Energy & Commodities

Electric Companies Are Shutting Down

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Posted by Nick Hodge- Energy & Captial

on Thursday, 28 June 2012 10:42

Over the next few months, you'll have a front row seat to the turning point in America's energy independence as nearly 85 million businesses and homes have the chance to stop paying their electric bills. - NICK HODGE OF ENERGY & CAPITAL

Ed Note: Its no secret that Solar Energy is spectacularly unprofitable without massive government subsidies. Just take one look at Obama's scandalous taxpayer investment in Solyndra that has now brought the FBI into investigate what happened with Solyndra's,  $535 million government-backed loan with the help of the Obama White House over the agressivee objections of federal budget analysts. In short, without a technological breakthrough, solar just isn't economical withough digging into taxpayers pockets very very deeply.

 Energy & Capital describes a huge technological breakthrough that is right upon us and for those in early the profits with be enormous. Though I remain cautiously sceptical with all of the boondoggles in Green Energy to date, I do think this one is worth a look - Rob Zurrer for Money Talks.

Electric Companies Are Shutting Down

Over the next few months, you'll have a front row seat to the turning point in America's energy independence as nearly 85 million businesses and homes have the chance to stop paying their electric bills.

This is not a revolt, organized political stand, or protest against "the corporations" — far from it, actually...

In the next few months, one of the greatest breakthroughs of the last century will hit the open market.

It will allow virtually every building in America to affordably start generating its own electricity without unsightly turbines or generators. And most importantly, without any government subsidies.

It's all thanks to one publicly-traded tech firm that's rapidly garnering worldwide attention.

Over the past two months alone, this company's share price is up 44% — with near-infinite growth potential.

You don't want to miss another point from this gem, which is why I'm giving you free access to this short presentation.

I want you to be fully informed on the situation and how to take advantage of it, come the next opening bell...

Call it like you see it,

Nick Hodge
Senior Editor, Energy and Capital

Watch the short video HERE or read Transcript HERE

This ‘Absolute Black’ Solar Panels Absorb Almost All Sunlight

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Energy & Commodities

Oil Has Even More Downside Ahead

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Posted by Matt Badiali, editor, S&A Resource Report

on Wednesday, 27 June 2012 05:52

In the last two months, the benchmark U.S. crude oil price has dropped more than 20%.  

And it's not done falling.

As regular Growth Stock Wire readers may remember, I began writing about a collapse of the price of crude oil back on April 4. At the time, oil prices were still up around $105 per barrel.  

Back then, I noted how the huge and growing U.S. oil inventories, coupled with growing U.S. production, would cause prices to drop. Since then, the price of crude oil has fallen below $80. Last week alone, we saw prices decline 6%.

Today, I'll show you why I think oil prices are going even lower…

The fundamentals of supply and demand remain out of balance in the oil market. Two months ago, I showed you how much more oil we had in storage than the 10-year average. Here's an updated chart… 

You can see things have gotten even more extreme.


One important point to note is that usually, the oil in storage is declining by June as the summer driving season kicks in.  

This year, according to the Energy Information Administration's data, the volume of oil in storage is still rising into the summer. It hit 387.3 million barrels at the end of last week. That's 11% more than it was when we checked in April. And it's 12% above the average for this time of year.  

In other words, the world's largest oil consumer has a lot more oil around than it usually does. So supply is up, what about demand? 

Turns out demand is way, way down. Gasoline constitutes 42% of oil demand here in the U.S. So we can use the volume of gasoline supplied by refiners as a rough gauge. In April, which is the latest data available, we see the gasoline consumption was about 344.6 million gallons per day. That's the lowest consumption for the month of April since 1997.  

Demand is not only failing to keep pace with the huge new supplies coming online… it's actually falling.

It was a recipe for lower oil prices two months ago. The same is true today. I don't know exactly how far it could fall, but $70 or $60 is easily possible in the next six months.

