Tag: news

Submitted by Zainab Calcuttawala via OilPrice.com,

In a 7-4 vote, Councilors of the county of North Yorkshire approved industrial tests on Monday in a move that will allow fracking in Britain for the first time in five years.

The Guardian reported that the go-ahead “swept aside” vocal protests from residents and environmentalists who feared “catastrophic seismic activity, health problems, and pollution” if hydraulic fracturing was introduced.

 

The shale gas tests will occur in the village of Kirby Misperton by the British firm Third Energy.

The council’s decision followed a two-day hearing during which supporters and opponents of the proposal voiced their hopes and concerns.

The last fracking incident in Britain occurred in 2011, when the U.K.-based oil and gas company Cuadrilla Resources admitted that two minor earthquakes in north-west England had been caused by the company’s use of the controversial drilling practice.

Two other high-profile applications to frack in the Lancashire area have been rejected by councilors since late-2011, but the companies have lodged appeals to reverse the decisions.

The council that allowed the new tests in North Yorkshire received 4,375 objections to the proposal and 36 letters in support of the company’s plan to frack for shale gas near an existing well in the area, according to The Guardian’s report.

David Cameron and his ministers are set to welcome the tests, as the prime minister said in 2014 that his “government was going all out for shale.”

The Wall Street Journal said the British leader is “eager” to replicate the success of the United States’ shale boom.

Cameron’s energy secretary Amber Rudd said she “would deliver shale” after the general elections winded down in 2014.

Last August, several other ministers had said they would assist oil companies in preparing their fracking applications after firms became frustrated that local councils had not granted them access fast enough.

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While the US coal industry has had its share of bad news in the past year, following extensive plant shutdowns and numerous bankruptcies including that of the largest US coal producer Peabody Energy, there was some even more tragic news last night when as AP reported, West Virginia State Police say longtime coal company executive and recent Patriot Coal CEO Bennett K. Hatfield has been murdered.

Last night, the local press reported that Hatfield, 59, was shot to death Monday at Mountain View Memory Gardens, a cemetery in southern West Virginia’s Mingo County.

Hatfield resigned in 2015 as president and CEO of Patriot Coal, a month before the company, headquartered in Creve Coeur until early 2015,  filed for Chapter 11 bankruptcy protection for the second time. He was International Coal Group’s CEO when a 2006 explosion at the Sago Mine in northern West Virginia killed 12 miners.

Bennett K. Hatfield, file photo from May 4, 2006

Sgt. M.S. Lively says Hatfield’s body was found early Monday and was believed to have been dead about 12 hours. Smith says authorities traced his cellphone to Mountain View Memory Gardens cemetery in Maher, where his body was found.

But before the suicide rumors started swirling, earlier this morning St. Louis Today reported that an Ohio man was arrested in the death of Hatfield. Anthony R. Arriaga, 20, is being held on a first-degree murder warrant in Allen County, Ohio, Mingo County Sheriff James Smith said. Jail records listed Arriaga’s hometown as Delphos, Ohio. The records didn’t indicate whether he has an attorney.

Anthony Raheem Arriaga is shown in a photo provided
by the Allen County (Ohio) Sheriff’s office,Tuesday,

The sheriff didn’t immediately release a motive.

He said state police dogs found a weapon along a river bank next to the cemetery. Allen County Sheriff Sam Crish said Arriaga faced an extradition hearing later Tuesday. Authorities believe Arriaga sneaked along the river bank and asked some neighbors to take him to Wayne County, Smith said. A man who drove Arriaga contacted authorities after hearing about Hatfield’s death.

“Once he heard what was going on, he let us know he gave this subject a ride to Wayne County,” Smith said.

A state police team helped track the suspect to Wayne County and eventually into Ohio. Smith said authorities had been stumped until the neighbor stepped forward.

Hatfield’s girlfriend had reported him missing after he didn’t return home, and authorities traced his cellphone to the cemetery, where his body was found, Smith said. An autopsy by the state medical examiner was ongoing.

Hatfield’s twin brother, Dennis Hatfield of Louisa, Ky., was likewise a longtime coal industry executive, including at Massey Energy.

“Ben Hatfield was well known, not just for his many accomplishments within the industry, but also as a mentor to so many of us,” said Bill Bissett, president of the Kentucky Coal Association. “His kindness and compassion were legendary, as was his intellect and ability. His belief in those around him often succeeded our belief in ourselves, which made you work that much harder to accomplish the task at hand.”

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Another day, another too-big-to-fail bank gets slapped on the wrist after being busted for blatant rigging of the market. The CFTC Order finds that, beginning in January 2007 and continuing through January 2012 (the Relevant Period), Citibank on multiple occasions attempted to manipulate, and made false reports concerning, the U.S. Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX), a global benchmark for interest rate products. Notably, while a handful of European banks have already settled criminal or civil claims tied to Libor rigging, Citi is the first U.S. bank to do so.

