Keltorttruth

Investing in Natural Gas: It's Time

FYI - the September contract is at $2.87 right now. Is your point that we buy it after the first 40% move?

On Aug 23 01:46 PM Steven Ward wrote:

> NG goes up when articles such as this one dissapear and the newsletter
> guys throw in the towel.
>
> We can all wait. Before gas goes to 6 bucks its got to hit 4 bucks
> first. We can wait.

Unwise to Tax the Rich to Pay for Health Care

You kind of had me going until, almost as if a non-sequitor, you threw in "tax the rich". I was weighing in my mind, perhaps spreading healthcare costs amongst all is a positive NPV project? Maybe?

But then you did it again. Why disproportionately take $ out of the hands of the most productive members of society? The first place we should start should be to CUT spending, it is absurd how much $ the gov't wastes (which, incidentally, is why I am so against giving them any more of my $ - when I choose charities, I look at the efficiences, how much of every $ actually goes to the people that are meant to be helped - on that basis, one would not give one penny to the gov't b/c they are by far the worst).

How about everyone pays for their fair share? How about a consumption tax instead of an income tax? And, to me, you underplay, the importance of lawsuites. You have an unbelievable natural conflict of interest because lawmakers are lawyers.

Unwise to Tax the Rich to Pay for Health Care

Wow. You never stop. Let me fill you in on a little secret. Private charities and church donations do much more with much less than the government could ever hope to do. Your ideaology has actually led to your president calling for an end to deductions for charitable donations! Who is the heartless egoist now? The more money I make, the more I give to charity. How about you? By simple statistics, I would bet you don't give any money to charity. Look at any census poll and the donations by self-identified Republicans are consistantly more than charitable donations by self-identified Democrats:

"Although liberal families' incomes average 6 percent higher than those of conservative families, conservative-headed households give, on average, 30 percent more to charity than the average liberal-headed household.

-- Conservatives also donate more time and give more blood.

-- In 2000, brows were furrowed in perplexity because Vice President Al Gore's charitable contributions, as a percentage of his income, were below the national average: He gave 0.2 percent of his family income, one-seventh of the average for donating households. But Gore "gave at the office." By using public office to give other peoples' money to government programs, he was being charitable, as liberals increasingly, and conveniently, understand that word.

On Jul 17 01:57 AM Michael Clark wrote:

> Pay by what one can afford to pay. Those who would allow their poor
> cousin to die because they have no money and are sick need to check
> to see where they have misplaced their soul. Yes, the mind can argue
> ANYTHING, and convince itself it is right. But the soul KNOWS what
> is right. All you Christians arguing with Saint Paul that those who
> don't work (there are millions in that category now, who don't work
> even though they want and need to work) should check the words of
> the founder of the religion, who counseled sharing and generosity,
> not the Stalinist disciple.
>
> It would be an utter tragedy in Bill Gates and Warren Buffet had
> to pay a bit more in taxes. Yes; no question about it. At least Gates
> and Buffet have demonstrated that they have a soul. What about the
> Walmart family? They can pay more without disturbing anything in
> their life except a line in their accountant's spreadsheet.

Unwise to Tax the Rich to Pay for Health Care

Quite simply, I can not disagree with you more. The incentive of individual properity creates the drive to produce at the most efficient and effective possible levels if it is understood that others have the same right to the same freedoms by following the same set of unchanging rules - fair competition drives innovation. When one introduces a government competitor who plays by a completely different set of rules which are highly slanted in the government's favor, that drives individuals away from taking risk and investing in their beliefs.

In my opinion, a great society is one where the individual, to as large an extent as possible, determines his/her own outcome. This leads to people taking risks on ideas/products/franchi... - basically anything entreprenuerial. When these ideas work, they often lead to mass hirings of those who may not have the ideas or the capital to pursue their ideas but who can help implement the ideas. The pursuit of individual betterment has the side effect of dragging others up along with it b/c they can compensate others when their ideas work.

