Michael Fitzsimmons' Instablog

Michael Fitzsimmons' Instablog Michael Fitzsimmons believes worldwide oil supply will have much difficulty keeping pace with worldwide oil demand given a functioning world economy. The United States imports a large percentage of its oil leading to trade and fiscal deficits. Since natural gas is the only domestic fuel capable of significantly reducing foreign oil imports, the U.S. needs a strategic, long term, comprehensive energy policy and to adopt natural gas transportation. Natural gas is abundant, clean, and cheap. Fitzsimmons is an engineer, not a CFA. Please do your own research. Fitzsimmons cannot be held responsible for investment decisions you may make after reading his articles and opinions. Michael Fitzsimmons http://seekingalpha.com/author/michael-fitzsimmons/instablog Fed Chairman Bernanke and Energy Secretary Chu - Lost in the Woods w/o a Compass http://seekingalpha.com/instablog/173432-michael-fitzsimmons/143052-fed-chairman-bernanke-and-energy-secretary-chu-lost-in-the-woods-w-o-a-compass?source=feed 143052
Meantime, Energy Secretary Chu continues to be the most incompetent energy secretary ever. Anyone heard a word out of our physicist since the Middle East crisis started? Has anyone yet heard Chu acknowledge the important role nat gas transportation could play to reduce foreign oil imports? Chu should be fired. Bernanke should lost his job when we shut down the un-Constitutional Federal Reserve and transition back to Constitutional money (gold & silver).
]]> Tue, 01 Mar 2011 14:49:20 -0500
Meantime, Energy Secretary Chu continues to be the most incompetent energy secretary ever. Anyone heard a word out of our physicist since the Middle East crisis started? Has anyone yet heard Chu acknowledge the important role nat gas transportation could play to reduce foreign oil imports? Chu should be fired. Bernanke should lost his job when we shut down the un-Constitutional Federal Reserve and transition back to Constitutional money (gold & silver).
]]> Could Fiat bring an Energy Policy to the U.S.?? http://seekingalpha.com/instablog/173432-michael-fitzsimmons/117589-could-fiat-bring-an-energy-policy-to-the-u-s?source=feed 117589
www.bloomberg.com/news/2010-12-01/fiat-s...
]]> Thu, 02 Dec 2010 18:16:43 -0500
www.bloomberg.com/news/2010-12-01/fiat-s...
]]> "QE2" or Natural Gas Transportation? http://seekingalpha.com/instablog/173432-michael-fitzsimmons/101313-qe2-or-natural-gas-transportation?source=feed 101313
Benjamin Bernanke - Chairman, Federal Reserve
Alan Greenspan - Bernanke's predecessor
Janet Yellen - Vice Chairman, Federal Reserve
Tim Geitner - U.S. Secretary of the Treasury
Barney Frank - Chairman, House Financial Services Committee
Jared Bernstein - Chief Economic Advisor to Joe Biden
Jacob Lew - Director OMB
Peter Orzag - Lew's predecessor
Larry Summers - Assistant to the President, National Economic Council

How is it that such an educated group of men and women be so blind as to the fundamental problem of the U.S. economy (foreign oil imports)? This wise group of policymakers apparently think the solution to what ails America is "QE2", a euphemism for "printing money out of thin air". I'm only an engineer, but I can already see the impact this will have: higher commodity prices. We have seen this in oil, gold, silver, corn, soybeans, and across the spectrum. Powering this move is, of course, a weak U.S. currency. This group of distinguished "economists" apparently believe that the key to a U.S. economic resurgence is to devalue our currency. Those opponents of the Federal Reserve, Ron Paul and a handful of other patriotic Americans, know that this is a recipe for disaster. As Paul relates in his great book End the Fed, a one-ounce $20 gold piece in the early 1900's would buy you a nice suit, shirt, tie, belt and shoes. Today, that same 1 oz. gold piece would do the same, but what would $20 buy you? Maybe the belt. Maybe. This massive devaluation of the U.S. currency is the result of placing our faith in an un-Constitutional entity like the Federal Reserve. They print money in complete secrecy, distribute it to their good friends and buddies who just happen to be the CEO's of the largest banks and financial institutions and already rich beyond belief, and all with no Congressional oversight already. Yet when legislation comes before Congress to simply audit the Fed (duh!), even some of the bill's sponsors voted against it!? This shows you the grip on economic policy this small group of people have on U.S. economic "policy". It has had disastrous effects - who can doubt America is on a fast moving train into the economic abyss?

