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Friday, June 24, 2022

Week 25: June 19, 2022 -- June 25, 2022.

Top story of the week:

  • Joe Biden is still president.
  • SCOTUS "overturns" Roe vs Wade
  • "Devout Catholic" deeply saddened by the SCOTUS ruling on abortion today.
  • EIA "systems failure" (see below)
  • Chevron exits California; moves to Texas

Top international non-energy story:

  • The Ukraine war drags on.
    • tea leaves suggest the West is ready to concede to Putin;

Top international energy story:

Top national non-energy story:

  • "January 6th" hearings — compelling.

Top national energy story:

  • EIA's information technology suffers a "systems failure." EIA did not report any data (except natural gas fill rate) for this past week; next week, we get an "update." 
    • EIA denies their system was hacked but that's all they would say
  • White House press secretary says $5- gasoline vs $60,000 EV is comparing "apples to oranges" 

Top North Dakota non-energy story:

Top North Dakota energy story:

Geoff Simon's top North Dakota energy stories:

Bakken economy:

Commentary:

For Investors -- Oil Stocks -- June 24, 2022

Link here.


The problem with Citi's note: no timeline. I assume Citi is looking six to twelve months out. 

Six-to-twelve months out is a lot different that a 30-year horizon. But for oil to continue to attract investors, they need to increase their dividends significantly. Remember, many of these companies had breakevens at $40, and, yes, I know, inflation has raised their costs, but if they had breakevens at $40, their earnings should be incredible in 2Q, 3Q, and full year. So, we'll see.

In addition, for those fortunate enough a revenue stream for continued investing, plenty of opportunities to by great dividend-paying companies. 

But note: has anyone heard anything about windfall profits taxes lately. I can't recall when I last heard calls for such taxes. That silence is deafening. The president cannot increase taxes with an executive order. Only Congress can pass tax legislation. And I don't think Schumer / Pelosi have the votes for any new taxes. Especially with a recession facing investors. 

Again, the usual disclaimers apply
. This is not an investment site. 

America: What A Great Country -- June 24, 2022

What a great country!

Link here. Ninety-eight percent of Americans won't "get this" photograph. Ninety-nine percent of those living in NYC won't "get this" photograph.

Drink of choice when temperatures hit 110°F heat index: sangria. Or is it Sangria?

Ford To Close German Plant In 2025 -- Or Maybe Not -- June 24, 2022

Link here to Forbes: this story was previously posted, different source, but this headline caught my eye. 

It's nearly impossible to close a factory in Germany where unions control the industrial sector. So, my hunch: this factory will remain open, re-imagined, re-configured. In fact, by 2025, ICEs may be back in vogue. LOL. A $25,000 Honda Civic or a $110,000 Tesla? It's "apples to oranges" according to the White House press secretary who may go down as the worst press secretary ever. Have you ever really listened to her? 

Germany: about to implode.  Link to Rigzone

Germany fears Russia could permanently close main gas pipeline.Germany’s economy minister said he can’t be sure that Russia will resume shipments through a key gas pipeline following planned maintenance next month, raising the prospect of a fresh surge in prices and rationing this winter. 
“I would have to lie if I said I didn’t fear that,” Economy Minister Robert Habeck said late Thursday in an interview with public broadcaster ZDF. 
His concerns were echoed Friday by Klaus Mueller, the head of the federal network agency, who said that flows through the Nord Stream 1 link might not restart even after the end of the 10-day maintenance period beginning on July 11, 2022. 
Mueller also warned that prices for consumers could triple, and urged households and businesses to put money aside and save energy wherever possible
“If we have a very, very cold winter, if we’re careless and far too generous with gas then it won’t be pretty,” Mueller said in an interview with public broadcaster ARD.

Germany: just a matter of time (about two months). Link to Irina Slav

ERCOT: Texas grid will easily hold today which means lots of wind and lots of sun. Gotta love it. In DFW area, high is forecast to be 101°F and the heat index to be 110°F. And the grid will hold. Gotta love it. 

SCOTUS ruling: finally Biden gets it. Congress needs to codify things if they want to thwart the courts. Congress has had decades to "fix" Roe vs Wade which was known to be tenuous at best when first "passed." Likewise, gun control and the second amendment. Congress has had decades to "fix" these issues. 

My analogy: SCOTUS is like a goalie on a soccer team or a hockey team. One can't blame the goalie for a loss. It's a team sport, and if it's that important for the team, in this case, the US Congress, needs to change the constitution before it reaches SCOTUS. And, yes, it can be done: Dred Scott, prohibition, prohibition repealed. This was not a SCOTUS issue, this was a Congressional issue, but something Congress never wanted to touch. 
Whether one agrees with SCOTUS or not, one must acknowledge the court is at least ruling based on strict reading of the constitution. 

