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Read this before investing in Uber or Lyft IPOs

Investopedia, 24 January 2019

Stock investors who expect to rake in big profits on the soaring shares of Uber Technologies and Lyft if they go public as early as this year should think again, according to a detailed analysis by industry expert Joseph Vitale.

Deloitte’s global automotive practice leader, whose group delivers consulting, risk management, and other services to auto makers, suppliers, dealers, and car rental companies, and also advises governments, is not one of the wave of sell-side analysts waiting to market the two ride hailing stocks.

4 Reasons to Be Cautious About Uber and Lyft

Uber and Lyft are actually worsening the urban congestion problem.
Ride hailing will become less convenient for consumers as congestion increases.
Ride hailing isn’t as economically traffic-efficient as taxis.
Ride sharing has declined among the heaviest users.

Unicorns Valued at $120B and $15B

The public debuts of America’s two leading ride-hailing rivals are among the most anticipated in 2019, as the volume of IPOs soars to its highest level since the dotcom bubble in 2000. Uber’s estimated value is now at $120 billion, compared to Lyft, at $15 billion, per an earlier Investopedia story. Their forthcoming IPOs are seen as helping the transportation giants expand into new markets like autonomous cars and bike sharing. The funding is also seen as aiding the ride-sharing companies to solidify their leadership in the burgeoning mobility-as-a-service space, wherein fewer people will own cars and instead hail rides via self-driving taxis at the push of a button.

Still, Uber and Lyft have yet to receive feedback from the U.S. Securities and Exchange Commission (SEC) on their filing for initial public offerings, Bloomberg reported earlier this month. A partial government shutdown has choked off SEC review.

Traffic Jam
While on the surface, popular ride hailing platforms may look like a smart way to invest in the changing mobility landscape, Vitale highlights a handful of major risks facing these soon-to-be traded stocks, per Barron’s. First, he notes that Uber and Lyft aren’t solving the congestion problem that cities want to solve, instead they are actually causing it.

As urban congestion increases, Vitale suggests ride hailing will become even less convenient for consumers. This is due to the fact that ride hailing isn’t as economically or traffic-efficient as taxis, argues the Deloitte market expert. With the Uber and Lyft apps, the ride sharing driver has a period of time with no one in the car in-between rides. “Congestion is a big deal for cities, especially with 80% of people expected to live in urban environments by 2025,” Vitale told Barron’s. “Right now, Uber has made congestion worse. It isn’t as efficient as taxis. The ride sharing driver is waiting and has to drive an empty car to come and get you. A taxi drops someone off just before you get in.”

Ride-Sharing Declines Among Heavy Users

Ultimately, ride sharing may not offer the growth that Uber and Lyft want, suggests Vitale, pointing to his firm’s data which shows ride-sharing usage has actually declined among the heaviest users. “Usage is up for the occasional user and with more people using ride-hailing services there may be growth, but waiting for a ride while taxis pass you isn’t ideal,” he explains. While both companies have invested heavily in their car-pooling initiatives, Vitale suggests that the hard fact is, “no one actually wants to share a ride.” “On the subway or the bus people will pack themselves in, but no one expects to talk. In a car you feel rude not acknowledging a fellow passenger,” he noted. Lyft has pledged to make over 50% of its trips shared rides by the end of 2020. While shifting consumer preferences and the introduction of driverless car technology could change the game, Vitale isn’t sold. He views ride-sharing as just one part of a multimodal approach to mobility as a service, alongside smart infrastructure, and light rail.

“Investors should ask the companies how they plan to tackle the problems of low asset utilization and resistance to actual sharing. Investors should also try to understand how the ride-sharing companies plan to work with local governments to help lessen congestion and help make life more convenient for commuters,” read Barron’s.

Looking Ahead

The Deloitte study indicates that while Uber and Lyft are innovative, they may face limited profit growth, potentially making them poor long-term investments. On the upside, it’s important to note that these two companies have already surmounted a huge amount skepticism and prevailed.

The tech companies that debut in 2019 could face turbulence in the coming years, similar to many of the firms that had their IPO at the height of the dotcom boom. Meanwhile, as the market heads into a period of heightened volatility, investors could continue to pull out of less-certain growth plays in tech and into more defensive value stocks.

