The CheekyFrenchy Blog: a Frenchman in Britain

Sad day for the North Sea

An helicopter crashed yesterday in the North Sea coming from the BP Miller field. 16 people were on board and they probably all died although only 8 bodies were found immediately after the accident. The emotional impact of such a bad news is always immense in petroleum cities, that are organised around the oil and gas industry. Accidents are relatively rare, the level of safety awareness is so high including many safety trainings that it is almost a common belief that working  and traveling offshore is 100% safe. When an accident happens, the consequences are often big.

I have already been on  Miller and passed nearby several time when visiting other installations. Miller was often used for helicopters to refuel and to temporarily wait when an other installation nearby is foggy and landing is not immediately possible (although the pilots would tend to go back to shore or go the Shetlands instead).
The "survival training" is a three day training that has to be done prior to going offshore. It explains to extract from an helicopter that lands into the water and capsizes. Even the practice could be scary although it is in 25 deg swimming pool (far away from the 6 deg the north sea without the stress level associated with a real emergency landing). I have to admit sometimes some equipments are more difficult to use. I personally always struggled to use the re-breather, a device that helps to re-breath our own air in case of landing into water and always hoped that I never would need to use it. The training also teach who to behave in the water, i.e. how to be seen by the rescue  team (basically forming a big circle by holding each other, females at the outside of the circle and men inside). This makes unfortunately  believe that alive bodies in the water with such training should be seen quickly. It also makes believe that the additional 8 bodies will not be found alive.

When I heard about the news I run into my neighbours' house as I knew he was currently offshore...on the Miller. Fortunately his wife confirmed that he was not due to return until the week after so he was no part of that trip. However he knew everyone who was in the chopper at that time. The communication between the platform and the outside world was immediately cut to avoid the number of ever growing incoming phone calls in the afternoon. Only the OIM (Offshore Installation manager) could use the emergency line in the control room. The atmosphere onboard, as we can all imagine, was awful.
This is really a sad news, for the families and colleagues of those who are gone.

Miller is not producing anymore. It was the "perfect field". Longer than expected production plateau, rapid decline...investment paid back extremely quickly. 3 years ago the production was maintained at an extremely low level (almost to cover for the operating costs)  because the DF1 project targeted Miller as a preferred host. This innovative project intended to capture and reinject CO2 into a mature North Sea reservoir to reduce atmospheric emissions and to provide enhanced oil recovery. When this project was killed, the decommissioning of Miller started. All people on board are now preparing this platform decommissioning.

Attempt to prevent binge drinking

At least a good news....the French parlement as voted for the ban of open bars to prevent binge drinking. It is now illegal to pay a one off and drink for free for the rest of the night. I think it is a good approach. This does not apply to wine testing, though, the wine lobby is too strong to let such a law apply to them.

Lie, lie, lie...the Sarko life...

Two years ago the campaign for the French President elections was highly seen in the media, fascinating almost every French people. The three main candidates at that time (the socialist Segolene Royal, Francois Bayrou in the center and of course Sarkozy) did their best to seduce the French who really expected a change. They appeared in lots of debates, or prime time interviews on TV for example.
I remember Sarkozy, liar as usual, explaining that the most prestigious positions appointed by the government will now be done because of people's competence and previous track record of success and not because of their network, friendship or connections. What an idiot I was: I believed him. I though he was a great speaker and what he said made sense. I almost thought the time of the Chiraquie was gone and a new fair system would be put in place.
This is even worst.
This is now almost disgusting.
Not only Sarkozy always ppoints people that are very close to him to those positions, but he doesn't hesitate to sack highly competent people who did not contribute to increase the prestige of the French President. Recently a Prefet (Rep of the State in a Region, who is also in charge of the regional security and police) was badly sacked because Sarkozy was whistled during a meeting in his region.
The latest scandal happened this week when Sarkozy nominated  Francois Perole, ex deputy general secretary of the Elysee Palace, to the head of the new bank that will result from the merging between Banque Populaire and the Caisse d'Epargne, which will become the second French bank. What experience does he have in managing a bank and the risks in such a climate? None, probably, but that doesn't matter for the French. In the middle of the scandal Saroky claimed that the "Commission of Deontologie" (a kind of Code of Conduct institution that is supposed to give its approval when someone who worked for the French administration at a high level is appointed to a private company )  gave its approval. It appeared that it was wrong and that the commission has never been consulted before Sarko made this public annoucement.

The French elitism doesn't focus on achievement or competence, but on the academic background, friendship or network. The perfect system to have the wrong person in the wrong place probably in the wrong time. Like Sarkosy may be. The problem is that in France this practice is widely known, recognized and accepted.

French politicians are not credible. No one (or a few) could be trusted. To be where they are they would have demonstrated their ability to lie, to betray and to flatter. To be where they are is the culminant point of their bad practices, when they have become and expert and they have now even more power to practice their art. 

-12.5% for Oil and Gas Contractors

For a long time contractors in the Oil and Gas industry were highly paid, almost creating a tension in teams where they could make twice (or more) more money than a staff doing the same job. And for many of them if another Oil company would pay slightly more they would leave their job immediately, in the middle of a project, and go within a week. On the other hand, their position was supposed to be the first one to be threatened in case of bad economical climate. Actually those contractors are/were safe because this industry is always starving for the competence they have devloped by accepting of doing the same job for 20 years of more. And because the became experts in a particular field, a company could not justify to sack them.
Yesterday a contractor told me that for the first time in 20 years he knows people in process engineering who have been sacked and are not able to find another job within two months. Rumours are stipulating that oil campagnies will decrease contractor rates by 12.5%, almost a 8th of a salary is gone for doing the same job.
Not sure it is shocking. It is an adjustment back to normal (or let say towards a more acceptable limit). Back to where we shouldn't have gone anyway.

