Wednesday, October 19, 2022
Mercer County: North Dakota Center Of Excellence For Extracting Metals For Batteries? October 19, 2022
Mercer County? Think Beulah.
A Minnesota metals company is planning a $433 million minerals processing facility in central North Dakota as part of a federal effort to expand domestic manufacturing of batteries for electric vehicles and the power grid.
The Biden administration on Wednesday awarded $2.8 billion in grants to projects in 12 states including the one in North Dakota's Mercer County.
A total of 20 companies nationwide are getting money for projects to extract and process lithium, graphite, nickel and other battery materials, manufacture battery components and strengthen U.S. supply of critical minerals.
WTI Surges -- October 19, 2022
Diesel: finally, someone provides "US diesel, in days of supply." The number: 25. Now, to find EIA source.
OKE: declared quarterly dividend for 4Q22; unchanged from previous quarter. OKE has not changed its dividend since 1Q20.
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Back to the Bakken
Active rigs: 43.
WTI: $85.87. Surges 3.68% after President Biden speaks; up $3.05 / bbl.
Natural gas: $5.444 (down slightly).
Eight new permits. #39317 - #39324, enclosed:
- Operators: Grayson Mill (4): Oasis (4)
- Fields: Painted Woods (Williams); Todd (Williams)
- Comments:
- Grayson Mill has permits for four Marilyn wells, lot 5-section 31-155-102, to be sited 1703 FNL and between 322 FWL and 412 FWL;
- Oasis has permits for three Osprey wells, and one Harrier well, SESE 23-154-101, to be sited between 681 FSL and 708 FSL and betweeen 1010 FEL and 1070 FEL
Please note that it appears the three Oasis Osprey wells were previously permitted; the original ones (#39117 - #39119) were permitted August 1, 2022, but slightly different spud sites.
One producing well (a DUC) reported as completed:
- 37368, 568, Petro-Hunt, Estby 159-94-35C-26-3H,
Investing And WTI -- October 19, 2022
I mentioned this to a reader earlier today:
I have never been happier with my current investment portfolio, with my "new money" allocation strategy, and with my overall investment strategy.
For the first time in fifty years of investing, I feel like I'm "hitting on all cylinders."
On top of this, the US macro-economy looks like it has been through the roughest patch. Folks are getting used to 5% interest rates; companies are pricing in highest costs and passing those costs on to consumers, and consumers seem to be accepting the higher costs.
The downside (actually two):
- $7-gasoline in California and the risk of $5-gasoline across the rest of the US; and,
- the price of diesel.
There is no quick fix for the diesel issue. It's a refining problem and that's not going to change (ever?). Maybe RBN Energy will do a blog on the high price of diesel and what can be done about it.
Today, President Biden announced another 15-million-bbl release from the SPR and WTI surged $3 / bbl. LOL.
Anyone following this story understands what's going on. When the president announces another 15-million-bbl release from the SPR and no plans for any export ban, and WTI surges $3 / bbl one needs to sit up and take notice. This should be very, very concerning for the consumer (not concerning at all for those investors long in oil).
What's scarier? The SecEnergy has no clue.
So, how did oil companies do today?
- EOG: up almost 5%; up over $6 / share; trading at $130;
- DVN: up over 3%; up over 26 / share; trading at $72;
- XOM: up almost 3%; up almost $3 / share; trading at $104;
- CVX: up over 3%; up over $5 / share; trading at $168;
- OXY: up only 1%; up less than a $1 / share; trading at $68;
Refiners:
- MPC: up only 0.6%; up 65 cents / share; trading at $109
By the way, with regard to the 15-million-bbl release, the mainstream media got it wrong again, and once folks realized that, WTI surged.
Gasoline Demand -- Down Slightly -- October 19, 2022
Has the "gasoline demand" curve re-set for a new "norm"?
I'm done with conspiracy theories with regard to "gasoline demand." I now accept the numbers that the EIA is providing.
The question is whether the "gasoline demand" curve should be "reset" as the new "norm"?
