On the Peak Oil (Demand) Front...

Peak Oil demand is spreading more pain and gloom throughout the Oil Patch of the global economy.

The following two articles were posted by Raúl Ilargi Meijer on The Automatic Earth yesterday and today.

The first one:  More Pain Seen For US Crude As Product Glut Adds To Gloom (Reuters)

A glut of refined products has worsened the already-grim outlook for U.S. crude oil for the rest of the year and the first half of 2017, traders warned this week, as the spread between near-term and future delivery prices reached its widest in five months. A stubborn, massive supply overhang punished crude over the winter as U.S. oil futures hit 12-year lows in February. As supply outages and production cuts increased, crude rallied and spreads tightened significantly in May. But the unusually large amount of gasoline and oil in storage, combined with expectations of a ramp-up in crude production, has made traders more bearish on the price outlook for late 2016 and early 2017.

The second one: Fracklog in Biggest US Oil Field May All But Disappear (Bloomberg)

The number of dormant crude and natural gas wells in the U.S. stopped growing in the first quarter – and may all but disappear in the nation’s biggest oil field should prices hold steady. As of April 1, there were 4,230 wells left idle after being drilled, a figure little changed from January, according to an analysis by Bloomberg Intelligence. While some explorers have continued to grow their fracklog of drilled but not yet hydraulically fractured wells, others began tapping them in February as oil prices rose, the report showed.

Crude in the $40- to $50-a-barrel range may wipe out most of the fracklog in Texas’s Permian Basin and as much as 70% of the inventory in its Eagle Ford play by the end of 2017, according to Bloomberg Intelligence analyst Andrew Cosgrove. While bringing them online is the cheapest way of taking advantage of higher prices, the wave of new supply also threatens to kill the fragile recovery that oil and gas markets have seen so far this year. “We think that by the end of the third quarter, beginning of the fourth quarter, the bullish catalyst of falling U.S. production will be all but gone,” Cosgrove said in an interview Thursday. “You’ll start to see U.S. production flat lining.”

"Higher oil prices," that is, in the $40 to $50 range, can entice the extractors to return to pump out or frack out the wells that are dormant, or just drilled and capped. Unfortunately, according to the above Reuters article, and oil price developments today, those higher prices cannot be guaranteed. As Raúl Meijer says, What’s going to happen to the lenders who made it all possible?

Now the latest from The Wall Street Journal:

Oil prices fell Friday as a glut in oil products stoked market concerns that the global crude market will remain oversupplied longer than expected. 

U.S. crude oil for September delivery recently fell 54 cents, or 1.2%, to $44.21 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 58 cents, or 1.3%, to $45.62 a barrel on ICE Futures Europe.

This simple chart explains why oil prices are so low compared to those in 2014.
Source: vox.com.

Demand is not keeping up with supply, despite an amount lower than the peak extracted in July of 2015. A NEW oil production peak, projected for the end of 2016, is not expected to outstrip demand. Which means there will be an even BIGGER glut and a backup in oil supplies being delivered because consumption by the end user is not fast enough. And storing all that oil has got to cost a lot of money.

Now what's the cause of this new oil peak? It is certainly not demand. But the lenders have to be paid, the social welfare systems of the producer countries have to be supported, companies' employee payrolls have to be met (otherwise employees get laid off), and some amount has to be set aside or spent for maintenance, exploration, drilling of new wells, and overhead, especially if lenders become loath to lend any more money to the fossil fuels industry.

Eventually the oil producers and oil producing companies will have to wise up, and reduce the supply to clear out the glut and backup of oil, in order to get the prices to go back up to a level where they can make a profit, "hopefully" at a price the end consumer can afford*.

* "Hopefully" at a price the consumer can afford: this would be good for the economy, which always has to grow to keep people employed and governments to meet its obligations and lenders to be repaid, but it would be TERRIBLE for the biosphere, us and our civilization, all of which depend on a salubrious climate that doesn't change more rapidly than species and ecosystems can adapt. Burning of more fossil fuels means more Carbon Dioxide in the air which means more and faster Global Weirding... with the coming superstorms the size of continents and the strength of hurricanes coming sooner and more frequently. One already happened last winter.

Demand-Side Peak Oil is Here -- Supply-Side Peak Oil to follow.

Major source for today's blog article: The Peak Oil Paradox -Revisited-, posted 19 July 2016 on The Automatic Earth by Raúl Ilargi Meijer.

So far, supply-side Peak Oil is a myth... so far. Although, prior to the hydrofracturing boom, it wasn't for the United States.

M. King Hubbert's Peak Oil predictions based on reserves.
Source: M. King Hubbert via The Automatic Earth.

In 1956, M. King Hubbert generated the above graph indicating Peak US Oil about 1965 for ultimate reserves of 150 billion barrels of oil, 1970 for 200 billion barrels.

Actual US Oil Production 1900 through 2015.
Enter fracking, and mutatis mutandis, no more Peak US Oil!
Source: The Automatic Earth.

I'll give you a short history behind the end of US Peak Oil, or rather, US "Twin Peaks" Oil. Right now in 2016 the US is pumping slightly less oil out of the ground due to the end of the fracking boom. The boom itself got underway by inflated estimates of the amount of oil in the Bakken Shale formation and elsewhere. Htdrofracturing was a perceived profit center. A lot of debt was issued to get the new method of oil and natural gas extraction underway. And for a short while, it was, at least for oil, so ling as fossil fuel prices remained relatively high ($100 to 110 per barrel 2011 up to mid 2014). But then the oil prices started to collapse!

Oil price History 1974 through 2014.
Source: The Huffington Post.

Oil prices have gone on a roller coaster depending on supply, demand, political intervention and speculation. However, since the end of 2014, oil prices have remained relatively low.

Oil Price History 2006 through end 2015.
Source: The Motley Fool.

The Motley Fool article asked if another price spike was underway, and indeed a small one did come about, and hit about $60 or so per barrel, but quickly collapsed when China cracked down on commodities speculation. It's now about $45 per barrel. Where the oil price goes now depends on how big the continuing supply is, and how strong or weak the demand is. Whether the oil industry can make a profit on the price is a different story.

