reality is only those delusions that we have in common...

Saturday, March 11, 2017

week ending Mar 11

  Why the Fed means business this time - FT - US monetary policy has now clearly embarked on an important new phase. For a long while, the markets have been extremely reluctant to recognise that the Federal Reserve might actually mean what it says about increasing short term interest rates by 0.25 per cent on three separate occasions this year. Remembering repeated episodes in which the Fed has failed to deliver its threatened tightening in policy since 2013, investors have concluded that dovish surprises from the Fed are endemic.Last week, however, they woke up to the fact that FOMC really is serious about raising rates in March, and that this may be the first of three or even four rate hikes this year. After a series of hawkish speeches by several FOMC heavyweights, the coup de grâce came on Friday, when Janet Yellen warned that a rate rise in March “would be appropriate” unless economic data surprised in the meantime. She added rather ominously that policy accommodation would be removed more rapidly this year than in 2015 and 2016.The great unknown is whether this will come as a major shock to the financial markets. It will certainly mean that investors will need to build in a faster path for rate hikes in the near term than anything that has previously been contemplated in this cycle. But the good news is that the final destination for rates does not seem to be changing, at least in the view of the FOMC. The Committee is increasing the speed of travel towards its destination, but is not changing the destination itself. So what has justified the shift toward more hawkish thinking on the FOMC? And will this upset the equity market, which is still ignoring the prospect of higher rates?One key reason for Fed hawkishness is that monetary conditions have actually eased since the Fed raised rates last December, because the equity market has risen and the dollar has fallen since then. Goldman Sachs estimates that its financial conditions indicator has eased by an amount equivalent to a cut of 40-70 basis points in the Fed funds rate, a shift in the opposite direction from the tightening intended by the FOMC.

Merrill on the March FOMC Meeting -- A few excerpts from a research note from Merrill Lynch: The markets listened to the chorus of Fed officials and are now pricing in near certainty of a hike. With the rate decision on 15 March likely to be a non-event, attention turns to the Summary of Economic Projections and the press conference. We believe the combination of a shift higher in the dots and language changes in the statement will send a hawkish signal. However, we suspect that Chair Yellen will sound more balanced in her press conference.  We expect a number of tweaks to the statement which will deliver a more hawkish message. In the first paragraph, we think the Fed will present a more positive assessment of the economy. We also think that the Fed will change the economic outlook paragraph to argue that the balance of risks has improved. ... We think Chair Yellen's press conference will be less hawkish than the statement or SEP. ... Chair Yellen is likely to sound more positive about the outlook, noting the improvement in sentiment measures and reduction in labor market slack. However, we expect her to argue that inflation should only increase slowly to the target. Also, she is likely to argue that the Fed is not behind the curve and isn't “playing catch up” with policy. We also look for Yellen to note that the committee is discussing the plan for addressing the balance sheet and that more formal communication will be forthcoming. In the meantime, she is likely to note that the Fed will continue with the reinvestment program until an increase in fed funds rates is “well underway”.

Goldman Changes Fed Forecast: Sees Rate Hikes In March, June And September; Earlier Balance Sheet Reduction - While we suggested that the lack of a solid rebound in average hourly wages clouded the Fed's intentions on future rate hikes after March, Goldman had no such doubts and in a report issued moments after the "solid jobs report", Goldman's chief economist Jan Hatzius revised his forecast for upcoming FOMC moves, pulling forward the next two rate hikes, expecting interest rate increases in March, June and September, up from the previous March, September and December. More importantly, Goldman now also expects the Fed to start its "balance sheet normalization to Q4 2017 from mid-2018 previously."  BOTTOM LINE: Following the better-than-expected February employment report we have made a few modest changes to our Fed call for 2017. We now look for funds rate increases in March, June, and September (compared to March, September, and December previously), and have pulled forward our forecast for the start of balance sheet normalization to Q4 2017 from mid-2018 previously. MAIN POINTS:  Nonfarm payroll employment increased by 235k in February, more than expected by consensus forecasts, and the underlying details of the report generally looked solid. As a result of the strong jobs numbers, benign financial conditions, and recent communication from FOMC participants, we are making a few modest changes to our Fed call for this year. Specifically, while we continue to expect three rate increases in 2017, we now look for a March hike to be followed by rate increases in June and September (versus September and December previously). In addition, we have changed our forecast for the start of balance sheet normalization: we now expect the committee to end full portfolio reinvestment in Q4 2017, instead of mid-2018. Under our forecasts for the US economy, we see it as a close call as to whether the FOMC would raise the funds rate four times this year or hike three times and begin balance sheet normalization.

When the Fed Meets, We Need to Know - Narayana Kocherlakota -- Officials at the U.S. Federal Reserve, including Chair Janet Yellen, have been sending unusually strong signals that they intend to raise interest rates at their next scheduled policy-making meeting later this month. Why the sudden certainty? One possibility is that they have already met secretly via video conference. The Federal Open Market Committee, which sets the central bank’s monetary policy, holds eight planned meetings per year in Washington. The dates are announced publicly at least six months in advance -- a schedule that Fed watchers in the media and the markets follow closely. Occasionally, though, the chair brings the committee together for previously unscheduled video conference meetings. Sometimes these meetings are held to discuss emergency situations, such as the European debt crisis of 2010 or the U.S. debt ceiling standoff of 2011. But the unscheduled meetings can serve another purpose: allowing officials to have a deeper conversation about key policy issues. In October 2010, Chairman Ben Bernanke held such a meeting to discuss quantitative easing -- a possibility that became reality a few weeks later. Yellen’s first meeting as Chair, in March 2014, was also unscheduled. Officials focused on whether to keep providing specific quantitative guidance regarding the future path of Fed’s target rate. As a member of the committee, I found these kinds of unscheduled deep dives into policy very useful. Because committee members are spread out across the country, they don’t spend as much time together as do similar monetary-policy committees in other countries. The extra meetings provide a great way to establish a better collective understanding of issues that can be very complex. I do, however, find the secrecy of the meetings troubling. The Fed reveals that they have taken place only about three weeks after the next scheduled meeting, when minutes are released. As a result, the public didn’t find out about the March 4, 2014, video conference meeting until April 9. (Full transcripts for the unscheduled meetings are released according to the usual practice, after a lag of five years or so.)

Janet Yellen, not Donald Trump, is far more likely to decide whether or not we reach genuine full employment in 2017 - In recent weeks, a number of stories have been written about the Trump administration’s excessively rosy projections for economic growth in coming years. And three weeks ago, Federal Reserve Board Chair Janet Yellen testified before Congress about the likely path of monetary policy over the next year. The Trump administration forecasts and Fed decisions are deeply intertwined. While the Trump administration’s precise forecasts are clearly unrealistic in the long-run, we should be clear in noting that the next couple of years could easily see a substantial pickup in economic growth. If this happens, however, we will have Janet Yellen and her colleagues at the Fed to thank, not Donald Trump. The reason is straightforward: 2017 is the year when the Fed will finally decide whether or not to guarantee genuine full employment by giving the economy “room to run” by not raising rates aggressively. While Fed policy largely sputters when trying to spur growth with lower short-term interest rates, raising rates does reliably slow growth. So for all the chatter about the importance of Fed policy in recent years, their attempts to spur growth with low short-term rates were often futile. But once they firmly decide to start reining in growth with higher rates their policy choices will have real bite. The metaphor used to describe the problem with using low rates to boost growth was that you can’t “push on a string”. Essentially, the Fed can lower rates to try to induce businesses and households (and even governments) to borrow and spend more, but they cannot force this spending to actually happen. If governments ignore low rates and indulge in spending austerity for ideological reasons, or if households do not respond to low rates because their housing wealth had been torpedoed and hence home refinancing is impossible, or if businesses do not take advantage of low rates to build new factories because they do not have customers for what their current factories are producing, then the Fed cannot do much about any of this.

 Why the American taxpayer might prefer a large Fed balance sheet -- David Andolfatto and Larry White have been having an interesting debate on the public finance case for having a large (or small) Federal Reserve balance sheet. In this post I'll make the case that American taxpayers are better off having a large Fed balance sheet, perhaps not as big as it is now, but certainly larger than in 2008. To explain why, we're going to have to go into more detail on some central banky stuff. The chart below illustrates the growth of the Fed's balance sheet. Prior to the 2008 credit crisis, the Fed owned around $900 billion worth of assets (green line), these being funded on the liability side by $800 billion worth of banknotes (red line), a slender $10-15 billion layer of reserves (blue line), and a hodgepodge of other liabilities. The Fed now owns an impressive $4.5 trillion in assets. These are funded by around $1.5 trillion worth of banknotes and $2.3 trillion worth of reserves. So the lion's share of the increase in the Fed's assets is linked to the expansion in reserves, which have ballooned by around 25,000%.There's a problem with the above chart. It shows reserves clocking in at just $10 billion prior to 2008, but it's important to keep in mind that this *understates* the quantity of reserves issued by the Fed. Prior to 2008, the Fed would typically lend out tens of billions worth of reserves to banks during the course of the day, these amounts being paid back before evening. These loans are referred to as "daylight overdrafts." Because the above chart uses end-of-day data, it omits daylight overdrafts, thus making the balance sheet look smaller than it actually was.  How big did the Fed's balance sheet actually get during the course of a day thanks to overdrafts? Prior to the 2008 credit crisis, daylight overdrafts typically peaked at around $150 billion. So if we recreate the chart using intraday Fed data, the pre-2008 balance sheet would be around $800 billion + $150 billion, or 20% larger than if we use end-of-day data. And rather than a relatively flat pattern, we see a pulsing pattern. I've drawn out the chart by hand to give a sense for how the balance sheet would have looked, although its not to scale and doesn't use real data.

 Central Bank Embrace of Blockchain is All About Control - Bitcoin, whether one considers it sound money or not, is a challenge to the established system monopolized by central banks everywhere. TheWar on Cashnarrative fits in with the reality that central banks and governing authorities feel a need to address the lack of control and centralization in the currency world. Just as Bitcoin challenges the use of government protected clearing systems, so cash allows some inkling of freedom by consumers to withdraw from central-bank-driven monetary insanity. It is no surprise that monetary bureaucrats worldwide have all but declared war on these "alternatives." It's all about control — about knowing what everyone is up to at all times. Instead of allowing the individuals to choose on the market, central bankers are all over the budding technology. They want to both challenge the existence of alternatives (Bitcoin) and embrace the technology behind it.  The New York Times observes, creepily:For the central banks, the promise of the technology is that it would allow them to track every pound or renminbi on every step of its travels through the financial system in real time — something that is impossible now. The goal would be to make the financial system more transparent, fast, efficient and secure.Indeed, while declaring war on Bitcoin itself, we discover that Chinese banks are experimenting with their own central-bank-approved version of a purely digital currency:The digital currency, known to the broader world as “ChinaCoin,” but officially referred to inside China as digital renminbi, or RMB, was developed by the PBOC in partnership with other private and public entities.  Eventually, Chinese authorities hope digital RMB will help the government strengthen oversight of the country’s banks, while helping to prevent financial crime.It's not really about fighting crime and promoting stability. It's about total financial domination. Even at the Federal Reserve, Lael Brainard, the Fed governor who oversees new technology, is behind the trend: We are paying close attention to distributed ledger technology, or blockchain, recognizing this may represent the most significant development in many years in payments, clearing and settlement," Ms. Brainard said.

Atlanta Fed Slashes Q1 GDP To Only 1.3% With Yellen Set To Hike -- One week ago, we pointed out a curious bifurcation: the Fed was telegraphing an imminent rate hike - one which following Yellen's Friday conference is now virtually assured - even though it appears the FOMC would be hiking in a quarter in which GDP comes in in the mid 1%-range, or lower. The reason: while "soft data" - which is important to animal spirits if not actual economic output - continues to surge, the "hard data", that which actually matters to the economy, is still disappointing.  Fast forward one week when according to the Atlanta Fed, Janet Yellen is about to dig an even deeper hole because should the Fed hike next Wednesday it will do so in a quarter in which GDP was just revised from 1.8% as of last week to just 1.3%. This forecast was more than double, or 2.7%, as recently as one month ago. From the sourceThe GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.3 percent on March 7, down from 1.8 percent on March 1. The forecasts for first-quarter real personal consumption expenditures growth and real nonresidential equipment investment growth fell from 2.1 percent and 9.1 percent, respectively, to 1.8 percent and 7.3 percent, respectively, after Thursday's motor vehicles sales release from the U.S. Bureau of Economic Analysis. The forecast of the contribution of inventory investment to first-quarter growth fell from -0.50 percentage points to -0.72 percentage points after yesterday's manufacturing report from the U.S. Census Bureau.

 Q1 GDP Now Just 1.2% According To Atlanta Fed; Rate Hike Imminent --Another day, another downgrade to US GDP: after yesterday the Atlanta Fed slashed its Q1 GDPNow estimate from 1.8% to 1.3% - with the forecast as high as 3% at the start of the year, and 2.5% as recently as the end of February - moments ago the Atlanta Fed has once again cut its US growth forecast, and now sees Q1 GDP of just 1.2%, on par with the disappointing 0.9% and 0.8% prints in Q4 2015 and Q1 2016.The reason, according to the model's author, "the GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.2 percent on March 8, down from 1.3 percent on March 7. The forecast of the contribution of inventory investment to first-quarter growth fell from -0.72 percentage points to -0.79 percentage points after this morning's wholesale trade report from the U.S. Census Bureau." What the above really means is that what started off with a quarter full of optimistic forecasts population the model's fields, as more and more actual data had to be plugged in, the underlying growth rate continued to get dragged lower and lower, until it barely top 1%. This is taking place one week before Janet Yellen is expected to hike the interest rates by another 25 bps.Incidentally, the Atlanta Fed is now roughly 50% below the Wall Street consensus estimate for Q1 GDP.Finally, in the most bizarre chart to have emerged in recent weeks, it appears that the Fed's GDP estimate is now closely following the inverse of the March rate hike odd probability.

The economy will continue to improve, as long as policymakers don’t thwart its progress - EPI - President Trump has recently claimed that he inherited an economic “mess,” calling the American economy a “disaster.” From a broad macroeconomic perspective, this is simply untrue. The overall unemployment rate has been steadily falling and is essentially back to where it was immediately before the Great Recession started. Recent years have even seen improvements in labor force participation as the labor market continues to firm up. And while other measures, such as the prime-age employment-to-population ratio and nominal wage growth, continue to lag, they have still shown continued improvement over the last several years. To be clear, the economy is still weak and still hasn’t reached genuine full employment like it did in the late 1990s and early 2000s. Many workers and their families are still struggling, and the lower unemployment rate is only now beginning to translate into broad-based wage growth. But the economy is on track to recover, and there are no obvious signs of any underlying weakness that would lead to a recession in the near term. Inheriting a “mess” would accurately describe what President Obama was handed in January 2009—with the economy having lost 3.4 million jobs just in the previous six months and with unemployment having risen 3.4 percentage points over the previous 18 months. President Trump has clearly inherited something quite different—a stable albeit too-slow recovery that is on extremely firm ground. It’s important to keep this steady improvement in mind as we assess economic progress moving forward. No policymaker should be allowed to claim credit for improvements that are simply a continuation of a trend. To that point, I’m going to lay out some key labor market indicators, discuss their recent trends, and assess their likely progress over the next two years.

Discussing Trump’s policy impact on interest rates: Pethokoukis on CNBC’s ‘Squawk on the Street’ – video

 Great Expectations (Not) – Kunstler - Halloween’s coming super-early this year and it will be a shocking surprise to those currently busy looking for Russians behind every potted plant in Washington DC. First, accept the premise that your country has lost its mind.  This is what happens when societies (and individuals) can’t face the true quandaries of a particular moment in their history. All of their attention gets channeled into fantasy: spooks, sexual freakery, conspiracies, persecution narratives, savior fairy tales. It’s been quite a cavalcade of unreality for the past six months, with great entertainment value for connoisseurs of the bizarre — until you’re reminded that the fate of the nation is at stake. The questions Americans might more profitably ask ourselves: can we continue living the way we do? And by what means?  These matters of home economics have been sequestered in some forgotten storage unit of the collective mind for at least a year while a clock ticks in the time-bomb that sits on the national welcome mat. That bomb is made of financial plutonium and it’s getting ready to blow. When it does, all the distracting spookery and freakery will vaporize and the shell-shocked citizens will have a clear view of the bleak, toxic, devastated landscape they actually inhabit.   March 15 is when the temporary suspension of the national debt ceiling — engineered in a 2015 deal between Barack Obama and then House Speaker John Boehner — finally expires, meaning the government loses its authority to continue borrowing money. The chance that congress can pass a bill raising the debt ceiling to enable further borrowing is about the same as the chance that Xi Jinping will send every American household a dim sum breakfast next Sunday morning by FedEx. The US treasury will then be left with around $200 billion in walking-around money, at a burn rate of about $90 billion a month —meaning that that around June sometime the country won’t be able to pay invoices, issue salaries, send out entitlement checks, or do anything, really. It means pure government paralysis. It means no infrastructure spending jamboree, no “great” wall, no military shopping spree, none of the Great Expectations sewn into the golden fleece of Trumptopia. Meanwhile, over the next few weeks, Janet Yellen and her crew of economic astrologasters at the Federal Reserve will have to put up or shut up vis-à-vis raising the interest rate on the basic overnight lending rate. The Las Vegas odds of it being raised currently stand at around 95 percent. So, they will be running that play around the time that the debt ceiling issue materializes into a live-action event. Of course, the Fed could welsh on its carefully-scripted previous hints and utterances and do nothing. But that option would probably extinguish the last remaining shreds of the Fed’s credibility, since they’ve been jive-talking about raising rates since they began “tapering” the QE bond-buying spree in the spring of 2013, i.e., a long time ago.

 Yield Curve Inverts As Mnuchin Warns Congress Of "Extraordinary Measures" To Avoid Debt Ceiling - With the Treasury cash balance collapsing near zero, Treasury Secretary Mnuchin has written to Congress to warn them that Treasury will need to start taking extraordinary measures when statutory limit on U.S. debt is reinstated on March 16.A copy of the letter dated March 8 was posted on Treasury website:“Treasury anticipates it will need to start taking certain extraordinary measures in order to temporarily prevent the United States from defaulting on its obligations”Treasury will suspend the sale of State and Local Government Series (SLGS) securities, which count against the debt limit, as of March 15 and “until the debt limit is either raised or suspended” As it’s done in the past, Treasury will use additional extraordinary measures.Mnuchin says that “honoring the full faith and credit” of U.S. outstanding debt is a critical commitment.As The Hill reports,“By CBO’s estimate, the Treasury would most likely be able to continue borrowing and have sufficient cash to make its usual payments until sometime in the fall of this year without an increase in the debt limit, though an earlier or later date is possible,” the CBO said in the report. Failing to raise the debt ceiling after those measures run out would risk the United States defaulting on its debt.

U.S. Senate leader McConnell says U.S. will raise debt ceiling - (Reuters) - The United States will not default on its debt and will raise its debt limit in some fashion, U.S. Senate Leader Mitch McConnell said on Thursday in an interview with Politico. "The government is not going to default," McConnell said. On raising the U.S. debt ceiling, he added "We'll do it. In what context, I wouldn't predict at this point."

 Trump’s Military Ambition: Raw Power as a Means and an End - President Trump’s vision of American power, something of a mystery during the campaign, has come into new focus after a week of speeches and budget plans hinting at his ambitions for the military.They reveal a president fascinated with raw military might, which he sees as synonymous with America’s standing in the world and as a tool to coerce powerful rivals, such as China and Iran, which appear to be his primary concern.He also appears little-focused on the details of America’s continuing wars in Afghanistan, Iraq and Syria and globally against Al Qaeda. None of those missions will be resolved by the new aircraft carriers Mr. Trump has promised, and generals warn that they will be set back by his proposals to slash funding for diplomacy and aid.This may not necessarily be an oversight on Mr. Trump’s part, analysts suggest, but rather flow from a nationalistic worldview that is unfamiliar today but dominated the geopolitics of the 19th and early 20th centuries. That may be revealed most clearly in Mr. Trump’s vision of victory. He has portrayed the military’s primary role as winning battles, and winning battles as sufficient for winning wars — two ideas out of favor since at least the Vietnam War. Ever since then, most generals have emphasized that war is driven by political conflicts that can rarely be resolved through force alone.“We will give our military the tools you need to prevent war and, if required, to fight war and only do one thing. You know what that is? Win. Win,” Mr. Trump said this week. It is perhaps early to say whether his views cohere into a single Trump doctrine. But they suggest a pursuit of policies that seem less suited to any particular strategy or conflict than to a view of military power as its own end.

The US spends more on its military than the next 8 countries combined (video) According to 2015 estimates gathered by the Stockholm International Peace Research Institute, the United States was responsible for 36% of the entire world's military spending. Even so, President Trump is calling for a $54 billion increase in US military spending which he says is needed to "rebuild the military." In order to pay for this, Trump is also calling for a $54 billion cut in other parts of the federal budget.

 More Americans Think The US Spends "Too Little" Than "Too Much" On The Military -- Following The House's decisive approval of a $578 billion spending bill to keep the US armed forces operating through September, Gallup recently conducted a poll to gauge public opinion on the current level of U.S. military expenditure. The results may surprise some... As Statista's Niall McCarthy notes, Gallup found that 37 percent of people think the government is spending too little compared to 31 percent who say it's too much and 28 percent who think it's about right. The trend of "too little" exceeding "too much" is infrequent in Gallup's polling only occurring before or after a Republican administration replaces a Democratic one. Historically, the percentage of Americans saying Washington spends too much on defense peaked during the Vietnam War in the early 70s and again at the end of the Cold War in 1990 under Reagan.  

Trump to Allow Pentagon Raids Without Presidential Approval - President Donald Trump wants to give Defense Secretary James Mattis and top military officials a freer hand to launch military raids overseas without presidential approval. That’s according to The Daily Beast, which reports the move could give wide latitude to generals to launch operations like the raid in Yemen that cost the life of a Navy SEAL and killed 25 civilians, including nine children under the age of 13. President Trump told a joint session of Congress on Tuesday the Yemen raid captured "large amounts" of vital intelligence that would prevent future terrorist attacks. But NBC News reports that multiple military sources said the raid produced "no actionable intelligence."

Dreams of ‘Winning’ Nuclear War on Russia - In 1961, senior Pentagon consultants drafted a 33-page blueprint for initiating — and winning — a nuclear war against the Soviet Union. It was based on top-secret intelligence that Soviet nuclear forces were few in number and poorly defended — making them an easy target for a U.S. preemptive strike. Convinced of U.S. superiority, the Joint Chiefs of Staff began advising President John F. Kennedy to risk nuclear war over Cuba and Vietnam — even though their own analysis conceded that if something went wrong, 75 percent of Americans might die. If JFK hadn’t rejected their advice, we might not be here today.President Trump may soon face a similar test. With almost no public awareness, the Pentagon’s nuclear program has achieved unprecedented capabilities that once again raise the possibility that a U.S. first strike could cripple Russia’s nuclear arsenal and “decapitate” its leadership. Such capabilities all but ensure that hawks will begin lobbying for more aggressive measures toward Russia, based its growing vulnerability to U.S. nuclear weapons. A frightening new analysis for the Bulletin of the Atomic Scientists — by three eminent strategic arms experts at the Federation of American Scientists, Natural Resources Defense Council, and MIT — provides evidence that U.S. nuclear planners have “implemented revolutionary new technologies that will vastly increase the targeting capability of the US ballistic missile arsenal,” giving it for the first time in decades “the capacity to fight and win a nuclear war by disarming enemies with a surprise first strike.”

American Diplomats’ Comfort With Tillerson Gives Way to Unease --  U.S. diplomats breathed a sigh of relief three months ago when Rex Tillerson was nominated as secretary of state, welcoming the oilman as a seasoned manager who would shield them from ideologues ready to gut America’s foreign policy machinery. Yet that comfort is now giving way to unease, as the former Exxon Mobil Corp. chief embraces President Donald Trump’s vision. Tillerson supports the president’s goal to cut the State Department budget and shift its mission away from existing initiatives such as climate change, global health and development assistance beyond key allies, according to half a dozen people familiar with his thinking who requested anonymity to discuss internal matters. “The issue isn’t a lack of resources, it’s how do we refocus the department on its core priorities, and this is a way of getting at that,” said Brett Schaefer, a senior research fellow at the conservative Heritage Foundation. “It’s sort of a pressure exercise to force the people inside State and at USAID to rethink how budgets have been allocated and focus on critical priorities.”nt That doesn’t mean Tillerson will rubber stamp the Office of Management and Budget’s proposal to slash 37 percent of the combined $50 billion budget for the State Department and the U.S. Agency for International Development to free up money for the military, but he supports the sentiment behind it, the people said. Tillerson, according to the people interviewed, wants a slimmed-down department that serves Trump’s goal -- a national security strategy more narrowly focused on backing U.S. allies in the Middle East and Europe to advance his “America First” theme. That means largely doing away with the global promotion of democracy and other “soft power” initiatives.

Tillerson struggles to make his mark in Trump’s Washington – FT - When Rex Tillerson visits Japan, South Korea and China next week, the new US secretary of state will not escape the whispers back home: the former ExxonMobil chief executive has been all but invisible since arriving in Washington. In his first weeks as the top US diplomat, the Texan has been conspicuously low-profile. His silence has fuelled concerns that President Donald Trump intends to downgrade diplomacy — and relegate the one cabinet official who has vast experience dealing with foreign leaders — as he propels his “America First” policy. In contrast to John Kerry, his predecessor who was a tireless advocate for US policy at home and abroad, Mr Tillerson has stayed below the radar in Washington and made only two short foreign trips, to Mexico and Germany. Even his efforts to reassure US allies while in Germany were overshadowed by James Mattis, defence secretary, and Mike Pence, vice-president, who were more public in their attempts to do the same at that week’s Munich security forum. Mr Tillerson is struggling to hire a team after Mr Trump rejected his choice of deputy, foreign policy veteran Elliott Abrams. The White House also wants to slash the state department budget by almost 40 per cent, while giving the Pentagon another 10 per cent. Mr Trump often speaks deferentially about “Mad Dog Mattis” but rarely mentions Mr Tillerson, who has been absent for some of the president’s meetings with foreign leaders.   “It illuminates a broader problem. When Trump speaks about national security he speaks solely about the military.”  While Mr Tillerson and Mr Mattis have established a good relationship, the secretary of state faces powerful rivals inside the White House, including Jared Kushner, the president’s son-in-law, and Steve Bannon, the political strategist, who is less interested in traditional alliances and is a vocal critic of the European Union.

Rex Tillerson vs. The Enemy of The People: Inside The Media War At The State Department - Twice during the past week at the U.S. State Department, NBC’s chief foreign affairs correspondent, Andrea Mitchell, was ejected from photo ops when she had the unmitigated gall to ask questions of Rex Tillerson. The 70-year-old journalism workhorse, a skillful creator of viral video moments during her long network television career, failed to get answers as frantic aides firmly ushered her out of the secretary of state’s ceremonial seventh-floor office. But the confrontations produced some gripping optics that MSNBC, where Mitchell hosts a weekday show, deftly deployed in a promo touting her intrepid reporting style. Mitchell’s encounters—which exploded on social media this week after Fox News’s resident troglodyte, Bill O’Reilly, called her “unruly” on Twitter—also highlighted a more serious issue: a secretary of state who refuses to engage or even acknowledge the press corps assigned to cover him. , Tillerson—who as chairman and CEO of ExxonMobil for a decade met the media only in highly controlled and orchestrated circumstances—has yet to answer a single question from the press corps at Foggy Bottom. And when he leaves next Wednesday for a critical four-day trip to Japan, South Korea and China—a series of crucial consultations overshadowed by North Korea’s nuclear saber-rattling—Tillerson will not even be taking a single pool reporter with him on the secretary of state’s plane.P.J. Crowley, Barack Obama’s former assistant secretary for public affairs in charge of the state department’s media relations, drew a sharp intake of breath when informed of Secretary Tillerson’s travel arrangements.“That,” he said after a lengthy pause, “is a very significant break with tradition.”“It’s actually totally bizarre,” said the Washington Post’s Glenn Kessler, the newspaper’s state department correspondent during the tenures of Colin Powell, Condoleezza Rice and Hillary Clinton. “Watching this beginning by Tillerson, I’m actually pretty appalled by it.”

If Tillerson gets it wrong in Asia, the consequences could be catastrophic -- US Secretary of State Rex Tillerson has a tough job on his hands when he comes to Asia later in the month.  His five-day visit, which includes stops in Japan, China and South Korea, will see him walk into a region increasingly on edge over North Korea’s mounting provocations.Top of the agenda will be the escalating crisis of North Korean leader Kim Jong Un’s volatile behaviour which hit its zenith on Monday after the simultaneous launch of four missiles into waters off the Japanese coast.Pyongyang has said it was a drill for striking American bases in Japan.This follows a tense few weeks that saw the assassination of Kim’s estranged half-brother on Malaysian soil and the threat of the country’s ever-expanding nuclear arsenal. US President Donald Trump’s administration officials have said “all options” to deal with North Korea are under consideration, a departure from the policy of “strategic patience” pursued by his predecessor Barack Obama.Tillerson’s meeting with Chinese Premier Xi Jinping will likely be tense, given the move by the US to deploy a missile defence system in South Korea this week.The Americans claim the Terminal High Altitude Area Defence system (THAAD) is needed to protect its ally who has long been threatened by North Korea.But the news was met with an angry response from Beijing.Chinese Foreign Ministry spokesman Geng Shuang said on Monday such deployment would undermine “the strategic balance of the region” and “the security interests” of countries, including China. While this may be their diplomatic line, Beijing is not convinced with the US’s justification for the anti-missile system as it is only designed to intercept short and medium range missiles, not the intercontinental ballistic missiles that pose a threat to American soil.

Trump Offers Russia Ambassador Post To Putin-Critic Jon Huntsman -- As had been periodically leaked over the past several weeks, overnight both Poliico and theWSJ confirm that President Trump has offered former Utah governor Jon Huntsman the job of U.S. ambassador to Russia and is in the process of submitting paperwork to accept the position; Huntsman is said to have accepted the offer. This is the latest sign of backtracking from plans for Washington-Moscow conciliation, a development which will make future reports based on "anonymous sources" that Trump is a Kremlin puppet even more problematic.  The 56-year-old Mr. Huntsman’s long record in politics and diplomacy—as governor of Utah and ambassador to Singapore under President George H.W. Bush and to China under President Barack Obama—likely will assure him of an easy confirmation in Congress. Huntsman, who served as ambassador to Singapore under President George H.W. Bush and then to China under President Barack Obama, was an outspoken critic of President Donald Trump during last year's campaign.  "It's a bit bizarre because he was so anti-Trump last year," said one source close to the administration. "But it's also a smart choice, because he really knows his [stuff]."

 America Is Facing a Dangerous Enemy. We Just Can’t Agree Who It Is  -  America is currently engaged in an epic war of ideas in which the country’s very way of life is at stake. The struggle is reminiscent of earlier clashes against ideologies such as communism or fascism. The ideological adversary of the United States is powerful. It is authoritarian. It is spreading. And it is completely different depending on which government officials you’re talking to. During the Cold War and World War II, American leaders largely agreed about what ideological battle they were waging, even as they disagreed about how to fight it. Not so today. Among those who believe the U.S. is engaged in an ideological struggle, there is division on the question of which ideology represents the greatest threat to America: ISIS-style radical Islam or Russian-style autocracy. Donald Trump referenced the first enemy during his address to Congress on Tuesday. In pledging to prevent a “beachhead of terrorism” from forming inside the United States, Trump summarized the threat in three words—“Radical. Islamic. Terrorism.” Sebastian Gorka, a counterterrorism adviser to the president, wrote that in saying those words Trump had uttered the “key to Victory against Global Jihadism.” Gone were the days of Barack Obama refusing to associate terrorism with Islam and probing the “root causes” of violent extremism, Gorka rejoiced. Here were the days of recognizing ISIS for what it is—“evil incarnate”—and finally committing to eradicate the scourge of jihadism after 16 years of failed counterterrorism policies. Obama’s defenders often dismiss anger over the Obama administration’s avoidance of the term “radical Islam” as a distraction. But those who clamor for the use of the words maintain that the terminology is actually central to the fight against terrorism, because it reveals the true nature of the enemy. Radical Islamic terrorism, they say, is precisely what it sounds like: terrorism rooted in radical interpretations of Islam. As a political-religious ideology, it must primarily be combatted not at the level of drone strikes or even immigration restrictions, but at the level of ideas. And as a political-religious ideology, it poses a threat to the Judeo-Christian values and liberal democracy that characterize Western civilization. The long war against radical Islamic terrorism, they assert, is nothing less than the defining struggle of our time.

Trump Budget Reflects Working-Class Resentment of the Poor - You could almost hear the gasps from both sides of the ideological divide when President Trump unveiled the outline of his first budget late last month, proposing to slice $54 billion from the discretionary civilian budget next year to pay for a beefed-up defense. That part of the budget pays for pretty much everything the government does other than the military, pensions and health insurance for older people. And it has been slashed repeatedly already. It adds up to only some $500 billion, hardly the best place to balance a $4 trillion federal budget. After Mr. Trump’s proposed cuts it would be 25 percent smaller than it was in 2010, adjusted for inflation.Even Republicans in Congress, no friends of government spending, argued that the math made little sense. While they share Mr. Trump’s twin goals of balancing the budget and slashing taxes, they would prefer to square the circle by cutting the entitlements of Social Security and Medicare.And yet Mr. Trump’s approach possesses a powerful political logic: The frazzled, anxious working-class men and women who voted for him like Social Security, Medicare and defense. Other government spending, not so much. Notably, there is little political cost for Mr. Trump — in fact, potential benefit — in going after means-tested programs for the poor.  These programs appeal to two constituencies that working-class voters show little affinity for: the poor and urban liberal elites who can express enormous sympathy for the disenfranchised while ignoring the struggle of the white working class.

 In WSJ Op-Ed, Peter Navarro Writes Deficits "Could Put US National Security In Jeopardy" At the end of January, the Euro soared following an FT piece in which Trump's trade advisor and director of the White House National Trade Council, Peter Navarro, launched what was then seen as the first shot in the transatlantic trade wars, when he accused Germany of using a “grossly undervalued” euro to "exploit the US and its EU partners", comments which triggered alarms in Europe’s largest economy. Navarro  told the Financial Times the euro was like an “implicit Deutsche Mark” whose low valuation gave Germany an advantage over its main partners. While not necessarily novel - Germany has often been accused of being the biggest winner from a weak euro at the expense of peripheral Europe - his views suggested the new administration is focusing on currency as part of its hard-charging approach on trade ties. Since then immediate worries about bilateral trade wars have taken a back seat after several paliative comments from Trump's Treasury secretary, Steven Mnuchin as well as a de-escalation between Trump and Beijing after the president softened his rhetoric on the One China policy. However, worries about trade wars may reemerge following a Sunday evening op-ed in the WSJ by the same Peter Navarro in which he explains "why the White House worries about trade deficits" and highlights that "an imbalance imperils economic growth—and could put U.S. national security in jeopardy."

National Security and Trade Deficits -  Menzie Chinn - National Trade Council Director Peter Navarro writes in the WSJ: The national-security argument that trade deficits matter begins with this accounting identity: Any deficit in the current account caused by imbalanced trade must be offset by a surplus in the capital account, meaning foreign investment in the U.S.  … running large and persistent trade deficits also facilitates a pattern of wealth transfers offshore. Warren Buffett refers to this as “conquest by purchase” and warns that foreigners will eventually own so much of the U.S. that Americans will wind up working longer hours just to eat and to service the debt.  I’ve made a similar argument before, particularly in the context of how the current account deficits of the mid-2000’s were driven by the tax cuts and unfunded wars (and hence budget deficits) of the G.W. Bush Administrations [1]. However, there is an important caveat — and that is that the net international investment position does not move in lockstep with the cumulative current account imbalance. This is shown in this Figure reproduced from Brad Setser:  The gap is driven by various factors, including exchange rate changes, but also valuation changes of FDI. So far, the gap has amounted to a not-inconsequential 10% of GDP as of 2015.  None of this should be taken to mean that we shouldn’t be concerned about the deteriorating net international investment position. However, changes in relative prices of imports and exports by virtue of tariffs against specific countries are unlikely to change the current account balance, which is largely driven by private saving vs. investment flows, and the government’s net saving (i.e., inverse of budget deficits). My guess is that a CBO score of the President’s budget — when it comes out — is unlikely to show a reduction in the full employment budget balance. If I were thinking about national security, I might be more concerned about the destabilizing impact of aggressive trade actions on our allies’ economies (including those of Mexico and the NATO nations).

Trade chief’s policies could be disastrous for eurozone -- According to Peter Navarro, the top trade advisor to the Trump administration, the $65 billion U.S. trade deficit with Germany is “one of the most difficult” trade issues facing the nation, which will have to be addressed bilaterally outside of the framework of the European Union (EU).Set aside for a moment the fact that trade policy is part of the exclusive competence of European institutions, not of member states, which makes the meaning of Mr. Navarro’s remarks hard to decipher. More importantly, he reveals an unhealthy mercantilist obsession with trade deficits, illustrated by his controversial opinion piece in the Wall Street Journal last Sunday.In short, Mr. Navarro confuses the simple accounting relationship between GDP and net exports (the difference between the value of exports and imports) with a causal, economic link. That leads him to believe, wrongly, that the U.S. economy can be expanded simply by boosting net exports — by exporting more, by importing less, or both.  However, imports into the United States are part of a story much more complicated than Navarro’s accounting exercise would lead one to believe. For starters, imported goods often serve as inputs into production in the United States. As Germany accumulates growing trade surpluses, it is also a net exporter of capital. German savings, in other words, are looking for productive uses abroad, with a higher rate of return than what the domestic economy has to offer.  Going aggressively after the U.S. trade deficit with Germany would thus mean going after the Volkswagen plant in Chattanooga, Tennessee, the Mercedes plant outside of Vance, Alabama, the BMW factory in Greer, South Carolina, or the Siemens Service Center in Houston, Texas. Of course, the story of Germany’s trade surpluses has a twist — the euro. But the problem is not, as Navarro said in January, that the Germans would be using a “grossly undervalued” euro to flood the U.S. with German goods. In fact, such terms make little sense in a world of market-determined exchange rates, such as the one between the dollar and the euro.

Those Rising German Trade Surpluses - For the world as as a whole, exports need to equal imports. Thus, the large US trade deficits are necessarily offset, out there in the world economy, by equally large trade surpluses in other countries. From a global perspective, these offsetting surpluses are largely in three countries: China, Germany, and Japan. Here's are some statistics from the IMF last October showing trade balances around the world. The US trade deficits are near the top. Of China, Germany, and Japan, China had the biggest trade surplus in 2015, but Germany's trade surplus was larger in 2016 and is projected by the IMF to be much larger in 2017. China’s economy is much larger than Germany's. So given that their trade surpluses are roughly similar in absolute size, Germany's trade surplus will be a much larger share of it. Here is the same trade data expressed as a share of GDP. Germany's trade surpluses are now up to about 8% of GDP. As a share of GDP, Japan's trade surpluses are larger than those of China. Like a lot of economists, I think the seemingly belief that trade surpluses are a sure-fire sign of economic health while US trade deficits are a sign that the rest of the world is taking advantage of us is a signal of illiteracy in economics. I won't argue that case here, beyond noting that Japan's trade surpluses during the last quarter-century have not meant that Japan's economy was growing in a robust manner. If we're going to have a political argument in which US trade deficits are blamed on other countries, rather than on high rates of US domestic consumption and low rates of US domestic saving, we presumably should be negotiating harder with Germany than with China.

Donald Trump is suffering from trade deficit disorder – Stephen Roach - US President Donald Trump suffers from an acute strain of trade deficit disorder. He blames America’s ills on trade deficits and the bad deals that underpin them. Not only is this poor economics, drawing heavily on the fearmongering of White House senior trade adviser Peter Navarro, it threatens the stability of a still-fragile global economy.The US has trade deficits with 101 nations. This is not a bilateral problem, as the Trump administration insists. It is a multilateral one. This profusion of deficits reflects a far deeper problem: the US’s saving deficit. In the third quarter of 2016, its net domestic saving rate stood at just 3 per cent of national income, less than half the 6.3 per cent average that prevailed over the final three decades of the 20th century.  Lacking in saving and wanting to grow, the US must import saving from countries like China, Germany, and Japan, which have big surpluses. But it must run a massive balance of payments deficit in order to attract the foreign capital. Since 2000, the cumulative $8.3tn balance of payments deficit has been almost identical to the $8.6tn multilateral trade gap over the same period. This underscores why tough talk aimed at one nation or another is nothing more than political bluster. Without dealing with the root cause of the problem, eliminating a trade deficit with a few nations will simply be reflected in expanded deficits with others. The temptation to punish China is an example of this misguided approach. Assume that the Trump administration delivers on its threat and imposes punitive tariffs on China. With China accounting for close to 50 per cent of America’s total merchandise trade deficit, such a move may seem appealing. But it would backfire.  The Chinese chunk of the US’s multilateral trade imbalances would have to be absorbed by other nations, most of which have cost structures and product prices that are well in excess of those currently available in China. The labour compensation rate in Chinese manufacturing runs at about 10 per cent of that of America’s top 10 non-Chinese foreign suppliers. Asking them to fill the void would be tantamount to a large tax on Walmart prices and US consumers.

Donald Trump and Peter Navarro – the ‘most dangerous men in global economics’ – suffer from ‘trade deficit disorder’- Mark Perry of AEI -Peter Navarro, director of Trump’s White House National Trade Council, has been in the news recently for his speech on Monday to the National Association of Business Economists and his op-ed in Monday’s Wall Street JournalWhy the White House Worries About Trade Deficits.” In his speech and op-ed, Navarro laid out Team Trump’s trade agenda that involves expanding US exports, reducing imports, and thereby reducing America’s merchandise trade deficit and supposedly therefore increasing our nation’s economic growth. Unfortunately, that’s a pure mercantilist trade agenda, which is an approach to trade that has been discredited now for several hundred years. Navarro’s op-ed was a real bouillabaisse of economic errors, misunderstandings and false presumptions, and his “river of rubbish” (according to Don Boudreaux) invoked a swift round of responses and rebuttals, some of which are featured below. The general consensus of the responses summarized below is that both Navarro and Trump suffer from a massive “understanding deficit” about  international trade issues (or “trade deficit disorder” as Stephen Roach describes it below), and deserve a failing grade for International Trade 101. Here’s a collection of responses to the “two most dangerous men in global economics” to paraphrase Linette Lopez’s description of Navarro.

 The Trump Presidency: An Embarrassment for Those Who Believe in the Market - After his election, it was difficult to predict what President Trump would do. In the election campaign he said everything and the opposite of everything: from a 45 percent tariff on Chinese imports to the reintroduction of the separation of commercial and investment banks, from an aggressive use of antitrust authority to the total abolishment of Dodd-Frank, the financial regulation that was enacted after the crisis. After two months, it is clear that the Trump industrial policy will be pro-business, not pro-market. It may seem to be a nuance, but there is a fundamental difference. A pro-business policy favors existing companies at the expense of future generations. A pro-market policy favors conditions that allow all businesses to thrive without any favoritism. A pro-business policy defends domestic enterprises with favorable rates and treatment. A pro-market policy opens the domestic market to international competition because doing so would not only benefit consumers, but would also benefit the companies themselves in the long term, which will have to learn to be competitive on the market, rather than prosper thanks to protection and state aid. A pro-business policy turns a blind eye (often two) when companies pollute, evade, and defraud consumers. A pro-market policy seeks to reduce the tax and regulatory burden, but ensures that laws are applied equally to all. Paradoxically, a pro-business policy ends up damaging not only the economy, but also, in the long-run, those companies that it had originally benefited. This matters little to its supporters, because when the chickens come home to roost they will have already grossed billions. Angelo Mozilo, founder of Countrywide, the bank responsible for a large chunk of the toxic mortgages that led to the 2008 crisis, lives happily on the $600 million he accumulated, despite the enormous damage of the financial crisis that he helped to create.

Trumponomics - Trump’s America First economic strategy looks a lot like the import substitution economic development strategy that was so popular several decades ago—notably in Latin America and South Asia..  But it only had limited success, especially compared to the export led growth strategy followed in East Asia.  Import substitution tended to produce fragmented, inefficient and low productivity industries protected from foreign competition by high tariffs and other trade barriers Take autos, for example.  It does not take a lot more labor to build a $30,000 or $60,000 car than a $15,000 car.  But no one can profitably manufacture a $15,000 car using expensive American labor.  That is why most auto imports are economy or luxury cars.  But this is exactly what Trump is asking Detroit to do.  SEER suspects that the auto CEOs told Trump what he wanted to hear and went back home and did nothing. If for no other reason, the auto industry is operating at very high capacity utilization and does not have the idle capacity to dedicate to small car and truck production. If questioned, they can say it is more difficult than they thought and they are still working on it. That is probably preferable to  actually building some white elephant. Most manufactured imports are not profitable to make in the US at current prices. The Border Adjustment Tax ( BAT) appears to be dead, but who knows.  SEER does not accept the idea being pushed that the dollar will automatically rise to offset the tariffs. It is an interesting theory, but SEER has not been able to find a single historic example of it ever actually happening.  The trade deficit is driven by the domestic savings-investment gap – including the federal deficit as negative savings.  BAT will be a major source of federal revenues and will dampen the savings- investment gap as well as the trade balance.  The impact of BAT on the dollar appears indeterminate as far as SEER can tell. But the bottom line is that the Republicans have long worked to shift taxes from income to consumption and BAT is just another example of that.

White House civil war breaks out over trade - FT - A civil war has broken out within the White House over trade, leading to what one official called “a fiery meeting” in the Oval Office pitting economic nationalists close to Donald Trump against pro-trade moderates from Wall Street.  According to more than half a dozen people inside the White House or dealing with it, the bitter fight has set a hardline group including senior adviser Steve Bannon and Trump trade adviser Peter Navarro against a faction led by Gary Cohn, the former Goldman Sachs executive who leads Mr Trump’s National Economic Council.   At the centre of the debate is Mr Navarro, a firebrand economist who has angered Berlin and other European allies by accusing Germany of exploiting a “grossly undervalued” euro and calling for bilateral discussions with Angela Merkel’s government over ways to reduce the US trade deficit with Europe’s most powerful economy.   The officials and people dealing with the White House said Mr Navarro appeared to be losing influence in recent weeks. But during the recent Oval Office fight, Mr Trump appeared to side with the economic nationalists, one official said.  The battle over trade is emblematic of a broader fight on economic policy within the Trump administration. It comes ahead of a visit to Washington next week by Ms Merkel, the German chancellor, and amid preparations for a meeting of G20 finance ministers in Germany next week at which allies’ concerns over protectionism are likely to be high on the agenda.   In a statement, a spokeswoman said: “Gary Cohn and Peter Navarro are both valued members of the president’s economic team. They are working together to enact the president’s economic agenda, protect American workers and grow American businesses.”  According to people familiar with White House discussions, Mr Cohn and others have seized on Mr Navarro’s public comments — and widespread criticism by economists of his stand on trade deficits and other matters — to try and sideline him.  That has led to discussions over moving Mr Navarro and the new National Trade Council he leads out of the White House and to the Commerce Department, headed by another Wall Street veteran, Wilbur Ross.  Mr Cohn has also been featuring more prominently in discussions over the renegotiation of the North American Free Trade Agreement with Canada and Mexico, one of Mr Trump’s top trade priorities.  After a meeting with Mr Cohn and other White House officials on Thursday, Mexico’s foreign minister, Luis Videgaray, said the goal was to wrap up talks quickly and by the end of this year. That contradicted Mr Ross, who has called for deeper and potentially longer talks that could drag well into next year.

Trump's Plan to Bring Back Manufacturing Isn't Crazy - The head of President Donald Trump's National Trade Council, Peter Navarro, has been making waves recently, with an op-ed in the Wall Street Journal and a speech to the National Association of Business Economists. The bad news is that Navarro still uses some dodgy economics when arguing for lower trade deficits. As I explained last December, lowering trade deficits doesn't necessarily give gross domestic product a boost. Navarro should stop using this talking point. That said, Navarro's vow to "reclaim all of the supply chain and manufacturing capability" that the U.S. has lost in recent decades isn't necessarily a bad thing. There are good reasons to want to revitalize U.S. manufacturing and lower the trade deficit -- as long as it's done in the right way, and as long as expectations are appropriately modest. What a manufacturing revival definitely wouldn't do is bring back good old-line manufacturing jobs. The U.S. is a rich country, meaning that its comparative advantage in manufacturing lies in capital-intensive, high-value-added goods -- semiconductors, industrial machinery, aircraft and pharmaceuticals. Those are the kinds of things that are mostly made by machine tools and robots, not by human beings working on an assembly line.  So even if the U.S. manages to bring manufacturing back, it wouldn't recreate the widespread industrial employment of the 1950s and 1960s. But there are plenty of other reasons to want to bring supply chains back to the U.S. High-value-added manufacturing -- robot factories pumping out goods -- creates jobs for Americans in other ways. As economist Enrico Moretti explains in his book "The New Geography of Jobs," high-tech manufacturing creates higher-paying service-sector jobs in a local area. The dollars that come into a town with a robot factory get spent on doctors and waiters and personal trainers, and the money circulates throughout the community, leaving everyone better off.

A Key Part of the GOP’s Plan to Overhaul the Tax Code Is in Deep Trouble - The president and Republican leaders in Congress have described tax reform as a top priority—a once-in-a-generation chance to overhaul the tax code in a way that lowers rates for companies and individuals, encourages businesses to make things at home instead of abroad, and ends incentives for companies to book profits overseas. All without raising the budget deficit. Republicans in Congress, led by House Speaker Paul Ryan, have come up with what they believe is a key part to the solution: a border adjusted tax, or BAT. Their plan proposes scrapping the 35 percent corporate rate, one of the highest in the world, and replacing it with a 20 percent rate that applies to profits from domestic sales and to imported goods and materials. Money earned from exports would be exempted from a company’s taxable income—effectively letting U.S. sales abroad go tax free. By taxing imports the plan would raise about $1.1 trillion in federal revenue over a decade—enough to offset the revenue losses from lower tax rates. Sounds great, right? Except there’s a reason the tax code hasn’t been fundamentally changed since the Reagan administration. Entire industries and business models have been built around tiny nuances of the rules, so any change creates big winners and losers. And sure enough, political and corporate forces have mobilized to take sides in what has become the biggest tax fight in almost four decades. Companies that rely heavily on exports, such as Boeing Co. and Oracle Corp., love the plan—for obvious reasons. Beyond profits, they also say a BAT would make American manufacturers more competitive by putting them on equal footing with foreign competitors around the world. Importers hate the BAT. Big retailers such as Walmart Stores Inc. and Best Buy Co. contend that border adjustments will dent profit margins and force them to raise prices on everything from avocados and furniture to Nike shoes and French cheese. In a Feb. 28 letter to congressional leaders, the Americans for Affordable Products coalition said the tax would raise consumer costs “by as much as $1,700” in the first year.

“GOP Economist Concerned Data Quality May Be Hurt Under Trump” -- Menzie Chinn -- That’s the title of an article in Bloomberg yesterday. “I remain concerned, particularly in an environment where you’re talking about cutting the budget, that a victim in that exercise could be the production of good data,” Glenn Hubbard, who served as chairman of President George W. Bush’s Council of Economic Advisers from 2001 to 2003, said Monday in Washington. I think funding is only part — albeit very important part — of the story. The issue begins with the person at the top of the Executive Branch, and his feelings about “data”.   From a transcript in Time, last August: If you start adding it up, our real unemployment rate is 42%. Now consider this graph of the official unemployment series, the “Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons” rate of unemployment, aka U-6, and Trump’s “estimate” of the true unemployment rate. Since the quote is from August, I assume Mr. Trump’s estimate pertains to July, 2016. The gap between U-6 and Mr. Trump’s estimate is 32.3 percentage points. If you were hoping that the economic policy making team had a less-detached-from-reality view of the world, you would not gain any succor from hearing Secretary of Treasury Mnuchin’s views“The unemployment rate is not real,” Mnuchin told lawmakers. “I’ve traveled for the last year. I’ve seen this. And the president-elect understands that very clearly.” Add to this the proposal to report alternative trade statistics, and anyone who wants the government to collect accurate data can become really worried.

Americans Aren’t Filing Their Taxes This Year -  Are millions of Americans just forgetting to file their taxes this year? More than halfway through the 2017 filing season, the U.S. Internal Revenue Service reported receiving 5.7 million fewer individual returns than at a comparable point last year. That’s an 8.5 percent drop. Tax professionals often discuss tax seasons the same way live performers talk about audiences. Each one is different, they say, with its own mood, rhythm, and political undercurrents. The vibe for 2017? Slow and sluggish. There are several possible explanations for why taxpayers aren’t filing. More and more people who used to file in January and February are waiting until the last minute. Last year, IRS data on April 15—the traditional tax deadline—showed individual filings running 5.8 percent behind the previous year. But the deadline was April 18 in 2016, which gave taxpayers an additional three days to file. In the week following April 15, a whopping 12 million tax returns came in, and filings ended up 1.7 percent higher than in the previous year. The political rhetoric of President Donald Trump may be scaring some taxpayers. With the Republican promising to crack down on illegal immigration, undocumented immigrants may be afraid to create a paper trail with the government by claiming tax refunds. John Hewitt, chairman and chief executive of Liberty Tax, raised the possibility in a call with analysts March 8. Undocumented immigrants often use individual taxpayer identification numbers (ITINs) rather than Social Security numbers to file. “Those ITIN filers are filing at a reduced level this year,” Hewitt said. They’re “probably fearful of the Trump initiatives.”It’s also possible that the overall political atmosphere could be affecting filing. The Trump administration is enforcing the health insurance mandate differently this tax season, while Congress moves quickly to gut the Affordable Care Act, and Trump has promised massive tax cuts. Although no tax code changes would affect what you currently owe, Julie Miller, a spokeswoman for TurboTax owner Intuit Inc., speculated that “there could just be confusion, or [people are] waiting for the dust to settle.”

The amazing plunge in IRS audits of rich people and large companies - Catherine Rampell -- Round after round of budget cuts have forced the Internal Revenue Service to dramatically scale back its efforts to catch tax cheats. And as I mentioned in my column today, some of the biggest beneficiaries of this decline in enforcement are wealthier Americans and larger corporations (that is, the taxpayers with the most resources available to engage in aggressive tax planning).That’s primarily because these are the groups most likely to get audited in the first place, as you’ll see in the charts below.But first, take a look at the precipitous decline in key enforcement personnel. These figures come from data the IRS recently sent me.This appears to be what Treasury Secretary Steven Mnuchin was referring to during his confirmation hearings, when he said he was both “surprised” and “concerned” to learn about a recent 30 percent decline in the IRS head count. Now take a look at what’s happened to audit rates for companies of varying sizes: Audit rates for large firms have about halved, from 17.8 percent in fiscal 2012 to 9.5 percent last year. Audit rates for individual income tax returns have also fallen. In fiscal 2016, 0.7 percent of 147 million such returns were audited, the lowest rate since 2003. Again, those with the deepest pockets saw the sharpest declines: In fiscal years 2011 and 2012, the audit rate for those earning more than $1 million was greater than 12 percent; last fiscal year, it was below 6 percent. President Trump reportedly wants to cut the IRS’s budget further, which will result in even fewer resources available to make sure taxpayers pay what they legally owe.

Robots are wealth creators and taxing them is illogical -- Lawrence Summers - I usually agree with Bill Gates on matters of public policy and admire his emphasis on the combined power of markets and technology. But I think he went seriously astray in a recent interview when he proposed, without apparent irony, a tax on robots to cushion worker dislocation and limit inequality. The Microsoft co-founder is right about the gravity of the problem and need for action, but he is profoundly misguided in his proposed solution — and in ways that point up problems with the current public debate.First, I cannot see any logic to singling out robots as job destroyers. What about kiosks that dispense aeroplane boarding passes? Word processing programmes that accelerate the production of documents? Mobile banking technologies? Autonomous vehicles? Vaccines that, by preventing disease, destroy jobs in medicine? There are many kinds of innovation that allow the production of more or better output with less labour input. Why pick on robots? Does Mr Gates think anyone, let alone the US Congress, the Trump administration or a commission comprised of his fellow technocrats, can distinguish labour-saving activities from labour-enhancing ones?  Surely even if experts could draw such distinctions, the ability of the US Internal Revenue Service to administer them is in doubt.Second, much innovative activity, even of a robot-like variety, involves producing better goods and services rather than simply extracting more output from the same input.

Caterpillar Is Accused in Report to Federal Investigators of Tax Fraud -- For years, federal investigators have been scrutinizing Caterpillar’s overseas tax affairs with no resolution to the examinations of the complex maneuvers involving billions of dollars and one of the company’s Swiss subsidiaries. Now, a report commissioned by the government and reviewed by The New York Times accuses the heavy-equipment maker of carrying out tax and accounting fraud. It is extremely rare to accuse a big multinational company of tax fraud, which could result in high penalties. “Caterpillar did not comply with either U.S. tax law or U.S. financial reporting rules,” wrote Leslie A. Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report. “I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price. These actions were fraudulent rather than negligent.” No charges have been filed, and it is not clear whether investigators agree with the findings or intend to act on them. The report, which has not been made public or made available to Caterpillar, outlines a company strategy for bringing home billions of dollars from offshore affiliates while avoiding federal income taxes on those earnings. Corrie Heck Scott, a Caterpillar spokeswoman, pointed out that the company had not been provided with a copy of the report and declined to comment further. The company, which makes heavy construction and mining equipment, has defended its tax strategies in previous years by calling the arrangements prudent and lawful among large United States companies.

 Is Wall Street Responsible for Our Economic Problems?  - Jeffrey Sachs, an economist at Columbia University and the author of “The End of Poverty,”  served as an adviser to Bernie Sanders during his Presidential campaign, and has published a new book, “Building the New American Economy,” in which he presents the policy ideas that likely would have animated a Sanders Presidency—ideas that feel almost inconceivable in the current political climate. At the core of Sachs’s argument is the idea that the United States has been locked in a self-destructive tax-cutting mindset since January 20, 1981, the day Ronald Reagan was inaugurated as the nation’s fortieth President. From that point forward, he argues, the country stopped funnelling sufficient resources into areas of society that are now in decline: the construction and maintenance of highways and airports; an education system that adequately serves people from all economic backgrounds; public health, technology, and communal spaces. Against a backdrop of the dramatic shifts in the global economy, the predictable result has been the gradual weakening of the middle class, the same group of people who finally rose up and reacted in anger and frustration, contributing to Donald Trump’s election to the Presidency. “Long-term economic improvement occurs when societies invest adequately in their future,” Sachs writes. “The harsh fact is that the United States has stopped investing adequately in the future; slow U.S. economic growth is the predictable and regrettable result.” Even if the economy were growing robustly, Sachs points out, it wouldn’t guarantee that the wealth being generated is spread around in ways that encourage long-term prosperity. Over the last few decades, economic growth has disproportionately accrued to the wealthy, “who least need it,” he says, leaving far too many people struggling. Median household incomes in the United States, when adjusted for inflation, have barely changed since 2000; most Americans still haven’t recovered whatever economic footing they had prior to the financial crisis.

Chao says U.S. drivers may face more tolls to raise infrastructure funds - Transportation Secretary Elaine Chao this past week raised the prospect that needed infrastructure improvements may be funded to some extent by imposing tolls on more of the nation’s roads and bridges. It was unclear whether she intends to expand tolling on the U.S. interstate system. The concept of granting massive tax credits to lure private infrastructure investment was the centerpiece of President Trump’s campaign promise to raise $1 trillion for roads and bridges. “To launch our national rebuilding, I will be asking Congress to approve legislation that produces a $1 trillion investment in infrastructure of the United States,” Trump said in Tuesday’s address to a join session of Congress. He said the money would be raised “through both public and private capital, creating millions of new jobs.” Beyond repeated calls to draw private investment, however, the White House had not reiterated its campaign promise to raise at least of portion of the money through new tolls. Even if investors attracted by the 82 percent tax credit Trump said he hopes to offer, they would expect an additional return on their money, and when it comes to roads and bridges, that cash would come from imposing new tolls. “The federal government cannot assume the cost for all of it,” Chao said Tuesday night in a Fox News interview after Trump’s address, reiterating a point she made during her Senate confirmation hearing. She told Fox host Sean Hannity that “new and innovative ways” were necessary to find funding.

 State highway officials still awaiting ‘meat on bones’ on alleged $1 trillion infrastructure plan - Logistics Management: As the late, great senator Everitt Dirksen would say, “A trillion here, a trillion there, pretty soon you’re talking real money.” So far, talk is all that’s being produced from President Donald J. Trump’s promise of a grand $1 trillion investment program for, as he put it in his recent speech before both houses of Congress, “new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.” But in a recent gathering of top state highway officials in Washington there was considerable skepticism that Trump’s plan, like so much of his fledgling presidency, is a lot of talk and very little doing. "We appreciate President Trump's continued emphasis on producing an infrastructure investment package,” Bud Wright, executive director of the American Association of State Highway and Transportation Officials (AASHTO), the group that represents state departments of transportation, told the AASHTO Journal. “Our state members hope it will generate sufficient investments to really improve mobility throughout the nation." But Wright cautioned that state DOTs and other transportation stakeholders "are looking for the details" of what the president will propose. "There's not a lot of meat on the bones yet," he said.“We spent $6 trillion in the Middle East, and we have potholes all over our highways and our roads,” Trump said recently. “I have a friend who is in the trucking business. He said, 'My trucks are destroyed going from New York to Los Angeles.' ”

Trump wants to fast-track $1 trillion infrastructure plan -  President Donald Trump pushed his White House team on Wednesday to craft a plan for $1 trillion in infrastructure spending that would pressure states to streamline local permitting, favor renovation of existing roads and highways over new construction and prioritize projects that can quickly begin construction. “We’re not going to give the money to states unless they can prove that they can be ready, willing and able to start the project,” Trump said at a private meeting with aides and executives that The Wall Street Journal was invited to observe. “We don’t want to give them money if they’re all tied up for seven years with state bureaucracy.” Trump said he would was inclined to give states 90 days to start projects, and asked Scott Pruitt, the new head of the Environmental Protection Agency, to provide a recommendation. He expressed interest in building new high-speed railroads, inquired about the possibility of auctioning the broadcast spectrum to wireless carriers, and asked for more details about the Hyperloop, a project envisioned by Tesla founder Elon Musk that would rapidly transport passengers in pods through low-pressure tubes. “America has always been a nation of great promise, because we dream big,” Trump said. “We’re going to really dream big now.”

US Infrastructure Report Card: America gets a D Plus, and a Big Bill to Fix it -- One of President Donald Trump’s first promises after getting elected was to spend $1 trillion on infrastructure—bridges, roads, tunnels, pipes, dams. And whether you’ve had to evacuate a town in the shadow of a crumbling dam, buy filters for tainted municipal water, or even just bounced over potholes on a highway, you’ve experienced the problems the president alluded to.Well, it really is as bad as you think. The American Society of Civil Engineers has just released its latest infrastructure report card, and grades the United States at D plus. That means the country’s public works are in substandard condition, with a risk of failure. The ASCE releases its reports every four years, and the mark hasn’t changed since the last time. “While our nation’s infrastructure problems are significant, they are solvable,” says ASCE President Norma Jean Mattei. But that’ll take money.So … $1 trillion, right? Great news! Except the ASCE report says it’ll take $4.59 trillion to bring things up to a B, or adequate grade, by 2025. That’s a shortfall of $2 trillion over current spending plans. Again: $1 trillion is nowhere near enough.Yesterday President Trump had lunch with infrastructure and transport business leaders to start discussing his plans for nationwide rebuilding. As The Wall Street Journal reports, he wants to focus on renovating old roads and building high-speed rail, and he talked about both public and private financing. He even asked Elon Musk for more details about his hyperloop idea. All of which would be a good start but won’t fix many of the issues the new report highlights. Some areas have shown modest improvement since 2013. The 30,000 miles of levees that protect communities and infrastructure along rivers and coasts went from a D minus to a D. Rail went from C plus to B, mainly because freight companies own the majority of the nation’s railroads, and they’ve spent on repairs and upgrades. Passenger rail is still old and underfunded, the report notes—likely no surprise to anyone who uses it.

The US will need to invest more than $4.5 trillion by 2025 to fix its failing infrastructure - The American Society of Civil Engineers (ASCE) said the US will need to invest $4.59 trillion by 2025 to improve the nation's infrastructure in its Infrastructure Report Card, an assessment of the nation's infrastructure that comes out every 4 years. The ASCE gave the US' infrastructure an overall grade of D+, the same score it received in 2013.  The ASCE said the government and private sector will need to increase its investment in the nation's infrastructure from 2.5% to 3.5% of GDP by 2025 to raise its overall infrastructure score.  If the government continues on the same trajectory it is currently, it will result in $3.9 trillion in losses to the GDP and 2.5 million jobs lost, the report said.  The ASCE evaluates 16 different infrastructure categories to get its final grade. This year's scores were as follows:

  • Aviation: D
  • Bridges: C+
  • Dams: D
  • Drinking Water: D
  • Energy: D+
  • Hazardous Waste: D+
  • Inland Waterways: D
  • Levees: D
  • Parks and Recreation: D+
  • Ports: C+
  • Rail: B
  • Roads: D

FBI undercover stings foil terrorist plots – but how many are agency-created? -- Announcements of foiled terrorist plots make for lurid reading. Schemes to carry out a Presidents Day jihadist attack on a train station in Kansas City. Bomb a Sept. 11 memorial event. Blow up a 1,000-pound bomb at Fort Riley. Detonate a weapon of mass destruction at a Wichita airport — the failed plans all show imagination. But how much of it was real? Often not much, according to a review of several recent terrorism cases investigated by the FBI in Kansas and Missouri. The most sensational plots invoking the name of the Islamic State or al-Qaida here were largely the invention of FBI agents carrying out elaborate sting operations on individuals identified through social media as being potentially dangerous. In f act, in terrorism investigations in Wichita, at Fort Riley and last week in Kansas City, the alleged terrorists reportedly were unknowingly following the directions of undercover FBI agents who supplied fake bombs and came up with key elements of the plans.

Trump To Sign New Executive Order On Travel Bans Today: Will Exclude Iraq, Green Card Holders - Moments ago, Kellyanne Conway confirmed that President Donald Trump will sign a new executive order on immigration Monday, which as Reuters reported earlier, will remove Iraq from the list of countries targeted in the travel ban. The revised order comes over a month after his controversial first attempt was blocked in the courts.  According to a Reuters source, the new executive order would keep a 90-day ban on travel to the United States by citizens of six Muslim-majority nations - Iran, Libya, Syria, Somalia, Sudan and Yemen. Iraq has been removed from the list of countries in the original Jan 27 order because the Iraqi government had imposed new vetting procedures, such as heightened visa screening and data sharing, and because of its work with the United States in countering Islamic State militants. In other words, Iraq complained the most vocally and Trump's advisors conceded that there is more to be lost than gained by keeping Iraq off the list.In another important change, the new order is expected to apply only to future visa applicants from the targeted countries, with current visa holders and legal permanent residents, or green-card holders, unaffected. That is a significant rollback from the original, which impacted nearly 60,000 existing visa holders from seven nations, according to the State Department. The original order was unclear about the treatment of green-card holders. More than two dozen lawsuits were filed in U.S. courts against the original travel ban, and the state of Washington succeeded in having it suspended by the 9th Circuit court of Appeals by arguing that it violated constitutional protections against religious discrimination. Trump publicly criticized judges who ruled against him and vowed to fight the case in the Supreme Court, but then decided to draw up a new order with changes aimed at making it easier to defend in the courts.

 Immigration Courts Paralyzed By Case Volume As 300 Judges Face 530,000 Pending Cases -- As the President gets ready to sign a new immigration executive order today (see our note here:  "Trump To Sign New Executive Order On Travel Bans Today: Will Exclude Iraq, Green Card Holders"), a group of overly burdened federal immigration judges are wondering whether they'll get additional support to tackle their already massive caseload which is sure to only balloon further under Trump's new rules. As the Associated Press points out, there are 58 immigration courts in 27 states around the country with a total of 301 judges.  The problem, of course, is that those 301 judges already face a mountain of 534,000 pending immigration cases which is likely to balloon even higher under Trump's administration. Of 374 authorized immigration judge positions, 301 are filled. Fifty more candidates are in various stages of the hiring process, which typically takes about a year, said Kathryn Mattingly, a spokeswoman for the Executive Office for Immigration Review. In all, more than 534,000 cases were pending before immigration courts nationwide in February, according to a recent memo from Kelly. The massive backlog means that processing errors are a common occurrence and ultimately just result in illegal immigrants getting a free pass to reside in the country even longer.The backlog and insufficient resources are problems stretching back at least a decade, said San Francisco Immigration Judge Dana Marks, speaking as the president of the National Association of Immigration Judges. “It would be a shame if the mistakes of the past continue to be repeated," Marks said, citing previous attempts to ramp up enforcement without providing adequate resources to the courts.When asked if adding more cases to the backlog could threaten the due-process rights of noncitizens, Marks said it is the job of immigration judges to make sure that doesn't happen."But the pressures on the system certainly do allow more opportunities for errors to be made," she said. "You try to do your best to hear things fairly but also quickly, and there is always a tension between how you strike that balance."

Trump releases new travel ban executive order - Politico - President Donald Trump on Monday retreated behind closed doors as he re-issued his travel ban executive order with significant concessions adopted after his first directive was halted by a firestorm of controversy and a fusillade of legal actions.The new order exempts existing visa holders from travel limits and removes Iraq from the list of seven Muslim-majority countries whose citizens Trump barred from entering the U.S. in a hastily signed and chaotically implemented order issued just a week after he took office. Reporters and press photographers were excluded as Trump signed the new directive Monday, although the White House released a photo on social media. Trump dispatched three members of his Cabinet officials to tout the new ban at a brief appearance before journalists a few blocks away, although no questions were taken there either. "Today's executive order...will make America more secure and address long overdue concerns about the security of our immigration system," Secretary of Homeland Security John Kelly added. "We must undertake a rigorous review and are undertaking a rigorous review of our immigration vetting programs to increase our confidence in the decisions we make relative to visitors and immigrants that travel to the United States. We cannot risk the prospect of malevolent actors using our immigration system to take American lives." Many of the changes are designed to help the new order avoid the fate of Trump’s first directive, which was effectively blocked by a series of court rulings. The new order will put a 90-day hold on issuance of visas to citizens of six countries: Iran, Libya, Somalia, Sudan, Syria and Yemen. It also stops refugee admissions worldwide for 120 days. Attorney General Jeff Sessions said Justice Department lawyers will vigorously defend the new order, which he insisted is well within Trump's authority.

Trump makes key changes to travel ban | TheHill: President Trump on Monday signed a new executive order limiting travel to the United States, making significant revisions to the policy that appear aimed at defusing controversy and defeating challenges in court. Democrats were quick to denounce the order, but it did not generate the same level of backlash as the travel ban in January, which was met with late-night protests at airports around the country. The order still temporarily bans most travel to the United States from six Muslim-majority countries and halts refugee resettlement in the United States. But in other ways, the order represents a major departure from what came before.The policy will not take effect until March 16, rather than immediately; it spells out clearly that green-card holders are not affected; and it provides a lengthy list of travelers who could be provided a waiver to come to the U.S., including students and children seeking medical treatment. The narrowed policy drew praise from Republicans, including Sen. Lindsey Graham (S.C.), a frequent Trump critic. He said the new order would both “pass legal muster” and “help achieve President Trump’s goal of making us safer.” The order will almost certainly garner court challenges from opponents who say it is discriminatory toward Muslims, but former officials and legal experts say that the administration has plugged many of the most egregious legal holes. “It’s pretty narrowly applied to new visa applicants, which is probably the place where the president has the most authority.” Among other changes, the new order does not single out Syrian refugees for indefinite suspension, instead barring all refugee resettlement for 120 days.

Full text of new immigration ban executive order -- The full text of the Trump administration’s new travel ban executive order via the Washington Post

The U.S. Doesn’t Benefit from the Revised Ban - American Conservative -- Benjamin Wittes acknowledges that the Trump administration made a number of important concessions in its revised travel ban order, but still says this: To be sure, the new version of the executive order will have consequences—all of them bad. It will keep large numbers of people from six countries out of the United States for no good reason.  It will delay resettlement of large numbers of refugees and prevent altogether resettlement in the United States of a smaller number of refugees. As with the earlier version of the executive order, the overwhelming majority of people affected by this one will not be terrorists or even people against whom there is whiff of suspicion. The overwhelming majority of those affected, rather, will be innocent victims of horrific violence and folks who just want to come to the United States for reasons of tourism or business. It’s terrible policy that will, I suspect, have implications almost as negative for counterterrorism effectiveness as it will for this country’s moral standing and self image. All of that seems right to me, and I would just add that it isn’t going to make the U.S. any safer because the people that are being barred from entry aren’t a threat to us. They are being treated as potential threats because their countries are suffering from civil war or because their governments are deemed state sponsors of terrorism, which means that they are being subjected to collective punishment because of events or policies beyond their control. The U.S. doesn’t “have to” let any of these people come here, but there is no compelling reason why nationals from the targeted countries should be singled out as especially dangerous. Because the ban is security theater, it may give the public the impression that the government has done something to reduce the (already small) threat of terrorism, but it will achieve nothing in reality while imposing unnecessary burdens on would-be visitors and refugees. Even if it holds up under legal scrutiny, the order is lousy policy and ought to be rescinded.

Hawaii To File Lawsuit Over Trump's New Travel Ban - If Trump was harboring any hopes that his "new and revised" travel ban would sneak through unopposed, they were just dashed by the state in which Trump's ex-presidential nemesis was born. Just as the federal government said Washington state and Minnesota had consented to dismiss their cases before the U.S. Court of Appeals in San Francisco, Hawaii announced it plans to challenge Trump's new travel ban, according to legal documents as well as tweets from one of the l awyers involved. "Here we go," tweeted Hogan Lovells partner Neal Katyal Tuesday night, and one of Hawaii's lead attorney. "Proud to stand w/State of Hawaii challenging Pres. Trump's 'new' Executive Order issued yesterday." "To be sure, the new executive order covers fewer people than the old one," Katyal said in an interview with CNN. However, he added that the new order though still "suffers from the same constitutional and statutory defects."The state will file its complaint and temporary restraining order in federal court by Wednesday, according to a document published on the website of the Hogan Lovells law firm, based in Washington.After Trump's initial immigration order faced quick backlash, with protests breaking out across the country and many lawmakers speaking out against it, the president on Monday issued a new revised order on immigration which revised the original o ne by exempting green card holders, removing Iraq from the list of banned countries, and being phased in over a period of time. It still bans travelers from six mostly-Muslim countries from entering the United States for 90 days and bans all refugees from entering the country for 120 days.

Washington, New York And Oregon Sue To Block Trump's New Travel Plan - Just a few days after Trump signed a new and revised travel ban executive order, his old nemesis, Washington state announced it will file a restraining order against the revamped travel ban, a move which, in a replica of the first immigration order fiasco, foreshadows a new legal showdown between the administration and a wave of challenges to the controversial executive order. Washington is not alone: Oregon and New York will join with other states are expected join the lawsuit in the upcoming days, Washington state Attorney General Bob Ferguson said Thursday during a press conference.Washington state's announcement comes just one day after Hawaii became the first state to sue Trump over the revised travel ban. A hearing on the suit is set for March 15, the day before Trump's revised travel ban is scheduled to go into effect.According to NBC, Washington state will ask that a temporary injunction issued last month by a federal judge on Trump's initial executive order apply to the newly revised travel ban. If again upheld, this would block federal employees nationwide from enforcing the travel ban. "It's my duty, my responsibility to act. We're not going to be bullied by threats and actions by the federal government," Ferguson said.  The original order, which Trump signed Jan. 27, barred entry for 90 days for nationals of Iraq, Syria, Sudan, Iran, Somalia, Libya, and Yemen. It also temporarily stopped refugees from entering the U.S. and indefinitely suspended all Syrian refugee entry. HIs revised order was issued on Monday, and  removed Iraq from the list of barred countries. It also lifted the indefinite ban on refugees from Syria, instead issuing a 120-day suspension of all refugee entry and limiting the total number of refugees allowed entry in 2017 to 50,000. At a press conference on Monday, Secretary of State Rex Tillerson defended the revised order. "To our allies and partners around the word, please understand this order is part of our ongoing efforts to eliminate vulnerabilities that radical Islamic terrorists can and will exploit for destructive ends," Tillerson said

Federal judge refuses to apply previous travel ban stay to Trump's new order | TheHill: - A U.S. federal court on on Friday refused to apply the emergency stay that halted President Trump's first travel ban to his revised executive order, Reuters reported. Seattle U.S. District Court Judge James Robart, who was appointed by former President George W. Bush in 2003, said lawyers from the states that opposed the measure needed to file more extensive court papers. A group of states, led by Washington and Minnesota, successfully challenged Trump's January executive order on immigration, and Robart issued a temporary restraining order to halt the policy nationwide as lawsuits proceed. Robart's decision was upheld by a federal appeals court.This week, the Trump administration put forth a revised executive order that will temporarily stop citizens from six Muslim-majority countries from entering the U.S. Robart ruled Friday against a request from several Democratic attorneys general to have the block on the original order carry over to the new version. The new ban, which some legal experts have said avoids some of the pitfalls that hampered the initial version, now temporarily blocks citizens of six Muslim-majority countries: Iran, Libya, Somalia, Sudan, Syria and Yemen. Iraqi citizens, covered by the initial ban, will be allowed to travel to the United States under the new order. It also halts the acceptance of refugees for four months, but does not indefinitely bar Syrian refugees as the previous order did. The new executive action is set to go into effect March 16. While the former halt to the travel ban was not upheld, the revised travel ban will surely still face legal challenges. Maryland became the latest state Friday to join in on the challenge agains the executive order.

US Immigration: Waiting for Chaos - Walter Pincus - Among the various issues that came newly into focus with Donald Trump’s speech to Congress on Tuesday, the question of immigration stood out. Hours before the speech, Trump seemed to shift away from his controversial hard-line approach, telling TV anchors at an off-the-record White House session that he could consider legislation to open the way for millions of undocumented immigrants to remain in the US. Then, in the speech itself, Trump made a different emphasis, saying that, “I believe that real and positive immigration reform is possible, as long as we focus on the following goals: To improve jobs and wages for Americans; to strengthen our nation’s security; and to restore respect for our laws.” In short, he was talking about reforming who comes into the country, not the way we deal with illegal immigrants who are already here. Meanwhile, a revision of his January 27 executive order on immigration, which has been challenged in court, is expected in the coming days. Who knows what he thinks today? One thing however is clear. Trump’s recent efforts to use blunt executive power to close our borders and prepare the way for deporting large numbers of undocumented immigrants are confronting far-reaching problems. Not only is there opposition from federal judges, the business sector, civil liberties groups, and others. There is also a major roadblock from another quarter: our already broken system of immigration laws and immigration courts.

Immigrant Doctors -  One percent of all the physicians in the United States come from the six countries targeted in Donald Trump’s new Executive Order. I found that a surprisingly high number. According to the Immigrant Doctors Project, those 7000 physicians provide 14 million doctors’ appointments each year and many of them are located in the poorer, whiter, and rural parts of the country. I don’t see this as a knockdown argument against the policy but it does illustrate a surprising cost and also how much the United States benefits from the immigration of the highly-skilled and educated.

Immigration under capitalism: Life and death along the US-Mexico border Part Four -- The migrant working class lives under constant fear of raids by Immigration and Customs Enforcement [ICE] officers, who sweep into communities and workplaces making mass arrests. One such sweep took place earlier this month in Austin, Texas. The World Socialist Web Site spoke to Cristina Parker, immigrations programs director of the non-profit organization Grassroots Leadership. “There are two ways in which ICE raids happened recently. Either they knock on peoples’ doors at home or they follow them from home or work in their cars, pulling them over under the guise of a traffic stop.” WSWS reporters, in fact, witnessed local police joined by border patrol agents pulling over a car in what otherwise appeared to be a routine traffic stop. Parker said that ICE officers are usually not in uniform, “so all over they will try to trick or otherwise manipulate people into opening their doors.” She continued: “They will lie about why they’re there. A famous example came from Atlanta last year, where ICE agents in collaboration with police would hold up a photo of a black man, say there was a dangerous criminal in the house, and arrest all those without papers inside. Families only find out after a person has been detained, so people often come home from school or work to find that their parent or spouse isn’t there. “The apparatus that Trump is now building his deportation machine on was built originally by the Obama administration. One of the most egregious examples was family detention and is something that will mark Obama’s legacy. He opened these giant for-profit family detention centers where they exclusively hold women and children seeking asylum, and he didn’t close them before handing the keys over to Trump. So everything we’re seeing weaponized right now was built by Obama.”

 Unauthorized Immigrants Pay More in Taxes Than Top Earners – CBPP - Unauthorized immigrants pay a larger share of their income in state and local taxes than the nation’s top earners, and immigration reform would improve state and local finances across the country, a new report from the Institute on Taxation and Economic Policy (ITEP) finds. ITEP’s findings are particularly timely and important as a growing number of states are facing budget shortfalls, and the Trump Administration considers immigration-related policy changes that could affect state and local tax revenues.Unauthorized immigrants pay sales taxes when they buy goods and services, property taxes (mostly passed along through their rent), and income taxes when employers withhold them from their paychecks — even those who don’t file income tax returns, although between about half and three-quarters do. Among ITEP’s key findings:

  • Unauthorized immigrants paid about $11.7 billion in state and local taxes in 2014.
  • They pay about 8 percent of their income, on average, in state and local taxes, significantly higher than the 5.4 percent that the average taxpayer in the top 1 percent pays. (See chart.)
  • Comprehensive immigration reform would further boost the state and local taxes that these immigrants pay by allowing them to come out of the shadows and work legally. ITEP estimates that granting lawful permanent residence to all unauthorized immigrants who are now in the country would lift state and local tax collections by about $2.2 billion a year and raise the effective state and local tax rate that these unauthorized immigrants pay to about 8.6 percent from about 8 percent.

Trump administration sends judges to immigration detention centers: sources | Reuters: The Department of Justice is deploying 50 judges to immigration detention facilities across the United States, according to two sources and a letter seen by Reuters and sent to judges on Thursday. The department is also considering asking judges to sit from 6 a.m. to 10 p.m., split between two rotating shifts, to adjudicate more cases, the sources said. A notice about shift times was not included in the letter. The Justice Department did not respond to a request for comment. On Jan. 25 President Donald Trump issued an executive order aimed at speeding up deportations and holding migrants in detention until their cases can be heard. Trump campaigned on a pledge to get tougher on the estimated 11 million illegal immigrants, playing on fears of violent crime while promising to build a wall on the border with Mexico and to stop potential terrorists from entering the country. The order called for the end of a policy known as "catch and release," by which immigrants were released from detention and given a date to appear in court. Immigration courts have a backlog of over 550,000 cases, according to the Justice Department's data, so many court dates are set years into the future. Judges are employed by the Justice Department to oversee cases that determine if immigrants are given protections, such as asylum, or ordered deported. A handful of judges work from detention centers but most work from courts around the country. Two sources familiar with the Justice Department's plan said the department would ask more judges to volunteer for one or two month deployments at detention centers. If the department cannot find enough volunteers, the department would assign judges to detention centers, the sources said.

