Peak oil notes
Developments this week
The death of Osama Bin Laden over the weekend triggered a market pullback that lasted through Wednesday when NY oil closed at $109.24, a fall of nearly $5 a barrel. Opinions were mixed as to just why the death should lead to lower oil prices with the consensus seeming to say that some of the “terror premium” should come out of oil prices. The decline was aided by a larger-than-expected growth in US crude stockpiles and disappointing business surveys and employment reports on Wednesday. Efforts to control inflation in China and India added to concerns that global economic growth would be slower in coming months. In London, Brent crude slipped from $126 a barrel Monday morning to settle at $121.16 on Wednesday.
Supporting oil prices was the continuing fall of the US dollar which reached all-time lows against the Swiss franc and is getting closer to $1.50 against the euro. Continuing unrest in the Middle East including another attack on the natural gas pipe from Egypt to Israel and Jordan helped contain the price drop.
Despite another drop in US gasoline stocks, gasoline futures in NY continued to fall this week, closing on Wednesday at $3.31 a gallon down from an opening above $3.40 on Monday. Retail prices continued to move higher this week with the AAA saying that national average price for regular is now $3.98 a gallon – up 10 cents a gallon in the last week and the highest since July 2008.
There was not much news on supply and demand so far this week. Reuters reported that Saudi production in April was up about 300,000 b/d from the 8.2 million they pumped in March. A Saudi banker said the Kingdom’s production is expected to average 9 million b/d in 2011. Coal shortages leading to power outages continue to be reported across eastern China.
Gasoline prices hit a record high of $9.10 a gallon in Germany after the Russians put a ban on fuel exports to deal with domestic shortages. Price ceilings in Russia were making it too attractive for Russian refiners to sell their products on the export market.
Fuel and power shortages
For a variety of reasons fuel and power shortages are continuing to appear in many corners of the world. In addition to the domestic shortages in Russia, long lines at gas stations were reported in Libya, Yemen, Kenya, Pakistan, Nepal, Chile, Senegal, Nigeria, Pittsburgh and parts of Georgia.
Electric power shortages in Pakistan continue to plague the country. It seems likely the country will soon have few, if any goods to export, and will be living on subsidies from foreign governments. Nepal is just about completely out of motor fuel due to the inability to pay its bills and India keeps upping its orders for foreign coal.
As a matter of interest, Hertz car rentals is now charging a fee of $9.29 a gallon to customers who do not return vehicles with full tanks.
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