Posted on 01/12/2014 6:00:03 AM PST by Dartman
Combustion turbines are unique in that they require minimal staff compared to coal and nuke. They’re cheaper than either coal or nuke. They go together fast assuming the primary equipment supplier (GE, Siemans) can get the unit out the door. They can be shut down and started up with minimal fuss from a remote dispatch center. Baseload coal and nukes can’t be started up and shutdown frequently.
That means if natural gas gets too expensive, the combustion turbines just set there whether that’s for a couple of months or much longer.
My belief that NG will move up in two years is based on the EPA forcing the closure of coal plants. The replacement power has to come from somewhere. NG fueled plants are the fastest and cheapest to build ... and the current crop of utility execs didn’t go through the last run up in NG prices their predecessors caused. The industry is going to do it again.
If you believe NG will move up dramatically in the next two years... you should buy NG contracts 2 years out. It’s a forward traded commodity. You can buy contracts 2 years out right now... and then make $$$$$ when the price moves up.
What is?
Well put. That’s been a big problem for years — despite the theoretical wellhead cost of $35/bbl (used to be $8/bbl, dang that OPEC-engineered inflation!), the House of Saud doesn’t like budget deficits, and the entire economy of the country (23 million or so people) is run like a private household, so, they raise the oil price rather than cutting the budget. Cutting the budget would literally cut their throats.
And speaking of inflation — inflation in the US has been exported via the trade deficit with China and its subsequent reinvestment in US gubmint debt to keep their own currency from rising. If the yuan rises radically against the USD, game over for the Chinese economy. They are rats on our wheel.
As US oil production rises, our non-Chinese trade deficit declines, which puts upward pressure on the USD exchange rate (helping the Chinese); but the growth in petroleum consumption by countries other than the US maintains the market.
For about ten years now OPEC has priced in Euros indirectly, by looking at the Euro-USD exchange rate, hence, the price per bbl fluctuates in USD but remains pretty close to price-stable in Euros. This decision was made to maintain OPEC’s competitiveness with Russian oil in the European Union.
I think that those contracts are too thinly traded.
If you're willing to take the position that the forward looking pricing strips are wrong... and if you're right... you can make a LOT of money.
“There is not one Muslim country...that is an ally of America”
The Kingdom of Morocco was the first country to recognize the United States and has been an ally by treaty for over 200 years. Look it up.
Because at the time they were looking to kick the Brits out of Tangiers.
“Because at the time they were looking to kick the Brits out of Tangiers.”
Yessir, and it doesn’t invalidate the point that most of Islam is hostile to the west. But give credit where it is due. Our relationship with Morocco has lasted a long time.
The Saudis should modernize and frack themselves.
btr
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