Politics and Economics Headlines - 14 August, 2005
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Many more articles are available through the Energy Bulletin homepage
Independent truckers stage work stoppage (US)
David Wilkins - Daily World Writer
More than 50 independent log truckers parked their rigs and refused to work this morning, as a protest over the high price of fuel - and, they say, timber companies' refusal to help defray the costs.
"They're paying us on a scale that hasn't been updated since 1984," said Rick Smith, president of the Twin Harbors Division of the Northwest Log Truckers' Co-operative. "Everybody knows that in 2005, you can't live on what you worked for in 1984."
The problem, Smith said, is that the "big three" timber companies on the Twin Harbors - Weyerhaeuser, Rayonier, and Sierra Pacific - only pay a surcharge of between nine and 13 percent for fuel on each load of logs. The national average, he said, is currently at 23 percent. The truckers are planning on staying away from work, Smith added, until they get some action.
"We've made these companies millions," Smith said. "It's time to say no. We can't even fill our pickups with gas, much less our log trucks."
(10 August 2005)
See Truckers Protest Heavy Load for report of a similar recent protest in Florida.
Iran: Oil embargo best response to nuclear boycott
Hassan Hanizadeh, Tehran Times
Thursday’s resolution of the International Atomic Energy Agency Board of Governors, issued under pressure from the United States and the European Union big three, actually indicated that the status of international organizations, including the IAEA, has declined seriously in the face of the blackmail of the neocolonialist powers. ...
The continuation of the unequal relationship between Third World countries, particularly Muslim countries, and the U.S. and other Western countries, which have adopted an unfair attitude, will never benefit the countries of the global South.
Therefore, the oil-rich countries, including Iran, which possess the most significant pressure lever, should wisely use this tool to punish the Western neocolonialist countries. Iran is a country with great potential to respond to Western meddling. ...
(14 August 2005)
Dangerous curves on Turkey's energy policy: Jammed between Russia and Iran
M.Faruk Demir, The New Anatolian via Turkish Weekly
Turkey's energy policy is very related to its foreign policy. The density of Turkey's demand from the outside requires a supply of energy from surrounding states. ...
Today, Turkey's national energy policy needs a rapid and effective revision. There are three reasons for the need of such a reconfiguration. Firstly, Turkey's energy needs and diversity rates are changing. Secondly, regional geopolitical instability results in new political and security risks. And thirdly, in the international markets energy prices and the balance of supply and demand changes radically at short notice. ...
(13 August 2005)
The Turkish Weekly is published by the International Strategic Research Organization based in Ankara, Turkey. About:
"The ISRO is a non-profit and non-governmental (NGO) research organization. .. The organization works to stimulate debate and research on international relations. The main key issues in its researches are security and co-operation. The ISRO is not intended to be a forum for single-issue advocacy or lobbying. ... The ISRO relies on membership fees, sponsorship and charitable donations from trusts, foundations, companies and individuals for its income. It receives no core funding from any government. ..."
Venezuela tax agency closes Shell office
Staff, Associated Press via BusinessWeek Online
Venezuela's tax agency asked a court for an injunction on Royal Dutch Shell PLC assets worth US$130 million (euro105 million) or more amid a tax dispute with the oil company, the government said Thursday.
Shell was given a US$130 million (euro105 million) tax bill in July. Since then the company has decided to challenge the claim, provoking the Venezuelan tax agency to seek the injunction on "goods and rights for an amount over 280 billion bolivars" (US$130 million, euro105 million), the agency said in a statement.
The tax office said it had "to guarantee that the tax credits in favor of (the government) are sufficiently guaranteed." The tax agency asked for the injunction in a tax court in the oil-producing western state of Zulia. The agency has said Shell will lose out if the tax case goes to court, and have to pay additional fines for fighting the claim.
Meanwhile, the tax agency ordered a two-day closing of Shell's office in the western city of Maracaibo on Thursday due to alleged irregularities in value-added taxes. Shell confirmed the closing of the office, where about 150 employees work, but declined to comment on the injunction. The company's oil production in Venezuela has not been affected by the office closing, company spokeswoman Bettina Steinhold said. ...
