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The Easy Money In European Natural Gas Is Gone

Authored by Tsvetana Paraskova via Oilprice.com,

At the end of last winter’s heating season, it was an unusually cold spell that upended European natural gas markets, with storage levels falling below average and prices firming up as demand shot up.

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At the end of this winter’s heating season, it is the unusually mild weather in most of Western Europe for most of the winter that has driven natural gas prices down and left supplies higher than the seasonal average.

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The summer gas futures at the Dutch TTF hub have declined by 16 percent so far this year and have been trading lately around the lowest in 10 months. The winter gas futures contract, however, has dropped by just one third of the decline in the summer contract, according to data from ICE Endex compiled by Bloomberg.

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So the discount of the Dutch summer natural gas futures to the winter contract widened to the biggest since 2011 as of early March. Typically, such a wide spread would mean that one of the most common European gas trades—buying cheaper gas futures in the summer to sell in the winter—would be the most profitable in eight years.

However, traders are unable to take full advantage of the wide winter-summer spread because several factors have combined this winter season to create a perfect storm in the European natural gas markets. These factors are higher stockpiles than usual, limited available storage capacity as most of it is booked out amid declining overall capacity, and increased liquefied natural gas (LNG) shipments to Europe as Asian LNG spot prices continue to tumble.

First, unlike last year’s winter, this winter has been unusually mild in many parts in Western Europe. This has led to lower natural gas demand and lower withdrawal from storage—a stark contrast compared to the 2018 winter.

The cold spell in Europe at the end of February and early March of 2018 led to record withdrawals in the first quarter of 2018, and storage levels dropped to 18 percent of capacity—well below the five-year range—the European Commission (EC) said in its Q1 Quarterly Reporton European gas markets. By the end of the winter season, natural gas stock levels dropped below 10 percent of capacity in countries such as Belgium, France, and the Netherlands, where high gas demand from the UK contributed to strong withdrawals.

Before the 2019 winter season began, the European market was tight amid higher demand in the summer’s heat wave, while natural gas stockpiles were still lower than usual after the winter of 2018, one of the coldest winters in the past decade.

Natural gas prices in the UK surged to the highest for a summer season, with Europe’s natural gas market the most bullish in years, as higher-than-expected summer demand and a tighter market drove natural gas price futures to levels last seen during the winter’s supply crunch.

But the 2019 winter has been quite a different story. The UK, for example, registered its warmest February on record, with daily maximum temperatures the highest on record dating back to 1910, according to the UK’s Met Office.

Due to the warmer winter, natural gas stockpiles across Europe are now higher than the typical levels for this time of the year. What’s left of the storage capacity is nearly “sold out”, according to analysts who spoke to Bloomberg.

“We are going into this summer with full storage, among the highest in years,” Wayne Bryan, a trader and analyst at Alfa Energy in London, told Bloomberg, noting that he wasn’t buying anything at the moment.

In addition, Europe’s total storage capacity has declined by more than 4 percent since 2016, according to data from gas industry trade association Gas Infrastructure Europe, cited by Bloomberg.

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As a result, higher-than-usual gas stocks in European storage and almost fully booked storage space have been preventing natural gas traders from profiting from the most profitable price differential between winter and summer gas futures contracts in years.

Walmart holiday-quarter sales jump, says consumers still spending

February 19, 2019

By Nandita Bose

(Reuters) – Walmart Inc posted its strongest holiday quarter in at least a decade on Tuesday, boosted by higher grocery and e-commerce sales, and said it saw no signs of weakness in U.S. consumer spending despite recent signs of a slowdown.

Online sales jumped 43 percent in the quarter helped in particular by the expansion of Walmart’s online grocery pickup program to more than 2,100 stores by year end.

Shares of the world’s largest retailer rose 2.2 percent on Tuesday in a broadly flat market, putting them up 9.7 percent so far this year.

Walmart and rival Target Corp’s unexpectedly strong growth in holiday sales reflected the health of the U.S. consumer as spending remained robust due to a strong labor market and cheaper gasoline prices.

