I bought a little SCO for $27.36

This oil market is just too fat to ignore. It’s a self correcting problem.

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Once again, for every-single-year in a row since 2007 (here’s a fun link courtesy the BBC), we find ourselves circle jerking over the impoverished bastards of the middle east. War! War is coming! And we are doomed.

Give it a rest already. I don’t care that we’re about to level Syria. It isn’t going to do anything to oil supplies. There’s a reason we’re positioning our military assets right on top of these misers.

Any culture or group of peoples that attempts to interrupt global oil supplies will be subjected to “extinction” levels of violence. Not that they would want to anyway, because both sides of Syria desperately needs the oil sales to finance their victory.

Oil supplies are coming out of our ears, so you’re jacking a $30 premium on the price because Syria is a ball of intolerance? Come on…

This is getting ridiculous. We’re 7 years out now, from the first time we were just months out from a global war. But it’s not coming, because no one in the developed world is actually willing to put their lives on the line for some people slogging it out in that 13th century lifestyle.

Despite oil demand being at multi-decade lows, recession literally everywhere, and the most massive energy revolution taking place in America since the 20’s, we have “blessings” of $100 oil, all because markets, in their infinite wisdom, have been shaking in fear of the same “imminent threat” for what is rapidly appraoching a decade.

Maybe it’s time we had a very real discussion about cutting back off the broader markets from being able to place bets in oil. It was better when there were only a few major players. This is just getting stupid. These moves are going to double dip us, for no reason.

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Read this closely:

On an adjusted basis, our earnings this quarter were $61 million ($0.15 per share diluted) compared to $31 million ($0.08 per share diluted) (see non-IFRS measure) in the second quarter of 2012, mainly due to:

•higher earnings from our uranium business based on higher realized prices and increased sales volumes

…(other reasons listed)

This may be all I needed to see. The uranium market, being a low volume, old school brokerage operation, is an insane place. Opague as concrete, and getting quotes isn’t much different than trying to swim through said material.

I have been a little concerned, since uranium prices in the main broker-dealer I follow have just been collapsing.

But URA seems to have bottomed, and indicated prices as increasing. So what’s real?

Well, I can assure you, I don’t care what “uranium prices” are “really” doing. Because Cameco is living in CCJ land, where prices are higher. Lower uranium bids seem to be predominantly an phenomenon effecting small, POS miners.

Sure, you can buy long term uranium contracts really cheap from a URRE, a UEC, or a USU. You can also take on the very real counterparty risk that they won’t be around in another two years to make good on those contracts.

But if you don’t feel like taking long gambles on companies scrambling into deadend, horrible supply deals to stave off bankruptcy, you’re going to pay real rates to CCJ.

I still need to look through their filing closely – there were a few things that stuck out to me briefly as mild concerns, when I did a once over. They still have a ton of currency hedges in place, that probably expose them to all sorts of potential losses, and I’m curious about how the NUKEM deal is working out.

Also, the company has promised to cut expenses by 10%. This is just one of many elements that bares scrutiny and inspection.

But the fact that Cameco could sell uranium for higher prices in this market is astounding.

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If you are trading BAS, I want you to memorize this passage, which I put up inside of The PPT for the privileged and well connected.

BAS is down 11% at the time of this writing on bad earnings. Bad earnings should be expected with this company, for the moment and into the forseeable future.

As it stands, I actually was pleased with BAS’ earnings, as they were about what I expected. I will break them down later this weekend, when I have time. I will point out; even though the company lost money, their cash level increased from earlier this year. That has a lot to do with why I am in this name in particular, and not one of their competitors.

If you are following along, I caution you to reflect on what kind of person you are. Are you prone to panic? Do you actually understand what’s going on here?

I am in this name because I believe they will emerge, following a great consolidation in the fracking revolution taking place in the US, victorious and on top. I anticipate that they continue to lose money from fierce competition for the time being. It is the floundering deaths of BAS’ competitors that has put pressure on their bottom line, and will continue to do so for the forseeable future.

Just before July 4, I restructured BAS down, selling shares until it was only 7% of my account. I view this price collapse as a buying opportunity. But I want it lower, closer to $10-11.

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The uranium space ripped to the upside today. It was led by URA as the specter of a uranium price bottom led speculators into the miners. Several of the smaller names doubled, and even Cameco experienced a 3% upside day.

The actual story is decidedly more complicated.

Uranium prices at a few of the brokers I keep tabs on have actually begun to crack lower. The reports are that 8 separate utilities arranged deals at low prices last week and threats of funding and fears of even lower offers led the small names to cave into demands and sign contracts.

This is why I have avoided small cap uranium miners, like foreigners in France around 1349.

What comes next depends. Fears surrounding Japanese policy could be taking root. If those are grounded, then we may have quite a bit of trouble on our hands. Any such trouble would be viewed, from my perspective, as a buying opportunity. However, a rehash into the $10-20’s would not be out of the question. At current demand and sales, I put CCJ at $13, roughly.

However, if Cameco and the other miners can band together, they may be able to strike back against the weak hands that are presently caving. Cameco is in the distinct advantage of controlling more than 20% of the global market. If they can leverage themselves, banding together some of the smaller survivors, they could create a strong floor, devouring the weak in the process at rock bottom prices.

Longer term, the uranium market remains ripe for picking. There are several trends I am seeing that could lead grid demand to pick up 10-20% just here at home, at minimum, over the next one to two decades, and no real positive supply growth to see yet. Couple that with continued demands from environmentally conscious politics to trend away carbon emitting fuels and the necessity of alternative energies like wind or solar to be supplemented with constant energy sources and a build out in nuclear power is an obvious go to.

Thus far, there is no word on Russia extending the HEU agreement. The moment will be dominated by Japan. The decade won’t care about Japan at all.

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Seeing solar leading the rally like this always causes the hairs on my neck to stand on end. But, I can’t in good faith just offhandedly dismiss the move. What if there’s a good reason behind it?

This is a ritual I practice about every two years. Solar makes a big push, enthusiasts assure me, up and down (crossing fingers, then crossing their hearts) that solar has crossed “the point”, and that this is the future.

I look online, inundated with crappy, low quality journals and studies set up by people with high school math under their belt (maybe a year of college).

I get disgusted and fed up. I badger some friends who are actual engineers.

And they tell me what I shouldn’t have had to been bothered with:

No it isn’t that feasible.

Currently, if you’re going to slap a $30,000-40,000 panel on your roof, you’ll “enjoy” paying about $0.01 more per kilowatt hour than you could get from direct purchase of power from an energy company. I’d say that is understating things, because when I buy power, I typically don’t pay for 15 years up front.

The numbers get better depending on location. But I’d say those numbers are always overly optimistic. Are you going to slap a $30,000 unit on top of your house in Florida, in the middle of the Hurricane belt, without insuring it? That seems stupid.

The subsidies have the potential to allow the retail buyer to get ahead. However, with state finances being what they are, how long before state representatives, slammed with deficits, start balking? I wouldn’t count on the federal government to support solar for too long either, given their current…er, divisional situation.

So as far as I’m concerned, the strength in solar is a black flag, to be treated as a omen.

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