Where the Jobs Went

Whiskey & Gunpowder By Henry Daniels
December 8, 2010
Los Angeles, California, U.S.A.

As we head into the Holidays, with no signs that things are ever going to get better, some news was recently released that casts an interesting, and gloomy, light on why there are no jobs.

If there is one common theme I’ve heard from friends who still have jobs over the last two years, it’s that they are working harder than ever and making the same or less than they used to. Personally, I’m self-employed, and while I work 15 to 20 hour days, seven days a week, it hasn’t been in vain; the last two years have been my best ever.

Today, I heard a report on corporate profits and amazingly (or not) the quarter has been the most profitable in corporate history since they started keeping records on such things over 60 years ago.

The math is simple. If a corporation can get by with 50 to 65 percent fewer employees while holding production steady, they will make a lot more money. So what if people have to work two or three times harder than they did a few years ago? If they don’t like it, there are ten people standing in line to take their place.

This means there’s no incentive for corporations to hire. None. At least not until one of three watershed events occur.

The first watershed will be when the workers productivity starts to falter. The truth is that the only way work is getting done on time these days is because the workers are forced to take shortcuts to meet deadlines and quotas. It is already showing up in the quality of products, things are not made as well or last as long as they did just a few years ago. The failure rate is getting alarming on car parts, computer components, and customer service.

The second watershed event will be when the workers decide they are tired of being exploited, and if anyone else wants their job they’re welcome to it. We will see worker slowdowns similar to those popular in Europe. Suddenly, corporate profits will be jeopardized.

The third watershed event will be when corporations no longer have anyone left to sell to. In other words, if the number of unemployed keeps rising, at some point there will no longer be anyone left to buy things until they get employed again. At this point corporate survival will dictate the need to hire people if only to continue selling their products.

Last week, we talked about how one of our first indications of where things are going would be the Black Friday and Cyber Monday’s sales figures. By all accounts, sales this year were basically flat compared to last year. This argues quite forcibly that status quo is where we are stuck for a while.

My guess is we won’t see new jobs for at least a year, maybe two. There will be no trickle down job creation. It’s going to take something more visceral to stimulate job creation.

We’ve become a nation fixated on short-term quotas while we ignore the long-term consequences of such actions. I’ve never held that to be a way to run anything: not your life, not your personal finances, not corporate policy.

Regards,
Henry Daniels

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This hard-hitting, thought-provoking documentary features nine hours of uncensored conversations with Joseph Farah, Naomi Wolf, Doug Casey, Dr. Paul Craig Roberts, professor Mark Crispin Miller, Alex Jones, David Icke, Mickey Z, David McAlvany, Doug McIntyre, G. Edward Griffin and Ken Klein. If you listen to them and follow their advice, you’ll be prepared for whatever lies ahead….

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First, a correction…

Remember this letter from last time?


“I think you guys are becoming the most left-leaning rag on the net. Get a life or get out if you dislike America. These are some of the [most] leftist-leaning articles I have ever read. Are you guys commies or just deep-seeded socialists?”

Seems we got the guy all wrong. He followed up with an email to express his shock at how I used his letter.


“I thought I clearly stated in the subject line that I was referring to Samantha Buker’s anti-Christian article. If I didn’t, then my mistake. I did like your comments after Black’s article.”

There was truly no indication in the email that the comments were directed at Sam, who sits mere feet away from the Whiskey Bar. The editors at The Daily Reckoning snapped her article before I could. So I wasn’t expecting any heat from it.

Anyway, I promised the reader I’d clear up the confusion.

Now, about those taxes…


“I’m as opposed to the high-end tax cuts today as I’ve been for years. In the long run, we simply can’t afford them.”


— Barack Hussein Obama, 2010


“Gimme yo’ damn money, rich boy!”


— Barack Hussein Obama, 2012

Barack is trying to be polite about it right now, but make no mistake: He fully believes that the more money one makes, the more one should be forking over to people in nice suits who have no idea how to make an honest buck…

And he warns that come 2012, somebody is going to be upping their government tithes… or else…

From The Associated Press:


“‘If we don't get my option through the Senate right now and we do nothing, then on Jan. 1 of this 2011, the average family is going to see their taxes go up about $3,000,’ [Obama] warned.

“‘At any given juncture, there are going to be times where my preferred option, what I'm absolutely positive is right, I can't get done,’ the U.S. president said, stabbing his finger for emphasis.

“‘And so then my question is does it make sense for me to tack a little bit this way or tack a little bit that way because I'm keeping my eye on the long term and the long fight.’”

I got your long fight right here, Barack…

Tax Revolt: The Rebellion Against an Overbearing, Bloated, Arrogant, and Abusive Government




A powerful rallying cry to all Americans to continue to fight against ever-increasing taxes…

By exploring the crippling effects of taxes on our economy and the lives of each individual citizen and drawing from the stories of other revolts, Phil Valentine will anger and incite readers to action, giving them the motivation and know-how to spread the word and activate a powerful new revolution.

At the Whiskey Bar, we’ve never met a tax cut we didn’t like. In the spirit of tax revolt, we’re offering a discount on this book if you order it by clicking here.

It’s normally $24.95, but if you enter in the discount code TAX2011, then you’ll get $5 off. So be sure to order your copy right now.

Regards,
Gary Gibson
Managing Editor, Whiskey & Gunpowder

P.S.: As always, after you get the book, be sure to drop me a line about it: gary@whiskeyandgunpowder.com. We’re moving the Bar into the corner of this very nice bookstore, and there will be a lot of reading to do and a lot to discuss.

Evidence for ET is mounting daily, but not proven

By SETH BORENSTEIN.....WASHINGTON — Lately, a handful of new discoveries make it seem more likely that we are not alone — that there is life somewhere else in universe.


In the past several days, scientists have reported there are three times as many stars as they previously thought. Another group of researchers discovered a microbe can live on arsenic, expanding our understanding of how life can thrive under the harshest environments. And earlier this year, astronomers for the first time said they'd found a potentially habitable planet.

"The evidence is just getting stronger and stronger," said Carl Pilcher, director of NASA's Astrobiology Institute, which studies the origins, evolution and possibilities of life in the universe. "I think anybody looking at this evidence is going to say, 'There's got to be life out there.'"

A caveat: Since much of this research is new, scientists are still debating how solid the conclusions are.

Another reason to not get too excited is that the search for life starts small — microscopically small — and then looks to evolution for more. The first signs of life elsewhere are more likely to be closer to slime mold than to ET. It can evolve from there.

Scientists have an equation that calculates the odds of civilized life on another planet. But much of it includes factors that are pure guesswork on less-than-astronomical factors, such as the likelihood of the evolution of intelligence and how long civilizations last. Stripped to its simplistic core — with the requirement for intelligence and civilization removed — the calculations hinge on two basic factors: How many places out there can support life? And how hard is it for life to take root?

Alien Life Living Among Us?
What last week's findings did was both increase the number of potential homes for life and broaden the definition of what life is. That means the probability for alien life is higher than ever before, agree 10 scientists interviewed by The Associated Press.

Seth Shostak, senior astronomer at the SETI Institute in California, ticks off the astronomical findings about planet abundance and Earthbound discoveries about life's hardiness. "All of these have gone in the direction of encouraging life out there and they didn't have to."

Scientists who looked for life were once dismissed as working on the fringes of science. Now, Shostak said, it's the other way around. He said that given the mounting evidence, to believe now that Earth is the only place harboring life is essentially like believing in miracles. "And astronomers tend not to believe in miracles."

Astronomers, however, do believe in proof. They don't have proof of life yet. There's no green alien or even a bacterium that scientists can point to and say it's alive and alien. Even that arsenic-munching microbe discovered in Mono Lake in California isn't truly alien. It was manipulated in the lab.

But, says NASA astrobiologist Chris McKay, who has worked on searches for life on Mars and extreme places on Earth, "There are real things we can point to and show that being optimistic about life elsewhere is not silly."

First, there's the basic question of where such life might exist. Until a few years ago, astronomers thought life was only likely to be found on or around planets circling stars like our sun. So that's where the search of life focused — on stars like ours.

That left out the universe's most common stars: red dwarfs, which are smaller than our sun and dimmer. Up to 90 percent of the stars in the universe are red dwarf stars. And astronomers assumed planets circling them would be devoid of life.

But three years ago, NASA got the top experts in the field together. They crunched numbers and realized that life could exist on planets orbiting red dwarfs. The planets would have to be closer to their star and wouldn't rotate as quickly as Earth. The scientists considered habitability and found conditions near these small stars wouldn't be similar to Earth but would still be acceptable for life.

That didn't just open up billions of new worlds, but many, many times that.

Last week, a Yale University astronomer said he estimates there are 300 sextillion stars — triple the previous number. Lisa Kaltenegger of Harvard University says scientists now believe that as many as half the stars in our galaxy have planets that are two to 10 times the size of Earth — "super Earths" which might sustain life.

Then the question is how many of those are in the so-called Goldilocks zone — not too hot, not too cold. The discovery of such a planet was announced in April, although some scientists are challenging that.

