IS SAUDI ARABIA SENDING A MESSAGE TO BIDEN

[ronwagn + 6,290]

23 hours ago, waltz said:

JoMack, you forgot to mention that as retaliation for stopping weapons sales to the Kingdom MBS may/can stop doing business in dollars.  Bye bye petrodollar.  MMT fails as a theory, I do not look forward to the ramifications when the dollar is no longer the world fiat currency.

        waltz 

IMHO MMT involves just plain inflation of the currency. Dollars used for excess government spending decrease the value of all dollars. It does not take very long to become apparent to the wise consumer that their dollars are worth less. It is the way that the rich get richer and the poor get poorer. The rich understand the game and control it, the average person just complains about it. Some buy commodities like silver, gold, machinery, ammunition etc. 

[Gerry Maddoux + 3,627]

1 hour ago, ronwagn said:

How can oil prices SOAR when there is oversupply? If oil prices ever do soar natural gas will eventually increase as a replacement for ICE. 

There won't be an oversupply very long . . . not as long as this pandemic ends like it seems to be doing. Demand is going to go through the roof, especially in India and China. Saudi Arabia was perfectly willing to pump and dump in exchange for U.S. favors (think defense: the latest jets and Patriot missile defense) but now that the new American president has called them a "pariah state" and has notified them that the latest and greatest weapons are going to slow to a trickle, the Saudis are now likely to become more and more a seller to China. 

And remember, in large measure the price of LNG is hooked to shale oil . . . at least the LNG coming from America. The Marcellus and Utica produce a lot of dry gas but only a pittance of the total LNG train feedstock compared to the vast amount of wet gas roaring from the ground in the Permian. If the price of WTI goes way high, more wells will be drilled, the natural gas market will be flooded, and the price of LNG will come down. There is a certain amount of methane that comes up with the shale oil, and now that Statewide Rule 32 is going to be followed, they can't vent and flare much so when the pipes get full of NG, oil production slows, LNG pricing goes up, and so on. 

In effect, this is going to be a seesaw between OPEC and U.S. shale for the rest of the life of the shale basins. At least that's my take on it.

As for polling numbers, Mr. Biden doesn't particularly care--he isn't ever going to run for anything again and he'll be 82 if and when he finishes his term. He is more interested in a legacy. And if gasoline is $2 at the pump, Biden is going to have a hard time selling the American people on his massive renewables project--trillions of taxpayer dollars. I believe that Mr. Biden wants high gas prices. People get angry and disgruntled when it cost them a hundred buck to fill up their pickup. Part of Mr. Biden's giant plan is precisely to raise the price of fossil fuels. That's the only way in hell he can sell his plan. The Democrats are going to take a wrecking ball to about everything they can--it has already started. Through HR-1, along with bringing D.C. and Puerto Rico into the Union, they are trying to rig the scales in their favor. Lots of the money in this HR-1 goes for Democrat campaign money.   

[Old-Ruffneck + 1,246]

15 minutes ago, Gerry Maddoux said:

And if gasoline is $2 at the pump

Here in central Illinois 2.89 a gallon and 3.09 for diesel..............

[Eyes Wide Open + 3,555]

26 minutes ago, Old-Ruffneck said:

Here in central Illinois 2.89 a gallon and 3.09 for diesel..............

$4.00 per gallon is the magic number, now why that is i really have no ideal. What i can tell when it does hit that number Hybrids sales hit big numbers. EV''s are merely a speed bump in the grand scheme of things. If i remember correctly it also takes a $3000 govt tax credit, when all those dynamics merge one can purchase a EV and the 6000 up charge washes itself.

Diesel is a real wild weasel in this odd energy cycle, Jet fuel demand is in the tank and will take yrs to recoup if it ever does. Now only so much gas is in a barrel of oil and a lot of kerosene/diesel needs to go somewhere..Personally i anticipate a fire sale on diesel..

Edited March 6, 2021 by Eyes Wide Open

[ronwagn + 6,290]

2 hours ago, Gerry Maddoux said:

There won't be an oversupply very long . . . not as long as this pandemic ends like it seems to be doing. Demand is going to go through the roof, especially in India and China. Saudi Arabia was perfectly willing to pump and dump in exchange for U.S. favors (think defense: the latest jets and Patriot missile defense) but now that the new American president has called them a "pariah state" and has notified them that the latest and greatest weapons are going to slow to a trickle, the Saudis are now likely to become more and more a seller to China. 

And remember, in large measure the price of LNG is hooked to shale oil . . . at least the LNG coming from America. The Marcellus and Utica produce a lot of dry gas but only a pittance of the total LNG train feedstock compared to the vast amount of wet gas roaring from the ground in the Permian. If the price of WTI goes way high, more wells will be drilled, the natural gas market will be flooded, and the price of LNG will come down. There is a certain amount of methane that comes up with the shale oil, and now that Statewide Rule 32 is going to be followed, they can't vent and flare much so when the pipes get full of NG, oil production slows, LNG pricing goes up, and so on. 

In effect, this is going to be a seesaw between OPEC and U.S. shale for the rest of the life of the shale basins. At least that's my take on it.