I don't really care why the "gasoline demand" curve has changed (if it has changed); there could be multiple reasons:
- better mileage on new cars;
- changing driving habits;
- EVs (unlikely yet)
Right now, instead of ten million bbls per day, the new "bar" should be set at nine million bbls per day.
Next summer will be the "tell."
NOG Announces Investment In Core Midland Basin Development Project -- October 19, 2022
- NOG enters into agreement to acquire a 36.7% working interest in a stacked pay, six-zone development project (the “Mascot Project”) in the core of the Midland Basin for $330 million
- Acquisition includes producing properties and associated midstream assets, plus 62 gross in-process and future wells in Midland County, Texas, with sub-$40 per barrel average breakevens
- Average production of 6,450 Boe per day (2-stream, ~80% oil) expected for 2023
-
Clear line of sight to significant free cash flow generation with 22.8
net undeveloped and in-process locations, all scheduled to be developed
over the next two years
- ~$150 million of expected 2023 unhedged cash flow from operations at strip pricing as of October 13, 2022 (~2.2x transaction multiple)
- ~$300 million of unlevered free cash flow expected through 2025 (inclusive of cash flows received from effective date but prior to closing)
- Transaction expected to be significantly accretive to key financial metrics
- Future wells will be developed under a joint operating agreement with defined controls and governance, providing strong alignment
- NOG has hedged a substantial portion of the expected production
- Acquisition to be financed with cash
Comments:
- Devon is the fastest growing oil company (operator).
- one wonders if NOG might be the fastest growing oil company (non-operator).
- $330 million / 6,450 boepd = $50,000 / flowing boepd; but incredibly more expensive if NOG is only getting 36.7% of that
New "Gym" In Apartment Complex -- October 19, 2022
I'll post a better video later. I was in a hurry.
This Is A Deal-Breaker -- Not Happy With Apple -- October 19, 2022
Updates
October 21, 2022: was this also a deal-breaker for Apple's top designer after only three years?
- way too many iPad versions;
- the newest tenth generation iPad is a disaster;
- the iPhone 14 not selling well; certainly nothing design-worthy;
- any progress on an Apple EV
October 21, 2022: the purpose of the original note was to highlight the fact that the "new" 10th generation iPads (there are two versions) will not support the second generation Apple Pencil. The 9th generation iPad Air -- even though it's a 9th generation and not a 10th generation will support the second generation Apple Pencil.
For those who rely on the Apple Pencil this is huge, and makes no sense that Apple would do this.
It appears there is a reason. Apple moved the "front-facing camera lens" to the center of the new iPad and that made it impossible for the charging "station/edge" to be kept in the original position which supported the second generation Apple Pencil.
Others have noted this. See the thread at this link. "Everyone" agrees this ranks as one of the worse engineering decisions ever made by Apple. More appalling, Apple is very, very clever to obfuscate the issue on its website and in its advertisements.
If you rely on the Apple Pencil, you want the second generation Apple Pencil, and your choices:
- the older, entry-level, 9th generation iPad; very, very inexpensive, starting at $329; or
- the brand new, M2-chip, iPad Pros; expensive, but worth every penny, with two versions:
- the large display starting at $799; or,
- the even larger display starting at $1099.
If you don't care about the Apple Pencil, then you have additional choices, but -- wow! -- the Apple Pencil is too cool, too useful, not to have!
For another perspective, see this article at MacRumors, "iPad 10 vs iPad Air." This article does a great job comparing:
- the 10th-Generation iPad (2022); A14 Bionic chip, $449; and,
- the 5th-generation iPad Air (2022), M1 chip, $599
Their conclusion:
In theory, the iPad Air is a more compelling package with the M1 chip, 4GB of additional memory, a dedicated media engine, Stage Manager for multitasking, a better display, and a much better Apple Pencil experience, but in practice, users are unlikely to notice much difference between the devices. Unless you have specific needs for the iPad Air's added features, it will be worth saving the $150 and buying the 10th-generation iPad.
