SharperDingaan

Assume your current car is using 15 gallons/week (67.5 litre). Your current hybrid ('cause plug-in is not available everywhere) will use maybe 30% of that, 20 litres/week. Costco gas is currently CAD 1.69/liter, and there are 4.33 weeks/month (52/12). Just the gas saving on that hybrid is CAD 347.59/month (67.5-20)x1.69x4.33. Repair/insurance is also cheaper, and savings of CAD 100-150/month are fairly common. At savings of CAD 450-500/month you are going to switch to hybrid asap. https://www.gasbuddy.com/gasprices/ontario/toronto The average family car may be 12 years old, but that ownership is over 2 or more owners. Most cars are leased, and most are for sales reps who have to be seen in fairly new cars. Most leases will be for 5-7 years, and they represent the company as well as the rep. If your company is selling "greening" tech, your reps need to 'walk the talk', and your fleet needs to be all hybrid asap. When the average lease is 7 years, the average fleet age is roughly 4 years (lease life/2). Every major auto manufacturer makes EV's, exports, and a high cost spread over a 15 year life cycle is peanuts/yr. A 2022 Toyota RAV4 Hybrid only costs roughly CAD 40,000, even in a constrained supply chain environment. Capex isn't a limiting factor. We just cannot imagine such radical change happening so quickly, even though it is staring us in the face. We do not see that gasoline powered auto's are not wearing out, they are becoming obsolete. Just as your fully functional ancient beer fridge was replaced with a new one, when you eventually decided that its 2-3x power consumption just wasn't worth the cost anymore. It became obsolete. SD

It is already here. I would suggest to you that most gas guzzlers on the road today, would already be gone were it not taking the supply chain 6-9 months to deliver a replacement hybrid car. Once Covid recovery starts to dominate, and supply chains begin to untwist, the re-sale value of those gas guzzlers drops like a brick - and hybrids don't need price 'rebates' any more. New car plants produce all electric/hybrids, very few produce new IC cars. As existing IC car plants are run down; the existing vehicle fleet will rapidly be replaced. Assuming an average 8-year new-vehicle cycle, about 4 years until most cars on the road are electric/hybrid. Less demand for oil & more demand for gas to fire up the electricity generating power station. O/G reserves extend their lives as the gas/water cut typically rises at the expense of liquids/condensate; existing collection facilities transition to gas at minimum incremental cost. However, there is NO new reserve addition - you simply extend the life of what you already have. Hence the idea that the 'best' oil, is that oil which is never produced. Effing heretics!!! Lot of implications here. SD

The tax thing is unlikely to pass. O/G companies are not paying taxes, because they are both incurring big tax losses when writing down assets to comply with ESG, and carrying forward prior year losses. Every 100B of write down reducing tax owing by roughly 37B. No additional moneys other than royalties on additional production. The Biden view is longer term, the industry view short term. Like it or not IC engines are being phased out in favor of electric, creating less demand for ongoing o/g. Restricting drilling on new lands, foot dragging on egress, etc. is just asset stripping; minimize ongoing net capex, and get as much out of the existing infrastructure now while you can - before o/g production is wound down in favor of electric generation. The industry view is 1970's first oil price shock. Get the gas pump price down! asap!!! Give us the leases, give us the financing, get out of our way, and let us drill baby, drill. Problem is that it is now 50 years later, times have changed, and a great many haven't been able to move on with the times. Lots of frustration 'cause its our last shot at the golden ring, we know exactly what we have to do, yet you will not let us do it - what the f*** is wrong with you people!!! Obviously, lots of ways by which this could be played. SD

Bear in mind that the US/Poland exchange is really an open-ended revolving 'lend/lease' arrangement. US supplied Polish planes (of different types) over the Ukraine, flying out of Polish air bases, supported by US AWAC assistance. Predator drones continually looking for high-ranking 'targets of opportunity'. Arms merchants need to demonstrate the efficacy of their weaponry, live targets are better, and it is very easy to make foreign pilots 'dual nationals'. Hot pursuits back into Polish airspace providing live targets for sophisticated friend/foe air defense systems. Putin propaganda cant hide large numbers of crashing aircraft, or burnt bodies coming home in body bags, and it would appear that is now the intent. It also cant hide how the war has turned the 1945 Russian 'special hate' for Nazis... into todays very similar Ukrainian 'special hate' for Russian troops. Afghanistan repeating itself. SD

