It would be possible to have a very autocentric land use pattern even with basically no zoning (in fact, this is basically exactly what Houston has).

 

Houston has all the same floor area ratio, setbacks, parking minimums, height restrictions, buffer zone requirements, and street geometry rules that codify sprawl.  The only thing that's different is the lack of specific use-type regulations.  So even if you wanted to build a house in an industrial park, you'd still have to meet a sizable number of zoning criteria.  Like I said before, if you wanted to move closer to work, you're physically prevented from doing so even if you can afford to buy the property.  And just find another job?  What world do you live in? 

 

Also you'd struggle to find a bank willing to finance construction of traditional-style homes in the middle of an office park.  It's kind of like how there is no law against renting out every condo in a complex, but banks don't sell mortgage loans to condo associations that are more than 25% rentals. 

Isn't this just an argument about the meaning of "freedom" and positive vs negative rights?

 

Largely yes.  I consider that a very serious topic, even if abstract.  But I prefer to deal with the abstract where it intersects with the concrete (no pun intended) ... such as here.

 

Offered without comment:

 

Developing alternative energy sources is a matter of national security, Ray Mabus, Secretary of the US Navy, said Monday at a conference on climate change.

 

"Energy can be - and is - used everyday as a weapon," Mabus told the Climate Leadership Conference held outside the nation's capital.

 

Speaking to a room full of business leaders, scientists and representatives from non-profits and government agencies, Mabus said that unless the US has a homegrown source of fuel, the country will remain "hostage to global price increases."

 

The Navy must have the "ability to be at the right place all the time," he said, which depends on the Navy's "ability to have fuel."

 

This is why, by no later than 2020, at least half of the Navy's power will come from non-fossil fuel sources, he said.

 

Absolutely true.  And the Navy isn't the only branch of the defense establishment that is quite reasonably pushing ahead with alternative power projects and will continue to do so even if the price of oil temporarily drops to $10/barrel.  Some of the most advanced recent work on solar power was done by the U.S. Army for deployment in forward operating bases in Afghanistan, a long way from the coast.

 

That said, I think that it would have been a very good idea for the U.S. to use the recent crash in oil prices to refill the strategic petroleum reserve, though admittedly it <a href="http://www.fool.com/investing/general/2014/10/19/why-president-obama-should-refill-the-us-strategic.aspx">hasn't been drained quite as much as some alarmists have suggested</a>.  The need for petroleum isn't going away anytime soon, notwithstanding the best efforts of defense, university, and private researchers; might as well top up the tank while it's cheap.

 

It would be possible to have a very autocentric land use pattern even with basically no zoning (in fact, this is basically exactly what Houston has).

 

Houston has all the same floor area ratio, setbacks, parking minimums, height restrictions, buffer zone requirements, and street geometry rules that codify sprawl.  The only thing that's different is the lack of specific use-type regulations.  So even if you wanted to build a house in an industrial park, you'd still have to meet a sizable number of zoning criteria.

 

Fair point, and I shouldn't have made that comparison, since those are exactly the requirements that I'd prefer to eliminate.  (I wouldn't replace them with pro-density mandates, though.  I'd just let people build what and where they wanted and see what the market produced.)

 

And just find another job?  What world do you live in?

 

The real world.  The one in which you don't get to claim that you're oppressed just because you don't have your dream job, your dream house/condo/apartment, and your dream mode of transportation to get from one to the other.  That's not what freedom means.

 

This is the kind of rhetorical excess that makes people tune out when people start talking about actual threats to freedom and actual violations of rights.  You want to see evidence of America acquiring some dangerously Soviet characteristics?  Don't look at the highway appropriations bill.  Look at the <a href="http://www.theguardian.com/us-news/2015/feb/24/chicago-police-detain-americans-black-site">Chicago PD</a>.

 

Or the TSA.

Offered without comment:

 

Developing alternative energy sources is a matter of national security, Ray Mabus, Secretary of the US Navy, said Monday at a conference on climate change.

 

"Energy can be - and is - used everyday as a weapon," Mabus told the Climate Leadership Conference held outside the nation's capital.

 

Speaking to a room full of business leaders, scientists and representatives from non-profits and government agencies, Mabus said that unless the US has a homegrown source of fuel, the country will remain "hostage to global price increases."

 

The Navy must have the "ability to be at the right place all the time," he said, which depends on the Navy's "ability to have fuel."

 

This is why, by no later than 2020, at least half of the Navy's power will come from non-fossil fuel sources, he said.

 

"It's an issue of national security," Mabus said. "It makes us better at defending this country."

 

http://www.timeslive.co.za/world/2015/02/24/energy-can-be-a-weapon-fossil-fuels-pose-a-security-risk-us-navy

 

Yes, of course they are.  They are dependent on energy and not quite as dependent on dense energy as the Air Force, though its close.

 

It's common sense.  The more ways there are to generate usable energy the cheaper all sources are. 

 

That's why storage is important as well.  It allows diffuse sources to be densified and used.

Well, when you get down to the total power used by the Navy, I think a decent amount of it is nuclear--because all ten of our fleet aircraft carriers are nuclear powered and those things are just huge.

 

Indeed, I note that that Secretary of the Navy quote spoke of "non-fossil fuel sources," not necessarily renewables.  As in, whatever it is, we'd rather it not be stuff that, in a conceivable future, we might have to try to buy from the people we're fighting.

 

I wouldn't put it past the Navy to be taking at least a casual look at <a href="http://en.wikipedia.org/wiki/Thorium-based_nuclear_power">thorium reactors</a> for smaller ships, those too small to handle the big, heavy uranium reactors that are barely even practical for the large ships.  (Economically, even on the carriers, nuclear power is more expensive than conventional power, which is why the UK chose not to use it for their carriers even though they have the technology.  We made the decision that the longer times between refuelings and the ability to sustain operations for longer periods were worth the extra cost, even though when one of those reactors does need to be refueled, it is ridiculously expensive.)

