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.
2011 blew in with strong echoes 2008 as food and fuel prices rose strongly. The UN warned food prices are reaching “dangerous levels” as the global food index rose above the level that caused widespread rioting three years ago, and the IEA’s Fatih Birol cautioned rising oil prices could derail the economic recovery. WTI is around $88/barrel and Brent crude almost $94.
Dr Birol urged OPEC to increase production to stop the oil price being driven up over $100/barrel, but there are no signs yet that OPEC intends to oblige. Qatar’s oil minister Abdullah Al Attiyah said on Thursday the cartel couldn’t interfere since there was no supply shortage.
Food prices have risen on a combination of poor harvests, extreme weather events such as the floods in Australia, and rising fuel costs, and look set to rise further. The flooding has also hit coal production in Queensland and looks set to push up global coal prices.
With oil prices rising, governments are coming under increasing pressure to allow drilling in more hostile and risky environments. The American Petroleum Institute is lobbying the new Congress to reverse the Obama administration’s drilling moratoria for the eastern Gulf, Atlantic and Pacific waters. That’s in spite of a scathing report from the National Commission into the Deepwater Horizon spill that found BP and its partners guilty of major management failings, but which also concluded the problems were industry-wide and “might well reoccur”.
In the UK this week a review by the Energy and Climate Change Committee found that Britain lacks the ability to deal with a Macondo-style spill in the deep waters west of Shetland, but recommended against a drilling ban on the grounds of energy security. In the meantime the first gas shale exploration in Lancashire is already the subject of controversy as campaigners argue that safety concerns around ‘fracking’ have not yet been sufficiently addressed.
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Oil
Higher oil price could affect recovery, warns IEA
In July 2008, the price of oil reached $147 dollars a barrel – its highest dollar value.
Barely two months later, the world was engulfed by what many argue was its worst financial crisis since the Wall Street Crash and Great Depression…
Leading article: An opportunity to kick our fossil-fuel addiction
Is the world on the brink of another ruinous oil shock? The International Energy Agency (IEA), which speaks for the big industrialised consumers in the West, is nervous. The organisation’s chief economist, Fatih Birol, has issued a warning that prices are entering a “dangerous zone” and could leave economic recovery in many countries stillborn.
The Organisation of the Petroleum Exporting Countries — satisfied, we suspect, by the prospect of more bucks for its barrels — is more sanguine. Last month Opec decided against increasing supplies, with Saudi Arabia, the club’s most influential member, suggesting that there was no need for members to meet again until the summer. Given the recent trajectory of prices, however, Mr Birol’s analysis is more compelling…
BP, firms made risky decisions before spill-report
BP (BP.N) and its partners made a series of cost-cutting decisions that ultimately contributed to the oil spill that ravaged the Gulf of Mexico coast over the summer, the White House oil spill commission said on Wednesday.
In its final report on causes of the largest offshore oil spill in U.S. history, the commission said BP and its collaborators on the doomed Macondo well had lacked a system to ensure their actions were safe…
Congress May Force White House To Expand Drilling: Group
Congress should pass legislation, if necessary, to force the Obama administration to open more offshore areas to oil and gas exploration, the head of the American Petroleum Institute said on Tuesday.
The administration last month removed from its proposed five-year offshore drilling plan an earlier decision to allow energy exploration off the Atlantic coast and in Florida waters. It had pledged to open the areas to exploration shortly before last summer’s BP oil spill…
US eases barriers to deepwater drilling
The Obama administration on Monday eased new environmental barriers to some oil and gas deepwater projects, but companies will still have to meet stringent regulations before drilling resumes…
MPs say keep drilling despite risk from oil spill
Britain lacks the ability to deal with a large-scale North Sea oil spill in bad weather conditions but nonetheless should allow oil companies to continue deep water drilling off the coast, MPs will say today.
The Energy and Climate Change Committee said it could become impossible to contain a serious oil spill in the deep water drilling fields off the west coast of Shetland, but it opposed any moratorium on deep water drilling for oil in the UK’s seas, because such a move would undermine the country’s energy security…
Shell Suffers New Setback on Alaska Offshore Drilling
Shell suffered a new setback to its plans to drill offshore in the arctic after environmentalists successfully challenged a decision to grant the company air-quality permits.
Shell has invested $3.5 billion in an exploration program in Alaska’s Beaufort and Chukchi seas but has yet to drill. The company’s plans have been dogged by legal challenges and regulatory obstacles…
India refiner rushes for oil on Iran supply fears
India’s top buyer of Iranian crude is seeking as much as 2.6 million barrels from the spot market, in the face of any possible supply disruption due to a payments row between the two countries.
India’s central bank said in December payments to Iran could no longer be settled through a longstanding clearing house system run by central banks, prompting fears India’s $12 billion annual oil imports from Iran could be threatened…
Desire disappoints again as another well comes up dry
The Falklands explorer’s shareholders have had a nail-biting year, after Desire claimed to have made an oil “discovery” at its Rachel North well earlier this month. Less than two weeks later, the company admitted the well held only water, causing its shares to crash 50pc in one day.