As for polling numbers, Mr. Biden doesn't particularly care--he isn't ever going to run for anything again and he'll be 82 if and when he finishes his term. He is more interested in a legacy. And if gasoline is $2 at the pump, Biden is going to have a hard time selling the American people on his massive renewables project--trillions of taxpayer dollars. I believe that Mr. Biden wants high gas prices. People get angry and disgruntled when it cost them a hundred buck to fill up their pickup. Part of Mr. Biden's giant plan is precisely to raise the price of fossil fuels. That's the only way in hell he can sell his plan. The Democrats are going to take a wrecking ball to about everything they can--it has already started. Through HR-1, along with bringing D.C. and Puerto Rico into the Union, they are trying to rig the scales in their favor. Lots of the money in this HR-1 goes for Democrat campaign money.   

There is so much natural gas available worldwide that it will always be cheap unless there are active measures to interdict supply. More is coming online all the time. It is gradually becoming the preferred fuel for marine use. While everyone is looking at electric cars natural gas is growing market share by replacing coal, marine fuel, and heating oil. 

Biden being reelected is not the primary problem for the Democrats. It is the 2022 election which is already in its first stages. The party in power usually loses some seats in the mid term. They will probably lose the House IMHO, and maybe the Senate. Their radical measures will only assure this. The problem IS that if passed they may have already given the coup de grace to the Republican Party which may be too feckless to undo their damage. 

https://primexbt.com/blog/natural-gas-price-prediction-forecast/

Edited March 6, 2021 by ronwagn
reference

[0R0 + 6,251]

On 3/5/2021 at 10:28 AM, JoMack said:

OPEC has agreed today that there will be no production increases on the global market while Russia and Kazakhstan are raising output by small amounts.  Oil hit $65.48 this morning and it appears that the signal from OPEC is impacting oil prices significantly for the moment.

This might be OPEC just stabilizing the market to watch the recovery from the coronavirus around the world, or is the Crown Price Mohammed bin Salman sending a message to Biden that he can hit him where it hurts - gas prices.  After Biden halted arms sales to Saudi Arabia and pulled the U.S. support on the conflict with the Iran backed Houthi rebels in Yemen, Biden certainly shot across Salman's bow that his alliance with the US under the Trump Administration was over.  Salman is certainly not one to accept this move to pull away from SA without so much as a phone call, as we saw when Russia added 500,000 bbls of oil in March 2020 during the height of the pandemic and SA took them to task and added 3 million to crush the price to -$36 a bbl.

But, the icing on the cake was Biden's decision to release the intelligence report on the killing of Jama Khashoggi in Turkey in October 2018.   The report was withheld by the Trump Administration but the classified assessment sent by the CIA to Congress was soon leaked in 2019.  So, everyone reported on bin Salman's involvement and that he ordered the killing, and it has continued to be reported after the murder and to this day.  Since the Biden Administration has been burning through the policies of the Trump Administration, the Middle East actions by them are being scuttled by Biden without any thought to possible consequences.  In my opinion the release of this report was again a smack against Saudi Arabia and as Biden said on the campaign trail he suggested that Saudi Arabia should be made a pariah that they are over its alleged human rights abuses.  Since Biden and family are in bed with China, their human rights abuses are just, "cultural".  So it is a question as to Biden's intentions since his most significant foreign policy move will be to enter again into the Iran Nuclear Deal.  Of course, Iran shows its willingness to cooperate by sending ballistic missiles into American bases in Iraq.  So, we know Biden's foreign policy is reaching into the past since he is no longer available in real terms to understand what is happening around him today let alone what's going on elsewhere.  

The problem with having the Saudis as a "pariah" in Biden's foreign policy is Biden's wish to cut crude oil and natural gas in significant amounts to invest taxpayer dollars in the trillions on his green agenda.  Crude oil exploration and development was crushed by the pandemic, along with the Saudi-Russia war on production output in March, 2020 by flooding the markets with 3 million bbls at a time when demand was zero and now supply is down from a high of 13.5 million bbls a day to 10.8 million bbls a day.  

 At the time U.S. production was rising in 2018-2019,  SA imported 700,000 bbls into the U.S.  Now, as investment in fossil fuels is drying up and the Majors are moving its major investments into renewables, it should be assumed that the U.S. will continue to lose production.  The problem as our supply is reduced back to the Obama era in the 9 million bbl or less OPEC, with SA as the largest and most significant producer will have significant impact on energy prices as never before.  Machin in the Senate has stated that he will back the nomination of Deb Haaland as Director of the Department of Energy.  She's a radical environmentalist who protested against the Dakota Access Pipeline which has been moving 580,000 bbls of crude from the Bakken in ND for 3 years.  She is also no fan of driving on federal lands and will place a permanent ban on drilling on federal lands, onshore and offshore.  She'll also spend billions on the reclamation of the Jackpile mine on the Laguna Pueblo lands 40 miles north of Albuquerque, NM.  When the mine closed in 1982, ARCO, the Laguna Pueblo, that Haaland belongs to, the DOI and the Bureau of Indian Affairs met and came to agreement that ARCO would pay $44 million to the Laguna Pueblo for reclamation.  In 2016 the Pueblo sued ARCO to cede its responsibility on the reclamation which didn't happen and told the court the statue of limitations had passed.  The court didn't agree so the Pueblo went to the BIA and the Jackpile mine is now a Superfund site.  

