Investment Themes - Energy

Search all article by their themes/tags in the search area
below for example “Energy” or “Technology”.

Search Results

Found 504 results in Energy
September 16 2019

Commentary by Eoin Treacy

Aramco Said to Face Weeks Without Majority of Abqaiq Output

This article by Anthony DiPaola, Will Kennedy and Javier Blas for Bloomberg may be of interest to subscribers. Here it is in full:

Saudi Aramco faces weeks or months before the majority of supply from the giant Abqaiq plant is restored after this weekend’s devastating aerial attack, according to people familiar with matter.

Aramco is still assessing the state of the plant and the scope of repairs, but the state oil company currently believes less than half of the the plant’s capacity can be restored quickly, the people said, asking not to be identified before an official announcement. It’s a more pessimistic outlook than Aramco had immediately after the incident, they said.

All eyes are on how fast the kingdom can recover from the weekend’s devastating strike, which knocked out roughly 5% of global supply and triggered a record surge in oil prices. The loss of Abqaiq, which handles 5.7 million barrels of oil a day, or about half of Saudi production, is the single worst sudden disruption to the oil market.

Aramco, the world’s largest exporter, is currently supplying customers from its stockpiles, but is asking some buyers to accept different grades. President Trump has said he’s ready to release oil from the U.S. Strategic Petroleum Reserve to ensure ample supply.

Saudi Arabia is also starting idle offshore fields to replace some of the lost production.

Eoin Treacy's view -

Let’s lay out the questions. The first is just how much geopolitical risk is present and has that been under appreciated by markets? The second is the Khurais field is about equidistant from the border with Iraq and Yemen so how did these drones penetrate air space without being intercepted. The third is what is likely to do well as a result of these events?



This section continues in the Subscriber's Area. Back to top
September 11 2019

Commentary by Eoin Treacy

Factors or Fundamentals, Quant Tremor Is Field Day for the Geeks

This article by Sarah Ponczek and Vildana Hajric for Bloomberg may be of interest to subscribers. Here is a section:

You wouldn’t know it from benchmarks, but beneath a tranquil surface violent swings are lashing traders along obscure fault lines. Companies like real-estate firms that rose the most in 2019 are plunging, and some that have trailed are being pushed out front. It’s been a mild reckoning for hedge funds and others who have bet on the status quo persisting.

Amid all the churn has been a renewed focus on a quantitative concept known as factor investing, which groups companies not by industry but traits such as how fast their prices move or profits rise. A question gaining currency in the past few days is whether these categories are just handy descriptions of twists in the market -- or are at some level guiding them.

“It seems very mechanical right now,” said John Swarr, investment specialist at Penn Mutual Asset Management, which has $27 billion under management. “If you look within some of these stocks that are being hit the hardest, some are in much better shape than others and yet they’re all being affected similarly,” he said. “It does feel like it’s a rules-based rotation.”

Eoin Treacy's view -

The total of negative yields bonds was at $17 trillion for a brief time at the end of August and has since contracted to $14.3 trillion. That’s a big more in a little less than two weeks.

The failure of the German government to sell a full allocation of bonds and failed auctions at the US Treasury in August were probably the catalysts for sapping investor demand for bonds globally. The unwinding of leveraged long positions now has the scope for meaningfully move bond yields higher with clear upward dynamics evident across multiple markets.



This section continues in the Subscriber's Area. Back to top
September 03 2019

Commentary by Eoin Treacy

Is an inflation resurgence credible?

Eoin Treacy's view -

At the end of last year, a return of inflation was assumed to be inevitable with the 10-year Treasury yield trading comfortably above 3%, commodity prices recovering, wages marching higher, full employment and high capacity utilisation. The perspective could not be more different today.

Interminable deflation has been priced in to Treasury yields as they test the lows of the last eight years. Commodity prices are under pressure, the trade war has resulted in a number of export dependent nations flirting with recessions, purchasing managers indices suggest contracting manufacturing activity and an inverted yield curve has started the clock on the next recession. Meanwhile gold has exploded on the upside to complete a six-year base formation.



This section continues in the Subscriber's Area. Back to top
August 28 2019

Commentary by Eoin Treacy

Homeowners are sitting on a record amount of cash, but they're not really tapping it

This article by Dina Olick for CNBC may be of interest to subscribers. Here is a section:

So-called tappable equity grew by more than $335 billion during the quarter. The total is 26% more than the mid-2006 peak of $5 trillion. Roughly 45 million mortgage holders have excess equity, and half of them have mortgage rates higher than 4.25%, making a refinance not only possible but attractive. The average rate on the 30-year fixed is now around 3.6%. The majority of these borrowers also have top credit scores.

Falling mortgage rates over the past several months have caused a surge in overall refinance activity, but despite the record housing wealth, homeowners have been highly conservative about taking cash out. In 2006, 89% of refinances were cash-out, according to Freddie Mac. In 2012, when home prices crashed, that share dropped to 12%. But even now, with prices back above their previous peak and mortgage rates much lower, cash-out refinances are just 61% of the total pool of refinances.

“I think you’re seeing a little bit of reluctance both on the side of lenders and on the side of borrowers,” said Andy Walden, director of market research at Black Knight. “If you look at lending, guidelines are a little bit tighter than they were back in 2006, but even given those lending restrictions, I think you’re seeing more conservative behavior on behalf of homeowners as well, as folks have the remembrance of the financial crisis in the rearview mirror.”

Eoin Treacy's view -

I was at an end-of-summer party on Saturday night and conversation turned to mortgage refinancing. About half of the people I was talking with had used low rates over the last 18 months to refinance at about 3.5% while the rest had not done so yet. Mortgage rates have done a round trip from 3.5% to 5% and back again over the last year and there is still scope for the rate to move lower. That is going to put additional cash in the pockets of the people most likely to invest in the stock market.



This section continues in the Subscriber's Area. Back to top
August 27 2019

Commentary by Eoin Treacy

OPEC+ Expects to Drain Oil Stocks as It Makes Supersized Cut

This article by Grant Smith for Bloomberg may be of interest to subscribers. Here is a section:

In response, the Saudis have reduced output by far more than pledged under the terms of the deal, and the coalition’s overall implementation rate last month was 59% above target, according to a statement posted on its website on Tuesday. That means the alliance cut supplies by about 1.9 million barrels a day.

OPEC signaled that the deeper-than-anticipated cutbacks had been necessary because of the extreme upheaval in the global economy.

“This high level of overall conformity has offset uncertainty in the market due to ongoing economic-growth worries,” according to the statement from the Joint Ministerial Monitoring Committee, a body set up by OPEC and its allies to oversee implementation of their strategy.

“Along with healthy oil demand,” the supply restraints have “arrested global oil-inventories growth and should lead to significant draws in the second half of the year,” the committee said.

Eoin Treacy's view -

Brent Crude is flirting with $60 and WTI is testing the $55 area. OPEC and Russia need a higher price to meet their domestic obligations. Meanwhile shale producers need a higher price to justify continued drilling and to help meet their debt obligations. That suggests the $50 area for WTI is a big level for the US domestic onshore sector because they cannot justify supply growth below that level. Despite this competition between OPEC and the Permian oil is trading in backwardation out to two-year maturities.



This section continues in the Subscriber's Area. Back to top
August 23 2019

Commentary by Eoin Treacy

Powell Says Economy in Favorable Place, Faces Significant Risks

This article by Craig Torres and Rich Miller for Bloomberg may be of interest to subscribers. Here is a section:

“Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” Powell said in the text of his remarks Friday to central bankers gathered at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming. “We will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2% objective.”

Eoin Treacy's view -

It is looking like the learning curve for a newly installed Fed chair is about 18 months. Today’s measured statement from Jerome Powell did an excellent job of placating investor fears while leaving open the optionality of how much to cut by. The Fed has made clear they will cut rates if they need to but will not hurry. However, the simultaneous announcement by China that they are increasing tariffs on $75 billion of US goods is likely to be prove the catalyst for deeper cuts.



This section continues in the Subscriber's Area. Back to top
August 16 2019

Commentary by Eoin Treacy

Musings From the Oil Patch August 13th 2019

Thanks to a subscriber for this edition of Allen Brooks’ ever-interesting report for PPHB. Here is a section:

Today’s energy world is nothing like what it was prior to OPEC’s move.  It is even moving away from the model that evolved immediately after the price collapse.  Both of those models have been shunned by investors.  A new model is evolving in response to investor demands that energy companies be profitable and return cash to investors.  This new model is evolving in response to the disconnect between energy company fundamentals and their share prices.  That disconnect is evident in Exhibit 8, which tracks oil prices and stock indexes reflecting oil and oil service companies since mid-2014 when oil prices began sliding, before OPEC delivered its coup de grâce.  Oil company stocks (XLE) performed better during this period, largely because they pay dividends, offering investors income while waiting for share values to reflect higher oil prices.  Oil service stocks (OSX) fell steadily in this period, because of too much debt and shrinking market activity leading to substantial asset impairment and eroding company values.  

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

If we are indeed now in a period where energy investors are more demanding of profits than production growth that is not great news for the fragmented nature of the shale oil sector. That suggests there is significant scope for consolidation to provide the profitability demanded by investors.



This section continues in the Subscriber's Area. Back to top
August 12 2019

Commentary by Eoin Treacy

Mysterious radiation leak, 100x larger than Fukushima disaster, traced to Russian facility

This article from the Bigthink.com may be of interest to subscribers. Here is a section:

"Today most of these European networks are connected to each other via the informal 'Ring of Five' (Ro5) platform for the purpose of rapid exchange of expert information on a laboratory level about airborne radionuclides detected at trace levels," it says. "In October 2017, an unprecedented release of ruthenium-106 into the atmosphere was the subject of numerous detections and exchanges within the Ro5."

State-owned Russian nuclear corporation Rosatom denied the findings of the recent study.

"We maintain that there have been no reportable events at any Rosatom-operated plants or facilities," Rosatom said. "Both the national regulator and experts from an independent international inquiry inspected the Mayak facility back in 2017 and found nothing to suggest that the ruthenium-106 isotope originated from this site, nor found any traces of an alleged accident, nor found any evidence of local staff exposure to elevated levels of radioactivity."

Eoin Treacy's view -

This kind of headline, regardless of whether it originally occurred in 2017 is bad news for uranium miners. We can make the case for the viability of next generation reactors until we are blue in the face, but one headline grabbing accident kills any progress make in rehabilitating perceptions.



This section continues in the Subscriber's Area. Back to top
August 09 2019

Commentary by Eoin Treacy

Email of the day - on European energy prices

This is by Benny Peiser who is the director of the GWPF. Some bold warnings about Europe's decline fuelled by its high energy prices.

 

Eoin Treacy's view -

Outsized economic growth and the higher standards of living it delivers is the single best way of creating concern for lower emissions, a cleaner environment and creating greater efficiencies. We have plenty of empirical evidence that this is the case and yet it is still a hard sell for many politicians. The concentration of the argument on climate change is probably at the root of this problem. Instead we should be thinking about improving the human condition not as the problem but as the solution.



This section continues in the Subscriber's Area. Back to top
August 08 2019

Commentary by Eoin Treacy

Bridgewater's Ray Dalio Discusses the Impact of China's Growth on the World Economy

This is a fascinating interview where Ray Dalio discusses the merits of betting on China.

Eoin Treacy's view -

There are two very big questions we have to answer which are fundamental to the construction of a long-term portfolio. The first is does governance really mean anything? The second is how do you value private assets in a portfolio?
 
At this service we have long held that governance is everything. Is that still true? Ray Dalio appears to be agnostic on whether property rights, respect for minority shareholder interests, an independent judiciary and a free press are important. What I personally find particularly interesting is that the performance of China’s stock market, during the decade where it has achieved the heights of its ambition has been dismal.



This section continues in the Subscriber's Area. Back to top
August 08 2019

Commentary by Eoin Treacy

As Shale Drillers Stumble, Big Oil Says It Can Do Permian Better

This article by Rachel Adams-Heard for Bloomberg may be of interest to subscribers. Here is a section:

Concho Resources Inc., long considered one of the Permian’s premier operators, was forced to scale back activity after drilling almost two dozen wells too closely together. That move by the Midland, Texas-based producer spooked investors across the industry, with Evercore ISI predicting the “carnage” would have a lasting impact.

Concho’s problem with well spacing highlights the challenges of fracking so-called child wells: Too close to the “parent,” and output is less prolific; too far apart, and companies risk leaving oil in the ground.

Exxon and Chevron say they aren’t as exposed to those problems. Because of their size relative to smaller independent producers, the oil giants are able to lock up acreage, giving them room to be more conservative in their well spacing.

Eoin Treacy's view -

The lower for longer nature of oil pricing over the last few years and probably for the foreseeable future suggests smaller independent oil drillers and producers need to concentrate a lot more on containing costs. That suggests there is scope for consolidation within the Permian where the larger better capitalised companies are likely to have an advantage.



This section continues in the Subscriber's Area. Back to top
August 07 2019

Commentary by Eoin Treacy

Tesla's big battery in South Australia is a "complete waste of resources," claims Nissan

This article by Simon Alvarez for Teslarati.com may be of interest to subscribers. Here is a section:

Thomas’ statement comes as he was discussing the new Leaf’s vehicle-to-grid/vehicle-to-home (V2G/V2H) system, which will allow the all-electric car to serve as a home battery unit. With the system in place, the Leaf will not only store energy by plugging into a home or business; the vehicle could also serve the energy back when needed. V2H is already in use in countries such as Japan, and a release in Australia is expected within six months. 

The Nissan executive noted that the Leaf’s V2G system has the potential to help homeowners save money, especially if the vehicle charges through a rooftop solar system during the day, and uses its stored energy to power appliances and lights at night. 

“The way we distribute and consume energy is fundamentally inefficient … what we need is flexibility in the system. It’s great that we’ve invested all this money in renewable energy, but fundamentally we’re wasting most of that energy because it’s all being generated in the middle of the day when we don’t really need it,” he said. 

Tim Washington, CEO of charging solutions provider Jetcharge, noted that Nissan V2H technology has a lot of potential, considering that vehicles spend much of their time just parked, or in the case of electric cars, plugged in. 

Eoin Treacy's view -

Tesla has battery manufacturing capacity so it produces batteries. Nissan produces cars so it is pushing a use case for cars to provide base load during periods of peak consumption.



This section continues in the Subscriber's Area. Back to top
August 05 2019

Commentary by Eoin Treacy

The Top Miners Are Split on How to Chase the EV Battery Boom

This article by David Stringer for Bloomberg may be of interest to subscribers. Here is a section:

“We did a review of all the battery input materials -- nickel, cobalt, lithium,” said Eduard Haegel, asset president at the BHP’s Nickel West unit. “We think that in the medium-to-longer term there will be a margin that will be sticky for nickel -- we think it’s an attractive commodity.”

BHP, the biggest miner, this year reversed long-term efforts to seek a buyer for the division, opting to retain Nickel West to benefit from forecast growth in lithium-ion batteries and a scarcity of high-quality nickel supply. From the second quarter of 2020, the unit will begin production of bright-turquoise colored nickel sulphate -- a premium raw material for the battery supply chain -- from a nickel refinery south of Perth, with plans to potentially carry out the industry’s largest expansion.

