Tag Archives: oil

The Lessons of Socialism Being Taught in Venezuela

Monday, 07 September 2020 08:54

This article was published by The McAlvany Intelligence Advisor on Monday, June 26, 2017:

The Coat of arms of Venezuela

The Coat of arms of Venezuela

Thanks to Americans for Prosperity (AFP), the lessons being taught by the on-going destruction of Venezuela have been codified. It’s called “10 Biggest Lies of Socialism” and seven of them apply directly to the once-prosperous oil-rich South American country. First the lie is stated and then the reality:

Under socialism there will be income equality, as everyone will contribute what they can and receive what they need. But, says AFP, the system instead guarantees that everyone (except the elites in charge) will be equally poor.
Under socialism private companies will be forced by the government to charge what it determines to be “reasonable” prices through price fixing. Rationing follows when goods previously available disappear from the market. All that these mandates do, says AFP, is guarantee bread lines and shortages as producers cannot produce under such strictures without going bankrupt.
Under socialism, the economy, having eliminated the overhead cost of “profits” needed under a free market capitalist system, is touted as being able to make the economy grow. In Venezuela, however, the oil-rich nation is unable to feed itself, thanks to bureaucratic miscues and massive corruption among government officials doing the rationing of goods and services.
Socialism is sold as guaranteeing a class-free society that turns out, according to AFP, to be a society where “everyone is equal in their misery.”
Socialism guarantees free college educations and free healthcare for everyone but without asking, and answering, the key question: at whose expense? The myth that everyone can live at the expense of everyone else has been exposed in Venezuela.
Socialism claims that everyone is entitled to material goods (see 5 above) but fails as instead it favors those at the top at the expense of everyone else, leaving the population destitute.
Socialism promises that workers will be “liberated” from their capitalist slave masters, but discover that they are now slaves of the state, subject to the orders of the state and having their earnings taken from them and distributed to the state for distribution to others.

The sad forced transition of Venezuela into a backward, third-world country whose starving citizens are forced to barter has been tracked extensively. Starting in April,

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Saudi Arabia Once More Delays Plans to Sell Part of Its Oil Company

Thursday, 22 March 2018 04:29

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.

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Hey, Prince! How Does it Feel to Have the Crude Oil Shoe on the Other Foot?

Wednesday, 21 March 2018 09:43

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

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

Tuesday, 13 February 2018 06:32

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,

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Fracking Revolution Pushes U.S. Daily Crude Oil Production Over 10 Million Barrels

Saturday, 03 February 2018 06:18

This article appeared online at TheNewAmerican.com on Friday, February 2, 2018:

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

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“What Hath God Wrought?” Tax Reform and Deregulation Unleashing an Economic Tsunami

Thursday, 01 February 2018 06:34

This article was published by The McAlvany Intelligence Advisor on Wednesday, January 31, 2018:

When Samuel Morse asked for suggestions on what his first message over his telegraph should be on May 24, 1844, Annie Ellworth suggested a verse from Numbers 23:23: “There is no magic charm, no witchcraft, that can be used against the nation of Israel. Now people will say about Israel: Look what God has done!” [Good News Bible translation.]

The same might be said about the effect that the magic elixir of deregulation and cuts in tax rates is having not only in the United States, but globally as well. Economists at the International Monetary Fund just announced that, thanks to the combination of those two potent medicines, it has revised its global economic growth estimates for each of the next two years to 3.9 percent.

This is a staggering 70 percent improvement over the average global GDP growth experienced during the unlamented Obama years.

