Medill Money Mavens » Energy

Nalco swings to profit in Q2 with increased sales of oil dispersant

Traci McMillan — Wed, 28 Jul 2010 18:18:06 +0000

: BP cleanup efforts include the use of Nalco’s Corexit oil dispersants. Photo by Spc. Casey Ware

Water treatment company Nalco Holding Company swung back into the black in the second quarter, with increased sales of the oil dispersant used in cleanup efforts for the Gulf oil spill, and raised its revenue outlook for the full year.

Nalco’s dispersant, Corexit, breaks up the oil in the ocean, making it easier for bacteria to digest. This helps combat the oil from forming a slick.

Naperville, Ill.-based Nalco earned $57 million, or 41 cents per diluted share, in the quarter ended June 30, moving earnings to the positive from a loss of $27 million, or 21 cents per diluted share loss, in the year-earlier period.

Nalco’s earnings surpassed the consensus analyst expectation of 34 cents per share, according to Yahoo Finance.

Sales soared 19.1 percent to $1.09 billion from $913 million, led by $70 million in sales of the dispersant used in the Gulf. Excluding Corexit sales, revenues rose 9 percent, the company said.

Nalco said it expects July’s $15 million in Corexit sales to be the last of its Gulf crisis response, but nevertheless raised its adjusted 2010 earnings estimate to $1.40, up 10 cents from its earlier forecast of $1.30.

According to Morningstar Inc. analyst Daniel Rohr, the demand for water treatment services will keep growing. ”Water treatment spending tends to grow faster than GDP in developing countries,” he said, indicating that the company’s growth will be seen beyond the oil spill.

Brian Drab, an analyst with William Blair & Company, had forecast higher second quarter earnings of 52 cents per share. He said the company’s shortfall was a result of lower-than-expected sales of the dispersant and a high tax rate of 42.4 percent.

Nalco said it will continue to work on paying down its debt this year, which should reduce servicing costs. The company raised its expectation for free cash flow to more than $150 million for 2010 from its earlier forecast of $100 million.

Shares of Nalco rallied 2.4 percent to a high of $25.37 at Wednesday’s opening, but by 1 p.m. central time, had fallen to $24.68, down 9 cents from Tuesday’s close.

Wholesale prices increase 1.4 percent in January

Jeniece Pettitt — Thu, 18 Feb 2010 21:47:15 +0000

The Producer Price Index, or wholesale prices, rose at a seasonally adjusted rate of 1.4 percent in January, mainly due to a rise in energy costs, pharmaceutical costs and light trucks, the U.S. Bureau of Labor Statistics reported today.

This increase followed a 0.4 percent rise in December and a 1.5 percent rise in November.

Analysts forecast a 0.8 percent increase in January wholesale prices, according to the median of 75 predictions in a Bloomberg LP survey.

So what does this mean for us?

The PPI measures the prices of goods before they reach store shelves and it is considered the first measure of inflation each month, followed by the Consumer Price Index released Friday. Luckily, we do not need to worry about inflation at this point.

“There is so much slack in our economy with the high unemployment and subdued labor costs,” said Richard DeKaser, president of Woodley Park Research. “That tells me that we shouldn’t see any big increase in inflation anytime soon.”

A main cause for the increase in the PPI was the rise of energy prices and food prices, partially because of the abnormally cold January, DeKaser said. Meat prices increased by 3 percent in January. Energy, meanwhile, rose 5.1 percent in January, its fourth consecutive monthly increase, according to the report. A majority of the energy increase can be attributed to an 11.5 percent jump in gasoline prices.

“The increase in energy prices affects consumer confidence,” DeKaser explained. “This will drain discretionary income. Whatever is spent at the pump will not be spent elsewhere.”

The core index, which excludes energy and food, rose 0.3 percent in January, led by higher prices for light trucks and airplanes, according to the report. Pharmaceutical prices jumped 1.3 percent as well.

DeKaser speculated that the rise in drug costs could be because congressional health reform has been derailed.

