Tuesday, July 25, 2017

Making America Great Again -- Revising/Freezing 2021 Fuel Efficiency Standards -- Reuters -- July 25, 2017

From Reuters:
The U.S. Transportation Department said on Tuesday it may revise auto fuel efficiency requirements starting with the 2021 model year, a year earlier than previously disclosed, and could adopt lower standards through 2025.
In March, President Donald Trump ordered a review of U.S. vehicle fuel-efficiency standards from model year 2022 through 2025 established under the Obama administration.
U.S. regulators said in a notice published Tuesday they are preparing a new environmental impact statement and could decide to freeze 2021 standards through 2025, rather than raising them every year.
Meanwhile, Britain and France will ban gasoline / diesel vehicles by 2040. It will be interesting to see how this all plays out. Americans will be driving bigger and bigger SUVs with lots of room for recreational equipment; Europeans will be driving electric golf carts. LOL.

The End -- SunEdison -- July 25, 2017

From Bloomberg:
SunEdison Inc. won final approval for a bankruptcy plan that will leave what was once the world’s largest renewable-energy firm as a shell of its former self, with nothing for shareholders whose investment at one point had been worth about $10 billion.
SunEdison, known for gobbling up other companies and expanding at breakneck speed, will now exit Chapter 11 to “continue business operations to administer and maximize the value of the company’s remaining assets,” including intellectual property and fixtures, Chief Financial Officer Philip Gund said in court filings.
I have more than a dozen posts on SunEdison, I suppose. This post is where I will post the post-mortem

Reminder: the "original" list of 36

Back To 60 Rigs; 42 Emerald Wells Transferred To Petro-Hunt -- July 25, 2017

Active rigs:

Active Rigs603273192208

Five new permits:
  • Operators: Petro-Hunt (3), Petroshale (2)
  • Fields: Charlson (McKenzie); Mandaree (Dunn)
  • Comments: the Charlson oil field is an incredible field; it is tracked here.
Two permits renewed:
  • Whiting (2): two P Bibler permits, Williams County
Operator transfer:
  • 42 wells transferred 
  • from: Emerald Oil
  • to: Petro-Hunt
  • oldest permit: #25919
  • most recent permit: #31506
  • most in McKenzie County; a few in Stark and Billings counties (SW ND)
  • familiar names: Hot Rod; Joel Goodsen; Dudley Dawson; Mary Samsonite; Lloyd Christmas; Dagny Taggart; Robert The Bruce; Chip Diller; Clark Griswold; etc.
Another day with no DUCs reported as completed.

The Energy And Market Page, Part IV, T+186 -- July 26, 2017

Making America great again: Trump says Apple will build three manufacturing plants in the US. If accurate, this tells me all I need to know about "inexpensive energy percolating through the entire economy." It will be interesting if the three plants are built in California.

Whoo-hoo! Bank of New York Mellon increased its dividend significantly, from 19 cents to 24 cents. 

Energy drinks? NYC bars take top cocktail awards. BlackTail, Dante, PDT and NoMad Bar took home awards at Tales of the Cocktail, an annual gathering that brings together the world’s top bar and spirits professionals.
BlackTail has won fans for its fanciful takes on tropical drinks and other classic cocktails, from the daiquiri to the Old Fashioned, since it opened in August 2016. Even the bar’s version of the rum-and-cola is an elaborate affair that goes beyond the namesake ingredients to incorporate Champagne and a bitter Italian spirit.
I'm old school. I don't care for cocktails, in general, unless they are very, very simple. Rum-and-Coke; classic martini; and, that's about it. Scotch? With an ice cube or two and that's it.

Lego: Lego Boost Review. Meet your child’s new coding coach. The new Lego Boost kit makes the classic bricks come to life with programmable motors and sensors. Three junior builders help us put it to the test. Our middle granddaughter attended Lego camp this past summer -- one week of Lego robots.

Huntington Beach, Surf Capital, USA

Sophia, just turned three years old, on her way to boogie board for the very first time in her life!

