Right Wing Granny

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Tag Archives: OPEC

This Is Not Good News For The American Economy

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Remember when America was energy independent and gas was less than $2 at the pump? Those days are long gone, and if the Biden administration and OPEC have anything to say about it, we will never see them again.

On Monday, CNSNews reported the following:

Saudi Arabia and half a dozen other members of OPEC+ announced on Sunday that they plan to cut up to a combined 1.15 million barrels of oil a day from May until the end of 2023, calling the decision a “precautionary measure” aimed at ensuring market stability.

The unexpected move comes six months after a decision to cut production by two million barrels a day, also through the end of 2023, sparked a serious diplomatic spat between the Biden administration and the kingdom.

…“We don’t think cuts are advisable at this moment given market uncertainty – and we’ve made that clear,” Reuters quoted a U.S. National Security Council spokesperson as saying in response to Sunday’s announcements.

The announcements by the various oil producers made clear that the new cuts were additional to those announced last October, when OPEC+ agreed on a reduction by two million barrels a day until the end of 2023.

That decision, shortly before the U.S. midterm elections, came despite Washington’s appeals for OPEC+ to increase supply. The administration responded bitterly, portraying the move as one that would hurt U.S. interests and benefit Russia’s war in Ukraine.

President Biden warned of “consequences” and White House and State Department officials said the administration would consult with Congress after the midterms and look to “recalibrate” the 70-plus year relationship with Saudi Arabia.

President Biden needs to realize that no one is listening to him. He has undermined the power of America on the world stage to the point where no one cares what he says. The only real way to avoid the economic crisis that this production cut will create is to resume ALL American drilling immediately. Those involved in the extreme environmental movement need to realize that if they crash the American economy, their movement will lose a lot of support and economic clout. America needs to be energy independent for national security purposes and for geopolitical purposes. If we do not turn the Biden administration’s energy policies around quickly, we are in danger of failing as a nation.

Destroying The United States’ Economy

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President Biden has not done a great job on economic issues, and things are about to get a lot worse for his administration. One of the main things that has kept the American dollar from being totally worthless is the fact that oil is traded in American dollars. That is now changing.

WallStreetMojo explains the Petrodollar as follows:

The petrodollar history stems from the Soviet Union’s breakdown (1991), following which the US became the only superpower throughout the materialized unipolar world. Subsequently, the world observed several destabilizations and crises to sustain the leadership of the petrocurrency structure.

The term emerged in 1973 when the US agreed to offer armed protection to Saudi Arabia. It also provided weaponry and other military supplies in an agreement involving the overall sale of oil in US dollars. Moreover, Saudi Arabia would recycle the surplus dollars into the American economic system using US treasury bills and bonds.

By 1975, all OPEC members embraced the petrocurrency arrangement and consented to oil export in US dollars. As a result, the American currency now contributes to almost two-thirds of the international economy. It is the reserve currency for most central banks worldwide since the US dollar is the chief currency needed for natural gas and oil trading.

On Wednesday, PJ Media reported the following:

The petrodollar — a term describing the post-WWII global system of trading in oil almost exclusively using the U.S. dollar — has literally built and buttressed the U.S. empire for decades.

Saudi Arabia has long been a stalwart supporter of the U.S. petrodollar, which it adopted in exchange for security provided by the dominant U.S. military.

But that arrangement may be about to change.

Via TVP World:

Saudi Arabia, the world’s largest crude oil exporter, is open to discussing oil trade settlements in currencies other than the U.S. dollar, Saudi Minister of Finance, Mohammed Al-Jadaan, told media outlet Bloomberg in Davos on Tuesday.

If the Saudis were to open to talks about oil trade arranged in non-dollar currencies it would represent a significant threat to the current dominance of the U.S. dollar in the global oil trade.

Saudi Arabia is just the latest rat to contemplate leaving the sinking ship. Ghana recently announced intentions to purchase oil in gold instead of U.S. dollars moving forward. Russia, China, Brazil, India, and South Africa (BRICS) are reportedly cooperating to develop a “new global reserve currency.”

President Obama was put in place to manage America’s decline–not to make America great again. President Biden is finishing what President Obama began.

The Coming Increase In Gasoline Prices

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On Monday, Ed Morrissey at Hot Air reported that the Organization of the Petroleum Exporting Countries (OPEC) is planning a major decrease in oil production in order to get the price of oil back to $100 a barrel.

The article quotes a CNBC article:

An influential alliance of some of the world’s most powerful oil producers is reportedly considering their largest output cut since the start of the coronavirus pandemic this week, a historic move that energy analysts say could push oil prices back toward triple digits.

OPEC and non-OPEC producers, a group often referred to as OPEC+, will meet in Vienna, Austria, on Wednesday to decide on the next phase of production policy.

The oil cartel and its allies are considering an output cut of more than a million barrels per day, according to OPEC+ sources who spoke to Reuters.

“The OPEC ministers are not going to come to Austria for the first time in two years to do nothing. So there’s going to be a cut of some historic kind,” Dan Pickering, CIO of Pickering Energy Partners, said, referring to the group’s first in-person meeting since 2020.

This is the cost of America giving up its energy dependence. I can’t emphasize often enough that we were energy independent under President Trump and were able to help the American economy and the American consumer by the domestic production of oil. The election of Joe Biden changed all of that. Even if the Republicans take Congress this year and a Republican becomes President in 2024, it will take a while to bring American energy back to what it was under President Trump. Hopefully the American economy can hold out that long without collapsing.

The article concludes:

Of course, Biden could put the US on a footing that would allow us to dictate not just production levels but also heavily influence oil prices to deny Vladimir Putin his excess revenue stream. Rather than choke off exploration and extraction, Biden could cancel his EO 13990 and reverse his lease-sales policies to encourage more investment in oil and natural gas production. That would unleash massive new resources for both domestic use and export, and even the initial steps would shock oil futures markets into accounting for sudden new production levels from the US. Biden won’t do it, however, because he’s more in thrall of his progressive-environmental Left than he is focused on economic and strategic national-security concerns.

So once again, we’ll be dancing to any tune that OPEC+ plays. It’s yet another reminder of Joe Biden’s 1970s revival in all the wrong ways.

