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Daily Archives: February 19, 2014

“Polar Vortex” Shock And Awe: The Utility Bill Arrives (And Why It Will Get Worse Before It Gets Better) | Zero Hedge

“Polar Vortex” Shock And Awe: The Utility Bill Arrives (And Why It Will Get Worse Before It Gets Better) | Zero Hedge.

The “polar vortex” shock has arrived, only this time it is not in the form of another 12 inches of overnight snow accumulation but in the shape of household utility bills. A reader was kind enough to send us his just received ConEd bill for the month ended Februery 10. The result speaks for itself. It also speaks for where so much of US household disposable income will go in first quarter. Spoiler alert: not toward discretionary purchases.

 

If readers have more dramatic instances of the “Polar Vortex” invoice shock, please forward them to us at the usual address.

And unfrotunately it will get worse before it gets better. On the back of a rapid decline in the “glut” of low cost natural gas (as stockpiles are drawn down to the lowest level since 2004) and the shift in forecast (that the freezing weather could last well into March), Natural gas futures are soaring (up over 10% today). This is the highest front-month futures contract price since December 2008 as “the possibility of periodic shortages now looms.”

 

 

Charts: Bloomberg

RIGZONE – Report: US Energy Secretary Favors Reducing Oil Shipped By Rail

RIGZONE – Report: US Energy Secretary Favors Reducing Oil Shipped By Rail.

 

by  Reuters
|

Wednesday, February 19, 2014

Reuters

NEW YORK, Feb 19 (Reuters) – U.S. Energy Secretary Ernest Moniz supports reducing the amount of crude oil shipped by rail in favor of pipelines that are safer, cheaper and cleaner, Capital New York reported on Wednesday.

“What we probably need is more of a pipeline infrastructure and to diminish the need for rail transport over time,” he said in an interview published on the Capital New York website.

He said the infrastructure is “not there” to handle the surge in North Dakota Bakken oil production from near zero to 1 million barrels per day (bpd).

“Frankly, I think pipeline transport overall probably has overall a better record in terms of cost, in terms of emissions and in terms of safety.”

A Department of Energy spokesman was not immediately available to provide more detail on Moniz’s comments.

His comments are among the first by a senior Obama Administration official to signal an apparent preference for shipping oil from places like the Bakken shale by means other than rail lines, in the wake of a series of explosive derailments that have alarmed the public.

While pipelines are generally a much cheaper form of transport, shipping crude in mile-long trains has become a popular alternative since new terminals can be built more quickly than pipelines to serve booming remote shale patches, and offer greater flexibility for refiners.

Moniz has bemoaned the lagging pace of infrastructure development before, but has not been so blunt in backing pipelines over rail shipments.

President Barack Obama has been considering whether to greenlight construction of the Keystone XL pipeline from Canada, without which there could be a significant increase in crude moved by rail, according to a State Department report.

U.S. regulators are considering imposing tougher standards on older models of oil tank cars. Moniz said the U.S. Department of Transportation could issue new regulations this year.

“There’s been a handful of train accidents and that’s been quite troubling,” he said. “We have been transporting oil products by train with a decent safety record over time and there’s a lot of it.”

(Reporting by Jonathan Leff; Editing by David Gregorio)

Authoritarian Regimes (Like the U.S. and Britain) Treat Reporters Like Terrorists Washington’s Blog

Authoritarian Regimes (Like the U.S. and Britain) Treat Reporters Like Terrorists Washington’s Blog.

The U.S. Government Condemns Authoritarian Regimes Which Use Anti-Terror Laws to Stifle Journalism

It is widely known that authoritarian regimes use “anti-terror” laws to crack down on journalism.

But this extreme tactic is becoming more and more common.  The Committee to Protect Journalistsreported a year ago that terrorism laws are being misused worldwide to crush journalism:

The number of journalists jailed worldwide hit 232 in 2012, 132 of whom were held on anti-terror or other national security charges. Both are records in the 22 years CPJ has documented imprisonments.

The American government has rightly condemned such abuses.  For example, the U.S. State Department noted last April:

Some governments are too weak or unwilling to protect journalists and media outlets. Many others exploit or create criminal libel or defamation or blasphemy laws in their favor. They misuse terrorism laws to prosecute and imprison journalists. They pressure media outlets to shut down by causing crippling financial damage. They buy or nationalize media outlets to suppress different viewpoints. They filter or shut down access to the Internet. They detain and harass – and worse.

