Nuclear Proliferation, Oil, Profiteers, War and how Trump’s policy can create a market cycle
US Politicians claim weapons of mass destruction, human rights violations, onset of oppression and false imprisonment. These US government characterizations are that of a foe publicly. One side claims to have rockets shot at unsuspecting ships and down surveillance planes.
Where is the evidence?
The evidence is in the oil.
OIL THE BLACK GOLD OF POLITICS
Based on Friday’s price action and the $57.14 close, the direction of the August WITI crude futures oil contract on Monday is being influenced by market sentiment. Buying dried up as profit-takers hit the market after word came out that President Trump cancelled a retaliatory air strike on Iran. Heightened tension over US-Iran relations has direct correlation to higher prices last week.
True prices were underpinned by a weaker US Dollar, stock pile reductions and hopes of a US Trade Deal with China but largely Iran was a factor. The factors traditionally influencing oil prices are 1) Current Supply & output, 2) Future supply and reserves, 3) Demand from major countries, 4) Political events and crises, and 5) Renewable Alternatives.
Back in 2014 Oil prices were trading around $105 a barrel. 2014 was a time of renewable energy stimulus, green energy pushes, and geopolitical landscape calls for climate sensitive technologies.
Since the 2014 peak, prices decreased as low as $30 a barrel. Much of 2018 saw firm resistance around $70. For several decades, the Organization of Petroleum Exporting Countries (OPEC) was the elephant in the room on trading floors. Together the oil producing alliance works to heavily influence the market. Some of the world’s top oil producers are politically unstable. Some nations encounter sanctions by the United States or United Nations. The most notable of past historical events were the Iranian Revolution (1970’s), Iran-Iraq War (1980’s), Persian Gulf War (1990’s), and the Arab Oil Embargo. The Asian Financial Crisis in 1997 began with Thailand no longer pegging their local currency to the US Dollar. This event caused rapid declines in host currency. This in turn permeated through several countries in Asia ultimately reducing import revenues and leading to government upheaval.
In a study from the Oil and Gas Journal, published on August 1st 2017, In 2015 the Oil & Gas Industry supported approximately 10.3mm jobs or 5.6% of the total US employment. The study was commissioned by the American Petroleum Institute and conducted by PwC LLP. Texas held the most with 1.985mm jobs but states like Pennsylvania, Ohio, Florida, New York and Louisiana held over 200,000 jobs (some contributed as high as 392,000). When you consider these factors we realize many oil and gas professionals in 2016 were laid off during a time of oil price reductions. The work force nationally constricted as a result of oil price down turns.
Let’s think about our US president.
Mr. Trump is a campaigner of jobs and economy. The sure way to improve job ratings is to employ traditional workers who have 1) skills to work, 2) skill at jobs paying great wages, 3) skills correlating to large employment numbers, 4) a huge population pool waiting for high paying jobs and 5) were recently laid off.
Trump sees two industries as his allies in economic policy. Coal is one ally. Oil & Gas is the other. Both industries have deep roots in our working population. Both industries built cities, counties and tradition around employing local populations. With the advent of renewable energy these cities and counties were decimated.
Economic crisis would unfold in Texas if Oil & Gas were completely replaced. States like Kentucky and West Virginia had many cities sent to near poverty when coal was aggressively removed as a primary source for electricity. In 2006 coal provided 49% of the country’s electricity. In 2017 coal provided 30% of the country’s electricity according to the Energy Information Administration (EIA). Between 2011 and 2016 US Coal producers lost more than 92% of their market value according to a Times Article.
In 2017 West Virginia, a coal state, ranked 49th in per capital income, 50th in educational attainment and 49th in life expectancy.
Trump knows that a significant portion of our population is trained for traditional jobs. These jobs include coal, oil, gas, natural gas and petroleum. A president that is erratic as Trump only has 4 years to make a sizable improvement. You cannot make dramatic national changes by inventing something new. The easiest way to make immediate change is to give back what was just taken away. Reopen a coal plant and raise oil prices to bring back the 2014 boom.
Nuclear proliferation is a one sided agreement where top countries (United States, Russia, China, Europe) agree to keep other countries (Iran, Iraq, North Korea) from having nuclear weapons.
Morally it makes sense but politically it is a bully tactic.
Basically it’s a moral argument that conveniently prevents a grab for power by new nations. We shouldn’t have nuclear weapons because it will destroy our planet. Therefore, the flawed logic is only World Powers with Nuclear Weapons can have it because they won’t use it.