I'm bringing the Jackpile mine into the discussion since the WSJ had an article about Haaland and her background and a large part of the article was her story telling about the mine and that she was determined to take the land back for her Native American heritage.  So, this is the character or lack thereof on the nominee for DOI.  So, we'll see her hand on the road to diminishing crude oil and natural gas production, and coal miners were told yesterday that they will lose their jobs and they can mine for components that will be needed for batteries so who knows the job loss she and Biden will bring. The question in all of this is how far will our production slide in 2021-2022 and how high will prices go.  It looks like the Middle East is starting to unravel under Biden in just over a month, and for the U.S., when Biden goes back into the Iran Nuclear Deal, will SA look at this as another slap in the face and pull production further to hit America where it really hurts, at the gas pump.  If OPEC and non-OPEC decide the U.S. is no longer trustworthy, and use crude oil as its weapon of choice, how high will prices go?  Will Biden be able to withstand the blowback?

 

 

The oil fields in Southern Iraq have about 17 billion bbl of oil resource. Biden intends on having that delivered to China at a discount to the global oil price. Remember that Biden has no interest in the US at all, he intends to destroy as much of it and kill off as many of us as he can get away with. He is uniquely operating on China's behalf. Haaland is just another CCP agent in environmentalist drag doing her bit to de-industrialize the US and  preserve its resources for a Chinese takeover. Biden't oil policy is to crush US production,, get prices sky high and distribute the Iraq oil business to his Junta's sponsors in the CCP and international oil companies. His green policy is to generate demand for rare earth minerals that China has a monopoly on. It has no relationship whatsoever to any environmental goals. 

KSA and MBS are opposed to the Global Reset Junta acting on behalf of the CCP to destroy the West. They are opposed to the international currency reset via the IMF. They want a gold and silver based monetary system, not one based on bank liabilities. They are done with that. That is why Trump did his best to quash the Khashogi scandal. That is in alignment with Israel and Russia and the Chinese opposition (Taiwan agents in China that have infiltrated the government and industry but have been "sleepers" till last month). Iran may be at the table with Israel and Saudi, UAE, etc. to extricate itself out of the war cycle. The extent to which they are willing to engage with Biden's war mongering nuclear armament plan will show which way they are leaning, taking up Biden's offer of free nukes and no sanctions so they can bomb the West, vs. making peace with the regional powers (Israel coalition and Turkey) in return for a sphere of influence. So far they are not at Biden's (CCP) table.

We will have to see how things resolve. But Biden is not representing the US, he is representing the CCP and its business partners. The US military is acting on its own as the geopolitical military power. BTW the spook rumor mill has the Syrian US bombings as actually having been Israeli planes in US paint since the Air Force wouldn't do it on Biden's orders,, so he (i.e. Kamala Harris) asked Israel to do it, which they did after clearing it or at least notifying with the US military. 

[0R0 + 6,251]

On 3/5/2021 at 6:55 PM, Gerry Maddoux said:

The Saudis have long wanted to be paid in gold. So far the petrodollar has held. But now?

Well, this is all coming at an interesting time. During the pandemic the digital yuan has been underwritten by the ABC (Agricultural Bank of China) and is now the currency of choice in China. According to Pepe Escobar (a very well informed Brazilian journalist re' all things China), the commission putting this together for Xi has been agitating to back the digital yuan with gold.

China mines an awful lot of gold. They buy even more. According to one of the Swiss "Gold Bugs," the effort is to back the DY with the same amount of gold that the U.S. backed the dollar with at the Bretton Woods meeting. That would not only give the DY authenticity, but would skyrocket the price of gold. (That price would be something like $40,000/ounce.) 

This gets darker. Much of the Bitcoin in the world was mined, or is being mined, in the same remote province where the Eighurs are being interned. There have been similar implications that the DY might be backed by Bitcoin. 

 

The current Yuan debt money (bank liability) is not separate from the dollar debt money. The Eurodollar system is centered in London/HK-Singapore and till 2020 the US share of the bank system's liability holdings was just 30%. Europe's banks had a big deficit of dollars relative to their liabilities. Those would include the HSBC UBS and Standard that serve Asia. 

The most likely digital system would be a digitally traded physical gold (and silver) system on a distributed blockchain. The centrally controlled system that the CCP and IMF/Global Reset bankers want is a non starter. Their plan, as Putin stated publicly and loudly, is DOA. The Q people are talking about a "QFS" system and denote that it is running in parallel to the Fed and London Eurodollar system since the Wednesday outage at the Fed 2 weeks ago.. Currently, they claim, 24 satellites are running the communications for the blockchain system with around 30 clearing centers, ultimately becoming 192. Don't know what to make of that, but it has a ring of truth to it as it is mechanically correct. 