I disagree completely! The iPad Air -- despite being $150 more -- is the much better choice unless the Apple Pencil is not an issue.
So, for my wife, either the iPad Pro, starting at $799, or the iPad Air, starting at $599.
Original Post
When you get ready to buy an Apple iPad, check the "specs."
Even MacRumors has noted how confusing the iPad line up is.
Don't worry so much about the chip.
Your first decision: the size -- large, medium, or small.
Then look at what affects you most.
Do you plan on loading lots of apps? Then, check storage.
Do you like photography? Then check camera specs and landscape / portrait modes.
Do you like to use a "pencil"? This is critical. The 10th generation will only support the 1st generation pencil. The "old" 9th generation iPad supports the much, much better 2nd generation pencil.
That's a deal-breaker for me. I would not buy an iPad that doesn't support the 2nd generation pencil.
Consider yourself forewarned.
BMW To Build EVs In Their Plant In South Carolina -- October 19, 20222
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Word For Thee Day
Percipient: adjective or a noun --
- having a good understanding of things, perceptive
- a person who is able to perceive things
Going Biking -- Going Walking -- October 19, 2022
High-speed rail map for China. Link here.
Wuhan is the center for high-speed trains (in China). It's the hub for high-speed trains everywhere in China.
Wuhan is a city of eleven million people, the largest in central China.
Among the first Chinese [Covid-19] studies published internationally was one in The Lancet. This study, from a group of 41 people including medical staff at Jinyintan Hospital in Wuhan, where many of the December, 2019, cases got treatment, appeared online on January 24, 2020 -- the same day as K.Y. Yuen's report of the family cluster in Shenzhen and the ominous hint of asymptomatic spread.
Twenty-seven of the forty-one had links to the [Wuhan market] but fourteen did not.
The earliest of all forty-one patients was identified / diagnosed on December 1, 2019. The epidemic (not yet a pandemic) most likely began in November, 2019, and at some location other than the [Wuhan market].
First confirmed Covid-19 case was likely "a" Mr Chen who fell sick on December 8, 2019; Mr Chen reported no links to the Huanan market. He shopped at a larger supermarket.
The first recorded fatality was a sixty-one-year-old man, a regular customer at the Huanan market. The date was not specifically given of this man's death but appears to have been on / before January 24, 2020. By that date, there were 24 confirmed Covid-19 deaths.
So, where did the virus first begin circulating? Three possibilities (among others):
- in the city of Wuhan, or elsewhere in Hubei province;
- somewhere between Wuhan and the caves of Yunnan (bats); or,
- northern Italy.
UAL Earnings -- 3Q22
Tell me again the US economy is in trouble.
I do believe that the part of my portfolio that I manage myself is now doing better than what it was prior to the JPFRI (net assets in "my" portfolio now exceed what they were prior to the JPFRI.
UAL:
We'll See -- October 19, 2022
I'm not sure this guy knows what he is talking about. Link here. PCR doesn't disguise anything.
PCR is very, very accurate and can be very, very sensitive.
Stephen Covey: seek first to understand.
Wuhan flu. The blog. Coronavirus: statistics. Seasonal flu: CDC.
Weekly EIA Petroleum Report -- October 19, 2022
Today's take: the decision for release of oil from the SPR was much more complicated than folks like me understood at the time the announcement was made, some six months ago.
Pet peeve: inaccurate headlines by mainstream media.
New release? Link here: all that talk about a new, additional release before the midterm elections -- won't be delivered until after the midterms, to be delivered in December, 2022. Effect on gasoline prices? At best: previous releases have reduced gasoline prices by about forty cents per gallon compared to what they would have been absent these drawdowns.
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The Weekly EIA Petroleum Report
WTI: $84.11 at time of release.
