Massenbach-Letter. NEWS 11.11.16

Massenbach-Letter. News

· Nick Butler, FT:Will oil peak within 5 years? * John Kemp: Trump’s energy policies yet to be defined

· Judy Asks: Are Europe’s Leaders Prepared for a Changing America?

· George Friedman: President-Elect Donald Trump

· Why Trump won — and why the media missed it

· Trump’s victory has enormous consequences for the Supreme Court

· Judy Asks: Are Europe’s Leaders Prepared for a Changing America?

· CSU-Grundsatzprogramm 2016

Massenbach*Nick Butler, FT:Will oil peak within 5 years?

“The 20th century was the age of oil. The 21st will not be and the adjustment process for those involved could be very disruptive – destroying rentier economies built on oil revenues, changing the pattern of trade and adding another challenge to unstable and dangerous parts of the world.”

On November 2 Simon Henry, the chief financial officer of Royal Dutch Shell and one of the most respected figures in the industry, told analysts on a conference call for the Shell results presentation that he believed “oil demand will peak before supply and that peak may be between five and 15 years hence”. I think he is right, and that the peak of demand will come within five years and possibly by 2020. The reasons for what sounds like a very radical challenge to the conventional wisdom are clear and the advance warning signs are already evident in the data.

Oil demand in the developed OECD world has already peaked and is 9 per cent below the level reached in 2005. In Europe, oil demand is down 17 per cent over the same period.

After a surge in Chinese demand over the past decade – particularly during the years of rapid growth and industrialisation – it has become obvious that demand there has flattened off. Some of the oil imported over the last two years has been re-exported, and more has gone into strategic stock piles – a prudent measure when prices are low but not something that can continue. Demand is still growing in India and Turkey but the volumes involved are relatively small.

All the indications are that in the developed world demand has further to fall. Oil use is now heavily concentrated in the transport sector. Electric vehicles have only a fractional share of the market but the numbers are growing month by month. Technology is improving, reducing costs and expanding sales. Tesla gets most of the publicity but those wanting to understand the impact of EVs on the oil market should look at China where 188,000 new electric and hybrid vehicles were sold in 2015. This year that number is expected to more than double to around 450,000.

The technology improvements will continue but I believe the next big step will be a regulatory drive to make EVs the default choice for motorists in cities. Measures such as lower vehicle taxation, lower congestion charges and easier parking are being used as gentle incentives for behaviour change. But I can see cities in countries such as Germany or China going further and mandating their use – with the shift implemented over a relatively few years. In both countries local production will spur the adoption of new public policies. I will write more about what is happening in Germany in a future post.

Gradually, or perhaps more quickly, EVs will eat into the market currently reserved for petrol.

The conventional wisdom in some of the other oil majors is that this effect will be swamped by the growth in car use in the emerging market economies of Asia and Latin America. But that misses the phenomenon of leapfrogging. As EVs proliferate, their costs will fall until they are the natural purchase everywhere. Urban air quality is a big social issue in most developing countries, and once a viable alternative to petrol is available the shift could come quickly. Perhaps the internal combustion engine can match the falling costs and reduced pollution but it would be foolish to take that for granted. In addition, the new EV industry centred in places such as Germany and China will have every incentive to compete internationally.

What are the implications if Mr Henry’s forecast is correct and oil demand peaks by the early 2020s at about 100m barrels a day?

First, it is important to be realistic. A peak is likely to become a plateau rather than a sharp decline. The global capital stock of conventional vehicles will turn over only slowly. Demand could remain flat for another five or 10 years with reductions in the developed world matched by growth in Asia and elsewhere. But the coming of the peak will create incentives among producers – public and private. Companies will have to plan not just for low prices but also for low demand. Of course, they can adapt and if necessary cut back exploration and new development work ; many have already begun that process in response to the immediate challenge of low prices. Companies can also diversify into gas and other forms of energy including renewables, as Total, for example, is already doing. Others will wait but will come under pressure from shareholders not to delay too long and not to waste money chasing a shrinking business.

The biggest challenge of the peak and plateau will face producing countries, especially those that have failed to diversify their economies, such as Russia, Nigeria, Algeria, Venezuela and, of course, Saudi Arabia. Some have such a low production cost base that they should be able to keep their market share. But with the prospect of a decline in oil use in mind many will want to maximise production quickly to extract as much revenue as possible as soon as they can. In a declining market the expectation will be that prices will stay low or fall further, removing any remaining incentive to keep oil in the ground.

