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ODAC Newsletter - June 10

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.

Oil prices surged as the OPEC meeting broke in acrimony with no agreement to raise production quotas. The Saudi oil minister said it was the worst meeting ever, and some analysts claimed the cartel, which controls around 40% of global oil supplies, is on the point of collapse.

Traditional price hawks Iran and Venezuela ganged up with Libya, Algeria, Angola, Ecuador, Venezuela and Iraq to defeat the increase, proposed by Saudi Arabia, the UAE, Kuwait and Qatar, with voting largely determined by the distribution of spare capacity. Saudi, with three quarters of OPEC's estimated 4 mb/d spare capacity, and its allies, wanted to raise output to soften prices and protect demand. The rest had nothing to gain, at least in the short term; with no spare capacity to speak of, they would have suffered lower oil prices and not been able to raise output to compensate.

The row illustrates OPEC's increasing irrelevance. Most members are running flat out and incapable of raising output even if they wanted to, and the power to influence the oil market is increasingly concentrated in Saudi Arabia, although many doubt they have as much meaningful spare capacity as claimed. With seasonal demand due to surge some 2 mb/d by the end of the year, Saudi is now likely to raise output in any case, but this will reduce its spare capacity in the event of any further geopolitical spasms. Buckle up.

2010 saw global energy use increase at its fastest rate since 1973, according to the latest BP statistical energy review released on Wednesday. Oil consumption rose to a record 87.4 million barrels/day, (2008 was 86 mb/d), while coal consumption increased by 10%, driving a near 6% increase in greenhouse gas emissions. But it is natural gas that is shaping up to be the next big thing, according to a new report, "Are we Entering a Golden Age of Gas?", from the IEA. According to the Agency, gas consumption could rise by 50% by 2035, requiring global production to grow by three times the current output of Russia.

The IEA's new scenario depends on a number of big and questionable assumptions, including that plentiful shale gas will keep prices low. But the watchdog makes clear the report's rosy-tinted title applies only to the industry, not the planet. The scenario cuts greenhouse gas emissions only fractionally compared to their central forecast, because gas backs out not only coal but also nuclear and renewables, and lower prices stimulate demand. Despite the industry's attempts to position natural gas a as 'clean', this high-gas scenario still ties us to a railroad track heading for a catastrophic 3.5C rise in global temperatures.

In the UK this week there was dismay in the solar industry at the release of revised feed in tariffs that substantially reduce the payback rates for medium to large scale solar installations, to protect money for domestic installations. At this point it is difficult to deduce whether the policy is aimed at increasing the take up of solar power, or sweetening voters.

Finally, you may be interested to take a look at the various documents of the Call For Evidence: Prospects for Crude Oil Supply and Demand — including a submission by ODAC— published on the DECC website this week. Taken with the department's recent agreement to work with the UK Industry Task Force on Peak Oil and Energy Security to produce an oil-shock response plan, things may - finally - be inching in the right direction.

Oil

Breakdown points to power shift in cartel

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Global Energy Use Advances at Fastest Pace Since 1973 on Coal, BP Says

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DECC accepts warning of rising peak oil risks

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Oil Futures Rise to One-Week High as OPEC Fails to Agree on Output Quotas

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BP boss on defensive after Rosneft fiasco

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Exxon Makes Big Find in Gulf of Mexico

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Oil Sands Project in Canada Will Go On if Pipeline Is Blocked

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Gas

Natural Gas Entering 'Golden Age'

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LNG demand rises as nuclear power is shunned

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MPs call for inquiry into shale gas drilling after earthquakes

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Nuclear

Fukushima nuclear plant may have suffered 'melt-through', Japan admits

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IAEA Draws Fire Over Japan Crisis

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Berlin accelerates nuclear shutdowns

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Renewables

US solar power nears competing on price

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A Hybrid Power Plant Takes Shape in Turkey

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UK

Government confirms deep solar incentive cuts

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Solar power battle looms as Government slashes subsidies

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Millions of households face record high energy bills

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Government to make Green Deal ambitions legally binding

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St Andrews hopes on-site wind farm will cut crippling energy bills

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EDF guarantees Morrisons £1m a year in energy savings

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Transport

Airlines lose economy passengers as soaring fuel bills force up ticket prices

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Airline emissions trading will spark trade wars, industry warns EU

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Research finds fitting hybrid technology to diggers and cranes could boost fuel efficiency

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