New Oil Pipeline in Canada?

Mark Carney is an idiot prime minister, but he's smart enough to know running the country as a leftist liberal he's not going to survive with his minority government. But in Trump's wake and the tariff situation he's still way out of his depth.

His party caused a massive Canadian malaise and he cannot just will it away with pronouncements on oil pipelines or the housing market:

Canadian unemployment is going up, unlike in the U.S.; Canada's problems run deep.

And why did you think this would go any differently? OPEC cuts

OPEC nations actually care about their own economic well being, unlike Let's Go Brandon and the rest of the leftist cabal who either knowingly or due to a lack of understanding, are harming America. They care about their own national interest rather than an agenda.  While they have agendas, they typically align with their national interest.  Most sane countries act in a way that helps themselves.  Even most insane countries do so, even though they may do so with ill intent or in insane ways.  But it is truly insane to act in a way that undeniably hurts your own nation.

Only Democrats do that.

Here Peter Zeihan discusses OPEC's oil production cuts, even after the Let's Go Brandon begging for oil tour.

Elon Musk - more oil in America

I've always maintained that alternative energy sources are not necessarily a bad idea,  BUT we are nowhere near the point in history where fossil fuels can disappear. We are likely still decades away from that point.  You know who agrees with me to some degree?  Electric vehicle Tesla founder Elon Musk.

It goes beyond the Russia Ukraine war situation. Forget the war, should America be buying oil from Venezuela or Saudia Arabia when it has its own abundant supply?

Deep Sanctions that "are not designed" to prevent the flow of oil

You cannot make up this level of incoherent inconsistency on a team.  Let's Go Brandon.  Watch past the bumbling for the real wow moment.

Saturday Learning Series - A brief history of oil

This is interesting, and despite talking about climate change, is predominantly factually based.

 

Sarah Palin has the right to say "I told you so"

What a contrast.  Back in 2008 you had this from T Boone Pickens, "billionaire investor, philanthropist and energy reform activst" who warned against expectations that domestic oil drilling could ever contribute significantly to American energy independence.

Forget what candidate Obama was saying at the time, about bankrupting coal and promising to increase drilling (something he clearly did not follow through on). Meanwhile the most mocked woman in America, possibly ever in the history of the mainstream media, Sarah Palin was saying this - for which she was roundly mocked as not seeing the reality of American energy:

Flash forward 9 years to this.  Yesterday in Bloomberg:

Donald Trump will tout surging U.S. exports of oil and natural gas during a week of events aimed at highlighting the country’s growing energy dominance.

The president also plans to emphasize that after decades of relying on foreign energy supplies, the U.S. is on the brink of becoming a net exporter of oil, gas, coal and other energy resources...

“It’s about utilizing our abundance of resources at home to create jobs and grow the economy, and at the same time use those to strengthen America’s leadership and influence abroad,” said Michael Catanzaro, a special assistant to the president on domestic energy.

...The U.S. is on track to produce 10 million barrels of oil per day on average next year, according to a forecast from the Energy Information Administration -- a milestone that would shatter a record set in 1970.

For reference purposes only two countries in the world produced 10 million barrels per day in 2016, Russia and Saudi Arabia.  America is indeed on a path to energy independence, after an eight year stall under then president Obama. Granted not all that wealth of resources is from Alaska, but if anyone has the right to say, "I told you so" today, it's Sarah Palin. 

America's biggest weapon and why Trump needs to win.

America's biggest weapon is oil.  America is on the cusp of having the ability to become energy independent, which would dramatically help the national trade imbalance.  But the potential of America becoming a net exporter of oil has incredible geo-political implications and it's one of the biggest reasons that America needs Donald Trump to win the presidency later this year.

Let's start with the situation.  Oil prices have remained low despite Saudi Arabia's attempt to create a supply glut and drive new and developing production out of the marketplace, thus restoring their oil hegemony and dominance.  Once that occurred they could then re-establish a price of their choosing.

