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Petrodollars fuel rally in U.S. government bonds

Daniel Kruger, Bloomberg News via IHT
The biggest quarterly rally for U.S. government securities in five years is getting an extraordinary lift from the burgeoning reinvestment of petrodollars by the Organization of Petroleum Exporting Countries.

OPEC members increased their holdings of Treasury securities 12 percent this year through July to $123.8 billion, Treasury Department data show. Oil prices have risen 31 percent since December, which will raise OPEC revenue 4 percent, to $630 billion, this year and 9 percent, to $688 billion, in 2008, according to estimates by the U.S. Department of Energy.

Petroleum exporters are adding to holdings of U.S. debt three times as fast as other foreign investors, the Treasury data show. Yields on 10-year notes are 21 basis points lower because of the additional petrodollar reinvestment, the consulting company McKinsey in New York said last week.

“Oil revenues are up; they’re still in dollars and it has to be put to work,” said David Ader, the head of U.S. government bond strategy for RBS Greenwich Capital in Greenwich, Connecticut. “It bodes well for U.S. debt.”

Demand from oil exporters may help drive yields lower, even as signs that the U.S. economy is weathering the worst housing market in 16 years reduce investors’ expectations for lower interest rates.
(10 October 2007)

France lays plans for a green future
Broad consensus reached on environment policy

Declan Butler, Nature
A recipe: take a roomful of French farmers, fishermen, trade unionists, captains of industry and environmentalists, then mix in scientists and politicians. Ask them to come up with an agreed blueprint for a green revolution in France and leave them to simmer for ten weeks. It might seem a rich dish, but last week these unlikely bedfellows surprised many, including themselves, by reaching a consensus on proposals for almost everything from climate change to biodiversity. Their recommendations (see ‘Key proposals’) will be finalized at a summit chaired by France’s president, Nicolas Sarkozy, at the end of October.

Environmental progress in France lags badly behind that of some of its European neighbours, such as Germany and Scandinavia. But Sarkozy made the greening of France a major plank of his election campaign this year. He has since created a superministry for ecology, biodiversity and sustainable development, with responsibility for the powerful sectors of transport, energy and construction – a first in France, where ecology was previously off the political radar (see Nature 447, 518; 2007).

Scientists involved in this vast whirlwind arbitration say the exercise marks a first in the handling of science-based issues in France.
(3 October 2007)
Mentioned by Joseph Romm in a posting at Gristmill: French conservatives go green, too!.

Center for Global Development’s Roodman ranks industrialized countries’ enviro policies
(Video and transcript)
Monica Trauzzi, E&E TV
Each year, the Center for Global Development ranks 21 industrialized nations on how their policies affect poor countries. This year the ranking, called the Commitment to Development Index (CDI), focuses on the environment.

During today’s OnPoint, the CDI’s author, David Roodman, discusses the findings of the report and the United States’ last place ranking. He talks about why the CDI was expanded to include Brazil, Russia, India and China this year and explains how the findings play into the push for a new international climate policy.
(11 October 2007)

European Leaders Sign Pipeline Deal

Gary Peach, Associated Press
VILNIUS, Lithuania (AP) – Ministers from five eastern European countries signed a deal Wednesday to build an oil pipeline linking the Black and Baltic seas – a project aimed at improving regional energy security and reducing dependence on Russian crude.

The agreement by Azerbaijan, Georgia, Ukraine, Poland and Lithuania calls for a 300-mile extension to an existing pipeline in western Ukraine northward to the Polish port of Gdansk on the Baltic Sea, and securing supplies of Azerbaijan’s crude from the Caspian Sea.

“This deal will have great impact not only for signatory countries, but for all of Europe,” Polish President Lech Kaczynski told a news conference in Vilnius.

The estimated $700 million project is considered to be a victory for the five countries, which are increasingly weary of Russia’s nationalistic energy policy and are searching for both alternative energy sources and supply routes.
(19 October 2007)