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ODAC News – July 15
The Oil Depletion Analysis Centre
Headlines and commentary from a peak-oil perspective.
(15 July 2007)
Oilwatch Monthly – July 2007
Rembrandt, The Oil Drum: Europe
The July edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.15 MB, 16 pp).
Latest developments:
1) Crude oil – Production of crude oil increased by 181,000 b/d from March to April. Total production in April was estimated at 73.40 million b/d by the Energy Information Administration (EIA), which is 850,000 b/d lower than all time high crude oil production of 74.25 million b/d reached in December 2005.
2) Total Liquids – Production of all Liquid fuels decreased by 560,000 barrels per day in May from April according to the latest figures of the International Energy Agency (IEA). Resulting in total world liquids production of 84.94 million b/d, which is 136,000 b/d higher year on year from May 2006 to May 2007 but 1.17 million b/d lower than all time maximum liquids production of 86.11 million b/d reached in July 2006. …
(15 July 2007)
When the wells dry up
Offshore production has spawned a high-tech cluster of British businesses with global ambitions
The Economist
“EVERYONE else in Britain hangs on what the Bank of England does with interest rates,” says one proud Aberdonian. “Up here, we don’t care about that. We’re much more interested in what OPEC does to the oil price.” An exaggeration maybe, but Aberdeen is the Houston of an offshore industry that has long made Britain a big oil and gas producer.
The petropounds coursing through the “Granite City” on the north-east coast of Scotland have turned Aberdeen into one of the most prosperous cities in Britain.
…Aberdeen is booming now thanks to high oil prices, but the future looks less rosy. Offshore output peaked eight years ago, when Britain was the world’s sixth-biggest producer of oil and gas; by 2006 it had become the 12th-biggest. The International Energy Agency said on July 10th that the drop in production had been steeper than expected. “There’ll be nothing here in 15 years’ time,” says one former offshore worker. “Oil’s been good to me, but I wouldn’t want my son going into the business.” The recent decision by Royal Dutch Shell to sell off several of its North Sea fields and to abandon the construction of a Ă‚ÂŁ25m headquarters in the city has added to local worries.
Yet even though oil and gas output is declining, the local businesses that have sprung up to support it have bright prospects. The North Sea was one of the earliest offshore oil basins to be developed. Many of the technologies needed to produce oil from underwater wells-especially in the difficult, gale-prone waters off the British coast-were developed in Scotland. Around 90% of oil-industry workers are employed not by the big international companies such as BP or Total that operate the fields but by local businesses.
(12 July 2007)
Sky-high oil prices signal higher rates
Heather Stewart, The Observer
Rocketing global oil prices could force the Bank of England to keep interest rates higher for longer to stamp out fears of spiralling inflation, analysts have warned.
After supply cuts from producers’ cartel Opec, and predictions that global energy demand will remain strong, the cost of a barrel of Brent Crude rose by well over $1 on Friday, to close at $73.93, near the all-time highs of last summer.
…In the long term, sky-high oil costs tend to depress household spending, slamming the brakes on economic growth; but first, they push up inflation. With the Bank keen to signal that it will keep a lid on rising prices, after inflation shot up to 3.1 per cent earlier this year, David Brown, chief European economist at Bear Stearns, agreed that hawkish rate-setters could now keep borrowing costs higher, for longer.
…A prolonged period of higher rates would raise the risk of a hard landing in the booming housing market. Economists at the Bank of America this weekend added their voices to predictions of a slowdown, saying homes were 20 per cent overvalued, and there was a one-in-five chance of a crash next year or in 2009.
…The impact of higher oil prices on inflation could be compounded by the rising costs of other commodities. World food prices, in particular, have shot up as farm land is gobbled up to grow subsidised biofuels, and droughts in Australia exacerbate shortages
(15 July 2007)