ICE detainees are asking to be put in solitary confinement for their own safety -- Last week it was reported that the Trump administration is eyeing a major expansion of detention facilities for many of the immigrants Trump hopes to deport. The move underscores an often-overlooked reality of Trump’s signature campaign promise: before immigrants are actually expelled from the country, they are generally detained — sometimes for years — as they are processed or as their cases are reviewed. Immigration and Customs Enforcement (ICE) contracts out many of its detention facilities to private prison corporations like CoreCivic — formerly known as Corrections Corporation of America (CCA) — and the GEO Group, which have seen significant increases in their stock prices since Donald Trump’s election.  Hundreds of logs obtained by The Verge through a Freedom of Information Act Request detailing the use of solitary confinement at three of these privately run ICE facilities provide a window into the conditions of desperation and violence that immigrants, including those diagnosed with mental illness, can face inside such detention centers. The logs show that life inside the facilities can be so dangerous and hostile that numerous detainees have voluntarily admitted themselves to solitary confinement just to seek refuge from the general population. In other cases documented in the logs, detainees were disciplined with isolation for perpetrating acts of violence, sexual assault, or disruption; yet others were placed in solitary for more minor infractions, such as charging detainees for haircuts or “horse-playing.” In dozens of instances at a Georgia facility, detainees were placed in solitary confinement for hunger striking; in one case, an detainee with a mental illness was placed in isolation at the request of ICE for reasons that facility officials writing the log readily admitted they did not understand.

A Border Adjustment Tax just means more new loopholes --That is the focus of my latest Bloomberg column, here is one bit from it: Under one somewhat-neglected feature of [one version of] the tax, companies could no longer deduct advertising, interest, rent and employee benefit costs from their bills for tax due. This is a recipe for major tax dodges and the further politicization of government-business relations. To think through these problems, note that under circulating versions of the tax reform a company still can deduct its asset acquisition and inventory costs. So, to cite one potential problem, if a company acquires a building it can deduct that expense, but not if it rents a similar building. The result is that the rental market would suffer badly. Some companies would put up their own structures, but others might engage in temporary “repurchase” agreements so they are owning their space (“asset acquisition”) rather than renting it. That’s just one example of the big loopholes the new tax code could create. There is no single canonical account of how a border adjustment tax would work, so maybe that loophole won’t apply to your preferred version. (Here is a 2016 outline, but expect further changes and details; this KPMG document is useful on options.) But the general point is this: By creating such a sharp distinction between deductible and nondeductible business expenses, the opportunities for tax arbitrage and tax-code lobbying are huge. The suspicion is that most business expenditures could, one way or another, be converted into forms that allow for full and immediate expensing. How about a version of the tax that allows for deductibility of newly constructed but not purchased buildings? Well, that would encourage overinvestment in new construction. You can also imagine building purchases accompanied by overbilled site modifications (with some of that money being returned in another associated transaction), so the refitted structure could count as new construction. As I say in the piece, please do note that many people have their particular favored versions of the tax, sometimes designed to avoid various specific problems that are raised.  But I don’t think any version of the tax will avoid these problems in general.  Full and immediate expensing is a potent lure, and it will attract a great of gamesmanship.

In First Trade War Shot, Mexico Cancels Sugar Export Permits To U.S. --While the Trump administration has in recent days withdrawn from calls for an all-out trade war with Mexico, and is seeking to re-establish calmer relations with the Mexican presidency after a sharp fallout over his plan to build a wall on the Mexican border and crack down on illegal immigrants arriving from Mexico, it appears that it is Mexico that has taken a pre-emptive step in the imminent trade dispute by canceling existing sugar export permits to the US in a dispute over the pace of shipments, Reuters reports citing a letter. The trade flare-up could temporarily disrupt supplies industry sources were cited as saying. Reuters adds that the letter was sent by Mexico's sugar chamber to mills on Monday, partly blaming the situation on unfilled positions at the U.S. Department of Commerce, which it said has led to a "legalistic" interpretation of rules with no U.S. counterparts in place in Washington for Mexican officials to negotiate with.The cancellations are the latest dispute of a years-long trade row between Mexico - the United States' top foreign supplier of sugar - and its neighbor at a time when cane refiners are struggling with prices and tight supplies, U.S. industry sources said. The development also comes as ties between the United States and Mexico have frayed under U.S. President Donald Trump, who took office in January and wants to recast the North American Free Trade agreement as he sees the trade deal skewed to favor Mexico.  Monday's letter made no mention of the political tensions between the twonations, instead saying that permits were "suspended" to comply with accords with the United States because the export limit for the six months up to March 31 was reached ahead of time, said Juan Diaz Mazadiego, director of foreign trade at Mexico's Economy Ministry. The move affects 54 permits from 23 mills, although the amount of sugar affected was not mentioned. Existing permits would be reissued in April, the letter said.

 Schumer’s plan to stop the wall - Chuck Schumer has concluded that denying President Trump his wall is perhaps the surest major defeat Democrats can hand the President in his first year. Keep reading 340 words Trump needs 60 Senate votes to fund construction of his "great wall" along the Southern border. Unlike healthcare or tax reform, Republicans can't use the budget process to ram the wall funding through Congress using only Republican votes. Schumer's thinking: There's nothing the Republicans would be willing to offer that could get Trump the eight Democratic Senators he needs to fund the wall. Mitch McConnell's only other option would be to invoke the nuclear option and bypass the filibuster. But Democratic appropriators are betting the Republican leader won't be willing to undermine such a fundamental Senate tradition just to pay for Trump's wall. The evolving plan, being discussed by Schumer's office and Senate appropriators: If Republicans put money for the wall into a bill, Democrats block it. It doesn't matter what else is in the bill — Schumer will make it about the wall. The way Democrats see it, if they can block the wall, they'd crush a central feature of Trump's political identity. And as the face of the strategy, Schumer would thrill the Democratic base (though less so the red-state Democratic senators up in 2018). What happens next: Team Trump knows it's not going to be easy to fund the wall. A source familiar with the administration's plans says the preferred strategy would be to attach the wall funding to the bill that funds the military. That way, Republicans could tell the public that Schumer and the Democrats are blocking money not only for border security but for our troops. They'll run relentless attack ads against Senate Democrats up for re-election in 2018 in states that Trump won.

Republicans unveil plan to repeal Obamacare - Republicans on Monday took a step closer towards delivering on Donald Trump’s pledge to scrap Obamacare, unveiling a plan to repeal his predecessor’s healthcare reforms that is set to trigger fierce debate in Congress.The draft legislation, which would roll back many of the core tenets of Barack Obama’s government-led healthcare legacy, was released by Republican lawmakers who have struggled to bridge internecine divisions as they craft a bill for the president.The legislation will provide a starting point for bartering among Republicans, most notably in the Senate, but it is far from certain to win enough party support to pass Congress and reach Mr Trump’s desk.The plan from House Republicans abolishes Mr Obama’s requirement for every American to buy health insurance or pay a penalty, replacing it with a new system of tax credits designed to encourage people to buy affordable insurance. Unlike subsidies offered under Obamacare, those tax credits would be determined by the individual consumer’s age instead of their income.Mr Trump and congressional Republicans have targeted the repeal and replacement of Obamacare as their first legislative priority, but their efforts have become bogged down in recent weeks, freezing progress on other fronts such as tax reform.The party is seeking to repeal Obamacare using a budget process that would enable them to proceed without any Democratic support, but it requires near total Republican unity.The House plan would also cut back the expansion of the Medicaid health programme for low-income Americans that was part of Mr Obama’s signature healthcare scheme, a proposal that is anathema to some Republican senators.Republicans did not provide estimates on how much their plan would cost or how many people would gain or lose insurance — both crucial political questions. On Monday four Republican senators — Rob Portman of Ohio; Shelley Moore Capito of West Virginia; Cory Gardner of Colorado*; and Lisa Murkowski of Alaska — sent a letter to Senate leader Mitch McConnell urging him to reject any bill that cut back Medicaid.

U.S. Republicans unveil plan to dismantle Obamacare, critics pounce | Reuters: Long-awaited legislation to dismantle Obamacare was unwrapped on Monday by U.S. Republicans, who called for ending health insurance mandates and rolling back extra healthcare funding for the poor in a package that drew immediate fire from Democrats. In a battle waged since the 2010 passage of the Affordable Care Act, Democratic President Barack Obama's signature domestic policy achievement, Republicans including President Donald Trump have long vowed to repeal and replace the law. But they failed for years to coalesce around an alternative. With a proposal now on the table, the fate of the plan is uncertain even with Republican majorities in both chambers. Also unclear is where Trump stands on many of the details. "Today marks an important step toward restoring healthcare choices and affordability back to the American people," the White House said in a statement, adding Trump looked forward to working with Congress on replacing Obamacare. Republicans condemn Obamacare as government overreach, and Trump has called it a "disaster." Critics complained about the penalty the law charged those who refused to buy insurance. The Republican proposal would repeal that penalty immediately. Congressional Democrats denounced the Republican plan, saying it would hurt Americans by requiring them to pay more for healthcare, to the benefit of insurers. Obamacare is popular in many states, even some controlled by Republicans. It has brought health insurance coverage to about 20 million previously uninsured Americans, although premium increases have angered some.About half those people gained coverage through an expansion of the Medicaid program for the poor. The Republican proposal would end the Medicaid expansion on Jan. 1, 2020, and cap Medicaid funding after that date.

House Republicans Release Plan To Repeal and Replace Obamacare: Key Highlights -- On Monday afternoon, House Republicans unveiled their long-awaited legislation as part of House Republicans effort to repeal and replace Obamacare through the reconciliation process. The measure would roll back the government's health care role and is expected to result in fewer people having insurance coverage. Upon releasing the legislation, House Energy and Commerce Committee Chairman Greg Walden said: “With today’s legislation, we return power back to the states - strengthening Medicaid and prioritizing our nation’s most vulnerable. We provide the American people with what they’ve asked for: greater choice, lower cost, and flexibility to choose the plan that best suits their needs. Today is just the first step in helping families across this country obtain truly affordable health care, and we’re eager to get this rescue mission started.” The plan would dismantle the key aspects of ObamaCare, including subsidies to help people buy coverage, the law's fines on people who don't purchase health insurance, the expansion of Medicaid, and drop the plan to tax employer-sponsored plans. The bills can be found here andhere. In place of the existing Affordable Care Act legislation, republicans will implement a system centered on a tax credit to help people buy insurance.  That tax credit would range from $2,000 to $4,000 annually  increasing with age. That system would provide less financial assistance for low-income and older people than ObamaCare, but could give more assistance to younger people and those with somewhat higher incomes. Democrats have warned that between the phasing out of ObamaCare’s Medicaid expansion and the smaller tax credit for low income people, coverage would be put at risk for many of the 20 million people who gained it from ObamaCare. As The Hill adds, Republicans acknowledge that their plan will cover fewer people, but note that unlike ObamaCare, they are not forcing people to buy coverage through a mandate. They say their system is less intrusive and provides people a tax credit without mandates or a range of tax increases.

 What Are Republicans Hiding In Obamacare Replacement Plan? -- Remember when Nancy Pelosi famously declared, “We have to pass the bill so that you can find out what’s in it?” She was, of course, referring to the Affordable Care Act, AKA Obamacare, and was justly skewered by “conservatives” at the time for the outlandish statement. Fast forward seven years, and now it’s the Republicans doing the exact same thing. The GOP has chosen to conceal the text of what may become the replacement for Obamacare. Not only can you – someone the bill will most definitely affect – not read it. Members of the U.S. Senate are not even allowed to see what is contained in the legislation. Senator Rand Paul, who is advocating for a complete repeal of the ACA, has made repeated attempts to view what he refers to as “Obamacare Lite,” but has still been unable to get his hands on a copy of the bill. The Kentucky senator has even gone so far as to wheel a copy machine to where he was told the bill was being housed. Paul, a Republican, was denied access. The secrecy should be enough to alarm citizens across the U.S. and cause the public to demand to see what kind of health care reform may be about to be shoved down their throats. But what Senator Paul believes the bill contains is the most distressing part of this story.  “When we heard it was secret, we wanted to see it even more because if something is secret, you do worry that people are hiding things,” Paul said speaking to CNN.  He continued: “What we think is being hidden from conservatives is that there’s a lot of Obamacare lite in their bill. There’s a new entitlement program that will increase at about 5 percent a year forever. There is also a Cadillac tax, or something similar to the Cadillac tax that was in ObamaCare. And there’s also an individual mandate, believe it or not. Instead of paying the mandate to the government, they’re going to tell you that you have to pay the mandate by law to an insurance company.”  So basically, If you like being fined by the government for not purchasing a service, you’re going to be able to keep your fine — except instead of paying a penalty to the government, you’ll pay a private corporation. Sounds like more of the same from Washington, but worse.

COMMITTEE PRINT Budget Reconciliation Legislative Recommendations Relating to Repeal and Replace of the Patient Protection and Afford-able Care Act  DropBox. Text of proposed bill.

Four GOP senators pledge to vote against rolling back Medicaid expansion | TheHill - Four GOP senators on Monday told Senate Majority Leader Mitch McConnell (R-Ky.) they will vote against any ObamaCare repeal bill that eliminates the healthcare law's Medicaid expansion. Sens. Rob Portman (Ohio,) Shelley Moore (W.Va.), Cory Gardner (Colo.) and Lisa Murkowski (Alaska), all from expansion states, said they want to ensure those covered won't be left in the cold. "We believe Medicaid needs to be reformed, but reform should not come at the cost of disruption in access to health care for our country’s most vulnerable and sickest individuals," the senators said in a letter to McConnell. "Any changes made to how Medicaid is financed through the state and federal governments should be coupled with significant new flexibility so they can efficiently and effectively manage their Medicaid programs to best meet their own needs." The senators said a "gradual transition" is needed to ensure states have the time to implement changes. They noted that a Feb. 10 draft of the repeal bill "does not meet the test of stability" for people currently enrolled in the program. "We will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states," the letter reads. Some of the Senate's most conservative members, however, have argued the expansion must be repealed because it is too costly.

Is the American Health-Care Act 'Obamacare Lite'? Not Quite - On Monday evening, the House Energy and Commerce and Ways and Means committees released the two long-awaited components of the House GOP’s plan to repeal and replace Obamacare. Although intense secrecy from House aides and a hunt for the bill last week involving Senator Rand Paul and a gaggle of reporters had raised expectations of dramatic changes, the bills that will go into markup Wednesday in the committees look pretty similar to a draft version of the bill that leaked a few weeks ago. The two components—called the “American Health Care Act” in tandem—are intended to be passed by the reconciliation budgetary process, and as such only contain provisions that pertain to budgetary items, like the amount of the Affordable Care Act’s individual mandate tax or the Medicaid funding granted to states. The whole bill has yet to be scored by the Congressional Budget Office, a critical step that will determine both the number of people projected to gain or lose coverage under the law, and the amount of spending or saving it would incur. In advance of that scoring, the general shape of the bill has been criticized from both sides even within Republican circles. Some, like the members of the more conservative Freedom Caucus in the House and Senator Rand Paul, have derided the tax credits as “Obamacare lite.” On the other side, some have blasted the idea of pulling Medicaid coverage away from sick, rural Americans who just became eligible under the ACA and enjoy their coverage. With the bill now public, it’s clear that while the framework does maintain some key Obamacare provisions, it also still would fundamentally reshape health policy—and reassign who reaps most of the benefits. Here’s a breakdown of what’s in the drafts:

The House ACA replacement plan will unwind the coverage gains of the ACA, part 1 - Jared Bernstein -- Much as I worried about in an extended piece from yesterday on the problems with Republicans’ replacement ideas, their new bill to replace the Affordable Care Act will lead to less coverage and more cost shifting from government to moderate and low-income families. I’ll be adding to this post throughout the day, but here are a few initial impressions:

  • –The bill will lead to millions losing coverage, due to the repeal of the Medicaid expansion and to lowering the subsidies available to moderate- and low-income households.
  • –The key disconnect here is that their tax credits are no longer tied to the cost of coverage, so paying for health coverage will mean more out-of-pocket costs than under Obamacare. Once the CBO scores this aspect of the plan, along with the Medicaid part I note next, I suspect we’ll see large coverage losses, possibly unwinding up to 20 million in coverage gains from the ACA.
  • –As I wrote yesterday, Republicans turn Medicaid financing into a “per capita cap,” a type of block grant. Instead of receiving the federal financing they need to pay for anyone eligible for Medicaid, the per person cap is a fixed allotment that grows at the rate of inflation plus 1 percent.  But the key question is: how much less will states get relative to their current allotments? Since Republicans are clearly counting on savings from this switch, the answer can’t be zero (otherwise, why make the switch?). My guess is states will need to make up north of $100bn, and that they’ll be very unlikely to do so, meaning diminished coverage for low-income families.
  • –The bill ends employer and individual mandates and, in their place–because health insurance doesn’t work if people can just seek coverage when they’re sick–allows insurers to impose a 30 percent surcharge on those with gaps in coverage. As I noted in my piece yesterday, low-income persons and those with pre-existing conditions are the most likely to face coverage gaps.
  • –The plan targets Planned Parenthood by disallowing Medicaid reimbursements. To state the obvious, that has nothing to do with health care reform and is a pure sap to the anti-choice right.
  • –It’s not all about cutting coverage – the bill is also about cutting taxes for the rich. It repeals two very progressive taxes implemented under the ACA, a Medicare payroll tax on high earners and a tax on the investment income of high-income people. My colleagues previously estimated that the average millionaire household would receive a tax cut of around $50,000 from getting rid of these provisions, and that the 400 richest households would receive an average tax cut of $7 million.

Five Ways The GOP Health Bill Would Reverse Course From The ACA -- Some conservative Republicans have derided the new proposal — the American Health Care Act — calling it “Obamacare Lite.”  It keeps intact some of the more popular features of the ACA, such as allowing adult children to stay on their parents’ health plans to age 26 and, at least in theory, ensuring that people with preexisting conditions will still have access to insurance.In some cases the elements of the law that remain are due to political popularity. In others, it’s because the special budget rules Congress is using — so Republicans can avoid a Senate filibuster — do not allow them to repeal the entire law. But there are some major changes in how people would choose and pay for health care and insurance. Here are some of the biggest:

  • Both the GOP bill and the ACA provide tax credits to help some people pay their premiums if they don’t get insurance through work or government programs. But the GOP’s tax credits would work very differently from those already in place.The GOP tax credits would be tied largely to age, with older people getting twice as much ($4,000 per year) as younger people ($2,000). But the Republican plan would also let insurers charge those older adults five times as much as younger adults, so even a credit twice as big might not make up the difference in the new, higher premiums.
  • The biggest changes the Republican bill would make are to the Medicaid program. Starting in 2020, it would roll back federal funding for the ACA’s expansion that allowed states — if they so chose — to provide Medicaid coverage to all low-income individuals under 138 percent of the poverty level, rather than just the specific categories of poor people (children, pregnant women, elderly, disabled) who were previously eligible.
  • Help For Wealthier People: First, it would repeal almost all of the taxes that were increased by the ACA to pay for the expansion of health coverage. The bill would also provide new tax advantages for those who can afford to save — including allowing more money to be deposited into health savings accounts, and lower penalties for those who use those accounts to pay for non-medical needs. In addition, the plan would lower the threshold for deducting medical expenses on income taxes and allow people with job-based tax-preferred “flexible spending accounts” to put away more pretax money. It would also restore over-the-counter drugs as eligible for reimbursement from those accounts.
  • Mandates: The GOP plan doesn’t actually repeal either the requirement for individuals to have coverage or for employers to provide it. That’s because it can’t under budget rules. Instead, the bill would reduce the penalties in both cases to zero, rendering the requirements moot.
  • With all the taxes and fees stripped from the ACA, how will Republicans pay for their tax credits? The answer is not clear yet.“We are still discussing details, but we are committed to repealing Obamacare and replacing it with fiscally responsible policies that restore the free market and protect taxpayers,” said the Republican fact sheet that accompanied the release of the bill.

How "Ryancare" Would Increase the Risk of a Healthcare Death Spiral - Ed Dolan - On March 6, the Republican House leadership finally released a draft plan for repealing and replacing the Affordable Care Act (ACA). Although only a draft, it has already earned the name of "Ryancare." As this is written, with the ink not yet dry, it already is running into political trouble. Influential Republicans are dismissing it as a “framework for reform” or a “work in progress.” Still, it is not too early to address one question that will demand an answer no matter what happens to this early draft: will it, or any replacement for the replacement, stop the impending death spiral in the individual insurance market that is at the heart of the ACA’s problems? From what we know of Ryancare so far, the answer is “No.” Here is why. : A private insurer can profitably offer healthcare coverage to a pool of customers only if it can find a premium that is low enough to be affordable, yet high enough to cover expected claims and administrative costs, with enough left over to keep shareholders happy. In order for that to happen, the pool of customers must contain enough healthy people to keep claims and premiums low. If premiums are too high, healthy people begin to drop out and take their chances covering their own medical costs. Fewer healthy people in the pool raises the claims per member—a process that economists call adverse selection. Soon, premiums have to be raised further. That causes still more people to drop out until only the sickest people are left in the pool. At that point the insurers themselves pull out, and the death spiral is complete. Two features of the Ryancare draft would tend to enlarge the pool of those seeking insurance in the individual market. One is the repeal of the mandate for larger employers to provide coverage.  In addition, a separate set of provisions that tighten eligibility for Medicaid would push some low-income households into the individual market. On the face of it, enlarging the individual insurance pool would make the system more stable. However, that would be true only if the individuals who actually purchased individual policies after being displaced from employer coverage or Medicaid were of average or better health. In reality, those displaced are likely to be of lower than average income. Medicaid is already limited to households below or just above the poverty line, and companies would be more likely to stop healthcare coverage for their marginal employees than for their best workers. Lower income households not only tend to have more health problems, but are more likely to forego coverage unless they are very sick—that is, more likely to succumb to adverse selection.

The House GOP plan to repeal and replace Obamacare would effectively defund Planned Parenthood -- House Republicans on Monday released their plan to repeal and replace the Affordable Care Act, the healthcare law better known as Obamacare. Among its many provisions, the new bill, known as the American Health Care Act, seems to pull back funding for the women's health group Planned Parenthood. The bill has a provision that does not allow states to use "direct spending" on "prohibited entities" with federal funds allocated from the AHCA. Prohibited entities are defined in the bill as any healthcare provider that is an "essential community provider" that is "primarily engaged in family planning services, reproductive health, and related medical care" or "provides for abortions" in any case besides the life of the mother, incest, or rape. In this case, it appears that Planned Parenthood would fall under the category of a prohibited entity. The organization did not miss the language. Its advocacy arm, the Planned Parenthood Action Fund, tweeted about the "GOP ACA attack" and encouraged supporters to "Fight back."  The #GOP #ACA attack includes language to block people from care at Planned Parenthood. Fight back→https://t.co/UnNzuHzlTT #IStandWithPP pic.twitter.com/RlbNM6fOQY — Planned Parenthood (@PPact) March 7, 2017 Republicans have for a long time attempted to deny Planned Parenthood funding because of its abortion services, but they have not been successful.  On the other hand, Democrats have noted that the organization provides a lot of women's health services beyond abortions and that the group is already barred from using any government funding for any abortion-related service.

The Republican Health-Care Bill Is the Worst of So Many Worlds - With the release of the American Health Care Act, House Republicans have pulled off an impressive feat: managing to alienate virtually everybody with a stake in health care. If you liked the Affordable Care Act, you will, unsurprisingly, hate this bill. We’ll get into the details later (the bill is in two parts; the Energy and Commerce Committee text is here, the Ways and Means Committee text here; summaries in plain English here and here), but in short, the subsidies for insurance coverage are stingier, the coverage itself is worse, and the penalty for non-coverage is actually higher. Under this bill, the average American will be more likely to be uninsured, or insured with higher co-pays and deductibles, or “covered” with a plan worth as much as the plastic insurance card it’s issued on.  As for government-run programs, Medicare’s trust fund will come four years closer to depletion, and Medicaid will shed millions of people over time through a per capita cap, which is just as bad as a block grant, an inflexible funding outlay that fails to shift upward in times of need. Even if you get health care through an employer, the bill creates incentives for companies to throw people off insurance, sticking you in the aforementioned hazardous individual market.  If you didn’t like the ACA, whether from the left or the right, there’s nothing really here for you either. That’s because the basic structure of Obama’s 2010 law has been retained.  “Writing checks to individuals to purchase insurance is, in principle, Obamacare,” concluded the Republican Study Committee, a conservative faction in the House that opposes the bill. They are correct. The AHCA gives refundable tax credits to every American (up to a certain income threshold) to buy insurance. The size of the tax credits are pathetic, but fixing that is one Democratic budget-reconciliation bill away. Because Republicans aren’t even bothering with Democratic votes on this legislation, and progressing through the clumsy reconciliation process, they’re only muting the ACA rather than obliterating it. For example, the individual mandate and employer mandate would still exist; their penalties would be set to $0, which is simple to change back. The tax credits could be dialed up as well. 

The AHCA’s mandate replacement doesn’t make sense to me - The Republicans hate the individual mandate. I get that. I don’t necessarily understand their rationale, but I accept it. They also, however, understand the need for some sort of carrot/stick to get healthy people to buy insurance so that we don’t get adverse selection and see the private insurance market enter a death spiral. So they need to replace it. There are many ways to solve this adverse selection problem without a mandate. Open enrollment periods, penalties for not signing up, loss of protections, inducements for keeping coverage, etc. We have written about this again and again and again and again and again and again. So I’m not saying that you can’t replace the individual mandate. Many wonks believe that too few healthy people are joining the exchanges. This is leaving the risk pool too expensive and leading to higher premiums. To fix that, we could increase the size of the mandate penalty (stick), increase the size of the subsidies to make insurance cheaper (carrot), or both (carrot and stick). The AHCA plan, though, goes at this sideways. It eliminates the stick. It reduces the carrot. And it then puts in a new plan – the 30% insurance markup if people lose continuous coverage. Let’s say I’m single and I’m in my late 20’s, and insurance costs me $3000. In just one year, I make money. If I skip a number of years, I can save even more. I’m not sure this is much of a stick. They could fix this by increasing the size of the stick or by sweetening the deal with carrots, but they didn’t. Moreover, the incentive is totally in the wrong direction. The individual mandate punishes those who don’t buy insurance – every year. As long as I remain uninsured, I will be penalized. I will be hit again and again, until I buy insurance. That’s a stick. The new AHCA penalty works in the opposite direction. Once I’m out of the market, I’m left alone. It’s not until I re-enter that I’m hit with the penalty. The longer I stay out, the longer I avoid the pain. It’s an inducement to remain uninsured. We know what needs to happen to reduce adverse selection. We need to make the carrots and/or sticks stronger. This seems to do the opposite. I don’t get it.

The Republican health-care plan isn’t about health care at all - Catherine Rampell - Let’s abandon the pretense. Republicans’ “health care” bill is not really about health care. It’s not about improving access to health insurance, or reducing premiums, or making sure you get to keep your doctor if you like your doctor. And it’s certainly not about preventing people from dying in the streets. Instead, it’s about hundreds of billions of dollars in tax cuts — tax cuts that will quietly pave the way for more, and far larger, tax cuts. The American Health Care Act, which has been opposed by nearly every possible stakeholder of nearly every ideological orientation, is being rushed through Congress with non-extreme vetting. In fact, it passed out of one committee in the middle of the night, overseen by a committee chairman who just a day earlier criticized Obamacare for being “written in the dark of night.”  From the bill text, we can tell the directionality of some of the changes Republicans are proposing — i.e., tax revenue will fall, lots of people will lose health coverage and the Medicare trust fund will be exhausted sooner. But we still don’t know the magnitude of these changes — i.e., how much, how many or when, respectively. We don’t know the answers to these questions yet, because Republicans don’t want us to know them. Part of the reason they have rushed the bill through committees is to front-run an (inevitably unflattering) analysis from the nonpartisan Congressional Budget Office. In the meantime, other experts and government bodies have scrambled to compile their own estimates for the bill’s effects. The ratings and analytics firm S&P Global has ballparked the number of people who would lose their insurance at 6 million to 10 million; others have offered figures as high as 15 million and 20 million. Meanwhile, a group of health researchers calculated that the bill would increase costs for enrollees on the individual insurance market by, on average, more than $1,500 per year when it would take effect, and by more than $2,400 per year by 2020.  Oh, and the Medicare trust fund would be exhausted by 2024, according to Brookings Institution researchers.

Follow the Health Care Money - Many Americans over the age of 60 would have to pay more for health insurance under the Republican health care plan. Many low-income families would lose their insurance. Many disabled people, hepatitis patients and opioid addicts, among others, would no longer receive treatments that they do now. Care to guess where the billions of dollars in savings from these cuts would go instead?They would go largely to the richest 1 percent of households, those earning at least $700,000 a year, according to the Tax Policy Center. A disproportionate amount of the savings would go to the richest of the rich — those earning in the millions.The Republican health care bill is, in no small measure, a tax cut for the wealthy.If you’re wondering how Republican leaders can defend cutting benefits for older, sicker and poorer Americans to pay for a top-end tax cut, House Speaker Paul Ryan offered a revealing non-answer, as Jonathan Chait noted in New York Magazine.At a news conference, a reporter asked Ryan why the bill cuts taxes for the rich. Ryan laughed, waved the question away, told the reporter to read the bill and then moved on to another question. Evidently, he can’t defend the tax cut. In related news, the list of groups opposing the bill now includes AARP, the American Medical Association, the American Hospital Association, the Association of American Medical Colleges, the Catholic Health Association of the United States and the Children’s Hospital Association.

 Health insurers billion dollar windfall GOP Obamacare replacement: There's a sweet deal for insurers buried in the GOP's new Obamacare bill. Health insurance companies could realize a $1 billion or more windfall over the next decade — and end up paying their CEOs even more money — because of a simple tweak in the GOP's proposal to replace Obamacare. That tweak, buried in cryptic language on page 67 of the bill, would end the $500,000 cap that health insurers currently have under the Affordable Care Act on deducting the cost of executives' compensation as business expenses on their taxes. The Republican proposal to eliminate that cap means that insurers would be able to deduct nearly the full value of their CEOs' compensation, and not pay taxes on it. For a company such as Aetna, whose CEO Mark Bertolini earns more than $17 million annually, ending the cap would add to its bottom line, and encourage insurers to pay executives more money, critics say.At the same time, revenue to the federal government would drop. The left-leaning Institute for Policy Studies think tank in 2014 estimated that for the prior year the government received at least $72 million in additional tax payments from insurers as a result of the compensation deduction cap. Asked how much getting rid of that cap, as the GOP wants, would cost the U.S. Treasury in lost taxes over the next decade, Anderson said, "I think a conservative estimate would be a billion dollars." "The way the tax code works [under the GOP plan] the more [insurance] companies pay their CEO, the less they pay in taxes, because they just increase their deductions," Anderson said.

The GOP Health Care Law Is Missing a Surprising Number of Tea Party Hobbyhorses: I was reading through the Republican health care bill last night, and it struck me that a lot of Republican hobbyhorses are missing. ... I'm pretty sure the bill doesn't include any of the following:

  • -No tort reform. ...
  • -No insurance sales across state lines. ...
  • -No change to the essential benefits required of all health care plans. ...
  • -Obamacare is chockablock with regulations of all kinds, including incentives to reduce costs and rules about how doctors are paid. These appear to be intact under the Republican bill.

Why is this? If you look carefully, you'll see what these things all have in common: they don't directly affect the federal budget, which means they can't be passed via reconciliation. They have to be passed in a separate bill under regular order, which means Democrats can filibuster them. Republicans don't have 60 votes in the Senate to overcome a filibuster, so they can't do any of this stuff. Republicans can starve the subsidies to make Obamacare virtually useless for the poor, but they can't repeal the entire law. The result of such a partial repeal is likely to be such obvious chaos that they'll be lucky to get their bill passed in the House, let alone the Senate. There are bound to be at least three senators who just aren't willing to clap loudly and pretend that everything is OK. It's very hard to see a path to passage for this bill.

 Trump Budget Director Has Key Role in ACA Replacement Drama -- There’s a new elephant in the crowded room of Republicans trying to figure out in the effort to repeal and replace Obamacare: Office of Management and Budget director Mick Mulvaney. According to the Washington Post, Mulvaney was the deal-closer in a key White House meeting on Friday that built (or forced) consensus among congressional Republican leaders who will be jointly unveiling Obamacare legislation any day now — even as the ostensible administration point man, HHS Secretary Tom Price, was hanging out with Paul Ryan and Mike Pence in Wisconsin. Here’s how the Post explained the switcheroo: On Capitol Hill, Price is seen by some Republicans as more knowledgeable about health-care policy than Mulvaney, given his experience as a physician and his time as chairman of the House Budget Committee. But Mulvaney benefits from the close relationships he has forged with Trump’s top advisers and with the House’s conservative wing. Aside from his personal credibility from being a member of “the House’s conservative wing” until he was confirmed on February 16, Mulvaney could be useful as a protector of the president’s right flank on Obamacare in two very important ways. He illustrated the first during a wide-ranging interview this morning with radio host and conservative opinion-leader Hugh Hewitt. Mulvaney was questioned closely on two subjects: his commitment to Trump’s defense buildup (he seemed to pass Hewitt’s test despite much grumbling from hawks like John McCain that he cared too much about deficits and too little about giving the Pentagon whatever it wants), and his willingness to buck Trump’s promises to protect entitlement programs. Mulvaney’s rap on entitlements was revealing: [Y]ou see the AARP ad on television, which many of us have seen, and the speech he gives says he’s going to protect and save Social Security, protect and save Medicare. And that’s exactly what we are going to try and do. So I’ve already started to socialize the discussion around here in the West Wing about how important the mandatory spending is to the drivers of our debt. I think people are starting to grab it. There are ways that we can not only allow the President to keep his promise, but to help him keep his promise by fixing some of these mandatory programs.

GOP sails into the health care storm -The passage of the Affordable Care Act in 2010 involved months of hearings, endless negotiations, delays to other legislative priorities, and, ultimately, massive political cost. Democrats at the time enjoyed strong congressional majorities, and were relatively united on the need for reform, but still barely passed the legislation that expanded health insurance coverage to about 20 million Americans. If House Speaker Paul Ryan and Senate majority leader Mitch McConnell are serious about their efforts to overhaul that law, they had better be prepared for a similar ordeal. That much was clear from the tepid reaction to the health care bill that House Republicans unveiled on Monday. By Tuesday, both conservative Republicans in the House and moderates in the Senate had expressed reservations or outright opposition. The GOP of 2017 is more ideologically divided than the Democrats of 2009, and its majorities are slimmer.  In other words, it’s not going to be easy to muscle the new bill through Congress. And since the problems that the GOP’s health care legislation is attempting to solve are largely imaginary, the question that McConnell and Ryan need to consider is whether it’s really worth the titanic effort that the legislation would require. Rewriting the Affordable Care Act, aka Obamacare, could paralyze Congress — but only if the leadership allows it.

If the AHCA can’t pass, what does @SpeakerRyan do next? - The House Republicans released the American Health Care Act (AHCA) on Monday. Aaron summarizes it here. Critics of the bill include all liberals, many conservatives, the major medical societies, and many health industry groups.  It will be challenging to pass the bill. On the one hand, Democrats will oppose it because it reduces taxes on people with high incomes while cutting Medicaid and health insurance subsidies. On the other hand, the conservative wing of the House Republicans may not support it because they view it as “Obamacare-lite“. But suppose conservatives refuse to support the AHCA and it is defeated in the House. What happens next? Speaker Ryan will revise the bill to meet the conservatives’ demands and unite the Republican caucus. He’ll then pass the revised bill in the House. Here’s why.  First, although Ryan could conceivably pass a more liberal ACA replacement with Democratic votes, he won’t. Ryan believes what the conservatives believe. The current AHCA is his attempt to win just enough moderate Republican Senate votes to get the bill passed. The current AHCA was his move to the left, and he won’t make another one if it fails. Second, although Ryan’s in trouble if he can’t pass something, he’s finished as Speaker if he compromises with the Democrats on ACA repeal. Ryan’s problem if he moves right is that a more conservative AHCA would probably lose moderate Senate Republican votes and be defeated in the Senate. However, that defeat would not cost Ryan his job and his credibility with the Republican base, and with them his prospects for enacting his legislative program. Moreover, the 2018 election has many Democratic seats at risk. If the Republicans take those seats and expand their Senate majority, the chances for a hard-right ACA repeal and replace bill get much better.

Trump Vows "Full-Court Press" As Opposition To 'RyanCare' Mounts --As the U.S. House of Representative marks up Paul Ryan's American Healthcare Act, the battle between the moderate and conservative factions of the Republican Party continues to mount behind the scenes all while opposition from a variety of advocacy groups is also growing.  “This is what good, conservative health-care reform looks like,” House Speaker Paul Ryan said Wednesday. “It is bold and long overdue. And it is us fulfilling our promises.”Despite the public bickering, Republicans scored a victory early Thursday, pushing a measure through the House Ways and Means Committee repealing tax penalties on people who don’t buy insurance but otherwise progress on the bill has been slow.As the Wall Street Journal notes, Ryan and House Republicans have to thread a very fine needle on healthcare legislation that appeals to a sufficient number of  conservatives to pass the House while not alienating the more moderate factions of the party in the Senate.House Republican leaders are under pressure to ease passage through the House by making changes that appease conservatives who want a more aggressive repeal of the ACA. Those changes risk further jeopardizing support in the Senate, where centrist Republicans have said they are concerned the proposal will cause too many people to lose coverage, particularly those with low incomes. Underscoring the Senate’s central role, a group of Republican governors representing states that expanded Medicaid under the existing law have largely given up on lobbying the House and instead are focusing their efforts on the Senate, according to two people familiar with their thinking.“Yes, I do not think it will be well received in the Senate,’’ Sen.  Susan Collins (R., Maine) told Yahoo News. “But I do want to emphasize that it’s still a work in progress. … So, who knows, maybe it’ll eventually get better.’’ She also signaled she would oppose measures in the House bill to end funding for Planned Parenthood.

Trump goes into dealmaking mode, works behind the scenes on health bill – WaPo - Absent, for now, are the skewering tweets, the raging news conferences and the combative speeches. Instead, Trump is quietly courting wary conservatives in private meetings and keeping himself somewhat out of the picture as party leaders and his Cabinet officials defend the plan. Trump is spending time listening to critics and on-the-fence lawmakers as they vent, which is what he did Wednesday evening when right-wing leaders stopped by and when Sen. Ted Cruz (R-Tex.) and his wife joined Trump later for dinner, White House officials said. The president also may travel to Kentucky on Saturday, shining a spotlight on the bill’s most dedicated Republican foe, Sen. Rand Paul (R-Ky.) — though Paul says he is not budging. “He has leaned all the way in and has had a deft touch,” White House counselor Kellyanne Conway said. “We’ve had an open-arms, olive-branch, politely-nod-your-head mentality.” Trump’s approach is driven by the sensitivities of the moment in his young presidency and on Capitol Hill, where Republican majorities have pledged to repeal and replace President Barack Obama’s health-care law but where there is little consensus on how to do it. Attuned to the fact that health care represents his first major political test — and knowing that failure on the issue could define his term — Trump wants to spend time with key political stakeholders before he mounts an all-out public campaign for final passage, the officials said.They also said Trump is willing to negotiate specifics of the legislation and to tear up parts of it if need be, telling aides and congressional leaders that he views the initial bill as malleable.“He’s certainly open to negotiation,” Paul said in an interview. “He’s genuinely interested in what conservatives have to say, knows there is still room for agreement.” But Paul wondered whether Trump would remain an avowed advocate for the proposal in the coming weeks. “The leadership is selling him a bill of goods and has mischaracterized to him the amount of opposition,” he said. “The speaker keeps saying the votes are there and the president could end up being annoyed.”

WH privately supports earlier rollback of Medicaid expansion: report | TheHill: President Trump's administration is privately supporting an earlier rollback of ObamaCare's Medicaid expansion than what is outlined in GOP leadership's healthcare plan, CNN reported Thursday. A senior House conservative aide and two senior administration officials told the news source that the White House, while publicly supporting the House GOP bill, is privately backing a call from conservatives to reverse the expansion before the bill's 2020 phase-out date. According to the report, the administration is already urging several House Republican leaders to change the legislation for an earlier rollback.Conservatives in the House and Senate have blasted the ObamaCare replacement plan for not going far enough in undoing the Affordable Care Act, but members of Congress and governors from states that expanded Medicaid under ObamaCare are concerned about people losing coverage. A Republican congressional aide told CNN that the move to alter the rollback date would severely diminish the bill's chances of success in the Senate. "This could kill the bill in the Senate and make it even more complicated in the House," the aide said. A senior administration official told CNN the shift largely stems from a meeting Trump had with budget director Mick Mulvaney and Freedom Caucus leaders Rep. Jim Jordan (R-Ohio) and Mark Meadows (R-N.C.) Under the GOP plan, new Medicaid enrollments under the expansion would be stopped in 2020, and a cap would be placed on federal Medicaid funding to the states. Rep. Mark Walker (R-N.C.), chairman of the conservative Republican Study Committee, is pushing two Medicaid-focused amendments to the plan, one of which would move the Medicaid expansion cut-off date to 2018.

White House Casts Pre-emptive Doubt on Congressional Budget Office — President Trump showed an affinity for “working the referees” in his race to the White House, criticizing a federal judge as biased, panning polls as rigged and even questioning the aptitude of the nation’s intelligence agencies. Now, with Mr. Trump’s administration aggressively pitching the House Republican plan to repeal and replace the Affordable Care Act, Capitol Hill’s official scorekeeper — the Congressional Budget Office — is coming under intense fire. As it prepares to render its judgment on the cost and impact of the bill, the nonpartisan agency of economists and statisticians has become a political piñata — and the latest example of Mr. Trump’s team casting doubt on benchmarks accepted as trustworthy for decades.  “If you’re looking to the C.B.O. for accuracy, you’re looking in the wrong place,” Sean Spicer, the White House press secretary, said on Wednesday, arguing that the agency’s failure to accurately project enrollment in the Affordable Care Act’s online marketplaces had essentially killed its credibility. Mr. Spicer’s criticism echoed that of some House Republicans who raised questions this week about the C.B.O.’s record. The reason for their umbrage is clear: The C.B.O.’s official judgment on the American Health Care Act, as the Republican legislation is known, is expected to be released on Monday and it is more than an intellectual exercise. It could make or break the bill. Budget rules that Republicans are using to bypass a possible Democratic filibuster in the Senate stipulate that the health care legislation must not add to deficits over the span of a decade. If the C.B.O. predicts that it would, Senate Democrats could block the bill. More broadly, a judgment by the C.B.O. that the Republican plan would strip health care from millions of people could have politically disastrous effects. Analysts at the Brookings Institution said last Friday that the plan could increase the ranks of the uninsured by more than 15 million — and said the C.B.O. estimate might put that figure considerably higher.

House GOP would let employers demand workers' genetic test results - A little-noticed bill moving through Congress would allow companies to require employees to undergo genetic testing or risk paying a penalty of thousands of dollars, and would let employers see that genetic and other health information. Giving employers such power is now prohibited by legislation including the 2008 genetic privacy and nondiscrimination law known as GINA. The new bill gets around that landmark law by stating explicitly that GINA and other protections do not apply when genetic tests are part of a 'workplace wellness' program. The bill, HR 1313, was approved by a House committee on Wednesday, with all 22 Republicans supporting it and all 17 Democrats opposed. It has been overshadowed by the debate over the House GOP proposal to repeal and replace the Affordable Care Act, but the genetic testing bill is expected to be folded into a second ACA-related measure containing a grab-bag of provisions that do not affect federal spending, as the main bill does. "What this bill would do is completely take away the protections of existing laws,"  Employers say they need the changes because those two landmark laws are "not aligned in a consistent manner" with laws about workplace wellness programs, as an employer group said in congressional testimony last week. The ACA allowed them to charge employees 30 percent, and possibly 50 percent, more for health insurance if they declined to participate in the "voluntary" programs, which typically include cholesterol and other screenings; health questionnaires that ask about personal habits, including plans to get pregnant; and sometimes weight loss and smoking cessation classes.. Despite those wins, the business community chafed at what it saw as the last obstacles to unfettered implementation of wellness programs: the genetic information and the disabilities laws. Both measures, according to congressional testimony last week by the American Benefits Council, "put at risk the availability and effectiveness of workplace wellness programs," depriving employees of benefits like "improved health and productivity." The council represents Fortune 500 companies and other large employers that provide employee benefits. It did not immediately respond to questions about how lack of access to genetic information hampers wellness programs.

Cruz: Let's overrule Senate officer to expand ObamaCare bill | TheHill: Sen. Ted Cruz (R-Texas), emerging as a key player in negotiations to repeal and replace ObamaCare, says Vice President Pence should exert his power over the Senate to significantly expand the scope of the House healthcare reform bill. Cruz, who had dinner with President Trump on Wednesday evening, says that Pence, who by virtue of his office also serves as president of the Senate, should be prepared to overrule the chamber's parliamentarian to bulk up the controversial measure. House Republicans left several reforms popular with conservatives out of their healthcare bill because the parliamentarian is likely to rule them outside the scope of special rules in the upper chamber that prevent a Democratic filibuster. Cruz argues that Pence, as the person likely to preside over the chamber at the most important moments of the healthcare debate, can decide what and what isn’t eligible for the so-called reconciliation process. He says the Senate parliamentarian’s role is to advise, not to rule. “Under the Budget Act of 1974, which is what governs reconciliation, it is the presiding officer, the vice president of the United States, who rules on what’s permissible on reconciliation and what is not,” Cruz told reporters Thursday. “That’s a conversation I’ve been having with a number of my colleagues."

Conservatives want to blow up Senate rules to kill Obamacare -  House Republican leaders narrowly tailored their Obamacare repeal bill to avoid violating Senate rules, but conservatives are pushing back with advice of their own: tear up the rulebook. A growing number of conservative lawmakers on Thursday urged GOP leaders to push the limits of how much of the health law they can reshape under a powerful procedural maneuver known as budget reconciliation — and to overrule the Senate parliamentarian if she doesn't decide in their favor.  Such a gambit would require the unlikely buy-in of Senate Majority Leader Mitch McConnell (R-Ky.), a noted institutionalist who earlier this year avoided talk of changing his chamber's rules to kill the ability to filibuster Supreme Court nominees.  If the Senate changes precedent for what can be passed under reconciliation now, a future Senate — whether controlled by Republicans or Democrats — could enact a wide range of legislation with just a simple majority."There are limits to what we can do" on Obamacare while complying with the Senate rules, Finance Chairman Orrin Hatch, the longest-serving Senate Republican, said in a Thursday floor speech. Under reconciliation guidelines, bills can be passed in the Senate with a simple majority and cannot be filibustered, as long as their provisions have a direct impact on spending or tax levels. But conservatives in both chambers are still trying to make the case for sending the Senate a more far-reaching Obamacare repeal bill than the one House GOP leaders unveiled this week. Sen. Ted Cruz (R-Texas) on Thursday kept up his pitch for a strategy that would see Vice President Mike Pence overruling the Senate parliamentarian, if necessary. “I have been encouraging leaders in both houses that we should not approach this with both hands tied behind our back," Cruz told reporters. According to the 1974 law that set up reconciliation, he insisted, "it is the presiding officer — the vice president of the United States — who rules what’s permissible under reconciliation and what is not.”

President Trump: “We Must Save the American People” from the Affordable Care Act -  C-SPAN (4 minutes)

House Committee Chairs Discuss White House Meeting on Health Care - C-SPAN (7 minutes)

Vice President Mike Pence Meets with Conservative Leaders on Health Care - C-SPAN (6 minutes)

Julie Rovner Explains Health Care Repeal and Replace Process - C-SPAN (3 minutes)

Meet the Hundreds of Officials Trump Has Quietly Installed Across the Government - A Trump campaign aide who argues that Democrats committed “ethnic cleansing” in a plot to “liquidate” the white working class. A former reality show contestant whose study of societal collapse inspired him to invent a bow-and-arrow-cum-survivalist multi-tool. A pair of healthcare industry lobbyists. A lobbyist for defense contractors. An “evangelist” and lobbyist for Palantir, the Silicon Valley company with close ties to intelligence agencies. And a New Hampshire Trump supporter who has only recently graduated from high school. These are some of the people the Trump administration has hired for positions across the federal government, according to documents received by ProPublica through public-records requests. While President Trump has not moved to fill many jobs that require Senate confirmation, he has quietly installed hundreds of officials to serve as his eyes and ears at every major federal agency, from the Pentagon to the Department of Interior.Unlike appointees exposed to the scrutiny of the Senate, members of these so-called “beachhead teams” have operated largely in the shadows, with the White House declining to publicly reveal their identities.While some names have previously dribbled out in the press, we are publishing a list of more than 400 hires, providing the most complete accounting so far of who Trump has brought into the federal government.The White House said in January that around 520 staffers were being hired for the beachhead teams.  The list we obtained includes obscure campaign staffers, contributors to Breitbart and others who have embraced conspiracy theories, as well as dozens of Washington insiders who could be reasonably characterized as part of the “swamp” Trump pledged to drain. The list is striking for how many former lobbyists it contains: We found at least 36, spanning industries from health insurance and pharmaceuticals to construction, energy and finance. Many of them lobbied in the same areas that are regulated by the agencies they have now joined.

Donald Trump attacks Barack Obama over Watergate-style bugging of Trump Tower - but is then branded a 'liar': Donald Trump's relationship with Barack Obama descended to a new low on Saturday after the US president made explosive accusations that his predecessor orchestrated an illegal Watergate-style bugging operation at Trump Tower in New York. In an unprecedented attack by a sitting president on former occupant of the White House Mr Trump called Mr Obama "sick" and suggested he should be criminally prosecuted for "wiretapping" him during the election campaign. Mr Trump unleashed his astonishing allegations on Twitter from is Mar-a-Lago estate in Florida, where he was spending the weekend, but offered no proof and it was believed he may have based them on media reports.In the series of tweets beginning at 6.26am Mr Trump:

  • Accused Mr Obama of having his phones tapped.
  • Claimed his predecessor stooped as low as Richard Nixon during Watergate.
  • Called Mr Obama a "bad guy".
  • Suggested the former president had overseen a McCarthy-style witch hunt.
But on Saturday night Mr Obama's closest allies hit back, saying Mr Trump's behaviour was not presidential, labelling the president a liar and calling the allegations "simply false". One Democrat dismissed the explosive allegations as "just the president up early doing his routine tweeting".

What to Make of Donald Trump’s Early-Morning Wiretap Tweets -- Between six and six-thirty this morning, the President of the United States, who had returned to his Mar-a-Lago estate, in Florida, unleashed a series of tweets accusing his predecessor of tapping his phones just before Election Day: “A NEW LOW!” “This is Nixon/Watergate. Bad (or sick) guy!” Two hours later, he tweeted again, this time about Arnold Schwarzenegger’s decision to leave “The New Celebrity Apprentice”: “Sad end to great show.”

    • Terrible! Just found out that Obama had my “wires tapped” in Trump Tower just before the victory. Nothing found. This is McCarthyism!
    • Just out: The same Russian Ambassador that met Jeff Sessions visited the Obama White House 22 times, and 4 times last year alone.
    • Is it legal for a sitting President to be “wire tapping” a race for president prior to an election? Turned down by court earlier. A NEW LOW!
    • I’d bet a good lawyer could make a great case out of the fact that President Obama was tapping my phones in October, just prior to Election!
    • How low has President Obama gone to tapp my phones during the very sacred election process. This is Nixon/Watergate. Bad (or sick) guy!

Donald Trump’s early-morning Twitter binge unleashed, as he likely expected it would, a flurry of comments on the same medium, with his partisans echoing his rage at Barack Obama while many others questioned Trump’s motives, his integrity, and his mental stability.   Others pointed to articles posted on Breitbart as a possible inspiration; it would not be the first time that Trump has been moved to action by something published on Breitbart, the former home of his close adviser Steve Bannon. One of the articles is based on Senator Orrin Hatch’s remark about the wiretaps that led to the downfall of Michael Flynn as the national-security adviser. Another is based on Mark Levin, a conservative radio host, who recently accused Obama of “police state” tactics to carry out a “silent coup” against Trump. One of President Trump’s most consistent rhetorical maneuvers is a fairly basic but often highly effective one—the diversionary reverse accusation.  It would seem that Trump, in the same spirit of diversion, has conflated the work of the courts, law enforcement, and intelligence agencies with “Obama.”

Trump’s ‘evidence’ for Obama wiretap claims relies on sketchy, anonymously sourced reports - WaPo - President Trump’s explosive allegation that former president Barack Obama wiretapped him is based on — what? That has been the question ever since Trump sent provocative early-morning tweets over the weekend, because he and his staff have provided no evidence.At The Fact Checker, we require the accuser to provide the evidence for a dramatic claim. We asked Saturday and received no answer.However, in calling for a congressional investigation of apparent Russian meddling in the election to also look into Trump’s allegation, White House press secretary Sean Spicer on March 5 referred to “reports concerning potentially politically motivated investigations.” That suggests the tweets were based on media reports, not information the president might have received from inside the government.Our colleague Robert Costa has reported that White House aides have internally circulated an article on Breitbart titled “Mark Levin to Congress: Investigate Obama’s ‘Silent Coup’ vs. Trump.” Breitbart is a right-leaning news organization that is a rather unreliable source of information. Often the material that is published is derivative and twisted in misleading ways.However, a White House spokesman told The Fact Checker that the White House instead is relying on reports “from BBC, Heat Street, New York Times, Fox News, among others.” He provided a list of five articles. Let’s explore the sources of the president’s claim.

If Trump Tower Was Wiretapped, Trump Can Declassify That Right Now - If in fact Trump Tower was wiretapped during the 2016 presidential campaign, as President Trump claimed in several tweets Saturday morning, he can do much more than say so on twitter: Presidents have the power to declassify anything at any time, so Trump could immediately make public any government records of such surveillance.What Trump is saying seems to be a garbled version of previous reporting by the BBC, among other news outlets. According to a report in the BBC, citing unnamed sources, a joint government task force was formed in spring of 2016 to look into an intelligence report from a foreign government that Russian money was somehow coming into the U.S. presidential race. In June the Department of Justice, part of the task force, asked the Foreign Intelligence Surveillance Act court for a warrant to intercept electronic communications by two Russian banks.However, the BBC’s report says, the FISA court turned the application down.. The Justice Department then asked again in July with a more narrowly drawn request, which was again turned down. Justice then made a third request for a warrant on October 15, which was granted. None of this involves wiretapping Trump Tower. However, it is possible that Trump picked that up from a Breitbart article that in turn relied on a Heat Street piece that claimed the warrant was issued because of evidence of links between a “private server in Donald Trump’s Trump Tower” and a Russian bank. In fact, the server in question, set up by a marketing company hired by Trump, was physically located in Philadelphia.

 Was There a Wiretap of Trump? -  Pam Martens  - Commander-in-Tweet Donald Trump has potentially dug a deep hole for himself. By publishing a Tweet over the weekend stating that President Obama had tapped his phones during the Presidential election campaign, Trump has simultaneously suggested that a Foreign Intelligence Surveillance Act court (FISA court) found sufficient evidence to warrant a wiretap. (The wiretap would have been at the behest of an intelligence agency, not President Obama directly.)  Chuck Todd, host of Sunday’s Meet the Press, summed up the mess as follows on his program yesterday: “It’s such a serious allegation. I mean it is either, if it’s true, it’s an extraordinary political scandal. And if it’s not true, it’s an extraordinary political scandal.” It should be noted that if it’s not true, it would be not so much a political scandal as it would be another in a long, long series of off-the-wall falsehoods promulgated by Trump with no negative ramification to his career – unless one considers being elevated to the highest public office in the land a negative impact. For years, Trump was a leading purveyor of the birther meme that former President Obama had no legitimacy as President because he was foreign born and not entitled to hold the office. Then, abruptly, Trump decided to renounce that position. While there has been only glowing embers and a little smoke before on the ties between the Trump camp and Russian officials, there’s now darting flames scorching a lot of toes.

Judicial Watch Sues CIA, DOJ For Intel Leak Records: "President Trump Is On To Something" - Judicial Watch announced today that it filed a Freedom of Information Act (FOIA) lawsuit against the Central Intelligence Agency (CIA), the United States Department of Justice and the Department of the Treasury regarding records related to the investigation of retired United States Army Lieutenant General Michel Flynn’s communications with Russian Ambassador Sergey Kislyak (Judicial Watch v. Central Intelligence Agency et al. (No.1:17-cv-00397)). (The National Security Agency refused to confirm or deny the existence of intelligence records about communications between Gen. Flynn and Amb Kislyak.)Judicial Watch filed the lawsuit after the agencies failed to respond to a January 25, 2017, FOIA request seeking:Any and all records regarding, concerning, or related to the investigation of retired Gen. Michael Flynn’s communications with Russian Ambassador to the United States Sergey Kislyak between October 1, 2016 and the present.This request includes, but is not limited to, any and all related warrants, affidavits, declarations, or similar records regarding the aforementioned investigation.For purposes of clarification, please find enclosed a CNN report regarding the investigation, which cites information that was provided to CNN by members of the Intelligence Community.In its complaint Judicial Watch asks the court to order the agencies to search for all records responsive to its FOIA requests and demonstrate that they employed reasonable search methods; order the agencies to produce by a specific date all non-exempt records and a Vaughn index of all withheld records; and instruct the agencies to cease withholding all non-exempt records.  On January 23, 2017, the establishment shot itself in the foot as CNN reported that the government was investigating Flynn, former national security adviser to President Trump:

AP: Trump Got Wiretapping Story From Breitbart News - President Donald Trump's accusation that former President Barack Obama wiretapped Trump Tower during the 2016 campaign was allegedly taken from a Breitbart News article that had been given to Trump by one of his aides. In a piece detailing Trump's obsession with reading the newspaper and watching cable news, The Associated Press reported that the allegation against Obama was first presented by conservative radio host Mark Levin. The story -- for which Levin supplied no evidence -- was then picked up by Breitbart News, the alt-right outlet formerly owned by Steve Bannon, Trump's chief strategist. According to AP, an aide printed out the Breitbart article and slipped it into the president's reading pile. Hours later, Trump sent out a series of tweets in which he accused Obama of spying on him by tapping his phone lines in his main New York City residence and place of business, Trump Tower. "Terrible!" he wrote on March 4. "Just found out that Obama had my 'wires tapped' in Trump Tower just before the victory. Nothing found. This is McCarthyism!"

The Conspiratorial Game of Telephone in Bannon’s Rag that Made Left, Right, and POTUS Go Crazy - Marcy Wheeler  -- A story published in Steve Bannon’s rag, Breitbart, got circulated around the White House this morning like some President’s Daily Conspiracy, sending President Trump off on a rant attacking the counterintelligence investigation into his aides’ (and possibly his own) ties with Russia. Let me unpack it.  (full detailed explanation)

Congress will investigate Trump's wiretap claims : — Key members of Congress say they will honor President Donald Trump's request to investigate his unsubstantiated claim that Barack Obama overstepped his authority as president and had Trump's telephones tapped during the election campaign. A US official said the FBI had asked the Justice Department to dispute Trump's allegation, though no such statement has been issued. Obama's intelligence director also said no such action was ever carried out. Trump's startling claim of presidential abuse of power, made without evidence in a series of tweets early Saturday, capped a week in which the positive reaction to his address to Congress quickly evaporated amid the swirl of allegations — and revelations — about contacts between Trump aides and Russia's ambassador to the US, both during and after a presidential election Russia is believed to have meddled in. Trump is said to be frustrated by his senior advisers' inability to tamp down the Russia issue. Compounding the situation was the revelation last week that former US senator and now Attorney General Jeff Sessions, an early Trump campaign supporter, had met twice with the Russian official but didn't disclose that to lawmakers when he was asked about it during his Senate confirmation hearing.

Trump Has Royally Screwed Congressional Republicans - New Republic -- President Donald Trump’s White House hunkered down unexpectedly Saturday to formulate a response to the president’s bizarre, unhinged tweets that morning accusing former President Barack Obama and members of the Obama administration of illegally “wire tapping” Trump Tower telephones in the weeks before the election. Suspicion quickly mounted that Trump lashed out after reading a Breitbart article, which amplified right-wing radio host Mark Levin’s call for Congress to investigate “Obama’s ‘Silent Coup’” against Trump. Considering the explosiveness of Trump’s allegations, and the likelihood that they were created from whole cloth, his aides would have been well advised to begin the followup process by asking Trump, “Why did you tweet that? Was Breitbart your source?” Instead, Trump and his retinue have decided that the wisest course of action is to pretend the accusations may have merit, and ask Congress to get to the bottom of them. Unsurprisingly, Republicans on Capitol Hill aren’t anywhere close to prepared to rebuff Trump, and have decided instead to pretend Trump’s allegations might be well-founded. House Intelligence Committee Chairman Devin Nunes promised in an official statement to “make inquiries into whether the government was conducting surveillance activities on any political party’s campaign officials or surrogates.”  Between Trump, who may have aided and abetted a Russian effort to sabotage Hillary Clinton’s presidential campaign, and Obama, who now stands accused of abusing his powers to lawlessly surveil a rival party’s standard bearer, only one of them is acting as if he knows he’s done nothing wrong. And it isn’t Trump.

Empire in Decay as Trump Spying Allegations Fly --naked capitalism - Yves here. I find this Real News Network interview with Colin Powell’s former chief of staff, Lawrence Wilkerson, to be astonishing. He effectively says that Trump may not be wrong in his claims that he was spied on. At the 50,000 foot level, Trump’s claim is trivial. Anyone who paid attention to the Edward Snowden revelations knows that the NSA is in a total data acquisition mode, hoovering up information from smart devices and able to use computers and tablets as monitoring devices. But Trump used the word “wiretapping,” which gave his opponents a huge out, since that means a judge gave a warrant to allow for monitoring. And pinning surveillance on Obama personally was another huge stretch. In other words, Trump took what could have been an almost certain statement of fact, and by larding it up with dodgy particulars, pushed it well into crazypants terrain.  What made Trump look bad was the FBI making clear it was not snooping on Trump, when the FBI would have been involved in a wiretap. Lambert and I discussed that it wasn’t hard to come up with scenarios that weren’t wiretaps by which Trump could have been spied upon while keeping Obama Administration hands clean. The most obvious was to have another member of the Five Eyes do the dirty work. What is therefore striking about this report is that Wilkerson, who is no fan of Trump, nevertheless is defending him in this matter. That is a sign that he regards the campaign against Trump as dangerous from an institutional perspective. And he states that the idea that Lambert and I had casually bandied about, that a foreign spy organization like the GCHQ, did Trump dirty work for the US government, is seen as a real possibility in the intelligence community.

Former Congressman Dennis Kucinich Warns Congress that CIA Wiretaps Are Real and It Happened to Him --According to a poll done by the WSJ/NBC, support for the CIA is soaring in recent months, alongside cognitive dissonance -- due to ephemeral dreams of deep state coups being plotted against the Trump regime. Enter former liberal Congressman from Ohio, Dennis Kucinich (D) -- disclosing the fact that he was wiretapped in 2011 and only learned about it after the Washington Times let him listen to the surveillance tape. (video) Let that sink in for a moment.  He went on to warn Congress that this is happening and they shouldn't dismiss the notion that candidate Trump was being spied on, illegally or unethically, just because of their unwavering and irrational fealty to the vainglorious efforts of the CIA, the venerable nostrum for all of their sorrows and long lost dreams of a utopia --  dashed and cracked asunder by a populist movement blowing the hot coals of discord.

Judiciary Panel Asks DOJ, FBI For Information On Trump Wiretapping, Demand Warrants, Court Orders --While some had expected that Trump's latest threat to demand a probe into Obama's alleged wiretapping of the Trump Tower to quietly fade from public consciousness the same way his threat to probe the rigged elections went nowhere, moments ago members of the Judiciary Panel, Senators Graham and Whitehouse, announced they have asked the FBI and DOJ for information on the wire-tapping on President Trump, including copies of warrant applications and associated orders.From the news release:Senators Graham and Whitehouse Request Warrant Applications and Court Orders Related to Possible Wiretapping of President Trump, Trump Campaign, or Trump Tower  U.S. Senators Lindsey Graham (R-South Carolina) and Sheldon Whitehouse (D-Rhode Island), the chair and ranking member of the Senate Judiciary Committee's Subcommittee on Crime and Terrorism, today sent a letter to the Director of the Federal Bureau of Investigation (FBI) and Acting Deputy Attorney General requesting information on possible wiretapping of President Trump, the Trump campaign, or Trump Tower."We request that the Department of Justice provide us copies of any warrant applications and court orders—redacted as necessary to protect intelligence sources and methods that may be compromised by disclosure, and to protect any ongoing investigations—related to wiretaps of President Trump, the Trump Campaign, or Trump Tower," wrote Graham and Whitehouse. "We will be glad to review any such applications and orders once they are disclosed, and proceed as appropriate with the oversight the President has requested.""As Chairman and Ranking Member of the Senate Judiciary Committee's Subcommittee on Crime and Terrorism, we would take any abuse of wiretapping authorities for political purposes very seriously. We would be equally alarmed to learn that a court found enough evidence of criminal activity or contact with a foreign power to legally authorize a wiretap of President Trump, the Trump Campaign, or Trump Tower." And here is the letter they sent to the acting Attorney General Dana Boente as well as FBI Director James Comey:

FBI's Comey: "You’re Stuck With Me For Another Six And A Half Years" -- Refuting speculation that after infuriating first democrats with his handling of Hillary Clinton's email server scandal, and then by demanding that the DOJ deny Trump's allegations that Obama had bugged the Trump Tower, he may quit prematurely, FBI Director James Comey made it clear where he stands on the issue: "You’re stuck with me for about another six and a half years," Comey said on Wednesday at a cybersecurity conference hosted by the FBI and Boston College, referring to the amount of time remaining in his 10-year appointment to the post. Concerns over Comey's tenure re-emerged after he again found himself in the center of a political storm, this time over probes into Russian hacking of the 2016 election and his request on Sunday night that the Justice Department officials reject President Donald Trump’s claims that his predecessor “tapped” his phones (three days later the DOJ has still not complied with Comey's request). Comey is among those invited to testify at the March 20 hearing over Russian "hacking" of the US elections. As Bloomberg reports, Comey didn’t address the controversy during his speech, which was focused on cybersecurity threats, or in response to questions from the audience afterward. He did, however, say that hacking attacks are moving beyond just stealing money and data to affect the U.S. economy and security. "They’re increasingly attacks on our fundamental rights,  the rights guaranteed to us as free people especially here in this great country," Comey said.

Senator Grassley Launches Probe Into FBI Ties With British Spy Behind "Trump Dossier" -Senator Chuck Grassley, the republican Chairman of the Senate Judiciary Committee, has opened a probe into allegations the FBI worked with the British spy who authored the controversial opposition research dossier - which at various points was funded by both an unnamed democrat and republican - on President Trump during the 2016 election.  In a letter to Comey, Grassley asked for records pertaining to any agreements the agency may have had with Christopher Steele. As a reminder, the former MI6 agent wrote an explosive memo on behalf of Trump’s political enemies alleging that the Russians had compromising information on the president. Comey briefed Trump on the existence of the memo in a private meeting in January. Shortly after, several news organizations published the unverified allegations, which the White House denied; BuzzFeed controversially posted the whole memo, for which it has since been taken to court. In late February, The Washington Post reported that the FBI reached an agreement with Steele whereby the British spy would continue his investigation on behalf of the bureau.“While Trump has derided the dossier as 'fake news' compiled by his political opponents, the FBI’s arrangement with Steele shows that the bureau considered him credible and found his information, while unproved, to be worthy of further investigation,” the Post, which has been spoon-fed every piece of leaked wiretapped information involving the Trump administration, reported at the time.However, today Grassley pushed back and demand the FBI provide information relevant to its relationship with and use of the British spy, whose salacious allegations - among which an infamous golden shower scene involving hookers - have infuriated Trump and his allies.“The idea that the FBI and associates of the Clinton campaign would pay Mr. Steele to investigate the Republican nominee for President in the run-up to the election raises further questions about the FBI’s independence from politics, as well as the Obama administration’s use of law enforcement and intelligence agencies for political ends,” Grassley wrote.

The Deep State vs. President Trump - Corporate media like CNN, MSNBC, The New York Times, The Washington Post, and elements within the intelligence community are singing from the same hymnal in denouncing and demonizing President Trump and are not at all subtle in suggesting that only impeachment can "save democracy."  Democratic Party leaders hope to parley this into retaking the White House.To be sure, Trump is a neo-fascist demagogue and his actions should be resisted at every step. However, this is not what's motivating most of these critics. What is the Deep State? It's a hybrid network of structures within which actual power resides. It includes the military-industrial complex, Wall Street, hordes of private contractors whose sole client is the government, national security agencies, select (not all) members of the State, Defense, CIA, Homeland Security, a few key members of the Congressional Defense and Intelligence Committees, and so on. Except for a handful of Congresspersons, Deep State members have not been elected and are accountable to no one. They profoundly influence virtually every domestic and foreign matter of consequence. D.J. Hopkins, another close student of this phenomenon, notes that "the system served by the Deep State is not the United States of America, i.e., the country most Americans believe they live in; the system it serves is globalized Capitalism." And they do so regardless of which party is nominally in control. Lofgren takes pains to point out that the Deep State is not a coven of diabolical conspirators. It has evolved over several decades to become the antithesis of democracy. Why does the Deep State fear and despise Trump? First, his chief strategist, Stephen K. Bannon, is a fervent disciple of capitalist economic nationalism. Further, his America is the "shining city on a hill," but where the dwellers are Christian white people. Deep State types are convinced Trump's skewed priorities will undermine the dominant role played by the U.S. in the global capitalist system from which they derive their power, wealth, and ultra-lavish lifestyles. We are witnessing a no-holds-barred clash between two warring camps. Second, both the Pentagon and their arms-dealer friends are salivating over a new Cold War with Russia and will do anything to sabotage enhancing peaceful understanding between Washington and Moscow. This explains their hysterical Kremlin-baiting of Trump. Likewise, Trump sent chills through the Deep State when he voiced doubts about NATO as an archaic relic of the past, expensive and dangerously misused outside of Europe.

President Donald Trump is the most powerful cornered animal in the world - For all his inconstancy of character, Donald Trump is a master manipulator. He rose to political prominence by slandering Barack Obama. He rode the birther myth as far as it would go – before brazenly jettisoning it with the insistence that it was all the handiwork of Hillary Clinton. Now once again, he seeks to buoy his political fortunes by attacking Obama. Perhaps what is so striking about the tweets is not their desperation, but their cynicism. In exclaiming “This is McCarthyism!”, Trump said something deeply revealing – only about himself. McCarthyism was never in the first instance about wiretapping. It was about defaming public officials with charges of treason without a shred of evidence. Sounds familiar, no? Equally revealing was Trump’s tweet: “I’d bet a good lawyer could make a great case out of the fact that President Obama was tapping my phones in October, just prior to Election!” As Trump well knows, a good lawyer can make a case out of anything. In the 1970s, after the justice department accused the Trump Corporation of racially discriminatory rental policies, Trump hired Roy Cohn. This was a man who, as a young lawyer, had assisted Joseph McCarthy’s red-baiting. On Trump’s behalf, Cohn countersued the government for $100m, a tactic Trump absorbed and has practiced throughout his career: when on the defensive, attack.  Concerned about congressional investigations into contact between his campaign and the Russians? Make a groundless charge of wiretapping against Obama and insist that the allegations be included in the investigations.  Cohn’s countersuit did not prevail, nor will Trump’s charges against Obama stick. But that is not the point. The point is to distract attention away from real allegations by creating a chaos of conflicting claims. And in this regard the strategy is all too effective. If there is something extraordinary about Trump it is how low he is willing to go.

Official Washington Tips into Madness - The intensifying hysteria over Russia has pushed Official Washington over the edge into outright madness. On one side of this asylum, you have the Democrats, neoconservatives and mainstream media, while on the other, you have the embattled Trump administration. Both sides have been making grave allegations with little or no evidence to support them. The Democratic/neocon/MSM side has pushed the conspiracy theory that Donald Trump’s campaign colluded with Russians to put the real-estate mogul in the White House, but there is, as yet, no evidence that such a thing happened.Even one of the top advocates feeding this Russia frenzy, New York Times correspondent Thomas L. Friedman, acknowledged on Sunday on NBC’s “Meet the Press” that “I agree, there is no evidence,” but then added: “which is why we need a special prosecutor or an independent commission to get to the bottom of it.”But that is not how investigations are supposed to work. You’re supposed to have evidence of wrongdoing and then examine it in the investigative phase to see if the evidence withstands scrutiny. What Friedman is suggesting is more like a “fishing expedition” or a “witch hunt.” The drip-drip of this investigative water torture finally got to President Trump last week as he flew down to his winter home at Mar-a-Lago. He joined the crazy melee early Saturday morning by sending out a flurry of tweets accusing President Obama of wiretapping Trump Tower in New York City in the weeks before the Nov. 8 election. Trump also offered no evidence while demanding an investigation to get to the bottom of this.

Russia: The Conspiracy Trap - Masha Gessen -- What’s so terrible about Russia? Serious question. Among the things that unite President Trump and his cabinet picks is their propensity for lying. ProPublica recently offered a list of lies made by Trump nominees in confirmation hearings in Congress, mostly under oath. Environmental Protection Agency head Scott Pruitt lied when he claimed not to have used a private email account as Oklahoma attorney general (Vice President Mike Pence used one too, as governor of Indiana); Health and Human Services Secretary Tom Price lied about a suspect stock purchase; Treasury secretary Steven Mnuchin lied about his firm’s history of profiting from the housing crisis; Education Secretary Betsy DeVos lied that she was not involved in her family foundation, which has supported anti-LGBT causes and funded a variety of conservative think tanks and colleges, though tax filings show she has been its vice president for seventeen years. And, as we now know, Attorney General Jeff Sessions lied about contacts with the Russian ambassador. Lying to Congress is a criminal offense. But Pruitt was confirmed in a 52-46 vote, with two Democrats voting in favor; Price got confirmed 52-47; Mnuchin’s tally was 53-47; and even DeVos, whose utter lack of knowledge about public education led two Republicans to vote against her, squeaked through with a 50-50 vote broken by Vice President Pence. These affirming votes took place despite the fact that it was clear before the decision that the candidates had misled Congress—and despite the fact that each of them supports policies that are deeply threatening to large numbers of Americans. Lies about Russia are a different matter. Trump’s national security adviser, Mike Flynn, was forced to resign less than four weeks into the new presidency after it emerged that he had lied to Pence about meeting with the Russian ambassador; and Sessions, under bipartisan fire for having lied to Congress about the same thing, now faces calls to step down.  For more than six months now, Russia has served as a crutch for the American imagination. It is used to explain how Trump could have happened to us, and it is also called upon to give us hope. When the Russian conspiracy behind Trump is finally fully exposed, our national nightmare will be over.

Leading Putin Critic Warns of Xenophobic Conspiracy Theories Drowning U.S. Discourse and Helping Trump - Glenn Greenwald -- Masha Gessen is a Russian-American journalist and author who has become one of the nation’s leading Russia experts and one of its most relentless and vocal critics of Vladimir Putin. She has lived her life on and off in the U.S. and Russia, but as a Jewish lesbian and mother of three children, she left Russia in 2013 and moved back to the U.S. in part because she felt threatened by the increasingly anti-LGBT climate there, one that began particularly targeting LGBT adopted families with discriminatory legislation. Throughout the years Gessen (pictured, above) has become one of the go-to Kremlin critics for the U.S. media, publishing harshly anti-Putin reporting and commentary in numerous media outlets, including the New York Times, the Washington Post, Slate, Harper’s and several articles about political repression in Russia for the Intercept. She has also become a virulent critic of Donald Trump, writing shortly after the election that “Trump is the first candidate in memory who ran not for president but for autocrat—and won,” while describing the critical lessons that can be learned on how to resist Trump’s autocratic impulses by studying Putin. She now has a new article in the New York Review of Books – entitled “Russia: the Conspiracy Trap” – that I cannot recommend highly enough. Its primary purpose is to describe, and warn about, the insane and toxic conspiracy-mongering about Russia that has taken over not the fringe, dark corners of the internet that normally traffic in such delusional tripe, but rather mainstream U.S. media outlets and the Democratic Party. Few articles have illustrated the serious, multi-faceted dangers of what has become this collective mania in the U.S. as well as Gessen’s does.

Is The Left Trying To Start A Civil War? --- An army of subversives is attempting to undermine the Trump administration from within the government, and at the same time a whole host of prominent leftist leaders are fueling the flames of hate against Trump and are promoting riots, civil uprisings and in some cases even violence. And of course the mainstream media is a more than willing accomplice, because pretty much everyone that works in the mainstream media absolutely hates Donald Trump. On a fundamental level, the United States is more divided today than it has been in any of our lifetimes, and the radical left is treating the presidency of Donald Trump as if it was the end of the world. We are seeing terms such as “Nazi”, “racist” and “dictator” thrown around very casually, but people need to understand that words really matter. When subversives on the left use such inflammatory language, there is a very real danger that they could actually spark a violent insurrection against the United States government.Just think about this for a moment. If a “Nazi” had really become the president of the United States, what would the appropriate response be?  When the left calls Donald Trump and his supporters “Nazis” and “racists”, they are suggesting that people should act accordingly, and that is extremely dangerous. Yesterday, I wrote about how the “deep state” is attempting to destroy the Trump administration from the inside, but meanwhile others are trying to spark an uprising from the outside. Something that former Obama Attorney General Loretta Lynch recently said is extremely disturbing. She recorded a video message in which she suggested that in the struggle against Donald Trump there is going to be blood in the streets and some people are going to have to dieIt has been people, individuals who have banded together, ordinary people who simply saw what needed to be done and came together and supported those ideals who have made the difference. They’ve marched, they’ve bled and yes, some of them died. This is hard. Every good thing is. We have done this before. We can do this again.”  Remember, this is not just some passionate young leftist radical saying these things. This woman was the Attorney General of the United States not too long ago. For her to make statements such as these is irresponsible to the extreme. If you have not seen this video yet, you can find it on YouTube right here.

Russian Hackers Reemerge, Now Said To Demand Bitcoin Ransoms From Liberal Groups --In the latest attempt to steer the political narrative away from Trump's wiretapping accusations and back to Russian hackers, Bloomberg's Michael Riley is reporting this morning that at least a dozen liberal groups in the U.S. have been targeted in a new wave of new cyber attacks.   Apparently those hackers are scouring the emails of left-leaning organizations for embarrassing details and attempting to extract hush money. At least a dozen groups have faced extortion attempts since the U.S. presidential election, said the people, who provided broad outlines of the campaign. The ransom demands are accompanied by samples of sensitive data in the hackers’ possession.In one case, a non-profit group and a prominent liberal donor discussed how to use grant money to cover some costs for anti-Trump protesters. The identities were not disclosed, and it’s unclear if the protesters were paid.At least some groups have paid the ransoms even though there is little guarantee the documents won’t be made public anyway. Demands have ranged from about $30,000 to $150,000, payable in untraceable bitcoins, according to one of the people familiar with the probe.  Of course, in what has become a journalistic norm, all of the details from Bloomberg come from two anonymous people "familiar with probes being conducted by the FBI and private security firms."

 GOP Rep Mike Kelly: "Obama Is In Washington For One Reason Only, To Run A Shadow Government" --Speaking to a group of fellow Republicans at an event Saturday in Pittsburgh, U.S. Representative Mike Kelly of Pennsylvania was caught on film saying that President Obama's extended stay in Washington D.C. has absolutely nothing to do with where his daughter attends school, but rather, is motivated by his desire to run a 'shadow government' to disrupt the agenda of the new Trump administration."President Obama himself said he was going to stay in Washington until his daughters graduated.  I think we ought to pitch in to let him go someplace else because he's only there for one purpose, and one purpose only, and that is to run a shadow government that is going to totally upset the new agenda.  It just doesn't make sense." "And people sit back and they say, 'my gosh why can't you guys get this done.'  And I'm saying, we've got a new CEO and we've got some new heads in the different departments but the same people are there and they don't believe that the new owners, or the new managers, should be running the ship."

Sessions asks 46 Obama-era US attorneys to resign - Attorney General Jeff Sessions has asked dozens of U.S. attorneys appointed by former President Obama to submit their resignations, the Department of Justice announced Friday.U.S. attorneys are normally replaced at the beginning of new administrations. Of the 93 U.S. attorneys, 46 remain from the past administration, according to the Department of Justice (DOJ).Sessions asked for the federal prosecutors to resign "in order to ensure a uniform transition," DOJ spokeswoman Sarah Isgur Flores said in a statement.“As was the case in prior transitions, many of the United States Attorneys nominated by the previous administration already have left the Department of Justice," the spokeswoman said.The DOJ said career prosecutors in Sessions' office would continue investigations and prosecutions until the new U.S. attorneys are confirmed.The call for resignations applies to all Senate-confirmed U.S. Attorneys, including Preet Bharara, the U.S. attorney for the Southern District of New York.That comes as a surprise, as Bharara reportedly met with Trump after the election and agreed to remain in his position during the Trump administration. Sessions also asked him to stay, the prosecutor told The New York Times.Once the resignations are submitted, it would be Trump's decision on whether to accept all of them. Sen. Charles Schumer (D-N.Y.) said in a statement that he was "troubled to learn of reports of requests for resignations from the remaining U.S. Attorneys, particularly that of Preet Bharara."

Bharara, Wall Street’s Cop, Among Prosecutors Asked to Quit -- Wall Street enforcer Preet Bharara may be forced out as the U.S. attorney in Manhattan despite assurances he said he had received from the incoming Trump administration that he would remain in the job. Attorney General Jeff Sessions on Friday abruptly asked for the resignations of 46 U.S. attorneys, all those remaining who had served under former President Barack Obama. Although most of the holdovers were expected to leave at some point, Bharara said shortly after meeting with Sessions and President-elect Donald Trump last November that he was asked to stay on in the new administration and had agreed to do so. A Justice Department statement on the request for resignations didn’t address whether all would be accepted or some held for later use, allowing for continuity on important investigations. After a similar request to State Department political appointees, the resignations were accepted immediately.     Sessions’ request for resignations on Friday didn’t specify exit dates. The U.S. attorney in Brooklyn, Robert Capers, and Paul Fishman of New Jersey said in separate statements that they had been told to resign effective Friday.  The Senate’s top Democrat, Chuck Schumer of New York, said the attorney general’s move to purge U.S. prosecutors would interrupt investigations and hinder the department’s work. “While it’s true that presidents from both parties made their own choices for U.S. attorney positions across the country, they have always done so in an orderly fashion that doesn’t put ongoing investigations at risk,” he said in a statement. Trump declined to accept the resignations of Dana Boente, a U.S. prosecutor in Virginia who’s currently acting deputy attorney general, and Rod Rosenstein of Maryland, Trump’s pick to become deputy attorney general, Justice Department spokesman Peter Carr said in email.

