Fossil Fuel Headlines - 17 July, 2005
Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
Staff, Community Solutions
The Second U.S. conference on "Peak Oil" and Community Solutions will be held September 23-25, 2005, in Yellow Springs, Ohio. The conference will explore:
• The implications of Peak Oil.
• An in-depth look at changes in agriculture.
• The characteristics of a new economy.
• Peak Oil’s effect on our financial system.
• Alternatives to oil and our high energy way of life.
• The communities of the future.
• Ways to transition and answers to "What should I do now?"
Conference brochure & registration (246-KB PDF)
(13 July 2005)
Kurt Cobb, Resource Insights
Even if the world suddenly had 10 trillion more barrels of oil in the ground, it might not matter much in the short term. If the maximum possible rate of extraction ended up being something under what we currently consume or what we'd like to consume, we would still be in deep trouble. So, when reports appear that new technologies are going to double the amount of oil we can extract from old wells, the crucial question to ask is not, "How much?" but rather, "How fast?"
True, oil supplies will last longer if these technologies succeed at doing what they promise to do. (Don't let anybody kid you into thinking that we know they will. These technologies have yet to be widely deployed or tested.) But, even if we increase the amount of oil that is ultimately recoverable, we may not solve the real problem. We have a world economy entirely dependent for its growth on ever-increasing rates of oil production. This is the crux of the peak oil problem. It's not that there won't be any more oil; it's that at some point we will not be able to get it out of the ground at the rate we would like. And, of course, worse yet that rate will start to decline even though huge amounts of oil remain. To date we've been extracting the easy, fast-flowing oil. Increasingly, we are going after the hard, slower-flowing oil.
(14 July 2005)
David Room (interviewer), Global Public Media
Jason Bradford, founder of the Willits Economic Localization (WELL), speaks with Global Public Media’s David Room about climate change, oil peak, and how Willits is preparing for an energy-constrained future. He discusses how WELL got started, the efforts of the group, and their progress.
(2 May 2005)
Dan Crawford, The Republic (Canada)
The poorer nations are first to experience what we will all be swept over by: expensive energy.
Recently, Fidel Castro, who attended the first PetroCaribe Energy Summit at Puerto La Cruz, Venezuela, made a statement that was ignored by international media. He informed the summit that no Caribbean country will be able to purchase oil once the price reaches $100 a barrel.
Castro was only pointing out the obvious—the first places to be affected by increasing fuel costs will be the poorest countries of the world. The fact that media ignored this statement is significant. Logically, if one wishes to understand how rising energy costs will affect us, then one should look at the very places that are being affected now. The poorest countries that rely completely on diesel generators for their electricity are the ones showing the initial signs of trouble brewing.
Nicaragua, the poorest country in Central America, is a case in point. The President, Enrique Bolanos, recently issued a state of emergency over energy due to rising fuel costs. This event was so poorly covered by media that only a handful of reports ever surfaced, much of them containing inaccurate information. ...
Adam Porter, BBC
As oil prices remain volatile the markets do their best to forecast future prices. Unfortunately this is not an easy task. While it may appear extraordinary to outsiders one of the main problems in the oil market is the reliability of basic statistics. The oil industry calls the problem 'data transparency'.
As an example this week is a 'revision' to oil demand growth in the United States in 2004. Previously the growth in oil demand was thought to be 2.4%, about 484,000 barrels per day. In fact it was 697,000 barrels per day or 3.5%. That is in fact 46% more than was previously stated - a huge revision. ...
Energy Files director Dr Michael Smith said "it is no longer appropriate to accept glib demand forecasts from oil companies, financial institutions and governments¿suggestions that oil consumption will grow to up to 120 million barrels per day by 2020 and that automobile and airline traffic will increase at extraordinary rates are futile and damaging." ...
(15 July 2005)
Supertanker bookings for oil exports from the Middle East reached their highest monthly level this year in July, doubling shipping costs, as OPEC increased output. ...
Shipping rates for voyages to Asia have doubled in the past three weeks after the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world's oil, agreed to raise daily production quotas by 500,000 barrels to 28 million barrels last month. OPEC began raising quotas July 1 in a bid to lower record oil prices that threatened global economic growth.