The 20th century was the age of oil. The 21st will not be and the adjustment process for those involved could be very disruptive – destroying rentier economies built on oil revenues, changing the pattern of trade and adding another challenge to unstable and dangerous parts of the world.

Here is why you should wait before judging what impact the president-elect will have on energy policy and markets. I am mindful of what I wrote earlier about not trying to produce instant analysis in the hours after any election result. So this column makes zero predictions about future policy (and explains why such predictions are impossible at this point) but tries to take a detached look at the overall political landscape that confronts a new president with big ambitions on energy issues (and most presidents come to office with promises to remake energy policy).

COLUMN-Trump’s energy policies yet to be defined: Kemp – Reuters News

09-Nov-2016 12:59:46

John Kemp is a Reuters market analyst. The views expressed are his own

By John Kemp

LONDON, Nov 9 (Reuters) – Donald Trump’s victory in the U.S. presidential election will trigger a race among journalists, analysts and traders to explain what it means for energy policy and markets.

But the president-elect does not yet have clearly formed policies on most energy issues so the implications will become clear only in the weeks and months ahead as he starts to build an administration.

Energy analysts tend to make the mistake of assuming that everyone thinks about the detail of energy policy as much as they do themselves.

Trump’s energy-related policies are probably not even known in detail to the president-elect himself – much less knowable by anyone else.

In contrast to his rival Hillary Clinton, who conducted a classic programmatic campaign, accompanied by highly detailed energy policies, Trump mounted a values-based campaign, with few detailed commitments.

Some of the broad contours of Trump’s energy agenda can be discerned from his statements as a candidate and comments made by his advisers.

Trump has promised to end the Obama administration’s “war on coal” and overturn unnecessary federal regulations on oil, gas and coal production.

Trump has also promised to overturn the Obama administration’s Clean Power Plan, which is being litigated in the courts.

Trump is far less concerned about global warming and climate change than either his rival or the current administration.

He wants to take a much tougher line on Iran, which may include the reimposition of nuclear-related and other sanctions.

Trump also wants big tax cuts and a business-friendly pro-growth agenda, though that is complicated by his instinctive protectionism and hostility to trade agreements.

In general, a Trump administration is likely to be much friendlier towards oil, gas and coal producers, and less receptive to arguments from renewable energy and clean technology firms.

Trump’s administration will pay closer attention to the concerns of the American Petroleum Institute and less to arguments from green groups such as the Natural Resources Defense Council.

The rhetoric of energy policy will undergo a transformation as the focus shifts from climate change to energy security and affordability.

But it is much less clear how far and how fast energy policy will change in practice because the incoming administration will face formidable institutional constraints to its freedom of action and difficult policy trade-offs.


The United States is not an elective monarchy, for all the exaggerated attention paid to the occupants of the White House.

The U.S. constitution is one of separated institutions sharing power, and in many areas the president’s power is mostly the power to persuade (“Presidential Power and the Modern Presidents”, Neustadt, 1960).

Trump’s administration must obtain congressional consent if it wants to legislate on energy issues and the Democrats will still have a blocking majority on most issues in the Senate.

The president can issue executive orders and rescind orders issued by his predecessors but in most areas his power is still limited by due-process requirements.

Trump’s administration will be entitled to make its own interpretation of statute law, including the Clean Air Act.

But it must still ensure that its interpretations are reasonable and decisions are not “arbitrary, capricious, (or) an abuse of discretion” under the Administrative Procedure Act.

The Trump administration cannot simply rescind or withdraw federal regulations; it will have to undertake a new evidence-based rulemaking process to amend or cancel them.

There is plenty of scope to alter policies towards the production of energy on federal lands, including new leasing rounds, and environmental permitting.

But Trump’s administration will have to make the case for its energy policies in the federal courts, where it is likely to be challenged by powerful and well-funded environment groups.

The Obama administration was able to use regulatory powers to help remake the energy landscape mostly because it could persuade the judiciary to agree with many of its statutory interpretations.

There is already a large corpus of judicial rulings on environmental issues which will not disappear and will constrain how much the new president can change domestic energy policy.

