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North America – the energy picture II
North American Energy Working Group (NAE
The goal of North America – The Energy Picture II is to assess and enhance trilateral energy trade information to improve the decisions of the governments and industries concerning energy policies, regulations, national security, and other significant regional issues, building upon North America – The Energy Picture (June 2002).

The 2002 report was one of the first outcomes of NAEWG and represented the first time energy data provided by the three countries was presented side-by-side in one document as an effective resource for participants in the North American energy sector. This updated version will allow energy stakeholders to gain an accurate snapshot of the North American energy sector in 2005, as well as developments in the energy market over the past 25 years.
(January 2006)

Coal converts

Christopher Swope, Governing
When it comes to lining up new energy sources, a number of states see plain old coal as the cleanup hitter.
…Coal has always played a huge role in the U.S. energy mix. Even as windmills and biomass grab headlines today, the reality is that half of the nation’s electricity comes from coal-fired power plants. As sky-high energy prices converge with the sort of advanced technologies that John Rich is promoting, coal consumption is only going to increase. Coal is relatively cheap and incredibly abundant. In the Gilberton Valley, it’s sitting right there on the ground, all over the place.

The coal push is also getting a boost from coal-state governors claiming that coal benefits national security. The world’s oil supply may be running out, Rendell notes, but America’s heaping coal reserves could sate the national energy appetite for 300 years. West Virginia’s Joe Manchin last year weighed in on the hurricane-induced energy crisis by announcing that he would find sites for industry to build next-generation plants that make diesel or power from coal. And Montana’s Brian Schweitzer picks his analogies carefully when he calls his state’s vast eastern plain the “Saudi Arabia of coal.” Schweitzer is trying to drum up public and private support for a massive $1.5 billion coal-to-liquids facility.

The governors are fond of calling their various initiatives by the name “clean coal.” The coming coal boom, however, brings with it some serious environmental consequences. Coal raises thorny questions about greenhouse gases that contribute to global warming. Coal mining also suffers a bad reputation, especially in Appalachia, where destructive mountaintop removal techniques are common. “Coal sounds like a wonderful solution to our dependence on foreign oil,” says Cindy Rank, mining chairwoman for the West Virginia Highlands Conservancy. “But it will only cause more problems and greater destruction if we push to get more coal out of the ground as fast as we can.”

Yet environmentalists are split on the coal question, particularly when it comes to global warming. The new technologies make it theoretically possible to lock greenhouse gases away, but such techniques aren’t proven and will cost money. With an entire generation of dirty-coal power plants set to retire, many environmentalists want the next generation of coal plants to at least be capable of sequestering carbon dioxide. “We had this moment in the ’90s where everybody was building natural gas power plants,” says Judi Greenwald, director of innovative solutions with the Pew Center on Global Climate Change. “We’re about to get into a moment in the next decade where people will mostly be building coal. So here’s your shot. You’ve got to get this right.”
(April 2006)

Clinton calls biofuels key to creating jobs

Stuart Laidlaw, Toronto Star
Takes aim at Bush’s decision to pull out of Kyoto agreement
Urges industry leaders to act on poverty and the environment
CHICAGO-Former U.S. president Bill Clinton took dead aim at his successor in the White House at a major business conference here yesterday, saying the key to prosperity in the future lies in fighting global warming.

And it can be done for a lot less than the cost of the war in Iraq, he says.

“The most important thing you can do is give us a different energy future,” Clinton told a luncheon crowd at BIO 2006, a gathering of 20,000 biotechnology executives and scientists.

During his presidency, George W. Bush has opposed efforts to fight global warming, and pulled his country out of the Kyoto Protocol to limit climate change.

Clinton said that every decade or so a new source of good-paying jobs must be found. During his presidency of the 1990s, that source was the booming technology sector.

“In this decade, we have not found that new source of jobs. It’s sitting right in front of us,” he said. “Biofuels are the bird’s nest on the ground.”
(12 April 2006)

Europe urged to curb demand for oil and gas

Carola Hoyos, Financial Times
The energy watchdog of the world’s biggest economies has called on the European Commission to set maximum energy consumption standards for electrical equipment such as light bulbs and washing machines.

Europe needed to do more to curb its oil and gas demand in light of increasing fears over supply, Claude Mandil, executive director of the International Energy Agency, said.

Continuing civil strife in Iraq and Nigeria has already seriously reduced both countries’ oil exports, and the threat of US military action against Iran, the world’s fourth largest oil producer, has driven prices to new records.

Mr Mandil also raised fresh concerns about the reliability of supply from Russia, the world’s second biggest oil producer, saying it could fall short of IEA expectations over the next four years.

“One of the most important ways to increase energy security is through energy efficiency and the market signals for that are not big enough,” Mr Mandil said.

“I don’t think goals and targets in shares of renewables or in decreasing energy consumption is a useful tool. We think the [European] Commission could be bolder on norms and standards. It’s within its responsibility.”

