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.
The collapse of the Greek government amidst a wave of popular protest and riots sent markets reeling this week. The Greeks reject the austerity measures attached to their bailout by the Eurozone, and there is serious concern that other countries will follow. The Euro troubles had a bearish effect on oil prices, however prices were buoyed by better than expected US jobless figures, and an increased oil demand forecast from the IEA.
In its Medium Term Oil Market Report the IEA base case anticipates an annual oil demand increase of 1.2 million barrels/day in the next 5 years resulting in what it describes as “a fairly thin supply cushion” of around 4m/d. The current high oil price is described as “in large part…justified by supply and demand fundamentals”. Meanwhile the agency’s monthly report calls for an increase in OPEC production for this year of 400,000 barrels/day.
The UK government’s position on peak oil was called into question again this week, after DECC was forced to publish an internal paper from 2009 entitled Report on the risks and impacts of a potential future decline in oil production. The department had appealed against the ruling but lost, and quietly published the document along with the responses to its recent call for evidence on the same subject.
The report shows how different the previous government’s public and private positions were on peak oil. The internal report — a summary of work conducted in 2007/8 — concluded that while it was impossible to predict the exact timing, the impacts of an early peak could include social unrest and negative impacts on GDP. In public, the Wicks Report on Energy Security, published in 2009, the same year the internal one was written, dismissed the idea out of hand on the usual bogus arguments – see ODAC’s demolition at the time.
What they both share, however, is a deadening bureaucratic complacency. Having reviewed the potential impacts of peak oil, the newly revealed report concludes: “…there are no obvious additional policies the UK government should pursue to minimise the likelihood of a ‘peak oil’ scenario and to be prepared to mitigate its impacts in addition to those already in place” (their emphasis).
Since those words were written the geopolitics of the Middle East have shifted significantly, oil prices have surged again to $120/barrel and are expected to rise further this year. Coalition, take note.
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Oil
IEA piles pressure on OPEC to pump more oil
The West’s energy watchdog the IEA upped the pressure on producer club OPEC to increase output by forecasting a steep rise in oil demand later this year and predicting the strain on supply would last over the medium term.
Oil prices rose in response to the latest sets of numbers from the International Energy Agency. Brent crude hit a session high of nearly $115 a barrel on Thursday, up almost $2…
$120 oil risks economic double dip, says IEA
Oil around the current level of close to $120 a barrel risks tipping the world economy into a double dip recession, the International Energy Agency’s chief economist said on Wednesday.
He also said the Paris-based consumer watchdog was monitoring the supply-demand balance every day to judge whether it was necessary to release strategic stocks…
UK ministers ignored ‘peak oil’ warnings, report shows
The government was warned by its own civil servants two years ago that there could be “significant negative economic consequences” to the UK posed by near-term “peak oil” energy shortages.
Ministers were told it was impossible to know exactly when production might fail to meet supply but when it did there could be global consequences, including “civil unrest.”…
Crude Oil Edges Higher in New York as Fewer Americans File Jobless Claims
Crude oil edged higher after a government report showed that fewer Americans filed applications for unemployment benefit last week.
Futures climbed from the lowest level in almost four months after the Labor Department said jobless claims fell by 16,000 to 414,000 in the week ended June 11. Oil dropped earlier, extending yesterday’s 4.6 percent slide, as Greek Prime Minister George Papandreou sought to win a confidence vote and violence erupted over budget cuts and austerity measures needed for aid…
Saudi, US mulled secret oil reserve swap
It was to be a swap felt around the world – a plan privately discussed by the world’s largest oil exporter and the globe’s biggest consumer to take the heat out of $120-plus oil prices.
In the weeks leading up to the failed June OPEC meeting, US and Saudi officials met to discuss surprising the market with an unprecedented arrangement: exchanging urgently-needed high-quality crude oil stored in the US emergency reserve for heavier, low-quality oil from Saudi Arabia, according to people familiar with the plan…
Kuwait ruler warns against unrest, security threats
Kuwait’s emir said Wednesday the Gulf state would show “zero tolerance” to anyone threatening the OPEC oil exporter’s security, after the opposition held weekly rallies demanding that the prime minister step down.
Thanks to a generous welfare system, Kuwait has avoided the mass protests that have forced out the rulers of Egypt and Tunisia…
Oil-giant Venezuela tries to limit energy use
Venezuela, one of the world’s leading oil producers, is trying to limit its power consumption as the country’s decrepit power utilities struggle to keep up with the demand.