 Hopefully not the last words that she will hear: "Watch out for the sharks!"

Yes! Reason #3 Why I Love To Blog -- July 25, 2017

I have not read the article yet, but just from the headline I know what Mike is going to say. And my hunch is there is yet more that could be said.

The title of his most recent Bakken post at SeekingAlpha: Eagle Ford enhanced completions help show why the marginal cost of production remains low.

I said as much in this post on July 20, 2017, just 5 days ago: if OXY says they are getting Permian for $28/bbl, the "new" bbls coming out of the Bakken are much less -- using the same methodology OXY uses to cost-out oil production.

Summary of the Mike Filloon article:
  • New well completions continue to produce more oil and this will continue to pressure the US Oil ETF (USO).
  • Production improvements more than offset the increased costs
  • The isolation of these well designs provide a look at where economics are headed as operators improve fracturing near the well bore
  • Completions using more than 10 million lbs of proppant are improving economics in the Eagle Ford
  • This was part of a presentation given at the Bakken Conference and Expo thebakkenconference.com
At the Filloon article, this graphic with the wells that interest me:

We're seeing the same thing in the Bakken. 
Homeowners Paying A Huge Price For Solar Energy In California

Likewise, oilprice is noting the same thing I noted a few days ago: with the California "duck" or "Twin Peaks," residential users are paying a heavy price for solar energy while government agencies, manufacturing plants, and businesses are getting a huge break. 

Elon Musk, a manufacturer, must be loving it.

Why I Love To Blog -- July 25, 2017

Flashback, October 6, 2016 -- just one month before Trump was elected president: the WSJ had an article with this headline -- that McDonald's is struggling.  Wow, how just six months can make a difference. McDonald's shares are likely to close at an all-time high. Wow.  And a bit longer ago, January 29, 2015:
The McDonald's story is interesting. Slumping sales; slumping CEO.

Today this headline: McDonald's has 'total brand confusion': Sonnenfeld.
Amazing how fast a CEO can turn a company around.  Note: the last link was to an article written in January, 2015. Three months later, March 1, 2015, Steve Easterbrook took over as McDonald's CEO.

Before him was Don Johnson, CEO, 2012 - 2015, an electrical engineer who was at Northrop Grumman before moving over to McDonald's Executive (1990 - 2015). According to wiki:
Due to a 4.1 percent decline in customer traffic in 2014, Thompson announced that he was stepping down from his CEO position effective March 1, 2015.
In November 2015, it was announced that Thompson joined the board of directors of vegan meat-alternative company Beyond Meat.
Maybe his heart was not into hamburger. Or perhaps an example of the Peter Principle.

Why I Love To Blog

Hillary can't even succeed as a memorable hurricane. Just a lot of hot air and little impact. Not only that, they misspelled her name, but cogitating on her gender affinity, one wonders....

This is interesting timing. Just 48 hours ago I sent an e-mail to a reader suggesting where Hillary might be. Now we know: in the eastern Pacific.

Are Numbers Real? The Uncanny Relationship of Mathematics and the Physical World
Brian Clegg
St Martin's Press
c. 2016
DDS: 510 CLE

The author: the author of many book. He holds a physics degree from Cambridge. He lives in Wiltshire, England.

Look At These Frack Solutions For Three EOG Wells Coming Off Confidential List Today -- July 25, 2017

For newbies: EOG has led the way in high-intensity fracks in the Bakken. Its my impression that EOG has no shortage of sand. It owns its own sand quarries out-of-state (Wisconsin, Minnesota, or Wisconsin -- I forget specifics -- unimportant). These wells came off the confidential list today:
  • 27391, 998, EOG, Parshall 68-1820H, Parshall, 52 stages; 14.6 million lbs; all 100 mesh; t1/17; cum 73K 5/17;
  • 28402, 428, EOG, Parshall 30-1820H, Parshall, 40 stages; 10.4 million lbs; all 100 mesh; t1/17; cum 86K 5/17;
  • 28404, 1,399, EOG, Parshall 31-1820H, Parshall, 39 stages; 10.3 million lbs; all 100 mesh; t1/17; cum 74K 5/17;

