Tuesday, March 22, 2016

Barack Obama, Drill, Baby, Drill and the Broken Shell

Actually, the tag at the left should say "NON-GOP." This blog post is certified to not contain the words "Trump" or "Cruz" anywhere in its content. It is about oil and gasoline pricing, not make believe, breathless politics questions which will never matter anyway. Enjoy the fresh air!

Thank you, MeanMesa

Crude Oil Pricing:
A Bitter Sweet, Economic Paradox
It's like the tide -- only with strings
 pulled by billionaire puppet masters.

Crude oil runs through the veins of the American economy like the blood of a death cage martial arts fighter. The "good things" can't really happen without it, and the "bad things" all seem to have at least something to do with bleeding it out from where it should have been for the "good things" to happen.

On blogs such as this one it is awkwardly easy to find page after page of ranting and raving about the oil tycoons and their oligarchic wet dreams of establishing perpetual, dynastic, family fortunes of "petro-dollars." Most of these complaints are, frankly, well deserved, overly genteel, "under statements" of the actual malicious reality.

[image MeanMesa]
Still, we see the "two or three edged sword" of an economic Damocles slowly swinging over the entire sector. When oil prices are sky high, Wall Street is humming in orgiastic joy, but American drivers are watching gas pump tallies painfully and slowly devouring their grocery budgets. Still, the declining numbers of Americans still boasting 401K, pensions or mutual fund accounts in the lingering aftermath of the Great Republican Recession of 2008 are quietly smiling as they receive their monthly statements.

However, when prices drop, Wall Street starts screaming, but drivers all across the country are very happily finding more and more discretionary income left in their pockets as they pull away from the SHELL station after topping off the tank. Those left over dollars find their way into the active parts of the US economy almost at once, boosting economic prosperity indicators such as the GDP and tax revenues.

[For any visitors who might consider such harsh words for Wall Street "over the top," please remember that the single largest holder of crude oil futures in the US economy is Goldman Sachs. The banksters have LOTS of crude futures without having to bother with messy drill rigs, environment wrecking leases or out of date, exploding oil trains. Read more: Goldman-Sachs-Sees-Oil-Bull-Market 2016-01-15_BLOOMBERG]

Poor Mr. Ox
You shouldn't have bet everything on oil.

[image source]
All of these factors become worthy of a blog post when they are mixed into a surreal soup of love-hate for the President's economic policies. and MeanMesa can remember gasoline prices in San Diego as they hit the $4 per gallon mark, and the current "affordability" of those same gallons is a direct result of the energy policies put in place by the Administration.

While there's plenty of talk about the new, post gasoline, energy economy -- for lots of really good reasons, it's going to take years to ween ourselves out the dependency mess we're in at the moment. At every moment between now and then someone's ox will be in the process of being gored.

Of course, MeanMesa would prefer to see that ox suffering slowly on Wall Street. Americans have already been bruised more than enough by the oligarchs' Ponzi scheme. Let's take a closer look at the "joys of wildly careening gasoline prices" brought to us by the current crop of out of control casino capitalists. 

All this is very dependably imaged to be the crude market's exclusive, organic reaction to changing geopolitical conditions. Rest assured. Every time the price of gasoline changes by a single penny on the tickers in the oligarch's country club parlor, the crude oil billionaires are tugging at the puppet strings and roaring with laughter. THAT's why we call them "petrogarchs."

Reagan's 1980's Recession,
 Economic Damages
and the Battered Crude Oil Market
Attention Republicans: "The economy has 
to stay alive to sell this junk at a profit."

Firing up the "way back" machine will offer us a reminiscent glance at just how things were in the 1980's with respect to the price of gasoline. 

At first it was a dazzlingly Utopian paradise for selling gasoline for an outrageous profit -- until the S&L crisis, increasing numbers of bank failures, jumping unemployment, deregulation of banking involvement in real estate risks and all the other delights of the Reagan Recession "altered" the playing field. By 1996 the economy was still struggling to recover, demand for crude was plummeting and prices were left at a dismal $25-30 per barrel. [1980's Recession/WIKI]

Around this time the corporate oil conglomerates were, naturally, complaining to Congress about regulatory limits on off shore drilling, national forest drilling, Alaskan ANWAR drilling and so on. The "petrograchs" perched in the executive conference rooms of these "horribly over regulated and abused" oil conglomerates were scheming to reestablish traditional crude prices so they could boost gasoline prices for a tasty "wind fall profit."