IA adds six rail initiatives to priority list

Rail Express, 15 February 2019

Infrastructure Australia’s newest Infrastructure Priority List has been welcomed by the Australasian Railway Association (ARA), with six new or updated rail initiatives included.

Capacity on Victoria’s Cranbourne and Hurstbridge lines, port access at Melbourne, and connectivity on the Gold Coast and in Perth are all new aspects of the latest List, released on February 14. The List is compiled by Infrastructure Australia, arranging proposals into early-stage ‘Initiatives’, and ‘Projects’, whose business cases have been approved by Infrastructure Australia, thus recommending them for federal funding.

In all, the ARA counts 54 rail-related projects and initiatives among the 124 on the new list. “As Australia’s population grows, rail infrastructure will increasingly become the backbone to meet Australia’s growing passenger and freight needs,” ARA chief executive Danny Broad said. “To manage the challenges posed in our cities and regions in the long-term, Australia will need to ensure that it continuously invests in rail infrastructure.”

The list is developed using data from the Australian Infrastructure Audit, and submissions from state and territory governments, industry and the community, including more than 100 submissions in the last year. Not much has changed at the top end of the list produced on February 14. Three ‘High Priority Projects’ have graduated from the list entirely: New South Wales’ WestConnex road project and Victoria’s Monash Freeway Upgrade Stage 2 and North East Link projects. No ‘High Priority Projects’ have been added, and no rail-related ‘Priority Projects’ have been added or removed from the list.

Six new rail-related Initiatives are included on the new list, however.

1. A new Priority Initiative concerns the duplication of eight kilometres of the Cranbourne Line between Dandenong and Cranbourne southeast of Melbourne, which the Andrews Government has already committed $750 million to deliver by 2023.

2. Another new Priority Initiative is for capacity on the state’s Hurstbridge Line. Before last year’s election the Andrews Government targeted marginal seats with a $530 million proposal to build a new train station at Greensborough, and duplicate sections of track along the line.

3. An initiative concerning container terminal capacity at Melbourne was updated to include the near-time landside transport initiatives needed to support capacity growth, “including road and rail access from metropolitan, regional and national networks”.

4. Stage 3A of the Gold Coast’s G:link light rail line was essentially added, listed as ‘Public transport connectivity between Broadbeach and Burleigh Heads’. The Federal Government in November 2018 committed $112 million to the project, and the Queensland Government is progressing with the plan.

5. Transport connectivity between Morley and Ellenbrook is a new Priority Initiative, the third of Perth’s Metronet urban rail projects added. WA’s Government submitted the Morley-Ellenbrook Line for the list in September, and it joins the Yanchep Rail Extension, a High Priority Project, and the Thornlie-Cockburn Link, a Priority Project. Metronet’s Forrestfield-Airport Link was also once on the list, but has graduated.

6. Also in Perth, a new Priority Initiative is to improve the Canning Bridge public transport interchange, to improve public transport patronage and reduce impact on the adjacent road network. Canning Bridge station is on the Mandurah Line.

Infrastructure Australia chair Julieanne Alroe described the 2019 list as the independent advisor’s “largest, most comprehensive and most diverse” yet. “With a record 121 nationally significant proposals and a $58 billion project pipeline, the Priority List will guide the next 15 years of Australian infrastructure investment,” she said.
“The 2019 Priority List provides a credible pipeline of nationally significant proposals for governments at all levels to choose from. As an evidence-based list of opportunities to improve both our living standards and productivity, the Priority List reflects the diversity of Australia’s future infrastructure needs across transport, energy, water, communications, housing and education.”

Alroe noted many of the new projects would respond to the challenge of population growth in Australia.
“Congestion in our cities and faster-growing regional centres not only has significant consequences for the Australian economy, but has direct impacts on communities, reducing people’s access to education, health services, employment and other opportunities,” Alroe said.

Citing the forthcoming NSW and federal elections, Alroe urged politicians to avoid making politically-motivated funding commitments, and to trust the independent advisor’s analysis when making budget decisions.
“Infrastructure Australia is urging decision makers to commit to solving any emerging or growing problem by embarking on a feasibility study to identify potential options, rather than a pre-defined project that may not be the most effective solution,” she said. “Decision makers at all levels will best serve all Australians by continuing to consult the Priority List as a source of informed analysis on the projects that represent the best use of our infrastructure funding.”

