1) More than 93% of children under the age of 12 will go out trick-or-treating in the US this year.
(Coincidentally, the natural gas storage level in the UK is currently at 93%).

2) 16% of adult Halloweeners dress up as a witch each year.
(This is the same amount, in Bcf, that industrial demand consumes of natural gas each day).

3) 22% of Americans say they’ve seen or felt a ghost.
(22% of energy consumed in the US is by the residential sector).

4) 28 million Halloween cards are sent each year.
(28% of energy used for industry and manufacturing is from natural gas).

5) 90% of parents admit to sneaking goodies from their kids’ Halloween trick-or-treat bags.
(over 90% of coal in the US is used to generate electricity).

6) Chocolate is the most popular candy for trick-or-treaters, with Snickers #1.
(Unaware of this fact, I referred to the oil market as being ‘more nutty than a Snickers bar’ in last week’s burrito bites. As a sidenote, In my extensive research for this post I read conflicting information to say Reece’s Peanut butter cups were #1. Either way, both are nutty so is a moot point).

7) 86% of Americans decorate their house for Halloween.
(Global oil demand is currently 86.9 million barrels per day).

8) 78% believe in life after death.
(78% of mobile homes have a clothes dryer. EIA fact).

9) 1.4 million people dress up as vampires each Halloween.
(1.4 million barrels of jet kerosene are produced in the US each day).

10) 10% of pet owners dress their pets in a costume.
(From every barrel of oil, there are 10 gallons of diesel produced).

Happy Halloween!

Arabian Sea, Aug 9

Happy Southpaw Day!

Stormy seas across the financial world have caused the good ship crude to roll over. Prices have charged lower through $80 as the Federal Reserve confirmed fears of a slowing US economy, while data from China has pointed to economic headwinds (…although self-inflicted, to quell inflationary squalls). US natural gas was buffeted lower at the beginning of the week, but has steadied the ship and has drifted sideways ever since. Equities have been looking like they want to visit Davy Jones’ locker, while bond prices are…King of the world! Ahoy, me hearties, grub’s up: 

–Ten stops on the road to carbon management - article by Summit’s John Hoekstra in GreenBiz this week.

–America’s energy future may lie in Canada’s oil sands.

–Fantastic infographic on the timeline for Back To The Future (h/t MK).

–China’s oil imports fall in July on curbed demand.

–Peak Oil proponent and energy legend / conspiracy theorist Matt Simmons died this week.

–A reverse auction for energy efficiency grants.

That's your lotto.

–A hummer built with lottery tickets.

–IEA raises the global forecast for oil demand.

–What’s the carbon footprint of the internet?

–Human domino world record.

–Sales of electric cars in Spain increase 16-fold from last year….to 16.

–Balloons glow to show air quality.

–Huge ice island could pose threat to oil, shipping. (h/t LB/NG)  

–A salute to Southpaws everywhere.

–Is Snooki our new investment guru?

The Burrito Deluxe Award of the Week goes to the bond market, for being the voice of reason and quietly pointing out for the past few months that all is not well in the US economy. 

The Burnt Burrito Award of the Week goes to black gold, Texas tea. Last week it boomed into the $80 realm in an over-excited reaction to manufacturing data, only to be brought back down to earth this week with all the gloomy talk and doomy data. 

Burrito Headline of the Week: Goat Rentals for Weed Control.

Burrito Word of the Week: Shaleapalooza.

Have a rip-roaring weekend!

This phrase has resonated with me recently, as financial markets continue to tread water and trade sideways, as the outlook for the global economy remains somewhat mottled. We have had our recession, and we have experienced some semblance of a recovery. But now we are at a fork in the road; from hereon out we may experience a double-dip in the global economy (top of the pops on google search), we may see economic growth gather pace, or we may see the global economy stall and stumble along a path inbetwixt a recovery and a recession.

So it is no surprise given this backdrop that we see sideways action in our dearly beloved commodities. After crude pre-empted a global recovery last year by more than doubling between January and June, prices have traded within a broad range ever since, as prices await the next signal that global oil demand will continue to increase by virtue of a clearly strengthening global economy – both in developing and developed countries:

US natural gas prompt prices have followed a similar sideways pattern, despite having a different set of influences at work. Being both a domestic market, and a radically-changing one at that, prices have remained subdued yet supported as market participants await further clarity on future supply from game-changing sources (i.e., unconventional supplies) and technology. All the while, prices look for further improvement in future demand by virtue of improving economic growth: 

 So, in this current state of flux, the best thing we can do (as well as being in constant dialogue with an energy consultant, of course) is to keep our heads, and wait for the dust to settle, realizing that commodity prices can turn on their heads at any time. Yet all the while, remembering the mantra…to keep calm and carry on.

While the current unemployment rate is 9.8%, the underemployment rate is nearly double at 17%. This is reaching pandemic proportions, as baby boomers are forced to retire later as their pensions have just been halved, 18% of  18-24 year olds are unemployed, and 7,000 people a day are facing the expiration of their unemployment insurance. 

And that isn’t even the biggest doozie on deck: since the start of the recession in December 2007 we have seen 6.8 million people lose their jobs in the US - just shy of the population of Hong Kong.

The crux of the problem arises when we build our energy burrito; the ingredients just don’t add up. Energy demand is driven by consumption. Consumption is driven by spending.  And spending is driven by income - income earned in a job.  And consumer spending makes up approximately 70% of GDP in the US. With such a drag on GDP, how can we expect energy demand to not only recover (without such espresso shots as cash for clunkers and $8k first-time homebuyer rebates), but also spur itself on to significant growth?

Put simply, we can’t. And the punchline? Sorry, there isn’t one. 

Rock-paper-scissors is not a game of chance, and neither are commodity markets. You have to place some faith in a rational approach by studying the fundamentals of a market to forecast future trends, because it is overwhelmingly likely that supply and demand are the key price drivers (barring technical analysis). But while in rock-paper-scissors you can always ask for the ‘best of’ 3, 5, 7, ad infinitum (depending how badly you are getting beat), adverse price movements from an ill-timed trade means you can be punished for a single weak decision; hence the need for extreme care.