It’s the one where the Millennium Falcon is being inextricably pulled towards the Death Star by a tractor beam…except in naturalgasworld™, natty is the Millennium Falcon and the Death Star is below the $3 mark. With me so far? Good, good. The analogies, however, do not end there. There is a number of themes which flow through natural gas like the force…and here are but a few.

Jabba the Hut = storage. Just like Jabba, storage is bulging, overbearing, and inflated (currently at a 398 Bcf surplus to last year’s level), and is set to exit the withdrawal season where it started – at a record level.

Lando Calrissian = weather. Just like the rogue that is Lando, the weather is not something you can count on. This has been exemplified by this winter period, where November and December were the warmest in over 30 years. That said, we cannot write off  the fact that the weather could flip to the cold side before we reach spring.

The Force = Forward pricing. It is a metaphysical, binding, and ubiquitous power, manifested through the emotions of both the light and dark side (h/t wookieepedia). (Translation: It is also a projection of where the current market believes futures prices are of fair value).

C3P0 & R2D2 = Electronic trading. Despite NYMEX having floor trading (Jawas?), the lion’s share of trading takes place on electronic platforms. So if you are trading, in this case…these are the droids you are looking for.

Swinging the spotlight back onto energy (as is inevitable here on the burrito), I realized there is a lot to be thankful for in the US. Despite some obvious shortfalls in the energy landscape (reliance on fossil fuels, foreign energy dependence, etc) I believe the US is moving in the right direction. So henceforth I present some random points as to why the US is great, from both an energy perspective, and from the perspective of a Brit.  

–The ramp up in domestic oil production from shale plays – hot on the heels of the shale gas revolution - means less dependence on foreign energy. Domestic energy production currently meets three quarters of total US energy demand.

–The US has lots of space. You don’t have to be a millionaire to have a good-sized garden / yard.

–New fuel economy standards announced in the US last year target car performance in 2025 of 54.5 miles per gallon, set to save 12 billion barrels of oil. 

–The weather. It is still a novelty and a pleasure to experience five three consecutive days of sunny weather.

–Oil imports in the US are now below 50% of total consumption, on the decline since peaking in 2005.

–The worst public restroom in the US is probably on par with the best public restroom in London.

–Shale gas is expected to support 870,000 jobs by 2015, and contribute $118.5 billion to GDP.

–Buffalo chicken. Cajun food. BBQ.

–8% of all energy in the US comes from renewable sources. 10% of electricity comes from renewables.

–People are generally more friendly / less grumpy.

–Lower natural gas prices means residential rates are falling across the country.   

–Kids with American accents are much cuter (I have proof²). British kids just sound like Oliver Twist.

–The focus on reducing pollution and harmful emissions (through acts such as CSAPR, and energy policy focused on safer and cleaner energy) points to a better future for all of us.

–The US is full of simple ideas to make life easier, such as drive-thru ATMs…simple yet effective.

So that’s what happens when I try to avoid making reviews, previews or forecasts. From my perspective the US has got it right - or at least is on the right path - from both the energy landscape, and otherwise.

Yep, it’s that time of the year to desperately hunt for what to get Auntie Maude or Uncle Fred for Christmas. But search no longer, my friends.  Here is a collection of energy-related gifts I am sure they would be thrilled to receive:

–The solar power/ornament combo, it’s all the rage! Delight your kinfolk with a royally ruling solar-powered Queen, or how about a different kind of flower power…a solar-powered flower.

–Or how about gifting the gift of giving? A nifty gift for those who have everything….a carbon offset.

–After discovering the glorious passion and humor of producer/director Ben Evans on the burrito earlier in the year, you can now fulfill your destiny and buy the YERT movie!

–So you think that being eco-friendly and decadent don’t go together? Wrong. Organic wine and chocolate are as decadent and delicious as you can get, with the guilt-free bonus that organic farming is less energy intensive.  

–If buying your loved one an appliance, make sure it is Energy Star qualified (for the double whammy of both lower energy bills and a potential tax credit). 

–Not the most thrilling gift, but perhaps the most practical – an energy gift certificate.

–If you’ve been bad, you could get a lump of coal. But if you are lucky, it may be a Martha Stewart style one.

–What’s better than gifting? Regifting. You can regift your Christmas tree through recycling it (find your closest location here), where it can be turned into biofuel.

–Or the ultimate in ultimate forecasting tools, Summit Energy’s own crude oil 8-ball.  

Well, here we are in December; a time to think of family, such as my cousin Paul and his six degrees of separation from the underwear indicator and his ‘interesting’ choice in knitwear, and friends such as Marilyn Lesher for correctly predicting her solar-powered flower would inspire my next post. God bless us, everyone! (even my cuz Paul).

There was an advertisement in last week’s Economist for a car. The focal point of the ad, however, was not the engine, its look, or its reliability. The key point was, in fact, a key. A MyKey™ . And it really could have helped the grandpa in my cousin’s story. As the ad explained, the MyKey™ is a car key through which a parent can not only limit the speed at which their teenager drives, but also the audio volume of the car stereo. This not only encourages them to drive safer, but also means better fuel efficiency from lower speeds (= aha, the green angle). This ad fascinated me as the product (= the car) was being sold on the merit of something which really had nothing to do with it. This was thinking ‘outside the box’ at its best.  

