Michael Fitzsimmons

My Thoughts on Oil

here is hefner's website:
www.the-get.com/
there is a "buy now" link on the top right.
yeah, kunstler is pretty dire, but i can see why he feels that way. with our congress, president, and energy secretary - it's tough to be an optimistic.

My Thoughts on Oil

longoil: my choice would be: robert hefner III.

his book "the grand energy transition" deals with the energy issues facing america better than any other book i've ever read. hefner is obviously an expert on natural gas, but he shows a wealth of pragmatic knowledge on all energy sources. he is especially spot-on when it comes to the issues re coal. i imagine this is a result of coal taking over for natural gas in the electrical generation starting back in the 70s. what i don't understand is why john podesta (who wrote a review of hefner's book on the inside cover) doesn't go over and kick chu (and obama) in the butt and say "READ THIS!"

My Thoughts on Oil

Andy: too bad you haven't looked at the US dollar movement compared to US oil companies and foreign oil company because it exactly proves my point. i don't see why you don't want to look at stock market behavior as an indicator for these investments (since they are in, obviously, the stock market). the girations of the US dollar last week, and the subsequent movement in the prices of these stocks, i think, proved my point. when the dollar was very weak, STO and BP (for instance) outperformed XOM and CVX.

Mmarrrk: hey, no problem, i have been bashing obama too. as i have said, he's way off on afghanistan, energy policy, and the people he is putting in charge of the financial regulation (shapiro, geitner, etc. etc. - same old NYC inner circle that birth madoff and milken and LTCM principals). like i have said in some articles, on the things that matter most (energy, finance, military) he has not made any significant changes from bush. yes, he has done some things on energy, but they haven't reduced foreign oil imports, and won't significantly do so. on finance and military, it's the same old bs. anyhow, your point that chu should read the EIA inventory reports is excellent. funny that guys like you and me should have to tell the energy secretary of the US to read his own departments energy reports. he should also take a look at the EIA's websites on worldwide oil production and consumption as he apparently not only doesn't have a clue about US natural gas, but he also doesn't seem to understand the amount of foreign oil we are importing. unbelievable. perhaps we can schedule him on donald trump's show. then americans might get interested (they love to be entertained) and perhaps we could hear "the donald" say "YOU"RE FIRED!"

phewtures: i have a friend that keeps telling me that the US is sitting on top of a bunch of oil off the east and west coasts. says we have the same kind of fields that brazil does. not sure i buy it, but i don't know for sure. i do know if we are waiting to produce it later, when is later? $145/barrel didn't make the "powers that be" behind this "hidden oil conspiracy" start pumping it...and look at the deep ka-ka we are in now. besides, for the US be oil independent, we'd have to produce the combined output of the two largest oil producing counties in the world: Russia and Saudi Arabia *combined*. now, i just don't know if that is possible..my gut tells me certainly not. and yes, E=mc2 means a few grains of rice has a helluva lot of energy in them which is why humans can exists on very small amounts of food for quite some time. that said, it's harnessing the energy in matter that matters (pun intended). hydrogen fusion would save the world if we could only figure out how to do it. research continues....thanks for the post.

My Thoughts on Oil

user396040: you are right about recent efficiency gains in natural gas electrical generation. however, the thing that scares me about EVs on a grand scale in the short term is that it they would likely require increased coal consumption. when i hear obama and chu repeat "clean coal" as often as possible, it frightens me that they actually believe it is possible. of course it is not. regardless, i'd also be interested in the analysis you're asking for - it would be interesting and valuable.

elcopone: yup, i agree - both the republicans and democrats appear hell bent on destroying the country. my solution: i think the 50 states should come together and call for a constitutional convention. we should tear down the current system, scrap everything but the constitution and bill or rights, and start over with a flat tax, term limits, and elemination of the federal reserve. we also need to kick out everyone in government who used to work at goldman sachs...

sovestor: sure, inventories have been rising. but consider the SPR has less than 40 days of supply. in other words inventory would fall rather quickly if economic activity picked up. demand is down 7.7% or so over the past 4 weeks. if demand picked up, combined with lower rig counts, lower E&P budgets, and reduced OPEC supply, prices will pop again. it's just a matter of time (assuming world economic activity picks up at some point).

