According to official US economic data, the US Gross Domestic Product (GDP) has expanded for 22 quarters, raising real GDP 12.1% above its high prior to the 2008-09 economic contraction. Yet, US manufacturing output and US industrial production have not recovered to their pre-contraction high. So what is driving the real GDP growth? In my opinion, the rise in real GDP is an illusion produced by the under-measurement of inflation.
At their meeting in Vienna on Wednesday, the member nations of OPEC agreed to cut their oil production by 4.5% for a period to run 6 months, effective January 1st. The amount of oil output each member is expected to forgo is generally based on their October production, although for some countries, such as Iran, the baseline for the output cut has been adjusted for special factors. Libya and Nigeria, whose recent production has been disrupted by civil conflict, will be exempt from the cuts.
On Monday of last week, the U.S. Energy Information Administration posted an article on their daily blog (Today in Energy) titled "United States remains largest producer of petroleum and natural gas hydrocarbons".. The article featured a graph of our production of gas and oil vis a vis that of Russia and Saudi Arabia and went on to tell the familiar story about how fracking made it possible for our output of gas and oil to pass that of Russia in 2012
A number of on again, off again, stories that Russia was planning to meet with the members of the OPEC cartel to negotiate production cuts drove oil prices higher last week, but even now it's still not clear if there was any actual communication between any leaders of the countries to bring about such a meeting
The Cyprus Parliament rejected a bail out plan that would have seized almost 10% of private savings deposits and used the money to bail out Cyprus banks. The vote was almost unaminous.
Today's UK Guardian has an article about how Russia, Iran, and Qatar are forming a natural gas cartel rivaling what OPEC has done for oil.
The move by the three countries, which control 60% of the world's gas reserves, was met with immediate opposition from the European commission, which fears the group could drive up prices.
Alexey Miller, chairman of Russia's Gazprom, said they were forming a "big gas troika" and warned that the era of cheap hydrocarbons had come to an end.
"We are united by the world's largest gas reserves, common strategic interests and, which is of great importance, high cooperation potential in tripartite projects," he explained. "We have agreed to hold regular - three to four times a year - meetings of the gas G3 to discuss the crucial issues of mutual interest."
Canada, Russia, Denmark, Norway and the United States are squaring off over 1.2 million square kilometers (460,000 square miles) of Arctic seabed, thought to hold 25 percent of the world's undiscovered oil and gas. Experts estimate the ridge has ten billion tons of gas and oil deposits and significant sources of diamonds, gold, tin, manganese, nickel, lead and platinum.
It's Friday Night! Party Time! Time to relax, put your feet up on the couch, lay back, and watch some detailed videos on economic policy!
Recent comments