DrumBeat: December 27, 2006
Posted by threadbot on December 27, 2006 - 10:05am
Topic: Miscellaneous
Energy's winners and losers in 2006
NEW YORK (CNNMoney.com) -- Even with oil prices little changed from the end of 2005, 2006 was still a very good time to be an energy investor.
The AMEX oil and gas index is up nearly 14 percent year to date, while the electric utility index on Baseline is up 17 percent and the Wilder Hill clean energy index is up about 6 percent.
But within these broad categories, which companies pulled the weight, which were laggards, and what trends can investors look forward to next year?
China buys oil, minerals with reserves
China will take advantage of its massive foreign exchange reserves to expand its stock of strategic resources such as oil and minerals, state media reported Wednesday, citing a top economic official.
Vice Prime Minister Zeng Peiyan told leaders of the national legislature that the government plans to step up exploration for key resources such as oil, gas and coal. It also intends to use the opportunity afforded by the country's more than $1 trillion in foreign reserves to improve strategic resource bases, the state-run newspaper China Business News and other reports said.
California: Pinch at the pump worst in 25 years
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EU Commission open to use of nuclear energy
PARIS - The European Commission is open to increasing the use of nuclear energy as a way for member states to cut carbon emissions and avoid volatile energy prices, French newspaper Les Echos reported on Tuesday.
German Energy Giant Reopens Debate on Nuclear Phase-out Plan
One of Germany's leading energy companies wants to extend the lifetime of one of its nuclear plants in a move that anti-nuclear campaigners describe as an attack on plans to phase out nuclear energy in Germany.
Seemingly unrelated events of last week suggest considerable trouble ahead for U.S. vital interests. As President Bush puts the finishing touches on his plans for a new strategy for waging the War for the Free World, he had best make sure he focuses not only on Iraq and Iran (as recommended in this space last week) but on energy security, as well.
How coal may soon be keeping jets in air
Already the United States Air Force has carried out tests flying a B-52 Stratofortress with a coal-based fuel.
And JetBlue Airways is supporting a bill in the US Congress that would extend tax credits for alternative fuels, pushing technology to produce jet fuel for the equivalent of $40 (£20.50) a barrel - way below current oil prices.
Team ready to keep toxic gas underground
An international research team is heading to the southeast corner of Saskatchewan to check on millions of tonnes of carbon dioxide buried beneath the frozen fields. They want to ensure the notorious greenhouse gas stays more than a kilometre underground in perpetuity and doesn't leak out of oil wells that have turned the Canadian prairies into a geological pincushion.
I have a hankering for a creamy ripe avocado but the one facing me on the kitchen counter is as hard as the seed that sits at its core. No matter what trick I apply in ripening the fruit, it resists my persistence and growing impatience.
And so it is with the ripening of ‘peak oil.” We analyze the data, we cajole, we organize conferences, we give presentations, we rant, we blog, we reanalyze, we give up and then come back for more. To some degree, our emotional state runs from full octane to running on fumes depending upon the news or events of the day. And like the avocado, we run the risk of bruising when we are probed and then passed over for the riper issue of the day.
Venezuela Generators to Nicaragua
Managua - The first Venezuelan generators will arrive in Nicaragua in two days and will start working in a couple of weeks to palliate the energy crisis in this country, reported a source of construction.
Uganda: Bujagali environment impact study finished. Bujagali is 250MW private hydro-electric power plant. Uganda hopes it will help their energy problems. But even hydro-power is somewhat oil dependent:
Bujagali Energy is a joint venture between US-based Sithe Global LLC and Industrial Promotion Services of Kenya, who proposed a high budget for the project due to high oil and metal prices.
World's First Affordable Diesel Hybrid Powertrain
A British firm has developed a low-cost, high-efficiency hybrid-electric drivetrain as an alternative to expensive proprietary systems.
Statoil's Hydro Buy-Up Could Be Bad for NCS
The proposed merger of Statoil and Norsk Hydro's oil and gas arm has been widely hailed as a success for the two companies, but could spell trouble for the Norwegian oil and gas industry's future prosperity.
London-on-Sea: the future of a city in decay
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GOM Producers Can Terminate Royalty Deals if Others Get Better Terms
The five oil companies that signed agreements with the government last week to begin paying royalties on some Gulf of Mexico oil and gas production can terminate those deals, if other operators negotiate more favorable terms.
