Singapore
Raising the bar
Jul 17th 2008
From The Economist print edition
A rare slip-up in court by Singapore’s elder statesman, Lee Kuan Yew
MEMBERS of Singapore’s government are notorious sticklers for legal exactitude. So it has been interesting to watch the reaction after the country’s elder statesman, Lee Kuan Yew—a British-trained lawyer before he became a politician—gave inaccurate testimony in the trial of two opposition leaders.
In May Mr Lee testified in a hearing to decide damages against Chee Soon Juan, the leader of the Singapore Democratic Party (SDP), and his sister, Chee Siok Chin, for defaming the former prime minister and his son, Lee Hsien Loong, who is now prime minister himself. Mr Lee senior claimed that after the London-based International Bar Association (IBA) held its annual conference in Singapore last October, its president sent a letter to the Law Society of Singapore praising the country’s justice system. It has since emerged that there was no such laudatory letter.
Mr Chee (who along with his sister was briefly jailed for contempt for accusing the judge in his case of bias) tried unsuccessfully to have the hearing reconvened in the light of Mr Lee’s incorrect testimony. Mr Lee’s counsel, Davinder Singh, wrote to the court on July 9th admitting that his client was wrong about the letter but noting that the IBA’s president, Fernando Pombo, had praised Singapore’s “outstanding judiciary” in a speech at the start of the conference. Mr Singh argues that what matters is that the IBA did praise Singaporean justice, not whether it did so in a speech or a letter. Mr Chee says there is a difference: the speech was made before the conference, where criticisms of the justice system were aired. Mr Lee was claiming, in effect, that the IBA was still impressed after this.
By coincidence, on July 9th the IBA’s Human Rights Institute issued a report criticising the use of defamation suits by the ruling People’s Action Party (PAP) to silence the opposition and the press, and expressing concerns about the independence and impartiality of Singapore’s judges. The law ministry has rejected the IBA’s report, pointing out that Singapore’s legal system has won excellent ratings in other international surveys. Indeed, in cases not involving the country’s leaders, there is no dispute about its quality. As for the IBA’s worries about cases involving PAP figures, the law ministry claims that the IBA failed to substantiate its “grave” allegations with evidence, though its report does discuss several worrying cases.
America’s State Department, which is in rather less danger of being sued by the PAP than are the opposition or newspapers, has expressed concern about judicial independence in political cases in Singapore. In its latest human-rights report, in March, the department noted that the PAP’s consistent success in defamation suits against critics “led to a perception that the judiciary reflected the views of the ruling party in politically sensitive cases.”
According to the Straits Times newspaper, Mr Lee on July 11th accused human-rights organisations of “a conspiracy to do us in”. He said that they saw that Russia and China had been studying Singapore’s success, and hence regarded it as a threat. Mr Lee and the government argue that doing things their way has made Singapore prosperous, orderly and corruption-free, and has earned international respect. The threat of defamation proceedings may make opposition politicians weigh their words more carefully than they do elsewhere. But Singaporean voters continue to buy the PAP’s argument that such constraints are a price worth paying—so far.
Sunday, July 20, 2008
Disgusting!
India and pollution
Up to their necks in it
Jul 17th 2008 | VARANASI
From The Economist print edition
Despite good laws and even better intentions, India causes as much pollution as any rapidly industrialising poor country
Getty Images
A HEREDITARY Hindu priest, Veer Bhadra Mishra is wont, shortly after sunrise, to totter down the stone steps of his temple to the Ganges river, and there perform a three-part ritual. He touches the sacred water. He dips himself in it. He cups it in his hands and drinks it.
Mr Mishra, 70, cannot make it down to the river every day. The steps are steep. And the river-level at Varanasi, Hinduism’s holiest city, where Mr Mishra is the eighth-generation custodian of a temple dedicated to the monkey-god Hanuman, has fallen. Diversion of the river-water, for industry, agriculture and dozens of upstream cities, is the cause of this. So, to save Mr Mishra’s creaking knees, his acolytes sometimes bring him a morning cup of Ganges water—a cloudy brown soup of excrement and industrial effluent—to relish.
Mr Mishra has contracted typhoid, polio, jaundice and other water-borne ailments. A hydrologist turned environmental activist, he reasonably assumes that his morning devotions are to blame. By official standards, water containing more than 500 faecal coliform bacteria per 100 millilitres is considered unsafe for bathing. As it passes Mr Mishra’s temple, at the upstream end of Varanasi’s 6.5km (4 mile) stretch of terraced riverbank, or ghats, the Ganges contains 60,000 bacteria per ml.
Downstream of the ghats, where 60,000 devotees perform daily ablutions in the river and 32 streams of raw sewage empty into it, the figure rises to 1.5m. Two cremation grounds along the ghats, which dispose, wholly or partly, of 30,000 corpses a year, do not help. (Over 3,000 corpses were reported bobbing in the river last year.) In places, the Ganges becomes septic: tar-black, stinking, without life. Mr Mishra fears that Hinduism, which reveres the Ganges as “the source of life”, will suffer for this. But the corporeal effects of foul water in India may be easier to measure.
By official estimates, India has facilities to treat 18% of the 33,200m litres of sewage its cities produce every day. In fact, it treats only 13%, because of shortages of power, water and technical expertise in its sewage plants. These figures may underestimate the problem: measuring the output of 700m Indians who have no access to a toilet is tricky. But it is enough to suggest why most Indian rivers, from which millions of Indians draw their water, are horribly polluted. Unsurprisingly, then, despite much progress in related areas, such as availability of safe drinking-water, an estimated 1,000 Indian children die of diarrhoeal sickness every day. In the words of Sunita Narain, a prominent environmentalist, mocking the tourist ministry’s slogan: “Incredible India, drowning in its excreta”.
As India rapidly industrialises, this invites a troubling thought. By 2020, according to the World Bank, India’s water, air, soil and forest resources will be under more human pressure than those of any other country. Undaunted, India plans to sustain its current high rate of economic growth without the environmental devastation that Western countries, and recently China, have wrought. Its democratic traditions, it is often said, including a free press, independent judiciary and vigorous social activism, will help prevent the damage. So should its voters: according to a survey last year by the Pew Research Centre, 79% of Indians considered pollution a “very big problem”. And yet, if India cannot begin to deal with its own excrement, how will it cope with more complicated, and politically contested, hazards?
After all, its rivers are noxious despite many excellent environmental laws and regulations. Nor is a lack of money the main problem. Since 1985, and the launch of an emergency plan to save the Ganges, India has dedicated 51 billion rupees ($1.2 billion) to cleaning its rivers, mostly by urging state governments to build sewage-treatment plants beside them. The Ganges and one of its main tributaries, the Yamuna, which runs through Delhi, were allotted over half of this cash. But less than half has been spent. And the sanitation it has built would be hopelessly insufficient even if properly used, which it is not.
In Varanasi, the state government of Uttar Pradesh (UP) has built three treatment plants with a total capacity of around 100m litres of sewage a day. But Varanasi produced 150m litres when they were built, and may now produce twice this amount. Moreover, the plants rarely operate at full capacity. During frequent power cuts, the sewage flows untreated into the Ganges. During rainy seasons—around five months of each year—the river floods the plants’ sump wells, with the same effect.
At least there is hope, in the shape of the activist priest, Mr Mishra. For over a decade, he has been engaged in a legal dispute with UP’s government over how to fix the problem. The government wants to build more of Varanasi’s current expensive and unsuccessful treatment plants. Mr Mishra, with support from the municipal government, wants a cheaper sort, designed by researchers at the University of California, Berkeley, which relies on gravity and naturally occurring bacteria and uses almost no power. On June 30th the ministry of environment, in Delhi, requested UP’s rulers to abandon their plan in favour of testing Mr Mishra’s.
Occasional victories by dogged activists, backed by the courts, are justly celebrated in India. A successful campaign in 2001 by Ms Narain’s organisation to convert Delhi’s buses and taxis from diesel to gas, and thereby reduce air pollution in the capital, was a cheering example. But these are exceptional cases amid a pervasive institutional weakness. Clueless local governments; corrupt state governments; feuding, overburdened central government: all three have played a part in the Ganges foul-up. To achieve relatively clean economic growth India will have to overcome these frailties, even as its capacity to pollute soars. Against such forces, the efforts of environmentalists to affect policies with powerful backers seem puny, and their triumphs short-lived. Alas, with 1,000 extra vehicles on its roads every day, Delhi’s air is now filthier than ever.
Up to their necks in it
Jul 17th 2008 | VARANASI
From The Economist print edition
Despite good laws and even better intentions, India causes as much pollution as any rapidly industrialising poor country
Getty Images
A HEREDITARY Hindu priest, Veer Bhadra Mishra is wont, shortly after sunrise, to totter down the stone steps of his temple to the Ganges river, and there perform a three-part ritual. He touches the sacred water. He dips himself in it. He cups it in his hands and drinks it.
Mr Mishra, 70, cannot make it down to the river every day. The steps are steep. And the river-level at Varanasi, Hinduism’s holiest city, where Mr Mishra is the eighth-generation custodian of a temple dedicated to the monkey-god Hanuman, has fallen. Diversion of the river-water, for industry, agriculture and dozens of upstream cities, is the cause of this. So, to save Mr Mishra’s creaking knees, his acolytes sometimes bring him a morning cup of Ganges water—a cloudy brown soup of excrement and industrial effluent—to relish.
Mr Mishra has contracted typhoid, polio, jaundice and other water-borne ailments. A hydrologist turned environmental activist, he reasonably assumes that his morning devotions are to blame. By official standards, water containing more than 500 faecal coliform bacteria per 100 millilitres is considered unsafe for bathing. As it passes Mr Mishra’s temple, at the upstream end of Varanasi’s 6.5km (4 mile) stretch of terraced riverbank, or ghats, the Ganges contains 60,000 bacteria per ml.
Downstream of the ghats, where 60,000 devotees perform daily ablutions in the river and 32 streams of raw sewage empty into it, the figure rises to 1.5m. Two cremation grounds along the ghats, which dispose, wholly or partly, of 30,000 corpses a year, do not help. (Over 3,000 corpses were reported bobbing in the river last year.) In places, the Ganges becomes septic: tar-black, stinking, without life. Mr Mishra fears that Hinduism, which reveres the Ganges as “the source of life”, will suffer for this. But the corporeal effects of foul water in India may be easier to measure.
By official estimates, India has facilities to treat 18% of the 33,200m litres of sewage its cities produce every day. In fact, it treats only 13%, because of shortages of power, water and technical expertise in its sewage plants. These figures may underestimate the problem: measuring the output of 700m Indians who have no access to a toilet is tricky. But it is enough to suggest why most Indian rivers, from which millions of Indians draw their water, are horribly polluted. Unsurprisingly, then, despite much progress in related areas, such as availability of safe drinking-water, an estimated 1,000 Indian children die of diarrhoeal sickness every day. In the words of Sunita Narain, a prominent environmentalist, mocking the tourist ministry’s slogan: “Incredible India, drowning in its excreta”.
