Thursday, August 30, 2018

Four-Week Jobless Claims Average -- Lowest Since 1969 -- Making America Great -- And Keeping Yet Another Campaign Promise; Hillary's Campaign Promise: Putting A Lot Of Miners Out Of Work

Earlier this evening when it was noted that Denmark became a net importer of oil for the first time, I wrote:
On May 18, 2013, I wrote:
So, How Did That Renewable Energy Plan Work Out? Europe May Be The Only CONTINENT In The Universe To Depend On Imported Energy. 
Backtrack to: Europe At A Tipping Point, one of "the big stories" that I have been following since the beginning of the blog.
Now this, which I think is a portent of the future:

And then this screenshot from the Drudge Report -- great juxtaposition:

The jobless report (the link is blocked by "blogger"): jobless claims lower than expected, four week average hits lowest level since 1969.
New claims rose by just 3,000 to a seasonally adjusted 213,000 last week. After three consecutive weeks of declines, economists had forecast a rise to 214,000, according to Bloomberg.
Jobless claims are an indication of layoffs and have been closely watched this year for signs that trade disputes might weigh on the U.S. labor market. So far, there are no signs that tariffs have cost the U.S. economy any jobs.
The four-week moving average of claims, which smooths out weekly volatility and is considered by many economists to be a more reliable gauge of conditions, fell by 1,500 to 212,250. That is the lowest level since December 1969, according to the US Labor Department.
Other than one's family, shelter and food, I'm trying to think of one thing that is more important than being employed.

Okay, So Which Is It? -- August 30, 2018

From Snowboarding:

From the Almanac:

Algore's prediction: the Arctic will be ice-free by November, 2018.

Trudeau's prediction: my political future is toast.

Whistling Past The Graveyard -- SeekingAlpha -- Update On The Trudeau Pipeline Expansion Project

See this post for background to this story.

From SeekingAlpha, "be happy, don't worry."
  • Trans Mountain expansion faced a big setback today when the Federal Court of Appeal quashed the government's approval to build the expansion;
  • but valuation matters and Canadian heavy oil producers have already discounted the wider-than-normal spreads into the current price;
  • crude by rail (CBR) remains the key catalyst to narrowing the discount near term, and this setback for Trans Mountain can actually push producers to ink multiyear crude by rail deals;
  • With TMX now uncertain, Canadian oilsand capex will keep decreasing, which would push lower Canadian oil production, resulting in less global oil supplies. This could tighten global oil balances further;
  • Because of the discounted valuations, we're bullish on Canadian heavy oil producers as we don't believe this is a material setback on fundamentals. Rather, it's only a setback on sentiment
The writer of that story is betting on the wrong horse. The winner in this race: the Canadian railroads. 

Eh, What Just Happened? -- August 30, 2018


August 31, 2018: a reader who is well versed in legal matters and who has followed this case closely (he/she has relatives in Burnaby) sent me a note with comments and questions. I won't post that but here is "my-not-ready-for-prime-time" reply. From the reply you can probably guess the issues in the original note:
1. I was a bit hasty in suggesting inadequate documentation by the pipeline companies regarding First Nations. You are correct.

2. I strongly believe that the judge in this case had her decision made long before the final judgement was published. It was just a matter of framing it (the arguments/conclusions) to fit the decision.

3. Legally, I am sure the contract reads that the deal is consummated pending a majority vote by the Kinder Morgan shareholders (that occurred yesterday after the judge's verdict; the timing was coincidental). So, even if money has not traded hands, it's a legally binding contract, I'm sure. But it's a man-made contract (not on two stone tablets) so there would be ways, I assume, to "renegotiate."

4. However, Canada needs the pipeline more than anyone is suggesting. They can get the oil out on rail if no other alternatives, but this is a huge sovereign issue -- as I've said, Canada is getting the reputation that a) it's greenness is killing the economy; and, b) "the country can't close a deal."

5. I'm sure some cartoonist will come up with a name for the pipeline that Orca killed.

6. Speaking of which, Trudeau's second mistake (his first mistake was using the orca to kill the Enbridge pipeline some years earlier): he knew this case was in court and would likely suffer the very same fate (nothing was different between the two cases). He should have published an executive order once Canada bought the pipeline stating clearly that Canada would take all necessary precautions to save the Orca and would donate "X" amount of money to environmental clubs dedicated to saving the whale.  The judge only said the company's response was inadequate. An executive order and a tweet by Trudeau would have solved the problem. Assuming, of course, the judge was unbiased going into the case -- a huge, huge assumption.
Original Post 

Wow, I knew this was going to be a huge story, but I think it's a bigger story than most realize. This is going to be fascinating to watch.