crocodillian: i simply don't agree it's a complicated issue. the natural gas supplies are there. that is a proven fact. look at supply growth the last few years. look at the shale reserves discovered over the past few years. so, supply is simply not a problem. for our energy secretary not to understand this, or refusing to acknowledge it because it doesn't fit his "clean coal" agenda is tragic. secondly, sure it will be a large investment to build out CNG refueling infrastructure and convert vehicles to run on natural gas. however, what is more economically viable for most americans - ditch their $40k SUV (which they wont get anyone to buy) and buy an new and expensive EV, or, pay a couple thousand (which costs should come down if we do it in volume) and convert that SUV to run on natural gas? also, home garage nat gas refueling devices should come down to less than $1500 in volume, allowing people living in the 130,000,000 homes currently connected to the nat gas pipeline grid to refuel at home. so, these things are not complicated at all, they just require addition and subtraction skills. now, you talk about the cost of converting to natural gas to the cost of staying addicted to foreign oil. we could convert half our cars and trucks to natural gas within 5 years, saving 6-7 million barrels of foreign oil a day. now, this money for foreign oil would instead go to american energy industrial companies, landowners and farmers as royalty payments, etc. etc. just like the interstate highway system, the inventions from the man on the moon project, the cross country telephone and telegraph projects, switching to natural gas transportation would pay dividends to all americans for decades to come and such a project would pay for itself very quickly with the savings in foreign oil. these are fairly simple calculations, so no, i did not miss the point, chu did. but the thing is, you know a nobel prize winning physicist has the brains to figure out something so simple. so, we know he knows what i am saying is correct. the problem is, the gov has an agenda...and that agenda is to "master" the american people and control us. natural gas transportation and refueling at home would allow american's to remain free, whereas addiction to oil eventually means it will be rationed and we can be controlled. so, don't be fooled by these statements by chu. think for yourself and look at the facts. it is not complicated...they just want you to THINK it is complicated and unsolvable. it's like health care. they act like that is sooo complicated an issue and can't be solved, yet countries the world over have solved it and do have great health care systems that work. bottom line, chu should be fired, but won't be because just like bush/cheney, obama doesn't *really* want to reduce foreign oil imports, he just wants to talk about it (like every president the US has had since eisenhower).

My Thoughts on Oil

Andy: did you compare the oil companies i mentioned? did you notice today when the US dollar was stronger how STO and BP were down more in comparison to XOM and CVX? these stock movements (when the US$ is both up and down) over the past few years prove my point better than any other argument. so, i suppose we agree to disagree.

Crocodillian: glad you brought up chu's exact quote, because it is a perfect example of his wrong-headed thinking and why he should be fired:

first he says he is "agnostic" about using the most abundant, clean, and cheap energy resource in the US (natural gas) for transportation. nothing "nuanced" there. BAD ENERGY POLICY.

second: he wants to develop biofuels. ethanol?? switch grass? terrible use of increasingly vital water supplies not to mention the distortions in the food market resulting in inflation across that sector. didn't 2008 teach him anything? not only that, biofuels is just another way to keep us addicted to *liquid* fuels (i.e. gasoline derived from foreign oil imports) when we should be transitioning to gaseous fules (i.e. natural gas) once again, BAD ENERGY POLICY.

lastly, he uses the same old excuse XOM used to scare the hell out of congress in the 1970's: that using natural gas for transportation will strain the other uses (oh no!! we wont have gas to heat our homes!!). it's like a bush fear tactic! the truth is, US nat gas reserves are abundant, clean, and cheap. for a sitting secretary of energy to not understand the fundamentals behing the US's best weapon against foreign oil imports is almost criminal considering what is at stake. once again, BAD ENERGY POLICY.

