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Summary Notes from the Forum: Saudi Arabian Oil Facilities: The Achilles Heel of the Western Economy
Walter Derzko, Smart Economy
Today the Jamestown Foundation, presented a Forum in Washington , entitled: Saudi Arabian Oil Facilities: The Achilles Heel of the Western Economy
Three distinguished speakers presented some thought-provoking ideas:
1) Mr. Michael Scheuer, Former Chief of the bin Laden Unit, CIA’s Counterterrorist Center on Saudi Arabia’s Islamist Insurgency
2) Mr. Stephen Ulph, Editor, Terrorism Focus on The Global Implications of Large-Scale Attacks on Saudi Oil Facilities
3) Dr. John C.K. Daly, International Correspondent, UPI
Oleg Ivanov, who is an intern at the U.S.- Ukraine Foundation in Washington, was good enough to take detailed notes of the proceedings, and gave his permission for me to post his summary on the Smart Economy Blog.
(16 Mar 2006)
OPEC `Doing Enough’ to Meet Demand as States Miss Output Quotas
Bloomberg
Saudi Arabia and Qatar, which together account for a third of OPEC’s output, said members are doing enough to expand oil production capacity even as four states in the exporters group have failed to meet their quotas since January.
Saudi Oil minister Ali al-Naimi said oil producers should study future demand forecasts before boosting output capacity beyond what’s already planned. “Global growth may not continue at this level for many years,” he said in a speech today at an oil conference in Amman, Jordan.
The kingdom opened its Haradh expansion facility on March 22 which increased Saudi’s crude output capacity by 2.7 percent to 11.3 million barrels a day. The facility is the latest addition in a five-year, $14 billion program to boost the country’s production capacity almost 14 percent to 12.5 million barrels a day in 2009.
The International Energy Agency last week lowered its estimate for 2006 crude demand by 200,000 barrels a day to 84.83 million barrels a day, reducing this year’s growth to 1.5 percent. OPEC pumped 170,000 more barrels a day in April, increasing its output to 30.04 million barrels a day, the IEA said.
Iran, Venezuela, Nigeria and Indonesia, which together account for almost 40 percent of OPEC’s target output ceiling, fell short of meeting their daily quotas by 1.55 million barrels last month, according to Bloomberg data.
OPEC states “will create huge capacity in just three or four years and it will lower prices, but my concern is that still we don’t see any guarantee that someone will use this spare capacity,” Qatar’s Oil Minister Abdullah bin Hamad al-Attiyah said in an interview in Jordan today.
(14 Mar 2006)
It’s still unclear whether or not OPEC, which has been in slight decline since September 2005, will increase output this month, especially given the mixed messages in this article. -AF
Chavez sees oil at $100 a barrel if U.S. hits Iran
Reuters
Venezuelan President Hugo Chavez said on Sunday that if the United States attacked Iran in its dispute with Tehran over nuclear technology, the price of oil could soar to triple figures.
Visiting London following an EU-Latin American summit in Vienna at the weekend, Chavez, leader of the world’s fifth largest oil exporter, said the Iranians would have no choice but to respond to a U.S. assault by cutting oil production.
“If the United States attacks Iran … oil could reach $100 a barrel or more,” Chavez told a meeting hosted by London’s left-wing mayor Ken Livingstone. “The English middle classes would have to stop using their cars.”
(14 Mar 2006)
As oil prices go up, companies struggle to contain their costs
Steven Mufson, Washington Post
…In many U.S. corporate boardrooms, strategists are taking another look at their assumptions about oil prices and trying to figure out how they will affect business. The price of petroleum can make a significant difference in a company’s profits.
Last fall, the jump in oil prices seemed more like a blip. Temporary factors, such as the hurricanes in the Gulf of Mexico, seemed to be the main culprits. But nine months later, persistently high prices are changing forecasts and assumptions about future prices.
