The Battlefield, October 7, 2016 – We Win, They Lose

We’ve got some excellent news for the oil and gas industry here in America. Congratulations, guys, you’ve won.

Oil prices are climbing again after a long dark age, thanks to an OPEC decision to cut oil production.

Earlier this week there was a great piece by the Hudson Institute’s Arthur Herman at National Review on why those prices dropped and stayed low, and why they’re coming back. The long and short of it was we just fought a war against the Saudis – and we won.

That war was supposed to collapse America’s fracking industry. Instead, as reported on, “Saudi’s entire economy is collapsing” — and they are desperate to push oil prices back up again.

The announcement last week was a complete reversal of the policy the Saudis have been following since the summer of 2014, when, as global oil prices began to tumble, their oil ministry announced that they were going to continue normal production. That flew in the face of the way a major OPEC producer typically reacts to falling prices: Slash production so that demand outstrips supply and prices rise again.

But the Saudis had other ideas. They had watched the fracking boom in the United States with deep unease, as production of shale oil from places like the Bakken field in North Dakota and Eagle Ford in Texas was turning the U.S. into the Saudis’ chief rival as the world’s biggest oil producer (at one point in early 2014 the U.S. even surpassed the Saudis at almost 11 million barrels a day).

The Saudi answer to the American challenge was to keep pumping even as prices fell. The Saudis assumed that a global oil glut would push prices so low that American producers would be forced out of business, production would grind to a halt, and places like the Bakken would soon be as silent and desolate as the surface of the Moon. After all, even if prices fall to five dollars a barrel, the Saudis will still make money, because their production costs are so low. By contrast, in 2014 the average oil-fracking operator was looking at a break-even price of around $60 a barrel. After several months of $40 oil, Riyadh figured, the pain would be too much. Americans would cry uncle, and the Saudis – and the cartel they dominate, OPEC – would once again be kings of the energy hill.

So the kingdom has been pumping and pumping and pumping, at one point this August reaching its highest-ever monthly production, as the price per barrel, after sinking into a trough below $40, settled into a “new normal” in the mid-40s range (compared with over $100 a barrel in June 2014).

Last week someone did finally cry uncle — the Saudis. Far from ruining the U.S. fracking industry, the global oil glut is about to ruin the kingdom of Saudi Arabia. It seems that an economic and social system that has developed around oil — indeed, is entirely dependent on it — couldn’t sustain itself at prices this low.

Essentially, the fracking industry in the United States survived what was essentially a war of attrition imposed on it by the Saudi attempts to drive them out of business. They cut costs and came up with innovative ways to improve their industry, and the attempts to drive them out and re-corner the oil market failed. Those attempts failed because the Saudis run their entire economy on oil profits, which pay not only for extravagances by those at the top but for welfare for those at the bottom. They don’t make anything, other than jihad, in that country; all they do is sit around and count the oil money. But when there isn’t enough oil money to go around, they run a deficit – and a big one. We panic at budget deficits around 2.5 percent of GDP; the Saudis have been running one above 13 percent.

Something was going to break. It turned out to be them. And now, those American oil companies who survived the war will be in a position to advance in the market. With the profits from higher oil prices, look – as Herman notes – for some innovative results out of research and development. Like laser drilling, and fracking fluids which aren’t water-based and therefore don’t induce strokes among environmentalist nuts.

As for the Saudis, they’re going to need to rethink some things. If they’re not the big dog on the world’s energy porch, their entire business model is in jeopardy. It’s hard to have much sympathy for them.

Simplistic-Weapon-12-Battle-Axes-in-Saltire – “Good enough for government work.

The Obama administration has rehired an outside contractor that was partly responsible for what many think was the largest theft of personal information from the government in U.S. history, even as it continues to boast of several new steps it is taking to enhance federal cybersecurity.

The Office of Personnel Management is housing a new entity charged with ensuring the integrity of background checks for potential federal workers and contractors, and OPM has hired four contractors to help with this work.

One of them is Key Point Government Solutions, Inc., the company from which hackers gained access to an employee’s credentials to steal personal information from 22.1 million federal workers and contractors, an event that forced the OPM chief to step down.

Key Point is the subject of a class-action lawsuit, along with OPM, spearheaded by the country’s largest government union, the American Federation of Government Employees.

However, Key Point was one of four companies to receive contracts worth at least $1 million to help the government’s cybersecurity efforts. The others are CACI Premier Technology, Inc., CSRA LLC, and Securitas Critical Infrastructure Services, LLC.

In the real world this would simply never happen. The shareholders of any corporation which made a decision to go back to the well and hire someone who did that much damage would swiftly revolt and dispatch the management team to the unemployment line. But this isn’t the real world, it’s the dysfunctional and corrupt federal government – where it’s only the good deeds which get punished.

Simplistic-Weapon-12-Battle-Axes-in-Saltire – This. One thousand times this.

Simplistic-Weapon-12-Battle-Axes-in-Saltire – Perhaps the latest (they pile up so quickly it’s becoming impossible to keep track) in the chain of examples of the utter corruption of the Obama-Clinton cabal running this country is the Marc Turi case.

Who’s Marc Turi? He’s an arms dealer, and he was in a lot of trouble for selling weapons to the Libyan rebels illegally. It seems the Justice Department had him more or less dead to rights.

Except Turi had a get-out-of-jail-free card, which his lawyers played and he’s now back to his leisure…

The Obama administration is moving to dismiss charges against an arms dealer it had accused of selling weapons that were destined for Libyan rebels.

Lawyers for the Justice Department on Monday filed a motion in federal court in Phoenix to drop the case against the arms dealer, an American named Marc Turi, whose lawyers also signed the motion.

The deal averts a trial that threatened to cast additional scrutiny on Hillary Clinton’s private emails as Secretary of State, and to expose reported Central Intelligence Agency attempts to arm rebels fighting Libyan leader Moammar Qadhafi.

Government lawyers were facing a Wednesday deadline to produce documents to Turi’s legal team, and the trial was officially set to begin on Election Day, although it likely would have been delayed by protracted disputes about classified information in the case.

A Turi associate asserted that the government dropped the case because the proceedings could have embarrassed Clinton and President Barack Obama by calling attention to the reported role of their administration in supplying weapons that fell into the hands of Islamic extremist militants.

“They don’t want this stuff to come out because it will look really bad for Obama and Clinton just before the election,” said the associate.

Right. Of course. Winning the news cycle in advance of the election is more important than enforcing the law. Anybody can see that, particularly when enforcing the law probably means prosecuting your own presidential candidate.

Bill Whittle was exactly right that Hillary created ISIS. Four good Americans had to die in Benghazi to do it, too. And we’ll never get to the bottom of it.

Simplistic-Weapon-12-Battle-Axes-in-Saltire – We love Today’s Last Thing and we think you will too. After all, you really can’t get any more fun than a bluegrass cover of Rocket Man, can you?

So good it needs more – and we’ve got it for you. Here’s the same band – they’re called Iron Horse – covering Enter Sandman by Metallica…

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