US/Canadian production is to be held down, and put under ESG controls. Iran/Iraq/ME production increased to supply Europe and displace Russian oil. They can supply a lot more o/g and quicker than the US/Canada can, and the more they do the less extreme the price spike will be. 'Cause after this is over, we're all going to driving electric, and all those US/Canadian investments need to have already been paid off. It's just being smart. SD

Not a big risk. Russia already has weapons, and still needs USD/Euro to pay for what it needs - can't easily do that with Yuan. In the near term there is no real reserve currency alternative, in the long term it just accelerates replacement with a functional digital currency equivalent. All good. Today the sanctions are primarily banking, tomorrow it would seem that oil will be added, the day after - the illegal drug trade selling into the West? When the troops coming back from the Ukraine start talking about what they saw/did, 'external' news feeds cannot be totally kept out, and ruthless rich men become poor - what do you think happens? Putin in a box, and we all go back to being friends again. He pushes the button, we all lose. Go back to being a gang level street punk, or take care of the problem? SD

The primary end buyers of black market oil are India and China. In simplified terms, the oil sanctions discussion is remove Iranian sanctions, and impose Russian ones; China and India sell their Iranian purchases into Europe, buy the replacement crude from Russia, and keep the price difference. Temporary demand/supply imbalances met from SPR releases and new drilling. The US clearly sees new drilling/infrastructure repair as primarily coming from Iran/Iraq, not the US/Canada. The risks are relatively small, the increments very large, and egress already established. However, not what many from US oil want to hear. It would appear that the tool of choice to tame inflation pressure is going to be higher oil prices versus higher interest rates. Oil prices were already going to rise as Covid related recovery demand came to bear. However, it will rise a lot higher when Russian export terminals suddenly experience ongoing 'accidents', shutting in production. While Russia may take the Ukraine, sanctions are unlikely to stop until Putin is gone. High crude prices for at least another 12 months. SD

The reality is that the USSR used to be a super-power. Now it's just Russia, and its the junior in what are now three super-powers. The powers that be recognize they have little remaining time at the top, and want their 'glory' days back! Gaming wise they have little to lose - whether death by misadventure, or death by dementia/failing health, death is still very near. The world has moved on, whereas these individuals were not able to. THE big takeaway from 1945, was that an early and successful assassination would have saved millions of lives. The SECOND takeaway was that population/infrastructure replacement will touch off a long and sustainable economic boom. Putin in a box, as an economic policy; wars exist because it was not possible to reach a political solution. Lot of direct investment opportunities presenting themselves, but expect to lose everything invested. The reality is that trying to predict outcome on the other side of a difficult regime change is impossible. In the meantime try to take in as many Ukrainians as you can, get them to safety, support them in a fresh start, and get out of their way. Stand up to be counted when it mattered, and you will reap the rewards for DECADES to come. SD

We used to be mocked by those in love with their Ford 150, 250, etc. - primarily because we prefer the zip of the Mini (Baby BMW), and now the hybrid. Many of the folks who own those 150's, also own variable mortgages, and their overall costs (inflation) are now escalating by at least $100/month - each and every month. They knew they were taking a risk, but the money was good! and the risk? ... far away, and remote! But if enough people were 'wrong' at the same time, it really wasn't going to be 'their' problem anymore - it was going to be 'ours'. Welcome to poor mans moral hazard ! Obviously, if you took precautions, you're going to do very well; whereas those 'others' ... not so much. Just keep in mind that it's not a lot of fun when you're making a killing, and your neighbors are losing their homes to their new inability to make ends meet. Everyone has to live somewhere, but to keep your wealth - others have to allow it. 'Gated Community' is just the pretty word for 'compound' ... otherwise known as a 'gilded cage' SD

