Steven Greenhut Says Bad Oil News Doesn’t Validate Environmentalists’ Fracking Ban Demand

Environmentalists are gleeful
at the news reported last week by the U.S. Energy Information
Administration that the amount of recoverable oil from California’s
Monterey Shale formation — predicted to be the nation’s largest
reserve of oil — is a whopping 96-percent below
original production estimates due to the state’s difficult
geology. In response, more than 100 environmental
groups signed a letter to the California Legislature calling
for a moratorium on hydraulic fracturing and other “stimulation”
techniques that ultimately would be needed to develop this oil
field. They say the new estimates are “undercutting the misguided
rationale” for allowing fracking before more studies are done.
Steven Greenhut counters that the estimate does not change the
dynamics or the debate about hydraulic fracturing. There’s no less
oil in that vast geologic formation that largely lies underneath
the Central Valley and parts of the Los Angeles basin, people just
need the economic incentive to figure out how to extract it.

View this article.

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Here Is What The Slide In Gold Is Being Blamed On (Hint: Weather)

When the US economy underperforms expectations, the weather is blamed; and now, on the heels of Japan's pre-emptive blaming of weather for crushed consumer spending patterns; The FT proclaims that El Nino is responsible for the weakness in gold (as monsoon season will reduce physical demand from India)… welcome to mainstream media meteoronomics 101. What is odd about this reasoning is that we are actualkly more prone to a La Nina than an El Nino pattern this year based on the Southern Oscillator Index.

 

Gold down due to El Nino – Via The FT,

Concerns about the effect of El Niño, which have hit commodities markets since the start of the year, is spreading to gold, as some analysts point to the weather phenomenon’s potential impact on India’s monsoon season.

 

he lack of physical buying by Indian consumers, normally active purchasers of the yellow metal, has been one of the bearish factors for the gold market this year. The precious metal was down 3 per cent on the week at $1,253.90 a troy ounce, and Edel Tully, precious metals strategist at UBS in London, said India was likely to be on the radar in June as the monsoon season started.

 

 

A bad monsoon could hit crops and lead to higher food inflation, prompting higher income earners to buy gold.

 

However, a larger impact on the gold market is likely to come from poor crops and rising food costs forcing farmers to “sell part of their gold holdings as well as leaving less money for gold purchases”, UBS added.

As we noted previously…though few have commented on it – the SOI has swung closer to La Nina than the El Noino threshold

The Southern Oscillation Index, or SOI, gives an indication of the development and intensity of El Niño or La Niña events in the Pacific Ocean. The SOI is calculated using the pressure differences between Tahiti and Darwin.

 

Sustained negative values of the SOI below −8 often indicate El Niño episodes. These negative values are usually accompanied by sustained warming of the central and eastern tropical Pacific Ocean, a decrease in the strength of the Pacific Trade Winds, and a reduction in winter and spring rainfall over much of eastern Australia and the Top End. You can read more about historical El Niño events and their effect on Australia in the Detailed analysis of past El Niño events.

 

Sustained positive values of the SOI above +8 are typical of a La Niña episode. They are associated with stronger Pacific trade winds and warmer sea temperatures to the north of Australia. Waters in the central and eastern tropical Pacific Ocean become cooler during this time. Together these give an increased probability that eastern and northern Australia will be wetter than normal.

Oddly, we are seeing more La Nina than El Nino weather… So buy gold?




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Anti-Pot Republicans Forsake Federalism in Medical Marijuana Vote

Today more Republicans
than ever
voted
to stop federal harassment of medical marijuana
providers, but they still opposed the measure by a ratio of 3.5 to
1. In my latest Forbes column, I consider the
implications of the GOP’s failure to defend federalism in this
context. Here is how the column starts:

Early this morning, by a vote of 219
to 189, the House of Representatives approved an
amendment aimed at stopping federal interference with state laws
that “authorize the use, distribution, possession, or cultivation
of medical marijuana.” If it is included in the appropriations bill
passed by the Senate and signed by the president, the amendment
would prohibit the Justice Department, which includes the Drug
Enforcement Administration (DEA), from spending taxpayers’ money on
dispensary raids or other attempts to stop medical use of marijuana
in the 22 states that allow it.