The numbers:
- crude oil inventories decreased by 1.7 million bbls, despite or because:
- refiners operating below 90% of their capacity;
- huge SPR releases continue
- refiners operating at 89.5% of their operating capacity;
- US commercial crude oil inventories are only 2% below the five-year average for this time of year
- the high price of gasoline is not due to a shortage of crude oil, and it's not due to lack of refining
- distillate fuel inventories increased slightly; inventories remain 20% below five-year average;
- jet fuel supplied was up 7.5%
Eight minutes after release, WTI at $84.16 and trending very slightly higher.
Too Many Choices -- October 19, 2022
Too many choices:
- Sophia: every weekday, 3:00 p.m. to 7:00 p.m.
- twins in Portland: FaceTime, most evenings, 8:30 p.m. to 9:00 p.m. CT
- best book ever? Jann S. Wenner: Like A Rolling Stone, A Memoir, released September, 2022. 554 pages; great index.
- Amazon original: Bond (007) music; a documentary.
- Amazon (?) original: Hugh Hefner, a documentary.
- Amazon FireStick: Perry Mason
- NFL football
- College football
- NASCAR championship
- Covid-19: personal library being put together
- travel to Nashville; Portland; Montana
- investing
- blogging
- biking
- walking
- fitness center
- taxes
- YouTube music
- letters
- memoir
- twitter
Diesel Usage -- Busiest Interstates For Trucks -- October 19, 2022
Busiest for trucks:
- I-95:
- I-80:
- I-75: Florida to Michigan, at the Canadian border.
- I-90: Boston to Seattle, longest "I" in the US; 3,021 miles.
- I-40: Barstow, CA, to Wilmington, NC; 2,559 miles.
Most diverse geography; most scenic:
- of the five above, I-40
Most boring stretch:
- I-94, North Dakota
- I-90, South Dakota
Top ten bottlenecks, link here, worst listed first:
- I-95 at SR 4: Fort Lee, New Jersey
- I-285 at I-85 (north): Atlanta, GA
- I-24 / I-40 at I-440 (east): Nashville, TN
- I-45 at I-69 / US 59: Houston, TX
- I-75 at I-285 (north): Atlanta, GA -- that's two for Atlanta
- I-290 at I-90 / I-94: Chicago, IL
- I-20 at I-285 (west): Atlanta, GA -- that's three for Atlanta
- I-71 at I-75: Cincinnati, OH
- SR 60 at SR 75: Los Angeles, CA
- I-710 at I-105: Los Angeles, CA
Steiff Lioness -- October 19, 2022
We bought this in Germany in 1984 or thereabouts.
Kept in pristine condition.
In September, 2022, sent to Laura and her boys.
Kiri had also wanted it but Laura asked first and her boys are now the right age.
It
would be nice if the boys could keep this "in the family" and give it
to one of Kiri's daughters if they have children. And so on.
I just checked the price for this plush toy over on Amazon: the price? Priceless.
RMDs -- October 19, 2022
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RMDs
October 14, 2022:
Updated final regulations for required minimum distributions (RMDs) under Internal Revenue Code (IRC) Section 401(a)(9) will not apply before 2023, IRS has announced in Notice 2022-53.
The regulations will implement two significant changes to the RMD requirements made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (Div. O of Pub. L. No. 116-94), along with various other statutory changes. The act increased the RMD beginning age from 70-1/2 to 72 and set new limits on “stretch” distributions to defined contribution (DC) plan beneficiaries.
The notice also provides relief for DC plans that failed to make RMDs in 2021 or 2022 to beneficiaries under a new 10-year payment rule and gives excise tax relief to affected individuals.
Final regulations delayed The SECURE Act’s changes to IRC Section 401(a)(9) took effect in 2020. In proposed regulations issued earlier this year, IRS indicated that the final regulations would apply to 2022 and later distribution calendar years. However, the new IRS notice says the final regulations won’t apply until at least 2023. The preamble to the proposed regulations explained that for 2021 distributions, plans and taxpayers should rely on existing 401(a)(9) regulations but take into account a good-faith interpretation of the SECURE Act. Compliance with the proposal will show good-faith compliance with the statute. This presumably continues to apply for 2022 RMDs.
Further delay possible.
