Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
Deepening political anxiety about the economic crisis went public this week as Mervyn King, Governor of the Bank of England declared that “this is the most serious financial crisis at least since the 1930s, if not ever.” and David Cameron in his keynote speech to the Conservative Party Conference admitted that “the threat to the world economy — and to Britain — is as serious today as it was in 2008 when world recession loomed.” The gloomy outlook led to a fall in the price of commodities with Brent oil briefly dipping under $100/barrel on Tuesday — it had however rallied by Thursday to $104/barrel.
So why-given the severity of the economic news-isn’t the oil price falling faster? Goldman Sachs’ latest research note sums up the situation simply — “The world crude oil market remains exceptionally tight.” The loss of Libyan production means that the world is more reliant on non-OPEC oil — this oil is increasingly expensive to produce with the marginal barrel now around $90/barrel.
There has also been a reversal of the ‘contango’ in oil price futures contracts that has prevailed over the last few years. Until recently the price of oil for future delivery was higher than that of oil for immediate delivery — the logic being that tomorrow would bring a brighter economic future and tighter supplies. Now the market sentiment has reversed making today’s oil more expensive and resulting in a drawdown of stocks which (outside the US) are now at a 9 year low. The market is now essentially between a rock and a hard place — sudden economic optimism would result in tight supply and higher prices; economic decline will make the marginal barrel unaffordable. Goldmans warn that any uptick in economic activity would leave the market unable to meet supply, leading to another another price spike — and presumably another recession.
So, just when it should surely be becoming ever more obvious that the only rational policy for the future needs to be about a reduction in our oil dependence, the Conservative Party conference appeared to show that they just aren’t getting it. So we now have a Chancellor who wants to back-pedal on carbon reduction commitments, a Transport Secretary who wants to increase the motorway speed limit and build new roads while allowing record increases in train fares, and an energy department which is struggling to roll out a coherent strategy to encourage renewables and carbon capture. In short it looks like the government’s green credentials have got a severe case of the blues.
Oil
Crude Oil Falls in New York on Renewed Growth Concern After Two-Day Rally
Oil fell in New York on speculation the biggest two-day rally in seven months was exaggerated amid U.S. unemployment and signs of slowing global demand for crude.
Futures slipped as much as 0.6 percent, paring the first weekly increase in three. OPEC will keep shipment levels unchanged through most of this month as the economic slump constrains demand, tanker-tracker Oil Movements said. The jobless rate in the U.S., the world’s biggest crude user, held at 9.1 percent for a third month in September, a Labor Department report may show today. A technical indicator signaled oil-price rises aren’t justified by buying momentum…
Goldman on who’s really wagging the oil market
If you’re wondering what Goldman Sach’s view on crude is — it can be summed up in one neat sentence from their latest research note:
“The world crude oil market remains exceptionally tight.”…
Oil sands imports could be banned under EU directive
Oil from controversial and environmentally destructive tar sands is likely to be all but banned from Europe after a decision on Tuesday. The move also casts doubt on the future of other controversial energy sources such as shale gas.
Tar sands (also known as oil sands) have been a target of green campaigners for several years, as the extraction of low quality oil from sands — chiefly in Canada to date — produces far greater greenhouse gas emissions than conventional oil drilling operations, and requires vast quantities of water. The exploitation of tar sands has also led to the destruction of swaths of forest and is blamed for water and air pollution…
The Cronyism Behind a Pipeline for Crude
The Keystone XL project would create jobs from Montana to Texas. But what scientific and environmental issues should be considered first?
LATE last month, the Obama administration unveiled a new tool that lets anyone send a petition to the White House; get 5,000 signatures in 30 days and you’re guaranteed some kind of answer. My prediction: it’s not going to stop people from trying to occupy Wall Street. After the past few years, we’re increasingly unwilling to believe that political reform can be accomplished by going through the “normal channels” of democracy…
Bill McKibben, a scholar in residence in environmental studies at Middlebury College, is a spokesman for tarsandsaction.org, an organization that opposes the Keystone XL pipeline.
IEA Warns Of Ballooning World Fossil Fuel Subsidies
Global subsidies for fossil fuel consumption are set to reach $660 billion in 2020 unless reforms are passed to effectively eliminate this form of state aid, the International Energy Agency (IEA) said on Tuesday.