The Interior Department, trying to redo botched contracts that already have cost American taxpayers nearly $2 billion, reworked these deals with Shell Oil, BP, ConocoPhillips, Marathon Oil Co., and Walter Oil and Gas Corp.
Belarus warns Russia over gas transit to Europe
MINSK/MOSCOW - Belarus issued an implicit threat that it could stop Russian gas deliveries through its pipelines to western Europe unless Russia's gas monopoly Gazprom relented on demands Minsk pay steep price increases in 2007.
The threat is likely to revive unpleasant memories of gas cuts to Europe last year when Russia was locked in a similar pricing row with Ukraine. But Belarus ships smaller volumes of gas to Europe via its territory and Russia said Europe was safe as Gazprom had stockpiled extra gas in Germany.
"We are inter-dependent. If I don't have a domestic gas supply contract, Gazprom won't have a transit deal," Belarus's Deputy Prime Minister Vladimir Semashko said at Minsk airport late on Tuesday after his return from failed talks in Moscow.
Nigerian health workers disinfect pipeline blaze site, search for victims
Local television stations speculated Wednesday that a petrol shortage that has plagued much of Lagos for the past ten days or so may have pushed the thieves to tap the pipeline in the hope of making big profits by re-selling fuel on the black market.
Democrats eye oil money for conservation
WASHINGTON - House Democrats in the first weeks of the new Congress plan to establish a dedicated fund to promote renewable energy and conservation, using money from oil companies. That's only one legislative hit the oil industry is expected to take next year as a Congress run by Democrats is likely to show little sympathy to the cash-rich, high-profile business.
NEW YORK – Remember this? Motorists complaining at the pump as the price of gasoline rises. Airlines bumping up airfares to cover expensive jet fuel. And delivery services tacking on surcharges, reflecting a record price for a barrel of oil.
But it's not just a description of this past spring. It's also the forecast for next year, probably just when school lets out for the summer and motorists are starting to put more miles on the odometer.
China fears disasters, grain cut from global warming
BEIJING - Global warming threatens to intensify natural disasters and water shortages across China, driving down the country's food output, the Chinese government has warned, even as its seeks to tame energy consumption.
Algeria increases the price of oil
But there is a significantly more troubling consequence. This trend implies consumer nations will never be able to reach a long term contractual relationship with producer nations for the allocation of earth’s remaining oil and natural gas resources. Producer nations will continue to pursue pricing and production decisions based on their selfish best interest.
GE Oil & Gas has agreed to supply gas turbines to Saudi Aramco's oil field expansion projects at the Ghawar and Khurais fields. GE will deliver 12 mechanical drive packages, including seven driven by MS5002C gas turbines and five by MS5002D gas turbines. Saudi Aramco wants to increase crude output from the fields.
Ledesma: Oil firms are tools of Imperial Manila
Even the petroleum companies are rubbing it in. They announced a P2.00-rollback but the beneficiaries are only Metro Manila and Cebu. Beat that? The decision makers of corporate giants in Metro Manila are just as imperious as the lawmakers in the Senate. They think only of Imperial Manila forgetting that we Mindanaons are just as eager to have some relief from the high cost of fuel.
It sure sounds like the Chinese are catching on that the US National Debt is a giant Ponzi Scheme, and they're the mullets.
I think they've known for a long time. John McFadden, who has lived in China, had some interesting comments on this in the Dec. 17 DrumBeat. He says China is signalling that it's willing to take a hit, but not a disproportionate hit. If backed into a corner, they could dump their dollar reserves, but they know this is an act of economic war, and don't want to do it. (But they are more likely to do this than launch an actual war.) Basically, what they want is for everyone to back away from the dollar slowly. Share the pain, if you will. They will not allow the U.S. to leave them holding the bag.
Leanan, can you provide a link? Thanks
The Dec. 17 DrumBeat is here:
http://www.theoildrum.com/story/2006/12/17/85510/525
There doesn't seem to be a good way to link to specific comments yet, but you can search for McFadden's name.
One thing's for sure: If they really want Taiwan, they've got it. If it came down to a choice between losing Taiwan and a recession to end all recessions, we're surely choose the former.
In what sense would "we" be "losing" Taiwan?
VT: You would be "losing" Taiwan to the Evildoer Commie Chinese (the ones that hold a second mortgage on the USA).
The Chinese monetary authority has tied the yuan to the dollar. The U.S. would like the dollar to float down against the yuan so as to improve the U.S. balance of payments deficit with China. China adamantly refuses to let the yuan float.
