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Chevron CEO Ponders Prices
Russell Gold and Ana Campoy, Wall Street Journal
O’Reilly Expects
High Energy Costs
For the Long Haul
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… WSJ: … What do you say to consumers who are paying $100 every time they pull into a gas station to fill up their pickup trucks?
Mr. O’Reilly: The price of crude is not determined by drivers in Texas. It is determined by the total demand for energy globally. Oil production in this country has been in decline, and we’re importing more and more oil. And we’re competing for that oil with the people who are importing it into other countries to satisfy their needs. That’s what’s impacting the price at the pump today.
… WSJ: In a 2005 speech, you said, “The time we could count on cheap oil and even cheaper natural gas is clearly ending.” That day, oil cost $47 a barrel. Today it’s close to $120. Any other predictions?
Mr. O’Reilly: Do I see the market going up significantly from where it is today? No, probably not. You are seeing the impact of the higher prices on demand. For example, here in the U.S., we’ve seen gasoline demand drop somewhat in the first quarter of the year. People are using gasoline more efficiently. Big trucks are selling much more slowly. Smaller, more efficient automobiles are selling [better]. The market is telling us that behavior change is required and I think we’re starting to see it, but we need to see more of it.
WSJ: What do you think is the likely range for oil prices?
Mr. O’Reilly: I can’t predict what the price is going to be. You would have to tell me what the economic situation in the world is going to be a year from now. I don’t think it is going to get back to those relatively low levels we experienced in the late ’90s and early 2000s.
WSJ: Ever?
Mr. O’Reilly: No.
(1 May 2008)
The Coal Crunch is Materializing
Luís de Sousa, The Oil Drum: Europe
… Putting it simply, China is importing a smaller volume of Coal than last year, but actually spending more money doing it. Especial attention should be taken to the prices per tonne, in the order of $60 – 70.
At the same time prices in Europe are well above $100 /tonne and Indonesian Coal is expected to reach a $150 /tonne, this kind of Coal was below $50 /tonne last year.
Apparently the international Coal market is getting tight enough for a country like China to feel the pinch. While Europe and North America are still able to import their usual share with prices triple of those last year, China isn’t. Volumes available for export in South East Asia, Australia and New Zealand are being diverted away from local buyers with lower purchasing power.
Partially this problem is rooted on extreme weather events that have been affecting Australia’s production. Floods during the first months of the year brought hard cooking coal prices to a spike of $400 /tonne [hat tip Big Gav]. Still, the same article indicates long term contracts being celebrated at $300 /tonne, and thermal coal also bound to go over $100 /tonne this year.
With the Coal Crunch the world is stepping into is just another dimension of the present energy crisis that is being triggered by anaemic oil production. Either by pushing demand up for other energy sources or supply down for minerals, food and other commodities, oil is building an economic whirlwind that has the potential to transform the face of our societies. Ready to ride?
(1 May 2008)
Peak Oil Panic
Irwin M. Stelzer, Weekly Standard
There’s plenty of oil for everybody.
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THERE ARE MORE MISUNDERSTANDINGS about the oil market than perhaps any other. In America, drivers are fuming and politicians are demanding explanations because gasoline has hit about $3.50 per gallon. That’s less than half the price being paid by motorists in most industrialized countries. High to us is low to them.
… Another myth: we are running out of oil.
… Production of oil is being constrained by several forces, none of them due to God’s failure to put enough of the black gold under our feet. Several countries that are important sources of supply are in political turmoil, and unable to bring to market the oil they are currently capable of producing. Think Nigeria, where security problems have shut down about 20 percent of the nation’s 2.5 million barrels of capacity, and discouraged new investment, and Iraq, where political paralysis and terrorists have kept production at less than half of its potential. Other countries will not develop the reserves of oil known to lie under their territories.
Russia has made it clear that foreigners who invest in its oil industry might be playing a game with Vladimir Putin known as heads I win, tails you lose.
… There is a lot of oil out there to be found and produced, not even including the vast reserves in Canada’s tar sands. We might have reached the age of peak panic about oil supplies, but not of peak oil.
One thing we think we know about the oil business is correct. High oil prices and the greenhouse gasses produced by using oil have important geopolitical consequences. These $100+ prices have led to a massive flow of wealth, and hence power, from consuming to producing countries.
Irwin M. Stelzer is a contributing editor to THE WEEKLY STANDARD, director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).
(29 April 2008)
The Hudson Institute is a conservative U.S. think tank (Wikipedia / SourceWatch).
Contributor Calvin Sloan writes:
Stelzer fails to grasp the overall concept of Peak Oil, and instead gets lost in ideological trivialities. No matter how much Stelzer feels that ‘left-wingers’ and not basic geological principles are to blame for supply woes, the decline of fields like Cantarell simply cannot be reversed by foreign investment. He concludes by describing the predictable symptomatic effects of Peak Oil – shifts of power in politics and finance, signs of infrastructural failure, and ‘feverous’ attempts to expand alternative technologies – without defining a cause as to why oil prices are rising at extreme rates.
