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Pouring oil on troubled borders

Ros Taylor, Guardian (News Blog)
What if Scots had voted for independence back in 1979? One of the most intriguing what-ifs of recent political history cropped up today as 30-year old documents were released which suggest that the Treasury played down the true value of North sea oil reserves to try to scupper the nationalist movement.

Harold Wilson’s Labour government had won the 1974 general election promising a referendum on Scottish devolution. But BBC Radio 4’s Document (broadcast at 8pm tonight) has uncovered a memo warning that if Scotland left the union the impact on the rest of the economy would be “grim”.
(30 January 2006)

NG costs draining farms

Amy Bickel, The Hutchinson News (Kansas)
Cost of natural gas continues to drive farmers away from irrigation
…Kansas farmers have been battling high-energy costs for months, paying more for natural gas use and to fertilize their fields. Also among the nation’s biggest users of diesel, gasoline and other petroleum products, they have doled out thousands of dollars more as prices remain high.

Economists say 2006 could be equally as tough. And in an era where the trend is fewer farmers and larger farms, this year could mean even more farm sales.

“This happens every year, but in ’06, it will be bigger,” said Kansas State University Extension agriculture economist Kevin Dhuyvetter. “There are going to be some people that will say it’s not worth fighting anymore
(29 January 2006)

How the US fell out of love with its cars

UK Observer
…The US car industry is lurching into terminal decline. It means a fundamental part of America has died as well. Nothing has come to symbolise the American century more than the American car. It began with Henry Ford and the Model T and went right through the tail-finned monsters of the Fifties and the hot rods of the Seventies.

American cars were about freedom, sexual liberation and sheer confident patriotism. For young Americans a driving licence and their first Chevy or Ford was the most important rite of passage into adulthood.

…America’s tempestuous affair with the car has become a passionless marriage. Americans still need their cars, but the world has changed and they no longer really love them.

…After decades of the car being so much more than just a mode of transport – of symbolising industry, art, freedom, sex, a triumphant America – it has now become simply a way of getting from A to B.
(29 January 2006)

Is a run on the (resource) bank behind rising inequality?

Kurt Cobb, Resource Insights
…Supply-side ideology promised a rising economic tide that would reduce inequality. While many people throughout the world have indeed been raised into the middle class in the last 25 years, inequality has greatly expanded not only between the rich and the poor, but also between the rich and the middle class.

Now, the renewed scarcity of vital natural resources, especially oil and natural gas, has initiated another scramble to get to the head of the resource line. But unlike 25 years ago the policies that make it easy for the rich and powerful to cut in line and grab an increasing share of the world’s wealth are already firmly in place. It is a tragic irony that those policies will provide no solution to resource depletion and will ultimately undermine the social and ecological stability upon which wealth of the world’s most privileged depends.
(29 January 2006)

Italy Shivers as Europe’s Cold Spell Hurts Gas Supply
Flavia Krause-Jackson, Bloomberg Millions of Italians will be told to turn down their thermostats and urged to shower, not bathe, after Russia’s coldest weather in half a century led to a shortage of natural gas in Europe’s third-largest gas market.

Prime Minister Silvio Berlusconi’s cabinet meets today in Rome to consider emergency measures that would force offices and homes to reduce central heating to 19 degrees Celsius (66 Fahrenheit). The government is also urging Italians to cover their pots and pans when they cook and not to leave their television sets on standby.

A Siberian cold front blew west a week ago, and temperatures plunged across Europe. Freezing weather hit northern Italy and cold fronts reached central and southern Italy. As temperatures fell, Eni SpA, Italy’s biggest gas importer, got less gas than it asked for from OAO Gazprom, Russia’s gas exporter. Gazprom blamed Ukraine, through which much of its gas flows to Europe. (24 Jan 2006)

Saudis, Chinese agree to landmark energy accord
Eric Watkins, Oil & Gas Journal
Saudi Arabia’s King Abdullah bin Abdulaziz al-Saud and Chinese President Hu Jintao, following a recent summit meeting in Beijing, have agreed to a landmark accord on oil, natural gas, and minerals as part of five main areas of cooperation between their two countries.

“China is willing to improve the dialogue and the method of cooperation on energy with Saudi Arabia to raise the level of energy cooperation,” Hu said, adding that closer cooperation in the fields of infrastructure construction and telecommunication is also under way.

The new agreement on hydrocarbons, signed by Saudi Arabia’s Petroleum and Mineral Resources Minister Ali Al-Naimi and Ma Kai, the head of China’s State Development and Reform Commission, is the first between the two governments on overall cooperation in the field of energy. (24 Jan 2006)

Ford: Explorer era nearing a close
Ted Evanoff,
Dogged by dismal sales of the Explorer SUV, Ford said Monday it will close its main Explorer plant in St. Louis. It’s part of a wider plan by Ford to idle 30,000 workers, shut 14 plants and wipe out 26 percent of the automaker’s assembly capacity in North America.
(24 Jan 2006)

Pricey oil is deflationary, not inflationary threat
Jeremy Gaunt, Reuters
Oil prices are rising again, but the threat to global investments is not what you might think — deflation of the global economy rather than inflation of consumer prices.

Investors are generally calm about the prospect of spiking crude prices working their way into broad-based inflation and expect interest rates to stay low as a result.

They worry rather that higher prices will drag on economic growth and weaken company profits, in effect deflating relatively robust global economic performance.

“The action is on the economic side of the argument rather than the price side,” said Philip Barleggs, head of allocation at Britain’s Insight Investment.

One inference of this is that rising oil prices — U.S. light sweet crude is trading around $67 a barrel — could be more of a threat to equities, tied as they are to corporate profit growth, than to inflation-sensitive bonds.

Indeed, oil’s price rise — more than 10 percent so far this year — has been a factor in recent global equity market weakness while helping demand for bonds whenever stocks decline.
(24 Jan 2006)