Some figures: depdending on experience and field, a contractor would easily make between 600 and 1200 GBP per day. Which sounds acceptable for a particular shor term mission for a client, but many  of them are doing the same job, in the same desk for the same company for over 15 years....

Sarko and his little toys

I mentioned yesterday how Sarko (that's how our president Sarkozy is called in France) sacked a prefet (the rep of the government in a shire, who has full accountability for the police and the security in its department or shire) because there were too many whistles against him during a meeting in Saint Lo. Today the Elysee sacked another responsible person of the departmental police. This is even more worrying that this local police was recently recognised for its particular high efficiency in tackling issues and solving problems.

Safety issues? No, just Sarko received lots of whitsles from people who are demonstrating against his policy. I can't even understand how Sarko could pay attention to things like that, does he really have the time to bother with such little things? Why does he sack people who are performing well in their position? Jsut because he got irritated that so many people are against his way of doing and his way of being. This president seems incapable to understand the status of his position and uses his job to act like a "little chief " who wants to demonstrate to everyone he has the power. That is clearly not what we expected when voting for him, France was after and inspirational leader who would put France back on track, not a little boy thinking France, the police and everyone around him are his toys.

This is a pity that Sarko seems to believe that being president was an achievement and not the begining of a story that would make him a great man. That is clearly not what France expected two years ago. 

La liberte d'expression selon Sarko

Chahute lors d'une visite dans la Manche Sarko vient de virer le prefet en place depuis seulement 6 mois. Le "peuple" avait manifeste son mecontentement au President. Placardise. En plus la depeche intervient pendant les grandes manifs du jours donc va passer relativement inapercu. Bref dans le monde de Sarko, le prefets sautent si le monde n'est pas content. Mais y en a combien en France qui vont sauter aujourd'hui avec toutes ces manifs.
Il n'a vraiment que ca a foutre, a la tete de l'etat pour regler ses petits coups pour un pet de travers. Vraiment notre Sarko n'arrive pas a prend re de la hauteur par rapports aux evenements et aux choses. J'ai parfois l'impression qu'il joue plus au petit chef qu'au president. C'est desolant.

Even the Oil and Gas industry is impacted...

The economical slowdown has certainly started to impact the Oil and Gas Industry. Some small companies have been through receivership, like OilExco, although their prospects and reserves look promising. They are just short of cash, for two reasons:
- Oil price has dropped minimising the revenues and the cash available to be injected in new projects
- Loan by banks are currently more difficult if not impossible to get. Those companies rely on the credit to almost entirely finance their projects
For OilExco more specifically, an unexpected long-term shut-down of one of their platform has contributed to severely impact their revenues

All other the places project budgets are cut, and studies are differed. "Small" players, like Talisman, have also started to get rid of some of their contractors because most of the projects have been suspended. Three months ago oil companies were starving for resources and prepared to pay silly money to get a contractors to do some few calks. This is one example among others.
Unfortunately for those companies that are cash constrained, it is probably a good time to invest now and the big players are doing so. Those large Oil Companies cut some projects but in average their investment spending in the current climate remain enormous. Probably because they have been through similar crisis in the past with low oil price and they have slashed recruitment and training of personals (which explains the current shortage of engineering skills). Apparently the lessons have been learnt, which is good.
Investments have to be made now because any new development that is being studied from scratch today will start to pay from 2013 onwards at the earliest. And 2014 is a more realistic target of when the fields could start to produce. By 2014 demand might laregly excceed the supply for ol and gas, hence pushing Oil price very high.
Rig rates will certainly drop in the next couple of weeks (keep in mind that drilling rig rates have been through the roof in the last couple of years because every oil companies had a field to explore or produce). Rig rates have jumped to 350 or even £450,000 per day. Now the drilling programs are reduced if not cut and this should significantly help reducing the overall drilling costs.

Ludwig: Cost Cutting...

Ludwig works for BigOilCo, an International Oil Company that most of you know very well, most certainly because you fill your tank at BigOilCo's petrol stations every week or even because you have BigOilCo shares that pay lots of dividends !. A well admired company...from the outside. When Ludwig mentions that he works for this company, people show admiration or envy, they even think that his salary is huge, his bonus massive, and he doesn't pay for his fuel.

BigOilCo is cutting costs nowadays. You would find this situation quite normal in this overall depressed economical climate. Actually BigOilCo has been cutting cost for years, maintaining the employees under the constant pressure that a reorganisation is on-going to further cut the costs. The free fruits, dinners with the team, traveling have disappeared a long time ago, years ago. The recent economical climate has not changed things much as cost cutting campaigns have already taken place and it seems hard to further cut the costs without hugely shocking the employees. Ludwig is amused by this message from the management claiming that time is hard and spending has to be reduced. Because this message was even given and re-enforced in July 08 when the oil price reached $147/bbl. The logic might even look obvious: high oil price means that more projects are in the pipe, everywhere: everything is more expensive because the market is tight, so BigOilCo needs to save money, regardless the billions of profits that are being made every year. Now less project are in the pipe, drilling rig day rate have started to get lower and lower: projects cost are reducing. But the message hasn't obviously changed.

