Energy Crisis? What Energy Crisis?
By Jeff Macke Nov 05, 2008 1:40 pm
Election no reason to get bullish on alternative fuels.
Greetings from New York, where the notion that the new regime is “bullish for alternative energy” is, to be perfectly blunt, the silliest notion I've seen since last summer, when I got angry (really angry) emails for saying the Ag stocks were in a bubble.
Crude is $65 a barrel. America has a dead consumer, a financial meltdown in progress, a massive deficit and the collective attention span of a goldfish. The only thing we don’t have, at least for the moment, is an energy crisis.
You can do what you want, trading-wise, but playing yesterday’s bubbles as an “investment” is akin to loading up on Beanie Babies in the hope that they'll start selling for $20,000 apiece again.
Then again, maybe I just lack the vision to picture a world where Americans start buying insanely expensive cars that need to be recharged every 100 miles when gas costs less now than it did a year ago. Load up on windmills, Don Quixote, I’ll be busy re-doubling my efforts to teach my family the art of the Grift.
Here’s what I’m looking at, beyond readily portable tents that can be carried at the end of a good stick:
- Robert Rubin is being bandied about as Treasury Secretary? Surely we’re not talking about the same Bob Rubin who got paid $10-$15 million to play the same role at Citigroup (C) that Joe Louis once held at Caesar’s Palace, right?
- Neither “re-opening the TARP” nor unleashing a second round of stimulus packages can give the economy as much bang for the buck as gas prices dropping 25% in a month. Suffice it to say, the consumer remains less stimulated than Hugh Hefner. I’m happy to pay my share; I just don’t want it wasted in an attempt to awaken the dead.
- Adding to my tax grumblings is the fact that this year’s volatility has made a mockery of the concept of “holding for the long term.” To pick one of the scores of groups giving back yesterday’s huge rally, consider coal names.
If you were sharp enough to buy a basket of, say, Massey Energy (MEE), Arch Coal (ACI) and Peabody (BTU) (just to name 3 heavily traded names), you went to bed a hero, woke up a bum, and are now down on trades which were up over 10% yesterday.
This election was easier to handicap than a Globetrotter’s game. The stocks aren’t being moved by politics. They're moving by animal spirits. Rule one in stampede markets is not letting a gain turn to a loss. - While we’re in the no-longer-growing-globally group, one name which is actually moving on news is ArcelorMittal (MT). The world’s biggest steel producer missed earnings, cut production and is shaving cap-ex in response to a crisis Mittal’s eponymous CEO described as “a situation the world has not seen since the 1930s.” ArcelorMittal's stock is down over 17% today, up over 13% in the last week and down over 41% in the last month.
Again, ArcelorMittal is the world’s largest steel company, not a Chinese start-up. Capital-gains taxes stink, and are likely to get worse, but it beat the snot out of riding ArcelorMittal down 75% in the last 4 months. - If you don’t believe me, ask those who’ve been lugging Cisco (CSCO) in their portfolios since it was in the $70s. The router kingpin reports tonight. At the risk of sounding cynical, I doubt even a surprisingly strong quarter will catalyze the fourfold increase required to get the buy-and-hold camp back to even.
No position in stocks mentioned.
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Reply
2008-11-05 13:49:13
Train "yes", alternatives "No" for now
FYI, They look to be on hold for a while.
The latest Cali prop numbers:
1A - Safe, Reliable High-Speed Train Bond Act
YES: 4,959,358 52.3%
NO: 4,535,334 47.7%
07 - Renewable Energy Generation
YES: 3,328,190 35.1%
NO: 6,153,681 64.9%
10 - Altern. Fuel Vehicles and Renewable Energy Bonds
YES: 3,783,465 40.2%
NO: 5,625,858 59.8%
The latest Cali prop numbers:
1A - Safe, Reliable High-Speed Train Bond Act
YES: 4,959,358 52.3%
NO: 4,535,334 47.7%
07 - Renewable Energy Generation
YES: 3,328,190 35.1%
NO: 6,153,681 64.9%
10 - Altern. Fuel Vehicles and Renewable Energy Bonds
YES: 3,783,465 40.2%
NO: 5,625,858 59.8%
2008-11-05 14:21:51
Energy
Uh, we have an acute environmental crisis caused by petro and coal products? Don't discount the fact that carbon will be priced and 'the exxon mobil's of the world' will be held accountable for the environmental costs they currently externalize. What's the price for clean air and water? Be part of the problem if you want, but we are going to alternative sources, and it isn't all about money.