In a world where our lives are being ever more analyzed through data – from our social networking patterns to our spending habits -thinking ‘outside the box’ has become less maverick, and more mandatory. The MyKey™ ad exemplifies this mindset: approaching a common concept but from a different angle. This logic extends itself to other areas, such as data mining. MasterCard is one of the more prominent advocates of this. Through SpendingPulse™ they analyze credit /debit card transactions to identify consumer spending trends. Through real-time data collection, they are able to inform us of the latest trends in consumer behavior – for example, just yesterday SpendingPulse™ told us that gasoline demand on a 4-week average basis just posted its 31st consecutive decline. Extracting such value from a raw and seemingly unrelated set of data is pretty smart, but is becoming ever more the norm.     

Flipping (yep, pun intended, read on…) this product-to-trend process on its head, The Economist has not only thought ‘outside the box’, but also ‘inside the bun’ to develop The Big Mac Index. This index, through burgernomics (…or perhaps burger-nom-nom-nom-ics), takes something which is truly synonymous the world over and pegs it as a global benchmark to determine whether a currency is under or overvalued. Essentially, you can tell whether a country’s currency is fairly priced or not, based on the cost of a Big Mac there. Through burgernomics, as of July we can identify that the Brazilian currency (Real) is extremely overvalued, while the Chinese currency (Yuan) appears surprisingly close to fair value.   

Technological advancement not only means we can measure the things we can hold (and bite), but we can also measure the less tangible. For example, satellite images are now used to predict economic and commodity trends; parking lots are monitored to predict retail sales, while images of storage tanks (like at Cushing, Oklahoma where WTI is priced) are used to predict the level of oil stockpiles. Once again, by being ‘outside the box’ (and ‘into the atmosphere’) interesting insights can be yielded, even from unorthodox methods. But that doesn’t mean we have to ignore what is in front of us everyday…    

As life goes by at a hundred miles an hour, there are probably a hundred trends we could identify if we looked hard enough. Some indicators can be easily quantifiable, yet some are more subjective. This leads us to one of the more random yet recognized ‘outside the box’ economic indicators in the world; the Hemline Index. According to this study by the Econometric Institute, the hemline on women’s dresses fluctuates with the economy. In times of economic woes, the hemline moves closer to the floor, while in good times skirts get shorter. The Econometric Institute study concludes that the economic indicator holds true, but at a three-year lag. Hence, the latest financial crisis a few years back means next year’s fashion is set to be…ankle length skirts.     

The Hemline Index

From my cousin walking on an East London street, we have looked at ‘outside the box’  logic via MyKeys™, MasterCard, Big Macs, Satellites, Hemlines, to finally go one layer less to….the Underwear Indicator. Now the MUI (Men’s Underwear Index) – much like the last – has its support embedded in the upper echelons of academia. For the underwear indicator is a favorite of none other than the last chairman of the US central bank – for 19 years, no less - Alan Greenspan. The indicator simply identifies tough economic times, as sales dip as men try to space out their purchases. The silver lining? Apparently men’s underwear sales are on the up.  On that good news, I leave you where we started; with my cousin Paul.

Paul, Penguin, me

1) Which sector has just seen its fuel demand hit a 10-year low in the US?

2) Which of the two has seen more of a substantial improvement in energy efficiency in the past several decades?

3) Traveling in which vehicle offers the greater likelihood of a fatality?

4) Transportation makes up 27% of all greenhouse gas emissions in the US. Which of the two transportables makes up the smaller share?

5) Rail travel has the highest energy efficiency per passenger of all transportation. But which sector has the higher energy efficiency per passenger: aviation or automobile? 

6) The European Union told which sector last week that as of next year it will need to start offsetting emissions through carbon permits?

7) Which came first: the Wright brothers first flight, or the incorporation of Ford Motor Company?

8) You need to get from New York to San Francisco; which form of transport is more economical? 

9) Traveling at night in which form of transportation is said to have an increased impact on global warming?

10) In the US, in which of the two does the average person travel 10,000 miles a year?

Bonus question: From where does the phrase ‘my way or the highway’ originate? I have googled upon googled it, but still can’t find a satisfactory answer. The most plausible response (submitted as a comment) will win a burrito-related prize to the value of $20. Good luck!

Answers

1) Automobile. According to the API, September saw its lowest level of gasoline demand in a decade, due to high prices (and likely, unemployment) causing people to cut back on driving.

2) Aviation. Energy intensity has fallen by 60%, while that of an automobile has only fallen by 20%

3) Automobile. Despite macabre sites like this, it is a fact of life that due to more automobiles, there are unfortunately more fatalities. And for the record, the whole ‘donkeys kill more people than aviation crashes’ thing is a myth…apparently. 

4) Aviation. It only accounts for 2.7%, while on-road automobiles account for 21%.

5) Automobile. Automobiles consume on average 3,543 btu/per passenger mile versus 3,666 btu’s for aviation.

6) Aviation. The European Union announced last week that airlines will be required to pay for 15% of the carbon they emit, starting next year.

7) Automobile. Ford Motor Company was incorporated on June 16, 1903, while the first flight by the Wright brothers was on December 17, 1903.

8) Aviation. Just because driving is less harmful for the environment doesn’t mean it is cheaper. In a standard car the round-trip would currently cost you nigh on $1000. 

9) Aviation. Jet exhausts have a warming effect at high altitudes, which is magnified in winter. Night flights account for 25% of all flights, but up to 80% of the warming caused by commercial aviation.

10) Automobile. Aviation miles per capita is less than 20% of the total number of miles traveled in a car.    

Grade yourself: 
0 – 6  = Transportation Twit
7 – 10 = Energy Einstein

Thanks for playing, have a great day!