Category

Oil

Nanotech Breakthrough Delivers "Cleaner" Oil

A recent nanotech breakthrough means we won't have to rely on wind and solar as the main ways to fuel the coming Green Economy – to drive our cars and trucks and planes and keep our factories running.

And that's a huge relief.

You see, there's a problem with "clean energy".

Nothing in the world today can compete with the power provided by oil.

At present, it only takes a few barrels of oil to match the power a big windmill or a massive array of solar panels can provide.

And efficiency is just one problem. Unlike oil, it's very difficult to store clean energy to use (after the sun goes down or when the wind refuses to blow).

On the other hand, drilling for oil poses big risks. We want to keep our land and water clean and need to protect ourselves from the huge damage oil spills do to the environment.

Those safeguards, however, raise the cost of drilling and the price you pay at the pump. But what if you could drill for oil without concern for spills?

It would provide a boon to the entire U.S. economy and reduce our need for oil imports. We could save billions a year at the pump, lower the cost of making U.S. products, and create millions of jobs in the process.

No doubt, that would be a game changer…

That's why I'm happy to report that researchers recently invented tiny sponges that can soak up huge amounts of oil.

I predict that, in as little as a decade, these "nanosponges" will help the U.S. become more energy independent.

Too bad clean-up crews didn't have these two years ago to soak up the 200 million gallons of oil BP spilled in the Gulf of Mexico.

That was a big job, but these tiny new sponges – much smaller than a single human hair – could have handled it. In fact, their miniscule size is what gives these sponges their huge advantage. It's hard to imagine making sponges any smaller. After all, you can't see them individually without the aid of a powerful microscope.

Yet they can soak up many times their own mass… It's almost like being able to drain a swimming pool with an ordinary kitchen sponge.

Not only that, these sponges resist damage. You can actually abuse them without the material breaking down. Consider that a team of researches "squeezed" the sponges 10,000 times in the lab and found that they remained elastic and ready for use.

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Oil and Gas Companies: What this EPA Official Doesn't Understand

Government bureaucrats really need to stop talking when there's a camera present; otherwise, they might just get caught telling the truth about their agenda when the tape resurfaces.

Enter Dr. Alfredo Armendariz, the U.S. Environmental Protection Agency (EPA) regional administrator for Region 6, a region that oversees environmental regulations for energy companies in Louisiana, Arkansas, New Mexico, Texas, and Oklahoma.

Turns out, Armendariz doesn't like oil and gas shale production, and he's quite the history buff.

Joel Gehrke in Washington explains:

"Al Armendariz, a regional administrator for the Environmental Protection Agency, explained in 2010 that he understands the EPA policy to be to "crucify" a few oil and gas companies to get the rest of the industry to comply with the laws.

"I was in a meeting once and I gave an analogy to my staff about my philosophy of enforcement," Armendariz said during a meeting in 2010. "It's kind of like how the Romans used to conquer little villages in the Mediterranean: they'd go into little Turkish towns somewhere, they'd find the first five guys they'd run into, and they'd crucify them and then, you know, that town was really easy to manage over the next few years."

Armendariz said that by finding companies that are "not compliant with the law and you make examples of them," the EPA could maximize its enforcement capability with limited resources. He added that "fines can get very high very quickly, and that's what these companies respond to.""

Breathe.

Let's forget the reference to killing dissidents for a second. That's a whole different therapy session.

There are a few important points that need to be addressed about this sort of rhetoric.

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ExxonMobil (NYSE: XOM) Earnings Miss – But Investors Should Stay Put

ExxonMobil (NYSE: XOM) earnings came up short this morning. The oil giant missed analysts' expectations by about 9 cents.

Steve Schaefer at Forbes runs down the numbers:

"The energy giant recorded earnings of $9.5 billion, or $2.00 per share. Those figures were down 11% and 7%, respectively, from the first quarter of 2011, and earnings per share were below the $2.09 analyst consensus. Revenue of $124.1 billion was up 8.8% from a year ago, but just shy of the $124.8 billion expected.

Earnings in Exxon's upstream, or exploration and production, fell 10.1% from a year ago, to $7.8 billion, while downstream earning, which include refining, were up 44% from the prior year to $1.6 billion, thanks largely to gains from asset sales and improvements in volume and mix."

This earnings miss is the least of Exxon's short-term worries as we head into the summer months and the election heats up. There are a lot of problems for the company to overcome all at once – but it shouldn't send ExxonMobil investors headed for the exits.

