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Energy Headlines - Apr 20, 2005

Click on the headlline (link) for the full text.

The Missing Energy Strategy
New York Times
The House is moving quickly and with sad predictability toward approval of yet another energy bill heavily weighted in favor of the oil, gas and coal industries. In due course the Senate may give the country something better. But unless Mr. Bush rapidly elevates the discussion, any bill that emerges from Congress is almost certain to fall short of the creative strategies needed to confront the two great energy-related issues of the age: the country's increasing dependency on imported oil, and global warming, which is caused chiefly by the very fuels the bill so generously subsidizes.

What's maddening about this is that there is no shortage of ideas about what to do. Step outside the White House and Congress, and one hears a chorus of voices begging for something far more robust and forward-looking than the trivialities of this energy bill. It is a strikingly bipartisan chorus, too, embracing environmentalists, foreign policy hawks and other unlikely allies.
(19 Apr, 2005)
(also posted on Common Dreams)


Confronting America’s Addiction to Oil
Berkeley Daily Planet
America is teetering on the edge of recession. We’ve run up a huge debt and, as a result, have developed startling vulnerabilities. While there are many explanations for our precarious situation—ill-advised tax cuts and wrong-headed administration priorities, for example—the root problem is our dependency on oil. Although we are barely 5 percent of the world’s population, we consume 25 percent of the annual oil production. We produce 6 million barrels of oil per day yet devour 20 million.

We are oil junkies, physically dependent upon our daily fix of petroleum. To wean ourselves from our slavish dependency on carbon-based fuels, we will have to go through a harrowing withdrawal process. The sooner we do this the better, as many experts are predicting that 2005 will be the peak oil production year for the planet.
(19 Apr, 2005)


Jeanette Fitzsimons: Exploration will not provide the oil to match demand
New Zealand Herald
I am glad that Owen McShane agrees with the Greens that we are not about to run out of oil - he confirms our view that at this stage we are facing only the end of cheap oil.

He then argues that higher prices will encourage more exploration, more efficient cars will allow demand to keep growing, and the market will provide replacement energy sources when the price of oil gets high enough. There is no evidence for these claims, other than market theory.

It is more than a year since oil prices doubled, but what are the oil companies doing? Some exploration continues but little net increase in refining capacity is planned and most of their effort seems to be going into mergers and takeovers. What do they know that they haven't told us?
Jeanette Fitzsimons is the New Zealand Green Party co-leader.
(20 Apr, 2005)


Goldman: Costly oil not a bubble
Jump in crude prices during the past year backed by economics of supply and demand, firm says.

CNNMoney/Reuters
The surge in oil prices during the past year is backed by the economics of supply and demand rather than the result of a short-lived bubble, the global head of commodities research at Goldman Sachs said Monday.

"The fundamental shift is not a bubble generated by speculation, but that of a systematic upward shift in the long-term price of oil," Jeff Currie, a managing director at top energy derivatives trader Goldman, told an energy conference.
(19 Apr, 2005)


Oil's not well with the world
The Courier
At an estimated cost of $4 billion, and scheduled to take 20 years to build, the proposed TransApex tunnel network is arguably the most ambitious construction project in Brisbane's history. But chances are the project probably will be discontinued after the tunnel to the airport is completed in 2013.

The reason – what is known as "peak oil" will have solved Brisbane's traffic congestion by making motoring far too expensive.
(20 Apr, 2005)


Global: Tilt! (Stephen Roach)
Morgan Stanley
An unbalanced global economy is at risk of becoming unhinged. Beset by record imbalances between current account deficits and surpluses, it doesn’t take much to derail a system that is already in serious disequilibrium. Such a possibility now seems less remote in the face of a confluence of powerful blows -- an energy shock, threats to European unity, an outbreak of overt hostility between China and Japan, and the rising tide of US-led protectionist sentiment. Meanwhile, steeped in denial, global policymakers are asleep at the switch. With an unbalanced world lacking the inherent resilience needed to overcome these mounting tensions, the global expansion is now at risk. That conclusion does not seem to be lost on stretched and still overvalued financial markets.
(18 Apr, 2005)


High Energy Prices are here to stay (Marshall Auerback)
PrudentBear.com
Concern that rising oil prices could harm the global economy dominated weekend meetings of world finance ministers and central bankers who gathered after Wall Street plunged to new lows for 2005. There were intense talks about the energy situation at both the meetings of the Group of Seven major industrialized countries and the policy-making committee of the 184-nation International Monetary Fund last Saturday.

But is this yet another case of policy makers closing the barn door after the horse has bolted? After all, oil prices now threaten to drop below $50 per barrel, having fallen 9 days in a row amidst concerns of slowing global economic growth, falling stock markets and a further unwinding of the great reflation trade (which is engendering significant liquidation of the speculative long positions on the oil futures market).
(19 Apr, 2005)


Are Oil Prices Headed for a 'Super Spike'?
Some analyst at Goldman Sachs says it's going to $105 a barrel!

