No Good Deed Goes Unpunished -- June 22, 2018

From SeekingAlpha:

• Sempra Energy's  request to build a 47-mile gas pipeline known as Line 3602 in San Diego County is rejected by the California Public Utilities Commission
• SRE's San Diego Gas & Electric had argued that the pipeline was necessary to replace an old line that was constructed nearly 70 years ago, but a CPUC administrative law judge last month recommended commissioners reject the utility’s plan
• the CPUC backed the administrative law judge's findings, which is says were based on the utility’s projections for natural gas supply and its own natural gas reliability standards

Apparently in some earlier assessment, SRE was reassuring its customers and its shareholders that "things" were okay. No good deed goes unpunished.

California deserves better. You can't have it both ways.

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The Road To Williston

This is what happens when folks:

• don't want to tackle really serious problems; a meeting is only so long;
• run out of things to do and run out of ways to spend taxpayers' money; and/or
• want to appear like they are doing something 

By the way, unlike much of America, Williston has incredibly good sidewalks -- at least in the "old" part of Williston that I know well. "No one" walks on those sidewalks and between the sidewalks and the parking "lanes," there is more than enough room to bike. At least from my narrow, cynical, curmudgeonly mind. [Wow, I'm glad my "comments" section doesn't work.]

I got a huge chuckle out of this. Mind you, I'm a huge fan of bicycling. I'm not sure I'm a fan of bicycle lanes anywhere in urban traffic.

Having said that: they say there are two seasons in North Dakota -- winter and August. Or maybe, winter and the construction season (August). Not exactly bicycling weather seasons, except maybe August.

During the entire time I was growing up in Williston, and the many times I have been back there as an adult, I have seen exactly three bicycles on Main Street.

The screen shot says these would be "new" bike lanes. That suggests there are bike lanes already there but the city would like to put "new" bike lanes in place of the "old" bike lanes. I'm probably misreading that. More likely, the city "wants to put in bike lanes on Main Street."

Indecision Delays IPO Launch -- January 28, 2018

From The Wall Street Journal: the Aramco IPO s stalled by indecision over where to list. Saudi Arabia’s state-owned oil producer continues to weigh risks of listing in New York, London, Hong Kong or locally.

Most likely it's due to all those "transparency" rules over at the NYSE.

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The Road To New England

Updates

February 2, 2018: New Hampshire site evaluation committee votes unanimously to deny the "right-of-way."

Original Note

 
A reader sent me this note:

• executive summary, in a couple of weeks, a crucial decision will be made by small, New Hampshire board (Site Election Committee)  on whether or not to allow Northern Pass transmission line to be built through state
• the 1,000 Mw - to be sourced by Quebec Hydro - was chosen days ago by Massachusetts to be supplier to fulfill "renewable' mandates
• problem? not yet built nor even approved. And the approval is far from certain as ALL the juice will be sent on power lines despoiling NH mountainsides for Mass' consumption
• if the line is approved, court fights will immediately ensue
• if the line is approved, it will be a near miracle to be in service late 2020, a full year AFTER Pilgrim nuke is retired
• Bottom line is NE is entering 'interesting' times.

So, there are two problems here:

• decision yet to be made; tea leaves not particularly helpful; in New England many decisions on energy seem capricious
• at least a year, maybe more, for a huge energy gap

Map and story here, final vote delayed until March 30, 2018, so we'll see in a couple of months. 

Background, from UtilityDive:

• Massachusetts chose the Northern Pass transmission project to supply 9,450,000 MWh of renewable energy annually to the state's utilities to meet goals established in the Global Warming Solutions Act passed two years ago.
• Northern Pass, owned by Eversource Energy, is developing a 192-mile transmission line that would move power from Hydro-Quebec dams in Canada to a substation in Deerfield, N.H. Northern Pass will provide up to 9.4 TWh of hydropower annually, while also reducing  wholesale energy costs, project backers say.
• The transmission line will begin at the Canadian border in Pittsburg, N.H., and will extend 192 miles to the point where it connects to the New England electric grid. Sections of the line will also be buried along roadways to reduce the impact of views around the White Mountain National Forest. Contract negotiations are expected to be completed by March 27 and sent to regulators by April 25 for review, according to the state's timeline.

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The Road To California

The California PUC suggests the natural gas crisis is so acute that utilities should place a moratorium on new natural gas hook-ups for commercial and industrial customers. Wow, this will encourage new commercial and industrial customers to relocate and/or expand in California. By the way, look at the trend in the cost of energy in southern California.

Making America Great Again, T+3 -- January 24, 2018

Updates

Later, 4:17 p.m. CT: beating a dead horse (the Campbell Soup story below). Don sent me another article on this story. My thoughts, not ready for prime time:

I'm beginning to think that this was more about good-old fashioned consolidation.

Four plants with excess capacity. Close one plant and consolidate to three plants. Just closing one-fourth of all your plants and still meeting supply/demand seems to be the right thing to do. Folks are simply buying less Campbell Soup.

Campbell Soup is pretty old school. I doubt millennials are buying it. I still enjoy Campbell soup but I'm probably a dying breed. But I find Campbell Soup incredibly expensive -- I remember cans used to be below a dollar. Now they run about $1.79 here; occasionally go on sale to $1 if bought in bulk.

Making Campbell Soup is actually rather time-consuming -- generally it has to be cooked on the stove after scooping it out of the can; alternative like ramen can be microwaved. Clean-up is a pain if cooked on the stove; microwaved ramen container can be thrown in the trash.

