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ODAC Newsletter - Oct 7

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.

Deepening political anxiety about the economic crisis went public this week as Mervyn King, Governor of the Bank of England declared that "this is the most serious financial crisis at least since the 1930s, if not ever." and David Cameron in his keynote speech to the Conservative Party Conference admitted that "the threat to the world economy — and to Britain — is as serious today as it was in 2008 when world recession loomed." The gloomy outlook led to a fall in the price of commodities with Brent oil briefly dipping under $100/barrel on Tuesday — it had however rallied by Thursday to $104/barrel.

So why-given the severity of the economic news-isn't the oil price falling faster? Goldman Sachs' latest research note sums up the situation simply — "The world crude oil market remains exceptionally tight." The loss of Libyan production means that the world is more reliant on non-OPEC oil — this oil is increasingly expensive to produce with the marginal barrel now around $90/barrel.

There has also been a reversal of the 'contango' in oil price futures contracts that has prevailed over the last few years. Until recently the price of oil for future delivery was higher than that of oil for immediate delivery — the logic being that tomorrow would bring a brighter economic future and tighter supplies. Now the market sentiment has reversed making today's oil more expensive and resulting in a drawdown of stocks which (outside the US) are now at a 9 year low. The market is now essentially between a rock and a hard place — sudden economic optimism would result in tight supply and higher prices; economic decline will make the marginal barrel unaffordable. Goldmans warn that any uptick in economic activity would leave the market unable to meet supply, leading to another another price spike — and presumably another recession.

So, just when it should surely be becoming ever more obvious that the only rational policy for the future needs to be about a reduction in our oil dependence, the Conservative Party conference appeared to show that they just aren't getting it. So we now have a Chancellor who wants to back-pedal on carbon reduction commitments, a Transport Secretary who wants to increase the motorway speed limit and build new roads while allowing record increases in train fares, and an energy department which is struggling to roll out a coherent strategy to encourage renewables and carbon capture. In short it looks like the government's green credentials have got a severe case of the blues.

Oil

Crude Oil Falls in New York on Renewed Growth Concern After Two-Day Rally

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Goldman on who's really wagging the oil market

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Oil sands imports could be banned under EU directive

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The Cronyism Behind a Pipeline for Crude

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IEA Warns Of Ballooning World Fossil Fuel Subsidies

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Saudi Arabia Vows 'Iron Fist' After Attack

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BP Has 2 European Refinery Fires in 3 Days

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Container ship stranded off New Zealand leaking oil

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Hopes that economic crisis will deliver cheaper oil

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Drilling for Crude Goes Solar

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Gas

Putin says Russia closely watching EU Gazprom raids

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France Cancels Shale-Gas Permits Over Fracking IMpasse

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Poland lobbies against EU shale gas regulation

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Nuclear

Middle East sovereign wealth funds 'queue up' to invest in UK nuclear power stations

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Nuclear seeps back into favour as Japan begins energy debate

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Japan Discovers Plutonium Far From Crippled Reactor

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Renewables

Germany may buy Greeks' sunshine

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Work starts on solar bridge at Blackfriars station

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UK

Conservative Party Conference 2011: Green initiatives watered down to help business

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Renewable Heat Incentive withdrawn by government hours before launch

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Road-building plan takes us back to the last Tory government

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The Smart answer to the energy crisis?

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Flagship green energy project faces axe

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Climate

Court adviser says EU airline carbon cap would be legal

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China climate goals run against growth: report

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