Thursday -- December 26, 2013

Active rigs:

	12/26/2013	12/26/2012	12/26/2011	12/26/2010	12/26/2009
Active Rigs	186	186	197	162	78

RBN Energy: Part 2 of the two-part series on natural gas alternatives for the northeast.

For peaking customers, the jury is still out.  Although New England and Atlantic Canada desperately need additional supplies of natural gas on peak (natural gas prices at Algonquin Citygate for January are currently trading up to $20 /MMBtu over Henry Hub), distributed CNG and LNG likely do not make sense to solve a winter peaking shortage of the magnitude facing the region.  

The infrastructure costs for the CNG “virtual pipeline” delivery system reside largely in the trailers that deliver the product.  Mobilization of these trailers to serve significant on-peak requirements for only a few days or weeks per year would be very expensive per unit.  LNG may provide more peak capacity, but, like pipeline capacity expansions, the liquefaction, storage and vaporization costs associated with LNG would have to be underwritten by the market.  Given the reluctance of power generators in New England to make investments in natural gas infrastructure (the generators remain at risk for cost recovery of these investments), on-peak LNG infrastructure will likely not provide a viable solution given current market structure.

The Wall Street Journal

This is an incredible story; I've been posting short notes on this for the past wek or so. It's really quite incredible: a surge in web buying blindsides UPS, retailers.

A surge in online shopping this holiday season left stores breaking promises to deliver packages by Christmas, suggesting that retailers and shipping companies still haven't fully figured out consumers' buying patterns in the Internet era.

United Parcel Service Inc. UPS -0.29% determined late Tuesday that it wouldn't deliver some goods in time for Christmas, as a spike in last-minute shopping overwhelmed its system. "The volume of air packages in the UPS system did exceed capacity as demand was much greater than our forecast," a UPS spokeswoman said. Consumers were reporting missing deliveries from FedEx as well, although a FedEx spokesman said the company wasn't experiencing significant delays.

There are at least three story lines here for savvy investors.
After years of cuts in state subsidies and growing resistance to rising tuition, U.S. colleges and universities are starting to unwind decades of administrative bloat and back-office waste that helped push up costs and tuition. The State University of New York system shaved $48 million in the past two years by cutting unused software licenses and consolidating senior administrators. Disclaimer: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have read here. 

CarpeDiem has talked about this issue many, many time: colleges are trimming staff and administrative bloat. My hunch: the ObamaCare mandate pushed the colleges and universities into action. ObamaCare is not mentioned but if one reads between the lines, it's the 800-pound gorilla.

ObamaCare deadlines continue to slip. My hunch: insurers will use this confusion to deny claims.

Max Baucus to China; Mary Landrieu, a strong supporter of the oil and gas industry and a strong supporter of the Obama administration (talk about cognitive dissonance), to energy committee in the Senate.

Fake knee surgery as good as real procedure. My hunch: insurers will sent a fake reimbursement check.

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A Note To The Granddaughters

Flashback, March 29, 2006

I've really come to enjoy Blu-Ray this Christmas season. Reflecting on this, I recall a note I wrote some years ago when two DVD technologies were competing to be the ONE system:

HD-DVD vs Blu-Ray. Toshiba will release HD-DVD next month, and Panasonic will release Blu-Ray in September – battle lines have been drawn.

This will be very interesting to follow. 

To summarize: 

• HD-DVD (15 – 45 GB): Microsoft, Intel (moved to Blu-Ray, Jan 06), Universal, Paramount (switching back and forth) 
• Blu-Ray (50 – 100 GB): Panasonic, Apple, Porn industry (as of Jan 2006), Sony, Disney, Sharp, Fox, MGM, Time Warner, Dell, H-P. 

Note: Microsoft has delayed – again – its new operating system, called Vista – many issues. 

EU unhappy with MSFT trying to imbed Google-like and PDF (Adobe)-like applications – trying to shut down Google and Adobe!! 