As India rapidly industrialises, this invites a troubling thought. By 2020, according to the World Bank, India’s water, air, soil and forest resources will be under more human pressure than those of any other country. Undaunted, India plans to sustain its current high rate of economic growth without the environmental devastation that Western countries, and recently China, have wrought. Its democratic traditions, it is often said, including a free press, independent judiciary and vigorous social activism, will help prevent the damage. So should its voters: according to a survey last year by the Pew Research Centre, 79% of Indians considered pollution a “very big problem”. And yet, if India cannot begin to deal with its own excrement, how will it cope with more complicated, and politically contested, hazards?
After all, its rivers are noxious despite many excellent environmental laws and regulations. Nor is a lack of money the main problem. Since 1985, and the launch of an emergency plan to save the Ganges, India has dedicated 51 billion rupees ($1.2 billion) to cleaning its rivers, mostly by urging state governments to build sewage-treatment plants beside them. The Ganges and one of its main tributaries, the Yamuna, which runs through Delhi, were allotted over half of this cash. But less than half has been spent. And the sanitation it has built would be hopelessly insufficient even if properly used, which it is not.
In Varanasi, the state government of Uttar Pradesh (UP) has built three treatment plants with a total capacity of around 100m litres of sewage a day. But Varanasi produced 150m litres when they were built, and may now produce twice this amount. Moreover, the plants rarely operate at full capacity. During frequent power cuts, the sewage flows untreated into the Ganges. During rainy seasons—around five months of each year—the river floods the plants’ sump wells, with the same effect.
At least there is hope, in the shape of the activist priest, Mr Mishra. For over a decade, he has been engaged in a legal dispute with UP’s government over how to fix the problem. The government wants to build more of Varanasi’s current expensive and unsuccessful treatment plants. Mr Mishra, with support from the municipal government, wants a cheaper sort, designed by researchers at the University of California, Berkeley, which relies on gravity and naturally occurring bacteria and uses almost no power. On June 30th the ministry of environment, in Delhi, requested UP’s rulers to abandon their plan in favour of testing Mr Mishra’s.
Occasional victories by dogged activists, backed by the courts, are justly celebrated in India. A successful campaign in 2001 by Ms Narain’s organisation to convert Delhi’s buses and taxis from diesel to gas, and thereby reduce air pollution in the capital, was a cheering example. But these are exceptional cases amid a pervasive institutional weakness. Clueless local governments; corrupt state governments; feuding, overburdened central government: all three have played a part in the Ganges foul-up. To achieve relatively clean economic growth India will have to overcome these frailties, even as its capacity to pollute soars. Against such forces, the efforts of environmentalists to affect policies with powerful backers seem puny, and their triumphs short-lived. Alas, with 1,000 extra vehicles on its roads every day, Delhi’s air is now filthier than ever.
Saturday, July 12, 2008
Intelligent investor
Stop Worrying, and Learn to Love the Bear
Take It From Graham and Buffett,
These Miserable Markets Are
A Gift From the Financial Gods
July 12, 2008
When you bought into the gospel of "stocks for the long run," did you have any idea how long the long run can turn out to be? Exactly 10 years ago, the Standard & Poor's 500-stock Index was at 1164; it closed Friday at 1239. That's an annualized average return of 0.63%. At that rate, it will take you 111 more years to double your money in the stock market.
Meanwhile, this newspaper, and most of Wall Street, has declared that stocks have officially entered a bear market now that the Dow Jones Industrial Average is 20% below its record high of last October. I think that's poppycock. We've been in a bear market for years; the Dow was almost 600 points higher in early 2000 than it is today. What about that 10% yearly return that U.S. stocks supposedly provide with near-certainty? To earn a 10% long-term return, according to Morningstar, you need to have bought at least 19 years ago and held on ever since.
Could things possibly get worse? I don't know, but I am an optimist -- so I certainly hope things do get worse. Nothing else should satisfy an intelligent investor.
This May, at the Berkshire Hathaway annual meeting, Warren Buffett boiled down what it means to be an intelligent investor into two startling sentences: "If a stock [I own] goes down 50%, I'd look forward to it. In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month." Knowing he owns good businesses, Mr. Buffett wants prices to go down, not up, so he can buy even more shares more cheaply before the bounce back.
In the last long bear market, 1969 to 1982, stocks returned just 5.6% annually; after inflation, investors lost more than 2% a year. That mauling by the bear made stocks so inexpensive that over the ensuing 18 years they went up 18.5% a year, enough to turn $10,000 into more than $200,000.
The people who so far this year have yanked $39 billion out of U.S. stock funds, and $6 billion out of exchange-traded stock funds, do not understand this. But if you are still in your saving and investing years, a bear market is a gift from the financial gods -- and the longer it lasts, the better off you will be. Instead of running from the bear, you should embrace him.
This new column takes its name from the classic book by Benjamin Graham, who wrote that "the investor's chief problem -- and even his worst enemy -- is likely to be himself." I hope to help you understand the chaotic markets around you, and the even more treacherous enemy within. For, as Mr. Buffett has also pointed out, investing is much like dieting: It is simple, but not easy. Everyone knows what it takes to lose weight. (Eat less, exercise more.) Nothing could be simpler, but few things are harder in a world full of chocolate cake and Cheetos.
Likewise, investing is simple: Diversify, buy and hold, keep costs low. But simple isn't easy in a market seething with "free" online trades, funds that promise to transform losses into gains, and TV pundits who shriek out trading advice as if their underpants were on fire. The real secret to being, or becoming, an intelligent investor is bolstering your self-control.
So, in these columns, I will seek to combine the wisdom we can glean from Graham with the latest insights from psychology, neuroscience and behavioral economics. The result, I hope, will be practical advice that can increase your odds of reaching your financial goals.
For now, bear this in mind: That which does not kill investors makes them stronger. Physiologists have shown that minuscule doses of poison may actually make organisms (including humans) healthier, a phenomenon called hormesis. I do not recommend seasoning your food with cyanide.
But the findings on hormesis do remind us that painstaking investors -- literally, those who can take the pain of a bear market that seems to drop another 1% every day -- will ultimately triumph, by patiently amassing greater and greater equity positions at better and better prices. The ancient King Mithridates of Pontus is said to have made himself immune to poison in constant gradual doses, a tale retold by the poet A.E. Housman:
They put arsenic in his meat
And stared aghast to watch him eat;
They poured strychnine in his cup
And shook to see him drink it up....
I tell the tale that I heard told.
Mithridates, he died old.
Take It From Graham and Buffett,
These Miserable Markets Are
A Gift From the Financial Gods
July 12, 2008
When you bought into the gospel of "stocks for the long run," did you have any idea how long the long run can turn out to be? Exactly 10 years ago, the Standard & Poor's 500-stock Index was at 1164; it closed Friday at 1239. That's an annualized average return of 0.63%. At that rate, it will take you 111 more years to double your money in the stock market.
Meanwhile, this newspaper, and most of Wall Street, has declared that stocks have officially entered a bear market now that the Dow Jones Industrial Average is 20% below its record high of last October. I think that's poppycock. We've been in a bear market for years; the Dow was almost 600 points higher in early 2000 than it is today. What about that 10% yearly return that U.S. stocks supposedly provide with near-certainty? To earn a 10% long-term return, according to Morningstar, you need to have bought at least 19 years ago and held on ever since.
Could things possibly get worse? I don't know, but I am an optimist -- so I certainly hope things do get worse. Nothing else should satisfy an intelligent investor.
This May, at the Berkshire Hathaway annual meeting, Warren Buffett boiled down what it means to be an intelligent investor into two startling sentences: "If a stock [I own] goes down 50%, I'd look forward to it. In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month." Knowing he owns good businesses, Mr. Buffett wants prices to go down, not up, so he can buy even more shares more cheaply before the bounce back.
In the last long bear market, 1969 to 1982, stocks returned just 5.6% annually; after inflation, investors lost more than 2% a year. That mauling by the bear made stocks so inexpensive that over the ensuing 18 years they went up 18.5% a year, enough to turn $10,000 into more than $200,000.
The people who so far this year have yanked $39 billion out of U.S. stock funds, and $6 billion out of exchange-traded stock funds, do not understand this. But if you are still in your saving and investing years, a bear market is a gift from the financial gods -- and the longer it lasts, the better off you will be. Instead of running from the bear, you should embrace him.
This new column takes its name from the classic book by Benjamin Graham, who wrote that "the investor's chief problem -- and even his worst enemy -- is likely to be himself." I hope to help you understand the chaotic markets around you, and the even more treacherous enemy within. For, as Mr. Buffett has also pointed out, investing is much like dieting: It is simple, but not easy. Everyone knows what it takes to lose weight. (Eat less, exercise more.) Nothing could be simpler, but few things are harder in a world full of chocolate cake and Cheetos.
Likewise, investing is simple: Diversify, buy and hold, keep costs low. But simple isn't easy in a market seething with "free" online trades, funds that promise to transform losses into gains, and TV pundits who shriek out trading advice as if their underpants were on fire. The real secret to being, or becoming, an intelligent investor is bolstering your self-control.
So, in these columns, I will seek to combine the wisdom we can glean from Graham with the latest insights from psychology, neuroscience and behavioral economics. The result, I hope, will be practical advice that can increase your odds of reaching your financial goals.
For now, bear this in mind: That which does not kill investors makes them stronger. Physiologists have shown that minuscule doses of poison may actually make organisms (including humans) healthier, a phenomenon called hormesis. I do not recommend seasoning your food with cyanide.
But the findings on hormesis do remind us that painstaking investors -- literally, those who can take the pain of a bear market that seems to drop another 1% every day -- will ultimately triumph, by patiently amassing greater and greater equity positions at better and better prices. The ancient King Mithridates of Pontus is said to have made himself immune to poison in constant gradual doses, a tale retold by the poet A.E. Housman:
They put arsenic in his meat
And stared aghast to watch him eat;
They poured strychnine in his cup
And shook to see him drink it up....
I tell the tale that I heard told.
Mithridates, he died old.
Thursday, July 03, 2008
Happy 4th of July!
Oh say can you see
By the dawn's early light
What so proudly we hailed
At the Twilight's last gleaming
Who's broad stripes and bright stars
Through the perilous fight
Over the ramparts we watched
Were so galantly streaming
And the rockets BLUE glare
The bombs bursting in air
Gave prove through the night
That our flag was still there
Oh say does that star-spangled banner yet wave
O'er the land of the free
And the home of the BEARS!!!!!
