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I definately understand that and I worried about Dilma Rouseff's socialist tendencies. However, after trying to deal with issues she realized she needed a heavy hitter and brought in Joaquim Levy as Finance Minister. he has cut government expenditures to maintain Brazil's investment grade status and has hiked rates to deal with the stagflation issue. So he is dealing with the situation in a manner similar to the approach used by Volker in the 80's. This definately creates strain -hence the unrest you mentioned. Looks like they should be primed to start reducing rates next year. If this happens it could set up a long term tailwind (since their rates are around 14%). Obviously Brazil suffers from the China slowdown and the lack of commodity demand. However, when this situation starts to exhibit clear signs of resolution, the Brazilian market will turn quickly.
So once again, I'm probably early starting to nibble. Sao Paulo tends to be more conservative than the rest of Brazil so Dilma is pretty unpopular. I don't see them adopting Venezuala type repatriation policies. I get interested when the prices for a profitable monopoly get cut by 75%.
I will probably be around more since I'm fed up with Yahoo
I got fed up with Yahoo sensoring posts so I posted the information they would not let me post on the Ihub SBS board. But is very relavant to this board since it deals with water and sanitation in Sao Paulo Brazil. SBS is similar to Suez and Veolia but it is incredible beaten down. Mostly due to currency issues, less so due to the drought in South America.
I think it provides a great long term opportunity since Sao Paulo is one of the fastest growing metropolitan areas in the world. SBS is suceeding in getting rate increases to cover capital projects to strengthen their water supply. I figure that people will be willing to give up a lot of other things before water and wastewater treatment.
I'd be interested in thoughts on this board.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=116515421
Most importantly, I forgot to mention they have secured tariff increases which will enable SBS to recoup the costs of these capitol improvement projects. From what I can see the debt is largely denominated in local currency so SBS is not that susceptible to the currency markets. I'd appreciate it if anyone is better at translating the prospectuses on the company website to confirm my impressions about the debt structure. Google translate only goes so far.
FL
For some reason Yahoo would not let me post. So I'm moving to IHUB.
SBS is up again in local currency but down on the ADR's. The currency headwind has made this a very difficult investment. However, last night I looked at the currency charts and it is apparent that the dollar has strengthened relative to the real and is now approximately 2 stand dev above the long term ave. From what I can see of the long term graphs these types of conditions generally last less than 3 years. we are mor than two years into this cycle. The site I looked at "tradingeconomics" can be used to forecast future exchange rates. Their forecast is provided below. Unfortunately it does not break down the future projecteions on 1 or two year increments. Based on the forecast it looks like the real/dollar is hitting the trough now. However, this bottoming process could extend well into 2016. However, the long term trend is projects that the dollar will weaken relative to the Real (see below). In the short term, it does not appear that these types of 2+ standard deviation cycles generally last more than two years. In 2003 the peak was approximately a year in duration (this one appears to have started early in 2014). The market upheaval we are currently experiencing could very well trigger currency revaluation that would provide a lot of relief to SBS.
Forecast Actual Q3/15 Q4/15 Q1/16 Q2/16 2020 2030 2050 Unit
Currency 3.63 3.6 3.6 3.46 3.5 2.3 2.5 1.67
Brazilian Real Forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts expectations. We model the past behaviour of Brazilian Real using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for - Brazilian Real - was last predicted on Wednesday, August 26, 2016.
On the practical side I see SBS undertaking the steps to shore up the companies long term future. They have undertaken large problems to stem leakage and will complete a large water diversion project that will add 5 m3/s in 2017.
FL
I see GHDX's involvement with NVTA as complimentary. NVTA offers a panel of tests designed at determining whether there will be a predisposition for various cancers, whereas GHDX's efforts are directed toward multigene tests that seek to evaluate the best treatment options for various cancers. GHDX tests are designed for the Neoadjuvant, local and adjuvant treatment phases whereas NVTA appears to be targeting the initial screening market. I can see NVTA opening a door for GHDX by identifying a population that might benefit from additional testing.
Furthermore, the facilities are located only a few miles from one another, potentially there may be subcontract lab synergies that might develop.
FL
Palo Alto Partners must have seen the writing on the wall. About 3 yrs ago at the annual meeting they put on a presentation about how the stock option plan was out of control. At the time MNTA was flush with cash from m-enox, Palo Alto was pushing for MNTA to buy back some shares to offset the dilution. Wheeler said they would consider it. They didn't and it looks like Palo Alto sold out.
