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The Wall Street Journal: Farmers Play Ethanol Roulette (includes commentary about Jeroen van der Veer)

If you’re hungry for WSJ energy news, but too busy to flip through the entire paper to find it, here’s a quick roundup:

Across the U.S. plains, farmers are placing big bets on where the price of corn will go in 2007. They are preparing to plant more corn than they have in decades, spending more on seed and fertilizer, investing in new equipment and buying crop insurance against the possibility of bad weather. Some are signing futures contracts to lock in prices now; some are holding off in the hope that prices will climb higher.

Texas officials recommended that TXU face a $210 million payment for allegedly manipulating the state’s electricity market two years ago, a development that could signal a tough regulatory path for a $32 billion effort to buy the utility giant.

When Jeroen van der Veer, a low-key chemicals executive and marathon ice skater, took the top job at Royal Dutch Shell in 2004, industry watchers wondered how long it would be before the Dutchman took a tumble at the scandal-tarred energy titan. Three years later, he’s not only still in the race, but he’s also starting to outpace BP, his biggest European rival.

A shareholder vote coming up here lays bare a widespread practice that investor advocates say is a little-understood risk of investing in China’s stocks: the loaning of money from a company that’s publicly traded to an affiliate that’s not. Tomorrow, independent shareholders of Cnooc Ltd. will decide whether to let China’s third-largest oil company by production sock away cash with a unit of its state-owned parent.

Shares of farm-machinery titan Deere have been riding high on the fumes of the ethanol boom, but that intoxication could soon level off.

The initial move in a $5 spike in crude-oil futures late Tuesday may have been triggered by an erroneous electronic trade or an inordinately large buy order rather than specific speculation about Iran, several brokers involved in trading said yesterday.

Enel Chief Executive Fulvio Conti said the Italian power company plans to take part in the sale of assets of bankrupt Russian oil company Yukos, as part of a push to increase its presence in upstream gas assets.

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Comments

The ethanol-front pager insisted that each farmer is worried that, if he overproduces corn, he’ll cause market oversupply and depress prices. That is, of course, ludicrous — no individual farmer can single-handedly depress market prices.

If farmers are worried about growing too much corn, it’s because they are simultaneously deciding how much soy to grow, hoping to maximize revenues from not only corn but also soy (and hoping, perhaps, that oversupply of the former causes undersupply of the latter).
Comment by Displaced Hawkeye – March 29, 2007 at 12:21 pm

Contrary to the generally favourable response by the business news media to the announcement that Royal Dutch Shell CEO Jeroen van der Veer will stay on until 2009, he actually has an atrociously bad track record. It only looks otherwise when compared with BP’s recent calamities.

Van der Veer has been skating on thin ice ever since he assumed the crown after his predecessor, Sir Philip Watts, was forced to resign in disgrace after the reserves scandal in 2004. Van der Veer remains tainted by his personal involvement in the reserves debacle.

He got off to a bad start as Shell CEO with his almost immediate surrender to Hugo Chávez when the Venezuelan President implemented a resource nationalism programme. This weakness was spotted by President Putin who seized control of Shell’s Sakhalin2 project in Russia. Once again, Van der Veer ran up the white flag without even putting up a face saving fight. It was a complete humiliation which has already cost Shell untold billions.

Van der Veer has taken Shell back into Iran despite the objections of the U.S. authorities and the risk of sanctions. Shell is still doing business with the Iranian government even though the outlaw regime has supplied roadside bombs and other weapons to insurgents in Iraq who have used them to kill American and British Soldiers (and currently hold 15 British sailors as hostages).

Under Van der Veer, Shell’s safety track record is even worse than BP’s. This is an extract from your article “Shell’s safety problem” published on March 15, 2007: “BP has been criticized for its safety standards since the deadly Texas City refinery explosion in 2005. But Royal Dutch Shell was a far more dangerous company to work for in the past two years.”

The saving grace for Van der Veer has been the one issue out of his control, the record high oil price which has generated billions in profits, enough to cover up his mismanagement. Posted by John Donovan of the website www.royaldutchshellplc.com
Comment by John Donovan – March 30, 2007 at 11:17 am

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

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