Tag: finance

Submitted by Daniel J. Graeber of OilPrice.com,

Geopolitical crises in Eastern Europe have been met with calls in the United States to use energy as a foreign policy tool. With U.S. Energy Secretary Ernest Moniz asking the industry to make a stronger case, however, it's domestic policies that may inhibit energy hegemony.

"The industry could do a lot better job talking about the drivers for, and what the implications would be, of exports," Moniz told an audience at the IHS CERAWeek energy conference in Houston.

The Energy Information Administration said in its weekly report that gross exports of petroleum products from the Unites States reached 4.3 million barrels per day in December, the first time such exports topped the 4 million bpd mark in a single month.

EIA said the United States is a net exporter of most petroleum products, but crude oil exports are restricted by legislation enacted in response to the Arab oil embargo in the 1970s.

In January, Kyle Isakower, vice president of economic policy at the American Petroleum Institute, said reversing the ban would help stimulate the U.S. economy and lead to an increase in domestic oil production by as much as 500,000 bpd. Current export polices, he said, are "obsolete."

This week in Houston, Sen. Lisa Murkowski, R-Alaska, ranking member of the Senate Energy Committee, said oil could help reposition the United States as the premier superpower.

"Lifting the oil export ban will send a powerful message that America has the resources and the resolve to be the preeminent power in the world," she said.

President Obama can show "true American grit" if he acts quickly and according to precedent. If the ban is reversed, it will be for the benefit of the international community, she said.

Moniz, who said in December the export ban deserves some "examination," said he wasn't yet convinced the case had been made to open the U.S. spigot, however.

For natural gas, House Energy and Commerce Committee Fred Upton, R-Mich., said expanding U.S. liquefied natural gas exports could be used to contain Russia, which dominates much of the Eastern European gas market.

Russia caused a stir with its military response to the Ukrainian situation and Upton said Monday foot-dragging at the Energy Department on LNG exports was putting U.S. allies in Eastern Europe "at the mercy of Vladimir Putin."

The U.S. federal government needs to determine that LNG exports to countries without a free-trade agreement are in the public's interest. The United States doesn't have a free trade agreement with any European country and the current transatlantic agreement up for debate has been stymied by EU concerns over the National Security Administration's cyberespionage campaign.

A January report from the Center for a New American Security said the economic connection that would come from oil exports could manifest itself as "coercive political influence" in foreign affairs. Domestic policy, however, needs to be honed first before the U.S. tries once again to tip the balance of power overseas.

via Zero Hedge http://ift.tt/NGOgR3 Tyler Durden

Despite warnings from various members of the Fed that Student Loans are becoming troublesome, we suspect President Obama’s address this afternoon on expanding opportunities to go to college will be nothing but more pumping free money into a hyper-inflating (and increasingly worthless) higher education system…

As we previously noted,

What’s worse, while the 90+ day student debt delinquency rate did
post a tiny decline from 11.8% to 11.5% in Q4, on a total notional basis
due to the increase in outstanding balances, as of this moment
the amount of heavily delinquent student loans has just hit a fresh
record high of $124.3 billion, up from $121.5 billion in the prior
quarter.

So: when does the Fed finally admit i) there is a student loan
problem and ii) the only way to solve said problem is to promptly
monetize it?

Finally, putting new “debt” creation in perspective, in 2013 just student and car loans alone represented 108% (that’s right, more than all) of total household debt created.

That won’t end well..

via Zero Hedge http://ift.tt/1g6vVaE Tyler Durden

More lies, propaganda, or for once, the truth? Just out from Time’s Simon Shuster:

BREAKING: Crimea TV reporting that Russians have begun storming Ukraine air-force base on the peninsula, ramming the gates with a truck

— Simon Shuster (@shustry) March 7, 2014

CONFIRMED: Russian forces storming Ukraine base near Sevastopol, home of anti-aircraft commander center #Crimea http://t.co/sUFx3sni7f

— Simon Shuster (@shustry) March 7, 2014

Then again, considering the source is disinformation central Ukraine Pravda, take it with a huge grain of salt. More as we see it.