On Wednesday, Desire again found no evidence of oil in the Jacinta well, which analysts had claimed had just a one in 20 chance of success. It will now drill down further to a depth of 1,670 metres in the hope of finding oil deeper under the sea…
Gas
UK joins ‘gas rush’ despite pollution fears
A controversial new technique for drilling gas wells, which campaigners say has polluted water courses in America, is to be tried for the first time in Britain later this month.
Supporters of hydraulic fracturing or “fracking” say it could unleash so much gas across the globe that it will solve the energy crisis for the next century, as well as help reduce carbon emissions…
Gas field size puts Israel as exporter: US firm
A gas field offshore from Israel holds an estimated 450 billion cubic metres (16 trillion cubic feet) of natural gas, positioning the Jewish state as an exporter, Noble Energy said on Wednesday.
The new estimates, announced by the US firm which has a major stake in the field, said the Leviathan gas field dwarfs Israel’s next biggest offshore field, Tamar…
Coal
The Queensland Flood is Coming to Your Neighborhood
The news this week that about one-third of Australia’s coal production has been halted by massive flooding in the state of Queensland is an opportunity to look at the coal supply situation in Asia and the impact it could have on global energy prices in the next few months.
For several decades now, China has been the epicenter of rapidly increasing global coal production. In fact, it is hard to understate the significance of the China’s coal industry’s contribution in recent years to the world’s economic growth. With total coal production of circa 1 billion metric tons in 1990, Beijing was able to grow its coal industry to the point where it might (the numbers aren’t in yet) have produced on the order of 3.2 billion tons including a 10 percent or nearly a 300 million ton increase in production during 2010 alone. Now this is a whopping amount of energy. The utility of coal and oil of course are not the same for the world’s transportation systems run on the liquid fuels derived mainly from oil, while the world’s coal production mainly goes to generate electricity, heat buildings and make coke for steel…
The Australian floods and the impact to the coal industry
Devastating floods in the Australian state of Queensland have thrown the coal markets into disarray.
According to various reports, the flooding has affected an area the size of Germany and France, while around three quarters of coal mines in Queensland have been affected…
Nuclear
China boasts breakthrough in nuclear technology
Chinese scientists have made a breakthrough in spent fuel reprocessing technology that could potentially solve China’s uranium supply problem, state television reported on Monday.
The technology, developed and tested at the No.404 Factory of China National Nuclear Corp in the Gobi desert in remote Gansu province, enables the re-use of irradiated fuel and is able to boost the usage rate of uranium materials at nuclear plants by 60 folds…
Mining and Minerals
China ‘mulls export quotas’ on rare earth alloys
China is considering new export quotas on rare earth alloys, a report said Thursday — a move that would further restrict shipments of the minerals used in a variety of high-tech industries.
The country — which has a near-monopoly in the industry — is also mulling separate export quotas for heavy and light rare earths, Dow Jones Newswires reported, citing an unnamed official with knowledge of the plans…
UK
David Cameron revives Tory plan to curb fuel price rises
David Cameron today breathed new life into longstanding Conservative plans to rein back escalating fuel prices by saying he was working with the Treasury on a “fair fuel stabiliser” aimed at keeping fuel duty down when oil prices rise.
He said the joint impact of increases in duty and VAT meant things were “very painful and difficult”, and he would love to do something to minimise the impact…
Rail fare rise campaign unveiled at Charing Cross
A campaign against rail fare rises has begun as millions of commuters return to work after the Christmas break.
The Campaign for Better Transport asked passengers at London’s Charing Cross station to sign petitions, write to the government and take part in protests…
We bin 10 Wembleys full of food a year — what a waste of energy
Thousands of tons of food are being needlessly buried or burned as councils across the UK fail to meet recommendations on how to deal with biodegradable waste. An Independent on Sunday survey of local authorities has revealed that while the vast majority collect garden waste for composting, less than half pick up food waste separately from general household rubbish.
As a result, food waste that could be used for composting or to generate power is being sent for landfill or incineration. But there is growing opposition to the spread of a new generation of incinerators across the UK. More than 80 sites have been earmarked as part of a so-called “dash for ash”, which could see the amount of household waste that is burnt more than double…
Economy
China car sales stay in the fast lane
China’s automotive market, the largest in the world, is expected to grow strongly this year in spite of Beijing’s decision to phase out some tax incentives and restrict new car sales in the capital, analysts forecast…
The coming hunger: Record food prices put world ‘in danger’, says UN
Food riots, geopolitical tensions, global inflation and increasing hunger among the planet’s poorest people are the likely effects of a new surge in world food prices, which have hit an all-time high according to the United Nations.
The UN’s index of food prices — an international basket comprising wheat, corn, dairy produce, meat and sugar — stands at its highest since the index started in 1990, surpassing even the peaks seen during the 2008 food crisis, which prompted civil disturbances from Mexico to Indonesia…
Overheating East to falter before the bankrupt West recovers
This bear is not for turning. It would be joyous indeed if a fresh cycle of global growth were safely underway, but I don’t believe it. Sorry.
Policy levers in the US, Europe, and Japan remain set on uber-stimulus with the fiscal pedal pressed to the floor and rates near zero everywhere, yet OECD industrial output has not regained the peaks of 2007-2008 by a wide margin. Leading indicators are tipping over again. We are one shock away from a liquidity trap…