One of those decision makers, deputy prime minister and minister for infrastructure Michael McCormack, said the Government was now taking this approach. “Once upon a time there was a ‘build it and they will come’ sort of attitude,” McCormack said when the new list was released. “There were also the political ramifications and implications and benefits of spending money on infrastructure. But the fact remains that we need rigour and accountability around what we’re doing, how we’re doing it and where we’re delivering it.”

IA adds six rail initiatives to Priority List

Five new lines open in two days

Railway Gazette, 27 December 2018

CHINA: Revenue services began on two more high speed lines on December 25, with another inaugurated the following day, along with two new mixed-traffic railways. First to open on December 25 was the 293 km Harbin – Mudanjiang Intercity Railway, running southeast from the capital of Heilongjiang province to a major city close to the Russian border with a population of 2·5 million inhabitants. Authorised in 2014 at a cost of 33·6bn yuan, the line has been built for 250 km/h operation. It includes 109 bridges and viaducts totalling 103 route-km and 39 tunnels accounting for a further 69 km, leaving 121 km at grade. Intermediate stations have been built at Xin Xiangfang Bei, Acheng Bei, Mao’ershan Xi, Shangzhi Nan, Yimianpo Bei, Weihe Xi, Yabuli Xi, Hengdao Hezi Xi, and Hailin Bei; a further station at Mudanjiang Xi is expected to open in the summer. As part of the project, the existing main stations at Harbin and Mundanjiang have been remodelled and extended. Journey times between the two cities have been cut from 4 h 30 min to 90 min by the fastest non-stop services. In the longer term, plans are being discussed for a 380 km cross-border extension to Vladivostok.

Also opened on December 25, the 287 km Hangzhou – Huangshan Passenger-Dedicated Line forms the eastern section of the Hangzhou – Nanchang high speed axis, which is due to be completed throughout by 2022. This route has intermediate stations at Hangzhou Dong, Hangzhou Xi, Fuyang, Tonglu, Jiande, Qiandaohu, Sanyang, Jixi, Shexian and Huangshan Bei. The biggest engineering works included the 12 km Tianmushan tunnel and the 4·1 km Shinuishan tunnel as well as the 2·3 km Chuanfang viaduct. Designed for 250 km/h operation, the line is initially provided with 11 trains each way per day, offering a fastest end to end journey time of 1 h 43 min. The line is expected to provide a boost to regional tourism, as Huangshan is one of China’s four ‘sacred mountains’, while nearby towns such as Qiandaohu have become tourist destinations in their own right.

350 km/h network reaches Qingdao

December 26 saw the long-awaited opening of the 350 km/h Jinan – Qingdao trunk line, which boosted capacity on the important corridor connecting the two principal cities in Shandong province. Forming part of the national ’10 x 10’ high speed grid, the 307·8 km line is connected to the Beijing – Shanghai route at Jinan, this line allows travellers from those two cities to reach Qingdao entirely on 350 km/h routes, apart from a short section between Jiaozhou Bei and Hongdao which is restricted to 250 km/h.

Under construction since December 2015 at a cost of 59·9bn yuan, the line runs almost entirely on viaduct, with 87% of the route elevated. The fastest timing between Jinan and Qingdao has been reduced to 1 h 40 min, almost an hour faster than the best achieved by high speed trains using the upgraded conventional route. Intermediate stations have been provided at Jinan Dong, Zhangqiu Bei, Zouping, Zibo Bei, Linzi Bei, Qingzhou Bei, Weifang Bei, Gaomi Bei, Jiaozhou Bei and Hongdao. A 7·5 km tunnel takes the line under Qingdao Airport, where an underground station has been provided. Rather than running into the city’s main station, most trains terminate at the Qingdao Bei high speed hub, where connections are provided to the growing metro network.

