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Russia warns Europe it could face gas shortages

Terry Macalister and David Gow, Guardian
Britain was given a sharp reminder of the dangers to its energy supplies today when Gazprom warned western Europe could be hit by gas shortages. The Russian gas provider said a long-running row with Ukraine could disrupt supplies to Europe this winter.

The fears were raised just 24 hours before Russia hosts a meeting of the world’s major gas suppliers to set up an Opec-style production cartel that could also push up the price of energy in the UK and elsewhere.

Energy experts warned that the two events demonstrated Russia was using energy as a political weapon and argued Britain should fast-track its switch to renewable power to reduce its dependence on unpredictable carbon fuel suppliers.
(22 December 2008)

Japan Oil Imports Fall 17% as Recession Damps Demand

Megumi Yamanaka, Bloomberg
Japan’s crude oil imports fell for the first time in three months as exports plunged to a record in November, cutting consumption by the world’s third-biggest user.
(22 December 2008)

Mexico Looks To Buck Global Oil Trend By Raising 09 Spending

Peter Millard, Dow Jones via Borsa Italiana
Oil firms from offshore Louisiana to Middle Eastern deserts are cutting back during the price collapse, but oil-hungry Mexico is spending as if the boom is just starting.

In Mexico, oil exports will run out in less than seven years at current decline rates, and the urgency to reverse the sharp fall has created a flurry of activity in Mexico’s oil patch.

If Mexico manages to buck the low-investment trend hitting the global oil industry, output will stabilize or at least fall at a slower rate over the next few years. This would guarantee fiscal revenue at home and a stable source of U.S. oil imports when demand picks up again.
(22 December 2008)

Pemex Oil Production Drops 6.5% on Cantarell Field

Andres R. Martinez, Bloomberg
Petroleos Mexicanos, the state-owned oil company, said crude oil output fell 6.5 percent in November from the year-earlier period as production at its Cantarell field declined at a faster-than-expected rate.

Production dropped to 2.711 million barrels a day, from 2.901 million barrels a day a year earlier, the company known as Pemex said today on its Web site. In an e-mail, Pemex cited Cantarell, its largest field, as the reason for the drop.
(22 December 2008)

Lower gas prices won’t last forever, economists warn

Larry P. Vellequette, Toledo Blade (Ohio)
The average price for a gallon of gasoline reached a zenith in Toledo in May at $4.19, and crude oil prices reached a record in July at $146.50 a barrel.

It changed lives. It crippled industries. It arguably ignited a global recession that rages unabated to this day. And for people such as Sara Ortolano of Monroe, who filled up this week for $1.65 a gallon, the wild swing in fuel prices makes no sense at all.

“I’d still like some answers of why the drastic swings. It doesn’t make sense to the average consumer,” said Mrs. Ortolano, who commutes daily from Monroe to her job as a manager at a West Toledo department store.

In just five short months, the oil market has tanked. Last week, even as oil producers promised to remove as much as 5 percent of their daily production, crude oil prices fell well below $40 per barrel – a stunning 75 percent decline in just five months.

But don’t get too comfortable, economists and oil industry experts warn: Today’s “cheap oil” will soon be replaced again with “peak oil” – and prices will rocket back up again.

“As soon as the world economy turns around, then prices will shoot higher again,” said economist Ken Mayland of ClearView Economics LLC in suburban Cleveland. “As soon as those economies pick back up, we’re going to be right back in the soup.”

Mr. Mayland is talking about the economic theory of peak oil, the belief that oil production will or already has reached its maximum, and that as production declines, prices will rise accordingly. Peak oil theory, first proposed in 1956, may play out in a series of wildly speculative price swings that grow increasingly volatile over time, proponents say.
(21 December 2008)