The FDA and the DEA Are Butting Heads Over CBD

A letter from the Department of Health and Human Services (HHS) to the Drug Enforcement Administration (DEA) reveals that medical reviewers at the Food and Drug Administration (FDA) and the National Institute on Drug Abuse (NIDA) believe the federal government should lift its ban on cannabidiol, a cannabis-derived compound commonly marketed as CBD.

HHS Assistant Secretary Brett Giroir sent the letter, which Marijuana Moment‘s Tom Angell obtained and published this week, to DEA Acting Administrator Robert Patterson, who has since retired, in May. “After reviewing the available information,” Giroir writes, the FDA and NIDA “conclude that CBD and its salts [should] be controlled in Schedule V of the Controlled Substances Act.” Drugs in Schedule V, which is the least restrictive category for controlled substances, have demonstrated medical value and are deemed unlikely to cause harm, abuse, or addiction. By contrast, drugs in Schedule I, where CBD currently sits as a component of marijuana, are supposed to have no recognized medical value and a high potential for abuse.

Giroir’s letter also reveals that the DEA told HHS in April, 2018, that descheduling CBD would violate the United Nations Single Convention on Narcotics, a decades-old treaty to which the U.S. is a signatory. The DEA insists that CBD can be legalized only one product at a time, as particular preparations undergo clinical trials and receive FDA approval. Last month, for instance, the DEA put the CBD medication Epidiolex in Schedule V after the FDA approved it as a treatment for two severe forms of epilepsy.

The FDA, by contrast, has argued that CBD itself should be moved to Schedule V. In fact, the FDA report Giroir shared with DEA says that CBD should be descheduled altogether if the Single Convention is ever amended. Currently, the treaty requires signatories to regulate and control cannabis and all of its derivatives:

That recommendation speaks to the safety of CBD, which is marketed across the United States as a treatment for conditions ranging from stress to epilepsy. As far as I know, the FDA has never argued that a drug in Schedule I should be descheduled altogether.

In a fight between scientists and drug cops, however, the drug cops win. The Controlled Substances Act, passed in 1970, empowers the attorney general to disregard recommendations from HHS. If Attorney General Jeff Sessions’ ongoing obstruction of cannabis research is any indication, it is likely that the DEA will, for the foreseeable future, resist a broad rescheduling of CBD.

“DEA will continue to support sound and scientific research that promotes legitimate therapeutic uses for FDA-approved constituent components of cannabis, consistent with federal law,” Acting DEA Administrator Uttam Dhillon said in a press release announcing the rescheduling of Epidiolex. The agency patted itself on the back for that decision:

Marijuana and CBD derived from marijuana remain against the law, except for the limited circumstances that it has been determined there is a medically approved benefit. In those instances, such as here, the drug will be made appropriately available to the public for medical use.

The drug is already widely available to the public for medical use, both as a component of most cannabis products and as a concentrate that is probably similar to Epidiolex (although we can’t know that for sure, thanks to the federal prohibition on studying the effects of state-legal cannabis products in humans). There is broad support across the global medical community for CBD’s therapeutic value, and the World Health Organization released a report in June that found

CBD “exhibits no effects indicative of any abuse or dependence potential”, “may be a useful treatment for a number of other medical conditions”, and “is generally well tolerated with a good safety profile”. It also found “no evidence of recreational use of CBD or any public health-related problems associated with the use of pure CBD”.

To make matters slightly more frustrating, attorney Rod Kight argues that not all forms of CBD are covered by Schedule I, because not all forms of CBD come from marijuana:

It is true that CBD derived from marijuana is also controlled. This is because CBD derived from an unlawful source is itself unlawful. But that’s just the beginning of the inquiry. There are legal forms of cannabis, including industrial hemp, non-psychoactive hemp, and the mature stalks of the plant, which are an exception to the definition of marijuana. (Additionally, CBD can be derived from sources other than cannabis.) When CBD is derived from a lawful source it is lawful.

Except law enforcers don’t treat any form of CBD is lawful. That CBD products have proliferated as quickly as they have says more about law enforcement priorities and resources than any consensus among cops and prosecutors about the legality of CBD.

In addition to citing the Single Convention on Narcotics as a reason to keep CBD in Schedule I, the Justice Department (which includes the DEA) has used the treaty as an excuse for blocking cannabis research. In April, Sessions cited the treaty when explaining to Congress why he continued to sit on applications for new manufacturers of research cannabis. As I wrote at the time, Sessions seems to be intentionally misreading the treaty to suit his anti-pot prejudices. That excuse probably won’t hold water much longer: We now know that Sessions’ obstruction of cannabis research conflicts not just with the wishes of Congressional Republicans but with the scientific advice of HHS and the FDA.