Oil companies have sacked people massively, then they realise they were short of skills. Then they hired them again. At a higher grade, more costly. But something has changed. The commitment of these employees. Why being committed if BigOilCo can fire them anytime? Good question. That's is why BigOilCo is the best example of the 9 to 5 work, sorry the 8 to 4, or let say the 8.30 to 4 with a big coffee and lunch break in between. A place sometimes with no passion, no energy, where reports are generated to fill the time. Sometimes a project goes through bringing a little bit of excitement in this universe. Ludwig doesn't want to generalize  but he has the feeling that many of this colleagues force themselves to look busy, overloaded or tired. May be they are. But why Ludwig isn't?

Quelle guerre a mene Israel a Gaza?

Reportage hier sur France2, sur les bombardements dans la bande de Gaza. Le journaliste a reussi a penetrer le territoire par le sud, a la frontiere egyptienne. J'imagine qu'il doit etre bien difficile de verifier la veracite des propos des palestiniens bombardes, propos souvent biaises par l'influence du Hamas. Seuls ceux qui ont tout perdu parlent.

Des combattants se sont inflitres dans des habitations pour y lancer des rockets. la nuit suivante l'immeuble est bombarde, exclusivement des civiles sont tues. D'autres propos relatent des civiles palestieniens tues proche de la frontiere, devant chez eux, alors meme qu'ils agitaient des drapeaux blancs. Questions du reportage. Quelle guerre a mene Israel a Gaza?

Bien difficile a dire puisque les journalistes n'avaient pas le droit d'entrer sur le territoire. En voyant ce reportage, cette guerre en David et Goliath on est force de rejoindre la cause palestinienne comme de plus en plus de gens de part le monde. Apres tout la guerre est sale, mais tirer sur des civiles innocents (en supposant que le reportage dise vrai), est inhumain et lache. Et pourtant on ne parle jamais de crime contre l'humanite et violation de la convention de Geneve. Qui nous dira un jour quelle guere Israel a mene a Gaza? Personne, a vrai dire la question fache alors on n'en parera plus dans quelques temps.

Ludwig Van E.

Happy New Year for the very few people who will read this blog in the next couple of weeks.

This blog is will now be largely about the completely ordinary life of Ludwig Van E., a little character that has absolutely nothing to do with the author. Ludwig lives in Scotland just now but has lived in many countries previously. Ludwig likes to comment the news, have on opnion on everything and thinking about changing the world. Ludwig is very cheeky. Beside that, as it is well said in French: "Toute ressemblance avec des personnages existant ou ayant existé serait fortuite et indépendante de la volonté de l'auteur".

Oh, one more thing, some posts will also be written in French now.

Bad Pound

Every 3 months I have to transfer a significant amount of money to France. End of December is approaching and I really need to do it now. I had waited as long as I could hoping that value of the pound would raise slightly and hit me less than expected. As I have explained already I transfer now using a special broker, avoiding the costly and not transparent services of a bank. I use www.ukforex.com and I very happy with them. I am just less happy with the pound.
€1.15 for a pound. One month ago it was 1.25 and 6 months ago close to 1.45. To transfer 5,000 Euros it used to cost me 3,450 GBP it would now cost me 4,350 which is 900 GBP more. This is rather bad news, very bad news.
Expert predict that the pound will be equal to one euro soon. Why they just no shut-up. We are still in a world of pure speculation or at least in a financial work where rationality is gone of the moment. Oil price was supposed to reach $200/bbl before the end of the year and went below $40 over the week end. When people are so wrong how could they call themselve experts.

We still pay too much @ pump but nobody cares anymore...

The price of petrol at the pump was 88.9p/l this morning (1p less overnight, oil campanies are so genereous). Oil price this morning was 54.65 USD, the currency exchange £/$ was 1.543 making the oil price at 35.4 GBP and my favorite R factor at R=2.51. This is too high compared to previous figures. Remember in June it was 1.81 in mid october it was 2.37 (which was already high). On the 4th November it was 2.54. We continue to pay too much for the petrol @ pump but obviously you never hear about it in the media anymore. Credit Crunh, pre-sale Christmas, black Friday and Crazy Monday are under the spotlights. Those are the subjects people want to hear about.  Next month you will hear about Christmas sale performance, the VAT reduction effect, property price dropping, the weak pump...let scare people because the more you scare them the more they read the articles and generate profit to the media.

Price at pump is not a reason to be scared anymore, even if we hugely overpay at the end...that is why it is now omitted.

€70k vs. €12k for the same job...per month

I have already talked about Laurence Ferrari's JT (Journal Televise, or the TV news in France). I can't make anymore comments as I am not watching it anymore. I very rarely watch the news on TV but when I do so I watch the one from the public TV channel: France 2 (part of France Television, the "equivalent" of the BBC).

However I keep following the performance of Mrs Ferrari's audience, because the media, the newspapers talk about it all the time. That would never happen in the UK, but the news are not such a popular daily event in Britain. This TF1 JT is the most popular in Europe, and certainly the one from France 2 is not far behind. 6 months ago the JT on TF1 was seen by 38% of the people watching TV: this number has reduced to 30% with Laurence Ferrari in 3 months (which is still 8 millions)...hum, I am so glad that my first impression was correct and shared by so many French people. In comparison 22.5 % watch the JT on France 2, presented by David Pujadas (5.7 millions).

