I believe CIBC's Jeff Rubin called for oil to go to $50 when it was trading around $30 a coupla' years back. Here's his latest:
Bloomberg: Commodity Strategists: Oil May Average $93 in 2007.
Oil may average $84 a barrel next year, $93 in 2007, and $100 in the fourth quarter of 2007, as demand outpaces supply, Canadian Imperial Bank of Commerce's chief economist said, jumping ahead of other analysts who are trying to catch up with surging prices.
Rising consumption in China is straining supplies, and damage from Hurricane Katrina to Gulf of Mexico facilities will delay new oil projects in addition to cutting output now, Canadian Imperial's Jeffrey Rubin wrote in a Sept. 7 report. Global supply will be as much as 2.4 million barrels below projected demand by 2007, and the gap will only be closed as rising prices slow demand growth, Rubin wrote.
``We estimate that 1.8 million barrels per day of consumption must be squeezed out next year through the impacts of higher prices,'' Rubin wrote. The gap between supply and demand grows as much as 3 million barrels a day by 2008. Global oil needs are almost 84 million barrels a day now.
``About 42 percent of the growth in global demand is coming from China, where there is virtually no price sensitivity to demand,'' Rubin said in a separate phone interview. ``There's a huge relationship to income growth there, but a very uncertain relationship to price at all.''
Instead of adding nearly 600,000 barrels of oil a day by 2007, new fields in the Gulf may contribute just 300,000, according to Rubin's report.
``When you juxtapose that with the apparent insensitivity of the demand curve, then what happens is that even though it's a relatively small reduction in supply, you need huge price increases to rein in demand,'' Rubin said during the interview.
``You have had a very significant reduction in the growth of demand, something in the neighborhood of a 40 percent reduction in the growth of demand already,'' he said. ``Unfortunately it's taken huge prices to achieve that.''
Tuesday, September 13, 2005
God Save the Queen.
Make of this what you will. You probably want to read it all. There are rumors around that the Saudis are experiencing some issues with Ghawar production, and I assume that has something to do with Simmons' more urgent tone here. But you never know where the rumors come from and who benefits.
Petroleum News: Saudi Oil Shock Ahead.
Quotes:
Simmons also suggests that Saudi production is very near its peak. But the feedback he has received from technical people who have read the book, leads him now to believe that Saudi Arabia has “actually exceeded sustainable peak production already.”
“And I think at the current rates they are producing these old fields, each of the fields risks entering into a rapid production collapse,” he said.
Saudi oil shock is imminent
Meanwhile, as the world’s thirst for oil grows, Saudi Arabia and other oil-producing countries will be unable to keep pace. Some analysts say Saudi Arabia is capable of producing 20 million to 25 million bpd, but Simmons says that level of production is “impossible.”
“And I also believe that — Ghawar, for instance, which is really the whole nine yards, because that is 60 percent of their production — that North Ghawar, which is the top 20 percent of the field, has a productivity index that is about 25 times the productivity index of the rest of Ghawar, and that’s the area that is almost depleted now,” Simmons observed. “And when that drops, you could basically see Ghawar go from 5 million down to 2 million bpd in a very short period of time.”
ANWR may hold ‘queen’
America needs more oil sources and Alaska is a good place to look, Simmons said. As for ANWR, he said it’s ludicrous for people, whether geologists or environmentalists, to make definitive statements about the quantity of oil reserves in the refuge.
Found on The Oil Drum.
Petroleum News: Saudi Oil Shock Ahead.
Quotes:
Simmons also suggests that Saudi production is very near its peak. But the feedback he has received from technical people who have read the book, leads him now to believe that Saudi Arabia has “actually exceeded sustainable peak production already.”
“And I think at the current rates they are producing these old fields, each of the fields risks entering into a rapid production collapse,” he said.
Saudi oil shock is imminent
Meanwhile, as the world’s thirst for oil grows, Saudi Arabia and other oil-producing countries will be unable to keep pace. Some analysts say Saudi Arabia is capable of producing 20 million to 25 million bpd, but Simmons says that level of production is “impossible.”
“And I also believe that — Ghawar, for instance, which is really the whole nine yards, because that is 60 percent of their production — that North Ghawar, which is the top 20 percent of the field, has a productivity index that is about 25 times the productivity index of the rest of Ghawar, and that’s the area that is almost depleted now,” Simmons observed. “And when that drops, you could basically see Ghawar go from 5 million down to 2 million bpd in a very short period of time.”
ANWR may hold ‘queen’
America needs more oil sources and Alaska is a good place to look, Simmons said. As for ANWR, he said it’s ludicrous for people, whether geologists or environmentalists, to make definitive statements about the quantity of oil reserves in the refuge.
Found on The Oil Drum.
Monday, September 12, 2005
Let them eat rice cakes.
Man, oh man, Clinton and Bush Sr. have clearly been hanging out together too much.
He must not need the speech fees so much anymore, 'cause I'm not sure they're having have him back after this.
ABCNews: Clinton to China: Find New Energy Sources.
Quotes:
Former President Clinton urged China on Saturday to recognize the urgency of the environmental threats to its growth, and to use the Internet as a tool to surmount them. But he remained silent on the risks faced by those who use the Internet as a forum for dissent.
"You will have to come to grips with significant challenges to your growth," Clinton said at an Internet conference in this eastern resort city. He warned that the energy consumption required to keep China's economy growing at its recent rate of more than 9 percent is "unsustainable."
China's oil imports have soared as it struggles to keep booming industries growing. Its continued strong growth, and that of the rest of the world, will depend on its ability to find alternative energy sources and make better use of the resources it has, Clinton said.
"If we don't do it, it will eventually impose severe restraints on economic growth and make future conflicts far more likely," Clinton said. "It's not clear to me that there will be enough oil to produce that growth according to traditional energy use patterns," he said.
He must not need the speech fees so much anymore, 'cause I'm not sure they're having have him back after this.
ABCNews: Clinton to China: Find New Energy Sources.
Quotes:
Former President Clinton urged China on Saturday to recognize the urgency of the environmental threats to its growth, and to use the Internet as a tool to surmount them. But he remained silent on the risks faced by those who use the Internet as a forum for dissent.
"You will have to come to grips with significant challenges to your growth," Clinton said at an Internet conference in this eastern resort city. He warned that the energy consumption required to keep China's economy growing at its recent rate of more than 9 percent is "unsustainable."
China's oil imports have soared as it struggles to keep booming industries growing. Its continued strong growth, and that of the rest of the world, will depend on its ability to find alternative energy sources and make better use of the resources it has, Clinton said.
"If we don't do it, it will eventually impose severe restraints on economic growth and make future conflicts far more likely," Clinton said. "It's not clear to me that there will be enough oil to produce that growth according to traditional energy use patterns," he said.
Saturday, September 10, 2005
Mind if we dance with your dates?
"Why, yes. We do." Frenchie said, as his arm tightened around his young hottie.
Sorry, missed this. Kind of busy lately.
Bloomberg: Total Raises Bid for Deer Creek to C$1.67 Billion.
Quotes:
Total SA, the world's fourth-largest oil company, raised its bid for Canada's Deer Creek Energy Ltd., an oil-sands producer, to C$1.67 billion ($1.41 billion) to match a competing offer.
Total, based in a Paris suburb, raised its offer by 24 percent to C$31 per share from C$25 a share on Aug. 2, the company said in a statement.
High oil prices are encouraging companies including Exxon Mobil Corp and Royal Dutch Shell Plc to spend billions to boost output from deposits of oil-soaked sand buried under northern Alberta, the largest source of oil outside of the Middle East. Increased oil demand from the U.S., India and China have contributed to oil prices climbing to a record $70.85 a barrel on Aug. 30.
``There are very attractive features about oil-sands projects,'' Mark Friesen, an analyst with Calgary brokerage FirstEnergy Capital Corp., said today in a telephone interview. ``These are great projects. There's no decline in production, no geological risk in a politically stable area in a world that questions where the next barrel of supply is going to come from.''
The competing bid may have come from a Chinese company as the Asian nation with the fastest-growing economy in the world is scouring the globe to lock up oil supply, said Friesen, who does rates Deer Creek as `underperform' and doesn't own any.
PS. Yeah, yeah, the quote is from Animal House and Frenchie is from Grease, and was a woman. Oh well..
Sorry, missed this. Kind of busy lately.
Bloomberg: Total Raises Bid for Deer Creek to C$1.67 Billion.
Quotes:
Total SA, the world's fourth-largest oil company, raised its bid for Canada's Deer Creek Energy Ltd., an oil-sands producer, to C$1.67 billion ($1.41 billion) to match a competing offer.
Total, based in a Paris suburb, raised its offer by 24 percent to C$31 per share from C$25 a share on Aug. 2, the company said in a statement.
High oil prices are encouraging companies including Exxon Mobil Corp and Royal Dutch Shell Plc to spend billions to boost output from deposits of oil-soaked sand buried under northern Alberta, the largest source of oil outside of the Middle East. Increased oil demand from the U.S., India and China have contributed to oil prices climbing to a record $70.85 a barrel on Aug. 30.
``There are very attractive features about oil-sands projects,'' Mark Friesen, an analyst with Calgary brokerage FirstEnergy Capital Corp., said today in a telephone interview. ``These are great projects. There's no decline in production, no geological risk in a politically stable area in a world that questions where the next barrel of supply is going to come from.''
The competing bid may have come from a Chinese company as the Asian nation with the fastest-growing economy in the world is scouring the globe to lock up oil supply, said Friesen, who does rates Deer Creek as `underperform' and doesn't own any.
PS. Yeah, yeah, the quote is from Animal House and Frenchie is from Grease, and was a woman. Oh well..
Trend or anomaly?
It will take a few weeks of data to see.
WSJ: U.S. Gasoline Use Fell 4% Last Week. [$]
Quotes:
Americans used 4% less gasoline amid skyrocketing pump prices last week than they did the week before Hurricane Katrina hit, the federal government reported. But whether that indicates consumers have decided to conserve or merely that they couldn't find all the gasoline they wanted isn't clear.
The figures didn't include data from the Labor Day weekend or from this week. It's also unclear whether the weather simply reduced driving in the affected states, though government analysts doubted that explained the full drop. Tom Kloza, chief oil analyst with the Oil Price Information Service, a Wall, N.J., industry-research firm, said fuel retailers he has talked to have reported a particularly large drop-off in demand since Saturday. "It dropped off the table," he said -- a shift that, if true, wouldn't be reflected until the next government report, due out next week.
Yesterday's EIA numbers were the second indication in as many days that Americans might be tempering their consumptive ways in response to sharply higher gasoline prices. On Wednesday, the EIA slashed its prediction for U.S. oil-demand growth for the full year, "largely due to higher prices."
WSJ: U.S. Gasoline Use Fell 4% Last Week. [$]
Quotes:
Americans used 4% less gasoline amid skyrocketing pump prices last week than they did the week before Hurricane Katrina hit, the federal government reported. But whether that indicates consumers have decided to conserve or merely that they couldn't find all the gasoline they wanted isn't clear.
The figures didn't include data from the Labor Day weekend or from this week. It's also unclear whether the weather simply reduced driving in the affected states, though government analysts doubted that explained the full drop. Tom Kloza, chief oil analyst with the Oil Price Information Service, a Wall, N.J., industry-research firm, said fuel retailers he has talked to have reported a particularly large drop-off in demand since Saturday. "It dropped off the table," he said -- a shift that, if true, wouldn't be reflected until the next government report, due out next week.
Yesterday's EIA numbers were the second indication in as many days that Americans might be tempering their consumptive ways in response to sharply higher gasoline prices. On Wednesday, the EIA slashed its prediction for U.S. oil-demand growth for the full year, "largely due to higher prices."
Wednesday, September 07, 2005
Three is the magic number.
Three is a magic number,
Yes it is, it's a magic number.
Somewhere in the ancient, mystic trinity
You get three as a magic number.
The past and the present and the future.
Faith and Hope and Charity,
The heart and the brain and the body
Give you three as a magic number.
It takes three legs to make a tri-pod
Or to make a table stand.
It takes three wheels to make a ve-hicle
Called a tricycle.
[and hey, we may be riding a lot more of those soon..]
Lyrics: Schoolhouse Rock
I've always thought that $3 was the number that would put a little religion in people and cause some amount of demand destruction by getting them to cut that portion of their usage that is pure waste as well as take some marginal steps to conserve. [I'm talking average income person here.]
So I'll be interested to see how long we stay around here and what happens to gasoline consumption as a sort of peak oil test.
One of the reasons I don't subscribe to the worst case scenarios is that I believe we are wasting a lot of gasoline, and thus have a lot of room for improvement if things get really tight. (Assuming market prices are allowed to reflect reality.)
Anecdotally:
USA Today: Gas shock echoes across USA.
Quotes:
Consumers are flocking to the Internet for help. They've besieged GasBuddy.com, the best-known site for finding cheap gas. The site's message board shut down on Thursday. Co-founder Jason Toews says the Minnesota-based Web site averages 300,000 hits daily but was on pace to get more than 4 million Thursday.
"We've just been overwhelmed," Toews says. "Our server couldn't handle it."
Here and there are stories of flat-out craziness, such as when the T-Bird Mini Mart in Springfield, Vt., decided NOT to raise its gas prices.
T-Bird stopped raising its prices midday Wednesday at $2.60 a gallon while all the other gas stations around kept pushing their prices higher - until T-Bird was charging 30 cents a gallon less.
People started showing up from as far away as New Hampshire. Lines snaked through town. Neighboring businesses summoned police, who directed traffic for hours. So overwhelming was the traffic, says clerk Jason LaValley, "We had to raise (the price) to keep people away." The store was selling gasoline for $3.19 Wednesday night, more in line with the competition.
In Chandler, Ariz., Nezar Alsai, owner of the independent Blue Diamond Fuel, says customers were screaming at him Thursday about the $3.09 price of regular.
"They say, 'Shame on you! You're taking advantage of the situation,' but I'm not," Alsai says, whipping out the latest fuel bill from his supplier, which shows he is paying $3 a gallon for regular.
Alsai expects the wholesaler wants $3.10 a gallon for the next load, but he's holding out. "I am waiting for the price to drop. I expect I will run out of gas and don't know what to do," he adds.
AP: Katrina's Wrath Hits Holiday Drivers.