The same day saw the opening of a new coastal line running south from Qingdao Bei to Yancheng in Jiangsu province. This 428·8 km route with 15 stations is initially served by two daily EMUs in each direction, the faster taking 3 h 5 min to complete the journey at an average speed of 139 km/h including stops. December 26 also saw the start of revenue operation on the 318 km Huaihua – Hengyang railway in Hunan province, which had been formally inaugurated on the previous day. Another 200 km/h mixed-traffic line with 16 stations, this line had been under construction since June 2014. It required 41 tunnels and 243 bridges totalling 57% of the route length. As well as the 17 km Liangshan tunnel, major bores include the Jianfengshan (6 406 m), Xiangjiashan (4 014 m) and Baishiwan (3 788 m) tunnels. Meanwhile, the National Development & Reform Commission has approved the construction of a 292 km high speed line between Xi’an and Yan’an in Shaanxi province. Budgeted at 55·2bn yuan, the line is expected to open in 2023.

Fracked Shale Oil Wells Drying Up Faster than Predicted, Wall Street Journal Finds

DeSmog, 10 January 2019

In 2015, Pioneer Natural Resources filed a report with the federal Securities and Exchange Commission, in which the shale drilling and fracking company said that it was “drilling the most productive wells in the Eagle Ford Shale” in Texas. That made the company a major player in what local trade papers were calling “arguably the largest single economic event in Texas history,” as drillers pumped more than a billion barrels of fossil fuels from the Eagle Ford. Its Eagle Ford wells, Pioneer’s filing said, were massive finds, with each well able to deliver an average of roughly 1.3 million barrels of oil and other fossil fuels over their lifetimes.

Three years later, The Wall Street Journal checked the numbers, investigating how those massive wells are turning out for Pioneer.
Turns out, not so well. And Pioneer is not alone.Those 1.3 million-barrel wells, the Journal reported, “now appear to be on a pace to produce about 482,000 barrels” apiece — a little over a third of what Pioneer told investors they could deliver. In Texas’ famed Permian Basin, now the nation’s most productive shale oil field, where Pioneer predicted 960,000 barrels from each of its shale wells in 2015, the Journal concluded that those “wells are now on track to produce about 720,000 barrels” each.

Not only are the wells already drying up at a much faster rate than the company predicted, according to the Journal’s investigative report, but Pioneer’s projections require oil to flow for at least 50 years after the well was drilled and fracked — a projection experts told the Journal would be “extremely optimistic.”

Fracking every one of those wells required a vast amount of chemicals, sand, and water. In Karnes County, Texas, one of the two Eagle Ford counties where Pioneer concentrated its drilling in 2015, the average round of fracking that year drank up roughly 143,000 barrels of water per well.

A Billion Missing Barrels

And while Pioneer has become one of the most active drillers in the Permian, it’s hardly alone in booking projections that the Journal found were dubious. “Two-thirds of projections made by the fracking companies between 2014 and 2017 in America’s four hottest drilling regions appear to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota,” it reported. “Collectively, the companies that made projections are on track to pump nearly 10 percent less oil and gas than they forecast for those areas, according to the analysis of data from Rystad Energy AS, an energy consulting firm.” “That is the equivalent of almost one billion barrels of oil and gas over 30 years,” the Journal added, “worth more than $30 billion at current prices.”

The problems the Journal focused on will be familiar to those who’ve turned a critical eye to shale reserves in the past: The most productive areas, or “sweet spots,” are smaller than first expected and companies predicted that wells would dry up slower than they have. DeSmog launched its latest series covering shale’s financial woes in April 2018 and our coverage extends back over a half-decade.
For the Journal, the take-aways were financial. “So far, investors have largely lost money,” the newspaper pointed out, adding that a review of 29 drillers showed companies have spent $112 billion more than they earned from drilling in the past decade. “Since 2008, an index of U.S. oil and gas companies has fallen 43 percent, while the S&P 500 index has more than doubled in that time, including dividends.”
The industry’s defenders argue that spending money now to make money later is simply how business works — this year’s “losses” are actually investments in future profits. But because shale drilling is relatively new, even the experts are left guessing about how much oil will be flowing from the wells 10, 20, or 30 years after fracking — and investors have become frustrated as shale drillers have largely failed to turn the corner and start racking up profits instead of continuing to operate in the red.