“Governments and taxpayers spent about half a trillion dollars last year supporting the production and consumption of fossil fuels,” the energy watchdog to 28 industrialized countries said…
Saudi Arabia Vows ‘Iron Fist’ After Attack
Saudi Arabia vowed to use “an iron fist” after 11 members of the security forces were attacked and injured during unrest in a Shiite Muslim town in the east, the official Saudi Press Agency said.
The government accused an unidentified foreign country of seeking to undermine the stability of the kingdom as a result of the violence in Awwamiya, in which the assailants, some on motorcycles, used machine guns and Molotov cocktails, the Riyadh-based news service reported late yesterday. A man and two women were also injured, it said…
BP Has 2 European Refinery Fires in 3 Days
A fire seriously burned one person and inflicted minor injuries on another Tuesday atBP PLC’s Lingen refinery in northwest Germany, the second blaze in three days at European refineries owned by the U.K. oil major, following a separate incident Sunday at its Castellon facility in Spain.
Tuesday’s fire also is the second serious accident at its Lingen facility this year. The troubles have once again thrown the spotlight on BP’s refining safety record, which reached its nadir with a 2005 fire and explosion that killed 15 people and injured more than 170 others at its refinery in Texas City, Texas…
Container ship stranded off New Zealand leaking oil
A large container ship stuck on a reef off the coast of New Zealand is leaking oil.
Maritime New Zealand said the intermittent leak appeared to be coming from damaged pipes rather than from fuel tanks…
Hopes that economic crisis will deliver cheaper oil
Oil prices have tumbled on world exchanges raising hopes among consumer groups that one silver lining from the eurozone crisis will be lower petrol prices.
Brent crude dropped below $100 a barrel while US crude oil prices fell to $75 a barrel, levels not seen since late September 2010 and marking a nearly 35% decline from 2011 highs hit in early May…
Drilling for Crude Goes Solar
Chevron Corp. is enlisting the sun to help drain the sludge-like dregs of crude from an aging oil field.
Chevron is keen to extract this thick crude by heating it with steam. Historically, oil companies have used natural gas to create the energy for the steam. Here in Coalinga, the energy comes from a vast stretch of solar panels…
Gas
Putin says Russia closely watching EU Gazprom raids
Russian Prime Minister Vladimir Putin said on Monday that the government was paying close attention to the situation surrounding recent raids on subsidiaries of Gazprom and ordered the company to cooperate with European authorities.
“The government of Russia will follow what is going on around Gazprom in the most attentive way,” Putin told Gazprom chief Alexei Miller, the Interfax news agency reported…
France Cancels Shale-Gas Permits Over Fracking IMpasse
The French government on Monday canceled all three exploration permits on shale-gas fields after oil major Total SA and U.S.-based Schuepbach Energy LLC—which hold the rights—maintained their intention to drill the potential fields using hydraulic fracturing, a controversial technique that was banned in the country earlier this year.
In a joint statement, France’s energy minister, Éric Besson, and environmental minister, Nathalie Kosciusko-Morizet, said that the three permits, which represent all of the country’s potential shale-gas fields, had been cancelled after the companies submitted a mandatory report about their drilling techniques in which they maintained their plans to use hydraulic fracturing, or “fracking.’…
Poland lobbies against EU shale gas regulation
Poland, long seen as promoting a common European approach to shale gas, has now published a surprising study describing possible EU regulation on the industry as “unfeasible”.
Just ahead of its Presidency, Poland had lobbied for shale gas to become a “common European project”. But Warsaw would apparently now prefer Brussels to abandon plans to develop the industry.
The Polish Permanent representation to the EU hosted a public event in Brussels on Tuesday (4 October) to present a new study on shale gas, published in Warsaw the day before…
Nuclear
Middle East sovereign wealth funds ‘queue up’ to invest in UK nuclear power stations
Sovereign wealth funds from the Middle East and other oil-rich areas are “queuing up” to invest in UK nuclear power, according to Charles Hendry, the energy minister.
Experts have been worried that the UK will find it difficult to attract enough companies willing to fund an estimated £40bn for new nuclear plants…
Nuclear seeps back into favour as Japan begins energy debate
Former Japanese prime minister Naoto Kan concluded in March that nuclear power was no longer worth the risk after the world’s worst nuclear accident in 25 years. His successor seems less convinced.
