Wednesday -- December 17, 2014; Utility Bills Soar In New England -- Forbes; Housing Starts Decline, First Drop Since August -- Global Cooling To Blame -- Bloomberg

Before we get started. Rex Reed's top 10 movies for 2014 includes The Grand Budapest Hotel, at number 6. I watch it regularly, watching it again last night. And before that, I watched The Great Gatsby for the third time in two days. I never fail to see something new. I remember Roger Ebert saying he once went through Casablanca frame-by-frame; at the time I had trouble seeing why someone would do that. Now I understand. By the way, Rex Reed's comments on Scarlett Johansson (Under The Skin, #3 among the ten worst) are right on (with one exception, Lost In Translation).

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Linn Energy (soars 28%).

New England's utility bills soaring -- Forbes. Memo to self. See if Pocahontas is quoted. [No, she isn't. Apparently she is not interested in this issue, just banking.]

Why oil will go up in price in 2015 -- 24/7 Wall Street.

Excess of 2 million bopd -- LA Times. Regular readers have read several times that pundits said one million bopd need to be taken off the market; I have said from the start, 2 million, and have always said that would be easy to do.

CLR's earnings match estimates -- Market Realist.

COP surging today -- The Street. 

Dow surges 220 points -- ExxonMobil, Chevron surge -- Barron's.

I had lost track of this one; watch for an increase in head of cattle in North and South Dakota, and Montana next summer. Beef is hitting all-time highs and unlikely to plateau any time soon. Blame it on the drought in the southwest.  -- Wall St Cheat Sheet.

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Active rigs in North Dakota:

	12/17/2014	12/17/2013	12/17/2012	12/17/2011	12/17/2010
Active Rigs	180	186	183	200	166

RBN Energy: crude and natural gas after the crash -- the ratio. 

West Texas Intermediate crude futures settled yesterday at $55.93/Bbl, down 52% since June 2014 and NYMEX Henry Hub natural gas futures settled at $3.619/MMBtu. The crude-to-gas ratio of these two energy commodities - meaning the crude price in $/Bbl divided by the gas price in $/MMBtu - was just over 15X.

We have not seen a crude-to-gas ratio at this level since June 2010. Over the past 4 years the ratio has been far higher - averaging 27X and reaching a high of 54X In April 2012.

That lofty four year run for the crude-to-gas ratio has arguably been responsible for much of the crude and natural gas liquids production boom since 2011 and a “Golden Age” of natural gas processing. Today we begin a two part series on the implications of a lower crude-to-gas ratio.

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Global Warming

Climate Change

Extreme Weather

Whatever

Ice Age Now

Putting things into perspective: we all agree -- warmists, deniers, and Algore --  we all agree that the warmists predict that the global temperature will rise about 1.5 degrees over the next 100 years.

Don noted that Minot's average temperatures deviated from the mean by almost that exact amount this past year, 1.27 degrees. Link here. 

But for the warmists: note that the 1.27-degree deviation was a DECREASE in temperature in Minot by that amount.

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New Englanders and Pocahontas Are Betting On Global Warming

Remember the shock last year when New Englanders paid 20 cents/kWh during the "Polar Vortex"?

No "Polar Vortex" yet this year, but, if I'm reading the story correctly, the New England utilities have already set this winter's fare rate at 24 cents/kWh. Maybe I'm misreading the story. Forbes is reporting:

Consumers in New England got a shock in their utility bills this month. A 40% increase over the previous month. National Grid , the largest utility in Massachusetts, decided that electricity prices for this winter would rise to 24¢/kWh, a record high.

But peak electricity prices could exceed 100¢/kWh like they did last year during the polar vortex.

Not sure why New Englanders are so surprised. It was their choice to throw all-in for natural gas and renewables in a land of harsh winters. But they’ve refused to build new gas pipelines. And they’re shutting a nuclear plant that has 20 years of cheap reliable cold-resistant energy left on it.

