Be Greedy When Others Are Fearful -- June 15, 2022

Wow, I'm in a good mood. I have a new goal starting this fall. Won't post it now. We'll see what October brings. 

I'm in a very enviable situation, I suppose. Sorry. Not sorry. 

Whoever would have thought "Sorry. Not Sorry." would have become a thing? But I digress.

I'm in a very enviable situation, I suppose. Sorry. Not sorry. 

I spend my day in the pool and / or with Sophia, watching her play soccer or perform in gymnastics. And we do "flashcards" every day, and even a bit of Duolingo Spanish.

And my monthly revenue stream exceeds my wildest expectations of only five years ago. And that revenue stream is almost 100% due to investing, living below my means, and maintaining a "rolling" thirty-year horizon.

Changes in attitude, changes in latitude.

When times were good, I checked my net worth at least once a day.

Now that times are tough, I don't ruin my day by checking my net worth, which continues to fall every day, though recently it seems to have stabilized. I haven't checked my net worth in two months.

But I can hardly wait for each new day because I continue to invest aggressively now that everything is on sale, and my monthly dividends / revenue stream keeps increasing. 

• 50 - 30 - 20: 
• blue chip, Fortune 500, Warren-Buffett-approved: 50%
• tech, 30%
• Permian, 20%
  

The "50" and the "30" won't change. The "20" may change, but I have no idea what it would be. Maybe "60/40" when I max out my risk-aversion to the Permian. 

Tusk:

Tusk, Fleetwood Mac

USC was my alma mater. 

Walk of Life, why not?

Walk of Life, Dire Straits

 Okay, one more and then I'm heading to bed.

The Wilson Brothers

Quibbling -- It Gets Tedious, Abhi -- Grow Up -- June 16, 2022

GasBuddy says the US hit 12 million bopd crude oil production. An analyst said that's inaccurate. What a doofus - that analyst. I hate quibbling. For all practical purposes, the US has hit 12 million bopd production.

From bulktransporter:

The U.S. Energy Information Administration (EIA) forecasts that U.S. crude oil production will average 11.9 million barrels per day this year and 12.8 million barrels per day in 2023, which would surpass the record average production of 12.3 million barrels per day set in 2019. 

Despite the increases in production, EIA expects the Brent crude oil price to remain above $100 per barrel this year, according to the agency’s May 2022 Short-Term Energy Outlook (STEO).

Quibbling:

Americans In Survival Mode -- June 15, 2022

Updates

Later, 10:57 p.m. CT: see comments -- 

As a medical provider, here is my reasoning for medical staying low. If you are contracted to an insurance company or a PPO, they only allow for about a 3% increase in reimbursement per year. Our costs have gone up considerably more, but we have no choice other than to take a hit. We can break the contract with the insurance carrier, but patient loyalty is diminished during times of financial stress. Because many are living paycheck to paycheck, many would move on to another preferred provider. So I believe the picture in medical is not as rosy as data would have you believe. Scary times right now. Not only that, the supply chains are broken for many medical supplies and equipment. We are on a 16 week wait for one piece of equipment as we speak. 

Comment: 

This is what frustrates me. My wife's medical care and prescriptions are on auto-pilot. In other words, from visit to visit nothing has changed. The only reason she makes her semi-annual physician appointments is to get six months of prescription refills for an incredibly mild condition. She is charged $350 / fifteen-minute visit. Three-hundred fifty dollars to say "hi" to her physician and get a new prescription. Medicare allows only $125 or thereabouts for that $350 charge. There's no way this would cost $350 in Tijuana.

Speaks volumes about cost of medical care these days. Three-hundred fifty dollars to say "hi" to one's physician, get a prescription refill, and say "goodbye" in all of five minutes. Yes, I know, thirty minutes of checking in, filling out paperwork, having weight and blood pressure checked by a registered nurse, before seeing the physician. She could have her blood pressure checked by "the machine" at the supermarket.  I suppose all things being equal / being fair, that five-minute visit should now cost 1.087 x $350 = $380.

I don't have a lot of sympathy for Big Health. And, as you know, I practiced medicine for thirty years with the USAF.

