The TRUTH will set you FREE.
Wednesday, December 31, 2014
Tuesday, December 30, 2014
The Fracking Boom Is a Fracking Bubble
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The Fracking Boom Is a Fracking Bubble
Walter Brasch: Had the state imposed an extraction tax on each well, there would have been enough money to fund road and bridge repair without additional taxes for motorists. Every state with shale oil but Pennsylvania has an extraction tax.
Walter Brasch: Had the state imposed an extraction tax on each well, there would have been enough money to fund road and bridge repair without additional taxes for motorists. Every state with shale oil but Pennsylvania has an extraction tax.
The Fracking Boom Is a Fracking Bubble
In Pennsylvania, the prices at the pump are in the mid-$2 range.
That’s because Gov. Tom Corbett and the legislature imposed a 28-cent per gallon surcharge tax. Until 2019, Pennsylvanians will be paying an additional $2.3 billion a year in taxes and fees—$11.5 billion total—to improve the state’s infrastructure. In addition to the increased tax on gas at the pumps, Pennsylvania motorists will also be spending more for license registrations, renewals, and title certificates.
For far too many years, the state’s politicians of both major parties, preaching fiscal austerity—and hoping to be re-elected by taxpayers upset with government spending—neglected the roads, bridges, and other critical problems.
What the state government doesn’t readily acknowledge is that much of the damage to roads and bridges has come from increased truck traffic from the fracking industry.
The state roads, especially the section of I-80 that bisects the northern and southern halves of the state, were already in disrepair, as any long-haul trucker can attest. The addition of 40-ton fracking trucks on two-lane roads, highways and the Interstates, has added to the problem.
“The damage caused by this additional truck traffic rapidly deteriorates from minor surface damage to completely undermining the roadway base [and] caused deterioration of several of our weaker bridge structures,” Scott Christie, Pennsylvania’s deputy secretary of the Department of Transportation, told a legislative committee in 2010. Since then, the damage has increased in proportion to the number of wells drilled into the state. There are about 7,100 active gas wells in the state, with the cost of road repair estimated at about $13,000 to $25,000 per well. The fracking truck traffic to each well is the equivalent of about 3.5 million cars on the road, says Christie.
Had the state imposed an extraction tax on each well, instead of a much-lower impact tax, there would have been enough money to fund road and bridge repair without additional taxes for motorists. Every state with shale oil but Pennsylvania has an extraction tax.
Had the state imposed an extraction tax on each well, instead of a much-lower impact tax, there would have been enough money to fund road and bridge repair without additional taxes for motorists. Every state with shale oil but Pennsylvania has an extraction tax.
Although corporations drilling into Pennsylvania have agreed to fund repairs of roads they travel that have less than two inches depth of asphalt on them, the fees don’t cover the full cost of repair. Had the state imposed an extraction tax on each well, instead of a much-lower impact tax, there would have been enough money to fund road and bridge repair without additional taxes for motorists. Every state with shale oil but Pennsylvania has an extraction tax.
Gov.-elect Tom Wolf, who supports fracking, says he wants the state to begin to impose those extraction taxes. The politicians, who benefitted from campaign contributions from the oil and gas industry, claim the industry—and all its jobs—will leave the state if the taxes are too high.
There are several realities the oil/gas industry knows, but the politicians, chambers of commerce, and those who believe everything politicians and corporations tell them don’t know or won’t publicly admit knowing.
First—As long as it’s economical to mine the gas, the industry won’t leave the state, even if they have to pay a 5 percent extraction tax, which is at the low end of taxes charged by other states.
Second—Tthe expected $1 billion in extraction tax per year, even if the legislature approves, should not be expected. The industry has already found most of the “sweet spots,” and production will likely fall off in 2015, leading to less income to the state and to leaseholders.
Third—Like a five-year-old in a candy shop, the industry salivated at the newly-found technology and gas availability and overdrilled the past four years, leading to a glut and falling prices. End of the year prices are about $3.17 per million cubic feet, down almost 30 percent from November.
Fourth—Falling prices have led to drilling not being as profitable as it could be.
Fifth—The OPEC countries have not lowered their own production of oil, and the reason for the lower gas prices at the pumps is not because of the shale gas boom, but because of the plunging price of oil per barrel, which has declined by about 40 percent since Summer. Once oil prices fell beneath about $70–73 per barrel, American shale frackers found themselves unable to compete economically.
