We "May" See $50 Oil Next Year -- August 2, 2016

Lead link for the day: I've opined on numerous occasions that ObamaCare is one of three reasons why the US economy is doing so poorly. Don sent me this link a couple of days ago, in Forbes magazine: Is ObamaCare blameless in the weakest recovery since 1949?

It’s official. In terms of average annual growth, the Wall Street Journal reports that the pace of the current Obama recovery ”has been by far the weakest of any since 1949.” Since the recession officially ended in 2009, GDP has grown by an anemic 2.1% a year.

That’s less than half the 4.3% average annual growth during the Reagan recovery.

Indeed, Tyler Durden has pointed out that President Obama is now on track to “be the only president in history to never have a year of 3% GDP growth. That is truly abysmal economic performance."

Yet Hillary Clinton apparently believes it’s a good idea to double down on Obamanomics by running for Obama’s third term.  

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Back To The Bakken

 
Active rigs:

	8/2/2016	08/02/2015	08/02/2014	08/02/2013	08/02/2012
Active Rigs	34	74	194	179	207

RBN Energy: update on Canadian oil sands after the wildfires -- an incredible story, to say the least.

Three months after a series of devastating wildfires wreaked havoc in Alberta’s oil sands region, production is essentially back to normal. Temporary shutdowns at several production sites initially reduced the oil sands’ output by more than 1 MMbbl/d –– or about one-third the area’s pre-fire production level –– which trimmed inventories and goosed world oil prices. But the short-term closures appear to have had little effect on the Canadian and U.S. refineries that process oil sands-sourced crude. Now, oil sands producers (stung more than many by the collapse in oil prices) are focused again on reducing production costs in an effort to stay profitable in a low-oil-price era. Today, we summarize the current, post-wildfires state of oil sands production and consider the region’s future in the new, tight-oil/Shale Revolution world.

The series of wildfires that swept through parts of Fort McMurray, AB and nearby oil sands production areas in early May 2016 caused damage totaling an estimated Canadian $3.6 billion (the equivalent of more than U.S. $2.7 billion), making the event the most expensive natural disaster in Canada’s history (by far, according to a July 2016 report by the Insurance Bureau of Canada). As we said in our initial look at the wildfires’ impact on oil sands production in mid-May, the wildfires consumed hundreds of thousands of acres (ultimately, more than 1 million acres had burned by the time the last, spotty fires were put out the first week of July) and forced tens of thousands of people from their homes. That spurred staffing shortages at many oil sands production facilities, prompting production scale-backs and a handful of temporary production shutdowns.

As fierce and as far-reaching as the wildfires were, however, they didn’t cause any major damage to the oil sands production areas themselves, or to the pipelines that bring diluent in (to add to bitumen to improve its flow-ability) and crude oil out. Some pipeline flows were interrupted, though, and there was some damage to the electric grid ––but fortunately not enough to slow the rebuilding of oil sands production over the following few weeks.

Remember all that talk about $60 oil by the end of the year. It now looks questionable if we will even hit $50 next year. From Bloomberg: crude oil may rebound to $57 next year. That is incredibly bad news for the Mideast. Saudi Arabia cannot survive on $57 oil, and "may" is the operative word.

Progress will be slow. The crude glut will take a long time to dissipate, meaning only gradual price gains, said Michael Hsueh, a strategist at Deutsche Bank AG. West Texas Intermediate, the U.S. benchmark, will average $49.50 in the fourth quarter before breaking decisively above $50 next year.

Rizone has a nice article that brings us up to date on Russia's efforts to find new oil and natural gas markets in China, India, and southeast Asia. Many, many data points

• India is the world's #3 consumer of oil, consuming 4.2 million bopd in 2015
• Russia's largest crude oil market is the Netherlands (yes, no typo)
• Russia's second largest crude oil market is China (no surprise); currently 15% of Russia's output ends up in China
• China will compete the CNPC Mohe-Daqing oil pipeline in 2017; will make it easier for eastern China to access Russian crude oil
• Russian gas sales are set for tremendous growth after Russia / China signed major supply agreements in 2014 and 2015, and again 2016 when an MOU was signed to cooperate on building underground gas storage and gas-fired power generation facilities in China

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The TrainWreck

Updates

August 3, 2016: New Jersey premiums may go up 5 to 26%.