Physically sever where the (western) replacement parts/expertise cannot be easily replaced. Can't bribe if the pipe is physically bust, to repair they have to cannibalize from elsewhere, and accidents happen . Cut off the money flow (oil sales, banking, etc.) and they suffocate. Use military force to physically sever the drug pipelines to the west, and the oligarchs have to react. Quickly becomes a choice of give up the Ukraine, or give up your life. Peace negotiations take time, Putin's time is rapidly running out, the failures are mounting (Kiev airport), tanks/choppers are trapped in the Ukraine, and mercenaries now have the required weaponry. Ultimately the czar has to go, and everybody (oligarchs included) loses if he goes the nuclear route. Both Cesar, and Genghis Khan, were not able to survive their hordes SD

There is more than enough existing LNG capacity in Qatar and Oman. Tankers only need to go to/from the Netherlands &/or southern European facilities from which the LNG/gas can be subsequently piped - short trips. Tankers can also go to/from US Gulf & East Coast facilities direct to Rotterdam, at the already tested roughly 12/week - longer trips. There is a reason why the Netherlands o/g loading facilities were recently cyber attacked. https://www.spglobal.com/platts/en/market-insights/latest-news/energy-transition/091521-global-gas-power-sector-to-drive-middle-east-gas-demand-as-hydrogen-stays-small https://www.cpomagazine.com/cyber-security/fuel-troubles-continue-in-europe-as-oil-terminals-in-netherlands-and-belgium-suffer-cyber-attacks-unclear-if-breaches-are-coordinated/ Physically sever the Nord Stream pipelines, and you cant bribe to let the gas through There will be disruption, but the Russian gas will ultimately be permanently displaced - hence the new deal with China. The smart folks would also ban off-loading tankers from Russia, and physically sever the loading facilities on the Northern Sea Route to the Pacific. Russian would be forced to sell to China at a both a discount and a fearsome transportation differential - welcome to the egress bitch!. The Chinese in turn selling their now 'surplus' imports into Europe at elevated prices https://en.wikipedia.org/wiki/Northern_Sea_Route The banking stuff is important, but to really make it bite - states need to coordinate seizure of toys/assets/accounts, liquidate them, and keep the proceeds. Even in a Canada, protestor truck rigs are seized and sold, with proceeds going to the City of Ottawa to pay for damages Suddenly make lots of rich people poor, and they will be quick to assign blame. With mercenaries everywhere you go, Moscow becomes a very dangerous place. SD

The reality is that the Ukraine will be invaded .... however Russia then needs to keep it. The political solution is another Ukrainian state declaring itself independent, recognition by the west, and a provisional acceptance into NATO subject to missile placement in that state. Sanctions remain, Putin goes ballistic, and the Ukraine remains a no-mans land until both sides pack up and go home. Mercenaries exist for very good reasons, and are widely used by all. Sever the Nord Stream pipelines, such that they can't pump for a while, and can't be easily repaired under sanctions. Prices go up, Germany temporarily gets its gas from the ME/US instead, and everybody but Russia makes out like bandits. Call the bluff. SD

Growing cross border shelling has gone on for 2-days now, and the news has been hidden behind the Olympics. Invasion delayed because the big buyer of Russian gas doesn't want an upstaging of the big event they are hosting - invade while the games are on, and the deal is off? Ukrainian officials talking 'soothingly' with the assistance of a AK-47 at their head? Tanks cross the border, for whatever reason, and WTI very quickly goes > $100. And if they don't take Kyiv by nightfall on day-1, those tanks die - by the hundreds. SD

The trick to severing o/g infrastructure is to localize the damage. Long enough to stop the flow and cut off income, but strategic enough that replacement parts/expertise can only come from the west. Disable the collection points, blow the storage facilities, and force a hard suck on the reserves. Can't project force for too long, if you do not have the oil. Russian exports can be readily replaced by Iraqi, Iranian (NG), Qatari (NG), and US/Canada (NG, heavy oil) supply - but the timing differences have to be met from global inventory. We get higher WTI prices because of that inventory squeeze. We get higher drilling costs when the primarily western technology is put under sanctions. Failing at invasion is dangerous. Freeze all Russian western assets and loan facilities, dismantle Russian drug and weapons supply, and Moscow becomes a very dangerous place. Oligarchs can be a bastard, and how often does a crime family get to clean house and move up? The smart move is not to start. SD