And it’s just getting started. Walmart, Boeing, Apple, Comcast, and more than 200 other companies have announced what they’re doing with their tax savings, impacting directly the paychecks of an estimated three million workers. Now comes ExxonMobil with its announcement: $35 billion of new money is going to be pumped into its operations in the United States. The company’s CEO, Darren Woods, gave credit where credit is due:

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Venezuela’s Crude Oil Exports to U.S. Declining Sharply

Tuesday, 30 January 2018 06:23

This article appeared online at TheNewAmerican.com on Monday, January 29, 2018:

The flow of Venezuelan heavy crude oil to U.S. Gulf Coast refineries dropped by 60 percent in the first three weeks of January, according to data from the U.S. Energy Information Agency (EIA). Shipments had been averaging around a million barrels a day, but they dropped to 394,000 bpd since the first of the year.

This adds to Marxist Nicolas Maduro’s financial woes, and none too soon, either. He has been relying on cash generated by those exports to continue to keep his regime in power. But now, in the famous words of Great Britain’s former Prime Minister Margaret Thatcher, “The problem with socialism is that you eventually run out of other peoples’ money.”

For Maduro “eventually” is upon him and his totalitarian dictatorship.

The news from the EIA is welcome but not surprising.

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U.S. Oil Production Will Soon Overtake Saudi Arabia’s

Tuesday, 23 January 2018 06:45

This article appeared online at TheNewAmerican.com on Monday, January 22, 2018:

Fatih Birol, head of the Paris-based International Energy Agency (IEA), told a congressional committee last week, “What we see is a result of the shale revolution [fracking]. The U.S. is becoming the undisputed leader of oil and gas production worldwide. [U.S.] oil production is growing very strongly and will continue to grow. We think that this growth is unprecedented [both in the] size of the growth and the pace of the growth.”

In 1973, Saudi Arabia punished U.S. citizens with an oil embargo in retaliation for the U.S. government’s support for Israel during the Yom Kippur War. It could do so because it held the biggest hammer: Saudi Arabia controlled the world’s largest reserves of crude oil and the kingdom. Within months, the price of oil quadrupled in the United States, resulting in shortages and rationing. Gas stations were closed, and when they reopened they were forced to restrict gasoline purchases to “odd” and “even” days depending upon their customers’ license plate numbers. The federal government imposed “double-nickel” (55 mph) speed limits on highways, and experimented with “daylight saving” time in order to reduce the impact of the embargo.

Those days are long gone and not likely ever to return. Saudi Arabia and its OPEC cartel are slowly being reduced to bit players in the global energy market. Saudi Crown Prince Mohammed bin Salman saw that coming more than two years ago when he announced

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Venezuela’s Oil Production Collapsing Along With Its Economy

Saturday, 20 January 2018 06:45

English: Fatih Birol, the Chief Economist of t...

Fatih Birol, head of the IEA

This article appeared online at TheNewAmerican.com on Friday, January 19, 2018:

Embed from Getty Images

The Paris-based International Energy Agency (IEA) reported on Friday that oil production from Venezuela’s state-owned, state-controlled, and state-operated energy company, PdVSA, dropped by 12 percent last month, following a decline by a third in 2017. The announcement avoided saying anything disparaging about the Marxist government’s ham-handed mismanagement of the company, nor did it criticize attempts to run the company with military officers with no technical training in place of the technicians who were in place earlier. Nothing was said about the arrest of dozens of top officials of the oil company in Maduro’s attempt to blame the fall in production on their corruption, mismanagement, and fraud, instead of his socialist program of Chavismo. And certainly no mention was made of the root cause of the collapse: Socialism always fails when it runs out of other people’s money.

Maduro is about out of other people’s money.

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Trump’s Interior Secretary Proposes Selling Offshore Drilling Leases Starting in 2019

Saturday, 06 January 2018 06:21

This article appeared online at TheNewAmerican.com on Friday, January 5, 2018:

English: Nancy Pelosi photo portrait as Speake...

One of the usual suspects

President Trump’s Interior Secretary Ryan Zinke was very careful in announcing his agency’s next step in expanding energy development to include the United States’ offshore reserves. He knew that environmentalists and far-left politicians would attack his plan and did what he could to placate them in advance. Said Zinke:

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Dakota Access Pipeline Fulfilling Its Promise

Tuesday, 02 January 2018 05:58

This article appeared online at TheNewAmerican.com on Monday, January 1, 2018:

Fully operational since June, the Dakota Access Pipeline is lowering transportation costs, reducing tank car usage, reducing environmental and population risk, improving North Dakota’s financial condition, and putting the lie to the alarmist anti-pipeline propaganda.