Good investing, 

Matt Badiali

P.S. Yesterday, my colleague Jeff Clark showed you how oversold oil stocks are right now. He's expecting a short-term bounce soon. He might be right. But I believe the long-term trend is still down. Unless you're a trader, you should probably be out of oil stocks here.

Further Reading:

Oil isn't the only commodity sector that's suffering…. Matt says small resource companies are going to fall further before resuming their uptrend. They're toxic for 99% of investors right now. But in the long-run, this market is doing us a favor…  

"When it's over, we're going to be able to buy the highest-quality stocks in the sector for 2009 prices," Matt says. "That's when we'll make big, triple-digit gains."Get the full story here.


Energy & Commodities

3 Ways To Invest in the Oil Sands

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Posted by Michel Massad Oil & Gas Investment Bulletin

on Tuesday, 26 June 2012 09:44

Energy stocks across the board have been hit hard in the last quarter—both producers and service companies.  Stock charts have been laid to waste. Neither sexy resource plays nor respected leadership were enough to stem the bleeding.

But shareholders of three energy services companies—Gibsons Energy (GEI-TSX), Black Diamond Group (BDI-TSX) and Horizon North Logisitics (HNL-TSX)—are laughing all the way to the bank, as their stock charts are at or near all-time highs. (See OGIB story on Black Diamondhere.)

And strangely enough, they are all oilsands related.  I say strangely because analysts have not been kind to the producers, warning investors that lower Canadian heavy oil prices could stay for a couple years, impacting profitability.  And there is no close resolution on increased pipeline capacity to handle any increased oilsands production.

On the services side, Canadian securities firms like National Bank and Raymond James have been telling their clients to sell oilfield services stocks for weeks.

The first 2 oilfield services companies are Black Diamond Group (TSX-BDI) and Horizon North Logistics (TSX-HNL), which derive a substantial percentage of their revenue from business related to Alberta’s oilsands.

They provide a turnkey-style Camps and Catering service offering, including manufacturing, transportation and installation, servicing, as well as catering. These companies basically make money from renting beds to oilsands workers, including charging them for management and catering. The work camps are equivalent to small villages with a population exceeding 3,000 souls in some instances.

black-diamond-group 2

....read more and view two more charts HERE


Energy & Commodities

The Benefits of (Canada's) Bountiful Oil Supply Described

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Posted by Joel Bowman: The Daily Reckoning

on Thursday, 21 June 2012 09:20

Ed Note: Michael Campbell thinks Canada's Oil Reserves are the Key to Federal Pension / Economic Solvency. 

The Benefits of a Bountiful Oil Supply by Joel Bowman 

6/20/12 Stavanger, Norway – Mercedes…Mercedes…Volvo…Mercedes…BMW…Mercedes…Volvo…

We were waiting for a taxi outside Oslo’s central train station on the weekend. Not since our dusty stint in Dubai had we seen so many luxury vehicles in a row, all with a meter and a foreign driver, waiting to shuttle the locals around town.

Norway is an expensive place to be. Unless you have the good fortune (literally) of being Norwegian. Tiny, one-bedroom houses on the outskirts of town start at roughly half a million dollars. A round of drinks for four at a pub will eat up most of a $100 note. And oysters down by Oslo’s main pier (admittedly some of the best “Rolls Roysters” we’ve ever tasted) sell for $7 per…um…slurp.

Sitting in the back of the taxi, looking out the window at all the sleek stores and grand old hotels along the famous Karl Johans Gate, we began wondering how a cab driver could afford to live in such a place. Then we arrived at our hotel…barely a five minute drive from the station.

“That’ll be 150 kroner,” said the driver, in perfect English. Our European readers will recognize that amount as about €20. Americans may call it $25. Ah…so that’s how. When it came time to depart the capital, we paid ourself $25 to walk back to the station. Easy money.