See this post for background.

I haven't read the newest stories yet, but as you go through this, remember:
  • Trudeau killed the Enbridge Northern Gateway pipeline to British Columbia some years ago by playing the "orca" card -- when it was "cool" to be against pipelines;
  • he had to have known that the "orca card" would kill Trans Mountain;
  • when he convinced Canadians to buy the Trans Mountain Pipeline he did not tell them that the environmental study was so flawed, one could drive a Canadian Pacific locomotive through it;
  • nor did Trudeau tell them that the case was in court and it wouldn't take a rocket scientist to see the flawed environmental study;
  • and the flawed environmental study involved exactly what? yes, you guessed it, the "orca"
  • the "orca" killed the Enbridge Northern Gateway;
  • it will take some interesting legal footwork by Trudeau's government to convince folks that, "hey, this time it's different"; the Enbridge pipeline would have killed the killer whale but the Trans Mountain would not
  • bottom line: Trudeau knew all about the orca issue and he knew it from the beginning when he convinced Canadians to buy the pipeline
The interesting thing is that Trudeau could have stopped this from going to court in the first place with some legislative language. But I think he was in India when this story was developing some months ago.

If the articles mention the environment at all, they don't mention (or hardly mention the "orca") and they don't reference the case that set the precedent -- the Enbridge Northern Gateway case.

Alberta pulling out of federal climate change plan until pipeline construction resumes, CBC.
  • "we are winning: several BC First Nations celebrate Trans Mountain victory
  • the ruling suspends construction on the pipeline indefinitely
  • this story says it is a $7.4 billion project
five things about the Trans Mountain pipeline ruling, Vancouver Sun
  • this source says it is a $9.3 billion project
  • fails to mention the real reason the project was killed
a video, Global News
another video, Global News
another video, Global News
fighting words, CTV

I wonder if Trudeau can sell the pipeline back to TransCanada?

The Road To Denmark -- Reality Struck Home Sooner Than Expected; New Hampshire Helping To Save The World From Global Warming --- August 30, 2018

Texas oil production: drops for first time since February, 2017. The slowdown comes as oil prices in west Texas have fallen to near four-year lows. From SeekingAlpha. This is a pretty cool story -- production drops for free market reasons.
  • the state is not slowing down progress with too many regulations;
  • no war; no terrorists;
  • no policies out of Washington, DC;
  • simply low prices due to production more than infrastructure can accommodate
Denmark: become net oil importer for first time in 25 years. From oilpriceOn May 18, 2013, I wrote:
So, How Did That Renewable Energy Plan Work Out? Europe May Be The Only CONTINENT In The Universe To Depend On Imported Energy. 
Backtrack to: Europe At A Tipping Point, one of "the big stories" that I have been following since the beginning of the blog. Back to the oilprice article:
For the first time since 1993, Denmark is on track to become a net oil importer this year, as oil production in the Danish part of the North Sea will be lower than the country’s consumption, the Danish Energy Agency said on Thursday, revising down its oil production forecasts.
The new forecast by the agency is a change from last year’s assessment and forecasts, which had expected that Denmark would continue to be a net oil exporter for a number of years.
Now, the country is expected to be a net oil exporter for a single year, in 2024, when oil production is forecast to exceed consumption due to expected start-up of new developments.
Comment: wow.
New Hampshire? How is renewable energy working out for you? Folks there are paying some of the highest energy bills in the country. Faux environmentalists stopping natural gas pipelines and state government mandating renewable energy. Recipe for disaster. And I thought New Englanders were known for common sense.