*** ENERGY SECRETARY CHU SHOULD BE FIRED ***

oldwizard: to answer your question about auto companies and nat gas conversions, i think you would like to read hefner's book "the grand energy transition" where he describes how we could save the US auto manufacturers, dealers, and hundreds of thousands of jobs by converting existing american's SUV's (investments worth $30-50k) over to natural gas rather than expecting them to just junk them and buy EV's (a ludicrous expectation when all middle class americans are currently suffering mightily due to the oil crisis to begin with! i'm either very dense, or this is simply a no-brainer. it is so clear to me, yet our energy secretary, president, and auto companies just don't see it...one side is very wrong, and one is very right. i've been wrong before, but on this issue, i am like abraham lincoln once said: this is my opinion, and i am sticking with it until someone can convince me i am wrong. well, secretary chu's weak arguments are not convincing to me at all, and i would LOVE to debate him on CNN for a half an hour on the issue. after that half-hour, about more americans would have my opinion that he should be fired and go back to studying particle physics or whatever.

My Thoughts on Oil

Righteous Dude: wrt your comments on japan importing 100% of its oil, i would note that japan's economy is one of the worst hit economies of this crisis, with economic growth -9.6 in the first quarter of this year. so, ok, you win, there is an economy out there more exposed than the US. my apologies. that said, we should look at japan as a warning for what can and will happen in the US if we don't do something about our foreign oil addiction.

My Thoughts on Oil

DonFurio: exactly - i called for topping off the SPR when oil was under $50. china is outmanuerving the US on obtaining long-term oil supplies by using their financial superiority while the US, even under obama, apparently seems to bank on its military to obtain oil via oil wars (and that is what afghanistan is...it's all about getting caspian sea energy to the ocean for transport and cutting russia and iran out of the path).

DeanM: well said and better than my earlier response.

montyman: you guys are killing me with this conversation - i love it. good luck and good action with the bus chicks. wish i had a bus here, i'd test your theory.

Andy1234: look at it this way. if you owned 100 shares of a US energy company at $10/share, you had a $1000 investment. over the couple months, the US dollar dropped roughly 8%. so, your purchasing power dropped $80 by owning that investment when compared with a basket of international currencies. for the same reason, it is more expensive to travel to europe now, for example. this is why it is a good idea to invest in international stocks when the US dollar is dropping. look at BP, STO, and PBR recently when the US dollar dropped and compare those to XOM, CVX, and COP over the past couple months. by investing in those companies (BP, STO, and PBR) you not only get the bump due to rising oil prices, but you also get the bump (as an american) because the US dollar is dropping in value. don't get me wrong, i like american oil companies, i just think it also makes alot of sense to invest in international energy companies. and, you also have the kicker that due to recent idiotic US foreign policy, alot of oil rich countries would rather deal with STO or Eni of Total than the US big 3. sad, but very true.

My Thoughts on Oil

isaac: yup, OIH is great and so is FSESX. however, i sure learned a lesson wherein on this website, in 2006, 2007 and early 2008 i said energy service companies were my single best investment choice. and they were...for awhile doing great...and then they dropped what, like 65% in 2008? ouch! that said, i didn't sell mine...and i hope no one else did. they have been on fire so far this year.

Andy1234: since you mentioned australia, they are a resource "have" country along with russia, brazil, and canada. i expect all those four currencies to outperform the US dollar in the years ahead. so, yes, i agree with you completely..invest in those countries and their resources. not only do you get the resource pop, but the currency translation as well. and thus, STO, which i don't think you like for some reason, but is the same exact scenario.

Jimbo: you're too kind. yes, the dutch and i didn't realize until recently how big the italians were into NGVs or at least bi-fuels. wrt "weird behavior of Congress", i must say it does appear to be a coordinated effort to weaken the US so that it can be raped, pillaged, and plundered. i had great hopes for obama, chu, and podesta. but alas, when the rubber hits the road (and for me that is reducing foreign oil imports), we might as well have bush/cheney in office. it will be another wasted 4 years i am afraid. that will make it 12 years in a row in which we could have (should have) been moving toward natural gas transportation and did not. so all the economic, environmental, and national security problems just keep getting bigger and bigger...and yet Congress (and president obama) does nothing. big dissapointment. huge.

