bank) reported:

It is becoming apparent that non-OPEC producers [in the United States] are not as responsive to low oil prices as had been thought, at least in the short run.

The main impact has been [for U.S. producers] to cut back on developmental drilling of new oil wells, rather than slowing the flow of oil from existing wells.

This [strategy to break U.S. producers] requires more patience.

But patience will last only as long as their foreign reserves of cash, and Saudi Arabia’s reserves (immense though they be) are dwindling rapidly. They peaked at $737 billion in August of 2014. In May of this year, they were down to

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Fracking Is Boosting Reshoring of American Jobs

This article appeared online at TheNewAmerican.com on Thursday, July 9, 2015:  


In its latest report on American competitiveness, the Boston Consulting Group (BCG) estimates that the average cost to make goods in the United States is now only five-percent higher than in China, and between 10 and 20 percent lower when compared to the major European economies such as Germany and France. In less than three years, BCG projects China’s advantage to disappear altogether.

While part of the reason is rising wages in China and in the Eurozone and American companies improving their productivity faster than their competitors abroad, the primary reason, says BCG, is fracking — the technology that has driven energy costs to a fraction of what they were just a few years ago.

Back in August 2013, Harold Sirkin, a senior partner at BCG, predicted the U-turn that would result in “reshoring” of millions of jobs, starting in 2015:

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China’s Stock Market Continues Its Sharp Decline

This article appeared online at TheNewAmerican.com on Wednesday, July 8, 2015:

As predicted, the Chinese stock market accelerated its decline on Wednesday despite efforts by Chinese government officials to slow it.

The combination of over-leveraged investors with little prior experience about the prudent use of margin to buy stocks has turned the decline of the Chinese stock market into a rout. Closing on Wednesday at 3,507, the Shanghai Index has lost one-third of its value just since June 12 when it hit 5,178. The smaller Shenzhen Composite, made up of smaller technology stocks, is down 40 percent.

Jeremy Warner, economics commentator and assistant editor at London’s Daily Telegraph, viewed the carnage and remarked:

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First-quarter GDP Report Is Awful

This article first appeared online at TheNewAmereican.com on Wednesday, April 29, 2015: 

Logo of the United States Bureau of Economic A...

The report released Wednesday morning by the Bureau of Economic Analysis (BEA) was stark: The economy stalled in the first quarter in every sector, with overall growth barely positive, and embarrassing once again economists who predicted substantially better results. According to the BEA the economy in the first quarter grew at an annual rate of just 0.2 percent, compared to estimates of between 1.0 and 2.0 percent by the “experts.”

Personal spending dropped by nearly two thirds from the fourth quarter of 2014; durable goods purchases fell by more than 80 percent; and non-durable goods purchases almost disappeared compared to the last quarter, falling by 0.3 percent compared to an increase of more than four percent. The service industry limped along at two-thirds of last quarter’s pace.

Investment in business capital equipment went negative, as did

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Oil Production Still Increasing — Confounding Experts

This article first appeared online at TheNewAmerican.com on Monday, March 16, 2015: 

Logo of International Energy Agency

A month ago the International Energy Agency (IEA) began hedging its bet that declining oil prices would cut production: “U.S. supply [of crude oil] so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations.” 

This is how economists say “Oops!” 

On Friday the IEA was still astonished at the resilience of the oil industry as it continued to produce at record levels, despite predictions that declining rig counts would force production cuts. Instead, total U.S. crude oil production hit a high of 9.4 million barrels a day during the week ending March 6. 

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US Crude Production Sets Record in March, Surprises the IEA

This article first appeared at The McAlvany Intelligence Advisor on Monday, March 15, 2015: 

Just a quick look at the history of the International Energy Agency should convince anyone of its inefficacy: founded in 1974 at the suggestion of Henry Kissinger, its focus is on management of other peoples’ resources. Its mandate: the “3Es”: energy security, economic development, and environmental protection. The fact that it lacks any understanding of how the free market automatically addresses these issues showed up a month ago when its prediction of lower oil production in the US fell flat: “The U.S. supply [of crude oil] so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations.”

On Friday it confirmed its ignorance of how the free market works when it announced – surprise of surprises – that

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Will this be OPEC’s Final Failed Gamble?

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, February 18, 2015: 

Cover of "The Prize: The Epic Quest for O...

Six years ago historian Daniel Yergin wrote in The Prize about OPEC’s failed gamble in 1986. The cartel tried to secure its preeminent place among the world’s oil producers by forcing crude oil prices down:

Was the price now poised for a great fall? Most of the exporters [primarily OPEC] thought so, but they expected no more than a drop [from more than $30 a barrel] to $18 or $20 a barrel, below which, they thought, production … would not be economical….


