Ukraine (Crimea) was about Oil, and its ALWAYS About Oil

To put the U.S. Oil circumstance into its proper perspective please take a gander at the following graphs:    

    24 months of data starting January 2012 and ending December 2013

Data from the U.S. Department of Energy's EIA website pages Here and here.

I make no representation here as to whether these trends will hold, but as they say on Wall Street: "the trend is your friend". My money says they hold even if my mouth won't commit.

Total U.S. domestic production and imports remains at or under 14mm bpd for the past 2 years, and had been as high as 18mm bpd in 2005. The downtrend of the last 4 months in net petroleum imports has overwhelmed the increase in domestic production that had kept this metric static for the past 2 years. A peak to trough decline of 1.7 million bpd.

As I have asked before: Where is the Oil that did not show up in the U.S.? Did the exporters cut exports? Or did the other importers import more than they had been? Every data point I read tells me, in so many words, that the other importers did not increase their imports (though everything cite's another source that cite's another source, etc... which leaves me cold. Of course, the EIA leaves me cold, too, but that and the IEA are the only sources we have).

So what's this have to do with Russia/Ukraine/Crimea?

Putin made a remark in the press that he could ruin the financial system of the West with a wave of his hand (pen). At first, I thought he was talking about the US$ and Russia's customers in Asia. Maybe. Or maybe Russia agreed to cut exports to keep the price high enough so that the fracking boom does not fall on its face. The U.S. actually finds itself in the position of desiring high oil prices! If Oil is $70, still very expensive historically, the fracking fields in North Dakota and Texas go bust and billions of $$ in capital equipment rusts in the rain. Was Putin reminding the U.S. of some such deal? Such a deal would be in both parties' interests... but far more so for the U.S. in the short term.

I cannot see how it is to Putin/Russia's advantage to undue the U.S.$ trade settlement for Oil at this moment or in this fashion. I can see how increasing domestic Oil production could collapse West Texas Intermediate prices in Cushing, OK, due to their unique pipeline and storage issues if helped along by international prices. I could see that outcome very easily. That would not be in the U.S. OR Russia's interests - but it is Russia that holds, and deals, the cards in that game.

The U.S. economy has proven that it can handle $100 Oil, even if 40% of the population cannot. (Not a single f**k is given in the U.S. about those people, and some of that attitude is rightly so: that population is busy consuming heroin, meth, and tattoos; does it really matter if they don't have enough fuel to get back and forth to the tattoo parlor? Lest you think I am being elitist... I am a product of the lower portion of the working class. The way up and out of that is not drugs and tattoos - but that is another issue for another time.) What the U.S. economy cannot handle is a collapse in domestic production caused by low Oil prices.

Suicide and Commercial Aviation

The possibility that one of the pilots of the missing Malaysian jet committed mass murder/pilot suicide is an ugly prospect - and evidence increasingly points in that direction - though clearly no one knows what happened at this time.

If this is indeed the case it would be, at least, the 5th mass murder/pilot suicide on a commercial airliner  (the SilkAir crash was not a slam dunk, but certainly highly suspicious) in the last 15 or 20 years (including 9/11). Wrap your mind around that for a minute.

Not "pilot error". "Pilot Suicide", but instead of hanging himself in the garage he decides to go out with a bang - and take hundreds of other innocent people along with him.

Spy satellites show no mid air explosion, but they do show a sudden turn in the aircraft. Could some mechanical failure have occurred? Sure, and if that was the case the crew would have had plenty of time to communicate a problem... but there was no such communication and no distress signal.

That's disconcerting.

The Oil Export Cat is out of the Bag

Regardless of whether or not Putin pushes the Oil export/US$ issue at this time is not the issue. To me, the issue is now reasonably clear.

I pointed out in 2 earlier posts, here and here,  that something very big has happened in "Export Land". During the past 5 months, Oil imports into the U.S. have fallen steeply. Its a zero sum game. Either the exporters are exporting less or the other importers are importing more; given the $10 to $15 rise in Oil prices during the period, I am going with less Oil exported. I could be wrong, but if Oil was backing up from non U.S; deliveries I would expect Oil to have fallen by $10+, not gained $10+.