The other half of the equation is: How likely is life? Over the past decade and a half, scientists have found Earth life growing in acid, in Antarctica and other extreme environments. But nothing topped last week's news of a lake bacterium that scientists could train to thrive on arsenic instead of phosphorous. Six major elements have long been considered essential for life — carbon, hydrogen, nitrogen, oxygen, phosphorus and sulfur. This changed that definition of life.

By making life more likely in extreme places, it increases the number of planets that are potential homes for life, said Kaltenegger, who also works at the Max Planck Institute in Germany.

Donald Brownlee, an astronomer at the University of Washington, is less optimistic because he believes what's likely to be out there is not going to be easy to find — or that meaningful. If it's out there, he said, it's likely microbes that can't be seen easily from great distances. Also, the different geologic and atmospheric forces on planets may keep life from evolving into something complex or intelligent, he said.

If life is going to be found, Mars is the most likely candidate. And any life is probably underground where there is water, astronomers say. Other possibilities include Jupiter's moon Europa and Saturn's moons Enceladus and Titan.

There's also a chance that a telescope could spot a planet with an atmosphere that suggests photosynthesis is occurring, Kaltenegger said. And then there's the possibility of finding alien life on Earth, perhaps in a meteorite, or something with an entirely different set of DNA.

And finally, advanced aliens could find us or we could hear their radio transmissions, McKay said. That's what the SETI Institute is about, listening for intelligent life.

That's where Shostak puts his money behind his optimism. At his public lectures, Shostak bets a cup of coffee for everyone in the audience that scientists will find proof of alien life by about 2026. The odds, he figures, have never been more in his favor.

___

Online:

NASA Astrobiology Institute: http://astrobiology.nasa.gov/

SETI Institute: http://www.seti.org/

Facebook and Consumer Learning Process

A great deal of successful marketing today depends on closely understanding consumer behavior. As a marketer, you may always be curious to understand what excites or motivates your customers into buying either your products or those of your competitor. Depending on the buying and consumption cycle of your product, there can be several factors that will determine the sales conversion ratio for your product.

Toward Right Learning
A successful sale happens when your customer understands his need and is convinced that your product can satisfy that need in a reliable way. Both these steps happen through a process, which is known as learning. Hence as a marketer, your job begins by ensuring that the customer perceives his need and, more importantly, finds the solution in your product

Right Learning and Right Conversations
At this very moment, you may be reading this article on your laptop or desktop. Remember the day when you had decided to buy your first computer. You must have considered many factors before finalizing which computer to purchase. One of the important decision points for a buyer is his circle of reference. It is natural for you, as a buyer, to discuss with your informed friends about the best brand. Positive references from friends and acquaintances help one make a decision.

How has Facebook changed all of this?
Research has shown that buyers do a great deal of product research on the Internet and most of the time choose to purchase the product either online or offline. The power of the Internet as a research and information resource has been realized to a great extent by customers worldwide.

The basics of consumer behavior, learning, reference groups, and buying decisions have remained exactly the same. But what has changed significantly is the speed with which everything happens. Technology has brought down the barriers in global communication. Social networking sites, and more importantly the rising popularity of Facebook, bears a strong testimony to the growing power of the Internet as a mode of communication and a source of information.

Before and After Facebook
Like we discussed, most of the learning before the proliferation of Facebook and social media happened through advertisements on television. During the days of conventional media dominance, marketing was driven by the power to broadcast. Marketing communication was primarily unidirectional through blaring advertisements and press releases.

Word of mouth happened on a one-on-one basis, where the conversation would begin and end around a small group of people. Today, a search on your favorite brand on Facebook may reveal many conversations about the brand, which may depict user’s positive or negative experiences with the brand. Unlike the clandestine brand gossip of earlier days, the Facebook era ensures that conversations are documented and made easily available through social networking sites.

Brands trying to ignore this new medium find themselves in a state similar to an ostrich, with its head buried in sand, thinking the world cannot see it. The real image of the brand in people’s minds shows up aloud these days through conversations on Facebook.

These dumb kids on Facebook made $119,833.57

Facebook and Online Reputation
The power of Facebook, as discussed, has extended the scope of Word of Mouth beyond the good old conversation between friends. Today, each and every Facebook user is free to publish his views on your brand. The true effect of this happens whenever these conversations appear in searches and influence people’s opinion about the brand image. This is where online reputation, primarily on a widely accepted medium like Facebook, matters.

In a nutshell..
Managing a positive image of your brand requires you to expand your reach, more than what you would do in case of conventional media. The conversational nature of social networking sites, such as Facebook, demands a different approach. Unlike one-time broadcast by the conventional medium, Facebook stores each and every conversation and makes it available through the search option for anyone who is curious to know more about your brand.

That is the reason why it is a critical part of any brand plan to feature positively on social networking sites, such as Facebook. Engaging consultants who have experience in managing brands through the new era of social networks is a growing practice that can help brands manage the new wave.
Get more information here for the best Facebook training available.

Facebook and Social Media - The Next Marketing Opportunity

Marketing as an activity is all about reaching the right customers with the right products, and the result sought is delighted customers who are more than willing to open their purses wide enough to boost your revenues. For many years, marketers stalked their target customers through various means and by trying to get their message across to spread awareness about their wares.

Traditional Means of Communication

Traditionally, marketing communications were conducted via print, broadcast and such traditional media through disruptive advertising, where advertisements appear in between the content of interest for the customer.

Traditional media does give a large reach to a marketer with its programming of mass appeal. However, the wastage is equally high, since a large portion of the audience would belong to a different segment than the one that is to be targeted by the marketer.

Enter Social Media and the Internet

The revolution stirred by the internet as a medium took place because of the fact that it is highly personalized and provides more content on-demand than any other available medium. Social sites proliferated far and wide in their usage for a few simple reasons:

The power to create and distribute content is equally available to every user, irrespective of him/her being a customer or a marketer. In the earlier forms of media, that power rested with the editorial staff of the channel or the advertiser, but hardly ever with the user.
The medium is completely personalized, and a user can create or join groups and further create content based on what he/she likes.
Opinions are free and fair. This is one reason why social media is of utmost concern to marketers, since buying decisions are no more influenced as much by advertisements. The traditional word-of-mouth marketing approach has grown leaps and bounds on social networks.


Facebook – At the Center of Social Media

With 500 million (and growing) unique users worldwide, Facebook is the number one social networking site in terms of activity and subscriptions. What started as a garage initiative by Mark Zuckerberg has now become the biggest phenomenon on the internet.

A user interface that allows for quick communication and the ability to create fan pages and groups at the click of a mouse button are what make Facebook extremely popular. Another important reason for its immense popularity is the wide variety of social applications that have been developed and made available within the Facebook environment.

These applications can allow users and friends to do joint activities like playing games that run endlessly, sharing photos, videos, and web links, and many more.


How does this help a marketer?

Traditionally, media plans were drawn to include television channels, publications, or any other media that can grab maximum eyeballs and effectively reach a selected target audience. The science of segmentation and targeting has become only more accurate in the case of social media.

Facebook provides a wide variety of avenues to communicate with the audience, which opens up an entirely different world of possibilities to have a fruitful dialogue with customers. Some of these methods used popularly by marketers are:
Get more information here for the best Facebook training available

Advertising: The first opportunity, which is the most obvious one, is advertising on Facebook. The difference, however, is the fact that you can create your own advertisement in a matter of minutes and also specify the details of your target group in terms of demographics and types of discussions where you want your advertisement to appear.
Fan Pages: Facebook allows every brand, as well as individual users, to create fan pages for their favorite celebrities and their own homegrown businesses. Large brands have also created their official pages on Facebook that have a huge, immediate fan following around the world. The fan page has immense utility to convey first hand information about the brand and also to collect immediate and frank feedback from your customers.
Branded applications: One of the most effective ways to engage a user toward your brand is by creating an application; this could be a game or a contest, with your branding coming across subtly through it.

What makes Facebook even more exciting is the way it allows you to target your communication sharply just to the customer segment you want to attract. It also provides analytics and page insights that give good feedback and measurement on the activity done.

The options provided by Facebook can be creatively explored and used judiciously for bringing about maximum benefits to any brand.

However, while doing all this, you need to be aware of the fact that customers have an equal say and have the ability to respond immediately to any of your actions with a thumbs up or a thumbs down. Availing the service of a social media consultant to work out a social media strategy may be required so that your efforts will not be in vain.

Get more information here for the best Facebook training available

Fight Corporate Offshoring of U.S. Jobs - Free Trade = Job Loss

Corporate offshoring of American jobs to low-wage countries has become one of the defining issues of the 2010 elections.

Even The Wall Street Journal—not exactly a cornerstone of the supposed “liberal media”—just published a survey with some revealing results about who and what is to blame for our nation’s poor economy:

86% of Americans believe that offshoring of jobs by U.S. companies contributed to our sluggish economy.
Nearly 7 out of 10 people—an all time high—say that “free trade” agreements with other countries cost us jobs here at home.
Over three-quarters of Americans consider corporate profit-seeking a factor in the downturn.
This is not news to you, or to Public Citizen. Time and time again, we have proven that flawed trade policies and blind corporate greed are eroding the U.S. economy.

