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To: ms.smartest.person who wrote (3159)	10/2/2008 8:02:29 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition October 2, 2008 S&P/TSX COMPOSITE INDEX $10900.54 -813.97 CONNACHER OIL & GAS (T-CLL) $2.53 -0.30 CRUDE OIL $93.66 -4.87 In the last few days, we’ve heard that car sales, be it Toyota, Nissan, GM or Ford suffered sales drops for the month of almost 30%. It’s a combination of two things...on the one hand, people who are turning on their TV everyday and hearing about an economic crisis are going to delay purchasing big ticket items. On the other hand, the ones that actually want or need a car, are finding out that credit is simply not available to everyone except for maybe those who really don’t need it. Unemployment numbers just took a big hit and while many analysts that we know are suggesting that oil should still be at decent numbers, once this mess is sorted out, today Merrill Lynch comes out with a report that talks about the other side of that story. Merrill is suggesting that with the economic slowdown, they are going to lower their expectations for oil prices this coming year 2009 from $107 to $90. They also suggest that if there is a world recession, because of expected new OPEC production and less demand for oil if there is a recession, oil could drop in volatility to as low as $50.00. Scary stuff, but then we are suddenly in a very scary world. What a time for Dick Gusella and the crew at Connacher Oil and Gas that are, in a workmanlike way, continuing to develop their Great Divide Project in Northern Alberta. Yesterday Gusella tells us that on their Pod-1 project, they’ve been nudging up recently to as much as 9740 barrels a day, getting very close to the planned 10,000 barrels a day production level. And yesterday, Connacher announced that the Energy Resources and Conservation Board is advancing Connacher’s application for its second 10,000 barrel a day project (the Algar) to the cabinet for final approval which is basically a formality. Meanwhile, that project has been well planned and there’s lots of supplies and equipment virtually by the side of the road ready to be put together for a 300 day building time. What a difference ... just a few weeks ago, oil was above $100 and economies around the world were humming along nicely. Today, oil is at $95 and everyone is nearly panic-stricken. The big question for the oil sector of course, is what next for oil? One thing for certain that Dick Gusella and his crew at Connacher did right, now...in hindsight ... is that they put all their financing together for the Algar project a long time ago. If they were trying to do that today, it probably, simply, wouldn’t happen. So while Gusella feels like he should be sipping champagne to celebrate their accomplishments, in this kind of market, there is little joy for anyone. Don’t mention the word “investment banker” around Gusella as he’s a little ticked at the Wall Street-types that helped create and market the subprime paper. POTASH CORP. SASK. (T-POT) $101.00 -35.50 AGRIUM INC. (T-AGU) $45.01 -13.47 It was a theory that made a lot of sense just a few days/weeks/months ago as booming economies around the world saw commodity prices reflect those booming economies. Plus the demand from Asia as many people who had never had motorbikes, cars, fridges, stoves and the like, suddenly needed them and of course you need steel, nickel and copper for all of those products. Then of course out of left field, a problem that only a few analysts seemed to talk about—the sub-prime mess in the United States became a lot more of problem ... it’s become a crisis. Suddenly commodity prices from copper to you-name-it, have been hit huge. And there has been a huge awakening for gold bugs as suddenly we find out once again, that in a time of crisis, people don’t go to gold ... they sell it as today gold drops $50.00. Another part of the theory to this commodity boom was that huge population in Asia still needs to be fed and as incomes go, they want to be fed better quality produce. Because of that, some of the biggest winners in the whole commodity story had been agricultural plays and fertilizers in particular. The chart of Potash Corp. of Saskatchewan shows you just how well it had benefited and some analysts had targets of $350.00. Boom! That theory is gone and today a very morose Merrill Lynch decides to downgrade the fertilizer sector, writing in a report, “Cheap Stocks Likely to get Cheaper—downgrading fertilizers”. They write, “We continue to believe that low global grain inventories will create a favorable multi-year demand environment for input providers and that it will take several years for significant new capacity to come on line. While the stocks remain inexpensive they appear to be driven more by price and earnings momentum than by valuation. With phosphate prices falling, nitrogen prices peaking and potash prices rising less than expected there is considerable uncertainty surrounding the near-term earnings outlook as underscored by Mosaic’s earnings miss…” There was a time just a few weeks ago that Potash Corp. of Saskatchewan was Canada’s biggest company by market capitalization. That speeding train that came out of left field that has swacked the commodities market, has come at record speed and one only wonders, what the next surprise is...