The Changing Face of Oil Markets

I have a habit of buying gasoline at $15 per fill up. I have convenient locations on my daily flight path and so I don’t mind the constant stops. But as prices have fallen I have noticed that in the beginning I barely got one-third of a tank. Today for my $15 I got more than one-half tank and paid less that $2 per gallon (--)  Thank you President Obama!

The worldwide glut of oil is a fairly small differential; the overproduction is not dramatic, but as better spoken by Shakespeare- paraphrasing here- tis not so deep as a well nor so wide as a church door…But tis enough.  The critical factor is the U.S. market, it was the U.S. market after all that began the illegal control of oil prices by the oil producers in a nation whose basic laws require the opposite- The fundamental legal policy here is to oppose monopoly control and trusts.  By allowing the producers to control the price and supply of crude oil, we auctioned our national future for the sake of a few oil companies and their stockholders.  Finally, the flown birds have come back to roost.
The trigger was U.S. Shale oil production and the noxious hydraulic fracturing technology. The kicker was the technological refinements in that technology that significantly increased production efficiencies and yield per well, per day.

There are many international scenarios intertwined in the changing face of oil markets, and even as the price of oil continues to fall, there are signs of a further economic slowdown in Europe, a profound slow-down in Russia, and the lessened strategic value of oil as a political and military weapon. Consider the extraordinary effectiveness of Western sanctions against the Russian Invasion and Occupation of Ukraine. A Republican U.S. President would have ignored it with no more than passing bits of harsh language. The weak-kneed Republican response would have been to increase arms sales to the satellite nations that could afford to buy more. But Obama established a definitive global impact that has had a profound effect on the Russian economy; oil is the engine for its military aggression. A shrouded public in Russia will not understand that the invasion of Ukraine and Occupation of Crimea has little to do with national pride and a lot to do with creating vast luxuries for his network of fellow Russian billionaires. But controlled media cannot douse the growing hungers, unemployment, and shrinking purchasing power. The face of oil has changed in Russia, from the great fountain to a meager flow.
 In the U.S. drivers enjoy low priced gasoline, some ancillary consumer benefits may come in the form of lower production costs for goods and agriculture- intertwined with petroleum-based chemical processes- may also see some commodity price benefits. More than anything, the drain of petroleum prices was a drag on economic growth; along with insurance, petroleum siphoned much of the lifeblood of the U,S, economy, which can have substantial periods of consumer-driven expansion(--) or simply pay $4 at the pump and stagnate- we see growth and it is impelled by  lower fuel costs and increased discretionary spending. The face of oil markets has changed in America.
Lower prices may eventually shut down some new production, and this is the floor for oil prices; when production declines. However, as an insular market - we do not export crude oil- there is an insulating price factor too. Domestic shale oil can survive below $60 per barrel, and low prices will encourage greater efficiency.  There is a window of production efficiency that is a by-product of the rush to establish production, Not enough care to some, but certainly room for improvement in capturing useful substances that were initially cast aside as wastes.  While some projects will close and other will never open, the impact has been felt, and production will continue even as prices fall below $50 per barrel.
In the near future, as alternative energy continues to grow, many structural users of petroleum and natural gas will adjust their reliance on crude oil, electric cars too will have some immediate force, and then a far more pronounced market impact. The U.S. will once again face an opportunity to move further past oil. Whether hydrogen powered vehicle as envisioned by Toyota or national deployment of solar production, a set of panels on every roof, we will have opportunities to use national policies to further change the face of oil markets.

The XL Pipeline has become obsolete before its construction, and this is a telling impact of change. The dirty, difficult-to-process mountains of tar sands have no place in the world's markets, and only continue due to the influence of money on the U.S. Congress. Seen in the light of changed oil markets, it appears to be a nearly corrupt abrogation of national interests. To burden the world with un-needed, life choking levels of pollution, and to abuse the precious American heartland to deliver Canadian oil profits. Even in news and truth-sheltered and limited American public will begin to wonder why we would do such a thing, inflict such a scar on this beautiful country. They will wonder of the patriotism of the corporate Senators and Congress-persons, and they will wonder why we would make such an effort to raise oil prices, there is no cheap way to process tar sands.