Now, our Global Trade Watch team has launched an innovative, interactive website to give you the knowledge to be a more informed voter by seeing the full impact the corporate pursuit of profits has on jobs, the environment and our communities.

Check out Public Citizen’s Trade Data Center.

This powerful new tool is just the latest example of the tremendous amount of research, education and advocacy that Public Citizen does to expose and counteract policies that benefit mega-corporations at the expense of We, the People.

This powerful new tool is just the latest example of the tremendous amount of research, education and advocacy that Public Citizen does to expose and counteract policies that benefit mega-corporations at the expense of We, the People.

Lost jobs. Corporate greed. Of course these are the issues you care about. And Nobody is more committed to reforming the failed trade regime and challenging runaway corporate power than Public Citizen.

With your support, Public Citizen can continue developing resources like the Trade Data Center and fighting for policies that benefit all of us, not just the multinationals.

Onward!
Robert Weissman, President

To get regular e-alerts about opportunities for activism and other ways to help with Public Citizen's work, sign up for the Public Citizen Action Network.

A Really Bad Day for Maliki, the Prime Minister of Iraq

No matter how bad a day you’re having, it’s probably not as bad as the day Nouri al-Maliki is having.

Maliki is the prime minister of Iraq. He wants very much to remain prime minister of Iraq, but he’s having trouble forming a coalition that can make up a majority of parliament. He’s been trying ever since indecisive elections last March -- seven months ago -- a world record, the BBC reckons.

You knew the job was dangerous when you took it…

On a visit to Tehran today, Maliki was told he must “get rid of America” and the 50,000 remaining U.S. troops in his country. So said Iran’s Supreme Leader, Ayatollah Ali Khamenei.

He’s the real power in Iran, in contrast to the blowhard president Mahmoud Ahmadinejad, who grabs all the headlines but doesn’t even command the military.

Maliki will take this seriously. For one thing, he lived in exile in Iran during Saddam Hussein’s rule. On the other hand, he’s well aware he wouldn’t be prime minister now if the United States had never invaded Iraq. It’s hard to serve two masters.

Now he has to make a choice. Two weeks ago, Iran convinced another faction in Iraq to back Maliki’s bid to remain prime minister. It happens that Washington insists this faction be kept out of the coalition because it insists on the departure of U.S. troops.

Maliki’s 4½-year balancing act between the United States and Iran is coming to a head. This is the choice he now faces…

Side with Iran and form a viable governing coalition
Side with the United States and allow a seven-month crisis to drag into perpetuity, undermining his legitimacy among ordinary Iraqis
No. 1 seems like a slam-dunk. It’s an outcome Washington won’t like but nonetheless can live with. The Bush administration already negotiated an agreement under which all the U.S. troops are gone by the end of next year. That gives the current administration political cover.

Still, come the end of next year, we can just imagine the cries: “Who lost Iraq?” That is, how did the U.S. invasion manage to strengthen Iran’s hand in the Middle East?

We won’t wade into that political thicket. We’ll just note that Iran sees itself as a sort of godfather to all Shia Muslims. And now they’re allied with an oil-rich country next door where 60% of the population is Shia.

“Iran's Shia influence,” says Byron King, “has spilled across the border into southern Iraq. Southern Iraq is where you'll find six of Iraq's eight ‘supergiant’ oil fields. It's also where you'll find a key border with Shia Islam's mortal enemy -- Saudi Arabia.”

If that sounds like a recipe for conflict, you’re right. It could easily push oil to $125 a barrel… and, if it really spirals out of control, $200 or more. Byron paints an all-too-believable scenario in a fully revised and updated version of his presentation on the subject. He also shows you how to safeguard your investments when the day comes.

Regards,

Addison Wiggin
The 5 Min. Forecast

Thank you for reading The 5 Min. Forecast! We greatly value your questions and comments. Please send all feedback to 5minforecast@agorafinancial.com

Save the U.S. Senate from Corporate Domination Sponsored by Republicans

There's no point in sugarcoating this: If the election were held today, Republicans and their corporate benefactors would gain control of the House—and quite possibly the Senate.

That's the nightmare scenario. It would spell an end to any hope of progress in the next two years—and quite possibly to Obama's presidency.

But there are three key races that Republicans would have to win to take the Senate, and all are tied. Meaning, they're close enough for us to tip the balance. We need to help these Democratic candidates raise enough money to get their message out—despite all the corporate ads targeting them—and run serious get-out-the-vote efforts.

This is a true emergency: We must stop the Republicans from taking over the Senate. There's a critical fundraising deadline at midnight tonight.

Please, make the most generous contribution you can afford, immediately

Here are the three progressive candidates in tight races who need our help right now:

We're adding Alexi Giannoulias in Illinois to our Progressive Heroes list today because he's locked in a tight race for President Obama's old Senate seat, and because he's running a populist campaign focused on taking on the corporate special interests and cleaning up Washington, D.C. This is the closest race in the country: Every poll in this race for the past two months has been tied.

Sen. Patty Murray is the highest-ranking Democratic woman in the Senate. She supported the public option and the fight for clean energy jobs, and has worked with other pro-choice Democratic women senators to eliminate egregious gender disparities in insurance coverage. Her Republican challenger significantly out-raised her in the last three months, and Murray needs our help to win.

And Sen. Harry Reid in Nevada is facing Sharron Angle, the tea party fanatic who wants to "phase out" Social Security and Medicare, withdraw from the United Nations, and abolish the Department of Education.1 The latest polls show her tied—or even slightly ahead, and just yesterday her campaign announced that they've raised a record-breaking $14 million in the past three months.2

Can you chip in to these candidates' campaigns and help stop the takeover?
Thanks for all you do.

–Michael, Joan, Anna, Adam, and the rest of the team


1. "Sharron Angle says eliminate Social Security," Progress Now Nevada, June 8, 2010

"Reid, in Fistfight, Could Take More Punches From Climate Bill," Climate Wire, May 26, 2010


"Sharron Angle wants to eliminate federal Department of Education," MyNews4, September 8, 2010


2. "Angle raises $14.3 million," The Washington Post, October 12, 2010


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PAID FOR BY MOVEON.ORG POLITICAL ACTION, http://pol.moveon.org/.

The U.S. Solar Market Annual Review: 2010 Early Results

RenewableEnergyWorld.com weekly e-newsletter
FREE to you every week. To view an online version of this message, please visit http://www.renewableenergyworld.com/partner/altaterra/2010-09-21/.

Our Online Executive Conferences bring you independent, in-depth information on critical marketplace developments in efficiency, renewable energy, and sustainable business--in a time-efficient 60- to 90-minute interactive format.


Final Call: The U.S. Solar Market Annual Review: 2010 Early Results
When: Thursday, September 30, 2010
11:00 AM-12:30 PM PT / 2:00-3:30 PM ET


Where: Live Online Web Conference and Teleconference


Cost: $74 to $331 (See registration page for details)


Contact: Eric Paul (e.paul@altaterra.net)


Registration Ends this Wednesday, September 30
Register for this event »

Online Conference Details Full Details »



Larry Sherwood, the solar industry’s "best-kept secret," is the author of the single most widely cited source of information about the United States’ solar market--the annual IREC U.S. Solar Market Trends report.

In this online conference, we will be taking a behind-the-scenes preview of 2010 and look into 2011. Mr. Sherwood will provide data and analysis including preliminary installation results and projections by state, customer segment, and technology for the U.S. solar market.

If you do or are considering doing business in the U.S., you can’t afford to miss this opportunity to learn how the U.S. solar market is shaping up this year and what to expect next year.

This presentation and discussion will address key questions facing solar companies today, including:
• How have sales and installations grown in 2010 and what is the outlook for 2011?
• How does the total market break down by state and by segment (residential, commercial, utility)?
• How is project size growing?
• How have the concentrating solar power (CSP/CST) and solar heating and cooling markets developed in 2010 and what can be expected for 2011?
• What are the implementation and market execution bottlenecks, and how are they being addressed?
• Which states had the most installations in 2010? Which states experienced the highest growth rates?
• What are the key factors driving the market for the near future?

The conference will provide an in-depth look at the rapidly-changing nature of the U.S. solar market, including preliminary installation figures for 2010 by state, customer segment, and technology. The conference will also feature a discussion on potential regulatory barriers to accelerated growth and the latest incentives driving state-level growth.

RenewableEnergyWorld.com Editor Jennifer Runyon will draw on her wide knowledge of the solar market industry and trends to frame and contribute to the discussion. The event will be moderated by Jon Guice, managing director of research at AltaTerra.

About the Speaker: Larry Sherwood is widely known as the author of the authoritative annual report, "U.S. Solar Market Trends 2009," with the Interstate Renewable Energy Council. President of Sherwood Associates, a renewable energy consulting firm, Mr. Sherwood has nearly 30 years of experience in renewable energy. His public roles include serving as Project Administrator for the Solar America Board for Codes and Standards, Executive Director of the Small Wind Certification Council, and Editor of the IREC Small Wind Newsletter.

