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U.S. commercial oil inventories cover about 164 days of net imports by Jan. 2015. Excluding net imports from Canada and Mexico this reaches 279 days of net imports from other countries. When strategic oil reserves are included this goes up to 450 days, which will put pressure on oil prices in 2015 as the price of oil drops below $50. The surge in oil production in the U.S. by 1.2 million barrels a day contributed to this buildup.

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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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Karen Elliott House, Pulitzer prize winning journalist and expert reporting from Saudi Arabia, in 2007. You can follow her reports in the Elliott House group and link.

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One of the favorable factors for Iraq in recent years was the surge in oil production, adding 1 million barrels a day to reach 3.3 million barrels a day. It surged to an average of 3.7 million barrels a day in December 2014 after a deal with the Kurdish region in northern Iraq for an additional 550,000 barrels a day in exchange for Kurds getting a 17% share of federal revenues. This helped Iraq overcome other problems. The drop in oil prices has led to a 40% drop in revenues and the invasion by Islamic State in a loss of some production.The federal budget of $101 billion planned revenues is based on an oil price of $56 and exports of 3.3 million barrels a day, resulting in a $20 billion deficit. It assumes $10 billion in new tax revenues which may be hard to achieve with a lack of strong central government. Experts on Iraq's oil industry say large investments are needed to offset declining oil production from older oil fields in southern Iraq. Oil exports were 2.5 million barrels a day in 2014, and experts say even this will be hard to achieve for 2015. Investments could come from western oil companies, but Iraq and the Kurdistan region are behind in payments to oil companies. Iraq is considering issuing bonds for $10-$15 billion....

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U.S. President Obama's effort to ramp up sanctions against Iran to force Iran to halt its nuclear program.

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Saudi Arabia's strategic moves at the OPE pricing meeting in Nov. 2014. Saudis push for keeping the production levels as they are, not making any cuts. Analysts say the Saudis are aware other OPEC countries and other producers outside OPEC such as Russia, are not likely to make cuts in production as they face severe budget constraints- especially Venezuela, Iran, Russia. In this situation they have decided to take a wait and see approach to see where prices are headed in coming months. A price of $60 for Brent crude is likely to lead to cuts, according to some analysts.

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Biden's ultimate faith in the fairness of the American cause and the American people gets him two big wins with the $280 billion semiconductor bill, and the $369 billion climate change action bill. Biden says about this when many had given up hope- "The work of government can be slow and frustrating, and sometimes even infuriating. Then the hard work of hours, days and months from people who refuse to give up pays off. History is made. Lives are changed." With Europe at war and struggling to get through the winter with gas rationing it was up to America to lead the way as the world faces ever increasing floods, fires and heat waves that affect food supply and environment. And Schumer? The New York Democrat asked about the effort quoted his father who passed away last year. "As my late father said: you need to persist. God will reward you." For months Mr. Manchin a critical vote in the US Senate had opposed the Democrats proposed bills. Then Senators Mark Warner of Virginia, Chris Coons of Delaware, John Hickenlooper of Colorado took a different approach. They did not openly criticize Mr. Manchin, and appealed to his sense of history, his zeal for playing a leading role in a high stakes legislative deal. Schumer and Biden were willing to make some concessions for fossil energy now that with the war in Ukraine the US needed to export LNG to Europe to replace Russian supplies. China and India were still going to be using fossil fuels after COP26 and after the pandemic induced lower growth. The US had to find a different approach some fossil fuel concessions would make it possible to use it as abridge towards the larger goal of getting ahead on renewable energy in a big way. This opened the way for a deal that centrists could support.  ...

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This is the biggest climate bill in history. The NYT looks at the $369 billion Biden Climate bill to show how it will cut carbon emissions by 40% by 2030 over 2005 levels.

