Politics and Economics Headlines - 22 August, 2005
Politics and Economics
Save us, Indian oil firms tell PM
New Delhi - Officers of state-run oil firms have petitioned Prime Minister Manmohan Singh for rationalising duties on crude oil and petroleum products to prevent the public sector firms from bankruptcy.
“With the soaring of crude oil prices, all the downstream oil companies are faced with severe losses and cash crunch. They have already clocked losses in the last quarter and are set to erode their net worth, a fact that has been unheard in the history of the oil industry in India,” Oil Sector Officers’ Association (OSOA) said in a memorandum submitted to the PM.
While crude oil prices have doubled in last two years, diesel price has been increased only by 29 per cent, petrol by 21 per cent, LPG by 17 per cent and there has been no increase in kerosene price.
OSOA asked Prime Minister to rationalise duties. “The government should restore the duties on both crude and other products to specific rates instead of advalorem at present.” Demanding that oil companies be given freedom to raise prices of petrol, diesel, LPG and kerosene in phased manner, it sought imposition of an ‘oil cess’ in line with the education cess to reduce the government burden on subsidy. ...
(22 August 2005)
Believe 'advalorem' means 'In proportion to the value', 'cess' is given as 'luck' by dictionary.com, but reader Andrew G. checked his 1958 Concise Oxford Dictionary:n. Tax, rate, (now displaced by rate in England, but used in various senses in Ireland, Scotland, & India). [properly sess for obsolete assess n.]. Thanks Andrew -LJ
Dems urge Bush to open gas reserves
Evan Lehmann, Brattleboro Reformer
WASHINGTON -- With gas prices still climbing, some Democrats are intensifying pressure on the president to unleash millions of barrels of oil from the nation's vast underground reserves saved for national emergencies.
A sudden influx of oil into the market from the salt caverns of the Strategic Petroleum Reserve along the Gulf of Mexico could lower gas prices and ease the cost of heating fuel as the Northeast moves toward winter, the lawmakers say.
"The high price of gasoline is placing a severe strain on consumers in Vermont and other states, and the price spiral also threatens the nation's economic security," Sen. Patrick Leahy, D-Vt., wrote in a letter to President Bush Friday urging him to tap the reserve. "It is vitally important that the Administration halt this alarming trend by making use of any tools at its disposal to immediately quell ongoing oil price increases."
Opponents of an oil release, including some Massachusetts Democrats, dismiss it as an empty gesture that would fail to significantly temper prices in a global market that uses more than 80 million barrels of oil every day.
(20 August 2005)
Ecuador oil protesters freed; talks expected
Reuters via CNN
QUITO, Ecuador -- Leaders of protests that shut down Ecuador's oil industry were freed from jail after agreeing to halt their attacks and negotiate with the government, officials on both sides of the conflict said Sunday.
The protesters, who started dynamiting pipelines and vandalizing pumping machinery Monday, remained on alert while both sides decide on a time and place to start talks.
Demanding jobs and infrastructure investment, protesters invaded oil fields in Sucumbios and Orellana provinces, helping push U.S. crude oil futures by $2 to more than $65 a barrel Friday.(Full story)
Many of the protest leaders released late Saturday are mayors and other elected officials in the region.
(21 August 2005)
US seeks to improve relations with former foe Libya
CAIRO, Aug. 21 -- The United States has stepped up efforts to achieve normalized relations with Libya, an Arab analyst said Sunday after a prominent US senator wound up a visit to the oil-rich North African country.
"The visit is part of efforts exerted by US officials to normalize relations with Libya, which sticks out luringly to many US oil giants with its vast reserves," said Saber Rabie, a Cairo-based Arab analyst.
Senator Richard Lugar ended his two-day visit to Libya on Saturday, becoming the highest-ranking US official to visit Tripoli after it announced to stop seeking weapons of mass destruction in December 2003. Ending his visit, Lugar, chairman of the powerful Senate Foreign Relations Committee, said he had met with several senior Libyan officials, including Libyan leader Muammar Gaddafi, on wide-ranging issues pertaining to bilateral ties.
"I noted the dramatic improvement in US-Libyan relations and stressed the US commitment to a continually improving relationship as cooperation between our countries grows," Lugar told reporters in Tripoli at the end of his visit. The US senator voiced hope that the two-day mission would help bring about further rapprochement between the former foes.
...Meanwhile, US oil giants, which were forced to quit Libya after bilateral ties turned sour more than two decades ago, have been pushing for normalization of relations which they hope will lead them back to some of the most lucrative oil fields in the region.
"There has been a sense of urgency among US oil companies, which have been forced to sit and watch their French, Italian, Spanish and even Canadian counterparts flock to Libya as relations between Tripoli and those countries rapidly improve," said Rabie.
(21 August 2005)
Oil industry image suffers as energy prices rise; Survey indicates more people see 'corporate greed'
Lynn J. Cook, Houston Chronicle via MyWestTexas.com
HOUSTON -- As oil and gasoline prices rise, the public's opinion of the energy industry erodes.
Even in Texas, a state where oil and gas have been a major part of the economy for more than a century, the industry's image has taken a beating as companies book record profits, according to a survey commissioned by the Texas Alliance of Energy Producers.