Read Full Details »
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A.O.P: The Secret Investment That's Crushing Gold!

A.O.P: The Secret Investment That's Crushing Gold!
Learn about this special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. Don’t miss your chance to get in on the biggest payouts yet.
Copied from http://www.stockgumshoe.com/2010/08/a-o-p-the-secret-investment-thats-crushing-gold.html

“Everyone knows gold is a great investment. Since 2000, it’s gone from $275 to $1,250 an ounce.

“But what if I told you there’s a special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. In terms of average, annualized returns:

“It’s performed 18-times better than the S&P 500

“It’s beaten mutual funds 17 to 1

“It’s beaten utilities 6 to 1

“It’s beaten bonds 3 to 1

“In fact, we couldn’t find a single type of investment that has even come close to this ‘gold-beater.’

“And the next 12-24 months could be the most profitable period to date for this investment.”
Not that gold is necessarily the one thing we should be comparing all other investments to (personally, I’ve always thought of gold as more of a “store of value” savings vehicle than an investment, but it sure has gone up in recent years) … but whatever you compare it to, those are some nice numbers.

So what is this? The folks at Stansberry Research tell us that they call it the “A.O.P.” — here’s how they put it:

“Spawned by a 31-year old snippet of U.S. corporate tax code, the A.O.P. has been generating capital gains AND progressively higher levels of income since the inception.

“But you won’t find this income opportunity through any government agency website… even though it owes its very existence to an act of Congress.

“Plus – and here’s the kicker – the A.O.P. has historically increased shareholder payouts every year no matter what’s going on in the markets.”
And then, as newsletters are wont to do, they brag about the fact that they’ve been behind this “AOP” investment for a long time, letting their shareholders enjoy a nice run:

“We first wrote about the A.O.P. four years ago.

“At the time the economy was booming, the financial markets were still strong, and people were spending money hand over fist.

“Everyone knows what happened next…

“Banks began to fail, the markets collapsed, the economy went into a tailspin…

“But for those who took advantage of the A.O.P., it’s been a much different story…”
So this made me check back in the Gumshoe files … and yes, the S&A Resource Report did teaser this “AOP” investment in their ad campaigns several years ago — I don’t know if it was really four years ago, since I wasn’t publishing then and the Gumshoe had yet to lay the foundation on our virtual edutainment storefront … but I did write about Matt Badiali’s teaser for his newsletter, which was then called the S&A Oil Report, and he was pushing the “AOP” quite hard then.

And from that point, the investments have mostly done quite well — but that’s because they’re roughly flat (not counting dividends) — which, compared to the S&P and other comparables, is pretty good. When I wrote about this sector for the first time back then, in May of 2007 when my inbox was overflowing with A.O.P. stuff, I thought these investments were pretty expensive and would have to come back in to make the yields more competitive and attractive… and they did, taking an outsize hit in late 2008 and early 2009 that made them, in retrospect, insanely cheap.

But I should go ahead and slake your thirst for the “answer”, right? The A.O.P. is their acronym for “American Oil Pension,” and then as now it’s a teaser about investing in Master Limited Partnerships (MLPs), largely those MLPs that make up the majority of the sector, the companies that transport, process and store oil and natural gas.

I’d have to assume, however, that Badiali and his copywriters are teasing out different MLPs than they did three years ago — so let’s dig into the tease a bit, shall we?

If you’re not familiar with the MLP term (and don’t worry, no one else sues AOP — that’s just a copywriter invention to help make this seem mysterious, and bolster Badiali’s case that he’s got the inside info you need on this little-known investment), Master Limited Partnerships are a creation of the Reagan-era tax code, designed to help spur investment in our oil and gas infrastructure and domestic energy production.

There were some bad apples in the bunch in the early years that were essentially just created as tax dodges, but the sector is now largely well-run and well-respected, and the larger MLPs are effective and efficient pipeline operators (for the most part) who benefit from the tax code in a couple ways: first, they don’t have to pay taxes on their corporate income as long as they pass it along to their unitholders (not technically shareholders, since these are partnerships, not corporations); and second, they own assets that for the most part are very long-lived and relatively inexpensive to maintain, and that generally depreciate quite a bit faster than they physically deteriorate, so they generate even more cash than they actually classify as income, meaning that they can disperse even more cash to their unitholders and keep them happy.

I’ve written about MLPs many times before, so this may all be a bit boring — but essentially, they are a way to get high current income and defer taxes on that income until you sell your units, since the fact that the dividends/distributions to unitholders are far higher than the partnership’s reported income means that you’re often getting a “return of capital” as most of your distribution, which just lowers your cost basis in the shares and means you end up paying capital gains taxes on that “return of capital” … but not until you sell the shares and register that gain, so you get to choose when to incur taxes (and I’m not a tax expert so don’t rely on me for the details of this, but I think that inherited MLP shares get a bump up in cost basis, so this is a popular investment among older investors in part as a way to efficiently pass along wealth to future generations without forgoing current income — do remember, I could easily be wrong on that point).

And yes, MLPs are generally probably not very well understood by most investors, so there is perhaps an opportunity for folks to get in on a sector that’s critical and profitable but somewhat small and not dominated by institutions (many institutions can’t own MLPs, and most mutual funds do not although they’re now technically allowed to), but it’s worth noting that MLPs generally trade like other yield-focused investments — they compete with bonds, high dividend stocks, and stuff like Real Estate Investment Trusts for the attention of income-focused investors, so the prices fluctuate in part due to yield expectations for those other sectors. Right now the yields on most investments are so absurdly low that it’s tough to say what’s fair — the REITs and the utilities yield about 4-4.5% (or at least the averages of those, as measured by the big ETFs for those sectors), the ten year US Treasury bond or a 5-year CD yields a bit under 3%, and the closest thing to an index for MLPs (the JP Morgan Alerian Exchange Traded Note) yields about 5.5%. MLPs don’t historically seem to get to yield much less than that before the price falls to get the income levels back up, but we haven’t had many long-lasting low-interest-rate environments like this in the past, where 5 or 6% seems like a terrific yield.

And certainly MLPs have been probably by far the best thing to own for the last decade or so — the compounding high interest and the relative stability of their income stream have helped them to avoid the worst of the crashes (though they’ve had several downward spikes), and I wouldn’t argue with anyone who wanted to dedicate a portion of their portfolio to the sector.

So without further ado, which are the favored “A.O.P.” investments that Matt Badiali is pushing now? Here’s how he hints for us:

“Today, there are TWO A.O.P. businesses that stand head and shoulders above the rest—they regularly send out the biggest paychecks… and have superior streams of revenue.

“I’m very confident and pleased with the results these companies have had to offer investors. Take a look below, and you’ll find a brief description of what I really like about each one:

“A.O.P. Company #1: This Pennsylvania business owns and operates natural gas assets, including five natural gas processing facilities and over 4,000 miles of natural gas gathering pipelines.

“Although they’ve only been around for 3 years, this company has increased its distribution payouts by an incredible 457%.

“Since 2005, they’ve also increased their total revenues by 58% and cash distributions by around 200%.

“To qualify for the August 14, 2010 distribution check, you must enroll by August 3.”
Well, I don’t know how you get the “only been around for three years” and reconcile that with the “since 2005″ numbers in the subsequent paragraph, but maybe they just made a little mistake on the dates — this MLP had only been around for three years in 2005, arguably (this entity was formed in 2001), but they have been in business under various names and corporate structures since the late 19th century … I think this first one must be Penn Virginia Resources (PVR), which does have the natural gas assets described in the tease but which is also has a second major business as an owner of coal properties in Appalachia.

And oddly enough, when you think “Pennsylvania” and natural gas you probably think of the Marcellus Shale, which might get you excited about growth prospects for Penn Virginia … but in actuality, when it comes to natural gas they’re still mostly a Texas/Oklahoma company. That’s possibly going to gradually change over the next several years, since they have made deals with two different Marcellus producers to expand gathering systems in the area over the next several years, most notably a five-year deal with Range Resources that started just recently and that will have them spending a couple hundred million building out gathering pipes for some of Range’s acreage in Pennsylvania. They do think this will be accretive to “distributable cash flow” by next year, which means they shouldn’t have to cut the quarterly distribution to unitholders.

PVR is an interesting MLP, they own primarily gathering and midstream assets on the natural gas side (gathering is what it sounds like, small pipes that connect the wells to bigger pipelines for movement to refineries or storage; midstream is mostly refining and processing, and the separating of natural gas liquids), which means they have to constantly analyze the production in their service areas and expand to new areas as (or if) the area where they’re “gathering” sees production declines, so it’s a bit more complicated than the MLPs who primarily own the big interstate pipelines that primarily, for example, move crude oil from the Gulf Coast to the Northeast.

And if you add on the coal business, you’d think that would provide some additional stability to earnings — you get, at least, more diversity of revenue. The coal business is basically just land ownership — the own the coal, but they don’t produce it, they just collect royalties, so it’s far smaller in terms of revenue than their natural gas business, but that revenue comes in with far higher margins because they don’t actually have to mine the coal.