We are talking 1 million bpd from Q3 to Q4. Where would that kind of drop come from? Saudi Arabia or Russia.

Is this part of Putin's set up? If I were working for CIA/ONI/NSA I would know. They have the tanker data (there are 4000+ Oil tankers plying the world trade. Data collected via satellite makes clear, down to the gallon, how much Oil is going to who) so I don't think there is any question about this among the top brass in D.C.

Putin launches an ICBM test? And tells the West (thru an underling, but believe me, there are no undisciplined leaks when you work for the former head of the KGB) that he has them by the Gishga's (that's a yiddish technical term for important parts of the male human anatomy) and that he can demolish the Fractional Reserve Banking system with a wave of his pen?

At this level, I do not believe in coincidences. I believe that Putin wants the Federal Reserve, the U.S. Congress, the intelligence agencies, and the Pentagon to know where he stands because he does not want the Administration to make a serious mistake and force his hand. Putin thinks like a chess player/Judo competitor. He is not a Low T, botoxed, metrosexual American. He is a genuine tough guy.  The real deal. You don't rise through the ranks of the KGB without tolerating quite well the smell and screams generated when blow torches are applied to human flesh .

I am not trying to paint a boogey man here. Bobby Fisher, chess master and world champion famously quiped that you play the man, not the board. This is my understanding of the man and I would play chess with him accordingly.

I don't think Putin wants to end US$ hegemony this way, but I do think he wants to end it because it is in his best interests to do so. What is the point of US$ hegemony in a world without Oil exports and the massive social programs' impacts on a currency created via lending? There is none! Putin has the Oil. Japan and China want Putin's Oil. Why would these parties wish to involve the U.S.'s paper currency in these transactions if they can come up with a new arrangement?

The U.S. continues to build a massive military. Those weapons are pointed at who?

China and Russia.

Why would those nations be interested in continuing to fund a weapons system that has them in the cross hairs? These 2 political cultures are dominated by chess players, mathematicians, scientists, and intelligence officers. They think differently than our political culture, dominated as it is by word smiths and people concerned with flag burning and gay marriage.

I don't know when Putin will end the US$ settlement of Oil in the world markets. I am absolutely convinced that he will end it, because it is in his best interests to end it, and because he holds all of the cards.

When this happens the fireworks will be of the shock and awe variety, though I do not know if it will be deflationary or inflationary. I can make an argument for it both ways.

U.S. is in the Hands of Putin

The U.S., like it or not, irrespective of whether one is rich or poor, dumb as a bag of hammers or razor sharp, is in the hands of the Oil exporters. Particularly Saudi Arabia and Russia. Especially Russia.

I have my doubts about what is being reported is what is really going on inside of Ukraine. Dmitri Orlov's analysis has merit, but ultimately, and at this moment (and I reserve the right to change me mind on a dime), I think Dmitri is incorrect; or perhaps I should say that I think my scenario is just slightly more probable.

Of course, I lack Dmitri's native Russian experience... in this he has it all over me... but I think Putin just put (most of) his cards on the table, and I think that this has been in the contingency plan playbook for some time now. Please keep in mind that I do not think Putin is a boogey man like much of the U.S. establishment does. In fact, I think he is a first rate SOB with a serious talent for chess. I grew up in a "chess home". Chess players are simply better at combinational game theory than Lawyers. President Obama is a nice guy. His staff is bright. They probably see what has happened here, maybe even saw it coming... and realize that they can't do a damn thing about it.

The Russian political establishment are ALL chess players; the U.S political establishment are ALL lawyers. Please don't take this as a shot at lawyers. It is not. Lawyers make fine wordsmiths, and sometimes that's what you need. An experienced trial lawyer would be the next best thing to an accomplished chess player - those guys can think many steps ahead - but that's not what the U.S. has running the train set. In the final analysis, Russia and the East just won't be doing as much business with the U.S. and will be much more keen on doing business between themselves in the future and will be more interested in cutting the U.S. out of the transaction than supporting U.S.$ hegemony.

