NightBlogger

Russian oil companies could soon begin searching for oil in deep Gulf of Mexico waters off Cuba, a top diplomat said just days before Russian President Dmitry Medvedev visits the island. Russian oil companies have “concrete projects” for drilling in Cuba’s part of the gulf, said Mijail Kamynin, Russia’s ambassador to Cuba, to the state-run business magazine Opciones. Kamynin also said Russian companies would like to help build storage tanks for crude oil and to modernize Cuban pipelines, as well as play a role in Venezuelan efforts to refurbish a Soviet-era refinery in the port city of Cienfuegos, according the article published this weekend. More

As deleveraging occurs and debt is destroyed, prices of commodities and other assets will fall in terms of real money, which is gold and other precious metals. The price of oil, for example, will continue to fall in terms of gold. (Investors need to start thinking of values in terms of ounces of gold instead of dollars, because that is where we are headed) What this means is that, while it is possible that the price of oil could still increase in terms of dollars, the price of gold will increase to an even greater degree. There will be no deflation in terms of dollars Right now, everyone is buying dollars and US treasuries based on the idea of price deflation in terms of dollars. More

Oil prices spiked more than $25 a barrel Monday—the biggest one-day price jump ever—as anxiety over the government’s $700 billion bailout plan, a weak dollar and an expiring crude contract ignited a dramatic rally. Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back to settle at $120.92, up $16.37. The contract expired at the end of the day, adding to the volatility as traders rushed to cover positions; the October price began accelerating sharply in the last hour of regular trading, a common occurrence when a contract is about to go off the board. More

Fears are mounting that Russia may restrict oil deliveries to Western Europe over coming days, in response to the threat of EU sanctions and Nato naval actions in the Black Sea. Any such move would be a dramatic escalation of the Georgia crisis and play havoc with the oil markets. Reports have begun to circulate in Moscow that Russian oil companies are under orders from the Kremlin to prepare for a supply cut to Germany and Poland through the Druzhba (Friendship) pipeline. It is believed that executives from lead-producer LUKoil have been put on weekend alert. “They have been told to be ready to cut off supplies as soon as Monday,” claimed a high-level business source, speaking to The Daily Telegraph. Any move would be timed to coincide with an emergency EU summit in Brussels, where possible sanctions against Russia are on the agenda. More

The International Forecaster
The plan for an economic takedown, the results of rampant market speculations, insiders picking up assets for pennies on the dollar, the coming hyperinflation, the credit crunch, collapse of the dollar carry trade, suppression of metals prices, American meddling in Georgia.

The objective is to run the paper, dollar-denominated stock, bond and derivative markets up in the mother of all bear market rallies just before the elections in order to support traitorous, incumbent, Congressional scum, while simultaneously driving the commodities markets, and markets for other tangible, real assets, like real estate, down. Then comes the bailout and the rollover and reinvestment of the proceeds. Dark pools of liquidity, Project Turquoise and Baikal, have been set up so that all dollar-denominated paper assets can be dumped outside of public view, thereby avoiding the collapse of asset values as the elitists pour their sales proceeds into tangible, real assets.

Both the bailout and the reinvestment of the proceeds from the bailout will happen as gradually as they can manage, because they want to avoid public scrutiny and get the best possible prices when selling paper assets and buying real assets. Meanwhile, false economic statistics from our government, fabulous fables from the Fed and endless fane-stream media jaw-boning will be used to convince the public and non-insider institutional investors that everything is hunky-dory and a recovery is just around the corner, right up to the moment that the destruction of our economy is finally given voice by our government officials, financial shills and fane-stream media.