I could have dealt with leisure suits and platform shoes coming back–but I can’t deal with gas lines and ultra-expensive gasoline again.

The Need For American Energy Independence

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The Hill reported Monday that OPEC (Organization of the Petroleum Exporting Countries) will be decreasing its production in October in response to declining oil prices.

The article reports:

Oil-producing alliance OPEC+ announced on Monday it will slightly lower oil production in October, eliminating the 100,000 barrel per day increase that began this month.

OPEC leaders made the decision after gathering for a meeting, where they noted the 100,000 barrel per day increase was only intended for September. OPEC produces around 28 million barrels per day.

In researching this article, I came across the following chart from oilprice.com:

Two of the reasons for the increase under President Obama were the use of fracking and the fact that the drilling was occurring on private land. President Trump was still dealing with a Congress that blocked some of his plans to increase American energy production (despite the fact that under President Trump we did achieve energy independence).

Note that the chart reflects changes–not total barrels. Under President Trump, crude oil production hit 10.038 million barrels per day (per The Western Journal). Do you think that level of production would help alleviate the price hikes that are coming because of the OPEC move to decrease oil production?

The article at The Hill continues:

The price for a crude barrel of West Texas Intermediate (WTI) oil climbed 3 percent after the announcement, reaching $90 per barrel, while Brent crude was also up 3 percent to $96 per barrel.

President Biden traveled to Saudi Arabia, the second largest OPEC member nation, over the summer as high gas prices beleaguered Americans and sunk his approval ratings.

After Biden met with Crown Prince Mohammed bin Salman and fist-bumped the Saudi leader, OPEC announced a mostly symbolic increase of 100,000 barrels per day for September.

Energy independence would stabilize oil prices for Americans and the ability to export oil would also fight inflation and improve the American economy.

This Could Easily Crash The American Economy

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In explaining why oil is traded in American dollars, Quora reports the following history:

Allegedly, In a series of meetings, the United States — represented by then U.S. Secretary of State Henry Kissinger — and the Saudi royal family made an agreement. The United States would offer military protection for Saudi Arabia’s oil fields, and in return the Saudi’s would price their oil sales exclusively in United States dollars (in other words, the Saudis were to refuse all other currencies, except the U.S. dollar, as payment for their oil exports). By 1975, all of the oil-producing nations of OPEC had agreed to price their oil in dollars and to invest surplus oil proceeds in U.S. government debt securities in exchange for similar offers by the U.S.

That agreement has propped up the American dollar during Washington’s wild spending binges. It has allowed America to create the massive debt we now have without going bankrupt. Just for the record, high inflation makes it easier to pay off that debt.

Yesterday Yahoo News posted an article that is not good news for the future of the American dollar.

The article reports:

Saudi and Chinese officials are in talks to price some of the Gulf nation’s oil sales in yuan rather than dollars or euros, The Wall Street Journal reported Tuesday, citing people familiar with the matter.

The two nations have intermittently discussed the matter for six years, but talks have reportedly stepped up in 2022, with Riyadh disgruntled over the United States’ nuclear negotiations with Iran and its lack of backing for Saudi Arabia’s military operation in neighboring Yemen.

Nearly 80 percent of global oil sales are priced in dollars, and since the mid-1970s the Saudis have exclusively used the dollar for oil trading as part of a security agreement with the U.S. government, according to the Journal.

The talks are the latest in an ongoing effort by Beijing both to make its currency tradeable in international oil markets and strengthen its relationship with the Saudis specifically. China previously aided Riyadh in construction of ballistic missiles and consultation on nuclear power.

Conversely, the Saudi-U.S. relationship has been increasingly frayed in recent years. Crown Prince Mohammed bin Salman initially put forth a public image as a reformer, liberalizing the country’s policies on women’s rights and criminal justice.

However, the 2018 assassination of dissident journalist Jamal Khashoggi has been catastrophic for both the crown prince’s public relations offensive and relations with Washington. The rift intensified after President Biden, who has said the assassination should make the kingdom a “pariah,” took office.

During the same period, China’s economic relationship to Saudi Arabia has grown closer, with the kingdom providing 1.76 million barrels of oil a day to the country in 2021, according to the Journal, citing China’s General Administration of Customs. While the country plans to maintain the dollar for the majority of its oil trading, a shift by the Saudis could create a domino effect for China’s other major oil suppliers, such as Russia, Angola and Iraq.

I am not a financial expert and would not presume to tell anyone what a safe investment would be for the future, but I can say that this is not good news for the American economy.

Spin Instead Of Solutions

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I am not a big fan of the current gasoline prices. I doubt anyone is. How in the world did we go from being energy independent to sky-high gasoline prices? Well, it might have started with the shutdown of the Keystone XL Pipeline on day one of the Biden administration.

Yesterday The Daily Caller posted an article about the Biden administration’s current excuse for high gasoline prices.

The article reports:

President Joe Biden claimed Tuesday that gas prices have skyrocketed due to Russia and the Organization of the Petroleum Exporting Countries (OPEC) refusing to “pump more oil.”

Biden delivered his remarks during the United Nations climate conference (COP26) in Glasgow, Scotland, where he was asked to comment on when Americans could expect to see everyday prices come down, including those of gas.

When America was energy independent, we didn’t have to worry about the output of Russia or OPEC.

The article notes:

Despite his decisions to revoke the permit for the Keystone XL pipeline and impose a moratorium on new oil and gas leasing and drilling permits for U.S. lands and waters, the president has accused OPEC of being unwilling to significantly ramp up their production of oil to combat rising gasoline prices.

“[T]he idea that Russia and Saudi Arabia and other major producers are not going to pump more oil so people can have gasoline to get to and from work, for example, is not right,” Biden said Sunday at the G20 summit.

Many OPEC members have shunned Biden’s pleas, arguing that they shouldn’t produce oil at a faster rate due to the uncertainties associated with the pandemic, according to Al Jazeera.

U.S. Energy Information Administration (EIA) released a report mid-October, forecasting that American households could see their energy expenditures go up as high as 54% compared to the winter of 2021.