2008-11-05 14:54:23
Cali says "No", but what will FED say?
I still however see the government spending big on this one over the next few years. Yes, there was an oil bubble, but many funds went into oil as an inflation hedge (and inflation will likely be here in the future in a big way). Also, the fact that world oil supply got "stuck" at $85M barrels/day since mid-2004, can not be a good sign.
Not to mention global warming.
In my opinion, the Cali voters saw more immediate problems. However spending on infrastructure and new growth industries is an investment in the country. I would hate to see a situation, that when global growth returns, inflation gets going, and then oil hits us again with supply problems. We saw how inflationary, and even deflationary (with supply shocks) energy can be.
Not to mention global warming.
In my opinion, the Cali voters saw more immediate problems. However spending on infrastructure and new growth industries is an investment in the country. I would hate to see a situation, that when global growth returns, inflation gets going, and then oil hits us again with supply problems. We saw how inflationary, and even deflationary (with supply shocks) energy can be.
2008-11-05 15:10:33
alternatives are needed yesterday
and I'm not talking about cars.
I mean something the average CONSUMER can utilize without breaking the bank.
Solar energy for the home at $50,000 is absurd!
I have another much simpler - I like KISS - idea which will enable the average consumer to heat their house and cook for pennies. Cost of equipment < $7,000 and possibly 1/2 in mass production.
Why isn't it being done now???
Gee, let me look at the lobbyists and greedy corporations???
any ideas???
do it now or we'll all pay big time in the next few years.
do it while things are in the tank and when they revive we'll be ready.
It's called being PRO-ACTIVE not re-active!!
I mean something the average CONSUMER can utilize without breaking the bank.
Solar energy for the home at $50,000 is absurd!
I have another much simpler - I like KISS - idea which will enable the average consumer to heat their house and cook for pennies. Cost of equipment < $7,000 and possibly 1/2 in mass production.
Why isn't it being done now???
Gee, let me look at the lobbyists and greedy corporations???
any ideas???
do it now or we'll all pay big time in the next few years.
do it while things are in the tank and when they revive we'll be ready.
It's called being PRO-ACTIVE not re-active!!
2008-11-05 15:14:02
fairness and solar power
Where I live (PA), we receive roughly a sixth of the usable solar energy that more fortunate spots, like Arizona, receive. That simple fact affects any businesslike assessment of a potential solar power installation. That's clearly unfair. If the Federal Government should decide to incentivize solar power, they must do so on a sliding scale, based on annual insolation, so that the time-to-recoup is similar in all parts of the nation.
Since you can't feasably re-distribute the insolation, per se.
(^_^)
Since you can't feasably re-distribute the insolation, per se.
(^_^)
2008-11-05 16:53:26
Energy Crisis? What Energy Crisis?
Jeff
You talk about doubling the grit on the family side to save a few bucks. I am no greenie but my wife is.
So we now recycle everything. Initially is was a pain in the preverbal but over time a system that was easy developed. Thus the "habit" developed much to my pleasant surprise. It did take time as I am slow learner.
Organic matter was huge and by dividing this from all other waste (recycle only) I can assure you 100% (yep a sure bet) it teaches you about grit.
I was also made to make a small investment in solar for a few thousand dollars. You'll be getting the hang of me getting the stick by now. But the carrot part of the equation is that the kids now think they are getting some for free and its from the sun, so they are into it. They have also worked out that if you use to much energy around certain areas of the house they run out of power so you have to conserve. It is also good to have the things they enjoy hooked up to these certain areas powered by solar as when the power runs out they learn about grit.