Meanwhile this is still going on during this week - From Diane Ravitch’s blog: While we’re consumed 24/7 with the Trump/Russia psychodrama, Republicans are quietly, under the cover of darkness and diversion, introducing these new bills in the House:

  • HR 610 Vouchers for Public Education — (The bill also repeals basic nutrition standards for the national school lunch and breakfast programs)
    HR 899 Terminate the Department of Education
    HR 785 National Right to Work (aimed at ending unions, including teacher unions)
  • –HR 861 Terminate the Environmental Protection Agency
    –HJR 69 Repeal Rule Protecting Wildlife
    –HR 370 Repeal Affordable Care Act
    –HR 354 Defund Planned Parenthood
    –HR 83 Mobilizing Against Sanctuary Cities Bill
    –HR 147 Criminalizing Abortion (“Prenatal Nondiscrimination Act”)
    –HR 808 Sanctions against Iran

Vanity Fair Acts as Democratic Party Enforcer Against Greenwald, NC, Others; Train Wreck Ensues -- Yves Smith - Vanity Fair has never been shy about its fealty to people with money and power, including Mike Milken, Blackrock’s Larry Fink, Theranos founder Elizabeth Holmes, and Democratic Party elites. One of the magazine’s better-known writers, James Wolcott, is so unhinged at how a Trump presidency has upended the natural order that he savaged an eclectic group of writers, movie celebrities, and public figures that he regards as insufficiently hostile to Trump.   He included Naked Capitalism in his hit list.  As far I can can tell, Wolcott’s targets share one characteristic: They are known for doing high quality work. That, and they refuse to buy into the proposition that having the losing factions in a Presidential election – including the “intelligence community” – engineer a soft coup against the winning candidate is a consummation devoutly to be wished.  We don’t share his enthusiasm because we’ve contemplated what rule by President Pence or military/surveillance community coup-meisters would amount to. Yet Wolcott explicitly advocates turfing Trump out by non-political means: “Go, State, go.”   Wolcott’s screed has such a high noise-to-signal ratio that he offers little concrete criticism. In fact, it’s both sad and revealing when a writer esteemed for his phrase-making descends into incoherent blather that we are supposed to regard as incisive because there are a lot of big words in there. It’s the rhetorical equivalent of the naked Emperor not realizing that the sight of his bouncing bum isn’t very enticing.

Chris Hedges: Donald Trump’s Greatest Allies Are the Liberal Elites - The liberal elites, who bear significant responsibility for the death of our democracy, now hold themselves up as the saviors of the republic. They have embarked, despite their own corruption and their complicity in neoliberalism and the crimes of empire, on a self-righteous moral crusade to topple Donald Trump. It is quite a show. They attack Trump’s “lies,” denounce executive orders such as his travel ban as un-American and blame Trump’s election on Russia or FBI Director James Comey rather than the failed neoliberal policies they themselves advanced.  Where was this moral outrage when our privacy was taken from us by the security and surveillance state, the criminals on Wall Street were bailed out, we were stripped of our civil liberties and 2.3 million men and women were packed into our prisons, most of them poor people of color? Why did they not thunder with indignation as money replaced the vote and elected officials and corporate lobbyists instituted our system of legalized bribery? Where were the impassioned critiques of the absurd idea of allowing a nation to be governed by the dictates of corporations, banks and hedge fund managers? Why did they cater to the foibles and utterings of fellow elites, all the while blacklisting critics of the corporate state and ignoring the misery of the poor and the working class? Where was their moral righteousness when the United States committed war crimes in the Middle East and our militarized police carried out murderous rampages? What the liberal elites do now is not moral. It is self-exaltation disguised as piety. It is part of the carnival act.   The liberal class, ranging from Hollywood and the Democratic leadership to The New York Times and CNN, refuses to acknowledge that it sold the Democratic Party to corporate bidders; collaborated in the evisceration of our civil liberties; helped destroy programs such as welfare, orchestrate the job-killing North American Free Trade Agreement and Trans-Pacific Partnership deal, wage endless war, debase our public institutions including the press and build the world’s largest prison system.  “The truth is hard to find. The truth is hard to know. The truth is more important than ever,” reads a television ad for The New York Times. What the paper fails to add is that the hardest place to find the truth about the forces affecting the life of the average American and the truth about empire is in The New York Times itself. News organizations, from the Times to the tawdry forms of entertainment masquerading as news on television, have rendered most people and their concerns invisible. Liberal institutions, especially the press, function, as the journalist and author Matt Taibbi says, as “the guardians” of the neoliberal and imperial orthodoxy.

 An Odds-On Bet – Mankiw - According to the betting odds over at Ladbrokes, President Trump is more likely to resign or be impeached than he is to serve a full term.

The People Who Love Donald Trump’s Favorite Preacher -- Reverend Franklin Graham is the preacher who gave the blessing at Donald Trump's inauguration this past January. He has caused significant unease within the Christian world, and the general public, for saying things like Islam is evil, that LGBTQ people should not be welcomed into your home, and that God intervened to elect Trump because, among other things, the White House had been infiltrated by secularists and Muslims. He's also the son of legendary tent revivalist, Billy Graham. And an Obama birther to boot, according to the Globe and Mail. Graham was in Canada this weekend—not under some tent in rural Alberta, but preaching to a packed 20,000-seat stadium in rainy, progressive Vancouver. I went to the free-to-the-public "Festival of Hope" to find out why so many turned out for a man openly opposed by many local church leaders and politicians.

CIA Contractor on #VAULT7 Leak: ‘There is Heavy Shit Coming Down’ -- Everything that Wikileaks has revealed over the past year has hurt both the integrity and honor of the United States. The question you have to grapple with, is it well deserved? After all, living inside of a vast and powerful empire has its benefits. As the empire expands, so does the wealth of its citizens. But it hasn't worked out that way, has it? The CIA deep staters have turned their guns on the people they serve -- using third world banana republic tactics to silence opposition, take down regimes not beholden to their world view, using advanced technology to both spy and monitor on American citizens -- infringing on our civil rights like nothing we've ever seen before. The reason for the populist uprising and the lack of equanimity amongst those traditionally supportive of the CIA lies in the improper distribution of the spoils of war. There aren't any. All the average American has received from $10 trillion in Obama inspired deficit spending is American casualties of war, jobs lost to cheaper labor overseas, expensive oil prices, expensive healthcare, and run away education costs -- along with a sundry of social disturbances that have people fed up.While the elite flaunt hedonistic lifestyles, eschewing basic decency for the perverse, normies get more of the same old bullshit. After electing a true agent of change in Donald Trump, the people are laughed at and impugned by the elitist media. Their President is set upon by 'permanent government' officials in the intelligence agencies -- whose only goal is to derail and destroy his term before it even begins.Then we come to find out the same people who told us the Russians were our enemy, revealing corruption and depravity on a monumental scale via the Podesta emails, they were, in fact, the ones spying on us all along -- both lying and mocking us like Lords in a fiefdom.Here's Fox News reporting on the latest scandal to hit the wires, #VAULT7 Fox New sources inside the CIA said the agency was running around like headless chickens, saying 'there is heavy shit coming down.'

WikiLeaks publishes ‘biggest ever leak of secret CIA documents’ Guardian - The US intelligence agencies are facing fresh embarrassment after WikiLeaks published what it described as the biggest ever leak of confidential documents from the CIA detailing the tools it uses to break into phones, communication apps and other electronic devices. The thousands of leaked documents focus mainly on techniques for hacking and reveal how the CIA cooperated with British intelligence to engineer a way to compromise smart televisions and turn them into improvised surveillance devices. The leak, named “Vault 7” by WikiLeaks, will once again raise questions about the inability of US spy agencies to protect secret documents in the digital age. It follows disclosures about Afghanistan and Iraq by army intelligence analyst Chelsea Manning in 2010 and about the National Security Agency and Britain’s GCHQ by Edward Snowden in 2013. The new documents appear to be from the CIA’s 200-strong Center for Cyber Intelligence and show in detail how the agency’s digital specialists engage in hacking. Monday’s leak of about 9,000 secret files, which WikiLeaks said was only the first tranche of documents it had obtained, were all relatively recent, running from 2013 to 2016.  The revelations in the documents include:

  • CIA hackers targeted smartphones and computers.
  • The Center for Cyber Intelligence, based at the CIA headquarters in Langley, Virginia, has a second covert base in the US consulate in Frankfurt which covers Europe, the Middle East and Africa.
  • A programme called Weeping Angel describes how to attack a Samsung F8000 TV set so that it appears to be off but can still be used for monitoring.

The CIA declined to comment on the leak beyond the agency’s now-stock refusal to verify the content. “We do not comment on the authenticity or content of purported intelligence documents,” wrote CIA spokesperson Heather Fritz Horniak. But it is understood the documents are genuine and a hunt is under way for the leakers or hackers responsible for the leak.

CIA hack job(s) EXPOSED --Finally, we have a 'snowden' event for the CIA and the inner workings of how the agency operates in the digital 'cyber' sphere. Wikileaks released "Vault7" - a treasure trove of documents pertaining to their 'cyberwarfare' or in layman's terms, hacking operations. Since we've released Splitting Pennies, in the hope of explaining how the world 'really' works - we've received mostly positive feedback, but many mainstream readers have accused us of being 'conspiracy theorists' - well now we have the proof.  The CIA has spent millions of dollars, hired the best computer experts in the world, and developed a series of world class hacking tools.  These aren't just your normal Ion Cannon or 'scripts' - these are the most sophistocated and powerful hacking tools in the world.  So sophistocated, they fooled software titans like Google and Microsoft (who have their own in-house security experts).  More alarmingly, the CIA allowed this information to be proliferated into unclassified hands and eventually to end up in Wikileaks: Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA. The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive. What's not clear yet at this point, if the 'source' was a lone ranger, or it was a coordinated release.  Or, the source may have been one of the unclassified users who accidentally received these files or access to them in a breach, and felt obligated to forward them to wikileaks.  Possibly we'll never know, but it doesn't really matter.  Like previous leaks, these documents are an inner working 'blueprint' of CIA's modern internet operations. 

WikiLeaks CIA files: The 6 biggest spying secrets revealed by the release of ‘Vault 7’ -- WikiLeaks has released a huge set of files that it calls "Year Zero" and which mark the biggest exposure of CIA spying secrets ever.The massive set of documents – over 8,000 pages in all – include a host of hacking secrets that could embarrass intelligence agencies and the US government, as well as undermining spying efforts across the world. Here are six of the biggest secrets and pieces of information yet to emerge from the huge dump.

  • 1) The CIA has the ability to break into Android and iPhone handsets, and all kinds of computers. The US intelligence agency has been involved in a concerted effort to write various kinds of malware to spy on just about every piece of electronic equipment that people use. That includes iPhones, Androids and computers running Windows, macOS and Linux.
  • 2) Doing so would make apps like Signal, Telegram and WhatsApp entirely insecure Encrypted messaging apps are only as secure as the device they are used on – if an operating system is compromised, then the messages can be read before they encrypted and sent to the other user. WikiLeaks claims that has happened, potentially meaning that messages have been compromised even if all of the usual precautions had been taken.
  • 3) The CIA could use smart TVs to listen in on conversations that happened around them. One of the most eye-catching programmes detailed in the documents is "Weeping Angel". That allows intelligence agencies to install special software that allows TVs to be turned into listening devices – so that even when they appear to be switched off, they're actually on.
  • 4) The agency explored hacking into cars and crashing them, allowing 'nearly undetectable assassinations'
  • 5) The CIA hid vulnerabilities that could be used by hackers from other countries or governments Such bugs were found in the biggest consumer electronics in the world, including phones and computers made Apple, Google and Microsoft. But those companies didn't get the chance to fix those exploits because the agency kept them secret in order to keep using them, the documents suggest.
  • 6) More information is coming. The documents have still not been looked through entirely. There are 8,378 pages of files, some of which have already been analysed but many of which hasn't. When taken together, those "Vault 7" leaks will make up the biggest intelligence publication in history, WikiLeaks claimed.

Gaius Publius: Explosive WikiLeaks Release Exposes Massive, Aggressive CIA Cyber Spying, Hacking Capability - naked capitalism - Yves here. The first release of the Wikileaks Vault 7 trove has curiously gone from being a MSM lead story yesterday to a handwave today. On the one hand, anyone who was half awake during the Edward Snowden revelations knows that the NSA is in full spectrum surveillance and data storage mode, and members of the Five Eyes back-scratch each other to evade pesky domestic curbs on snooping. So the idea that the CIA (and presumably the NSA) found a way to circumvent encryption tools on smartphones, or are trying to figure out how to control cars remotely, should hardly come as a surprise. However, at a minimum, reminding the generally complacent public that they are being spied on any time they use the Web, and increasingly the times in between, makes the officialdom Not Happy. And if this Wikileaks claim is even halfway true, its Vault 7 publication is a big deal: Recently, the CIA lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized “zero day” exploits, malware remote control systems and associated documentation. This extraordinary collection, which amounts to more than several hundred million lines of code, gives its possessor the entire hacking capacity of the CIA. The archive appears to have been circulated among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive. This is an indictment of the model of having the intelligence services rely heavily on outside contractors. It is far more difficult to control information when you have multiple organizations involved. In addition, neolibearlism posits that workers are free agents who have no loyalties save to their own bottom lines (or for oddballs, their own sense of ethics). Let us not forget that Snowden planned his career job moves, which included a stint at NSA contractor Dell, before executing his information haul at a Booz Allen site that he had targeted. Admittedly, there are no doubt many individuals who are very dedicated to the agencies for which they work and aspire to spend most it not all of their working lives there. But I would assume that they are a minority.

Wikileaks Exposes CIA Exploit Capable Of Cyber "False Flag" Attack To Blame Russia--Earlier today, Wikileaks once again made headlines following its release of the “largest ever publication of U.S. Central Intelligence Agency (CIA) documents.” The massive release – just the first batch in a trove of documents code-named “Vault 7” by Wikileaks – details the CIA’s global covert hacking program and its arsenal of weaponized exploits. While most coverage thus far has focused on the CIA’s ability to infiltrate and hack smartphones, smart TVs and several encrypted messaging applications, another crucial aspect of this latest leak has been skimmed over – one with potentially far-reaching geopolitical implications. According to a Wikileaks press release, the 8,761 newly published files came from the CIA’s Center for Cyber Intelligence (CCI) in Langley, Virginia. The release says that the UMBRAGE group, a subdivision of the center’s Remote Development Branch (RDB), has been collecting and maintaining a substantial library of attack techniques ‘stolen’ from malware produced in other states, including the Russian Federation.” As Wikileaks notes, the UMBRAGE group and its related projects allow the CIA to misdirect the attribution of cyber attacks by “leaving behind the ‘fingerprints’ of the very groups that the attack techniques were stolen from.”In other words, the CIA’s sophisticated hacking tools all have a “signature” marking them as originating from the agency. In order to avoid arousing suspicion as to the true extent of its covert cyber operations, the CIA has employed UMBRAGE’s techniques in order to create signatures that allow multiple attacks to be attributed to various entities – instead of the real point of origin at the CIA – while also increasing its total number of attack types.

CIA contractors likely source of latest WikiLeaks release: U.S. officials | Reuters: Contractors likely breached security and handed over documents describing the Central Intelligence Agency's use of hacking tools to anti-secrecy group WikiLeaks, U.S. intelligence and law enforcement officials told Reuters on Wednesday. Two officials speaking on condition of anonymity said intelligence agencies have been aware since the end of last year of the breach, which led to WikiLeaks releasing thousands of pages of information on its website on Tuesday. According to the documents, CIA hackers could get into Apple Inc (AAPL.O) iPhones, devices running Google's Android software and other gadgets in order to capture text and voice messages before they were encrypted with sophisticated software. The White House said on Wednesday that President Donald Trump was "extremely concerned" about the CIA security breach that led to the WikiLeaks release. "Anybody who leaks classified information will be held to the highest degree of law," spokesman Sean Spicer said. The two officials told Reuters they believed the published documents about CIA hacking techniques used between 2013 and 2016 were authentic. One of the officials with knowledge of the investigation said companies that are contractors for the CIA have been checking to see which of their employees had access to the material that WikiLeaks published, and then going over their computer logs, emails and other communications for any evidence of who might be responsible. On Tuesday in a press release, WikiLeaks itself said the CIA had "lost control" of an archive of hacking methods and it appeared to have been circulated "among former U.S. government hackers and contractors in an unauthorized manner, one of whom has provided WikiLeaks with portions of the archive."

The Conflict within the Deep State Just Broke into Open Warfare: When do the unlimited powers of the Intelligence/Security agencies threaten America's domestic and global national interests? The CIA and its political enablers claim the agency's essentially unlimited powers, partially revealed by Wikileak's Vault 7, pose no threat to America's interests, since they are intended to "defend" American interests. This is the rationale presented by neocon CIA allies in both political parties: the CIA can't possibly threaten America's interests because the CIA defines America's interests. This is the wormhole down which civil liberties and democracy have drained. It is an extraordinarily defining moment in American history when the director of the FBI publicly declares that there is no such thing as "absolute privacy" in the U.S. In effect, privacy is now contingent on the level of interest the Security State has in the private conversation/data. If we read the U.S. Constitution, we do not find such contingencies: civil liberties are absolute. Post-1790 presidents have temporarily mooted civil liberties in time of war, and the CIA-led camp of the Deep State has justified its unlimited powers by effectively declared "a state of war is now permanent and enduring." So what's left to defend if America has become the enemy of civil liberties and democracy, i.e. become a totalitarian state ruled by Security Services and their political henchmen and apologists?

The WikiLeaks revelations and the crimes of US imperialism  - Whenever the State Department, the CIA or unnamed “intelligence officials” proclaim another alleged “cyber” provocation by Washington’s geopolitical rivals, news anchors breathlessly regurgitate the allegations as fact, accompanying them with potted infographics and footage of masked men in darkened rooms aggressively typing away at computer keyboards.But the official narrative of a benevolent and well-intentioned US government coming under attack from hordes of Russian and Chinese hackers, spies and “internet trolls” was upended Tuesday with the publication by WikiLeaks of some 9,000 documents showing the methods used by the Central Intelligence Agency to carry out criminal cyber-espionage, exploitation, hacking and disinformation operations all over the world.The documents reveal that the CIA possesses the ability to exploit and control any internet-connected device, including mobile phones and “smart” televisions. These tools, employed by an army of 5,000 CIA hackers, give the agency the means to spy on virtually anyone, whether inside or outside the United States, including foreign governments, “friend” and foe alike, as well as international organizations such as the United Nations.The WikiLeaks documents expose the United States as the world’s greatest “rogue state” and “cyber criminal.” The monstrous US espionage network, paid for with hundreds of billions in tax dollars, uses diplomatic posts to hide its activities from its “allies,” spies on world leaders, organizes kidnappings and assassinations and aims to influence or overturn elections all over the world. On Tuesday, former CIA director Michael Hayden replied to the revelations by boasting, “But there are people out there that you want us to spy on. You want us to have the ability to actually turn on that listening device inside the TV to learn that person’s intentions.” One can only imagine the howls of indignation such statements would evoke in the American press if they were uttered by a former Russian spymaster. In his comments, Hayden barely attempts to cover up the fact that the United States runs a spying and political disruption operation the likes of which Russian President Vladimir Putin or Chinese President Xi Jinping could only dream of.The WikiLeaks documents show that the United States seeks to cover up its illicit operations by planting false flags indicating that its geopolitical adversaries, including Russia and China, bear responsibility for its crimes.

The CIA are the real ‘threat to national security’; leaks show they treated software exploits like toys - In the wake of Wikileaks’ latest release – 8,000 webpages detailing CIA malware development named ‘Vault 7’ – most media attention has related to the ‘Weeping Angel’ software used to turn Samsung TVs into listening devices that appear off. The smart TV exploit has satisfied a media thirst for headlines with its James Bond-esque gadgetry and dystopian project title, but it is far from being the most concerning aspect of the documents released so far. That would be a project named Hive. While smart phones, routers, and other data transmission devices are routinely reverse-engineered in order to probe potential access points for the CIA – for instance, the HarpyEagle project created access to place a root kit on the Apple Airport Extreme and Time Capsule base stations – this was largely suspected by a public living in a post-Snowden era. Much more distressing is the Hive software, developed as an ‘interactive shell’ within Windows operating systems and Mikrotik router software in order to provide an ‘initial foothold’ for future projects. Put simply, if you are one of 1.25 billion people in the world who use a Windows PC then your device contains an exploit that can be remotely accessed and manipulated by another agent. This agent was supposed to be the CIA, however, the past has shown that ultimately it can be whoever pays top dollar for the privilege. The CIA’s preferred business model is to outsource much of their development to private agencies. This model in the past has inevitably led to software being hoarded by private contractors who, despite passing a security clearance, have little regard for the integrity of the CIA and an abundance of contacts acquired through their line of work who would being willing to pay huge sums for the source code.

Let’s Give the CIA the Credit It Deserves -- For months now, our country has endured the tacit denigration of American ingenuity. For way too long, Russia has been credited with prodigious hacking and undermining of democracy in the United States. Contrary to all the public relations work that U.S. intelligence agencies have generously done for them, the Russians don’t even rank as peripheral to the obstacles and prospects for American democracy. Rest assured, throughout the long history of the United States, we haven’t needed foreigners to get the job done. In our current era, can Vladimir Putin take any credit for purging huge numbers of African Americans, Latinos and other minority citizens from the voter rolls? Of course not. Did Putin create and maintain the barriers that prevented many low-income people from voting on November 8? Only in his dreams. Can the Kremlin hold a candle to the corporate-owned cable TV channels that gave Donald Trump umpteen free hours of uninterrupted air time for speeches at his campaign rallies? Absolutely not. Could any Russian operation claim more than a tiny sliver of impact compared to the handiwork of FBI Director James Comey as he boosted Donald Trump’s prospects with a pair of gratuitous announcements about a gratuitously re-opened probe of Hillary Clinton’s emails during the last days of the 2016 campaign? No way. Is Putin anything but a miniscule lightweight in any efforts to manipulate the U.S. electorate compared to “dark money” American billionaires like the Koch brothers? Give us a break. And how about the Fourth Amendment of the U.S. Constitution? The Kremlin can only marvel at the way that the CIA, the NSA and the bipartisan leadership in Washington have shredded the Fourth Amendment while claiming to uphold it. To sum up: The CIA’s efforts to tout Russia add up to jaw-dropping false modesty! The humility of “deep state” leaders in Langley is truly awesome. Let’s get a grip. Overwhelmingly, the achievements of thwarting democracy in America have been do-it-yourself operations. It’s about time that we give adequate credit to the forces perpetuating this country’s self-inflicted wounds to American democracy.

The Bag Holder and His Bag -- Kunstler -Can you see those swans coming in for a landing on Pond USA? They’re not exactly black swans, because you knew they were out there circling, but they’re dark enough against the twilight’s last gleaming to give you the heebie jeebies. Troubles and portents of more trouble are stacking up as we approach the Ides of March zone of financial turmoil. You must surely surmise that a debt ceiling impact, a Federal Reserve interest rate hike, and the election of a Dutch anti-EU leader all scheduled for that one day are a good start on the greater unravel to follow. Glowering in the spotlight at center stage will be President Donald Trump, designated bag-holder of the Deep State and its myrmidons. And what’s in that bag he’s holding? Just a couple of shit sandwiches and a hair shirt for his journey down the lonely road to exile. But getting rid of Trump would only leave the Deep State with a bigger problem: itself. That is, an economy and a society that can’t be governed by any means. I think many professional observers-of-the-scene are missing something in this unspooling story: the Deep State is actually becoming more impotent and ineffectual, not omnipotent. Case in point: RussiaGate — come on, let’s finally call it that — the popular idea that Russia hacked the 2016 presidential election. It’s popular because it’s such a convenient excuse for the failure of a corrupt, exhausted, and brain-dead Democratic establishment. But all the exertions of the Deep State to put over this story since last summer were negated this week by two events. First, there was former NSA Director James Clapper’s appearance on NBC’s Sunday Meet the Press show with Chuck Todd featuring the following: CLAPPER: We did not include any evidence in our report, and I say, “our,” that’s N.S.A., F.B.I. and C.I.A., with my office, the Director of National Intelligence, that had anything, that had any reflection of collusion between members of the Trump campaign and the Russians. There was no evidence of that included in our report. And so what to make of the RussiaGate histrionics served up by CNN, The New York Times, the WashPo, NPR, and sundry tools as Senator Chuck Schumer (D–NY)? What I make of it is a growing civil war in the government itself, and perhaps something arguably like sedition. Second matter: this week’s release of Wikileaks’ Vault-7 trove of purloined government documents. These seem to suggest that US Intel agencies have acquired the ability to spoof any activity on any sort of computer or program that makes it impossible to track the identity of any hacker and, what’s more, gives US Intel a tool to make any party appear culpable for any given case of hacking — meaning that if so called computer hacking “footprints” had been discovered linking Russia to the Hillary-DNC-Podesta emails, those footprints could have been engineered by US Intel itself… meaning further that any so-called “evidence” of Russian election hacking could not be proven one way or the other.

Internet of things: Home is where the hackers are – FT -  When George Orwell envisioned the “telescreen” — the TV that keeps constant tabs on its viewers — in 1984, he predicted that governments would use technology to cross the threshold into our private lives.  Confidential documents published by WikiLeaks this week purport to show that the Central Intelligence Agency created its own 21st century telescreen by hacking into smart TVs. You may be watching YouTube or Netflix, not forced military propaganda, but spies are still able to listen into your living room. Developers used vulnerabilities in Samsung TVs to ensure the products would capture conversations even when they appeared to be switched off.  In what WikiLeaks describes as the first instalment of the “largest intelligence publication in history”, the CIA appears eager to exploit the new spying opportunities created by the internet of things — everyday objects that are connected to the web. Market research group Gartner forecasts there will be more than 20bn appliances, TVs and other devices connected to the internet by 2020. The CIA’s engineering development group had a “to do” list for the smart TV that included the ability to record video and break into its browser and apps. Other documents seemed to show it had explored infecting vehicle control systems used by connected cars. “This is the most troubling WikiLeaks ever. We’ve learned the CIA has all the tools to spy on American citizens,” said John McAfee, the antivirus pioneer who is now chief executive officer of MGT Capital Investments. “And now it is in the hands of some unknown hacker organisation or nation state.” The basic vulnerabilities inherent in the internet of things — one of the biggest concepts being pursued in the technology industry — have been known for some time. Samsung even warned customers in 2015 that “if your spoken words include personal or other sensitive information, that information will be among the data captured and transmitted to a third party through your use of voice recognition”.  Cyber security researchers have highlighted holes in everything from cars to cameras, robots to refrigerators. It was revealed last month that children’s conversations with WiFi-enabled teddy bears from one toymaker had been leaked online.  Law enforcement has become interested in using audio collected by devices such as Alexa, Amazon’s voice-controlled personal assistant.

Q&A: How Can I Stop My TV Spying On Me? --Following today's publication, by WikiLeaks, of documents exposing the CIA's secret hacking program - describing tools that can turn a world of increasingly networked, camera- and microphone-equipped devices into eavesdroppers, AP's Frank Bajak answers the public's biggest questions. Bajak warns consumers, there's "not much you can do if you don't want to sacrifice the benefits of the device," but offers a silver-lining of sorts for the average joe, the "tools that appear to be targeted at specific people's (devices).. and many intrusion tools are for delivery via 'removable device'."  Smart televisions and automobiles now have on-board computers and microphones, joining the ubiquitous smartphones, laptops and tablets that have had microphones and cameras as standard equipment for a decade. That the CIA has created tools to turn them into listening posts surprises no one in the security community.

Congress begins rolling back Obama’s broadband privacy rules - As expected, Republicans in Congress have begun the process of rolling back the FCC's broadband privacy rules which prevent excessive surveillance. Arizona Republican Jeff Flake introduced a resolution to scrub the rules, using Congress' powers to invalidate recently-approved federal regulations. Reuters reports that the move has broad support, with 34 other names throwing their weight behind the resolution.The rules require broadband providers to secure their customers' consent before they can sell their private data to marketing agencies. That information includes your precise geolocation, financial and health data, information about your children and your social security number. In addition, the rules forbade ISPs from storing your web browsing, app usage and contents of your text messages automatically.  Ajit Pai, current head of the FCC, has already moved to undermine the rules by halting their rollout late last month. Pai, who opposed move during his predecessor's tenure, claims that they favor one set of companies over another. He believes that limits on ISPs data-gathering are unfair given that social networks are exempt from the regulation. The American Civil Liberties Union issued a statement saying that "Congress is essentially allowing companies like Comcast, AT&T and Verizon to sell consumers' private information to the highest bidder." The organization added that "consumers have a right to control how these companies use their sensitive data."

GOP senators’ new bill would let ISPs sell your Web browsing data - Republican senators yesterday introduced legislation that would overturn new privacy rules for Internet service providers. If the Federal Communications Commission rules are eliminated, ISPs would not have to get consumers' explicit consent before selling or sharing Web browsing data and other private information with advertisers and other third parties.As expected, Sen. Jeff Flake (R-Ariz.) and 23 Republican co-sponsors introduced the resolution yesterday. The measure would use lawmakers' power under the Congressional Review Act to ensure that the FCC rulemaking "shall have no force or effect." The resolution would also prevent the FCC from issuing similar regulations in the future. Flake's announcement said he's trying to "protect consumers from overreaching Internet regulation." Flake also said that the resolution "empowers consumers to make informed choices on if and how their data can be shared," but he did not explain how it will achieve that.Flake called the FCC's privacy rulemaking "midnight regulation," even though it was approved by the commission in October 2016, before the presidential election, after a months-long rulemaking process. “The FCC's midnight regulation does nothing to protect consumer privacy," Flake said. "It is unnecessary, confusing, and adds yet another innovation-stifling regulation to the Internet." Flake's announcement also said that the FCC-imposed "restrictions have the potential to negatively impact consumers and the future of Internet innovation."

The FCC Helped Make the Internet Great: Now, It’s Walking Away - The mantra that regulation stifles innovation is so ingrained these days that we ignore examples which don’t fit the script. That includes the biggest one: the growth and development of the internet. The Federal Communications Commission played an important role over the past 20 years, under Democrats and Republicans alike, in making the digital economy what it is today. Now, under a new president and chairman, it’s making an abrupt U-turn. The Trump FCC may become at best insignificant, and at worst, a tool for mischief and dirty tricks that will weaken the foundations of our democracy. The FCC wasn’t the source of the internet’s entrepreneurial ideas, technical innovations and massive investments, of course. All that took place predominantly in the private sector. Yet without the FCC, the internet ecosystem today would be different, and in most ways worse: less vibrant, less advanced, less competitive, less open and less reflective of American leadership and values. Along the way, this tiny agency — a tenth the size of the EPA — became a highly visible and important player in critical public policy debates. Had the FCC not put in place rules ensuring network access for new devices and applications, and opened the unlicensed wireless capacity for WiFi, the internet would never have taken off so robustly in the U.S. In the late 1990s, had it accepted the arguments of industry groups who wanted to impose per-minute charges on internet access, ban internet telephony and subjected small software companies to legacy regulations and fees, the internet as we know it could have been stopped in its tracks. Had the FCC agreed to hold evidentiary hearings to back up Congress’s 1996 decision to restrict “indecent” speech online, the courts may not have been so willing to overturn it.

Public interest groups urge officials to protect net neutrality | TheHill: A coalition of 171 public interest groups sent a letter to Federal Communications Commission and Senate leaders on Tuesday urging them not to dismantle the net neutrality rules from 2015. The ACLU, Greenpeace, MoveOn.org and Public Knowledge were among the groups signing on to the letter favoring the regulations, which prohibit internet service providers from discriminating against traffic to certain sites.Protecting net neutrality is crucial to ensuring that the internet remains a central driver of economic growth and opportunity, job creation, education, free expression, and civic organizing for everyone,” the letter reads. On Wednesday, FCC Chairman Ajit Pai and the FCC commissioners will appear before the Senate panel for the first oversight hearing of the agency under the Trump administration, and net neutrality is sure to be among the topics that Democrats will be raising. Pai has signaled his intention to go after the landmark net neutrality rules, which passed under his Democratic predecessor. Republicans and the telecom industry have taken issue with the rules because they reclassified service providers as common carriers, which opened them up to tougher regulation from the FCC.

Republicans Plan a Coup Today in the House, Gutting Established Class Action Law -- Pam Martens - Without holding as much as one public hearing, Republicans in the U.S. House of Representatives are hoping to show their fealty to their corporate masters and make it next to impossible for citizens to bring class action lawsuits against corporate wrongdoers. A vote will be held today on H.R. 985, a bill with the Orwellian reverse-speak title of “Fairness in Class Action Litigation Act of 2017.” While the media is absorbed in the wild accusations-du-jour Tweeted out by the President of the United States, corporations are salaciously using the media distractions to repeal a century of hard-fought gains in labor and civil rights protections. The bill was introduced by Bob Goodlatte, a Republican from Virginia. According to the Center for Responsive Politics, the largest donors to the Goodlatte political campaign in 2016 were multinational corporations and their trade associations. The legislation is so bad that the American Bar Association, which represents both plaintiff and defense counsel, sent a strident letter to House members on Monday. Thomas M. Susman, the Director of Governmental Affairs for the ABA, said it would create a “nearly insurmountable burden for people who have suffered a personal injury or economic loss at the hands of large institutions with vast resources, effectively barring them from bringing class actions.” One of the worst features of the bill, and there are many that strip citizen protections to access the nation’s courts as a class, is a requirement that all of the proposed class members must affirmatively demonstrate that they have “suffered the same type and scope of injury” as the named plaintiffs or class representatives. Rarely do individuals suffer the same scope of injury. For example, thousands of individuals may have taken a poorly vetted drug. It may have impacted the liver of one group; the kidneys of others; and created blood clots in others. Some may have died from the drug while others were impacted to a lesser degree. To discourage lawyers from taking Wall Street cases and others, H.R. 985 proposes to deny a paycheck indefinitely to the plaintiffs’ lawyers. It requires that until full monetary relief is received by the class, the attorneys for the class don’t get paid. Cases like these can drag on for years – how would the lawyers continue to pay their staff?

Senators seek to reform justice system nationwide by launching National Criminal Justice Commission -- A bipartisan group of U.S. senators introduced a bill Wednesday to create a National Criminal Justice Commission, which would work for 18 months to review every aspect of the nation’s criminal justice system, from policing to prosecution to prisons, and then issue a set of proposed reforms for not only federal but state and tribal systems as well.The legislation aims to accomplish what a similar Commission on Law Enforcement and Administration of Justice did when it was created by President Lyndon B. Johnson in 1965. That group produced more than 200 recommendations, which had a lasting impact on the justice system, such as calling for the creation of the 911 emergency call system, improving training for law enforcement and establishing research organizations such as the Bureau of Justice Statistics. The bill is being introduced by Sens. Gary Peters (D-Mich.), Lindsey O. Graham (R-S.C.) and John Cornyn (R-Tex.) with 17 co-sponsors, including Republican Sens. Orrin G. Hatch (Utah) and Thad Cochran (Miss.) and Democratic Sens. Claire McCaskill (Mo.) and Kamala D. Harris (Calif.). The proposal also has the backing of numerous law enforcement and civil rights groups, such as the Fraternal Order of Police, the International Association of Chiefs of Police, the National Urban League, the NAACP and the Leadership Conference on Civil and Human Rights. “Too many Americans see growing challenges in our justice system,” Peters said in a statement, “ranging from overburdened courts and unsustainable incarceration costs to strained relationships between law enforcement and the communities they serve.” He said he hoped the new commission would help “reduce crime, improve public safety and promote more equitable criminal justice practices.” Both the Fraternal Order of Police and International Association of Chiefs of Police have been calling for such a commission for years.

Credit rating agency reform is incomplete - Brookings Institution - In the on-going controversy over how strictly to regulate financial institutions and markets in the wake of the financial crash of 2008, regulation of credit rating agencies (CRAs) has dropped out of sight. Inflated ratings on securities that turned toxic played a major role in the build-up of the financial bubble that eventually burst with such costly consequences. But figuring out how to preserve the usefulness of credit rating agencies while fixing their weaknesses has proved challenging. This paper reviews the CRA problem and reform actions taken so far and discusses what else can be done to avoid future risk to financial stability from the behavior of CRAs.

Trump SEC Pick Made Millions Representing Banks, Hedge Funds --President Donald Trump’s pick to lead the Securities and Exchange Commission has earned $7.62 million since 2015 representing some of Wall Street’s biggest firms, including Goldman Sachs Group Inc. and Bill Ackman’s Pershing Square Capital Management, according to a federal disclosure form. Jay Clayton, the Sullivan & Cromwell partner tapped by Trump, outlined his clients -- and his potential conflicts -- in a filing to the U.S. Office of Government Ethics that he signed in January. The breadth of Clayton’s legal work is likely to provide fodder for Democratic lawmakers, who have already criticized the SEC chairman nominee over his ties to the financial industry. If confirmed by the Senate, Clayton would have to recuse himself for one year from matters involving Sullivan & Cromwell and companies he represented. He also would be barred from ever weighing in on a specific business deal or an investigation that he worked on as a lawyer. At least one of Clayton’s clients, Valeant Pharmaceuticals International Inc., has disclosed that it’s being investigated by the SEC. Pershing Square, another Clayton client, is among Valeant’s biggest investors and Ackman sits on the company’s board. Clayton’s disclosure form also shows deep ties to Goldman Sachs, where his wife works as a wealth manager. Clayton has done legal work for the Wall Street bank and has represented some of its former top executives. They include Roy J. Zuckerberg, who was one of Goldman Sachs’s longest-tenured partners when he retired almost 20 years ago, and Eric Schwartz, the former co-head of the firm’s investment-management division who left in 2007 to start his own business. Clayton’s wife plans to leave Goldman Sachs if he wins Senate confirmation. Other Clayton clients include Paul Tudor Jones, the billionaire founder of hedge fund Tudor Investment Corp., and Ally Financial Inc., one of the last big banks to repay the government bailout it received during the 2008 financial crisis. Clayton also represented William Erbey, the founder and former chairman of Ocwen Financial Corp. The mortgage servicing company agreed to pay $2 million in January 2016 to settle SEC allegations that it misstated its financial results.

Trump’s Cesspool --Yeah, Trump drained the swamp alright…and created a cesspool in it’s place!  via ProPublica, Here are More than 400 Officials Trump has Quietly Deployed Across the Government --While President Trump has not moved to fill many jobs that require Senate confirmation, he has quietly installed hundreds of officials to serve as his eyes and ears at every major federal agency. ProPublica has obtained a list of many of them. They include dozens of former lobbyists, Trump campaign staffers and some affiliated with the online far-right. If you have any information about members of the Trump beachhead teams or their roles in the agencies, contact us at beachhead@propublica.org or via Signal at (774)-826-6240. Here is a guide for how to leak to ProPublica.

5 Graphics To Help You Understand President Trump's Conflicts Of Interest -- Since he has refused to divest from his business holdings and place the assets in a blind trust, President Donald Trump enters office with massive conflicts of interest, including business dealings with foreign governments that led CREW to sue him for violating the foreign emoluments clause of the Constitution. The full extent of the president’s conflicts can be difficult to grasp as Trump owns a complex network of over 500 businesses, loosely grouped under the banner of the Trump Organization. Collectively, the Trump Organization is considered the 48th largest private company in the United States.  In order to help the public understand the unprecedented conflicts and potential for corruption guaranteed by President Trump’s determination to maintain ownership of his businesses, CREW’s research team analyzed the personal financial disclosure (PFD) form he filed with the Federal Election Commission in May 2016, which lists his non-government positions, assets, liabilities and more, but does not provide the full scope and details of President Trump’s financial interests. Though President Trump has made some changes to his portfolio since filing the report, the following infographics provide a snapshot of how he makes his money, where he has business overseas, what debts he owes and to whom, and how these holdings may interact with the government he now leads.

Dodd-Frank Reform Losing Momentum - Barron's: After the Republican election sweep in November, it seemed almost inevitable that the Dodd-Frank Act would be swept away or gutted in short order. Three months later, “the drive to wipe out or scale back Dodd-Frank has lost momentum,” writes Bloomberg. While President Trump on Feb. 3 ordered a Treasury Department review of the Dodd-Frank law, he did not refer to the law during his first address to Congress, last week. “As with the Republican vow to repeal Obamacare, the sticking point may be finding a replacement for the law on the books,” Bloomberg explains. House Financial Services Committee Chairman Jeb Hensarling of Texas is an outspoken critic of the law. But his House bill, the Financial Choice Act, is seen as unlikely to become law. The bill is unpopular with bankers because it requires banks to maintain higher levels of capital. Congressional Democrats say it does away with vital safeguards against another financial crisis. A Democratic filibuster in the Senate could await the bill if it makes it that far. Because of competing legislative priorities in Washington, Dodd-Frank could be on the back burner until at least 2018. And eventual changes could be confined to delivering relief to smaller banks that don’t pose systemic risks.

Is It Repeal Or Replace Dodd-Frank? Neither - Think More Like Hitting The 'Refresh' Key - The recent executive action by President Trump regarding the Dodd-Frank Wall Street Reform and Consumer Protection Act is getting much attention. Although six 'core principles' were announced, the only substantive part of the executive order was to mandate a report from the U.S. Treasury identifying "any laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other Government policies," inconsistent with those six principles. So does this mean the end for Dodd-Frank, the cornerstone regulatory law that has become synonymous with the global financial crisis? In short, I think the answer is "no." Dodd-Frank regulations are primarily in statute form and require 60 votes in the U.S. Senate to change significantly; because of this I believe there is virtually zero possibility of a full repeal or replacement. So with a full repeal or replace off the table, what will the Trump Administration hope to accomplish? Let's call it hitting the 'refresh' key. Instead of taking a meaningful bite out of Dodd-Frank or replacing it all together, I believe the Trump Administration will likely "nibble" around the edges of the behemoth law, focusing on the following areas:

  • Less adversarial enforcement: The impact on banks depends not on what the Dodd-Frank rules say, but rather on how they are enforced. For example, banks will still be subject to annual stress tests to judge the adequacy of capital and liquidity. However, the stress test scenarios could be changed. Looser scenarios mean it's easier to hit capital hurdles, which would result in more capital to return to shareholders. Another example is  the Volcker Rule. I think that the rule will continue, but the implementation of it needs a new coat of paint… one that is much more lenient.
  • Turnover in leadership. If the tone is set from the top, the Trump administration has a significant opportunity to change the tone of many regulatory agencies in the coming years. Whether we are talking about the new Head of Banking Supervision; the new heads of the SEC, CFTC, FDIC, or OCC; the possible changes at the Consumer Financial Protection Agency; the two vacant seats on the FOMC; or the two additional Seats on the FOMC in 2018, change is surely coming!
  • Staying local. I believe that any meaningful changes will focus outside the large, multi-national money center banks and instead target mid-tier, regional, and community banks.

Reg rollback could make the still-fragile system buckle - In a recent Foreign Affairs article entitled “Are We Safe Yet?” former Treasury Secretary Timothy Geithner asks a series of questions: What is the underlying fragility of the U.S. system today or how “dry is the tinder?” What is our ability to limit the intensity of any crisis especially via macroeconomic responses? How adequate are our emergency response mechanisms to prevent a crisis from spinning out of control?  Geithner’s analysis of the current risks in the U.S. financial system is sober but not alarmist. He correctly notes that financial regulation has materially improved the capital and liquidity buffers in the U.S. system as a whole and expanded the supervisory perimeter to include most major institutions. He emphasizes the inherent risks in the maturity transformation at the heart of modern finance — that is the practice whereby financial institutions borrow money on shorter time frames than when they lend money out, that leaves banks and other institutions vulnerable to “runs” on deposits. As financial sector experts are acutely aware, we can never know risks to the financial system with any certainty. Hence the need to assess system preparedness to respond to shocks. Liquidity risks appear to have risen in some U.S. financial markets. Some asset prices appear extended. This is in part a result of the extended low interest rates that have been part of the macroeconomic response in the U.S. There has been growth in nonbank financial activity, in part in response to stronger regulation. However, strong memories of the 2008 crisis are probably placing some curb on the risk appetite of many players, assisted by the more intense prudential and macroprudential regulation brought forth by the crisis. As a result, the U.S. financial system risks did not figure prominently in the most recent International Monetary Fund survey of global financial risks. Nevertheless, and this is a point underplayed by Geithner, there are near-term risks to the domestic U.S. financial system emanating from outside the U.S., adding urgency to his overall arguments for focusing on resilience in U.S. policy settings.

Four myths in the battle over Dodd-Frank -In their drive to revamp the Dodd-Frank Act, Republicans have repeatedly asserted that the 2010 financial reform law has increased the cost of consumer lending and cut off access to credit. "Thanks to Dodd-Frank’s red tape, consumers pay more for mortgages, credit cards and auto loans — that is if consumers can even get access to them," House Financial Services Committee Chairman Jeb Hensarling said in a typical recent speech.  Yet the available data indicates otherwise. Consumer credit has roared back in the six years since Dodd-Frank, with a 46% jump in outstanding consumer credit to $3.8 trillion, according to recent Federal Reserve data.   Following is a guide to some of the claims made, and what the data says about them.

  • Myth No. 1: Mortgage costs have gone up because of Dodd-Frank - Interest rates for the 30-year fixed mortgage spiked to a three-year high this week, jumping to 4.21%.  But that increase appears related to the Federal Reserve's expected hike in the federal funds rate next week, not the passage of Dodd-Frank. Indeed, interest rates have been at record lows since 2010 and still have not reached their level prior to the law's enactment.
  • Myth No. 2: Dodd-Frank is keeping consumers from obtaining a mortgage - Laurie Goodman, co-director of the Urban Institute's Housing Finance Policy Center, argues that tight credit has kept as many as 5 million borrowers from obtaining home loans between 2009 and 2014. She has estimated that roughly 1 million loans could have been made in 2015 if "reasonable" lending standards had been in place. But it is difficult to blame the pullback in mortgage lending specifically on Dodd-Frank. Lenders began imposing higher minimum credit scores, known as credit overlays, long before the Consumer Financial Protection Bureau enacted new mortgage regulations in 2014.
  • Myth No. 3: Dodd-Frank made auto loans more expensive and less available - Auto lending has been on a tear since the financial crisis, with total lending hitting a peak of more than $1 trillion in the fourth quarter of 2016, up from $634 million in the fourth quarter of 2010, according to Experian.Moreover, average interest rates on both new and used car loans were slightly lower in the fourth quarter of 2016, to 4.7% and 8.5%, respectively, than they were in the same period in 2010, Experian found.
  • Myth No. 4: Dodd-Frank hurt credit card availability and raised costs - Credit card lending has returned to pre-crisis levels with total lending hitting an all-time high of $996 billion at end of 2016, up from $839 billion in 2010. "There is certainly no roadblock on availability to credit right now," Foran said.

Gutting Dodd-Frank Is Hard, So Republicans Turn to Easier Things - Here’s the latest indication Wall Street regulations won’t be gutted anytime soon: Republicans who write financial laws are starting to focus on other things. The Senate Banking Committee, led by Mike Crapo, on Thursday approved a measure about publishing research on exchange-traded funds, and a collection of other narrow bills with bipartisan support.  In the House, the Financial Services Committee held a hearing about flood insurance, further stalling the rollout of Chairman Jeb Hensarling’s plan to eliminate laws enacted in response to the financial crisis of 2008. Reality is setting in on Capitol Hill that rolling back the Dodd-Frank banking law won’t be quick or easy -- even though it’s a priority for Republican President Donald Trump, who says the measure is hurting the economy. Bank stocks have rallied partly because investors expect change. Congress is bogged down by high-profile fights over replacing Obamacare and rewriting tax laws, leaving little capacity for a battle over Wall Street. Republicans, who control both chambers of Congress, don’t have a plan for rewriting financial rules that would be likely to attract support from Democrats, something that’s needed to advance most major bills in the Senate. Democrats say the existing laws are needed to prevent another financial meltdown and protect investors. “I do not think they will get any substantial legislative change through the Congress," said Barney Frank, a former Democratic lawmaker who served as chairman of the Financial Services Committee, in an interview with Bloomberg Television. “Except areas where there might be some agreement -- give a little relief to mid-size banks and smaller banks in ways that don’t in any way undermine the regulatory framework."

Skepticism grows for reg relief's chances under Trump -- American Banker - The White House and the Republican majorities in Congress have big plans for rolling back the Dodd-Frank Act and other aspects of post-crisis financial reform, but there are growing doubts that they will be able to deliver on the sweeping changes that they've promised. Battles over health care, tax reform and other priorities are liable to eat up both time and political capital, while President Trump's team may have overpromised on economic growth, which could further sap policymakers' ability to enact reform.

 Bad News For Wall Street: No Tax Reform Until Fiscal 2018, McConnell Warns -- As explained, most recently two days ago, the key reason Wall Street is concerned about the complications involving Obamacare's "repeal and replace", which now appears will be stuck in Congress for a long time following vocal opposition from various conservative groups and outside lobby interests, is that it will delay tax reform. As Goldman laid it out over the weekend, "if Republican leaders cannot send the President an ACA bill by April or May, they will face two politically unpalatable options. First, they could continue to press for a solution, delaying consideration of tax reform for an indefinite period. This delay would occur because both proposals are expected to be considered under the “budget reconciliation” process. However, since only one tax bill and one spending bill can be considered under that process in each budget cycle—and ACA repeal legislation is expected to have tax and spending provisions—Republican leaders plan to consider the ACA bill in the FY2017 budget cycle, and to begin the FY2018 budget cycle, including instructions to pass tax reform, once the ACA bill has passed." The other option Goldman put forward would be to postpone ACA legislation and move to tax reform, essentially reneging on a campaign commitment. That however is not going to happen. Instead, in some very bad news for Wall Street, earlier today Senate Majority Leader Mitch McConnell confirmed the worst case outcome, when he poured cold water on the Trump administration's goal of completing tax reform by the August recess.  "I think finishing on tax reform will take longer," McConnell said during a Playbook Live interview.

Separating Trump's regulatory principles order from the sound bites - President Trump’s executive order last month on “core principles” for financial regulation is succinct and instructive. Interpreting it is more complex especially when attempting to reconcile it with what Trump or his Cabinet members have said about regulation in general and financial regulation in particular. Let's go over the main policy points.

  • "Empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth."  . This policy goal implies that customers be given the right information at the right time to make the right decisions from a cost-benefit point of view. It also means that financial institutions or fintech startups adopt a transparent business and revenue model while selling to customers.
  • “Prevent taxpayer-funded bailouts" and “foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry.” I am in violent agreement with the intended goal here.  If current regulation fosters or encourages taxpayer-funded bailouts or moral hazard, it should be eliminated.
  • Enable American companies to be competitive with foreign firms in domestic and foreign markets" and "advance American interests in international financial regulatory negotiations and meetings." These two policy goals leave much to interpretation. Are we meant to understand that we shall see the U.S. engaging in regulatory competition while decoupling from international banking regulation or that the U.S. will collaborate with other jurisdictions to ensure a level playing field?
  • “Make regulation efficient, effective, and appropriately tailored.” Regulators also need to change. Regulators need to develop novel ways to conduct their own businesses and upgrade their own capabilities. Bottom-up approaches such as testing environments or initiatives around regtech collaboration are the way forward.
  • If this policy goal nudges U.S. financial regulators to think outside of the box and help them regulate along the lines of what can be possible as opposed to what is not permissible, the U.S. regulatory landscape will have been greatly enhanced.
  • "Restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework."  Let's face it, the U.S. financial regulatory landscape is a mess: OCC, FDIC, Fed, CFPB, FSOC, CFTC, FHFA, FTC, NCUA, SEC, HUD, Treasury and Fincen, not to mention 50 state regulators for banking, insurance, money transfers, debt collection and securities.All of these independent yet interrelated agencies were built for the industrial age. Overlaps, redundancies and gaps plague the system and create inefficiencies as well as uncertainties, let alone unnecessary costs for market participants, startups and new entrants. Incumbents, ironically, have historically used this regulatory maze for their benefit as a defensive moat. A major rethink is needed.
  • This next sound bite is not from Trump himself, but from Gary Cohn, the director of Trump’s National Economic Council. He said: “We need to get capital available to small and medium size businesses and for entrepreneurs. Today banks do not lend money to companies. Banks are forced to hoard money because they are forced to hoard capital and they can’t take any risks. We need to get banks back in the lending business, that’s our number one objective.” The wording is clearer here: banks are hoarding too much capital and we should allow them to take more risks and lend more by reserving less capital.

 How will stress tests change in the Trump era? | American Banker – short video- The recent decision by the Federal Reserve Board to exempt banks with less than $250 billion in assets from the qualitative aspects of the CCAR stress tests may be a sign of things to come, says Joo-Yung Lee, head of North American financial institutions at Fitch Ratings.

How stress tests can shift the reg relief debate – Bank Think - My op-ed published last month argued that, while Rep. Jeb Hensarling’s proposal to exempt banks meeting a stronger capital standard from prudential rules had merit, the plan needed an alternative way to measure a stronger capital standard. The better capital benchmark is that assessed by stress tests, rather than a flat leverage ratio based on historical data. But the addendum to that is, in exchange for meeting that capital benchmark, which prudential rules can be taken off of banks’ plate that won’t then harm financial stability?Marianne Lake, the JPMorgan Chase chief financial officer, said recently, according to the Financial Times, that " 'the time feels right’ to start relaxing rules put in place after the global financial crisis.” The time is right to question historical rules, I agree, if we have the right supervisory framework in place. An important question is: What rules and processes might be rolled back productively, versus others that are and will remain key components of prudent bank regulation in the second decade of the 21st century?  I have not made a comprehensive survey of which aspects of supervision should remain and which should be eliminated or curtailed. That would be an undertaking for after the new stress-test regime is in place and the continuing validity of living wills has been assured. But here’s a rough idea of forms of regulatory relief that a stress test benchmark could enable, versus rules that should remain in place to ensure the safety of the financial system.

Trump pledges to ease regulations of community banks - President Trump met with nearly a dozen community bankers on Thursday, pledging to ease regulations the industry says has stifled its growth.Community banks “play a vital role in helping create jobs by providing approximately half of all loans to small businesses. … [We want to] preserve our community banks,” Trump said during the meeting at the White House.The meeting — dubbed a “listening session” — was also attended by Treasury Secretary Steve Mnuchin and Gary Cohn, head of the National Economics Council, as well as executives from small banks across the country, including Texas and Vermont.Trump's statements echo his repeated pledges to dismantle financial- crisis-era legislation, the Dodd-Frank Act. The law was designed primarily to rein in large Wall Street firms, but small and medium-size community banks say they have been crushed under its new regulatory burdens. “One-size-fits-all regulations are imposing unnecessary burdens on community banks that stifle lending and growth in local communities,” said Rebeca Romero Rainey, chairman of the Independent Community Bankers of America. Community banks, they say, shouldn’t face the same sort of rules as megabanks such as Goldman Sachs or Bank of America. The smaller banks, for example, want to raise the $50 billion asset threshold at which banks face tougher oversight. And they are fighting proposed rules that would require banks to comply with the same reporting requirements when making a small-business loan as they do with a mortgage. That extra paperwork, and the threat of facing prosecution or a fine if it is not filed correctly, industry officials say, could scare some banks away from making small-business loans. During the hour-long meeting, Trump encouraged Mnuchin and Cohn to address the regulatory burdens mentioned by the bankers within six months, according to an industry official who attended the meeting. He also said the White House is “very, very close” to announcing a nominee for a Federal Reserve Board seat reserved for a community banker, a position that has been vacant for more than two years, the official said.

Inside Trump's meeting with community bankers — President Trump met with community bankers on Thursday to highlight executive actions he has taken to provide regulatory relief to the industry and promote job growth. Trump has signed executive orders that put a pause on new regulations, call for eliminating two rules for every one new one written and ordered Treasury Secretary Steven Mnuchin to report back with a strategy to improve financial regulation. The independent regulators do not have to explicitly comply with the executive orders, but have generally volunteered to do so. Trump used the meeting to praise community banks as well as pledge relief. Small banks "play a vital role in helping create jobs by providing approximately half of all loans to small businesses," Trump said, according to a pool report. "Community banks are the backbone of small business in America." Trump met in the Roosevelt Room at the White House with nine community bankers, as well as Rob Nichols, the head of the American Bankers Association, and Camden Fine, president of the Independent Community Bankers of America. Mnuchin and Gary Cohn, the director of the National Economic Council, also attended the meeting. Trump said the executive orders were "very powerful" and are already "taking a lot of the regulation away." But it's not clear that is the case. The executive orders have been general in nature, and do not appear to have stopped the agencies from promulgating rules already in the pipeline. The executive order that requires agencies to cut two regs for every new one is easily maneuvered around, financial analysts have said. Still, Trump said they will have an impact. "You'll be able to loan," Trump told the group. "You'll be able to be safe. You'll be able to provide the jobs that we want and also create great businesses."  Overall, bankers are optimistic that Trump can deliver regulatory relief, according to a recent poll by SourceMedia Research. Yet the practical realities of making good on that promise are challenging. Given lawmakers' battles over other issues, such as health care and tax reform, a reform bill appears increasingly out of reach this year.

Spicer: Trump still wants Glass-Steagall back -- Sean Spicer said during today's White House press briefing that President Trump remains committed to restoring Glass-Steagall, which effectively prohibits commercial banks from engaging in investment banking. The rule originally became law in 1933, but most of it was rescinded in 1999.  The Republican Party platform last summer called for establishing a more modern version of Glass Steagall, but did not provide specifics. The Democratic Party platform also called for a return of Glass Steagall.  Confusing: Trump also has aimed fire at financial regulations like Dodd Frank, part of which acted as a backdoor reinstatement of Glass Steagall principles.

Deutsche Bank To Sell $8.5 Billion In Stocks, Announces Major Restructuring -- Confirming last week's report of an imminent share sale, on Sunday the biggest German lender announced it would raise €8 billion ($8.5 billion) in new capital through a rights offering sale of 687.5 million new shares, and sell parts of its asset management business in its latest attempt to shore capital following €8 billion in losses in the past two years after a major operational and balance sheet restructuring was launched by CEO John Cryan in 2015, settling misconduct investigations and scaling back capital-intensive debt-trading businesses. The bank also announced that CFO Marcus Schenck, 51, and Christian Sewing, who oversees wealth management and consumer banking, would become co-deputy CEOs. The company will find a new CFO “in due course.” The timing of the share sale takes advantage of the recent resurgence in Deutsche Bank’s share price, which has almost doubled from multiyear lows near €10 in September. The shares closed Friday at €19.14 in European trading. Last year, corporate clients and hedge funds pulled balances and other business from Deutsche Bank over concerns about its legal costs and weak capital position. Deutsche Bank on Friday night confirmed investor expectations that it needs a capital injection, saying it was doing “preparatory work” for a share sale and considering other strategic moves. The announcement marks the bank's third time to tap capital markets since early 2013. Since taking over in mid-2015, Mr. Cryan said he wanted to avoid selling shares, which will hurt existing shareholders, however it was concerns over the bank's capitalization, and at time liquidty, that prompted a vicious selloff in August and September of 2016, sending DB's shares to all time lows on concerns the bank's RMBS settlement with the DOJ would drain the company's funding to dangerously low levels. According to the bank, the share sale would boost its common equity Tier 1 ratio to 14.1% and set a new target of “comfortably above” 13%. The measure stood at 11.9% at the end of 2016, shy of the then-target of 12.5% for the end of 2018. In an amusing twist, during a media call, DB CEO said the Bank hopes to return to attractive dividend ratio from 2018, suggesting that while the bank is raising capital now, it hopes to return it back to shareholders next year.

 Deutsche Bank to ask market for $8.5 billion after big losses -- After two years of heavy losses, Deutsche Bank is asking investors for $8.5 billion to help improve its financial health. Germany's biggest bank announced plans for the huge share sale on Sunday along with another overhaul of its strategy. Deutsche Bank said it will seek to raise about €8 billion ($8.5 billion) in the coming weeks -- its fourth capital hike since 2010. The four add up to a total of about €30 billion ($32 billion), more than the bank's current market value. CEO John Cryan, who took up the top job in 2015, had said previously that the bank could get by without turning to markets for more money. Deutsche Bank's share price took a hammering in September, crashing to its lowest level in more than 20 years because of fears it didn't have the funds to cover its mounting legal costs. The bank and the German government had to deny that a bailout was in the cards. The lender weathered that crisis, and its stock has rebounded strongly from its September lows, making a capital increase more appealing. But the plan means current investors will take a hit: Deutsche Bank shares fell Friday as reports of the hike emerged and continued their plunge Monday, sinking around 6% in Frankfurt, after details were announced. Cryan said in a message to employees on Sunday that shoring up the bank's capital will "remove a major source of uncertainty" and "make us significantly more attractive for our clients."

OCC's Curry fires back at fintech charter skepticsWhen Deutsche Bank Wobbles, Wall Street Gets Shaky Knees - Pam Martens -  Yesterday, the German global bank, Deutsche Bank, fell by 3.82 percent by the close of trading on the New York Stock Exchange on news of a capital raising and revamp in strategy. That price action took down every major Wall Street bank stock and, interestingly, MetLife, which closed down 1.64 percent, beating out even Citigroup which closed down 1.18 percent. The rest of the major derivatives players fared as follows: JPMorgan Chase closed with a loss of 0.95 percent; Bank of America was off by 0.75 percent; Morgan Stanley closed down 0.56 percent; with Goldman Sachs down a meager 0.35 percent after infusing itself throughout the Trump administration’s corridors of power in Washington.Last June, Deutsche Bank found itself the subject of unwanted attention in a report issued by the International Monetary Fund (IMF). The report looked at the “Financial System Stability” of German financial institutions and examined the systemic impact that a major bank blowing up would have on other domestic German banks and insurers as well as financial stability in other countries. The report concluded that spillover effects would not be limited to Germany but would impact France, the U.K. and the U.S.The troubling report called out Deutsche Bank as “the most important net contributor to systemic risks.” (See chart above.) Its findings included the following:“Notwithstanding moderate cross-border exposures on aggregate, the banking sector is a potential source of outward spillovers. Network analysis suggests a higher degree of outward spillovers from the German banking sector than inward spillovers. In particular, Germany, France, the U.K. and the U.S. have the highest degree of outward spillovers as measured by the average percentage of capital loss of other banking systems due to banking sector shock in the source country…

Deutsche Bank Tries to Stay Alive - Wolf Richter -  When an at-risk too-big-to-fail bank raises fresh capital from investors, it’s a great thing for affected taxpayers. When push comes to shove, every dollar thus extracted from investors lowers the burden on taxpayers. Since the Financial Crisis, Deutsche Bank has been raising capital in large waves — $20 billion so far. And now, its new efforts to raise another $8.5 billion by selling shares would bring the total to $28.5 billion, and it would nicely dilute existing shareholders further, and it would be a great thing for affected taxpayers. Not that taxpayers would be off the hook: The assets on Deutsche Bank’s opaque balance sheet equal 58% of Germany’s GDP. That $8.5 billion in new capital would nevertheless lower both the risks for affected taxpayers. So I’m all for it. But I just love the way they’re going about doing it. The new plan calls for boosting the retail business in Germany, and so it abandoned old plans to sell Postbank. It’s going to compete with largely state-owned cooperative banks. It’s going to be just as tough as it was before it had decided in one of its prior turnaround plans to cut its exposure to the German retail business. And it wants to strengthen its global investment bank, after it had decided to shrink it in one of the prior plans. Deutsche Bank’s three largest investors who together own nearly 20% – a group of Qatari funds controlled by former Prime Minister Sheikh Hamad bin Jassim al-Thani, US fund manager Blackrock, and China’s HNA Group – are likely to back the capital hike, “people familiar with the matter” told Reuters.One of the other options would be that Deutsche Bank might not make it, and their existing equity stakes would dissolve in financial smoke. The Qatari funds, which own nearly 10%, have been on board with a capital raise since October last year and had expressed their willingness to buy more shares to protect their stake if the bank were to raise more capital. Blackrock, which owns nearly 6% of Deutsche Bank in its funds, is, according to Reuters “likely to take up its rights, partly because many of its funds are bound to do so because of the lender’s stock market weighting.” HNA Group, a conglomerate with big interests in airlines and a passion for global acquisitions, owns 3% of Deutsche Bank and is also willing to buy more shares to protect its stake from dilution, “a person familiar with its thinking” told Reuters.

Dimon Says Trump Has Reawakened 'Animal Spirits' in the U.S. -- Jamie Dimon said President Trump’s economic agenda has ignited U.S. business and consumer confidence and he expects at least some of the administration’s proposals to be enacted. “It seems like he’s woken up the animal spirits,” Dimon, chairman and chief executive officer of JPMorgan Chase & Co., said Thursday in a Bloomberg Television interview in Paris. Confidence has “skyrocketed because it’s a growth agenda,” Dimon said, adding that he’s not overly concerned about the possibility of a correction in equities markets, which have surged since the November election. Dimon, 60, has been a vocal supporter of Trump’s business agenda, saying last month that the U.S. has a bright future if the president overhauls taxes, regulations and infrastructure investment. Since Trump’s victory, Dimon was named chairman of the Business Roundtable of almost 200 CEOs and joined Trump’s policy forum aimed at boosting job growth. Shares of U.S. banks have climbed on speculation that higher economic growth and interest rates will boost results.“If he gets it done, even part of it, it will be good for growth, good for jobs, good for Americans,” Dimon said. “I’m really confident he will get that done.”Dimon said he’s reassured because of the caliber of people Trump has brought on t o push the administration’s economic policies, including Gary Cohn, the former Goldman Sachs Group Inc. president who’s now director of the National Economic Council and a top adviser to Trump.

These Are The 100 Most Overpaid CEOs --According to the Economic Policy Institute,“CEO pay grew an astounding 943% over the past 37 years, greatly outpacing the growth in the cost of living, the productivity of the economy, and the stock market, disproving the claim that the growth in CEO pay reflects the ‘performance’ of the company, the value of its stock, or the ability of the CEO to do anything but disproportionately raise the amount of his pay.”For the past two years, we have highlighted the 100 most overpaid CEOs of S&P 500 companies, and the votes of large shareholders, including mutual funds and pension funds on their pay packages.What has changed since the first report? Not much. Executive pay has continued to increase. Although mutual funds and pension funds are doing better at exercising their fiduciary responsibility by more frequently voting their proxies against some of the most outrageous CEO pay packages. Of the mutual funds with the largest changes in voting habits from last year, all of them opposed more of the pay packages than they had the prior year.As we noted in our prior reports, the system in place to govern corporations has failed in the area of executive compensation. Like all the best governance systems, corporate governance relies on a balance of power. That system envisions directors representing shareholders and guarding the company’s assets from waste. It also envisions shareholders holding companies and executives accountable.

 It's 1994 Again: Why Albert Edwards Expects An Imminent "Bond Market Bloodbath" - Following the Trump presidential victory, two prominent macro strategists have undergone a significant change in their outlook: while David Rosenberg, who started off with a deflationary, and bearish outlook, then flipped to inflationary (and bullish), has recently once more "mean-reverted" and expects a further drop in yields as deflationary forces return, his SocGen peer, Albert Edwards - while still expecting a deflationary "ice age" in the longer-run now expects an imminent "bond rout" in the coming weeks as the Fed's rate hike cycle leads to an aggressive selloff in short- as well as long-term rates. The result will be another "central bank-inspired recession", which will lead to the convergence of yields on the 10Y US Treasury with Japanese and European bonds below zero, as the global deflationary ice age enters the final round. Edwards' summary of his current state of mind, just as the Fed is about to make (yet another) historic mistake, is - as usual - rather picturesque:  Make no mistake. Unlike most in the markets, I remain a secular bond bull and do not think this 35 year long bull bond market is over. I believe the US Fed has created another massive credit bubble that will, when it bursts, lay the global economy very low indeed. Combine this with the problems of a Chinese economy dependent on increasingly ineffective injections of credit to produce increasingly pedestrian GDP growth and you have a right global mess. The 2007/8 Global Financial Crisis will look like a soft-landing when the Fed blows this sucker sky high. The seeds for that debacle have already been sown with the Fed having presided over one of the biggest corporate credit bubbles in US history. All that is needed now is for the Fed to sprinkle life-giving rate hikes onto these, as yet dormant, seeds of destruction. Accelerated Fed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, most especially in the 2 year – just like 1994. But as yet another central bank-inspired global recession unfolds, I  believe US 10y bond yields will ultimately converge with Japanese and European yields well below zero – in other words, buy 10y bonds on weakness!

US Bond Markets cannot bring down Trump - Billy Mitchell -  There was an article in the ABC Opinion series (March 8, 2017) – Donald Trump’s presidency might be short-lived, because ‘something’s gotta give’ – which more or less claimed that the private US Treasury Bond markets had the capacity to bring Donald Trump’s Presidency to a halt. Apparently, if the bond markets form the view that Trump won’t deliver on his promises they can somehow end his term in office. What, by driving yields up?  Not likely. And even if there was a way that higher US Treasury bond yields had some link to his political tenure, the central bank could control the yields at whatever level they wanted. The article poses the question: What if I told you a very wealthy, powerful collection of people are already starting to make up their minds about Donald Trump? The tenet of this claim – that the bond market is now the predictor of Trump’s longevity – is based on the observation that: The bond market is worth many trillions of dollars. The US bond market itself (in its various forms) is worth well over $10 trillion. . The 10-year US Treasury bond is a benchmark debt security …  The thing about the 10-year Treasury bond market is that its movements tell a much bigger story. If the yield on the Treasury bond rises, it means that investors forecast better economic times ahead, and the need for higher interest rates. If the yield falls, investors are forecasting the opposite. Well, not quite.  There are various reasons why the yields might rise on US government bonds. First, here is a primer. […]The following graph shows the yields for the 1-year Treasury bond, the 5-year and the 10-year from the beginning of June 2016 to March 7, 2017.The ABC article says that:As you can see from the chart, the yield on the US 10-year Treasury bond market started to rise around the time Donald Trump won the election. Which is not quite correct. It was rising prior to the election and prior to the date that Trump was nominated by the Republican Party to be the Presidential candidate.The most recent low rate (1.37 per cent) was recorded on July 5, 2017. It then rose steadily from then before jumping on the day Trump was elected on November 8, 2017.It is also true that in recent weeks the yield has fallen, but only from 2.6 per cent (December 16, 2017) to 2.52 per cent (March 7, 2017). But it is hardly a bond market rebellion.

 Everything You Wanted to Know About Bond Workouts But Were Afraid to Ask -- Adam Levitin - There's a great new paper available on out-of-court restructuring and the Trust Indenture Act.   The New Bond Workouts is up on SSRN.  From the abstract it sounds pretty darn amazing—a new, empirically based analysis of bond restructurings that rediscovers a long-forgotten intercreditor duty of good faith:   Bond workouts are a famously dysfunctional method of debt restructuring, ridden with opportunistic and coercive behavior by bondholders and bond issuers. Yet since 2008 bond workouts have quietly started to work. A cognizable portion of the restructuring market has shifted from bankruptcy court to out-of-court workouts by way of exchange offers made only to large institutional investors. The new workouts feature a battery of strong-arm tactics by bond issuers, and aggrieved bondholders have complained in court. The result has been a new, broad reading of the primary law governing workouts, section 316(b) of the Trust Indenture Act of 1939 (“TIA”), which prohibits majority-vote amendments of bond payment terms and forces bond issuers seeking to restructure to resort to exchange offers. This Article exploits the bond market’s reaction to the shift in law to reassess a long-standing debate in corporate finance regarding the desirability of TIA section 316(b). Section 316(b) has attracted intense criticism, with calls for its amendment or repeal because of its untoward effects on the workout process and tendency to push restructuring into the costly bankruptcy process. Yet section 316(b) has also been staunchly defended on the ground that mom-and-pop bondholders need protection sharp-elbowed issuer tactics.

Does latest surge in past-due car loans mean problem is here to stay? - Bankers and industry analysts may dispute whether or not this is a worrisome trend, but the numbers paint a clear picture — more consumers are falling behind or defaulting on their auto loans. Total delinquencies, those at least 30 days past due, increased 17% in the fourth quarter from three months earlier, to $9.9 billion, according to Federal Deposit Insurance Corp. data compiled by BankRegData.com. While it is common for auto delinquencies to rise in the fourth quarter of any year, the spike in last year’s fourth quarter from three months earlier was higher than in past years.

The Next Domino to Fall: Commercial Real Estate: Just as generals prepare to fight the last war, central banks prepare to battle the last financial crisis--which in the present context means a big-bank liquidity meltdown like the one that nearly toppled thr global financial system in 2008-09. Planning to win the next war by assuming it will be a copy of the last confict is an excellent strategy for losing the next war. The same holds true for the next financial crisis: reckoning that it will be a repeat of 2008 is an excellent way to be caught completely off-guard. Crises may rhyme, but they don't repeat. The next Global Financial Meltdown won't start in subprime mortgages--that sector has been wiped out, written down, or passed on to the poor tax-donkey taxpayers. The next crisis also won't arise on money-center banks, either. Central banks have figured out how to bail out the banks, and have rebuilt the bank balance sheets by stripping hundreds of billions of dollars in interest from savers. (Sorry, widows and orphans--your interest income had to be transferred to the big banks. We're sure you understand why the banks are more important than you are as you enjoy yet another meal of canned beans and saltine crackers.) The central banks and state treasuries around the globe may be confident they can bail out the banks, but what if the next domino to fall isn't a bank? What if it is a "safe, high yield asset" held by institutional owners such as pension funds, insurance companies and REITs (real estate investment trusts)? What if the next crisis isn't a spot of bother caused by excessive leverage, but a systemic collapse of collateral as an entire sector--retailers holding millions of square feet of bricks-and-mortar store space--falls off a cliff? Consider this chart of sky-high commercial real estate (CRE) valuations...

Artificial Intelligence Finishes 360,000 Hour Workload In Seconds, Law And Banking Jobs Threatened - Automation is the current boogeyman for blue collar workers, minimum wage earners, and even doctors, but it seems lawyers and bankers are now on the list of endangered occupations. JPMorgan Chase & Co. recently showed how an artificial intelligence could go through 360,000 hours of work reviewing documents by its lawyers in a matter of seconds.The banking firm used an AI called COIN (COntract INtelligence) to go through thousands upon thousands of documents pertaining to loan contracts, Bloomberg reports. Before the AI went live back in June 2016, it was the job of lawyers to sift through all of these documents to review them and make sure that everything was in order.What took these professionals hundreds of thousands of man hours to complete, COIN finished in less than a minute. What’s more, the AI made fewer mistakes compared to the work of the lawyers and is expected to take no paid vacations. Put all of these advantages together and the bank has a pretty good case to replace a good chunk of its workers with a system that is expected to save them a lot of money.COIN’s impressive efficiency is something that the financial sector and the rest of the industry simply can’t ignore anymore, Futurism reports. If a program can save banks, tech companies, and even the government a considerable amount of time of tedious labor, it can be difficult to justify not using such a convenient tool.

OCC's Curry fires back at fintech charter skeptics - Comptroller of the Currency Thomas Curry on Monday defended plans to offer a nonbank charter to fintech firms, disputing arguments by state regulators that his agency lacks the legal authority to do so and emphasizing that it will appropriately monitor any firms that go through the rigorous application process. “Some have questioned whether we have the authority to grant charters to such companies and the experience to supervise them,” Curry said, speaking in New York at the annual LendIt conference. “To be clear, the National Bank Act does give the OCC the legal authority to grant national bank charters to companies engaged in the business of banking.”

Cheat sheet: The trade-offs of blockchain privacy tools - As banks explore the potential of blockchains, they’ve been quick to surmise that the technology, as it was originally designed, does not provide robust privacy.  When Satoshi Nakamoto invented bitcoin in 2009, he (or she or they) provided a way for multiple participants, who have no reason to trust each other, to work together in maintaining a canonical, tamperproof history of transactions and digital messages. But the design required that all activity be exposed for anyone to see.  This is unfortunate for financial institutions, which are eager to benefit from the organizational cost-cutting promises of a shared ledger, but are compelled by law and by their own competitive natures to keep the bulk of their activities confidential. “The privacy requirements for blockchain won’t be any different to current regulations applied to any other technology in financial markets,” said Edward Budd, the chief digital officer of global transaction banking at Deutsche Bank. “Therefore, any potential adoption of distributed ledger technology must ensure that the high industry security standards which are applied to financial services are met.” Over the past year, software developers and crypto-engineers have devoted an immense amount of time and resources to devising schemes to protect the privacy of people making transactions on blockchains. Last November, the research arm of R3, a consortium of banks pursuing blockchain-enabled financial applications, released to its members a study making sense of the most promising solutions. The study, which has not previously been made public, provides a breakdown of the level of privacy granted by each approach while examining the trade-offs that inevitably attend them.Banks have funneled their energy (both on their own and as members of consortia like R3) into building permissioned ledgers, a strategy which limits the participants in a blockchain to known entities. This is partly driven by banks’ reluctance to rely on anonymous actors to validate transactions, not to mention anti-money-laundering and know-your-customer regulations, which require them to extensively vet their counterparties. But another benefit of restricting who can participate is that it means restricting who can read the ledger and see the transactions. The authors of the R3 paper describe the restriction of read access as a “low-tech” option for privacy. Permissioned ledgers also allow for faster processing by getting rid of mining, which in bitcoin and Ethereum is needed to determine the order of transactions, but which is extremely costly in both time and energy.However, permissioned ledgers alone may not be enough to protect participants from antitrust and insider trading laws which require confidentiality even between different departments in the same financial institution.

Is it OK for lending algorithms to favor Ivy League schools - Much of the energy behind the fintech movement stems from the promise that it can provide financial services to those left out of the mainstream banking sector. But the way some online lenders go about deciding to whom they will lend flies in the face of this premise. Their underwriting relies heavily on where the potential borrower attended college, and they tend to skew in favor of the Ivy League. Their algorithms predict the future income potential of graduates based on their alma mater — those who hail from Harvard are likely to be far richer in the future than those from, say, certain community or vocational schools. While disparate-impact studies have yet to be conducted on this practice, how can it not have a disparate impact? The school someone goes to depends, to a large degree, on the socioeconomic strata they were born into, how much money their parents make and what neighborhood they live in. None of these factors are supposed to be considered in a lending decision. Comptroller of the Currency Thomas Curry made this point at the LendIt conference this week. He didn’t speak directly of using education as a lending criterion, but he did stress that all fintech companies, especially those that seek a special-purpose charter from the OCC, must provide financial inclusion and not discriminate. “Last year, we started an international conversation by offering one definition for responsible innovation,” Curry said. “Implicit in the definition are rigorous controls and governance to ensure you comply with applicable laws and regulations, provide fair access to your services, and treat your customers fairly.” Fintech companies that apply for a national charter must include in their business plans a description of “how they will support the needs of the communities they serve and promote financial inclusion,” Curry said.

Are crypto 'tokens' like ether securities by another name? - Ask forgiveness, not permission. That’s the no-holds-barred philosophy in bitcoin-land, where developers tend to write software and entrepreneurs tend to build businesses first, without seeking approval from regulators.Sometimes this turns out fine, but other times bright-eyed experimenters can find that the legal gray area they thought they were operating in was much more black than white. In other words, just because you’re using cryptocurrency does not mean you’re outside of the reach of law enforcement. As Ripple, Erik Voorhees, Charlie Shrem, Trendon Shavers and many others have found out, the law can still come crashing down on top of you if you’re doing something illegal. One of the legally murky aspects of the crypto world is the initial coin offering. An ICO is a way for developers and businesspeople to collect money directly from individuals who wish to invest in a new project or venture. Investors usually send bitcoin to the development team behind the new offering in exchange for a new altcoin, appcoin, or other type of digital token. The general idea with these digital tokens is that they will be tied to the growth of a specific project or business. As that project grows in popularity, the thinking goes, the token purchased during the initial coin offering will also grow in value. The connection between a platform’s popularity and why that should result in increased value for the related digital token is often hazy.  Questions remain about the legality of the ICO concept. One of the major issues with ICO tokens is that sometimes it’s unclear if a security is being created, which would potentially require registration with the Securities and Exchange Commission. If the authorities decide that the tokens are securities, technologists and entrepreneurs who raised money on the internet through ostensibly unregulated token sales face fines or even jail time under certain circumstances where fraud or similar charges are involved.  At stake is the innovative role blockchain technology — which has gained increasing acceptance from bankers as a multitool of the future, albeit without the tokens — can play in business, especially in raising money from the public. If these digital tokens are regulated like traditional financial assets, then the supposed benefits offered by blockchain technology, such as raising money from a wider range of individuals and lowering the cost of doing so, are dubious at best.

Bitcoin Plummets 18% as SEC Rejects Winklevoss ETF Proposal -- Bitcoin’s price plummeted after U.S. regulators rejected a proposal by the Winklevoss twins for a publicly traded fund based on the digital currency, dashing hopes that a government-approved investment vehicle would lead to wider interest in virtual money. The Securities and Exchange Commission refused to grant an exemption that would have let the Winklevoss Bitcoin Trust trade on the Bats BZX Exchange, according to a filing posted Friday on the regulator’s website. The decision ended a months-long rally that pushed the virtual money’s value higher than gold. Bitcoin fell as much as 18 percent against the dollar to $978.76 after the decision, the lowest intraday price in a month.Tyler and Cameron Winklevoss, the brothers famed for their dispute with Mark Zuckerberg over the origins of Facebook, vowed to continue working with the SEC to make their bitcoin vision a reality. They have been engaging with regulators and tweaking their proposal for years.Friday’s decision doesn’t close the door on a possible future exchange-traded fund based on bitcoin, but it makes the path more complicated. The SEC rejected the application because the Bats exchange would be unable to enter into necessary surveillance-sharing agreements given that “significant markets for bitcoin are unregulated,” according to the filing on the agency’s website. “The Commission does not find the proposed rule change to be consistent with the Exchange Act.” Bitcoin isn’t regulated by any government and has been used by consumers worldwide to shelter assets from inflation or political upheavals in their home countries. Last year, bitcoin outperformed all major foreign-exchange trades, stock indexes, and currencies and commodity contracts.