When the station did get a shipment of gas on Saturday, a day after running out, it asked only for regular gasoline because not many people were buying mid-grade and premium blends, Neuhart said. The station, which was charging $3.09 a gallon for regular, also was limiting drivers to 10 gallons per vehicle.
One driver, Phillip Craig, said he had had been trying to hold off until prices fell. "The only reason I came here today was because my wife noticed it was $2.89 on her way home and told me to stop and fill up," he said.
At a Marathon gas station near downtown Orlando, Fla., the pumps were vacant Saturday. Plastic bags covered all but a few, $3.19-a-gallon premium pumps at the station, where owner Bibi Razak usually sells 1,200 gallons daily.
"It's definitely hurting business," she said, pointing to her food and drink displays. "No one's coming here to buy the gas, so they don't come here for anything else."
Yes it is, it's a magic number.
Somewhere in the ancient, mystic trinity
You get three as a magic number.
The past and the present and the future.
Faith and Hope and Charity,
The heart and the brain and the body
Give you three as a magic number.
It takes three legs to make a tri-pod
Or to make a table stand.
It takes three wheels to make a ve-hicle
Called a tricycle.
[and hey, we may be riding a lot more of those soon..]
Lyrics: Schoolhouse Rock
I've always thought that $3 was the number that would put a little religion in people and cause some amount of demand destruction by getting them to cut that portion of their usage that is pure waste as well as take some marginal steps to conserve. [I'm talking average income person here.]
So I'll be interested to see how long we stay around here and what happens to gasoline consumption as a sort of peak oil test.
One of the reasons I don't subscribe to the worst case scenarios is that I believe we are wasting a lot of gasoline, and thus have a lot of room for improvement if things get really tight. (Assuming market prices are allowed to reflect reality.)
Anecdotally:
USA Today: Gas shock echoes across USA.
Quotes:
Consumers are flocking to the Internet for help. They've besieged GasBuddy.com, the best-known site for finding cheap gas. The site's message board shut down on Thursday. Co-founder Jason Toews says the Minnesota-based Web site averages 300,000 hits daily but was on pace to get more than 4 million Thursday.
"We've just been overwhelmed," Toews says. "Our server couldn't handle it."
Here and there are stories of flat-out craziness, such as when the T-Bird Mini Mart in Springfield, Vt., decided NOT to raise its gas prices.
T-Bird stopped raising its prices midday Wednesday at $2.60 a gallon while all the other gas stations around kept pushing their prices higher - until T-Bird was charging 30 cents a gallon less.
People started showing up from as far away as New Hampshire. Lines snaked through town. Neighboring businesses summoned police, who directed traffic for hours. So overwhelming was the traffic, says clerk Jason LaValley, "We had to raise (the price) to keep people away." The store was selling gasoline for $3.19 Wednesday night, more in line with the competition.
In Chandler, Ariz., Nezar Alsai, owner of the independent Blue Diamond Fuel, says customers were screaming at him Thursday about the $3.09 price of regular.
"They say, 'Shame on you! You're taking advantage of the situation,' but I'm not," Alsai says, whipping out the latest fuel bill from his supplier, which shows he is paying $3 a gallon for regular.
Alsai expects the wholesaler wants $3.10 a gallon for the next load, but he's holding out. "I am waiting for the price to drop. I expect I will run out of gas and don't know what to do," he adds.
AP: Katrina's Wrath Hits Holiday Drivers.
When the station did get a shipment of gas on Saturday, a day after running out, it asked only for regular gasoline because not many people were buying mid-grade and premium blends, Neuhart said. The station, which was charging $3.09 a gallon for regular, also was limiting drivers to 10 gallons per vehicle.
One driver, Phillip Craig, said he had had been trying to hold off until prices fell. "The only reason I came here today was because my wife noticed it was $2.89 on her way home and told me to stop and fill up," he said.
At a Marathon gas station near downtown Orlando, Fla., the pumps were vacant Saturday. Plastic bags covered all but a few, $3.19-a-gallon premium pumps at the station, where owner Bibi Razak usually sells 1,200 gallons daily.
"It's definitely hurting business," she said, pointing to her food and drink displays. "No one's coming here to buy the gas, so they don't come here for anything else."
Friday, September 02, 2005
Ask not what your country can do for you..
Ask: "How many shares of Canadian Natural Resources can I afford?"
There's definitely a case to be made here for buying Canadian energy stocks of all sorts [aka Operation Alberta Freedom], certainly before the Chinese get a hold of them, maybe even before the Canadians figure out what happened. [Canadian readers: I'm kidding. Chinese readers: I'm not kidding.] I'm not buying them right now, I've actually got a good bit already, but at some point if they fall in price, I may end up buying even more.
EIA: Hurricane Katrina's Impact on the U.S. Oil and Natural Gas Markets
According to the Minerals Management Service (MMS), as of 11:30 Central Time September 1, Gulf of Mexico oil production was reduced by over 1.356 million barrels per day as a result of Hurricane Katrina, equivalent to 90.43 percent of daily Gulf of Mexico oil production (which is 1.5 million barrels per day). The MMS also reported that 7.866 billion cubic feet per day of natural gas production was shut in, equivalent to 78.66 percent of daily Gulf of Mexico natural gas production (which is 10 billion cubic feet per day).
MarketWatch: Gulf oil sector makes scant headway. Shattered infrastructure spells lengthy recovery
Quotes:
Four days after Hurricane Katrina tore through the heart of the Gulf Coast oil industry, most of the region's refineries remain shut and its offshore platforms unmanned, raising fears of fuel shortages and keeping energy prices at record levels.
Shockwaves from the outages are rattling commodities markets, manufacturers, airlines and consumers, with many motorists facing $3-a-gallon gasoline for the first time. See full story.
The threat of gas lines prompted President Bush to waive a ban on foreign vessels carrying cargoes between U.S. ports. He said the move would allow foreign-flag ships to join an overstretched U.S. tanker fleet rushing gasoline to regional markets running low on supplies, due to pipeline outages in the South.
At the same time, Bush asked Americans to avoid unnecessary gasoline purchases until the country gets through what he called a "temporary disruption" to the nation's fuel supply.
How long the disruption lasts hinges on how quickly oil companies can bring back the thousands of offshore wells shut by Katrina.
You know you're ^&^#%# when Micheal Lynch gets negative. Some sort of good news at the end.
Bloomberg: Gasoline Rises for a Fourth Day as Katrina Shuts Refineries.
Quotes:
``Gasoline supplies are going to be real tight for a long time,'' said Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts. ``All you need is a little hoarding to cause regional shortages. This is what we went through in the 1970s when motorists rushed to filling stations and filled tanks because they feared supplies would run out.''
``Nothing can stop the average pump price from passing $3 a gallon in the next few days,'' Lynch said. ``At some point you will see a big drop in demand.''
Waiting for Refineries
``We have to wait for the refineries to come back on line, which will take a couple weeks,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte. ``We're hearing a lot about the importance of getting the power going, but that isn't the only problem we will have reopening the refineries. Homes throughout the region are destroyed and workers need someplace to live.''
September typically is the most active month in the June- through-November Atlantic Basin hurricane season.
The U.S. is vulnerable to hurricanes because so many of ``our refineries are in one geographical area,'' said Matthew Simmons, chief executive of Simmons & Co., a private investment bank in Houston for the oil and gas industry. ``We shoved it all into Texas and Louisiana. We put the heart of the industry in the middle of hurricane alley.''
Last year prices rose after Hurricane Ivan destroyed platforms and closed refineries when it struck the Gulf coast on Sept. 16.
``Even another tropical storm could set the reconstruction back for months,'' Simmons said.
Profit Margin
The profit margin for turning a barrel of crude oil into heating oil and gasoline is $28.761, based on futures prices in New York. That has more than doubled from Aug. 26 and is five times higher than a year ago.
``U.S. prices are sending a signal to every refinery in the world,'' said Bill O'Grady, assistant director of market analysis at A.G. Edwards & Sons in St. Louis. ``Gasoline imports are going to surge in the weeks ahead.''
BP Plc and Morgan Stanley are among companies planning to ship European gasoline to the U.S. As many as 10 tankers were booked this week to transport 363,000 metric tons from Europe to the U.S., according to five shipbrokers. The total would equal about 130 million gallons, enough to fill 5 million Chevrolet Tahoe trucks. Other companies hiring ships include Chevron Corp. and ConocoPhillips, the brokers said.
PS. Ask also: "How much can I afford to give to people who have suffered a devasting blow?" That's the nice thing about making money, you can be generous.
There's definitely a case to be made here for buying Canadian energy stocks of all sorts [aka Operation Alberta Freedom], certainly before the Chinese get a hold of them, maybe even before the Canadians figure out what happened. [Canadian readers: I'm kidding. Chinese readers: I'm not kidding.] I'm not buying them right now, I've actually got a good bit already, but at some point if they fall in price, I may end up buying even more.
EIA: Hurricane Katrina's Impact on the U.S. Oil and Natural Gas Markets
According to the Minerals Management Service (MMS), as of 11:30 Central Time September 1, Gulf of Mexico oil production was reduced by over 1.356 million barrels per day as a result of Hurricane Katrina, equivalent to 90.43 percent of daily Gulf of Mexico oil production (which is 1.5 million barrels per day). The MMS also reported that 7.866 billion cubic feet per day of natural gas production was shut in, equivalent to 78.66 percent of daily Gulf of Mexico natural gas production (which is 10 billion cubic feet per day).
MarketWatch: Gulf oil sector makes scant headway. Shattered infrastructure spells lengthy recovery
Quotes:
Four days after Hurricane Katrina tore through the heart of the Gulf Coast oil industry, most of the region's refineries remain shut and its offshore platforms unmanned, raising fears of fuel shortages and keeping energy prices at record levels.
Shockwaves from the outages are rattling commodities markets, manufacturers, airlines and consumers, with many motorists facing $3-a-gallon gasoline for the first time. See full story.
The threat of gas lines prompted President Bush to waive a ban on foreign vessels carrying cargoes between U.S. ports. He said the move would allow foreign-flag ships to join an overstretched U.S. tanker fleet rushing gasoline to regional markets running low on supplies, due to pipeline outages in the South.
At the same time, Bush asked Americans to avoid unnecessary gasoline purchases until the country gets through what he called a "temporary disruption" to the nation's fuel supply.
How long the disruption lasts hinges on how quickly oil companies can bring back the thousands of offshore wells shut by Katrina.
You know you're ^&^#%# when Micheal Lynch gets negative. Some sort of good news at the end.
Bloomberg: Gasoline Rises for a Fourth Day as Katrina Shuts Refineries.
Quotes:
``Gasoline supplies are going to be real tight for a long time,'' said Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Massachusetts. ``All you need is a little hoarding to cause regional shortages. This is what we went through in the 1970s when motorists rushed to filling stations and filled tanks because they feared supplies would run out.''
``Nothing can stop the average pump price from passing $3 a gallon in the next few days,'' Lynch said. ``At some point you will see a big drop in demand.''
Waiting for Refineries
``We have to wait for the refineries to come back on line, which will take a couple weeks,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte. ``We're hearing a lot about the importance of getting the power going, but that isn't the only problem we will have reopening the refineries. Homes throughout the region are destroyed and workers need someplace to live.''
September typically is the most active month in the June- through-November Atlantic Basin hurricane season.
The U.S. is vulnerable to hurricanes because so many of ``our refineries are in one geographical area,'' said Matthew Simmons, chief executive of Simmons & Co., a private investment bank in Houston for the oil and gas industry. ``We shoved it all into Texas and Louisiana. We put the heart of the industry in the middle of hurricane alley.''
Last year prices rose after Hurricane Ivan destroyed platforms and closed refineries when it struck the Gulf coast on Sept. 16.
``Even another tropical storm could set the reconstruction back for months,'' Simmons said.
Profit Margin
The profit margin for turning a barrel of crude oil into heating oil and gasoline is $28.761, based on futures prices in New York. That has more than doubled from Aug. 26 and is five times higher than a year ago.
``U.S. prices are sending a signal to every refinery in the world,'' said Bill O'Grady, assistant director of market analysis at A.G. Edwards & Sons in St. Louis. ``Gasoline imports are going to surge in the weeks ahead.''
BP Plc and Morgan Stanley are among companies planning to ship European gasoline to the U.S. As many as 10 tankers were booked this week to transport 363,000 metric tons from Europe to the U.S., according to five shipbrokers. The total would equal about 130 million gallons, enough to fill 5 million Chevrolet Tahoe trucks. Other companies hiring ships include Chevron Corp. and ConocoPhillips, the brokers said.
PS. Ask also: "How much can I afford to give to people who have suffered a devasting blow?" That's the nice thing about making money, you can be generous.
All this, and a great beer too.
Tim Guinness of Guinness Atkinson Global Energy Fund on Bloomberg TV this morning.
His comments:
- On any basis, $60 oil, $70 oil, or $80 oil, he believes oil stocks are still cheap as oil stocks are priced as if the long run price of oil will be $42.
- If oil prices were to stay in the range of $50 - $60, he sees 30-50% upside in oil stocks over the next 18 to 24 months.
- He believes there is a possibility oil prices could go to $80 - $85 and stay there for a long time, in which case he believes oil stocks have an upside of 200% if investors are convinced this is the long run price. This will take longer.
- He likes the integrated oils now, particularly Chevron, which he believes is the best value, with a 9x pe. Exxon, for comparison, is at 12x.
- He also like oil sands stocks, particularly Canadian Natural Resources and Opti Canada. If prices stay at these levels, he believes these stocks will be 'cash waterfalls' for 50-70 years.
[Note: CNQ and Opti Canada are getting highlighted all over the place. Opti has been mentioned by Peter Thiel, Boone Pickens, Donald Coxe and now Tim Guinness.]
His comments:
- On any basis, $60 oil, $70 oil, or $80 oil, he believes oil stocks are still cheap as oil stocks are priced as if the long run price of oil will be $42.
- If oil prices were to stay in the range of $50 - $60, he sees 30-50% upside in oil stocks over the next 18 to 24 months.
- He believes there is a possibility oil prices could go to $80 - $85 and stay there for a long time, in which case he believes oil stocks have an upside of 200% if investors are convinced this is the long run price. This will take longer.
- He likes the integrated oils now, particularly Chevron, which he believes is the best value, with a 9x pe. Exxon, for comparison, is at 12x.
- He also like oil sands stocks, particularly Canadian Natural Resources and Opti Canada. If prices stay at these levels, he believes these stocks will be 'cash waterfalls' for 50-70 years.
