Goldman Eyes $20 Oil; Glut Overwhelms Storage Sites

The price of two oil benchmarks, Brent Crude and West Texas Intermediate (WTI), in danger of collapse? (source)

by Gaius Publius

Ever since the "Exxon Knew" story broke, and especially since NY AG Eric Schneiderman announced his Martin Act investigation of Exxon and other carbon companies for fraud, I've been watching to see how this disrupts the oil and gas markets.

To be clear — I consider a disrupted carbon fuel market to be good, since the supply of fossil fuel does have to be interrupted, and forcefully. Consider that if they dig it, we will burn it. So we have to prevent them digging it, and again, with force. The law, when applied with penalties, counts as force. A collapsing commodity price market also counts as force, as does a collapsing stock market price for companies like Exxon.

The alternative, if the market for extracted carbon starts to collapse or become wildly chaotic, is for government to prop it up with even more subsidies and "bailouts" — the opposite of what any climate-aware citizen should want. We need to get off of oil, as a nation, quickly, and we need all the help we can get doing it. I don't want to see government standing in the way of the destruction of the oil and gas industry. (Do you?)

So, is the carbon market headed for chaos? I don't know, but the possibility of oil at $20/barrel is frightening many analysts, including those at Goldman Sachs. From the Telegraph (my emphasis):

Goldman eyes $20 oil as glut overwhelms storage sites

“The world is floating in oil. The numbers we are facing now are dreadful," said David Hufton from PVM Group

The world is running out of storage facilities for surging supplies of oil and may soon exhaust tanker space offshore, raising the chances of a violent plunge in crude prices over coming weeks, experts have warned.

Goldman Sachs told clients that the increasing glut of oil on the global market has combined with mild weather from a freak El Nino this winter. The twin-effect could send prices plummeting to $20 a barrel, the so-called ‘cash cost’ that forces drillers to abandon production. “Risks of a sharp leg lower remain elevated,” it said.

Oil has fallen from $110 a barrel early last year and is hovering near $40 for US crude, and $44 for Brent in Europe.

The US investment bank said the overall glut in the commodity markets may take another twelve months to clear. It cited ‘red flag’ signals on the Shanghai Future Exchange over recent days. Copper contracts point to “imminent weakening” in China’s ‘old economy’ of heavy industry and construction, it said.

The chart at the top shows that benchmark prices have dropped to about $36/barrel, risen but not to new near-term highs, then dropped again. A technical analyst would say, watch that $35 price point. A drop below that could be trouble.

Now for the fundamentals. Note in the quote above: "$20 a barrel [is] the so-called 'cash cost'." At present, people are keeping their oil off the market, not selling their inventory in hopes of a better price ...

It is estimated that at least 100m barrels are now being stored on tankers offshore, waiting for better prices. A queue of 39 vessels carrying 28m barrels is laid up outside the Texas port of Galveston, while the Iranians have a further 30m barrels offshore ready to sell as soon as sanctions are lifted.

“The world is floating in oil, and commercial stocks on land are at a record high,” said David Hufton, head of oil brokers PVM Group. “The numbers we are facing now are dreadful. Stocks have been building continuously for two years. This is unprecedented.”

... yet even so, prices are falling, despite current buying by the Chinese for their strategic reserve (see the article for those details). We're in new territory at present — low prices, high inventory, high production — and could be headed for even newer territory.

The Story Is Complicated; the Outcomes Are Many

This is not a simple story, as the article makes clear. No one in position to comment expects a permanent collapse, yet the items in play are both many and varied. To name just a few, they include conflict among the OPEC nations about how much to produce, the length of time the bear market in oil will stay depressed, the ability of marginally-financed producers — the U.S. shale oil producers qualify here — to stay afloat in a "below cost of production" sales environment, the worldwide growing awareness that climate change and carbon emissions are linked, and so on.

At some point, if these conditions prevail (the last will certainly grow stronger), carbon production will drastically slow and companies will simply go bankrupt. At that point, absent government intervention, if you're an investor do you buy or sell the stock of these companies?

