HerrHansa

Valero (VLO) to close its refinery in Delaware City, Del., taking a charge of $1.7B-1.8B, or about $2/share. The refiner will shed about 550 jobs - and operating expenses of some $450M. Shares +1.6% to $16.62.

It could easily go back to a situation in that importing refined products becomes cheaper than refining domestically. That would benefit the companies that refine overseas, or that ship.

Disclosure: Long Torm (TRMD)

The Weak Dollar Crowd Is Too Confident

federalreserve.gov/new...

They could strengthen the US Dollar by further shortening this, perhaps even returning to a true "overnight" model.

Evergreen Solar Plans to Move U.S. Panel Production to China

In the earnings transcript is a great quote from CFO Michael El-Hillow:

"So this is why getting back to the earlier comment I made, there has to be a statement out of Washington that this is going to be the national energy policy for the United States of America and states must follow it. I mean, it's not unlike what happened in the '70s in the gas shortage where there was a mandate to go to 55 miles an hour on the highways. If you didn't do that as some states out west did because if you ever tried to drive through Wyoming at 55 miles an hour you'd want to kill yourself, but the fact is this that if you decided not to do it, you didn't get federal matching funds for your highway.

So that was the state's decision to make. We need that at the federal level. We haven't seen it yet, but we know it has to happen because we really do not believe that we're going to let one country dominate this industry. This is too much of a growth industry for the world at large, but we haven’t seen it. But I will tell you, I think you people go to a lot of these conferences where government officials are there, they just don't seem to get how to get out of their own way and provide these funds that are so critically needed for companies that are based in the United States to compete."

Companies like Evergreen Solar (ELSR) need some sort of incentive to produce more product in the United States. Beyond that they have a responsibility to shareholders to increase profits, and for the future that means going somewhere else to reduce production costs. Recall that there are environmental issues to producing solar cells and panels, and that other countries have regulations that lag behind what the US imposes.

Disclosure: long Evergreen Solar (ESLR)

In a brief reaction to a "sobering" jobs report, President Obama said he's examining new measures to spur growth and ran off a list of five: road/bridge investment, energy retrofitting, additional tax cuts for businesses to create jobs, boosting credit to small businesses and support for exporters.

Seems that is an admission that the first "Stimulus" package got it wrong, and that four of those five measures should have started all those months ago. The fifth one, support for exporters, indicates to me that the US intends to further devalue the US dollar.

Notes from the Great Investors' Best Ideas Symposium: More Notable Investor Ideas

Golar LNG (GLNG) also trades on the Oslo stock exchange. It is good to follow on the OB Match listing there, and see where the stock goes, then compare it to the NASDAQ listing. It is a good idea to be patient with the shipping industry, especially with LNG shipping, so I see this as a long term choice.

The company recently launched a Research and Development arm called Golar Energy. This division will develop more FPSO, regassification, and other LNG technologies, while the main Golar LNG (GLNG) will focus on shipping. The company has also indicated that they desire to list Golar Energy in the US stock market at some point in the near future.

Disclosure: Long Golar LNG (GLNG)

Four Shippers Emerging from the Mire

Marine Transportation sector needs to be judged on day rates and percentages of ships under charter. There is currently a worse oversupply problem in bulk and cargo than there exists in tankers. When the rates go back up, then some well managed companies can gain profits. BDI is one measure, but when you evaluate each company (not just the four mentioned) then you learn that the clean tanker or dirty tanker rates mean more for some, and Capesize rates mean more for other. Without evaluating types of ships, routes, and particular charters, you will not get an accurate feel for the future prospects of a company.

navigatemag.ru/

That above link is a fast and easy way to watch shipping rates, including BDI (Baltic Dry Index). Keep in mind that worldwide cargo is at an overcapacity level, which keeps rates down in the short term. A few companies are trying to affect the rates, like large players Maersk, CMA CGM, and MSC, but they are only one segment of marine transportation.

I was recently in Houston, and it was great to see more tankers of all types than there were a few months ago. A counter-check on my vessel tracking software confirmed that ships are finally starting to move more, though tankships are getting more action than others. Whether this is an interim lift, a bottom, or the start of a recovery, I think is slightly too early to tell. If you are long, then there may be some good plays, but it depends upon Q4 2009 rate improvements.

Disclosure: long Ship Finance International (SFL), Golar LNG (GLNG), and DHT Maritime (DHT)

The End of the Oil Age? Not Quite

I question it because other sources, like IEA numbers, don't look to agree with it. Many times I have heard similar statements from people in the industry, though without some organized form of numbers that is unverifiable. I could accept that EIA might be more accurate than IEA, but why would there be a discrepancy between these two? What would be a very good reason to accept EIA data and reject IEA data?

Obviously I could fire off an e-mail to both, but I liked your article and would like to know your opinions on this. I was just in the Houston Ship Channel a couple days ago, and I have another meeting tomorrow, and it certainly seems that things are much busier than my last trip here. As to what could be gained by fudging the numbers a bit, perhaps that is another approach to digesting EIA numbers. If the US Government never restated nor manipulated economic numbers, then I would be more likely to accept them at face value.