By the dawn's early light
What so proudly we hailed
At the Twilight's last gleaming
Who's broad stripes and bright stars
Through the perilous fight
Over the ramparts we watched
Were so galantly streaming
And the rockets BLUE glare
The bombs bursting in air
Gave prove through the night
That our flag was still there
Oh say does that star-spangled banner yet wave
O'er the land of the free
And the home of the BEARS!!!!!
Sunday, June 22, 2008
The Best Damn Thing
"The Best Damn Thing"
Let me hear you say hey hey hey
Alright
Now let me hear you say hey hey ho
I hate it when a guy doesn't get the door
even though I told him yesterday and the day before
I hate it when a guy doesn't get the tab
And I have to pull my money out and that looks bad
Where are the hopes, where are the dreams
My Cinderella story scene
When do you think they'll finally see
[Chorus:]
That you're not not not gonna get any better
You won't won't won't you won't get rid of me never
Like it or not, even though she's a lot like me
We're not the same
And yeah yeah yeah I'm a lot to handle
You don't know trouble, I'm a hell of a scandal
Me, I'm a scene, I'm a drama queen
I'm the best damn thing that your eyes have ever seen
Alright, alright
Yeah
I hate it when a guy doesn't understand
Why a certain time of month I don't wanna hold his hand
I hate it when they go out, and we stay in
And they come home smelling like their ex girlfriends
I found my hopes, I found my dreams
My Cinderella story scene
Now everybody's gonna see
[Chorus]
Give me an A (always give me what I want)
Give me a V (be very very good to me)
R (are you gonna treat me right)
I (I can put up a fight)
Give me an L (let me hear you scream loud)
One, two, three, four
Where are the hopes, where are the dreams
My Cinderella story scene
When do you think they'll finally see
[Chorus]
Let me hear you say hey hey hey
Alright
Now let me hear you say hey hey ho
Hey hey hey
Hey hey hey
Hey hey hey
I'm the best damn thing that your eyes have ever seen
Let me hear you say hey hey hey
Alright
Now let me hear you say hey hey ho
I hate it when a guy doesn't get the door
even though I told him yesterday and the day before
I hate it when a guy doesn't get the tab
And I have to pull my money out and that looks bad
Where are the hopes, where are the dreams
My Cinderella story scene
When do you think they'll finally see
[Chorus:]
That you're not not not gonna get any better
You won't won't won't you won't get rid of me never
Like it or not, even though she's a lot like me
We're not the same
And yeah yeah yeah I'm a lot to handle
You don't know trouble, I'm a hell of a scandal
Me, I'm a scene, I'm a drama queen
I'm the best damn thing that your eyes have ever seen
Alright, alright
Yeah
I hate it when a guy doesn't understand
Why a certain time of month I don't wanna hold his hand
I hate it when they go out, and we stay in
And they come home smelling like their ex girlfriends
I found my hopes, I found my dreams
My Cinderella story scene
Now everybody's gonna see
[Chorus]
Give me an A (always give me what I want)
Give me a V (be very very good to me)
R (are you gonna treat me right)
I (I can put up a fight)
Give me an L (let me hear you scream loud)
One, two, three, four
Where are the hopes, where are the dreams
My Cinderella story scene
When do you think they'll finally see
[Chorus]
Let me hear you say hey hey hey
Alright
Now let me hear you say hey hey ho
Hey hey hey
Hey hey hey
Hey hey hey
I'm the best damn thing that your eyes have ever seen
Monday, June 16, 2008
Quest for oil
Quest for Oil:
Where to Look
Is the Question
Drill on New Lands
Or Existing Fields?
Fueled by Gas Price
By STEPHEN POWER and BEN CASSELMAN
June 16, 2008; Page A4
The oil industry is turning up the heat on Congress to open up more federal land to oil and natural-gas drilling, arguing that will do more to cut energy prices than new taxes on industry profits. But environmentalists and Congressional Democrats opposed to that tack are firing back with a new challenge: Drill what you have.
For years, political and environmental obstacles have limited the oil industry's access to large swaths of U.S. territory, most notably the Arctic National Wildlife Refuge in northern Alaska.
Democrats have tended to support restrictions on access to sensitive lands and focused on other ways to drive down prices: reining in speculators; punishing the OPEC oil cartel; and funding research on alternative-energy sources, possibly via a windfall-profits tax on oil companies.
Industry backers, including many Republicans, say the answer to high prices is increased supply and that the way to do that is to drill in areas now off-limits.
Now, voter anger over soaring gasoline prices is shoving this perennial dispute to the top of Washington's energy agenda. On the New York Mercantile Exchange, benchmark crude for July delivery fell $1.88 Friday to settle at $134.86, near its all-time high. Last Monday, the average retail price for a gallon of regular unleaded was $4.039, according to the Energy Information Administration.
A recent Gallup poll shows 57% of Americans support opening up new territories to drilling, while a Wall Street Journal-NBC News poll conducted this month shows 59% of Americans saying Congress should take the lead on responding to high gas prices.
Although high prices are giving the oil industry a new opportunity to make its case for greater access to domestic petroleum, the industry's allies in the Democratic-controlled Congress have so far had little success. Last week, a House panel voted against lifting a decades-old ban on drilling in the outer continental shelf.
Complicating matters, Sen. John McCain of Arizona, the presumptive Republican presidential nominee, has broken with many members of his party, including President Bush, in saying he would oppose drilling in the Arctic National Wildlife Refuge. He has indicated he would defer to the wishes of coastal states on drilling in the outer continental shelf.
Democrats are looking to shift the terms of the debate by arguing it is possible to increase domestic oil production without opening up new lands. The government, they point out, has leased some 91.5 million acres of land and waters for drilling, but federal data show only about a quarter of that is producing oil and gas. Moreover, the portion is shrinking; about 27% of the onshore acres were producing oil and gas in 2007, down from an average of 30.5% in production over the preceding decade.
The industry and its backers say such arguments reflect a fundamental misunderstanding of the oil industry. Companies don't know how much oil is under the lands they lease, so they buy up large swaths in the hope that a fraction will work out. Much of the area that isn't producing, they say, doesn't have oil or gas in commercially viable quantities.
Moreover, bringing a new field into production can require years of mapping, testing, drilling and construction -- during which time the land would show up in statistics as being "not in production," even as companies spend millions or even billions of dollars to bring it online.
"I guarantee you, anybody who's got a commercial discovery today in the United States has got it under development. They'd be silly not to at these prices," Exxon Mobil Corp. Chief Executive Rex Tillerson said in an interview.
Such explanations aren't winning over skeptical Democrats on Capitol Hill. "Why should we expect oil-and-gas companies to rush into new areas to begin production when they are sitting on literally millions and millions of acres of existing leases without doing any production on those?" Sen. Jeff Bingaman, a New Mexico Democrat who is chairman of the Senate Committee on Energy and Natural Resources, said in a speech last month.
Mr. Bingaman added in an interview, "If there have been a lot of leases let that are not produceable, that's information we need to have to determine whether we should renew those leases. There's no reason to renew leases if they're not produceable."
Some lawmakers are mulling ways to change the industry's incentives. Wall Street increasingly values oil companies -- especially the smaller ones that dominate onshore U.S. production -- based on their reserves, not just their production. That gives companies an incentive to snap up land even if they won't be able to drill it for years.
On Thursday, House Democrats introduced legislation that seeks to compel energy companies to either produce or give up the federal onshore and offshore leases they are holding, by barring them from obtaining any more leases unless they can demonstrate that they are producing oil and gas, or are "diligently developing" the leases they hold.
Currently, companies must give up nonproducing leases after a set period of time -- usually five or 10 years -- but they can often get extensions, and there is no limit on the number of leases a company can hold at a given time.
The bill is modeled on a 1976 law that attempted to discourage speculation on federal coal as a result of the energy crises of the 1970s.
"If they're bidding on these leases, we're assuming they're bidding on them because they believe there's a high-percentage likelihood that there is oil there. And if they don't, then they should not have bid on them," says Rep. Edward Markey, a Massachusetts Democrat who is chairman of the House Select Committee on Energy Independence and Global Warming.
Red Cavaney, president of the American Petroleum Institute, a trade group, called Mr. Markey's remarks, "naive."
"They call the first step in the oil business 'exploration.' If every bit of land had oil and gas, you wouldn't need to explore," he said.
High prices have driven new interest in fields that weren't economical when oil was selling for less than $60 a barrel three years ago. If prices stay high, Mr. Cavaney said, the percentage of leased land in production will rise.
Even if the lands are opened to drilling, however, most experts don't expect immediate relief from high prices. The more-accessible reserves off the coasts of California and Florida would take several years to bring into production, and the remote Arctic refuge would take a decade or more. Even once those fields did come online, their impact on prices would likely be limited. The largest field in the Arctic National Wildlife Refuge is believed to contain about 1.4 billion barrels of oil -- roughly half what Saudi Arabia exports in a single year.
As oil prices have hit records, proponents of drilling in new areas have increased pressure on Congress. A group led by the former House Speaker Newt Gingrich said Wednesday that its "Drill Here, Drill Now, Pay Less" petition drive had netted half a million signatures.
Industry supporters say they can't be sure how much oil exists in areas they haven't explored. But they say there are good reasons to think large reserves exist in areas now closed to drilling. Closed areas in the Gulf of Mexico and off the coast of California, for example, abut areas that have been drilled successfully for years.
The industry also complains that efforts to produce on leased land are sometimes slowed by environmental groups. In the West Tavaputs field in Northeastern Utah, Denver-based Bill Barrett Corp. is producing natural gas on only 30% of the more than 40,000 acres of federal land it owns the rights to there. The company says its progress has been stymied by legal challenges from environmental groups.
Steve Bloch, an attorney for the Southern Utah Wilderness Alliance, says his group and others have been trying to slow drilling in the area but they have often been unsuccessful. State-wide, he adds, his group has objected to only a small fraction of drilling-permit applications.
Where to Look
Is the Question
Drill on New Lands
Or Existing Fields?
Fueled by Gas Price
By STEPHEN POWER and BEN CASSELMAN
June 16, 2008; Page A4
The oil industry is turning up the heat on Congress to open up more federal land to oil and natural-gas drilling, arguing that will do more to cut energy prices than new taxes on industry profits. But environmentalists and Congressional Democrats opposed to that tack are firing back with a new challenge: Drill what you have.
For years, political and environmental obstacles have limited the oil industry's access to large swaths of U.S. territory, most notably the Arctic National Wildlife Refuge in northern Alaska.
Democrats have tended to support restrictions on access to sensitive lands and focused on other ways to drive down prices: reining in speculators; punishing the OPEC oil cartel; and funding research on alternative-energy sources, possibly via a windfall-profits tax on oil companies.
Industry backers, including many Republicans, say the answer to high prices is increased supply and that the way to do that is to drill in areas now off-limits.
