04/2/20

Moving Markets — President Trump And Global Oil

We are living in interesting times. We are facing a pandemic, an economic crisis, a stock market brouhaha, and an oil bust.

Today, we focus on the oil bust. In case you haven’t been following things, the Russians and the Saudis got into a pissing contest as to the level of oil output by the OPEC + bunch.

OPEC + is the Organization of Petroleum Exporting Countries which has been around since 1960 and is in the oil pricing manipulation business. The + means Russia is in the talks.

The result of the Saudi Arabia v Russia pissing contest — the Russians would not agree to reduce production levels — was a collapse in global oil prices with some incredibly low prices — 1950s prices — which then translated into lower gasoline prices.

These two clowns wrecked the global oil business in an amateurish “who has the bigger dick” contest.

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03/8/20

Oil War

If you slept in on Daylight Savings Time, then you may have missed that we have another war erupting in the Middle East — Saudi Arabia (through the newly public Aramco which it controls) has lowered the price of its crude, while threatening to increase crude oil production by more than 2,300,000 barrels daily to a total of 12MM barrels per day.

This is a hissy fit on the heels of an unsuccessful OPEC + meeting (the plus being the addition of Russia) attempt to reduce production by 1.5MM barrels.

As always when this group meets, there was a lot of discussion, but no consensus.

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09/17/19

Iran, Curious, Provocative Iran

The Middle East is on the verge of an explosion precipitated by a spiral of Iranian provocative behavior. Your Big Red Car would like to calmly discuss what has transpired to bring the world to this point. We need to know the history of the region and Iran.

In 1979, the Shah of Iran — an American ally of some long standing — fled and the resulting leadership void was filled by the Ayatollah Khomeini, a religious exile of some fifteen years. The son of a religious scholar, the Shiite cleric was said to have memorized the Qur’an as a youth.

The Shah — Mohammed Reza of the family of Pahlavi — had been put into power in 1941 by the Russians and the British (when they attacked and seized Iran in World War II to safeguard supply lines to Russia) and was considered to have been only the second “modern” Shah. As Shah, Reza was pro-Western. He spoke English, French, German, and Persian (Farsi), but was at his core a playboy.

Reza, as Shah, launched the White Revolution in the mid-1960s. His advancement of the Iranian culture was extraordinary as was the growth of the standard of living amongst the Iranian people and womens’ rights. It is important to note that the Shah “reigned” and, ultimately, “ruled.” The big driver was oil wealth of gargantuan proportions. In many ways, he was ahead of his time in the westernization of Iran.

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08/21/18

Texas Oil

Big Red Car here talking Texas oil, y’all. One of the worst reported business phenomenon is the enormous strength of American oil production and Texas’ part in that.

Y’all know all about the enormous flows from shale oil, fracking, and horizontal drilling, right? But, you ask, “How big is it, Big Red Car?”

As you can see, it is an impressive curve with a May 2018 monthly flow of 4,243,000 barrels per day. This is larger than any Middle East country other than Saudi Arabia. Hello, America!

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04/20/18

Trump on Oil

Trump on oil, Big Red Car?

We woke this morning to a Tweet from our Tweeter-in-Chief picking a long overdue fight with OPEC. The Organization of Petroleum Exporting Countries was formed in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

Currently, it is composed of Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emerates, and Venezuela. Sudan has applied to join. Indonesia was once a member.

[See what odd bedfellows a bit of oil and money creates?]

There is an “observer” class consisting of Egypt, Mexico, Norway, Oman, and Russia.

OPEC produces about 44% of the world’s oil while holding 73% of the world’s proven oil reserves.

OPEC exists to manipulate the price of oil by controlling the level of production thereby driving prices up through artificial scarcity.

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04/18/16

Oil, Keep An Eye on Oil

Big Red Car here with gasoline prices in the ATX now at a low of $1.69/gallon at Sam’s Club in South Austin where it was about $1.49/gallon less than two months ago. It’s all about the price of oil. Wow!

Still, that is historically cheap.

Big news in the last few days out of Doha — the OPEC + Russia countries were unable to agree to freeze oil production at current levels through the end of 2016.

Saudi oil pic

The fly in the ointment?

You guessed it — Iran.

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02/5/16

Taxing Anything Good — the Democrats or Just President Obama?

Big Red Car here in the sunny ATX but it is a little chilly. Will be 65F this afternoon from a low of 35F this morning. That is a Texas winter. An idea we can all get behind, no?

So, have you seen the President’s proposed tax on the low price of oil? That will warm you on a cold morning.

Haha, you didn’t think that taxing rascal was going to let you keep that bit of declining gas price lagniappe, did you?

You are so cute when you have that stupid look on your face. You did think he was going to ignore it, didn’t you? So cute!

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