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Watch Live: Senate Casts Key Procedural Vote On Kavanaugh After Vigorous Debate

The Senate is voting on whether to formally end debate on Judge Brett Kavanaugh’s nomination to the Supreme Court. 

Friday’s vote will be a crucial test to gauge if he has enough support to win confirmation next week, tipping the Supreme Court to a conservative majority. 

As a practical matter, the parliamentary move could force senators to show where they stand. If 51 vote to stop debate, Kavanaugh could be confirmed as soon as Saturday. –Philadelphia Inquirer

Kavanaugh’s fate in the hands of GOP swing voters

According to Axios, the GOP doesn’t have the 50 votes needed to confirma Kavanaugh, as there are two undecided GOP Senators: Jeff Flake (R-Ariz.) and Lisa Murkowski (R-Alaska). 

A senior source involved in the process told me fairly late last night:

  • “We’re going into this vote and we don’t have 50 right now.”
  • “There’s been a lot of work that was done today, by members wading through this material. I don’t want to put my thumb on the scale. Things keep moving — so much, it feels like we’re walking on quicksand. So I don’t even want to say confidence or not confidence.”

“Sometimes you just have to vote,” the source added. “But what if … something f—g happens in the morning? This whole process has just been … so much drama, so many balls coming out at the last minute.” –Axios

On Friday morning, CNN reported that a third GOP holdout, Susan Collins of Maine, would vote “yes” during the procedural vote, while CNN‘s Manu Raju reports that Republicans believe they will have enough Senators by the 10:30 vote.  

That still leaves “flip-flop Flake” and Murkowski…

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Where The Jobs Were In June: Who’s Hiring And Who Isn’t

As noted earlier, September was a hurricane-affected month for payrolls, resulting in lower than expected jobs across several categories, among which Leisure and Hospitality jobs were the hardest hit.

However, a deeper dive reveals that other industries were also severely impacted, with the 2nd worst September in contraction in Retail (-20K), Telecom (-3K), Education (-12K), Child Care (-4K) and Food Services (-23K).

This, according to Southbay Research, was remarkable because while last year’s layoffs surged 100K above trend due to 2 major Hurricanes that displaced millions and destroyed 10s of thousands of homes, with jobless claims across Texas, Florida and Puerto Rico soaring by 100K+, this year, one hurricane came but was very mild and had minimal impact, with Initial Jobless Claims rose a combined 12K. Yet somehow, “the impact was the same.”

Here’s one example: Food Services. As Southbay notes, somehow a mild storm led to layoffs at a scale only seen last year when 2 major Hurricanes shut down Puerto Rico and Florida and pummeled Texas.

One note here is that if one were to revise last month’s data to incorporate the “missing” jobs, the impact on hourly earnings would be adverse as these are mostly lower paying jobs, and while the result would have been higher jobs, it would have also pushed down on hourly earnings.

Odd BLS estimates of layoffs aside, we know the following:

  • Employment in professional and business services increased by 54,000.
  • Health care employment rose by 26,000 as hospitals added 12,000 jobs, and employment in ambulatory health care services continued to trend up (+10,000).
  • Employment in transportation and warehousing rose by 24,000. Job gains occurred in warehousing and storage (+8,000) and in couriers and messengers (+5,000).
  • Construction employment continued to trend up in September (+23,000).
  • Employment in manufacturing continued to trend up in September (+18,000)
  • Employment in mining, employment in support activities for mining rose by 6,000

And visually:

Looking over the past year, the following charts from Bloomberg show the industries with the highest and lowest rates of employment growth for the prior year. The latest month’s figures are highlighted.

One final observation from Southbay Research, who notes that overtime pay dropped as staffing increases.

Overtime is a temporary solution to strong demand.  While a drop in overtime can signal a fall in demand, it can signal that employers no longer think the strong demand is temporary.

Whatever the reason, after 1+ years of above-trend overtime, employers have turned to hiring.  Because it’s also cheaper than paying double rates for overtime. This, to Soutbay, “is another metric supporting continued hiring growth.”

