If You Wondered Why Energy Independence Is Important

The Wall Street Journal posted an article yesterday about the drone attack on Saudi oil fields. The Iran-allied Houthi rebels in neighboring Yemen have claimed credit for the attack.

The article reports:

The production shutdown amounts to a loss of about 5.7 million barrels a day, the kingdom’s national oil company said, roughly 5% of the world’s daily production of crude oil.

Officials said they hoped to restore production to its regular level of 9.8 million barrels a day by Monday. Energy Minister Prince Abdulaziz bin Salman said lost production would be offset through supplies of oil already on hand.

The strikes mark the latest in a series of attacks on the country’s petroleum assets in recent months, as tensions rise among Iran and its proxies like the Houthis, and the U.S. and partners like Saudi Arabia. The attacks could drive up oil prices if the Saudis can’t turn production back on quickly and potentially rattle investor confidence in an initial public offering of Saudi Aramco, the national oil company.

The article concludes:

The Yemen war is a central front in a new and more aggressive foreign policy overseen by Prince Mohammed, who launched the intervention with a coalition of allied states in 2015. Under the prince’s watch, the kingdom also applied a blockade on neighboring Qatar, detained Lebanon’s prime minister, and sent a team of men to kill exiled journalist Jamal Khashoggi in Istanbul in 2018.

A conservative kingdom with a Sunni Muslim majority, Saudi Arabia has been an opponent of Iran in a struggle for power across the broader Middle East since the 1979 revolution that toppled Iran’s monarchy.

The attacks on Aramco’s facilities are poorly timed for Aramco’s coming IPO and pose a challenge to oil officials after a changing of the guard in their leadership. Aramco last week picked seven international banks to help it list on Saudi Arabia’s domestic exchange, an IPO that could value the company at about $2 trillion dollars and come before the end of the year.

There are a lot of things going on behind the scenes here. This is part of the conflict between Sunni and Shiite Muslims. At their core, both the Saudis and the Iranians want to bring back the former caliphate. The Ottoman Empire (which was that caliphate) existed until the early 1900’s. Many Muslims want that Empire restored. The argument is over who will rule the caliphate when it is established. Al Qaeda and the Muslim Brotherhood are players in this conflict, as is ISIS. Jamal Khashoggi was a part of the Muslim Brotherhood. Descriptions of him as simply a journalist were misleading. Another part of this puzzle is the fact that Saudi Arabia is drawing closer to aligning with Israel because of the fear of a nuclear Iran. That also would be a cause for increased aggression from Iran.

Generally speaking, any terrorism that goes on in the Middle East can be traced back to Iran. They have been training and funding terrorists since the Iranian Revolution in 1979.

I have no idea what impact this will have on world oil prices. I do know that Saudi Arabia will work to repair the damage as soon as possible. I have no doubt that Iran is violating the sanctions on its oil exports, so if the price of oil rises significantly, Iran may be able to pull itself out of its current economic difficulties and calm its population. America will continue to prosper as oil prices rise because we are now a net exporter of oil rather than a net importer. Because of the policies of President Trump, we are in a very different situation than we were during the oil crisis of the 1970’s.

The Power Of Energy Independence

America is now energy independent. We now export oil and natural gas. This gives us some degree of leverage against what used to be the monopoly held by OPEC (The Organization of the Petroleum Exporting Countries). Yesterday Townhall posted an article that illustrates the influence America now wields because of its energy independence.

The article reports:

In the midst of the oil price spike scare, President Donald Trump warned the Organization of Petroleum Exporting Countries (OPEC) on Monday to “take it easy” on raising the price of oil.

This is the tweet:

So what were the consequences of this tweet?

The article reports:

Since this morning, the price of crude oil dropped by more than a dollar per barrel in just an hour. Bloomberg reported today that New York saw a 2.7 percent decrease in oil prices, which is the lowest drop in two weeks.

