" />
Building a world of
resilient communities.

MAIN LIST

 

Peak oil notes - June 17

Prices and production
Oil settled at $77.67 on Wednesday. Prices are now up more than $7 a barrel since June 7th. US gasoline demand rose by 144,000 b/d last week to 9.33 million b/d, the highest level since August 2009. As has been the situation for many weeks, the fundamentals of oil demand continue to compete with the outlook for economic recovery in the EU and US as the key factor dominating oil prices.

On Wednesday, a government report showing that new housing starts declined by 10 percent in May, cast doubts on the strength of the US economic recovery. On the plus side, US industrial production is reported to have increased by 1.2 percent last month, to 75 percent of capacity. US crude stocks increased by 1.6 million barrels last week despite rising demand for gasoline.

Chart followers are saying that oil prices have now broken a 200-day average and are poised to test the recent high of $87 a barrel set on May 3rd.

Tanker rates are rising due to the 31 percent jump in Chinese imports and the increasing share of Chinese imports that are coming from Africa, thereby adding to trip distances.

Deepwater Horizon
It has been a busy week for the Deepwater Horizon saga. After giving a nationwide TV address on government efforts to mitigate the situation, President Obama met with senior BP executives on Wednesday and extracted an agreement under which BP will deposit $20 billion into a fund to pay for the damages arising from the incident.

BP will bypass its dividend for three quarters, reduce capital expenditures, and sell $10 billion in assets. This settlement was much harsher than most analysts had expected, but BP said it was necessary to assuage rising anger towards the company. BP expects to generate over $30 billion from its global operations this year.

BP also agreed to pay $100 million into a fund to help oil workers laid off by the moratorium on deepwater drilling.

In the meantime, BP has been successful in its efforts to establish a second path to capture and bring in an increased share of the leaking oil to the surface. How well this path is working has not yet been announced, but if all goes well BP will be capturing some 25,000 b/d out of the 35,000 to 65,000 b/d which is the newest estimate of the leak’s size.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Make connections via our GROUPS page.
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.