[Historical note: The oil corporations were not the only ones with an appetite for skewing the market into massive, artificial profit centers. At the time MeanMesa was living in San Diego. The corporate ENRON conglomerate had very strategically closed a good collection of generation plants "for maintenance," so larger cities in California were experiencing "brown outs." The unhappy result of this was that the California grid managers were forced to purchase premium priced electricity from neighboring states creating a rapid, marked increase in California electrical bills.

Sarah Palin [image]
Literally millions of California electric bills started their atmospheric ascent in no time. Without delving too deeply into wild conspiracy theories MeanMesa also presumes that the ENRON "electrogarchs" and the "horribly abused, oil conglomerate petrogarchs" were actively scheming with each other to depose the Governor and install a mindless weightlifter/movie star from Austria to "straighten out" their respective, terrifically painful, "over regulation" problems.]

By the 2008 election high gasoline prices had become the "vibrant life blood" component of the Republican Presidential campaign. The histrionic whining reached its apex when the job of continually screaming the "Drill, Baby, Drill!' mantra was handed over to the shrill, rasping voice of the tediously confused, Alaskan Vice Presidential candidate and oil production "expert," Sarah Palin. [Drill Baby Drill!/WIKI]

Perhaps a part of this discontent arises from MeanMesa's memories of paying 16 cents per gallon in the 1960's -- a per gallon price which changed very little year after year.

The Ugly Picture of the Big Crude Boys Shaking in Terror
Oh how the mighty have fallen...

The Guardian
Shell vows to sell $10bn extra assets as profits plunge 87%

Terry Macalister Energy editor
Thursday 4 February 2016
[Visit the original article Shell Profits Drop-The Guardian]

Collapse in oil price hammers profits as BG* takeover looms but CEO pledges not to conduct a fire sale or cut more jobs.
Shell profits have suffered thanks to the plunging oil price.
[*BG = British Gas - now an exploration company] 
Photograph: Shaun Curry/AFP/Getty Images

Shell has promised to dispose of a further $10bn of assets this year but insisted it does “not intend to hold a fire sale”.

The sell-off commitment came as the Anglo-Dutch group reported an 87% collapse in annual profits to $1.9bn just as it completes its £35bn takeover of rivalBG.

Ben van Beurden, the Shell chief executive, had previously said the group wanted $30bn of asset sales following the BG deal and he now expects a third to come in the next 12 months without losing out on price.

“We do not intend to hold a fire sale. We don’t have to,” Van Beurden insisted while saying a general slump in costs across the industry had meant that the business was now making money again in the central North Sea.

Shell reported that quarterly earnings fell by 58% to $939m although the underlying profit of $1.8bn was in line with expectations.

Shell has been hammered by a collapse in oil prices which has left the key North Sea Brent crude as low as $32 per barrel in recent days. On Tuesday, BP unveiled the worst annual loss in its history at $6.5bn while Conoco in the US has just cut its dividend.

The company’s share price closed up more than 6% at £15.26, as commodity companies rallied on the back of rising oil prices. It is still down more than 10% since the start of the year.

BP makes record loss and axes 7,000 jobs

Van Beurden said he was committed to make “substantial changes” to cope with the lower cost of crude but has not increased the total number of job losses planned, with 7,500 gone and 2,800 still to come.

“The completion of the BG transaction, which we are expecting in a matter of weeks, marks the start of a new chapter in Shell, rejuvenating the company, and improving shareholder returns,” he said.

“We are making substantial changes in the company, reorganising our upstream, and reducing costs and capital investment, as we refocus Shell and respond to lower oil prices.”

The latest figures from Shell show quarterly oil and gas production down 5% and put quarterly cash flow from operating activities at $5.4bn with annual spending at $28.9bn, down 23% on the year before.

Over the last year Shell has ditched its controversial exploratory drilling operation in the Arctic and postponed or scrapped projects such as the LNG Bab gas field in Abu Dhabi and Canada LNG.

The company took a final investment decision on only four new projects last year and few are expected to be approved in 2016.

This strategy has started to drag down Shell’s reserve replacement ratio, a metric used to reflect new reserves added relative to the amount produced, down to 48%, even lower than BP.

Despite the dismal financial results, Van Beurden announced the 2015 annual dividend would be held at $1.88 and “is expected to be at least $1.88 per share in 2016”.

