August 12, 2013
- China and OPEC buddy up… while U.S. oil producers scramble to tap a vast resource now going to waste
- Gold pops: The number Greg Guenthner’s waiting to see before he’s convinced the rally has legs
- The pitiful retirement assets of America’s “displaced workers”… and our own survey in which we ask how much you’d need to live out your retirement dreams
- Detroit gets closer to selling the family jewels, but wait — who left this $1 million check lying around?
- Canadian tells us to shut up about Obamacare… the quest for a 3-D-printed house… a Nobel Peace Prize nomination… and more!
PetroChina is on track to become “the biggest single foreign investor in Iraqi oil,” according to a report over the weekend on the Reuters wire.
We first noticed China getting an oil foothold in “post-conflict” Iraq in December 2009. By June of this year, even The New York Times caught on. “The Chinese are very simple people,” an Iraqi Oil Ministry official told the Gray Lady. “They don’t have anything to do with politics or religion. They just work and eat and sleep.”
And they line up deals.
Word leaked on Saturday that PetroChina will partner up with Exxon Mobil to develop the West Qurna-1 field. PetroChina is also in talks to take a stake in the West Qurna-2 field being developed by Russia’s Lukoil. Together, West Qurna 1 and 2 could one day rival Saudi Arabia’s Ghawar field, the world’s biggest producer.
“Iraq’s oil fields are the largest in the Middle East open to foreign investment,” Reuters explains, “making them hard to resist as China’s dependency on imports rises.”
The OPEC countries in general are getting cozier with China; the U.S. oil boom has seen to that. The other side of that coin is this: Going forward, the United States will be ever more reliant on domestic oil for future supply.
“Right now,” says Byron King, “there are about 9,000 oil wells operating in the Bakken shale region, which covers large swaths of North Dakota, Montana and up into Saskatchewan.
“At present rates, the number will grow to an eye-popping 50,000 wells by 2030.”
All that drilling for oil has created an intriguing byproduct…
This is a NASA photo of the upper Midwest at night. “Over on the right side is Lake Michigan,” Byron explains, “with the lights of Milwaukee at the shoreline.” Move to the northwest and you see the Twin Cities.
“Out further west? At the far end of the Dakotas? Look at that light coming from the oil patch! Wow! For all the talk one hears about oil from Bakken development, there’s a lot of natural gas that comes up as well. And after it comes up? For lack of options, operators burn much of that natgas. Indeed, the flares are visible from space.”
“According to some estimates,” Byron goes on, “about one-third of the natural gas produced along with Bakken oil has no pipeline or other immediate storage or use. Operators simply burn it off.
“And even at the low natgas prices we have in the current marketplace, the gas is worth about $100 million a month.”
Flaring is a worldwide phenomenon that comes with oil development. But in the Bakken, the problem is acute, and simple — there aren’t enough gas pipelines to carry the surplus to market.
“This Bakken gas-flaring issue is, however, a problem that seems to be finding its own solution,” Byron adds. “In the past two years, nearly 4,000 miles of pipeline have been installed in the Bakken area to gather natgas.”
Meanwhile, “more and more operators are working to convert oil-site equipment to run on this otherwise ‘stranded’ natural gas. This includes things like electric generators, large equipment and even the massive engines that run drilling rigs.
“So the way to look at that photo from space is that it truly is a snapshot in time. Ten years ago, pre-Bakken development, the prairies of North Dakota would have been dark at night, save for the very occasional town or farm out in the great lonesome. Today, we can see the flares of gas being burned off. A few years from now? Those gas molecules will be powering something else, and not shooting photons into the empty night sky.”
Investable? You bet. The gas byproduct from Bakken oil is just one more aspect of the “Remade in America” phenomenon that Byron’s been tracking. And even though he’s been on the case for more than 18 months, it’s not too late for you to profit. Check out Byron’s updated research right here.
The Dow begins the week nearly unchanged from Friday’s close — which brought an end to the index’s six-week win streak. At last check, the number on the big board was 15,426.
“This past week closed with stocks behaving indecisively,” Options Hotline editor Steve Sarnoff wrote his readers last night. “With buyers and sellers slugging it out for control of price direction, this type of action often marks a turning period. Beaten-up bonds, gold and silver were finding support and looking to bounce. We shall see if that movement picks up over the weeks ahead.”
Precious metals are rallying hard this morning. Gold is up 2%, to $1,341. Silver’s up 4%, to $21.39.
“Keep a close eye on $1,350,” advised Greg Guenthner in this morning’s Rude Awakening. “A break above this price is a fairly good indication we could see higher prices soon. But failure at $1,350 could cut gold’s late summer comeback short.”
The retirement crisis is becoming acute for America’s “displaced workers.”
Transamerica is out with its 14th annual retirement survey, and it’s come up with some alarming numbers among Americans who’ve lost jobs or had their hours cut back. More than one-third of those displaced workers — 36% — have raided their retirement account for cash.
The longer they remain displaced, the more desperate they become: “Forty-two percent of those displaced for a year or more took a withdrawal, compared to only 23% of those displaced for less than a year,” says Catherine Collinson of the Transamerica Center for Retirement Studies.
The average balance among those displaced workers? $7,500. For workers in their 50s, the number is $16,000.
That’s — uh — not going to cut it if you go by the common yardstick that you need 80% of your pre-retirement income to live comfortably after retirement.