Now, voter anger over soaring gasoline prices is shoving this perennial dispute to the top of Washington's energy agenda. On the New York Mercantile Exchange, benchmark crude for July delivery fell $1.88 Friday to settle at $134.86, near its all-time high. Last Monday, the average retail price for a gallon of regular unleaded was $4.039, according to the Energy Information Administration.
A recent Gallup poll shows 57% of Americans support opening up new territories to drilling, while a Wall Street Journal-NBC News poll conducted this month shows 59% of Americans saying Congress should take the lead on responding to high gas prices.
Although high prices are giving the oil industry a new opportunity to make its case for greater access to domestic petroleum, the industry's allies in the Democratic-controlled Congress have so far had little success. Last week, a House panel voted against lifting a decades-old ban on drilling in the outer continental shelf.
Complicating matters, Sen. John McCain of Arizona, the presumptive Republican presidential nominee, has broken with many members of his party, including President Bush, in saying he would oppose drilling in the Arctic National Wildlife Refuge. He has indicated he would defer to the wishes of coastal states on drilling in the outer continental shelf.
Democrats are looking to shift the terms of the debate by arguing it is possible to increase domestic oil production without opening up new lands. The government, they point out, has leased some 91.5 million acres of land and waters for drilling, but federal data show only about a quarter of that is producing oil and gas. Moreover, the portion is shrinking; about 27% of the onshore acres were producing oil and gas in 2007, down from an average of 30.5% in production over the preceding decade.
The industry and its backers say such arguments reflect a fundamental misunderstanding of the oil industry. Companies don't know how much oil is under the lands they lease, so they buy up large swaths in the hope that a fraction will work out. Much of the area that isn't producing, they say, doesn't have oil or gas in commercially viable quantities.
Moreover, bringing a new field into production can require years of mapping, testing, drilling and construction -- during which time the land would show up in statistics as being "not in production," even as companies spend millions or even billions of dollars to bring it online.
"I guarantee you, anybody who's got a commercial discovery today in the United States has got it under development. They'd be silly not to at these prices," Exxon Mobil Corp. Chief Executive Rex Tillerson said in an interview.
Such explanations aren't winning over skeptical Democrats on Capitol Hill. "Why should we expect oil-and-gas companies to rush into new areas to begin production when they are sitting on literally millions and millions of acres of existing leases without doing any production on those?" Sen. Jeff Bingaman, a New Mexico Democrat who is chairman of the Senate Committee on Energy and Natural Resources, said in a speech last month.
Mr. Bingaman added in an interview, "If there have been a lot of leases let that are not produceable, that's information we need to have to determine whether we should renew those leases. There's no reason to renew leases if they're not produceable."
Some lawmakers are mulling ways to change the industry's incentives. Wall Street increasingly values oil companies -- especially the smaller ones that dominate onshore U.S. production -- based on their reserves, not just their production. That gives companies an incentive to snap up land even if they won't be able to drill it for years.
On Thursday, House Democrats introduced legislation that seeks to compel energy companies to either produce or give up the federal onshore and offshore leases they are holding, by barring them from obtaining any more leases unless they can demonstrate that they are producing oil and gas, or are "diligently developing" the leases they hold.
Currently, companies must give up nonproducing leases after a set period of time -- usually five or 10 years -- but they can often get extensions, and there is no limit on the number of leases a company can hold at a given time.
The bill is modeled on a 1976 law that attempted to discourage speculation on federal coal as a result of the energy crises of the 1970s.
"If they're bidding on these leases, we're assuming they're bidding on them because they believe there's a high-percentage likelihood that there is oil there. And if they don't, then they should not have bid on them," says Rep. Edward Markey, a Massachusetts Democrat who is chairman of the House Select Committee on Energy Independence and Global Warming.
Red Cavaney, president of the American Petroleum Institute, a trade group, called Mr. Markey's remarks, "naive."
"They call the first step in the oil business 'exploration.' If every bit of land had oil and gas, you wouldn't need to explore," he said.
High prices have driven new interest in fields that weren't economical when oil was selling for less than $60 a barrel three years ago. If prices stay high, Mr. Cavaney said, the percentage of leased land in production will rise.
Even if the lands are opened to drilling, however, most experts don't expect immediate relief from high prices. The more-accessible reserves off the coasts of California and Florida would take several years to bring into production, and the remote Arctic refuge would take a decade or more. Even once those fields did come online, their impact on prices would likely be limited. The largest field in the Arctic National Wildlife Refuge is believed to contain about 1.4 billion barrels of oil -- roughly half what Saudi Arabia exports in a single year.
As oil prices have hit records, proponents of drilling in new areas have increased pressure on Congress. A group led by the former House Speaker Newt Gingrich said Wednesday that its "Drill Here, Drill Now, Pay Less" petition drive had netted half a million signatures.
Industry supporters say they can't be sure how much oil exists in areas they haven't explored. But they say there are good reasons to think large reserves exist in areas now closed to drilling. Closed areas in the Gulf of Mexico and off the coast of California, for example, abut areas that have been drilled successfully for years.
The industry also complains that efforts to produce on leased land are sometimes slowed by environmental groups. In the West Tavaputs field in Northeastern Utah, Denver-based Bill Barrett Corp. is producing natural gas on only 30% of the more than 40,000 acres of federal land it owns the rights to there. The company says its progress has been stymied by legal challenges from environmental groups.
Steve Bloch, an attorney for the Southern Utah Wilderness Alliance, says his group and others have been trying to slow drilling in the area but they have often been unsuccessful. State-wide, he adds, his group has objected to only a small fraction of drilling-permit applications.
Monday, June 02, 2008
China Stockmarket
Disclosure in China
Stepping backwards
May 29th 2008 | HONG KONG
From The Economist print edition
Worries about transparency undermine markets in China and Hong Kong
ESTABLISHING credibility has been a hard slog for China's equity markets. All three, Shanghai, Shenzhen, and Hong Kong, are to varying degrees known for government intervention and a clubby opacity. As the profitability and scale of Chinese companies have grown and their shares have rocketed, plenty of effort has gone into making the markets work more efficiently. But there is an awfully long way to go, and Hong Kong and the mainland show worrying signs of backsliding.
In Shenzhen plans are afoot to create a new exchange for smaller companies with briefer operating histories. The model is America's NASDAQ, a market that has had tremendous success funding innovative start-ups from around the world, including start-ups based in China.
Good luck. NASDAQ's success rests on an approach that is antithetical to China's. Capital-hungry companies deluge potential investors with information in an effort to create demand for their shares. The government is there to ensure that the information is accurate. However, in China disclosure remains wretched, the result of a censored press, poorly enforced laws and a history of conflating information with propaganda. Regulators tightly control which companies can go public and when shares can be sold, based on perceptions of what is good for the overall market. (For instance, the Chinese government has reportedly stepped in to cap the amount that two state-owned banks can bid for Wing Lung Bank, a listed Hong Kong lender.) Nothing about the new Chinese market will change this state of affairs, except that the companies permitted to list will have even less information to disclose than those on the existing small-company bourse already operating in Shenzhen.
Hong Kong's stock exchange has thrived in recent years on the premise that it is a well governed alternative to Shenzhen and Shanghai. But even here disturbing signs have emerged. May 15th saw the resignation of David Webb, a writer and former investment banker known for his independent views as a member of the exchange's board of directors. Mr Webb resigned, citing policy decisions made “through the back door” by government officials and the exchange's unwillingness to provide critical information.
Mr Webb's criticisms about all manner of abuses inflicted upon investors, from layers of transaction fees to ignored proxy votes, made him something of a hero to Hong Kong's numerous punters. He also gained a huge, if less voluble, fan base within big global financial institutions.
In the fracas after his departure, it emerged that the exchange and Hong Kong's government were having quiet discussions about creating a new set of listings, known as a “professional board”, with fewer disclosure requirements. The Hong Kong exchange already demands less frequent disclosure than other big Asian markets. Even so, more opacity is thought to appeal to the tycoons in charge of Hong Kong's sprawling business empires, because they would like a way to transfer profits between operations without having to reveal the details to minority shareholders.
Going up against the establishment in Hong Kong is not easy. In April Mr Webb backed another candidate with heavyweight financial credentials for a seat on the exchange's board but the government put its voting muscle behind a candidate who had only recently headed the audit committee of a firm that collapsed. The hope is that China's mainland bourses are dragged up to the level of Hong Kong; the fear, that all slither down.
Stepping backwards
May 29th 2008 | HONG KONG
From The Economist print edition
Worries about transparency undermine markets in China and Hong Kong
ESTABLISHING credibility has been a hard slog for China's equity markets. All three, Shanghai, Shenzhen, and Hong Kong, are to varying degrees known for government intervention and a clubby opacity. As the profitability and scale of Chinese companies have grown and their shares have rocketed, plenty of effort has gone into making the markets work more efficiently. But there is an awfully long way to go, and Hong Kong and the mainland show worrying signs of backsliding.
In Shenzhen plans are afoot to create a new exchange for smaller companies with briefer operating histories. The model is America's NASDAQ, a market that has had tremendous success funding innovative start-ups from around the world, including start-ups based in China.
Good luck. NASDAQ's success rests on an approach that is antithetical to China's. Capital-hungry companies deluge potential investors with information in an effort to create demand for their shares. The government is there to ensure that the information is accurate. However, in China disclosure remains wretched, the result of a censored press, poorly enforced laws and a history of conflating information with propaganda. Regulators tightly control which companies can go public and when shares can be sold, based on perceptions of what is good for the overall market. (For instance, the Chinese government has reportedly stepped in to cap the amount that two state-owned banks can bid for Wing Lung Bank, a listed Hong Kong lender.) Nothing about the new Chinese market will change this state of affairs, except that the companies permitted to list will have even less information to disclose than those on the existing small-company bourse already operating in Shenzhen.
Hong Kong's stock exchange has thrived in recent years on the premise that it is a well governed alternative to Shenzhen and Shanghai. But even here disturbing signs have emerged. May 15th saw the resignation of David Webb, a writer and former investment banker known for his independent views as a member of the exchange's board of directors. Mr Webb resigned, citing policy decisions made “through the back door” by government officials and the exchange's unwillingness to provide critical information.
Mr Webb's criticisms about all manner of abuses inflicted upon investors, from layers of transaction fees to ignored proxy votes, made him something of a hero to Hong Kong's numerous punters. He also gained a huge, if less voluble, fan base within big global financial institutions.
In the fracas after his departure, it emerged that the exchange and Hong Kong's government were having quiet discussions about creating a new set of listings, known as a “professional board”, with fewer disclosure requirements. The Hong Kong exchange already demands less frequent disclosure than other big Asian markets. Even so, more opacity is thought to appeal to the tycoons in charge of Hong Kong's sprawling business empires, because they would like a way to transfer profits between operations without having to reveal the details to minority shareholders.
