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

The Inevitable Demise of the OPEC Cartel

This article first appeared at TheNewAmerican.com on Sunday, October 26, 2014: 

English: Flag of the Organization of Petroleum...

Flag of the Organization of Petroleum Exporting Countries

Following the death of Total SA’s CEO, Christophe de Margerie, on October 20, OPEC sent this letter to the board of the multinational oil and gas company expressing sorrow over the loss:

It is with the deepest regret that the Organization of the Petroleum Exporting Countries (OPEC) learned of the tragic death of Christophe de Margerie, Chairman and Chief Executive Office of French oil major, Total SA, who died when his corporate jet struck a snow plough on a runway at Moscow’s Ynukovo airport late on Monday 20 October.

Missing from the letter was any mention of the demise of OPEC, which has been slowly imploding for years. Recent events have significantly speeded up the process, which

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What’s Behind the Attack on Fracking?

The following is the text of a talk I made in September to some oil industry people in Nashville:

In the opening sequence of the movie Gasland, Josh Fox, the film’s producer, said:

One day I got a letter in the mail. It was from a natural gas company. The letter told me that my land was on top of a formation that was called the Marcellus Shale which stretched across Pennsylvania… New York… Ohio… and West Virginia… and that the Marcellus Shale was the “Saudi Arabia” of natural gas.

I could lease my land to this company and I would receive a signing bonus of $4750 an acre. Having 19.5 acres, that was nearly $100,000… Right there in my hand. Could it be that easy?

No, it couldn’t.

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Safety Records Show Pipelines Best Method for Transporting Oil

This article first appeared at TheNewAmerican.com on Monday, October 20, 2014:

The combination of the Obama administration’s intransigence in approving the Keystone XL pipeline and the exponential explosion in the production of crude oil, especially from the Bakken formation in North Dakota, has put increasing pressure on alternative modes of transportation to get that crude to refineries and customers. But with the increasing use of alternative modes such as barges, rail cars, and over-the-road tanker trucks has come a growing concern about safety.

A series of rail accidents over the last several years has caught the attention of the Department of Transportation, and CNBC has tried its best to question the viability of oil transport safety. Since 2008, at least 10 incidents involving freight trains hauling crude across North America have spilled almost

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The Keystone Pipeline Delay: Killing People; Saving the Environment

This article first appeared at The McAlvany Intelligence Advisor on Monday, October 20, 2014:

Some contend that the Keystone pipeline delay is having consequences that were intended from the beginning. Others contend that those urging the president to delay approval of Keystone weren’t smart enough to anticipate the negative consequences that delay is having.

But there they are, nevertheless. In an ironic coincidence, the Manhattan Institute published its report claiming that pipelines are far safer for the transportation of oil and gas than railroads in June 2013, the same month of the tragic

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Canada’s Energy East Pipeline to make the Keystone XL Pipeline Irrelevant

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, October 15, 2014:

Keystone XL demonstration, White House,8-23-20...

Canada’s Prime Minister Stephen Harper must not have been happy following receipt of a phone call from President Obama on November 10, 2011, telling him that he was going to put the Keystone XL pipeline approval on hold. Obama no doubt claimed that the pending environmental lawsuit in Nebraska gave him plausible deniability in delaying his approval.

An immense part of the Bakken shale formation is under Canadian soil, and Harper was hoping that its development would continue to strengthen Canada’s economy. Estimated at up to some 24 billion barrels of recoverable oil, the Bakken formation is one of the top two or three largest oil discoveries in history. Not only was Obama’s call a reflection of his pandering to his environmentalist supporters, it also, no doubt, infuriated Harper that a foreigner

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Canadian Workaround to Make Keystone Pipeline Irrelevant

This article first appeared at TheNewAmerican.com on Tuesday, October 14, 2014:

Within days of President Obama’s surprise phone call on November 10, 2011 to Canada’s Prime Minister Stephen Harper telling him that he was going to put approval of the Keystone XL pipeline on interminable hold, Frank McKenna, the former Canadian ambassador to the United States, said: “The best way to get Keystone XL built is to make it irrelevant.”

What’s nearly approved is the plan to send the crude oil that’s pouring out of the Bakken formation at the Keystone Hardisty terminal in Alberta coursing through an underused natural gas pipeline stretching from Hardisty to Québec. From there it’s a relatively short hop to New Brunswick’s Irving oil refinery, where the refined product will easily and efficiently find its way to thirsty countries such as India. The beauty is that, as investigative journalists writing in the Montréal Gazette last week expressed it:

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OPEC Continues to Unravel

This article first appeared at TheNewAmerican.com on Monday, October 13, 2014:

With oil production from the Bakken formation in North Dakota now exceeding one million barrels a day and the Eagle Ford and Permian Basin oil fields in Texas producing more than three million barrels per day, prices for crude are dropping worldwide and pushing gasoline prices down along with them.

Crude oil prices on the New York Mercantile Exchange hit a 52-week low of $83.59 a barrel last Friday, while Lundberg just reported average prices for gasoline across the country have dropped to $3.26 per gallon. As recently as May 2, gas in the United States cost $3.72 a gallon.

