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'Smacks of hypocrisy': Alberta slams White House for demanding more OPEC oil after cancelling Keystone XL – Financial Post

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Biden is taking the heat for higher gasoline prices during the summer driving season

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Wounded after U.S. President Joe Biden cancelled the Keystone XL pipeline that would have shipped Alberta crude to the United States, the province snapped at the White House’s call on the Organization of Petroleum Exporting Countries Wednesday to raise production faster than planned.

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“The Biden administration pleading with OPEC to increase oil production to rescue the United States from high fuel prices months after cancelling the Keystone XL pipeline smacks of hypocrisy,” Alberta Energy Minister Sonya Savage said in a statement Wednesday. “Keystone XL would have provided Americans with a stable source of energy from a trusted ally and friend.”

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Alberta Premier Jason Kenney was also critical of the Biden Administration.

“The same US administration that retroactively cancelled Canada’s Keystone XL Pipeline is now pleading with OPEC & Russia to produce & ship more crude oil,” the premier tweeted. “This comes just as Vladimir Putin’s Russia has become the 2nd largest exporter of oil to the US.”

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The pipeline project, challenged by environmentalists for more than a decade, was expected to pump 830,000 barrels a day of Alberta crude to Nebraska, connecting to pipelines feeding refineries in Texas. It was abandoned by owner TC Energy Corp. in June after the Biden administration revoked a presidential permit on assuming office in January. President Barack Obama had blocked the project and President Donald Trump had revived it.

Jake Sullivan, Biden’s national security adviser, criticized global oil producers Wednesday, saying, “At a critical moment in the global recovery, this is simply not enough.” Sullivan also said in the statement: “Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery.”

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Canada is the U.S.’s largest source of oil imports, shipping just over 4 million barrels per day of oil on average in May. Russia recently emerged as the second largest source of oil imports, shipping 844,000 bpd to the U.S. in May, eclipsing Mexico.

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As the pandemic depressed oil demand last year, the benchmark West Texas Intermediate crude briefly traded at negative US$36.98 a barrel in April 2020, compelling the 13-member OPEC and 11 other major oil producers such as Russia, to cut supply by about 10 million bpd, or around 10 per cent of global demand. In July, the group agreed to increase production by 400,000 bpd starting this month. The reduction now stands at about 5.8 million bpd, and OPEC has agreed to erase that by year’s end.

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But with the U.S. economy reopening rapidly, demand is surging but production hasn’t kept up. WTI has been trading above US$60 a barrel since February, according to the U.S. Energy Information Administration, while average U.S. retail gasoline prices have jumped to US$3.17 a gallon in August from US$1.94 a gallon in April 2020. U.S. crude dipped 0.03 per cent to US$69.23 a barrel Thursday, while Brent crude was flat at US$71.43 per barrel.

Biden is taking the heat for higher gasoline prices during the summer driving season, with Republicans on social media attempting to link prices at the pump with his Keystone XL decision, efforts to disincentivize domestic oil production and plans for higher taxes in a US$3.5 trillion budget blueprint approved Wednesday.

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Our producers can easily produce that oil if your Administration will just stay out of the way,” tweeted George Abbott, the Republican governor of Texas. “Allow American workers—not OPEC—(to) produce the oil that can reduce the price of gasoline. Don’t make us dependent on foreign sources of energy.”

Other Republicans also took the opportunity to criticize the government that has been aggressively pushing out green energy policies to reduce the country’s carbon footprint.

“It’s pretty simple: if the President is suddenly worried about rising gas prices, he needs to stop killing our own energy production here on American soil,” Republican Senator John Cornyn of Texas said in a statement. “Begging the Saudis to increase production while the White House ties one hand behind the backs of American energy companies is pathetic and embarrassing.”

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However, OPEC may not immediately pay heed to the White House’s call as the Delta variant is crimping global oil demand.

On Thursday, the International Energy Agency cut its forecast for global oil demand “sharply” for the rest of this year as the resurgent pandemic hits major consumers, and predicted a new surplus in 2022.

It’s a marked reversal for the Paris-based agency, which just a month ago was urging the OPEC+ alliance to open the taps or risk a damaging spike in prices. The oil cartel had responded to calls to hike supply, which is now arriving just as consumption slackens.

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“The immediate boost from OPEC+ is colliding with slower demand growth and higher output from outside the alliance, stamping out lingering suggestions of a near-term supply crunch or super cycle,” the IEA said in its monthly report.