The State Department condemned Burundi in 2012 for treating journalists as terrorists.

The 2012 State Department human rights report on Turkey criticized the country for imprisoning “scores of journalists…most charged under antiterror laws or for connections to an illegal organization.”

The State Department rightly announced in 2012:

We are deeply concerned about the Ethiopian government’s conviction of a number of journalists and opposition members under the Anti-Terrorism Proclamation. This practice raises serious questions and concerns about the intent of the law, and about the sanctity of Ethiopians’ constitutionally guaranteed rights to freedom of the press and freedom of expression.

The arrest of journalists has a chilling effect on the media and on the right to freedom of expression. We have made clear in our ongoing human rights dialogue with the Ethiopian government that freedom of expression and freedom of the media are fundamental elements of a democratic society.

As Secretary Clinton has said, “When a free media is under attack anywhere, all human rights are under attack everywhere. That is why the United States joins its global partners in calling for the release of all imprisoned journalists in every country across the globe and for the end to intimidation.”

Last October – in response to respected Moroccan journalist Ali Anouzla being arrested under an anti-terror law for linking to a Youtube video – the State Department said:

We are concerned with the government of Morocco’s decision to charge Mr. Anouzla. We support freedom of expression and of the press, as we say all the time, universal rights that are an indispensable part of any society.

U.S. and U.K. Do the Exact Same Thing

Unfortunately, the American and British governments are doing the exact same thing.

The British High Court just ruled that Glenn Greenwald’s partner could be treated like a terrorist because he was trying to deliver leaked documents to reporters.

Amnesty International writes:

It is clearly deeply troubling if laws designed to combat terrorism can be used against those involved in reporting stories of fundamental public interest. There is no question the ruling will have a chilling effect on freedom of expression in the future.

Indeed, the British government considers the following activities to constitute terrorism:

The disclosure, or threat of disclosure, is designed to influence a government [or] made for the purpose of promoting a political or ideological cause.

The ACLU’s Ben Wizner satirically writes:

Relax, everyone. You’re not terrorists unless you try “to influence a government.” Just type what you’re told.

The U.S. government is targeting whistleblowers in order to keep its hypocrisy secret … so that it cankeep on doing the opposite of what it tells other countries to do.

As part of this effort to suppress information which would reveal the government’s hypocrisy, the American government – like the British government – is treating journalists as terrorists.

Journalism is not only being criminalized in America, but investigative reporting is actually treated liketerrorism.

Veteran reporters and journalists say that the Obama administration is the most “hostile to media” of any administration in history.

The government admits that journalists could be targeted with counter-terrorism laws (and here). For example, after Pulitzer Prize winning journalist Chris Hedges, journalist Naomi Wolf, Pentagon Papers whistleblower Daniel Ellsberg and others sued the government to enjoin the NDAA’s allowance of the indefinite detention of Americans – the judge asked the government attorneys 5 times whether journalists like Hedges could be indefinitely detained simply for interviewing and then writing aboutbad guys. The government refused to promise that journalists like Hedges won’t be thrown in a dungeon for the rest of their lives without any right to talk to a judge

After the government’s spying on the Associated Press made it clear to everyone that the government is trying to put a chill journalism, the senior national-security correspondent for Newsweek tweeted:

Serious idea. Instead of calling it Obama’s war on whistleblowers, let’s just call it what it is: Obama’s war on journalism.

Moreover:

  • The Bush White House worked hard to smear CIA officersbloggers and anyone else who criticized the Iraq war
  • In an effort to protect Bank of America from the threatened Wikileaks expose of the bank’s wrongdoing, the Department of Justice told Bank of America to a hire a specific hardball-playing law firm to assemble a team to take down WikiLeaks (and see this)

And the American government has been instrumental in locking up journalists in America (and here),Yemen and elsewhere for the crime of embarrassing the U.S. government.

A Vital Message from Venezuela – “They Talk Like Marx, Rule Like Stalin…” | A Lightning War for Liberty

A Vital Message from Venezuela – “They Talk Like Marx, Rule Like Stalin…” | A Lightning War for Liberty.

