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Own A Piece Of Facebook! TILE Two-Liners 1.3.11 >> 1.7.11

Tuesday, January 4th, 2011

MONDAY

  • The National Weather Service and the stock market go together like frigid weather forecasts and rising oil prices. That’s cold. (Reuters)
  • Big news: “It’s hard to anticipate the direction of financial markets.” (thanks for the heads-up, Wall Street Journal)

TUESDAY

  • Middle-aged white guys at Goldman Sachs value Facebook at $50 billion, scramble to get a piece of it before the company’s stock becomes publicly available. (Wall Street Journal)
  • 6,000 new jobs at dollar stores are still new jobs, aren’t they? (CNN)

WEDNESDAY

  • Microsoft-Google deathmatch: Who gets to provide email services to the U.S. Department of Fish and Wildlife? (Wall Street Journal)

THURSDAY

  • Reason 1,174 to be glad you’re a person and not a state: States lost an average of 30% of their revenue in 2009. (The Washington Post)

FRIDAY

Ban On Deepwater Drilling Lifted

Friday, October 15th, 2010

The ban is lifted, but it’s not business as usual for deepwater oil drillers...

  • President Obama halted deepwater drilling after a BP oil rig exploded and started dumping millions of gallons of oil into the Gulf of Mexico this summer. Now the ban is being lifted, but the oil industry will be forced to comply with new, stricter regulations before they’ll be issued permits to drill.
  • According to the oil industry, the main problem isn’t increased oversight or costs related to the new regulations – that they expected. Instead, they’re concerned that without knowing the new rules in advance, they won’t be able to plan for the profitable reopening of their drilling operations.
  • Environmentalists are worried that the ban is being lifted too soon, without proper study of what caused the Deepwater Horizon oil rig explosion. The new rules are okay, they say, but not nearly thorough enough.

Best Quote

“The truth is, there will always be risks associated with deep-water drilling.” – Interior Secretary Ken Salazar

Drunken Broker Single-Handedly Alters Global Oil Price

Friday, July 9th, 2010

Bet your parents never warned you about this potential side effect of drinking…

  • Last year, Steve Perkins – a broker for PVM Oil Futures – got “blackout drunk” and decided to buy 7 million barrels of crude oil with his firm’s money, driving up the global price of oil.
  • After realizing what he’d done, the 34 year old broker texted his managing director saying that he wouldn’t be coming into work the next day due to an ill family member.
  • As PVM challenged his story, Perkins confessed to spending the firm’s money.
  • Perkins seems to have had no motive for buying the oil, and he claims that he has a blurry memory of the entire night.

Facts and Figures

  • Perkins spent $520 million of PVM’s money, but his job title only allows him to place trades on behalf of his clients.
  • He bought 7 million barrels of crude oil at 2am.
  • Perkins’s purchase raised the global oil price up more than $1.50 a barrel to an 8-month high.
  • Mr. Perkins has been fired, banned from trading for 5 years, and fined £72,000 (about $110,000).

Best Quote

“Mr. Perkins poses an extreme risk to the market when drunk.” – Financial Services Authority

Obama Attempts To Repair An Environmental Disaster

Tuesday, June 22nd, 2010

President Obama reacts with strict environmental regulations in response to the BP oil disaster.

  • On Tuesday night, the president addressed the United States regarding his plans to repair, repay, and prevent damage caused by the BP oil spill in the Gulf of Mexico.
  • Obama is proposing a multi-billion dollar compensation plan for Gulf residents that BP seems unlikely to agree to.
  • In order to prevent more harm to the environment, Obama says he will develop new energy sources, expand nuclear power, and is considering a tax on carbon to reduce pollution.

Best Quote

“Make no mistake, we will fight this spill with everything we’ve got for as long it takes. We will make BP pay for the damage their company has caused. And we will do whatever’s necessary to help the Gulf Coast and its people recover from this tragedy.” – President Barack Obama

An Oil Company Actually Benefits From The Oil Spill

Wednesday, June 16th, 2010
While most oil companies are suffering in the wake of the big spill, investors are becoming more confident in Brazil’s Petrobras because it doesn’t operate in the Gulf of Mexico.
  • As BP shares continue to fall, shares of Brazilian oil company Petrobras have remained stable for weeks.
  • Petrobras plans to make more stock available for sale later this summer, indicating that it’s doing well despite other oil companies suffering from the oil spill.
  • While the oil spill is hurting stocks associated with the Gulf, investors are confident that oil companies elsewhere (like Petrobras) could actually benefit.

Facts and Figures

  • Petrobras plans to offer $25 billion in equity this summer
  • If they do sell all of their offered stock, it would be the second largest equity offering ever
  • Petrobras operates worldwide – from Turkey to New Zealand to, of course, Brazil

Best Quote

“Petrobras does not have the headline risk that BP does right now. Investors are unlikely to move away completely from the oil sector but substitute from one company to another.” – Gerry Sparrow, Chief Investment Officer, Sparrow Capital

Oil Disaster Ignites Innovation, Ingenuity, Entrepreneurial Spirit

Wednesday, June 16th, 2010
Over 20,000 people responded to BP’s call for suggestions, proving that creativity prevails amid relentless Gulf damage.
  • Countless environmental entrepreneurs are stepping up to offer solutions to the Deepwater Horizon crisis in the Gulf of Mexico.
  • C.I. Agent Solutions, a Kentucky-based company that makes oil-blocking polymer, has created a technology that stops the oil by changing it from liquid to solid. When the polymer and oil meet, the oil becomes a non-toxic rubber-like material, making it easy to pick up.
  • A Florida-based company, C.W. Roberts Contracting,, takes a more basic approach, using hay as an absorbent.
  • While the oil industry has invested billions of dollars in finding new oil, hardly any new research or improvements have been been made or funded in the realm of regulation and cleanup.