Well, when you get down to the total power used by the Navy, I think a decent amount of it is nuclear--because all ten of our fleet aircraft carriers are nuclear powered and those things are just huge.

 

Indeed, I note that that Secretary of the Navy quote spoke of "non-fossil fuel sources," not necessarily renewables.  As in, whatever it is, we'd rather it not be stuff that, in a conceivable future, we might have to try to buy from the people we're fighting.

 

I wouldn't put it past the Navy to be taking at least a casual look at <a href="http://en.wikipedia.org/wiki/Thorium-based_nuclear_power">thorium reactors</a> for smaller ships, those too small to handle the big, heavy uranium reactors that are barely even practical for the large ships.  (Economically, even on the carriers, nuclear power is more expensive than conventional power, which is why the UK chose not to use it for their carriers even though they have the technology.  We made the decision that the longer times between refuelings and the ability to sustain operations for longer periods were worth the extra cost, even though when one of those reactors does need to be refueled, it is ridiculously expensive.)

 

Keep in mind that he is probably also talking about bases as well as ships, where solar and other means of power generation might be used.

Well, when you get down to the total power used by the Navy, I think a decent amount of it is nuclear--because all ten of our fleet aircraft carriers are nuclear powered and those things are just huge.

 

Indeed, I note that that Secretary of the Navy quote spoke of "non-fossil fuel sources," not necessarily renewables.  As in, whatever it is, we'd rather it not be stuff that, in a conceivable future, we might have to try to buy from the people we're fighting.

 

I wouldn't put it past the Navy to be taking at least a casual look at <a href="http://en.wikipedia.org/wiki/Thorium-based_nuclear_power">thorium reactors</a> for smaller ships, those too small to handle the big, heavy uranium reactors that are barely even practical for the large ships.  (Economically, even on the carriers, nuclear power is more expensive than conventional power, which is why the UK chose not to use it for their carriers even though they have the technology.  We made the decision that the longer times between refuelings and the ability to sustain operations for longer periods were worth the extra cost, even though when one of those reactors does need to be refueled, it is ridiculously expensive.)

 

Keep in mind that he is probably also talking about bases as well as ships, where solar and other means of power generation might be used.

 

It's a lot tougher to protect huge fields of delicate solar panels than smaller power plants.

Well, when you get down to the total power used by the Navy, I think a decent amount of it is nuclear--because all ten of our fleet aircraft carriers are nuclear powered and those things are just huge.

 

Indeed, I note that that Secretary of the Navy quote spoke of "non-fossil fuel sources," not necessarily renewables.  As in, whatever it is, we'd rather it not be stuff that, in a conceivable future, we might have to try to buy from the people we're fighting.

 

I wouldn't put it past the Navy to be taking at least a casual look at <a href="http://en.wikipedia.org/wiki/Thorium-based_nuclear_power">thorium reactors</a> for smaller ships, those too small to handle the big, heavy uranium reactors that are barely even practical for the large ships.  (Economically, even on the carriers, nuclear power is more expensive than conventional power, which is why the UK chose not to use it for their carriers even though they have the technology.  We made the decision that the longer times between refuelings and the ability to sustain operations for longer periods were worth the extra cost, even though when one of those reactors does need to be refueled, it is ridiculously expensive.)

 

Keep in mind that he is probably also talking about bases as well as ships, where solar and other means of power generation might be used.

 

It's a lot tougher to protect huge fields of delicate solar panels than smaller power plants.

 

Technically true, but only if they're like Christmas lights, where losing one panel takes out an entire string.  Otherwise, if you've got a field of 1000 panels and a rocket attack destroys 20, you actually haven't lost all that much.

 

And of course, modern distributed power management technology is at the point where it's at least possible to not have all your panels in one place.  Maybe not civilian grid parity yet, but the military can be more flexible on such matters than those subject to pure market forces.  In fact, one of the greatest strengths of solar power on the home front is its distributed-generation possibilities.

Only reason why I'm posting this in the Peak Oil thread is because it was tweeted by the International Energy Agency and I couldn't think of a better place to post it:

 

IEA ‏@IEA  6m6 minutes ago

Two- & three-wheelers greatly outnumber passenger light-duty vehicles in Asia http://bit.ly/1Fh59d4  #Transport

Drill Baby Drill!

 

Oil at $40/barrel:

http://www.cnbc.com/2015/11/12/oil-rises-after-drop-still-on-course-for-big-weekly-loss.html

Not certain if this is the right thread for this, so apologies if it is in a bad spot.

 

Is Ohio looking at anything like this, i.e. putting a $0.10/gallon gas tax on current pumps in the state?

 

It looks like it has worked out well in Iowa so far and with falling gas prices, people haven't even noticed:

 

http://www.thegazette.com/subject/news/government/iowas-gas-tax-increase-working-as-planned-officials-say-20160228

I'd be all for it--I actually didn't know that states could add their own on top of the federal tax that goes into the highway trust fund.

Not certain if this is the right thread for this, so apologies if it is in a bad spot.

 

Is Ohio looking at anything like this, i.e. putting a $0.10/gallon gas tax on current pumps in the state?

 

It looks like it has worked out well in Iowa so far and with falling gas prices, people haven't even noticed:

 

http://www.thegazette.com/subject/news/government/iowas-gas-tax-increase-working-as-planned-officials-say-20160228

 

Another idea might be to make it inversely proportional to gas prices.  Say it maximizes as 15c when gas is a dollar a gallon and gradually drops to 0 around $3.  (I mean the extra tax).