Not one to complain without offering solutions, there is another path. We could address this country's four major economic problems:

1) reduce foreign oil imports by adopting natural gas transportation
2) adopt a strategic long-term comprehensive energy policy:
http://thefitzman.blogspot.com/2008/08/strategic-long-term-comprehensive-us.html
3) audit the Federal Reserve and eventually abolish it in favor of a Constitutional monetary standard based on gold and silver
4) reduce the budget of America's biggest entitlement program - the U.S. military and its imperialistic approach to "foreign policy"

What would create more American jobs: "QE2" or building out a natural gas transportation infrastructure? Like the interstate highway system, the telephone and telegraph system, or putting a man on the moon, government spending on building a natural gas transportation infrastructure would pay dividends to ALL Americans for decades into the future. We would re-industrialize our energy, automobile, and manufacturing sectors. We would create real JOBS. Americans could be filling up with domestically produced natural gas in their garages for about half the current price of gasoline ($1.40/GGE vs. $2.65)! More importantly, the U.S. could easily reduce foreign oil imports by 5,000,000 barrels a day within 5 years. At $80/barrel, this is $400,000,000 a day that would stay in the country. You want to talk about stimulus, try that one!!

Fake monetary stimulus programs like "QE2" simply devalue the currency, funnel money to a select few of already wealthy Americans, and has no long-term benefit to anyone and in fact, is very detrimental to the long term growth and health of the U.S. currency and economy. But, I am just a lowly engineer and not a Nobel Prize winning economist. However, common sense should tell you that if all it took to make a country an economic success was printing money out of thin air, Zimbabwe and the Weimar Republic would be at the top of the heap.

But alas, the media avoids the topic like the plague, people like Boone Pickens are ridiculed and chastised, and the great minds of this country keep silent on the issue. So, what does it all mean? Oil, gold, and commodities will go higher. Buy Conoco Philips (COP), Chevron (CVX), Occidental Petroleum (OXY), Marathon(MRO), and gold and silver bullion or ETFs (GLD, SLV).

But it's 2008 all over again and we all know how that turned out. The bubble will burst, even these suggested investments could plummet as they did in 2008, and the U.S. will be even weaker than it is now. If you have a garden, a pond with catfish in it, a good hunting rifle and some land with game you'll be better off than most. Meantime, batten the hatches. "QE2" and current U.S. economic, energy and military "policy" seem specifically and consciously designed to welcome the U.S. into the category of 3rd world economies. Meantime, we have a solution right in front of our faces: abundant, clean, and cheap natural gas and natural gas powered cars and truck that are a mature and proven technology. All we need is a government to embrace the fuel and the technology. Don't hold your breath. Pickens is on his own. America seems destined to fulfill Pickens' prediction that we will go down as the stupidest country in history for not addressing the economic, environmental, and national security issues brought about by its addiction and reliance on foreign oil imports. Is it possible that American economic policymakers have a vested interest in America staying addicted to foreign oil? How else does one explain their ignoring such a fundamental and basic economic problem? So sad and so unnecessary. Natural gas transportation technology is mature, safe, and proven alternative to gasoline (foreign oil) powered engines. All we need is some economic and energy policy leadership.

Educate yourself on CNG transportation here:
http://en.wikipedia.org/wiki/Compressed_natural_gas

How ironic that today's U.S. dollar drop is being blamed on a strengthening move by Singapore, a country that has embraced natural gas transportation.

Disclosure: Long COP

Disclosure: Long COP

Disclosure: Long COP]]> Thu, 14 Oct 2010 11:13:47 -0400
Benjamin Bernanke - Chairman, Federal Reserve
Alan Greenspan - Bernanke's predecessor
Janet Yellen - Vice Chairman, Federal Reserve
Tim Geitner - U.S. Secretary of the Treasury
Barney Frank - Chairman, House Financial Services Committee
Jared Bernstein - Chief Economic Advisor to Joe Biden
Jacob Lew - Director OMB
Peter Orzag - Lew's predecessor
Larry Summers - Assistant to the President, National Economic Council

