free. education free. for trojan free. range free. three stooges free. download free blog videos for your media project c.e.o. don carty dot com. good afternoon welcome to capital account i'm laurin the star here in washington d.c. these are your headlines for thursday november fifteenth two thousand and twelve after brant crude reportedly rose to one hundred eleven dollars a barrel today because of supply concerns with fighting between israel and gaza the

headlines then changed to reflect oil falling as the media said economic fears outweighed mideast violence these are the type of news making abends that some argue impact the day to day price swings in oil what about the bigger more complex picture of supply and demand to paint that is mehran could to such energy investment strategist at casey research at a house panel has released a long awaited ninety seven page report reportedly blaming placing the blame squarely on the shoulders of john corazon for m.f. global's collapse it also places blame on regulators and ratings agencies it makes the case for civil action but falls short of accusing corazon of breaking the law also no democrat signed on so what does this mean for the case against the failed firms former c.e.o. will hear from a lawyer representing m.f. global customers john l. roe and. you say the. only.

all right so what actors in that it was going you saw famous french actor gerard depardieu is acting like he's trying to escape france's seventy five percent income tax plan for citizens like him making major dough we'll talk about the evidence in loose change let's get to today's capital account. i mentioned at the top of the show the purported reasons for oil short term moves just today but other longer term developments in oil and gas are fueling a broader discussion about game changers in the energy outlook and the u.s. attorney general announced just today he had a press conference a four point five billion dollars settlement with b.p. which will plead guilty to criminal charges reportedly two over the deep horizon

oil spill this afternoon reminding us things don't always go as planned when it comes to energy outlooks but remember let's back up earlier this week the international energy agency report is forecasting that the u.s. will be the world's top oil producer by twenty twenty is projected by twenty thirty five to be virtually self-sufficient in oil with modest imports coming from secure suppliers but for the most part to be self-sufficient and also new fuel efficiency measures and transportation will begin to occur u.s. oil demand is another fault finding that the result is a continued fall in u.s. oil imports to the extent that north america becomes a net while export around twenty thirty now this shift according to the i.a.e.a. will be driven primarily by excel aerated extraction of natural gas and oil from shale and other tight rock formations as a result of technologies specifically hydraulic fracturing and horizontal drilling and opec last week admitted for the first time that shale oil production in the u.s. would significantly diminish its share of the u.s.

market so joining me now with a much more new wants to view of the factors involved here. he's chief investment strategist at casey research and i'm very very happy to have you on the show thank you so much for being on with us today. ok so let's bring up the. view of it in terms of the demand and the production in u.s. oil we actually have a chart which we're going to bring up but it shows how they're forecasting the demand will go down and their production will rise now this is attributed to shale oil and gas in the. some like jamie diamond have called this a gift from the gods others consider it a commercial failure and are concerned about the environmental impact so my question is what is your view on particularly do you see the u.s. becoming energy self-sufficient as a result of it and if so in what timeframe first of all no they will not be energy

self-sufficient and the time. given if you go back through history the reports there is many many years just like america is going to be a major net importer of l n g energy just ten years ago so the game changed that there are a lot of potential for the shale gas but you see that it all comes down to costs at what price there's the block in the coal now so saudi dakoda where prices that box will become you know cost effective but what price is the eagle ford you know will work for the americans and the reality is it does not work at fifty dollar will if they want to use the unconventional oil you're going to need plus eighty dollars prices moving forward that said let's not forget that a lot of these unconventional she'll be isms are what they call liquid rich but it's mostly that they're getting the gas and that's where we're going to get this interesting point here so you know there's

a lot more going on in the world and what we need to focus on is what is america doing to export all of this known g. energy and their decades away from what i think that's a great point i want to get into that little later but first i want to get into a little more of the nuts and bolts on the production side because you have said that shale wells to climb much more rapidly than conventional wells that as much or more than a fifty percent decline after the first year so does the resulting need in constant drilling and commissioning of wells make this sustainable production impractical. it all comes down again to costs and when you know when you go back to the original . what they call the big elephant oil deposits you look what's going on saudi arabia and go back to spindle talk to originally in america you're looking at fifty one hundred thousand barrels a day production those are world class deposits today few get ten thousand barrels a day that's no one in the top five percent of all of the wells globally we're

talking about today with those unconventional out of those two three hundred barrels a day from each one of these wells so even four or five years ago when they would do four to a bracks per well now they're getting up to sixty four fracs per well so yes the you can produce a lot but you need to drill a lot and that's high cost of oil ok and also i know that water is required when it comes to hydraulic fracturing and getting natural gas so what does this do to water politics and water is a touchy thing is this something that will come more into play i think so there's the education there's the science behind the reality is the shale frac or the rock through it's use is so much deeper than the water reservoirs and with the new technologies like poseidon and with the water systems that they have in the fracking you know you do need between two to five million gallons in a million gallons per frac job ok that's a lot