Back to the Bakken

Active rigs:

Active Rigs62543376194

Three new permits:
  • Operator: Newfield
    Field: Siverston (McKenzie)
    Comments: Newfield has permits for a 2-well pad and a third well either near or on the same pad (a Goliath well and two Dahl wells) in section 5-150-98
One permit renewed:
  • BR, a State Dodge permit in McKenzie County
Four producing wells (DUCs) reported as completed:
  • 32701, 443, Peregrine Petroleum Partners, Burlington Fee 9-16-1H, Hay Draw, t7/1; cum --
  • 33609, 1,387, Hess, SC-Gene-154-98-0805H, Truax, t8/18; cum --
  • 34621, 3,298, Whiting, Loken 41-17-2H, Pembroke, t7/18; cum --
  • 33260,  A, Wold Federal 44-7-2H, Banks, 4 sections, t--; cum --

Wow, Wow, Wow -- WTI Just Went Over $70 -- August 30, 2018

About two months ago we were told WTI was in "severe backwardation -- meaning that "going forward," the price of WTI was expected to decline. Ever since that "severe backwardation" announcement, it seems, the price of WTI has been trending up.

Today, WTI went over $70 and is now solidly over $70.

See this post.

Military Pensions Could Rise By Biggest Percentage Amount In Seven (7) Years -- Making America Great Again -- August 30, 2018

From Axios:
In a letter sent to House Speaker Paul Ryan on Thursday, President Trump announced that a majority of civilian federal employees will not receive pay increases next year, undoing the original 2.1% pay increase that was set to take effect in 2019.
The details: The president explained the change is an effort "to put our Nation on a fiscally sustainable course, and Federal agency budgets cannot sustain such increases." No change has been announced for pay increases of military troops, which are still on track to receive a 2.6% bump according to the Military Times, marking their biggest pay raise since 2009.

Now we go to military pensions. Two parts: 
The 2019 Cost of Living Adjustment (COLA) is heading towards a 3% increase based on July’s inflation data. July’s CPI-W rose by 3.16% on an adjusted basis over the previous 12-month period. July is the first of three months the does count towards 2019 COLA measurement. COLA increases are based on the inflation measurement period of the 3rd quarter (July, August, and September).
The 2019 COLA is expected be announced in mid-October 2018. There are still two months go but all signs point to the biggest COLA increase in 7 years.
One wonders if the decision to scrap the civilian federal employee raise was "necessary" to cover the military? Just rhetorical.

I believe the COLA affects the following on these dates:
  • Retired military veterans, VA rates for compensation and pension for disabled veterans and surviving families will be effective December 1, 2018 and will be reflected on the first check to be paid on December 31, 2018.
  • Social Security benefits will be effective beginning with December 2018 benefits, which are payable in January 2018.
  • Federal SSI payment levels will begin on December 29, 2018.

Cue Up Discovery Channel Documentary On Orca, The Killer Whale -- August 30, 2018

Trudeau killed Enbridge Northern Gateway because of the killer whale ("orca") issue. Previously posted.

See this note also.

It's going to take some fancy legal footwork for a court to overturn precedent -- Trudeau and the court killed the Northern Gateway by throwing out the "killer whale card."  

As Hunter S. Thompson would say: this is the "nut" of the ruling today: no one can contest that increased shipping will have adverse effect on killer whales off the coast of British Columbia, but most damning, the pipeline company punted or ignored the issue, almost "contemptuously" if the transcript can be believed.

From the ruling:
[432] Bearing in mind that the primary focus of the applicants’ concern about the Board’s assessment of Project-related marine shipping is the Board’s assessment of the adverse effects of the Project on Southern resident killer whales, the previous review of the Board’s findings demonstrates that the Board considered the Project’s effects on the Southern resident killer whales, including the environmental effects of malfunctions or accidents that might occur, the significance of those effects and the cumulative effects of the Project on efforts to promote recovery of the species. The Board found the operation of the Project-related tankers was likely to result in significant, adverse effects to the Southern resident killer whale population.

[433] Given the Board’s finding that the Project was likely to result in significant adverse effects on the Southern resident killer whale, and its finding that Project-related marine vessel traffic would further contribute to the total cumulative effects (which were determined to be significant), the Board found that the increase in marine vessel traffic associated with the Project is likely to result in significant adverse effects on the traditional Indigenous use associated with the Southern resident killer whale.

[434] The Board then considered mitigation measures through the limited lens of its regulatory authority. It found there were no direct mitigation measures Trans Mountain could apply to reduce or eliminate potential adverse effects from Project-related tankers.