But even given that, this MLP has an above-average yield, and unlike some MLPs they actually make enough in income to cover their distribution (it’s not just the distribution of depreciation). I haven’t looked at this one for my personal account in a long time, and I don’t want to downplay the relative risk of owning gathering systems in Texas and Oklahoma when fields might decline, but it is impressive that they have an above-average yield for the MLP space (just under 8%) — and like essentially all MLPs, they have been able to continue to increase the distribution amount, though not as aggressively as some. They’ve got a market cap of about a billion dollars, so they’re quite small compared to big guys like Kinder Morgan (KMP) and Enterprise Products Partners (EPD) which are 20 times as large, but they also yield more (the big MLPs generally have yields in the low-6% range) and, since they are smaller, might arguably have more growth potential.

And there’s one more …

“AOP Company #2: This Houston firm is one of the largest A.O.P. businesses in the world. They own 49,100 of oil and gas pipeline throughout the continental U.S.

“If you bought 5,000 shares of this A.O.P. business soon after it first went public in 1998, you would have since collected over $90,000 in distribution payouts.

“You’d have received 47 distribution checks during that time and your initial $5,000 stake would now be worth $155,000 in capital gains. Combined, you’d have made $245,000.

“In order to ensure you receive the next distribution payout, which will likely be paid on August 13, you will want to purchase your shares prior to August 6, 2010.”
Well, what do you know — this one is one of the biggies I mentioned above, Enterprise Products Partners (EPD). I think this is actually the largest of the pipeline MLPs at the moment, their market cap is just under $25 billion, and they do pretty much everything that you think of for “traditional” MLPs — they own gas gathering systems, they own onshore and offshore pipelines for both gas and oil, they do midstream gas processing and marketing of the various products, they own storage facilities and terminals, and they even sell chemicals and feedstocks. So if you’re looking for one of the more diversified MLPs, it’s hard to argue with EPD.

While Enterprise is huge, they are also focused on growing — and growth for MLPs generally means either acquiring small pipeline operators, or building new (or expanding and extending old) gathering and transportation systems. EPD has done quite a bit of acquiring in the past, and they do seem focused on significant oil and gas growth areas, which I would always look for in an MLP to make sure they’ve got some potential to keep adding to their revenue base — in EPD’s case, the expansion focus seems largely to be the southern shale areas, primarily Barnett and Haynesville, and the big Eagle Ford Shale that has everyone excited in South Texas.

But as I said, the yield is not massive — EPD will earn you just a whisper over 6%, and that will eventually be taxable unless you try to finagle holding it in an IRA. And most people don’t recommend holding MLPs in IRAs since a lot of their value is in the tax deferral, which you get with an IRA anyway — as an aside, some MLPs will tell you that holding their units in a Roth IRA isn’t kosher, but I think that’s just for pipeline operators that are entirely FERC-regulated (I know that both Boardwalk Pipeline — which I own — and El Paso Pipeline Partners are ineligible for Roth IRAs, but as far as I know that’s a FERC-specific issue in proving that tax is eventually paid on those distributions).

So there you have it — the two main A.O.P. investments that Badiali appears to be recommending in the MLP space this time around — and no, neither of these was on his list three or four years ago, if you’re curious about those “original” A.O.P. ideas you can always check out my older article here (those four picks from 2006 or 2007 have generally done well, though as a group they’ve probably been similar to the average MLP performance — unless you picked these on downward spikes they’re wealth builders and powerful compounders, not usually rocket stocks), and of course under “related articles” below you’ll see several other MLP-oriented articles, these tend to come up at least once a month or so.

The only general thoughts I’d share as you get started in your research are to look at how the MLPs you like might grow (ie, these days that mostly means they’re either an acquirer, or they’re serving the hot new exploration areas in some way, like shale gas), and make sure they’re generating enough free cash (or EBITDA, depending how you want to measure — it doesn’t have to be actual accounting income) so they don’t have to cut the distribution if things get ugly for a year (as happened in late 2008, precipitating the dips in most of these stocks — and the disappearance of the weakest ones). You might also, if you’re looking more closely, check on how the company’s pipes are regulated and their services priced — many pipelines, especially larger ones, tend to have pricing agreements set by regulators, like other utilities, and they tend to be consistently busy, the smaller or more regional gathering systems may be unregulated and possibly more subject to pricing pressures from time to time.

And, of course, there’s always risk — just ask Enbridge Energy Partners (EEP) about their major spill last week on the pipeline that transports Canadian oil to midwest refineries (though that’s of course quite minor compared to BP’s Gulf disaster, and didn’t seem to hit EEP’s unit price terribly hard, at least not yet).

Finally, I know I have lots of MLP-happy folks in the vast Stock Gumshoe readership, so feel free to share your thoughts about the best or worst MLPs out there, that’s why we’ve got the friendly little comment box below.

Full disclosure: as noted above, I do own shares of Boardwalk Pipeline Partners (BWP), but do not currently own any other Master Limited Partnership units named above (or any others, actually). I will not trade in any mentioned shares for at least three days.

Chevron Witch Trials: "environmental justice" lawsuit being prosecuted against Chevron, by U.S. attorneys, in Ecuador

Now, before you think too much about silver, let's switch gears and return to a topic that I've discussed in previous OI updates, beginning exactly one year ago. It's what I call the Chevron Witch Trial, a so-called "environmental justice" lawsuit being prosecuted against Chevron, by U.S. attorneys, in Ecuador. Right now, the proposed damage award against Chevron is in the vicinity of $27 billion -- no typo, $27 billion.

Even though we don't hold Chevron in the OI model portfolio, I think the news I'm about to relate is very important to investors. It reflects on the kinds of obstacles that are out there, hindering energy development across this world.

The news in this update also offers a sobering lesson in how "lawfare" can come out of nowhere, let alone make its way through national-level court systems. That is, unscrupulous parties can engage in pure fraud, under color of judicial proceedings, and strike at any large, deep-pocketed resource company. As I'll describe below, this is not just my view. It's the finding of fact by a U.S. federal court.

Going Back to the Texaco Days

Here's a quick summary of what's happened so far. In the early 1990s, a U.S. lawyer from New York, named Steven Donziger, sued the former Texaco company in U.S. federal courts over alleged environmental contamination from oil operations in Ecuador.

Yes, Texaco operated in Ecuador, beginning in the 1960s. But starting in 1977, the Ecuadoreans began a systematic program to nationalize Texaco assets. By the early 1990s, Texaco was entirely out of Ecuador. Oil development in Ecuador, from 1977 through the 1980s and into the 1990s, was controlled by the state-owned oil company, Petro-Ecuador.

When Texaco finally withdrew from Ecuador, it made an agreement with Petro-Ecuador and the Ecuadorean government to remediate a portion of the list of old oil sites. Texaco cleaned up many former oil sites, and the balance of the oil sites were left for Petro-Ecuador to clean up.

Texaco kept up its part of the bargain, cleaned up the sites and even received a "release" of claims from the national government in Quito. But that didn't stop attorney Donziger -- fresh out of Harvard Law School, Class of 1991 -- from suing Texaco.

The "environmental justice" claim is a novel legal concept that they teach at enlightened places like Harvard. In this case, it's along the lines that Texaco's energy development adversely affected the Ecuadorean environment and local residents. After much preliminary litigation, the case was dismissed in the U.S. and re-filed in Ecuador.

Dealing With the Situation In Ecuador

Texaco merged with Chevron in 2001. Chevron then became the named defendant in the Ecuadorean lawsuit, even though Chevron never operated down there.

The details of the Ecuador lawsuit are technically complex, and very voluminous. I'll just summarize and note that the proceedings are ongoing, with hundreds of thousands of pages of exhibits and testimony. Litigating this case has pretty much "been" Mr. Donziger's entire legal career.

The long and short of it is that there are still many areas in Ecuador that are a huge mess from oil operations. But the source of the current environmental problem in Ecuador sure as heck isn't Chevron. Indeed, the problem appears to be the shoddy industrial practices of long-time domestic energy operator Petro-Ecuador.

What's the real problem? Well, for many years Petro-Ecuador has paid over the bulk of its operating capital to the government. Hence Petro-Ecuador has chronically under-invested in maintenance and safe operations.

Indeed, much of the "evidence" in the Ecuador trial displays problems that are recent, if not ongoing. That is, the damage occurred long after Texaco departed the scene, and is objectively and entirely attributable to Petro-Ecuador.

The Fake "Expert"

Well, now we're down in Ecuador, dealing with a species of patriotic emotion known as resource nationalism. It's hard for anyone -- especially an appointed judge -- to point the finger too close to home. After all, even Ecuadorean judges have to eat lunch.

So the judge passed the buck by naming a so-called "expert witness," Richard Cabrera, to advise the court on the scope of damages, injuries, and monetary claims.

Here's where things get really interesting. Turns out that this "expert witness," Mr. Cabrera, is a complete fake. At least, his "expert report" is a complete fake. How do we know?