“Analysts attributed the price rise to improving trade talks between the U.S. and China, unrest in Nigeria and Venezuela, Libya’s refusal to restart production in the El Sharara oil field and continued efforts to curtail supplies by OPEC and Russia,” according to The Daily Caller.

When you don’t have to depend on OPEC for oil to keep your economy going, you have much more power to negotiate oil prices.

Sometimes Getting Things Done Takes Time

The Daily Caller is reporting the following today: “Late-Night Deal Breaks Deadlock Over Natural Gas Exports. The Trump Administration Is Ecstatic.” Natural gas is one of the cleanest energy sources in the world. America has a lot of it. Exporting it will have financial and diplomatic rewards.

The article reports:

The Federal Energy Regulatory Commission (FERC) broke a two-year partisan deadlock Thursday night to approve a liquefied natural gas (LNG) export terminal in Louisiana.

Top Department of Energy (DOE) officials said this was a major breakthrough that will alleviate a growing problem for U.S. energy producers — a lack of export infrastructure.

“We have been promoting US energy around the world and today’s decision by the FERC is a very important one,” DOE Deputy Secretary Dan Brouillette told The Daily Caller News Foundation in an interview.

The Calcasieu Pass LNG export terminal is the first such project to get FERC approval in two years. Republican FERC commissioners Neil Chatterjee, the chairman, and Bernard McNamee worked with Democrat Cheryl LaFleur to hash out an agreement to get her support.

The article concludes:

FERC’s other Democratic commissioner Richard Glick opposed the terminal, arguing his colleagues were “deliberately ignoring the consequences that its actions have for climate change.”

The commission’s environmental review of Calcasieu Pass found the facility would emit roughly 3.9 million metric tons of carbon dioxide emissions per year — about 0.07 percent of total U.S. emissions.

Brouillette argued that while an individual LNG export terminal would emit greenhouse gases, it would help lower global emissions because countries want gas as an alternative to coal.

“To the extent that LNG is displacing coal around the world, we think the impact is going to be positive,” Brouillette said.

Brouillette also stressed the geopolitical implications of LNG exports and the role energy could play in President Donald Trump’s foreign policy.

“These are decisions that impact the President’s ability to make foreign policy decisions,” Brouillette told TheDCNF. “We get to assist Poland, we get to assist Lithuania, we get to assist the Baltic states.”

Energy independence for America is important, but it is also important to be able to export energy around the world when countries such as Russia threaten to shut down their energy pipelines in order the win political victories.

Sometimes The Lies Are Just Funny

The Daily Caller posted an article today about President Obama’s claim that he started the oil boom in America. Somehow that’s not the way I remember it.

The article reports:

Former president of Shell Oil Company John Hofmeister said former President Barack Obama had nothing to do with America’s increased oil production and actually frustrated many areas of the energy sector.

Obama claimed he was responsible for America’s recent oil boom during an event hosted by Rice University’s Baker Institute on Tuesday night and Hofmeister challenged his assessment.

…“The facts are the facts. And, yes, the production did increase throughout his term,” Hofmeister said on “Fox & Friends” Thursday. “But, frankly, he had nothing to do with it.”

“This was production in states like Texas, Oklahoma, Pennsylvania, Ohio, Colorado — North Dakota in particular. And these were all state decisions made with industry applications for permits. The federal government had no role.”

The article notes the roadblocks President Obama put in the way of accessing American oil:

Hofmeister said Obama opposed the energy industry at every turn with his actions against offshore drilling and his handling of the Keystone Pipeline.

“If anything, he was trying to frustrate the efforts by taking federal lands off of the availability list — putting them just, no more drilling [sic]. He shut down the Gulf of Mexico for a period of six months,” he said. “[He] changed the regulations from an average of 60 to 80 pages per permit to 600 to 800 pages per permit. He also never approved the Keystone XL pipeline after dangling all the potential customers for eight years. And it was in the eighth year when he said no Keystone Pipeline.”

“I would say that he was not a leader when it comes to energy,” Hofmeister said.