In response to these falling prices, Saudi Arabia, the largest producer in OPEC, earlier this summer

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Saudi Arabia Capitulates, Cuts Oil Prices

This article first appeared at The McAlvany Intelligence Advisor on Monday, October 65, 2014:

Saudi Arabia’s announcement last week that it was cutting prices to its Asian, European, and US customers by between $.40 and $1.00 a barrel represents a major capitulation and recognition of reality. It also represents a major departure in its role as the leading member of the OPEC cartel, proving once again that every cartel eventually blows up as its members seek their own interests over those of the cartel.

For decades, the role of the OPEC cartel has been to protect the cash flow of its members by manipulating oil prices through changes in production levels. If prices got too high and demand started falling as a result, the cartel would increase the supply of crude to the world markets. If prices got too low, on the other hand, it would gladly restrict those supplies to bring prices back up to a level acceptable to the cartel.

Those days now appear to be over.

By bringing its prices down below prices charged by OPEC member Qatar and non-OPEC member Oman, Saudi Arabia is setting the stage for an international oil price war. Futures traders, who have gotten hammered as crude oil prices have dropped almost 20% since June, are holding their collective breath to see if Qatar and Oman jump ship and reduce their prices as well. Energy analysts like John Kilduff with Again Capital are estimating that crude oil prices will consequently drop to the low $80s, while Fadal Gheit at Oppenheimer is predicting prices dropping into the low $70s. Gheit explained:

It’s both supply and demand. It’s basically the perfect storm that brought all these prices down. You have plenty of supply, which you never thought possible, and all of a sudden demand is shrinking: China is slowing down [and] Europe never recovered.

Gheit is a realist. He stated what every observer already knows: the OPEC cartel “is held together by scotch tape. They hate each other.” Now that the leader of the pack has decided to leave the pack, it’s going to be much easier for other OPEC members to join the fray and drive prices down even further.

Part of that perfect storm is the shale oil fracking revolution that has driven crude oil production in the United States to levels not seen in 50 years. Part of it is Russia’s increase in crude oil production to nearly post-Soviet era records as well. In addition, production from Kurdistan over the next 15 months is expected to more than provide China’s increased demands for energy, thus assuring that world supply will continue, in the short run at least, to outpace world demand.

Saudi Arabia’s admission of reality is already having welcome impacts. Gas prices in the United States have fallen to $3.32 a gallon on average, with more than half the states having at least one gas station selling gas for less than $3 a gallon. It’s also pulling the legs out from under the foreign policy justification of adventurism abroad in order to protect the supply of energy which America is now almost capable of providing all by herself.

As prices decline, consumers are able to redirect spending into other areas, helping along the modest economic recovery from the Great Recession. It may also prove to skeptics that, once again, Warren Buffett is right. His much ballyhooed announcement of his purchase of Van Tuyl Group, the nation’s largest US auto dealership chain, should help his company, Berkshire Hathaway, ride the wave of cheaper gas and the consequent willingness of customers to replace their aging fleet of vehicles with new ones.

It is possible, however, that prices may drop too far, causing capital that is currently flooding into the energy exploration business to go elsewhere where it will be treated better in the years to come. As Stephen Leeb, a writer at Forbes, put it: “It takes energy to get energy.” In the early 1950s, it took the energy from one barrel of oil to harvest five barrels. Today, because of improvements in technology, it takes about one barrel to produce nine in conventional fields.

But in unconventional fields – i.e., shale oil fracking – it takes the energy of one barrel of oil to discover, develop, and lift just four barrels, which, according to State University of New York Professor Charles Hall, isn’t enough to keep America’s modern industrial society operating at peak efficiency. The proper ratio, according to Hall, is that one barrel of energy must generate at least five barrels of new production, preferably more.

If the Old Farmers Almanac’s prognostications are correct, the US should enjoy another relatively mild winter, reducing chances of a spike in demand that would drive crude oil prices higher. For the time being then, Saudi Arabia’s capitulation and potential blowing up of OPEC will be enjoyed by American drivers and consumers. In the longer run, however, capital may be redirected away from the oil patch to more profitable areas if the price of crude stays too low, too long. In the meantime, America will once again enjoy the view from the catbird seat.

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Sources:

Commerzbank: ‘OPEC Appears to Be Gearing Up for Price War’

CNBC: Saudi signals price skirmish as oil heads to bear market

Bloomberg: Brent Oil Falls to Lowest Since June 2012 on Ample Supply

The Old Farmers Almanac: 2014–2015 Winter Weather Forecast Map (U.S.)

Forbes: Dangerous Times As Energy Sources Get Costlier To Extract

Auto Blog: Warren Buffet buys largest private US car dealership chain

Saudi Arabia Cuts Oil Prices, Could Spark Price War

This article first appeared at TheNewAmerican.com on Friday, October 3, 2014:

In a surprise move this week, Saudi Arabia cut the price of its flagship Arab light oil, which it sells mostly to its Asian customers, by one dollar a barrel. It also cut prices to its customers in the United States and Europe by $.40 a barrel. This brings Saudi Arabia’s prices below those offered by OPEC member Qatar and non-OPEC member Oman. Oil futures traders are holding their breaths, waiting for Qatar and Oman to cut their prices in response, setting off a full-scale oil price war.