For some strange reason, New York-licensed attorney Donziger allowed himself to be filmed by a documentary film-maker named Joe Berlinger. Mr. Berlinger was making a movie about environmental issues related to oil development. I suppose that Mr. Donziger wanted to be a movie star or something.

A couple months ago, Chevron obtained the out-takes of the movie -- the stuff that never made it past the cutting room floor. Here's what one of Mr. Berlinger's out-takes shows attorney Donziger saying about how he approaches his dealings with the Ecuadorean justice system:
"Hold on a second, you know, this is Ecuador. . . . You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want. Sorry, but it’s true. ... Because at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bullshit. It really is. We have enough, to get money, to win."
Whose "Expert" Report?

Oh really? I suppose that's what those pesky Rules of Ethics mean when they refer to an attorney's obligation of "candor towards the tribunal?" It's all "smoke and mirrors and bullshit," right?

Now, based on the movie out-takes, Chevron wants to depose a man in North Carolina named Charles Champ. Who's that? Well, he runs a small company called Champ Science and Engineering. And it turns out that Mr. Champ worked as an "environmental consultant" for attorney Donziger.

Oh, it gets much better. In the out-takes from the Berlinger film, Mr. Champ is shown as he discusses writing the "expert report" that Mr. Cabrera eventually submitted to the court. In other words, the evidence -- on film, no less -- indicates that attorney Donziger's "consultant," Mr. Champ, had a hand in ghost-writing the "expert" report submitted by Mr. Cabrera.

So much for an independent expert report, eh?

Opposing Deposing -- and a White Hot Federal Court Decision

Mr. Champ, as you might imagine, does NOT want to be deposed by Chevron. Must be some issue about either telling the truth, or possibly facing federal criminal charges for perjury. So Mr. Champ went to court in North Carolina to oppose the Chevron subpoena.

Last week, on August 27, the federal court in the Western District of North Carolina held a fact-hearing on the merits of Mr. Champ's objection to being deposed. Here's what the Honorable Dennis Howell, a U.S. Magistrate Judge wrote in his decision:
"As the court stated during the hearing, it was clear from the materials presented that Mr. Champ played a key supporting role in such plaintiffs’ efforts to write the court appointed independent expert’s report for him, masking his own opinions and any documents as those of the expert. Further, the court determined that Mr. Champ’s expertise, which appears to be remediation and the cost of clean up of oil spills, amount to shared expertise on what was likely the ultimate object of the litigation, an award of damages.
So here we have a federal judge, determining that the "expert report" in a $27 billion lawsuit was ghost-written, with the purpose of running up large damage claims against Chevron. Wow.

Somebody is in a LOT of trouble. Having spent many years of my life practicing law, including practice in U.S. federal courts, I have to say that I think this judge is kind of mad at Messrs. Champ and Donziger.

There's more. Indeed, the federal judge was just warming up. He continued:
"(It) is very clear from the words used by plaintiffs’ lawyer (Mr. Donziger) in the meeting - - some few weeks before the expert sitting in the room was in fact appointed by the court - - that Chevron did not know that the expert report was being ghostwritten by experts for the party opponent, that it would be important for no one at the meeting to tell Chevron that such had occurred, and, to the amusement of those in attendance at the meeting, Chevron would not realize what had happened to them with the independent report."
As findings of fact go in a federal court, I have a hard time putting any sort of "happy face" on this decision, towards the plaintiffs and their New York attorney Mr. Donziger.

"Bigger Problems Than An Oil Spill"

Really, how does one get out from behind this eight-ball? Mr. Donziger had better be talking with his malpractice insurance carrier, if not his favorite criminal defense counsel. Because the federal judge wasn't finished. Here goes:
"While this court is unfamiliar with the practices of the Ecuadorian judicial system, the court must believe that the concept of fraud is universal, and that what has blatantly occurred in this matter would in fact be considered fraud by any court. If such conduct does not amount to fraud in a particular country, then that country has bigger problems than an oil spill."
Hmmm... "What has blatantly occurred in this matter would in fact be considered fraud by any court." Can a federal judge be any more clear?

OK, if it's not clear, then maybe the judge made his point towards the end of the decision, when he ruled against any use of "attorney-client privilege" to stay proceedings during any appeal by Mr. Champ:
"(It) appears that any consulting expert privilege has been waived and that the crime-fraud exception prevents assertion of any other privilege by respondent, requiring the disclosures and testimony requested."
The "crime-fraud exception?" You don't really have to know the details of this concept, except maybe for your bar-exam. If you're interested, you can look it up.

The actions and issues in this matter probably rise to the level of an indictable federal offense. Bottom line is that none of this is good for either Mr. Champ, nor attorney Donziger, nor for their lawsuit against Chevron .

Still, despite this measure of justice for Chevron in a U.S. federal court, the California-based company is still in the crosshairs of the Ecuadorean judicial system. There's still $27 billion in play. That's the world in which we live.

And that's all for now. Thanks for reading. Have a good Labor Day weekend.

Byron W. King

P.S. As I mentioned in the article, plaintiffs' attorney Steven Donziger is a graduate of the Harvard Law School, Class of 1991. Coincidentally, one of Mr. Donziger's classmates was none other than Barack H. Obama, now President of the United States. Which goes to show that sometimes you can choose your President of the United States, but you can't choose your classmates.
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Oil platform explodes off La. coast; crew rescued

NEW ORLEANS, La. — An oil platform exploded and caught fire Thursday off the Louisiana coast, the second such disaster in the Gulf of Mexico in less than five months. All 13 crew members were rescued from the water in protective "Gumby suits."

The Coast Guard initially reported that an oil sheen a mile long and 100 feet wide had begun to spread from the site of the blast, about 200 miles west of the site of BP's massive spill. But hours later, Coast Guard Cmdr. Cheri Ben-Iesau said crews were unable to find any spill.

The company that owns the platform, Houston-based Mariner Energy, did not know what caused the blast.

Louisiana Gov. Bobby Jindal said Mariner officials told him there were seven active production wells on the platform, and they were shut down shortly after the fire broke out.

The Coast Guard said Mariner Energy reported the oil sheen. But the company said in a public statement that an initial flyover of the platform did not reveal any spilled oil.

Photos from the scene showed at least five ships floating near the platform. Three of them were shooting great plumes of water onto the machinery. Light smoke could be seen drifting across the deep blue waters of the gulf.

By late afternoon, the fire on the platform was out.

The platform is in about 340 feet of water and about 100 miles south of Louisiana's Vermilion Bay. Its location is considered shallow water, much less than the approximately 5,000 feet where BP's well spewed oil and gas for three months after the April rig explosion.

Responding to any oil spill in shallow water would be much easier than in deep water, where crews depend on remote-operated vehicles access equipment on the sea floor.

A homeland security update obtained by The Associated Press said the platform was producing 58,800 gallons of oil and 900,000 cubic feet of gas per day. The platform can store 4,200 gallons of oil.

White House press secretary Robert Gibbs said the administration has "response assets ready for deployment should we receive reports of pollution in the water."

Crew members were found floating in the water, huddled together in insulated survival outfits called "Gumby suits" for their resemblance to the cartoon character.

"These guys had the presence of mind, used their training to get into those Gumby suits before they entered the water," Coast Guard spokesman Chief Petty Officer John Edwards said.

The crew was being flown to a hospital in Houma. The Coast Guard said one person was injured, but the company said there were no injuries.

A company report said the well was drilled in the third quarter of 2008.

There are about 3,400 platforms operating in the Gulf, according to the American Petroleum Institute. Together they pump about a third of the America's domestic oil, forming the backbone of the country's petroleum industry.

Platforms are vastly different from oil rigs like the Deepwater Horizon. They are usually brought in after wells are already drilled and sealed.

"A production platform is much more stable," said Andy Radford, an API expert on offshore oil drilling. "On a drilling rig, you're actually drilling the well. You're cutting. You're pumping mud down the hole. You have a lot more activity on a drilling rig."

In contrast, platforms are usually placed atop stable wells where the oil is flowing at a predictable pressure, he said. A majority of platforms in the Gulf do not require crews on board.

Many platforms, especially those in shallower water, stand on legs that are drilled into the sea floor. Like a giant octopus, they spread numerous pipelines across the sea floor and can tap into many wells at once.

Platforms do not have blowout preventers, but they are usually equipped with a series of redundant valves that can shut off oil and gas at different points along the pipeline.

Numerous platforms were damaged during hurricanes Katrina and Rita. The storms broke pipelines and oil spilled into the Gulf. But the platforms successfully kept major spills from happening, Radford said.

"Those safety valves did their job," he said.

Federal authorities have cited Mariner Energy and related entities for 10 accidents in the Gulf of Mexico over the last four years, according to safety records from the Bureau of Ocean Energy Management, Regulation and Enforcement.

The accidents range from platform fires to pollution spills and a blowout, according to accident-investigation reports from the agency formerly known as the Minerals Management Service.

In 2007, welding sparks falling onto an oil storage tank caused a flash fire that slightly burned a contract worker. The Minerals Management Service issued a $35,000 fine.