FL
mnta trading similarly to 2010 pre m-enox.
I'm not that I'm trying to claim Tekor's place as a chartist but there are alot of similaritiesbetween the recent trading pattern and the period prior to the July 2010 m-enox approval.
i.e., nice run up on the expectation of m-enox approval resulted in an approx 70% gain, followed by a decline of 30% or so when doubts were raised about m-enox comming to market in 2010(from what I recall the citizens petitions and analyst predictions of delays created some doubts in early 2010). Similar doubts exist now with Teva's plan to switch patients to Thrice weekly prescriptions and attempts to revise patents.
It will be interesting to see if the trend continues to unfold in a similar manner.
FL
The recent MNTA downward move seems to be inversely correlated to Teva's move up. This may not mean anything since the generic drug group has been pretty strong since the Forest Lab take out.
FL
Besides the horible day for the market as a whole, the MF piece about the Teva copaxone reformulation may have gotten some to cash in some chips.
FL
Isn't that part of the idea behind the affordable health care act? I thought the emphasis was to shift to paying for improved outcomes and not just reimbursing for treatment.
Either way I continue to be interested at the rate at which GHDX is able to sign up payers. Looks like NICE and Medicare are in the bag for for OncoType DX Breast cancer test and I suspect that the NICE ruling will open a lot of other doors in Western Europe. Wide scale reimbursement for prostate test is probably a ways off (i.e., case by case basis right now) since it was just rolled out 8 months ago.
Based on the last conference call it looks like profitability will be challenged for the next couple of quarters while they ramp up the sales staff to market to Urologists. The current sales staff apparently markets primarily to oncologists.
Revenues are ramping nicely and I think a lot of the costs will be reduced if they are successful in receiving the payer endorsement and coding for the prostate test. This should happen if they can show that the number of expensive proton beam radiation treatments or robotic surgeries are significantly reduced without affecting the mortality rate.
So far it sounds like there is some level of agreement from you and Dew that technologies that squeeze costs out of the system will eventually gain traction here in the US and therefore should provide a reasonable investment thesis. Right now I'm only playing this thesis from the long side. I think there will be too much resistance in the system to short companies that manufacture products that may be used to over treat some conditions like prostate cancer. At some point they may be a good short.
FL
I tend to agree on the colon cancer PR. However, the NICE endorsement for the breast cancer test is what originally got my attention. NICE seems to be laser focused on getting the most bang for the health care buck (or should I say pound). I think this trend is going to take over the developed and probably the emerging market world.
I'm going to be real interested on how many of the urologists that initially ordered OncoType DX Prostate test reorder. If it lives up to half the promise of the Cleve Clinic study, it will have the potential to reduce men's health costs tremendously. I would not want to be invested in ISRG or any maker of proton radiation treatment that are dependent on this condition being aggressively over treated.
The problem I have with GHDX is that they seem to underfund rigorous validation studies, I guess they are waiting for others to independently accomplish the validation of the test. This lowers the initial costs but seems to slow the uptake.
The business I launched has gotten too busy for me to be as hands on on my investments. So last year I hired a institutional firm that charges 1%. I'm not real happy with the arrangement so I think I'll have to figure a good way to stay on top of it.
Thanks
FL
Thoughts on GHDX
The recent news on GHDX has been pretty strong yet the price has not responded. The Oncotype DX test suite seem to focus on improving treatment and reducing unnecessary treatment costs as evidenced by the NICE Brest cancer test endorsement. The release of the prostate cancer test seems to be one of the greatest needs in all of men's health. I decided to follow the Baker Bros and established a long position the past couple months below 30. The Chart looks pretty bad and it is one of the few areas in biotech/genomic testing that has not run up despite what I think are fairly strong fundamentals. Any thoughts on this seeming contradiction.
The OncoType DX Colon Cancer Test
http://finance.yahoo.com/news/genomic-health-announces-results-oncotype-130000032.html
http://finance.yahoo.com/news/positive-results-genomics-colon-cancer-201003507.html
http://finance.yahoo.com/news/genomic-health-announces-colon-cancer-130000647.html
The OncoType DX Prostate Cancer Test
http://finance.yahoo.com/news/genomic-health-announces-publication-oncotype-130000285.html
The OncoType DX Brest Cancer Test
http://finance.yahoo.com/news/nice-recommends-genomic-healths-oncotype-093000148.html
Thanks FL
What does the SC decision mean to Momenta's Intellectual Property (even beyond the current Lovenox case)? Strange to see price stability today?