The CFTC Order requires Citibank to pay a $250 million civil monetary penalty and to immediately cease and desist from further violations of the Commodity Exchange Act.  Further, Citibank is required take specified steps to implement and strengthen its internal controls and procedures, including measures to detect and deter trading potentially intended to manipulate swap rates such as USD ISDAFIX and to ensure the integrity of interest-rate swap benchmarks.

 

“The CFTC’s order demonstrates that we will vigorously continue to investigate any efforts to manipulate financial benchmarks, and we will take action where possible to protect the integrity of these benchmarks,” said Aitan Goelman, the CFTC’s Director of Enforcement. Mr. Goelman further commented, “The terms of this settlement are intended to reflect all aspects of Citibank’s response to the investigation, including the evolving nature of its cooperation.”

 

Citibank’s Unlawful Conduct to Benefit Derivatives Positions

 

As the Order sets forth, Citibank attempted to manipulate USD ISDAFIX by making false USD ISDAFIX submissions.  According to the Order, on multiple occasions during the Relevant Period, Citibank, in its role as a panel bank, submitted a rate or spread higher or lower than the reference rates and spreads disseminated to the panel banks on certain days that Citibank had a derivatives position settling or resetting against the USD ISDAFIX benchmark, in an attempt to benefit that derivatives position.

 

The Order also finds that Citibank, on multiple occasions, attempted to manipulate USD ISDAFIX by bidding, offering, and executing transactions in targeted interest rate products, including swap spreads and U.S. Treasuries at or near the critical 11:00 a.m. fixing with the intent to affect the reference rates and spreads captured in the snapshot sent to submitting banks, and thereby to affect the published USD ISDAFIX.  As captured in electronic communications, Citibank traders boasted about “pushing out the isdafixing” or “push[ing]” the market, described USD ISDAFIX as being “suprising[ly] easy to push,” and explained the best way to “influence the set.”

 

The Order describes multiple examples involving these strategies for attempted manipulation and false reporting by Citibank during the Relevant Period.

Additionally, Citi faces fine for manipulating Yen Libor…

• *CFTC ORDERS CITIBANK & JAPANESE AFFILIATES TO PAY $175M PENALTY

Citi issued the following statement:

“These settlements represent a significant step for Citi in resolving its legacy benchmark rate investigations. In addition to adopting industry-wide reforms related to participation in benchmark rates, Citi has made substantial investments in its systems, controls and monitoring processes to better guard against inappropriate behavior.  

 

Our greatest priority is to ensure that we conduct business in keeping with the highest ethical standards. We continue to fully cooperate with pending investigations conducted by other agencies related to benchmark rate submissions.”

As they proudly note in the press release, with today's actions, CFTC has imposed over $5.08 billion in penalties in 17 actions against banks and brokers to address rigging and manipulation in ISDAFIX, FX, and LIBOR benchmarks.

"Cost of doing business" is what we call that… you decide – basedon the spike in Citi's stock – whether the market thinks this is a let-off or a real punishment…

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Just when the Greek debt deal appeared certain even if as we reported last night, virtually all the funds from the approved first tranche would go to repaying creditors, the IMF, which has been pushing for more debt relief since last summer, appears read to pull the plug again, following a report that the IMF isn’t officially endorsing the latest Greek debt deal until the board approves new loan program, and according to AFP, the IMF is not ready to add funds to the Greek bailout as it stands now.

#BREAKING IMF says not ready to add funds to Greece bailout as it stands now

— AFP news agency (@AFP) May 25, 2016

As Bloomberg adds, citing an IMF official says on conference call with reporters, that the IMF board should be able to consider new program by end of year.

IMF will be seeking more details on debt relief by European creditors and fund will analyze whether Greek debt is sustainable.

Most troubling is the warning that the IMF may come to a conclusion that latest debt-relief measures aren’t sufficient.

Jeroen Dijsselbloem, the Dutch politician leading the Eurogroup, claimed to have brokered a compromise between Germany and the IMF. He has he proposed a three-stage plan:

Short-term: Athens receives funds to reduce its debt and payment terms are adjusted.
Medium-term: Greece would receive longer grace and payment periods.
Long-term: There could be more far-reaching, though unspecified, measures.

And with Short- and Medium-term solutions now in doubt… again; Saxo Groups’s Stephen Pope asks,  What about the long-term?

 What I want to know is, what about the third leg of the agreement? What are the more far-reaching, though unspecified, measures?

 

Where are the discussions about what Greece will do in terms of further privatisation? This has been the most aggravating issue for the creditors as Greece has simply dragged its feet on this matter for the past six years.