The funny thing is, those bankruptcies and closures didn't exactly happen:

Opec's worst fears are coming true. Twenty months after Saudi Arabia took the fateful decision to flood world markets with oil, it has still failed to break the back of the US shale industry.

The Saudi-led Gulf states have certainly succeeded in killing off a string of global mega-projects in deep waters. Investment in upstream exploration from 2014 to 2020 will be $1.8 trillion less than previously assumed, according to consultants IHS. But this is a bitter victory at best.

North America's hydraulic frackers are cutting costs so fast that most can now produce at prices far below levels needed to fund the Saudi welfare state and its military machine, or to cover Opec budget deficits.

It's not about the number of rigs in production, it's about the incredible increase in productivity of the rigs that do exist.

What this means worldwide is an incredible opportunity for America that goes well beyond trade.   It means economic muscle that stretches beyond OPEC regimes all the way to Russia and China and their belligerent agendas.

Firstly, unfriendly Middle Eastern nations will struggle despite the fact that oil prices will rise again in a few years;

...This sets the stage for an oil shortage and a price spike later this decade. Whether Opec can survive that long is an open question. Most of the cartel need prices of $100 to fund their regimes.

Venezuela is already in the grip of hyperinflation and food riots. Nigeria's currency peg was smashed last month, and the naira has fallen 60pc. Angola has turned to the International Monetary Fund, Azerbaijan to the World Bank.

But where this really matters is in Russia and China. Russia's aggressiveness will necessarily be curtailed while oil prices remain low as that is their primary economic driver. Less money means less ability to invade the Ukraine. The threat of cutting off Europe can be offset by cheap production from America, a supply glut, and Middle Eastern countries desperate to peddle their product as American oil production better satisfies domestic demand and they have to find new buyers.

Similarly an expansionist China will face a renewed America not so economically anemic. The failing oil markets might create alternate markets for production besides cheap Chinese labor. Weakening China's economic clout which they are clearly abusing.

This is where a Trump victory in November becomes so important. Hillary Clinton speaks green because her base wants here to do so. Winning Sanders' voters' hearts and minds means having to kowtow to every anti-business group she can, including environmentalists, anti-frackers and the solar crowd. She'll put coal miners out of work, she's said. Coal is not oil, but the premise is the same - power your world with rainbows. Meanwhile that enables OPEC. It enables Russia and China. It keeps America weak and dependent on foreign oil. But with magically free health care and tuition. There is no upside, only suicide on a national level. Should she win, four more years of an anemic economy, an anemic America are a certainty. The only thing not certain is the future time of death for America. Donald Trump on the other hand gets this, if nothing else - a strong economy means a strong America, a wealthy America means a safer world. That alone is enough to require a Trump victory

An example-based reason the U.S. must unfetter it's economy

Oil prices continue to falter. In Canada it has contributed to the changes from a Net Exporter to a Net Importer and a trade deficit, despite favorable trade for those seeking Canadian goods. Unfortunately, too large a percentage of those goods, appear to be oil.

It points out a national need to compete in other areas such as manufacturing, or service based industries. Sadly, Canada has not seen the productivity gains over the last decade required to compete in those areas. That means that Canada's economy will continue to be soft until the productivity situation is rectified or oil prices rebound.

The lesson is that over-reliance on one particular industry or commodity is dangerous. Basic economics would indicate that nations should specialize in whatever area(s) they excel and rely on trade with other nations for other items. This specialization provides the most benefit to the most people. But diversification, as in a stock portfolio is prudent to stave off shocks. What if your nation was the best in the world at manufacturing buggy whips? Those became obsolete a long time ago. If you did not have other industries to rely on, your economy might be in terrible shape. The point is, specialization is important but it should not be in any single industry.