I'd be all for it--I actually didn't know that states could add their own on top of the federal tax that goes into the highway trust fund.

 

Yes, every state has its own excise tax on gasoline and diesel fuel.

 

I'm surprised you haven't heard about this -- considering all of conversations about the state's constitutional restriction on the spending of state gas taxes and other state fees paid by motorists on anything other than roads.

 

Ohio is considering raising the gas tax. I'm hopeful that the portion of it that's not paid by motorists (about 5% or $80 million per year) can be used for transit.

KJP:

 

Since I am not familiar with the numbers, what tax rate would that be at for Ohio?  It seems to me that it would be a boon for the state with new construction projects and jobs, and also better access, etc.  If $80 million is 5%, that means the full amount is $1.6 billion per year. 

 

I am not an expert, but it seems to me that would have a great multiplier effect for the state in regards to wage growth and per capita income for not only the construction workers themselves, but also suppliers and manufacturers of the steel rebarb, pins, concrete mixers, etc. 

 

Another question I am too lazy to look up but wondering if you know off the top of your head: What is the annual DOT road budget for the state of Ohio?

IAGuy39, I see the confusion. The state gasoline tax is currently 28 cents per gallon (last raised in 2005). The federal gasoline tax is 18.4 cents per gallon (which hasn't changed since 1993). Note that those are fixed rates per gallon and are not affected by the change in the price of oil, gas, diesel fuel, etc. etc.

 

The 5% figure (it may actually be closer to 4%) is roughly how much gasoline is consumed by persons not engaged in driving on a public road. So when you take your portable gas can to the gas station and you refill to take back home to fill the gas tank on your lawnmower, garden tractor, chainsaw, snowblower, leaf blower, leaf shredder, go cart, off-road motorcycle, ATV, snowmobile, etc., those and other similar activities are accounted for in that 4-5%. That 4-5% is based on the national experience which could be different for Ohio. Ohio doesn't track the types of activities that comprise the consumption of gasoline. Yet the gasoline taxes on the non-roadway activities are used to pay for the repair, construction, upkeep, ice/snow removal, etc. of Ohio's roads. Article XII, Section 5a of the Ohio Constitution says:

 

Use of Motor Vehicle License and Fuel Taxes Restricted

No moneys derived from fees, excises, or license taxes relating to registration, operation, or use of vehicles on public highways, or to fuels used for propelling such vehicles, shall be expended for other than costs of administering such laws, statutory refunds and adjustments provided therein, payment of highway obligations, costs for construction, reconstruction, maintenance and repair of public highways and bridges and other statutory highway purposes, expense of state enforcement of traffic laws, and expenditures authorized for hospitalization of indigent persons injured in motor vehicle accidents on the public highways.

 

The state of Oregon has a similar constitutional restriction on the use of gasoline taxes and other road-borne public excise/fees and was able to legally use that portion on non-highway projects and programs -- namely supporting capital construction and operating costs of the Eugene-Portland segment of the Cascades Corridor passenger rail service that goes north up to Seattle and Vancouver.

 

ODOT's current two-year budget, signed into law last April, is $7.06 billion, or an average of $3.53 billion per year. About $1.8 billion of that is from the state gasoline tax. Another $1.3 billion is from the Federal Highway Trust Fund which is funded primarily by general treasury transfers and the rest by federal fuels tax. So do other states like Michigan. But before Michigan's constitution was passed, an old state law defined a railroad as a public roadway. So Michigan uses gas taxes on public transportation and passenger rail service programs.

 

Now if Ohio's 4-5% of existing gasoline tax revenues went to transit, rail, bikeways, etc., it would take $80+ million in state funds and 2-5 times more in federal funds away from road projects. Obviously that would cause some grief.

 

HOWEVER -- if a state gas tax increase was enacted, there would be no harm to roadways and there would instead be benefit. Each cent of state gas tax generates about $65 million per in revenue. So if the state gas tax was raised only two cents per gallon and 4-5% of all state gas tax revenues went to support non-highway transportation, the state would still get $50 million per year in state gas tax revenues for roads. If the state gas tax was raised by four cents per gallon, it could have $180 million per year more for roads. Ohio probably can't get any more federal road funding than what it's getting now. But it can get additional federal funding for transit and rail projects it's leaving in Washington by not having a meaningful share of state funding dedicated to transit and rail.

 

That's why a state gasoline tax increase with a 4-5% set-aside from ALL state gas tax revenues for transit, rail, bikeways, Amish buggy lanes, etc. would actually result in more federal transportation funding for Ohio. State funding for roads would increase substantially too, especially for urban areas which are donors of state road funds under current ODOT policies that affect the redistribution of roadway funding to counties.

Well, when you get down to the total power used by the Navy, I think a decent amount of it is nuclear--because all ten of our fleet aircraft carriers are nuclear powered and those things are just huge.

 

Indeed, I note that that Secretary of the Navy quote spoke of "non-fossil fuel sources," not necessarily renewables.  As in, whatever it is, we'd rather it not be stuff that, in a conceivable future, we might have to try to buy from the people we're fighting.

 

I wouldn't put it past the Navy to be taking at least a casual look at <a href="http://en.wikipedia.org/wiki/Thorium-based_nuclear_power">thorium reactors</a> for smaller ships, those too small to handle the big, heavy uranium reactors that are barely even practical for the large ships.  (Economically, even on the carriers, nuclear power is more expensive than conventional power, which is why the UK chose not to use it for their carriers even though they have the technology.  We made the decision that the longer times between refuelings and the ability to sustain operations for longer periods were worth the extra cost, even though when one of those reactors does need to be refueled, it is ridiculously expensive.)

 

Keep in mind that he is probably also talking about bases as well as ships, where solar and other means of power generation might be used.