Russia, unlike Saudi Arabia has the means at its disposal to defend its Oil, Nat Gas, and Coal resources. But we are really talking about Oil.

Russia is the second largest Oil exporter in the World - over 7,000,000 bpd, or about 20% of the world export market. Putin knows, with absolute certainty, that the end is coming for Oil exports, Russian or otherwise. He knows, with certainty, that the end is much less than 20 years away. Not the potential end - the real end. As a chess player, he must know that it is better to make your move when the board is not forcing your hand. Russia has been waiting for the West to move king's knight to Ukraine, and we just did. That knight has been beheaded. Will Russia now go directly for the Queen (Checkmate is not as valuable in this case and at this moment)? We shall see.

Russia does NOT have to remove all of its exported Oil from the market. 3mm bpd would be enough, me thinks, and allow them many more years of net exports and acceptable internal conditions. But just for sh**'s and grins, Putin could, to make his point, hold up all 7 million bpd for just a week, smash asset prices the world over, and restart negotiations with a much weaker adversary. Or something like that.

(For those that think that with U.S. imports declining that this is no big deal: The removal of several million bpd of Oil exports might well firm oil prices as it weakens Russia's political adversaries. If they cut their exports by half, and the price of Oil rises 50%, Russia is still getting 75% of what it was getting on a current basis, but will dramatically increase the total take over the life of the exportable resource.)

Russia (Putin) is going to do what is in their best interests. Nothing more, nothing less. Ergo, the big question is:

Is it in Russia's best interest's to do this now? If so, they will do it, and they will do it now, and everything else is just freebee negotiating. They can make all kinds of demands, all of which the West will acquiesce to, and then will do whatever is in its best interests anyway. Its just cold, calculating chess. If it is not in their best interests to do this now, then they won't. I don't know exactly what is in their best interests at the moment... I am going to noodle it, but that doesn't mean much. We will find out soon enough. If they pull the Oil from the market it will be far more interesting than 1973's oil embargo.

And all of that nonsense, shouting and screaming, huffing and puffing, sucking and blowing you hear from the U.S. political class? They have no power to do anything about this and are merely posturing for the next political election cycle here. They will blame Obama, G.W. Bush, the Right, the Left, the Middle, the Up, the Down... but its just chess.

Sick of "The Economy"

Personally, I am absolutely sick of hearing about "The Economy".  I cannot conceive of a sillier meme than this thing that gets tossed around as if it was actually of some real importance and that mankind must serve this monster always; like its your patriotic duty to "help" the economy. WTF??!!

Granted, I am over 50, very comfortable financially, so one might think I am just "Old & in the Way". Perhaps. But stay with me for a minute while I lay this f&^%$# mutt bare.

Our system has convinced people that there is no other way; they must delay maturation/adulthood until age 18 + 4, 6, 8, even 12 years of "education" (snicker) During which time the system neuters, indoctrinates, and finally "approves" you for "elite employment" ("EE"). And, as a newly minted member drone worker of the Corporate/Government plantation system of EE, with your approval sticker stuck to your forehead, you can now look forward to 10 to 20 years of student loan payments (unless your parents had money; more on that later); 60,000 hours of cubicle/office time under florescent lights while sitting all day in the absence of sunlight; 20,000 hours commuting (which in less than 10 years will turn your sleek and youthful body into something that looks like a bald-yet-hairy, triple chined, bag-for-a-belly cross between Humpty-Dumpty and Cecil the Dinosaur), and;  3,000 (I am being generous here) boring sexual experiences - that is, before you kill yourself with a stout rope in the garage while the car is running and you hold a gun in your hand as a backup because you just can't take it anymore, while the spouse you are not sleeping with watches under the influence of Big Pharma's cocktail of anti-depressants and anti-psychotics... but only if you don't get prostate cancer first. Or, fat f*** that you (now) are, die of sleep apnea.