There’s scarcely a downside.

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Obama Fracking Rule to be Overturned by BLM in January

Saturday, 30 December 2017 07:17

This article appeared online at TheNewAmerican.com on Friday, December 29, 2017:

Map of the part of the region in Texas, red is...

Part of the Permian Basin in west Texas

A federal appeals court refused on Wednesday to reconsider its decision to overturn an Obama administration rule on fracking, holding that the issue was moot: The Trump administration is planning to throw out the rule altogether in January.

The Bureau of Land Management (BLM) said that the Obama administration’s rule “unnecessarily burdens industry compliance costs and information requirements that are duplicative of regulatory programs of many states and some tribes. As a result, we are proposing to rescind, in its entirety, the [Obama administration’s] 2015 final rule.”

The original decision in 2016 ruled that the Obama administration was guilty of federal overreach,

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Crude Oil Price Outlook: Back to the ’40s?

Wednesday, 27 December 2017 06:23

This article appeared online at TheNewAmerican.com on Tuesday, December 26, 2017:

The same day that OPEC announced it would be extending its production cut agreement through the end of next year, the U.S. Energy Information Administration (EIA) announced that U.S. crude oil production jumped an astonishing 290,000 barrels per day from August levels.

Oil traders yawned and drove the price of crude higher. After all, it was a one-month spike, and compliance among both OPEC members and non-members remained surprisingly high. The agreement was taking crude oil off the market faster than producers were adding it. Voila! Increased demand coupled with decreased supply equals higher prices. Futures moved higher with Brent (prices set in London) moving past $62 a barrel with West Texas Intermediate (WTI, prices set in Cushing, Oklahoma) approaching $60.

Those traders were happy to ignore the increase in rig counts in the United States, and the more than 1,000 new horizontal wells being developed as a result — the highest seen since March 2015.

But all three official observers of the world’s crude oil market had a surprise waiting:

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Opening ANWR to Energy Development May Be Too Late

Friday, 22 December 2017 12:20

This article appeared online at TheNewAmerican.com on Wednesday, December 20, 2017:

Part of the motivation by Republicans to open the Arctic National Wildlife Refuge (ANWR) to energy development — off limits for nearly 40 years thanks to environmental extremists and the Obama administration — is to use lease fees to offset the deficits in the tax reform bill.

The numbers coming from the Congressional Budget Office (CBO) are impressive. Leasing even a tiny part of the tiny part that “Section 1002” represents of the total ANWR acreage would produce $2.2 billion in revenues over the next 10 years, to be split evenly between Alaska and the federal government.

Alaska’s Republican Senator Lisa Murkowski said in a speech on the floor of the Senate late Tuesday night that

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The New York Times Masks the Truth in Venezuela

Friday, 22 December 2017 05:27

This article was published by The McAlvany Intelligence Advisor on Wednesday, December 20, 2017:

After five months and 5,000 words, the journalists at the New York Times refused to use the word “socialism” as the cause of the horrors they uncovered in Venezuela. Instead, Venezuela’s problems are the result of years of “economic mismanagement” instead.

What they found was horrific, and more than sufficient to prove the point: socialism destroys, maims, and kills. Its worst atrocities are inflicted on the defenseless: the elderly and the very young. The intrepid journalists focused on the latter, and what they found was predictable and heartrending: babies in Venezuela are dying of malnutrition at rates seen only in refugee and concentration camps. Emergency rooms are filled to overflowing by mothers with starving infants at their breasts while others are being turned away. Doctors told the journos that children arrive at the hospitals weighing the same as when they were born. Infant mortality rates are soaring, and there’s little doctors can do about it. Said the authors: “The statistics that have come out are staggering. In the Ministry of Health’s 2015 report, the mortality rate for children under four weeks old had increased a hundredfold [while] maternal mortality had increased nearly fivefold.”

