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DrumBeat: May 9, 2007
Posted by Leanan on May 9, 2007 - 9:06am
Topic: Miscellaneous
AccuWeather: Major Gulf Coast hurricane likely in 2007
There is an above-average chance that a major hurricane will hit the storm-weary Gulf Coast this year, leading hurricane forecasters predicted on Tuesday.If the predictions prove true, 2007 could mark a return to the destructive seasons of 2004, when four strong hurricanes hit Florida, and 2005, the year of Katrina, after a mild 2006 when only 10 storms formed.
World Oil Outlook: Markets Tighten, Continued Growth In Demand
World oil markets are projected to tighten this summer due to continued growth in oil demand and production restraint by members of the Organization of Petroleum Exporting Countries (OPEC). Despite the recent increases in world oil prices, global oil consumption is projected to grow by 1.4 million barrels per day (bbl/d) in 2007 and by 1.6 million bbl/d in 2008. About one-half of the projected growth will come from China and the United States.
Iraq oil workers set to strike over law
Most of Iraq's oil production and all of its exports are likely to stop Thursday as its oil union threatens to strike in protest of the draft oil law.
Geopolitics and oil supply disruption: Is India prepared?
What do we do when crude price touches $250 a barrel? Even with high foreign exchange reserves, India will have a very hard time to absorb such a high price. We could dismiss this as Doom's Day scare mongering at our peril. But then a study done last year by one of the international banks projects such three-figure oil price-line as bottom line case scenario, given the volatile potential for oil supply situation; given the potential for Iran-US confrontation getting a lot worse before it gets better.
Good Question: Why Not Build More Oil Refineries?
A new refinery would cost $2 billion to $3 billion. Today's environmental regulations help keep our air clean but also make it much more expensive to run a refinery. Finding land is tough because nobody wants to live near a refinery.
Driving Michelin's Zero-Pollution Car
Working in a skunkworks in Switzerland, researchers have developed the Hy-Light, a fuel-cell car that drives 80 mph and refuels at a solar-powered pump.
31 U.S. states form registry to cut carbon emissions
With pressure growing on the U.S. government to regulate greenhouse gas emissions blamed for global warming, 31 U.S. states will start a registry next year to track those emissions with an eye toward reducing them.
Govs want more time on oil shale
The governors of Wyoming and Colorado want federal officials to allow more than the allotted two weeks for the states to study and comment on a draft environmental review of commercial-scale oil shale development proposed in the region.
Japan to seek 50% global emissions cut at G-8 meet
Prime Minister Shinzo Abe will propose global steps aimed at halving greenhouse gas emissions by 2050 from current levels during next month's Group of Eight summit, and has already gotten U.S. President George W. Bush's promise to cooperate, sources said Tuesday.
Senate panel OKs bill to boost fuel efficiency standard
In a sign of congressional concern over near record-high gasoline prices and global warming, a Senate committee Tuesday approved legislation calling for the most significant increase in vehicle fuel efficiency in decades.The measure would boost the fleetwide average fuel economy standards to 35 mpg by 2020, up from 25. It now goes to the Senate, where a similar measure was defeated two years ago after heavy lobbying by automakers.
Oil markets ‘over-supplied, refineries are the problem’
World crude-oil markets are “over-supplied,” and high gasoline prices are the result of few available refineries, Qatar’s deputy premier and energy minister has said.“The problem is not the shortage of crude oil,” HE Abdullah bin Hamad al-Attiyah told reporters at a news conference in Washington yesterday.
“The problem the whole world is facing today is the limitation of refineries.”
4 U.S. oil workers reportedly seized in Nigeria
Heavily armed gunmen kidnapped four U.S. oil workers from a barge off the Nigerian coast near Chevron's Escravos oil export terminal, said security sources.