[435] The Board stated that it considered all reasonable alternatives to Project-related marine shipping that would reduce the impact on SARA-listed species’ critical habitat. This would include the critical habitat of the Southern resident killer whale. As part of this consideration, the Board directed Information Request No. 2 to Trans Mountain. In material part, Trans Mountain responded that the only known potential mitigation measures relevant to the Salish Sea to reduce the risk of marine mammal vessel strikes would be to alter the shipping lanes in order to avoid sensitive habitat (that is areas where whales aggregate), and to set speed restrictions. Trans Mountain advised that shipping lanes and speed restrictions are set at the discretion of Transport Canada.
[436] Thereafter, the Board issued an Information Request to Transport Canada that, among other things, requested Transport Canada to summarize any initiatives it was currently supporting or undertaking that evaluated potential alternative shipping lanes or vessel speed reductions along the southern coast of British Columbia with the intent of reducing impacts on marine mammals from marine shipping. Transport Canada responded that it was “not currently contemplating alternative shipping lanes or vessel speed restrictions for the purpose of reducing impacts on marine mammals from marine shipping in British Columbia”. However, Transport Canada noted it was participating in the Enhancing Cetacean Habitat and Observation Program led by Port Metro Vancouver.

[437 Transport Canada’s statement that it had no current intent to make alterations to shipping lanes or to impose vessel speed restrictions would seem to have pre-empted further consideration of routing alternatives by the Board.

[438] This review of the Board’s report has shown that the Board in its assessment of Project-related marine shipping considered:
  • the effects of Project-related marine shipping on Southern resident killer whales;
  • the significance of the effects;
  • the cumulative effect of Project-related marine shipping on the recovery of the Southern resident killer whale population;
  • the resulting significant, adverse effects on the traditional Indigenous use associated with the Southern resident killer whale;
  • mitigation measures within its regulatory authority; and,
  • reasonable alternatives to Project-related marine shipping.

Trudeau Batting A Thousand; What Goes Around Comes Around -- August 30, 2018

See this link for background.

Part 2 of this note is here.

Canada: the country that can't close a deal.

Oil: Canada's big income generator. Now landlocked. Four Canadian pipelines killed outright or stalled.
  • Enbridge: Northern Gateyway -- killed by Trudeau.
  • Enbridge Line 3: stalled in Minnesota by friends of Trudeau, Obama
  • TransCanada: Keystone XL, killed by Obama
  • TransCanada: TransMountain stalled but ....
... death knell for Trans Mountain Pipeline expansion project? Some will say yes, some will say no.

But here's the CTV headline: court ruling quashes approval of Trans Mountain.

You can go with the headline or read all the "what ifs", "buts" and, "maybes" in the story ....

This may be most concerning:
The Federal Court of Appeal has quashed Ottawa's approval of the contentious Trans Mountain pipeline expansion.
The decision means the National Energy Board will have to redo its review of Kinder Morgan Canada's project.
In a written decision, the court says the energy board's review was so flawed that the federal government could not rely on it as a basis for its decision to approve the expansion.
Wow, what if the new review suggests that the project could do irreparable harm to British Columbia?

I can't imagine this getting resolved within two years, and, wow, the First Nations have huge leverage and are in a win-win -- either they kill the project and get a psychological victory, or they cash in. Not telling what they will do, but I can guess.

Investors? Yawn. Apparently the share price was baked into the court ruling. On a down day for the market, TRP is down about half a percent. Yawn.

Back to Trudeau. Maybe time to "work" with Trump on trade.

Idle Rambling

There seems to be a consistent story line when it comes to oil companies / pipeline companies and "First Nations" (generic): a failure on the part of the oil companies / pipeline companies to maintain really, really good notes and really, really good documentation.

It seems that "First Nations" seldom enter the process early on -- for whatever reason -- and then only after the decision affects them ("First Nations") do they get actively involved.

The oil companies / pipeline companies need to aggressively get the "First Nations" involved from the get-go and if they get no cooperation, get the courts involved early, and keep great, great documentation.

And, as noted, early in the blog -- wow, I must have written this a decade ago -- "First Nations" can and will claim "ownership" on any land in the western hemisphere.

The Market, Energy, And Political Page, T+17 -- August 31, 2018

Idle chatter. It appears to be a quiet day, so I will interrupt it with my incessant chatter.

Sector rotation: the Dow (irrelevant) is down 100 points. AAPL, meanwhile, hits a new high, rising another $1.77, trading at $224.76. Pretty impressive. 