Sources:
Chevron Shuts Down Arctic Deep Water
http://switchboard.nrdc.org/blogs/ddroitsch/reality_bites_chevron_indefini.html?utm_source=fb&utm_medium=post&utm_campaign=socialmedia

XL Pipeline is no longer financially sound
http://www.latimes.com/nation/la-na-keystone-20141216-story.html

http://www.politico.com/story/2014/12/oil-keystone-xl-113551.html

hydrogen cars from Toyota
http://www.businessweek.com/articles/2014-12-17/toyota-embraces-fuel-cell-cars-for-post-gasoline-future

Normalization With Cuba Is The Right Policy

Cuba sits on our southern doorstep, except for the common border countries; it is the most prominent nation in our geographic neighborhood with which we do not have diplomatic and commercial relationships.  We have watched for decades as we deployed our punitive policy against the Dictator Fidel Castro against the Cuban population. Castro’s brutal rule forced millions to flee, and it is for that reason the large Cuban community in the U.S. is largely comprised of people who have been victimized by Castro. History justifies the  Cuban community's deep resentment  but history also supports change. Isolation has not produced progress, and the people of Cuba suffer from our policies that truly are aimed at the political leadership there.

We have people in leadership in the United States who have been as brutal and doctrine driven as Castro. It is not a reach to suggest that an entire generation of Americans has been victimized by U.S. aggression in Iraq. Trillions of dollars wasted, hundreds of thousands of lives lost. Many thousands of American families suffered from the combat causalities there. It was reckless and misguided; it was brutal in its impact. The semblance of society that remains in Iraq is a sad tribute to the destruction of war.  There must be better ways to remove a few criminal dictators, and to provide free choice for a population. If there are, then they must begin with engagement.

Normalization Will Boost The U.S Economy
Opening travel and trade with Cuba will boost the U.S. economy. It will perhaps reduce one additional source of trade for the sanctioned Russian government. It will provide opportunities for cultural and educational enrichment for both nations. And it will improve economic opportunity for the current generations of Cuban people who have done nothing to deserve  international isolation.  Punishing the people for the perceived misdeeds of an autocratic government makes little sense. The Cuban people- by our theory of the world- are political captives.

Republican Critics Have a Reflex and No Reason
By all accounts, the Republican party leaders will condemn the policy because it is the Obama policy. They will ignore the President’s splendid role, and historic achievements  as the leader of Western Democracy and claim he has weakened the U.S. by dealing with a dictator.  These same people have promoted Putin’s war in Eastern Europe; soft-pedaled Bin Laden and Al Qaeda, and played politics with ISIL while they cut a swath of terror in the Middle East. They have, thus far, failed to advance a legislative policy to contain the global threat of an oil-rich ISIL. There is little reason to pay attention to them. To assert that they care for the poor in Cuba is clouded by the way they treat the poor in America. It is as if they forget, in the global stage, you are what you do, and not what you say.

U.S. Cubans Can Make a Difference
The Cuban ex-patriot community has skin n the game. They have family ties, cultural roots, and ultimately a love of their native country. Engagement will be an opportunity to reach the Cuban community and foster ideals that can bring change. Opening relations with Cuba is an opportunity for involvement and the Cuban American community, there is no group better positioned to influence democracy in Cuba.

FREEFALLING…Putin Style (Opinion)

The rouble has crashed, it has fallen to 80 then resuscitated to 70 to one dollar. The Russian government is unable to support the currency.   People rush to dump roubles and salvage goods for them as best they can. Rising interest rates seem to have failed to stabilize banks or the currency. While not admitting a financial panic, watching local behavior, the conclusion is hard to avoid. People are urgently trying to maintain themselves while the currency loses value before their eyes.

This is the true price of Putin’s invasion of Ukraine, it is a price paid by the average Russian citizen, their pensions and salaries becoming more and more meaningless as the consumerism they have grown to cherish is pushed further away from their reach. The people have been told by their leaders and the state-controlled media that the economy has been attacked by the West, and that they will prevail by being morally strong. The call to patriotism and pride resonates with the common people; they believe they will defeat the West. Some stories are heart warming reminders that people will find silver linings no matter how foolhardy their leader’s behaviors might be.  

