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Brunei: Sleepy sultanate prepares for rude awakening after oil
Connie Levett, Sydney Morning Herald
BANDAR SERI BEGAWAN: The sultan with the largest palace in the world – 1788 rooms – has flagged the beginning of the end of the good times, recently asking his loyal subjects to tighten their belts a notch.
Then he gave civil servants a pay rise and sat down to dinner with 4000 of his closest friends to celebrate his 60th birthday.
Welcome to Brunei, which gets tagged as “sleepy and oil-rich”, in the same way Aceh gets tagged “troubled and resource-rich”.
Brunei’s 370,000 citizens live a tax-free existence, with free health and education and heavily subsidised petrol prices – 51 Brunei cents a litre (42 cents). The country has more cars than people, even though 80 per cent is still covered by forest.
But sleepy Brunei may soon have to wake up. The size of its oil and gas reserves is a state secret, but it is estimated they may last only another 20 years. In his birthday address on July 15, Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah warned that “an open attitude towards the diversification of our economy is important when it comes to ensuring the country’s survival”.
(5 Aug 2006)
A BBC view of natural gas supply
Heading Out, The Oil Drum
The BBC, on Channel 4, has just issued an analysis of oil and natural gas called Over a Barrel . Lest you feel impelled to search the dial, I should perhaps warn you ahead of time, that a favored expert is the good Dr Yergin.
And so their opinion seems to be that the oil peak will not be a concern until 2020, but that the gas situation is worse. Not because there is a real shortage, but rather, as has been discussed here, because of the behavior of Russia, who supplies an increasing portion of European gas.
A lot of the worry comes because Gazprom is spending more money on other investments, by a factor of three, rather than putting it into the development of their available fields, such as those in the Yamal Peninsula, Barents Sea ( mainly the Shtokman field) and in the Far East. Gazprom seems to be investing in distribution systems, and other businesses, and looking to foreign investors to help in field development.
(5 Aug 2006)
An Interview with Bill Powers
David Shvartsman, Finance Trends Matter
Today we’ll be talking with energy analyst and hedge fund manager Bill Powers, of Powers Asset Management. Bill has published two successful energy investment newsletters, Canadian Energy Viewpoint and US Energy Investor, and has been a contributor and guest to Financial Sense Online and the Financial Sense Newshour.
…A magazine cover supplied the contrary indicator that signaled an end to the downtrend in oil prices. The appearance of The Economist’s now famous “Drowning in Oil” issue was something that told him the timing was “absolutely right”. During our discussion, Powers compared The Economist’s March ’99 cover story to BusinessWeek’s infamous “Death of Equities” cover which preceded the bull market in stocks beginning in 1982.
Q: What do you make of the argument that higher oil prices will bring on more supply?
Right now, that’s one of the big conundrums that a lot of economists are struggling with.
Higher oil prices- what’s somewhat different from the traditional economic thinking, as far as this bull market goes- no matter how high prices go it’s not going to bring on a significant amount of production. That’s because we are at, or very close to, peak oil. We may have already passed it, or it may still be in front of us, but to meaningfully grow oil supplies from here will be extremely difficult and extremely expensive.
So we’re in a situation where, no matter how high prices go supply will not be increased significantly. The same is somewhat true of natural gas. When the industry worldwide is working flat out, there’s not much more that can be done that’s not already being done.
Q: I’m kind of amazed to see so many people applying this textbook economic principle to something in the ground that is an exhaustible resource. It’s almost as though they are thinking the resource won’t run out or will quickly replenish itself.
But you also have to remember that for a period of 24 years, from ’78 –2002, when oil prices went up, supply did come on. Basically that type of thinking is similar to the generals who are fighting the last war. It really is. When Churchill went on the offensive in WWII, he fired all of the generals and put young twenty-something lieutenants in charge.
Q: So who has the power to put these kind of influential thinkers in policy positions?
Well, there are some people who are clearly out front on this issue. Colin Campbell, Ken Deffayes, Jim Rogers has been out front on this issue, Matt Simmons, Julian Darley.
People like these and many others who have been sounding the alarms that this situation is happening and that it does deserve attention.
Q: So basically we’re looking at private individuals and industry veterans who have done their own thinking on the issue and are able to come out and stir the pot.
Yes, and unfortunately that’s the way society works.
(4 Aug 2006)
Feel The Beat: A Boschian Peak Oil Canvas
Bill Henderson, Counter Currents
…With billions now contemplating the imminent peak of oil production and the consequent peak of that spike of human population we are all a part of, each day brings a wider, deeper understanding of what life at the peak means. But the incredible energy, the pace and momentum, the creative/destructive power of this moment of maximum human power is water to fish underappreciated.
Feel the pulse; feel the beat. Never been anything more alive.
…Like the best party ever, at the peak there are more people feverishly talking and dancing, swiving and praying, prancing and doing deals, eating and drinking, people watching and acting bored, whooping it up or paralyzed with fear, loving and grooming, hating and fighting, catering and cleaning up, puking and peeing, in ecstasy or in contemplation, in pleasure or in pain, more people more alive than ever before and maybe more people at a party than there will ever be again.
Try talking oil depletion protocol or contraction-convergence or biodiversity protection or runaway global warming at this party. Might as well try reading a holy book in the crowd at an entertainment lollapalooza of Olympic proportion.
…The crescendo reminds me of Mickey Mouse as the sorcerer’s apprentice; our god made mouse, the personalization of our quest with fossil fuels. There is water everywhere. But what happens over the peak? Does Mickey drown? Does the castle just burst? Do the brooms run out of water? Is the sorcerer still in the building? Do we powerdown or come apart at the seams? Wake up tomorrow with a variety of hangovers?
I guess we’ll just have to wait and see. But right now we might as well enjoy the party – with as small a consumption footprint as possible. Watch out for the brooms and water, the neocons and WW3; know where the exits are and have a plan. But have fun enjoying the best party of a humantime.
(5 Aug 2006)
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