[Note: CNQ and Opti Canada are getting highlighted all over the place. Opti has been mentioned by Peter Thiel, Boone Pickens, Donald Coxe and now Tim Guinness.]
Thursday, September 01, 2005
Peter Thiel Endorsing Operation Alberta Freedom.
Looks like a young Rumsfeld, doesn't he? Peter Thiel's fund at Clarium Capital is up 53% year to date and now at $1 billion. (I believe it was $250 million early in the year, then $400 million a few months ago. Ah, it's good to be the king..)
MarketWatch: Google, $100 oil, and housing bubbles. Video too.
Warning: Don't read this if you've just bought a home.
MarketWatch: Google, $100 oil, and housing bubbles. Video too.
Warning: Don't read this if you've just bought a home.
Wednesday, August 31, 2005
A Shock to the System.
I have to go with my gut, and my gut says we've hit the tipping point, and we're about to go through a sea change as a result of this hurricane and the aftermath.
The effects are obviously devastating to New Orleans and the surrounding areas, but the shock seems to be spreading very quickly.
Gas prices are spiraling out of control. There's talk of shortages. That SUV is looking like a frightening liability. People are feeling vulnerable.
Are recessions about jobs and income, or are they about psychology? I think they're about psychology, and I think that may be running off the tracks.
I don't think this one will be a short, sharp one, like 2001, rather a more protracted shift of attitudes, a subtle belt tightening, a sobriety in spending habits.
Just one man's opinion..
The effects are obviously devastating to New Orleans and the surrounding areas, but the shock seems to be spreading very quickly.
Gas prices are spiraling out of control. There's talk of shortages. That SUV is looking like a frightening liability. People are feeling vulnerable.
Are recessions about jobs and income, or are they about psychology? I think they're about psychology, and I think that may be running off the tracks.
I don't think this one will be a short, sharp one, like 2001, rather a more protracted shift of attitudes, a subtle belt tightening, a sobriety in spending habits.
Just one man's opinion..
Tuesday, August 30, 2005
Katrina: The Oil Storm?
Drudge Report: Gas Scare Hits Atlanta.
Quotes:
Metro Atlanta drivers are facing the possibility of paying considerably more than $3 a gallon for gas by Labor Day -- if they can get it at all, The Atlanta Journal-Constitution is reporting Wednesday.
The two pipelines that bring gasoline and jet fuel to the region are down -- powerless to pump as Hurricane Katrina wreaked havoc on electrical infrastructure.
The metro Atlanta region generally has about a 10-day supply of gasoline in inventory, said BP spokesman Michael Kumpf. The pipelines have been down for two days.
Alpharetta, Ga.-based Colonial Pipeline Co., cut off from its suppliers on the Gulf Coast, is now pumping gas from huge storage tanks, many in Powder Springs, Ga. Whether electric power can be restored to the pipeline pumps before supplies run out is "the great uncertainty ... that hangs over all of us," said Daniel Moenter, a spokesman for Marathon Ashland Petroleum, a major supplier of metro Atlanta's fuel.
MarketWatch: Asia markets mixed; crude oil weighs.
Quotes:
In U.S. energy markets, unleaded-gasoline futures jumped more than 20% Tuesday to an all-time U.S. closing high as traders assessed damage in the Gulf of Mexico from Katrina.
One analyst characterized trading in the spot market as "pure panic."
Supply concerns also boosted crude futures to a new record of $70.85 a barrel, while natural-gas prices rallied nearly 5%.
"There is clear desperation among physical players actually looking for wet barrels of gasoline, and their desperation is leading to eye-popping premiums above gasoline futures," said Tom Kloza, chief oil analyst at the Oil Price Information Service.
"The panic is greater than anything I have seen since the Iranian Revolution," he said. In most places, gasoline prices will be "north of $3 a gallon," he said. Read the full story on gasoline.
Unleaded gasoline for September delivery traded as high as $2.50 a gallon on the New York Mercantile Exchange. It closed at $2.4745, up 41.39 cents, or 20.1%.
NY Times: Carriers Are Stricken by Cancellations and Lack of Fuel.
Quotes:
The airline industry felt the brunt of Hurricane Katrina yesterday, with some airports running low on jet fuel and carriers canceling hundreds of flights. Meanwhile, Wall Street feared that the financial problems of the sickest airlines could grow worse.
The industry's trade group, the Air Transport Association, said the nation's supply of jet fuel had been cut 13 percent because of damage to refineries on the Gulf Coast.
The association arranged for supplies of jet fuel to be shipped by air tanker to airports in Charlotte, N.C., and Fort Myers and West Palm Beach in Florida, where supplies had dwindled, the group's chief economist, John Heimlich, said yesterday.
The group also planned to send jet fuel by tanker truck as well as plane to other airports, Mr. Heimlich said. Of particular concern are supplies at two big airports -Hartsfield, serving Atlanta, and Dulles, serving Washington. Both airports generally rely on supplies from refineries in Louisiana and in Memphis.
MarketWatch: Assessing Katrina's long-term impact.
Quotes:
If disruptions in Gulf energy supplies are limited, retail gasoline prices could top $3 a gallon for a couple of months, said Nariman Behravesh, chief economist for Global Insight. High energy prices would likely cut consumption and knock 0.3 to 0.5 percentage points off U.S. gross domestic product.
"We are not at the worst-case scenario," Behravesh told MarketWatch. "But we are moving in that direction" as companies assess the damage to their facilities.
In a worst-case scenario, the storm could shut down deliveries of as much as 25% of U.S. energy needs for several months.
In that case, gasoline prices would average $3.50 a gallon for the next four to six months, Behravesh said, cutting U.S. growth to zero in the fourth quarter.
The key unknown is how much damage petroleum refineries suffered. The U.S. could conceivably import more crude petroleum to replace Gulf production, but it's almost impossible to replace lost refinery capacity.
Americans could be swimming in crude, but wouldn't have a drop of gasoline to run their cars.
Louisiana, Mississippi and Alabama are home to 24 refineries with daily capacity of 3.3 million barrels, said Michael Helmar, an economist for Economy.com. Sixteen of the refineries are on the coast.
The other major unknown is the condition of crucial ports to bring in imported petroleum and oil and gas produced in the Gulf.
The vital Louisiana Offshore Oil Port, the only U.S. port that can handle supertankers, apparently escaped major damage, the manager of the port told Dow Jones NewsWires.
The major onshore port at Port Fourchon, also escaped major damage, according to Dow Jones NewsWires. The port is the base for oil service operations for oil rigs in the Gulf.
However, the channel leading to the port may have suffered severe silting from the storm surge. Dredging the channel could take weeks or longer. There could be a "very large impact to the energy supply," if the port can't reopen, port manager Ted Falgout told CNBC.
The Henry Hub, the junction of several pipelines in central Louisiana that serves as the pricing point for natural gas, reopened Monday afternoon. The condition of pipelines leading to the Henry Hub from the coast is not known.
Quotes:
Metro Atlanta drivers are facing the possibility of paying considerably more than $3 a gallon for gas by Labor Day -- if they can get it at all, The Atlanta Journal-Constitution is reporting Wednesday.
The two pipelines that bring gasoline and jet fuel to the region are down -- powerless to pump as Hurricane Katrina wreaked havoc on electrical infrastructure.
The metro Atlanta region generally has about a 10-day supply of gasoline in inventory, said BP spokesman Michael Kumpf. The pipelines have been down for two days.
Alpharetta, Ga.-based Colonial Pipeline Co., cut off from its suppliers on the Gulf Coast, is now pumping gas from huge storage tanks, many in Powder Springs, Ga. Whether electric power can be restored to the pipeline pumps before supplies run out is "the great uncertainty ... that hangs over all of us," said Daniel Moenter, a spokesman for Marathon Ashland Petroleum, a major supplier of metro Atlanta's fuel.
MarketWatch: Asia markets mixed; crude oil weighs.
Quotes:
In U.S. energy markets, unleaded-gasoline futures jumped more than 20% Tuesday to an all-time U.S. closing high as traders assessed damage in the Gulf of Mexico from Katrina.
One analyst characterized trading in the spot market as "pure panic."
Supply concerns also boosted crude futures to a new record of $70.85 a barrel, while natural-gas prices rallied nearly 5%.
"There is clear desperation among physical players actually looking for wet barrels of gasoline, and their desperation is leading to eye-popping premiums above gasoline futures," said Tom Kloza, chief oil analyst at the Oil Price Information Service.
"The panic is greater than anything I have seen since the Iranian Revolution," he said. In most places, gasoline prices will be "north of $3 a gallon," he said. Read the full story on gasoline.
Unleaded gasoline for September delivery traded as high as $2.50 a gallon on the New York Mercantile Exchange. It closed at $2.4745, up 41.39 cents, or 20.1%.
NY Times: Carriers Are Stricken by Cancellations and Lack of Fuel.
Quotes:
The airline industry felt the brunt of Hurricane Katrina yesterday, with some airports running low on jet fuel and carriers canceling hundreds of flights. Meanwhile, Wall Street feared that the financial problems of the sickest airlines could grow worse.
The industry's trade group, the Air Transport Association, said the nation's supply of jet fuel had been cut 13 percent because of damage to refineries on the Gulf Coast.
The association arranged for supplies of jet fuel to be shipped by air tanker to airports in Charlotte, N.C., and Fort Myers and West Palm Beach in Florida, where supplies had dwindled, the group's chief economist, John Heimlich, said yesterday.
The group also planned to send jet fuel by tanker truck as well as plane to other airports, Mr. Heimlich said. Of particular concern are supplies at two big airports -Hartsfield, serving Atlanta, and Dulles, serving Washington. Both airports generally rely on supplies from refineries in Louisiana and in Memphis.
MarketWatch: Assessing Katrina's long-term impact.
Quotes:
If disruptions in Gulf energy supplies are limited, retail gasoline prices could top $3 a gallon for a couple of months, said Nariman Behravesh, chief economist for Global Insight. High energy prices would likely cut consumption and knock 0.3 to 0.5 percentage points off U.S. gross domestic product.
"We are not at the worst-case scenario," Behravesh told MarketWatch. "But we are moving in that direction" as companies assess the damage to their facilities.
In a worst-case scenario, the storm could shut down deliveries of as much as 25% of U.S. energy needs for several months.
In that case, gasoline prices would average $3.50 a gallon for the next four to six months, Behravesh said, cutting U.S. growth to zero in the fourth quarter.
The key unknown is how much damage petroleum refineries suffered. The U.S. could conceivably import more crude petroleum to replace Gulf production, but it's almost impossible to replace lost refinery capacity.
Americans could be swimming in crude, but wouldn't have a drop of gasoline to run their cars.
Louisiana, Mississippi and Alabama are home to 24 refineries with daily capacity of 3.3 million barrels, said Michael Helmar, an economist for Economy.com. Sixteen of the refineries are on the coast.
The other major unknown is the condition of crucial ports to bring in imported petroleum and oil and gas produced in the Gulf.
The vital Louisiana Offshore Oil Port, the only U.S. port that can handle supertankers, apparently escaped major damage, the manager of the port told Dow Jones NewsWires.
The major onshore port at Port Fourchon, also escaped major damage, according to Dow Jones NewsWires. The port is the base for oil service operations for oil rigs in the Gulf.
However, the channel leading to the port may have suffered severe silting from the storm surge. Dredging the channel could take weeks or longer. There could be a "very large impact to the energy supply," if the port can't reopen, port manager Ted Falgout told CNBC.
The Henry Hub, the junction of several pipelines in central Louisiana that serves as the pricing point for natural gas, reopened Monday afternoon. The condition of pipelines leading to the Henry Hub from the coast is not known.
Monday, August 29, 2005
Start Counting.
WSJ: Storm Jolts Energy Markets As U.S. Output Takes Blow. [$]
Quotes & Irony:
Houston-based Citgo Petroleum Corp., owned by Petroleos de Venezuela SA, says it needs 500,000 barrels of crude oil from the Strategic Petroleum Reserve to keep its Lake Charles, La., refinery operational.
"The request was made to ensure the refinery operates normally," says Citgo spokesman Fernando Garay. The facility -- located 200 miles west of New Orleans and far from the brunt of Katrina -- is having trouble getting enough oil to run through its refinery, said Mr. Garay. He said the shut down of two major oil pipelines, including one that connects to the Louisiana Offshore Oil Port, is the problem.
In recent years, new and hugely expensive exploration and production projects have turned the gulf's waters into a crucial source of critically needed oil and gas -- and a potential choke point when a major hurricane spins through. Energy markets depend on continuous production from the gulf -- there's simply not enough inventory to keep the oil sector going for more than 10 days without new feeds of crude oil and gas.
Katrina's potential body blow to the industry comes as global crude-oil prices already have surged in recent weeks on concerns that spare crude production capacity is so thin that any disruption could drive prices up. "You've only got 1.5 million barrels a day of spare capacity in the world and it's gone," says Paul Sankey, an energy analyst for Deutsche Bank.
Much of the anxiety was because hurricane damage is often so unpredictable and difficult to assess quickly. When Hurricane Ivan, a slightly weaker storm, passed slightly to the east of the heart of offshore production last September, initial reports were encouraging. But the hurricane triggered hundreds of underwater mudslides that wreaked havoc on the pipeline system and took months to repair. Chevron Corp.'s Petronius, a $500 million platform tower that is taller than the proposed Freedom Tower in New York, appeared to suffer minimal damage from a helicopter pad that smashed into its sleeping quarters. But the tower wasn't running until March, nearly six months after the storm.
Quotes & Irony:
Houston-based Citgo Petroleum Corp., owned by Petroleos de Venezuela SA, says it needs 500,000 barrels of crude oil from the Strategic Petroleum Reserve to keep its Lake Charles, La., refinery operational.
"The request was made to ensure the refinery operates normally," says Citgo spokesman Fernando Garay. The facility -- located 200 miles west of New Orleans and far from the brunt of Katrina -- is having trouble getting enough oil to run through its refinery, said Mr. Garay. He said the shut down of two major oil pipelines, including one that connects to the Louisiana Offshore Oil Port, is the problem.
In recent years, new and hugely expensive exploration and production projects have turned the gulf's waters into a crucial source of critically needed oil and gas -- and a potential choke point when a major hurricane spins through. Energy markets depend on continuous production from the gulf -- there's simply not enough inventory to keep the oil sector going for more than 10 days without new feeds of crude oil and gas.