a lot of water yes and now think about remember i said between two to three hundred on average to three hundred barrels a day of this production and then in twelve months it reduces by fifty percent but the crime rates are massive so now you can imagine how many. well if you house the brock to replace one well in saudi arabia wow so it's a long way to go and we're talking about natural gas and oil and they're often want to get there because they're both hydrocarbons people use them in the same sentence but these are very different commodities how did the market mechanics differ from one to the other but definitely i'm going to move the area so if you look at the pad district of america does this refining complex first of all america's got the best refining complex in the world it can refine just under eighteen million barrels of oil a day a lot of this oil is not in the areas where you need to refine it so they've got to build the pipeline so you know with obama coming in and he wants to take care of both the left and the right people on the promise everything to everybody the

reality is there's only so much oil you can ship on the on the rail we need to invest in new pipelines going to the new areas and what is ironic that the keystone x.l. being delayed america today imports more venezuelan oil than it's producing in bach and even with the success of the bucket that's very interesting but what about in terms of exporting natural gas i mean it was a global commodity and natural gas is much more limited regionally because it's not easy to export you have to liquify it right correct so it's a very localized market so yes you look at japan their pain over fifteen dollars per m.c.f. in europe it's about three times what it is in the u.s. today unfortunately it costs billions of dollars to build a liquor cation plant which takes the gas and condenses that by over six hundred times think about this is a terrorist attack waiting to happen so you've got to remember that part of permitting and then they have to ship it out so you know right now america can't do

that so it's going to take a long time think about how much per meeting in the delays in just a pipeline they remind all these are in jeeps months actually ship of the world and the reality is russia has three right now it's already behind the russians and the russians are good. in the middle east and getting involved in the is really offshore discoveries to get their energy potential so you know a lot of things are moving on and on paper it's great for a bunch of bureaucrats to say all the potentials can be great america is going to be c and it fits perfectly with obama's you know revolution but the reality is that it's a lot more money and a lot more time. with the bureaucrats think it just of telling off of something you said earlier why is this right for a terrorist attack why is that an element people have to worry about you know think about if you take it if you condense it by over six hundred times and if you look up big this infrastructures these l. and g. tankers are in one one thousand dollar missile to blow up the whole facility. interests ok and you mentioned a bureaucracy regulation that so often paint plays

a role of amber in california they had all these alternative energy plans but then realized oh wait we're going to get them out and find there are two they were right exactly it was it was a challenge that they hadn't quite factored into their very aggressive goals so along those lines according to fanciulla times the u.s. has approved only one the coal fired natural gas plant with export capabilities that it's in cameron parish louisiana it's not slated to begin export ing until two thousand and fifteen according to this article interestingly china and singapore have jointly invested a billion dollars in this plant so have some investors blackstone group so as natural gas does become exportable from the us what impact might this have on natural gas prices in the u.s. market. almost none really it will make up less than twenty percent of the production it has to do so everyone's talking about if you just sit down and do the mathematics what these bureaucrats have to understand it will make up less than

a fifth of what you're producing certain things that the holy grail is going to be producing you know time to all you know to japan and china and everyone else it doesn't fly like that would have us of could tar which has the largest facility right now in the world just says ok we want to have a longer term and a much cheaper price on top of that america hasn't built their first facility yet but about cost overruns about dudley's what about libor there are so many factors that go in and i think they will see that it's going to cost a lot more money with the inflation and cap ex and also it's going to be take a lot longer to get going ok and also too we forget how much oil is used in so many different things marilyn cosmetics carpet great shampoo what did you say your i phone yeah right lipstick tire shaving cream think concrete i mean the list goes on and on so also i don't see very many natural gas fueling stations so what do you see is the likelihood of

a replacement for oil with natural gas. i think will will start as i had lunch with t. boone pickens i think the pickens plan is actually a very smart plan for america to and i'm surprised it's not getting more momentum where they want to start is on the long haul trucks it makes up less than about four or five percent of america's room usage but makes up just under twenty percent of the fuel usage so that's where you want to start with do we see the s.u.v. switching to c. and g. not quite yet but you know there are places. where they now brought in you have to have seen him but it works for lower powered vehicles you know it doesn't work with your cadillac or your trans am or your mustang if you go to move by new delhi it works on those little you know three wheelers so i think again it maybe start with the pickens plan that's a good place to start but it's not going to see energy it's not going to replace the oil overnight and really quickly just before we go what would you say are the biggest head when's in this this report that you know by that that this is even

going to happen this i.a.e.a. report that we're going to become energy self-sufficient in the u.s. or that all everything is going to work perfectly so one of the biggest factor is just quickly there are the headwinds against us happening well number one most of the producers are losing money today so you know this report doesn't take into the market side of the financial side of producing this unconventional oil so that's number one number two the decline rates and they have to invest a lot of money to prove up so remember for one well in saudi arabia we have to drill one thousand wells ok those are some some good had ones right there will leave it there i appreciate you for showing us just such a more nuanced picture than these reports that capture headlines that was marine corps to use that chief energy investment strategist for casey research and still ahead what are the health panel's report on m.f. global mean for the criminal and civil case against john porter is dying and also about politics we'll talk about it after the break but first your clothing market

numbers. me eat. eat. see. wealthy british style. that's not on the title.