 

It's a lot tougher to protect huge fields of delicate solar panels than smaller power plants.

 

Technically true, but only if they're like Christmas lights, where losing one panel takes out an entire string.  Otherwise, if you've got a field of 1000 panels and a rocket attack destroys 20, you actually haven't lost all that much.

 

And of course, modern distributed power management technology is at the point where it's at least possible to not have all your panels in one place.  Maybe not civilian grid parity yet, but the military can be more flexible on such matters than those subject to pure market forces.  In fact, one of the greatest strengths of solar power on the home front is its distributed-generation possibilities.

 

I would imagine a "soft bomb" like was used in Serbia (conductive fibers) would be devastating to a solar panel complex which by definition needs to have some critical components exposed.

^^KJP

 

Thank you very much for that explanation.  It makes much more sense to me now what you were talking about.

 

That's why a state gasoline tax increase with a 4-5% set-aside from ALL state gas tax revenues for transit, rail, bikeways, Amish buggy lanes, etc. would actually result in more federal transportation funding for Ohio. State funding for roads would increase substantially too, especially for urban areas which are donors of state road funds under current ODOT policies that affect the redistribution of roadway funding to counties.

 

Read more: http://www.urbanohio.com/forum2/index.php?action=post;topic=2706.2590;last_msg=792934#ixzz42PxFOF4y

 

 

From your explanation on the above, it makes so much sense for the state of Ohio to do this.  I assume the politicians know about this?  Maybe that's a hard assumption, but it makes too much sense not to.  Though the current administration seems to think transit funding is kryptonite, so possibly they are avoiding at all costs.

 

Thanks again for the deep explanation.  It is always good to be on top of the loop in matters such as this, which are so critical to the State of Ohio and also to the nation as a whole.

Big news...Saudi Arabia plans to gradually sell off state-owned oil company, invest around the globe in companies and real estate:

http://www.bloomberg.com/news/articles/2016-04-01/saudi-arabia-plans-2-trillion-megafund-to-dwarf-all-its-rivals

I saw on CNBC today the Saudis will invest in USA shale oil/gas projects.

Check out @AlexJFMorales's Tweet:

Check out @AlexJFMorales's Tweet:

 

This almost falls under "no excrement".  Shale oil is more expensive to produce so as the price per barrel goes down, production will come off line.

 

Williston just got its bonds downgraded.

The weird counterbalance is that it is very easy to start a Shale operation. The Saudis can flood the market and shut down shale, for now.  As soon as the price gets to about $55 a barrel, shale operations can start up again.

 

I work in the oil industry in the gulf coast / Deepwater.  That industry is done.  I'm working on a $16 Billion dollar project called Appomattox.  I expect that to be the last large offshore facility for at least a generation.

To do a tieback to an existing host (the lowest cost way to tap reserves) will cost about $100,000,000.  To start new fracking wells, about $10,000

 

What is scary about fracking is while I personally don't think there is enough regulation in Deepwater, Fracking has none.  Big companies who have deep pockets may decide to do it "right". But with such a low cost barrier to entry, every cowboy good old boy who knows a little bit about drilling can pump hydraulic fluid into the ground and hope for oil & gas.

 

If oil ever goes north of $100 a barrel, Deepwater might come back, but I predict the next 50 years the golf coast will be the new rust belt and Houston will be the next Detroit.

(A more apt comparison is Cleveland, we used to be the oil Titan town, what was left mostly pulled out w/ city's bankruptcy)

 

 

 

 

The weird counterbalance is that it is very easy to start a Shale operation. The Saudis can flood the market and shut down shale, for now.  As soon as the price gets to about $55 a barrel, shale operations can start up again.

 

I work in the oil industry in the gulf coast / Deepwater.  That industry is done.  I'm working on a $16 Billion dollar project called Appomattox.  I expect that to be the last large offshore facility for at least a generation.

To do a tieback to an existing host (the lowest cost way to tap reserves) will cost about $100,000,000.  To start new fracking wells, about $10,000

 

What is scary about fracking is while I personally don't think there is enough regulation in Deepwater, Fracking has none.  Big companies who have deep pockets may decide to do it "right". But with such a low cost barrier to entry, every cowboy good old boy who knows a little bit about drilling can pump hydraulic fluid into the ground and hope for oil & gas.

 

If oil ever goes north of $100 a barrel, Deepwater might come back, but I predict the next 50 years the golf coast will be the new rust belt and Houston will be the next Detroit.

(A more apt comparison is Cleveland, we used to be the oil Titan town, what was left mostly pulled out w/ city's bankruptcy)

Having read the JDR biography, I see what you did there.  :)

 

The low startup costs for shale are of course even lower to restart an existing site.  That makes the decision to shut down when the markets or even the trends aren't in your favor easier.  This of course leads to inexperienced people at re-start, and more risks.  I'm very pro-fracking, but this needs to be kept in mind.

Well my hunches that we had hit the bottom about two months ago were correct, and I could have doubled my money.  Oasis Petroleum was down to $4.80 or something like that back in February, and I remember having the impulse to take $5,000 out of savings and throw it at that stock.  Now it's at $9.20.  So I would have made a little under $5,000 after taxes. 

^ Steel is another easy money maker that very closely follows oil for a number of reasons. In January I was tempted to do something similar to what you just described, and throw a couple thousand at some Ohio companies: AK Steel and TimkenSteel. AK was $1.88 and is now $5.05. Timken was $3.99 and is now $13.00. I bought an engagement ring instead. I could have bought the ring and still had more money than I started with if I had taken the chance (though I probably wouldn't sell it yet - at least not all of it).