Katrina's potential body blow to the industry comes as global crude-oil prices already have surged in recent weeks on concerns that spare crude production capacity is so thin that any disruption could drive prices up. "You've only got 1.5 million barrels a day of spare capacity in the world and it's gone," says Paul Sankey, an energy analyst for Deutsche Bank.
Much of the anxiety was because hurricane damage is often so unpredictable and difficult to assess quickly. When Hurricane Ivan, a slightly weaker storm, passed slightly to the east of the heart of offshore production last September, initial reports were encouraging. But the hurricane triggered hundreds of underwater mudslides that wreaked havoc on the pipeline system and took months to repair. Chevron Corp.'s Petronius, a $500 million platform tower that is taller than the proposed Freedom Tower in New York, appeared to suffer minimal damage from a helicopter pad that smashed into its sleeping quarters. But the tower wasn't running until March, nearly six months after the storm.
Saturday, August 27, 2005
Force Majeure.
Defined.
Illustrated.
A lot of people are going to be watching this track.
MarketWatch: Hurricane threatens Gulf oil production.
Quotes:
Hurricane Katrina strengthened Saturday and set a course directly for major oil and gas production fields in the Gulf of Mexico and New Orleans.
The National Hurricane Center now expects the year's fourth hurricane to make a second landfall near the major oil and gas hub at Port Fourchon, La., sometime early Monday, and then continue inland to New Orleans, which could be devastated by a direct hit by a major storm.
"Right now they are predicting the storm in the worst-case scenario for us," said Ted Falgout, director of Port Fourchon, according to Dow Jones Newswires. "It's not going to be a pretty sight if it goes as projected."
[Did we tick somebody off? Is Pat Robertson in New Orleans? I digress..]
Illustrated.
A lot of people are going to be watching this track.
MarketWatch: Hurricane threatens Gulf oil production.
Quotes:
Hurricane Katrina strengthened Saturday and set a course directly for major oil and gas production fields in the Gulf of Mexico and New Orleans.
The National Hurricane Center now expects the year's fourth hurricane to make a second landfall near the major oil and gas hub at Port Fourchon, La., sometime early Monday, and then continue inland to New Orleans, which could be devastated by a direct hit by a major storm.
"Right now they are predicting the storm in the worst-case scenario for us," said Ted Falgout, director of Port Fourchon, according to Dow Jones Newswires. "It's not going to be a pretty sight if it goes as projected."
[Did we tick somebody off? Is Pat Robertson in New Orleans? I digress..]
Thursday, August 25, 2005
Michael Economides on CNBC 08-25-05.
Prior appearance on March 14.
Economides is joining the oil is going to $100 club.
He stated three primary reasons.
1.) Russia - "First Yukos was destroyed and taken over by Rosneft, now you have Sibneft, the fourth largest, being taken over by Gazprom, so 50% of Russian oil production is being re-Sovietized, and the Soviet Union did not have a very good track record in oil production."
2.) Chavez - "Even before the assassination insinuations he was militant enough, and I'm sure he's not going to be a happy camper for us."
3.) China - "The yuan has been re-valued and it will make it a lot easier for China to buy oil. They have gone beserk already last year, look for China to increase it's energy demands and oil purchases significantly."
"All of these things are a hurricane level 5, perfect storm to increase the price of oil towards $100."
On OPEC: "OPEC is not very relevant; inadvertently OPEC is not relevant because it has no excess capacity to manipulate the market. If anything, every time the price of oil goes up, OPEC's exploration and production budgets go down, because what is their incentive? Make no mistake: they like $100 oil."
On whether Americans are being gouged: "No, we are not. Because we don't really have an oil policy in this country. The recent energy bill was a bloody disaster when it comes to that. You cannot talk about energy independence unless you address the transportation issue. It doesn't matter how many degrees you change your thermostat and air conditioning for example, it won't change the oil imports, because you don't use any oil for power generation. There are a lot of facts that people just simply avoid talking about."
"It's the first time ever that we have reached a real parity between supply and demand, so any one of these little events that we are talking about, have an amazing effect on the market."
Economides is joining the oil is going to $100 club.
He stated three primary reasons.
1.) Russia - "First Yukos was destroyed and taken over by Rosneft, now you have Sibneft, the fourth largest, being taken over by Gazprom, so 50% of Russian oil production is being re-Sovietized, and the Soviet Union did not have a very good track record in oil production."
2.) Chavez - "Even before the assassination insinuations he was militant enough, and I'm sure he's not going to be a happy camper for us."
3.) China - "The yuan has been re-valued and it will make it a lot easier for China to buy oil. They have gone beserk already last year, look for China to increase it's energy demands and oil purchases significantly."
"All of these things are a hurricane level 5, perfect storm to increase the price of oil towards $100."
On OPEC: "OPEC is not very relevant; inadvertently OPEC is not relevant because it has no excess capacity to manipulate the market. If anything, every time the price of oil goes up, OPEC's exploration and production budgets go down, because what is their incentive? Make no mistake: they like $100 oil."
On whether Americans are being gouged: "No, we are not. Because we don't really have an oil policy in this country. The recent energy bill was a bloody disaster when it comes to that. You cannot talk about energy independence unless you address the transportation issue. It doesn't matter how many degrees you change your thermostat and air conditioning for example, it won't change the oil imports, because you don't use any oil for power generation. There are a lot of facts that people just simply avoid talking about."
"It's the first time ever that we have reached a real parity between supply and demand, so any one of these little events that we are talking about, have an amazing effect on the market."
Wednesday, August 24, 2005
Sayonara Tim Evans.
I've always been mildly entertained by Tim Evans, watching as he railed against the rising price of oil. He was consistently wrong, but I thought I should read his stuff to understand what the counterargument was. Now, unfortunately, I realize he's just not too bright.
Here's the problem:
Hawaii has a price fixing plan for gasoline.
Sounds nice, right, but governments don't produce gas, companies do.
Hawaii has tied it's prices to the mainland, but it's not on the mainland, nor, I believe, does it have it's own oil. Since Hawaii is an island in the middle of nowhere, and not as big a market as New York or Los Angeles, the transportation costs per barrel to Hawaii are higher and the number of competitors serving the market are fewer. So Hawaii puts this plan into place, tying it's prices to markets that are easier for companies to serve.
The fly in the ointment: As oil goes up, the price of transporting it goes up too. And if oil goes up enough so that the margin specified by Hawaii for gasoline over the mainland no longer covers these costs, what happens? The companies might just leave Hawaii a little (or a lot) short, as they focus their resources on more profitable activities. Given the fact that the reason for a large increase in price might be a shortage to begin with, Hawaii might find it has doubled it's bet - and lost out big time.
The only idiots who don't seem to understand this are legislators and Tim Evans.
Quote:
"The fact that their pricing mechanism is market-related minimizes the risk that a physical shortage would arise," said Tim Evans, senior oil analyst at IFR Energy Services in New York.
"They are attempting to go about this in an intelligent fashion," he added.
Here's the problem:
Hawaii has a price fixing plan for gasoline.
Sounds nice, right, but governments don't produce gas, companies do.
Hawaii has tied it's prices to the mainland, but it's not on the mainland, nor, I believe, does it have it's own oil. Since Hawaii is an island in the middle of nowhere, and not as big a market as New York or Los Angeles, the transportation costs per barrel to Hawaii are higher and the number of competitors serving the market are fewer. So Hawaii puts this plan into place, tying it's prices to markets that are easier for companies to serve.
The fly in the ointment: As oil goes up, the price of transporting it goes up too. And if oil goes up enough so that the margin specified by Hawaii for gasoline over the mainland no longer covers these costs, what happens? The companies might just leave Hawaii a little (or a lot) short, as they focus their resources on more profitable activities. Given the fact that the reason for a large increase in price might be a shortage to begin with, Hawaii might find it has doubled it's bet - and lost out big time.
The only idiots who don't seem to understand this are legislators and Tim Evans.
Quote:
"The fact that their pricing mechanism is market-related minimizes the risk that a physical shortage would arise," said Tim Evans, senior oil analyst at IFR Energy Services in New York.
"They are attempting to go about this in an intelligent fashion," he added.
Tuesday, August 23, 2005
BMO Nesbitt Burns on Suncor.
BMO Nesbitt Burns report on Suncor (SU), includes on page 6 their price targets for several major oil sands firms.
It appears, based on the comments of the gentleman who sent this out and also the footnotes, that these price targets are based on $40 oil.
It appears, based on the comments of the gentleman who sent this out and also the footnotes, that these price targets are based on $40 oil.
Sunday, August 21, 2005
Gentlemen: Stop your engines.
On NBC News, the CEO of Autotrader.com Chip Perry, saying that they now have more than 1 million used SUVs listed for sale, which is up between 40 and 50% versus last year.
Saturday, August 20, 2005
Don't rush the monkey, and you'll get a better dance.
[Must ... resist ... temptation...]
Well . . .
I'm going to refrain from making any comments on the above quote [we have standards here after all - and I'd like to keep it family friendly], which Boone Pickens passed on to CNBC's rather attractive Melissa Francis as words of wisdom. I'm sure he was referring to investing, but boy, oh boy.. Where's Joe Kernen when you need him?
Anyway, here's a video clip from CNBC of Boone Pickens (his mother didn't like the 'T', apparently) with him highlighting his favorite stocks. He likes.. coal, oil sands, and companies that don't have to buy reserves.
Go to MSN Video, delete all the clips it loads automatically, and play the one labeled "Pickens Bets on $75 Oil". They do expire these eventually, so I may well post some notes later. You might also have to search for it via the Video Search box on the left, try "Boone Pickens".
There's also one "A Day in the Life Of Boone Pickens", which is fairly useless. I see more of this stuff and I'm selling everything.
Well . . .
I'm going to refrain from making any comments on the above quote [we have standards here after all - and I'd like to keep it family friendly], which Boone Pickens passed on to CNBC's rather attractive Melissa Francis as words of wisdom. I'm sure he was referring to investing, but boy, oh boy.. Where's Joe Kernen when you need him?
Anyway, here's a video clip from CNBC of Boone Pickens (his mother didn't like the 'T', apparently) with him highlighting his favorite stocks. He likes.. coal, oil sands, and companies that don't have to buy reserves.
Go to MSN Video, delete all the clips it loads automatically, and play the one labeled "Pickens Bets on $75 Oil". They do expire these eventually, so I may well post some notes later. You might also have to search for it via the Video Search box on the left, try "Boone Pickens".
There's also one "A Day in the Life Of Boone Pickens", which is fairly useless. I see more of this stuff and I'm selling everything.
Thursday, August 18, 2005
So you wanna be a Rock and Roll Star Oil and Gas Investor?
Funny how sentiment can turn in an instant, eh? I suggest either dollar cost averaging or using a technical trading discipline to keep yourself out of trouble. If we're really in a long term bull market for energy stocks due to Peak Oil, then your main objective is to avoid losing money getting caught up in the short term spikes and corrections that happen along the way.
So, let's see..
Goldman Sachs raises their oil price forecast. Note that this is another part of GS, not the 'super spike' group.
Interesting view on why, quotes from Reuters article above:
Goldman Sachs on Thursday raised its U.S. oil price forecast for the rest of this year by $13.50 to $67 a barrel as demand outstrips supply and the industry sits on billions of dollars it could invest in finding new oil.
Goldman Sachs blamed the lack of investment on uncertainties over cost.
"With the potential for costs to fall or a competing technology to prove less expensive -- driving long-term prices lower and making higher-cost investments unprofitable -- investors are motivated to delay investment and need a premium in long-dated prices to compensate for the increased investment risk," it said.
Among the factors that have added to the cost uncertainty are barriers to accessing reserves in oil-rich nations and the increasing complexity of projects as more easily extractable oil runs out.
Pulled off one of my favorite stock market focused sites, Alchemy of Trading:
"Dougie Kass, over on our sister sight SI, is forecasting the end for oil. While not his first forecast for the top, he might be correct this time. Oil is due for a pullback.However, my favorite large cap integrated stock is still too cheap to sell. I know, the stocks will follow the commodity. Blah, blah, blah. If only sound bite investing were that simple.
That stock discounts oil in the high $30's. While this is the highest implicit price for oil since the rally began, the spread between the spot price and the implied price is wider than ever! Get that? $62 per barrel spot price-$39 implied price=$23 spread. If you want to short oil, you should short the commodity, not cheap oil stocks!
When oil gets to $40, I will begin to worry. All the hand wringing over what to do with the stocks is misplaced in my opinion. Didn't these same calls about cyclicals occur last spring at the bottom?" -- Bob Marcin, Realmoney.com, August 18, 2005
Original quote is from thestreet.com, and for reference, I believe Bob Marcin's favorite oil is COP.
And from Chuck Jaffe of Marketwatch: "How to tell cheap gas is gone for good."
Quotes:
Chatting with a friend at the checkout of the nearest gas station last weekend, we couldn't help but notice the banner headline on the August 22 issue of the Weekly World News. It reads "No More Oil! World supply will be gone in six months." The subheads read "Economy will collapse!" and "Millions will starve!"
The big concern for consumers should be that this does not appear to be any sort of bubble, or temporary spike. Events -- like the release of oil inventory numbers -- are going to push the market around, and prices at the pump could retreat back to the now lovingly-recalled time at the beginning of the month, but it's hard to find the event that is going to change the trend.
That may actually be good news for investors, who are reaping big returns from oil and energy stocks and who want that rally to continue.
If you forget the conspiracy theorists who think the price of crude oil is being entirely manipulated and controlled by hedge funds -- and I find it ironic that the Weekly World News has somehow missed that angle -- and focus on the fundamentals in the industry, you can see why things will stay as they are for awhile.
"By the end of the year, we are going to be consuming everything we produce, and having so little spare capacity to increase production adds to the risk premium that people are willing to pay," says Brian Hicks, manager of U.S. Global Investors Global Resources fund (PSPFX: news, chart, profile) . "The price is representative of the fundamentals of the oil market. ... Near-term, it is possible we could see a retrenchment for a short time, but we're heading into the peak demand period for heating oil, and we are still in the summer driving period and so you just can't expect a significant change in demand right now."
That should ease the mind of investors looking to cash in on energy's continued ride.
Many have been worried that the rally in oil and gas are about to end, and they fear the kind of crash they saw in tech stocks back in 2000, but the situations are distinctly different.