Mariner Energy Inc. focuses on oil and gas exploration and production in the Gulf. In April, Apache Corp., another independent oil company, announced plans to buy Mariner in a cash-and-stock deal valued at $3.9 billion, including the assumption of about $1.2 billion of Mariner's debt. That deal is pending.

On Friday, BP was expected to begin the process of removing the cap and failed blowout preventer, another step toward completion of a relief well that would put a final seal on the well. The Deepwater Horizon exploded April 20, killing 11 people and setting off a three-month leak that totaled 206 million gallons of oil.

___

Associated Press writers Janet McConnaughey in New Orleans, Chris Kahn in New York, Eileen Sullivan, Matthew Daly and Gerry Bodlander in Washington, Garance Burke in Fresno, Calif., and researcher Monika Mathur in New York contributed to this report.

The Great Grain Robbery: Drought in Russia,Ukraine,Khazakstan

by Chris Mayer of the Daily Reckoning

In 1972, Russia's wheat crop failed. Russia had to dip into the global grain markets to meet demand. Before Washington knew the plight of its Cold War adversary, Russia bought up all of the surplus wheat in the US. Dubbed "The Great Grain Robbery," Russia's purchases sent grain prices soaring around the world.

Grain prices soon hit 125-year highs in Chicago. In a 10-month span, soybeans went from $3.31 to $12.90 a bushel. Food prices around the world rose 50% in 1973.

Some of the old traders are wondering if it's happening all over again.

On Thursday, wheat prices hit $7.25 a bushel, a 71% increase since the June low. It's the biggest one-month jump in three decades. The last time prices got this high was during the food crisis in 2008. (Wheat prices topped out at $13 then.) You may recall the ensuing food riots across the globe from Haiti to Egypt to Bangladesh.

Russia is again the center of attention. The worst heat wave and drought in a century has baked crops to a crisp in Russia, Ukraine and Kazakhstan. These three are among the biggest exporters of wheat in the world. They provide critical food supplies to the largest importing regions in the world - the Middle East and North Africa.

In some areas of Russia, the heat and lack of rain killed half the crop. Withered wheat stalks litter the usually fertile fields along the Volga River. This is one of the world's breadbaskets. Russia and the Ukraine alone were supposed to supply 18% of the world's wheat. Now it looks like Russia's exports could drop to zero.

Originally, forecasts called for 81-85 million metric tons of wheat, rye, barley and other crops. Now the Russian Grain Union says 72-78 million. Skeptics abound on that number, which looks too optimistic. The head of Glencore, the giant grain-trading house, thinks the real number will be closer to 65 million tonnes.

Holy smokes, I hear you say. Yes, it is bad. But it gets worse.

It's so bad that Glencore begged Moscow to ban the export of grain - as it did in the food crisis of 2007-2008. That's because Glencore thinks that trading houses around the world won't be able to fulfill their contracts to deliver grains. When Moscow bans exports, then trading houses can declare force majeure, a clause that allows them to escape these deals. On Thursday afternoon, Russia did just that.

Russia's crop failure comes at a bad time. Most of the world's wheat exporters are having problems. The Aussies battle locusts. The Canadians suffer from too much rain. Even European farmers struggle with drought. The Italians' beloved tomato crop will come up 10-15% short this year. Belgian potato farmers say drought will nick their yields. Polish fruit orchards will be down by a fifth. The French wheat farmers curse the skies as their wheat fields shrivel in the sun. The English sheep farmers, short on hay and grass, have sold their flocks early. Even the Dutch expect 10% fewer tulip bulbs this year.

The market is tightening and there are ripple effects across the globe. Over the weekend, Egypt bought 180,000 metric tons of wheat - its second purchase in two weeks and more than expected. Egypt is the world's largest importer.

One key difference this time around compared to 2007-08 is that inventories are in better shape - at least on paper. But I have to wonder. In India, government officials have let their once-plentiful grain stockpiles rot in the fields. India thinks food is too important to leave to the private sector. The government is in charge of food stockpiles. In a common display of government folly, bureaucrats, apparently, threw thin plastic sheets over these supplies and let them sit in the fields to rot and wash away in the rains.

The savior in all this looks like it will be the US. Stockpiles here should be healthy, at almost 30 million tons.

It seems like only yesterday the market took a cheerful look at the grain markets and said all was well. Global harvests looked like they were going to put in another record. I warned that nothing counts until the crops hit the bin.

Now that record harvest is gone, kaput, in just a month's time.

So what are the effects of all this? Expect ripples across the food chain. Prices for everything will rise. Prices for cocoa, coffee and pork bellies have already gone up. Beer brewers will pay more for barley, as the barley crop will be down by 20%. All flour-related products - breads, biscuits and the like - will be more costly. As The Financial Times reported, "Food executives are also warning about surging prices for feeding and malting barley, which could push higher the retail cost of products from poultry to beer."

How will this go over with the already rattled consumer in a fragile recovery? Many companies seem reluctant to raise prices. As Domino's CEO said, "Consumers are still hurting out there." Many companies hedge their exposure to food commodities, but if these prices continue to climb, it could crimp their bottom lines.

Meanwhile, the fertilizer stocks have rallied. From July 6 lows, PotashCorp (NYSE:POT) shares are up 34% and Mosaic (NYSE:MOS) is up 31%. The logic is simple enough. High grain prices inspire more planting. More planting means more fertilizer use. Already, as we've seen, volumes are snapping back in the fertilizer business. In their last quarterly reports, both Potash and Mosaic doubled their profits from a year ago.

Recent events show you, once again, the challenges in meeting the world's demand for food. The food crisis of 2007-2008 was not a one-off event. It was a warning. And today, we see again how quickly and easily we can get to another food crisis.

Hang onto those fertilizer stocks.

Chris Mayer,
for The Daily Reckoning

Going Deep: An Interview with President of Chevron Arica & Latin America Exploration and Production Co.

By Byron W. King Pittsburgh, Pennysylvania

Recently, I had a long talk with Ali Moshiri, President of Chevron Africa and Latin America Exploration and Production Company. Mr. Moshiri has been working for Chevron for over 30 years. He’s one busy man, whose responsibilities begin in the southern waters of the Gulf of Mexico and extend to the cold reaches of the southern Atlantic Ocean.

In our talk, Mr. Moshiri and I looked at the future of offshore oil and gas exploration and development. Here’s part of what we discussed...

Byron W. King: Mr. Moshiri, you run a division of Chevron that includes Africa and Latin America. How much oil and gas do you pull out of the ground every day?

Ali Moshiri: For Africa and Latin America, on a gross basis, Chevron is producing somewhere around 840,000 barrels per day.

BWK: That’s about 1% of all the oil that the world uses every day, at 85 million barrels per day. Can you say some more about what’s happening in the areas with which you deal?


AM: (My area is ) the Atlantic Basin... If you look down at the southern part of the Americas and Africa, people are ignoring the contribution it’s making worldwide.

The basins in this area are different. It’s not necessarily like the Middle East, that they are huge fields. But there are many accumulations. On the aggregate, they’re significant. Not only to the Chevron portfolio, but overall to the supply of oil to the market.

If you look at this area, they’ll always be a net exporter. They’ll always produce more than they can consume. My personal view is that if they continue their level of economic growth, that they assume is going to be above global, they’ll still be an exporter.

It creates an environment for industry to include them as part of the energy equation. The barrels can move to other locations where they don’t have that balance.

BWK: Are you only looking for oil? What’s the larger hydrocarbon picture?

AM: The (Atlantic) basins have similarity, but at the same time the basins have both oil and gas. It’s not just oil. At the moment, the focus has been tremendously towards oil. I believe that both basins in West Africa as well as in Latin America have tremendous potential for gas for the future. But because of lack of infrastructure, they haven’t got to the point similar to Asia Pacific of the Middle East yet.

But if you look ahead 15 years, they’ll get to the point of contributing natural gas, through LNG (liquefied natural gas) or pipeline... That’s the next phase. Today it’s very much focused on the oil side.

BWK: In the Middle East, you’re looking at a mature, 60-70 year old concept of exploration. Also, culturally, you’ve got similarities of climate, ethnicity to some extent, religion too. Not that everybody’s the same. But by comparison, if you’re moving from the Caribbean Basin to West Africa to Brazil to Angola, you’re going to see a lot of different people and different governments and different cultures that you’re going to have to work with. Can you comment?

AM: Absolutely. If you look at the Chevron operations, we deal with ten different countries. Three of them are in OPEC. Two of them are observers in OPEC. Therefore five of them are very much within the framework of the OPEC community. That shows that each of them have (their) oil policy and different view compared to when you look at places like the US, Australia, UK and Europe.

For that matter, you have to deal with each country separately. You have to understand, first of all, the geology, the technical aspects of it. And also the policies. The policies vary.

I’m not saying it’s good or bad, whether it’s in the hands of the government or the private sector. That’s what we deal with in this area. Not only do we have to worry about the technical side, but also about the fiscal, commercial aspects of it as well.

BWK: Can you comment about what you’ve seen over the past 20 years, with the rise of the national oil companies (NOCs) in these regions, and how you’ve had to adapt from the way you used to do business to the way you have to do business now in the NOC environment?