Now add in AG Schneiderman's fraud lawsuit, and then, way down the road, the potential for a Sarbanes-Oxley prosecution to yield criminal charges and jail time for oil and gas execs — assuming some AG (that's you, Ms. Lynch; that's you, whomever President Sanders appoints) is bold enough to pursue that course. That will certainly stir the pot even further, and not in a good way. Just the announced intent to pursue Sarbanes-Oxley prosecution could further roil this market — the roilage of which is your friend, since an uncertain energy market drives an increased move to "safer" renewables.

At this point, it's all up in the air. Oil prices may recover and the market re-stabilize. That would be a bad thing, assuming you have grandchildren and care about them. But the good news is ... right now, it really is all up in the air. That good thing that could turn into a very good thing with just a few more breaks our way.

GP

Sanders Officially Requests Fraud Investigation by AG Lynch into Exxon

Exxon knew, and they still know.

by Gaius Publius

Senator Sanders to Attorney General Lynch on Exxon:

"We are writing regarding a potential instance of corporate fraud - behavior that may qualify as a violation of federal law."

And that's how it's done.

Bernie Sanders, from his Senate office, has asked Attorney General Loretta Lynch to "form a taskforce by December 19, 2015, to determine whether there is sufficient evidence to launch an official inquiry against any actors and entities involved." Why? Because of "a potential instance of corporate fraud – behavior that may ultimately qualify as a violation of federal law."

Sanders cites the Inside Climate News stories we've been following here and here. If the taskforce he asks for does determine there is sufficient evidence to launch an inquiry, we're in RICO territory.

I should add that the O'Malley campaign has also signaled it's onboard with RICO as well (via Twitter). This is much more forceful, though both are helpful. Thanks to both candidates for their strong pro-climate efforts.

The Sanders press release is here. The letter is here and reprinted below. The trove of Exxon documents published by Inside Climate News is here.

October 20, 2015

The Honorable Loretta Lynch
Attorney General of the United States
U.S. Department of Justice
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Dear Attorney General Loretta Lynch:

I am writing concerning a potential instance of corporate fraud – behavior that may ultimately qualify as a violation of federal law. I respectfully request the Department investigate these allegations, and take appropriate action if the investigation yields evidence of wrongdoing.

According to an eight-month investigation by journalists at Inside Climate News, Exxon – now ExxonMobil – may have conducted extensive research on climate change as early as 1977. As a result, it appears that top Exxon scientists concluded both that climate change is real and that it was caused in part by the carbon pollution resulting from use of Exxon’s petroleum-based products. In addition, the purported internal business memoranda accompanying the news report asserted that Exxon’s so-called “climate research program” was launched in response to a perceived existential threat to its business model.

In 1998, the New York Times reported that Exxon participated in the American Petroleum Institute’s Global Climate Science Communications Plan, an effort aimed at stressing “uncertainty” on climate science. Exxon has since contributed more than $31 million since 1998 to think tanks and organizations that cast doubt on mainstream climate science.

These reports, if true, raise serious allegations of a misinformation campaign that may have caused public harm similar to the tobacco industry’s actions – conduct that led to federal racketeering convictions. Based on available public information, it appears that Exxon knew its product was causing harm to the public, and spent millions of dollars to obfuscate the facts in the public discourse. The information that has come to light about Exxon’s past activities raises potentially serious concerns that should be investigated.

I am heartened that, according to your September 9, 2015, memorandum “[f]ighting corporate fraud and other misconduct is a top priority of the Department of Justice.” I request that the Department form a taskforce by December 19, 2015, to determine whether there is sufficient evidence to launch an official inquiry against any actors and entities involved. I look forward to hearing the Department’s recommendations in a timely manner.

Thank you for your time and close consideration of this matter.

Sincerely,

Bernard Sanders
United States Senator

Bold moves like this are what we need. Next up? Ask what Hillary Clinton thinks. If she agrees with Sanders and O'Malley, we have a trifecta.

If you want to sign a petition asking the government to prosecute Exxon, go here.

And if you'd like to say thank you to Bernie Sanders for this excellent advocacy of the people's interest, you can do so here. Adjust the split any way you like at the link.

GP

Exxon knew, and they still know.

We could get a new attorney general as the Senate reaches a "bipartisan deal" to get back in business -- oh joy

If all goes well, U.S. Attorney for the Eastern District of New York Loretta Lynch could get an up-or-down confirmation vote as U.S. attorney general, well, maybe Thursday, or else early next week. What's the rush?