Whatever is happening with energy, it is not a repeat of the Internet stock bubble. Energy companies have real earnings and sales growth, they have proven reserves and are paying dividends, and they are trading at multiples that are normal, rather than in the defying-gravity range. That's no guarantee that the stocks won't get whipsawed, especially if crude prices and energy costs drop dramatically next spring, in the post-winter heating/pre-summer air conditioning demand period.
Says Hicks: "Maybe when the supermarket tabloid is predicting the end of the oil industry, it's the sign of a market top."
I went to the Weekly World News web site [WARNING: NOT OFFICE FRIENDLY.] to check out if perhaps Matt Savinar was quoted in the article, but I couldn't find it. I did find lots of other entertaining items though. [Sorry, it just kinda went with the post title..]
So, let's see..
Goldman Sachs raises their oil price forecast. Note that this is another part of GS, not the 'super spike' group.
Interesting view on why, quotes from Reuters article above:
Goldman Sachs on Thursday raised its U.S. oil price forecast for the rest of this year by $13.50 to $67 a barrel as demand outstrips supply and the industry sits on billions of dollars it could invest in finding new oil.
Goldman Sachs blamed the lack of investment on uncertainties over cost.
"With the potential for costs to fall or a competing technology to prove less expensive -- driving long-term prices lower and making higher-cost investments unprofitable -- investors are motivated to delay investment and need a premium in long-dated prices to compensate for the increased investment risk," it said.
Among the factors that have added to the cost uncertainty are barriers to accessing reserves in oil-rich nations and the increasing complexity of projects as more easily extractable oil runs out.
Pulled off one of my favorite stock market focused sites, Alchemy of Trading:
"Dougie Kass, over on our sister sight SI, is forecasting the end for oil. While not his first forecast for the top, he might be correct this time. Oil is due for a pullback.However, my favorite large cap integrated stock is still too cheap to sell. I know, the stocks will follow the commodity. Blah, blah, blah. If only sound bite investing were that simple.
That stock discounts oil in the high $30's. While this is the highest implicit price for oil since the rally began, the spread between the spot price and the implied price is wider than ever! Get that? $62 per barrel spot price-$39 implied price=$23 spread. If you want to short oil, you should short the commodity, not cheap oil stocks!
When oil gets to $40, I will begin to worry. All the hand wringing over what to do with the stocks is misplaced in my opinion. Didn't these same calls about cyclicals occur last spring at the bottom?" -- Bob Marcin, Realmoney.com, August 18, 2005
Original quote is from thestreet.com, and for reference, I believe Bob Marcin's favorite oil is COP.
And from Chuck Jaffe of Marketwatch: "How to tell cheap gas is gone for good."
Quotes:
Chatting with a friend at the checkout of the nearest gas station last weekend, we couldn't help but notice the banner headline on the August 22 issue of the Weekly World News. It reads "No More Oil! World supply will be gone in six months." The subheads read "Economy will collapse!" and "Millions will starve!"
The big concern for consumers should be that this does not appear to be any sort of bubble, or temporary spike. Events -- like the release of oil inventory numbers -- are going to push the market around, and prices at the pump could retreat back to the now lovingly-recalled time at the beginning of the month, but it's hard to find the event that is going to change the trend.
That may actually be good news for investors, who are reaping big returns from oil and energy stocks and who want that rally to continue.
If you forget the conspiracy theorists who think the price of crude oil is being entirely manipulated and controlled by hedge funds -- and I find it ironic that the Weekly World News has somehow missed that angle -- and focus on the fundamentals in the industry, you can see why things will stay as they are for awhile.
"By the end of the year, we are going to be consuming everything we produce, and having so little spare capacity to increase production adds to the risk premium that people are willing to pay," says Brian Hicks, manager of U.S. Global Investors Global Resources fund (PSPFX: news, chart, profile) . "The price is representative of the fundamentals of the oil market. ... Near-term, it is possible we could see a retrenchment for a short time, but we're heading into the peak demand period for heating oil, and we are still in the summer driving period and so you just can't expect a significant change in demand right now."
That should ease the mind of investors looking to cash in on energy's continued ride.
Many have been worried that the rally in oil and gas are about to end, and they fear the kind of crash they saw in tech stocks back in 2000, but the situations are distinctly different.
Whatever is happening with energy, it is not a repeat of the Internet stock bubble. Energy companies have real earnings and sales growth, they have proven reserves and are paying dividends, and they are trading at multiples that are normal, rather than in the defying-gravity range. That's no guarantee that the stocks won't get whipsawed, especially if crude prices and energy costs drop dramatically next spring, in the post-winter heating/pre-summer air conditioning demand period.
Says Hicks: "Maybe when the supermarket tabloid is predicting the end of the oil industry, it's the sign of a market top."
I went to the Weekly World News web site [WARNING: NOT OFFICE FRIENDLY.] to check out if perhaps Matt Savinar was quoted in the article, but I couldn't find it. I did find lots of other entertaining items though. [Sorry, it just kinda went with the post title..]
Monday, August 15, 2005
2005: The Day the Music Died?
CAN RUNAWAY ENERGY PRICES BE STOPPED?
Oil spiking. [You need a link?!]
Natural gas spiking and prices look to go higher.
Utility plants have run down supplies of coal, and prices are rising.
IS IT CURTAINS FOR THE CONSUMER?
DVD sales softening?
DVD Player/Recorder sales softening?
[A connection? I dunno. But DVDs are the new impulse items (witness their placement near the register next to the batteries and candy at Target), and sales appear to be weakening.]
WHERE IS BATMAN WHEN GOTHAM NEEDS HIM!?
WAS THE JOKER INVOLVED IN THAT ENERGY BILL!?!
WILL THE BATMOBILE RUN ON BIODIESEL WITH A NEGATIVE EROI!?!?
STAY TUNED!
Oil spiking. [You need a link?!]
Natural gas spiking and prices look to go higher.
Utility plants have run down supplies of coal, and prices are rising.
IS IT CURTAINS FOR THE CONSUMER?
DVD sales softening?
DVD Player/Recorder sales softening?
[A connection? I dunno. But DVDs are the new impulse items (witness their placement near the register next to the batteries and candy at Target), and sales appear to be weakening.]
WHERE IS BATMAN WHEN GOTHAM NEEDS HIM!?
WAS THE JOKER INVOLVED IN THAT ENERGY BILL!?!
WILL THE BATMOBILE RUN ON BIODIESEL WITH A NEGATIVE EROI!?!?
STAY TUNED!
Moneytalk Freak Show.
Man, what a Freak Show on Bob Brinker's Moneytalk radio show this weekend.
I didn't catch all of it, but the parts that I did were mostly about oil, and included appearances by (I kid you not):
- The woman who's brother invented the 100 mile per gallon carburetor that the auto companies bought and are suppressing. (Yeah, yeah, I know, fuel injection and all.. But the woman sounded so sincere.)
- A guy who's boss invented the engine with 2 moving parts that gets 200 miles per gallon. (I forget what happened here, I was only half listening. Was it the neo-cons or the Arab League suppressing this one?)
There were various other solutions to the oil problem, and a guy who asked Bob Brinker if he believed in Peak Oil, to which Bob replied something like "Absolutely!" I found that a rather strange admission, since Bob gives his caller's little advice on oil investments, except for maybe "I wouldn't invest with oil at $65."
Anyway, be advised that we seem to have hit the sentiment tipping point. Moneytalk callers were mostly focused on real estate lately, and now they're talking oil.
Is it the beginning of the end, or the end of the beginning? (And of what? Oil? Real estate?)
I didn't catch all of it, but the parts that I did were mostly about oil, and included appearances by (I kid you not):
- The woman who's brother invented the 100 mile per gallon carburetor that the auto companies bought and are suppressing. (Yeah, yeah, I know, fuel injection and all.. But the woman sounded so sincere.)
- A guy who's boss invented the engine with 2 moving parts that gets 200 miles per gallon. (I forget what happened here, I was only half listening. Was it the neo-cons or the Arab League suppressing this one?)
There were various other solutions to the oil problem, and a guy who asked Bob Brinker if he believed in Peak Oil, to which Bob replied something like "Absolutely!" I found that a rather strange admission, since Bob gives his caller's little advice on oil investments, except for maybe "I wouldn't invest with oil at $65."
Anyway, be advised that we seem to have hit the sentiment tipping point. Moneytalk callers were mostly focused on real estate lately, and now they're talking oil.
Is it the beginning of the end, or the end of the beginning? (And of what? Oil? Real estate?)
Wednesday, August 10, 2005
Who can make oil rise?
Who can make oil rise,
up a buck or two
get the pits a hoppin'
and the shorts in a screw...
The candyman,
Oh the candyman can,
The candyman can 'cause he knows just when
to drop a bomb and make oil jump real good
Who can take a 75 quote,
Wrap it in a sigh?
To hell with the oil inventory report
We're having sweet potato pie!
The candyman?
The candyman can…
The candyman can 'cause he charmed Melissa Francis
and made oil investments look real good…
The Candyman makes
every prediction he bakes up
Satisfying and delicious.
Go ahead and dream those millionaire wishes.
You'll no longer have to wash dishes!
Who can take the futures,
Make 'em start to scream?
Break the backs of shorts and collect up all the cream,
The candyman?
The candyman can, the candyman can…
The candyman can 'cause he mixes it with 'aw shucks'
and makes it all sound real good..
And the oil goes up
'cause the candyman thinks it......s-h-o-u-l-d!
T Boone Pickens predicted $75 oil within a year yesterday to Melissa Francis on CNBC.
His successful predictions so far:
- In 2003, he predicted $28-32 over the next 2 years.
- On May 16th, 2004 he predicted $45 'pretty quick', which it hit in 3 months.
- In July 2004, he predicted $50 before $30.
- On September 29th, 2004, he predicted $60 before $40, and said he didn't think we'd ever go back to $35 again.
Can the streak last?
up a buck or two
get the pits a hoppin'
and the shorts in a screw...
The candyman,
Oh the candyman can,
The candyman can 'cause he knows just when
to drop a bomb and make oil jump real good
Who can take a 75 quote,
Wrap it in a sigh?
To hell with the oil inventory report
We're having sweet potato pie!
The candyman?
The candyman can…
The candyman can 'cause he charmed Melissa Francis
and made oil investments look real good…
The Candyman makes
every prediction he bakes up
Satisfying and delicious.
Go ahead and dream those millionaire wishes.
You'll no longer have to wash dishes!
Who can take the futures,
Make 'em start to scream?
Break the backs of shorts and collect up all the cream,
The candyman?
The candyman can, the candyman can…
The candyman can 'cause he mixes it with 'aw shucks'
and makes it all sound real good..
And the oil goes up
'cause the candyman thinks it......s-h-o-u-l-d!
T Boone Pickens predicted $75 oil within a year yesterday to Melissa Francis on CNBC.
His successful predictions so far:
- In 2003, he predicted $28-32 over the next 2 years.
- On May 16th, 2004 he predicted $45 'pretty quick', which it hit in 3 months.
- In July 2004, he predicted $50 before $30.
- On September 29th, 2004, he predicted $60 before $40, and said he didn't think we'd ever go back to $35 again.
Can the streak last?
P.S. We may already have peaked.
Kenneth Deffeyes has a blurb in his book about how although he predicts a peak for Thanksgiving 2005 (or thereabouts), it's possible we may already have peaked.
Amusingly, if you look on the EIA's website, at page 333 of this PDF document [warning: the document is huge and takes a long time to load], you see some interesting figures:
World primary energy production by source, 1970-2002
Quadrillion btu
Year | Crude Oil | Total
..
1994 | 130.46 | 354.75
1995 | 133.32 | 363.84
1996 | 136.64 | 372.33
1997 | 140.52 | 380.26
1998 | 143.15 | 383.94
1999 | 140.79 | 384.77
2000 | 146.50 | 396.28
2001 | 145.25 | 403.33
2002 | 142.86 | 405.12 - Preliminary estimate
(Total = Coal + Natural Gas + Crude Oil + Natural Gas Liquids + Nuclear Electric + Hydroelectric + Geothermal and other)
Notice anything funny here?
Why is it that crude oil is apparently hitting a ceiling, while the overall total appears to be rising?
When you go look at the original table, you will see the other items broken out and see that the other hydrocarbons are in rising trends, while oil appears to be in a leveling off trend. And the fact that the overall total still rose suggests the crude oil figures might not have been due to economic contraction.
Uh oh.
Amusingly, if you look on the EIA's website, at page 333 of this PDF document [warning: the document is huge and takes a long time to load], you see some interesting figures:
World primary energy production by source, 1970-2002
Quadrillion btu
Year | Crude Oil | Total
..
1994 | 130.46 | 354.75
1995 | 133.32 | 363.84
1996 | 136.64 | 372.33
1997 | 140.52 | 380.26
1998 | 143.15 | 383.94
1999 | 140.79 | 384.77
2000 | 146.50 | 396.28
2001 | 145.25 | 403.33
2002 | 142.86 | 405.12 - Preliminary estimate
(Total = Coal + Natural Gas + Crude Oil + Natural Gas Liquids + Nuclear Electric + Hydroelectric + Geothermal and other)
Notice anything funny here?
Why is it that crude oil is apparently hitting a ceiling, while the overall total appears to be rising?
When you go look at the original table, you will see the other items broken out and see that the other hydrocarbons are in rising trends, while oil appears to be in a leveling off trend. And the fact that the overall total still rose suggests the crude oil figures might not have been due to economic contraction.
Uh oh.
Tuesday, August 09, 2005
Ben Bernanke Ain't Gonna Like This.
Dallas Morning News: Is there a bubble in energy investing?
Quotes:
The idea of regarding energy as a separate portfolio asset began just before I wrote The Coming Generational Storm (MIT Press, 2004) with economist Laurence J. Kotlikoff.
In the book we lay out the liabilities our government is creating for the future with Social Security and Medicare. We suggest those liabilities will be paid for with large amounts of inflation and newly printed money.
We came to the conclusion that energy should be treated as its own asset class because the British thermal unit is the ultimate "currency" of industrial society.
The producers of paper currency are working hard to create a global oversupply, while the producers of BTUs are having difficulty meeting demand and replacing reserves.
Unlike the dot-com bubble, oil companies have real assets, real earnings and solid dividends – and below-market multiples of earnings, book value and cash flow. They look like a cautious, value-oriented investment, which is why I bought shares of many energy companies, to create a kind of reserves-based index.