The Q people who talk about the gold backed system say that the gold to back it up was stolen from the Vatican and several Asian former dictator's estates the oft mentioned stat for the size of the haul was 650 plain loads, which I am assuming was on C130s. Brought over to US and Taiwan among many other places. It does not break down to a $40k per oz price, it comes out far smaller as the amount of gold found was so much greater than was known to exist. Still trying to get a handle on the scale of the above ground gold available according to these folks. 

[Gerry Maddoux + 3,627]

5 hours ago, ronwagn said:

There is so much natural gas available worldwide that it will always be cheap unless there are active measures to interdict supply. More is coming online all the time.

Ron, there is so much natural gas because it comes up with shale oil. True, those dry gas wells in the Haynesville Shale are monsters, but there are going to be only so many of them. Lots of NG from Qatar and Australia. But the price is currently being set by voluminous gas from shale oil. 

It's not always going to be cheap. 

Wind and solar are going to hit a percentage wall. Batteries are going to hit the same wall. 

LNG has sprung up in an environment of collapsing oil prices. Natural gas was at giveaway prices. When the shale basins are fully exploited, watch the price of NG go through the roof. Jerry Jones bought a lot of the Haynesville. He didn't do that to sell NG at $2.50

[Wombat + 1,028]

On 3/6/2021 at 8:43 AM, JoMack said:

That is a key point, if crude stops trading in the dollar.  It is a very scary outlook to think that oil would instead be trading with a volatile basket of currencies, or worse, the Yuan, I don't want to picture what would happen to the global market if the dollar is no longer traded or accepted around the world.  Could Biden's trillions of dollars in spending and a ticked off Middle East oil giant be enough to wreak havoc on the dollar?  

Ummmm... YES!!!!!!!! That is precisely why the bond market is selling off right now. 

[Wombat + 1,028]

18 hours ago, Gerry Maddoux said:

Not to go too China on you, but the KSA has steadily built an alliance with China and Pakistan, simultaneously. China has historically maintained close ties to Iran, but those have faded a bit. It seems that KSA is supplanting Iran's relationship with China.

To recount, Iran and Saudi Arabia are restive with each other. Iran largely use regional proxies: Lebanon's Hezbollah, Yemen's Houthi rebels, Shiite militias in Syria and Iraq, Palestinian Hamas, the Islamic Jihad. To counter Iran, the KSA has the 3rd-largest defense budget in the world and is the world's largest arms importer. The bad news for them is that many of the weapons are beyond their capability. For example, they have the Patriot missile system but can barely run it. They apparently like jets and their Royal Air Force is their shining star. 

Lately, they have been cozying up to the Chinese. China has encouraged their advances. For example, during the worst days of the pandemic, when oil prices were cratering, the Saudis gave China a special price. Trump had scrapped the Iran deal, his son-in-law had formed a friendship with MbS, and consequently the U.S. turned a blind eye and a deaf ear to the Khashoggi murder and even the China oil deal. That has now changed dramatically. With the U.S. signaling some level of animosity toward the thuggishness of MbS, he has little recourse but to develop a tighter bond with China. 

And that is precisely why I brought up the Digital Yuan and the Pepe Escobar article on possibly backing the DY with gold and Bitcoin (both in large supply in China). Saudi Arabia and other OPEC countries have become increasingly wary of the petrodollar, especially as they see the U.S. Federal Reserve printing trillions of dollars. Bretton Woods is long gone. We're talking fiat currency here, barely worth the paper it is printed on if big-time inflation hits.

However, the Saudis really, really like the idea of gold/Bitcoin. Something like that would drive them to offer better and better deals to China, especially if Xi assures them that he will protect them from Iranian attack--their greatest fear. For his part, Xi is perfectly willing to cut Iran adrift if he has a ready supply of cheap(er) oil from MbS. Both China and Saudi Arabia share the same opinion regarding Pakistan and Afghanistan, and both countries are apparently willing to go along with it. 

Mr. Biden is playing a chess game. He actually wants higher oil prices, which will frustrate the American people and make it easier for him to get his trillions for the green transition. But he has knocked both foreign and domestic in the head at once--the Saudis, the Keystone Pipe--and that makes it a very dangerous chess game.

Every day in this direction makes the Middle East, as well as the Middle Kingdom, a more dangerous place. 

Gerry, you have just about uncovered my master plan! If you factor in India, Japan, and Australia, you will get a lil closer  Pls do some reading on "the Quad" if you want to know where your foreign policy is heading. Am amazed at how little your govt tells you about it. Your media even less?!?

[Wombat + 1,028]

17 hours ago, Ward Smith said:

Oh he's damned alright

Yup. He's the devil. My right-hand-man!

[Gerry Maddoux + 3,627]

3 hours ago, Wombat said:

Gerry, you have just about uncovered my master plan! If you factor in India, Japan, and Australia, you will get a lil closer  Pls do some reading on "the Quad" if you want to know where your foreign policy is heading. Am amazed at how little your govt tells you about it. Your media even less?!?