I have read recently that despite this bad performance Laurence Ferrari earns 70,000 Euros/months (slightly less than £57,000/month). In comparison David Pujadas makes "only" 12,000 Euros/months for the same job. And believe me this difference is not justified by the difference in their own performance !! And Mr Pujadas’ pay slip will not greatly improve in the future...At least it is my view. Let see why.

TF1 is owned by Martin Bouygues (yes the same company than Bouygues Telecom or the famous civil engineering and construction company). For information Martin Bouygues is a very close friend of Nicolas Sarkozy, he is even the godfather of its last son. Recently Mr Sarkozy (or let say the government that executes what he says) has decided to make the public TV free of ads. This instantaneously boosted the TF1 share price last January that was already in trouble.

So how will France Television get its funding now? via the TV licence of course (but this is far less than in the UK) and 3% of the advertising profits made by private TV’s will go to the government, which in return will give it back to France Television.

That is where the problem is: in the UK the BBC budget is fixed and decided after difficult discussions for 10 years, and no government in place can ever change it. That is what I call an independent TV. In France there is no such a thing and there is a risk that the budget of France Television (the 3% that should be paid directly ot France television) will depend of their attitude toward the government in place.

I am sorry for mr Jujadas but his salary is not about to go through the roof, despite the excellent job of his team and himself.

 

 

 

There is no strong "opposition" political party in France anymore...

OK the Socialists are not ready for a change yet. They elected Martine Aubry as their leader, the person who was responsible for the 35 hrs in France (people work 35 hrs per week in France): this law  created some real social progresses for few people and a nightmare for many others but also a real chaos in the country. Martine Aubry has been around for a long time, too long and is the symbol of everything but a real change.
But it could have been worst. It could have been Sego (Segolene Royale), this excited women who never admitted that she has been beaten and that French people don't wont to hear from her anymore. She was severely defeated by Sarkozy in 2007, the worst socialist score ever during a President election. Lessons learnt? Nada. Nothing. Rien. She doesn't care. The socialists who have recently voted for her don't care either. I personally can't listen to her, I am getting fed up at the first word she would say. And the content is in accordance with the ton of her voice.
Last week she lost by 42 votes originally, which is nothing, and launched a real battle claiming that errors were made during the election at her disadvantage. She threatened to go to court...Well I don't really wont to expand, her behaviour and the behaviour of the party was appalling.

Sarkozy is the big winner of this election!!! He is in a good position to win again in 2012. It is interesting to see that people never learn from their mistakes, and certainly not the socialists. There are some good, young, and open minded MP's within the socialists who are in a really good position to initiate a change.  But this new generation is too young apparently to be a leader yet. Shame. The socialists have really miss something.

France really needs a real opposition party that can control more closely what the Sarkozy boys and girls are doing in the government. A strong opposition party. Sego has just killed this opposition party with her school girl attitude. The socialists have never been more divided, with no real leader. Shame on her.

The Socialists have never been closer to a real change

The French socialists are electing their leader today. Well, it should have been last Week End but being unable to find a common view and giving priority to the personal interests they haven't managed to elect a single candidate.

Since François Mitterrand and may be later Lionel Jospin the socialists have always struggled to find a leader, a young, dynamic and inspirational leader. Instead they always had the same influent but totally "has been" "elephants" (that's how they are called in France): Strauss Kahn, Fabius, Rocard, Jack Lang, Mauroy. Later on, and almost by chance, Segolene Royal (55) was designated to represent the socialist in the last French president elections.
Although she has been severely defeated by Nicolas Sarkozy she is one of the candidate to become the party leader and be the socialist rep against N. Sarkozy in 2012. Same arrogance, same speeches with no substances in it: but she still claims that she is the candidate of the rupture.
Against here Martine Aubry (58) and Benoit Hamon (41). Martine Aubry has been around in politics for a long time (too long?) and represents with S. Royal the last generation of politics formatted by the ENA (Ecole Nationale de l'Administration), the top of the elitism in France that created political and industrial leaders. France is a country where your academic performance at the age of 20 drives you entire career: it is less and less the case, almost not anymore. N. Sarkozy is not coming from one of those prestigious schools, nor is Benoit Hamon. And this is good.
And that's what I like with them: young, new ideas, not formatted, disconnected somewhere from this old generation of politics and closer to the reility. Hamon has almost no chance to win today but I strongely support him. Just because I support a real change. France needs new people, new ideas, Sarkozy was one of them when he was elected, the Socialists have a unique chance to generate another one. Unfortunately i am sure they will miss this chance.

A MP kills his partner...

Yesterday a French MP killed his partner (or mistress) who decided to dump him. Then he killed himself with the same gun.

He was the local MP of the city where I grew up, he was also the mayor of this city until last spring. He was a very influent person locally. She was 43 and he was 65.
Recently he was defeated as a mayor of Thionville, a city of 50,000 inhabitants between Metz and Luxembourg.

I was in Florence when I heard about this tragedy and have to admit I was shocked. I was shocked that a man who has been successfully elected as a MP for the last 20 years was in reality so fragile, that he couldn't really psychologically recover from his defeat as a mayor of Thionville (although he was re-elected for the 5th time as an MP last year). I was shocked that if a political defeat encouraged him somewhere to end up with his life, he has decided that someone else had to go with him. She was a mother of 2 children.
I was shocked that such and instable person was purely in charge of the others for the last 20 years.