The fact that US Congress has had decades to fix these issues tells me all I need to know about the US electorate.  

Off The Net For Awhile -- Have A Dozen Articles On SCOTUS To Read -- June 24, 2022


Dividend history:


This is what US oil sector is going to have to do across the board to attract investors.

COP's regular dividend has increased from twenty cents six months ago, to seventy cents six months later.

In addition, COP has paid forty-six cents in variable dividends in two months since. 

With that kind of track record, I couldn't accumulate shares in COP fast enough. But this is what makes this so much more interesting. The cash generated by COP dividends will be used to buy more shares in dividend-paying companies. 

Tesla's New Car Factories Losing Billions -- June 24, 2022

Toyota: park your EVs now the American bZ4X crossover. Link here

Losing billions: themes - 2022.

Tesla: new car factories "losing billions of dollars." Link here.
  • TSLA: up 3.44%; up $24; trading at $729

EVs:

  • Tipping point.
    • cathodes and anodes.
    • losing billions -- added June 24, 2022
  • Infrastructure.
  • Ukraine war; inflation; recession risks? Everything changed. 

Disruptive:

There It Is: Roe Vs Wade Overturned -- June 24, 2022

Updates


June 26, 2022: no shortage of states where abortion rights still intact. But gives the lie to those who say majority of Americans favor abortion after 15 weeks. 

June 26, 2022: flashback -- Biden pushed for constitutional amendment to overturn Roe v Wade, 1982. 

June 25, 2022: June 24, 2022 -- the day Chief Justice Roberts lost his court -- NY Times.

Original Post

Links everywhere. 

Justices ruling here -- SCOTUS opinion and dissent.

Reuters:
The court, in a 6-3 ruling powered by its conservative majority, upheld a Republican-backed Mississippi law that bans abortion after 15 weeks of pregnancy. The vote was 5-4 to overturn Roe, with conservative Chief Justice John Roberts writing separately to say he would have upheld the Mississippi law without taking the additional step of erasing the Roe precedent altogether.
First thoughts:

SCOTUS ruling: finally Biden gets it. Congress needs to codify things if they want to thwart the courts. Congress has had decades to "fix" Roe vs Wade which was known to be tenuous at best when first "passed." Likewise, gun control and the second amendment. Congress has had decades to "fix" these issues. 

My analogy: SCOTUS is like a goalie on a soccer team or a hockey team. One can't blame the goalie for a loss. It's a team sport, and if it's that important for the team, in this case, the US Congress, needs to change the constitution before it reaches SCOTUS. And, yes, it can be done: Dred Scott, prohibition, prohibition repealed. This was not a SCOTUS issue, this was a Congressional issue, but something Congress never wanted to touch. 
Whether one agrees with SCOTUS or not, one must acknowledge the court is at least ruling based on strict reading of the constitution. 

The fact that US Congress has had decades to fix these issues tells me all I need to know about the US electorate.  

No stuttering, no stammering, nothing to suggest any senility. It's great to get the whole speech without detractors clipping and taking out of context. If this link breaks, I'm sure it will end up on YouTube eventually. He does have an interesting "tick": scratching around his right nose with his right index finger and/or his right pinkie finger. 

The remarks were often incorrect and disingenuous but that doesn't take away from the clarity with which he delivered those remarks. 

Some liberals take the SCOTUS ruling all the way back to RBG -- upset that she did not resign while Obama was president, which would have certainly changed the composition of the court. But those making that argument are missing the point: if the SCOTUS ruling is what the majority of voters in 40 states wanted, then Congress could have codified Roe vs Wade long ago. The fact that Congress did not codify Roe vs Wade tells me that this is still not settled ... by a long shot. 

Later: apparently there are at least twenty states that will "ban" abortions - to some extent -- which means that there was no way that Roe vs Wade would have been codified. Forgetting the court's ruling, it is interesting that the minority refuses to admit we live in a democracy. 

Later: looking at the split ruling, 6 - 3, and 5 - 4, and looking at his past rulings, Chief Justice Roberts seems to be voting "on feelings" when it comes down to really tough decisions, trying to appease his personal conscience and maintaining a relationship with both "sides," as it were. The majority in this case, seemed to decide based on strict interpretation of the constitution; the minority, in the 6 - 3 decision, clearly are ruling based as if they are running for some future political office (which of course is not going to happen). 