In my head is the whole enchilada: India, Japan, Australia, and many more. Being from "Down Under," you will have a better grip on this than I can muster. However, yes, I do have more to share. And an explanation for our apparent mouse-like scurry to the dark side.  

Wombat, here's a newsflash: our media is censoring our news. I would have thought that had become apparent worldwide but since I haven't traveled I have no way of knowing. In fact, to tell you just how much our media is censoring the news, Twitter and Facebook are at the top, shutting down accounts that don't agree with their business plan, and CNN, MSNBC, The New York Times and The Washington Post go along with it all. 

America is in trouble!

At long last, after a remarkable sociological study of democratizing a republic put together quilt-like, we have seemingly overnight been subsumed by a gigantic wave of sociological propaganda underscored by failure of Amazon to publish certain books and removal of others without cause. That scheme was put together, and worked, to put our current administration in power. The cities that favor this movement were terrorized last summer and some are boasting about more to come--and that too was ignored by our current administration and by most media. Socialism alone is just socialism, but that never lasts very long without violence entering the equation. Socialism plus violence equates to Bolshevism . . . and certain quarters of America, including the mainstream media, seem to be giving the Good Housekeeping seal of approval to it. That's unfortunately where we are. Teetering on the edge.

Underneath this turbulent surface at home roils an equally massive sea change abroad--churning away almost out of our view. On some level some of us see that and hear about it and get worked up about it. But I can assure you that the general public has been more worried about their families and work and whether their business is going to fall into the winner or loser category determined by a virus genetically-engineered by the CCP and (by propaganda that has amazingly been approved by the above media/administration forces) put back into the Wet Market by WHO (believing the CCP propaganda), Dr. Fauci (believing WHO), and Mr. Biden (believing all of them). We have become like mushrooms: kept in the dark, fed horse-shit. 

Worldwide hysteria about global climate change has prompted many policies to go willy-nilly after the latest new thing. There is absolutely no doubt that the world needs to work on reducing carbonaceous pollution, but that includes massive forest fires, which seem to have been left out of the tropospheric carbon calculus, and also includes the unbelievable amount of carbon put into the air by open-earth mining for lithium and the REE's needed for renewables. Somewhere in all this fits the Solar Minimum, which could possibly equate to the Maunder Minimum in degree and influence. And along with solar quietude always goes an increased incidence and size of Coronal Holes, which in turn are eerily correlated with the awakening of volcanoes and earthquakes. Solar doesn't do well under a persistent cloud of ash from a volcanic eruption, yet Hawaii, right in the middle of the Ring of Fire, is going all-solar. 

Obviously, there's a lot going on right now. If you try to dogleg geopolitical influences and movement in with energy and natural occurrences in the solar system and therefore the climate and ocean currents, you wind up heading straight for the Tequila bottle. While most everyone has jumped on Texas--because they do everything bigger and then brag about it and their charity and giving spirit is lost in the other stuff--they have focused on the "freak natural breaking out of the polar winds through a weakening warm air jet stream," totally ignoring the larger picture that this was a warning to the world: 1) Variable energy sources are difficult to fit into a grid under stress, 2) All grids are under stress, mostly due to aging distribution lines (ave. age 35 years in the U.S.), but also due to a too-fast transition to poorly-understood renewables fitting into the grid. 3) EMP would wipe out large areas of the grid--pick a country you'd like to see go dark.

Hegemony is like a wolf on the prowl: it is as much a function of emotion and global gestalt as military might. Hegemony and reserve currency go hand-in-glove, so if you have hegemony you always have the money to pay for it. But as we're learning, you can also make that money--the reserve currency--worthless if you print too much of it. As the rest of the globe wrestles with the Made-in-China virus, China triumphs in new life and forwards the Digital Yuan, sharpens its gaze on Taiwan, adds more tarmac to the Spratley Islands, chants 5G almost continuously, and also builds a relationship with KSA, Pakistan, Afghanistan and even Russia (in sharing the warm water port at the peninsula looking out over the Arabian Sea--that's where the Russian gas pipeline will end). The KSA is an equal opportunity opportunist, so it will go wherever hegemony leads . . . especially if that involves getting paid in gold-backed something.

This will all work itself out without any input by me. However, American public awareness is at an all-time low, people are being led around by the government that is now in charge with absolutely no counterbalancing opposition, and as mentioned above, this is all made worse--much, much worse--by the fact that the news is absolutely, no doubts about it, being censored. We American people, alarmingly, are being led around  by a nose pinch, fed and watered according to the Doctrine of the Far Left, the Crazy, the Dramatic, the Senile, and the Profiteers. 

And that's as scary as it can get!

[0R0 + 6,251]

12 hours ago, Wombat said:

Ummmm... YES!!!!!!!! That is precisely why the bond market is selling off right now. 

Largely a result of naked short selling by mostly hedgies. That is visible in the unusually high rate of failures to deliver on bond repos and overnight treasury borrowing rate (the rate charged to borrow treasuries) which is greater than the rate 5 fold of what you get on the overnight cash you get in return.

