POP v3  

Posted by Big Gav

More than six months have passed since I last updated the peak oil portfolio, so I figure its time to have a look and see how its been going.

The same disclaimers as last time applies - this isn't investment advice, I'm not a financial adviser and never ever invest based on the rantings of strangers on the internet, particularly pseudonymous ones !

Bearing in mind that over this period, the oil price has dropped from around US$66 to US$63 (negative for this portfolio), while the A$ has risen from 71 cents to 79 cents (negative) and the ASX has risen from 5100 to 5410 (positive), here's how things are looking:

Oil Search (OSH)2520$3.33$8,391
Woodside (WPL)280$37.50$10,500
BHP (BHP)445$26.00$11,570
Alinta (AAN)865$10.46$9,050
Origin (ORG)1355$7.59$10,284
Worley Parsons (WOR)965$19.14$18,470
Centennial Coal (CEY)1980$2.83$5,603
ROC Oil (ROC)3570$3.16$11,280
GRD (GRD)1755$1.99$3,490
TAP Oil (TAP)1690$1.50$2,535
Paladin (PDN)2200$7.04$15,490
Solco (SOO)16,665$0.15$2,500
Aust Renewable Fuels (ARW)3185$0.61$1,940
Karoon (KAR)2560$1.88$4,810
Compass Resources (CMR)3155$5.10$16,090
Downer EDI (DOW)820$7.03$5,760
since last-0.2%
since start+12.7%

By way of comparison:
WTI$66 (approx)$63-4.50%
WTI (adjusted to A$)$93 (approx)$80-14.00%
ASX 200510054106.10%

On the whole the portfolio has been a bit soggy but a couple of star performers (small uranium miners) have kept things solid in spite of the headwinds that energy prices have encountered. It has lagged the index considerably though, so you would have been better off getting an index fund than tracking this one.

Note that this isn't an ethical portfolio (quite the opposite in many cases) nor is it a clean energy one - the ASX just doesn't have much in the way of clean tech companies and I'm too lazy to try and construct good US and European based portfolios where I could come up with a set of stocks I would be proud to own.

One of the real dogs in the portfolio has been Centennial Coal who have been in the news a lot lately. While I can't do much about their past dismal performance, I'd still like to make some positive suggestions about how they run the business in future, given that I seem to have a few readers there (hi guys - just because coal is the enemy of all life on earth doesn't mean I dislike you personally - I know you have to make a living just like the rest of us).

Given that coal fired power stations are doing more to destroy the planet than anything else, I'd suggest that the way for the coal industry to try and remain relevant in a low carbon world is to stop simply trying to delay change by coming up with silly propaganda points like "if we don't export the stuff to China, someone else will", as some duplicitous harpy from the coal lobby was doing on TV on the weekend, and to instead come up with some strategies that are aligned with what the rest of us need.

Simply pushing the government to handover some taxpayers dollars for research into "clean coal" doesn't really cut it either - we all know that in the absence of a price signal that makes "clean coal" more expensive than "dirty coal", no will invest in actual clean coal plants.

So here's my suggestion - the coal industry pushes for a worldwide protocol to cap coal exports for "dirty coal" plants at current levels and reduces the cap by some reasonable percentage (say 5%) each year. Exports to be burnt in "clean coal" plants can continue unmolested. The protocol would be enforced by the IAEA, just like uranium exports.

They could also push the government to put a similar scheme in place inside the country, and lobby for the same rules to be incorporated into the international protocol.

Coal will still lose overall market share to solar, wind and other renewables over time, but the coal industry won't simply disappear as it would otherwise deserve to.

Another growth area is coal seam methane of course (the old "we're an energy company, not a xxx-dirty-fossil-fuel company" strategy). But I'd strongly recommend against the CTL route.

Moving on, I'm sure there is plenty of other news out there, but I've been busy trying to get the right paint to match my wall colour and generally swearing a lot at paint companies, so I haven't had to time to scan whats happening. As usual - the links in the sidebar contain more news than any person can read in a single day.

As I seem to have a few new and unusual readers in the past few days, I might just repost this section explaining what this blog is about:

1. Peak oil is real and a serious problem (although probably not in itself as serious as some of the doomer schools of thought would have us believe)

2. Global warming is real and a serious problem

3. Oil dependence (and the desire to use it to control others) is leading us to do a lot of very unpleasant things (and thus the references to Iraq, terrorism, resource wars and the propaganda and surveillence industries)

4. There are lots of solutions for dealing with all 3 of these problems - however there is a lot of inertia and political resistance hindering the adoption of these (and some solutions to peak oil are anti-solutions to global warming, so dealing with both requires some intelligent policy and investment decisions to be made - which is challenging given the present (sad) state of our collective leadership)


I think 'clean coal' needs to be put in perspective. I believe the world has 4 combined cycle coal gasification plants without CO2 capture and there may be 5-10 'clean coal' working experiments underway. The biggie FutureGen doesn't even know where it will be located yet. Working carbon capture projects like Weyburn are not representative of the archetypal older coalfired power station. Therefore in practice 'clean coal' has no runs on the board as yet. That's why the coal industry probably choked on its cornflakes at the idea of 5% annual cuts. They're thinking 5% annual growth minimum with clean coal a distant novelty.

My watcher at Centennial checked in at 8:50 this morning - I would have liked to have seen his/her face when they read the post :-)

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