Daily Archives: August 20, 2004

Butt ugly

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Pete Munro and Chad Harville pitched batting practice to the Cubs on Friday night at the Juice Box. Unfortunately, the umps kept score and the Cubs used seven (actually six, I lost count when I posted that they had hit seven) yaks to pound the Stros, 9-2.
Frankly, given that the Stros were using pitchers who are really AAA quality, the outcome of the game was not surprising. On Saturday night, Brandon Backe, who could not remain with the club as a reliever earlier this year, starts against the Cubs’ Mark Prior. It will take a minor miracle for the Stros to win that game.
The Sunday matinee has a great matchup between Roy O and Kerry Wood, which should at least generate some interest until Roger Clemens‘ next start. That’s about all Stros fans have to look forward to these days.

Skilling and Causey request separate trials

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As expected, former Enron CEO Jeffrey Skilling and chief accountant Richard Causey filed motions with the U.S. District Court in Houston Friday requesting that their pending criminal case be severed for separate trials. Their motions mirrored a similar motion that their other co-defendant — former Enron chairman Kenneth Lay — filed earlier this month.
Frankly, all three defendants can make a good case that they should be tried separately. Mr. Lay has far fewer charges pending against him than either Messrs. Skilling and Causey. Indeed, four charges against Mr. Lay involve personal banking matters that do not even relate to Enron’s business. On the other hand, Messrs. Skilling and Causey are each accused of 35 or more counts of conspiracy, fraud and insider trading in a scheme to manipulate Enron’s earnings while getting rich personally.
In his motion, Mr. Skilling argues that the indictment against Mr. Causey and him “strains” to link Mr. Lay and him, and that the jury deciding Mr. Skilling’s fate should not be tainted by evidence introduced against Messrs. Lay and Causey. On the other hand, Mr. Causey — who is not nearly as well known as either Mr. Lay or Mr. Skilling — argues that the jury in his case should not be prejudiced by the noteriety of his better-known co-defendants who would be sitting next to him in a joint trial.
U.S. District Judge Sim Lake has not yet set a trial date for any of the cases against the three men. Mr. Lay has requested a trial as soon as possible. Enron Task Force prosecutors have requested March 2005 trial, while Messrs. Skilling and Causey have requested a March 2006 trial.

Anadarko announces big asset sales

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Houston-based Anadarko Petroleum Corp. announced plans today to sell its Gulf of Mexico shelf properties through two deals valued at a total of $1.31 billion. The deals are part of Anadarko’s plan to refocus on exploration and other areas where the company believes it can achieve sustainable growth.
Houston-based Apache Corp. will acquire part of the properties for $537 million and Morgan Stanley’s Capital Group trading unit will pay Anadarko $775 million to acquire an overriding royalty interest in some of the reserves that are expected to be produced over the next four years.
As noted here earlier, Anadarko announced plans in June to sell oil and natural-gas properties valued at about $2.5 billion in connection with its plan the company more competitive by focusing on such areas as exploration and unconventional resource development and exploitation. Anadarko expects to use about $1.4 billion of proceeds from its asset sales to reduce debt and the rest to buy back stock.
By divesting of its Gulf shelf properties, Anadarko will can focus on its Gulf deepwater exploration program, which is expected to be the single-largest contributor to Anadarko’s growth target over the next five years. Anadarko’s shelf (i.e., shallow-water) properties include 78 fields and 112 platforms. When the asset sales are completed, Anadarko will operate only one offshore platform in the Gulf of Mexico.

Are you ready to rumble?

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Check out this highly entertaining Washington Post article today on the Olympic Water Polo Tournament:

Water polo is a combination of swimming, soccer and basketball, plus wrestling, boxing and mugging. The players are phenomenal athletes who perform amazing feats of speed, grace, stamina and ball-handling. They also perform amazing feats of kicking, punching, scratching, clawing and choking. And that’s just the men. The women are also fond of tearing each other’s bathing suits off.

Uh, what channel is the Olympic Water Polo Tournament on?

“It gets pretty feisty,” agrees Natalie Golda, 22, a defender on the U.S. women’s team. “On top of the water, it looks pretty mellow — you’re passing the ball around — but under water, they’re grabbing, they’re punching and people are getting dunked. Sometimes they’ll pull you under water for so long, you’re thinking, ‘If I don’t get air, soon, I’ll be in trouble.’ “

And, how exactly does this whole “tear off the swimsuit” thing happen?:

If your eyes follow the ball, you see a fair amount of fighting, but the real action, brutality-wise, occurs as players who don’t have the ball fight for position in the prime real estate in front of the goal. . .
Frequently, a player will suddenly disappear under the water, as if yanked down by an invisible hand. That’s because he was yanked down by an invisible hand — the hand of an opponent.
For men, the preferred method of dunking an opponent is to grab the body and yank down, Golda says. For women, it’s grabbing the opponent’s swimsuit and yanking down.
“They’ll grab the suit in the back and twist it, and sometimes it’ll tear off,” she says. “So you lose quite a few suits.”
When that happens, she says, “you play as long as you can and then you get subbed out.”