The bookings are ``clear evidence that OPEC's sailings have gone up, even by more than the 500,000 barrel-a-day increase they pledged,'' said Roy Mason, the founder of consulting company Oil Movements, based in Halifax in Britain. ``Normally bookings reach a trough during this time of the year.'' ...
(15 July 2005)
POLITICS AND ECONOMICS
E.Judge, N.Hopkins, G.Duncan, The Times (UK)
SIX leading Arab economies, including Saudi Arabia, may reconsider pegging their currencies to the dollar, under their plans for a “euro-style” Arab single currency in the region.
Muhammad Al-Jasser, Vice-Governor of the Saudi Arabian Monetary Agency, the country’s central bank, told The Times that the six oil-exporting nations — Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates — could link the proposed single currency to the euro, or to a basket of currencies.
“We have to decide if it will continue to be pegged to the dollar or if we will do something else,” he said, making clear that: “Nothing is ruled in or out.”
Under proposals for an Arab single currency, first mooted in 2001, the six countries in the Gulf Co-operation Council are expected to take the next steps towards monetary union next year, paving the way for a launch of the currency, possibly called the dinar, by 2010.
As a first step, all six countries pegged their existing currencies to the dollar in 2002 in a move that reflected the fact that oil prices are denominated in dollars. But the dollar’s slide on currency markets has triggered speculation over a rethink. Since 45 per cent of the six states’ imports come from Europe, the euro’s rise against the falling dollar has ratcheted up their import bills, potentially making an alternative peg arrangement more attractive.
The increased attractiveness of a stronger euro to Arab states was underlined yesterday as the UAE said that it might convert 5 per cent of its foreign currency holdings from dollars into euros.
But Prince Alwaleed bin Talal, the billionaire Saudi investor, cast doubt yesterday over a change in the states’ existing dollar peg. “Denominating in US dollars is the best scenario. The US economy has proven beyond doubt that it is the locomotive for growth of world economies,” he said.
(16 July 2005)
Staff, People's Daily Online
A Chinese foreign ministry official summoned a Japanese diplomat in Beijing on Friday to lodge solemn representations to and express "strong protest" against Japanese government's approval of a Japanese oil and gas company's drill request in East China Sea.
Cui Tiankai, director of the Foreign Ministry's Asian Department, told Chihiro Atsumi, minister of the Japanese embassy in China, that such activity is a "severe provocation and violation" against China's sovereignty and interest, which is also against the rules in the United Nations Convention on the Law of the Sea.
Cui said China and Japan have not settled their demarcation in the East China Sea as they have disputes over demarcation there. It is untenable for the Japanese side, employing its unilateral position on the so-called "middle line", to grant test drilling rights to Japanese enterprises in the disputed sea area. ...
The Chinese side seriously requests the Japanese side, in the above-mentioned spirit, to correct its decision and stop any action that impairs China's sovereign rights and interests, said Cui. ...
The Japanese government has granted Teikoku Oil Co. concessions to conduct experimental drilling in the East China Sea near natural gas fields being explored by a Chinese consortium, Economy, Trade and Industry Minister Shoichi Nakagawa said Thursday. ...
The oil firm originally applied for exploration rights in the sea area in 1969 and 1970 but the government shelved the applications because of unsettled EEZ demarcation in the sea between Japan and China.
(15 July 2005)
According to this Japan Times story, "Teikoku plans to test drill just inside Japan's claimed boundary. China's platforms are just on its side of the line.". Same article also questions the viability of Japanese production: "The sites are too far from mainland Japan. Unless the deposits are huge and high-grade, the shipping costs alone would mean a loss to Teikoku," said Li Zhidong, an associate professor at Nagaoka University of Technology's management and information system science department and a visiting researcher at the Institute of Energy Economics, Japan. "Teikoku would have to sell whatever they drill to China."
Howard LaFranchi, Christian Science Monitor
Smugglers and thieves are stealing profits from oil even as insurgents work to keep the nation unstable.