“We still feel pretty good about the consumer. We haven’t seen much of a change,” Walmart Chief Financial Officer Brett Biggs told Reuters. “The data we are seeing still looks pretty healthy. Gas prices are down year over year, which helps.”

Investors and Wall Street analysts have been expecting U.S. spending to slow this year, against a backdrop of rising debt, trade tariffs and economic uncertainty. Walmart’s results settled nerves, but some doubts remain.

“There are definitely some storm clouds on the horizon,” said Charles Sizemore, founder of Sizemore Capital Management LLC, which owns Walmart shares. “A big example would be delinquent loans in the auto sector which are rising … the consumer may be on hard times and in 2008 that was the prelude to the global economic slowdown.”

U.S. retail sales recorded their steepest drop in more than nine years in December, the government reported last week, as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

However, overall sales for the 2018 U.S. holiday shopping season hit a six-year high as shoppers were encouraged by early discounts, according to a Mastercard report in late December.

Walmart sales at U.S. stores open at least a year rose 4.2 percent, excluding fuel, in the fourth quarter ended Jan. 31. The gain exceeded analysts’ expectations of 2.96 percent, according to IBES data from Refinitiv.

Sales were boosted by federal officials distributing food stamp aid early during the partial government shutdown. The demise of retailer Toys R Us also helped Walmart gain toy market share, the company said.

Adjusted earnings per share increased to $1.41 per share, beating expectations of $1.33 per share, according to Refinitiv. But the retailer’s gross margins declined for the seventh consecutive quarter due to higher transportation costs and e-commerce investments.

ONLINE SALES JUMP

Walmart’s 43 percent rise in online sales matched the previous quarter’s increase, and the company credited a broader assortment on its website and improved delivery, as well as store pickup of online grocery orders.

Higher online grocery sales helped it expand market share in the category, Walmart said. It will have the store pickup service at 3,100 stores by next January.

Walmart will offer grocery deliveries to about 800 more stores by the end of the year, bringing the total to 1,600 stores.

But the company reiterated that it expected e-commerce losses to increase this year due to ongoing investments. Chief Executive Officer Doug McMillon said on a conference call the company was focused on getting return customer visits and strengthening product assortment.

Grocery sales currently make up 56 percent of total revenue for the retailer. Amazon.com Inc is trying to crack the food category, especially since it bought organic supermarket chain Whole Foods.

Walmart is partnering with third-party couriers and working with so-called gig, or freelance, drivers, who are cheaper than full-time employees, to push down costs, Reuters recently reported.

Google-backed Deliv, a Walmart delivery partner in Miami and San Jose, ended its relationship with the retailer, Reuters reported last week.

The U.S. retailer, which overtook Apple Inc to become the third largest e-commerce retailer last year, is likely to capture a 4.6 percent share of the U.S. e-commerce market, behind eBay Inc and Amazon, according to research firm eMarketer.

Walmart repeated its forecast that fiscal year 2020 earnings per share would decline in the low single digits in percentage terms, compared with last year. Excluding the acquisition of Indian e-commerce firm Flipkart, it sees an increase in the low- to mid-single-digits.

McMillon said the company was disappointed in India’s revised e-commerce regulations, which ban companies from selling products via firms in which they have an equity interest and also bar them from making deals with sellers to sell exclusively on their platforms.

He said the Indian government didn’t consult with Walmart and other U.S. companies before it changed the rules. “We hope for a collaborative regulatory process going forward, which results in a level playing field,” he said.

Walmart expects fiscal year 2020 comparable sales growth of 2.5 percent to 3 percent, excluding fuel and online sales growth of 35 percent.

Total revenue increased 1.9 percent to $138.8 billion, beating analysts’ estimates of $138.65 billion. Walmart has recorded 18 quarters, or over four straight years of U.S. comparable sales growth, unmatched by any other retailer.

The stock rose 3.7 percent to $103.68. Target and Costco Wholesale Corp were both up more than 1 percent.