Well my hunches that we had hit the bottom about two months ago were correct, and I could have doubled my money.  Oasis Petroleum was down to $4.80 or something like that back in February, and I remember having the impulse to take $5,000 out of savings and throw it at that stock.  Now it's at $9.20.  So I would have made a little under $5,000 after taxes. 

 

Yeah I had the same thought because of the cost of fracking.

^ Steel is another easy money maker that very closely follows oil for a number of reasons. In January I was tempted to do something similar to what you just described, and throw a couple thousand at some Ohio companies: AK Steel and TimkenSteel. AK was $1.88 and is now $5.05. Timken was $3.99 and is now $13.00. I bought an engagement ring instead. I could have bought the ring and still had more money than I started with if I had taken the chance (though I probably wouldn't sell it yet - at least not all of it).

 

Why would you sell only part of an engagement ring? :P

 

Also, I got burned on the steel rise as well, for a different reason: I sold covered calls on Nucor with a strike of $41 when it was down around $35 just a couple of months ago.  It skyrocketed from there to almost $50, one of the fastest rises I've ever seen on that normally plodding stock.  Almost all of my shares got called away; the few piddling ones I have left exist only because of a dividend (you can set Fidelity to reinvest dividends in the stock by default, which I've done across the board).  Moving back slightly to the oil topic, I've got another covered call that might get exercised on me as well, on Kinder Morgan, if it's above $19 in June.  That one went down to around $11 not long ago after a dividend cut, and I thought the market overreacted to that (it was still generating fantastic cash flow), so I did a buy-write.  Then Berkshire Hathaway announced that they'd just plunked $350 million into Kinder Morgan on the drop, and of course with that stamp of approval, the stock rebounded, hard and fast.

 

I have to admit to a certain Schadenfreude, or at least positive reinforcement.  With gasoline down at $1.40 a gallon in the winter, my decision to buy an electric car was definitely questionable.  Even now that it's back around $2/gal, it's something of a push economically, but I at least feel somewhat better about myself.  And, of course, I made good gains on those fossil fuel and steel stock trades, just not as much as I would have if I hadn't gotten greedy with options.

Well my hunches that we had hit the bottom about two months ago were correct, and I could have doubled my money.  Oasis Petroleum was down to $4.80 or something like that back in February, and I remember having the impulse to take $5,000 out of savings and throw it at that stock.  Now it's at $9.20.  So I would have made a little under $5,000 after taxes. 

 

Me too. A few months ago I bought a petroleum ETF when the price of WTI was about $30. I felt oil had bottomed out at $26 but I didn't want to be in a commodity tracking fund like I was before because it's blurred by non-oil commodities. So I bought a petrol SPDR that has risen 8.5 percent since. It's my second-best performing investment so far this year.

Speaking of Warren, I've read too much of his stuff to speculate in single stocks with any real sum of money, which is why I didn't pull the trigger and don't anticipate ever doing.  You will get lucky from time to time but you probably won't come out ahead throwing money at companies you don't really know about in industries you don't really know about.  It's way too easy to trick yourself into thinking you're good at this by only remembering your big wins and dismissing your big losses. 

 

I also think that most people who post here will do much better investing in rental properties in their respective cities than they could get in stocks.  Houses and multi-families are cheaper in Ohio than basically anywhere else in the first world, meaning they can't lose much value but they have an unlimited upside. 

People always want to play around with loose stocks thinking they'll catch Apple '82, but YOU can't control what the stock does. Meanwhile, if you start your own business and/or get involved in real estate YOU are much more in control of your fate and income.

 

After 6 years in business for myself I have become addicted to the notion that I have now so much control over my income than someone with a regular job. It did take years to get this far though, and not everyone can ditch their job to start a business that loses money for three years.

Speaking of Warren, I've read too much of his stuff to speculate in single stocks with any real sum of money, which is why I didn't pull the trigger and don't anticipate ever doing.  You will get lucky from time to time but you probably won't come out ahead throwing money at companies you don't really know about in industries you don't really know about.  It's way too easy to trick yourself into thinking you're good at this by only remembering your big wins and dismissing your big losses. 

 

I also think that most people who post here will do much better investing in rental properties in their respective cities than they could get in stocks.  Houses and multi-families are cheaper in Ohio than basically anywhere else in the first world, meaning they can't lose much value but they have an unlimited upside.

 

I've had good luck investing in single stocks, but I don't advise it for just everyone.  I really enjoy the numbers game, and I'm comfortable with financial statements and most of the fundamental value metrics (though when you start getting into the Greeks of options trading, I'm a little shakier).  I'm also a paid subscriber to the Motley Fool and spend a fair amount of time reading and learning there.  While it isn't quite at the level of a part-time job for me, I estimate I spend about 20 hours a month on portfolio management.  Not an inordinate burden, but most people won't even do that.

 

I've also looked at real estate investing (and we can continue this over on the owning rental properties thread), but that really did start to look like a full time additional job.  And at least one banker I spoke to about this when I was exploring it said that you really aren't going to get the kind of income that lets you quit your main job until you own something like 20 properties, and since I can't exactly make that happen all at once, there would at least be a while when I would own maybe two or three properties.  From the standpoint of a business owner, the notion of control is appealing, but from the standpoint of someone whose touchstone is equity security investing, real estate ownership and management is insane: you're sinking large sums of capital into highly leveraged, fixed, illiquid investments with ongoing carrying costs in the form of property taxes that have no stock portfolio analogue.

 

(In fact, I did fork this to the Owning Rental Properties thread: http://www.urbanohio.com/forum2/index.php/topic,29168.70.html.)

I used to be a bigger stock market guy but still feel that markets act too irrationally despite all the computerization that has happened over the past 20 years. Too many people sink money into companies that they "like" rather than in fundamentals. I learned that a company's marketing is often much more important than fundamentals and I don't like that. When I was in the financial sector I paid a lot of attention to companies' ad campaigns because I sarcastically knew that every ad for the product was an ad for the stock.