Moving New York City toward Sustainable Energy Independence
How creation of an Energy Shortage Plan will prepare the City for energy price volatility and accelerate the long-term transition to energy sustainability
A specter is haunting the world, but it is not a well-defined ideology, like capitalism or communism. And yet, since World War II, it has been responsible for more destruction than these ideologies, creating a civilization that is copied the world over, one that specializes in using up as much oil and coal, forests and land as possible. It is the specter of suburbanism, the idea that it is everybody’s God-given right to live as far away from work, shopping, recreation and friends and relatives as one wants to. Now that we are confronted with a virtually intractable set of global problems, what is the recommended path to global safety that seems to emanate from this “non-negotiable lifestyle”? Shopping, of course!
Bangladesh to import oil from India
Bangladesh has decided to import diesel from the Numaligarh Refinery in East India's Assam region following acute shortage of fuel, Indo-Asian News Service (IANS) reported Tuesday."Bangladesh would import 120,000 tons of diesel per annum from the Numaligarh Refinery due shortage of vehicular fuel," IANS quoted Pinak Ranjan Chakraborty, Indian high commissioner in Dhaka, as saying in Agarthala in Tripura region in East India.
Light-rail system would mean smoother travel for everyone
I propose that a regional, light-rail system coordinated with connecting Chatham Area Transit service and suburban park-and-ride lots might just be the pro-active solution for Savannah's parking problems. There are many cities that have proven that rail-based commuter systems are successful in getting large number of people into a metropolitan area with limited parking (New York, Chicago, Washington, D.C. and St. Louis, to name a few).
Jilin To Open First Clean Fuel Plant
"With a total investment of RMB509 million and covering 8 hectares, the plant will convert 300,000 tons of stalks into 300 million kilowatts of electric power annually," said Wang Lingfang, chairman of the board of Shandong Luneng Construction Group.Statistics show China produces 350 million tons of vegetable stalks every year, 24% of which is used as livestock feed, 15% as fertilizers, 40% as fuel, and 18.7% is discarded. The country has abundant biological resources, and together with its stalks production, it exceeds 720 million tons, of which 604 million tons can be used as energy.
India misses import target for gas by 67%
India was able to import only a third of the gas it wanted to ship into the country in 2006-07, owing to uncertainties in the global gas trade and inadequate infrastructure in the country to handle gas imports, resulting in a shortage of the fuel that affected several companies, including power utilities and fertilizer manufacturers.The country had originally planned to import 15 million tonnes per annum (mtpa) of gas, but ended up importing a third of that amount, according to a senior official at the ministry of petroleum and natural gas, who did not wish to be identified.
Geothermal heating a hot topic
Geothermally heated homes may be a rarity in Edmonton, but the Alberta Geothermal Energy Association hopes to change that.Consumers who are more aware of declining natural gas reserves and fixed income seniors facing out-of-control energy costs are sparking an interest in the industry, vice-chairman Don MacIntyre says.
The matter at hand was what to do when there is no more crude oil. Peak Oil is when the extraction rate of petroleum reaches its maximum and can no longer meet demand."The alternatives cannot ramp fast enough," John Easton of Sustainable Indiana said.
The mass media is back at it, trying to explain high prices at the pump to the average American. If their lack of understanding weren’t so scary, we could all have a laugh. This time its being blamed largely on problems at petroleum refineries. We Americans do like simple answers. If prices at the pump rise rapidly, we assume there must be an easy explanation. It couldn’t be a more comprehensive problem with the way we use energy and our reliance on a finite resource.
Nuclear power is on the verge of, well, exploding. The U.S. has 103 working nuclear power plants, but plans for 30 more are in the works with the Nuclear Regulatory Commission.To fully comprehend what a sea change this is, consider that the most recent construction permit was issued in 1978 – before Three Mile Island.
Credit this nuclear boom to large federal incentives, the soaring price of natural gas (often used to power electric plants), and ever-increasing demand for electricity.