NYC: back to normal. Long Island customers will only pay $110/MWh today. Link here.

Natural gas fill rate, link here:

T+17, Iran sanctions. First round went into effect on August 7, 2018; second round set to begin November 4, 2018.

Selfish: for selfish reasons I would like to see Melania, the First Lady, out and about a bit more. She keeps a very, very low profile and I don't blame her. I hope she is enjoying life. I assume she is doing just fine. I really, really would enjoy seeing her out and about. But, having said that, not seeing her is so much better than the alternative, seeing Bill Clinton, First Man, dominating the news, had Hillary been elected. And if it weren't for the 22nd Amendment, we would still be seeing Michelle and her garden. Speaking of which, I assume the garden has now become a putting green.


Global warming:

The Hippocratic oath: "first, do no harm."

The market:

Oh, before I begin, the disclaimer -- this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here. I am now posting financial "stuff" because:
  • at least one of my siblings appreciates it (I think she's the only family member that actually reads the blog)
  • my wife has successfully completed an in-depth financial course and may someday actually read the blog
  • in September, I will step down as CEO and chairman of our financial affairs "entity" and hand over CEO responsibilities to my executor; I will remain as chairman; due to non-disclosure agreements, nothing else can be said at this time
Now, back to the market, for my one sister who reads the blog and my executor, not intended for anyone else; whether or not I have holdings in those mentioned, I enjoy following them:
  • all major indices: red; profit-taking; background noise
  • AAPL; flat; it had a good run; Apple is now a mature company; generally it will trade in a "trading range," and will show volatility leading up to quarterly earnings; growth will be tough; it's a value stock now; hard to call it FANG; lots of cash so dividend increases likely and overall return will be nice but not great; stay with what you have, but don't add to your portfolio; up as much as $4.00 today; apparently Warren Buffett's BRK added another 5% to their overall AAPL holdings;
  • ENB: down along with the overall market; Line 3 is the concern here; buying Spectra was huge and could offset problems associated with Line 3;
  • SRE: nice; on a down day for the market (albeit not much), SRE is showing some life, up about 0.65%); paying 3%
  • D: ditto SRE; I think I read somewhere Dominion Energy is the fastest growing utility in the US; paying almost 5%; wow;
  • COP: movers and shakers in the oil sector consistently say good things about COP; up a bit today and paying 1.6% but expectations for dividend increases are often cited
  • CVX: flat today, slightly red; paying a remarkable 3.76%;
  • XLNX: down slightly today; a real sleeper; paying almost 2%;
  • PLUG: what can I say; stay away;
  • BRK-B: might as well invest in Schwab Total Stock Market Index Fund (SWTSX) -- easy to remember -- "SW" = Schwab; "TS" = total stock' and "X" = mutual fund; the only difference: no avuncular advice
  • UNP: off its recent high; paying 2%; trucking industry with challenges; truckers have "last mile" niche but rails will get the rest;
  • Midstream MLPs: not for the faint-hearted; I love the two I have; would have preferred a third, but more trouble than they are worth? Some analysts suggest MLPs have seen their worst days after FERC changed the rules; 
  • OAS: actually "green" today; 
  • NOG: flat 
  • S: up a bit today; may still have legs before merger?
  • BABA: volatile; long-term? No dividend
  • YUM: hold, but don't add. Pays $1.7%; watch for another year, then decide
  • AMZN: share price hit $2,000 but still hasn't hit market cap of $1 trillion, and pays no dividend
  • SLB: up a bit today; pays 3%; time to move on;
  • TSLA: oh, TSLA, almost forgot; how could I forget, $302, well off it's high of $389 and well short of the one analyst's target: $4,000 
  • ETP and ETE: SeekingAlpha

Idle Rambling On A Day When No Wells Come Off The Confidential List -- August 30, 2018


September 13, 2018: when will the longest expansion on record end? See this post.