 

Often, energy companies are in a different place with their marketing since they do a lot of B2B and B2G. Selling to pros is vastly different than selling to the public. The public will irrationally keep a company afloat or even kill it irrationally.

Which is why some people have a saying that in the short term, the market is a voting mechanism, but in the long term, it's a weighing mechanism.

 

There is a reason that fossil fuel stocks like Kinder Morgan have rebounded sharply and other fossil fuel stocks like SeaDrill (one that I'm glad I sold out of, though I definitely should never have bought back in after I sold in 2013) have not.  Many land-based companies like Kinder Morgan (among the largest pipeline operators in the world) have been doing at least OK; offshore-focused companies are in all kinds of trouble.  Fracking also has the advantage of flexible production because a fracking well can be simply be turned off and won't be that much worse for wear in a year or two if the leaseholder wants to resume.  Many mineral rights leases require minimum payments regardless of whether the well is producing, so the driller has to give some money to the owner just to keep the lease from terminating, but nothing compared to the financial sink of an idle offshore rig.

 

This is very good for America overall, because it means we have a lot of capacity that has already been idled and can be reactivated as the price begins to rise again.  If the sector overdoes it, prices could even fall again, but the most likely outcome will be a very slow uptrend with comparatively modest volatility compared to the wildcatter fracking days of the last few years.  That's reasonably sustainable, at least for a good long while.  (Obviously in the long term, fossil fuels are not sustainable, but one always has to ask long the "long term" is.  After all, in the long run, we're all dead.  Heck, in the longer long run, so is the sun.)

After all, in the long run, we're all dead.  Heck, in the longer long run, so is the sun.)

 

 

Which is why the space program is so damned important.  :)

 

Having been an urban landlord briefly, I would question how much more under one's one control real estate investments are versus the stock market, and they are a lot more work.

 

I used to be a bigger stock market guy but still feel that markets act too irrationally despite all the computerization that has happened over the past 20 years. Too many people sink money into companies that they "like" rather than in fundamentals. I learned that a company's marketing is often much more important than fundamentals and I don't like that. When I was in the financial sector I paid a lot of attention to companies' ad campaigns because I sarcastically knew that every ad for the product was an ad for the stock.

 

Often, energy companies are in a different place with their marketing since they do a lot of B2B and B2G. Selling to pros is vastly different than selling to the public. The public will irrationally keep a company afloat or even kill it irrationally.

 

Since 1950 stock market investing has gradually shifted from buying stocks for dividends to buying stocks for appreciation.  If a dividend stock also appreciates in value, then great.  But a lot of people don't ever grasp the simple idea that a dividend stock that loses value over time might still have be a solid investment.  Same with a rental property.  My dad is currently under contract to buy a 2-family in Cincinnati for $66,000 that the current owner bought in 1998 for $69,000.  That guy is of course losing money on the sale when inflation and selling costs are considered, but he has collected about $190,000 in rent since he bought it.  So he has made money.  Not a ton, but probably enough to have made the hassle worth it, esp if he reinvested the surplus. 

I used to be a bigger stock market guy but still feel that markets act too irrationally despite all the computerization that has happened over the past 20 years. Too many people sink money into companies that they "like" rather than in fundamentals. I learned that a company's marketing is often much more important than fundamentals and I don't like that. When I was in the financial sector I paid a lot of attention to companies' ad campaigns because I sarcastically knew that every ad for the product was an ad for the stock.

 

Often, energy companies are in a different place with their marketing since they do a lot of B2B and B2G. Selling to pros is vastly different than selling to the public. The public will irrationally keep a company afloat or even kill it irrationally.

 

Since 1950 stock market investing has gradually shifted from buying stocks for dividends to buying stocks for appreciation.  If a dividend stock also appreciates in value, then great.  But a lot of people don't ever grasp the simple idea that a dividend stock that loses value over time might still have be a solid investment.  Same with a rental property.  My dad is currently under contract to buy a 2-family in Cincinnati for $66,000 that the current owner bought in 1998 for $69,000.  That guy is of course losing money on the sale when inflation and selling costs are considered, but he has collected about $190,000 in rent since he bought it.  So he has made money.  Not a ton, but probably enough to have made the hassle worth it, esp if he reinvested the surplus. 

 

Even moreso than stocks, though (and more in line with the theme of this thread), commodities trading has become a ridiculous speculator's game.  It used to be that the people signing massive contracts for fossil fuel futures were actual end users either hedging or actually intending to exercise and take delivery of the commodity in question.  Now it's flipped so far that ostensibly non-financial companies often have financial arms that play the commodities markets basically like Wall Street does.  (Check out the amount of commodity and energy futures contracts on FirstEnergy's quarterly reports sometime.)

You get to be really picky about tenants these days as long as vacancy isn't too high in the surrounding areas.

This is Peak Oil

 

by Luís de Sousa, originally published by At the Edge of Time  | TODAY

 

In the last press review of 2015 I asked if that had been the year petroleum peaked. The question mark was not just a precaution, the uncertainty was really there. Five months later the reported world petroleum extraction rate is pretty much still where it was then. This is not a surprise, but the impact of two years of depressed prices is over due.

 

Nevertheless, during these five months of lethargy the information I gathered brings me considerably closer to removing the question mark from the sentence and acknowledging that a long term decline is settling in. Understanding the present petroleum market as a feature of the supply destruction - demand destruction cycle makes this case clear.