Oil Prices Continue the Slide

The Russian plans for $95 per barrel benchmark prices have been buried beneath a gusher of U.S. oil production. Oil shale projects with low interest financing have proven influential and persistent despite low market prices. As benchmarks fall below $60, there are few signs of falling U.S. production, and the world still has an oversupply of crude. The ironies are not lost here. It resembles a Russian tragedy of its ages, and played out many times before. Whether by Czarists aristocrats, class and privilege conscious communists, or as now, billionaire oligarchs, the common people find the reasons to go on believing. They buy into a dream that they will never share, or, perhaps as in America, the poor feel it is their role- to be loyal to the rich. While appealing to patriotism, It appears that much of the international aggression is aimed at creating greater luxuries for the oligarchs.

The motto emblazoned across this prow of this sinking ship is that:  the Crimea is ours…. This is little comfort to the growing bottom economic layer where inflation and a crashed currency have made comfort less obtainable. It is not a substitute for the middle class preferences that keep them preoccupied with personal progress, it is not a substitute for the capital flight from Russia as investors have withheld or withdrawn nearly a trillion dollars in investment capacity from the Russian economy since the invasion of Ukraine. While Putin makes news by elaborate gestures to Turkey, China, and India this path to diversification is characterized by weakness and desperation. It is not the high-tech super warship cancelled by France, or the elaborate gas pipeline into central Europe.  All over the world, fast money moves are building new Russia-free linkages, and this is the true damage brought by Putin, he has set Russia on a path of isolation as the global economy grows exponentially around his military aggression.

The Powers of Political Media

Like the United States, Russia has a propaganda machine that feeds a constant stream of counter-reality to its people. In the United States for example, they were fed a multi-billion dollar deluge of ant-Obama, ISIS, and Ebola.  Many believed that the U.S. was under siege by Obama, ISIS and a flood of immigrants from Latin America, who also carried ISIS and Ebola.  The hysteria worked and despite a booming economy and amid excellent signs of economic recovery, the American people recently voted a radical, pro-corporate government into place that is determined to depress the middle-class. There is a similar dynamic in Russia, where news media have created a narrative that holds Obama to blame for Putin’s aggressions. While Putin may be building seaside resorts for his rich allies, the average Russian believes they are in a Holy test of will and patriotism.  The problem in both the U.S. and Russia is simply this, under media influence people support political causes that will limit progress and do permanent damage to their future prospects.

Sanctions Accelerate Damage

The world owes a debt of gratitude to President Obama’s leadership on Ukraine sanctions. The Obama response to the invasion of Ukraine marks a noticeable first: oil is not a fuel for military aggression.  The oil-money powered Russian military has not achieved its objectives so far. The simple and easy conquest of Ukraine has brought instead an economic maelstrom.  War is a failure of reason; historically, it has been a tool of base convenience and essential evil.  Sanctions are an effort to bring about reason, debate, and positive change. In Russia, there is a gravity–defying syndrome of patriotism and bravery in the face of growing economic chaos. The people, their hopes and political will, all committed to keeping the society moving forward. However, like any objects spinning in air, there is a good chance that, in the end, gravity will prevail.

Obama Doctrine- International Conflict Management

In the crosscurrents of news coverage, there are important events that go overlooked and false events that appear real and far more important than they are. The Russian invasion of Ukraine after the the fall of the Russian puppet Victor Yanukovich was a real event. Russia moved to swallow-up an important, burgeoning Democracy. It invaded the Crimea, ran phoney elections, annexed the Peninsula, and began a military buildup to invade the rest of Ukraine. The world stood by without armed resistance, however, under the leadership of Barack Obama, began a remarkable battle plan to stop and reverse a brutal conquest. This strategic rather than military initiative opens an intriguing possibility,  that after thousands of years, people have begun to use rational processes to resolve conflict rather than brute force and killing.

