scrambledyegs

Oil as a Deflationary Investment

Wow, theoildrum.com article gives a depressing outlook on the future. Is mankind really at a point where economic contraction is the only possible outcome?

There are so many things that could be done differently by wealthy nations that could alter oil consumption/production (efficiency enhancements, alternative fuels/energy, technological advancements in extraction/refining). Yes oil has been a cheap source of energy for a long time; that's why it has been used so inefficiently. As long as profits are good and consumers get what they want why would you make a change to the way you do things? Now that there are new variables to consider affecting both corporate profits and consumers buying oil products changes will be made in the marketplace that allow mankind to continue to advance.

OIl will continue to be a good investment. Its going to be the primary fuel used for transportation for a long time to come.

Priming the Pump for $20/Gal. Gas: Interview with Chris Steiner

Thomas Malthus and James Kunstler would probably agree that we are going to reach $20/gallon for gasoline in the near future. The problem with making predictions like this is that there a more variables involved than anyone can really take into consideration coupled with the fact that humans are very inventive and adaptable. New technologies can be deployed much faster today compared to 50 or 25 years ago; especially with the right amount of financial incentive.

Yes, things are going to change because they always do but I think people are still going to have cars (probably not gasoline powered) and lots of people will live in outer suburbs (maybe not in 5,000 s.f. mcmansions) and that by the time gasoline reaches $20/gallon it is not going to be the world's predominant transportation fuel.

Natural Gas: The Best Risk-Adjusted Commodity Speculation

Yes NG has been hammered but has it bottomed? Why can't it slump under $3?

Lots of new supply is still coming online from the shale plays, LNG is going to start being imported, industry is still slumping, people are still losing jobs or having their earnings reduced and they are watching their thermostats closely (perhaps electricity demand will not be as strong this summer from residential utility customers). There is lots of extra NG available right now and I would expect this to put pressure on prices through the end of 2009.

Atlas Pipeline: Hang in There

I listened to the recent APL conference call. I think the market has reacted with additional price declines because APL is selling assets that generate fixed price revenues (the only assets that have decent market value). This is leaving the partnership with a higher percentage of assets that generate variable price revenues based on the price of natural gas or NGL's. Unless prices for natural gas and NGL's increase in the near future I would expect the partnership to cut the dividend significantly or even eliminate it. The partnership is being forced to sell their "good" assets now in order to comply with debt convenants so the news about the asset sales should not be considered good news. Finally, while the APL management stated that they thought the current dividend was sustainable they did not provide any reasons for that belief; they did not tie their expectations of future performance to an expected or estimated price for natural gas or NGL's.