Alternative Vehicle Trends as Gas Prices Rise
The next time you're on the road or in a parking lot, take a look around. What do you see? Despite the fact that gasoline prices are once again hovering near the $3.00/gallon mark, and our climate seems to be changing more rapidly than most of us can utter the phrase “global warming,” chances are that you don't see a disproportionate number of hybrid cars flitting in and out between monster trucks and SUVs large enough to have their own zip codes.
Ian Kuijt, professor of anthropology at the University of Notre Dame, has written extensively on social change in Neolithic villages 8,000 years ago. Of particular interest is the phenomenon of collapse. What prompts a large population center to fall apart abruptly as the people abandon their life ways and decentralize? One compelling theory, advanced by Kuijt, proposes that there are two triggers: the external, environmental cause and, more importantly, the internal one, driven by members of society.
U.S.’s thirst for liquid natural gas growing
Energy companies have proposed 35 new U.S. terminals in 10 states and five offshore areas near the coast. Eighteen terminals have been approved by the Federal Energy Regulatory Commission.The majority of the projects are proposed for the Northeast, which has seen huge price increases for heating oil and public distrust of nuclear power; California, where natural gas is in high demand for power generation; and the Gulf Coast, where LNG processors can easily plug the finished gas product into interstate pipelines.
Natural-gas powered cars: Who even knows they exist?
Imagine paying as little as $1.25 a gallon to run your car.Not for gasoline. Instead, you would pump a fuel that's readily available, North American-produced and virtually pollution-free. Many motorists could even fill up in their own garages every night just like they would power-up with one of the gas-electric plug-in hybrids still under development.
AP Moller Maersk believes oil production in North Sea has reached its peak
Management at AP Moller Maersk's Maersk Oil & Gas division believe oil production in the North Sea has reached its peak, daily Boersen reported.'Production is, under all circumstances, expected to decline during coming years, but our task is to counteract this as far as possible,' Maersk Oil & Gas deputy director Anders Wurtzen said according to Boersen.
However, the Danish Energy authority expects new technology will help increase oil production in the North Sea, Boersen added.
U.S. uranium sales down as price soars
As the price of uranium surged another $7 over the past week, the U.S. Energy Department may scale back its inventory sale and open a strategic reserve.Uranium prices hit $120 per pound Monday, the weekly pricing date, on the heels of expected growing demand and a new futures trading product offered by the New York Mercantile Exchange and uranium analyst Ux Consulting.
The price has jumped from $56 per pound last October. It was around $20 at the start of 2005.
Venezuela, Conoco spat continues
Just why ConocoPhillips remains a holdout remains a mystery. Officials at the company`s headquarters in Houston refused to speculate on the delay in negotiations when questioned by United Press International.
Oil discovery enough for 50 years extraction
"Density is the most important gauge of crude oil. The density of this oil field stands at 0.82 to 0.83 - a light to normal level. The reserve is not deep - at about 1800 to 2800 meters under the ground," says Jia Chengzao,Vice President of China National Petroleum Corporation.
One way to interpret this presumed myopia is to treat it as the product of a system in a highly complex environment. At the macro-social level Luhmann’s General System Theory provides insight into why we might expect offices such as the GAO and other governmental bodies to be restrained in their communication to the public about the Peak Oil phenomenon.
Upstream Oil Project Cost Rise Slows, Could Plateau In '08
Capital costs for upstream oil and gas projects climbed 7% in the six months to March 31st, compared with the 13% increase seen in the previous six months, suggesting cost inflation could reach a peak next year, IHS and Cambridge Energy Research Associates said Tuesday.
Uganda: Govt Explores Dar Option to Solve Diesel Crisis
The Ugandan government has resolved to import additional fuel through Tanzania after problems with Kenya's Mombasa-Eldoret oil pipeline caused a diesel shortage and higher pump prices.The decision comes after President Yoweri Museveni accused the Kenya Revenue Authority (KRA) of worsening the crisis by asking Ugandan oil firms to pay deposits on any fuel loads they collect from Mombasa.