(11 August 2005)
Better Ask Santa For Gasoline
David Bird, FWN Financial News via Rigzone
There are still 135 shopping days until Christmas, but smart shoppers may want to put gasoline futures at the top of their list now.
Crude oil, heating oil and gasoline futures all are trading at record highs on the New York Mercantile Exchange, and there are strong signs that runaway gains won't be reined in soon.
In particular, while the calendar shows the peak-demand summer season will soon be a memory, high gasoline prices won't fade away. In fact, an Energy Matters analysis of U.S. government data and forecasts, as well as a review of Nymex trading patterns, suggests gasoline could actually be the engine of the market heading into and during the winter heating oil season. ...
(12 August 2005)
China grapples with high oil prices
Asia Pulse/XICvia Asia Times
China's economy has turned out to be vulnerable to the challenges posed by
soaring international oil prices, now fluctuating around US$65 per barrel.
This article is more of a discussion about market vs. nation oil production
possibilites than about problems with current oil price.-AF
(9 August 2005)
Oil price rise puts squeeze on industry
Julia Kollewe, The Independent
Raw material costs rose at the fastest annual rate in more than 20 years last
month on the back of the surging oil price, hitting manufacturers' profit
margins and limiting expectations for further interest rate cuts.
(9 August 2005)
UK: How expensive oil hurts consumers
Geneviève Roberts, The Independent
* Motorists now spend an extra £7.5m a day on fuel compared with January.
* Powergen says gas bills will increase by 11.9 per cent this month, a 33 per
cent rise since January last year.
* On Friday, British Airways warned its annual fuel bill was likely to be £75m
more than previously thought and £525m above the level of last year.
* The average cost of a home rose by 5 per cent from a year earlier to £182,651.
(9 August 2005)
Oil Prices, Amid Global Concerns, Surge to a Record
Jad Mouawad, New York Times
... "Refiners are exhausted, like runners in midmarathon," said Deborah White, a
senior commodities economist with Société Générale in Paris. "They've been
pushing very hard since last year. As a practical matter, these things have
limits. If you push too hard, capacity drops."
"Other than the weather, and hurricanes, and refineries going down, and Saudi
Arabia and Iran, and strong economic statistics, there really is no reason why
crude oil prices should be so high," Ms. White said. "It must be speculation,
don't you think?" ...
But analysts dismiss OPEC's power to influence markets. With little production
left untapped outside of Saudi Arabia, there is nothing the cartel can do to
rein in prices.
"OPEC? They are irrelevant," said Lawrence J. Goldstein, the president of the
PIRA Energy Group, an oil consultancy in New York. "It's only when you hold off
supplies than you become influential." He added, "Today, all the events are leaning in the same direction: Up."
(9 August 2005)
I'm sure we could think of some other reasons too to add to Deborah White's
Euro rivals cut off UK gas pipeline
Sir Roy Gardner, CEO of Centrica, Energy 365 via Powerswitch
I think the decline was sharper than many inside the industry expected.
This, coupled with continuing high oil prices, is pushing up the cost of
gas to record levels. As several energy suppliers have warned, customers
face the prospect of rising bills. Heavy industry has said that it may
have to stop production this winter.
Many people will rightly be asking why prices have risen so much, while
part of the answer lies in simple supply and demand economics, the
makeup of today's gas price is a great deal more complex.
There is likely to be enough gas this winter and consumers need not be
concerned about the lights going out. But with North Sea reserves
declining we do need to take action.
(10 August 2005)
Sir Gardner while pointing out a genuine concern for the UK (and
Ireland) goes on to argue that EU trade liberalisation is the way to
help the UK aquire natural gas in the future, and probably not
incidently, create some investment opportunities for Centrica. -AF
I couldn't find the story on the 365 Energy page Powerswitch links to. Many interesting news items are provided, but without links or, in some cases, a source.-LJ.
Has India sacrificed at Washington's altar?
Ramtanu Maitra, Asia Times
Shortly after his return from a state visit to Washington, Indian Prime Minister Manmohan Singh told the Indian media that the United States had no role in the proposed gas pipeline from Iran to India via Pakistan. It was the umpteenth time this face-saving line had been ritually trotted out in New Delhi, despite evidence to the contrary.