War Is Simply Too Much
For any circumstance, except to repel an armed invasion, war is a poor weapon. It is meant  to achieve one objective: killing indiscriminately and in large numbers.  It is too broad; it is a blunderbuss when one needs a laser point.  In Iraq, for example, the phrase collateral damage became a heartless euphemism for destruction of innocent human life.  Collateral circumstances arose in the form of civil war and incredibly vicious sectarian attacks. Minimal estimates declare more than 100,000 perished in the civil conflicts.

Among recent examples of U.S. resistance to aggression, war has been selectively used and essentially politically motivated. Iraq was initiated for profiteering and oil, and  Afghanistan,the longest U.S. war. carried out as an appearance, a feigned pursuit of Osama Bin Laden.  The U.S. invaded Iraq and poised itself to obtain vast amounts of oil reserves. The premise for the invasion was a false claim of self defense.  The Bush Doctrine  justified use of extreme force against any threat, real or imagined. While Iraq at the time was under intensive U.S. military monitoring, and had no ability to effect an attack on the U.S.; we perceived a threat. Despite the weight of reality, the U.S. leadership under George Bush initiated an invasion, toppled the Saddam regime, which led to a decade of bloody civil war. The U.S. lost nearly 5,000 dead and spent more than $2 Trillion dollars.

Iraq Is Evidence: War Solves Little
In the past weeks, we have seen the Iraq government fold under a relatively mild assault from a small band of insurgents. ISIS have been able to capture broad swaths of Iraq territory, major cities, and oil fields. It is an insurgent force that, while greatly outnumbered by Iraqi military resources, has essentially met little to no opposition. Iraqi military have surrendered the field and turned over vast amounts of arms and equipment to the insurgents. The U.S. war in Iraq ended with a apparently stable Iraq and a government which sought no further U.S. military assistance. After our military separation, poor management and divisive politics have produced a crippled State that cannot police its borders nor defend its people and resources. The use of U.S. overwhelming military force by the Bush Administration destroyed the balance of social and political factors that made Iraq a cohesive state, it now founders and can easily fall into radical control that will further destabilize an entire region.

War Is a Failure of Reason
The invasion of Ukraine once again highlighted the gross folly of warfare. The precipitous invasion threatened to immerse all of Europe in a bloodbath for reasons of personal vanity or mere political advantage. However, the military and diplomatic crises in Ukraine offered new opportunities to employ a modern age set of principles and strategies. It would be a battle of banks and privileges, an economic counter-attack to a brutal use of military force.It was bold and brilliant. This strategy used weapons that pierced deeply into the fragile shell of Russia, namely, its weak and needy economy.  Run by oligarchs in key sectors, the Russian economy was interconnected with dependencies in Central Europe and to varying degrees much of the rest of the world. Using this new, policy-warfare, the allied West made piercing strikes into parts of the economic body of Russia that were vital and vulnerable.

It consisted of precision movements: a strike into the oil sector, a dramatic loss of equity in the Russian stock market, denial of international monetary and credit privileges for key Russian Banks, personal restrictions on economic access and travel for key players in the Putin Regime. A strategic boycott of an annual economic development summit deprived the Russian economy of its Black Friday - when so many large international transactions were usually consummated that the balance of the year was in the black. The results of the economic sanctions, joined by a solid alliance of Western Europe have been devastating to Russia. While not harmful to its average citizens, it was devastating to the national programs for economic growth. The power of the approach was always that there was a next, more severe, level, and that the pressures and deprivations would inexorably increase.

The Obama Doctrine- Punish Aggression with Precision
The selective use of force as secondary to diplomatic and economic measures can be called the Obama Doctrine. In it evolution, it has ushered-in a new possibility for managing conflict. It offers a potential for  rationalizing much of the world's conflicts to avoid armed confrontation.  Those nations which are invested in the global economy can no longer afford to pause for intervals of warfare.  The U.S. experience has shown those who will learn, that war is impossibly expensive and largely un-winnable.  We have Afghanistan and Iraq to offer as cases in support of the cautionary message of modern history. War is only profitable to the war machine, and they have learned to profit from not fighting as much as fighting.  The F-35 fighter at $125 million per plane is the current U.S. answer to ghosts of terrorists with box cutters and plane tickets. Somehow, the math does not favor us, and we still spend more than the next 10 nations combined in defense.