jimboy: sure, oil is priced in US dollars in a worldwide market, no issue there. to make my point, take a look at STO's stock price in relationship to the US dollar index. last year, when the "flight to quality" rush was on (chuckle chuckle...) and the US dollar skyrocketed (to my huge surprise), STO just got hammered. now, over the past few weeks as the dollar has weakened, look at STO's stock price reaction. with respect to norway gov involvement, yet they are involved and yes they do tax. however, read Albert Meyer's comment on my recent STO article:

seekingalpha.com/artic...

on executive compensation. in addition, foreign countries currently unfriendly to the US like working with STO. all i can say, i said in the aforementioned article. i think STO is a great way to play energy and, for US investors, an insurance policy against weakening US economics.

user396040: you bring up an interesting issue and perhaps one day i will do such an analysis. one thing i can tell you on efficiency is that the fewest number of energy translations is usually (but not always) the best. in other words, my gut tells me burning natural gas directly in the car would be more cost efficient than burning natural gas to generate electricity to charge the batteries. there you have power loss in the transmission lines, some in the transformers, and more still during the charging process (IR drop in the wires themselves, etc). however, as i so often mention (i know, i am boring and need new ideas...), the BEST transportation solution i know of is that nat gas/electric hybrid (toyota camry concept car). think prius running on nat gas instead of gasoline (no plug-in). anyhow, thanks for the idea and if i run out of stuff to do i might do that analysis for the fun of it (i must be getting old to do that for fun huh?).

Mmarrkk: well, my dad bought one of the few Fiats in louisiana back in the 1970's, and when our neighbors paying out the nose for gas to fill up their american made tuna boats, we were getting over 30 mpg and i don't remember the car ever giving us problems except for once the fuel filter needed to be replaced. Honda doubled their production of the GX this year, and they are all already spoken for by dealers (i got that from NA honda rep). there is already an EPA certified kit for the silverado and many other vehicles. see this list:

www.ngvamerica.org/pdf...

old wizard: yeah, i didn't think you'd be very happy with chu either. i'd fire him in a new york second if i was obama. that said, i wouldn't mind if my roof was white (other than it would look freakish) as it hit 90 here today and my AC turned on for the first time this year (always sad for me when that happens). anyhow, thanks for supporting nat gas transportation...i hope you are making these same good arguments to your elected officials. who knows, maybe a miracle will happen and HR 1835 will pass. speaking of that, i wonder how that bill is making its way through committee...?

jan300: your comment was directed at another, but yes, i believe i know what "clean coal" means...it means whoever believes in it is a moron: first of all, coal is environmentally destructive simply to mine it. secondly, there is no way anyone can convince me that they have figured out how to pump CO2 into the earth economically or practically. the only successful attempt has been in colorado where exxon is pumping CO2 into gas fields to optain natural gas. i am all for that example, but that is the exception, not the rule. plus, they had to build a rather long pipeline to get the CO2 from the coal plant to the gas field. thirdly, once the coal is burned, the dirty little secret is the "fly-ash" combustion remnants...a cocktail of the most toxic metals on earth at very concentrated levels: mercury, lead, copper, cadmium, chromium, arsenic, barium...well, just read about it here:

en.wikipedia.org/wiki/...

now, multiply that "fly ash storage pond" by hundreds all across the country. so, yeah, i know about "clean coal". it's a myth and an oxymoron and we should convert all coal plants to natural gas as soon as humanly possible.

Andyman: you're cracking me up...how much action does the guy on the bus get?! bar har har har. thanks, i needed that. what you say is true though...chicks, in general, seem to be attracted to energy hogs. wrt GDP, it's only sustainable GDP that impresses me...the US economy is built on cheap oil in an era of peak oil. that is simple uneconomical and unsustainable and we are seeing the warning signs of that all around us after 2008's $145/barrel oil.

OilFinder: yup, haynesville seems to just keep growing. now some guys are saying it may be the same field in which they are finding gas in eastern mississippi. last i read, it could be the 4th largest natural gas field in the world! and yes, argentina and south/latin america in general has alot of nat gas vehicles (motorcycles too). and yup, pakistan is all over it (i get personal emails from guys in pakistan on this issue). iran is headed that way too so they can sell more of their oil on the open market.

thanks all!

