A fine balance in the energy market

Let me just say that neither Bloomberg nor any other news outfit should use the word "peak" in a headline unless they're talking about peak oil. My hopes for MSM interest in PO were sparked by this headline:

EnCana, Canada Oil Shares Fall as Investors Bet Oil Has Peaked

Alas, the article has nothing to do with PO. What they mean is that oil prices have peaked.

Still the article was rather interesting. As oil prices were steeply rising earlier this year, EnCana and Suncor were raking it in on the stock market. However, now there's a perception that the tide is turning, and that oil prices are going to drop. This is hurting EnCana and Suncor on the stock market.

How do they know the tide is turning?

Well, our old friend the SUV, of course.
To Phillips, Hager & North Investment Management analyst Andrew B. MacDonald, declining sales of sport-utility vehicles earlier this year signaled a peak in the price of oil.

The Vancouver-based firm, which oversees $49 billion, in May began paring its holdings of oil stocks such as EnCana Corp. and Suncor Energy Inc. When oil prices get so high that they turn off potential buyers of gas guzzlers, it's a sign the pendulum is about to swing back.

"We were looking for evidence that high energy prices were affecting consumption," MacDonald said. "We saw the early signs of that."

The end of the article is an illustration of the recent fortune in Alberta, where the tar sands are located.  
Alberta is in a celebratory mood as a result. The provincial government last week raised its budget surplus estimate for the third time in two months, thanks to oil riches. Petroleum wealth is helping to push house prices up too: The average single-family home in Calgary, the Alberta city home to much of Canada's oil industry, sold for C$284,235 this year, up 13 percent from 2004, according to the Calgary Real Estate Board.

Premier Ralph Klein decided to pay each of Alberta's 3.2 million residents a C$400 ``prosperity bonus.'' Some Calgary residents may need the extra cash to pay those bigger mortgages.

So, does anyone want to start speculating on how long the celebration in Alberta is going to last?

In other fascinating news that you may or may not have seen, Hugo Chavez is providing discounted heating oil to disadvantaged Bostonians this winter. Maybe now's a good time for the American oil companies to extend a similar gesture to improve their PR, as Senators Grassley and Craig suggested a few weeks ago.

Typical analyst display of in-depth ignorance  -  Encana is not an oil company, they are a natural gas producer (84% NG vs. 16% oil).  Is the analyst ignorant of this (as a Canadian analyst you'd think he'd be somewhat familiar with Canada's largest corp. by market cap), or does he make no distinction between oil and natural gas?  Either way, this is typical of the mass media's need to have a simplistic explanation for every short term move in the price of anything.
The word "peak" normally implies that an industry is cyclical - which to be honest energy and utilities normally have a cyclical boom and bust pattern. But I agree that this use of the word peak is misleading to someone that has heard of PO.

To do a little word play:

Has Oil Piqued?
piqued (adj): a feeling of anger and annoyance, especially caused by damage to your feeling of pride in yourself...

I'm also waiting for someone to use the phrase "peak Turkey" or "peak Pig" on some discussion board seriously talking about the inevitable decline of our industrial carnivorous animal farming practices.

I like "Peak Pork" better!  ;-)
Hey now!  I did say "Peak Food" (production) the other day in a post.

 Though what I was talking about was the actual Peak in Oil Production would mean a Peak in our Food Production in as far as the fact that most food we eat is heavily dependent on OIL.   But maybe Peak NG Production will hit our food production faster.


I believe we have just gone through a price trough like we do most Novembers. I noticed that today gas prices are 10c higher than last week at my friendly neighborhood pumps.
We need a "POOPeR" acronym.

To make it clearer that our discussions are directed to:
Peak Of Oil Production/extraction Rates
we need the POOP or POOPer acronym.

I think that when the media sees the POOP part, they will understand that we, as a society are in deep you know what.

Here's an article that mentions peak oil:


If that link doesn't work for some reason, try this one:  http://www.startribune.com/dynamic/mobile_story.php?story=5742859 , or get a login/password from here: http://www.bugmenot.com/
Acually, stock analysts use their technical charts to call market 'tops' which is a better term than 'peak'. When their favorite indicators show the price topping, then they look for some 'fundamental' reason to explain the top in order to flesh out their article. But what their charts actually measure is investor sentiment (lemming-like behavior) and not anything related to the commodity or stock itself so that their explanation of what is causing the 'top' (or 'bottom') is usually very short term and has little to do with the real fundamentals.