Eoin Treacy's view -

Every auto manufacturer is going to have electric vehicle offerings in the next 18 months. That is going to create a lot of demand for batteries and the commodities that comprise the anode, cathode, catalysts and electrolyte.



This section continues in the Subscriber's Area. Back to top
July 25 2019

Commentary by Eoin Treacy

Evaluating US Nuclear Competitiveness and its Future as a Carbon-Free Clean Energy Source

Thanks to a Keith Rabin for this interview of Dr.Robert F.Ichord. Here is a section:

Both Russia and China are strongly committed to domestic nuclear development, international nuclear power exports, and the development of small modular reactors (SMR) and advanced nuclear reactors. Russia is building seven third–generation VVER–1200 reactors domestically and over twenty internationally. China is building domestically about eleven indigenous units, not including the Russia VVERs, the French EPRs or the recently completed US AP–1000s. They have two reactors of the Hualong One design under construction in Pakistan near Karachi and one planned at Chasma, the site of older, smaller Chinese reactors. They are also pursuing deals in the UK, Romania and Argentina as well as Bulgaria and several other countries. These strong state–financed commitments create the domestic and industrial capabilities needed for future innovation as well as to establish long–term political and economic relationships with countries of strategic interest. US historical influence over international standards and regulatory system development is therefore being challenged as well as US overall foreign policy interests in democracy and open markets. South Korean and Japanese companies are also international competitors but remain long–time US collaborators.

According to the World Nuclear Association about 30 countries are considering, planning or starting nuclear power programs. These range from sophisticated economies to developing nations. Is nuclear a viable option for emerging and frontier economies and how does installation and utilization differ in these locations from developed economies in terms of safety, non–proliferation as well as political stability, environmental and regulatory standards, supporting infrastructure and other factors?

I believe there is a major shift occurring in the global nuclear industry from the industrial countries to the non–OECD countries. Most of future global electricity growth will be in these countries and they want to diversify and develop cleaner energy systems. Despite the huge upfront costs, countries are deciding to accept attractive Russian and Chinese financing for these large, multi–billion dollar units. There is the national pride involved from joining the “nuclear club' as well as possible corruption in certain cases. Russia also offers military equipment as well as full fuel and operating services in its strategy to expand influence. Although both Russia and China have significant training efforts to develop local capacities, overall governance and transparency in a number of these countries is weak and the commitment to competent Nuclear Regulatory Commission (NRC)–like regulatory institutions is questionable. Although most of the countries have signed the Non–Proliferation Treaty (NPT) and the International Atomic Energy Agency (IAEA) Additional Protocol, the introduction of current nuclear power technologies in countries and regions – in which there are significant tensions and political conflicts, e.g. Middle East – raises serious concerns for US foreign policy.

Eoin Treacy's view -

The mining investment cycle of the early part of this century delivered on additional supply capacity. While the building plans for new reactors are impressive, they have been slowed by the Fukushima disaster and competition from other energy sources. That has resulted in quite a bit of volatility for uranium miners.



This section continues in the Subscriber's Area. Back to top
July 22 2019

Commentary by Eoin Treacy

Email of the day on climate change from Dr. David Brown:

I am impressed by your bravery in questioning much that appears in the media about 'climate change'. I am sure the climate is changing, as it is still warming from the last ice age, but that is a natural cycle. As a dyed-in-the-wool scientist, trained carefully in my PhD studies in the logic, method and philosophy of science, I have been horrified by the apparent abandonment of scientific method by many in research on our climate. 

I say this for two reasons. The first is that a basic premise of scientific method is that nothing can ever be proven for certain, that all conclusions are subject to change. Adoption of that approach was a key step in development of the scientific method and abandonment of religious-type certainty, yet it appears to have been abandoned as far as climate research in concerned. Second, you may remember that ex-president Obama opined that no grant money should be given to scientists seeking to disprove theories of climate change, yet the whole scientific method IS to generate experiments to disprove a hypothesis. I recommend subscribers read Karl Popper on this matter, as he explains the scientific method very clearly. 

I do not know whether human activity is particularly relevant to climate change, but I do know that much that passes as 'scientific research and comment' is just the opposite. I am more concerned about pollution that carbon dioxide, and that focus would have been much wiser than the approach adopted by the EU that ignored common sense, led to subsidy of diesel engines, and caused tens of thousands of premature deaths. (Was anyone ever held to account?). I never switched to diesel.

Well, despite Obama, there are alternative research views being published and this article refers to one quite contrary to the carbon dioxide hypothesis.

The original research article can be accessed by links in the article and I strongly suggest subscribers do read it to at least loosen their views a little.

It suggests that human influence is negligible and that any changes are mostly due to increased cloud cover generated by cycles in cosmic radiation. However, I fully expect the response to an alternative view will be as you stated: "Confirming evidence is accepted at face value but non-confirming evidence is dismissed. This practice is justified by the urgency of the problem and the need for action, but it is exactly when a vital decision needs to be made that cool heads need to prevail." 

Well done Eoin for stating this. You are impressive in your clear thinking and all subscribers benefit from your wisdom if they learn from you while investing.

Eoin Treacy's view -

Thank you for this email and I also read the article citing Finnish research with interest. Karl Popper was required reading when I was at university.

Cloud formation as a result of cosmic rays is particularly interesting as is cloud formation resulting from airline contrails. There are over 100,000 airline flights per day and that number is growing at an impressive rate as living standards rise. It makes intuitive sense that if there are more clouds the blanket effect of trapped heat is greater. Therefore, one of the most important innovations to monitor for pollution and climate is the drive towards emission free air travel.  

This article also discusses how planes can make rain and snow storms worse.

This link to Comment of the Day on May 21st may also be of interest. 

One point worth considering is if the regulatory authorities were not willing to act against diesel there is no chance a concerted effort will be made to tackle aircraft pollution until a viable alternative is commercially available.



This section continues in the Subscriber's Area. Back to top
July 19 2019

Commentary by Eoin Treacy

Email of the day on climate change.

Regarding the Allen Brooks piece on Climate change. I have to say I find the benign conclusions of the report totally unconvincing. Over the years I have read widely on the subject and have been especially impressed by the publications and books of one of the most eminent climate scientists whose work goes back more than 50 years. I refer to Professor James Lovelock. In a recent BBC interview, he suggested that global warming may be entering an acceleration phase. As I write this reply a news story has just announced that a high-pressure dome is due to affect the Eastern states of the US with predicted city temperatures likely to exceed 40 deg C. The simple fact is that you cannot expect hydrocarbons that have been trapped in the Earth’s crust over many millions of years, to be exploited by man over a few decades with the bye products going into the atmosphere, without grave consequences.to follow. Globally we have just experienced the hottest June ever and significantly Siberia has been 7 deg C above normal for the time of year. I mention this in respect of the melting permafrost which is now releasing methane in significant amounts. A gas thirty times more significant than CO2.as a greenhouse gas Of course this topic is an extremely emotional one, simply because the decisions made now on how we collectively proceed could not be more important. On balance I think I would go with the IPCC and James Lovelock. His books on Gaia theory, by the way, are worth reading

Eoin Treacy's view -

Thank you for this email which may be of interest to others. Higher median temperatures and more humid conditions in some areas than we are accustomed to are a fact. Coral bleaching and marine calcification are also facts we cannot dispel. Pollution of our rivers, lakes and oceans, desertification following logging and rapid expansion of cities to accommodate billions more people all represent significant challenges that need to be dealt with.



This section continues in the Subscriber's Area. Back to top
July 18 2019

Commentary by Eoin Treacy

Email of the day on the Australian Dollar

You may have seen this but thought it worth sending as it has potentially big impact for us Aussie’s.

Eoin Treacy's view -

Thank you for this article which I’m sure will be of interest to subscribers. Here is a section:

Wilson, however, says that given Australia's funds have accumulated such a large stock of foreign assets, an aggregate decision of super funds to hedge their exposure will result in flows that will be twice as large as a percentage of GDP.

And it is the hedging of those exposures that is becoming a more relevant focus for market participants and policy makers

"A 10 percentage point shift in super fund hedge ratios was equivalent to a flow of 1.5 per cent of GDP in 2013. This is now 3.5 per cent."

It is therefore plausible that strengthening in the Australian dollar could trigger a "scramble to hedge" particularly among performance ranking obsessed super funds.

"A discrete increase in hedge ratios by Australian super funds now has the capacity to overwhelm the underlying outflow."

Australia, Wilson says has actually built up a "significant stock of foreign currency exposure" – well in excess of $1 trillion, or the equivalent of or 60 per cent of GDP.

That is because the banks, which borrow heavily from offshore, hedge the currency risk of virtually every dollar they raise, while super funds are prepared to take on more foreign exchange exposure.



This section continues in the Subscriber's Area. Back to top
July 18 2019

Commentary by Eoin Treacy

Oil Dips as Russian Pipe Flow Is Restored, Earnings Are Mixed

This article by Alex Longley and Alex Nussbaum for Bloomberg may be of interest to subscribers. Here is a section:

Russian pipeline operator Transneft PJSC, meanwhile, said it resumed full flows from the country’s largest crude producer, Rosneft PJSC, after imposing restrictions amid concerns about contamination.

Oil has fallen all week as the specter of a renewed U.S.-China conflict dented the demand outlook, while American fuel stockpiles jumped. That’s overshadowed worries that Iran may shut down the Strait of Hormuz, a key chokepoint for much of the world’s oil shipments.

Eoin Treacy's view -

This week we have been treated to two examples of how much the energy sector has changed. First a hurricane shut down most gas supply in the Gulf of Mexico and hit the New Orleans area which is where a lot of processing infrastructure is situated. The price of gas fell instead of rising because so the market no longer relies on the Gulf of Mexico as a swing producer.



This section continues in the Subscriber's Area. Back to top
July 18 2019

Commentary by Eoin Treacy

Musings from the Oil Patch July 16th 2019

Thanks to a subscriber for this report from Allen Brooks which may be of interest. Here is a section on climate models:

What is most important about the Institute’s climate model was its near perfect replication of the temperature history of 1861-2013.  Projected into the future, the Institute’s model projects an unalarming temperature increase to 2100 of 1.4C (2.52 F).  Note that the Institute’s projection falls below the 1.5C increase environmentalists say is necessary to keep the planet from selfdestruction.  That target can be met without upending our entire economic system and how it is powered.  

 The Institute’s temperature forecast is well below those produced from the climate models utilized by the IPCC, which in some cases are as much as five times greater.  The criticism of climate models is that they are biased to the warm side.  An interesting chart shows the temperatures from climate models attempting to recreate actual temperatures at various elevations of the atmosphere for 1979-2010.  The chart shows that the models always exceed the actual observations when they rely on CO2 as the forcing mechanism.  Without CO2, the models come much closer to replicating temperature history, demonstrating the warming bias of the carbon emissions thesis.  

Understanding that natural variables are more important in explaining our temperature history is important since such a climate model projects a smaller temperature increase.  This goes against the preconceived basis for founding the IPCC, and weakens the attack on fossil fuels.  The Institute’s climate model results suggest that adaptive steps, more fuel-efficient vehicles, equipment and appliances, as well as increased use of cleaner fossil fuels could be a more palatable and less costly route for the global economy than draconian plans such as the Green New Deal.  

Eoin Treacy's view -

A link to the full report is posted in the Subscriber;s Area.

Guilt is one of the most powerful of human emotions. When we fail it is because we did something wrong and need to atone for our sins. When we succeed it is happenstance and we don’t deserve the rewards we have received. This latter point is particularly relevant for people who become much more successful than they had initially expected, and even more so if there is a wide difference in performance relative to their kin or community.



This section continues in the Subscriber's Area. Back to top
July 11 2019

Commentary by Eoin Treacy

Email of the day - on uranium and investing in illiquid shares

How do you think about liquidity in the context of a narrow theme like Uranium? And how would you measure it in this case? Volumes picking up and an increase in market capitalization of the sector? Or does it all tie back to the Fed and other central banks

Eoin Treacy's view -

Thank you for this question which may be of interest to other subscribers. Uranium is a comparatively small market with lots of minor constituents and a couple of large producers. When investing in any illiquid market, whether a sector or country index, weight of money moving in and out can have an inordinate effect on prices. That generally means you will not have an issue buying but selling often needs to be done in anticipation of a peak because liquidity can quickly evaporate during a downturn.



This section continues in the Subscriber's Area. Back to top
July 10 2019

Commentary by Eoin Treacy

German Vow to Cancel Permits Sends Carbon to 11-Year High

This article by Brian Parkin and Mathew Carr for Bloomberg may be of interest to subscribers. Here is a section:

“We’ve seen an encouraging rise in permit prices, so it’s no surprise that we see it as essential that the instrument continues to work as it should do,” Schulze said. “That’s logical. It makes no sense at all to implement an exit from coal here, only to export pollution licenses into the wider European system.”

And

“Scarcity is central to the aims of the European carbon trading market.”

Eoin Treacy's view -

Regardless of how one feels about the merits of carbon credits there is no arguing with state sponsored bull markets.

 



This section continues in the Subscriber's Area. Back to top
July 02 2019

Commentary by Eoin Treacy

Roubini Lives Up to Dr. Doom Alias With Global Recession Call

This article by Gregor Stuart Hunter for Bloomberg may be of interest to subscribers. Here is a section:

On the trade front, deglobalization looms as countries around the world have to choose which country to align with -- the U.S. or China -- once the bilateral negotiations collapse, Roubini said. “This divorce is going to get ugly compared to the divorce between the U.S. and the Soviet Union.”

On top of that, an oil-price shock coming from Iran tensions would raise the prospect of 1970s-style stagflation as a rise in crude prices coincides with slower growth, Roubini said.

Speaking at a blockchain summit in Taipei, Roubini reiterated his skepticism toward cryptocurrencies such as Bitcoin.

“There’s massive, massive amounts of price manipulation” in cryptocurrency trading, he said in remarks at the conference. As for blockchain, “it’s the most overhyped technology ever, it’s nothing better than a glorified spreadsheet,” Roubini said. “Nobody’s using it, and nobody’s ever going to use it.”

Eoin Treacy's view -

The stock market is at a new all-time high, but there is still such an impending sense of doom. That is not what one expects from market tops. Nouriel Roubini has a particular talent for soundbites, not least about cryptocurrencies. However, the challenges he alludes to are worthy of consideration.



This section continues in the Subscriber's Area. Back to top
July 02 2019

Commentary by Eoin Treacy

Musings From The Oil Patch July 1st 2019

Thanks to a subscriber for this edition of Allen Brooks ever interesting report. Here is a section:

Growing gas production has also allowed buyers to worry less about having substantial volumes in storage to meet winter demand.  Therefore, buyers see little need to lift gas prices to encourage storage injections.  That dynamic has been demonstrated by the low level of storage we reached last year, and now how quickly we are rebuilding storage, while also meeting increased gas consumption from the power and export markets.  

The recent gas production growth, which accelerated starting in 2016, appears to be slowing.  To some degree, it is a function of the Permian Basin crude oil pipeline capacity shortage, which has restricted associated natural gas output.  Will that change when the new oil pipelines begin operating later this year?  Only time will tell, but official forecasts call for a slowdown in the growth of gas production.  That means the bigger question for the natural gas market will be demand.