Most policies on energy production (including drilling regulations and renewable energy mandates) are set at state rather than federal level.

The president has a lot of power but he cannot remake energy policy on his own, at least not quickly and completely.

The Obama administration, like all its predecessors, has found out the hard way just how difficult it is to push through big changes in energy policy.


The president’s power is greater in foreign policy, where he can draw on the inherent powers of his role as commander-in-chief and chief representative of the United States.

But even here, the president’s power is not unlimited, and it depends crucially on his ability to build alliances with other countries to support his goals.

The Obama administration’s signature foreign policy, sanctions followed by an agreement with Iran, was made possible because the White House convinced other major powers to back the U.S. policy.

U.S. foreign policy has always been successful and powerful when it can rally allies, and weakest when the United States is isolated.

President-elect Trump may want to reverse all of the Obama administration’s domestic and international energy-related policies but in practice may find many of them difficult to alter.

Trump’s administration must still deal with the reality of climate change, sluggish global growth, concern about income inequality, and the rising power of China, all of which have challenged the Obama administration.

If Trump wants to be re-elected in four years‘ time, and most presidents want the vindication of a second term, he must come up with policies to deal successfully with at least some of these issues.

Trump’s administration may promise a revolution in energy policy, as in many other areas, but the reality is likely to be messier and involve a lot more compromise.

U.S. energy policy has always involved substantial elements of both continuity and change, and it has rarely been consistent or coherent. The Trump administration will be no different (“U.S. energy policy since 1945”, Vietor, 1984)


For that reason, journalists, analysts and traders should be cautious about making firm predictions about what Trump’s administration will do in the energy area.

The enormous uncertainty surrounding the Trump administration’s energy policies is one reason that oil prices have scarcely moved following the election outcome.

The contours of Trump’s energy policy will only become clearer over the next few months as he starts to staff his administration and articulate detailed policy objectives.

It is tempting to assume that a Trump administration would involve a bonfire of energy regulations at home and a complete reordering of energy-related foreign relations abroad.

The result, however, may involve much more compromise as the new president tries to adapt his bold if vague campaign rhetoric to the practical problems of governing.

John Kemp

Senior Market Analyst



Deal with US to prevent Turkey role in Raqqa assault: SDF

An armored military vehicle drives past a wall along the border between Turkey and Syria, near the southeastern village of

Besarslan, in Hatay province, Turkey, November 1, 2016.

Agence France Presse

BEIRUT: Washington has agreed that Turkey will play no role in the battle to capture ISIS‘ Syrian bastion Raqa, the spokesman for the Kurdish-Arab force leading the fight said Sunday.

"We have agreed definitively with the (U.S.-led) international coalition that there will be no role for Turkey or the armed factions allied with it in the operation," Talal Sello of the Syrian Democratic Forces (SDF) told AFP.

The SDF is an alliance led by the Kurdish People’s Protection Units (YPG) and has been a key ally of the U.S.-led coalition against ISIS.

But Turkey considers the YPG a "terrorist" group, and in August launched a military operation inside northern Syria targeting the Kurdish forces as well as ISIS.

The SDF announced Sunday it had begun a long-awaited operation to capture Raqqa from ISIS, as Iraqi forces push into the extremist group’s bastion of Mosul across the border in Iraq.


Policy= res publica

Freudenberg-Pilster* Judy Asks: Are Europe’s Leaders Prepared for a Changing America?

Posted by: Judy Dempsey + Wednesday, November 09, 2016

A selection of experts answer a new question from Judy Dempsey on the foreign and security policy challenges shaping Europe’s role in the world.

Cornelius Adebahr. Nonresident associate at Carnegie Europe

Europe’s leaders—those at the national level and those in the EU—are hardly prepared to deal with the changing countries in which they live. How could they be prepared for a changing America that even current U.S. leaders, Democratic and Republican, find hard to understand?

Leaders, for sure, are not confined to the political realm. However, if they want to shape the fate of their continent, they have to step into the public arena at some point. So it is one thing if the political discourse in European countries has begun to consider the momentous social and societal changes of the past thirty years. It is quite another, and much more demanding, to turn these insights into political programs—by responding to globalization-induced rising inequalities in Western societies, empowering citizens to live more flexible lives while providing safety nets for those who cannot, and maintaining a level of social cohesion that is a precondition for a functioning democracy.