So far away from the boring Champions League

I am not excited by a Football match on the TV generally and don't really watch it anymore. The  World Cup and European championship are different of course but those are only every 4 years.
The Champions league is boring and of no interest. The group matches have been set up to please the richest football clubs (G14) and prevent them to create a parallel competition. It offered 6 matches of high level at least for those clubs. However those matches  are of non interest because there is no stake, and people can't get excited every two weeks by a football match.  By the time the competition reaches the next level I am definitely bored and don't watch it anymore. Furthermore the same teams are always there at the end because the groups matchs remove almost all surprises.

 

The only exciting games are the cup matches. Yesterday my favorite and ex-local team, FC Metz, the one I would support above all, won in Lyon, the French champions for the last seven years and qualified for the next round. Because it's only one game everything is possible and that's what I like with football. The game was good, there was a little bit of tension on my side and we won eventually. A pleasant evening. Lyon got beaten and is out of the league cup at the earlier stage because they probably underestimated the otherside and this time there is not a second chance.

Oil price drop: other companies rip you off

Petrol price vs. oil price. This is of course a very sensitive subject and oil companies feel now obliged to pass on some the oil price drop in their petrol or diesel price at the pump. Public pressure effect. Some companies don't have the same pressure and take the opportunity to completely rip off their customers.
Those companies are Tires manufacturers.

I changed two tires last April on the Subaru and bought the same two this week. Last April the oil price was at $105/bbl, against around $60/bbl this week. However I haven't seen any difference in the price I paid for my tires, and believe me I have shopped around.
I remember well earlier in the year that tires manufacturers explained that their price depends so much on oil price that tires prices will now fluctuate laregely during the year. They haven't specified that it would only fluctuate in one direction.

Costco is currently offering 20% off when buying four tires. The manager of the tyre department in my local Costco explained to me that Michelin did not reduce their price despite of the oil price drop as it was expected but launched this offer to compensate partially for what they should have done.
 
But after all why would they reduce their price. People need tires, they don't want to compromise on safety and would go for a premium brand. If you want to fit tires, you would be explained that safety has a price and you would just buy it.

Petrol @ Pump: where is the drop?

What a surprise!! Oil companies do not reflect the oil price drop at the pump anymore. It might usually take days before seeing the impact of a sudden oil price change at the pump but the Brent Crude Oil has been around $60/bbl for weeks already. And the change has been kept to a minimum.
Let's consider again my post of the 18 October where I give my own method to link the petrol price at the pump and the oil price.

This morning I paid 94.9p/l for my petrol. The exchange rate being 1.579$/£ and oil price $59/bbl the R factor is 2.54. As explained before: The higher the ratio, the more the customer pays at pump compared to what he/she should pay based exclusively on oil price fluctuation.
On the 18th October we determined that the ratio was 2.37, which was already high compared to the 1.81 ratio of july. If the orginally high ratio of 2.37 was maintained I should have paid 88.6p./l for my petrol and under the July ratio I should have paid 67.3 p/l.

We are clearly overpaying our petrol for the moment. But because it has reached an acceptable price again people, media, politicans and media do not really care anymore. Or they don't consider that it is worth to further save the money of British citizens in this difficult recession period ahead of us.

You will not hear about high petrol price until it reaches the 100p/llimit again. And don't worrry if you pay too much just now, it is not going to change soon.

Oil price: speculation, speculation and speculation

Oil price reached another limit below $59 /bbl this morning. Three months ago it was at its historical high above $140/bb. Recession, financial crises, credit crunch...with the current climate industries and households (both for heating and transportation) have all reduced their consumption by half !!! no let's be realistic, the demand has not dropped, the supply is probably the same if not higher, but oil has lost  50% of it value.
What does it mean?
- As I keep repeating Oil price has became entirely about speculation, speculation and speculation.... I keep laughing and laughing when seeing those experts debating about the oil price in the next 5 days, 5 weeks and 5 years, or even 50 years. They don't know, we just don't know. The only thing we can be sure of is that in the long term oil price will severally jump because the supply won't meet the demand.
- I don't think that oil should be a speculative product. It doesn't only impact the overall economy but also the households especially those with lower earnings, hit far more that everybody else to go to work to heat their home etc...This is the reason why France built its impressive nuclear plants network nearly 30 years ago after the oil crisis in the 70s, to reduce it dependence to oil but also to offer a more uniform price.
- Oil price has dropped but not petrol price, we are currently overpaying our petrol, but nobody cares anymore. I will expand tomorrow on this subject.

Some days in Scotland...

There are some days in Scotland that make me believe that the weather is really too hostile and I need to return down South. Some other beautiful days like today make me think that there is no other place like here. Those pictures were taken this morning, during a Sunday walk with my family.

Number of the week: tourism in France

I came accross those numbers this morning: France is the most visited country in the world in term of International arrivals with nearly 82 millions (1.3 times the French population), ahead of Spain (59 millions), the US (56 millions), China (55 millions), Italy (44 millions) and the UK (31 millions). Everyday nearly 225,000 foreign tourists enter France (nearly 41,000 for English people, followed by the German with 35,000 visitors). The most touristics monuments are Notre Dame de Paris with 37,000 daily visitors, The Eiffel Tower with 19,000 daily visitors and Le Louvre with 23,000 daily visitors.
And what about the Ardeche? It is doing relatively well see my post here.

How much for a second home in the Ardeche?

With 1 million visitors every year for the Ardeche Canyon and 400,000 for the Bois de Paiolive, the Ardeche is doing relatively well in term of tourism. For information the Ardeche has around 32,000 holidays homes (residences secondaires) in the entire department. Definitely a good place to be with a family...