A recent webinar on the natural gas market and outlook through 2020 had two charts we found very interesting.  The first dealt with the significantly different gas storage picture in Europe.  Today, storage is well ahead of last year, which may have an impact on the amount of future liquefied natural gas (LNG) shipments.  So far, it appears to have had little impact, but the lack of clarity about output levels from the Dutch gas fields could also impact the market for U.S. LNG shipments to Europe.  

The most interesting chart was explaining the firm’s gas price forecast compared to the NYMEX futures strip price.  The forecasters were able to frame their perspective about the upside and downside to their forecast by listing and quantifying the positive and negative factors for gas demand and supply.  We are not endorsing the forecast, but rather pointing out that there are a number of plusses and minuses that need to be considered when making a gas price forecast.  

Eoin Treacy's view -

Natural gas is in a secular bear market. There is no shortage of it and a steep contango remains evident. That continues to exert downward pressure on the price. New sources of outsized demand are required to resolve this condition. Outsized economic growth, hydrogen fuel cells or shifting demand from coal are all candidates.  The downtrend suggests these sources of potential demand are not yet strong enough to influence the market.



This section continues in the Subscriber's Area. Back to top
June 24 2019

Commentary by Eoin Treacy

The Future of Hydrogen

This report from EIA may be of interest to subscribers. Here is a section

The time is right to tap into hydrogen’s potential to play a key role in a clean, secure and affordable energy future. At the request of the government of Japan under its G20 presidency, the International Energy Agency (IEA) has produced this landmark report to analyse the current state of play for hydrogen and to offer guidance on its future development. The report finds that clean hydrogen is currently enjoying unprecedented political and business momentum, with the number of policies and projects around the world expanding rapidly. It concludes that now is the time to scale up technologies and bring down costs to allow hydrogen to become widely used. The pragmatic and actionable recommendations to governments and industry that are provided will make it possible to take full advantage of this increasing momentum.

Hydrogen can help tackle various critical energy challenges. It offers ways to decarbonise a range of sectors – including long-haul transport, chemicals, and iron and steel – where it is proving difficult to meaningfully reduce emissions. It can also help improve air quality and strengthen energy security. Despite very ambitious international climate goals, global energy-related CO2 emissions reached an all-time high in 2018. Outdoor air pollution also remains a pressing problem, with around 3 million people dying prematurely each year.

Hydrogen is versatile. Technologies already available today enable hydrogen to produce, store, move and use energy in different ways. A wide variety of fuels are able to produce hydrogen, including renewables, nuclear, natural gas, coal and oil. It can be transported as a gas by pipelines or in liquid form by ships, much like liquefied natural gas (LNG). It can be transformed into electricity and methane to power homes and feed industry, and into fuels for cars, trucks, ships and planes.

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The dramatic decline in natural gas prices and the abundant quantities being produced and in reserve mean that it is inevitable that new sources of demand will appear to take advantage. Since natural gas is one of the primary sources of hydrogen, it makes sense to promote fuel cell vehicles or range extenders for electric vehicles. How long it will take for this evolution to have an effect on the market is questionable, but it will probably be the catalytic event necessary to boost prices out of the long-term base. 



This section continues in the Subscriber's Area. Back to top
June 19 2019

Commentary by Eoin Treacy

Musings from the Oil Patch June 18th 2019

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here Is a section on the commodity/S&P500 ratio:

When we contemplate the market’s assessment of commodities versus stocks, we find the former, which includes oil and gas, to be at the lowest valuation point in at least 50 years.  Does this mean that the commodity market it being disrupted?  Peak valuation points occurred in 1973-74, 1990 and 2008.  Each peak was associated with spikes in oil prices caused by geopolitical events such as the Arab Oil Embargo, the First Gulf War and the Global Financial Crisis, which happened as oil prices traded in excess of $100 per barrel.  Likewise, each low has been associated with low oil prices – either absolute lows, or lows below more recent oil price ranges.  

With respect to the low points in the valuation of commodities versus stocks, the prior two lows were marked by excess stock market speculation about super-growth stock future earnings.  The 1998-99  Dot.com Bubble, which saw companies brought public with barely any revenues and no earnings, but lots of “eyeballs” on web sites or clicks on shopping sites, happened to also be associated with oil prices falling to $11 per barrel as the Asian currency crisis unfolded and a brief global recession occurred.  The 1970-73 low was marked by the market bubble created by the Nifty-Fifty growth stocks, as price-to-earnings ratios for these 50 super-growth companies soared to ratios in excess of 50 times next year estimates for earnings per share.  Of course, two energy service companies – Schlumberger Ltd. (SLB-NYSE) and Halliburton Companies, Inc. (HAL-NYSE) – were part of this Nifty-Fifty stock group.  Crude oil prices at that point were in the $3 per barrel range, and there was a battle brewing between the seven largest global oil companies that ruled the international oil business and the Organization of Petroleum Exporting Countries over the value of a barrel of oil for tax and royalty calculations.  That tax battle lit the fuse that exploded after the Yom Kippur War involving Israel and Egypt in 1973, leading to the Arab Oil Embargo and the explosion in global oil prices.  

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

This ratio has been doing the rounds of pundit commentary for the last couple of years because commodities are trading at a such a record low level relative to stocks. Jeff Gundlach in particular has been predicting a resurgence in commodity prices because of their relative discount to stocks and one of the reasons private equity has been so interested in the energy space is because of the relative discount to equities on offer, coupled with the prolific production profiles (and early payback) of unconventional wells.



This section continues in the Subscriber's Area. Back to top
June 13 2019

Commentary by Eoin Treacy

Email of the day - on the USA's oil advantage:

Quick thought, following your comment on America's oil glut, and Morgan Stanley's report you highlighted.

I have been watching the difference in price between the WTI and Brent Crude for a long time now. The difference seems to vary between 10 and almost 20% depending on the day, with WTI obviously being the cheaper. Is it too SIMPLISTIC to say?

1) that US factories, offices, homes etc enjoy an enormous advantage over their global competitors with energy costs being so much cheaper, not forgetting it already enjoys a significant tax advantage over many as well.

2) when the US does become a significant oil exporter, it can make a lot of profit, even by offering only minor discounts to the Brent price to attract business. Possibly more profit than from its LNG exports.

Eoin Treacy's view -

Thank you for highlighting these points. I’ve always been a fan of Ockham’s Razor. There is no need to get over complicated. The USA has a massive advantage in terms of its oil and gas production capacity. That is reshaping global geopolitics, it will have a meaningful effect on the balance of payments and it has already had a meaningful effect on the chemical industry because of reduced input costs.  one.



This section continues in the Subscriber's Area. Back to top
June 13 2019

Commentary by Eoin Treacy

Uranium Sector

Thanks to a subscriber for this report from Eight Capital which may be of interest. Here is a section:

Enviro Minister Schulze recently said that Germany will stick to its timetable to close the last nuclear reactor by YE22.  Some critics like Volkswagen CEO Herbert Diess believe that it should wind down coal before nuclear. A recent Forbes article “What Does It Actually Cost to Charge Up an Electric Car focused on cost of charging an EV.  We took it one step further and also determined the environmental impact of Germany’s decision.  Given that France’s electricity generation is 73% nuclear and Germany is only 12%, we compared estimated costs and emissions associated with charging a Tesla Model S with a 100-kWh battery. First off, electricity prices appear 45% lower in France.  Secondly, CO2 emissions from electricity generation to charge an EV in France is just 13% of what it is in Germany. Yes, Germans would see a 140% CO2 reduction by using EV’s versus that from an average ICE vehicle, but the French would see a 1,720% CO2 reduction.

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

For the green movement there is no greater cause celebre than to combat nuclear proliferation. That consideration more than any other fired the resolve of Angele Merkel to wind down Germany’s nuclear industry following the Fukushima disaster even though Germany is not a seismically active area.



This section continues in the Subscriber's Area. Back to top
June 12 2019

Commentary by Eoin Treacy

What if the US and China Reach a Trade Deal?

Thanks to subscriber for this report from Morgan Stanley which may be of interest. Here is a section:

June 07 2019

Commentary by Eoin Treacy

Shell's Floating Prelude LNG Poised to Load First Cargo

This article by Stephen Stapczynski for Bloomberg may be of interest to subscribers. Here it is full:

Shell’s Prelude floating LNG plant offshore Australia is expected to load its first cargo on the vessel Valencia Knutsen, which is currently idled in the area, according to commodity shipment tracker Kpler.

* The vessel arrived near Prelude on June 4 and was likely attempting to load from the facility, but it left berth range a few hours after arrival, Kpler analysts said

** The vessel will probably be moored alongside the Prelude facility before the end of the week: Kpler

* NOTE: Shipment of the first LNG cargo is “imminent,” Platts reported on June 4, citing Shell’s head of integrated gas, Maarten Wetselaar

Eoin Treacy's view -

When Royal Dutch Shell announced it was ready to spend billions on developing a major offshore LNG processing facility in Northern Australia a few years ago it was considered a risky venture. However, the company’s long-term bet on natural gas representing a much better demand growth trajectory than crude oil has been proved correct. 



This section continues in the Subscriber's Area. Back to top
May 16 2019

Commentary by Eoin Treacy

Stock Rally Gains Momentum on Risk Bet, Bonds Fall

This article by Randall Jensen and Vildana Hajric for Bloomberg may be of interest. Here is a section:

This has become a pattern where you get a big aggressive statement from the administration that might impact trade and then the market reacts aggressively as it did on Monday and then it seems to back off,” Chicago-based Susan Schmidt, head of U.S. equities at Aviva Investors, said in an interview. “Business is still doing well. I think if the market can stay focused on the facts and the data, then I think the market will hold.”

Strong economic data and earnings, along with hints from the Trump administration that it may be willing to compromise on trade has helped stocks rebound from the battering they took when the tariff battle with China flared. But the headlines have come fast and furiously, most recently President Donald Trump signed an order that’s expected to restrict Chinese telecommunications firms from selling in the U.S.

Eoin Treacy's view -

China’s dependence on global trade is far greater than the USA’s and the market has been voting with its feet by both supporting the Dollar, the bond market and the stock market since the trade war began.



This section continues in the Subscriber's Area. Back to top
May 14 2019

Commentary by Eoin Treacy

Oil Rises as Drones Strike Saudi Pipeline and Trade Fears Recede

This article by Alex Nussbaum and Grant Smith for Bloomberg may be of interest to subscribers. Here is a section:

Oil climbed as drones struck Saudi Arabia’s main cross-country crude pipeline, while President Donald Trump said a trade deal with China is still within reach.

Futures gained 1.2% in New York, amid assaults on the world’s chief crude exporter. State-owned Saudi Aramco halted operations in the area after the strike on two pumping stations, which was claimed by Iran-backed rebels from neighboring Yemen. The attack followed damage to four oil tankers anchored off the United Arab Emirates on Sunday.

Eoin Treacy's view -

The intensification of sanctions on Iran risked retaliation among the country’s proxies across the Middle East with Yemen being a good example. It is almost inevitable that Hizballah will now also rachet up activity as well.



This section continues in the Subscriber's Area. Back to top
May 07 2019

Commentary by Eoin Treacy

Email of the day - on oil prices

“May I clarify something? The item denoted as Oil (1st West Texas) (CL1 COMB COMDTY) in the Chart Library - is this the Spot Price for WTI? Or is it the near-term futures price for WTI? Thanks in advance.“

Eoin Treacy's view -

Thank you for this question which other’s may also be interested in. The CL1 ticker is for the 1st month continuation chart. Oil trades on one-month contracts so it rolls with the most active contract at the end of every month.



This section continues in the Subscriber's Area. Back to top
May 03 2019

Commentary by Eoin Treacy

Shell's Great Natural Gas Earnings Had a Helping Hand From Oil

This article by Kelly Gilblom and Dan Murtaugh for Bloomberg may be of interest to subscribers. Here is a section:

Shell is the world’s largest liquefied natural gas trader and sells most of the fuel on long-term contracts linked to oil prices. Some of those agreements are structured with a three-month lag, Chief Financial Officer Jessica Uhl told reporters on a conference call. That means that while global gas prices were tanking, Shell was still reaping benefits from a crude rally that sent Brent prices to the highest level in four years in early October.

“We have a business structured predominantly around long-term contracts, mostly oil linked,” Uhl said. “The price environment doesn’t have material impact on our business.” In addition, Shell also benefited from trading. The gas business was buoyed by a $234 million accounting gain in the value of its commodity derivatives. Shell’s rival, BP Plc, told investors on Tuesday that its strong trading earnings reflected shorting gas contracts.

Eoin Treacy's view -

Natural gas is the big winner from the demise of coal. Not only is it now cheaper than coal, because of tighter emissions regulations and unconventional drilling, but it is also less polluting. That’s particularly important for Asia which has some of the most polluted cities in the world and where standards of living are increasing most rapidly which is creating demand for clearer solutions.



This section continues in the Subscriber's Area. Back to top
May 01 2019

Commentary by Eoin Treacy

Email of the day on crude oil prices:

Please check on my enquiry below (sent to Eoin on 16.4.2019): [On 12/4/2019, you wrote "Nevertheless, a great deal of additional supply, internationally, becomes economic above $80 so that level represents a significant Rubicon for prices." I presume the $80 refers to the Brent crude oil price. What is the equivalent Rubicon price for the WTI? Thanks in advance.] I have not seen a reply to my query above. Can you please check what happened?

Eoin Treacy's view -

Thank you for this email which I am only seeing now because of previously undiscovered issue with the contact us form on the site. If anyone sent an email which has not been replied to in the last couple of weeks please resend it.



This section continues in the Subscriber's Area. Back to top
April 29 2019

Commentary by Eoin Treacy

Perspectives for the Clean Energy Transition

This report from the International Energy Agency may be of interest to subscribers. Here is a section:

In contrast to current trends, the Faster Transition Scenario sets out a vision for an extremely ambitious transformation of the energy sector. Energy-related emissions peak around 2020 and drop 75% to around 10 gigatonnes of CO2 (GtCO2) per year by 2050. The carbon intensity of the power sector falls by more than 90% and the end-use sectors see a 65% drop, thanks to energy efficiency, uptake of renewable energy technologies and shifts to low-carbon electricity.

Electrification plays a major role in the transition, combined with clean power generation. Electricity’s share in final energy reaches about 35% by 2050, compared to less than 20% today. That growth is mainly due to adoption of heat pumps in buildings and industry, as well as a swift evolution in transport. Efficiency improvements keep electricity demand for other end uses, such as lighting and cooling, relatively stable, while access to electricity improves worldwide.

Eoin Treacy's view -

One of the biggest challenges facing the environment is the emotionality of the debate. It is almost impossible to discuss objective facts versus subjective opinion. Until this century there was no record of a hurricane in the South Atlantic, but now there have been three. Baobab trees that stood for thousands of years in Africa are dying and coral bleaching is taking over an increasingly large percentage of the world’s reefs. These are facts that point toward a changing climate.



This section continues in the Subscriber's Area. Back to top
April 18 2019

Commentary by Eoin Treacy

On Target

Thanks to Martin Spring for this edition of his ever-interesting letter. Here is a section on the coal market which I found particularly illuminating: 

While climate-change activists make a lot of fuss about the US, where emission of greenhouse gases has been in decline, they aren’t demonstrating loudly about China -- which attacks developed countries for not doing enough, while itself doing most to worsen it,

The New York Times reports that China, the world’s leading emitter of greenhouse gases from coal, now admits it’s burning up to 17 per cent more coal than its government previously claimed when it signed up for the Paris accord.