Of course, it wasn’t always this way. A little more than half a century has passed since Phillips Petroleum Company (since merged with ConocoPhillips) discovered the Ekofisk oil field in the North Sea. Production began in 1971 and was followed by a slew of other fruitful discoveries, both of oil and natural gas. Since that first well was sunk, Norway’s GDP, adjusted for inflation, has more than quadrupled. Happily for this northern nation, Norway also derives 99% of its domestic energy consumption from hydropower. Nice source…if, again, your geography allows for it.

As of March this year, the total value of Norway’s Sovereign Wealth Fund (SWF) was NOK 3,496 billion ($613 bn) — the world’s largest. Officially The Government Pension Fund of Norway, the fund derives its wealth not from pension contributions, but primarily from oil revenues, including taxes, dividends, sales revenues and licensing fees. Norwegians refer to it simply as Oljefondet, or “The Oil Fund.”

This vast wealth has allowed the Norwegians to indulge in that most costly of economic experiments: Socialism. Proponents of this sadly persistent model of welfare statism like to point to the “Nordic Model” as proof that their tax-and-spend philosophies work. As usual, they confuse cause and effect. Norway’s riches are the result of oil, not socialism. Wealth comes from revenue, savings and capital formation, in other words…not from spending, public works and redistribution. Norway’s oil riches make the case for socialism as well as Abu Dhabi’s riches make the case for oppressive medieval sheikdoms — i.e., poorly to not at all.

Fortunately for Norway — and conveniently for reality-averse advocates of the welfare state — the North Sea’s hydrocarbon bounty is not about to run out overnight. Although production from the North Sea’s largest field, Statfjord, has been in steep decline since the mid ’90s, revenue continues to pour in from smaller, surrounding deposits. Conservative estimates predict the fund may reach $800-900 billion by 2017 — roughly $200,000 for every ridiculously attractive member of the population.

As regular reckoners know, however, the state is always and everywhere working to misdirect capital, to distort markets and to indulge folly. This is true no matter how joyous its people, how scrumptious its seafood, how picturesque its fjords.

Joel Bowman
for The Daily Reckoning

Joel Bowman

Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.

Special Report: Wait until you see what could happen in America next… An unbelievable phenomenon is set to sweep the nation... The railroad, steel, and technology age - this phenomenon triggered them all. And now it’s taking shape again! Watch this special, time-sensitive presentation now for full details on how it could affect your job… your lifestyle… and your wallet. Here’s How…

Read more: The Benefits of a Bountiful Oil Supply http://dailyreckoning.com/the-benefits-of-a-bountiful-oil-supply/#ixzz1yPxLUjhQ


Energy & Commodities

3 Reasons Why Oil Prices Will Go Lower Short-Term

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Posted by Sean Brodrick: Uncommon Wisdom

on Friday, 15 June 2012 07:32

OPEC is meeting today (June 14th( in Vienna. And boy, does this group have a lot to talk about.

That’s because the price of U.S.-benchmark West Texas Intermediate crude is down about 25% since hitting a 10-month high of $110.55 a barrel back in March.

That’s a big move in anyone’s book. But I think the price could drop even lower from here.

Part of the reason for that big move down? More supply.

‘A Tremendous Oil Surplus’

According to data from Platts, crude oil production from OPEC rose to 31.75 million barrels per day in May. That’s up 40,000 barrels a day from April; it exceeds OPEC’s own production ceiling by 1.75 million barrels a day, and is the highest level since October 2008.

This occurred even as Iranian supplies were being squeezed by a drop in the number of customers willing to take its oil. Kuwait, Libya and especially Saudi Arabia led production higher.

The Saudis could face pressure from some countries at the Vienna meeting to rein in production. In fact, OPEC president, Abdul-Kareem Luaibi, who also serves as Iraq’s oil minister, told reporters on Monday: “It’s very clear there is a tremendous surplus that has led to this severe decline in prices in a very short timespan. This will not serve anyone.”

So that should put a floor under oil prices, right?