The following quote written on a piece of cardboard from the ongoing protests in Venezuela basically summarizes how the oligarchs, or the 0.01%, and their political henchmen rule in all countries around the world at the moment. Then theycry like little welfare babies when people criticize their behavior.

Powerful stuff:

They speak like Marx
Rule like Stalin 
And live like Rockefellers 
While the people suffer

TalklikeMarx

Warren Buffet is the absolute master of the above tactic, which is why I once wrote about him being: A Wolf in Sheep’s Clothing.

In Liberty,
Michael Kriegr

Oil Train Derailments Reaching Crisis Point

Oil Train Derailments Reaching Crisis Point.

By Nick Cunningham | Tue, 18 February 2014 23:00 | 0

On February 13 a Norfolk Southern Railway train bound for New Jersey derailed in Vandergrift, Pennsylvania. About 3,500 to 4,500 gallons of crude oil spilled, although miraculously it somehow didn’t leak into nearby water supplies. The Federal Railroad Administration announced that it will investigate the crash. The episode is merely the latest in a series of derailments and will raise pressure on federal regulators to issue new safety rules.

It is hard to imagine the National Transportation Safety Board (NTSB) not taking action soon as the problem has become too common to ignore. Between 1975 and 2010 only 800,000 gallons of crude oil spilled from rail tankers. But in 2013 alone, over 1.15 million gallons of oil spilled. That is because shipping oil by rail has skyrocketed from fewer than 10,000 carloads in 2009 to more than 400,000 in 2013.

With hundred-car trains rolling out from the Bakken in every direction – west to Washington state and Los Angeles, south to Gulf Coast refiners, north to Canada, and east to refineries in New Jersey – towns and cities are calling for greater scrutiny, but are powerless to take matters into their own hands as rail safety is regulated at the federal level.

The NTSB and the Transportation Safety Board of Canada issued joint recommendations on January 23 that call for treating crude oil like other toxic materials. These came on the heels of fiery crash in North Dakota in late December 2013. The recommendations call on rail companies to use reinforced rail cars, enhanced safety procedures, and alternative routes that avoid populated cities and towns. But, the recommendations are not binding – and action on things like rail design safety would need to come from another agency, the Pipeline and Hazardous Materials Safety Administration (PHMSA). Regulators have said that they need more time to review rail designs and that they do not plan on publishing new rules within the next year. But, the issue isn’t going away. CSX, a major rail company, projects that oil shipped by rail will increase by 50% in 2014.

One of the major problems is that rail companies are using DOT-111 rail cars, which are older models used to carry agricultural products. These models have thinner walls that can puncture when they derail. This is particularly important because crude from the Bakken is more flammable than other types of oil. The Association of American Railroads issued new standards for manufacturers for cars built after 2011, which require thicker shells that are resistant to puncturing. But, the vast majority of railcars in use were constructed before this standard.

Related Article: Shell’s Asset Purge to Hit UK North Sea

The big question is whether or not PHMSA will require and accelerate the phase out of DOT-111 cars, making reinforced cars mandatory. Last summer, Senator Chuck Schumer (D-NY) wrote a letter to PHMSA, calling on them to do just that. PHMSA has thus far been unwilling to act, prompting North Dakota Governor Jack Dalrymple to press them for an interim standard until they come out with something more concrete in 2015. And Senators Ron Wyden and Jeff Merkley, both from Oregon, held ameeting with rail executives to push them on safety. Despite the pressure from a few lone politicians, the government has been slow to act and the rail industry has resisted any regulation, arguing it would cost more than $1 billion.

The House Transportation and Infrastructure Committee will hold a hearing on rail safety on February 26, an indication that after multiple train derailments and explosions, the issue is finally getting greater attention on Capitol Hill.

By Nicholas Cunningham of Oilprice.com

About the author

Gold, The Fed’s “Stockholm Syndrome”, & Keeping An Open Mind | Zero Hedge

Gold, The Fed’s “Stockholm Syndrome”, & Keeping An Open Mind | Zero Hedge.

Once the family/gang has carved out their turf, they then turn to controlling and exploiting the resoruces (either natural or human) inside of it. How different is today’s President-Congress-Governor-Mayor-Worker relationship to the mafia’s boss-soldiers-associates model?