And it’s making things worse. Across China the government is building a fleet of new coal-fired stations with 259 gigawatts of capacity, while outside the country it’s financing even more new coal plants, providing $36 billion for 399 gigawatts.

“Chinese bankers and project planners like coal-backed projects because they are cheap,” says the energy consultancy IEEFA. “While they are restricted by Chinese pollution and emissions targets at home, they are free to fund coal-backed projects abroad.”

Eoin Treacy's view -

The standard of living attained by China’s middle class has resulted in a clear call for cleaner air and the government is intent on showing progress. However, there is no getting around the fact that coal fired power stations are cheap to build and run and are very reliable. Moreover, China has plenty of experience building them and there is a ready market for coal in emerging markets, not least in India and increasingly Africa.



This section continues in the Subscriber's Area. Back to top
April 12 2019

Commentary by Eoin Treacy

Chevron Buys Anadarko in $33 Billion Bet on Shale Oil, LNG

This article by By Kimberly Yuen, Javier Blas and Kelly Gilblom for Bloomberg may be of interest to subscribers. Here is a section:

"Chevron’s deal for Anadarko escalates the race with Exxon Mobil for the Permian and delivery of synergies and efficiencies will be critical in narrowing or overtaking its peer’s returns." --Fernando Valle, industry analyst, and Jonathan Mardini, associate analyst

The deal may put pressure on Shell to seek assets in the Permian, where the Anglo-Dutch company has said it wants to grow. Oil executives and bankers had in the past speculated that Shell may buy Anadarko because they have adjacent acreage. Shell has in the past several months held talks with Endeavor Energy Resources LP, the largest privately-owned company in the Permian that bankers say might be valued at $10 billion to $15 billion.

Eoin Treacy's view -

Unconventional oil and gas production is more expensive than conventional supply but there is a lot more of it. The challenge for producers is to compress the cost of production as much as possible so that they can be competitive when prices occasionally decline. That is what is driving the desire to get economies of scale through acquisitions.

 



This section continues in the Subscriber's Area. Back to top
April 04 2019

Commentary by Eoin Treacy

Musings from the Oil Patch April 3rd 2019

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section on coal to gas power plant conversions:

With an investment of roughly 50% of the value of an operating coalfired power plant, the benefits of converting to natural gas for fuel can make economic sense, based on our estimates.  However, as every technical article we read discussing fuel conversions pointed out, each project is different and requires an extensive analysis before reaching a conclusion.  We will not bore you with the extended lists of issues to be considered.  Natural gas makes for a cleaner environment and operating facility, and also requires less ongoing maintenance.  Gas plants are also less labor intensive, which may become a greater consideration in the future with a tighter labor market and an aging labor force.  

Given the amount of natural gas resources in the world, it would be nice to say that this conversion option is a panacea for the expensive decarbonization efforts currently being proposed.  A global coal-to-gas conversion effort is not likely, even though we suspect many more switches could (may) be justified.  As the economics of the Joliet conversion highlights, the plant moved from a baseload to peaking status, which could be justified by current energy economics.  We doubt all regions have similar economics that facilitate such a move.  The world will continue to remain dependent on an “all of the above” energy slate for ensuring everyone has access to cost-effective electricity.  

Eoin Treacy's view -

Natural gas prices went negative in Texas over the last couple of days, as a result of a surge in supply from the Permian. A couple of years ago there were negative electricity prices in the same region as a result of all the wind power. These market anomalies help to highlight just how prolific production can be. Meanwhile US oil production is in excess of 12 million barrels a day.



This section continues in the Subscriber's Area. Back to top
April 04 2019

Commentary by Eoin Treacy

Production of battery grade cobalt blows up First Cobalt's stock

This article from Mining.com may be of interest to subscribers. Here is a section:

“Producing a battery grade cobalt sulfate is one of our most significant accomplishments as the majority of refined cobalt for the electric vehicle market is produced in Asia. With no cobalt sulfate production in North America today, First Cobalt stands to become the first such producer for the American electric vehicle market," Trent Mell, President & CEO said in the press release.

“Electric vehicle demand in North America will keep growing," Henrik Fisker, First Cobalt director and CEO of electric vehicle manufacturer Fisker Inc., said. "Companies such as Fisker continue to introduce new, affordable EV models to the market. Automakers and battery manufacturers have a responsibility to ensure any materials we use in our batteries are sourced in an ethical way.  The restart of the First Cobalt Refinery is an important step towards producing battery materials in America with a clean record from mine to machine.”

Eoin Treacy's view -

Cobalt has bubbly characteristics by the time it peaked last year. One of the oldest adages in the commodity markets is “the cure for high prices is high prices” and the surge in cobalt prices encouraged new production and a drive towards greater consumption efficiency. The peaceful transition of power in Congo, the world’s largest producer, represented an additional bearish sign and contributed to the crash.



This section continues in the Subscriber's Area. Back to top
April 04 2019

Commentary by Eoin Treacy

Fastest Electric Car Chargers Waiting for Batteries to Catch Up

This article by David Stringer for Bloomberg may be of interest to subscribers. Here is a section:

“The charging capacities of electric vehicles have doubled in the space of a few years,’’ Wolfsburg, Germany-based Volkswagen said in an email. “We expect that fast-charging in public spaces will become the norm.’’

Tesla, which has more than 12,000 chargers globally, is boosting the speed of its own refueling units to cut time at the pump by as much as half. The upgrade promises to add as much as 75 miles of charge in five minutes -- still lagging the ultra-fast models.

The speed at which current EVs can recharge is limited by such factors as the size of their battery, the voltage the pack can accept and the charger’s current.

While it may be years before battery packs able to handle the power surge from ultra-fast chargers go mainstream, some new EVs -- including Hyundai Motor Co.’s Kona Electric and Jaguar Land Rover Automotive Plc’s I-Pace -- already can recharge faster than previous generations.

Volkswagen’s Porsche brand will introduce its electric Taycan sports car later this year. It’s the first vehicle capable of taking full advantage of the fastest chargers, with a larger battery and the ability to operate at a higher voltage.

“The cars are coming,” said Marty Andrews, CEO of Chargefox Pty, which installed ABB’s fastest units at some Australia charging stations. “The carmakers want ultra-rapid chargers because they want this to be future-proof. This is not a six-month plan, it’s a 10-year plan.”

Eoin Treacy's view -

Refueling infrastructure during the era of internal combustion engines was built out by the oil companies and they still own large parts of the filling station market. What was particularly interesting about Royal Dutch Shell’s announcement last month that it aims to become the world’s largest power producer by 2030, is that this dovetails with the proposed increase in demand from electric vehicles. 
That has little to do with the environmental impact of the move and more to do with protecting a significant portion of its business from terminal decline.



This section continues in the Subscriber's Area. Back to top
April 02 2019

Commentary by Eoin Treacy

The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

This article by Javier Blas for Bloomberg may be of interest to subscribers. Here is a section:

The new maximum production rate for Ghawar means that the Permian in the U.S., which pumped 4.1 million barrels a day last month according to government data, is already the largest oil production basin. The comparison isn’t exact -- the Saudi field is a conventional reservoir, while the Permian is an unconventional shale formation -- yet it shows the shifting balance of power in the market.

Ghawar is so important for Saudi Arabia because the field has "accounted for more than half of the total cumulative crude oil production in the kingdom," according to the bond prospectus. The country has been pumping since the discovery of the Dammam No. 7 well in 1938.

On top of Ghawar, which was found in 1948 by an American geologist, Saudi Arabia relies heavily on two other mega-fields: Khurais, which was discovered in 1957, and can pump 1.45 million barrels a day, and Safaniyah, found in 1951 and still today the world’s largest offshore oil field with capacity of 1.3 million. In total, Aramco operates 101 oilfields.

Eoin Treacy's view -

A lot of what Saudi Arabia is producing today is heavy oil and coupled with Venezuelan production that has boosted refining capacity for high sulphur blends. That transition is reflective of the changing production profile of the Saudi Arabia’s fields even as it continues to sustain the ability to produce up to 12 million barrels a day.



This section continues in the Subscriber's Area. Back to top
March 27 2019

Commentary by Eoin Treacy

Aramco to Buy $69 Billion Sabic Stake in Record Mideast Deal

This article by Matthew Martin, Dinesh Nair, and Archana Narayanan for Bloomberg may be of interest to subscribers. Here it is in full:

Saudi Aramco, the world’s biggest oil producer, will buy a majority stake in local chemical giant Sabic from the kingdom’s sovereign wealth fund for $69.1 billion.

The Middle East’s biggest deal will transfer a big slug of cash into the Public Investment Fund, helping Crown Prince Mohammed bin Salman finance his economic agenda. It also weights Aramco away from its core oil production business, pumping 10 percent of the world’s crude, and more toward the production of fuels and chemicals.

“This transaction is a major step in accelerating Saudi Aramco’s transformative downstream growth strategy of integrated refining and petrochemicals," Amin Nasser, chief executive officer of Aramco, said in the statement.

The deal, first mooted last year, values the Public Investment Fund’s 70 percent stake at 123.4 riyals per share according to a statement. The remaining shares, traded on the Saudi stock market, aren’t part of the transaction.

Eoin Treacy's view -

This merger is a clear signal of Saudi Arabia’s long-term intentions. They know as well as any of us that the USA is going to become a competitor for established energy markets which means they have to produce more value-added products in order to compete with higher cost producers. That is particularly bad news for Canada and Brazil where supply bottlenecks, grades and deep water all represent challenges that are only likely to be overcome by higher prices.



This section continues in the Subscriber's Area. Back to top
March 12 2019

Commentary by Eoin Treacy

Oil 2019: Analysis and forecast to 2024

This summary report from IEA may be of interest to subscribers. Here is a section:

The United States leads global supply growth The United States continues to dominate supply growth in the medium term. Following the unprecedented expansion seen in 2018, when total liquids production increased by a record 2.2 million barrels per day (mb/d), the United States will account for 70% of the increase in global production capacity until 2024, adding a total of 4 mb/d.

 

Important contributions will also come from other non-OPEC countries, including Brazil, Canada, a resurgent Norway, and newcomer Guyana, which together add another 2.6 mb/d in the next five years. In total, non-OPEC production is set to increase by 6.1 mb/d through to 2024.

 

Among OPEC countries, only Iraq and the United Arab Emirates have significant plans to increase capacity. These gains have to offset steep losses from Iran and Venezuela, which are subject to sanctions and political or economic turmoil. As a result, OPEC’s effective production capacity falls by 0.4 mb/d by 2024.

The United States is also turning into a major player in the global oil trade
As a result of its strong oil production growth, the United States will become a net oil exporter in 2021, as its crude and products exports exceed its imports. Towards the end of forecast, US gross exports will reach 9 mb/d, overtaking Russia and catching up on Saudi Arabia. The transformation of the United States into a major exporter is another consequence of its shale revolution.

Greater US exports to global markets strengthen oil security around the world. Buyers of crude oil, particularly in Asia, where demand is growing fastest, have a wider choice of suppliers. This gives them more operational and trading flexibility, reducing their reliance on traditional, long term supply contracts.

Global trade is not simply a story for the United States. The second-largest increase in crude exports comes from Brazil, which ships an extra 0.8 mb/d of oil by 2024. Following Brazil, Norway is enjoying a renaissance and will overtake Kazakhstan and Kuwait in the next five years a remarkable achievement.

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area. 

“Unconventional oil and gas are gamechangers for the energy sector” has been a refrain at this service for more than a decade and the full extent of that change is now becoming clear. When we first talked about the USA becoming energy independent it sounded to many like a fanciful view but the country is already an exporter and will reverse decades of imports in the coming couple of years.



This section continues in the Subscriber's Area. Back to top
February 25 2019

Commentary by Eoin Treacy

Wild Week Ahead for Trump, Kim, Brexit, Cohen and Fed's Powell

This article by Tony Czuczka for Bloomberg may be of interest to subscribers. Here is a section:

After days of buildup, Trump kicked off the week by delaying a threatened increase in U.S. tariffs on Chinese imports and dangling a summit with President Xi Jinping at Mar-a-Lago, his Florida retreat, if “both sides make additional progress.” Along the way, he slapped down Lighthizer on a semantic point. Earlier, the two sides were haggling over how to ensure Beijing lives up to its promise to not weaken the yuan. Trump then reported substantial progress, including on currency.

And

Look for Powell to offer signals on what’s next for the Fed during two days of congressional testimony. When they last met, policy makers broadly backed ending the runoff of the central bank’s balance sheet. Lighthizer, who testifies Wednesday, may give a sense of how likely the U.S. is to impose tariffs on auto imports. The European Union is threatening to hit back. U.S. fourth-quarter gross domestic product, due Thursday, is expected to show 2.5 percent expansion last year, short of the Trump administration’s ambitious goal.

Eoin Treacy's view -

The Shanghai A-Share Index rose 5.95% as investors raced to price in the conclusion the trade war is over. The Index has been trending downwards for more than a year but broke its sequence of lower rally highs two weeks ago and extended that advance today.



This section continues in the Subscriber's Area. Back to top
February 12 2019

Commentary by Eoin Treacy

The Weak Spot in the Oil Market That Traders Are Missing

This article by Stephanie Ying for the Wall Street Journal may be of interest to subscribers. Here is a section:

Faltering demand in Germany has preceded weak industrial data, which raised fears of a continued slowdown in Europe’s largest economy. Industrial production dropped for the fourth straight month in December, and Germany’s economy contracted in the third quarter of 2018 for the first time since 2015.

Standard Chartered analysts warn that the weakness could spread to other parts of Europe, further undermining demand for oil.

German demand makes up a minor fraction of the world’s oil consumption; the country was the 10th largest oil consumer in 2016, accounting for 2% of the global total, according to the U.S. Energy Information Administration. Since China made up 13% of oil consumption as of 2016, a drop in Chinese demand growth would likely have a comparatively larger impact.

Additionally, signs of slowing demand in other parts of Europe haven’t materialized, Mr. Horsnell noted.

Eoin Treacy's view -

Saudi Arabia continues to cut back on supply which buoyed the market today. However, the reasons for this move are not only to support prices but also in response to the slowdown in the global economy which is being led by Europe and China.



This section continues in the Subscriber's Area. Back to top
February 07 2019

Commentary by Eoin Treacy

Musings From The Oil Patch February 5th 2019

Thanks to a subscriber for this particularly detailed edition of Allen Brooks’ report for PPHB. Here is a section oil related equities:

Eoin Treacy's view -

A link to the full report and a section from it are posted in the Subscriber's Area. 

There is a mismatch between the statements from many politicians that the future of energy is in renewables and the statements from industry insiders that confirm the profit margins from these businesses are nowhere near those of conventional fossil fuels. That virtually ensures the continued success of renewables is dependent on subsidies and/or priority offtake agreements to justify the considerable expense in building these operations.



This section continues in the Subscriber's Area. Back to top
February 05 2019

Commentary by Eoin Treacy

Morning Tack February 5th 2019

Eoin Treacy's view -

A link to the full report and a section from it are posted in the Subscriber's Area. 

Since the dawn of the first industrial revolution 250 years ago there has been a clear correlation between the energy intensity of economies and economic growth. That is certainly still true in many emerging markets. However, when we look at highly developed economies like the USA and parts of Europe the energy intensity of the economy is declining, but data intensity is rising.