Did I mention that you will be so exhausted from the above that you will take the majority of the 6 waking hours you have left each day (55,000 hours or so during your working career) and plant yourself in front of a TV for your daily dose of political/social/economic propaganda? Yep. That, too.

And please... I am not a cynic (though I am a Cynic/Hedonist/Stoic). I skipped all this crazy sh#!. Did I miss anything? Oh, yea. And we can't seem to raise a kid into a functioning adult contemporaneously with shaving.

The system has convinced people not to have children (look, the Corporate Drone, EE, types are either 0 or 1 child producers) with the Drones now believing that on their death bed they will feel good about a life of Corporate EE Drone work and the occasional industrial vacation... and while dying on that death bed the Drone can keep a copy of his/her business card with his "title" on it and his net worth statement handy to comfort him...  along with a box of airline receipts proving that he/she had been to Club Med 10x and Europe twice. Such a Cosmopolite!!  And since he has no heirs, the healthcare system will be happy to take care of his net worth....

I know a bunch of folks enamored with the "Paleo Diet" lifestyle... well, sort of. Have you heard of the Paleo Diet? It is supposed to recreate the diet of man during our period as hunter-gatherers...

See, the real Paleo man hiked mountains, swam rivers, ran deer into the ground, speared fish... and then stopped by his lover's hut with a chunk of meat, food for sex style, contributed to the gene pool and kept his prostate healthy and his lover happy (anti-depressants were not available) - multi tasker that he was - before heading home to the family cave (just after his genetic competition finished the process of food-for-sexing his own gene pool contribution). Is that what your day looked like? I didn't think so. No, modern man might have walked from the kitchen table to his garage, and then from his parking spot to his cubicle for a day of sitting and porn surfing (and I got nothing against porn. I am just a real thing kinda guy).... and when his day is finished modern man is off for hearth and home to deal with the propaganda affected modern woman... well, either that or he's a dead beat dad. What a choice.

Modern man has been reduced to a fury, fat, childless cubicle dweller that gets none and after a while is too unhealthy to want any... scheming all day to make more money while his arteries harden and his wedding tackle softens - but at least his religious belief system, the Right, the Feminists, and the Corporatocracy, and several other special interest groups approve of his swollen prostate & pasty skinned life style! Hey! Its good for the economy!! Its for the kids! For the children! Every time I hear that I reach one hand to hold onto my wallet and with the other hand I hold onto my junk.

Sometimes I think I am the only normal person left.

I cringe when I see force or control being applied to the kinds of relationships and social contracts that cannot flourish - nay even exist - in that environment, yet our entire system is built upon this notion. Oprah tells her flock how to be a wife and mother (she has never been either). Celibate clergy exert control over men in their relationships. The family "role models" in our Movie and TV media are created by people that have no experience as a role model or operating within a family. Corporations themselves end our family lines with their demands.

And a never ending drumbeat of media propaganda in lives made fake by convenience. Our lives would have made entertaining science fiction just 2 generations ago.

To be continued...

Why Bother Driving when you could "take the bus or train and be Online"?

 Everything covered in this NYT article I have covered before, except this incredible nugget that most of us have over looked:

A study last year found that driving by young people decreased 23 percent between 2001 and 2009. The millennials don’t value cars and car ownership, they value technology — they care about what kinds of devices you own, Ms. Sheller said. The percentage of young drivers is inversely related to the availability of the Internet, Mr. Sivak’s research has found. Why spend an hour driving to work when you could take the bus or train and be online?

The new material competition for sexual selection for young adults is now devices and not cars?

If so, I think that that is a wonderful development. It seems the over-40 crowd takes exception to the following generations tendency to see only the screen in front of them (and certainly we have a point, but just hold on for a second while I get to the "benefit" associated with this "cost"). Fair enough. But if those devices ease the transition away from cars and the concomitant pollution, deaths,  and catastrophic injuries associated with automobile use that input really must be factored into the equation. (Of course, this is on my mind as today would have been the 53rd birthday of one my closest childhood friends lost in a car crash 28 years ago. His was the first of many funerals I have been to as a result of car crashes.)

