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

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Dr. Daniel Fine: Trump and oil in trade geopolitics


The full article is here-> Full Article by Dr. Fine

“Unlike 1973, and its oil embargo against the United States, there is no supply threat from the Middle East. Consequently, only a demand unknown moves the price of crude oil. Permian/Delaware has displaced the Middle East as a source and even Mexico imports U.S. production.

This has caused euphoria in Santa Fe among lobbyists who prepare for a new Governor from the Democratic Party.

She will have to decide that the rhetoric of renewable energy is no match for her budget bounty made up of revenue flows from Lea and Eddy Counties. Token demonstrations for higher taxes from oil and gas producers no doubt will occur, but in Santa Fe only the price of oil is the threat that can take the punch off the table.

And here the connected experts publicly answer reporters that the Permian is an exceptionalism in oil and gas: it will never become a basin in a downturn.

However, all the charts and slides converge on upward supply without much on demand to offset the upward slope. It is almost impolite to ask where is the market for the massive supply of oil now and in the near-term future?  What about demand for oil?
China? Not quite as electric cars – yes, Tesla or Chinese versions appear as I-Phone-like technology against the combustion engine.

California, with 40 million people and seven states following its waiver, can set miles per gallon requirements on engines towards zero emissions.

This is the meaning of President Trump’s policy to force California back into the Union where Washington decides on what the combustion engine can and will do.

This a decisive battle over Climate Change and the “Resist” (Trump) movement of the Democratic Party.

After all, it is California which pledged to support the Paris Climate Change Treaty which Trump opposed.”

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Fine: No such thing as ‘free trade’ with OPEC as a cartel


 

The article by Dr. Daniel Fine can be found here @ FARMINGTON DAILY TIMES/USA TODAY->  https://www.daily-times.com/story/money/industries/oil-gas/2018/05/27/if-free-traders-saddle-up-higher-oil-prices-and-opec-run-cover/615999002/

Among some speakers at the 2018 Four Corners Oil and Gas Conference last month in Farmington there were evasive positions on the future of OPEC. Also, previous online or media positions of “free trade” were muted to be popular with the oil, gas and equipment operators who made up those in attendance.

There is no “free trade” with OPEC as a cartel, either with assigned member production quotas or with the current maximization of revenue strategy led by Saudi Arabia. If you hear free traders saddling up with current higher prices and OPEC, run for cover.

On Thanksgiving 2014, OPEC and Saudi Arabia refused to reduce oil production volume and entered a market share offensive against non-OPEC high cost oil producers in shale and tight sands.

This was a glut, or oversupply, of world oil but it was a chance to put San Juan oil just then — with rising production in the Gallup Sand — out of business. This was only reversed through the Algiers Meeting and agreement among OPEC members by cartel anti-free trade supply and demand manipulation.

President Trump captured this with his position that something was “artificial” about the price and supply of OPEC oil. Internal changes in the ruling House of Saudi Arabia, coupled with its power over OPEC, raised the price of world oil at least temporarily within the historic cycle of the industry.

Some Republicans oppose Trump and published or spoke against his opposition to OPEC. which is also connected to higher oil prices for consumers who might be voters. OPEC members had no problem with a hypocritical response to let the market work. Not only is there no free market making oil prices, but oil and gas operators do not make markets any longer. Commodity traders have replaced them since the 1980s.

Only three years ago, when OPEC/Saudi Arabia had deviated from its role of supporting the world price of oil through supply volume strategy, Harold Hamm of Continental Resources called for smashing OPEC to protect independent and non-super major producers in New Mexico, Oklahoma, Texas and North Dakota.

At the Expo, this writer traced current OPEC oil price support to the fall of Venezuela as a producer.

Less Venezuela barrels in OPEC production protects other members, and now, Russia, from real cutbacks. Among American conservatives who believe there are free markets for oil, very little understanding of world petroleum economics and history exists.

What happens to OPEC supply and demand management when Saudi Aramco floats its shares on stock markets and reached its target of an intake of 100 billion dollars? Are New Mexico and Southwest producers preparing planning price scenarios similar to world producers for oil prices next year or in 2020? What would Washington do in a second downturn with the oil prices “awry” again?

