Windows on the World of Raymond Plank
Founder, Apache Corp

Vol. 2015 No.  1

CURRENT ASSESSMENT

 

This being my first Windows of 2015, best wishes! 

A number of writers and commentators have previously categorized the reign of the Obama administration as a “Failed Presidency.”  I take no exception. President Jimmy Carter’s one term service did not receive similar negative recognition.  Having come to know President Carter my personal experience is that his endeavors as a former president were considerably more effective in the post presidency era for such outreaches as housing under Habitat for Humanity, the observation of elections to limit vote-counting fraud along with a very worthy initiative which sponsored the Foreign Corrupt Practices Act.

My primary concern is that the Americas from North to South may well have entered into the era of leftists’ domination on such issues as inflation and deflation, unless that malaise spread like falling dominos. 


Deflation Evidence

Job layoffs among service companies to the world’s largest industry oil & gas.

Jobs Lost:

Halliburton                                10,000 jobs lost

Schlumberger                             9,000 jobs lost

Baker Hughes                             7,000 jobs lost

Miscellaneous                             6,000 jobs lost


The reason is simple.  When the supply and inventory exceeds demand the price falls. 

Unemployment is increasing because the jobs lost above are in my opinion, only the tip of the iceberg; they are likely to be followed by something resembling the sinking of the Titanic. 

In the past few years the multi zone Bakken play of N.D. has enabled production increase from approximately 25,000 bpd to 110,000 bpd with the price of crude decreasing rapidly or gaining momentum on the downside in later 2014 the cost of expensive long lateral shale drilling and fracture treatment has precipitated job losses which are only beginning to play through the economy as a whole.  

But there are other indicators at hand.

One hundred thirty-three Target stores in Canada are being closed causing the probably loss of 17,600 more jobs and demonstrating that the current malaise is likely to spread. 

While new car sales spiked with low gasoline prices and easier credit terms, and large discounts (up to $9,000 per vehicle) were temporary stimulus to the automobile industry’s contribution to the economy. 

Sources indicate that U.S. manufacturing have dropped to13% of goods produced.   Central European Banks are putting together an emergency fund of over $1 trillion, sugar prices have fallen to about half of normal in 2014 with one country reversing its plan to add additional capacities.  Copper prices are down by half.

The Keystone pipeline project had it gone forward would have added 10,000 construction jobs, which could have helped the continuing layoffs in North Dakota.  The message behind “Late Breaking News” essentially deals with the affect of that which is reported.  If we were to put this in sporting terms, a forward pass is not thrown to where the receiver is at the time the ball leaves the quarterback’s hands it is thrown where the receiver is expected to be when the ball reaches the receiver, in game hunting terms if you are shooting at a passing duck or goose without an appropriate lead, you miss the bird appropriate.  In the U.S. today we are missing in both categories sadly, while no economist the next Windows will seek to identify causes, which is where the leverage on a public opinion and those who wish to contribute to better governance might focus.

Thank you,

Raymond Plank

January 22, 2015