How is it that such an educated group of men and women be so blind as to the fundamental problem of the U.S. economy (foreign oil imports)? This wise group of policymakers apparently think the solution to what ails America is "QE2", a euphemism for "printing money out of thin air". I'm only an engineer, but I can already see the impact this will have: higher commodity prices. We have seen this in oil, gold, silver, corn, soybeans, and across the spectrum. Powering this move is, of course, a weak U.S. currency. This group of distinguished "economists" apparently believe that the key to a U.S. economic resurgence is to devalue our currency. Those opponents of the Federal Reserve, Ron Paul and a handful of other patriotic Americans, know that this is a recipe for disaster. As Paul relates in his great book End the Fed, a one-ounce $20 gold piece in the early 1900's would buy you a nice suit, shirt, tie, belt and shoes. Today, that same 1 oz. gold piece would do the same, but what would $20 buy you? Maybe the belt. Maybe. This massive devaluation of the U.S. currency is the result of placing our faith in an un-Constitutional entity like the Federal Reserve. They print money in complete secrecy, distribute it to their good friends and buddies who just happen to be the CEO's of the largest banks and financial institutions and already rich beyond belief, and all with no Congressional oversight already. Yet when legislation comes before Congress to simply audit the Fed (duh!), even some of the bill's sponsors voted against it!? This shows you the grip on economic policy this small group of people have on U.S. economic "policy". It has had disastrous effects - who can doubt America is on a fast moving train into the economic abyss?

Obama and Chu: "clean coal" Partner's in Crime

Meantime, the most abundant, clean, and cheap of all fuels (natural gas) is completely ignored by the supposed environmentalist. What a tragedy. It's a tragedy that both Ford and GM make NGVs but don't sell them in America. It is a tragedy that Fuel Systems Solutions (FSYS) builds its natural gas home refueling appliance in Italy instead of America. It's a tragedy that America sends it energy wealth to Arab oil producers and funds both sides of the war on terror. It's a tragedy that this country will not reach its potential because of greedy, incompetent, and corrupt politicians.

Making matters worse is Obama's response to the Gulf oil spill. Instead of realizing the BP's well was a huge departure from the norm in terms of well design and management, the Obama administration has apparently painted all oil companies with the same broad brush. The first negative result of his wrong-head moratorium are the canceling of deep-water rig contracts. StatOil (STO) is the latest to terminate two contracts (Transocean and Maersk rigs). Higher unemployment rates will follow next. And finally, the U.S. will be further de-industrialized and our dependence on foreign oil will grow. Combined with the idiotic energy policy pushed last night on national TV, one begins to wonder if the conspiracy theory might have some truth to it. After all, it was the Obama administration that appointed a former BP exec to the MMS. And it was the Obama administration that has dragged its feet on the oil spill response. All a big conspiracy to push his supposed "clean energy" agenda down our throats?

But what kind of clean energy "policy" is Obama designing when his policies:

1) increases coal consumption
2) increases our dependence on foreign oil?

This is not "policy", this is insanity. We've all been betrayed. Despite the two largest coal and oil environmental disasters in U.S. history (the Kingston, TN coal fly-ash spill and the Horizon disaster), our supposedly super smart environmentally friendly President hasn't learned anything. He is making everything worse. I could not design a worse energy policy if I sat down and tried. Of course, what can we expect from a President whose administration turned down the Dutch offer to supply supertankers designed to surround the leaking oil rig and suck the oil out of the water before it reached shore? Obama has lost all credibility. He is not concerned with the environment nor the American middle class. He is continuing, and expanding, the U.S. government's objective of weakening the middle class and the country's economic future.

Not one to complain without offering solutions, here is a strategic long-term comprehensive energy policy:

http://thefitzman.blogspot.com/2008/08/strategic-long-term-comprehensive-us.html

that would leverage America's abundant, clean, and cheap natural gas reserves to:

1) reduce foreign oil imports
2) keep American energy dollars in the U.S. by leveraging natural gas transportation
3) re-industrialize the country by creating jobs in the auto, energy, and industrial sectors
4) greatly reduce CO2 and toxic particulate emissions by replacing coal and oil consumption with cleaner and cheaper natural gas
5) usher in an era of prosperity most Americans have, at this point, given up on
6) allow us to reduce our imperialistic military policy and spend our wealth in our own country for our own people
7) allow us to balance our budget and maintain our standard of living

For American investors, all this means higher oil prices and harder economic times. It is time to get out of all broad S&P500 investments and into energy stocks and precious metals. A few suggestions: Conoco Philips (COP), Chevron (CVX), Petrobras (PBR), StatOil (STO), Exxon Mobil (XOM), Murphy Oil (MUR) and Suncor Energy (SU). Buy on market weakness and rely on the fact that long-term oil prices are going higher. Much higher.

