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Energy

  • Russia And China‚Äôs Growing Energy Relationship

    Russia’s economic freefall and isolation from the West has made it increasingly eager to build its relationship with China, even at the cost of lost leverage with Beijing. But new economic data from China shows that Russia has succeeded in capturing a larger share of the massive – and growing – Chinese oil import market. China’s imports of Russian oil skyrocketed by 36 percent in 2014. The rapid rise in Russian oil exports to China is displacing other sources, such as Saudi Arabia and other OPEC members. The Wall Street Journal reports that China’s oil imports from Saudi Arabia fell…

  • Drug Cartels Threaten Mexican Energy Future More Than Oil Prices

    As the oil and gas industry deals with a very unfavorable international market environment, Mexico’s current government can no longer ignore the risks posed by the country’s challenging security scenario. 2014 has been a difficult year for Peña Nieto’s government, as it endures a considerable public backlash resulting from a series of corruption scandals and its mishandling of the case of the disappearance of 43 students in Iguala, Mexico. Over the past six months, personnel of the oil and gas industry have also continued to be targeted by criminal groups. Adopted from its predecessor, Peña Nieto’s security strategy has enjoyed…

  • Electric Utilities Face A Disruptive Future

    Cheap gas and oil aren't the only forces disrupting the U.S. electric system. Solar is already wreaking havoc, and large-scale batteries are looming. What Uber and Lyft have done to the taxi industry worldwide is just beginning to happen to the electricity industry; and it could shock consumers – particularly the less affluent – as surely as though they had stuck their finger in an electrical outlet. The disruptive revolution is not only happening here, but also in Europe, as Marc Boillot, senior vice president at Electricite de France (EDF), the giant French utility, writes in a new book. Ironically,…

  • Bearishness Continues Among Oil Industry Experts

    The business world is full of sometimes conflicting theories about what caused the plunge in oil prices during the past seven months, and how low that price will go. But Goldman Sachs seems to have come up with a unified theory. It began late in the afternoon of Jan. 26 when Gary Cohn, the president of Goldman Sachs Group Inc., told the CNBC television program “Closing Bell” that he expected the average price of oil, now around the $45 range per barrel, to fall further, perhaps as low as $30 per barrel. “My view is we’re probably in the lower,…

  • How The Economy Is Tied To Energy

    How does the economy really work? In my view, there are many erroneous theories in published literature. I have been investigating this topic and have come to the conclusion that both energy and debt play an extremely important role in an economic system. Once energy supply and other aspects of the economy start hitting diminishing returns, there is a serious chance that a debt implosion will bring the whole system down. In this post, I will look at the first piece of this story, relating to how the economy is tied to energy, and how the leveraging impact of cheap…

  • U.S. Crude Inventories Reach Highest Levels Since 1982

    EIA Inventory build was double expectations at 8.87 million barrels...With Total Crude Supply at its highest since at least 1982...* * *Related: OPEC Chief Claims Oil Will Rebound Higher Than In 2008Remember how exuberant yesterday's small gains in Crude Oil were perceived to be? Yeah - that's all over, with WTI back near a $44 handle - following a large 12.7 million barrel inventory build according to API (EIA reports the 'main event' at 1030ET today - which Saxo Bank warns "a bigger-than-expected build would likely push the market over the cliff edge.") Additional weakness overnight is also likely due to…

  • Increasing Demand For Refined Products Will Increase Oil Prices

    In last week’s article I posted a chart from the International Energy Agency’s recent Oil Market Report that shows global demand for refined products catching up to supply by the 3rd quarter of this year. My opinion is that all of the analysts who are now blaming the sharp drop in oil prices on a “glut” of supply could change their tune quickly as consumers adjust to lower fuel costs. Just as higher costs reduce demand for any commodity, lower costs will increase demand. This is especially true for a commodity that has a direct impact on standard of living,…

  • OPEC Chief Claims Oil Will Rebound Higher Than In 2008

    OPEC’s secretary-general says the 7-month-old plunge in oil prices finally may have bottomed out and may be ready to rise again. In fact, Abdullah al-Badri hypothesized that a decision by his cartel to cut production conceivably could lead to oil at $200 a barrel. “Now the prices are around $45 to $55 [per barrel], and I think maybe they reached the bottom and will see some rebound very soon,” al-Badri said Monday in an interview with Reuters in London, and if OPEC cut production, that price certainly would rise, perhaps to unimaginable levels. “Suppose we cut production, and then we’ll…

  • New England Growing More Dependent On Natural Gas

    New England may avoid a spike in natural gas prices this winter, but the region is becoming increasingly dependent on the fuel, ensuring that price spikes in future years are not out of the question. A year ago, the polar vortex brought several bouts of low temperatures and heavy snow to the northeast, causing demand for heating and electricity to jump. Temporary shortages in natural gas flows due to pipeline constraints led spot prices to shoot up. Prices at Algonquin Citygate, a marker for the Boston area, hit an all-time high of $77.595 per million Btu (MMBtu) on January 23,…

  • Russian Gas Provides Lifeline To Chinese Expansion

      The shale gas game began to cool in China after the latest plunge in oil prices. However, thanks to the recently concluded Power of Siberia pipeline deal, Beijing will be able to rely on a stable supply of natural gas from Russia during a highly volatile time for the market. Ever since 2010, when the State Dept. first introduced fracking as a panacea for all energy problems, the technology has transformed the US energy sector, but it has remained more of a psychological phenomenon in Asia. The fracking game is over in both China and continental Europe, as a…