FL
Brief mention of the Baxter MNTA collaboration.
FL
http://articles.chicagotribune.com/2013-04-19/business/ct-biz-0419-baxter-20130419_1_baxter-international-inc-baxter-shares-biosimilars
If you google search several of the other articles discuss the geologic similarities to the US sedimentary basins which are currently generating shale gas. Chevron and Shell are not small independent players and would not get involved unless the potential was great enough to move the needle. I think there is a good chance that the geology and the politics will coincide to a much greater extent than the US. People in the Ukraine are more apt to favor exploitation of such a windfall.
The Russians have blatantly used Nat gas as a means to keep the Ukrainians in line. Western technology can obviously be bought at a price so I think there is a good chance this will result in measurable new gas sources coming on line in the next couple years.
As we have seen in the US, Nat gas is a positive economic catalyst. I think Ukrainian Nat Gas could be a decent speculation. However, the only way I have seen to play it is a Ukrainian ETF sold on the FTSE. However, the information on this ETF is questionable and renders it uninvestible in my opinion.
Regards FL
Ukrainian Shale gas plays
Ukraine has been working with Chevron and Shell to develop shale gas resources that appear very similar to the Marcellus in the US. Given that the sedimentary basins lie beneath the pipelines feeding much of western Europe this could be a big market mover for the Ukraine.
The problem is finding a way to invest or speculate. Chevron and Shell are too big and diversified to move much even if this turns out to be very successful. From what I can see there aren't any good domestic aggregate or steel pipe suppliers that are publicly traded in the US. Might have to consider a Fidelity account to get access to overseas markets. LaFarge is too globally diversified to provide meaningful exposure to the the Ukrainian aggregate/cement markets. There are a few Eastern European ETF's but they do not appear to provide significant exposure to sectors that are tied to oil and gas.
Given that shale gas has been a game changer in the US, it is inevitable that the technology (horizontal drilling and fracking) would be applied elsewhere. There is a very willing market in Europe that is terrified of being too beholden to Gazprom for Nat Gas.
Perhaps we can stir up a decent discussion of how to play this trend.
FL
http://www.ogj.com/articles/print/volume-111/issue-02/regular-features/journally-speaking/ukraine-eying-shale-gas.html
Several Prostate Cancer Tests are ready to hit the market
The recent NY times article highlights several of the prostate cancer tests that are getting ready to hit the market. They primary focus on GHDX and Myriad.
http://www.nytimes.com/2013/03/27/business/new-prostate-cancer-tests-may-supplement-psa-testing.html?_r=0
However they also mentioned Opko's improved PSA test.
http://clincancerres.aacrjournals.org/content/16/12/3232.abstract
If ever there was a disease that screamed for improved diagnostic testing prostate cancer is it. A small portion of the disease sufferers have a very aggressive form that will claim their life(my father was one)whereas many will have a benign form that they will live with a long time, but will eventually die of something else.
From what I have seen, it looks like the GHDX test will stake out the the high end of this market. I believe that I read the GHDX test is based on 295 genetic markers. I thought that the cost of this test will run between $4000 and $5000 whereas, Myriad, Opko and others will target simpler, faster, more cost effective tests.
I feel that the Cleveland Clinic involvement with GHDX is telling. They reportedly have one of the most extensive libraries of tissue samples collected over more than a decade. The gene biomarkers developed from the study of this database supposedly form the backbone of the oncotype DX test.
While GHDX has announced positive top line data from recent studies, they have provided few details. Apparently these details will be released at the Am Urological Assoc meeting in a few weeks.
The Baker Bros have been buying GHDX heavily. This may suggest that they think this will be a game changer for this disease. I've established a position but think it could be several years before this type of a relatively expensive test gains traction and insurance payer support. Any thoughts?
However, the costs of the side effects associated with unnecessary treatment (for non-aggressive form of the disease)is simply too great for a significant diagnostic improvement not to gain traction. Thus, it seems like the costs for a more definitive test will be justified by savings realized by avoidance of unnecessary treatment. If the conference data is compelling I'll probably increase my stake.
