Click on the headline (link) for the full text.
Many more articles are available through the Energy Bulletin homepage
Indonesia clashes over fuel hike
BBC
Indonesian police have clashed with demonstrators angry that fuel prices are about to rise sharply. The government is set to announce new prices late on Friday as it slashes subsidies to balance its budget.
Police reportedly fired tear gas at around 200 students in Jakarta who were throwing stones and burning tyres.
Protests took place in at least 10 cities on Friday, involving thousands of people facing a rise in kerosene and petrol prices of about 60%. They follow widespread demonstrations in at least eight cities on Thursday.
(30 September 2005)
Many other similar reports in the media, including this one from AP: Indonesian Students, Police Clash Over Gas.
Milk price increase just the beginning, ACA warns
ABC (Australia)
The price of most groceries and some services will rise because of pressures caused by high world oil prices, the Australian Consumers Association (ACA) has warned. Dairy Farmers has already announced that high fuel prices are behind its decision to raise the price of milk and other products from next week.
The company says its packaging and distribution costs have increased significantly. It says from Monday, prices for milk, cheese, yoghurt and fruit juice will rise by between 4 and 8 per cent.
Deputy chief executive of the Consumers Association Norm Crothers says the price increase by Dairy Farmers may be just the beginning. “The cost of fuel is going to go into the cost of just about every product that we buy and some services, so I think the concern we have is that it will flow through to everything,” he said.
TD Securities economist Stephen Koukoulas told the ABC’s AM program that a jump in the price of a basic commodity is a worrying sign. “It’s significant in terms of the impact of these high petrol prices that we have been seeing for the last five or six months, that not only are we as consumers having to pay that extra money to fill up our car with petrol but now it seems the cost of doing business, the cost of transportation is also going up,” he said.
“If this is starting to impact on milk prices and other parts of the economy, it actually spells some concern for inflation.”
See also the story on milk/dairy price hikes, ALP calls for price gouging enquiry,, and farm fertiliser supplier Incitec Pivot announcing another price rise (20%+ in 12 months).
(30 September 2005)
So Mr Koukoulas divines that if five years of rising oil prices somehow mysteriously raise food prices, this may impact on inflation? Can we pay these people enough for such insights! -LJ
India looks east for gas
Siddharth Srivastava, Asia Times
NEW DELHI – With the Iran-Pakistan-India (IPI) gas pipeline caught in the US crossfire over Iran, India’s quest for energy security continues in other fronts, with progress being made in the proposed Myanmar-Bangladesh-India (MBI) gas pipeline project.
As US interests in these regions is low at the moment, India has been talking in earnest with the two nations to iron out differences on the project. Some analysts predict an early breakthrough, with the project possibly moving onto the implementation stage quicker than expected.
(28 September 2005)
American Airlines Cancels Flights on Fuel Costs
Associate Press
FORT WORTH, Texas – American Airlines, the nation’s largest passenger air carrier, announced Friday that it was canceling 15 round trips temporarily in markets it serves from its two largest hubs, Chicago O’Hare and Dallas-Fort Worth international airports.
The cutbacks will go into effect Wednesday and continue through Oct. 29, when American said it will evaluate the jet fuel market and decide whether to restore the flights.
“The skyrocketing price of jet fuel has forced American Airlines to take the regretful step,” according to a statement issued by the Fort Worth-based airline, a unit of AMR Corp.
Jet fuel costs have risen 39 percent in the past month. That alone prompted the decision, said Dan Garton, American executive vice president. American said jet fuel cost 91 percent more Thursday than in September 2004, while crude oil prices had increased just half of that amount, 45 percent, in the same period.
(30 September 2005)
Reader AD adds:
I find the markets to be quite amazing: the share price of a contracting company, which may soon be a “Dead Dinosaur” like the fuel it requires for its very existence, goes up due to reduced services and cutbacks. I think it may be worth a small “short” bet.
Essential oil
William Keegan, Guardian
Economists are surprisingly sanguine about the impact of higher oil prices – but only in the short term.
————-
All conversations at the annual meetings of the World Bank and the International Monetary Fund in Washington last weekend led to the subject of oil – and many of those conversations had started there.
