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What We Read Today 28 January 2016

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.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).


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Topics today include:

  • Nevada Cancels Net Metering Retroactively

  • Globalization of LNG

  • Oil Spikes Higher

  • World Corruption

  • 300 Texans Out of Work

  • Stealing Moldova

  • China's New Military

  • U.S. States Well-Being Ranking

  • London Home Presales Down 19%

  • Minorities and the Poor Targeted with Hazardous Waste

  • And More

Articles about events, conflicts and disease around the world


Oil prices spiked 5% to near $35/bbl on Thursday following reports that Russia’s energy minister was prepared to convene with Saudi-led OPEC to discuss the possibility of an oil output cut. OPEC delegates have reportedly denied that there's a planned meeting. As we explore below, there are very significant obstacles to coordinated action. So far, this is just talk. But because this "talk" involves the world's top 2 oil exporters, the market is responding, and oil prices are rising. 

  • Double-dealing: World's most-corrupt countries (USA Today, MSN News)  The most corrupt country classification is a tie:  North Korea and Somalia.  The least corrupt:  Denmark.  The characterizations are made ion the 2015 Corruption Perceptions Index released Wednesday by Transparency International, a Berlin-based organization that tracks perceived levels of public sector fraud and dishonesty worldwide.  The top ten least corrupt are all in Europe except for Singapore and Canada.  The U.S. is ranked 16th (out of 167 nations ranked), the highest ever since the index was started in 1995.

  • Step on it (The Economist)  The international gas market is dominated by long-term contracts linked to the price of oil, both for gas delivered via pipeline and as LNG. This is an anomaly that dates back to the 1960s, when European suppliers developing their first gasfields had no price on which to base long-term contracts, so used oil instead. Since then, supply and demand for these commodities have diverged; oil indexation increasingly fails to reflect the disparities.  Analysts believe that, as a result, the pricing mechanism for natural gas is on the verge of change, and that a real global market will start to emerge, adding Asian trading hubs to those in America and Europe. This should spur the spread of natural gas, the cleanest fossil fuel and one that should be in the vanguard of the battle against global warming. But the change may not come easily or quickly - producers, who fear any change will lead to a drop in prices, are set to resist. They say long-term oil-linked contracts are still needed to offset the risk of their huge investments in LNG. (Gazprom, a Russian producer, has made the same argument in Europe about pipelines.)  Even with the old system LNG exports have been rising rapidly.



  • The Oil Price Crash Has Put Almost 300,000 Texans Out Of Work, Ingham Says (Oil Pro)  From December 2014 to December 2015, an estimated 288,000 Texas jobs have been lost due to the oil price collapse. That includes an estimated 72,000 direct oil and gas jobs and 210-220,000 indirect/induced jobs, according to Karr Ingham, a petroleum economist for the Texas Alliance of Energy Producers. Ingham created and compiles the Texas Petro Index, a composite index based upon a comprehensive group of upstream economic indicators.

  • 2015 State Well-Being Rankings (Gallup-Healthways)  Free registration required for access.



  • London Home Presales Drop 19% as Sales Taxes Damp Demand (Bloomberg)  Demand for London homes under construction slumped by 19% in the fourth quarter as rising sales taxes and global market turmoil damped demand.  Presales in the U.K. capital fell to about 5,216 from 6,444 in the same period a year earlier, according to data compiled by researcher Molior London Ltd. A record 8,818 units were sold in the first quarter of 2015.


  • A republic, if you can steal it (The Economist)  Many Moldovans are incensed by reports in the Western press that the current struggle is one between pro-Russian and pro-European parties. For most protesters, the conflict has nothing to do with geopolitics. As Victoria Bucataru of the Foreign Policy Association of Moldova puts it, they are fed up with elites fighting for power while they grow poorer.  In 1918 the then three-month-old Moldovan republic gave up the struggle for survival and united with neighboring Romania. It is a sign of how dire things are today, says Iulian Fota, a Romanian analyst, that people are talking about doing so again. Ever since 2014, when the embezzlement of about $1 billion from three banks forced a taxpayer bail-out that has crippled the economy, the country has been lurching towards collapse.  Complicating the situation is the fact that an eastern portion of the country is pro-Russian and is occupied by more than 1,000 Russian troops.  The two leading parties in a new election are likely to be pro-Russian philisophically, but the leader of one says he would continue the country's agreements with the EU.


  • Put priority on growth, Indian central bank chief says (Nikkei Asian Review)  Title is somewhat misleading.  Reserve Bank of India Gov. Raghuram Rajan spent more time talking about why easy money from central banks propping up asset prices for so long means that global stock markets may have been due for a takedown.  And also he discussed the limits of monetary policy and the need to clean up the global financial systen (over-leverage) 


  • How One Oil Company Defied Crude's Slump by Surging 142%: Chart (Bloomberg)  The Malaysian unit of the biggest Philippine oil refiner has been a star performer the past year even as its parent and oil prices slump. Petron Malaysia Refining & Marketing Bhd. surged 142% as the company has been able to expand its retail network, offsetting falling crude, and turning profitable in the third quarter amid stable margins. Parent Petron Corp. has tumbled 35%.



  • China's military reorganization could be a force for destabilization (Nikkei Asian Review)  The government of Chinese President Xi Jinping has embarked on a sweeping restructuring of the country's armed forces. The aim is to wipe out the last remnants of the old, outmoded military and turn it into a modern and powerful force that can move nimbly under the control of the Chinese Communist Party. The upgrade, being accomplished via structural reforms, is the largest in the history of the Chinese military, and will result in much greater efficiency and effectiveness. However, it is also certain to destabilize the Asian region.

Who Owns the Sun? (Noah Buhayar, Bloomberg Businessweek)  Warren Buffett controls Nevada’s legacy utility. Elon Musk is behind the solar company that’s upending the market.  Musk's Solar City (NASDAQ: SCTY) has been very successful in Nevada, in part because of laws requiring net metering, which allows customers to sell power they generate but do not use back too the utility they are served by.  The success has been resisted by the state's largest utility NV Energy, which is owned by Buffett's Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) which first lobbied successfully to  limit the total amount of energy homeowners and small businesses were allowed to generate to 3% of peak capacity for all utilities. Then it expertly argued its case before regulators, who rewrote the rules for net-metering customers. In December it scored a major win: Nevada’s Public Utilities Commission (PUC) imposed rules that not only make it more expensive to go solar, but also make it uneconomical for those who’ve already signed up. Similar regulatory skirmishes are playing out in dozens of other states, but no other has gone as far as Nevada to undermine homeowners who’ve already installed solar arrays.  This article points out that utility scale solar electricity is (and will continue to be) cheaper than from from distributed rooftop panels.  In that situation does it make sense for incentives to support the more expensive power?  The bottom line question here is whether the failure to honor previous contracts can survive a court challenge. 


Other Economics and Business Items of Note and Miscellanea

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