Congress is currently considering “SECURE 2.0” legislation that would increase the RMD beginning age to 75. If that change is enacted, IRS may need to make additional revisions, which could further delay the final regulations.
Relief for unexpected IRS interpretation of new 10-year rule: The SECURE Act changed the requirements for DC plans paying benefits after a participant’s death. Distribution of a deceased participant’s benefit previously had to follow one of two rules, depending on whether the participant died before or after the required beginning date (RBD). If the participant died after the RBD, the beneficiary had to receive payments at least as rapidly as the participant had been receiving them. If the participant died before the RBD, the benefit had to be distributed within five years of the participant’s date of death; alternatively, the plan could allow payments to stretch over a period not exceeding the designated beneficiary’s life expectancy.
Now, DC plans generally must distribute benefits to a designated beneficiary within 10 years of the participant’s death, regardless of whether the participant dies before or after the RBD. Plans can still offer stretch payments as an alternative to the 10-year rule, but only to “eligible designated beneficiaries” (EDBs). The five-year rule still applies if the participant has no designated beneficiary or the beneficiary isn’t an individual.
(These new rules also apply to IRAs but don’t apply to defined benefit plans.)
Proposal caught some plans and beneficiaries off guard. The proposed regulations would require payments under the 10-year rule to begin the year after the participant’s death if the participant died after the RBD. The preamble explains that this is because the “at least as rapidly” rule still applies when participants die after their RBDs; the 10-year rule merely requires paying out any benefit still remaining at the end of the 10th year.
Until IRS published the proposal, several commenters had believed the new 10-year rule would work like the five-year rule, which allows delaying all payments until the end of the fifth year after the participant’s death. Under the proposal, DC plans that hadn’t paid RMDs to beneficiaries of participants who died in 2020 or 2021 after reaching their RBDs would have violated Section 401(a)(9), and the beneficiaries could face a 50% excise tax under IRC Section 4974.
Relief for 2020 and 2021. In response to these concerns, the notice says IRS won’t consider DC plans to have violated Section 401(a)(9) merely because they didn’t make “specified RMDs.” In addition, individuals who didn’t take specified RMDs won’t be subject to the excise tax. (Individuals who already paid an excise tax can file for a refund.) The notice’s definition of a specified RMD is complex, but in simplified terms, it is a payment that should have been made under the new 10-year rule to the beneficiary of a participant who died in 2020 or 2021 after reaching the RBD, if the beneficiary is not taking stretch payments.
Applicability.
The new 10-year rule is generally effective for distributions to beneficiaries of participants who died after Dec. 31, 2019, though governmental plans and certain collectively bargained plans have a later effective date. The notice’s relief applies only to beneficiaries of participants who died in 2020 or 2021 after the new requirement took effect for the plan. The relief also applies to individuals with inherited IRAs and certain beneficiaries of EDBs who died in 2020 or 2021.
No relief beyond 2021. The notice’s relief applies only for the 2020 and 2021 distribution calendar years. Although the new notice doesn’t address RMDs beyond 2021, presumably IRS expects plans and taxpayers to comply with the proposed regulations’ interpretation of the 10-year rule for 2022 and later years. This could also signal that IRS doesn’t intend to revise its interpretation of the 10-year rule in response to comments received on the proposed regulations.
IRS Tax Brackets For 2023
All things being equal, seniors may pay a bit more in taxes in 2023 -- let's see -- those taxes would be due April 15, 2022, but quarterly estimates earlier .... that's plenty of time to prepare ... the bigger problem for seniors -- the market is going to surge in 2023 -- that's what will really affect one's taxes ... from the reader:
SS COLA for the year 2023 will result in many seniors paying more income tax because the standard deduction went up 6.94 % when the COLA is to go up 8.7 %.
The standard deduction will also increase in 2023, rising to $27,700 for married couples filing jointly, up from $25,900 in 2022. Single filers may claim $13,850, an increase from $12,950.
New income tax brackets for 2023.