Whether ministers, officials, bankers and other observers were speaking on or off the record – or in some cases, it has to be said, off the wall – the big issue was how the higher oil price would affect the world economy in the short and longer terms. Graphically illustrating the subject were the reports at one stage during last week’s exodus of traffic from the coastal towns of Texas and Louisiana that “Houston has run out of gas”.
…This year’s rises in oil prices, and the hurricanes, have undoubtedly affected oil supplies and industrial production in the US, and third-quarter growth is bound to be well below previous market assumptions. But, other things being equal, official sources in the US are privately sanguine about the medium-term outlook for growth. They do not expect another major rise in the price and are even suggesting there ought to be some easing.
The bad news is that, given problems with refining capacity and mismatches in the quality of “crudes” (as they refer to the different types of oil), the US – which is already running a balance of payments deficit approaching 7% of gross domestic product – will have to import even more oil to fill the gap.
Despite this, and notwithstanding widespread worries about the imbalances in the world economy and the well-founded belief that the US cannot go on for ever increasing its trade deficit, there was remarkable confidence in the short term about the US’s ability to go on attracting foreign funds to finance its deficit.
…But the message I picked up in Washington was that, for all the horrific scenarios that can be constructed around the US deficit, there could be one more lease of life before some almighty crisis hits the international monetary system.
However, even the short-term optimists about the US economy are very concerned about the longer term. The big concern is that, with China and India now major consumers of oil, and not showing obvious signs of significant deceleration in their rates of economic growth, the oil price will stay stubbornly high after an expected dip and even go much higher.
The problem worrying officials at the highest level is the gap between known oil resources in the ground (or under the sea) and the rate of extraction. Given the obvious time lags between investment in new extraction facilities and delivery to those great tankers, a serious gap in supply can be envisaged over the next five years.
(29 September 2005)
Time for a tax shift
Clark Williams-Derry, Gristmill
Not so long ago, it seemed like gas at $2.33 a gallon cost an arm and a leg; now it seems like a bargain. And not surprisingly, high prices at the pump have spawned a backlash against fuel taxes across the U.S. — and have added fuel, so to speak, to the campaign to repeal Washington state’s most recent gas tax hike.
As a general matter, I think responding to high gas prices by rolling back taxes is misguided.
… even though I tend to favor higher gas taxes, one thing is clear enough: Gas taxes are regressive. Like high gas prices, they hurt the poor the most. Which, if you care about fairness and equity in the tax system, is a bad thing.
The question is — as a matter of policy, what do you do about that? Do you forego a gas tax hike on equity grounds — and just accept extra gas consumption as a consequence? Do you raise taxes, and just accept the resulting inequities?
Or do you do something smarter?
To me, the smartest strategy, both for discouraging gas consumption and making the tax system fairer, is tax shifting — that is, raising taxes on gas, but lowering other regressive taxes, such as state sales taxes.
(29 September 2005)
High time for an energy fix
Oliver Morgan, The Observer
Katrina and Rita are the latest crises to show us that we need new sources of energy – soon.
————
From the Prime Minister’s lips in Brighton to the howls of pain from motorists; and from the Gulf of Mexico to the polar icecap, the signs are converging: decisions on what the world does for energy are overdue.
Last week several events brought the problem into sharp focus. In the UK, Energy Minister Malcolm Wicks warned there may be power cuts this winter due to a shortage of gas. Then Tony Blair announced a policy review that would look at all-new nuclear power stations. All this in
a week that started with the London oil market remaining open at the weekend to deal with the impact of Hurricane Rita, while petrol prices
edged up once again.
Meanwhile, figures from the US National Snow and Data Centre showed arctic sea ice coverage 20 per cent below the annual average, the latest evidence that we are reaching a ‘tipping point’ in global
warming. Plus, of course, Katrina and Rita brought the effects of warming into the oil and gas backyard of the US.
Tom Burke, environmental consultant and a former government adviser, says: ‘We are beginning to see people understand that this is a real problem but I don’t think governments have a clue about the speed or urgency of the issue.’
(2 October 2005)
Long round-up of energy developments.
We can do this the nice way … or the nasty way
Larry Elliott, The Guardian
Two hurricanes in a month, petrol prices at $3 a gallon, a current account deficit of enormous proportions, a housing market that defies gravity: little wonder that the mood in the United States is a little edgy.
