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14 November 2015

Press review 14-11-2015 - Peak Coal, says Greenpeace

Foreword: This review was written before the terror attacks yesterday night in Paris. This is incredibly sad; my thoughts are with the families that lost their loved ones. For long I have been reporting in this review that in these past few years Europe has been supporting the wrong side in various conflicts. There is no way to know if these attacks had taken place whether Libya and Syria were not at war. However, this is definitely the moment to rethink the foreign policy towards these neighbouring countries and jihadist organisations in general.

Coal was the big story this week. Within days of the graphs by Jean Laherrère on Coal extraction being published, the Greenpeace came out with a study confirming the terminal decline in the Middle Empire. But the environmentalist organisation goes further, claiming the rest of the world will not be able to make up for this decline. With this report the Greenpeace clearly distances itself from the IPCC and the IEA; this dose of realism is most refreshing.

However, the Coal news making the rounds is an article by the New York Times claiming the Chinese have under-reported their extraction and consumption figures by as much as 17%. Coincidentally, I am subscribed to an e-mail list where David Fridley explained how this American newspaper is simply comparing different figures reported by the Chinese institutions. But it is always interesting to know on which side the press is.

And the other big news of the week was a 10% decline in petroleum prices; the Brent index now stands at 44 $/b, the lowest level since 2009.

Coal's terminal decline

This year is on course to see the largest fall in coal consumption in history, a Greenpeace study has shown. There has been a drop of at least 2.3% and possibly as much as 4.6% in January September 2015, compared to the same period a year ago.

It follows the levelling off of global coal use in 2014, and creates a nightmare scenario for the coal industry.

[...] In China, which has been responsible for half of global demand, coal consumption levelled off in 2014 and has been falling rapidly in 2015, driven by economic rebalancing, a war on pollution and an astonishing growth in renewable energy.
Little attention has been given by the mainstream media to Greenpeace's study, and in many cases it questioned its conclusions with the foul accounting by the New York Times. But sometimes there is the odd exception.
Global Coal Consumption Heads for Biggest Decline in History
Ewa Krukowska, 09-11-2015

Coal consumption is poised for its biggest decline in history, driven by China’s battle against pollution, economic reforms and its efforts to promote renewable energy.

Global use of the most polluting fuel fell 2.3 percent to 4.6 percent in the first nine months of 2015 from the same period last year, according to a report released Monday by the environmental group Greenpeace. That’s a decline of as much as 180 million tons of standard coal, 40 million tons more than Japan used in the same period.

“The coal industry likes to point to China adding a new coal-fired power plant every week as evidence that coal demand will pick up in the future, but the reality on the ground is rather different,” according to the report. “Capacity utilization of the plants has been plummeting. China is now adding one idle coal-fired power plant per week.”
In the petroleum market there is now a wide anticipation of a relevant decline in extraction, starting this year and deepening in 2016. Petroleum has been under priced for too long and the consequences are massive. Saudi officials warn against those that see this market lasting in the long term.
Financial Times
Saudi official: Oil bears will turn out to be wrong

In a speech at an energy conference in Doha, Prince Abdulaziz warned spending cuts across the industry - as prices collapsed from a June 2014 high of $115 a barrel to below $50 - will have a "substantial and long-lasting" impact on future oil supplies and could lead to a price spike.

"Non-OPEC supply is expected to fall in 2016, only one year after the deep cuts in investment. Beyond 2016, the fall in non-OPEC supply is likely to accelerate, as the cancellation and postponement of projects will start feeding into future supplies, and the impact of previous record investments on oil output starts to fade away," Prince Abdulaziz said in the speech, quoted by Reuters.
And speaking of Saudi Arabia, there have been multiple articles in the mainstream and alternative press painting a dire situation of the kingdom's finances. The announcement of a sovereign bond issuance programme seems to confirm this view. However, the kingdom's foreign reserves still amount to some 90% of its yearly GDP.
Financial Times
Saudi Arabia to tap global bond markets as oil fall hits finances
Simeon Kerr, 09-11-2015

Saudi Arabia has decided to tap international bond markets for the first time, in a sign of the damage lower oil prices are inflicting on its public finances.

