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What Will Follow The Age Of Oil?

What Will Follow The Age Of Oil?

LNG carrier

U.S. natural gas production will increase by 10 percent this year alone and by as much as 60 percent by 2037, a new report from IHS Markit has forecast. The market research company is extremely upbeat about U.S. gas because of the shale gas revolution, seeing the country becoming a leading LNG exporter thanks to this revolution as well.

Besides production, IHS analysts also raised their estimates of gas supply in the United States that is economical at prices below the US$4 per MMBtu Henry Hub benchmark price—from 900 trillion cubic feet in 2010 to 1,250 trillion cubic feet. Thanks to this consistent cost decline, IHS expects natural gas to come to account for almost half of power generation in the country by 2040, from about 42 percent today.

To date, the U.S. produces around 81 billion cubic feet of natural gas daily. That’s up from 50 billion cubic feet before the shale boom, but if IHS estimates are correct, the daily average will expand to 118 billion cubic feet by 2037.

That’s good news for the power generation sector where coal and nuclear plants are being retired at a faster pace now that there is so much cheap gas around. Moody’s earlier this month estimated that growing gas production will make it possible to offset the loss of 35 GW of power generation capacity from plant retirements over the next five years. Sure, some renewable installation additions will help, too, but gas-fired plants will be the dominant alternative to coal and nuclear.

Since the United States cannot consume all this gas, a lot more of it will go to international markets, with IHS expecting the daily average LNG export rate in five years at a minimum of 10 billion cubic feet natural gas equivalent. That’s up from an estimated 3 billion cubic feet this year and 1.9 billion cubic feet last year.

…click on the above link to read the rest of the article…

China’s Oil Trade Retaliation is Iran’s Gain

China’s Oil Trade Retaliation is Iran’s Gain

I’ve told you that once you start down the Trade War path forever will it dominate your destiny.

Well here we are.  Trump slaps big tariffs on aluminum and steel in a bid to leverage Gary Cohn’s ICE Wall plan to control the metals and oils futures markets.   I’m not sure how much of this stuff I believe but it is clear that the futures price for most strategically important commodities are divorced from the real world.

Alistair Crooke also noted the importance of Trump’s ‘energy dominance’ policy recently, which I suggest strongly you read.

But today’s edition of “As the Trade War Churns” is about China and their willingness to shift their energy purchases away from U.S. producers.  Irina Slav at Oilprice.com has the good bits.

The latest escalation in the tariff exchange, however, is a little bit different than all the others so far. It’s different because it came after Beijing said it intends to slap tariffs on U.S. oil, gas, and coal imports.

China’s was a retaliatory move to impose tariffs on US$50 billion worth of U.S. goods, which followed Trump’s earlier announcement that another US$50 billion in goods would be subjected to a 25-percent tariff starting July 6.

It’s unclear as to what form this will take but there’s also this report from the New York Times which talks about the China/U.S. energy trade.

Things could get worse if the United States and China ratchet up their actions [counter-tariffs]. Mr. Trump has already promised more tariffs in response to China’s retaliation. China, in turn, is likely to back away from an agreement to buy $70 billion worth of American agricultural and energy products — a deal that was conditional on the United States lifting its threat of tariffs.

…click on the above link to read the rest of the article…

California Lacks Real Marine Protection as Offshore Drilling Expands in State Waters

California Lacks Real Marine Protection as Offshore Drilling Expands in State Waters

One of the big news stories neglected by both the mainstream and “alternative” media is the capture of California politics and the regulatory apparatus by Big Oil and other corporate interests in recent years – and the massive expansion of offshore drilling that has occurred in state waters under the helm of Governor Jerry Brown as a consequence of this regulatory capture.

The enormous power that Big Oil exerts over California regulators was inadvertently revealed in a March 10, 2012 article in the Santa Barbara Independent that discussed a so-called “marine protected area” created under the privately funded Marine Life Protection Act (MLPA) Initiative that went into effect on January 2 of that year.