Original Post

Americans in survival mode:

• discretionary income being used to buy food and gasoline

ZeroHedge: US retail sales unexpectedly tumble in May. Link here or go direct to ZeroHedge.

• another myth dead: the myth of the "strong US consumer."
• along with the myth of "spare capacity."

Core inflation: definition at investopedia.  

Previously posted:

When talking about inflation, one needs to go through this chart, line by line.

Assuming it's accurate, a few comments.

First, for investors, it's an open-book test to figure out which sectors could be challenging as investment opportunities.

Second, things I don't see on the list:

• electronics (televisions, computers, cameras, streaming services)

Third, two sectors that are usually at the top of "inflation lists": medical care and college tuition are now at the bottom. There may be explanations but different explanations for each.

• the interesting thing folks never seem to consider: the US postage analogy
• so what if US postage stamps increase by 100%: no one uses US postage stamps any more
• likewise, the huge expenses -- in terms of dollars -- college tuition and medical expenses have gone up very little;
• rents have increased but one can lock in monthly rents with 15-month leases;
• "dining out" can be a very high-cost item and one most easily modified

Fourth, the "inflation list" cannot be reconciled / overlaid with investment sectors.

• for example: "gasoline" and "vehicles, new and used" are at the top of the inflation list but unlikely that "oil" and "automakers" would be seen as similarly attractive by investors;
• "semi-conductors" are spread throughout the inflation list; how does one invest?

Apparently It's Patriotic To Sell EVs Below Cost -- June 15, 2022

The more vehicles they sell, the more money they lose ...

With that news, F was up at the close, and gained more after hours.

Yields: 3.26%.

WTI Slumping -- Severe Recession No Longer Unlikely -- June 15, 2022

Amazon: still amazes me after all these years

• for purposes of travel, I needed another external hard drive:
• I wanted the same one that I had purchased two or three years ago;
• before 0800 today, I went to Amazon, looked at "prior purchases," found the hard drive, and a couple of clicks and it was ordered
• I was given the choice
• to be delivered between 1000 and 1500 hrs, or between 1500 and 2000 hrs today; or,
• tomorrow
• free delivery, regardless of delivery choice
• the hard drive arrived at my door step at 1455
• and, as noted, it was ordered earlier this morning
• and, because it was ordered from Amazon, on my Amazon credit card, 5% cash-back
  

WTI: $115.30.

• everything to do with FOMC ("Fed" rate and inflation expectations)
• "Fed" rate + inflation expectations = severe recession
•  "back to the future": 1974?
• see wiki link: millennials never experienced this; the rest of us did
• it was not pleasant
• mortgages for as much as 15%
  
• severe recession --> significantly decreased energy and feedstock requirements
• --> falling gasoline prices
• whether we have the third leg of stagflation (high unemployment) is yet to be seen, but unemployment concerns are not on the Fed's radar scope yet 
• I've argued against unemployment issues, but I could very easily be wrong
• I'm no longer taking any wagers
  

***************************
Back to the Bakken

NDIC GIS map server: NDIC goal to have it up and running June 14, 2022;

• no update; still not up and running

CLR:

• in the red today: down 3.5%; down $2.61; closed at $71.61
• up slightly after hours
• average trading volume: 1.650 million shares are traded daily on average
• today's volume traded: 4.877 million shares

WTI: $115.30.

Active rigs: 37 or thereabouts

Three new permits, #39021 - #39023, inclusive:

• Operator: Kraken
• Field: Oliver (Williams)
• Comments:
• Kraken has permits for three King wells in SESE 8-157-98, 
• to be sited 340 FSL and between 424 FEL and 490 FEL

Fifteen permits renewed:

• BR (9): two Kellogg Ranch; three Lillibridge; two Nordeng -- all in McKenzie County; and, two Patton permits, both in Dunn County;
• Whiting (6): two USA Federal permits, McKenzie County; one Littlefield permit, Mountrail; three Brehm permits, all in Mountrail County

ISO-NE -- Prices Set To Double -- June 15, 2022

Link here.

From the linked article:

One of [New Hampshire's] major utilities is set to double the price of electricity in August, and it’s likely other utilities will be forced to raise their prices, too. 

The price hikes are being driven by projected high costs of natural gas. 

