Contributing Member of the Energy & Industrials Councils

All News Analyses by this Author

1. The Death of Newspapers is Highly Exaggerated

March 27, 2009

Analysis of:What if there is no more newsprint demand? | www.glgroup.com

As Mark Twain, said the news of his death was highly exaggerated! When I spent 5 years in Malaysia one of the residents in  our building was a Canadian paper mill manager, who took a contract running a local newsprint recycling operation. He explained the "urban forest", ie recyling, had cut into the need for virgin newsprint in Canada and the older and less efiicent mils had no choice but to close. Canada used to have 146 pulp and paper mills when I last did a detailed industry investment analysis. That number has been drastically reduced by the opening of new and larger mills and the closure of a good number of the older ones. The first wave of closures years ago was driven by the shift from  the polluting  sulphite to cleaner kraft pulping and bleaching and the introduction of thermo-mechanical pulping. Bowater's  future will depend on it's ability to innovate, modenize and cut costs. Closing one mill will not mean it has no future in the pulp and paper industry.

Suncor-Petro Canadfa Merger model for future OIlpatch Consolidation

March 27, 2009

Analysis of:Suncor's Petro-Canada bid may spur more deals | www.reuters.com

1. Consolidation in the energy industry will continue due to limitations on further overseas expansion limited by state oil companies 2. The very large amount of capital needed for new projects requires firms with broad-based cash flow. 3. Most Canadian reserves are secure but have high cost. The last 2 years have proven that only large players have enough staying power. Canada will a major role in the future North American energy supply.

Why Crude Oil Prices Will Go Up Again

December 12, 2008

Analysis of:Crude oil prices swing up | www.upi.com

The current slump in oil prices is due largely to the worldwide economic slowdown with resultant demand destruction. Attempts by OPEC to cut production have only been partially successful since actual and planned reductions are seldom the same. However, most oil forecasters  overlooked a key factor;  that of "supply destruction". As prices drop, many more expensive sources of oil are shut in or further developments are halted. Unlike manufacturing, where  a plant has a fixed capacity, oil and gas production needs constant development dollars to keep the production level even, and much more to increase capacity. Venezuela, China, Indonesia, Great Britain, Nigeria, Mexico, the USA and  other countries are seeing their productive capacity drop. Even OPEC agrees that an oil prce of $75 needed to keep the world's more expensive sources of oil from declining. Cheap oil will also increase per capita consumption, and  late next year  will see the next supply crunch and price rise.

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