And how much it would cost to buy a house there....it depends of course where, what size and how much has to be done inside. Here are three exemples below, in the South Ardeche, close to les Vans.

 

 This house (left) is to be entirely renovated, beautiful view over the Chassezac valley. € 130,000. I have to admit there is a lot to be done, but you would enjoy the scenery.

Next House (see below) costs €192,000. Beautifully restored but only 70sqm2 inside. It looks beautiful, located in the sunny South of the Ardeche, but there are neighbors nearby !!

 

I like the next one too, beautifully restaured too, for sale at €250,000 but it is located in Meridional Ardeche, so probably north of Les Vans   

And if you have more money to spend you might fall in love with the latest one, at €340,000, close to les Vans. I personally don't like the kitchen and some of the renovation aspects.

That makes me remember that I now need to call our plumber who is doing a fanstastic job in our place when we are away. If you need a good carpenter or electrician/plumber in the area, let me know !! And if you want to buy a house there, never pay the asking price, you have much more room for negotiation that you might think.

Number of the Week: £34 a month on wasted food...

I received recently a voucher from my council encouraging households to better plan and prepare their meals and food shopping so that they can buy more efficiently and avoid wastes. Basically just buying what the family needs. After investigation I understood better why.
According to the Waste & Resources Action Programme Organisation (wrap) each UK household wastes an estimated of £410 a year on food, which is £8.8 per week. This is to be compared with an average weekly £47 household expenditure for Food and non-alcoholic drink purchases (source statistics.gov.uk).
Among those £47, £12.50 went on meat, £3.60 on fresh vegetables and £2.90 on fresh fruits. The extra food that we buy and don't use represents 70% of the total meat purchased in the UK. In comparison non-alcoholic drinks accounted for £4.10 and £1.90 was spent on chocolate and confectionery per week. (see details below, graph taken from www.statistics.gov.uk)

 

Just for info household spending was highest in the transport category at £62 a week. This included £23.40 on purchase of vehicles, £28.60 on the operation of personal transport (such as petrol, diesel, repairs and servicing) and £10.00 on transport services such as rail, tube and bus fares.

Are we really paying too much at pump? May be not...

Oil companies are frequently blamed for reflecting oil price increase at pumps but are reluctant to cut pump prices when the oil price goes down. In France this subject is even more sensitive than in the UK with big pressure on the government to create special taxes for oil companies. Are we really paying too much at pumps? Does petrol price at the pump really reflect the oil price? I have decided to gather the relevant data and make up my own mind. The results are quite surprising.

First of all let's have a look at the Petrol and Diesel price in the UK (pence) and France (cents) vs. Oil price in US$. Don't be confused by the different Y-axis units, it doesn't mean that petrol is more expensive in France at this stage. In average Petrol and Diesel prices follow the trend given by the oil price. From mid 2007 petrol price seems to raise less than oil price, which is of course due to the weakness of the US$.

 

How has oil price risen in France and in the UK in their own currency? The following graph is quite interesting as it shows the oil price in US$, in € and in £ assuming the same starting point in 2006 (i.e. 1€ equals 1£ equals 1US$). This shows that for the last two years the oil price increase has not been the same for everyone. Americans were hit more than British people, who themselves were hit more than the French. For example in April 2008 French people were hit 23% less than Americans because the € was strong, similarly in Nov 2007 the difference was 15% between the UK and the US. The US$ has recently been stronger: this is reflected in the graph for the months of August and September. Although oil price has dropped, the effect was less visible in the UK because the Pound has been weaker compared to the US$.
   

For the purpose of this article we now need to compare the petrol price vs. oil price in the same currency. The enclosed graph on the RHS shows oil price in US$, in € and in GBP for the same period.

 

But are Petrol and Diesel prices reflecting the oil price? To answer this question I have created a simple ratio R. R is the price at pump in a country  divided by the oil price in the currency of this country. The results are now very interesting.

I have assumed that no other parameters intervene massively in this ratio. In theory a refinery receives crude oil, processes it and distributes it. There is no particular reasons why the ratio shouldn't be more or less flat (few fluctuations might exist as refinery costs are flat and not linked to the oil price). Taxes variation might influence but this variation is still marginal compared to how much the ratio fluctuates (see later).

The ratio being flat means that when oil price goes up, price at pump reflects this. And vice versa. The higher the ratio, the more the customer pays at pump compared to what he/she should pay based exclusively on oil price fluctuation. If R increases, then the customer pays more than the oil price increase. If the ratio decreases, the customer pays actually less at pump compared to what he/she should pay. Of course the ratio doesn't mean anything by itself, only its variation or relative value is important.

Graph Above: Ratio R fluctuation over the last two years

The results are surprising. This ratio reached a peak in Jan 2007 in both France and the UK, with a particular peak for Diesel UK. It has then decreased severely until last month. In June 2008 it has reached its minimum, almost divided by 2 compared to Jan 2007. It clearly means that we are not overpaying the petrol at pump, or at least compared to what we paid in 2007.
In Feb 2007 Diesel price was 90.9p with a monthly average oil price of  52.6 USD. In June 2008 Diesel price was 131.6p for an oil price of 126.3 USD. During this period oil price has increased by 140% while diesel price has increased by only 45%. This is the strongest difference that appeared on this graph but it shows that it is rather difficult to blame oil companies for taking advantage of the situation today. However it seems fair to admit that they were abusive 18 months ago, largely overpricing the price at pump when the oil price was relatively low. At this time we were hearing a little bit about petrol price increase, but not as much as today.

