| | | HI Kirk,
You are touching on what is big oils or XOM's worst fear - fear of long term Corona shutdown. Which I call a red herring.
I think this market downtrend is going to extend the downturn in the market awek or two.
Offsets in clx for the 10 day are a positive 19 points for next week - not supportive.
30 day offsets are all positive (except for a -6 and a -3)for the next 10 days netting 30 positive points again not supportive.
Full super moon on March 9th, with WWW on the 11th, a good setup for a nice reversal.
I'm thinking we are seeing an abc x abc corrective fourth wave (of a bigger 3) that started back on 1/24 @ 3333.18. It also would then be an expanding flat which should require a low exceeding the low of the first abc @ 3214.68 on 1/31/20 (which barely exceeded the 23.60% retrace from the high @ 3333.18).
That first abc was too quick for a four - fours you never can trust - I think we're about to see that again.
Elmatador has a friend who lives in China. He lives in the province adjacent and east of the ground zero virus problem. His friend said he was going back to work on Monday and two provinces are already at work.
I think by the end of two weeks China will be ramping and playing catch up.
Oil demand will ramp up, and there will be a lot of storage that is maxed out no doubt.
During market declines, pandemic fears have often surfaced - it's uncanny how this fear tactic gets hyped by the media during declines. It builds fear,and it is surfacing in earnings reports.
So far the US annual death toll on influenza (which is an annual event) is a greater problem.
More hype in a nervous market at new highs.
I'm thinking we'll be down to sideways to the next full moon March 9th. to the WWW on the 11th.
clx 30 day and clxpp 30 day are very close to going into negative territory - which is usually a bottoming kind of action. Add to that no help on offsets and we have another dip coming, which we must weather.
Lack of oil demand and the virus with its shutdowns are going to give us a 15 year low price in XOM.
EV's are being hyped to make the ICE obsolete, but no one has a time schedule. No one knows the price of a future battery,but it is prohibitive now and needs a cost reduction innovation.
In between oil and fossil fuel have demand growth - at a declining rate going into 2040 :
I think Xom is a great very solid balance sheet company that will be putting in charging stations when EV's get a market share greater than 5%. They dwindle in sales now at less than 2 % and that's with crazy rebates that phase out with volume.
As long as we have cheap gas and EV's have expensive batteries their market share will be anemic.
Heck I could be way wrong, I just think that oil and gas will be here in a bigger way tomorrow than they are today - even if EV's grow. Gasoline is not the only use for oil ,natural gas liquids and natural gas.
One thing for sure I count on is: low prices will shut down drilling and exploration.
It already has:
EIA: Shale NatGas Production Declines First Time in 39 Months
February 19, 2020 Industrywide Issues, Research
 We knew this day would come (although we secretly wished it never would). Our favorite government agency, the U.S. Energy Information Administration, yesterday released our favorite monthly report–the Drilling Productivity Report (DPR). The DPR chronicles how much oil and gas the country’s seven largest shale plays produced last month and their prediction for the coming month. For the first time in 39 months, the combined natural gas output of the seven shale plays will decrease instead of increase. But what a run it’s been! With gas prices in the basement and drillers slashing budgets and people, this was bound to happen. However, shale oil output will hit a new record in March: 9.18 million barrels per day.
Oil will soon follow!
Meanwhile EV's and renewable electricity are not cheaper than fossil fuels - just another case of political waste and corruption billed as the opposite of what it is. I love the editors soundly based opinion:
How many times do politicians have to learn they aren’t good at picking winners and losers. Crescent Dunes is the latest solar failure and humility hint.
The Nevada solar-energy plant Crescent Dunes has gone under after receiving a $737 million federal loan guarantee during the Obama Administration. Crescent Dunes, a 110-megawatt facility, was supposed to use molten salt to store heat from the sun, produce steam, and generate electricity even when the sun was not shining.