The oil extractors at least in the United States and Canada have managed to get their costs down, at the expense of future investment, but some, especially small-time frackers, are pumping as much as they cam just to meet service payments on their debt! Oil-producing countries, on the other hand, have social welfare safety nets to take care of, which hikes their break-even oil price requirements considerably. Of course, some like Russia are somewhat lucky, because their internal costs are in the local currency, and shrink in relation to the world price which is in US Dollars, due to drop in the currency for whatever reasons (in the case of Russia, US sanctions causing reduced trade with Europe). Even so, some companies have gone under, other companies have shut their wells, and the daily production has dropped as a result.

Latest peak production was in July 2015. Production has been shrinking by 2% per year since.
Source: The Automatic Earth.

Now it may be that the price of oil may go back up again, if the demand trend line shown above continues. If it spikes back up far enough, the financial sector, now reeling from default by the "oil patch" companies (but not as bad as it did from the bursting of the housing bubble), may choose to invest in oil extraction and the development of oil extraction technologies again. On the other hand, they may not, and in which case a rise in production may not occur until there are lines at the gas stations. And if there has been a considerable amount of disinvestment in and neglect of the oil extraction infrastructure, the daily production rates may never see the peak attained in 2015 ever again! But then again, it might, or even exceed it. At any rate, we could be in for several cycles of price collapse, financial fallout, production drop, shortage, price spike, reinvestment, production rise, glut, and price collapse, rinse and repeat, until the physically and economically feasible oil extraction drops remorselessly.  Natural gas extraction and coal mining may accordingly drop along with it.  

In which case... voila! Supply-side peak oil becomes a reality, thanks to demand-side peak oil attained in mid-2015.

Here are Raúl Meijer's concluding thoughts (read the article) on the matter, which I believe is similar with my thoughts above on the future of fossil fuels' extraction.

1. M. King Hubbert’s forecast for US oil production and the methodology it was based on has been proven to be sound when applied to conventional oil pools in the USA. When decline takes hold in any basin or province, it is extremely difficult to reverse even with a period of sustained high price and the best seismic imaging and drilling technology in the world.
2. On this basis we can surmise that global conventional oil production will peak one day with unpredictable consequences for the global economy and humanity. It is just possible that the near term peak in production of 97.08 Mbpd in July 2015 may turn out to be the all-time high.
3. Economists who argued that scarcity would lead to higher price that in turn would lead to higher drilling activity and innovation have also been proven to be correct. Much will depend upon Man’s ability to continue to innovate and to reduce the cost of drilling for LTO in order to turn a profit at today’s price levels. If the shale industry is unable to turn a profit then it will surely perish without State intervention in the market.
4. But from 2008 to 2015, oil production actually fell in 27 of 54 countries despite record high price. Thus, while peak oil critics have been proven right in North America they have been proven wrong in half of the World’s producing countries.
5. Should the shale industry perish, then it becomes highly likely that Mankind will face severe liquid fuel shortages in the years ahead. The future will then depend upon substitution and our ability to innovate within other areas of the energy sector.

And I will add: what sorts of innovation? Wind, hydro, solar, nuclear if it weren't so dodgy, and biofuels if they didn't take food out of the mouths of the poor.

Besides, we have a soon-approaching abrupt and civilization-wrecking climate change coming up.

Oil at $30 Dollars a Barrel Bodes Ill for Fossil Fuel Interests as Renewables Ramp up

First, there's no sign the present oil glut is going to go away. The inventories in the USA are bigger than ever since the Great Depression and the prices both on the spot market and at the pump just keep dropping -- with a few jumps to keep experts guessing.

From Zero Hedge via The Automatic Earth (hat tip to Raul Ilargi Meijer)


US Crude Inventories Are The Highest Since the 1930s
by Tyler Durden, Zero Hedge, 27 January 2016

In case you were under the impression that oil was stabilizing, we thought this chart might help clarify just how “different” it is this time in the energy complex… U.S. crude inventories are at levels last seen when President Herbert Hoover was battling the Great Depression.

US Crude Inventories are the greatest since the Great Depression!
Source: Zero Hedge via The Automatic Earth 

After this week’s build – Crude stockpiles climbed 8.38 million barrels to 494.9 million in the week ended Jan. 22, the highest since November 1930, according to weekly and monthly data from the Energy Information Administration. It did not end well last time…

http://www.zerohedge.com/news/2016-01-27/us-crude-inventories-are-highest-great-depression

But prices will probably continue to go down. After all, according to historic data going back to 1861, today's prices, while relatively inexpensive, are no bargain.

From Market Watch via The Automatic Earth (again, hat tip to Raul Ilargi Meijer)


Chart going back to 1861 shows oil isn’t insanely cheap right now
By William Watts, Market Watch, 27 January 2016

Not insanely cheap by historic price
Source: Market Watch via The Automatic Earth.

Oil futures are hovering around $30 a barrel—not far off 12-year lows—and bears are penciling in a test of $20 or lower. It is a pretty downbeat picture, but is black gold really that cheap on a historical basis? Not really, according to the chart from Deutsche Bank, which tracks inflation-adjusted oil prices—and the average price—all the way back to 1861, just two years after Edwin Drake drilled the first productive U.S. oil well near Titusville, Pa. Over the last 150-plus years, the average oil price is $47 a barrel, according to the data. West Texas Intermediate oil futures for March delivery were down 22 cents, or 0.7%, at $31.23 a barrel in late morning trade. “So current levels are low but not exceptionally low relative to long-term history,” said Jim Reid, macro strategist at Deutsche Bank, in a Wednesday note.

The charts were published as part of an annual study by the investment bank. Interestingly, Reid did note that this was the first year that the firm’s long-term mean reversion exercise shows positive return expectations for oil since the study began more than a decade ago. But don’t get too excited over prospects for an immediate mean-reversion rally. Reid puts the findings in the context of the commodity cycle, which is on the downswing after a sharp run-up that began in the mid-1990s. He notes the “long-held belief” that commodities, such as oil, that are a factor of production can’t outstrip inflation over the long term because “if they do there will be alternatives found.”

That helps to explain oil’s pullback. This process, however, “can take years to resolve, so even if we’re correct, commodity cycles can still last a long time before they eventually mean revert,” he wrote. Meanwhile, the graph “doesn’t suggest that current levels are as extreme as many would suggest even if long term value has returned,” Reid said. “The $140 prices a few years back look especially bubble-like” from a long-term perspective.

Of course, if oil stays at a low price for *too* long, when demand comes back up, the fossil fuel companies may not be in a position to furnish the demanded supply. Prices will shoot up and demand will be destroyed again.

