Tuesday, August 8, 2017

The Market And Energy Page, T+199 -- August 8, 2017; Coal-Fired Plants To Be Leading Source Of Electricity For Next Two Years -- EIA

Wow. I wasn't paying attention. Futures were down earlier this morning so I wasn't paying attention to the market. For whatever reason I checked in and to my surprise, all indices are green, and actually doing quite well. Dow 30 and S&P 500 both hit new all-time highs. Now, 87 new highs on the NYSE. Among the new highs: Deere; RDS (Shell); Diageo (whoo-hoo);

Jolt: job openings at a record high. Apparently 6.2 million job openings. June JOLTS job openings 6.163 billion vs 5.7 billion expected.

Apple just hit another all-time high, now trading above $160; market cap $828 billion with a quarter of a trillion dollars in cash. Shares outstanding: 5.17 billion.

Plug Power missed estimates; shares fall 7%.

Credit card debt: Americans now have the highest credit-card debt in U.S. history. This is an incredibly interesting story. Cheap money. A digression. Apple has a quarter-trillion dollars in cash, and yet it raises more money selling bonds. Why. Because money is cheap. Other examples abound. Same for the individual. Banks are offering individuals the opportunity to borrow thousands of dollars against their credit card with zero percent interest if the loan is paid off in twelve months (only charge, a transaction fee). Retailers, especially those selling big ticket items like furniture, are doing the same thing: one, two, even three years of no interest as long as the debt is paid off within the time period. Ads on television suggest similar low-interest loans on automobiles.

I took advantage of one of those bank offerings -- 0% interest as long as the loan is paid back within the year. I will pay it back well before the due date, and will have that much more in my equity portfolio. So, I am one of those Americans that "contributes" to the highest credit-card debt in US history. I assume I am not the only one, and I assume I "borrowed" a relatively small amount.

The good news: I will pay back my interest-free loan in half the time required. The even better news: the offers keep coming. But I won't do it again until current loan paid off.

EIA Short-Term Energy Outlook

Oil Markets:
  • The forecast calls for U.S. oil production rising over the next two years, with oil output heading for an all-time high of just over 9.9 million barrels per day in 2018, surpassing the old record set in 1970.
  • U.S. oil production growth could slow as some U.S. energy companies plan less investment spending for the rest of this year and the number of drilling rigs has recently increased at a slower clip.
  • The monthly increase in U.S. onshore oil production during the second half of 2017 is expected to slow from the pace seen during the first six months of this year.
Gasoline/Refined Products:
  • U.S. consumers are buying record amounts of gasoline this summer, even though pump prices are higher than last year.
  • A growing economy and more people working are major contributors to higher gasoline consumption this summer.
Natural Gas:
  • U.S. natural gas production growth is expected to accelerate over the next two years with growth rates over 2% in 2017 and over 5.5% in 2018.
  • Forecast record natural gas production in 2018 coincides with an expected rise in electricity generation from natural-gas fired power plants and a 23% increase in U.S. natural gas exports.
  • Looking ahead to the start of the upcoming winter heating season, U.S. natural gas inventories are forecast to total just over 3.9 trillion cubic feet at the end of October, about 2.9% less than last year’s record level.
  • U.S. electricity generation is expected to decline in 2017 for the third year in row, as forecast milder temperatures in the third quarter compared to the same period a year earlier reduces electric cooling demand.
  • Coal-fired power plants are expected to be the leading source of U.S. electricity for the next two years, as the cost of coal is expected to rise by less than the cost of natural gas and renewable generation continues to grow.
  • U.S. coal production is getting a boost in 2017 from higher coal exports and more coal-fired electricity generation. (Coal certainly is getting a boost.)
  • U.S. wind power, which provided 6% of total U.S. electricity in 2016, is expected to have a 9% generating capacity increase this year and another 16% in 2018. (1.09 x 6 = 6.54%)
  • Solar power, which provided 1% of total U.S. electric generation in 2016, is expected to see the largest rate of growth in utility-scale electricity generating capacity of any energy source, increasing 36% this year and more than 10% in 2018. (1.36 x 1 = 1.36%; 1.36 x 1.1 = 1.5% in 2018)

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