“Most people have been disbelieving of this increase most of the way,” said Stephen S. Roach, chief economist of Morgan Stanley & Co. “In the last six to nine months, there certainly has been some consensus on high energy prices. As people become convinced of this, they move to change their assumptions.”
That could mean passing along price increases to consumers, changing capital spending plans and altering the way businesses are run.
American Airlines, which uses more oil every year than the Republic of Ireland, has asked employees for ideas about how to cut consumption. Courtney Wallace, spokesman for American Airlines’ parent, AMR Corp., said a variety of innovations had saved the company $110 million over the past 18 months. Among the bigger ideas was using a single engine when a jet taxis, to save about $8 million a year. Now the company is installing “winglets” on the wings of its Boeing 737 jets that will reduce fuel consumption and help takeoff performance.
A lot is at stake for American Airlines. A 1-cent increase in the price of a gallon of jet fuel translates into an additional $33 million in annual costs, the company said.
(11 May 2006)
Suggested by David Room of Energy Preparedness.
Mayors sound alarm on rising fuel costs, energy crisis
Rhonda Spears Bell, U.S. Newswire (press release)
With record-level gas prices and rising fuel costs in America, The United States Conference of Mayors (USCM), led by Conference President Long Beach Mayor Beverly O’Neill and Chicago Mayor Richard M. Daley, hosted an urgent National Summit on Energy and the Environment on May 10 to 11 in Chicago to sound a national alarm on the country’s energy/environmental challenges and to stress the importance of energy/environmental conservation. Approximately 35 mayors joined with industry experts and the private sector to discuss a broad range of topics including air quality, climate change, alternative energy sources, alternative vehicles, public transit and green housing and buildings.
“Mayors are very concerned about the recent spike in fuel and energy costs and the financial burden it places on American citizens and their families. We know that aggressive action is necessary to turn this tide, and we are taking the lead in addressing the nation’s energy challenges to reduce our dependency on foreign oil. We can not wait on the federal government; we must do what mayors do best and act now,” said Conference President Beverly O’Neill.
…Already, mayors have implemented innovative programs in their cities that provide short-term solutions to energy dependence, and released a best practice guide that outlines these programs at the Summit. Numerous cities like Chicago, Ill., Austin, Texas, Los Angeles, Calif. and Charlotte, N.C., contributed to the guide that illustrates specifically how mayors are dealing with this crisis on a local level.
Mayor Daley underscored the importance of the best practice guide saying, “There are things that mayors can do to help our constituents deal with the energy crisis. And that’s why we’re having this conference – to share ideas on how we can conserve energy and encourage the development of new forms of energy.”
During the Summit, the mayors also pledged to develop an Energy/Environment Conservation Action Agenda to be issued at the Conference’s Annual Meeting in June in Las Vegas, Nev. Among the items to be included in the Action Agenda, the mayors are calling for the following six initial steps to help alleviate energy problems:
1) Invest more money in transportation options including public and mass transit, bike paths, etc.
2) Encourage at the local, state, and federal level the building or rehabilitation of more energy efficient buildings in both the public and private sector.
3) Encourage automakers to make more energy efficient cars as well as encouraging individuals to buy vehicles that are more energy efficient including alternative fuels, hybrids, and plug- in hybrids.
4) Encourage more investment in renewable and alternative energy through additional incentives.
5) Encourage more mixed-use development to allow people to have more walkable communities.
6) Encourage the public and private sector, as well as citizens, to do their part in conserving energy.
The following mayors participated [in the conference]…
The U.S. Conference of Mayors is the official nonpartisan organization of cities with populations of 30,000 or more.
(10 May 2006)
Oil Wealth Colors the U.S. Push for Democracy
Glenn Kessler, Washington Post
…With energy prices soaring, the administration’s campaign to spread democracy has taken a detour in some countries. Azerbaijan and neighboring Kazakhstan have the kinds of human rights records that usually would deny them high-level U.S. attention. But they also have vast oil and gas reserves — and are key players in a global scramble for energy against the Russians.