 

Looking Backwards

 

Worldwide petroleum extraction hit some sort of ceiling back in 2004, once it crossed above 70 Mb/d. The volume coming to the market kept increasing, but at a shy pace. From 2004 to 2012 the extraction rate grew only 3%, from 72 Md/b to 74 Mb/d.

 

At the same time, the Brent index endured a remarkable rise from 2004 to 2008. Some called this the "end of cheap oil", alluding to the increasing need for lower return-on-investment resources: ultra-deep water, heavy petroleums, Arctic, etc. Nevertheless, the price collapsed by a third from 2008 to 2009. Back then I explained how the concept of an ever rising petroleum price was at odds with "peak oil". For the world extraction to enter a declining trend, periods of supply destruction must take place to keep those higher entropy resources at bay.

 

Today the market is going through the second supply destruction cycle since the 2004 shift. In reality these cycles are taking far longer than I anticipated, showing a considerable time lag in the adjustment of the supply curve. There is however something special about this supply destruction cycle that could possibly be sealing the end of growth as far as petroleum is concerned...

 

full article at:

http://www.resilience.org/stories/2016-05-23/this-is-peak-oil

This is Peak Oil

 

by Luís de Sousa, originally published by At the Edge of Time  | TODAY

 

In the last press review of 2015 I asked if that had been the year petroleum peaked. The question mark was not just a precaution, the uncertainty was really there. Five months later the reported world petroleum extraction rate is pretty much still where it was then. This is not a surprise, but the impact of two years of depressed prices is over due.

 

Nevertheless, during these five months of lethargy the information I gathered brings me considerably closer to removing the question mark from the sentence and acknowledging that a long term decline is settling in. Understanding the present petroleum market as a feature of the supply destruction - demand destruction cycle makes this case clear.

 

Looking Backwards

 

Worldwide petroleum extraction hit some sort of ceiling back in 2004, once it crossed above 70 Mb/d. The volume coming to the market kept increasing, but at a shy pace. From 2004 to 2012 the extraction rate grew only 3%, from 72 Md/b to 74 Mb/d.

 

At the same time, the Brent index endured a remarkable rise from 2004 to 2008. Some called this the "end of cheap oil", alluding to the increasing need for lower return-on-investment resources: ultra-deep water, heavy petroleums, Arctic, etc. Nevertheless, the price collapsed by a third from 2008 to 2009. Back then I explained how the concept of an ever rising petroleum price was at odds with "peak oil". For the world extraction to enter a declining trend, periods of supply destruction must take place to keep those higher entropy resources at bay.

 

Today the market is going through the second supply destruction cycle since the 2004 shift. In reality these cycles are taking far longer than I anticipated, showing a considerable time lag in the adjustment of the supply curve. There is however something special about this supply destruction cycle that could possibly be sealing the end of growth as far as petroleum is concerned...

 

full article at:

http://www.resilience.org/stories/2016-05-23/this-is-peak-oil

 

At what point does "the boy who cried wolf come into play"?

 

Fracking sites are very easy to stop and restart.  As the oil price drops, some close down.  As it goes back up, they reopen.

^ But the fracking sites deplete after just a few years instead of decades.  That's the problem few are acknowledging (but which is mentioned in the article).  All it does is let us more quickly scrape the leftover sludge off the bottom of the barrel, so to speak. 

^ But the fracking sites deplete after just a few years instead of decades.  That's the problem few are acknowledging (but which is mentioned in the article).  All it does is let us more quickly scrape the leftover sludge off the bottom of the barrel, so to speak. 

 

The other thing that starts up when the prices go up is exploration.  The other other thing is research on synthetics.

 

 

Well sure exploration goes up when prices go up, but all the easy stuff has been found and put into production already.  So like I said, it takes more work (and money) to find, extract, and refine the smaller, dirtier, harder to reach fields.  Since the world (and especially the American) economy is predicated on inexpensive oil, when prices get high enough to make producing these resources viable, demand goes down, and those prices crash.  This is the supply/demand destruction cycle we've seen playing out, due to time lag between supply and demand responses, plus other investments and subsidies that further distort normal market forces. 

Well sure exploration goes up when prices go up, but all the easy stuff has been found and put into production already.  So like I said, it takes more work (and money) to find, extract, and refine the smaller, dirtier, harder to reach fields.  Since the world (and especially the American) economy is predicated on inexpensive oil, when prices get high enough to make producing these resources viable, demand goes down, and those prices crash.  This is the supply/demand destruction cycle we've seen playing out, due to time lag between supply and demand responses, plus other investments and subsidies that further distort normal market forces.

 

It might be true that all the easiest stuff has been found and put into production already, but the combination of fracking and horizontal drilling really did represent a seismic (no pun intended) shift in the extraction cost curve, moving a large amount of "proven" reserves (a great adjective that isn't quite as significant as it sounds) into the "economically recoverable" category (a much bigger deal).  Granted, gas at $1.40 a gallon again was only ever going to be a fleeting moment in historical terms; that was a momentarily supply glut and seems to have already worked its way out of the system.  But we really do have significant supply ready to come back online as prices begin to climb again, which will in turn mitigate the upward trajectory of those prices.  It might not actually crash the price again, but treading water in the $2-3/gallon range in 2016 is a lot better than many people were predicting just a few years ago.  And if we spike up closer to $4 again or even higher, then the offshore options (which were some of the hardest hit because their break-even thresholds are the highest ... SeaDrill went from an investors' darling to the brink of bankruptcy in the space of just a few years) become viable again.

$60 a barrel is the new ceiling in the oil industry.

That is the number that makes fracking profitable.

 

For major reserves it takes an incredible amount of up front capital to exploit.  With fracking (without regulation) the costs to start and then to stop are almost negligible.  At $65 start up fraking again, flood the market, when it dips to $55 stop.