How fintechs are using AI to transform payday lending - Fintech startups looking to disrupt payday lending are using artificial intelligence to make loans with rates as low as 6% and with default rates of 7% or less.AI can make a difference on several fronts, the startups say. It can process enormous amounts of data that traditional analytics programs can’t handle, including data scraped constantly off the borrower's phone. It can find patterns of creditworthiness or lack thereof on its own, without having to be told of every clue and correlation, startups like Branch.co say. And the cost savings of eliminating the need for loan officers lets these companies make the loans at a profit.  MyBucks is a little-known, oddly named Luxembourg-based fintech company that started lending in South Africa but is spreading around the globe. It’s also doing several things many U.S. banks would like to do, such as identity proofing and enrolling new customers in its lending service through a mobile device and sending loan funds to that device within 15 minutes.It’s making loans to previously unbanked people with no credit score at rates of 20% for loans of less than six months and 25% to 40% for long-term installment loans. And it’s profitable.   The power behind the lending operation is a credit-scoring engine called Jessie. Jessie analyzes cell phone bill payment history, bank account history (if the person has a bank account), utility bills, geolocation, and credit scores.“We've built a fraud engine that allows us to credit score quite efficiently, and check whether or not there is any fraudulent behavior,” said Tim Nuy, deputy CEO. Some of this information, including transaction histories and geolocation, the system pulls from the customer’s own device, with consent.  “Android has no privacy restrictions whatsoever,” Nuy said. “iPhone is slightly less.”  People who are underbanked tend to be unconcerned about privacy. They're more worried about meeting an urgent need for cash. The software has allowed MyBucks, which has deposit and lending licenses in several countries, to reduce the timeline for getting credit from at least a week to 15 minutes.

 Defending my business from the federal government - Never did I imagine that I would find my livelihood threatened by the United States government, but over the last several years, my company has been victimized by “Operation Choke Point,” an organized federal government program among federal banking regulators under the Obama administration to terminate the banking relationships of regulated short-term lenders and other legal industries that the administration disapproved of. I have worked in the short-term loan industry for 30 years, operating more than 60 centers across seven states, where my co-workers and I serve up to 25,000 hardworking Americans each year. Recently, the difficulty in keeping banking relationships has caused us to shut down 12 loan centers. The most recent banking relationship loss occurred in January 2016, when U.S. Bank sent me a 12-day notice stating they would be closing our account with no explanation. This is not a faceless government program; Operation Choke Point deliberately attacks regulated businesses such as mine based on the personal biases of unelected bureaucrats. We might never have known what caused the bank’s sudden decision had a congressional investigation not uncovered the existence of Operation Choke Point. Internal FDIC memos obtained by the House Financial Services Committee revealed that government officials held a personal vendetta against the payday lending industry. The committee discovered that the agencies were pressuring banks to cut off services to businesses like mine, despite the fact that we are state-licensed and have an excellent record of compliance.While Operation Choke Point threatens to take down my business secretly, another federal agency, the Consumer Financial Protection Bureau, proposed a new federal rule that will likely shut down the entire regulated short-term lending industry, and leave millions of consumers with fewer credit options. As it developed its proposed rule, the law required that the CFPB gather input on how the rule would affect small businesses — in spite of the bureau itself estimating a 70 percent cut in business revenue for short-term lenders. I was selected by the bureau to serve on a small-business review panel and report on the potential impact of the rule. However, from the very start it was clear that the CFPB had already made up its mind about my industry.

GOP switches tactics in 'war' against CFPB | American Banker -- Stymied by an appeals court decision that made it more difficult for the Trump administration to fire Richard Cordray as the director of the Consumer Financial Protection Bureau, Republicans have shifted their strategy to trying to contain the bureau.  They have opened multiple fronts against the agency, undertaking separate efforts through obscure legislative processes to cut its funding and roll back past and future rules, while also considering a larger bill that would effectively gut the agency entirely.

Justice Department turns against CFPB in constitutional court case -- The Justice Department plans to defend President Trump's executive authority by siding with PHH Corp. in the mortgage lender's contentious case alleging the Consumer Financial Protection Bureau is unconstitutional. In a filing made late last week, the Justice Department said it would file a friend-of-the-court brief no later than March 17. The motion appears to indicate that the White House intends to resolve the fate of CFPB Director Richard Cordray through the courts rather than through an action by the president, lawyers said.

Trump discussed Cordray's future in community bank meeting — President Trump deeply impressed the community bankers he met with Thursday, listening attentively to their concerns while demonstrating a willingness to pull out all the stops to help get them regulatory relief, according to multiple participants. The president also openly consulted with his top economic advisers during the meeting, pondering the future of Consumer Financial Protection Bureau Director Richard Cordray while repeatedly asking whether he could fix community bank concerns through new executive orders. In interviews with participants, they described Trump as engaged and empathetic to the plight of community banks, willing to dive into specific concerns while pledging to deliver relief as fast as possible.  The conversation, which took place in the White House’s Roosevelt Room before Trump led the group on an impromptu tour of the Oval Office, lasted roughly an hour and covered a range of issues. That included a discussion of Cordray’s future and that of the CFPB. At one point, Trump expressed to the group that many had urged him to oust Cordray, but the president was not sure it was worth the political backlash. But Trump was apparently under the impression that Cordray’s term would be up soon. Informed by Treasury Secretary Steven Mnuchin, who attended the meeting along with Gary Cohn, the White House’s chief economic adviser, that Cordray’s term lasts until July 2018, Trump asked whether anything could be done before then. Cohn said he and Mnuchin were working on the issue, while raising the prospect that Cordray could voluntarily depart to run for office in his home state of Ohio, according to participants in the meeting. Top Republicans have urged Trump to fire Cordray directly, but his authority to do so is unclear. Many observers believe the administration is awaiting the outcome of a legal battle between the CFPB and a mortgage servicer over its constitutionality. They also discussed the structure of the CFPB. Republicans have sought to replace the single director with a five-member board, though their enthusiasm for that idea has waned after Trump won the election. “Both Treasury Secretary Mnuchin and Mr. Cohn were very engaged with CFPB,” Heitkamp said. “We talked about a five-member board and [Trump] was very engaged with trying to understand” the benefits of a five-member board.

Democrats highlight arbitration agreements ahead of CFPB fight - Democratic senators are gearing up for a showdown with Republicans over a Consumer Financial Protection Bureau rule governing arbitration agreements in financial contracts. The CFPB is expected to release a final rule this spring that would restrict the use of mandatory arbitration clauses, but Republicans are prepared to use a legislative process called the Congressional Review Act to roll back the regulation when it is released.

Weakening CFPB will strengthen ID protection providers – Bank Think - Generating nearly $4 billion in annual revenue, identity protection is a big business — one that has consistently drawn the attention and ire of regulators. But regulatory pressure that once alienated the largest resellers may soon ease and the identity protection industry could become even bigger — fast. With policymakers considering steps to curb the powers of the Consumer Financial Protection Bureau and other agencies, we estimate the market could become $5 billion or more practically overnight.   In years past, the Federal Trade Commission had the sole purview of the identity protection space. But the newest regulator, the CFPB, has since taken up the mantle of de facto identity protection industry regulator. Since 2012, regulators — most notably the CFPB — have levied $1.6 billion in fines and settlements related to identity protection and similar products primarily sold through U.S. financial institutions. In moves that some considered emblematic of regulatory overreach, federal and state regulators have punished a number of companies, citing what they considered to be dubious marketing and sales practices. LifeLock Inc., for instance, agreed in 2015 to pay $11 million to the FTC and $1 million to a group of state attorneys general to settle charges related to marketing claims around its identity theft protection services. That same year, the CFPB took action against Affinion Group Holdings and Interactions Inc. for the way in which the companies charged consumers for credit card add-on benefits that the agency said consumers never received. With each new fine or settlement, banks backed away from offering these products to their customers. As a result, far fewer major financial institutions continue to sell these products, despite the fact that identity fraud has hit a record high. However, a new U.S. president and emboldened Congress may effectively change the dynamic that drove so many financial institutions from the identity protection spaceThe CFPB is under attack. A defanged CFPB would mean less risk for financial institutions that choose to return to the identity protection reseller market.As the practices that once put providers and financial institutions in regulatory crosshairs have become less of an issue, financial institutions would have one less obstacle to get back into the game. The real question then becomes: Which identity protection provider should banks trust with customers' identities?

CFPB delays implementation of final prepaid rule, citing complaints - The Consumer Financial Protection Bureau said Thursday that it is seeking to delay the effective date of its final rule on prepaid cards by six months because industry participants need more time to comply. "We have learned that some industry participants believe they will have difficulty complying with certain provisions of the rule by the current October 1, 2017 effective date," Kris Andreassen, a CFPB senior counsel, wrote in a blog post.

Trove of consumer data pledged in new credit bureau product -- Equifax has introduced a software product that gives lenders instant access to all of its consumer data in a single platform. The new product, Equifax Ignite, pulls together 3 terabytes of data, including its own proprietary data culled from clients plus data from alternative sources such as social media and utility payment records, said Prasanna Dhore, chief data and analytics officer. Ignite also includes analytical tools for risk management, marketing and fraud prevention. “A 360-degree view of the consumer … has been the holy grail of banks for ages,” says Prasanna Dhore, chief data and analytics officer at Equifax.“This gives you a 360-degree view of the consumer, which has been the holy grail of banks for ages,” Dhore said. If Ignite lives up to billing, it would be an extremely significant new product in the market for providing consumer data to lenders, said Manav Patnaik, an analyst at Barclays. Patnaik has not yet seen the Equifax product nor is he involved with it. “This is the ultimate goal for a lot of companies out there,” Patnaik said. “It’s something any company in the world would love to do. It’s a very simple concept; it’s just been tough to do technologically.” The credit reporting business is undergoing disruption like the rest of financial services. Traditional rivals such as TransUnion, Experian and Fair Isaac are battling it out while facing increasing challenges from other data services such as Dun & Bradstreet, LexisNexis and FactSet Research Systems and alternative credit reporting bureaus like Clarity Services and MicroBilt. Ignite will allow Equifax to deliver customer data to its clients much faster, and to create customized products for a specific lender’s data needs, Dhore said. “It used to be that we gave the same product to everyone,” Dhore said. “Now we can give the perfect fit to each customer.”

Don't let tax reform pull plug on crucial housing programs – Bank Think - As the Trump administration prepares to tackle tax reform, many bankers hope that a new tax policy will respect the important role of tax-assisted community development programs in encouraging business investment in distressed neighborhoods. Preserving and expanding these high-impact programs can provide a pathway to broader economic growth.  Across the country, financial institutions are working closely with local partners, who are actively engaged in transforming communities to create jobs, build affordable housing and revitalize neighborhoods. Collectively, these public-private partnerships provide billions of dollars in loans and investments to low-income neighborhoods that benefit residents and local businesses while providing stable, consistent returns to lenders.   Despite the success of these programs, the changing political landscape has raised concerns that they could land on the wrong side of potential tax reforms and budget cuts.  Specifically, the three federal “pillars” of community development financing that some fear may be in jeopardy are: the Low-Income Housing Tax Credit (LIHTC), which generates equity to fund real estate costs that cannot be supported by rental cash flow or property values; Section 8 rental subsidies, which enables landlords to house tenants who can only pay a portion of their rent; and the New Markets Tax Credit (NMTC) program, a relatively new program offering tax incentives to equity investors for real estate or businesses in low-income, highly distressed communities.  Each of these federal community development financing pillars has proven to be effective in channeling private investment to enact positive change. The LIHTC has resulted in approximately 107,000 apartments and created numerous jobs every year since 1986, according to the Department of Housing and Urban Development. Section 8 serves over 3.3 million low-income households annually, of which over two-thirds are extremely low-income and about 90% are households with children, veterans or elderly or disabled people.

Trump Mulls Cutting $6 Billion From HUD to Fund Defense - Last October in Charlotte, Donald Trump detailed his vision for bringing “urban renewal” to America’s “inner cities.”“The conditions in our inner cities today are unacceptable,” Trump said, before lamenting that the United States had “wasted $6 trillion on wars in the Middle East that have produced only more terrorism, more death, and more suffering — imagine if that money had been spent at home.”Five months later, the Trump administration is considering cutting $6 billion from the Department of Housing and Urban Development to help fund a $54 billion increase in America’s defense budget, according to documents obtained by the Washington Post.The U.S. already spends more more on its military than China, Russia, Saudi Arabia, the United Kingdom, France, India, and Germany — combined.Apparently, when Trump said that the conditions in our inner cities were “unacceptable,” he meant that our public housing is too well-maintained, urban communities are too well-developed, and the rent (for low-income people) is too damn low.The president’s budget proposal would slash $1.3 billion from the public-housing capital budget, and $600 million from its operating fund. Funding for capital repairs in public housing is already so insufficient, tens of billions of dollars in backlogged repairs plague the nation’s facilities, according to a 2010 HUD report.The Community Development Block Grant Program has traditionally enjoyed bipartisan support and currently receives $3 billion a year. The program brings bike trails, affordable housing projects, gyms, recreation centers, and other development projects to urban communities. The Trump budget would eliminate the program entirely.

Appeals court rules against Bondi in Broward mortgage-fraud case -In a setback for Florida Attorney General Pam Bondi, an appeals court this week reversed a ruling against a Broward County mortgage company accused of defrauding hundreds of homeowners at the height of the housing crisis. The Fourth District Court of Appeals in West Palm Beach ruled Wednesday that the state’s case against Outreach Housing must go back to trial. The decision also did away with the $8.3 million judgment that had been imposed against the company. According to the appeals court, the trial judge erred in quickly ruling in the state’s favor after incorrectly accepting the state’s argument that Outreach’s principal, Blair Wright, had admitted wrongdoing in the case. Wright had been representing himself in court before three defense attorneys stepped in, working on a pro bono basis. “He literally got railroaded,” said Robyn Sztyndor, one of Wright’s attorneys. “There were disputes on every single issue, and there was evidence on both sides. He did not get his day in court.” Circuit Court Judge Michael Gates was also wrong to award $880,000 in restitution and $7.45 million in damages, the appeals court ruled. “We’re very, very encouraged,” said Claudia Pastorius, another of Wright’s attorneys. “We’re encouraged a miscarriage of justice has been corrected.” A Bondi spokesman said her office is reviewing the opinion.

 No title? No worry. LLC that no longer owns house files to evict Milwaukee family - The eviction suit filed against Jesse White last month stands out from the nearly 900 other evictions filed in Milwaukee County Circuit Court last month.The difference: Kaja Holdings 2 LLC -- the company seeking to throw the 79-year-old man and his two teenage sons out -- does not own the house on N. 26th St. where the family lives. The company lost title to the property on Oct. 31 in a tax foreclosure."It takes guts to evict somebody from property you don't own," Ald. Robert Bauman recently told Thomas Cassady, a Chicago attorney representing Kaja Holdings 2.White has been paying rent, maintaining and fixing up the house since March 2015 when he entered into an agreement to pay $570 a month rent, with about $41 of that going toward the $40,000 purchase price for the house that was bought at a sheriff's sale for about $8,000. The three-bedroom home is assessed at $52,400, records show.White's situation sheds light on the growing rent-to-own business, an industry that critics say is a form of predatory lending. Kaja Holdings 2 is one of several limited liability companies owned or linked to Vision Property Management, a South Carolina company that reportedly manages about 5,500 rent-to-own properties nationwide. White leased his house through Vision. A spokesperson for Attorney General Brad Schimel confirmed this week that the state Department of Justice is investigating Vision, and sources said the Milwaukee City Attorney's Office is also looking into the company.

Oceanside man sentenced to 15 years in prison in mortgage scheme - An Oceanside man was sentenced to 15 years in prison in Brooklyn federal court on Tuesday for masterminding a $3.5 million scheme to fraudulently collect fees from thousands of homeowners for mortgage modifications, as well as other scams, the government said.David Gotterup, 37, controlled a series of companies from 2008 to 2012 that used telemarketers and salespeople to convince homeowners to pay advance fees for help with distressed mortgages, and then provided no services, prosecutors said. He was also involved in schemes to defraud mortgage lenders, the Federal Housing Administration and the Small Business Administration, prosecutors said. Gotterup has been imprisoned since his arrest in 2015, and pleaded guilty last June. He was sentenced by U.S. District Judge Nicholas Garaufis. His lawyer did not immediately return a call for comment

Florida Realtors caution of Final Notice scam -- Florida's leading real estate industry group cautioned members against replying to a "Final Notice" bill from the Florida Board of Realtors. There is no Florida Board of Realtors. "It's a scam," said Florida Realtors chief executive Bill Martin. "And it's not a simple scam. High-tech criminals put a great deal of work and planning into this." The scam became apparent over the weekend after agents, brokers and association executives notified Florida Realtors. The "Make check payable to:" address appears to be a post office in Deerfield Beach, according to the association. The form comes with a threat: "Failure to respond with your 2017 Agent Board Listing may lead to closure of board listing. Response required to be included in the Agency listing." The letter includes a website, floridaboardofrealtors.org. The website not only appears legitimate, it's very professional, according to Florida Realtors. Apparently most of the links don't work. Blogs in their "archive" appear to stretch back a few years, for example, but no content appears. So far no members of Florida Realtors have reported they responded to the demands, said a spokeswoman for the group.

 Down-payment spat renewed as FHA accused of insuring risky loans - Nearly $30 billion of Federal Housing Administration mortgages may be at risk because they relied on so-called borrower-financed down-payment assistance, according to a new federal report. At issue is assistance provided by state housing finance agency programs, which borrowers receive by agreeing to pay higher interest rates on their mortgages. Those bigger monthly payments raise the odds of default to the point of putting the Mutual Mortgage Insurance Fund at risk, said the report, which compares the state programs with seller-funded down-payment assistance that has been banned.

 CoreLogic: "1 million borrowers moved out of negative equity during 2016" – From CoreLogic: CoreLogic Reports 1 Million US Borrowers Regained Equity in 2016: CoreLogic ... today released a new analysis showing that U.S. homeowners with mortgages (roughly 63 percent of all homeowners) saw their equity increase by a total of $783 billion in 2016, an increase of 11.7 percent. Additionally, just over 1 million borrowers moved out of negative equity during 2016, increasing the percentage of homeowners with positive equity to 93.8 percent of all mortgaged properties, or approximately 48 million homes.In Q4 2016, the total number of mortgaged residential properties with negative equity stood at 3.17 million, or 6.2 percent of all homes with a mortgage. This is a decrease of 2 percent quarter over quarter from 3.23 million homes, or 6.3 percent of all mortgaged properties, in Q3 2016* and a decrease of 25 percent year over year from 4.23 million homes, or 8.4 percent of all mortgaged properties, compared with Q4 2015 ... Negative equity peaked at 26 percent of mortgaged residential properties in Q4 2009 based on CoreLogic equity data analysis, which began in Q3 2009.  “Average home equity rose by $13,700 for U.S. homeowners during 2016,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The equity build-up has been supported by home-price growth and paydown of principal. The CoreLogic Home Price Index for the U.S. rose 6.3 percent over the year ending December 2016. Further, about one-fourth of all outstanding mortgages have a term of 20 years or less, which amortize more quickly than 30-year loans and contribute to faster equity accumulation.”  On states: "Nevada had the highest percentage of homes with negative equity at 13.6 percent, followed by Florida (11.6 percent), Illinois (11.1 percent), Rhode Island (10 percent) and Arizona (9.8 percent). These top five states combined account for 29.7 percent of negative equity in the U.S., but only 16.3 percent of outstanding mortgages."  Note: The share of negative equity is still high in Nevada and Florida, but down from a year ago.

 Black Knight: Mortgage "Origination volumes in 2016 highest level seen in nine years" -Black Knight Financial Services (BKFS) released their Mortgage Monitor report for January today. According to BKFS, 4.25% of mortgages were delinquent in January, down from 5.09% in January 2016. BKFS also reported that 0.94% of mortgages were in the foreclosure process, down from 1.30% a year ago.This gives a total of 5.19% delinquent or in foreclosure.Press Release: Black Knight’s Mortgage Monitor: Strong Q4 Pushes 2016 Originations to Highest Level in Nine Years; Reperforming Loan Population Sits at Nearly Two Million This month, Black Knight examined final Q4 2016 origination data to get a sense of purchase and refinance lending volumes and trends for the year as a whole. In addition, the report also looked at the nation’s population of reperforming loans (RPLs), mortgages that had been at least 120 days or more delinquent or in active foreclosure at some point in the past but have now been current for at least four months. As Black Knight Data & Analytics Executive Vice President Ben Graboske explained, 2016 was the best year for overall mortgage originations since 2007. “A strong fourth quarter finish to the year pushed total 2016 origination volumes to the highest level seen in nine years,” said Graboske. “We’ve now seen nine consecutive quarters of double-digit purchase origination growth, and growth overall in the purchase market in 21 of the past 22 quarters. The $2.1 trillion in first lien mortgages originated throughout the year represented a 17 percent increase over 2015, stemming from a 22 percent jump in refinance lending and a 13 percent increase in purchase loans. This was the second straight year of double-digit growth in purchase lending, which hit its highest yearly total since 2006 at $1.1 trillion. As good of a year as it was for purchase lending, it was still 28 percent off the peak volume seen in 2005.”

MBA: Mortgage Applications Increase in Latest Weekly Survey -- From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey Mortgage applications increased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 3, 2017. The previous week’s results included an adjustment for the President’s Day holiday... The Refinance Index increased 5 percent from the previous week to the highest level since December 2016. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 15 percent compared with the previous week and was 4 percent higher than the same week one year ago. ... The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) increased to 4.36 percent from 4.30 percent, with points increasing to 0.44 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The first graph shows the refinance index since 1990.The second graph shows the MBA mortgage purchase index. Even with the increase in mortgage rates over the last few months, purchase activity is still holding up. However refinance activity has declined significantly since rates increased.

Mortgage Rate Losing Streak Pauses - After moving higher for 5 days in a row, mortgage rates finally moved a bit lower today.  The improvement was fairly small, however, merely undoing Friday's modest move higher.  Bonds markets (which dictate rates) continue to price in extremely high chances of a Fed rate hike next week.  That wasn't entirely the case before the recent 5-day losing streak.  In fact, the odds of a Fed rate hike more than doubled last week based on market metrics.  This doesn't mean the Fed was half as likely to hike 2 weeks ago.  Rather, it has more to do with the fact that financial markets had been sort of complacent about adjusting bond prices to reflect the probability.  Complacency ended early last week and bond yields (and thus "rates") quickly adjusted to their new, higher reality). In other words, the past week was more than just a random move inside a narrow range for mortgage rates.  It was a legitimate repricing of expectations.  It would take something very compelling to push rates significantly lower between now and next Wednesday's Fed announcement.  This could come in the form of shockingly bad employment numbers on Friday or massive geopolitical drama, but until it happens, it's safer to remain defensive with respect to locking and floating. Inclined floaters should understand there's not a huge payout if rates manage to improve this week.

 CoreLogic: House Prices up 6.9% Year-over-year in January -- Notes: This CoreLogic House Price Index report is for January.  The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).  From CoreLogic: CoreLogic US Home Price Report Shows Prices Up 6.9 Percent in January 2017 Home prices nationwide, including distressed sales, increased year over year by 6.9 percent in January 2017 compared with January 2016 and increased month over month by 0.7 percent in January 2017 compared with December 2016, according to the CoreLogic HPI. ..“With lean for-sale inventories and low rental vacancy rates, many markets have seen housing prices outpace inflation,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Over the 12 months through January of this year, the CoreLogic Home Price Index recorded a 6.9 percent rise in home prices nationally and the CoreLogic Single-Family Rental Index was up 2.7 percent—both rising faster than inflation.”

 Northwest Housing Prices Are On Fire -- Robert Oak - The December 2016 S&P Case Shiller home price index shows a seasonally adjusted 5.6% price increase from a year ago for the 20 metropolitan housing markets and a 4.9% yearly price increase in the top 10 housing markets.  Both Seattle and Portland's annual home price gain exceeded 10%.  Home prices are still climbing and nationally exceeded their 2006 housing bubble peak.  The U.S. National Home Price Index has also increased 5.8% from a year ago and continues at a 30 month high.  From the 2006 price peak, the national index, covering all nine geographic divisions, has increased 0.5%.  Since the price low of March 2012, the 10-City composite index has increased 41.0% and the 20-City composite index has increased 43.7%.  S&P is wondering if housing is in another bubble or if these prices are sustainable.  Prices are back to winter 2007 levels and once again unaffordable as wages and incomes have not similarly recovered.  The housing bubble peak was in July and June 2006.  Nationally, housing prices have surpassed that peak by 0.5%.  The 20-city index is still -6.7% below and the 10-city index is -8.8% below their 2006 bubble peaks.  We can only assume that America is back to being a debtor nation and we don't know how anyone is making their mortgage.  Below are all of the composite-20 index cities yearly price percentage change, using the seasonally adjusted data.  The Northwest is on fire with Portland Oregon home prices increasing 10% and Seattle, Washington prices worse with a 10.8% annual increase.   Denver Colorado prices increased over 8.9% from a year ago.  Dallas Texas homes have also increased 8.1% in a year  Tampa Florida has increased 8.4% from a year ago.  This is so unattainable for most people, especially now with mortgage rates increasing.

Fed's Flow of Funds: Household Net Worth increased in Q4 --The Federal Reserve released the Q4 2016 Flow of Funds report today: Flow of Funds.  According to the Fed, household net worth increased in Q4 compared to Q3: The net worth of households and nonprofits rose to $92.8 trillion during the fourth quarter of 2016. The value of directly and indirectly held corporate equities increased $728 billion and the value of real estate increased $557 billion.  Household net worth was at $92.8 trillion in Q4 2016, up from $90.8 trillion in Q3 2016.  The Fed estimated that the value of household real estate increased to $23.1 trillion in Q4. The value of household real estate is now above the bubble peak in early 2006 - but not adjusted for inflation, and also including new construction.The first graph shows Households and Nonprofit net worth as a percent of GDP. Household net worth, as a percent of GDP, is higher than the peak in 2006 (housing bubble), and above the stock bubble peak. This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations. This graph shows homeowner percent equity since 1952. Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008. In Q4 2016, household percent equity (of household real estate) was at 57.8% - up from Q3, and the highest since Q2 2006. This was because of an increase in house prices in Q3 (the Fed uses CoreLogic).

6 constraints on new home construction (slides) More consumers are looking to buy a home than ever before, according to recent data from Redfin. And while new home sales are indeed picking up — data from the U.S. Census Bureau showed January's new home sales rate was 5.6% higher than a year earlier, new home construction still remains well below its pre-recession peak. The following are six factors that could hamper efforts to boost new home construction.Struggling shopping malls let high schools, doctors move in where Penney’s used to be - Beneath some positive stats, shopping malls are facing serious problems that threaten their health, including a shift to non-retail tenants and forecasted rent declines, according to Wells Fargo analysts. Wells Fargo stresses a need to look deeper at high mall occupancy rates. Occupancy for the fourth quarter of 2016 was 93.6%, near the 93.3% for all of 2015, according to data from the National Council of Real Estate Investment Fiduciaries, cited by the International Council of Shopping Centers. However, the type of tenants many malls have is shifting to a lower-quality occupant for the overall health of the retail-focused mall, the analysts said. “[F]or example, there are far more ‘mom-and-pop’ stores, and some malls have repurposed space for non-retail uses such as doctors offices, town libraries and even a high school,” Wells Fargo said in the report published Sunday. “Mom-and-pop” retail in a mall setting may generally be seen as a more-vulnerable long-term tenant and less of a traffic pusher without big-name brand backing. The annual base rent for malls at the national level was $27.30 per square foot in 2016, up 1.4% from 2015, according to the International Council of Shopping Centers. But that doesn’t take into account the impact of long-term leases.

 Leading Index for Commercial Real Estate Increases in February -  This index is a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.  From Dodge Data Analytics: Dodge Momentum Index Increases in February: The Dodge Momentum Index rose 1.6% in February to 144.0 (2000=100) from its revised January reading of 141.7. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. February’s increase was due to a 4.4% jump in institutional planning, while commercial planning slipped slightly, falling 0.3% for the month. The Momentum Index has now increased for five consecutive months; however, the underlying components continue to be volatile on a month-to-month basis as large projects continue to sway the data. The overall trend, however, is rising. On a year-over-year basis the Momentum Index is 22% higher, with commercial planning up 28% and institutional planning moving 15% ahead of last year. This suggests that construction activity will continue to see further growth as the year progresses.

A Third Of All Shopping Malls Are Projected To Close As 'Space Available' Signs Go Up All Over America --As you will see below, it is being projected that about a third of all shopping malls in the United States will soon close, and we just recently learned that the number of “distressed retailers” is the highest that it has been since the last recession.  Honestly, I don’t know how anyone can possibly believe that the U.S. economy is in “good shape” after looking at the retail industry.  In my recent article about the ongoing “retail apocalypse“, I discussed the fact that Sears, J.C. Penney and Macy’s have all announced that they are closing dozens of stores in 2017, and you can find a pretty comprehensive list of 19 U.S. retailers that are “on the brink of bankruptcy” right here.  Needless to say, quite a bloodbath is going on out there right now. But I didn’t realize how truly horrific things were for the retail industry until I came across an article about mall closings on Time Magazine’s websiteAbout one-third of malls in the U.S. will shut their doors in the coming years, retail analyst Jan Kniffen told CNBC Thursday. His prediction comes in the wake of Macy’s reporting its worst consecutive same-store sales decline since the financial crisis. Macy’s and its fellow retailers in American malls are challenged by an oversupply of retail space as customers migrate toward online shopping, as well as fast fashion retailers like H&M and off-price stores such as T.J. Maxx. As a result, about 400 of the country’s 1,100 enclosed malls will fail in the upcoming years. Of those that remain, he predicts that about 250 will thrive and the rest will continue to struggle.Can you imagine what this country is going to look like if that actually happens?Shopping malls all over the United States are literally becoming “ghost towns”, and many that have already closed have stayed empty for years and years. The process usually starts when a shopping mall starts losing anchor stores.  That is why it is so alarming that Sears, J.C. Penney and Macy’s are planning to shut down so many locations in 2017.  According to one recent report, 310 shopping malls in America are in imminent danger of losing an anchor store

US Credit Card Debt Sees Biggest Drop In Over Four Years --The credit-card fueled spending spree came to a screeching halt in January, when according to the latest just released consumer credit data from the Fed, revolving credit tumbled by $3.8 billion. This was the first decline since February of 2016, and the biggest drop since December 2012. On the other hand, the far more generous non-revolving, student and auto loans, rose once again, posting a $12.6 billion increase in January, bringing the total consumer credit increase to just $8.8 billion, one half of the $17 billion expected, and down materially from the revised December print of $14.8 billion.The sharp contraction in revolving, i.e. credit card debt, is seen more clearly in the chart below laying out only this component of total consumer credit: As expected, there was no change to the breakdown of student and auto loans, which remained at $1.4 trillion and $1.1 trillion, respectively, as this data series is updated once every quarter.

US Consumer Spending Highest Since 2008 As Economic Confidence Hits Record High: Gallup -- Perhaps it is the last hurrah of the Trump post-election euphoria  but according to Gallup there were two notable development in February. First, Americans' daily self-reports of spending climbed to an average of $101 in February. This, Gallup reports, was the highest average for the month of February since 2008, when spending averaged $106. The latest monthly average is up $13 from January's figure, but still lower than December's holiday-influenced $105. Gallup notes that this is the seventh daily spending average of $100 or more that Gallup has recorded for any month over nine years of tracking Americans' spending reports, and the only one in February since 2008. During that year - but before the global financial crisis in the fall - Americans' monthly average spending exceeded $100 four times. What makes the Gallup report even more surprising were previous reports that due to a delay in the payment of Tax refunds by the US Treasury, spending would be muted in the past month. The latest data not only refutes this assumption but suggests that the outcome was just the opposite of what many had expected. Additionally, Gallup observes that since 2008, Americans' spending in the month of February has generally been similar to their January spending, though it is common to see a slight increase in February after January's seasonal, post-holiday drop. But the January-to-February increase in 2017 is larger than usual, with this year's $13 bump outpacing the previous record $9 increases in 2008 and 2014.

 US Economic Confidence Index at Record High of +16 -- Many Americans either gained or regained economic optimism last week, as Gallup's U.S. Economic Confidence Index soared seven points to hit +16. This marks the highest weekly average in Gallup's nine-year trend. The index has recovered the ground it lost over the week of Jan. 30-Feb. 5, when it fell from the previous record high of +14 to +8 and languished at that lower level for the next three weeks.Gallup's U.S. Economic Confidence Index is the average of two components: how Americans rate current economic conditions and whether they feel the economy is improving or getting worse. The index has a theoretical maximum of +100 if all Americans were to say the economy is doing well and improving, and a theoretical minimum of -100 if all Americans were to say the economy is doing poorly and getting worse.  Last week was an eventful one for the U.S. economy. President Donald Trump gave his maiden address to Congress on Feb. 28, emphasizing his key economic policy goals such as lowering the corporate tax rate. Those who watched the speech were generally pleased with it, and traders on Wall Street were decidedly upbeat: Stock markets rallied on Wednesday, and the Dow Jones industrial average closed above 21,000 for the first time in its history. Federal Reserve Board Chair Janet Yellen also spoke favorably of current economic conditions in a speech on Friday.

 US wholesale inventories has biggest drop since February 2016 - U.S. wholesale inventories fell slightly more than previously estimated in January, but inventory investment still was likely to contribute to economic growth in the first quarter. The Commerce Department said on Wednesday wholesale inventories decreased 0.2 percent, the biggest drop since February 2016, after jumping 1.0 percent in December. The department reported last month that wholesale inventories edged down 0.1 percent in January. The component of wholesale inventories that goes into the calculation of gross domestic product - wholesale stocks excluding autos - rose 0.2 percent in January. Inventory investment added one percentage point to the economy's 1.9 percent annualized growth rate in the fourth quarter. That was the second straight quarterly contribution to GDP growth after a drag that lasted more than a year. The Atlanta Federal Reserve is forecasting GDP increasing at a 1.3 percent rate in the first quarter. Sales at wholesalers slipped 0.1 percent in January after jumping 2.4 percent in December. At January's sales pace it would take wholesalers 1.29 months to clear shelves, unchanged from December. The ratio has declined from 1.37 months in January of last year, which was the highest since March 2009.

Trade Deficit at $48.5 Billion in January --From the Department of Commerce reported: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $48.5 billion in January, up $4.2 billion from $44.3 billion in December, revised. January exports were $192.1 billion, $1.1 billion more than December exports. January imports were $240.6 billion, $5.3 billion more than December imports.The trade deficit was at the consensus forecast. The first graph shows the monthly U.S. exports and imports in dollars through January 2017.Imports and exports increased in January. Exports are 16% above the pre-recession peak and up 7% compared to January 2016; imports are 4% above the pre-recession peak, and up 8% compared to January 2016. Clearly trade is picking up. The second graph shows the U.S. trade deficit, with and without petroleum. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products. Oil imports averaged $43.94 in January, up from $41.45 in December, and up from $32.06 in January 2016. The petroleum deficit has generally been declining and is the major reason the overall deficit has mostly moved sideways since early 2012. The trade deficit with China increased to $31.3 billion in January, from $28.9 billion in January 2016. The increase this year was probably due to the timing of the Chinese New Year (the deficit will probably be smaller in February). In general the deficit with China has generally been declining. This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100. The index was up 0.7% in January (NSA), and is up 6.9% over the last year. This index is not seasonally adjusted, and this was another solid month-to-month increase. The index is still 4.0% below the bubble peak in nominal terms (not inflation adjusted). The second graph shows the YoY change in nominal terms (not adjusted for inflation). The YoY increase had been moving sideways over the last two years, but might have picked up recently (the recent pickup could be revised away). The year-over-year comparison has been positive for five consecutive years since turning positive year-over-year in February 2012.

January Trade Deficit Up $4.2B from Revised December - The U.S. International Trade in Goods and Services, also known as the FT-900, is published monthly by the Bureau of Economic Analysis with data going back to 1992. The monthly reports include revisions that go back several months. This report details U.S. exports and imports of goods and services. Here is an excerpt from the latest report: The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $48.5 billion in January, up $4.2 billion from $44.3 billion in December, revised. January exports were $192.1 billion, $1.1 billion more than December exports. January imports were $240.6 billion, $5.3 billion more than December imports.The January increase in the goods and services deficit reflected an increase in the goods deficit of $4.0 billion to $69.7 billion and a decrease in the services surplus of $0.3 billion to $21.2 billion. Year-over-year, the goods and services deficit increased $5.1 billion, or 11.8 percent, from January 2016. Exports increased $13.3 billion or 7.4 percent. Imports increased $18.4 billion or 8.3 percent. Today's headline number of -48.50B matched the Investing.com forecast. The previous month was revised downward by 3.0M and another set of revisions were made to 2016 figures. This series tends to be extremely volatile, so we include a six-month moving average.

Oil imports lift U.S. trade deficit to near five-year high | Reuters: The U.S. trade deficit jumped to a near five-year high in January as rising oil prices helped to push up the import bill, pointing to slower economic growth in the first quarter and posing a challenge for the Trump administration. President Donald Trump took office with a pledge to boost annual economic growth to 4 percent and renegotiate trade deals in favor of the United States. Trump blames U.S. trade policy for the loss of American factory jobs and the import-driven surge in the trade gap could intensify the debate on a cross-border tax. "If it is not made in America then we don't want it is what the Trump administration is saying." The Commerce Department said on Tuesday the trade gap increased 9.6 percent to $48.5 billion, also buoyed by imports of cell phones and automobiles. That was the highest level since March 2012. When adjusted for inflation, the trade deficit rose to $65.3 billion from $62.0 billion in December. Both the inflation-adjusted imports and exports were the highest on record in January, signs of improving domestic demand and stronger economic growth among U.S. trading partners. Nevertheless, the wider trade deficit suggests trade could again weigh on economic growth in the first quarter. Data such as housing starts, consumer spending and construction outlays have implied the economy struggled to regain momentum early in the first quarter after growth slowed to a 1.9 percent annualized rate in the final three months of 2016. Trade cut 1.7 percentage points from gross domestic product in the fourth quarter. Following the trade data, the Atlanta Federal Reserve slashed its first-quarter GDP estimate by five-tenths of a percentage point to a 1.3 percent rate. The economy grew at a 3.5 percent pace in the third quarter.

Trump Won't Be Happy: US Records Biggest Trade Deficit In 5 Years -- In a report that will be closely scrutinized - and criticized - by the trade-sensitive Trump administration, today the Department of Commerce announced that the January trade deficit surged in January 2017, jumping from $44.3 billion in December (revised) to $48.5 billion in January, in line with expectations, as imports increased more than exports.This was the biggest trade deficit going back to early 2012. The previously published December deficit was $44.3 billion. The goods deficit increased $4.0 billion in January to $69.7 billion. The services surplus decreased $0.3 billion in January to $21.2 billion. The January increase in the goods and services deficit reflected an increase in the goods deficit of $4.0 billion to $69.7 billion and a decrease in the services surplus of $0.3 billion to $21.2 billion. Year-over-year, the goods and services deficit increased $5.1 billion, or 11.8 percent, from January 2016. Exports increased $13.3 billion or 7.4 percent. Imports increased $18.4 billion or 8.3 percent. The details, first exports

  • Exports of goods and services increased $1.1 billion, or 0.6 percent, in January to $192.1 billion. Exports of goods increased $1.1 billion and exports of services decreased less than $0.1 billion.
    • The increase in exports of goods mostly reflected increases in industrial supplies and materials ($2.1 billion) and in automotive vehicles, parts, and engines ($1.3 billion). A decrease in capital goods ($1.9 billion) was partly offsetting.
    • The decrease in exports of services reflected nearly offsetting changes of $0.1 billion or less in all categories.
  • Imports of goods and services increased $5.3 billion, or 2.3 percent, in January to $240.6 billion. Imports of goods increased $5.1 billion and imports of services increased $0.2 billion.
    • The increase in imports of goods mostly reflected increases in consumer goods ($2.4 billion), in industrial supplies and materials ($1.0 billion), and in automotive vehicles, parts, and engines ($0.9 billion).
    • The increase in imports of services mostly reflected an increase in transport ($0.2 billion), which includes freight and port services and passenger fares.

On a geographic basis, the January figures show surpluses, in billions of dollars, with Hong Kong ($3.5), South and Central America ($3.1), Singapore ($1.2), and Brazil ($0.7). Deficits were recorded, in billions of dollars, with China ($30.2), European Union ($13.4), Germany ($5.7), Mexico ($5.5), Japan ($5.5), Italy ($2.4), OPEC ($2.4), South Korea ($2.3), Canada ($2.0), India ($1.9), France ($1.6), United Kingdom ($0.9), Taiwan ($0.9), and Saudi Arabia ($0.9).

 The January U.S. Trade Data - Over the last year, U.S. import growth stalled. Capital goods imports did nothing—in part because of weakness in non-residential investment. And consumer goods imports were flat. That appears to have changed. Real consumer goods imports were up 9 percent year over year in January. Real capital goods imports were up 7 percent (table 10 in the trade data release). To be sure, the January trade data can be a bit funky. As Bill McBride of Calculated Risk notes, the timing of China’s lunar new year plays havoc on the United States’ own seasonal adjustment. But the ISM import index suggests February won’t be much different. Of course, there are different ways to interpret the recent strength in imports. Import growth can reflect an acceleration in demand growth that is also supporting strong growth in domestic activity (China right now?). Or it can mean that more of a given amount of demand growth is bleeding out to the benefit of the rest of the world, leaving the “home” economy short demand — slowing the economy (U.S. from 2001 to 2004?). In practice it is often a bit of both. See Neil Irwin. In 2016 the U.S. benefited from the fact that imports were a bit lower than would be expected based on the overall performance of the U.S. economy. U.S. demand growth was a bit weaker than expected, and imports were even weaker than implied by the overall evolution of U.S. demand (in part because of changes in inventories). Import growth picked up in q4 2016—and looks to have remained strong in q1. Exports have been more of a mixed bag. They are bit stronger than they were in most of 2016, but still not all that strong. Core manufactured exports were up 4 percent year over year in January (agricultural export volumes were way up versus last January, but that may not be sustained through the full year). The export sub-component of the ISM survey does suggest that this pick up in export growth should be sustained. Sum it up and the real non-petrol deficit in January was about 30 basis points of GDP larger than its 2016 average. It is trending up. Cole Frank and I also took out agricultural exports, for soybean-surge related reasons.

Trump Slump: Declining International Travel and Tourism in America - U.S. President Donald Trump's revised travel ban on citizens of six Muslim-majority countries will not reduce its impact on tourism, according to Taleb Rifai,  the head of UN World Tourism Organization. "People don't go to places where they don't feel welcome," he added. Reports indicate that foreign travelers from many non-Muslim majority countries have also been met with hostility by US officials upon arrival in the United States. Mem Fox, author of children's books advocating tolerance and acceptance, was detained by U.S. immigration officials as she arrived in America to give a talk about the importance of tolerance and acceptance, the Washington Post reported.  She said "the manner in which we were interrogated — in public view about really private information — was terrible. It was the insolence that was beyond mind-boggling.” Hopper, an app which uses data to predict and analyze airfares, says that its research indicates that searches for flights to the US between January 26 and February 1 by internet users from 122 different countries dropped 17 per cent compared to the first three weeks in January, according to media reports. Trump's travel ban has already resulted in a worldwide 6.5 per cent drop in the number of airline bookings for travelers headed to the United States, according to Daily Mail. Meanwhile,  New York City projects it will see 300,000 fewer international visitors in 2017 than it did in 2016, a 2.1% dip, according to a report in USA Today.  It's the first time that group of travelers has shrunk since 2008, according to NYC and Company, New York's tourism arm.

Dry bulk: Atlantic Supramax freight rates under pressure as heavy tonnage outweighs cargoes -  A long tonnage list for the second half of March is likely to see Supramax rates out of the US Gulf Coast come down next week, according to market sources. Time-charter rates for the front-haul grain runs from the US Gulf Coast to the Far East already dipped this week as tonnage kept accumulating in the Atlantic.Voyage rates for now have been slower to respond to the bearish sentiment, with the New Orleans to Kashima grains route, basis 50,000 mt, assessed at $37.50/mt Thursday, $1.25 up from last week. However, as the tonnage to cargo asymmetry becomes clearer the next week, voyage rates are likely to cave under the downward pressure too. "We count as many as 80 ships available for load in the US within the next 40 days," said a ship operator. "I would be amazed if this does not have an impact." At the same time, a decline in rates might be short-term as cargo availability is expected to improve by the end of the month, with increased petcoke demand from India as well as Turkey ahead of the construction season beginning in April. According to shipping sources, $18,000-$19,000/d levels were heard traded for Ultramaxes on Thursday, which is a drop of $3,000/d from last week when a 64,000 dwt Ultramax Bao Tong, was heard fixed at $22,000/d by Marubeni for a grains trip to Japan. This puts the usually cheaper Supramax vessels in the $17,000-$18,000/d range.

 US Import Prices Soar To 5 Year Highs As Fuel Costs Spike -- Thanks to a surge in prices from Canada and Asia Near East, US Import Prices soared more than expected in February. The 4.6% rise is the highest since February 2012, driven by a40.5% surge year-over-year in Fuels and lubricants. Notably US import prices from Mexico fell 0.3% YoY.

U.S. factory orders rise for second straight month | Reuters: New orders for U.S.-made goods increased for a second straight month in January, suggesting the recovery of the manufacturing sector was gaining momentum as rising prices for commodities spur demand for machinery. Factory goods orders rose 1.2 percent, the Commerce Department said on Monday after an unrevised 1.3 percent jump in December. Economists polled by Reuters had forecast factory orders advancing 1.0 percent in January. Factory orders were up 5.5 percent from a year ago. Total shipments of manufactured goods increased 0.2 percent after surging 2.5 percent in December. Manufacturing, which accounts for about 12 percent of the U.S. economy, is regaining its footing after being buffeted by lower oil prices, a strong dollar and an inventory overhang. The nascent recovery was underscored by a survey last week showing a gauge of national factory activity jumped to a 2-1/2-year high in February. Manufacturing could be boosted by the Trump administration's proposed tax reform, which would include corporate tax cuts. Promises of a lower corporate tax bill have buoyed business confidence in the last few months, but are yet to translate into strong business investment on capital goods. The Commerce Department also said orders for non-defense capital goods excluding aircraft - seen as a measure of business confidence and spending plans - slipped 0.1 percent in January instead of the 0.4 percent drop reported last month. Shipments of these so-called core capital goods, which are used to calculate business equipment spending in the gross domestic product report, fell 0.4 percent in January. They were previously reported to have declined 0.6 percent.

 Rising Orders for Class 8 Trucks Point to Trucking Industry Rebound - Sales of heavy duty trucks rose in February, pointing to a turnaround in the trucking industry. North American orders for trucks in the heaviest Class 8 weight segment rose 28 percent to 22,900 vehicles compared with the same month a year earlier, according to FTR Transportation Intelligence. February’s order level was 5 percent above January. “Orders have increased for four straight months, indicating the market is making a solid recovery after the second-half slump in 2016,” said Don Ake, vice president of commercial vehicles at FTR. The steady order trend pushed backlogs to over 100,000 units for the first time since June 2016, the research firm said. “Freight is starting to pick again after sagging some in 2016. Rates are climbing and fleets are feeling much more confident about business going forward,” Ake said. “Truck builds and sales should now begin a modest upturn which should continue throughout this year.” The rebound is good news for truck manufacturers. The industry slashed production and laid off thousands of workers in the U.S. last year. Class 8 orders for the past three months translate to an annualized sales pace of 263,000 units, Ake said. Class 8 truck sales fell to 216,000 last year after reaching 278,000 in 2015. “This is what a turning point looks like,”

 Weekly Initial Unemployment Claims increase to 243,000 -- The DOL reported: In the week ending March 4, the advance figure for seasonally adjusted initial claims was 243,000, an increase of 20,000 from the previous week's unrevised level of 223,000. The 4-week moving average was 236,500, an increase of 2,250 from the previous week's unrevised average of 234,250.  The previous week was unrevised. The following graph shows the 4-week moving average of weekly claims since 1971.

The Growing Gap Between Jobless Claims and Job Losses - There is a growing gap between the number of workers losing their jobs and the number applying for unemployment benefits, and it’s not entirely clear why. Layoffs have been stable since 2013. Claims have continued to drop. “So there is something else putting downward pressure on claims,” said Heidi Shierholz, senior economist at the Economic Policy Institute, a left-leaning think tank. That “something else” could be more than one thing, not all good—such as tenuous work arrangements or difficulty applying for benefits. A more positive explanation could include the relative ease of job-hopping in an expanding labor market.  The most recent data is particularly stunning. The number of U.S. workers filing for first-time unemployment benefits fell to the lowest level in 44 years for the week ended Feb. 25. At a seasonally adjusted 223,000, initial jobless claims, often used as a proxy for layoffs, were the lowest since the final week of March 1973. And that’s when the U.S. labor force was a mere 89 million, about 44% smaller than in January.The initial claims series is valued for its frequency, timeliness and relatively long history—it’s week-old data that reaches back to 1967, allowing historical comparisons through multiple economic cycles. The Job Openings and Labor Turnover Survey, by comparison, is only monthly, dates back to 2000 and lags claims by nearly two and a half months. A comparison of two series, however, shows a significant divergence. The last time the unemployment rate was similar to today’s, in 2006 and 2007, roughly 76% to 78% of layoffs and discharges led to an unemployment claim. That fell to about 70% in 2016. Ms. Shierholz surmises more people are falling through the cracks of the unemployment-insurance system, possibly because of more precarious work arrangements as contractors or temps, or difficulty applying to and qualifying for the state-run programs.

ADP: Private Employment increased 298,000 in February ---From ADP:Private sector employment increased by 298,000 jobs from January to February according to the February ADP National Employment Report®. ... The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis...“February proved to be an incredibly strong month for employment with increases we have not seen in years,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Gains were driven by a surge in the goods sector, while we also saw the information industry experience a notable increase.”  Mark Zandi, chief economist of Moody’s Analytics said, “February was a very good month for workers. Powering job growth were the construction, mining and manufacturing industries. Unseasonably mild winter weather undoubtedly played a role. But near record high job openings and record low layoffs underpin the entire job market.”  This was well above the consensus forecast for 183,000 private sector jobs added in the ADP report. 

First Look at February Employment: ADP Says 298K New Nonfarm Private Jobs - The economic mover and shaker this week is Friday's employment report from the Bureau of Labor Statistics. This monthly report contains a wealth of data for economists, the most publicized being the month-over-month change in Total Nonfarm Employment (the PAYEMS series in the FRED repository). Today we have the ADP February estimate of 298K new nonfarm private employment jobs, a significant increase over January's 261K, which was an upward revision of 15K. Revisions were made through December 2016 based on ADP and revised payroll data.The 298K estimate came in well above the Investing.com consensus of 190K for the ADP number.The Investing.com forecast for the forthcoming BLS report is also for 190K nonfarm new jobs (the actual PAYEMS number) and the unemployment rate to remain tick down to 4.7%.Here is an excerpt from today's ADP report:“February proved to be an incredibly strong month for employment with increases we have not seen in years,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Gains were driven by a surge in the goods sector, while we also saw the information industry experience a notable increase.”Mark Zandi, chief economist of Moody’s Analytics said, “February was a very good month for workers. Powering job growth were the construction, mining and manufacturing industries. Unseasonably mild winter weather undoubtedly played a role. But near record high job openings and record low layoffs underpin the entire job market.” Here is a visualization of the two series over the previous twelve months.

ADP Reports Sharply Stronger US Jobs Growth In February - US companies added workers at a blistering pace in February, according to the ADP Employment Report. Private payrolls increased 298,000, far above the 183,000 consensus forecast via Econoday.com. The gain is the strongest monthly increase in nearly three years. Today’s update also lifted the year-over-year trend in payrolls for the second straight month. If the bullish data is confirmed in Friday’s official jobs report from Washington, the news will further boost confidence for expecting that the Federal Reserve will raise interest rates at next week’s monetary policy meeting. “February proved to be an incredibly strong month for employment with increases we have not seen in years,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Gains were driven by a surge in the goods sector, while we also saw the information industry experience a notable increase.” The February data could be an outlier, of course, but the firmer trend looks genuine.  In particular, it’s encouraging to see that the annual pace of growth has picked up in the last two months: Private payrolls increased 1.9% last month vs. the year-earlier level, a five-month high. It’s premature to conclude that the trend in labor-market growth is accelerating, but it’s clear that last year’s deceleration has at least stabilized. February’s 1.9% annual increase is still near the lower end of the year-over-year pace that’s prevailed in recent history, but it appears that the slowdown in the labor market has ended. In turn, it’s reasonable to wonder if the latest downgrades in first-quarter GDP growth are overly pessimistic. Yesterday’s estimate via the Atlanta Fed’s GDPNow model called for a sharp slowdown in Q1 output to a 1.3% rate, substantially below the sluggish 1.9% gain reported for last year’s Q4. What accounts for the recent upswing in jobs creation? “Confidence is playing a large role,” says Mark Zandi, chief economist of Moody’s Analytics, which co-produces the ADP Employment Report. “Businesses are anticipating a lot of good stuff — tax cuts, less regulation. They are hiring more aggressively.”There’s still a debate about whether the rosy expectations will be matched with hard data in terms of a stronger macro trend overall. Based on today’s report, however, the scales tipped a bit more in favor of a bull’s eye view of the future.

February Jobs Report: Another 235K New Jobs, Better Than Expected -  --This morning's employment report for February showed a 235K increase in total nonfarm payrolls. The unemployment rate ticked downward from 4.8% to 4.7%. The Investing.com consensus was for 200K new jobs and the unemployment rate to tick down to 4.7%. January's nonfarm payrolls were revised upward for an additional 11K jobs and December was revised downward by 2K for a total gain of 9K. Here are two excerpts from the Employment Situation Summary released this morning by the Bureau of Labor Statistics: Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in construction, private educational services, manufacturing, health care, and mining. Here is a snapshot of the monthly percent change in Nonfarm Employment since 2000. We've added a 12-month moving average to highlight the long-term trend. The unemployment peak for the current cycle was 10.0% in October 2009. The chart here shows the pattern of unemployment, recessions and the S&P Composite since 1948.  Note the increasing peaks in unemployment in 1971, 1975 and 1982. The mirror relationship appears to be repeating itself with the most recent and previous bear markets. Now let's take a look at the unemployment rate as a recession indicator, or more specifically the cyclical troughs in the UR as a recession indicator. The next chart features a 12-month moving average of the UR with the troughs highlighted. As the inset table shows, the correlation between the MA troughs and recession starts is remarkably close.

235K Jobs Added In February, Beat Expectations But Earnings Disappoint - The US economy added 235,000 jobs in February, beating upward revised expectations of 200K, in-line with whisper exepctations of 233K. Last month's report was upward revised from 227K to 238K with the net addition for the past two months coming to +9K.  The unemployment rate stayed at 4.7%, while the labor participation increased fractionally from 62.9% to 63.0%. The Underemployment rate came in at 9.2%, down from 9.4% in January. And while the headline data was stronger than expected, the growth in average hourly earnings disappointed again, rising 0.2% M/M, below the 0.3% increase expected, following last month's disappointing 0.1% increase.

February Employment Report: 235,000 Jobs, 4.7% Unemployment Rate - From the BLS: Total nonfarm payroll employment increased by 235,000 in February, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in construction, private educational services, manufacturing, health care, and mining.... The change in total nonfarm payroll employment for December was revised down from +157,000 to +155,000, and the change for January was revised up from +227,000 to +238,000. With these revisions, employment gains in December and January combined were 9,000 more than previously reported.In February, average hourly earnings for all employees on private nonfarm payrolls increased by 6 cents to $26.09, following a 5-cent increase in January. Over the year, average hourly earnings have risen by 71 cents, or 2.8 percent. The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed - mostly in 2010 - to show the underlying payroll changes). Total payrolls increased by 235 thousand in February (private payrolls increased 227 thousand). Payrolls for December and January were revised up by a combined 9 thousand. This graph shows the year-over-year change in total non-farm employment since 1968. In February, the year-over-year change was 2.35 million jobs. This is a solid year-over-year gain. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate increased in February to 63.0%. This is the percentage of the working age population in the labor force. A large portion of the recent decline in the participation rate is due to demographics. The Employment-Population ratio was increased to 60.0% (black line). I'll post the 25 to 54 age group employment-population ratio graph later. The fourth graph shows the unemployment rate. The unemployment rate decreased in February to 4.7%. This was above expectations of 195,000 jobs, and the previous two months were revised up slightly (combined).

February jobs report: hitting on all cylinders but wages - HEADLINES:

  • +236,000 jobs added
  • U3 unemployment rate down -0.1% from 4.8% to 4.7%
  • U6 underemployment rate down -0.2% from 9.4% to 9.2%
  • Not in Labor Force, but Want a Job Now:  down -142,000 from 5.739 million to 5.597 million   
  • Part time for economic reasons: down -136,000 from 5.840 million to 5.704 million
  • Employment/population ratio ages 25-54: up +0.1% from 78.2% to 78.3%
  • Average Weekly Earnings for Production and Nonsupervisory Personnel: up $.04 from $21.82 to $21.86,  up +2.5% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

December was revised downward by -2,000, and January was revised upward by +11,000, for a net change of +9,000.  The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mainly positive.

  • the average manufacturing workweek was unchanged at 40.8 hours.  This is one of the 10 components of the LEI. 
  • construction jobs increased by +58,000. YoY construction jobs are up +219,000.   
  • manufacturing jobs increased by +28,000, and after being down YoY for a year, have now turned the corner again and are up +7,000 YoY
  • temporary jobs increased by +3,100.
  • the number of people unemployed for 5 weeks or less increased by +98,000 from 2,468,000 to 2,566,000.  The post-recession low was set over 1 year ago at 2,095,000.
  • Overtime rose +0.1 from 3.2 to 3.3 hours.
  • Professional and business employment (generally higher- paying jobs) increased by +37,000 and are up +597,000 YoY, an acceleration over the last year's pace.
  • the index of aggregate hours worked in the economy rose by 0.2 from  106.4 to 106.6
  • the index of aggregate payrolls -rose by 0.6 from 132.4 to 133.0.

Prime-Age Employment Rate Hits New High for Recovery - Dean Baker - The employment-to-population ratio (EPOP) rate for prime-age workers (ages 25-54) inched up to 78.3 percent in February, a new high for the recovery, as the economy added 235,000 jobs in the month. The unemployment rate was little changed at 4.7 percent. The EPOP for prime-age workers is 0.5 percentage points above its year-ago level. Most of the rise has been among women, with an increase in the prime-age EPOP of 0.8 percentage points to 71.6 percent over the last year. The rise among men over this period has been just 0.2 percentage points. The EPOP for women is 1.3 percentage points below its pre-recession peak, while the EPOP for men is 2.7 percentage points below the pre-recession peak. Compared to the 2000 peak, women’s EPOP is down by more than 3.0 percentage points and men’s by more than 4.0 percentage points. The rise in EPOPs over the last year is noteworthy since it suggests that there are more workers being pulled into the labor force as the recovery continues, even as the unemployment rate has remained relatively stable. If this trend continues, it indicates that the labor market can continue to tighten without creating inflationary pressure.  Other data in the report are consistent with a labor market that still has considerable slack. While the number of people working part-time involuntarily fell by 136,000 in February, it is still well above pre-recession levels. The percentage of workers who are unemployed because they voluntarily quit their jobs fell for the third consecutive month. At 10.7 percent of the unemployed, this key measure of workers' confidence in their job prospects is closer to recession levels than full employment.  Wage growth also appears to be slowing somewhat. Year-over-year growth in the average hourly wage was 2.8 percent in February, but if we compare the average of the last three months (December-February) with the prior three months (September-November) the annualized rate of wage growth was just 2.5 percent. This does not support the view that wage growth is accelerating. It is also important to remember that employers are shifting compensation from health care to wages, so wage growth is likely exceeding the rate of growth of labor compensation.  The EPOP for workers with a college degree is actually down by 0.3 percentage points over the last year, while the EPOP for workers with just a high school degree is up by 0.4 percentage points. The latter figure is especially striking since the workers now reaching retirement age disproportionately have less education. The areas contributing the most to job growth in February were construction (58,000), educational services (29,300), manufacturing (28,000), and health care (26,800). The construction figure was likely inflated some by unusually mild winter weather in the Northeast and Midwest. The manufacturing gains were broadly based although the erratic food sector accounted for 8,800. The jump in educational services is likely an aberration that will be reversed in future months. Job growth in health care was slightly below the 29,700 average over the last year.  Retail lost 26,000 jobs, likely due to cutbacks at a number of major department stores. Restaurant employment rose by 16,700 in February, down somewhat from its 21,300 monthly pace over the last year. If this pattern continues it could mean that workers are moving from relatively low paying and low productivity jobs in retail and restaurants to higher paying, higher productivity jobs in other sectors of the economy as the labor market tightens.

February Jobs Report – The Numbers  - U.S. employers added jobs at a solid pace during the first two months of the year. Steady employment growth and a low unemployment rate could give Federal Reserve officials confidence the economy is well positioned for an interest-rate increase. Here are some key numbers from the February jobs report released Friday by the Labor Department. Nonfarm employers added a seasonally adjusted 235,000 jobs in February, above economists’ expectations for a 197,000 gain. Employers added a revised 238,000 in January for the best back-to-back performance since June and July 2016. One area of strength those two months: construction jobs. Over the past three months, total job growth has averaged 209,000. That shows an acceleration from the 179,000 average pace in September through November. Revisions to December and January’s figures added a net 9,000 jobs to payroll figures. The jobless rate in February was 4.7%, moving down from January and matching economists’ expectations. The unemployment rate has held consistently below 5% since April. That suggests the economy is at or near full employment, an important consideration for Fed policy makers. In December, central bankers said the unemployment rate in the long run should sit in the 4.5% to 5% range, with a median longer-run projection of 4.8%. They’ll release fresh projections next week. Average hourly earnings for private-sector workers were $26.09 in February, a 6-cent increase from January. Wages rose 2.8% in February from a year earlier, showing pay gains are strengthening. Wages have increased at just better than a 2% average annual pace since the recession ended in mid-2009. A tighter labor market should lead to better wage growth, which could in turn put upward pressure on inflation, another key concern for the Fed. The share of Americans who had a job or were looking for one in February was 63.0%, up from 62.9% in January. A year ago, the rate was also 62.9%. The labor-force participation rate had generally trended down since it peaked in 2000, at least in part a reflection of an aging U.S. population. But the rate has been little changed over the past year. That could reflect a slowing pace of Americans exiting the labor force or might suggest some who had given up looking for work are starting to come off the sidelines after more than six years of steady job creation. In addition to the unemployment rate, the Labor Department produces several other measures of labor underutilization. A broader measure of unemployment known as the U-5, which includes discouraged workers not actively seeking employment and others marginally attached to the labor force, was 5.7% last month. That compares to 6% a year earlier. Another measure—the U-6—which also includes workers with part-time jobs but who want full-time work, was 9.2% last month. That is down from 9.8% a year earlier. Those alternative measures have edged down during the past 12 months, but remain slightly above prerecession levels.

US Private-Sector Hiring Picked Up In February -Companies added more workers to payrolls in February, the Labor Dept. reports. Private-sector payrolls increased 227,000 last month, modestly higher than January’s revised 221,000 advance. A second month of robust expansion of the labor market gives the Federal Reserve another reason to hike rates at next week’s monetary policy meeting. But while the monthly change has rebounded this year after weak growth in 2016’s third quarter, the year-over-year trend was unchanged last month, holding at a relatively subdued increase. Firms raised employment by 1.78% in February vs. the year-earlier level, matching January’s pace. That’s a healthy rate, but the lack of acceleration in the annual change contrasts with Wednesday’s news that ADP’s estimate of private-sector employment’s year-over-year trend ticked higher for the second month in a row.Nonetheless, it’s clear that the labor market’s forward momentum remains intact, although the improvement this year may be partly due to unseasonably warm weather. Last month was the second-warmest February on record, according to the National Oceanic and Atmospheric Administration. Is that a clue for thinking that the recent uptick in payrolls growth could reverse in the months ahead? Perhaps, but taking the numbers at face value today leaves little room for gloomy forecasts for payrolls or the economy. Today’s upbeat employment report also strengthens the case for expecting that the Federal Reserve will lift its target Fed funds rate next Wednesday, when the central bank releases its monetary policy statement. By some accounts, a new round of policy tightening is virtually assured, inspiring a deeper focus on how many times the Fed will hike this year. As the Financial Times reports: Odds that the US central bank will overshoot its own projections set last year — when policymakers forecast three rate rises in 2017 — with four rate increases eclipsed 25 per cent on Friday, according to calculations on federal funds futures by Bloomberg. That is the highest level since at least July and lifts the probability of three or more 25 basis point rate rises this year to 61 per cent, up from 54 per cent at the start of the week. A survey of economists conducted by the Financial Times at the end of last week showed the vast majority projecting three quarter point rises in 2017, including one when policymakers meet next week.

Jobs Report: Strong report shows we’re closing in on full employment but not quite there yet. --Jared Bernstein - In the latest edition of a long series of solid job reports, payrolls posted a strong 235,000 job gain last month, as the unemployment rate ticked down slightly to 4.7 percent and wages accelerated a bit.Federal Reserve officials, many of whom had already been talking about getting back to their “normalization” campaign–raising the benchmark interest rate they control back up to more normal levels–sooner than later, will find very little in today’s report to wave them off a rate hike at their next meeting later this month. The jobs day smoother, which averages out monthly noise over 3-, 6-, and 12-month periods, shows payroll growth at around 200,000 jobs per month at each one of these averages. Given the size and growth of the labor force, this healthy pace of employment growth is strong enough to continue putting downward pressure on the jobless rate and upward pressure on wage growth.  Speaking of wages, the pace of growth of workers’ paychecks is sending a signal that the tightening job market is providing workers with a bit more bargaining clout. In tight labor markets, which have been the exception in the US job market in recent decades, employers typically must bid compensation up to get and keep the workers they need.We’ve already seen some of this dynamic in recent job reports, as the figure below reveals. From about 2010 to 2015, average hourly wages grew at about 2 percent, year-over-year. But around mid-2015, as unemployment hit 5 percent, heading for rates with a ‘4’ handle, wage growth accelerated. It held at around 2.5 percent for a few months, but as the figure shows–note the smooth trend line–has accelerated further in recent months, increasing 2.8 percent in February.The question for the Federal Reserve, however, is not just “are wages accelerating?” Their dual mandate is full employment at stable prices, not stable wages. Moreover, wage gains for middle- and low-wage workers have been long awaited in this recovery, so the decision to tap the brakes on growth by raising the interest rate–which could push back on this favorable, accelerating trend–cannot be taken lightly. The questions much be a) how much slack is left in the job market? and b) most importantly, is wage growth fueling faster price growth?   Re ‘a’, (are we at full employment?): Not quite. The underemployment rate, a broader measure of slack, fell from 9.4 percent in January to 9.2 percent last month, but it is still elevated due to 5.7 million involuntary part-timers, though that number is down 300,000 from a year ago. Still, at full employment, I’d like to see an underemployment rate of around 8.5 percent.The other indicator that still has some room to run is the employment rate of prime-age workers. At 78.3 percent, it’s still below its pre-recession peak of 80.3 percent (see figure). However, at its low point, this rate was at 74.8 percent, meaning these workers have clawed back 3.5 percentage points, or about 2/3’s of the decline. That decline was stronger for men–their employment rate fell 7.6 points from its peak, but they’ve made back about 5 points, also about 2/3’s. Women were down 4.1 points and have made back about 3 points.

Where The Jobs Were: Manufacturing, Construction Workers Soar --There has been a distinct shift in the composition of job gains in the first full job report under Donald Trump: whereas in the recent past, jobs under Obama were mainly focused in low-paying, minimum-wage categories, such as retail, hospitality, education and, of course, food service and drinking places, in February there was a notable change with some of Trump's favorite sectors, such as manufacturing and construction posting dramatic gains.While all sectors of the economy, with the exception of retail and utilities, expanded payrolls in February, it was the jump in manufacturing employment, which increased 28,000, and the largest increase since August 2013, that caught analysts' attention. Employment rose in food manufacturing (+9,000) and machinery (+7,000) but fell in transportation equipment (-6,000). Over the past 3 months, manufacturing has added 57,000 jobs.And then there was the surge in highly-paid construction payrolls, which soared by a whopping 58,000, the biggest gain since March 2007, boosted by warmer weather. Construction has now added 177,000 jobs over the past 6 months, in what has been interpreted by analysts as good news for the US housing market.On the other hand, confirming the woes of the retail sector, employment here fell 26,000 after a gain of 39,900 jobs in January. In recent months, retailers including J.C. Penney and Macy have announced thousands of layoffs as they shift toward online sales and scale back on brick-and-mortar operations: these mass layoffs are finally starting to be noticed by the BLS. Other notable highlights:

  • Specialty trade contractors (+36,000) and heavy and civil engineering construction (+15,000) saw major gains. .
  • Employment in private educational services rose by 29,000 in February, following little change in the prior month (-5,000). Over the year, employment in the industry has grown by 105,000.
  • Health care employment rose by 27,000 in February, with a job gain in ambulatory health care services (+18,000).
  • Employment in mining increased by 8,000 in February, with most of the gain occurring in support activities for mining (+6,000). Mining employment has risen by 20,000 since reaching a recent low in October 2016.
  • Employment in professional and business services continued to trend up in February (+37,000), even though just 3,100 temporary workers were added in February. The industry has added 597,000 jobs over the year.

The visual summary is below.

Comment: Another Solid Employment Report - Bill Mcbride - The headline jobs number was above expectations, and there were combined slight upward revisions to the previous two months. In addition wage growth picked up.  This was a solid report. Note: The warm weather was a factor in the solid February employment report and there may be some payback in March. In February, the year-over-year change was 2.35 million jobs. Solid job growth.This graph is based on “Average Hourly Earnings” from the Current Employment Statistics (CES) (aka "Establishment") monthly employment report. Note: There are also two quarterly sources for earnings data: 1) “Hourly Compensation,” from the BLS’s Productivity and Costs; and 2) the Employment Cost Index which includes wage/salary and benefit compensation. The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees.  Nominal wage growth was at 2.8% YoY in February.  Wage growth is trending up.  Since the overall participation rate has declined recently due to cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old. In the earlier period the participation rate for this group was trending up as women joined the labor force. Since the early '90s, the participation rate moved more sideways, with a downward drift starting around '00 - and with ups and downs related to the business cycle.The 25 to 54 participation rate increased in January to 81.7%, and the 25 to 54 employment population ratio increase to 78.3%.  The participation rate has been trending down for this group since the late '90s, however, with more younger workers (and fewer older workers), the participation rate might move up some more. The number of persons working part time for economic reasons decreased in February. This level suggests a little slack still in the labor market. These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 9.2% in February. This graph shows the number of workers unemployed for 27 weeks or more.  According to the BLS, there are 1.80 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 1.85 million in January. This was the lowest number since 2008.

White House: Job totals were 'phony,' but they're 'very real now' -- The job numbers for February were released this morning, and the data was very encouraging: the U.S. economy added 235,000 jobs in February, with an unemployment rate of 4.7%. The White House, not surprisingly, is thrilled that the job market Donald Trump inherited from his predecessor is this strong as the new administration gets underway. That is, if the president actually believes the data. Trump spent months telling Americans not to believe official jobs reports, so it was hardly a surprise when a reporter asked White House Press Secretary Sean Spicer about whether Team Trump accepts the latest job figures or not. Spicer replied, with an unusually broad smile: “Yeah, I talked to the president prior to this [briefing] and he said to quote him very clearly: ‘They may have been phony in the past, but it’s very real now.’” Everyone chuckled and moved on. That’s a shame. Look, I realize it was a lighthearted moment, and my point is not to sound like a killjoy, but we can’t really have a credible political discussion if the president – and the president alone – is supposed to tell us when the jobs numbers are real and when they’re not, as if it’s our job to simply accept Donald Trump’s strange declarations as fact. As the Washington Post’s Greg Sargent added, “It’s key that Trump explicitly told Spicer to recite this line to the press corps. He’s telling them who gets to say what’s true.”

Labor Paradox: As Trump Fights For Jobs The Trucking Industry Struggles With 'Yuge' Labor Shortage --Job creation has been a key focus of the Trump administration which has blamed outsourcing to lower cost countries like Mexico and China for the stagnant wages of the middle-class working folks of America's Midwest.The only problem with that theory is that certain industries in the U.S. are actually struggling with extreme labor shortages but can't fill positions either due to skill gaps or an entitled millennial workforce that would rather live in their parents basement for the rest of their life than take a "blue collar" job that doesn't value their BA in Anthropology.According to a recent analysis from the American Trucking Association (ATA), the OTR Truckload industry is one area where employers are expected to face a huge labor shortage of as much as 175,000 by 2024.There are many reasons for the current driver shortage, but one of the largest factors is the relatively high average age of the existing workforce. The current average driver age in the OTR (Over-the-Road) TL (Truckload) industry is 49. In addition, the industry has historically struggled to attract all segments of the population as just 5.8% of truck drivers are women.  This share has been essentially unchanged over time.In 2014, the trucking industry was short 38,000 drivers.  The shortage is expected to reach nearly 48,000 by the end of 2015. If the current trend holds, the shortage may balloon to almost 175,000 by 2024. Per the ATA, replacing retirees accounts for nearly half of the 890,000 new drivers that will need to be hired over the next 10 years.   Of course, one problem is that, like most other "main street" jobs, real annual wages for truck drivers have actually declined over the past 10-15 years.  But as Steve Viscelli, a sociologist and fellow at the University of Pennsylvania’s Robert A. Fox Leadership Program, points out, the real wage deflation for truck drivers is massively underestimated by the grueling nature of the industry's owner-operator model that consistently demands more from drivers without pay increases.

Why are so many American men not working? - Brookings Institution - Despite recent gains in employment rates across the country, one in seven, (or 15 percent) of American men between the ages of 25 and 54 currently aren’t working—and this number has been on the rise for decades. This troubling trend has led to wasted human potential, more people collecting government benefits, and fewer people paying taxes, all of which are harmful to the economy as a whole. But why is this happening? In a new video, David Wessel, Director of the Hutchins Center on Fiscal and Monetary Policy at Brookings, provides a few possible explanations:

 When Factory Jobs Vanish, Men Become Less Desirable Partners - In many small towns across the country, there aren’t very many good jobs these days. Once there werefactories that employed millions and paid decent wages. Today, young men are scraping by working at local bars or in lower-paid temp jobs. Many of these men are single, and new research suggests that those two things—their poor economic status and their singleness—are not unrelated. It’s no wonder, then, that the changes wrought by the disappearance of manufacturing jobs helped elevate the platform of Donald Trump, who won 67 percent of white workers without a college degree. Their malcontent comes not just from their economic struggles, but from the dramatic changes to their personal lives that the decline of manufacturing have created. A new study by the economists David Autor of MIT, Gordon Hanson of the University of California at San Diego, and David Dorn of the University of Zurich, provides evidence that their economic struggles are directly responsible for many of their personal ones. The study finds that, as men’s economic prospects decline, they marry less frequently. Once, men had good earnings, especially when compared with women. But now these men don’t earn much more than women do, and so fewer people are getting married, and more children are being born out of wedlock. Children are much more likely to grow up in poverty in households headed by single mothers. “We see a decline in fertility, a decline in marriage, but a rise in the fraction of births that are disadvantaged, and as a consequence the kids are living in pretty tough circumstances,” Autor, the study’s lead author, told me. Fertility has declined and out-of-wedlock births have risen all over America during the past three decades, not just in areas where jobs have been displaced by trade. But the authors show that these trends have been much more pronounced in areas that have lost a significant number of manufacturing jobs, where, as a result, men’s prospects have declined disproportionately.

US Productivity Growth Slowed Dramatically In Q4 -- Following Q3's 3.3% surge in US worker productivity - the best in 2 years - Q4 was a disappointment as growth slowed to just 1.3% (below the 1.5% expectation).  Productivity growth slowed to just 1.3% in Q4 - the exact average growth rate of President Obama's 8 year reign. Unit labor costs rose very slightly more than expected but remain subdued at just 1.7% QoQ (notably non-financial corporations saw notable drops in unit labor costs) and Real Compensation fell 0.4% QoQ in Q4 and Manufacturing employee hours dropped the most since 2015.

Federal contract workers need the protection of the Fair Pay and Safe Workplaces rule - Last week, Senator Warren, joined by her colleagues Senator Murray and Senator Sanders, asked Attorney General Sessions to open a criminal investigation into the deaths and serious injuries of workers employed by VT Halter Marine, Inc., a shipbuilder with United States Navy contracts. Senators argue that, while the Occupational Safety and Health Administration (OSHA) has assessed penalties against VT Halter, the fines “are clearly not a sufficient deterrent for VT Halter.” The senators’ request follows a report from the Center for Investigative Reporting documenting VT Halter’s history of violating workplace safety regulations. Despite the company’s track record, it has continued to receive hundreds of millions of dollars in federal contracts. Today, the Senate is voting on a resolution of disapproval to block the Obama administration’s Fair Pay and Safe Workplaces rule that would help ensure that law-breaking employers, like VT Halter, do not receive federal contracts. The rule requires contractors to disclose violations of federal labor and employment laws, including the Occupational Safety and Health Act, and directs agency contracting officials to consider a company’s record of violations in awarding federal contracts. President Trump has already stated that he will sign the resolution and block the rule. This, as he announced his intention to increase military spending, leading to hundreds of millions in taxpayer dollars going to federal contractors for the development of new ships, planes, and technology in support of our military. By blocking the rule designed to reform federal contracting, the president and congressional Republicans have essentially ensured that taxpayers will continue to support contractors with a history of violating worker protection laws and regulations.

Broken: The human toll of Michigan's unemployment fraud saga --  To date, Michigan's Unemployment Insurance Agency has taken more than $14,000 from Jason Doss' Ford Motor Co. paychecks. And the settlement notwithstanding, the agency says he still owes nearly $70,000, which includes a penalty of more than $62,000 and over $7,000 in interest. Doss is among a flood of workers who insist they were incorrectly accused of fraud by a rogue state computer, never told the precise nature of what they had done wrong, and were never given a chance to defend their actions before their paychecks were garnished. An internal state review of more than 20,000 fraud claims showed a 93 percent computer error rate.The federal lawsuit settlement binds UIA to an earlier agreement that the state would review each fraud case generated by the computer -- impacting some 40,000 workers -- and ensure workers get appropriate notice of the accusations and an opportunity to respond before the state starts collection efforts. The deal also ends the state’s heavily criticized practice of “income spreading,” in which claimants' occasional work earnings were treated by the computer system as having been earned across an entire quarter. Attorneys say the practice led the state to falsely conclude some workers were illegally getting paychecks during periods when they were also collecting unemployment insurance. For its part, the state agency is now acknowledging the potential scope of the damage. An agency internal review in December found that nearly 21,000 workers – 93 percent of the cases reviewed – had been falsely accused of fraud over a 22-month period.

Why hurting the poor will hurt the economy - Robert Rubin - Not long after I became treasury secretary in 1995, a senior U.S. senator summoned me to Capitol Hill for a meeting. He demanded to know why our department had just opened a community development office, tasked with focusing on poverty, inner-cities and distressed rural areas. “Treasury’s purview is economic policy,” the senator said. “What exactly do poverty and social issues have to do with your job?”The answer to that question has never been more important than it is today: Anti-poverty programs such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP, often called food stamps) and other safety-net programs designed to assist low-income Americans are not only social and moral imperatives — they serve critically important economic purposes. To start, these are vital public investments with high rates of return. They improve productivity and reduce social costs caused by crime, malnutrition and poor health. For adults, Medicaid and SNAP better enable effective participation in the workforce. Roughly 20 percent of U.S. children live in poverty. In the wealthiest country in the world, that’s not just a moral outrage — it’s a serious detriment to our economic future. For low-income children, Medicaid and SNAP are investments that significantly improve outcomes later in life. For example, one study found that children who received SNAP were less likely to experience stunted growth, heart disease and obesity as adults — and had graduation rates that were 18 percentage points higher. We need to do more, not less, to help these children — by providing early family intervention, better schools and housing, safer neighborhoods and much else. What’s more, these programs serve as “automatic stabilizers” during an economic downturn: In a weak economy, as more people lose income and become eligible for federal benefits, the programs expand, putting more money in more people’s pockets. People then spend that money, increasing demand and helping the economy recover.  All this adds up to a clear but underappreciated reality: Anti-poverty programs are an economic imperative. And yet their future is in jeopardy

Is It Better to Be Poor in Bangladesh or the Mississippi Delta? - interview by Annie Lowery -- Angus Deaton studies the grand questions not just of economics but of life. What makes people happy? How should we measure well-being? Should countries give foreign aid? What can and should experiments do? Is inequality increasing or decreasing? Is the world getting better or worse?Better, he believes, truly better. But not everywhere or for everyone. This week, in a speech at a conference held by the National Association for Business Economics, Deaton, the Nobel laureate and emeritus Princeton economist, pointed out that inequality among countries is decreasing, while inequality within countries is increasing. China and India are making dramatic economic improvements, while parts of sub-Saharan Africa are seeing much more modest gains. In developed countries, the rich have gotten much richer while the middle class has shriveled. A study he coauthored with the famed Princeton economist Anne Case highlights one particularly dire outcome: Mortality is actually increasing for middle-aged white Americans, due in no small part to overdoses and suicides—so-called “deaths of despair.” (Case also happens to be Deaton’s wife. More on that later.)  Deaton sat down with me after his speech. We talked about whether poor people are better off here or in low-income countries, the moral ambiguities of companies making money off of Medicaid-financed OxyContin prescriptions, which is the nicest conservative think tank in Washington, what is going on with white people and mortality, and the charms of former-President Obama. The transcript below has been edited for concision and clarity.

Class action suit: Immigrants held in Aurora required to work for $1 a day, threatened with solitary if refused -- About 62,000 people who were held in an Aurora immigration detention center and required to work, sometimes for $1 a day, while they awaited possible deportation have been certified as a class in a lawsuit alleging violations of the federal Trafficking Victims Protection Act.  Senior Judge John Kane’s ruling could have far-reaching implications, potentially boosting the cost of holding immigration detainees by millions of dollars at a time when President Donald Trump’s administration gears up to deport millions more people who are living in the U.S. illegally.“It’s a huge step forward for all the detainees,” said Boulder attorney Brandt Milstein, one of several attorneys representing the class in U.S. District Court in Denver. “This lawsuit is a win for immigrants because it exposes the true cost of detaining immigrants.”Colorado felons are also paid a fraction of the state minimum wage for their work in prison, but they have been convicted of crimes and have lost certain rights as a consequence, including the right to own guns and to vote. But the people held at the Aurora facility are only civilly detained. “There is a big difference between someone convicted of murder or rape and someone being held on a civil detainer for possible deportation,” plaintiff’s attorney Nina DiSalvo said. The lawsuit accuses GEO Group, which operates the 1,500-bed Aurora Detention Facility under a contract with U.S. Immigration and Customs Enforcement, of forcing detainees to work, a violation of the Trafficking Victims Protection Act. Among other things, the act is intended to combat forced labor and slavery. The lawsuit seeks “more than $5 million” in damages for as many as 60,000 detainees who performed sanitation chores like cleaning toilets without pay over the past decade.The lawsuit also accuses GEO, which runs numerous detention facilities and prisons across the U.S., of unfair enrichment at the expense of 2,000 detainees paid $1 a day for work such as preparing food and doing laundry during the past three years.