“In 2009 drugs prices showed a slowing, possibly because of the ongoing health-care reform debate,” DeKaser said. “Pharmaceutical companies could have raised prices due to the idea that regulation may not be put into place any time soon.”

How charged are the high Volt claims?

kellen.henry — Wed, 12 Aug 2009 17:40:29 +0000

BY KELLEN M. HENRY– MEDILL NEWS SERVICE

The U.S. Environmental Protection Agency isn’t sure whether General Motors’ triple digit mileage claims will meet the road for its Chevrolet Volt when it is released next year.

The ailing automaker announced Tuesday following a viral marketing campaign that its forthcoming plug-in car will have an estimated fuel economy of 230 miles per gallon. The Chevrolet Volt would run 40 miles on its charge before tapping into the gasoline reserve.

The EPA has yet to confirm GM’s claims, according to the agency’s response to the Green Car Advisor blog through Edmunds Inc.

The EPA statement said:

EPA has not tested a Chevy Volt and therefore cannot confirm the fuel economy values claimed by GM. EPA does applaud GM’s commitment to designing and building the car of the future – an American-made car that will save families money, significantly reduce our dependence on foreign oil and create good-paying American jobs. We’re proud to see American companies and American workers leading the world in the clean energy innovations that will shape the 21st century economy.

Competitors in the electric car market have yet to break the 100 mpg barrier in terms of EPA rating, although Nissan has made assertions, similar to GM’s, that its Leaf vehicle would get 367 mpg.

Toyota’s recognizable Prius hybrid, for instance, receives a fuel efficiency of 51 from the department.

In response to questions about the Volt’s potential EPA rating, the Green Car Advisor took a look at the mileage claims.

Senior Editor John O’Dell writes:

That the Volt might or might not get the equivalent of 230 miles per
gallon doesn’t mean it actually would go 230 miles if you put a single
gallon of gas in its tank and sent it out to find its way in the world. That’s preposterous.

The EPA’s mileage rating for electric vehicles delves into the hypothetical realm of gas mileage equivalence and not true miles and gallons, according to the article. The fuel efficiency ratings for electric vehicles, though different than for traditional vehicles, still depend on how the vehicle is being driven.

Industry analysts remain skeptical as well, according to an article in the New York Times Wednesday, because “GM has a poor track record of introducing green technology into the market.”

The Volt’s true traveling capacity will be proven down the road when the vehicle is released in 2011. The question is whether 230 miles in the green direction are enough to carry GM where it needs to go.

Fed says the economy remains sluggish but decline slowing

kellen.henry — Wed, 29 Jul 2009 20:33:25 +0000

via The Federal Reserve Board

BY KELLEN HENRY – MEDILL NEWS SERVICE

The economic story in the Midwest is the same the one we’re hearing across most of the country — The economy is weak, but it’s no longer in free-fall.

According to The Beige Book, the report on current economic conditions released Wednesday by The Federal Reserve Board:

Economic activity in the Seventh District remained weak in June and early July, but the pace of decline slowed from the previous reporting period.

Business spending was slow, with few indications of new hiring, but also fewer layoffs in the labor market than in the previous period. Several re-openings of auto assembly plants in the Great Lakes region took place in the June to July period, but often with fewer employees. In the retail sector, increases in the minimum wage last week resulted in fewer hours worked for employees.

Consumer spending also remained sluggish, with closing of auto dealerships due to the GM and Chrysler bankruptcies, affecting local communities. However, auto dealers report higher sales, bringing inventories closer to historical levels.

According to the report:

New incentives and interest in brands expected to be discontinued after this model year were both cited as contributors to increases in showroom traffic and sales.

After slow holiday travel on July 4 nationally, back-to-school shopping is expected to remain slow in the Midwest, due to uncertainties about the economic recovery.

The Chicago Federal Reserve Bank reported that loan quality was better than expected for the period, helped by the boost from the stimulus package. However, the climate remained tight for business and commercial real estate lending, with terms tightening. The report said sources indicated that the quality of loans were expected to continue to deteriorate.