But now, I wonder – MSFT is delaying Vista until after 2007 – I wonder if MST realized Blu-Ray most likely – and either Blu-Ray has to be added to Vista or at least thought about.

It was clear to me, back in March, 2006, who would come out winning: HD-DVD or Blu-Ray.

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The 2013 Salinger Biography

I have placed a review of this biography at Amazon.com.

I enjoyed Michael Clarkson's observations regarding same. 

New Jobless Claims Have Trended Higher Since September; Level Is Still Consistent With Job Growth

A quote from Reuters regarding the most recent data:

New jobless claims have trended higher since September, although economists say their level is still consistent with job growth.

This suggests to me there is still a lot of "fat" in the US economy, according to Reuters analysis. 

Reuters is reporting:

The number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly a month, a hopeful sign for the labor market.

Initial claims for state unemployment benefits decreased 42,000 to a seasonally adjusted 338,000, the Labor Department said Thursday.

Claims for the prior week were revised to show 1,000 more applications received than previously reported. Economists polled by Reuters had expected first-time applications to fall to 345,000 last week. 

The following information was in the earlier Reuters story. It has now been removed from the article: unemployment claims are now in the same range as in the "early days of the 2007 - 2009 recession." They replaced that with a graph, but the graph is for this year only, conveniently not going back to the beginning of the Obama administration.

Trillions of dollars in stimulus and we are not farther along than we were "in the early days of the 2007 - 2009 recession. 

But Reuters continues to spin the analysis:

New jobless claims have trended higher since September, although economists say their level is still consistent with job growth. Other labor market indicators have pointed to strengthening job growth.

Meanwhile:

The four-week moving average for new claims, which irons out week-to-week volatility, increased 4,250 to 348,000.

The most amazing thing is how volatile these numbers are. I've talked about this before.

Commercial Break Between First Quarter And Second Quarter Of ObamaCare

The first quarter has come to an end.

We're now in a commercial break before the start of the second quarter.

So, what will we be focused on going in the second quarter? Offside penalties, that is -- deadlines and confusion over the deadlines.

Fox is reporting:

The deadlines in the ObamaCare enrollment process have been a moving target. For those seeking coverage for the start of the new year, the deadline to sign up was originally Dec. 15. Then it was moved to Dec. 23, and then again to Dec. 24. Even after that deadline passed Tuesday night, the administration announced that those who ran into technical problems on HealthCare.gov could still seek an exemption and get covered by Jan. 1.

Then comes the next set of deadlines. After appeals from the Obama administration, major health insurers announced earlier this month that they would give people until Jan. 10 -- as opposed to Dec. 31 -- to pay their first month's premium and have coverage effective Jan. 1.

But many states running their own exchanges have their own deadlines for first payments. Some have more than one.

In Idaho, for instance, Blue Cross, Bridgespan and Select Health extended their deadline to Jan. 10. But PacificSource extended its deadline to Jan. 15. The deadlines in Washington, D.C., also depend on the insurer.

Other deadlines are earlier. California's and Rhode Island's is Jan. 6. Vermont's is Jan. 7.

It was noted that Mr Obama, already covered by the best government health insurance program out there, the military health program (Tricare), has "also" signed up for "Obamacare." He opted to enroll only himself, and did NOT elect to enroll his wife or his daughters (three more folks thrown under the bus, I guess). Not only that, he chose the least expensive plan, a "bronze" program that will cost "only" $400/month. It's hard to believe that's the least expensive plan for a healthy, non-pregnant, relatively young male.

