The story of today is the price of oil. A month ago it looked as though it couldn’t go any lower as US wells were pegged to a production price of about $80 per barrel. Now, it’s at $60 per barrel. There are signs that many US wells will indeed keep operating as improvements in efficiency and a lower operating cost once the sunk costs once well is started leave room for more profit even at this low price. Cheap oil may be here to stay longer than we thought.
But with that, we still have the problems in Russia. The Ruble has fallen off a cliff, a problem often blamed on the price of oil. It’s deeper than that, and the flailing Russian response has in some ways made things worse. The currency has lost about 60% of its value in one year, versus about 40% for oil.
That’s not to say there aren’t threats as well as opportunities in the US beyond oil itself. Cheap oil changes a lot of games, and is worth thinking through.
As is so often the case today, bad news is good news. Sen. Elizabeth Warren (D-MA) had a terrible loss when an important provision of the Dodd-Frank financial reform was weakened over her very vocal objections, slipped into the critical budget deal when no one was supposed to be looking. But if you read the press, it was good for her because it increased her stature at a time when calls for her to run for President are only getting louder.
There are now two prominent calls for her to run, one by MoveOn and another independent one pushed by a group of major Obama backers. A true hero usually heeds the third call. The way the press is writing her story, that’s about to come. What does it all mean?
The Senate report on CIA torture has been released. It will be a hot political topic for some time to come, and the use of torture will likely have its defenders.
That’s a terrible problem, because many fundamental principles of our great nation have been violated through the practices used. The release of this information has indeed shamed us, but only a truly great nation can admit its mistakes and correct them. We will get through this, but more to the point we have to make sure that this never happens again.
Winter is supposed to be cold up here in the frozen North. November? Not so much. But the patterns that have brought unbelievably cold air directly from the Arctic and lifted Lake Erie into a frozen cloud that buried Buffalo are abating. Next week should be warmer, and the weeks after that perhaps better as well.
The reason? The Jet Stream, which has been hardly functioning for many years, appears to be re-forming. There is always a lot of speculation as to why, without a lot of solid assurances, but the trend is our friend. Let’s hope that what we see coming next week becomes the pattern.
Did you hit the stores for “doorbuster” deals and a mad rush for great deals? If you did, you’re one of a smaller group every year as Black Friday and its even darker sibling on Thursday become a feature of Thanksgiving past.
The final data is not in, especially with “Cyber Monday” still in front of us. But this weekend was particularly weak and, if the past is any indication, a sign of a bleak holiday shopping season. But no one thinks this will hold as shopping patterns are changing. The forecast remains for a robust gain of 4.1% year over year.
The death of the Black Friday frenzy is a big story of the year if this pulls out.
As oil prices remain low, the benefit for US consumers is obvious. But for oil companies? In the short run, prices running at about the cost of production mean no profits for the year, but in the longer run there is a terrible problem ahead.
That’s because the start-up of so many fracking operations across the US came at a cost, and that cost was financed primarily through junk bonds – high yield securities that demand a hefty interest payment to keep the operation going.
Zero profit means more than hard times – it means default and, in all likelihood, a shut down of many wells. That might not only spike up the price of oil, it is big enough to trigger a huge financial problem.
“Above all else, we must strive to keep the highways of commerce open to all on equal terms.”
President Theodore Roosevelt, 1905
When President Obama came out in favor of Net Neutrality, the debate suddenly flared up. Ted Cruz and the Tea Party wing reflexively started campaigning hard against it, signaling a big battle ahead. Perhaps Obama should issue a statement claiming that “The sky is blue” just to see what fun ensues.
For all the noise, this is an important debate that is now settling in to become another political battle. The nuances are almost certainly going to be lost, especially with very mixed messages coming from the voting public. It is, however, one of the most important issues of our time – who controls the media, or for that matter, what exactly is “the media” today?