An energy development of Internet proportions could change the prospects of oil prices.
That development could be a breakthrough in efficient solar power, successful fusion power, sudden acceptance of nuclear power, or some development that would lead to a dramatic reduction in hydrocarbon demand.
Is it likely? I hope so.
But I'm not holding my breath.
Quotes:
The idea of regarding energy as a separate portfolio asset began just before I wrote The Coming Generational Storm (MIT Press, 2004) with economist Laurence J. Kotlikoff.
In the book we lay out the liabilities our government is creating for the future with Social Security and Medicare. We suggest those liabilities will be paid for with large amounts of inflation and newly printed money.
We came to the conclusion that energy should be treated as its own asset class because the British thermal unit is the ultimate "currency" of industrial society.
The producers of paper currency are working hard to create a global oversupply, while the producers of BTUs are having difficulty meeting demand and replacing reserves.
Unlike the dot-com bubble, oil companies have real assets, real earnings and solid dividends – and below-market multiples of earnings, book value and cash flow. They look like a cautious, value-oriented investment, which is why I bought shares of many energy companies, to create a kind of reserves-based index.
An energy development of Internet proportions could change the prospects of oil prices.
That development could be a breakthrough in efficient solar power, successful fusion power, sudden acceptance of nuclear power, or some development that would lead to a dramatic reduction in hydrocarbon demand.
Is it likely? I hope so.
But I'm not holding my breath.
Alberta endorses Operation Alberta Freedom?
cnews: Poll: Westerners considering separation.
Quotes:
In the survey, 35.6 per cent of respondents from Manitoba, Saskatchewan, Alberta and British Columbia agreed with the statement: Western Canadians should begin to explore the idea of forming their own country.
Albertans, at 42 per cent, were most apt to consider independence, followed by Saskatchewan at 31.9 per cent.
I guess they're not looking forward to sharing all that oil sands revenue with Quebec for the next 40 years.
Me neither.
Quotes:
In the survey, 35.6 per cent of respondents from Manitoba, Saskatchewan, Alberta and British Columbia agreed with the statement: Western Canadians should begin to explore the idea of forming their own country.
Albertans, at 42 per cent, were most apt to consider independence, followed by Saskatchewan at 31.9 per cent.
I guess they're not looking forward to sharing all that oil sands revenue with Quebec for the next 40 years.
Me neither.
Charles Maxwell on the CERA Report.
maxwell@weeden: Will Oil Markets Loosen or Tighten in the Next Five Years?
It's not too long, read the whole thing if you can, otherwise skip to the bottom for the conclusion.
Hat tip: The Big Picture
It's not too long, read the whole thing if you can, otherwise skip to the bottom for the conclusion.
Hat tip: The Big Picture
Monday, August 08, 2005
Sunday, August 07, 2005
SEC, IMF to endorse Operation Alberta Freedom?
Big Oil Set to Pounce in Alberta: expert.
Donald Coxe speculating big oil companies may be looking to takeover oil sands companies if the SEC changes it's rules on booking reserves from oil sands.
Donald Coxe speculating big oil companies may be looking to takeover oil sands companies if the SEC changes it's rules on booking reserves from oil sands.
Friday, August 05, 2005
The simple truths of the energy spike.
MarketWatch: Don't ask the experts.
Quotes:
So it's important to filter out the disinformation. If someone says they're an "expert" trader, beware. See what they have to back it up -- and that comes from, well an expert who at least knows enough to know he doesn't know everything.
So the next time I'm asked at a party if oil going higher, I know my answer:
"The 1970s oil shocks occurred when U.S. oil imports were far lower than today. America now imports well over half its oil compared with about 35% in 1973. This level of dependence on imports, nearly 60%, is the highest in this nation's history, and will continue to increase as we use up domestic resources.
"The vast majority of the world's oil reserves are concentrated in the Middle East, 65% to 75%, and controlled by the members of OPEC.
"The United States accounts for about 25% of global oil consumption but has only 3% of proven global oil reserves. So you tell me!
"Hey, are those pigs in a blanket over there? Time to deplete another reserve."
Quotes:
So it's important to filter out the disinformation. If someone says they're an "expert" trader, beware. See what they have to back it up -- and that comes from, well an expert who at least knows enough to know he doesn't know everything.
So the next time I'm asked at a party if oil going higher, I know my answer:
"The 1970s oil shocks occurred when U.S. oil imports were far lower than today. America now imports well over half its oil compared with about 35% in 1973. This level of dependence on imports, nearly 60%, is the highest in this nation's history, and will continue to increase as we use up domestic resources.
"The vast majority of the world's oil reserves are concentrated in the Middle East, 65% to 75%, and controlled by the members of OPEC.
"The United States accounts for about 25% of global oil consumption but has only 3% of proven global oil reserves. So you tell me!
"Hey, are those pigs in a blanket over there? Time to deplete another reserve."
Thursday, August 04, 2005
Wednesday, August 03, 2005
WSJ dips it's toe in the Peak Oil debate.
WSJ: Drilling for Broke? Experts Debate "Peak Oil".
It's free for everybody to read and features the author of the blog Econobrowser.
It's free for everybody to read and features the author of the blog Econobrowser.
Tuesday, August 02, 2005
Total/France endorses Operation Alberta Freedom.
Probably in cahoots with them Quebec &*&^#%#&.
Reuters: Total to expand in Canada with $1.1 bln takeover.
Quotes:
PARIS/CALGARY, Aug 2 (Reuters) - Total SA (TOTF.PA: Quote, Profile, Research) launched a friendly, $1.1 billion bid for Canada's Deer Creek Energy Ltd. on Tuesday to gain control of what is seen as one of the country's last big available oil sands opportunities.
The French oil major's cash bid of C$25 ($20.50) a share is 39 percent higher than Deer Creek's (DCE.TO: Quote, Profile, Research) Friday closing price, a rich premium one analyst said is necessary to win over investors in the developer of the Joslyn oil sands project in northeastern Alberta.
"Total definitely paid up, but they had to pay up if they wanted to get in," said Kyle Preston, analyst with Salman Partners in Calgary.
"Deer Creek had one of the last remaining oil sands leases that someone could potentially come in and buy. For the past several months, Deer Creek knew they were in the driver's seat and could wait for the right price or the right partner."
The acquisition gives Total, the world's No. 4 oil firm by market value, access to the multistage Joslyn project, which has bitumen, or extra-heavy crude, reserves pegged at more than 2 billion recoverable barrels of bitumen.
"It's a relatively small deal for Total ... but it does provide some foundation for production growth for the next decade, and that should reassure investors," a London-based analyst said.
The deal is subject to regulatory approvals and acceptance by holders of at least two-thirds of Deer Creek's stock.
Deer Creek shares soared 38 percent to C$24.83 on the Toronto Stock Exchange. In Paris, Total gained 1.3 percent to 209.20 euros.
Surging crude prices and scarce secure supplies have prompted a boom in spending to develop Alberta's oil sands, which rival Saudi Arabia's conventional reserves in size but are far more expensive to develop.
The energy industry estimates oil sands output will nearly triple to 2.7 million barrels a day by 2015, pushing overall Canadian oil production to 3.9 million barrels a day.
Oil sands have also lured Chinese companies, and some analysts figured Deer Creek would be a target for them, too.
Deer Creek -- which has an 84 percent stake in the Joslyn lease -- had been searching initially for a partner with know-how in upgrading tar-like crude from the oil sands into refinery-ready oil, as well as refining and marketing.
"As you talk to people about their ideas, sometimes other ideas come forward. As a result of the characteristics of the proposal that came through from Total, it was a value-creation level that the board felt merited consideration," Chief Executive Glen Schmidt told Reuters.
Besides the bid, Total brings expertise in developing bitumen, or extra-heavy crude, with steam-assisted drilling technology as well as upgrading in Venezuela, Schmidt said.
Total once had conventional oil and gas operations in Canada, but sold them in the early 1990s. It returned a few years later to scout out oil sands opportunities and secured a 50 percent stake in the Surmont project, 125 km (78 miles) south of Joslyn.
Schmidt said Total was not the only company interested in the Joslyn project.
"Deer Creek had discussions with parties that had the capabilities we were looking for, and through that the Total process developed," he said.
Total said it aimed to submit an application to Alberta regulators in early 2006 for the first phases of the mine and related extraction facilities. Production is scheduled to begin in 2010 and hit a plateau of 200,000 barrels a day.
Reuters: Total to expand in Canada with $1.1 bln takeover.
Quotes:
PARIS/CALGARY, Aug 2 (Reuters) - Total SA (TOTF.PA: Quote, Profile, Research) launched a friendly, $1.1 billion bid for Canada's Deer Creek Energy Ltd. on Tuesday to gain control of what is seen as one of the country's last big available oil sands opportunities.
The French oil major's cash bid of C$25 ($20.50) a share is 39 percent higher than Deer Creek's (DCE.TO: Quote, Profile, Research) Friday closing price, a rich premium one analyst said is necessary to win over investors in the developer of the Joslyn oil sands project in northeastern Alberta.
"Total definitely paid up, but they had to pay up if they wanted to get in," said Kyle Preston, analyst with Salman Partners in Calgary.
"Deer Creek had one of the last remaining oil sands leases that someone could potentially come in and buy. For the past several months, Deer Creek knew they were in the driver's seat and could wait for the right price or the right partner."
The acquisition gives Total, the world's No. 4 oil firm by market value, access to the multistage Joslyn project, which has bitumen, or extra-heavy crude, reserves pegged at more than 2 billion recoverable barrels of bitumen.
"It's a relatively small deal for Total ... but it does provide some foundation for production growth for the next decade, and that should reassure investors," a London-based analyst said.
The deal is subject to regulatory approvals and acceptance by holders of at least two-thirds of Deer Creek's stock.
Deer Creek shares soared 38 percent to C$24.83 on the Toronto Stock Exchange. In Paris, Total gained 1.3 percent to 209.20 euros.
Surging crude prices and scarce secure supplies have prompted a boom in spending to develop Alberta's oil sands, which rival Saudi Arabia's conventional reserves in size but are far more expensive to develop.
The energy industry estimates oil sands output will nearly triple to 2.7 million barrels a day by 2015, pushing overall Canadian oil production to 3.9 million barrels a day.
Oil sands have also lured Chinese companies, and some analysts figured Deer Creek would be a target for them, too.
Deer Creek -- which has an 84 percent stake in the Joslyn lease -- had been searching initially for a partner with know-how in upgrading tar-like crude from the oil sands into refinery-ready oil, as well as refining and marketing.
"As you talk to people about their ideas, sometimes other ideas come forward. As a result of the characteristics of the proposal that came through from Total, it was a value-creation level that the board felt merited consideration," Chief Executive Glen Schmidt told Reuters.
Besides the bid, Total brings expertise in developing bitumen, or extra-heavy crude, with steam-assisted drilling technology as well as upgrading in Venezuela, Schmidt said.
Total once had conventional oil and gas operations in Canada, but sold them in the early 1990s. It returned a few years later to scout out oil sands opportunities and secured a 50 percent stake in the Surmont project, 125 km (78 miles) south of Joslyn.
Schmidt said Total was not the only company interested in the Joslyn project.
"Deer Creek had discussions with parties that had the capabilities we were looking for, and through that the Total process developed," he said.
Total said it aimed to submit an application to Alberta regulators in early 2006 for the first phases of the mine and related extraction facilities. Production is scheduled to begin in 2010 and hit a plateau of 200,000 barrels a day.
Jim Cramer endorses Operation Alberta Freedom.
I guess we've hit the big time.
TheStreet.com: Mad Money Wrap-up
Oil Sands Plays
Cramer asked investors if they knew where the second-largest oil reserve in the world is. It's in Alberta, Canada, Cramer said. But people rarely talk about Canadian oil because it's trapped.
But Kinder Morgan's (KMI:NYSE - commentary - research) $3.1 billion purchase of British Columbia-based Terasen, an oil sands play, tells Cramer that the oil sands business is now profitable. The acquisition, Cramer said, tells him that the companies trying to tap into Canadian oil sands will continue to move higher. It also tells Cramer that companies with exposure to oil sands are undervalued.
Cramer points to French company Total (TOT:NYSE ADR - commentary - research), which launched a $1.1 billion bid for Deer Creek Energy on Tuesday, as more proof that oil sand plays are for real. Deer Creek, an oil sands play, had climbed almost 95% prior to Total's bid. Deer Creek climbed another 39% on Tuesday.
So who is going to benefit from this pin action in Kinder, which ended Tuesday up more than $6, and Total? Cramer said that investors should be looking at Suncor Energy (SU:NYSE - commentary - research), which is a pure play that gets all of its oil from tar oil.
Investors should also be buying Canadian Natural Resources (CNQ:NYSE - commentary - research), which will move higher once it gets its Horizon oil sands project up and running. Investors should be in that one before the project is fully operational, though -- if they want to make money.
Cramer said that investors should be looking at Husky Energy, a Canadian company, which could be spinning off its oil sands assets soon.
Cramer also said that Petro-Canada (PCZ:NYSE - commentary - research), which trades at 19 times earnings, is another name that investors should be looking at.
EnCana (ECA:NYSE - commentary - research), which trades at 17 times earnings, is the most undervalued stock in the group, Cramer said. And it will go higher. Indeed, Cramer called EnCana the cheapest and best play of the lot.
TheStreet.com: Mad Money Wrap-up
Oil Sands Plays
Cramer asked investors if they knew where the second-largest oil reserve in the world is. It's in Alberta, Canada, Cramer said. But people rarely talk about Canadian oil because it's trapped.
But Kinder Morgan's (KMI:NYSE - commentary - research) $3.1 billion purchase of British Columbia-based Terasen, an oil sands play, tells Cramer that the oil sands business is now profitable. The acquisition, Cramer said, tells him that the companies trying to tap into Canadian oil sands will continue to move higher. It also tells Cramer that companies with exposure to oil sands are undervalued.
Cramer points to French company Total (TOT:NYSE ADR - commentary - research), which launched a $1.1 billion bid for Deer Creek Energy on Tuesday, as more proof that oil sand plays are for real. Deer Creek, an oil sands play, had climbed almost 95% prior to Total's bid. Deer Creek climbed another 39% on Tuesday.