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RMDs
More importantly, link here:
October 14, 2022:
Updated final regulations for required minimum distributions (RMDs) under Internal Revenue Code (IRC) Section 401(a)(9) will not apply before 2023, IRS has announced in Notice 2022-53.
The regulations will implement two significant changes to the RMD requirements made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (Div. O of Pub. L. No. 116-94), along with various other statutory changes. The act increased the RMD beginning age from 70-1/2 to 72 and set new limits on “stretch” distributions to defined contribution (DC) plan beneficiaries.
The notice also provides relief for DC plans that failed to make RMDs in 2021 or 2022 to beneficiaries under a new 10-year payment rule and gives excise tax relief to affected individuals.
Final regulations delayed The SECURE Act’s changes to IRC Section 401(a)(9) took effect in 2020. In proposed regulations issued earlier this year, IRS indicated that the final regulations would apply to 2022 and later distribution calendar years. However, the new IRS notice says the final regulations won’t apply until at least 2023. The preamble to the proposed regulations explained that for 2021 distributions, plans and taxpayers should rely on existing 401(a)(9) regulations but take into account a good-faith interpretation of the SECURE Act. Compliance with the proposal will show good-faith compliance with the statute. This presumably continues to apply for 2022 RMDs.
Further delay possible.
Congress is currently considering “SECURE 2.0” legislation that would increase the RMD beginning age to 75. If that change is enacted, IRS may need to make additional revisions, which could further delay the final regulations.
Relief for unexpected IRS interpretation of new 10-year rule: The SECURE Act changed the requirements for DC plans paying benefits after a participant’s death. Distribution of a deceased participant’s benefit previously had to follow one of two rules, depending on whether the participant died before or after the required beginning date (RBD). If the participant died after the RBD, the beneficiary had to receive payments at least as rapidly as the participant had been receiving them. If the participant died before the RBD, the benefit had to be distributed within five years of the participant’s date of death; alternatively, the plan could allow payments to stretch over a period not exceeding the designated beneficiary’s life expectancy.
Now, DC plans generally must distribute benefits to a designated beneficiary within 10 years of the participant’s death, regardless of whether the participant dies before or after the RBD. Plans can still offer stretch payments as an alternative to the 10-year rule, but only to “eligible designated beneficiaries” (EDBs). The five-year rule still applies if the participant has no designated beneficiary or the beneficiary isn’t an individual.
(These new rules also apply to IRAs but don’t apply to defined benefit plans.)
Proposal caught some plans and beneficiaries off guard. The proposed regulations would require payments under the 10-year rule to begin the year after the participant’s death if the participant died after the RBD. The preamble explains that this is because the “at least as rapidly” rule still applies when participants die after their RBDs; the 10-year rule merely requires paying out any benefit still remaining at the end of the 10th year.
Until IRS published the proposal, several commenters had believed the new 10-year rule would work like the five-year rule, which allows delaying all payments until the end of the fifth year after the participant’s death. Under the proposal, DC plans that hadn’t paid RMDs to beneficiaries of participants who died in 2020 or 2021 after reaching their RBDs would have violated Section 401(a)(9), and the beneficiaries could face a 50% excise tax under IRC Section 4974.
Relief for 2020 and 2021. In response to these concerns, the notice says IRS won’t consider DC plans to have violated Section 401(a)(9) merely because they didn’t make “specified RMDs.” In addition, individuals who didn’t take specified RMDs won’t be subject to the excise tax. (Individuals who already paid an excise tax can file for a refund.) The notice’s definition of a specified RMD is complex, but in simplified terms, it is a payment that should have been made under the new 10-year rule to the beneficiary of a participant who died in 2020 or 2021 after reaching the RBD, if the beneficiary is not taking stretch payments.
Applicability.
The new 10-year rule is generally effective for distributions to beneficiaries of participants who died after Dec. 31, 2019, though governmental plans and certain collectively bargained plans have a later effective date. The notice’s relief applies only to beneficiaries of participants who died in 2020 or 2021 after the new requirement took effect for the plan. The relief also applies to individuals with inherited IRAs and certain beneficiaries of EDBs who died in 2020 or 2021.