In a free trade world, nothing.

On natural gas prices that afternoon, there was a sense of how low the San Juan discount to Cushing could go and adaptation in taking some producing gas wells out of production.

Late that afternoon, after New Mexico Secretary of Energy Ken McQueen spoke of his work on the Governor’s Initiative of cost-cutting via state regulatory access and permitting on Federal land, I concluded that the San Juan Basin still has too much natural gas too fail.

And what happened to the big banks 10 years ago?

And General Motors?

Dr. Daniel Fine is the associate director of New Mexico Tech’s Center for Energy Policy and the State of New Mexico Natural Gas Export Coordinator. The opinions expressed are his own.

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.”

Oil leaders: OPEC threatening U.S. economy and New Mexico’s lifeblood; Nation has lost 400,000 oil and gas jobs in past two years


The full article is here-> http://rdrnews.com/wordpress/blog/2016/10/08/oil-leaders-opec-threatening-u-s-economy-and-new-mexicos-lifeblood-nation-has-lost-400000-oil-and-gas-jobs-in-past-two-years/

Dan Fine, an oil economist with the New Mexico Center for Energy Policy, speaks at a conference in Carlsbad recently about how foreign oil imports are hurting the American oil industry. Fine said OPEC has flooded the U.S. market with foreign oil since 2014 in an intentional effort to put U.S. producers out of business, while Saudi Arabian-backed companies are trying to buy American companies in an effort to control the flow of oil within U.S. borders. (Hobbs News-Sun Photo)

CARLSBAD — Oil experts say America is under attack by Saudi Arabia and OPEC, but instead of bombs, the OPEC oil cartel is dropping millions of barrels of oil on the U.S. economy in a clear effort to undermine the nation’s oil producers and kill any chance of American energy independence.
The first to feel the flood of foreign oil into the U.S. are the independent oil producers, whose stripper wells in Texas alone account for 20 percent of the nation’s oil and gas production, said Judy Stark, executive vice president of the The Panhandle Producers & Royalty Owners Association.
Stark was one of the half dozen speakers at an event of 25 people Sept. 27 in Carlsbad where the Panhandle Import Reduction Initiative, a group of independents seeking import quotas on foreign oil, met to announce their “white paper” that will be presented to the next president.
“We know OPEC has toyed with our market for many years but what I see coming now is a threat, without a doubt, to our national security,” Stark said. “The Middle East wants control of the U.S. market. When they came out and decided to flood the market with oil and drive U.S. producers out of business, their whole point was to take back their lost market share — our production. They are telling us is they are not going to let us produce our own natural resources. Guess what? They have done a pretty good job.”
The Sept. 27 Carlsbad meeting was a first battle cry that Dan Fine, a co-founder of the initiative and oil economist with the New Mexico Center for Energy Policy, said won’t be taken up by the nation for two years — when the rest of the country wakes up and finds it is too late to stop OPEC from controlling America’s energy industry.
“We are pioneers,” Fine said. “My point is, we are sitting here today 18 months to two years ahead of everyone. Sometime in early 2018, the country will discover what we are having a discussion about here today.”

What’s at stake?

What’s at stake is some 276 billion barrels of oil reserves now estimated to exist in the United States.
According to Fine, that number surpasses what Saudi Arabia has and they are terrified. Fine quoted Harold Hamm, CEO of Continental Resources, concerning the shale oil discoveries made in the United States.
“The United States has increased oil production by an enormous 65 percent over the past five years,” Fine said, quoting Hamm’s statement. “We can and should use our nearly unlimited oil and gas supplies to drive a stake through the heart of OPEC forever.”

Energy group hopes to reduce foreign oil imports


by James Fenton

The full article is at–> http://www.daily-times.com/story/money/industries/oil-gas/2016/06/14/energy-group-hopes-reduce-foreign-oil-imports/85855044/

“FARMINGTON – A group of oil and gas executives and energy policy experts from the Texas Panhandle and New Mexico’s piece of the Permian Basin are pushing a plan to restrict seafaring imports of foreign oil from coming into the U.S. in order to stabilize the oil and gas industry and bring back lost oilfield jobs.