U.S. oil production hit a record high of 12.3 million bpd in 2019 before dropping to about 11.3 million bpd during the pandemic, according to the EIA.

Helima Croft, head of global commodity strategy at RBC Capital Markets, says the administration’s “real anxiety appears to be about retail gasoline prices that have risen by over 40 per cent since the start of the year.” Biden doesn’t want to jeopardize his climate change-fighting policy target of the U.S. achieving net zero carbon production by 2050, she says.

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“Encouraging greater U.S. oil production appears to be an absolute non-starter,” Croft says in an Aug. 11 report. “Hence calling on OPEC may be one of the only levers they can pull to try to keep U.S. gasoline prices in check while at the same time preserving their climate credentials.”

Part of the gasoline price surge lies with refining capacity hurt by “less than robust economics as well as the structural issue of refinery closures in recent years,” Croft says.

“Gasoline inventories have put in a new five-year seasonal low, an 8.6 million barrel deficit, recording the largest deficit since the winter storm freezeover knocked out U.S. refining capacity back in March. Moreover, U.S. crude production remains 1.8 million barrels a day below pre-pandemic levels, which has left crude inventories deeply in deficit territory since the start of May.”

Biden’s call on OPEC “serves as a more politically palpable way to deal with spiking pump prices” as opposed to how Trump urged producers to “drill baby drill” in domestic oil fields, Croft says.

For Minister Savage, “the Biden administration’s plea for more oil confirms there will continue to be demand for Canadian and Alberta energy, and highlights the need for affordable and reliable energy as the world seeks to lower emissions.”

“The bottom line is the world needs Alberta’s energy.”

Financial Post

With files from Thomson Reuters

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DoorDash laying off 1,250 people, about 6% of its workforce – CBC News

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DoorDash Inc. said on Wednesday it was cutting about 1,250 jobs, or six per cent of its total workforce, as the food-delivery company looks to keep a lid on costs to cope with a slowdown in demand.

DoorDash went on a hiring spree to cater to a flood of orders from people stuck at home during the height of the pandemic, but a sudden drop in demand from inflation-wary customers has left the company grappling with ballooning costs.

“We were not as rigorous as we should have been in managing our team growth … That’s on me. As a result, operating expenses grew quickly,” chief executive Tony Xu said in a memo to employees that was posted on the company’s website.

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“Given how quickly we hired, our operating expenses — if left unabated — would continue to outgrow our revenue.”

DoorDash has about 20,000 employees worldwide, and “some of the affected employees are based in Canada,” the company told CBC News in a statement, without elaborating.

The company joins a growing list of technology firms, including Amazon, Facebook-owner Meta, Twitter, Shopify and others that have laid off thousands of employees in recent weeks as they brace for a potential economic downturn.

British food delivery company Deliveroo said in late October that sales growth would be at the lower end of its previous forecast. In September, Winnipeg-based food delivery app SkipTheDishes laid off 350 workers.

Earlier this month, DoorDash reported a bigger-than-expected quarterly net loss of $295 million US, raising questions about the growth prospect of delivery firms as economies reopen. The company’s shares have lost two thirds of their value this year.

“Greater emphasis on its cost structure is a welcoming sign, especially given the potential for consumer spending to deteriorate faster than expected,” said Angelo Zino, analyst at CFRA Research.

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'I didn't ever try to commit fraud on anyone,' FTX founder Sam Bankman-Fried says – CBC News

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The man at the centre of collapsed cryptocurrency exchange FTX made his first public appearance since the saga began, telling a New York audience on Wednesday that it was never his intention to commit fraud.

Sam Bankman-Fried, the 30-year-old founder of FTX, appeared at the New York Times’ Dealbook Summit on Wednesday, for an interview with journalist Andrew Ross Sorkin about what happened to cause his cryptocurrency firm to collapse into bankruptcy earlier this month.

The firm, once worth more than $32 billion US, entered bankruptcy protection on Nov. 11 after a whirlwind series of days that saw it go from trying to solve a liquidity crunch by merging with a rival, to having that deal fall apart and succumbing to a run on the bank as traders pulled out $6 billion in funds within three days.

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Filings show the company owes almost $10 billion to various creditors, and at least $1 billion worth of customer deposits are missing. 

Among numerous allegations, customer deposits at FTX appear to have been used as capital and collateral for loans for an investment firm called Alameda affiliated with him — an allegation that amounts to fraud, and one that he pushed back against strongly.

‘Deeply sorry’ 

“I didn’t ever try to commit fraud on anyone,” he told Sorkin, “I didn’t knowingly co-mingle funds.”