From Our Finite World (hat tip to Gail Tverberg)


Why oil under $30 per barrel is a major problem

by Gail Tverberg, Our Finite World, 19 January 2016  

A person often reads that low oil prices–for example, $30 per barrel oil prices–will stimulate the economy, and the economy will soon bounce back. What is wrong with this story? A lot of things, as I see it:

1. Oil producers can’t really produce oil for $30 per barrel.

A few countries can get oil out of the ground for $30 per barrel. Figure 1 gives an approximation to technical extraction costs for various countries. Even on this basis, there aren’t many countries extracting oil for under $30 per barrel–only Saudi Arabia, Iran, and Iraq. We wouldn’t have much crude oil if only these countries produced oil.



Source: Alliance Bernstein via Our Finite World.

2. Oil producers really need prices that are higher than the technical extraction costs shown in Figure 1, making the situation even worse.

Oil can only be extracted within a broader system. Companies need to pay taxes. These can be very high. Including these costs has historically brought total costs for many OPEC countries to over $100 per barrel.

Independent oil companies in non-OPEC countries also have costs other than technical extraction costs, including taxes and dividends to stockholders. Also, if companies are to avoid borrowing a huge amount of money, they need to have higher prices than simply the technical extraction costs. If they need to borrow, interest costs need to be considered as well. 

http://ourfiniteworld.com/2016/01/19/why-oil-under-30-per-barrel-is-a-major-problem/

In the above article, Gail Tverberg notes that renewables are still at a vary small fraction of total energy supply, but the graph she posts indicates that they are increasing in proportion. Enough to cause some traditional fossil fuel energy companies to try to head off the ramp-up of renewables off at the pass. Like in Nevada recently. (hat tip to Robertscribbler.)

Welcome to the Renewable Energy Renaissance — Fight to End Fossil Fuel Burning is Now On
by Robertscribbler, 27 January 2016

Beneath the dark and growing cloud of human fossil fuel emissions there are a few carbon-free lights being kindled among all the black, coal-ash soot.

They’re the lights of a new renaissance. An unprecedented period of change for governments, the energy markets, and for individuals themselves. For we are all, whether we realize it or not, now embroiled in a struggle that will determine our own fates as well as that of our children and of all the generations to follow. For this renaissance is as much about liberation — the provision of clean energy choice as means to free ourselves from a wretched captivity to fossil fuel consumption — as it is about fighting to leave those very hothouse mass extinction fuels in the ground.

It’s a new kind of vital social unrest. A global struggle for justice on a scale not seen since at least the downfall of the slave trade. The battle lines have been drawn — in courtrooms, at ports, along pipelines, and on the train tracks, in the legislative offices of cities, states and in the halls of the federal government itself. We, as a civilization, are being divided into pro-renewable energy, pro-response to climate change, pro saving life on this Earth, and anti-renewable energy, anti-response, climate change denial factions. It is a disruptive, highly dangerous period of history. One we must successfully navigate if we are to survive as a modern civilization and, perhaps, as a species living on this Earth....

An example of this struggle in microcosm took place during December through January of 2015 in Nevada. Emboldened by similar decisions in Arizona, monopoly utilities moved to protect their carbon-polluting infrastructures by pushing the state government (made up of a majority of republicans to include the governor — Sandoval) to impose restrictive fees on solar energy use throughout the state. Targeting rooftop solar energy systems, the Nevada Public Utilities Commission (PUCN — also made up entirely of republicans) voted to, across the board, increase costs for rooftop solar users by both slashing incentives and imposing draconian fees. The decision negatively impacted 12,000 current solar customers using rooftop power to include families, schools and even public libraries....

Nevada’s PUC decision smacks of a monopoly power generation protection scheme. One that has made it impossible for solar installers to operate in the state. As result, Nevada’s two other top solar installers (Vivint and Sunrun) have now followed Solar City’s example [of stop doing business in Nevada] and decided to halt operations in Nevada. The jobs impact from just these three solar providers closing shop is a net loss of 6,000. But with hundreds of small solar installers active in Nevada before the ruling, the economic and environmental damage is likely to be ongoing and long-term....

As if Nevada’s war against rooftop solar industry within its own state wasn’t bad enough, a group of 26 states currently governed by fossil fuel industry funded republicans are now submitting a Supreme Court challenge to Obama’s Clean Power Plan. The group has re-stated the now typical and jaded republican claim that the EPA doesn’t retain the legal authority to regulate carbon emissions. The new claim is predicated on the statement that EPA will force fossil fuels out of business, stating that the federal government does not retain the authority to effectively ban the use of a particular set of fuels.

It’s a convoluted appeal that smacks of past states rights arguments regarding every kind of dangerous, toxic or nefarious trade from slavery, to firearms, to tobacco. The appeal letter demands an ‘immediate stay’ on the Clean Power Plan (a cessation of implementation). It seeks to sanctify as ‘legal right’ the ability of coal plants to remain open and to continue pollution. It attacks federal government decisions that would support renewable energy as a solution to climate change (without using the words climate change once in the document, which itself required a supreme manipulation of legalese to achieve). And it uses language that implies state policy directives and goals supersede those of the federal government. 

http://robertscribbler.com/2016/01/27/welcome-to-the-renewable-energy-renaissance-fight-to-end-fossil-fuel-burning-is-now-on/

It is folly to oppose the growth of Renewables and further increasing it. Because we don't have an infinite amount of fossil fuels within the Earth's crust and eventually, sooner rather than later due to the insanely low prices compared to the costs of extraction, there will be no more fossil fuels that will be brought to market, and an ever-increasing reduction in supply prior to that. Better to build out renewables as much as we can, and perhaps build ourselves a bridge to a better future, even with a lower standard of living, than to collapse, bit by bit, headlong into a new Dark Age and all the misfortunes and unpleasantlesses that would accompany it.

Oil companies getting in a big heap of trouble...

Big Oil and the small oil extraction companies too are getting in a heap of trouble. Big Oil is in scandal over dissassembling the truth over Climate Change while they KNEW the truth, and both Big Oil and the small fry are in trouble over their debts. The latter troubles do not bode well for the oil companies when the supply tightens up again, because of investors issues with the companies' debts that went bad before that point in the future.

Tips o' th' hat to Abel Adamski, Apneaman[1] [2],  Griffin, Ryan in New England, Robert Scribbler [1], [2], dtlange, and Raúl Ilargi Meijer of The Automatic Earth.

