More Idle Ramblings On A Sunday Afternoon In North Texas -- September 2, 2018

While putting together the top stories of the past week I had some random thoughts. I've pretty much forgotten most of them now, but let's see if I can recall some of my observations.

Canada: the pipeline stories and "landlocked" resources in Canada need to be put into perspective.

Look at this graph:

It certainly appears that even without the additional pipeline capacity, Canadian oil is getting to the states.

The actual numbers:

Look at that increase in the past couple of years.

It was recently reported that Canadian CBR will jump from 200,000 bopd to 800,000 bopd now that the Trans Mountain Pipeline expansion project has been killed. At least that's what I recall; I could be wrong. That's fine. We all have our own world views, our own myths.

140,000,000 bbls/month = 5 million bopd.

800,000 bopd / 5 million bopd = 16% of Canadian oil will go by CBR.

For newbies: the US refiners along the Gulf Coast need heavy oil to "balance" the light oil from the shale plays in the US. US refiners along the Gulf Coast were optimized for heavy oil from Venezuela and Canada twenty years ago -- just before the US shale revolution which changed everything, and further exacerbated when Obama killed the Keystone XL.

By the way, killing the Keystone XL was a tectonic event; it was completely unexpected; it will forever be seen as the "event" that empowered the North American anti-pipeline movement.

In the US oil industry, the Keystone XL will forever be seen as an unexpected momentous event.

In the world of terrorism: Yassir Arafat conceiving the idea of hijacking a commercial airliner.

In race relations: Rosa Parks and seating on a bus.

In women's rights: Margaret Sanger and the birth control pill.

In biology: Jim Watson and a bit of luck.

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Denmark

I never thought of Denmark as an exporter of oil so I was taken aback to read that Denmark has become a net importer of oil. That completely blew me away. 

This is a huge story; I don't think folks have caught on to this yet.

Going forward, global trade will become more free, less dependent on tariffs. There is no reason for tariffs on automobiles any more, for example. As free trade becomes "more free" the gap between energy-producing countries and energy-consuming countries will widen. Europe will become the only continent in the world to depend on imported energy. That's huge and that explains a lot of angst among the Europeans. They see the writing on the wall.

All things being equal -- i.e., truly "free" trade -- and the gap between the the US and the EU will continue to widen. 

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Metonyms

Had it not been for Rockefeller (in this case, "Rockefeller" is used as a metonym) at least one more species of whale, and possibly three species of whales would now be extinct due to humans killing off whales for their oil.

Can you imagine the world had crude oil not been discovered?

Can you imagine the world had there not been a shale fracking revolution in the US and 90% of the world's oil supply controlled by Vladimir Putin and Prince Salman?

It would be interesting to trace back the history of renewables with an emphasis on that small factoid.

Prior to 2007, and probably prior to 2000, that's exactly where the world was headed. Ten years ago, the US was building huge terminals along the Gulf Coast to import natural gas; now, those same terminals have been re-purposed to export natural gas. The US is now free to export crude oil -- the law was changed under President Obama.

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Lost Decades

The US has had two lost decades: the Bush decade and the Obama decade, 2002 -- 2016. The US appears to be making up for lost time. Record low unemployment; record economy.

The rest of the world suffered through the same two lost decades, but, unlike the US, most of the world looks forward to another lost decade. Canada is in a world of hurt -- it can't close a deal, and NAFTA is coming to an end. Even with a "Hillary" in office in 2020, it will be hard to put that genie back in the bottle.

Mexico: a socialist president who appears to know how to run the country's oil industry.

Into the ground.

Venezuela. Oh my goodness. No light at the end of that tunnel.

I'm not keeping up with the Argentina story, but that doesn't sound good, either.

Mideast: in deep, deep trouble.

Turkey is going the route of Venezuela. I think Turkey is going to be one of the biggest international stories of the decade. And not a "good" international story. [September 3, 2018, The Washington Post: Turkey's woes could be just the start as record global debt bills come due.]

In the US we will see something similar: winners and losers.

California will go its own way. It will survive (and thrive) despite Sacramento's penchant for spending other people's money. The "big state" that needs to be worried: New York.

New York will lose a seat or two in the US House. Texas, California will gain.

New York state and Canada, it seems, have a lot in common. (Sacramento: another metonym for those playing along at home.)

I saw a beer ad on television last night: the state where more people move to than any other state: Texas. Welcome all those newcomers with a beer. Great ad.

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Beto

The meteoric rise of Beto ("Justin") is fascinating on so many levels.