Disclosure: Long COP, PBR, STO

Disclosure: Long COP, PBR, STO]]> cop pbr mur su xom cvx sto Energy Oil Natural Gas Why Obama Hates Natural Gas Transportation http://seekingalpha.com/instablog/173432-michael-fitzsimmons/67521-why-obama-hates-natural-gas-transportation?source=feed 67521
First of all, Obama and Chu aren't clueless about natural gas and natural gas transportation. THEY KNOW it can solve our problems. So, let's take a look at why they are not doing so.

COAL POWER

And we are not talking about coal power electrical generation here - we are talking about the power of the coal lobby and coal interests. The last thing the coal folks want is adoption of natural gas for power generation and for transportation. This is obvious. These powers own Obama and Chu, and is the only explanation for Obama and Chu supporting the myth of "clean coal". We know its a myth because we know it is dangerous to the environment to simply mine it. We know of the workers who suffers all kinds of ailments and bodily harm in their work to obtain it. We know that burning coal generates 50% more CO2 than natural gas, but this isn't the biggest negative. The biggest negative is the toxic heavy metal particulates generated by burning coal. These end up in our air and in our water. We only need read about the disaster at the TVA's coal plant in Kingston, TN

http://en.wikipedia.org/wiki/Kingston_Fossil_Plant_coal_fly_ash_slurry_spill

to understand the entire Tennessee River system is dead water for at least two generations. I pity the poor folks in the Tennessee River valley whose municipal water systems exists in this watershed. I anticipate cancer rates to skyrocket. Further, the only reason coal is "cheap", is because the government subsidizes coal to the benefit of the miners and company executives, and the health care and environmental costs are all paid for directly by the American people. So, everyone knows "clean coal" is a myth and the phrase is an oxymoron. Yet, Obama and Chu support their failed strategy of electric cars charged by burning coal. Obama, the supposed environmentally, is therefore supporting the dirtiest and most expensive fossil fuel. Talk about an oxymoron.

MILITARY INDUSTRIAL POWER

U.S. military and defense contractors also don't want to see America adopt natural gas transportation. Doing so would negate the need to fight oil wars and deploy hundreds of thousands of troops around the world to obtain and secure oil. How would the generals then get their promotions and how would the defense executives get their big salaries and bonuses if there were fewer defense contracts? It's clear the American military industrial complex is also against natural gas transportation.

PRO-ISRAELI POWER

The pro-Israeli lobby, including most of the government economist and Federal Reserve bureaucrats, are also against natural gas transportation. Why? Because they desire the U.S. military to be deployed in the Arab oil producing countries (Israel's enemies) believing this makes Israel more secure. This is the main reason you never hear supposed "economists" in the U.S. fully discuss the severity of America's foreign oil addiction on the present and future U.S. economy. This "strategy" appears to be working: U.S. troops are in Iraq and Afghanistan and surround oil producing Iran. Massive quantities of Iraqi oil could indeed hit the market relatively soon. (NOTE: I am receiving an increasing number of emails suggesting that my bullish outlook on oil will be completely wrong when the Iraqi oil comes online. I of course counter that lower oil prices in the short-term will increase economic activity, oil consumption, and therefore oil dependence. I also counter that oil demand in China, Asia, and the Middle East (not to mention the U.S. military) will also drive up demand). However, the "strategy" seems to be failing long-term. Why? Firstly, the Arab oil producers (Israel's enemies) are being enriched beyond belief. As weapons technology improves and becomes more widespread, do the pro-Israeli powers actually believe some of this Arab wealth will not be funneled into anti-Israeli efforts? Secondly, the U.S. is simply going bankrupt due to high oil prices, out of control government spending, insane tax-and-spend policies (creating huge deficits), imperialist military policies abroad, and the lack of a strategic long-term comprehensive energy policy:

http://thefitzman.blogspot.com/2008/08/strategic-long-term-comprehensive-us.html

So, how is a strategy that is bankrupting the United States, Israel's sole protector, good for Israel? It's very ironic to me that the majority of America's economic policymakers are pro-Israel and anti natural gas transportation. Again, it's an oxymoron in my mind. Why not reduce the flow of American wealth to Israel's enemies? Why not strengthen the U.S. economy and energy foundation? I have no respect for these economists as they are simply not doing their jobs. They, along with Energy Secretary Chu, should be fired and forced to go out into the labor market and make a real living doing something productive. Perhaps then, they'd look back and see how foolish their "economic policy" has been.

