Monday, December 30, 2013

Fire In The Hole (St Louis, Missouri, Story) -- Puts Fracking Into Perspective; Tea Leaves Suggest WTi Will Trade Toward $85 In 2014

Active rigs: 187

RBN Energy: the tea leaves suggest that most pundits expect WTI to fall towards $85/bbl in 2014.
In their Short Term Energy Outlook published earlier in December (2013) the EIA predicted that US crude production will increase by 1 MMb/d in 2013 to 7.5 MMb/d and is expected to increase by another 1 MMb/d in 2014. Those increases are driven by tight oil production of predominantly light sweet crude. As a result we cannot expect there to be any demand for imports of light sweet crude at the Gulf Coast in 2014. That means Brent prices will continue to be “detached” from the US domestic crude market.
Whatever happens in the world market, WTI prices will continue under pressure from rising domestic production and the oversupply of light-sweet crude on the Gulf Coast. If international supplies are tight then Brent prices will rise relative to WTI. If international markets are oversupplied then Brent prices will fall but they are unlikely to dip below WTI. The greatest danger for producers is that both WTI and Brent prices will be pushed into a downward spiral by a glut of world crude supplies. But of course in that case it might just be refiners who will “Get Lucky.”
Worst Funded US Pension Plans: City, State -- Financial Times

In case the link breaks, the worst-funded metropolitan pension plans ("best" to worst, % funded):
San Diego (70%); Boston (60%); Phoenix (60%), New York City (60%), Jacksonville (50%), Philadelphia (50%), Chicago (37%). [80% funded is considered a healthy threshold.]

For the states: US average (70%), Rhode Island (60%), Mississippi (60%), Kansas (60%), New Hampshire (60%), Louisiana (60%), Connecticut (50%), Kentucky (45%), Illinois (40%), Puerto Rico (10%).

The Wall Street Journal

Chesapeake energy got cash for sales; now bills come due.  
As Chesapeake Energy Corp. burned through cash in recent years, it raised billions of dollars by selling pieces of its empire: oil and gas properties, pipelines, even royalties from wells yet to be drilled.
Some of these deals saddled the nation's second-largest natural-gas producer with costs that only now are becoming clear.
The obligations pose hurdles to new Chief Executive Doug Lawler, who has pledged to rein in spending and improve profit.
When Chesapeake unloaded its pipeline business last year in a medley of transactions totaling more than $4 billion, it agreed to ship a certain amount of natural gas on lines now owned by Access Midstream Partners. But in north Texas, Chesapeake isn't tapping enough gas to fill the space it reserved as it cuts back on drilling new gas wells.
The shortfall means Chesapeake must pay for a service it isn't using. If its wells there continue to produce gas at current rates—which isn't likely, given that production has been falling—the company would have to pay at least $400 million to Access over the next five years to make up for the shortfall, according to a Wall Street Journal analysis of regulatory filings. That equals almost half of the company's profits through the first nine months of 2013. 
This seems to have come at the wrong time. What's up with this? Mass-transit commuters face a hit.
An expiring tax-code provision means commuting by mass transit will cost some people more when the new year begins Wednesday.
An expiring tax-code provision means commuting by mass transit will cost some people more when the new year begins Wednesday.
The maximum monthly tax exemption for transit riders is set to drop to $130 in 2014, while the benefit for drivers' parking expenses will rise slightly, to $250. This year, mass-transit users have been allowed to set aside up to $245 a month of their pretax income to pay for commuting expenses, reducing their overall tax bill and effectively lowering the cost of their ride. Americans who drive to work have gotten the same benefit for their parking costs in 2013. The reasons for the divergence in mass transit and parking next year reflect the complicated ways Congress sometimes writes tax law.
Lawmakers originally set the transit benefit lower than the drivers' break, but since 2009 has temporarily raised it to match the drivers', and that provision expires at the end of this year. Meantime, the drivers' benefit is set to rise in the new year because it is tied to inflation.
Fire in the hole! And folks are worried about salt-water waste from fracking. St Louis, Missouri, has a radioactive waste problem on their hands.
A dispute is smoldering here, in one sense quite literally, over what to do with thousands of tons of radioactive waste in a landfill in this suburban St. Louis town.
Some residents argue the waste, created decades ago by the U.S. nuclear-weapons program and other federal work, poses a health and environmental threat and should be removed. The landfill's owner disputes that and says the best course is to leave the waste in place with some beefed-up protections. The Environmental Protection Agency has favored the second option but is reconsidering in reaction to community opposition.
The dispute is complicated by other factors. What officials from the EPA and the landfill's owner call a "subsurface smoldering event"—locals call it an underground fire—has sprung up in a nearby nonnucleaThe price of a popular genetic test that predicts women's risk of breast cancer is likely to drop in the New Year after the agency that administers Medicare benefits said it would slash its reimbursement rate for the test by half.r landfill area. It isn't clear what would happen if the smoldering reaches the radioactive materials. Efforts are under way to prevent that.
Reimbursement for breast-cancer test to be cut. I had no idea one test would cost nearly $3,000.
The rate cut goes into effect on Jan. 1, 2014, with consequences for genetic-testing companies, particularly Myriad Genetics Inc., the dominant supplier of screenings for mutations in the genes known as BRCA1 and BRCA2. Medicare will pay a maximum of $1,440 for the BRCA test, a 48.5% decline from the rate of $2,795 it paid in 2013, according to a notice published Friday afternoon on the website of the Centers for Medicare and Medicaid Services.
Los Angeles Times

