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

Posts tagged ‘Taxpayer’

Fine: Washington DC and oil and gas, Part 2 by Dr. Daniel Fine


 

The complete article is here (Please share!)-> http://www.daily-times.com/story/opinion/columnists/2016/01/24/fine-washington-dc-and-oil-and-gas-part-2/78875210/

Editors note: This is the conclusion of a two-part article by Daniel Fine. The first appeared on Dec. 28 in The Daily Times’ Energy magazine.

A measure lifting the crude oil export ban was approved by Congress in December. OPEC and Saudi Aramco entered the price war against American high-cost shale production in September 2014. This war has consisted of counter strike or retaliation options from the beginning.

Consequently, the congressional  “deal”  lowered the Brent and WPI price of oil by 6 percent in December. Advocates of lifting the crude oil ban were silent or indifferent. Where are they now?

At  least 60,000 barrels were sold to a Swiss trading company by one of the advocate oil producers. We must wait for a first quarter report for details on the pricing and impact to cash flow. Simply put, was the money spent on studies and lobbyists profitable? Highly unlikely.

The year 2016 has opened with both Brent and WPI  prices in virtual convergence at 2008 trading lows. OPEC does not expect recovery oil prices (2010-2014 levels) until 2040 which almost coincides with the Paris objectives of reducing fossil fuels. Meanwhile, the San Juan Basin is active with forced asset sales.

The big energy banks will face stress tests soon which explore price scenarios in relation to oil trading positions and loans to oil and gas producers. Smaller banks, the traditional source of small oil explorers and producers credit will face more severe determinations of debt.

The OPEC  price war for market share continues. Some $200 billion of capital expenditure among the shale or light tight oil American producers has been lost. There is still weak demand, oversupply, and Chinese reset on buying commodities, including oil, leading from super-boom to deflation.

Will geopolitics revive prices? Yes, but only on episodic and short-term speculative thrusts in financial market trading.

Advertisements

Potential Bounty for North Carolina


By Dr. Daniel I. Fine

Nearly 40 years ago, when the first oil price shock from the Middle East and OPEC disrupted the American economy, North Carolina and Appalachia briefly became an oil and gas frontier. Following geological investigations, Chevron drilled an exploratory well in the Deep River Basin beneath Lee County, N.C. Oil was discovered at 5,000 feet, but it contained excessive paraffin and Chevron plugged the well.

It remains there today as a new natural gas and oil technology has emerged: the capability of opening tight rock formations or shale through hydraulic fracturing and horizontal drilling.

Why is North Carolina not yet a site for drilling rigs, mud and service companies? Why is there shale gas exploration and production in the Marcellus Shale in Pennsylvania and West Virginia, and on different rock formations in Arkansas, Texas and in the Rocky Mountains?

The answer is political.

Read Energy expert Dr. Daniel Fine’s Op-Ed “Potential bounty for North Carolina”now on Shale Gas in North Carolina


Dr. Fine writes “Nearly 40 years ago, when the first oil price shock from the Middle East and OPEC disrupted the American economy, North Carolina and Appalachia briefly became an oil and gas frontier. Following geological investigations, Chevron drilled an exploratory well in the Deep River Basin beneath Lee County, N.C. Oil was discovered at 5,000 feet, but it contained excessive paraffin and Chevron plugged the well. and asks the question: Why is North Carolina not yet a site for drilling rigs, mud and service companies? Why is there shale gas exploration and production in the Marcellus Shale in Pennsylvania and West Virginia, and on different rock formations in Arkansas, Texas and in the Rocky Mountains?

 

Video

Dr. Daniel Fine discusses North Carolina’s approach to shale gas and hydraulic fracturing


Renowned energy expert Dr Daniel lecturing at the John Locke Foundation

Tag Cloud