AM: The reality is that with the truly conventional aspects of oil and gas, the technology is there. The know-how is there. Whether or not we have it, or a service company has it. It’s there. So the view of the NOC is that they have more than one option on just the conventional (development).

For example, (what) if you discover an oil field on land, say light oil? Then building it, developing it, putting it into the market is relatively conventional. So what we would focus on is increasing the recovery factor. We focus on getting more out of the ground.

The next phase is what I’d say depends on technology. You get into deepwater. The technology is different. The incremental cost is significant. Room for efficiency becomes a greater part of how we develop things. Yes, everybody (says that they) can develop deepwater. But how do you manage expensive wells that you’ve got to drill? How do you test the basin? How do you commit to the investment? Those are significant.

As you see in the market today, it’s almost becoming like there are a lot of people who can explore. But there are not a lot of people who can develop deep water.


BWK: I had a chance to visit a Chevron operation in the Gulf of Mexico (GOM) in March. Chevron had the Transocean vessel, Discoverer Inspiration, drilling in over 6,700 feet of water, about 200 miles off the Louisiana coastline. The target depth was over 30,000 feet. It was quite an operation.

AM: I’m glad you took a visit to some of our operations. (You should see) some of the other remote places like offshore, deepwater off Nigeria. You can see how those places are highly technically driven.

And for as much as we’ve gone so far into developing these (deepwater) fields, the technology is not there to work over the wells when there are problems. The technology is not there to create efficiency for working over some of these wells. For example, if a well goes off production in West Africa, and it’s in the swamp, or in Block Zero, off Angola, in shallow water, we move a rig in and we know how to work over the well.

But if a well goes off production and it comes to a work-over, if it’s in deepwater, in say 8,000 feet of water, then you almost have to spend as much to work over a well as you spent to drill the well. Therefore, we are looking for the technology, and expanding our expertise, how to go back and do some of that work. To work those kinds of wells over.

BWK: Can you describe how Chevron’s relationships are changing over time, with the NOCs?

AM: Yes, our relationship with the NOCs is changing, moving to a different direction. The next phase goes several years down the road and gets into the non-conventional hydrocarbons. Like tight sands and shale gas. I always use the US as the base, where we started.

I’ve been in this business 32 years with Chevron. I remember when 500 feet of water was deep water. But now 500 feet of water is a conventional development, or work-over, with high recovery factor. And I think we need to expand that one all the way.

In some of the other regions, especially my region, we are not to that point yet. Again, it’s because some of these basins have not matured yet.

BWK: Can you elaborate on that concept of maturity? How are things different between, say the US and further south in the Atlantic Basin?

AM: (The US) Gulf of Mexico shelf is mature. But if you look at it south, from Mexico down to Argentina, or West Africa or sub Sahara or East Africa, we are still at the first phase of understanding the basins, understanding the potential, developing the technology around it, and being able to transport it.

Some of the discoveries (that) some of the companies have, in sub Sahara Africa, the transportation is going to be the issue. That region is going through a different phase. The transportation is about one phase behind where we are in the US.

According to Chevron’s Mr. Moshiri, there’s great potential for future energy development in the Atlantic Basin. The hydrocarbon resource is there – both oil and natural gas – and development is at an early stage.

The future will see more exploration and development, moving from oil into gas. The local markets will doubtless expand, but there’s still quite a bit available for export. But to accomplish this, the transportation infrastructure needs to expand. In short, there’s much left to accomplish in an immense swath of the world.

The Future Challenge of Energy Development

There are great opportunities for future exploration and energy development in Latin America and Africa. This will require trillions of dollars of capital over many years. That, plus world-class technology, superb and skilled people, as well as close coordination between developers and the national host governments.

Chevron, the subject of this article, is one of the world’s best independent oil companies. From its roots in the California oil patch of more than a century past, Chevron has a solid record of successful exploration and development. Chevron has great financial strength, and a deep pool of technical competence. Chevron’s success – certainly in deepwater development – is built upon its highly skilled and talented people such as Mr. Moshiri and the many members of his extensive team.

That said, there are many other companies working on deepwater oil exploration and development projects across the world. They range from very big to not very big, from independent to nationally-owned and operated.
If you’re interested in learning about another aspect of deepwater development, I can tell you about a small, Canadian company that is developing a remarkable play in offshore Africa. To access my full presentation, just click here.

Until we meet again,

Byron W. King
for The Daily Reckoning

According to the feds, 74% of all the oil leaked into the Gulf has already been removed.

Despite headlines screaming “the worst oil spill in history,” it turns out the BP blowout disaster wasn’t really as big a deal as you’d have thought.
Oh, well… sorry.

According to the feds, 74% of all the oil leaked into the Gulf has already been removed. “Much of the rest,” The New York Times summarizes a government report released today, “is so diluted that it does not seem to pose much additional risk of harm.”

Nearly half -- 41% -- of the oil simply “evaporated, dissolved or dispersed” -- taken care of by Mother Nature herself. That’s a larger share of spill containment than all of BP’s burning, skimming, recovery, dispersing and plugging efforts… combined.

The report estimates about a million barrels of crude oil remains floating in the Gulf.


“Of course, it's not good to blow out your oil wells,” Byron King explains. “But we can be thankful that nature has oil-eating bacteria out there. Add oil to the seawater, with heat from the sun, and sunlight, and stir it up with wind and wave and you see that the oil is going away faster than many people expected.

“In a normal environment, oil-eating bacteria are in equilibrium with their surroundings. If there's not much oil in the water, the bacteria are few and far between. But if you add oil to the mix, the bacteria bloom.

“As the bloom progresses, more bacteria eat more and more of the oil. They eat the oil until it's mostly gone. When the ‘oil food’ is gone, the bacteria die off. The result is much less oil, and much more microscopic biomass in the water.”

Cheers,

Addison Wiggin
The 5 Min. Forecast

P.S. Small question: If so many people hate this new video format, why is it grabbing so much attention?

Thank you for reading The 5 Min. Forecast! We greatly value your questions and comments. Please send all feedback to 5minforecast@agorafinancial.com

Abandoning the Capped Oil Well: What Could Possibly Go Wrong?

Thursday, July 22, 2010
FROM: http://georgewashington2.blogspot.com/2010/07/abandoning-capped-oil-well-what-could.html

BP will leave the cap on the oil well while it vacates the area for a number of days to avoid the coming tropical storm.
What could possibly go wrong?

One expert warns that increasing pressure might have an unintended danger:

Bill Gale, a California engineer and industrial explosion expert who is a member of the Deepwater Horizon Study Group, said… that gas hydrate crystals could be plugging any holes in the underground portion of the well, and they could get dislodged as pressure builds.
(Gale was formerly Chief Loss Prevention Engineer for Bechtel in San Francisco, obtained his undergraduate degree in Chemical Engineering, Masters in Civil Engineering and PhD in Fire Safety Engineering Science from the University of California, Berkeley. Gale is a registered professional engineer in both mechanical engineering and fire protection engineering, and has more than forty years of industrial loss prevention, process safety management, and fire protection/fire safety engineering experience.)

In other words, there may have been a destruction of a portion of the steel well casing which was temporarily plugged by methane hydrate crystals. Leaving the well cap may slowly raise the pressure in the well to the point where the hydrate crystals are dislodged, in which case the well might really start leaking.

Indeed, the relationship between methane hydrate, pressure and temperature is well-known:


Sound farfetched? Maybe.

But remember that the "top hat" containment dome failed because it got plugged up with methane hydrate crystals.

And remember that there's a lot of methane down there. Indeed, while most crude oil contains 5% methane, the crude oil gushing out of the blown out well is 40% methane.

Although even less likely, scientists say that the methane could disturb the seafloor itself. As the St. Peterburg Times points out:

Disturbing those [methane hydrate] deposits — say, by drilling an oil well through them — can turn that solid methane into a liquid, leaving the ocean floor unstable, explained [Carol Lutken of the University of Mississippi, which is part of a consortium with SRI which has been conducting methane research in the Gulf of Mexico for years].
***

Generally the oil industry tries to avoid methane areas during drilling for safety reasons. But the U.S. Energy Department wants to find a way to harvest fuel from those methane deposits, Lutken said. [I've previously discussed that issue in detail.]

So what's the bottom line?
I am not predicting that anything bad will happen. Hopefully, when the storm is over and the underwater ROV submersibles return to the spill site, everything will be peaceful and stable.

But there are many variables such as methane hydrates which - in a worst-case scenario - could complicate matters.


W said...
Suppose for a moment that the well is actually leaking.

The oil and gas is finding its way into pathways that it cut through the compromised well bore, and over time, it slowly hollows out a space as the fluid flows.

The flow into the other geological structures get larger and larger, and those, may (who knows) in turn, seep.

From this logic, seeps can happen miles (many) away that are really from pressure in this reservoir.

The longer the pressure is on, the more likely that if there are other pathways it will punch its way through it.

It can end up creating a much bigger problem.

July 22, 2010 4:17 PM

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