In a Monday filing with the Public Utilities Commission, Liberty Utilities proposed increasing the per kilowatt hour price of electricity from 11.11 cents, the rate in effect from February to July of this year, to 22.23 cents starting in July. 

That means a typical household would see a 47 percent increase in its electric bill, according to consumer advocate Don Kreis. 

(Other charges on the bill would remain unchanged.) 

A household currently paying $150 per month would see their electricity increase to $220 per month. “I think people are really going to feel this in their pocketbooks. It’s going to be a very unpleasant winter for everyone in New Hampshire,” said Kreis, adding that low prices for natural gas have lulled the state and region into complacency over the last decade.

Something tells me a lot of folks are going to be thinking about those pipelines that could have been built and buried years ago. 

This is on top of their gasoline bills. 

And, on top of their food bills. 

And, of course, their new $80,000 EV as a second car.

No Links -- Not Worth The Time Or Effort -- January 15, 2022

Both have lost all credibility.

Gasoline Demand -- June 15, 2022

Link here.

Although gasoline demand dropped ever so slightly, week-over-week, one must remember that the previous week included Memorial Day weekend (I believe; could be wrong). This week's number does not include any three-day weekend. 

Exactly What The EU Feared; Exactly Why They Funded "Leave It In The Ground"; Exactly Why They Feared US Shale -- June 15, 2022

Updates

Later, 2:33 p.m. CT: from a reader who really, really understands energy, and the business climate on the East coast:

Your post on Lego locating in Virginia got me curious. 

Turns out, apparently, that the plastic pellets arrive at the Lego plants and are then molded into the desired pieces. 

So, it would seem to be in Lego's interest to be near 'cheap' plastic feedstock rather than the raw gas itself. 

The Shell cracker plant - just north of Pittsburgh on the Ohio river, is due to start operations in a few weeks. 

The plastic feedstock produced will be amongst the cheapest in the world, literally, as unfathomable amounts of ethane are produced all around that region. 

Down the road, there could be as many as three or more crackers ultimately  constructed up there if the politics and economics are favorable.

Original Post 

It doesn't take a degree in rocket science to connect the dots. 

Suggesting they will use solar power to power this plant is incredibly disingenuous. If that is true, why aren't building in Europe? From CNBC, it's all about natural gas allowing them to run three shifts:

• The factory in Chesterfield County, Virginia, will be the Danish company’s second in North America and seventh worldwide.
• The factory will be powered by renewable energy produced at an onsite solar park.
• The 160,000-square-meter factory is scheduled to be operational in the second half of 2025 and will employ more than 1,760 people.

And why Virginia? Texas would have been a much better location.

But this is the real story.

What's the feedstock used for plastic Lego bricks?

Yes, natural gas.

Which state has more natural gas? Virginia or Texas. 

Which state has less expensive natural gas? Virginia or Texas?

Which state has a more favorable tax rate? Virginia or Texas? 

Which state is more centrally located in the western hemisphere?

What was Lego thinking? 

**********************
ISO NE

The entire region is 6th decile or worse.

Far west Massachusetts at 7th decile. 

Link here.

WTI Slides To $116; EVs And The California Grid -- Beating A Dead Horse -- June 15, 2022

EVs: on another note, one should expect Tesla to report huge losses for 2Q22 due to cryptocurrency. 

How did EVs do today:

• GM: up 2.6% today; trading at $34
• F: up 0.7%; trading at $12.
• TSLA: up 3%; up trading at $683
• RIDE: down 2%; trading at $1.60
• GOEV: up 1.7%; trading at $2.67;
• ELMS: down 17% today; trading at 14 cents;

Back to the grid, from Yahoo!Finance, from less than a month ago -- May 19, 2022, and if you can't trust Yahoo!Finance, whom can you trust (LOL)?

California energy officials issued a sobering warning this month, telling residents to brace for potential blackouts as the state’s energy grid faces capacity constraints heading into the summer months.

In Sacramento, officials said California’s grid could face a potential shortfall of roughly 1,700 megawatts, which would affect the power supply of between 1 million and 4 million people this summer. That number would likely be exacerbated by an additional shortfall of 5,000 megawatts in the case of extreme heat and further fire damage to existing power lines.

