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With domestic oil consumption growing at 10% a year, and the Arab Spring leading to increased subsidies and social spending, the Saudis are looking at nuclear power to generate some of the supply of electricity. Saudi Arabia expects to have no reserve margin of supplies by 2020 at current levels of domestic consumption. In 2011 the Saudi government setup the King Abdullah City for Atomic and Renewable Energy, or KA-CARE, for coming up with nuclear energy policies. KA-CARE has an agreement with French supplier AREVA.

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Does a 10% reduction in tariffs on China with the October 30 2025 agreement- made in Busan South Korea at APEC meetings- make a difference for companies relocating from China? It only does for smaller companies who are stuck with Chinese sources. Larger American companies prefer to diversify their supply chain and continue to relocate part of their factories to Vietnam, India and other countries knowing that the tariffs game will end up with allies EU, Japan and India in the 10-15% tariff range as a concession to US for putting up with trade disadvantages and job losses 2000-2025. China's will still be at 47% in comparison and the fentanyl issue causing serious questions to be asked by the American people which have not been grasped in China or even in the US by companies and politicians.   Does it affect the urgency and general shift out of China? The fentanyl issue is unlikely to change and it is likely to do lasting damage to China's credibility to a degree that it not clearly understood in China, and even not fully grasped even in the US today because of the sheer size of the number dead- more young Americans dead from fentanyl than in the Korean, Vietnam and First World Wars combined. Other issues are technology that has been transferred without a proper assessment of the importance to national security, the need to shift the manufacturing base back home that US industries have inadvertently and carelessly shifted to China in the disastrous Bush and Obama years 2000-2016, and for the jobs, the wages, and cost of living concerns when supply chains are outside one's control. This article asks the question about tariffs on India and Brazil as being contradictory and showing a lack of consistency in tariffs. India is compared to China with India facing a 50% tariff because of Russian oil purchases, and Brazil a 100% tariff related to treatment of former president Bolsonaro even though US has a trade surplus with Brazil. One expects that at some point India and the US will come to an agreement that lowers the tariffs in a way that was done with the European Union to bring it closer to 10%. China's tariff to be sure is still around 47% dropping from 57% a concession for rare earths and for the upcoming elections and economic concerns not because of policy intent which has not changed on  strong action for fentanyl which is also part of the Appeal to the People in the DJT base.   ...

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Oil prices are up and staying there longer in December 2011. The 12 month rolling average for oil prices for Brent crude oil is at $109, compared to $106 a barrel in September 2008, according to consultants JBC Energy. The situation is worse for eurozone countries because of the declining value of the euro estimated at between $1.16-$1.30 in 2012 depending on how the eurozone crisis is handled. The 12 month rolling average was 70 euros when Brent crude prices were at their high in 2008, compared to 78 euros today. France and Italy are seeing their current account surplus disappear with reduced exports and higher import bill for oil.