Interested in any thoughts on the potential winners and losers in diagnostic tests for this disease.
Regards
FL
The litany of failed biogeneric ventures and projects reminds me of the viewpoint NVS was expressing more than 5 years ago. At the time Vasella was saying that there would be only a select few firms capable of competing in this field (I believe he indicated less than 5 serious competitors) due to lack of resources, technical expertise, lack of legal expertise, lack of biologic manufacturing backbone etc.
NVS viewed these impediments as the moat that would protect margins. Vasella decided that this market niche would be a primary focus for Sandoz in order to avoid the commoditization of the conventional generic drug market.
I own shares of both NVS and MNTA but I sometimes worry that NVS extracted a lot of technical expertise from MNTA and saw no need to expand the biogeneric relationship beyond m-enox and copax, thus opening the door for BAX. Arguably, Sandoz is the 500 lb gorilla in biogenerics. They are relatively quiet about their biogeneric projects and pipeline. However, it is apparent to me that relative secrecy is a necessity since patent threats from biogenerics will be met by numerous lawsuits.
Regards
FL
The # of prescriptions is probably pretty stagnant. I believe that Teva has been pushing 10% annual price increases.
Regards FL
Another post that the Yahoo board would not allow.
EXC is/was poorly positioned for this cycle. They are a major energy generator at a time when the price of energy is plummeting due to the economic downturn and deregulation. The delivery business has been mired in regulatory issues associated with cost recovery for grid modernization. However, some of EXC's competitors are in worse shape and the washout of these competitors will eventually put a floor in on energy generation prices.
In the past 2 weeks Edison Mission Energy and Ameren have decided to throw in the towel on their power generation businesses in Illinois. The question is whether there are any assets worth picking up at these distressed prices. The Midwest generation facilities are coal fired and were previously owned by Com Ed so it is a pretty sure bet that EXC has no interest in these facilities. Reportedly some of the Ameren divestment includes nat gas fired facilities, so there may be some interest in these facilities.
More importantly the washout of weaker hands is likely to mark the bottom of this cycle. These companies have determined that they are no longer willing to sustain losses on these facilities.
FL
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Coal Endgame
The attached article does a great job of describing the pressures facing coal generation facilities (at least in the Midwest). I think we are on the brink of a large washout of these facilities. This will help the survivors.
Sorry about the deluge of posts, but for some reason Yahoo will only allow total fluff posts on the EXC board. Even without links the posts are blocked.
FL
http://www.midwestenergynews.com/2012/11/02/investor-call-fuels-doubts-about-illinois-coal-plants-future/
Given the recent 20% haircut EXC took and today's report release advocating nat gas exports it looks like a highly opportune time to invest in EXC.
Some other factors which I believe are positive for EXC include the following:
1)7% dividend
2) Financial stability which outpaces its peers.
3) Midwest Energy (largest coal power producer in IL) on verge of default/bankruptcy. It is unlikely that another firm will step in and make the clean air act improvements necessary to continue to operate these Illinois Coal plants. They have already closed 2 plants in the Chicago area. The 3 remaining plants could be shuddered by year end.
http://www.reuters.com/article/2012/11/20/idUSWNA980120121120
4) Nat gas prices have doubled since earlier this year.
5) Synergies from the Constellation merger should start being realized in 2013.
6) An unfavorable renewable energy purchase contract expires in June 2013 allowing EXC to be more competitive in pursuing deregulated power contracts.
The EXC financials have been hit the past year as EXC lost several Chicago area suburban power generation contracts. This appears to be reversing as their competitors FE and others cited increased gas prices as the reason they were lowering guidance. These contracts come up for rebid biennially. EXC hedges and renewable energy contracts limited the company's competitiveness. These factors are changing (contracts expiring) allowing EXC to chase deregulation contracts more aggressively in 2013.
Given the yield and the recent haircut this is a good IRA option. I believe the recent ICC decision takes some of the pressure off of the dividend, since the grid modernization may be delayed until funds roll in from the bill surcharge.
EXE has the cleanest energy fleet in the country. If global warming related carbon emissions become a target of the Obama administration during the 2nd term, this has to be the No. 1 play.
Regards
FL
Something bizarre is going on on the Yahoo EXC board, it will not let me post the following message (tried about 5 times).