The Toronto was targeted for closure as far back as 2015, I think the article said. If I were to re-do the post, or update the post, I would say that this has nothing to do with energy or taxes or healthcare, per se. Simply consolidating from four factories to three factories because way too much capacity. 

But why did they consolidate by closing that Canadian store? Ask Trump.

Original Post

 

From Bloomberg, Campbell Soup is shifting Canadian production to its US factories. When I saw this I immediately thought that it was due to a) energy; and/or, b) taxes.

But I'm not exactly sure how taxes for a company headquartered in the US with production facilities elsewhere are affected by the Trump tax bill. So, for now, let's call that a wash.

But energy: that's a no-brainer. Anyone following the blog knows that Canada has a huge energy problem despite being energy-rich. (Venezuela is the best example of an energy-rich poor country.)

But there needs to be something else.

Let's look at an earlier WSJ headline/story that I posted earlier today:

ObamaCare: healthcare premiums rise well ahead of healthcare costs for employer-provided health insurance. Huge story over at WSJ. 

One would think that socialized medicine in Canada would be a better deal for corporations but one wonders if corporations in Canada don't pay a disproportionate cost of health insurance premiums for their employees. I don't know.

On the other hand, the shift in production may have absolutely nothing to do with energy, taxes, or healthcare premiums.

Most likely it is simply over-capacity. The article suggests that US facilities can easily make up the difference caused by shifting production from Canada to the US. But it is noteworthy, they didn't close a US factory (due to over-capacity) and shift that production to Canada.

All one can say for certainty about this is this: it's less expensive to make soup in the US and then send it to Canada.

Gee, I wonder if Trudeau might put a 50% tariff on US soup? LOL.

By the way, speaking of energy, if your business has a high-energy requirement, where in the US would you rather be?

That's a troubling trend in southern California, by the way.

Huge Natural Gas Draw In July; Last Time This Happened: 2006 -- Eleven Years Ago -- Tuesday Market News -- Nothing About The Bakken -- Yet -- August 9, 2016

Is something going on? We have the data but not the analysis. From PennEnergy: high natural gas-fired generation leads to rare summer net national weekly storage draw.

This is really cool. When I started the blog back in 2007, deleted it, and then started again in 2009, I knew nothing about natural gas and did not plan to blog about it. But a reader kept pestering me with natural gas data and I finally got the message: natural gas is important. Well, duh.

So, now I know a bit more about natural gas. Not much more, but a bit more. I do know something about natural gas storage and weekly "draw" data. So that's interesting.

I'm glad the reader kept at it. Otherwise I might have blown past this story, but it seems to be a biggie. We have the data but not the analysis. Go to the link for the graphic. From the linked article:

Working natural gas storage inventories posted a rare summer net withdrawal of 6 billion cubic feet (Bcf) for the week ending July 29, 2016, according to EIA's Weekly Natural Gas Storage Report.

Record-high consumption of natural gas for electric power generation drove this withdrawal.

Although withdrawals in the summer are not unprecedented, and happen regularly in the South Central storage region, the last time a net withdrawal in July occurred on a national basis was in summer 2006.

This net withdrawal brings total inventories to 3,288 Bcf, or about 16% higher than the previous five-year average (2011–15).

During the current injection season, net injections had already been much lower than the previous five-year average for almost every week. This trend reflects an unusually high inventory level at the start of the injection season, high power burn, and slightly lower natural gas production, which has recently fallen below year-ago levels. Following a warm 2015–16 winter, inventories headed into the injection season were at record high levels. Despite lower injections, and a net withdrawal this week, inventories are still substantially higher than the five-year average and year-ago levels.

Some data points:

• US economy not particularly robust, so that is probably a "wash" when trying to explain the drop; although the contributor said natural gas demand was due to increase in electricity demand, no numbers were provided for this year or for 2006. [In fact, the EIA has not posted the numbers for June or July, 2016 - a dynamic link.]
• US natural gas production is surging. Hmmmm....
• US natural gas delivery systems, infrastructure vastly improved over past couple of years. Hmmmm....
• coal plants closing faster than ever. Hmmmmmm.......
• wind and solar energy increasing. Hmmmmm....
• wind and solar energy require dispatchable natural gas "back-up" --- a big "hmmmmm......"
• atmospheric CO2 decreased month-over-month, July-over-June. Hmmm....
• I couldn't possibly run the numbers but everything I've read suggests General Electric and Warren Buffett's Berkshire are heavily weighted toward a) natural gas; and, b) a growing US economy.

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California Natural Gas

This is a most interesting graphic from the Obama administration. This is a graph that could be easily overlooked, and the data points are even more interesting:

Add these data points to the graphic above:

• the state mandates more non-dispatchable energy which requires more natural gas 
• the state is closing (or has closed) all nuclear reactor sites 
• the hottest part of the year is yet to come
• the tea leaves suggest demand for energy will increase in California
• the state is politically not particularly eager to produce more natural gas
• assuming natural gas operators are at least somewhat efficient, either the past five years were way out of whack, or this year, something else is going on (yes, I am aware of SoCal leak)
• California, like Hawaii, is an "energy island" but for different reasons

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The Market

Mid-day, the Dow 30 is flirting with new highs. On the NYSE, 230 new highs.

• BRK is nearing a new high
• MDU is inexplicably down a bit
• GE is flat
• SRE is down a bit
• T is very close to a new closing high

Early morning trading gets off to a good start: the S & P near record highs. NYSE:

• new highs: 188 -- none of which interest me, except perhaps PBR
• new lows: 5