The official language for the marine protected area in the Isla Vista area of Santa Barbara County, the Campus Point State Marine Conservation Area, reads, “Take of all living marine resources is prohibited, except for take pursuant to operation and maintenance of artificial structures inside the conservation area … ”

“The caveat, allowing marine resources to be taken near artificial structures, exists to allow oil production representatives the ability to maintain equipment, including pipelines, located in this area,” the article by Cat Heushul stated.

Unfortunately, the reporter failed to mention the even bigger story — that Catherine Reheis-Boyd, President of the Western States Petroleum Association, actually served as the Chair of the Marine Life Protection Act Initiative to create this “marine protected area” and others like it in Southern California.

She also served on the task forces to create “marine protected areas” on the Central Coast, North Central Coast and North Coast. If that is not a huge, glaring conflict of interest, I do not know what is.

…click on the above link to read the rest of the article…

Areas Of The World More Vulnerable To Collapse

Areas Of The World More Vulnerable To Collapse

Certain areas of the world are more vulnerable to economic and societal collapse.  While most analysts gauge the strength or weakness of an economy based on its outstanding debt or debt to GDP ratio, there is another factor that is a much better indicator.  To understand which areas and regions in the world that will suffer a larger degree of collapse than others, we need to look at their energy dynamics.

For example, while the United States is still the largest oil consumer on the planet, it is no longer the number one oil importer.  China surpassed the United States by importing a record 8.9 million barrels per day (mbd) in 2017.  This data came from the recently released BP 2018 Statistical Review.  Each year, BP publishes a report that lists each countries’ energy production and consumption figures.

BP also lists the total oil production and consumption for each area (regions and continents).  I took BP’s figures and calculated the Net Oil Exports for each area.  As we can see, the Middle East has the highest amount of net oil exports with 22.3 million barrels per day in 2017:

The figures in the chart above are shown in “thousand barrels per day.”  Russia and CIS (Commonwealth Independent States) came in second with 10 mbd of net oil exports followed by Africa with 4 mbd and Central and South America with 388,000 barrels per day.  The areas with the negative figures are net oil importers.

The area in the world with the largest net oil imports was the Asia-Pacific region at 26.6 mbd followed by Europe with 11.4 mbd and North America (Canada, USA & Mexico) at 4.1 mbd.

Now, that we understand the energy dynamics shown in the chart above, the basic rule of thumb is that the areas in the world that are more vulnerable to collapse are those with the highest amount of net oil imports.

…click on the above link to read the rest of the article…

Europe Is Awash With Oil Stored On Ships

Europe Is Awash With Oil Stored On Ships

shell North Sea

While many analysts and agencies have already called the end of the global oil glut, oil held in floating storage in Europe is at an at least 18-month-high, also due to the booming U.S. oil exports that have displaced some of the traditional crude oil routes in the world.

Oil in ships around European shores was 12.9 million barrels on average in May, accounting for 26 percent of all global floating storage, and more than Asia-Pacific’s 9.7 million barrels of oil stored, according to estimates by oil analytics company Vortexa, as carried by Reuters.

In the two preceding months, March and April, the share of oil in floating storage in Europe accounted for 10 percent of the global storage, compared to 40 percent stored in the Asia-Pacific region. But in May, the volumes of oil held in Europe—including in the Mediterranean—exceeded the oil held off the Asia Pacific coasts for the first time since at least early 2015, according to Vortexa.

Consultant Kpler has estimated that there are some 17 million barrels of oil stored on ships in northwest Europe—the highest since at least the beginning of 2016.

Soaring U.S. exports have upended some traditional buying patterns, as China, India, and Indonesia have purchased more U.S. crude at the expense of African crude grades from OPEC members Nigeria and Angola, and of some Middle Eastern crudes.

On the other hand, U.S. crude oil exports to Europe have also been rising lately, as U.S. oil is increasing in popularity with European refiners, often at the expense of oil cargoes from OPEC nations and Russia.

…click on the above link to read the rest of the article…

Ronald Stoeferle: Gold Is Dirt Cheap Right Now

And a new bull market for the metal is beginning
Fresh from releasing his exhaustive 230-page annual report titled In Gold We Trust, Ronald Stoerferle joins us to summarize his forecast for the yellow metal.