Oasis Reports A Huge Well In Camp Oil Field -- The Bakken, North Dakota, USA

Wells coming off the confidential list Christmas Day (Wednesday) and Thursday:

Thursday, December 26, 2013

• 23103, 556, SM Energy, Johnson 3-6HS, Musta, t11/13; cum 3K 101/3;
• 23804, 786, Oasis, Lars 5792 13-3H, Cottonwood, t9/13; cum 12K 10/13;
• 24272, drl, HRC, Fort Berthold 147-94-3B-10-3H, McGregory Buttes, no production data,
• 24646, 3,284, Oasis, Pikes 5200 41-20B, Camp, t8/13; cum 62K 10/13;
• 25070, drl, Hess, EN-Hermanson a 155-93-3601H-4, no production data,
• 25124, 224, Oasis, Shafer 6093 13-1B, Gros Ventre, t8/13; cum 12K 10/13;
• 25396, 1,882, Oasis, Rizzo 5493 44-23T, Robinson Lake, t11/13; cum --
• 25496, 719, Slawson, Walleye (Federal) 1-12-11H, Sanish, t11/13; cum --
• 25665, drl, BR, Washburn 44-36TFH, Charlson, no production data,

Wednesday,  December 25, 2013

• 24450, 1,528, Whiting, Kummer 34-31-2H, Pleasant Hill, t6/13; cum 32K 10/13;
• 25746, 113, CLR, Christine 1-30 H1, Hanson, t8/13; cum 12K 10/13;

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24646, see above, Oasis, Pikes 5200 41-20B, Camp:

Date	Oil Runs	MCF Sold
10-2013	9914	13282
9-2013	23778	20491
8-2013	27627	18227

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Holiday retail numbers will be interesting to watch. 

The other day I posted that a US postal service carrier said that in his 30 years of working for USPS he had never seen such busy holiday season, delivering packages.

Now, this very, very interesting story: UPS says there system was overwhelmed with all the packages. Reuters is reporting:

A high volume of holiday packages overwhelmed shipping and logistics company UPS, the company said on Wednesday, delaying the arrival of Christmas presents around the globe and sending angry consumers to social media to vent. 

Amazon.com responded with an email to affected customers offering shipping refunds and $20 gift cards to compensate. A convergence of factors, including higher volume than expected and recent patches of bad weather, caused the delays, UPS spokeswoman Natalie Black said. The company projected 132 million deliveries last week "and obviously we exceeded that," Black said, without disclosing how many packages had been sent.

Meanwhile, another economic data point that surprised analysts. CNBC is reporting:

Perfect timing: just before Christmas, the market has been gifted with another strong economic number--this time, in the form of November durable goods. The figure was up 3.5 percent, was far better than the 2.5 percent gain expected, and even orders excluding defense were strong. 

That indicates capital goods orders are picking up. Because of an expiring research and development (R&D) tax credit, there is some question about whether capital goods orders have been "pulled forward," which would explain the strong rise. Regardless: this is the third decent number we have had, after November retail sales and personal spending were both better than expected.

The Nativity: From The Gospels of Matthew And Luke

Most Christmases, we begin our Christmas Day reading the Christmas story. Today, my wife handed each of us a brand new copy of Ruth Sanderson's The Nativity: From The Gospels of Matthew and Luke, c. 1993.

We each took turns reading one page. 

The pages are unnumbered, but the third page of text (about the sixth page):

In those days a decree went out from Caesar Augustus that all the world should be enrolled. And all went to be enrolled, each to his own city. And Joseph also went up from Galilee, from the city of Nazareth, to Judea, to the city of David, which is called Bethlehem, because he was of the house and lineage of David, to be enrolled with Mary, his betrothed, who was with child.

Ah, yes, to be enrolled. 

Merry Christmas to all.

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A Note to the Granddaughters

I received a number of books for Christmas.

More on those later but it was a great Christmas as far as books go, including a biography of J. D. Salinger, a biography of J. Paul Getty, and incredibly, the autobiography of J. Paul Getty, written at the request of editor-publisher Hugh Hefner back in the 1960s.

The first chapter of J. Paul Getty's autobiography is as good a description of what is going on in the Bakken as any could hope to find. Nothing is new under the sun. 

This is my Japanese mother-in-law's lemon tree. It has been producing lemons at least since 1975 when I met my wife-to-be.  It produces lemons throughout the year. We get so many we give them away to local delis to be used in their recipes calling for lemons.