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How to Profit from High Crude Oil Prices

Despite a recent price pullback, my "oil constriction" approach for how to profit from high crude oil prices has not gone away.

In fact, it is right on track.

But we need to remember that the constriction in oil availability will not hit all oil sector shares the same way.

There are four overriding elements in what is coming.

1) Crude Oil and Gas Prices on the Rise

The markets have witnessed a rise in both crude oil and gasoline prices – West Texas Intermediate (WTI) prices are up 37% since Oct. 4, while RBOB (the gasoline futures contract traded on NYMEX) is up 29% since Nov. 25.

The constriction, however, is not simply reflected in the price.

We have a very different dynamic underway than the one experienced in 2008. Three years ago, it was a speculatively driven rise in oil prices that came crashing down when an outside crisis hit (the subprime mortgage mess and the corresponding credit freeze).

This time around, the constriction results from the rapid decline in prices from the third quarter of 2008 through a sluggish leveling-off through the fourth quarter in 2009. This period produced a significant cutback in new drilling.

Consider this: The top 15 oil producers in the world have replaced barely 70% of the extractable reserves they extracted over the past three years.

With conventional production, therefore, the constriction is already in place.

However, we have moved quickly into accelerating unconventional oil production.

That is element number two.

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Ride the Boom With These 5 Bakken Oil Shale Stocks

The Bakken oil shale boom is the opportunity of a lifetime.

With activity ramping up rapidly – production has soared from 100,000 barrels a day in 2005 to 494,000 barrels a day in February – the Bakken oil shale boom could turn out to be just as big, if not bigger than the California gold rush 1849.

Last week we told you about how the Bakken oil shale boom has affected Williston, ND. The town has an absurdly low unemployment rate of 0.8%, and the average pay for the oil company jobs is about $90,000.

One way to take advantage of this boom yourself would be to move to North Dakota.

But with dozens of companies flocking to the region, a much easier way to get in on the boom is to simply invest in some Bakken oil shale stocks.

The allure of big profits has attracted dozens of companies to the Bakken oil shale formation. The list ranges from industry giants like Exxon Mobil Corporation (NYSE: XOM) and ConocoPhillips (NYSE: COP) to pipeline companies like Enbridge Inc. (NYSE: ENB).

With oil prices expected to keep rising, and the production in the Bakken not expected to peak until 2020, it will be hard not to make money in Bakken oil shale stocks.

"Bakken is almost twice as big as the oil reserve in Prudhoe Bay, Alaska," Harold Hamm, CEO of Continental Resources Inc. (NYSE: CLR) – one of the major players in the Bakken oil shale boom — told The Wall Street Journal last October. "We expect our reserves and production to triple over the next five years."

Still, some Bakken oil shale stocks will benefit more than others.

For example, the really big companies like Exxon, with large global operations, will see less of a boost than companies with operations concentrated in the Bakken and other North American shale deposits.

Money Morning has taken a look at these Bakken oil shale stocks and found five companies positioned to benefit most from this historic find's tremendous potential.

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Keystone Pipeline a Shining Example of What's Wrong with U.S. Energy Policy

With election season now entering full swing, many Democrats are beginning to distance themselves from the current administration's policies.

Mass. Rep. Barney Frank last week stated that the Affordable Healthcare Act (Obamacare) had political consequences and shouldn't have been the focus of the party when it held both arms of Congress in 2009 and 2010.

Now, Democrats are distancing themselves from President Obama on another important election issue: Energy policy.

Wrote Byron York at the Washington Examiner:

"The president has put his feet in cement in opposition to the Keystone oil pipeline. But on Capitol Hill, more and more Democrats are joining Republicans to force approval of the pipeline, whether Obama wants it or not.

The latest action happened Wednesday, when the House passed a measure to move the pipeline forward. Before the vote, Obama issued a veto threat. The House approved the pipeline anyway — by a veto-proof majority, 293 to 127. Sixty-nine Democrats abandoned the president to vote with Republicans."

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How to Profit from the Bakken Oil Shale Boom

Did you ever wish you'd been around for the California gold rush of 1849? Or the Texas oil boom of the early 1900s?

Maybe you can't go back in time, but you don't have to.

The Bakken oil shale boom going on in North Dakota right now is just as big-if not bigger.

Just take a look at what's been happening in Williston, ND, the epicenter of the Bakken oil shale boom.

In Williston, it's like the recession never happened.

Unemployment is under 0.8% — that's right, less than 1%, far below the national average of 8.2%. And the new oil jobs pay well, too. The average oil worker is making more than $90,000 a year.

