Items this week:

2008 Peak Oil Conference, Mexico, Nuclear Power, Internet Power Usage, World's 4^th largest energy user and Gasoline Price Temperature Map

House votes to let government sue OPEC.

Associated Press (May 22^nd) ~ "Decrying near-record high gasoline prices, the House voted Tuesday to allow the government to sue OPEC over oil production quotas." This is one of the dumbest ideas I have ever heard come out of our congress. If this is an example of the best they can offer us for energy policy we are all in much deeper trouble than I thought.

http://www.msnbc.msn.com/id/18808477/

Subsidies will have to end – Chinese Oil Giant Sinopec posts further losses

Chinastakes.com (May 27^th) ~ "Sinopec's latest quarterly financial report puts the company's earnings per share at .077yuan, 65.78% down over the same period last year. Without a government granted subsidy of 7.4 billion yuan for the quarter, the company would actually be running in the red." The Chinese government is afraid of the inflation implications of allowing energy prices to rise. However, the longer they play this game the worse the ultimate shock will be. If they appreciated the implications of Peak Oil they would never have played the game this way. At some point they will follow Indonesia, Taiwan and other SE Asian countries in pulling back from energy subsidies. When they do it is going to sting.

http://www.chinastakes.com/story.aspx?id=400

It is not just the airlines that have a problem.

Wall Street Journal (May 27^th) ~ "Dow Chemical Co. said it will raise prices of all its products by up to 20%, effective June 1, a move the company said is "essential" to its efforts to mitigate the effects of surging energy and related raw-material costs." Energy is The Master Resource that is going to drive costs in every sector of the economy. There is more on DOW in this week's report.

http://online.wsj.com/article/SB121198109401025957.html?mod=wsjcrmain (WSJ subscription required)

"Oil has reached a turning point"

Financial Times (May 27^th) ~ "What is now unfolding is an oil shock. The fact that the world could take $80 in its stride in the context of strong economic growth does not mean that a price that is 60 per cent higher at a time of a credit crunch will be so easily assimilated." Daniel Yergin of CERA makes several very valid points in his Comments in the Financial Times, particularly those related to the cost escalation facing the oil industry. However, as usual he is reluctant to face the realities of geology constraining supply from here on out.

http://www.ft.com/cms/s/0/57b6ff18-2bf2-11dd-9861-000077b07658.html

The Wall Street Journal begins to face Net Exports

Wall Street Journal (May 29^th) ~ "In all, according to the Energy Department figures, net exports by the world's top 15 suppliers, which account for 45% of all production, fell by nearly a million barrels to 38.7 million barrels a day last year. The drop would have been steeper if not for heightened output in less-developed countries such as Angola and Libya, whose economies have yet to become big energy consumers." They are beginning to get a grip on Net Exports, but if prices fall they will probably forget all about it. There is a great graphic of exports with this article.

http://online.wsj.com/article/SB121200725158327151.html?mod=hpp_us_whats_news (WSJ subscription required)

Link to this week's Master Resource Report 2008-05-30

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

Don't miss the Video on page one of this week's report.

Robert Hirsch on CNBC.

George Bush yesterday told leaders of the oil-rich states of the Middle East that they must face up to a future without their precious hydrocarbons.

The Scotsman (May 19^th) ~ "In a stark warning, he said their supplies were running out and urged them to reform and diversify their economies. The outgoing United States president told the World Economic Forum, meeting in the Egyptian resort of Sharm el-Sheikh, that it was time to "prepare for the economic changes ahead." OK, when is he going to tell the American public that they face the same changes?

http://thescotsman.scotsman.com/latestnews/You39re-running-out-of-oil.4095858.jp

Why $4-a-gallon gas is a bargain.

Slate.com (May 21^th) ~ "Gasoline is also a fairly minor expense when you consider the overall cost of car ownership. In 1975, gasoline made up 33.4% of the total cost of owning and operating a car. By 2006, according to the Bureau of Transportation Statistics, gasoline costs had declined to just 17.1% of the total cost of car ownership." Just consider the total cost of ownership to feed the beast in your garage. All the other expenses such as insurance and maintenance make up about 83% of what it cost to drive your car. Maybe our problem just might be that fuel has been too cheap.

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/Why4DollarAGallonGasIsABargain.aspx?page=1

"A pessimistic supply outlook from the IEA…"

Wall Street Journal (May 22^nd) ~ "The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand." It is only a matter of time until this realization begins to spread to coal, natural gas and energy supplies in general. Remember to think beyond the gas tank of your car.

http://online.wsj.com/article/SB121139527250011387.html?mod=hps_us_whats_news

Link to this week's Master Resource Report 2008-05-23

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

China Increases April Diesel, Gasoline Imports to Ease Shortage.

Bloomberg (May 15^th) ~ "China, the world's second-largest energy consumer, increased diesel and gasoline imports last month to ease a supply shortfall on the domestic market." This is one of the many reasons that diesel is priced above gasoline. So far this year China has become a black hole into which energy is being sucked at an ever increasing rate. I heard an observation recently that if something grows too fast it is a weed. Maybe that is worth keeping in mind concerning more than just your lawn.

http://www.bloomberg.com/apps/news?pid=20601207&sid=aKZ3Wvg.IUQA&refer=energy

Great news for thermal solar power.

