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Below
are a few letters we received on topics that appeared in the past few
weeks. They capture the essence of how many readers say they feel.
Green Tech Brightens - August 24, 2009
Another
well written and positive article about the promising future of renewable
energy markets.
I
have been advising a German PV firm as they plan to enter the U.S. market
in a big way. The hold up is landing the big sale with one of the utility
companies in Florida.
Also, I recently provided market research and business development advice
to a North American energy services company with plans to expand their
energy efficiency business in Florida.
Small
job here, small project there, pretty soon we will all enjoy the benefits
of renewables.
Mehmet Turkel
Turkel Consulting
If
we take your verbiage regarding post 9/11, and within two years show them
to you in the mirror relative to current activity, they'll look like:
To
be sure, the nation has a long way to go before it completely recuperates.
To get the country humming along after the 8/08 financial meltdown, the
Federal government enacted trillions in stimulus funding, which
subsequently began a massive borrowing binge, printing money to pay for
alternative and unproven economies -- effectively making bad loans to a
government with no concept of self control backed by a naive populous who
effectively sold the future of young Americans.
The
financial toll resulting from those toxic assets (government bonds) has led
the nation and ultimately the world into depression -- one for which we see
no end, and which may lead to severe downturns in gross domestic product.
That's why even the President's advisors acknowledge that while things are
bad, the worst is still on its way.
Just
as the government backed bad loans to people who could not afford them, and the lenders did not disclose the consequences
of increased interest rates and balloon payments, so too has this
administration's malfeasance embarked the nation on to a house of cards.
The stimulus, just as sugar can temporarily make the
diabetic temporarily feel better, will likely lead to a crash.
Stuart Robertson
Oil Alternatives - August 26, 2009
I
think the Earth is swimming in oil, let people drill and it will be found.
Just in the past two years Brazil
had a strike at a previously unknown source that has put it into the top 10
producers on the planet. There are untapped oceans of oil out there and the
peak oil concept is greatly exaggerated.
Additionally
natural gas strikes in the U.S.
are doubling and tripling reserves. The price is a telltale sign. The Catskill Mountains could become a major natural gas
supplier, who would have thought that 20 years
ago!
By
the way, if the price rises for energy are met by the unfettered hand to
find more, there will be no recession, just an expanded energy industry.
Drill, baby, drill! Create high-paying jobs, fuel the economy and
extinguish mountains of national debt -- if people are allowed to drill.
Guy Piazza
This
"peak oil" business is quite amusing. Although it is certainly the
case that there is a finite amount of oil in the earth, and that the cost
of new supplies tends to rise over time since we naturally find and use the
easier stuff first, the claims that we're going to run out of petroleum
soon are silly.
Some
of us are old enough to remember that during the 1970s there were ads
running in the newspapers and television telling us that by 1985, the
earth's oil supplies would be fully depleted. Well, here we are two dozen
years later, and although gasoline and related products are more expensive,
supplies of petroleum products are adequate.
In
the long term, we will need to find new energy sources,
and better use those we already have (think nuclear, geothermal, wind,
etc.) but it is alarmist to repeat these obviously incorrect assertions
about imminent petroleum scarcity.
Richard (Rick) Gonzalez,
PE
Chief Engineer, Transmission Planning
Excel Engineering, Inc.
Your
article exemplifies the deflective nature of those who believe Peak Oil is
a long way off or non-existent. When those that believe Peak Oil has
occurred or will occur soon reference real production rate declines (e.g., North Sea) and compare them with current demand,
their antagonists simply declare that some future technology will guarantee
BAU consumption for decades to come.
While
some technology (oil sands, ultra-deep water, etc.) is available, these
methods are viable only at an increasing cost (if not just in real dollars,
but also in environmental cost as well). As "future technology"
comes online, it will be viable at ever increasing per-barrel break-even
points. Certainly we are capable of producing well over 90 million barrels
per day, but perhaps only if oil is exceeding $200 per barrel.
At
the end of the day, production will happen only when it is profitable. To
maintain our current consumption levels for decades to come, we will
certainly pay a hefty price which, conveniently, many Peak Oil deniers seem
to omit.
William Kost
Onshore Property -- Global Energy
Your
article is well written and hits the mark. Industry, government,
environmentalists and the public need to focus on the fact that most
experts agree -- that the world oil reserves are limited. The issue is not
whether we will run out of oil 10, 50, 100 or 200 years from now (although
that does add some urgency to the matter); it is that we ARE going to run
out of oil at some point in the future.
The
same applies to GHG emissions. Whether global warming is caused by man-made
activities, or is a result of longer term naturally occurring climate change
cycles is an academic debate. Man-made GHG is a contributor. We need to do
something to address both issues now. Honest, open debate and pure facts
(not manipulated data) should be the benchmark in any discussions.
Something needs to be done starting now to provide a clean environment for
future generations.
World
population growth is another "uncomfortable" issue that needs to
be addressed; but not in this forum.
Bruce Bley
Environmental Product Solutions
Thank
you for the thought-provoking article on Oil Alternatives. Regardless of
the correctness of either theory, it is prudent to take action NOW to slow
down the oil consumption for a variety of reasons.
Given
the current state of energy technologies, I believe that natural gas should
be used as a partial intermediate alternative until more suitable
alternative technologies are fully established. And that is not going to
happen so soon. Large fleet vehicles should be converted to gas-powered
vehicles like school buses, city buses, etc. I am not sure whether the
hybrid gas/electric technology for these types of large vehicles can be
used at this time. This is an established technology.
The
idea is to slow down the use of oil. It will not only benefit the oil
demand equation, but also help environment, create lot of new jobs, and
help the economy.