This section continues in the Subscriber's Area. Back to top
January 23 2019

Commentary by Eoin Treacy

Musings from the Oil Patch January 23rd 2019

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section:

Eoin Treacy's view -

A link to the full report and a section from it is posted in the Subscriber's Area. 

OPEC’s supply cuts and US shale’s continued growth are already in the market. The question of how fast global growth will be, and therefore the demand outlook, is a movable feast but the trajectory of interest rates and the trade war are obviously important factors.



This section continues in the Subscriber's Area. Back to top
January 18 2019

Commentary by Eoin Treacy

China Is Said to Offer Path to Eliminate U.S. Trade Imbalance

This article from Bloomberg News may be of interest to subscribers. Here is a section:

China has offered to go on a six-year buying spree to ramp up imports from the U.S., in a move that would reconfigure the relationship between the world’s two largest economies, according to officials familiar with the negotiations.

By increasing annual goods imports from the U.S. by a combined value of more than $1 trillion, China would seek to reduce its trade surplus -- which last year stood at $323 billion -- to zero by 2024, one of the people said. The officials asked not to be named as the discussions aren’t public.

The offer, made during talks in Beijing earlier this month, was met with skepticism by U.S. negotiators who nonetheless asked the Chinese to do even better, demanding that the imbalance be cleared in the next two years, the people said.

Economists who’ve studied the trade relationship argue it would be hard to eliminate the gap, which they say is sustained in large part by U.S. demand for Chinese products.

Eoin Treacy's view -

On the face of it this is good news because it at least suggests the USA and China are engaging in productive discussions and some initiatives to end of the impasse are being discussed. The stock market continues to unwind the overextension relative to the trend mean as it prices in optimism that a deal with be struck.



This section continues in the Subscriber's Area. Back to top
January 09 2019

Commentary by Eoin Treacy

Outlook for 2019: The Game Has Changed

Thanks to a subscriber for this report from KKR which may be of interest to subscribes. Here is a section:

Eoin Treacy's view -

A link to the full report and a section from it are posted in the Subscriber's Area. 

The broad global adoption of fiscally stimulative policies is unlikely to be as coordinated as the monetary response to the credit crisis was. The big arbiters of how much liquidity is provided to the global economy and eventually the markets will be in which large countries adopt fiscal stimulus. Germany, China and Brazil are the big additional potential sources of stimulus so it is their political machinations that are most worth watching.



This section continues in the Subscriber's Area. Back to top
January 04 2019

Commentary by Eoin Treacy

Oil Set for Biggest Weekly Gain Since 2016 on Saudi Supply Cut

This article by Grant Smith for Bloomberg may be of interest to subscribers. Here is a section:

“Underpinning this wave of buying is mounting evidence that Saudi Arabia has taken an axe to its oil production,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. Oil’s positive start to 2019 follows its worst quarter in four years and a 20 percent annual loss driven by panic over a growing glut of crude. While OPEC’s output plunged by the most in almost two years last month and producers have pledged to curb supplies through the first half of 2019, concerns about oversupply prevail as stockpiles at America’s main storage hub show signs of swelling.

And

The majority of oil executives surveyed by the Dallas Fed are still planning to boost spending in the next year, even after a plunge in prices. Saudi Arabia raised pricing for most crude grades to Asia and for all blends to buyers in the U.S. for delivery in February as the world’s biggest exporter cuts output to clear a global oil glut. As the new year begins, the oil market looks set to be dominated by big shifts in production. A few months ago, investors were struggling to comprehend just how much cash the largest oil companies were about to dump on them. Those mountains of money have now been reduced to mere hills.

Eoin Treacy's view -

Saudi Arabia following through and cutting supply is a positive development but the declining economic activity in Texas is also an important consideration since the unconventional supply is a big part of the reason for the glut which has seen prices decline so swiftly.



This section continues in the Subscriber's Area. Back to top
January 04 2019

Commentary by Eoin Treacy

Will Winter of Discontent Make Summer of Slowdown?

Thanks to a subscriber for this report from Douglas Porter for BMO focusing on the Canadian market. Here is a section:

In normal times, it’s Canada’s turn to shine at this later stage in the cycle—typically benefitting from rising commodity prices and still-solid global growth. But the TSX was bludgeoned this year (down double-digits) by trade tensions, a housing slowdown and weak domestic oil prices. Next year’s growth outlook is dulled by oil production cuts, slower U.S. spending, slipping auto sales and the overhang of record consumer debt. Providing a mild offset will be the new LNG project, mildly stimulative fiscal policy in the lead-up to the October federal election, as well as (presumably) some certainty on the North American trade front. But with the big interest-sensitive sectors still gearing lower, we look for 2019 Canadian GDP growth to simmer down to a 1.8% pace following this year’s as-expected 2.1% advance. With population growth recently clocking in at 1.4% y/y, this points to quite modest per capita gains.

Even this more restrained GDP growth will tighten the labour market further, producing the lowest unemployment rate seen in Canada since the early 1970s. This will be the key ingredient convincing the Bank of Canada to tighten further in 2019, tempered somewhat by Governor Poloz’s view that there is still some hidden slack in job markets—surprisingly sluggish wage growth recently lends serious credence to that opinion. Overall, we look for the Bank to hike rates two times (50 bps) in 2019, following a year when policy actually met expectations to a T. Curiously, 10- and 30year Canadian bond yields are now only slightly above year-ago levels, and the GoC curve is even flatter than the flat Treasury curve; bonds clearly expect cooler Canadian growth next year as well. That view also appears to be built into the Canadian dollar, which spent most of the year on the defensive amid trade tensions and wobbly WCS prices. We look for only a mild recovery in 2019 for the loonie amid firmer oil prices and if/when the USMCA is ratified.  

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

Alberta is talking about secession. It’s never going to happen but the fact the province is even talking about it tells a tale of the ignorance the Ottawa government has for what helped Canada become a globally significant economy.



This section continues in the Subscriber's Area. Back to top
January 03 2019

Commentary by Eoin Treacy

December 21 2018

Commentary by Eoin Treacy

Indian Stock Market Leapfrogs Germany's as Economy Booms

This article by Srinivasan Sivabalan for Bloomberg may be of interest to subscribers. Here is a section:

India’s ascent on the global stage has claimed another victory after its stock market overtook Germany to become the seventh largest in the world.

The Asian giant edged past the equity market of Europe’s largest economy for the first time in seven years, according to data compiled by Bloomberg. That means, after the U.K. leaves the European Union in March, the bloc would have only one country -- France -- among the seven biggest markets.

The move reflects India’s positive returns this year as companies’ reliance on domestic demand enabled them to avoid the meltdown in other emerging markets spurred by Federal Reserve tightening and a trade war between the U.S. and China. It also highlights the challenges facing the EU, including its future relationship with the U.K., a standoff with Italy over budget allocations and separatist clashes in Spain.
 

Eoin Treacy's view -

India is benefitting right now from the decline in oil and other commodity prices as well as the fact its absence of a big export-oriented manufacturing sector insulates the economy from strife abroad.



This section continues in the Subscriber's Area. Back to top
December 18 2018

Commentary by Eoin Treacy

Oil Crashes to 1-Year Low as Dark Clouds Envelop Demand Outlook

This article by Alex Nussbaum for Bloomberg may be of interest to subscribers. Here is a section: 

“Oil has gotten caught up in all the panic you’re seeing,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC in St. Louis. “This is all about fears of a recession. It’s risk-off everywhere.”

A U.S. government report Monday forecast surging shale-oil production, adding to worries about a glut. In Moscow, Russian Energy Minister Alexander Novak said production is rising, although the country is preparing to implement output curbs to conform with an OPEC+ accord.

Crude’s mired in a bear market amid growing skepticism that cuts by the Organization of Petroleum Exporting Countries and its allies will be deep enough to prevent a surplus in 2019. The group’s efforts to balance the market have been undermined by the relentless growth in U.S. shale, which veteran crude trader Andy Hall said is making it harder to predict global supplies.

Eoin Treacy's view -

It’s all well and good to talk about the relentless growth of US shale but West Texas Intermediate at $46 is uneconomic for a substantial proportion of shale drillers. The response is going to be less drilling as soon as any hedges on supply run off. That is the great strength of unconventional wells. They are more capital intensive to bring online but their supply is elastic because continuous drilling is required to sustain production after initial prolific period. That give companies the ability to more closely match supply to demand than conventional wells.



This section continues in the Subscriber's Area. Back to top
December 14 2018

Commentary by Eoin Treacy

Platinum price gets $6 billion shot in the arm

This article by Frik Els for Mining.com may be of interest to subscribers. Here is a section:

Korean carmaker Hyundai on Tuesday announced a $6.7 billion program to raise production of fuel cells 200-fold going from 3,000 this year to 700,000 per annum by 2030.

The hydrogen society is probably further into the future than its promoters want you to believe, and detractors are plentiful 

Toyota was the first to back the technology for passenger vehicles, launching its Mirai – "future" in Japanese – back in 2015. Honda is bringing the Clarity back to its line-up and Hyundai’s Nexo SUV is launching in North America next year. Hyundai also inked a collaboration on fuel cells with Volkswagen in June.

The hydrogen society is probably further into the future than its promoters want you to believe, and detractors are plentiful. (Elon Musk was not only talking his book when he called fuel cell cars "extremely silly".)

Alongside Hyundai's announcement, the Korean government also made a commitment to roll out a fuel cell fleet and charging stations. But Canada, for example, got its first and so far only public hydrogen fuelling station only in August and California’s years long backing for fuel cell cars have hardly moved the needle on consumer and business uptake.

Nevertheless, the impact on platinum could be enormous.

There’s a simple reason – today's fuel cell cars need a full ounce of platinum versus a 2 – 4 grams PGM loading for your average gasoline (primarily palladium) or diesel vehicle.

Eoin Treacy's view -

The automotive sector has been investing in fuel cell technology for years so one of the reactions to the collapse of demand for diesel engines has been the acceleration of commercialisation efforts. The other factor in the development of fuel cells is dependent on ready availability of hydrogen. The low natural gas price, particularly in the USA is a major enabler of that evolution.



This section continues in the Subscriber's Area. Back to top
December 13 2018

Commentary by Eoin Treacy

Uranium price: best performer of 2018 set for more gains

This article by Frik Els for Mining.com may be of interest to subscribers. Here is a section: 

Struggling French nuclear giant Areva (rebranded as Orano this year) slashed production more than a year ago. In August Paladin put its Langer Heinrich mine in Namibia on care and maintenance, although this week the Sydney-based miner said it's working on a possible restart of operations with vanadium as a byproduct (vanadium is trading at record highs and the only metal outperforming uranium).

In a research note on Kazatomprom, BMO Capital Markets says the production discipline from top miners will break the trend of rising global uranium inventories following the Fukushima nuclear disaster in Japan in 2011 and prompt the first production deficit in more than a decade.

And

China has 42 operating nuclear reactors, 16 reactors under construction and a further 43 planned. At the end of November, the country's national uranium corporation bought control of the Rossing uranium mine in Namibia. China is also behind the only sizeable uranium mine to come into production in the past few years, the Husab mine in Namibia, although ramp there has been slow.

Eoin Treacy's view -

Japan is steadily firing up its shuttered nuclear plants and considering China’s demand for clean energy it is unlikely to be deterred from continuing its construction program. Meanwhile when the world’s major producers find it more cost effective to buy in the spot market than produce the metal themselves then we know prices are depressed.



This section continues in the Subscriber's Area. Back to top
December 07 2018

Commentary by Eoin Treacy

The U.S. Just Became a Net Oil Exporter for the First Time in 75 Years

This article by Javier Blas for Bloomberg may be of interest to subscribers. Here is a section:

The shift to net exports is the dramatic result of an unprecedented boom in American oil production, with thousands of wells pumping from the Permian region of Texas and New Mexico to the Bakken in North Dakota to the Marcellus in Pennsylvania.

While the country has been heading in that direction for years, this week’s dramatic shift came as data showed a sharp drop in imports and a jump in exports to a record high. Given the volatility in weekly data, the U.S. will likely remain a small net importer most of the time.

“We are becoming the dominant energy power in the world,” said Michael Lynch, president of Strategic Energy & Economic Research. “But, because the change is gradual over time, I don’t think it’s going to cause a huge revolution, but you do have to think that OPEC is going to have to take that into account when they think about cutting.”

 

Eoin Treacy's view -

It feels like yesterday when we first started talking about unconventional gas, and later oil, as being gamechangers for the energy sector. Looking back at the archives it was 12 years ago. The shift in US production from what looked like terminal decline to virtual energy independence is something the market is still coming to terms with.



This section continues in the Subscriber's Area. Back to top
December 06 2018

Commentary by Eoin Treacy

Riding in Waymo One, The Google Spinoff's First Self-Driving Taxi Service

This article by Andrew Hawkins for the Verge may be of interest to subscribers. Here is a section:

Over the course of three separate trips in Chandler, the trained drivers in my Waymo vehicles never take control. I’ve ridden in a Waymo vehicle without a human being in the driver’s seat once before, but it was not on public roads. I was fully prepared to experience a fully driverless ride while in Chandler, but, alas, Waymo rejected my request.

The rides are uneventful, but it is exciting to experience the little flourishes that have been added for ride-hailing customers. The minivans still smell new, or at least recently cleaned. The screen on the back of the driver’s headrest features a large blue “start” button that I could press to initiate the ride. (There’s also a physical button in the headliner of the vehicle that performs the same task.) After pressing the button, a musical chime sounds and a robotic-sounding woman’s voice says, “Here we go.”

As I said, I’m an experienced Waymo rider — three trips and counting — but this one feels more mature. Before, it felt like you were being driven by your half-blind grandmother, but now, riding feels… mostly normal. The car slows down for speed bumps, accelerates for lane changes, and handles a number of difficult maneuvers like unprotected left turns. And it even surprises me a couple of times, like when it ended up braking too far into the crosswalk at an intersection, and then reversed back a few inches to make room for pedestrians. Of course, it probably shouldn’t have stopped so abruptly in the first place, but it is still comforting to see the car correct its mistakes in real time.

Eoin Treacy's view -

This is perhaps the biggest news this week, even though the arrest of Huawei’s CFO and the tightening of liquidity are what are making global headlines.

Waymo are going slow on rolling out autonomy because they are very aware of the damage road deaths by semiautonomous vehicles have caused to companies like Uber and Tesla. However, the important point is riders are reporting the cars are delivering smoother rides and fewer unexpected stops where the car has to pause and figure out what to do next.



This section continues in the Subscriber's Area. Back to top
December 03 2018

Commentary by Eoin Treacy

Oil Jumps Most Since June on Saudi-Russian Pact, Trade War

This article by Alex Nussbaum for Bloomberg may be of interest to subscribers. Here is a section:

“There’s going to be a cut, I think it’s going to be more than people expected, and I think the market realized that today,” said Bob Iaccino, chief market strategist at Chicago-based Path Trading Partners.

For a time, oil pared gains on Monday after an OPEC advisory panel was said to make no recommendation for action and people familiar with negotiations said Russia and the Saudis still haven’t agreed on details of a cut. Iranian OPEC Governor Hossein Kazempour Ardebili, meanwhile, raised doubts about whether producers can reach unanimity in Vienna.