The simple economics of supply and demand have already driven the price of oil down by almost 20 percent since June, and a number of traders and other observers are suggesting those prices have

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Fracking Boom Continues to Set Records

This article first appeared at The McAlvany Intelligence Advisor on Wednesday, September 17, 2014:

Logo of International Energy Agency

Logo of International Energy Agency (Photo credit: Wikipedia)

The explosion in production in the oil patch makes it nearly impossible to keep up. Economist Mark Perry is trying. On September 2, he reported that Texas crude oil production in June topped three million barrels per day, noting that, as a separate nation, Texas would be the world’s eighth largest oil producer. The very next day Perry reported that natural gas production from the Utica Shale formation has increased by a factor of seven in just two years, and it’s just getting started.

Less than two weeks later, Perry reported that

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More Good News From the Oil Patch: Less Drilling, More Production

This article first appeared at TheNewAmerican.com on Tuesday, September 16, 2014:

A petroleum drilling rig capable of drilling t...

A petroleum drilling rig capable of drilling thousands of feet (Photo credit: Wikipedia)

It didn’t take long for naysayers at Newsweek magazine to declare that the fracking boom is at high risk of going bust. This followed an announcement from the Bank of America in July that the United States is now the world’s leading oil producer, ahead of both Saudi Arabia and Russia. In just the last five years, U.S. oil production has exploded from five million barrels a day to 11 million and, according to the International Energy Agency (IEA), that number will continue to climb for at least the next five years.

But what then? Newsweek posited: 

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Link Between Fracking and Earthquakes Remains Tenuous, Say Experts

This article first appeared at TheNewAmerican.com on Friday, July 11, 2014:

Aerial view of resource extraction in Texas. A...

Aerial view of resource extraction in Texas.

On July 3, Science magazine reported that, using its models in place of data they claimed was unavailable, water flowing from fracking disposal wells in Oklahoma “is potentially responsible for the largest swarm” of earthquakes recently noted in that state. The report, available in full to subscribers only, was immediately picked up by the Los Angeles Times, which said the study confirmed the link between fracking and the earthquakes.

Science, published by the environmentalist group American Association for the Advancement of Science (AAAS), has maintained a veneer of credibility for years while promoting the questionable science behind global warming. In December 2006, AAAS adopted an official statement on climate change:

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Texas 7, California Nothing

This article was first published at TheNewAmerican.com on Wednesday, July 9, 2014:

Moving Day.

Moving to Texas from California

One would think the good doctor is running for Congress from Texas, but he’s not. He’s running to boot a hard-left Democrat who’s been representing the 24th District in California for 15 years by touting all the good things Texas has been doing compared to California. In a letter to the Wall Street Journal, Dr. Brad Allen, a pediatric heart surgeon from Paso Robles, wrote:

As a Californian, I am pained to say that three of the nation’s five fastest-growing cities – and seven of the top 15 – are in Texas.

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Climate Changers Commit Fraud by Changing the Numbers

This article was first published by The McAlvany Intelligence Advisor on Wednesday, June 26, 2014: 

 

English: Remote Weather Station. Experimental ...

Remote Weather Station. Experimental site investigating effects of Global warming

The James Hansens of the world just can’t seem to catch a break. Before he supported APG – anthropogenic global warming – he scoffed at it. Climategate added to the pile of woes facing those predicting the end of humankind thanks to global warming, while the list of legitimate scientists (those without funding and therefore not beholden) continues to grow longer almost by the day.

That’s how truth will out: drip by drip by drip.

Steven Goddard, who blogs at Real Science, explained how he happened to learn about NASA’s latest manipulation of US temperature data:

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Government cuts California oil Reserve Estimates by 96 Percent

English: Monterey Formation, Gaviota State Par...

Monterey Formation, Gaviota State Park (Photo credit: Wikipedia)

A federal government agency reported on Tuesday that its previous estimate of the amount of recoverable oil from California deposits was way too optimistic. Its 2012 estimate that the Monterey formation contained 13.7 billion barrels of recoverable oil was cut to 600 million barrels, just 4 percent of its previous estimate. Adam Sieminski, head of the Energy Information Administration (EIA), said:

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Media’s Celebration over Fracking Verdict is Premature

Aerial view of resource extraction in Texas. A...

Aerial view of resource extraction in Texas. (Photo credit: Amy M. Youngs)

On April 22, when the 6-person jury’s verdict awarding $3 million in a strange nuisance lawsuit in Dallas was announced, the national media nearly frothed at the mouth, salivating over what they perceived as a “breakthrough” case in its war against fracking.

The headline from CNN screamed “Texas family plagued with ailments gets $3M in 1st-of-its-kind fracking judgment,” implying that the first olive out of the bottle is always the hardest, that the next ones will now come out more easily. The Los Angeles Times wrote that the verdict “is thought to be the first of its kind in the nation” and quoted environmentalist Gary Wocker who exclaimed:

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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.
Copyright © 2021 Bob Adelmann