GDPNow: 4.9% — Estimate 3Q23 — WTI Continues To Fall -- Five Wells Coming Off Confidential List Today -- October 3, 2023

Locator: 45633GDP.

GDP, estimate, 3Q23: nchanged for quite some time. Remains at 4.9%. Link here.

On target, link here. 

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

WTI: $88.30.

Wednesday, October 4, 2023: 12 for the month; 12 for the quarter, 582 for the year
39689, conf, WPX, Augustus 8-26H,
38273, conf, Hess, BB-Olson-150-95-09H-5
38037, conf, Petroshale, Tahu 2TF2H

Tuesday, October 3, 2023: 9 for the month; 9 for the quarter, 579 for the year
36961, conf, WPX, Nero 8-26H,
39458, conf, CLR, Arthur 4-12H,
38990, conf, Hess, RS-Harstad-155-91-0433H-6,
38272, conf, Hess, BB-Olson-LW-150-95-08H-1,
38038, conf, Petroshale, Tahu 4kTFH,

RBN Energy: are government forecasts underestimating gas burn for power?

Government forecasts are predicting a sharp drop in natural gas demand in the power sector in the coming decades based on an expectation that the renewable capacity build-out will accelerate and displace other sources. However, forecasts in the past decade have consistently and severely underestimated gas burn for power. In today’s RBN blog, we consider the pitfalls of forecasting gas consumption in a world often focused on pushing a renewables-heavy generation stack.

Vern Whitten Aerial Photography -- Something For Everybody -- October 2, 2023

Locator: 45632ND.  

Link here. 

My favorite: the golden, autumn foliage.

Vern Whitten Photography
www.vernwhittenphotography.com
(701) 261-7658

Be sure to take time to thank Mr Whitten and to visit his site. Mr Whitten has been incredibly generous sharing his photos with the blog for the past decade! Wow, the past decade! Possibly longer. 

Southern Surge -- Bill Clinton Gets It -- October 2, 2023

Locator: 45631POLITICS. 

Southern surge: Bill Cliniton "gets it." His recent comments will generate a lot of articles. Links:

• Austin: link here. His solution -- build more housing in Texas. Not so much in Democratic states like California (way too expensive); New Mexico (way too poor); Arizona (would make the state more purple). 
• New York City: link here. Says the Democrats are taking a big hit over this issue. Says permits to work in New York are taking too much time.
  

Peter Zeihan: I'm still waiting for him to weigh in on this. I can already guess how he views this.

WTI Drops Well Below $90; One New Permit; Six Permits Canceled; Five DUCs Reported As Completed -- October 2, 2023

Locator: 45630B.   

 Copper: prices, extreme contango; link here.

WTI: dips on soaring US dollar; profit-taking and demand worries.

US maintenance season: to lose 2.5 million bopd. Link here. 

OPEC oil production: grows for second month despite Saudi cut. Link here.

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

Active rigs: 32.

WTI: $88.82.

One new permit, #40232:

• Operator: Empire North Dakota
• Field: Starbuck (Bottineau County)
• Comments: 
• Empire North Dakota has a permit for a Wigeon well, confidential, SWSE 29-161-98. 
• to be sited 1495 FSL and 2208 FEL;

Six permits canceled:

• Enerplus: six Fort Berthold permits, Dunn County;

Five producing wells (DUCs) reported as completed:

• 27895, 1,234, CLR, Jersey FIU 12-6H1,
• 39293, 415, Petro-Hunt Dakota, Hot Rod 149-102-27B-26-2H
• 39301, 1,058, CLR, Skanchenko Federal 9-31H,
• 39302, 1,207, CLR, Skanchenko Federal 10-31H1,
• 39303, 759, CLR, MeadowlarkFIU 8-6H,

The Book Page -- October 2, 2023

Locator: 45629WHARTON.  

Wow, wow, just delivered. "Free delivery" and the books were "free," also. What a great country.

I've had to dispose of much of my library -- I simply ran out of shelves -- but now that I have a few empty shelves, I am re-building my library, as it were. I feel like the proverbial kid in a candy store.

I'm in my Edith Wharton phase, having just finished Hermione Lee's biography. My notes are here.

This is the Norton Critical Edition, c. 2003. Whenever possible, I tend to read the Norton Critical Editions first -- the introductions and the essays that generally make up half of the entire edition are incredible. I guess that's the real reason I buy the Norton books.