Right after the insiders have bailed and reinvested as stated previously comes the reality of thermonuclear, financial destruction. The dollar gives up the ghost. Up rocket gold, silver, oil and other commodities along with various other real assets as everyone runs for the door to dump their paper assets and tries desperately to reinvest the proceeds in real assets just as the insiders had done previously without them knowing. Next come the bankruptcies, foreclosures and liquidations. And who is there to scarf up all the fire sales at pennies on the dollar? That’s right, the evil, insider fiends whose real, tangible assets have skyrocketed after they just got the best possible deal on what is now worthless, dollar-denominated, paper “assets” from the public and non-insider, institutional sucker-dupes. More

(Bloomberg)
Commodities headed for their biggest weekly gain in 33 years as oil rose for a third day and a weakening dollar revived demand for raw materials as alternative assets. Every commodity on the CRB except hog futures moved higher today. Cocoa jumped 6.8 percent, silver rallied 5.3 percent and crude oil gained 4.4 percent. Oil and gold both headed for their biggest one-day advances since June. Platinum jumped 6.6 percent, the most since September 2001. More

Karl Denninger
The Market Ticker

America’s GDP, or the total of all goods and services produced in this nation in a given year, is about $14 trillion dollars.

America the nation currently has an outstanding debt of about $10 trillion dollars, and has more than doubled in the last ten years. But this number is not the real total, because it does not count all the “promises” (read: entitlements) that people have been told they will have. Those “promises” are Social Security, Medicare and Medicaid, in the main. They total, approximately $90 trillion dollars in current liability.

What’s worse, about 1/3rd of that was added with the “Medicare Part D” drug benefit, even though Congress was at the time fully aware that there was already $60 trillion or so sitting out there in unfunded liabilities. They did not care because the AARP, and you, screamed and demanded that Congress “do something.”

Oh they did something all right. They did the very same thing that you think you have a right to do - that is, spend more than you make.

That’s right. You have a right as an American to have a 4,000 square foot house on an acre, even if you only cut hair for a living. If you can’t get that loan honestly, you simply will make up an income and use some sort of “exotic” mortgage product to get it.

Your car broke down? Its beneath you to buy a used one, right? Just hit the home equity line and buy a new Suburban. $40,000. Cool. Oh, and charge the gas too.

Your kid comes home from school complaining that one of his friends has an iPOD. To shut him up, you go buy him one - even though you don’t have the $200 it costs. You just pull out the plastic and charge it. It will all be ok.

Your grandmother is taken deathly ill and whisked to the hospital. She’s 85, and has cancer. She has had a good life, but now it is drawing to a close. When you get there, the doctors ask what you, as her closest kin want, as she’s unconscious at the time. You tell them that they should preserve her life at all costs. Of course you don’t have any money to pay for the $500,000 in medical bills. Its ok; she was in a nursing home and didn’t have anything anyway, so there’s no estate for the bill to eat into; Medicare will pick it up. After all, she’s entitled to the best medical care money can buy as an American.

You love the $3/quart strawberries at the local WalMart. You won’t pay $3.50. As a consequence, the grower has fired all of his United States citizens as pickers and is employing illegal Mexicans. You don’t care, as you’ve got a good job - you answer the phones for Joe’s PCs and help people with their computer problems. Unfortunately Joe’s customers want to pay $50 less for that PC, so he fires you and outsources your job to India for $2/day. Oops.

Folks, what is going on in this country is exactly like what happened yesterday on the forum. Each and every day.

You drive around your neighborhood and see the “For Sale” and “Foreclosure” signs and the boarded-up businesses. You whine about $4 gasoline, $5 cheese and Ice Cream that is both more expensive and now is in a 1.5 quart instead of a 1/2 gallon container.

Your employer cuts medical benefits or expects you to pay more. You grumble or, if you’re unionized, you might actually strike. You end up capitulating anyway, then your job gets shipped to China.

We all feel the squeeze, but will we accept that we are part of the problem? That we have a spending deficit (that is, we spend more than we make), we have a savings deficit (we don’t save anything, on balance), we have a balance-of-trade deficit (we demand $30 DVD players from China, therefore, all the people who made them here are fired and they are manufactured there where workers are paid 25 cents/hour) and we have a common sense deficit (that is, we think we can continue to do this until the cows come home and there will be no consequence.)

Well, now we’ve got the beginning of the consequences, and what America is doing, for the most part, is sticking its fingers in its ears and going “LA LA LA LA LA LA LA LA” - because actually removing the fingers from your ears requires that you admit that you are likely part of the problem as you’re in debt up to your eyeballs and are unwilling to live within your earnings capacity!