The green thing to me is not about saving the world (or maybe it is), but it does teach grit / thrift. I promise you this 100% yep another certainty. Try it and for once you will get to enjoy your grit lecture and for a change the habit of conserving comes and will stay with the kids for life.
You yourself may not make a killing but your kids moving forward will learn to save a buck I promise you 100%. And you do a bit of learning along the way.
Regards
Pleasantly surprised non greenie.
You talk about doubling the grit on the family side to save a few bucks. I am no greenie but my wife is.
So we now recycle everything. Initially is was a pain in the preverbal but over time a system that was easy developed. Thus the "habit" developed much to my pleasant surprise. It did take time as I am slow learner.
Organic matter was huge and by dividing this from all other waste (recycle only) I can assure you 100% (yep a sure bet) it teaches you about grit.
I was also made to make a small investment in solar for a few thousand dollars. You'll be getting the hang of me getting the stick by now. But the carrot part of the equation is that the kids now think they are getting some for free and its from the sun, so they are into it. They have also worked out that if you use to much energy around certain areas of the house they run out of power so you have to conserve. It is also good to have the things they enjoy hooked up to these certain areas powered by solar as when the power runs out they learn about grit.
The green thing to me is not about saving the world (or maybe it is), but it does teach grit / thrift. I promise you this 100% yep another certainty. Try it and for once you will get to enjoy your grit lecture and for a change the habit of conserving comes and will stay with the kids for life.
You yourself may not make a killing but your kids moving forward will learn to save a buck I promise you 100%. And you do a bit of learning along the way.
Regards
Pleasantly surprised non greenie.
2008-11-05 20:24:11
Global Warming
75 deg in Wisconsin in November...
yeah, Global Warming is a myth.
yeah, Global Warming is a myth.
2008-11-05 20:28:51
Get bullish on alternative living styles
Maybe not on alt fuels, but socially, things will change as the failing economy puts trucking companies out of business: the ones delivering fuel to the farms and food to your grocery stores.
As the consumerism infrastructure is pivoting on a weak foundation right now, we will soon see what separates the truly sustainable from the spreadsheet sustainable.
Got food?
We are starting to see in oil prices the same effects that the markets have been doing to dairy farms for decades: the price change of the commodity is chaotically proportional to the supply/demand ratio when buyers go from panic to plenty to panic.
As the consumerism infrastructure is pivoting on a weak foundation right now, we will soon see what separates the truly sustainable from the spreadsheet sustainable.
Got food?
We are starting to see in oil prices the same effects that the markets have been doing to dairy farms for decades: the price change of the commodity is chaotically proportional to the supply/demand ratio when buyers go from panic to plenty to panic.
2008-11-05 23:50:10
Global Warming
Leif Erickson and his band of explorers were growing crops in what is now largely ice-covered Greenland over 1,000 years ago.
Global warming isn't a myth. It's a cycle. To disprove the notion of the globe warming and cooling on an ongoing basis for eons prior to our measuring day-to-day temperature fluctuations in Wisconsin or anywhere else is simply a reflection of the very human bias towards regarding the times we live in as "special" in any number of ways.
Enjoy your Indian Summer ("Native American Summer"?) in Wisconsin. Just don't use a one-off data point in a single location as the basis for a scientific or even anecdotal argument in favor not only of our ability to manipulate the global climate but, by extension, the efficacy of a single nation (the US) to sacrifice our global economic standing through the unilateral and totally unproven policy changes which would limit our "carbon footprint".
It's simply terrible science.
Global warming isn't a myth. It's a cycle. To disprove the notion of the globe warming and cooling on an ongoing basis for eons prior to our measuring day-to-day temperature fluctuations in Wisconsin or anywhere else is simply a reflection of the very human bias towards regarding the times we live in as "special" in any number of ways.
Enjoy your Indian Summer ("Native American Summer"?) in Wisconsin. Just don't use a one-off data point in a single location as the basis for a scientific or even anecdotal argument in favor not only of our ability to manipulate the global climate but, by extension, the efficacy of a single nation (the US) to sacrifice our global economic standing through the unilateral and totally unproven policy changes which would limit our "carbon footprint".
