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Oil is about to get more expensive in 2018, says analyst

$80 per barrel estimated within possibility after Futures continue to rally after 22% gain over the last year

Seraphim Hanisch

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The Petrodollar is gaining strength. So is the Petroruble, to coin a phrase.

Yes, that was a pun.

The truth is that over the last twelve months, oil prices have been gradually and steadily on the increase.  At the beginning of 2017, the price for a barrel of crude was about $56.  It sunk gradually until June of last year, bottoming out in the mid $40’s, and has been on the rise again ever since.

This rise gave one market forecaster, Byron Wien, impetus to predict that the price in 2018 is likely to continue to increase, reaching the US$ 80 point this year.  He predicts this as a surprise for the market.

Oil is a uniquely regulated market, because the quantity of actual oil available to pump is far higher than the amount that the oil-producing nations decide to pump.  This is what gave the OPEC cartel so much power in the late 20th century.  The common knowledge at that time was that the American oilfields were depleted, therefore the US, as the chief consumer of oil in those times, would have to pay the fiddler for the tune, and that fiddler was, of course, the consortium of oil producing nations in the Middle East.

However, this did not work all the time.  While there are many stories to tell about this, and probably infinite reasons given by many people as to what exactly controls price and demand of oil, by the early 21st century, the price per barrel had dropped very low, as low as $18 or $19 a barrel at times, and below $40 overall for nearly the first five years of this century.  Then it began an overall rise, peaking in 2008 with a price of about $140 per barrel.  This was the first time many American drivers witnessed prices per gallon of gasoline in excess of $4. This author believes that this price shock was the kickoff point for what became known as the Great Recession. The prospect of paying $100 per tank of gas was overwhelming to many people who owned low-efficiency vehicles, such as SUV’s, and the market for these vehicles came to a standstill as people stopped driving them and stopped buying them.  At the same time the attention of the nation turned to AIG and several other large companies in urgent need of a bailout, and so, the crisis was on.  As the graph below shows, the effect on oil prices was drastic.

The next rise, from about 2009 to about 2014 was partly politically driven, or at least hoped for.  The Obama Administration hoped to change the energy policy in the USA drastically, but his approach was a negative one, wishing to keep oil prices high to force the population to choose then-inefficient electric vehicles, or gas-powered ones with very small engines, His Energy Secretary, Steven Chu, had openly expressed hope for $10 per gallon gas before his appointment as Secretary, and to be fair he later recanted this.  On the record, Obama and Chu do not insist on such a rise as policy. But in the rather crafty way Obama had, he was able to express his wishes “nicely” without having to ever be forced to take responsibility for his words.  The prices for oil increased again, this time staying between $100 and $120 a barrel for several years, and during this time fuel prices continued to climb back into the $4 region.

But a new force was about to emerge in the oil market, and it came as a surprise to the whole industry.

The extraction industry had refined the technique of Hydraulic Fracturing (fracking) over the years, and with it, a new drilling technique was also devised, where instead of punching a hole straight down to where the oil was, companies could now change direction in the ground, or drill sideways, and pump water or other chemical compounds into the substrata and force more oil out.  This, plus the discoveries of at least two new major American oilfields, the Bakken Formation in North Dakota and the Niobrara Formation in Colorado and Wyoming, coupled with $120 per barrel prices, drove a drilling boom in the United States, of which I was a personal witness to, since I lived in the Niobrara region at the time. This technology did not stay restricted to the USA of course, and now for the first time in a generation, OPEC had an extremely aggressive challenger in the market.  In 2006, Russia and Saudi Arabia held roughly two-thirds of the production volume, with the USA at about 20%, but by the beginning of 2015, the American share of output had risen to 25%, while Russia and Saudi Arabia fell a bit, to about 28% apiece.

Crude Oil output of Top Five producing countries, from 1972 through 2016.

This broke the back of high-priced oil, and again the per-barrel price plunged below $40 in about one year’s time.  Now this price caused some of the new wells in the States to become unprofitable, so they were turned off for a time.  But as the price increases past the profitability points for these wells (ranging from as low as $10/bbl to $70/bbl), production can be increased again at the flip of a switch.

OPEC no longer has absolute control over the market.  However, like any good enterprise it is in competition, mainly to maintain a price-level and production level that maximizes its own profitability.

We have presented all of this information to make the following prediction.  Mr. Wien’s idea of $80/bbl oil is not entirely insane.  But it is unlikely to happen.  It should be somewhat more clear to the reader that this market is not just a simple supply vs demand equation.  There matters of geopolitics, national, regional and global finance, and efforts to regulate this industry to control it.  The amount of oil that is available in the world is certainly finite, but the truth is we keep finding more and more of it, so exactly what that finite point is, is still unknown.  It seems unlikely that we will see $80 oil, because high-priced gasoline will not be supported in the USA, even with this stronger economy now reported there.  Further, the increasingly successful EV market is getting more and more attractive and affordable.  With the advent of affordable electric vehicles that have comparable range to gas-powered ones, the demand for oil for gasoline (the biggest single by-product) will top out, and then slowly start to fall.