While we could see a bump in the price of crude, the short-term trend for oil prices is actually down. In fact, I wouldn’t be surprised to see crude drop to $70, $65 or even LOWER before the pendulum swings the other way.

Let me give you some reasons why …

#1. Saudi Arabia Could Tell OPEC to Take a Hike.

Recently, Saudi Arabia increased its production to 10 million barrels a day to pick up the slack from sanctions against fellow OPEC member Iran. What’s more, Saudi Oil Minister Ali al-Naimi said the desert kingdom saw increased oil production (and lower prices) as a “stimulus” for the sputtering global economy.

What’s more, Mr. al-Naimi said Saudi Arabia’s analysis “suggests we will need a higher (production) ceiling than currently exists.”

While the Saudis will see how other OPEC members react before formulating a position, Mr. al-Naimi added that his country needs to be allowed to produce more than it currently does. Saudi Arabia says it has spare capacity of another 2.5 million barrels per day.

Is Mr. Luaibi, the oil minister for Iraq, going to tell the Saudis otherwise? Iraq’s oil exports are expected to rise to 2.9 million barrels-per-day next year, from 2.4 million barrels this year. So, Mr. Luaibi might have trouble convincing the Saudis to cut back.

It may all be a wash because Saudi Arabia said it is going into the meeting planning not to ask for OPEC to raise the production level. But that won’t stop it from cheating like a bandit … indeed, any OPEC country that can produce more oil seems to be ready to do so, regardless of quotas.

Also, Saudi Arabia has every incentive to keep prices low enough to discourage a search for alternative fuels and keep demand high for its oil.

Sources say while Iran needs $117 oil to balance its budget, Saudi Arabia is happy with $100 oil. I think the Saudis might be happier with even-lower prices than that, considering that they can pump oil for an estimated cost of $20 per barrel.

Think about it: If the Saudis keep the price of oil low enough, long enough, a lot of expensive deepwater-oil projects will have to be shelved.

Compare their $20-per-barrel cost with North Sea fields that have a marginal cost of about $60 per barrel, while other new deepwater discoveries can cost from $70 to $90 per barrel.

That means more market share for the Saudis, who can ride prices back up again after they put some deepwater competitors out of business.

#2. U.S. Oil Production Soars; Imports Drop.

U.S. oil production has risen 25% since 2008 (an additional 1.6 million barrels per day), and last year, the United States registered the largest increase in oil production of any country outside of OPEC. America’s oil production could increase by 600,000 barrels per day this year.

Hydraulic fracturing has led to a monumental increase in U.S. natural gas and oil production, which will only increase further as the country’s demand for those resources grows.

Result: We are becoming more independent of imported oil. Net petroleum imports have fallen from 60% of total consumption in 2005 to 42% today. Here’s a chart I picked up from economics professor Mark J. Perry’s excellent Carpe Diem blog …


What’s more, the composition of our imported oil is changing. The output of Canadian oil sands has tripled since 2000. Not only is Canada a friendly country, but Canada’s production is already hooked into the North American oil grid. So, more production from Canada lowers U.S. oil prices, which already trade at a steep discount to the Brent crude international benchmark.

I’m not saying we’re going to be free of imported oil, or even free of importing oil from countries that hate us. I’m saying that the more independence we get with our energy supply, the better off we are.

Does more oil supply here in the U.S. translate to lower prices at the gas pump? Bet on it! The average price for a gallon of regular gasoline in the United States fell 15.9 cents to $3.624 in the past three weeks.

#3. Global Economic Growth Is Slowing Down.

The debt crisis is just one problem Europe is grappling with. Another is that economies all over Europe are slowing down rapidly, including the engine of Europe, Germany.

This economic slowdown — with a threat of recession — is weighing on oil demand and prices. In fact, Europe’s fuel demand has fallen so fast that nearly a quarter of Europe’s refinery capacity was taken offline in May, as refiners responded to declining demand for gasoline and diesel.

