Massive injections of liquidity have caused a double side effect: rising malinvestment in nonproductive activities and now a large inflow of capital into so-called value areas: more money directed to relatively scarce assets. Energy has gone from a consensus underweight to a large overweight, exacerbating the price increase. The marginal barrel of oil has risen almost 60 percent in a year despite supply rising in tandem with demand.
High oil prices are a symptom of economic and monetary imbalances, not just a consequence of Organization of the Petroleum Exporting Countries (OPEC) decisions. Throughout history, we have seen how OPEC cuts have done little to elevate prices when diversification and technology added to rising efficiency.
Likewise, OPEC output increases do not necessarily mean lower prices, let alone reasonable ones. Increased OPEC output helps but does not solve price issues, even if they would probably like to.
The problem in the oil market has been created by years of massive capital misallocation and underinvestment in energy created by extremely loose monetary policies directed by governments that have penalized capital expenditure on fossil fuels for ideological reasons.
Misguided activism and political nudging in the middle of massive monetary injections have created massive bottlenecks and underinvestment that hinder both security of supply and a technically feasible competitive energy transition.
Massive injections of liquidity have caused a double side effect: rising malinvestment in nonproductive activities and now a large inflow of capital into so-called value areas: more money directed to relatively scarce assets. Energy has gone from a consensus underweight to a large overweight, exacerbating the price increase. The marginal barrel of oil has risen almost 60 percent in a year despite supply rising in tandem with demand.
According to JP Morgan, the required capital expenditure in energy required to meet demand is $600 billion for the period 2021–30. This “cumulative missing capex” is part of the problem.
The other important problem is artificial demand created by chains of stimulus plans. As I’ve explained before, adding enormous energy-intensive infrastructure plans to a reopening economy where some supply bottlenecks have been worsened generates the same effect on energy prices as a huge speculative bubble.
Political intervention has also created an important price impact on the marginal barrel of oil. Threatening to ban domestic development of energy resources in the United States or announcing the prohibition of fossil fuel investment, as has happened at some European summits makes the net present value of the long-term marginal barrel higher, not lower. Why? Because those threats are not made with sound technical analysis and robust supply and demand estimates, but with political agendas. Any serious engineer that understands the importance of security and supply and technology development understands that a successful energy transition to a greener economy requires solid and realistic targets and policies that will avoid an energy crisis. Those have been forgotten.
OPEC is benefitting from high oil prices but not as much as one would think. The OPEC Reference Basket (ORB) is $68.33 per barrel year-to-date, a 68.4 percent increase over the same period last year, but still massively below the elevated levels prior to the 2008 financial crisis. Furthermore, OPEC and non-OPEC supply have risen in tandem with demand. Global liquids production in October increased by 1.74 million barrels per day compared with the previous month, to an average of 97.56 million barrels per day. The US liquids production growth forecast for 2021 has been revised up by 19,000 barrels per day and is expected to be 17.57 million barrels per day in 2021. Imagine where oil and gas prices would be if the political threats to ban or severely penalize domestic production had been enforced.
Let us not forget that OPEC has also revised down the estimates of global oil demand to 96.4 million barrels a day in 2021. Supply remains ample and the United States administration should also see that Russia and the US are expected to be the main drivers of next year’s supply growth. Without Russia and the US, production prices would soar no matter what OPEC partners or Saudi Arabia alone do.
We are suffering from the combination of misguided energy policies, excessive money creation and ill-timed giant construction plans. OPEC and its partner Russia may alleviate this, but not change it dramatically. Furthermore, as time passes and underinvestment becomes more severe, OPEC’s ability to curb prices will weaken. We cannot forget that OPEC and Russia account for less than half of total world supply. They matter, but putting two million more barrels a day on the market will not solve the long-term price problem.
