China Gets Hungry for Arctic Oil
China is the world's second-biggest importer of crude oil and its companies are on the prowl for oil all over the world.
By 2015, its oil companies are expected to produce more oil outside of China's borders than Kuwait pumps, according to the International Energy Agency.
The global Chinese search for energy has put a new region on the top of its agenda: Arctic oil.
The Arctic oil race is heating up as more countries look for paths in to this new hot source of energy profits.
You see, with the warming and melting of the Arctic ice cap, it is becoming easier to possibly exploit the energy riches that lie beneath the cold waters.
Money Morning Global Energy Strategist Dr. Kent Moors discussed the search for Arctic oil and gas in a recent article. Moors said the long-awaited U.S. Geological Survey's Circum-Arctic Resource Appraisal study found that 84% of the total undiscovered oil and gas left on the planet is located above the Arctic Circle. The oil and gas are mainly offshore and in three large basins that lie under shallow seas.
The vast potential of the Arctic for oil and gas piqued the interest of nations with territory north of the Arctic Circle such as the United States, Canada, Russia and Norway.
But it also got the attention of countries – like China – with no direct claim there, but with an increasing appetite for energy.
The Race for Arctic Oil: China and Iceland
Drillers Pay Hush Money to Keep Their Fracking Secrets
Hydraulic fracturing, or fracking, the art of separating oil from rock, has the potential of turning America into the world's top oil and natural gas producer.
But as with any bonanza it has some secrets oil and gas companies want to keep under wraps. And some companies are willing to put some big bucks behind that.
The industry has injected possibly carcinogenic chemical cocktails underground in more than 150,000 of wells during the fracking process.
U.S. companies have driven more than 30 trillion gallons of fracking liquid underground in the past several decades.
But not to worry: the U.S. Environmental Protection Agency is monitoring the situation! It is solely charged with conducting long-term studies of the potential impact of fracking on water.
Russia: The Greatest Threat to the Energy Markets
As Yogi Berra aptly put it, It's deja vu all over again.
The Soviet gulag state is coming back and this time it could wreak havoc on the world's energy markets.
I began my energy career in Russia. Back then it was part of a sprawling Soviet Union. For the past 23 years there have been 15 independent countries in its place.
But these days it sure feels like the Beatles song from the late 1960s, "Back in the USSR."
You see, many governments aren't able to work out how to plot the global energy sector because it becomes too wrapped up in local political machinations.
And the bigger the energy producer, the bigger the impact is on the global picture.
Three Hidden Water Costs That Promise to Boost Energy Prices
This may sound funny, but water availability is becoming an issue in energy generation. And it may start to impact prices.
The issue here is not the environmental impact of water usage. That is quite a different debate.
What I'm talking about today is the water supply/demand issue.
Because water is plentiful in those areas of the U.S. where shale gas and tight oil drilling is most concentrated, the price of the water itself is very low.
But there are three other costs involved with the usage of water, and those are beginning to cause some serious concerns.
Here's what I mean…
Oil Price Manipulation Awakens Libor, Enron Ghosts
Last July, we warned you that oil prices could potentially be manipulated in similar fashion to the London Interbank Offered Rate (Libor), and now a recent raid of major oil companies highlights this growing danger to the $3.4 trillion-a-year crude market.
The European Commission last week stormed the offices of Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B), BP PLC ( NYSE ADR: BP), and Statoil ASA (NYSE ADR: STO) as part of the ongoing investigation to find out whether companies are manipulating oil prices and, if so, how long it has been going on and the possible ramifications.
"The commission has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency (PRA) to manipulate the published prices for a number of oil and biofuel products," the EC said in a statement.
Besides major oil companies, big banks are active in the energy market and would likely benefit from any manipulation, David Frenk, director of research at the financial reform group Better Markets and a former commodities analyst, told CNN.
The ordeal has brought back memories not only of last year's Libor scandal but also of the actions taken 12 years ago by Enron to control energy prices.