Similar meaures
 have failed in the House six times since
2003. This year the amendment attracted record support from
Republicans, 49 of whom voted yes, compared to 28 last time around.
“This measure passed because it received more support from
Republicans than ever before,” says Dan Riffle of the
Marijuana Policy Project.
“It is refreshing to see conservatives in Congress sticking to
their conservative principles when it comes to marijuana policy.
Republicans increasingly recognize that marijuana prohibition is a
failed Big Government program that infringes on states’
rights.”

Yet Republicans still overwhelmingly opposed the amendment, by a
ratio of more than 3 to 1, while Democrats overwhelmingly supported
it, by a ratio of 10 to 1. Given the GOP’s frequent lip
service to federalism, the party’s lack of enthusiasm for letting
states set their own policies in this area requires some
explanation. So does the need for this amendment under a Democratic
administration that has repeatedly said it is not inclined to use
Justice Department resources against medical marijuana users and
providers who comply with state law. It is hard to say who is being
more inconsistent: a president who promised tolerance but delivered
a crackdown or members of Congress who portray themselves as
defenders of the 10th Amendment but forsake federalism because they
are offended by a plant.


Read the whole thing
.

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Friday A/V Club: The Campaigns Against Cable TV

The early development of cable TV was famously hobbled by the
broadcasters’ lobby, which fought hard to keep the cable
competition from emerging. But the broadcasters weren’t alone:
Owners of movie theaters worried they’d lose business if people
could watch more films at home. As Glenn Garvin
wrote recently
in Reason,

Subscription Television, you were too beautiful for this world.a California outfit called
Subscription Television Inc….offered a three-channel system
featuring major-league baseball, first-run films, and a handful of
tony cultural and educational programs. Put together by Pat Weaver,
the disgruntled former NBC programmer who invented both the
Today and Tonight shows, Subscription Television
created so much buzz during its few months on the air in 1964 that
it triggered the greatest Hollywood miracle since Cecil B. DeMille
parted the Red Sea: America’s TV executives and movie-theater
operators, blood enemies from birth, united to make war on the
newcomer. Running ads with headlines like “This Could Be the Last
World Series on Free TV,” they launched a pogrom that ended with a
public referendum outlawing pay TV in California.

The spectacle of industries using the ballot box to outlaw
competitors without even the faintest pretext of nobler purpose was
so appalling that Time was moved to wonder if it would
become a regular feature of the American economy: “A united front
of gluemakers, for example, might collect enough votes to ban the
manufacture of Scotch tape. Chrysler could war on General Motors.
Whichever collected the fewest votes would die a corporate death.”
Courts would eventually overturn the referendum, but by then
Subscription Television’s contractors and investors were gone with
the regulatory wind.

In 1969, theater owners went on another “Save Free TV” crusade,
lobbying congressmen for protection and showing anti-cable clips
before features. Here’s an artifact of that campaign:

The most transparently disingenuous line: “Pay TV and cable TV
companies are seeking the right to charge you for the very programs
you now get free!” Right. That’s how companies planned to make
money from cable: by persuading people to pay for shows they could
already watch without paying. Not by offering them programs they
otherwise couldn’t see.

Bonus links: If you think these protectionist crusades
are just a thing of the past, wise up here.
For past installments of the Friday A/V Club, go here.

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More Housing Bad News: Household Formation At 30 Year Lows

It was a little over two years ago when, scrambling for the next catalyst to justify a home price rebound (which as we then said and have subsequently been proven right was rising only due to three factors: i) offshore oligarchs parking laundered “all-cash” money in luxury US real estate: a process that is slowly ending, ii) Wall Street firms using cheap REO-to-Rent credit to bid up distressed properties and flip them as rentals: a process that is virtually over and iii) banks hoarding foreclosed properties on their balance sheet to avoid an avalanche of supply which would crush prices: this has yet to be unwound) some of the more “rose-colored glasses” media outlets came out with bomastic titles such as this one: “The Most Overlooked Statistic in Economics Is Poised for an Epic Comeback: Household Formation.”

While the article was quite correct in suggesting that household formation is very overlooked, the reality is that it is overlooked for a good reason: it refuses to play along with the broader recovery theme, which is a simple one: if there is to be a real housing recovery, households have to be formed at a much faster pace. Where the article also epically wrong was in its fundamental thesis: contrary to the author’s expectations “backed” by many pretty charts not only has household formation not made a “comeback”, it has crashed. In fact, according to Census Bureau data, in Q1 the number of households formed each month was 189,000, down from 1,563,000 in 2013, dropping more or less in a straight line since the article’s publication!