Today's Chicago trib indicated that Com Ed received unanimous ICC approval to delay the roll out of smart meters until 2015. Starting in Jan 2013 Com Ed will begin collecting the grid modernization surcharge equivalent to about $1.48 per average bill of $82.
I guess that even the ICC realized it was unfair to remove $2.6 billion of upfront grid modernization money and still expect EXC to proceed with the modernization effort on schedule. The delay will let EXC accrue funds to proceed with the modernization effort.
I wonder to what extent the dividend cut cut posturing by EXC has helped convince the ICC to change direction. Either way, the EXC div just got a little safer.
FL
ICC Decision
For Some Reason Yahoo will not allow me to post. So I'll post here.
Today's Chicago trib indicated that Com Ed received unanimous ICC approval to delay the roll out of smart meters until 2015. Starting in Jan 2013 Com Ed will begin collecting the grid modernization surcharge equivalent to about $1.48 per average bill of $82.
I guess that even the ICC realized it was unfair to remove $2.6 billion of upfront grid modernization money and still expect EXC to proceed with the modernization effort on schedule. The delay will let EXC accrue funds to proceed with the modernization effort.
I wonder to what extent the dividend cut cut posturing by EXC has helped convince the ICC to change direction. Either way, the EXC div just got a little safer.
FL
I feel that EXC is due for a rebound for the following reasons:
1) 5200 MW of Power production capacity appears poised to come out of the Chicago market as Midwest generation is in default of their bond payments (see link below) and is teetering on the brink of bankruptcy. Because coal is at an economic disadvantage due to pricing it is unlikely that any other producers will step in and make the $700 million in improvements necessary to comply with the Clean Air Act. Over capacity in the Midwest power generation market has been the chief thorn in EXC's side.
http://www.reuters.com/article/2012/11/20/idUSWNA980120121120
2) Nat gas prices are now at $3.90 mmBTU and have doubled since earlier this year. The nat gas rig count has dropped precipitously as drillers are now pursuing oil rather than nat gas. I believe the nat gas producers are looking for prices to stabilize in the $4-$5 area. A couple of months ago the Cleveland Plain Dealer indicated that First Energy and Dominion were pricing 2013 power generation $5.50 MWhr reflecting the uncertainty in nat gas pricing. I believe the pricing is approaching the threshold where EXC's nuclear plants are competitive, especially if weaker players like Midwest Generation exit the market.
3) EXC's share price appears to be finding support at $28 which is approximately a 76% retracement from the $90 highs achieved in early 2008. I would not be surprised to see a retest of this Fibonacci support level. I would view such a dip as an opportunity to buy. I have filled out most of the position I desire in the past week.
4) The Obama administration is likely to make carbon tax and global warming a part of the agenda. Thus Coal burning plants are unlikely to get significant relief from the Clean Air Act and USEPA enforcement.
Illinois has allowed municipalities to seek bids from power suppliers. EXC has lost power generation contracts for many of the Chicago suburbs. Some of this is a result of some of their hedging strategies. Reportedly, many of these hedges expire in 2013 allowing EXC to price contracts more aggressively and profitably. As indicated previously, the competition which relies on nat gas generation capacity will likely increase rates for the rebids since the feedstock prices are increasing. Chicago is reportedly bidding the City's contract before year end. I think they missed the boat and will not see as sizeable a decrease in power supply rates as was gained by the suburbs. More importantly, I suspect that EXC will win this contract and it will put a solid floor in under the EXC share price (at least I have invested accordingly). It is important to recognize that the Chicago market is large and their are few companies with sufficient available capacity to reliably serve this market. Thus, EXC is well situated for this bid.
The dividend may be trimmed however, EXC has less debt than most other elec utilities making it likely that they can maintain the dividend longer than most.
FL
Not sure I agree that the schedule change will take the heat off of a settlement.
Might the production of some of the requested materials in an unredacted form (even if it is only reviewed by MNTA counsel) not potentially provide a smoking gun which could increase the pressure for one of the parties (most likely the defendants) to settle?
Regards FL
I think Sanofi had an inkling that the m-enox ANDA was headed toward approval prompting the filing of a 2nd CP about a half year (can't remember timing exactly) prior to the ultimate approval.
In Teva's case they seem to just keep filing them.
Regards
LF
Any Intelligence on INO
It came across a technical upturn screen. Looks like they have added a former Merck Vaccine exec to the board and I see a Syncon H1N1 Universal Influenza patent.