(Reporting by Nandita Bose in Washington; Editing by Jeffrey Benkoe and Bill Rigby)

Texas GOP mayor’s environmental narcissism makes Gore happy while sticking its citizens with skyrocketing electricity bills

‘That’s right – $1,219 per household in higher electricity costs for the 71,000 residents of Georgetown, Texas, all thanks to the decision of its Republican mayor, Dale Ross, to launch a bold plan to shift the city’s municipal utility to 100 percent renewable power in 2012…’

But while Ross was being lauded far and wide, the residents of his town were paying a steep price. His decision to bet on renewables resulted in the city budget getting dinged by a total of $29.8 million in the four years from 2015 to 2018. Georgetown’s electric costs were $3.5 million over budget in 2015, ballooning to $6.3 million in 2016, the same year the mayor locked his municipal utility into 20- and 25-year wind and solar energy contracts to make good on his 100 percent renewable pledge. By 2017, the mayor’s green gamble was undercut by the cheap natural gas prices brought about by the revolution in high-tech fracking. Power that year cost the city’s budget $9.5 million more than expected, rising to $10.5 million last year, according to budget documents reported by The Williamson County Sun.

In Papua New Guinea, Exxon’s giant LNG project fuels frustration

January 16, 2019

By Jonathan Barrett and Tom Westbrook

PORT MORESBY (Reuters) – From her red-roofed home near Papua New Guinea’s capital of Port Moresby, Isabelle Dikana Iveiri overlooks a giant plant used by Exxon Mobil Corp to liquefy billions of dollars’ worth of natural gas before it is shipped to Asian buyers.

Dikana Iveiri can also see swaths of muddy shoreline, where mangroves have been felled for firewood by locals who don’t have electricity, gas, or money to buy either.

The $19 billion Exxon-led PNG LNG project was supposed to be a game-changer for PNG, a vast South Pacific archipelago beset by poverty despite its wealth of natural resources.

But much of the promised riches, through taxes to the government, royalties to landowners and development levies to communities, have arrived well below Exxon’s own commissioned forecasts, if at all, according to landowners, the World Bank and the PNG government.

“My family has been here a long time,” said Dikana Iveiri, one of several landowners interviewed by Reuters near the PNG LNG plant. “Our royalties are not going well; they are using our land but not paying us properly,” she said referring to both Exxon, which pays the royalties and the government, which distributes them.

Since gas exports began more than four years ago, Dikana Iveiri said she had received just one royalty payment in 2017. She was expecting about 10,000 kina ($2,885) based on information given to her by the government and community leaders. She said she received 600 kina.

Exxon, community leaders and the government did not comment on Dikana Iveiri’s specific situation but in a statement to Reuters, Exxon said distribution of royalties and benefits to the LNG plant site landowners started in 2017. Cash payments to individual landowners would depend on how many landowners were in a precinct and were just one of the benefits communities received, Exxon said.

The project employs nearly 2,600 workers, 82 percent of whom are Papua New Guinean and Exxon said it has invested $360 million to build infrastructure and pay for training and social programs.

“We could not be more pleased to see how the benefits are flowing to the communities at the LNG plant site, to see how investments are being made in important infrastructure such as schools and health that demonstrates the process is a good one and it works,” ExxonMobil PNG Managing Director Andrew Barry told a mining and energy conference in Sydney in December.

Barry said Exxon was hoping royalties would begin flowing in the pipeline and upstream areas “in the not too distant future”.

The government admits it has made mistakes.

PNG Prime Minister Peter O’Neill, who was part of the government but not the leader in 2009, said many of the disputes around PNG LNG stemmed from the way the government and Exxon proceeded with the project without first resolving landowner claims.

“It should have been done before, it wasn’t only for Exxon and the partners but even the government at the time did not do the proper clan vetting, proper identification of the land owners – they allowed this project to go on without that,” O’Neill told Reuters.

Treasury, the treasurer, and the Prime Minister’s spokesman declined to provide responses to Reuters’ questions about the project.