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Trump Slams Protesting “Elevator Screamers”: ‘They’re Paid For By Soros’

Thousands of demonstrators, including celebrity “feminists” like Amy Schumer and Emily Ratajkowski, descended on Capitol Hill Thursday to protest Trump SCOTUS pick Judge Brett Kavanaugh after the FBI once again found no evidence of sexual misconduct in the SCOTUS nominee’s past. Their concerns were promptly ignored by the Senate, which is planning to hold a confirmation vote for Kavanaugh as soon as tomorrow. But in response to the revelation that several of the professional activists, including the two young women who accosted Senator Jeff Flake last week, were exposed as “employees” of a non-profit organization funded by George Soros, President Trump has weighed in on Twitter, blasting the “elevator screamers” in a tweet that was essentially red meat for his base.

Trump slammed the “very rude elevator screamers”, accusing them of being “paid professionals only looking to make Senators look bad” before warning the American people “Don’t fall for it!” As evidence of the coordination behind the supposedly grass roots protest, Trump pointed to the signs carried by demonstrators and their suspiciously polished appearance “Look at the professionally made identical signs,” Trump said. “Paid for by Soros and others.’

“They are not signs that were made in a basement with love!” the president said, concluding the tweet with the hashtag ‘#Troublemakers’.

 

Trump isn’t the first Republican to criticize activists for their ties to Soros: Earlier this week, Louisiana Senator David Perdue pushed back against two activists who had confronted he and his wife at an airport, pointing out that they were employees of the Center for Popular Democracy – the same group that employed the two women who famously confronted Flake in the Senate elevator – which is financed by Soros’ Open Society foundation.

For decades, Soros has financed groups to spread his liberal political ideology across the West. But it’s Russia and China that have been accused of “election tampering.”

 

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Blasey Ford’s FBI “Polygraph” Buddy Pressured Woman From Mystery Groping Party To Change Story

A former FBI agent and lifelong friend of Brett Kavanaugh accuser Christine Blasey Ford allegedly pressured a woman to change her statement that she knew nothing about an alleged sexual assault by Kavanaugh in 1982, reports the Wall Street Journal

photo: theconservativetreehouse.com 

Leland Keyser, who Ford claims was at the infamous high school “groping” party, told FBI investigators that mutual friend and retired FBI agent, Monica McLean, warned her that Senate Republicans were going to use her statement to rebut Ford’s allegation against Kavanaugh, and that she should at least “clarify” her story to say that she didn’t remember the party – not that it had never happened. 

The Journal also reports that after the FBI sent their initial report on the Kavanaugh allegations to the White House, they sent the White House and Senate an additional package of information which included text messages from McLean to Keyser

McLean’s lawyer, David Laufman, categorically denied that his client pressured Keyser, saying in a statement: “Any notion or claim that Ms. McLean pressured Leland Keyser to alter Ms. Keyser’s account of what she recalled concerning the alleged incident between Dr. Ford and Brett Kavanaugh is absolutely false.”

Ms. Keyser’s lawyer on Sept. 23 said in a letter to the Senate Judiciary Committee that she had no recollection of attending a party with Judge Kavanaugh, whom she said she didn’t know. That same day, however, she told the Washington Post that she believed Dr. Ford. On Sept. 29, two days after Dr. Ford and the judge testified before the Senate Judiciary Committee, Ms. Keyser’s attorney sent a letter to the panel saying his client wasn’t refuting Dr. Ford’s account and that she believed it but couldn’t corroborate it.WSJ

Keyser’s admission to the FBI – which is subject to perjury laws – may influnce the Senate’s upcoming confirmation debates. Senator Bob Corker (R-TN) said that he found the most significant material in the FBI report to be statements from people close to Ford who wanted to corroborate her account and were “sympathetic in wishing they could, but they could not.” 

In his testimony last week, Judge Kavanaugh sought to use Ms. Keyser’s initial statement to undercut his accuser. “Dr. Ford’s allegation is not merely uncorroborated, it is refuted by the very people she says were there, including by a long-time friend of hers,” he said. “Refuted.”

Two days later, Ms. Keyser’s lawyer said in a letter to the Senate Judiciary Committee: “Ms. Keyser does not refute Dr. Ford’s account, and she has already told the press that she believes Dr. Ford’s account.” Mr. Walsh added: “However, the simple and unchangeable truth is that she is unable to corroborate it because she has no recollection of the incident in question.” –WSJ

In last week’s testimony before the Senate Judiciary Committee, Ford claimed she never told Keyser about the assault, saying “She didn’t know about the event. She was downstairs during the event and I did not share it with her,” and adding that she didn’t “expect” that Keyser would remember the “very unremarkable party.” 