It's hard to believe but The Age of Innocence is set in 1875 -- only ten years after the end of the Civil War. Edith was born in 1862, in NYC, during the Civil war. She was brought to Europe by her parents when she was four years old, or thereabouts, and did not return to America until 1872, at the age of ten. She wrote Innocence during the years following the end of WWI where she was instrumental in helping refugees from the war, particularly those from Belgium. The book was published in 1920 and was written to capture how she remembers Old New York, the working title for the book. This book won her the Pulitzer Prize; Wharton was the first woman to have won the Pulitzer Prize. She was nominated, but never won, the Nobel Prize for literature on three different occasions, first in 1920, if I recall correctly.

I am incredibly excited to see how Edith Wharton remembers "old New York," just a few years after the end of the US Civil War. 

Wharton was a generation (or more) than the great women writers of the 18th and 19th centuries, and before the great writers, male and female, of the 20th century, to include Virginia Woolf and F. Scott Fitzgerald. She met Scott Fitzgerald; I don't recall if she met Virginia Woolf. Edith died in 1937; Woolf committed suicide by drowning in 1941, unable to live through yet another European war.

On another note, for some reason -- and I've long forgotten what/why -- I had a renewed interest pterosaurs a few months ago. I did a fairly exhaustive search over at Amazon to see which might be the "best" book. Way too many to choose from. This is the one I selected. A reminder: pterosaurs are reptiles, not dinosaurs. Dinosaurs only lived on land: they did not fly and they did not return to the ocean.

Running The Numbers: Rivian — October 2, 2023

Locator: 45628EVS.

The Wall Street Jounal.

Link here.

Rivian Automotive set out to build the ultimate electric vehicle for American consumers—a pickup truck with sports-car handling and a dizzying array of features.

Engineers gave the truck a beefy underlying metal frame for higher crash-test ratings and one of the most complicated suspension systems on the market for a smoother ride on- and off-road. It can go from zero to 60 miles an hour in 3 seconds. Rivian added pop-out flashlights stored away in the doors and a portable Bluetooth speaker.

All that comes at a cost. Rivian vehicles sell for over $80,000 on average. Yet they’re so expensive to build that in the second quarter the company lost $33,000 on every one it sold. That’s roughly the starting price of a base model Ford F-150.

When Rivian launched onto the electric-vehicle scene, industry watchers expected it to beat rivals to market and become the “Tesla of trucks.” Investors piled into its splashy market debut in 2021, when it raised nearly $12 billion in cash and became the U.S.’s largest IPO in years. For a short while, Rivian was worth more than Ford Motor and General Motors.

In two years, Rivian has blown through half of its $18 billion cash pile, in part because it struggled to master the nuts and bolts of manufacturing. While production is now growing and losses have narrowed, Rivian still loses money on its vehicle sales. In an industry known for narrow margins and tough competition, Rivian pays too much for parts and produces too few vehicles to cover its costs.

The company currently sells three models: the R1T pickup truck, the R1S SUV and an electric delivery van for Amazon.com. Rivian’s truck and its SUV, which share many parts, accounted for 83% of its August sales, according to Motor Intelligence data.

As of the end of September, Rivian had only built a total of around 65,000 vehicles, a fraction of what other car companies manufacture at a single U.S. factory in a year. Even with output increasing, Rivian’s factory in Normal, Illinois, is operating at less than one-third of its build capacity. It aims to produce 52,000 vehicles this year.

And more:

Some, like fellow EV truck startup Lordstown Motors, have already gone bust. Lucid Group is struggling to stem heavy losses on sales of its first model, the luxury Air sedan. Fisker has only begun selling vehicles but has encountered launch delays and cut its production outlook.

The entire article is a must-read. And 534 comments, so far!! Including this one:

The Rivian electric pickup is a joke! It weighs 7,000 lbs, costs $70,000, requires a huge battery, takes two days to charge on a level 1 home charger, and wears out its 275/55R21 front tires in 10,000 miles. So why is this joke being subsidized by Biden?

The Kavanaugh Court — October 2, 2023

Locator: 45627SCOTUS. 

 

Considering the source, some might want to take this article with a grain of salt but it’s worth a read.

Link here.