Sixth—To compensate for lower prices in the United States, the megacorporate drilling corporations have begun to find alternative ways to make money. One way is to build a massive maze of pipelines, and send natural gas to refineries in Philadelphia and the Gulf Coast, changing the gas into the extremely volatile liquefied natural gas (LNG), putting it onto ships, and exporting it to countries that are willing to pay more than three times what Americans are paying for natural gas. However, there is an unexpected twist. The OPEC low-cost oil has led to a severe drop in Russia’s economy and value of the ruble. Gazprom, the Russian-owned world’s largest gas supplier, is now forced to drop its own prices to be competitive, and has been developing plans to provide gas to Europe and Asia, especially China where American gas is headed, at a price that makes it uneconomical to do long-term contracts.
Seventh—The banks and investment lenders are getting testy. Because of overdrilling, combined with inflated estimates of how much gas really is in the Marcellus Shale, corporations have found themselves in trouble. Many corporations have begun cutting their drilling operations; others have already left the state, burdened by debt to the lending institutions; some corporations have sold parts of their operations or declared bankruptcy.
Eighth—The jobs promised by the politicians, the various chambers of commerce, and the industry never met the expectations. Gov. Tom Corbett claimed 240,000 additional jobs. The reality is the increase in jobs is about one-tenth of that; more important, most of the full-time jobs on the rigs and well pads are taken by workers from Texas and Oklahoma who have extensive experience in drilling; most of the other jobs are temporary, and layoffs have already begun.
Ninth—The fracking boom for Pennsylvania is more like the housing bubble. At first, the availability of mortgages looked like a boom. However, a combination of greedy investors and lending institutions with almost no governmental oversight, combined by a client base of ordinary people who were lured into buying houses with inflated prices they couldn’t afford, led to the Great Recession. Those who didn’t learn from the housing bubble guaranteed the fracking boom would become a fracking bubble.
Tenth—The continued push for fossil fuel development, and more than $4 billion in governmental subsidies, slows the development of renewable energy, while escalating the problems associated with climate change and brings the world closer to a time when global warming is irreversible.
Finally, but most important—The fracking industry doesn’t acknowledge that this newer process to extract gas, which has been viable less than a decade, is destroying the environment, leading to increased climate change, and putting public health at risk, something that dozens of independent scientific studies are starting to reveal. It was a 154-page analysis of public health implications, conducted by the New York Department of Health, and based upon scientific and medical studies, that led New York this month to ban all drilling—and infuriate many politicians and some landowners who were expecting to make extraordinary wealth by leasing mineral rights beneath their land to the gas companies. Of course, they didn’t look to their neighbor to the south to learn the wealth promised was never as much as the royalties delivered and that many landowners now say they should never have given up their mineral rights and the destruction of the land and farms that came with it.
Until prices stabilize, Americans are paying lower prices for gas at the pump; Pennsylvanians are also paying lower prices, but not as low as the rest of the country.
And the politicians and industry front groups continue to foolishly claim there are no environmental or health effects from horizontal fracking, only blue sky and rainbows of riches.
Walter Brasch
Wanderings
Wanderings
The TRUTH will set you FREE.
Sunday, December 28, 2014
Trusting ex Shell executives to run a railway network? and other news
Rail chaos at Finsbury Park: Trusting ex Shell executives to run a railway network?
(THE ABOVE SCREENSHOT IS FROM AN ARTICLE IN THE INDEPENDENT PUBLISHED SUNDAY 28 DEC 2014)
ARTICLE BY BILL CAMPBELL, RETIRED HSE GROUP AUDITOR, SHELL INTERNATIONAL
Could you really trust ex Shell executives to run a railway network?
In the usual manner *TFA Malcolm the Tank Engine arranged for his apprentice Marc Carne to take over as CEO of Network Rail, but like his disciples Bjorn Berget, Chris Finlayson, Gregory P Hill, dear Marc is a follower, not a leader, how otherwise would TFA Brinded have recruited them as his obedient servants in the first place.
Outside the protected arena of Shell, and in the public domain, we sense their true worth.