(GRAPHIC: ExxonMobil’s LNG facilitie – https://tmsnrt.rs/2QhGSAz)

GAS-POWERED MONEY SPINNER

PNG LNG was completed ahead of schedule and exported 8.3 million metric tonnes in 2017, compared to its anticipated design capacity of 6.9 million tonnes, according to the project’s website.

Exxon does not disclose the project’s revenue or profits but research house Morningstar estimates it has generated $18.8 billion in revenue for Exxon and its partners since production started in 2014.

The project’s break-even price of around $7.40 per million British Thermal Units (mBTU) compares favorably to an average over $10/mBTU for eight recent gas projects in the region, according to analysis by consultancy Wood Mackenzie and Credit Suisse.

“The plant capacity has performed phenomenally,” Credit Suisse analyst Saul Kavonic told Reuters. “On cost, it’s much lower than peers … it’s got an ample resource base and it’s got a well-disciplined operator in the form of Exxon.”

The project’s contribution to Papua New Guinea’s economy and government finances is less clear.

PNG’s Treasury does not report project income figures, but government budget papers show tax revenue flowing from PNG LNG has been well below expectations.

In its 2012 budget, the PNG government estimated it would receive $22 billion in revenue over the project’s life to 2040.

In November, the government slashed its revenue forecast in half to $11 billion over the life of the project.

It identified 11 tax concessions, which along with a drop in gas prices, amounted to hundreds of millions in kina in annual revenue forgone.

A 2017 World Bank analysis found the project partners had negotiated favorable methods of calculating royalties to the government that allowed them to take various deductions.

Combined with tax concessions, the project created “a complex web of exemptions and allowances that effectively mean that little revenue is received by government and landowners,” the World Bank said.

Exxon did not respond to questions regarding the World Bank findings and the World Bank declined to provide further comment.

Exxon’s partners, which include Australian-listed Oil Search Ltd and Santos Ltd, and a subsidiary of Japan’s JXTG Holdings Inc, referred Reuters’ questions to Exxon.

Exxon said in a statement to Reuters the project has generated 5 billion kina in revenue for the government and landowners via taxes, royalty and benefit payments. The figure includes revenue to the PNG state-owned stakeholders.

“SOME MISTAKES”

A second LNG project, Papua LNG, led by France’s Total with Exxon and Oil Search as minority partners, is scheduled to finalize an agreement with the PNG government in early 2019.

Papua LNG, a new gasfield using the same but expanded processing plant, could commence production as soon as 2024, according to Total. Analysts estimate it will cost around $13 billion.

“The experience of the first project developed by Exxon and Oil Search, there was some criticism, some mistakes,” Total CEO Patrick Pouyanne told Reuters in an interview in Port Moresby, referring to relations with landowners.

“Some lessons (are) being taken out … around the management of landowners and trying to engage at an early stage with them.”

Total has agreed to an undisclosed annual minimum payment to the government and to reserve some gas for local industry, he said.

Exxon did not respond to requests for comment on Pouyanne’s statements.

In its statement, Exxon acknowledged that “distribution of royalties and benefits in some project areas were delayed since the start of production due to court action by a small number of landowners which prevented the relevant government departments from completing their administrative processes.”

Exxon said it was committed to assisting the government ensure landowners receive royalty and equity dividends as soon as practicable.

Disputes have broken out within communities near PNG LNG facilities as landowners fight to have their claims recognized.

Some clashes have been fatal, said Highlands clan leader Johnson Tape, one of 16 clan leaders with a claim over the Komo Air Field, used by the Exxon project.

“Our clans fought each other, but now there is peace; we are one team fighting Exxon,” said Tape.

Christopher Havieta, the governor of Gulf Province, where gas fields for the new project are located, said locals wanted to avoid the experiences of Exxon’s PNG LNG.

“It was a foundation project and so a lot of exemptions were made and the end result is we have a lot of social problems that have risen up.”

(Reporting by Jonathan Barrett and Tom Westbrook in PORT MORESBY; Editing by Lincoln Feast.)