Changes (perhaps radical ones) in the United States can be a source of inspiration as much as instability. Europe will have to find its own way of dealing with the challenges it faces. Few of today’s leaders seem willing to rise to them.

Carl Bildt. Former foreign minister of Sweden

No, they are not.

First, the politics of Europe has turned distinctly introverted during recent years. The EU’s troubles, the increasing problems of governance in different countries, and other factors have led European leaders to pay less attention to a rapidly changing global environment. The ring of fire in the EU’s immediate neighborhood is the only exception.

Second, everyone, notably the Americans, is profoundly confused as to what sort of United States is emerging. Very few expected a phenomenon like president-elect Donald Trump to go as far as he has, and it will take some time for the U.S. system to digest and adjust to what has been happening.

But no relationship is as important to Europe as the relationship across the Atlantic. That bond will require far more attention—and possibly even care—as the United States comes to terms with itself after these grueling months.

Federiga Bindi. Senior fellow at the School of Advanced International Studies at Johns Hopkins University, director of the Foreign Policy Initiative at the Institute for Women’s Policy Research, and D. German distinguished visiting chair at Appalachian State University

Absolutely not. Now that the U.S. presidential election is over, Europe has to step up its game. The time for relying politically and militarily on the United States is over.

Europeans therefore have two possibilities: to continue to divide themselves, each country in the hope of becoming the United States’ new best partner; or to unite and finally project a coherent voice in world affairs. The temptation will be to lean toward the first option. This sad game was seen in Washington in 2009, when the Europeans competed with each other over which European capital would be visited first by U.S. President Barack Obama or then secretary of state Hillary Clinton. But it is not a real option: divided, Europe will lose all its influence.

As EU foreign policy chief Federica Mogherini said, “to do better we have to do [things] together.” After the 2016 U.S. election, the emperor is naked and European leaders need to ask themselves what they want to do when they grow up.

Ian Bremmer. President of Eurasia Group

No. What’s worse is that Europe’s leaders are not even prepared for a changing Europe, which is more to the point. The current transatlantic relationship—the bedrock of the global order since World War II—is now at its weakest point in over seventy years. And it’s at its weakest precisely because both the United States and Europe don’t think or act remotely like it’s a priority.

The election of Donald Trump as U.S. president certainly isn’t going to do anything to improve cross-Atlantic relations. He is going to enter office with the weakest mandate of any president in the postwar era. He will have plenty of work to focus on at home, with an increasingly polarized electorate and U.S. Congress to worry about.

And given the multiple crises plaguing Europe at the moment, the transatlantic relationship won’t be improving from the European side, either. That’s bad news for Europe, which needs friends now more than ever. But it’s not going to receive unadulterated support from the next U.S. president. Europe needs to worry about its own changing politics before it can start worrying about the changing politics of others.

Denis MacShane. Former UK minister for Europe

The greatest geopolitical foreign policy error of the twentieth century was the United States turning its back on Europe in 1920 and spending the next twenty years unable to influence the shape of world events.

Now, it is Europeans who are unable to offer any effective partnership to the United States in the face of most twenty-first-century challenges. All over Europe, antitrade, anti-immigrant, nationalist, populist politics are growing. Britain’s vote to leave the EU was one example of the turn inward. The initial opposition of the Belgian region of Wallonia to the EU-Canada trade deal was another.

Anti-Americanism is modish and will get worse under U.S. President Donald Trump. French President François Hollande has said, “The Americans, whatever they’re up to, are arrogant.” One of his challengers for the presidency in 2017, François Fillon, has said the United States “exercises a form of control of the European economy that’s absolutely intolerable.” German Social Democrats prefer Russian President Vladimir Putin to his U.S. counterpart, Barack Obama.

No one in Europe has had any time for Trump, other than France’s National Front leader, Marine Le Pen, and the UK Independence Party’s leader, Nigel Farage. The United States is now as strange to current European leaders as it was when Columbus set sail in 1492.

Europe has given up on the United States, and the compliment is being returned as the term “Euro-Atlantic” loses all meaning.