“Leland has significant health challenges, and I’m happy that she’s focusing on herself and getting the health treatment that she needs, and she let me know that she needed her lawyer to take care of this for her, and she texted me right afterward with an apology and good wishes, and et cetera.” said Ford. 

About that polygraph

On Wednesday, Senate Judiciary Committee Chairman Chuck Grassley (R-IA) fired off an intriguing letter to Christine Blasey Ford’s attorneys on Tuesday, requesting several pieces of evidence related to her testimony – including all materials from the polygraph test she took, after her ex-boyfriend of six years refuted statements she made under oath last week. 

Grassley writes: “The full details of Dr. Ford’s polygraph are particularly important because the Senate Judiciary Committee has received a sworn statement from a longtime boyfriend of Dr. Ford’s, stating that he personally witnessed Dr. Ford coaching a friend on polygraph examinations. When asked under oath in the hearing whether she’d ever given any tips or advice to someone who was planning on taking a polygraph, Dr. Ford replied, “Never.” This statement raises specific concerns about the reliability of her polygraph examination results.” 

McLean issued a Wednesday statement rejecting the ex-boyfriend’s claims that she was coached on how to take a polygraph test. 

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Kavanaugh Confirmation Comes Down to Four Senators: Reason Roundup

Kavanaugh vote scheduled for 10:30 a.m. The professional fate of Supreme Court nominee Brett Kavanaugh is up for grabs today. Following a half-hearted FBI investigation into sexual claims against the judge—the bureau interviewed neither Kavanaugh nor his first accuser, Christine Blasey Ford—senators are scheduled for a first vote this morning on whether to advance the controversial nominee to the high Court bench.

In an op-ed published by The Wall Street Journal last night, Kavanaugh admitted to getting emotional during last week’s testimony before the Senate Judiciary Committee, but he said it was because he was there as a “son, husband, and dad.” As a judge, Kavanaugh insists, he can turn off the quick temper and tears.

As of last night (and a week ago), most Democrats and Republicans in the Senate had made up their minds about how to vote on Kavanaugh. But a few still seemed conflicted.

Sens. Susan Collins (R–Maine), Jeff Flake (R–Ariz.), Joe Manchin (D–W.V.), and Lisa Murkowski (R–Alaska) have not yet said how they will vote.

Colorado Republican Sen. Cory Gardner’s office told The Denver Post yesterday that Gardner “hasn’t decided how he’ll vote on Judge Brett Kavanaugh.” But his office later put out a statement saying that “Gardner has been supportive of Judge Kavanaugh throughout the nomination. He had the opportunity to review the FBI report tonight. Nothing in the report changed his mind and he remains supportive of Judge Kavanaugh’s nomination.”

FREE MINDS

Getting tougher on juvenile offenders? “The Office of Juvenile Justice and Delinquency Prevention (OJJDP), a division of the Department of Justice (DOJ), has removed a number of webpages related to ongoing programs and policy guidance, and altered messaging on its website in ways that indicate a shift toward a more punitive approach to juvenile justice under the Trump administration,” according to a new report from the Sunlight Foundation, a nonprofit focused on government transparency. It continues:

Information related to girls in the juvenile justice system and the use of solitary confinement among youthful offenders were among the materials removed from its website without notice. Changes have been made to the terminology used to describe juveniles that come into contact with the justice system and the types of programs and services OJJDP supports and provides. The Sunlight Foundation’s Web Integrity Project documented those removals and significant language shifts, through an analysis of pages preserved by the Internet Archive’s Wayback Machine, in a pair of reports released today.

The changes come as the office, which is a component of the Office of Justice Programs (OJP), has taken a distinct turn toward more punitive policies under the new administration, advocates and a former OJP official told WIP. The office has toughened its rhetoric as its current director has announced that she intends to “rebalance” its approach to direct more focus on victim’s rights and community safety, and away from therapeutic interventions for youth.

More on the worrying shifts here.

FREE MARKETS

Millennial men more socialist than millennial women. A new poll from Buzzfeed looks at socialist leanings among young Americans. The poll—conducted in late September among folks 22 to 37 years old—found “millennial men were much more likely than women to call themselves a socialist or democratic socialist”: 39 percent of all men surveyed, compared to just 22 percent of women. Overall, 31 percent of those surveyed said they considered themselves a socialist or a democratic socialist.

Poll questions and data here.

