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Politics and Economics Headlines - 28 September, 2005

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Many more articles are available through the Energy Bulletin homepage


Peak Oil


Nigeria: Oil facilities open again as militiamen withdraw threat of attacks

IRIN, Reuters via AlertNet
PORT HARCOURT, 27 September (IRIN) - Two oil facilities in Nigeria, shut by militiamen protesting their leader's arrest, have reopened, oil company officials said on Tuesday, after the groups withdrew their threats to dynamite installations and kidnap foreign workers.

Oil giant Chevron said production had resumed at its two plants that were forced to close down last week as insecurity mounted in the wake of the arrest of Moujahid Dokubo-Asari, the leader of the Niger Delta People's Volunteer Force (NDPVF).

"We have reopened Idama and Robertkiri due to an improved security situation," said Chevron spokesman Deji Haastrup.

The NDPVF said in an official statement on Tuesday that it was suspending its threat to attack oil installations and foreign oil workers.
(27 September 2005)


High gas prices raise questions of gouging

Mark Trumbull, Christian Science Monitor
Katrina and Rita are factors, but some critics blame oil companies for exploiting the market.
------------
By tearing through the engine room of the US economy, two hurricanes have pushed gas prices to record highs and stirred a different kind of storm: populist anger at alleged price gouging.

State and federal agencies are probing thousands of consumer complaints. And some lawmakers are urging a tax on the oil industry's "windfall profits."

The recent $3 peak virtually matched the inflation-adjusted high reached in 1981. One economist reckons that gasoline shouldn't cost that much until oil nears $100 per barrel - about $35 higher than it is today.

So where is that money going? Are profiteers manipulating the market? Economists say oil producers and refiners, not gas stations, are reaping a windfall. Judging by history and laws of the market, it will be very hard to find evidence of impropriety. Mindful of growing public anger, President Bush Monday pledged to tap federal reserves if needed.

Besides spurring official investigations, that ire could prompt the federal government to revisit debates over energy policy and to give closer scrutiny to the question of whether mergers have stifled competition in the energy market.
(27 September 2005)
The Seattle Times had an editorial on gouging: The bogeyman at the gas pump.


Saudi Oil: A Slippery Future?

Stephen D. Simpson, CFA, Motley Fool
With high energy prices and pressing concerns about supply disruptions, the arguments over the state and fate of the global oil economy keep getting more interesting by the day. For example, while Saudi Arabia's oil minister, Ali al-Naimi, recently made some soothing comments at the World Petroleum Congress, plenty of people out there are far more worried.

To begin, al-Naimi claimed that there is plenty of oil available to meet future demand and that the Saudis currently have excess capacity. The problem, he said, is that there are no customers -- refineries are already running at capacity. That sets up a bizarre scenario in the markets: Some people are afraid that declining oil-production numbers presage trouble (and so oil prices go up), while others say that there's plenty of oil available but production is below capacity because there isn't enough refinery capacity to use it.

That's all well and good, but al-Naimi's other comments might be considered more controversial. In particular, he said that Saudi Arabia will boost its reserves by nearly 76%, or 200 billion barrels of oil, and increase daily production to as much as 15 million barrels per day.

The trouble with the first number is that the Saudis don't permit external audits of their reserve figures.
(27 September 2005)


Bus fleets feeling the fuel pinch

David Wilkins - Daily World (Washington state coast)
You think a 20-gallon fillup is expensive? Imagine how much worse it'd be if your gas tank held 300 gallons or more -- as many school and transit buses do.

Bus fleet managers on the Twin Harbors say their fuel costs have doubled in the past year.

"It's not a major disaster, but with our funding problems, this is not helping," says Grays Harbor Transit manager Dave Rostedt. "Over time, this will have a major impact on us, unless something else comes along to soften the blow."
(26 September 2005)
A reader asked for more coverage of how energy prices are affecting life "on the ground." This is only one of many articles appearing in the media. -BA


To conserve gas, President calls for less driving

David Leonhardt, Jad Mouawad and David E. Sanger, NY Times
With fears mounting that high energy costs will crimp economic growth, President Bush called on Americans yesterday to conserve gasoline by driving less. He also issued a directive for all federal agencies to cut their own energy use and to encourage employees to use public transportation.

"We can all pitch in," Mr. Bush said. "People just need to recognize that the storms have caused disruption," he added, and that if Americans are able to avoid going "on a trip that's not essential, that would be helpful."

Mr. Bush promised to dip further into the government's petroleum reserve, if necessary, and to continue relaxing environmental and transportation rules in an effort to get more gasoline flowing.