The flood of jobs has made Williston the fastest-growing small city in the United States.

Consequently, there was no collapse in home prices in Williston. The inrush of new employees to work the Bakken oil shale boom has actually created a housing shortage.

A one-bedroom apartment that went for $500 in 2005 costs at least $2,000 now. Builders literally cannot build homes fast enough.

The rapid population growth from the Bakken oil shale boom has left many people sleeping in cars and tents. Williston just this week was forced to pass an ordinance that makes it illegal to live in a camper within city limits.

And while other states have been cutting services, shedding jobs and raising taxes, North Dakota is building up the state trust fund and reducing property taxes. All that, and still it projects a $1 billion surplus for its two-year budget.

"This boom is just wild and crazy," Williston Mayor Ward Koeser told Governing magazine last year. "It's more than you can fathom."

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Oil Price Manipulation: What President Obama Doesn't Understand About Oil

If you think gasoline prices are volatile now, stay tuned. President Obama's plan to clamp down on oil speculators is going to make things worse.

I'm sure you've seen the news by now.

The president wants to clamp down on so-called "oil price manipulation" and has proposed a $52 billion plan to increase f ederal supervision of oil markets.

What the p resident doesn't understand is that the oil markets already have this function built in.

Speaking from the Rose Garden last Tuesday, President Obama noted specifically that we can't afford to have "speculators artificially manipulating markets buy buying up oil, creating the perception of a shortage and driving prices higher – only to flip the oil for a quick profit."

Evidently, the president hasn't passed Econ 101.

If he had he would know that prices on everything from eggs to houses are by their very definition self regulating.

Speculation, as opposed to manipulation, is a vital part of the markets – they are not the same thing despite the fact that the p resident is interchanging the terms.

If prices are too high, people stop buying. If prices are too low, they stop selling. By authorizing $52 billion in oversight, he's chasing a ghost that he'll never catch.

The Real Problem with Oil Prices

The real problem is that the United States consumes 20% of the world's crude but only produces 2%.

It comes a time when oil demand is expected to rise more than 25% (to 105 million barrels a day) by 2015, according to a new report titled Oil and Gas: A Global Outlook by Global Industry Analysts, Inc.

If you want the biggest piece of the pie from the deli, you have to pay a premium.

There is no hocus pocus and there's no additional oversight necessary. Rather, we need to enforce the laws we already have on the books.

Sure the $10 million fines he's jawboning about (up from $1 million) sound great but they're really a non-starter. In fact, given that Exxon Mobil Corporation (NYSE: XOM) alone generated an average of $1.33 billion a day in 2011, they're little more than an acceptable cost of doing business. Nice try.

Take gasoline, for example.

Prices have jumped 78.2% since the p resident took office and that doesn't sit well with the party faithful who are convinced that evil oil price speculators are responsible.

They are distraught that traders put hundreds of billions of dollars into energy every month because that may cause prices to rise.

This is not complicated. Any time there are more buyers than sellers, prices go up. Any time there is more demand than supply, prices go up.

Contrast what's going on in the oil markets with what's happening in natural gas.
Prices for natural gas are at ten- year lows. Demand has risen but supply has risen faster. There are more suppliers than buyers. So natural gas prices drop.

Natural gas, by the way, is traded by many of the same traders who trade oil.

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Exxon-Rosneft Deal Centers on Arctic Oil (NYSE: XOM)

Quite a few emails already coming in about the potential of the $3.2 billion Exxon-Rosneft deal.

On April 16, Exxon (NYSE: XOM) officially entered into a massive offshore exploration partnership with Russia's Rosneft to jointly develop resources in the Kara and Black Seas.
From the Rosneft press release:

"The agreements signed today form joint ventures to manage an exploration program in the Kara Sea and Black Sea. They also set the terms for investments to be made by the partners in Russian offshore projects. The initial cost of preliminary exploration is estimated at over US $3.2 billion.

Neftegaz Holding America Limited, an independent indirect subsidiary of Rosneft registered in Delaware, concluded separate agreements on the acquisition of a 30 percent equity in ExxonMobil's share in the La Escalera Ranch project in the Delaware Basin in West Texas in the United States."

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Congress Wastes Time on Buffett Rule, Keystone Pipeline to Beef Up Attack Ads

They are at it again…

With a cynical eye cast toward the November election, members of Congress forced votes on the "Buffett Rule" and the Keystone pipeline knowing both would ultimately fail.

The real purpose for voting on the Buffett Rule and the Keystone pipeline was to embarrass the opposition and produce material for campaign attack ads.

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