Perhaps, just perhaps, after the fiasco and chaos at Finsbury Park dear Marc will follow the example of Chris the gasman and be booted out his organisation, what a way to run a railway network!!
ARTICLE ENDS
*Shell’s notorious “Touch F*** All” safety culture on North Sea Platforms resulted in the deaths of Shell employees in an explosion on the Brent Bravo platform.
RELATED
Mark Carne, New Network Rail Boss, To Get £100,000 More Than Sir David Higgins: HUFF POST: 5 SEPT 2013
Extract
Network Rail’s new chief executive has come under fire for being paid £100,000 more than his predecessor. Mark Carne, a former oil executive at Royal Dutch Shell, will receive a basic salary of £675,000, which is £100,000 higher than his predecessor’s pay.
Mark Carne and the Shell Brent Bravo Scandal 5 SEPT 2013
Extract
Several years ago, Mr. Carne didn’t get a job in Shell UK that he was hoping for, and he left to take a role in BG. It didn’t take BG long to release him.
Oil majors’ finances strained by price slump
Sunday Telegraph newspaper article by Ben Marlow: Oil majors’ finances strained by price slump
The sudden fall in the price of crude oil, from $120 to just $60 a barrel in six months, is the biggest economic shock of 2014 and the fall out is expected to be profound and long-lasting, especially for the oil majors.
THE FINANCES of Britain’s three biggest oil majors are looking more stretched amid the sudden fall in the oil price, ratings agency Standard & Poor’s has warned.
S&P said the dramatic deterioration in the oil price outlook had prompted the agency to take a number of “rating actions” on European oil and gas majors including Shell, BP, and BG Group.
S&P outlined three key concerns around a group of the industry’s biggest European producers: Shell, Total, BP, Eni and BG Group.
The first is debt levels, which have jumped from a combined S162.9bn (£105bn) for the five companies at the end of 2008 to an estimated $240bn in 2014.
Secondly, while borrowings have risen, dividends have also jumped, leading to “a very substantial cash deficit”, S&P said.
Lastly, costs and capex, “have increased materially”.
The ratings agency has revised the outlook on BP and Shell to negative.
On BP, the ratings agency said “the outlook revision to negative reflects our concern that in 2015-16, cash flow generation might come under pressure”. It also said it could downgrade the company in the next six to 12 months if its debt profile deteriorated.
It said Shell’s cash flow could be “significantly affected” by the lower oil price and the company was constrained by “hefty capital spending” and a fixed dividend payout.
The ability of tile biggest companies to withstand the oil price collapse depends on the extent to which they can reduce expenses…
Extracts end
The extracts are from the article “Oil majors’ finances strained by price slump” published on the front page of The Sunday Telegraph Business Section on 28 December 2014.
The TRUTH will set you FREE.
Saturday, December 27, 2014
Petitioning Edward Heerema, founder of Allseas Group SA
Petitioning Edward Heerema,
founder of Allseas Group SA
Share this petition
with 11 supporters
89 needed
Big Oil’s $3 Billion Homage to Nazi War Criminal
The biggest vessel in the world, the Pieter Schelte (above) has been built by Daewoo in South Korea. Swiss company Allseas commissioned the building of the huge $1.7bn ship. Both the legs and main structure of a rig can be moved simultaneously (shown in illustration)
Please change the name of your new ship, the Pieter Schelte, at 1,253 feet long and 384 feet wide, said to be the largest ship in the world in area.
Astonishingly, you have named the ship in honour of your late father Pieter Schelte Heerema, a former officer in the murderous Waffen SS officer and a diehard member of the Nazi party, who was once quoted as saying:
"The German race is model. The Jewish race, by comparison, is parasitic ... therefore the Jewish question must be resolved in every Aryan country."
You have done so in your capacity as the founder of the Swiss-based Allseas oil services company that owns the Nazi named ship, which has just entered service in the offshore oil industry, with Shell as one of its first clients.
This public homage by you as the weathy son of a Nazi war criminal is an affront to the relatives of tens of millions of souls who perished at the hands of Nazi Germany, the most evil regime in history. Many innocent victims, including children, died in the most horrific circumstances in the gas ovens at Nazi concentration camps.