Jasbir Singh
Siemens Energy
Speculating on Higher Natural Gas Prices
- August 31, 2009
I
suppose I shouldn't be amazed that politicians and bureaucrats would be
swayed more by the public's reaction to high prices than by an accurate
understanding of futures markets and hedging. Don't they know that if
natural gas producers had hedged liberally in the spring of 2008, they
wouldn't be gasping for air right now and scrambling quite as wildly as
other market segments right now.
In
May of last year, if producers had hedged October 2009 production with
October 2009 gas futures contracts, they could be banking the difference
between $10/Mcf gas and $2.98/Mcf gas. The losers would be the speculators
everyone loves to hate, and the winners would be industry workers who might
not have been laid off in the downturn.
Remember,
while speculators may look like money-grubbing sharks with no stake in the
game, they help make it possible for the parties with stakes in the game
(i.e., producers and end-users) to manage price fluctuations for the
benefit of both.
David M. Behrman
One
of the points that rarely gets discussed is the shift
of futures markets from a market for allocating risk associated with
physical market transactions (the "original" purpose of these
markets) into markets associated with the transfer -- and accretion -- of
price risk. This creates fundamentally different markets, and the
regulators do not seem to get that this change has occurred. Futures
markets have moved from being a market for physical product in the prompt
month to a market for price risk -- even in the prompt month contract.
One
of the "old" market presumptions was that the financial market
and physical market had to converge at front month contract expiration. The
market required all contracts to cross in open outcry. Large open positions
had very significant risk of price movements and "getting
trapped" at expiration. This made large purely financial plays much
more risky.
The
shift to MOC orders and then the following shift to allowing EFS trades
have "broken" that requirement for convergence of the financial
and physical market. The ability to access the much larger OTC swap market
as the source of liquidity FOR CLOSING open positions means that entities
can accumulate significant financial risk without any concern about
underlying physical market price convergence.
In
fact, the reliance of the physical market on futures-based pricing means
that the financial risk market has now become the fundamental driver for
pricing in the physical market, with minimal impact for underlying physical
market supply/demand balance. This fact of life is recognized in the cries
against speculators but it is not a manipulation of the market but rather
the changes by the markets themselves that have removed the constraint of
physical market price convergence from the financial markets.
I
would argue it is too late to "put the genie back in the bottle"
and further would posit that until this basic change in the market is
acknowledged and regulatory changes are placed in this context, regulatory
constraints on "speculation" will either fail miserably or cause
unintended consequences on futures markets activities.
Thomas Lord
President
Volatility Managers, LLC
Traders
took positions on over 1 billion barrels per day, while the world market
could only produce/consume about 85 million barrels per day. Thus 8.5
percent of the market was REAL, 91.5 percent of the market was trading
positions fueled by pure speculation. In late 2007 hedge fund managers the
likes of Boone Pickens prognosticated $200 per barrel oil, its pretty clear
where the hedge funds wanted oil and natural gas to go.
Oil
and natural gas are commodities which do not afford consumers an easy
alternative, the volatility of these fuels impact all markets, all people
of the world. It is too important to allow the "smartest guys in the
room" (Wall Street) to manipulate the market. Four traders each
personally made over $1 billion in 2008. Give me a break, I bet very few
ever took delivery on one barrel of oil.
Investment
banks and hedge funds are the catalysts. And while they try to profit from
price volatility, they are responsible for product innovation and the
formation of a robust market. That, in turn, creates efficiencies and
prices are eventually a truer reflection of supply and demand. This last
statement applies to the supply demand of hedge products with no
significant impact to real supply and demand.
James
Simons, the founder of Renaissance Technologies, is said to have been the
highest-earning hedge fund manager last year, bagging a cool $2.5 billion,
slightly down on the $2.8 billion he bagged in 2007.
Kirk King
President
Obama has the right idea relative to natural gas pricing. In fact any
commodity necessary for the general public's well-being should be rigidly
regulated. The California
energy crisis was an economic horror; legislation should be enacted to
prevent this criminal behavior in all deemed necessary commodities.
Joe Langenberg
Whenever
the powers-that-be have been unable, or unwilling, to deal with supply and
demand fundamentals, there was always the loud cry of "speculators!"
to distract attention and funnel anger away from themselves.
This
has been a common pattern for centuries. The only change being that the
modern CFTC is not authorized to burn anyone at the stake.
There
is the usual (deliberate?) confusion between "speculators" and
"manipulators," while in reality, with more of the former, it is harder for the latter.
As
you say, "natural gas, in fact, is the lifeblood of many aspects of
the American economy." So if access to that lifeblood remains
needlessly constrained, then the economy's EKG, as seen in a price graph,
will continue to swing alarmingly.
Michael Sultan
Markets Editor
Natural Gas Week
Energy Intelligence Group
China's Motivations - September 02, 2009
With
reserves between $800 billion and $1 trillion in U.S.
securities, the assumption that China needs foreign investment
seems like an outdated idea. And with that financial capacity, China can
buy the latest technology. If there were no security concerns, the economic
realities would lead to China
investing to replace the very old fleet of coal-fired plants in the U.S., not
the other way around.
Arden Brummell
Scenarios to Strategy
As
much money as we are dumping into China and giving them all the
products to produce and we then have to import products,
which is costing Americans jobs, why do they need our support?
Everything
you buy any more is MADE IN CHINA.
They
take all our national resources, copper, aluminum, etc., and cause our cost
for construction and materials to rise. Why give them money???
Keep
the money at HOME.
Jerry Griffith
Senior Estimator
Hypower, Inc.
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