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Note that Goldman Sach's analysts who first predicted that oil prices could reach $100 are now predicting that the downward momentum is building up. The prediction from them now is that prices may go up further than the $96 right now but should drop to $80 by April. Its not too difficult to see why. First on the supply side the momentum for downward shift is not so significant but still there are signs. The Iraqi oil flow disruption either from a Turkish invasion of norther Iraq or from internal disruption is shrinking as the Turks see this as a small operation at most, and the Iraqi law and order situation is improving. The Iranian situation may be stabilizing without US intervention possibilities shrinking. On the supply side the oil majors except for Total see their output shrinking somewhat, and OPEC has not increased supplies significantly as oil inventories have not built up as they do before winter. But overall the supply situation is stable. On the demand side is where the significant downward momentum exists. With the US economy slowing down amid the buildup of the housing tumble and the credit crunch which looks to get worse in 2008 before stabilizing in 2009 and a stronger euro and other factors affecting Europe's expansion oil consumption by industry in the industrialized countries is slowing. Much of the pressure on oil prices comes from increases in demand each year from China and India. Here gasoline is subsidized by the government and this reduces incenive for conservation. The policy of letting market prices be reflected at the pump to a limited degree so as not to seriously affect people is now taking hold in these countries. In China prices were raised 10% and there is likely to be further increase in the near future. This along with the increasing awarenes of the dependence on foreign oil and the need for conservation in both China and India should build pressures in both countries to make the best use of resoures and have users share some of the burden of higher prices. The American and European gasoline market is driven by a public that has not been too conscious of conservation especially in America. It appears that high oil prices have not encouraged conservation, witness that with rebates for higher oil prices and zero interest rates financing large pickups are still selling at levels of 2005, and there has not been a significant reduction in consumption at the pump. What may shift this equation now is probably government mandated fuel economy standards. Europe already has new standards and the automakers there are racing to meet it with new technologies, in America its now almost certain that public sentiment and congressional sentiment is likely to lead to similiar standards or at least significantly improved standard. Public sentiment is already pushing the automakers in the USA to introduce new models with higher fuel economy and use this as a n advertising and competitive edge. This reduction in gasoline consumption at the pump through new technologies in the industrialized countries and through price increases being allowed to flow through in the developing countries of China and India in a stable supply environment where the downward political risks are stable may be the pivotal turning point for the price of oil. ...

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This editorial in the WSJ finds problems in the policies of the Tories and the Labor Party before the parliamentary elections in Britain in May 2015. It says Chancellor Osborne hurt lower income families disproportionately by raising the value added tax from 17.5% to 20%. Lower oil prices are lowering prices for middle and low income families, not the policies of the Conservative Party, it points out. Not much has been done to increase housing supply, with housing costs taking up about half of a family's income in some places. It finds little comfort in the targeted subsidies of the Tories, or the minimum wage ideas of Labor.

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On June 30, 2008, oil prices hit an high of $140. Because of the opaqueness of the oil futures markets that help set the price of oil, very little is known about the different players in that market. Because of increasing demands for public scrutiny of such spikes in the market and its effect on the economy, the CFTC has released information about the players in oil trading and futures markets. This list for the period when the prices reached $140 in June 2008 include banks, hedge funds, sovereign wealth funds, pension funds, private investment arms of wealthy individuals, and airlines. Investments related to million barrels of oil were made by 219 investors. The banks include: Goldman Sachs and Morgan Stanley which have played a role in oil markets for a long time. BP and Delta Air Lines as users of oil products. It includes Yale University endowment fund, Singapore's government, hedge funds Brevan Howard and D.E. Shaw & Co., pension funds for Texas teachers, Cascade Investment LLC (the investment firm of Bill Gates), and the Danish pension fund ATP....

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Goldman's final superspike phase idea for oil prices and the trend to anywhere from $150 to $200. The duration and magnitude of this phase remain uncertain. other analysts support this including CERA and Yergin who are normally cautious. See the WSJ link to this on the facts, and the thinking behind this, and why Yergin also agrees in WSJ 5/7/08. Note that the term final spike is used because at some point in the next 6-24 months the slowdown will be global, and the bite into worldwide oil and commodities in general consumption becomes significant. BRIC's countries will see themselves overextended at some point in the next 6-24 months, just when the bite into US consumption becomes significant and really painful which it is not at this point, and with that prices should come down, and some of the imbalances get corrected. "The core of our super spike view is that the lack of adequate supply growth and price insulated non-OECD demand growth is leading to a sharp spike in oil prices," says the Goldman Report of May 6, 2008. This could lead to a sharp correction in demand as a result of the spike in oil prices. Deutsche Bank's Sieminski also said in a April 25 report that there is a huge risk prices could go up perhaps $200, before demand is collapsing when ordinary people can no longer afford to burn energy the way they are doing now. The Institue of Supply Management's index of USA non-manufacturing business, service industries making up a large part of the economy, shows a first increase since December 2007, according to a Bloomberg, May 6 report, and this suggests increasing energy use. ...

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Prices for WTI crude dropped below $50 in January 2015. Higher inventories weighed on oil prices and Saudi Arabia added to the pressure by cutting the price of crude sold in the U.S.