On another note: I’m impressed with the mainstream media’s general inclination to give Donald Trump the benefit of the doubt with his (Trump’s) recent public comments.

More on this later, perhaps.

Fish oil supplements. Link here.

Nvidia -- The Fourth Industrial Revolution -- October 2, 2023

Locator: 45627NVIDIA. 

30-second elevator speech: CPUs will still be the heart of the computer but it will be the GPUs that will be the real heroes. If the CPU is the quarterback, the GPUs are the tight ends, the wide ends, the back field runners, and the placekickers. GPUs will be the "special teams." LOL Seriously.

30-second elevator speech: for NASCAR aficionados, the CPU will be the driver that gets all the glory but the GPUs will be the crew chief, the pit crew, the go-fers, and the garage mechanics.

From the Nvidia website:

In a talk, now available online, NVIDIA Chief Scientist Bill Dally describes a tectonic shift in how computer performance gets delivered in a post-Moore’s law era.

Each new processor requires ingenuity and effort inventing and validating fresh ingredients.

That’s radically different from a generation ago, when engineers essentially relied on the physics of ever smaller, faster chips.

The team of more than 300 that Dally leads at NVIDIA Research helped deliver a whopping 1,000x improvement in single GPU performance on AI inference over the past decade.

It’s an astounding increase that IEEE Spectrum was the first to dub “Huang’s Law” after NVIDIA founder and CEO Jensen Huang. The label was later popularized by a column in the Wall Street Journal.

1000x Leap in GPU Performance in a Decade

The advance was a response to the equally phenomenal rise of large language models used for generative AI that are growing by an order of magnitude every year.

“That’s been setting the pace for us in the hardware industry because we feel we have to provide for this demand,” Dally said.

In his talk, Dally detailed the elements that drove the 1,000x gain.

The largest of all, a sixteen-fold gain, came from finding simpler ways to represent the numbers computers use to make their calculations.

The New Math

The latest NVIDIA Hopper architecture with its Transformer Engine uses a dynamic mix of eight- and 16-bit floating point and integer math. It’s tailored to the needs of today’s generative AI models. 

Separately, his team helped achieve a 12.5x leap by crafting advanced instructions that tell the GPU how to organize its work. These complex commands help execute more work with less energy.

As a result, computers can be “as efficient as dedicated accelerators, but retain all the programmability of GPUs,” he said.

In addition, the NVIDIA Ampere architecture added structural sparsity, an innovative way to simplify the weights in AI models without compromising the model’s accuracy. The technique brought another 2x performance increase and promises future advances, too.

Dally described how NVLink interconnects between GPUs in a system and NVIDIA networking among systems compound the 1,000x gains in single GPU performance.

No Free Lunch

Though NVIDIA migrated GPUs from 28nm to 5nm semiconductor nodes over the decade, that technology only accounted for 2.5x of the total gains, Dally noted.

That’s a huge change from computer design a generation ago under Moore’s law, an observation that performance should double every two years as chips become ever smaller and faster. 

Those gains were described in part by Denard scaling, essentially a physics formula defined in a 1974 paper co-authored by IBM scientist Robert Denard. Unfortunately, the physics of shrinking hit natural limits such as the amount of heat the ever smaller and faster devices could tolerate.

************************
Nvidia -- The Wall Street Journal

Link here.

From the linked article:

During modern computing’s first epoch, one trend reigned supreme: Moore’s Law.

Actually a prediction by Intel Corp. co-founder Gordon Moore rather than any sort of physical law, Moore’s Law held that the number of transistors on a chip doubles roughly every two years. It also meant that performance of those chips—and the computers they powered—increased by a substantial amount on roughly the same timetable. This formed the industry’s core, the glowing crucible from which sprang trillion-dollar technologies that upended almost every aspect of our day-to-day existence.

As chip makers have reached the limits of atomic-scale circuitry and the physics of electrons, Moore’s law has slowed, and some say it’s over. But a different law, potentially no less consequential for computing’s next half century, has arisen.

I call it Huang’s Law, after Nvidia Corp. chief executive and co-founder Jensen Huang. It describes how the silicon chips that power artificial intelligence more than double in performance every two years. While the increase can be attributed to both hardware and software, its steady progress makes it a unique enabler of everything from autonomous cars, trucks and ships to the face, voice and object recognition in our personal gadgets.