As far as President Obama’s opposition to the Keystone Pipeline goes, as long as that pipeline was not built, the oil was shipped via the Burlington Northern Santa Fe railroad, owned by Berkshire Hathaway, owned by Warren Buffett, a close friend of President Obama. On February 21, 2013, I reported the following (article here):

If the Obama administration holds firm on blocking Keystone, the big loser will be TransCanada Corporation. But who will the big winners be? American railroads:

And of them, the biggest winner might just be the Burlington Northern Santa Fe, which is owned by Berkshire Hathaway, the conglomerate controlled by Obama supporter and Omaha billionaire Warren Buffett. In December, the CEO of BNSF, Matthew Rose, said that his railroad was shipping about 500,000 barrels of oil per day out of the Bakken Shale in North Dakota and that it was seeking a permit to send “crude by rail to the Pacific Northwest.” He also said the railroad expects to “eventually” be shipping 1 million barrels of oil per day.

President Obama did not facilitate the energy independence of America. He did, however, do a pretty good job of lining the pockets of some good friends.

Economic Growth For The Second Quarter

The Conservative Treehouse posted an article today about the revised economic figures for the second quarter. It is always amazing to me that under a Republican President when the revisions come, they are higher than the original estimates and under a Democrat President when the revisions come, they are lower than the original estimates, but I guess that’s the way it is.

At any rate, this is the chart of growth from the article:

The article had some further observations about the current economy:

1) The upward revision to nonresidential fixed investment was mostly accounted for by investment in software. (2) Imports, which are a subtraction in the calculation of GDP, were revised down. Within goods, the downward revision was widespread, the largest contributor was petroleum.

In addition to presenting revised estimates for the second quarter, today’s release presents revised estimates of first-quarter wages and salaries, personal taxes, and contributions for government social insurance. Wages and salaries are now estimated to have increased $122.5 billion in the first quarter of 2018, an upward revision of $0.4 billion.  (source data)

The article also notes that President Trump’s economic policies have benefited Main Street as well as Wall Street.

The article concludes:

The economic models of the entire last generation+ are based on the assumptions of continuing globalist economics which advances, and has advanced, the interest of Wall Street over Main Street. They were driving a “service-driven economy” message.

Simultaneous to domestic capital investment inside the U.S., the ability of our nation to provide goods and services to meet the economic expansion, means less reliance on imported materials, goods and/or services. We are making more of our own stuff; exporting at a larger rate; and importing less – specifically due to the energy independence strategy within the larger Trump policy.

Every granular policy is like a small part in a larger machine. Each individual part of the MAGAnomic policy is working to compliment the larger objective.

We needed a businessman in the White House. Our current politicians don’t seem to understand economics.

Why Energy Independence Matters

The Washington Times posted an article today about Iranian military exercises in the Straits of Hormuz. The Straits of Hormuz is significant because 35% of all seaborne traded oil, or almost 20% of oil traded worldwide flows through the Straits of Hormuz. This is something to watch as the situation in Iran becomes more volatile.

This is today’s Dry Bones cartoon:

The Washington Times reports:

Iran’s navy sent dozens of small boats into the Strait of Hormuz on Thursday, dramatizing its ability to choke off the strategic Persian Gulf waterway — a move that could send global oil and U.S. gasoline prices soaring — and escalating the confrontation with the Trump administration for withdrawing from the 2015 nuclear deal.

U.S. officials said the naval exercise was Tehran’s way to show its capability to create a disruption in the waterway, through which some 30 percent of the world’s sea-transported oil passes daily. Officials at the Pentagon said they expected the exercise would last only a few hours, although it was unclear Thursday night whether it had ended.

“We are monitoring it closely, and will continue to work with our partners to ensure freedom of navigation and free flow of commerce,” said a statement by Navy Capt. Bill Urban, U.S. Central Command spokesman.