“Cars Have Just Been Crushed”: The US Auto Market Is Officially In Recession Again

Despite surprisingly strong 2018 results and 2019 estimates out of General Motors last week, it’s becoming clearer that a recession in the U.S. auto industry is already underway. All one has to do is look around: factories are closing, shifts are being truncated and thousands of layoffs have taken place.

Meanwhile, Detroit is showing increasingly more signs that it is in the midst of a recession as demand for sedans has collapsed. This collapse has been the result of most consumers moving to sport utility vehicles and pick-ups. In fact, the models that used to be the lifeblood of the car industry, sedans like the Honda Accord and Ford Fusion, only made up 30% of US sales in 2018.

Sedans are estimated to sink to 21.5% of the US market by the year 2025, according to research from LMC Automotive. That will leave car manufactures with extra factory capacity that will be capable of producing some 3 million more vehicles than buyers want. This type of overcapacity has resulted in losses and has catalyzed past recessions for the industry.

Jeff Schuster, senior vice president of forecasting at LMC Automotive, simply told Bloomberg: “You could classify this as a car recession.”

As a result, the mood at the upcoming North American International Auto Show in Detroit this week should be a key indicators. The car show is being moved to the summer next year in an attempt to try and re-establish its relevance, as car dealers who are attending this January won’t include once notable attendees as Mercedes-Benz, BMW and Audi. Why? Perhaps because Morgan Stanley analyst Adam Jonas recently predicted that manufacturers will use the Auto Show as an opportunity to lower guidance.

Meanwhile, as we said last Friday when GM raised its guidance, we were skeptical about any material upside, and we remain skeptical.

“We’re not sure if Barra is only raising guidance now to (double) cut it later, or perhaps betting on a timely resolution to the trade war (or maybe both), but it’s tough to feel like there isn’t much more here than what meets the eye,” we noted on Friday. The total overcapacity by US auto makers is the equivalent of 10 extra plants, according to Bloomberg. This would account for at least 20,000 potential jobs being scrapped; this means that more cuts are on their way. Jeff Schuster continued: “GM has taken some actions, but they still have some well-underutilized plants. So we may not be done with this yet.”

Traditionally when this kind of problem has arisen, automakers have taken sedans and stuffed them into rental lots and commercial fleets. Now, that tactic is only serving to add to the current capacity crisis. Fleet channels are already stuffed: these sales helped inflate the market over the last few years, even though individual retail sales peaked three years ago.

Mark Wakefield, head of the automotive practice at distressed turnaround consultant AlixPartners stated: “The car recession and the retail recession have already arrived in the sense that retail sales peaked in 2015 and have gone down ever since. Cars have just been crushed.”

And again, crossover SUVs are getting the blame. Some of the issue is attributed to the fact that SUVs now get almost as good of fuel mileage as sedans. The Chevy Equinox, for instance, only gets one mile less per gallon than the Chevy Malibu, a popular sedan.

But outside of Detroit, executives at companies like Toyota are sticking out with sedans. Jim Lentz of Toyota North America said: “We are not going to get out of that business [making sedans]. We still see an opportunity there.”

Interestingly, the wide adoption of sedans was a result of the last automotive recession. When gas prices were much higher and the industry last had to go through layoffs and plant closings, many of the Detroit factories changed from making SUVs to making sedans, using gas mileage as a selling point. But now, with fuel costs no longer a prohibitive factor, that cycle has turned once again.

Soaring Restaurant Prices Signal Inflation Is Much Higher Than ‘Official’ Data Suggest?

For equity market bulls, Friday’s CPI data couldn’t have been more of a gift if the report came wrapped up with a bow. Falling neatly in line with the market’s expectations, headline core inflation downshifted to 1.9%, the weakest reading since August 2017. Even more importantly, relenting price pressures sent one of the most widely watched inflation gauges back below the Fed’s 2% Maginot Line, handing the “data dependent” central bank more justification to put off hiking rates until H2.

