MAYFLOWER, Arkansas — Warren Andrews had just finished putting up balloons for his stepdaughter’s 18th birthday party at their suburban home in Mayflower, Arkansas, when his wife came inside and said something was wrong.
After stepping out of his house, and taking one glance, he immediately dialed 911.
A rejection of the Keystone XL pipeline by President Barack Obama would push more of Canada’s US$73-billion oil exports onto trains, which register almost three times more spills than pipelines.
Oil rebounded along with equity markets as Spanish bond prices recovered after the government met its target at a debt auction.
Futures in New York rose as much as 0.5 percent, after dropping 1.2 percent, as the cost of insuring Spain’s debt fell from a record. Greek political leaders may agree as soon as today to form a government and to seek relief from austerity measures, also helping ease concern that Europe’s debt crisis will curb fuel demand.
YPF SA climbed the most in three years after Mexican billionaire Carlos Slim became the fourth-largest stakeholder in Argentina’s top oil producer.
Slim controls 32.9 million of YPF’s Class D shares, or an 8.4% stake worth US$345-million, according to a regulatory filing yesterday from the Buenos Aires-based company. A loan default prompted Argentina’s Eskenazi family to sell the shares to Slim.
In an appearance before the Senate Finance Committee tomorrow, the CEO of Continental Resources will argue for preserving the billions of dollars in tax subsidies the federal government provides to oil companies each year. Given that Continental Resources bills itself as "America's Oil Champion" (after, we assume, a difficult championship battle), the CEO's stance probably comes as no surprise. In fact, it's hard to figure out why the Senate's even bothering to hear from him, when a large blinking sign reading MORE MONEY PLS would be functionally equivalent.
I strongly support the arguments in this article adressing the outrageous American energy subsidies:
By Fábio Pinheiro via Flickr
If President Obama wants to set us on a path to a sustainable energy future—and a green one, too—he should propose a very simple solution to the current mess: eliminate all energy subsidies. Yes, eliminate them all—for oil, coal, gas, nuclear, ethanol, even for wind and solar. It will be better for national security, the balance of payments, the budget deficit, and even, believe it or not, the environment.
“China’s government was until the global downturn only modestly committed to solar power as an energy alternative–so Chinese producers focused on exports. But in 2009 its stimulus package included subsidies for large solar installation projects; China is now helping its local producers. Other parts of the government, however, show more interest in investment in thin-film makers than domestic silicon-wafer producers, as evidenced by First Solar’s deal in Mongolia. By contrast, European and U.S. governments have long been active promoters of solar energy.”
It seems like this sector is critically dependent on public funding and more driven by random news, rather than fundamentals. Maybe because the fundamentals are harder to analyze when one is dependent on unpredictable politicians. I cross my fingers for a higher oil price – it is good for environment and renewable energy!
Renewable Energy Corporation soars over 5 % today:
But as many other renewable energy companies – no joyride the last 3 years:
Renewable Energy Corporation ASA (REC), one of the world’s largest producers of polysilicon and wafers for solar applications reported second quarter results today and surprised analysts with strong overall market demand. Go to the highlights here: REC Second Quarter 2010 and look at the development the share price here: Renewable Energy Corporation ASA (REC) (The chart below shows the development the last 5 years – not very promising, is it..).
The solar industry is still dependent on subsidies to compete with traditional energy sources. When contemorary state finances are poor you also expect the subsidies to gradually crumble – if you add a boom in low-cost peers in Asia, factory delays and lower oil prices; future prospects do not look bright – therfore the lack of confidence in the stock post 2008.
Another study shows that increased production (contradicting the arguments for subsidies) of renewable energy can also cause unintended effects through changes in quota prices. A study of the German electricity market (Bohringer and Rosendahl 2009 “Green Serves the Dirtiest”) found that subsidies to renewable energy is forcing the most efficient coal plants out of the market, while the least efficient coal plants increased their production. The combined effects of subsidies for renewable energy may be different than what emerges from a partial analysis of energy production for given prices. Last: Why sponsor ethanol based on corn? “It has been estimated that using corn for fuel rather than food contributes a third of the rise in prices worldwide” Hurting those who need food the most: people in developing countries. For me it is obvious that you have to equalize the treatment of these energy sources; Cut the subsidies.
BTW: While were on the “subsidies” topic (not on energy though) – I remember this enlightening post on government intervention on the Carpe Diem blog:
“A great example from today’s The Gartman Letter about how government agricultural subsidies generate significant and costly economic distortions and inefficiencies:
“One of the axioms of economics is the simple notion that if you subsidize the production of anything you are going to get more of it… and usually more of it than you need. Our favorite example of that was back in the 1970s and 1980s when the US government subsidized durum wheat production in the Dakotas primarily. We got more durum wheat than we could use, so we had to subsidize the export of that wheat to Italy primarily.
Italian pasta makers gladly took the subsidized overproduction at newly subsidized prices that were below the world price of that wheat, and produced wonderful pastas that they exported to the US. The US pasta producers protested and got the government to put a tariff on the imported pasta! In other words, American tax payers “paid” to have too much wheat grown; “paid” again to have that excess wheat exported and “paid” again to buy the pasta they cherished from the Italian pasta producers… and all along the way there were more and more government employees needed to supervise each level of subsidies and tariffs. It was a wonder to behold! It was a scam for the ages.”
Dennis then uses this example to ask “how anyone could be surprised to find that new home sales have fallen off the edge of a precipice in recent months following the “incentives” for buying new homes put into effect late last year and expiring several months ago this year?”
Update: Wheat farmers continue to receive very generous subsidies, more than $30 billion has been paid out between 1995 and 2009 to more than a million farmers, see data here andhere. More than $2 billion has been paid out in each of the last two years (2008 and 2009)”.
Mark Hayes was a Washington policy wonk on a long and steady ascent. A series of emails to a client was all it took to put that carefully crafted career on hold.
For all the talk that "Wall Street is back" from the ravages of the 2008-2009 crisis, there are signs that the financial industry is undergoing a profound transformation, writes Francesco Guerrera.
Thomson Reuters and Markit, rival data providers, have teamed up with investment banks to build a new messaging service to challenge competitor Bloomberg LLP.
Reblogged from Financial Post | Business:
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