 

Is it simply ironic that the term “bankster” has become so ingrained? As Santiago Capital’s Brent Johnson explains in this brief presentation… if you can keep your mind open, today’s business leaders and politicians are no different as they run protection, extortion, control the flow of ‘drugs’, and manage ‘crime’.

 

 

Is it possible, he asks, that we are all collectivley empathizing and sympathizing (and in many cases defending) the very system and the very people that are holding us captive?

 

“No, sire, it is a revolution…”

“No, sire, it is a revolution…”.

It’s pretty ironic that I have two visitors right now in my home– one from Ukraine and the other from Thailand.

Both of their countries are in the midst of chaotic turmoil right now, characterized by riots and violent clashes between protestors and police.

It reminds me of the old quote from Louis XVI upon being informed in 1789 that the French people had stormed the Bastille. The King asked, “Is it a revolt?”

“No, sire,” the duke replied, “It is a revolution.”

People in both of these countries have reached their breaking points. In Ukraine especially, economic conditions have deteriorated in almost spectacular form.

History is packed with examples of how people rise up in the streets whenever economic conditions deteriorate.

The French Revolution in 1789 is one famous example; the French people finally reached their breaking points after nearly starving to death.

The 2011 Egyptian Revolution and entire Arab Spring movement is a similar example.

In fact, a 2011 study from the New England Complex Systems Institute showed a clear statistical correlation between social unrest and (specifically) food prices. The higher food prices get, the greater the chances of riots and revolution.

This is not a condition exclusive to the developing world; it is a fundamental human trait to provide for one’s family.

And while human beings will take a lot of crap from their governments– stupid regulations, higher taxes, erosion of freedom, and even inflation– the moment that a man is no longer able to put food on the table for his family, revolution foments.

Europe and the US are not immune to this. And with deteriorating wealth gaps, 50%+ youth unemployment, unchecked government power, and a system that disproportionately favors the elite, the conditions are ripe.

The main difference is that Westerners have been brainwashed into believing that the civilized people voice their grievances in a voting booth rather than doing battle in the streets.

It’s a false premise. Unfortunately, so is violent revolution.

As my dictionary so perfectly defines, “revolution” has two meanings.

First, it can denote an overthrow of a sitting government, whether violent or ‘bloodless’.

But in celestial terms, ‘revolution’ denotes a complete orbit around a fixed axis. In other words, after one revolution, you end up right back where you started.

So whether violent or non-violent, or whether in a voting booth or on the streets, revolutions put a country right back where it started.

In the French revolution, people traded an absolute monarch in Louis the XVI for a genocidal dictator in Robespierre for a military dictator in Napoleon.

In 1917, the Russians traded Tsarist autocracy for Communist autocracy.

In 2011, Egyptians traded Hosni Mubarak for Mohamad Hussein Tantawi (who subsequently suspended the Constitution), for Mohamed Morsi (who as President awarded himself unlimited powers), for yet another coup d’etat.

All of this is because of a knee-jerk reaction– ‘if our country is having major problems, we should throw the bums out and let the man on the white horse take over.’

This creates a never-ending cycle in which the fundamental problems perpetuate.

It’s not about any single person or group of people. It is the system itself that needs changing.

In our system we award a tiny elite with the power to kill, steal, wage war, educate our children, and conjure unlimited quantities of paper money out of thin air.

This is just plain silly. And antiquated. We’re not living in the Middle Ages anymore where we need kings to tell us what to do, knights to keep the peace, and serfs to do all the work (and enrich the nobles).

Yet this is not too far from the system we have today.

The real answer is within ourselves. As Ron Paul told our audience in Santiago last year, become less dependent on the government and more self-reliant:

This idea is beginning to resonate with more and more people who are increasingly disgusted with the system… and all parties.

With our modern technology, transportation, and access to information, we have all the tools available to do this.

Ukraine Government-Opposition Truce Announced | Zero Hedge

Ukraine Government-Opposition Truce Announced | Zero Hedge.