via Zero Hedge http://ift.tt/1k0BjwN Tyler Durden

Hiding behind the big boys (literally) appears to be the m.o. of France’s President Hollande who declared today that “there will be no referendum in Crimea without Ukraine’s agreement,” and added that it is a necessity for Russia to “accept the solution.” We suspect Vladimir Putin will have something to say about that but who is going to argue with Hollande given the following image…

via Zero Hedge http://ift.tt/1hTzZLe Tyler Durden

With chatter of overnight invasions increasing and rhetoric surging among the non-Russian-allied nations of the world, Russian foreign Miniister Lavrov has some serious words of warning for the West:

• U.S. SANCTIONS AGAINST MOSCOW WOULD “HIT THE UNITED STATES LIKE A BOOMERANG”

Lavrov added that “hasty and reckless steps” would harm Russian-American relations (and bear in mind Russian lawmakers are already drawing up a bill to confiscate western assets).

via Zero Hedge http://ift.tt/1k0oti7 Tyler Durden

via Keep Talking Greece blog,

President Karolos Papoulias raised the issue of World War II reparations to his German counterpart Joachim Gauck currently on a 3-day official visit to Athens. But as expected, Gauck repeated the official legal position of Berlin.

Karolos Papoulias told Gauck that Greece has not dropped its compensation claim over the Nazi atrocities and the enforced loan by the Nazi occupiers during the World War II.

“I want to point out that Greece has never given up its claim of German reparations, ” Papoulias reportedly told Gauch at a private meeting in Presidential Manson adding “it is necessary to solve the problem with the earliest possible start of negotiations.”

On his part, Joachim Gauck reportedly spoke of German “atrocities”, of mistakes that have been made in the past.

“I can not take another position than the legal position of the Government of Germany . What I do is , when we [Gauck and Papoulias] get together in Ioannina, to find words and acknowledge the guilt of Germany towards the victims of the area. Guilt is not only material, it has also a moral dimension. In Germany there is a wrong development. Many things have been forgotten. There is a moral obligation. I will show the way. The horrors of Nazism should remain in our memory,” Gauck told Papoulias.

On Friday, the two presidents will travel to the home town of  Papoulias Ioannina in Northern Greece to pay tribute to victims of the Nazis in Ligkades village, where the Nazis executed 92 people in October 1943.

The Greek President informed his German counterpart on the economic crisis and spoke of the vicious cycle of recession and unemployment, especially among the youth.

The German President expressed his solidarity with the Greek people, acknowledging that sacrifices have been made in the effort to boost the economy through structural reforms. “I want to express my recognition and my respect to those who endure the reforms,” Gauck said repeating the cliche of the famous light at the end of the equally famous dark tunnel.

Gauck will meet also with main opposition party leader Alexis Tsipras from left-wing SYRIZA. The meeting will be attended also by WWII resistance fighter Manolis Glezos, whose main aim is the issue of WWII reparations.

PS and when German President Gauck will officially acknowledge Germany’ guilt in Ligkades village, we will proudly announce, that they all lived happily ever after….

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Wolf Richter   http://ift.tt/NCxwUy   http://ift.tt/Wz5XCn

Washington is tangled up in spirited bouts of mudwrestling over exporting US-produced crude oil, which has been prohibited since the Arab oil embargo of 1973. Oil companies, environmentalists, consumer groups, lobbyists, lawmakers – they’re all at it.

Oil companies, faced with lackadaisical consumption and ballooning production in the US, are desperate. They have visions of dropping prices just when exploration and production costs are rocketing higher. So they want to benefit from the higher prices their US-produced oil would bring in other markets – and they want to create scarcity in the US to fire up local prices.

But environmentalists fear general mayhem if crude oil were allowed to be exported. Consumer groups are worried that it would raise the cost of gasoline, diesel, propane, and heating oil – though oil companies have sworn up and down a million times, via numerous studies they themselves directly or indirectly funded, that oil exports wouldn’t impact prices at the pump. Lobbyists of all stripes see in this conflict a mega-opportunity to fatten up their wallets. And lawmakers want to exact their pound of flesh from both sides; elections are coming, and they need to stuff their campaign coffers with money.