The Next Big Change in the Energy Markets
Thoughts are again turning to the next big change in the energy landscape.
As it unfolds, I have been working on how to exploit this trend and will be rolling out my recommendations when I appear at the MoneyShow in Las Vegas next Tuesday and Wednesday.
Of course, before I sketch my new approach to the Caesar's Palace audience, I'll outline it here first. You can expect more on this in coming Money Morning editions.
Today, I want to extend on Saturday's discussion and set the stage for the revisions I will be begin sketching out in my next article.
This is once again about hedging.
10 Ways the U.S. Shale Oil Boom has Made North Dakota an "Economic Miracle"
Thanks to the U.S. shale oil boom, some parts of the country are experiencing growth comparable to emerging markets.
The best example of this high-powered economic surge is in North Dakota.
North Dakota is the epicenter of the Bakken shale oil boom. Since 2009, it has had the fastest growth in personal income, tax revenues, jobs and home prices of all the 50 states. The state also has enjoyed both a population surge and the lowest unemployment rate in the country.
According to July 2012 figures from the U.S. Census Bureau, the state's population rose by 4% in just two years – compared to 1.7% for the nation as a whole. The western part of the state, where the Bakken is located, may see its population jump 50% over the next two decades, according to a North Dakota state survey.
For North Dakota as a whole, at the end of 2012 the unemployment rate was only 3.2%. In the 12-county Bakken region of the state, unemployment stood at a mere 1.8%. In Williams County, which is at the heart of the Bakken shale oil boom, unemployment was at a miniscule 0.9%
This is why some have called North Dakota an "economic miracle."
Frack or Fail: Is It Time For California's Liberals to Go?
Editor's Note: California is in a LOT of trouble financially. Cities are going under and the state can't balance its budget. It also has almost half a trillion in state pensions to fund and revenue is drying up.
But there is one way out: Tap the largest oil and gas play in the Lower 48.
The question is whether this left-leaning state crowded with special interests like the Sierra Club will actually let oil services companies begin to start fracking on state land.
In our inaugural Money Morning Fight Club brawl, Frank Marchant and Garrett Baldwin square off on this contentious issue. The best part is we are asking you to turn in your scorecard and pick the winner at the end.
So let's get ready to rumble…
The Untold Truth About Solar Stocks
The price of solar energy shares has been spiking, leading to the obvious parallel questions:
Is it sustainable?…Or what prospects exist for the average individual retail investor?
Before we address these questions, it would be best to lay some groundwork.
The increase in solar share prices has been just about across the board. This is most clearly seen in the rise in solar and related exchange traded funds (ETF). Guggenheim Solar (NYSEArca: TAN) has advanced 24.8% this past month, while American Vector Solar Energy ETF (NYSEArca: KWT) is up 15.2%. The iShares S&P Global Clean Energy Index (NasadqGM: ICLN) has improved 11.8%.
However, before you rush out and buy any of these ETFs, consider the longer view.
From December 1, 2012, TAN is down 36%, KWT is off 34.9%, and ICLN is weaker by 10.7%. The recent push up has resulted in some – apparently – better solar plays. Yet the medium-term perspective indicates the run up might not last.
This Dangerous "New" Energy Crisis is Crippling the Middle East
Don't look now, but there are some problems developing in the global energy network.
It's hardly reassuring that the epicenter of all this is the Middle East.
The primary problem is hardly new. Actually, calling it an "old" problem is more accurate because the culprit is a collapsing network of delivery and storage that has been deteriorating for decades.
Unfortunately, this is hitting areas already beset by broad, accelerating economic shortfalls the hardest. That they also happen to be areas of significant unrest hardly improves the situation.
The latest is in Pakistan. There a combination of lower-than-expected water availability and a government powerless to provide the diesel fuel essential for the planting season means a population already on the brink is staring at food shortages.
The picture is very grim.