 

I work in oil & gas in New Orleans, and deep water is pretty much toast for a generation.  Some people may applaud that, but think about the fines BP had to spend on Macondo.  The oil companies still need more discipline, but they are much more risk averse for safety and the environment just to ensure their investment is jeopardized.  A fracking company can start up and disappear within a month, leaving all the environmental problems for someone else to clean up.

Well sure exploration goes up when prices go up, but all the easy stuff has been found and put into production already.  So like I said, it takes more work (and money) to find, extract, and refine the smaller, dirtier, harder to reach fields.  Since the world (and especially the American) economy is predicated on inexpensive oil, when prices get high enough to make producing these resources viable, demand goes down, and those prices crash.  This is the supply/demand destruction cycle we've seen playing out, due to time lag between supply and demand responses, plus other investments and subsidies that further distort normal market forces. 

 

You are correct.  Development of expensive, low energy returned on energy-invested oil (EROEI) is the result of peak oil, which was never about running out of oil but about how fast you can get it out of the ground to keep production growing an affordable price.  We're stuck between an inability to grow production as fast as we did for the first 150 years of the oil age and an economy that needs cheap oil to function. 

 

Despite temporarily low oil prices and what the industry and media say, Peak Oil is still a reality.  Discovery of new sources of oil have been lagging behind global oil production for decades  and it is now at a 70-year low:

 

Peak Oil by Any Other Name is Still Peak Oil

 

One of the most compelling charts I have ever seen is the “Growing Gap” chart that used to appear on the front page of every ASPO Newsletter. This is the one from the last ASPO Newsletter, written by Colin Campbell and published in April 2009.

 

Since then, more than seven years have passed, and peak oil has disappeared from the mainstream press headlines--almost. On August 29, Bloomberg published a story alerting to the fact that conventional oil discovery has reached a 70-year low. It published a very interesting chart, using data provided by Wood Mackenzie, the oil consulting firm, to show that fact. Unlike the ASPO chart, Bloomberg's chart only goes back to 1947, the year before Ghawar was discovered...

 

Full article at:

 

http://www.resilience.org/stories/2016-09-08/peak-oil-by-any-other-name-is-still-peak-oil

It's market forces at work keeping new discoveries down since it costs a lot to get oil today out of the ground while prices are low.

It's market forces at work keeping new discoveries down since it costs a lot to get oil today out of the ground while prices are low.

 

Sorry, but no it's not.  Your statement is a good example of how we keep lying to ourselves about what's really going on.  Plus it's awfully easy to make a statement like that without providing a shred of evidence to back it up. Anyway...

 

1.  This is not a recent development.  Production has been exceeding new discoveries for several decades now-- read the article and look at the data (I suspect you haven't actually read the whole thing?). 

 

2.  Oil companies never stop looking for oil.  They need to replace their reserves in order to keep their stock prices up, the dividends going and the investors happy.  This problem really started rearing its head in the mid 1990s when decades old oil companies began merging.  They were merging because they could no longer increase their reserves anything but marginally with  new discoveries, so they increased them by merging.  In a similar vein, the reason Exxon, for example,  has been quietly buying back its stock for quite a few years now is to artificially keep the price of their stock up because they can no longer replace their reserves like they used to.  The new oil just isn't there in significant quantities anymore compared to the past. 

 

3.  New oil discoveries are expensive because they are smaller in size,  lower in quality, lower in yield, and lower in energy returned on energy invested compared to the super-giant fields in Saudi Arabia, Kuwait, Mexico, Texas (the original Texas fields, not the new shale oil ones), Shallow Gulf of Mexico, North Sea, Daquing field in China, Iran, Iraq, Alaska Prudhoe Bay, etc that were discovered decades ago.  If there were significant cheap, easy fields left that's what the oil companies would be going after, but there are none left.   

 

4.  90% of global production today comes from legacy, super-giant oil fields that are decades old (see partial list above).  There just isn't enough new oil out there to replace these huge, cheap, easy fields, many of which are in production decline. 

 

5.  Even when prices were higher, these new, expensive fields just couldn't do what the super-giant legacy fields (again, see above). It takes a couple thousand wells in the shale-oil fields of North Dakota, for example to produce what less than a 10th of that number can produce in Saudi Arabia.

 

6.  On top of it all, and I provide this one to show the level of denial that is occurring:  things that aren't crude oil have been included in "new oil production" since about 2006-- the industry and even the US government in the US Energy Information Administration changed the definition of crude oil to mask the problem.  They started including things like biofuels and natural gas liquids in the oil production figures.  These things aren't oil.  I even saw a figure in the Wall Street Journal a few years ago that was comparing US oil production with Saudi production in an effort to show that our oil production was exceeding that of Saudi Arabia.  But the US chart included natural gas liquids and biofuels, but not the Saudi chart.  Sorry, but you can't take two bushels of apples and a bushel of oranges produced in one place and compare it to to two and a half bushels of apples produced somewhere else and say the first place produced more apples. 

 

Reality is what it is.  Denial can't change it.  We are in the midst of Peak Oil now. 

 

 

And yet prices at the pump have been stable or declining for a long while now.  Years, honestly.  Peak oil alarmists have a serious boy-who-cried-wolf stigma at this point, at least when it comes to policy.  (And this is from someone who drives an electric car and lives in an urban neighborhood.)  Even if the fundamental underlying dynamic hasn't changed (demand for oil will at some point grow faster than the market can adapt due to physical realities of discovery and extraction), something is clearly counterbalancing it at the moment and has been for years.  I'm glad I didn't buy my LEAF for cost-saving reasons alone; I estimate my break-even point to be about $1.33/gal., and that's if I never charge at something like a ChargePoint station, where the price for electricity is actually far above the price of gasoline in terms of miles of personal mobility purchased.