Thanks for the great article and comments.


On Oct 14 09:58 AM Michael Fitzsimmons wrote:

> HerrHansa: well, again, here is the real data:
> www.eia.doe.gov/basics...
> look under "disposition related" and you see transportation is 71%
> of oil consumption in the U.S. this number has been relatively stable
> over the past years, and is accepted truth and an often referred
> to number by other reputable experts. i'm not sure why people are
> questioning this number, it's a fact. ......

The End of the Oil Age? Not Quite

www.iea.org/stats/grap...

Check Final Consumption by Sector

I will not claim to have personal statistics to prove or un-prove this. What would be helpful is links to other sources. I generally consider IEA Statistics to be reliable, but I welcome the opportunity to view other sources that may prove more reliable. Thanks in advance.


On Oct 13 01:21 PM Road Runner wrote:

> HerrHansa, 40% you mention below is not accurate. 45% of oil goes
> to gasoline in the US. Then add in diesel, and you get to about
> 70%.
>
> On Oct 13 12:21 PM HerrHansa wrote:

The End of the Oil Age? Not Quite

I have seen reports indicating closer to 40% of oil going towards transportation usage in the US. Probably one of the more interesting related comments was from the Saudi Oil Minister a few months ago, in that he stated the US Military was the single greatest user of oil and refined products in the US. Somewhere in all these statements is a reality that oil and refined products will continue to be important. Currently with manufacturing down the demand is greatly reduced, and it might be a slow change to any increases.

The Port of Los Angeles switched over to Natural Gas truck and service vehicles this year, and reported that they greatly reduced their carbon footprint as a result of that. I would expect truck fleets to make the move sooner than passenger cars. Some US cities bus systems run on natural gas already. The infrastructure is there, though it takes quite a larger step to make natural gas more available for private transportation.

Italy already has natural gas vehicles that the average person can purchase. There is also existing technology in several places for a home fill-up kit, or to get fueling station pumps to allow natural gas for passenger cars. Unfortunately demand is low, and many of the big oil companies don't seem interested in changing the existing gasoline stations. It seems there might be more of a push to get natural gas to replace coal at power stations, than there is to have natural gas automobiles.

Disclosure: long on Statoil (STO) and Golar LNG (GLNG)

Norway, Robertson on the Kroner, And Other Reasons to Increase Foreign Exposure

I have been going with a Norway strategy for most of this year, including Statoil (STO) and a few other choices. I continue to look into this market, since it contains some well managed companies. Many are small, a little low on volume, and sometimes volatile, so I consider a long term evaluation the best way to approach research.

Disclosure: Long on Statoil (STO), and Golar LNG (GLNG)

Don’t Blame Free Markets for the Crisis: They Never Existed

Freedom is the ability to succeed or fail.

With stocks up more than 55% since March, is it still a "bear market" rally? "Any bears out there ready to capitulate?"

Over one fourth of the volume in the turds of the market. Gold going up with the market. Volumes overall back to years ago levels. Program trading making up a larger percentage of that volume. Looks more like a suckers rally.

One in Two Solar Firms Will Fail, Say Analysts

I would expect a few things to happen in the coming solar market. One which is already happening is cooperative manufacturing agreements between western solar innovators, and Chinese manufacturing facilities. The next thing I would expect is more M&A activity, possibly large energy companies picking up some solar companies, or solar companies combining to gain strength from becoming larger companies. Those solar companies with low cost, carefully controlled expenses, and unique technologies will be the best survivors in this, either as individual companies, or as part of larger companies.

There is also quite a lag from identifying a location, to installation of solar. Very large installations experience bureaucratic and regulatory hurdles. Smaller installations run into cost issues, or need subsidies and tax breaks to spur growth. All of this indicates that implementation of more solar is a very slow process; perhaps slower than some in the stock markets would like.

Disclosure: very long Evergreen Solar (ESLR)

Report from Europe: Does September Mean Sell?

Lots of EU residents take holiday in August, and then return en mass to work in September. It is easy to see a somewhat self fulfilling prophecy in an early sell, choppiness, then oversold conditions. That would be enough to suck people back into the market, giving a short lift, and then BOOM, more selling. Anyway, that's how some Septembers past have gone, though of course no guarantee of the same happening now.

Even if it goes as many Septembers past, the overall month might not be much different. It still looks like a mostly sideways market. I do think there are some buying opportunities, and quite likely I will take some profits to allow for flexibility. I don't think we are even close to a normal market yet.

Banks who will be fingered if the Fed is forced to divulge where its money has gone over the past year are none-too-happy: "The Court's Order threatens to impair the ability of our members to access emergency funds through the NY Fed's Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause," they say in a declaration filed yesterday.

If they can pry their way into UBS AG (UBS) accounts, then it is only fair that US taxpayers can get a look at the trail of money to US banks.