Matt Vespa suffers under no such confusion about the cause of what’s happening there:

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Credit Agencies Declare Venezuela in Default

Wednesday, 15 November 2017 06:26

This article appeared online at TheNewAmerican.com on Tuesday, November 14, 2017:

English: Federal dependencies of Venezuela's Flag

Federal dependencies of Venezuela’s Flag

Following a meeting between some of Venezuela’s bondholders and Venezuelan officials in Caracas on Monday, Maduro’s government declared the meeting a success: “The process of refinancing Venezuela’s foreign debt began with resounding success. The start of this refinancing of our debt ratifies our full intention to comply, as we have always done, with all our obligations.” One observer of the 25-minute long meeting, Raymond Zucaro of RVX Asset Management, said, “Nothing of substance happened.”

What did happen is that Maduro’s government, which promised it would be making a number of bond interest payments, didn’t. According to both Moody’s and S&P Global,

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The U.S. Economy is Built on Papier-mâché and Politicians’ Promises

Thursday, 02 November 2017 05:32

This article was published by The McAlvany Intelligence Advisor on Wednesday, November 1, 2017:

What a perfect definition of the American economy! Papier-mâché is defined as a “composite material consisting of paper pieces of pulp, sometimes reinforced with textiles, bound with an adhesive such as glue, starch, or wallpaper paste.” Add in a dose of political promises that everyone knows cannot be kept – not even close – and we have the American economy.

From a distance it looks pretty good. More than pretty good: to the untrained eye the American economy is setting world records, to wit:

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U.S. Economy Powers Through Hurricanes, Beats Forecasts With Three-percent Growth in Third Quarter

Friday, 27 October 2017 12:51

This article appeared online at TheNewAmerican.com on Friday, October 27, 2017:

Putting in its best six-month performance in three years, the U.S. economy barely skipped a beat in the third quarter, growing at a three-percent annual rate. That was just slightly behind the second quarter, which grew at 3.1 percent, but way ahead of economists who had forecast growth for the third quarter at just 2.5 percent.

The Commerce Department said

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Aramco CEO Not Worried About American Frackers

Friday, 27 October 2017 07:31

This article appeared online at TheNewAmerican.com on Thursday, October 26, 2017:

English: Headquarters of Aramco Services Company

Headquarters of Aramco Services Company

Saudi Aramco CEO Armin Nasser told CNBC’s Squawk Box on Sunday that he wasn’t at all worried about American frackers, since they are concentrating on “sweet spots” — the richest fields with the highest returns — which can’t last forever: “The concentration that we are seeing today [by American frackers] is on the sweet spot of shale, and this will not last forever. You can concentrate for some time on the sweet spots and produce more oil. But ultimately you need to venture downward, and that’s where you have less quality and you require more cost to produce these barrels. Shale oil will contribute additional barrels [to world crude oil supplies], but it will all depend on the price of crude.”

Nasser no doubt was referring to data released last week that showed

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Aramco’s CEO Tells Half a Truth

Friday, 27 October 2017 07:19

This article was published by The McAlvany Intelligence Advisor on Friday, October 27, 2017:

Carbon print of Alfred Lord Tennyson, 1869, pr...

Alfred Lord Tennyson, 1869

A Yiddish proverb holds that “a half-truth is a whole lie,” while Ann Landers said that “the naked truth is always better than the best-dressed lie.” Alfred Lord Tennyson said it best: “A lie which is half a truth is ever the blackest of lies.”

Whether Aramco’s CEO intended to tell a lie or just wasn’t completely forthright remains unknown. What Armin Nasser did tell CBNC’s “Squawk Box” on Sunday certainly wasn’t the whole picture. He blew off America’s energy frackers:

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