For example, OPEC countries will eventually feel the shock when oil becomes a less valuable commodity. The United States has benefitted from it's heyday in the mid 20th century as the world's manufacturer in that it had a very diverse manufacturing base. While the percentage of the world's manufacturing has declined, the basis for it is still there - the challenge is entirely on the cost of manufacturing side (a productivity/labor issue). The United States is also blessed with resources, some of which they appear loathe to use or produce (e.g. coal, shale oil). Nevertheless they are blessed with geography, population, resources and infrastructure to remain a diverse economic producer.

What they face instead are self-imposed constraints on what they will produce, and how they will produce it. Energy is not encouraged to come from the most efficient methods (oil, coal, nuclear power). Production is often hampered by higher labor costs than in other nations and results in a constant disequilibrium of net imports, and the offshoring of jobs and the net loss of domestic spending power and ultimately demand. There is also a perception that a service based economy, a post-industrial economy is not only inevitable but also sustainable. But at a micro-economic level people will always require food, shelter, heat, clothing, and transportation. Those all involve manufacturing or construction. Medical services and financial services would be the biggest service based industries. Those do not translate internationally for trade as easily as the manufacturing-based industries. It's not impossible for a bank to go international. It's not impossible for drug companies and other medical innovations (e.g. artificial hearts) to be made available for export.

There is no magic formula on what is the right mix of economic activity. But the simple notion that an economy should be diverse (i.e. specialize in more than one single area) just seems like common sense.

We can't wait says Obama. But you know we will.

I don't know if the White House has figured out that we've figured out the cynical process of a late Friday news dump so that unappetizing news items get the weekend to cool down and hopefully will be forgotten before Monday.  But either they've caught on and started dumping stupid news items in other time slots, or else they've been doing that all along and we haven't caught on that every single thing out of this white House is bad.

Really?

The most undeserved photo op ever:

Remember, you like me.

The president has the gall to stand in front of pipes to announce he's approving the southern leg of the Keystone XL pipeline (after the horse has left the barn).  He's also fond of taking credit for the largest oil production in U.S. history due entirely to the approvals and actions of his predecessors and not in any way, shape or form to his efforts.  Not...at...all.

Some people still fall for this trickery.  Of course years in, they were able to find people who hadn't heard about the O.J. Simpson trial too.

I figured out how to make solar panels work.

Get them to run on oil.

</end sarcasm>

Canada-China oil talks in high gear

A quick update on the failure of the Obama administration to make a decision on the Keystone XL pipeline which would bring Canadian oil to the Gulf coast for refining.  Canada is in talks with China - today.

Canadian oil and business executives are well-represented in the delegation travelling to China with Prime Minister Stephen Harper, since oil exports are expected to be high on the government's agenda.

A delegation assigned to Natural Resources Minister Joe Oliver includes eight mining or oil and gas companies.

Harper's own delegation includes a wider businesses focus, with top executives from Air Canada, SNC Lavalin and Bombardier, Manulife and Scotiabank.

Foreign Affairs Minister John Baird and Agriculture Minister Gerry Ritz will also visit China.

China's total investment in Canada used to add up to millions of dollars, but since 2009 has increased to up to $20 billion.

It has come with a shift in this country from relying solely on the United States as the only buyer of Canadian oil and gas — something Harper emphasized repeatedly when U.S. President Barack Obama delayed a decision and then denied a permit to TransCanada for its Keystone XL pipeline. The pipeline would have sent oil from Alberta through the U.S. to the coast of Texas.

The president would like to pretend there are no consequences to his non-decision on the pipeline.  He's wrong. These talks, while always an option that would be considered, are moving forward faster as a direct result of the president's delays.

Keystone bends but not the White House

According to a Fox News report, TransCanada is willing to re-route the Keystone pipeline after the Obama administration said it needed at least another year to assess the environmental implications of running the pipeline through some environmentally 'special' areas.  You would think that would be a big step forward considering that the alternative being openly contemplated is for Canada to sell that 700,000 barrels of oil per day (approximately 3.5% of U.S. daily consumption), oil to the Chinese.  But that's not the case.

