Welcome to my website on all matters oil and gas. I have created this
site in response to the many requests I get for good books and websites that I
refer to in relation to oil and gas and other commodities. My own interest
stems from a lifetime spent investing in oil and gas companies across the
globe. The complex nature of world economies in relation to oil and gas
has fascinated me for many years. With this in mind, I hope you find the
following recommendations for books and websites useful in your own quest to
further understand the relationship between politics, consumer demand and the
supply of oil and gas across the globe.
19.03.2012: Glenn Olnick's Thought for the Day
Can the world exist on $140 barrel oil when the world is in recession? Obama
continues to ignore natural gas; a home-grown fuel and possibly the key to
paying down US debt. (Author: Glenn Olnick. The views included in
this website are the personal views of the author Glenn Olnick and should not
be regarded as advice or recommendation)
21.03.2012 Glenn Olnick's Thought for the Day
The discrepancy between WT and Brent continues to exist – the cost of finding
new oil as fracking and horizontal drilling continue to increase. Can the
world continue as it is? (Author: Glenn Olnick. The views included in
this website are the personal views of the author Glenn Olnick and should not
be regarded as advice or recommendation)
26.03.2012 Glenn Olnick's Thought for the Day
With a number of global new off-shore discoveries in the past weeks, it's worth
bearing in mind that any new off-shore discovery will be more costly due to the
ecological and environmental considerations. $50 oil is unlikely, so
costs can only expect to escalate. Worth a thought. (Author: Glenn
Olnick. The views included in this website are the personal views of the
author Glenn Olnick and should not be regarded as advice or
recommendation)
21.04.2012 Glenn Olnick's Thought for the Day
The US has licensed the construction of the Sabine Pass LNG terminal, and
construction is expected sometime this year. This baffles me. The
US is running a huge deficit of and is verging on bankruptcy. However,
they continue to import oil from 'unfriendly' companies when they even turned
down the Keystone pipeline from Canada! Now they are going to export
natural gas - this just doesn't make sense in my mind. (Author: Glenn
Olnick. The views included in this website are the personal views of the
author Glenn Olnick and should not be regarded as advice or
recommendation)
18.05.2012 Glenn Olnick's Thought for the Day
Everyone expected demand for oil to fall in March and April. In actual
fact it has risen. Oil prices should remain high right through the
summer. We are experiencing a similar divergence between the price of oil
and oil producers. The oil producing stocks are now becoming attractive.
(Author: Glenn Olnick. The views included in this website are the
personal views of the author Glenn Olnick and should not be regarded as advice
or recommendation)
4 June 2012: Glenn Olnick's Thought for the Day
Fears of worldwide recession forcing oil down both Brent and WTI.
Weakness in the market is translating in the share prices of oil and gas
companies. Oil could go lower. We have not seen the bottom.
(Author: Glenn Olnick. The views included in this website are the
personal views of the author Glenn Olnick and should not be regarded as advice
or recommendation)
14.06.2012 Glenn Olnick's Thought for the Day
Oil and gas prices continue to show weakness as the world flirts with a whirl
wind recession. It looks like oil may continue to weaken. This is not the time
to be brave and be a buyer, be patient as I believe oil and gas will continue
to weaken. (Author: Glenn Olnick. The views included in this website are
the personal views of the author Glenn Olnick and should not be regarded as
advice or recommendation)
11.07.2012 Glenn Olnick's Thought for the Day
Investors are eagerly awaiting the contents of the minutes of the last Federal
Open Market Committee (FOMC) meeting to see if there are hints about further
QE. If so, then we could see oil price further
affected. And if QE3 isn’t imminent, then we may need to
prepare for a further fall in prices. This provides the US with a much
needed stimulus as it will possibly lead to more disposable income available to
the US economy and therefore better economic forecast figures. We will
wait and see. (Author: Glenn Olnick. The views included in this website
are the personal views of the author Glenn Olnick and should not be regarded as
advice or recommendation)
25:07:2012 Glenn Olnick's Thought for the Day
When it comes to oil and gas, we are entering a new world order with the US now
entering the energy game in a way that it has never done before. Daniel
Yergin’s book The Quest: Energy, Security, and the Remaking of the Modern
World” is a balanced view on the emergence of America’s own oil and gas
industry in line with the demand for more renewable sources. This new
reality, according to Yergin, “ requires a new way of thinking and talking
about America’s improving energy position...” Until the US government
does this in a balanced and realistic way, costly and political dependency on
imports will continue. (Author: Glenn Olnick. The views included in
this website are the personal views of the author Glenn Olnick and should not
be regarded as advice or recommendation)
4 September 2012
Whatever the commodity, China is the dominant factor when it comes to the
market. However getting a clear picture on what China’s growth prospects
look like, and the ultimate knock-on effect to commodity suppliers globally is
difficult. I recently read an interesting article featured in The Energy
Report by Keith Fitz-Gerald from Money Morning. He answers some of
those questions and clichés that constantly circle about China. Read on
for an interesting view point, or click through to the website at
http://www.theenergyreport.com/pub/na/14261?utm_source=delivra&utm_medium=email&utm_campaign=streetwise-reports%2009/04/2012%2015:17:30
Q - The Chinese copy everything. Companies can't make money there, especially
lately. A - That's simply not true. Domestic Chinese companies have made plenty
of money. So have foreign companies like McDonalds, ABB, Coke, and even GM,
which have been fabulously successful there because they've taken the time to
localize their products.