I never understand these stories: the top story in The LA Times today is a story about a pedophile priest who was moved from California to Texas without folks knowing his background, and now the headline: one troubled priest who got a second chance.
Yolanda Villegas adored Father John. A pillar of the Church of the Holy Spirit, she knew nothing of his past. Few parishioners did. Nearly every Sunday for a decade, she arrived for the Spanish-language Mass, knelt in the same pew and wondered how he'd inspire her that week.
After several paragraphs of what a great guy he was, and how he was molested by his mother, we finally learn well into the article, "in 1987, Salazar pleaded guilty to abusing two teenage boys and sent to prison."

Not once is the word "pedophile" used in the article. The word used was "abuse" to describe the sexual molestation.

By 1991, he was out of prison, on parole. He left California to be a priest of a parish in Texas where folks did not know him.

He was accused of sexually molesting a close family friend after his arrival in Texas. In 2004, he was finally defrocked and was criminally charged for the third time. He was found guilty and sentenced to life in prison. In 2011, the top criminal appeals court in Texas overturned Salazar's conviction and was released from prison last year. [The LA Times uses the word "abuse" to describe "forcible oral sex" on the 18-year-old family friend. His defense: it was consensual.]

And, as the Los Angeles Times reports, Salazar is given a second chance. A second chance?

Another young man has now stepped forward and Salazar faces his fourth criminal charge for sexual molestation -- although again, the LA Times only says he is charged with "abuse."

I never understand these stories. But again, I may be missing something. It was hard to wade through the story that was more concerned with touchy-feely writing than presenting the facts, and/or using the word pedophile.
Los Angeles and Santa Monica have approved several construction projects along two well-known faults in recent years without requiring seismic studies. But they will study fracking for decades. Fracking began in 1947 in western Kansas.
Obamacare: 1.1 million enroll at federal website; maybe a total of 2 million have enrolled overall. Goal was 3 million by this time; the insurers need 7 million (that was the original story, but the goalposts will move. But folks are following the wrong metric. The metrics that need to be tracked: a) how many are paying their premiums; and, b) who enrolled. By July, 2014, we will know. These are the two immediate problems:
Others may discover that although they're properly enrolled in a health plan, the doctor or hospital they visit or the prescription they want to fill won't be covered by the plan they have selected.
Still other patients, including many who have never had insurance before, may be shocked to learn they have to pay thousands of dollars out of pocket before their coverage kicks in. Like employer-provided health plans, many insurance plans set up under the health law come with low premiums and high deductibles.
Obamacare, unlike Obamaphones, has a very high up-front cost for lost-premium health care policies.
For Investors Only

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here. 

PSX is off and running: up over a percent, and now trading at a new high.

SRE, still well off it's highs, is up about half a percent today, at just under $90.

CHK, despite the WSJ story earlier today, is up over 1%, at almost $28, trading near its 52-week high of $29.

Oasis, well off its highs of nearly $60 and now trading well below $50, is up over a percent today.

Schlumberger is up a bit today.

CVX is down about as much as SLB is up today.

And that gives me a quick overview of how the market values the energy companies today. 

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