Looking For A Handout -- GM -- March 8, 2018; I Need A Hero -- A Hercules To Fight The Rising Odds

Back on February 24, 2018, I predicted that US automobile companies would ask for an extension of tax credits for EVs (I suspect Trump will support the extension if he is concerned about putting Americans to work).

Well, here we go: in The WSJ yesterday, "GM CEO pushes for renewed tax breaks on electric vehicles. She's right to ask for a renewal/extension/expansion but for the wrong reasons.

General Motors Co. Chief Executive Mary Barra is pressing Washington for an expansion of electric-vehicle tax credits, a plea that would help the company and rivals like Tesla Inc. sell battery-powered cars in an era of cheap gasoline and skepticism about alternative vehicles.

A handful of auto makers face the expiration of $7,500 income-tax credit that has applied to hundreds of thousands of electric-vehicle purchases since the Obama administration established the offer. GM has used the incentive to bring the tab of its electric Chevrolet Bolt to under $30,000.

GM is expanding production of the Bolt, but it will soon hit a sales cap that triggers the gradual expiration of the incentive for individual car companies that have sold 200,000 electric cars since the credit’s inception in 2009. 

I've already posted my 30-second elevator speech at the linked post above. I won't repeat.

Maybe some elevator music instead. No, I won't go that far.

Speaking of EVs, the February scorecard is complete. Note Nissan Leaf. I still think Chevy Volt/Bolt is going to be the short-term winner (short-term: 2016 - 2021); after that it's anyone's guess but either GM or Ford in the US; Volvo/Daimler worldwide (think Asia).

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Looking For A Handout? Looking For A Hero

Something tells me this song was not considered the theme song for the 90th Oscars presentation the other night.

Where have all the good men gone and where are all the gods? Where's the streetwise Hercules to fight the rising odds? Isn't there a white knight upon a fiery steed? Late at night I toss and I turn and I dream of what I need. I need a hero. I'm holding out for a hero 'til the end of the night. He's gotta be strong and he's gotta be fast.

Perhaps something for the US presidential campaign in 2020.

I Need A Hero, Bonnie Tyler

Small Spat Upending Europe's Power Grid -- AP -- March 8, 2018

It sounds like this article/story was written to some extent, "tongue-in-cheek." But I am absolutely astounded how "fragile" the European electricity grip appears to be.

When you read the linked article, imagine if an MDU/REC spat involving Tioga and Williston affected utility customers in New York City and Los Angeles, but apparently that's an appropriate analogy for what we are seeing in Europe.

The AP is reporting that European clocks slowed down, reported the wrong time, due to "a lag in the continent's power grid:

Millions of Europeans who arrived late to work or school Wednesday had a good excuse — an unprecedented lag in the continent’s electricity grid that’s slowing down some clocks.

The problem is caused by a political dispute between Serbia and Kosovo that’s sapping a small amount of energy from the local grid, causing a domino effect across the 25-nation network spanning the continent from Portugal to Poland and Greece to Germany.

“Since the European system is interconnected ... when there is an imbalance somewhere the frequency slightly drops,” said Claire Camus, a spokeswoman for the European Network of Transmission System Operators for Electricity.

I love the spin from Claire Camus: "....since the European system is interconnected ..."

Claire, hellooooo...interconnection is not the problem. Hellooooo. It's all those ill-conceived policy decisions in the EU.

And the farther you read into this story, the worse it gets:

• first time it's ever occurred
• won't be solved for weeks
• lack of energy in Kosovo's system
• needs to be solved politically and then technically

How this all happened, apparently:

Serbia’s power grid company EMS blamed the problem on Kosovo, claiming that in January and February the country “was uninterruptedly withdrawing, in an unauthorized manner, uncontracted electric energy from the Continental Europe synchronous area.”

Kadri Kadriu, deputy manager of Kosovo’s grid operator KOSTT, acknowledged that electricity from elsewhere was diverted to the Serb minority in the north, but said consumers there hadn’t paid for their electricity, causing considerable financial burden to the company.

 This is so incredibly ridiculous -- a spat in Kosovo and Serbia causing grid problems thorughout Europe.

Something tells me that it isn't just clocks that are being affected.

Huge thanks to Don for alerting me to the article.

The Growing Role of VLCCs in U.S. Crude Oil Exports -- RBN Energy -- March 8, 2018

Winter heating season over:

Jobless claims: link here --

• previous: 210K
• forecast: 220K 
• actual: 231K

Hmmm....combine this with 1Q18 GDP forecast lower to 2.8 (from 3.5); leveling off of gasoline demand; tariff talk; chaos in the White House; and, now the jobless claims report, and one might say we are starting to "see" a narrative develop.

Total now second largest producer in the North Sea: completes acquisition of Maersk Oil.

Devon downsizes: agrees to sell southern Barnett. $533 million deal. Nice background to shale revolution in the linked article.

Top story, from The WSJ today -- Trump putting Americans back to work -- 

Some steel and aluminum makers to restart plant operations amid tariff plans. U.S. Steel and Century plan to fire up idle furnaces and increase their workforces.