It is a matter of timing, of course, and the fascinating thing about following this market is to observe when, and how, all these elements come together.

Our prediction, for what it is worth: Oil will not exceed $74 this year.

Let the games begin.

 

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US media suffers panic attack after Mueller fails to deliver on much-anticipated Trump indictment

Internet mogul Kim Dotcom said it all: “Mueller – The name that ended all mainstream media credibility.”

RT

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Important pundits and news networks have served up an impressive display of denials, evasions and on-air strokes after learning that Robert Mueller has ended his probe without issuing a single collusion-related indictment.

The Special Counsel delivered his final report to Attorney General William Barr for review on Friday, with the Justice Department confirming that there will be no further indictments related to the probe. The news dealt a devastating blow to the sensational prophesies of journalists, analysts and entire news networks, who for nearly two years reported ad nauseam that President Donald Trump and his inner circle were just days away from being carted off to prison for conspiring with the Kremlin to interfere in the 2016 presidential election.

Showing true integrity, journalists and television anchors took to Twitter and the airwaves on Friday night to acknowledge that the media severely misreported Donald Trump’s alleged ties to Russia, as well as what Mueller’s probe was likely to find. They are, after all, true professionals.

“How could they let Trump off the hook?” an inconsolable Chris Matthews asked NBC reporter Ken Dilanian during a segment on CNN’s ‘Hardball’.

Dilanian tried to comfort the CNN host with some of his signature NBC punditry.

“My only conclusion is that the president transmitted to Mueller that he would take the Fifth. He would never talk to him and therefore, Mueller decided it wasn’t worth the subpoena fight,” he expertly mused.

Actually, there were several Serious Journalists who used their unsurpassed analytical abilities to conjure up a reason why Mueller didn’t throw the book at Trump, even though the president is clearly a Putin puppet.

“It’s certainly possible that Trump may emerge from this better than many anticipated. However! Consensus has been that Mueller would follow DOJ rules and not indict a sitting president. I.e. it’s also possible his report could be very bad for Trump, despite ‘no more indictments,'” concluded Mark Follman, national affairs editor at Mother Jones, who presumably, and very sadly, was not being facetious.

Revered news organs were quick to artfully modify their expectations regarding Mueller’s findings.

“What is collusion and why is Robert Mueller unlikely to mention it in his report on Trump and Russia?” a Newsweek headline asked following Friday’s tragic announcement.

Three months earlier, Newsweek had meticulously documented all the terrible “collusion” committed by Donald Trump and his inner circle.

But perhaps the most sobering reactions to the no-indictment news came from those who seemed completely unfazed by the fact that Mueller’s investigation, aimed at uncovering a criminal conspiracy between Trump and the Kremlin, ended without digging up a single case of “collusion.”

The denials, evasions and bizarre hot takes are made even more poignant by the fact that just days ago, there was still serious talk about Trump’s entire family being hauled off to prison.

“You can’t blame MSNBC viewers for being confused. They largely kept dissenters from their Trump/Russia spy tale off the air for 2 years. As recently as 2 weeks ago, they had @JohnBrennan strongly suggesting Mueller would indict Trump family members on collusion as his last act,” journalist Glenn Greenwald tweeted.

While the Mueller report has yet to be released to the public, the lack of indictments makes it clear that whatever was found, nothing came close to the vast criminal conspiracy alleged by virtually the entire American media establishment.

“You have been lied to for 2 years by the MSM. No Russian collusion by Trump or anyone else. Who lied? Head of the CIA, NSA,FBI,DOJ, every pundit every anchor. All lies,” wrote conservative activist Chuck Woolery.

Internet mogul Kim Dotcom was more blunt, but said it all: “Mueller – The name that ended all mainstream media credibility.”

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Canadian Lawmaker Accuses Trudeau Of Being A “Fake Feminist” (Video)

Rempel segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career

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Via Zerohedge

Canada’s feminist-in-chief Justin Trudeau wants to support and empower women…but his support stops at the point where said women start creating problems for his political agenda.

That was the criticism levied against the prime minister on Friday by a conservative lawmaker, who took the PM to task for “muzzling strong, principled women” during a debate in the House of Commons.

“He asked for strong women, and this is what they look like!” said conservative MP Michelle Rempel, referring to the former justice minister and attorney general Jody Wilson-Raybould, who has accused Trudeau and his cronies of pushing her out of the cabinet after she refused to grant a deferred prosecution agreement to a Quebec-based engineering firm.

She then accused Trudeau of being a “fake feminist”.

“That’s not what a feminist looks like…Every day that he refuses to allow the attorney general to testify and tell her story is another day he’s a fake feminist!”

Trudeau was so taken aback by Rempel’s tirade, that he apparently forgot which language he should respond in.

But Rempel wasn’t finished. She then segued to Trudeau’s push to quash an investigation into allegations that he once groped a young journalist early in his political career. This from a man who once objected to the continued use of the word “mankind” (suggesting we use “peoplekind” instead).

