What's up with the prices at the pump?

From the files of Marita K. Noon at Energy Makes America Great, Inc.

Meet Marita K. Noon at Energy Makes America Great

First, Saudi Arabia drove down the price of oil by increasing its production, which gave Americans a welcome drop in prices at the pump. Could the kingdom now be pushing them back up?

Prices at the pump have gone up nearly 40 cents a gallon from the January low—60 cents in California. They will continue to rise while the price of crude oil remains low.

Based on explanations, the jump was expected. Every year, at this time, refineries shut down to make adjustments from the “winter blend” to the “summer blend.” It is “refinery maintenance season.”

However this year, the increase is exacerbated.

The unexpected extreme weather in the south, Patrick Dehaan, senior petroleum analyst for GasBuddy, explained: “caused some of the refineries in the south to shut and restart, resulting in disruption for a couple of days.”

The February 19 explosion at an ExxonMobil refinery in California, that supplied 10 percent of California’s gasoline, has driven the state’s extreme uptick. Reports indicate months could pass before it the plant is back to full production.

Then we have is the expanding steelworker’s strike that began on February 1—the first in 35 years. Because of refinery automation, the impact to date has been minor. Michael Noel, an associate economic professor at Texas Tech who specializes in oil and gas, told me the strike causes about 10 cents a gallon of the current price increase. However, if the strike actually shuts down operations, the Washington Post (WP) states: “the impact on gas prices could be swift.”

Opinions vary on why the United Steelworks chose now to strike—especially in a time when labor unions, according to the WP, “rarely exercise that right.” The WP explains: “There were only 11 strikes involving more than 1,000 workers last year, down from hundreds annually in the 1970s.”

Energy economist Tim Snyder sees that big refiners lose their incentive to bargain when crude oil prices fall to low levels. He told me: “The strike helps raise prices so the longer the strike goes on, the more profits they can recover. It appears for the next couple of weeks, oil and gasoline prices will go in opposite directions, due to supplies continuing to build in crude and supplies drying up in gasoline.”

In contrast, energy market analyst Phil Flynn explains: “I think the Union is striking now because refining margins have been good and they want some of that benefit.”

Whatever the reason, the WP quotes Jim Savage, leader of the United Steelworkers Local 10-1, as saying: “We picked a fight with the wealthiest, most powerful people in the history of the world. So we’re either very courageous, or the stupidest people walking.”

But what if the union workers chose this time to strike because of outside influence—specifically Saudi Arabia? There are many coincidences that seem too obvious to ignore.

First, the last time refinery workers went on strike was 35 years ago—about the same time as the oil crisis of 1979. Then, after the Iranian Revolution caused an oil shortage resulting in a catastrophic spike in the price of oil that drove other countries to expand production, it is reported that “to gain back market share, [Saudi Arabia] increased production and caused downward pressure on prices, making high-cost oil production facilities less profitable or even unprofitable.”

Now, increased Saudi production, once again, has driven the price drop, and, it, too, that is about maintaining market share and driving out higher-cost U.S. shale production.

But there’s more.

We think of Saudi Arabia as producing crude oil. However, according to the Wall Street Journal (WSJ), the kingdom “plans to become the world’s second largest [behind the U.S.] exporter of refined oil products in 2017 as part of its drive to diversify its economy and increase its share of the global crude and petroleum products markets.”

The Financial Post (FP) takes it further: “Saudi Arabia and its OPEC cohorts may have abandoned their role as market stabilisers, but they are taking the fight with their rivals downstream.” The FP adds: “The push downstream comes as OPEC’s strategy to maintain production and push out expensive non-OPEC producers is working.”

So, while the U.S. hasn’t built a new refinery in decades, Saudi Arabia has two new refineries—with a third planned. One of the new refineries started output last year and the other last month.