Consumers did feel relief with falling energy prices in early July, according to the Fed report. But costs for steel and lumber increased while copper and aluminum prices remained static.

Windmills at a standstill

kellen.henry — Thu, 09 Jul 2009 21:47:48 +0000

Flickr.com

BY KELLEN HENRY – MEDILL NEWS SERVICE

Was T. Boone Pickens just blowing hot air?

The Texas billionaire and oilman-turned-alternative energy investor announced earlier this week that he is abandoning plans to build the world’s largest wind farm near Pampa, Texas.

It was only a few months ago that Pickens touted the viability of wind farms and his Pickens Plan for energy independence in Chicago. As the keynote guest at the American Wind Energy Association’s WINDPOWER 2009 conference in May, he rallied many of the conference’s 21,000 enthusiastic attendees with his commitment to building the 1,000-megawatt farm and transforming America’s energy reliance on foreign oil.

Click HERE to listen to an excerpt of T. Boone Pickens’ speech at WINDPOWER.

[display_podcast]

His reasons for reneging on the project demonstrate many of the sweeping challenges with overhauling the country’s energy infrastructure. Pickens credits the failure to trouble with transmitting the power to population centers and with low prices from competing fuel sources, he told The Dallas Morning News this week.

The windfarm was a lot more alluring when it was launched last summer as oil prices topped $140 a barrel. These days, crude oil is closer to $60 a barrel and natural gas prices are at a deep low, taking away some of the urgency around using alternative fuels. Though energy consumers may see the value in cutting carbon emissions or relying less on foreign oil, there are immediate wallet benefits of relying on traditional electricity when it’s cheap. Often, what people say they want and what they’re willing to pay for are two very different things.

“The price of conventional or of any energy source will affect the demand,” said Henry Kurth, associate director of the Energy Resources Center at the University of Illinois at Chicago.

Even consumers that say they want more efficient energy provisions, the idea of towering powerlines cutting through backyards can be a lot of swallow. People have deeper reservations about things like nuclear power plants, they have hang-ups about alternative infrastructure as well.

“There’s the same ‘not in my backyard’ syndrome when you’re looking at a wind farm. It does take up space, it does block views. It’s not completely benign,” Kurth said.

Though Texas and the Midwest corridor have some of the highest grade wind potential in the county, reliability issues will exist until renewable can be supplemented with other kinds of energy and be brought onto the power grid.

“On a muggy, summer day in Chicago, the wind doesn’t blow and we need electricity the most,” Kurth said. “The slow development of the smart grid will be somewhat of a barrier.”

Money Talks Podcast – The uproar over the climate change bill

sidvee — Wed, 03 Jun 2009 20:29:51 +0000

This week on Money Talks, your chatty hosts Joseph Freeman and Siddhartha Vaidyanathan speak with our seasoned agriculture reporter, Bridget Macdonald. Climate-change legislation has been proposed by the House Energy and Commerce Committee Chairman Henry Waxman, but Illinois agricultural groups are up in arms, saying the bill has the potential to raise input costs rather than reward farmers for carbon mitigating practices.

Bridget explains the issue and also talks about her experiences over the last six months reporting stories related to agriculture in the Midwest. She has interviewed a small farmer in Elburn, Ill., written on the ethanol industry, explored the wonderful world of Maple syrup, and reported on the growing popularity of local food in Chicago. Listen to her talk about the agricultural business in the Midwest and and the wonderful people she met along the way.

Top ten reasons nuclear might not be a major clean energy player

hannahkokjohn — Wed, 20 May 2009 19:04:18 +0000

The Dresden Generation Station in Grundy County, Ill. (Hannah Kokjohn/MEDILL)

BY HANNAH KOKJOHN – MEDILL NEWS SERVICE

After the Bush administration voiced support for nuclear energy in 2005, companies fell over one another to submit a total of 26 applications for licenses to build new nuclear reactors, and for good reason.