What Happens if You’re Too Poor to Pay Bail? - Sandra Bland is the one you knew about. In the year after her well-publicized death, 815 people died in jail awaiting trial. A third of them died within the first three days of incarceration. Most were in jail for one reason only: They were too poor to pay bail. This reality is what terrified Tai Sherman’s mother, Tracey, and the reason she spent every dime she had—and a lot she didn’t—to get her daughter out.  Tai’s story is featured in this short film series, The Bail Trap, by Brave New Films, which was produced as part of a major, statewide campaign to end the unjust and ineffective system of money bail in California.. Tai’s is a classic case in point of what is wrong with money bail. Tai had no criminal record. She was arrested for driving away while a police officer was trying to arrest an acquaintance of hers for shoplifting $38 worth of stuff—dish soap and the like. For this, Tai was slapped with $100,000 bail.  Money bail is what most of us think of—thanks to TV cop shows—as bail. The reality is, however, that bail is simply the temporary release of a person while they are awaiting trial. The money part is a modern invention—no doubt a way to make someone rich by taking advantage of someone else. Bail is a $14 billion-a-year business with its own trade association—the American Bail Coalition or ABC—made up of national bail-insurance companies who underwrite the bonds and take a cut. Today, only 23 percent of those let go before trial are released on recognizance, while 49 percent must purchase commercial bail.  What money bail is good for is promoting a stratified race-and-class system. The system allows millionaires to go free without actually losing a dime, while low-income people like Tai’s family have to fork over 10 percent of their bail—$10,000 in Tai’s case—to a bail-bonds company. It’s money that they will never get back. So, as we show in the film, Lindsey Lohan commits an offense, pays the full bail amount to the court, then repockets it after sentencing (plus whatever she makes from telling her story to a magazine) and walks out of jail unharmed.

State, Local Officials Push $6 Billion Infrastructure Bill | NBC Bay Area: A state Senate bill that promises to fix California's battered roads and bridges with $6 billion a year from gas tax and vehicle registration fee increases is set to go before the Governance and Finance Committee on Wednesday. State and local officials held a news conference in San Jose on Monday morning to urge legislators and Gov. Jerry Brown, who supports the bill, to pass a transportation package before spring recess begins on April 6. Sen. Jim Beall, D-San Jose, introduced Senate Bill 1, the Transportation Infrastructure and Economic Investment Act, on Dec. 5, after two-and-a-half years of work. "We have a terrible challenge with our roads," said San Jose Mayor Sam Liccardo, who is a commissioner on the Metropolitan Transportation Commission and vice chair of the Santa Clara Valley Transportation Authority. San Jose faces a current road repair backlog of $584 million, up from $250 million seven years ago, Liccardo said. Almost one in every 4 miles of street infrastructure in San Jose is in poor condition, up from 6 percent in 2006. "That is a serious cost to every one of our residents," Liccardo said, citing a report by the national transportation research group TRIP that says potholes cost San Jose residents $863 a year in car repairs.

 Why the federal government should subsidize childcare and how to pay for it - Brookings Institution - Childcare is expensive and licensed center-based care is unaffordable for families of poor to modest means. There is broad public support for more government spending on childcare as long as that spending does not result in another unfunded entitlement that worsens the deficit. Claims that more spending on childcare will pay back the taxpayer in the long run based on better child development or increased workplace productivity are shaky. Political appetite for more spending on childcare will be greater if a childcare subsidy can be paid for as we go with an offset elsewhere in the federal budget. The federal deduction for charitable contributions is a possible target for such an offset.The plan for increased childhood subsidies outlined in this paper would cost $42 billion and would provide a substantial subsidy for every child from birth to fifth birthday in a family at or below 200 percent of the federal poverty level. This is nearly half the families in the U.S. If current federal spending on childcare and early childhood programs, amounting to about $26 billion a year, were shifted to the new subsidy, $16 billion more would be required. The charitable deduction presently costs the U.S. Treasury $55 billion a year. A $16 billion offset for childcare would allow the proposed childcare subsidy to be budget neutral while leaving $39 billion on the table to continue the charitable deduction or to support various tax reform proposals that are in the works. Most voters want government to spend more money of the care and education of young children, for the good of families and everything that flows from stable homes and supportive environments for children and adults.  The present paper provides one solution in the form of childcare and education savings accounts paid for with redirection of current federal spending on early education and care, and through an offset from the federal deduction for charitable contributions. There are other policy mechanisms that have overlapping goals, including a Trump plan involving tax credits. Now is the time and the opportunity for serious political consideration of new funding and delivery models for childcare.

Wisconsin school districts' debt soars after $1.35 billion in new borrowing: New and remodeled school buildings, performance centers and swimming pools. Upgrades for technology, security and energy efficiency. And just plain old general maintenance — new roofs and boilers — work that has been delayed by years of razor-thin budgets. Public school districts in Wisconsin are in the midst of a building boom, financed by a surge in new debt not seen since the 1990s, a new analysis by the Wisconsin Taxpayers Alliance has found. According to the report, voters in districts across the state approved through referendums borrowing $1.35 billion last year, 10 times more than in 2011 and the most since the alliance began keeping records in 1993. The previous high, adjusted for inflation, was $1.04 billion in 1996. In per-pupil terms, the report says, borrowing has more than tripled from $2,313 in 2010 to $9,733 last year. And it shows no signs of abating. This spring, 23 districts have asked or will ask voters to approve nearly $708 million in new debt. In southeastern Wisconsin alone, 10 school districts have won voter approval to take on nearly $400 million in debt for capital improvements since Jan. 1, 2015. Four others have failed in their requests to borrow an additional $151 million. School districts defend the rise in debt, saying the improvements are needed to accommodate growing enrollment or to upgrade and maintain facilities in an increasingly competitive educational environment. And most districts remain well below their state-imposed borrowing caps, Taxpayers Alliance Research Director Dale Knapp said.

School districts use federal funds to offset state pension costs - Darrow is one of two reading specialists at Peoria Heights Grade School. She's there to provide extra instruction to students who need extra help learning to read. Part of her salary is paid through federal funds provided to school districts that need extra financial resources to help students academically. Federal Title 1 funds, as they're known, are meant for school districts with high numbers of students from low-income families. In a state ranked at or near the bottom in most measures of school-funding inequality, federal funding can also be distributed inequitably — to pay down unfunded pension liability rather than to help children achieve academic success. Ideally, there's supposed to be a straight line from Peoria Heights' use of Title 1 funds for reading specialists to students' academic success. Surprisingly, and only in Illinois, the line makes a trick turn and shifts a large chunk of federal funds meant for poor children to pay down the state's pension debt in the teachers' retirement system — a loss of at least $59 million for school districts outside of Chicago. "It makes zero sense," says Eric Heath, superintendent of Peoria Heights School District. "They are just hurting the schools and the students who need those dollars the most." Heath's logic hasn't taken hold in Washington or Springfield, where lawmakers have failed, so far, to fix a state law that forces school districts to use federal dollars to pay down state debt. State representatives get another chance Wednesday. They're scheduled to vote on a bill, introduced by State Rep. Jehan Gordon-Booth, D-Peoria, that would end the so-called pension surcharge, or federal funds rate. "I get we have a pension backlog that has to be addressed, but it has to be addressed in an honest way," Gordon-Booth says of the Illinois Teacher Retirement System's $71.4 billion in unfunded liability. "The feds aren't sending money to poor kids to underwrite suburban teachers' pensions."

In Puerto Rico, Teachers' Pension Fund Works Like a Ponzi Scheme -The teachers’ pension fund in Puerto Rico looks very much like a legalized Ponzi scheme — one that might hold a warning for teachers across America. Puerto Rico, where the money to pay teachers’ pensions is expected to run out next year, has become a particularly extreme example of a problem facing states including Illinois, New Jersey and Pennsylvania: As teachers’ pension costs keep rising, young teachers are being squeezed — sometimes hard. One study found that more than three-fourths of all American teachers hired at age 25 will end up paying more into pension plans than they ever get back. “I think they’re really being taken advantage of,” said Richard W. Johnson of the Urban Institute, a co-author of the research. “What’s so tragic about this is, often the new hires aren’t aware that they’re getting such a bad deal.” The problem is magnified by the fact that the Puerto Rico teachers union — like many teachers and police unions around the country — opted out of Social Security long ago, hoping it could save both workers and the government money by not paying Social Security taxes. That decision was predicated on the assurance that the workers’ pensions would be well managed and adequately funded. But in Puerto Rico, as in some other places, that has not been true for decades.In Puerto Rico, for instance, the pension funds are so short of cash that money contributed by working teachers basically flows straight out to retirees. None of Puerto Rico’s current teachers can expect to get their money back, because the fund is due to run out of money in 2018, long before they retire. That is, essentially, a Ponzi scheme. But this structure is legal in Puerto Rico because of a complicated series of changes in the law brought about in recent years by the island’s financial crisis.

Supreme Court won't hear transgender bathroom case | TheHill - The Supreme Court on Monday declined to hear a high-profile case on transgender rights, sending it back to the lower courts. The justices tossed out a ruling Monday that allowed Gavin Grimm, a transgender boy in Virginia, to use the bathroom he chooses, and ordered that a lower court reconsider the case in light of new guidance issued by the Trump administration last month. The justices had planned to hear arguments later this month and both sides had pressed for the high court to weigh in amid a national debate over rights for the transgendered.Grimm, born female, was barred from using the boy’s bathroom in 2014 after the Gloucester County School Board enacted a policy requiring all students to use the bathroom that corresponds with the gender assigned at birth. The 4th Circuit Court of Appeals sided with Grimm, who argued that the school board “impermissibly discriminated against him” in violation of Title IX anti-discrimination laws and his constitutional right to equal protection under the law. The court cited Obama administration guidance that transgender students should be allowed to use the bathrooms corresponding to their gender identity, claiming those rights were covered federal anti-discrimination laws addressing “sex.” But on Feb. 22, the Trump Justice Department and Education Department sent a letter to the lower court rescinding that Obama guidance.

The Next Step in the Trump-DeVos Plan to Send Taxpayer Money to Religious Schools | Mother Jones: During his address before a joint session of Congress earlier this week, President Donald Trump paused to introduce Denisha Merriweather, a graduate student from Florida sitting with first lady Melania Trump. Merriweather "failed third grade twice" in Florida's public schools, Trump said. "But then she was able to enroll in a private center for learning, great learning center, with the help of a tax credit," he continued, referring to Florida's tax credit scholarship program that allows students attend private schools. Trump used Denisha's story to call for his favorite education policy, school choice, asking lawmakers to "pass an education bill that funds school choice for disadvantaged youth, including millions of African American and Latino children. These families should be free to choose the public, private, charter, magnet, religious, or home school that is right for them." Education Secretary Betsy DeVos has also been pointing to Denisha and Florida in the past two weeks as a way to promote school choice. "Florida is a good and growing example of what can happen when you have a robust array of choices," DeVos told a conservative radio host on February 15. DeVos brought up the state's school choice model again during her speech to the leaders of historically black colleges earlier this week. So what is it about Florida? For starters, the state offers many different types of school choice, including charter schools, vouchers for low-income students and those with disabilities, and tax credit scholarships. Charter schools, found in 43 states and Washington, DC, represent the most common type of school choice. Vouchers are a little more complicated: They essentially operate like a state-issued coupon that parents can use to send their child to private or religious schools. The amount is typically what the state would use to send a kid to a public school. But vouchers are difficult to implement, because many state constitutions, like those in Michigan and Florida, have what are called Blaine Amendments, which prohibit spending public dollars on religious schools. And notably, only 31 percent of Americans support vouchers.

A Lawmaker Is Trying To Ban Howard Zinn Literature From Public Schools - A Republican Arkansas lawmaker has introduced legislation to ban the works of the late historian, activist, and writer Howard Zinn from publicly funded schools.The bill from Rep. Kim Hendren, just noted by the Arkansas Times, was introduced on Thursday and referred to the House Committee on Education.  It states (pdf) that any “public school district or an open-enrollment public charter school shall not include in its curriculum or course materials for a class or program of study any book or other material” authored by Zinn from 1959 until 2010, the year in which he died. Here is the summary bill.. (jpg)  The Zinn Education Project, which aims to “to introduce students to a more accurate, complex, and engaging understanding of United States history than is found in traditional textbooks and curricula,” noted Thursday that educators in the state may have a very different take from Hendren: “To date, there are more than 250 teachers in Arkansas who have signed up to access people’s history lessons from the Zinn Education Project website.” The project is also offering a free copy of Zinn’s seminal A People’s History of the United States to any Arkansas teacher who requests it:

Governors are poised to bear down on ed tech and rural education in 2017 - In what became a viral sensation during a tense confirmation process, US Secretary of Education Betsy DeVos gave rural schools fifteen minutes of fame when she explained that guns could be useful “to protect [students] from potential grizzlies.” Her comment garnered attention on Twitter, on Saturday Night Live, and in the mainstream media. But as the bear jokes die down, it’s not likely rural education will see much of the federal spotlight going forward. Senator Susan Collins (R-ME)’s comments in DeVos’s confirmation hearing explain why: “Maine has a unique situation with students attending school on islands and in rural areas. … the right answer for Maine is not the right answer for Indiana or any [other] state.” In states that have larger rural populations, the “right answer” in education is much more likely to include focusing on the challenges facing rural schools. Governors across the nation offered their own answers in their annual “State of the State” addresses earlier this year. Of the 39 governors whose speeches I read, just six specifically mentioned rural education. But eighteen touched on education technology, which can be a particularly sticky challenge for rural communities and was frequently a central component of governors’ rural reform efforts. Arizona’s Doug Ducey provided a perfect example of the overlap between technology and rural education: “It’s 2017, but outside of our urban areas, broadband is still spotty. Let’s fix this by connecting these rural schools to high-speed Internet. And let’s couple it with a statewide computer science and coding initiative.”

 Indian IT Firms May Fund U.S. Trade Schools To Replace H-1B Workers -- Back in March 2016, Trump trashed the current H-1B visa system, saying "The H-1B program is neither high-skilled nor immigration; these are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay." [….] In response, a recently revealed draft of a new Trump executive order related to the issuance of H-1B visas reportedly directs the Secretary of Homeland Security to consider ways to "make the process of H-1B allocation more efficient and ensure the beneficiaries of the program are the best and the brightest."  While that directive could be accomplished in a variety of ways, one likely solution would be to replace the current lottery system with one that prioritizes visas for those earning the highest salaries.   Now, under pressure from Trump’s administration, Indian outsourcing firms are ramping up their lobbying efforts and proactively proposing solutions that the White House may find attractive.  As the Wall Street Journal points out, one such solution would entail setting up trade schools in the rust belt to train U.S. workers to take the jobs that otherwise would have been filled by Indian H-1B visa holders.Indian information-technology firms are boosting efforts to lobby U.S. lawmakers and are considering ways to train American workers for tasks that Indian workers come to the U.S. to do.Indian outsourcers and U.S. tech firms say the visa program, which Mr. Trump assailed on the campaign trail as “a cheap labor program,” is necessary to fill jobs where too few workers with the right skills are available in the U.S. Critics say H-1B visas are used as a cost-cutting method, with firms largely hiring Indians, who are willing to work for less than Americans.

AEI President Arthur Brooks on Charles Murray’s speech at Middlebury - Last Thursday night at Middlebury College in Vermont, a large group of students physically prevented AEI scholar Charles Murray from speaking at a college-sponsored event, and then a group of demonstrators violently attacked him and his host (a professor at thecollege). The professor was injured and treated at a local hospital. You can read Murray’s account of the incident here and a press account here. This is especially disheartening to all who would like to believe that this should not happen in America, and in particular on a college campus, where freedom of thought and expression is supposed to be sacrosanct. I am confident that the Middlebury administration and faculty, no matter what their views on Murray’s research, do not support or stand for this. I hope they will repudiate it in the strongest terms and take appropriate action.  Charles Murray is a strong and courageous person, and I am proud to call him my colleague. I have no fear that he will ever be silenced. My fear, rather, is for the willingness and ability of others (whether their views are on the political right or left) to express themselves openly if they are threatened for their unpopular views–as they would be in so many illiberal countries around the world.

Charles Murray on the new normal at America’s college campuses: ‘intellectual thuggery’ -- My AEI colleague Charles Murray reflects thoughtfully (and pessimistically) in his essay “Reflections on the revolution in Middlebury” on his experience last Thursday at Middlebury College, where and he and Middlebury professor Allison Stanger were attacked by a violent mob of student protestors following a chaotic attempt at a lecture (Professor Stanger was assaulted and briefly hospitalized) and when as Dr. Murray told Time Magazine, “the inmates ran the asylum.”  Here’s an excerpt: Absent an adequate disciplinary response, I fear that the Middlebury episode could become an inflection point. In the twenty-three years since The Bell Curve was published, I have had considerable experience with campus protests. Until last Thursday, all of the ones involving me have been as carefully scripted as kabuki: The college administration meets with the organizers of the protest and ground rules are agreed upon. Middlebury tried to negotiate such an agreement with the protesters, but, for the first time in my experience, the protesters would not accept any time limits. If this becomes the new normal, the number of collegeswilling to let themselves in for an experience like Middlebury’s will plunge to near zero. Academia is already largely sequestered in an ideological bubble, but at least it’s translucent. That bubble will become opaque. Worse yet, the intellectual thugs will take over many campuses. In the mid-1990s, I could count on students who had wanted to listen to start yelling at the protesters after a certain point, “Sit down and shut up, we want to hear what he has to say.” That kind of pushback had an effect. It reminded the protesters that they were a minority. I am assured by people at Middlebury that their protesters are a minority as well. But they are a minority that has intimidated the majority. The people in the audience who wanted to hear me speak were completely cowed. That cannot be allowed to stand. A campus where a majority of students are fearful to speak openly because they know a minority will jump on them is no longer an intellectually free campus in any meaningful sense.

Social democracy and free speech in the university -- On March 2nd, a crowd prevented the conservative writer Charles Murray from speaking at Middlebury College. [...] Social democracy is a loosely defined concept with a complex history, but briefly: social democrats affirm democratic institutions, capitalist economies, and a redistributive welfare state. Among the most important writers in the tradition are J. S. Mill and John Rawls, the leading English-speaking political philosophers of the 19th century and 20th centuries. Both writers championed civil liberties.  […] Now suppose there was a history seminar on the Holocaust and one of the Nazi students argued that the event never happened. In my view, the professor would be right to fail him: the student is wrong on the facts. But it would wrong to expel the student from the class. The Holocaust is the topic at hand and in this setting the student has the right to state his view.The Middlebury events, however, came nowhere near the borders of such hard cases. Murray had an invitation to speak from a legitimate student group. There is no report that Murray said anything that can be construed as hate speech. I strongly disagreed with Murray’s book The Bell Curve, which argued that genetic determination of social structure made social policy futile (see James Heckman’s devastating review of the book in the Journal of Political Economy). But that disagreement would be a reason for me to, say, vote against him if he were proposed for a lectureship in my department. It’s not a justification for shouting him down if he were giving the lecture.I hear the claim that the threat of fascism justifies violence. While we still have a democracy, this is doubly wrong. On the one hand, violence to inhibit speech is antithetical to democracy. As such, violence communicates exactly the wrong message about who we are on the left. On the other hand, the norms and institutions of free speech are part of our defence against tyranny. In the Trump era, I am astonished that anyone could lose sight of this last point.

 The Most (And Least) Worthwhile Degrees - For many young people, the decision of whether to extend their education careers and attend university is a tough one to make. With soaring costs, Statista's Martin Armstrong notes, not all that choose to do a bachelor's degree graduate with the feeling that it was all worthwhile.Emolument surveyed 1,800 graduates to reveal that the most regretted major is psychology. Only 33 percent of bachelors of this particular science said their degree was worth it. On the other end of the scale, 87 percent of chemistry and natural sciences alumni said they felt their studies were worth it. You will find more statistics at Statista Last week, former Secretary of Education and US Senator Lamar Alexander wrote in the Wall Street Journal that a college degree is both affordable and an excellent investment. He repeated the usual talking point about how a college degree increases lifetime earnings by a million dollars, “on average.” That part about averages is perhaps the most important part, since all college degrees are certainly not created equal. In fact, once we start to look at the details, we find that a degree may not be the great deal many higher-education boosters seem to think it is. In my home state of Minnesota, for example, the cost of obtaining a four-year degree at the University of Minnesota for a resident of Minnesota, North Dakota, South Dakota, Manitoba, or Wisconsin is $100,720 (including room and board and miscellaneous fees). For private schools in Minnesota such as St. Olaf, however, the situation is even worse. A four-year degree at this institution will cost $210,920. This cost compares to an average starting salary for 2014 college graduates of$48,707. However, like GDP numbers this number is misleading because it is an average of all individuals who obtained a four-year degree in any academic field. 

US Life Expectancy Is Expected to Match Mexico's by 2030 - The poor levels of life expectancy in the U.S. against other rich nations has been laid bare in a new report, which predicts that minimal gains over the coming years will see the country have similar rates to Mexico by the year 2030. In general, global life expectancy is on track to increase by the year 2030, according to the study released on Monday, but the U.S. is predicted to continue to lag behind its peers. "Notable among poor-performing countries is the USA, whose life expectancy at birth is already lower than most other high-income countries, and is projected to fall further behind such that its 2030 life expectancy at birth might be similar to the Czech Republic for men, and Croatia and Mexico for women," the study, published in the U.K. medical journal Lancet, said. ••••• the U.S. was found to be on course for the lowest average life expectancy levels of all the rich countries worldwide. The study predicted an average age of 83.3 for women and 79.5 for men by 2030, not dissimilar to levels forecast in Mexico and Croatia. Current levels are 76.5 for men in the U.S. and 81.2 women, according to the study. "(The U.S.) are almost the opposite of South Korea," said Majid Ezzati, professor of global environmental health at Imperial College London and the leader of the latest medical research. "(Society in the U.S. is) very unequal to an extent the whole national performance is affected – it is the only country without universal health insurance," Ezzati added. ••••• The research described how the U.S. has the highest child and maternal mortality, homicide rate, and body-mass index of any high-income country. "The USA is also the only country in the OECD (Organization for Economic Co-operation and Development) without universal health coverage, and has the largest share of unmet health-care needs due to financial costs. Not only does the USA have high and rising health inequalities, but also life expectancy has stagnated or even declined in some population subgroups," the research document said. "Therefore, the poor recent and projected U.S. performance is at least partly due to high and inequitable mortality from chronic diseases and violence, and insufficient and inequitable health care."

Michael Hudson: Retirement? What Social Obligation? - naked capitalism - Yves here. This Real News Network interview is from a multi-part series about Michael Hudson’s new book, J is for Junk Economics. And after a lively discussion by readers of the economic necessity of many to become expats to get their living costs down to a viable level, a discussion of the disingenuous political messaging around retirement seemed likely. Among the people in my age cohort, the ones that managed to attach themselves to capital (being in finance long enough at a senior enough level, working in Corporate America and stock or stock options) are generally set to have an adequate to very comfortable retirement. The ones who didn’t (and these include people I know who are very well paid professionals but for various reasons, like health problems or periods of unemployment that drained savings, haven’t put much away) will either have to continue working well past a normal retirement age (even charitably assuming they can find adequately compensated work) or face a struggle or even poverty.

 US Fertility Rate At Lowest Point Since Records Began In 1909 -- The US fertility rate fell again last year, marking the lowest rate of reproduction since the CDC started keeping records in 1909. This prompted the amusing Bloomberg headline, “Make America Mate Again.” The above chart shows that in 2015, there were only 62.5 births per 1,000 women of childbearing age. That fertility rate dropped even further, touching 62.3 births per 1,000 women, in the first half of 2016. To put the fertility rate in perspective, it is now at about 1.85 births per woman. To maintain a stable population requires at least 2.1 births per woman. The US has been at or below the replacement fertility rate since 1972, as the chart below shows. Demographers worry that a dwindling birth rate will hurt economic growth and tax revenues needed to fund transfer payments to a growing elderly population. Some project that fertility rates will rise when the economy expands If the Trump administration achieves higher economic growth, it’s unlikely to do so fast enough to support the mandated 9% increase in entitlement spending for older Americans without more deficit spending. Trump says he intends to preserve Social Security and Medicare spending levels, but he seems unaware of the demographic headwinds we are sailing into. Few policymakers grasp the profound impact of an inverting demographic pyramid, simply because it has never happened before.

Will Drug Prices Come Down As Donald Trump Promised? His Regulators Help Pharmaceutical Companies Block Shareholder Questions About Rising Drug Prices - A week before his inauguration, Donald Trump said that when it came to drug prices, pharmaceutical companies were “getting away with murder” — and he pledged to take decisive action to reduce the rising cost of medicine. Six weeks into his presidency, though, his government has moved to help drug companies block shareholder initiatives designed to help bring more scrutiny to drug price increases. With drug prices skyrocketing in the United States, investor groups last year filed shareholder resolutions with 13 drug companies that — if passed — would force their boards to more meticulously detail their price increases for major medicines, and to provide “the rationale and criteria used for these price increases.” Days after Trump met with pharmaceutical industry CEOs at the White House, the Securities and Exchange Commission endorsed drug companies’ moves to block the resolutions from being voted on by shareholders at their annual meetings. The SEC move followed Trump promoting Republican SEC commissioner Michael Piwowar to serve as acting chairman of the agency. The SEC win for the pharmaceutical industry represents the latest victory for an industry that has been ramping up efforts to stop governments from taking action to lower — or force more disclosure about — drug pricing. Last month, federal lawmakers from both parties helped the industry block Senate legislation to let Americans purchase lower-priced FDA-approved medicines from Canada. Meanwhile, in the last two years, drug companies have been largely successful in their fight against a barrage of price transparency bills. Such legislation has been stymied in all but one state, Vermont.At the SEC, the recent help for the pharmaceutical industry came in the form of “no action” letters, assuring the companies that regulators would not recommend punishment if the firms omitted the resolutions from their shareholder ballots. In all, the SEC issued 10 “no action” letters in February, including eight on a single day.The SEC letters said the resolutions could be omitted because they related to “ordinary business matters” that, it asserted, are not subject to shareholder re solutions under federal securities law. In their requests for the no action letters, the companies argued that the initiatives sought to inappropriately meddle in management’s day to day operations.

8 out of 10 patient-advocacy groups have conflict-of-interest problems, study finds - More than 80 percent of prominent non-profit organizations that advocate for patients with cancer, diabetes, heart disease, lupus, mental illness and other conditions accept funding from drug and medical device companies, raising questions of conflicts of interest, a new study has found.The study also found that about 40 percent of the organizations have a current or former pharmaceutical industry executive on their board of directors.These findings are troubling, as patient-advocacy groups are at the center of many high-profile healthcare debates, such as what a drug or other medical therapy should cost and whether the therapy should be approved at an accelerated pace (before large clinical trials have proven its efficacy and safety).In such instances, the interests of the pharmaceutical and medical device industries can be at odds with those of patients. Greater transparency is needed from patient-advocacy organizations, say the authors of the study, which was published online Thursday in the New England Journal of Medicine (NEJM).“If you’re a policymaker and you want to hear from patients, there’s a danger if there’s an undisclosed or underdisclosed conflict of interest,” Matthew McCoy, the study’s lead author and a medical ethicist at the University of Pennsylvania, told Kaiser Health News reporter Emily Kopp. “The ‘patient’ voice is speaking with a pharma accent.”

Doctors: E-health records raise costs, don’t help patient outcomes -- Three out of four U.S. physicians believe that electronic healthcare records (EHRs) increase practice costs -- outweighing any efficiency savings -- and seven out of 10 think they reduce productivity, according to a new survey. Deloitte's "2016 Survey of US Physicians" released this week found little had changed since its last report two years ago, when doctors surveyed at the time generally held negative opinions of EHRs. The latest survey found nearly all physicians would like to see improvements in EHRs, with 62% calling for them to be more interoperable and 57% looking for improved workflow and increased productivity. Deloitte has been surveying a "nationally representative" sample of physicians since 2011. The most recent survey was conducted in the spring and involved 600  respondents. Deloitte's survey is not the first to unearth negative attitudes toward EHRs. In July, the results of a study of 17 U.S. hospitals published in the British Medical Journal (BMJ), found EHRs had little long-term impact on patient treatment outcomes, and could even have negative ones in the short term. The Deloitte study, conducted by Harvard University and Brigham and Women's Hospital, noted that implementing a new EHR or switching to another is likely one of the most disruptive predictable events a hospital can experience, "affecting practically every employee and workflow.  "In the period immediately after implementation, workflow disruptions created by technologies like electronic order entry can give rise to a wide array of unintended consequences, such as inefficient workarounds, disruptions in continuity of care, and other electronically enabled errors," the study said. "Quality could also suffer because providers might be distracted by the abrupt change in how they retrieve test results, consultation notes, and prior admission/discharge documentation, and how they document patient care."

Do Electronic Health Records Breed Burnout? -- Electronic health records, and especially the computerized ordering of tests and procedures, have helped fuel a national epidemic of burnout among doctors, research shows."The clerical burden associated with electronic health records has been a major contributing factor to physician burnout, with computerized physician order entry as the biggest source of frustration," says Dr. Tait Shanafelt, the lead author of a study on the issue and director of the Mayo Clinic Department of Medicine Program on Physician Well-Being. Completing even the simplest task, Shanafelt says, can be a challenge: "When you're just writing a prescription or ordering a test, you sometimes feel like you're fighting a computer for five minutes to do something that used to take five seconds."   Nearly half of U.S. doctors are burned out, and many believe electronic health records, or EHRs, are partly to blame. Sold to health systems nationwide on a promise of unprecedented efficiency, the computerized records are intended to streamline everything from bookkeeping and research to patient care. Ideally, they would allow doctors and health systems to capture information, analyze it and then quickly exploit the results to cut costs and improve service.  This potential of electronic health records to transform health care sparked federal policymakers in 2009 to create an incentive program offering up to $27 billion to encourage doctors and hospitals to switch to EHRs from paper charts. Since 2008, the proportion of medical practices using electronic health records has soared from around 15 percent to more than 80 percent. Nearly all Medicare-accepting hospitals have adopted their use, according to the Centers for Medicare and Medicaid Services, and those that don't face a substantial financial penalty.

 Death rates from drug overdose have more than doubled since 2002 -- Opioids continue to wreak deadly havoc in America, even after a half-decade of efforts to stem the epidemic. In 2015, more people died of overdosing on opioids than ever before: 33,000 people in 2015, according to a new study (pdf) from the Centers for Disease Control and Prevention. Thanks largely to surging opioid use, the age-adjusted rate of fatal drug overdoses is now 16.3 per 100,000 people, about twice what it was in 2002.That makes drug overdoses quite a bit deadlier than other major mortality causes in America. Certain states are suffering a lot more than others. In West Virginia and New Hampshire, for instance, the overdose fatality rate is more than twice that for the US in aggregate. The new data are consistent with a shift to heroin and synthetic opioids, as governments have tightened access to prescription painkillers—OxyContin and Vicodin, for instance—and as pharmaceutical companies have made the pills harder to abuse. Limited availability to painkillers has been driving addicts to take up heroin and, increasingly, fentanyl, a synthetic opioid that can be as much as 100 times more potent than heroin. In 2010—just before it started getting harder to buy prescription painkillers—heroin and synthetic opioids accounted for about 8% of overdoses apiece. Five years later, heroin caused a quarter of overdose deaths, while synthetic opioids were responsible for 18%.

 Is Medicaid Contributing to America's Opioid Epidemic? - Nicholas Eberstadt recently raised an interesting question regarding the role of Medicaid, the United States' welfare program that provides free health insurance for Americans with low incomes, when he commented on how it may very well have directly contributed to the nation's rising problem with opioid addiction.  How did so many millions of un-working men, whose incomes are limited, manage en masse to afford a constant supply of pain medication? Oxycontin is not cheap. As Dreamland carefully explains, one main mechanism today has been the welfare state: more specifically, Medicaid, Uncle Sam's means-tested health-benefits program. Here is how it works: [The Medicaid card] pays for medicine—whatever pills a doctor deems that the insured patient needs.. If you could get a prescription from a willing doctor—and Portsmouth had plenty of them—Medicaid health-insurance cards paid for that prescription every month. For a three-dollar Medicaid co-pay, therefore, addicts got pills priced at thousands of dollars, with the difference paid for by U.S. and state taxpayers. A user could turn around and sell those pills, obtained for that three-dollar co-pay, for as much as ten thousand dollars on the street.  It occurred to us that we have the ability to determine whether Medicaid is contributing to the nation's growing opioid epidemic by taking advantage of a natural experiment made possible by the Affordable Care Act.  ….  not all states agreed to expand their Medicaid program when the Affordable Care Act went into effect on 1 January 2014. From that time through 2015, 28 states and the District of Columbia had chosen to participate in the Affordable Care Act's expansion of eligibility for Medicaid, while 22 others opted to not do so during those years.  For the 28 states that acted to expand the eligibility of their state's Medicaid programs, 19 have seen the number of deaths from drug overdoses increase by 2.0 per 100,000 or higher per year, accounting for 68% of all Medicaid expansion states. The change in each of these states' age-adjusted death rates ranged from New Hampshire's biggest increase of 19.2 deaths per 100,000, to Nevada's decrease of 0.7 deaths per 100,000, where the median change was an increase of 2.7 drug overdose deaths per 100,000 population.  For non-Medicaid expansion states, only 7 of 22 states saw their age-adjusted death rates from drug overdoses increase by 2.0 per 100,000 or more per year, representing 32% of the states whose increase in death rates exceeded the median for all states. In the non-Medicaid expansion states, the change in each of these states' age-adjusted death rates ranged from the biggest increase of 8.0 deaths per 100,000 population for Main, to a Oklahoma's decrease of 1.6 deaths per 100,000 population. The median change for the non-Medicaid expansion states was an increase of 1.5 deaths per 100,000 population.

Drug firms poured 780M painkillers into WV amid rise of overdoses  -- Follow the pills and you'll find the overdose deaths. The trail of painkillers leads to West Virginia's southern coalfields, to places like Kermit, population 392. There, out-of-state drug companies shipped nearly 9 million highly addictive — and potentially lethal — hydrocodone pills over two years to a single pharmacy in the Mingo County town. Rural and poor, Mingo County has the fourth-highest prescription opioid death rate of any county in the United States. The trail also weaves through Wyoming County, where shipments of OxyContin have doubled, and the county's overdose death rate leads the nation. One mom-and-pop pharmacy in Oceana received 600 times as many oxycodone pills as the Rite Aid drugstore just eight blocks away. In six years, drug wholesalers showered the state with 780 million hydrocodone and oxycodone pills, while 1,728 West Virginians fatally overdosed on those two painkillers, a Sunday Gazette-Mail investigation found. The unfettered shipments amount to 433 pain pills for every man, woman and child in West Virginia. “These numbers will shake even the most cynical observer,” said former Delegate Don Perdue, D-Wayne, a retired pharmacist who finished his term earlier this month. “Distributors have fed their greed on human frailties and to criminal effect. There is no excuse and should be no forgiveness.” The Gazette-Mail obtained previously confidential drug shipping sales records sent by the U.S. Drug Enforcement Administration to West Virginia Attorney General Patrick Morrisey's office. The records disclose the number of pills sold to every pharmacy in the state and the drug companies' shipments to all 55 counties in West Virginia between 2007 and 2012.

Overdoses In W.Va. Drain Fund For Burials - The state of West Virginia has paid for so many burials for indigent people who have died from drug overdoses that the funding has run out five months before the end of the current fiscal year on June 30. Frederick Kitchen, president of the West Virginia Funeral Directors Association, said the state Department of Human Services earmarks about about $2 million a year to help cover the burial costs for indigent people. The state offers funeral homes $1,250 per person to cover burial expenses in cases where the deceased has no funds nor anyone willing or able to pay the funeral costs. “The Department of Human Services ran out of that money at the end of February. We’ve got five months with no money available. Funeral directors do what they can but this creates a hardship for a lot of funeral homes,” Kitchen said. Kitchen said there have been so many drug overdose deaths in West Virginia, it often takes two to three weeks for the state medical examiner to complete the required autopsies. He said families then have the added stress of not being able to carry out a funeral for weeks after a death occurs. “The biggest thing we are seeing is it’s putting a strain on the state medical examiner’s office being overwhelmed doing autopsies. Families sometimes have to wait two or three weeks to get their loved ones back and have a funeral,” Kitchen said. “It puts a lot of hardship on families after getting the worst news of their lives.” Eric Fithyan, funeral director and planner for James and Chambers funeral homes in the Northern Panhandle, has seen how the drug overdose deaths have affected families in many ways. His funeral homes have earned excellence awards in the industry for their funeral service practices. “The biggest and hardest thing is dealing with those left behind. A drug overdose death is almost like a suicide or unplanned death, and there is no way to alleviate the grief,” Fithyan said. And addicts often target their own family members for money to support their addictions. “Then they (parents and grandparents) can’t have the funeral they want because they spent all their finances on the child or grandchild. In some case they are taking care of the addict’s children who have become wards of the state … It’s almost a form of elder abuse.”

Rubber And Heroin In A Dying City -- On a Friday night in the fall of 2016, Akron reported twenty-one heroin overdoses. The day before, there were four overdose deaths reported in Akron, bringing the total number of deaths due to overdose that year to 112. During one particularly startling stretch in July, there were 236 overdoses reported in just three weeks. This was a sharp spike from the period of January through June, when Akron paramedics got 320 overdose calls. Three out of ten people in Ohio are addicted to opiates, but the problem is worst in Northeast Ohio. The river towns, the factory towns, the towns where there was once hope and now less.  Today, heroin has become inexpensive to make, and therefore inexpensive to purchase, without cutting into the high it gives. To make it even cheaper, traffickers began cutting it with Fentanyl, a powerful opioid painkiller. Some would even cut their heroin with elephant tranquilizers, too powerful to be consumed by the human body, which is what kicked off the influx of overdoses in Akron last year. There is seemingly no end to it. In towns like Akron and the even smaller towns that surround it, officials have begun to throw up their hands and just let the epidemic play out, hoping that there will be a population left when it does.  It is perhaps hard to look at all of this in a historical context, as a story of how misfortune echoes down generations. Goodyear, having effectively outsourced its labor to places all over the globe, is back on its feet now. But the layoffs of the early nineties and the early 2000s had a lasting impact in Akron. There is no story that’s just an ending. Akron wasn’t always as hopeless as it seems now. The people who were laid off in each of those two eras were parents, neighbors, community members who supported the town and helped it thrive. Without their income, the town suffered, and without the ability to move anywhere else, their struggle was passed down to their children. In one decade, thousands of Akron’s working class were rendered jobless, and as the old story of deindustrialization goes, many of them didn’t have skills that transferred out of the factory and manufacturing settings they were trained for.

Trump taps Gottlieb for FDA commissioner - POLITICO: President Donald Trump on Friday nominated Scott Gottlieb, a conservative drug industry insider and former FDA and CMS official, to serve as FDA commissioner. Gottlieb, a physician, is a far more traditional pick to lead the FDA than other candidates Trump had considered. One of them, Silicon Valley investor Jim O’Neill, had shocked public health advocates with his comments that FDA should approve drugs without proof they worked. Story Continued Below If confirmed, Gottlieb would play a major role in the Trump’s administration’s efforts to speed up regulatory approval of drugs. Trump, who’s been critical of high drug prices, has often argued that shortening the FDA approval process and cutting regulations would bring down drug prices. Gottlieb’s close ties with industry are likely to draw close Senate scrutiny. A classic Washington insider who has occupied conservative turf in the health care debate for two decades, Gottlieb is a board member or adviser to various drug companies and plays a role in funding the industry through a venture capital firm, New Enterprise Associates. Rep. Rosa DeLauro (D-Conn.), ranking member of the House Appropriations subcommittee that oversees FDA, said Trump's decision "sends a dangerous message that he is committed to rolling back regulations and opening the floodgates to potentially dangerous drugs and medical devices."FDA, which reviews and approves drugs, vaccines and medical devices, as well as regulates tobacco, food and cosmetics, has a yearly budget of $5 billion, close to 15,000 employees. A slew of FDA user fee programs, in which industry essentially funds half the FDA budget, are up for reauthorization in the fall; it will fall upon Gottlieb, if approved, to shepherd the agreements — negotiated under his predecessor — through Congress.

 Air pollution alters bacteria and effectiveness of antibiotics - We know that air pollution is the single largest environmental health risk in the world today. Now a new study has discovered how bacteria that cause respiratory infections are directly affected by air pollution.  Black carbon is one of the main components of the particulate matter in polluted air that we breathe. The effects of particulate matter on human health have been well studied, however, the effects on the bacteria that are responsible for respiratory infections are poorly understood. A new study by researchers at the University of Leicester has discovered that air pollution changes the way bacteria that cause respiratory infections behave, increasing their potential for infection as well as changing the effectiveness of antibiotic treatment, reports Science News Online. "Our research could initiate an entirely new understanding of how air pollution affects human health. It will lead to enhancement of research to understand how air pollution leads to severe respiratory problems and perturbs the environmental cycles essential for life," says Dr. Julie Morrissey, University of Leicester.

Pollution Kills 1.7 Million Children Every Year, WHO Says - A quarter of all global deaths of children under five are due to unhealthy or polluted environments including dirty water and air, second-hand smoke and a lack or adequate hygiene, the World Health Organization (WHO) said on Monday.Such unsanitary and polluted environments can lead to fatal cases of diarrhea, malaria and pneumonia, the WHO said in a report, and kill 1.7 million children a year.“A polluted environment is a deadly one -– particularly for young children,” WHO Director-General Margaret Chan said in a statement. “Their developing organs and immune systems, and smaller bodies and airways, make them especially vulnerable to dirty air and water.”In the report ― “Inheriting a sustainable world: Atlas on children’s health and the environment” ― the WHO said harmful exposure can start in the womb, and then continue if infants and toddlers are exposed to indoor and outdoor air pollution and second-hand smoke.This increases their childhood risk of pneumonia as well as their lifelong risk of chronic respiratory diseases such as asthma. Air pollution also increases the lifelong risk of heart disease, stroke and cancer, the report said.The report also noted that in households without access to safe water and sanitation, or that are polluted with smoke from unclean fuels such as coal or dung for cooking and heating, children are at higher risk of diarrhea and pneumonia.are also exposed to harmful chemicals through food, water, air and products around them, it said. Maria Neira, a WHO expert on public health, said this was a heavy toll, both in terms of deaths and long-term illness and disease rates. She urged governments to do more to make all places safe for children.

 Pollution Kills 1.7 Million Children Every Year, WHO Reports - Underscoring the dangers of U.S. President Trump's broad attacks on air and water regulations, a pair of reports published by the World Health Organization (WHO) on Monday revealed that one in four young children die each year as a result of unhealthy environments. "A polluted environment is a deadly one—particularly for young children," said WHO Director-General Dr. Margaret Chan in a press statement on Monday. "Their developing organs and immune systems and smaller bodies and airways, make them especially vulnerable to dirty air and water." Beginning in utero, children are exposed to harmful environmental risks. According to the studies, roughly 1.7 million children under the age of 5 die each year from factors that could have been prevented through addressing environmental risks, which WHO called "a shocking missed opportunity."  The first study, Inheriting a Sustainable World: Atlas on Children's Health and the Environment , provides a detailed update on a similar 2004 study, now incorporating some of the latest factors that affect children's health, including "increasing urbanization, industrialization, globalization and climate change ."  A companion report delves into the details of environment-related death statistics. Among the known threats that kill hundreds of thousands of children each year, the studies found:

  • 570,000 children under 5 years die from respiratory infections, such as pneumonia, attributable to indoor and outdoor air pollution and second-hand smoke.
  • 361,000 children under 5 years die due to diarrhea, as a result of poor access to clean water, sanitation and hygiene.
  • 270,000 children die during their first month of life from conditions, including prematurity, which could be prevented through access to clean water, sanitation and hygiene in health facilities as well as reducing air pollution.
  • 200,000 deaths of children under 5 years from malaria could be prevented through environmental actions, such as reducing breeding sites of mosquitoes or covering drinking-water storage.

Groups Seek End to Factory Farm Pollution Loopholes Dating Back to 1970s -- Nearly three dozen advocacy groups are calling on the Environmental Protection Agency to close loopholes that they say have allowed massive factory farms to continue polluting waterways with animal waste.  The groups are asking the agency to fix its rules for permitting Concentrated Animal Feeding Operations, or CAFOs, which can house tens of thousands of animals and have become one of the most significant sources of water pollution in the nation. The effort is part of a broader one aimed at forcing stronger oversight of CAFOs, including their contributions to greenhouse gas emissions. In a petition filed this week, 35 groups led by Food & Water Watch, maintain that EPA has the authority to require more CAFOs to seek permits that would limit the amount of animal waste that ends up on farm fields and in waterways. Among other things, the groups are asking that the agency rely on more current rainfall data that reflects extreme weather events fueled by climate change. "The current rules have failed to prevent pollution," said Tarah Heinzen, an attorney with Food & Water Watch. "So we're urging EPA to adopt rules that require more CAFOs to get permits and to make those permits more stringent."The petition likely will open up an ongoing legal battle that stretches back nearly two decades in which courts have consistently sided with the livestock industry and against the agency. The Clean Water Act defines CAFOs as "point sources" of pollution—much like factories or municipal sewage systems. But the farming industry has fought against that definition and won exemptions from regulation. 

EPA relationship with Monsanto under scrutiny in Roundup trial  -- In new court filings, plaintiffs in a class-action lawsuit that claims Roundup causes non-Hodgkin lymphoma and other cancers are alleging that there has been collusion between the EPA and Monsanto, the maker of the weedkiller. The plaintiffs have petitioned to depose Jess Rowland, the EPA’s recently retired deputy division director. The allegation is based on a letter dated March 4, 2013, written by the late EPA senior toxicologist Marion Copley, in which she concludes that, “It is essentially certain that glyphosate causes cancer,” directly contradicting the agency’s 1991 ruling that glyphosate is not carcinogenic to humans. In the letter, Copley accuses Rowland of behaving unethically, intimidating staff, and changing reports to favor industry. “For once in your life, listen to me and don’t play your political conniving games with the science to favor the registrants,” she wrote. “For once do the right thing and don’t make decisions based on how it affects your bonus.”Lawyers for the plaintiffs are heralding the letter as a “potentially explosive new development.” Two years after Copley wrote the letter, the World Health Organization’s International Agency for Research on Cancer (IARC) classified glyphosate as “probably carcinogenic to humans.” Several countries, including Colombia, El Salvador, Sri Lanka, Bermuda, and the Netherlands have responded to the IARC cancer listing by banning the sale of Roundup and other herbicides that contain glyphosate. Argentina, Brazil, and Germany are considering bans, and France banned their use in home gardens.

EPA Sued for Failure to Release Glyphosate Documents -- U.S. Right to Know , a consumer advocacy organization, filed a federal lawsuit Thursday against the U.S. Environmental Protection Agency (EPA) for violating provisions of the Freedom of Information Act (FOIA). Public Citizen Litigation Group, a public interest law firm in Washington, DC, is representing U.S. Right to Know in the action.  The lawsuit , filed in the U.S. District Court in Washington, DC, seeks documents related to EPA's assessment of a controversial chemical called glyphosate . Glyphosate is the most widely used herbicide in the world and is the key ingredient in Monsanto's branded Roundup herbicides as well as other weed-killing products. Concerns about the chemical have grown since the World Health Organization in 2015 said its cancer experts classified glyphosate as a probable human carcinogen . Other scientists have also said research shows safety problems with the chemical and the formulations its used in.  U.S. Right to Know requested the EPA records after the EPA posted an internal memorandum titled GLYPHOSATE: Report of the Cancer Assessment Review Committee (CARC) to the agency's website on April 29, 2016. The internal EPA report, known as the CARC report, concluded that glyphosate was "not likely to be carcinogenic to humans." The EPA then deleted the public posting on May 2, 2016, saying that the document was posted inadvertently. But before it was deleted Monsanto officials copied the document, promoted it on the company website and on social media and made reference to it in a court hearing dealing with lawsuits filed by agricultural workers and others who allege Monsanto's herbicide gave them cancer.  The May 12, 2016, FOIA request asked for certain records relating to the CARC report on glyphosate as well as records of communications between Monsanto and EPA officials that discussed glyphosate issues. Under FOIA, the EPA had 20 working days to respond to the request, but well over 190 working days have now passed and the EPA has yet to produce any records in response to the request. The EPA has also failed to comply with similar, more recent FOIA requests made by U.S. Right to Know for documentation of EPA dealings with Monsanto regarding glyphosate, though those requests are not part of this lawsuit.

Glyphosate Reviews Within the Corporate Science Paradigm -- Greenpeace is accusing the European Chemical Agency (ECHA), whose opinion on the cancerousness of glyphosate is supposed to be imminent, of “conflict of interest” because its panel members also operate as “risk assessment consultants” for the industry.As a system NGO, when Greenpeace says “conflict of interest” they’re referring to conventional corruption of “public servants” who are paid also by the industry they’re supposed to be regulating in accordance with scientific method. Our abolitionist analysis is much deeper and more comprehensive than this, of course. While this kind of corruption is common, it’s epiphenomenal compared to the overall ideological and methodological framework of technocracy and the corporate science paradigm. Cadres of an agency like the ECHA, or the US EPA, FDA, and USDA, operate according to the corporate/technocratic template. Its three components are:

  • 1. The corporate power/profit project is normative. It is the primary purpose of civilization. Under no circumstance can any other value or alternative project be allowed significantly to hinder the corporate project. This has profound implications for actions like a pesticide cancer review. For technocratic regulators to acknowledge the fact that all synthetic pesticides cause widespread cancer would significantly hinder the corporate project. Therefore even the prospect of such acknowledgement is ruled out a priori.
  • 2. Given the strictures of (1), the regulator may if absolutely necessary impose limits on the most excessive harms and worst abuses. More often, it only pretends to do even this. Which leads to the template’s third component.
  • 3. The regulator then puts its imprimatur on the corporate project as having been sufficiently regulated for safety. According to the ideology of technocracy and bureaucracy, the people are supposed to believe implicitly in the competence, rigor, and honesty of the regulator.

Updates on the Poisonist Regulators -- Yesterday we discussed further how examples of so-called “conflict of interest” highlight the fact that corporate regulators have no such conflict, since in principle as well as practice they exist to serve the corporate imperative. Therefore to fixate on superficial conflicts of interest and conventional notions of corruption is to mistake the character of the entity. Whether or not a soldier in your unit is pilfering from the ration depot is less important than the fact that he’s really an enemy officer wearing the wrong uniform. That’s how we have to understand the sham of a “public interest” regulator, as well as many other types of entities which claim to act in the public interest but really act only in the technocratic corporate interest. Greenpeace has posted the ECHA’s response to its letter accusing the body of allowing conflicts of interest to ferment on its glyphosate review panel. This comes the same day as another public interest group, the US Right to Know, announced it is suing the EPA for that body’s flouting of USRTK’s many Freedom of Information Act requests. EPA’s handling of its pro-glyphosate propaganda mandate has been especially brazen and clumsy. Last April its Cancer Assessment Review Committee (CARC) posted on the EPA website a memo whitewashing glyphosate’s cancerousness. EPA suppressed the post a few days later claiming it was supposed to be secret and had been posted inadvertently. In the meantime Monsanto copied the post and proceeded to tout it in public and in court, with full EPA approval. Here the regulator’s pro-poison brazenness is extreme even by their standards. They post the fraudulent imprimatur, then quickly delete it claiming it’s not for public perusal, even as the corporation, with the regulator’s approval, publicizes this now-phantom imprimatur. This proves that EPA’s phony “evidence” is so poor that even given the regulator’s extremely low standards, it doesn’t feel confident about posting even a sham assessment.

Pesticides Cause 'Catastrophic' Harm to People and Planet, UN Report Says -- The chronic overuse of pesticides across the world has caused "catastrophic" harms to human health, human rights and global biodiversity, according to a report presented to the United Nations human rights council Wednesday. The UN-solicited study on toxic chemical impacts to global food sources criticizes pesticide manufacturers ' "systematic denial" of the broad harms caused by their products and calls for a transition to healthier farming methods that move away from the current dependence on pesticides. "This report vividly reveals the harms pesticide manufacturers have caused by promoting the myth that their toxic chemicals are necessary to feed the world," said Nathan Donley, a senior scientist with the Center for Biological Diversity . "As this report recommends, we must move away from the industry-driven addiction to pesticides that is poisoning farmworkers, contaminating our water and wildlife and causing long-term human health problems." The report is part of a growing body of evidence detailing the harms caused by the overuse and under-regulation of pesticides. For example, a study published last week in the journal Nature Plants found pesticide use could be heavily reduced in most situations without an impact to crop yield. The U N report finds that poverty, coupled with inequitable production and distribution systems, are two of the major barriers to feeding the hungry.

UN experts denounce ‘myth’ pesticides are necessary to feed the world - The idea that pesticides are essential to feed a fast-growing global population is a myth, according to UN food and pollution experts.A new report, being presented to the UN human rights council on Wednesday, is severely critical of the global corporations that manufacture pesticides, accusing them of the “systematic denial of harms”, “aggressive, unethical marketing tactics” and heavy lobbying of governments which has “obstructed reforms and paralysed global pesticide restrictions”.The report says pesticides have “catastrophic impacts on the environment, human health and society as a whole”, including an estimated 200,000 deaths a year from acute poisoning. Its authors said: “It is time to create a global process to transition toward safer and healthier food and agricultural production.”   The world’s population is set to grow from 7 billion today to 9 billion in 2050. The pesticide industry argues that its products – a market worth about $50bn (£41bn) a year and growing – are vital in protecting crops and ensuring sufficient food supplies.  “It is a myth,” said Hilal Elver, the UN’s special rapporteur on the right to food. “Using more pesticides is nothing to do with getting rid of hunger. According to the UN Food and Agriculture Organisation (FAO), we are able to feed 9 billion people today. Production is definitely increasing, but the problem is poverty, inequality and distribution.” Elver said many of the pesticides are used on commodity crops, such as palm oil and soy, not the food needed by the world’s hungry people: “The corporations are not dealing with world hunger, they are dealing with more agricultural activity on large scales.”The new report, which is co-authored by Baskut Tuncak, the UN’s special rapporteur on toxics, said: “While scientific research confirms the adverse effects of pesticides, proving a definitive link between exposure and human diseases or conditions or harm to the ecosystem presents a considerable challenge. This challenge has been exacerbated by a systematic denial, fuelled by the pesticide and agro-industry, of the magnitude of the damage inflicted by these chemicals, and aggressive, unethical marketing tactics.”

Jane Goodall: How Can We Believe It Is a Good Idea to Grow Our Food With Poisons? - Two new reports published in recent weeks add to the already large and convincing body of evidence, accumulated over more than half a century, that agricultural pesticides and other toxic chemicals are poisoning us. Both reports issue scathing indictments of U.S. and global regulatory systems that collude with chemical companies to hide the truth from the public, while they fill their coffers with ill-gotten profits. According to the World Health Organization, whose report focused on a range of environmental risks, the cost of a polluted environment adds up to the deaths of 1.7 million children every year. A report by the Special Rapporteur on the right to food, presented to the United Nations Human Rights Council, focused more narrowly on agricultural chemicals. The UN report states unequivocally that the storyline perpetuated by companies like Monsanto —the one that says we need pesticides to feed the world—is a myth. And a catastrophic one at that. The fact that both these reports made headlines, in mainstream outlets like the Washington Post and the Guardian, is on one hand, good news. On the other, it's a sad and discouraging commentary on our inability to control corporate greed. Ever since Rachel Carson , in her book Silent Spring , so eloquently outlined the insanity of poisoning our environment, rational thinkers have warned that at the least, we ought to follow the precautionary principle when it comes to allowing the widespread use of poisons to be unleashed into the environment. And yet, here we are, in 2017, facing the prospect under the most corporate-friendly administration in history, of dismantling what little remains of the government's ability to stop the rampant poisoning of our soils, food, water and air—the very resources upon which all life depends.

  Get ready for a whole lot more Lyme disease in the Northeast. - The tick-borne disease is spreading, thanks in part to climate change. But another culprit has been stealthily transmitting the disease, NPR reports, leading to infection rates three times higher today than they were in the early 1990s: mice. Turns out mice thrive in the chunks of forest padding the roads and farms of New England and the East Coast. The unnatural patchwork of woods that covers much of the region is the result of new growth filling in where early European settlers clear-cut to plant crops. It’s a perfect habitat for mice, but not for foxes, owls, and other predators. Without much competition, mice populations have multiplied — right next to the humans who favor the same wooded, road-accessible landscapes for their homes. Mice are ideal transmitters of Lyme disease. They pass the infection to 95 percent of the ticks that bite them, and can carry 60 to 100 ticks at any one time. An explosion of mice in the Hudson River Valley last summer suggests to ecologists that this year will see a matching explosion of Lyme disease. Not to mention that, with spring coming to the Northeast earlier and earlier every year, Lyme season just got longer.

Poachers Kill 4-Year-Old Rhino After Breaking Into Zoo -- A young white rhino was killed after being shot in the head three times by poachers who broke into the Thoiry Zoo in Paris Monday night. Poachers de-horned the 4-year-old rhino, named Vince, and left alive two other white rhinos, 37-year-old Gracie and 5-year-old Bruno. They left part of Vince's second horn, leading local police to believe they were ill-equipped or interrupted. The poachers are still at large.  "It is extremely shocking what just happened," Zoo Director Thierry Duguet said . "An act of such violence, never before seen in Europe."  Vince was discovered by his caretaker Tuesday morning. According to reports, the poachers forced open a gate and two doors to enter the rhinoceros building. They likely used a chainsaw to remove Vince's horns.  A trend of rhino horn thefts from private collections and museums in the past several years has led to increased concern among conservationists for captive rhinos, The Washington Post explained . These bold new attacks are a sign that "zoological facilities need to take serious measures to keep their rhinos safe," said Susie Ellis, executive director of International Rhino Foundation.

Another Somalian Famine --Last month, the United Nations declared another famine threat in Somalia due to yet another drought in the Horn of Africa. Important lessons must be drawn from the Somalia famine of 2010-2012, which probably killed about 258,000 people, half of whom were under-five. This was the greatest tragedy in terms of famine deaths in the 21st century, and in recent decades since the Ethiopian famine of the late 1980s.  A 2013 report, for the Famine Early Warning Systems Network (FEWS Net) and the Food Security and Nutrition Analysis Unit (FSNAU), used a variety of sources to estimate the likely death toll. Both FEWS Net and FSNAU had been warning of the impending tragedy with increasing urgency for some time, producing numerous early warning alerts besides directly briefing agencies and donor governments. Some critics claim that the early warnings may actually have been late, and even under-estimated the scale of the emerging crisis. By ignoring early warnings, cutting aid and constraining humanitarian interventions in Somalia, Western governments exacerbated the deteriorating situation, making famine more, not less likely. Instead of trying harder, humanitarian organizations presumed it would be politically unfeasible to raise resources. As-Shabaab’s expulsion of the UN’s World Food Programme in 2010 only made things worse, with another 16 UN agencies and international NGOs suffering similar fates in 2011 for allegedly “illicit activities and misconduct”.   Thus, Western donors prioritized their geopolitical priorities over the urgent need to avoid famine. Although donor governments and humanitarian organizations were quick to announce that they had learnt the lessons of the Somali famine, things are now worse in some respects. In recent years, both the US and the EU have imposed strict sanctions on remittances to Somalia, which have cut the meagre resources available to destitute households. As income from such remittances served to mitigate the devastating impact of the last famine, it would be worse this time without them.

As global food demand rises, climate change is hitting our staple crops - While increases in population and wealth will lift global demand for food by up to 70% by 2050, agriculture is already feeling the effects of climate change. This is expected to continue in coming decades. Scientists and farmers will need to act on multiple fronts to counter falling crop yields and feed more people. As with previous agricultural revolutions, we need a new set of plant characteristics to meet the challenge.When it comes to the staple crops – wheat, rice, maize, soybean, barley and sorghum – research has found changes in rainfall and temperature explain about 30% of the yearly variation in agricultural yields. All six crops responded negatively to increasing temperatures – most likely associated with increases in crop development rates and water stress. In particular, wheat, maize and barley show a negative response to increased temperatures. But, overall, rainfall trends had only minor effects on crop yields in these studies. Since 1950, average global temperatures have risen by roughly 0.13°C per decade. An even faster rate of roughly 0.2°C of warming per decade is expected over the next few decades. As temperatures rise, rainfall patterns change. Increased heat also leads to greater evaporation and surface drying, which further intensifies and prolongs droughts. A warmer atmosphere can also hold more water – about 7% more water vapour for every 1°C increase in temperature. This ultimately results in storms with more intense rainfall. A review of rainfall patterns shows changes in the amount of rainfall everywhere.

America’s Hidden Water Affordability Crisis  --Elizabeth Mack, an assistant professor at the Department of Geography, Environment, and Spatial Sciences at Michigan State University, in an article published in the science journal PLOS ONE, asked a new question: Is there a burgeoning water affordability crisis in the United States? Mack, along with research assistant Sarah Wrase, determined that if water rates increase at projected amounts over the next five years, the percentage of households that can’t pay their water bills could triple from 11.9 percent to more than a third. Nearly 14 million households nationwide already struggle to afford water services. An additional 27.18 million — or 8.5 percent of the country’s population — could soon face the same challenges. “I don’t think we think about this, about what it would mean to not have running water,” Mack told Fusion. Of course, some Americans have experienced it. Water affordability is becoming an increasingly critical issue in cities across the country, including Philadelphia, Atlanta, Seattle, and Detroit. In Philadelphia, an estimated four out of 10 water accounts are past due. Atlanta and Seattle have some of the highest water rates in the country. And in Detroit, a campaign to cut off delinquent residents has stopped water and sewage service for 50,000 households since 2014. It’s a reality Mack thinks Americans in other parts of the country could face. “Any place with shrinking city characteristics, any city where we have a hollowing out of a downtown core that used to be quite vibrant” could be in trouble, she said. That’s the case in Detroit, where a declining population has left fewer households to shoulder the costs of water services. The cost of replacing water systems built around World War II are projected at more than $1 trillion over the next 25 years across the country. Prices will be even higher if cities tap private companies to provide water services because they tend to charge higher rates than public providers. A majority of Americans get their water from public providers, but in Atlanta, where the privatization of water services in part drove up water expenses, the service costs $325.52 per month. Households must make at least about $87,000 for that to be affordable.

 Farmers Challenge Environmental Regulations Meant To Protect Land and Water - The way environmentalist Craig Cox sees it, streams and rivers across much of the country are suffering from the side effects of growing our food. Yet the people responsible for that pollution, America's farmers, are fighting any hint of regulation to prevent it. "The leading problems are driven by fertilizer and manure runoff from farm operations," says Cox, who is the Environmental Working Group's top expert on agriculture.Across the Midwest, he says, nitrate-filled water from farm fields is making drinking water less safe. Phosphorus runoff is feeding toxic algae blooms in rivers and lakes, "interfering with people's vacations. [They're] taking their kids to the beach and the beach is closed. There's stories about people getting sick."This is preventable, Cox says. Farmers can take simple steps to reduce the problems dramatically. They can plant "cover crops," making sure that there's always vegetation on their fields to capture nitrates before that pollution runs into streams. They can plant wide, grassy "filter strips" along stream banks. They can send the water from underground drainage pipes into wetlands rather than straight into streams.Some farmers do this; many do not. And there's no law making it mandatory.The Clean Water Act, which has cleaned up pollution from factories over the past 40 years, specifically exempts what it calls "normal farming practices" like plowing or maintaining drainage ditches. In recent years, farmers have fought any hint of stricter regulation.

Why farmers and ranchers think the EPA Clean Water Rule goes too far - President Trump issued an executive order Feb. 28 directing federal agencies to revise the Clean Water Rule, a major regulation published by the Environmental Protection Agency and the Army Corps of Engineers in 2015. The rule’s purpose is to clarify which water bodies and wetlands are federally protected under the Clean Water Act. EPA Administrator Scott Pruitt led a multi-state lawsuit against the rule as Oklahoma attorney general, and has called it “the greatest blow to private property rights the modern era has seen.”At the Colorado Water Institute at Colorado State University, we work in partnership with the farm and ranch community to find solutions to difficult western water problems. Farmers and ranchers often express frustration with one-size-fits-all worker protection, food safety, animal welfare, immigration, endangered species and environmental regulations. So we understand their concern that this rule may further constrain agricultural activities on their land.In particular, they fear the Clean Water Rule could expand federal regulations that impact their private property rights. However, regulatory agencies and the regulated community need to know the limits of the Clean Water Act’s reach so they can take appropriate measures to protect water resources. If the rule is scrapped, we still will need to know which water bodies require protection under the law. The Clean Water Act of 1972 protects the “waters of the United States” from unpermitted discharges that may harm water quality for humans and aquatic life. However, it leaves it up to EPA and the Army Corps of Engineers to define which waters the law covers.  Agencies and the courts agree that this term includes “navigable waters,” such as rivers and lakes. It also covers waterways connected to them, such as marshes and wetlands. The central question is how closely connected a water body must be to navigable waters to fall under federal jurisdiction.

Trump Proposal To Gut Great Lakes Funding Could Allow Pollution To Flourish  ― The Trump administration’s reported proposal to slash Environmental Protection Agency funding could spell major problems for the Great Lakes.President Donald Trump’s administration is looking to chop 25 percent from the agency’s budget. The Great Lakes Restoration Initiative would see the biggest funding cut, to just $10 million in fiscal 2018 from its nearly $300 million allocation this year ― a 97 percent reduction, according to The Oregonian, which first reported details on funding proposals for several dozen programs last week. Other parts of the EPA budget would roll back regulatory work aimed at curbing climate change. The Great Lakes initiative started in 2010 and has directed more than $2 billion toward protecting the lakes, the largest surface freshwater source in the world. The EPA partners with more than a dozen other federal agencies and provides local grants for projects like controlling invasive species and managing watersheds to minimize pollution.A focus is on restoring so-called areas of concern that have been damaged by decades of industrial pollution. The EPA spent $90 million addressing areas of concern last year. Several of the areas have improved enough to be taken off the list since the restoration initiative began in 2010.The EPA budget cuts were included in an internal recommendation from the Office of Management and Budget that the National Association of Clean Air Agencies obtained and shared with The Oregonian. The association confirmed the figures to The Huffington Post. The EPA can still contest the draft cuts, and Congress ultimately approves a final budget. But the proposed massive reduction concerns researchers in the Great Lakes region.  “If something happens to the EPA and the Great Lakes Restoration Initiative, it’s going to be public health that suffers,” said Bradley Cardinale, a University of Michigan ecologist. “This is going to result in a lot of job loss, a lot of pollution and reverting us back to many of the problems we had when Lake Erie once caught on fire because it was so polluted.”

Backlash greets Trump proposal to gut Great Lakes cleanup funding - Drastic proposed cuts to Environmental Protection Agency funding that pays for Great Lakes pollution cleanup are not sitting well with environmental groups, Great Lakes mayors and members of both parties on Capitol Hill.President Donald Trump's initial 2018 budget proposal for the EPA effectively kills the Great Lakes Restoration Initiative (GLRI) by slashing the grant program from $300 million to $10 million, according to a document obtained by the National Association of Clean Air Agencies.The cuts are part of a "passback" budget draft that is not a final version of the administration's 2018 budget, which is expected to go before Congress later this month. The GLRI has standalone authorization at the $300 million level until 2021, giving Congress the ability to restore the funding.Nonetheless, the proposed Great Lakes funding cuts -- among numerous programs at the EPA expected to be slashed or eliminated altogether -- align with statements made by Trump on the campaign trail and cabinet members. The cuts are part of Trump's goal of increasing military spending by 10 percent.The GLRI funds state and local projects that combat invasive species, restore wildlife habitats and clean up watersheds polluted by a Rust Belt economic legacy across the eight-state Great Lakes region. It has traditionally enjoyed strong bipartisan support in Congress, which in the past has restored smaller cuts proposed under President Barack Obama.  Below is some of the reaction to the proposed Great Lakes cuts:

Trump Proposes Cutting Great Lakes Funding by 97% - New findings revealed Wednesday show which U.S. Environmental Protection Agency (EPA) programs will be most affected by the Trump administration's proposed budget cuts, including a 97 percent budget cut for the Great Lakes Restoration Initiative .  The Great Lakes Restoration Initiative strategically targets the biggest threats to the Great Lakes ecosystem, including toxic substances, invasive species and pollution. As the Senate currently works to finalize 2017 appropriations and develop legislation to fund the federal government in 2018, it is up to them to make sure that the EPA receives the funding it needs to fulfill its mission of protecting public health and the environment, through programs such as the Great Lakes Restoration Initiative. Budgets are statements about values and priorities. Trump's budget shows his priorities are corporate profits, not our communities or drinking water for the 1 in 10 Americans who live in this region.  Because of President Trump's proposed gutting of the U.S. Environmental Protection Agency, the vital funding that goes to restore and protect the iconic Great Lakes could be nearly zeroed out, putting the health of these waters and our communities at risk. These cuts aren't just despicable, they are dangerous to the Great Lakes that millions of Americans rely on for recreation and for business. Every Senator needs to do the right thing for those living by the Great Lakes and reject these dangerous cuts.

Riverbanks collapse after Oroville Dam spillway shut off - San Francisco Chronicle: When state water officials scaled back their mass dumping of water from the damaged Oroville Dam this week, they knew the riverbed below would dry up enough to allow the removal of vast piles of debris from the fractured main spillway.But they apparently did not anticipate a side effect of their decision to stop feeding the gushing Feather River — a rapid drop in river level that, according to downstream landowners, caused miles of embankment to come crashing down.With high water no longer propping up the shores, the still-wet soil crashed under its own weight, sometimes dragging in trees, rural roads and farmland, they said. “The damage is catastrophic,” said Brad Foster, who has waterfront property in Marysville (Yuba County), about 25 miles south of Lake Oroville.The farmer not only saw 25-foot bluffs collapse, but also lost irrigation lines to his almonds. “When the bank pulled in,” he said, “it pulled the pumps in with it. It busted the steel pipes.”Officials at the state Department of Water Resources, which runs the dam, said Friday that they’re monitoring the river for erosion. But they declined to discuss the situation. The department is already wrestling with the problem of endangered salmon becoming trapped in riverbed pools since the outflows at the dam were cut. The falling riverbanks, reported mainly in Sutter and Yuba counties, are just the latest outgrowth of the state being forced to quickly increase and decrease flows from the swollen reservoir since early February.

NASA Data Show California’s San Joaquin Valley Still Sinking - Since the 1920s, excessive pumping of groundwater at thousands of wells in California’s San Joaquin Valley has caused land in sections of the valley to subside, or sink, by as much as 28 feet (8.5 meters). This subsidence is exacerbated during droughts, when farmers rely heavily on groundwater to sustain one of the most productive agricultural regions in the nation. Long-term subsidence is a serious and challenging concern for California’s water managers, putting state and federal aqueducts, levees, bridges and roads at risk of damage. Already, land subsidence has damaged thousands of public and private groundwater wells throughout the San Joaquin Valley. Furthermore, the subsidence can permanently reduce the storage capacity of underground aquifers, threatening future water supplies.  An initial report of NASA’s Jet Propulsion Laboratory’s findings (Aug. 2015) analyzed radar data from several different sensors between 2006 and early 2015. Due to the continuing drought, DWR subsequently commissioned JPL to collect and analyze new radar images from 2015 and 2016 to update DWR on the land subsidence. Several trouble spots identified in the first report continue to subside at rates as high as 2 feet (0.6 meters) a year. Significant subsidence was measured in two subsidence bowls located near the towns of Chowchilla, south of Merced; and Corcoran, north of Bakersfield. These bowls cover hundreds of square miles and continued to grow wider and deeper between May 2015 and Sept. 2016. Maximum subsidence during this time period was almost 2 feet (0.6 meters) in the Corcoran area and about 16 inches (41 centimeters) near Chowchilla. Subsidence also intensified near Tranquility in Fresno County during the past year, where the land surface has settled up to 20 inches (51 centimeters) in an area that extends 7 miles (11 kilometers). Subsidence in these areas affects aqueducts and flood control structures. Small amounts of land subsidence were also identified in the Sacramento Valley near Davis and Arbuckle. A small area observed for the first time in Sierra Valley, north of Lake Tahoe, shows about 6 inches (15 centimeters) of subsidence.

Red State Rural America Is Acting on Climate Change — Without Calling It Climate Change -- My colleagues and I did a survey of over 200 local governments in 11 states of the Great Plains region to learn about steps they’re taking to mitigate the effects of climate change and to adapt to them. We found local officials in red states responsible for public health, soil conservation, parks and natural resources management, as well as county commissioners and mayors, are concerned about climate change, and many feel a responsibility to take action in the absence of national policy. But because it is such a complex and polarizing topic, they often face public uncertainty or outrage toward the issue. So while these local officials have been addressing climate change in their communities over the past decade, many of these policy activities are specifically not framed that way. As one respondent to our survey said: “It is my personal and professional opinion that the conservation community is on track with addressing the issue of climate change but is way off track in assigning a cause. The public understands the value of clean water and clean air. If the need to improve our water quality and air quality was emphasized, most would agree. Who is going to say dirty water and dirty air is not a problem? By making the argument ‘climate change and humans are the cause’ significant energy is wasted trying to prove this. It is also something the public has a hard time sinking their teeth into.” In order to address the vulnerabilities facing their communities, many local officials are reframing climate change to fit within existing priorities and budget items. In a survey of mayors, we asked: “In your city’s policy and planning activities (for energy, conservation, natural resources management, land use, or emergency planning, etc.) how is climate change framed?” The following quotes give a sense of their strategies.

Hawaii Had More Snow This Week Than Denver Or Chicago Has Had All Year - The mountaintops on Hawaii's Big Island are no strangers to snow.  The National Weather Service issued a blizzard warning in Hawaii this week. While that may sound peculiar, it’s not all that extraordinary. It snows nearly every year on the Big Island’s tallest mountains, where the warning was issued. But during that blizzard, which lasted late Tuesday to early Wednesday, the Big Island received more snow than Denver has received all year, according to Fox 31 Denver. Indeed, this week’s blizzard left up to 8 inches of snow on Mauna Kea and Mauna Loa, which are both more than 13,000 feet high, USA Today reported. Denver, on the other hand, has had a total of only 7.9 inches of snow measured in 2017. However, the Mile High City has had 19.3 inches of snow for the winter season, according to CBS Denver.Hawai‘i just got more snow in a day than Chicago has gotten all year. Please always respect the mauna https://t.co/cDlqhxBi6u @abcactionnews pic.twitter.com/QoVxvAEAID The Big Island’s peaks even saw more snow than Chicago, which documented zero snow on the ground in January and February for the first time in 146 years, The Chicago Tribune reported. Chicago’s measurements don’t include any snow that may have fallen and melted after 6 a.m., which is when the National Weather Service measures the snow. Some experts are chalking up Chicago’s lack of snow to climate change, according to the Tribune.

Alaska’s Big Problem With Warmer Winters --  From 1932 to 2017, the daily minimum temperature in Homer, a city on the eastern shore of the inlet, averaged 19F in February. Narrow that to the past 10 years and the average rises to 21F; for the past five years, 25F. Last February, Homer’s daily low averaged 30F—just two degrees colder than in Washington, D.C., 1,200 miles closer to the Equator. Precipitation that used to fall as snow lands as rain, eroding the coastal bluffs and threatening the only road out of town. Less snow means less drinking water in Homer’s reservoir; it also means shallower, warmer streams, threatening the salmon that support Cook Inlet’s billion-dollar fishing industry.Heavier storm surges are eating away at Homer’s sea wall, which no insurance company will cover and which the city says it couldn’t pay to replace. Warmer water has also increased toxic phytoplankton blooms that leach into oysters and clams. When eaten by humans, the toxins can cause amnesia, extreme diarrhea, paralysis, and death. Homer is lucky compared with some villages on Alaska’s western coast that are falling into the ocean. Those villages have asked for hundreds of millions of dollars to be relocated inland. “I’m up against other places that are losing their infrastructure or have severe problems due to flooding,” says Rick Abboud, Homer’s city planner. Last year, Abboud asked the state for $300,000 to pay for a plan to cope with a growing stormwater problem. He didn’t get it.  Across Alaska, in towns built on permafrost, rising temperatures are causing the ground to sink, damaging buildings and roads. In towns built on the coast, less sea ice means greater exposure to storms and floods. Drier conditions have led to more forest fires. Extreme weather killed or injured as many Alaskans in 2015 as in the previous 10 years combined. “Environmental change is not a theoretical in Alaska,” says Rick Thoman, the state’s climate sciences and services manager for the National Weather Service. “It’s happening, and it’s accelerating.”

Drought Conditions at Lowest Point Since 2010 - Nationally, we are seeing extreme to exceptional (D3 to D4) drought conditions fall to their lowest point in more than 6 years. Nowhere is that change more dramatic than in California. The current (February 21, 2017) Drought Monitor for California notes the disappearance of D3/D4 from California. At the California drought's peak from August-October 2014, that percentage was nearly 82 percent. As recently as early-December 2016, coverage of D3/D4 in California stood at 43 percent. Economic impacts of the California drought are difficult to estimate, but researchers at the University of California estimate that the drought in 2016 alone resulted in resulted in $247 million loss of farm-gate revenues, and 1,815 full and part time jobs. When spillover effects to other parts of the economy are considered, total impacts are estimated to be 4,700 full and part time jobs and $600 million in sector output losses. Those costs were likely higher in 2014 and 2015 due to more severe drought conditions. Data from the California Department of Water Resources indicates the snow that fell across the Sierra Nevada in January alone contained an average of two feet of liquid--more than 80 percent of the normal seasonal total. Adding snow that accumulated from October-December 2016 and during the first three weeks of February, the Sierra Nevada is ensured of an above-average snowpack for the first time in six years when the traditional peak snowpack date arrives on April 1. While most decisions about water allocations are made at the state level, the abundance of precipitation during California's wet season; the promise of abundant, snowmelt-driven spring and summer runoff; and an already dramatic increase in statewide reservoir storage all bode well for a general easing of water restrictions in the wake of the five-year drought and for agriculture in general, the largest user of California's stored water.

Second Warmest U.S. February on Record: Chalk It Up to Greenhouse Gases - As suggested by plants budding and blooming several weeks ahead of schedule, last month placed second among all U.S. Februaries in records going back 123 years, according to NOAA’s National Centers for Environmental Information. In its quarterly climate summary, NCEI announced that the 48 contiguous United States saw its second warmest February and sixth warmest winter (December - February) on record.   The month’s warmth was remarkably widespread. Every contiguous state but Washington came in above average, and 16 states from Texas to New York had their warmest February on record (see Figure 2). The warmth and a fast-drying landscape helped pave the way for enormous wildfires that raged across the Southern Plains on Monday, killing at least seven people. The most spectacular index of February’s warmth is the 28-to-1 ratio of daily record highs (11,743) to daily record lows (418) noted in Wednesday’s report. When it comes to all-time monthly records, the ratio was even more wildly skewed: 1151 to 2.As shown in Figure 3, NOAA data show that only February 1954 (average temperature of 41.41°F) topped February 2017 (average 41.16°F). The only other February to rack up an average above 40°F was in 1930. It’s noteworthy that February 2017 was much less of a leap from the “new normal” than its rivals. Against the long-term linear trend of the last century (the blue line in Figure 3), last month came in about 5°F above the trend line, whereas February 1954 was nearly 7.5°F above the trend line.  The message here is that it’s not as difficult to get this kind of February warmth as it used to be. Increased greenhouse gases are the main reason, according to a study released Wednesday by the World Weather Attribution project. The WWA, led by Climate Central with several partners worldwide, uses observations and in-depth climate modeling to provide prompt assessments of how recent weather and climate events fit into the context of a changing planet.

February record warm for 16 states, 145M Americans -- The USA might not have recorded its warmest winter since data-keeping began more than 120 years ago, but it didn't feel that way for nearly half of Americans whose states sweltered through their warmest February on record.  Overall, the country recorded its 2nd-warmest February since climate tracking started in 1895, and its 6th-warmest winter, federal scientists announced Wednesday. Sixteen states experienced their warmest February ever recorded.The average U.S. temperature last month soared to 7.3 degrees above average, scientists from NOAA’s National Centers for Environmental Information said. Only February 1954 was warmer. Cities and towns across the nation tallied an incredible 11,743 record highs compared to 418 record lows in February — the highest ratio of highs to lows, meteorologist Guy Walton said.Some scientists already blame human-caused climate change for playing a role in the extreme February heat. “We found clear and strong links between last month’s record warmth in the United States, and climate change,” said Geert Jan van Oldenborgh, senior researcher at the Netherlands Meteorological Institute.Using observational data and computer models, scientists found that greenhouse gas emissions have increased the probability of extreme heat in February roughly threefold, said Claudia Tebaldi, a climate statistician with Climate Central and the National Center for Atmospheric Research. Other notable weather anomalies last month included Massachusetts' first February tornado on record and Chicago's third snow-free February, NOAA said.

Records tumble through Straya’s “angry summer” - From the Climate Institute annual report:

  • 1. The Australian summer of 2016/17 marked the return of the Angry Summer with record-breaking heat especially in the east of the nation. The Angry Summer was characterised by intense heatwaves, hot days and bushfires in central and eastern Australia, while heavy rainfall and flooding affected the west of the country. Noteworthy records from this summer include:
    • In just 90 days, more than 205 records were broken around Australia.
    • The state-wide mean temperature in summer was the hottest for New South Wales since records began, with temperatures 2.57°C above average.
    • Sydney had its hottest summer on record with a mean temperature 2.8°C above average.
    • Brisbane had its hottest summer on record in terms of mean temperature at 26.8°C, equivalent to 1.7°C above average.
    • Canberra had its hottest summer on record in terms of daytime temperatures and recorded temperatures of at least 35°C on 18 days, already far higher than what is projected for 2030 (12 days).
    • Adelaide experienced its hottest Christmas day in 70 years at 41.3°C.
    • Moree in regional New South Wales experienced 54 consecutive days of temperatures 35°C or above, a record for the state.
    • Perth had its highest summer total rainfall on record of 192.8 mm.
  • 2. Climate change is driving hotter, longer lasting and more frequent heatwaves..
  • 3. Escalating extreme weather is putting Australia’s ageing energy system under intense pressure.
  • 4. The costs of the extreme heat are clear with reduced work productivity, increasing risk of bushfires and escalating damage to the Great Barrier Reef.
    • The impacts of the last Angry Summer of 2013/14 cost the Australian economy approximately $8 billion through absenteeism and a reduction in work productivity. The economic impact from the 2016/17 Angry Summer has not yet been quantified.
    • Above-average sea surface temperatures this summer have triggered a new bleaching outbreak on the Great Barrier Reef. This follows the worst mass bleaching event in the reef’s history in 2016.
    • Extreme fire weather is increasing in Australia’s southeast. During the most severe heatwave of this recent Australian summer, nearly 100 bushfires were ignited and raged through parts of inland New South Wales

Australia placed on El Niño 'watch' as weather bureau puts chance at 50% for 2017 -- Australia could be heading into another El Niño year according to new analysis by the Bureau of Meteorology, which found the chance Australia would be affected by the phenomenon in 2017 had increased to 50%. Six of the eight models used by Australian climatologists to predict El Niño and La Niña events indicate the El Niño threshold could be reached by July, while seven indicate a steady warming in the Pacific Ocean over the next six months. El Niño is declared when temperatures in the tropical Pacific Ocean are 0.8C above average, and brings a dry winter and spring to southern Australia and a warmer than average spring and summer to the eastern states. It comes as the Bureau of Meteorology (BoM) confirmed Sydney had just experienced its hottest summer on record, with mean temperatures 2.8C above the long-term average. Sydney experienced a record-breaking 26 days of 30C or higher and 11 days of 35C or higher. In 2015 Pacific Ocean temperatures increased to 2C above average, causing the most severe El Niño since the late 1990s. BoM manager of climate prediction services, Dr Andrew Watkins, said it could mean a return to difficult conditions for Australian farmers after what he described as a “neutral” year in 2016, which produced the best season in decades for Australian grain growers. “We have been seeing a fairly steady warming up of those waters [in the tropical Pacific Ocean] since the start of the year,” Watkins said.

