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Britain must use less oil, says Brown
Crisis forces Chancellor to stress renewable energy
Gaby Hinsliff, Juliette Jowit and Heather Stewart, The Observer
Britain must use less oil, Gordon Brown is to warn as the Government braces itself for rocketing petrol prices and the threat of fuel protests.
The damage caused by Hurricane Katrina has affected supplies and sent the price of oil soaring – hitting motorists in the pocket and prompting British Gas to raise fuel bills. Hauliers are threatening to blockade fuel refineries this week in protest.
The Chancellor is expected to freeze petrol duty again later this autumn to help ease the pain for motorists. If there is another blockade, ministers have emergency plans to introduce petrol rationing – drawn up after the last protest – by limiting supplies to essential workers such as doctors, preventing the chaos caused by panic buying.
But in a speech to the annual TUC conference this week, Brown will raise longer-term solutions to cushion the British economy from oil shocks, including weaning the country off fossil fuels towards greener, renewable energy – which would also help slow down global warming.
A senior Treasury source said that Katrina had given ‘critical impetus’ to Brown’s thinking about the longer term: ‘We have got to do something so we are not so vulnerable to these shocks and in the longer term we are able to get things more stable.’
Yesterday the RAC, one of Britain’s leading motoring organisations, joined the debate by warning higher petrol prices were here to stay and motorists should start cycling more instead.
In a surprise intervention, it said one in five car journeys were under 1.5 miles and therefore unnecessary. ‘You could easily walk, cycle, take the bus without putting yourself at any great hardship,’ said Edmund King, executive director of the RAC Foundation.
…The long-term shift away from oil, and the knock-on benefits to climate change, has been identified by Brown as key priorities for his current spending review as the world nears the crunch point of peak oil production – when the amount of ‘black gold’ being extracted starts drying up. Experts say it could trigger a global recession as scarce oil becomes ever more expensive.
(11 September 2005)
Interesting that peak oil is mentioned in passing as an established fact.
UK: Secret plan to ration fuel on the forecourt
Ministers draw up crisis strategy to combat petrol protests as prices soar
Francis Elliott, Independent
Motorists face rationing at petrol stations under emergency plans that are being drawn up by ministers to combat this week’s fuel protests, The Independent on Sunday has learnt.
Ministers met secretly last week to finalise the Government’s response to blockades of Britain’s refineries threatened for Wednesday.
Petrol prices – which passed the £1-a-litre mark in the wake of Hurricane Katrina – are expected to remain at record highs in the coming weeks because of damaged refineries on the US Gulf Coast.
Soaring petrol prices are likely to add to growing demands for fuel tax cuts and further encourage militant hauliers and farmers into taking direct action in order to force the Government’s hand.
Planned measures to combat a successful blockade include rationing of supplies, limiting the hours during which petrol can be sold and reserving some filling stations for “priority users”. Leading hauliers were called in for a meeting with Department of Trade and Industry officials last week, at which they were warned that police have new powers to remove blockades.
(11 September 2005)
The New Prize: Alternative Fuels
Danny Hakim, NY Times
DETROIT – A week ago, Benjamin Kleber was spending $3.39 a gallon at a gasoline station in Maryland when he noticed an obscure decal on his minivan.
“It’s this sticker about the size of a business card that’s stuck on the side of the gas flap that I never really paid attention to,” said Mr. Kleber, a 25-year-old electrical engineer for a government contractor. The decal said he could be using E85, a fuel cocktail that consists mostly of grain alcohol, or corn-based ethanol, with a splash of gasoline.
Production of ethanol fuel, much of it blended in small doses with regular gasoline, has doubled to more than three billion gallons in the last half decade. This year, propelled by rising gasoline prices, E85 is finding new life as an alternative fuel.
It remains hard to find, to say the least, in part because many oil companies have no desire to put a competing product in stations that carry their banner. But the number of stations offering E85 has nearly doubled since January, to more than 460, mostly in corn-growing states like Minnesota. And because of incentives included in recently passed energy legislation, and the fact that E85 is now about 40 to 50 cents cheaper than a gallon of regular gasoline, E85 backers are expecting the surge to accelerate.