“The industry’s only hope of paying off debt and rewarding equity investors is for oil prices to rise high enough for long enough that they can generate consistent cash flow without breaking the bank on capex [capital expenditures],” said Clark Williams-Derry, director of energy finance at the Sightline Institute. “But they’ll have real problems — sweet spots are getting depleted, wells are declining faster than they’d hoped, pipelines are still constrained causing deep discounts in some markets, co-produced gas is close to worthless, and any sustained rebound will boost the cost for drilling services (i.e., higher prices mean higher costs).” “Plus,” he added, “investors need to worry about long-term cleanup costs.”

Calling in the Experts

And the pressure on the experts charged with preparing oil and gas production estimates for drillers is enormous. As the first shale wells get older and more production history rolls in, engineers have developed models they say can make better predictions — but the Journal suggested those tools haven’t been widely adopted. “Why aren’t we doing this?” one engineer demanded repeatedly after John Lee, one of the most prominent reserves experts in the U.S., gave a talk in Houston in July about making more accurate shale projections. “‘Because we own stock,’ replied another engineer, sparking laughter,” the Journal reported.

The Journal’s reporting frequently cited Rystad Energy, an independent oil and gas consulting firm, as the source of more conservative projections — but, as DeSmog has previously reported, Rystad isn’t the only large independent firm to find troubling indications that shale wells are on track to produce only a fraction of their “proved” reserves. Wood Mackenzie, another major oil consulting firm, studied the Permian’s Wolfcamp shale, where early projections predicted that production from a five-year-old well should be declining at a rate of 5 to 10 percent. Those wells, the firm found, are actually declining by roughly 15 percent a year — a significantly larger drop than expected and an ominous sign for any companies projecting wells can last 50 years.

And fracking giant Schlumberger — which like Halliburton specializes in performing hydraulic fracturing jobs on wells other companies drill — has begun calling attention to a problem with much more immediate impacts: The sweet spots are getting too crowded. For years, the industry has said that it can minimize impacts by drilling multiple wells from the same well pad — but in parts of the Permian, wells drilled later on or near existing well pads have proved roughly 30 percent less productive compared to the first well drilled.

“[T]he well-established market consensus that the Permian can continue to provide 1.5 million barrels per day of annual production growth for the foreseeable future is starting to be called into question,” Schlumberger’s CEO Paal Kibsgaard said in an October 2018 earnings call. “At present, our industry has yet to understand how reservoir conditions and well productivity change as we continue to pump billions of gallons of water and billions of pounds of sand into the ground each year.” Kibsgaard warned that similar problems are beginning to show up in the Eagle Ford as well.

The Long-Term Costs of a Boom and a Bust

Karnes County is still the most active part of the Eagle Ford, with 562 drilling permits issued last year. After a heady oilfield boom, oil prices plunged in 2015 and 2016, leading to the layoffs of thousands of workers and royalty checks drying up. This past year, drilling has re-emerged, albeit at a slower pace. “It’s not a boom, but there’s a resurgence here in the Eagle Ford,” Rick Saldana, an energy company superintendent told the Houston Chronicle in October.
Investors have faced a rocky ride. Sanchez Energy, the Eagle Ford’s third largest driller, has now been warned twice by the New York Stock Exchange that it will be de-listed if its stock price, now at roughly $0.26 a share, doesn’t soon rise above $1.

But other impacts of the boom and bust cycle run deeper. In nearby Dilley, Texas, a former oilfield man-camp, built to house Eagle Ford workers, was turned into the “the South Texas Family Residential Center” in December 2014 by a private prison company. It’s now the nation’s largest immigration detention center for families, housing up to 2,400 people, half of them children.

And while over the past decade, Wall Street and other investors poured billions into fracking — the Journal tallied $112 billion more spent than earned from production at 29 major drillers — the U.S. more broadly has failed to seriously invest in a rapid transition away from climate-changing fossil fuels. That leaves the U.S. at risk of being left behind as the rest of the world focuses its efforts to innovate on renewable energy prospects that don’t dry up like oil wells. Bethany McLean, a financial journalist famous for first breaking the Enron story, recently told Fortune about conversations she’d had with major private equity investors as she researched her new book Saudi America. “They are all trying to figure out when we’ll be able to see the end of the oil age, because as soon as that happens, the price of oil will go into secular decline (as it did with coal),” she said. “Other countries, namely China, are frantically investing in renewables. For us to crow about our oil wealth, and not focus on renewables, is for us to miss the opportunity to be leaders in the world as it’s going to be.”