Tax is a key role in determining the petrol price but it remained in the region of 55 to 65 % for diesel and 60 to 67 % for petrol in the UK during this period (small fluctuation wrt to the R ratio). Taxes do not explain the big fluctuation of Ratio R. Of course petrol price has an almost fixed element in it, the refinery cost. However this element is marginal given the large volumes treated and doesn't justify such a fluctuation in the R Ratio.

What about today?

I filled my car with petrol in the UK this morning and paid 99.9p/l. Oil price this morning was 72.8 USD, the currency exchange USD/GBP was 1.729 making the oil price at 42.1 GBP and R=2.37, which according to our graph is good but could be improved. If the ratio was 1.81 like in June 08 I would have paid 76p per liter. Oil price is very low for the moment and the response from the petrol stations is even lower. Oil companies suspect it will raise again soon, so they prefer to wait. However we can easily assume that today, even at 99.9p/l, petrol is too expensive.

 

Working on my laptop was great...then I installed Miscrosoft Office...

Over the last two years I had been using Open Office at home. Open Office is a free software license and its distribution allows unlimited use. For those who are not familiar with Open Office, it is a collection of application designed to mirror those available in Microsoft Office. Calc is similar to Excel with an equivalent range of features, Writer is similar in look and feel to Microsoft Word, etc...It can of course read and write most of the file formats in Microsoft office.
Open Office just prevents users from paying for Microsoft Office use.

However recently I have bought Microsoft Office at home since I could have a professional offer for 17 GBP. I was curious to see the modifications made to Excel 2007. I have installed it last week-end and started to have issues when launching the application. When starting Excel the configuration process would start and this time consuming process would repeat everytime I try to go into Excel 2007.

At first I have tried to fix it by myself and I have spent may be 3h trying to fix it. I went on IT forums or specialised websites, I also explored the MS website (all they offer is a patch to be used with Windows 2000 !!)...I have tried many options but couldn't fix it. I realised that already in 2007 many users had this problem, that the patch is not available and to get support from Microsoft it costs £199. People go on those forums because Microsoft doesn't apparently bother to do its own job by fixing a problem they created or fixing a default product they have sold to their customers.
A pure scandal, ridiculous. I am so glad I had paid only 17 GBP for this application as I won't be using it. I will ask MS to reimburse me and will return the CD if required. I now understand when angry customers call it M$ in many forums. You pay and left on your own.
I personally decided that 3h spent on the case where enough and that Open Office was working fine after all. I got shocked when I read how long some people have spent on the very similar case without fixing the problem.

I now understand why Open Office is more and more popular. I had never have any problem with this application. Apparently it is use by the Singapore's ministry of Defense and Bristol city council in the UK and many other administrations already. In France it is now the official office software for the French Gendarmerie.
Think twice before buying Microsoft Office, at least try Open Office for a short time (it is a free software anyway).

Number of the week: $33,000

The US debt is now $10,149,644,933,872 or over $33,000 per inhabitant. According to Le Figaro, The 'national debt clock' installed on the 6th Avenue in NY, is now too small. Original installed in 1989 when the US debt was around $2,700 billions, it has now reached $10,150 billions. In 2001 when President Bush was elected the US debt was $5,600 billions, and $8,200 in 2005 (an increase of $54 billions per months).

This counter had only 13 boxes for a 13-digit number. The symbol '$' has now been removed to be replaced by '1' so that the entire amount is visible.
This debt represents $ 86,017 per family, or $33,327 per inhabitants if we rely on the US population clock. In average in the last 20 years the national debt has increased by $32.5 billions per month.

In comparison the 2008 US budget is $2,900 billion, a third of the debt. Details of the 2008 budget below, source Wikipedia. The Ministry of Defense' budget itself is $481 billion.

 

$261 billions were dedicated to the Interest on National debt. Debt has now reached 70% of the GDP.

 

How could a Bank bankrupt in few hours?

Lehman Brothers last September, Bear Stearns last March went already in Bankruptcy. Many other Banks or Insurance companies would have also disappeared if the Bank of England, the US Federal Reserve or the European Central Bank wouldn't have recently injected billions into the system.
I have always been convinced that keeping cash on a saving account was not the greatest investment. Firstly because the interest rate of saving account in France are far lower than the British ISA's and teh ISA's deposits are limited, and because in average, due to the inflation, prices double every 20 years. If I put 1000 on a saving account for 20 years at 2% (what you might get in France for large deposits), I would get 1485 at the end of this period. At 3% it would be 1806 which is better but still doesn't match the inflation. That is why I believe a split between smaller savings, properties portfolio and shares is more appropriate. However I rarely thought that banks could bankrupt so easily, in such a short time and that people's savings could potentially evaporate.

How could a Bank or Insurance company bankrupt in few hours?

Banks would invest most of their funds keeping their liquidities to a minimum. The liquidity is the cash immediately available for the day to day operations. We could anticipate that may be 10% of the funds are kept within their liquidity department, the rest being invested in more or less risky financial products. This system is working fine as long as those investments could 'return' quickly into liquidity when needed. The failure in the system occurs when small companies bankrupted, or when people are unable to reimburse their mortgage or when some of the investments were too risky and lost most of their value. Then the banks can't repatriate cash into their liquidity department and need to rely on money lent by other banks. However in such circumstances banks would not trust each other anymore and would be reluctant to lend money. If the funds of a bank are 100 billions, with only 10 in cash, and if the losses in various investments reach 10 in a few days without new money being lent by the other banks, then the bank is bankrupted. Either the Central Banks intervene to inject cash and nationalise the bank or another bank takes over.