"A deal to move forward with the trafficking bill and Lynch is the key to unlocking a productive six-week work session for the Senate."

-- from "Senate reaches deal to vote on confirmation
of Loretta Lynch," on washingtonpost.com

by Ken

I plucked the above line out of Mike DeBonis's washingtonpost.com report, headlined "Senate reaches deal to vote on confirmation of Loretta Lynch," because it made me giggle. "A productive six-week work session for the Senate"? Our U.S. of A. Senate? When was the last time you saw "productive" and "Senate" in the same sentence, or even thought of them in the same sequence of thoughts?

Before breaking out the champagne, take a moment to contemplate what constitutes a "productive" U.S. Senate:

Waiting for floor consideration are major policy measures, including a bipartisan bill setting out a congressional review of a potential nuclear deal with Iran, a bill to strengthen national cybersecurity efforts and, next month, legislation granting President Obama "fast track" trade authority.

Might we not be better off if, once we have a new AG confirmed, the Senate goes back into, well, whatever the heck you would call this state it's been in? Like maybe "stinking right-wing garbage-brainedness"?

So, you're probably wondering, what's the deal with this "deal" that promises to allow, finally, an up-or-down vote on the nomination of Loretta Lynch to succeed AG Eric Holder? As you recall, the official hold-up has been the deadly concern of Senate Majority Leader "Miss Mitch" McConnell about a Republican bill on human trafficking.

"I'm glad we can now say there is a bipartisan proposal that will allow us to complete action on this important legislation," Majority Leader Mitch McConnell (R-Ky.) said Tuesday morning about a bill combating human trafficking that has become entangled in partisan bickering. "As soon as we finish the trafficking bill ... we'll move to the president's nominee for attorney general hopefully in the next day or so."

JUST TO BE CLEAR, MISS MITCH
IS AGAINST HUMAN TRAFFICKING

I mention this because I'm not sure it's at all obvious what Miss Mitch's position might be. This sounds like the sort of thing that under other circumstances it might be lobbying hard for -- those "other circumstances" having to do with who's getting rich off of it. I guess we can conclude that they're not Miss Mitch's kind of people, which is to say the kind of people who keep him in office. The "kind of people" part is important, because we know from painful experience that that there's a severely limited range of humans Miss Mitch gives a damn about. So we can pretty well guess that there's stuff in the bill that makes it safe for a right-wing garbage-brainer to dig its heels in over.

Democrats have filibustered the anti-trafficking due to abortion restrictions embedded within it, and Republicans have vowed not to move forward with Lynch's confirmation until the trafficking bill is dealt with. The deadlock appears to have been broken after language was inserted specifying that a fund established by the legislation would not be used for healthcare or medical services -- and thus not for abortions.

We can trust Republicans to know what's important. And this doesn't include human trafficking or confirming a new attorney general.

The deal came together after weeks of tough talk from both sides and mounting pressure from outside groups urging Republican leaders to move forward with an up-or-down vote on Lynch.

Minority Leader Harry M. Reid (D-Nev.) came to the floor Monday afternoon to accuse Republicans of "pushing around Loretta Lynch for sport" and trying to "dupe American women." But behind the scenes, staff continued efforts to hash out a deal.

So what happens now? Well, AG Holder, who is hanging on until he has a successor in place, can at least think about getting his bags packed, but maybe not yet making travel arrangements.

The Senate could start taking up amendments to the trafficking bill later Tuesday, setting up a vote for final passage late Tuesday or Wednesday. Unless all senators agree to move forward with Lynch's confirmation, which is unlikely given the rancor surrounding her nomination, a procedural vote would have to take place -- pushing her confirmation until Thursday or perhaps early next week.

And then the Senate can get on to that other productive business: screwing up a nuclear deal with Iran, increasing government control of our secrets, and Fast Track-ing the horrors of the Trans-Pacific Partnership agreement (and the enabling Fast Track authorization) that our colleague GP has been cataloguing (see most recently yesterday's "What's Wrong with Wyden-Hatch-Ryan's Fast Track Bill: The Specifics").

'Cause our U.S. Senate is (almost) back in business! Oh joy.