For the archives. In a post written yesterday I mentioned an article I would come back to read later. Here is the original comment followed by today's update:
"Hat Trick: How George Strait Became The Most Reliable Star In Music," by Kelefa Sanneh. Her short bio simply says Sanneh has been a staff writer for The New Yorker since 2008. It will be interesting to see if she seems to know anything about country music. It sounds like she actually visited San Antonio to get the story. It must have been culture shock for her.
[Later, I did read this article the next day. It is very, very good and highly recommended for country music buffs. It's the kind of writing one might have found in Rolling Stone in its heyday. I learned a new term: stacked blue jeans. That's when wearing blue jeans long enough that they bunch up when standing up; the purpose is that when on a horse, they cover as much of the boot as possible. So, "stacked blue jeans."]
The Apple Page

Apple is now firmly back to iPod-style domination for the wearables market.

No competitor has the money and/or the incentive (as they already lost tons of money on their failed wearables efforts) to research and develop the futuristic tech Apple is expected to deliver in the next years.

This is Apple's game to play, and win, for the foreseeable future. 
My thoughts about the Apple Watch back on March 9, 2015

Early Communion With "Ghost Species"?

The Energy And Market Page, Part III, T+186 -- July 25, 2017

Market: smashes through to new records --
Economy, via Bloomberg --
  • unemployment near a 16-year low (after two lost decades)
  • US stocks reaching record highs
  • consumers remain upbeat
  • consumer confidence rises to 147.8, a 16-year high, from 143.9
  • consumer expectations for the next six months gained to 103.3 from 99.6
Bloomberg tried to downplay these statistics, suggesting beneath these numbers are darkening clouds; and, of course they would. So anti-Trump, how else could they spin the story?

So, if you're a Hillary apologist, and have bought into the mainstream media story, and invested accordingly, you have missed one of the most spectacular equity rallies in history.

Other details from the economic report released today:
  • respondents citing "good" business conditions rose to highest level since early 2001
  • the labor differential widened to 16.1 percentage points, the highest since August, 2001 (very, very good)
Making America Great Again

From the EIA today:
In EIA’s latest Short-Term Energy Outlook (STEO), total U.S. crude oil production is forecast to average 9.3 million barrels per day (b/d) in 2017, up 0.5 million b/d from 2016.
In 2018, EIA expects crude oil production to reach an average of 9.9 million b/d, which would surpass the previous record of 9.6 million b/d set in 1970.
EIA forecasts that most of the growth in U.S. crude oil production through the end of 2018 will come from tight rock formations within the Permian region in Texas and from the Federal Gulf of Mexico. In the July STEO, the Permian region is expected to produce 2.9 million b/d of crude oil by the end of 2018, about 0.5 million b/d more than the estimated June 2017 production level, representing nearly 30% of total U.S. crude oil production in 2018. The Permian region covers 53 million acres in the Permian Basin of western Texas and southeastern New Mexico. --- EIA
How Amazon Has Raised The Bar

Every so often Lego introduces a high-demand set that quickly sells out. When that happens, one can then find the same item on eBay selling for about 2x Lego's advertised price. Lego will eventually catch up with demand -- it usually takes about two months -- and Lego keeps its same original price. [As a rule of thumb: each piece averages out to 10 cents/piece; is a set has 1,000 pieces, it will cost $100.]

Lego recently came out with such an item; high demand and Lego quickly sold out. I bookmarked the site and checked periodically.

Yesterday, the item was available. I immediately ordered one set for my daughter (Lego set limit to two sets per order; we sometimes buy two sets on these special items, but for now, in this case, we just ordered one).

After placing my order, I called Lego to confirm that the order had gone through (it's a long story; unimportant).

"Josh" took my phone call. Great conversation. He, too, had been waiting for the Apollo Saturn 5 to become available again; he also noted that it had just come available but by company rules he is not allowed to order on the company computer; he said he will have to wait until he got home.