During this never-ending financial crisis banks have completely changed their behaviours and are now investing their liquidities in the safest products. For example one ounce of gold was $800 in August and it reached $900 in September. Similarly banks would depose their extra liquidity in Central Banks: normally they would invest that money between themselves. The graph below is self explanatory.

The red curve shows (in millions Euros) the Deposit Facility for the European Central Bank (deposit made by banks into the Central Bank): from 'next to nothing' normally (less than 100 millions Euros) it jumped to 49.5 billions on the 7th October with a peak at 102.8 billions on the 30th September.

The blue curve shows the Marginal Lending Facility, which is the money normally borrowed by the banks to Central Banks. Once again it has jumped from normally less than 5 millions to over 24.5 billions (24,500 millions !) at the end of September. More information available on the ecb website.

Normally Banks don't make deposit to Central Banks because the offered interest rate is far lower than exchanging money between themselves. In parallel they wouldn't normally borrow money to Central Banks as the interest rate is less favourable. This will in return impact the rate they will offer to the households or the small companies. The interest rate being higher, it will be more difficult to for small companies to borrow or for households to finance a new car or a new home: this is return will impact the overall economy.

This is why Central Banks and States are now trying hard to re-establish the trust between banks and stop this frozen inter-bank market. Big fund withdrawals is another problem because depositors who take money out of one bank put it into another. Normally big fund withdrawals cause no problems, because the second bank then lends it back to the first. Of course this works as long as banks are willing to lend to each other. If this confidence is replaced by panic, no bank in the world can survive.

Unfortunately France is candidate...

France will be candidate for the Winter 2018 Olympic Games. It is now official and was announced last week. The president of the French National Olympic committee, Henri Serandour, even said that organising the Winter Olympic Games will increase the chances of Paris to organise the 2024 Summer Olympics (their main objectives I have heard).

Let's put it that way. The most prestigious event are the Summer Olympic Games watched by billions of people on earth, and the Winter Olympics are just a parallel competition that few people on earth really care about. I am personally convinced that organising the Winter Games will jeopardised the chance of Paris to organise the Summer Games in 2024 or 2028. I have already explained why in a recent post.
- France successfully organised the World Cup in 1998
- France successfully organised the Winter Olympic games in 1992
- France successfully organised the Athetics World Championship in 2003
...and Paris lost the Olympic games in 2001 against Beijing and in 2005 against London. How could France even claim that organising the games in 2018 will increase their chances to win the Summer Games the near future? France sets already (and again and again) itself for failure.

Three cities are candidates for the moment: Grenoble, Annecy and ...Nice. Nice might even be the favorite: you must know this city located close to Monaco in the cote d'azur, so popular for the sun, the beaches and peaceful climate of the South of France.  

Nice (see picture on the right!) claims that it is just few hours away from the slopes in the Southern Alps. And you know what? Paris is also just few hours away with the high speed train (TGV) from the Nothern Alps. I suggest that Paris should be candidate for the Winter Olympic in 2018, and Serandour will soon tell us that it will further increase the chance of Paris to win also the 2024 summer games. Sacre French !!
I just hope they won't get the 2018 games...France deserves more than being excited by the possibiliy of organising a minor event when it is targetting the most prestigious one.

Beautiful Ardeche...

I like going to Ardèche and enjoying the southern relaxing way of life. But the Ardèche is not the Cote D'Azure and some areas are so isolated that I always feel disconnected from the rest of the world. My priorities there change suddenly: DIY, cutting trees and wood, building a stone wall, collecting chestnuts and figs, BBQs, Saturday Market in Les Vans, going to the valley to buy the essentials (construction materials and food) and visit the local villages.

There are three beautiful small medieval villages nearby, ideally located in the National Park or Cevennes: Banne and Nave close to les Vans and la Garde Guerin (located in Lozère not in Ardèche but very close to the house). Exploring those villages is so peaceful, so unique that I always have the great feeling that the time has stopped many years ago in those areas.

Banne is located 10 km south of Les Vans. His huge castle that dominated the village, was destroyed during the French Révolution but the stables remained and have been beautifully restored (picture below). The "bois de Païolive" nearby is a strange forest, made from a strange mixture of white oaks and strangely shaped limestone rocks. In 2008 the Movie "le Missionnaire" from Luc Besson (who also produced Nikita, the 5th Element or Leon) was made in this village.

 

Nave is perched on a rocky outcrop and is a mixture of stony alleys and arched passageways. Nave has the "Village de Caractère" label that recognises the great restoration work and the touristic attraction of this village.

 

 

 

 

 

 

You might appreciate the beautiful old Renault 4: if you want to see very old French cars on the road, go to Ardèche and you will discover cars that you wouldn't even have suspected the existence. A local friend of mine once told me that in Ardèche people drive the old Citroen or Renault and leave the Ferrari in the garage...

La Garde Guerin (pictures below) is a village located about 2600 feet above sea level, dominating the Chassezac Gorge. This village played an important trading role when the Regordane way was the only way to cross the Kingdom of France in the 9th Century (Between Saint Gilles du Gard on the Mediterranean sea and le Puy en Velay). In 1992 the village received the very prestigious label "plus beaux villages de France". More information about this village here.