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Natural Gas: The bridge fuel to nowhere?
EA
Last modified on November 16, 2017 at 3:01 am
With the push towards renewable energy globally, are companies investing in natural gas infrastructure ending up with the short straw?

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On December 1, 2017, EA commented on Impact of Isolationism on Manufacturing Strategy of Ford Motor Company :

Thanks for a great read, Amanda. Couple thoughts:

1) The cost-benefit analysis of moving operations offshore is tricky since it is extremely difficult to predict the impact moving your operations offshore would have on demand given the negative perception it could bring with it.
2) I like your suggestion about diversifying their asset base. In the long-run, I’m of the view that isolationism can not be the winner. Given that, Ford should do the bare minimum it needs to protect its brand and avoid negative public perception while doing all it can to optimize on costs.

On December 1, 2017, EA commented on Re-inventing the medical device supply chain: How is Philips leveraging digitalization to up the ante? :

Thanks for this brilliant read, Sushant. Found it to be very informative.

I am a big fan of diagnostics-as-a-service model. While it helps traditional hospitals lower costs, I think the biggest value proposition is in the data that Phillips is able to aggregate and what they do with that data. Legalese aside, this model could bring access to rural areas and under-served populations who would likely be willing to share their medical data in exchange for such valuable access to diagnostic products.

On December 1, 2017, EA commented on Donald Trump and Natural Gas – An Explosive Combination? Examining the natural gas industry’s response to NAFTA renegotiations :

Thanks for a great read.

To answer your question of how “real” is the risk to US natural gas companies from NAFTA renegotiations? It is extremely low. In addition to the energy’s importance to the US economy and the industry’s favorable relationships with the Trump administration, the economic and production fundamentals of natural gas make it anything but a threat.

The US is believed to have well in access of 100-150 years of natural gas that could be commercially extracted for about $2.50/Mcf. But the more important piece of this equation is the fact that a lot of this natural gas is “associated” gas i.e. gas that is a by product of drilling oil. So an argument could be made that exporting natural gas or LNG to Mexico or other FTA and non-FTA countries around the world isn’t in any way leading to additional drilling in the US.

On December 1, 2017, EA commented on Skistar: the impact of climate change on ski resorts :

Great article, Ken. Enjoyed reading it.

I’m afraid that ski-resorts will just have to accept the changing weather patterns as the new normal and diversify operations into other activities to maintain current profitability. Also agree with your point about the irony in manufacturing artificial snow – it is a short term solution. Also, ignoring the environmental impacts of that solution, I also question it’s effectiveness in bringing in the same customer base. All this is to say that times are a changing for the ski industry.

Lastly, one other potential solution could be to introduce night time skiing during the peak seasons to maximize profits for the resorts that don’t have it already.

On December 1, 2017, EA commented on Autonomous Trucks – Industry Savior or Environmental Threat? :

Very interesting post, Grant. Enjoyed reading it.

I agree with the issues you’ve raised around operational inefficiencies and customer convenience (or lack of thereof). The one other question that popped up in my mind was that around the monetary risk return of this proposition and how long it would take before the end customer realizes a portion of the benefit. In my opinion, the early adopters of this technology are assuming significant operational risks and are unlikely to pass along potential fuel cost savings to their customers. Similarly, the operational inefficiencies created by the adoption of the technology is likely to result in additional costs for not only JB Hunt but also their customers. I wonder if this is likely to resulting in increased costs for the end consumer at least for the first few years before the technology is well-proven.

On December 1, 2017, EA commented on Disruption of Video Game Retailers :

Great read! Given the business today and where the industry is headed, I also have doubts about this business being a going concern.

All the measures that the management is taking to improve the business seem like short-term fixes i.e. I don’t think real-estate cost management, direct shipments, game rentals, new category assortments address the fundamental question of how this business is going to compete with digitalization.

I like your suggestion about using existing physical store footprint to engage more deeply with gamers – I believe it is the only way to continue driving foot traffic in the face of digitalization. However I question if that can generate enough volume and sales to rationalize investing in brick and motor stores?

My skepticism is compounded when I put on the hat of PlayStation, Xbox or EA. With the advent of digital distribution, I am skeptical that these players need the retail distribution channel to access their customers. Given the lower value proposition provided by retailers, I can see their margins getting squeezed further bringing into question the capital intensive nature of the business model.