The reality is that a large portion of the Ukraine population is pro Russian, and that population largely lives near the Russian border. However they are a minority within the Ukraine, and the majority of Ukrainians choose democracy. So ..... if you can't get your way, and life would be better for you under Russian rule ... what do you do? Even the US thinks Russia has little choice but to invade, and that they very likely will take some territory. Then Russia has to keep it, NATO has to demonstrate its chops, and the end goal is regime change without triggering nukes. The fighting stops when the Ukraine is no longer worth the cost, and there is a graceful way out. The hostilities stop with Putin in a box, as the next 'ace of spades'. All one can do is stay as far away as possible, and position oneself for volatility. CNN isn't going to be reporting on the killing fields until well after the event, and it is going to be both heavily sanitized and censored. This isn't Disney .... What do think happens if/when the hundreds of tanks discover there is no gas one day in? at the same time the night killing begins? What do you think happens when the Russian oilfields, pipelines, refineries, loading facilities, and storage (including tankers) are severed, at the same time that Iranian sanctions and US drilling restrictions are lifted? We're pretty sure o/g will do very well. SD

Similar story in the craft beer biz ... We have more demand than we know what to do with, but it is just impossible to reliably get the most basic of packaging - cans, glass, keg components, sealers, labels, C02, etc. If you are not part of a bulk buying collective, or sharing trucking, you're f****d. We pass the costs on per batch, and try to minimize impact by producing as big a batch as possible. The good news is that customers are telling us they'll pay up to 25%+ more - if we bring back the small batches. Direct feed from the bright tank, $10 a glass in the summer beer garden; $12 if we throw in live music for the afternoon. People are willing to pay, but the price increases are permanent, and materially more than the headline CPI number. Lot of staff are burnt out, and most employers are keeping total pay the same, while cutting hours - to produce pay raises in the 5% range. The loss in hours being made back through higher productivity. SD

It really doesn't get much better than this. Should the rumors hold up, we close out the next 2 weeks at WTI > USD 100 https://www.pbs.org/newshour/world/putin-to-invade-ukraine-next-week-according-to-u-s-officials SD

These numbers have been heavily manipulated. The numbers divide the C02 spent to maintain the infrastructure, by the throughput - hence 2020 C02/BOE trends up because throughput was reduced for part of the year (lack of pipeline egress, super-wide differentials) Industry arguing C02/BOE declines, IF you allow us to raise throughput further! all quite true as long as no new mines are opened. Environmentalists arguing bullshit as CO2/BOE is inherent to the extraction method, and has nothing to do with economies of scale. Hardly surprising there is grid-lock, and difficult for either side to admit they ain't playing fair. Good news for investors is that new mines are impossible, and new capex can only go into efficiency improvements &/or CO2 sequester. FCF for buybacks, putting a minimum ROE under the share price. Environmentalists forcing the capital discipline that industry couldn't do itself. The next time you see an environmentalist, give them a hug! SD

We all also need to keep in mind the 'stun' factor which is very real here. When BTC was < USD 15,000, very few imagined that it would go much higher - despite the accumulating evidence that significant and material structural market changes were taking place. People just could not imagine, that net money inflows would be so large - that BTC really had nowhere to go but up. It was much more comforting to simply deny, and spout slogans - BTC is rubbish, nothing backs it, etc. Mass cognitive failure, great for the rest of us It is the same thing with O/G. On our little island, people just cannot imagine the coming change, despite the overwhelming and growing support for it. Mass cognitive failure, great for the rest of us! Every druggie eventually gets to the end of their fix, whereupon the search for the next fix begins. Should the supply be restricted in some fashion, mass cognitive failure turns into mass panic USD 200/boe forecasts are not unrealistic, they just aren't sustainable - which doesn't matter for an o/g producer. All that is really required at the time, is a deep and liquid forward market. All of which is just the tide changing. Anything that can float (turkeys flying in strong winds) does extremely well. GLTA SD

Shush! CVE, SU, MEG are up 24%, 20%, 33% since Dec-31 - and this is before Q4 earnings announcements SD

Ah..... but when he was a young man, it was back in the 'olden times' - last century! Fortunately, it's a whole different world today SD