Stoerferle, an author of several books on Austrian economics and head of strategy and portfolio management at Incrementum AG, concludes that gold is extremely cheap right now in dollar terms. And he sees a new bull market beginning for the precious metal — one likely to quickly build momentum as the next (and long overdue) financial market correction arrives.

We’re at the beginning of a new stage of a bull market.

We’ve seen a massive correction with a big drawdown, but we’re now seeing the Commitment of Traders report suggesting that there’s been a washout. We’re seeing that sentiment is really negative. We’re seeing that nobody really cares about gold and mining stocks, and especially about silver. Silver is probably the biggest contrarian investment, though silver mining stocks are probably even more contrarian at the moment.

We all know that the herd behavior in the sector is getting more extreme. I think it has got to do with career risk in the financial industry, so nobody really wants to make a contrarian call. But once we go above this $1,360-$1,380 resistance, which is also the neckline of a large inverse head & shoulder formation, I think gold will hit $1,500, $1,600 pretty quickly.

The most important thing is: in comparison to all the monetary printing that we’ve seen in the last couple of years, gold got significantly cheaper. Gold, in monetary terms, is dirt cheap at the moment. We’re basically at the same levels like in 1971 when it comes to the gold backing of the US dollar. So gold is a bargain at this level.

…click on the above link to read the rest of the article…

The Geostrategy That Guides Trump’s Foreign Policies

The Geostrategy That Guides Trump’s Foreign Policies

The Geostrategy That Guides Trump’s Foreign Policies

According to Alastair Crooke, writing at Strategic Culture, on June 5th:

“Trump’s US aims for ‘domination’, not through the globalists’ permanent infrastructure of the US defence umbrella, but through the smart leveraging of the US dollar and financial clearing monopoly, by ring-fencing, and holding tight, US technology, and by dominating the energy market, which in turn represents the on/off valve to economic growth for US rivals. In this way, Trump can ‘bring the troops home’, and yet America keeps its hegemony [America’s control of the world, global empire]. Military conflict becomes a last resort.”

He bases that crucially upon a landmark 6 November 2017 article by Chris Cook, at Seeking Alpha, which laid out, and to a significant extent documented, a formidable and complex geostrategy driving U.S. President Donald Trump’s foreign policies. Cook headlined there “Energy Dominance And America First”, and noted that,

“Towards the tail end of the Clinton administration and the Dot Com boom in 2000, [Trump’s U.S. Treasury Secretary until April 2018] Gary Cohn of Goldman Sachs had dinner with his counterpart at Morgan Stanley, John Shapiro. From this dinner was hatched an audacious plan to take control of the global oil market through a new electronic global market platform.”

This “global market platform,” which had been started months earlier in 2000 by Jeffrey Sprecher, is “ICE,” or InterContinental Exchange, and it uses financial derivatives in order to provide to Wall Street banks control over the future direction of commodites prices (so that the insiders can game the markets), by means of the financial-futures markets, locking in future purchase-and-sale agreements. It also entails Wall Street’s buying enormous commodities-storage warehouses and stashing them with such commodities – such as, in that case, aluminum), and so it influences also the real estate markets, and doesn’t only manipulate the commodities markets.

…click on the above link to read the rest of the article…

It’s The Demand, Stupid! Is China About To Burst The Black Gold Bubble?

For months we have heard about how the oil market’s over-supply ‘glut’ has been removed thanks to OPEC/NOPEC’s production cut deal and the narrative of ‘global synchronous recovery’ has buoyed the demand side of the equation – sending crude prices to four year highs (helped considerably by an increasing geopolitical risk premium, that is now evident more in Brent than WTI).

However, the last couple of weeks have turned ugly for the ‘no brainer’ record spec longs in crude oil as prices have tumbled (and President Trump has complained)..

The 50% surge in crude prices – and concurrent rise in gas prices at the pump – has begun to worry some that demand destruction looms. However, as The Wall Street Journal’s Nathaniel Taplin reports, what investors may not appreciate is that demand growth is also poised to slow in the world’s largest net oil importer last year, China.