Big Oil braced for global warming while it fought regulations
By Amy Lieberman and Susanne Rust of the LA Times
Dec. 31, 2015 Link

“A few weeks before seminal climate change talks in Kyoto back in 1997, Mobil Oil took out a bluntly worded advertisement in the New York Times and Washington Post.

“Let’s face it: The science of climate change is too uncertain to mandate a plan of action that could plunge economies into turmoil,” the ad said. “Scientists cannot predict with certainty if temperatures will increase, by how much and where changes will occur.”

One year earlier, though, engineers at Mobil Oil were concerned enough about climate change to design and build a collection of exploration and production facilities along the Nova Scotia coast that made structural allowances for rising temperatures and sea levels.

http://graphics.latimes.com/oil-operations/

The problem is it’s not just AGW-Deniers and Republicans. It’s pretty much the entire political apparatus. Congress puts poison pills in must-pass bills and Obama signs off on them. Every. Fracking. Time.

During Paris Climate Summit, Obama Signed Exxon-, Koch-Backed Bill Expediting Pipeline Permits
By Steve Horn of Desmog Blog
December 31, 2015 Link

Just over a week before the U.S. signed the Paris climate agreement at the conclusion of the COP21 United Nations summit, President Barack Obama signed a bill into law with a provision that expedites permitting of oil and gas pipelines in the United States.

The legal and conceptual framework for the fast-tracking provision on pipeline permitting arose during the fight over TransCanada's Keystone XL tar sands pipeline. President Barack Obama initially codified that concept via Executive Order 13604 — signed the same day as he signed an Executive Order to fast-track construction of Keystone XL's southern leg — and this provision “builds on the permit streamlining project launched by” Obama according to corporate law firm Holland & Knight.

That 60-page streamlining provision falls on page 1,141 of the broader 1,301-page FAST (Fixing America's Surface Transportation) Act (H.R. 22 and S. 1647), known in policy wonk circles as the highway bill. The provision is located in a section titled, “Federal Permitting Improvement.”

http://www.desmogblog.com/2015/12/31/paris-climate-summit-obama-exxon-koch-bill-pipeline-permit

And right after, he lifted the export ban. Big Oil didn't take long exploiting it, either. First ship was already on the way on December 31st.

First U.S. Oil Export Leaves Port; Marks End to 40-Year Ban

By Joe Carroll and Sheela Tobben of Bloomberg

31 December 2015 Link

The first U.S. shipment of crude oil to an overseas buyer departed a Texas port on Thursday, just weeks after a 40-year ban on most such exports was lifted.

The Theo T tanker has left NuStar Energy LP’s dockside facility in Corpus Christi, Texas, along the western shore of the Gulf of Mexico, Mary Rose Brown, a spokeswoman for NuStar, said in an e-mail. The ship is carrying a cargo of oil and condensate to Italy from ConocoPhillips’s wells in south Texas that was sold to Swiss trading house Vitol Group.

A campaign by oil explorers including Continental Resources Inc., Chevron Corp. and Exxon Mobil Corp. to lift the 1970s-era export prohibition culminated in a Dec. 18 congressional decision to end the ban.

http://www.bloomberg.com/news/articles/2015-12-31/first-u-s-oil-export-leaves-port-marking-end-of-40-year-ban

Well whaddya know! Lots and lots and lots of oil can be materialised into existence using accounting parlor tricks! And then disappeared when the tricks are corrected. The investors and creditors won't won't be happy, tho'.

Billions of Barrels of US Oil Set to Disappear. Poof
Tom Lewis of The Daily Impact Link

In a few weeks, several billion barrels of American oil will vanish in an instant. (I am not making this stuff up: the headline is right there on Bloomberg Business, hardly a chicken-little medium.) This is — shortly to be was — the oil that just a few months ago (Remember? When we were young, and happy?) was to return us to energy independence, to make us the number one oil producer in the world, to bring the happy days here again for good. 

But much of that oil is about to disappear, not with the boom of an oil-train explosion or deep-well blowout or terrorist bomb, but with the quiet click of a computer mouse. And this time it’s not (as it often has been before) the Energy Information Administration revising downward a previous guess about oil reserves.   

As the American shale-oil boom, a.k.a. American Oil Revolution, was accelerating back in 2009, the Masters of the Oil Universe demanded and got an accommodation from the Securities and Exchange Commission: it was made easier for the oil companies to claim as hard assets, for purposes of valuing their companies and borrowing money, the value of all the oil they estimated to be “in reserve,” which is to say lying somewhere under the ground they had under their control.

The oil companies’ estimates of their own “proven reserves” were astronomical, of course. In the careful words of one expert observer, David Hughes, “There was too much optimism built into their forecasts.” Translation: They lied.

http://www.dailyimpact.net/2015/12/10/billions-of-barrels-of-us-oil-set-to-disappear-poof/ 

Richard Heinberg gives a presentation here that focuses on the false promises of fracking, and how since the mid-2000s the major oil companies have invested tens of billions in expanding oil production without hardly any increase in the amount extracted. They are seeing rapidly diminishing returns, and need to maintain production levels. It’s why there is so much fracking and digging up of tar sands and drilling in the deepwater ocean and the Arctic. The low-cost, easy-to-get oil is depleting now but our dependency on oil remains.

Robert Scribbler has this to say about Prof. Heinberg's conclusions:

The old, cheap oil is a diminishing fraction of current production. Growth comes from the expensive unconventional a which is one major reason why we have so many companies facing bankruptcy. From the point of view of strategic use of money to reduce future carbon emissions, now is prime time for divestment. But given a still general lack of strong government policy, the energy markets will face a long series of shocks as a result. Laissez faire again and the result is mass malinvestment in fossil fuels and assets stranded in wave after wave.

 http://robertscribbler.com/2015/12/31/amidst-disasters-around-the-world-top-scientists-declare-links-between-extreme-weather-and-climate-change/#comment-62636

And as the floods come down the Mississippi like a million tractor trailers barreling down the Mass. Pike, Exxon is able to close a refinery to minimize flood damage in Memphis due to lack of demand because of the weird, warm weather we've been having. The weird, warm weather that's being caused by too much Carbon Dioxide in the atmosphere due to combustion of fossil fuels, particularly coal and oil.