So who is going to benefit from this pin action in Kinder, which ended Tuesday up more than $6, and Total? Cramer said that investors should be looking at Suncor Energy (SU:NYSE - commentary - research), which is a pure play that gets all of its oil from tar oil.
Investors should also be buying Canadian Natural Resources (CNQ:NYSE - commentary - research), which will move higher once it gets its Horizon oil sands project up and running. Investors should be in that one before the project is fully operational, though -- if they want to make money.
Cramer said that investors should be looking at Husky Energy, a Canadian company, which could be spinning off its oil sands assets soon.
Cramer also said that Petro-Canada (PCZ:NYSE - commentary - research), which trades at 19 times earnings, is another name that investors should be looking at.
EnCana (ECA:NYSE - commentary - research), which trades at 17 times earnings, is the most undervalued stock in the group, Cramer said. And it will go higher. Indeed, Cramer called EnCana the cheapest and best play of the lot.
Monday, August 01, 2005
Kinder Morgan endorses Operation Alberta Freedom.
WSJ: Kinder Morgan To Buy Terasen, Tap Oil Sands
Quotes:
Hoping to capitalize on a vast store of oil under development in western Canada, U.S. pipeline operator Kinder Morgan Inc. said it is purchasing Terasen Inc., of Vancouver, British Columbia, for $3.1 billion in stock and cash and the assumption of $2.5 billion in debt.
Houston-based Kinder Morgan operates 35,000 miles of natural-gas and oil pipelines across North America, as well as 145 storage terminals. But it lacks a significant presence in Alberta, Canada, where the world's second-largest deposit of oil rests locked in gritty oil-sands deposits.
Extracting and processing the molasses-like bitumen -- the type of crude oil found in oil sands -- is much more expensive than producing and refining conventional crude oil, but recent high oil prices have made bitumen projects more viable. Analysts have estimated that oil-sands developments need long-term prices averaging $25 a barrel or more for benchmark crude -- well below recent levels.
Kinder Morgan's move shows one of the pipeline industry's largest players expects elevated prices to sustain development. "For the last year or so we have thought that a great megatrend to be involved with was the oil sands," Kinder Morgan Chairman and Chief Executive Richard D. Kinder said in an interview yesterday.
Terasen operates pipelines linking Alberta with the U.S. Midwest and Canada's West Coast. It also is the largest natural-gas distributor in British Columbia.
The big opportunity in the deal, said Mr. Kinder, was the prospect of building pipelines, particularly as oil-sands production is expected to grow from one million barrels of oil a day to two million sometime in the next decade. "There's a tremendous need for midstream energy infrastructure," he said. Midstream is the gathering and processing of oil and gas, the link between rigs in the field and the large interstate pipelines that carry oil and gas to consumers.
While the U.S. is the main market for exports from the oil sands, China has shown growing interest. China state oil company PetroChina Co. in April agreed with Canadian pipeline company Enbridge Inc. to share the costs of building a $2 billion pipeline from Alberta to the West Coast.
Quotes:
Hoping to capitalize on a vast store of oil under development in western Canada, U.S. pipeline operator Kinder Morgan Inc. said it is purchasing Terasen Inc., of Vancouver, British Columbia, for $3.1 billion in stock and cash and the assumption of $2.5 billion in debt.
Houston-based Kinder Morgan operates 35,000 miles of natural-gas and oil pipelines across North America, as well as 145 storage terminals. But it lacks a significant presence in Alberta, Canada, where the world's second-largest deposit of oil rests locked in gritty oil-sands deposits.
Extracting and processing the molasses-like bitumen -- the type of crude oil found in oil sands -- is much more expensive than producing and refining conventional crude oil, but recent high oil prices have made bitumen projects more viable. Analysts have estimated that oil-sands developments need long-term prices averaging $25 a barrel or more for benchmark crude -- well below recent levels.
Kinder Morgan's move shows one of the pipeline industry's largest players expects elevated prices to sustain development. "For the last year or so we have thought that a great megatrend to be involved with was the oil sands," Kinder Morgan Chairman and Chief Executive Richard D. Kinder said in an interview yesterday.
Terasen operates pipelines linking Alberta with the U.S. Midwest and Canada's West Coast. It also is the largest natural-gas distributor in British Columbia.
The big opportunity in the deal, said Mr. Kinder, was the prospect of building pipelines, particularly as oil-sands production is expected to grow from one million barrels of oil a day to two million sometime in the next decade. "There's a tremendous need for midstream energy infrastructure," he said. Midstream is the gathering and processing of oil and gas, the link between rigs in the field and the large interstate pipelines that carry oil and gas to consumers.
While the U.S. is the main market for exports from the oil sands, China has shown growing interest. China state oil company PetroChina Co. in April agreed with Canadian pipeline company Enbridge Inc. to share the costs of building a $2 billion pipeline from Alberta to the West Coast.
Friday, July 29, 2005
Raymond James endorsing Operation Alberta Freedom.
Raymond James Research Report Gushes Over Canada's Oil Sands.
Quotes:
CALGARY, July 28 /CNW/ - Investment Dealer Raymond James Ltd. today released an in-depth research report that emphatically declares that after almost a century of development, the time for Canada's Oil Sands has finally come.
"We continue to believe that those companies with leverage to the Oil Sands of Canada offer excellent long-term investment opportunities," says John Mawdsley, Senior Vice President and Energy Research Analyst at Raymond James. "Even with the significant share price appreciation of these energy-related stocks over the past year, the stars are aligning for companies involved in the Oil Sands."
Companies highlighted in the Raymond James report include:
Black Rock Ventures Inc.
Canadian Natural Resources Limited
Canadian Oils Sands Trust
Deer Creek Energy Limited
EnCana Corporation
Husky Energy Inc.
Imperial Oil Limited
Nexen Inc.
OPTI Canada Inc.
Petro-Canada
Shell Canada Limited
Suncor Energy Inc.
UTS Energy Corporation
Western Oil Sands Inc.
According to the report, some of the circumstances that positively impact the Oil Sands of Canada include the following:
- With the Oil Sands of Canada holding 175 billion barrels of proven
recoverable reserves (second in size only to Saudi Arabia's 262
billion barrels), Canada is one of the few non-OPEC countries that
can increase oil production.
- Production from the Oil Sands is expected to exceed all OPEC
producers, except for Saudi Arabia, by mid-next decade. This will
make the Oil Sands the third largest oil producer in the world,
after only Saudi Arabia and Russia.
- The "low-hanging fruit" of global oil reserves have been picked.
To find new, substantial reserves, producers often have to deal
with extreme conditions, like drilling in ultra-deep water, the
severe High Arctic, or in politically unstable areas.
- The number of giant oil field discoveries has been very limited
over the last 10 years, and the likelihood of finding more of
these fields drops with each passing day.
- At 83 million barrels a day, the world consumes one billion
barrels of oil every 12 days; there certainly is not a discovery
of a one billion barrel pool every 12 days.
- Canada's political stability creates a more positive climate for
investors and oil producers when compared to other countries where
other significant oil reserves are found including Russia,
Venezuela, the west coast of Africa and the Middle East.
The report also underscores the importance of the massive Oil Sands reserves to the North American economy. "At current rates of consumption of approximately 20 million barrels a day in the United States, the 175 billion barrels of proven reserves in the oil sands could supply all of the U.S. oil requirements for the next 25 years," says Mawdsley. "If we include the additional 130 billion barrels of potential reserves, Canada could supply all U.S. oil requirements for the next 40 years."
The economic implications are immensely positive for companies involved in the dramatic growth of the Oil Sands at a time when global oil production is close to reaching a peak, says Mawdsley.
"We believe that world oil production will peak in the next five to ten years," he says. "Many of the world's oil producing nations have already reached their production peaks and many more nations will be added to this list. We believe that this bodes extremely well for investment in the Oil Sands where production can grow dramatically over the next decade and longer."
Quotes:
CALGARY, July 28 /CNW/ - Investment Dealer Raymond James Ltd. today released an in-depth research report that emphatically declares that after almost a century of development, the time for Canada's Oil Sands has finally come.
"We continue to believe that those companies with leverage to the Oil Sands of Canada offer excellent long-term investment opportunities," says John Mawdsley, Senior Vice President and Energy Research Analyst at Raymond James. "Even with the significant share price appreciation of these energy-related stocks over the past year, the stars are aligning for companies involved in the Oil Sands."
Companies highlighted in the Raymond James report include:
Black Rock Ventures Inc.
Canadian Natural Resources Limited
Canadian Oils Sands Trust
Deer Creek Energy Limited
EnCana Corporation
Husky Energy Inc.
Imperial Oil Limited
Nexen Inc.
OPTI Canada Inc.
Petro-Canada
Shell Canada Limited
Suncor Energy Inc.
UTS Energy Corporation
Western Oil Sands Inc.
According to the report, some of the circumstances that positively impact the Oil Sands of Canada include the following:
- With the Oil Sands of Canada holding 175 billion barrels of proven
recoverable reserves (second in size only to Saudi Arabia's 262
billion barrels), Canada is one of the few non-OPEC countries that
can increase oil production.
- Production from the Oil Sands is expected to exceed all OPEC
producers, except for Saudi Arabia, by mid-next decade. This will
make the Oil Sands the third largest oil producer in the world,
after only Saudi Arabia and Russia.
- The "low-hanging fruit" of global oil reserves have been picked.
To find new, substantial reserves, producers often have to deal
with extreme conditions, like drilling in ultra-deep water, the
severe High Arctic, or in politically unstable areas.
- The number of giant oil field discoveries has been very limited
over the last 10 years, and the likelihood of finding more of
these fields drops with each passing day.
- At 83 million barrels a day, the world consumes one billion
barrels of oil every 12 days; there certainly is not a discovery
of a one billion barrel pool every 12 days.
- Canada's political stability creates a more positive climate for
investors and oil producers when compared to other countries where
other significant oil reserves are found including Russia,
Venezuela, the west coast of Africa and the Middle East.
The report also underscores the importance of the massive Oil Sands reserves to the North American economy. "At current rates of consumption of approximately 20 million barrels a day in the United States, the 175 billion barrels of proven reserves in the oil sands could supply all of the U.S. oil requirements for the next 25 years," says Mawdsley. "If we include the additional 130 billion barrels of potential reserves, Canada could supply all U.S. oil requirements for the next 40 years."
The economic implications are immensely positive for companies involved in the dramatic growth of the Oil Sands at a time when global oil production is close to reaching a peak, says Mawdsley.
"We believe that world oil production will peak in the next five to ten years," he says. "Many of the world's oil producing nations have already reached their production peaks and many more nations will be added to this list. We believe that this bodes extremely well for investment in the Oil Sands where production can grow dramatically over the next decade and longer."
Thursday, July 28, 2005
Buck up boys.
I see some of you folks weakening. You want to sell, don't you? You're afraid it might not last, that it's a bubble. You want to sell it all and get that G500 you've had your eye on for when the oil goes back to $20.
Well buck up boys.
A little Deffeyes to help you through your weak moments. [video]
A little Don Coxe to buck you up. [audio, Windows Media Player format]
The striking difference between this 'bubble' and the Internet bubble is that most of the major 'pushers' of this bubble are older, experienced, 'seen it all' guys, guys who've been in oil forever or who have made some solid investment calls in their careers.
Experienced oil guys: Simmons, Deffeyes, Maxwell, Pickens, Campbell, Groppe.
Investment guys: Coxe, Rogers, Wanger, Heebner, Leeb.
That said, you must make your own judgements. Sell when it's right for you.
Well buck up boys.
A little Deffeyes to help you through your weak moments. [video]
A little Don Coxe to buck you up. [audio, Windows Media Player format]
The striking difference between this 'bubble' and the Internet bubble is that most of the major 'pushers' of this bubble are older, experienced, 'seen it all' guys, guys who've been in oil forever or who have made some solid investment calls in their careers.
Experienced oil guys: Simmons, Deffeyes, Maxwell, Pickens, Campbell, Groppe.
Investment guys: Coxe, Rogers, Wanger, Heebner, Leeb.
That said, you must make your own judgements. Sell when it's right for you.
Wednesday, July 27, 2005
Top 10 Signs We've Passed Hubbert's Peak.
Note: For background, read this first.
What to look for to let you know we've passed Hubbert's Peak:
10. Tim Evans of IFR, throwing in the towel, declares "oil stocks have reached a permanently higher plateau". In reaction, oil prices spike a further 50% overnight.
9. James Howard Kunstler is arrested at the former Neverland Ranch by Santa Barbara sheriff's deputies and charged with gross abuse of farm animals. [No, no, not what you think. It just turns out that some of these &*^%$# things are rather stubborn.] Neighbors observe that he had grown increasingly bitter in spite of all the fame, and that the millions he secretly made on oil futures and shorting the stocks of airlines and US car manufacturers never really brought him happiness.
8. General Motors introduces their miniHummer hybrid. It gets 19 MPG and is available in 5 cool colors. Honda, meanwhile, introduces the 11th generation of their hybrid Civic which gets 178 MPG, while parked returns power to the grid and downloads the latest Paris Hilton videos, and for those customers who occasionally forget, flosses.
7. United States President Hillary Clinton, surrounded on each side by resolute and purposeful looking Democratic colleagues, declares "This will not stand!" when a Saudi school child drops his ice cream in a Saudi branch of the American chain Baskin Robbins and doesn't clean it up. In retaliation, President Clinton announces Operation Black Gold Rush 2010 and orders US forces to launch operations against all major oil producing nations in the Middle East from Forward Operating Base Mesopotamia.
6. French President Jacques Chirac, upon being informed of Operation Black Gold Rush 2010, announces his countries' immediate support, gives authorization for "any and all US overflight rights", sends French forces to occupy Libya (post US seizure, of course..), and personally vows to round up a few dark-ish looking folks on his way back to Paris.
5. After protesting briefly the launch of Operation Black Gold Rush 2010, the Chinese, seeing American attentions diverted, seize the boundary waters of every Asian nation and overrun them with Chinese built clones of BP's ThunderHorse deepwater oil drilling platform. Surprisingly, the Chinese do not invade the actual island of Taiwan. Intelligence intercepts later reveal the Chinese premier exclaiming: "What the %#^& are we gonna do with more &*&^%$ laptop makers!?!"
4. Survivor: LA
3. Trump Oil files for bankruptcy.
2. Russian President Vladimir Putin announces the first of several stages of purges of Russian elites and elects himself "President for Life". Gazprom, Rosneft and Lukoil are merged into the Soviet secret police.
