Politics & economics - July 4
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Attacks on Iraq's northern pipelines cease, oil exports boom
RYAN LENZ, The Mercury News
For more than two years the attacks came like clockwork. As soon as the military secured and workers repaired the pipelines from Iraq's northern oil fields, just when the valves were about to open, insurgents would strike.
But roughly three weeks ago they suddenly stopped, letting crude oil flow freely from Iraq's vast reserves near Kirkuk.
Perhaps insurgents feared reprisals in Salahuddin province, where pipelines from Kirkuk flow to the country's largest refinery in Beiji. Maybe terror leader Abu Musab al-Zarqawi's death disrupted a chain of command that ordered the attacks, military officials said.
Whatever the cause, the U.S. forces welcome the change, even if history since the U.S.-led invasion in 2003 has shown the free flow of oil in Iraq is only temporary at best.
(29 June 2006)
Ford bails out on hybrid promise
Ford Motor Co. Chairman and CEO Bill Ford Jr. is backing away from his much-publicized commitment to produce 250,000 hybrid vehicles a year by the end of the decade, saying the company intends to pursue a broader environmental strategy that focuses more on other alternative-fuel vehicles.
With timing perhaps intended to blunt criticism of the move, Bill Ford announced the strategic shift in an e-mail to employees Wednesday, the same day he and the CEOs of General Motors Corp. and DaimlerChrysler AG's Chrysler Group sent a letter to Congress promising to double their annual production of alternative-fuel vehicles to 2 million by 2010.
Critics decried the back-pedaling on hybrids as another broken promise by the automaker to build more fuel-efficient vehicles.
(30 June 2006)
Kuwait's election is cold comfort for the long running attempt to open the upstream to international oil companies
Peter Kemp, Energy Intelligence
Kuwait's election result is cold comfort for Project Kuwait, the long running attempt to open the upstream to international oil companies. The strong showing by Islamists and anti-government reformers in the new parliament is a stinging rebuke to the ruling Al-Sabah family. Charges of corruption now taint the regime and could ruin any lingering hopes of moving Project Kuwait forward. Last year the fervent advocacy of Oil Minister Sheikh Ahmed al-Fahd al-Sabah was seen to be winning lawmakers over to Project Kuwait with final legal approval looking imminent. But a stalemate is now more likely as the strengthened opposition pursues demands for electoral reform and more transparent, accountable government. Caught in the crosshairs of this domestic standoff, international oil companies can only look forward to another long wait for Project Kuwait.
(4 July 2006)
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Rep. Bartlett opposes offshore oil drilling
Congressman Roscoe Bartlett opposes H.R. 4761, the Deep Ocean Energy Resources Act that would authorize off shore oil drilling. Congressmen Roscoe Bartlett and Tom Udall last night requested, but the Rules Committee denied considering the peak oil resolution, H. Res. 507, as an amendment to H.R. 4761, the Deep Ocean Energy Resources Act.
Congressman Bartlett will be speaking without a prepared text - but intends to say something similar to what he said below on May 25, 2006 in opposing drilling in ANWR.
"In the past year, two major studies were done for the federal government, one for the Department of Energy and one by the Army Corps of Engineers.
Both said that we were at peak oil -- when the maximum oil production capacity in the world will be reached -- and that the consequences would be devastating.
America has only 2 percent of the world's known oil reserves." We produce 8 percent and consume 25 percent of the oil produced worldwide and import close to 2/3 of the oil we use. With those statistics in mind, I am having trouble understanding how it is in our national security interest to use up our little bit of oil as quickly as we can.
If we could pump ANWR tomorrow, what would we do the day after tomorrow. We are saddling our children and grandchildren with an unconscionable debt. We should not deny them access to these finite energy sources.
Drilling in ANWR is not the right thing to do at this time."
(30 June 2006)
Europe tries to persuade Russia on energy with trade deal
George Parker and Andrew Bounds, Financial Times
European leaders yesterday dangled a wide-ranging trade liberalisation deal in front of Vladimir Putin, Russian president, in a new attempt to persuade him to liberalise the country's energy market.
José Manuel Barroso, European Commission president, wants to use every lever at the EU's disposal to win western access to Russia's energy sector when the two sides start talks next year on a new partnership pact. "We propose to move towards a free trade agreement to be completed once Russia accedes to the World Trade Organisation," Mr Barroso said in Helsinki at the launch of Finland's EU presidency. Mr Barroso's aides say he wants to nego-tiate a "comprehensive and legally binding" agreement with Russia, including trade liberalisation, energy and the fight against terrorism and illegal migration.
At the heart of Mr Barroso's grand bargain is a simple equation: Europe is offering better access to its lucrative internal market provided Moscow agrees to help ease the bloc's growing fears about energy security.
(4 July 2006)
Eyeing energy supplies from opposite ends of a telescope
Quentin Peel and Carola Hoyos, Financial Times
With only days to go before the Group of Eight summit in St Petersburg, high-level officials are still struggling to agree a common text on energy security, the top item on their leaders' agenda.
No doubt they will succeed in finding a form of words to paper over their differences. But the problem in agreeing more than platitudes is that they are looking at energy security from opposite ends of the telescope.
On the one hand there is Russia, a huge oil and gas exporter, that wants to ensure "security of demand", above all for Gazprom, the gas monopoly.
On the other are the big consumers of the original G7, such as the European Union, where dependency on energy imports is likely to increase from 50 per cent today to 70 per cent in 20 years' time. They want "security of supply", meaning diversification of their sources: just what Gazprom does not want.
The two sides should have a common interest in reliable production and delivery of oil and gas, but ever since Russian President Vladimir Putin switched off the gas to Ukraine on January 1 - if only briefly - they have been divided by political suspicion and misunderstanding. The same is true of the whole energy security debate.
...How severe are the supply constraints? Colin Campbell heads the Association for the Study of Peak Oil. He argues that global oil production is in an irreversible decline.
"Globally, discoveries peaked in 1964," he says. "We are not replacing what we use, and that has been the case since the early 1980s."
Most industry analysts are more sanguine.
...Another misunderstanding concerns the importance of China. China and India are certainly behaving as if they believe that oil and gas supplies are dwindling. But China's energy consumption accounts for only 8 per cent of world demand, although it does provide some 30 per cent of the growth in that demand. Indian consumption, meanwhile, is less than 40 per cent of China's. Their national oil companies have been aggressively seeking to buy new sources of supply.
The real engine of demand on the energy market, however, remains the US economy, where the latest surge in oil prices is only very gradually having an effect on the political debate over the need for fuel economy. It is estimated that an increase of 10 miles per gallon in US fuel economy standards for cars would reduce oil imports by about 2.5m barrels a day - nearly one quarter.
The Chinese and Indian actions are not logical so long as there are adequate global energy supplies. Whoever controls the oil and gas will still need to sell it. Suppliers may enjoy high prices, but not so high that they drive customers to alternative energy sources too fast. As for the consumers, they want long-term supplies at stable prices.
That should be the conclusion of the St Petersburg summit: both sides need a huge investment programme to tap new energy resources more efficiently.
They need to liberalise their markets to attract it. The question is whether they can agree on that gracefully, or allow political mistrust to muddy the water, and be forced to agree ungracefully, and belatedly.
(4 July 2006)
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