Everyone working for the benefit of everyone only ensures that very little potential job-creating, real productivity increasing capital risking will take place. If I'm only allowed to earn the same as the guy next to me, why on earth would I put one extra ounce of effort into my job? Why would I even think about taking any sort of risk with my capital? You propose a very slippery slope. Maybe you think 55% of one's income is not too much; maybe the next guy thinks 65% is not too much (and maybe even you after you've had time to grow comfortable with the previous level) and on and on it goes. Where does it stop and who decides? The point is that the guiding principle you seem to believe in rings of pure communism which you seem to imply is a the hallmark of a "great society" - sounds like Utopia to me. My guiding principle, and the guiding principle our forefathers used to take a dramatic risk in breaking away from the Brits and their "confiscatory" 12.5% tax rate is the right of the individual to pursue life, liberty and the pursuit of happiness. They went as far as to call these rights God given, not government given as you would suggest.

There are plenty of places in this world for your ideaology, I just don't want America to transform into one of them.

On Jul 17 02:10 PM Michael Clark wrote:

> Reactionary: I can at least smile at your username.
>
> You say health-care is not a right. I say it is. The right to bear
> arms is not God-given -- it's given by men in society. The right
> of free speech is not God-given -- it's given by men in society.
> The right to vote is also not God-given -- it's given by men in society.
> ALL of our rights are given by our fellow-men (ancestors, in this
> case) since public opinion decided these 'rights' were important
> for a great society. How do we define a 'great society' -- I'm assuming
> you would like to live in a great society, and have history judge
> America as being a great society. Sink or swim? Dog-eat-dog? Are
> these the values of a great society? Do we care about our neighbors,
> or only about ourselves? Can America really become a great society
> with the philosophy that 'its every man for himself and God against
> all'? Do you think we MUST have prisons full, murder, rape, and robbery
> a contagion? Does a great society value only the accumulation of
> money by individuals? Are there other values that would help develop
> our sense of humanity. My parents generation knew their neighbors
> and cared about them. This all changed in my generation. Me-me-me:
> nothing else matters. Is this blind egoism what makes a great society?
>

Unwise to Tax the Rich to Pay for Health Care

Almost anywhere. The U.S. has the highest corporate tax rate to any developed country other than Japan. Who do you think owns most of the businesses in America? The "poor" people? Give me a break.

I am truly shocked and appalled at some of what I'm reading. I thought Obama got elected on his marxist platform b/c people thought he was just grandstanding for the left and didn't believe he was actually that far left. However, after reading many of these comments, I think far more people DID get him and are in agreement. We didn't become the world's super power by stifling growth and punishing risk takers; it simply doesn't work that way!

A few basic questions that I hope will open some of your eyes. For those of you who say, "tax the rich, go get those evil doers who have been smart, worked hard, gotten lucky and been productive", when's the last time you ever worked for a poor person? Do you think if your boss makes less money he/she is more likely to pay you more money? Do you think he/she is somehow less likely to lay you off? If the marginal returns on TAKING RISK to open a new plant/office/store or anything else that might employ you are now less because of a lower expected return due to higher taxes, is that going to make these evil rich people more likely to take that risk? Wake up! It's very simple, unless you want to live off the government, you want the most productive members of society (and yes, your boss and the multitude of similar risk takers whose income depends not on a salary but on successful business plan execution are by definition more productive than you) to have MORE capital to put to work rather than less. The way out of this mess can only be through more private sector jobs which lead innovation and increase real productivity, not through more government wasteful spending.

I've seen the tired argument that the gap between the rich and the poor is growing so therefore capitalism doesn't work and we should push towards all people earning the same amount (which is exactly what taxing the "rich" more and having larger negative real tax rates for the "non-rich" equates to - wealth redistribution). Fist of all, that (to its ultimate end) is called communism. Remember that? We had a cold war that nearly got us all blown up because, at least back then, we believed in personal freedoms and the right of an individual to reap what he/she sows and we didn't want the infectuous spread of communism to pervade our individual liberties. Please don't fool yourselves; by your "tax the rich" rhetoric, you are headed, idealogically, down that exact path. Maybe that's what you want, but I still have faith that the America I grew up in and my relatives fought and died for still exists.