The International Monetary Fund made it clear last week that it saw the world’s largest economy as an accident waiting to happen. The US could not continue to live beyond its means indefinitely, and there were only two ways to deal with the unsustainable imbalances in the global economy: the nice way or the nasty way.
The nice way, according to simulations by IMF staff, would involve a gradual slowdown in the pace of consumption in the US, accompanied by slightly higher real interest rates and a modest 15% devaluation in the dollar over a few years.
…The nasty way involves a much sharper contraction in US activity. Under this scenario, the overseas investors who have been funding the American trade deficit by buying US assets decide they have had enough. The result is a large and sudden devaluation of the dollar, which adds to inflationary pressure and forces the Federal Reserve to raise short-term interest rates aggressively. Protectionist pressures mount and this, together with the big appreciation of China’s currency, leads to much slower growth. With both the world’s two big growth engines – the US and China – faltering, Europe and Japan also suffer. Financial markets suffer hefty losses, adding to the gloom.
(27 September 2005)
Michel Ruppert cites this article and adds:
Look, I hate to say it, but I need to say it.
We told you so.
This article sums up the actualization of almost everything we have been writing and warning about for more than a year. I am not happy to have been right. No one at FTW is happy to have been right. There is more really bad oil news coming but even I can only take so much in one day. It can wait.
-BA
Out of Gas
Editorial, The Nation
During George W. Bush’s first months in office in 2001, before 9/11 swept all else aside, his top policy objective was to overcome the ongoing energy crisis, triggered by oil shortages, high gasoline prices and an overtaxed infrastructure. “The nation has got a real problem when it comes to energy,” he declared in March of that year. “We need more sources of energy.” To tackle this problem, Bush ordered Vice President Cheney to devise a new national energy strategy. The resulting blueprint, announced with great fanfare on May 17, 2001, called for a host of initiatives aimed at boosting the nation’s energy supply. Today this strategy, like so much else touched by Hurricane Katrina, lies in ruins.
…These flaws derive from the driving thrust of the Cheney plan: to perpetuate the nation’s addiction to cheap petroleum for another few decades, thereby preserving the power and profits of Big Oil (from which so many of the Bushies emerged) and postponing the costly and disruptive–but ultimately inevitable–transition to a post-petroleum energy system. The Cheney plan paid lip service to the need for conservation, but the emphasis was on increasing the supply rather than curbing the demand.
In pursuing its goals, however, the White House faced a monumental dilemma: The nation’s appetite for cheap petroleum keeps growing, as more and more SUVs hit the road, while the amount available from domestic fields is in decline. To overcome this challenge, Cheney came up with two basic solutions: (1) boost output from offshore fields in America’s coastal waters, most notably the Gulf of Mexico, and (2) increase imports from key foreign suppliers, particularly those in the Middle East, Africa and the Caspian Sea region. Progress in the first arena would be achieved through tax breaks, subsidies and environmental waivers for Big Oil; progress in the second would be promoted through diplomacy, economic incentives and–though this was not publicly acknowledged–“regime change.”
(29 September 2005)
Running on Fumes
Sasha Abramsky, The Nation
More than 100 miles north of Sacramento, the flat farmlands of California’s Central Valley give way to the forested mountains and breathtaking grasslands surrounding the 14,000-foot Mount Shasta. It is a remote landscape–more akin to Wyoming’s Big Sky Country than to the rest of California–dominated by the glacier-covered Shasta and the menacing clouds that frequently cluster around its peak; and, when the tourists and the second-homers from the Bay Area and elsewhere in the region are factored out, it is a poor landscape. It is also a place where distance is an irreducible fact of daily life. Because so many residents rely on cars to get between the far-flung towns, they are particularly vulnerable to oil price fluctuations, and many are at risk of economic catastrophe as gas prices at the pump soar.
…While much ink has been spilled over the potential problems suburban and exurban commuters would face if the era of cheap oil really sputtered to a close, the most immediate victims are likely to be the long-distance commuters in places like Siskiyou County, too remote even to be considered exurbs. A perfect storm of economic changes could, quite simply, render towns like McCloud and Yreka unlivable for working-class residents, administering a coup de grâce to a region already bedeviled by blue-collar job loss. In the same way that the end of ready pickings from the gold fields created depopulated mining ghost towns throughout much of the West, so the series of oil price spikes may profoundly alter the Western landscape, as well as many other remote, car-dependent regions of the country.