A world power doesn’t have reason to use a weapon when it has world power.
WAR’S APPLICATION TO POLITICAL GOALS
War is justified with moral arguments and the underlying pretext of violating some human right. The reason for war is not actually the public justifications. War is always started in countries that affect world power domestic policies. These policies center on energy, minerals, resources or fiscal numbers. All of these policies correlate to money.
Behind every great fortune is a murder.
A country does not defend human rights in countries where there is no economic gain.
Want some justification? Sure I will give you one. A sad example is Sudan.
Sudan’s President Omar al-Bashir is not a benevolent leader. Estimations by the United Nations are more than 15,000 villagers were killed by the government-backed Janjaweed militia between early 2003 and late 2004 in Darfur. Millions of Sudanese people were displaced as a result of rape, oppression and pillaging. The Janjaweed militia was accused of raping women in Darfur. The government stands accused of using chemical weapons against their citizens.
The International Criminal Court’s chief prosecutor issued an arrest warrant in 2009 for Bashir. The warrant was for charges of genocide and war crimes. All these items directly relate to Darfur.
The court issued another arrest warrant in 2010. In 2014 the court had to suspend the case because of lack of support from the United Nations Security Council.
Guess who is on the United Nations Security Council?
Yep the United States of America is a key decider in what happens there.
Through all these atrocities Bashir retained power. The reason why Bashir retains power is no secret. There is no obvious economic benefit for the United States or any member state on the Security Council.
Iran has a fraction of violations. Iran has honored a 2015 nuclear agreement. Despite these substantial facts the United States pushes for frontal confrontation. This same country turns a blind eye to Sudan…something doesn’t add up.
The moral implications are horrible. The idea to profit off human suffering or war is terrible. I am no advocate for capitalizing on human suffering. I am however a realist. Trump will deploy these strategies against Iran to drive prices of oil up. These prices will support a robust job infrastructure. People will have money. The push for his re-election agenda will gain support in high paying jobs. People will be happy and ignore the means to an end. Giving 5mm people jobs today guarantees the victory tomorrow.
Put yourself in a coal miner’s shoes. Would you vote for someone that took you out of poverty and promised to defend your job over the next 4 years? It’s easy to see why this person would choose Trump again.
In the middle are people like us (i.e. the person reading this and I). We are individuals who detest the morality of people like this but understand no reason not to profit. Does this make me amoral? I don’t think so but I guess that’s a matter of opinion. We can miss an opportunity to make money on moral grounds or take the money because it will happen anyways. People such as I choose to take the money. These changes drive opportunity for new technologies that support the continuation of the oil and gas industry.
Traditionally, +$70 per barrel prices spur oil and gas investment. The new influx of profits allows investment into technologies that seek to maintain high profit margins despite rock bottom oil prices. As an entrepreneur contemplating your next technology startup it’s important to see this market trend. Money will become available for those seeking investment to experiment in profit preservation margins despite low oil prices. Technologies not proven will enjoy R&D investment during this time.
Old habits die hard. People don’t like change. Ask to get money, to preserve your benefactor’s power in a bad time, while money is plentiful and you discover funding sources.
The opportunity exists by combining technology speculation with establishment’s desire to hold power.
Those with power and money rarely imagine themselves without it. Appealing to this insecurity allows influx of money. The next opportunity exists. Despite the immorality of the circumstances the byproduct is a market cycle opportunity. What will you do when it shows up?
To your knowledge success!
About Christopher: Christopher Knight Lopez is a Professional Entrepreneur. Christopher has opened over 7 businesses in his 14-year career. Christopher’s purpose is to take advantage of various market-driven opportunities. Christopher is a certified Master Project Manager (MPM) and Accredited Financial Analyst (AFA). Christopher previously held his Series 65 securities license. Christopher also has his General Lines — Life, Accident, Health & HMO. Christopher has managed a combined 286mm USD in reported Assets Under Management & Assets Under Advisement. Christopher has work experience in 29 countries, raised over 50mm USD for various businesses, and grossed over 7.5mm in his personal career. Christopher worked in the highly technical industries of: biotechnology, finance, securities, manufacturing, real estate, and residential mortgages. Christopher is a United States Air Force Veteran. Christopher has a passion for family, competitive sports, fishing, martial arts and advocacy for entrepreneurs. Christopher provides self-help classes for up-and-coming entrepreneurs. Christopher’s passion to mentor comes from belief that entrepreneurs need guidance. The world is full of conflicting information about entrepreneur identity. See more at www.christopherklopez.com.