Comments & Replies In Response To "The Great Chessboard" Chat
cool61mrn: Ive been watching the speculator since 2009. all the main depth to understand the importance of Iraq and its Dinar dates back to 1792 B>C> when King Hammarabi gave 282 laws to his people, like Moses, but now is printed on the 25,000$ dinar.
It will rv very soon despite all that happenned by God the almighty. Daniel 11:1-4 Saleh. Nice Chatting with you all and Med' for his insight and beleif as well.
The Us Gov. set up Iraqs oil accounts since June 2011 and 6 months before that the dinar was legal currency and is in the currency basket, the Foreign Currency catologues since then.
In the USA. You can go to any bank and see it, just ask the bank clerk. So as things are ripe in Iraqs last stand and ISIS at their front door, we should see political agendas accept the Rv now, because their outa time and no more political procrastination.
The 33 trillion dinar they have sold to Russis, China, Europe and the Usa are now demanding pay back. so its check mate Iraq...as a mighty king stands up in Parliment, "thats the que for the RV". Fasten your seat belts its here.
Caviar Dream: Thanks Charlie I am really sorry I missed this. I love it when someone can put all this news in perspective and show the relationships. I see it but I can't seem to state it without messing it up. Parts of this were touched upon in conversations with Mailman years ago........
I would like to make a comment about shale oil and the pipeline. sorry I can't find the broadcast... I heard it on NPR. There was a study done 5 or 6 years ago showing there to be 40 years of oil to be recovered.
Well even with the price dropping there hasn't been a reduction in production...(.but they figured out how to ship it) and now there's 35 years worth and they still want to spend billions upon billions of dollars to send it to the south, where the only advantage would be the shipping ports. really not worth it for such a short period of time.
Personally (and this is my own conspiracy theory) is that the pipeline (before oil the is gone...it will reach a point where the volume will no longer be worth it to pump....) will be needed to supply potable water to the southern states ....and geee now there's a way to move it in place.
And because the operation of the pipeline will be privately maintained we start with the control and privatization of water (an issue that already came up in Victoria BC 3 years ago during the occupy movement there).
Charlie: Hi Caviar, I agree that the pipeline is all about getting the oil out to the ports. but the truth about shale oil is that it's not economically viable for most plays below $80/barrel. Here's why:
A few years ago they were very hopeful that the shale oil plays would produce significantly, but the results have been very short of those expectations.
The Utica in Ohio, once billed as $500 billion worth of fossil energy has turned out to be pretty much a complete bust, with individual wells pumping out less than 100 barrels per day on average.
The rock is simply too tight and will not yield economical energy until and unless oil increases in price several fold from here – in current dollar terms.
The Mississippian formation under Kansas was extensively explored by Shell, which ended up completely throwing in the towel on that shale play in September 2013 after disappointing yields were obtained from all 45 completed wells.
Literally, the best month of production for a shale well is the first month – by far. And things very rapidly go downhill from there. The typical shale oil well depletes by some 70% in the first year alone.’
And is down by some 80% to 90% after just three years. Because individual shale wells have these decline profiles, many of them summed together end up having the same profile.
That is, to increase production in a shale field requires that constantly more new wells are drilled this year than last year just to outrun the decline profiles of the prior wells.
With shale plays, the typical well goes down for 10,000 feet, turns sideways for another 10,000 feet, and then gets fracked in 20 or more stages to fracture the tight rock formations so that gas and or oil can flow.
Far more money, and energy, is required to drill and multi-stage frack a 20,000 foot well vs. a 1,000 foot well that required no fracking. A shale well typically costs between $7 and $10 million to drill.
We are a peak cheap oil. The amount of energy we must expend to draw oil out of the ground increases every year. The current story about the shale revolution is that technology unlocked those shale play riches, but that’s not at all accurate. In fact it is a myth.
The twin technologies of horizontal drilling and fracking have both been around for many decades, and yet the shale plays just sat there untouched for all those decades.
So what did unlock the shale riches? Price. Specifically energy prices above a certain level of economic return. Horizontal drilling and fracking are very expensive.
The amount of oil flowing from the shale wells is low. The only way to make that equation balance economically is if oil is safely above a certain price.
It is no coincidence that shale drilling began in earnest once oil rose over $80 per barrel and stayed there. Below $80 a barrel and the drilling will slow down enormously or even cease entirely.
As for production:
HOUSTON – The active U.S. rig count dropped by 48 drilling units this week, according to oil field service company Baker Hughes, in one of the smaller weekly declines in the past few months.
Thirty-seven of those rigs were drilling for oil, bringing the number of idled U.S. oil rigs down by 406 compared to this time last year. It’s now at its lowest point in almost four years.