On Jul 16 02:49 PM bricki wrote:

> The top 5% of earners in the US also earn nearly 50% of the income,
> so the 50% of the taxes doesn't exactly seem out of line.
>
> A lot of the comments propose that these wealthy people would move
> offshore. Other than China where exactly would they move that would
> offer a better tax rate than the US?
>
> On Jul 16 02:29 PM User 449150 wrote:

Is Excessive Speculation in Oil and Commodities Markets Actually Occurring?

I was going to get really upset, but then I read your name and it explains an aweful lot. Although Vermont appears to be fully socialist, many of the rest of us believe that risk should be rewarded when it pays off and punished (by the associated losses) when it fails. What about biotech or technology firms? If they put a bunch of risk capital at work and it pays off, should they have to pay 85% taxes? Should they not be able to deduct their speculative R&D losses? What about you? What do you do for a living? I am going to guess you organize political rallies. If you buy a bunch of red bandanas and T-shirts expecting all of us to join you neo-commie party and we don't and you fail miserably, should you be able to deduct your losses? Can you explain to me the difference?

Also, I am pretty sure that you will already go to jail for tax evasion in this country, ask Wesley Snipes.


On Jul 10 08:54 AM Vermonter43 wrote:

> How about federally taxing the trading gains of oil speculators (any
> person frim or association who cannot take delivery of ALL their
> contracts into their own storage facilities) at 85%, denying any
> deduction for trading losses, and extending the jurisdiction of the
> U.S. I.R.S. to any person, firm or association worldwide who has
> ANY commerical contact with the USA or any person, firm, or association
> that has contact with the USA. Make evaision of the tax on energy
> trading profits subject to mandatory incarceration. Perhaps these
> actions might cool the ardor of the speculators that Craig tells
> us do not exist at all. Club Gitmo is soon to be empty, and the collected
> speculators could vacation in style....

Is Excessive Speculation in Oil and Commodities Markets Actually Occurring?

Why? If I am an airline company looking to hedge against high oil prices, why do you think I shouldn't be able to do so? Alternatively, if I believe in peak oil and think the prices will sky rocket but don't have the time or ability to accurately discern between the public E&P companies and want to eliminate any company specific risk and tie my returns directly to the commodity, why shouldn't I be able to do so? How is buying and selling a commodity any different than buying and selling a public equity or bond (or, rather, why should it be any different); isn't all investing speculating? If you buy art or real estate or baseball cards or gold, aren't you hoping the value goes up so that you can sell it in the future at a profit? As long as there is no blatant attempt to corner the market, why should commodities be any different?


On Jul 09 06:08 PM SteveK wrote:

> This article is unadulterated bs. There should be a rule that whoever
> buys,sells, owns oil futures MUST register themselves and be in a
> position to put-up full monetary value oil trades and be able to
> take 100% delivery of oil futures they trade! And I don't mean taking
> delivery via a third-party! We need to stop enabling speculator gamblers
> from throwing hordes of money into oil futures, manipulating prices
> via artificial demand/supply machinations, and then rolling-over,
> closing-out, or selling their positions to eliminate taking delivery.
>
>
> These speculators are nothing more than gamblers ... their activities
> have no legitimate bearing on any facet of global demand or supply
> for oil ... and they do nothing but distort prices in the oil marketplace.
> The government should regulate oil traders and eliminate blatant
> speculative activities!

Before Regulating Oil, Remember the '70s

Thanks Derryl, I'll check out the comments and see if there are sound, logical reasons to doubt the man (rather than ideological ones).

Before Regulating Oil, Remember the '70s

Tony Petroski - you need to read Craig Pirrong's article about the lack of speculation before you discuss things you clearly do not fully understand. (I don't have a link, but he's on Seeking Alpha and he will open your eyes to a few facts that most either choose to ignore or simply haven't seen.)

As for User 357705, you're damn right we're arrogant and have every right to be! As long as we remain capitalist (vs socialist), we will remain the most powerful, most innovative, most individually charitable and proudest nation on earth and I am not about to apologize for it.

Is Excessive Speculation in Oil and Commodities Markets Actually Occurring?

