Daily Archives: October 27, 2009

Kate Mackenzie

Wondering if these recent cool summers mean something? Confused by the Freakonomics guys going all climate change-contrarian? Thinking that, perhaps, that you were too concerned about climate change 18 months ago?

If so, you may enjoy this sharp (and fairly short) piece from AP science writer Seth Borenstein (our emphasis): Read more

Sheila McNulty

President Barack Obama has announced a $3.4bn investment into modernising the nation’s electricity grid in the largest single grid modernisation investment in US history. It has been a long time in coming. As Carol Browner, assistant to the president for energy and climate change, put it, the US has an “antiquated” system. The funding, which must be matched at least dollar-for-dollar by recipients, means a total of $8.1bn is to be spent.

The US government says modernising the grid and installing smart meters, thermostats, will create tens of thousands of jobs, save money for consumers and businesses, and allow for the transportation of renewable energy across the nation. Jared Bernstein, chief economist and economic policy adviser to the vice president, said the US government is helping to unleash the vast potential of the economy. Read more

Kate Mackenzie

On FT Energy Source:

More gloom about oil prices and the recovery Read more

Kate Mackenzie

Francisco Blanch of Merrill Lynch-Banc of America has again been warning that high oil prices could dampen an economic recovery. In the FT he writes:

“A spike in oil prices above the $100-a-barrel level could create significant headwinds for the global economy,” he adds, warning that a sharp increase could also lead to a repetition of last year’s price collapse. Read more

Kate Mackenzie

WWF Australia

Source: WWF Australia

The Montara oil well, between Western Australia and Indonesia, has been spewing crude oil into the sea for more than two months, and a fourth attempt by the well’s owner PTT Exploration and Production to plug has been postponed. Read more

Kate Mackenzie

BP has clearly impressed the markets with 3Q results showing bigger than expected savings from its cost-cutting programme, and a better underlying profit than consensus forecasts.

Revenue and profits were of course lower, year-on-year, due to lower oil and gas prices. But markets appear to have been impressed by upstream production, the lifeblood of a big hydrocarbon company, which was almost 7 per cent higher at 3.917m barrels of oil equivalent per day.

In this, BP’s year-on-year performance has been benefited from more clement weather. As Standard & Poors notes:

The Q3 09 results were in line with our expectations and just above Bloomberg consensus. In our view, there were no surprises; however the shares rose 4.5% after the release, in what we view as an overreaction. The market probably picked up on a 7% rise in hydrocarbon production y-o-y (2.2% lower q-o-q), but we note annual production figures are not comparable given Q3 08 was marred by hurricanes and production shut-downs.

As quick look at the US Hurricane Center reports for July, August and September this year shows all three were considerably quieter than usual for the North Atlantic. This compares to last year, when Hurricane Ike caused a shut-in of BP’s massive Texas City refinery. Read more

BP shares soared as much as 5 per cent higher on Tuesday, hitting a 16-month high after the oil major significantly beat expectations on its third quarter results on sharper than expected cost-cutting measures in the period and rising oil prices.

Replacement cost net profit, which strips out unrealised gains or losses related to changes in the value of fuel inventories, fell 50 per cent to $4.98 bn, versus a consensus expectation of $3.16 bn by market analysts. Read more

Kate Mackenzie

Regular commodities watchers might know it, but not everyone does: passive investing is a tricky business. In crude oil, for example, there’s the roll – when one month’s contract expires, the shift to the next month (which in the current, contango market structure is more expensive) means it costs more money to maintain the same holding.

This chart from Reuters shows that since January, the investor in a fund tracking Goldman Sachs’ Commodities Index would have made 12 per cent while the spot returns were almost 45 per cent: Read more

Kate Mackenzie

Obama to announce big smart grid investment (Reuters)
Largest clean energy investment from stimulus funds

Oil could exceed $100 next year (FT)
Could create problems for economy, says Merril Lynch-Banc of America’s Blanch Read more