Hard to believe that an Amex exchange Company trading at 0.70 with 47 employees could be a significant player in all the areas they claim to be doing clinical testing in.
Any thoughts
FL
No I'm not, but you know that I'm prone to conspiracy theories. My current belief is that some unnamed Biogen supporters may have gotten the press to overplay the Gilenya SE issue in order to slow Gilenya traction. This may have been done to neutralize the NVS' first launch advantage. About a year ago TEVA (Marth) was also taking shots at the Gilenya SE profile. That was before laquinimod hit a major bump in Phase II trials. I believe their is a fear that if a patient gets on a drug and has success with it, it will be hard to get them to switch.
The 4th QTR NVS conference call detailed that some of the deaths referenced by at least one of the press articles included suicides and a drowning.
It never ceases to amaze me the shots from competitors and their allied analysts will take. I distinctly remember an analysts a few years ago saying that mTOR drugs such as everolimus would not represent significant opportunities. I should try to track down which analyst said this, so that I never heed their advice.
Maybe I better get back on my meds.
Regards
FL
Unfortunately the EMA review has been delayed until April 20.
http://www.advfn.com/nyse/StockNews.asp?stocknews=NVS&article=51653691
NICE Backs Gilenya
http://www.advfn.com/nyse/StockNews.asp?stocknews=NVS&article=51649998
FL
I didn't mean to gloss over your comment but I was trying to avoid a long winded discussion of how society also benefits by more widespread adoption of nat gas as a fuel source let me summarize the high points:
1) Ability to cut carbon emmissions and improve air quality;
2) Reduce dependence on foreign oil derived primarily from politically unstable areas in the middle east. This stability will help promote national security.
3) Help foster gasoline price stability by adjusting supply demand dynamic.
4) Create jobs building critical infrastructure to refuel nat gas vehicles.
5)Support Nat Gas energy suppliers which have been one of the few areas of the economy that was thriving up until about 6 months ago when the price of nat gas fell to $2mcf.
TBP or CLNE and Road Pilot are spending their own money building fueling stations, however you are talking about a mammoth undertaking when you consider the # of miles of highway in the US. The initiative will expand with or without government involvement since the economic incentives already exist in the form of cheaper fuel. However, the build out will take decades if only private equity is utilized. I suspect GM's and Dodge's release of nat gas and/or bifuel pick up trucks next year will mark the start of more widespread use of Nat Gas for passenger vehicles. This should spur more private equity interest since the market is huge.
The nat gas adoption will likely start with small businesses which can justify installing refueling devices. CNBC indicates that the cost for a refueling compressor/dispenser will be closer to $4000 than the $2000 I quoted a few weeks ago (see link). My numbers were based on Canadian and Italian costs where there is more of an economy of scale.
http://video.cnbc.com/gallery/?video=3000077723
Everyone is playing their own investment angle (or you ought to assume it if your an investor), the question is whether they are aligned with the majority of the population as a whole. I think widespread use of a clean domestic fuel is clearly in the Country's best interest. The Koch Bros see long term cheap nat gas as a distinct advantage to many of their businesses. So they are lobbying the Senate to secure long term cheap gas that benefits them.
The tax payers should only be hit up for funds if there is a long term payoff. Taxing the nat gas fuel provides the means of providing that payoff. Economists also believe in multiplier effects. I've heard economists estimate that Kennedy's decision to put a man on the moon resulted in a payoff to the economy that was at least 40 times the amount invested in NASA. Think of all the new technology and industries that sprung up out of this initiative (computer processing, propulsion, aeronautical engineering, composite materials, rocket defense systems, etc.). What was the national prestige worth? I think these points make the case for gov involvement under the right circumstances.
I'll concede when the country is $15T in debt which equates to about $50,000 for every man woman and child, we need to be careful how and where we spend. I believe that a nat gas energy plan is one of the few places where the benefits will outweigh the costs of the investment.
I think we can agree to disagree!
FL
Jon
I agree with you on all of your points. It is apparent to me that the Koch Bros and the pacs seeking to influence the Senators often have ulterior motives. They are trying to benefit their industries by holding nat gas prices low by limiting exports and restricting build out of critical infrastructure which would allow more efficient use of nat gas. In my opinion, this is really not a conservative vs. liberal issue. More or less it depends on economic issues and benefits which are dependent on industry specific factors.