Luxembourg to be first country to introduce free public transport

Euronews 6 December 2018

Luxxembourg is to become the first country in the world to scrap fares on all public transport.The plans, introduced by Prime Minister Xavier Bettel’s coalition government, will see trains, trams and buses run free of charge from next summer.

Bettel, who took office for a second term on Wednesday, made environmental protection a key part of his election campaign.
His Democratic Party will form a government with the left-wing Socialist Workers’ party and the Greens. Currently, fares are capped at €2 for anything up to two hours of travel, which covers most journeys in the 2,585 km² nation.

Luxembourg City, the landlocked country’s capital, is home to around 107,000 but sees 400,000 commuters cross its borders every day to work, causing some of the worst congestion in Europe. Part of the cost for the initiative will be footed by removing a tax break for commuters. Luxembourg has previously shown it has a forward-looking attitude towards transport — over the summer, the government introduced free transport for young people under the age of 20.
Secondary school students are also provided free shuttle services between their places of study and homes.

Electric buses coming to Hawaii, New York & Estonia

Cleantechnica, 14 January 2019

Are electric buses news? Not if you live in Shenzhen, China, which has converted its entire fleet of buses — more than 16,000 in all — to electrics. They are also now appearing in lesser numbers on the streets of London, Katowice, Brasilia, and Jerusalem, among many other cities. What is news, though, is that more and more cities are getting involved in the electric bus revolution.

Proterra To Supply Electric Buses To Hawaii And NYC

Last week, Proterra announced Hawaiian tour operator JTB Hawaii has agreed to purchase 3 of its Catalyst E2 electric buses to replace 4 diesel-powered buses in use today. It will also install two 60 kW chargers supplied by Proterra. The company provides tours for more than 1.5 million people throughout the islands each year. During the expected 12 year life span of the new electric buses, more than 8 million pounds of carbon emissions will be eliminated.

Hawaii is a national leader in the transition to renewable energy and reducing carbon emissions. It has a plan to be a net zero society by 2045. “Hawaii has set an example for other states by committing to ambitious clean energy goals, and we’re honored to be selected as the first battery-electric bus provider for JTB Hawaii,” said Proterra CEO Ryan Popple. “We look forward to working with JTB Hawaii to provide its passengers with clean, quiet, transportation and contribute to the continued preservation Hawaii’s natural beauty.”

Proterra also announced last week that the Port Authority of New York and New Jersey has agreed to add 18 more electric buses to its existing fleet of electrics. They will be used to shuttle passengers between the area’s three major airports — JFK, LaGuardi, and Newark.
“This deployment represents one of the largest commitments to zero-emission vehicles of any airport authority in the U.S., and we applaud the Port Authority’s goal of converting their entire bus fleet to electric vehicle technology,” said Ryan Popple, CEO of Proterra. “We’re proud to help New York and New Jersey introduce electric bus technology throughout the Port Authority airport system. Kennedy, LaGuardia and Newark Liberty airports are a gateway to our country. Clean, quiet, Proterra electric buses – designed and manufactured in America – will make a wonderful first impression on travelers from all over the world.”

The 18 buses will prevent nearly 50 million pounds of carbon dioxide emissions from escaping into the local atmosphere during their lifespan and save over 2 million gallons of diesel fuel. The purchase price of the buses will be offset in part by rebates offered through the New York Truck Voucher Incentive Program, which supports Governor Andrew M. Cuomo’s ambitious clean energy goals to reduce greenhouse gas emissions 40% by 2030.

700 Electric Buses For Estonia

Tallinna Linnatranspordi (TLT), the municipal transport company of the Estonian capital Tallinn, plans to switch completely to electric mobility by 2035, which will entail the purchase of up to 700 electric buses. A 10-bus test fleet is expected to begin operating in the city this year as the company explores the best routes and charging options for its new fleet of zero emissions vehicles.

According to Electrive, TLT has signed an agreement with state owned energy supplier Eesti Energia to create the charging infrastructure that will be needed to support that growing electric bus fleet. There is no word on who the manufacturer of the electric buses will be.

Electric Buses Coming To Hawaii, New York City, & Estonia