…
Adrian Moses, a 55-year-old computer consultant in a suburb of St. Paul, said he had for several years used E85 to fuel his Ford Ranger pickup. “I do it because it’s the right thing, not because of economics,” he said, adding that it was “cleaner for the environment” and “made here in the Midwest, not in the Middle East.”
Now, here are some of the catches.
For starters, it’s hard to find the stuff. There are roughly 180,000 gasoline stations nationwide and fewer than 500 with E85. And ethanol can take us only so far. Huge tracts of farmland would have to be converted to corn production to provide enough fuel for significant portions of the American automobile fleet.
A recent study published in the journal BioScience forecast that for all cars and trucks to run on ethanol by 2048, “virtually the entire country, with the exception of cities, would be covered with corn plantations.” Using more farmland to produce ethanol would also drive up food prices. And E85 cannot be transported through gasoline pipelines, because it sucks up grime and water.
E85 is also less energy-dense than gasoline, so a driver goes a bit less far on a gallon.
…On the upside, ethanol is a domestic resource and most studies indicate that it reduces emissions of both smog-forming pollutants and global warming gases, the amount depending on how it is produced. An emerging process of creating ethanol from agricultural waste like cereal straw has the potential for far greater emissions reductions and more efficient land use.
This so-called cellulose ethanol has much greater potential than current ethanol, said Michael Wang, a researcher at the Center for Transportation Research at the Argonne National Laboratory, but, he added, “the technology has not arrived.”
(9 September 2005)
Recommended by Geoff Dabelko at Gristmill. The NY Times went into more depth than the usual gee-wow ethanol article; however, they didn’t cover the crucial subject of Energy Returned On Energy Invested (EROEI), nor did they mention the recent pessimistic analysis of ethanol by a UC Berkeley scientist.
Related articles:
Fuel’s gold – Turning corn into ethanol may not be worth it
The Tragic Abuse of Corn
-BA
Demand for Fuel Seems to Be Falling
James F. Peltz and Claire Hoffman, LA Times
Drivers are tired of high prices, some analysts say. A spot check shows many car owners are conserving or shifting to public transportation.
————
Hello, tipping point? Drivers’ demand for gasoline appears to have downshifted since Hurricane Katrina sent pump prices soaring above $3 a gallon across much of the nation.
Katrina initially sparked panic buying, sporadic shortages and televised images of long lines at some service stations. Then consumers pulled back as prices hit record highs, analysts said Thursday.
“America topped its tanks, and then the knee-jerk reaction was, ‘I’m not going to pay $3.19 a gallon for gas,’ ” said Tom Kloza, chief analyst at Oil Price Information Service, an energy research firm.
Demand was likely to taper off anyway because the Labor Day weekend marks the unofficial end of the busy summer driving season. In addition, gas prices already were at or near record levels even before Katrina hit Aug. 29.
In the aftermath of Katrina, at least one gasoline seller reported a 15% drop in sales over Labor Day weekend compared with a year earlier, Kloza said.
A random sampling of motorists and other commuters in Southern California confirmed that many were conserving or taking public transportation instead of using their cars.
(9 September 2005)
EU demands more and cheaper oil
Sumeet Desai and Paul Carrel, Reuters
MANCHESTER – European ministers urged the oil-producing countries on Saturday to boost supplies rapidly to combat soaring fuel bills and told oil companies to reinvest more of their vast profits in exploration and refining.
After chairing a meeting of European Union finance ministers in England, British finance minister Gordon Brown called on OPEC states to raise production by half a million barrels per day ahead of its September 19 meeting.
“This global problem needs global solutions,” Brown said, highlighting estimates that, beyond the immediate threat to economic growth from world oil prices of nearly $70 a barrel, oil demand could rise 50 percent in the next 20 years.