In this instance, I think that TBP interests are more in line with the best interests of the Country than the Koch Bros. Clean fuel, reducing oil imports, improving energy independence and creating jobs should trump the chemical and Ag industries right to ultra cheap fuel ($2 mcf vs $10 throughout the rest of the world).
Regards
FL
Koch Bros motives are far from altruistic, they have vast chemical and paper industry holdings that are huge nat gas consumers. Pipelines are actually neutral on cost of nat gas. They are levered to volume of gas moved not necessarily the costs.
As far as the payback, if Congress passes a law requiring that a mcf of cng be taxed at a given rate the pay back is a pretty certain. The benefits achieved building out the infrastructure and the multiplier effect achieved by putting people back to work might be more debatable.
FL
Gas Act amendments to transportation bill shot down in Senate
Oakes you'll probably side with the Koch brothewrs on this. As I indicated, I side with TBP and think it is ok for government to front the money knowing that a payback is written into the bill. I think we will see it pass once the amendments are added to protect the chemical manufacturing industries.
I'd worry more about providing incentives to the wind energy industry. This seems like it has the potential to become another Solindra (sp). The wind energy production tax incentives seem to be encouraging the production of energy that is not economical at a time when energy prices are already depressed due to low nat gas prices.
FL
http://www.reuters.com/article/2012/03/14/us-usa-transportation-natgas-idUSBRE82C17420120314
This type of bad well construction is actually pretty easy to diagnose. A suite of downhole geophysical logs (including the casing collar log) can be run to identify poor grout jobs.
It would seem that the industry would be better off routinely running the diagnostic testing and accepting liability for poorly constructed wells (where necessary) rather having these types of dispersion made about the whole fracking methodology.
Regards
FL
No doubt that Pickens seeks to make a profit through the distribution of Nat gas as a vehicle fuel. The distribution system meets a critical need, isn't identifying a need and getting in at the ground floor what investing is all about.
I personalty don't have a problem if the government provides an incentive to get the infrastructure built and then gets a return on their investment by taxing the sale of the product. This would create jobs and is the model for many public works projects (highways, dams, sewers, etc). I like the Impco distribution systems for fleets and homes. These gas refueling systems could be installed at residences by local gas company technicians. They are being used effectively in other parts of the world. I think this model scares the hell out of petroleum companies with strong retail sales operations (are not diversified). Who knows, this may have been one of the future visions that prompted XOM to overpay for XTO.
I have not had a chance to listen to the FSYS call this morning. It looks like revenue growth is accelerating but earnings missed badly. If they can gain efficiency and improve margins the later cycle earnings could catch a nice tailwind.
FL
What part of the author bio doesn't instill confidence.
"S. E. Robinson is the Executive Director of Students for Solvency PAC and a writer for Human Events. A graduate of Bowdoin College and a native Mainer, he lives in Washington and works at Regnery Publishing."
In all seriousness, the substance of the Nat Gas Act may change as the sausage gets made in Congress. Pickens was on CNBC yesterday morning and indicated that the price advantage and environmental benefits should be enough that Congress does not need to do much to incentivize the switch to Nat Gas as a fuel and that it would pay for itself without artificial stimulus. However, Pickens did indicate that some government involvement in the infrastructure build out might needed. He used the toll road analogy. It pays for itself once put in place.
FL
I'm obviously long FSYS so you realize my perspective. However, I agree with Boone Pikens. If we do not use nat gas effectively to cut our oil imports we will go down in history as the dumbest generation to have inhabited the planet.
It is ridiculous that Dominion and Cheniere are looking to transport and exporting LNG out of the country so we can import more expensive dirtier burning oil to fuel our vehicles.
I'm finally developing some hope that nat gases time as a transport fuel may be at hand (see link).
http://www.humanevents.com/article.php?id=50010
PS. My wife is always reminding me that I'm old enough to her father.
Nat gas home refueling appliance.
Nat gas recently reached an all time low price per equivalent thermal unit relative to gasoline. The recent announcement that Chrysler and GM will be marketing nat gas pick up trucks raises the question of how will the vehicles be refueled. The Fuelmaker home refueling system could be part of the solution. The FSYS earnings are on March 8. Might be worth a listen to see whether the uptake of nat gas vehicles is picking up and whether they will step up marketing of the refueling systems.
FL
http://www.impcoautomotive.com/index.php?pagename=fuelmaker