Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
Last week began with a brief weakening of the oil price in response to the latest interest rate adjustment by the Fed, this was however extremely short-lived. By mid-week oil was breaking records again going past $120/barrel. The future of the oil price was the subject of a widely quoted report from Goldman Sachs as well as a recent report by CIBC. Both reports anticipate impending supply constraints, the effects of which will force demand rationing in the OECD nations, especially in the area of transport fuel. So far there is no evident change in strategy from the leaders of the US or the UK with both Messrs Bush and Brown still calling for OPEC to raise production. Malcolm Wicks in the meantime spent time this week looking at an extinct volcano in the US in search of a fix to increase the potential recoverable reserves from the declining North Sea oil fields. This puts an interesting slant on the delicate position in which Gordon Brown found himself this week with regard to calls for a referendum on Scottish Independence.
The deadline for bids for British Energy has arrived. The French company EDF appears to be the frontrunner. This week the Tories asked for greater transparency on the sale, which is to lead Britain’s nuclear future. Alan Duncan, the shadow business secretary, asserted that “Our energy security . . . should be above party politics”, a quote worth making note of. In the Guardian Michael Meacher provided commentary on the challenges inherent in betting on a nuclear renaissance.
The food crisis continued to dominate much ink during the week. A knock on effect of the high oil price is rising fertilizer costs. According to reports, farmers in the bread basket of Kenya have planted only a third of what they planted last year due the high cost of fertilizer, which has more than doubled in a few months. High food prices and fear of shortages are leading to greater protectionism around food. This week saw discussion in Asia of a ‘rice OPEC’ and reports that Saudi Arabia is making plans for stockpiles.
In economic news this week the Ernst & Young Item Club revised its forecast for UK growth downwards, in response to rising oil prices. The Labour party felt the pain of the downturn in the ballot box as they were routed in local council elections. The electorate clearly doesn’t want the good times to end. Reports this week demonstrated that while rising food prices are driving up inflation Britons are throwing away £9bn/year of ‘avoidable food waste’. In the meantime, in the same week as the AA reported an 11% increase in the cost of motoring in the last year alone, the Office of National Statistics released figures which showed no corresponding decrease in car travel. Some habits are hard to break.
Alert: If you are a UK voter you may want to write to your MP to encourage them to sign an Early Day Motion tabled by John Hemming MP, Chair of APPGOPO. EDM 1453 calls on the government to urgently review its prediction as to when peak oil will occur, in the light of rising energy and food prices. You can find out who your MP is and email them through www.writetothem.com
Oil hits new high amid warnings of $200 peak
Oil Rises to Record $125 as Nigeria Unrest Draws Speculators
Total’s First-Quarter Profit Climbs 18% on Record Oil
Bush to seek OPEC oil production increase
UK’s Brown seeks Opec pressure
US volcano may hold key to UK oil reserves
EU eyes progress on gas pipelines from Iraq, Egypt
MEPs to vote to open up EU energy market
Centrica joins with EDF in British Energy deal
Tories increase pressure over British Energy auction
Russia, U.S. sign civilian nuclear pact
Food Price Crisis Called Global Hunger Emergency
Fertilizer prices more than double
Asean acts over rice prices
Saudi eyes food investments overseas, stockpiles
Oil’s surge to $120 poses new threat to UK economy
Jeremy Warner’s Outlook: With utility bills likely to rise another 30-40 per cent, oil still has the power to shock
US sees oil use down on weak economy, high prices
Food waste on ‘staggering’ scale
Britain not green enough
‘Lazy, short-sighted and irresponsible’