Southern states brace for surging Mississippi River flooding
By Victoria Cavaliere of Reuters
Additional reporting by Daniel Wallis, Erwin Seba, Justin Madden and Mary Wisniewski
Bernard Orr and Tom Brown, eds.
Fri Jan 1, 2016 Link

Officials in Louisiana are checking levees daily, and Exxon Mobil Corp has decided to shut its 340,571 barrel-per-day refined products terminal in Memphis, Tennessee, as floodwaters threatened to inundate the facility just south of the city’s downtown.

“All that water’s coming south and we have to be ready for it,” Louisiana Lieutenant Governor-Elect Billy Nungesser told CNN. “It’s a serious concern. It’s early in the season. We usually don’t see this until much later.”

http://www.reuters.com/article/us-usa-weather-idUSKBN0UF1R620160102

And Robert Scribbler finds it "very ironic and more than a little disturbing that the same oil companies that have been shoring up their own infrastructure to deal with climate change keep blocking policies that are now much needed to prevent damage to an undefended public."

Of course, the falling oil prices are going to force oil companies big and small to cut costs any way they can, or face defaults on their debts. We should expect plenty of oil company defauts and bankruptcies in 2016 which could potentially shut-in a lot of oil reserves underground (good news for Climate Change!) due to investors, including big banks, who were once bitten and will be twice shy.

Oil drops 31% in 2015 on global crude glut
By William Watts and Jenny W. Hsu
Dec 31, 2015 Link

Oil futures ended higher Thursday in the final trading session of 2015, but posted a steep annual drop for the second year in a row as markets continue to wrestle with a global glut of crude. On the New York Mercantile Exchange, light, sweet crude futures for delivery in February rose 44 cents, or 1.2%, to finish at $37.04 a barrel. For the year, the U.S. benchmark dropped 30.5% and has lost 62.4% over the last two years. Crude hadn’t dropped two years in a row since 1998. February Brent crude, the global benchmark, rose 82 cents, or 2.3%, on London’s ICE Futures exchange to settle at $37.28 a barrel. Brent fell 35% in 2015, marking its third straight yearly drop. Oil trimmed gains somewhat after oil-field services firm Baker Hughes said the total number of U.S. oil rigs fell by two this week to 536.

Oil’s bounceback on Thursday likely reflected some short covering ahead of year-end and a three-day weekend, said Phil Flynn at Price Futures. U.S. markets will be closed Friday for the New Year’s Day holiday. Flynn said traders might be nervous about maintaining short positions amid rising tensions within Iran that could threaten the implementation of a nuclear accord that was expected to result in the lifting of sanctions that have prevented the country from exporting oil. Iran’s president has ordered his defense minister to expedite the country’s ballistic missile program following newly planned U.S. sanctions, he said Thursday, according to The Wall Street Journal. With U.S. production “growing for the last few weeks and global inventories being near storage limits, this is yet another reminder that the supply glut could take a long time to clear, which may mean even lower oil prices in the near term,” said Fawad Razaqzad at Forex.com.

http://www.marketwatch.com/story/crude-holds-tight-as-dark-clouds-hang-over-prices-for-2016-2015-12-31

Looks like we'll be in interesting times!

Yep... COP21's a Fraud.

UPDATED 12-19-2015

This week’s Global Research News Hour invites three analysts with three different perspectives related to fossil fuel dependence and climate change.  In my opinion, only Richard Heinberg knows what he's talking about: how transitioning to renewables pose to be much more difficult than is commonly believed in Climate Change activist circles and feared in fossil fuel corporation boardrooms -- the other two, Dave Wigington and GuyMcPherson, are cranks. Still, all these two are worth listening to because there are nuggets of truth behind Wigington's HAARP conspiracy theories and McPherson's Near Term Human Extinction by the Year of Our Lord 2050 nonsense.

http://www.globalresearch.ca/inconvenient-truths-facing-the-cop21-climate-conference/5495442 

Now, no sooner did the ink run dry on the COP21 agreement with no mandatory targets, no compulsory financing (despite $100 bn annual commitment for climate financing in developing countries), and commitments to reduce emissions that were panned as missing the 2 degrees C (3.6 F) by 0.7 C (1.3 F) on the warm side, which is not good if we want to avoid a stormy climate that will completely demolish civilization, utterly, we have countries giving the green light for MORE fossil fuel emitting projects! Plus the TPP, TPiP and other free trade agreements in the wings that will deprive governments of the power to mandate emissions, and make them pay damages to boot, if some corporation sues them in secret trade commission court set up under these bad bad treaties.

First, we hear from the UK Guardian -- Members of Parliament have voted to allow fracking under Britain’s national parks, amid accusations that the government has sneaked the measure through parliament without a proper debate.

Ministers used a statutory instrument – a form of secondary legislation – to push through the new rules, which means legislation can pass into law without a debate in the House of Commons. MPs voted in favour by 298 to 261. 

The new rules allow fracking 1,200 metres below national parks and sites of special scientific interest, as long as drilling takes place from outside protected areas. This comes despite the government previously pledging an outright ban on the controversial technique for extracting shale gas in such areas.

In January Amber Rudd, the then parliamentary undersecretary of state for climate change, told MPs: “We have agreed an outright ban on fracking in national parks [and] sites of special scientific interest.”

http://www.theguardian.com/environment/2015/dec/16/fracking-under-national-parks-approved-by-mps-amid-acrimony

Second, North Korea and Japan are going ahead with building more coal-fired power plants. I wonder how many are set to go up in People's Republic of China?

Less than a week since signing the global climate deal in Paris, Japan and South Korea are pressing ahead with plans to open scores of new coal-fired power plants, casting doubt on the strength of their commitment to cutting CO2 emissions.

Even as many of the world’s rich nations seek to phase out the use of coal, Asia’s two most developed economies are burning more than ever and plan to add at least 60 new coal-fired power plants over the next 10 years

http://www.dailysabah.com/asia/2015/12/15/japan-s-korea-plan-61-new-coal-plants-in-next-10-years-despite-global-climate-deal

India to double its coal output. That means doubling its CO2 emissions, too. Because "most efficient" energy source means it's also the least expensive.

India still plans to double coal output by 2020 and rely on the resource for decades afterwards, a senior official said on Monday, days after rich and poor countries agreed in Paris to curb carbon emissions blamed for global warming.

India, the world's third-largest carbon emitter, is dependant on coal for about two-thirds of its energy needs and has pledged to mine more of the fuel to power its resource-hungry economy while also promising to increase clean energy generation.