Excellent article. It should be required reading for the sheeple in D.C. I would be interested in reading your thoughts on cap and trade. I think it is an impending disaster that will plunge us squarely back into the throws of the recession.

Commodities, Cap and Trade and Natural Gas

Will Deliver, I’d like to address each of your points because I fear you are sadly mistaken as are a lot of people. This is an extremely important discussion that will have massive ramifications on all of our lives and I can not impress upon you enough to please read what economic-minded (vs environmentally-minded) people are writing.

1. Reducing demand for foreign oil from the petro terrorists!
This is patently FALSE. All this will accomplish is making domestic production of the petroleum products derived from foreign oil more expensive. The easier and cheaper way to offset this cost is NOT to spend billions on upfront capex and develop comparably inefficient wind and solar; it is to import more LNG, more heating oil, more diesel fuel, more gasoline and more distillates.
2. Job creation. Weatherization and energy efficiency improvements are more labor intensive than material and technologies. Energy efficiency is more cost effective than increasing the energy supply. Again, immediately reducing demand for foreign oil!
WRONG! This will lead to job LOSSES for Americans. If a factory is using energy to create widgets in America and it will now either directly pay for its carbon production or pay for it indirectly through higher energy bills and the same rules do not apply to foreign-produced widgets, then (assuming there is still demand for the widgets) at least some portion of the widget sales will transfer to the foreign producer who is now, artificially, relatively more competitive. This will for certain lead to job losses across all affected industries which will include any industry that uses energy to create its products so long as they are transferable.
3. This bill provides the means to lower cost energy for our children & grand children. Building wind and solar installations will take labor and capital expenditures, but it will provide the infrastructure to generate electricity from free, unlimited energy sources, the sun and the wind.
Because of this bill, our children and grandchildren will be handed over a country so heavily burdened with debt that all of our hard earned savings will be evaporated through inflation. The right answer, assuming you believe either that carbon emissions are a potential problem or that we are truly in peak oil, is to continue to use the cheapest, most efficient forms of energy while also incentivizing the private sector to develop renewables through subsidies, not by taxing ourselves back into a deeper recession with additional massive national debt that can only be repaid by printing dollars.

Please take a look at who's against American Clean Energy. It is the rich and powerful fossil fuel lobby. The 'Cap and Trade' retoric is a distraction.
The rich and powerful fossil fuel lobby? What? If that is so, then it must be the single most ineffectual lobby in the history of lobbies. When is the last time you saw congress do something for the benefit of the risk takers who help provide our country with the energy we need to survive? Never! Last year, when the companies were able to earn ROI’s that approached ½ of the tech and healthcare and biotech industries, what did we hear? Windfall profit taxes! The people who are against the cap and tax bill are those who think about things from an economic stand point, not an ideological one.

Commodities, Cap and Trade and Natural Gas

A few points about the article. In the 1st paragraph, you get close, but not quite there. This is a unilateral handcuffing of American businesses. There is no way for China to "cheat" b/c they are not part of any agreement. This is why, even if you believe that minimally reducing CO2 emissions will effectively combat climate change (or is it global warming this week?) this bill will not work. China and India and Latin America have not, and will not, agreed to any of this, they are dying for us to send our factories and jobs their way.

What this bill will accomplish is making American factories and refineries less competitive because there will be a new input cost that we unilaterally have imposed on ourselves. The effect will be to "shrink the oceans". While some American goods held a competitive advantage as far as selling them in America b/c they are produced locally, this additional cost will erase that advantage and make foreign products relatively more competitive b/c the cost of transporting them will be offset by carbon costs.

The main point of this vis a vis your article is that this bill will definitely INCREASE our dependency on foreign refined products. Domestic refiners run on very slim margins (most of the time) and this additional cost will have to be passed through to consumers. Consumers will, of course, look to buy their products for the lowest price which will now, in a larger sense than before, come from somewhere else that hasn't handcuffed itself with this new additional cost.

