(朋友PHUL FLYNN的油盘看法)

The Energy Report for Friday, January 12, 2007



We all know that the Democrats are fully in control of the House and the Senate. But really, with the way they have been talking, maybe they should change their name to the Green Party because when it comes to energy, they see nothing but green.



For example the Democrats want to see this country move to more use of "green" fuels. And the way they want to encourage that is to get more "green" in the form of higher taxes. And of course the main way they want to get those higher taxes is to go after those big mean oil companies who have been making lots of "green". The Dems would love to get their hands on those big oil obscene profits and give it to upstart, pure and righteous "green" thinking - however, sadly - somewhat unprofitable alternative fuel companies. That’s right, take from the rich, unfeeling mean, dirty, oil companies and give that money to the sweet lovable, hug-able (as in tree hugging) alternative fuels companies. It so easy, just take money from a successful business and give it to the upstart competition and whammy all is right with the world. And soon all our energy problems will disappear! Why haven’t we thought about this before?



Yet despite the noble intentions, the Democrats and their new place of power is under a vicious attack. And it is under attack by a most powerful foe that has no concern about whether or not we will ruin the environment with greenhouse gases or how obscene the profits are that big oil companies are making. This force has no morals or social conscious at all! Try to guess what this force is. Is It Exxon Mobil? Perhaps it’s Halliburton. They love to hate Halliburton. No, it is not any of these but a force more powerful and influential than all of them put together! The force that may foil the Democratic game plan is - are you ready for this? -the free market!



The push to encourage the use of more alternative fuels is under attack. And that attack is by the markets. With oil plunging close to $50.00 a barrel, which is the point of profitability for many forms of alternative fuels. So a break below $50.00 may spoil the Democrats and even President Bush’s bigger plans. Just think, if the price of oil continues to plummet oil company profits might not be so obscene and the taxes the Dems expect might not be big enough to support these fledgling upstart alternative fuel companies.



Time to face facts. According to The Earth Policy Institute, there are currently 79 ethanol plants under construction and one might speculate how many of those plants will be completed if oil goes below $50.00. Not to mention how many might be bankrupted. Bankrupt ethanol companies will need more Democrat "green" to bail them out but the source of that "green" is supposed to come from obscene profits from the oil companies that might not be possible if oil keeps falling. Even the Democrats and their control on power is still no match for the markets.



The markets are powerful and who would you suppose is very worried about that these days? OPEC is very worried about oil and the steep price drop. Of course when it comes to pumping oil they just can’t seem to help themselves. According to Oil Movements, an oil tanker tracking firm, OPEC production is rising. OPEC’s President Mohammed al-Hamli has called the drop in the price of oil unacceptable. He has called on better compliance from his OPEC brethren.

Yet the Democrats and OPEC need not get too worried as more than likely the wash out in the price of oil is most likely going to be short-lived. In fact despite the fact that the market is tanking, there was another market that seemed to optimistic about the use of alternative fuels.



Corn prices hit limit up and have been on a tear in part based on the assumption that oil was bound to stay above $50.00 and therefore the world would be screaming for more ethanol. The market and investors have placed high bets that the world wide oil supply/demand situation will get tighter and tighter.


Estimates by the Earth Policy Institute and reported by The New York Times estimates that ethanol production capacity is to expand to 11.0 billion gallons by 2008. I guess that’s assuming that oil stays above $50.00. Still with the money flowing in, some might expect that the ethanol boom is still here to stay.



The key reason that oil prices have gone up in the first place has been strong demand. Lower prices in recent years have spurred more demand. More demand in turn raise prices. We have seen these peaks and valleys in demand as well as in price but other evidence in the economy would seem to suggest that oil is far from done.


Geopolitical risk not being the least concern for crude oil. President Bush made it very clear in his speech this week that Iran’s feeding of the insurgency in Iraq will not be tolerated. Then the day after the speech US forces storm an Iranian consulate in Iraq seizing computers and detaining 6 employees of the consulate. This is sign that we may see more tension between the US and Iraq. Will Iran retaliate for this? We will see.



We're long February crude from apprx 5250 - stop 5150.



Stopped on long February heating oil from apprx 15150 at apprx 15000. Buy February heating oil at 14500 - stop 14200.



Buy February RBOB at 13500 - stop 13300.



Sell February natural gas at 702 - stop 722.



Have a GREAT day!