 

Eoin Treacy's view -

The big news from the oil market has been the decision by Alberta to reduce supply by 385000 barrels a day. That’s a direct response to the plummet in Western Canada Select from a peak near $60 to $13 last week. This also highlights how it is marginal suppliers reliant on high prices for profitability are most at stress in the evolving secular bear market.



This section continues in the Subscriber's Area. Back to top
November 29 2018

Commentary by Eoin Treacy

Long-term themes review October 29th 2018

Eoin Treacy's view -

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

Let me first set up the background; I believe we are in a secular bull market that will not peak for at least another decade and potentially twice that. However, it also worth considering that secular bull markets are occasionally punctuated by recessions and medium-term corrections which generally represent buying opportunities.

2018 has represented a loss of uptrend consistency for the S&P500 following a particularly impressive and persistent advance in 2016 and 2017. Many people are therefore asking whether this is a medium-term correction or a top. There is perhaps no more important question so let’s just focus on that for the moment.



This section continues in the Subscriber's Area. Back to top
November 23 2018

Commentary by Eoin Treacy

BP Starts Production at Massive North Sea Oil Development

This article Sarah Kent for the Wall Street Journal may be of interest to subscribers. Here is a section:

Clair Ridge is expected to reach a production plateau at a peak of 120,000 barrels of oil a day and is designed to run for 40 years. The companies are currently evaluating the potential for a third project within the field to expand output even further.

It’s BP’s sixth new project to start production this year, the latest marker of the company’s return to growth after years of retrenchment in the wake of its fatal blowout in the Gulf of Mexico. To pay for the 2010 disaster, which killed 11 people and caused the worst offshore oil spill in U.S. history, BP was forced to sell off billions of dollars of assets, shrinking its production.

But a string of new developments that started up over the past two years is reversing that trend, and BP is closing in on its ambition to regain its former size. The company’s production averaged 3.6 million barrels a day in the first nine months of the year, up nearly 3% compared with the same period in 2017. Output will receive a further boost from its recent $10.5 billion acquisition of BHP Billiton Ltd’s shale assets.

Eoin Treacy's view -

Saudi Arabia pumping at capacity is one factor in the decline of oil prices and speculation is rife whether that is a quid pro quo for President Trump’s assistance in Khashoggi assassination scandal.



This section continues in the Subscriber's Area. Back to top
November 23 2018

Commentary by Eoin Treacy

Japan's Inflation Stalls at 1% as Risks to Price Gains Gather

This article by Yuko Takeo for Bloomberg may be of interest to subscribers. Here is a section: 

Slow but steady improvement in Japan’s core inflation gauge has come to a halt as a host of forces gather that could see price gains begin to slow.

Consumer prices excluding fresh food rose 1 percent in October from a year earlier, as expected by economists. That’s just half way to the Bank of Japan’s 2 percent target with the prospect of falling energy costs and lower charges from mobile-phone carriers pointing to weaker price growth ahead.

Eoin Treacy's view -

The decline in oil prices is a significant benefit for consuming nations like Japan, India and China. In that regard it is disinflationary rather than an outright drag on the economy. Nevertheless, Japan needs inflation so companies can regain pricing power and promote more dynamism in the economy.



This section continues in the Subscriber's Area. Back to top
November 20 2018

Commentary by Eoin Treacy

Oil Legend Andy Hall Weighs Crude's Chance of Recovery on OPEC

This article by Aaron Clark for Bloomberg may be of interest to subscribers. Here is a section:

 

“The balance of risk at this point favors some sort of recovery,” the trader once known as ‘God’ in the industry due to his lucrative trades, said in a phone interview Friday. “It’s quite likely OPEC will come through with some sort of cut in the next month or two.”

Demand has taken a downturn probably because of a stronger dollar against emerging market currencies, or on concern the trade war between the U.S. and China is beginning to curb economic growth, according to Hall. West Texas Intermediate crude is in a bear market after plunging from a four-year high in October and is trading near $57 a barrel following the biggest gain in U.S. stockpiles in 21 months.

“When you know you’ve got prices in 2020 and beyond for WTI down below $60 a barrel, almost down to the mid-$50s further along the curve, I think that is essentially at the bottom,” said Hall.

Eoin Treacy's view -

Brent crude oil prices have been unable to sustain a rally of more than $3 since early October. Seven consecutive weeks on the downside have unwound the commodity’s entire advance for the year and in the process a deep short-term oversold condition has evolved. That suggests potential to a bounce and reversionary rally back towards the mean is improving.



This section continues in the Subscriber's Area. Back to top
November 19 2018

Commentary by Eoin Treacy

Technology Megatrends Leading to the Disruption of Transportation 2020-2030

Thanks to a subscriber for this presentation by Tony Seba which may be of interest.

Eoin Treacy's view -

Perhaps the most interesting part of the discussion focuses on the rate at which the cost of producing batteries is accelerating to almost 20% per annum.
 
That holds out the prospect of batteries becoming commoditised in the same way as solar cells when production comes on lines. For the shares of battery producers that is likely to represent a challenge but not quite yet considering the supply inelasticity argument that still prevails within the market.



This section continues in the Subscriber's Area. Back to top
November 16 2018

Commentary by Eoin Treacy

China Is Giving the World's Carmakers an Electric Ultimatum

This article from Bloomberg News may be of interest to subscribers. Here is a section:

The world’s biggest market for electric vehicles wants to get even bigger, so it’s giving automakers what amounts to an ultimatum. Starting in January, all major manufacturers operating in China—from global giants Toyota Motor and General Motors to domestic players BYD and BAIC Motor—have to meet minimum requirements there for producing new-energy vehicles, or NEVs (plug-in hybrids, pure-battery electrics, and fuel-cell autos). A complex government equation requires that a sizable portion of their production or imports must be green in 2019, with escalating goals thereafter.

The regime resembles the cap-and-trade systems being deployed worldwide for carbon emissions: Carmakers that don’t meet the quota themselves can purchase credits from rivals that exceed it. But if they can’t buy enough credits, they face government fines or, in a worst-case scenario, having their assembly lines shut down.

Eoin Treacy's view -

China is the world’s largest market for automobiles so what they decide is permissible within their market is likely to shape the plans of manufacturers for the globe. One of the primary reasons companies have been announcing plans for lots more electric and hybrid vehicles over the coming years is because of the Chinese mandates. That is the primary driver behind the capacity build in the battery sector which needs to ramp up substantially if the demand growth profile is to be reached.



This section continues in the Subscriber's Area. Back to top
November 08 2018

Commentary by Eoin Treacy

OPEC Considers 2019 Oil Production Cuts in Yet Another U-Turn

This article by Grant Smith and Javier Blas for Bloomberg may be of interest to subscribers. Here is a section:

Earlier in the summer, prices began to surge as the risk of production shortfalls from sanctions on Iran and Venezuela’s economic collapse rattled the market. Losses from those two OPEC members threatened the biggest supply disruption since the start of the decade and Brent crude eventually peaked above $86 a barrel last month.

Since then, big things have happened on the other side of the supply equation. OPEC has been in “produce as much as you can mode” to reassure consumers, according to Saudi Energy Minister Khalid Al-Falih. The kingdom has lifted output close to record levels, while Libya is pumping the most in five years. Unexpected waivers for buyers of Iranian crude have blunted the impact of U.S. sanctions.

Then there’s the small matter of American production growing at the fastest rate in a century, just as fuel demand is at risk from the slowdown in emerging economies and the U.S.-China trade war.

Eoin Treacy's view -

The Brent Crude price trended higher in a consistent manner for more than half of 2017 with each $5 range being one above another. Then the price pulled back by $10 in 2018 before rallying $20 from the low, pulled back by $10 and if consistent would have been expected to rally $20. However, the rally did not quite manage to extend its breakout by that much and has now experienced a much larger reaction. Additionally, the price is back below the trend mean. A deep short-term oversold condition is now evident but a clear upward dynamic will be required to check supply dominance.



This section continues in the Subscriber's Area. Back to top
November 06 2018

Commentary by Eoin Treacy

Oil Heads For 8-Month Low as Specter of Global Shortage Fades

This article by Samuel Robinson for Bloomberg may be of interest to subscribers. Here is a section:

“Oil prices don’t have any real reason to rally significantly,” said Phil Streible, senior market strategist at R.J. O’Brien & Associates LLC in Chicago.

Crude has tumbled about 20 percent since touching a four-year high last month as bearish supply signals around the globe crowded out concerns about disrupted exports from Iran and Venezuela. The waivers announced this week by U.S. Secretary of State Mike Pompeo apply to China, India and six other nations.

“The U.S. has for now given a lifeline to Iran,” said Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland. “The end result of the sanctions is softer than expected. The final outcome of the sanctions also confirms the political fear of high gasoline prices.”

 

Eoin Treacy's view -

By issuing exemptions to tariffs to China and India, Iran can now import equipment and material from those countries to try and boost production. That essentially hands the Iranian oil market over the Asia and pretty much re-establishes the status quo that existed before the liberalisation agreement was put in place.



This section continues in the Subscriber's Area. Back to top
October 25 2018

Commentary by Eoin Treacy

Long-term themes review October 4th 2018

Eoin Treacy's view -

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.



This section continues in the Subscriber's Area. Back to top
October 22 2018

Commentary by Eoin Treacy

Howard Marks: Why the Word "When" Is Dangerous

This interview from the Motley Fool may be of interest to subscribers. Here is a section:

3. The words you should never say

Bill Mann: Do you think that there are opinions or beliefs in the market that you find to be particularly unhealthy for investors?

Howard Marks: The first thing (and I try to make this clear in the book, and it's essential if people are going to be able to deal with cycles) is everybody wants an easy answer. Everyone wants to know how long an upswing lasts. And the first step is you must dispense with any concept of regularity.

The whole book is based around Mark Twain's statement that history does not repeat but it does rhyme. When he says it doesn't repeat, in our case he wasn't talking about the market. He was talking about history. But the truth is market cycles vary one to the next in terms of their amplitude, their speed, their violence, their duration. It's all different. And so people want to know how long an upswing is and the answer is we absolutely can't tell them. So expecting regularity and, thus, predictability is wrong.

And then you can go from there to the whole concept of predictions. What makes the market go up and down? To a small extent it is what I call fundamental developments in the economy and the companies. But to a large extent it's psychology or, let's say, popularity. And it should be clear by now to everyone that the swings in popularity are unpredictable. And if they are, then most forecasts are not going to work.

So the next concept is that people say to me, "OK, when will the market turn down?" And I never answer a question that starts with the word "when." In the investment business, sometimes we know what's going to happen. We never know when. So I would dispense with that immediately.

You must accept the ambiguity in the situation and accept the need to live with uncertainty. And that's why in the book I say there are certain words that every good investor should drive out of his vocabulary. Things like never, always, must, can't, has to. These words are out. We can talk about likely events. We can talk about probabilities. More and less likely. But we can never say has to or won't.

Eoin Treacy's view -

One of the biggest lessons from The Chart Seminar in my view is that it is senseless to tell the market what to do. It doesn’t listen. We need to foster the humility to allow the price action to unfold as it will and tailor our tactics accordingly. To do other than react to reality is to engage in fantasy.

At The Chart Seminar, we talk about distilling everything in the market down to two things. Money flows and crowd psychology. We use charts to monitor both. It is impossible to predict exactly where a top might appear but we can narrow the range down to when monetary policy is restrictive and investors are overenthusiastic.

The three primary trends are acceleration, a massive reaction against the prevailing trend and ranging, time and size. Let’s look at some examples.

Amazon has a history of accelerating. It’s half the reason people want to own the share. Every time it accelerates it has reverted to the mean so each of the accelerations is a minor trend ending. The primary consistency of the trend is it finds support in the region of the trend mean, consolidates for a while and rebounds. It has paused at big round numbers like $1000, $1500 and $2000 so the current pullback falls into the ‘normal’ category provided it finds support in the region of the trend mean.

Microchip Devices has posted a massive reaction against the prevailing trend over the last few weeks. Prior to that it exhibited a loss of momentum, greater volatility and failed upside breaks which all constituted a lengthier range. The clear downward dynamic is a trend ending characteristic.

It is quite normal that after a Type-2 topping characteristic we see a range develop below the peak, which can be considered a period of right-hand extension or a first step below the top.

Oil ranged mostly between $100 and $120 between 2011 and the middle of 2014. That lengthy range corresponded with a high degree of confidence the $100 level would hold so when it declined below that level it triggered a lot stop and the price collapsed. The prior to formation was represented by ranging, time and size.

Meanwhile, Microsoft remains in a reasonably consistent medium-term uptrend, characterised by a succession of short-term ranges one above another. Provided the $100 level holds as an area of support during this reaction the trend can be considered consistent.

The next venue for The Chart Seminar will be in London on November 12th and 13th. Please contact Sarah at sarah@fullertreacymoney.com to secure your place.



This section continues in the Subscriber's Area. Back to top
October 19 2018

Commentary by Eoin Treacy

Email of the day on timelines to implementing new technologies

About the development of technologies in Batteries and EV, I think a great standpoint is that of Umicore (UMI BB), which is one of the main producers of cathodes. They had their Capital Market Day in June, and with a bit of patience one can follow the webcast on their site here:  , and specifically the part presented by Mr Vandeputte 

One of the points made is that manufacturing autos is complex to the point no one takes on technological risk with a light heart, so the technology currently in use will probably stay around for a years before we get some leap forward into something different such as solid-state batteries.

Eoin Treacy's view -

Thank you for this informative email as well as the reports from Umicore which I’m sure will be of interest to the Collective. Much of the investment focus for batteries has been on lithium but as you say other battery components also offer investment avenues for the sector.



This section continues in the Subscriber's Area. Back to top
October 15 2018

Commentary by Eoin Treacy

Plenty of Oil, Just Not in the Right Places

This article by spencer Jakab for the Wall Street Journal may be of interest. Here is a section:

The market isn’t tight everywhere, though. As evidenced by prices, there are localized gluts and producers who would gladly put more supply on the market if logistics would oblige. U.S. benchmark crude futures, priced at Cushing, Okla., are $9.00 a barrel below Brent and cash prices in the prolific Permian Basin are even cheaper. A lack of pipeline capacity is to blame.

None of that holds a candle to western Canada at the moment. Western Canada Select crude cash prices are now $46 a barrel below Brent. Pipeline and rail capacity already was stretched and, according to JBC Energy, a gas pipeline incident in the Pacific Northwest has worsened the situation significantly. Refineries in the region have had to scale back operations and thus crude purchases.

Eoin Treacy's view -

West Canada crude is trading at its widest discount to Brent Crude since at least 2013. At $57, as of Friday’s close, that is enough of an incentive to use any means available to get the oil to market. If previous spikes in the spread are any guide that is exactly what we can expect over the coming months.



This section continues in the Subscriber's Area. Back to top
October 12 2018

Commentary by Eoin Treacy

Tesla's Model 3 Sedan Production Cruises Past the 100,000 Mark

This article by Tom Randall for Bloomberg may be of interest to subscribers. Here is a section:

Expanded production comes with downsides, however. Tesla posted on its website Friday that buyers must place their orders by Oct. 15 to get their car by the end of the year and qualify for the expiring U.S. federal tax credit. Tesla was the first company to sell 200,000 electric cars cumulatively in the U.S., which triggers the gradual phase-out of the subsidy. The $7,500 credit will drop by half for Tesla on Jan. 1.

