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Michael Fitzsimmons
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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... More
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  • It's a Cutthroat Market 3 comments
    Jul 5, 2009 4:08 PM

         In my opinion, one of the most beautiful fish in existence is the Colorado Cutthroat Trout. In its spawning colors, one can easily see how the fish was named as it truly does appear to have had its throat cut and is bleeding all over itself. This trout was caught (and released) in the Flat Tops Wilderness area of Colorado. Some say it is the only trout native to the waters of that state. However, I believe the Rio Grande Cutthroat found in the waters in and around the San Juan Wilderness area are also native to Colorado.

    Flat Tops Wilderness Colorado Cutthroat

    The term "cutthroat" also reminds me of the US stock and bond markets. I continue to wonder how the US equity markets can be strong when the US has no coherent energy policy and the middle class is being systematically decimated - their taxpayer money being funneled to the already uber wealthy and their jobs going bye-bye. Last Thursday's market action was another stark example of what poor US employment data can do to the markets.

         It seems like the braintrust at Goldman Sachs has already figured out that making money "the old fashioned" way is no longer possible, so the last remaining honey-pot store of wealth to plunder is the good old middle class tax-payer. An acquaintance made on SeekingAlpha sent me this interesting link:

    http://www.rollingstone.com/politics/story/28816321/the_great_american_bubble_machine

    Matt Tiabbi is one of my favorites - he cuts right through the fog and shines light on topics no one really wants to talk about. Early on, one of my biggest disapointments with Obama was his appointment of Shapiro to the SEC which means nothing will change anytime soon wrt to Tiabbi's subject matter in this article. I believe he is spot on. The only disagreement I have with TIabbi is that he appears to blame Goldman Sachs for the entire run-up in oil prices. Although GS and speculators in general did indeed play a role, the supply/demand fundamentals in 2007-2008 were indeed very tight - the result of years earlier increases in Chinese demand coincident with Iraqi oil taken off the market because of you-know-who.

    SeekingAlpha likes contributors to write articles focusing on particular stocks or investments. However I am going to take a chance they'll still publish this article even though I am all over the place today and going to make some more general summertime observations:

    • Driving across the mid-US, I don't recall having previously seen so many billboards faced with "Your Ad Here". Advertising must be in the dumps bigtime.
    • Trying to follow the US Open Golf Tournament on my truck's radio was impossible. Even ESPN's radio show only mentioned Tiger Woods and Phil Mickelson. Yet, there were so many other stories - Duval, Glover, Barnes. At times, their updates only mentioned how far Tiger and Phil were behind and never even mentioned who was in the lead! Ridiculous.
    • While scanning the AM and FM dials for US Open scores and updates on Sunday, I was simply amazed at how many religious channels were in operation. Who funds all these stations? Do Americans really send in the millions of dollars it must take to keep this shows on the air? Interestingly enough, on Monday those same stations were right wing political talk shows. Religion is a far too successful control mechanism in America today.
    • Demand for gasoline is down, but let's keep things in perspective. Although gasoline demand might be down 7-9% year over year, how does that compare to home sales? Retail sales? Car sales? Sure gasoline demand is down, but there is no alternative to gasoline in the US today and so gas stations across the country are still doing a good business. Most Americans *must* drive and buy gasoline (unfortunately, there is no realistic alternative). So, how can one not stay invested in oil stocks like XOM, OXY, PBR, COP, and CVX? What is left other than gold to invest in? Goldman Sachs?!
    • I feel sorry for people who have never viewed the stars at night from a wilderness area at 10,000 feet. It's awe inspiring. I also found myself wondering what the trout think when they look up through the clear mountain waters and see twinkling points of light.

    OK, so much for random thoughts. Driving across Kansas I stopped at a McDonalds for coffee (and coffee only). While waiting in line I eavesdropped on a conversation between four farmers. They were very witty, down to earth, and had really interesting (and different) perspectives on things. So I sat down next to them with my coffee and waited for an opportune moment to stick my nose in. I asked them "Hey, what do you guys think about natural gas powered farm equipment?" One man whom I would guess to be in his late 60's or early 70's said he used to run his combines on propane years ago and they worked great, but the machinery all went diesel and so, so did he. Another fellow said he got whacked financially when diesel went over $4.50 in 2008, but all they could do was suck it up and pass the costs on as much as possible. The next fellow mentioned a local Cummins dealer and I asked if he had heard about the natural gas powered ISL-G engine from CWI (the Cummins Westport Innovations joint venture). He said he had not, but would look into it when I told him natural gas was under $1/GGE in most of the US compared to around $2.50 for diesel. After we all discussed this for awhile, I asked them, don't you guys feel exposed to rising oil (diesel) prices and why wouldn't you go to US produced natural gas if its cheaper and cleaner and you could fill up on your ranch? The quiet one finally spoke and he said, Michael, there are two things you should know about farmers:

    1) We don't buy anything until we try it first and see it work for ourselves.

    2) A large majority of farmers won't buy equipment their farming neighbors don't also use.

    In other words, a message to CWI and WPRT: if you guys want to seriously penetrate the farming market quickly with your ISL-G engines, you need to get some demo units out to dealers across Kansas, Nebraska, Colorado, Oklahoma, and North and South Dakota. You need to make a case to these farmers that natural gas is cheap, abundant, and that the engines will be fully serviced and maintained through the farmers' local machinery businesses. The feeling I get is that these farmers know diesel prices are going to be a problem in the near future. They want an alternative. But they are concerned about the infrastructure and support.

         Anyone have any updates on HR 1835 - the so-called "NAT GAS Act"? All I know is that the bill has strong bi-partisan support and on Apr 6, 2009 the House Science and Technology referred the bill to the Subcommittee on Energy and Environment. I continue to believe that this bill will pass and that Westport Innovations' (NASDAQ:WPRT) stock could see quite a pop.

         Hope you all had a happy 4th of July.

    Disclosure: the author is long WPRT, COP, and PBR.

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Comments (3)
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  • pragmattist
    , contributor
    Comments (56) | Send Message
     
    www.mines.edu/Potentia...

     

    Contact Cole Perryman for the latest on HR 1835
    (202) 225-2701
    6 Jul 2009, 06:50 PM Reply Like
  • pragmattist
    , contributor
    Comments (56) | Send Message
     
    Senate Majority Leader Harry Reid, D-Nev., said he was co-sponsoring a bill that offers a variety of tax breaks for the production and purchase of natural gas vehicles...Reid’s endorsement came with that of Sens. Robert Menendez, D-N.J., and Orin Hatch, R-Utah, giving the legislation support from both parties and two distinct regions.

     

    Boren and Sullivan also got a northeastern lawmaker to sign on early to their bill, Rep. John Larson, a Connecticut Democrat. Boren said Wednesday he now has 73 co-sponsors.

     

    newsok.com/top-senator...
    10 Jul 2009, 11:38 AM Reply Like
  • Michael Fitzsimmons
    , contributor
    Comments (11170) | Send Message
     
    Author’s reply » pragmattist: thanks for the updates. i sure hope HR 1835 isn't yet another piece of legislation that shows bright promise in the house only to quietly die a slow death in the senate (the house of horrors). you know the senate wants to kill it because the oil and coal lobby money will be *extremely* PO'd. that said, there is alot of publicity this time thanks to pickens, the low price of nat gas, the faultering S&P500 and auto companies etc. etc.

     

    i know i will be watching my senators' action wrt HR 1835. if it comes to a vote, and they don't vote for it, they won't get my vote!
    3 Aug 2009, 10:44 AM Reply Like
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