Vice President Cheney, for instance, blasted Russian commitment to democracy internally and on its borders when he made a swing through Europe and Central Asia this month. But one day later he was in Astana, the Kazakh capital, where he praised the country for the progress it has made since the fall of the Soviet Union — even though by all accounts its human rights record is worse than Russia’s.
Asked about Kazakhstan’s human rights record, Cheney expressed “admiration for all that’s been accomplished here in Kazakhstan.” The State Department’s annual human rights report has decried the rule of the longtime president, Nursultan Nazarbayev, saying dissent is suppressed, journalists harassed and power concentrated in the presidency.
Similarly, Secretary of State Condoleezza Rice last month warmly greeted Teodoro Obiang Nguema, the president of Equatorial Guinea, as a “good friend” in Washington, even though he was reelected with 97 percent of the vote in 2002 and a Senate investigation two years later found that he and his wife had accounts worth $13 million in the Riggs National Bank while most of his fellow citizens live on less than a dollar a day. Since offshore oil reserves were discovered in 1995, the country has become the third-largest oil exporter in sub-Saharan Africa and a major player in oil exploration.
(14 May 2006)
Related: Cheney’s Oily Interests – Kazakhstan (The Nation).
When two poor countries reclaimed oilfields, why did just one spark uproar?
George Monbiot, The Guardian
The outcry over Bolivia’s renationalisation and the silence over Chad’s betrays the hypocrisy of the critics
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Civilisation has a new enemy. He is a former coca grower called Evo Morales, who is currently the president of Bolivia. Yesterday he stood before the European parliament to explain why he had sent troops to regain control of his country’s gas and oil fields. Bolivia’s resources, he says, have been “looted by foreign companies”, and he is reclaiming them for the benefit of his people. Last week, he told the summit of Latin American and European leaders in Vienna that the corporations which have been extracting the country’s fossil fuels would not be compensated for these seizures.
You can probably guess how this has gone down. Tony Blair urged him to use his power responsibly, which is like Mark Oaten lecturing the Pope on sexual continence. Condoleezza Rice accused him of “demagoguery”. The Economist announced that Bolivia was “moving backwards”. The Times, in a marvellously haughty leader, called Morales “petulant”, “xenophobic” and “capricious”, and labelled his seizure of the gas fields “a gesture as childish as it is eye-catching”.
Never mind that the privatisation of Bolivia’s gas and oil in the 1990s was almost certainly illegal, as it took place without the consent of congress. Never mind that – until now – its natural wealth has only impoverished its people. Never mind that Morales had promised to regain national control of Bolivia’s natural resources before he became president, and that the policy has massive support among Bolivians. It can’t be long before Donald Rumsfeld calls him the new Hitler and Bush makes another speech about freedom and democracy being threatened by freedom and democracy.
This huffing and puffing is dressed up as concern for the people of Bolivia.
…Four days before Morales seized the gas fields – on May 1 – an even bigger expropriation took place in an even poorer country: the African republic of Chad. When the Chadian government reasserted control over its oil revenues, not only did it ensure that an intended lifeline for the poor really was removed from their reach, but it also brought the World Bank’s claims to be using oil as a social welfare programme crashing down in flames. So how did all those bold critics of Morales respond? They didn’t. The whole hypocritical horde of them looked the other way.
The World Bank decided to fund Chad’s massive oil scheme in 2000, after extracting a promise from the government of Idriss Deby – which has a terrible human rights record – that the profits would be used for the benefit of the country’s people. Deby’s administration passed a law allocating 85% of the government’s oil revenues to education, health and development, and placing 10% “in trust for future generations”. This, the bank said, amounted to “an unprecedented system of safeguards to ensure that these revenues would be used to finance development in Chad”.
Without the World Bank, the project could not have gone ahead.
(16 May 2006)