While he acknowledged mistakes were made, Bankman-Fried rejected repeated attempts to characterize what happened at his cryptocurrency firm as being in any way malicious or illegal.

“I am deeply sorry about what happened,” he said. “I was excited about the prospects of FTX a month ago, I saw it as a thriving, growing business.”

Bankman-Fried has seen his personal net worth evaporate in the debacle, from more than $26 billion a year ago to “close to nothing” today — and he insisted that he doesn’t have any of the money that has vanished.

“I don’t have any hidden funds here. Everything I have, I am disclosing,” he said. 

“I’m down to one working credit card … [and] hundreds of dollars or something like that, in a bank account.”

WATCH | Former regulator weighs in on FTX debacle: 

Former regulatory executive weighs in on FTX collapse

19 days ago

Duration 4:04

Charley Cooper, a former executive at commodities regulator the CFTC, says the collapse of FTX is a good lesson of the inherent dangers of the cryptocurrency space.

He says, to his knowledge, there are enough funds at FTX to give users their money. But his hands are tied since he no longer has a formal role at the company since it entered bankruptcy proceedings.

“I believe that withdrawals could be opened up today and everyone could be made whole,” he said.

John Jay Ray III, the restructuring expert who has been handling FTX’s bankruptcy proceedings has said in legal filings that Bankman-Fried appears to have treated the company as his “personal fiefdom” and has called the fiasco a “complete failure of corporate controls.”

Bankman-Fried has been active on Twitter since the debacle first started, but his appearance on Wednesday marks his first public appearance since the saga began.

There was speculation he was going to appear in person, but ultimately he appeared via video link from the Bahamas, where he lives.

Legal problems

Sorkin asked Bankman-Fried if he did not appear in person because he is worried about being within the reach of U.S. agencies including the Department of Justice and the Securities and Exchange Commission, both of which are probing what happened at FTX.

Bankman-Fried appeared to side-step that question, remarking instead that, to his knowledge, he can still legally enter the U.S. 

“I’ve seen a lot of the hearings that have been happening [and] would not be surprised if some time I am out there talking about what happened,” he said, adding that he “does not personally think” he has any criminal liability to worry about.

That being said, he said his legal team is “very much not” supportive of his decision to appear at the summit and speak publicly about what happened at FTX. His lawyers advice was “to recede into a hole,” he joked.

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Investors focus on Powell's comments which put gold back into rally mode – Kitco NEWS

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Today gold futures are trading solidly higher as market participants react to Chairman Jerome Powell’s speech at the Hutchings Center on Fiscal and Monetary Policy, held at the Brookings Institution in Washington. Market participants focused intently on his remarks which alluded to a dynamic change in the Federal Reserve’s monetary policy.

“Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down … The time for moderating the pace of rate increases may come as soon as the December meeting.”

However, it must be noted that the reaction by investors at large seems to focus on what they had hoped to hear which is the Fed will begin to raise rates at a slower pace rather than his nuanced message that the time required for the Federal Reserve to achieve their goal will take much longer.

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“It is likely that restoring price stability will require holding policy at a restrictive level for some time … History cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”

As of 6:16 PM EST gold futures basis of the most active February, 2023 Comex contract is fixed at $1784.60 After factoring in today’s double-digit advance comprised of dollar weakness, buyers in the market along with the rollover from the December to February contract month.

Chairman Powell’s speech today diminished the concern of investors as they reacted to other members of the Federal Reserve who have been extremely vocal about upcoming interest rate hikes. Specifically, recent remarks by James Bullard underscored the hawkish intent of the Federal Reserve. Last week he commented on the need for the Federal Reserve’s benchmark rate to go as high as 7% to deal with inflation. This week he said that “the Federal Reserve will likely need to keep its benchmark policy rate north of 5% for most of 2023 and into 2024 to succeed in taming inflation.”

Chairman Powell’s statements were not in conflict in any way with those made earlier by James Bullard and other members of the Federal Reserve in his prepared speech. However, the chairman was able to deliver this message in a much softer tone. Chairman Powell in essence cemented a 50-basis point rate hike at the December FOMC meeting. However, he stressed that slowing the pace of rate hikes would require that the Fed maintains a restrictive monetary policy for a longer period.

Gold’s recent rally from $1621 to just shy of $1800 is a reflection of a major change in the market sentiment of investors. It suggests that investors are focusing intently on inflation and that lowering inflation to restore price stability will be a multi-year process.

For those who would like more information simply use this link.

Wishing you as always good trading,

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