"The environment is non-negotiable and we are extremely careful about it," Anil Swarup, the top bureaucrat in the coal ministry, told Reuters. "(But) our dependence on coal will continue. There are no other alternatives available."

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While India has plans to add 30 times more solar-powered generation capacity by 2022, there were limitations to clean energy and coal would remain the most efficient energy source for decades, he said.

http://www.reuters.com/article/us-climatechange-summit-india-coal-idUSKBN0TX15F20151214

Decline of the Empire asks, "What climate deal?"

This is a short follow-up to yesterday's post. Reuters reports today that Japan and South Korea stick to coal despite global climate deal....

Here's my favorite quote from the report.

"Japan, in particular, has been criticized for its lack of ambition — its 18-percent target for emissions cuts from 1990 to 2030 is less than half of Europe's — and questions have been raised about its ability to deliver, since the target relies on atomic energy.... Mutsuyoshi Nishimura, a former climate negotiator for Japan, said Japanese industry and the government had been caught napping by the Paris agreement.... "They were too caught up in the belief that industrialization and economic growth would entail such huge CO2 emissions in developing countries that China, India etc. would oppose any notion of decarbonization," he said. To be sure, China uses vastly more coal and has nearly a thousand more such plants in various stages of planning and construction.

That belief those Japanese and Koreans were "caught up in" is correct! China and India will indeed oppose de-carbonizing their economies if such measures threaten further expansion of those economies.

But, in 2015 it is politically expedient ("correct") to go along with a toothless non-binding climate deal. 

http://www.declineoftheempire.com/2015/12/climate-deal-what-climate-deal.html

And the US Congress is on record of enabling other countries to burn more petroleum than otherwise by lifting the US oil export ban. They are adding to the insanity -- and as far as I am concerned, mandatory hypocrisy -- of continued carbon combustion. Obama will probably sign it into law; it's embedded in a big spending bill.

The U.S. could soon end restrictions on oil exports put in place in the mid-1970s. The lifting of the embargo is part of a spending deal expected to be pushed through the House and Senate by the end of the week.

http://www.bigstory.ap.org/ba5445dbae1a449984bf691556bd64e9

And the so-called "liberal media" are responsible for so much of this mandatory hypocrisy. They more than anyone else catapult the propaganda -- whether it's We-Can-Save-the-Planet-by-Driving-Hybris-SUVs, or Saddam's-Got-WMDs-and-Is-Prepared-to-Use-Them or what have you -- by giving it a sheen of legitimacy. They are the ones, after all, who crucified Jimmy Carter with his "Malaise" speech after the public initially responded positively to it. The rest was inevitable and is now history.

The times we live in are so dangerous and so distorted in public perception that propaganda is no longer, as Edward Bernays called it, an “invisible government”. It is the government. It rules directly without fear of contradiction and its principal aim is the conquest of us: our sense of the world, our ability to separate truth from lies.” .....

The most effective propaganda is found not in the Sun or on Fox News – but beneath a liberal halo. When the New York Times published claims that Saddam Hussein had weapons of mass destruction, its fake evidence was believed, because it wasn’t Fox News; it was the New York Times.” ....

“What we need is a Fifth Estate: a journalism that monitors, deconstructs and counters propaganda and teaches the young to be agents of people, not power.”

http://johnpilger.com/articles/war-by-media-and-the-triumph-of-propaganda

But it looks like China realises that continued fossil fuel burning will do quite a disasterous number on their river systems, which are already stressed. Even though they're building coal power stations like mad.

Even if the global warming scare were a hoax, we would still need it

China is the low-carbon superpower and will be the ultimate enforcer of the COP21 climate deal in Paris

Chinese scientists have published two alarming reports in a matter of weeks. Both conclude that the Himalayan glaciers and the Tibetan permafrost are succumbing to catastrophic climate change, threatening the water systems of the Yellow River, the Yangtze and the Mekong.

The Tibetan plateau is the world’s “third pole”, the biggest reservoir of fresh water outside the Arctic and Antarctica. The area is warming at twice the global pace, making it the epicentre of global climate risk.

http://www.telegraph.co.uk/finance/economics/12052582/Even-if-the-global-warming-scare-were-a-hoax-we-would-still-need-it.html

The UK government cuts subsidies to homeowners even though its own review indicates the cuts will cost almost 19,000 jobs. THis is just days after their representative agreed to move swiftly to a low-carbon energy future at the climate change conference in Paris. Like India says, what is the most cost-efficient is the form that will be used. Government policy changes revise the equation. Revisions in favor of fossil fuels is madness!

The government has decided to cut subsidies to householders installing rooftop solar panels by 65% just days after agreeing to move swiftly to a low-carbon energy future at the climate change conference in Paris.

An impact assessment study by the Department of Energy and Climate Change (Decc) admits the move could wipe out up to 18,700 of the industry’s 32,000 jobs.

A second subsidy scheme known as the renewables obligation has also been cut for small-scale and large projects angering both the solar industry and environmentalists, who dismissed the moves as “huge and misguided”.

The government argues it needs to protect wider energy bills from the rising impact of renewable energy subsidies and that this justifies paying rooftop solar installers 4.39p per kilowatt hour from February instead of the existing 12.47p.

http://www.theguardian.com/business/2015/dec/17/uk-solar-panel-subsidies-slashed-paris-climate-change

More madness from the UK. Diesel backup generators when they could keep their nuclear power stations instead.  Not that nukes are a good thing, but still...

The government is facing calls for an urgent investigation into how companies were awarded more than £175m in subsidies to build heavily polluting “diesel farms” to provide the UK with backup energy generating capacity.

Critics said an energy generation auction overseen by the National Grid had descended into a farce by rewarding intensive carbon dioxide (CO2) emitters, just as ministers committed Britain to lower carbon emissions at UN climate change talks in Paris

http://www.theguardian.com/business/2015/dec/11/diesel-farms-built-subsidies-national-grid-auction

But the far side Peak Oil will soon distort Business As Usual, as global warming bankrupts the fossil fuel industry: both by change and reduction in energy demand, and by less heating degree-days each winter.

Global Warming is bankrupting the Energy industry

But we'll just pretend it's not actually happening...

The MAX PAIN trade is not in oil it's in Natural Gas which just hit a new 17 year low this week, mostly due to the unseasonably warm "weather", that happens to take place every day now.

Energy companies exposed to natural gas are getting decimated, along with their junk debt...