Not obvious that the bond issuance is at play. The Eurodollar deficit is still in place and treasuries are still needed as Tier 1 dollar assets for the system. If the issue was actually an international sell off of Treasuries then the dollar would have dropped. So far it has risen off its recent lows. 

[ronwagn + 6,290]

21 hours ago, Gerry Maddoux said:

Ron, there is so much natural gas because it comes up with shale oil. True, those dry gas wells in the Haynesville Shale are monsters, but there are going to be only so many of them. Lots of NG from Qatar and Australia. But the price is currently being set by voluminous gas from shale oil. 

It's not always going to be cheap. 

Wind and solar are going to hit a percentage wall. Batteries are going to hit the same wall. 

LNG has sprung up in an environment of collapsing oil prices. Natural gas was at giveaway prices. When the shale basins are fully exploited, watch the price of NG go through the roof. Jerry Jones bought a lot of the Haynesville. He didn't do that to sell NG at $2.50

I am talking about all natural gas resources. That includes the entire land mass of the world, offshore, methane hydrates, coal seam methane, biomethane, methane form peat bogs, biogas etc. There will be no shortage for hundreds of years. That does not mean that something better may not come along, but nothing aside from coal comes close. Oil will eventually become too expensive. Natural gas, probably not. 

[ronwagn + 6,290]

32 minutes ago, ronwagn said:

I am talking about all natural gas resources. That includes the entire land mass of the world, offshore, methane hydrates, coal seam methane, biomethane, methane form peat bogs, biogas etc. There will be no shortage for hundreds of years. That does not mean that something better may not come along, but nothing aside from coal comes close. Oil will eventually become too expensive. Natural gas, probably not. Nuclear is not, at present, a popular choice compared to other options. 

https://www.sciencedirect.com/topics/earth-and-planetary-sciences/giant-gas-fields

https://geology.com/articles/methane-hydrates/

 

 

 

 

Edited March 8, 2021 by ronwagn
reference

[Wombat + 1,028]

2 hours ago, 0R0 said:

Largely a result of naked short selling by mostly hedgies. That is visible in the unusually high rate of failures to deliver on bond repos and overnight treasury borrowing rate (the rate charged to borrow treasuries) which is greater than the rate 5 fold of what you get on the overnight cash you get in return.

Not obvious that the bond issuance is at play. The Eurodollar deficit is still in place and treasuries are still needed as Tier 1 dollar assets for the system. If the issue was actually an international sell off of Treasuries then the dollar would have dropped. So far it has risen off its recent lows. 

Oro, please bear in mind that the majority of long-dated treasuries are owned by the Fed now. Overall, the international ownership of treasuries (in % terms), is already at a historic low. That is despite the enormous US trade deficit. I do not put too much thought into the Eurodollar as some do, a moot point IMHO. I am more interested in the petrodollar, and the way in which it CAUSES your trade deficit. During the GFC, Bernanke's biggest headache was the strength of the USD despite the ZIRP. Same thing is happening now. Indeed, there is some research which suggests that QE actually puts UPWARDS pressure on your currency, and that is what the evidence seems to suggest. Given that the current QE program is something like quadruple the size as that a decade ago, I imagine that the next "taper tantrum" will be four times as severe as well. They say that history doesn't repeat, but it rhymes. During the GFC, the price of Iron ore hit $180/tonne. Same as now. Oil Price hit $140/bbl. If that happens within 12 months, all hell will break loose. I agree with Gerry, in that we are living in very dangerous times on multiple fronts. After all, both world wars followed serious global economic depressions. And oil played a massive part in the equation too. I can see another "perfect storm" brewing, which makes the shift to renewables even more important IMHO.

[Ward Smith + 6,615]

On 3/6/2021 at 9:35 AM, ronwagn said:

Yes but Biden is already getting a reputation for raising gasoline prices at the pump. The Democrats will soon realize that will not work well for them. Biden has low poll numbers already.

Doesn't matter. Xiden didn't win the last election

[Rob Plant + 2,756]

On 3/6/2021 at 7:34 PM, Old-Ruffneck said:

Here in central Illinois 2.89 a gallon and 3.09 for diesel..............

I'd rip your arm off for those!

In the UK

United Kingdom Gasoline prices, 01-Mar-2021

United Kingdom Gasoline prices	Liter	Gallon
GBP	1.234	4.671
USD	1.713	6.484
EUR	1.425	5.394

[Ward Smith + 6,615]

On 3/6/2021 at 11:18 AM, Gerry Maddoux said:

There won't be an oversupply very long . . . not as long as this pandemic ends like it seems to be doing. Demand is going to go through the roof, especially in India and China. Saudi Arabia was perfectly willing to pump and dump in exchange for U.S. favors (think defense: the latest jets and Patriot missile defense) but now that the new American president has called them a "pariah state" and has notified them that the latest and greatest weapons are going to slow to a trickle, the Saudis are now likely to become more and more a seller to China. 