Later: fallacy. Roe vs Wade was not overturned. Every state in the union is allowed to make no restrictions whatsoever regarding abortions. Even the state that was the center of contention, Mississippi, can go forward in the future and change its law(s) on abortions. In addition, it appears there are 30-some states that will not change its law on abortions, allowing abortions to continue. Practically the entire west coast is still pro-abortion: California, Oregon, Washington, New Mexico, Arizona, Colorado, Montana (?). Same with the Atlantic coast, north of the Mason-Dixon line, namely New York, Massachusetts and the rest. At the end of the day, this appears to be a states' rights issue as prescribed by the constitution. The "right to privacy" has never held water for me with regard to this question. 

Later: women across the US still have unlimited access to abortions. Yes, some will be severely inconvenienced but corporations and others are stepping up to make sure no woman is denied an abortion in the US. It is interesting that I'm not hearing any personality saying he / she will move to Canada in light of this ruling. This speaks volumes. On other issues, there were any number of personalities who said they would move to Canada if the outcome was one they could not accept. Somehow folks know there is a bit of hyperbole involved in discussing the ruling in this case. 

Later: the fact that California, much of the midsection of the US, and most of the northeast, including New York will still allow abortions, the practical effect seems very limited. It will be interesting to see the number of abortions performed annually in 2021 will compare with the number of abortions performed annually in 2023. My hunch: the change will be less than 10 percent. 

Later: the biggest impact this ruling will have? Huge amounts of dollars will flow into the Democrat party. We'll start seeing those numbers next month and leading into the midterm elections. 

Later: Fox News said Biden misspoke / lied when Biden said that this ruling makes the US an outlier. Fox News compared the abortion laws in various states with the abortion laws in western Europe. In that regard, the US is not an outlier. Many western European countries have much stricter abortion laws than many of our US states. However, and this is very, very interesting because it takes us to a new argument. In all western European countries (to the best of my knowledge), have national abortion laws. With this ruling today, the US no longer has a national standard or a national abortion law, and based no that, the US is definitely an outlier. That, of course, brings a new article: if SCOTUS wanted to absolutely turn-over Roe vs Wade, it could have banned abortions nationally. But this is very common for SCOTUS: threading the needle. In this case, the court was able to sidestep the issue and turn it back to the states. 

TGIF -- June 24, 2022

France: the story not being reported. French nuclear sector in shambles. Now importing electricity when it used to sell "excess" electricity. Link here.


Lake Mead: could soon be renamed, "Deadpool." Link here.
The water level at Lake Mead was measured at 1,044.03 feet on Wednesday — the lowest elevation since it was filled in the 1930s. 
If the reservoir drops below 895 feet — a possibility still years away — the lake would reach dead pool status, with potentially catastrophic consequences for millions of people across Arizona, California, Nevada and parts of Mexico. 
Comment: "Years away" ... not decades away.

Texas relocation: ATI corporate headquarters moving from Pittsburgh to Dallas. No employees will move. Link here

ATI? Yeah, it's the new name for Allegheny. The employees will remain in Pennsylvania. The executive team will be moving to Texas -- much nicer weather ... and ... no state income tax. Again, what am I missing here: the employees in a high-tax state will stay put; the executive staff will see a huge increase in their annual income. 
With its move, ATI becomes the second large manufacturer with Milwaukee-area operations to move its headquarters to the Dallas area in recent days. Last week, Caterpillar Inc. said it was moving its headquarters to Irving, Texas, from Deerfield, Illinois.

List: link here.

ECO-Pad = $$$$-Pad -- June 24, 2022

Early on in the Bakken, there were many reports of small mom-and-pop mineral owners becoming millionaires overnight. 

A lot of these folks were farmers who happened to still hold their mineral rights after all these years. 

In the early days of the Bakken, operators were drilling as fast as they could for many reasons, but mostly to hold the leases by production. 

To drill that fast, operators often drilled one well in any given spacing unit

Often, the small mom-and-pop mineral owners were "living" off one well. And still becoming millionaires. Maybe some hyperbole, but not much.

Fast forward to 2022. Now, it is the norm to drill mega-pads with six wells on each pad. 

Can you imagine a small mom-and-pop mineral rights owner with one well all these years to now see six new wells coming in. All at once. And with oil at $110 / bbl. 

What a great country. 

Yesterday, as the most recent example: Oasis with six new permits on one pad. That's been the norm for quite some time. Pioneered by Harold Hamm, one might argue. 

How Bad Is It? June 24, 2022

Americans will be able to manage $6-gasoline for about two more months.

Hess To Help The Biden Administration With More Drilling -- June 24, 2022

Is anyone paying attention? Despite the EIA being unable to publish the weekly EIA petroleum report, it is having no trouble reporting everything else. Conspiracy theories abound. 

