scfranklin94

Is Oil Going the Wrong Way, Or Do We Need to Adjust Our Perceptions?

Here's the paradox:
Stimulus package creates demand, which increases crude prices to the point that the increased energy costs offset the value of the stimulus package....

The energy markets are all over the idea that CL is going to $75/bbl; seems no one has factored in that the return to higher prices will force the US into a stagflation scenario, meaning very low growth in GNP and a flattening of demand.

Sorry Arnold, TARP Can't Be Used to Bail Out the Golden State

On May 27 12:15 PM Duude wrote:

> The fact is as a large state wealthy Californians have been subsidizing
> smaller states for decades. Large states have always, always put
> more into the pot and got little back while little states put in
> little and get all of it back and then some. The call for bail out
> might not be as unfair as many believe.

This only became true when the military started closing bases in the 1990s, before then California got more from the Feds than they paid in taxes.

Sorry Arnold, TARP Can't Be Used to Bail Out the Golden State

If the state of California can save the bulk of $21 billion just by cutting back on the school year by a week, they should let kids off for a month, it's not like the kids are missing out on anything (the state has a 20% dropout rate as it is).

Bloodbath for Natural Gas and Solar

Even if Katrina and Rita happened this year, NG end of season storage would be 4.2 tcf, unfortunately there's only 3.9 tcf of available storage, so a lot of gas will have to get shut-in in the late summer/early fall. Look for NG prices to test $2.50 in August.

Bloodbath for Natural Gas and Solar

Katrina and Rita can't save the NG market from the storage train wreck that is coming.


On May 22 09:41 AM Fred W wrote:

> one weather event and the NG price spike will come...a couple of
> "events" and we will be back to 2005 #s

Bloodbath for Natural Gas and Solar

Wait till September; NG will be a train wreck until then.


On May 21 11:04 PM Zeon wrote:

> Time to start buying.

Obama's Sweeping Changes for America's Cars

So I should buy a Porsche Turbo now before it gets legislated out of existence...

Natural Gas: Not Many Reasons to Own It

Freya, I don't agree, you're stats are according to conventional vertical gas well fields. Everyone in the business now knows that there is two to three times as much unconventional natural gas reserves as there are of conventional gas reserves.

I remember petroleum engineers from Conoco coming to my high school in the 1970's and telling us that the US would run out of natural gas in twenty five years. I remember looking a well logs for the Barnett Shale in the 1980's and being told by the older guys in the company how the gas in the shale was trapped and would never be recovered economically. Then I attended a conference in the 1990's saying how the US was running out of natural gas and LNG was the only way that we could meet US demand. Now they're saying that the new shale plays will 'only' last 50 to 100 years.... All I know is that on my death bed, there will be more gas production in the US than in anytime else during my lifetime.

Natural Gas: Not Many Reasons to Own It

For those wanting to time an investment in UNG, I wouldn't want to own it before the end of October. Way too much gas out there; storage will max out and we'll have well shut-ins being mandated to maintain pipeline integrity in late October, possibly as early as late September. If we don't have an active hurricane season and above normal summer temperatures, oversupply issues may start as early as Labor Day.

There's no way that the lack of new production will keep this from happening this fall; but by next summer the situation should swing from oversupplied to undersupplied, and there should be a multi-dollar increase in price.

Terra Nitrogen: Super-Stock or High-Yield Villain in Disguise?

Jason and Robert - you guys are exactly right. 95% of the cost of fertilizer is natural gas. The only reason that Terra Nitrogen didn't have huge losses last year when NG reached $13/MMBtu is that ethanol production kept corn prices at all time highs, therefore farmers would pay for more expensive fertilizer.

If the gov't returns to it's senses (admittedly that's a big IF) and reduces or cancels the ethanol subsidies (the program produces no net reductions in hydrocarbon or CO2 emissions - it's just welfare for farmers), and in the meantime NG returns to higher prices in 2010 as demand returns, Terra Nitrogen will be in a bind like it was earlier in the decade and it won't be making any distributions to its partners.

Anyone selling Terra Nitrogen partnerships as stable income should be indicted for fraud; the company's cash flows are extremely volatile.

Minyanville: Subprime Lending Is Back with a Vengeance

Just finished reading "House of Cards"; it's hard to believe that the government is back at it, trying to get people into homes that they can't afford.

Articles like this remind me of the quote from Darryl Hannah in Blade Runner, "Then we're stupid and we'll die".

Natural Gas Is Cheap; Volatility Is Here to Stay

The breakeven cost at Trinidad and Nigeria to run their LNG gasification facilities is in the 50 cent per Mcf range plus fuel; Japan and Korea (the top two int'l markets for LNG) have been cutting back on their deliveries. Europe has minimal storage, so that leaves the US as the destination for this summer. One LNG publication said that the breakeven for Oman and Qatar LNG to the US is $2.50/Mcf (total delivered cost) - so it looks like it's coming here.

As for $4 drilling costs - that's not true everywhere. The flow rates in the Haynesville have actually driven the breakeven cost below $2, so they'll drill if they want to (getting credit to drill is a bigger problem than the breakeven cost).

From the Halliburton earnings call, they don't see drilling picking back up till 2010, because of the huge backlog in drilled wells that haven't been tied into gathering systems yet. So the falling rig count now may not lead to as steep a drop off in production as should happen otherwise.

The only way that NG goes up and stays there before the winter is if the recession is over and the US economy is coming back strong. It might happen, but I doubt it.

Natural Gas Prices Are Down, But Still Relatively High

Buy UNG in Aug/Sep, NG is going down to sub $3 between now and then.

Natural Gas Prices at a 6.5 Year Low

Sempra contracted to get the Sakhalin supply because 1) Japan doesn't need the amount they contracted for from Sakhalin, 2) Sempra owns the facility in Tijuana/Espinosa, so they need to show investors that they are using it, 3) This keeps Western US suppliers honest - it's only .128 bcf/day. If I was a driller in the US Southwest, I wouldn't want the additional competition, but hey, it's a free market.

The Growth of Japan's Working Poor

One thing you didn't mention is while wages have been declining, Japan has been experiencing deflation; so you make less, but things cost less also. The ones that deflation hurts the most are the those that didn't have any savings back in 1990 - basically the younger generation. The older generation makes virtually nothing on their savings, but then the yen keeps appreciating, so they are effectively 'more wealthy'.

As for the decision for Japanese companies to move the bulk of their electronics manufacturing to China, either they did that or watch Korean and Taiwanese companies come to dominate China based industries. So either way, the Japanese manufacturing jobs were going to be lost.

As to free market policies increasing wealth disparity in Japan, it's impossible for an export-dependent economy to maintain labor wage rates via protectionist policies, so the only answer is constant labor productivity gains. Productivity gains in a rapidly aging workforce is difficult at best, that is why you see Japan spending so much money on robotics research - whether it will work or not remains to be seen.

The gist of your post is that this is the future for the US; perhaps, but the US population is still increasing via immigration. In 2040 the US is projected to have a population of 400 million, while Japan will be 65% of todays population. 80 million more people in the US will mean more demand for everything (whether that's necessarily a good thing is a matter of opinion).

Lastly you point out all the problems in Japan, with the implied premise that capitalism has 'failed' the Japanese people. What other system would allow them to have the highest standard of living in Asia? If you have to be poor, would you rather be poor in Japan or China?