Later, 8:39 p.m. Central Time: CNN's headline -- nation's largest insurer, Aetna, latest insurer to question ObamaCare's future; 

Aetna is reconsidering its participation in Obamacare, making it the latest large insurer to cast doubts on the future of the individual exchanges.

Aetna said Tuesday it is canceling plans to expand into five more states next year and will reassess its involvement in the 15 states where it currently offers coverage on the individual exchanges.

Aetna -- which expects to lose $300 million (pre-tax) on its Obamacare business this year -- must conclude its review by the end of September and notify states where it intends to withdraw.

Original Post

 

For some odd reason, there were many, many ObamaCare stories today; I assume we will see more of these stories as insurers announce new premiums for 2017. Premiums will be set in August, I believe for open season to begin in November (I may have the dates wrong, but something like that).

First this story from The Wall Street Journal: two more health co-ops sue over ObamaCare's risk-adjustment formula. 

From The Chicago Tribune: rates in Illinois may go up 45%.

Blue Cross Blue Shield of Illinois, the most popular insurer on the state's Obamacare exchange, is proposing increases ranging from 23 percent to 45 percent in premiums for its individual health-care plans, according to proposed 2017 premiums that were made public Monday. The insurer blamed the sought-after hikes mainly on changes in the costs of medical services.

Ultimately it will be insurers setting the rates that will take effect January 1, 2017. Illinois, unlike a number of other states, doesn't have the power to reject the proposed rates outright, said Dena Mendelsohn, a staff attorney at Consumers Union, the advocacy and policy division of Consumer Reports.

Then this huge story, also from The Wall Street Journal: Aetna joins rivals in projecting loss on AbamaCare. That's the headline, but it understates what really may happen: "Aetna will review how it will continue its public exchange business in existing states." Not good news.

Aetna Inc. became the last of the five major national health insurers to project a loss on Affordable Care Act plans for 2016, and the company said it would re-evaluate its participation in the business and cancel a planned expansion.

Aetna, which had previously expressed relative optimism about the ACA exchanges, said it was setting up a reserve of $65 million to account for expected losses on individual plans over the rest of 2016. The move, coming after a similar shift in tone last week by Anthem Inc., is the latest sign of instability and financial pressures in the marketplaces that are at the heart of the health law.
And the stories continue. 

Also from The Wall Street Journal, but re-printed over at Fox News: former Obama adviser -- how I was wrong about ObamaCare. Another 2016 Geico Rock Award nominee?

Spin from The Huffington Post: ObamaCare getting more expensive but still cheaper than predicted. Wow. 

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Florida Could Be Under 6 Feet Of Water By End of Century -- Zillow

Looks like Zillow needed some "free press" -- this is so beyond the pale, it is laughable. It's bad enough Zillow went down this road, but then seeing who posted the story (Bloomberg) it is not surprising. [Apparently even Yahoo!Finance thought this story was laughable; early this morning this story had a headline position; then it was moved well down the page. Now, it's so far down the page the story is lost in all the chaff.

Rising sea levels could soak homeowners for $882 billion, according to a new report from real estate website Zillow. The research takes its initial cue from the journal Nature, which in March found sea levels could rise more than 6 feet by the end of the century. In that scenario, Florida could lose close to 1 million homes, or 13 percent of the state’s current stock. That comes out to $400 billion in value—a figure that doesn’t include losses to commercial buildings or public infrastructure or account for future appreciation in home value.

Zillow combined its own home price estimates with sea level projections from the National Oceanic Atmospheric Administration. There’s still a lot of guesswork going on, cautions Zillow Chief Economist Svenja Gudell. Governments could build barriers to protect coastal communities or sea level rise could prove more moderate. But whatever the variables, there will be major losses as the waters move in.

Even in Zillow's less calamitous scenario of a 2-foot increase in sea level, the U.S. would still lose $74 billion in home value, with Florida leading the way at $17 billion.

Meanwhile, four legitimate peer-reviewed scientific articles have concluded there has been no evidence of any rise in sea levels, anywhere, due to manmade global warming.