Politics

[VertigoBE]

I know these sound like big numbers to you, but they have to be looked at in the context of the investment that has to be made to capture them. RONA for these companies is typically in the 8 to 10 percent range. For every good year there are one or two marginal years.

Years ago I was responsible for an asset that made $120 MM EBITDA. Sounds good right? Replacement cost for that asset was $3.5 B. It would take $350 mm EBITDA for 20+ years to justify building that asset. Context is everything. Quoting profit without providing the context just proves that AI can’t make you an expert.

Exactly right.

I have a bit of experience in this field of excess profits during times of increased market volatility.

The name of the game is Risk Management. For the most part, energy companies are not taking massive risks with their energy portfolio. As @WAB pointed out, assets must be financed, you cannot do this by just hoping for a crisis to make a profit. Vice versa, you don’t want to shut down the asset as soon as energy prices dip below your cost to run the installation. So what you do is you will layer in a multitude of hedges over the liquid horizon of the forward market. In effect “selling” your asset in the future. You do this according to strict rules and many years in advance, so you will always be assured that your asset is at least break even. But that also means when a crisis does erupt, you generally cannot really profit from this too much because you’ve already sold your production in the past.

So how do you get extra money then, when volatility spikes? There are a few effects like increased bid-ask, reduced number of counterparties due to insufficient credit lines, but then there are especially the financial instruments that you used throughout your hedging strategy. Mainly options:

Very simplistic: I have an asset that needs a price of 100 to not make any losses. I can buy an option for 10, that allows me to sell my production for 100, even if the market price is 70. That way I can insure selling at a price that will cover my cost, while keeping the opportunity open to profit from any moves upwards. In 6-8 years of a decade, I’ll just be paying the premium, the insurance, reducing my EBITDA, but in some years, I’ll make a killing.

Another technique: you have four assets producing electricity in the same zone. Normally you would hedge all of them well in advance of the storm hitting the markets, but since you were worried that these old assets might break down in already tight market conditions, which means you would need to buy the hedges back at the much higher spot prices, you decide not to hedge one of your assets. Leaving it open to spot market. Volatility and higher spot prices arrive and you make a killing.

All of these examples, I have lived through, advised on and profited from (or at least my company did) happened on a few occasions. None of them were “luck” , “inappropriate profits” or “profiteering from a difficult situation”. Only good risk management.

V.

 

[Red Leg]

I do t think I’ve ever seen anyone complain about the US use of AC. Just like @Foxi in Bavarian, and many other EU members, we have been suffering from the heat wave the past 10d. Up to 34C inside the sleeping rooms for the past week. Luckily we have some ventilators to blow air on our kids and us.

Having AC here is more often seen like a luxury or non-standard. Not something typical. New built villas will have AC, but most people will live in houses built 20-50 years ago, when this definitely was not a thing yet. Even now contemplating putting AC in our home feels a bit like “is this really needed for the 3weeks a year that the heat is unbearable”.

A difference in mentality I suppose.

Thank you. I am thoroughly aware of housing in Europe. To remind, I have actually lived there as well as visit almost annually. However, X is full of primarily German reactions to their own citizens who are visiting the US for the World Cup (many for the first time), and their marveling over our universal indoor climate management. Heck, even the domed stadiums seating 80,000 are cooled. The condition seems to be causing the Greens unbearable Teutonic angst.

 

[Tubby’s Canteen]

I like to keep my living room cold enough to hang beef in from the end of may until the end of September, the Germans probably wouldn’t like me.

 

[Brent in Az]

Over a 1000 deaths in France.
Someone should introduce Europe to the mini split AC system. No built in ductwork required.

 

[Foxi]

Heck, even the domed stadiums seating 80,000 are cooled. The condition seems to be causing the Greens unbearable Teutonic angst.

Red Leg.
This waste of energy and resources is unthinkable in Germany and throughout Europe.
You don’t even have to be a “green” person to see that.
Americans are just energy lovers (I won’t say “wasters” out of politeness )
They consume twice as much energy as a European—40,000 kWh more! That’s about 17,000 USD more per year here. No one here can afford that—just for energy.

Foxi
p.s

Didn't the power go out in Texas years ago? Something like that happened, didn't it?
According to ERCOT (?), the power grid was on the verge of a complete collapse that would have lasted for months...


Every sin is avenged on earth (Goethe)

Cheers
I'm going to have an ice-cold,ice-cold Shanty now—well chilled
Foxi

 

[Pheroze]

For those who don’t know, Daniel Smith is the leader of the conservatives in Alberta and the Premier there. I really like her and this interview is the most balanced and optimistic I have heard from any leader in a long time.

 

[spike.t]

Seems lukashenko is backpedaling slightly....