There’s Been Another Mass Coral Bleaching Event On The Great Barrier Reef -- Images released by Greenpeace show another year of above average water temperatures is “cooking the reef alive”, according to biologist Brett Monroe Garner. “I’ve been photographing this area of the reef for several years now and what we’re seeing is unprecedented,” Monroe Garner said. “In these photos, nearly 100% of the corals are bleaching, and who knows how many will recover. Algae is already beginning to overgrow many of the corals.” In 2016, scientists confirmed a coral die-off as a result of a sustained period of bleaching was the worst on record, with more than two-thirds of corals killed in some areas. Coral bleaching occurs when abnormally high sea temperatures cause corals to expel tiny photosynthetic algae called zooxanthellae, turning the coral white, often killing it. The Greenpeace findings are backed by Terry Hughes from James Cook University’s Centre of Excellence for Coral Reef Studies, who called the second bleaching event the “worst kept secret in the world”. Hughes, who begins his own aerial survey of the reef next week, warns that as bleaching events occur more frequently, affected corals will never be given a chance to fully recover, putting the reef in severe danger. “What’s happening with global warming is that these events are becoming the new normal,” he told BuzzFeed News. “The gap between them is becoming shorter and shorter. This is the first time we’ve had back-to-back bleaching. It’s a real wake up call.” Hughes warns that Australia and governments around the world are not doing enough to act on climate change.

Fish under threat from ocean oxygen depletion, finds study - The depletion of oxygen in our oceans threatens future fish stocks and risks altering the habitat and behaviour of marine life, scientists have warned, after a new study found oceanic oxygen levels had fallen by 2% in 50 years. The study, carried out at Geomar Helmholtz Centre for Ocean Research in Germany, was the most comprehensive of the subject to date. The fall in oxygen levels has been attributed to global warming and the authors warn that if it continues unchecked, the amount of oxygen lost could reach up to 7% by 2100. Very few marine organisms are able to adapt to low levels of oxygen. The paper contains analysis of wide-ranging data from 1960 to 2010, documenting changes in oxygen distribution in the entire ocean for the first time. “Since large fish in particular avoid or do not survive in areas with low oxygen content, these changes can have far-reaching biological consequences,” said Dr Sunke Schmidtko, the report’s lead author. Some areas have seen a greater drop than others. The Pacific – the planet’s largest ocean – has suffered the greatest volume of oxygen loss, while the Arctic witnessed the sharpest decline by percentage. “While the slight decrease of oxygen in the atmosphere is currently considered non-critical, the oxygen losses in the ocean can have far-reaching consequences because of the uneven distribution,” added another of the report’s authors, Lothar Stramma.It is increasingly clear that the heaviest burden of climate change is falling on the planet’s oceans, which absorb more than 30% of the carbon produced on land. Rising sea levels are taking their toll on many of the world’s poorest places. Warming waters have devastated corals – including the Great Barrier Reef – in bleaching events. Acidic oceans, caused by a drop in PH levels as carbon is absorbed, threaten creatures’ ability to build their calcium-based shells and other structures. Warming waters have also caused reproductive problems in species such as cod, and triggered their migration to colder climates. Lower oxygen levels in larger parts of the ocean are expected to force animals to seek out ever shrinking patches of habitable water, with significant impacts on the ecosystem and food web.

Warming may disrupt four-fifths of world's oceans by 2050: study | Reuters: Global warming will disrupt four-fifths of the world's oceans by 2050 if greenhouse gas emissions keep rising, threatening fish that are the main source of food for a billion people, scientists said on Tuesday. Curbs on man-made emissions, however, would give marine life more time to adapt to warming conditions or for marine life from algae to cod to shift to cooler waters nearer the poles, they said. "By 2050 around four-fifths of the ocean surface will be affected by ocean acidification and ocean warming," lead author Stephanie Henson, of the British National Oceanography Centre in Southampton, told Reuters of the findings. Carbon dioxide, the main greenhouse gas, forms a weak acid in water. Currently, only about 10 percent of the oceans are under stress from the twin impacts of high temperatures and acidification, she said. Cuts in greenhouse gas emissions, in line with goals set by almost 200 nations under a Paris Agreement on climate change in 2015, could limit the impact to two-thirds of the ocean by 2050, giving marine life more time to adapt, the scientists said. Declines in the amount of oxygen in the waters and a reduction in nutrients, both linked to climate change, would add to stresses on the oceans this century, they wrote. Figuring out the impact is important because one in seven of the world's population, or about a billion people, depend on the oceans as the main source of protein, according to the experts in Germany, the United States, France, Norway and Britain.The effects on individual species - such as lobsters, herring, sharks or whales - and on the ocean life as a whole were "poorly understood", they wrote in the journal Nature Communications.

Enjoy NOAA's vital satellite imagery, while you still can… U.S. satellites help us predict and prepare for powerful storms, even before they arrive at our door. The data let us to monitor climate change and map the effects on coastlines, glaciers, oceans and land. With satellite systems, we can tell when it's safe to fly a plane, steer a ship or drive a car.   This research — and far more — all falls largely under the umbrella of the National Oceanic and Atmospheric Administration (NOAA), one of the top U.S. climate science agencies. Yet NOAA may soon be forced to dial back or pause some of this work if the Trump administration succeeds in slashing the agency's budget.  The White House aims to cut NOAA's funding by 17 percent from current levels, according to a four-page budget memo obtained by the Washington Post last week. That includes eliminating $513 million, or 22 percent, of the current funding for NOAA's satellite division, and slashing another $216 million, or 26 percent, from NOAA's Office of Oceanic and Atmospheric Research.  Scientists said the deep cuts at NOAA would not only jeopardize academic research but also our ability to withstand storms and adapt to the effects of human-caused global warming.  For those unfamiliar with NOAA — and for all the weather and climate geeks — here's a quick tour of the agency's latest satellite-driven research.

Siberia's 'doorway to the Underworld' Is Getting So Big It's Uncovering Ancient Forests --It's no secret that Siberia's permafrost has been on thin ice lately. Conditions are varying so much that huge holes are appearing out of nowhere, and, in some places, tundra is quite literally bubbling underneath people's feet.But new research has revealed that one of the biggest craters in the region, known by the local Yakutian people as the 'doorway to the underworld', is growing so rapidly that it's uncovering long-buried forests, carcasses, and up to 200,000 years of historical climate records.  Known as the Batagaika crater, it's what's officially called a 'megaslump' or 'thermokarst'.  Not only is the crater already the largest of its kind, almost 1 km (0.6 miles) long and 86 metres (282 feet) deep, but it's getting bigger all the time. Research presented last year by Frank Günther from the Alfred Wegener Institute in Germany revealed that the head wall of the crater has grown by an average of 10 metres (33 feet) per year over the past decade of observations. And in warmer years, the growth has been up to 30 metres (98 feet) per year. The team also suspects that the side wall of the crater will reach a neighbouring valley in the coming months as temperatures heat up in the Northern Hemisphere, which could lead to even more land collapse.As the crater continues to melt, these greenhouse gases could be released into the atmosphere, triggering more warming. "This is what we call positive feedback," added Günther. "Warming accelerates warming, and these features may develop in other places. But it's not all terrible news. A study published this month in the journal Quaternary Research has shown that the layers exposed by the crater could now reveal 200,000 years of climate data.  That's in addition to the preserved remains of long-buried forests, ancient pollen samples, and even the frozen remains of a musk ox, mammoth, and a 4,400-year-old horse.

Sea Ice Extent in Antarctica Bottoming Out at Lowest on Record - As summer draws to a close across the Southern Hemisphere, the extent of sea ice ringing Antarctica has fallen to the lowest values ever observed in satellite records dating back to 1979. On Wednesday, March 1, the daily extent data from the National Snow and Ice Data Center (NSIDC) showed 2,109,000 square kilometers of Antarctic sea ice, its lowest value on record. That value nudged up slightly on Thursday, but a more useful measure, the five-day rolling average, hit its lowest value yet on Thursday (see Figure 1 below). Update: The five-day average fell even lower on Friday, March 3, dropping from 2,113,000 to 2,106,000 sq. km. We can expect the regular autumn rebound in southern ice to kick in very soon now. However, this has been a notably persistent melt season--one that wouldn’t take too much longer to break a record for tardiness. If Thursday’s five-day average turns out to be the lowest for the summer, it will be tied with March 2, 1991 for third-latest minimum behind March 6, 1986 and March 3, 2003.“It could start trending upward any day,” sea ice expert Walt Meier (NASA Goddard Space Flight Center) told me on Thursday. “Of course, this year has been rather unusual, so it would not surprise me to see it going into unprecedented territory.”  For now, at least, Antarctic sea ice has relinquished its role as a poster child for counterintuitive events on a warming planet. Unlike the Arctic, where sea ice extent, area and thickness have all undergone dramatic dips consistent with human-produced climate change, the Antarctic has not only held its own but expanded to record-high extents at times. The southern summers of 2013, 2014, and 2015 each retained enough sea ice to rank among the five highest minimums in yearly extent since 1979. 

Antarctic Sea Ice Sets Record Low, Providing Another Mystery for Scientists - A new record warm temperature for Antarctica was confirmed by the World Meteorological Organization as sea ice surrounding the continent has shrunk to a record low.The temperature reached its record high of 63.5 degrees Fahrenheit on March 24, 2015, according to an announcement by the WMO, which often takes years to verify new records.The news came as sea ice around Antarctica is experiencing its lowest extent ever. As of March 1, only 820,000 square miles of the ocean around Antarctica was covered in ice, according to data from the National Snow and Ice Data Center in Boulder, Colo. The loss of ice represents an all-time minimum for Antarctic sea ice cover since satellite observations began in 1979. The current decline, however, may not be part of a larger climate change trend. The low point comes less than three years after Antarctic sea ice set a record high in October 2014. "If you look at the long-term trend, Antarctic sea ice is still increasing slightly, said Son Nghiem, a researcher with NASA's Jet Propulsion Laboratory. That increase has provided fodder for climate denial arguments and was a mystery to scientists because it differed so greatly from the rapid melting occurring in the Arctic. But recent research has provided clues to the reasons. The continent's unique topography shields it from warming occurring elsewhere, Nghiem said.

No words for this: both Antarctic and Arctic sea ice extents are at record lows --Tenney Naumer -  OK, this has never occurred before in recorded history, so far as we know, since of course we have not had good measurements of the sea ice around Antarctica for that long - maybe since 1979 about when satellite observations began. But the record-low sea ice in the Arctic should not be all that surprising given the extraordinarily high temperatures that have occurred in that region all winter long. In the Arctic, during March-April-May, generally speaking, if the Arctic Oscillation (AO) Index is positive, a lot of warm air flows into the Arctic via the North Atlantic, causing that side of the Arctic to lose sea ice extent.  The AO Index has been positive for a few weeks, but it looks like the Index may be heading back to neutral or negative territory.  If the extent continues to go down in spite of this, then we really do have an amazing situation going on.  (graphs)

Arctic sea ice may vanish even if world achieves climate goal: study | Reuters: Arctic sea ice may vanish in summers this century even if governments achieve a core target for limiting global warming set by almost 200 nations in 2015, scientists said on Monday. Arctic sea ice has been shrinking steadily in recent decades, damaging the livelihoods of indigenous peoples and wildlife such as polar bears while opening the region to more shipping and oil and gas exploration. Under the 2015 Paris Agreement, governments set a goal of limiting the rise in average world temperatures to well below 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial times, with an aspiration of just 1.5C (2.7F). "The 2 degrees Celsius target may be insufficient to prevent an ice-free Arctic," James Screen and Daniel Williamson of Exeter University in Britain wrote in the journal Nature Climate Change after a statistical review of ice projections. A 2C rise would still mean a 39 percent risk that ice will disappear in the Arctic Ocean in summers, they said. Ice was virtually certain to survive, however, with just 1.5C of warming. And they said they estimated a 73 percent probability that the ice would disappear in summer unless governments make deeper cuts in emissions than their existing plans. They estimated temperatures will rise 3C (5.4F) on current trends. In March 2017, the extent of Arctic sea ice is rivaling 2016 and 2015 as the smallest for the time of year since satellite records began in the late 1970s. The ice reaches a winter maximum in March and a summer minimum in September. "In less than 40 years, we have almost halved the summer sea ice cover,"

Trump Files Motion to Delay Kids' Historic Climate Lawsuit  - The Trump administration filed a motion Tuesday seeking an appeal to the Ninth Circuit Court of Appeals on a federal judge's Nov. 10, 2016 order in Juliana v. United States . The Trump administration also filed a motion to delay trial preparation until after its appeal is considered. Further, the Trump administration asked for expedited review of both motions, arguing the plaintiffs' Jan. 24 letter requesting the government to retain records relating to climate change and communications between the government and the fossil fuel industry was overly burdensome. The excerpt from the government's stay motion said: "Plaintiffs … intend to seek discovery relating to virtually all of the federal government's activities relating to control of CO2 emissions ... Compounding the United States' burdens, Plaintiffs have indicated that their intended discovery has a temporal scope of more than sixty years ... Absent relief, there will most certainly be depositions of federal government fact witnesses ... that will explore the extraordinarily broad topic of climate change and the federal government's putative knowledge over the past seven decades." Yet, in another complex case regarding the Deepwater Horizon oil spill and BP, the U.S. produced more than 17 million pages of documents from April to September of 2011. Plaintiffs maintain that their requests are limited, reasonable and aimed at getting to trial this fall.

Scientists could end up flying blind about Arctic sea ice at the worst possible time: All is not well in the Arctic, where sea ice is in a long-term precipitous decline due to human-caused global warming. In February, for example, Arctic sea ice set a monthly record low, with sea ice extent coming in 455,600 square miles below the February 1981 to 2010 average. That means that, at the end of February, the Arctic was missing an ice chunk the size of Texas, California and West Virginia combined, thanks to an unusually warm winter and long-term climate change. That's a lot of missing sea ice.To track sea ice trends, scientists have been using microwave sensors aboard Defense Department weather satellites that pass near the North Pole, but recent failures in key instruments plus delays in planning and launching next generation satellites means we may soon be flying blind in the Far North at the worst possible time. The National Snow and Ice Data Center (NSIDC) in Boulder, Colorado, which tracks sea ice trends, warned in a news release on Tuesday that satellite data gaps may soon cause sea ice observations to go dark for a few years. The specific timeframe they're concerned about is the period between now and 2023. The reasons for the concern are a little wonky, but they amount to a combination of aging, increasingly unreliable sensors aboard current satellites, a Pentagon decision not to launch a replacement satellite for one that failed on Feb. 11, 2016, and the likelihood that no new satellite with the necessary hardware will be in orbit until 2023 at the earliest.

Trump plan for 40% cut could cause EPA science office ‘to implode,’ official warns -- In 2015, when the U.S. Environmental Protection Agency (EPA) in Washington, D.C., unveiled a controversial regulation aimed at improving protection for wetlands and small streams, officials pointed to a 400-page technical tome assembled by agency researchers as the rule’s scientific foundation and justification. But that document carried little sway this week as President Donald Trump signed an executive order aimed at gutting the rule.Now, the White House wants to dramatically slash the budget of the EPA science office that produced that report, employs some 1700 researchers and others, and runs essentially all of the agency’s other major scientific activities.The Trump administration wants to cut spending by EPA’s Office of Research and Development (ORD) by more than 40% from roughly $510 million to $290 million, according to sources that have seen preliminary directives from the White House’s Office of Management and Budget (OMB). The cuts target scientific work in fields including climate change, air and water quality, and chemical safety. EPA’s $50 million external grant program for environmental scientists at universities would disappear altogether. Such erasures represent just part of a larger plan to shrink EPA’s budget by 25% to $6.1 billion, and cut its workforce by 20% to 12,400 employees, in the 2018 fiscal year that begins 1 October. The cuts are needed, the OMB guidance suggests, to help reduce the burden that EPA regulations place on industry and state and local governments. But environmental scientists, regulators, and current and former EPA officials warn the reductions would devastate the agency’s efforts to carry out its mission of protecting human health and the environment. The proposed cuts could cause EPA’s research office “to implode,” warns a senior EPA official. “This is serious stuff. We’re all concerned about what might happen, not just to our livelihoods, but to our ability to support the agency’s mission,” “This is a premier research organization, and it doesn’t take much for the best and the brightest to start looking for other places for work.”

'Just racist': EPA cuts will hit black and Hispanic communities the hardest -- Donald Trump’s administration is proposing a 25% reduction in the EPA’s $8.1bn budget, eliminating nearly 3,000 jobs and several programs including the agency’s environmental justice office. Funding for the cleanup of lead, marine pollution, tribal lands and the Great Lakes region faces severe cuts, while climate initiatives are earmarked for a 70% budget reduction.  The environmental justice office is tasked with bridging the yawning disparity in pollution experienced by black, Hispanic and low-income communities and wealthier white neighborhoods. It provides grants to communities to mop up toxins and rehabilitate abandoned industrial facilities that are invariably found in poorer areas. In the final months of Barack Obama’s administration, the EPA unveiled a new effort to tackle lead poisoning, air pollution and other problems suffered by communities of color situated next to waste treatment plants, smelters and other sources of toxins. But this plan will be cut down in its infancy should the environmental justice office be dismantled. “The Trump administration has decided fence-line communities across the country, whose residents already bear an outsized burden from pollution, are on their own to take on big polluters,” said Ken Cook, president of the Environmental Working Group, an advocacy organization.“Most pollution-spewing operations are within eyeshot of the backyards and kitchen windows of African American and Hispanic families, as well as those of many largely white lower-income communities. “Through this decision to zero out funding for the EPA’s environmental justice programs, the president and the administrator have sent a shameful message: the health of poor Americans is less important than that of the wealthy.”

EPA Chief Scott Pruitt Discounts Carbon’s Role in Warming Planet - Scott Pruitt, the head of the Environmental Protection Agency, said he does not believe carbon dioxide is the main cause of climate change, and pledged to listen to industries’ concerns before issuing new regulations. "Measuring with precision human activity on the climate is something very challenging to do, and there’s tremendous disagreement about the degree of impact," Pruitt said on CNBC’s "Squawk Box" on Thursday. "So no, I would not agree it’s a primary contributor to the global warming that we see." In an interview with Bloomberg News, Pruitt said the Trump administration wouldn’t defend the EPA’s Clean Power Plan in court and stressed that carbon dioxide emissions have fallen to the lowest level in decades without any government intervention. He credited innovations in the oil and gas sector for the decline. "I believe it’s because of horizontal drilling and hydraulic fracturing," he said, which has led to greater use of natural gas. And he criticized environmentalists who want to curb carbon emissions but do not support nuclear power. Pruitt, who was sworn in last month to lead the EPA, said during his confirmation hearing that humans were responsible for global warming, but also stressed he wasn’t sure how much. His comments Thursday, delivered ahead of an address to the CERAWeek energy conference in Houston, went further to discount the role of people.

House committee passes two EPA science bills | TheHill: The House Science Committee on Thursday approved two bills to reform how the Environmental Protection Agency conducts scientific research. The committee, led by Chairman Lamar Smith (R-Texas), approved a bill requiring the EPA to publicly release scientific research it uses to write regulations. Smith’s bill is similar to legislation introduced and passed by the House in each of the last two Congresses. He said the legislation would end the EPA’s use of “secret” science and “ensure sound science is the basis for EPA decisions and regulatory actions.”“The days of trust-me science are over,” he said. “In our modern information age, federal regulations should be based only upon data that is available for every American to see and can be subjected to independent review. That’s the scientific method.” Members also approved legislation from Rep. Frank Lucas (R-Okla.) to overhaul the EPA’s Science Advisory Board by opening it up to new membership, requiring more information from its members and expanding public comment on its actions. “We must reaffirm the board’s independence so that the public can be confident policy decisions are not hijacked by a pre-determined political agenda,” he said. The committee approved Smith’s bill on a 17-12 vote; Lucas’s bill passed 19-14, with Democrats opposing both measures.

Oil exec: Trump should keep US in Paris climate pact | TheHill: The head of oil giant ConocoPhillips said President Trump should keep the United States in the landmark Paris climate change agreement. Ryan Lance, whose company is one of the largest oil and natural gas producers, gave the comment at an industry conference in Houston. “It would be good for the U.S. to stay in the climate agreement,” Lance said after giving a speech, according to Axios. Lance puts ConocoPhillips in the same league as Exxon Mobil Corp. and numerous oil companies outside the United States in supporting the Paris pact, like BP and Royal Dutch Shell. Trump promised on the campaign trail to pull the United States out of the agreement, a four-year process. He so far has not taken any action to exit the accord, which includes non-binding greenhouse gas emissions limits that nearly 200 countries determined on their own. Officials in the Trump administration have taken different public positions on the pact. Secretary of State Rex Tillerson, who used to be Exxon Mobil’s CEO, wants to stay in the accord, while White House chief strategist Stephen Bannon opposes it. The president's daughter Ivanka Trump and her husband, presidential adviser Jared Kushner, reportedly convinced Trump to delete criticism of the Paris agreement form an upcoming executive order.

  'Green' funds flush with new cash, challenges as Trump era dawns | Reuters: Environmentally conscious investors are using their pocketbooks to protest President Donald Trump's plans to slash environmental regulations, fueling a rally in funds that only invest in companies that meet progressive criteria for sustainability. From the start of November to the end of January, investors poured $1.8 billion into actively managed equities funds in the "socially responsible" category, according to Lipper data. In the same period, there was a net outflow of $133 billion from funds that do not have environmental or social mandates. Trump was elected president on Nov. 8. Investors worried that Trump's policies may imperil causes they believe in are hoping an influx of flows will help keep companies alive. "If clients see the federal government withdrawing from a space they think is important, they may actually be more active in wanting to enforce their views through the dollars allocated," said Vincent Reinhart, chief economist at Standish Mellon Asset Management. The inflows are a boon for fund managers but also a challenge, requiring them to find companies whose share prices have a chance to climb despite less favorable federal policies

Climate scientists and weather forecasters outraged by proposed cuts to NOAA -- The Trump administration has proposed a 17 percent cut to the budget of the National Oceanic and Atmospheric Administration, according to a four-page budget document obtained by The Washington Post and reported on Friday. Several leaders in the weather and climate community have expressed exasperation, saying such cuts would profoundly set back advances in weather prediction and climate science. Some said they could even cost lives.NOAA, which is part of the Department of Commerce, houses the National Weather Service and the divisions responsible for weather satellites and atmospheric research. The weather satellite division, known as the National Environmental Satellite, Data and Information Service, would be hardest hit by the proposed cuts. The administration proposes slashing its budget by $513 million in the 2018 fiscal year, which starts Oct. 1.  Data from weather satellites are indispensable for models used to predict the weather. NOAA has conducted experiments that show that forecasts for costly and deadly storms would be far less accurate without such information.  The administration’s proposed budget would only partially fund the “Polar Follow On” satellites, two polar-orbiting satellites planned for launch in 2024 and 2026. The budget proposal asks NOAA to instead “work with its partners and OMB [Office of Management and Budget] to develop options for re-phasing the program with later launch-readiness dates, with the goal of lowering annual costs.” Delaying the launch of those satellites is the “exact opposite” of what is needed and could lead to gaps in coverage, said Jonathan Malay, a past president of the American Meteorological Society who worked in the satellite industry. “They need to be flown earlier not later to assure continuity in observations,” he said. “NOAA satellites save lives and protect our country. It’s time to stop apologizing that they cost a lot of money.”

NOAA Cuts Could Stymie Research, Put Lives at Risk -- On Friday, the meteorology community was riding a major high as stunningly high-definition images came in from the nation’s newest and much-anticipated earth observation satellite. The high came crashing down that evening, though, as the first hints of significant cuts to the budget of the National Oceanic and Atmospheric Administration began to emerge. NOAA oversees weather forecasting and is a major funder of weather and climate research. If these cuts — which an Office of Management and Budget document obtained by the Washington Post pegged at 17 percent agency-wide — materialize, they could significantly hamper improvements in weather forecasting and climate modeling and put the public at risk, experts warned. “Any weakening of our technological, scientific, and human capabilities related to weather and climate places American lives and property at risk,” Marshall Shepherd, director of the atmospheric science program at the University of Georgia and a former president of the American Meteorological Society, said in a Forbes blog post. The proposal “is opposite to the ‘leave it better than you found it’ philosophy. This is take the money while you can, and let someone else in the future put Humpty Dumpty (aka NOAA) together again,”David Titley, director of the Center for Solutions to Weather and Climate Risk at Penn State and a retired rear admiral in the Navy, said in an email.

 New Interior secretary 'not happy’ about budget proposal | TheHill: The new head of the Interior Department told employees Friday he is “not happy” about the agency’s upcoming budget request crafted by the White House. “I looked at the budget,” Interior Secretary Ryan Zinke said in his first address to employees. “I’m not happy. We’re going to fight about it, and I think I’m going to win at the end of the day." Zinke told reporters after the speech that he has concerns with certain spending accounts in the White House’s proposed budget, noting programs like wildfire management and a property tax reimbursement program for counties with large areas of federal land.“A lot of it is: new administration comes in, my ability to articulate with the expert staff on why we need to prioritize infrastructure, on why some of the line items of the budget need to be adjusted,” he said. “It’s negotiated, so it’s not hard. … The president, the White House, is working with us on it, but I’ve been in the office for one day and I have my priorities and I think my priories are going to match the president’s.” Details of President Trump's budget request have rankled some of his incoming Cabinet officials. Environmental Protection Agency Administrator Scott Pruitt, a likely ally of Trump’s when it comes to undoing Obama-era climate programs, said this week he is concerned about funding proposals for state grant programs, among other items. The Senate confirmed Zinke to his position at Interior on Wednesday. By Thursday, he had signed two secretary-level orders, including one repealing a ban on lead in ammunition and fishing tackle. He also made headlines by riding a horse to work on his first day. After his speech at Interior’s headquarters on Friday, Zinke said he would reconsider late actions from the Obama Interior Department, including orders blocking drilling in the Arctic Ocean.

EPA to reconsider vehicle fuel standards, may move against California targets- The Environmental Protection Agency plans to announce its intent to withdraw final determination on strict fuel-efficiency standards for future cars and light trucks, the latest signal by the Trump administration that it is charting a new course on climate change. According to individuals briefed on the matter, the new administration also is considering issuing an executive order that would revoke California's ability to set its own, tighter targets for those model years. California is the only state allowed to do so under the Clean Air Act, but other states can adopt its regulations as their own. Two associations representing the world's biggest automakers last week asked EPA Administrator Scott Pruitt to reconsider the standards for model years 2022 to 2025, which would require the nation's car and light-truck fleet to average 54.5 miles per gallon by the end of that period. Although automakers struck a 2009 deal with the Obama administration to set the first-ever carbon limits on cars and trucks, many of them now say it will be difficult to achieve these long-term targets given the lower price of gasoline and Americans' preference for sport-utility vehicles. Any decision to revoke California's federal waiver could spur a major legal fight, and the state has already retained former U.S. Atty. Gen. Eric H. Holder Jr. The state will "vigorously participate and defend ourselves" on setting the state's own air quality rules, California Air Resources Board Chair Mary Nichols said.

Trump to Undo Vehicle Rules That Curb Global Warming - The Trump administration is expected to begin rolling back stringent federal regulations on vehicle pollution that contributes to global warming, according to people familiar with the matter, essentially marking a U-turn to efforts to force the American auto industry to produce more electric cars. The announcement — which is expected as soon as Tuesday and will be made jointly by the Environmental Protection Agency administrator, Scott Pruitt, and the transportation secretary, Elaine L. Chao — will immediately start to undo one of former President Barack Obama’s most significant environmental legacies. During the same week, and possibly on the same day, Mr. Trump is expected to direct Mr. Pruitt to begin the more lengthy and legally complex process of dismantling the Clean Power Plan, Mr. Obama’s rules to cut planet-warming pollution from coal-fired power plants. The regulatory rollback on vehicle pollution will relax restrictions on tailpipe emissions of carbon dioxide and will not require action by Congress. It will also have a major effect on the United States auto industry. Under the Obama administration’s vehicle fuel economy standards, American automakers were locked into nearly a decade of trying to design and build ever more sophisticated fuel-efficient vehicles, including electric and hybrid models. The nation’s largest auto companies told Mr. Trump last month that they found those technical requirements too burdensome.

Trump To Undo Fuel Efficiency Standards -- The Trump administration is set to undo one of former President Obama’s signature achievements. On Tuesday, the EPA and the Transportation Department are expected to jointly announce the rollback of fuel efficiency requirements for the nation’s auto fleet, a move that will not require the approval of Congress. In the wake of the financial crisis and the crumbling of top U.S. automakers, the federal government bailed out General Motors and Chrysler, while other companies were severely damaged and barely survived the downturn. With their backs against the wall, the Obama administration was able to push through historic fuel efficiency requirements, known as corporate average fuel economy (CAFE) standards, the most stringent in decades. For cars made between 2012 and 2016, car companies had to achieve an average fuel economy of 35.5 miles per gallon, up from 25 mpg previously. For model years 2017-2025, fuel efficiency had to jump to 54.5 mpg. The requirements have successfully boosted the efficiency of the nation’s auto fleet, with cars and trucks steadily achieving ever higher ratings on fuel efficiency. Car companies have ratcheted up efficiency on multiple fronts, introducing new electric vehicles and electric-hybrid models, while also boosting the fuel efficiency of traditional cars and trucks.   But at the behest of the auto industry, President Trump is set scrap those requirements. A coalition of 17 automakers sent letters to the EPA asking the agency to remove the CAFE standards, calling it “the single most important decision the EPA has made in recent history.” The car companies said the standards are unreachable, and that they would force the industry to spend $200 billion over the next decade in order to comply with them.

Detroit's Death Wish Comes Roaring Back as Trump Vows to Lower Emission Standards - The oil industry and its "deep state" allies in the Trump administration have lured U.S. auto companies into a potentially fatal political trap, chumming Detroit by tapping into the deeply embedded penchant of the Big Three for chasing short-term market trends at the expense of long term value.   Excited by the arrival of a Big Oil ally, Scott Pruitt , to head the U.S. Environmental Protection Agency (EPA), the auto industry asked the Trump administration to undo the recent Obama Administration rule locking long term, reliable standards for emissions and fuel economy. The industry argued that the standards, which it agreed to back in 2009 as part of the auto bail-out, were now too onerous because consumers were shifting to buy SUV's again with lower oil prices. The argument is utterly bogus. The 2009 rules set separate, if ambitious, standards for each size class of vehicle, so while more SUV sales do drive up average emissions and oil consumption, they do not require the companies to make a single vehicle to a higher standard than they agreed to.  What's really at stake here is the pace of vehicle electrification. Meeting the 2009 standards for each vehicle class was always dependent on a significant portion of those vehicles being zero-emission electric drive. That's an existential threat to the oil industry—and in many ways to Detroit's dealers, who make most of their money repairing the drive trains of internal combustion cars. Electric drive vehicles (EV) have a fraction of the maintenance costs of gas or diesel

Dems push Trump to keep Obama-era car emissions standards | TheHill: Senate Democrats are pushing the Trump administration to preserve the strict car emissions standards set under former President Obama. The 12 Democrats, led by Sen. Ed Markey (Mass.), sent a letter to Environmental Protection Agency (EPA) head Scott Pruitt on Tuesday, days after the New York Times and other outlets reported that Pruitt will act as soon as this week to start weakening the greenhouse gas emissions standards. “These automobile emissions standards are economically feasible and technologically achievable for the auto industry,” the senators wrote, citing the EPA’s decision at the end of the Obama administration to maintain the rules for the 2022 to 2025 model years, despite auto industry pleas.“They will enhance our national security by reducing our consumption of foreign oil. They will benefit consumers, saving them billions of dollars at the pump and reduce our carbon pollution. It is critical that they remain in place.” Markey, who helped write the 2007 law the led to the standards, said that the rules helped the domestic auto industry recover from the recession, while reducing dependence on foreign oil. A rollback “would undoubtedly lead to costly litigation and create needless uncertainty for the auto industry, and threaten the economic and employment gains automakers have made in recent years,” he told reporters Tuesday. “Strong fuel efficiency standards have put American consumers in the driver’s seat, and that’s where they should stay.” The EPA’s standards set greenhouse gas limits for vehicles, limits that strengthen throughout the time period ending in 2025. They were set jointly with the Department of Transportation’s fuel efficiency standards for vehicles, and the two agencies work together to administer a single program.

Icahn’s Trump Relationship Sparks a Civil War in the US ethanol industry - Billionaire Carl Icahn’s relationship with President Donald Trump has helped spark a round of recriminations within the $24 billion American ethanol industry just as it navigates one of the most crucial points in its history. The discord has emerged in the past three days as ethanol companies react to a proposal from Icahn and a lobby group that would shake up how the industry is regulated. At the heart of the dispute lies the question of who exactly should be responsible for complying with a 12-year-old law mandating the blending of ethanol in gasoline. Icahn, a renowned corporate raider, controls one of the largest independent U.S. refiners. He argued loudly and repeatedly during the general election that the burden shouldn’t fall on companies like his but on fuel blenders instead. Icahn’s position is anathema to most of the biofuels industry. That made it all the more surprising when it emerged Feb. 27 that the 81-year-old billionaire -- now a special regulatory adviser to President -- had won the backing of the Renewable Fuels Association. The Washington-based lobbying group’s president, Bob Dinneen, had long opposed the kind of change Icahn advocates, yet his group is now backing the proposal, which is being discussed in the White House. The news roiled the gasoline and corn markets -- and triggered an unprecedented display of public disunity from ethanol producers. “We believe the Renewable Fuels Association has been bought, sold and delivered on a platter," Todd Becker, chief executive officer of Green Plains Inc., In November, the renewable fuels unit of Valero Energy Corp., the largest independent U.S. refiner, joined the Renewable Fuels Association. The company endorses the move championed by Icahn, and Becker said that may have helped to sway the deal. “Bob Dinneen sold his soul to the devil,” Becker said of Valero joining the group. Also under fire is how the proposed deal was presented to the Trump administration without wider consultation. Poet LLC, the largest U.S. ethanol producer and a founder of Growth Energy, a separate trade group vehemently opposed to the Icahn move, called the agreement "a back-room deal" made while "leading voices" were absent.

White House Pushes for Deep Cuts to Clean Energy Office - The White House is seeking to cut hundreds of millions of dollars from the budget of an Energy Department division that has funded technological research in projects ranging from the LED light bulb to plug-in electric trucks, according to people familiar with the plans. The Office of Energy Efficiency and Renewable Energy, currently funded at $2.1 billion a year, would see its allocation slashed by at least $700 million under a proposal from the Office of Management and Budget, according to three people briefed on the plans who asked not to be identified discussing the internal deliberations.Scott Sklar, the chairman of the steering committee of the Sustainable Energy Coalition, said he’s been told the goal could be even more severe: two-thirds of the office’s budget, or $1.4 billion. The details were still under negotiation between the Energy Department and the White House and so the final figure could end up changing, Sklar said."It would be a very very significant cut," said Dan Reicher, who led the office during the Clinton administration. "Clearly this would have some very serious impacts on some very important programs."The White House budget proposal is set to be released next week to Congress, which will then spend the coming months writing the government’s spending blueprint.The proposed cuts come as President Donald Trump, who bashed wind and solar power on the campaign trail, seeks to boost defense spending by $54 billion while offsetting that spending with cuts from the rest of the government. Conservative groups, such as the Heritage Foundation, have called for the office to be eliminated entirely, saying energy innovation is best left up to the private sector.

White House doesn't want reporters talking up energy cuts -- The White House not only wants to crack down on officials telling reporters about potential cuts to the energy and environment budgets, but also doesn't want journalists reporting on the "specifics" of internal discussions before the budget is made public next week. "The budget blueprint will be released in mid-March," said John Czwartacki, communications director for the White House Office of Management and Budget. "It would be premature for us to comment on — or anyone to report — the specifics of this internal discussion before its publication," he said. "The president and his Cabinet are working collaboratively as we speak to create a budget that keeps the president's promises to secure the country and prioritize taxpayer funds," he said. Earlier Wednesday, Bloomberg reported that the Energy Department's clean energy office was expected to be cut by at least $700 million from its current $2.1 billion, or one-third.Democrats such as Sen. Maria Cantwell, D-Wash., the ranking member of the Energy and Natural Resources Committee, voted against the confirmation of Energy Secretary Rick Perry because of concerns that he would help implement a plan pushed by the conservative Heritage Foundation to curtail many of the agency's core programs. But Czwartacki's comments seem to imply that the White House may not have settled on the cuts. Scott Sklar, a long-time Washington clean energy consultant, said the next eight days will tell if the Energy Department cuts will stick. The latest is that Perry "is fighting" the Office of Managment and Budget "to get cuts within acceptable limits," but "We'll see," Sklar wrote in an email to the Washington Examiner. "It's the next eight days that will determine the play." It wouldn't be strange for Perry to fight the cuts. Interior Secretary Ryan Zinke, who was also sworn in last week, said he was "unhappy" with the cuts he has seen for his budget, and vowed to fight the administration to ensure the agency has the funding to do its job right.

 The Heritage Foundation has a plan for gutting EPA and the Energy Department. It’s eerily plausible -The authors of the Heritage blueprint state upfront that they don’t believe climate change is a problem — and hence recommend eliminating virtually everything the EPA does on the issue. That means:

The US Department of Energy (DOE) spends about $5 billion per year on programs to research and develop low-emissions energy technologies — from advanced wind, solar, and biofuels to next-generation nuclear power to carbon capture for coal plants. Some examples of big-ticket items targeted for cuts:

  • Eliminate ARPA-E, an office within DOE that funds early research into long-shot energy technologies too risky for the private sector, like futuristic batteries or biofuels.
  • Eliminate the DOE’s Office of Energy Efficiency and Renewable Energy, which funds research into wind, solar, hydrogen, biofuels, and more.
  • Eliminate the DOE’s Office of Fossil Energy, which funds research into technologies to reduce emissions from coal, oil, and gas — including carbon capture technology.
  • Reduce funding for DOE’s Office of Nuclear Energy, zeroing out government research into advanced reactors and leaving only some funding for restarting the Yucca Mountain waste repository.
  • Eliminate the DOE Office of Electricity Deliverability and Energy Reliability, which funds research into modernizing electric grids.
  • Eliminate DOE’s Energy Innovation Hubs, which bring basic and applied research together to overcome barriers to new energy technologies like batteries.

DOE: Downsizing U.S. EIA poses a challenge --  In its search for $54 billion in cuts from domestic spending to offset an equal increase in defense spending, the Trump administration is reportedly looking at sizable reductions at agencies such as U.S. EPA, the State Department and the Department of the Interior. And while the proposed cuts at the Energy Department have yet to be leaked, if they are on the same order of magnitude and follow transition-period advice from conservative think tanks, then the venerable U.S. Energy Information Administration may be in danger. This wouldn't be the first time that a new president, feeling that his election validated an agenda to dismantle parts of the federal government, turned his sights on EIA. President Reagan did just that in 1981. In his first budget, Reagan proposed to cut back on EIA's work, saying its data and analysis had "limited practical value." And handing some or all of its work over to the private sector also was discussed early in the George W. Bush administration. Neither the Reagan nor the Bush effort gained traction. But this year could be different. The latest challenge to the federal government's role in collecting and analyzing a sweeping range of energy data stems from a series of recommendations by the Heritage Foundation, a conservative think tank whose post-election proposals for the Trump administration, "Blueprint for Reform," would eliminate or privatize EIA. Heritage staff played prominent roles on the Trump transition team. "Members of Congress do not need information on energy market trends to create sound policy. In fact, the federal government should have a minimal, if any, role in energy markets. Further, information has value. Investors who need this information can obtain it from private parties. If the federal government should need information on energy markets, it can pay for it as well," the document reads.

Renewable energy matters more in Trumpland than you might think -  Trump has criticized wind-power, cast doubts on solar power's cost effectiveness, and promised on the campaign trail he would bring back coal jobs. But Trump is unlikely to touch the tax credits that subsidize investments and production in solar and wind power. Here's why that makes sense:Here's why that makes sense: States politically important to Trump support renewables jobs: Republican states that led to Trump's 2016 win support hundreds of thousands of jobs in the renewable energy industry, and for the most part, states that Trump narrowly won have a higher percentage of energy jobs that are renewable-energy jobs than safe Republican states. (And generally among Democratic states, the higher the percentage of energy jobs that are renewable energy jobs, the stronger the margins for Democratic candidates.) The number of these jobs is increasing: Although the interactive is a snapshot in time using the DOE data, solar employment has been growing by 20% annually since 2010, and wind power employment was up 32% in 2016 from the previous year, according to the Department of Energy. Congressional backing, too: The Republican-controlled Congress voted in 2015 to extend renewable energy tax incentives — and it passed with a majority in both the House and the Senate with bipartisan support. Iowa Republican Charles Grassley said of Trump and the incentives: "If he wants to do away with it, he'll have to get a bill through Congress, and he'll do it over my dead body."

Trump Got Nearly $1 Million in Energy-Efficiency Subsidies in 2012 -- The Trump White House has wasted no time in targeting pro-climate policies, freezing energy-efficiency standards finalized during the last days of the Obama administration. Its “America First Energy Plan” makes no mention of renewable energy or energy efficiency, and it is focused on fossil fuels. But in 2012, Donald J. Trump, the businessman, played a different tune. That year, Mr. Trump finished securing almost $1 million in energy-efficiency incentives and low-interest loans from New York State to fit a Trump-branded residential tower in Westchester County with eco-friendly fixtures, state records show. “I strongly believe in clean energy, in conserving energy, all of that — more than anybody,” Mr. Trump is quoted as saying in a fact sheet about the project, at Trump Tower at City Center in White Plains. As part of the project, a state-of-the-art power system that recycles energy was installed. The Trump Organization also received smaller incentive payments in 2011, for a total of about $40,000, for energy-saving projects at two separate condominium buildings in Manhattan, at 100 and 106 Central Park South, according state records obtained under New York’s Freedom of Information Law. Changes in federal policies by the Trump administration would not necessarily alter energy-efficiency subsidies in New York State. But Mr. Trump’s acceptance of them highlights the seeming dissonance between his use of environmental subsidies and incentives while at the helm of his sprawling business, and his administration’s public hostility toward financial support for clean energy and energy efficiency.

Renewable energy: A world turned upside down | The Economist - The wind blowing across Wildpoldsried towards the Alps lazily turns the turbines on the hills above. The south-facing roofs of the houses, barns and cowsheds are blanketed with blue photovoltaic (PV) solar panels. The cows on the green fields produce manure that generates biogas which warms the Biergarten, the sports hall and many of the houses where the 2,600 villagers live, as well as backing up the wind and solar generators in winter. All told, the village produces five times more electricity than it needs, and the villagers are handsomely rewarded for their greenness; in 2016 they pocketed about €6m ($7m) from subsidies and selling their surplus electricity. It hardly looks like the end of the world; but Mr Schröder, who works at Sonnen, an energy-storage firm, has a point. Many environmentalists want the world’s energy system to look like Wildpoldsried’s. And the things it is based on—subsidies for investment, very little spending on fuel, and moving electricity generation to the edge of, or off, the grid—are anathema to electricity markets and business models developed for the fossil-fuel age. AdvertisementFew greens would mourn them. But the fall in utility revenues that comes with the spread of places like Wildpoldsried is not just bad news for fossil-fuel-era incumbents in the generation and transmission businesses. It is also becoming a problem for the renewables themselves, and thus for the efforts to decarbonise the electricity supply that justified their promotion in the first place. In 2014 the International Energy Agency (IEA), a semi-official forecaster, predicted that decarbonising the global electricity grid will require almost $20trn in investment in the 20 years to 2035, at which point the process will still be far from finished. But an electricity industry that does not produce reliable revenues is not one that people will invest in.

The Lappeenranta renewable energy model – is it realistic? -- Energy Matters - As reported in a recent Blowout Week the Lappeenranta University of Technology (LUT) in Finland has published an energy model which claims to show how the entire world can move to 100% renewable electricity by 2030 at the modest cost of between 55 and 70 euros per megawatt-hour. According to glowing press reports the model debunks myths about what renewables can and cannot achieve – for example that a fully renewable energy system cannot possibly run stable for all hours of the year due to the intermittent character of solar and wind energy and that an electricity system cannot work without backup baseload generation capacity. In this post we investigate these weighty claims.

U.S. wind generating capacity surpasses hydro capacity at the end of 2016 -- Installed wind electric generating capacity in the United States surpassed conventional hydroelectric generating capacity, long the nation’s largest source of renewable electricity, after 8,727 megawatts (MW) of new wind capacity came online in 2016. However, given the hydro fleet’s higher average capacity factors and the above-normal precipitation on the West Coast so far this year, hydro generation will likely once again exceed wind generation in 2017.  Wind and hydro generation both follow strong seasonal patterns. Hydro generation typically reaches its seasonal peak in the spring and early summer, especially in the Pacific Northwest and California where about half of U.S. hydropower is produced. Across most of the country, wind generation typically peaks in the spring with a smaller peak in late fall and early winter. The Pacific Northwest and California have a slightly different seasonal pattern for wind resources, with generally only one peak in the early summer.  In the Southwest Power Pool (SPP) electric system, which extends from northern Texas to North Dakota and Montana, wind power recently supplied more than half of the system’s generation mix for a brief period, reaching 52.1% (11,419 MW) in the early hours of February 12, 2017—a first for any of the seven U.S. regional transmission organization (RTO) electric systems that together serve two-thirds of the country’s electricity consumption.  The Electric Reliability Council of Texas (ERCOT) system which covers most of Texas continues to set records for the highest level of wind generation on any U.S. electric system. ERCOT’s most recent record of 16,022 MW occurred on the morning of December 25, 2016, and accounted for slightly more than 47% of the generation mix at the time.

Renewables are not equally clean. Time to separate good from bad. - Renewable energy systems differ widely in their environmental impact. Solar cells require sizable energy inputs to manufacture. Photovoltaic cells originating from China mostly utilize coal-fired electricity with high level of GHGs that is revealed by lifecycle emission assessments.  There are currently no uniform standards for assessment of the degree to which a “renewable” energy resource is indeed renewable. Nor is there a standardized life cycle assessment methodology for emissions from “clean” energy sources as compared to their “fossil” fuel counterparts and competitors. There are substantial differences in GHG emissions within and between categories that can vary greatly by facility and location. Today, investors and customers for solar energy cannot readily distinguish between the benefits of using higher cost photovoltaic panels primarily made with clean hydroelectric power versus coal-fired electricity, because both as equally “clean” and “renewable” in law.   Similarly, absence of standardized life cycle assessments, reporting and audits makes it impossible for consumers and investors to balance costs and outcomes to economically achieve high levels of renewability and cleanliness in their energy choices.      What is needed is a dynamic, living, breathing assessment system that captures the changing flow and ebb of “renewability” and “cleanliness” as markets, technologies, entrepreneurs, innovators, etc., engage in a complex dance in a market economy.       America can meet this need and become the world leader in defining standards and specifications for both renewability and cleanliness for primary energy production:  a Generally Accepted Accounting Principles (GAAP) for renewable and clean energy.

Union Pacific Train Carrying Ethanol Derails In Iowa, Bursts Into Flames - 27 fuel tank cars carrying ethanol burst into flames on Friday morning after a freight train derailed in northwestern Iowa, authorities said. The flames from the train could be seen from at least eight miles away.The derailment occurred around 1 a.m., near Graettinger, about 160 miles northwest of Des Moines, the Palo Alto County Sheriff's Office said in a news release. It said two crew members escaped unharmed. Nearby residents were asked to evacuate the area and no injuries have been reported. Raquel Espinoza, a spokeswoman for Union Pacific, confirmed that the train is operated by that railroad oompany, but she declined to say more, referring questions to the National Transportation Safety Board.Palo Alto County emergency management director Mark Hunefeld said at least 27 of 101 cars derailed, including the burning tanks. Eight cars were still burning as of 7 a.m., the sheriff's office said. Railroad personnel were able to unhitch 74 loaded tankers and move them from the site. Sasha Forsen, spokeswoman for Green Plains Inc. in Omaha, Nebraska, confirmed that the tanks had been filled with ethanol at the company's plant in Superior, Iowa. She declined to say where the shipment was heading. NTSB spokesman Keith Holloway said agency investigators would be at the derailment site to determine the cause of the accident Friday afternoon.

Scotland-England Electricity Transfers and The Perfect Storm -- In January this year a perfect storm gathered around European, UK and Scottish electricity supplies. But the lights stayed on, in the UK at least. This is the first of two posts on this topic. Here, I take a quick look at the electricity transfers between Scotland and England since this was the first big test for the system since the closure of the 2.4 GW Longannet Coal Power Station in March 2016. Towards the end of 2016 France shut down 20 of its 58 nuclear reactors in response to safety concerns raised by Greenpeace. France, that would normally export electricity to all surrounding countries, suddenly turned importer placing strain on supplies in all of its neighbours. On 20th November, a ship dragged its anchor during storm Angus breaking half the cables of the UK-France interconnector reducing capacity from 2 to 1 GW. In the circumstances, this seemed like a bigger problem for France that would now only manage to import up to 1 GW from the UK.And then of 16th January the wind died completely across the UK and much of Europe and it stayed calm for 7 days (Figure 1). January is a winter month normally associated with peak electricity demand in the UK, but this January was not particularly cold. I was keeping an eye on UK nuclear outages via the EDF portal. At one point 5 reactors were off line due to unscheduled maintenance and low load refuelling. On the 14 January, nuclear output was down to 6.3 GW, 2.6 GW below capacity of 8.9 GW. I’m pretty sure this included 1 reactor at Torness in Scotland going offline during the windless week.  The key observations from January-February 2016 are:

  1. Scotland was exporting electricity to England virtually all of the time.
  2. There were 5 occasions when Scotland briefly imported a small amount that I would speculate is probably out of grid balancing convenience.
  3. Maximum exports of 3.5 GW occurred at times of high wind and this effectively marks the de-rated capacity of inter-connectors between Scotland and England.

Electricity Consumption Continues To Fall - Electricity sales in 2016 fell, the sixth year in the past ten in which America’s electricity users managed to do with less. Industrial firms made the sharpest cuts in their electricity usage. Their consumption fell in seven of the past ten years. The 1.3 percent drop in total consumption in 2016 looks small but it comes despite economic growth and lower real price of electricity. Okay, economic growth has not been robust and the real decline in price small, but electric sales always used to go up when the price of electricity declined and the economy grew. In economic parlance, electricity had a negative price and positive income elasticity. In the old days a 1.6 percent improvement in real gross domestic product (GDP) and a 2.5 percent real price decrease together should have spurred consumers to use at least 1-2 percent more electricity. But, with similar conditions in both 2015 and 2016, kWh sales declined in both years.The picture for industrial usage is even more puzzling. Industrial users consumed 5.1 percent less electricity in 2016. Industrial users have been cutting back for years. Admittedly, the industrial production numbers have been weak, but sales of electricity to industrial customers has been far weaker as seen in Figure 2. Weakness in domestic electricity sales does not bode well for prospective sales of coal or natural gas to the electricity industry. In addition, renewables will continue to take a small but growing slice of the American kilowatt-hour pie.

Electronic energy meters’ false readings almost six times higher than actual energy consumption - Some electronic energy meters can give false readings that are up to 582% higher than actual energy consumption. This emerged from a study carried out by the University of Twente (UT), in collaboration with the Amsterdam University of Applied Sciences (AUAS). Professor Frank Leferink of the UT estimates that potentially inaccurate meters have been installed in the meter cabinets of at least 750,000 Dutch households. The is published in the scientific journal IEEE Electromagnetic Compatibility Magazine.In the Netherlands, traditional energy meters (kWh) — the familiar energy meter with a rotating disc — are being increasingly replaced by electronic variants (which are also known as ‘static energy meters’). One well-known variant of the latter is the ‘smart meter’. The Dutch government wants smart meters in every household by 2020.The meters were connected, via an electric switchboard, to a range of power-consuming appliances, such as energy saving light bulbs, heaters, LED bulbs and dimmers. The researchers then compared the actual consumption of the system with the electronic energy meter’s readings.  In the experiments (which were entirely reproducible), five of the nine meters gave readings that were much higher than the actual amount of power consumed. Indeed, in some setups, these were up to 582 percent higher. Conversely, two of the meters gave readings that were 30 percent lower than the actual amount of power consumed. The greatest inaccuracies were seen when dimmers combined with energy saving light bulbs and LED bulbs were connected to the system. According to Mr Keyer (lecturer Electrical Engineering at the AUAS and PhD student at the UT) “OK, these were laboratory tests, but we deliberately avoided using exceptional conditions. For example, a dimmer and 50 bulbs, while an average household has 47 bulbs.”

 Scientists in the search for bigger storage options for renewable energy  (audio) : The world is in the middle of a renewable energy revolution. Prices for clean energy systems are plummeting and investments in renewables are reaching record highs. But there's still a major hurdle to the large-scale adoption of green power around the world. The batteries needed to store the intermittent energy from renewables – such as solar and wind – are still too costly.

Electric cars: China’s battle for the battery market - Inside the vast CATL factory, battery parts move silently on automated conveyor belts. Signs on the walls encourage workers not to waste materials or time, or indulge in “unnecessary bending” for their own safety. The plant looks like lots of others dotted across the country. But with a valuation of $11.5bn, Contemporary Amperex Technology Ltd, to give it its full name, is anything but mundane. It is set to become China’s Panasonic — a national champion — and a key part of Beijing’s ambitious plan to remake the global battery market and exploit rising demand for electric cars. CATL, which had capacity to produce 7.6 gigawatt hours of batteries last year according to Goldman Sachs, says that by 2020 it plans to produce more than the gigafactory, the Tesla Motors and Panasonic joint venture that opened in Nevada in January and is expected to be the largest producer in the US. That would potentially make it the biggest battery factory in the world. Beijing last week called for companies to double electric vehicle battery capacity by 2020 and encouraged them to invest in factories overseas. As carmakers invest more heavily in electric vehicles the lithium-ion battery will be a key technology for at least the next decade, creating a market Goldman Sachs estimates will be worth $40bn by 2025 and dominated by China. “It will not be easy to surpass Japanese and South Korean companies,” says Mr Yang. “But we think over the next 10 years, there may only be 10 lithium battery producers left, with the top three taking 60 per cent of the market.” Since 2012 China has spent billions of renminbi subsiding its electric carmakers, turning Shenzhen-based BYD, in which Warren Buffett’s Berkshire Hathaway has a stake of about 10 per cent, into the world’s largest electric car and bus maker with a market capitalisation of $18.7bn. As well as boosting supply China is also creating demand: by 2020 it predicts 5m electric vehicles will be on its roads, from 1m today.

China Considers Dialing Back or Delaying Electric Car Quota --China is considering dialing back or delaying proposed measures aimed at pushing automakers to produce more electric vehicles, after industry feedback that the targets are overly ambitious. Under draft rules released in September for public consultation, automakers will be required to obtain a new-energy vehicle credit score of 8 percent next year, derived from different weightings assigned to various types of zero- and low-emission vehicles. Companies that fail to meet the requirement face fines or have to buy credits from those that exceeded the minimum. Average production of new-energy vehicles last year may have contributed only about 3 percent of the score required, 5 percentage points short of the proposed 2018 target, according to the China Association of Automobile Manufacturers. German Economy Minister Sigmar Gabriel told German media in November that he expressed the view to his Chinese counterpart that the 2018 targets were not attainable. Miao Wei, China’s minister of industry and information technology, told Bloomberg News in an interview in Beijing on Sunday that his ministry is considering either lowering the credit requirement in percentage terms or delaying the implementation date. “We are still working on the regulation,” Miao said on the sidelines of the opening of the annual session of the National People’s Congress. “It may be finalized around May or June.”

China vows new steel, coal capacity cuts to make sky blue | Reuters: China will cut steel capacity by 50 million tonnes and coal output by more than 150 million tonnes this year, its top economic planner said on Sunday as the world's No. 2 economy deepens efforts to tackle pollution and curb excess supply. In a work report at the opening of the annual meeting of parliament, the National Development and Reform Commission (NDRC) said it would shut or stop construction of coal-fired power plants with capacity of more than 50 million kilowatts. The pledges are part of Beijing's years-long push to reduce the share of coal in its energy mix to cut pollution that has choked northern cities and to meet climate-change goals while streamlining unwieldy and over-supplied smoke-stack industries such as steel. Speaking at the opening of parliament on Sunday, Premier Li Keqiang reiterated the government's plan to ramp up monitoring of heavy industry and crack down on companies and officials that violate air quality rules. "Officials who do a poor job in enforcing the law, knowingly allow environmental violations, or respond inadequately to worsening air quality will be held accountable," he said. "We will make our skies blue again." In its report, the NDRC said it would cut energy consumption per unit of gross domestic product by 3.4 percent and curb carbon intensity by 4 percent this year. By 2020, the government has said it aims to close 100 million-150 million tonnes of steel capacity and 800 million tonnes of outdated coal capacity. This year's targets come after the world's top coal consumer and steel maker far exceeded its 2016 goals to eliminate 250 million tonnes of coal and 45 million tonnes of steel capacity.

Pipe dream? China faces daunting task to suck in gas and wean itself off coal | Reuters: China has set itself a staggering task to cure its smothering pollution: switching coal-fired boilers and heating systems in at least 1.2 million households in 28 of its smoggiest northern cities to run on gas or electricity. By October. Beijing's latest crackdown on pollution, outlined in a policy document dated Feb. 17 and seen by Reuters this week, dangles a potentially game-changing carrot for the country's saturated global natural gas market. The projected extra needs would inflate China's gas demand by a quarter, according to consultancy Wood Mackenzie - some 50 billion cubic metres (bcm), more than the whole of France consumes in a year. That would offer the prospect of boosting prices in a seller's market and surging liquefied natural gas (LNG) imports. There's a large, expensive catch. Such expansion is all but impossible without investing in doubling underground storage capacity, building thousands of miles of pipeline to carry the gas in the west to the eastern cities, and installing pump stations in rural villages - all of which is supposed to be complete within a meager seven months. "The magnitude of this policy is unprecedented," said Guo Zihua, head of a rural development department at Beijing city hall that deals with villages surrounding the capital - now on the front line of the battle for cleaner air. "The central government has given us very little time to remove coal heating in rural villages. We are under tremendous pressure to reach the target," said Guo

Coal gets second wind as Australia battles power crisis | Reuters: The rise of wind and solar power in Australia was supposed to be the death knell for coal use in the world's biggest exporter of the fossil fuel, but the shunned fuel is finding a new lease of life and may yet attract subsidies to keep the lights on. Growth in electricity demand and a drop in supply since 2014 have strained the Australian grid, triggering outages amid heatwaves and storms. The worst - an eight-hour blackout in South Australia last year - crippled industry for up to two weeks and provoked public outrage. Supplies are set to tighten with France's Engie SA closing Australia's dirtiest power station, Hazelwood, this month. That means the national electricity market will need to replace about 10,350 gigawatt hours of "baseload power" that can be called upon when the wind isn't blowing and the sun isn't shining. "That's our concern: this could get worse before it gets better," said Matthew Warren, chief executive of the Australian Energy Council, which represents generators. More than half the shortfall will be needed from remaining coal-fired plants and the rest from restarting mothballed gas-fired power plants, the Australian Energy Market Operator says. The pressure is now on the government to make it happen. "The blackout in South Australia was a real wake-up call when 1.7 million people went into the black," Energy and Environment Minister Josh Frydenberg told Reuters in an email, adding that security and affordability were the government's top energy priorities. In the short term, the government and market operator will have to change the way the market prices electricity to put a premium on baseload power, generators and industrial users say.

Elon Musk Tweets Offer to Fix Australia's Energy Crisis in 100 Days -- Tesla boss and prolific tweeter Elon Musk has made an audacious bet to solve South Australia's energy woes by building a 100-megawatt battery storage farm. If the system is not operational in 100 days, the AUD$33 million (USD$25 million) technology will be provided for free.  It all started on Thursday when Atlassian CEO and Australian billionaire Mike Cannon-Brookes tweeted an article to Musk that cited a similar offer from Lyndon Rive, who heads Tesla's battery division. Rive said he would "commit" to installing the 100-300 megawatt hours of batteries to help stop South Australia's recent string of blackouts. "We don't have 300MWh sitting there ready to go but I'll make sure there are," he said.  Cannon-Brookes then tweeted to Musk asking him if he could really make this happen if the funds were available and the politics were sorted out. Incredibly, Musk didn't just cement the offer, he wagered that Tesla could do it in less than 100 days or else the whole installation would be given free of charge. "That serious enough for you?" Musk added. In response, Cannon-Brookes called Musk a "legend" and asked for seven days to "sort out politics and funding." He also asked for a price quote via private message. Musk replied with an actual figure—$250 per kilowatt-hour for 100MWh systems—noting that Tesla is being more transparent about the prices of its products.

Interior Sec. Zinke promises review of coal leasing program — Interior Secretary Ryan Zinke on Friday promised a comprehensive review of the federal coal leasing program, even as President Donald Trump moves to do away with a moratorium on coal leases on public lands. Trump, who has vowed to revitalize the slumping coal industry, is expected to issue an executive order any day now abandoning the moratorium on new coal leases imposed under the Obama administration. Zinke, who was sworn in Wednesday as interior secretary, said he will “look at everything across the board” on coal, adding that the department is likely to revamp the leasing program to ensure maximum value for coal companies and taxpayers alike. Under the current coal leasing program, “there is no probability that actually you can do with that lease what’s intended with it,” he said, comparing federal lease sales to junk bonds. “Rather than selling a junk bond, we need to look at maybe selling a double-A bond,” the former Montana congressman told reporters after an introductory speech to Interior employees. “I think we all benefit from that.” The Interior Department “needs to do a lot of homework upfront, look at that (lease) and value it correctly,” Zinke said. “And also give the buyer a probability that there is a return on investment.”

The Robots Sent Into Fukushima Just Keep Dying - Tokyo Electric Power Company's  (TEPCO) head of decommissioning admitted on Thursday that more creativity was needed in developing its robots sent to the reactive zone.The Fukushima nuclear power plant was massively damaged in 2011, when three of the six nuclear reactors suffered meltdown after being struck by a 9.0-magnitude earthquake and associated tsunami waves.More than 100,000 residents of the nearby Fukushima Prefecture had to be relocated, and the government has spent the last five years struggling with the aftermath. The incident is regarded as the world's largest nuclear disaster since Chernobyl.Part of the clean-up includes robots, sent in to probe the site, because radiation levels are too high for humans.But earlier last month, a robot sent into Fukushima's No. 2 reactor was forced to abort its mission after it was blocked by deposits — believed to be a mixture of melted fuel and broken pieces of structure.Two previous robots had also failed in its missions after one was stuck in a gap and another was abandoned after being unable to find fuel during six days of searching.This is an example of one of the robots TEPCO had sent to probe the area in the past. "We should think out of the box so we can examine the bottom of the core and how melted fuel debris spread out," TEPCO Head of Decommissioning Naohiro Masuda said. Mr Masuda also added that he wants another robot sent in before deciding on methods to remove the reactor's debris. Despite the failed probe missions, officials have added that they want to stick to their schedule of starting the site clean up in 2021.  Decommissioning the site is expected to cost tens of billions of dollars and last around 40 years. Fukushima's No. 2 reactor was found in February to have a radiation level of 530 sieverts.  Exposure to four sieverts is enough to be lethal, according to the National Institute of Radiological Sciences.

Radioactive Boars in Fukushima Thwart Residents’ Plans to Return Home -- They descend on towns and villages, plundering crops and rampaging through homes. They occasionally attack humans. But perhaps most dangerous of all, the marauders carry with them highly radioactive material.Hundreds of toxic wild boars have been roaming across northern Japan, where the meltdown of the Fukushima nuclear plant six years ago forced thousands of residents to desert their homes, pets and livestock. Some animals, like cattle, were left to rot in their pens.As Japan prepares to lift some evacuation orders on four towns within the more than 12-mile exclusion zone around the Fukushima plant later this month, officials are struggling to clear out the contaminated boars.Wild boar meat is a delicacy in northern Japan, but animals slaughtered since the disaster are too contaminated to eat. According to tests conducted by the Japanese government, some of the boars have shown levels of radioactive element cesium-137 that are 300 times higher than safety standards.Officials have also expressed concern that returning residents may be attacked by the animals, some of which have settled comfortably in abandoned homes and have reportedly lost their shyness to humans.Since the nuclear crisis in Fukushima in 2011, video footage taken by journalists has shown packs of badly unkempt dogs scampering across roads. Rat colonies have overrun abandoned supermarkets. Farmland, transformed into grassland, has become a perfect habitat for wild boars and foxes. Boars have caused about $854,000 in damage to agriculture in Fukushima prefecture, reported the Japanese newspaper Yomiuri. The local authorities in towns across Fukushima have hired teams of hunters to cull the boars. It is unclear whether those efforts will pay off, or whether they are enough to persuade former residents to return home.

6 Years Later ... Fukushima Nuclear Disaster Far From Over -  Six years ago, more than 15,000 people perished and tens of thousands of people's lives changed forever . Northeastern Japan was hit by a massive earthquake , followed by an enormous tsunami that wiped out coastal towns one after another. In the days that followed came the horrifying news: the Fukushima Daiichi nuclear reactors went into meltdown. The disaster is still with us.  Nuclear survivors continue to live with fear for their family's' health and with uncertainty about their future. Women are bearing the greatest brunt . They continue to grapple with unanswered questions, unable to relieve a deeply held sense of anger and injustice.  Over the past six years, starting just two weeks after the beginning of this nuclear disaster, Greenpeace conducted radiation surveys in the contaminated region. The latest survey gathered data in and around selected houses in Iitate village, located 30-50 km from the Fukushima Daiichi nuclear power plant. In some homes, residents would receive a radiation dose equivalent to getting a chest x-ray every week. And that's assuming they stay in the limited decontaminated areas , as 76 percent of the total area of Iitate has not been touched and remains highly contaminated.  Despite this, the government, headed by Shinzo Abe, intends to lift evacuation orders from the village and other areas in March and April 2017, and one year later terminate compensation for families from those areas. It will also cancel housing support for those who evacuated outside designated zones. For those dependent on this support, it could mean being forced to return.

GOP lawmaker confronts Kasich on Ohio's green-energy mandates -  In the final days of 2016, Republican Gov. John Kasich vetoed legislation that would have delayed the state’s renewable energy mandates from going into effect for two years. Instead, they are set to resume this year.Now state Rep. Bill Seitz is pushing to get rid of these costly regulations altogether.Ohio’s renewable portfolio standards require utility companies to derive an increasing share of their electricity from renewable sources like wind and solar. By 2025, 12.5 percent of utility power must be generated from renewable energy. Financial penalties are imposed for failure to meet the mandate. Ohio utilities currently derive 2.5 percent of their electricity from renewables.The Ohio Legislature imposed a two-year pause on these mandates in 2014 while a newly established Energy Mandates Study Committee examined whether Ohio should revive them. After the committee recommended legislators indefinitely suspend Ohio’s portfolio standards, the Legislature sent to Kasich’s desk a measure that would have delayed implementation until 2019. Kasich vetoed the bill two days after Christmas. In a statement released with the veto, the governor said “Ohio cannot afford to take a step backward on the economic gains that we have made in recent years … and arbitrarily limiting Ohio’s energy generation options amounts to self-inflicted damage to both our state’s near and long-term economic competitiveness.” In response, Seitz plans to introduce legislation this session that would extend Ohio’s renewable energy target deadline to 2027 and turn it into a voluntary goal instead of a state mandate.  These changes would effectively abolish Ohio’s renewable portfolio standards.

Republican Lawmakers Move, Again, Toward Repealing Ohio's Renewable Energy Standards | WKSU --  When Gov. John Kasich vetoed another two-year freeze on the state’s renewable energy benchmarks last year, his fellow Republicans in the Legislature promised they’d be back with a total repeal of those benchmarks. Statehouse correspondent Karen Kasler reports they appear to have taken the first step.Amid the rush in December, Gov. John Kasich vetoed a bill that would have frozen for another two years the state’s renewable energy standards for electric utilities. He says it would “do self-inflicted damage to Ohio’s economic competitiveness." He'd telegraphed that veto to lawmakers in Ohio while speaking at an appearance at the University of Texas last September. “If you try and kill the standards, whether it has to do with the renewables or whether it has to do with the issue of saving energy, I’ll veto the bill,” Kasich warned. That bill would have made the renewable energy benchmarks voluntary goals instead of required mandates for the utilities for two years. Kasich and others viewed last year’s proposal as a continuation of the two-year freeze lawmakers passed for the standards in 2014, and he had repeatedly had said he couldn’t support an indefinite freeze. After that veto, supporters of the freeze vowed they’d be back right away. And two months into the new two-year session, half the House is co-sponsoring a bill from Cincinnati Republican Rep. Lou Blessing that would make a major change in the renewable energy law by abandoning the state’s mandates and the penalties for not meeting them. “Now it is permanently goals. So there’s no compliance portion of the renewable portfolio standard,” Blessing said.Blessing’s bill also reduces the energy-efficiency goals for the next decade by a fifth. And it allows many businesses to opt-out of clean energy charges from electric utilities. Blessing maintains it’s not a total repeal. However, the chief opponent of the standards says the bill is where he thinks the state should go with repeal.

Ohio GOP lawmakers aim to kill wind, solar mandates, endorse competitive markets -- The Republican majority in the Ohio House is moving again to get rid of the state's renewable energy rules. In a bill sponsored by a Cincinnati Republican and released late Tuesday, the House would make voluntary the mandates that now require power companies to generate or buy and sell a percentage of power from wind, solar and other renewable technologies. The 73-page bill, as sponsored by State Rep. Louis B. Blessing would:

  • Allow any customer who has signed a contract with an independent power company to avoid paying the delivery company any extra charges for green power. This provision appears to be aimed at American Electric Power's plans to build 900 megawatts of wind and solar (about as much power as the Davis-Besse nuclear plant generates) and have customers pay for the construction.
  • Leave it up to each power company to decide what percentage of the power it sells has been generated by renewable technologies such as wind and solar.  The law currently demands that by 2026,  12.5 percent of the power sold must be from renewables. The standards under this proposed legislation would be completely voluntary and there would be no penalties for companies that chose not to sell green power. The bill eliminates all fines since the standards would become voluntary benchmarks. And in 2026, even the voluntary benchmarks would disappear from the law.

The legislation continues rules on "Renewable Energy Credits, or RECs, but appears to effectively kill the value of RECs in future years.   Starting in 2009, power companies could buy the RECs in a market rather than build their own wind and solar.  The REC market was designed to be a source of money for independent companies building wind and solar.The bill would also:  Allow large commercial or industrial customers to opt out of utility-sponsored energy efficiency programs. This is an expansion of the current law, which allowed only industrial customers to opt out. But residential customers are not permitted to opt out of the programs, as the bill is now written.

Liberty trustee raises concern about horizontal drilling in township -- Trustee Jodi Stoyak has raised welfare concerns about a company planning to drill horizontally within the township. The company also is seeking to hydraulically fracture, or “frack,” at the site, said Steve Irwin, a spokesman with the Ohio Department of Natural Resources. PAC Drilling LLC, an oil and gas company based in Bolivar, Ohio, has filed for a permit from ODNR to drill about 2 miles deep on 170 acres near Warner Road. Irwin said ODNR initially granted a permit to the company to drill horizontally in Liberty from the Clinton Sandstone formation.   PAC Drilling has since submitted a new version of the permit, seeking to instead drill at an adjusted nearby location. The revised permit application is pending. “I have grave concerns about this,” Stoyak said of drilling. “I don’t think this type of activity should be happening in a residential area where people have no other choice but to rely on well water. ... ODNR will tell you that they have all these regulations in place, but there have been situations that occur. If there’s an accident, there’s no turning back.”

New Protest Escalates Ohio Fracking Fight - Center for Biological Diversity (press release)— Conservation groups this week filed an administrative protest challenging a Bureau of Land Management oil and gas lease auction slated for Ohio’s Wayne National Forest. The protest takes aim at the Bureau’s refusal to adequately analyze the impacts of fracking on climate change, water quality and endangered species. “Our protest challenges the Bureau’s disturbing practice of favoring fracking industry interests over clean water, wildlife and human health,” said Taylor McKinnon of the Center for Biological Diversity. “With each new federal fossil fuel lease, the Trump administration pushes us closer to climate disaster.”The protest charges that the plan to allow hydraulic fracturing or “fracking” on 1,186 acres of Wayne would degrade streams and groundwater, fragment wildlife habitat and worsen climate change. The federal auction is scheduled for March 23.The groups also note that the federal environmental assessment for the lease auction failed to fully disclose fracking’s effects on the national forest. That’s because the government failed to study the increased surface disturbance, habitat fragmentation, and water-pollution impacts of opening up adjacent privately owned areas to oil industry development. “The Wayne National Forest is owned by all Americans, and it’s a special place that deserves protection,” said Nathan Johnson, an attorney with the Ohio Environmental Council. “Tens of thousands of citizens are demanding a halt to fracking in the Wayne. The public doesn’t want to see pipelines tearing up this forest, and we don’t want fracking chemicals staining its streams. This fight is about holding the federal government accountable to both the law and the will of the people.”The protest follows a November filing by the groups that raised similar concerns about a December oil and gas lease auction in Wayne National Forest. In January the groups filed a notice of intent to sue the Bureau and the U.S. Fish and Wildlife Service for failing to consider the impacts of fracking in conjunction with white-nose syndrome and climate change effects on the endangered Indiana bat and other protected species threatened with extinction in the area.

Ohio EPA streamlines permitting process - — The Ohio Environmental Protection Agency announced last week it has created a program to consider permit applications for oil and natural gas midstream compressor stations on more of a generic basis.The move is being made in anticipation of more growth in horizontal fracturing of shale, or fracking, which has made vast reserves of oil and natural gas in the southern and eastern parts of the state more accessible.Previously, air emissions from future compressor stations — such as a controversial one planned between Waterville and Whitehouse for the upcoming NEXUS Gas Transmission pipeline being developed by Houston-based Spectra Energy and DTE Energy of Michigan — were subject to a longer case-by-case permit process.Applications for general permits follow a template, the Ohio EPA said, adding that it believes the new, streamlined process can become “an effective means to track and regulate air emissions and can be more efficient and timely for processing.” The new general permits and comments received from the public may reviewed online at: epa.ohio.gov/​dapc/​genpermit/​ngcs.aspx.

Rex Energy reports better returns on Carroll wells - Canton Repository -Rex Energy is getting better returns on its Utica Shale wells in Carroll County. Assuming natural gas worth $3 per thousand cubic feet and oil at $55 a barrel, the rate of return on Carroll wells grew from 28 percent to 47 percent in 2016, according to a press release announcing Rex Energy’s earnings Tuesday.Rex drilled seven wells, fracked ten wells and began production from 13 wells in Carroll last year. No wells remained to be drilled or fracked at the end of the year.Among the new wells in production were the four wells of the Vaughn pad in Washington Township. The wells had a 5-day average sales rate per well equal to 1,500 barrels of oil per day, with liquids accounting for 65 percent of production.Rex is based in State College, Pa., and has drilled 31 Utica wells in Ohio.The company had a net loss of $67.4 million for the fourth quarter and $176.7 million for the year. The company spent $29.5 million on capital projects, about $6 million less than anticipated.Rex produced 71.5 billion cubic feet of natural gas equivalent in 2016, up 6.6 percent from the previous year.Average daily production is estimated at 194 million to 204 million cubic feet of natural gas equivalent per day in 2017.Rex agreed last year to sell 14 wells and the drilling rights to approximately 4,100 acres in Guernsey, Noble and Belmont counties to Antero Energy.Rex has said it plans to spend up to $80 million drilling and fracking wells this year, with one-fifth of that money invested in its Utica holdings in Carroll.The rest of the money will be spent in the company's   Marcellus and Upper Devonian Burkett shales in Pennsylvania.

Pa. Supreme Court again considers how communities zone for drilling: — The Pennsylvania Supreme Court heard arguments Wednesday in a Marcellus Shale zoning case that could have broad implications for how municipal governments decide which of their land use districts are appropriate for oil and gas drilling. The case, Brian Gorsline v. Board of Supervisors of Fairfield Township v. Inflection Energy, has been closely watched because of its potential to influence shale gas development far outside of the Lycoming County community at its center. But during the session Wednesday the justices appeared inclined to keep a tailored focus. Four residents, represented by the environmental organization PennFuture, challenged Fairfield Township’s decision to allow Marcellus Shale wells as a conditional use in an area zoned for residential and agricultural uses. They argue that the township disregarded its own zoning commitments by introducing industrial drilling into a residential district designed to preserve its quiet character. A Lycoming County court judge sided with the residents, but the Commonwealth Court reversed that decision. The appeals court reasoned that a shale gas well is similar to types of facilities that provide a broad public service — such as a power substation or a water treatment plant — that can generally be located in any zone. The case offers the high court an opportunity to further define the scope of its 2013 landmark decision in Robinson Township v. Commonwealth that wiped out a provision of the state’s drilling law requiring shale gas development to be allowed in all zoning districts. The Gorsline case has drawn an array of friend of the court briefs from industry groups, chambers of commerce, environmental organizations and local governments hoping to guide the court’s direction.

DEP chief defends methane rules for well sites: The Pennsylvania Department of Environmental Protection is defending its controversial plans to reduce methane and other air pollution from natural gas production facilities even as it expands the timeline for public scrutiny of the proposals. Acting DEP Secretary Patrick McDonnell offered a detailed justification of the proposed permits for new shale gas well sites and associated equipment in a letter last Friday to three Republican Senate leaders. The proposed new and revised permits “balance the needs of industry for cost-effective operations and the needs of the public for enhanced environmental protection,” he wrote. Sens. Jake Corman, Joe Scarnati and Gene Yaw — the chamber’s majority leader, president pro tem and environmental resources and energy committee chairman — had raised 21 questions about the permits after meeting with Mr. McDonnell in early February to discuss their concerns that the complexity of the requirements will discourage companies from drilling in Pennsylvania. The senators were among those who asked DEP to expand the public comment period on the permits from March until June 5 — a move that environmental groups fear will make the permits vulnerable to being traded away during state budget negotiations that peak in the month leading up to the spending plan’s June 30 deadline.

Physician Diagnoses New Health Risk: Explosions at Drilling Sites - Marsha Haley, M.D., is a radiation oncologist at two of the University of Pittsburgh Medical Center hospitals. She’s also a concerned mother of a 10-year old.Together, they live in a newer, suburban neighborhood in the Borough of Seven Fields, Butler County, PA. Her daughter attends the local elementary school, part of a five building K-12 campus very close to natural gas well pads. Over the past few years, as fracking operations crept closer to school property, Dr. Haley became more and more concerned about the proximity of wells to school children. It’s not easy to evacuate a school and Dr. Haley particularly was worried about blast zones should an explosion at a well pad occur.  At some point, she realized she could no longer stand by as her worries continued to grow. When a well was drilled 500 feet from another school in Southwestern PA, the absolute limit from a building allowed by Pennsylvania law, she knew she had to act. A serious, academic woman, tall, angular, and well-dressed, Dr. Haley chooses her words carefully. Growing concern lead her to begin researching the science behind setting setback distances, which are meant to protect those working and living around oil and gas operations from potential explosions. “I heard about a well pad fire in Ohio where firefighters were exposed to chemicals I was familiar with as a physician,” she says. Speaking from her sunroom, she goes on to explain that the Ohio firefighters were exposed to a therapy-grade radioactive isotope that was found onsite in a fracking truck. “As a radiation oncology physician, that caught my interest,”  According to Dr. Haley, radiation oncologists are required to carefully track every microcurie of radioactive material for the Pennsylvania Department of Environmental Protection (PA DEP). However, for years, fracking operators were permitted to dispose of hydraulic fracturing waste water at public sewage plants, which were not equipped to handle the chemical-laden, radioactive material. “It’s such a double standard,”

  FERC certificates several new natural gas pipelines in 2017 - Several large natural gas interstate pipeline projects have come online in recent years to support the shifting geography of domestic natural gas production. The Marcellus and Utica shale plays in the Northeast, where production has grown and resources are abundant, are major drivers for pipeline development. In 2016, the Federal Energy Regulatory Commission (FERC) certificated 17.6 billion cubic feet per day (Bcf/d) of new natural gas pipeline capacity. So far in 2017, FERC certificated more than 7 Bcf/d of new pipeline capacity before losing its quorum following the departure of one commissioner in February, which left just two sitting commissioners and three vacant seats.    The seven projects certificated during the first few weeks of 2017 include more than 1,500 miles of natural gas pipeline construction and expansions, involving combined additions of more than 7 Bcf/d of capacity. The pipeline projects are concentrated in the eastern half of the United States to improve access to markets for growing eastern natural gas production, and they have projected 2017 and 2018 in-service dates.  Two large-capacity projects, the Rover Pipeline Project (and related projects) and the Atlantic Sunrise Pipeline Project, were among those that received certificates in early 2017. The Rover Pipeline will move natural gas out of the Utica shale play that spans parts of New York, Pennsylvania, West Virginia, and Ohio. According to Rover Pipeline LLC, the $4.2 billion project will have direct deliveries in Ohio; West Virginia; Michigan; and Ontario, Canada and will reach a capacity of 3.3 Bcf/d. Construction will begin in the first quarter of 2017.  The Atlantic Sunrise Pipeline will move natural gas out of the Marcellus shale play to markets in the mid-Atlantic and southeastern states. According to the Transcontinental Gas Pipe Line Company, LLC, the $2.6 billion expansion will add 1.7 Bcf/d of pipeline capacity, and construction will begin in mid-2017.  Other recently certificated pipeline projects include the Orion Project, Transco to Charleston Project, Rayne and Leach Xpress, Northern Access, and Northern Lights 2017 Expansion. As of February 23, 33 projects had FERC applications in process, and 20 projects had submitted FERC pre-filings, according to data from PointLogic Energy. Consideration of these projects, among others, will be deferred until FERC has at least the three commissioners required to constitute a quorum.

