Analysis by the father of American Geopolitics Dr. Daniel Fine, MIT.

Archive for the ‘Opec’ Category

The Panhandle Import Reduction Initiative (PIRI) Calls for New White House Policy: Unfair Trade Endangers U.S. Oil Industry Too


The full press release is here-> http://www.businesswire.com/news/home/20170518005304/en/Panhandle-Import-Reduction-Initiative-PIRI-Calls-White

May 18, 2017 06:00 AM Mountain Daylight Time 

AMARILLO, Texas–(BUSINESS WIRE)–In a letter directed to the President of the United States and received by the White House, the founders of (PIRI), the Panhandle Import Reduction Initiative representing thousands of independent small producers of oil in the Southwest United States wrote, “We call upon President Donald J. Trump for a second Presidential Memorandum to order the Secretary of Commerce, to establish the crude oil industry as a “Core” industry to be added to steel, aluminum, vehicles, aircraft, shipbuilding and semiconductors. Crude oil should be recognized as one of the critical elements of US manufacturing and defense industrial bases, which we must defend against unfair trade practices and other abuses.”

“We call upon President Donald J. Trump for a second Presidential Memorandum to order the Secretary of Commerce, to establish the crude oil industry as a “Core”

The PIRI founders further stated in the letter “Following the Presidential Memorandum on the case for steel against Chinese export practices that you signed, PIRI further calls for an immediate Investigation by the Department of Commerce of Saudi Arabia and OPEC abuse between August 2014 and March 2016 of the American oil industry by expanding production to lower world oil prices to destabilize and cause hardships to American producers mainly of light tight oil (shale oil). This was an announced effort to undermine and shut-down producers with higher costs of production. According to one estimate some 150 US companies filed bankruptcy and $150 billion in capital outlay postponed or cancelled. More than 300,000 US industry-related jobs were lost.”

Dr. Daniel Fine: OPEC oil and ours, who wins? Daily Times 10/29/16


The full article is here->  http://www.daily-times.com/story/opinion/columnists/2016/10/29/fine-opec-oil-and-ours-who-wins/92440428/

This is an excerpt of the article ”

Has the oil price and market share war ended with a Saudi Arabian win?  Or, as some fund managers and speculators argue, has Midland won? We are now in a trading range high of $50 per barrel for West Texas Intermediate.

Looking back two years, Wall Street, the oil and gas industry and its trade associations got it all wrong. I was a minority of one in New Mexico with my OPEC analysis of a low of $23 to $28 per barrel which was realized earlier this year.  Once again there is triumphalism and  hubris about winning the war against OPEC.

What is it all about?  If OPEC agrees to freeze production at August output that would put OPEC between 32.5 and 33 million barrels per day. In 2013,  OPEC was below 30 million.   If they “freeze” it will be at 2.5 million more than early 2014 while our production had dropped almost 1.5 million.

In other words,  OPEC oil expanded its market share and more significantly has displaced our oil here at home in the American market by nearly one million barrels per barrel.  This is a double win for OPEC and Saudi Arabia:  more of their oil imported into our market and fewer barrels of our oil produced, which is the loss of rigs and jobs and a painful downturn.

The Permian Basin and its Delaware Basin extension into New Mexico has become the new North Slope  Alaska of the 1970s.  It is there that drilling rigs and well completions will be re-activated next year.  The “breakeven” price is lower because of  geology and cost-cutting service contracts.   The downturn contracts, however, will expire and non-Haliburton contractors will ask for more.   Margins will tighten as costs increase.   But North Dakota has leveled off and Eagle Ford is not the Permian.”

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