Forbes published an article on the subject on 20 December 2014:
"Big Oil's $3 Billion Homage to Nazi War Criminal"
Extract from the Forbes article
The interesting thing is that Allseas seems to be getting away with this. The Dutch government even provided a subsidy for the project. Meanwhile, after a brief flurry of interest in 2008 when the original contract to build the Pieter Schelte was signed with Korea’s Daewoo shipyard, the Dutch press has largely swept the controversy under the rug. The Korean press too has been quiet. (Even as the ship left Seoul in November, the event seems to have gone almost completely unrecorded...
I am identified in the Forbes article as a so-called Shell whistleblower. I have published articles on the subject, corresponded with Allseas Group and received written threats from your company, no doubt originated by your lawyers.
I accept that you had the ship named after your father out of genuine affection and high regard for him, irrespective of his past. I was very fond of my late father who fought against the Japanese in Burma.
However, in view of the unspeakable war crimes against humanity committed by the Nazis, I believe your action is morally wrong and hope you will reconsider an act that many might regard as the height of arrogance and blatantly disrespectful to the victims of Nazi atrocities.
Please change the ships name so that it no longer sails under the name of a former Waffen SS Officer jailed for war crimes.
I feel sure that many others will share my feelings and support this appeal to you.
(A photograph of Pieter Schelte Heerema wearing an SS uniform can be viewed via the link shown below. He was a renowned maritime engineer, but rightly condemned for his service in the Nazi Waffen SS.)
Edward Heerema, founder of Allseas Group SA
Change the name of his new ship, the Pieter Schelte, at 1,253 feet long and 384 feet wide, said to be the largest ship in the world in area.
The TRUTH will set you FREE.
Friday, December 26, 2014
The economic analyst who predicted the oil prices bust
Jesse Colombo, the economic analyst who predicted the oil prices bust
FULL CREDIT TO THE EXPERT WHO CORRECTLY PREDICTED THE OIL PRICE CRASH
By John Donovan
In June of this year Forbes.com published an extensive prescient article by Jesse Colombo, an economic analyst, under the headline:
“9 Reasons Why Oil Prices May Be Headed For A Bust”
His prediction made 6 months ago:
“There are a growing number of reasons, however, why crude oil prices are likely to finally experience a bust in the not-too-distant future.”
Jesse Colombo correctly predicted an event of huge significance. Ask Putin or Shell’s Ben van Beurden.
Some further extracts from his brilliant article, which deserves reading in full.
While extreme aggregate trading positions can persist for quite a while, as is the case in the crude oil market for the past few years, they are still a reliable indication that a powerful market reversal is likely to occur when the proper catalyst eventually appears and sends speculators heading for the exits. So far, no bearish catalyst has presented itself in the crude oil market, but the other points that I’ve listed in this piece may combine to form a perfect storm that finally causes the oil market to crack.
The 9 cited reasons are:
1) The unwinding of record speculative bullish bets
2) The “smart money” is growing increasingly bearish
3) The global monetary environment is tightening
4) The shale oil boom is increasing supply
Surging North American oil production, courtesy of the recent U.S. shale and Canadian oil sand booms, is dramatically reducing U.S. oil imports and has even led to a glut of light, sweet crude oil in the United States.
5) Production is starting up again in many countries
6) OPEC’s limited ability to boost prices by cutting production
When oil prices dropped significantly in the past, OPEC countries would cut their oil production to bolster the price of oil. Growing fiscal deficitsin many OPEC nations in recent years, however, make it far more difficult to cut oil production because these countries can no longer afford the loss of oil revenues.
7) Global oil demand is slowing
Led by China and other emerging nations, global oil demand spiked in the years following the 2008 financial crisis, which contributed to oil’s bull market. Since 2011, oil demand growth has slowed significantly to a half-decade low largely due to the ongoing economic slowdown in China and emerging economies:
8) The global economic “recovery” is actually another bubble
9) The ending of the commodities supercycle
Link to the full article with explanations for all 9 reasons.
(Jesse Colombo is an analyst and anti-economic bubble activist who is currently warning about growing bubbles in Canada, Australia, Nordic countries, China, emerging markets, Web 2.0 startups, U.S. higher education, and more. He believes that the popping of these bubbles will cause the next financial crisis.)
The TRUTH will set you FREE.
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