My advice for those reality skeptics who don't "believe" in Global Warming - keep holding onto those soon-to-be-bankrupt stocks, they'll make good 4-ply...

http://ponziworld.blogspot.co.uk/2015/12/global-warming-is-obliterating-energy.html

And US consumers apparently think cheap gasoline is never going to end.

Surging demand for trucks and SUVs fueled by cheap gasoline is holding back improvements in U.S. fuel economy and greenhouse gas emissions, a government report due out on Wednesday is expected to show.

In November, fuel efficiency of vehicles purchased fell sharply to 25 mpg – down 0.8 mpg from a peak in August 2014, said University of Michigan researcher Michael Sivak, who tracks fuel efficiency.

Nearly 59 percent of U.S. vehicle sales this year have been of sport-utility vehicles, pickup trucks or other larger vehicles, up from 54 percent last year, according to industry consultant Autodata Corp.

http://www.reuters.com/article/us-autos-emissions-idUSKBN0TZ0HY20151216

COP21 Is a Big, Fat Fraud.

Yes, they said they'd educe carbon emissions and opted to get the target for maximum global warming to "well under 2 degrees Celsius." Except the pledges brought to the table beforehand would bring us about 2.7 C. Plus the phrase "Fossil Fuels" is nowhere to be found in the Paris agreement

Good grief... 21 years of treaties and negotiations have all been stepping around the main problem: the production of fossil fuels. And as I said in the last post, we can't afford to wait for peak oil, peak coal and peak natural gas to work their charms on Business As Usual and reduce its emissions.

Look at this graph provided by the BP Statistical Energy Review of 2015:

Notice how fossil fuels and nuclear outrank hydro and renewables by 9-to-1 in the amount of energy produced? And this is worldwide!


From The Real News: 'Fossil Fuels' Nowhere to be Found in the Paris Agreement:

The Guardian reported that James Hansen, former lead scientist at NASA, said that the Paris climate agreement is all BS. He says as long as fossil fuels appear to be the cheapest fuels out there, they will be burned. If we follow this agreement, we'll have 2 degrees Celsius warming target, and then try to do a little better every five years. It's just worthless words. There is no action, just promises, he says. Further, our next guest, scientist at Pace University Chris Williams, the author of Ecology and Socialism: Solutions to Capitalist Ecological Crisis just wrote about the Paris outcomes. And he says despite the self-congratulatory statements from world leaders praising themselves for single-handedly saving the world from climate catastrophe, the reality is that they have set the planet on course to burn....

 

[Professor Williams says,] "[D]espite the fact that they've reduced, you know, how much we can go up by and stay safe down to 1.5 degrees, all the pledges that have come in, all of which are now voluntary, so there's no enforcement mechanism, actually put us on track for 3 degrees or more of warming. So--and there's no real mechanism for financing. They're expanding the role with the market, cap and trade, including offsets, all of which we know don't work. And there's no mention of the phrase 'fossil fuels' anywhere in the agreement. And we know that 80 percent of the fossil fuels that we already know exist in reserves have to stay under the ground....

 

"So what we need to be talking about is how come we're not closing down, first of all, exploration for more fossil fuels, which is not happening? Secondly, the most polluting fossil fuels in use at the moment, which is coal. Why we're not ending those, and transferring the trillions of dollars that are subsidized to produce more of these things, more of this energy source, why are we not transferring that to developing nations so that they can skip the whole generation of dirty energy and move on to clean alternatives? The alternatives are out there.

 

"Well, there is a mechanism for saying, well, we need to review this every five years, because maybe we're not on track for where we need to go. And we already know that we're not on track. They know that they're not on track. But basically we also know that the sooner we take action the easier and the cheaper and the more effective all of our solutions will be. So by delaying things for another five years, and not saying we're even starting things until 2020, and whatever we do there is no enforcement mechanism. It's all completely voluntary.

 

"So what should we be doing? Well, first of all, ending all the subsidies to fossil fuel production to incentivize that. According to the IMF that's several trillion dollars. Trillion dollars. And yet they're fighting over handing $100 billion a year to developing countries to help them. So the first and most obvious thing would be to end subsidies to produce fossil fuels. That would immediately alter the price of fossil fuels disadvantageously and improve the cost-effectiveness of solar and wind, and wind is already cost-competitive with most forms of fossil fuel production, even with the subsidies."

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=15300

And yes, James Hansen really calls the COP21 talks "bullshit".

From The Guardian: James Hansen, father of climate change awareness, calls Paris talks 'a fraud':

Mere mention of the Paris climate talks is enough to make James Hansen grumpy. The former Nasa scientist, considered the father of global awareness of climate change, is a soft-spoken, almost diffident Iowan. But when he talks about the gathering of nearly 200 nations, his demeanour changes.

“It’s a fraud really, a fake,” he says, rubbing his head. “It’s just bullshit for them to say: ‘We’ll have a 2C warming target and then try to do a little better every five years.’ It’s just worthless words. There is no action, just promises. As long as fossil fuels appear to be the cheapest fuels out there, they will be continued to be burned.”

 

The talks, intended to reach a new global deal on cutting carbon emissions beyond 2020, have spent much time and energy on two major issues: whether the world should aim to contain the temperature rise to 1.5C or 2C above preindustrial levels, and how much funding should be doled out by wealthy countries to developing nations that risk being swamped by rising seas and bashed by escalating extreme weather events.

 

But, according to Hansen, the international jamboree is pointless unless greenhouse gas emissions are taxed across the board. He argues that only this will force down emissions quickly enough to avoid the worst ravages of climate change.

http://www.theguardian.com/environment/2015/dec/12/james-hansen-climate-change-paris-talks-fraud

And yet right now there is such an oversupply of oil that the prices there are swooning. I'm not sure how competitive renewables (solar, wind) are with the low, low prices the economic and oil market experts expect to see in the next several years.  And renewables competing with fossil fuels these days is rather like catching a falling knife.

From the UK Guardian: How Low Can Oil Prices Go?:

Not only did US prices fall under $40 this week but so did the global benchmark Brent crude oil prices, for the first time since February 2009. The global supply glut of about 1.5m barrels per day is the driving factor behind the lower oil prices, with much of that overproduction because of Opec’s opening the spigots. [Jay Hatfield atr Infrastructure Capital Advisors] said there’s another factor behind the new drop in oil prices: warm weather. “The fact that you can almost go swimming in New York City right now is horrible. Absolutely horrible [for heating oil demand]. To me, that’s the straw that is breaking the camel’s back. We’re ground zero for fuel oil demand,” he said.