Would you like to know the rest of the consequences that are coming for you, your children and grandchildren if you don’t remove the fingers and stop chanting? Do you even know what they are? Let me lay a few out for you:

Michael Klare
In commenting on the war in the Caucasus, most American analysts have tended to see it as a throwback to the past: as a continuation of a centuries-old blood feud between Russians and Georgians, or, at best, as part of the unfinished business of the Cold War. Many have spoken of Russia’s desire to erase the national “humiliation” it experienced with the collapse of the Soviet Union 16 years ago, or to restore its historic “sphere of influence” over the lands to its South. But the conflict is more about the future than the past. It stems from an intense geopolitical contest over the flow of Caspian Sea energy to markets in the West. More

Robert M Cutler
The armed conflict between Russian and Georgia has further exposed the fragile position of the energy links running through the smaller country from the Caspian Sea to developed market economies.

Russian forces are placed to disrupt oil flows through the Baku-Tbilisi-Ceyhan (BTC) pipeline, which has carried Caspian Sea oil from Azerbaijan across Georgia to Turkey since 2006, and the Baku-Tbilisi-Erzerum pipeline, which opened last year and exports gas to Turkey, as well as the older Baku-Supsa “early oil” line that runs to the Georgian Black Sea coast. A fire in eastern Turkey that last week shut down the BTC pipeline, the result of a bomb claimed by the Kurdistan Workers’ Party (PKK), has been extinguished, but there will be a three-week delay in lifting Azeri oil from the Turkish terminal at Ceyhanon, on the East Mediterranean coast, as the line is inspected, repaired, and tested.

The Russian troops occupying Georgia, effectively cutting the country in half on Monday as they occupied the town of Gori on the main east-west highway and not far from the BTC pipeline, could easily prevent it reopening on schedule. Despite the supply disruption, the price of light sweet crude on the New York Mercantile Exchange declined to under US$114 in electronic trading on Monday, as traders continued to factor in decreased world demand as a result of anticipated economic contraction. Meanwhile, the Azeri state energy company SOCAR has ceased shipments to the Georgian Black Sea ports of Batumi and Kulevi and will probably declare force majeure to limit its liabilities.

As from Sunday, ships of Russia’s Black Sea fleet were blockading Georgia’s Black Sea coast, after Russian military planes had bombed and significantly damaged the oil loading terminal at Poti, which serves the Baku-Supsa line that had been used for so-called “early oil” before the BTC entered into service and was being refurbished in view of expanded capacity. More

Grant Lawrence
This Russian-Georgian war that is presently being fought is actually part of a Grand Chess Game being played out right in front of your eyes. The players are making strategic moves to grow or to try to offset America’s corporatist global empire. Sure Georgia wants S. Ossetia and S. Ossetia wants to be independent. But in order to really understand what the war is about we need to go back in history and read what Barack Obama’s key international adviser has to say about America’s empire and where the empire game needs to be played.

But first some news on the Russian-Georgian war and a little background.

Georgia, the homeland of Stalin and once part of the Soviet Union, attacked its breakaway province of S. Ossetia. Russia, declaring the region independent, responded with massive force attacking Georgia. Now Abkhazia, another Georgia breakaway zone, has declared war on Georgia today. The latest news as of this writing is that Georgia, pleading for American help, has declared a cease fire and has withdrawn from S. Ossetia.

Russian jets, after the Russian-Georgian war started, bombed the (BTC) Baku-Tbilisi-Ceyhan pipeline. which starts from the oil fields of the Caspian Sea in Azerbeijan and in part runs about 60 miles south of S. Osetia and continues onto Turkey and the Mediterranean Sea where it is shipped to an energy hungry West. All of this you will note bypasses Russia. This pipeline carries 1% of the world’s oil supply and it is an essential part of a future strategy for the Western world to gain access to oil from Central Asia, in which the reserves are estimated to be one of the largest in the world. Nearly 70% of the pipeline was funded by the World Bank. More

Consumerist.com
Here’s the list:

1. 2000 Honda Insight (manual) 51 mpg
2. 2001-02 Toyota Prius 41 mpg
3. 2000-05 Toyota Echo 38 mpg
4. 1998-2002 Chevrolet Prizm 32 mpg
5. 1998 Mazda Protegé LX 32 mpg
6. 1998-2000 Toyota Corolla LE 32 mpg
7. 1998-2001 Acura Integra LS (manual) 32 mpg
More