This article may be the most effective advertisement in history for an obscure Olympic sport.
Equally hilarious is the coach of the U.S. mens’ team, who apparently knows a thing or two about how to play the game:

After the U.S. men’s team beat Kazakhstan 9-6 on Tuesday, Ratko Rudic, the legendary coach of the American team, lumbered into the “mix zone” where players meet the media, grumbling to reporters about the brutality of the Kazakh team.
“This is not football, it’s water polo,” he fumed through his thick, bristly mustache. “If some teams can’t get the result they want, this is how they play.”
“This game was so violent,” said Rudic, 56. “I can’t remember such a violent game.”
It was an odd statement coming from Rudic, who has never been mistaken for Mahatma Gandhi. . .
Coaching Italy in Sydney in 2000, Rudic argued so vociferously with a referee that he had to be restrained by police, and he was later suspended from the sport for a year over the incident. That didn’t hurt his career: When the year was up, he was hired by USA Water Polo to whip the mediocre American team into shape.
And now, in Athens, Rudic was shocked — shocked! — at the violence in water polo.
“Who will protect us?” he asked.

However, Coach Rudic’s assessment that the Kazakhs were guilty of excessive violence was not shared by all the U.S. team members:

Defenseman Dan Klatt, 25, who scored one goal, didn’t think the Kazakhs were particularly brutal, . .
“A couple guys got punched in the face and a couple got kicked in the face,” he said with a shrug. “But that’s just part of the game.”

But then the interview was interrupted by a television shot of another game:

Up on the big TV screen was a candid shot from the pool: A Russian player appeared to be giving a Serb player a big bear hug. The Serb hugged him back.
For a split second, it looked like one of those heartwarming moments of Olympic brotherhood. Then the two men started trying to drown each other, and you realized it was just another heartwarming moment of Olympic water polo.

Enjoy the entire piece.

More on the Cowboys’ stadium deal

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Professor Depken is providing clear thinking on the Dallas Cowboys’ proposed new stadium deal with Arlington. Check it out.

Primer on higher oil prices

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This Wall Street Journal ($) article provides a timely overview of the economic and political forces that have caused the increased energy prices over the past two years and how this price hike differs from previous ones:

As oil prices near $50 a barrel, a fundamental difference between this oil crunch and prior ones is becoming clear: This one is less acute, but it may prove to be more chronic.
So far, the current oil-price surge still trails the big blows of the past. In inflation-adjusted dollars, oil peaked in 1981 at $73 a barrel, 55% above where it’s trading now. Back then, moreover, the oil crisis sparked a full-blown recession. Today, despite some signs of a slowing, the economy continues to grow — and, with it, oil demand.

However, it’s that knotty problem of growth that continues to push prices upward:

It’s precisely the steadily rising demand, however, that is worrying the market. Unlike in the 1970s, the problem this time isn’t primarily a supply shock in which the world’s biggest oil spigots have been shut off. It’s that, even though they’re wide open, the world is consuming pretty much everything that comes out of the ground. The resulting fear is that isolated supply disruptions — a change in government in Venezuela, say, or a terrorist attack in the Middle East — could push prices even higher.

And although U.S. energy prices remain relatively high, there are contrarians as to the current prices:

Still, [U.S.] commercial inventories of crude oil are 5% above last year’s level, and gasoline stocks are up 4.5%.
Some observers see the U.S. inventory levels as evidence that there’s plenty of oil to meet growing demand and that today’s oil price is largely the result of excessive speculation. Trading volume has soared in recent months as hedge funds and other fast-moving traders have headed into the oil markets. “I don’t think the fundamentals support prices anywhere close to this level,” says Kyle Cooper, an oil analyst at Citigroup in Houston. He believes prices should be closer to $30.

But futures markets are still betting on continued high prices:

The market isn’t betting on a quick fix. In a big change from past experience, this time it isn’t just the price of today’s oil that’s surging. Futures contracts through May 2006 delivery are above $40. The contracted price of oil to be delivered six years down the road is also rising. After years in which they hovered between $20 and $25, these so-called six-year futures now are trading around $35.

And although the market takes time to adjust to higher energy prices, it does eventually work, as reflected in its reaction to the energy price hike of the 1970’s:

Improving energy efficiency takes a long time. But it can be done, says a longtime advocate, Amory Lovins, chief executive of the Colorado-based Rocky Mountain Institute. He says that between 1977 and 1985, real GDP in the U.S. grew by 27% while oil use fell by 17%.
By his calculation, if the U.S. kept reducing oil use at that pace, every year and a half the U.S. would decrease its daily oil consumption by some 2.5 million barrels, about the amount it currently imports from the Gulf. “It’s a measure of how much we did the last time we paid attention,” Mr. Lovins says.

Read the entire piece. Moreover, here is an NY Times article on speculation regarding similar increases in natural gas prices.
Also, for more analysis on how this energy price hike relative to past ones, review this earlier post on the work of James D. Hamilton, an economics professor from San Diego who specializes in analysis of energy markets.