Deep Blade Journal

November light sweet crude touches $50

The Daily Star: “This is a major problem we don’t need. There is just not enough sweet crude“.

Some of the current rationales given for the latest spike in oil prices include

· Unrest in Nigeria – Shell evacuated 200 workers from the Niger Delta due to insecurity

· Unrest in Saudi Arabia – firefight in Riyadh’s Shifa district, Frenchman killed in Jeddah

· More sabotage attacks on Iraqi pipelines – two Iraqis were killed near Kirkuk when a bomb they were planning to plant exploded

· Tropical storm Jeanne – any news suggesting an oil supply threat moves traders, because…

· …U.S. oil inventories are at the lowest levels since February.

“There is beginning to be a problem with inventories”, a trader quoted in the Bloomberg piece said. He continued, “$50 is a psychological shock, and it could climb to $60. It’s definitely something that could happen”.

Additional reporting from the New Zealand Herald lays out a grim future:

The lack of a supply cushion has reinforced the view among some investors that oil near $50 is not overpriced, despite a 50 per cent jump in crude prices since the start of the year.”The market faces the prospect of years without sufficient flexibility or insulation from shocks during a period of extreme geopolitical stress,” said analyst Paul Horsnell of Barclays Capital.

But here’s the real kicker. Demand is so high that

Extra crude from Opec, now pumping at a 25-year high, has failed to make any impact. The group produced 30.5 million bpd in September, the highest since 1979, tanker-tracking consultancy Petrologistics said Monday.

The people who watch tankers suggest that OPEC has succeeded in increasing output by 2.5 million bpd, but it doesn’t matter, due to the Nigerian problems and other strains making the highest output rates unsustainable, growing demand still hasn’t been slaked.

The story that moved the markets last week, Yukos cuts in China deliveries, barely makes the radar compared to this week’s oil problems.

I really need to finish that “next posting” I promised two months ago, as energy could sharply rise as an issue in the presidential campaign. Could the October surprise be gas lines?

Meanwhile, it is time to review the Matthew Simmons material I cited in July.

Update 9:45am: Oil is up sharply at $50.47 in early Tuesday trading. According to this updated version of the Bloomberg story cited, Robert Mabro, president of the U.K.-based Oxford Institute for Energy Studies is quoted:

With geopolitical uncertainty, large demand growth and limitations to capacity, the surprise isn’t that oil reached $50 but that it hasn’t gone to $70.

Also,

The Niger Delta People’s Volunteer Force plans to extend the fighting across the delta and will target Agip, a unit of Rome-based Eni SpA, Reuters reported, citing an interview with rebel leader Mujahid Dokubo-Asari. In March 2003, Shell, ChevronTexaco Corp. and Total were forced to idle more than a third of Nigeria’s output because of violence around the town of Warri.

“Given the fact that we have such a tight supply-demand balance and that Nigeria is one of the major oil producers in OPEC, any potential disruption there at this moment in time would be very significant for prices”, said Simon Wardell, an analyst at World Markets Research Centre in London.

Daily oil output in the Gulf of Mexico, home to a quarter of U.S. oil production, remains about 500,000 barrels below normal two weeks after Hurricane Ivan, the U.S. Minerals Management Service said. More than 11 million barrels of production have been lost in the past two weeks.

Funny how the Bush campaign is basically mum about how high oil prices may affect the election, preferring instead to push the terror panic button. All we know is the Whitehouse is keeping “a close eye on” the oil price, according to spokesman Scott McClellan. I really feel secure knowing that.

CSPAN is a treasure trove of wonders. Washington Journal, the 7am – 10am call-in show, receives its share of crackpot callers. A few days ago, a transcript (credit: Sinfonian/Blast Off!) of a call into Washington Journal by an obviously disturbed individual made the rounds of blogspace commentary. Atrios was particularly impressed.

This “housewife” began

I’m going to vote for President Bush because, after all, you know, God made us there, you know, in His image, free from any black color and all [Host looks up, surprised]….

Click through for the rest of the incredible ride.

Some time ago (August 2003), I posted this, also a Washington Journal transcription.

CSPAN: Memphis, Tennessee, our next caller, good morning.

BUSH LOYALIST: Good morning. Yes, I’d like to say that I totally support George Bush as he reshapes the Middle East. People don’t understand it’s necessary that we throw all these countries into chaos, and kill all the Arabs as much as possible, so that we can have a greater Zion in that area, and have more glory and power for the United States of America.

CSPAN: Thank you for the call.

Note the intense Bush support. Back in 2003 I asked, “Why is it that George W. Bush inspires such loyalty from this warped crowd?”, and lamented the “bizarre spread of Zionist-American religious right extremism promoting a new kind of final solution”.

I still wonder how it is that Bush has locked in this most extreme cross-section of reactionary America – those holding the most rabidly racist views along with a willingness to give them out loud to a national audience. George W. Bush has called out kooks of this strain in droves. How? Why?

Today I will engage in some new speculation on this matter. I recalled an article I read in American Demographics magazine a very long time ago. It dealt with of all things, bug spray and low-income consumers. But it’s something that’s stuck with me. A bit of searching unearthed a quote from this article in American Demographics for Nov. 1991:

Psychographic marketing techniques helped Raid roach spray marketers discover that the reason low-income Southern women were the heaviest users of roach spray was that “a lot of their feelings about the roach were very similar to the feelings that they had about the men in their lives,” said the advertising executive on the account. They said the roach, like the man in their life, “only comes around when he wants food.” The act of spraying roaches and seeing them die was satisfying to this frustrated, powerless group.

Here’s my speculation – Bush engenders, in essentially powerless people who are vulnerable to his propaganda, feelings similar to what they get with a spray weapon in their hands while exterminating insects.

There are oh so many of those little devils – brown people, followers of Islam…. George W. Bush promises to spray them back, put them down. He’s been molded to fit in the hand and give just the right satisfactions. Meanwhile, Democrats like Kerry are just leechy wimps who’ll eat you out of house and home while giving everything away to the insects.

My hypothesis is that this is a technique through which the Republicans control people of different races and cultures with low resources to act against their own interests by turning them against each other. Bush becomes the satisfying exterminator of terrorists and other leeches. The targets are dehumanized through racist transmogrification into insects while a thick layer of supernatural belief forms a barrier through which no rational thought can go.

It’s just speculation. Anyone have further thoughts?