The Israeli-Georgia connection is estimated to be worth $1 billion, according to a former Georgian ambassador to Israel. The Jewish state and private investors have provided military assistance and advisors to Georgia, where pipelines pump oil destined for Israel. A new pipeline is being built to bypass Russian territory. The Ministry of Foreign Affairs said that Israeli companies in Georgia have begun evacuating their staff and that Israeli tourists are leaving for home. More

The conflict that has erupted in the Caucasus has set alarm bells ringing because of Georgia’s pivotal role in the global energy market. Georgia has no significant oil or gas reserves of its own but it is a key transit point for oil from the Caspian and central Asia destined for Europe and the US. Crucially, it is the only practical route from this increasingly important producer region that avoids both Russia and Iran. The 1,770km (1,100 miles) Baku-Tbilisi-Ceyhan pipeline, which entered service only last year, pumps up to 1 million barrels of oil per day from Baku in Azerbaijan to Yumurtalik, Turkey, where it is loaded on to supertankers for delivery to Europe and the US. Around 249km of the route passes through Georgia, with parts running only 55km from South Ossetia. More

More than five million British passengers could be priced out of the budget holiday market as airlines raise their fares, bringing the era of cheap travel to an end. Holidaymakers preparing for the traditional summer getaway this week may find that when they come to book their next break the fares have become unaffordable. Ticket prices are expected to rise by 10 per cent this year and next as the cost of oil pushes up airline fuel bills. The dramatic increase in the price of oil, which has doubled in the past year, will almost certainly lead to radical changes in the airline industry once this summer season ends. Carriers will raise fares, cut the number of flights they offer and some well-known names will go out of business. More

The head of French energy giant Total believes that oil prices will one day top 200 dollars per barrel but not this year even if the market will inevitably remain strong. “We must get used to high energy prices,” Total Chief Executive Christophe de Margerie told France 24 television in an interview broadcast at the weekend. “Will the price of oil reach 200 dollars one day? Most definitely. Will it go above 200 dollars one day? I am sure of it. When? I don’t know,” de Margerie said. More

Russia’s cut in oil supplies coincided exactly with US Secretary of State Condoleezza Rice’s visit to sign the radar base deal last Tuesday. As the ink dried on that agreement, which will provide radar control for a US silo of interceptor missiles due to be based in Poland, oil flow through the Druzhba ­ Friendship - pipeline began to ebb. Two days later, Prague was forced to protest after Russia threatened a “military response” to the deal ­ interpreted as retargeting and redeployment of its own missile arsenal. More

LONDON (Reuters) - Oil jumped over $4 to a new record high near $146 a barrel on Friday, spurred by growing worries of threats to supplies from Iran and Nigeria and a strike of Brazilian oil workers next week. U.S. crude was $4.17 at $145.82 a barrel by 6:56 a.m. EDT, off highs of $145.98, after jumping $5.60 or 4 percent a barrel in late trading on Thursday. London Brent crude was up $4.25 at $146.28 a barrel. Leading the oil complex was ICE gas oil futures which climbed to a new record high of $1,335 a tonne amid strong demand for diesel and aviation fuel. More

OPEC would not be able to replace Iran’s oil production if supplies were halted in case of a war with Israel or the US, the oil cartel’s chief said today. “I hope there will be no attack on Iran. I hope that problem will be solved peacefully,” the Organisation of Petroleum Exporting Countries’ secretary general Abdalla Salem El-Badri told a news conference in Vienna. “But if something were to happen it is impossible to replace the production of Iran.” Iran is OPEC’s second-largest oil producer with an output of about four million barrels per day. More

In a special program looking at issues surrounding oil & the economy, trends analyst Gerald Celente appeared for the full show. He was joined by investment adviser Catherine Austin Fitts in the third hour, and oil expert Matt Savinar in the last hour.

The dollar has lost 41% of its value during the Bush administration, and we’re going to see company failures so big they won’t be able to be bailed out, like Bear Stearns, said Celente. He cited the Federal Reserve, which functions as a private company with no congressional oversight, as one of the major problems. Predicting food & gas riots, as well as tax revolts, Celente suggested diversifying your savings among a number of banks, if you have more than $100,000.