market why not come to. find out what's really happening to the global economy with mike's cause or for a no holds barred look at the global financial headlines tune in to kaiser report on our. welcome back a long awaited report from the house financial services committee on m.f. global is out ninety seven pages nothing earth shattering in the way of calling for criminal charges against john horizontally and so for those that were hoping for

that didn't make it but joining you from our new york studio to talk about what did and if this matters is john rowe co-founder of the commodity customer coalition he's been fighting on behalf of and the global customers since this firm collapse so thanks for being on the show thank you for having me yeah ok so the full report is out i'm sure you've read it i know you've spoken with members of congress over time that have been working on this you've also been fighting on behalf of customers so is there anything groundbreaking in this report there's nothing groundbreaking it is a nice concise timeline of events with footnoted information sort of the puts everything together in one place the case against corazon himself the facts about the firm why it failed what happened and when it happened ok so great news for someone who someday wants to write the book on what happened they need a good timeline but for people like yourself and james good to list who i know have been finding this damning evidence and a least i know for james i don't speak for you there has been some some hope for

a criminal case does this hurt that cause certainly not it's another data point in that case it's not congress's job to pursue criminal action that of course rests with the department of justice in the executive branch and what they can do is say hey look we found this they're not passing judgment on intent that's a very difficult question the part of the justice is going to have to look at what they are saying is there obviously were some problems that happen to them of global these problems were directly attributable to mr corps and it's time for regulators and the people that are in whose job it is to prosecute the wall and wrongdoers to to go after this guy so i think while it's not maybe the smoking gun. we have it now it is yet another data point we have a sip of trustees report we now have a report from congress and we have two regulatory agencies that have yet to file any civil charges which have a much lower burden of proof then criminal charges so i think it's a positive development it is certainly not earth shattering but it is something

we've been looking for for a long time ok and i'm just really dying to know if it includes the most damning evidence that john corps is i knew that customer money was potentially at risk and being transferred ahead of the collapse of m.f. global well there's no single piece that directly points to that in this report but we think that there are certainly evidence of that in the super trustees report where you have a body of evidence that corazon put into place things that he knew were going to potentially put customer money at risk and in the final week when you have a liquidity crunch that's unprecedented and they're moving money around and they know it's coming from customer accounts and they were aware that they were using what's known as the alternative method to calculate what their excess funds were in segregation and they knew that if they moved the money around a little bit too quickly or too hastily or something didn't come back that they would actually be using customer funds they certainly knew or should have known

which is the legal standard that's in question here the customer money was at risk in the final week and you know whether or not we actually get a criminal charge in this is beyond sort of i think our ability to influence that's going to be on the department of justice is. what we can do though as an industry is make sure that john course i never touches customer money again the national futures disassociation which james and i are now running for to be on the board of directors has the authority to ban him from membership of the national he just you know what that would do is prevent him from getting a license to be in a position where he's acting as the principal of a company that's managing funds and segregated one of my younger why that hasn't happened. and yeah. but i would be one of those who wonders that there's an almost no standard of evidence for this you need a ten member business conduct committee to decide that someone that has you know violated just an equitable principles of trade will that i mean absolutely happened

the day m.f. global went to bankruptcy with a shortfall in customer property yeah so you've got enough evidence to do that i don't know why it's taking the n.f.c. a year to find out we're certainly going to try to get on the board there and make sure that john corazon can never touch a customer segregated funds again i hear you i appreciate you for working on that but i'm dying to know to this house panel report it was only signed on to by republicans so no democrat signed on so i am i'm curious about this for a few reasons a does it make it pretty easy to dismiss this report as politically motivated because it doesn't have bipartisan report and b. does this say something about what it requires for anyone in washington to take down a big banker or with the goldman connections that you need that political motivated motivation on this in this case the republican side well there's no doubt it definitely says that we have partisanship in washington that unprecedented levels i mean i do think justice was a partisan issue and apparently it is in this case corazon obviously was