QUICK HITS

  • Today’s financial traders are “subject to 24-hour Big Brother-style surveillance that goes beyond the scrutiny of equity and bond desks.”
  • So it begins: A woman is suing Facebook for allegedly enabling sex trafficking.
  • Passing laws turns voters off from political parties. Hmmm…
  • Thanks to our copyright regime in the U.S., we already know how aggressive content moderation works, write the folks at Techdirt. “And it’s a disaster.”
  • Thirty people, including actresses Amy Schemer and Emily Ratajkowski, were arrested Thursday in anti-Kavanaugh protests.

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US Trade Deficit With China Hits Record

The August trade deficit – a closed watched number in a time of trade wars – came in at $53.2BN, fractionally better than the $53.6BN expected, but 6.4% worse than last month’s revised print of $50.0BN ($46.8BN excluding petroleum), and just shy of a new all time high.

The deficit deteriorated as a result of less exports (-0.8%) and more imports (+0.6%). Broken down, August exports were $209.4 billion, $1.7 billion less than July exports, while July imports were $262.7 billion, $1.6 billion more than July. August imports of goods (excluding services) of $215.6 billion were the highest on record

The August increase in the goods and services deficit reflected an increase in the goods deficit of $3.6 billion to $76.7 billion and an increase in the services surplus of $0.4 billion to $23.5 billion. Year-to-date, the goods and services deficit increased $31.0 billion, or 8.6 percent, from the same period in 2017. Exports increased $129.6 billion or 8.4 percent. Imports increased $160.6 billion or 8.4 percent.

Some notable highlights from the report:

  • August exports of services ($70.5 billion) were the highest on record.
  • August imports of goods and services ($262.7 billion) were the highest on record.
  • August imports of goods ($215.6 billion) were the highest on record.

Digging into the numbers, even more records were revealed:

  • August imports of industrial supplies and materials ($49.7 billion) were the highest since December 2014 ($51.8 billion).
  • August imports of automotive vehicles, parts, and engines ($31.7 billion) were the highest on record.
  • August imports of other goods ($9.1 billion) were the highest on record.
  • August petroleum imports ($20.5 billion) were the highest since December 2014 ($23.6 billion).

But what was most important is the geographic distribution of trade, and this is where Trump will be displeased because in July the trade deficit with both China ($36.8 billion)…

… and while the trade deficit with the EU rebounded from last month’s record high ($17.6 billion), to $15.7BN, the US also posted a record trade deficit with Mexico ($8.7BN) and Ireland ($4.3BN).

While this number will not have much of an impact on Q3 GDP, it could have a major impact on future trade because if Trump wanted one more “reason” to expand China’s tariffs to all Chinese imports, he just got it.

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China Slams Pence For “Fanning Fires” And “Escalating Tensions” After Aggressive Speech

One day after US Vice President Mike Pence all but declared China to be the US’s new “enemy No. 1”, a status previously enjoyed by Russia and its president, during a speech at the Hudson Institute that outlined allegations of Chinese election-hacking, while blasting President Xi Jinping and the Communist Party for illegally asserting territorial dominance over the South China Sea and Taiwan (while at the same time promising that the US will impose its military will across the Indo-Pacific), the Chinese Foreign Ministry has issued a statement warning the US to stop “fanning fires” and “escalating tensions” between the world’s two largest economies, claiming that the US has no right to “irresponsibly” question the One China Policy that has long labeled Taiwan as an inalienable part of China, according to Bloomberg. 

China

Chinese Foreign Minister Wang Yi

The ministry insisted that building necessary defense facilities has nothing to do with militarization, that China attaches “high importance” to safeguarding human rights and that “all ethnic groups have freedom of religion” – a claim that runs contrary to the deluge of reporting by US media outlets regarding China’s repression of its ethnic Uyghur minority. Instead of lobbing accusations at China, the US should “focus on its own domestic human rights issues instead of interfering with China’s internal affairs.” 

Pence sought to expand on President Trump accusations, made before the UN Security Council last week, that China had been trying to undermine Republicans by interfering in US elections. While neither Trump nor Pence cited any evidence to justify their claims, Pence said China’s election-hacking efforts were “sophisticated” and vowed to expose Beijing’s “malign influence and interference.”

Here’s more on Pence’s speech from Reuters:

Pence said Beijing, with an eye not only to the congressional elections but also to Trump’s 2020 re-election bid, had “mobilized covert actors, front groups, and propaganda outlets to shift Americans’ perception of Chinese policies” and was targeting its tariffs to hurt states where Trump has strong support.