Musk boasted in 2016 that Tesla would make more than 100,000 Model 3s by the end of 2017. It didn’t work out that way. As often happens on Musk time, Tesla arrived late to an impossible goal. But Model 3 production now appears to be cruising—from the first cars off the line in July 2017, it took about 14 months for the company to build the initial 100,000 Model 3s. At the current rate of production, it will build the second 100,000 in less than six months.

Eoin Treacy's view -

This is a good news story for Tesla. Getting production numbers up is essential if the company is going to reach the economies of scale necessary to ever make a profit. The big question which I have seen addressed is what that number is? Musk has stated on more than one occasion that he wants to get the price of a Model 3 down to around $35,000 but how many of them will the company have to make to make a profit at that price?



This section continues in the Subscriber's Area. Back to top
October 03 2018

Commentary by Eoin Treacy

Long-term themes review August 15th 2018

Eoin Treacy's view -

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

Let me first set up the background; I believe we are in a secular bull market that will not peak for at least another decade and potentially twice that. However, it also worth considering that secular bull markets are occasionally punctuated by recessions and medium-term corrections which generally represent buying opportunities. 



This section continues in the Subscriber's Area. Back to top
September 28 2018

Commentary by Eoin Treacy

Oil on Biggest Tear in Decade as Global Supply Cushion Vanishes

This article by Samuel Robinson for Bloomberg may be of interest to subscribers. Here is a section:

Fears are growing that the constriction of Iranian exports by U.S. sanctions and the collapse of Venezuela’s oil industry will leave a deep shortfall in the market. Those worries have only been stoked this week as key producers from Saudi Arabia to Russia and the U.S. signaled their reserves are off limits.

Some of the world’s largest oil producers and traders are warning that triple-digit prices could soon return, with negative consequences for the economy.

“There is concern in the market that the loss of barrels from Iran and Venezuela is not going to be made up for through extra supplies from particularly Saudi Arabia and Russia,” said Gene McGillian, manager of market research at Tradition Energy. “Worries about trade relations affecting economic growth have fallen away.”

Eoin Treacy's view -

Venezuela is unlikely to reverse supply declines under the current administration. Iran’s export capacity has bene constrained by sanctions. Libya is also struggling to increase supply. Meanwhile we seldom hear that Mexico’s supply has been trending lower for years and shows little sign of improving. The bright spot is Texas supply bottlenecks may be easing with a tightening spread between Midland and Cushing prices.



This section continues in the Subscriber's Area. Back to top
September 24 2018

Commentary by Eoin Treacy

Oil Traders Say $100 Coming as OPEC Strains to Fill Iran Gap

This article by Javier Blas, Heesu Lee, Alfred Cang and Dan Murtaugh for Bloomberg may be of interest to subscribers. Here is a section:

Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as OPEC and its allies struggle to compensate for U.S. sanctions on Iran’s exports.

With Brent crude already jumping to an almost four-year high on Monday, that’s exactly the kind of price surge President Donald Trump has been seeking to prevent by pressuring the Organization of Petroleum Exporting Countries to raise production. Yet the cartel and its allies gave mixed signals at a meeting in Algiers on Sunday, ultimately showing little sign they would heed U.S. demands to rapidly push down crude prices.

OPEC’s reticence, combined with signs of accelerating supply losses from Iran, created a bullish mood the annual gathering of the Asian oil industry, traders, refiners and bankers in Singapore on Monday.

“The market does not have the supply response for a potential disappearance of 2 million barrels a day in the fourth quarter,” Mercuria Energy Group Ltd. co-founder Daniel Jaeggi said in a speech at the S&P Global Platts Asia Pacific Petroleum Conference, knows as APPEC. “In my view, that makes it conceivable to see a price spike north of $100 a barrel.”

Eoin Treacy's view -

Saudi Arabian official stated only last week that they are comfortable with the idea of oil trading above $80 so it is not so surprising that OPEC is not racing to increase supply not least since its members all rely on high oil prices to balance their budgets.



This section continues in the Subscriber's Area. Back to top
September 17 2018

Commentary by Eoin Treacy

How an Aussie miner and American tech company plan to extract lithium quickly in Argentina

This article by Valentina Ruiz Leotaud may be of interest to subscribers. Here is a section:

What sets this partnership apart is that both the miner and the techie claim they can produce lithium carbonate or lithium chloride more rapidly and at a lower cost than others. According to Lilac, this is possible because its system eliminates the need for sprawling evaporation ponds, which are expensive to build, slow to ramp up, and vulnerable to weather fluctuations.

“Even for the world's best lithium reserves in the Atacama desert, conventional evaporation ponds take many years to ramp up and remain vulnerable to weather volatility. Lilac's projects will run at full capacity from year one of commissioning and maintain that output regardless of weather or brine chemistry. We have done benchtop testing in other brines and we saw recoveries over 95% in less than 2 hours versus 9-24 months in evaporation ponds,” the company’s CEO, Dave Snydacker, told MINING.com.

Snydacker explained that the reason why the processes run by his company are so fast is that his engineers have developed ion exchange beads that absorb lithium directly from the brine. Once they do that, the beads are then loaded into ion exchange columns and brine is flowed through such columns. As the brine contacts the beads, the beads absorb the lithium out of the brine. Once the beads are saturated with lithium, the alkali metal is recovered from them as a lithium solution, which is later on processed into battery-grade lithium carbonate or lithium hydroxide using streamlined plant designs.

Eoin Treacy's view -

I described the lithium market as an example of supply inelasticity meets rising demand as early as 2013. What is apparent today, following massive investment in additional supply, is that is no longer true. In fact, as demand for the commodity ramps up technological innovation is contributing to the ability suppliers to more than keep pace.



This section continues in the Subscriber's Area. Back to top
September 13 2018

Commentary by Eoin Treacy

The United States is now the largest global crude oil producer

This article from the EIA by Candice Dunn and Tim Hess may be of interest to subscribers. Here is a section:

The United States likely surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer earlier this year, based on preliminary estimates in EIA’s Short-Term Energy Outlook (STEO). In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.

Although EIA does not publish crude oil production forecasts for Russia and Saudi Arabia in STEO, EIA expects that U.S. crude oil production will continue to exceed Russian and Saudi Arabian crude oil production for the remaining months of 2018 and through 2019.

U.S. crude oil production, particularly from light sweet crude oil grades, has rapidly increased since 2011. Much of the recent growth has occurred in areas such as the Permian region in western Texas and eastern New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana.

Eoin Treacy's view -

The embedded charts in this article tell an important story of renewal in the US onshore domestic supply market versus the relatively stagnant supply growth in both Russia and Saudi Arabia. 



This section continues in the Subscriber's Area. Back to top
September 07 2018

Commentary by Eoin Treacy

MIT study sees nuclear power as integral to a low-carbon future

This article by David Szondy for NewAtlas.com may be of interest to subscribers. Here is a section: 

Much of this is a matter of intense debate, but one big problem is that if the world is to invest in a policy of deep decarbonatization by the year 2050, there is a real chance it can only be done at either massive expense or the price of much less electricity being available at higher costs, lower standards of living in both the developed and developing world, and even a shrinking global economy.

To prevent this from happening, the MIT study says that nuclear power with its zero-carbon emissions must play a much larger role in electricity generation on a global scale. Today, the total share of global nuclear power as a primary energy source is a mere five percent, with very little growth in the West and some countries actually abandoning the technology.

Eoin Treacy's view -

If we wish to cut down on carbon emissions then renewables are certainly a way to do it but they do not get around the questions of sustaining base load when the wind does not blow or the sun does not shine. That means we need to have a lot more industrial sized batteries to store energy for the proverbial “rainy day” or we need additional back up conventional generators. Nuclear is carbon neutral but is also prone to massive cost overruns and accidents, however rare, tend to influence public opinion for decades.



This section continues in the Subscriber's Area. Back to top
September 04 2018

Commentary by Eoin Treacy

Musings From The Oil Patch September 4th 2018

We listened to Catherine Wood, founder and CEO of ARK Investment Management, LLC, expound to CNBC anchors why her firm was adamantly opposed to Elon Musk’s proposal to take Tesla, Inc. (TSLA-Nasdaq) private.  Her argument was that ARK’s research showed that by 2023 annual electric vehicle (EV) sales would be 17 million units per year worldwide.  Tesla, because of its focus on software, its ability to collect the driving mileage of its vehicle purchasers, and its vision about Mobility-as-a-Service (MaaS), coupled with its ability to create a fleet of four million EV taxis, would be worth nearly $1 trillion, in less than five years, earning shareholders a 17-fold return from the current share price.  

The day following this interview, Mr. Musk announced he was dropping the idea of taking Tesla private.  He stated that he changed his mind because his shareholders told him that they didn’t want him to make such a move.  Was Ms. Wood one of those shareholders Mr. Musk decided to listen to?  He had spent an incredible amount of time and energy since his tweet about privatizing Tesla in preparing for the move, as well as defending himself from a Securities and Exchange Commission (SEC) investigation about possible investment fraud.  That inquiry will not go away as easily as merely changing his mind, and we have yet to hear from the plaintiffs’ attorneys.  

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The emissions cheating scandal and the increasing utility of electric vehicles means established auto manufacturers have to spend very large sums to retool and get electric vehicles to market. Audi announced yesterday it has started production of its electric SUV and Daimler said today that it is going to spend more than €10 billion to develop its electric vehicle fleet.



This section continues in the Subscriber's Area. Back to top
August 27 2018

Commentary by Eoin Treacy

2030 Energy Mix: Key Regional Trends Marching Towards A Cleaner Future

Thanks to a subscriber for this report from DBS Group which may be of interest. Here is a section:

As can be seen from the table above, the trend of energy efficiency improvements or declines in energy intensity is not uniform across time periods for various country groups or for individual countries. For developed or high-income countries, the trend is most secular with improving efficiency in every time period as we move forward in time. However, for middle and low-income countries, periods of high growth may be associated with high energy intensity, which could slow down the overall improvement rate. This is most apparent for China in the 2000-2010 timeframe, where very high GDP growth rates coincided with lower focus on energy efficiency. Energy efficiency has now picked up again in the current decade, where Chinese GDP growth has moderated and a focus on environment friendly energy practices has evolved. Move over to low-income countries like India, and it seems that improvements in energy efficiency are lower in the current decade owing to higher economic growth. Thus, the Chinese pattern could repeat for emerging countries like India, which will likely moderate the pace of energy efficiency improvements to an extent as we move toward 2030.

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

It is easy to conclude high income countries are more efficient because they are more technologically sophisticated than developing economies. The secular trend toward greater energy efficiency in high income countries and the corresponding evolution of technology is supportive of that conclusion.



This section continues in the Subscriber's Area. Back to top
August 22 2018

Commentary by Eoin Treacy

Major lithium-ion battery manufacturer planning output that may rival entire 2015 LIB market: analysts

This article by Michael Allan McCrae for Mining,com may be of interest to subscribers.

LG Chem, a major South Korean lithium-ion battery manufacturer, is increasing its cell manufacturing capacity to such an extent that it may surpass the entire LIB market in both output and raw material consumption from just three years ago.

Roskill, industry analysts that ran the numbers on LG Chem's planned output, says that South Korean manufacturer plans to increase capacity to 90GWh in 2020 from a previous forecast of 70GWh.

"Assuming 100% of output was to be NMC532, 90GWh would require around 100kt of cathode, containing 40kt nickel, 22kt cobalt, 16kt manganese and 50kt lithium (carbonate equivalent), and 90kt of anode materials which could be 100% graphite," writes Roskill.

"If producing at capacity, LG Chem’s LIB output and raw material consumption would be greater than the entire LIB market in 2015."

LG Chem, South Korea's largest chemical company, is one of the top five LIB manufacturers. It makes batteries for the Ford Focus, Chevrolet Volt and Renault ZOE.

LG Chem has been making deals to ensure it has raw material. This past spring Zhejiang Huayou Cobalt and LG Chem announced they are planning a cathode material facilities with capacity of 40,000tpy and 100,000tpy capacity planned for future. It also signed deals other raw material deals with Nemaska Lithium and Ganfeng Lithium.

While cobalt and lithium prices are currently falling, Roskills says cell manufacturers are locking in supply and ". . . that activity in the sector continues at a rapid pace."

Eoin Treacy's view -

The auto-manufacturers sector remains under stress because of continued issues with revelations about emissions cheating; most recently in Japan. The cost of meeting current emissions standards not to mention the tightening of regulations slated for the next few years represents a significant cost for just about all conventional car manufacturers. The fact the majority of manufacturers are planning on releasing electric vehicles is as much about responding to Tesla’s success as it is about the challenge of meeting regulations that are now going to be enforced.



This section continues in the Subscriber's Area. Back to top
August 21 2018

Commentary by Eoin Treacy

Musings from the Oil Patch August 21st 2018

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section:

August 17 2018

Commentary by Eoin Treacy

Uranium: Time "U" move?

Thanks to a subscriber for this report from Canaccord Genuity which may be of interest. Here is a section:

August 07 2018

Commentary by Eoin Treacy

Musings From the Oil Patch August 7th 2018

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB which may on this occasion focuses on the impending IMO 2020 regulations for ship emissions. Here is a section:

Eoin Treacy's view -

A link to the full report and a section from it is posted in the Subscriber's Area.

The Baltic Dry Index has base formation characteristics and exhibits a rounding characteristic associated with accumulation over the last five years. The pace of scrapping older ships is increasing as shipping rates are low and scrap prices are high so that will create a supply inelasticity environment eventually. Retrofitting costs of older ships both to comply with tighter emissions standards and new ballast water regulations mean the pace of scrapping is likely to increase.



This section continues in the Subscriber's Area. Back to top
July 26 2018

Commentary by Eoin Treacy

Musings from the Oil Patch July 24th 2018

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. This week it contains some interesting commentary on natural gas. Here is an excerpt:

Natural Gas: The Forgotten Fuel’s Future Needs LNG Exports 

One can be forgiven if he/she believes only crude oil news is important to the energy sector.  The volatility of crude oil prices, coupled with the OPEC meeting drama and President Donald J. Trump’s twitter campaign against high oil prices, provides opportunities for shocking headlines and non-stop commentary by the media.  On the other hand, if your business is tied to natural gas, you can be excused for believing it’s pretty boring since no one is talking about gas.   

Eoin Treacy's view -

                    



This section continues in the Subscriber's Area. Back to top
July 17 2018

Commentary by Eoin Treacy

Long-term themes review July 17th 2018

Eoin Treacy's view -

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.



This section continues in the Subscriber's Area. Back to top
July 16 2018

Commentary by Eoin Treacy

Trump Says U.S. to Compete With Russia for Europe Gas Market

This article from Bloomberg news may be of interest to subscribers. Here is a section:

But Europe may have difficulty attracting gas cargoes from overseas, given higher prices in Asia. The WGI spot LNG assessment for Northeast Asia was $10.30 per million British thermal units on July 9, while U.K.’s National Balancing Point gas futures traded at $7.50 on Monday.

Longer term, gas export project developers in the lower 48 states may face delays as they wait for regulatory approval. Sefcovic called the U.S. approval process “redundant” and said it needed to be revamped.