Going up against the establishment in Hong Kong is not easy. In April Mr Webb backed another candidate with heavyweight financial credentials for a seat on the exchange's board but the government put its voting muscle behind a candidate who had only recently headed the audit committee of a firm that collapsed. The hope is that China's mainland bourses are dragged up to the level of Hong Kong; the fear, that all slither down.
Friday, May 30, 2008
Dark Blue Jeans
My mission today was to get a pair of dark blue jeans. Really dark ones, almost Navy Blue. And why do I need a pair of blue jeans? Well the story starts like this:
For the longest time I had 4 pairs of jeans which I bought in US/Canada. All of them are regular blue levi's and I got them dirt cheap, US$50 bucks or less a piece. One pair remained the color that it was, cos I haven't really used it. Those were my work jeans for Concrete canoe, and came with epoxy stains. They were baggy so I could climb up and down without overstretching. Other than that pair, all 3 remaining pairs kinda lost their color after repeated washings. And yes, I do mean lost their color as in they were so used that their blue has almost become white. Apparently it is not the fashion in town to be walking around with blue jeans that are practically almost white in color! Everyone's been commenting about why I buy such weird light color jeans. To which I respond, "no they are worn out, isn't worn out the in thing for jeans?" And I get an "oh". Well worn out jeans are in, but only if they are worn out and patchy, not evenly worn out ya know? Like those dark ones with white patch in the middle where they are stretched. Anyway, dark jeans are in and I have a semi-dark G2000 Blu and a recently bought black Levi's (which cost a bomb), so its time for a pair in the "dark blue" range.
First stop: Espirit. Espirit jeans don't come cheap, so why Espirit? Cos I got Espirit card! Espirit card is the coolest clothing card ever, cos you get discounts on top of whatever discounts are currently available. And most of the time I'm looking for something, they have it. So I walked in and lo and behold they only have one design for dark blue jeans, perfect! Size 32 but I'm swimming in it, these guys need to get their sizes right, I'm a 33 yet I cant get into 32. Anyway they didn't have any smaller size, so...
Well I was wearing G2000 Blu when I went out today. So next stop was G2000 Blu. Guess what? They don't sell jeans there anymore!!! :(
Alright, by now I was kinda flustered that I can't seem to get my jeans. Next up, my favorite shop Fox. But I only get tops at Fox, never tried their bottoms and its not like they have many of them. Design was good, but not my tried and tested and I'm picky on pants. So perhaps try Giordano first.
Giordano only has sizes 32 and 34, they don't have odd sizes. Fox too. For some reason people don't like 33's so I need to slim down. Giordano's 32 was so so tight I couldn't even slip into it, ouch! But their 34 was so big I couldn't put a belt around it! Whoa! That was a really huge disparity in sizes, I think they need to do some quality control here, that 32 was so not 32. My waist is 33 but I can wear 32, just a little tight, not so tight!!! Sigh...
So it was back to Fox. A little skeptical, but their 32 is just nice, fit right in. Heheh, so I bought it. What's most important though: their size is right. I can't imagine what factories in China these other guys get their goods from. A 32/33 is a 32/33, you can measure it with a measuring tape, how can I be swimming in or not able to pull up a size 32 pants?
For the longest time I had 4 pairs of jeans which I bought in US/Canada. All of them are regular blue levi's and I got them dirt cheap, US$50 bucks or less a piece. One pair remained the color that it was, cos I haven't really used it. Those were my work jeans for Concrete canoe, and came with epoxy stains. They were baggy so I could climb up and down without overstretching. Other than that pair, all 3 remaining pairs kinda lost their color after repeated washings. And yes, I do mean lost their color as in they were so used that their blue has almost become white. Apparently it is not the fashion in town to be walking around with blue jeans that are practically almost white in color! Everyone's been commenting about why I buy such weird light color jeans. To which I respond, "no they are worn out, isn't worn out the in thing for jeans?" And I get an "oh". Well worn out jeans are in, but only if they are worn out and patchy, not evenly worn out ya know? Like those dark ones with white patch in the middle where they are stretched. Anyway, dark jeans are in and I have a semi-dark G2000 Blu and a recently bought black Levi's (which cost a bomb), so its time for a pair in the "dark blue" range.
First stop: Espirit. Espirit jeans don't come cheap, so why Espirit? Cos I got Espirit card! Espirit card is the coolest clothing card ever, cos you get discounts on top of whatever discounts are currently available. And most of the time I'm looking for something, they have it. So I walked in and lo and behold they only have one design for dark blue jeans, perfect! Size 32 but I'm swimming in it, these guys need to get their sizes right, I'm a 33 yet I cant get into 32. Anyway they didn't have any smaller size, so...
Well I was wearing G2000 Blu when I went out today. So next stop was G2000 Blu. Guess what? They don't sell jeans there anymore!!! :(
Alright, by now I was kinda flustered that I can't seem to get my jeans. Next up, my favorite shop Fox. But I only get tops at Fox, never tried their bottoms and its not like they have many of them. Design was good, but not my tried and tested and I'm picky on pants. So perhaps try Giordano first.
Giordano only has sizes 32 and 34, they don't have odd sizes. Fox too. For some reason people don't like 33's so I need to slim down. Giordano's 32 was so so tight I couldn't even slip into it, ouch! But their 34 was so big I couldn't put a belt around it! Whoa! That was a really huge disparity in sizes, I think they need to do some quality control here, that 32 was so not 32. My waist is 33 but I can wear 32, just a little tight, not so tight!!! Sigh...
So it was back to Fox. A little skeptical, but their 32 is just nice, fit right in. Heheh, so I bought it. What's most important though: their size is right. I can't imagine what factories in China these other guys get their goods from. A 32/33 is a 32/33, you can measure it with a measuring tape, how can I be swimming in or not able to pull up a size 32 pants?
Monday, May 26, 2008
Moneyness
Today's blog entry has nothing to do with options despite the title "Moneyness". I actually want to talk about money, and the word moneyness sounds cool, so I thought the title was apt. Don't worry I'm not about to rattle off about the Black-Scholes-Merton model or the greeks (delta, vega, theta, rho). Hey I know my greeks okay, don't mess around with me!
Anyway, people often say money is not important. It's not the most important thing and neither does it rank anywhere up there. As someone who could do with a lot more money right now, I take offense at that. How often have you known people from your school days who are socially inept, totally no street smarts, psychological freak, probably can't ever do anything successfully; yet because they have a lot of money they are actually getting along much better than you ever would? Yeah that's right, even the part about being totally out of place in this society, be it arrogant, uncivilised, poor grooming what have you, but they seem to get along with the world just fine, perhaps even better than you and me.
Just think about the guy without streetsmarts but with a lot of money who needs to get married. The rest of us would be hella stressed with the rings, wedding preparations, which HDB flat to ballot for, what to bargain the car dealer for, how to make sure the contractor is not cheating you on renovation. Hell you gotta be pretty streetsmart to survive all that and make your whole wedding process spectacular right? Well, if you have money, just buy the biggest rock (ring), get an expensive wedding planner, pick whichever condo in Bukit timah, and forget the car dealer, you can afford those rims without any free gift or loan anyway. Oh and contractor? Well you can just hire an interior designer to kick ass for you. That solves the problem.
How about in a social setting? Surely one will not hang out with total jackasses just because they are rich? Time and time again I'm proven wrong. Some total idiots who don't know how to say the right things at the right time, offend everybody, dress inappropriately (say singlet and shorts at a church wedding!!!), still get to be overwhelmingly popular and snag all the babes as well. And those girls are actually there to stay, not just down for a one-night stand (what are they thinking?).
Sure money is not everything, wasn't that Maslow's hierachy of needs or some shit that said that? Well I've actually looked at the real table (of sorts) by this Maslow guy. It says that money is not everything ONCE YOU HAVE IT!!!! Human beings firstly need food and shelter. And once they got that they need money, materialistic goods etc. Only when they reach the top of the food chain then they clamour the well being of others and want to love others as much as they want to gratify themselves. Well, I'm not even halfway there yet, so I think I need the money before I can even think about saving the world....
Perhaps that's why people who have thoughts about politics, economics, society, etc dun really gain popularity as easily as some rich nutheads. Okay correction, my point was you don't even need to be "rich". You just need enough money to show off. Perhaps these people have $0 left in their bank account after all their shenanigans, but who cares? They can ride on the coattails of their admirers.
But then again perhaps this is mostly just Asian society and its nuances. I would like to think that in more developed countries people who have great minds and great thinkings are equally or more admired than those who flaunt their wealth. Indeed, Bill Gates is admired more for his vision than his money, so is Steve Jobs.
Moral of the story? If you want to be successful and popular in Asia its much easier to do so by having a lot more money than the average middle-income Joe than any other way. That way you can be a total jackass and still be loved, embraced and get all the cute girls.....
Anyway, people often say money is not important. It's not the most important thing and neither does it rank anywhere up there. As someone who could do with a lot more money right now, I take offense at that. How often have you known people from your school days who are socially inept, totally no street smarts, psychological freak, probably can't ever do anything successfully; yet because they have a lot of money they are actually getting along much better than you ever would? Yeah that's right, even the part about being totally out of place in this society, be it arrogant, uncivilised, poor grooming what have you, but they seem to get along with the world just fine, perhaps even better than you and me.
Just think about the guy without streetsmarts but with a lot of money who needs to get married. The rest of us would be hella stressed with the rings, wedding preparations, which HDB flat to ballot for, what to bargain the car dealer for, how to make sure the contractor is not cheating you on renovation. Hell you gotta be pretty streetsmart to survive all that and make your whole wedding process spectacular right? Well, if you have money, just buy the biggest rock (ring), get an expensive wedding planner, pick whichever condo in Bukit timah, and forget the car dealer, you can afford those rims without any free gift or loan anyway. Oh and contractor? Well you can just hire an interior designer to kick ass for you. That solves the problem.
How about in a social setting? Surely one will not hang out with total jackasses just because they are rich? Time and time again I'm proven wrong. Some total idiots who don't know how to say the right things at the right time, offend everybody, dress inappropriately (say singlet and shorts at a church wedding!!!), still get to be overwhelmingly popular and snag all the babes as well. And those girls are actually there to stay, not just down for a one-night stand (what are they thinking?).
Sure money is not everything, wasn't that Maslow's hierachy of needs or some shit that said that? Well I've actually looked at the real table (of sorts) by this Maslow guy. It says that money is not everything ONCE YOU HAVE IT!!!! Human beings firstly need food and shelter. And once they got that they need money, materialistic goods etc. Only when they reach the top of the food chain then they clamour the well being of others and want to love others as much as they want to gratify themselves. Well, I'm not even halfway there yet, so I think I need the money before I can even think about saving the world....