Prime Minister Yoshihiko Noda’s month-old government let a panel of experts begin debate on Japan’s energy policy on Monday, but Noda has already signalled that nuclear power could play a role for decades…
Japan Discovers Plutonium Far From Crippled Reactor
Trace amounts of plutonium were found as far as 28 miles from the damaged Fukushima Daiichi nuclear-power plant, the first time that the dangerous element released from the accident was found outside of the immediate area of the plant.
The science ministry report issued Friday comes just as the government lifted one of its evacuation advisories, underscoring the difficulty of restoring normalcy and assuring the safety of residents around the crippled plant…
Renewables
Germany may buy Greeks’ sunshine
Germany’s economy minister, Philipp Rösler, arrived in Athens on Thursday with businessmen, entrepreneurs, financiers and green energy experts in what was billed as a potentially groundbreaking visit to draw badly needed investment into the debt-stricken country.
The prospect of German business reviving Greece’s economy might have seemed far-fetched not long ago: at 109 in the World Bank’s “ease of doing business” index, the nation ranks below Bangladesh, Ethiopia and Yemen. Foreign direct investment in the country was on a par with that of Libya before the outbreak of war…
Work starts on solar bridge at Blackfriars station
Work on the world’s largest solar bridge formally begins today as the first of more than 4,400 solar panels are installed above the new Blackfriars station platform.
The historic London site is undergoing a multi-million pound refit, which includes extending the platform along Blackfriars Bridge, a structure built in 1886…
UK
Conservative Party Conference 2011: Green initiatives watered down to help business
The Chancellor said that the Government will not cut carbon emissions faster than elsewhere in the European Union. Previously, Britain has prided itself on taking a leading role in cutting greenhouse gases.
He insisted that British businesses must be protected from excessive environmental costs if they threaten to put firms at an international disadvantage…
Renewable Heat Incentive withdrawn by government hours before launch
Confidence in the government’s commitment to a green energy agenda was dealt another major blow on Friday when an £860m scheme to subsidise renewable heating systems was pulled at the last minute.
The Department of Energy and Climate Change insisted that its groundbreaking Renewable Heat Incentive was being delayed rather than abandoned, and blamed the European commission for failing to give it the immediate go-ahead. But the industry described the news as “desperately disappointing” and was angry that the final decision from DECC came just hours before the RHI was meant to come into force…
Road-building plan takes us back to the last Tory government
The money has run out, or so we keep being told. There are no funds left for any but essential projects: the frontline services and the capital spending which cannot be deferred. Councils in particular are desperate for cash: so desperate that they are having to cut everything from libraries to residential care homes, Sure Start centres to Citizens’ Advice Bureaux. Every month they have to make horrible decisions whose consequences will damage people’s lives.
So why are these same cash-strapped councils now intending, alongside central government, to spend £897m on new roads, some of which were first proposed decades ago, but which were deemed unnecessary even when cash was abundant? And why is the government minded to approve this spending?…
The Smart answer to the energy crisis?
Smart meters are billed as the key to solving Britain’s looming energy crisis.
But while a live display of energy costs and consumption may help parents bribe teenagers to spend less time in the shower, the results of a key trial indicate the meters will barely affect overall power consumption…
Flagship green energy project faces axe
Scottish Power is understood to have pulled the plug on a major green energy scheme at Longannet power station, Fife, close to the Firth of Forth.
The threatened scrapping comes amid growing concern that David Cameron and George Osborne want to scale back the green agenda on the grounds that low carbon technology, such as carbon capture storage (CCS) and offshore wind power, cost too much in a time of austerity…
Climate
Court adviser says EU airline carbon cap would be legal
Plans to include any airline landing or taking off on EU territory in an emissions trading scheme are legal, an adviser to Europe’s top court has said.
European Court of Justice Advocate General Juliane Kokott said this in response to a legal challenge to the scheme by North American airlines…
China climate goals run against growth: report
China, the world’s biggest carbon dioxide emitter, will meet near-term goals to fight climate change but quick economic growth will mean C02 emissions will be higher than previously thought, researchers said on Tuesday.
China’s quick adoption of clean energy will help it exceed emissions-to-GDP targets agreed last year, but its carbon dioxide output will still be increasing a decade from now with an expanding economy, said scientists with Climate Action Tracker…