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Fossil Fuel Headlines - 14 July, 2005

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Many more articles are available through the Energy Bulletin homepage


PEAK OIL

An Energy Tsunami Ahead (1.4-MB PDF)

Matthew Simmons, Simmons International

Slides for a recent talk. The closing slide is upbeat:

The Steps To A Brighter Future Are Clear The Steps To A Brighter Future Are Clear
* Implement data reform ASAP!
* Create access to all realistic supplies.
* Attack capacity bottlenecks on all fronts.
* Adopt genuine energy conservation fast.
* Energy R&D needs to “explode.”
* Existing energy infrastructureneeds rebuilding.
* If done immediately, the Energy War can be won!
(1 July 2005)
It's good to see some optimism and constructive suggestions, but do we really need another war metaphor ("The Energy War")? Still, if Simmons can get the ear of G.W. Bush and the Republicans in this way, so much the better! -BA

The Relationship Between a Country's Income and Energy Consumption per Capita

Prof. Goose, The Oil Drum

To me, this [graph of countries's energy consumption vs income] really shows how far the US has to fall as "king of the mountain." We're a rich country that uses a lot of energy per person...and as energy becomes more and more expensive, the rest of the world will look at stats like these and say, "hey US, you're going to have to take it down a notch or ten." Just one more reason that they're going to hate us more and more as oil gets more and more expensive.

This is the world that a shrinking supply of oil is going to lead us towards, it seems to me.

The problem is that we are in the mindset that everything, including economies, will keep growing. However, it is ONLY BECAUSE OF CHEAP OIL/ENERGY that economies have continually grown. After watching Jared Diamond last night, this becomes even more abundantly clear...it sounds deterministic that geography facilitated societal development, yes...but oil is part of that geographic catalyst. The US, because of its agricultural and natural resource wealth, has had the riches to pay for the oil...at least up until now.

It also seems that, when you take cheap oil out of the equation, and many economic assumptions would seem to no longer hold. We've had 100 years of constant growth facilitated by cheap oil. If peak oil is now, with nothing ready to replace the energy margin, the implications are ugly.
(13 July 2005)

Oilcast #17: IEA shock markets with predictions Audio - 4.7Mb MP3 file

Oilcasters

The IEA have shocked the oil markets with predictions that have left some analysts reeling. What did they say? Whose figures are we to believe? Is this the most important piece of oil data this year? We take a good look at the figures.
Plus the damage from Dennis, the arrival of Emily, and a report from Platts on OPEC that makes even more interesting reading now the IEA have confounded the forecasters..
(13 July 2005)

Diane Rehm discusses Peak Oil on WAMU (US radio)

Diane Rehm, WAMU

"Some oil industry experts argue that worldwide demand for oil is about to outpace production. We'll hear several views on future supply and demand for oil. "
One hour of broadcast radio show available as Realaudio file.
Guests include:
*Colin Campbell, petroleum geologist
*Michael Lynch, president, Strategic Energy and Economic Research
*J Robinson West, chairman, PFC Energy, an energy consulting firm

One hour of broadcast radio show available as Realaudio file.
(13 July 2005)

POLITICS AND ECONOMICS


New age of anxiety dawns

Kenneth Rogoff, Australian Financial Review

The global economy seems to be walking on water, shrugging off soaring oil prices, policy paralysis in Europe, unsustainable borrowing by the United States and record housing prices.

Is it because, as leaders of the Group of Eight economies would have us believe, investors are in a buoyant mood, confident in their leaders' stewardship of the world economy? Or are we being governed by a pathology of fear, fed by events such as the recent London bombings, that is holding down long-term interest rates, thus covering up a host of simmering problems?

The role of phenomenally low long-term (inflation-adjusted) interest rates in covering up a multitude of weaknesses in the global economy is all too apparent.
(14 July 2005)
Kenneth Rogoff, a former International Monetary Fund chief economist , is professor of economics at Harvard University.

Suez Strikes Back in Bolivia

Susan Spronk, Znet

In his address to the nation on March 6, 2005 now deposed President Carlos Mesa warned that Bolivian citizens could not exercise their democratic rights to decide the future of their nation's natural resources. Should private gas and water companies be expropriated, he warned, Bolivia would have to pay the multinational corporations that invested in privatized water, gas, and other key enterprises.

As we shall see, Mesa's threat was not a hollow one. Bolivia faces an impending lawsuit for cancelling the water contract with Aguas del Illimani, the private consortium controlled by majority shareholder Suez. Thanks to a bilateral investment treaty signed between France and Bolivia, Suez has the right to sue the Bolivian government for breach of contract.
(12 July 2005)
More tensions between rich countries and poor countries with resources.