Once a nuclear plant is up and running, it churns out electricity cheaply and efficiently. Nuclear doesn’t fill the atmosphere with carbon dioxide like dirty coal does. And it’s hard to argue with the largely successful track record of the 104 operating nuclear reactors in the U.S., minus that small Three Mile Island incident back in the 70s.

And yet, nuclear growth is stalled. While the wind industry doubled its capacity in 2008 from the previous year, the nuclear industry remained static.

What’s holding those atom splitters back? Here are the top ten reasons the nuclear industry might not become a leading energy generator in the U.S.:

10. What to do with all that radiation lying around

Spent fuel has been a problem since the advent of nuclear power. In the Nuclear Waste Policy Act of 1982, the government legislated temporary solutions for what to do with the radioactive waste – bury it or put it in a cooling lake. Yucca Mountain, which was supposed to be the ultimate burial ground for the spent fuel, has lost so much popularity on Capitol Hill that it’s now considered a dead solution.

It is a concern, but not a stumbling block. According to Jim Riccio, nuclear policy expert at Greenpeace, “Nuclear waste has never stopped one reactor in this country.”

9. There’s no such thing as a carbon-free lunch in the nuclear industry

While the production of nuclear energy does not produce emissions, uranium enrichment facilities do. When the government is considered which energies to invest in, this issue might come into play.

8. The lengthy Nuclear Regulatory Commission application process

The Nuclear Regulatory Commission takes three to four years to approve a license before a company can break ground on a new nuclear reactor, according to William Burns, a spokesman for the NRC. While companies are drafting nuclear applications, the renewable industries are throwing up solar panels and wind turbines right and left.

7. Wind is faster

It’s hard not to notice the wind turbines popping up all over rural America. They’re quick and cheap to install, and in the race to beat the ticking bomb of climate change, speed counts.

6. The Obama administration likes smart grids, and smart grids don’t like nuclear

One of the great things about smartgrids, which received a large chunk of money in the American Recovery and Reinvestment act, is that smartgrids make renewable integration into the utility grid possible. A localized, digital grid would make renewables, which are dependent on external factors, easy to control, easy to transport and more cost-effective.

Nuclear power, a reliable baseload energy, does not need a localized, digital grid. Like coal, it’s functioning just fine on the current centralized utility grid.

5. Uncertainty

A nuclear plant hasn’t been built in three decades. Economists and companies can debate construction costs until they are blue in the face, but until a new reactor with new technology is actually built, the exact cost of a building a nuclear plant is unclear. In the midst of the most painful recession of the post-War period, financial risk is out of style.

4. FERC antagonism

Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission, is not joining the nuclear cheering squad. Instead he is publicly denouncing nuclear as a viable source in the future clean energy mix.

From a cost standpoint, from the numbers I’ve seen, the plans [for nuclear energy] seem very costly. They look much more expensive than the alternatives, including not only renewable but also energy efficiency. Also combined heat, power and other distributed systems that would use natural gas. So, I think there are a whole plethora of alternatives that are less expensive that the nuclear alternative.

3. Where’s the Congressional love?

While wind, solar and energy-efficiency scored big with building incentives in the American Recovery and Reinvestment Act, the only bone Congress threw nuclear was $6 billion in stimulus money to clean up radioactive waste at existing nuclear sites.

2. Obama is sending mixed signals

To make a multi-billion dollar plant cost-effective, nuclear needs extensive support from the government. While the Bush administration was eager to give nuclear a helping hand, the Obama administration hasn’t taken a clear stance on nuclear policy. Energy secretary Steven Chu has publicly said he supports nuclear power, but no clear message is coming from the administration as a whole.

1. Getting the best bang for your buck

Saying a nuclear plant is expensive is an understatement. Charlotte-based Progress Energy Inc. estimatedin 2008 that their proposed two-reactor nuclear plant would cost $17 billion. This is more expensive than any other type of renewable energy. And while a number like $17 billion might seem like nothing to a country that regularly sees the words “billion” and “trillion” tossed around, finding that kind of capital might be challenging.

