Politics and economics – Nov 6

November 5, 2005

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Many more articles are available through the Energy Bulletin homepage


Politics and Economics

BP boss predicts oil price fall

BBC
The chief executive of BP, Lord Browne, has said that crude oil prices are “unsustainably high” and will fall as consumers seek cheaper energy sources.

Oil prices have risen 40% this year following a shortage of global refining capacity and disruptions to supply.

But the BP boss said an increase in the amount of oil being pumped would eventually force prices down.

In the longer term, the availability of cheaper energy sources would force prices down further, Lord Browne added.
(4 November 2005)


West balks at backing revolution as elections loom in oil-rich state

Jeremy Page, London Times
…As a political consultant to the opposition Azadliq (Freedom) bloc, [political activist Murad Gassanly] is co-ordinating its efforts to win Western support for the opposition if the Government rigs parliamentary elections on Sunday.

It is, however, a far more formidable task than in Georgia or Ukraine. The Government of Azerbaijan is determined to prevent any repetition of those revolutions and the West’s priority is to maintain stability in a country where it has key strategic interests.

Azerbaijan is rated as one of the poorest and most corrupt countries in the region, with more than 40 per cent of its people living below the poverty line. It has been ruled most of the time since its independence from Russia by Heydar Aliyev, a hardline former KGB chief who was succeeded by his son, Ilham, in 2003.

But this secular Islamic state on the Caspian Sea is also a key element of the United States’s strategy to contain Iran and secure access to the Caspian’s huge oil and gas reserves.

A staunch US ally, Azerbaijan was one of the few Muslim states that sent troops to Iraq. The US has built radar stations near its border with Iran. Western companies have also invested billons of dollars in a building a pipeline to take Caspian oil from Baku, via Georgia and Turkey, to the Mediterranean. President Aliyev says that there is no cause for a revolution because his country is on the crest of an oil boom that will eradicate poverty and unemployment. Ali Hasanov, a senior presidential aide, told The Times: “Even if the US wanted a revolution here, it would be impossible, because the people do not want it.”

The opposition accuses President Aliyev of trying to pack Parliament with his friends and relatives and has threatened to bring tens of thousands of people on to the streets after the elections
(4 November 2005)


Oil patch faces rough patch
Still, lawmakers may give industry more carrots than sticks

Jeffrey Ball, John J. Fialka, Russell Gold, et al; Wall Street Journal
The chief executives of the nation’s largest oil companies are expected to face tough questions when they appear next week before two Senate committees, and even some Senate Republicans are beginning to utter the “t” word long forbidden in their party — a new tax on the companies’ outsize profits. But don’t shed any tears for the industry just yet.

The energy industry — which in the past two weeks has reported big third-quarter profits from rising prices for crude oil, natural gas, gasoline and heating oil — is ramping up a lobbying and public-relations campaign to beat back the attacks. And while a populist political penalty may clear the Senate, there’s no sign such measures are gaining in the more pro-business House of Representatives. President Bush also remains opposed to any punitive action.

Indeed, for all the political rhetoric attacking oil companies, the White House and congressional leaders are still more likely to respond to high prices with carrots long desired by the industry rather than sticks. The Senate yesterday backed drilling in the Arctic National Wildlife Refuge. (See related article.) Another provision moving through Congress would lift a 24-year moratorium on offshore drilling around much of the U.S. Incentives for new oil refineries also have support on the Hill.
(4 November 2005)


Firms must plan for energy costs

Mike Rasor, Knight Ridder Newspapers via Seattle Times
The profit-and-loss battles this winter could be influenced by energy prices more than ever. And for some businesses, energy costs could rule the day.

Natural gas. Heating oil. Propane. They all will cost significantly more this winter. Businesses that rent could find themselves paying costs passed on by their landlords.

The situation is severe. After hurricanes Katrina and Rita hit the energy-producing Gulf Coast, President Bush asked the entire nation to conserve energy.

One area the federal government is targeting is business.

Industry uses more than one-third of all the energy consumed in the United States. Most of the energy is from natural gas and petroleum, with electricity coming in a distant third, followed closely by coal, according to the U.S. Department of Energy (DOE).
(4 November 2005)
The original article interviews several energy consultants on common sense ways that businesses can save money through conservation.


Environmentalists slam World Bank’s clean energy ‘failure’

AFP via Yahoo!News
LONDON – International environmental pressure group Friends of the Earth (FoE) slammed the World Bank for failing to play an effective leadership role on climate change and renewable energy.

The report comes as energy and environment ministers from the Group of Eight leading industrialised nations and their colleagues from such nations as China and India thrash out their climate change strategy and ways of developing sustainable clean energy sources later in London.

The Washington-based World Bank, which provides finance to states for poverty alleviation and development purposes, has been tapped by the G8 as a key player in funding renewable energy sources.

But FoE laid into the institution for failing to meet its already existing targets for increasing financial support for such projects.
(31 October 2005)


Albania imposes extensive power cuts due to drought

AFP via Yahoo!News
TIRANA – Albanian authorities imposed electricity cuts for up to 13 hours a day across the country because of a severe shortage of water for power stations.

“Albania is obliged to adopt such a measure as a serious drought has affected hydroelectric power stations,” national electricity distribution company KESH said in a statement.

The cuts, for 10 to 13 hours a day, had to be made because there was a risk that water at the power stations would run out and bring a complete halt to electricity production, the authorities said Wednesday.
(2 November 2005)


UK: Are we heading for a new winter of discontent?

