Submitted without comment � Theclubabove’s Weblog

Submitted without comment � Theclubabove’s Weblog

Michael Jackson embodied diversity. He *was* diversity, all in one body. Witness:

He was born a black boy from Gary Indiana.

He died a white man from Hollywood.

He loved men, women, and children. Literally, evidently.

There wasn’t a religion he didn’t call his own.

He’d breathe oxygen, sometimes with nitrogen and sometimes without.

He had a large nose.

He had a small nose.

He had no nose.

He had a cleft chin.

He had no cleft chin.

He had no chin.

He had frizzy hair.

He had wavy hair.

He had straight hair.

He had burning hair.

He’d wear two gloves. He’d wear one glove. He’d wear no gloves.

He’d wear gold lame’ jock straps OUTSIDE of his clothes and, we must presume, inside as well.

Yes, truly, Michael Jackson was all things to all people.

Must-Know Tips to Keep Your Pet's Ears Healthy

Must-Know Tips to Keep Your Pet's Ears Healthy

Home On the Range

Home On the Range: "There is a Korean martial art called Kum Do, which involves some very sharp swords and in its original form, a fight to the death. Now, in our kinder and gentler day, bamboo sticks are used, but many of the moves that survived the ensuing centuries were developed to shake blood off the blade so that the coagulating blood didn't dull the edge. Kum Du teaches students to avoid what is known as the four poisons of the mind 'fear, confusion, hesitation and surprise'. The constant tendency of men to anticipate and predict an event is a disadvantage, for in Kum Do if you let your natural inclination of prediction run loose, you could get a surprise, leading to confusion and then death (or a really sharp whack with that damn bamboo pole)."

Voting Present vs. Having Skin in the Game

Voting Present vs. Having Skin in the Game: "Voting Present vs. Having Skin in the Game

Many commentators discuss Obama's statements on Iran only in terms of providing moral support. I have done so myself, actually. John McCain too, who specifically disclaimed any intent to arm the protesters or take any other aggressive action against the regime in demanding Obama speak out more forcefully.

But the thing is, that's kind of disingenuous.

When a President speaks out forcefully on a regime's behavior, he's putting a little of his credibility on the line. He's risking some authority in a gamble, basically."

Read the whle thing!!!

What is the Average True Range?

What is the Average True Range?

The Average True Range Is An Awesome Measure Of Volatility And Market Noise But What Makes It So Fantasic For Setting Stops?

Provided By Trading Secrets Revealed

You may have read that many traders use the average true range for setting their stop losses. The reason is that the average true range is a fantastic measure of volatility and market noise.

Very simply, the average true range (ATR) determines a security’s volatility over a given period. That is, the tendency of a security to move, in either direction.

More specifically, the average true range is the (moving) average of the true range for a given period. The true range is the greatest of the following:

The difference between the current high and the current low

The difference between the current high and the previous close

The difference between the current low and the previous close

The average true range is then calculated by taking an average of the true ranges over a set number of previous periods. Care should be taken to use sufficient periods in the averaging process in order to obtain a suitable sample size, i.e. an average true range using only 3 periods would not provide a large enough sample to give you an accurate indication of the true range of the security’s price movement. A more useful period to use for the average true range would be 14.

The value returned by the average true range is simply an indication as to how much a stock has moved either up or down on average over the defined period. High values indicate that prices are changing a large amount during the day. Low values indicate that prices are staying relatively constant. Note that both trending and level prices can have high or low volatility.

So, how can we use the average true range in calculating our stop loss? All you do is you subtract a multiple of the average true range from the entry price. I might take two times the average true range and subtract it from my entry price. For example, if we had a one dollar stock and its average true range value was five cents, I would simply take a multiple of the average true range, which I said we’ll use two in this example, and we’d subtract it from our entry price. So, two times our average true range is ten cents, subtracted from our entry price gives us a stop loss value of 90 cents.

Now, by adhering to this pre-defined point at which I sell, I know that if the share price doesn’t move in my favored direction, and actually moves against me, I already know the point at which I’m going to sell. My emotions are removed from the equation, and I just simply follow what my stop loss says. This is how most successful traders limit their losses. They know when they’re going to sell and they have this pre-defined before they even begin trading. Although their methods of calculating the average true range and the stop loss may be different the one common element here is that they have a stop loss in place.

