Just a BP Quickie

Until the BP spill, "everyone" spoke of volume of oil in barrels. During the first few days after the disaster, reported continued that trend, quantifying the spill interns of barrels of oil. But then, a few weeks later, the reporters began to write their stories using gallons instead of barrels to quantify the amount of oil spilled, collected, or burned.

That small change results in a number 42 times larger than how it is usually reported. Fair and balanced.

On another note, I don't possibly see how BP can survive as a company without declaring bankruptcy. This would not be setting a precedent. Texaco declared bankruptcy back in 1987 following a lawsuit with Pennzoil.

Update -- August 6, 2010:

• This became a non-story over time. The oil has disappeared. The media is upset there is no video. All they can do now is complain about the dispersants that were used, hoping that Congress bans them in the future, so better video of oil-tarred seagulls, pelicans, seals, polar bears can be filmed. What hypocrisy. 
• BP is probably wishing they hadn't acted so rashly selling all their assets for a debacle that became less-than-a-debacle.
  

Update -- July 20, 2010:

• The company has spent $3.95 billion so far with regard to the clean-up.
• The company is under pressure to set up an independent escrow account, just to get started, of $20 billion. 
• BP has committed itself to raising $10 billion this year (the year is half over) for the clean-up.
• BP's cash position is $7 billion. 
• BP has $32 billion in debt.
  BP's annual operating cash flow is $30 billion.
• Today BP announces plans to sell off assets worth $1.7 billion to start building that $10 billion. 
• BP's market cap is $108 billion.

Wyoming Wind Taxes Highest Among Neighbors

If planned taxes go into effect, Wyoming's taxes on wind would be highest among its neighbors.

The story lacks much financial information. For example, there is no comparison between taxes on fossil fuels and wind energy on an energy-producing basis.

In addition, there is no cost estimate of the biggest bottleneck: lack of transmission lines. Someone has to pay for those lines. Again, the reporting on wind energy is lacking. I have nothing against wind energy; I just want everything to be "transparent."  Voters can then decide how they want to spend their money.

Home Sales

I didn't realize this: existing home sales reported yesterday reflected the largest drop in anyone's memory, according to CNBC this morning. I did not know it was that bad; the opening paragraphs of this story did not say that, so I don't know how accurate CNBC's commentary is, but again, it "surprised" analysts.

With this kind of news, it's hard to believe that a) price of oil holds up as well as it does; and, b) the economy, as reflected in the stock market and Congressional spending, is doing as well as it is. It appears Congress has lots of money to spend.

With today's report that new home sales plummeted to worse level, either historically, or at least back to 1971, suggests two things: a) a reflection of the general economy (but everyone knew that); and, b) Congress has now introduced a wrinkle to home sales that was used in the car industry to devastating effect. [It's official: worse new home sales report since 1963 when records were first kept. Something tells me the administration will do anything to distract voter -- say, like fire a 3-star general officer?]

That wrinkle: rebates, tax credits, etc. At one time, the car industry did not offer rebates, but once they did, folks would hold off buying a new car until rebates or tax credits were offered. Years ago I read stories about the automobile industry realized they made a big mistake introducing the concept of rebates.

Now, Congress has done the same thing with the housing industry. Why buy a house now if you missed the opportunity this past year when Congress offered an $8000 credit? If you wait long enough, and I think it will be less than one year (with the election looming, it could be less than six months), Congress is likely to offer another credit. And there begins the housing cycle based on Congressional incentives.

By the way, 1,300 prison inmates received $9 million in new home-buying credits; 141 of those inmates were serving life sentences. In all, more than 14,600 taxpayers wrong received $27 million in credits. Other notes: one house was used by 67 folks to claim the tax credit. 

Peak Oil and BP Oil Spill Revisited

If other nations follow suit in slowing down or limiting off-shore drilling altogether, "peak oil" is probably nearer than most people think, according to a story in the Christian Science Monitor.

Two things I do not subscribe to: a) man-made global warming theory; and, b) peak oil theory, in their current renditions. I am not saying that either theory is completely inaccurate, but we are certainly not getting the whole story. When it comes to both theories, I follow a) the money; and, b) the politics.

With regard to peak oil theory, a) the US is swimming in natural gas; and, b) we have decades of coal available to convert to liquid hydrocarbon (althought there is an opposing view: a recent study that suggests this is not true).

Our energy problems are a policy problem, not a "peak oil" problem. Oil prices certainly do not reflect any near-term concern with peak oil. They are down again today (June 23, 2010).

The article linked above asks when "peak oil" arrives. Two sources in the article "believe" we are already there or passed it a few years ago (that's obviously incorrect to anyone with any common sense); a third source says 2025.

As stated before, "peak oil" theorists have not defined the concept well enough for me to understand (or more likely, I am the only one who misunderstands the concept and everyone else understands it perfectly):

Is peak oil when ACTUAL production falls off, or when POTENTIAL production is reached?

If today, someone discovered a cheaper, cleaner, safer alternative to oil that replaced all need for oil, the actual production would drop to zero, and thus yesterday would have been the day "we" saw peak oil production. However, if all of a sudden, the global economy takes off and oil consumption rises significantly, and price of oil rises to $300/barrel, I can guarantee you that oil production would take off.

Yes, someday the world will use less oil but it will be due more to economics than to actual last drop of oil being found.

Hess To Build a Rail Loading Facility in Tioga Area

I thought "takeaway" capacity for oil about matched / slightly exceeded production, but it turns out I may be wrong. Hess is planning to build an oil loading facility in the Tioga area.

These links don't often stick around for very long; I don't even know if they are always archived. Here's another link that is unlikely to disappear for a long time with the same story.

Census Numbers in the Bakken Don't Match Expectations

The census numbers in the Bakken don't match estimates. The spokesman said there were no theories or explanations for census numbers coming in significantly lower than expectations. Here are some of my thoughts:

1. The census tabulators only go after houses/homes/edifices with house numbers or addresses. There has been a housing crunch and a lot of folks are finding places to stay without fixed addresses. Something tells me the census tabulators aren't knocking on recreational vehicles at campsites.

2. Many of the workers are probably in the field and not responding to the census in the first place. Finding them will be very, very difficult.

3. Most of the new workers probably still call home their last place of residence and have not officially moved here in their minds. My hunch is that a large number of workers are itinerant, and probably coming from states with no income tax, like Texas (yes, I know, they would still pay out-of-state taxes on income earned in North Dakota).

Update on Wind Energy Costs in the Bakken

The wind energy story in Montana sounds a lot like the Cape Wind energy story here in Boston, Massachusetts.

Wind energy costs at least 30 percent more than conventional energy.

Wind energy promoter says his particular wind farm can only produce at 30 percent capacity: I suppose this means that the wind only blows at the right strength about 30 percent of the time. That would jive with what I saw while visiting Montana/North Dakota last summer; most of the turbines were not turning when I passed them (in the wonderful Amtrak trip from Los Angeles up to Portland, Orgeon, and then east to Williston (heart of the Bakken) and then on to Chicago, and finally south to San Antonio. What a fantastic trip!)

Incidentally, it has been my experience that most promoters of anything tend to exaggerate (including fishermen); if this promoter says his wind farm is producing at 30 percent capacity, I wonder what the true rate is.

The Public Service Commission (PSC) won't set rates for the wind farm (for a variety of reasons), suggesting that competitive bidding process be allowed to set rates.

The wind promoter is asking for $90 per megawatt-hour, significantly higher than the price currently being paid by the utility, $56. The average residential customer uses 9 megawatt-hours per year.