And since the state has committed to phase out all new gas-powered vehicles by 2035 — well ahead of federal targets — the additional load from electric vehicle (EV) charging could add more strain to the electric grid.

“Let’s say we were to have a substantial number of [electric] vehicles charging at home as everybody dreams,” Ram Rajagopal, an associate professor of Civil and Environmental Engineering at Stanford University, who authored a recent study looking at the strain electric vehicle adoption is expected to place on the power grid 

“Today’s grid may not be able to support it. It all boils down to: Are you charging during the time solar power is on?”

Disclaimers And Other Notes -- June 15, 2022

Disclaimer: I am inappropriately exuberant about the Bakken. 

Disclaimer: I love Big Oil. And small oil. And all oil in between. I agree completely that the climate is changing, as it has for millions (actually billions) of years. 

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

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them.

Opinions are interspersed with facts and factoids. It is often difficult to tell the difference. 

Comments are heavily moderated: comments are generally not posted if they "don't move the conversation along." Although I post much political content, I almost never publish political comments in reply to my political posts. If comments would hurt Sophia's feeling, they don't get published.

Twitter is a huge source of "breaking news."

Analysis of the Bakken: compromised by fact that some of the NDIC site is still not back to "normal," specifically the GIS map server. Without that interactive map, it's almost impossible to sort out what's going on in the Bakken. 

Full disclaimer: there is much more at this post but this post has not been reviewed or updated in a long, long time.

Dashboards Have Posted; Weekly EIA Petroleum Report -- June 15, 2022

EIA dashboards:

• EIA pdf, Bakken: https://www.eia.gov/petroleum/drilling/pdf/bakken.pdf
• EIA, pdf, Permian: https://www.eia.gov/petroleum/drilling/pdf/permian.pdf
• EIA, pdf, Eagle Ford: https://www.eia.gov/petroleum/drilling/pdf/eagleford.pdf

*************************
Weekly EIA Petroleum Report

WTI: just before report was released -- down about a buck; trading at $118.0

Link here.

• US crude oil in storage increased by 2.0 million bbls (was that SPR release really necessary?)
• US crude oil in storage now stands at 418.7 million bbls, 14% below the five-year average
• US imported 7.0 million bopd, an increase of 0.8 million bpd from the previous week
• US imports have averaged 6.5 million bopd, 2.2% more than same four-week period last year
• US refiners are operating at 93.7% of their operable capacity (compare with US government?), but Biden wants more
• distillate fuel inventories increased by 0.7 million bbls; inventories are now 23% below the five-year average
• jet fuel supplied was up 22.6% compared with same four-week period last year

All-in-all:

• not much changed;
• US oil sector seems to be meeting US demand

WTI: after report was released -- down about 75 cents; trading at $118.0. No change.  Later: WTI continues to drop ever so slightly.

• I have no thoughts on how to explain this, other than what I've previously posted.

***************************
How Important Is Libya?

On the day that it was reported that Libya oil production ground to a halt -- taking one million bopd off the global market -- WTI plunged from $123 (and trending higher) to $117  (and trending lower).

Clearing Out The In-Box -- Wednesday Morning -- June 15, 2022

Blogging today: I'm not sure how this morning plays out. It's possible, due to family commitments, I will be off the net for much of the morning. It depends on whether I get "reception" at venue this morning.

A stand-alone post? Maybe. But for now, let this sink in -- do you think the White House is watching?

*********************
The Sports Page

NBA: tomorrow night -- for the Boston Celtics, win or it's over in game six.
USGA: US Open begins tomorrow

• story line: Phil's reception?
• story line: how well will Phil play? Prediction: barely makes the cut.
• story line: how will be be received by fans, athletes? Prediction: not well.
• this will be the number one reason to tune in
• "paired" with first two days:
  
• 1:47 p.m./8:02 a.m. – Phil Mickelson, Rancho Santa Fe, Calif.; Shane Lowry, Republic of Ireland; Louis Oosthuizen, South Africa
• why is Phil "allowed" to play?
• this is a USGA event, not a PGA event.
• Mickelson has a five-exemption following his PGA Championship win last year; this is his first of five years of that five-year exemption. 
• The US Open is the only one of four major championships that Mickelson has not won. He is 51 years old -- perhaps the oldest "real" contender, and he will play this tournament until he wins or the 5-year exemption(s) run out.
  

