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Article Archive

  • These Gold Numbers Are About To Hit A 15-Year High

    Things have changed a lot in the gold market--in a very short period of time.And news this week suggests that further structural changes are coming to the market. The kind we haven't seen in over 15 years.Specifically when it comes to gold hedging. The practice of forward-selling bullion in order to lock in a fixed price.With gold rising over a good part of the last decade, investors wanted as much exposure as possible to prices. With buyers betting that prices would continue to rise--generating increasing profits for companies that produce bullion.Related: Here's A New Update in India's Gold SagaThat led…

  • Falling Coal Prices Wreaking Havoc With Corporate Balance Sheets

    The slide in oil prices has raised speculation that oil companies in the U.S. could be forced to cut back on production, but a market slump in another commodity is also putting pressure on producers. Coal markets are currently experiencing a supply glut that is showing no signs of recovery. Mining companies drew up plans for billion-dollar projects in the mid-2000s, when commodity prices were on the upswing. With many of those projects now coming online, coal production is rising.BHP Billiton, an Australian mining giant, just opened a $3.4 billion mine in Queensland, which will add 5.5 million tonnes of…

  • Russian Credit Rating Slashed, Economic Future Remains Dim

    The struggling Russian economy was short on good news last week as Moody’s Investors Service slashed the country’s credit rating to its second lowest level, Baa2, citing the crisis in Ukraine and Western sanctions. The move follows similar ratings downgrades by Fitch Ratings Ltd and Standard & Poor’s and reaffirms Russia’s meager medium-term growth prospects. In the more immediate future, Russian equity markets remain a risky play. Long term, the picture is less clear and Russia’s vitally important energy industry is riddled with uncertainties. Related: Ukraine-Russia Gas Deal Still Possible Despite SetbackAmid Western sanctions over Russia’s actions in Ukraine, plummeting…

  • 8 Reasons For Our Oil Price Predicament

    A person might think that oil prices would be fairly stable. Prices would set themselves at a level that would be high enough for the majority of producers, so that in total producers would provide enough–but not too much–oil for the world economy. The prices would be fairly affordable for consumers. And economies around the world would grow robustly with these oil supplies, plus other energy supplies. Unfortunately, it doesn’t seem to work that way recently. Let me explain at least a few of the issues involved.1. Oil prices are set by our networked economy.As I have explained previously, we…

  • Is The UK The Most Energy Secure Country In The EU?

    Two related articles appeared in Blowout Week last Sunday. In the first the Daily Express fulminated about how the UK government’s energy policies will send electricity bills skyrocketing and maybe snuff the lights out at the same time:The green crusade of successive governments is set to double electricity bills for households and cost homes £26 billion a year by 2030, it was claimed yesterday. The cost of renewable energy and carbon taxes will put an extra £983 a year on household bills by then, compared to relying on a mix of nuclear and new gas-fired power stations, three experts told…

  • Are More Troubles Coming For This Critical Gold Center?

    Very significant news emerging this week for the gold market.From one of the biggest consuming nations on the planet.That’s India. Where reports from local press suggest that the government may once again tighten restrictions on gold imports into the country.Related: Mick Davis has now almost $5 billion to build new mining empireOfficials are reportedly looking at re-instating the so-called “80:20 rule” on imports. Under which importers of gold were required to re-export 20% of the supply they brought in from abroad.The 80:20 rule was formally relaxed last May after being in force for a year. A move that has allowed…

  • Ukraine-Russia Gas Deal Still Possible Despite Setback

    Negotiations over a natural gas deal between Ukraine and Russia have faltered since the spring, but the standoff has taken on a new urgency as winter approaches.Following the overthrow of Ukrainian President Viktor Yanukovich in February, Russia altered the terms by which it sells natural gas to Ukraine. Along with Yanukovich, favorable pricing went away. In April, Russia nearly doubled the sale price of natural gas to Ukraine, from $268.50 per thousand cubic meters to $485.50. This was a price that the Ukrainian government said it could not meet. Even worse, Russian gas company Gazprom demanded upfront payment for gas…

  • Big Oil And Renewables: Not So Strange Bedfellows

    In most conversations about energy, the topic of Big Oil versus renewables usually becomes a zero-sum game. Renewable advocates accuse Big Oil of conspiring to shut out wind, solar and other alt-energy sources in the pursuit of greater profits driven by fossil fuels. Big Oil defenders say that renewables, while an important adjunct, can never meet the global demand for energy provided by traditional sources: coal, oil and gas. In fact, the big oil companies have never shunned renewable energy in their mix of business operations, and only recently have pulled back investments in solar and wind. But the reasons…

  • Russia Opens Criminal Probe Into Plane Crash Death Of Total CEO

    Russia’s chief investigative panel has opened a criminal probe into the Oct. 20 accident at Moscow’s Vnukovo International Airport that killed Christophe de Margerie, the CEO of the French multinational oil company Total, saying the field’s management was negligent and that the snowplow driver who apparently caused the crash was drunk.The accident occurred when de Margerie’s private jet struck the plow during its takeoff attempt, burst into flames and crashed on the runway, killing de Margerie and the plane’s three French crewmembers. The plow driver was not injured.The Investigative Committee, Russia’s chief investigative agency, said the driver of the plow…

  • Oil Shocks And The Global Economy

    Here I re-tread a well-trodden path, but with recent events in the oil market I thought a brief recap might be timely.I begin with a photographic illustration of a typical US demand response to the tripling of oil prices that occurred during the first “oil shock” in 1974: Demand response after a tripling of oil price, USA, 1974Those long lines of gas-guzzlers were indeed a demand response, but not to the oil price increase. They were a reaction to the nationwide shortage of gasoline caused by the oil embargo that accompanied it. Americans, like George Patton’s tanks during the Normandy breakout,…