State regulators order gas station to raise its prices
Despite soaring oil prices, Wisconsin has ordered a local gas station to raise its prices, saying it was breaking the "minimum markup" law by offering a discount to senior citizens and supporters of a youth sports league, according to the Wausau Daily Herald.
Texas: House OKs suspending gas tax
Relief from soaring gas prices may soon be on the way.The Texas House tentatively adopted a measure Tuesday that would suspend the state's 20-cent gas tax through the summer.
That would mean an immediate 20-cent drop in the price per gallon.
"The more cars you have, the more relief you get," said Rep. Trey Martinez Fischer, a San Antonio Democrat who added the proposal to an omnibus tax collection bill.
35 terminals? Are there anywhere near the number of tankers available to supply that number?
Sounds like a Cargo Cult, doesn't it?
Without an LNG export terminal, an LNG import terminal obviously would serve no purpose to anyone. (Unless you got the contract to build it)
This seems to be based on the idea of "if you build it they will come".
Aren't the current handful of US LNG terminals only running at about 50% utilisation?
Isn't this due to spot market prices being too high, so the US can't afford the cargos to "feed" the terminals?
In order to justify more LNG terminals the US needs to have long term supply contracts for LNG.
Key questions: Do these supply contracts exist? Can the US afford them?
Currently, there are too many LNG tankers for the size of the market because there aren't enough terminals of both types. Yet, LNG tankers continue to be built because of the massive contracts taken between China and Qatar/Iran, whose yearly volume alone would require at least 100 LNG tankers for transport. Further, the US is way behind in securing longterm LNG contracts, which Bush administration policies haven't helped.
I calculated that we would need at least 8 tankers per terminal to run at near full capacity (more if the LNG comes farther afield).
That is 280 tankers. Just for the US alone.
The committee on homeland security sees some challenges with this as well:
Another type of skilled trade shortage...in the energy industry as well.
Perhaps a bit optimistic about the domestic production.
A 2002, EIA LNG export report:
I guess we will have to hope that they can continue to expand like mad, since the US alone will take half of this LNG down the road.
If you have access to yesterday's Financial Times (or ft.com), check out "Hedge fund banking on higher than predicted interest rate rises [by James Mackintosh p.23]. It's mostly behind a paywall, but the gist of it isn't:
Clarium Capital, the $2bn San Francisco hedge fund run by Peter Thiel, the Paypal co-founder, is betting that central banks will raise interest rates far more than most people expect after concluding that the global wave of liquidity is being generated by petrodollars.
Mr Thiel's thesis is simple, if unconventional. Oil-rich Arab states and gas-rich Russia are earning $600bn a year, which they are investing back into geared financial assets such as structured products, hedge funds and property, supporting global asset prices. The resulting liquidity is helping the price of assets from London homes to equities to emerging market bonds bubble up.
Oddly enough, one of the ways he suggests avoiding assets affected by these petrodollars is to invest in the oil industry, as petrodollars seek to diversify.
Another article worth reading is in the special energy section "FT REPORT - ENERGY IN THE AMERICAS: Riches beyond the wit of politicians" which notes that the US gets much more energy from the Americas.
Thanks for the tip.
Here's a link that's not behind a paywall:
Clarium Capital bets on rates to rise more
Today's FT had the above article. Obviously, not everyone is going to be a winner out of net loss of $1.5 trillion!
Do the Chinese have a Year of the Vulture in their calendar cycle?
Well, it's either going to go Thiel's way or "helicopter" Bernanke's way. If we had the answer we could afford to outbid the Bush family for their retreat in Paraguay.
Question is, are you willing to bet on the fed doing the right thing for the people of the US? Mr. Thiel seems excessively optimistic.
Speaking of Paraguay...
Hezbollah builds a Western base
Yeah, that tri-border area pretty much is like the Bermuda triangle, everything goes and no one has any real control.
The Argentine army going in there is like the LAPD going into south central, it can be done, theoretically. LOL.