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The cost of social stability in OPEC countries is changing the attitude of countries that advised moderation in pricing in the past. Saudi Arabia has committed itself to $129 billon in new spending for public sector jobs, pay increases for state employees, and allowances for the unemployed, to preserve social stability after the democracy protests in the Middle East. This is happening throughout the Arab world and in most OPEC countries. Algeria and Iran have also increased social spending. The oil price that Saudi Arabia needs to balance its budget and pay for this is going up from $68 a barrel in 2010, to $88 in 2011, and $110 in 2015, according to the Institute of International Finance. Merrill Lynch says it is $95 a barrel for this in 2011. This is bringing the moderates like the Saudis and the hawks like Iran and Venezeula together on price issues. In the second week of April 2011, Saudi Oil Minister Ali Al-Naimi, said the Saudis had cut production by 800,000 barrels a day in March because of oversupply in the market. A consultant for Arab Petroleum Investments Corporation which reflects Saudi and OPEC views, says: "OPEC members spending pattern is expected to bear on their oil price preferences and production policy behaviour." The only restraint on price will be that price at some point will affect the global economic recovery and lead to lower consumption and growth, something the Saudis have paid attention to in the past....

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Sharp drop in oil prices in Dec. 2015.

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So much for political campaigning and talk of inflation, inflation comes in lower in September after DJT tariffs of 10-15% on EU, Japan and other trading partners. The higher tariffs on China are action needed to reduce trillion dollar trade deficits the world has with China, deficits that are economically destabilizing for the world economy, with supply chain concentration a serious problem. US inflation in September came in at 3.0 percent lower than expected.  One reason is that the headline numbers are high but in actual practice the tariffs are on average at 12.5% not 17% or 25% as headlines show. The tariffs vary by country and the US was careful to keep them at 10% for the EU and Britain and 15% for Japan, the key trading partners. China is an exception at 47% because it is US policy to reduce the world's 1 trillion trade deficit with China and cutting this is a major goal. For decades the US tried every possible way to bring it down to no avail till this effort with tariffs. Another is exceptions in products- for India this includes semiconductors, smartphones and pharmaceuticals. Another factor is that postpandemic inflation in 2021-2022 created higher profit margins in auto, retail and other sectors of the economy. As a result only 30-40% of the tariff gets passed onn to consumers. In autos only about 20% because buyers cannot afford the high prices. Some tariffs are still being negotiated and are a foreign policy tool to get India to stop funding Russia in the Ukraine war knowing that India was importing most of its oil from non-Russian sources till 2019. China is also funding Russia, that is true but the US can insist on exercising its leverage with Asian partners not China. With China the tariff on fentanyl and the overall 47% tariff- down from 57% after meetings in Busan, South Korea between Xi and DJT last month- shows the US takes the Chinese role in distorting world trade to its benefit seriously.  ...

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How the supply and demand for oil is changing according to updated forecasts by the International Energy Agency. Demand is expected to be 500,000 barrels a day less than originally forecast for the fourth quarter by IEA. Also Iraq's northern fields produced 600,000 barrels a day and Angolan production also went up to increase supply by 1.4 million barrels a day. This provides some slack in the supply-demand situation to ease price pressures. Examples of energy conservation are given one of a refrigerated truck firm, Willis Shaw Express in Arkansas which runs a fleet of 725 refrigerated trucks and has installed "governors" on its truck engines to max speed at 65 miles per hour and thus get more fuel economy per gallon used. The full impact of recent price increases has not been felt at the pumps till noand this should also encourage further conservation. The slowing down of the U.S. economy should help reduce demand in 2008 as the full impact of the mortgage crisis is felt (see the OECD report of further losses ahead estimated at $300 billion by 2008-2009) this should lead to slowing demand. At this time demand in the US is rising by 1% down from 3-4% in the 1990's. This could be be part of a trend that could lead to actual decline in consumption in the industrialized countries. The impact of a US slowdown could impact less industrialized countries and moderate demand there. Slower growth is reported for Eastern European countries. Meantime Saudi Arabia states its on schedule to increase production from 11.3 million barrels a day to 12.5 million barrels a day by 2009. ...