My Thoughts on Oil

RighteousDude: you may find my statement highly misleading, but it is highly true. i don't find your argument wrt GDP very strong as GDP is slowing dramatically as a result of 2008's oil crisis. so, that doesn't work for me at all. to have an economy addicted to a dwindling and expensive commodity (oil) which must be imported is simply a recipe for disaster. honestly, i can't believe we are even debating the issue. Japan doesn't fight oil wars to secure supply, they depend on the US to do so, and in case you haven't noticed, we are going broke doing it - spending more on defense then all other countries combined). just because europe has nat gas issues (and i think LNG will save their ass, as well as STO), doesnt mean the US shouldn't bank on nat gas - we have abundant and cheap supplies of natural gas. you speak of "costing american consumers dearly", what do you think addiction to foreign oil has done? the S&P500 is negative over the last decade. the US dollar is depreciating at such a rate countries around the world are asking for a new world "reserve currency". the US is being deindustrialized. meanwhile, we fund both sides of the "war on terror". what could cost the american consumer more than its foreign addiction to oil?

ripskii: thanks, and to answer your question, i don't know. obama is a big dissapointment. i thought he would be above supporting coal just because he is from a coal state (illinois), but, apparently not.

My Thoughts on Oil

thanks for all the comments. my turn:

thetruthhurst: yes, a natural gas/electric hybrid (like the toyota concept car referenced in the article) is just a no-brainer for a country like the US that is facing such severe problems as a result of foreign oil addiction. i cannot understand how the president, his energy secretary, and congress ignore such a vehicle. they should be passing robust policies to support such a solution.

Andy1234: if the US dollar depreciates, you want to own companies that have earnings in other currencies. that said, if you look at my list of suggested investments, there is XOM, COP, and CVX as well as RIG and DO...so, i am not sure where you are coming from with your comment. at this point, which would you rather own, the US dollar or the Norwegian krone (STO)?

SSALarry: yes, the bush admin's ethanol mandates have been and will continue to be a disaster..using up ever shrinking water supplies and causing inflation and distortions in the food sector. it is also just another means of keeping us addicted to dirty and expensive liquid solutions when we should be moving to gas. wrt where we import oil, i hear this all the time. from an economic standpoint, it doesnt really matter where the money leaving the country is going TO....it is still leaving, and still causing trade deficits. at the same time, the oil market is a worldwide market and any oil we use helps ALL oil producers because we are such a big consumer (about 25% of total oil supply). so, to think US consumption is not beneficial to saudi, iran, russia, and venezuela is, well, simply missing the larger dynamic at work here.

User412092: why do i think that? because in every speech obama has made on energy (btw, only two speeches that i can remember), and throughout the campaign, he uttered "clean coal" every chance he got. so does his incompetent sidekick energy secretary chu. at the same time, i have never heard obama even mention natural gas transportation. chu has, and he says he is "agnostic" about it. so, how do obama and chu plan to reduce foreign oil imports as both say they want to do? well, all i can see that they are for is electric cars and "clean coal". now, we all know there is no such thing as clean coal, and we know electric cars are not going to be built (or bought) in sufficiently quantity to significantly reduce foreign oil imports over the next 5 years. so, the obama admin will fail to reduce foreign oil imports. we might as well have bush/chaney back in office. nothing is going to change for 4 more years. big big disappointment as i supported obama.

Mmarrkk: wrt Fiat, i would note that fiat is producing nat gas cars for italy and europe and is very successful at selling them. the US could learn alot from what Fiat and Italy are doing to stay off foreign oil imports. i hope bigtime that Fiat brings their NGVs to the US.

johngordon: i have no doubt oil will exceed $147/barrel. the question of course is when. i'll bet you $10 it is within 5 years. we on?

ferdinand: thanks, if you can arrange the job for me, i will accept it as long as they give me time off in the summer to fly-fish for trout.

gavity404: the dollar has dropped about 8% while oil jumped 50%. clearly, there is more to the equation than simply a depreciating US dollar. i like MRO too. thanks.

