The auto industry’s attempt to build small cars profitably in the U.S. has hit a pothole.
Ford Motor Co. said a Michigan factory that assembles its small Ford Focus and C-Max wagon will end production of those vehicles in 2018 in a new setback to efforts to create a market for small cars made in the U.S. Production of the Focus will be moved outside the U.S.
The move could put pressure on the United Auto Workers union to temper demands for wage increases in upcoming contract negotiations. Ford, General Motors Co. and Fiat Chrysler Automobiles NV, although profitable, are struggling to keep pace with lower-cost Asian auto makers that now have the added advantage of weaker currencies compared with the U.S. dollar.
Small cars like the Focus deliver far lower profit margins than the pickup trucks and sport-utility vehicles the Motor City is best known for, but they are essential to helping car makers meet stringent fuel economy mandates.
Auto makers won concessions from the UAW before and after the financial crisis to dramatically lower labor costs. Those agreements helped usher in a return of U.S. small car production. GM now makes the subcompact Chevrolet Sonic in Lake Orion, MI, and Ford its Focus in Wayne, MI.There are several story lines with regard to stringent fuel economy mandates and US car manufacturers. 2018 is a key year; larger vehicles get a better mileage mandate break; and, Tesla.
Great News For The Bakken
Two stories out today and a look at California crude oil production suggests tough times for the oil and gas industry in California.
First, the EIA data regarding California crude oil production:
In 2014, the data suggests less than 600,000 bopd.
The two articles. One was a Bloomberg article reported over at Rigzone.
The second was a front-page Los Angeles Times internet article. I will have a lot of fun with the Los Angeles Times article if I get around to it, but I will probably ignore it for now, except for two data points.
First, from the article:
Seth Shonkoff, lead author on the public health sections of the report, said he was surprised to learn during his research that recycled wastewater from oil fields was being used on crops.Really? Anyone paying attention knew this; I've been reading about it for the past two years and I'm not even "in" the industry; can't remember if I blogged it. I wouldn't think of blogging it because irrigating with produced water is so common as to be not newsworthy. And that was the lead author who was unaware that produced water was being used for irrigation. I'm sure I linked this story or a similar story on the blog a long time ago: KQED is reporting:
With California’s reservoirs running low, many Central Valley farmers are struggling to keep their trees and crops alive this year.
In the southern San Joaquin Valley, some are getting extra water from an unlikely source: the oil industry.
California is the third largest oil-producing state in the country, extracting roughly 200 million barrels a year. But in the process of getting oil, companies also produce massive volumes of water, found naturally in the same underground formations.
“To produce one barrel of oil, we produce about nine barrels of water,” says Chevron’s Thep Smith, walking around the company’s Kern River oil field, east of Bakersfield.Just wait until the state bans irrigation with produced water. Wow.
Jane Long, the report's co-lead, said researchers did not find strong evidence of fracking fluids in irrigation water but added: “What we did find was that there was not any control in place to prevent it from happening.”
Ms Long also noted that the researchers did not find any elephant dung in California water, but they also found that there were no controls in place to prevent elephant dung from entering the California water supply.Okay, I made that part about elephant dung up.
The bottom line is that crude oil production in California is not going to get easier based on a reading of the swirling tea leaves.
Too Big To Exit
Back on June 10, 2015, on the blog: Greece. I always said that Merkel would cave. Now Drudge is linking a story that says "Merkel blinks."
Earlier today I was going to post the note that The (London) Telegraph is doing the best job of reporting the Greek tragedy but never got around to it; actually I had the time, just not particularly interested. But I digress.
The Telegraph is reporting:
This is the first time Europe's institutions have acknowledged clearly that Greece’s public debt – 180pc of GDP – can never be repaid and that no lasting solution can be found until the boil is lanced.So, sometime tomorrow, or over the weekend, or next week, Germany et al will send Greece $8.1 billion so Greece can start paying Germany et al some of the money they are owed. It will be interesting to see if Greece, if it gets the money, will pay back any of the money it owes the IMF.
German Chancellor Angela Merkel said “a classic haircut” is out of the question, but tacitly opened the door to other forms of debt restructuring, conceding that it had already been done in 2012 by stretching out maturities.
Two more Wall Street Journal articles on the Greek tragedy: