Wednesday, January 23, 2013

I'm back

After 9 months of quiet I've decided to post again.  My focus remains Canadian, but of course now I can be less cautious about my identity, since I no longer work in a big-ish bank... the reason for posting was to provide my non-canadian clients some insight into "all things Canadian"  leaving banking, thank god that's over, means that my natural audience had disappeared -- I still have some thoughts that I want to share.

Right now I've got a few bees in my bonnet:

(1) Why are CEO & senior management of large companies receiving compensation out of proportion with their value added [short answer is that they can!].

(2)  Why are companies borrowing so that they can pay large dividends [this is illegal in the UK where I received most of my training]

(3)  Why are union so inefficient in protecting "real rights"  [I'm thinking of you Air Canada]

I will address these issues in upcoming blogs, I need to make sure that I have more than just anecdotal evidence...

I will resist talking about "American stuff" mainly because every time you make a comment about the good old US of A, the comments section gets out of control -- and I don't really care about the US (aside from a purely neighbourly voyeuristic way). Obviously I would prefer that Canada be less  dependent on the US, NAFTA has increased the overall trade between the two economies, and has increased the risk of interference.  On the bright side the US should continue to treat Canada like Saudi Arabia, we can do more or less what we want as long as we continue to ship the "black gold" they need.  The whole "American energy independence" discourse sounds fake to me, especially when looking at data that shows that shale sector durability to be a lot less than meets the eye.

I remain fascinated by the North American energy sector, especially the shale oil and gas sector that seems to be perpetrating a fraud, the number of drilling continues to increase but the quantity of oil being produced is levelling off, which means that older shall gas/oil wells are not producing nearly as well as had been anticipated by the market.  Some energy commentators have even suggested that shale drilling is really unable to meet its capital costs... the implication is that there is not enough oil to justify the expenses of drilling.

This is a small thing -- and this graph relates specifically to the Bakken region see here the original blog post.  I'm no engineer, but one thing I know is that once you start injecting water or other substances in oil wells production is about to fall of the cliff face; and that's the starting argument for shale gas/oil... anyway (NB  I know that the poster of the original statement is making the argument that the average is not falling off, the problem is the growth of exploration which is logarithmic -- you cannot drawn average from log progression -- that's a mistake)

I'm back


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