Facts & Figures

  • A YouTube demonstration of the oil-absorbing hay has gotten over 1.5 million hits.

Best Quote

“Traditional cleanup companies sell time and material. Our method takes less time and uses less material so they don’t like it.”  - Dan Parker, President Of C.I. Agent Solutions

BP’s Forecast: Cloudy At Best

Tuesday, June 8th, 2010

Bankers, lawyers, and Wall Street are all anticipating the oil superpower’s next move. The consensus? Bankruptcy.

  • Between the rapidly declining value of BP shares, the cleanup costs, and the anticipated lawsuits from gulf fisherman and tourism companies, it seems likely that BP is being primed for a takeover.
  • Who’s interested? Both Shell and Exxon have the means to buy BP, and bankers believe now is the time to strike. Only problem is how to separate the deal from all the legal exposure.
  • BP’s chief executive, Tony Hayward, insists that BP will foot the whole bill.
  • According to the Oil Pollution Act of 1990, BP’s financial responsibility for the cleanup is capped at $75 million. But if it’s determined that safety regulations were violated (which is very likely), the cap is no longer relevant.

Facts & Figures

  • BP has lost more than a third of its value since the Deepwater Horizon catastrophe.
  • BP generated nearly $17 billion of profit last year.
  • One estimate of the BP cleanup bill is more than $40 billion.
  • If a court rules against the company, the cost of the spill could skyrocket into the hundreds of billions, almost guaranteeing the end of  BP.

Best Quote

“The strength of cash-flow generation in recent quarters has provided us with a balance sheet that allows us to fully take on the responsibility for the Gulf of Mexico response.” – Tony Hayward, Chief Executive of BP

When you’re pumping gas, what are you really paying for?

Friday, October 23rd, 2009

To understand what you pay for at the pump, first you should know where gas comes from. Gasoline is made from crude oil – the black oil that shoots up from the ground. Somebody’s got to collect it all and then refine it into a usable form. From there, it’s shipped all over the world to companies who market and distribute it to stations across their respective countries (think Shell, Texico, Chevron, etc.). Lastly, your local, state, and federal governments add taxes onto the cost of each gallon. From there, gas stations are happy to accept your money in cash, debit, or credit.

While your money goes directly to the gas station, it is really paying for all of these production stages. In total, you pay for the discovery, extraction, and shipment of crude oil; the refinement of oil into gasoline; the shipping, distribution, and marketing of gas by oil companies; the costs of running a gas station; and the taxes levied by the government. Simply put, you’re paying for it all!

Is There Any Logic Behind The Price Of Petroleum?

Tuesday, August 18th, 2009

Why does it seem like the pundits are unable to guess what’s going to happen to the price of oil?

  • Since last summer, oil prices have gone from record highs to extreme lows and then doubled again, in swings that don’t seem to be related to market fundamentals – supply and demand.
  • The apparent disconnect between market fundamentals and oil price has reignited the debate about the role of speculators in commodity markets, as governments and investors fear a return to record oil prices in the current economic climate.
  • In contrast to last year, the recent upswing in oil prices is happening in a recession and, therefore, not sustained by high demand. This will almost certainly result in even greater losses for the already struggling automobile and airline industries.

Facts & Figures

  • Compared to last summer’s high of $145 a barrel, oil has increased from only $33 to $70 a barrel in just the past 7 months.
  • Petroleum-based fuel accounts for 1/3 Southwest Airlines’ operating costs.
  • The airline industry is projected to lose $9 billion this year, after losing $10.4 billion last year.

Best Quote

“To call this extreme volatility might be an understatement. Over the past 15 to 18 months, this has been unprecedented. I don’t think it can be easily rationalized.” – Laura Wright, Chief Financial Officer at Southwest Airlines

Gas Is Going To Cost You No Matter What The Rest Of The Economy Is Doing

Saturday, April 25th, 2009

This story explores how, thanks to a small group of powerful individuals, oil prices will remain high despite changes in demand.

  • Though oil prices initially dropped when the global economy began to falter, they have recovered and stayed more or less stable – even as demand for oil continues to drop.
  • This doesn’t really make sense economically – according to the law of supply and demand, prices should be plummeting as unemployment around the world grows and oil consumption slows.
  • But as other markets remain volatile, investors are seeking the relative safety of oil. Oil production is tightly controlled by OPEC, which can keep prices stable by limiting supply when demand decreases, and vice versa.

Facts & Figures

  • In July of 2008, the price of oil rose as high as $140 per barrel. By December, the price had dropped to $33 a barrel. Today, the price fluctuates somewhere between $40 and $50 a barrel.
  • Demand for oil is expected to drop 2.8% this year – to 83.4 million barrels per day.
  • Oil inventories are at their highest level since 1990, but members of OPEC have cut production of new oil by approximately 3.5 million barrels a day.

Best Quote

“This is a measure of just how abruptly the world economy has fallen in recent months, and how dire and uncertain its future prospects have become.  De-globalization may already have begun.” – from a report published this month by PFC Energy, a consulting firm

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