Not many people know this, but the ultimate sign of executive status is a
jet–black Buick minivan in Beijing at the moment. How's that for a
contradiction?!
As you might imagine, I get a lot of questions about China—it's topical and
it's very important to our future.
Most are really just reincarnations of concerns voiced since 1970 when China
first began to open up. In that sense, they're really nothing new.
So rather than tackling the same old "they'll never succeed because they're not
democratic" or "ghost cities" arguments that seem to incessantly make the
rounds, let's frame them in terms of what's in the news lately and dig into the
subtleties that escape most Westerners.
And, let's start with one of the questions I get the most.
Q - Is China going to have a "hard" or "soft" landing?
A - This one stumps me. Where have the people asking this question been?
China's had a soft landing for the last four years. They are already there—the
economy is slowing, debt is rising, and the urban migration may be closer to an
end than people think.
The fact is that nobody can define what a Chinese soft or hard landing actually
is because Western metrics don't apply. It's just a catch phrase that gets
bandied about in the media.
That's why I believe this question is really a matter of perspective. For
example, there is no question China faces huge challenges, but those challenges
are no different than many we've faced here in our own past.
During the last century we experienced two world wars, multiple recessions, a
depression, and a presidential assassination—and still the Dow rose more than
20,000%.
China will, too. The genie is not going back in the bottle.
As I recall, many people in England thought that America was a pretty silly
venture at one time. And don't forget that the world thought Japan was good for
nothing more than cheap tin toys following WWII.
Looking at China through Western lenses is a mistake. The losers are those who
show up simply expecting to "show the Chinese a thing or two" by virtue of
their success in Western markets.
In their rush to condemn China, people have conveniently forgotten that
European markets were problematic to crack, too.
It wasn't all that long ago, for instance, that executives anxious to sell into
Germany via the Internet didn't understand that many German consumers still
prefer cash. Eventually they began to understand that the payment framework was
a big deal and the key to profitability.
With regard to imitation and copycats, both frustrate Western executives unused
to the practice, which has existed for centuries as a matter of China's
cultural fabric.
In reality, both speed up the product development cycle and sales.
Companies that are unprepared or do not have the right partners cannot compete
no matter where in the world they operate (an argument, by the way, that is
laid out very well by Kal Raustiala and Christopher Sprigman in their new book,
"The Knockoff Economy" (Oxford University Press).
People may not like how the Chinese handle things, but that's a different story
and one that requires a different set of responses.
Q - Export growth is failing, therefore China must be failing. . .right?
A - Nope. The inconvenient reality is that China is still operating at 3–5
times the speed of Western economies, which will be extremely lucky to eke out
1% growth this year despite the trillions thrown into the hopper.
I find that people who voice the connection between exports and China's
complete collapse are often voicing their own frustrations about the lack of
growth in the West, or perhaps outright jealousy that it continues practically
unabated there.
Even if the data is completely faked, Chinese demand backed by 1.3 billion
people completely outstrips anything we have in the West and creates a tailwind
that will last for decades. Like every country that's gone before it, this will
involve ups and downs both political and economic. It will not be a flawless
nor smooth journey by any stretch of the imagination.
