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Energy policies - June 1

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Many more articles are available through the Energy Bulletin homepage


Forgotten themes

Shaun Carney, The Age (Australia)
HERE'S hoping that this budget session of the Federal Parliament is an aberration. If it turns out to be typical of the way our federal politicians will debate the really big, daunting issues under the Rudd Government, then the country is in a welter of trouble. Labor's FuelWatch scheme? The Liberals' five-cent cut in the excise on a litre of petrol? Give us a break.

The world is experiencing nothing less than an oil shock. Those among us of a certain age can recall the effect of the oil shocks of the 1970s: a quarter of a century of wondrous economic growth in the West came to a shuddering halt. If we're incredibly lucky - and we might be, because this oil shock appears to be mostly driven by demand in growing economies while the 1970s shocks resulted from supplier-generated price rises - this time around we won't find ourselves mired in a cycle of stagflation. Nevertheless, the effects are substantial, and painful. All economies - international, domestic and personal - are being transformed as a result.

Here's an unavoidable truth: the price of oil and all of its byproducts will continue to rise. And that's before we even begin an emissions trading scheme, which is guaranteed to lift all energy prices even more and further transform the ways we all do business. And that's why the ridiculous "debate" about the respective merits of the excise cut proposal and FuelWatch has been such a woeful waste of time, energy, public attention and - for the Government and the Opposition - political capital.
(31 May 2008)
Contributor SP writes:
The cartoon with the story is ok... the cartoon has "peak oil" in it but the text of the story doesn't.

As an organisational tool, the "does the story mention peak oil" selection menu may soon become redundant.

Perhaps you need to replace it with Does the story illustrate populist short-sighted "solutions" [OR} Does the story propose meaningful solutions ;-)


Why I was wrong about rationing

Mark Lynas, New Statesman
A far simpler way to constrain carbon is to deal "upstream" with the few dozen companies that produce or import fossil fuels, rather than hitting tens of millions of consumers

I should start with an apology. In October 2006 I wrote an article for the New Statesman strongly advocating carbon rationing as the only appropriate response to the emergency of climate change. So you might expect me to be furious that the Environment Secretary, Hilary Benn, has shelved a suggested rationing scheme following a lukewarm government feasibility study. But I believe Benn has taken the right decision. Rationing now seems to me both unnecessary and possibly counterproductive.

...So, is there a better solution? Yes: the system we already use to ration our consumption - the price mechanism. A far simpler way to constrain carbon is to deal "upstream" with the few dozen companies that produce or import fossil fuels, rather than "downstream" with tens of millions of consumers. Companies drilling, mining or importing carbon into the domestic economy would have to buy tradable quotas to cover the emissions from their products. The rest of us simply find fossil fuels becoming more expensive and change our behaviour accordingly. The financial incentive is the same as with rationing, but we don't have to become experts in trading.

The remaining question involves equity: more expensive fuels make some people, primarily the poor, worse off; hence the egalitarianism of rationing. True, but it is what happens to the money that counts. If revenue raised from auctioning carbon quotas to companies is targeted at those who most need it, perhaps through the tax and benefits system, then a progressive outcome can still be achieved. I hate to admit it - but in abandoning carbon rationing, the government, for once, has got it right.
(29 May 2008)
This is one view on a debate which is just getting going on the UK. -SO


UK power giant says energy industry on the brink of radical change

Mark Milner, Guardian
Britain's second biggest gas and electricity supplier, Scottish and Southern Energy, warned today the industry stood on the brink of radical change.

Centralised fossil fuel fired generation would have to give way to a combination of energy efficiency and diversity of generation.

"The days of meeting an unchecked demand for energy through monolithic carbon intensive power stations are coming to an end. Increasingly the emphasis will be on energy efficiency, renewables, cleaned up fossil fuel plant and micro generation," the company said in a statement accompanying its full-year results.

SSE's comments came as the government clashed with environmentalists over the role of nuclear generation in meeting Britain's energy needs.
(29 May 2008)


Pushing South

Peter McKenzie-Brown, Language Matters
Notes on geopolitics as Canadian crude pushes toward the Gulf Coast
(This article appears in the June 2008 issue of Oilsands Review.)

“There certainly appear to be a lot of forces increasing the demand for Canadian heavy, particularly in the US,” says Steve Wuori. Enbridge’s executive vice president observes that right now only Venezuela and Mexico are seriously competing for the heavy oil market in the Gulf Coast, and “there are declines in Mexican supplies for geologic reasons, and Venezuelan declines for both economic and political reasons. So structurally it’s a very good time for Canadian heavy oil to secure that market."

Wuori’s comments reflect a sea change in Canada’s approach to selling the stuff. Early bitumen development in Alberta was slow and easy - regional producers supplying heavy oil to refineries in America’s northern tier states, with virtually no competition from overseas. Today, with surging supplies projected well into the future, Canadian producers, pipelines and marketers have had to become aggressive. Global forces are having a greater impact on the industry than ever before.

... Here is the problem in a nutshell. Access to the world gives you the best available prices for your heavy oil. Access to a crowded regional market gives you Western Canada’s heavy oil discount. That is why the marketing Shangri-la for the heavy oil sector is the Gulf of Mexico, and why it’s important at this point to discuss the labyrinthine world of pipelines.
(30 May 2008)


Permit for oil well in South Downs is 'act of vandalism'

Mark Hughes, The Independent
A storm is brewing in the normally tranquil South Downs after permission to dig for oil was granted to a petroleum company. Conservation groups are furious that the council is allowing such a development on a designated area of outstanding natural beauty.

West Sussex County Council granted permission this week for Northern Petroleum to drill an oil well in Markwells Wood, an ancient woodland in the village of Forestside, near Chichester. The company expressed an interest in drilling in the area after oil prices soared.

Groups opposing the plans say the drilling - which will destroy a hectare (2.5 acres) of woodland in an area which is likely to become part of the South Downs National Park - amounts to an act of environmental vandalism. But the council, despite its own ecologist and landscape officers objecting to the scheme, decided that the application met all legal requirements and approved it on the understanding that Northern Petroleum will replace and enhance the woodland when it has finished working on the site, which is expected to be in about three years' time.
(15 May 2008)

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