Gasoline prices are not going down until American voters wake up and remove the current administration (and their congressional allies) from power. We can begin in 2022 by voting for conservatives for Congress and continue by re-electing President Trump in 2024. If you want to see gasoline prices go back down, that is the solution.

In What World Does This Make Sense?

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The Western Journal posted an article today about the Biden administration’s energy policy. About the kindest adjective for the policy I can come up with is illogical.

The article reports:

The Biden administration, which began its reign by turning off the spigot of oil flowing from North American sources, is now begging Middle Eastern nations for anything they can spare.

The White House on Wednesday released a statement by National Security Advisor Jake Sullivan in which Sullivan said the United States needs foreign nations to bail it out.

“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery. The price of crude oil has been higher than it was at the end of 2019, before the onset of the pandemic,” the statement said.

The American Automobile Association on Wednesday said the average price of gasoline in the United States is $3.185 per gallon. That’s more than $1 higher than the average price of $2.183 from a year ago.

“While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022. At a critical moment in the global recovery, this is simply not enough,” the statement continued.

“President [Joe] Biden has made clear that he wants Americans to have access to affordable and reliable energy, including at the pump.”

“Although we are not a party to OPEC, the United States will always speak to international partners regarding issues of significance that affect our national economic and security affairs, in public and private. We are engaging with relevant OPEC+ members on the importance of competitive markets in setting prices. Competitive energy markets will ensure reliable and stable energy supplies, and OPEC+ must do more to support the recovery,” the statement said.

I don’t mean to be cynical, but you could fertilize your garden with the above statement. The statement was made as a diversion from the policies of the administration that caused the price of gasoline at the pump to rise.

Some of us remember the gasoline lines of the 1970’s because we depended on Middle East oil rather than developing our own resources. The dependency influenced American foreign policy in a negative way. President Trump freed us from that dependency. President Biden is bringing us back to that dependency.

The Economic Cost Of Giving Up Energy Independence

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One of the accomplishments of the Trump administration was bringing America to a place of energy independence. The policies that led to energy independence were immediately reversed (via executive order) by the Biden administration. Americans have seen the results of that reversal in the form of higher gasoline prices at the pump and an increase in the cost of heating and cooling our homes.

Yesterday CNBC reported that U.S. oil benchmark West Texas Intermediate crude futures traded as high as $76.98, a price not seen since November 2014.

The article notes:

Oil jumped to its highest level in six years after talks between OPEC and its oil-producing allies were postponed indefinitely, with the group failing to reach an agreement on production policy for August and beyond.

On Tuesday, U.S. oil benchmark West Texas Intermediate crude futures traded as high as $76.98, a price not seen since November 2014. But by 11 a.m. on Wall Street those gains were erased, and the contract for August delivery dipped $1.60, or 2.1%, to trade at $73.56 per barrel. Brent crude hit its highest level since late 2018 before also reversing gains, and last traded 3.1% lower at $74.77 per barrel.

The article concludes:

Oil’s blistering rally this year — WTI has gained 57% during 2021 — meant that ahead of last week’s meeting many Wall Street analysts expected the group to boost production in an effort to curb the spike in prices.

“With no increase in production, the forthcoming growth in demand should see global energy markets tighten up at an even faster pace than anticipated,” analysts at TD Securities wrote in a note to clients.

“This impasse will lead to a temporary and significantly larger-than-anticipated deficit, which should fuel even higher prices for the time being. The summer breakout in oil prices is set to gather steam at a fast clip,” the firm added.

Wouldn’t it be nice if we were not dependent on the whims of OPEC.

 

Why We Need To Maintain Energy Independence

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Yesterday Breitbart posted an article about some investment plans by the Communist Chinese.

The article reports:

Reuters reported Wednesday that “major Chinese investors” are in talks to buy a stake in Saudi Aramco, the national oil company of Saudi Arabia.

Saudi Crown Prince Mohammed bin Salman (MBS) mentioned the possibility of selling some Aramco stock in a television interview Tuesday.

…Reuters immediately noted China’s state-owned PetroChina and Sinopec previously expressed interest in buying up to five percent of Aramco in 2017. 

Aramco raised almost $30 billion with its initial public offering in 2019, providing a significant amount of the money needed to finance MBS’ “Saudi Vision 2030” plan to diversify the Saudi economy. 

The IPO ended up selling about 1.7 percent of the company’s stock, much of it to Saudi and Middle Eastern buyers. The record-breaking results were considered something of a disappointment compared to MBS’ original vision of selling 5 percent of the company and raising $100 billion.

The scaled-down IPO was partly a consequence of investors disputing the $2 trillion corporate valuation the Saudis put forward, and partly because Aramco was uncomfortable with some of the transparency requirements demanded by foreign investors. The dogged efforts of Iran’s terrorist proxies in Yemen to blow up Aramco facilities with missiles and drones were not helpful.

On Wednesday, “several sources” confirmed Chinese investors were part of the deal MBS mentioned in his interview, pointing to a sovereign wealth fund called China Investment Corporation (CIC) as a potential buyer.

The Renegade Tribune noted the following on November 7, 2018:

Nixon’s decision in 1971 to withdraw the United States from the gold standard greatly influenced the future direction of humanity. The US dollar rose in importance from the mid-1950s to become the world reserve currency as a result of the need for countries to use the dollar in trade. One of the most consumed commodities in the world is oil, and as is well known, the price is set by OPEC in US dollars, with this organization being strongly influenced by Saudi Arabia.

It is therefore towards Riyadh that we must look in order to understand the workings of the petrodollar. After the dollar was withdrawn from the gold standard, Washington made an arrangement with Riyadh to price oil solely in dollars. In return, the Saudis received protection and were granted a free hand in the region. This decision forced the rest of the world to hold a high amount of US dollars in their currency reserves, requiring the purchase of US treasuries. The relationship between the US dollar and oil breathed new life to this currency, placing it at the centre of the global financial and economic system. This privileged role enjoyed by the dollar allowed the United States to finance its economy through the simple process of printing its fiat currency, relying on its credibility and supported by the petrodollar that required other countries to store reserves of US treasuries in their basket of currencies.