Energy prices will decline with more technology, investment, and diversification, not empty political threats. Author:
Liberal socialist utopias such as California are a blessing for deadbeat klepto hobos from around the world thanks to the state’s lack of prosecution of shoplifting, but the same policies are becoming a major headache for nationwide retailers such as Best Buy which this morning reported that despite beating on the top and bottom line
Liberal socialist utopias such as California are a blessing for deadbeat klepto hobos from around the world thanks to the state’s lack of prosecution of shoplifting, but the same policies are becoming a major headache for nationwide retailers such as Best Buy which this morning reported that despite beating on the top and bottom line (revenues of $11.9 billion vs expectations of $11.7BN, EPS of $2.08, beating est of $1.96), its margins missed, echoing the same margin crunch theme that emerged recently with big box retailers such as Walmart.Gross margin fell 0.1% to 23.5%, Best Buy said, missing the 23.6% average of analyst estimates compiled by Bloomberg, while the decline in the core U.S. operation was steeper. The company also reported a 10% drop in domestic online revenue as more shoppers returned to stores. But besides the usual margin-crushing suspects of frayed supply chains and deep discounts as a result of stepped-up promotional activity and a drag tied to its new TotalTech membership program, the company brought up the reason why Democrats are looking at far more losses in the coming months as a reason for the margin drop: organized theft.
“We are seeing more and more particularly organized retail crime,” Chief Executive Officer Corie Barry said on a conference call with analysts. “You can see that pressure in our financials, and more importantly, frankly, you can see that pressure with our associates. It’s traumatizing.”
Best Buy’s unexpected struggle to shore up gross margin comes after the recent stock surge boosted Wall Street’s expectations. That’s why today’s sharp return to reality sent BBY shares plunging as much as 17% to $115.01 in New York trading — the biggest intraday plunge since the covid crash on March 18, 2020.Hilariously, Best Buy had advanced 38% this year through Monday, attaining record levels and outpacing the 28% gain of an S&P 500 index of consumer discretionary companies. Because while BBY channel checkers were right and traffic was indeed off the charts; alas most of that foot was courtesy of thieves.
But, seriously, this is just the beginning of the Winter Siege I wrote about recently. The plan seems to be to New-Normalize Europe first — generally speaking, Europeans are more docile, respectful of all authority, and not very well armed — and then use it as leverage to force the new pathologized totalitarianism on the USA, and the UK, and the rest of the world.
So, GloboCap has crossed the Rubicon. The final phase of its transformation of society into a pathologized-totalitarian dystopia, where mandatory genetic-therapy injections and digital compliance papers are commonplace, is now officially underway.
Austria is just the tip of the New Normal spear. Prominent New-Normal fascists in Germany, like Der Führer of Bavaria, Markus Söder, and Minister of Propaganda Karl Lauterbach, are already calling for an allgemeine Impfpflicht (i.e., “compulsory vaccination requirement”), which should not come as a surprise to anyone.
The Germans are not going sit idly by and let the Austrians publicly out-fascist them, are they? They have a reputation to uphold, after all! Italy will probably be next to join in, unless Lithuania or Australia beats them to the punch.
But, seriously, this is just the beginning of the Winter Siege I wrote about recently. The plan seems to be to New-Normalize Europe first — generally speaking, Europeans are more docile, respectful of all authority, and not very well armed — and then use it as leverage to force the new pathologized totalitarianism on the USA, and the UK, and the rest of the world.
I do not believe this plan will succeed. In spite of the longest and most intensive propaganda campaign in the history of propaganda, there remain enough of us who steadfastly refuse to accept the “New Normal” as our new reality.
We are not “vaccine hesitant” or “anti-vax” or “Covid-denying conspiracy theorists.” We are millions of regular working-class people, people with principles, who value freedom, who are not prepared to go gently into the globalized, pathologized-totalitarian night.
We no longer give the slightest shit whether our former friends and family members who have gone New Normal understand what this is. We do. We understand exactly what this is. It is a nascent form of totalitarianism, and we intend to kill it — or at least critically wound it — before it matures into a full-grown behemoth.
Now, I want to be absolutely clear. I am not advocating or condoning violence. But it is going to happen. It is happening already. Totalitarianism (even this “pathologized” version of it) is imposed on society and maintained with violence. Fighting totalitarianism inevitably entails violence.
Because I had just written two articles about military bases and military personnel in October, I did not have a special Veterans Day article this year. Some people were expecting one, and expressed to me their disappointment. What follows here is something that I have thought about writing for a long time that would have been suitable for Veterans Day.
