Wednesday, September 10, 2008

Daily Sources 9/10

1. Sean Brodrick, at Money and Markets, published a piece entitled "The Agriculture Bomb" today. I think the analysis is solid, for the most part. (I have no thoughts on the stock advice.)

2. Thomas Frank at the Wall Street Journal has an interesting piece, not all that related to geopolitics, which points out that the GOP's strategy of alienating the coasts altogether might prove just a tad self-defeating. Most interesting factoid: Sen. Obama has a 100% rating from the Farmer's Union, Sen. McCan a 0% rating.

3. OPEC announced the outcome of its meeting in Vienna today, noting that the market was "oversupplied," but establishing an overall production quota of 28.8 mb/d, an increase over last quota (set in November) of 27.3 mb/d, though members promised to "strictly comply" with them. (This is viewed as a de facto cut of 500 kb/d, coming from Saudi Arabia, but we will have to see whether Riyadh actually cuts.) Oil Ministers which came to "observe" were from Russia, the Sudan, and Egypt. Resolutions passed will be published October 10, should the member countries' legislative wings ratify them. Evidently, Saudi Arabia has already promised not to abide by the new quota, as per a story by Jad Mouawad at the New York Times.

4. Felix Onuah at Reuters reports that the Nigerian President, Umaru Yar'Adua, reorganized many of the government ministries today, including the Energy Ministry.

5. The EIA's Short-Term Energy Outlook was released yesterday. It predicts that global consumption / demand will grow by 970 kb/d in the second half of 2008 and 920 kb/d in 2009, on a year over year basis. Demand growth was slow in the first half of 2008, with a 930 kb/d decline in US consumption. "Moderation in China’s demand, however, is expected to be temporary, as sustained economic growth is expected to support oil consumption growth." The EIA's Week in Petroleum was released today and it reports a 5.9 mb drop in crude stocks, a 6.5 mb decline in gasoline stocks, and a 1.2 mb decline in distillate inventories. However, stock levels were at about the average of the last five years, except for in the case of gasoline. This edition also has a useful and interesting graphic of the prices paid for gasoline and diesel in countries across the world.

The Oil & Gas Journal reports that the IEA (International Energy Agency) published its Oil Market Report today and revised downwards their projections of worldwide demand growth. However, it predicts that non-OECD demand will grow more than previously predicted, mostly on the strength of Chinese and Indian demand growth.

6. Andres R. Martinez and Jens Erik Gould at Bloomberg report that the Mexican government will raise the price of gasoline sold by Pemex on a weekly basis until they are at the market rate.

7. Assocham published a study which posits that tight money policy in India has, in conjunction with high energy prices and subsidization, caused energy companies to defer expansion plans, as per domain-b.

8. Curbs on Oil Speculators a Diversion by Andrea Corcoran and Tom Corcoran. My view.

9. Enlightening, if not surprising, piece by Greg Farrell at the Financial Times about how Ohio Republican Mike Oxley had submitted legislation in 2005 to reform the GSE's which was put down by the White House, which argued that the only solution to the troubles of Fannie and Freddie could be their complete privatization.

10. Leon Aron has another piece of alarmist analysis in the Wall Street Journal today, which, given the storm of it, is likely self-fulfilling. Provide Russia with the rationale--NATO expansion--to involve itself further in Ukrainian affairs, encourage an energy environment of high prices--via two wars and belligerent diplomacy--enabling Russian adventurism, demonize Moscow thus discouraging efforts to recognize mutual interests and thus why non-confrontational jaw jaw is better than war war, and then cry, see, I told you so!

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