Chinese petroleum demand still appears fine. Growth bounced back to a healthy 9% on the year in April, twice the rate in March. April’s petroleum burn was flattered, however, by exceptionally weak demand in the same month the year before – and probably by the official end of the government’s winter pollution controls, which had given temporary shot in the arm to Chinese industry this spring.

Unfortunately the overall trend for the industrial and transport sectors – which together account for about 70% of Chinese oil demand – looks shaky.

Growth rates in freight traffic and electricity production both peaked in the third quarter of 2017, excluding January and February figures distorted by the Lunar New Year holiday.

Freight tonnage growth is now running at barely half the 11%-12% rate it reached in mid-2017.

Weakening global trade, driven partly by the slowdown in Europe, will put further downward pressure on those numbers.

…click on the above link to read the rest of the article…

Gold and the Monetary Blockade on Iran

Gold and the Monetary Blockade on Iran

This blog post is a guest post on BullionStar’s Blog by the renowned blogger JP Koning who will be writing about monetary economics, central banking and gold. BullionStar does not endorse or oppose the opinions presented but encourage a healthy debate.

With Donald Trump close to re-instituting economic sanctions on Iran, it’s worth remembering that gold served as a tool for skirting the the last round of Iranian sanctions. If a blockade were to be re-imposed on Iran, might this role be resuscitated?

The 2010-2015 Monetary Blockade

The set of sanctions that the U.S. began placing on Iran back in 2010 can be best thought of as a monetary blockade. It relied on deputizing U.S. banks to act as snitches. Any U.S. bank that was caught providing correspondent accounts to a foreign bank that itself helped Iran engage in sanctioned activities would be fined. To avoid being penalized, U.S. banks threatened their foreign bank customers to stop enabling Iranian payments or lose their accounts. And of course the foreign banks (mostly) complied. Being cut off from the U.S. payment system would have meant losing a big chunk of business, whereas losing Iranian businesses was small fry.

One of the sanctioned activities was helping Iran to sell oil. By proving that they had significantly reduced their Iranian oil imports, large importers like Japan, Korea, Turkey, India, and China managed to secure for their banks a temporary exemption from U.S. banking sanctions. So banks could keep facilitating oil-related payments for Iran without being cut off from the dollar-based payments system. The result was that Iran’s oil exports fell, but never ground to a halt. This was a fairly balanced approach. While the U.S. wanted to deprive Iran of oil revenue – which might be used to build nuclear weapons – it didn’t want to force allies to do entirely without necessary crude oil.

…click on the above link to read the rest of the article…

Next Stage of Pressure on Iran – Lower Oil Prices

Next Stage of Pressure on Iran – Lower Oil Prices

President Trump is stepping up his attack on Iran.  He’s now planning the long-game for maximum pressure.  The news that Trump quietly asked Saudi Arabia to ramp up output by 1 million barrels a day is the key.

From the analysis at Oilprice.com:

Saudi Arabia and some of its close Arab allies in the Gulf, as well as the leader of the non-OPEC nations taking part in the production cut deal—Russia—are the only producers that have the spare capacity to increase production. So, in case of increased production from OPEC and allies, the potentially lower oil prices would hurt the other OPEC members that don’t have the spare capacity to boost output.

The point here is to begin dropping oil prices now that the U.S. has blown out Turkey’s finances and helped Saudi Arabia improve its fiscal position for the rest of the year with high oil prices.

Turkey is a net energy importer and $75+ per barrel oil is a huge drain on its finances at a time when its currency and bond markets are under serious pressure from a strengthening U.S. dollar.  Don’t think for a second the Turkish lira wasn’t helped in its fall.  This is a classic hybrid war attack on a country not playing by U.S. rules.

But, now that Trump’s U.S. economy is threatened by high energy costs, he’s looking to improve that situation while also putting a strain on Iran’s finances through the double whammy of losing not only up to 1 million barrels of production per day but also getting $20-25 less per barrel.

And right on target, oil shorts are piling on because that’s what happens when the markets are told which way policy is heading.

