US on its way to becoming a net exporter of oil, dominating global oil market and securing the dollar as global reserve currency

Note to Chris Irons: This is not bullish for gold.

The US is about to send a lot more oil into an already oversupplied world market: 

“It will be 4 million barrels a day by six or eight months. Four million barrels a day is a lot bigger than the North Sea as a whole. That crude oil is going to go everywhere. It goes to Asia, Europe, to India,” said Edward Morse, Citigroup global head of commodities research. “If the U.S. gets to 6 million barrels a day in three years, it will be hands-down the world benchmark.” ... 

“Add on the amount of petroleum products that are exported and add on the amount of natural gas that is exported. The U.S. becomes the biggest hub for energy trading in the world,” said Morse. “It has dramatic implications for the U.S. dollar.”Morse notes there are those who doubt the dollar’s future as the global reserve currency. But in a scenario where the U.S. grows into an energy powerhouse, “the dollar becomes more entrenched.”The U.S. had been the world’s dominant oil producer, prior to World War II. “This will be back to the future for the Gulf Coast,” said Daniel Yergin, IHS Markit Vice Chairman. Yergin said the U.S. would not have had the opportunity to increase production as much, were the law not changed in 2015 to allow for U.S. oil exports.

Trump asks for more oil, OPEC delivers

Story here.

A favor to save the Republicans' November election bacon.

Trump request for 1 million barrel per day oil production boost from Saudis and others debated in Kuwait over the weekend

What's this? Trump has to ask the Arabs to do what American producers cannot?

The story is here.

150 big spending House Republicans gave away the store in December 2015 in exchange for lifting the oil export ban

The Roll Call vote is here.

Since the vote on Dec. 18, 2015 what we got in return is US debt to the penny increasing by $2.33 trillion through 4/9/18, or 12%, and the price of a gallon of gasoline climbing by 65-cents, or 33%.

Way to go, Brownie!

Dumb shit Senate absentee Marco Rubio doesn't realize decades-old oil export ban was already rescinded last December

Noted here:

Rubio told supporters he would lift the ban as president at a private fundraiser in Texas Friday, and his campaign website has an entire page devoted to the need to lift the ban. “I would also allow American oil producers to be able to export,” Rubio said, when asked what he would do about poor oil prices as president. “Right now we’re not allowed to export.”

Congress lifted the ban in December as part of the $1.1 trillion omnibus spending bill it passed. “Oil companies rush to exploit end of U.S. crude export ban,” reported Reuters in the wake of the vote that ended a 40-year ban on crude oil exports. ...

Rubio missed the omnibus vote, opting to campaign for president instead. He later chalked up his absence to a vote against a bill full of “garbage.” “The outcome is already predetermined,” he told Greta Van Susteren on Fox News in December.

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Rubio is so out of touch he doesn't even realize Republicans gave away the store just to get the export ban lifted.

Analyst says oil price plummet primarily driven by OPEC abandoning swing producer role

Dirk Leach, who also credits the rising dollar but not to the extent others have, here:

"Now that OPEC has abdicated their role as swing producer, the only mechanism to stabilize oil prices is the market itself based on supply and demand. As we are now seeing, the supply side of that balance has a lot of inertia. Despite some analysts' view that shale production can be turned on and off rather quickly, the time it takes to decrease production is measured in months or quarters while the crude oil price response is essentially immediate. Going forward, we appear to have a crude oil market pricing system with a very fast response time and a very slow feedback mechanism (supply adjustments). Generally, this type of system is not very stable and results in frequent large swings in market pricing. Going forward, it might be a more bumpy oil market than we have been used to."

US could join this list of the world's top oil exporters thanks to relaxation of 1974 oil export ban yesterday

Export of up to 1 million barrels per day could put the US in 16th or 17th on this list from the US Energy Information Administration by the end of 2015.

The global oil war just got even more interesting: Dept. of Commerce relaxes export ban

With a tip o' the hat to Andrew Critchlow at the UK Telegraph, Reuters reported just a couple of hours ago that the US Dept. of Commerce has announced relaxation of some parts of the 1974 US oil export ban, here:

(Reuters) - The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world.

The Department of Commerce on Tuesday ended a year-long silence on a contentious, four-decade ban on oil exports, saying it had begun approving a backlog of requests to sell processed light oil abroad. It also issued a long-awaited document outlining exactly what kinds of oil other would-be exporters can ship. ...

... the impending swell of U.S. petroleum into global markets may intensify what many analysts say is a pivotal oil market war, with Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) unwilling to yield ground. Now they will face even greater competition beyond U.S. shores.

