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James Stafford

James Stafford

James Stafford is the Editor of Oilprice.com

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Energy Update: Is OPEC Really Worried About the U.S. Oil & Gas Boom?

New energy police leadership around the corner; a bit of unusual energy consumerism philosophy; various takes on how scared OPEC is about the US oil and gas boom; and a roundup of this week’s Premium offerings …

Before we get onto the news I just wanted to mention that this is the last week you can take advantage of our introductory price for Oilprice.com Premium. On Sunday the price will be rising to $697 from the current price of $497. I have listed some additional benefits at the bottom of the introduction – but we offer a NO RISK 30 day free trial. If you have been thinking about giving the service a try now is the time to do so. Click here

Onto the news:

In light of the apparent forward movement to crack down on energy price-fixing, everyone in Washington is watching closely as the change of guard looms for the Federal Energy Regulatory Commission (FERC). FERC Chairman Jon Wellinghoff submitted his resignation to President Obama this week, announcing that he would not seek another term when his current one expires on 30 June. Wellinghoff will likely be convinced to stay on until the Senate has a chance to confirm a new chairperson. Wellinghof was appointed to FERC in 2006 and made its chairman in 2009.

No one’s quite sure why Wellinghoff is resigning, and the FERC chairman has been tight-lipped about his reasons. But it’s lost on no one that his battle has been a tough one. Under his watch, FERC has embarked on a much more serious fight against energy price-fixing, little by little bringing the problem more visibly into the public forum. Wellinghoff is credited with leading the crackdown and subsequent ongoing investigations into the energy manipulation activities of major US banks; first, Barclays Plc (BARC) and Deutsche Bank AG (DBK), and most recently JPMorgan Chase & Co. (JPM). The past two years have been particularly ambitious for FERC, which undertook 13 investigations (that we know of) for energy market manipulation.

It could be weeks before we see a name pop up for Wellinghoff’s replacement as chairman of the five-member FERC board. The next senior FERC figure, Commissioner John Norris, could assume the chair, or we could see a new candidate altogether.

Who leads FERC is much more important than it ever has been in the past. The US oil and gas boom has seen to that. Now everyone’s paying much closer attention to energy market manipulation, and consumers are starting to catch on to what this means for their own wallets.

Shifting gears here, we were amused to come across a new study published by the National Academy of Sciences which suggests that political conservatives are not likely to buy any products that are labeled environmentally friendly even if it is in their economic interest. It’s a very interesting philosophy-of-marketing study that should raise a few eyebrows in the industry.  The end result of this research was based on something as benign as a light bulb presented to 210 consumers who were duly apprised of the product’s long-lasting (9,000 hours) nature and its economy, which could cut electricity costs by 75%. The consumers were given a choice between this energy-saving light bulb (with “protect the environment” stickers) and regular light bulbs. The result was that when the prices for both light bulbs were the same, nearly all chose the energy-saving bulb; when energy-saving bulbs were more expensive upfront but cheaper over the long term, conservative consumers choose regular light bulbs, while non-conservative consumers chose the energy-saving version in both cases.  The point of the study is ostensibly to demonstrate how politically polarized the energy issue has become for Americans and how all decisions are being blinded by this politics.  We’re not sure we’re buying the argument, but it is an interesting study, nonetheless.

We leave you with what seems to be the most popular story of the week: OPEC has gone fracking. It’s a popular theme in the US that OPEC countries, particularly Saudi Arabia, are quaking in their boots over the fracking-induced US oil and gas boom. But we urge you to exercise a bit of restraint while mulling this over, and we leave you with the words of Breitling Energy CEO Chris Falkner, whom we had the pleasure to interview last week:

“Don’t forget the Kingdom is still the world’s swing supplier, a role it’s held since the late 1970s. It’s important to remember that the Saudis not only have the largest proven reserves of oil, it’s also the largest repository—by far—of low-cost oil reserves. Saudi Arabia could easily flood the market, as it did in the early ‘80s, if it lost too much market share, dropping oil prices to $50 or less, and US drilling and production would collapse.”

Our research piece below comes from the Executive report in Premium and reveals game changing intelligence to readers on Turkey and why a hot venue is about to become even hotter. This is a MUST READ for oil companies and investors. See below for the full report.

Don’t miss this week’s Premium Newsletter, where we take you through the first in our series of emerging US shale plays and our trader extraordinaire Dan Dicker details four trades for energy investors over the coming week.

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First, you’ll have heads of two of world’s leading private intelligence networks working for you:

Anes Alic is president of ISA Intel, a private boutique intelligence network focusing on the Middle East, Europe and Africa. ISA Intel is a global leader in providing strategic human intelligence to the energy sector.

Anes and his team have decades of experience gathering and analyzing intelligence. His team can tell you what’s happening inside governments, extremists groups, criminal organizations and everything in between.

And Anes puts ISA Intel’s strategic expertise at your disposal as an Oil & Energy Insider.

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president of Southern Pulse, a private intelligence network with over 200 assets on the ground throughout South American, the world and the energy sector.

Southern Pulse handles a wide range of intelligence operations from strategic planning, risk assessments and in-depth investigations for clients ranging from private companies to governments.

Second, you’ll get world class fundamental and technical analysis of the energy markets from veteran oil & energy traders and analysts:

Dan Dicker is a 25-year veteran oil & gas trader and the author of the award winning book, Oil’s Endless Bid. Each week Dan brings you his best investing and trading ideas.

Dan’s experience and floor contacts will help keep you one step ahead of the crowd - enabling you to make profitable investments and trades before the majority of investors are even aware of the opportunity. His weekly report looks at both fundamental and technical analysis and reveals undervalued investment opportunities for investors.

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He’ll tell if there is aggressive buying or selling. He’ll tell you if the market is short or long oil or gas. He’ll tell you if speculators are liquidating their long positions and preparing for a drop, or shoring up their long positions in front of a rally.

His weekly x-ray of the market keeps you on top of the maneuvering of Wall Street and how best to profit from it.

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I hope you enjoy this weeks report below and have a great weekend.

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