Monday Night Links

• "The possibility that KMI will abandon plans to build a gas pipeline should have been cheered by astute investors aware of the history. Less KMI capex means less chance to invest at a return on invested capital below the company’s cost of capital. ET has helped KMI from building on their poor track record. KMI investors should be happy." [SL Advisors]
• Every year or so Wells Fargo publishes Show Me The Money in which they compare ROICs for midstream companies. Its release is probably not greeted with boundless enthusiasm by senior executives at KMI, because they have ranked poorly for years. In the most recent edition (October 2024), they were dead last, with a 25-year average ROIC of just 5.4%. For the 2018-23 period Wells Fargo calculates KMI’s ROIC at 3.4%, worse than all their peers except Plains All American. With a 6.3% WACC, they’re earning a –2.9% spread. This suggests that on average, KMI investors would be better served if the company hadn’t made those investments. It’s not a perfect scorecard. Wells Fargo notes that KMI had some natural gas pipeline contracts that matured and were renegotiated at lower rates. Maybe those projects were done twenty years ago and so shouldn’t reflect on more recent capex. Nonetheless, KMI’s returns have been consistently poor. It means that the enthusiasm with which management describes their $9.3BN backlog should not be shared by KMI investors. [SL Advisors]
• But oil’s volatility is nothing compared with electricity. The spot price of electricity in Texas can jump from $0/MW to $5,000/MWh in 5 minutes, then back to $0/MWh in another 5 minutes. Nothing else has price dynamics like electricity. Electricity is so volatile that its price can’t be described with the same metrics and visualizations as other commodities. The last 50 years of oil price movements would hardly be visible when graphed against a single volatile day of electricity price movements. [Chris Gillett]
  
• TSMC will be drained out of Taiwan. By the late 2030s, Taiwan will have agreed a deal to become China’s third SAR formally by 2049, making the centennial celebrations of the PRC a truly festive affair. No massive world war is coming. Our stocks are safe. I believe in this so strongly as the inevitable coming tide. It’s why geopolitics is utterly boring now and in no way really matters that fundamentally. No world war is coming, the only question now is just how fast and how weird AI models and robotics and transhumanism alters the human species itself. But all this political crap? It’s finished tbh. [@okaythen]
• When you fully unpack any job, you’ll discover something astounding: only a crazy person should do it. Do you want to be a surgeon? = Do you want to do the same procedure 15 times a week for the next 35 years? Do you want to be an actor? = Do you want your career to depend on having the right cheekbones? Do you want to be a wedding photographer? = Do you want to spend every Saturday night as the only sober person in a hotel ballroom? If you think no one would answer “yes” to those questions, you’ve missed the point: almost no one would answer “yes” to those questions, and those proud few are the ones who should be surgeons, actors, and wedding photographers. [Experimental History]
• How dreadful are the curses which Mohammedanism lays on its votaries! Besides the fanatical frenzy, which is as dangerous in a man as hydrophobia in a dog, there is this fearful fatalistic apathy. The effects are apparent in many countries. Improvident habits, slovenly systems of agriculture, sluggish methods of commerce, and insecurity of property exist wherever the followers of the Prophet rule or live. A degraded sensualism deprives this life of its grace and refinement; the next of its dignity and sanctity. The fact that in Mohammedan law every woman must belong to some man as his absolute property, either as a child, a wife, or a concubine, must delay the final extinction of slavery until the faith of Islam has ceased to be a great power among men. [The River War, Churchill] 
• Thank you for this. Nigerian here, and I have to say that you hit the nail squarely on the head. Population counts in Nigeria are deeply political and essentially every region/state is motivated to fake/overestimate their headcount to get a bigger chunk of the oil revenue, which is pretty much the most significant slice of gov. revenue. But, once you dig into the figures, you realize it'd be a miracle if Nigeria has up to half of the population it claims. Every single census that's been conducted has been marred by controversy, with states trying to buff up their populations to make their ethnicity/region look bigger and more important. [y/churchill]
• On the road from kikwit to Kinshasa we had noticed our rear differential was leaking again. Problem is the seal and the liquid sealant they use here. Normally there is a rubber gasket, but nobody stocks this gasket in the entire DRC. A lot of differentials here are leaking, that's for sure. We had to buy a sheet of plasticky gasket material and cut one out ourselves. A lengthy task. [Josephine and Frederik]