The Shell boss was reluctant to predict the direction of future oil prices but he expected them to start moving up from Thursday’s level of mid-$34 towards $50 over the next 12 to 18 months.

The BG merger still needs a low $60 oil price to make sense but the Shell boss said this was a long-term assessment and he remained confident the deal was advantageous to shareholders.

Asked at a briefing whether the company would urge British voters to reject Brexit in a referendum vote, Van Beurden said it was up to the public to decide but added: “It would be bad for the European Union. It would not be a good thing for Shell.”

Meanwhile, Greenpeace said the collapse of profits at oil companies was a result of making the wrong decisions on fossil fuels.

“Oil giants like Shell and BP are already paying a huge price for failing to bring their businesses into the 21st century,” said Greenpeace’s senior climate adviser Charlie Kronick.

“The more electric cars, solar panels, and better-insulated homes we have, the less fossil fuels we’re going to need and the less they’re going to be worth. Shell and BP have bet heavily on the wrong energy sources, and now they’re losing big.”

A Couple of Foreign Oligarchies Playing With Fire
For Big Stakes -- Including War and Recession
The Saudis and the Russians are still tossing in chips for their ante...

The international geopolitics of this mess are churning along at the "edge of an explosion." The Saudis could have probably frozen crude oil prices at the last OPEC meeting. Of course, there would have been a price because it would have meant cutting production and eliminating the glut of cheap oil which was drowning prices in the global market. Still, the Princes and King who would have had to take such a decision are literally trillionaires.

Continuing Saudi production levels which would ensure the glut for the foreseeable future was a strategic decision for them. The other OPEC countries were screaming for relief from the low prices, but the Royals knew that the glut would, in time, strike at the heart of economies of some potent nations they would never be able to hit by any other means -- Iran and the Russian Federation. 

Even with some of the sanctions lifted, Iran is still staring down the barrel of a crude market in the $30-$50 per barrel range. At this moment the Islamic Republic needs everything that oil money could possibly buy for them. The domestic economy is in shambles. Youth unemployment is sky high.

The Russian Federation has put all their "nested eggs" in the same basket. The Russian oligarchs probably thought that Putin's fantasy of resurrecting the old Soviet Union looked like fun in the beginning, but the international price for scooping up Crimea has now become a brutal hangover from a vodka soaked escapade of sheer masochism. Current crude oil prices amount to an ice pick delivered right in the middle of the agony.

Even the going price for illegal oil from ISIS has crashed. The Turkish markets for the stuff were funneling six digit monthly stipends to the crazies while the per barrel prices were better, but now, between the coalition air strikes on the Syrian and Northern Iraqi production facilities and the nearly worthless, low priced "black gold" being loaded into the caliphate's old tankers for the trip north, ISIS headquarters is replacing all the un-affordable luxuries from the early days with lots of appetite suppressing meth. [Thanks, Obama...]

The Social Media - Dancing on Big Oil's Grave

It may be cruel to speak ill of the dead,
but it's a slightly different moment when it's your abusive masters who are dying.

It's never been much of a "heavy lift" to incite an exercised condemnation of Big Oil in a late night, bar room complaint session, but even after setting such histrionics aside, the oil business tycoons have not enjoyed any social affection -- even in quieter moments -- from us "little people" for centuries. Nonetheless, this unavoidable "victim-hood" has never really included any workable alternatives. The grip of the crude oil billionaires has always been unassailable, ensconced deeply in the gears of a social fabric almost entirely reliant on gas guzzling automobiles.

Nonetheless, social media has, once again, drawn out a "new frankness" when it comes to comments about the on-going scheme. The facts driving such bravery are no secret -- 1. the United States is now one of the leading oil exporting countries, and 2. US factories are now un-apologetically producing automobiles which do not run on gasoline...and, SOME OF THEM ARE "RED HOT CHICK MAGNETS," too!

TESLA Chick Magnet - no gasoline, no smoke, no petrogarchs.

Further, MeanMesa is no stranger among those making this constant torrent of complaints about the damage the petrogarchs' Ponzi scheme has been perpetually inflicting on American crude consumers for years. Have a look at a couple of old MeanMesa sample posts [below].

And finally, no post about social media's response to this matter would be complete without a sample of what's currently appearing on Face Book.

The guy on the right has actually held a gasoline nozzle. 
[screenshot fB]

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