Saudi officials say the kingdom could increase debt levels to as much as 50 per cent of gross domestic product within five years, up from a forecasted 6.7 per cent this year and 17.3 per cent in 2016.

[...] The decision to tap bond markets underscores the impact on the kingdom’s revenues from the plunge in the oil price, from $115 a barrel last year to $50 now, as well as Riyadh’s expensive military intervention in Yemen. br>
Over the past year, Saudi Arabia has seen its foreign reserves decline from last year’s high of $737bn to a three-year low of $647bn in September.
Over at the US the decline in petroleum extraction is now more evident. The industry still endures though, as the banking sectors keeps chipping in for the read numbers in accounting reports.
U.S. shale oil basins to decline
Daniel J. Graeber, 10-11-2015

The U.S. Energy Information Administration in a monthly report on drilling productivity found most of the seven inland shale basins that account for nearly all of the domestic oil production growth between 2011-14 are now in decline.

Energy companies are spending less on exploration and production because lower crude oil prices translate to less capital available for investments. The trend in spending is reflected in the decline in the number of rigs deployed across North America.

[...] EIA in its drilling productivity report found only the Permian shale basin that straddles the border of Texas and New Mexico and the Utica shale in the U.S. Midwest are expected to report increased in production from November.
The following article clearly shows how far is Iran in its path back to international markets and regular foreign policy relations. This is another aspect pressuring petroleum prices downwards.
The Washington Free Beacon
U.S. to Help Iran Rebuild Nuclear Reactor
Adam Kredo, 10-11-2015

The United States and other global powers are helping Iran to update and reconstruct a nuclear reactor that has been suspected of helping the Islamic Republic produce enough material for a potential nuclear weapon, according to regional reports and statements from the State Department.

The United States’ goal is to work with Iran to refit the reactor in such a way that it can no longer produce weapons grade material.

However, Iran maintains that the United States and other partner nations will soon provide “advanced equipment” for the reactor, which is located near the Iranian industrial city of Arak.

A spokesman for the Atomic Energy Organization of Iran, the Islamic Republic’s main nuclear regulator, said on Tuesday that the United States and several other nations would begin supplying Iran equipment so that it can modernize the nuclear reactor.
In Syria, the anti-Daesh coalition continues to make progress. This is the most sustained retreat the self proclaimed caliphate has endured.
The Telegraph
Russia and Iran-backed offensive helps regime break Isil's two-year siege on Syrian airbase
Louisa Loveluck, 10-11-2015

Syria’s army has broken Isil's two-year siege on an airbase in eastern Aleppo, marking the first major success for a military campaign backed by Russia and Iran.

State television said on Tuesday that regime troops had reached the Kweiris airbase and were in the process of securing it.

Almost a thousand soldiers had been trapped on the base, surviving through air drops of food and munitions.
Now on to more political news. Finland has been struggling since the country's technology giant Nokia was sold to Microsoft. The American company was hasty in dismantling Nokia and Finland never really recovered. As is now fashionable in Europe, the medicine for any economic difficulty is austerity, but it works as well in Scandinavia as in the Mediterranean or in Portugal.
'Sick man of Europe' Finland agonises over austerity
Jussi Rosendahl and Anna Ercanbrack, 11-11-2015

Finland was one of the toughest European critics of Greece during its debt crisis, chastising it for failing to push through reforms to revive its economy.

Now the Nordic nation is struggling to overhaul its own finances as it seeks to claw its way out of a three-year-old recession that has prompted its finance minister to label the country the "sick man of Europe".