But as is often the case with US data – particularly measures of inflation which chronically under-represent the true level of inflation in the economy, as we have explained in the past – the devil is in the details. And Friday’s print was no exception.

To wit: While headline inflation slipped, the subindex for full-service food and snacks – which represents the costs of dining at full-service restaurants – climbed 0.5%, its largest month-over-month increase since 2011.

So why the reason for the divergence?

Particularly considering that the cost of food – which, as we understand it, is the primary product sold at restaurants – remains below its levels from the beginning of 2018.

While it’s tempting to attribute this to accelerating wage growth or minimum wage hikes, the increase occurred in December; a wave of minimum wage hikes across the US aren’t slated to take effect until next month. And while jobs data have recently reflected a pickup in average wages, restaurant workers mostly rely on tips to get by.

Bloomberg hinted at the incongruity, describing the increase in full-service restaurant prices as a “another headwind for Americans.” In fact, given the many warning signs about consumption in the second half of 2018, including trade-related headwinds and the blow to the “wealth effect” in stocks, it’s almost as if something about this number doesn’t quite add up…

Rising restaurant costs are another headwind for Americans. Even though low gas prices and high consumer confidence suggest a strong environment, market volatility at the end of the year, disappointing holiday sales, headwinds from trade and the U.S. government’s partial shutdown are starting to put some buyers on alert. If questions about global growth continue to persist, restaurant sales could fall victim to an economic slowdown, with consumers opting to save money by eating at home.

…that is, unless it’s really a breadcrumb suggesting that the true rate of inflation in the US economy is actually much higher than the official data would suggest. Of course, if that were true, then it could create serious headaches for investors and participants in the real economy – because not only would the Fed be pressed to accelerate rate hikes, but it would also presumably trigger a damaging repricing in Treasury yields that could ignite a replay of the “Shocktober” market rout.

In light of this, we’d like to highlight once again a report published back in 2017 by Devonshire Research Group which analyzed what its authors described as chronic underreporting of US inflation data. Back then, Devonshire suggested that the true rate of inflation could be as much as three times higher than the official rate. They listed a number of reasons why this might be true, starting with the notion that outdated inflation gauges like the CPI had ceased serving as a “financial tool” to be utilized by investors, and had instead become a “policy tool” used by central bankers to justify their hyper-accomodative monetary policy.

Here’s a summary of Devonshire’s summary conclusions:

US official CPI calculation is governed, and possibly distorted, by numerous and complex technical decisions
Inflation reporting is less a measure of purchasing power (and therefore a financial tool), and increasingly a process of affecting macro-economic policies (and therefore a policy lever)
Real gross domestic product (GDP) measures, yield curves, and treasury issued inflation protected securities (e.g. TIPS), government and union / minimum wages all rely on official US inflation indices that are subject to these distortions
Most financial, wealth management models rely on a price stability assumption and default to 3% inflation input – what would happen to these models if the true value was closer to 7-11%?
If we re-compute a purchasing power CPI, de-sensationalize contrarian reporting, and remain disinterested with modern economic policies, we arrive at a 7-9% practical CPI rate over the past decade
This has profound implications on reported vs. actual standard of living, and might explain the rapid appreciation of American consumer debt, potential reduction in perceived vs. reported quality of life, not to mention unexpected political trends
Post-1990 inflation of 7-9%, not 3% would also suggest near “bubble-like” conditions exist across many consumer sectors

* * *

For anybody who doubts the CPI’s importance as a policy-setting tool, consider the following comments made Thursday (a day before the latest CPI print) by Fed Vice Chairman Richard Clarida, who hinted that the recent “slowing” in inflation had lessened the pressure on the Fed to raise interest rates (according to the median projections in the central bank’s latest “dot plot”, Fed policymakers anticipated in December that the central bank would hike rates only two times next year, down from three previously, while expectations for the long-run terminal rate declined to 2.8%, from 3%).

Clarida said in a speech on Thursday that “inflation has surprised to the downside recently, and it is not yet clear that inflation has moved back” to the central bank’s goal on a sustainable basis.