Perhaps that's why people who have thoughts about politics, economics, society, etc dun really gain popularity as easily as some rich nutheads. Okay correction, my point was you don't even need to be "rich". You just need enough money to show off. Perhaps these people have $0 left in their bank account after all their shenanigans, but who cares? They can ride on the coattails of their admirers.
But then again perhaps this is mostly just Asian society and its nuances. I would like to think that in more developed countries people who have great minds and great thinkings are equally or more admired than those who flaunt their wealth. Indeed, Bill Gates is admired more for his vision than his money, so is Steve Jobs.
Moral of the story? If you want to be successful and popular in Asia its much easier to do so by having a lot more money than the average middle-income Joe than any other way. That way you can be a total jackass and still be loved, embraced and get all the cute girls.....
Tuesday, May 20, 2008
doctors and trading
When I started working with futures trading systems in high school, I noticed something rather odd: A very high percentage of our customers were doctors and dentists. At the time, I believed that doctors and dentists were attracted to trading because they had good incomes and could afford to risk money in futures markets. Looking back on it, I can see that was only a partial answer. I now believe that the real reason doctors and dentists are drawn in disproportionate numbers to commodities trading is that they have a lot of confidence in their intelligence and ability to translated their success in their work to success in another industry -- perhaps too much confidence in this particular instance...
... At the same time, many doctors and dentists expect to be successful traders immediately. Trading appears to be so simple that they believe that this should be possible. However, I found that a large percentage of them were not successful as traders because they did not have realistic expectations. Success in one sphere of business does not guarantee success in trading.
... At the same time, many doctors and dentists expect to be successful traders immediately. Trading appears to be so simple that they believe that this should be possible. However, I found that a large percentage of them were not successful as traders because they did not have realistic expectations. Success in one sphere of business does not guarantee success in trading.
Monday, May 19, 2008
Way of the Turtle
Some quotes from the book I'm reading. Looks like my style is "counter-trend". ;)
We're going to raise traders just like they raise turtles in Singapore.
The trend is your friend until the end when it bends.
High risk, high reward, it takes balls of steel to play this game.
Human emotion is both the source of opportunity in trading and the greatest challenge. Master it and you will succeed. Ignore it at your peril.
Trade with an edge, manage risk, be consistent, and keep it simple.
Good trading is not about being right, it's about trading right.
We're going to raise traders just like they raise turtles in Singapore.
The trend is your friend until the end when it bends.
High risk, high reward, it takes balls of steel to play this game.
Human emotion is both the source of opportunity in trading and the greatest challenge. Master it and you will succeed. Ignore it at your peril.
Trade with an edge, manage risk, be consistent, and keep it simple.
Good trading is not about being right, it's about trading right.
Sunday, May 18, 2008
Will Singapore become like cancun?
Travel and tourism
Asia, beware Benidorm
May 15th 2008
From The Economist print edition
Booming tourism in emerging economies promises huge benefits. But not if it copies the mistakes of mature markets
WHEN low-cost air travel was taking off in Europe in the early 1990s, the German and the British ambassadors to Greece used to call each other at the end of each week during the summer, to compare notes on the bad behaviour of the visitors from their countries. No clear winner emerged. Sunburnt Brits and Germans would both get blind drunk, lose their money and passports, wind up in a fight at a beach bar and end the night in one of the Greek islands' police cells.
Tourism in Europe's Mediterranean countries is a big business, but it is not loved. It is blamed for polluting the landscape, spoiling the beaches and corrupting the locals' morals. This is partly the countries' own doing. In the 1960s the governments of Spain, Portugal, Italy and Greece encouraged the building of hotels and other tourist infrastructure, which seemed the fastest way to catch up with the wealthier north. During the 40 years of breakneck development that followed, vast stretches of the Spanish coast were concreted over, transforming the Costa del Sol into the Costa del Concrete and attracting hordes of tourists in search of sun, sea and sand. Some Greek islands have come to resemble a Hellenic Hong Kong, with high-rise hotels and traffic jams.
Some people in tourism made good money, but in recent years even they have started to notice how the ugliness and the noise is keeping visitors away. The government in Madrid grew so concerned that it bought tracts of seaside land itself, to stop developers from getting their hands on it.
The package and the bill
As tourism is about to explode in the developing world, governments should heed such lessons. During the next two decades the growth of tourism in emerging economies will be two or three times that of the developed world (see article). That is something to celebrate. Mass travel is a path to development and one of the fruits of increasing wealth—travel for experience, for food and culture, and for sheer pleasure. Yet it also contains the danger that development will destroy the very thing people have come to enjoy.
Emerging economies are suspicious about the developed world telling them to act responsibly. Why shouldn't they exploit their natural resources? A pristine hard-to-reach beach with a small exclusive hotel may be just what rich Westerners want; local fishermen would prefer new schools for their children. But with tourism, it is not so clear that rapid development really is in the locals' economic interest. If their government trashes their natural habitat, it is like an investment manager who pays you big dividends out of your capital. The money is good for a while, but you lose in the long term.
Take care of your capital
That is worth remembering because the lesson from tourism in the West is that nobody keeps an eye on the capital. The bay, the ancient site, the coral reef and the fresh water have no single owner to protect them. The hotelier who raises a 1,000-room monstrosity will pay for the bricks and mortar, but not for scarring the view or wrecking an historic monument.
The question planners in these new markets should ask themselves is where they want tourism in their country to be in 20 years. At the moment tourists from emerging markets have their own tastes. Russians like two weeks on a sunny beach, wild parties and lots of retail therapy. The Chinese prefer urban travel to sea and sand. People from the Gulf states travel in big families and require halal food. Yet, with the progress of economic prosperity they will probably become more like Europeans and Americans, who want scenery, a decent environment and a smattering of history and culture. If you destroy your heritage and scenery, you will come to regret it.
From Mexico comes a cautionary tale. The country's Caribbean coast was once a natural paradise. Then data were fed into a government computer program. It digested the statistics and spat out the name of a potential touristic gold mine: a spit of sand called Cancún. Today Cancún has nearly 24,000 hotel rooms, roughly 4m visitors a year and an average of 190 flights daily. Mass tourism needs mass development, but don't pave paradise to put up a parking lot.
Asia, beware Benidorm
May 15th 2008
From The Economist print edition
Booming tourism in emerging economies promises huge benefits. But not if it copies the mistakes of mature markets
WHEN low-cost air travel was taking off in Europe in the early 1990s, the German and the British ambassadors to Greece used to call each other at the end of each week during the summer, to compare notes on the bad behaviour of the visitors from their countries. No clear winner emerged. Sunburnt Brits and Germans would both get blind drunk, lose their money and passports, wind up in a fight at a beach bar and end the night in one of the Greek islands' police cells.
Tourism in Europe's Mediterranean countries is a big business, but it is not loved. It is blamed for polluting the landscape, spoiling the beaches and corrupting the locals' morals. This is partly the countries' own doing. In the 1960s the governments of Spain, Portugal, Italy and Greece encouraged the building of hotels and other tourist infrastructure, which seemed the fastest way to catch up with the wealthier north. During the 40 years of breakneck development that followed, vast stretches of the Spanish coast were concreted over, transforming the Costa del Sol into the Costa del Concrete and attracting hordes of tourists in search of sun, sea and sand. Some Greek islands have come to resemble a Hellenic Hong Kong, with high-rise hotels and traffic jams.
Some people in tourism made good money, but in recent years even they have started to notice how the ugliness and the noise is keeping visitors away. The government in Madrid grew so concerned that it bought tracts of seaside land itself, to stop developers from getting their hands on it.
The package and the bill
As tourism is about to explode in the developing world, governments should heed such lessons. During the next two decades the growth of tourism in emerging economies will be two or three times that of the developed world (see article). That is something to celebrate. Mass travel is a path to development and one of the fruits of increasing wealth—travel for experience, for food and culture, and for sheer pleasure. Yet it also contains the danger that development will destroy the very thing people have come to enjoy.
Emerging economies are suspicious about the developed world telling them to act responsibly. Why shouldn't they exploit their natural resources? A pristine hard-to-reach beach with a small exclusive hotel may be just what rich Westerners want; local fishermen would prefer new schools for their children. But with tourism, it is not so clear that rapid development really is in the locals' economic interest. If their government trashes their natural habitat, it is like an investment manager who pays you big dividends out of your capital. The money is good for a while, but you lose in the long term.
Take care of your capital
That is worth remembering because the lesson from tourism in the West is that nobody keeps an eye on the capital. The bay, the ancient site, the coral reef and the fresh water have no single owner to protect them. The hotelier who raises a 1,000-room monstrosity will pay for the bricks and mortar, but not for scarring the view or wrecking an historic monument.
The question planners in these new markets should ask themselves is where they want tourism in their country to be in 20 years. At the moment tourists from emerging markets have their own tastes. Russians like two weeks on a sunny beach, wild parties and lots of retail therapy. The Chinese prefer urban travel to sea and sand. People from the Gulf states travel in big families and require halal food. Yet, with the progress of economic prosperity they will probably become more like Europeans and Americans, who want scenery, a decent environment and a smattering of history and culture. If you destroy your heritage and scenery, you will come to regret it.
From Mexico comes a cautionary tale. The country's Caribbean coast was once a natural paradise. Then data were fed into a government computer program. It digested the statistics and spat out the name of a potential touristic gold mine: a spit of sand called Cancún. Today Cancún has nearly 24,000 hotel rooms, roughly 4m visitors a year and an average of 190 flights daily. Mass tourism needs mass development, but don't pave paradise to put up a parking lot.
Saturday, May 17, 2008
Golf exercises
Getting Fit for the Links
Golf-Specific Exercises Can Pay Off --
If You Stick With Them
May 17, 2008; Page W5
A lot of golfers I know follow Mark Twain's regimen for physical fitness: "Every time I feel the urge to exercise, I lie down until it goes away."
Still, it's hard not to wonder what a little more application on the physical front could do for one's golf game, given the way golf magazines and TV commentators rhapsodize about the maniacal workouts of players such as Tiger Woods and Vijay Singh. I have nothing against exercise. In fact, I enjoy a heart-thumping 30 minutes on the elliptical trainer whenever I can find time for the gym. Ditto for the pumped-up feeling in my arms and legs after a weight workout.
But there's a difference between this type of general exercise and the golf-specific drills prescribed in articles and on videos. Golf routines usually have you assume some kind of awkward position -- standing on one leg or prone like a wounded bug on your back with feet and arms waving in the air. Then they call for repeatedly moving an isolated body part or an obscure muscle -- such as the gluteus medius -- in an unnatural way.
These exercises, in my experience, are amazingly tedious. Sometimes when you finish, you don't even feel tired; there's instead a fatigue in the microfibers of the muscles, which isn't the same as that good old satisfying "burn." You have to take it on faith the effort is worthwhile.