The euro zone accounts for just 12% of global oil demand, or about half as much as the United States. But since oil prices are made on the margins, a euro-zone recession will be a heavy weight on crude.

Meanwhile, in China, imports went up 0.4% in May to a record 6 million barrels, but that’s because China is building up oil stockpiles. In fact, the most bullish news for oil is that China diverted 40 million barrels to its strategic petroleum reserve and could add another 85 to 110 million barrels in the second half of the year.

But China’s economy is hitting the brakes. China’s inflation dipped to a two-year low in May while economic activity remained weak. Steel production fell 2.5% in May compared to April. Iron ore spot import prices fell 8% through most of May. And output of copper fell 1.4% month-on-month, its second-consecutive month of decline.

Here in the U.S., our economy is still growing. But job creation slipped alarmingly in April and May, and manufacturing orders slid lower in the last two months.

I don’t know if we’re going into another recession. In fact, I hope we can avoid it, and one thing that will help us avoid a recession is lower oil prices. But the fear of a recession should be enough to cause traders to make bearish bets on oil prices. And that could send oil prices lower, faster than anyone thinks possible.

OPEC has a poor record of halting such dives. Deutsche Bank data shows that, over the past 20 years, OPEC has slashed production 13 times to try and prop up prices. Three-quarters of the time, the tactic has succeeded within three months. There are three notable exceptions: 1998, 2001 and 2008. In each instance, amid a worldwide economic slump, it took an average of 15 months for the cuts to work.

So oil prices should go lower. Hooray! But don’t get too comfortable …

Why the Drop in Oil Prices Won’t Last Longer-Term

I am expecting oil prices to go down in the short term, but they’ll probably bottom and head higher again by next year at the latest.

For one thing, the election results should clear up the gridlock in Washington one way or another, so we’ll see more economic stimulus. And there will likely be more stimulus in Europe, as well as in China and other countries. That should get the global and U.S. economies firing on all cylinders again.

Another reason — the ramp-up in production from Saudi Arabia is amazing, but advances in technology will only get you so far. You can’t extract an infinite amount of oil from a finite world. So, I expect production in Saudi Arabia to peak either because the Saudis cut to support prices or because aging oil fields simply can’t keep up.

Meanwhile, the marginal cost of oil production, defined as the cost of pumping the last and most expensive barrel required to satisfy demand, is rising as old, cheap oil is pumped and new wells and fields cost much more. If the oil price falls below the marginal cost, there is no incentive to produce more oil. That will remove supply from the global market until prices go higher again.

According to The Wall Street Journal, in 2011, the average marginal cost of oil production was $92.26 a barrel for the 50 largest listed oil and gas companies. And it will reach $100 a barrel next year.

Of course, the best-laid plans of mice and oil men often go awry, so we’ll see what really happens down the road.

4 Ways to Profit from Lower Oil Prices

  1. For now, you should be hedging bullish positions in oil producers, if you have any. And if you have the stomach for speculation, rallies in oil can be shorted.
  2. Also, you might want to look at long positions in companies that do very well when oil prices go down — airlines, for example.
  3. And you know who is helped by falling oil prices? Gold miners! Fuel costs are a big part of the cost-per ounce, so as oil prices go down, profits go up for well-run miners.
  4. One more thing to consider — when oil prices do bottom, we should see some really attractive opportunities on the long side in the under-loved energy companies.

All the best,


P.S. What will come out of OPEC’s meeting? As a member of my Red-Hot Global Resources service,you can be among the first to find out how I’m playing the ebb-and-flow of oil prices. Sign up for your risk-free trial membership today!

Sean Brodrick is a natural resources expert and editor of Global Resource Hunter, a monthly newsletter designed to help you ride the commodity supercycle – an ongoing surge in price of food, energy, metals and more.

Sean is also the editor of Red-Hot Global Resources, a weekly newsletter that aims to help you rack up profits with commodity-focused exchange-traded funds (ETFs) and natural resource-sensitive stocks that operate around the world.


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