Jonathan Brown, Jeremy Laurance and Barrie Clement, The Independent via From The Wilderness
Britain could be left paralysed by energy shortages, a health crisis and gridlock on the roads if the predicted Arctic winter strikes with severity.

Prolonged sub-zero temperatures after nearly a decade of mild winters could result in the death of tens of thousands of people, with fears that the National Health Service faces the prospect of a full-blown winter bed shortage for the first time since Labour came to power in 1997.

The Confederation of British Industry warned that power shortfalls caused by the rising domestic demand to keep warm and Britain’s dwindling strategic stockpiles could lead to factory shutdowns and a return to the three-day week. At present, only 11 days’ supply of gas is being held in reserve, compared with 55 days’ worth elsewhere in Europe. Consumer groups fear that hardest hit will be members of the two million poor households already struggling to cope with the 40 per cent rise in energy prices since 2003.

Transport specialists also warn that the authorities have not acted fast enough to keep motorways and other routes open in the event of heavy snowfalls. The situation would be worse in Scotland.

Concern has been mounting since the Meteorological Office took the unprecedented step of issuing a long-range forecast predicting the likelihood of a much harsher-than-average winter.
(22 October 2005)


High prices for energy hold down job growth

David Leonhardt, NY Times
Job growth was surprisingly meager last month, the Labor Department reported yesterday, in a sign that business executives have become worried that the economic damage from high energy prices might be growing.
(5 November 2005)


What is happening to Iraqi oil

Issam Al-Chalabi, Middle East Economic Survey
The views contained in this paper were expressed to the participants in the 26th International Oil & Money Conference held in London on 20-21 September 2005. Mr Chalabi, who has written this paper for publication by MEES, is a former Iraqi Oil Minister (1987-90) and former president of Iraq National Oil Company.

It is common knowledge that Iraq has the second-largest proven oil reserves in the world, with no less then 112bn barrels, and probable reserves of around 250bn barrels. But why is that Iraqi oil does not account for more than a fraction of global oil supply? In fact Iraq has made no more than 2.5mn b/d of its oil available to the world market for almost 25 years, with the exception of a few spells when exports exceeded that.

In order to understand the current situation of the Iraqi oil industry and its future outlook, we need to go back to the past….
(10 October 2005)


US stripper well oil down in 2004; gas up

OGJ editors, Oil & Gas Journal
HOUSTON – The number of onshore US marginal oil wells increased last year, but production totals for those wells dropped from the previous year, the Interstate Oil and Gas Compact Commission reported.
IOGCC’s annual study showed 397,362 marginal oil wells produced 311 million bbl in 2004, or an average of 2.14 b/d/well. During 2003, a total of 393,463 stripper wells produced 313.7 million bbl, or an average of 2.18 b/d/well.
Marginal wells accounted for 15.7% of oil and 7.8% of gas produced in the US onshore in 2004. A marginal oil well produces 10 b/d or less. A marginal gas well produces 60 Mcfd or less.
The number of marginal gas wells has climbed steadily since 1995, IOGCC said in its report, “Marginal Oil and Natural Gas: American Energy for the American Dream.”
(4 November 2005)


A vulnerable natural-gas supply

Jack Gerard, Washington Times
Among the many lessons of Hurricane Katrina is the serious vulnerability of our nation’s natural-gas supply — and the urgent need for Congress and industry to work together to find a way out of what is now nothing short of a national emergency.

It is a crisis for the 6-in-10 American families who heat their homes with natural gas and face an average price increase of close to 50 percent or $500 per family this winter. It is a crisis for the chemistry industry, which uses natural gas as a raw material for compounds used in thousands of consumer products — from agriculture, telecommunications and automobiles to pharmaceuticals, health and beauty products and food packaging.

…In the chemistry industry alone, more than 100 plants have closed and more than 100,000 jobs have been lost. These jobs have been literally exported to other countries — in Europe, the Middle East, Latin America and China — where natural gas is plentiful and up to 20 times cheaper.

…Over the past two decades, we have been using more natural gas — and producing less — creating shortages and price increases. Electric utilities, which burn about a third of all available natural gas as a fuel, have been encouraged to use natural gas over other energy sources.

…In order to secure the nation’s access to natural gas and bring prices down to their historically affordable levels, we need to address supply:

• Congress must send a powerful message to the markets by eliminating barriers to offshore energy production in the oil-and gas-rich Outer Continental Shelf (OCS).
• The Department of the Interior must expedite leasing to tap the vast natural-gas reserves in the eastern Gulf of Mexico, 100 miles from the Florida coast.

Jack Gerard is president and CEO of the American Chemistry Council.
(1 November 2005)
Expect more opinion pieces like this in the future from industry, especially in conservative newspapers like the Washington Times. Note the emphasis is entirely on supply; no mention is made of conservation. -BA


Democracy Now mentions peak oil

Juan Gonzalez, Democracy Now
In a long article entitled “Where Have All The Fighters Gone? An Analysis of New York City Mayoral Race of 2005,” Juan Gonzalez mentions peak oil:

Today, with the world approaching peak oil production, and the price of petroleum destined to skyrocket for decades to come, there is an even stronger economic imperative to reclaim greater swaths of the cities from the poor and working class, to create metropolises on the European or Latin American model, where the wealthy both inhabit and work in the central core, while the poor are relegated to huge low-income and slum housing in the distant suburban rings.

(3 November 2005)
Thanks to ldcdnd for tipping us off to this and many other articles. -BA


Tags: Activism, Politics