With only a rudimentary public transport infrastructure, centered on a handful of rush-hour bus routes to and from Yreka, and with many workers now having to commute to far-off service-sector workplaces a long way from the nation’s major oil-distribution networks, these towns are being hammered by some of the highest gas prices in the nation.
…That urban and suburban communities–with their affluent professional classes, increasing numbers of status-enhancing (and expensive) hybrid cars and at least partial accessibility to public transit systems–can absorb higher energy prices is not hard to believe. That residents of low-income areas like Siskiyou County could afford to eat the extra $5, $10, then $15, $20, $30 and $40 a week they had to spend on gas this year simply to drive to low-paying jobs in towns like Yreka and Redding, and that they can continue to do so indefinitely, is harder to believe. Indeed, the very fact that some commentators, such as the Cato Institute’s Jerry Taylor, so glibly assume (or, at least, assumed pre-Katrina) that an oil price shock can be painlessly absorbed shows just how invisible the country’s poor have become to much of its pundit class.
These are people who are continually juggling rent and food and medical bills, who tap their resources days before the start of a new pay cycle and routinely resort to credit card debt and other borrowing to weather the lean times. How, then, can the volatile oil market not be hurting them? People like Rosie Kerr who are already spending a disproportionate amount of their income on gas face a burden far in excess of that experienced by middle-class consumers, who spend only 3 to 5 percent of their money on fuel. Moreover, in regions like Siskiyou County, where everything has to be delivered over long distances, as gas prices soar so, too, does the cost of other goods.
…In a nutshell, Kerr’s experience shows up the fallacy of the laissez-faire notion that free-floating prices alone are a fair way to regulate consumption of a scarce commodity like gasoline. While higher prices might stop some tourists from driving up to Castle Crags and might curtail the discretionary gas use of the middle classes, as long as people live in regions like Siskiyou County and commute to far-away jobs in places that are hard, if not impossible, to reach by public transportation, these people are going to need gas. And as long as they need gas simply to continue working, they are going to do whatever it takes–short-changing themselves on food and medicine, charging the gas on credit cards, deferring car repairs or upgrades to better, more fuel-efficient vehicles–to keep their tanks full. After all, entire communities and lifestyles and job choices and consumption patterns have been crafted over the better part of a century on the basis of cheap and plentiful gasoline. Suddenly change the equation without offering any government relief and, even though gas remains cheaper per gallon than in much of the rest of the world, the relative difference will prove disastrous.
(October 17, 2005 issue)
Long article. Important subject. Higher gas prices may be the factor that turns the Red States around. -BA
Energy prices hitting home
Even before storms’ impact, winter, N. Texans see bills jump
Angela Shah, Dallas Morning News
In ways big and small, record-high energy prices are biting into North Texans’ wallets.
East Dallas resident Joe Gomez says he quit his job at SBC because he could no longer afford his 52-mile round-trip commute to Plano.
In Cedar Hill, where Sherri Doucette proudly bought her first home in July, she’s had to slash expenses to pay for a fuel bill that’s doubled from last year to $300 a month.
She’s cut back on watering her lawn and totes brown-bag lunches to work. Her kids no longer receive an allowance.
Indeed, finding ways to pay for higher energy costs dominates the everyday decisions of daily life in North Texas and nationwide.
(30 September 2005)
Submitter WT nominates the following quote from the article as Quote of the Year:
In Cedar Hill, where Sherri Doucette proudly bought her first home in July, she’s had to slash expenses to pay for a fuel bill that’s doubled from last year to $300 a month.
…”If I would’ve known how high gas prices would rise, I would’ve considered moving closer to work,” she said.
Alaskans want bigger piece of oil boom
Yereth Rosen, Christian Science Monitor
Dissatisfied with the state’s share of revenues, some push to cut tax breaks and force construction of a pipeline.
————
ANCHORAGE, ALASKA – When Rosemary Ahtuagaruak began blaming an alarming outbreak of asthma cases on oil-field air pollution a few years ago, local elders in her Inupiat Eskimo village cautioned her against antagonizing the oil industry.