If given the option wouldn't any rational parent prefer their teen and young adult offspring to take a train to a rock concert and stare at their smart phone rather than drive? 4 college students in a car on their way to a rock concert is a disaster waiting to happen. 4 students on public transportation texting like mad just does not concern me very much.

In the final analysis, the next generation of young Americans do not have a choice. If these device makes the transition seem like their idea? Mazel Tov!

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Like most professional New Yorkers, I used to ski in New England every winter. I always loved the idyllic quaint charm of the place, particularly the home architecture. Clearly, at one time the people living there had a sense of the human need for grace and beauty. (If you have only lived in the Northeast you might not appreciate how interesting and appealing that is, but having spent some time in the Southeast - and its never ending style of what I call "Early American Air-Conditioned Brick Bunkers" - I can tell you first hand that, for the most part, Dixie just does not get the grace and beauty thing. Restaurants here are often lit with florescent lighting; Someone smart once said the experience is like eating in a used car show room. I wish I knew who to credit. SPOT ON.)

Yet it seems that the demoralization and dispiritedness which I thought was limited to the fly-over-land middle of the country (It occurs to me that many people might not have heard the term "fly-over-land": Coined by the coastal elites, fly-over-land is the territory between JFK and LAX that the elites fly over to get to the other coast. A land and culture not worthy of touching down in... for the most part, unfortunately, the elites are right. There is good reason that the Louvre is in Paris and the Country Music Hall of Fame is in Nashville and Hooters is considered "fun family dining") of the South and Midwest has taken firm hold of New England. That's disconcerting to me... kinda bummed to hear about this.

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The obesity topic is everywhere in American Media; and well it should be.

Want to read an article governed by the very definition of "specious"? The writer raises enough reasonable questions to make the average American feel better about the state of their self-inflicted poor health. (Although the issue of industrial chemical exposure certainly is deserving of significant funding and research.) The fact is that obesity does not exist, for the most part, among the coastal elites and it is rampant in fly-over-land. This does not jive well with the argument that it is something in the environment that is doing this to us (but of course does not preclude that, either). My experience, for the most part, was the professional women of Wall Street and the trophy wives in Boca Raton. They all seemed to be 36-24-34 marathon runners, and not a single tattoo or odd body piercing to be found... In Nashville its more like 58-74-83 (hike! Sounds more like a football audible than a human measurement) with enough ink and perforations thrown in with their ponderous heft to cement the image of human defeat and arrant loss of dignity. So what gives?

Poor, uneducated, white American women have lost 5 years of life span expectancy. From my perspective, and keen observer of the human condition that I strive to be, their health span (the span of life where people live free of chronic disease) has lost 20 years or more. The social isolation that accompanies obesity disability should not be overlooked, either. These people are functionally disabled and incapacitated in their 20's and 30's. While they may possess existence I cannot conceive of that existence as a "life", so the loss of 5 years in life expectancy is small potatoes compared to the loss of the ability to live.

I would bet dollars to donuts (boy, that's an old one... from a time when a donut was 5 cents. Memes are hard to kill) that obesity in America is much more a function of cars, media, and government social programs than industrial chemicals or any of the other assertions contained in the AEON article, or at least I hope so... because that would be much easier to address.

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U.S. Natural Gas storage could actually approach ZERO next month. Nah, its not the end of the world... but it does seem to indicate that the idea of bigger homes, industries, agriculture, etc... might not jive well in a different world. Change winter average temps by an average 2 or 3 degrees, which is not out of line with natural oscillations of weather patterns, and POW!

The Nat Gas thing is small potatoes. A change in the weather (extreme drought) for a couple of growing seasons in the world's grain producing regions will put that in perspective. Of course, our policy makers are always fighting the last crisis/war, i.e. there will be PLENTY of propane next winter. Using grain for fuel while having a Strategic Petroleum Reserve and not a Strategic Grain Reserve is exactly the kind of policy we can expect from lawyers, which is the profession dominating elected office. 


Better days ahead.