Fortune
The news spread instantly across Wall Street trading desks on a Thursday morning at the end of March: "Some analyst at Goldman Sachs says oil is going to $105 a barrel! He's calling it a 'super spike'!" Within minutes the price of oil was surging—a day later it would hit a new high of $58 a barrel. Angry investors lashed out at Goldman, calling the report preposterous and accusing the firm of manipulating the market to benefit its energy-trading desk. There were calls for a government investigation. The host of one cable TV business show wondered whether the guy who made the call had "some type of insidious background." A week later, at the firm's annual shareholders' meeting, Goldman Sachs CEO Hank Paulson felt compelled to defend the report and the integrity of the analyst and his firm. Whew! Such is the nature of the oil markets these days.

So just who is this super-spike man, and what in the world was he thinking? Well, his name is Arjun Murti, and he's a veteran oil analyst and a managing director at Goldman. Press-shy by nature anyway, the poor guy was so unsettled by the reaction to his report that he refused all interview requests—until, that is, I was able to persuade him to take my call.
(19 Apr, 2005)


How to Curb BC’s High Risk Hunger for Energy:
Spreading pipelines, vulnerable to sabotage, fuel our growing appetite.

The Tyee (British Columbia)
Last year, one of the most surprising findings of a new regional index of progress called the Cascadia Scorecard was that -- of seven key trends -- British Columbia and the rest of the Pacific Northwest scored most poorly on energy efficiency.

Yes, despite Cascadians’ interest in renewable energy, clean energy, and hybrid cars, the average northwesterner consumes nearly as much highway fuels and nonindustrial electricity as a Texan. British Columbians are more energy efficient than folks from Washington, Oregon, or Idaho, but still consume relatively high levels of energy -- almost 50 percent more per person than Germans.

This year’s edition of the Cascadia Scorecard, released last month, confirmed the region’s poor performance on energy and added a surprise twist to the story -- as well as some good news.
(18 Apr, 2005)


Where would ANWR oil go?
Seattle Times
Alaska Sen. Ted Stevens stood on the floor of the Senate a month ago and urged his colleagues to support drilling in the Arctic National Wildlife Refuge. Do it to boost our domestic oil supplies, he said. Do it to reduce our dependence on foreign oil.

What Stevens did not mention was this: Alaskan oil could wind up being sold overseas.

The Senate vote, which gave Stevens a 51-49 victory, makes no promise the oil pumped from the wildlife refuge (ANWR) has to be sold to domestic refineries.
(19 Apr, 2005)


Is it all relative? Maybe oil prices aren't so bad, after all.
Christian Science Monitor
Yes, gas prices have soared, but they're still 34 percent below 1980 levels. Housing and baseball tickets are another story.

HOUSTON – We groan when our grandparents go on about Coca-Cola costing only a nickel in their day. How did things become so much more expensive, they always want to know?

Here's the short answer: With inflation factored in, that same bottle of Coke during World War II would cost roughly what we pay for it today. Eggs, milk, and bread now cost less.
(19 Apr, 2005)


The Great Engine of China Is Low on Fuel
New York Times
GUANGZHOU, China, April 15 - Service stations across China are starting to run short on diesel this spring, while electricity blackouts here in southeastern China are growing worse as power stations cut back on purchases of fuel oil.

For truckers and factory owners, the diesel and electricity shortages are a nuisance, sometimes a costly one. The Guangzhou Boaosi Appliance Company, which makes refrigerators here, is without electricity from the municipal grid four days a week, and just bought a costly generator last month to continue operating on diesel.

The diesel and power shortages have one thing in common: they are largely the result of the clash between China's Communist past and its increasingly capitalist present. The government has set retail prices too low for diesel and electricity. So businesses, facing high world oil prices, are supplying less of both.

Disruptions in Chinese markets for fuel oil, diesel and other oil products are causing ripples in global markets in turn, as traders and investors around the world struggle to interpret the effects on international oil supply and demand.
(15 Apr, 2005)


House bill seeks bigger tax breaks for energy sector
Washington Post/Seattle Times
WASHINGTON — The House this week will consider $8 billion in tax breaks targeted to the energy industry at a time when some of those companies are enjoying soaring profits from high consumer prices.

The vast majority of the tax breaks would benefit companies that produce and supply traditional forms of energy, with a large portion going to the oil and natural-gas sector.
(19 Apr, 2005)


The Coming Saudi Oil Shock And The World Economy
Simmons and Company International
Matthew Simmons slide presentation about his new book
3.6 MB PDF
(16 Apr, 2005)

Editorial Notes: Thanks to Peakoil.com and Tidepool for many of the leads. -BA

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