The group’s plan, which would exempt crude oil imported from Mexico and Canada, is an effort to push back against the price wars the group said are being waged by OPEC, or the Organization of the Petroleum Exporting Countries, led by Saudi Arabia.

Members met at the School of Energy at San Juan College Tuesday to promote  the “Panhandle Import Reduction Initiative,” which they say could be implemented in multiple phases within 90 days of the next administration, with the ultimate goal of reducing heavy crude oil imports to about 10 percent of demand.

Launched in November, the initiative aims to cut foreign oil imports enough to activate more domestic drilling rigs and boost domestic production to meet current demand levels within four years.

Former state legislator and Four Corners Economic Development Chief Operating Officer Tom Taylor said the drop in natural gas prices eight years ago and the fall of crude oil in 2014, has delivered prolonged pain to the regional economy.

“We find ourselves … in a situation now where we’re down about 6,000 jobs, most of those in the oil and gas industry,” Taylor said of the San Juan Basin. “We have about 11,000 people who have left (San Juan County) … So while we’re down 6,000 jobs and down 11,000 people, we’ve built seven fast-food restaurants, three more under construction, and two big box stores. It’s a different world out there.

“But the fact of the matter is that the economic base of the community is in trouble. And not only is the community in trouble, but the state of New Mexico is in trouble, and not only is New Mexico in trouble but our nation and its security. It’s all tied together. It’s a very difficult situation we find ourselves in when we have one country that can control oil prices. It goes beyond free trade. It’s a problem we need a solution to. We are at the dependence of foreign oil.”

Taylor said about a third of New Mexico’s general fund comes from the oil and gas industry in the form of taxes and fees.”

Our View: Limiting oil imports would help to protect American producers


by the Lubbock Avalanche-Journal editorial board

The full story is here-> http://lubbockonline.com/filed-online/2016-04-28/our-view-limiting-oil-imports-would-help-protect-american-producers#.VzaWRPkrLIU

“When the price of oil drops, so does the cost of gasoline. But while people are enjoying paying lower prices at gasoline pumps, plunges in oil prices can cause economic damage in Texas.

And it can put American oil producers out of business when the price of foreign oil imports gets cheaper than the costs of extracting oil from the ground in the U.S.

Oil producers in the Panhandle recently announced the Panhandle Import Reduction Initiative. Their hope is to limit the amount of oil that can be imported from other countries.

We wish them success in getting sympathetic ears to hear their initiative and gathering like-minded people to help further it.

They are right that a limitation should be set on the amount of oil imports from the Organization of Petroleum Exporting Countries.

Representatives of OPEC’s 18 nations recently met in Doha, Qatar. Among their topics of discussion was whether to freeze oil production levels.

The nations didn’t reach an agreement on the subject.

“OPEC and Russia and various countries met and decided they weren’t going to freeze oil and, in fact, OPEC said they will increase production again. This will drive the price down to $26 (a barrel) again,” said oil producer Tom Cambridge.”

Our View: Limiting oil imports would help to protect American producers


By A-J Editorial Board

The full article is here-> http://lubbockonline.com/filed-online/2016-04-28/our-view-limiting-oil-imports-would-help-protect-american-producers#.Vyf6UPkrLIU

“When the price of oil drops, so does the cost of gasoline. But while people are enjoying paying lower prices at gasoline pumps, plunges in oil prices can cause economic damage in Texas.

And it can put American oil producers out of business when the price of foreign oil imports gets cheaper than the costs of extracting oil from the ground in the U.S.

Oil producers in the Panhandle recently announced the Panhandle Import Reduction Initiative. Their hope is to limit the amount of oil that can be imported from other countries.

We wish them success in getting sympathetic ears to hear their initiative and gathering like-minded people to help further it.

They are right that a limitation should be set on the amount of oil imports from the Organization of Petroleum Exporting Countries.

Representatives of OPEC’s 18 nations recently met in Doha, Qatar. Among their topics of discussion was whether to freeze oil production levels.

The nations didn’t reach an agreement on the subject.

“OPEC and Russia and various countries met and decided they weren’t going to freeze oil and, in fact, OPEC said they will increase production again. This will drive the price down to $26 (a barrel) again,” said oil producer Tom Cambridge.”

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