More volatility ahead for the oil price

Yesterday I noticed a new Exchange Traded Fund (ETF) available on the NYSE. DNO, or the United States Short Oil Fund, takes SHORT positions in oil futures. Therefore, it appreciates as the price of oil declines (in theory anyway - depends how the fund managers channel their funds into the short contracts).

Now, this is very scary. As if USO (The United States Oil Fund) and the tons of other professional instruments weren't enough to force $4 a gallon out of me (or $10/gallon out of my brother) at the pump for a while, the United States Commodity Funds Company (never trust a company with "International" or "United States" in it, or a country whose name includes the word "Democratic") has unleashed yet another way for speculators to, with the lure of a 30-day buck, move the oil price.

President Obama did promise closure of the "Enron loop hole" (Thanks again, Wendy Gramm), that allowed such commodity speculation, before he took office.

So I don't know whether DNO would survive the coming regulation...

So I've put off my temptation to purchase short put options on DNO (gasp! Second order derivatives on a commodity!)

Now for the interesting part.

1 barrel of oil = 42 gallons of oil = 159 litres
1 barrel of oil = about $65
1 barrel of oil yields about 4 gallons of gasoline (gasp! but remember the other fractions that you never see: coal tar, lighter fuel, kerosene, aviation fuel, plastics-grade products, pharma-grade product, etc)
Do the math..

I thought a barrel was this thing I saw at a keg party, or rolling down the planks in "Donkey Kong". But no, a barrel is bigger than I am...

No really, how IS Trono?

Toronto island, seen from the CN tower. If you look carefully, you can see a small regional aircraft taking off.

Honestly, this has been one of the most challenging, fun, yet bittersweet weeks ever. We've got plenty to show for it. But also a week where I've had to grow up ten years. There's been a very unexpected and unpleasant twist. But, there's something muy special that I'm looking forward to next week...

So, how's Trono?

After playing cat and mouse with Rogers wireless for over a week, I've given in to the fact that if you haven't paid for something (5c/kb for iPhones and Blackberries), trying to fool your ISP into thinking you're not a smart phone and getting the $7/month unlimited data special will give you this screen 50% of the time, and the other 50% of the time the relief of being able to surf and tether to your heart's content. Just don't let your iPhone go to sleep. Or reboot your iphone (/private/var/root will disappear, erasing the proxy.pac file). Or let the wind blow the wrong way. Or even pass wind. IT WILL STOP WORKING!

Don't make discretionary donations

On many occasions, whether at supermarkets, restaurants or department stores, I've been asked (while paying my bill) to make a discretionary $1 donation to a named charity. Not wanting to look like a stingy b**tard, I've always complied, as the cashier's always been within earshot of other customers.

Jacquie, my friend in Toronto, explained why this is a bad idea: the company in question always takes a tax deduction on their customer's contributions: it's more often than not free money for them at no expense.

Better, ask for details of the charity (eg the website), and donate at home if you're really interested. Then claim the tax deduction for yourself.

And if you dine at Pizza Express in the UK, resist the urge to donate a discretionary 25p to the "Veneziana fund". Unless you were born in Venice.

Sunrise, Oakville

Sunrise over Lake Ontario, Canada
Waves. Geese. Seagulls. Joggers on the track. View of downtown Toronto and the CN tower. No internet access. Maybe it's better that way.

Buy electricity stocks

There's certainly been plenty of fuss in the press lately about investment in Green energy. From Solar panels with 60% efficiency (something that my Uncle, a PhD in photon physics has been investigating) to algae-covered roofing, to the hybrid wars (Toyota still carries the flag), to Bolivia proclaiming itself the new "Saudi Arabia of Lithium" (thanks Peter Day!).

It seems that propulsion of passenger vehicles will, in the United States at least, continue by fossil fuel. There might be a higher transition rate to hybrid vehicles, and, if GM gets its way, a renaissance (can't believe why people think Electric Vehicles are a new thing - they are not!) of EVs. Pure Electric Vehicles will be charged overnight, or, through some amazing induction system, in under 10 minutes at a gas station. However, the electricity will originate from fossil fuels. In France, this electricity might originate from Nuclear power.

Thus we'll see an increase in demand for electricity, and an increase in the demand for oil.

Notice that the stocks of many electricity companies have been creeping up over the past 6 months. Huge demand (both peak and off-peak (off-peak will cease to exist by 2012, as everyone plugs in his car at night creating a surge around 3am)) will mean that electricity companies will increase their prices (not wanting a 2001-style California fiasco). The government will be forced to deregulate the industry, and re-assess the "utilities" as commodities.

My thoughts: CALL OPTIONS ON ELECTRICITY COMPANIES ARE UNDER-PRICED.


WARNING: Not related to Electricity! :)
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Meanwhile, Internet access will shift towards being a utility. Sorry, AT&T and all of you dark-fibered dinosaurs. You should have seen this coming. Also, AT&T, you ought to grow up. "Hang up when you have finished leaving your voicemail" is so 1930s. This is the age of Twitter for heaven's sake.

Which begs the question, why on earth is ak on Blogger?