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December 30, 2014

Oil Prices Fall to Record Lows, Thanks to Fracking Glutting the Market;
So Of Course Obama is Rushing Out New Regulations on Energy Production

We don't talk about it here, because it's Good News that Obama has nothing to do with, but fracking has re-made the oil markets. It's accurate to speak of a "Fracking Revolution," with far-reaching consequences due to the new technology.

One of those consequences is the price of oil at five year lows, and still falling.

Global benchmark Brent crude LCOc1 settled down $1.57 at $57.88. U.S. crude settled down $1.12 at $53.61 a barrel, following Brent downward.

The rally followed by the steep drop showed the market's fears about oversupply are not going away, said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut. "Every time the market tries to pick itself up, it's just another wave of selling," he said.

Saudi Arabia is refusing to cut production -- which they would ordinarily do, to prop up oil's price -- because they want to send oil prices low enough to punish American frackers, and maybe drive them from the market. (Fracked oil and gas is more expensive than easily-pumped fuel, and can only be sold at a loss at low prices.)

Another consequence: Russia, whose government's funding comes principally from oil (more than half), is expecting its first recession in five years, due to the massive cut in that country's allowance the oil glut is causing.

he Russian economy contracted by 0.5% in November, the first fall in national output - Gross Domestic Product -- since October 2009, official figures show.

The Russian government expects a 0.8% decline in GDP next year, compared with 0.6% GDP growth in 2014 as a whole.

The rouble fell to a rate of 57 to the dollar on Monday, a fall of more than 6%, after some gains last week.

(Unfortunately Putin does not have to stand for reelection until 2018.)

The fact that Americans are putting less dollars into foreign bank accounts means they have more dollars to spend on goods made in America, and that has resulted in the nation's best growth since Obama's depression.

The U.S. economy grew at its quickest pace in 11 years in the third quarter, the strongest sign yet that growth has decisively shifted into higher gear.

The Commerce Department on Tuesday revised up its estimate of gross domestic product growth to a 5.0 percent annual pace, citing stronger consumer and business spending than it had previously assumed.

So all of these goods flow from expanded American energy production -- the Russian bear hobbled, the American economy growing, Middle Eastern tyrants with less money to spend on religious terrorism.

So of course Obama, the Shit-Fingered Midas, is stepping in to put a stop to all this.

The Obama administration is planning to release in the coming months a series of regulations on the oil and natural gas industry, a response to the nation's energy boom that also is aimed at burnishing President Barack Obama's environmental legacy in his final two years.

The coming rules--at least nine in total--would include the first-ever federal standards addressing methane emissions, stricter controls on hydraulic fracturing, drilling requirements in the Arctic, new rules governing oil shipped by trains and tougher standards on offshore drilling technology.

The repercussions for the industry could be higher operating costs and fewer incentives to drill on public lands. Mr. Obama and his environmental backers say new regulations are needed to address the impacts of the surge in oil and gas drilling and production.

Get this: Obama has blocked the Keystone XL pipleline for years, and this has resulted in more oil being transported by rail.

Obama's coming "solution"? Regulate the shit out of rail transport of oil and drive the price up.

And of course he's doing this without Congress.

"There's this attitude that if the people and the democratically elected institutions don’t agree, we’re going to go it alone," Mr. Gerard said in an interview. "I think that attitude is permeating some of the regulatory bodies."

So the frackers causing all these wonderful secondary effects are going to be hit by a double misfortune: The low prices they've caused will drive many of them out of business, and meanwhile a walking catastrophe named Barack Obama is going to ramp up regulatory costs on them as well.

250,000 energy workers may lose jobs because of the improved energy outlook they themselves created. And that's before Catastrophe Obama deliberately punishes them further.

It's almost as if he's working for Them, huh?

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posted by Ace at 12:05 PM

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