The cap and trade idea at this point in time is completely unfeasible and will be a disaster. It will put the final nail in the coffin of some struggling American factories and refineries and will increase Hugo Chavez's influence on our daily lives. Not to mention that it is a huge (largest in American history?) tax on the middle class, whether they want to call it that or not. Obama wants us to "be like California" who has the lowest carbon usage per capita in America. I'm sure a North Dakota resident is all over not using their heater in the winter and folks in Dallas will be happy to shut off their A/C's in the summer so they can be more like California which, incidentally, despite having the best possible climate (meteorological) for being “green” is still bankrupt.

Reining in Oil Speculators

Exactly, Shale Gas. This will be the end of the UNG and USO as we know them. They will be forced to become closed end funds or shut their doors. Yet another example of government killing successful innovation through either intended or unintended consequences.

On Jul 08 08:59 AM Shale Gas wrote:

> What will the ETF's do if there is a position limit, yet they have
> to buy futures because money is pouring into that particular ETF?

Crude Reality: How Long Can Oil Stay Down?

Goldfriend,

Don't confuse reserves w/ potential reserves. Oil in the ground only becomes "reserves" when it is both proven to be there (as opposed to estimated) and can be retrieved economically. If you haven't noticed, there are literally no new greenfield (starting from scratch vs brownfield which is continuing to produce existing reserves or extending existing production plans). Why? Because Canuck tar sands are not pipeline quality and need to be upgraded in order to move them, or (and it's usually a combination of both) they can be mixed w/ diluent, which is simply high quality crude. These facilties are extremely upfront capital intensive and at prices this low, these projects are not economically feasible. Thus, reserves in Canada at YE2008 from the tar sands will actually likely decline significantly. As for probable and possible quantities, I can not say, but, again, please don't confuse those with reserves.

Crude Reality: How Long Can Oil Stay Down?

Healthwiz; I apologize but I have to disagree with what you wrote, "Bakken oil, which takes some work, is still only $16 a barrel......that's not a figure pulled out of my backside, that's from the mouth of the Lead Geologist there."

All you have to do is look at the financials of the producers in the play. If you drill a successful Bakken well at $16/bbl for a well cost of $6mm, you will lose $4.2-$4.3 mm over the 20+ year life of the well. If you think about this on an overly-simplistic, totally undiscounted basis, this makes sense. Think about it this way, spend $6mm, produce 420 mbbls, get 336 mbbls after a 20% royalty, get $5.3 mm - that's a $700k loss w/ no production costs, production taxes, allocated g&a, dd&a, etc and assumes that you get all the revenues on day one. Your math, or your geologist's math, just doesn't work.

I think what is more likely is that you are confusing the cost of continuing to produce an existing well with the cost of making a new well. I think also that the author of this piece suffers from the same mistake. Certainly, the cost to continue producing existing wells is much lower than $60/bbl, and yes, there are many plays that are profitable at lower oil prices, but there are not nearly enough of those to offset the 7% global yearly decline rate. That is 6 mmbopd per year. The author's argument that the 80th mmbopd represents the cheaper oil and the bbls above that to stretch supply to 85-86 mmbopd are the bbls that cost the most is not valid. The reason why is that the base 80 mmbopd is not static, it too is declining. Let's suppose that they are the better bbls from the better reservoirs and are only declining at 3.5%/year; that is still 2.8 mmbopd/yr that is coming out of the supply chain and will need to be replaced w/ something. It doesn't seem logical that if someone had very low cost bbls to produce that they wouldn't have been producing them, but let's assume that makes up 0.8 mmbopd. Still, 2.0 mmbopd needs to come from the higher cost oil to keep production flat.

Next step, let's assume that global demand for oil goes down 2 mmbopd to 84 mmbopd and that excess supply (defined by the OPEC cuts) is 4 mmbopd. Take the 2 mmbopd decline from the existing good/cheap fields/year, and you're left w/ some period of time of less than 2 years to chew through the excess supply. (Unaided by additional drilling capex, but aided by existing field level capex, global crude oil declines will be somewhere between 2 and 6 mmbopd.) We all know the markets are forward looking, it's just a matter of how far forward before we see the rebound to the true marginal cost of oil once again being the spot price. Six months seems to be a consensus number, so I will go on record as calling for $65+ WTI by the end of the year.