Korean gov’t agrees energy-saving measures

Chosun (Korea)

... Under measures agreed Thursday, power-guzzling businesses like gas stations, public baths and saunas may have to shorten business hours or close once a week. The government and ruling Uri Party agreed to take compulsory energy-saving measures if the price of Dubai oil remains above US$50 by the end of the month. ...

An official in the Industry, Commerce and Energy Ministry said the auto-free day for car owners was left out because many drivers could buy another car to dodge the system, increasing instead of reducing the number of cars on the road. Car insurance discounts and the difficulties for the self-employed who need a car for work were also taken into account, the official said.

The Ministry of Commerce, Industry and Energy plans to form a team consisting of ministry and local government staff and the police to crack down on illegal gasoline products. A reward system for reporting violators will be revived. ...

The Federation of Korean Industries has several times asked the government to reduce oil-related taxes, but instead the tax on gasoline is going up by W63 per liter on Friday. ...
(7 July 2005)

ASEAN avoids tough issues, touts biofuel as oil fix

Jonathan Leff, Reuters

SIEM REAP, Cambodia, July 13 (Reuters) - The Association of Southeast Asian Nations pledged on Wednesday to pursue alternative energy to blunt the future impact of $60 oil, but sidestepped any political measures that might provide more immediate relief.

Energy officials from the Association of South East Asian Nations (ASEAN) touted biofuels -- partially synthetic gasoline or diesel made from crops such as corn or sugar -- as the best means of supplanting oil demand with a cleaner, domestic source. ...

ASEAN also worked to update a 1986 petroleum security pact, which stipulates that oil-rich members such as Indonesia, Malaysia and Brunei assist importers during times of need. ...

The absence of many ministerial-level officials highlighted the problems facing the region. The minister for ASEAN's top consumer Indonesia was kept at home to deal with a domestic supply crisis borne of the government's struggle to keep up with heavily subsidised domestic fuel costs.

And Thailand's top official stayed in Bangkok to announce the early end to domestic subsidies as ASEAN's biggest oil-importing economy reels from $60 crude. ...

ASEAN, which also groups Laos, Myanmar, Vietnam and Singapore imports a net 1.5 million barrels of oil per day, more than a third its total demand and a sharp reversal from its status as an exporting region a decade ago.
(13 July 2005)

Progress noted on China's strategic reserve

Editors, Oil & Gas Journal

China, the world's third largest oil importer after the US and Japan, is making progress in building a strategic petroleum reserve (SPR), said Energy Security Analysis Inc., Wakefield, Mass (US).

China's first storage base in Ningbo (Zhenhai), with a capacity of 29 million bbl of crude oil, is to be complete in August and hold crude oil before yearend. ...

At current crude prices, the Chinese government remains cautious about filling the Ningbo base storage. Chinese government officials expect other storage bases in Dalian, Zhoushan, and Quingdao to be completed by 2007.

But ESAI believes it could be several years before these tanks are filled. The four bases together will represent total storage capacity of 102 million bbl of crude, representing about 40 days of oil imports.

The government has said it plans to increase its strategic storage capacity to 55 days of imports by 2015 and 90 days by 2020.
(12 July 2005)

Vancouver airport not ready for oil hike

Charlie Smith, Georgia Strait

The Vancouver International Airport Authority has just launched a $1.4-billion capital plan to accommodate projected increases in passenger traffic. However, the airport authority’s president and CEO, Larry Berg, has acknowledged to the Georgia Straight that his staff have not assessed the impact of higher oil prices on the number of people who will travel through YVR in the future.

COPE Coun. David Cadman told the Straight that he questions how much more airport infrastructure is necessary in an era of rising oil prices. He noted that the world is consuming oil much more rapidly than it’s being discovered, which means that the price will continue increasing. “As the price goes up, so necessarily will the cost of flying,” Cadman said. “And as the cost of flying goes up, it will impact the number of people who do holiday flights and, I suspect, will even impact the number of people who do business flights.”

Prior to the committee meeting, Berg told the Straight that airport staff have not prepared any models on the effect that higher oil prices will have on passenger traffic through the airport. He added that the airport authority relies on forecasts from Transport Canada that he described as “very accurate”, and from individual airlines.

“I don’t put myself in the position of trying to predict the future of oil prices,” Berg said. “That’s not my business.” ...

Julian Darley, director of a think tank called the Post Carbon Institute (www .postcarbon.org/), told the Straight that he thinks Berg’s comment about not being in the business of predicting oil prices is akin to a ship captain saying he is not in the business of forecasting the weather. ...
(7 July 2005)

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