With the Hryvnia at near-record lows (9.08 to the USD) and 3-month bill yields at 42%, we get a glimmer of good news from Ukraine:

  • *UKRAINE PROTEST CAMP WON’T BE STORMED TONIGHT, OPPOSITION SAYS
  • *UKRAINE GOVT, OPPOSITION AGREE ON TRUCE, YANUKOVYCH SAYS
  • *UKRAINE TALKS AIMED AT STOPPING BLOODSHED, YANUKOVYCH SAYS

Though sadly we have seen this before…

President of Ukraine Viktor Yanukovych held a meeting with Chairman of the Verkhovna Rada of Ukraine Volodymyr Rybak and members of the Working Group on the Settlement of Political Crisis.

The meeting was attended by Head of the Presidential Administration of Ukraine Andriy Kliuyev, First Deputy Head of the Presidential Administration of Ukraine Andriy Portnov, Acting Minister of Justice Olena Lukash and leaders of opposition parties Arseniy Yatsenyuk, Vitali Klitschko, Oleh Tiahnybok.

Following the meeting, the parties declared:

  1. Truce
  2. Beginning of negotiations aimed at cessation of bloodshed and stabilization of the situation in the country for the sake of civil peace.

Peak Oil is Real and the Majors Face Challenging Times « Breaking Energy – Energy industry news, analysis, and commentary

Peak Oil is Real and the Majors Face Challenging Times « Breaking Energy – Energy industry news, analysis, and commentary.

By  on February 18, 2014 at 9:32 AM

Surging Oil Industry Brings Opportunity To Rural California

The idea that global oil production was nearing its peak, only to plateau and then decline was a common view in the energy world for many years. The geophysicist M. King Hubbard predicted in the 1950’s that US oil production would peak in the 1970’s, a forecast that held true until technology allowed companies to economically extract oil and gas from tight geologic formations like shale.

The recent surge in US liquids output – crude plus natural gas liquids (NGLs) – quieted the peak oil community. A well-known, largely peak oil-focused website – The Oil Drum – shut down in 2013, an event some considered the death knell of the peak oil theory.

But not so fast says Steven Kopits from energy business analysis firm Douglas-Westwood. Total global oil supply growth since 2005 – 5.8 million barrels per day – came from unconventional sources, shale oil and NGLs in particular, Kopits recently told the audienceat Columbia University’s Center on Global Energy Policy.

“Not only US, but global, oil supply growth is entirely leveraged to unconventionals right now,” and the legacy, conventional system still peaked in 2005, he said. This gets a bit technical, as shale oil and liquids produced with natural gas are fed into the main crude oil stream and priced as such. But the strong degree to which increasing oil supply growth is dependent on unconventional sources is important to remember and often gets lost in the exuberance over top-line output figures.

And despite prolific incremental oil and gas production made possible by hydraulic fracturing and horizontal drilling advances, maintaining legacy production has been expensive and arguably of limited success.

Total upstream spend since 2005 has been $4 trillion, of which $350 billion was spent on US and Canadian unconventional oil and gas, with an additional $150 billion spent on LNG and GTL, according to Kopits’ presentation. About $2.5 trillion was spent on legacy crude oil production, which still accounts for about 93% of today’s total liquids supply. And despite that hefty investment, legacy oil production has declined by 1 mmb/d since 2005, said Kopits.

By comparison, between 1998 and 2005 the industry spent $1.5 trillion on upstream development and added 8.6 mmb/d to total crude production. The industry “vaporized the GDP of Italy,” with its $2.5 trillion upstream spending for oil since 2005, which barely maintained the legacy oil production system. Kopits argues this level of investment by the major oil companies appears unsustainable, and the major’s current cost structure is troublesome.

Collective oil production of the world’s largest listed oil companies has faltered, while upstream capex soared, Kopits said. Profits have suffered because costs are rising faster than revenues in a range-bound crude oil price environment. “E&P capex per barrel has been rising at 11% per year,” he said, but Brent oil prices have largely been flat. As a result, Chevron, ExxonMobil, Statoil and BP all recently put major projects on hold or cancelled them outright.

“If your costs are rising faster than your revenues, do you sell your assets? The majors have been doing this, but is it sustainable?” asked Kopits. The industry was able to maintain conventional crude oil production levels by throwing $2 trillion dollars at the system – essentially “putting it on steroids” – but now that’s run its course and capex is being curtailed, a trend that looks set to continue, in his view.