Here’s a little extra finesse point that you might look at including in your trading plan. I sometimes introduce a time stop depending on the type of system I’m trading. This type of stop simply takes you out of a position after a fixed amount of time if I haven’t made enough profit.

To successfully implement this type of stop, you’re going to have to work out the average true range and do some sort of back testing, to find out if it’s appropriate for the particular instrument you’re trading. I just thought I’d throw that in there to make sure you have all your bases covered.

When you first begin calculating your average true range and outlining your stop losses, just keep in mind what Tom Baldwin, the successful trader said. He said the best traders have no ego. You have to swallow your pride and get out of your losses. He’s simply referring to having a stop loss set, and more importantly, having the discipline to stick to it.

Obama and Biden: Inspector Gate Exposed � Count Us Out

Obama and Biden: Inspector Gate Exposed � Count Us Out

ICECAP

ICECAP

Global warming NOT!

World Climate Report

World Climate Report

Global warming NOT!

Still Waiting For Greenhouse

Still Waiting For Greenhouse

Global warming NOT!

The Oil Drum: Europe | Could $30/bbl Oil Happen Before New Year’s Eve?

The Oil Drum: Europe | Could $30/bbl Oil Happen Before New Year’s Eve?

R-Squared Energy Blog: How Much Natural Gas to Replace Gasoline?

R-Squared Energy Blog: How Much Natural Gas to Replace Gasoline?

Friday, June 19, 2009

How Much Natural Gas to Replace Gasoline?

I Took This Picture of a CNG Bus on a Recent Trip to D.C.

You may have seen the news this week that a report by the Potential Gas Committee says natural gas reserves in 2008 rose to 2,074 trillion cubic feet. The New York Times and the Wall Street Journal (via Rigzone) both had stories on it, and T. Boone Pickens issued a press release. First, from the New York Times (and this is a really good article):

Estimate Places Natural Gas Reserves 35% Higher

Thanks to new drilling technologies that are unlocking substantial amounts of natural gas from shale rocks, the nation’s estimated gas reserves have surged by 35 percent, according to a study due for release on Thursday.

Estimated natural gas reserves rose to 2,074 trillion cubic feet in 2008, from 1,532 trillion cubic feet in 2006, when the last report was issued. This includes the proven reserves compiled by the Energy Department of 237 trillion cubic feet, as well as the sum of the nation’s probable, possible and speculative reserves.

The new estimates show “an exceptionally strong and optimistic gas supply picture for the nation,” according to a summary of the report, which is issued every two years by a group of academics and industry experts that is supported by the Colorado School of Mines.

The Wall Street Journal wrote:

US Has Almost 100-Year Supply of Natural Gas

The amount of natural gas available for production in the United States has soared 58% in the past four years, driven by a drilling boom and the discovery of huge new gas fields in Texas, Louisiana and Pennsylvania, a new study says.

...the Potential Gas Committee's study was prepared by industry geologists who analyzed individual gas fields using seismic imagery and production data provided by gas producers. The surge in gas resources is the result of a five-year-long drilling boom spurred by high natural-gas prices, easy credit and new technologies that allowed companies to produce gas from a dense kind of rock known as shale. The first big shale formation to be discovered, the Barnett Shale near Fort Worth, Texas, is now the country's top-producing gas field, and companies have made other huge discoveries in Arkansas, Louisiana and Pennsylvania. Together, the shale fields account for roughly a third of U.S. gas resources, according to the Potential Gas Committee.

Pickens had this to say:

T. Boone Pickens Statement on Surge in Estimated Natural Gas Reserves

Today’s report substantiates what I’ve been saying for years: there’s plenty of natural gas in the U.S. I launched the Pickens Plan a year ago to help reduce our dangerous dependence on foreign oil, and using our abundant supply of natural gas as a transition fuel for fleet vehicles and heavy-duty trucks is a key element of that plan. On the same day this report is going out, diesel prices are again on the rise, squeezing the trucking industry. Now more than ever we need to take action to enact energy reform that will immediately reduce oil imports.