And remember, in large measure the price of LNG is hooked to shale oil . . . at least the LNG coming from America. The Marcellus and Utica produce a lot of dry gas but only a pittance of the total LNG train feedstock compared to the vast amount of wet gas roaring from the ground in the Permian. If the price of WTI goes way high, more wells will be drilled, the natural gas market will be flooded, and the price of LNG will come down. There is a certain amount of methane that comes up with the shale oil, and now that Statewide Rule 32 is going to be followed, they can't vent and flare much so when the pipes get full of NG, oil production slows, LNG pricing goes up, and so on. 

In effect, this is going to be a seesaw between OPEC and U.S. shale for the rest of the life of the shale basins. At least that's my take on it.

As for polling numbers, Mr. Biden doesn't particularly care--he isn't ever going to run for anything again and he'll be 82 if and when he finishes his term. He is more interested in a legacy. And if gasoline is $2 at the pump, Biden is going to have a hard time selling the American people on his massive renewables project--trillions of taxpayer dollars. I believe that Mr. Biden wants high gas prices. People get angry and disgruntled when it cost them a hundred buck to fill up their pickup. Part of Mr. Biden's giant plan is precisely to raise the price of fossil fuels. That's the only way in hell he can sell his plan. The Democrats are going to take a wrecking ball to about everything they can--it has already started. Through HR-1, along with bringing D.C. and Puerto Rico into the Union, they are trying to rig the scales in their favor. Lots of the money in this HR-1 goes for Democrat campaign money.   

Beautifully said. The Other reason the democrats don't care about popularity is they are working to institutionalize the fraud in all further elections. Remember, Trump's hands were tied again and again because elections belong to the states. HR1 is a slap in the face to that, historians will look back in amazement as they did concerning Germany that so few controlled so many so viciously. The last thing the "democrats" want is "democracy".

[Gerry Maddoux + 3,627]

^

Great article. 

American democracy has just been hijacked!

This is the biggest threat to a democracy yet!

[0R0 + 6,251]

On 3/7/2021 at 9:19 PM, Wombat said:

Oro, please bear in mind that the majority of long-dated treasuries are owned by the Fed now. Overall, the international ownership of treasuries (in % terms), is already at a historic low. That is despite the enormous US trade deficit. I do not put too much thought into the Eurodollar as some do, a moot point IMHO. I am more interested in the petrodollar, and the way in which it CAUSES your trade deficit. During the GFC, Bernanke's biggest headache was the strength of the USD despite the ZIRP. Same thing is happening now. Indeed, there is some research which suggests that QE actually puts UPWARDS pressure on your currency, and that is what the evidence seems to suggest. Given that the current QE program is something like quadruple the size as that a decade ago, I imagine that the next "taper tantrum" will be four times as severe as well. They say that history doesn't repeat, but it rhymes. During the GFC, the price of Iron ore hit $180/tonne. Same as now. Oil Price hit $140/bbl. If that happens within 12 months, all hell will break loose. I agree with Gerry, in that we are living in very dangerous times on multiple fronts. After all, both world wars followed serious global economic depressions. And oil played a massive part in the equation too. I can see another "perfect storm" brewing, which makes the shift to renewables even more important IMHO.

As usual, internal US monetary policy had nothing to do with the inflation nor the credit boom of the 2000s, the inflation pre 2008 GFC came from the Eurodollar side as international credit expansion  was the cause and it was centered on the China bubble. Just as Italy Japan Korea etc in the 1960s and 1970s inflated the Eurodollar system as an aftereffect of their externalization of their inflationary monetary policy, The central banks are irrelevant here, it is only their role as backing up their jurisdiction's international banks' dollar books. 

The Fed's book is far smaller than it should have been. BIS data  shows that in 2019 the total share of American holders in dollar bank liabilities and cash was 30%. That is an absurdity due to half a century of tight money policy on the Fed's side as at first Europe, than Asia and then China had received the benefit of dollar credit expansion and caused it. US rates were held artificially high in order to prevent it from recovering industrial capital as its markets were shut off from it.  However, the recycling of capital into the US since Volcker and cresting in 2007   at an inflow rate of 17% of US GDP- far dwarfing US bank's contribution of 3% of GDP in new credit, had countered much of this deliberately destructive Fed policy.

The ZIRP followed the GFC, not preceded it. Oil prices never made it back to their peak bubble period of 2007 near $150/bbl after the GFC. The GFC was a consequence of the China bubble and its collapse. All the finger pointing in Asia against the US and its supposedly profligate ways is the precise opposite of reality. The US banking sector was, and even now remains, a minor contributor to US credit inflation. The eurodollar system through which these same Asian complainers shove the monetary consequences of their irresponsible malinvestment in useless industrial capital, China at the head of the parade, CAUSE the exact circumstance they blame the US for. The US trade deficit is a consequence of their policy FORCED capital outflows in both financial flows and subsidized exports that amount to capital export into the US as well. The conceit of China and its Asian neighbors that their policy driven and debt financed investment into market flooding production capacity being "smart" rather than the idiotic "great leap forward" kind of strategic "thinking" does not deserve serious consideration as anything other than a massive delusion. 