This arrangement continued to sustain itself in spite of numerous wars (the Balkans, Iraq, Afghanistan), financial crises (the Black Monday of 1987, the Dotcom bubble of 2000, and Lehman Brothers’ subprime crisis of 2008), and the bankruptcies of sovereign states (Argentina in 1998). The explanation is to be found in the credibility of the US dollar and the US itself, with its ability to repay buyers of treasury bonds. In other words, as long as the US continues to maintain its dominance of the global financial and economic system, thanks to the dollar, its supremacy as a world superpower is hardly questioned. To maintain this influence on the currency markets and the special-drawing rights (SDR) basket, the pricing of oil in US dollars is crucial. This explains, at least partially, the impossibility of scaling down the relationship between Washington and Riyadh. Nobody should delude themselves into believing that this is the only reason why Saudi-US relations are important. Washington is swimming in the money showered by Saudi lobbies, and it is doubtful that those on the receiving end of such largesse will want to make the party stop.

Think about what the impact of large amounts of Chinese cash into Saudi Arabia might have on the current arrangement of the U.S. dollar as the world reserve currency. China has wanted to undo that arrangement for some time. Also consider the impact of the runaway spending proposals of the Biden administration and the impact they will have (if passed) on the value of the U.S. dollar. We may be headed for a perfect storm. One thing that would help us weather than storm would be energy independence.

Losing Energy Independence

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There are two groups of people who are attempting to end America’s energy independence–OPEC (The Organization of the Petroleum Exporting Countries) and the Democrat Party. OPEC is fighting American energy independence because it represents competition and loss of OPEC’s worldwide influence. I am not really sure what the Democrat Party stands to gain by fighting American energy independence except that the position opposes President Trump’s position, which seems to be their platform–if President Trump is for it, we’re against it.

Yesterday Fox News posted an article about the resistance to America’s energy independence.

The article reported:

The battle to win U.S. energy independence has been long, hard and well worth it but the industry is facing new foreign threats from OPEC as well as right here at home from Democratic presidential nominee Joe Biden.

Biden wants to ban U.S. fracking, which was the key to our winning the war of energy independence. The former vice president at one point has said “no new fracking” — which, because of the nature of the shale decline rate, would end the U.S. shale revolution. This would not only cost the U.S. thousands of high-paying jobs, it would allow other countries to fill the void and produce more oil and gas.

…Biden has also said he has a goal to completely eliminate fossil fuels. While all men are created equal, energy sources are not. The move to fossil fuel alternatives in the near future is not reasonable and handicapping the U.S. energy industry will only put U.S. energy security at risk.

In fact, because of demand drops due to the COVID-19 shutdowns, many alternative fuels have also seen setbacks in investment and are not viable. The truth is the road to get the world off of fossil fuels will be much longer than the original goal of energy independence and in some form, we will be using fossil fuels for energy for generations to come.

Having a presidential contender looking to curb the U.S. energy industry comes at a time when threats from foreign actors are rising amid allegations they have conspired to try to bankrupt the U.S. energy industry so that we return to depending on them for our economic and national security.

While Saudi Arabia and Russia denied it, many believe that the goal of an oil production war in the midst of COVID-19’s oil demand collapse was to once and for all neutralize and bury the hard-won U.S. energy independence.

Does anyone remember the gasoline crisis of the 1970’s? Because we were almost totally dependent on foreign oil, we had gas lines and high gasoline prices. Does anyone really want to do that again? Energy independence is an economic issue, a national security issue, and a geopolitical issue. It determines our economy, our national security, and can influence our foreign policy. The less dependent we are on foreign oil, the more free we are to stand up to tyrants in countries with large supplies of oil. Energy independence should not even be debatable–it it necessary for the survival of our republic.

A Very Mixed Blessing

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CNBC posted an article yesterday (updated today) that because OPEC has not been able to reach an agreement about oil prices with its allies (led by Russia), Saudi Arabia has cut its oil prices and increased its production. A price war is expected to follow. This is great news for consumers, but horrible news for American oil production.

The article reports:

U.S. West Texas Intermediate (WTI) crude and international benchmark Brent crude are both pacing for their worst day since 1991.

WTI plunged 18%, or $7.36, to trade at $33.92 per barrel. WTI is on pace for its second worst day on record. International benchmark Brent crude was down $8.44, or 18.7%, to trade at $36.80 per barrel. Earlier in the session WTI dropped to $30 while Brent traded as low as $31.02, both of which are the lowest levels since Feb. 2016. 

“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”

On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.

The article concludes:

“$20 oil in 2020 is coming,” Ali Khedery, formerly Exxon’s senior Middle East advisor and now CEO of U.S.-based strategy firm Dragoman Ventures, wrote Sunday on Twitter. “Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc – may prove existential 1-2 punch when paired with COVID19.”

But others, including Eurasia Group, believe that Saudi Arabia and Russia will eventually come to an agreement.

“The most likely outcome of the failure of the Vienna talks is a limited oil price war before the two sides agree on a new deal,” analysts led by Ayham Kamel said in a note to clients Sunday. The firm puts the chances of an eventual agreement at 60%.

Vital Knowledge founder Adam Crisafulli said Sunday that oil “has become a bigger problem for markets than the coronavirus,” but also said that he does not foresee prices falling to the Jan. 2016 lows.

“Saudi Arabia can’t tolerate an oil depression – the country’s fiscal breakeven oil prices remain very high, Saudi Aramco is now a public company, and MBS’s grip on power isn’t yet absolute. As a result, the [government] won’t be so cavalier in sending oil back into the $30s (or even lower),” he said in a note to clients Sunday.

OPEC has played this game before. In the 1970’s oil crisis, OPEC boycotted America because of our support of Israel. When American energy companies responded by drilling wells to meet the need, OPEC dropped the boycott and lowered the price to put those companies out of business. I suspect there may be an attempt to do that again, but I am not sure we are as vulnerable as we were then. If America continues on the path to energy independence, our oil prices will be less vulnerable to foreign manipulation. We may have to pay a little more than the price the Saudis will drop to for our oil, but it would be worth it in the long run. Hopefully we have people currently in charge that are looking long term rather than short term.

The Geo-Political Impact Of America’s Energy Independence

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In January of this year, Forbes Magazine reported:

The U.S. Energy Information Administration (EIA) recently published their 2019 Annual Energy Outlook. Whenever your optimism on the prospects for U.S. energy infrastructure waivers, this will restore your confidence. The outlook for domestic energy production is bullish, and in many cases more so than a year ago.