 

[Altitude sickness]

Red Leg.
This waste of energy and resources is unthinkable in Germany and throughout Europe.
You don’t even have to be a “green” person to see that.
Americans are just energy lovers (I won’t say “wasters” out of politeness )
They consume twice as much energy as a European—40,000 kWh more! That’s about 17,000 USD more per year here. No one here can afford that—just for energy.

Foxi
p.s

Didn't the power go out in Texas years ago? Something like that happened, didn't it?
According to ERCOT (?), the power grid was on the verge of a complete collapse that would have lasted for months...


Every sin is avenged on earth (Goethe)

Cheers
I'm going to have an ice-cold,ice-cold Shanty now—well chilled
Foxi

There is no such thing as energy waste. Energy can never be destroyed. And energy does not care for what purpose it is used.

Energy simply moves continually from one state to another. The Earth, the climate and physics do not share our self centered beliefs. One political party or the other.

 

[Pheroze]

Red Leg.
This waste of energy and resources is unthinkable in Germany and throughout Europe.
You don’t even have to be a “green” person to see that.
Americans are just energy lovers (I won’t say “wasters” out of politeness )
They consume twice as much energy as a European—40,000 kWh more! That’s about 17,000 USD more per year here. No one here can afford that—just for energy.

Foxi
p.s

Didn't the power go out in Texas years ago? Something like that happened, didn't it?
According to ERCOT (?), the power grid was on the verge of a complete collapse that would have lasted for months...


Every sin is avenged on earth (Goethe)

Cheers
I'm going to have an ice-cold,ice-cold Shanty now—well chilled
Foxi

How does a government justify setting energy so expensive that it will predictably lead to the deaths of vulnerable people?

I don’t know why energy has become the luxury of the rich in Europe, especially with such available reserves up north, and historic alternatives like nuclear. But for Canada, I have long thought that the regressive carbon tax and similar approaches to energy to be unethical. If we accept we have to save the planet, why does the fodder have to be at the detriment of those least able to absorb the cost of the transition?

While the “excess” may seem distasteful, the fact is that Americans will always allow a system that benefits the most.

 

[Altitude sickness]

When the war on coal started here in the U.S. We started down the path towards unnecessarily high electric bills. And just like every other Democrat caused catastrophe, they also eventually have the answer to high electricity. And it won’t lower bills. But put more taxes in their pockets.

 

[Tanks]

What do you consider to be the criterion that makes a profit questionable?

Having AC here is more often seen like a luxury or non-standard. Not something typical. New built villas will have AC, but most people will live in houses built 20-50 years ago, when this definitely was not a thing yet. Even now contemplating putting AC in our home feels a bit like “is this really needed for the 3weeks a year that the heat is unbearable”.

It is the green policy, in Switzerland one needs a doctor's note to get AC installed. In UK councils are forcing people to remove AC units. What is funny is in France, where 70% of energy is nuclear and clean they still complain about carbon emissions due to AC.

In Europe about 175K people per year die from heat related causes, in the USA about 2,400 per year.

"Democratic socialism" at work.

 

[Altitude sickness]

And don’t discount the possibility that these types are actually ok with people dying.

For them, There far too many people anyway. Humans are a noxious weed on the planet.

 

[Red Leg]

Red Leg.
This waste of energy and resources is unthinkable in Germany and throughout Europe.
You don’t even have to be a “green” person to see that.
Americans are just energy lovers (I won’t say “wasters” out of politeness )
They consume twice as much energy as a European—40,000 kWh more! That’s about 17,000 USD more per year here. No one here can afford that—just for energy.

Foxi
p.s

Didn't the power go out in Texas years ago? Something like that happened, didn't it?
According to ERCOT (?), the power grid was on the verge of a complete collapse that would have lasted for months...


Every sin is avenged on earth (Goethe)

Cheers
I'm going to have an ice-cold,ice-cold Shanty now—well chilled
Foxi

How does a government justify setting energy so expensive that it will predictably lead to the deaths of vulnerable people?

I don’t know why energy has become the luxury of the rich in Europe, especially with such available reserves up north, and historic alternatives like nuclear. But for Canada, I have long thought that the regressive carbon tax and similar approaches to energy to be unethical. If we accept we have to save the planet, why does the fodder have to be at the detriment of those least able to absorb the cost of the transition?

While the “excess” may seem distasteful, the fact is that Americans will always allow a system that benefits the most.

Exactly. European energy is expensive largely because of the revenue actions of European governments (tax). Yes, the power itself is more expensive than in the US , but politicians and ministries have placed massive taxes and fees on it as well. They have largely achieved the support of their uncomfortable citizens by clothing those additional costs with the virtuous goal of saving the planet. According to what I can find immediately at hand, roughly 32% of a German household's power bill is in the form of taxes including an eco-tax. Another 27% goes to grid maintenance. I haven't looked at Canada's costs, but suspect the taxation model is much more like the EU than the US.

