May Day! 2018

TSLA-MPC-Andeavor: from The Financial Times -- the deal challenges Tesla's electric dreams. California seen as needing steady source of petrol and diesel long into the future. 

If Elon Musk believes the adage that “as California goes, so goes the nation”, then the founder of Palo Alto-based Tesla may have cast a weather eye over the mega-deal between Marathon Petroleum and Andeavor. 

The $36bn transaction, the 11th largest in oil market history, will turn Marathon into the biggest oil processor in the US once it absorbs Andeavor’s fleet of largely West Coast-based refineries. 

But it comes at a time when Mr Musk and his contemporaries are trying to remake the Golden State as a test bed for an electric vehicle future, with the aim of relegating the internal combustion engine and its reliance on fossil fuels to an afterthought behind long-range batteries. 

California already had six EVs per 1,000 people in 2016, a ratio that will have risen since then, compared with just 0.7 in Texas.

The Marathon-Andeavor deal represents a wager against some of the loftier claims of Mr Musk’s vision with “old economy” companies still believing they have a thing or two to teach the tech stars of Silicon Valley about oil’s future.

California will continue to need a steady source of petrol and diesel long into the future with cars accounting for only a third of oil demand globally.

Freight, petrochemicals, aviation and shipping comprise the rest and will not be so easily electrified. “It’s essentially a bet, in part, that the Californian market will not electrify as easily as the politics and culture of the state might suggest,” says Alan Gelder, head of refining at energy consultancy Wood Mackenzie.

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

Disclaimer: I make a lot of simple arithmetic errors. I often see things that do not exist; I read quickly and miss important points. Sometimes it takes me days (maybe even weeks) to see where I was wrong.

Dividends: corporations boosting dividends. Exxon raised its quarterly dividend by 7%, from 77 cents to 82 cents.

Apple: pending. Expectations that Apple will make some interesting announcements during its earnings call, probably tomorrow. Apple's earnings will be released after market close today.

Iran sanctions decision: less than two weeks for Trump's decision. Trump likes to negotiate; doesn't like to rip up documents or delay the process. John Bolton is now his SecState. Bibi releases 100,000 "verified" documents.

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RBN Energy: Canadian and US Northeast (Marcellus/Utica) natural gas suppliers battle for midwest market share.

For years, the U.S. Midwest has been a perennial net exporter of natural gas to Eastern Canada. But with Marcellus/Utica and Canadian gas supplies barraging the region, that’s changing. Less Midwest gas is flowing across the border into Ontario. At the same time, Canadian gas supply that used to serve U.S. Northeast demand is being displaced to the Midwest. That’s on top of Marcellus/Utica gas that’s physically moving to the Midwest via new capacity on the Rockies Express and Rover pipelines. The result is that the Midwest’s net exports to Canada are declining and even flipping into net imports during some summer months when the market is in storage injection mode. Thus far, this reshuffling of supply has occurred at the expense of Gulf and Midcontinent gas that historically has served the Midwest. But now there’s little of that left to displace from the Midwest, even as still more supply is expected to move there. Canadian producers are banking on capturing more of the Midwest market, as are Northeast producers via expansions like Rover’s Phase II and NEXUS. In other words, there’s a fierce battle brewing for Midwest market share. Today, we look at flow dynamics and factors affecting Canadian gas flows to the U.S. Midwest.

Earlier this year, we began a series examining Canada’s gas exports to the U.S. by region. These gas flows play a key role in the U.S. natural gas supply-demand balance, but have been in flux in recent years due to increasing competition from gas-producing basins in the U.S. We started by looking at the macro fundamentals affecting the Canadian gas supply-demand balance, including growing gas production from the Montney and Duvernay shale plays in Alberta and British Columbia. While Canada’s gas demand is also rising — for gas-fired power generation and to supply steam and power for oil sands production — exports remain a necessary demand source for Canadian producers. However, the problem is that the U.S. needs less and less of that Canadian gas.