The government on Monday said the biggest electricity consumers — shopping malls, factories, office buildings and even some homes — must trim their energy use by 10 percent compared to their monthly average use…
Drought Threatens Texas Oil Boom
The worst Texas drought since record-keeping began 116 years ago may crimp an oil and natural- gas drilling boom as government officials ration water supplies crucial to energy exploration.
In the hardest-hit areas, water-management districts are warning residents and businesses to curtail usage from rivers, lakes and aquifers. The shortage is forcing oil companies to go farther afield to buy water from farmers, irrigation districts and municipalities, said Erasmo Yarrito Jr., the state’s overseer of water supplies from the Rio Grande River…
North America
Voters put $10 limit on green energy cost
US voters support increased use of renewable power but would pay only about $10 per month extra for it, according to an opinion poll that highlights the difficulties facing many forms of lower-carbon energy.
The poll also identifies reduced US dependence on foreign oil as a top priority for energy policy and shows support for greater use of natural gas, in spite of concerns about possible pollution caused by shale gas production…
Senate Rejects Effort to Cut Ethanol Subsidy
A Senate effort to take away ethanol subsidies came up short Tuesday but exposed weakened support for a $6 billion tax break, suggesting that the incentive could be eliminated.
The Senate didn’t reach the 60 votes needed to proceed to a vote, undermined by Democratic leaders frustrated at the procedural maneuver used to bring the measure to the floor. But in the process of reaching the 40-59 vote, a coalition of conservatives and environmentalists challenged the legitimacy of the subsidies as their peers became entangled in a larger debate over tax breaks in an age of deficits…
E.P.A. Delays Rule on Power Plant Emissions
The Environmental Protection Agency, facing intense opposition from Congressional Republicans and industry over a broad range of new air quality regulations, said Monday that it was delaying by two months the release of a proposed rule on greenhouse gas emissions from power plants and other major pollution sources.
The delay of the rule, which will have a major impact on the nation’s efforts to reduce emissions of gases blamed for the warming of the planet, is the latest step by the E.P.A. to slow the issuing of regulations that its critics claim will hurt economic growth, drive up energy costs and cut employment. The delay is a tacit admission that the regulations pose difficult political, economic and technical challenges that cannot be addressed on the aggressive timetable the agency set for itself early in the Obama administration…
Gas
Labour urges government to stop fracking around with shale gas
Labour has reiterated calls for the government to impose an immediate moratorium on shale gas projects in the UK until it has commissioned and completed its own report on the likely impact of the controversial technology.
Shadow energy minister Huw Irranca-Davies wrote to energy minister Charles Hendry, urging him to enforce a temporary ban on planned shale gas operations, including a proposed development near Blackpool. The letter follows a similar call for Hendry to impose a moratorium at the start of the year, which was rejected by the minister…
European Natural Gas Pipelines Plagued by Uncertainties
Could the plan to build the world’s most expensive natural gas pipeline turn out to be an elaborate bluff?
South Stream, backed byGazprom, the monopoly exporter of Russia’s natural gas, would run underneath the Black Sea and deliver large amounts of fuel to the European Union, sometime in the second half of this decade…
Shale gas doesn’t make Poland the new Norway yet
Poland is being hailed as Europe’s new Qatar. Located deep beneath its rolling landscape are 5300 billion cubic metres (bcm) of recoverable shale gas, more than enough to meet the country’s needs (currently 14 billion bcm per year) for centuries to come. This has captured the imagination of a country that sees its dependency on Russian gas as a threat to national sovereignty. But Poland already seems to have sold its resources to American oil companies — and they might find it more lucrative to sell into the Russian-controlled pipeline network. As one analyst puts it, ‘Poland is not on course to become a second Norway, more a second kind of Turkmenistan.’…
Nuclear
China’s nuclear power plants pass safety inspections
China has moved a step closer towards resuming its ambitious nuclear power plans after it was revealed that safety inspectors have given the country’s 13 reactors the all-clear.
The clean bill of health makes it more likely that Beijing will not follow the example of other countries — most recently German, Italy and Japan — who have promised to scale back or abandon nuclear power in the wake of the meltdown at the Fukushima Dai-ichi plant in March…
Berlusconi’s nuclear power plans crushed
The anti-nuclear movement won a crushing victory in Italy on Monday when well over 90% of voters rejected Silvio Berlusconi’s plans for a return to nuclear power generation.
