Category Archives: Commodities

Don Quijones: Spain’s Silent Reconquest of Mexico

With the ink still drying on Mexico’s historic energy reform, global oil and gas majors are salivating at the prospect of gaining access to one of the world’s largest and until recently most nationalized energy markets. One of those companies is the Spanish electricity giant Iberdrola, which expects to massively expand its operations in Mexico through increased investments of close to €1 billion.

Now, I know what you’re thinking: €1 billion is chicken feed in this age of inflated corporate balance sheets. Indeed, for some corporations such a sum is probably hardly worth getting out of bed for these days. However, in Mexico it can go a very long way, much further than it can in Europe or the US – especially when you have paid moles lobbying for your every interest at the highest level of government.

Michael Hudson: The Fracking/World Bank/IMF/Hunter Biden Dismantling Plan for Ukraine

Richard Smith was early to take a dim view of R. Hunter Biden becoming a director of a Ukraine’s biggest private gas producer, Burisma Holdings:

This has to be a hoax, right?

It’s so bizarre that you almost have to assume it’s a hoax. It sounds more like a cliched movie plot — a shady foreign oil company co-opts the vice president’s son in order to capture lucrative foreign investment contracts — than something that would actually happen in real life. But the indications as of this afternoon are that the board appointments actually happened, and that a Ukrainian energy company has retained the counsel of the vice president’s son and the Secretary of State’s close family friend and top campaign bundler.

Michael Hudson reports in a Real News Network interview that the commercial and geopolitical logic behind the Biden role, and the bigger US and World Bank/IMF program, is to push fracking onto a decidedly unreceptive population in eastern Ukraine.

Whose Oil Will Quench China’s Thirst?

As the heir-in-waiting to the title of world’s largest economy, China finds itself in a strange position in terms of its oil consumption.

In September 2013, China became the biggest net importer of crude, beating out the U.S. for the first time. This came as no surprise, given how rapidly China’s thirst for oil has grown, although landing in top place happened a little ahead of U.S. Energy Information Agency (EIA) predictions that it would take place in 2014. However, where the U.S. has been shoring up its own internal production, China has lagged behind. Between 2011 and 2014, U.S. oil production rose by 31 percent, as opposed to China, which saw its own production increase by a little more than 5 percent over that time. This leaves China utterly dependent on oil imports, a vulnerable position to be in at a time when its economy is beginning to wobble.

Will Fossil Fuel Be the Subprime of This Cycle?

Ambrose Evans-Pritchard makes a compelling argument in his latest article: that the $5.4 trillion of investment poured into fossil fuel exploration and development projects over the last six years includes quite a lot of investments that will never show an adequate return. He argues that when that sorry fact starts to be recognized, the losses could be the wake-up call to investors who have shrugged off risk as financial assets climb to ever-more-implausible valuations.

Joe Costello: Why the Oil Industry is Running Into Major Trouble

Over the last year, some deep truths about oil and the oil industry have begun to bubble to the surface. Not necessarily that they were ever hard to see, but they were easy to obscure and maybe more importantly, without too much effort, ignore. No longer.

The Chronic Exporters’ Curse?

Why the much-envied position of being a chronic exporter isn’t quite a bed of roses.

Russia Eyes Crimea’s Oil and Gas Reserves

Dave here. In case you were thinking that the Great Game was obsolete or something. Needless to say the referendum passed, this was written slightly before the release of the results. By Nick Cunningham, a Washington DC-based writer on energy and environmental issues. You can follow him on twitter at @nickcunningham1. Cross-posted at Oil Price. […]

Washington Does Not Have a Natural Gas Weapon Against Moscow

To many, the answer to the specter of Russian natural gas dominance is clear: unleash America’s natural gas abundance and displace Moscow. But will that work?

Twitter 2, JP Morgan, 0: Bythe Masters Withdraws After One Day Appointment as CFTC Advisor

This was not a world-record revolving door stint, but the head-spinning was of the good sort for a change.

George Mangus Warns of Broad Impact of Emerging Markets Turbulence

In the runup to the global financial crisis, George Magnus, who was then chief economist at UBS, was one of the most insightful commentators and was early to call how bad things might get. He’s back to sound alarms about the emerging markets turmoil.

The Emerging Markets Rout Abates….for Now

Journalists and laypeople tend to use stock markets at their proxy for economic and financial market conditions. The performance of US stock markets looked like an encouraging return to a semblance of normalcy after last week’s squall, until a wave of selling in the final hour, with 600 million shares of volume, pushed the major indexes solidly into negative territory. As of this writing, that barometer is still a bit wobbly. Australia was down 1.26% overnight and the Nikkei off .17%. But Chinese and the Singapore markets are up, as are European and the S&P and DJIA indices.

But some of the explanations are less persuasive than others.

Gail Tverberg: How the EIA, IEA, and Other Researchers Are Modeling the Wrong Growth Limit

Why the real constraint on energy production isn’t the availability of resources, but the cost of developing them, and how these neglected investment constraints have big ramifications for “peak energy” and economic growth generally.

Are Fracking Fluids to Blame for Rail Car Explosions?

Over the past year or so there seems to have been far more train derailments of cars carrying crude oil that have resulted in huge, deadly explosions, and it is not a coincidence that the oil in these explosions originated from the Bakken shale formation in North Dakota.

Are Banks About to Win on Commodities Trading After Their Success in Watering Down Basel III Capital Rules?

You know it’s bad when Bloomberg’s editors attack the banks’ win against regulators, in this case, their success in watering down already-too-generous Basel III capital requirements. And they look primed to score a twofer on pending rulemaking on trading in physical commodities.

Michael Klare: Have the Obits for Peak Oil Come Too Soon?

Among the big energy stories of 2013, “peak oil” — the once-popular notion that worldwide oil production would soon reach a maximum level and begin an irreversible decline — was thoroughly discredited. The explosive development of shale oil and other unconventional fuels in the United States helped put it in its grave.

But this assessment may be premature.