New England already has the highest electricity prices in North America – about 18¢/kWh averaged over the whole year. The national average is 12¢/kWh. In my own state of Washington, it’s only 8¢/kWh thanks to hydro and nuclear, and a reasonable market structure.

But last year during the polar vortex, New Englanders paid over 20¢/kWh.

Prices will go up, of course, if Cape Wind ever gets built. That was the agreement the state made with Cape Wind promoters -- a guaranteed 3.5% increase / year.

As usual, the Forbes article is excellent, providing a lot of background.

It continues:

ISO New England, which manages the region’s transmission grid and wholesale electricity market, had to bring up dirtier coal and oil plants to try to make up the difference.

Nuclear energy, unaffected by cold, became the primary provider of electricity in New England, edging out gas 29% to 27%. Oil generation made up 15% while coal accounted for 14%. Hydro, with a little renewable, provided the rest.

The utilities know they are in for another bad winter and have adjusted prices up knowing they’ll have to pay for these dirtier and more expensive stop-gaps when the same thing happens this winter.

But nuclear won’t be able to help as much this year. The political and warped market pressures have forced Vermont Yankee Nuclear Power Plant to close at the end of this month.

Ironically, low gas prices were cited as a reason for this closure 20 years ahead of schedule. And some coal plants are closing as well, making sufficient capacity and reliability for the region dicey.

So, not only are the Boston folks going to pay more for their electricity this year, they are going to push more coal-derived CO2 into the atmosphere.

But that could be good, if it hastens global warming, at about 1.5 degrees over the next 100 years.

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The Spin Is 24/7

Despite a dismal housing report yesterday, this is what the spin was:

“All the conditions for stronger residential investment are in place for 2015,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc., who forecast starts would slow to a 1.03 million pace. “An improving job market is going to do wonders for the housing market.”  

Say what? "An improving job market"? If, and it's a big if, the job market is improving, it's because fast food restaurants (McDonald's) and hospitality services (motel/hotel cleaning staff) have increased hiring, along with seasonal retail hiring (at $8.25/hour here in the DFW area) -- these aren't the kind of jobs that will drive the housing market.

So how bad was the report yesterday?  Bloomberg is reporting:

Housing starts declined 1.6 percent, the first drop since August, to a 1.03 million annualized rate from a revised 1.05 million pace in October that was stronger than previously estimated, figures from the Commerce Department showed today in Washington.

The decrease was led by a plunge in the South as other areas registered gains.

Building permits also fell last month, indicating a surge in construction is probably not in the cards for the immediate future. 

The word "plodding" was used to describe the housing market. 

And what are the attributing the plunge in housing starts in the South? Sit down; you won't believe this. The plunge in housing starts was blamed on global cooling. Say what, global cooling?  From the linked article:

Only the South showed a decrease in starts, plunging 19.5 percent in November from the prior month, the biggest drop for the region since June.

Some economists attributed the drop in starts to colder-than-normal temperatures. Last month was the coldest November since 2000, according to the National Climatic Data Center.

I can't make this stuff up. The CNBC headline for a Reuters story was even sillier: "US housing starts, permits fall; trend points to recovery."

No, I can't make this stuff up.

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Islamic Spin Puts US Spin Into Perspective

The Islamic Taliban justifies killing / executing / massacring / butchering / slaughtering 132 children, some as young as two years of age.

But we all know that the Taliban is not an Islamic organization. No religion would ever do this. President Obama has told us this. It is interesting which religions he defends.

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For The Archives

Governor Cuomo Bans Fracking In New York State

The story is found everywhere. 

This was their "smoking gun":

The health department spent more than 4,500 hours on its analysis, reviewing academic studies, consulting experts and meeting with health officials in other states, Zucker said. The studies and data showed many potential health risks, including groundwater contamination in Wyoming and increased traffic deaths in areas of Pennsylvania.

I am unaware of any documented groundwater contamination due to fracking, and "increased traffic deaths in areas of Pennsylvania" is simply laughable.

Based on the health department's findings, I'm surprised they haven't banned tobacco cigarette smoking altogether.