It's simply terrible science.
2008-11-06 12:29:04
Global Warming
Mr Macke,
Global temperatures have been attributed to natural cycles+human influences.
Please read:
http://climate.jpl.nasa.gov/
While alternative energy might not be a good investment, I didn't know you were a qualified environmental scientist?
You are however a qualified financial guru
Global temperatures have been attributed to natural cycles+human influences.
Please read:
http://climate.jpl.nasa.gov/
While alternative energy might not be a good investment, I didn't know you were a qualified environmental scientist?
You are however a qualified financial guru
2008-11-06 16:23:23
Jeff, you are missing the point
on alternative energy. The plug in Volt runs on electricity and gasoline. So yeah, maybe consumers don't plug in when gas is at $2 but a lot will when it is $4.
I don't know if you consider ethanol being green, but it is produced in Brazil at a buck a gallon. With new advances, that cost could go to fifty cents. And solar and wind energy in the long run are cheaper as the input costs on said plants are nothing.
So will the American public return to having the attention span of a goldfish as you say and enjoy the short term gain and forget about the long term good? History says yes, however, I am hopeful that maybe we do see a change this time around. No one gave Obama a chance two years ago.
From an economic, environmental, and national security stand point, I think America's dependence on foreign oil may be the most troubling issue we face. As for blowing off alternative energy, I fear you are right, but I hope you are wrong.
I don't know if you consider ethanol being green, but it is produced in Brazil at a buck a gallon. With new advances, that cost could go to fifty cents. And solar and wind energy in the long run are cheaper as the input costs on said plants are nothing.
So will the American public return to having the attention span of a goldfish as you say and enjoy the short term gain and forget about the long term good? History says yes, however, I am hopeful that maybe we do see a change this time around. No one gave Obama a chance two years ago.
From an economic, environmental, and national security stand point, I think America's dependence on foreign oil may be the most troubling issue we face. As for blowing off alternative energy, I fear you are right, but I hope you are wrong.
2008-11-06 23:20:26
Jeff, you are missing the point
We all agree dependence on imported energy isn't good.
As Pete S. pointed out, going green may provide surprising benefits especially if it teaches conservation and grit. Great stuff. Like Amory Lovins says, the cheapest energy is the energy that one saves, and therefore never has to be generated. Lost in all the discussion is the concept of consuming less.
Hopefully the public will have a long enough attention span to do as Fred F suggests, get things done now in advance of, and to be ready for, the next "crisis", whether it is a price crisis or a supply crisis.
Ethanol at 1$ a gallon in Brazil... at what cost in deforestation and pollution by fertilizers ? ps I live in a tropical area of South America in a country bordering on Brazil and the deforestation is out of control. A lot of cars run on CNG though the range is limited (excellent for short trips), and no one in this country attempts to run their cars on ethanol - how well does yours run on it ?
As for plug-in vehicles, what is the efficiency ? Maybe 40 % at the generating station, less transmission losses, then maybe 50% converting the elecricity into locomotion ? Is that better than directly burning fuel in the car ?
As Pete S. pointed out, going green may provide surprising benefits especially if it teaches conservation and grit. Great stuff. Like Amory Lovins says, the cheapest energy is the energy that one saves, and therefore never has to be generated. Lost in all the discussion is the concept of consuming less.
Hopefully the public will have a long enough attention span to do as Fred F suggests, get things done now in advance of, and to be ready for, the next "crisis", whether it is a price crisis or a supply crisis.
Ethanol at 1$ a gallon in Brazil... at what cost in deforestation and pollution by fertilizers ? ps I live in a tropical area of South America in a country bordering on Brazil and the deforestation is out of control. A lot of cars run on CNG though the range is limited (excellent for short trips), and no one in this country attempts to run their cars on ethanol - how well does yours run on it ?