I'm sure all of this will be remembered the next time we have a Republican president making presidential appointments, and sending to the Hill hordes of life forms that should prudently be confined to good strong cages. Yes, I'm sure it will all be remembered. Ha ha.

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Re. the Lynch AG nomination: The Senate GOP majority keeps sinking lower and lower

What a bunch! Senators Ernst (IA), Cornyn (TX), McConnell (KY), and Thune (SD) pretend to give a hoot about sex trafficking. No, no, they're pretending to be against it. That's not the problem.

by Ken

Remember back when U.S. Attorney for the Eastern District of New York Loretta Lynch was nominated to succeed Eric Holder as U.S. attorney general? And President Obama was reamed royally by apologists for the toxic sludge passing for U.S. senators under the Republican banner? Once again, we learned, That Damned Obama was guilty of the most heinous crimes in U.S. history -- a combination of Benedict Arnold, Hitler, and the kiddie-devouring monster hiding under the bed, because he hoped to have USA Lynch confirmed by the still-Dem-controlled Senate. And the crackpot-right-wing apologists rose in holiest dudgeon to denounce the president for this vile slur against the incoming Republican Senate majority. How dare this Kenyan Muslim America-hater?

As those self-same Republican Senate majoritarians have demonstrated since they assumed control of the chamber, any apprehensions about the horror of their rule were understated.

It's vaguely amusing to recall some of what the NYT's Julie Hirschfeld Davis and Matt Apuzzo wrote on November 7, when it became clear that Ms. Lynch would get the AG nomination:

Mr. Obama chose Ms. Lynch, a low-profile prosecutor, amid a new political environment after Republicans took the Senate. . . .

Nominating Ms. Lynch may also carry political benefits for a White House looking to recalibrate its strategy. She is a two-time United States attorney whom the Senate confirmed by acclamation in 2000 and again in 2010. She has no personal ties to Mr. Obama or his policies, freeing her of the baggage that weighed down other candidates.

If she is confirmed, her appointment will also allow the president, questioned in recent days about what he may do differently after his party’s thrashing, to bring a fresh face into an administration many have criticized as too insular.

The initial Republican reaction was guardedly positive. Senator Charles E. Grassley of Iowa, the senior Republican on the Judiciary Committee, said Ms. Lynch would receive “a very fair, but thorough, vetting” by the panel.

“I’m hopeful that her tenure, if confirmed, will restore confidence in the attorney general as a politically independent voice for the American people,” Mr. Grassley said in a statement. . . .

"A very fair, but thorough, vetting," eh? Ha ha ha! Grassley must be working up a comedy act. Which is to be encouraged if it would entail his departure from the Senate.

The November 7 NYT report also included this paragraph:

It was not clear how quickly Ms. Lynch could be confirmed in the lame-duck congressional session that convenes next week, when Democrats will still control the Senate. A White House official said Mr. Obama believed she should be confirmed “as soon as possible.” But Senator Mitch McConnell, the Republican leader, said the nomination “should be considered in the new Congress, through regular order.”

"Through regular order," eh? Ha ha ha! Good one, Miss Mitch! And it's to be hoped that those lying-scumbag right-wing apologists who were vilifying the president and basking in the glow of the New Regular Order have all eaten poison and died. Because here we are four months and change later, and, well, the Senate majority leadership doesn't seem able to get the Lynch nomination to a vote.

Because there's far-right-wing ideological psychosis to be pursued! And nothing could be more important than suffocating the country in these creatures' stinking doody. Here's Carl Hulse's report from his NYT "First Draft" column this morning (links and name-boldfacing on-site):

Democrats to Ramp Up Push for Attorney General Vote

Democrats say they will intensify the pressure on Senator Mitch McConnell of Kentucky to allow a vote this week on Loretta E. Lynch for attorney general after the majority leader said he would not bring her nomination to the floor unless Democrats relent in a separate fight over a human trafficking bill.

The new developments on Ms. Lynch’s nomination were the latest twist in the bizarre saga of the human trafficking measure – a once-bipartisan piece of legislation that has not only gone off the rails, but is now ensnaring a major cabinet-level nomination. Democrats say they will not allow the trafficking measure to proceed unless Republicans drop an anti-abortion provision that Democrats say they were not aware of – even though they had weeks to review the legislation.