On Capitol Hill, senior Republicans called for new legislation that they said would lower energy costs by increasing supply and expanding oil refining capacity over the long run.

Even though Hurricane Rita caused much less damage to the oil industry than feared, the two recent hurricanes have disrupted production in the Gulf of Mexico enough to ensure that Americans are facing a winter of sharply higher energy costs. The price of natural gas, which most families use to heat their homes, has climbed even more than the price of gasoline recently.

Households are on pace to spend an average of $4,500 on energy this year, up about $500 from last year and $900 more than in 2003, according to Global Insight, a research firm.

Mr. Bush's comments, while similar to remarks he made shortly after the disruption from Hurricane Katrina pushed gasoline prices sharply higher, were particularly notable because the administration has long emphasized new production over conservation. It has also opted not to impose higher mileage standards on automakers.
(27 September 2005)
Related story at the Guardian: Go easy on the gas, Bush tells America .


Ottawa hints at energy cost relief
Government working on plan that could provide rebates to low-income families

Anne Dawson, CanWest News Service via Victoria Times Colonist
OTTAWA -- The federal Liberals are working on a plan to deliver relief to low-income Canadians facing severe financial hardship because of high energy costs and are also in the process of setting up a new mechanism to monitor how energy companies set prices.
(27 September 2005)


Alberta has answer to refinery crunch

Patrick Brethour, Globe and Mail
Alberta's Energy Minister says his province — already a major supplier of crude to the United States — could be the answer to weaning that country from its dependence on hurricane-prone refineries on the Gulf of Mexico.

But the province will have to compete with Kuwait, and maybe even the Pentagon, as the U.S. scrambles to find a way to end the roller-coaster ride of gasoline prices across North America.

Hurricanes Katrina and Rita have battered U.S. refineries on the Gulf of Mexico, draining supplies of fuel continent-wide and driving up pump prices in a series of dramatic spikes.

...Enter Alberta, with growing supplies of bitumen and crude — and big ambitions to capture more of the profit from its natural resources. Speaking in Johannesburg at the World Petroleum Congress, Energy Minister Greg Melchin said he wants to see more refineries built in his province, a move that would help reduce the chance that another hurricane would spur a price spike for motorists.
(26 September 2005)


Big auto makers want Bush to act on energy

Reuters via Planet Ark
NEW YORK - Ford Motor Co., Toyota Motor Corp. and other auto makers say they want the Bush administration to take more aggressive action to cut US dependence on petroleum, the Wall Street Journal reported on Monday.

As Hurricane Rita bore down last week on US Gulf Coast oil refineries, Ford Chairman and Chief Executive William Clay Ford Jr. sent a letter to President George W. Bush asking for an energy summit involving auto makers, suppliers, fuel providers, consumers and government officials, the newspaper said.

It quoted Ford as saying a summit would focus on what the auto industry can do to find solutions for alternative fuel resources and that the recently signed $17 billion energy bill "is only the beginning."
(27 September 2005)


'Move Opec base to Abu Dhabi'

Stanley Carvalho, Gulf News
An oil industry expert has proposed moving Opec's headquarters to Abu Dhabi since the group is becoming concentrated in the Gulf.

"Opec is getting very concentrated in the Arab Gulf region, especially in Abu Dhabi, Saudi Arabia and Kuwait. Opec should perhaps start thinking about moving its headquarters to Abu Dhabi," said George S. Littell, partner of oil industry analysts and forecasters Groppe, Long & Littell of the United States. ...

Littell, a former executive of Mobil Oil Corporation, said most geological ideas about oil were wrong. The capacity to produce oil is fixed and crude oil is only an intermediate to the final product. ...
(27 September 2005)


Gulf states 'should create spot oil market'

Stanley Carvalho, Gulf TImes
Abu Dhabi: Gulf oil producers must create a spot market for crude oil to integrate into the global market, an expert told the Gulf energy conference yesterday.
"The present environment presents the GCC with an opportunity to constructively re-integrate itself into the global oil structure. This could be achieved by creating a viable Gulf-based spot market for crude oil," said Dr. Edward Morse, Executive Advisor, Hess Energy Trading Company of the US.

He said such a market would provide a better market mechanism to determine prices as well as an improved approach to globalisation.

"Moreover, workable contracts could be created for crude, jet fuel, distillates as well as LNG. This would require integrating upstream and downstream sectors," he told delegates at the ECSSR's conference. ...
(27 September 2005)

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