Berkshire Hathaway: Like a Kid in a Candy Store

Berkshire Hathaway is down this year because it is over-exposed to the consumer. Buffet's big mistake is being optimistic on the future of the US economy as we approach an era of peak oil where worldwide oil supply will not keep pace with worldwide oil demand. In this future, many of the stocks that Buffet owns in Berkshire will continue to do poorly. I thought he and Charlie "got it" when they bought ConocoPhillips (a great stock for these times), but now I realize they don't get it as they buy a gum company and sell the COP. Their finances are great, but as Buffet himself says, don't expect past returns in the future (that is an understatement). You'd be much better off buying energy services and energy stocks than BRK.

What You Can - And Can't - Learn from Warren Buffett

oops! "uneducating" should have been "uneducated" (duh)
when will i ever learn to re-read my comments before posting?

What You Can - And Can't - Learn from Warren Buffett

Kudlow, like Rush Limbaugh, is a paid winbag to fool the uneducating into believing the BS coming from the administration - like how good they would be for the economy and the markets. we've seen how 8 years of that BS has worked out.

wrt buffet: he and his investments don't seem to understand the realities of a future in which worldwide oil supply won't keep up with worldwide oil demand. if so, he wouldn't own all the exposure to the consumer that he does with his housing related investments etc. he did buy some COP awhile back, but has had little follow up that i know of in that regard. meanwhile, berkshire is down, what, close to 20% year to date?

i contacted both buffet and gates 6 months or so ago in an attempt to get their chartible foundations to attack the energy issue, as i made a fairly logical argument as to how the rest of their charitible endeavors would ultimately fail if the energy issue is allowed to crack the US and world economy. neither responded. i noticed this week gates put $500 million (!!!) toward an "anti-smoking" campaign. now, imagine if that amount of money would have been turned over to T. Boone Pickens and was allowed to educate, inform, and fund American energy policy. it's clear to me that gates and buffet just don't see what is currently happened to our economy, currency, and security due to oil. sure buffet bet on the brazilian currency and made money, but, for someone who professes to love america so much (which i am sure he does) and care so much about his children (which i am sure he does) and has alot of integrity (which i am sure he does), how else does one explain his lack of effort when it comes to the "oil problem" other than to simply say "he just doesn't get it". let's hope he WILL get it soon, and put his and his buddy Gates' large foundation finanances at work to DO something about it ala Pickens.

Is Warren Buffett Missing Something?

SuperDon: yup, that youtube video is the segment i saw on CNBC and mentioned in my article. what i attempted to point out is that if Buffet truly believes in peak oil, the investment in Wrigley puzzles me. i believe in peak oil, and i must say that investing in chewing gum might not be my last choice, but it's definitely toward the bottom of the list. i can't say that carpet or bricks would be near the top either. now, railroads, or ConocoPhillips is another story - it's in the right industry segment, and its earnings and stock price are moving in the right direction. but like i said, who am i to second guess buffet, and, as i also pointed out that it's MARS who really bought Wrigley's, not Berkshire. Buffet is the financier and will take a minority stake in the subsidiary. still, i just gotta think there are better investments for BRKA shareholder's than chewing gum. the other point i tried to make was buffet has given alot of money to worthy causes. if he believes in peak oil, then surely he must know that it is absolutely the biggest national security threat to the US. in that case, why doesn't he use his influence, power, and money to prod our incompetent US government to 1) acknowledge peak oil, and 2) adopt a real energy policy to deal with it. he seems content to make money while waiting for the US to go down the tubes. i think harry truman would have given up the money and done what is right for the country. it's just an observation, but it was the main point i was attempting to make with the article. thanks for your comments.

Is Warren Buffett Missing Something?

pursley: your bloggin website is *awesome*

yes, buffet is right that production is at an all-time high. and, i agree it is still rising and will continue to for a few more years. yet, so is demand. the real issue is supply/demand balance. the CEO of ConocoPhillips questioned whether man will ever produce more than 100 million BPD, yet the EIA is projecting 150 million BPD demand in the not too distant future. that is quite a disconnect...