The development marked Iran’s latest escalation in response to Mr. Trump’s promise to begin reimposing harsh economic sanctions in the coming days that were suspended under the 2015 deal. One Pentagon source said the unexpected Iranian navy moves were meant to hammer home Tehran’s rejection of President Trump’s offer this week for direct, unconditional talks with Iranian President Hassan Rouhani.

The article details the unrest in Iran:

It is an increasingly delicate moment for Mr. Rouhani, who faces protests in Iran over the nation’s struggling economy, weak growth and declining currency.

The Rouhani government has been rocked by a string of protests in cities across the country over the failing currency, mismanagement and investor fears of U.S. sanctions, the first wave of which is set to begin Tuesday. The Trump administration is pressuring Iran’s other trading partners in Europe and elsewhere to curb trade and investment ties as well.

A report by the official IRNA news agency said about 100 people took to the streets Thursday in the northern city of Sari and that demonstrations broke out in at least three other cities. The agency reported that none of the protests had official permission and all were broken up by police.

Iranian dissident groups abroad have detailed multiple demonstrations in recent days, with harsh police crackdowns in response. The Associated Press cited videos circulating on social media purporting to show dozens of demonstrators setting fire to police vehicles and shouting “death to the dictator.” The authenticity of the videos could not immediately be verified.

One way for a dictator to unite his people is to unite them against a common enemy. This may or may not work in Iran since many of the younger people in the country are more inclined toward western ideas than the ideas of the mullahs.

The article concludes:

“Any disruption of oil supplies in the Persian Gulf would be a major threat to the global economy and would hurt U.S. trading partners, thereby damaging the U.S. economy,” said Amy Myers Jaffe, who heads the Program on Energy Security and Climate Change at the Council on Foreign Relations.

U.S. domestic oil and gas production and export increases in recent years “have not reduced the U.S. need to police the free flow of oil from the Middle East,” Ms. Myers Jaffe wrote in an analysis for the think tank this week. “An oil price rise due to the loss of supply in one part of the world is reflected in U.S. price levels as well all other locations across the globe.”

Rockford Weitz, who heads the Fletcher Maritime Studies Program at Tufts University, said that in the Strait of Hormuz, Iran “could damage commercial shipping with relatively cheap anti-ship missiles, fast patrol boats, submarines and mines.

“Even threats and modest disruption to commercial shipping could trigger economic damage in the form of higher marine insurance rates, crude oil supply concerns and unsettled stock markets,” Mr. Weitz wrote in an analysis published by Tufts last month.

We live in a fragile world–keep praying.

Russian Collusion Is Real–Just Not Where Robert Mueller Is Looking

The Daily Signal posted an article today about the collusion between Russia and some popular environmental groups in America.

The article reports:

New Yorkers who are missing out on the natural gas revolution could be victims of Russian spy operations that fund popular environmental groups, current and former U.S. government officials and experts on Russia worry.

Natural gas development of the celebrated Marcellus Shale deposits has spurred jobs and other economic growth in neighboring Pennsylvania. But not in New York, which nearly 10 years ago banned the process of hydraulic fracturing, also known as fracking, to produce natural gas.

Two environmental advocacy groups that successfully lobbied against fracking in New York each received more than $10 million in grants from a foundation in California that got financial support from a Bermuda company congressional investigators linked to the Russians, public documents show.

The environmental groups Natural Resources Defense Council and the Sierra Club Foundation millions of dollars in grants from the San Francisco-based Sea Change Foundation.

 “Follow the money trail, and this [New York] ban on fracking could be viewed as an example of successful Russian espionage,” Ken Stiles, a CIA veteran of 29 years who now teaches at Virginia Tech, told The Daily Signal.

The article explains why the Russians would be concerned about energy development in America:

Since the U.S. is now the top producer of natural gas in the world, and well positioned to export liquefied natural gas across the globe, Russia recognizes it gradually could lose influence in parts of the world where Moscow has been the dominant supplier of oil and gas, Stiles said in a phone interview.