The challenge - and what makes so many people so uncomfortable—is that China's
goals are now intertwined with the world's fiscal future.
Q - Doesn't Bo Xilai's recent removal imply that China's leadership is more
fractured than ever?
A - I hear this one a lot lately.
By way of background, in case you are not familiar with him, Bo Xilai was
China's version of a political rock star.
Rising from meager beginnings as Dalian's mayor, he became one of the most
powerful men in the Communist Party as its Secretary in Chongqing and a member
of China's Central Politburo. He was widely considered to be in line for
President of the People's Republic of China.
Unusually charismatic for a senior Chinese politician, he seemingly could do no
wrong. . .right up until his top lieutenant and police chief sought asylum in
the American consulate in Chengdu and exposed all sorts of conduct unbecoming
of a senior politician.
It didn't help that his wife, Gu Kailai, was charged and subsequently found
guilty of murdering British business man Neil Heywood, possibly with Bo's
help.
Contrary to what most Westerners believe, the speed and totality of Bo Xilai's
dismissal is not a sign of weakness.
Instead, it reflects significant strength because it suggests that the Chinese
leadership is consolidating power and closing ranks to keep the system strong,
just as they have over 2,000 years of history whenever a dynastic structure was
threatened.
And yes, before somebody gets going on that one, I consider the Communist Party
to be another dynastic structure for all intents and purposes, even though
technically speaking it's something entirely different.
Q - There's no way the dollar can lose out to the yuan as the world's reserve
currency. Besides, the amount of trading allowed now is so small that it can't
possibly have an effect on the U.S. dollar and the euro. . .Right?
A - I know this is the perception, but the reality is different.
First, the United States has gone from the world's single biggest creditor to
the greatest debtor in the history of the world. We owe ourselves more than
$222 trillion at last count, according to Boston University Professor Lawrence
Kotlikoff and the CBO. The dollar is a disaster enjoying temporary strength by
virtue of the EU crisis.
Second, it's already well under way. China has quietly set up hundreds of
billions in bilateral yuan swaps with nations all over the world to safeguard
against the global financial crisis, strengthen the yuan outside the normal
currency pairs, eliminate currency risk and strengthen trade ties.
As of last February, China had signed agreements with 18 nations, the most
recent of which is the $30 billion bilateral contract with Brazil.
Lest you think this is isolated to second tier players, it's worth noting that
the Bank of England was actively considering such an agreement until March when
it was kyboshed. Germany is also rumored to be considering the
possibility.
At the same time, there are also new "panda-bonds" being floated that further
tie the international community into yuan. Shanghai, meanwhile and on a related
note, has set up futures markets already trading in yuan-denominated
instruments.
Citi just became the first Western bank to launch a yuan-denominated credit
card, obviously with a local partner.
The implications are clearly global and already in process. The dollar is
already being supplanted. It's only a matter of time before traditional
dollar-based markets find themselves outgunned by the amount of yuan-based
trade that bypasses traditional currency channels. The same can be said for the
euro, although on a lesser scale. . .so far.
Not only that, but I believe there is a good argument to be made that the
establishment of these agreements actually takes a lot of pressure off the
dollar, too.
At the end of the day, what Western leaders and bankers fail to grasp is that a
parallel currency exchange mechanism is being built right under our
noses.
So what should you do?
That's up to you, but the way I see things you've only got one decision to
make. Imagine the Dragon is coming to lunch next Tuesday; ask yourself if you
want to be at the table or on the menu?
Then, consider this bit of common sense advice from the legendary Jim Rogers:
it's far easier to get rich in China with its tailwinds than it is to get rich
in America with its headwinds. (Author: Glenn Olnick. The views included
in this website are the personal views of the author Glenn Olnick and should
not be regarded as advice or recommendation).