Later, 1:32 p.m. CDT: below, in the original post, I suggested breaking up the red line into two lines, a yellow line for the Obama-expansion (beginning in 2009 and extending to 2016; and a red line for the Trump-expansion (beginning November 8, 2016 and extending to the present day. A reader asks (rhetorically) if I could name one thing that Obama did that resulted in the "Obama-expansion." I could not. The stimulus, perhaps, but if folks remember, the stimulus was highly targeted and highly flawed. On the other hand, "everyone" can list any number of things that the Trump administration specifically did that led to the Trump-expansion. The corporate tax bill (and all that was associated with that bill) was perhaps the one biggest line-item that can be tied directly to the current US economic expansion. Going farther, the lack of any specific Obama initiative that could "explain" the Obama-expansion confirms that even an incredibly "poor" president cannot stop the United States economy. It just won't grow as fast as it otherwise might.

Original Post 

Time to say what I've been thinking for quite some time, but first this graphic from John Kemp over at twitter:

"Everyone" is talking about how long the current period of economic expansion has lasted, saying that it is now the longest on record. Some think the economic expansion still has legs; but others, think it will "soon" come to an end. CNBC is generally talking the market down (my two cents worth). It's my perception that even those who think the expansion will "soon" come to an end, don't think it will be as "soon" as next year (2019).

I have not followed economic cycles. I know nothing about them except what the "average" person on the street might know.

A couple of things from the graph:
  • first, and I was surprised by this, the current expansion is still almost a year shorter than the longest one (the one that began in 1991)
  • most surprising: how short the periods of economic expansion lasted after WWII
    • 1945: 3 years
    • 1949:  3.5 years
  • so much changed after 1933, I don't think it's worthwhile to go back farther than 1945 when considering economic cycles; some might argue going farther back than 1969 is even going back too far
I'm absolutely convinced that the current economic expansion had two (2) periods, both set in motion by entirely different events.

The current expansion is said to have begun in 2009 and has gone on without interruption; it began after coming out the second worst downturn in US history; at some point, the economy had to turn.

Had the pundits been correct, the market (and possibly the economy) would have tanked immediatly after Trump's election (November) and it was going to take two to three years to recover.

Had that happened, the graphic above would show:
  • economic expansion for 6.5 years -- not atypical for for modern-era America -- ending in late 2016
  • the next economic expansion would have begun in 2018; we would now be into our first year of another period of new economic expansion (all things being equal)
  • "all things being equal" -- had the market tanked in 2016/2017, it is unlikely Trump would have gotten the tax cut or the other changes that propelled the economy we are seeing now; he likely would have been impeached by now if the Trump election had put the US into a depression
  • however, assuming that "all things being equal" -- that Trump persevered and his policies went into effect, the economy would have righted itself, and taken off
Bottom line:
  • I would suggest breaking up the red line in the graphic above that begins in 2009 into two separate lines:
  • the first segment would begin in 2009; end in 2016
  • the second segment would begin in 2017 and extend to the present day
If one does and if one considers a typical economic expansion cycle to last six years in the modern era, we still have four years of this economy growing.

My two cents worth.

WTI Flirting With $70; Active Rigs Jump To 63 -- August 30, 2018

Jobless claims, link here:
  • consensus: 214K
  • prior: 210K
  • actual: 213K
  • so, the number comes in 1,000 less than forecast -- right in line
Personal income and consumer spending: right in line

Market, just before the open --  all indices red, but not particularly remarkable; a typical back-and-forth; background noise

Enbridge: from SeekingAlpha 

Flaring: in the Permian; same problem the Bakken had. Next, satellite photographs of Texas at night.  Texas regulators' response: so what? We've been through this before. It will take care of itself. In the Bakken, flaring bad. In the Permian, flaring is the cost of doing business. And so it goes.

Produced water: in the Permian. This IS a problem. 

Appalachia: Eclipse and Blue Mountain merge; creating a $1.4 billion company.

Methanol: new plant in Texas reached milestone -- data points --
  • Beaumont, TX
  • 5,000-metric ton per day (1.8 million metric tons per annum)
  • successfully ramped up to full utilization 
  • achieved provisional acceptance
  • Consolidated Energy Ltd (CEL)
  • analyst: North America is oversupplied in natural gas; methanol is a great way to monetize that resource
Day late, dollar short: OPEC will discuss in December if it needs to ramp up production to make up for Iranian shortfall due to sanctions. Inshallah.

No wells coming off confidential list until this weekend. There was no "February 30" six months ago.

Active rigs:

Active Rigs63543376194

RBN Energy: Hurricane Harvey and the important of the Gulf coast refined product infrastructure to the US, part 2.