We’re in the process of conducting an informal survey of our own — asking you, “What’s your number?” Not the total retirement savings you want to live comfortably, but to live your dream — where you wouldn’t have to worry about a budget for meals out, or golf or travel.
Think big. And then tell us your number at this link. Don’t worry — it’s completely anonymous. We’ll share the average among all the replies we get tomorrow. And later in the week, we’ll take the wraps off a project to help you reach that number. Stay tuned…
“Would Paris sell the Mona Lisa?” asks president of the Art Dealers Association in response to our latest addition to the “mother of all financial bubbles” file…
Detroit’s stupendously paid emergency manager Kevyn Orr, as we mentioned early last month, is trying to plug the city’s estimated $18.5 billion black hole of debt.
One idea, we also mentioned, was to sell the city’s impressive stockpile of masterpieces in the Detroit Institute of Arts (DIA).
Although Orr recently told Reuters that getting rid of masterpieces is “not a high priority,” the idea appears to be still on the table: Christie’s Appraisals Inc. recently confirmed to the media that Mr. Orr hired them to appraise a portion of the institute’s collection.
The famed pieces held by the DIA include works by Rembrandt, Van Gogh, Botticelli and Diego Rivera.
Meanwhile, Detroit misplaced a $1 million check written out to the city’s school system.
The check sat in a city hall desk drawer, where it was found a month after it should’ve been deposited.
Philip Bump of the Atlantic Wire shrugs, noting that while it sounds staggering, it’s actually only 0.04% of the city’s $2.5 billion 2013-14 budget.
Hmm…
Mr. Bump apparently is privy to the “cockroach effect” — just because only one popped up to surface doesn’t mean a whole colony isn’t crawling beneath the floor boards.
Mr. Orr blames it on the city’s behind-the-times technology: “Nobody sends million-dollar checks anymore,” Orr’s spokesman Bill Nowling told Bloomberg, “they wire the money.
“We have financial systems that are three, four, five decades in the past,” Nowling went on. “If we can fix those issues, then we’ll be able to provide services better, faster, more efficiently and cheaper.”
Bloomberg notes that most U.S. public employers are charged around $18 to process each paycheck written. In Detroit, due to archaic operating systems, it’s about $62, for a total of $19.2 million per year.
Compared with the budget, of course, that’s chump change.
Here’s a thought: Instead of selling off their Van Goghs, maybe they should check the drawers around City Hall first.
“I would greatly appreciate your getting off the tea party propaganda line,” writes a reader who’s irritated at our notion that people might need some help evading the clutches of Obamacare.
“With insurance companies giving premium rebates, over-all costs coming down and more people being covered by health insurance, your arguments cease to be fact based.
“Granted I’m Canadian and have enjoyed no-bill health coverage for 40 years, including for coronary bypass and angioplasty. Your congressmen are digging their political graves with the ritual abolition (48 times and counting) of national health insurance.
“We like your investment advice. But spare us the mindless party line crap.”
The 5: You’re assuming Obamacare will achieve its stated objectives. But the feds’ own figures reveal that 26 million Americans will still have no health insurance once the program is fully implemented.
Meanwhile, our friend Jud Anglin has Canadian clients for his “medical tourism” business — people who don’t want to wait six months for a hip replacement.
And it’s the unstated objectives of Obamacare that worry us the most — and which prompted us to work with Jud to develop a comprehensive solution set for every American worried about what’s coming down the pike. If you’re not feeling as sanguine about Obamacare as our Canadian reader, you really need to check it out.
“I want to watch,” writes one of our regulars after Friday’s episode, “the first time somebody tries to remove a 395,000-pound concrete house from a 3-D printer.
“As you guys put it… Heh!”
The 5: The joke’s on all of us.
“A Dutch firm is currently attempting to build the world’s first 3-D-printed house,” the Telegraph reported in June. It’s using a purpose-built printer about 20 feet tall to print the house’s components from plastic.
We’re not sure how viable that venture is… but our Ray Blanco has done the research on four early movers in the 3-D printing space that have the potential to multiply your money many times over.
As always, we encourage you to judge for yourself. Here’s where to begin.
“May I suggest,” a reader writes after our mention Friday of two encrypted email services that shut down, ” the next time that the Nobel Peace Prize committee meets that they include the name of Ladar Levison, founder of Lavabit, for their consideration for the next award. He’s one man that can’t be bought.
“He stood up to the unconstitutional tactics of the federal government, which has cost him his business of 10 years, rather surrender his principles. And it would be a good way of showing the rest of the world that their giving a past award to the current occupant of the White House (After five years, I still can’t endure putting the words ‘President’ and ‘Obama’ together) was an aberration that they do not intend to repeat.”
The 5: As I mentioned in an email to you earlier today, even the president has acknowledged you have reason to worry. “Understandably, people would be concerned,” he said in a news conference Friday. “I would be, too, if I weren’t inside the government.”
It pays to do everything in your power to keep your information out of the government’s hands. Which is why we moved heaven and earth to prepare a special report as quickly as possible — helping you do exactly that.
And did you see Sen. John McCain said something even more revealing on Sunday? “Right now there’s kind of a generational change,” he said of Edward Snowden’s hero status among the Millennials. “Young Americans do not trust this government. Without trusting government, you can’t do a lot of things.”
Do you sense the bastards are running scared?
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. At last check, 545 readers like you have taken us up on an unusual offer.
You might do a double-take the first time you see it. But once you understand what’s in it for you… you too might feel compelled to act. Check it out right here.