No relief beyond 2021. The notice’s relief applies only for the 2020 and 2021 distribution calendar years. Although the new notice doesn’t address RMDs beyond 2021, presumably IRS expects plans and taxpayers to comply with the proposed regulations’ interpretation of the 10-year rule for 2022 and later years. This could also signal that IRS doesn’t intend to revise its interpretation of the 10-year rule in response to comments received on the proposed regulations.
The Apple Page -- October 19, 2022
See update here; important.
Original Post
Apple announced a huge rollout of new products yesterday. The headlines:
- Apple's new 2022 iPad lineup gives customers more options than eveer
- updated three big product lines: iPad, iPad Pro, Apple TV (the device)
- the new M2 iPad Pro is finally here
- headline jack removed from all new iPads -- finally;
- does anyone still use a headphone jack for any Apple product?
- Apple lowers prices of refurbished 11-inch iPad Pros: $469. Incredible!
- new releases: no price increase in the US; hikes prices for Europe;
- Apple TV 4K -- getting a lot of love
- new Apple TV 4K -- lower starting price, and it was a huge decrease: $129 vs $179
- new Apple TV 4K with an A15 Bionic chip; thinner, weighs 50% less; fanless
- likely to bring price of Apple TV device below $100 in 2023
- Apple begins selling Belkin mount for using an iPhone as a Mac's webcam!
- macOS Ventura to be released next week
With regard to the Belkin mount: this guy has a $1400 iPhone and a $1400 Apple laptop, and he/she thinks $30 is too much to pay for a classy mount, LOL:
From Bloomberg Today -- A Botched Strategy -- Biden's Strategic Political Reserve -- October 19, 2022
Regardless of the politics surrounding the decision to release more oil from the SPR, it's a self-inflicted botched strategy that forced the Biden administration to do this:
- killed the Keystone XL;
- slow-rolled shale permits;
- banned off-shore drilling;
- banned drilling on Federal on-shore
- started a public spat with Saudi Arabia
From Bloomberg today:
The US established its Strategic Petroleum Reserve, or SPR, in the wake of the 1973 oil crisis as a weapon to be wielded against overseas producers. There’s a problem with that status in 2022: the oil producers most threatened by it these days are in North America itself.
The idea of strategic commodity reserves is straightforward. By holding on to an outsized inventory, consumers are able to withdraw initial supplies to relieve tight market conditions, sanding the peaks off price spikes. Coupled with a ban on US crude exports that lasted from 1975 to 2015, that once gave Washington significant control over supplies of oil to the world’s largest consumer. If OPEC wanted to use production cuts as leverage against America, they’d have to contend with the firepower of a 714 million-barrel stockpile.
The emergence of the US as the world’s biggest marginal oil supplier has changed that. When the White House orders the release of fuel from the SPR, it’s not just blunting the OPEC+ oil weapon — it’s also deterring local producers from pumping more barrels.
You can see this change in the Energy Information Administration’s output estimates. Domestic crude producers will average 11.7 million daily barrels of production this year and 12.4 million barrels in 2023, the EIA forecast last week — down from estimates of 12 million barrels and 13 million barrels, respectively, in April, when the current releases started. As a result, a significant slice of the 1 million barrel-a-day cushion is being cannibalized by weaker domestic production.
Some of that output downgrade, to be sure, is the result of the darkening economic outlook as the Federal Reserve raises interest rates. Still, other metrics such as the differential between Canadian crude and benchmark WTI — which hit its widest level in four years last week — suggest marginal production also is being put off by the ready availability of SPR barrels.
With the White House considering a further release of 15 million barrels from reserves, that should give pause for thought. If the Biden administration is seeking an explanation for the failure of North American oil production to keep pace with demand, it’s worth considering the role of the mammoth inventory it controls in reining in animal spirits.
--David Fickling, Bloomberg Opinion
Energy Wrap -- October 19, 2022
If You Have Time For Just One Investment Article Today -- October 19, 2022
Jim Cramer's #1 piece of advice over the years: take your profits and play with "house money." I've never bought into that.