The WSJ reports: “Planning for refineries in Saudi Arabia began around a decade ago to meet growing domestic fuel demand as well as to provide jobs. Domestic demand hasn’t grown as fast as expected, but as prices for Saudi Arabia’s unprocessed oil have slumped—crude prices have more than halved internationally since last summer—the refineries could offer a profitable alternative source of income.”

Note this key line from the WSJ: “Domestic demand hasn’t grown as fast as expected, but as prices for Saudi Arabia’s unprocessed oil have slumped...” This means that the kingdom has excess capacity at a time that it needs extra income. Economists say Saudi Arabia needs tough economic reform.

The Financial Times states: “The IMF wants the government to reduce the growth in spending still further, especially on wages and subsidies, and focus on infrastructure investment. But economists also worry that lower oil prices will hit the government’s capital spending, which could depress economic activity in the coming years.”

The WSJ points out: “the refineries could offer a profitable alternative source of income.” But first, the kingdom needs outside customers—and the Steelworkers’ strike could help the Saudis.

The U.S. is the number one global exporter of refined petroleum products. Saudi Arabia aims to capture some of that market share to become number two. We know that, when to its advantage, the kingdom thinks nothing of hurting its ally—but not friend—the United States.

When I ran my strike-influence theory by Gregg Lakoski, a Senior Petroleum Analyst with GasBuddy, he replied: “All I can say is it makes sense for any supplier to try to ‘influence’ commodity prices for the world’s largest purchaser of that commodity. Saudi Arabia, as the de facto leader of OPEC, manipulates OPEC and non-OPEC oil prices in a variety of ways, some more obvious than others.”

Announcing the first shipment of gasoline from the new Saudi refinery on February 6, the Middle East North Africa Financial Network states: “The refinery is expected to reach full capacity in mid-February. A source close to the company said most of the middle distillates volumes coming out of Yasref would be heading to Europe for now as the East-West spread is currently favorable. He said European demand was good due to worries about the refinery strike in the United States which could reduce the amount of U.S. diesel heading to Europe.”

So a refinery strike in the U.S. helps establish a foothold for Saudi Arabia’s plans to “diversify its economy” by handing them customers. And, perhaps, this creates the how and why, after dropping oil prices, the kingdom has begun to drive up gasoline prices.

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The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.

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OPEC predicts oil can hit $200 per barrel

OPEC prediction of $200 a-barrel-oil ignores market realities or maybe not from Marita Noon at Energy Makes America Great, Inc.

Meet Marita Noon at Energy Makes America Great

OPEC’s Secretary General Abdulla al-Badri made headlines when he announced that the oil price may have bottomed out—indeed, we had four straight days of increase—and predicted “you will see more than $200 when it comes to future oil prices.”

Al-Badri makes a strong argument. In the current reduced-oil-price environment, we see oil companies cut back on budgets, curtail exploration, and pull in rigs—as in many places it costs more to get the oil out of the ground than the present sales price.

The Wall Street Journal (WSJ) reports: “the number of rigs drilling in the U.S. has sunk to a three-year low.” Reuters states: “The rig count is down 29 percent from its October peak … a clear sign of the pressure that tumbling crude prices have put on oil producers.”

In today’s market for crude oil, a reduction in the number of drilling rigs in the U.S. does not mean overall production declines.

It only means less future production, Tim Snyder, an energy economist with Lubbock, Texas, based Pro Petroleum Inc., who analyzes trends to help his company, and others, make educated decisions and manage risk, told me: “We anticipate a decrease in ‘new’ production in the U.S. as exploration and production companies reallocate capital expenditures and reduce drilling exposure.”

Economics 101 tells us that less supply results in higher prices. Addressing the recent up-tick in prices, Yahoo News says: “Investors bet supplies would tighten in the long term because major oil companies were scaling back investments and drilling to cope with falling prices.

Al-Badri extrapolates this scenario out to a future of $200 a-barrel oil.

