Market briefing --- Mike (fast)
Interview with long-time oilman
>> welcome back. all three major averages down on the day. the dow jones industrials you can see there finishing lower by 108 points. the s&p 500 down by 11. the nasdaq, 38 points lower. the dow at its lowest close of the year. checking u.s. treasuries, they were higher on the day. the 10-year treasury note finishing up by about 1/8. yield falling two basis points to 3.97%. the five-year note is up by 1/8 as well. and on the shorter end of the curve, the two-year note is up 1/32. its yield, 2.532% on the day. what do record oil prices mean for other energy sources, such as coal? brian sullivan asks in the second part of his interview with long-time oilman boone picken.
>> if it goes $75 you’re going to have a lot of ideas on how to introduce other energy.
>> do you see a max for the prees of oil?
>> no, i don’t. i think you could―you could spike to anything. but where you went from there down, i’ve given you a bottom that i think you got. and i said $60 before $40. so i’ve given you a range there. where can you go above $60? i think you can spike to anywhere, and i don’t know where --
>> it would be a spike, a short-term imbalance or fluctuation?
>> ok. short-term imbalance or fluctuation, all right. but the part that i’m not comfortable trying to predict what price it will take to kill the demand, but i believe the only way―i mean, you already know what the supply part of the equation is. i think it’s $82 -- 82 million barrels. that’s 24 billion barrels a year. and when you start trying to replace 24 billion barrels a year and you haven’t had two fields that were a billion barrels each in the last three or four years, that’s hard to do. i mean, it’s hard to do. so i’m comfortable with the decline. the year going into a period of declining production. and within―by the end of the century, you will be in―long into another fuel.
>> you are hedging your bets. i know that you are involved in natural gas, you’ve been getting more heavily invested in your commodity fund into things like coal as well. the oil fans of canada. oil sands of canada, extracting oil from literally the very northern plains of canada. i’ve chatted with some of the c.e.o.’s of companies, but there’s also the cost of natural gas because they’ve got to use natural gas to extract that oil. natural gas is expensive. is it profitable if your mind? is that a venture you would get involved with, betting that the oil sands of canada will become profitable and win a win for energy investors?
>> in our equity hedge fund, the biggest investment, single investment we have is suncorp.
>> which is a little bit of a different story. they also produce natural gas. don’t have to buy as much on the stock market . you believe their margins are a little bit better than the other oil sands company.
>> well, i believe what’s going to happen with sun corps, they’ve developed a lot of petroleum coke in their processing. that goes to a light sweet crude on the upgrader. so all that’s coming out there now is light sweet crude. premium. and i think that petroleum coik coke they have up there, that’s going to further reduce their costs. but that’s highly profitable. and remember, you know, that -- you’re looking at about the same reserves that you are in saudia arabia.
>> boone pickens, chief executive of b.p. capital speaking with brian sullivan. pickens says his hedge fund has invested in arch coal, peabody and fording. companies such as duke energy and sunoco are backing republicans in three close senate races in hopes of ending a deadlock on president bush’s energy plan. energy company’s political action committees have funneled almost $300,000 to the republican senate candidates in florida, north carolina, and south carolina. the democrats in the three races are gotten less than $10,000 from the energy company p.a.c. in fact, $37 million has been spent by energy company p.a.c.’s on federal races so far this year with 75% of the funds going to republicans, according to a group that tracks political contributions. the president’s proposals include tax breaks for energy producers and allows oil drilling in alaska’s arctic national wild life refuge. our latest weekly survey shows sentiment that oil prices may rise next week. up to 57 traders and analysts we surveyed, 37 expect futures to continue to rise. if so, it would be the seventh straight week they have done so. oil prices finishing above $55 for the first time today. 55.17 for your close on the december future after reaching 55.50. citigroup says the securities and exchange committee may take enforcement action against thomas jones. he’s the former head of citigroup’s investment management business according to an s.e.c. filing, the investigation relates to the operation of an internal transfer agent, serving the company’s smith barney mutual funds group. jones has been note fid, along with an unidentified employee and another former employee. already this week, the group announced the departure of three executives related to a banking scandal in japan. lazard’s biggest shareholder is backing against the c.e.o.