LIV: I don't care for Steven A. Smith, but I have to agree with his commentary on the LIV. 
NHL: first game of the Stanley Cup Finals tonight, in Colorado. Tampa Bay will be visiting.

********************* The Apple Page

Partners with Major League Soccer, link here.

• will stream every single MLS through the Apple TV app for the next ten years
• deal to kick off next year, 2023
• fans will be able to stream every live match, with no local blackouts or restrictions of any kind
• the deal will include access to all MLS and League Cup games, along with select MLS Next Pro and MLS Next matches
• said to be a "historic first" for a major professional sports league
• deal will last through 2032
• Apple has already established a deal with Major League Baseball 
• rumors: may be pursuing NFL's Sunday Ticket package
  

CLR Going Private -- Twitter Links -- June 15, 2022

Links:

• query here.
• Why?
• new 52-week high.
• Josh Young: it's a "non-binding proposal."
• again, non-binding;
• to reduce legal challenges, CLR probably needs to get 40% approval from the minority (17%) shareholders

Pre-market, one day later: down 2.51% this morning, pre-market

• down $1.86; trading at $72.36
• did traders note that this is a "non-binding proposal"?

If CLR goes private: 48% of Bakken production is "private"

WTI Plunges; One Well Coming Off Confidential List Today -- June 15, 2022

Top story to follow today:

• White House: more evidence of panic in the White House
• there are so many YouTube videos of Biden "keystoning" America
• these clips will start to be shown this September
• every day, we get a new WH talking point suggesting exacerbation (and panic) with regard to current situation
• today Biden turns to refiners, and, again, of course, gets it all wrong
• blames refineries for high-priced gasoline; demands that refineries explain why not operating at higher capacity (of course, they are operating at highest levels ever)
• Biden demands oil companies explain lack of gasoline -- CNBC
• I can hardly wait for Biden to demagogue that not enough pipelines have been built even though oil industry has more money than God to fund those pipelines

Big story with which I'm struggling:

• reason why WTI plunged from $123 (and trending higher) to $117 (and trending lower) in matter of six hours or less, yesterday
• first thought: FOMC could scare the heck out of investors today, not only with rate hike but frank words regarding how bad it really is
• frankly, my dear, we are between Scylla (out-of-control inflation) and Charybdis (a severe and record-long recession)
• second thought: Biden's breathless announcement yesterday the largest SPR-release ever, at his direction
• but this makes no sense: this is simply a continuation of the original plan announced earlier this year;
• amounts to an additional one million bopd
• if one connects the dots, it now makes sense why Biden released SPR heavy oil when US refiners can't use it / don't need it -- posted yesterday
• first dot to connect and then work backward from this: which BLUE state has been most impacted by high prices
  
• third possibility: perhaps it's no more than Biden's jawboning that spooked traders that caused WTI to plunge
• maybe readers have explanation, but I certainly don't: explanation why:
• WTI plunged from $123 (and trending higher) to $117 (and trending lower) in matter of six hours or less, yesterday

Going into mid-terms:

• White House knows gasoline needs to get back to 3-handle gasoline by mid-terms
• Americans won't accept 4-handle gasoline any more than they accept 6-handle gasoline
• tea leaves:
• most Americans will see $6-gasoline during height of driving season
• Biden's initiatives risk regional spot shortages of gasoline and photos of gas lines
• the good news for the Biden administration: by the end of September, prices start to drop -- but again, gasoline needs to drop to less than $3.79 to improve mid-term prospects
• does anyone see national gasoline price to be below $3.79 by October, 2022?
  