For example, in their 2018 report, the EIA’s Reference Case projected that the U.S. would eventually become a net energy exporter. Now, thanks to stronger crude and liquids production, they expect that milestone to be reached next year.

We have reached that milestone. So what is the impact? Fist of all, we are free of the threat of an oil boycott by OPEC (Organization of the Petroleum Exporting Countries). The oil embargo placed on the United States by OPEC in the early 1970’s rapidly increased gasoline prices and caused shortages at the gas pumps. We don’t want to do that again. Aside from the impact on average Americans, we need gas to fuel our military. However, being energy independent does not entirely free us from having to be nice to Arab countries that don’t like us. Because of an agreement made between Richard Nixon and Saudi Arabia, oil is traded in American dollars. This is one of the reasons American dollars still have value despite our large national debt. The Saudis have been responsible for seeing that oil continues to be traded in American dollars, so it is in our best interest to be nice to them. The Saudis are also moving toward a friendlier relationship to Israel because of fear of Iran. Being energy independent allows us to support the nation of Israel without fearing another oil embargo.

American energy independence also has a potential impact on our relations with Russia and Europe.

In July 2018, The Washington Post posted an article about Europe’s dependence on Russian oil.

The article notes:

Putin has proved through his actions that he views everything as a potential tool to gain an advantage economically, politically and militarily. One of his most powerful tools is Russia’s energy resources, and he has used Europe’s reliance on these resources to strengthen his position. Some European leaders have been all too willing to take the bait.

This was the point President Trump was making at a NATO summit this month. He caused a stir for speaking undiplomatically in a room of diplomats. He was also pointing out what everyone in the room already knew: Europe’s reliance on Russian natural gas undermines its security.

Trump also understands, as he demonstrated this week in his talks with European Commission President Jean-Claude Juncker, that the United States can and should help solve this problem. By supplying our own natural gas reserves to Europe, the United States can loosen Putin’s economic grip on the region.

The article concludes:

By increasing exports of American natural gas, the United States can help our NATO allies escape Russian strong-arming. America is the world’s leading producer of clean, versatile natural gas. There are two export facilities in the United States. able to ship natural gas overseas — one in Maryland and one in Louisiana. Three more are due to be operational by the end of this year, and at least 20 additional projects are awaiting federal permits. We must speed up these approvals to give our allies alternatives to Russian gas.

We have plenty of natural gas to meet Americans’ needs and increase our exports. Independent studies have found that prices will remain low even with significant gas exports. Now we just need to clear away the regulatory hurdles and show our European allies that U.S. natural gas is a wiser option than Russia’s.

When Putin looks at natural gas, he thinks of politics, he thinks of money and he thinks of power. It is in America’s national security interests to help our allies reduce their dependence on Russian energy. We need to make clear how important it is for their own security, as well.

Our NATO alliance is strong. Ending Europe’s dependence on Russian energy will make it even stronger.

An energy-independent America is good for America, good for Europe, and good for Israel.

The Power Of Energy Independence

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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.

Some Good News For Commuters

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USA Today posted an article yesterday about gasoline prices. I just got back from California where the price of a gallon of gas was about $4. It’s really good to be back in North Carolina!

The article reports:

Gas prices are expected to plunge sharply in the final days leading up to the midterm elections, potentially nearing $2 a gallon at some stations in low-tax states.

The sudden respite at the pump comes from sharply lower oil prices and declining wholesale gasoline prices.

Oil Price Information Service analyst Tom Kloza said it could amount to a “colossal collapse” in prices for consumers: from a $2.78 national average on Friday to as low as $2.50 by Tuesday.

“There’s the possibility you could see some prices flirt with $2 a gallon in the next 10 days or so in some of the low-tax areas,” Kloza said. “For now it’s going to be a great break.”

The break comes after gas approached four-year highs in October, topping a national average of $2.90 a gallon at one point.

Prices have already fallen by 6 cents per gallon over the last week, according to AAA. But they remain 27 cents higher than a year ago.

The increase in gasoline prices was one of the factors in the housing bubble collapse in 2008. In four years, the price of a gallon of gasoline had gone from an average of $1.85 a gallon to an average of $3.25 a gallon. If you commute thirty miles to work, that could mean as much as $3.00 a day added to the cost of your commute plus the cost of any recreational driving. To some people working with a tight budget, the increase was the difference between being able to pay the mortgage and not being able to pay the mortgage.

The article continues:

U.S. oil prices have fallen about $13 per barrel from their October high, trading at around $63 on Friday morning.

One key reason: Rising oil production throughout the world is causing stockpiles to build up.

The Organization of the Petroleum Exporting Countries’ output has reached a two-year high, with leading OPEC member Saudi Arabia’s output “near its all-time high,” Jefferies analyst Jason Gammel said in a research note. American oil output has also spiked.

“This surge has driven the market into oversupply,” pushing prices lower, Gammel said.

A decrease in gasoline prices is good news for all consumers.

Reaping The Benefits Of America’s Energy Development

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On Monday, Investor’s Business Daily posted a commentary on the current global oil market. The commentary noted that Russia has been working with OPEC (Organization of the Petroleum Exporting Countries) to cut oil production in an effort to keep oil prices artificially high (after all– it worked in the 1970’s).

The commentary reports:

Despite an uptick in oil prices, a closer look at the oil market unveils the real winner of curtailing crude exports: America. U.S. oil output broke through the 10 million barrels a day mark for the first time in half a century. And, according to a recent statement by the Director of the International Energy Agency, it could reach a record of 12.1 million barrels a day in 2023.

Although the price of a barrel of oil has somewhat retreated from the January $70 heights, it is still $10 above its level a year ago and more than double what it was during the price collapse in early 2016. This has been helped along by phenomenal discipline within OPEC+, as the agreement on production cuts between OPEC, Russia and nine more exporting countries is informally known. Apparently compliance has reached a surprising 138% — exporters have made bigger cuts than initially pledged.

