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  • Time To Again Take A Flier On Coal  [View article]
    I'm not sure how much China effects American coal names. BTU has exposure to china from its Australian coal business, but Americans ship very little coal to china (exports are growing, but still small percentage of overall US production). China weakness would have a negative effect on coal names only indirectly through pressures on pricing. I just don't understand the connection between domestic coal names and China.
    Jan 24, 2014. 11:17 AM | 2 Likes Like |Link to Comment
  • FOMC Announcement: QE3 is on to the tune of an open-ended pledge to buy $40B in MBS per month. The pledge to keep rates extraordinarily low is extended until mid-2015.  [View news story]
    As funny as this is, the "gateway meat" comment is quite accurate. Research has shown that the smell of bacon fat is so enticing that many vegetarians eat bacon as their first meat when they break their diet. Personally, I went for steak first, but bacon sure was tempting me for many years.
    Sep 13, 2012. 01:54 PM | 3 Likes Like |Link to Comment
  • Why Exxon Mobil Should Support Natural Gas Transportation  [View article]
    I will offer reasons why Exxon should not support natural gas transportation:
    1. If prices stay low due to lack of demand for increasing production, many of the natural gas producers are going to go bankrupt, leaving lots more natural gas assets for Exxon to gobble up. They can afford to loose money on nat gas since they have loads of oil related income.
    2. Why support an alternative to oil when they get most of their income from oil? Supporting nat gas transportation would decrease demand for their bread and butter product. Eventually things will shift as their oil production falls off (sorry if you dont believe in peak economically recoverable oil), they will be interested in increasing the value of their nat gas assets, which in 5 years will be far greater than today due to aforementioned producer bankruptcies.

    Guess this is a cynical view, but if there's one thing I know about the oil majors its that they are shrewd businessmen who care much more about profit than whats good for the country.
    Aug 2, 2012. 01:10 PM | 5 Likes Like |Link to Comment
  • Controversy On Shale Gas Boom And Burst Explained  [View article]
    Mark, great article on shale gas. Others will be saying "this time is different" until they are blue in the face. If the model is anywhere near accurate though, NG prices are nowhere near profitable for shale gas producers. Their valuations I believe are more reflective of the land they hold, which has been pumped up by all the hype. When the true value of the land is realized, these companies are going down hard.
    May 8, 2012. 12:13 PM | 3 Likes Like |Link to Comment
  • Natural Gas: The Numbers Also Tell A Tale Of Switching  [View article]
    Paulo, I love this response. It is a mirror of my response to you the other day on a different article and here you are using the same argument.

    Yes I was using averages but "The point is one that's visible in large numbers and averages". LMAO!

    By the way, in that same comment discussion, I asked for numbers showing that NG was cheaper than coal., cause my calculations show the opposite. This article attempted to show that some localities it is cheaper and therefore more widely used. I commend you for this use of data and calculations, and you have gained back some respect. But I still dont think that on "average" NG is cheaper than coal.
    May 4, 2012. 01:27 PM | Likes Like |Link to Comment
  • Natural Gas Has Not Displaced U.S. Coal Demand  [View article]
    Maybe I will just give up discussing this topic with you, Paulo. Your statement was "temporarily and in many locations". I used averages, which should reflect data from "many locations". Either you didn't mean nationwide, but on a more limited local scale, in which case that doesn't help your point of LOTS of switching going on, or you did mean on a larger scale, in which case the data averages dont support your statement. Either way you missed the point and provided no calculation (even for one region) that supports your point.

    I think your arguments and theories have some validity to them, and even agree with you often enough. However your lack of logical arguments and proof lately has given me the idea you may not quite know what you are talking about.
    May 2, 2012. 02:22 PM | 1 Like Like |Link to Comment
  • Natural Gas Has Not Displaced U.S. Coal Demand  [View article]
    "coal is not the lowest cost fuel right now"

    Paulo, can you please provide supporting evidence for this statement. I hear this statement used all to often lately and I don't think those who say this have any clue.
    The cost to electricity generators in Jan 2012, in dollars per million btu:
    Coal - $2.43
    Natural Gas - $3.67
    With the efficiencies listed in Mark's chart above for Jan 2012, 32.47% and 45.09%, it seems coal is still about 8% cheaper. If you know differently, please provide the numbers. I don't mind admitting I'm wrong as long as someone can prove I am.
    May 2, 2012. 01:46 PM | 2 Likes Like |Link to Comment
  • Is Natural Gas Displacing U.S. Coal Demand?  [View article]
    Me too, both sides of argument have their solid points. I am building long positions in both NG and Coal. If one wins, I win, if both win, I win. Both commodities are suppressed in price and shouldn't drop much further. May the best energy win, after all thats what capital markets are about.
    Apr 27, 2012. 09:07 AM | Likes Like |Link to Comment
  • EIA Weekly Natural Gas Updates Indicate No Coal To Gas Switch  [View instapost]
    Mark-I follow many of your articles and posts. Great work. I also like to dive in and digest the data at EIA, which gives a much different picture than many of the discussions taking place here on SA. Keep up the research and vigorous discussions, from this rookie investor who is focusing on energy commodities - I like your style.
    Apr 27, 2012. 08:43 AM | 2 Likes Like |Link to Comment
  • Denial Is Not Just A River In Egypt  [View article]
    Quoting a gas company executive seems like a one-sided argument. Of course he is going to say things bullish towards NG. That doesn't make it so.