WTI Up After Administration Announces Additional SPR Release -- October 19, 2022
Brittney Griner: eight months in prison; serving nine-year sentence; turned 32 years of age. Appealing sentence.
Airlines: apparently profits are surging.
OFS: apparently profits are surging.
The good news: long term oil investors now have a floor for WTI -- $75. Thank you, Mr Biden.
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Back to the Bakken
The Far Side: link here.
Active rigs: 42.
WTI: $83.96. Up 1.4%; up $1.14 after it's announced that President Biden will release another 15 million bbls of oil from the SPR.
Natural gas: $5.703.
Thursday, October 20, 2022: 26 for the month, 26 for the quarter, 471 for the year.
38858, conf, WPX, Samuel Packineau 8HIL,
38365, conf, CLR, Fuller 5-2H,
RBN Energy: FANG doubles down -- doubles down -- again -- on the Permian with FireBird deal. Archived.
It would be tough to find a large U.S. E&P with a clearer, more consistent geographic focus than Diamondback Energy. Over the past four years, the Permian-centric producer has closed on four 10-figure deals — total value $13.7 billion — that together have added more than 200,000 net acres in the nation’s leading shale/tight-oil play. Just this month, Diamondback went to the Permian well yet again, this time with a $1.6 billion deal to acquire FireBird Energy, a privately held Midland Basin producer that has been on a Permian buying spree of its own. When the deal closes later this year, Diamondback’s total production in the Midland and Delaware basins will approach 400,000 barrels of oil equivalent per day (Mboe/d), or more than 100x what it was producing 10 years ago when the company had just gone public. In today’s RBN blog, we discuss the company’s latest acquisition and its rapid rise to Permian prominence.
As we said a couple weeks ago in a blog about EQT Corp.’s acquisition of natural gas production and midstream assets in the Marcellus/Utica — the ongoing frenzy of M&A activity in the U.S. oil and gas space has been driven by a number of factors, including (1) renewed confidence that, despite the likelihood of a near-term recession, hydrocarbon demand — and prices — will stay strong for years to come; (2) a preference among many larger E&Ps to grow production and free cash flow through acquisition, not aggressive capital spending; and (3) a desire by many smaller, privately held producers (and midstreamers) to cash in now and reap big gains as they do. No U.S. production area has seen more deals in the COVID/post-COVID era than the Permian — the biggies there include ConocoPhillips’s $13.3 billion acquisition of Concho Resources, Chevron’s $13 billion purchase of Noble Energy, Cabot Oil & Gas’s $9.3 billion buy of Cimarex Energy (the combined company is now known as Coterra Energy), and Pioneer Natural Resources’ $7.6 billion acquisition of Parsley Energy and $6.4 billion purchase of DoublePoint Energy.
Wow -- Why I Love To Blog -- Reason #47 -- October 19, 2022
Cars: I forget when it was but sometime last year / early this year I predicted the "car situation" would resolve in July, 2022. It looks like I was off by just a few months. It's gonna be a great Christmas for those interested in buying a new car. Link here.
I'm already looking.
My hunch: Jeep prices will drop to compete nicely with Hyundai Kona.
I'm also seeing our local dealership lots starting to fill up, and I'm starting to see a lot of new cars on the highways. It may be subtle but it's real.
Too Much Going On -- Impossible To Keep Up -- October 19, 2022
Biden's three concerns:
- $7-gasoline in California -- "it's always been that way" -- Joe Biden, who always takes the train;
- $5-diesel across the US
- rising gasoline prices across the US despite huge SPR releases
Oil -- this from yesterday, EIA data out today -- later this morning:
Wow -- Why I Love To Blog -- Reason #46 -- October 19, 2022
With regard to the Bakken, one gets the feeling that "new" activity has come to a virtual standstill. Operators will manage their assets -- their active wells -- and delay new drilling for now.
Early this morning on twitter:
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