Meanwhile, behind the scenes, so to speak, something else has been happening: a breathtaking boom in exports, not of crude oil, which would be illegal, but of refined “petroleum products,” which is perfectly legal, even if it’s refined just enough to circumnavigate the crude-oil export ban.

BP, the British oil mastodon which is still in hot water over the Horizon oil spill in the Gulf of Mexico, figured it out too. It has inked a 10-year deal for at least 80% of the capacity of a refinery being built by Kinder Morgan Energy Partners LP in Houston, Bloomberg reported. The first phase of the 100,000 barrel-a-day refinery is expected to come online in July. It’s designed to refine crude just enough to turn it into a "petroleum product," which then can be legally exported without limits.

To heck with the crude oil export ban.

It’s not just BP. The possibility of legally exporting barely refined “petroleum products” to profit from the price differential overseas has been such an irresistible lure that it has triggered a construction boom of specialized refineries along the Gulf Coast.

An “inexpensive way around the export prohibition” is what Judith Dwarkin, chief energy economist for ITG Investment Research, called the phenomenon. She told Bloomberg, “You can lightly ruffle the hydrocarbons and they are considered ‘processed’ and then they aren’t subject to the ban.”

Specialized refineries, built at a fraction of the cost of full-fledged refineries, can distill the lightweight crude or “condensate” found in parts of the US into various “petroleum products” that often need to be refined further in the receiving country. Production of condensate has doubled since 2011, creating glut-like conditions in some areas. Hence the drive for exports. And the drive to finagle a way around the crude-oil export ban.

This chart by the Energy Information Administration shows the “petroleum product” export boom that is making such hilarious mockery of the crude-oil export ban:

Since 2007, when this boom took off, exports of petroleum products have tripled to a full-year average of 3.5 million barrels per day (bbl/d) in 2013, up 11% from 2012, according to the EIA. And they hit 4.3 million bbl/d in December, the first month ever such exports exceeded the 4 million mark.

Among these petroleum products are “distillates,” the largest category that includes diesel, kerosene, and home heating oil. US refineries increased their production of distillates to an average of 4.7 million bbl/d for the year, and set a new record in December of 5.1 million bbl/d. About 1.1 million bbl/d were exported in 2013, up 10% from prior year, half of it to Central and South America, 400,000 bbl/d to Europe.

Worried about the price of gasoline at the pump? Exports of gasoline (finished gasoline and gasoline blending components) rose 9% to an annual average of 550,000 bbl/d, with December setting a new record of 770,000 bbl/d.

Heating your home with propane? You got snookered this winter. Propane around the country prices nearly doubled since October, though they have started to wind their way back down to earth recently. Meanwhile, propane exports, supported by a new export terminal that came on line in September, soared, particularly in the last quarter, and averaged 300,000 bbl/d in 2013. A 76% jump from prior year!

Whatever the original purpose of the export ban, it wasn’t immensely helpful in keeping prices down – I mean, if I remember right, a gallon of gasoline cost a fraction of a buck at the time. Now the ballooning exports of “petroleum products” and the potential for outsized profits have nurtured along a specialized industry that is piling billions into infrastructure, plant, and equipment, with the sole goal of elegantly dodging the export ban.

What is perhaps the most gigantic loophole in the history of mankind may well obviate that spirited high-dollar mudwrestling show in Washington. Then lawmakers and lobbyists would have to go look for some other cause which they could leverage to exact their pound of flesh. And the industry will continue to use every trick in the book to light a fire under prices – and exporting “petroleum products” is just one of them.

Despite breath-taking hype on Wall Street and President Obama’s budget that assumes economic growth of 3.1%, true corporate insiders – executives and directors, not large investors that are also considered “corporate insiders” – are dumping their shares in bouts of extreme bearishness, just like they did with impeccable timing in the summer of 2007, before the last crash. Read….. True Corporate Insiders Are Freak-Out Bearish

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