We know that conservative, evangelical, and fundamentalist churches are some of the worst offenders when it comes to heaping praise on the military on one of the three American military appreciation days: Memorial Day, Fourth of July, and Veterans Day.
For many years now, I have harshly criticized the military blasphemy and idolatry that takes place in many of these churches on the Sundays before Memorial Day, Fourth of July, and Veterans Day. Woe be to the Christian who happens to be in one of these patriotic services when the Fourth of July or Veterans Day falls on a Sunday! These are high holy days to Christian patriots.
I won’t recount here all the blasphemy and idolatry that takes place on these Sundays or on the extra military appreciation Sundays that some churches have throughout the year. See my many articles on Christianity and the State, Christianity and War, and Christianity and the Military. What I want us to do is just imagine the attitude of the early church toward Veterans Day.
The early Christians were averse to war and military service. See my detailed review of The Early Christian Attitude to War (1919), by C. John Cadoux.
The early Christians did not initially meet in church buildings. But when they did meet, can you imagine the following things taking place?
Can you imagine the early church having a patriotic service?
Can you imagine the early church making apologies for the Roman empire?
Can you imagine the early church inviting a Roman senator to speak in their assembly?
Can you imagine the early church singing hymns of praise to the Roman empire?
Can you imagine the early church adorning their bodies or their meeting places with the insignias, emblems, and banners of the Roman empire?
Can you imagine the early church recognizing Roman soldiers in attendance?
Can you imagine the early church having a Roman soldier speak in their assembly?
Can you imagine the early church pledging allegiance to the Roman emperor?
Can you imagine the early church praying for Roman soldiers serving in harm’s way in the far reaches of the Roman empire?
Can you imagine the early church singing “God Bless the Roman Empire”?
Can you imagine the early church having Roman soldiers march through the middle of their gathering?
Can you imagine the early church thanking Roman soldiers for their service?
Can you imagine the early church crediting Roman soldiers for their freedom to worship?
Can you imagine the early church calling Roman soldiers returning from a tour of duty heroes?
Can you imagine the early church having a Roman soldier appreciation day?
Can you imagine the early church applauding Christians who expressed a desire to join the Roman army?
By Alan LeverittMr. Leveritt is the founder and publisher of The Arkansas Times. His lawsuit against Arkansas’s anti-boycott law is being reviewed by the U.S. Court of Appeals for the Eighth Circuit.At The Arkansas Times, a publication I founded 47 years ago, our pages focus on small-scale local issues, like protecting Medicaid expansion from the predations of our state legislature and other elements of Arkansas politics, history and culture. So I was surprised when in 2018 I received an ultimatum from the University of Arkansas’s Pulaski Technical College, a longtime advertiser: To continue receiving its ad dollars, we would have to certify in writing that our company was not engaged in a boycott of Israel. It was puzzling. Our paper focuses on the virtues of Sims Bar-B-Que down on Broadway — why would we be required to sign a pledge regarding a country in the Middle East?I understood the context of that email. In 2017, Arkansas pledged to enforce support for Israel by mandating that public agencies not do business with contractors unless those contractors affirm that they do not boycott Israel. The idea behind the bill goes back 16 years. In 2005, Palestinian civil society launched a campaign calling for “boycott, divestment and sanctions against Israel until it complies with international law and universal principles of human rights.” Around the world, Boycott, Divestment and Sanctions, or B.D.S., as it became known, gained momentum. In response, Israel and lobbyists have used multiple strategies to quash the movement. In the United States, one such strategy took the form of anti-B.D.S. bills. Currently, more than 30 states have provisions on the books similar to Arkansas’s.It soon became clear that The Arkansas Times had to answer our advertiser. Though boycotting Israel could not have been further from our minds and though state funding is a significant source of our income, our answer was no. We don’t take political positions in return for advertising. If we signed the pledge, I believe, we’d be signing away our right to freedom of conscience. And as journalists, we would be unworthy of the protections granted us under the First Amendment.And so, instead of signing, we sued to overturn the law, represented by the American Civil Liberties Union, on the grounds that it violates the First and 14th Amendments. We are still fighting it.
by Tyler Durden