The details of this show that one reason for the drop in production is the collapse of Venezuela‘s oil industry. Last year oil production in Venezuela shrunk by 20 percent– roughly 500,000 barrels a day. When the government nationalized the oil rigs in Venezuela, they had no idea how to maintain the rigs and maintain production, so production has continued to drop since that takeover. What has happened (and is happening) in Venezuela is a living example of the fact that socialism does not work.

The commentary concludes:

Arguably, leaders of the Gulf states and Russia are falling victim to politics, a field in which it’s better to be seen doing something than nothing. Especially when no one is sure what (if anything) would work. But who is the biggest economic winner in this game? Ironically, it’s America yet again.

Each time Saudi Arabia and their allies restrict exports, they prop up the price and create a vacant market share which then gives a boost to those producers outside the agreement that are not bound by quotas. The biggest among them is the United States. Naturally, thousands of American companies are keen for a free ride.

All of that is happening already. The U.S. has just overtaken Saudi Arabia in oil production and is expected to rival Russia soon. No wonder U.S. oil companies were expected to be especially cordial with the Saudi delegation during the princely visit. But one might imagine that on the sidelines of the meetings many Saudis will be scratching their heads and wondering how and why did they get themselves into this pickle.

America needs to be energy independent. It allows us to be in control of the fossil fuel that is the backbone of the current world economy. The 1970’s proved that was important.

The Worldwide Impact Of Developing America’s Energy Resources

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With the lifting of many of the restrictions on domestic oil drilling (and fracking) in America, the impact of American oil and natural gas on the world market has grown. Today Reuters posted an article about the impact of American energy on the global oil market.

The article reports:

Surging shale production is poised to push U.S. oil output to more than 10 million barrels per day – toppling a record set in 1970 and crossing a threshold few could have imagined even a decade ago.

So what does this mean?

The article explains:

The economic and political impacts of soaring U.S. output are breathtaking, cutting the nation’s oil imports by a fifth over a decade, providing high-paying jobs in rural communities and lowering consumer prices for domestic gasoline by 37 percent from a 2008 peak.

…“It has had incredibly positive impacts for the U.S. economy, for the workforce and even our reduced carbon footprint” as shale natural gas has displaced coal at power plants, said John England, head of consultancy Deloitte’s U.S. energy and resources practice.

The article notes that in an attempt to stop American energy development, OPEC (Organization of the Petroleum Exporting Countries) tried to discourage shale production of oil in America by flooding the market with oil (Saudi Arabia also played a role in financing movies and advertising containing misinformation about fracking).

The article notes:

The cartel of oil-producing nations backed down in November 2016 and enacted production cuts amid pressure from their own members over low prices – which had plunged to below $27 earlier that year from more than $100 a barrel in 2014.

Shale producers won the price war through aggressive cost-cutting and rapid advances in drilling technology. Oil now trades above $64 a barrel, enough for many U.S. producers to finance both expanded drilling and dividends for shareholders.

The article also  mentions American oil exports:

Efficiencies spurred by the battle with OPEC – including faster drilling, better well designs and more fracking – helped U.S. firms produce enough oil to successfully lobby for the repeal of a ban on oil exports. In late 2015, Congress overturned the prohibition it had imposed following OPEC’s 1973 embargo.

The United States now exports up to 1.7 million barrels per day of crude, and this year will have the capacity to export 3.8 billion cubic feet per day of natural gas. Terminals conceived for importing liquefied natural gas have now been overhauled to allow exports.

That export demand, along with surging production in remote locations such as West Texas and North Dakota, has led to a boom in U.S. pipeline construction. Firms including Kinder Morgan and Enterprise Products Partners added 26,000 miles of liquids pipelines in the five years between 2012 and 2016, according to the Pipeline and Hazardous Materials Safety Administration. Several more multi-billion-dollar pipeline projects are on the drawing board.

Energy independence is important for America. Total energy independence will have a very positive impact on our foreign policy. Because tyrannical regimes in the Middle East have traditionally controlled the oil supply to the rest of the world, western countries have been required to support governments they should not be supporting in order to keep the oil flooding. Russia is another country that has used its pipelines to Europe as a way to control certain European countries. Energy independence will give America a degree of freedom we have not had for a long time. Hopefully we will use that freedom wisely.

The Threat Posed By America’s Looming Energy Independence

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One America News posted a story today about a comment made by Mohammad Barkindo, OPEC secretary-general.

The article reports:

OPEC and other oil producers may need to take “some extraordinary measures” next year to rebalance the oil market, the OPEC secretary-general said on Sunday.

“There is a growing consensus that … a rebalancing process is under way. We are gradually but steadily achieving our common and noble objectives,” Mohammad Barkindo told reporters at the India Energy Forum organized by CERAWeek in New Delhi.

“To sustain this into next year, some extraordinary measures may have to be taken in order to restore this stability on a sustainable basis going forward,” he said, without elaborating.

Saudi Arabia and Russia helped secure a deal between the Organization of the Petroleum Exporting Countries and 10 rival producers to cut output by about 1.8 million barrels per day (bpd) until the end of March 2018 in an effort to reduce a glut.

Barkindo said consultations were under way for the extension of the OPEC-led pact beyond March 2018 and that more oil producing nations may join the supply pact, possibly at the next meeting of OPEC in Vienna on Nov. 30.

He also said that Nigeria and Libya, who are exempted from the pact, “are making progress towards full recovery” of production, after which they could join the OPEC-led agreement.

Translated loosely, there is a glut of oil on the world market, and the price has dropped. America is less dependent on foreign energy and has even been an exporter of crude oil since 2014 (see article here). The noose around America’s neck that OPEC exploited in the 1970’s no longer exists. OPEC will attempt to put that noose back, but I think it is too late.

Generally speaking, the countries that have been hurt by the drop in oil prices are not countries that celebrate freedom for their citizens–Russia and Venezuela to name a few. American energy independence is a good thing–both for America and for the world.

What American Energy Independence Means

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Yesterday Investor’s Business Daily posted an editorial about the current price of oil. Any person familiar with basic economic theory understands the law of supply and demand. When there is a  lot of something, the price goes down. When something is scarce, the price goes up. Some of our recent political leaders missed this point, but we are now seeing the principle of supply and demand at work in the oil industry.