Catherine Austin Fitts commented that the demise of Bear Stearns may have been a hit job, “cannibalized” for the good of other finance companies. There is an effort underway to centralize the economy and shift assets away from local communities, she warned. Fitts described these efforts as “economic warfare” being conducted on a global scale that is fostered by technology and “invisible weaponry,” such as satellites. The US economy is purposely being “pumped and dumped,” she noted.

Matt Savinar said global oil supplies have plateaued, and with lessening oil reserves it becomes increasingly expensive to bring up the remaining oil. Prices will continue to skyrocket upwards, he suggested, as we enter the down side of “peak oil.” Tapping unused reserves in the United States and Canada will only postpone the problem for a short time, and the theory of abiotic oil is a kind of misinformation, Savinar argued. The oil crisis is an “economic 9-11,” and we’re going to see a crash worse than the Great Depression, Celente added.

(CBS) Oil prices neared $146 a barrel Thursday for the first time ever on reports of declining U.S. stockpiles and the threat of conflict with Iran. Comments by Saudi Arabia’s oil minister suggesting his country had no immediate plans to boost production also lifted prices. Expectations that the European Central Bank will raise interest rates later Thursday could further weaken the U.S. dollar and drive oil prices even higher, as investors turn to commodities as a hedge against a falling greenback, traders said. By midday in Europe, light, sweet crude for August delivery rose $2.28 to a record $145.85 a barrel in electronic trading on the New York Mercantile Exchange. More

“Imagine a situation where crude hits 200 dollars a barrel. All development in Bangladesh will stop.”

The Bangladesh government has raised fuel prices by between 34-67 per cent amid soaring crude oil prices, officials say. Authorities have said they have no alternative to the sharp increases because surging crude oil prices have strained government finances. The country can no longer afford to sell petrol, diesel, kerosene and gas at subsidised rates that were set when a barrel of oil cost $60, the government said on Tuesday. More

In a study of 162 countries, the Washington, D.C.-based IMF said surging global oil and food prices are causing the most pain in poor countries that rely on imports. With food taking up more than half of household spending in emerging and developing economies, the IMF warned that the share of undernourished could rise rapidly to above 40% of the total of their populations. “Some countries really are at a tipping point,” said IMF Managing Director Dominique Strauss-Kahn in a statement. “If food prices rise further and oil prices stay the same, some governments will no longer be able to feed their people and at the same time maintain stability in their economies,” he said. More

BAGHDAD - Frustrated Iraqis faced miles-long lines at gas stations on Tuesday — a stark reminder that a country with one of the world’s largest oil reserves still has major challenges delivering fuel to its people. The lines followed Iraq’s announcement Monday that it was opening six major oil fields and two natural gas fields to development by foreign firms, which could lead to the biggest outside stake in Iraq’s oil industry since it was nationalized more than 30 years ago. More

Jerome a Paris
The Oil Drum
As you may have heard, oil prices have reached a new high above $140. I can already hear the outcry against speculators and their out-of-control games to enrich themselves at our expense. Never mind that speculators have been caught shortselling oil (ie betting on a fall in prices) more than a few times in recent months. Never mind that spot oil prices, which require actual physical deliveries of oil at the end of each month, have behaved the same way as paper futures. Never mind that oil storage seems to not be increasing. Nope, it is just too convenient, too irresistible and, let’s say it, too comfortable an excuse that speculators are to blame. It’s not our fault, we have our scapegoat. Our price increases are temporary, we’ll soon be back to “normal” lower prices, as soon as (take your pick) speculators have been punished/oil companies are taxed for their profiteering/”fundamentals” are left to set prices. This is just denial. There are A LOT of good reasons why oil prices are going up. Let me show you just a few. More

By Bill Moyers & Michael Winship
Oh, no, they told us, Iraq isn’t a war about oil. That’s cynical and simplistic, they said. It’s about terror and al Qaeda and toppling a dictator and spreading democracy and protecting ourselves from weapons of mass destruction. But one by one, these concocted rationales went up in smoke, fire, and ashes. And now the bottom turns out to be….the bottom line. It is about oil.