Actually, operating costs – the cash costs to extract oil – were only $6 per barrel [at the time], so there would be no reason to shut down production at any price above that.

The cartel was hoping to squeeze out marginal producers, which would result in cuts in supply, allowing it to raise prices at will. It didn’t work then, and it isn’t working now. The Saudis apparently suffer from an appalling lack of understanding about how the free market works.

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Re-fracking Old Wells Is Extending the Fracking Revolution

This article first appeared online at TheNewAmerican.com on Tuesday, February 17, 2015:

English: A natural gas well (produces gas only...

A natural gas well

News that the oil industry is importing many of the new technologies developed by natural-gas producers, which led to steadily declining natural-gas prices, was greeted with great disappointment by at least one green group. Upon learning that fracking was not only a long way from disappearing in the face of declining oil prices but was actually on the verge of a resurgence, Sharon Wilson, a Texas organizer for Earthworks, told Bloomberg, “It’s terribly disappointing.”

It might be disappointing to Wilson, but

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Putin to Ukraine’s President: “What’s Mine is Mine…”

This article was first published at The McAlvany Intelligence Advisor on Friday, February 13, 2015:

John F. Kennedy

John F. Kennedy

Leaders of Germany, France, Lithuania, and Ukraine labored mightily into the night on Wednesday, to birth a minnow. Gathering around a table somewhere in the city of Minsk, French President Francois Hollande, German Chancellor Angela Merkel, Lithuanian President Dalia Grybauskaite, and Ukrainian President Petro Poroshenko agreed to a weak-kneed, temporary cease-fire between Russia-backed insurgents in eastern Ukraine and Poroshenko’s troops. It will begin on Sunday, and hopes are modest that it will stick this time.

Even if it doesn’t, it will cement into place Putin’s insurgents’ position.

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Oil Price Decline Hurting Alaska the Most

This article first appeared online at TheNewAmerican.com on Monday, January 26, 2015:

State Seal of Alaska.

Although oil-producing states such as North Dakota and Texas are expected to suffer declines in revenues if oil prices continue to drop, other states such as Wyoming, Louisiana, and especially Alaska will feel much more than just a temporary pinch. According to the Standard & Poor’s (S&P) Ratings Service,

If lower prices persist through 2015, the economies and finances of the energy producing states — Louisiana, Alaska, Wyoming, New Mexico, Oklahoma and North Dakota — will be put to the test.

Oil and mineral revenues account for a third of Wyoming’s budget, one-sixth of New Mexico’s, and one-eighth of Louisiana’s, while Texas — the state that, standing alone, would be the eighth-largest oil-producing country in the world — counts on less than

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Canada’s Oil Sands Impervious to Crude Oil’s Price Decline

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, January 14, 2015:


On Monday – the same day that UAE’s Energy Minister Suhall al-Mazrouel said that OPEC was going to stick to its decision to keep pumping regardless of price declines – the same day that Goldman Sachs issued its negative outlook for prices – when crude oil prices dropped in response by 5 percent, hitting a six-year-low of $44.20 a barrel on Tuesday, the CFO of Canadian Natural Resources announced he was going to expand both its production and its output into 2015 and beyond.

Chief Financial Officer Corey Bleber was oblivious to the carnage, saying that his company expected its overall output for 2015 to be at least seven percent ahead of last year’s, and that it would continue

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Impacts of Lower Crude Oil Prices Continue to Spread

This article first appeared online at TheNewAmerican.com on Tuesday, January 13, 2015:


After oil forecaster Jeremy Warner got lucky last year when he accurately called the top in oil prices, with a fall to at least $80 a barrel, he doubled down by predicting “that the oil price will remain low for a long time, sinking to perhaps as little as $20 a barrel over the coming year before recovering a little.”

Warner got lucky once again when Goldman Sachs confirmed his prognosis, setting off an eye-popping five percent decline in oil to $45 a barrel which continued into Tuesday. Tuesday’s low was $44.20. As Goldman Sachs noted,

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Oil Patch Activity Is Starting to Slow

This article first appeared online at TheNewAmerican.com on Friday, January 9, 2015:

U.S. Steel

In a letter to his union workers at U.S. Steel’s pipe and tube plant in Lorain, Ohio, Tom McDermott, president of United Steelworkers local 1104, was blunt:

The company has suddenly lost a great deal of business because of the recent downturn in the oil industry. What appeared just a few short weeks ago as being a productive year … has most abruptly turned sour.