He calculated that such a move could save by 2030 as much as 30 per cent of the amount of energy the world needs for everything but transport.
(11 April 2006)

It’s still about energy

David Kotok, Cumberland Advisors
We have seen the oil price well above $60 for nearly a year; it’s $70 right now. The futures prices have continued above $60 as well; five year NYMEX is at a record high near $68. All the forecasts of a break in the oil price have been wide of the mark. I specifically recall Steve Forbes $35 target made on CNBC; our rebuttal and our previous energy related commentaries are archived on our website, .

Why is this $60 plus price persisting if inventories seem high? Some have blamed a terrorism or geo-political risk premium that is in the price. They claim that a balanced or neutral oil price would be $10 or $15 dollars a barrel lower. But that analysis misses the whole story.

Reason: one of the ways oil is hedged against geo-political risk is to raise the inventory level. There are several methods and one of them is “slow steaming.” This is the term used to describe the slowdown in the movement of oil by tanker. Taking more time to transport oil means a company has to maintain a higher inventory on the water. Thus inventories rise even as the price stays higher than expected. Clearly that force has been at work for the past year.

Remember; the cost to the oil company is the added interest on the debt to finance the higher inventory. At the low global interest rates we have seen, this cost is quite small. Consider that a $70 dollar barrel of oil financed at 6% means a $4.20 annual interest cost. That is the risk premium, not $10 or $15.

Higher inventory hedging is likely to continue for a while because the latest bad actor on the oil risk stage is Iran. They sit on the Straits of Hormuz and could significantly disrupt world oil flows at any time. We conclude that higher inventories of oil go hand-in-hand with the higher oil price. They are an effect or outcome of the rising risk and not a cause in the pricing formula.
(11 April 2006)

Ready for $262 a barrel oil? (Soros)
Two of the world’s most successful investors say oil will be in short supply in the coming months.

Nelson Schwartz, FORTUNE via CNN Money
DAVOS, Switzerland – Be afraid. Be very afraid.

That’s the message from two of the world’s most successful investors on the topic of high oil prices. One of them, Hermitage Capital’s Bill Browder, has outlined six scenarios that could take oil up to a downright terrifying $262 a barrel.

The other, billionaire investor George Soros, wouldn’t make any specific predictions about prices. But as a legendary commodities player, it’s worth paying heed to the words of the man who once took on the Bank of England — and won. “I’m very worried about the supply-demand balance, which is very tight,” Soros says.

“U.S. power and influence has declined precipitously because of Iraq and the war on terror and that creates an incentive for anyone who wants to make trouble to go ahead and make it.” As an example, Soros pointed to the regime in Iran, which is heading towards a confrontation with the West over its nuclear power program and doesn’t show any signs of compromising. “Iran is on a collision course and I have a difficulty seeing how such a collision can be avoided,” he says.

Another emboldened troublemaker is Russian president Vladimir Putin, Soros said, citing Putin’s recent decision to briefly shut the supply of natural gas to Ukraine. The only bit of optimism Soros could offer was that the next 12 months would be most dangerous in terms of any price shocks, because beginning in 2007 he predicts new oil supplies will come online.
(11 April 2006)

Gas prices climb as summer driving season nears

Scott Horsley, Morning Edition NPR
Gasoline prices jumped nearly 10 cents a gallon in the last week, and forecasters say that drivers could see even higher prices as summer approaches.

Gasoline prices typically rise in anticipation of the summer driving season. But in 2004, it was mid-May before prices topped the $2 mark. Last year, gas prices reached that milestone by mid-March. And this year, $2-a-gallon gas is but a distant reflection in the rearview mirror. It’s $3 a gallon we seem to be closing in on.

“Unfortunately, there doesn’t seem to be anything on the horizon that would cause us to think that prices would come down,” says Geoff Sundstrom, a spokesman for AAA. “If we were suddenly to see an easing in international tensions and the price of oil was to retreat, that would be helpful. But nothing that we’re seeing in the news reports suggests that’s going to happen.”

Instead, mounting concern about Iran helped push crude-oil prices up to nearly $69 a barrel Monday. That’s the highest crude prices have been since September and the days immediately following Hurricane Katrina.

Today’s high prices don’t stop at the oil well. Oil refineries are adding to the high cost. The refining process is complicated this year as more refineries start adding ethanol to the mix instead of the gasoline additive MTBE. With refinery capacity already stretched thin, there could be more upward pressure on prices.
(11 April 2006)
11% Rise in Gas Prices Expected (Washington Post)
Oil, gas prices verge on records (Washington Times)
Summer gas prices likely to average $2.62 a gallon (AP):

Guy Caruso, head of the Energy Department’s statistical agency, said prices at the pump, which averaged $2.68 a gallon last week nationwide, are likely to increase 10 to 15 cents a gallon in the coming weeks, peak in May, and drop off in late summer. …But Caruso said motorists are not expected to cut back on their summer driving — a view mirrored by AAA, formerly the American Automobile Association, which also predicts a busy summer travel season. In fact, Americans are expected to use 1.5 percent more gas than last summer.