This Is Not An Investment Site -- Do Not Make Any .... July 22, 2018

Fitzsimmons on Chevron over at SeekingAlpha:

• integrated global energy giant is hitting on all cylinders (production, refining, & chemicals), yet the stock has been relatively weak
• that presents an opportunity for investors prior to the upcoming Q2 EPS report, which is due out this coming Friday
• current Q2 consensus EPS estimates have risen $2.10/share, but I think the company could earn $2.45+
• the current $4.48/share annual dividend yields 3.6%. Blue chip Chevron is a BUY and I raise my end-of-year price target by $5 to $145

At the moment, CVX is trading for 122 and change. An end-of-year price of $145 ... well, what can I say?

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For All Those Bernie Sanders / Alexandra Ocasio-Cortez Supporters 

Funny how things work out. Yesterday I posted three "international" stories -- for the archives, to keep the Bakken in perspective -- and then this, from The WSJ: oil-rich Iraq can't keep the lights on.

Does this sound familiar? Think Venezuela.

From the linked article:

Temperatures across southern Iraq are so high in the summer months that birds drop dead from the sky due to heat exhaustion. And tap water runs piping hot.

So when Iraq’s power supply faltered this month as a heat wave ramped up air-conditioning demand, it ignited an angry question: Why can’t one of the world’s top oil producers keep the power on?

Protests have rippled through Iraq’s oil-rich south for over a week as demonstrators railed against the government’s failure to provide basic services like electricity, health care and clean water. They have posed a serious enough risk that authorities have shut down the internet and sent in troops to quell the unrest.

More:

Iraq had been purchasing electricity from Iran for several years, but Iran cut the power citing unpaid debt and electricity shortages of its own. Ministry of Electricity spokesman Mosaab al-Modares said Iraq has the money to pay, but can no longer transfer the funds without violating U.S. sanctions on Iran.

The biggest problem, however, isn’t electricity generation, but distribution. As much as 65% of the power supply is consumed by people who illegally tap into the grid or don’t have electricity meters, according to the Ministry of Electricity. Fee collection is also weak. In 2015, its best year to date, the ministry said it collected just 12% of fees.

The government tried in 2015 to collect more fees and stop illegal power consumption, but a popular backlash stalled it. Among the biggest opponents, Mr. Modares said, were private power generator owners, who he says collectively make around $10 billion in annual profits from the government’s failure to provide electricity.

This comment hit the nail on the head:

“Iraqi electricity demand has grown to 23,000 megawatts at peak summer demand, but the country can only produce 15,900 megawatts, according to Iraq’s Ministry of Electricity.”

“…private power generator owners, … make around $10 billion in annual profits from the government’s failure to provide electricity.” 

A few questions.

The “make around $10 billion in annual profits” number?

Is the number credible? We don’t know because we don’t know if the source’s data was reviewed for accuracy. The source, a government official, might have a reason to provide an inaccurate number.

How much of the production deficit (23,000-15,900=7,100), if any, is produced by the privateers?

How much does it cost the privateers to produce the energy?

In some worlds the privateers would be considered entrepreneurs. 

Maybe the importance of the article is to point out that governments’ bureaucracies are, in fact, inefficient everywhere.

Maybe Iraq should privatize its government electric company. 

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The Golf Page

For the golfers who did not qualify for The Open this week, there was the Barbasol Championship in Nicholasville, Kentucky, where Brittany Lincicome played

Lincicome [was] only the sixth woman to ever play in a PGA TOUR event, and just the second to break par [once, on the second round; six over on the first round].

Only two women have completed 72 holes in official TOUR events: Babe Didrikson Zaharias at the 1945 Phoenix Open and the 1945 Tucson Open and Shirley Spork at the 1952 Northern California-Reno Open.

So, how did she do?

She missed the cut, ending tied for third or fourth. From last.

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The Book Page

Some weeks ago I was in my "China phase" -- among several books I read included two regarding the "opium wars," one fiction, one nonfiction.

Now, this book, of all things -- Barons of the Sea, Steven Ujifusa, c. 2018.

Reviewed at The WSJ.

For me, many, many dots connected, again.

But there is a dark side to the story. The Delanos, Forbeses and other American shipping fortunes were made not simply by importing tea to the U.S. but by smuggling opium from India into China. While there were no legal restrictions on opium in the U.S. at the time, the drug had been banned in China by imperial edict in the late 18th century on account of its disastrous social consequences.

Addiction was rampant, having spread from the wealthy to every stratum of Chinese society. “The Chinese government was nervous about using force to crack down on the trade,” Mr. Ujifusa writes. “Craving for the drug had overwhelmed all means of enforcement. So had bribery.” For British and American traders, however, the profits to be made by smuggling far outweighed any moral considerations; a single shipload of opium was worth tens of millions of dollars in today’s currency. Mr. Ujifusa’s “barons of the sea” were, in essence, America’s first drug cartel.

By the way, completely unrelated, the "opium wars" helps me put the current US-China trade war into perspective. It will be interesting to see if some writer at The WSJ can connect the dots. LOL.