What he apparently misses is that as soon as prices increase, activity in the oil industry will pick back up. Snyder says: “Once prices reach the $70-75 per barrel range, the more complex drilling solutions begin to become attractive and we will see new production increasing; putting downward pressure on prices all over again.

There are plenty of smaller companies that can be very nimble. The equipment they have pulled and the employees whose jobs they cut can get back in the field quickly—in fact, they must. Every day that equipment sits on a lot, they are losing money. The trained talent wants to be working.

Yes, it will take some time to get the bigger projects up and running again and to build the needed infrastructure, but as prices climb, more and more production will come back online—bringing balance to the markets.

When prices are high, human ingenuity comes in and finds a solution—which is how the technologies of horizontal drilling and hydraulic fracturing combined to unleash America’s new era of energy abundance and helped lower prices worldwide.

Maybe al-Badri’s comments were designed to talk the markets up—after all, several OPEC countries’ economies are grim due to the drop in oil prices. For example, oil-rich Venezuela is facing default and is rationing food. Business Insider reports: “The country is broke … in large part because oil prices are so low. And now … its economic crisis is leading to a health crisis”—a pack of 36 condoms costs about $750. Both Venezuela and Iran have called “for OPEC’s cooperation in stabilizing oil prices,” but Saudi Arabia—OPECs biggest producing member—is maintaining its current output.

Al-Badri is not stupid. He has held several high-ranking positions in his native Libya, starting in 1990 as Minister for Oil. He was appointed Secretary General for OPEC in 2007. His January 26 $200-a-barrel prediction focuses on the future production losses that will result from the industry pulling back—which, as outlined above, are not likely to result in $200 oil.

Snyder believes al-Badri may be signaling something bigger: “The only way for prices to reach the level mentioned is for there to be a decline in available supply through a disruption in production or a break in the supply chain.”

Libya, al-Bardi’s homeland, has the largest oil reserves in Africa. It, according to the WSJ, “helped trigger the world-wide rout in oil prices” when it “surprised the world with a sudden burst of new oil” last summer.

However, as Reuters points out: “Libya is in the middle of a struggle between two governments and parliaments allied to armed factions fighting for legitimacy and territory.” In the WSJ, Richard Mallinson, an analyst at London-based consultancy Energy Aspects explains: “There was an implicit agreement between the different factions to avoid disrupting oil production.

Now the parties have realized that controlling oil means power.” As a result of the fighting, “Libyan oil output has fallen to about 325,000 barrels a day in January from nearly 900,000 barrels a day in October.”

The situation in Libya is deteriorating and western oil companies are pulling out. Then, on Sunday, security guards at the last functioning export port, that used to export 120,000 barrels a day, went on strike because their salaries were not being paid—which closed the port and lowers Libya’s oil output to less than 300,000 barrels a day.

Libya does have one remaining port open, but it is used to supply the Zawiya refinery with crude rather than for export. Reuters states: “All other ports and most oilfields have shut down due to fighting nearby or pipeline blockages by rival factions.”

Snyder posits: “Maybe al-Badri is telling the world that, left unattended, the rapid increase in terrorist activity seen lately could be the only thing to lead to the $200 level in crude oil—which will have catastrophic results.”

With Jordan’s accelerated air strikes, and the United Arab Emirates rejoining the fight against ISIS, added to the already troubled situation in Libya, a major supply disruption becomes extremely plausible.

Maybe al-Badri is right—though not for the reasons he outlined. Maybe he knows more than his simplistic explanation revealed. If he is, if he does, the U.S. is going to need every drop of oil found within our borders, including the Arctic resources that President Obama just proposed be permanently put off limits.

With the current low oil prices, we can easily think that we have too much oil already—after all, last week’s sudden price drop came after the release of official data remain a factor and, if al-Badri is correct, America’s energy abundance can provide us with energy security and global stability—not to mention the economic benefit of supplying our allies with oil and refined-petroleum products.