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There is a mixed picture behind the drop in investment in new oil exploration. The IEA estimates that overall investment will be down 15-20% in 2009. The number of drilling rigs in use globally fell 32% in the year to April 2009, to 2055, according to Baker-Hughes, an oilfield services firm. In America the number of rigs in use is down by 50%, and OPEC countries are cancelling 35 big projects, according to the OPEC secretary general, Salem Al-Badri. Cambridge Energy Associates estimates that 5.5 million barrels a day of capacity additions may not take place in the next couple of years, which is a third of expected net increase by 2014. Examine this a bit more closely and you find that the oil majors despite lack of access to oil in inhospitable terrain or foreign countries, are still holding up well in investment. Exxon increased capital spending by 5% in the 1st quarter 2009, and Shell and Chevron plan to invest the same in 2009 as in 2008, $31 billion and $23 billion. BP plans to go from $21 billion to $20 billion. Canadian Tar Sands investments are being reevaluated in the light of prices, and smaller companies like Devon Energy are cutting back, for Devon from $9 billion in 2008 to $4 billion in 2009. From the national oil companies the investments are holding up in Saudi Arabia, whereas they are faltering in Russia and cash strapped Venezuela. Saudi Aramco recently completed a 5 year project increasing capacity from 10m b/d to 12.5 b/d at cost of $70 billion. And another $60 billion is set aside for more investments which will be less vigorously pursued as Saudis have 4.5m b/d of idle capacity after production cutbacks by OPEC. Petrobras plans to increase its investment by 55% to $174 billion in the next 5 years in offshore discoveries challenged by deep waters and thick layers of salt. The oilfield services companies like Schlumberger are cutting back, with Schlumberger cutting investment in 2009 by 13% to $2.6 billion and shedding 5000 jobs. Baker Hughes shed 3000 jobs. Mature fields are also receiving less investment, so that the drop from mature fields will be 9.4% according to IEA instead of 7.7% projected earlier with larger investments. The picture described above shows investments by the Saudis, the majors, oil field services firms, investments in recovery improvements in mature fields, not in a precipitious decline. The picture is of cautious and careful investment and some pullbacks as the economies of the US suffered decline in GDP of 6% in the 1st quarter 2009 over prior year and the German and Japanese economies suffered decline of 15-16%. Even the most optimistic forecasts for China do not go above 8% for 2009. In the light of these growth estimates the moderate drop in investments in new oil exploration may match the moderation in growth in Asia and the drop in growth in the USA and Europe and Japan. The forecasts of steeply higher oil prices or spikes like those in 2007-2008 are based on the notion of a quick economic recovery. See the links to economic recovery on this. These links suggest that the current surge may not last as the basics for a recovery are weak. In the US foreclosures, toxic assets, housing, consumption and savings, and unemployment all indicate a weak economy for several years down the road. And it is this weakness that the oil investment exploration budgets may be responding to in amoderated manner. The latest sign of this weakness is the spread of foreclosures to prime borrowers with job losses, link NYT May 24, 2009. The Saudi king thinks that $75 is a fair price for oil. Current prices have taken oil to $60 a barrel, even as inventories remain strong with over 60 days of supply. No spikes like those in the past are realistic in this economic environment....

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Fears that the conflict in Syria might spill over and lead to a conflict with Iran pushed up oil prices. At the same time the new forecast by the International Energy Agency in early August 2012 showing a 20% decrease in demand growth in 2013, as a result of the economic slowdown in the U.S., Europe and China, acted to put a lid on oil price increases. Light sweet crude for September delivery was at $92.87 a barrel on the New York Mercantile Exchange on August 10, 2012, and Brent crude was at $112.95 a barrel on the Intercontinental Exchange.

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The decision reached at the OPEC meeting on June 5, 2015, was to maintain production at current levels of an official level of 30 million barrels a day. This official level now acts as an indicator, as actual production is estimated at 31 million barrels a day.