Wind Energy, Turbines, Libya, and Oil Price Conspiracies

Updates

March 2, 2011: One of the points I was trying to make below was finally voiced in words that no one could misunderstand: Mississippi Governor Haley Barbour says the administration favors high oil prices.  The second point: for those following the high speed railroad story, ask who will build the high-speed electric locomotives, and then ask who is the administration's White House economic adviser. Answer at bottom of the this post.

Original Post

I have to flesh this out later, but while I cogitate on this, you all may want to spend some time connecting the dots.

• WTI price of oil: jumps 9.2 percent in one day; approaching $100/barrel; follows news in Libya
• Libya: accounts for less than 1.5 million barrels of oil/day; all of it goes to Europe (Brent, not WTI)
• Libya: accounts for less than 3 percent of global production
• XOM: accounts for about 3 percent of global production
• Saudi Arabia: everyone says Saudi can easily make up the difference if Libya is down for the long term
• The Bakken: estimates are that North Dakota could produce 1 million barrels of oil/day by 2015
• Link to the top wind energy turbine companies worldwide
• Recent wind energy turbine sales: Norway and Sweden to get giant GE turbines; "giant" was their word, not mine
• The administration's new economic czar is the CEO of GE, Mr Jeffrey Immelt
• I seem to remember an old adage, "what's good for GM, is good for America."

Whenever my students ask me a question I cannot answer or if they ask me a question that I can answer, but then the follow-up question is "why," I tell them two things:

• Follow the money
• Google it

I remember when I first started this blog, I remember reading many other blogs that opined that the Bakken was being "hyped."  Of course, that's in the eye of the beholder, but when I see the anxiety caused by "losing Libya" with a piddly 2 million bopd, and then seeing estimates of 1 million bopd coming out of the Bakken in a couple of years, it should give pause with regard to one's thinking exactly how important the Bakken, the Niobrara, and the Eagle Ford are.

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Answer to trivia question: it is my hunch that GE will make the electric locomotives for high-speed rail advocated by the administration. The administration's economic czar is the GE/CEO.

DNR/Encore -- A Bakken Player -- Reports Earnings Tripled

Earnings release here.

Unless there are "devil in the details" issues, it looks like a very, very good report.

Fourth quarter 2010 net income was $10.4 million, or $0.03 per basic common share, as compared to $3.5 million, or $0.01 per basic common share in the fourth quarter of 2009.

As folks will remember, Denbury acquired Encore, a big player in the Bakken, in the last year or so.

Denbury may be the premier mover and shaker when it comes to enhanced oil recovery which has yet to be proved workable in the North Dakota Bakken.

I believe I read that EOR is being used in the Alberta Bakken with success. If I have time, I will look for the link.

And Folks Wonder Why WTI Crude Went Up Nine (9) Percent in One Day

The talk on the morning talk shows following the nine (9) percent rise in oil prices over the weekend focused on Libya, a country from which the US gets no oil. The "talking heads" never mentioned a few facts closer to home that possibly, just possibly, might have contributed to the sudden spike.

I repeat myself:

• Alaska pipeline running under capacity ... any less, the pipeline will have to shut down ...
• BP and Shell both deferring any more drilling off Alaska ...
• "Permitorium" continues in the Gulf of Mexico ...
• EPA regulations hanging over domestic drilling ... like the sword of Damocles ...

What is interesting is that no one on the national stage is able to connect the dots.

Even "the face of the Bakken boom" is concerned that North Dakota leaders may not be thinking strategically.

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(Note: Libya produces about 1.5 million barrels/oil per day. With infrastructure in place, analysts estimate North Dakota could produce 1 million barrels/oil per day by 2015. According to CNBC, Libya "controls" three [3] percent of the world's total oil reserves/production. The fear of losing three percent of global production resulted in a price spike. That speaks volumes. Can  you imagine where the price of oil would go if the EPA shut down drilling in the US?)

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It's possible I missed someone mentioning the US energy policy (or lack thereof), but I doubt it. I was watching MSNBC, FOX, and CNBC.

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Note: minutes after posting the above, I was sent this article on "Spare Capacity Theory" from SeekingAlpha.

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With every new report on CNBC or MSNBC, the amount of oil that Libya has historically shipped has been dropping. First we were told as much as 2 million bopd; then we were told 1.8 million bopd. I thought 1.5 million bopd was the right number and now "they" say that the Saudis will have no trouble meeting the 1.2 million bopd gap caused by the Libyan disruption. We're now down to just 1.2 million bopd -- and all that oil goes to Europe, none to America.

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Wind energy ideologues see this spike in the price of oil as wonderful news. This may explain the lack of any sense of urgency by the administration. Something has to explain the lack of urgency and I can't figure it out, but ideologies may be the driving factor. The new White House economic czar has a huge interest in success of wind turbine business.

Medical Insurance Costs

From the Billings Gazette:

A new federal health care plan with no exclusion for "pre-existing conditions" offers insurance premiums significantly less expensive than current plans.

Under the Wyoming Health Insurance Pool, a 65-year-old resident living alone making less than $27,225 would have to pay $918 a month for a plan with a $5,000 deductible. But the new federal plan offers premiums that are far cheaper: A standard-option plan with a $2,000 in-network deductible would cost a 65-year-old Wyoming resident $403 a month.

Back-of-the-envelope calculations: 12 x $403 = $4,836 + $2,000 = $6,836/$27,225 = 25.11% of one's pay (the article did not say whether the $27,225 was net or gross).

“That is a stunningly low premium, stunningly low,” said Jay Angoff, senior adviser to U.S Health and Human Services Secretary Kathleen Sebelius.

Somehow I don't see 25% of one's salary as "stunningly low" when one is living on the margin. 

The state premium, $918 with a $5,000 deductible (~ 60% of that salary), is incomprehensible.

Misspellings? It Happens. But "Williston?"

This from the Williston Herald, February 23, 2011, on a story about a regional water system:

"I think it's a win-win situation for everyone. It's just going to create a wonderful situation for northwest North Dakota," Rep. Gary Sukut, R-Williston, said. If the bill passes the Senate, the project would originate in Williston.

And so it goes.