Stepping Back From The Brink
Share the perspective of a Ukrainian citizen watching as the Nation fell into a leaderless state through the demonstrations and bloodshed in Euro Maiden in Kyev, then to the menace of Russian Invasion. With the loss of Crimea and city after city Russian thugs fomenting civil uprisings, the military buildup on the borders clearly indicated imminent invasion and war with Russia. They knew the West wanted a deeper relationship but they also knew the West would not send troops and initiate a land war with Russia. In City after city, paramilitary groups took action and there seemed no escape from the inevitable- bloodshed and conquest. Obama began his leadership with powerful sanctions, few believed it could stop the onslaught and as sanctions took hold and increased, the curious present state began to form. Russia stopped, then pulled back; as the united block of U.S. and Western Europe tightened the screws on the Russian economy. There was a growing realization, Ukraine does not stand alone. Following new national elections, resumption of political and diplomatic relations with Russia and the West. Ukraine has achieve political stability and the elusive trade agreement with the West.

 A Delicate But Hopeful Balance
The Ukraine now sits in a delicate balance, there are still elements of the Russian subterfuge, still hostilities and remnants of the Russian takeover.  Crimea has been lost for the time being and its future is still a target of ongoing sanctions. Moldova and Georgia have joined with Ukraine in opening trade to the West, and  the Eastern European region  generally braces for economic and social change, not all of which is welcome. Inside Ukraine, there are pockets of peace and unrest. The still young movement towards greater democracy still requires nourishment and care. A nation must build democratic infrastructure; it must find its many voices of democratic communication.

A Small Step For A Nation, A Giant Leap For Mankind
Someday when the U.S. recovers from a drunken madness of right-wing-delirium about guns and bloodshed, we may look back with a distinct sense of pride and accomplishment. The small step towards alternatives to mass slaughter, in an age in which we reached a peak in the ability to inflict death and destruction, was truly amazing. The U.S. has stopped abruptly from an inertia of multiple fronts of war on an on-going basis.  We moved from an unlimited commitment essentially to fight every hostile nation in the middle-east, Asia, South America, and Africa and moved instead onto a path of non-lethal warfare and  peace. We can pursue conflict resolution without military means.

To be sure, the bristling level of armaments of the U.S. military are an essential part of diplomacy. But one cannot be blind to the fact that military strength does not stop every attack, and war does not solve the problems that give rise to conflict.There is more hope for the future when mankind can devote resources to solving common problems that threaten the global future well-being rather than engaging in warfare and destruction of life.

Better than bullets...

In the Soviet invasion of the Ukraine, following the drama of heroes in the Maijden in Kiev, the theft of Crimea, and the continued onslaught by State sponsored thuggism, a ray of hope and sunlight emerged. Proof of sanity in international relations. The United States under the leadership of President Obama, has stood boldly even where European nations have been too timid to act and established a landmark of peaceful resolution of armed conflict.

Far from the furious buildup of thousands of troops along the Ukraine border, and the brazen capture of the luxurious Crimean Peninsula, stands Russia now beginning to feel the deep chill of money blowing the other way.  It appears that they and most of the world forgot how dependent the Russian economy is upon foreign investment. The true engine of the Russian Economy is not oil and gas, but the money needed to exploit resources at home and abroad.
So much depends upon the willingness of bankers and creditors. So much depends on open arms in trade and on Wall Street. There is only so much money in selling arms all over the world, in the end it takes a lot of money to produce advanced weaponry.

There is a lesson in wisdom, that banking systems can fold a fragile national economy like a cheap Chinese fan, this is a better idea than a land war in Eastern Europe, it is a dollar war in cyberspace and on the floor of the Gulf of Mexico where they partner with Exxon for deep sea wells-- anywhere that Russia needs to be engaged in making profits.

The world is one step closer to finding resolve to handle a military dictatorship without a $trillion dollar invasion that only benefits the U.S. War machine. This is a grand bargain, peace at a price-- and on Mother's days yet to come, it will be a Grand Bargain.