Despite the various sub-indexes published to give investors a more comprehensive breakdown of where pricing pressures are showing up in the economy, the methods used to boil all of this down into a headline number – which is often all anybody looks at – remain surprisingly opaque.

Which means the data are much more prone to manipulation than many might understand.

Oil falls to $53 on economic worries, surging supply

January 2, 2019

By Alex Lawler and Noah Browning

LONDON (Reuters) – Oil fell to about $53 a barrel on Wednesday, under pressure from rising output in major OPEC and non-OPEC producers and due to concerns about an economic slowdown that could weaken demand.

Russian production hit a post-Soviet record in 2018, figures showed on Wednesday.

Earlier this week, official data showed U.S. output reached a record in October and Iraq boosted oil exports in December.

Brent crude <LCOc1> fell 72 cents to $53.08 a barrel at 1055 GMT. On Dec. 26, it hit $49.93, the lowest since July 2017. U.S. crude <CLc1> slipped 56 cents to $44.85.

“The omens are far from encouraging,” said Stephen Brennock of oil broker PVM, citing rising non-OPEC supply and the likelihood of further increases in oil inventories.

“The current bearish bias will therefore continue in the near term and it stands to reason that oil will struggle to break out from its current trough,” he said.

Oil fell in 2018 for the first year since 2015 after buyers fled the market in the fourth quarter over growing worries about excess supply and the economic slowdown.

Surging shale output has helped make the United States the world’s biggest oil producer, ahead of Saudi Arabia and Russia. Oil production has been at or near record highs in all three countries.

U.S. President Donald Trump celebrated the low prices. “Do you think it’s just luck that gas prices are so low, and falling? Low gas prices are like another Tax Cut!” he wrote on his official Twitter account on Tuesday.

Adding to concern about a slowing global economy, a series of purchasing managers’ indexes for December mostly showed declines or slowing manufacturing activity across Asia, the main growth region for oil demand.

Independent market analyst Greg McKenna said in a note on Wednesday that it was “difficult for traders and investors to ignore what looks like a genuine global economic slowdown.”

Signs of rising production illustrate the challenge facing the Organization of the Petroleum Exporting Countries and its allies including Russia, which are returning to supply restraint in 2019 to support the market.

However, the energy minister for the United Arab Emirates, an OPEC member, said on Tuesday he remained optimistic about achieving a market balance in the first quarter.

(Additional reporting by Henning Gloystein; Editing by Adrian Croft and Edmund Blair)

States finding tough climate for gas tax proposals

From FOXNews.com | Associated Press

ANNAPOLIS, Md. – As if gas prices weren’t high enough, several states across the U.S. are looking to raise fuel taxes they say are needed to pay for roads and bridges that are outdated, congested and in some cases, dangerous.

Maryland’s governor is proposing a phased-in 6 percent sales tax by 2 percent a year, which would raise about $ 613 million annually when fully implemented. Iowa is considering raising its current 21-cent-per-gallon tax by either 8 cents or 10 cents.

Such proposals were hard to even contemplate during the recession and its immediate aftermath. Now, states forced to grapple with the problem are running into record-high gas prices for this time of year and lingering effects of the recession.

In Maryland, lawmakers are questioning whether the time is right for such an increase, which is never popular even in good fiscal times.

RE Tea Party » Taxes

States finding tough climate for gas tax proposals

From FOXNews.com | Associated Press

In Maryland, lawmakers are questioning whether the time is right for such an increase, which is never popular even in good fiscal times.

RE Tea Party » Taxes

Gas Prices Could Hit $5 by Summer

By: CNBC

As the average gas price nationwide climbs towards $ 4 a gallon, analysts and energy experts are forecasting that prices could hit the $ 5 mark at the pumps this summer.

Rising gas prices could set the economy back.

Crude prices surged last year, causing prices at the pump to shoot up. This time around, however, gas prices are climbing similarly, but the price of crude is lower.

