Thursday, March 15, 2012

Thursday Morning Links

1. World crude steel production rose to a new record high in 2011 of 1,527 megatonnes, a 6.8% increase from 2010.  China produced more than 45% of world steel output in 2011 (695.5 megatonnes), while the U.S. ranked No. 3 with 86.2 megatonnes.

2. Excellent 6-minute animation of hydraulic fracturing and horizontal drilling. HT: Mike Carlson

3. Website that helps you find out which licenses and permits your business needs. 

4. Natural gas is expected to take another 14% of coal's market share in 2012, bringing coal's market share down to 36%.

5. Don Boudreaux's latest letter-writing brilliance about greedy speculators, including consumers who fill up with gas when their tank is more than half full, in anticipation of higher prices later. 

6. New drilling technologies and rising oil prices have generated a boom in drilling - and lots of high-paying jobs.

7.  The Myth of Scarce Oil in America - The U.S. May Have 60 Times More Oil Than Obama Claims, according to John Merline in yesterday's IBD. 

8. A History of U.S. Income Taxes, from Turbotax. 

23 Comments:

At 3/15/2012 11:01 AM, Blogger efimpp said...

OK, US oil reserves are underestimated. How does it changes the fact that US oil production has practically no influence on world prices of oil?

 
At 3/15/2012 11:06 AM, Blogger Jon Murphy said...

According to that article, we could have more oil that Saudi Arabia. That seems like a lot more than 2% of the world's oil. May even let us put pressure on the OPEC cartel. That could be a coup.

 
At 3/15/2012 11:21 AM, Blogger Che is dead said...

Isn't Voyager Oil and Gas one of the companies on "Vanges" short list?

They're ALL going to go bankrupt, or haven't you been reading his comments?

 
At 3/15/2012 12:01 PM, Blogger Rufus II said...

Good Lord *1.4 Trilyun, yes Trilyun with a "T"* in the "Green River Formation.

Gimmee a break.

That's Not Oil. That's Kerogen. And that's not "shale;" that's Marlstone.

After years of trying AMSO gave up on it. Chevron is, for all practical purposes, calling it quits, and Shell is just fiddle-farting around, putting out a press release every 3 or 4 years.

Total nonsense

 
At 3/15/2012 12:04 PM, Blogger Rufus II said...

1.4 "Trilyun" barrels of a waxy, pre-oil type substance, locked up in a very hard (unfrackable) rock.

Only a complete ignoramus, or a sociopathic charlaton would try to sell "the Green River Formation" as "Oil Reserves."

 
At 3/15/2012 12:55 PM, Blogger bart said...

Nonsense indeed... and at a million a barrel, there's lots more oil.

It's not peak oil, it's peak *cheap* oil.

 
At 3/15/2012 1:25 PM, Blogger Mike said...

That Boudreaux letter is funny. I may find it even more so since I work with these broadcasting numbskulls.

 
At 3/15/2012 2:51 PM, Blogger Methinks said...

This comment has been removed by the author.

 
At 3/15/2012 2:53 PM, Blogger Methinks said...

As usual, Don Boudreaux shoots the arrow directly through a a bull's eye many others would never even notice.

Lord Keynes would agree with that lady that we must frustrate speculators, but that's because he thought that peasants like the apoplectic Little Miss being interviewed is simply to stupid to value anything, unlike The Chosen Few. Like Lord Keynes. Not everyone, after all, is blessed with Lordly Wizdumb.

 
At 3/15/2012 3:05 PM, Blogger morganovich said...

speaking of nonsense obama claims, how about this one:

"So do not tell me that we're not drilling. We're drilling all over this country. There are a few spots we're not drilling. We're not drilling in the national mall. We're not drilling at your house. "

http://www.realclearpolitics.com/video/2012/03/15/obama_do_not_tell_me_that_were_not_drilling_were_drilling_all_over_this_country.html

not on federal land we aren't. output is dropping, the BLM will not sign new leases nor provide new permits and still has not allowed new drilling in the gulf after the great hype of a disaster that wasn't in the BP spill.

http://www.eia.gov/analysis/requests/federallands/

the numbers don't lie mr president, but it sure looks like you do.

 
At 3/15/2012 3:09 PM, Blogger morganovich said...

bart-

"It's not peak oil, it's peak *cheap* oil."

that's not entirely clear.

if, for example, one of the biological approaches to tar sands extraction were made to work, we'd be swimming in cheap oil again. right now, absolutely, the tar sands are not a cheap source, but that does not mean they couldn't be.

there's a lot of incentive to solve that one. if someone cracks it, it's going to be a game changer.

 
At 3/15/2012 3:10 PM, Blogger Methinks said...

There's more to be said about speculators.

They provide all-important liquidity to a market. A liquid market means that you can get in and out of positions easily and more inexpensively than illiquid markets. In other words, the price of the item is lower than it otherwise would be because the bid/ask spread is lower and copious volume means getting in and out of positions is less risky. So, speculators REDUCE the price of the commodity by acting in the market.