Jan Winiecki compares Vladimir Putin’s short-sighted leadership to Soviet rule in the 1970’s and 1980’s. – Project Syndicate

Jan Winiecki compares Vladimir Putin’s short-sighted leadership to Soviet rule in the 1970’s and 1980’s. – Project Syndicate.

RZESZOW – With the Winter Olympics underway in Sochi, Russia is again in the global spotlight – and President Vladimir Putin is taking the opportunity to present his country as a resurgent power. But, beneath the swagger and fanfare lie serious doubts about Russia’s future. In fact, long-term price trends for the mineral resources upon which the economy depends, together with Russia’s history (especially the last two decades of Soviet rule), suggest that Putin’s luck may well be about to run out.

Mineral-resource price cycles generally begin with a rise lasting 8-10 years, followed by a longer period of stable, relatively low prices. Given that prices have been on an upswing since the middle of the last decade, they should begin declining within two years, if they have not done so already. Moreover, the last price trough lasted more than 20 years, implying that Russia cannot expect simply to wait it out.

But, beyond acknowledging the need to cut spending – an obvious imperative, after the estimated $50 billion cost of the Sochi Olympics – Putin has not signaled any concrete plans to tackle Russia’s economic weaknesses.

Russia faced a similar challenge in the 1970’s and 1980’s – and, like Putin today, its leaders failed to do what was needed. According to former Prime Minister Yegor Gaidar, who led Russia’s only post-Soviet government that was oriented toward systemic change, the socialist command economy exhausted its growth potential by 1970.

Under non-totalitarian circumstances, the threat of stagnation would have generated strong pressure for systemic reform. But the Soviet Union’s aging communist leadership, encouraged by the OPEC-generated oil-price explosion and the discovery of massive hydrocarbon reserves in western Siberia, took a different tack, using natural-resource revenues to finance continued military expansion.

In an effort to appease the public, the Soviet leadership increased food imports – both directly (meat imports, for example, quintupled from 1970 to 1980) and indirectly (by increasing feedstock imports). While this strategy worked in the short term, it caused food consumption to increase far beyond what the economy could sustain.

As a result, the Soviet economy became even more dependent on resource revenues, making it extremely vulnerable to price fluctuations in international commodity markets. When mineral prices began to decline in the early 1980’s – reaching their lowest point in 1999 – the economy, which had already been stagnating for about five years, went into a free-fall.

Today, the Russian economy is no more resilient than it was in the late Soviet era, with commodities, especially oil and natural gas, accounting for around 90% of total exports and manufacturing for only about 6%. If anything, the economy’s dependence on exports of fuels and industrial minerals has increased, meaning that smaller price fluctuations have a greater impact on Russia’s fiscal and external position. Indeed, some observers – including the Central Bank of Russia (CBR) – have predicted that the country’s current account could slip into deficit as early as next year.

A lasting deficit would eliminate the major economic difference between Putin’s Russia and its Soviet counterpart during the 1980’s – namely, the financial buffer that has been accumulated over the last decade. It is this buffer – which amounted to $785 billion in the 2000-2011 period – that protected the economy from a larger shock when the global financial crisis erupted in 2009, and that has financed Russia’s foreign-policy initiatives, including its recent cooperation with Ukraine.

The CBR’s warning of twin fiscal and current-account deficits assumed that oil prices would remain steady, at $104 per barrel in 2015. But my expectation that oil prices will decline over the next 3-7 years suggests that Russia’s medium-term prospects are actually considerably worse.

In short, Russia will soon have to confront diminished macroeconomic health, with few options for restoring it. Russia’s uncompetitive manufacturing sector certainly cannot pick up the slack, and this is unlikely to change, given Putin’s unwillingness to pursue the needed shift to a more knowledge-intensive economy.

This new reality will not only affect Russia’s foreign-policy and imperial ambitions; it will also undermine the relative social and political stability that has characterized the last decade. Without resource revenues, the government will struggle to finance the policies and programs that are needed to placate ordinary Russians. In this context, the Sochi Olympics, intended to herald Russia’s triumphant return as a global power, may soon come to be regarded as a swansong.

Read more at http://www.project-syndicate.org/commentary/jan-winiecki-compares-vladimir-putin-s-short-sighted-leadership-to-soviet-rule-in-the-1970-s-and-1980-s#TiVhRbCHDwyeZSOZ.99

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