Gazprom is Europe’s largest gas supplier and provides more than a third of the region’s needs in the fuel. Its chief executive officer, Alexey Miller, confirmed in June its plan to start laying the pipes in the next couple of months and to open the Nord Stream 2 link by late-2019. The project would cut Russia’s dependence on Ukraine and help meet additional demand for the fuel in the EU in next two decades as local production falls.

Meanwhile, Russia is unperturbed by the prospect of American LNG supplies to Europe. They “will never catch up with and will never surpass” Russian gas exports to the region, Miller said in June.

Eoin Treacy's view -

Gas is increasingly an international traded commodity with global markets expanding as more countries transition away from a reliance of coal for power generation and heating and from solid fuel or electricity for cooking. The USA has the potential to be a major gas exporter since it has more of the commodity than it knows what to do with but it will have a hard time competing with Russia for Europe’s market.



This section continues in the Subscriber's Area. Back to top
July 16 2018

Commentary by Eoin Treacy

Long-term themes review June 22nd 2018

Eoin Treacy's view -

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

I realise this summary at 4600 words is getting rather lengthy which is why I decided to right another book to more fully explore the issues represented by the rise of populism and what that means for markets and the global economic order. I’ve agreed an August/September deadline so hopefully it will be available this year.



This section continues in the Subscriber's Area. Back to top
July 13 2018

Commentary by Eoin Treacy

Global Crude Oil Supply-demand

Thanks to a subscriber for this report from Nomura which may be of interest. Here is a section:

The IEA forecasts that US crude oil production will increase 1,720,000bbl/day in 2018 and 1,190,000bbl/day in 2019. In the Permian region, which has been driving growth in output, the lack of pipeline capacity is likely to persist until 2019. Because of this, Midland oil prices are some USD14/bbl lower than the WTI price. With issues including rising production costs and a lack of engineers, too, we think US shale oil output is unlikely to substantially exceed current forecasts even if tightening supply-demand causes oil prices to rise. See our 11 July 2018 Global research report US crude oil output - Sharp slowdown in pace of increase in 2019.  We estimate that US production forecasts are predicated on WTI price assumptions of USD55-60/bbl for 2018 and USD60-65/bbl for 2019. We estimate WTI of around USD70-75/bbl were the aforementioned short supply to be made up with increased output in the US.

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

The USA’s onshore production of oil and gas continues to surge, fuelled by access to cheap credit. If we cast our minds back to 2015, private equity firms had amassed massive sums to invest in energy and that has helped to fuel the surge in US supply over the intervening period.



This section continues in the Subscriber's Area. Back to top
July 12 2018

Commentary by Eoin Treacy

Musings from the Oil Patch July 10th 2018

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. This week it contains some interesting commentary on estimates of sea level rises but here is a section on electric vehicle demand:  

There are many reasons why EVs are popular in California.  Continuing to lead national social trends, the large population of wealthy entertainment and technology people love to show off their social awareness credentials, while taking advantage of lucrative financial and other driving benefits by purchasing EVs.  Those benefits are being reduced as EV car manufacturers reach the limits at which federal tax subsidies for EVs are eliminated.  The state has recently decided to double down and boost spending to subsidize EV sales.  What is interesting, however, has been the elimination of the right to drive EVs in High Occupancy Vehicle (HOV) lanes in Southern California with one person, as too many vehicles have slowed lane speed and increased accident risk when EVs are entering and exiting HOV lanes.  When the Toyota Prius lost use of HOV lanes, sales fell the following year.  Prepare for similar shocks.  

Eoin Treacy's view -

A link to the full report is posted in the Subscriber's Area.

Tesla will soon or potentially already has achieved 200,000 vehicles in sales which will mean that the $7500 subsidy buyers receive when taking delivery of cars will disappear. That’s a headache for the hundreds of thousands of people waiting to get their model 3s.



This section continues in the Subscriber's Area. Back to top
July 11 2018

Commentary by Eoin Treacy

Crude Crumbles Under Trade War That Imperils Economic Growth

This article by Jessica Summers for Bloomberg may be of interest to subscribers. Here is a section:

“There’s no doubt that that uncertainty continues to weigh, not only on the crude oil markets, but really all markets,” said Brian Kessens, who helps manage $16 billion in energy assets at Tortoise. As for the storage report, “there was a little bit of noise in the data. It just depends when the ships actually hit the docks.”

Oil topped $75 a barrel last week amid actual and anticipated supply disruptions from Canada to the Persian Gulf.

Saudi Arabia has promised to ramp up output to help cover shortfalls from other major suppliers, though some observers questioned the kingdom’s capacity to do so.

In the U.S. Gulf Coast region that includes refining centers in Texas and Louisiana, oil imports plunged by 1.13 million barrels last week, the steepest decline since September 2012, according to the EIA.

“There’s a sense that Saudi Arabia’s going to increase their exports to the U.S.,” Kessens said. “There’s a lingering sense in the back of people’s minds that we’ll see that a little bit later this summer.”

Eoin Treacy's view -

Oil prices have been firm because economic growth has been robust, OPEC had been reducing supply and major suppliers like Libya and Venezuela have dropped out of the market. News today that pro-government forces have retaken four of Libya’s export ports suggests supply will start flowing once more. Meanwhile the threat to China’s economy from a ratcheting up of tariffs is a simmering issue. 



This section continues in the Subscriber's Area. Back to top
July 10 2018

Commentary by Eoin Treacy

Shipowners on Pace to Scrap $1 Billion in Oil Tankers This Year

This article by Costas Paris for the Wall Street Journal may be of interest to subscribers. Here is a section:

Some 1,000 vessels are broken up every year and their steel and other metals are melted or simply stacked up and sold to factories. The yards in the Indian subcontinent recycle around 80% of all ships, with the remainder going to China and Turkey, although Beijing has said it will suspend scrapping starting next year.

The average age of VLCCs going to scrap this year is 18.8 years, the youngest since 2013, according to VesselsValue. A ship’s average operational age is around 25 years, but after 15 years in the water, the vessel has to go through an extensive survey to determine if it is seaworthy. “An average survey costs about $2 million, and you have to do it again at 20 years, so a number of owners opt to scrap instead,” Mr. Sharma said.

The oil glut is also sending offshore rigs to scrapyards. It is a relatively new business that has boomed over the past five years, as the cost of drilling at sea is much higher than inland exploration. At least 18 rigs have been broken up so far this year, compared with 46 last year, according to GMS.

Eoin Treacy's view -

The cost of maintaining a fleet of aging ships has risen considerably over the last few years because of the imposition of the long-awaited restrictions on bilge water discharge and environmental restrictions on diesel fuel. That is in addition to the cost of supporting vessels in a hostile maritime environment. These costs are helping to remove excess inventory from the market after a lengthy bear market.  



This section continues in the Subscriber's Area. Back to top
June 27 2018

Commentary by Eoin Treacy

Musings from the Oil Patch June 26th 2018

Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section:

To appreciate how the energy world is changing, two charts presented by Mr. Dale set the stage.  Global energy growth last year was 2.2%, up from 1.2% in 2016, and above the 10-year average of 1.7%.  That robust growth came as a result of strong global economic growth, but also due to a decline in energy productivity.  While the International Monetary Fund is warning of potential dark clouds on the horizon for global economic growth, its forecast remains robust, meaning energy growth is likely to remain high.  

Also important is the difference in where energy growth originated.  The driver for the above-average growth was the strength of the developed economies of the OECD, but also some deterioration in energy productivity.  However, nearly 80% of the total energy growth came from the non-OECD or developing economies of the world.  That is not surprising as they benefit from the global economic recovery, especially China.  China saw energy demand grow by 3%, nearly three times its growth rate of the past several years.  That higher growth was driven by recoveries in numerous high-energy sectors such as iron, crude steel and non-ferrous minerals.  Still, the high growth rate was well below China’s 10-year average rate, even though it was helped by a decline in energy intensity that was more than twice that of the global economy.  

The picture of primary energy fuel mix highlighted the title of Mr. Dale’s remarks – Two Steps Forward and One Step Back.  He pointed to the dramatic growth in natural gas and renewables as the two steps forward.  Combined, those two fuels accounted for 60% of the total growth in energy fuels.  

The backward step was the growth in coal usage.  In 2017, global coal use rose by 1.0%, or 25 million tons of oil-equivalent, marking the first annual increase since 2012.  The increase was driven by India, although China’s consumption also rose after declines in the three prior years.  

Eoin Treacy's view -

Batteries might eventually remove the need for quite so much back up conventional power generating capacity as renewable penetration of the energy market continues, but that is still some ways off. At present natural gas represents the happy medium between reliance on coal and the fact that renewables are not yet ready to stand on their own.



This section continues in the Subscriber's Area. Back to top
June 22 2018

Commentary by Eoin Treacy

OPEC+ to Boost Oil Output After Saudis Secure Deal With Iran

This article by Wael Mahdi, Grant Smith and Nayla Razzouk for Bloomberg may be of interest to subscribers. Here is a section:

The final communique made no mention of whether the kingdom, or any other member, could compensate for losses elsewhere. Yet it said the group as a whole should strive for “overall conformity” of 100 percent, which in practice will only be achievable if those nations with spare production capacity step in to fill the gap left by others.

"The lack of specificity is bullish for prices,” said Joe McMonigle, senior energy analyst at Hedgeye Risk Management LLC. “It’s a mystery oil production increase because we don’t really know the final numbers."

Eoin Treacy's view -

OPEC is going to raise production by maybe 1 million barrels a day which is less than it could have. That probably represents the difficulty that exists in getting Saudi Arabia and Iran to agree on anything and suggests the market will be tighter than might otherwise have been the case.



This section continues in the Subscriber's Area. Back to top
June 21 2018

Commentary by Eoin Treacy

Long-term themes review May 16th 2018

Eoin Treacy's view -

FullerTreacyMoney has a very varied group of people as subscribers. Some of you like to receive our views in written form, while others prefer the first-person experience of listening to the audio or watching daily videos.

The Big Picture Long-Term video, posted every Friday, is aimed squarely at anyone who does not have the time to read the daily commentary but wishes to gain some perspective on what we think the long-term outlook holds. However, I think it is also important to have a clear written record for where we lie in terms of the long-term themes we have identified, particularly as short-term market machinations influence perceptions.

Here is a summary of my view at present:



This section continues in the Subscriber's Area. Back to top
June 12 2018

Commentary by Eoin Treacy

Musings From The Oil Patch June 12th 2018

Thanks to a subscriber for this report edition of Allen Brooks’ ever interesting report for PPHB. Here is a fascinating section on energy efficiency statistics over the last 50 years:

Eoin Treacy's view -

A link to the full report and a section from it are posted in the Subscriber's Area.

There is no doubt that battery efficiency is improving and new solar innovation is being revealed on almost a weekly basis. There are laudable reasons for seeking to reduce carbon and nitrogen oxide emissions in our cities all of us can support. However, the question many people are worried about is whether this is merely transferring a problem from cities to less populated areas.



This section continues in the Subscriber's Area. Back to top
June 12 2018

Commentary by Eoin Treacy

Truckers Protest High Gas Prices in Spotty Strikes Across China

This article by Te-Ping Chen for the Wall Street Journal may be of interest to subscribers. Here is a section:

While trucker protests in China have occurred in the past amid complaints of road tolls, fuel prices and excessive fees, Geoff Crothall, spokesman for the labor monitoring group, said he couldn’t recall trucker protests of a similar scale. He estimated thousands of truckers participated.

As they have the world over, gas prices have risen in China this year, by 8.6%, according to data from the Ministry of Commerce. Taxes and other fees generally make gas more expensive in China than the U.S., and on top of that the government sets the prices, lagging changes in international oil markets by 10 days or more.

China’s National Development and Reform Commission, which sets those prices, announced Friday that it would cut the retail price of gasoline and diesel by 130 yuan ($20.29) per ton for gasoline and 125 yuan per ton for diesel. The new prices, effective this past Saturday, reflect a recent retreat in global oil prices. In the central province of Anhui, a transportation hub where protests occurred, gasoline now costs $3.99 a gallon, and diesel $4.04 a gallon.

Rising fuel costs have elsewhere prompted worker frustrations to spill over, most notably in Brazil, where protesters blocked highways and halted shipments of food, fuel and medicine before the government called in the military to help end the strike. Other trucker protests have also recently broken out in Iran.

Eoin Treacy's view -

Trucking has been all over the news recently with strikes in China and Brazil over high fuel prices and low pay while the USA is in dire need of 50,000 drivers.  These trends point to the fact the USA is close to full employment so attracting workers is becoming an issue while all three countries share upward pressure on wages. Higher shipping rates are inflationary because it will put pressure on companies to cover the increasing costs by raising prices for the end customer.



This section continues in the Subscriber's Area. Back to top
June 11 2018

Commentary by Eoin Treacy

Biggest Electric-Vehicle Battery Maker Soars 44% on Debut

This article by Ma Jie for Bloomberg may be of interest to subscribers. Here is a section:

Shares of the world’s biggest maker of electric-vehicle batteries jumped on their trading debut as investors bet on rising demand for new-energy cars worldwide.

Contemporary Amperex Technology Ltd. rose by the maximum 44 percent to 36.20 yuan at 10:17 a.m. in Shenzhen, China, valuing the company at about $12.3 billion. The manufacturer sold a 10 percent stake at 25.14 yuan a share in its initial public offering on May 30.

Investors are confident that CATL, as the company is known, can fend off rivals including Panasonic Corp. and continue to win orders as automakers move toward electric vehicles. CATL, whose customers include Volkswagen AG, had reduced the size of its IPO by more than half compared with its original ambitions because of declining margins and a cap imposed by Chinese authorities on price-earnings ratios in IPOs.

 

Eoin Treacy's view -

CATL produces more batteries than Tesla and is likely to continue to do so well into the future considering the pace of factory building it has planned. China has every intention of dominating the battery sector both because it is the largest auto market but also because it has a clear aim to become globally competitive in auto exporting. Additionally, as an energy importer it has a clear reason to reduce imports of oil if at all possible. That suggests China will be investing heavily in batteries for the foreseeable future.



This section continues in the Subscriber's Area. Back to top
June 08 2018

Commentary by Eoin Treacy

Milestone claimed as experimental nuclear reactor reaches temperature of the Sun

This article by Nick Lavars for NewAtlas may be of interest to subscribers. Here is a section:

The pursuit of nuclear fusion is inspired by the collision of atomic nuclei in stars, which fuse together to form helium atoms and release huge amounts of energy in the process. If we can recreate this process we could have an inexhaustible supply of energy on our hands that brings no harmful by-products, such as carbon dioxide emissions or the radioactive waste generated at nuclear fission-based power plants like Fukushima and Chernobyl.

But to do that we need to create Sun-like conditions here on Earth, which calls to mind one requirement first and foremost – incredible amounts of heat. Tokamak Energy hopes to achieve this through what's known as merging compression, where running high currents through two symmetrical magnet coils generates two rings of plasma, or electrically charged gas, around them.

Eoin Treacy's view -

The ITER tokomak being constructed in the south of France is based on technology from the 1970s. It is coming at the problem of containing plasma by building a big containment unit which is costing upwards of $30 billion. Today, much stronger magnetic fields can be attained through the use of superconductors. That means experiments can be much smaller and cost a fraction of the ITER model.



This section continues in the Subscriber's Area. Back to top