Tensions with Iran, rather than supply and demand, may be the reason gas prices have been consistently climbing, but what has yet to be seen is the impact that this will have on the economy and the country on the whole.

Mad Money’s Jim Cramer believes prices will not stop rising until the US reaches an understanding with Iran. “I believe $ 5 gas could set the whole economy back. While I know natural gas can bring the price down longer term if it is embraced by Washington, nothing can roll the price of oil back except for one movement by Iran to stand down from their nuclear program.”

To read more, visit: http://www.cnbc.com/id/46607228

RE Tea Party » Finance

Price Shock: Watch Cost of Gas Jump 10 Cents During ABC’s ‘World News’ Broadcast

By Sarah Amos, ABCNews.com

The headlines of major newspapers and TV networks this week have been dominated by rising gas prices.

Drivers across the country have shared their stories on the cost – with many already paying more than $ 4 a gallon at the pump. There have even been reports of gas prices rising at a rate of 10 to 15 cents in a matter of hours.

The swiftness at which those gas prices continue to climb was crystal clear Wednesday night during the broadcast of ABC News’ “World News with Diane Sawyer.”

As ABC News’ Cecilia Vega introduced her piece on high gas prices, the sign at the downtown Los Angeles gas station behind her showed the price of regular gas at $ 4.99 a gallon. However when the piece concluded nearly two minutes later the price of regular gas had jumped 10 cents to $ 5.09 a gallon.

Even Vega seemed truly surprised to see such a drastic change in such a short period of time, telling Sawyer that “it is almost too unbelievable to believe.”

“It went up 10 cents?” asked Sawyer, herself shocked at what just had occurred.

“Ten cents during that two minutes while we were on the air,” confirmed Vega.

RE Tea Party » Finance

Gas prices are highest ever for this time of year

By Beth Fouhy & Chris Kahn, CNBC.com

NEW YORK – Gasoline prices have never been higher this time of the year.

At $ 3.53 a gallon, prices are already up 25 cents since Jan. 1. And experts say they could reach a record $ 4.25 a gallon by late April.

“You’re going to see a lot more staycations this year,” says Michael Lynch, president of Strategic Energy & Economic Research. “When the price gets anywhere near $ 4, you really see people react.”

Already, W. Howard Coudle, a retired machinist from Crestwood, Mo., has seen his monthly gasoline bill rise to $ 80 from about $ 60 in December. The closest service station is selling regular for $ 3.39 per gallon, the highest he’s ever seen.

“I guess we’re going to have to drive less, consolidate all our errands into one trip,” Coudle says. “It’s just oppressive.”

The surge in gas prices follows an increase in the price of oil.

To read more, visit: http://www.cnbc.com/id/46439046

RE Tea Party » Finance

Payroll tax cut won’t cover Obama gas price rise

By: Paul Bedard, The Washington Examiner

Forget all the happy talk about how Americans, flush with their $ 1,000 payroll tax cut set to be extended by Congress, will be hitting the mall to spend, spend, spend. That cool grand won’t even cover the surge in gas prices under President Obama and will have to be nearly doubled if summer predictions of $ 5 regular come true.

The math is simple: according to government and consumer group figures, Americans pay an average of $ 1,010 more a year for gas than they did on President Obama’s Inauguration Day in January 2009. The payroll tax cut, which Americans already receive, is a maximum of $ 1,000. That means the tax cut, which Congress has agreed to extend, falls $ 10 short of paying American’s gas bill even before they hit the malls or pawn shops.

Here’s how it breaks down. When Obama came into office, gas averaged about $ 1.84, according to Consumer Reports. Americans drive an average of 13,476 miles a year, said the Department of Transportation. And the current average American mpg is 22.4 gallons. That means drivers buy an average of 601 gallons of gas a year. Today, a gallon of regular averages $ 3.52, a three year difference of $ 1.68, meaning Americans are paying $ 1,010 more a year than in January 2009.

And if gas surges to $ 5 as some reports suggest, that means Americans will end up paying $ 1,899 more than when Obama came into office, nearly twice the value of the payroll tax cut.

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