The conservative opposition then tried to summon Wilson-Raybould to appear before the Commons for another hearing (during her last appearance, she shared her account of how the PM and employees in the PM’s office and privy council barraged her with demands that she quash the government’s pursuit of SNC-Lavalin over charges that the firm bribed Libyan government officials). Wilson-Raybould left the Trudeau cabinet after she was abruptly moved to a different ministerial post – a move that was widely seen as a demotion.

Trudeau has acknowledged that he put in a good word on the firm’s behalf with Wilson-Raybould, but insists that he always maintained the final decision on the case was hers and hers alone.

Fortunately for Canadians who agree with Rempel, it’s very possible that Trudeau – who has so far resisted calls to resign – won’t be in power much longer, as the scandal has cost Trudeau’s liberals the lead in the polls for the October election.

 

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Why Joe May be Courting Stacey

Joe Biden has a history on compulsory integration dating back to the 1970s that Sen. Jesse Helms called “enlightened.”

Patrick J. Buchanan

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Authored by Patrick Buchanan via The Unz Review:


Of 895 slots in the freshman class of Stuyvesant High in New York City, seven were offered this year to black students, down from 10 last year and 13 the year before.

In the freshman class of 803 at The Bronx High School of Science, 12 students are black, down from last year’s 25.

Of 303 students admitted to Staten Island Technical High School, one is African-American.

According to The New York Times, similar patterns of admission apply at the other five most elite high schools in the city.

Whites and Asians are 30 percent of middle school students, but 83 percent of the freshman at Bronx High School of Science, 88 percent at Staten Island Technical and 90 percent at Stuyvesant.

What do these numbers tell us?

They reveal the racial composition of the cohort of scientists and technicians who will lead America in the 21st century. And they tell us which races will not be well represented in that vanguard.

They identify a fault line that runs through the Democratic Party, separating leftists who believe in equality of results for all races and ethnic groups, and those who believe in a meritocracy.

Mayor Bill de Blasio has expressed anger and frustration at the under-representation of blacks and Hispanics in the elite schools. But Gov. Andrew Cuomo and the state legislature have ignored his pleas to change the way students are admitted.

Currently, the same test, of English and math, is given to middle school applicants. And admission to the elite eight is offered to those who get the highest scores.

Moreover, Asians, not whites, are predominant.

Though 15 percent of all middle school students, Asians make up two-thirds of the student body at Stuyvesant, with 80 times as many slots as their African-American classmates.

The egalitarian wing of the Democratic Party sees this as inherently unjust. And what gives this issue national import are these factors:

First, the recent scandal where rich parents paid huge bribes to criminal consultants to get their kids into elite colleges, by falsifying records of athletic achievement and cheating on Scholastic Aptitude Tests, has caused a wave of populist resentment.

Second, Harvard is being sued for systemic reverse racism, as black and Hispanic students are admitted with test scores hundreds of points below those that would disqualify Asians and whites.

Third, Joe Biden has a history on compulsory integration dating back to the 1970s that Sen. Jesse Helms called “enlightened.”

Here are Biden’s quotes, unearthed by The Washington Post, that reflect his beliefs about forced busing for racial balance in public schools:

“The new integration plans being offered are really just quota systems to assure a certain number of blacks, Chicanos, or whatever in each school. That, to me, is the most racist concept you can come up with.

“What it says is, ‘In order for your child with curly black hair, brown eyes, and dark skin to be able to learn anything, he needs to sit next to my blond-haired, blue-eyed son.’ That’s racist!

“Who the hell do we think we are, that the only way a black man or woman can learn is if they rub shoulders with my white child?

“I am philosophically opposed to quota systems. They insure mediocrity.”

That was 44 years ago. While those views were the thinking of many Democrats, and perhaps of most Americans, in the mid-’70s, they will be problematic in the 2020 primaries, where African-Americans could be decisive in the contests that follow Iowa and New Hampshire.

Biden knows that just as Bernie Sanders, another white male, fell short in crucial South Carolina because of a lack of support among black voters, he, too, has a problem with that most loyal element in the Democratic coalition.

In 1991, Biden failed to rise to the defense of Anita Hill when she charged future Justice Clarence Thomas with sexual harassment. In the Senate Judiciary Committee, he was a law-and-order champion responsible for tough anti-crime legislation that is now regarded as discriminatory.

And he has a record on busing for racial balance that made him a de facto ally of Louise Day Hicks of the Boston busing case fame.

How, with a record like this, does Biden inoculate himself against attacks by rival candidates, especially candidates of color, in his run for the nomination?

One way would be to signal to his party that he has grown, he has changed, and his 2020 running mate will be a person of color. Perhaps he’ll run with a woman of color such as Stacey Abrams, who narrowly lost the 2018 governor’s race in Georgia.

An ancillary benefit would be that Abrams on the ticket would help him carry Georgia, a state Donald Trump probably cannot lose and win re-election.

Wrote Axios this morning:

“Close advisers to former Vice President Joe Biden are debating the idea of packaging his presidential campaign announcement with a pledge to choose Stacey Abrams as his vice president.”


Patrick J. Buchanan is the author of “Nixon’s White House Wars: The Battles That Made and Broke a President and Divided America Forever.”

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