Tuesday Morning

Active rigs: 185

RBN Energy: continuing series on reversal of REX.

Reversing the direction of flow on the eastern third of the Rockies Express (REX) pipeline would have a profound effect on natural gas markets throughout the industrial Midwest and the Midsouth. Not only would the plan significantly expand the regions’ access to gas from the Utica and western Marcellus shale plays, it would further erode the market shares held by traditional suppliers to those regions.   In this Part 3 of our series on the REX reversal we examine how moving large volumes of now-constrained gas west from southwestern Pennsylvania, Ohio and West Virginia would fundamentally change regional gas flow patterns, basis relationships, and even the operations of many pipelines.

Russia introduces tax breaks to encourage oil exploration. Interesting.

I assume the government shutdown means no new permits in much of the Bakken. All things being equal, one would assume the price of natural gas would start to increase fairly soon, to be followed by the price of oil, if the shutdown proceeds for any length of time.  Of course all things are not equal, and it's anybody's guess where the price of oil will go.

I have never understood the "strength" of the Japanese economy in the face of its debt. The Japanese government is set to increase the national sales tax from 5 percent to 8 percent to deal with the debt. Reuters is reporting:

The tax increase marks the first serious effort since 1997 to rein in Japan's public debt, which recently blew past 1,000 trillion yen ($10.18 trillion). At more than twice the size of the economy, this is the heaviest debt load in the industrial world.

The government has done little to rein in spending and is watering down the impact of the tax hike, so some critics doubt Tuesday's move will be enough to get Japan on track to achieve its goal of halving the budget deficit - excluding debt service and income from debt sales - by the fiscal year to March 2016 and balance it five years later.