In addition, products that are more liquid tend to trade very close to fair value, which means you are not selling too cheaply when you need to sell and not buying to dearly when you need to buy. That's efficiency.

Just as with the benefits of entrepreneurship and oxygen from trees, liquidity is a by-product of a speculator's main goal (to bet on the direction of price).

But don't expect the average fool at a petrol station to understand all that. I recently read comments in a yahoo article about the SEC possibly going after traders for canceling orders (um...when the market changes, we need to adjust our bids and offers. When the housing market tanked were you all still bidding at 2005 levels for property? When the housing market heated up in the early 2000's, were you still valuing your house at 1996 levels? Why would you expect a trader to do that then?). The argument against it was that liquidity would evaporate. The entire comment section was filled with BS that can be summarized like this: "OH YEAH?!!! Well, who says Main Street needs liquidity? HUH?"

Don B. recently wrote a post about how the culture must change before we see change in Washington. I think he's right. And I think for that reason, we're screwed.

 
At 3/15/2012 3:43 PM, Blogger AIG said...

"I recently read comments in a yahoo article"

Well there's your problem right there!! You read a yahoo article! :p

But you have a point. I think most people who are involved in trading, understand your point very well. On the other side, you really can't expect a politician, or any fool at the gas station, to understand this. They never have, they never will, and they never need to. They just need to not pass any laws about it.

 
At 3/15/2012 3:45 PM, Blogger AIG said...

While the US may indeed have that much oil, the question is, at what price do those resources become economical? And hopefully, those economical points shift as a result of cheaper costs at getting it, rather than increasing prices. Either way, of course, politicians need to get out of it.

 
At 3/15/2012 4:07 PM, Blogger Jon Murphy said...

While the US may indeed have that much oil, the question is, at what price do those resources become economical?

And that's the all important question, isn't it?

I think we'll see technology shift towards these things. Before fracking came along, much of the shale oil wasn't economical. Now it's being pulled out of the ground left and right.

I do expect we'll see companies develop new technologies to try to get access to this oil. No company wants to raise their prices (they understand the Law of Demand), so they try to lower costs to increase margins.

 
At 3/15/2012 5:12 PM, Blogger AIG said...

Yes Jon, hopefully that is what is driving, or will drive, increased output. But that's easier said than done, especially in that industry. Also, I'm not sure oil has very elastic demand.

 
At 3/15/2012 5:25 PM, Blogger Methinks said...

You're right, AIG. Unfortunately, those yahoo comments were not any different from the public comments on the left for the SEC on the SEC's website or with half-wit politicians.

And you're right again that people needn't understand these things about markets (and here I will say that these concepts are true for all markets and not just financial markets) so long as people who don't understand how things work don't seek to pass laws to change how things are done. The same people who would not for lack of understanding of the mechanics work on their own car or build their own house gladly mess with other things they know nothing about - financial markets, for instance. Unfortunately, they do. And we have a problem because they seek to act from a base of absolute ignorance. Like children.

 
At 3/15/2012 5:26 PM, Blogger Methinks said...

....and making things worse for themselves in the process. Oh, irony.

 
At 3/16/2012 11:04 AM, Blogger Hydra said...

re speculators.


I don't think most people think of the actual supliers or end users in a market as speculators.

Most people do not think of the farmer who sells corn or the food producer who buys and takes delivery of corn in the same way they think of someone who buys and then sells a contract to accept delivery on corn, with no intenetion of ever doing so.

 
At 3/16/2012 4:45 PM, Blogger Ron H. said...

"I don't think most people think of the actual supliers or end users in a market as speculators."

I'm not sure it matters what "most people" think. The suppliers and end users affect prices through speculation as much as anyone else in the market - like the person filling their half full tank before prices rise.

"Most people do not think of the farmer who sells corn or the food producer who buys and takes delivery of corn in the same way they think of someone who buys and then sells a contract to accept delivery on corn, with no intenetion of ever doing so."

Maybe they should start. Farmers often contract with buyers at the start of a season for a fixed price for their crop when it is harvested, and airlines often contract for delivery of future fuel at a price set now.

Anyone buying or selling stock, or investments of any kind are speculating.

Are there moral differences in types of speculators?

 
At 3/16/2012 8:19 PM, Blogger OBloodyHell said...

>>> there's a lot of incentive to solve that one. if someone cracks it, it's going to be a game changer.

Precisely. Simonize!

The only limit to human ingenuity seems to be not trying.

 
At 3/16/2012 8:21 PM, Blogger OBloodyHell said...

>>> Are there moral differences in types of speculators?

According to libruls, yes. EEEVil lies in the heart and mind of all non-consuming spekyalatrs, donchakno?

I mean, all they want to do is make a profit, feed their kids, buy a boat, maybe... Bastards!

 
At 3/16/2012 8:22 PM, Blogger OBloodyHell said...

The only "peak" about peak oil is the one on the meme promoter's heads.

If oil actually DOES "peak", then we'll be finding a suitable alternative by and by.

 

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