Electricity: A Crisis Is Coming?

[c1ue]

Re: Electricity: A Crisis Is Coming?

GRG,

On the one hand, it is great to have something needed which there is insufficient supply of.

On the other hand, if the supply can't meet the need, then I would think there would be a rapid switchover into other sources.

Its like being the shovel seller in the gold rush; if the gold strike tapers off quickly, you can end up stranded.

I am not an expert though - merely throwing out what I had seen somewhere that North America is poorly endowed with natural gas, unlike Russia.

[EJ]

Re: Electricity: A Crisis Is Coming?

When I read this I thought to myself: What industry is most susceptible to both falling demand and high electricity costs? Aluminum producers.

I thought shorting Alcoa would make a great play.

"I'll do it later," I thought.

Oops.

[GRG55]

Re: Electricity: A Crisis Is Coming?

When I read this I thought to myself: What industry is most susceptible to both falling demand and high electricity costs? Aluminum producers.

I thought shorting Alcoa would make a great play.

"I'll do it later," I thought.

Oops.

The danger with shorting individual companies, especially one like Alcoa with a set of assets difficult or impossible to create today, is the potential that somebody generating hellacious amounts of cash with their pricing power...

May 7 (Bloomberg) -- ...Chinese steel mills agreed in February to pay Brazil's Cia. Vale do Rio Doce, the largest iron-ore producer, 65 to 71 percent more for annual contracts. Prices have risen for six straight years as demand outpaces supply....

a premium valued stock enabling it to raise even more cash...

Vale to Raise $15 Billion for Expansion, Acquisitions

By Diana Kinch
June 10 (Bloomberg) -- Cia. Vale do Rio Doce, the iron-ore producer that shelved a takeover bid for Xstrata Plc in March, may sell as much as $15 billion of shares to fund expansion and possible acquisitions...

...The share sale would be the biggest ever for Rio de Janeiro- based Vale, with proceeds equal to 9.2 percent of the company's value of about $162 billion. Vale said in a statement today that it isn't currently in talks for any ``strategic acquisitions.''...

and a demonstrated appetite for similar acquisitions...

Vale, which bought Canada's Inco Ltd. last year, scuttled a $90 billion bid for Xstrata in March. Vale is boosting iron-ore and nickel output after prices rose to records.

comes along and spoils the party by saying "I'll have that one too"...;)

[metalman]

Re: Electricity: A Crisis Is Coming?

The danger with shorting individual companies, especially one like Alcoa with a set of assets difficult or impossible to create today, is the potential that somebody generating hellacious amounts of cash with their pricing power...

May 7 (Bloomberg) -- ...Chinese steel mills agreed in February to pay Brazil's Cia. Vale do Rio Doce, the largest iron-ore producer, 65 to 71 percent more for annual contracts. Prices have risen for six straight years as demand outpaces supply....

a premium valued stock enabling it to raise even more cash...

Vale to Raise $15 Billion for Expansion, Acquisitions

By Diana Kinch
June 10 (Bloomberg) -- Cia. Vale do Rio Doce, the iron-ore producer that shelved a takeover bid for Xstrata Plc in March, may sell as much as $15 billion of shares to fund expansion and possible acquisitions...

...The share sale would be the biggest ever for Rio de Janeiro- based Vale, with proceeds equal to 9.2 percent of the company's value of about $162 billion. Vale said in a statement today that it isn't currently in talks for any ``strategic acquisitions.''...

and a demonstrated appetite for similar acquisitions...

Vale, which bought Canada's Inco Ltd. last year, scuttled a $90 billion bid for Xstrata in March. Vale is boosting iron-ore and nickel output after prices rose to records.

comes along and spoils the party by saying "I'll have that one too"...;)

ej has said over and over don't try to short individual corps. what's this? giving in to temptation? speculative fever!

[Sapiens]

Electric companies wilting away in summer heat

http://www.chron.com/disp/story.mpl/...s/5830433.html

Electric companies wilting away in summer heat

How well hedged is your electric company?

If you don't know the answer, you may be sorry. Just ask customers of Riverway Power, which filed for bankruptcy last week and now says it can't continue operating. Riverway is one of four retail providers that failed in the past month.

With the summer heat, electric companies are wilting like unwatered daisies.

Welcome to dereg roulette, Texas-style. As if higher rates weren't bad enough, now we have to worry about the solvency of the electric companies themselves.

The price of natural gas, which determines wholesale electric rates, has more than doubled since August. That's squeezing companies that offered fixed-price contracts but didn't adequately hedge to protect against a wholesale price spike.

In other words, some companies have found themselves obligated to pay more for electricity in the wholesale market than they're collecting from retail customers.

...

[GRG55]

Re: Electricity: A Crisis Is Coming?

ej has said over and over don't try to short individual corps. what's this? giving in to temptation? speculative fever!

Another good reason to be wary of shorting the mining stocks...;)

Mining Replaces Financial Services as Biggest Driver of M&A

By Ambereen Choudhury and Brett Foley
June 12 (Bloomberg) -- Metals are the new green on Wall Street, as mining has displaced financial services to become the biggest source of mergers and acquisitions.

The value of announced mining takeovers more than tripled to $199 billion in the first five months of 2008 from a year ago, even as the global pace of M&A dropped 37 percent, data compiled by Bloomberg show...
http://www.bloomberg.com/apps/news?p...I9Q&refer=home