a person of considerable power not only was he bundling money for president obama and his campaign but he also bungled money for the detroit will see and for congressional campaigns and senate campaigns he's considered a lot of people on the hill now all those people aren't there anymore because of what happened in two thousand and ten but the fact that not a single democrat signed on to the report initially and they did say they were going to file an addendum and we're waiting for that we're hoping that they're going to rebuke mr cores on some very strong language but the fact they didn't even bother to sign on to this or refuse to sign on to this is indicative to me that if you're the right relationships and you've spread enough money around capitol hill you can certainly evade some scrutiny from your friends and it's very very sad to see that it's very very sad. to say that i know mr corazon didn't bother to check the party affiliation of him of global customers when he raided their accounts to save his failing brokerage so i don't know why he's a sacred cow on the hill other than to say that all of the skeptics and cynics are right that there's too much influential there's too much influence from wall street

in washington and it's literally taking half almost half in this case of government out of prosecuting john corps and out of being interested in seeing justice done because well he was one of ours yeah raise my answer too if that's what it takes to take down a big bank or with those wall street connections if you have the political motivation that that would help you politically if you take out a member of the opposite party we'll leave that but i want to know because this report did place some blame on regulators you obviously are trying to kind of work within the system running for the board of the f.a.a. but is this make you lost lose faith and regulators entirely there i don't i was ever i don't think i ever have much faith and regulators in the first place we know that regulation just like i guess police action is sort of an after the fact in a lot of cases it's very difficult to prevent fraud they are underfunded they don't have enough people etc etc etc but the reality is that we can't wait and expect them to do their job we have countless instances where they failed so what we need

is something that will be there when and help folks when they don't do their job and we have a couple of reform measures that we're working on a customer protection fund to provide some insurance for when they fail again an alternative form of segregation where instead of giving your money to a broker a commodity broker you leave it at a bank and margin your positions from there that puts you in the system and prevents the broker from swiping the funds in the middle of the night there we would guess them some solution and possibly on the horizon i appreciate you talking about all this with us john breaux i will wait to see that report from the democrats before we unfairly say that they're not you know coming out and saying maybe what they should it will be interesting to see if my couple want to as outspoken in that report as he was during those hearings when he was conjuring the memory of. and ron we will leave it there for today john co-founder of the commodity customer coalition thanks so much thank you.

all realize probably has changed dimitri or do you know this actor because you see it every movie in the world so let's take a lot of. sporting breed a mental hat and a big paralyse throws a temper tantrum on the plane obviously making fun of themselves for peeing in the aisle on a city jet flight from paris to dublin a few weeks ago. so his friends actors are our day party do well known and now possibly well known for getting out of france presumably to get away from that seventy five percent income tax for people making over a million euros so a belgian newspaper reported that he bought a mansion in belgium in an area populated with many french ex-pats so dimitri do

you think this is a rich french guy say and i'm going to go drink belgian beer and pay less income tax than what francois hollande wants from me right well the belgian government is sending him thank you letters and flowers. well because they can have his taxes in belgium they can tax them both and for whatever income is going to be generating yeah like the point is that now the belgian government gets all the taxes that he would have paying in france where you know our audience was slow you guys know because you're wondering why the news greencard dmitri no one has what are you average thing i learned it's a great movie ok we couldn't use it cause there was no good image or we just don't think was a livable probably was. departed you playing playing with the piano maddeningly that was the most important thing that goes for anyone else that isn't you know having a long time i think it's interesting because it's good when you have example that's a talking point when you say oh giving these really high taxes makes people believe it's different when you have a high profile people that actually are leaving we don't it's not confirmed if

that's why he's leaving but it just you know there's no doubt it's going to be something else that everybody will want seventy five percent still fifty percent he could come to the u.s. where there are thirty five well if you live in york there are thirty five there fifty percent because then you have state and local and everything else all right so i mean whatever the reason is your opinion if you want to hang on your want to go to the us are plenty of other things that could drop there but all right if you want to talk about like those serious. specific asper the taxes it's a perfect example because guys like this are getting taxed because they're going to tax on income but if you're a hedge fund manager and you're going to actually create interest or if you're warren buffett or whoever else there are guys or mitt romney out or right how mitt romney appearing in the teens that's who we should be worried about not taxing the crap out of jar the producer who leaves france and goes to belgium and buys a castle yet really funny sentence from from the article instead we see the report on this it was that he moved from france to belgium where income tax is only fifty percent which is a quite which is a sentence that you never hear this is

a weird sentence because in fact who passed only fifty percent doesn't sound because that's because they raised the seventy five yards is ridiculous we have to leave here as mr want ninety percent that's going to go to where they were at a time so they'll have to let him get away with it because that's all going on time for thank you so much for watching be sure to come back tomorrow in the meantime you know you can follow me on twitter you can like our facebook page there is the address right there you can watch any shows you mislead us comments at youtube dot com slash capital account watches in h.d. on hulu and from everyone here thank you so much for watching come back tomorrow have a great. mission

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