…click on the above link to read the rest of the article…

Everything That Dies Does Not Come Back


Charles Sprague Pearce The Arab jeweler c1882

There are a lot of industries in our world that wreak outsized amounts of havoc. Think the biggest global banks and oil companies. Think plastics. But there is one field that is much worse than all others: agro-chemicals. At some point, not that long ago, the largest chemical producers, who until then had kept themselves busy producing Agent Orange, nerve agents and chemicals used in concentration camp showers, got the idea to use their products in food production.

While they had started out with fertilizers etc., they figured making crops fully dependent on their chemicals would be much more lucrative. They bought themselves ever more seeds and started manipulating them. And convinced more and more farmers, or rather food agglomerates, that if there were ‘pests’ that threatened their yields, they should simply kill them, rather than use natural methods to control them.

And in monocultures that actually makes sense. It’s the monoculture itself that doesn’t. What works in nature is (bio)diversity. It’s the zenith of cynicism that the food we need to live is now produced by a culture of death. Because that is what Monsanto et al represent: Their solution to whatever problem farmers may face is to kill it with poison. But that will end up killing the entire ecosystem a farmer operates within, and depends on.

However, the Monsantos of the planet produce much more ‘research’ material than anybody else, and it all says that the demise of ecosystems into which their products are introduced, has nothing to do with these products. And by the time anyone can prove the opposite, it will be too late: the damage will have been done through cross-pollination. Monsanto can then sue anyone who has crops that show traces of its genetically altered proprietary seeds, even if the last thing a farmer wants is to include those traces.

…click on the above link to read the rest of the article…

Staying the Course: the Long March of Middle East Destruction

Staying the Course: the Long March of Middle East Destruction

When falsely convicted Andy Dufresne bored a hole through the Shawshank prison wall over the course of two decades, narrator “Red” says that Andy always liked geology, and that geology, like digging through a prison wall with a rock hammer, is just a matter of “pressure and time.” It’s much the same when it comes to American imperialism. Particularly the conquest of the Middle East, one of the longest-running projects in the U.S. pantheon. Our 16 seasons in Afghanistan counts as our longest foreign engagement to date. Even those living in a self-imposed media bubble of New York Times, CNN, and NPR are fully cognizant of this imperial project. George Bush called it the “Long War.” It can’t been disguised, even by the miserable mainstream media, where deception is an art form unknown to the deceived. Still, the causes and conditions of that project are as yet unclear to the masses. Mostly because the MSM daily reminds us that although we are on the right side of history, we are surrounded by crackpot Arabs, socialist lunatics, irrational Chinese, African bandits, and splenetic Slavs. Our borders are forever under attack. We must be eternally vigilant to ward off the thief in the night. This script was prepared in the ashes of World War Two, when our national security planners gleefully recognized that all the European nations had destroyed themselves fighting fascists, and that America had emerged comparatively intact. Our magnanimous brain trust quickly put together a plan to get its hands on Middle East oil, maintain our outsized consumption, violently snuff out any socialist movements rising from the European rubble, and scare the living daylights out of the exhausted population with demented fables of communist infiltration. It would require a garrison state, where the majority of money was dumped into the bottomless pit of defense spending. More or less everything was accomplished as planned.

…click on the above link to read the rest of the article…

Art Berman: Think Oil Is Getting Expensive? You Ain’t Seen Nothing Yet.

A global supply crunch approaches…

After issuing clear warnings on this program that sub-$50 oil prices were going to be short-lived, oil expert and geological consultant Art Berman returns to the podcast this week to explain why today’s $70 oil prices will go higher — likely much higher — and start materially contricting world economic growth.

Art explains how the current glut of oil created by the US shale boom — along with high crude output by both OPEC and non-OPEC  producers — is a temporary anomaly. Fundamentally, we are not finding nearly as much oil as we need to continue the trajectory of the global demand curve. And at the same time, we’re extracting our reserves at a faster rate than ever. That’s a mathematical recipe for a coming supply crunch — it’s not a matter of if, but when:

The price of oil has gone up 30%+ percent just here in the last year alone. There are some very good reasons for that.

In the United States, we’ve been drawing down our reserves, our inventory and the amount of oil we have in storage, consistently since February of 2017. We’re going into the 15th month of drawing from storage each week because we’re not producing enough to meet the need.