Suddenly, the Keystone pipeline’s critical role becomes perfectly clear.

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The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.

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Spare the blogger and lash us instead

Spare the blogger and lash us instead by Jeff Jacoby at the Boston Globe

On January 9th, the government of Saudi Arabia publicly whipped a liberal Muslim writer, Raif Badawi, flogging him 50 times outside a mosque in Jeddah.

It was the first installment of the 1,000 lashes to which Badawi had been sentenced — in addition to 10 years in prison and a fine of more than $250,000 — for the crime of "insulting Islam" on his former website, the Saudi Free Liberals Forum.

Two days later, following the Charlie Hebdo massacre, the Saudi ambassador to France joined in the great Paris solidarity march in defense of freedom of expression.

Such hypocrisy was more than seven members of the United States Commission on International Religious Freedom could abide. The commission — an independent, bipartisan federal agency — had several times expressed concern about the persecution of Badawi; it denounced his lashing as "a cruel and barbaric act" inflicted "for nothing more than creating an online forum for diverse views to be expressed freely."

Last week, writing in their individual capacities to the Saudi embassy in Washington, the seven commissioners drew attention to the glaring inconsistency between Saudi Arabia's public show of support for civil liberties in France and its brutal denial of those very liberties in Badawi's case.

Then, in a powerful demonstration of genuine solidarity, they offered to share personally in his flogging.

"If your government will not remit the punishment of Raif Badawi, we respectfully ask that you permit each of us to take 100 of the lashes that would be given to him," they wrote. "We would rather share in his victimization than stand by and watch him being cruelly tortured."

The signatories are as intellectually distinguished as they are religiously and politically diverse. They include Mary Ann Glendon, a Harvard law professor and former ambassador to the Vatican; Zuhdi Jasser, a physician and founder of the American Islamic Forum for Democracy; Robert George, a notable public scholar and professor of jurisprudence at Princeton University; and Eric Schwartz, a former assistant secretary of state who is now dean of the University of Minnesota's school of public affairs.

Another commissioner, Daniel I. Mark, is a political scientist at Villanova University; Hannah Rosenthal is president of the Milwaukee Jewish Federation; and Katrina Lantos Swett, the commission chairman, heads an international human-rights foundation.

Of course, the chances are nil that the Saudis will agree to administer lashes to prominent American thinkers and social activists. But that doesn't make the commissioners' willingness to share in Badawi's suffering insincere.

"If you're a serious religious person, you don't make such an offer unless you're prepared to carry it out," George told me. The same conviction was expressed by Mark, who in a blog post titled "#IAmRaif" wrote that he had been thinking hard about "what it means to sacrifice for others, to go to the Cross, as some might say, in the fight for justice."

Vocal appeals in support of Badawi have come not just from the American commissioners, but also from Nobel laureates, from Amnesty International, from members of Congress, and from PEN, the international writers' organization. But from the president of the United States there has so far been only silence.

President Obama cut short his state visit to India this week so he could travel to Saudi Arabia to pay his respects to the deceased King Abdullah. Yet "the Saudi who should be on the president's mind and heart right now," George insists emphatically, "is not Abdullah, it is Raif Badawi — the brutalized freedom advocate who has become the living symbol of the oppression practiced by Saudi Arabia's rulers."

Protesters hold a vigil for Raif Badawi outside the Saudi embassy in London. The 31-year-old
Muslim moderate has been sentenced to 1,000 lashes and 10 years in prison as
punishment for setting up a website, the Saudi Free Liberals Forum.

Obama's silence is a source of particular distress to Jasser, a faithful Muslim who since 9/11 has made opposition to radical Islam his life's mission. "Everybody asks why more moderate Muslims don't speak out against the poison of Islamism," Jasser said by phone the other day.