How all this will play out I do not know.
Perhaps China is saving up to buy the U.S. :-)
Don, I don't know, but with a Trillion cash they've already got the down payment for a F.H.A. loan!
FYI, I have a taker on my bet that front month WTI will not reach $100 in 2007. The money will held in Super G's Paypal account until 1/1/2008. If anyone else wishes to participate, let me know.
Cheers, RR
P.S. Did not mean to post this under Bob's post. There is an edit button, but not a delete button. :-)
It would certainly be better to have the Chinese buy up the US than the Arabs, as their society would assimilate much easier and are much more accommodating. They also have retained more of their old world technology, and it may be needed in the future. A White, Black, Hispanic, Oriental, Hybrid human specimen may be quite adaptable to the environment in 8 to 10 generations. Where else but North America.
??????!!!!! The yuan is and has been floating. It may be floating much more slowly than some would like but the movement is clear. It's fact, not my opinion.
The yuan has been allowed to float in a VERY narrow band. For all intents and purposes, the yuan is pegged to the U.S. dollar, because the Chinese like it like that.
A very narrow band that keeps moving up is a float. If you say movement of only a little over 2% since they abandonned the peg is the same thing as a peg we're not speaking the same language. Every indication is that the yuan will continue to slowly increase in value for quite a while before the Chinese change tack. And they are no longer looking only to the dollar.
According to your numbers, what is the percentage appreciation of the yuan against the dollar in 2006?????
Go to xe.com. I watch daily, same as watching nymex or checking the weather.
Very wise of the Chinese; they set their currency in motion only enough to be able to point out it isn't, technically, fixed. Is it floating? Not compared to the rest of the world's floating currencies. Is it pegged? Technically no, since it is moving. Heavily managed to move just enough to shut up protectionists in the US? Working so far...
You got that exactly right.
We can argue all day over the semantics of the yuan's 'flexible trading band', but in the eyes of FX traders, economists, hedge fund managers, the US Treasury, the Fed, and the world's central bankers, China's currency is to all intents and purposes pegged to the dollar.
For all intents and purposes, as we enter the new year, it's just as valid to state that the yuan is propping up the dollar as vice versa. If China would extend/loosen that band they have now for the yuan, effectively pushing it upward, the dollar could go in freefall mode.
Paulson and Bernake are well aware of that, and their trip recently certainly included talks on the topic. The US likes it "like this" too, but won't say it. Domestically, it's much more rewarding to supply headlines about unfair trade practices.
It's a peg if the price is where you want it and a wunnerful free market if the price is where I want it. Is there a currency entirely at the whim of forex traders? Possibly something minor and weak.
Interesting. I've made a few links from here to Overcoming Bias in the last couple weeks. They made a reverse connection recently, when one of their contributors made a quick post on Peak Oil.
Opinion there seems to be running against peak oil, but with a few of the predictable, knee jerk, responses one would not want to see in a bias-free discussion ("Malthusians are always wrong").
I personally think the pendulum should swing to concern but not fear, action without panic, etc. That might be happening out there in the broad world ...
I don't know exactly what the point of the Overcoming Bias site is. Whose bias are they trying to overcome - their own? Their foray into PO is with a very naive look at the futures market. Huh? Wouldn't geology be a little better place to start?
I've seen other sites like this, claiming to be skeptical arbiters of truth. They are usually pretty reactionary, preferring to believe the status quo, and throwing out any theory that deviates from it. I didn't check, but I guess that Overcoming Bias is probably dismissive of Global Warming. (A notable bias of sites based in the USA).
Sure, I'm biased too. But at least I am aware of it.
I think it's a pretty good site. Yes, I think they are trying to overcome their own biases. And yes, their first Peak Oil post might provide a test tube for the whole study.
You may be right, I haven't read the site much.
Do you think the guy who made the "Malthusians are always wrong" remark can get over his prejudice and give the arguments an objective hearing? It seems like he has already made up his mind.
Well, they are tackling the question The Future of Oil Prices 2 again.
Some consumers run into big problems with auto title lending
I guess this is the new trend.
Actually, this is a scheme to cut auto, and, therefore, oil use.
In that case, it's brilliant. It's also forcing people to cut electricity use, since they're selling their TVs, VCRs, etc., to pay off the auto equity line of credit.
I'd like to see a list of some people's New Year's resolutions. Here are some of mine:
1. Economize
a. by eating less to lose another seven pounds. (In 2006 I've lost 22 pounds.)
b. Drive less. (In 2006 I drove about 3,000 miles; I want to get that down to 2,000 miles or less in 2007.)