The most authoritative source for golf fitness advice is the Titleist Performance Institute, a supergym and golf-practice center in Oceanside, Calif. For $10,000, you can go there and get a physical workup by doctors, physical therapists, nutritionists and swing instructors, plus a new set of custom-fitted Titleist clubs. Titleist's Tour pros spend a lot of time at TPI.
Or you can log on to its Web site, mytpi.com (free after registration), and develop your own fitness program. The site goes deep with articles explaining the biomechanics of golf and provides sample workout regimes geared to different goals, such as power, balance or flexibility. Short video clips demonstrate each exercise.
The experts at TPI know their stuff, and the workouts they prescribe can help your golf game -- if diligently pursued. That's a big if.
Take, for example, Tour pro Rory Sabbatini, whose case study is posted on the site in such detail it feels like an invasion of privacy. Between February 2007, when he started working with trainer Jeff Banaszak, and February 2008, Mr. Sabbatini improved his internal hip rotation, which is key in creating a stable golf swing, from 25 to 60 degrees on one side and from 27 to 62 degrees on the other. He made dramatic progress in other measures and, more importantly, eliminated the lower left back pain that had been preventing him from practicing as much as he needed to. His world rankings during that period climbed from 42nd to eighth.
Mr. Sabbatini's progress didn't come easily. Mr. Banaszak, who runs a company called Back9Fitness, traveled to nearly every event where Mr. Sabbatini competed. Early each week he would give Mr. Sabbatini an hour of stretches and deep-tissue massage. He'd spend another 30 minutes working on Mr. Sabbatini's shoulders, trunks and hips before each round and put him through another session afterward. In addition, he supervised two or three strength workouts a week, and gave Mr. Sabbatini daily drills to do on his own. He even whipped up protein breakfast shakes for Mr. Sabbatini and prepared nutritious snacks to eat during rounds.
And that was just maintenance work. On Mr. Sabbatini's off weeks, Mr. Banaszak ordered more intense routines.
For everyday golfers, such commitment would be absurd. "Most golfers don't want anything to do with the gym, to be honest," Mr. Banaszak said. That's why he has decided to focus his business on Tour players rather than on the much larger consumer market.
But even a milder commitment to fitness can help. For those serious about improving their physical capabilities, Mr. Banaszak advises seeking out a well-trained physical therapist for an overall assessment. (The TPI Web site has links to trainers certified in its methods.) This kind of exam can identify any particular concerns, such as limited mobility or muscular imbalance, and therapists can recommend an appropriate conditioning program. After a few sessions, players can perform the exercises alone, but Mr. Banaszak recommends follow-up sessions every two to three months.
"Knowing how to adjust the intensity and when to progress is the part that you really can't do on your own," he said.
And if that's too much trouble? Dave Phillips, a TPI co-founder, said casual players can see dramatic improvements in their swing with as little as five minutes of work a day, provided it is the right kind.
Increasing internal hip rotation by just five degrees, for example, can lead to a significantly better turn behind the ball, which can increase distance and take pressure off the lower back. "Most back injuries from golf are caused because the hips aren't able to turn enough," he said, "causing the lower back to have to jump in and do a job it's not designed to."
A simple exercise to improve hip mobility is called the windshield wiper. When lying on your back, raise your knees and put your fists between them. Then, with calves parallel to the floor, push your feet out as wide as possible, hold briefly and repeat many times.
For most golfers, the two other prime areas to work are the gluteal muscles that run up the back of the upper legs and the core muscles of the lower torso. Mr. Phillips calls these the King and Queen. Both sets of muscles, he said, help the golfer brace against rotational forces during the swing and hold the body at proper angles.
The bedrock golf exercise, he said, is the deep squat, done with arms extended, holding a golf club over your head. "It involves all the most important golf muscles, both in the lower body and in the shoulders," he said. Nearly all Tour players can squat at least to where their thighs are parallel to the floor, he said, but only about 30% of American adults can.
"Those are the ones I'd work on: the King, the Queen, the hips and the deep squat," said Mr. Phillips. "Take five minutes a day while you're watching television. You'll be amazed at how your swing will improve."
Golf-Specific Exercises Can Pay Off --
If You Stick With Them
May 17, 2008; Page W5
A lot of golfers I know follow Mark Twain's regimen for physical fitness: "Every time I feel the urge to exercise, I lie down until it goes away."
Still, it's hard not to wonder what a little more application on the physical front could do for one's golf game, given the way golf magazines and TV commentators rhapsodize about the maniacal workouts of players such as Tiger Woods and Vijay Singh. I have nothing against exercise. In fact, I enjoy a heart-thumping 30 minutes on the elliptical trainer whenever I can find time for the gym. Ditto for the pumped-up feeling in my arms and legs after a weight workout.
But there's a difference between this type of general exercise and the golf-specific drills prescribed in articles and on videos. Golf routines usually have you assume some kind of awkward position -- standing on one leg or prone like a wounded bug on your back with feet and arms waving in the air. Then they call for repeatedly moving an isolated body part or an obscure muscle -- such as the gluteus medius -- in an unnatural way.
These exercises, in my experience, are amazingly tedious. Sometimes when you finish, you don't even feel tired; there's instead a fatigue in the microfibers of the muscles, which isn't the same as that good old satisfying "burn." You have to take it on faith the effort is worthwhile.
The most authoritative source for golf fitness advice is the Titleist Performance Institute, a supergym and golf-practice center in Oceanside, Calif. For $10,000, you can go there and get a physical workup by doctors, physical therapists, nutritionists and swing instructors, plus a new set of custom-fitted Titleist clubs. Titleist's Tour pros spend a lot of time at TPI.
Or you can log on to its Web site, mytpi.com (free after registration), and develop your own fitness program. The site goes deep with articles explaining the biomechanics of golf and provides sample workout regimes geared to different goals, such as power, balance or flexibility. Short video clips demonstrate each exercise.
The experts at TPI know their stuff, and the workouts they prescribe can help your golf game -- if diligently pursued. That's a big if.
Take, for example, Tour pro Rory Sabbatini, whose case study is posted on the site in such detail it feels like an invasion of privacy. Between February 2007, when he started working with trainer Jeff Banaszak, and February 2008, Mr. Sabbatini improved his internal hip rotation, which is key in creating a stable golf swing, from 25 to 60 degrees on one side and from 27 to 62 degrees on the other. He made dramatic progress in other measures and, more importantly, eliminated the lower left back pain that had been preventing him from practicing as much as he needed to. His world rankings during that period climbed from 42nd to eighth.
Mr. Sabbatini's progress didn't come easily. Mr. Banaszak, who runs a company called Back9Fitness, traveled to nearly every event where Mr. Sabbatini competed. Early each week he would give Mr. Sabbatini an hour of stretches and deep-tissue massage. He'd spend another 30 minutes working on Mr. Sabbatini's shoulders, trunks and hips before each round and put him through another session afterward. In addition, he supervised two or three strength workouts a week, and gave Mr. Sabbatini daily drills to do on his own. He even whipped up protein breakfast shakes for Mr. Sabbatini and prepared nutritious snacks to eat during rounds.
And that was just maintenance work. On Mr. Sabbatini's off weeks, Mr. Banaszak ordered more intense routines.
For everyday golfers, such commitment would be absurd. "Most golfers don't want anything to do with the gym, to be honest," Mr. Banaszak said. That's why he has decided to focus his business on Tour players rather than on the much larger consumer market.
But even a milder commitment to fitness can help. For those serious about improving their physical capabilities, Mr. Banaszak advises seeking out a well-trained physical therapist for an overall assessment. (The TPI Web site has links to trainers certified in its methods.) This kind of exam can identify any particular concerns, such as limited mobility or muscular imbalance, and therapists can recommend an appropriate conditioning program. After a few sessions, players can perform the exercises alone, but Mr. Banaszak recommends follow-up sessions every two to three months.
"Knowing how to adjust the intensity and when to progress is the part that you really can't do on your own," he said.
And if that's too much trouble? Dave Phillips, a TPI co-founder, said casual players can see dramatic improvements in their swing with as little as five minutes of work a day, provided it is the right kind.
Increasing internal hip rotation by just five degrees, for example, can lead to a significantly better turn behind the ball, which can increase distance and take pressure off the lower back. "Most back injuries from golf are caused because the hips aren't able to turn enough," he said, "causing the lower back to have to jump in and do a job it's not designed to."
A simple exercise to improve hip mobility is called the windshield wiper. When lying on your back, raise your knees and put your fists between them. Then, with calves parallel to the floor, push your feet out as wide as possible, hold briefly and repeat many times.
For most golfers, the two other prime areas to work are the gluteal muscles that run up the back of the upper legs and the core muscles of the lower torso. Mr. Phillips calls these the King and Queen. Both sets of muscles, he said, help the golfer brace against rotational forces during the swing and hold the body at proper angles.
The bedrock golf exercise, he said, is the deep squat, done with arms extended, holding a golf club over your head. "It involves all the most important golf muscles, both in the lower body and in the shoulders," he said. Nearly all Tour players can squat at least to where their thighs are parallel to the floor, he said, but only about 30% of American adults can.
"Those are the ones I'd work on: the King, the Queen, the hips and the deep squat," said Mr. Phillips. "Take five minutes a day while you're watching television. You'll be amazed at how your swing will improve."
Wednesday, May 14, 2008
Bulls and bears
I've been feeling really sleepy and tired lately. Just need to endure a couple more weeks, hope I don't fall sick!
I've been having 2 coffees a day, not counting the numerous teas, but tea doesn't really have an effect, so it doesn't count. I need to cut down to one coffee a day, I think coffee is not doing much good for me.... I'm not a big fan of stimulants.
The market is not moving upward very much, though I'm still very bullish on P52. If that works out it would be the one good thing that happened this year haha!
I really need more exercise to keep me in shape. But it seems like I'm almost down with the flu, so I shouldn't get out and run. This combination of lack of exercise and sickness is not good.
In other news, I've learned how to do the sliding backward stop (skating)! Heheh, I haven't skated in months but just decided to be more daring last sunday and it worked out alright ;). Now I just need to master the forward crossover....
I've been having 2 coffees a day, not counting the numerous teas, but tea doesn't really have an effect, so it doesn't count. I need to cut down to one coffee a day, I think coffee is not doing much good for me.... I'm not a big fan of stimulants.
The market is not moving upward very much, though I'm still very bullish on P52. If that works out it would be the one good thing that happened this year haha!
I really need more exercise to keep me in shape. But it seems like I'm almost down with the flu, so I shouldn't get out and run. This combination of lack of exercise and sickness is not good.
In other news, I've learned how to do the sliding backward stop (skating)! Heheh, I haven't skated in months but just decided to be more daring last sunday and it worked out alright ;). Now I just need to master the forward crossover....