The ministers issued a statement saying they also wanted oil companies to increase investment in oil exploration, production and refining capacity as well as alternative energy services.
“All over Europe, energy companies are making very high profits and it may be reasonable to recycle part of them” to help poor people whose bills for light and heating are soaring, Italian Economy Minister Domenico Siniscalco added.
(10 September 2005)
Interview with Schlumberger CEO Andrew Gould
JPT Magazine via Schlumberger Newsroom
Schlumberger Chief Executive Andrew Gould is Chairman of the 2005 Offshore Europe (OE) Exhibition and Conference, to be held in Aberdeen, September 6-9. One of the energy industry’s largest events, OE will feature technical sessions and exhibits highlighting new technologies for both mature and frontier regions, best business practices, and state-of-the-art “real-time” digital know how.
Mr. Gould spoke with JPT Editor John Donnelly recently…
Donnelly: The conference’s plenary and technical sessions will address several contemporary challenges—increasing productivity from mature basins, going into deeper waters, managing demographics issues. Has the industry met such formidable challenges seemingly happening all at once before?
Gould: In terms of facing formidable challenges, I do not think this is any different from the mid-1970s—the challenges are just different. In the mid-’70s, going offshore in the North Sea was a huge challenge. Developing Alaska was a huge challenge, and developing Cantarell in Mexico was a huge challenge. At the same time, there was an enormous geographic diversification of the industry away from North America.
Now, it is no longer just offshore, it is deepwater offshore. And it is no longer just geographical spread, it is the whole business of investing in natural gas infrastructure overseas. There is also the new challenge, which was not so key in the 1970s, of increasing recovery factors in mature areas to sustain plateau production. But on the scale of the challenge, I do not think it is that much different from the 1970s.
Donnelly: What is the biggest challenge facing the industry?
Gould: The biggest issue the industry will face in the next four or five years is people. There is a definite shortage in the availability of sufficient skilled specialists in all of the engineering practices that the industry uses to face a rapid ramp-up in activity. The industry does not really understand the scale of that problem yet, and I do not think any of us have a magic solution for it. It is a problem that will likely be with us for a number of years.
Donnelly: How does the industry not fully understand the problem?
Gould: If I can draw a very broad comparison, the future of the oil and gas industry is really no longer in the United States or in the North Sea. The place where it has a really huge future is the Middle East, China, Russia, and India. It is a little like when the car industry migrated to Japan. Eventually, the car industry, once the Japanese mastered it, came back to the U.S. in the form of Japanese companies. The industry does not quite understand that it is not going to meet the human challenge unless it employs human capital from other parts of the world, and that human capital is likely to go first to companies that have their own domestic identities.
…Donnelly: Oil prices are much higher now than they were at the last OE conference, in 2003. Do you expect an ebullient mood at the conference among attendees, or do you think the industry fears this is just an upward swing in a still-cyclical industry?
Gould: It would be astonishing if people were not in a lot better mood than they were in 2003. But what the whole industry seems to lack at the moment is confidence that this period of increased activity is actually going to last for quite a long time. This may well be a little bit driven by the current situation in the market. I have been on record for some time now saying that, provided there is no drop in demand, the state of supply is such that this cycle will be fairly long. The only thing that would cut it off prematurely would be an actual drop in demand and therefore an economic recession. The business has not stopped being cyclical. But is this a much longer up cycle than 1997 or 2001? In my opinion, yes, because until you start building reasonable surplus production capacity, you are unlikely to see a huge drop in the oil price.
Donnelly: Some operators appear reluctant to adjust their development programs to higher-priced oil.
Gould: Yes, and I can understand that because they have to look at this over 25 years. To bet that oil prices will stay where they are for that amount of time takes quite a bit of courage. They also have the question of where to put the money, because a lot of the domains to which they currently have access are deep offshore, and planning a new deepwater development does not happen overnight. So even though the oil price has been high for a year, I do not think we should be surprised that the major operators haven’t vastly increased their spending yet.
(July 2005 issue of JPT)
