Sunday, March 30, 2014


     Springtime brings ... more abundant sunshine, earlier, later, and higher in the sky.  Bees, flowers, songbirds, rain.  And time to rearrange the portfolio.

     For the time being, natural gas seems to have run its course.  Unexpected (by me), the remaining inventories in the country have been run down below 950 bcf .... this is a frightening number or at least it should be, but its a bottom.  The 5 year average for this point in the year is around 1600 and 950 represents less than a two-week supply.  Everybody understands that it will be rising for the next 6 months.  The big question is, "Will we be able to replenish the storage back to a normal high."  With demand for vehicles, for fertilizer, for chemical feedstocks, and for electricity for air conditioning all at all-time highs, well, I hardly think so.  Take into account also that among the exciting new tight gas shale formations, the Haynesforth, Permian, Denver Basin, Great Green River Basin, etc .... guess what?  Production is now declining already in all of them except the Marcellus.

     So we definitely need to revisit this issue when the weather becomes an issue again.  Note that a hot summer could have a similar impact as a cold winter.

     However, driving season is now upon us.  Year after year after year, the prices of crude typically bottm around February or March, then start climbing through the spring and summer.  Year after year, the -prices of the oil company stocks follow suit.

     This year, we have the added silliness of the greedy bankers who overstepped their bounds in the Ukraine, to add ether to the mix.  Investors are already beginning to figure out what the eventual inevitable results of their misbegotten policies are going to be.  Russia is simply going to accelerate its drive to sell more and more gas and oil to China and India.  They are better customers in the first place, guaranteed to increase demand over the long term.  In the second place, they don't exhibit the insufferable arrogance and pugnacity of the we4stern european and north american former imperialists.  third, they are capable of paying in gold, instead of the worthless paper that our bankers keep multiplying.

    And, there is still the little craziness about the Keystone.  Its not a big deal, its just a stupid one, where politics has reigned supreme over common sense and the real needs of the society.  surely no one thinks that blocking the pipeline will have any impact whatever upon production in Athabasca.  The only thing it does is to tighten the noose a little further around US energy needs, because the Canadians are working feverishily to facilitate selling their precious oil to other customers, instead, for a higher price.

     So, suddenly its time to buy Suncor already.  Actually the time was at the beginning of the week, because I'm certainly not the only person to come to these conclusions and the stock suddenly jumped up by 5% the last several days.  From a low of 32.50 it has gone to 34.50.  It was very interesting as well to see WTI rising while Brent actually fell.  By June it should be back to its normal 36-38 range, assuming the warmongers are kept in check.  But if hotter heads begin to prevail and the steady drumming of another losing war crescendos it will climb a lot higher than that.

    At that point we can go back and revisit gas and coal ....

Sunday, March 2, 2014

Crimea River

     The Washington Post has come out with an Oh! So typical editorial this morning which (in my humble opinion) once again puts childish feelings ahead of adult common sense.  Yellow journalism has never been so crass.

     They say:
"The United States now faces a naked act of armed aggression in the center of Europe by a Russian regime that is signaling its intent to steamroller this U.S. president and his allies. Mr. Obama must demonstrate that can’t be done."

     Editorialists love to use the word "naked" this way because it appeals to so many Americans who feel so impotent and inadequate in their sex lives, precisely because their own expressions of feeling are so often hateful and aggressive and so rarely understanding, empathetic and  amicable.

     I'm not all that different or special in this country.  It is true that I was exposed to a decent class in world history when I was in junior high school.  I can envisualize where the Crimea or the Caucasus mountains fall on a map of EurAsia.  But I was certainly never a military specialist or politician or historian or any of that.

     Anybody who knows anything about world history and economics understands the critical importance of access to the oceans and trade routes. The importance of such access for both peacetime and war success cannot be overstated.  All the great empires have dominated the seas.  Russia understands their principle, primary strategic and economic "crunch point" is ocean access;  they are doomed without it.  However all of their major ports are frozen solid for a good portion of the year; not a desireable state of affairs.  They cling and protect very strongly to what they've got because its all they've got.

     The Black Sea is a tenuous connection to the oceans.  While it does not freeze, the access to the open oceans can easily be commanded and controlled -- choked -- either at the Dardanelles (do you remember "The Guns of Navaronne" and why they were so important at that time? ) or at the Pillars of Hercules (surely you understand why a US insurance company places so much importance upon that rock?).  However, its the very best that Russia can do, otherwise they are landlocked.  Their very survival depends on it, all of their trade with the world depends on it, and any ability for them to defend themselves depends on it.

     This is why the country of Syria has so much importance to Russia.  This is why it was ignorant folly, last year, for Obama to make a stand against Russian support and control in that country.  A threat by the USA to Russian access to the port of Latakia is tantamount to attacking Moscow directly.  This is why Obama backed down from his last "red line", because wiser heads spoke quietly to him.  Trust me, strategists in Russia also observed how quickly he backed down.

     This is why the Crimea is so important to Russia.  Their survival depends on it.

     This is why they can be depended upon to defend their control of this vital strategic penninsula, regardless of the "rights" and niceties of the citizens who happen to life there.  They become pawns in a larger struggle.  The USA is quite prone to acting in the same autocratic, totalitarian manner when strategic locations critical for their commerce and control come under threat of unfriendly opposition, such as Cuba, Haiti, Nicaragua, or Panama, for examples.

     The Post, with today's editorial, is trying to stir up passions and foment trouble and sell more newspapers.  During my whole lifetime the world leaders have struggled mightely to avoid a major confrontation between the USA and Russia.  so how important is the Ukraine to the USA?  How important is it for us to stad up for their open political process?  Why are they suddenly more important than other oppressed people, such as those in Haiti, Somalia, Darfur, the Kurds, the Basques, and the "American Indians"?  Are they so important as to risk what so many have tried so hard to avoid, a world war three, a possible nuclear contfrontation, a potential for a large land and sea war?

    And if we do get involved in such a confrontation, do you think China will just sit back and watch?  Or will they take the opportunity of our diversion to crush Japan, once and for all?  And what other mischief might be expected to evolve in such a scenario?  What might happen to Israel while the US was busy elsewhere?

     Evidently, the paddle and the strap never should have been taken away from elementary school teachers in this country.  Evidently, some hot shot egotistical morons need some serious paddling, followed by years and years of studying about how things really are in this world.  Before its too late.....