There you have it. Obama, Chu, the Federal Reserve, the U.S. government, and the U.S. bureacrats in charge of economic policy all support the electric car charged by coal transportation architecture. They all work actively to prevent natural gas transportation for the reasons listed above. With respect to HR1835, it is dead. Part of that is the bill itself: why should U.S. taxpayers give an $85,000 tax credit for an natural gas 18-wheeler? Westport Innovations (WPRT) makes outstanding natural gas engine solutions and no one can tell me these engines and fuel systems are $85,000 more expensive than a comparable diesel engine. In this regards, Pickens shot himself in the foot. I also believe that to significantly reduce foreign oil imports, we must push natural gas transportation into middle-class Americans' garages.

What does all this mean for investors? Buy Peabody Coal (BUT) and Massey Energy (MEE). And you'll never know how much it pains me to type that.

Disclosure: Long BP]]> Sat, 08 May 2010 13:53:53 -0400
First of all, Obama and Chu aren't clueless about natural gas and natural gas transportation. THEY KNOW it can solve our problems. So, let's take a look at why they are not doing so.

COAL POWER

And we are not talking about coal power electrical generation here - we are talking about the power of the coal lobby and coal interests. The last thing the coal folks want is adoption of natural gas for power generation and for transportation. This is obvious. These powers own Obama and Chu, and is the only explanation for Obama and Chu supporting the myth of "clean coal". We know its a myth because we know it is dangerous to the environment to simply mine it. We know of the workers who suffers all kinds of ailments and bodily harm in their work to obtain it. We know that burning coal generates 50% more CO2 than natural gas, but this isn't the biggest negative. The biggest negative is the toxic heavy metal particulates generated by burning coal. These end up in our air and in our water. We only need read about the disaster at the TVA's coal plant in Kingston, TN

http://en.wikipedia.org/wiki/Kingston_Fossil_Plant_coal_fly_ash_slurry_spill

to understand the entire Tennessee River system is dead water for at least two generations. I pity the poor folks in the Tennessee River valley whose municipal water systems exists in this watershed. I anticipate cancer rates to skyrocket. Further, the only reason coal is "cheap", is because the government subsidizes coal to the benefit of the miners and company executives, and the health care and environmental costs are all paid for directly by the American people. So, everyone knows "clean coal" is a myth and the phrase is an oxymoron. Yet, Obama and Chu support their failed strategy of electric cars charged by burning coal. Obama, the supposed environmentally, is therefore supporting the dirtiest and most expensive fossil fuel. Talk about an oxymoron.

MILITARY INDUSTRIAL POWER

U.S. military and defense contractors also don't want to see America adopt natural gas transportation. Doing so would negate the need to fight oil wars and deploy hundreds of thousands of troops around the world to obtain and secure oil. How would the generals then get their promotions and how would the defense executives get their big salaries and bonuses if there were fewer defense contracts? It's clear the American military industrial complex is also against natural gas transportation.

PRO-ISRAELI POWER

The pro-Israeli lobby, including most of the government economist and Federal Reserve bureaucrats, are also against natural gas transportation. Why? Because they desire the U.S. military to be deployed in the Arab oil producing countries (Israel's enemies) believing this makes Israel more secure. This is the main reason you never hear supposed "economists" in the U.S. fully discuss the severity of America's foreign oil addiction on the present and future U.S. economy. This "strategy" appears to be working: U.S. troops are in Iraq and Afghanistan and surround oil producing Iran. Massive quantities of Iraqi oil could indeed hit the market relatively soon. (NOTE: I am receiving an increasing number of emails suggesting that my bullish outlook on oil will be completely wrong when the Iraqi oil comes online. I of course counter that lower oil prices in the short-term will increase economic activity, oil consumption, and therefore oil dependence. I also counter that oil demand in China, Asia, and the Middle East (not to mention the U.S. military) will also drive up demand). However, the "strategy" seems to be failing long-term. Why? Firstly, the Arab oil producers (Israel's enemies) are being enriched beyond belief. As weapons technology improves and becomes more widespread, do the pro-Israeli powers actually believe some of this Arab wealth will not be funneled into anti-Israeli efforts? Secondly, the U.S. is simply going bankrupt due to high oil prices, out of control government spending, insane tax-and-spend policies (creating huge deficits), imperialist military policies abroad, and the lack of a strategic long-term comprehensive energy policy:

http://thefitzman.blogspot.com/2008/08/strategic-long-term-comprehensive-us.html

So, how is a strategy that is bankrupting the United States, Israel's sole protector, good for Israel? It's very ironic to me that the majority of America's economic policymakers are pro-Israel and anti natural gas transportation. Again, it's an oxymoron in my mind. Why not reduce the flow of American wealth to Israel's enemies? Why not strengthen the U.S. economy and energy foundation? I have no respect for these economists as they are simply not doing their jobs. They, along with Energy Secretary Chu, should be fired and forced to go out into the labor market and make a real living doing something productive. Perhaps then, they'd look back and see how foolish their "economic policy" has been.

There you have it. Obama, Chu, the Federal Reserve, the U.S. government, and the U.S. bureacrats in charge of economic policy all support the electric car charged by coal transportation architecture. They all work actively to prevent natural gas transportation for the reasons listed above. With respect to HR1835, it is dead. Part of that is the bill itself: why should U.S. taxpayers give an $85,000 tax credit for an natural gas 18-wheeler? Westport Innovations (WPRT) makes outstanding natural gas engine solutions and no one can tell me these engines and fuel systems are $85,000 more expensive than a comparable diesel engine. In this regards, Pickens shot himself in the foot. I also believe that to significantly reduce foreign oil imports, we must push natural gas transportation into middle-class Americans' garages.

What does all this mean for investors? Buy Peabody Coal (BUT) and Massey Energy (MEE). And you'll never know how much it pains me to type that.

Disclosure: Long BP]]> Energy Coal Oil Natural Gas A Natural Gas "OPEC"? It Will Never Happen http://seekingalpha.com/instablog/173432-michael-fitzsimmons/64278-a-natural-gas-opec-it-will-never-happen?source=feed 64278
The problem Algeria faces is quite simple: the world is awash in natural gas. Huge natural gas supply is now, and will be coming on stream, from all over the world: Australia's coal seam gas, StatOil's (STO) Snohvit LNG project http://www.upstreamonline.com/live/article212423.ece , ExxonMobil's (XOM) huge LNG project in Qatar
http://www.exxonmobil.com/Corporate/news_features_20081231_qatar_lng.aspx
, as well as Iranian and Russian supply just to name a few examples. Best of all for United States are the prolific American shale plays and the technology needed to economically bring that shale gas to market. This is the wonderful news about natural gas: there is no possibility of an OPEC style cartel to control prices because the world has a very diverse set of suppliers. It is because of this abundance of supply and because of large LNG capabilities coming on-line which will enable world-wide delivery of natural gas that prices will remain low for decades into the future.

As I have written on Seeking Alpha before: I believe the historical oil-to-natural gas ratio has been changed forever. The ratio is currently over 20, about double the average since 1995 (9). Many natural gas consuming countries have made a huge mistake by linking natural gas contracts to on oil-index. This is a huge error and shows a basic misunderstanding of the fundamentals of oil and natural gas economics. In the coming years, worldwide oil supply will have much difficulty keeping up with worldwide oil demand while the exact opposite is true of worldwide natural gas supply and demand, It doesn't take a rocket scientist (let alone an economist...) to figure out this means higher prices for oil and low and stable prices for natural gas.

Yet the biggest error in judgment has been made by U.S. economists and energy policy "experts" like Energy Secretary Chu. Despite huge staffs of highly paid "professionals", these folks have been unable to figure out the energy basics described above. Their inability to figure things out is mystifying considering 2008's $145/barrel high, current oil prices over $80/barrel, and natural gas going for $4/Mcf. So what's their problem? Since the economics are obvious, natural gas is cleaner, and the supply is domestic(!), the problem must be political. How sad is that? As a result, legislation like HR 1835 remains moth-balled in Congress and the obvious solution to the economic, environmental, and national security issues America faces as a result of its addiction to foreign oil (natural gas transportation), has not been adopted. Worse still, the oil crisis we have experienced and still face has not resulted in an American strategic long-term comprehensive energy policy like this:
http://thefitzman.blogspot.com/2008/08/strategic-long-term-comprehensive-us.html

In spite of these serious lapses in energy policy, no one (other than me) seems to be calling for Energy Secretary Chu to resign. He should do so - preferably today.