The Hezbollah article is priceless. Washington is alarmed not because of terrorists going to the US from the Triple Frontier, but because they all bought property in the area themselves. Oh, and there's already a large Arab population there. Sounds like fun for everyone.
Why are they all so anxious? There is a very good reason to settle in the region: water. Meet the Guarani Aquifer.
And it gets better still, quote Wikipedia:
On the other hand the US is rapidly losing influence in Mercosur, they are not going to roll over and play dead.
The background info is there but these things are pretty fluid and some links are either recycled or outdated.
We live in interesting times.
The edge is getting sharper and we will fall off on one side or the other. I still think its a toss up.
History would point to "inflate or die" as the last gasp most societies take.
I take the position that the Fed is in a catch 22. raise interest raise to keep foriegn investment in US debt and stiffle domestic demand or cut rates to increase domestic consumption and loose foriegn investment. Screwed either way. I wonder if in the rear view mirror how close we were to cratering with Greenspan, and if now we are shooting over the top.
KSA and Opec are in a catch 22 as well. Tell the world oil is running out and start a panic or tell the world we don't feel like pumping oil, could cause some nasty problems as well. I see they are taking the course of blaming refineries. A very good move imo. But what are they going to do long term?
Eventualy both of these groups will have thier hands forced by circumstances beyond thier control.
May we live in interesting times....
Say, what's the deal on Paraguay, anyhow? Should we all be looking into it?
IMO you should look into an area along the lines of it, meaning really autonomous and under no ones direct control, or at least remote enough to be more then one tank of gas removed, but you need a knowledge on the lay of the land.
Most people would probably be better off playing the cards they know very well even if they are not the best cards.
Your typical urban US citizen would probably last about 24 hours there if he is lucky.
The Fed already should be raising interest rates a lot higher to counteract the plunge of the US$ against other currencies. But they know that to do that with the housing market already as it is, plus the millions already struggling to avoid foreclosure, would be a disaster for the US economy.
NOT a fun time to be a Fed governor!
One could say the Fed is impotent for the foreseeable future.
If he raises interest rates, he collapses the economy.
If he doesn't, the government cannot sell its bonds - finance crunch. Then they have to resort to helicopter drops/printing press mania (which is already underway) which devalues the US dollar further, inflating the economy and at the same time causing price inflation...which will likely crash the economy as well.
Wait...don't forget to throw in energy price spikes, hurricanes, war, general resource competition.
No way out of this one. But maybe they have something better in mind. Top secret like.
Here's hoping for some miracles.
That statement makes sense only when you assume the Fed is trying to "save the economy".
The assumption is, however, contradicted by just about everything the Fed has done over the past 20+ years (Alan Greenspan's reign). Now you can counter that by saying that they are grossly stupid, or he is, but that is an even greater assumption.
So why not assume the opposite: the Fed is in the process of deliberately destroying the US economy.. That fits much better with what is going on. Moreover, it paints them as being far from impotent.
The 1990's run-up to the tech boom was fueled with credit facilitated by Fed policies. Today's housing and mortgage bust would not have been possible without an even far greater supply of cheap credit and even lower interest rates. Both are Fed policies. In both instances the Fed could have taken action once damage was becoming clear, even if they wouldn't have foreseen it. In both instances they chose not to.
In 9/11 terms: they have come to the conclusion that, for the people they represent (hint: not you), it's not worthwhile to save the building, so they have decided to bring in Alan Greenspan, whose responsibility it's been to plant the explosives needed to "pull the building", in the financial equivalent of "controlled demolition".
You postulate a "what" but not a "why". Why would the Fed choose to destroy the US economy? What is gained?
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
How about "crash the economy, and buy back all the Govt issue bonds out there for cents on the dollar"?
Debt reduced, ready to start again.
Or am I being way too naive here?
The problem of this scenario is that US will lose its status of debt-fueled empire. Nobody will ever trust the USD for international reserve currency again and the conveyor belt transferring resources, goods and services in exchange of paper dollars will stop forever.