Other stories to follow today:

• cryptocurrency: could fall faster than Lehman; 
• at least two cryptocurrencies announced withdrawal freezes this week
• one of those two cryptocurrencies is apparently seeing bankruptcy protection
• crypto bankers have gone from $4 trillion a year ago to $1 trillion tooday
• took a lot of white collar and blue collar folks with them
• I have no idea how "big" story is at it affects the national economy and the Fed's dilemma but when we're talking "trillions" it has to be a bigger threat than most think
• Fed mandates: dual -- inflation and jobs
• "Schwab" no longer even pays attention to weekly jobs report
• historically, Schwab analysts breathlessly await each weeks jobless claims report
• now, not even interested. Why?
• Fed no longer focused on jobs: way too many job openings and not enough workers
• one of two mandates, employment, no longer anything the Fed even discusses
• only mandate on which the Fed is focuses: inflation
• Fed has turned more hawkish than some expected, but it's finally happened
• apparently a recession is better than out-of-control inflation
  
• politics: South Carolina pol that voted to impeach Trump defeated by Trump-supported opponent
• Australia: energy crisis; anticipating blackouts
• supply / demand: IEA has surprise announcement --
• global oil demand will "accelerate" to 2.2 million bpd in 2023 (that's next year)
• up from 1.8 million bpd in 2022
• "global oil supply may struggle to keep pace with demand next year" -- IEA
• right or wrong, I always associate IEA with Saudi Arabia
• regardless: both are now on same page of music -- spare capacity has been for quite some time
• here we go: Saudi Arabia told OPEC it raised its crude production by 97,000 bopd m/m to 10.538 million bpd
• this is nothing new
• they increase production this time every year to meet domestic demand
• Saudi burns oil to run air conditioning
• 97,000 bpd / 10.538 million bpd = 0.9%
• Bakken will increase production by 100,000 bopd m/m when May, 2022, data released
• LNG: with Freeport explosion, Asia's energy crunch turned from bad to worse

*************************
Back to the Bakken

NDIC GIS map server update

• NDIC goal: to have the GIS Map Server up and running as of yesterday, June 14, 2022
• NDIC front page (doesn't work on all browsers)
• at that "front page," at the sidebar at the left, click on "GIS Map Server" about halfway down:
• not only is there no "URL" for the "GIS Map Server, one gets the following:

Far Side: link here.

WTI: $118.40

Active rigs: 37 or thereabouts

Wednesday, June 15, 2022: 23 for the month, 161 for the quarter, 321 for the year

• 38434, conf, WPX, Wounded Face 14-15HB, McGregory Buttes, no production data
  

RBN Energy: producer restraint, tighter balances disrupt Appalachian gas market trends.

Before the bullish winter of 2021-22, it appeared the Northeast natural gas market was headed for familiar territory: worsening seasonal takeaway constraints and deeper, constraint-driven price discounts starting as early as this spring. Instead, the market went in the other direction the past few months. Takeaway utilization out of Appalachia has been lower year-on-year and, for the most part, Appalachian supply basin prices have followed Henry Hub higher even as that benchmark rocketed to 14-year highs. That’s not to say that constraints out of the Northeast aren’t on the horizon. But the market is now poised to escape the worst of it this year, despite the completion of the last major takeaway pipeline project in the region, Mountain Valley Pipeline (MVP), being pushed out another year or longer, if it crosses the finish line at all. In today’s RBN blog, we provide an update on regional fundamentals and what recent trends mean for gas production growth and pricing in the region.

As we’ve discussed many times in the RBN blogosphere, the Appalachia production basin has long struggled with midstream constraints. For much of the Shale Era, Appalachian producers were champing at the bit to grow production with every little piece of incremental takeaway capacity that came online. The situation became particularly dire by the middle of the last decade, when Northeast supply outgrew intra-regional demand and local production growth became constrained by producers’ ability to access markets outside the Northeast region. Production growth “slowed” to an average of 2.5 Bcf/d each year in the 2015-17 timeframe, compared with close to 4 Bcf/d in 2013 and 2014, as midstream capacity couldn’t keep up. Producers got a respite in 2018-19 as major capacity additions were completed and for the first time in years there was unused egress out of the basin, easing constraints and allowing Appalachian prices to strengthen relative to Henry Hub. But with conditions improving, production took off again, increasing by more than 4 Bcf/d in 2018, once again resuming the march toward midstream constraints and weaker prices. The pandemic slowed growth, of course, as rig counts fell and domestic and export demand evaporated, but Northeast production still grew by nearly 1 Bcf/d in 2020 and nearly 2 Bcf/d in 2021 to a record of 35.5 Bcf/d by December 2021, bringing with it record outflows.