To wit, one of the subsidiary companies of Warren Buffet’s Berkshire Hathaway Inc., MidAmerican Energy Holding Co., looked into building a plant in Payette County, Idaho. In January 2008, MidAmerican dropped the pursuit.

“Consumers expect reasonably priced energy, and the company’s due diligence process has led to the conclusion that it does not make economic sense to pursue the project at this time,” Bill Fehrman, President of MidAmerican Nuclear Energy Co, said in the letter to Payette County residents, according to Reuters.com

Despite a stagnant market, ethanol is still pumping from the Heartland

bcm141 — Thu, 14 May 2009 20:42:55 +0000

BRIDGET MACDONALD – MEDILL NEWS SERVICE

Although the ethanol market has been flooded with surplus over the past several months, forcing many producers to idle production or drop out of the business entirely, the industry is showing signs of life in the Corn Belt.

Six of the 11 ethanol plants in Illinois operate within a 50-mile radius of Peoria (as the crow flies), where agricultural industries are helping to offset the decline of traditional manufacturing.

According to specs from the Illinois Environmental Protection Agency, the six plants, including a new facility that opened in Galva on May 14, have the combined capacity to produce 797 million gallons of ethanol each year – 42 percent of the state’s projected output of 1.9 billion gallons for 2009.

Illinois, which boasts the second highest corn yield in the nation – about 2.2 billion bushels annually – produces about 60 percent of the grain used for ethanol in the United States according to statistics from the Illinois Corn Growers Association.

View Ethanol still pumping from the Heartland in a larger map

Money Talks – How clean is coal?

Joseph Freeman — Wed, 13 May 2009 22:28:52 +0000

(www.ohmygov.com)

In this week’s edition of Money Talks, the podcast where we put money on the line, your reliable hosts Joseph Freeman and Siddhartha Vaidyanathan take on the controversial subject of clean coal. Guests this week are two of our Medill News Service reporters, Kiran Sood and Hannah Kokjohn, who together published a piece Wednesday about clean coal in Illinois. Listen to what they had to say by clicking on the link below.

Online gaming, Twitter and Google could lower personal energy use

hannahkokjohn — Tue, 12 May 2009 15:55:48 +0000

Online gaming through open source software like Shaspa is designed to allow players to monitor their energy use through a virtual world. (shaspa.com)

BY HANNAH KOKJOHN – MEDILL NEWS SERVICE

Starting this week, the traditionally geeky realm of online gaming and virtual simulations are colliding with the trendy world of energy saving.

Jumping on the digital electricity bandwagon, Shaspa Home Energy on Monday launched an open-source simulator, similar to the popular virtual world, Second Life, that allows users to track and control their home energy appliances through online gaming.

The home energy kit comes with a digital sensor system to track temperature, air quality and energy use in every room of the house. Once the home system is set up, users can monitor their homes through an OpenSimulator, which is a virtual 3D environment.

Did you leave the water running? Click the right button in your virtual world, and the water in the real world will turn off. Is the air conditioning blasting when no one is home? Have your avatar digitally change the thermostat.

For those wary of virtual worlds, online gaming isn’t the only way to track your home’s energy use from a computer. Google and Twitter are also potential providers of energy information.

Google is testing a prototype called the Google PowerMeter to track information for free from utility smart meters and other energy management devices and display a chart like this on an iGoogle home page:

A Google PowerMeter would display personal energy usage to anyone who signed up for the information. (google.org/powermeter)

Through Pachube.com, a service that enables you to connect, tag and share real time sensor data from objects, devices, buildings and environments, users can get updates on their home energy use through social networking sites like Twitter.

In other words, through digital technology, your washing machine is able to send you a 140-word-or-less tweet that your clothes are done. Picture this showing up on your Twitter feed: washingmachine @hannahkokjohn your clothes are clean.