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Keith Bradsher's NYT interview with Raghuram Rajan, Governor of the Reserve Bank of India, comes when Rajan has come under criticism from the business sector and the small business support base of prime minister Modi's party. The criticism centers on the drop in oil prices since Nov. 2014, and Rajan's failure to drop interest rates at the Dec. 2, 2014 central bank meeting. Rajan says it was not clear whether oil prices would remain low for an extended period at the Dec. 2, 2014 meeting. Since then new inventory data, EIA estimates and OPEC policy guidance have confirmed low prices will remain for an extended period. Rajan lowered interest rates on Jan. 14, 2015, by one quarter of a percentage point. Under India's setup the central bank chief makes decisions on interest rates, compared to the decisions made by the Federal Open Market Committee at the U.S. Federal Reserve. Rajan says there is full understanding between the central bank and the Modi government economic team led by finance minister Arun Jaitley, Jayan Sinha, deputy minister of state for finance, and chief economic advisor Arvind Subramanium. Modi and Jaitley prefer to rely on the advice and policy direction of economic policymakers with long experience in the U.S. and international circles. Both Subramanium and Rajan bring this level of experience and expertise. Subramanium brings experience from his years at the GATT which preceded the WTO, the IMF, and the Peterson Institute of International Economics, and Rajan brings experience at the University of Chicago, and as chief economist of the IMF. Modi is a dilgent listener and policymaker giving careful attention to the best advice, making it unlikely that Rajan would be seen as a holdover from the administration of Manmohan Singh. Other criticism that the business sector has made of Rajan are as financial regulator in asking state banks to increase collateral required from large business firms for large bank loans. Rajan points out the need for business to bear the costs as well as the benefits of taking risks. Under previous governments the state banks allowed large firms to keep their holdings at companies even when the risk taking resulted in losses. Rajan has also not tried to reverse the sharp decline in the rupee, which hurts business firms which took on dollar denominated loans. Rajan has instead followed policy of building up the reserves by buying dollars. The reserves were depleted in 2013 by a policy of currency interventions to reverse that decline. Inflation in India reached 9.9% in Dec. 2013, with policy of the central bank under Rajan set to bring it down to 8% in 2014, and below 6% in 2015, so that India could get out of the trap of persistently high inflation with slow growth. This is critical for a new Indian success story. A goal set by Rajan in Oct. 2012 when he was appointed as central bank chief, was to increase foreign investment and encourage new business so that India was no longer dependent on large companies for growth. This is also critical for a new Indian success story, as the Modi administration and the central bank are both keenly aware. Just as Bernanke and now Yellen at the U.S. Fed face criticism for quantitative easing monetary policy, focus on the high long term unemployed, and not focussing on inflation- with their focus on the long term economic recovery in an environment of low inflation below 2% in the U.S.- India's Reserve Bank faces a different kind of criticism for careful and prudent policies to ensure long term growth....

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Israel's ambassador to the U.S., Michael Oren, describes Iran's efforts to make weapons grade nuclear material, escalating the enrichment process from 3.5% to 20%. He says Iran now has 225 pounds of 20% uranium and 11,000 pounds of 3.5%, enough for 5 nuclear bombs, and points out that 20% uranium can be enhanced to weapons grade in weeks. During the initial negotiations the P5+1 nations demanded suspension of enrichment acitivites at a time when the enrichment process was at 3.5%, and transfer of stockpiles abroad. As negotiations dragged on Iran escalated to 20% enrichment. current demands of the P5+1 are for cessation of 20% enrichment and removal of the 20% stockpile, and closing the facility at Qom, as a first step. This has been rejected by Iran. In this op-ed Oren says Israel alerted the world about the Iranian nuclear program 20 years ago, and as this has continued to what it is today, Israel's view is that much of that time was wasted and the window for international efforts to cease and dismantle Iran's nuclear program is almost shut. ...

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Better balance sheets, higher resale values, the trend away from subprime financing, and a lineup of vehicles that give better mileage (even with trucks acounting for 50% of sales) with the shift to lighter crossover vehicles, will help Detroit automakers face higher gas prices. These factors should help prevent a replay of the very serious problems of 2008, when gas prices exceeded $4.00 a gallon and the U.S. faced a financial crisis. At that time in 2008 vehicle sales declined by 18% and truck sales were down by 25%, according to Credit Suisse.

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Because most of the increase in U.S. oil production is in landlocked states in the U.S. midwest without easy access to markets in coastal cities, the lower prices of West Texas Intermediate (WTI) crude benefit refiners in the midwest but do little to lower pries of gasoline at the pump.