The result represented an overwhelming setback for the prime minister, who had tried to thwart the outcome by discouraging Italians from taking part. The referendum needed a turnout of at least 50% to be binding. Interior ministry figures projections indicated that more than 57% of the electorate had taken part. Greenpeace called it a historic result. Quorums were also reached in three other referendums held simultaneously — the first time in 16 years that a quorum had been achieved in any referendum in Italy…
Renewables
Renewables could provide 35 per cent of UK generating capacity by 2030
Renewable energy sources could account for 35 per cent of the UK’s energy generating capacity by 2020 if planning and grid connections are improved, a government-backed report says.
The Department of Energy and Climate Change (DECC) today published an assessment of the deployment costs and potential of a wide range of green energy generation technologies by engineering firm Arup. The work will inform next month’s review of support provided by the Renewables Obligation from 2013 to 2017…
UK boasts just one wind turbine per 100 square kilometres
The UK currently boasts just one wind turbine per 100 square kilometres, according to a new industry study intended to dispel the myth that the countryside is being paved with wind turbines.
The report from trade association RenewableUK confirms the UK is lagging far behind many other European nations in its development of onshore wind energy, currently boasting an average of just 1.11 wind turbines for every 100 square kilometres…
Chevron Bets on Power From $30 Billion Volcanoes in Indonesian Rainforest
Chevron Corp. (CVX) drilled 84 wells to a depth of two miles beneath the Indonesian rainforest to tap steam, not oil and gas, that’s trapped in the world’s richest store of volcanic energy.
The oil driller’s geothermal plant, set among wild orchids and bamboo trees, uses 315 degree Celsius (600 degree Fahrenheit) heat to spin turbines 24 hours a day, generating electricity for Jakarta, a four-hour drive to the north. Chevron, which pioneered geothermal energy 20 years ago in Southeast Asia’s biggest economy, is about to see competition…
Mining and Minerals
‘Urban Mining’ Could Reduce Reliance on Metal Imports
The demand for special metals used in the manufacture of electronics is booming, but a few countries control much of the world’s supply. Germany is looking to reduce its reliance on imports by exploiting the metal that is thrown away in trash. Urban mining could become big business.
Thierry Van Kerckhoven has an eye for hidden value. The Belgian can look at a pile of shredded scrap metal from electronic devices and recognize what it is made of. Not only that, he can tell how much it’s worth…
UK
Chris Huhne urges energy customers to switch suppliers
Consumers should vote with their feet and switch to a different supplier if their power company raises its charges, Energy Secretary Chris Huhne has said.
In an interview with the Observer, Mr Huhne said people did not have to take price increases “lying down”…
UK faces job losses as businesses threaten to flee abroad to escape green energy levies
British industry’s ability to compete with companies overseas is under threat from punitive green energy costs, the new president of the CBI has told The Sunday Telegraph.
Sir Roger Carr warns in an interview that the Coalition must give “some sort of support” over rising energy costs to UK manufacturers or else risk seeing businesses relocate abroad with the consequential loss of jobs…
Red tape cut for smaller power suppliers
Ministers are to cut red tape for small power companies to help them compete with larger rivals as pressure grows over soaring gas and electricity bills.
A wave of power bill increases is expected after Scottish Power, one of the six big companies that dominate the energy market, raised gas prices last week by 19 per cent and the cost of electricity by 10 per cent. The company blamed steep rises in the wholesale energy market…
Harrabin’s Notes: Waste not?
For all the green groups and business groups that have condemned the government’s Waste Review for lack of ambition, here’s some news: it could have been less ambitious.
I understand that proposals to consult on banning wood, textiles and food waste from landfill were inserted only after Downing Street complained that the document did not do enough to substantiate the “greenest government ever” promise…
Report: Waste is more effective than wind energy
A new report will argue that the government could create four times more jobs and save more carbon emissions than the same investment in onshore wind if it invested £1bn in waste technology such as recycling and district heating infrastructure.
The Environmental Services Association (ESA) will launch a report today quantifying the economic growth potential of the waste management sector and comparing its impact on jobs and carbon emissions with that of wind farms…
Economy
Europe’s ‘Lehman Moment’ Looms as Greek Debt Unravels Markets: Euro Credit
The European Union’s failure to contain the Greek debt crisis is sending fresh shockwaves through currencies, money markets, equities and derivatives.
The euro lost more than 2 percent against the dollar in the past two days and the cost of protecting corporate bonds soared to the highest level since January, with credit-default swaps anticipating about a 78 percent chance that Greece won’t pay its debts. Equities declined around the world, while a measure of fear in fixed-income markets jumped the most since November…