The 2,074 trillion cubic feet of domestic natural gas reserves cited in the study is the equivalent of nearly 350 billion barrels of oil, about the same as Saudi Arabia’s oil reserves.

A number of people have rightly pointed out that a 100-year implies usage at current rates. But it got me to thinking about how much natural gas it would take to displace all U.S. gasoline consumption. So in the spirit of my previous essay Replacing Gasoline with Solar Power, I will do the same calculation for replacing gasoline with natural gas. The big difference between this calculation and the earlier one is that solar power still has some technical issues to resolve (e.g., storage) and electric vehicles are not yet ready for prime time. On the other hand we are perfectly capable, today, of displacing large numbers of gasoline-fueled vehicles with natural gas.

How Much Do We Need?

The U.S. currently consumes 390 million gallons of gasoline per day. (Source: EIA). A gallon of gasoline contains about 115,000 BTUs. (Source: EPA). The energy content of this much gasoline is equivalent to 45 trillion BTUs per day. The energy content of natural gas is about 1,000 BTUs per standard cubic foot (scf). Therefore, to replace all gasoline consumption would require 45 billion scf per day, or 16.4 trillion scf per year. Current U.S. natural gas consumption is 23 trillion scf per year (Source: EIA). Therefore, replacing all gasoline consumption with natural gas would require a total usage of 39.4 trillion scf per year, an increase in natural gas consumption of 71% over present usage.

Assuming for the sake of argument that the 2,074 trillion standard cubic feet cited in the study is accurate, that the "probable, possible and speculative reserves" eventually equate to actual reserves, and that the gas is economically recoverable, that is enough gas for 53 years of combined current natural gas consumption and gasoline consumption. If you assume that only the proven plus probable reserves are eventually recovered, the amount drops to about 1/3rd of the 2,074 trillion scf estimate, still enough to satisfy current natural gas consumption and replace all gasoline consumption for almost 20 years.

We can also calculate in terms of oil imports. Right now the U.S. imports about 13 million barrels per day of all petroleum products. A barrel of oil contains around 5.8 million BTUs, but oil only makes up 10 million of the 13 million barrel per day figure. Other imports include things like gasoline (4.8 million BTUs/bbl) and ethanol (3.2 million BTUs/bbl). Scanning the list of imports, I probably won't be too far off the mark to presume that the average BTU value of those 13 million bpd of imports is about 5.4 million BTUs/bbl. On an annual basis, this amounts to 25.6 trillion scf, an increase over current natural gas usage of 111%. Going back to the 2,074 trillion scf from the study, this would be enough to displace imports of all petroleum products (again, at current usage rates and not factoring in declining U.S. oil production) for 43 years.

What's the Cost?

Natural gas is presently trading at about $4 per million (MM) BTU (although December 2009 is trading at almost $6). Oil is presently trading at $71/bbl, which equates to $12.24/MMBTU. Gasoline is presently trading at over $17/MMBTU. Thus, natural gas is a bargain relative to oil or gasoline. Incidentally, I just checked on seasoned wood and wood pellets, and they range from $8-$12/MMBTUs. So it is cheaper to heat your house with gas than with wood. I am not sure I would have guessed that.

While natural gas is a bargain relative to gasoline, converting a gasoline-powered vehicle to natural gas isn't cheap. According to this source, it can cost $12,500 to $22,500 to convert a gasoline-powered car to natural gas. Honda makes a compressed natural gas (CNG) vehicle, but according to this review in Car and Driver the premium over the gasoline version is $8780. A person would need to drive an awful lot to justify that premium. However, that's what fleets do. They drive a lot. The large price differential explains why fleets would be interested in running their vehicles on natural gas.

Conclusions

So, the good news is that the United States could be energy independent if the newly released natural gas reserve numbers are remotely accurate. It also appears that we have enough natural gas available that civilization isn't going to end any time soon due to lack of energy supplies. There are three caveats. First, energy independence via natural gas would require us to spend significantly more for personal automotive transportation. Second, "possible" reserves may never materialize. Finally, a large chunk of the calculated reserves are based on shale gas, and that requires gas to be in the $6-$8/million BTU range to be economical. Still, it is a bargain compared to gasoline, and it explains why fleets are more receptive to conversion to natural gas than the general public is likely to be for their personal vehicles.