Between November 2012 and this May, performance of Nvidia’s chips increased 317 times for an important class of AI calculations, says Bill Dally, chief scientist and senior vice president of research at Nvidia. On average, in other words, the performance of these chips more than doubled every year, a rate of progress that makes Moore’s Law pale in comparison.

Covid-19: Nobel Prize Winners -- October 2, 2023

Locator: 45626COVID.

Updates

October 5, 2023:  

The WSJ article on the Nobel Prize. One word: baloney.  Unless he's a fly on the wall, he has no clue what the Nobel Prize committees are doing.

The WSJ article on the Nobel Prize. Outstanding article. 

 

For me? The big takeaway — how incredibly amazing this country is. It would be interesting to see the long list of folks nominated for the various “science” Nobel Prizes.

The Fields Medal (for Math) is awarded every four years. It was last awarded last year, 2022. Of the last twenty winners, only seven were “from the US.”

The Nobel Prize for literature this year went to a Norwegian.

“Research" in math and literature, unlike research in physics, medicine, and chemistry, do not require any lab support. Research in the sciences does not require lab support per se, but generally speaking, lab support is needed to prove or disprove purported advances in PM&C.

Original Post

Global:

• Tech: Israel. 
• Medicine: US. 2023 Nobel — both from Penn State.
• Physics: US. 2023 Nobel — one of three — Ohio State.
• Chemistry: US
• Literature:
• Peace: woke

Biggest story today: Nobel Prize in medicine. It's good to see some standards still hold. This was an incredibly important "statement."

Katalin Karikó (Hungarian: Karikó Katalin; born 17 January 1955) is a Hungarian-American biochemist who specializes in RNA-mediated mechanisms, particularly in vitro-transcribed mRNA for protein therapies. Karikó laid the scientific groundwork for mRNA vaccines against major obstacles and scepticism in the scientific community. Karikó co-founded and was CEO of RNARx from 2006 to 2013. Since 2013, she has been associated with BioNTech RNA Pharmaceuticals, first as a vice president and promoted to senior vice president in 2019. She was also an adjunct professor at the University of Pennsylvania. She later became a professor at the University of Szeged in Hungary.

Drew Weissman (born September 7, 1959 is an American physician-scientist and Nobel Prize laureate best known for his contributions to RNA biology. His work, which won him a Nobel Prize in medicine in 2023, helped enable development of mRNA vaccines, the best known of which are those for COVID-19 produced by BioNTech/Pfizer and Moderna. Weissman is the inaugural Roberts Family Professor in Vaccine Research, director of the Penn Institute for RNA Innovation, and professor of medicine at the Perelman School of Medicine at the University of Pennsylvania (Penn). He and his research colleague Katalin Karikó have received numerous awards including the presigious Lasker-DeBakey Clinical Medical Research Award. He received the 2023 Nobel Prize in Physiology or Medicine together with Karikó "for their discoveries concerning nucleoside base modifications that enabled the development of effective mRNA vaccines against COVID-19."

Why was this so important? For our children: the iGen, the Z gen, the Alpha Gen. Especially our daughters and granddaughters.

From my "Covid library." I have to go back to these two books.

Moonshot: Inside Pfizer's Nine-Month Race to Make the Impossible Possible, Dr Albert Bourla, Chairman and CEO, Pfizer, c. 2022. 

The Vaccine: Inside The Race to Conquer the Covid-19 Pandemic, Joe Miller with Dr Özlem Türeci and Dr Uğur Şahin, c. 2022. Link here.

EVs -- Deliveries -- Forecast -- October 2, 2023

Locator: 45625AUTOS.

Pick-up trucks: by state -- Texas does not make top ten list -- link here: 

Prediction: one hundred percent of all Americans in the upper 10% income bracket will own/lease three cars/pickup trucks, one of which will be an EV by 2035. One hundred percent of all Texans in the upper 10% income bracket will have a Ford pickup truck by 2035.

Rivian: in round numbers, Rivian will ship about 50,000 vehicles in calendar year 2023. Link here. Here are the numbers. OMG.

Tesla: deliveries miss estimates. In round numbers Tesla shipped about 435,000 vehicles in 3Q23.

*************************
Asteroid City

One of the most interesting things about Asteroid City: so little foreshadowing. And something almost no one else has commented on.