Some U.S. steel and aluminum makers are restarting idle mills and boosting capacity to make up for imports that face being priced out of the market if President Donald Trump’s proposed import tariffs take hold.

United States Steel Corp. on Wednesday said it would fire up a blast furnace in Granite City, Ill., and call back 500 workers. Century Aluminum Co. aid last week it will restart lines at a smelter in Kentucky that have been curtailed since 2015, doubling its workforce there to 600.

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Back to the Bakken

"Arctic" rigs:

$61.24→	3/8/2018	03/08/2017	03/08/2016	03/08/2015	03/08/2014
Active Rigs	60	44	33	114	191

RBN Energy: the growing role of VLCC's in US crude oil exports.

U.S. crude oil exports from the Gulf Coast remain at a high level, as does interest in transporting crude to Asia and Europe in Very Large Crude Carriers (VLCCs) capable of carrying as much as 2 million barrels (MMbbl) each. The catch is that only one Gulf port — the Louisiana Offshore Oil Port (LOOP) — can send out fully loaded VLCCs, and so far LOOP has loaded only one; other Gulf ports need to fill or top off the gargantuan tankers in open waters using reverse lightering. Plans are afoot to allow greater use of VLCCs, but how long will they take to implement?

Today, we discuss the economic benefits of exporting crude on supertankers, the growing use of VLCCs for Gulf Coast exports and the challenges exporters face in utilizing them even more this year and next.

VLCCs are giants. The supertankers have an average length of about 1,100 feet — longer than Houston’s 75-story JPMorgan Chase Tower is tall — with an average beam (or width) of nearly 200 feet and an average fully loaded draft of 72 feet. There are about 800 VLCCs operating in the world today and, as we’ll get to, an increasing number of these behemoths are being filled with U.S. crude along the Gulf Coast and sent to faraway ports in Europe and Asia.

Which reminds me: where is Shaden? Unfortunately the site says the "Shaden is out of range." There have been no position updates since late February.

For The Record: The NDIC Daily Activity Report #17512 Is Dated Incorrectly

I assume NDIC will correct that date on Daily Activity Report #17512. Right now that report is dated March 6, 2018. It should be March 7, 2018.

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North Dakota State Budget

Counting On Interest From The Legacy Fund

Revenues on track with forecasts.

From The Bismarck Tribune:

The last fiscal month of revenues and transfers wavered 0.2 percent below the forecast, totaling $110.8 million, according to a preliminary statement. Overall, state revenues are 1.7 percent over the forecast, at about $1.6 billion with $2.7 billion left to collect this biennium based on the forecast.

Corporate income tax figures to date suggest a 70 percent overage from the forecast ...
... from an estimated end balance of $112 million, $65 million should carry over into the 2019-21 general fund, with $47 million to go into the budget stabilization fund.

And then this:

Senate Majority Leader Rich Wardner, R-Dickinson, said he's pleased for the immediate future but said planning for next biennium is the challenge.

"The interest from the Legacy Fund does help us meet some of our ongoing expenses that we need to meet next biennium," he said, also noting increased oil revenue.

"Interest" on deposits in the Legacy Fund. Imagine how much the Legacy Fund would generate if it were invested in equities rather than bonds. Even Warren Buffett knows that.

Gasoline Demand -- Short-Term Leveling Off; Latest 1Q18 GDP Forecast Drops Below 3% -- March 7, 2018

Some years ago a similar "anomaly" occurred and it suggested the downturn in gasoline demand might be foreshadowing some economic downturn. I've long forgotten how that turned out.

Now we see a similar "anomaly."

This, I can say, I had not expected. At all. It may be nothing; it may be something. I don't know. 

See the graphic below. I don't think this foreshadows an economic downturn. I don't know what it means, if anything, but I'm guessing it is due to some "one-off" -- perhaps the winter storms. I really don't know.

But if the "2018 gasoline demand" drops below that of a year ago, that would be cause for concern, I would think.

Having said that, the data in the graphic above and the most recent 1Q17 GDP forecast are certainly very coincidental, for lack of a better word.

Latest 1Q18 GDP forecast: 2.8 percent — March 7, 2018 (link here):

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2018 is 2.8 percent on March 7, down from 3.5 percent on March 1.

The nowcasts of first-quarter real consumer spending growth and first-quarter real nonresidential equipment investment growth declined from 2.9 percent and 10.1 percent, respectively, to 2.6 percent and 6.9 percent, respectively, after the light vehicle sales release from the U.S. Bureau of Economic Analysis on March 2. The nowcast of the contribution of net exports to first-quarter real GDP growth declined from -0.43 percentage points to -0.59 percentage points after this morning's international trade release from the U.S. Census Bureau.

A little voice from the deep recesses of my mind just whispered to me: combine the "gasoline demand" graphic above and the most recent GDP Now 1Q18 forecast and the recent turmoil in the White House associated with talk of tariffs and the resignation of Gary Cohn and a narrative starts to develop.

Not to worry. The incredible jobs data tell a different narrative, and the Trump tax cuts are just beginning. Idle chatter.