"Well, Badawi's ordeal is a clinic in what happens when they do." It would so hearten reformers and moderates within Islam, he says, if the president would publicly express concern for liberals like Badawi — the way Ronald Reagan made a point of mentioning Soviet refuseniks like Natan Sharansky by name.

Realpolitik may require an ongoing US relationship with the Saudis. But Americans are not obliged to pretend that Saudi Arabia — where liberals are whipped, dissidents are tortured, and jihadists are incubated — isn't one of the world's leading producers of intolerance and fanaticism.

Badawi and others like him are the antidote to those toxins. They need all the solidarity we can give them.

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Saudi King could not stand President Obama

NBC's Engel: Saudi King Abdullah 'Could Not Stand' Obama at Truth Revolt.org

Late Saudi King - Abdullah bin Abdulaziz

NBC News foreign correspondent Richard Engel dropped a rhetorical bomb on the Obama State Department this weekend when he revealed that late Saudi King Abdullah bin Abdulaziz al Saud was no friend to President Barack Obama.

Engel was responding to the diplomatic statement delivered on behalf of the administration that included a passage reflecting on the "genuine and warm" friendship the president shared with the late king.

"One of the big ironies here is that President Obama, in his statement, said how close he was to King Abdullah.

King Abdullah did not like President Obama.

In fact, a lot of people I know that are quite close to the late King Abdullah said that the king could not stand President Obama. 

This close personal bond between the president and the late Saudi leader, I think, is people being polite at a time of a national funeral.”

Engel cited Obama's unquestioning support of the "Arab Spring" movement as well as his abandonment of long-time US ally Egyptian President Mubarak as reasons why Abdullah was less-than-friendly with Obama.

Portions of this article appeared at Truth Revolt.org

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Obama takes credit for falling gas prices

Obama has an "I Built That" Moment and Takes Credit for Falling Gas Prices from the art studios of A.F. (Tony) Branco at Comically Incorrect.com

Get a Daily Dose of Humor from A.F. (Tony) Branco at Comically Incorrect.com

Check out some of the websites listed below that publish the A.F. (Tony) Branco Political Cartoon features.

• Editorial cartoonist
• Net Right Daily
• Legal Insurrection
• Liberty Alliance
• ConservativeDailyNews.com

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Iran controls 4 Middle East Capital Cities

Are we toast? Saudi king is dead; ISIS expands; we’re abandoning Yemen and Iran has a missile launcher from the files of Colonel Allen B. West

ImageSat Photo of Iranian Missile Launch Site

On Tuesday evening President Obama stated, “the shadow of crisis has passed and the state of the union is strong” — and of course the blind followers cheered.

Obama also hinted that we had “turned the page” on our fight against terrorism. Remember his unilateral declaration at the National War College that the war on terror had ended — and of course he has commanded that combat operations end in two theaters of operation; Iraq and Afghanistan.

But nothing could shine the light on President Obama’s naiveté (or approval?) more than the fact that just 48 hours after he dismissed the “shadow of crisis,” we are evacuating yet another U.S. Embassy — this time in Yemen.

It’s the same Yemen that just last fall, Obama referred to as the model of his success — just like Vice President Joe Biden once chimed that Iraq would be one of Obama’s greatest successes. When Obama said the shadow of crisis has passed, we had three U.S. Naval warships off the coast of Yemen ready to evacuate the embassy.

And if you’ve forgotten, this is the second U.S. Embassy to be evacuated in less than a year — the other being Libya…y’all remember the swan diving jihadists? This hardly reflects a state of the union that is strong. What it does reflect is a foreign policy of abject failure, resulting from the Obama “pivot” away from the Middle East.

And so now we have the Houthis, whose slogan is “Death to America, Death to Israel” by the way. We reported on them late last year, of course no one cared. Just the same as a year ago this week, when President Obama referred to ISIS as a “jayvee” team. The al-Houthi Islamist group is Shiite and backed by — yep, you got it — that nondescript country called Iran about whom Obama threatened a veto if Congress passed legislation restoring sanctions.