Alan Greenspan said so last fall. The former chairman of the Federal Reserve, safely out of office, confessed in his memoir, “…Everyone knows: the Iraq war is largely about oil.” He elaborated in an interview with the Washington Post’s Bob Woodward, “If Saddam Hussein had been head of Iraq and there was no oil under those sands, our response to him would not have been as strong as it was in the first gulf war.”

Remember, also, that soon after the invasion, Donald Rumsfeld’s deputy, Paul Wolfowitz, told the press that war was our only strategic choice. “…We had virtually no economic options with Iraq,” he explained, “because the country floats on a sea of oil.” More

(Reuters) - Oil prices rose to a record near $143 a barrel on Friday as a drop in global equities markets sent fresh investors into commodities. U.S. crude settled 57 cents higher at $140.21 a barrel, as profit taking sent prices from the record $142.99 hit earlier. London Brent crude settled up 48 cents at $140.31 a barrel. Global stocks slumped to three-month lows on concerns about the outlook for corporate profits and inflation, putting the Dow Jones industrial average on the verge of entering a bear market for the first time since 2001. More

Source: VOA News
The price of oil has risen almost four dollars in early trading in New York, following a prediction by the head of the Organization of Petroleum Exporting Countries that oil prices could rise considerably this year. OPEC President Chakib Khelil tells French television (France 24) the price of a barrel of oil could go as high as $150 to $170 a barrel in the next few months. Khelil blames soaring oil prices on a weak dollar and instability in the Middle East, but says he doubts oil prices will hit $200 a barrel. He also says OPEC is ready to meet additional demand for crude oil in the future. The price of crude oil for August delivery rose almost $4 in New York Thursday, soaring to more than $138 a barrel. Crude oil prices hit a record-high of nearly $140 a barrel last week, but dropped Wednesday after the U.S. Energy Information Administration said U.S. oil inventories rose over the past week.

The cost of oil will reshape the global residential landscape. If I were to invest in real estate right now, I’d invest in property close to commercial and industrial areas of the city, because eventually America’s suburb’s will turn into ghost towns.

ABC News
Mike and Lyeng Boseman are a case in point. The couple fled the high cost of life in Los Angeles and settled for a more affordable life in suburban Encino, Calif. But their commute into downtown Los Angeles took two and a half hours daily. One year and nearly 200 tanks of gas later, the Bosemans said they did the math and realized they weren’t saving any money at all. “About every four days, we went through a whole tank of gas,” said Mike Boseman. “I went through a lot of gas!”

The Bosemans abandoned suburbia, and their car, and moved to neighboring Pasadena. “The public transportation system is really great,” said Mike Boseman, “It only takes about 35 minutes from door to door.” Others in California are being driven back to the city after losing their suburban homes in the wave of foreclosures. More

Oil prices spiked more than $5 a barrel on Monday to a trading record of $139.89 before pulling back. Light, sweet crude for July delivery was up $3.66 cents at $138.52 a barrel at 9 a.m. ET. On Friday, oil fell $1.88 to settle at $134.86. Saudi Arabia, the world’s largest oil producer, told U.N. chief Ban Ki-moon over the weekend that it would boost output by 200,000 barrels a day, or by 2%, from June to July. In May, the kingdom raised production by 300,000 barrels a day, but this was ignored by the oil market partly due to strong global demand. Read More

According to CNN Money, “The U.S. Department of Transportation said Monday that Americans drove 11 billion miles less in March 2008 than a year earlier, marking the first time that estimated March travel on public roads fell since 1979. That 4.3% decline is the sharpest year-on-year drop for any month in the history of the agency’s reporting, which dates back to 1942.

So, if demand is falling, why are prices still rising almost 10 cents a week, and in such a coordinated manner? As I explained a few weeks ago, most drivers are not in a position to change their commuting habits. It is locked into our suburban lifestyle. The manipulators who are driving prices upward are doing so knowing that buyers have little choice but to keep buying at almost any price. We are hostages to our work and living habits, which we don’t really want to change. Even though urban living close to work has it’s advantages, it is a death trap during major crises when urban services fail and panic ensues as people have no fallback position for personal self-sufficiency. Read More