The study, which was conducted at the end of 2004 after crude oil prices topped $55 per barrel, is a glimpse into attitudes about oil. It found that 23 percent of Texans have a worse image of the industry than they did five years ago, and 40 percent think corporate greed is behind high gasoline prices.
If attitudes were negative then, how much more irate must consumers be now?
(21 August 2005)
Expert warns that Venezuela's threats could be the greatest danger to oil prices
Venezuelan President Hugo Chavez is becoming increasingly outspoken with his distrust of the United States, accusing Washington of planning attacks against his country. Likewise, the U.S. government has expressed public concern about Venezuela's plans to buy 100,000 rifles and ammunition from Russia.
Venezuela's energy minister, Rafael Ramirez, has said in recent reports that if the U.S. shows any signs of aggression toward his country, Caracas is "ready and willing" to cut off its oil supply to the United States. Ramirez went on to say that "the US market is not indispensable to us" and that Caracas, the only Latin American member of the Organization of the Petroleum Exporting Countries, had other clients to court, including China.
According to energy expert and frequent contributor to The Daily Reckoning, Kevin Kerr, if the two daily boats of Venezuelan oil head somewhere other than the United States, it would lead to big troubles for oil prices. Kerr warns, "Venezuela and the US eroding relationship couldn't come at a worse time. This threat could easily drive oil prices to $75 and $80."
(19 August 2005)
Geostrategic game revives with new players
Kathy Gannon, Associated Press via USAToday
ALMATY, Kazakhstan — When Sergei Pashevich looks at the map of Central Asia, he sees a chessboard on which a replay of the Great Game is unfolding, with oil, trade and the war on terrorism as the big global issues at stake.
The Great Game, a term invented to define the imperial rivalries and ambitions of 19th century Russia and Britain, now applies, in Pashevich's view, to a new, post-9/11 struggle for influence that is pitting Russia and China against the United States.
"Right now the whole Central Asian region is a field for geopolitical games," he says.
(20 August 2005)
Petrol price pushes 4WDs off the road
K. Needham and H. Alexander, Sydney Morning Herald
Fewer new four-wheel-drive passenger vehicles were registered in Sydney
during the first half of this year than in the same period in 2004, as a
result of higher petrol prices.
The Roads and Traffic Authority recorded 14,330 new registrations over the period, compared with 16,817 a year earlier. In June there were 2511 new registrations, compared with 3162 in June 2004.
Car dealers said high fuel prices had forced many owners of 4WD vehicles to sell them. "I've had people come to me and say, 'Look, I'm over driving this car and spending $100 on fuel. Get me something cheaper,' " said one northern beaches dealer, Mark Booth.
The owner of Cars Wanted, Andrew Nischler, said there had been a 20 per cent jump in people trading in 4WD vehicles this year. "There's definitely a heap of them going on the market," he said. "The prime reason is the price of fuel. There's just less people wanting them, period." ...
(20 August 2005)
High prices fuel increase in drivers doing a runner
Eamonn Duff, Sun Herald (Australia)
Rising petrol prices have sparked a dramatic increase in the number of motorists who drive away from service stations without paying for fuel. Petrol prices hit a record high last week of 126.9 cents a litre and industry voices said it was no coincidence that service stations were experiencing a high number of incidents involving motorists who fill, then flee.
Coles Express southern NSW operations manager Simon Wyrdeman confirmed that a franchise at Stanmore was targeted three times in as many hours last Sunday: "There is little doubt the problem is on the rise as petrol prices continue to increase," he said, adding: "Sydney could soon end up being a city in which motorists are forced to pay before they fill up."
The Caltex service station at Woodville Road, Merrylands, is one of several Sydney Caltex franchises to adopt a pay-first policy after sundown. The Budget petrol station, along the same road, launched a similar initiative until a row broke out with regular customers. ...
(21 August 2005)
Gold & Oil
Eric Hommelberg, 321 Energy
...Now why oil is heading to such highs you wonder, is it because of Middle East tension? Is it because of Saudi Arabia's king Fahd death (uncertainty about next regime and terrorist threats )? Or could it very well be that industry experts such as Matthew Simmons, Colin Campbell, Kenneth Deffeyes were right all along and that planet earth has approached the peak in world-oil production? Or even worse, could it be that we are at the verge of world peak production here and now?
And if that's the case why is it so important to the future prospects of gold? The Gold/Oil ratio tool says that gold is way undervalued compared to gold but is it still a valid tool (many analysts are pointing to the Gold/Oil ratio and argue that this ratio has dropped to such an extreme that buyers of gold could be very well on the right side of the trade for next coming years if oil prices do not come down) or has it lost its credibility? Does it make sense anyhow to compare a commodity which will be consumed to zero over time with a commodity which is only being accumulated over time? ...
Oil prices do have a strong correlation with gold since oil prices do have a tremendous impact on the world economy and so on financial markets. Since gold is money and trades like money it will react to inflationary pressures caused by rising oil prices since gold is the ultimate safe heaven in times of economic weakness. The Gold/Oil ratio has dropped to such an extreme that buyers of gold could be very well on the right side of the trade for next coming years if oil prices do not come down.
(21 August 2005)
A gold bear updates their case to integrate the oil peak, demonstrating a historical mean ratio between oil and gold prices, and argues that gold prices will follow oil up.
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