Juggling Dynamite

Oil is bouncing again, with the price of a European Brent barrel passing $70 today–more than doubling since 2014, and WTIC above $64 for the first time in more than three years.  Speculators are piling on, spiking volatility and price instability.

The Saudis have said they want oil about $60 a barrel to meet their cash flow targets, but not so high as to encourage more turning on of the taps from other producers.  Too late.  In today’s tech-rich oil sector, higher prices mean more production even without more rigs.  Production advances are racing faster than most dreamed possible.  See:  Why oil is up, but rig count is not:

The number of rigs drilling for oil in the U.S. — from the Gulf of Mexico to the Permian Basin in Texas to the Bakken shale in North Dakota — is less than half the count in the middle of 2014, when the crude market crash began. And yet, America is set to rival Saudi Arabia and Russia, with production expected to top 10 million barrels as early as next month and to reach 11 million toward the end of next year.

How? The combination of faster and faster horizontal drilling and more intense fracking has allowed production to explode even as the number of rigs drop. Up until about four years ago, it was safe enough to use the rig count to track activity because the industry was more reliant on single vertical wells…

At 7,500 feet, the average lateral length of a well is 50 percent longer compared to three years ago. And a rig can drill 25 wells a year, compared to 15 just two years ago.

The race is on.  Incentives to corner markets and ‘trade’ oil higher loom huge as Goldman Sachs and Citigroup are wrangling for lead roles in OPEC’s planned Aramco IPO later this year; the share sale could raise an estimated 1.5 to 2 $trillion–depending on oil prices.  Longer-term prospects for IPO buyers be damned; imagine the upfront underwriting fees to be scooped here.

Beyond the IPO hype though, the truth is that OPEC’s influence on oil prices is waning by the day.  Canadian producers are stuck in this game of chicken too:  higher prices mean more incentives for more supply, alternative fuels, higher efficiency and thus lower prices.  And so it goes.

See this direct video link.

Canada’s Minister of Natural Resources yesterday announced a $120-million investment to expand the network of electric vehicle charging and alternative refueling stations across the nation “to encourage Canadians to reduce their carbon footprint”.  Additional benefits will be improved air quality, lower household expenditures on fuel and internal combustion engine parts and repairs, and reduced pollution-related death and illness.  Smart investment for lasting benefits.  See: Coast to coast investments help Canadians drive clean:

Electric, hybrid and alternative fuel vehicles are the future of transportation. As Canadians continue to make greener choices, our government is giving them more options to drive clean while supporting a cleaner environment.

The funding, which is part of Phase 2 of the Green Infrastructure Fund, will support the deployment of electric chargers; natural gas and hydrogen refueling stations; the demonstration of new, innovative charging technologies; and the development of codes and standards. Proposals are now being accepted for deployment and demonstration projects.

Today’s announcement brings our total investment to $182.5 million. It builds on the success of the initial $62.5-million Phase 1 investment in 2017 that provided funding for more than 100 electric vehicle fast-charging stations, seven natural gas refuelling stations and three hydrogen refuelling stations across Canada. It is also funding 10 demonstration projects and the building of another 200 next-generation electric vehicle charging stations. A current list of all projects is available on the NRCan website.

The Government of Canada has also worked with our U.S. counterparts to create a Canadian version of their Alternative Fueling Station Locator map to ensure that all Canadian drivers and fleet owners have the most current information at their fingertips.

Through Canada’s national energy dialogue, Generation Energy, Canadians made it clear that the transition to electric vehicles and lower-carbon fossil fuel alternatives is not a luxury but a necessity for Canada’s low-carbon future. Our government continues to support green infrastructure projects that will create jobs, advance Canada’s clean future and help us realize our domestic and international climate change goals.

I am pleased to announce that we’re investing an additional $120 Million for electric vehicle charging and alternative refueling stations. The call for proposals is now open. https://t.co/IiUEEnUEB2 pic.twitter.com/xDjauQwu1C

— Jim Carr (@jimcarr_wpg) January 10, 2018

Paid-for-homes are a refuge of peace and shelter.  Homes continually gutted of equity are financial calamities waiting to happen.  Central bank-inspired speculation has wrought another nightmare on main street.  See: Home equity hits record high and here’s how homeowners are spending it:

“there is now a strong confidence among borrowers that home values will continue to rise, making it less likely that borrowing against their homes even more will not end up putting them underwater on their mortgages in the future.

For some that means investing in the stock market. For others it is buying more real estate…And of course, “Some are looking to profit from the popularity of cryptocurrencies such as bitcoin,” added Weaver.