WASHINGTON - First, the good news: With oil prices at record highs, Iraq is on track to bring in $20 billion or more in oil revenue this year. That may sound like a lot of petrodollars, especially for a war-torn country with tremendous needs in infrastructure repair and services delivery.
But the bad news is that very little, if any, of that money will actually be used in the country's stalled reconstruction - despite past lofty predictions that oil-rich Iraq would be financially self-sufficient by now.
Dealing with Iraq's insurgency is a chief reason for the gap between oil revenues and improving living conditions. But another reason for the lag is a growing problem of income loss from smuggling and outright theft of the revenues.
(14 July 2005)
Mike Davis, TomDispatch.com
...Dubai can count on the peak-oil epoch to cover the costs of these [huge construction projects]. Each time you spent $40 to fill your tank, you are helping to irrigate Sheik Mo's oasis.
Precisely because Dubai is rapidly pumping the last of its own modest endowment of oil, it has opted to become the postmodern "city of nets" -- as Bertolt Brecht called his fictional boomtown of Mahoganny -- where the super-profits of oil are to be reinvested in Arabia's one truly inexhaustible natural resource: sand. (Indeed mega-projects in Dubai are usually measured by volumes of sand moved: 1 billion cubic feet in the case of The World.)
Al-Qaeda and the war on terrorism deserve some of the credit for this boom. Since 9/11, many Middle Eastern investors, fearing possible lawsuits or sanctions, have pulled up stakes in the West. According Salman bin Dasmal of Dubai Holdings, the Saudis alone have repatriated one-third of their trillion-dollar overseas portfolio. The sheikhs are bringing it back home, and last year, the Saudis were believed to have ploughed at least $7 billion into Dubai's sand castles.
(14 July 2005)
Jeffrey Rubin, The Star (Canada)
Canada, more than most countries, should be able to cope with $100 (U.S.) per barrel oil - a price consumers are likely to see by the end of the decade.
Alberta's massive oil sands promise to make Canada one of the world's largest oil producers, and one which is strategically located next to the huge U.S. energy market. Soaring cross-border energy exports to the United States, and the promise of massive investment in the oil sands, paint a very rosy picture for the country's oil and gas patch in Alberta.
Unfortunately, the same cannot be said for the rest of the Canadian economy. ...
Soaring oil prices have the potential to fundamentally reshape the economic landscape of the country. The key question is to what extent market forces will be permitted to act. The last time oil prices were at or above today's level, in real dollars, Ottawa imposed made-in-Canada oil prices under its infamous National Energy Program. If and how it plans to redistribute national wealth this time around remains to be seen.
Jeffrey Rubin is chief economist and chief strategist at CIBC World Markets.
( July 2005)
Great to see more mainstream market watchers waking pup to the new rules of economics.
Jeremy Cresswell, Editor, Energy
WITH crude prices lately past the $60 barrier, with UK gas prices reckoned by Det Norske Veritas to have reached $80 per barrel equivalent - yes, $80 equivalent - with China National Offshore Oil Corporation (CNOOC) bidding to snatch US maxi-independent Unocal from the jaws of Chevron at the 11th hour, and with Matt Simmons's Twilight in the Desert storming up Amazon.com's hot titles list, there's a lot to worry about. Each of the foregoing represents a warning. $60 crude says that the complacency that currently grips the West's energy sector has got to stop.
$80boe gas in Britain is a frightening sign that Westminster may have utterly screwed up management of this aspect of UK energy policy. ...
I've harped on about oil prices rather a lot lately but feel I have to again in the light of the Cambridge Energy Research Associates report that effectively says "now, now children, everything's going to be all right and oil prices will cool and we can get back to our favourite lifestyle". CERA guys are smart, especially Daniel Yergin, author of that famous book on oil history, The Prize. But have they got it wrong this time as a growing number of analysts switch camps and side with the Peak Oil brigade led by its colonel-in-chief, Colin Campbell? ...
Mr Cresswell reinforces the Scottish reputation for plain speaking & canniness, taking CERA to task for their optimism on Saudi production and rocketing the privatisation policies of recent (UK) governments for their unsurprising effects in face of depletion.
