Weaker Dollar Causing Changes in Gas Prices

We have been discussing in class how government regulation and laws affect business, but in this case it is a monetary policy which is affecting the oil industry. According to a recent Wall Street Journal article, after the recent recession, the Fed worked to buy Treasurys in order to stimulate the economy. This action weakened the value of the U.S. dollar, causing gas prices to rise shortly. The most recent increase in gas prices will not last long, analysts say. Prices are still far below the record highs in Summer 2008. As crude oil prices lower because China and other investors have come back to using the dollar, the gasoline prices might soon fall as they usually follow the trends of crude oil by a few days. Obviously, an increase in production might decrease the effects of oil prices.
I find it very interesting that the trading of currency and the practices to stimulate the economy had an effect on the oil industry. I think it just goes to show that industries and the economy in general is extremely connected in many ways. The rise in gas prices reminded me of the talk about how due to the higher prices, especially in 2008, people were driving less, reducing pollution. As we have been talking about the government can have effect on an industry through regulations, I am curious as to how purposely raising prices of gas might affect the industry. I am unsure if the U.S. would ever do this though, as the free market economy seems to be a ideal very ingrained in our nation.

http://online.wsj.com/article/BT-CO-20101119-711279.html?mod=WSJ_Energy_middleHeadlines


- Caitlin McGonnigal

Exxon-Mobil

According to Exploration and Development news, on October 27, 2010 Exxon-Mobil, the largest international oil company, successfully drilled the PTU-15 and PTU-16 development wells in Alaska. PT or Point Thomson is a field in Alaska’s North Slope that is expected to have approximately 25% of the gas resources discovered in the North Slope, which is about 8 trillion cubic feet of oil and another 200 million barrels of condensates. A lot of money has been invested into this project, ExxonMobil claimed that it has spent about $1.5 billion in this project.
Exxon-Mobil also claimed that by the end of 2014 this project will allow the company to produce about 10,000 barrels a day of gas condensate.
Currently over 150 oil and gas companies are trying very hard to “advance development of the field in an environmentally responsible manner". This venture has created, and will continue to create many jobs in the field.

http://explorationanddevelopment.energy-business-review.com/news/exxonmobil_completes_drilling_ptu16_well_in_point_thomson_field_alaska_090828

Empire of the Rising Sun

This article talks about innovation in solar energy, an area I have become familiar with after conducting my informational interview with Scott Redd who works in Solar Project development at Sun Edison LLC, the leading supplier for solar energy in North America. In Japan, Solar frontier KK is taking steps to finalizing its solar panel factory, supposedly being able to produce more photovoltaic cells than an other facility in the world. What's interesting about this company's mission to becoming the worlds lead supplier for solar panels is that it's parent company is one of the biggest oil corporations in Japan, Showa Shell Sekiyu. The CEO of Solar Frontier Shigeaki Kamaeda recognizes that the oil industry isn't going anywhere anytime soon, as Scott Redd also stated during the informatonal interview, but both recognize the importance of an early investment in a potential industry changing technology. Yet, Solar frontier claims that it will turn this investment into profits by 2014 accounting for 50% of the company's earning's although this seems a little to optimistic to me, I would like to see them accomplish this. Solar frontier is taking advantage of the current decrease in demand for oil in japan and the decrease of it's oil capabilities by 20% to really focus on pushing solar energy. If Solar Frontier can accomplish the goals they have set out, it will be a milestone in the alternative energy revolution, and prove as an example for future companies that are seeking to do the same.

Jaisukh Samaha


http://online.wsj.com/article/SB10001424052748703957804575603531119514328.html?mod=WSJ_Energy_leftHeadlines

Informational Interview Assignment

Informational Interview Assignment

1.     Contact Name: Steve Haugenes

2.     Contact Title: Director of Wholesale Natural Gas

3.     Method of Contact:

Cell: 732-750-6000

            Email Address: SHaugenes@hess.com

4.     Company: Hess Corporation

5.     Three bullet points with your takeaways from the informational interview:

·      Mr. Haugenes works in the natural gas specialization of the Hess Corporation. He is the person who organizes distribution for the oil, which comes from different refineries and drill sights such as Texas and the Gulf of Mexico. He told me there were multiple ways in which this gasoline can be brought to the consumers. Either it can be delivered gasoline, which is “delivered” to say New York via pipelines, barges, and trucks or it can be bought in New York and transport is not needed. It is much cheaper to purchase gasoline elsewhere and then transport.    