He said he was 42 years old and still loved Lego products. I no longer have any Lego collection; it's all gone to our younger daughter.

But I digress.

As noted, I ordered about 4:30 p.m. Central Time, Monday afternoon. Today, a robotic e-mail alerted me that the product had already shipped. It would be coming by FedEx -- historically a high-cost mailing option -- and would arrive at our daughter's address on Thursday -- with free shipping.

Without Amazon pushing retailers, I seriously doubt we would see retailers expediting these orders -- for all practical purposes, the Lego shipment is a two-day affair. And free. Even Amazon requires a $99 annual Prime membership for 2-day, "free" shipping.

The on-line price was identical to what I would pay in a local Lego store (if available) and half what it would have cost on eBay had I been too impatient to wait.

The "limit 2 per order" will disappear over time, I believe. Regardless, these high-demand sets are available for a year or so and then production ceases, I believe. It probably varies.

[I just checked Amazon and eBay: the Apollo Saturn V is available about twice the advertised Lego price. It will be interesting to see how fast these prices come down, especially over at eBay.]

Update, 2:49 p.m. Central Time, July 27, 2017:

This was ordered late Monday afternoon, US Central Time; it arrived about noon, US Central Time, Thursday, by FedEx -- free shipping. With free shipping and a free gift worth about $25, Lego is practically giving this item away. LOL.

The Political Page, T+186 -- July 25, 2017

Huge thanks to Don for spotting this one.

The Energy And Market Page, Part II -- What's The Big Story For The Day?, T+186 -- July 25, 2017


Later, 8:31 a.m. Central Time: S&P 500 hits new record high. Wow.
Original Post

What's the big earnings story for today?
This is a rhetorical question; please do not reply/comment.

Futures: surging. Could the Dow hit a new high today? WTI up almost 2%. The Dow is forecast to open almost 200 points.

  • CAT came back much stronger than Cramer thought
  • no infrastructure bill
  • oil was still well below $50 throughout the corner
  • this takes me back to my story on the specialty truck company in Portland, OR; FAST (a July 15, 2017, post)
Disclaimer: I started watching CNBC at 5:00 a.m. but quickly switched to FBN. CNBC never changes. But as soon as Stu Varney came on, I immediately switched to Cramer over at CNBC. Varney's opening monologue (which will continue all day): US Senate vote on healthcare. 

For The Archives

I've probably eaten at more McDonald's restaurants across the country than anyone reading this. McDonald's is really the only spot I stop when traveling cross-country because I know I will have reliable wi-fi. I sometimes stop at Starbucks but not nearly as often as I used to.

One can pretty much be assured that the food will be absolutely the same from one McDonald's to another McDonald's. The only thing that really changes from one Mickey D's to another is the ambience, and that ambience seems to be directly related to a) the region of the country; and, b) urban or rural.

One would think that "rural" would be generally better but that's not always the case. Some of the worst McDonald's have been in low density areas where one would expect they would be happy to see you. But I suppose in some "rural" locations it's hard to find workers and the ambience of a McDonald's is directly related to the "quality" of its employees.

Snopes On The Ropes -- NY Times -- July 26, 2017

Long-term readers know my thoughts about Snopes.com. So this NY Times headline caught my attention: Snopes, in heated legal battle, asks readers for money to survive.
Snopes, the fact-checking website that once focused on debunking flimsy internet rumors but has expanded into a 16-person operation that calls out political leaders for dishonesty, is locked in a legal battle that it says has drained the money it needs to survive.
The site, which gets all of its revenue from advertising, created a crowdfunding page on Monday, seeking $500,000 from readers to remain operational indefinitely. It says that Proper Media, the vendor that runs its advertising services, has withheld the site’s revenue and has refused to relinquish control of the site. That leaves Bardav — the company that owns and operates Snopes — with no way of moving the site to a new host or installing its own ads, said David Mikkelson, a founder of the site.
“We have had no income whatsoever for the last several months,” Mr. Mikkelson said in an interview on Monday.
When asked how long the site could last without a successful fund-raising drive or legal victory, Mr. Mikkelson responded: “Not a whole lot longer.”
The other side of the story is completely different, according to the linked story. It looks like we need Snopes to fact check the story of its imminent demise. LOL.