Low oil prices continue to chase rigs away from the nation’s shale plays, but this week’s haul of idled rigs is around half the numbers reported in recent weeks.
Friday’s count brought the number of active U.S. rigs down to 1,310, a figure that has plummeted by more than 460 compared to last year. Fifty-three gas rigs and 2 miscellaneous rigs were idled, Baker Hughes said.
In Texas, oil companies stacked 22 rigs this week. The state’s rig count stands at 576, down from 907 in September. Since October, 65 rigs have gone silent in the Eagle Ford Shale in South Texas, while 196 rigs in West Texas’ Permian Basin and 70 rigs in North Dakota’s Williston Basin have idled.
Jan 26 (Reuters) - The decline in oil drilling that has occurred so far across the United States is probably enough to ensure U.S. production peaks by April or May, though that might not be evident until June or July given delays in publishing production records.
If the number of active rigs continues to decline in the next few weeks, which seems likely, it is reasonably likely U.S. oil production will be falling by June or July 2015.
U.S. tight oil production may fall 600,000 barrels per day by June 2015 based on reasonable projections of current rig counts.
I compared the decrease in rig counts that began in late 2014 to the rig count decrease in 2008 and 2009 following the Financial Crisis. I projected current total rig counts according to three scenarios out to June 5, 2015 shown in the chart below.
I then applied those decline rates to rig counts and production in the 4 major tight oil plays: the Bakken, D-J Niobrara, Eagle Ford and Permian basin.
Charlie: A much more scary scenario is hidden in the $2 trillion dollar oil derivative (junk bond) market. This is a potential catalyst for a Black Swan event. These derivatives are a ticking time bombs that could set off dominoes we tried to avoid back in 2008.
What's worse is that banks are already preparing for this.
Russian Roulette: Taxpayers Could Be on the Hook for Trillions in Oil Derivatives
The sudden dramatic collapse in the price of oil appears to be an act of geopolitical warfare against Russia. The result could be trillions of dollars in oil derivative losses; and depositors and taxpayers could be liable, following repeal of key portions of the Dodd-Frank Act signed into law on December 16th.
While the Lincoln Amendment was intended to lasso all risky instruments, by the time all was said and done, it really only applied to about 5% of the derivatives activity of banks like Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, according to a 2012 Fitch report.
Quibbling over a mere 5% of the derivatives business sounds like much ado about nothing, but Jamie Dimon and the president evidently didn’t think so. Why?
The preamble to the Dodd-Frank Act claims “to protect the American taxpayer by ending bailouts.” But it does this through “bail-in”: authorizing “systemically important” too-big-to-fail banks to expropriate the assets of their creditors, including depositors.
Under the Lincoln Amendment, however, FDIC-insured banks were not allowed to put depositor funds at risk for their bets on derivatives, with certain broad exceptions.
Starting in 2013, federally insured banks would be prohibited from directly engaging in derivative transactions not specifically hedging (1) lending risks, (2) interest rate volatility, and (3) cushion against credit defaults. The “push-out rule” sought to force banks to move their speculative trading into non-federally insured subsidiaries.
The Federal Reserve and Office of the Comptroller of the Currency in 2013 allowed a two-year delay on the condition that banks take steps to move swaps to subsidiaries that don’t benefit from federal deposit insurance or borrowing directly from the Fed.
The rule would have impacted the $280 trillion in derivatives primarily held by the “too-big-to-fail (TBTF) banks that include JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo.
Although 95% of TBTF derivative holdings are exempt as legitimate lending hedges, leveraging cheap money from the U.S. Federal Reserve into $10 trillion of derivative speculation is one of the TBTF banks’ most profitable business activities.
For Goldman Sachs and Morgan Stanley, the rule is almost a non-event, as they already conduct derivatives activity outside of their bank subsidiaries. (Which makes sense, since neither actually had commercial banking operations of any significant substance until converting into bank holding companies during the 2008 crisis).
The impact on Bank of America, Citigroup, JPMorgan Chase, and to a lesser extent, Wells Fargo, would be greater, but still rather middling, as the size and scope of the restricted activities is but a fraction of these firms’ overall derivative operations.
A fraction, but a critical fraction, as it included the banks’ bets on commodities. Five percent of $280 trillion is $14 trillion in derivatives exposure – close to the size of the existing federal debt.
And as financial blogger Michael Snyder points out, $3.9 trillion of this speculation is on the price of commodities, including oil.
As Snyder observes, the recent drop in the price of oil by over $50 a barrel – a drop of nearly 50% since June – was completely unanticipated and outside the predictions covered by the banks’ computer models. And with repeal of the Lincoln Amendment, the hefty bill could be imposed on taxpayers in a bailout or on depositors in a bail-in.