"No Business As Usual": Over 130 Groups Nationwide Announce Their Opposition To FERC Appointments -- Over 130 organizations across the country announced today that they will oppose nominees made by the Trump Administration to the Federal Energy Regulatory Commission (FERC). The move reflects the growing resistance nationwide from residents, farmers, business owners, physicians, and environmentalists to FERC's practice of recklessly permitting pipelines that put hundreds of communities and the drinking water of millions of Americans at risk, in addition to the global climate. The 135 groups range from dozens of local community organizations and activists to national nonprofit organizations (Beyond Extreme Energy, Center for Biological Diversity, Food and Water Watch, and Green America). At a time when citizens are increasingly calling on Senators to oppose appointed officials that support the fossil fuel industry, the pledge signers, representing over a million people nationwide, pledge to work against each nominee to FERC made by the Trump Administration, and to call on U.S. Senators to use the nomination process to highlight FERC's rubber stamping of pipeline projects and refusal to listen the legitimate concerns of community groups. FERC is the agency primarily responsible for reviewing applications for pipelines and conducting environmental assessments, and the agency has been increasingly criticized by local communities impacted by pipelines for its failure to take into account community concerns and independent environmental impact analyses documenting the risks.   "FERC serves the industry it supposedly regulates instead of the American public, and its rubber stamping of pipelines nationwide puts millions of people at risk," said Todd Larsen, executive co-director of Green America. "It is imperative that all Americans voice their opposition to business as usual at FERC and oppose any Trump nominees to the agency." "FERC is abusing its powers and the law in how it reviews, approves, and greases the wheels for pipelines cutting through communities across America," said Maya van Rossum, of the Delaware Riverkeeper and leader of the Delaware Riverkeeper Network. "Given the level of harm pipelines inflict on communities, Congress should be working hard to prevent new nominations to the FERC commission in order to prevent restoration of the quorum they need to approve new pipelines, rather than working with President Trump to advance them."

Warm US winter leaves natural gas market with excess supplies - Winter has lost its icy bite for the second straight year in the US, wrongfooting forecasters and slackening demand for natural gas, resulting in excess supplies. Unusual warmth across most of the country has led to the first-ever recorded rise in US natural gas inventories during the month of February. Normally utilities draw down stocks to fulfill heating demands. Demand for gas used in heating is averaging less than 38bn cubic feet per day this winter, off by more than 1.5bn cu ft/d from the five-year average, according to Platts Analytics. “Weather has been a big headwind for the gas distribution utilities in the last few months,” said Travis Miller, director of utilities research at Morningstar in Chicago. “A lot of gas utilities rely on heavy usage during the winter months to drive earnings for the entire year. That’s going to be a challenge this year.” When Public Service Enterprise Group released quarterly results on February 24, temperatures outside the utility’s New Jersey headquarters crested at a record 74 degrees Fahrenheit. The balmy conditions follow the warm winter of 2015-16, which had been intensified by El Niño, the Pacific weather pattern. When government forecasters looked ahead last autumn they eyed a winter about 12 per cent colder than last year, if still above normal.   Instead, this heating season has been running 3 per cent warmer than last year, weighted for population, according to the US National Weather Service. Over the past 30 days, more than 700 monthly high temperature records were set across the country, while only one low record was made.

Fast Growth Coming for Northeast Shale Gas Pipelines -  A surge in pipeline capacity for natural gas in the U.S. Northeast this year and next is expected to boost profits for producers and help hold down prices for Midwest and East Coast buyers. The $13.8 billion infrastructure build-out involves seven large pipeline proposals that will take gas in all directions. Producers in the Marcellus Shale region—primarily in Pennsylvania, West Virginia and eastern Ohio—are eager for the pipelines because they have been hurt by depressed prices in pockets of inadequate pipeline infrastructure, compounded by a nationwide two-year slump in gas prices. Gas producers in the region are likely to see substantial increases in profitability, said Andrew Weissman, the head of EBW Analytics Group and an attorney who specializes in energy practice at Pillsbury Winthrop Shaw Pittman LLP in Washington.  Leading producers in the Marcellus include Cabot Oil & Gas Corp., Chesapeake Energy Corp., EQT Corp., Range Resources Corp., Southwestern Energy Co. and Chief Oil & Gas LLC. The Federal Energy Regulatory Commission, with regulatory authority over interstate gas transmission, has approved five of the seven large proposed pipelines for moving gas out of the Appalachian region, which includes the deeper Utica Shale underlying the Marcellus Shale. FERC decisions are not necessarily the last word, however. “There are all sorts of relatively minor approvals that have to be granted for the pipelines to be completed,” Weissman told Bloomberg BNA, referring to such things as approvals for clearing trees along the routes. Some landowners have tried to block pipelines to preserve their trees. Environmental activists also have strongly opposed the pipelines. Ample supplies of gas holding down prices can discourage competing wind and solar projects that don’t produce the carbon emissions causing climate change. The new pipelines also could spell more trouble for operators of electric power plants that rely on coal and nuclear energy in competitive wholesale power markets.  “We are opposed to all fracking and fracked-gas infrastructure,” said Lee Stewart, an organizer for the group Beyond Extreme Energy. In fracking, or hydraulic fracturing, layers of rock are fractured to allow gas or oil to flow to a well.  Opposition also can come from states, as the backers of the Constitution Pipeline project discovered.

Hindus glad as major gas pipeline re-routed, bypassing Lord Krishna complex in West Virginia - Hindus worldwide are delighted over reported route altering of major gas pipeline, thus skipping the sacred sites of New Vrindaban Holy Dham focused on Lord Krishna near Moundsville in rural West Virginia.  This gas pipeline is being built by Rover Pipeline, a subsidiary of Energy Transfer Partners whose another pipeline project by the subsidiary Dakota Access was a site of highly publicized months long protests in North Dakota. The Rover and New Vrindaban officials reportedly reached a settlement over pipeline route around this multi-dimensional Hindu temple complex.  Distinguished Hindu statesman Rajan Zed, in a statement in Nevada today, thanked Energy Transfer Partners for giving due regard to the feelings of the area and worldwide Hindu community and sacredness of Hindu sites. He also commended the community for making efforts and seeking a solution for saving the sacred sites. Rajan Zed, who is President of Universal Society of Hinduism, urged all businesses to work towards respecting and accommodating the religious sentiments of the believers. Rover Pipeline, involving an investment of about $4.2 billion, is a new interstate 713-mile natural gas pipeline that is designed to transport 3.25 billion cubic feet per day of domestically produced natural gas to markets in USA and Canada. Energy Transfer Partners is a Fortune 500 company, founded in 1995 and headquartered in Dallas, which reportedly owns-operates one of the largest most diversified portfolios of energy assets in USA. Kelcy L. Warren is CEO.

 The True Cost of the Atlantic Sunrise Pipeline - A report prepared by Key-Log Economics for the Sierra Club and Appalachian Mountain Advocates was released Monday, detailing what it calls the true costs of the Atlantic Sunrise pipeline . The proposed fracked gas pipeline was approved by the Federal Energy Regulatory Commission (FERC) on its former chair's final day—just before the commission lost its quorum. The Atlantic Sunrise project would clear cut its way through 10 Pennsylvania counties, impacting 2,000 acres of forested land and crossings hundreds of wetlands and water bodies. The proposed route includes nearly 200 miles of new pipeline which would supply gas exports out of Maryland and gas plants in North Carolina and Florida. "FERC's failure to listen to the people and account for the true costs of this pipeline—not to mention recognize the lack of need for it—now puts tens of thousands of men, women and children at risk of not only polluted air, but spills and explosions." The report states that FERC overstated the pipeline's economic benefits while discounting or ignoring its costs, including the effects of the pipeline on property values; loss of environmental benefits like flood control, clean water and wildlife habitat; economic damages associated with increases in greenhouse gas emissions; and public health costs due to the release of toxins and smog-forming pollutants. "The report makes even more clear that, while the damage that this pipeline would cause to private property and the environment is very real, any benefits to the public are illusory," said Ben Luckett, an attorney with Appalachian Mountain Advocates. The report estimates the pipeline's total costs (the initial cost plus the discounted value of all future annual costs) at between $21.3 and $91.6 billion. The one-time costs (ecosystem services lost during construction) are estimated to be $6.2 to $22.7 million, while annual costs for this diminished ecosystem service productivity would total approximately $2.9 to $11.4 million per year. Using a 2.5 percent discount rate, the annual cost associated with the social cost of carbon from the project's greenhouse gas emissions would be $2.3 to $3.5 billion per year. The report cautions that the estimates are conservative and do not include the value of landscape preservation or damages to natural resources, property and human health in the event of a leak or explosion. The report does not quantify estimates in property value losses, but it does analyze what it calls FERC's failure to include realistic estimates in its analysis, citing the "well-established negative impact" of pipelines on property values.

Trump’s new Gulf of Mexico oil and gas drilling proposal looks a lot like Obama’s - The Trump administration on Monday announced an offshore oil and gas drilling proposal in the Gulf of Mexico that appears to mirror a plan offered by his predecessor a few months ago.In one of his first acts after last week’s Senate confirmation, Interior Secretary Ryan Zinke proposed leasing 73 million acres off Florida, Alabama, Texas, Louisiana and Mississippi over five years starting in August. The offer includes more than 13,700 lease blocks extending three miles to 230 miles offshore, according to an Interior Department statement.“Opening more federal lands and waters to oil and gas drilling is a pillar of President Trump’s plan to make the United States energy independent,” Zinke said in the statement. “The Gulf is a vital part of that strategy to spur economic opportunities for industry, states and local communities, to create jobs and homegrown energy and to reduce our dependence on foreign oil.” But the plan is similar to a five-year proposal by the Obama administration to lease 66 million acres in the same location, the gulf’s “Western, Central and Eastern planning areas” where water is as shallow as nine feet and as deep as 11,000 feet. As he prepared to leave office, President Obama banned drilling in the Arctic and Atlantic oceans for the next five years, but allowed it in the gulf with lease plans offered primarily off gulf states other than Florida. Obama’s interior secretary, Sally Jewell, said the proposal’s leases were focused “in the best places — those with the highest resource potential, lowest conflict and established infrastructure — and removes regions that are simply not right to lease.” The gulf, an area that has seen intense drilling, would see more compared with the Arctic and Atlantic, where little drilling occurs.

Exxon to invest $20 billion on U.S. Gulf Coast refining projects | Reuters: Exxon Mobil, the world's largest publicly traded oil producer, said on Monday it would invest $20 billion through 2022 to expand its chemical and oil refining plants on the U.S. Gulf Coast. The investments at 11 sites should create 35,000 temporary construction jobs and 12,000 permanent jobs, Chief Executive Darren Woods said in a speech at CERAWeek, the world's largest gathering of energy executives. Some of the expansions began in 2013, but the scope of the project is now growing and the timeline extended, Exxon said. Woods ran Exxon's refining division before becoming CEO two months ago, and the new spending benefits a sector with which he has significant experience and comfort. Investments in the high-margin projects should help ease concerns from Wall Street that Exxon's growth potential - especially in oil and gas exploration and production - is sliding. "Exxon Mobil is building a manufacturing powerhouse along the U.S. Gulf Coast," Woods said. "These businesses are leveraging the shale revolution to manufacture cleaner fuels and more energy-efficient plastics." The investments across Texas and Louisiana will take advantage of cheap shale gas to make plastics and other chemicals for export. The strategy builds on prior steps Exxon and peers, including Dow Chemical Co (DOW.N), have taken in the wake of the American shale expansion, which sharply cut production costs.

Saudi Aramco to Pay Shell $2.2 Billion in Refinery Breakup   - Saudi Arabian Oil Co. will pay Royal Dutch Shell Plc $2.2 billion including debt to finalize the breakup of a 19-year refining partnership known as Motiva Enterprises LLC.Saudi Aramco’s Saudi Refining unit will take full ownership of the Motiva Enterprises name and legal entity, including the largest refinery in the U.S. at Port Arthur in Texas, and 24 distribution terminals, according to a joint statement. Shell will take sole ownership of the Norco and Convent refineries in Louisiana and 11 distribution terminals. Aramco will make a $2.2 billion balancing payment, split between debt and cash and subject to adjustments including working capital, Shell said in a separate statement. Aramco will assume almost all of Motiva’s $3.2 billion of net debt, including $1.5 billion of Shell’s share. A cash payment will cover the balance, Shell said. The arrangement will also take the Anglo-Dutch company closer to its target of selling $30 billion of assets in the three years to 2018.  “Motiva is a strong competitor among U.S. refiners, and we value this important link with the dynamic U.S. energy sector,” said Abdulaziz Al-Judaimi, senior vice president of Aramco’s downstream business. “Our intent is to continue providing Motiva with strong financial support as it transitions into a stand-alone downstream affiliate.” The transaction is subject to regulatory approval and expected to close in the second quarter, the companies said. Shell and Aramco agreed last year to end the Motiva venture, which oversaw the three oil refineries as well as fuel terminals and fuel-branding rights in multiple U.S. states.

OPEC Said to Break Bread With Shale in Rare Show of Detente - For the last two years, they’ve been locked in a battle for supremacy of the oil market. But for a couple of hours in Houston over dinner on Sunday, the head of OPEC and leaders of some of America’s top shale producers shared a table for a rare off-the-record chat about the future of oil. Mohammed Barkindo, secretary-general of the Organization of Petroleum Exporting Countries, dined with 20 or so U.S. shale executives including Scott Sheffield of Pioneer Natural Resources Co., John Hess of Hess Corp., Robert Lawler of Chesapeake Energy Corp. and Tim Leach of Concho Resources Inc., according to people who attended the event and asked not to be named because it was private. Mark Papa, the oilman who helped create the U.S. shale industry more than a decade ago, also attended the dinner at a restaurant in downtown Houston on the eve of the annual CERAWeek conference. Halliburton Co. President Jeff Miller was among representatives of the oil-service sector. The sides agreed in principle that the market should be better balanced and lower inventories would be beneficial to everyone, according to the people. But while the shale producers signaled they weren’t ready to give up on the growth they see ahead, OPEC indicated it wants higher prices, even if it means enriching the shale companies, they said. “It was a very good exchange of information and views about oil," Hess Chief Executive Officer John Hess said in an interview Tuesday. “I really commend the OPEC secretary general for the outreach. It was a good talk." Spokespeople for Pioneer, Chesapeake and Concho Resources weren’t immediately available to comment on the dinner when reached outside of regular business hours. Mark Papa couldn’t be reached and Halliburton declined to comment.

OPEC invites U.S. shale firms, hedge funds into talks on glut: (Reuters) - The Organization of the Petroleum Exporting Countries is moving to bring U.S. shale producers and hedge funds into widening talks about how best to tame a global oil glut. The group held unprecedented talks with fund executives on Tuesday and earlier held meetings with shale producers, including Pioneer Natural Resources Co and ConocoPhillips. The introductory discussions were the first bilateral meetings with shale producers and investment funds, OPEC Secretary General Mohammed Barkindo said on Tuesday at the CERAWeek energy conference in Houston. The two have become important players in adding production to a world awash in crude oil. Cheap financing for newer producers has forced majors to turn their focus from big, long-term projects to those that can generate quick cash for their investors. Last November, OPEC took initial steps to widen its market reach as it sought to end a two-year price war, striking a historic agreement with 13 non-member countries, including such major oil producing nations as Russia, Kazakhstan and Mexico. Saudi Arabia Oil Minister Khalid al-Falih separately told a group of oil industry executives at the conference that the November pact set a new "cooperative framework" for OPEC to address short-term market turmoil. "All of us realize that such an expanded network of producers with a larger share of global production is the only way to achieve a constructive, stable market for all," he said.

Saudi says Opec deal invigorating US shale industry - Saudi Arabia’s energy minister told executives in Houston that its participation in an international agreement to cut crude output was reinvigorating rivals in the US shale patch, a development that could undermine efforts to stabilise a weak oil market. The comments of Khalid al-Falih at the CERAWeek by IHS Markit conference stood in stark contrast to those of his predecessor at the same venue a year ago. Then, minister Ali al-Naimi bluntly warned shale producers that they must trim their costs or risk bankruptcy. In November the Opec cartel, led by Saudi Arabia, joined 11 other producers to reduce output in the first six months of 2017. Oil prices have rebounded from less than $30 a barrel in early 2016 to more than $56. Mr Falih said that the cuts were taking effect more slowly than he expected and added that the agreement was helping sow “green shoots” in the industry, mainly in the US. As oil prices have increased, US producers have deployed more drilling rigs, threatening a rebound in supplies unbound by the output pact. He acknowledged that Saudi Arabia had a hand in “watering of the green shoots”, and welcomed the return of investment in US shale. He added: “I am optimistic about the global market outlook in the weeks and months ahead, though I caution that my optimism should not tip investors into irrational exuberance or wishful thinking that Opec or the kingdom will underwrite the investments of others at our own expense.” Saudi Arabia has reduced its own output to less than 10m barrels a day. Mr Falih said that any decision to extend the agreement would be predicated on how quickly oil inventories were falling back to average levels as well as the extent of other countries’ compliance with the deal.

OPEC and the shale industry seek a truce: Kemp (Reuters) - The Organization of the Petroleum Exporting Countries (OPEC) and shale producers have fought each other to a draw over the last two years, with neither able to achieve a decisive victory. Now both want a truce. There have been no winners from the oil producers’ civil war of 2014-2016, except for consumers, who have enjoyed two years of cheaper fuel prices. OPEC members are running out of money and need higher prices to reduce their budget deficits and halt the slide in their foreign reserves. And for all their bravado, shale producers and the entire U.S. oil supply chain have been badly wounded and rescued by a rise in prices largely engineered by OPEC. The bad-tempered exchanges between OPEC and shale chiefs that characterised 2014-2015 have given way in 2016-2017 to a recognition that their prosperity is tied together. OPEC and the shale industry are interdependent. Both lose if they raise output too much, flood the market with more oil than can be consumed, and cause prices to crash. Shale firms need OPEC to succeed in reducing global oil stockpiles and raising prices. And OPEC needs shale producers to be cautious in growing output to avoid undermining its policy of supply restraint. The warmer relationship between OPEC and shale firms on display at the CERAWEEK conference hosted by IHS Markit in Houston this week has been building for some time. OPEC's secretary-general said at the conference that the organisation had "broken the ice" with shale oil producers and hedge funds who have become major players in the market. Harold Hamm, head of one of the largest U.S. shale producers, said that industry would need to add output in a "measured way, or else we kill the market", suggesting no new dash for growth.

Shale Billionaire Hamm Says Industry Binge Can 'Kill' Oil Market - Harold Hamm, the billionaire shale oilman, said the U.S. industry could "kill" the oil market if it embarks into another spending binge, a rare warning in a business focused on fast growth to compete with OPEC. The statement, at an energy conference in Houston on Wednesday, comes as top shale companies announce large increases in spending for this year, and the U.S. government says domestic oil output next year will surpass the record high set in 1970. OPEC ministers have said they are keeping a close watch on shale production to decide in late May whether to extend their oil-supply cuts into the second half of the year. Oil prices plunged 5 percent on Wednesday to their lowest level this year, falling just above $50 a barrel, on investor concerns about unbridled growth in America’s shale basins swelling U.S. inventories. U.S. production "could go pretty high," Hamm said at the CERAWeek by IHS Markit conference in Houston, one of the largest gatherings of oil executives in the world. "But it’s going to have to be done in a measured way, or else we kill the market." After oil prices doubled over the past year, U.S. shale drillers have announced big increases in spending for 2017. Anadarko Petroleum Corp. this week said it planned to invest 70 percent more this year than in 2016. Last month, EOG Resources Inc., another big shale producer, said it will spend 44 percent more this year than last. Exxon Mobil Corp. plans to spend a third of its drilling budget this year on shale. Shale producers are staging the biggest surge in drilling since 2012, with the number of oil rigs rising to more than 600 this month, nearly double the level of June. They are rushing to spend again after the Organization of Petroleum Exporting Countries and Russia agreed last year to cut its supplies, boosting oil above $50 a barrel after a two-year price rout.

U.S. shale plots production growth despite OPEC's warning | Reuters: U.S. shale oil producers are plotting ambitious production growth outside the red-hot Permian Basin in Texas, widening a resurgence that could confound OPEC's strategy to tighten global supplies. As shale firms rebound from a two-year price war with OPEC, many are planning to expand production in North Dakota, Oklahoma and other shale regions. The Permian - America's largest oilfield - has already seen output jump in the past six months. Hess Corp, Chesapeake Energy Corp, Continental Resources Inc and other firms detailed their growth plans at an energy conference in Houston this week. The projects they outlined would result in a steady supply of American crude exports through the next decade. Rising U.S. energy clout has frustrated efforts by the Organization of the Petroleum Exporting Countries to control global oil prices through a production curb announced last fall - its first in eight years. The rise in U.S. output was enough to boost domestic crude stockpiles last week by 8.2 million barrels, more than quadruple estimates from analysts polled by Reuters. The unexpected supply surge pushed U.S. oil prices down more than 5 percent on Wednesday to close at $50.49. The price drop underscored the growing impact of U.S. shale production on global supplies and prices relative to OPEC member nations, which once exercised dominant influence on global markets. Representatives from both sectors acknowledged that power shift at the energy conference in Houston. "We are on something of an equal basis today with OPEC," said Harold Hamm, founder and chief executive of Continental Resources, which has invested heavily in Oklahoma shale projects in the past year.

 U.S. oil production forecasts revised higher: Kemp - (Reuters) - U.S. oil production forecasts for 2017 and 2018 have been boosted significantly as a result of rising prices as well as improved modelling techniques for predicting output down to the well level. Crude production is expected to reach 9.53 million barrels per day (bpd) in December 2017, according to the latest forecasts from the U.S. Energy Information Administration (EIA). Forecast output for December 2017 has been revised up from 8.29 million bpd when the agency prepared its predictions in March last year (http://tmsnrt.rs/2moZoqc). The forecasts are contained in the "Short-Term Energy Outlook" EIA publishes every month. Forecast output has been revised higher every month since September 2016. Revisions are concentrated in output from the Lower 48 states, excluding federal waters in the Gulf of Mexico, so they are mostly about shale output, rather than offshore fields and Alaska (http://tmsnrt.rs/2moXWnN). EIA has revised expected output at the end of 2017 from the Lower 48 excluding the Gulf of Mexico up by 1.4 million bpd since March 2016 (http://tmsnrt.rs/2niqnRS). Upward revisions stem from a combination of higher oil prices, an increased number of rigs drilling, and improvements in methodology. Operators have added many more rigs and produced more oil than the agency was forecasting just six months ago. Oil prices ended up being $5 per barrel higher in the fourth quarter of 2016 than the agency forecast back in August. Prices in the first quarter of 2017 have so far averaged about $7 higher. Higher prices have contributed to more drilling, particularly in the Permian Basin of western Texas and eastern New Mexico, raising the current rig count and actual production the forecast uses as a baseline. Higher rig counts have also revealed new information about the price levels at which operators in certain areas can grow production, which have filtered through to the models that the agency uses. In addition to the price impact, the agency has made a number of improvements to its methodology. EIA has shifted from basin-level to well-level forecasts, and improved its understanding of the time lags between price changes and when operators add drilling rigs. The agency has also tweaked the model it uses to allow for more interplay between oil and gas prices, allowing the model to select whether drillers will focus on oil or gas depending on price differentials.

 U.S. Oil Industry Becomes Refiner to World as Exports Boom --When PBF Energy Inc. scooped up a refinery from Exxon Mobil Corp. on the Mississippi River in 2015, it wasted no time sprucing up the plant with an eye toward quickly resuming lucrative fuel exports.Within three months, PBF was ready to load its first tanker for shipment abroad. By late last year, the New Jersey-based company was exporting 22,000 barrels a day of fuel, or 16 percent of that refinery’s output. Now, it wants to boost that to almost 25 percent.PBF isn’t alone in this push. From major producers such as Chevron Corp. to specialized refiners including Valero Energy Corp., the U.S. refining industry has shifted its game over the last five years, taking advantage of gaps left by struggling refiners in Latin America, Africa and Asia. Along the way, it’s transforming what had long been a largely domestic business into a new global venture."U.S. refiners are now the refiners for the world," said Ivan Sandrea, head of Sierra Oil & Gas, which is planning to build infrastructure to import U.S. fuels into Mexico.U.S. companies last year exported a record 3 million barrels a day of refined products, more than double the 1.3 million barrels a day shipped a decade ago, according to data from the Energy Information Administration. Gasoline led the surge, with exports hitting an all-time high of almost 1 million barrels a day in December, up ten-fold from a decade ago. On top of the export boom, U.S. refiners are enjoying fresh supplies of relatively cheap and high quality crude from the Permian, the Bakken and other shale basins. The combination is spurring oil companies to invest in new capacity, particularly along the Gulf of Mexico coast. Oil refiners are set to discuss their investment plans this week at the annual CERAWeek, an industry conference where every year thousands of executives, bankers and officials gather in Houston.

How new rules on bunker fuel sulfur content will impact refineries. Much tougher rules governing emissions from ships plying international waters soon will force wrenching change on the energy industry. Demand for high-sulfur fuel oil is expected to plummet; ditto for HSFO prices. Demand for low-sulfur distillates from the shipping industry will rise sharply, putting upward pressure on prices for marine gas oil, marine diesel oil and ultra-low-sulfur diesel. These demand and pricing shifts, in turn, will have a number of significant effects on refiners. Today we continue our series on the far-reaching effects of the International Maritime Organization’s (IMO) mandate to slash emissions from tens of thousands of ships starting in January 2020. This blog series is based on elements of a just-published report by our friends at Turner Mason & Co. that examines a number of crude oil- and refined products-related topics, including the impact of the IMO’s new sulfur rule (planned effective date: January 1, 2020) on high-sulfur fuel oil (HSFO) and low-sulfur marine distillate demand and prices, on future demand for various grades of crude (heavy vs. light, sour vs. sweet etc.), and on the refining sector more generally.

US crude exports hit record levels in January, February - US crude exports hit record highs in January and February, as domestic crude price discounts to Brent and Dubai widened significantly, an S&P Global Platts analysis of government data showed Tuesday. US Census Bureau data showed US crude exports rising by 304,000 b/d to 746,000 b/d in January, which was followed by a report by the US Energy Information Administration showing US crude exports averaging 900,000 b/d in the four weeks ending February 24. Congress' December 2015 decision to lift restrictions inaugurated a new era in US oil trade, with exports averaging an annual record of 521,000 b/d in 2016. Additionally, rising production from the Permian Basin in West Texas, in combination with a significant buildout in infrastructure to access export markets, has deepened price discounts for US light sweet crudes, allowing US crude exports to take off. "It's pure economics," said Tony Starkey, manager of energy analysis at Platts Analytics. "WTI/Brent finally widened enough to make some additional exports profitable since the export ban was lifted. There was also an uptick in exports back in August/September 2016 which aligns pretty well with when the WTI/Brent spread last flirted with the $3/b level." The WTI/Brent spread averaged $2.24/b in January, out from $2.03/b in December and 81 cents/b in November, making US crudes more competitive in Brent-linked markets across the Atlantic Basin. WTI flipped to a discount of 7 cents/b to Dubai in December, and that spread blew out to 95 cents/b in January as OPEC output cuts tightened the Middle Eastern sour crude market. Likewise, a widening discount of Mars crude to Dubai in recent months has boosted US crude exports to Asia.

Texas LNG Brownsville LLC Moves Another Step Closer For LNG Export Project -- I track list of potential new LNG export facilities at this site. At that site, these links:

  • January 28, 2017: Exelon has applied for an LNG export facility permit for Brownsville, TX. 
  • Annova LNG: has proposed a six-train, 6-MTPA liquefaction/LNG export facility planned by Exelon Generation for Brownsville
  • Third Point LLC (a NYC-based investment fund) and Samsung Engineering are developing Texas LNG, a proposed 4-MTPA liquefaction/LNG export terminal in Brownsville
  • Rio Grande LNG, being developed by NextDecade LLC: up to six 4.5-MTPA liquefaciton trains and two LNG loading berths along the Brownsville Shipping Channel

Today, over at Rigzone, this appears to be the Third Point LLC (Texas LNG - Samsung / NYC-based investment fund consortium:Texas LNG Brownsville LLC announced Thursday that Samsung Engineering Co., Ltd. and KBR Inc. will provide pre-final investment decision (pre-FID) detailed engineering and post-FID engineering, procurement and construction (EPC) services for its proposed 4 million tonnes per annum (MTA) LNG export project in South Texas. Samsung Engineering, a minority equity owner and technical partner in the mid-scale liquefaction project, has already completed the conceptual study, pre-front end engineering design (pre-FEED) and FEED, Texas LNG stated in a press release. The project's design calls for constructing modular designed and prefabricated liquefaction trains using proven technology and standardized components in a controlled shipyard environment, the project developer continued. Such an approach reportedly would lower overall project costs, reduce complex onshore civil construction works and minimize local onsite environmental impacts as well as commissioning costs during permanent installation on the deepwater Brownsville Ship Channel near the Gulf of Mexico.

Why more liquefaction capacity may be needed in less than three years. -- Last year was the best for global LNG demand growth since 2011, and a combination of ample LNG supply, new buyers and relatively low prices suggest that demand will continue rising at a healthy clip in 2017. That’s good news not only for LNG suppliers, but for natural gas producers and for developers planning the “second wave” of U.S. liquefaction/LNG export projects. Before those projects can advance, the world’s current—and still-growing—glut of LNG needs to be whittled down, and nothing whittles a supply glut like booming demand. Today we discuss ongoing changes in the LNG market and how they may well work to the advantage of U.S. gas producers and developers. It’s easy to get caught up in the fact that way too much liquefaction/LNG export capacity is being added in the 2016-20 period, most of it in Australia and the U.S. Sure, it’s a bummer that liquefaction-plant developers, responding to fast-rising demand and high LNG prices early in this decade, started building an army of new facilities to supercool natural gas into LNG, only to see LNG demand growth stall and prices plummet in 2014-15, just as the first of their new plants were nearing completion and about to come online. As we said in Coming Up, though, markets do respond when supply and demand get out of whack. Spot prices for LNG for a time fell below $5/MMbtu, and the price of LNG purchased under long-term contracts (many of which index the LNG price to the price of crude oil) declined as well (though not nearly as far). In response––and with the knowledge that a slew of new Australian and U.S. liquefaction capacity would be coming online over the next few years––global demand for LNG started rebounding.

 A take-it-to-Corpus option for the Permian and the Eagle Ford crude oil producers. --The expectation that crude oil production in the Permian Basin will continue growing has set off a competition among midstream companies, a number of which are known to be developing plans for additional pipeline takeaway capacity out of what is clearly America’s top-of-the-charts tight-oil play. One of the biggest topics of conversation the past few days has been the plan by EPIC Pipeline Co. to build a new crude pipeline from the Permian’s Delaware and Midland basins to planned storage/distribution and marine terminals in Corpus Christi. Today we detail EPIC’s plan and explain the rationale for the pipeline’s route and destination. The Permian Basin in West Texas and southeastern New Mexico has proven to be the Energizer Bunny of U.S. tight-oil and shale plays, not only surviving the oil patch’s nuclear winter of mid-2014 to mid-2016 but thriving during it. Sure, the rig count in the Permian fell by more than two-thirds post-crash—from 558 in July 2014 to 162 in July 2016, according to Baker Hughes. But unlike other major plays (the Bakken and the Eagle Ford, for instance), crude oil production in the Permian kept rising—from just under 1.6 million barrels per day (MMb/d) in June 2014 (when crude was selling for $108/bbl, on average) to just over 1.9 MMb/d in January 2016 (when it was selling for $29/bbl). And like that pink, drum-beating bunny, the Permian remains full of energy: Production there is up another 300 Mb/d in the past 14 months (now averaging about 2.2 MMb/d), and as of March 3 (2017) the Permian’s rig count stood at 308. As for the Bakken and the Eagle Ford, their production volumes are down 11% and 27%, respectively, since June 2014, even with crude prices now north of $50/bbl.

Emerging natural gas supply constraints and premium pricing in south Texas, part 2. -- U.S. natural gas exports drove a significant portion of overall gas demand growth in 2016 and are expected to continue being the primary demand driver over the next several years. Much of this export demand will be emerging along the Texas-Mexico border and at planned LNG export terminals along the southern Texas Gulf Coast. But production in the South Texas region is not expected to grow nearly as quickly or robustly as demand, setting the stage for supply constraints and premium pricing in the South Texas market and making the area a target destination for producers and pipeline companies. For example, on Wednesday, Enterprise announced the possibility of a new pipeline from Orla, TX, in the Permian Basin to Agua Dulce in South Texas. So how will all of this play out? Today, we continue our series analyzing the gas supply and demand balance in South Texas, this time with a look at the demand side and the resulting market balance.

Big Oil frets about Trump's border tax, Mexico policies --  — On the opening day of the biggest annual conference of energy executives, the chief executive of the biggest U.S. oil producer held forth on tax and trade policy. Exxon Mobil Corp. CEO Darren Woods didn't mention President Trump, but he came down clearly on the side of free international trade and against some of the administration's proposals on protective taxes. "Policies in the forms of subsidies, mandates and trade barriers only hinder progress," Woods told the 3,000 attendees at the annual CERAWeek conference by IHS Markit Ltd. "They are more expensive and lead to poor investment decisions focused on the limitations imposed, not true innovation," he said. The second and third days of the conference featured the heads of the No. 2 and No. 3 oil producers — Chevron Corp. and ConocoPhillips Co. — also talking about tax policy. Chevron CEO John Watson, who supports most of Trump's plan to overhaul the tax system, said a border tax could harm U.S. consumers by raising prices. Advertisement "I want to see the U.S. be more competitive, not burdening imports," he said yesterday. While the oil industry has generally supported Trump, the Big Oil executives gathered here — along with the utility and refining industries — are quietly staking out differences with the administration on a variety of issues, most notably taxes and trade policy.

Scientists Link Fracking to Explosion That Severely Injured Texas Family –  Scientists have determined that methane from a fracked well contaminated a Texas family's water supply and triggered an explosion that nearly killed four members of the family.  The family's ranch in Palo Pinto County is located only a few thousand feet away from a natural gas well. In August 2014, former oil field worker Cody Murray, his father, wife and young daughter were severely burned and hospitalized from a "fireball" that erupted from the family's pump house. A year later, the family filed a lawsuit against oil and gas operators EOG Resources and Fairway Resources, claiming the defendants' drilling and extraction activities caused the high-level methane contamination of the Murrays' water well."At the flip of the switch, Cody heard a 'whooshing' sound, which he instantly recognized from his work in the oil and gas industry, and instinctively picked his father up and physically threw him back and away from the entryway to the pump house," the complaint states. "In that instant, a giant fireball erupted from the pump house, burning Cody and [his father], who were at the entrance to the pump house, as well as Ashley and A.M., who were approximately twenty feet away."While the state's oil and gas regulator—the Texas Railroad Commission—has yet to definitely prove what caused the blast, new scientific studies commissioned by the Murrays' attorneys has directly linked the explosion to fracking operations.As the Texas Tribune detailed, the studies found that methane and drilling mud chemicals had escaped from a poorly sealed Fairway gas well and traveled through underground fractures and eventually into the Murrays' water supply.The hired experts include Thomas Darrah, a geochemist at Ohio State University; Franklin Schwartz, an Ohio State University hydrologist; Zacariah Hildenbrand, chief scientific officer at Inform Environmental; and Anthony Ingraffea, a civil engineering professor at a Cornell University with expertise in fracking."The timing is undeniable, the location is undeniable, the chemistry of the gas is undeniable," Chris Hamilton, the Murray's a ttorney, told news station WFAA. "This is not naturally occurring gas. This is gas that came from 4 to 6-thousand feet below the ground."

Back from the dead: US shale is booming again - Saudi Arabia’s attempt to kill off the US shale oil industry looks to have badly backfired. More than two years after Riyadh and its OPEC allies ramped up production to push down the price of oil and drive shale producers out of business, it’s actually the cartel that is licking its wounds – and not the US upstarts. The fight has destroyed OPEC members’ finances, forcing many to dip into reserves and sell bonds to finance spiralling fiscal deficits – Saudi’s alone is US$100bn a year. Other cartel members such as Nigeria have turned to the World Bank for emergency loans, while Venezuela has seen its economy paralysed by falling oil revenues. By contrast, the US shale industry is enjoying its second wave. After a painful couple of years when dozens of shale producers filed for bankruptcy and four out of every five rigs were mothballed, cost savings and big improvements in technology have reinvigorated the sector. Activity has rebounded, with 602 rigs now active, double the level last May. Rather than kill the sector off, the near-death experience has pushed US shale producers into becoming more efficient than ever. Five years ago, producers in the Permian basin were pumping 100 barrels per rig per day. Now it is over 600. Profits have leapt, cashflow is rising, and market share is growing – all at the expense of OPEC. “It’s worked out terribly for the Saudis and OPEC,” said Brian Gibbons, global head of oil and gas credit research at CreditSights “Their attempt at market share gains did of course result in a record number of shale producers defaulting, but what transpired at the same time was the remaining companies becoming that much more efficient.” “The US has got much stronger and more resilient … it’s the OPEC members that are haemorrhaging cash,”

$80,000 Jobs Find Few Takers in America's Red-Hot Shale Country - Five years ago, the thought of $55-a-barrel oil would have given Piotr Galitzine heartburn. Now it’s keeping one of his steel-pipe shops in Houston open 24/7 and fueling a flurry of orders. It’s stoking business for National Oilwell Varco Inc. too, with the oilfield-equipment giant for the first time in better than a decade selling more land-based than offshore gear. And it’s got Perry Taylor on the hunt for truckers to haul fracking sand. Even at $80,000 a year, jobs are hard to fill. “It’s tough,” said the chief executive officer of Agility Energy Inc. “We’ve got commitments that are very difficult to keep right now because we can’t get the drivers.” Crude is nowhere near its $100-plus highs of recent years, but drillers pounced after it steadily crept back up from the $26 bottom it sank to early last year. And as they tap more and more new wells, the rebound is spreading quickly, and powerfully, to the oilfield-services outfits that were so hard hit during the collapse. “Everyone is so hungry,” said Joseph Triepke, founder of the industry research company Infill Thinking in Dallas. “It’s like we’re hanging a steak in front of a bunch of starving people.” That services companies are hopping again with crude worth half what it was three years ago is thanks in large part to technological advances that help explorers to find more pockets of petroleum riches, and to drill faster and frack smarter. That last bit is key in the shale formations that hold the most promising on-land pockets of oil and gas; tapping them requires fracturing the surrounding rock with injections of water, sand and chemicals.The burst of activity has helped drive U.S. oil output up at a faster rate than during the last surge, with an average 125,000 barrels a day added since September. Now exploration and production spending in the U.S. and Canada is on track to climb four times more than the worldwide average this year.

Rising oilfield costs a 'test' for upstream companies: CEOs - - Oilfield costs that are set to rise in the energy industry are a test for upstream company managers as they seek to remain profitable at crude prices that persist at relatively low levels, chief executives of two top international oil companies said Monday. The start of recovery from a recent two-year industry downturn offers a "unique opportunity" for companies to transform and reset the cost base, Statoil CEO Eldar Saetre said during a panel discussion with the president of Petrobras on the first day of IHS CERAWeek. Statoil has brought down its breakeven price of what it calls its next-generation portfolio of emerging and current projects, which hold more than 3 billion barrels of oil equivalent, from around $70/b-plus to well below $30/b, Saetre told the annual gathering. "It turns out that we are capable of [shaving off] costs when we have to," he said. In addition, Pedro Parente, president of Brazil's state-controlled Petrobras, noted his company has undertaken a plan to reduce what was the oil industry's biggest debt load of $123 billion by selling about $15 billion of assets in 2015-16. The company also expects to accelerate its return to a better balance sheet by cutting net debt to 2.5 times EBITDA by 2018. In 2015, net debt was 5.3 times EBITDA.On top of the downturn where lower oil prices cut sharply into oil company profits, Petrobras was grappling with an internal corruption scandal involving kickbacks on building and other contracts. But Parente said the work that new management has done to revitalize the company and get it into better fiscal shape "has been recognized and acknowledged" by the market.

Could Artificial Earthquakes Trigger Disaster? Oklahoma's Risk "Now Equal To That Of San Francisco" - While Oklahoma has had a handful of notable earthquakes over the past century, it was essentially never an earthquake state. And rightfully so, given that the USGS and other officials, up until quite recently, ranked Oklahoma’s earthquake hazard level at the second lowest level, with a patch of slightly elevated, but still moderately low areas: According to the statistics that have been released, Oklahoma, in fact, had very few earthquakes (over a magnitude of 3.0) during the past half century – until the year 2009. That date marks the expansion of fracking in the oil industry, as the Obama Administration signaled an attack on coal and fossil fuels, and the petroleum industry sought to flood market supply to manipulate the political power of oil in certain key regimes around the world: Now, the low key heartland state of Oklahoma is suddenly rivaling San Francisco as the most earthquake-prone place in the United States.According to the Daily Mail:Oklahoma is the most at risk place in America for man made earthquakes caused by oil and gas drilling, a new USGS quake risk map has revealed. In its annual national earthquake outlook , the U.S. Geological Survey reported Wednesday that a large portion of Oklahoma and parts of central California have the highest risk for a damaging quakes this year: between 5 and 12 percent.Natural elevated quake risks exist through much of California, Seattle and the area where Missouri, Tennessee, Arkansas, Kentucky and Illinois come together, known as New Madrid.Seismologists say Oklahoma’s problem is triggered by underground injections of huge volumes of wastewater from oil and gas drilling.[…]From 1980 to 2000, Oklahoma averaged only two earthquakes a year of magnitude 2.7 or higher. That number jumped to about 2,500 in 2014 then to 4,000 in 2015 as the use of an oil and gas production technique that uses millions of gallons of water boomed.

New Mexico lawmakers fighting to keep limits on waste from oil, gas companies – New Mexico lawmakers are fighting a move in Washington to get rid of a rule that limits waste from oil and gas companies. They believe that waste is the cause of that giant methane cloud over the Four Corners area. NASA has documented that cloud over the years. It shows the largest plume of methane in the nation. While NASA is still investigating, they say the likely sources are venting from oil and gas activities, active coal mines and natural gas seeps. In November, a rule was passed under President Obama that would require oil and gas operators to limit the methane emissions. Now the Republican led House has passed a measure to get rid of that rule. It’s now in front of the Senate. New Mexico state lawmakers and Congressman Tom Udall argue that it would be very harmful to New Mexico in a number of ways. “When methane is released, so are harmful pollutants that have harmful consequences — benzene linked to cancer, small pollutants trigger asthma,” Rep. Georgene Louis, D-Bernalillo, said. “The natural gas is owned by the taxpayers, but instead of earning royalties, over $100 million worth of gas is going to waste each year just in New Mexico,” Sen. Udall said. State lawmakers argue that extra $100 million could help the state budget crisis. Many Republican argue the rules are hurting business. Other states like Colorado have enacted their own methane waste rules — something New Mexico lawmakers are also looking to do so that we don’t have to rely on the federal rules.

EPA scraps methane reporting for oil and gas industries - The Trump Administration has withdrawn an EPA request that oil and natural gas companies provide information on their methane emission from field operations.The Obama Administration had sent the data request to some 15,000 oil and gas companies late last year. It asked for basic information on the numbers and types of equipment used at onshore drilling and production facilities as well as more detailed information on methane emissions sources and control devices.Earlier in 2016, EPA issued methane control regulations for new oil and gas facilities, but did not address existing facilities. The data collection rule was an attempt by the Obama EPA to learn more about oil and gas operations in preparation for emissions regulations at operating facilities.Oil and gas operations are the largest industrial source of methane, a greenhouse gas 25 times more potent that carbon dioxide, according to EPA.  The U.S. is experiencing an oil and gas bonanza with some million wells in operation. However, in the rush to exploit the resource much is unclear—even the exact number of wells is uncertain. Confusion also surrounds the quantity of methane emissions. The now-canceled reporting was intended to help resolve this uncertainty.

Random Update Fracking Sand Amounts; Note The Bakken Well That Was Fracked With More Than 27 Million Lbs Of Sand -- There have been a few articles recently on the amount of fracking sand used in the Bakken. It seems to me it varies widely from operator to operator. Many operators are still using 4 million lbs; others are trending a bit higher but staying below 10 million lbs; I am starting to see at least one operator using 20+ million lbs (I often forget to check the length of the horizontals -- I will try to remember to point out 3-section laterals -- super-long laterals -- which can obviously affect the amount of proppant used; fortunately, 3-section -- super-long laterals -- are fairly rare).
The best way to compare wells is by the amount of proppant used per foot but that takes a bit more time: for the Bakken, in general, one can assume the horizontals are two-sections long, about 9,000 feet.  Look at the test date on an early well and the test dates of the three more recent wells and compare the amount of proppant EOG used in these sand fracks. Among the Bakken operators, EOG has talked often about the sand pits it owns. For these wells, I have included the depth of the wells:

  • 31403, 1,447, EOG, West Clark 117-0136H, Clarks Creek, 36 stages, 27.65 million lbs t5/16; cum 201K 1/17; 18,217 feet;
  • 31248, 1,272, EOG, West Clark 104-0136H, Clarks Creek, 36 stages, 21.029 million lbs; t5/16; cum 122K 1/17; 18,185 feet;
  • 31247, 1,613, EOG, West Clark 103-0136H, Clarks Creek, 37 stages, 21.15 million lbs; t5/16; cum 148K 1/17; 17,965 feet;
  • 20329, 1,203, West Clark 4-2425H, Clarks Creek, 34 stages, 9.12 million lbs, t5/13; cum 303K 1/17;(18 days in January, 2015); 19,594 feet;

It seems like the analysts are concerned about the cost of proppant. From my vantage point, the cost of sand is the least thing to be concerned about in the overall cost of the well (benefit vs cost analysis). The cost of resin-coated proppant may be a different story, but I still think the cost of sand is over-hyped.

Cost Of Fracking Sand Rising -- Seeking Alpha -- March 7, 2017 --- Recently I posted: It seems like the analysts are concerned about the cost of proppant. From my vantage point, the cost of sand is the least thing to be concerned about in the overall cost of the well (benefit vs cost analysis).  Today, over at SeekingAlpha an article on the rising cost of sand. 

  • leading producers of sand used by oil and gas explorers such as U.S. Silica, Hi-Crush Partners, and Fairmount Santrol are soaring this year even after a recent selloff, but their gains are turning into oil producers’ pain and could affect the global energy market, WSJ's Spencer Jakab writes
  • some analysts see demand for frack sand equaling or exceeding the 2014 peak even with drilling activity far lower; Raymond James analyst Praveen Narra estimates the amount used per foot of well depth last year was 40%-50% more than in 2014
  • Tudor Pickering analysts say a typical Permian Basin well might have cost ~$6M to drill last year including $350K worth of sand, but that could reach $800K by late 2017 and conceivably top $1M if providers flex their pricing muscles
  • the cost trend could hurt projected cash flows and means drillers would need higher breakeven prices to justify new investment, which Jakab concludes are "putting a smile on the faces of sand company shareholders but also should cheer people up in Riyadh and Moscow."

Mike Filloon talked about the rising cost of frack sand some time ago.

Minot legislators stand on principle against taxing frack water - The Minot Daily News reported yesterday that some Minot legislators have been taking some heat for voting against the Water Commission Budget (HB 1020), but they are standing their ground on principle to oppose the Water (Royalty) Tax on frack water for the oil industry.Reps. Larry Bellew and Dan and Matt Ruby, all R-Minot, explained their reasons for voting against the State Water Commission funding bill during a legislative forum in Minot Saturday.Bellew said he opposed the bill’s water tax on private water rights holders who draw from the Missouri River system for commercial, non-irrigation purposes. The bill imposes a royalty of 75 cents per 1,000 gallons on fresh water dispensed to an oil and gas industry user at a privately owned water depot or water-dispensing point in the state. Income from royalties would go to repay state-guaranteed loans to entities that sell fresh water to oil and gas industry users, particularly the publicly-owned Western Area Water Supply system.Dan Ruby said WAWS was to be self-sustaining as a water supply system for communities, rural residents and industry in northwestern North Dakota. He said he was skeptical of the project when it was proposed because he questioned the sustainability. Selling water to the oil industry was part of the project’s funding mechanism. He said:Every session they keep coming back and saying they can’t make it on what they are charging. I think they sold a bill of goods that was flawed from the beginning. Ruby said taxing private water sellers to pay for WAWS is not a good idea. He said he concedes the water is a public resource, but so is the water used for irrigation that is not subject to the royalty.

 What a Difference a DAPL Makes - How the New Crude Pipeline May Spur Bakken Gains -- A number of the Bakken’s leading producers are talking up the shale play’s prospects for crude oil production gains in 2017—and especially in 2018—but we are still waiting on numbers that would prove that the play has truly turned a corner. What is crystal clear, though, is that the Bakken’s biggest takeaway project ever, the 470-Mb/d Dakota Access Pipeline to Illinois, is finally nearing completion and operation after a very public delay. When DAPL comes online this spring, it will further reduce crude-by-rail volumes out of the Bakken and should help to increase the odds that production in the play will begin to rebound in earnest. Today we update production and takeaway capacity in the nation’s third-largest crude-focused shale play. The Bakken formation, and especially the core of the play in western North Dakota (where well over 90% of total Bakken production occurs; most of the rest comes from eastern Montana), proved to be one of North America’s most prolific and fast-growing crude oil production regions in the early years of the Shale Revolution. As we said recently in I Can See Clearly Now, forecasters routinely underestimated how quickly Bakken crude production would grow. For one thing, many failed to appreciate the ability of producers to increase their drilling and completion efficiencies; for another, it was remarkable how rapidly the midstream sector responded to the Bakken’s serious (and growing) pipeline takeaway shortfalls earlier this decade by building more than 20 terminals where crude could be loaded into rail tank cars for delivery via existing rail networks. In Slow Train Coming, our 2016 Drill Down Report on crude-by-rail, or CBR, we discussed the fact that railroads moved more than half of the oil produced in North Dakota through all of 2013 and 2014, and that while new pipeline capacity continues to be developed (including the Dakota Access Pipeline, which we will get to in a moment), CBR still plays an important role in the Bakken.

Judge won't stop construction of Dakota Access pipeline - A federal judge declined Tuesday to temporarily stop construction of the final section of the disputed Dakota Access oil pipeline, clearing the way for oil to flow as soon as next week. The Standing Rock and Cheyenne River Sioux tribes pledged to continue their legal fight against the project, even after the pipeline begins operating. The tribes had asked U.S. District Judge James Boasberg in Washington to direct the Army Corps of Engineers to withdraw permission for Texas-based developer Energy Transfer Partners to lay pipe under Lake Oahe in North Dakota. The stretch under the Missouri River reservoir in southern North Dakota is the last piece of construction for the $3.8 billion pipeline to move North Dakota oil to Illinois. The tribes argued that a pipeline under the lake violates their right to practice their religion, which relies on clean water, and they wanted the work suspended until the claim could be resolved. When they filed their lawsuit last summer, the tribes argued that the pipeline threatens Native American cultural sites and their water supply. Their religion argument was new, however, and disputed by both the Corps and the company. Boasberg in his ruling Tuesday said the tribes didn't raise the religion argument in a timely fashion. He also questioned its merit.

Judge deals another setback to those trying to block the Dakota Access pipeline -- A federal judge in Washington refused to issue a preliminary injunction Tuesday to stop construction of the Dakota Access pipeline, making it increasingly likely that the nearly complete pipeline will be cleared to start carrying crude oil.The Standing Rock and Cheyenne River Sioux tribes had challenged the pipeline on the grounds that running it under Lake Oahe in North Dakota would violate their religious freedom because of beliefs linked to the lake’s waters.District Court Judge James Boasberg said that the challenge was unlikely to succeed and that a preliminary injunction on that basis would cause an unreasonable delay in the project.But Boasberg will continue to weigh the tribes’ other challenges, including the obligations of the Army Corps of Engineers to the Native American tribes under the Fort Laramie Treaties signed in the mid-19th century.“The ruling is disappointing but not surprising — it is very difficult to get an injunction under these circumstances,” Jan Hasselman, a lawyer for the tribes, said in an email. “However, the Court has yet to hear our primary legal case that the Trump-issued permits were illegal. We think we have a strong case and look forward to our day in Court.”The Fort Laramie Treaties ceded a larger area of land to the tribes than those included in the modern reservations created later by Congress. And the tribes have asserted that the Army Corps has obligations to protect the tribes’ rights to hunt, fish or gather on those lands and to guarantee protection from oil spills in the sacred waters of the Missouri River and Lake Oahe.“Once again, the federal government and the army are treating the original inhabitants of this land as though we are less than human, as though our lives and lands are something to be ignored and discarded in the never-ending quest for profit,” Chase Iron Eyes, the lead counsel of the Lakota People’s Law Project.

Contractor nearly finished $1 million clean-up of pipeline protest camps - The million dollar clean-up of three camps used by Dakota Access Pipeline protesters in south central North Dakota is nearly complete. A contractor hired by the U.S. Army Corps of Engineers has completed work at the largest of the camps and another just south of it. Both are on Corps of Engineers-owned land. A third protest camp not originally in the clean-up plan, located on property owned by the the Corps of Engineers and the Standing Rock Sioux Reservation, is more than a third complete. Corps spokesman Captain Ryan Hignight says one of the big concerns has been about hazardous waste on the properties which could get washed into the Missouri River, contaminating the Oahe reservoir and other downstream locations. Hignight says several locations have been where there was human waste but it was minor. He says, "those at the camp said they were doing a lot to compost or remove it. That's not to say it's not out there we just haven't found it." More than 7,000 cubic yards of debris and garbage, filling 1600 rollout dumpsters has been collected so far. Hignight says the Standing Rock Sioux tribe has also collected propane tanks and lumber for recycling or use left behind when the camps were evacuated about two weeks ago.

Police win warrant to search Dakota Access Pipeline protest Facebook page - Local Washington state police have obtained a court warrant to search the Facebook page of a group dedicated to protesting the Dakota Access Pipeline.  The warrant from the Whatcom County Sheriff's Department seeks data surrounding the Bellingham #NoDAPL Coalition's Facebook page. The page, with more than 1,000 followers, provides information about pipeline environmental issues and is used to organize political protests and connect political activists.In addition to demanding account information about those who have interacted with the group's page, the warrant seeks "messages, photos, videos, wall posts, and location information" dating from February 4 to February 15. The search time period surrounds a February 11 protest in downtown Bellingham against the Trump administration's decision to follow through with the pipeline. Protesters had blocked Interstate 5 for more than an hour, snarling traffic for miles.  Bellingham resident Neah Monteiro, the page's top admin, received an e-mail from Facebook after the protest. It said the social networking site had received a warrant for the data. The American Civil Liberties Union intervened and filed a motion (PDF) Thursday to quash the warrant. The ACLU said the data is constitutionally protected speech. The organization continued in its motion: In fact, the County’s warrant would reach the messages of even general members of the public who interacted with the group on the Facebook page by asking questions about the group’s activities or engaging with the group in political debate. Hosting and participating in an online forum for political organizing, debate, and advocacy is activity that lies at the core of the First Amendment—and the Founders would have recognized it as such. A hearing in Whatcom County Superior Court on the matter is set for next Tuesday.

US officials to hold meeting on Alberta Clipper pipeline -- State Department officials will come to Minnesota on Tuesday to hold the only public meeting on a draft environmental review for the final segment of Enbridge Energy's project to boost capacity in its Alberta Clipper pipeline, which carries Canadian tar sands oil across northern Minnesota to Superior, Wisconsin. The State Department's four-year review concluded that there would be no significant environmental impacts from completing the project, which requires a presidential permit because the last remaining segment crosses the U.S.-Canadian border in North Dakota. But environmentalists and some Native American tribes dispute that and are gearing up for the meeting in the northern Minnesota city of Bemidji. Enbridge built the Alberta Clipper, also known as Line 67, in 2009 for $1 billion. Its capacity was 450,000 barrels per day. Enbridge later decided to nearly double that to 800,000 barrels; the Calgary, Alberta-based company did most of that by adding pumping stations along the route. Enbridge needs a presidential permit for the 3-mile segment where the 1,000-mile pipeline crosses the border. Getting the permit is a lengthy process. The Keystone XL pipeline that would run from Canada's tar sands to Nebraska, for example, was derailed when President Barack Obama rejected its permit. President Donald Trump has invited Keystone XL developer TransCanada to reapply. Enbridge is operating the Alberta Clipper at full capacity with a temporary workaround. It built a detour to and from a parallel pipeline that crosses the border nearby and already has a permit. Opponents challenged the legality of that setup in court but lost. Other Enbridge projects in the works are a proposed replacement for its 1960s-era Line 3 that would follow part of the same corridor. In fact, the Alberta Clipper detour uses an upgraded section of Line 3 to cross the border. Line 3 is also drawing opposition from tribes and environmentalists.

A Father of Fracking Seeks to Emulate U.S. Shale Boom in Alaska  - A pioneer of the U.S. shale revolution wants to take fracking to America’s final frontier. Success could help revive Alaska’s flagging oil fortunes. Paul Basinski, the geologist who helped discover the Eagle Ford basin in Texas, is part of a fledgling effort on Alaska’s North Slope to emulate the shale boom that reinvigorated production in the rest of the U.S. His venture, Project Icewine, has gained rights to 700,000 acres inside the Arctic Circle and says they could hold 3.6 billion barrels of oil, rivaling the legendary Eagle Ford. While the potential is huge, the difficulty of shipping millions of gallons of water, sand and chemicals -- the ingredients used in fracking -- to one of the most remote areas on earth is nothing short of monumental. At stake is an Alaskan industry that’s seen output tumble from 2.1 million barrels a day in 1988 to 520,000 in 2016 as reserves dwindled and explorers sought cheaper supplies in shale fields to the south. “The oil is there,” said Basinski, founder and chief executive officer at Houston-based Burgundy Xploration LLC, in an interview. “Now it’s a question of how quickly we can get it to flow and whether we can get the economics to work." One exploratory well has been drilled, he said, and a second is planned by mid year. The future of U.S. oil exploration has been among the hot topics as the industry’s biggest names gathered in Houston this week for the annual CERAWeek by IHS Markit conference. Alaska Senator Daniel Sullivan spoke during the meeting’s opening session and Senator Lisa Murkowski is set to help close it with comments on Friday.The dwindling volume of crude produced in the state has combined with a rout in oil prices over the last two years to undercut Alaska’s once-booming economy. When oil topped $100 a barrel in 2014, Alaska took in $5.7 billion in petroleum taxes and royalties for the fiscal year that ended that June, covering most of its budget. For fiscal 2017, the take is projected at $1.6 billion, a 72 percent drop. At the same time, the decline has fed worries that the 40-year-old Trans-Alaska Pipeline System, the North Slope’s 800-mile link to global oil markets, could become too expensive to operate by the next decade.

Alaska underwater pipeline leak may have started in December — A pipeline spewing natural gas into Alaska’s Cook Inlet may have started leaking in December, two months before the leak was spotted from the air, according to a federal pipeline safety office. The estimate of when gas started leaking into winter habitat for the endangered Cook Inlet beluga whales was issued in a proposed safety order last week by the U.S. Pipeline and Hazardous Materials Safety Administration that the agency confirmed on Tuesday. Processed natural gas continues to leak from a Hilcorp Alaska LLC pipeline that supplies four oil platforms in the inlet south of Anchorage — at a rate estimated by the company of 210,000 to 310,000 cubic feet of gas daily. A Hilcorp helicopter crew Feb. 7 spotted gas bubbling to the surface about four miles off shore. However, the company in late January reported that it had detected increased gas flow through the pipeline in January and started looking for a leak, according pipeline safety office’s report. A subsequent analysis of gas flow indicated the pipeline likely began leaking in December, the agency said. The agency late Friday issued the proposed safety order requiring the line to be repaired by May 1 or shut down.

Repsol, Armstrong Strike Big Oil Find In Alaska's North Slope - Repsol said March 9 it hit an oil find with big potential in Alaska's North Slope in the Nanushuk Play. With 1.2 billion barrels of recoverable light oil, Repsol and its partner, Denver-based Armstrong Energy LLC, claim the discovery is the "largest U.S. onshore conventional hydrocarbons discovery in 30 years." The Horseshoe No. 1 and 1A wells drilled during the 2016-2017 winter campaign confirm the Nanushuk Play as a significant "emerging play." The wells extend by 32 km (20 miles) in an area known as Pikka. Preliminary development concepts for Pikka anticipate first production there from 2021, with a potential rate approaching 120,000 barrels per day of oil. “Repsol and our partner Armstrong will continue evaluating these positive results in the coming months to determine next steps,” Repsol told Hart Energy in an emailed statement. Horseshoe-1 was drilled in January 2017, while Horseshoe-1A was drilled the following month from same well pad. The company said it has been actively exploring in Alaska since 2008, having made multiple discoveries on the North Slope since 2011 with Armstrong. Repsol holds a 25% working interest in the Horseshoe discovery and a 49% working interest in the Pikka Unit. Armstrong holds the remaining working interest and is currently the operator.

 Respol announces largest U.S. oil discovery in 30 years - Spanish oil company Repsol announced what it is calling “the largest U.S. onshore discovery in 30 years,” according to a March 9 press release. Repsol, and its partner Armstrong Energy discovered what they believe is approximately 1.2 billion barrels of recoverable light oil from Alaska’s North Slope in the Nanushuk play. Repsol isn’t new to Alaska. The company has been exploring there since 2008, with several North Slope discoveries since 2011. The Trans-Alaskan Pipeline System may see a little more action due to Repsol and Armstrong Energy’s discovery on the North Slope. Photo: Pixabay. According to Alaska Public Media, Armstrong is hoping to start designing Nanushuk’s central processing facility. Development of this facility is crucial to Alaska’s oil industry, since it would prepare oil to send down the pipeline. The Trans-Alaska Pipeline System has seen a significant decline in the amount of oil running through it. Alaskan oil output has dropped from 2.1 million barrels a day in 1988 to about a fourth of that, 520,000 barrels a day, in 2016. So Repsol’s discovery is considered a “game changer” for the slumping Alaskan oil industry. Repsol and Armstrong aren’t the only companies interested in the revitalization of Alaska’s oil industry. Alaska Dispatch reported yesterday that Paul Basinski, the geologist who helped discover the Eagle Ford in Texas, is involved in a venture called Project Icewine, which has gained 700,000 acres inside the Arctic Circle. He believes this area could hold as much as 3.6 billion barrels of oil, similar to the reserves in the Eagle Ford. One of the reasons that Alaska’s oil industry declined was the difficulty to utilize hydraulic fracturing in frigid temperatures, says the Dispatch. Drilling in the Arctic can cost three times what it costs in the rest of the United States, especially in the Permian Basin where oil seems to flow like water these days. In addition, imaging technology that could accurately pinpoint shale oil reserves below the permafrost didn’t exist until recently, when 3-D seismic imaging technology allowed geologists to better evaluate what’s below the surface.

Canada says no big hurdles remain for Keystone XL Approval - TransCanada Corp.’s Keystone XL pipeline doesn’t face any major remaining hurdles to U.S. approval, Canada’s ambassador to Washington said. Discussions on TransCanada’s crude-oil route are going “extremely well” with U.S. federal authorities, Ambassador David MacNaughton said Friday in an interview at his office. “I don’t see any big hurdles in the way of Keystone from the administration’s point of view,” he said, referring to the government of President Donald Trump. While the state of Nebraska may still have some issues, the outlook for the pipeline’s approval looks “very positive,” MacNaughton said. Approval would end years of uncertainty over the project, which sparked protests from environmentalists and created tension between the U.S. and Canada. The route would carry crude from Canada’s oil sands to Gulf Coast refineries. In 2015, former President Barack Obama rejected the pipeline, saying the project would undercut the U.S. fight against climate change. Trump revived the prospect of approval shortly after taking office, inviting TransCanada to reapply. The company applied to the State Department for a presidential permit in January. Canada’s government has said its approvals for the Keystone project remain in place and that the fate of the pipeline is now in the hands of the company and U.S. lawmakers.

Canada's environment minister says 'No. 1 focus' is U.S. trade | Reuters: Canadian Environment Minister Catherine McKenna said on Thursday the "No. 1 focus" of her government, including her department, is trade relations with the United States, as Canada steels itself for possible NAFTA renegotiation with its southern neighbor. McKenna was speaking on the day Royal Dutch Shell (RDSa.L) announced it would sell most of its Canadian oil sand assets, the latest oil major to exit the region. Opposition critics and some in the oil sands sector say tougher environmental restrictions in Canada versus the United States will make Canada less competitive. "Canadians expect us to take climate action, but it's also a real opportunity for us to find the solutions that are going to create jobs and grow our economy," McKenna said at a business event in Calgary, where many Canadian oil and gas companies are headquartered. Canada sends 75 percent of exports, including almost all of its crude, to the United States, and U.S. President Donald Trump's vow to renegotiate the North American Free Trade Agreement (NAFTA) could negatively affect the country. "Our No. 1 focus right now - and that includes me as environment minister - is on our trading relationship with the United States," McKenna said. "I've had calls with my American counterparts .. and the first issue I raised was trade." While trade and the economy do not come under McKenna's portfolio, her work in implementing her Liberal government's national carbon tax could have consequences for Canada's emissions-heavy energy sector, especially as it contrasts with the Trump administration's looser approach on the issue.

Shell to divest nearly all of its Canadian oil sands interests for $7.25 billion - Oil & Gas Journal: Royal Dutch Shell PLC has agreed to sell all of its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) to 10% from 60% in exchange for $7.25 billion. Under the first agreement, Shell will sell its entire 60% interest in AOSP, its 100% interest in the Peace River Complex in-situ assets including Carmon Creek, its 100% working interest in the Cliffdale heavy oil field, and several undeveloped oil sands leases in Alberta to a subsidiary of Canadian Natural Resources Ltd. (CNRL) for $8.5 billion. The purchase price comprises $5.4 billion in cash plus around 98 million CNRL shares currently valued at $3.1 billion. The current estimated production capability, before royalties, for the AOSP properties to be acquired by CNRL is 196,000 b/d with February production of 188,000 b/d of mine production and upgrader output of 195,000 boe/d from 70% working interest in AOSP; and 13,800 b/d of heavy oil from the Peace River properties. At yearend 2016, reserves associated with the assets were 2 billion bbl. In the second agreement, Shell and CNRL will jointly acquire and equally own Marathon Oil Canada Corp., which holds 20% interest in AOSP, from an affiliate of Marathon Oil Corp. for $1.25 billion each to be settled in cash. Marathon Oil also reported a separate agreement to acquire 70,000 net surface acres in the Permian basin from BC Operating Inc. and other entities for $1.1 billion in cash (OGJ Online, Mar. 9, 2017). That deal includes 51,500 acres in the northern Delaware basin of New Mexico, and current production of 5,000 net boe/d.

Shell sells Canadian oil sands, ties bonuses to emissions cuts | Reuters: Royal Dutch Shell has agreed to sell most of its Canadian oil sands assets for $8.5 billion, the latest international oil major to withdraw from the costly and carbon-heavy projects. Shell is trying to sell assets totaling $30 billion to cut debt following its $54 billion acquisition of BG Group and is under investor pressure to mitigate climate change risks. Shell also said on Thursday that 10 percent of directors' bonuses will now be tied to how well it manages greenhouse gas emissions in refining, chemical and upstream operations. Analysts welcomed the deal, under which Shell has agreed to sell its existing and undeveloped Canadian oil sands interests to Canadian Natural Resources and to cut its share in the Athabasca Oil Sands Project (AOSP) to 10 percent from 60 percent.Other oil firms including Exxon Mobil, Conoco Phillips and Statoil have written down or sold their Canadian oil sand assets. Shell said it would remain as operator of the AOSP Scotford upgrader and the Quest carbon capture and storage project.

Marathon Update; To Sell Canadian Sands; To Buy Permian -- From E & P Industry Research. From a press release dated today, March 9, 2017: Marathon Oil Corporation announced today it has signed an agreement to sell its Canadian subsidiary, which includes the Company's 20 percent non-operated interest in the Athabasca Oil Sands Project (AOSP), to Shell and Canadian Natural Resources Limited for $2.5 billion in cash, excluding closing adjustments.  Marathon Oil also announced the signing of a definitive agreement to acquire approximately 70,000 net surface acres in the Permian basin from BC Operating, Inc. and other entities for $1.1 billion in cash, excluding closing adjustments. The acquisition includes 51,500 acres in the Northern Delaware basin of New Mexico, and current production of approximately 5,000 net barrels of oil equivalent per day (boed). This is interesting because I thought I just read that Shell was selling some of its western Canadian oil sands. Yes, I did -- earlier this morning: Shell sells sands -- $7.25 billion -- Reuters. Will use proceeds to acquire more Permian assets, data points:

  • up to 10 targets within approximately 5,000 feet of stacked pay; base case assumes up to 6 target benches
  • 70,000 net acres with 51,500 net acres in the Northern Delaware basin
  • total implied acreage cost: $14,000
  • at $55 WTI, 90% before-tax IRRs
  • primary targets: Wolfcamp and Bone Spring
  • 350  million boe of risked resource at $2.80/BOE with 630 gross company operated locations
  • 900 million boe of total resource potential with 1,700 total upside locations
  • one operated rig; will add second rig mid-year

Oil industry costs will rise as focus shifts to growth: Kemp - (Reuters) - Oil industry costs are notoriously pro-cyclical, which is one of the main reasons for the pattern of boom and bust that has afflicted in the industry from the beginning.The cost of everything from skilled and unskilled labour to engineering contracts, field services, raw materials, equipment, spare parts and rig hire tends to rise and fall with price of oil.During a boom, prices for labour and equipment escalate rapidly, pushing up the breakeven cost of finding and developing new deposits, and driving the market-clearing price of oil even higher.In a bust, labour and equipment prices fall sharply, pushing down breakeven costs and helping sustain production at an unexpectedly high level despite the plunge in oil prices.Pro-cyclical costs include everything from skilled petroleum engineers and unskilled labour, to fuel, rig hire and drill bits.Pro-cyclical costs apply to a host of other services in the supply chain including catering, accommodation and transportation.And in the broadest sense, pro-cyclical costs include taxes, royalties and other government charges on exploration and production.In a downturn, governments cut tax and royalty rates, and offer regulatory relief, to attract investment, only to increase them again during a boom to capture windfall gains.The pro-cyclical behaviour of costs is a classic example of positive feedback which amplifies the boom-bust cycle in oil prices and delays the process of adjustment following a supply or demand shock.Pro-cyclical costs ensure crude supply tends to respond sluggishly to even a big change in oil prices ("Oil prices: volatility and prediction", Reuters, 2016).Rising costs hampered efforts to boost oil production during the 2004-2014 boom; more recently falling costs have hampered efforts to cut output and rebalance the market during the slump.

EIA: Natural gas, crude production fell in 2016 -- According to the U.S. Energy Information Administration March 8, 2017 report, U.S. natural gas production and crude production both fell in 2016. Average crude oil production in the lower 48 states in 2016 fell to 8.39 million barrels per day (b/d). This is a decrease of 6.1 percent from the 2015 average, or approximately 0.55 million b/d. Natural gas withdrawals also decreased in 2015, averaging 1.03 billion cubic feet per day (Bcf/d), 1.3 percent lower than in 2015.The Gulf of Mexico saw the only significant increase in U.S. oil production in 2016. Since offshore projects take much longer to complete, new projects planned in 2012-14 finally came online over a year later.  West Virginia and New Mexico were the only states that saw oil production increases in 2016. Ohio, Pennsylvania, North Dakota, and Louisiana saw net increases in natural gas production by state, despite an overall national decrease.While overall totals showed a net decline in crude production, recovery was evident in the increase in production during the second half of 2016. The price of West Texas Intermediate (WTI) crude oil went from a monthly low of $30 per barrel in January 2016 to an average of $53 per barrel in January 2017. Currently, oil is holding on just above $50 for March. However, current crude production increases across the shale plays have pushed market predictions lower. Some predict lower oil prices throughout the rest of the year. Eugene Graner with Heartland Investor Services says oil may have topped out in January.  According to Oilprice, a stable market means a rebound to $55-60 in 2018 and 2019, but a stressed, oversupplied market will mean $40 a barrel through 2019. The Organization of Petroleum Exporting Countries (OPEC) have committed to cutting oil production to help improve the global oil oversupply, or glut. However, U.S. shale producers, in response to slightly increased prices, have continued to increase production in recent months. After Texas saw the largest volumetric decrease in 2016 of 239,000 b/d, production in Texas now continues to increase. The February 13, 2017 Drilling Productivity Report showed an increase in the Permian Basin of 70,000 b/d from the previous month from 2,180,000 b/d to 2,250,000 b/d. The Eagle Ford continues to produce just over a million b/d while the Bakken is just below. Production in the Bakken region, however, continues to drop, showing a decrease of 18,000 b/d over the last month.

Is The US Becoming Overdependent On Natural Gas? - The story sounds familiar. For decades, oil and natural gas drilling have been proceeding and creating prosperity for those involved. At some point, significant earthquakes occur in areas where they were formerly very rare or nonexistent. Those quakes are linked to oil and gas drilling and production. The industry denies the link. The quakes continue, get worse and finally get strong enough to do damage.  To those living in Europe, it's the story coming out of The Netherlands, home to the Groningen Gas Field, one of the largest natural gas finds ever. What has caught the Dutch by surprise--and may someday soon catch America by surprise--is the speed with which its decades-long reliance on a large initial endowment of natural gas has turned into a liability. First, there were the earthquakes linked to drilling and production operations in Groningen which have forced the government (part owner of the field) to scale back production to reduce the frequency and severity of those quakes. This production decline of more than 50 percent has meant government gas revenues dropped by more than half from €13 billion to around €5 billion from 2013 to 2014. Second, as a result of the production cutbacks The Netherlands is now a net importer of natural gas, instantly losing its self-sufficiency status. Europe's gas now will likely have to come increasingly from Russia whose relations with Europe are replete with complications. Third, the Dutch have failed to prepare for this day.   Some 98 percent of Dutch homes use natural gas for heating and cooking. Renewable energy makes up a paltry 5.5 percent of the country's energy mix as of 2014. Fourth, the Dutch are still obliged to honor long-term contracts which force them to deliver substantial quantities of natural gas to customers outside the country. The country is increasingly facing the strange predicament of having to import more and more natural gas to offset what it must ship abroad. This is in a country whose dominant field, Groningen, is now 80 percent depleted. And, here is where the Dutch situation ought to be a warning to the United States. America is entering into more and more long-term contracts to export liquefied natural gas (LNG) to customers in Europe and Asia even as the country remains a net importer. There is good reason to believe that most estimates of future natural gas production in the United States are far too optimistic.   All shale plays have peaked and older plays, like the Barnett and Haynesville, are down 38 percent and 52 percent, respectively.

Dutch, German natural gas spot prices down on demand, weather - Dutch and German day-ahead gas prices were weaker Wednesday morning, with less demand expected and temperatures forecast above seasonal norms. Further dated contracts fell as crude prices dropped on weak data from China and the US. Around midday London time, TTF day-ahead last dealt at Eur16.25/MWh, down 32.5 euro cent from Tuesday's close. German NetConnect was also down 32.5 euro cent at Eur16.65/MWh, while GASPOOL moved lower by 20 euro cent to Eur16.825/MWh. Dutch and German prices followed UK NBP day-ahead, which was 0.50 p/th lower and last heard trading at 42.25 p/th at midday as a steep drop in demand caused both medium-range storage withdrawals and Dutch imports to cease. CustomWeather forecast temperatures in Amsterdam Thursday at 2 degree Celsius above seasonal norms, up from 1 C above norm Wednesday. Temperatures in Berlin, in the GASPOOL area, are expected to jump to 4 degrees C above norms Thursday, from normal Wednesday. In Munich, in the NCG area, temperatures are expected at 3 degrees C above seasonal norms Thursday, up from 1 C below Wednesday.

UK North Sea operators show signs of revival - Energy companies active in the UK North Sea will generate positive free cash flow in 2017 for the first time in four years, as groups show signs of recovery following the oil price crash of 2014, says the industry’s trade body.Exploration and production companies working in the basin are collectively forecast to generate £5bn of free cash flow this year if the rebound in oil prices persists around current levels, said Oil & Gas UK, which represents North Sea operators.That would mark an encouraging turnround from the past four years, when companies’ costs exceeded revenues as they battled against falling oil prices.Costs were exceeding revenues even before the oil price crash that began in mid-2014, with companies collectively having negative free cash flow in 2013, and this reflects how North Sea operators ran up some of the highest operating expenses in the world.The slump in crude prices pushed operators to cut costs, and average unit operating expenses in the basin have almost halved in the past two years, from $29.70 a barrel to $15.30, said Oil & Gas UK. This has led to optimism that the North Sea industry may finally be turning a corner and the basin has witnessed a flurry of deals since the turn of the year. These include Royal Dutch Shell’s agreement to sell assets in the basin to Chrysaor, a small UK company backed by private equity, for at least $3bn.

This Mysterious Oil Company Just Got A License To Drill In Crimea -- A mysterious company called Novye Proekty has been awarded an oil and gas exploration license for the Crimean Black Sea shelf, and the Kremlin’s spokesman is directing questions about it to the cabinet. The news about Novye Proekty was published by Kommersant earlier this week, sparking speculation, since according to some sources cited by the daily, the company was linked to fugitive Ukrainian energy and media businessman Serhiy Kurchenko, who is wanted by the Ukrainian authorities for the so-called “Kurchenko scheme”, which included fake oil deliveries and a number of other dubious enterprises. Kurchenko, according to Kommersant, currently lives in Moscow. What’s more interesting, however, is that Novye Proekty is a private company, and private companies are not allowed to explore for oil and gas in the Crimean shelf, TASS notes. Prime Minister Dmitry Medvedev opened the door for license-issuing for Crimea last year, but only state-owned companies were to be allowed through it. Yet, here this company is, awarded a 30-year license with the obligation to drill a well within the next eight years. The license is for the Glubokaya block, which holds reserves estimated in 2011 at 8.3 million tons of crude and 1.4 billion cu m of natural gas. Indeed, the Crimean shelf is believed to be quite rich in hydrocarbons, which is one logical reason for the annexation of the peninsula in the first place. Related: Saudi Arabia’s Secret Meetings With The World’s Largest Oil Traders An EU Observer article from 2014 discussed this in some depth, suggesting that Gazprom will be put in charge of the newly acquired oil and gas reserves. This does not seem to be the case in light of the Novye Proekty report. Coupled with Kremlin spokesman Dmitry Peskov’s reluctance to discuss the license, the plot thickens.

Argentina slashes drilling costs, sees more efficiencies | Reuters: Argentina's state-run oil company YPF has cut horizontal drilling costs by more than half and slashed the time required to complete new wells, the chairman said on Monday at the CERAWeek energy conference. The company cut the cost of horizontal drilling to around $8 million from $17 million a well, while the time required to complete a new well has been shaved to 15 days from 40 days, Miguel Gutierrez told the gathering in Houston. Those efficiencies have pushed break-even prices to below $40 per barrel, a significant gain for Argentina, which has struggled to attract capital since crude prices started to decline in 2014. Argentina recently has been pushing again to lure energy investment into the country, particularly into its massive Vaca Muerta formation. That reservoir is one of the largest shale deposits in the world. In January, Argentina announced changes to its subsidy program to offer producers $7.5 per million BTU of natural gas produced through 2020 - a figure well above U.S. gas prices. "It's competitive, especially compared to the United States," Gutierrez said on the sidelines of the conference. Despite the vast reserves, lack of production has left the country short on energy, and a bump in production is unlikely to curb imports in the near term. In 2016, Argentina was forced to significantly increase imports of LNG and purchase supplies from Chile, which resells a portion of the gas it receives to its neighbor.

Oil-for-loan debts cost Venezuela's PDVSA hard-won India market share | Reuters: Venezuela's state-run oil company, PDVSA, has spent at least a decade trying to build business ties and boost shipments to refineries in India, where crowds once welcomed the late socialist leader Hugo Chavez with cries of "Viva!" Now, the ailing firm is being forced to slash sales to its crucial trade partner. Venezuela has given up the fight for coveted market share in India because of a combination of declining crude production and heavy obligations under oil-for-loan deals with China and Russia, according to internal PDVSA data and two people familiar with the company's strategy and operations.Caracas needs the oil to pay debts to China and Russia, key political allies that have together lent Venezuela at least $50 billion in exchange for promised crude and fuel deliveries. PDVSA and the Venezuelan Oil Ministry did not respond to requests for comment. In 2013, when Venezuela exports and oil prices were high, PDVSA raked in nearly $14 billion from India, the world's fastest growing large economy. By last year, after an oil price crash, that figure had plummeted to $2.7 billion, according to a Reuters analysis of the PDVSA data. That means less cash income for the isolated South American economy, deepening a recession that has left many citizens skipping meals amid food shortages and soaring inflation. Oil accounts for almost all of Venezuela's export revenue, and many of Venezuela's customers pay for oil in kind - with food or medical supplies, for example. India is among the few trading partners that buy large volumes of PDVSA oil with cash.

Brazilian crude threatens Oceania, Middle East suppliers' Asian market share -  China's strong appetite for Brazilian crude has set off alarm bells among various producers in Oceania and the Middle East, prompting Australian and key Persian Gulf crude suppliers to slash their selling prices in an effort to remain competitive and protect their market share in Asia, market participants said Wednesday. Since late 2016, China saw a dramatic increase in Brazilian crude imports and the trend remained firmly intact with two Chinese state-run oil companies purchasing 5 million barrels or more of heavy sweet crude from the South American state for loading in March, according to a source with direct knowledge of the deals. March shipping fixtures seen by S&P Global Platts also showed that PetroChina has fixed the San Jacinto to move 130,000 mt of crude oil for March loading from Brazil to China, while trading company Vitol also booked Suez Hans and Fraternity to move a combined 260,000 mt of crude for loading in the same month for the similar journey. In addition, Shell and Repsol fixed Maran Artemis and Aquarius Voyager respectively, to move a combined total of 560,000 mt of crude for March loading from Uruguay to China, according to the latest fixtures. Uruguay's Montevideo is a common loading destination for Brazilian offshore producers because of its proximity to several prolific oil fields like those in the nearby Santos Basin. The source indicated that the Brazilian crude grades that the state-run Chinese companies had purchased for loading in March consisted mainly of Roncador, Marlim and Lula.

Australia Gas Firms Locked in Legal Battles After $200 Billion Spree Sours - After splurging $200 billion building the world’s biggest gas export plants, producers in Australia are now locked in legal battles with contractors over who should shoulder billions of dollars in liabilities sparked by delays and cost blow-outs. Chevron Corp., owner of the $54 billion Gorgon facility, Australia’s largest resource development, along with Inpex Corp. and Santos Ltd. are among energy heavyweights trying to claw back funds. The number of disputes is growing weekly in a chain reaction of litigation, which extends to small businesses subcontracted to supply materials and services. “There are billions and billions of dollars of claims out there in the market, and claims of hundreds of millions of dollars are not uncommon,” said Matthew Croagh, who handles liquefied natural gas matters as a partner in Melbourne with London-based law firm Norton Rose Fulbright. Croagh wasn’t referring to any specific dispute. After an investment bonanza at the start of the decade -- poised to catapult Australia ahead of Qatar as the world’s biggest supplier of LNG -- many of the world’s top energy producers and service firms face the prospect of weaker returns. Costs of completing eight Australian projects exceeded initial forecasts by $55 billion amid competition from rival projects for equipment, labor and resources that pushed up prices and led to delays. Now, an oil market slump means companies may have to wait years to get a return on their investments. The scale of disputes is shown in a 138-page document filed by Santos in the Supreme Court of Queensland in December. Australia’s third-biggest oil and gas producer is suing U.S. contractor Fluor Corp. for A$1.5 billion ($1.1 billion) in damages for work on its $18.5 billion GLNG facility in the northeastern state.