Given the fractious US-Iran relationship, and both statements issued by US officials and the pussyfooting of the Manmohan government over the past six months about the future of the ambitious project, it is evident that unless the Iran-US bilateral relationship changes dramatically, the pipeline is a non-starter.
The participating countries in the proposed 2,600-kilometer, overland natural-gas pipeline began discussions in the early 1990s, but it has only been in recent meetings among officials from India, Iran and Pakistan that indications were given that the project could get underway in the near future, despite pricing disagreements.
India is a huge and growing natural-gas market, with consumption of nearly 25 billion cubic meters in 2002 and projections it will reach 34 billion cubic meters in 2010 and 45.3 billion cubic meters in 2015. Iran sits on the world's second-largest natural-gas reserves - an estimated 26.6 trillion cubic meters, according to the US Energy Information Administration.
(12 August 2005)
Long article, lots of warnings for India.-LJ
A Superfluous Petroleum Reserve?
How should the SPR be used, and what benefits does it provide? (US)
T.Considine and K.Dowd, CATO Institute
Controversy surrounding the existence and management of the United States Strategic Petroleum Reserve (SPR) is not new. Since its creation, there have been legitimate concerns about whether the costs of acquisition and management are justified by the uncertain benefits provided by the SPR in the event of an emergency. Once established, additional questions have arisen about when and to what extent the SPR should be used in an emergency and even what constitutes a true emergency. More recently, some analysts have argued that the Bush administration's decision to fill the reserve to its capacity of 700 million barrels has significantly contributed to higher oil prices. ...
The CATO Institute is an American pro free market think tank, and this first appeared in their journal Regulation
(11 August 2005)
The article makes no consideration of supply constraints. -LJ
June Trade Deficit Surged as Oil Price Resumed Climb
Louis Uchitelle, NY Times
The nation's trade deficit surged in June to its highest level in four months, pushed up by the rising cost of imported oil and the reluctance of foreigners to purchase more of what America produces.
The $58.8 billion deficit in the trade of goods and services was $3.4 billion above the slightly revised May level, the government reported yesterday. Imported crude oil and petroleum products accounted for roughly half of the increase, and with oil prices continuing to rise since June, the promise is for even larger trade deficits in coming reports.
...No country played a bigger role than China in swelling the June trade deficit. China's purchases in the United States rose by a meager $96 million, to $3.4 billion, but its exports to this country jumped by $1.9 billion, to a total of $21 billion. Textiles, apparel and electronics products played significant roles in the surge, which produced a $17.6 billion trade deficit with China - eclipsing the $12.8 billion June deficit with Europe, in second place.
China's lopsided imbalance captures headlines, overshadowing the role of United States exports, which almost always rise. Indeed, they were a record $106.8 billion in June. But they have been stuck at nearly that level since April, despite a 15 percent decline in the value of the dollar over the last three years vis-à-vis the currencies of America's most important trading partners. A cheaper dollar should stimulate exports by making them less expensive in foreign currencies, and stimulate production at home by making imports more expensive.
Mr. Behravesh counts on this to happen, but first "the dollar must fall a minimum of at least an additional 20 percent, including at least that much against the Chinese yuan." The yuan so far is down 2.1 percent, a result of the Chinese government's announcement last month that it would allow the yuan to appreciate gradually
(13 August 2005)
U.S. trade deficit widens
Flood of Chinese textiles, record surge in purchase of foreign oil to blame
David Armstrong, SF Chronicle
The yawning U.S. trade deficit grew wider in June, hitting $58.8 billion for the month, chiefly due to soaring oil prices and a surge of textiles and apparel from China. It was the third-highest monthly deficit on record and exceeded economists' projections by more than $1 billion.
With crude oil closing at nearly $67 per barrel on Friday, energy bills for everything from gasoline to fuel for jet aircraft are going up, and the prospect of higher winter heating costs looms if trends continue.
Much of this oil was imported. The United States bought nearly $20 billion of foreign oil in June, the highest-ever monthly total.
The flood of imported oil was nearly matched by a wave of imported textiles and apparel, especially from China.
(13 August 2005)
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