Let's google my statement that there was so little foreshadowing in Asteroid City:

When I sat down to see his latest film "Asteroid City," I was very curious how the credits would look, given that 21 names appear on the film's poster alone.

What I loved about the opening credits is that every actor is billed along with their character name. One, in particular, stood out to me. It was in the ending "and" position, but it was not given that credit. It simply said, "Jeff Goldblum as the alien."

You see those five words together and become immediately jazzed. Not only was I anxious to see one of our most idiosyncratic performers play a Wes Andersonian alien, I was surprised they let us know that information so soon into the movie.

Also, from the review:

Renowned acting teacher Konstantin Stanislavski once said, "There are no small parts, only small actors," and Wes Anderson understands that better than almost any other filmmaker working today.

On another note, irony: very little time on screen, big actor, the movie was all about Marlon Brando and yet he barely appeared onscreen, huge role, small onscreen presence. Apocalypse Now.  Director unable to "control" Brando. Wes Anderson completely controls his productions.

Surge -- October 2, 2023

 Locator: 45624TECH.
 Locator: 45623NVDA.

Gasoline Prices -- Los Angeles -- October 2, 2023

Locator: 45623LA.

Link here.

CATL, EVs, And All That Jazz -- October 2, 2023

 Locator: 45622EVS.

Update -- Much More To The Story

Link to Forbes.

The chairs of the three most powerful House committees have threatened to subpoena Ford if it does not provide documents detailing a deal with China’s CATL battery maker. Ford cannot ignore this request, and it might even force them to back out of the deal. It’s already pressed pause on a new $3.5 billion battery plant in Michigan.

It’s not clear what Ford will do after this, but the experience illustrates how turbulent the electric vehicle (EV) transition might be.

In 2021, President Biden announced an executive order that directs government policies to ensure 50% of all new passenger vehicle sales are electric by 2030. This year, the administration proposed that the figure increase to two-thirds by 2032. These are ambitious targets—the electric vehicle (EV) share of the new vehicle market was just 7% for the first half of this year. Getting from 7% to 67% by 2032 in a commercially viable way is going to take a massive reallocation of people, capital, and resources.

Such a monumental transition would be challenging even in the best of times. Today’s EVs are powered by lithium-ion batteries. Coupling and growing the two industries together comes with many challenges, including investing in new capital equipment, forming new business ventures, licensing the know-how, and ensuring they have the right people in place.

Mining and processing the raw materials for these batteries so far has largely been done outside of the United States. Ford found a way to domestically manufacture EVs by licensing battery cell technology from China’s CATL, a world leader in lithium iron phosphate battery technology. The arrangement was announced in February 2023 and allowed for Ford’s wholly owned subsidiary in Michigan to manufacture the battery cells using CATL’s LFP battery cell knowledge and services. In other words, Ford will control a 100% ownership stake in the plant while licensing the know-how.

Now, congressional concerns over CATL’s ties to the Chinese Communist Party have led to the subpoena, and Ford has halted work at the Michigan battery factory. It’s unclear if they will resume.

Original Post -- Some Weeks Ago

Ford halts construction of $3.5 billion EV battery plant in Michigan:

• why Barron's says this is a big, big deal; link here; link here, also;
• "Michigan" can't be happy
• how many union jobs lost or "put on hold"?
• Ford re-thinking this EV thing?
• UAW - Ford, GM, Stellantis -- circular firing squad
• UAW planned / plans for months (plural)-long strike and will gradually expand

Monday, Monday -- October 2, 2023

Locator: 45621B.

First things first: the other day I mentioned that Barron's seemed to be down. It is / was not down. Like many other sites, Firefox can no longer access Barron's. At least on my Apple laptop. Firefox cannot access most NDIC webpages either.

Best NFL game over the weekend: on so many levels -- Chiefs vs Jets. On First Take, this game took priority over the Bills, Dolphins, and Dallas.

Nobel: prizes go to two scientists for mRNA vaccines. Link here.

Strike: apparently UAW and Mack reach agreement. Link here.

Saudi budget deficit: despite higher prices. Link here and here. And, here.

Saudi Arabia has lowered its growth forecast and expects to post a budget deficit this year rather than an earlier projected surplus, a preliminary budget statement showed on Saturday.