What does this mean for investors? Obviously my take is that the American economy will again be racked by much higher oil prices and gasoline prices. Logically then, an investor should have significant exposure to oil investments while at the same time being out of broad market investments like the S&P500. While smaller oil producers highly leveraged to oil prices and more likely to be bought out are perhaps the best way to play it, I also like the large oil producers that pay nice dividends: StatOil (STO), BP, Chevron (CVX) and Conoco Philips (COP) come to mind. Occidental Petroleum (OXY) is more highly levered to oil prices than any of these and deserves consideration albeit its devidend is less attractive. A more speculative stock is Brazilian company Petrobras (PBR). However, the proven large reserves will mean the biggest increases in oil production of all the previously mentioned companies. For this reason, PBR is worth the risk. Buy PBR anywhere below $45/share and you won't be sorry 3-5 years from now.

Disclosure: Long BP, COP, PBR, STO]]> Tue, 20 Apr 2010 11:45:41 -0400
The problem Algeria faces is quite simple: the world is awash in natural gas. Huge natural gas supply is now, and will be coming on stream, from all over the world: Australia's coal seam gas, StatOil's (STO) Snohvit LNG project http://www.upstreamonline.com/live/article212423.ece , ExxonMobil's (XOM) huge LNG project in Qatar
http://www.exxonmobil.com/Corporate/news_features_20081231_qatar_lng.aspx
, as well as Iranian and Russian supply just to name a few examples. Best of all for United States are the prolific American shale plays and the technology needed to economically bring that shale gas to market. This is the wonderful news about natural gas: there is no possibility of an OPEC style cartel to control prices because the world has a very diverse set of suppliers. It is because of this abundance of supply and because of large LNG capabilities coming on-line which will enable world-wide delivery of natural gas that prices will remain low for decades into the future.

As I have written on Seeking Alpha before: I believe the historical oil-to-natural gas ratio has been changed forever. The ratio is currently over 20, about double the average since 1995 (9). Many natural gas consuming countries have made a huge mistake by linking natural gas contracts to on oil-index. This is a huge error and shows a basic misunderstanding of the fundamentals of oil and natural gas economics. In the coming years, worldwide oil supply will have much difficulty keeping up with worldwide oil demand while the exact opposite is true of worldwide natural gas supply and demand, It doesn't take a rocket scientist (let alone an economist...) to figure out this means higher prices for oil and low and stable prices for natural gas.

Yet the biggest error in judgment has been made by U.S. economists and energy policy "experts" like Energy Secretary Chu. Despite huge staffs of highly paid "professionals", these folks have been unable to figure out the energy basics described above. Their inability to figure things out is mystifying considering 2008's $145/barrel high, current oil prices over $80/barrel, and natural gas going for $4/Mcf. So what's their problem? Since the economics are obvious, natural gas is cleaner, and the supply is domestic(!), the problem must be political. How sad is that? As a result, legislation like HR 1835 remains moth-balled in Congress and the obvious solution to the economic, environmental, and national security issues America faces as a result of its addiction to foreign oil (natural gas transportation), has not been adopted. Worse still, the oil crisis we have experienced and still face has not resulted in an American strategic long-term comprehensive energy policy like this:
http://thefitzman.blogspot.com/2008/08/strategic-long-term-comprehensive-us.html

In spite of these serious lapses in energy policy, no one (other than me) seems to be calling for Energy Secretary Chu to resign. He should do so - preferably today.

What does this mean for investors? Obviously my take is that the American economy will again be racked by much higher oil prices and gasoline prices. Logically then, an investor should have significant exposure to oil investments while at the same time being out of broad market investments like the S&P500. While smaller oil producers highly leveraged to oil prices and more likely to be bought out are perhaps the best way to play it, I also like the large oil producers that pay nice dividends: StatOil (STO), BP, Chevron (CVX) and Conoco Philips (COP) come to mind. Occidental Petroleum (OXY) is more highly levered to oil prices than any of these and deserves consideration albeit its devidend is less attractive. A more speculative stock is Brazilian company Petrobras (PBR). However, the proven large reserves will mean the biggest increases in oil production of all the previously mentioned companies. For this reason, PBR is worth the risk. Buy PBR anywhere below $45/share and you won't be sorry 3-5 years from now.

Disclosure: Long BP, COP, PBR, STO]]> Energy Natural Gas Oil