Energy & Commodities

Momentous Change in US Crude Oil Market, with Global Impact

Posted by Wolf Richter

on Monday, 2 December 2019 9:59

US exports of crude oil and petroleum products – this includes gasoline, diesel, jet fuel, naphtha, and many others – exceeded imports in September by 89,000 barrels a day, the EIA reported today, and so the US became a “net exporter” of crude oil and petroleum products for the first time on a monthly basis in the  EIA’s data going back to 1973.

The US has exported petroleum products – gasoline, diesel, heating oil, naphtha, propane, etc. – for a long time. This is the business some refineries are in. They buy crude oil from wherever they can get it, including other countries, and sell refined product to customers in the US and other countries.

For example, California produces some crude oil and gets some crude oil by tanker from Alaska and some by oil train across the Rockies. But there is no oil pipeline across the Rockies. So refineries in California, including in the San Francisco Bay Area, also import some of their crude oil from other countries, refine it, and then sell gasoline, diesel, and other petroleum products to other countries largely in Latin America….CLICK for complete article

Can Stablecoins ‘Hedge’ US Dollar Hegemony Risks?

Posted by Marie Huillet

on Friday, 29 November 2019 10:03

Stablecoins have the potential to temper the systemic threats posed by the United States dollar’s domination of global foreign currency reserves, according to an opinion piece published by the World Economic Forum (WEF).

The argument was made by the Fusion Foundation’s John Liu and Lapa Capital’s Peter Lyons in an article published on the WEF’s Agenda on Nov. 26

The Fusion Foundation is a non-profit organization focused on developing blockchain infrastructure for decentralized global finance; Lapa Capital is a tech-focused investment firm headquartered in New York.

IMF: USD accounts for 62% of all central bank foreign reserves

Liu and Lyons advocate the wide-ranging potential of stablecoins to underpin a more “sustainable, inclusive, and resilient global system” across trade and investment, banking and payments.

Until today, the authors note, the U.S. dollar continues to account for 62% of all foreign reserves held by central banks, as IMF data for Q1 2019 has demonstrated….CLICK for complete article

This U.S. Shale Giant Is On The Brink Of Collapse

Posted by Tsvetana Paraskova

on Friday, 29 November 2019 9:57

One of the shale gas pioneer companies in the United States said earlier this month that depressed oil and natural gas prices may force it to breach loan covenants over the next year and that a massive debt pile threatens its ability to “continue as a going concern.”

Chesapeake Energy—which helped propel the shale gas revolution in the late 2000s with leading positions in the Marcellus, Barnett, and Haynesville shale basins—is now facing tough times trying to heal its balance sheet, on which US$9.7 billion in total debt weighs.

Chesapeake Energy’s troubles are indicative of the current woes of the whole U.S. shale patch—firms now have to focus on generating free cash flow and successfully manage the debt they had taken on to boost production instead of profits. Squeezed between the scarce availability of capital from debt and equity markets and investors demanding more profits, many U.S. oil and gas firms are reducing capital expenditure plans for 2020…CLICK for complete article

The Fragility Of Monetary Policy

Posted by Keith Weiner

on Friday, 29 November 2019 9:47

Physics students study mechanical systems in which pulleys are massless and frictionless. Economics students study monetary systems in which rising prices are everywhere and always caused by rising quantity of currency. There is a similarity between this pair of assumptions. Both are facile. They oversimplify reality, and if one is not careful they can lead to spectacularly wrong conclusions.

And there are two key differences. One, in physics, students know that pulleys have mass and friction, and graduate to a more sophisticated understanding. Two, the Quantity Theory of Money (QTM) is not a simplified view of reality. It is oversimplified, to be sure, but it is a false theory.

QTM leads one to think that the groceries you can buy with a dollar are intrinsic to the dollar itself. And this leads to the idea that, the lower the dollar goes, the easier it would be to pay dollar debts. Returning to our physics analogy, pulleys are not massless and frictionless. And the value of the dollar is not 1/P (purchasing power).

Useless Ingredients

We have written a lot about when government forces businesses to pay for things that their customers do not value, and do not usually even know about. We deem these things useless ingredients. Consider an example. Suppose the federal government got more serious about the Americans with Disabilities Act, and they no longer allow noncompliant restaurants and bars to remain grandfathered under the old code. All of these businesses now must spend a lot of money getting compliant, and reducing their revenue-generating floor space for the sake of much larger bathrooms. This does not cause prices to rise, directly. If restaurants could charge more, then they would already be charging more…CLICK for complete article

New genes for you?

Posted by Trend Disruptors/The Trend Letter

on Thursday, 28 November 2019 12:18

The idea behind gene and cell therapy is to introduce organic material into a body that needs help. Bone marrow transplants, also known as stem cell transplants, infuse either your own stem cells (autologous) or someone else’s stem cells (allogeneic) into your body. This is done when your bone marrow no longer produces healthy blood cells, often a result of cancer treatments (chemotherapy). Stem cell infusion enables the body to once again produce healthy blood cells.

Stem cell therapy is well established in mainstream medicine. However, gene therapy has lagged behind, as the research is difficult, and one infamous human test failed badly, ending in the death of the patient. The idea with gene therapy is to introduce a healthy gene into the body, replacing all of the unhealthy genes, such as the gene that causes Cystic Fibrosis. The idea is sound in that we can now positively identify problem genes and we can identify and isolate good genes to replace them with. The really difficult part is finding a safe and effective way to…Click to read full article.