Paradoxically then, both US, and for instance, German citizens spend about the same per year for power related utility costs. However, an average US citizen consumes over 12,000 kWh, whereas a German roughly 6,100 kWh. Those comparative energy consumption patterns do result in very different quality of life environments. Something the soccer tourists of 2026 have found to their amazement.

 

[Altitude sickness]

Exactly. European energy is expensive largely because of the revenue actions of European governments (tax). Yes, the power itself is more expensive than in the US , but politicians and ministries have placed massive taxes and fees on it as well. They have largely achieved the support of their uncomfortable citizens by clothing those additional costs with the virtuous goal of saving the planet. According to what I can find immediately at hand, roughly 32% of a German household's power bill is in the form of taxes including an eco-tax. Another 27% goes to grid maintenance. I haven't looked at Canada's costs, but suspect the taxation model is much more like the EU than the US.

Paradoxically then, both US, and for instance, German citizens spend about the same per year for power related utility costs. However, an average US citizen consumes over 12,000 kWh, whereas a German roughly 6,100 kWh. Those comparative energy consumption patterns do result in very different quality of life environments. Something the soccer tourists of 2026 have found to their amazement.

Unfortunately we seem to be making the same mistakes. Albeit curbed for another 4 years temporarily. When the Dems get back in power they will continue the war on fossil fuels.

Then when our energy costs are unbearable, guess what? they will also have the solution.

But It’s always far enough in the future that nobody remembers those people actually caused the situation they are now trying to correct if they only had more “investment”.

 

[Scott CWO]

Oil companies are taking advantage of the chaos in international oil markets to artificially jack up prices. In March, the world’s top 100 oil companies made an estimated $30m per hour in unearned profits at the expense of everyday people. But Trump’s war in Iran is just one reason for sky-high gas prices.

View attachment 773347

And how are they at fault?

 

[Scott CWO]

Red Leg.
There is no fixed figure for this complex issue that would define a profit as indecent or disproportionate.
It depends on so many factors:
unfair wages, a lack of environmental sustainability, possibly child labor, and dozens of other aspects.
Ultimately, our private stock ownership is already questionable and unethical, because we all want to make profits without working for them.
What do you consider to be the criterion that makes a profit questionable?

Best regards from the hot mountains
Foxi

Private stock ownership is questionable? OMG only in liberal minds.

 

[Scott CWO]

Oh Red Leg.
I’m just not up to this discussion today—my brain has shut down in this heat.
We had 40 degrees Celsius in the cities and valleys. Try as I might, I can’t remember us ever experiencing anything like this.
The cold beer in the pubs and beer gardens was completely gone by mid-morning. And that really says something in Bavaria!
We Bavarians are certainly no Scots—even if certain similarities can’t always be entirely dismissed. But we don’t usually skimp on beer. This time, the heat simply drained our glasses faster than the taps could keep up.

Keep well
Foxi

Losing your brain and complaining about 104F in summer? Don’t come to the southern states of the USA May to September!

 

[Scott CWO]

Maybe because the current capitalist orgy is leaving them out in the cold?

Only a lazy idiot is left out in the cold.

 

[Scott CWO]

I do t think I’ve ever seen anyone complain about the US use of AC. Just like @Foxi in Bavarian, and many other EU members, we have been suffering from the heat wave the past 10d. Up to 34C inside the sleeping rooms for the past week. Luckily we have some ventilators to blow air on our kids and us.

Having AC here is more often seen like a luxury or non-standard. Not something typical. New built villas will have AC, but most people will live in houses built 20-50 years ago, when this definitely was not a thing yet. Even now contemplating putting AC in our home feels a bit like “is this really needed for the 3weeks a year that the heat is unbearable”.

A difference in mentality I suppose.

A big difference. I have AC in the foothills of the Rocky Mountains. It is set at 72F.

 

[Scott CWO]

Walmart is publicly traded and they get involved in shady shit all the time. They've paid out hundreds of millions in fines for tens of millions in bribes that they've paid over the years. And that's just what they got caught on. Not to mention the labor and safety law violations. HSBC got caught running a billion dollar money laundering scheme for central American drug cartels. Didn't slow them down much when they got caught.

Weren't 17 Republican governors making ESG considerations illegal in their states? Hedge funds invest in anything that makes a profit. ESG doesn't factor into it. Stop spreading conspiracy theories.

Oh the horror! Some evil corporations do something wrong! What will we do? I know! Let’s become Socialists! That will fix everything! Meanwhile, we will excuse the breaking of the law for individuals and open the borders! Great plan, Einstein!