“China wants a different American president,” Pence said.

Shortly before Pence took the stag (but hours after excerpts of his expected remarks had been released) Bloomberg Businessweek published an explosive report on a top-secret multiyear US investigation into China’s successful infiltration of hardware used by 30 US companies – including Apple and Amazon – and the US intelligence and defense industries.

China and the US have blamed one another for the cancellation of a planned security conference that was expected to involve high ranking officials from both countries. And with the US still planning to expand its tariffs to cover virtually all the Chinese goods flowing into the US market, and China recently partaking in a massive joint military exercise with Russia, the deterioration in the relationship between the US and China has been nothing short of alarming.

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Here Is The Reason For Today’s Big Jobs Miss

While on the surface, today’s jobs report was a disappointment due to the September payrolls miss with only 134K jobs added in a month when consensus expected 185K new payrolls, a cursory look between the lines reveals the reason for this miss, and it had to do with the one non-recurring factor we highlighted previously: the impact of Hurricane Florence, which affected one job category in particular.

As the BLS noted, employment in leisure and hospitality declined by -17,000 in September, whereas prior to this month, employment in the industry had been on a modest upward trend. And as the BLS explicitly states, “some of the weakness in this industry in September may reflect the impact of Hurricane Florence.” This is shown visually below:

Confirming that it was indeed the weather that adversely affected September payrolls, the BLS also noted that 299,000 people were not at work due to bad weather, which is over 210K higher than the 85K average for September.  Another 1,489K workers who usually work full-time could only work part-time due to the weather last month.

This means that next month, the September job report will be revised sharply higher, likely coming in line with initial expectations.

Also offsetting the headline September weakness was the revision to the August jobs report, which was nudged higher from 201K to 270K, while July was revised from 147K to 165K. With these revisions, employment gains in July and August combined were 87,000 more than previously reported.

Finally, confirming that wage gains remain on a solid trend, we found that both monthly and annual hourly earnings rose by 0.3% and 2.8%, respectively, in line with both expectations and the recent upward trend in higher wages.

To summarize: stripping away the weather distortions, the jobs report was not only not “weak”, but one can make a case that it was somewhat strong.

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Is The Threat Of High Oil Prices Overstated?

Authored by Robert Rapier via OilPrice.com,

As U.S. sanctions on Iran have forced some countries to stop importing oil from Iran, crude oil prices have inevitably risen. The U.S. started down this path earlier this year when President Trump announced the withdrawal from the Obama-era Iran nuclear agreement.

Some sanctions went into effect in August, but the sanctions with potentially the most significant global implications go into effect in November, when the sanctions target Iran’s oil exports.

In May of this year, Iran exported 2.7 million barrels of oil per day, which accounted for nearly 3% of the world’s daily crude oil consumption. The new sanctions are expected to impact about 1.5 million BPD of Iran’s exports.

Under pressure from the U.S., many countries have begun to reduce oil exports from Iran. As the market has slowly absorbed the implications of this loss, crude oil prices have steadily risen. As recently as August, a barrel of Brent crude oil was still in the upper $60s. Today, the price has risen to $83/bbl – a four-year high. West Texas Intermediate is now over $73/bbl.

This was entirely predictable. The world simply does not currently have a lot of spare crude oil capacity. But there is a widespread belief that the Organization of the Petroleum Exporting Countries (OPEC) has excess capacity that can be used to offset the loss of Iranian oil.

In fact, President Trump has tweeted his ire at OPEC on several occasions, most recently on September 20th when he wrote:

We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!

Saudi Arabia claims about 1.5 million BPD of spare capacity but that would take their production to an all-time high. A number of people have asked if I believe their claim. Yes, I think they do have some excess capacity, but the bulk of that is reserved for true emergencies. High oil prices do not constitute an emergency.

A true emergency would be the outbreak of violence in a major oil-producing country that took millions of barrels offline. In other words, a sudden, unexpected event that rocks that oil markets.

Publicly, Saudi Arabia and Russia rebuffed President Trump’s request.  Saudi Energy Minister Khalid al-Falih stated “The markets are adequately supplied. I don’t know of any refiner in the world who is looking for oil and is not able to get it.”

Privately, Saudi Arabia is expected to increase production somewhat to offset Iran’s lost barrels. It won’t be enough to make up for all of Iran’s lost exports, and it will put the world in a more precarious situation in case of a real emergency. But it may be enough to stave off a quick return to $100/bbl, as some analysts are predicting.

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