The Department of Energy finalized its loan guarantee on Sept. 23, 2011—a week before the federal loan program expired. Just prior to the finalization of the loan guarantee, Nevada approved $119.3 million in tax abatements for Crescent Dunes over 20 years. The plant also received roughly $140 million in private investment. NV Energy, the largest electric utility in Nevada, agreed to buy the electricity under a 25-year power purchase agreement.
Background
Crescent Dunes began commercial operation in November 2015, missing the deadline established by its agreement with NV Energy. But, less than a year later, the facility went offline because of a massive leak in the hot salt tank. Crescent Dunes resumed operations in the latter half of 2017, but had frequent and prolonged outages. Because of Crescent Dunes’ performance problems, NV Energy was at risk in meeting its renewable portfolio standard obligations.
In the summer of 2019, Crescent Dunes’ hot salt tanks had a catastrophic failure, causing ground contamination and requiring the removal of the solar tower that is needed for the plant to generate electricity as designed, halting operations. The Department of Energy sent a formal default notice in September, followed by NV Energy terminating its power purchase agreement.
Crescent Dunes was not cost-effective. Its average price was over $132 per megawatt-hour, compared to Techren Solar II in Nevada’s Eldorado Valley priced at $31.15 per megawatt-hour.
How the Technology Works
Crescent Dunes has a solar receiver that sits on a tower and absorbs sunlight from over 10,000 mirrors. The mirrors magnify the sun’s power 1,200 times, heating salt to high temperatures. The molten salt circulates through the tower and is then used to heat a steam cycle that generates electricity. The plant also uses an automated system that controls the flow of molten salt to the receiver.
Plant operators manage dozens of valves and pumps to start, stop, and adjust the collection of solar energy and control electricity production. Even with changing weather patterns, the molten salt is supposed to heat over 60 million pounds of salt each day to reach 1,050 degrees Fahrenheit. The salt continually circulates in a loop, enabling its reuse by storing it in tanks for use at a later time.
Crescent Dunes was designed to meet peak energy demand, extending into the evening hours until about midnight. The plant’s energy storage integration delivers solar energy captured during the day to the grid during the late afternoon and evening when the demand for power is at its highest. According to the Department of Energy, the molten salt absorbs 90 percent of the solar energy it receives and is used as both a heat transfer fluid and a storage medium.
Information Available to the Obama Administration
In September 2011, the Energy Department indicated that Crescent Dunes would be the first of its kind in the United States and the tallest molten salt tower in the world based on Solar Two, a 10-megawatt test facility in the Mojave Desert decommissioned in 1999 that had shown it was technically feasible to use molten salt to store and generate power. However, in a 2006 report, the Energy Department said the pilot plant was never expected to be a viable commercial-scale plant and, in fact, did not validate economic feasibility. The Crescent Dunes project shows that government investments under the Obama Administration were based on politics more than feasibility.
Conclusion
Like Solyndra, Crescent Dunes is another Obama Administration failure in solar energy development. Despite Crescent Dunes’ power being priced over 4 times as high as the nearest photovoltaic plant in Nevada, the Obama Administration chose to invest in it with taxpayers’ money to further its development of renewable technology. It is well known that the government has a poor track record for picking winners and losers, and Solyndra and Crescent Dunes are notable examples. Americans should be cautious about government attempts to pursue technology in the name of climate change, a recipe for many more Crescent Dunes fiascoes.
Editor’s Notes: All we have to do to lower emissions and deliver cleaner air along with energy affordability and security is to let the market work and continue to develop our natural gas resources. It’s simple but there’s no graft, so politicians refuse to learn>
Sorry about the long post, but it sums up ,what I think is the markets biggest bubble.
Energy is the only thing I've bought for the last two years. My timing is less than perfect, but I'm being paid nicely to wait.
I remember the internet in 1999, It was going to make Walmart go broke. It was going to change everything. It still is only 20% of retail sales. In between Walmart got digital and they are still making very nice profits.
IATL It always takes longer!
Bob |
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