With regard to the Bakken, Snopes has never updated it's March 10, 2011, post on the Bakken.
According to news accounts, although new drilling techniques have greatly increased oil production in Bakken formation in recent years, as of February 2011 that region was still yielding less than half a million barrels per day. 
Snopes was consistently negative on the Bakken throughout that fact-checking post and never updated the evolution of the Bakken.

Snopes completely missed the Bakken revolution. 

If I recall correctly, Snopes started out as a website run by one person (or possibly a husband-wife team) with no research department (in other words, simply another blog) with its own agenda. [Update: a reader sent me this link -- yes, it was a husband-wife team.]

Of course, one wonders if the whole story is fake, particularly coming from The New York Times. LOL. 

The Energy And Market Page, T+186 -- July 25, 2017

The other day, Don had some thoughts on the market going forward. This was my not-ready-for-prime-time e-mail reply.

Disclaimer: this is not an investment site. Do not make any investment, financial, travel, job, or relationship decisions based on what you read here or what you think you may have read here.

Disclaimer: I am inappropriately exuberant about the Bakken, and similarly inappropriately exuberant about the current economy. I have always been inappropriately optimistic about the US economy -- since 1984.

My thoughts in that e-mail, with slight editing:
I think Jamie Dimon was right: with Trump's agenda, the economy will grow very, very fast; without Trump's agenda, the economy won't grow any more slowly; in other words, Dimon thinks that even if Trump's agenda is stopped cold, the US economy will continue growing.

1. ENERGY: I think cheap energy prices are percolating throughout the entire economy.

2. MONEY: Cheap money continues to percolate through the entire economy. Even Janet Yellen seems more dovish all of a sudden; she either sees something that scares her or she wants to keep her job.

3. REGULATIONS: I have a note from a businessman in ND who says the change in federal regulations are already affecting how fast contractors can get things done in ND. In some cases, EPA, etc. would have slowed project start dates as long as eleven years; they're now seeing these delays going down to two or three years.

4. ATTITUDE: Amazon, Apple, Google, Tesla, JPMorgan, etc., all have a huge appetite to keep growing. Making America Great may sound like a simple slogan but it too percolates through the whole economy. Folks don't want to be left standing at the depot when the train pulls out. And several trains have already left the station. Amazon hit new highs yesterday. NASDAQ hit the 50th record high since Trump's election or something like that.

5. BALKANIZED: Whatever the US does as a whole, the economy, like politics, is going to become more regionalized. Despite my continued negative comments on California has, it remains a growth engine in technology. Texas cannot be held back. RBN Energy said Florida got a new natural gas pipeline in for the first time in decades and I don't think Florida can be held back. Financial institutions in Boston -- not going to be held back. The recent CNBC story said Minnesota was a great place to start a new business and Washington State was the best state to start a new business, so even those states are doing something right.

6. I think if the economy were to turn real ugly, it would have to be a "black swan" as they say -- something that no one expects.
Opportunity to weigh in: poll at sidebar. 

Bakken Déjà Vu -- Is There Enough Pipeline Capacity Coming Out Of The Permian? -- RBN Energy -- July 25, 2017

Active rigs:

Active Rigs583273192208

RBN Energy: squeeze coming to NGL takeaway capacity out of the Permian?
A big question mark hanging over the Permian like a dark cloud is whether there will be sufficient pipeline takeaway capacity to deal with continued production growth in the U.S.’s hottest shale play.
Mostly, takeaway-adequacy questions are asked about either crude oil or natural gas, but ensuring sufficient NGL pipeline capacity out of the Permian may ultimately be the biggest challenge of all. Why? Because just about everything involving NGLs seems to be more complicated — how they are produced, transported, stored and even priced. Today we begin a series on Permian natural gas processing, natural gas liquids production growth and existing plus planned NGL pipelines out of West Texas and southeastern New Mexico.