“America’s natural gas revolution has huge geopolitical ramifications, so Russia’s motivation to try to block our natural gas development is easy to understand,” the CIA veteran said. “If you are worried about the Russian bear rearing its ugly head in the next several years, the way to stop that and put it back into its cage is to cut it off at the knees financially.”

“That’s what natural gas pipelines are all about and that’s what fracking is all about. We are providing affordable energy to average Americans at home and our allies overseas.”

The Russian economy depends on higher oil prices. Russia also uses energy to blackmail European countries into cooperation. America’s development of its own natural resources is a necessary balance to the Russian use of energy as a blackmail tool.

 

What World Is He Living In?

This is part of the transcript from the speech President Obama gave to the graduating cadets at West Point:

Four and a half years later, as you graduate, the landscape has changed. We have removed our troops from Iraq. We are winding down our war in Afghanistan. Al-Qaida’s leadership on the border region between Pakistan and Afghanistan has been decimated, and Osama bin Laden is no more. (Cheers, applause.) And through it all, we’ve refocused our investments in what has always been a key source of American strength: a growing economy that can provide opportunity for everybody who’s willing to work hard and take responsibility here at home.

In fact, by most measures America has rarely been stronger relative to the rest of the world. Those who argue otherwise — who suggest that America is in decline or has seen its global leadership slip away — are either misreading history or engaged in partisan politics.

Think about it. Our military has no peer. The odds of a direct threat against us by any nation are low, and do not come close to the dangers we faced during the Cold War. Meanwhile, our economy remains the most dynamic on Earth, our businesses the most innovative. Each year, we grow more energy independent. From Europe to Asia, we are the hub of alliances unrivaled in the history of nations.

I will admit that I am very partisan, but that is not why I believe that America’s global leadership is slipping away. We have an American marine in prison in Mexico because he made a wrong turn. We have an American pastor in prison in Iraq because he is a Christian while his wife is in America. If America were stronger, both of these people would be at home in America.

American energy independence will be achieved despite the government, not because of it. The Obama Administration has blocked oil exploration on federal land. The Obama Administration has also blocked construction of the Keystone Pipeline. The administration has spent millions of dollars investing in technology that has not yet been proven to work. The Obama Administration is a roadblock to energy independence–not a facilitator.

This is the link to a transcript of the speech. Please read the whole speech and draw your own conclusions.

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Something To Think About As Gas Prices Climb

Part of the cause of the rise in gasoline prices is increased tension in the Middle East. Part of the rise is caused by the fact that America is not energy independent and we are at the mercy of things we can’t control. One of the ways to solve that problem would be to become energy independent. Alternative energy may be part of that solution, but right now the technology is such that more carbon-based energy is the current answer. The Keystone Pipeline would have helped and more hydraulic fracturing (fracking) has helped. However, there is a movement among the radical environmentalists to shut down fracking. That movement is not based on scientific evidence.

Hot Air posted a story today about a university study on fracking.

The article reports:

The hydraulic fracturing of shale formations to develop natural gas has no direct connection to groundwater contamination, according to a study released Feb. 16 by the Energy Institute at the University of Texas at Austin.

The study reported that many problems blamed on hydraulic fracturing are related to processes common to all oil and gas drilling operations, such as casing failures or poor cement jobs.

University researchers also concluded that many reports of contamination can be traced to above-ground spills or other mishandling of wastewater produced from shale gas drilling, rather than from hydraulic fracturing, Charles “Chip” Groat, an Energy Institute associate director, said in a statement.

“These problems are not unique to hydraulic fracturing,” he said.

The article also points out that fracking takes place hundreds, if not thousands, of feet below the aquifer. Hydrocarbons are naturally found in the water in areas where there is a high presence of shale oil–that’s why they drill there! The development of shale oil resources in America will provide jobs (the current unemployment rate in North Dakota is 3.3%) and move us toward energy independence. If the technology in green energy moves forward, that would be wonderful, but it isn’t there yet.

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