Friday Sept 21, 2018
Energy and Stocks Set New Highs
The blue chips surged more than 250 points to cap a three day run of gains the latest leg of a nine year rally that hurtled the index to its first record close since January 26.
Headline WSJ today
Energy Secretary and former Texas Governor Rick Perry has credited Saudi Arabia and Russia with avoiding a ‘spike’ in oil prices. Presumably Secretary Perry believes that the two have increased their oil production to offset the decrease from banned Iran.
We can be sure Mr. Putin is pumping every barrel he can at $70. Russia really has no economy other than its energy section. Have you ever bought any product labeled Made in Russia?
The truth though is that oil is both an economic and a financial commodity. Oil prices have been positively correlated to the stock market rise this year. Investors in an expansive mood are betting on higher stock and oil prices. Indeed in a booming economy, high oil pries can be afforded and so the price increases.
Crude oil prices in the Permian Basin are trading at a discount to the New York Mercantile price. The supply has overwhelmed the ability to move the oil to the Gulf Coast Refineries. This is boosting production from 1.1 million barrels per day to 1.5 mbpd in the Eagle Ford. The Eagle Ford is much closer to Corpus Christi and the Golden Triangle area so it is easier to ship the oil out.
And there is more good news for Texas. It is no accident that the TV series Dallas featuring loveable rogue J. R. Ewing took place in Texas, not Denver.
And there is more good news for Texas. It is no accident that the TV series Dallas featuring lovable rogue J. R . Ewing took place in Texas, not Denver. Environmentalists want to put Colorado out of the oil exploration business altogether.
Proposition 112, on the November ballot, would restrict new energy development within a 2,500 foot radius of any building, playground, body of water, or Jane Fonda when she visits the state. (okay just kidding about Jane) This would cut state oil revenue form $200Million to possible $1 billion. Some 145,000 jobs might be lost along with $218 billion in GDP. Democrat liberal Gubernatorial candidate Jared Polis opposed fracking in the past but now claims he does not support 112.
This is a project of a group called Colorado Rising but if it passes it looks more like GDP Falling. The usual out of state suspects like the Sierra Club and Greenpeace support 112.
If this passes expect Rising to migrate to other states. But I doubt it would pass in Texas, the home of J R Ewing
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