The editorial reports:

Energy: Last week Royal Dutch Shell (RDSA) told investors that it expects oil prices to be “lower forever.” We’re still waiting for all those people who were only recently complaining about higher-forever oil prices to admit their mistake.

It wasn’t that long ago that President Obama was mocking Republicans for their “three-point plan for $2 gas: Step one is drill, step two is drill, and step three is keeping drilling.”

He went on to say that “the American people aren’t stupid. They know that’s not a plan.”

Renewable energy, he said, was the only way to solve the “problem” of high oil prices.

Of course renewable energy came with numerous government subsidies and taxes on ‘old energy.’

The editorial explains the results of ‘drill, baby, drill’:

Domestic oil production was skyrocketing even as Obama made those remarks — thanks to advanced drilling technologies that have opened up vast new domestic supplies to production.

The Energy Information Administration projects that, next year, U.S. oil production will average almost 10 billion barrels a day, which would beat the previous record of 9.6 billion in 1970. What’s more, a quarter of this production is coming from one oil field: the Permian Basin in West Texas.

Those “obscene” industry profits? They’ve fallen as well. ExxonMobil’s (XOM) revenue in 2016 was about half what it was in 2011. In its most recent quarter, the company earned $3.4 billion — or 78 cents share. In the same quarter in 2011 it earned $10.7 billion, or $2.18 a share.

Oil companies for a time even had to borrow money to pay dividends.

Low oil prices have also led to a sharp drop in the taxes paid by the industry to the federal government. In 2016, the federal government collected about $6 billion in royalties, rental costs, and other fees from oil production on federal lands. That’s down from $14 billion in 2013.

Now Shell is saying that it’s bracing for low oil prices forever.

Lower energy prices have a positive impact on the American economy–consumers have extra money to spend, it is cheaper to manufacture goods here, and tourist-related industries thrive when Americans can travel and not worry about the cost of fuel.

The article concludes:

Even if the current oil glut causes some pain to the oil industry and crimps tax revenues, it is good news for the economy, since lower energy prices reduce the cost of doing business across the board, and make the U.S. a more-attractive place to do business on a global scale.

But it does raise some important questions: Where are those people who were screaming about Big Oil? Why aren’t they being asked to explain how they could have been so wrong? And just who, exactly, was being stupid?

Economic principles work–every time they are allowed to.

When Dominoes Fall

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YouTube is always posting pictures of creative patterns people create with dominoes. Here is one:

But sometimes things in real life have a domino effect. We are seeing that effect in some recent seemingly unrelated moves by the Trump Administration.

One of the immediate changes that took place when President Trump took office was the lifting of many regulations regarding energy production and energy exporting in the United States. That was the first domino. What seemed to be a national issue is now going to have major international implications.

On Tuesday, Bloomberg News posted an article predicting an agreement between the Trump Administration and Poland that would allow Poland to begin importing natural gas from America. That is the second domino.

The article reports:

Polish leaders are betting Donald Trump’s visit to Warsaw starting on Wednesday, two days before the U.S. president meets his Russian counterpart, will bolster their efforts to reduce the nation’s dependence on natural gas from its eastern neighbor.

Less than a month after Poland’s Baltic Sea terminal received its first shipment of U.S. liquefied natural gas, a spot cargo from Cheniere Energy Inc.’s Sabine Pass plant in Louisiana, authorities in Warsaw are mooting ambitious plans. The ideas range from a long-term gas deal with U.S. producers to infrastructure projects linking east European nations reliant on supplies from Moscow-based Gazprom PJSC.

“We’ve tested our ability to receive U.S. gas,” Krzysztof Szczerski, who heads Polish President Andrzej Duda’s office, said on July 1. “So what’s left is a simple business conversation — when, how much and for how much.”

America’s vast energy resources have the potential to change world politics–from OPEC to Russia’s blackmail of Europe by threatening to cut off the gas supply.

I suspect we are going to see a log more dominoes fall in the future.

Losing Your Monopoly…Slowly…

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Investor’s Business Daily posted an article today about the recent influences on oil prices.

The article reports:

As the mad dash back to the U.S. oil patch has even global oil giants like Chevron (CVX) and Exxon Mobil (XOM) turning their focus to shale, U.S. oil production is on pace to exceed peak production levels in July and could hit 10 million barrels per day in August.

Those milestones loom as OPEC and top non-OPEC producers weigh whether to extend by another six months their agreement to reduce output by 1.8 million barrels a day. The cartel’s next meeting is scheduled for May 25.

The initial pact reached late last year lifted oil prices and encouraged U.S. producers to pump more oil. The extra supply has since weighed on prices, which have fallen more than 10% since the start of the year. But hedges allowed U.S. firms to lock in the higher, earlier prices, and they have continued ramping up output.

U.S. crude futures sank 4.8% to settle at $45.52 a barrel on Thursday, plunging to a five-month low and dropping below the price seen before OPEC reached its production pact in late November.

The result of developing American energy independence by developing America‘s fossil fuel resources is lower fuel costs for Americans, better national security for Americans, and a better negotiating position with the ‘oil bullies’ of the world.

The chart below illustrates what is happening to the worldwide oil market:

There may come a day in the future when green energy is the dominant energy source, but right now the world economy is essentially based on fossil fuel. Until someone comes along and invents a green energy source that can provide energy 24 hours a day and be cost effective, the world will revolve on fossil fuel. Because our economy is based on fossil fuel, it is good to have some leverage against those who are able to deny their citizens basic human rights without being challenged because they have a monopoly on fossil fuel.

 

 

 

This Is Not Really Bad News

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Bloomberg is reporting today that OPEC (organization of the Petroleum Exporting Countries) has agreed to cut oil production beginning in January. The market has already reacted, and crude prices have climbed to $50. That means that the price of a gallon of gasoline will be going up, heating oil will be going up, and the cost of electricity may also be affected. However, there is a bright side to this.

One of the things to expect in a Trump Administration is the development of America‘s gas and oil resources. The Obama Administration has blocked that development wherever possible. Theoretically, the price increase along with the end of some regulations could create energy independence for America. This would have a drastic impact on our foreign policy. There is, however, more to the picture. In the past when OPEC has seen America moving toward energy independence, they have dropped the price of oil so that development of America’s oil reserves did not make financial sense. It will be interesting to see if they do that again.