MarketWatch (May 14^th) ~ "BrightSource Energy, Inc., a specialist in harnessing the heat from the sun to create steam for electric power generation, on Wednesday said it closed a $115 million round of financing from a diverse group of blue-chip backers." This is great news for a clean, renewable and domestic energy source that is ready today for deployment. Thermal solar has the ability to provide base load capacity to the grid which critical for successful replacement of fossil fuels power plants. Especially important in the announcement is the support of three major petroleum companies BP, StatoilHydro and Chevron.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bEB45C1E7-812E-45F5-916C-DF836A44FEE7%7d&siteid=nbs

So what is the rest of the world supposed to do for rigs?

Bloomberg (May 15^th) ~ "Petroleo Brasileiro SA, Brazil's state-controlled oil company, leased about 80 percent of the world's deepest-drilling offshore rigs…" The article reports that Petrobras is currently negotiating to 17 of the world's 21 rigs capable of working offshore in depths of up to 9,000 feet. So here we are again, infrastructure shortages. There is another example in this week's report concerning offshore wind farms.

http://www.bloomberg.com/apps/news?pid=20601207&sid=a8V5CHwdycrk&refer=energy

The oily truth about foreign policy.

Financial Times (May 13^th) ~ "The only plausible routes to "energy security" lie at home in the US - in the development of new technologies and in a change of lifestyles. Americans may have to drive their cars less. But it will be a brave presidential candidate who says that." So far U.S. energy policy has been focused on supply. Until we change that focus our foreign policy will also remained focused on supply and all the troubles it will bring.

http://www.ft.com/cms/s/0/380e0304-2086-11dd-80b4-000077b07658.html?nclick_check=1

Link to this week's Master Resource Report 2008-05-16

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

What makes up the cost of diesel and gasoline at the pump?

On page 4 of this week's report the Energy Information Agency gives the answers.

The idea of a gas tax to cut consumption has already been tested.

The idea of a 50 cent per gallon gas tax is examined on page one this week.

Top 3 air carriers boost fuel charge by $20 roundtrip.

AP (May 8) ~ "The increases by American Airlines, United Airlines and Delta Air Lines affect the carriers' fuel surcharges, which now total $130 roundtrip on many flights. That means passengers on some cheap flights could be paying more in fees and taxes than for the airfare itself." It is not impossible that in the future transportation costs will be comprised mostly of the fuel cost with other cost being a minor component. The airlines are also cutting routes. Neither of these actions will be the last.

http://money.cnn.com/news/newsfeeds/articles/djf500/200805081437DOWJONESDJONLINE001020_FORTUNE5.htm

How would you like to buy gas for $2/gallon again?

Best of all you won't have to buy anything or try to run you car on water.

Link to this week's Master Resource Report 2008-05-09

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.

Chevron CEO Expects High Energy Costs For the Long Haul

WSJ: Chevron is a major producer of crude oil, as well. Don't you have any control over the prices?

Mr. O'Reilly: Absolutely not. Our crude-oil production is about 1.5 million barrels a day, out of 88 million barrels a day globally. So we produce 2% of the total global supply. In reality, even though we're a very big company, we're a very, very small producer.

http://online.wsj.com/article/SB120958882073757383.html?mod=wsjcrmain (subscription required)

China oil consumption hits record high in first quarter of 2008

"According to statistics released Tuesday by the China Petroleum and Chemical Industry Association (CPCIA), China's apparent consumption of oil products composed of gasoline, diesel and kerosene rose by 16.5 percent year on year to 52.73 million tonnes in the first three months, and crude oil, rose by eight percent to91.8 million tonnes." That is right refined product imports rose 16.5% from last year.

http://news.xinhuanet.com/english/2008-04/29/content_8075648.htm

Is a windfall profit tax proposal due soon from Washington DC?

Wall Street Journal (April 30 ) ~ "On Tuesday, grain-processing giant Archer-Daniels-Midland Co. said its fiscal third-quarter profits jumped 42%, including a sevenfold increase in net income in its unit that stores, transports and trades grains such as wheat and corn, as well as soybeans. A sevenfold increase in net income, that makes Exxon look like a bit player. http://online.wsj.com/article/SB120949327146453423.html?mod=wsjcrmain (subscription required)

Iran dumps US dollars in oil deals.

Upstreamonline (May 1) ~ "The dollar has totally been removed from Iran's oil transactions. We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies," the Associated Press quoted Hojjatollah Ghanimifard, a top Oil Ministry official, as saying on state-run television." Is this a desperate move by Iran or are they a trend setter?

http://www.upstreamonline.com/live/article153461.ece

Link to this week's Master Resource Report 2008-05-02

Disclaimer

This publication is dedicated to the education of readers and is an information service only. While the editor is licensed to offer investments and investment advice, the information provided herein is not to be construed as an offer to buy or sell securities of any kind, is the opinion of the author and not endorsed by KMS Financial Services, Inc. It is possible at this or some subsequent date, the editor and/or affiliated parties may own, buy or sell securities discussed in this newsletter, or based upon information provided in the newsletter, or contrary to information provided in this newsletter. The information provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. We make every effort to provide timely information, but cannot guarantee specific delivery times due to factors beyond our control.