Efforts by new Prime Minister Juha Sipila to cut holidays and wages have been met with huge strikes and protests, while a big healthcare reform exposed ideological divisions in his coalition government that pushed it to the brink of collapse last week.
Some months ago I publisheda note explaining why the famous Powerwall household battery produced by Tesla is in most cases a bad trade. In general, the mainstream media keeps promoting this company, that excels at marketing practices. Those that dare to take a closer look at the numbers note that something broader is amiss with this darling of the press.
Financial Times
Tesla Motors: dream still intact

[...] This is understandably maddening to the shorts — of which there are many — and presumably to the Detroit carmakers. General Motors’ enterprise value is less than three times as big as Tesla’s heady $33bn. Yet GM revenues for the last 12 months are 38 times higher and its net income is $5.4bn, compared with a $675m loss at its electric rival. On Tuesday, Tesla missed earnings estimates. Still the beguiling Mr Musk can paint pictures that keep investors patient.

However, there are now two yardsticks that could cause a loss of confidence in the next two quarters. The company needs to ramp up deliveries of its long-awaited Model X vehicle and hit that 50,000 target. Although the market is not heeding it, Mr Musk was already offering excuses: the weather could be bad, car buyers might be away from home at Christmas.

Then there is the cash. Tesla wisely shored up its balance sheet by selling $739m of shares in August. It needed to. The cash burn reached record levels this quarter at almost $600m. Mr Musk now says he “aspires” to be free cash flow positive in the first quarter, ending next March. In February, he had said it would happen late in the third quarter. Satisfaction deferred is the story of Tesla. There still needs to be satisfaction, though, or at least the first glow of it. Fail on shipments and fail on cash flow and patience should run out.
The review includes an unusually high number of technology related news. The amazing story reported below affected me directly, since I am a ProtonMail user. The past year or so I have been testing the Swiss e-mail provider as a replacement for GMail. The survival to this massive attack is evidence the infant company is on the right track. And I wonder why would criminals go at such lengths (bringing down infrastructure as far as Russia) to attack a company that does not really make money at the moment.
Message Regarding the ProtonMail DDoS Attacks

[...] Slightly before midnight on November 3rd, 2015, we received a blackmail email from a group of criminals who have been responsible for a string of DDOS attacks which have happened across Switzerland in the past few weeks.

This threat was followed by a DDOS attack which took us offline for approximately 15 minutes. We did not receive the next attack until approximately 11AM the next morning. At this point, our datacenter and their upstream provider began to take steps to mitigate the attack. However, within the span of a few hours, the attacks began to take on an unprecedented level of sophistication.

At around 2PM, the attackers began directly attacking the infrastructure of our upstream providers and the datacenter itself. The coordinated assault on our ISP exceeded 100Gbps and attacked not only the datacenter, but also routers in Zurich, Frankfurt, and other locations where our ISP has nodes. This coordinated assault on key infrastructure eventually managed to bring down both the datacenter and the ISP, which impacted hundreds of other companies, not just ProtonMail.
And there is good reason to abandon Amarican companies. It is beyond me why folk still use Windows after news like this, especially when free and open source alternatives abound.
Microsoft Says Windows 10 Automatic Spying Cannot Be Stopped
Vijay Prabhu, 03-11-2015

Microsoft seems to be getting more and more emboldened with its spying ways. A few weeks earlier it was making Windows 7 users download the Windows 10 upgrade due to a ‘mistake.’ A few days back it said that from next year the Windows 10 will be made a ‘recommended update’ instead of a optional update making Windows 7 and Windows 8/8.1 users download the Windows 10 files even if they are unwilling to update.

Now comes the real shocker. Windows 10’s automatic spying on you cant be stopped. Yes you read it right!. Even Microsoft cant stop Windows 10 from automatically spying on you.

Speaking to PC World, Microsoft Corporate Vice President Joe Belfiore explained that Windows 10 is constantly tracking how it operates and how you are using it and sending that information back to Microsoft by default. More importantly he also confirmed that, despite offering some options to turn elements of tracking off, core data collection simply cannot be stopped [...]
The long read for the weekend, hat tip David Thomas.
Five hours with Edward Snowden
Lena Sundström and Lotta Härdelin, 05-11-2015

Suddenly he opens the door. DN’s Lena Sundström and Lotta Härdelin had a unique meeting with the whistleblower who has fans all over the world but risks lifetime imprisonment in the home country he once tried to save.

And that is it. Make up the best of the weekend, Winter will soon be upon us.

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