Third and final revision of 3Q2014 GDP surges to 5.0% on personal consumption and investment revisions

Personal consumption added 2.21 points to today's revision of 3Q2014 GDP at 5.0% while government consumption added 0.80 points. TOGETHER they represent 60% of the total, which again gives the lie to the meme that 70% of the economy is still consumer spending.

Not any more. Frugality is still operative in this economy when only 44% of it is from the consumer side. Keep in mind that that's a one month IMPROVEMENT in the BEA's assessment of the contribution of personal consumption by 46%.

Hm. The difference a month can make.

In the second report a month ago personal consumption had added just 1.51 points, and government consumption 0.76. Personal consumption had been averaging just 1.48 points in contribution in 2011, 2012 and 2013. Government consumption had been averaging -0.45, actually adding a SUBTRACTION to GDP over the same period. The positive contribution from government spending now, however, is nearly 83% defense spending . . . the war on ISIS.

More war, more GDP.

Gross private domestic investment added 1.18 points in today's revision, but only 0.85 in the second. The three year average had been 0.94. The 39% improvement in the estimation for this category is a very healthy and welcome sign for the economy.

Net exports added 0.78 in today's report, unchanged from the second, but way up from the prior period average contribution of just 0.08 points.

Refined petroleum exports, up 3.7% on average in 2014 year to date over the 2013 average. It's a good thing.

3Q2014 GDP revised up to 3.9% on surge in net exports (refined petroleum) and government spending (war on ISIS)

Today's second estimate of 3Q2014 real GDP surprised to the upside, rising to 3.9% from 3.5%. Consensus estimates had GDP declining to 3.3%.

Personal Consumption Expenditures contributed 1.51 points, hardly much above the average contribution for the three years 2011-2013 at 1.48. The people are spending about the same.

Likewise the contribution from Gross Private Domestic Investment was only slightly below average at .85 points. During the prior three years this had contributed to GDP annually on average just .94 points. So you could say investment activity is steady to declining.

No, the major contributions to GDP came from the huge reversals in net exports and government consumption expenditures. The former has contributed on average just .08 points annually 2011-2013, the latter -.45 annually. That's right, the net export category has been entirely inconsequential to GDP for the last three years, and that in a heretofore moribund dollar environment, while government spending has actually been a subtraction from annual GDP because the GOP takeover of the US House in 2010 arrested spending in its tracks.

But in today's report net exports contributed .78 points and government spending .76 points as  1) refined petroleum exports from the US shale boom help to pressure oil prices lower, making imported oil cheaper (imports thus are less of a subtraction from GDP at the same time), and as 2) the war on ISIS in Iraq and Syria ramps up military spending. Without those contributions to GDP and the other things being equal, growth was more like 2.36%.

Same old same old, except the dollar hit a 52 week high yesterday at 88.44. How long exports can help us in this rising dollar environment is anyone's guess, as is the tolerance of the American people for more spending on yet another foreign war.

US oil refining capacity is mismatched for our boom in light, sweet crude

So we either expand that capacity, or lift the 1975 ban on oil exports. Obama's decision to do nothing except take credit for production from private lands suggests he wants the oil boom to end.

Robert Samuelson, who has basically concluded elsewhere that Obama is lazy, in addition to being phony, tiny and small, here:

"The new oil consists mostly of "sweet, light" crudes, meaning they have a low sulfur content and are less dense than "sour, heavy" crudes. The trouble is that many U.S. refineries have been designed to process heavy, sour crudes and, therefore, aren't suitable for the new oil. At the end of 2013, the United States had 115 oil refineries capable of processing about 18 mbd, according to a report from the Congressional Research Service. About half were fitted for sour and heavy crudes. That's especially true along the Gulf of Mexico coast where more than half of U.S. refining capacity is located.

"The result is that more and more new oil is chasing less and less usable refining capacity. Refineries' bargaining power rises. Producers have to accept price discounts to sell their oil. A second problem is that much of the new production is located in North Dakota with an inadequate pipeline network to transport the crude to refineries. To offset more costly barge and rail transportation, producers (again) have to discount prices.

"Some strains will be eased by refinery expansions and new pipelines. How much is unclear. But as a report from the Brookings Institution argues, producers will be discouraged by an oil market that seems rigged against them. They will react by slowing -- or possibly stopping -- new exploration. The oil boom will ebb or end. Global oil supplies will then be lower than they would otherwise be; prices will be higher. It's a bad outcome for the United States but a good one for Russia, Iran and other producers hostile to us."