The House is expected to vote on H.R. 2454 , the American Clean Energy and Security Act of 2009, aka, the 2009 Energy Bill or more simply put, the Cap and Trade bill, later today. The vote is expected to be close. Here’s a link to the full 1201 pages of the proposed legislation. I’ve skimmed the bill and it is essentially a plan to have a plan with most of the pieces on cap and trade for carbon being put in motion within 6 to 24 months of the bills passage.
- The bill says things like: "the status of oil as a strategic commodity, which derives from its domination of the transportation sector, presents a clear and present danger to the United States"
- It goes on to compare oil to salt which was later replaced by technology to destroy the monopoly power evil salt miners had over the world. The focus immediately following this comparison is on ethanol to supplement and replace gasoline.
- The plug in electric vehicle language in the bill sounds more like an encouragement of the electric car technology as a test case to show that it works more than to really promote widespread use of electric vehicles. There are incentives for car manufactures to make electric cars but the details on timing are not in the bill (although $50 billion in incentives is with an initial $25 billion crossed out as it was deemed by someone as too little).
- Natural gas is not mentioned as a transportation fuel to be encouraged.
- The CBO has said the cost to American families will be $175 per year. Not surprisingly, the API thinks the number will be considerably higher with one source saying $3,000 is closer to the mark. It’s impossible to say given the lack of specifics here.
- Either way, this seems rushed to congress for a vote prior to recess and it is NOT a comprehensive energy plan as much as it is a cap and trade and jobs plan. No energy plan could be considered comprehensive without addressing domestic oil and natural gas in the mix and they really are not taken into account.
In Today’s Post:
- Holdings Watch
- Commodities Watch
- Natural Gas Inventory Review
- Stuff We Care About Today
- Odds & Ends
- $10KP: $20,000 / 54% Cash
- Added KOG shares at $1.10 in a personal account.
Crude oil rallied $1.56 to close at $70.23 on the back of a strong equity market. This morning crude is trading up slightly following renewed talk of amnesty for Nigerian rebels.
- Nigeria Watch #1: MEND claims it blew up another Shell oil field well head. Still waiting on confirmation of the last 4 attacks on Shell facilities.
- Nigeria Watch #2: Leaders of four rebel groups have said they want to meet with President Yar Adua to discuss accepting his previous offer of amnesty. Nigeria says if the rebels agree to take amnesty it will release ailing rebel leader Henry Okah and will observe a ceasefire from August 6 to October 4. MEND is not one of the four groups seeking to meet with the president. I’m not a conspiracy theorist but if I were, I’d point out that the rebels are too well armed to be conducting their activities without outside aid. I’d then add that these activities have helped to re-prop up the price oil and that the rebels are getting relatively little from the government with this amnesty other than a sick leader and the promise not to be eradicated. The pledges by the government to "share the oil wealth" are absent. So my sense is, if oil prices fall again, MEND and other rebel groups will be called upon to stir things up yet again.
- $225 Per Barrel Watch: Canadian economist with some interest comments about his oil price target for 2012.
Natural gas weathered another natural gas storage (this one a bit smaller than expected – see below) to close up $0.08 at $3.99 on the August contract that takes over as the front month today. The 12 month strip was up a dime to $5.21. This morning gas is trading flat to up slightly with oil.
Natural Gas Inventory Review
ZComment: Smaller than expected injection, somewhat balances out last week’s surprisingly super-sized injection. Warmer weather wasn’t warm enough to entirely account for the shift from week to week so I suspect a bit of survey error came into play in the two week period. No matter, that’s really just noise given how full storage is now. The next potential catalyst for gas comes at month end with the release of April production data. Obviously we have not yet seen, even in June, a large drop in natural gas production and while I don’t expect to see a significant drop in the April numbers, I do expect them to start showing more directionality to the downside than the last few readings. In other words, more of the rolling top action in gas supply won’t be good enough to support gas prices here … we need to see some more definitive declines in Texas, Wyoming, and the "other states". Not a big decline yet, just not so flattish.
Stuff We Care About Today
- (PQ) Post Deal Wrap:
- PQ raised $35 mm at $3.50
- Deals continue to be well received:
- Stock closed at $3.85 after pricing
- UBS upgraded the stock citing increased liquidity, near term Gulf Coast catalysts
Otherwise pretty quiet on this lazy summer day in energy land.
Odds & Ends
- All quiet on the energy analyst front.
Other Important Things To Watch Watch: The U.S. plays Brazil in the title match of the Confederation Cup Sunday, at 2pm EST on ESPN.
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