As for plug-in vehicles, what is the efficiency ? Maybe 40 % at the generating station, less transmission losses, then maybe 50% converting the elecricity into locomotion ? Is that better than directly burning fuel in the car ?
2008-11-07 20:07:43
Wall Dill
The oil companies have gotten to you. Sugar cane is not grown in the tropical rain forest areas of Brazil. In fact, high humidity is bad for cane. The best area for growing sugar cane in the world is Peru. See Maple Energy, based in Dallas and trades in Ireland. The world needs another 100 Maple energies.
How does my car run on ethanol? I own two diesels, but most gasoline cars can run fine on 20 and 30% ethanol. Another myth is that they get fewer MPGs. See the link: http://www.greencarcongress.com/2007/12/study-finds-cer.html
Finally, the electric cars or PHEVs are already out there. When they run on electricity, the electric cost is less than a buck a gallon. See the second link: http://www.calcars.org/vehicles.html
it is in America's interest to fix this problem. However, every time we have been through an "oil crisis" the price skyrockets, demand eventually goes down, and the pols do nothing to prevent the next crisis. I hope this time it's different, but I would not bet on it.
How does my car run on ethanol? I own two diesels, but most gasoline cars can run fine on 20 and 30% ethanol. Another myth is that they get fewer MPGs. See the link: http://www.greencarcongress.com/2007/12/study-finds-cer.html
Finally, the electric cars or PHEVs are already out there. When they run on electricity, the electric cost is less than a buck a gallon. See the second link: http://www.calcars.org/vehicles.html
it is in America's interest to fix this problem. However, every time we have been through an "oil crisis" the price skyrockets, demand eventually goes down, and the pols do nothing to prevent the next crisis. I hope this time it's different, but I would not bet on it.
2008-11-08 13:37:13
Global Warming
Jeffrey,
Forget about what is causing global warming for a moment and please explain why gluttony is good and conservation is bad.
Is there some limit to the 'more is better' philosophy?
I've always been a believer that discipline builds character while the easier life is to sustain the more arrogant, greedy and slothful people become. Of course too much 'discipline' leads to deprivation, hunger and even death.
It appears to me that some balance is the answer. It also seems that the majority of people are unable to find a reasonable balance on their own. So if we need global warming (caused by humans or not) as an excuse to do the right and necessary thing why would you argue against it?
2008-11-08 17:10:55
Home Again
Hi, folks!
Thanks so much for the spirited responses to the global warming and solutions theme. Honestly, such back-and-forths help inform us all and, from my perspective, make me more able to state positions more coherent and useful than is the norm.
I'm not trying to pick a fight (at least not with Minyans). What I am primarily is predisposed towards taking the other side of group think in all things.
It seems what we all agree is on is that there is a market/ government combination that should be able to work for all of us. What I'm so vry cynical about is the solutions our government (on both sides) is pushing through as contingencies for bailing out the Big 3.
They have enormous cash burn rates, terrible products and lousy balance sheets. Forcing them to spend tons of R&D on cars Americans may or may not want in order to secure bailouts is both extortion and Not-Bright.
Honestly, I'd rather let them die or socialize them. It's the solution in between that drives my nuts.
More later. Glad to back. We'll all talk soon.
-Macke
Thanks so much for the spirited responses to the global warming and solutions theme. Honestly, such back-and-forths help inform us all and, from my perspective, make me more able to state positions more coherent and useful than is the norm.
I'm not trying to pick a fight (at least not with Minyans). What I am primarily is predisposed towards taking the other side of group think in all things.
It seems what we all agree is on is that there is a market/ government combination that should be able to work for all of us. What I'm so vry cynical about is the solutions our government (on both sides) is pushing through as contingencies for bailing out the Big 3.
They have enormous cash burn rates, terrible products and lousy balance sheets. Forcing them to spend tons of R&D on cars Americans may or may not want in order to secure bailouts is both extortion and Not-Bright.
Honestly, I'd rather let them die or socialize them. It's the solution in between that drives my nuts.
More later. Glad to back. We'll all talk soon.
-Macke
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