Obama's Energy Policy - The War on Carbon

The Administration pays lip service to developing our own oil and natural gas resources.  As always, actions speak louder than words.  The Administration has: 

• Placed a de facto ban on leasing of offshore federal lands off the west coast, east coast and Alaska
• Substantially slowed the permitting of shallow and deep water drilling in the Gulf of Mexico
• Killed construction of the Keystone XL pipeline
• Subsidized failed green energy projects
• Through EPA action in early 2009, began the process that will ultimately lead to massive regulations for almost anything that emits carbon dioxide.

Delta to Buy Refinery - Such a Deal?

Conclusion

It is my opinion that Delta’s acquisition of the Phillips 66 Trainer refinery is a risky bet.

• Domestic gasoline demand has declined leaving the industry with surplus capacity
• The locus of demand is shifting to developing Asia.
• The policy of many OPEC producers has been to refine more of their own crude oil
• Domestic margins for gasoline are being squeezed in part due to the US exporting rather than importing the product (Exports increase transportation cost and therefore decrease refinery net back).  The short term exception is for those who have access to WTI and Bakken crude oil (more on this later)
• Slow economic growth will continue to hamper refinery profitability
• Simpler sweet crude refineries (like Trainer) are competing with more sophisticated Gulf Coast plants and from imports from Europe

Cape Wind Blows (for Taxpayers and Ratepayers)

Cape Wind is a massive $6 billion, 468 Megawatt wind farm to be built off the Coast of Massachusetts.  The project includes 130 wind turbines covering an area of 25 square miles.  Great huh?  Not so fast.  In my opinion, this project could never be built without massive subsidies.  In the case of Cape Wind, the taxpayer and ratepayer will carry the burden.  Here are some fun facts.

Buffett's Green Sure Thing - Topaz

In December of 2011, MidAmerica Energy Holdings, a subsidiary of Berkshire Hathaway purchased a large solar PV project called Topaz from First Solar.  The project is a 550 megawatt solar farm being built in California with an estimated completion date of 2015.  First Solar work included an approved EIS and a 25 year PPA (purchase power agreement) with PG&E. The price of the transaction was not disclosed.  In my opinion, the price was likely quite low.  First Solar was unable to finance the project itself, however, First Solar will benefit handsomely from the sale because of its Engineering and Construction Contract and its Operating and Maintenance Contract with MidAmerica.  In addition, it is likely that the solar panels used in the project will be First Solar products.  MidAmerica is financing 50% of the project through bonds.  I have researched the project and it appears that Buffett made a very good deal (Bruce Krasting wrote a very interesting blog about this project in December of 2011.  See the link http://brucekrasting.blogspot.com/2011/12/another-sweet-deal-for-buffett-who-pays.html ).