I don't think that this is acceptable scenario for TPTB. Instead I expect a middle road to be persued, which is more like the combination of the two scenarios. In the medium term we will be seeing increasingly rampant inflation and continuing USD devaluation. At the point of time this starts to get out of control the FEDs will intervene by shooting the rates to the sky and saving the greenbacks even if this costs wrecking the US economy. In short we will see the 70s followed by the 80s again.
According to the "Separate Peace" article by Peggy Noonan in the WSJ about a year or so ago, the elites know the game is more or less up, if not now then soon. Old ones like Kennedy know they'll avoid it via lifespan. But in Noonan's article Kennedy sorrowfully notes he's glad he won't be around when the ship can no longer be saved.
There is a possible motive to squeeze the middle class down to sustainable levels and use the rest as a surplus (euphemistic, I know). It's an HG Wells sort of scenario. Not actually likely (I don't think they're that competent), but also not actually impossible.
ciao,
Bruce
I think to understand it better, you have to turn it around first: what is lost by destroying the economy? And the answer to that increasingly seems to be: not much. The US economy has become an unproductive monster. It no longer produces anything, because a much cheaper manufacturing base has been erected elsewhere.
At the same time, while not producing, US citizens consume more than anyone. And that is a big problem, of course. You can't consume without producing, other than on borrowed credit. Well, on every possible level there is more debt here than anytime in history, anywhere in the world. Encouraging, tens of millions to go into debt as far as they have predictably does not make for a healthy economy. But debt does give you power over those that owe you.
The only Americans who still own something substantial can, do and will just as easily move to Paraguay, Dubai or Bali: they have no geographic links left at home. In other words: "destroying the economy" is just a different way of saying "amassing as much wealth as you can, and then taking it out of the country".
The underlying reason is peak oil. America runs on oil, and without it can no longer function. If prices would even only double from where they are now, the machine stops, even the slow sputter will be gone. In the face of energy decline, this makes a lot of sense: demand destruction is the only solid way of mitigating the crisis.
Then all that is left is the biggest army on the planet, by far. And millions upon millions of soldiers to operate its weaponry in the inevitable and expanding resource battles that both are talking place already, and lie ahead.
Oil will become much more important than it is now, once reserves start running out. It will be the no. 1 issue, because all military equipment runs on oil, so ceding control over oil will be ceding all control.
Hey, I have no proof of all this, just blabbing. I find it heard to swallow, though, that the mightiest financial institution on the planet, which means the mightiest institution, period, would for 2 decades fail to execute any and all measures that would achieve its stated goals.
BINGO! HeIsSoFly has it exact. TPTB have no interest in saving any nation states, quite the opposite. The game is about garnering as much family wealth as possible so one can be a lord somewhere in the new global plantation.
Shhhh! You'll upset the people here who still don't believe the Federal Reserve is a private enterprise :-)
"You can never solve a problem on the level on which it was created."
Albert Einstein
This scenario only works until the generals figure out that with the biggest military in the world, they can turn their guns on TPTB and then THEY can become TPTB.
This story has happened so many times before in so many different places. America has thought that it is somehow unique and exempt. But we are rapidly on the way to becoming just another banana republic. No, change that -- we don't even grow any bananas to sell!
The Fed controls the US economy. Not Europe's. Not China's. Not Japan's. You talk as though there is one huge worldwide conspiracy that wants to knock down the US for the benefit of another region but that's not how it is. The Fed would be destroying the only thing of value to them.
In other words, you choose to believe in a grand conspiracy rather than simple human incompetence.
Whatever. I don't buy it and I doubt many others do either. Most of the forces at work against our species are not deliberate actions by human beings but simply gigantic trends that can be summarized by statistics and other mathematical models. And for me it is far easier to believe in human ignorance, stupidity, or greed than in a grand conspiracy.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Amen.
Yummy deep thread profiteers of doom goodness!