Daryl Hannah arrested.

Trying to make a splash she can no longer make with her career, Daryl Hannah got arrested for protesting against common sense.

Daryl Hannah was arrested by U.S. Park Police Tuesday at a protest in front of the White House, a police spokesman told TheWrap.

Hannah was participating in a sit-in against the construction of a pipeline that would stretch from Canada to the Gulf of Mexico.

Why do I claim it's common sense that she seems to be against? It's explained here. And here.

What oil exploration does for a local economy

Fort McMurray - once and future boom town.

Back a few years ago the oil deposits being recovered in Alberta Canada provided a massive boom to the local economy of small towns like Fort McMurray.  The town experienced everything from housing shortages, to donut shop jobs paying $20/hour in donut shops.  Oil means jobs.  As Alberta readies for yet another boom after a lull created by the financial crisis of 2008, leadership in the United States continues to waffle on whether to take advantage of the resources of a friendly neighbor that is anxious to sell, and indeed of it's own resources that are practically stopped compared to what they could be providing.  Why this great opportunity is going relatively unnoticed is not as puzzling as it is concerning.

Obama risks American energy security (again)

With the world's third largest proven oil reserves, Canada is already the United States' largest supplier of oil.  Oil in Canada is safe, accessible by private enterprise, unlike most oil around the world, and Canada is more than friendly with the United States.  Ramping up oil production dramatically over the next 15 years, Canada is doing what the Obama administration is refusing to do, and is on it's way to becoming an energy superpower.  But along with that extra supply, new demand is needed, and Canada is increasingly looking east for another buyer, as the Obama administration drags its feet on purchasing more oil from its neighbor, instead looking to Brazil, and in the process risking increased reliance on an unstable Middle East.

Peak Oil versus Peak Medicare

The people who insist on alternatives to oil like solar and wind are insistent for a number of reasons; there's the global warming scam, there's the dependence on foreign oil and the money supporting questionable countries with questionable motivations, and then there's the worry over peak oil. Ah, peak oil. Proven reserves, the theory goes, have peaked and production will ultimately start to decline as we have reached the right hand side of the production bell curve. Here's some news for those of you who are so desperate to see a future of windmill-powered cars. You are as wrong about peak oil as you are about Medicare being untouchable.

Two Word Opinions

I'm trying to work on a couple of longer posts right now.  Between those and being busy in my day job, posting has been a little slower than I like.  There's a bunch of things to post on that would be great to discuss if I had the time.  However, with the limited time available let me instead rattle off a bunch of  dismissive two word opinions about some topics that may (or may not) deserve longer than I've allocated.  Two words typically don't do a topic justice and are obviously oversimplified.  But they can be fun.

Arnold Schwarzenegger marital issues - Doesn't matter.

Oil prices below $100 - Temporary Dip.

Michelle Bachmann - Go girl.

Ron Paul - Can''t win

Newt Gingrich - Jumped shark.

Socialist IMF head in rape scandal - Scum bag.

Medvedev cold war talk - bring it.

Debt Ceiling - Debt CEILING!

Pakistan - play hardball.

Potatoes banned in schools? - Soma instead?

NLRB dictating to Boeing - Back off!

Crude Oil Prices - Just a Spike?

Crude oil prices are currently sitting at $107 per barrel.  That's high, but a lot of reports in the media have called it a spike.  Is it a spike?  Maybe.  I went back into history and got some data from Inflation Data on both nominal and inflation adjusted crude oil prices since 1946.  It doesn't look like a spike, it looks more like a trend, even where the inflation adjustment is available, prices are almost uniformly uni-directional.

Wait, who pays for laid off oil rig workers?

After meeting with President Obama, BP agreed to set aside a special $100 million to compensate oil workers laid off as a result of President Obama's six month moratorium on deep water drilling. Why does it feel more and more like the United States is operating at the whims of an emperor?