 

Privatisation of public companies contributes to the reduction of public debt. It releases the state from paying subsidies, other transfers or state guarantees to state-owned enterprises. It is a key catalyst for increasing the efficiency of companies and the competitiveness of the economy as a whole, while attracting foreign direct investment.

 

It helps countries pay back their debt, improves efficiency and effectiveness, and therefore would boost economic growth.

 

This idea is often challenged by the left and one favoured argument is that sales of state-owned assets during recession have consistently failed to raise expected revenues.

 

It was Greece that predicted it could raise €50bn but has so far raised a paltry €3.5bn. This is not just a result of selling at a time of recession, but also comes down to the fact that Athens delayed the process of privatisation for too long and was eventually seen as a distressed seller.

 

An asset is only worth what a buyer will pay, not what a seller would like.

 

Greece has simply wasted time, opportunity and money just as the troika are showing their plan for what it is worth. The Greeks will never repay their debt, nor will the economy be reformed…but the Eurozone will pick up the tab as a price worth paying.

 

The 2010 plan to preserve the Eurozone as a financial “lobster pot” with no exit has now morphed into something very different. The scheme now being hatched is to use Greece as a useful defence for the ”not in my backyard” Europeans against the thousands of helpless refugees.

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Submitted by Charles Hugh-Smith of OfTwoMinds blog,

There are a number of reasons why adopting the USD is a natural choice for any Venezuelan government that is not bent on self-destruction.

Let's start our analysis of Venezuela's economic plight with two exhibits: Exhibit A is a chart of the market (free) exchange rate of the Venezuelan Bolivar and the U.S. dollar (USD), and Exhibit B is a chart of the USD.

Back in 2003, when the writing was already on the wall, one USD bought 1.6 Bolivars. Today, it takes over 1,000 Bolivars to buy one U.S. dollar. Though the official rate is 10 Bolivars to one USD for subsidized goods and 416 to the USD for everything else, the street exchange rate is 1,050 Bolivars to the dollar.

(The official exchange rate has multiple levels, creating multiple layers of confusion and opportunities for graft/corruption.)

While Venezuela's currency was in a free-fall to oblivion, a fundamental revaluation of the U.S. dollar pushed the USD up about 20% in the past two years.

Once a currency is mortally wounded, the government has a stark choice: either print more money and try to stimulate a dying economy by spending the fast-depreciating money, or relinquish the dead currency and establish a sound currency that will attract capital to the country's economy.

There are only two paths: either the state/central bank creates or borrows money into existence in an attempt to "print and deficit-spend our way to prosperity," or the state accepts sound money that it cannot print or borrow into existence. This stability soon attracts private capital.

If the state/central bank attempts to create capital by printing or borrowing money into existence, private capital will flee because the writing is on the wall: the currency and economy are doomed. You can create currency out of thin air, but you can't create sound money out of thin air or real capital out of thin air.

If the state/central bank surrenders the money-printing press, and accepts the limitations of a currency it can't print into hyper-inflation, then private capital will enter the economy because it can trust that the currency can't be devalued by politicos or the central bank.

I was interested in a recent article on Zero Hedge, Will Venezuela Be Forced To Embrace The Dollar?, for it followed my suggestion of four years ago that Greece should adopt the U.S. Dollar as its new currency (May 14, 2012).

There are a number of reasons why adopting the USD is a natural choice for any Venezuelan government that is not bent on self-destruction.

Adopting the U.S. dollar would deprive the Venezuelan state of its power to devalue its currency. The basic idea behind devaluing one's currency is to boost one's exports by making one's goods cheaper in other currencies.

But since Venezuela has few exports other than oil, which typically trades in USD, there is no export-driven reason to devalue the currency.

A gold-backed currency would be sound money, but does Venezuela have enough gold left to back a new currency? Perhaps, but if there are pervasive doubts about the state's policies and the ability of the Venezuelan economy to survive its present woes, everyone will quickly convert their currency into gold, and the nation's gold reserves would quickly be depleted.

Many people see the ability to devalue a currency as necessary to attract investment. The basic idea here is that if a currency gets cheap enough, foreign capital will smell a bargain and flood into the country, boosting growth.

I think this is absolutely backwards: what capital will sniff out is the possibility that a cheap currency will get even cheaper. As I always note, no nation has ever devalued its way to prosperity or influence. Devaluing one's currency impoverishes every holder of the currency, which invariably includes the bottom 99.9% of your population.

The practicalities also favor the U.S. dollar. With $1.4 trillion of actual physical cash in circulation globally, there is enough USD cash to grease daily commerce in Venezuela, which has about 30 million residents and a GDP of $131 billion (at the official exchange rate, about the size of Nevada's economy) or purchasing power parity (PPP) GDP of about $500 billion, about the size of North Carolina's economy.