Various, Associated Press
But evePricey oil this year has left Thais in the dark. It's also drawn German drivers to Polish gas pumps, kept cars parked in the United States and fishing boats moored in New Zealand. ...
"I have no option but to sell my motor bike," said businessman Rahul Mehta in the Indian city of Hyderabad, after oil crossed the $60 mark for the first time last month. ...
Peter Morici, a business professor at University of Maryland, says that while the oil spike has acted as a speed bump to world economic growth, it will not translate into recession this time. "First, oil prices would have to reach about $90 a barrel to match their previous high in inflation-adjusted dollars," Morici says. ...
Darren Guard, president of the fishermen's association in the New Zealand port town of Nelson, said that with 40 percent of income spent on diesel, it was becoming unprofitable to fish. "It's crippling. It's at the stage where boats are being forced to tie up," he told The Nelson Evening Mail.
(12 July 2005)
Paul Roberts, Newsday (US)
If American motorists seem unpanicked at $60-a-barrel oil, it's understandable. After four years of steadily rising crude prices, the predicted oil crisis hasn't materialized. Our economy is humming. Gasoline is flowing. We're still buying enormous cars and driving more miles, and most of us couldn't care less that Congress can't reform U.S. energy policy.
Such a blasé attitude is, by conventional economic theory, normal and even healthy. In a free market, consumers respond rationally to prices. When oil really does get costly enough to cause pain, we can depend on market forces to kick in. ... Until then, there is no crisis: If we don't feel compelled to change, then, by definition, the status quo is fundamentally sound. ...
Would $100 oil be such a bad thing? After all, it's only when prices get that high that consumers will likely start the move to a post-oil economy. The problem is that such a transition can't happen overnight. Oil isn't just a commodity, like coffee. Oil is fundamental to our economy: It supplies 95 percent of our transportation sector.
We will certainly find an alternative, for we are a clever species. But innovation of that scope takes years to develop, decades to roll out. Even a partial replacement for oil won't be concocted overnight - and certainly not fast enough to avoid one of those monster recessions that has followed every spike in oil prices in the past half-century.
Many conservative economists still insist that price alone is sufficient to bring any transformation. Yet, as the widening gap between domestic consumption and global production now shows, that comforting logic may no longer hold.
(15 July 2005)
Some cautious cage rattling from a very mainstream source, optimists will see as sign of progress.
Paul Roberts, Washinton Post
If American motorists seem unpanicked at the prospect of $60-a-barrel oil, it's understandable. After four years of steadily rising crude prices, the predicted oil crisis hasn't materialized. Our economy is humming. Gasoline is flowing. We're still buying enormous cars and driving more miles, and most of us couldn't care less that Congress can't reform U.S. energy policy.
Such a blasé attitude is, by conventional economic theory, normal and even healthy.
Put another way, rather than reflecting any inherent economic wisdom, today's blasé oil attitudes may mask a dangerous split reality in the world of oil. Prices aren't yet high enough to curb demand in America, China or elsewhere, which means demand pressure will continue to build. Nor are prices high enough to spur the innovation needed to move away from oil. And yet, by the time prices do rise, which they will, and the market performs its inevitable "correction," the invisible hand will have moved too late to do anyone any good.
This isn't to argue for a centrally planned energy system: The next energy economy will be built by the market, at a profit, or it won't happen at all. But if that transformation is to happen fast enough to make a difference, the process will need a push by policymakers -- and more likely a whole series of pushes, from billions in funding for research to, yes, some kind of tax on carbon emissions...
(14 July 2005)
Staff, Japan Today
TOKYO — Japan Airlines Corp. will accelerate a drastic review of its international flight operations to cut costs on the back of higher crude oil prices, President Toshiyuki Shimmachi said Friday.
"We will accelerate a review of routes with low profitability and leave no stone unturned," Shimmachi said in an interview with Kyodo News.
(16 July 2005)
Thats all they wrote, couldn't find cited interview at Kyodo News or similar stories elsewhere (as of 17 July).
What do you think? Leave a comment below.
Sign up for regular Resilience bulletins direct to your email.