In reality, it is not the Fed or Treasury that has a dollar policy and little share in dictating monetary affairs. It is the reality of international governments pushing their own policies into the Eurodollar system where 70-80% of dollar expansion had occurred since 1971 and which is now deflating, causing an enormous vacuum suction on the US domestic financial system for both fully reserved dollar cash accounts and treasuries to back Eurodollar liabilities. They US monetary policy needs to be orders of magnitude looser than the rest of the world for the next 2 decades to balance it out and maintain a viable system - and similarly for any system that may follow. US banks did not spend the last 20 years ruining their reputations and thus market shares with pervasive fraud because it was so lucrative, but because it was the only thing that they were able to do that  foreign capital inflows satisfied with low returns, didn't wash away, Their domestic control of their policing allowed them to do $100 Trillion of naked short selling - which is utter fraud and caused the market float to drop by 40% of companies, and a dearth of early stage companies coming to market where they could be attacked by banks producing counterfeit shares for their big hedgie clients to short. 

The continuous repetition of DeGaul's exorbitant privilege speech by every leader critical of the US dollar reserve system is the clear indication that they don't understand how it works and how little the US has to do with driving it one way or the other. It is a truly external currency system for the US and the world and has been so since 1933. It is a banker's banking system that has nothing to do with US policy and the bulk of the banks involved are not US banks but European banks, with the operations centered in London. The "successful" economies of big exporters that drover their people into industrial urban areas where they couldn't afford children and thus reverted to massive excess saving instead - a result of deliberate policy - complain about the system they themselves forced unto their people and the obvious consequences in finance of forcing the excess savings into massive capital malinvestment domestically and internationally. There were just recently $20 Trillion of negative yielding sovereign bonds. It is because malinvestment of these high saving high export economies has created a world with no persistent positive margins for the average business. 

There is no need to shift to renewables. LNG as shipping fuel displacing bunker diesels will reduce demand for the less plentiful oil. Renewables, where they make sense economically, will do their bit. But there is no need for policy to drive the panic into producing profits for Chinese rare earths monopolists. Policy should avoid EVs and favor H2 engines and infrastructure. It is an order of magnitude better system in reliability and distribution and storage capacity. The solar and wind projects only make sense as producers of H2 or electrogas (methane). Otherwise, the capacity needed to make for reliable electricity is 5X what you need with an all fossil fuel system, and costs 20 X as much capital (spit in the air figures of course). The H2 economy for general energy can justify the excess capital investment in producing something that can be used later at a reasonable cost with all that excess renewable electricity divorced from consumption periods.  The only reality of EVs and renewables are political ones and they have been pushed for parochial needs of desperate financiers lacking for large scale investments in real economic capital. It is a simple scheme of creating artificial deficits and supply constraints. It is Genocide for profit. And you get to moralize and pose in virtue signaling selfies. 

[Symmetry + 109]

15 minutes ago, 0R0 said:

 Policy should avoid EVs and favor H2 engines and infrastructure. It is an order of magnitude better system in reliability and distribution and storage capacity.

Hard to beat electricity distribution as the core infrastructure is everywhere.

As for a storage format that can be used in a car hydrogen has major problems.  The industry chose to go down the EV route and there are already many charging stations built. 

I have yet to see a hydrogen fuel station... 

Try reality.

Edited March 10, 2021 by Symmetry

[Tomasz + 1,608]

Well IMHO the Saudis are saying nowadays as clearly as possible to the whole world that the anno domini 2021 the are are no longer concerned with shale oil growth potential and its destructive impact on the balance of supply and demand.

Personally, I would even agree with it, considering that the period of rapid growth in shale oil production is probably over.

Let me notice that the number of oil rigs started to decline probably at the end of 2018, and certainly in 2019, when no one even heard about the coronavirus pandemic.

Secondly  are entering a long-term cycle of structural shortage in the crude oil market following the investment slump after 2014. From what I read from people more knowledgeable about the industry than me , the timeframe  between the commencement of the implementation of a conventional field and significant oil production from this field is about 7 years time lag.

So let me note that now it is already March 2021 and oil prices began to collapse in mid-2014, and perhaps now the moment long awaited by many participants in the oil market has come, when it will finally start to affect the production of conventional crude oil in next few years.

[Tomasz + 1,608]

From the less significant news, however, it is worth noting that according to EIA oil import stats in October the United States bought total 21 million barrels of Russian oil and petroleum products.

The quantities are still not very significant, but there are two reservations - this crude oil is needed in the technological processes of processing light shale oil into diesel at a time when strict sanctions are in force both on Venezuela and Iran.

The number of barrels imported is perhaps not great, but is systematically growing - in 2018 it was about 250,000 barrels a day, in 2019 about 500,000 barrels a day, in October it was already about 700,000 barrels a day.

With such numbers as in October, it is slowly starting to significantly affect US-Russian relations and proves that the world is a bit more complicated.

I would recommend this especially to those wondering why the US is not struggling with the Russian oil sector.

[Strangelovesurfing + 737]

Bloomberg has a great article about shale. Got some super sharp  members on this board, you guys discussed the exact same thing a bit ago.

https://www.bloomberg.com/news/articles/2021-03-12/the-giants-of-u-s-shale-are-proving-opec-right-with-discipline?sref=8lmlVGBP