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ODAC Newsletter - Dec 16

Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre.

We'll be taking a two week break for the holidays and will be back with the next newsletter on January 6th 2012. If you've found the newsletter useful this year, please do let us know by sending a donation our way. Thanks for your support.

The big oil news this week was that OPEC came to an agreement — albeit a bit of a fudge — showing something of a recovery from June's "worst meeting ever". Last time around the group failed to agree new quotas and was upstaged two weeks later by the IEA releasing strategic reserves to offset loss of production from Libya. This time it was important for OPEC to rally and demonstrate that it can still be effective. In the event the new quota essentially ratifies the current status quo. OPEC members are pumping at about 30mb/d and that is the new quota. Individual country quotas were not set, so is there really a quota or isn't there — your guess is as good as ours.

What is troubling OPEC leaders most, and indeed quite a few others, is the lack of clarity about the global economy and therefore global oil demand. Europe is now expected to go back into a "mild" recession, the US is still staggering along under its own huge burden of debt, and there are signs that China could be about to experience a slow down led by the bursting of their property bubble. With political and geopolitical uncertainty also in the mix who would like to predict what 2012 will bring?

One thing that does look certain is that controversy of shale gas will be on the increase during 2012. The release of a US Environmental Protection Agency (EPA) draft report at the end of last week linking poisonous chemicals found in water to hydraulic fracture operations in Wyoming has called the safety of the industry further into question. The company responsible for the drilling Encana Oil & Gas was quick to label the report inconclusive, but this was bad news for the industry. The report may result in further delays to fracking operations in the UK which were suspended in June following earthquakes and are subject to review following a report linking drilling activity to the quakes. That said, licenses and planning permission are still being granted for new projects as was evident from Cuadrilla's success last week to secure rights to drill in an area of West Sussex.

While the UK is deciding what it thinks of shale gas, it has apparently given the overwhelming thumbs up to wind and solar. A YouGov poll carried out for the Sunday Times (and then not published) demonstrated that 56% of Brits support building more wind energy capacity. The figure is surprising given the frequent hostile press given to wind power, exemplified by a report from the Adam Smith Institute this week, "Renewable energy: Vision or mirage?", which argues government policy on renewables is misguided and should replaced with a greater focus on gas and nuclear.

It was still a good week for renewables though as a new report by the Climate Change Committee showed rising energy bills have been caused overwhelmingly by the wholesale gas price, not environmental subsidies. Gas and electricity bills rose by £455 between 2004 and 2010, of which green measures added just £75. And of that, £45 went towards improving household energy efficiency, and just £30 towards low carbon generation. So at most, renewables have raised bills by 8 pence per day — hardly exorbitant.

View our Reports and Resources page

Oil

OPEC Opts to Increase Its Level of Output

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Oil Trades Near Six-Week Low, Heads for Second Weekly Decline

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Oil Sector Sets Sights High in Iraq

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Exxon's deal with the Kurds inflames Baghdad

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Chevron's Oil Spill in Brazil Prompts $10.6 Billion Lawsuit

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Report Seeks Far Tighter Safety System for Oil Drilling

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Obama threatens to veto pro-polluter payroll tax bill

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Canada Backs Total's Oil-Sands Project

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Gas

E.P.A. Links Tainted Water in Wyoming to Hydraulic Fracturing for Natural Gas

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Some Blame Hydraulic Fracturing for Earthquake Epidemic

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Firm linked to quakes eyes Sussex drilling

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Nuclear

Areva suspends raft of nuclear power projects

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Persistent drought in Romania threatens Danube's power

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Radioactive water leaked at second Japan plant

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UK

Gas, not renewables, is driving up bills, says Climate Committee

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Over-reliance on wind farms 'will lead to power cuts'

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Poll: Public overwhelmingly backs wind and solar power

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Solar feed-in tariffs fall by half

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Climate

Canada under fire over Kyoto protocol exit

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Transport

Campaign For Better Transport: how to reduce the need to travel

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Better Place drives into China's electric car market

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Economy

IMF warns that world risks sliding into a 1930s-style slump

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China's epic hangover begins

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Politics

Energy debate must consider demand - not just supply

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What do you think? Leave a comment below.

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