The largest Arab economy expects real gross domestic product to grow by 0.03% this year, the document released by the ministry of finance showed, compared with a previous forecast for growth of 3.1%.

The document projected a budget deficit of 2% of GDP, compared with an earlier projection for a 0.4% surplus.

Total revenue is now expected to be 1.180 trillion riyals ($314.64 billion) and government spending is forecast to be 1.262 trillion riyals. An earlier projection put revenue this year at 1.130 trillion riyals and spending at 1.114 trillion riyals. Reuters.

The current price rally in oil will help the kingdom rake more money in, with budget revenues seen at 1.18 trillion riyals, or $310 billion, up from an earlier projection of 1.13 trillion riyals, or $300 billion. Still, the updated revenue figure is substantially lower than last year’s revenues, which came in at 1.268 trillion riyals, equal to about $340 billion. Charles Kennedy.

Spending for the current financial year, meanwhile, has been revised upwards, widening the budget deficit gap.

The big story line for me: for how much influence Saudi Arabia has around the world, I had forgotten how incredibly small its annual budget was.

For the US: total revenue around $330 billion.

UAW strike, link here:

Friday, the UAW expanded its strike against the auto makers, the second expansion after walking out at three facilities, one at each auto maker, on Sept. 15.

“The UAW strike debacle continues in 313,” wrote Wedbush analyst Dan Ives, referencing the area code for Detroit. It’s “like watching a slow moving car crash.”

He estimates that the union’s demand can add $3,000 to $5,000 to the price of an electric vehicle manufactured by Ford (ticker: F), GM (GM), or Stellantis (STLA). That is an alarmingly high number. And it’s one that is likely too high.

Ford CEO Jim Farley didn’t completely discount the number when asked to comment on a Friday media call, pointing out that worst-case scenarios were based on the union’s initial demands, which include wage increases in the range of 40%, better retirement benefits, and a 32-hour work week (while still getting paid for 40 hours).

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Back to the Bakken

WTI: $91.66.

Tuesday, October 3, 2023: 9 for the month; 9 for the quarter, 579 for the year
36961, conf, WPX, Nero 8-26H,
39458, conf, CLR, Arthur 4-12H,
38990, conf, Hess, RS-Harstad-155-91-0433H-6,
38272, conf, Hess, BB-Olson-LW-150-95-08H-1,
38038, conf, Petroshale, Tahu 4kTFH,

Monday, October 2, 2023: 4 for the month; 4 for the quarter, 574 for the year
39690, conf, WPX, Marcus 8-26H,
39459, conf, CLR, Arthur 12-5H1,
38033, conf, Petroshhale, Tahu 2MBH,

Sunday, October 1, 2023: 1 for the month; 1 for the quarter, 571 for the year
39360, conf, CLR, Hegler 3-13HSL1,

Saturday, September30, 2023: 123 for the month; 325 for the quarter, 570 for the year
39566, conf, Kraken, Cass 4-9 5H,
39460, conf, CLR, Hegler 4-13H,
38989, conf, Hess, RS-Harstad 155-91-0433H-6,
38835, conf, Enerplus, Hay Draw 148-97-27-34-3H, see these spectacular wells here;

RBN Energy: gas-focused producers' strong, profitable reserve growth tested by recent price plunge.

U.S. natural gas producers had a rough start to 2023, with spot prices dipping to just above $2.15/MMBtu this past spring. But optimism was abundant in midyear earnings calls on expectations that demand will eventually soar, driven largely by a near-doubling of U.S. LNG export capacity by the end of the decade. A  key question, however, is whether E&Ps have built the inventories of proved reserves to support future production increases to meet that demand. In today’s RBN blog, we analyze the crucial issue of reserve replacement by the major U.S. Gas-Weighted E&Ps.

Before we began this four-part series, we asked, “How much longer can shale support U.S. oil and gas production?” In Say You’ll be There, we said that Energy Information Administration (EIA) estimates of proved reserves, which are assumed to have at least a 90% chance of eventual recovery under existing economic and operating conditions, imply about 10 years of remaining volumes of crude oil and condensate and 10-17 years of natural gas in the major producing basins. Critical to maintaining or expanding these inventories is the rate at which U.S. producers are replacing the reserves they produce. Equally important — especially in an era of heightened scrutiny over capital efficiency — is the price paid to achieve that replacement rate.