1. A video appears on the Internet of Paris Hilton having sex with a gas station attendant. Surprisingly, she appears to actually be into it this time.
What to look for to let you know we've passed Hubbert's Peak:
10. Tim Evans of IFR, throwing in the towel, declares "oil stocks have reached a permanently higher plateau". In reaction, oil prices spike a further 50% overnight.
9. James Howard Kunstler is arrested at the former Neverland Ranch by Santa Barbara sheriff's deputies and charged with gross abuse of farm animals. [No, no, not what you think. It just turns out that some of these &*^%$# things are rather stubborn.] Neighbors observe that he had grown increasingly bitter in spite of all the fame, and that the millions he secretly made on oil futures and shorting the stocks of airlines and US car manufacturers never really brought him happiness.
8. General Motors introduces their miniHummer hybrid. It gets 19 MPG and is available in 5 cool colors. Honda, meanwhile, introduces the 11th generation of their hybrid Civic which gets 178 MPG, while parked returns power to the grid and downloads the latest Paris Hilton videos, and for those customers who occasionally forget, flosses.
7. United States President Hillary Clinton, surrounded on each side by resolute and purposeful looking Democratic colleagues, declares "This will not stand!" when a Saudi school child drops his ice cream in a Saudi branch of the American chain Baskin Robbins and doesn't clean it up. In retaliation, President Clinton announces Operation Black Gold Rush 2010 and orders US forces to launch operations against all major oil producing nations in the Middle East from Forward Operating Base Mesopotamia.
6. French President Jacques Chirac, upon being informed of Operation Black Gold Rush 2010, announces his countries' immediate support, gives authorization for "any and all US overflight rights", sends French forces to occupy Libya (post US seizure, of course..), and personally vows to round up a few dark-ish looking folks on his way back to Paris.
5. After protesting briefly the launch of Operation Black Gold Rush 2010, the Chinese, seeing American attentions diverted, seize the boundary waters of every Asian nation and overrun them with Chinese built clones of BP's ThunderHorse deepwater oil drilling platform. Surprisingly, the Chinese do not invade the actual island of Taiwan. Intelligence intercepts later reveal the Chinese premier exclaiming: "What the %#^& are we gonna do with more &*&^%$ laptop makers!?!"
4. Survivor: LA
3. Trump Oil files for bankruptcy.
2. Russian President Vladimir Putin announces the first of several stages of purges of Russian elites and elects himself "President for Life". Gazprom, Rosneft and Lukoil are merged into the Soviet secret police.
1. A video appears on the Internet of Paris Hilton having sex with a gas station attendant. Surprisingly, she appears to actually be into it this time.
Tuesday, July 26, 2005
Ottawa Citizen endorsing Operation Alberta Freedom.
Ottawa Citizen: Great black north is an oil power.
Quotes:
As Ms. Cooper observes, there has been massive investment in Alberta's oilsands that hold an estimated 1.7 to 2.5 trillion barrels of oil, and are the world's biggest known reserve. This has not been lost on the energy-hungry Chinese. "Canada's oil production from the oilsands is on track to explode," she says.
ExxonMobil, which owns about 70 per cent of Imperial Oil, and is one of the most active oilsands players with a 25 per cent stake in the Syncrude mining project and the wholly owned Cold Lake heavy-oil project, is investing $3.5 billion U.S. to $5.5 billion U.S. in the Kearl oilsands project.
Other enormous players in the region are Suncor Energy, Canadian Natural Resources, Husky Energy, Shell, Chevron, Western oilsands, Petro-Canada, UTS Energy Corp. ConocoPhillips Ltd., Total SA and Devon Energy Corp.
"This massive investment in the oilsands has not been lost on the Chinese, and investment will soar further over the next 10 years and more," says Mr. Cooper.
The Canadian Energy Research Institute (CERI) conservatively estimates that by 2015, the output from the oilsands will total some three million barrels per day, likely making Canada the world's second-largest oil exporter, behind Saudi Arabia.
"Investors would do well to consider the implications of Canada's natural bounty in a world where technological innovation is rapid and globalization accelerates the free flow of capital, labour and investment," says Ms. Cooper.
"The United States has clearly begun to see this picture. The global geopolitical implications are very important. Canada's role in the global economy and in the political sphere is about to increase dramatically in importance. It's nice to have a world-class bounty that the two largest economic powers desperately need."
Quotes:
As Ms. Cooper observes, there has been massive investment in Alberta's oilsands that hold an estimated 1.7 to 2.5 trillion barrels of oil, and are the world's biggest known reserve. This has not been lost on the energy-hungry Chinese. "Canada's oil production from the oilsands is on track to explode," she says.
ExxonMobil, which owns about 70 per cent of Imperial Oil, and is one of the most active oilsands players with a 25 per cent stake in the Syncrude mining project and the wholly owned Cold Lake heavy-oil project, is investing $3.5 billion U.S. to $5.5 billion U.S. in the Kearl oilsands project.
Other enormous players in the region are Suncor Energy, Canadian Natural Resources, Husky Energy, Shell, Chevron, Western oilsands, Petro-Canada, UTS Energy Corp. ConocoPhillips Ltd., Total SA and Devon Energy Corp.
"This massive investment in the oilsands has not been lost on the Chinese, and investment will soar further over the next 10 years and more," says Mr. Cooper.
The Canadian Energy Research Institute (CERI) conservatively estimates that by 2015, the output from the oilsands will total some three million barrels per day, likely making Canada the world's second-largest oil exporter, behind Saudi Arabia.
"Investors would do well to consider the implications of Canada's natural bounty in a world where technological innovation is rapid and globalization accelerates the free flow of capital, labour and investment," says Ms. Cooper.
"The United States has clearly begun to see this picture. The global geopolitical implications are very important. Canada's role in the global economy and in the political sphere is about to increase dramatically in importance. It's nice to have a world-class bounty that the two largest economic powers desperately need."
Nat King Coal.
I happened to catch Kudlow & Company on CNBC today, which I generally don't watch. Perhaps it was serendipity, because two of the guests were hot on coal. Yes, coal. (They were also into energy in general, but they specifically picked out coal to highlight.)
The guests were Frank Husic of Husic Capital Management (I think - the web guest list doesn't mention him) and Susan Byrne of Westwood Holdings Group. Mr. Husic referred to it as a "secular move" (ie. long term).
Now I don't know where you are, but where I'm at it's hot and much of the US is hot. And hot means air conditioning, and air conditioning means electrical power, and much of our electrical power means coal. Additionally, some coal is used in producing metals, so in theory it is a China and India play. (I know next to nothing about this.)
Among names mentioned: Peabody, Massey, Arch, Consol, Foundation, Alpha Natural Resources, and Walter Industries, which the guest claimed had a hidden coal play.
FYI: I have some coal holdings myself, Peabody (BTU), Consol (CNX), Fording (FDG), and Natural Resources (NRP).
Article: Green Coal
Finally, coal need not be the backward polluting step many environmentalists might believe. Coal gasification facilities reduce dramatically particulate and sulfur dioxide and nitrogen oxide emissions. They can produce hydrogen, which would fit with zero-carbon hydrogen fuel cell technology.
And, as the Energy Department notes, "if oxygen is used in a coal gasifier instead of air, carbon dioxide is emitted as a concentrated gas stream. In this form it can be captured more easily and at lower cost for sequestration."
Finally, coal gasification technology is ready and available. Cleco Corp., which has generated 70% of its electricity with natural gas, on July 12 announced its plans to build a $1 billion, 600-megawatt "clean coal" power-generating plant in northern Louisiana. The company noted that natural gas prices had risen from $2 per million British thermal units of energy production to $7 per million Btu. It figures that the clean coal plant will save its customers $4 billion over 30 years over high priced natural gas.
The guests were Frank Husic of Husic Capital Management (I think - the web guest list doesn't mention him) and Susan Byrne of Westwood Holdings Group. Mr. Husic referred to it as a "secular move" (ie. long term).
Now I don't know where you are, but where I'm at it's hot and much of the US is hot. And hot means air conditioning, and air conditioning means electrical power, and much of our electrical power means coal. Additionally, some coal is used in producing metals, so in theory it is a China and India play. (I know next to nothing about this.)
Among names mentioned: Peabody, Massey, Arch, Consol, Foundation, Alpha Natural Resources, and Walter Industries, which the guest claimed had a hidden coal play.
FYI: I have some coal holdings myself, Peabody (BTU), Consol (CNX), Fording (FDG), and Natural Resources (NRP).
Article: Green Coal
Finally, coal need not be the backward polluting step many environmentalists might believe. Coal gasification facilities reduce dramatically particulate and sulfur dioxide and nitrogen oxide emissions. They can produce hydrogen, which would fit with zero-carbon hydrogen fuel cell technology.
And, as the Energy Department notes, "if oxygen is used in a coal gasifier instead of air, carbon dioxide is emitted as a concentrated gas stream. In this form it can be captured more easily and at lower cost for sequestration."
Finally, coal gasification technology is ready and available. Cleco Corp., which has generated 70% of its electricity with natural gas, on July 12 announced its plans to build a $1 billion, 600-megawatt "clean coal" power-generating plant in northern Louisiana. The company noted that natural gas prices had risen from $2 per million British thermal units of energy production to $7 per million Btu. It figures that the clean coal plant will save its customers $4 billion over 30 years over high priced natural gas.
Friday, July 22, 2005
LOBG: Use Care When Reading Columnist's Investment Advice.
I generally find sector funds to be very profitable ways to invest, so I disagree with this article. Nevertheless, there are a couple of good quotes buried in it.
USA Today: Investing - Use care if rotating into sector funds.
Ralph Wanger is a great money manager. Well, was. He retired.
Quotes:
Ralph Wanger, founder of the Acorn funds, thinks energy is the best long-term sector now. "You can make a pretty good case that petroleum production will peak in about 10 years," he says. "That doesn't mean there will be no fuel, but it does mean that there won't be increasing amounts of liquid petroleum."
David Dreman, chairman of Dreman Value Management, likes energy, too. "It's not that oil prices have to go sky-high," he says. "But energy companies are making enormous profits, they're buying in their own stock, and they're selling at low multiples." By "low multiples," Dreman means that their prices are relatively low compared with their earnings.
USA Today: Investing - Use care if rotating into sector funds.
Ralph Wanger is a great money manager. Well, was. He retired.
Quotes:
Ralph Wanger, founder of the Acorn funds, thinks energy is the best long-term sector now. "You can make a pretty good case that petroleum production will peak in about 10 years," he says. "That doesn't mean there will be no fuel, but it does mean that there won't be increasing amounts of liquid petroleum."
David Dreman, chairman of Dreman Value Management, likes energy, too. "It's not that oil prices have to go sky-high," he says. "But energy companies are making enormous profits, they're buying in their own stock, and they're selling at low multiples." By "low multiples," Dreman means that their prices are relatively low compared with their earnings.
Thursday, July 21, 2005
Greenspan endorses Operation Alberta Freedom.
Testimony of Chairman Alan Greenspan.
Energy prices represent a second major uncertainty in the economic outlook. A further rise could cut materially into private spending and thus damp the rate of economic expansion. In recent weeks, spot prices for crude oil and natural gas have been both high and volatile. Prices for far-future delivery of oil and gas have risen even more markedly than spot prices over the past year. Apparently, market participants now see little prospect of appreciable relief from elevated energy prices for years to come. Global demand for energy apparently is expected to remain strong, and market participants are evidencing increased concerns about the potential for supply disruptions in various oil-producing regions.
To be sure, the capacity to tap and utilize the world's supply of oil continues to expand. Major advances in recovery rates from existing reservoirs have enhanced proved reserves despite ever fewer discoveries of major oil fields. But, going forward, because of the geographic location of proved reserves, the great majority of the investment required to convert reserves into new crude oil productive capacity will need to be made in countries where foreign investment is currently prohibited or restricted or faces considerable political risk. Moreover, the preponderance of oil and gas revenues of the dominant national oil companies is perceived as necessary to meet the domestic needs of growing populations. These factors have the potential to constrain the ability of producers to expand capacity to keep up with the projected growth of world demand, which has been propelled to an unexpected extent by burgeoning demand in emerging Asia.
More favorably, the current and prospective expansion of U.S. capability to import liquefied natural gas will help ease longer-term natural gas stringencies and perhaps bring natural gas prices in the United States down to world levels.
See here for more info on supporting Operation Alberta Freedom. Send your dollars in now!
He also puzzles about the bond thing again, but he still doesn't have an answer. Poor Augustus.
Energy prices represent a second major uncertainty in the economic outlook. A further rise could cut materially into private spending and thus damp the rate of economic expansion. In recent weeks, spot prices for crude oil and natural gas have been both high and volatile. Prices for far-future delivery of oil and gas have risen even more markedly than spot prices over the past year. Apparently, market participants now see little prospect of appreciable relief from elevated energy prices for years to come. Global demand for energy apparently is expected to remain strong, and market participants are evidencing increased concerns about the potential for supply disruptions in various oil-producing regions.
To be sure, the capacity to tap and utilize the world's supply of oil continues to expand. Major advances in recovery rates from existing reservoirs have enhanced proved reserves despite ever fewer discoveries of major oil fields. But, going forward, because of the geographic location of proved reserves, the great majority of the investment required to convert reserves into new crude oil productive capacity will need to be made in countries where foreign investment is currently prohibited or restricted or faces considerable political risk. Moreover, the preponderance of oil and gas revenues of the dominant national oil companies is perceived as necessary to meet the domestic needs of growing populations. These factors have the potential to constrain the ability of producers to expand capacity to keep up with the projected growth of world demand, which has been propelled to an unexpected extent by burgeoning demand in emerging Asia.
More favorably, the current and prospective expansion of U.S. capability to import liquefied natural gas will help ease longer-term natural gas stringencies and perhaps bring natural gas prices in the United States down to world levels.
See here for more info on supporting Operation Alberta Freedom. Send your dollars in now!
He also puzzles about the bond thing again, but he still doesn't have an answer. Poor Augustus.
Weekend at King Fahd's.
Anybody seen Andrew McCarthy lately? The Saudi's may have a lucrative acting role for him.
Let's hope everybody else knows their lines and nobody wants to do any ad-libs.
Longest-Serving Saudi Ambassador Resigns.
Let's hope everybody else knows their lines and nobody wants to do any ad-libs.
Longest-Serving Saudi Ambassador Resigns.
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