So sour that U.S. Steel is idling 614 or its 700 workers in Lorain, along with all 142 of its workers in its Houston, Texas plant.

This is likely to be just the beginning. Even as U.S. Steel poured hundreds of millions into its gamble that producing “oil country tubular goods,” or OCTG, would reverse years of losses, other steel makers have done the same:

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Politics Overwhelms Economics as Crude Drops into the $40s

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, January 7, 2015:

English: Kingdom Centre, Riyadh, Saudi Arabia....

Kingdom Centre, Riyadh, Saudi Arabia.

Most prognosticators are concentrating on their understanding of economics to inform their predictions on how much lower crude oil prices can go. It’s a simple matter of supply and demand: supply is increasing, demand is decreasing (and it’s inelastic, to boot), so when demand meets supply – and “clears the market” as economists call it – crude will find a bottom.

One analyst at CNN expects oil to drop into the $30s, declaring that

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Human Progress Is Accelerating, Says Cato

This article first appeared online at TheNewAmerican.com on Wednesday, December 31, 2014: 

Cato Institute

The Cato Institute continues to update its Human Progress website with sources from around the world showing graphically the enormous progress human beings have made in every conceivable area of their lives, especially over the last 50 years. 

From communications to the environment, from housing to transportation, there’s a data set that shows how far the human race has come in a very short period of time. 

Cato’s primary purpose in continuing to develop its HumanProgress.org website, already remarkably robust, is to dispel the common myth that things are getting worse, and at an accelerating rate: 

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Venezuela’s Welfare State Collapsing Along with Oil Prices

This article first appeared at The McAlvany Intelligence Advisor on Monday, December 29, 2014:


As oil prices have dropped, so has Venezuela’s revenue stream that supports its welfare state. Ninety-five percent of Venezuela’s export earnings come from crude oil, and the industry makes up one quarter of the country’s gross domestic product. With oil prices setting new lows last week, Venezuela’s economy, already on the ropes, is set to descend into chaos, anarchy, and looting. The decision by Saudi Arabia to continue to pump in order to maintain its market share reveals not only the inherent inability of any cartel to maintain itself over time, but also the inability of a welfare state to sustain itself without outside help.

With the world’s largest oil reserves, surpassing those even of Saudi Arabia, an uninformed observer would be unable to explain how a country as richly blessed with natural resources as Venezuela could go broke,

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Collapse in Oil and Natural Gas Prices Hitting OPEC the Hardest

This article first appeared online at TheNewAmerican.com on Monday, December 29, 2014: 

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

As prices for crude oil and natural gas continued their precipitous fall over the last five weeks, most commentators have been focusing on the impact — real or predicted — on the oil and gas industry in the United States. Little noticed, however, was the report from the U.S. Energy Information Administration (EIA) about how those declines are likely to affect OPEC.

OPEC’s total revenues, which hit an all-time high of $900 billion in 2012, are expected to decline by half next year, to just $446 billion. And that projection is based on the assumption that oil prices will average

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Energy Junk Bond Investors Heading for the Exits

This article first appeared online at TheNewAmerican.com on Sunday, December 14, 2014:

English: Oil well An oil rig used for training.

An oil rig used for training.

As crude oil prices continue their breath-taking fall, the ripple effect is beginning to reach far beyond the gas pump. On Friday crude oil dropped below $60 a barrel, causing some experts to predict $55 a barrel the following week and $40 a barrel within a few months.

That is putting pressure on oil producers to service their massive debts — some $550 billion incurred in the last five years — and scaring bond investors who are now looking to sell.

It’s a mania, said Tim Gramatovich of Peritus Asset Management who oversees a bond portfolio of $800 million: “Anything that becomes a mania — ends badly. And this is a mania.”

Bill Gross, who used to run PIMCO’s gigantic bond portfolio and now advises the Janus Capital Group, explained that “there’s very little liquidity” in junk bonds. This is the language a bond fund manager uses to tell people that

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Gas Prices: How Much Lower and Longer?

This article first appeared online at TheNewAmerican.com on Friday, December 5, 2014: 

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

It made headline news when a OnCue Express station in Oklahoma City dropped its price for regular unleaded gasoline to $1.99 gallon on Wednesday. What didn’t make the headlines is what happened next: Drivers seeking to save a few pennies created long lines at OnCue, and so another station down the street, responding to the competition, cut its price to $1.98 a gallon. By the end of the day, another station located in nearby Moore, Oklahoma, cut its price to $1.95 a gallon. 

Gas wars are back, helping consumers and providing living, breathing proof that, despite everything, the free market still works. 

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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.

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