Let me put this all into perspective.

Yemen is home to the most vicious al-Qaida affiliate — yeah I know, they’re decimated and on the run – al-Qaida in the Arabian Peninsula (AQAP). This is the same group which claimed responsibility for the recent Paris Islamic terrorist attack.

There are now reports that ISIS is expanding into Yemen and as we reported last year, AQAP was seeking a pledge of alliance with ISIS. Yes, the Houthis and al- Qaida don’t exactly get along — but the Houthis are backed by Iran — who we are assisting the fight against ISIS in Iraq, along with their support to Bashar al-Assad in Syria.

And the Obama administration just announced it would send 400 advisors/trainers to Syria. But we’re allowing Iran to pursue its nuclear program, 10,000 centrifuges,– and the Washington Post just gave President Obama three more Pinocchios for his SOTU assertion that Iran’s nuclear program has slowed down. And as you know, Obama threatened to veto congressional action to sanction Iran.

Why should we kinda care? The Yemeni government was pro-American and was aiding in the fight against Islamists within their borders. Now, not only has the Yemeni government been toppled, it has been replaced with the specter of Iranian influence in the vicinity of a chokepoint entering the Red Sea — and not far from Somalia — yet another hot bed of Islamism.

Now, add on top of this hot fudge sundae the fact that King Abdullah of Saudi Arabia just passed away. Yemen is the southernmost country on the Arabian Peninsula where chaos now abounds at a time of a transition of leadership in Saudi Arabia.

The Saudis are Sunni and cannot be too happy with the Obama administration’s lack of focus and resolve in the face of Iranian regional hegemonic designs. So what does Saudi Arabia do? In concern for their own existence will the Saudis provide material support to Sunni Islamic terrorists in order to defeat the Iranian-backed Houthis?

And there is another wild card to this equation, as reported by The Algemeiner, “The Israeli satellite imaging company ImageSat released images from Iran revealing a new nuclear development site. The images show what appears to be a new missile launcher that stands 89 feet tall and is capable of launching a nuclear missile to Israel or Europe, according to a report by Israel’s Channel 2.”

“Among the new nuclear developments pictured was a large long-range missile, never seen before in the West. The missile is powerful enough to launch a satellite or a manned spacecraft, the report said.”

Now does this sound like someone with whom we should — or even can – be negotiating?

Ladies and gents, I know some of you may feel, who cares, let them all kill each other. Yes, to a point they will, but the shadow of crisis will not pass that easily.

From Libya extending all the way to Pakistan, and probably beyond, militant Islam has taken root and is exporting its terror and hatred all over the globe. And the policy of this administration is to remain in a state of denial. America sides with Turkey and Qatar. America is releasing Islamic terrorists back onto the battlefield. All the while w’re told move along, nothing here to see.

There’s lots to see, and my greatest concern is that the situation only worsens in these final two years of the Obama reign.

What can we do? Well, first we gotta pray — and I am serious folks. The situation in which we find ourselves is a perfect storm benefiting the Islamic fascists. Not only are they on the move and consolidating their gains while increasing recruitment, we are enabling it by decimating our own military capacity.

We must develop a strong, potent, expeditionary and lethal strike operations-oriented force for the 21st century battlefield. And I’m not talking about any “smart power” or nuanced rhetorical response, but rather a deterrent force capable of deployment and employment in any geographical contingency area.

This is not about nation building. And at some point in time we will have to combat the enemy’s ideology — we must defeat his belief system in order to de-legitimize him. Challenge the enemy and make them own their actions — and stop being Islam-apologists.

The crisis has not passed; it’s right here and all over the globe — heck, there’s even a Russian naval warship docked in Cuba while our state department bureaucrats are there to discuss opening up diplomatic and travel relations.

Can we really say that the state of our union is strong? If you believe that then you’re in a state of delusion. And remember, weakness is enticing.

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