The USD is already recognized and used as money in Venezuela (and virtually every other nation on the planet), and so the infrastructure is already set up to maintain a pricing mechanism in USD.

The current government of Venezuela has failed. That much is obvious. The only unknown is what sort of governance eventually replaces it and at what cost in human lives and suffering.

The new government, whether it labels itself Socialist, Communist, free-market or a hybrid of various ideologies, would immediately establish sound money and financial stability by adopting the U.S. dollar as its currency.

Since the USD is already a global currency, the new government would not need the American state's permission; it could announce the adoption, bank the dollars being paid for Venezuelan oil and get about reorganizing the economy for the betterment of Venezuela's people based on a currency that is recognized as a means of exchange everywhere.

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The July WTI contract neared $50 for the first time since early November ahead of this morning's DOE data, extending gains from last night's API-reported biggest draw since 2015 (which we warned seemed like catch up from a big build last week). DOE confirmed the big draw with a 4.22mm drop in inventories (less than API's 5.13 but more than 2mm expected) and further an even bigger draw at Cushing. Gasoline saw an unexpected build as Distillate inventories fell for the 6th week in a row. Production fell for the 18th week in a row, holding at Sept 2014 lows. Crude's reaction was chaotic, testing up over $49.60 and down to a $48 handle.

API

• Crude -5.137mm (-2mm exp)
• Cushing -189k (-400k exp)
• Gasoline +3.06mm (-1.5mm)
• Distillates -2.92mm (-750k exp)

DOE

• Crude -4.22mm (-2mm exp)
• Cushing  -649k (-400k exp)
• Gasoline  +2.04mm (-1.5mm)
• Distillates -1.28mm (-1m exp)

The biggest headline is not the significant draw in crude but the very unexpected build in gasoline inventories…

 

Production – down for the last 18 weeks – is hovering at its lowest since Sept 2014 (though some context is in order – at around 8.8m bbl/day, it is still up 60-70% from pre-2011 levels)

 

The reaction…total chaos… as we suspect the gaosline draw is bringing doubts over demand…

 

After nearing $50…

 

Since the last time WTI traded at $50, the rest of the curve has collapsed amid aggressive hedging…

 

Bear in mind, seasonally, the trend is for a draw in May. In fact May of 2015 saw one of the biggest draws of all time at -16.4 million. How did 2015 end?

 

Charts: Bloomberg

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In a surprising reversal, what many thought was impossible, namely the State Department cracking down on its former head and Democratic presidential frontrunner, Hillary Clinton, seems all too possible following news that the State Department Insecptor General audit has faulted Hillary Clinton, other secretaries of state for poorly managing electronic communications.

As Politico reports, the State Department inspector general concluded that Hillary Clinton did not comply with the agency’s policies on records, according to a report released to lawmakers on Wednesday that also revealed that Clinton and her top aides chose not to cooperate with the review.

The agency on Wednesday released the long-awaited report to Capitol Hill, copy of which was obtained by POLITICO, providing just the latest turn in the headache-inducing saga that has dogged Clinton’s campaign.

While the report concludes that the agency suffers from “longstanding, systemic weaknesses” with records that “go well beyond the tenure of any one Secretary of State,” it specifically dings Clinton for her exclusive use of private email.

“Therefore, Secretary Clinton should have preserved any Federal records she created and received on her personal account by printing and filing those records with the related files in the Office of the Secretary,” the report states. “At a minimum, Secretary Clinton should have surrendered all emails dealing with Department business before leaving government service and, because she did not do so, she did not comply with the Department’s policies that were implemented in accordance with the Federal Records Act.”

The report states that its findings are based on interviews with current Secretary of State John Kerry and his predecessors – Madeleine Albright, Colin Powell and Condoleezza Rice, but that Clinton and her deputies declined the IG’s requests for interviews.

Cheryl Mills, Jake Sullivan, and Huma Abedin are among those who did not cooperate with the investigation.

The IG report is just one of many fronts that still exist in the email scandal. Clinton also faces an ongoing FBI investigation into the setup of the private server that she used for official State Department business during her four years in the Obama administration, and various Freedom of Information Act lawsuits are working their way through the courts.

Needless to say, the report will only provide more ammunition for Donald Trump, who has already been seizing on the persistent controversy, which first emerged in March of last year, as he tries to further undermine the trustworthiness of “Crooked Hillary,” as he calls her.

Clinton and her allies contend she did nothing illegal by choosing to set up a private email server and account at her Chappaqua, New York, home, and that she was not trying to evade public records requests. Instead, Clinton has said she was motivated by the desire for convenience, though she has conceded it was not the best choice.

One again wonders if there is a quiet press behind the scenes to push for Bernie Sanders, or even Joe Biden at the Democrat convention if enough dirty laundry piles up against Hillary, who it is no secret has had a rocky relationship with many of the current Democrat power elite.

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