23:09:2012 Glenn Olnick’s Thought for the Day
I continue to watch China closely and also those commentators whose job it is
to interact with its economy and businesses. The recent conference in
Gstaad, Switzerland, hosted by Citywire, provided a platform for many of these
people. One that caught my eye was Pippa Malmgren, president of
Principalis Asset Management, who believes there is a very real threat that
food and energy inflation spikes in China could result in mass demonstrations
and protests like last year’s Arab Spring. According to Citywire’s
follow-up report, Malmgren had previously warned of inflationary risks ‘ripping
the emerging markets apart’ but she added this has become a real very concern
in China, with residents over areas such as Wukan protesting over government
policies. For the full article, go to Citywire’s site at
http://www.citywire.co.uk/global/china-edging-towards-arab-spring-style-unrest-says-malmgren/a620297?re=20680&ea=274749&utm_source=BulkEmail_Global_Weekly&utm_medium=BulkEmail_Global_Weekly&utm_campaign=BulkEmail_Global_Weekly
My advice as Glenn Olnick, is to watch closely and especially the continued
contraction in China’s economy. This will all have repercussions for the
natural resource sector. (Author: Glenn Olnick. The
views included in this website are the personal views of the author Glenn
Olnick and should not be regarded as advice or recommendation).
12 March 2013 Glenn Olnick’s Thought for the Day
I have been an observer of the Keystone Pipeline project for many years, and
am still appalled at the way Obama and his administration have been dragging
their feet. However, it now appears that Obama has no leg to stand on
when it comes to the ‘environmental’ argument. It appears that the State
Department has tried to hide their latest report on the pipeline’s development
which stated that it would pose minimal environmental risk. This
counteracts Obama’s arguments, and ultimately holds up job creation, and the
supply of oil to the US from a US-friendly country. A good analysis of
the situation has been written up by Amy Payne for The Foundry. You can
read the article at the website here:
http://blog.heritage.org/2013/03/04/obama-administration-buries-good-news-on-keystone-pipeline/
Alternatively, you can read the extract below:
In Washington, a presidential Administration releases news it doesn’t like
at 5 p.m. on Fridays. So it pays to pay attention when everyone is leaving work
for the weekend.
Late last Friday, the State Department released a positive environmental
review of the Keystone XL pipeline. President Obama has been delaying this
pipeline—which would carry oil from Canada to refineries in
Texas—for more than three years.
The delay has meant that America is still waiting on an additional 700,000
to 830,000 barrels of oil per day from a close ally, not to
mention 179,000 American jobs.
Why has this taken so long, when all environmental reports thus far have
been positive? Heritage’s Nicolas Loris, the Herbert and Joyce Morgan
Fellow, explains:
Given the need for jobs and more oil on the global market to offset high
prices, the permit application had been moving along positively with bipartisan
support without much attention until environmental activists made blocking the
Keystone XL pipeline their issue to rally around for 2011. Although President
Obama and the Department of State (DOS) said they’d make a decision at the end
of 2011, they ultimately catered to a narrow set of special interests, punting
the decision until after the 2012 elections.
The State Department, which is overseeing the pipeline because it crosses a
U.S. border, has “already conducted a thorough, three-year environmental review
with multiple comment periods,” Loris reported last year.
The review has
been comprehensive:
DOS studied and addressed risk to soil, wetlands, water resources,
vegetation, fish, wildlife, and endangered species. They concluded that the
construction of the pipeline would pose minimal environmental risk. Keystone XL
also met 57 specific pipeline safety standard requirements created by DOS and
the Pipeline and Hazardous Materials Safety Administration.
Canada has oil to sell, and it isn’t likely to wait
forever. Forbes writer Brigham McCown saidthat “Delays in approving the upper portion of the
pipeline have bewildered many Canadians who see the U.S. as their closest ally
and trading partner.”
McCown pointed out that “Even without the pipeline, Canada will continue to
extract the oil which would be most likely transported by pipeline and rail to
Canada’s coast for shipment to Asian markets.”
Because the State Department is overseeing the application, the new
Secretary of State, John Kerry, will be giving his recommendation on the
pipeline. Ultimately, the decision rests with President Obama. But Heritage’s
David Kreutzer says Congress can, and should, step in if the President continues to block it:
Should the President reject Keystone again, Congress should wield its
power to regulate commerce with foreign nations and approve the pipeline’s
construction once the State Department again finishes its review of the
rerouted project.
These delays are pointless. The Keystone pipeline has passed its
environmental reviews, and the Obama Administration is only hurting America by
holding it up
(Author: Glenn Olnick. The views included in this website are
the personal views of the author Glenn Olnick and should not
be regarded as advice or recommendation).