U.S. crude oil production growth bodes well for economy

UP In the HOUSE

Vote in House Flops, Plan B flaws,  Republicans want to take out taxing clause. Democrats say the vote is just a ploy, and Republicans just want to steal, Christmas joy.

Ho, ho, ho! Who wouldn’t go! Ho, ho, ho! Who wouldn’t go! Over the fiscal cliff, click, click, click. into the abyss or realpolitik

If the House can’t pass Plan B, where does that leave the Democrats and Obama’s plan? Out in the cold, that’s where. It appears not even Rudolph the Red Nose Reindeer with his nose so bright could lead the House of Representatives through this political storm of tax hikes without spending cuts or even any tax hikes at all. While the Democrats blame John Boehner and says he needs to work more closely with Obama on a compromise, it is clear that there are some in the House that would rather go over the cliff than give in on government spending cuts.

The failure of plan B caused stocks to tank and commodities, along with petroleum, is holding up well despite the precious metal retreat. Oil demand expectations are rising on hope for a more stable Europe and seasonal factors. A strong GDP and Philly Fed also seem to suggest that if we don’t go cliff diving then oil demand should improve next year. The market is still being supported by this week’s Energy Information Administration report that showed a disturbing drop in heating oil supply.

A must read Energy Information Agency report that showed significant increases in U.S. production of crude oil and other liquid fuels and the outlook for further growth have focused attention on the possibility that the United States could soon surpass Saudi Arabia to become the leading global producer!

A higher level of U.S. oil production could significantly boost the U.S. economy, and could also reduce global oil prices through its effect on the global crude oil and product market balances. However, regardless of any future crossing of U.S. and Saudi production paths, the timing of which would depend on which particular accounting convention is applied, Saudi Arabia will continue to play a unique and vital role in world oil markets.

U.S. production growth is only one of several key factors that determine when, or even if, such a milestone might be reached. Saudi Arabia, a leading member of the Organization of the Petroleum Exporting Countries (OPEC), plays a unique role as the only oil producer with significant spare production capacity. Saudi Arabia operates as the world's main swing producer to balance the global market in response to supply or demand changes.

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