    If you look at the EIA data for NG consumption, electric power usage was 7,387 BCF in 2010 and 7,602 BCF in 2011. An increase of only 3% y/y. I will admit this shows an increase in NG while coal saw a decrease, which I believe sort of helps your point but doesnt prove it. However, the way you phrase your article sounds more like double digit increases in NG usage to me and the numbers dont show it.

    "Coal prices won't go higher without nat gas going higher". Really? Thats like saying silver cant go up unless gold does. I'm a begineer at this, but I think the commodity markets are a wee bit more complex than that.

    Thanks anyway for the reply. I always enjoy a good discussion. But when I ask for data and numbers, Nat gas CEO quotes dont cut it.
    Apr 19, 2012. 11:56 AM | 4 Likes Like |Link to Comment
  • Denial Is Not Just A River In Egypt  [View article]
    You are quoting studies and research papers, not recent data. I do not deny that substituting NG for Coal in electric power generation is POSSIBLE. But where are your numbers showing that this is actually HAPPENING? Yes, coal consumption was down throughout this last winter. But so was electricity consumption, personally my bills were ~30% less this winter when compared with last year.

    I am glad that SA authors and commenters have had such a rigorous debate on this topic of coal and natural gas. I agree that Paulo's view of nat gas substitution is a plausible explanation for lower coal consumption. I also think Mark's explanation of milder winter weather is plausible, especially since we all experienced it first hand on our utility bills. However, to say that one is right and the other is wrong at this point is a bit of a stretch and more analysis of future data is necessary. And from my view, both sides are in at least in some state of denial.

    After following this debate through MANY articles and comments, I was compelled to review the EIA data (I have also reviewed some of the research articles) and like the numbers going forward for coal. Lower production and increased exports will be able to offset lower domestic consumption. This should help to raise coal prices. The effect on equities will be less since lower production and increased prices offset somewhat.

    Here is the EIA data for those interested, some quick addition and subtraction can lead you to the same conclusion:

    Long UNL/GASZ pair trade, long ANR.
    Apr 19, 2012. 10:07 AM | 4 Likes Like |Link to Comment
  • The Graphite Investment Boom Is Just Starting  [View article]
    Wow. Best SA comment I've seen in a long time. I appreciate that your DD may be flexible, and it allows investors to see the math and plug in their own assumptions. Great analysis and thanks for taking the time to share your knowledge.
    Apr 12, 2012. 09:42 AM | 1 Like Like |Link to Comment
  • Natural Gas Might Produce A Fracking Miracle In 2013  [View article]
    Yes, that does make sense now. Thanks for the reply.
    Apr 10, 2012. 01:28 PM | Likes Like |Link to Comment
  • Natural Gas Might Produce A Fracking Miracle In 2013  [View article]
    Paulo, how are you short GAZ? Through put options? I looked into this trade idea per TVIX and GAZ articles pointing out the premium to NAV, but GAZ premium has been maintained and options would be losing value waiting for the return to reality on pricing. Your thoughts are appreciated. Thanks for another interesting article.
    Apr 10, 2012. 12:41 PM | 1 Like Like |Link to Comment
  • Natural Gas Might Produce A Fracking Miracle In 2013  [View article]
    This is a good insight, and not talked about by many investors. Many are focused on the gas rig count (which actually went up last week), but that is not where all the gas production comes from.

    Looking at Paulo's idea of running out of storage, last year we had a build of 2,273 bcf. If we add that to the bottom for this year, or 2,369 bcf, we get a peak this November of 4,642 bcf. So even if we produce less this year than last, which is a big IF, it is easy to see how we could surpass the max storage of ~4,300.

    We'll see how the production rates play out this summer. Long UNL (less contango losses than UNG), with contango hedged via GASZ and hoping for a bounce within the next 6 months.
    Apr 10, 2012. 12:38 PM | Likes Like |Link to Comment