Australia's Gorgon LNG Train 3 to start in Mar, beating Q2 2017 expectation - The third train at the US$53 billion Gorgon LNG facility in Western Australia is now expected to begin production this month, beating previous expectation of a second-quarter 2017 start, Chevron's executive vice president Jay Johnson said on Tuesday night in Australia. "Train 3 construction and commissioning has gone smoothly and we're expecting first LNG [production] before the end of this month, ahead of our previously announced schedule," he said at a security analyst meeting. "We applied the experience gained during the construction, commissioning and early operations of Train 1 to both Trains 2 and 3," he said. As a result, Train 2, which commenced production in October 2016, achieved over 90% of nameplate capacity within a week of beginning production, and has been performing "very well," Johnson said. Typically, LNG plants require six-months to ramp up to nameplate capacity, but each plant is different and some plants only take a few weeks, while others can take longer than six months, Platts Analytics says. That solid performance at Gorgon Train 2 followed various production issues at Train 1, which had its first LNG cargo depart in March last year. "At Gorgon, Trains 1 and 2 are producing about 230,000 oil equivalent barrels a day of LNG and domestic gas. We've shipped 22 cargoes of LNG so far this year," Johnson said on Tuesday night. At full capacity, the three-train Gorgon facility will have a shipment capacity of 15.6 million mt/year of LNG and a domestic gas plant with a capacity to supply 300 terajoules of gas per day to Western Australia, Chevron said. The increased production at Gorgon will help in making Australia the world's largest LNG exporter, surpassing Qatar, which Platts Analytics expects to happen in 2019.

Analysis: Global LNG outlooks test conventional wisdom of supply glut -  When Shell last month presented its first global LNG Outlook since its 2016 acquisition of the UK's BG Group, it surprised some by effectively denying the existence of a global LNG supply glut, pointing instead to a well balanced market where all produced LNG cargoes were being consumed. Much of the commentary in recent months has been telling us the LNG market is already suffering a supply glut and is heading for a period of sustained oversupply until at least the start of the 2020s. LNG prices across the globe have fallen to multi-year lows -- other than a mostly weather-related spike in late 2016 -- and the expected slew of new project start-ups in 2017 from Australia and the US has been forecast to lead to a hugely oversupplied market with demand growth unable to keep pace.The report from Shell -- which is now more exposed than ever to LNG market dynamics since the BG purchase -- was in stark contrast to other views from the industry. Some players already talk of an oversupplied LNG market, with things only set to worsen in the coming years. Pablo Galente Escobar, head of LNG at global trader Vitol, said at a London conference last month his view of the LNG market was "very different" to Shell's. "We think the market will be significantly oversupplied over the next five years," he said, pointing to expected LNG supply growth to 400 million mt/year by 2020 from 240 million mt/year in 2015. This growth, he said, was unprecedented in the history of commodities, and represented the biggest "supply shock" he had ever known.

Bangladesh to build LPG-fueled power plant amid growing demand, gas shortage - Bangladesh plans to construct its first LPG-fired power plant to diversify energy supply sources and ease pressure on the country's diminishing natural gas resources, Nasrul Hamid, State Minister for the Ministry of Power, Energy and Mineral Resources, told S&P Global Platts Monday. The move is expected to add further momentum to the South Asian nation's LPG demand growth, largely driven by the use of the fuel in the automotive sector and the suspension of pipeline gas supply to households and commercial consumers. The project will be led by business conglomerate Beximco Group, in partnership with its US-based technical partner General Electric, according to another senior MPEMR official. The plant's capacity and location are yet to be confirmed. The project announcement follows the implementation January 29 of Bangladesh's first policy aimed at expanding supply and boosting consumption of LPG, to replace natural gas in the power, transport and industrial sectors.While Bangladesh's LPG consumption in 2016 was at around 300,000 mt, up from 200,000 mt a year earlier, MPEMR estimates that actual unconstrained demand could be around 500,000 mt as consumers are using kerosene and wood as alternatives to LPG due to lack of availability. Under the new policy, the private sector is now able to set up LPG terminals, autogas filling stations, autogas conversion plants and LPG bottling plants.

Japan LNG spot cargoes average price in Feb up 1.2% to $8.5/MMBtu - Natural Gas | Platts News Article & Story: The average price Japanese LNG buyers paid for spot cargoes contracted in February came in at $8.5/MMBtu, up 1.2% from January, data released by the Ministry of Economy, Trade and Industry showed Thursday. The ministry gathers data from LNG buyers in Japan to calculate a simple average, but it does not disclose delivery dates. Platts JKM spot price averaged $6.863/MMBtu in February, reflecting spot deals concluded for cargoes for March and April deliveries. The JKM gradually fell in February because of lack of demand and emerging supply. The ministry also said the February-delivered LNG spot price was $8.8/MMBtu in February, surging 20.5% from $7.3/MMBtu in January. The JKM for February-delivery cargoes averaged at $9.488/MMBtu. The February JKM started the assessment period at $9.2/MMBtu on December 16 and extended gains further before coming down to end the assessment period at $9.45/MMBtu on January 13.

LNG market at a ‘tipping point,’ CERAWeek speaker says -- If you are in LNG today, you want to be in Asia, the world’s biggest market for the power plant fuel. As much as there is opportunity, however, there also is uncertainty. The opportunity comes from the fact that the continent accounts for more than 70% of the world market for LNG. At the same time, concerns about oversupply due to significant new and expected output from the US and Australia have raised questions about how the renewal of long-term contracts will shake out as they expire by early next decade. The level of economic growth in China, the world’s most populous country, also is an uncertainty. That is forcing developers of proposed export projects in the US to be more cautious about moving forward with building their liquefaction terminals. If there is reason to be confident amid those dynamics, it is that virtually all of the new supply being produced now or planned for export facilities currently under construction is expected to be used up over the next five years, creating new demand around 2022. Also, new markets and buyers are emerging with different needs. “I’m confident we are at the tipping point,” said Hiroki Sato, chief fuel transactions officer at Jera, a Japanese firm established by Tokyo Electric and Chubu Electric that is the biggest individual buyer in the global LNG market. Speaking in Houston on Wednesday at the CERAWeek by IHS Markit energy conference, Sato said fragmentation of LNG buyers in Asia is helping to remove some uncertainties among producers, giving more weight to the opportunities that exist.  Houston-based Cheniere became the first US exporter of LNG produced from shale gas when it launched its initial cargo in February 2016. It has ramped up output since then, operating two trains and commissioning a third. Two more trains are planned, and a sixth has been proposed and is awaiting commercial support before a final investment decision is made.

India sanctions ADNOC involvement in Mangalore strategic crude oil storage - India's cabinet has approved ties between Indian Strategic Petroleum Reserve Ltd and Abu Dhabi National Oil Company on crude storage, oil ministry officials said Tuesday. In January, state-owned ISPRL signed a major deal with ADNOC to establish a strategic crude oil storage in the southern city of Mangalore. The deal with ISPRL covers the storage of 5.86 million barrels of ADNOC crude oil at the underground facilities in Karnataka state, which can hold 11 million barrels of oil. "Out of the crude stored, some part will be used for commercial purpose of ADNOC, while a major part will be purely for strategic purpose," said a statement issued after a cabinet meeting on Monday.ISPRL has set up around 39 million barrels of strategic crude oil storage at three locations -- Padur and Mangalore on the west coast and Visakhapatnam on the east coast to meet India's exigency demand. The UAE is the fifth-largest supplier of crude oil to India, sending 15.7 million mt of crude to the country in the fiscal year 2015-16 (April-March), according to official data. India is 79% dependent on imports to meet its crude oil needs, 8% of which is supplied by the UAE. In 2016, Indian crude imports rose 9.6% year on year to 215.43 million mt, provisional data from the country's Petroleum Planning and Analysis Cell showed.

Analysis: India eyes Myanmar's oil, gas in pursuit of expanding beyond borders -  Myanmar's dramatic growth in consumption of refined oil products and the inability of its aging refineries to meet that incremental demand have whetted the appetite of Indian oil companies to play a bigger role in the Southeast Asian nation's oil and gas sector -- from upstream to retail. Myanmar, one of the oldest oil and gas industries in the region and a country which exported its first crude oil centuries ago, is again emerging as a bright spot for overseas investors after sanctions, which were imposed on the country during a long period of military rule and political unrest, were lifted in 2012. To deepen ties, India's oil minister Dharmendra Pradhan led a delegation to Myanmar late February looking for opportunities to supply refined oil products to the country, as well as highlight the interest of Indian upstream companies to take part in the forthcoming bid round in Myanmar's oil and gas blocks. "They invited India to invest in all stream in oil and gas," Pradhan said in a message following the visit. Myanmar's demand for oil products has been steadily rising. But its production of oil and gas is expected to be more or less stagnant. While there have been some upgrades at the refineries in recent years through foreign assistance, including help from India, in the short term rising oil products demand is most likely to be met through higher imports.

Papua New Guinea Asks Energy Explorers: Can We Keep Some of Our Gas?  --Less than three years after it began sending one of its most precious resources overseas, Papua New Guinea’s future may be determined by how much of it stays at home. The Pacific island nation wants some of the world’s top explorers to allow a portion of its natural gas to stay in the country, said Nixon Duban, the minister for the government’s petroleum and energy department. The fuel pumped from remote mountain ranges and forest-covered hills could spur industries, generate cheaper power for an electricity-starved population and even help catch tuna.  But not at the cost of driving away drillers. “The challenge our government faces is finding the right balance,” Duban said. “We’re trying not to dictate against the energy industry.”    Duban’s caution is understandable. The developing country of less than 8 million people is one of the poorest in Asia, with soaring crime rates, high unemployment, and almost half the population living in squatter settlements. It’s counting on energy resources to boost finances, and needs foreign investment. Its exports have led to some signs of prosperity, with Port Moresby turning home to a luxury hotel and a major mall as well as hosting international sporting events. Still, more sustained development will mean using some resources for itself. When the government signed deals almost nine years ago that led Exxon Mobil Corp. to build a liquefied natural gas terminal, it allowed the energy giant and its partners to export all of the gas it found. The project’s $19 billion price tag was more than the country’s annual gross domestic product. The LNG now lights the homes in metropolises including Tokyo, Beijing and Taipei.

Eni sells Exxon 25 pct stake in Mozambique gas field for $2.8 bln - Exxonmobil said on Thursday it had agreed to buy a 25 percent stake in the giant Mozambique gas field of Italian major Eni for about $2.8 billion. Eni, which is selling stakes in a number of fields to fund development of other projects, is currently the operator of Mozambique's Area 4 where it holds a 50 percent indirect stake held through Eni East Africa. The field holds about 85 trillion cubic feet of natural gas and is one of the world's largest gas discoveries in recent years. Under the deal Eni will continue to lead all upstream operations in the area, while ExxonMobil will be in charge of building the onshore liquefied natural (LNG) gas plants. The Italian major said it will remain in charge of building the floating LNG plant in the Coral field, which is part of Area 4. The area 4 project envisages the construction of onshore and offshore LNG plants to export the gas to areas such as India and Asia. In 2013 Eni sold 20 percent of its Area 4 stake to China's CNPC for $4.2 billion but since then oil and gas prices have come down sharply

Libya’s biggest oil port seized in blow to production surge: Libya’s biggest oil port was seized by an armed group, dealing a blow to the North African country as it seeks to revive production of its most important commodity. The Benghazi Defense Brigades, a militia that’s not allied to the United Nations-backed government in Tripoli, took control of the Es Sider terminal last week, according to people with knowledge of matter who asked not to be identified because they aren’t authorized to speak to the media. The facility had previously been under the control of eastern-based Gen. Khalifa Hifter. “That is a considerable blow to Hifter,” said Mattia Toalda, senior policy fellow at the European Council on Foreign Relations. “We have to see if there is an immediate impact on exports. But for confidence in Libya’s production it’s a blow.” The clashes show just how vulnerable Libya’s recent oil-production surge is to conflict that escalated in late 2014 but that had shown signs of calming in the past few months. The nation pumped about 700,000 barrels a day in February, almost doubling from a year ago, according to information compiled by Bloomberg. After sweeping through the oil crescent in September and taking control of the ports in the region, Gen. Hifter had allowed Libya’s National Oil Corp., part of the Tripoli-backed government that he opposes, to use Es Sider for oil exports. But production remains vulnerable without a lasting peace between the east and west of the country. International efforts to break the political stalemate have so far failed.

Analysis: Nigeria's recovery could end OPEC oil output cut exemption, Libya further away -  When OPEC agreed to exempt Libya and Nigeria from its oil production cuts, market watchers said the two beleaguered countries' upside potential could complicate its attempt to accelerate the market's rebalancing. Both countries have ambitious aims to recover output following months of militant attacks on oil infrastructure that caused their production to plummet last year, as OPEC was negotiating the deal. But while Libya has seen a renewal of fighting that threatens to derail its recent fragile oil output recovery, Nigeria appears well on the way to full restoration of its output that could see it pressured by its fellow OPEC members to end its exemption from the production agreement. The six-month deal, which expires in June, will be up for review at OPEC's next meeting on May 25, with some ministers saying the production cuts should be extended to continue drawing down global inventories. "As things stand at present, potentially the new dynamic that will need to be resolved is if Nigeria's militant attacks die down, there will be a case to bring Nigeria into the quota system," said Richard Mallinson, geopolitical analyst with Energy Aspects. "That's unlikely to be something that Nigeria would welcome, but that would be a part of the negotiations." Nigeria oil officials could not be reached for comment, but oil minister Emmanuel Kachikwu, following the last OPEC meeting on November 30 when the production agreement was signed, acknowledged that a fully-recovered Nigeria likely would be asked to share in the cuts.

Peak Oil Exports - An oil export model has been developed based on BP Statistical Review 2016 oil production and oil consumption data. The model shows that global oil exports peaked in 2006 at 37.87 Mbpd. They have since fallen very slowly to stand at 37.07 Mbpd in 2015, the last year for which we have data. Exports have effectively been on a plateau since 2005. What this means is that much of the production growth seen in the exporting countries has been swallowed by consumption growth in these same countries. The impact of static oil exports on the global economy is for others to work out. Former readers of The Oil Drum will no doubt recall the Export Land Model (note that it even has its own Wiki page) that was introduced by Westexas (aka Jeffrey Brown) at a time when global oil production stubbornly refused to peak and decline as peak oilers expected it to do. Put simply, the export land model describes countries where rising domestic consumption, declining production or a combination of both results in a rapid decline in oil exports to the point where one time oil exporters evolve into oil importing nations. The poster child for the export land model was Indonesia, one time member of OPEC and major oil exporter, which watched exports evaporate as oil production went into decline while domestic oil consumption ballooned (Figure 1). Production peaked at 1.69 Mbpd in 1977 but only began to decline post-1991. But as population and prosperity rose, the production surplus turned to deficit in 2003 and by 2015, Indonesia imported 740,000 bpd. Should this be repeated in many of the oil exporting countries it must surely leave the oil importing countries gasping for breath.

The US Motorist Is Unwell: Miles Driven Suffer Biggest Slowdown In Over 2 Years - When trying to forecast the price of oil, it is becoming increasingly clear that the answer is not on the supply side at all but rather on the demand, where as we have been writing for the past month, things are getting quite troubling. While we urge readers to familiarize themselves with our recent coverage of collapsing gasoline demand to a level which according to a perplexed Goldman Sachs suggests the US economy should be in a recession...  ... other troublesome indicators have emerged confirming that not all is well on the demand side. The latest evidence comes from a recent report by Deutsche Bank which shows that the number of miles driven in the US is not only slowing, but in December, it posted the smallest monthly increase since November 2013.  As DB's Mike Baker writes, "we have hypothesized that the increase in gas prices could pressure miles driven, which as noted below slowed in 2016 versus 2015, and even more so towards the end of the year after the Thanksgiving inflection. The 0.5% increase in miles driven in December 2016 is the smallest monthly increase since November 2014. Gas prices inflected around Thanksgiving 2016 and are up year-on-year on a weekly basis over the last 15 weeks."While looking at the above chart of year-on-year change in monthly miles driven in 2016 versus the year-on-year change in average monthly gas prices, Baker notes an approximately (60%) correlation. He then notes that the concern is that gas prices were up only 14% year-on-year in December 2016. The reason why this is troubling is that while there is still no concurrent data, the national average price was approximately $2.23 per gallon as of February 27, 2017 and the price per gallon has increased more than 30% year-on-year over the last three weeks.  In other words, if the deterioration in the trendline persists, it would imply that some time in January of February, we got the first negative print in miles driven in years, and would also explain the recent collapse in gasoline demand.

Hedge funds trim record bullish position in oil: Kemp (Reuters) - Hedge funds have trimmed their bullish position in crude oil by the largest amount since OPEC announced its decision to cut output in November.Hedge funds and other money managers cut their combined net long position in the three main Brent and WTI futures and options contracts by 61 million barrels in the week to Feb. 28.The reduction was the largest since the week ending Nov. 8, according to an analysis of positioning data published by regulators and exchanges (http://tmsnrt.rs/2msPIv4).  But the decline comes after fund managers doubled their net long position from 425 million barrels on Nov. 8 to 951 million barrels on Feb. 21 (http://tmsnrt.rs/2meyam3). Even after the reduction in long positions and increase in shorts in the week ending on Feb. 28, the overall long position was still the third-highest ever. Hedge fund managers remain overwhelming bullish about the outlook for prices with long positions still outnumbering short positions by a ratio of nearly 8:1 (http://tmsnrt.rs/2megwP9). The accumulation of long positions may have helped accelerate the rise in Brent prices to $55 per barrel following the OPEC and non-OPEC accords in November and December.Oil prices have been closely correlated with the accumulation and liquidation of hedge fund positions since the start of 2015.Since Dec. 12, however, the rally has stalled, with no further rise in prices, despite an increase of 220 million barrels in the hedge funds' net long position since then.Commentators are divided over whether the large hedge fund long position in crude has become a crowded trade, and, if so, whether it signals a sharp reversal is imminent.Bullish hedge fund managers point to strong compliance by OPEC, renewed interest among investors in commodities as an asset class, a cyclical upswing, and the comparatively low level of oil prices. Fundamentals and positioning could both help push prices higher as oil stocks fall and institutional investors channel more money to specialised commodity hedge funds.

Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)

  • U.S. crude oil production averaged an estimated 8.9 million barrels per day (b/d) in 2016. U.S crude oil production is forecast to average 9.2 million b/d in 2017 and 9.7 million b/d in 2018.
  • Benchmark North Sea Brent crude oil spot prices averaged $55 per barrel (b) in February, largely unchanged from the average in January.
  • EIA forecasts Brent crude oil prices to average $55/b in 2017 and $57/b in 2018. West Texas Intermediate (WTI) crude oil prices are expected to average about $1/b less than Brent prices in the forecast. NYMEX contract values for May 2017 delivery traded during the five-day period ending March 2 suggest that a range of $46/b to $63/b encompasses the market expectation for WTI prices in May 2017 at the 95% confidence level.
  • Implied global petroleum and liquid fuels inventories increased by an estimated 0.5 million b/d in 2016. EIA expects a relatively balanced oil market in the next two years, with inventory builds averaging 0.1 million b/d in 2017 and 0.2 million b/d in 2018.
  • U.S. monthly average regular gasoline retail prices are expected to increase from $2.30/gallon (gal) in February 2017 to $2.51/gal in July before falling to $2.24/gal by December. U.S. regular gasoline retail prices are forecast to average $2.40/gal in 2017 and $2.44/gal in 2018.
  • U.S. dry natural gas production is forecast to average 73.7 billion cubic feet per day (Bcf/d) in 2017, a 1.4 Bcf/d increase from the 2016 level. This increase reverses a 2016 production decline, the first annual decline since 2005. Natural gas production in 2018 is forecast to rise by an average of 4.1 Bcf/d from the 2017 level.
  • In February, the average Henry Hub natural gas spot price fell by 45 cents per million British thermal units (MMBtu) from the January levels to $2.85/MMBtu. Unseasonably warm temperatures in the Lower 48 states contributed to lower prices.
  • New natural gas export capabilities and growing domestic natural gas consumption contribute to the forecast Henry Hub natural gas spot price rising from an average of $3.03/MMBtu in 2017 to $3.45/MMBtu in 2018. NYMEX contract values for May 2017 delivery traded during the five-day period ending March 2 suggest that a range of $2.15/MMBtu to $3.82/MMBtu encompasses the market expectation for Henry Hub natural gas prices in May 2017 at the 95% confidence level.

Oil majors reverse decade of stalled growth to beat supply crunch fears | Reuters: Oil majors have long been passive watchers of the pump war between OPEC and U.S. shale producers, but not any more. Majors were unable to grow output for the past decade even as oil prices soared above $100 per barrel due bad capital discipline and huge project delays. The oil price slump since 2014 has prompted the world's biggest oil firms to drastically cut costs but also to force contractors to make projects more efficient and extract the same amount of barrels for fewer dollars. As a result, most majors are now planning exceptionally strong production growth until at least 2021, a Reuters analysis of the latest investor presentation and corporate plans showed. Even as prices hold near $50 per barrel, the firms - Royal Dutch Shell, Exxon Mobil, Chevron Corp, BP Plc, Total, Statoil and Eni SpA - plan to grow output by a combined 15 percent in the next five years. "This environment requires discipline on costs and strong operating performance. It will reward businesses that can remain highly competitive at these prices," BP's chief Bob Dudley said at the London-based company's strategy day last week. The seven companies will add almost 3 million barrels per day to their combined output in the next five years effectively generating production the size of another major like Chevron.

U.S. oil output poses awkward forecasting problem for OPEC: Kemp - (Reuters) - U.S. oil drilling activity has surged but so far the impact on production has been limited because of the long delay in completing wells and reporting output.  The number of rigs drilling for oil has almost doubled since hitting a cyclical low at the end of May and is up by more than 50 percent compared with a year ago, according to oilfield services company Baker Hughes.But output of crude and condensates has risen less than five percent since May and is still below the level at the corresponding point last year, according to data from the U.S. Energy Information Administration. But the increase in drilling should eventually show up in a significant rise in production, most likely with a delay of 9 months or more (http://tmsnrt.rs/2maNQ81). In most cases, decisions about drilling programmes are based on the level and change in oil prices over the previous 2-3 months.From the moment a decision is made to drill an additional well, there can be a delay of 1-2 months before rig arrives on location while contracts are placed and the rig is moved.Rigging up, actually drilling the well and then removing all the equipment from the site can easily take another month.The arrival of the fracturing crew and other well completion services usually results in a further delay of 2-3 months.So the well could start producing 4-6 months after the initial decision is taken provided there are no unusual problems.But production records are published for full calendar months and output for the first month is likely to be for a fraction of the full 30-31 days; full production will not be recorded until the second month.There will be a further delay before output is reported to regulators and a final delay before regulators publish aggregated numbers.Given all these delays, the full impact of a decision to increase production is unlikely to show up in the official production data for 9 months or more, and is based on prices that are up to a year old.Output reported now is the result of decisions taken in June 2016 or even earlier. More recent decisions taken in the autumn of 2016 and early 2017 will not show up in output until later.The big increase in drilling reported in the second half of 2016 and the first two months of 2017 will not show up in output until the second half of 2017.

OPEC Woos Old Nemesis—Wall Street -- The Organization of the Petroleum Exporting Countries is on an unusual listening tour, in which it exchanges views with hedge funds, investment banks and other big financial players while trying to figure out how the market reacts to its moves. The private meetings with oil traders and money managers in London and New York, along with a planned gathering this week at a conference in Houston, are a departure for OPEC. The cartel's leaders have long derided oil-futures-contract traders as "speculators" who cause unnecessary volatility in crude prices. Now, OPEC and its most powerful member, Saudi Arabia, are wooing traders, trying to convince the market they are serious about raising oil prices with a nearly 5% production cut agreed to in 2016. The oil producers are also trying to understand how traders and banks make decisions. The gatherings began in Vienna just before the Nov. 30 decision to cut production. A Saudi OPEC official sounded out the effects of a potential cut with French oil trader Pierre Andurand, Lukoil traders and Mark Couling of Vitol Group, according to people familiar with the meetings. Mr. Andurand and Vitol have declined to comment, while Lukoil didn't respond to requests for comment. Since the output-cut deal, OPEC Secretary General Mohammad Barkindo has met with a series of hedge funds and oil buyers. Among them: BBL Commodities Value Fund, a $540 million investment vehicle run by ex- Goldman Sachs trader Jonathan Goldberg; Ospraie Management, headed by veteran commodities investor Dwight Anderson; Taylor Woods Capital which is managed by former Credit Suisse trader Beau Taylor; and EasyJet, the U.K. budget airline that buys and sells oil-market derivatives to hedge against fuel-price rises.

Why OPEC Is Colluding With Hedge Funds --Something unprecedented happened last November when OPEC sat down in Vienna to hammer out the final terms of its oil production cut deal (which, incidentally, has yet to translate into a drop of all time high inventories): one day before the summit, the oil producing cartel - or rather Saudi Arabia - secretly invited hedge funds to sit in on the negotiations and provide OPEC, with input on what to do. However, news of the meeting leaked shortly thereafter, and was reported by the FT: "Saudi Arabia convened private talks with the world’s largest oil traders in Vienna before OPEC’s crunch meeting on whether to cut oil output, seeking views about the likely market reaction should they fail to clinch a deal, it has emerged. Mark Couling, head of crude oil at Vitol, the world’s biggest independent oil trading company, was invited to Vienna by the Saudi delegation, according to people with knowledge of the talks. Pierre Andurand, who runs the $1.5bn Andurand Capital fund, one of the world’s biggest oil hedge funds, was also invited, alongside at least one trader from Russian independent oil company, Lukoil. Why this overture by the Saudis to invite and give traders responsible for shipping millions of barrels of oil and trading billions in crude derivative a potential first look? As the FT explained at the time, "Saudi delegates have previously done so on occasion when they were looking to get a better feel for the market."   It is now four months later, oil is modestly higher, but not too high, and conversation has recently shifted away from OPEC's favorite topic: production cuts, to something far less enjoyable: surging shale production which threatens to take away market share from the Saudis and OPEC, and whether or not OPEC will extend the production cut deal beyond the first half of the year.  It also appears that the OPEC is once again nervous, because as the WSJ reports, the "Organization of the Petroleum Exporting Countries is on an unusual listening tour, in which it exchanges views with hedge funds, investment banks and other big financial players while trying to figure out how the market reacts to its moves."

Oil Bulls Concerned By Russia's Failure To Cut Production -- If record US crude and gasoline inventories (and soaring US production) were not big enough concerns, oil bulls are starting to lose faith (hedge fund shorts at 12-week highs) afterlower growth targets in China and concerns over Russia's compliance with a global deal to cut oil output sparked renewed worries over a crude oil supply glut. Reuters notes that China on Monday lowered its growth target for the year to 6.5 percent, compared with 6.7 percent last year, and also tightened regulatory controls in an effort to tackle pollution. Investors are watching the moves carefully for signs they could dampen demand for oil.  Meanwhile, figures from Russia's energy ministry released last week showed February oil output was unchanged from January at 11.11 million barrels per day (bpd), casting doubt on its moves to rein in output as part of a pact with oil producers last year. Commerzank noted that Russia's production would need to fall by a further 100,000 bpd in March in order to comply with the agreement.  And while prices are rebounding modestly today (as the machines buy the dip again), the recent trend is clear. The China demand, Russia supply concerns outweighed news of escalating violence in North Africa that sparked questions about oil exports from the region and prompted a small price rebound on Friday.

Russia to achieve 300,000 b/d in agreed cut by end April: minister -  Russia will achieve by late April the 300,000 b/d cut it agreed to in the coordinated supply cut agreement reached with OPEC and 11 non-OPEC countries last year, Russian energy minister Alexander Novak told reporters Monday at IHS CERAWeek. Novak said Russia is currently meeting 50% of its supply cut commitment and will likely have cut 200,000 b/d by the end of March. Under the deal, OPEC in November agreed to cut 1.2 million b/d from its October levels while 11 non-OPEC countries led by Russia agreed to cut an additional 558,000 b/d. Novak said it remains unclear if the supply cut deal will be extended beyond June, a decision he said likely will not be made until shortly before the current deal is set to expire."It's a bit premature to talk about it right now," Novak said through a translator. "We just need to wait a little bit and see what will happen." He said Russia and other parties to the agreement will base their decision on extending the agreement based on a variety of factors, including supply and demand and price volatility. OPEC in February moved closer to full compliance with the landmark production cut agreement signed late last year, as output in the month fell from January levels to average 32.03 million b/d, according to an S&P Global Platts survey released Monday. In all, taking an average of January and February production, the 10 members obligated to reduce output under the deal have achieved 98.5% of their total combined cuts, according to the survey, up from 91% in January. Novak dodged a question Monday on whether the Trump administration was likely to lift sanctions against Russia and said that Russia was not interested in joining OPEC.

Oil Majors To Boost Production As IEA Warns Of Supply Deficit | OilPrice.com: The IEA issued a new report at the CERAWeek conference that looks at the oil market over the next five years, and the agency warned that although shale drilling is coming back and the market is currently oversupplied, relentless demand growth will soak up all the excess. By the early 2020s, the market could be short of supply, resulting in a price spike. The IEA says the draconian cuts to exploration spending over the past three years will result in too few barrels coming online in the five-year timeframe. OPEC will be stretched to its limits as demand soars.   Russia’s energy minister Alexander Novak said that Russian oil production will drop by 300,000 bpd by late April, which will allow Russia to comply with the cuts it promised as part of the OPEC deal. Together with Russia, other non-OPEC countries pledged to reduce output by 558,000 bpd. Russia’s compliance will further boost confidence in the deal.  A Reuters analysis finds that the largest oil companies in the world are planning on ramping up production over the next five years, after three years of contraction. Together, ExxonMobil (NYSE: XOM), Royal Dutch Shell (NYSE: RDS.A), Chevron (NYSE: CVX), BP (NYSE: BP), Total (NYSE: TOT), Statoil (NYSE: STO) and Eni (NYSE: E), will grow output by a combined 15 percent by 2021. Argentina’s state-run YPF (NYSE: YPF) said that drilling in Argentina’s shale is getting more cost effective. At the CERAWeek conference, YPF CEO Miguel Gutierrez said horizontal drilling costs have declined by half, falling from $17 million per well to just $8 million – still above U.S. shale drilling costs but rapidly converging towards parity. Also, the time it takes to drill a new well fell from 40 days to just 15 days. As a result, breakeven costs have dipped below $40 per barrel, making Argentina one of the most attractive places for shale drilling outside of North America.

Saudi cuts to lighter crude prices show shifting oil market: Russell | Reuters: A decision by Saudi Aramco to cut the price of its benchmark Arab Light crude to Asian refiners for April-delivery cargoes has prompted speculation that the world's top oil exporter is chasing market share. There is always a risk in over-interpreting moves in Aramco's official selling prices (OSPs), and trying to fit them into a narrative that supports a particular view of the state of the market. Perhaps a better approach is to look at whether the move in the OSP goes beyond what might be justified by changes in the market structure for crude oil in Asia, the region that buys about two-thirds of Saudi oil. First, the facts. Aramco cut the OSP for Arab Light for Asia to a discount of 15 cents a barrel over the Oman-Dubai benchmark for April cargoes from a premium of 15 cents the prior month. The effective 30 cents a barrel reduction came against a backdrop of a weakening premium for Dubai crude over global benchmark Brent and softer margins for key oil products in Asia, such as gasoline, naphtha and to a lesser extent, diesel. The Brent-Dubai exchange for swaps DUB-EFS-1M, a measure of the premium of Brent over the Middle East grade, dropped to $1.08 a barrel on Feb. 28, the lowest in 18 months. The profit of making a barrel of gasoline in Singapore GL92-SIN-CRK, known as the crack, has almost halved in just under a month, dropping to $7.30 a barrel on Monday, down from a recent peak of $13.16 on Feb. 2. The same measure for gasoil, the base product for diesel, was at $11.66 a barrel on Monday, down from $12.66 on Feb. 23.

Saudi Aramco expects OPEC crude oil output cut to be absorbed in spot LPG supplies - Saudi Aramco expects to see some impact on Saudi Arabia's LPG production from the OPEC crude output cut deal but it anticipates this will be absorbed in its spot supplies, a Saudi Aramco official said Tuesday. Speaking at the International LP Gas Seminar 2017 in Tokyo, Ali Alam, marketing coordinator of LPG sales and marketing, said Aramco expects Saudi Arabia's LPG production will probably fall as a result of the OPEC deal. But Alam said it is hard to determine the degree of LPG production cut because "Saudi LPG has so many variables" in its production associated with different crudes."We, Saudi Aramco, anticipate the [OPEC] cut to actually be on the spot side rather than the term side because this is part of our customer care," Alam said. Saudi Aramco had not offered any spot cargoes since January, a cutback from its previous spot offerings of about two cargoes per month in the fourth quarter, market sources said. Each cargo is 44,000 mt. OPEC on November 30 agreed to cut production by around 1.2 million b/d to 32.5 million b/d from January 1. This was followed by a commitment from 11 non-OPEC producers on December 10 to cut production by a combined 558,000 b/d also from January 1.

Extension of OPEC/non-OPEC crude output cut to be considered in May -- Saudi energy minister Khalid Al-Falih said Tuesday that an extension of the six-month OPEC/non-OPEC agreement to cut crude output will not be considered until May and will be based on levels of both conformity to the deal by participating countries and on global inventories. At a brief news conference at CERAWeek by IHS Markit in Houston, Falih and ministers from Russia, Iraq, Mexico and OPEC Secretary General Barkindo said that 1.5 million b/d have already been withdrawn from the global market as a result of the deal. Falih said he held the news conference to address concerns he heard in meetings at CERAWeek that the supply cut agreement could be undermined by the growth of US shale oil output. "This is a big market," Falih said, pointing to demand growth which could absorb the expected increase in US production. Russian energy minister Alexander Novak said that conformity with the deal has, thus far, been "satisfactory" and said the deal has had a "positive impact" on the market. Novak said his meetings with ministers and others at the conference had been focused on conformity levels, the possibility of an extension and the response from US shale to the deal. Barkindo said OPEC was intensifying its monitoring of commercial stocks, but declined to offer specifics on where that level would be in order for the deal to be extended. "We are closely monitoring this trend and it will be magnified in months to come," Barkindo said

Saudi energy minister says oil market fundamentals improving | Reuters: Saudi Energy Minister Khalid al-Falih said on Tuesday that oil market fundamentals were improving after an agreement struck with top oil producers to curb supply and end a two-year glut took effect. The kingdom led a pact between the Organization of the Petroleum Exporting Countries and other major producers, including Russia, Mexico and Kazakhstan, to cut global crude output by about 1.8 million barrels per day (bpd) from Jan. 1, and bring supply closer to demand. Saudi Arabia had cut beyond what it had pledged in the agreement and brought the kingdom's output below 10 million bpd, he said. Suppliers participating in the curbs have cut more than 1.5 million bpd, he said, exceeding what he called the market's low expectations. Global oil demand would grow by 1.5 million bpd in 2017, and increased output from the United States, Brazil and Canada would be more than offset by natural declines in aging fields, he said. "There is... cause for cautious optimism as we see the 'green shoots' of the recovery," Falih told energy executives and oil officials gathered at the CERAWeek industry conference in the U.S. energy capital of Houston. Benchmark Brent crude futures closed at $55.92 a barrel on Tuesday, and are up more than 10 percent since the output curb deal was struck in November. Still, he cautioned against any "irrational exuberance" among investors. "We should not get ahead of the market," he said.

 Oil little changed as growing U.S. output offsets bullish Saudi comments | Reuters: Oil prices ended little changed on Tuesday, as growing U.S. production expectations offset earlier gains after Saudi Arabia's oil minister said market fundamentals were improving. The market, meanwhile, braced for U.S. crude inventory data later Tuesday that is forecast to show a 1.9 million-barrel build for last week, the ninth straight weekly increase in stocks that are already at record highs. [EIA/S] At the CERAWeek energy conference in Houston, Saudi Oil Minister Khalid Al-Falih said last year's agreement by OPEC and non-OPEC countries to curb supplies and boost prices has improved oil market supply and demand fundamentals. But Falih said that happened only because Saudi Arabia cut beyond what it pledged, bringing the kingdom's output below 10 million barrels per day (bpd). He also said the Organization for the Petroleum Exporting Countries (OPEC) would not let rival producers take advantage of the cuts to underwrite their own production investments. The group is expected to meet again in May, when it could consider extending the production cuts. Brent futures slipped nine cents, or 0.2 percent, to settle at $55.92 a barrel, while U.S. West Texas Intermediate (WTI) crude lost six cents, or 0.1 percent, to settle at $53.14. Oil prices have been stuck in a $3 band since February, failing to take off after OPEC implemented, to a surprisingly high degree, the first production cut in eight years.

WTI Dips (But RBOB Rips) As Crude Inventories Surge More Than Expected -- Despite the desperate jawboning of the Saudis and OPEC today - trying to tell everyone to ignore Russia - crude ended the day at its lows, testing towards $52 handle. When API reported a much bigger than expected crude build, WTI prices tumbled. RBOB prices surged though as Gasoline inventories drewdown by the most since April 2014. API

  • Crude +11.6mm (+1.4mm exp)
  • Cushing +788k
  • Gasoline -5.00mm
  • Distillates -2.9mm

With Crude and Gasoline inventories already at or near record highs, this week's massive Crude build is the 9th weekly build in a row. The Gasoline draw was the biggest since April 2014...

Fitch Predicts Drop In Oil Prices By 2017 As U.S. Shale Output Soars - Oil bigwigs should take a step back before becoming too comfortable with the new oil price range according to Fitch Ratings’ newest market analysis.“The recovery in US drilling activity will drive up shale oil production in the second half of 2017, offsetting a portion of recent oil price gains,” the credit rating agency’s report released on Monday says. “We therefore expect average oil prices for the year to be below those in January and February.”In a stable market scenario, Fitch estimates that by the end of this year, oil prices will fall to $52.50, but then rebound to $55 and then $60 in 2018 and 2019, respectively. Long-term prospects for Brent barrels sit at $65 in this model.A stressed, oversupplied market will mean a $40 barrel through 2019, however.Since January, a 1.8 million-barrel global production cut led by the Organization of Petroleum Exporting Countries (OPEC) and joined by several other nations has kept prices between the $55-$60 range.Compliance to the terms of the November deal by members of the bloc has been strong. Last week, new data showed that OPEC’s compliance stood at 94 percent.But non-OPEC enthusiasm for the deal has been much talk, with moderate action. A February 23rd report puts compliance by the 11 NOPEC nations at a modest 60-66 percent. Fitch cited the continuous increase of active oil rigs in the United States since May 2016 as key evidence for an impending price collapse. American production is set to top nine million barrels over the course of 2017, the analysts estimate, due to rejuvenated capital expenditure budgets and higher output capacity.

WTI/RBOB Surge After Massive Gasoline Draw (Despite Record Crude Glut) -- Following API's reported massive build in crude (and draw in gasoline), DOE confirmed the extreme moves with a major 8.2mm crude build and a massive 6.56mm draw in gasoline (the biggest since April 2011). US Crude production rose once again - to 13-month-highs. DOE

  • Crude +8.21mm (+2mm exp)
  • Cushing +867k (+406k exp)
  • Gasoline -6.56mm (-1.99mm exp)
  • Distillates -925k (-1mm exp)

This is the 9th weekly rise in crude inventories (some chatter on API data including SPR barrels but that was marginal at best compared to the headline print)...The gasoline draw is the biggest since April 2011

Market alert: US oil price plunges toward $50 as a perfect storm brews: Oil is on track to break through the key psychological level of $50 a barrel after a ninth straight rise in U.S. crude stockpiles came at exactly the wrong moment, analysts said Wednesday. The amount of crude oil in U.S. storage rose to another record high on Wednesday, jumping 8.2 million barrels from the previous week, the Energy Information Administration reported. The increase was more than four times what analysts expected. Weekly figures also showed U.S. oil production continuing to tick up toward 9.1 million barrels a day, the highest level in more than a year. That provided further evidence that rising American output is confounding efforts by the Organization of the Petroleum Exporting Countries, Russia and 10 other exporters to reduce global oil inventories by curbing their own output.The data sent U.S. benchmark West Texas Intermediate crude prices plunging more than 5 percent to a nearly three-month low. The plunge through a number of lows on Wednesday puts oil on a path to test the December low of $49.95 a barrel, said John Kilduff, founding partner at energy hedge fund Again Capital. "From there you could accelerate," he told CNBC, adding that $50 "was the fail-safe." Kilduff's downside target, once oil breaks below $50 a barrel, is $42. For the last three months, oil has traded in a range between $49.61 and $55.24.

Oil Tanks To $51 Handle - One-Month Lows -- It seems ever-exuberant energy traders are finally waking up to the reality that the global rebalance is not happening. A record glut of crude and surging production has sent WTI back to a $51 handle this morning (one-month lows) and has weighed on gasoline prices... WTI has broken below its 100-day moving average as the machines ran overnight stops and then plunged after the DOE data...“Inventory drawdown slower than I thought after cuts,” Saudi Arabia's Khalid Al-Falih admits. Bloomberg's Vince Piazza warns U.S. inventories across the product value chain remain elevated, with crude oil 39% above the five- year average and distillates, jet fuel and gasoline between 5.5% and 22% higher. This, along with the 51% rebound in rig count since last year, and the robust level of more than 5,300 DUCs (drilled yet uncompleted wells) implies the near-term return of U.S. hydrocarbon volume with an environment of lower range-bound prices.

Crude Is Crashing --WTI Crude is suffering its biggest down day since September 2015 - crashing over 5% to a $50 handle and the lowest levels since 2016...WTI and RBOB are plunging after an initial post-DOE bounce... April WTI just tested to $50.05...As Bloomberg notes, net long commitment of traders shows WTI and Brent positioning is “well over-extended” and could spark liquidation of long positions as prices have remained range-bound for a couple months now, Scotia’s energy commodity strategist Michael Loewen writes in note, citing CFTC data.Market could get worse before improving as traders reduce holdings by selling WTI and Brent contracts into front-end of the curve.WTI has ripped through the 50-, 100-, and 200-day moving averages... Additionally, this is the worst day for USO (Oil ETF) since October, with about 220k puts on the U.S. Oil Fund (USO) changed hands, compared with a 20-day average of 47k and 57k calls traded today.

 Oil prices drop over 5% to end at 2016 low - Oil futures sank by more than 5% Wednesday to post the lowest finish of the year after U.S. government data revealed a weekly jump in crude supplies that lifted total inventories to another record. The plunge came even as representatives from the Organization of the Petroleum Exporting Countries this week touted high compliance among the output-cut agreement participants since the start of the year. OPEC Secretary-General Mohammed Barkindo said Tuesday, at a conference in Houston, that the commitment among output cut pact countries “remains high.” But in U.S., which isn’t part of the pact, the latest data revealed that crude production last week reached a more than one-year high.April West Texas Intermediate crude fell $2.86, or 5.4%, to settle at $50.28 a barrel on the New York Mercantile Exchange and May Brent crude on London’s ICE Futures exchange fell $2.81, or 5%, to $53.11 a barrel. Both marked their lowest settlement since Dec. 7, according to FactSet. The sharp drop in crude futures put pressure on the Dow Jones Industrial Average DJIA, -0.33% and the S&P 500 index SPX, -0.23% with the energy sector posting the steepest decline of the broad-market benchmark’s 11 sectors. The U.S. Energy Information Administration Wednesday reported an 8.2 million-barrel climb in domestic crude supplies for last week, lifting total commercial inventories to a record weekly level of 528.4 million. The weekly climb was the ninth in a row. Expectations for a large rise in the official data rose after data Tuesday from the American Petroleum Institute showed that domestic crude inventories rose by a whopping 11.6 million barrels in the latest week. Analysts polled by S&P Global Platts had forecast an inventory increase of 1.6 million barrels. “This report runs the gamut in terms of extremes, with a huge 8.2 million barrel build to crude stocks tilted bearish, large draws to the products distinctly bullish,” 

  OPEC Panics, Warns US Shale Not To "Assume" Production Cut Extension -- All it took for OPEC to panic, was the sharpest drop in oil prices since last summer, sending WTI not only back under $50, but also wiping out all gains since the November Vienna "supply cut" deal. With the cartel suddenly finding itself in unfamiliar territory, where neither the daily barrage of "flashing red headlines" sparks a headline-scanning algo buying frenzy, nor the alleged production cuts leading to a reduction in inventory (quite the contrary, US commercial stocks just hit a new all time high) OPEC had no choice but to make a  threat to its biggest competitor: US shale companies.According to Reuters, Saudi energy officials told top independent U.S. oil firms in a closed-door meeting this week that they should not assume OPEC would extend output curbs to offset rising production from U.S. shale fields. The reason for Saudi ire is simple: it is producing less, having shouldered the bulk of OPEC cuts, and yet with prices once again declining, and US shale producers ramping up production, not only are Saudis pocketing less revenue, but they are also are permanently giving up market share to US producers whose production in recent months has soared, especially in the Permian, where breakeven costs are as low as $30 for some producers. 

U.S. Shale Kills Off The Oil Price Rally - Oil prices plunged on Wednesday and Thursday, dropping to their lowest levels since December when the optimism surrounding the OPEC deal was just getting underway. WTI dipped below $50 for the first time in 2017 on March 9, a two-day loss of more than 8 percent. The catalyst for the sudden decline in prices was yet another remarkably bearish report from the EIA, which showed an uptick in crude oil inventories by 8.2 million barrels last week. That takes crude stocks to another record high, and it was the ninth consecutive week of inventory builds.Up until now, oil speculators have taken the unusual increase in crude inventories in stride. Instead of paring back their long positions, hedge funds and other money managers doubled down over the past two months, putting more money into bullish bets, hoping that the OPEC production cuts would outweigh the comeback in U.S. shale.The result was a shocking level of bullish bets on WTI and Brent, creating a lop-sided position in the futures market. That is not necessarily a problem if market conditions are tightening, as many investors believed, but it begins to look unbalanced if in fact the oil market is still oversupplied.The pace of adjustment in the physical market for crude oil is starting to drag on, and investors are getting anxious. With so many investors having staked out bullish bets, oil prices are exposed to sharp and sudden corrections if they unwind those positions. And that may be starting to occur. It was just a matter of time before sentiment shifted, and another week of enormous crude inventory builds might have been a too much to stomach. “When you look at a very visible marker like the weekly U.S. inventories and you see that crude stocks are still rising, then some of these market participants may begin losing a bit of faith in the effectiveness of producer restraint,”

Race to Bottom on Costs May Cause Oil to Choke on Supplies - When companies can lower the price at which they break-even, it means they can approve more projects and produce more oil, keeping dividends safe and investors happy. The risk: By drilling up their share price, they can also end up drilling down the price of oil. Welcome to 2017, the year after a two-year market rout made companies more efficient. At the CERAWeek by IHS Markit conference this week, fears of too much supply were palpable. "Everyone is driving break-even prices down," Deborah Byers, head of U.S. oil and gas at consultants Ernst & Young LLP in Houston, said in an interview at the meeting, the largest annual gathering of industry executives in the world. "It isn’t just shale companies; it’s everyone, from deep-water to conventional." As the conference was ongoing, those fears took physical form as West Texas Intermediate, the U.S. crude benchmark, plunged 9.1 percent this week, closing below the key $50-a-barrel level for the first time this year. It settled at $48.49 on Friday. The slump came as Scott Sheffield, chairman of Pioneer Natural Resources Co., said prices could fall to $40 if OPEC doesn’t extend its existing agreement to cut production. Shale billionaire Harold Hamm, the CEO of Continental Resources Inc., warned undisciplined growth could "kill" the oil market.The buzzword was efficiency. In panel discussions and keynote speeches, executive after executive tried to outdo rivals in announcing their low break-even prices. Eldar Saetre, head of the Norwegian oil giant Statoil ASA, told delegates that break even for his company’s next generation of projects had fallen from $70-plus to "well below" $30 a barrel."The downturn has been long and painful, but has presented the industry with a unique opportunity to strengthen ourselves," Saetre said.  From Patrick Pouyanne of Total SA to Darren Woods of Exxon Mobil Corp., almost every executive commented on the lower break-evens. For some new projects tying back to existing facilities, executives said they could avoid losses even at $12 a barrel. According to Rystad Energy, a Norway-based industry consultant, the well-head break-even costs for U.S. shale plays declined 46 percent between 2014 and 2016.

Oil drops to lowest since OPEC deal, U.S. crude below $50/bbl | Reuters: Oil fell about 2 percent on Thursday in heavy trade, extending the previous session's slump to prices not seen since an OPEC-led pact to cut production was agreed, as record U.S. crude inventories fed doubts about the effectiveness of the deal to curb a global glut. U.S. crude prices fell through the $50 a barrel support level, with market participants unwinding some of the massive number of bullish wagers they had amassed after the deal. The losses followed Wednesday's slide of more than 5 percent, the steepest in a year, after data showed crude stocks in the United States, the world's top oil consumer, swelled by 8.2 million barrels last week to a record 528.4 million barrels. [EIA/S] But several analysts remained bullish on oil for the long term. "Headline risk can capture the imagination of the market over the near term, but we see dips as short-lived, key buying opportunities," RBC analysts said in a note. "Record high inventory levels are reason for pause, but we believe that the market is overly focused on U.S. stocks ... The U.S. will be the last of the major regions to rebalance stocks given that storage capacity remains abundant, cheap and U.S. shale is extremely elastic in a $50-per-barrel price environment." Brent crude settled 92 cents, or 1.7 percent, lower at $52.19 a barrel. On Wednesday, the benchmark slumped 5 percent, its biggest daily percentage move in a year. U.S. West Texas Intermediate crude (WTI) extended Wednesday's 5.4 percent losses by 2 percent, or $1, to end at $49.28 a barrel, the first time below the $50-mark since mid December.

Saudis tell U.S. oil: OPEC won't extend cuts to offset shale - sources | Reuters: Senior Saudi energy officials told top independent U.S. oil firms in a closed-door meeting this week that they should not assume OPEC would extend output curbs to offset rising production from U.S. shale fields, two industry sources told Reuters on Thursday. Oil producers led by Saudi Arabia and top non-OPEC exporter Russia are in an uneasy truce with U.S. shale firms after a two-year price war that sent many shale producers to the wall. The Saudis and Russia led a deal to curb output in late 2016 to end a global supply glut that pushed oil prices to a 12-year low. The resulting rise in oil prices has sparked a rush of new output by shale producers, who this week outlined ambitious production growth plans across the United States. Speaking at an industry conference in the U.S. energy capital of Houston on Tuesday, Saudi Arabia's Energy Minister Khalid al-Falih said that there would be no "free rides" for U.S. shale producers benefiting from the upturn. Falih's senior advisors went a step further at the meeting on Tuesday evening with executives from Anadarko, ConocoPhillips, Occidental Petroleum Corp, Pioneer Natural Resources, Newfield Exploration and EOG Resources. "One of the advisors said that OPEC would not take the hit for the rise in U.S. shale production," a U.S. executive who was at the meeting told Reuters. "He said we and other shale producers should not automatically assume OPEC will extend the cuts." The Saudis called the meeting to exchange views on the market and to gauge the outlook for shale output, both sources said. Both sources spoke about the meeting on condition of anonymity due to the sensitivity of the matter.

Saudi Oil Rations Signal Sweet U.S. Threat as Sour Crude Cut - Saudi Arabia is handing customers in the world’s biggest oil market sweet treats while limiting sour supplies. The producer cut volumes of its Arab Medium and Arab Heavy crude for April sales to at least two North Asian refiners, according to people with knowledge of the matter. It instead gave the buyers more of the Arab Light and Arab Extra Light varieties to compensate, said the people, who asked not to be identified because the information is confidential. One other buyer in the region received cuts in volumes for all grades it sought. Saudi Arabian Oil Co. also gave full volumes of contractual supplies to two other North Asian refiners, which mostly buy lighter “sweet” crudes that typically have less sulfur and are easier to process than heavier “sour” oils. Processors in South Asia and Southeast Asia got all the oil they asked for in April. The state-run producer known as Saudi Aramco didn’t respond to an email seeking comment sent to its press office in Dhahran outside regular business hours. The strategy to offer more of its light crudes to customers reflects its pricing for supplies. While sweet crudes are typically costlier than sour oils, Aramco’s April official selling prices show the premium of one of its lightest grades to its heaviest has shrunk to the smallest since July 2015. That’s as it seeks to defend the market share of its less sulfurous varieties at a time when similar-quality crudes are rushing to Asia from the Americas, Europe and Africa.  The increased supply of light crude along with lower pricing for the oils is Saudi Arabia’s latest effort to ward off rivals in Asia while leading output cuts as part of a deal between OPEC and other nations to erode a global glut. In January, people with knowledge of the matter said it’s continuing to pump lighter oil while fulfilling its promise to cut output by focusing curbs on medium and heavy varieties.’

Is The Oil Price Plunge A Turning Point? – Berman -WTI futures fell $2.86 from $53.14 to $50.28 per barrel, and Brent futures dropped $3.81 from $55.92 to $52.11 per barrel. WTI is trading below $49 and Brent below $52 per barrel at the time of writing. The apparent cause was a larger-than-expected 8.2 million-barrel (mmb) addition to U.S. crude oil inventories. Based on history, we can see that this was an over-reaction. WTI has fallen below the $50 to $55 per barrel range in which oil futures have traded for the last 3 months (Figure 1). An 8.2 mmb addition to crude oil storage is actually fairly normal during the annual re-stocking season that we are in now (Figure 2). Inventories increased 10.4 mmb during this week in 2016 and the 5-year average for this date is 5.3 mmb. The fact that inventories have been in record territory since the beginning of 2015 has not kept oil futures from going through several rallies or from trading near $55 per barrel since November. The 13.8 mmb addition to storage a month ago was larger than yesterday’s amount yet prices barely responded. Comparative inventory–the crucial price indicator-only moved up 2.4 mmb (Figure 3). That is because we are in the re-stocking season and compared with previous years, this addition to storage is not that big. Other key measures of gasoline and diesel volumes fell by more than 1 mmb each. And there was some very good news this week that the markets ignored. EIA’s Short-Term Energy Outlook (STEO) showed that the global market balance (production minus consumption) moved to a deficit last month. The world consumed almost a million barrels more than it produced in February (Figure 4). This is a one-month data point and should not be seen as a trend. Still, it is a positive sign that seems to have been overwhelmed by an otherwise normal addition to U.S. storage.

Tumbling Oil Launches Record Options Trading As "800 Million Barrels" Change Hands --With oil's recent somnolent, low-vol levitation at their back, the number of hedge funds and other speculators who were soothed by the gradual move higher and betting on the success of OPEC reflationary strategy, had recently grown to an all time high, as seen in the chart below showing the number of long net-spec positions in the combined oil futures market. So when the price of oil unexpectedly tumbled on Wednesday, then continued to slide over the next two days, many were wondering if this sharp reversal in prices would unleash a margin-call driven liquidation scramble. For now, while the selling has persisted, it has been largely orderly and no major "flushes" lower have been observed following the sharp move on Wednesday. Furthermore, until we get the latest CFTC data later on Friday it will be impossible to determine if the record long overhang had dropped (or perhaps increased further), however what we do know is that according to ICE and CME data, a record number of options contracts traded on Thursday, as Bloomberg reports. The total includes contracts referencing Brent and WTI, and also shows a surge in bullish bets that the former will reach $70 a barrel by September.While it is possible that the spike in option trading is to hedge existing, predominantly long positions, thus preventing a wholesale sell-off, it is just as likely that the momentum chasers simply rushed to "buy the dip", thus becoming even more exposed, this time with leverage and theta, to continued downside risk. In total, options equivalent to to than 800  million barrels of crude oil exchange hands yesterday, an amount that is well more than half the total outstanding net long spec positions.

OilPrice Intelligence Report- How Much Further Can Oil Prices Fall?  - Oil prices awoke from their slumber this week, breaking out of a narrow trading range and plunging by more than 8 percent. WTI dipped below $50 per barrel on Thursday, and Brent dropped below $53 per barrel, the lowest levels since early December when the OPEC deal was announced. The reason for the sudden decline was the bearish EIA report, which showed a whopping 8.2 million barrel increase to crude oil inventories, pushing total stocks to another record high. The inventory increases have been consistent throughout 2017, but the combination of rising U.S. oil production and relentless stock builds seems to have finally put a dent in market bullishness.  At the CERAWeek Conference in Houston this week, OPEC officials made a concerted effort to court U.S. shale players, hoping to smooth over differences in order to cut down on market volatility. OPEC’s Secretary-General dined with shale executives, and met with investment banks to better understand OPEC actions on the market. By all accounts, the meetings have brought an aura of understanding between OPEC and market players. But, to be sure, they are still competitors. Saudi energy minister Khalid al-Falih warned shale companies not to move too quickly, arguing that OPEC would not bail out the shale industry if it makes unjustifiable investments. "He said we and other shale producers should not automatically assume OPEC will extend the cuts,” a shale executive told Reuters. The statement is all the more poignant given the slide in oil prices this week amid concerns of oversupply.   CEO Harold Hamm also warned the shale industry not to “kill” oil prices by ramping up too quickly.   Wednesday saw the worst one-day drop in oil prices in over a year. That has added a lot of weight and speculation to OPEC’s production cuts and whether the cartel will extend their deal through the end of the year. OPEC officials said they would wait until May and look at U.S. inventory levels before they decide. But with oil prices already falling, the failure to extend the cuts would mean more losses are to come. “If OPEC doesn’t extend the deal that would be price suicide, plain and simple,” Tamas Varga, analyst at London-based PVM brokerage, told the WSJ Speculators have built up a record position in net-long bets on crude oil, a position that could unwind with the shift in market sentiment. "It's confirmatory to me that they've thrown in the towel and we're in the process of a pretty big long liquidation at the moment that should carry us all the way down, I think, to the November lows of $42. We'll retrace the entirety of the rally from November to just recently,"

Total U.S. rig count jumps by 12 for eighth straight weekly gain:

  • The total U.S. rig count climbed by 12 to 768, rising for the eighth consecutive week, Baker Hughes reports in its latest weekly survey.
  • The oil rig count rose by 8 to 617, while the natural gas rig count rose by 5 to 151; a rig classified last week as miscellaneous was removed.
  • The total rig count is up by 288 rigs from last year's count of 480, with oil rigs up 231 from 386 and gas rigs up 57 from 94.

U.S. oil and gas rig count climbs by 12 - Drillers sent another 12 rigs this week back into oil and gas fields across the nation, Baker Hughes said Friday. The number of active oil-drilling rigs climbed by eight, up to 768, in the eighth consecutive weekly increase. Meanwhile, gas rigs increased by five, up to 151. One rig classified as miscellaneous was removed from the oil field service company’s go-to list of active rigs. Four of the oil rigs were sent to the DJ and Niobrara basins in Colorado and nearby states. One went to the Permian Basin in West Texas, another went to the Utica Shale in Ohio, and several more headed for regions Baker Hughes does not track. The nation’s rig count has climbed from 404 in late May to 768 this week, as oil prices have risen and OPEC’s oil production cut spurred drilling activity in U.S. shale plays.

BHI: US rig count records sixth double-digit rise of past 8 weeks -  The US drilling rig count climbed 12 units to 768 during the week ended Mar. 10, according to Baker Hughes Inc. data.The count has now risen in 8 straight weeks, 6 of which have been double-digit increases (OGJ Online, Mar. 3, 2017). Since May 27, 2016, the final week of an extended drilling downturn, the count has added 364 units.US oil-directed rigs, which represent more than 80% of the rigs to have come online since May 27, gained 8 units this week to 617, an increase of 301 units since May 27. Gas-directed rigs rose 5 units to 151, up 70 since Aug. 26 in their own rally. The country’s only unclassified rig stopped operations. Onshore rigs tallied 9 units to 743 as horizontal drilling rigs increased 6 units to 639, up 325 units since May 27. The offshore slump was somewhat eased by a 2-unit rise to 20. The count of rigs drilling in inland waters rose a unit to 5.  Among the major US operators contributing to the overall drilling rebound, Anadarko Petroleum Corp. this week reported 2017 plans reflecting its sharpened focus on the Permian Delaware and DJ basins after divesting several natural gas-weighted assets last year.The firm plans to average 10-14 operated drilling rigs in the Delaware during the year and drill more than 150 operated midlateral-equivalent wells. In the DJ basin, Anadarko plans to average 5-6 operated rigs and drill 290 midlateral-equivalent wells. The continued ramp up in rig deployment by operators in the Permian and other major oil regions has contributed to further upward revisions in forecast US crude oil production. The US Energy Information Administration this week lifted its US crude output forecast for 2017 by 200,000 b/d to 9.2 million b/d (OGJ Online, Mar. 7, 2017). A rare quiet week in Texas compared with other weeks during the drilling rebound allowed Louisiana and Colorado’s and Wyoming’s DJ-Niobrara to lead the way in activity increases. In part reflecting the offshore gains, Louisiana rose 5 units to 56.Oklahoma and Colorado each increased 3 units to 101 and 28, respectively. Oklahoma is up 47 units since June 24, and Colorado is up 13 units since May 13. The Cana Woodford edged down a unit to 49. The DJ-Niobrara jumped 4 units to 24, double its count from June 24. Ohio and the Utica each gained 2 units to 21 and 22, respectively. Wyoming also rose 2 units to 22. California posted its first increased since last September, edging up a unit to 7.

OPEC aims in vain for the Goldilocks oil price: Kemp - (Reuters) - CERAWeek has exposed all the contradictions at the heart of OPEC’s attempt to rebalance the oil market without rekindling the shale boom or conceding too much market share to rivals.The oil industry conference in Houston started with a celebration of higher prices, progress towards drawing down global stockpiles, and optimism about the outlook for shale producers.But it ends with the biggest daily fall in prices for more than a year, fears that stocks are not declining as planned, and warnings that shale producers could cause a renewed slump if they increase output too fast. OPEC members led by Saudi Arabia have reported nearly full compliance with output cuts announced last November, though performance remains very uneven across the group. Once again, Saudi Arabia has made the deepest cuts to offset patchy compliance by other members, returning to its hated role of swing producer. But OPEC’s rush to increase output before the accord took effect in January has left the market bloated with crude that continues to show up in the statistics as tankers arrive in North America and unload. The attempt to beat the deadline has made rebalancing harder and effectively moved the market against the organisation’s own members.  OPEC enlisted support from 11 other countries to spread the burden of rebalancing and protect its market share but compliance from non-OPEC countries has been much lower. The organisation’s members have been forced to discount their selling prices to protect their prized relationships with Asian refiners. And OPEC has encouraged hedge funds and other money managers to believe prices will rise to $60 per barrel or more. But OPEC and Saudi Arabia have spent CERAWeek warning shale producers against raising output too much and assuming the production cuts will be extended automatically. Saudi Arabia has pointedly warned shale producers that it will not cut its own output simply so they can grow theirs (“Saudis tell U.S. oil: OPEC won’t extend cuts to offset shale”, Reuters, Mar. 9). Without an extension, however, global oil production would rise by more than 1 million barrels per day at the start of June, and oil prices would likely swoon.

Why Kurdish Oil Is a Wild Card for Markets: If Iraq’s Kurdish territory were a country, it would probably qualify for OPEC membership. It wouldn’t even be the smallest member, given its production of about 600,000 barrels of oil per day. That’s an impressive achievement for a landlocked enclave that started exploring only a decade ago. The region’s potential is greater still, though it faces political, military and economic challenges to expanding its output.The semi-autonomous Kurdistan Regional Government says the area’s reserves could total 45 billion barrels, more than Nigeria’s, and Kurdish crude is generally cheap to extract. When foreign investors tramped into the region’s oil fields after the fall of Saddam Hussein’s regime, the crude was so abundant it seeped from the ground beneath their feet. Tony Hayward, former BP Plc boss turned wildcatter, called Iraqi Kurdistan “one of the last great frontiers” in the oil and gas industry as his new company Genel Energy Plc started prospecting there in 2011. Ashti Hawrami, natural resources minister for the KRG, has spoken of increasing exports to 1 million barrels a day or more.  Iraq’s Kurds have long chafed against control by Arab-led governments in Baghdad, and they’ve been developing their hydrocarbon industry to enhance their self-sufficiency. Kurdish authorities began offering oil contracts to foreign investors in 2007, against Baghdad’s wishes. The central government then barred companies working with the Kurds from operating in other parts of the country. Baghdad also threatened to sue anyone buying Kurdish crude. When it did just that in Texas in 2014, a U.S. judge blocked a tanker from unloading its cargo of Kurdish oil. The stakes rose that same year when Kurdish forces, defending against the encroachment of Islamic State, occupied oil facilities in the disputed province of Kirkuk. That’s left Baghdad in control of less than half of Kirkuk’s oil.

Saudi pledges big projects to soften austerity hit to business | Reuters: Saudi Arabia has promised to launch major development projects towards the end of 2017 to re-energize an economy which has been hit by austerity measures, industry sources told Reuters. Deputy Crown Prince Mohammed bin Salman, the kingdom's top economic official, made the commitment at a recent meeting with a delegation representing the Saudi private sector, the sources, who spoke on condition of anonymity, said. While they pledged support for Prince Mohammed's economic reforms, which aim to rescue state finances and diversify the economy in an era of cheap oil, the representatives of the business associations complained that the private sector had been hit hard by cuts to state spending and subsidies. The complaints underline growing pressure on the government as austerity policies in response to low oil prices enter their third year. While Prince Mohammed has cut a $98 billion state budget deficit and put the kingdom on track towards eliminating its deficit within several years, austerity has stifled the companies needed to create jobs for a growing population. The private sector, which grew by just 0.1 percent last year, "is now suffering from increasing operating costs and declining purchasing power among the people," Ahmed bin Suleiman al-Rajhi, the head of the Riyadh Chamber of Commerce and Industry, said in a report on the meeting. "In addition, the industry is starting to lose its competitive edge because of the increasing cost of power and fuel as well as the rising cost of foreign workers." The report did not give details of the development projects planned by Prince Mohammed, whose media team did not respond to a request for comment, although the government said in December it would provide $53 billion of incentives to the private sector over the next four years and establish a fund to enable capital investments.

Pentagon plan to seize Raqqa calls for significant increase in U.S. participation - WaPo - A Pentagon plan for the coming assault on Raqqa, the Islamic State capital in Syria, calls for significant U.S. military participation, including increased Special Operations forces, attack helicopters and artillery, and arms supplies to the main Syrian Kurdish and Arab fighting force on the ground, according to U.S. officials.The military’s favored option among several variations currently under White House review, the proposal would ease a number of restrictions on U.S. activities imposed during the Obama administration.Officials involved in the planning have proposed lifting a cap on the size of the U.S. military contingent in Syria, currently numbering about 500 Special Operations trainers and advisers to the combined Syrian Democratic Forces, or SDF. While the Americans would not be directly involved in ground combat, the proposal would allow them to work closer to the front line and would delegate more decision-making authority down the military line from Washington.President Trump, who campaigned on a pledge to expand the fight against the militants in Syria, Iraq and beyond, received the plan Monday after giving the Pentagon 30 days to prepare it.But in a conflict where nothing has been as simple as anticipated, the Raqqa offensive has already sparked new alliances. In just the past two days, U.S. forces intended for the Raqqa battle have had to detour to a town in northern Syria to head off a confrontation between two American allied forces — Turkish and Syrian Kurdish fighters. There, they have found themselves effectively side by side with Russian and Syrian government forces with the same apparent objective.

IS conflict: US sends Marines to support Raqqa assault - BBC News: The US has sent 400 additional troops to Syria to support an allied local force aiming to capture the so-called Islamic State stronghold of Raqqa. They include Marines, who arrived in the past few days. US special forces are already in Syria. Meanwhile, US-led coalition air strikes killed 20 civilians - including children - near the city, reports say. US Secretary of State Rex Tillerson is to host talks with coalition members ahead of an expected assault on Raqqa. Foreign ministers and senior officials from 68 nations and international organisations had been invited to attend a two-day gathering in Washington beginning on 22 March, the state department said. "Secretary Tillerson has been crystal clear that defeating Isis (IS) is the state department's top priority in the Middle East," acting state department spokesman Mark Toner said.  Defence officials told the Washington Post that a Marine artillery unit had been deployed with large field guns that can fire 155mm shells about 32km (20 miles). A coalition spokesman, Col John Dorrian, told Reuters news agency they would help "expedite the defeat" of IS in Raqqa. Over the weekend, a separate force of elite US Army Rangers was also deployed near a town north-west of Raqqa in heavily-armoured vehicles. The move was an attempt to end clashes between units from the Kurdish-Arab alliance, known as the Syrian Democratic Forces (SDF), and Turkish-backed rebels

Syria’s Civil War Is Almost Over … And Assad Has Won - Winners and losers are emerging in what may be the final phase of the Syrian civil war as anti-Isis forces prepare for an attack aimed at capturing Raqqa, the de facto Isis capital in Syria. Kurdish-led Syrian fighters say they have seized part of the road south of Raqqa, cutting Isis off from other its territory further east.Isis is confronting an array of enemies approaching Raqqa, but these are divided, with competing agendas and ambitions. The Syrian Democratic Forces (SDF), whose main fighting force is the Syrian Kurdish Popular Mobilisation Units (YPG), backed by the devastating firepower of the US-led air coalition, are now getting close to Raqqa and are likely to receive additional US support. The US currently has 500 Special Operations troops in north-east Syria and may move in American-operated heavy artillery to reinforce the attack on Raqqa.This is bad news for Turkey, whose military foray into northern Syria called Operation Euphrates Shield began last August, as it is being squeezed from all sides. In particular, an elaborate political and military chess game is being played around the town of Manbij, captured by the SDF last year, with the aim of excluding Turkey, which had declared it to be its next target. The Turkish priority in Syria is to contain and if possible reduce or eliminate the power of Syrian Kurds whom Ankara sees as supporting the Kurdish insurrection in Turkey.Turkey will find it very difficult to attack Manbij, which the SDF captured from Isis after ferocious fighting last year, because the SDF said on Sunday that it is now under the protection of the US-led coalition. Earlier last week, the Manbij Military Council appeared to have outmanoeuvred the Turks by handing over villages west of Manbij – beginning to come under attack from the Free Syrian Army (FSA) militia backed by Turkey – to the Syrian Army which is advancing from the south with Russian air support. Isis looks as if it is coming under more military pressure than it can withstand as it faces attacks on every side though its fighters continue to resist strongly. It finally lost al-Bab, a strategically placed town north east of Aleppo, to the Turks on 23 February, but only after it had killed some 60 Turkish soldiers along with 469 FSA dead and 1,700 wounded.

Iraqi forces retake Mosul museum, close in on IS-controlled old town | Reuters: Iraqi forces on Tuesday recaptured the main government building in Mosul, the central bank branch and the museum where three years ago the militants filmed themselves destroying priceless statues. A Rapid Response team stormed the Nineveh governorate complex in an overnight raid that lasted more than an hour, killing dozens of Islamic State fighters, spokesman Lieutenant Colonel Abdel Amir al-Mohammadawi said. The buildings, already in ruins, were not being used by Islamic State, but their capture is a landmark in the push to retake the militants' last major stronghold in Iraq, now restricted to the heavy populated western half of Mosul. Prime Minister Haider al-Abadi flew into to Mosul to visit the troops fighting to oust Islamic State from the city in which it declared its sprawling caliphate in 2014. Islamic State snipers continued to fire at the main government building after it was stormed, restricting the movements of the soldiers, and forces pushing further into western Mosul came under rifle and rocket fire. "The fighting is strong because most of them are foreigners and they have nowhere to go," said the head of a sniper unit for the Rapid Response, al-Moqdadi al-Saeedi. Some of Islamic State's foreign fighters are trying to flee Mosul, U.S. Air Force Brigadier General Matthew Isler said. "The game is up," Isler told Reuters at the Qayyara West Airfield, south of the city. "They have lost this fight and what you're seeing is a delaying action."

U.S. Military Deepens Yemen Role With Escalating Strikes Against Al-Qaeda Affiliate - Bloomberg - The U.S. military is deepening its involvement in Yemen, with escalating counterterrorism strikes targeting an al-Qaeda affiliate that’s gained ground in the chaos of the country’s civil war. U.S. forces carried out more than 30 strikes by airplanes and drones in the past week in southern and central provinces, said Navy Captain Jeff Davis, a Pentagon spokesman. The strikes followed the first commando operation Donald Trump approved as president, a Jan. 28 raid against the terrorist group by the Navy’s SEAL Team 6 in which a U.S. serviceman was killed. Al-Qaeda in the Arabian Peninsula, known as AQAP, has taken advantage of more than two years of fighting between Shiite Houthi rebels and President Abdurabuh Mansour Hadi’s government, which is backed by Saudi Arabia, Davis said. The U.S. provides the Saudi-led coalition with logistical and intelligence support, but not troops. It’s been estimated that at least 10,000 civilians have been killed in the fighting since the Saudi-led coalition began airstrikes in March 2015. All the while, AQAP has moved deeper into ungoverned provinces after being driven out of the port of Mukalla, which it had seized. Although attention in the fight against terrorism by the U.S. and allies has focused on Islamic State militants in Iraq and Syria, “AQAP is the organization that has more American blood on its hands,” Davis told reporters Friday at the Pentagon. “U.S. forces will continue to target AQAP militants and facilities in order to disrupt the terrorist organization’s plots and ultimately protect American lives.”

The U.S. Is Killing a Lot More Civilians in the Middle East This Year. Is It Because of Trump? - An airstrike in Syria on Thursday, believed to have been carried out by the U.S.-led coalition against ISIS, killed 23 civilians, including eight children, Reuters reports, citing the Syrian Observatory on Human Rights. The strike, in the countryside around the city of Raqqa, was part of the escalating campaign by the U.S. and allied local forces to recapture the city, ISIS’s de facto capital. An Air Force spokesman acknowledged that a strike had taken place in the area and said the event would be investigated. Also on Thursday, the Intercept published a dispatch by reporter Iona Craig from the Yemeni village of al Ghayil, the site of the now infamous Jan. 29 raid that left a number of civilians and a Navy SEAL dead in the first major counterterrorism operation of the Trump administration. Craig’s reporting disputes the administration’s description of the raid as a success and suggests that the event shows that “the Trump White House is breaking with Obama administration policies that were intended to limit civilian casualties.” Trump suggested during his campaign that he would take far more aggressive action against terrorist groups than his predecessor—“bomb the shit out of them,” to be precise. On Jan. 28, he issued a presidential memo recommending changes to rules of engagement for counterterrorism operations "that exceed the requirements of international law regarding the use of force against ISIS." This was generally interpreted to mean that measures preventing civilian casualties would be deprioritized. The White House reportedly also wants to speed up the process for approving raids by delegating more responsibility to the Pentagon, even after the January raid.  It’s too soon to tell if Trump is the cause, but the U.S. appears to have been both accelerating the pace of counterterrorism operations this year and killing more civilians in the process. This has been most evident in Yemen, where the main target is al Qaida in the Arabian Peninsula, or AQAP, and Iraq/Syria, where the main target is ISIS. (America's oddly neglected war in Afghanistan already saw a dramatic increase in both strikes and casualties last year.) The U.S. has dramatically ramped up the campaign against AQAP in Yemen in 2017, with deadly results. New America estimates that approximately 16 civilians have been killed in U.S. strikes in Yemen so far this year. All but one of these strikes was launched after Trump took office. The last time a yearly figure was that high was in 2013.

U.S. Drone Strikes Have Gone Up 432% Since Trump Took Office - When he was in office, former President Barack Obama earned the ire of anti-war activists for his expansion of Bush’s drone wars. The Nobel Peace Prize-winning head of state ordered ten times more drone strikes than the previous president, and estimates late in Obama’s presidency showed 49 out of 50 victims were civilians. In 2015, it was reported that up to 90% of drone casualties were not the intended targets.Current President Donald Trump campaigned on a less interventionist foreign policy, claiming to be opposed to nation-building and misguided invasions. But less than two months into his presidency, Trump has expanded the drone strikes that plagued Obama’s “peaceful” presidency.​  According to an analysis from Micah Zenko, an analyst with the Council on Foreign Relations, Trump has markedly increased U.S. drone strikes since taking office. Zenko, who reported earlier this year on the over 26,000 bombs Obama dropped in 2016, summarized the increase:“During President Obama’s two terms in office, he approved 542 such targeted strikes in 2,920 days—one every 5.4 days. From his inauguration through today, President Trump had approved at least 36 drone strikes or raids in 45 days—one every 1.25 days.” That’s an increase of 432 percent. The Trump administration has provided little acknowledgment of the human toll these strikes are taking. As journalist Glenn Greenwald noted in the Intercept, the Trump administration hastily brushed off recent civilian casualties in favor of honoring the life of a single U.S. soldier who died during one of the Yemen raids just days after Trump took office:

U.S. program for Afghan translators in jeopardy as visa supply runs low | Reuters: The U.S. State Department said on Thursday it will soon run out of visas for interpreters and other Afghans who have worked for the U.S. government during the decade and a half that U.S. forces have been engaged in the country. At least one U.S. senator, Democrat Jeanne Shaheen, said any decision to let the program lapse sends a message to allies in Afghanistan that the United States is not supporting them. She pledged to immediately introduce legislation to provide more visas. "It's both a moral and practical imperative that Congress right this wrong immediately," Shaheen said in a statement. Her office said more than 10,000 applicants are still in the process of obtaining visas. Shaheen and Republican Senator John McCain led a failed effort last year to pass legislation extending to 4,000 more people an existing special immigrant visa program for Afghans who assisted U.S. forces, often risking their lives. In Afghanistan, where the Taliban has steadily expanded its insurgency and where government forces now control less than 60 percent of the country, there has been deep concern among local contractors working for international forces. "Most of those working with foreigners are in trouble with their relatives, villagers and even family members," said one translator, who is waiting for medical checks after completing his interview. He declined to give his name because his visa has not yet been granted. The Taliban has captured biometric equipment to let it identify staff working for the Western-backed government and international forces, heightening the risk for those on official payrolls. "I cannot go to my home and it has been two years now," the translator said. "If they don't give us a visa, we will be killed or in big trouble, especially once foreigners leave Afghanistan."

Malaysia’s Future Role in Saudi Arabia’s Islamic Military Alliance -- Saudi King Salman is currently on a three-week tour across six Asian countries.  It comes at a time when the kingdom is promoting Vision 2030—an ambitious agenda aimed at ending the country’s reliance on oil and creating a prosperous and sustainable knowledge-based economy—and seeking to strengthen its geopolitical influence across the Asia-Pacific region. Significantly, the first leg of the king’s Asia tour was in Malaysia, which no Saudi monarch had visited since 2006. While in Kuala Lumpur, King Salman sought to identify new markets for Saudi Arabia’s non-oil exports and secure more Malaysian investment in Vision 2030. The two governments signed several agreements to enhance bilateral cooperation in sectors including construction, aerospace, halal products, and hajj services. Most importantly, Aramco agreed to invest $7 billion in a Petronas refining and petrochemical project, marking the kingdom’s largest downstream investment outside of Saudi Arabia. Symbolic, religious, and political dimensions contribute to Malaysia’s importance in Saudi Arabia’s grand vision for the Asia-Pacific region. Determined to extend influence among Muslim-majority countries in Southeast Asia, the kingdom sees Malaysia as having an important role to play in Saudi Arabia’s 41-member Islamic Military Alliance to Fight Terrorism (IMAFT). To showcase unity in the struggle against terrorism, Saudi Arabia and Malaysia announced the King Salman Center for Global Peace (KSCGP) to “intensify and concert the Islamic world’s effort to confront extremism, reject sectarianism and to move the Islamic world toward a better future.” The center, which is set to launch later this year, will focus on the threat of international terrorism without associating it with “any race, color or religion.” The Intellectual Warfare Center at the Saudi Ministry of Defense and the Center for Security and Defense at the Malaysian Ministry of Defense will jointly set up the institution. The Malaysian University of Islamic Societies and the Jeddah-based Muslim World League will be stakeholders in KSCGP.

Iran Wields Growing Influence in Unexpected Places  - Nigerian carpenter Bashir Muhammad has never been to Iran, but he would fight to the death for the country. “If Iran wants our help, we are ready to go and help it, even with our blood,” he said. “Donald Trump needs to know that Iran has followers all over the world ready to help defend it against America.” Touring the narrow unpaved streets of Zaria in Nigeria’s predominantly Muslim north, Muhammad shows Iran’s success in building enclaves of fervent support way beyond the Middle East and the limits of any harsher foreign policy planned by the U.S. president to contain it. The 30-year-old is among an increasing number of converts to the Shiite brand of Islam that Iran has been exporting since its 1979 revolution. As the world adjusts to the Trump era, the message for Washington and its allies is that Iran wields growing influence in unexpected places. The Islamic power has been able to expand its reach regardless of the economic sanctions that excluded it from much of the global oil market until last year. In this case, it’s in Africa’s most populous nation, key oil producer and a country where the sectarian battle that has thrown the Middle East into chaos is festering. Nigeria’s Muslims are mainly Sunnis and Iran’s growing foothold in Africa has alarmed the Saudis. “Iran is on its own crusade, its own global war, believing that the U.S. is out to get it,”   “They’re building networks, under religious slogans, that they can use in any fight. And wherever they are expanding, there’s a potential for a sectarian Shiite-Sunni conflict.”

Peace or War? Sanders on Israel, Palestinians and the Middle East - READ IN FULL: Bernie Sanders’ Speech on Israel, Trump and anti-Semitism at J Street Conference Bernie Sanders’ full speech to the J Street 2017 conference.

China launches world's largest oil exploration offshore platform, Bluewhale 1 weighs 42,000 tonnes and has a deck the size of a football field. Its height is 118m, or as tall as a 37-storey building. The platform has a maximum operating depth of 3,658m, and can drill a farther 15,240m into the earth's crust. It is suitable for deep-sea operation across the world, according to the official website of CIMC Raffles. Hong Kong's South China Morning Post said the Bluewhale 1 is designed "specifically for the South China Sea, where untapped oil reserves can lay buried 3,000m and more below sea level". China's deployment of large drilling rigs in disputed waters has raised concerns among its neighbours, particularly Japan and Vietnam. In 2014, Chinese and Vietnamese marine forces had a stand-off when the Haiyang Shiyou 981 platform drilled near the disputed Paracel Islands in the South China Sea. The Bluewhale 1 drilling platform uses state-of-the-art technology from leading domestic and overseas suppliers such as Germany's Siemens. Its operating speed is about a third faster than other Chinese drilling vessels, according to the manufacturer. The Bluewhale I was delivered to the client - China National Petroleum Corporation (CNPC) Offshore Engineering Company, a subsidiary of the oil giant CNPC - at Yantai, a port city in Shandong province on Feb 13.Chinese rig makers also mad