Gianni Riotta. Member of the Council on Foreign Relations

No. Europe has a split-personality approach to the twenty-first century. On the one hand, a delusion that Europeans still live in a Cold War I world, cozy in the protection and security offered by the United States, swamps the public conversation in Europe. On the other hand, Europeans are angry dwellers of the Cold War II age, busy toying with populism, nationalism, protectionism, xenophobia, and an adolescent crush on Russia.

The United States is riding its own wave of neonationalism and cultural protectionism, and nasty undercurrents of isolationism and pangs of “America First!” will loom on under the new president. European leaders should have the chutzpah to engage the United States and work together to face coming global turbulences. But they will not, indulging instead in petty squabbles with Google and Apple and turning their noses up at American genetically modified steaks, while the United States grumbles and retaliates.

Stephen Szabo. Executive director of the Transatlantic Academy

There seems to be a broad understanding among Europe’s leaders that after the U.S. presidential election they cannot rely on the United States to shoulder the burdens it has in the past. America is not about to abandon Europe, but the new U.S. leaders will expect Europeans to take on much more responsibility for their security.

That both the United States and the UK are turning inward has been clear for some time in European capitals. The declaration on October 16 by German Chancellor Angela Merkel that Germany will meet NATO’s guideline of spending 2 percent of GDP on defense is evidence of the new perception of the need for greater European responsibility. This means that Europeans will have a larger say in strategy and not simply follow whatever Washington decides.

A crisis is too good an opportunity to waste, and now is the time for both the United States and Europe to shape a new transatlantic bargain to meet not only the changing nature of U.S. politics but also the growing dangers to a stable and secure Europe.

Ben Tonra. Professor of international relations and Jean Monnet professor of European foreign, security, and defense policy at the School of Politics and International Relations, University College Dublin

No, they are woefully underprepared. U.S. president-elect Donald Trump’s own protectionist promises and isolationist ambitions will be reinforced by an electorate and a U.S. Congress profoundly skeptical of active international engagement and deeply resentful of the costs deriving from such engagement. Building on this base, and reflecting his policy ambitions, Trump will be focused overwhelmingly on domestic issues while profound global challenges deepen.

A U.S. foreign policy vacuum will therefore demand substantially greater European commitment to meet those challenges, with the expectation that Europe’s leaders are equipped, capable, and willing to act. In their absence, several outcomes can be expected: a substantially diminished Atlantic alliance, a fragmenting international trade regime, and even greater strategic instability. By default, German Chancellor Angela Merkel becomes the leader of the free world.

In the period ahead, the EU will grapple with defining a constructive relationship with the UK after its decision to leave the union, dealing with its own populist and illiberal demons, and addressing outstanding shortcomings in its own economic governance. In that context, the concern must be that European leaders will indeed fall short. The stakes have rarely been higher and the prospects for success lower.

Peter van Ham. Senior research fellow at the Clingendael Institute

European leaders would have preferred Democratic candidate Hillary Clinton to win the U.S. presidential election because this would have given them more time to adjust to the gradual decline of the United States as a global hegemon. The question now is whether Europe’s leaders will be better off shocked out of their complacency by the victory of Republican candidate Donald Trump.

Today, the attitude among Europeans still seems to be that the United States will back Europe up with political support and military power if the going gets tough—be it with Russia, Iran, or (in future) China. A Clinton administration would have kept Europe’s leaders in their comfort zone, lulling them to sleep in the mistaken belief that the United States still guards their security and defense. A Trump administration will be a shock and, I think, a most welcome one. Trump has indicated that well-off Europeans have to leave their postmodern dreamworld and take responsibility for their borders, their security, and their defense. This requires not only commensurate defense spending but also a much-needed acceptance by Europe’s leaders that the world has become a tough place where realpolitik reigns.

Europe won’t necessarily like U.S. President Trump, but it may well be the tough medicine it needs to finally wake up.

****************************************************************************************************************** Politics: From Vision to Action

Barandat* The Daily 202

Why Trump won — and why the media missed it.

THE BIG IDEA: President-elect Donald Trump was right all along. He had a silent majority. The media, the pollsters and Republican elites never saw it – even though it was right in front of them the whole time.

Das CSU Grundsatzprogramm – CSU Grundsatzprogramm.pdf
Who is the president of the United States – Donald Trump wins election – The.pdf