For the visual we go to Bank of America’s chart of the day, which shows a very unpleasant story for all those who keep betting that an “epic comeback” in household formation, and of course the economy, is just around the corner.

Here is what BofA had to say about this:

Equilibrium household formation: In equilibrium, home supply (new completions + excess vacant properties for sale + manufactured homes) should equal home demand (household formation + demolitions + second home purchases), assuming that builders were able to gauge market trends and build to meet the changes in demand. We can derive an equilibrium measure of household formation by solving for the variable based on the assumption that supply equals demand. It shows a clear downward trajectory in household formation with little recovery thus far, similar to the trend in the actual data.

And now time for the spin: apparently households aren’t formed when it is cold outside (see: harsh weather which claimed some $100 billion in lost GDP output in Q1), and the ongoing collapse in household formation, which is now at 30 year lows, means the rebound, if it ever comes, will be that much more pronounced.

Actually, come to think of it, tt really is not that difficult to spin any horribly ugly data point when one’s only fallback is endless optimism about the future.




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Who Wants to Ban Sex Toys, Chocolate Milk, and Golf Lessons?! Nanny of the Month

“Who Wants to Ban Sex Toys, Chocolate Milk, and Golf Lessons?!
(Nanny of the Month, 5-14)” is the latest video from ReasonTV.
Watch above or click on the link below for video, full text,
supporting links, downloadable versions, and more ReasonTV
clips.

View this article.

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Libertarianism 3.0: The Koch Brothers, the GOP, and What Comes Next

I’ve got
a new piece
up at The Daily Beast that talks about
Daniel Schulman’s brilliant new biography of Charles and David
Koch,
Sons of Wichita
, the brothers’ major role in fomenting the
contemporary libertarian moment, and how those of us who believe in
shrinking the size, scope, and spending of the government might
shift the course of politics in 2014, 2016, and beyond.
Snippets:

What’s far more interesting—and important to contemporary
America—is the way in which Schulman documents the absolute
seriousness with which Charles and David have always taken
specifically libertarian ideas and their signal role in helping to
create a “freedom movement” to counter what they have long seen as
a more effective mix of educational, activist, and intellectual
groups on the broadly defined left. By treating the Koch brothers’
activities in critical but fair terms,Sons of
Wichita
 points to what I like to think of as
Libertarianism 3.0, a political and cultural development that, if
successful, will not only frustrate the left but fundamentally
alter the right by creating fusion between forces of social
tolerance and fiscal responsibility….

The standard GOP response to unapologetic libertarianism is fear
and dismissal: It’s too whacked out, too radical, too scary. Yet
the only branch of the Republican Party that isn’t dead and
withered is precisely the libertarian one. Retired Rep. Ron Paul
(who ran for president on the Libertarian Party ticket in 1988)
packed college campuses with young kids and retirees with a vision
of limited government, fed audits, and restrained foreign policy.
If he fired up an enthusiasm that was never fully reflected in his
vote totals, he also inspired a new generation of candidates and
activists who want to be part of a major party. Whose heart
flutters at the sight of John Boehner or Eric Cantor? While not
necessarily doctrinaire libertarians, characters such
as Sen.
Rand Paul
 (R-Ky.), Sen. Mike Lee (R-Utah), Rep. Justin
Amash (R-Mich.), and Rep. Thomas Massie (R-Ky.) are not only
pushing for defense spending and the NSA to be put on the chopping
block, they are increasingly pushing for marriage and drug issues
to be settled at the state level. Paul is consistently at the top
of polls for 2016 presidential contenders.


Read the whole piece.

Disclosure:

David Koch is a trustee of Reason Foundation, the nonprofit that
publishes Reason.com and Reason.tv, of which I’m
editor in chief. Back in 1993, I received a fellowship for around
$3,500 from the Institute for Humane Studies, of which Charles Koch
is a major benefactor; the grant helped me complete my Ph.D. in
American literature at the State University of New York at
Buffalo.

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Gold Breaks Below $1250 – Worst Week In 8 Months

It would seem this week’s technical breaks in the precious metals was the perfect testing ground for junior Barclays traders to wet their whistle with “sudden bursts of sell orders.” Gold – once again – has seen a sudden heavy volume purge in futures that has pressed spot prices back under $1,250 and heading towards it worst week in 8 months…

 




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