Mr. McConnell said last week that the Senate would not move on to any other business until it had passed the trafficking bill. On Sunday, in an appearance on CNN, he made clear that ban on other business included a confirmation vote on Ms. Lynch, currently the United States attorney for the Eastern District of New York.

Mr. McConnell sees the Lynch nomination as powerful leverage to force Democrats to back off their objections to the trafficking bill and as a rationale for moving slowly on a nomination that many Republicans already oppose. Ms. Lynch appears to have the bare minimum number of votes needed to be confirmed, with Vice President Joseph R. Biden Jr. available to break a 50-50 tie.

But it is not as if the Senate never considers executive branch nominations with other legislation on the floor. In fact, the Senate is scheduled to vote Monday evening on two assistant secretary nominations. But Mr. McConnell is not likely to give in on the Lynch nomination very easily.

I could rant a little more, but what's the point? It's too late to hope that these creatures can be shamed into decency. It becomes ever more apparent that they don't have a spark of decency among them.

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So this is what confirmation hearings are going to look like in the new Thug Senate

Dana Milbank says: "The case against [AG nominee Loretta] Lynch deflated faster than if the New England Patriots had run the hearing."

by Ken

So now we've actually seen what the confirmation process is going to look like in a Senate under the control of thugs and mental defectives. I guess it's about what any reasonably informed person would have expected; it's just more revolting to actually witness. And this is a case where most of the loonies, actually noticing how exposed they were, tried to back off.

To start with a bit fo reality check, here's some of what Dana Milbank has to say in his Washington Post column today:

GOP case against Loretta Lynch falls apart

By Dana Milbank

Loretta Lynch had them at Jim Crow.

Senate Republicans had delayed confirmation hearings for President Obama’s attorney general nominee until they took control of Congress — giving them a chance to use the nomination to protest Obama’s immigration policy and other actions by Obama and the outgoing attorney general, Eric Holder.

But those who figured they could take out their frustrations on Lynch had misjudged her: The nominee has a long and impressive résumé as a no-nonsense prosecutor, and she managed at Wednesday’s hearing to be both assertive and anodyne in her testimony, expert in the law but opaque about controversial legal matters. As important, Lynch, with the help of committee Democrats, painted an unassailable biography: This daughter of a fourth-generation minister and a segregation-fighting mother from the South would be the first African American woman to be the nation’s top law enforcement official.

The case against Lynch deflated faster than if the New England Patriots had run the hearing.

Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) toned down his prepared statement as he read it. “I, for one, need to be persuaded that she will be an independent attorney general,” he read, but he then departed from the text and added, “I have no reason to believe at this point she won’t be.” He read a long list of complaints about the administration’s actions but then ad-libbed, “As far as I know, Ms. Lynch has nothing to do with the Department of Justice problems that I just outlined.” . . .

WASHINGTONPOST.COM DID ITS STAR
RIGHT-WING HATCHET HEAD NO FAVOR . . .

. . . by popping in a presumably automatic link, to a November post she wrote called "Let the new Senate confirm Loretta Lynch. " Since the only factoid she could process in the skuu space traditionally occupied by a brain is IT'S ALL OBAMA'S FAULT, she puked up this:

[I]t seems President Obama would rather start an unnecessary fight than get his way and get along with Republicans. A case in point is his attorney general nominee, Loretta Lynch. . . . Barring any surprise revelation, one strongly suspects she will win confirmation in the new Senate. (Republicans have much bigger fish to fry than getting into a standoff over a female, African American nominee.)

But Obama won't wait, it seems. He would rather jam her through with Sen. Harry Reid (D-Nev.) in charge than treat the new Senate with a modicum of respect. . . .

Confirmation hearings serve other legitimate purposes aside from approving nominees. . . .

YES, AND NOW WE KNOW WHAT THOSE
SO-CALLED LEGITIMATE PURPOSES ARE

It's to set the stage for a spectacle like yesterday's SJC confirmation hearing, to allow hysterical, IQ-free thugs to wallow in their own psychotic, imbecilic filth.

Giving the new Senate every imaginable benefit of the doubt, "a modicum of respect" is by conservative estimate a million billion quadrillion times more respect than this tub of human waste could ever dream of laying claim to.

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