John McCain's federal gas tax holiday sounds great on the surface. Who in their right mind wouldn't want to save 18 cents a gallon all summer long, from Memorial Day to Labor Day? Time to pack up the car for a roadtrip and head to the beach, right?
Not so fast. Although cutting the gas tax over the summer would seemingly ease the pain at the pump as prices continue to soar, lowering prices will only boost demand. And refineries won't be able to increase supplies in the short span of the summer months.
Clinton jumped on the gas tax holiday bandwagon without first considering its consequences. Obama, on the other hand, wholly opposed the idea. And here's why.
Most investors are broadly familiar with the Energy Independence and Security Act of 2007, passed late last year. The Bill provided for, among other things, a large increase in the mandate for biofuels in the US.
But there are some lesser-known provisions that are worth some attention also. One is Section 526 of the bill that states:
"No Federal agency shall enter into a contract for procurement of an
alternative or synthetic fuel, including a fuel produced from
nonconventional petroleum sources, for any mobility-related use, other
than for research or testing, unless the contract specifies that the
lifecycle greenhouse gas emissions associated with the production and
combustion of the fuel supplied under the contract must, on an ongoing
basis, be less than or equal to such emissions from the equivalent
conventional fuel produced from conventional petroleum sources."
Last night my colleague Whitney Richardson and I attended CharlesSchwab's
Global Perspectives symposium at the Italian Embassy in DC. Contrary to other
similar events I've recently attended, this one was particularly engaging and
informative.
While previous events have boasted a panel of fund managers spouting off a 3-minute spiel on their respective funds--information that I could easily have
gathered via Morningstar--last night's event provided personal insights
from each panel member regarding the state of the global economy and where it's heading through 2008 and beyond.
My colleague Kate Zanoni and I recently had the chance to sit down with Lee Giannone at the Charles Schwab Global Perspectives symposium. Mr. Giannone is senior vice president of Mondrian Investment Partners, which has partnered with Schwab affiliate Laudus to offer a selection of international and emerging markets funds, and was there to represent the company’s Laudus Mondrian International Fixed Income Fund.
Expectations were for a 30 billion cubic foot build in US natural gas inventories but we saw a little less (24 bcf build), which is bullish for natural gas. Inventories are at or slightly below the five year average. This is the first time we've seen inventories below average for two years. We're in the heart of the shoulder season--the winter heating season is over, but we're not really into the heat of the summer...
A Business News survey showed expectations for a 1.5 million barrel build in crude oil inventories in the US but we actually got 2.4 million barrels. It was a little higher than expected...
Not surprising: Zimbabwe's High Court rejected the MDC's plea to release official election results, further exacerbating tensions between Mugabe's ruling party and the opposition.
The failure to publish the results further supports speculations of Mugabe's vote rigging.
On Tuesday, the opposition called for a national strike to protest against authorities' failure to release the results, but the call met lackluster response as many feared confrontation with security forces and continued work as usual.
The increased delay of the Zimbabwe elections is severely affecting what's left of the country's collapsed economy. Before the elections, a number of workers skipped out on their jobs not because they wanted to go on holiday, but because the high inflation rate practically mandated it, as many couldn't even afford bus fare to get to work.
Now many workers aren't showing up because they fear unrest and feel uncertain and unsafe in regards to Zim's future.
Twelve days after the initial elections, confirmation of the the final tally is still up in the air and is pending a runoff before April 19. It makes me wonder who's actually running the country while Mugabe and his opposition battle it out in a war of political "he said, she said" over who is responsible for the country's economic downfall.
With $1.2 billion in writedowns, a pending $2.4 billion takeover by JP Morgan and a recent $1 billion lawsuit against it regarding two collapsed funds, the big question posed by The Wall Street Journal this past week regarding Bear Stearns: What’s going to happen to its championship men’s lacrosse team?
Today's US oil inventory statistics were unquestionably bullish across-the-board. Crude oil inventories tumbled by 3.2 million barrels against expectations for a 2.3 million barrel rise. Gasoline inventories were expected to fall by about 3 million barrels but actually fell by 3.4 million barrels.
And finally, distillate inventories fell by 3.7 million barrels against expectations for a 1.5 million barrel decline. Thus, whether we look at the crude oil report or the product inventories, today's inventory release from the EIA is bullish for crude oil prices.
Digging a bit deeper into the report a few more key trends are obvious. First, gasoline demand is actually slightly higher over the past four weeks compared to the same four weeks one year ago. Jet fuel demand is slightly lower and distillate demand is flattish. This hardly suggests that we're seeing much demand destruction due to a weakening US economy and sky-high oil prices.
Meanwhile, refineries are still operating at just 83.0 percent of their capacity. This suggests refiners are contining to respond to still-bloated gasoline inventories by cutting output.
It's pretty clear that Mugabe isn't happy with the outcome of Saturday's elections, although officials have yet to release the final results. Although the MDC announced premature results naming Tsvangirai as the outright winner yesterday and called for Mugabe to step down peacefully, the government won't let the opposition claim victory yet.
Government forces raided at least two hotels in the capital city of Harare, ransacking rooms of foreign journalists and taking several into custody. The number of journalists seized and their whereabouts are still unknown. The charges against the journalists (if there are any) are also uncertain.
Crude oil inventories were released yesterday and natural gas today. Crude rallied yesterday in the wake of teh report despite the fact that oil inventories actually rose much further than expected. I beliee there were two bullish aspects of the report. First, gasoline inventories dropped about twice as much as had been expected. And secondly, the demand figures released as part of the report suggest that there hasn't yet been much demand destruction in the US despite the slowing economy and high energy prices.
The trends in the report are broadly bullish for the beleagured refining industry. I do think we'll see a seasonal surge in this group into May though I have some longer-term concerns with respect to the industry.
Natural gas prices fell today, partly due to the fact that this week's drawdown was a little less than expected. However, unlike oil and gasoline, natural gas inventories support further upside for the commodity.
The waiting is over: ZEC officials have announced that Robert Mugabe has been defeated as president and also lost control of the parliament in Saturday's elections.
Mugabe has been in power since Zimbabwe gained independence in 1980. Since that time, he's run the country's economy completely into the ground. And with the inflation rate sitting above 10,000 percent, a change in rule can only bring a positive aura to an otherwise ravaged country.
The people of Zimbabwe have certainly spoken, although Zimbabwe
Electoral Commission (ZEC) officials continue to sit on the results.
The results of Saturday's potentially life-changing elections in Zimbabwe still haven't officially been released to the public. And the delay is causing more controversy than the election itself, as Zimbabweans anxiously await the pending make-or-break announcement.
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