We also need to remember what the impact of American energy independence will do to the world market of oil. If America can reach a point where it exports oil, OPEC will no longer be important. It will be interesting to see at what point practicality on the part of OPEC overcomes immediate greed. Their immediate greed will encourage the growth of the American energy market. Practicality would keep prices low so that America had no incentive to develop its resources.

We Have Seen This Play Before

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Bloomberg Business is reporting today that the Organization of the Petroleum Exporting Countries (OPEC) may boost oil production dramatically after the sanctions are lifted on Iran.

The article reports:

The global oil market is already in surplus by about 3 million barrels a day, with Saudi Arabia and Iraq responsible for OPEC’s oversupply in the past six months, Iran’s state-run Islamic Republic News Agency reported Sunday, citing Mehdi Asali. Iran can boost output by 500,000 barrels a day within one week after sanctions are lifted, Oil Minister Bijan Namdar Zanganeh said earlier this month.

…Iran made a “big mistake” when it backed OPEC’s decision in December 2011 to discard individual production quotas, Asali said. That allowed Saudi Arabia, Kuwait and other members to take over Iran’s share which was diminishing because of sanctions, he said.

…Brent oil futures closed at $49.19 a barrel on Friday, down 14 percent for this year.

We have seen this play before. There is an oil price at which fracking, a major part of American oil and natural gas production, is no longer profitable. To restart a fracking operation after it has been suspended is expensive and cumbersome. The easiest way to prevent America from becoming energy independent is to drop the price of oil as America begins to develop her oil and natural gas resources. This severely impacts the development–American businessmen are in business to make money. If fracking is not profitable, they will not invest the money to do it. OPEC would very much like to keep America dependent on their oil. Our dependency on OPEC oil has a tremendous impact on our diplomatic policy in the Middle East. We give money to and support in other ways countries whose basic ideas and values are in total conflict with our own. It would be very nice to be energy independent and be able to make decisions on international matters according to our principles–not our dependence on oil.

 

Another Scientific Report To Evaluate

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The New York Post posted a story today about a federal report stating that fracking does not harm drinking water. I suspect this is going to be a problem for many environmentalists. It will be interesting to see how they react to the study.

The article reports:

In their report, federal researchers studied the entire fracking process, from the acquisition of water to the disposal of wastewater.

Prompted by Congress, researchers reviewed thousands of pages of studies and conducted their own investigations of fracking, which collects natural gas and petroleum deep below the surface.

“Stated simply, this study follows the water,” Burke said. “We looked at each stage of the hydraulic water fracturing cycle to determine the potential impact on potential drinking-water resources.”

Before releasing the report, the feds sought comment from the public, industry officials, states, Indian tribes and nongovernmental organizations.

The report identified factors to consider: whether an area has enough water for people’s needs as well as fracking; spills; accidental injection into drinking-water sites; well failure; subsurface migration of gases and liquids; and inadequate or poorly treated wastewater.

The American Petroleum Institute, an industry trade group, said the study was a validation of the safety of fracking.

When attempting to evaluate this report, consider the fact that a lot of the anti-fracking movement is funded by OPEC (Organization of the Petroleum Exporting Countries). Obviously they have a vested interest in preventing America from developing her oil resources.

The Impact Of American Oil On The World Market

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Breitbart.com reported yesterday that according to a draft of its long-term strategy report, The Organization of the Petroleum Exporting Countries (OPEC) has admitted that their war on shale oil production in America has failed.

The article reports:

The current international price standard, called “Brent crude” has dropped from about $115 a barrel in June 2014 to $62 today. That is a direct result of the American shale-fracking boom adding 4.5 million barrels of oil per day to the U.S. market in the last 6 years. The U.S. standard, called “West Texas Intermediate” (WTI), sells at $57 a barrel, almost a 10 percent discount.

With revenues plummeting, most OPEC members are in a financial crisis and are forced to increase production from last year and flood the world market to financially survive.

There are a few interesting things in this article. First of all, developing America’s oil resources and decreasing America’s dependence on foreign oil will have a serious impact on American foreign policy. It should eventually allow America to support freedom and human rights in places where these are not currently practiced.

Second of all, there is an economic benefit to developing oil resources in America–not only does it bring down the cost of gasoline internationally, if the exporting of these products is allowed, it will strengthen the American economy.

Thirdly, it is interesting that OPEC did everything it could to discourage American oil production. The admission of that fact should give pause to those people who blindly signed on to the anti-fracking movement without checking their facts.

America is capable of leading the world economically. We are a country rich in resources and rich in talent. What we have lost in recent years is our morality and our work ethic. We need to regain both of those in order to achieve economic success.

This Is A Very Interesting Statement

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Fox Business posted a story today by Maria Bartiromo. The story included an amazing statement by Saudi billionaire businessman Prince Alwaleed bin Talal. The Prince stated that we will never see $100 a barrel oil again.

The article includes the following quote:

Saudi Arabia and all of the countries were caught off guard. No one anticipated it was going to happen. Anyone who says they anticipated this 50% drop (in price) is not saying the truth.

Because the minister of oil in Saudi Arabia just in July publicly said $100 is a good price for consumers and producers. And less than six months later, the price of oil collapses 50%.

Having said that, the decision to not reduce production was prudent, smart and shrewd. Because had Saudi Arabia cut its production by 1 or 2 million barrels, that 1 or 2 million would have been produced by others. Which means Saudi Arabia would have had two negatives, less oil produced, and lower prices. So, at least you got slammed and slapped on the face from one angle, which is the reduction of the price of oil, but not the reduction of production.

This is an interesting situation–the Saudis kept the production up so the price would go down. This seriously impacted the economies of Iran, Russia and Venezuela, and indirectly Cuba. It also made oil production in America less attractive–smaller profits. If the Saudis cut production to raise the price, American production comes back up and reduces the price. If the Saudis keep the price low, American production will be less, but will still exist.

I love the idea that we will never again see $100 a barrel oil. I am tired of being blackmailed by the Middle East oil producers. Maybe now we can stop funding terrorism.