To those paying attention: the United States is right now producing more oil than it ever has in its history. We are a million barrels a day higher than the peak in 1970 — the one that King Hubbert got in trouble for warning about. We’re higher by 50,000 or so barrels per month of production. Yet, here we are, still sucking oil out of storage. What does that tell you? There is only one way to interpret that: We are using more than we are producing.

…click on the above link to read the rest of the article…

Oil Jumps Above $80 For The First Time Since Nov. 2014

Two weeks after Saudi Arabia said it was targeting $80/bbl oil, this morning Riyadh got its wishes early when Brent hit the Saudi target, jumping as much as 1% to $80.18, following the latest drop in U.S. crude inventories and as traders continued to fret about the consequences of renewed sanctions on Iran.

This was the highest price since November 2014.

Today’s jump followed a reported from Goldman titled simply “The case for commodities strengthens ” according to which America’s surging shale output won’t be able to replace the potential drop in Iranian oil shipments after the U.S. reimposed sanctions on OPEC’s third-largest producer.

US shale cannot solve the current oil supply problems. Even if only 200-300 kb/d of Iran exports are at risk by year-end, OPEC is not likely to preempt this loss, only react to it. Further, any response will reduce spare capacity in an increasingly tighter market. The erosion in Venezuela and Angola oil output is accelerating at the same time ex-US growth is stalling. Only the US has seen supply surprises, but is facing growing pains with filled pipeline capacity, constraining US growth into 2019.

Goldman also noted that physical markets continued to ignore growth concerns – just yesterday the IEA warned that the surge in prices will kill demand – rising rates and USD.

Only financial markets care, which is why only gold has traded substantially lower with the risk-off sentiment. Growth concerns will likely prove temporary, realized demand remains robust and OPEC has never been able to catch late-cycle demand growth to replenish inventories before a recession occurs. And even if growth were to decelerate further, it would take global GDP growth collapsing to 2.5% yoy to simply balance the oil market! We recommend not ‘riding this one out.’

…click on the above link to read the rest of the article…

DOLLAR COLLAPSE COMING: EU To DITCH The US Dollar In Payments For Iranian Oil

DOLLAR COLLAPSE COMING: EU To DITCH The US Dollar In Payments For Iranian Oil

The dollar’s collapse is nearing.  The European Union is planning to switch its payments to the Euro for its oil purchases from Iran, eliminating United States dollar transactions.

Just one more nail to the US dollar’s coffin.  Its collapse is all but imminent at this point. The EU has successfully found a way to scoff at potential future sanctions on Iran by openly defying the US; and as an “added bonus,” they’ve helped seal the dollar’s fate.  According to RT, a diplomatic source with the EU has told a news outlet of the decision.  “I’m privy to the information that the EU is going to shift from dollar to euro to pay for crude from Iran,” said the diplomatic source. 

Brussels has been at odds with Washington over the US’s decision to withdrawal from the Iran nuclear deal, which was reached during the administration of Barack Obama. President Donald Trump has pledged to re-impose sanctions against the Islamic Republic as soon as he is able to do so. The Trump administration also has had plans to topple the current regime in Iran, according to leaked documents, and it looks like they’ve just given themselves the go-ahead:

The Washington Free Beacon has obtained a three-page white paper being circulated among National Security Council officials with drafted plans tospark regime change in Iran, following the US exit from the Obama-era nuclear deal and the re-imposition of tough sanctions aimed at toppling the Iranian regime.

The plan, authored by the Security Studies Group, or SSG, a national security think-tank that has close ties to senior White House national security officials, including – who else – National Security Adviser John Bolton, seeks to reshape longstanding American foreign policy toward Iran by emphasizing an explicit policy of regime change, something the Obama administration opposed when popular protests gripped Iran in 2009, writes the Free Beacon, which obtained a leaked copy of the circulating plans. –Zerohedge

…click on the above link to read the rest of the article…

Olduvai II: Exodus
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Olduvai
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Olduvai II: Exodus
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Olduvai III: Cataclysm
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