Localize: I'm moving to a neighborhood where almost all amenities are within walking distance.
c. Produce: I plan to write a best seller on Peak Oil, perhaps "The Peak-Oil Way to Fitness and Permanent Weight Loss." Also I plan to teach more people to sail than I did in 2006.
That's an excellent title Don. Here's a nice peer-reviewed paper to help you on your way:
http://odograph.com/?p=491
My resolution might be to get back on track with the paleo diet and exercise, and to try to get caught up less in niche web sub-cultures.
I don't think the paleolithic diet is a healthy one. For one thing, in hunting and gathering societies, where there are few or no means of food preservation, people gorge on meat whenever they can. Anthropologists have reported routine consumption of twenty pounds or more of meat at a single sitting (which could extend over twenty-four hours). Another point is that paleolithic peoples tended to die from drinking contaminated water. Beer or tea made from boiled water is much better than water with amoebas etc. in them. Also, paleolithic peoples ate opportunistically: If it was there, they would eat it--sometimes a well balanced diet but often not.
Judging by human longevity, some of the best diets are those of the Japanese and the Icelanders; both eat a lot of fish. "Eat more fish." is on my list of New Year's resolutions, along with "Catch more fish."
Do you believe in evolution?
Because if you do (even as a component of His plan), you have to think that the human being is optimized (as best God and Nature can manage) for a certain environment. We certainly diverge from that environment in a number of ways, but it might be a risk to think that a sedentary, low energy, lifestyle is as good for us as the occasional (and well-considered) antibiotic.
I'd say the reasonable middle ground is to understand our roots, and how and why we diverge from them. We should try to make our changes well-considered, and not just another trip in the SUV to buy more french fries.
BTW, please provide a peer reviewed article that shows humans routinely (rather than rarely) consumed "twenty pounds or more of meat at a single sitting."
Anyone familiar with fieldwork among hunting and gathering societies can verify the meat gorging which seems to be universal to these cultures. Here is the thing: You kill a giraffe or a buffalo or whatever, and it is too heavy to haul to where the clan has made camp. Instead, the whole clan moves to the site of the dead elephant (or whatever), builds a fire, and then the headman doles out the meat. Successful head men dole out the best cuts to those who most deserve it (successful hunters and their families, the headman's wives, etc.), but everyone eats as much as possible before the meat goes putrid. Typically people fall asleep from stuffing themselves, then wake up after a while and eat more and then yet more. When the meat goes bad the clan members waddle back to their huts or caves or whatever.
The Inuit often gorge on whale blubber, but the subzero temps provide a means of storing food, and hence gorging is not a big part of their culture.
Evolution has made gorging on meat a survival trait.
I expected a reference from you Don. Given the number of times you've said to me "you must find... another shrubbery!" ... I mean "another peer-reviewed journal!"
BTW, please provide a peer reviewed journal with the earliest dates for meat smoking and drying.
Meat smoking and drying goes way back into prehistory. However, if you cannot salt as well as smoke and dry the meat it tends not to keep well in hot and humid climates. Some Native American tribes (e.g. the Cree) made pemmican, which is a very durable (if unappetizing) concentrated and preserved food.
I can cite textbooks if you'd like, but by far the best source I know of on hunting and gathering societies is "The Hunters" about the San, a documentary film made more than sixty years ago. And oh boy, do they ever gorge . . . . When I showed this film to my sociology students, the girls especially got grossed out by the gorging--and many of them sympathized with the giraffe when it finally keeled over from a poisoned arrow. The guys all cheered at that moment.
Seriously, given the human anatomy, gorging on meat is tempting intestinal blockage in no small way.
I think fatty meat is much worse in this regard than lean game meat. Anyway, hunters and gatherers got plenty of fiber in their diets, maybe fifty grams a day or more on the average. So far as I know, constipation (except during times of food shortage) is rare among hunters and gatherers. Also, back trouble is virtually unknown, because they have not invented chairs. It wasn't a bad life, for the most part, because for one thing they got more living done in their twenty to forty years than do most people in modern U.S. society, who live to shop. Also, roles were clearly defined, which is not the case today.
Don: Trivia- longest living category of humans are Asian women living in the USA (ave. 87.4 yrs).
My guess is that they do not gorge on meat;-) However, I do think they tend to eat lots of veggies and fish.