Saturday, May 10, 2008
Oil
Russia's oil industry
Trouble in the pipeline
May 8th 2008
From The Economist print edition
Despite booming demand and record prices, Russia's oil industry faces problems
WHEN the price of oil reached another record on May 6th, of over $122 a barrel, analysts pointed to attacks on pipelines in Nigeria and turmoil in Iraq as the immediate causes. Even small disruptions to supplies from such places can cause the price to jump, since only Saudi Arabia has the capacity to replace the lost production, and it does not seem inclined to do so. But to understand how supplies became so scarce in the first place, one must look at the state of the oil industry in Russia, the world's second-biggest producer.
Over the past seven years, according to Citibank, Russia accounted for 80% of the growth in oil production outside the Organisation of the Petroleum Exporting Countries. The increase in its output in the early part of the decade matched the growth in demand from China and India almost barrel for barrel. Yet in April, production fell for the fourth month in a row. It is now over 2% below the peak of 9.9m barrels a day (b/d) reached in October last year. Before that, the growth in Russia's output had been slowing steadily, suggesting that the drop is not a blip. Leonid Fedun, a vice-president of Lukoil, a local oil firm, says Russia's production will never top 10m b/d. The discovery that Russia can no longer be relied upon to cater to the world's ever-increasing appetite for oil is naturally helping to propel prices to record levels.
Oil and gas have been the foundation of the regime of Vladimir Putin, Russia's outgoing president, and are also a preoccupation of his successor, Dmitry Medvedev, who was chairman of Gazprom, the state-controlled gas giant. The flow of petrodollars has created a sense of stability, masked economic woes and given Russia more clout on the world stage. Yet the malaise afflicting its most important industry is almost entirely man-made. “Geologically, there is no problem,” says Anisa Redman, an analyst at HSBC, a bank.
In principle, Russia's bonanza could continue for years: it has the world's seventh-biggest oil reserves, at 80 billion barrels, according to BP, a British oil firm. And oilmen reckon there are 100 billion more barrels to find—“the biggest exploration prize in the world”, in the words of Robert Dudley, the boss of TNK-BP, BP's Russian joint venture. But Russia has regulated the industry so poorly that production is falling despite the soaring oil price.
“Tax is the major impediment,” says Ms Redman. The government levies an export duty of 65% at prices over $25 a barrel. Add to that various corporate, payroll and production taxes, oilmen complain, and the state creams off as much as 92% of profits. Executives at TNK-BP have argued that rising costs across the oil industry will make many investments in Russia unprofitable unless the tax regime is changed. As it is, TNK-BP accounts for a fifth of BP's production, but only a tenth of its profits.
The government does offer tax breaks on production from older fields. So oil firms, naturally, have been concentrating on squeezing as much oil as they can out of those. Until recently, that was an obvious priority anyway, since fields that had fallen into ruin after the collapse of the Soviet Union in the early 1990s could be revived relatively easily and cheaply. By mapping existing fields more precisely, installing new pumps and injecting water and chemicals into wells to maintain pressure, private oil firms were able to raise Russia's production from 6m b/d to almost 10m b/d, mainly from western Siberia. In 2003 alone, output jumped by 12%.
But this strategy is now yielding diminishing returns. Mr Fedun says the western Siberian fields have reached their natural limit. To keep production at today's levels requires ever more investment. To get Russia's output growing again, firms must make huge investments to develop new fields in remote provinces such as eastern Siberia and the Sakhalin region.
There has been some growth in these areas, mainly thanks to the less heavily taxed projects, called “production-sharing agreements”, that the government offered briefly in the late 1990s but has since curtailed. Strip out the production from these projects, and Russia's output has been in fitful decline since August 2006, according to analysts at Citibank. Worse, the output from these projects declined last month too. The government's ill concealed expropriation of various prize assets over the past few years has only added to the reluctance to embark upon big new projects.
Lukoil, for example, is investing $10 billion a year, but roughly 30% of that goes into gas production, which is now more lucrative than oil, given rising domestic prices for gas and lower taxation, says Mr Fedun. It has also been investing in refining, since the export tax on petrol and diesel is lower than that on crude oil. It is still projecting 4% annual growth in its output over the next 15 years, but the figure would be much higher if the government eased the tax burden, says Mr Fedun. Rosneft, the state-controlled oil champion, took on so much debt buying the plum divisions of Yukos, a private firm bankrupted by the Kremlin's zealous tax collectors, that it has little leeway for expensive new projects. Other firms are hoarding their profits and waiting for the tax regime to change.
The government did provide some $4.5 billion in tax breaks last year. But this, the oil companies argue, is barely enough to keep production stable. In his inaugural speech to the Duma as prime minister on May 8th, Mr Putin said that taxes on the industry must be reduced. However, new fields can take a decade to develop. The Kremlin has also failed to hand out exploration rights in the Arctic—the region oilmen consider most promising. And it says that in future the foreign firms with the expertise to tap offshore fields beneath frozen seas will be limited to minority shareholdings in big projects. “Oil production will be whatever the government decides it to be,” says Mr Fedun.
Meanwhile, Russia today is more dependent on oil and gas than it has ever been, argues Chris Weafer, a long-time Russia watcher and chief strategist at Uralsib, a bank. The share of oil and gas in Russia's gross domestic product has more than doubled since 1999 and now stands at above 30%, according to the Institute of Economic Analysis, a think-tank. Oil and gas account for 50% of Russian budget revenues and 65% of its exports. Yet the government has put at risk the goose that lays these golden eggs.
Trouble in the pipeline
May 8th 2008
From The Economist print edition
Despite booming demand and record prices, Russia's oil industry faces problems
WHEN the price of oil reached another record on May 6th, of over $122 a barrel, analysts pointed to attacks on pipelines in Nigeria and turmoil in Iraq as the immediate causes. Even small disruptions to supplies from such places can cause the price to jump, since only Saudi Arabia has the capacity to replace the lost production, and it does not seem inclined to do so. But to understand how supplies became so scarce in the first place, one must look at the state of the oil industry in Russia, the world's second-biggest producer.
Over the past seven years, according to Citibank, Russia accounted for 80% of the growth in oil production outside the Organisation of the Petroleum Exporting Countries. The increase in its output in the early part of the decade matched the growth in demand from China and India almost barrel for barrel. Yet in April, production fell for the fourth month in a row. It is now over 2% below the peak of 9.9m barrels a day (b/d) reached in October last year. Before that, the growth in Russia's output had been slowing steadily, suggesting that the drop is not a blip. Leonid Fedun, a vice-president of Lukoil, a local oil firm, says Russia's production will never top 10m b/d. The discovery that Russia can no longer be relied upon to cater to the world's ever-increasing appetite for oil is naturally helping to propel prices to record levels.
Oil and gas have been the foundation of the regime of Vladimir Putin, Russia's outgoing president, and are also a preoccupation of his successor, Dmitry Medvedev, who was chairman of Gazprom, the state-controlled gas giant. The flow of petrodollars has created a sense of stability, masked economic woes and given Russia more clout on the world stage. Yet the malaise afflicting its most important industry is almost entirely man-made. “Geologically, there is no problem,” says Anisa Redman, an analyst at HSBC, a bank.
In principle, Russia's bonanza could continue for years: it has the world's seventh-biggest oil reserves, at 80 billion barrels, according to BP, a British oil firm. And oilmen reckon there are 100 billion more barrels to find—“the biggest exploration prize in the world”, in the words of Robert Dudley, the boss of TNK-BP, BP's Russian joint venture. But Russia has regulated the industry so poorly that production is falling despite the soaring oil price.
“Tax is the major impediment,” says Ms Redman. The government levies an export duty of 65% at prices over $25 a barrel. Add to that various corporate, payroll and production taxes, oilmen complain, and the state creams off as much as 92% of profits. Executives at TNK-BP have argued that rising costs across the oil industry will make many investments in Russia unprofitable unless the tax regime is changed. As it is, TNK-BP accounts for a fifth of BP's production, but only a tenth of its profits.
The government does offer tax breaks on production from older fields. So oil firms, naturally, have been concentrating on squeezing as much oil as they can out of those. Until recently, that was an obvious priority anyway, since fields that had fallen into ruin after the collapse of the Soviet Union in the early 1990s could be revived relatively easily and cheaply. By mapping existing fields more precisely, installing new pumps and injecting water and chemicals into wells to maintain pressure, private oil firms were able to raise Russia's production from 6m b/d to almost 10m b/d, mainly from western Siberia. In 2003 alone, output jumped by 12%.
But this strategy is now yielding diminishing returns. Mr Fedun says the western Siberian fields have reached their natural limit. To keep production at today's levels requires ever more investment. To get Russia's output growing again, firms must make huge investments to develop new fields in remote provinces such as eastern Siberia and the Sakhalin region.
There has been some growth in these areas, mainly thanks to the less heavily taxed projects, called “production-sharing agreements”, that the government offered briefly in the late 1990s but has since curtailed. Strip out the production from these projects, and Russia's output has been in fitful decline since August 2006, according to analysts at Citibank. Worse, the output from these projects declined last month too. The government's ill concealed expropriation of various prize assets over the past few years has only added to the reluctance to embark upon big new projects.
Lukoil, for example, is investing $10 billion a year, but roughly 30% of that goes into gas production, which is now more lucrative than oil, given rising domestic prices for gas and lower taxation, says Mr Fedun. It has also been investing in refining, since the export tax on petrol and diesel is lower than that on crude oil. It is still projecting 4% annual growth in its output over the next 15 years, but the figure would be much higher if the government eased the tax burden, says Mr Fedun. Rosneft, the state-controlled oil champion, took on so much debt buying the plum divisions of Yukos, a private firm bankrupted by the Kremlin's zealous tax collectors, that it has little leeway for expensive new projects. Other firms are hoarding their profits and waiting for the tax regime to change.
The government did provide some $4.5 billion in tax breaks last year. But this, the oil companies argue, is barely enough to keep production stable. In his inaugural speech to the Duma as prime minister on May 8th, Mr Putin said that taxes on the industry must be reduced. However, new fields can take a decade to develop. The Kremlin has also failed to hand out exploration rights in the Arctic—the region oilmen consider most promising. And it says that in future the foreign firms with the expertise to tap offshore fields beneath frozen seas will be limited to minority shareholdings in big projects. “Oil production will be whatever the government decides it to be,” says Mr Fedun.
Meanwhile, Russia today is more dependent on oil and gas than it has ever been, argues Chris Weafer, a long-time Russia watcher and chief strategist at Uralsib, a bank. The share of oil and gas in Russia's gross domestic product has more than doubled since 1999 and now stands at above 30%, according to the Institute of Economic Analysis, a think-tank. Oil and gas account for 50% of Russian budget revenues and 65% of its exports. Yet the government has put at risk the goose that lays these golden eggs.
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