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What We Read Today 04 January 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

Russia, Iraq Supply Most Oil in Decades as 2015 Begins With Glut (Grant Smith and Anna Andrianova, Bloomberg)  Oil production in Russia and Iraq surged to decades high levels in December 2014 as global oversupply pushed prices lower.  The price of oil has declined by almost half from earlier in the year.  Russia and Iraq combined supply 15% of the world's oil.  See also next article. 

Saudi Arabia bets its future on 'Berlin or Bust' oil strategy (Andrew Critchlow, The Telegraph)  With 12% of global oil production, Saudi Arabia is a chief architect of the oil price swoon as they have refused to cut output to counter the global production glut and in November convinced the rest of OPEC (Organization of Petroleum Exporting Countries)  not to cut production.  OPEC is responsible for 32% of world production.  The action by the Saudis is a do-or-die kind of move.  They risk breaking their country's economy should the price of oil go too low and stay there too long with the objective of regaining  control and emerging "stronger after re-asserting its global significance as the custodian of the world’s primary energy source".  To establish this control it must force the other two oil giants, Russia and the U.S., to cut back on higher cost production and the strategy is based on lower prices forcing that reaction.  See next article.

Oil Production:  Countries Overview (U.S. Energy Information Administration)  The three "giants" in oil production for the world are Saudi Arabia (11.73 million barrels a day), The U.S. (11.11 million) and Russia (10.40 million).  The three countries combine for more than a third of global petroleum production.  Data is for 2012 production.

Click for interactive data map at the EIA.


Articles about Local Fracking Bans

New York, Citing Health Risks, Moves to Ban Fracking (U.S. News & World Report)

After New York ban, Pennsylvania renews focus on fracking health impacts (StateImpact, NPR)

Behind New York's Fracking Ban (U.S. News & World Report)

New York Fracking Ban Is Killing Local Farms And Businesses (The Daily Caller)

Locals react to statewide fracking ban (WBNG Channel 12)

Heavyweight Response to Local Fracking Bans (The New York Times)

Interior secretary criticizes fracking bans (The Hill)

Toxic Chemicals, Carcinogens Skyrocket Near Fracking Sites (U.S. News & World Report)

Study Links Fracking to Infertility, Miscarriages, Birth Defects (U.S. News & World Report)

List of Bans Worldwide (Keep Tap Water Safe)

Hydraulic fracturing in the United States (Wikipedia)

Articles about events, conflicts and disease around the world

AirAsia Flight 8501

Race Relations and Related News










What We Know About Inequality (in 14 Charts) (Josh Zumbrun, The Wall Street Journal)  Another evocative graphic from the WSJ's Zumbrun.


Economists Dissing Economics (Unlearning Economics)  See Unlearning Economics' article at GEI Analysis 03 January 2015.  This is a collection of quotes from famous and not-so-famous economists.  The first is from Joan Robinson:

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.

The last is from David Wildasin:

The First Law of Economists: For every economist, there exists an equal and opposite economist.

The Second Law of Economists: They’re both wrong.

There are approximately 20 more timeless quotes in between.

Greed Kings of 2014: How They Stole from Us (Paul Buchheit, Common Dreams)  Hat tip to Rob Carter.  Buchheit claims the following corporations are thieves:

  • Exxon has almost 80% of its productive oil and gas wells in the U.S. but declared only 17% of its income here. The company used a theoretical tax to account for 83% of last year's income tax bill, and paid less than 2% of its total income in current U.S. taxes. 
  • Chevron has about 75% of its oil and gas wells and almost 90% of its pipeline mileage in the United States, yet the company claimed only 13% of last year's income in the U.S., and paid almost nothing (less than 1/10 of 1%) in current U.S. taxes. 
  • Pfizer had 40% of last year's sales in the U.S., but claimed losses in the U.S. and $17 billion in profits overseas. 
  • Bank of America, despite making 84% of its 2011-2013 revenue in the U.S., declared just 31% of its profits in the United States. 
  • Citigroup had 43% of its 2011-2013 revenue in North America but declared less than 3% of its profits in the United States. 
  • Apple still does most of its product and research development in the United States. Yet the company moved $30 billion in profits to an Irish subsidiary with no employees, with loopholes in place to avoid establishing residency in any country. The subsidiary files no returns and pays no taxes. Apple CEO Tim Cook said, "We pay all the taxes we owe." 
  • Google's business is based on the Internet, the Digital Library Initiative, and the geographical database of the U.S. Census Bureau. Yet the company has gained recognition as one of the world's biggest tax avoiders

Endangered Species: Young U.S. Entrepreneurs (Ruth Simon and Caelainn Barr, The Wall Street Journal)  A decline of 66% in the stock market is called a crash.


Is Global Poverty Falling? Not in Absolute Terms (Pedro Nicolaci da Costa, The Wall Street Journal)  The World Bank has published data (see graphic below) which indicates economic growth and social policies have helped pull millions out of poverty in the developing world.  But new research suggests a deeper look into poverty statistics paints a different picture. While there has been progress in reducing the number of people living below the poverty line, this has been achieved largely by raising those considered ultrapoor to just above the poverty line, rather than by boosting the standard of living of the poor more broadly.  See Are the World's Poorest Being Left Behind? (Martin Ravallion, Georgetown University Center for Economic Research, NBER Working Paper 20791).


California's last 36 months were the hottest & driest, by far, in the 119-yr instrumental record. (Peter Gleick, Twitter)


Roads to Nowhere (Paul Cleary, The MonthlyRoad freight is expensive, dirty and dangerous. Why are our governments addicted to it?  This is written by an Australian about his country's transportation problems, but they could also be about the U.S., although the author points out that the U.S. still moves 40% of domestic freight by rail while in Australia it is less than 17% nationally and less 5% in the most densely populated east.  The author identifies railroads as poor candidates for private enterprise profit; so, even though they are the most efficient means of shipping freight, they are not supported by moneyed interests because they are best run as utilities which reduces the opportunity for oligarchic profit.  The author also suggests that coastal marine shipping is also a potentially better freight transport solution than trucking.

Old Mexico lives on (The Economist)  At the end of the Mexican-American War in 1848 more than half of the land area of "old" Mexico was ceded to the U.S.  The Economist says that rather than talking about Mexican border-jumpers shouldn't we refer the border that jumped Mexicans?  See also about Mexico in The EconomistOn the trail of Hernán Cortés:  A journey into a past most Mexicans would rather forget


Other Economics and Business Items of Note and Miscellanea

Draghi comments send euro to lowest level since 2010 (BBC News)

Why so many commodity prices are down in the US, yet up in Europe (Jeffrey Frankel,  Jeffrey Frankel has contributed to GEI.

Uncertain global economics prompt Excelerate to shelve US LNG export plan (Platts, McGraw Hill Financial)

Putrajaya must revise budget in light of oil slump, says economist (The Malaysian Insider)

Mario Cuomo: Hero or ‘Hamlet on the Hudson,’ depending on who you ask (Reuters)

What Struggling McDonald's Could Learn from Shake Shack and Five Guys (TheStreet)

New Zealand Glaciers Ebb and Tour Guides Play Catch-Up (The New York Times)

What would happen if humans became extinct? (BBC News)  Video

Tasmania's giant ash trees may be the world's tallest (BBC News)  Redwoods still hold the record but maybe only because the Tasmanian trees have been extensively harvested.

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