Freeport: just how big is Freeport? It's huge. If a foreign government -- say Russia -- wanted to "take out" one of our LNG export terminals, why not start here? They took out the biggest American pipeline -- the Colonial -- last year. 


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



Far Side: link here.

WTI: $106.

Active rigs: 44.

No wells coming off confidential list today. Six months ago it was Christmas Eve.

RBN Energy: debate over methane emissions starts with determining size of the problem. Unless it's politics and then it doesn't matter. 
It’s well understood that methane is a significant greenhouse gas and that reducing methane emissions from oil and gas production is critical to hitting long-term emissions targets, but that’s about where most of the common ground ends. There are serious disagreements about the actual magnitude of methane emissions, the proper role of government regulation, and whether requirements to control those emissions would place an undue burden on the energy industry and lead to decreased supply. In today’s RBN blog, we look at how emissions estimates are made, why they can vary significantly, and how the disagreements about how to curb those emissions might be resolved.

Ukraine And Keystoning America -- June 24, 2022

July

  • several months ago I wrote that the sh*t will hit the fan in July (2022)
  • looks like we will see another war in Europe soon
    • it won't be a shooting war; it will be a "civil war" among EU nations fighting for their share of natural gas as the EU begins to ration natural gas; first fight -- between Germany and Italy.
  • twitter feed suggests that Russia will not only win Ukraine but will win big
    • Russian ruble is the best-performing currency of 2022 despite sanctions, links everywhere, here is one;
    • Russia shipping more petroleum / products than before the sanctions; at least that's the sentiment when surfing through the twitter energy feed
      • initially, to regions like Far East Asia and India,
      • but now to Europe, also, as the EU becomes desperate
  • sanctions sounded great when plenty of natural gas and warm weather (summer) was approaching,
    • but now, EU running on empty and anticipating a cold winter
  • bottom line: Putin had this figured out from the beginning; took bigger losses than expected but persevered; note: no nuclear talk for quite some time -- which means he knows he's winning
    • next: gradual return of photo ops with Putin
  • will Biden throw Zelenskyy under the bus to save the midterms? Probably too late but there are reports that US has slowed down weapon delivery to the Ukraine; no idea whether that's accurate
  • by the way, is this a coincidence …. reports that Biden was sending more weapons to the Ukraine ended less than 24 hours after Putin threatened to go nuclear? Who blinked first? Yeah, the guy who has trouble riding a bike. Not the guy who has photos of himself riding bears or whatever he rides.

EIA not releasing weekly petroleum report:

  • agency confirms it was not hacked;
    • which, I guess, means they did it themselves -- whatever they did -- inept or intentional
    • I assume the latter
  • the agency says it will provide update on Monday, June 27, 2022; an "update" suggests this delay is not temporary; we may not see reports for awhile? 
    • CDC Covid vaccine reports have changed from daily to weekly -- but no one cares;
    • might the EIA suggest monthly reports rather than weekly reports to even out the volatility?
  • why would the administration facing $6-gasoline purposely delay the report?
  • only two reasons I can think of:
    • one, the report shows that US refiners are operating at max capacity; which, if true, completely undermines President Biden / SecEnergy Granholm's assertions that refiners are holding back;
      • there are now reports that mandates for biofuels have significantly slowed US refiners from providing gasoline / diesel; 
      • remember: 60 refineries (?) requested biofuel waivers; not one waiver was granted by US government;
        • did biofuel / refinery mandate keystone American gasoline and diesel supplies?
      • California regulators now charge PSX that converting conventional refinery to renewable refinery was illegal; link here; and, here, as an exclusive.
    • two, the reports suggest that inventories are worse than expected, which would have pushed oil higher just before July 4th weekend
      • analysts are suggesting July 4th weekend will see biggest travel day ever

Ms Granholm agrees: US refiners are operating at max capacity; most recent meeting, SecEnergy did not criticize / make claims / accuse oil executives of profiteeringlink here;

Biofuels: it appears -- more and more as the data comes out and journalists are finally asking the right questions -- that the government's heavy handedness (or boots on their necks) toward refineries and biofuel mandates keystoned American production of "conventional" gasoline and diesel.

$6-gasoline: more and more this appears to have been intentionally engineered or the result of incredible ineptness by the Department of Energy. My hunch: it was the former but the department had no clue how bad it would get. Worse: the administration has no plans to change course. No matter how expensive it gets, this administration will stay the course on green energy transition. Link here: apples or oranges. 

An aside: White House press secretary -- Peter Principle in full view.

Liz Cheney: not quite accurate, but not too far from the truth -- Cheney will run as a "democrat" to win the primary. My suggestion: more should do that, especially in blue states like California, New York, and Minnesota.