Just to add to this .... A new investor needs to recognize that they will have two main 'risk windows' during their lifetime. When you are roughly between 20-30 and it is just you, and again around 55-65 - once you have your stash. In both windows, generally speaking - the highest return on your dollar, will be on those dollars spent on yourself. In your 20's - the dollars spent on education, professional designations, shopping for significant other. In your mid 50's - the dollars spent on reinvention to cover your next 20-25 years. You want to be long term greedy; exploitation of the short term opportunities is nice - but secondary. The reality for most is that 'trading' is really just a zero-sum game spanning decades - that 8-10% CAGR over a 25yr period is often 10-15 yrs of heavy losses, offset by maybe 5-10 yrs of big gains. Out-of-the-box you are utter sh1te, hopefully 25 yrs later you actually know something! (Gladwell 10,000 hours thing) Lots of ways to be long-term greedy. A great many immigrant communities look to housing - the own 2-3 rentals for retirement income. The more entrepreneurial look to business - buy the building you operate in, pay it off over time, liquidate upon retirement, use the proceeds to fund your retirement plan. The more trades orientated - start their own companies, put their profits into operations/properties that are repaired/flipped, and retire to villas. The professionals look to their firms pension plans, beneficiaries contributing the maximum they can, leaving management to other professionals. All of it a mind-set thing. Obviously, personality plays a part, but it also evolves over time. There are a great many very successful strong-minded people in the world, with varying degrees of 'color' - but almost every one of them is comfortable in his/her own skin. If they weren't, Darwinism would have crushed them a long time ago. The smartest thing a new investor can do is think strategically, pick your swim-lane, then thoroughly enjoy yourself while getting on with it. Obsessing over the 20% of 'investment', while ignoring the 80% of 'real life', really just misses the point of life. Good luck! SD

FWIW, in this environment, it seems that combining fortunes with family members may require some kind of long-term commitment (10-20 years?) and a no-questions-asked and sealed-trust component? +1 Think across generations, think training well beyond just 'investing', and the female side governing their own arrangements. If you didn't know already, you will quickly find out where the brains really are! SD

The fair deal is to 'walk away' The horse has already been led to water. If it doesn't want to drink, it's not to you to make it - It's not your decision. Hard to accept, but the better for all. To many people, monetary wealth is simply having the money to comfortably be able to pay for what you need, through until you eventually croak. If you already have more than enough, making the pile bigger via compound growth or minimizing inflation, just isn't relevant. You already have more than you can spend, getting even more is essentially worthless. Wealth is just being measured on other, and more relevant, metrics. To beneficiaries, that 'old bastard' should be making every nickel he can! so as to maximize my inheritance!! I have a mortgage to pay off, expensive cars to buy, a lifestyle to maintain - and it ain't cheap! Hungry mouths. Hence either 'walk away', or come at it a different way. SD

Just to throw in some perspective ... We have been in a financial 'emergency' ever since 2006/Lehman. 15 years of consecutive constant and aggressive CB manipulation to stave off global depression. CB's have done a great job, but the market has little memory of anything but CB bailout. Market discontinuity CB's are raising rates, and many plan to be aggressive - multiple successive hikes of 25-50bp over a shorter time frame. The market will throw a fit every hike, and throw a real fit should a subsequent melt-up be met with a 50bp hike The reality is that CB's need to snuff out aggressive inflation, and get more people back into the workforce. Raise rates 100bp, to raise your floating rate monthly mortgage payment, and you/your family are going back to work. Good news for everyone. Omicron is peaking in Canada, and not far from peak in most other places - Ontario will have lifted all restrictions by Mar-31. It's pretty evident the economy is expected to snap back hard, and pretty soon - however, the market prefers to deny. Opportunity https://covid-19.ontario.ca/public-health-measures So what? Any kind of FI instrument is going to be a lot cheaper, and pretty soon. If you're pretty sure the monthly/quarterly payment is reliable, yields should rise in a big way Lot of money is about to panic, and overwhelm the normal money flows - gotta love a buffalo jump We're coming into an environment of extreme change, not much different to what the robber barons experienced in their time. Back then there was the JP Morgan, Carnegie, etc. Today? they are merely a benchmark for a young and enterprising lad, with healthy dabs of ambition! SD