Wednesday, May 6, 2015; Bad, Bad Economic Reports On Jobs AND Productivity -- Sort Of A 1-2 Whammy On An Otherwise Beautiful Day

Active rigs:

	5/6/2015	05/06/2014	05/06/2013	05/06/2012	05/06/2011
Active Rigs	86	186	190	210	177

RBN Energy: finding markets for Utica condensates.

The largest refiner in Ohio is Marathon Petroleum Company (MPC). We first described proposals by their logistics affiliate MPLX to build one or more pipelines in central Ohio to deliver lease and plant condensate to area refineries in November 2013.

MPLX has just completed a successful binding Open Season for its proposed 50 mile up-to 180 Mb/d Cornerstone pipeline. The Cornerstone pipeline would initially connect two MarkWest gas-processing facilities at Cadiz and Leesville, OH, and a UEO Midstream fractionator at Scio, OH, to the 90 Mb/d MPC refinery at Canton, OH.

MPLX could also extend the Cornerstone project to connect to the MarkWest Hopedale fractionator and to deliver condensate and natural gasoline (as well as possibly butane) further west to refineries at Lima and connecting pipelines to Toledo and Michigan feeding other Midwest refineries. Extending those connections further west from Lima and north to Hammond, IL, would also allow condensate to be shipped to Canada via the Enbridge Southern Lights and Kinder Morgan Cochin pipelines.

MPLX also delivers condensate by truck (potentially in the future by pipeline) to a 60 Mb/d barge terminal at Wellsville, OH, from where it can be delivered 260 miles down the Ohio River to their 242 Mb/d Catlettsburg, KY, refinery.

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US Economy

US productivity falls for second straight quarter. Blame it on the winter. (To the best of my knowledge, winter comes every year; it was not particularly worse this year than other years [in fact, in North Dakota, relatively benign as winters go]; and, had it not been for global warming, it could have been worse. Uff da.) [Later, from the MDU 1Q15 earning transcript: Several factors negatively affected our results for this quarter. Some of the warmest winter weather on record affected utility earnings by approximately 6.6 million.]

U.S. nonfarm productivity fell in the first quarter as harsh winter weather weighed on output, pushing labor-related production costs to rise at their quickest pace in a year. 

Productivity declined at a 1.9 percent annual rate after dropping at a revised 2.1 pace in the fourth quarter. That was the first back-to-back fall in productivity since 2006.

And I know we've had harsh winters since 2006. Whatever. 

But, US private sector adds 169,000 jobs in April.  Oh, oh. Bad, bad report. Really bad.

U.S. private employers added 169,000 jobs last month, the fewest since January 2014 and far below economists' expectations.

Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 200,000 jobs.

March's private payrolls were ALSO revised down to an increase of 175,000 jobs from the previously reported 189,000.

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Peak Oil -- Again

One needs to be cautious when reading Oilprice.com. I wrote this some time ago:

I'm not familiar enough yet with OilPrice or Leonard Brecken. Googling Leonard Brecken: first hit -- a short call on Netflix back in 2011. The site also notes that Leonard Brecken is the founder of small NJ based hedge fund Brecken Capital.

The picture becomes clearer. Superficially we have Goldman Sachs bearish, and a hedge fund (Brecken Capital) calling them (Goldman Sachs) on that.

For me, Oilprice.com is interesting, but it combines the old "Oil Drum" blog with subtle Motley Fool undertones. You have been warned. Having said that, today's Oilprice post on "peak oil" is good news for those bullish on oil.

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

I think the premise of their message today is wrong.

However, embedded in their post today, the writer includes a link to another post with a score of graphs showing oil production from countries around the world. The graphs are interesting but when such countries as Denmark and Gabon are included, it sort of dilutes the point they are trying to make.

The best comment:

While not exactly statistically valid, paging thru the data I wonder if a really large fraction of the decreases in individual countries are not more politically than geologically driven. That seems to be the case for some of the big producers such as Iran, Mexico, Venezuela and Libya. Clearly, though, the North Sea is a dead duck. 

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Remember All Those Banks Telling Us Oil Would Collapse To $30 By Now?
Group Think?

To name just a few: 

• CNN Money "Investing Guide", March 16, 2015: down to $30.
• CNN Money "The Buzz", December 31, 2015: the same story as the one above.
• B of A, January 23, 2015: $30 oil.
• CNBC money pros, March 27, 3015: $30 oil.
• Goldman Sachs, January 12, 2015: $30 oil.

At least one bank thought outside the box:

• Citi, February 9, 2015: $20.

I guess no one saw the conflict in Libya coming.

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Apple Page

I did not know this: with 2,000 stores across the US, Home Depot will be the largest retailer to offer Apple Pay. I was sure McDonald's was taking Apple Pay (they do) and I was sure McDonald's had about 14,000 stores in the US (they do). Maybe I'm misreading something or maybe McDonald's is backing out of Apple Pay. Whatever.

CBS Sports and USA NOW channels now available on Apple TV. 

No glass ceiling at Apple. Apple's Ahrendts emerges as top-paid US woman; $83 million. Actually it's a one-off; this year's pay included a signing bonus and a make-whole grant for awards left behind at Burberry. Actually, she should have paid Apple for the opportunity to sign on with them. And, oh, by the way, the pay package is currently valued at $105.5 million. Not quite the $1 billion pay-off the former Mrs Harold Hamm received -- I suppose one could call the $1 billion check a "make-whole grant" for leaving the team.

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Civil Disobedience

Governor Jerry Brown calls for a 25% decrease in water usage.

Reality: a paltry 8.6% savings, cumulative since last summer. Actually it's worse:

Water board staff scientist Max Gomberg said California residents and businesses used only 3.6% less water in March than they did during the same month in 2013, the baseline year for savings calculations.

And it looks like Californians may not like rater rationing:

California's hundreds of urban water suppliers assessed only 682 penalties to water wasters in the last several months after receiving more than 10,000 complaints.