They did not want to revert to the pre-oil days of dire poverty when families lacked even basic furniture, she said at a recent conference here. “If you continue to speak the way you do, we’ll not eat on tables again,” she recalls one elder told her. But Ms. Ahtuagaruak, a onetime health aide later elected mayor of her village, Nuiqsut, continued her critiques.
As oil prices – and oil-company profits – soar and development spreads to previously protected areas, disgruntled Alaskans are becoming bolder in their critiques of the industry. They are spread from the Arctic coast, where Inupiat residents have used oil revenues to move into relative middle-class comfort, to the capitol in Juneau, where oil earnings account for at least 4 of 5 dollars going into the state’s general revenue fund, and everywhere in-between. Their charge: the industry exploits the state.
“Alaska, in fairness, ought to get every penny over $30 a barrel,” one man complained during a recent Alaska Public Radio Network call-in show. “Why can’t we be more like the sheiks or the princes of Saudi Arabia?”
(29 September 2005)
A recurrent theme as energy prices rise – inhabitants of lands with NG and oil demanding more control of the oil revenues. Other examples: Venezuela, Boliva, Ecuador. -BA
Son of Fallen Activist on U.S. “Price of Oil” Tour
Madhuri Mohindar, Inter Press Service via Common Dreams
NEW YORK – “In my book, I imagine my father’s last day before his execution. I went into his head, reconstructing it from his letters and poems from prison. He was always convincing me to write, and now I understand why. It’s because what you write is what you leave behind.”
Ken Wiwa, son of executed Nigerian environmentalist and human rights activist Ken Saro-Wiwa, then began to read from “In the Shadow of a Saint: A Son’s Journey to Understand His Father’s Legacy”.
Wiwa was speaking as part of a nine-city tour launched by the U.S.-based advocacy group Oil Change International, Amnesty International and others to commemorate the 10th anniversary of Ken Saro-Wiwa’s death.
Ending next month, it also aims to raise attention about the true “Price of Oil” in terms of climate change, oil-fuelled armed conflicts and the human rights of local communities targeted by the extractive industries.
“Ken sparked a global oil resistance movement, inspiring communities in countries as far apart as Burma and Ecuador,” said Stephanie Alston, coordinator for “The Price of Oil” tour. “We want to honour him and use his story as a legend that exemplifies just how dirty oil is. These tours are a way to inspire people to take action.”
Even as the tour picked up steam, news emerged that another oil pumping station in the Niger Delta region had been closed last week due to threats by militia groups. The violence of the current struggle highlights the tragedy of Saro-Wiwa’s 1995 execution under the military dictatorship of Gen. Sani Abacha, activists say.
(30 September 2005)
Iran takes over Pipelineistan
Pepe Escobar, Alexanders G&O
The black chador-clad secretaries behind rows of flat computer monitors at the Petroleum Ministry building in central Tehran are all smiles. Not to mention their bosses.
No wonder. According to the ministry’s latest estimates in August, Iran will export at least $ 60 bn in oil in 2005 — more than $ 10 bn more than the June estimate. And with oil hovering about $ 70 a barrel, it could be even more.
Internal turbulence, though, was the norm during the first days of the presidency of Mahmud Ahmadinejad. His appointed oil minister, close friend, tea and carpet trader and former acting mayor of Tehran, Ali Saeedlou, was rejected at parliamentary hearings, shown nationwide on live TV.
Ahmadinejad had pledged to rid the country of what he called “oil mafias” and vowed to better distribute Iran’s oil wealth. So he appointed an outsider, Saeedlou — who was revealed to be too much of an outsider: he got his geology degree only in 2003 from one Hartford University.
Saeedlou was expected to “purge” the state-run National Iranian Oil Co (NIOC), the fourth-largest oil company in the world, but somewhat inefficient and riddled with bureaucracy.
After Saeedlou’s rejection, Ahmadinejad hinted he would be the acting oil minister, only to nominate a caretaker, Karem Vaziri-Hamaneh — a former deputy oil minister, member of the NIOC board and thus an industry insider all over again. Ahmadinejad has up to three months to come up with another name to be ratified by the Majlis (parliament).
(5 September 2005)