 

The El Niño weather phenomenon can bring milder winter weather to the northern part of the US, and that’s been seen in places like New York and Chicago, where December temperatures are above normal, reducing heating demand. If Opec’s disorganization continues and temperatures stay mild, that could add further pressure to prices, he said. “I thought prices would have stabilized in the $40 to $50 area, but … now it could be $35 to $40,” he said. A few factors could influence oil, such as next week’s Federal Reserve’s monetary policy meeting, where the Fed may raise interest rates for the first time in seven years. That could give the dollar another boost, and Kessens said the greenback’s strength has hit oil since it is dollar denominated.

 

Next week is the last full trading week of 2015, so there could be some book squaring as investment managers close up accounts before the holidays when trade volume dwindles. Daniel Pavilonis, senior commodity broker with RJO Futures, said the next target for prices is likely the 2008 low. “I see prices going lower. I wouldn’t be surprised if we saw an uptick from here next week, maybe to the $40s, but then see a sharp decline, a sell-off below $35. There’s so much supply out there. I think [prices are] going to be lower than people will perceive,” he said.

 

Taking out a level that’s held for so long could be jarring and may have a snowball effect, he said. On the other hand, there is likely to be some opportunistic buying simply because prices are so low. Pavilonis didn’t rule out a dip under $30 a barrel, but just how far prices may go is hard to determine. “It’s hard to call a bottom. It’s like catching a falling knife. Just let the knife fall to the side and pick it up later so you don’t get hurt,” he said.

 

http://www.theguardian.com/business/2015/dec/13/oil-prices-opec-market-share-strategy-el-nino-us-interest-rates

Oil May Drop to 20 Dollars a Barrel. This Is What Peak Oil Looks Like!

Two articles harvested from The Automatic Earth, December 9th..

Allegedly, it would be a boon for the economy, but in the oil exporting countries and extracting companies it's a fiscal bane that can't be worked around except through austerity. Since the USA has a lot of oil extracting companies, the oil patch won't see the boom! And maybe no one else. Too much debt overload, you know.

Oil Producers Prepare For Prices To Halve To $20 A Barrel

(UK Guardian)

The world’s leading oil producers are preparing for the possibility of oil prices halving to $20 a barrel after a second day of financial market turmoil saw a fresh slide in crude, the lowest iron ore prices in a decade, and losses on global stock markets. Benchmark Brent crude briefly dipped below $40 a barrel for the first time since February 2009 before speculators took profits on the 8% drop in the cost of crude since last week’s abortive attempt by the oil cartel Opec to steady the market. But warnings by commodity analysts that the respite could be shortlived were underlined when Russia said it would need to make additional budget cuts if the oil price halved over the coming months.

 

Alexei Moiseev, Russia’s deputy finance minister, told Reuters: “If oil goes to $20, we will need to do additional [spending] cuts. Clearly we have shown that we are very willing to cut fiscal spending in line with an oil price at $60, for example. In order for us to be long-term sustainable [with the] oil price at $40, we need to do additional cuts, but if the oil price goes to $20 we need to do even more cuts.” Russia and Saudi Arabia – the world’s two biggest oil producers – both increased spending when oil prices rose to well above $100 a barrel. The fall from a recent peak of $115 a barrel in August 2014 has left all Opec members in financial difficulty, but Saudi Arabia has refused to relent on a strategy of using a low crude price to knock out US shale producers.

 

Hopes that Opec would announce production curbs to push prices up were dashed when the cartel met in Vienna last Friday, triggering the latest downward lurch in the cost of oil. Lord Browne, the former chief executive of BP, refused to rule out the possibility that oil could halve again in price when he was interviewed by Bloomberg TV. Asked if oil could hit $20 a barrel, Browne – who ran BP from 1995 to 2007 during a period when the cost of crude rose from $10 to $100 a barrel, said in the short term nothing was impossible. He added: “In the long run, $20 is probably wrong, but that’s as far as I’d go.”

Source: UK Guardian

 

http://www.theguardian.com/business/2015/dec/08/oil-producers-prepare-prices-halve-20-barrel

The entire global economy may be facing severe demand destruction in the months ahead and Bloomberg says it’s EXCELLENT! “..the world has enjoyed a windfall equivalent to 2% of GDP it would otherwise have spent on crude..” The crude does come out into the world from the Earth for free, you know; somebody has to pay to get it out -- and they need to make a profit selling it at a price the end-customers can afford. Otherwise, they gotta pay the piper; which means, the money will still be spent on getting the oil to market.

OPEC Provides Economic Stimulus Central Bankers Can’t or Won’t

(Bloomberg Business)

The world’s central bankers just got a helping hand from the world’s oil ministers. As the ECB delivers less monetary stimulus than investors sought and with the Federal Reserve set to tighten next week, the world economy may find support instead from the weakest oil price in more than six years. West Texas Intermediate is trading at about $40 a barrel four days after OPEC chose not to limit output, extending the commodity’s decline from its June 2014 peak of $107.73 and this year’s high of $62.58 in May. While its earlier slide failed to provide the economic pickup some anticipated, economists at UniCredit, Commerzbank and Societe Generale are still banking on cheaper fuel to spur spending by consumers and companies in 2016.

“On net, central bankers should take this as a positive,” said Peter Dixon, an economist at Commerzbank in London. “This does help to stimulate demand by leaving a little bit of money in the pocket and providing a feel-good factor.” At Societe Generale, Michala Marcussen, global head of economics, reckons every $10 drop in the price of oil lifts global growth by 0.1 percentage point. She estimates that since 2014, the world has enjoyed a windfall equivalent to 2% of GDP it would otherwise have spent on crude. “Our biggest relief last week was that OPEC decided no output cut, promising consumers inexpensive oil for longer,” said Marcussen. Even though falling oil may weaken the inflation rates central bankers are struggling to lift, Erik Nielsen at UniCredit said it was important to recognize that it’s “‘good’ disinflation, because it stems from supply rather than demand and so should raise real income, thereby propelling consumption and the recovery.”

“A drop in energy prices is the equivalent of a tax cut, with no implications for debt,” he said, adding that faster expansions as a result should end up bolstering prices too and so investors should be wary of wagering on a deterioration in inflation.

http://www.bloomberg.com/news/articles/2015-12-08/opec-provides-economic-stimulus-central-bankers-can-t-or-won-t