·      The government regulates the pipeline grid that transports the oil. Pipelines can only make a certain amount of money, as it is a highly regulated business. This guarantees them a rate of return and also makes sure that they don’t charge the oil companies too much. Other companies besides Hess use these pipelines as well, as it is a national grid. Everyone uses a part of the capacity of the pipelines and each company rents the space they need for their oil.

·      Problems can arise, as there are the restrictions on pipelines. Maintenance on the lines and technical problems can cause the oil to not arrive at its set location on time and Hess will not be able to deliver when previously thought. They all deal with firm contracts to the buyers. This basically means that they guarantee the oil to be there and there are no negotiations. They are obligated to get them their gas. This means that Hess has to use other methods in order to get the gas to the consumer on time and must have backups for their backups. These other methods can include barges, tucks, and other pipeline systems that may be more expensive and would eat into profits.


-Ryan Parker

Chesapeake energy corporation

Informational Interview:

1. Contact Name: David Griffith

2. Contact Title: Investor Relations Specialist at Chesapeake Energy

3. Method of Contact:
Phone: (405) 848-8000

4. Company: Chesapeake energy corporation

5. A few things I learned from this informational interview include:

· When I asked if there was any major difference in the company’s workforce he believed that it was “diffidently getting younger“- he stated that there was a sharp increase in employees that are under the age of 35. He did not provide me with exact statistics but estimated that workers under the age of 35 make up about 40% of the current work force.

· Working for this company is very time intensive. He started that time requirement is not just 8-5, it is until the work is done, which depending on the day can take many more hours. He also stated that although the compensation is great the job can get very exhausting and stressful.

· When I asked about their advertising method-he said that they seldom advertise- they take a PR stance- because the company sells natural resource, they are not really trying to build a consumer base but advertise the merits of using natural gas as energy source. Mr. Griffith strongly believed ,and claimed, that we need to decrease out dependence on foreign oil and start exploiting natural American resources. By doing so, he believed that, we can avoid the detrimental effects of oil.

Sun Edison LLC

1.     Contact Name: Scott Redd

2.     Contact Title: Solar Project Development

3.     Method of Contact (i.e. phone number and/or email address):

An email at sreed@sunedison.com then a follow up interview at (443) 909-7200

4.     Company: Sun Edison LLC

5.     Three bullet points with your takeaways from the informational interview:

·      Mr.Redd talked a lot about how renewable energy is not really taking a hold in the United States as quickly as he predicated, due to the high costs in research and the immediate needs for energy in everyday life. That’s why the majority of people continue to use “old” energy forms. When the technologies that encompass “new” energy forms becomes cheaper to produce and easier to use he feels that people will slowly transfer over.

·      Mr.Redd also stated the solar energy is one of the most cost effective ways of generating renewable energy. Generally a person will have an initial investment for the solar panels and installation then be able to generate stable amounts of energy depending on how many and where the panels are located.

·      As far as investment goes, Scott believes that the time to invest in renewable energy is now while new companies are entering the industry with innovative ideas there stock prices remain relatively low, and people will begin to look towards these companies as a means to lower dependence on overpriced foreign oil. Although, he recognizes that oil and coal continue to be the main sources of generating energy a slow shift to renewable energy is and has been taking place. A total shift he said may take years or decades depending on technology and effectiveness but eventually it will happen, and Sun Edison will be a the forefront of this change.

Mexico's Pemex Crude Output Figures Down Briefly On Bad Weather

Mexico's state oil company Pemex interrupted the transport of some of its crude oil production in early november due to bad weather in the Gulf of Mexico. This originally effected the output numbers but now the company says that with the weather going back to normal nothing was actually lost. The numbers that were posted by Pemex's exploration and production devision stated that there was an average daily output of 843,000 barrels and over november 1-7 they only produced 632,000 barrels daily. The violent winds and wave action disrupted shipments but it should not have an overall effect on the average production. 


 This company should be staying on track after this late shipment and still is a good option to invest in. Pemex's output is continuing to stay stable even after these late shipments. This company should continue to being invested in. 


http://online.wsj.com/article/BT-CO-20101110-722330.html?mod=WSJ_Energy_middleHeadlines


-Ryan Parker  

Alcoa Informational Interview

1. Donald R. Smith
2. Senior Technical Specialist
3. I first contacted Dr. Smith through email to ask when he’s be available and then I contacted him by phone and had a phone interview for about 20 minutes.
4. Alcoa Inc., a sector of Dow Jones
5. Takeaways:

• I learned that in creating a new product for a company or client, the marketing employees act as the “voice of the customer” and work closely with the research and development employees, which know about the industry very well, to create a new product.
• That government incentives to switch over to renewable energy will not really affect the transition all that much. If companies find renewable energy for cost effective than the transition will happen without the government’s help. Sometimes the incentives to switch will end up hurting companies more because non-renewable energy may be less costly than renewable ones for companies.
• The oil industry will not really disappear, the time for oil is right now, but a slow transition to renewable energy will occur if companies use it more as it becomes more cost effective. That is the major dependent in the switch to renewable energy.
I really learned quite a lot from Dr. Smith. Alcoa is diving into technology for the energy industry including lighter equipment for underwater oil drilling and also in renewable energy, such as the brand new design for a solar panel. To look at the solar panel (it is really cool), go to this website http://www.alcoa.com/global/en/innovation/info_page/home.asp and click on the "Bright Ideas" picture and look at the pictures on the side of the page. Look at how big it is, the second picture has people standing next to it. It's ridiculous. - Caitlin McGonnigal

Exxon leaves Australia

According to a wall street journal article, Exxon is in the process of selling its fuel terminal in Queensland to Caltex, which is an Australian oil company. Although this may seem like a small or minor transaction it shows another sign of Exxon Mobil’s exit from Australia(first sign was when it sold many of its filling stations to 7-11 in May of 2009). Although it claims other wise, many believe that Mobil will subsequently sell its Altona oil refinery, which is located in Victoria. Their motives is not yet clear but I am sure it will be in the next few days.

This was a really interesting yet awkward article, I initially thought it was irreverent until of course I read about The Exxon Valdez spill in Australia. The incident consisted of an 11 million gallons crude spill occurred in an area that was highly ecologically sensitive. This left me wondering if Exxons' reputation really recovered and whether their exit from Australia is somehow tied to this event that occurred many years ago. The same may be said for BP years down the line.

http://online.wsj.com/article/BT-CO-20101104-700336.html?mod=WSJ_Energy_middleHeadlines

What a newly elected congress means for energy and the enviroment

This article talks about the shift of power in congress as the november 2nd elections are turning out results. If the Republicans win the house it could mean major problems for the Obamas administrations long list of proposals and projects on energy and the environment. Republican House leaders are determined to fight and if need be deprive funds to the effort by Lisa Jackson (Environmental Protection Agency administrator) to regulate green house gas. Even after the BP oil spill republicans are expected to try and speed up the approval of permits that allow oil companies to drill in deep water area of the gulf of mexico.

I think we can see that the Obama administration is already feeling pressure from  the republicans by terminating the funds to construct solar and wind energy farms as Ryan talked about. Also it will be a major political move if Obama allows the republicans to approve permits for offshore drilling right after his administration was faced with the BP oil spill.


http://online.wsj.com/article/SB10001424052748704506404575592462788545960.html

- Jaisukh Samaha

China Making Sales in Renewable Energy

According to a recent Wall Street Journal article, two Chinese companies, Datang Corp. and Hongqiao Group, are participating in new sales for sites of renewable energy. The companies will make about $1 billion and $1.5 billion respectively. As China seems to be increasing their developments into renewable energy, the U.S. seems to be decreasing their interest in new energy. Another article describes how a fund meant for wind and solar energy research and development might be used in a different way, as Obama's top advisers believe that citizen's tax dollars can be used in a better way.
Although I do understand the recent economic crisis and the media hype on the cost of taxes to Americans, I also find it discerning that the U.S. is once again behind China in something concerning economics. If the move is political, which it probably is, I also find flaws in that renewable energy research was something Obama promised, and the newer energy has potential to bring new jobs and according the soon-to-be profits for these two Chinese companies, it obviously has the potential for a lot of money. There is a delicate balance between risk and the need to keep the money Americans and the government does have safe however. What do you guys think? If the need to ween ourselves from oil important enough to raise taxes and put precious tax money to?

- Caitlin McGonnigal

U.S. Weighs Funding for Renewable Energy Projects

Today President Obama's top advisers recommended cutting off funding for a federal fund program which is ment to spur the growth and construction of wind, solar farms, and other renewable energy. They stated that they believe taxpayers dollars could be better spend elsewhere. However there is a fear by Obama and his advisors that pulling money out of this program will antagonize some powerful allies in congress and would signify the failure of the recovery act.


Many sights have already begun construction assuming that they will have help from this federal fund program. A large wind farm in Oregon has already begun construction and brings up the question if this and other projects like it will be able to survive without the federal program. 


In my opinion I do not think it is a good idea to pull this program. For one it goes against Obama's promises and will look bad to the public. Also building these new sites takes away our need for foreign oil and creates many job in the area. I do not think that the government should pull the program. 


http://online.wsj.com/article/SB10001424052748703506904575592843603174132.html?mod=WSJ_Energy_leftHeadlines


Ryan Parker