DrumBeat: November 2, 2007
Posted by Leanan on November 2, 2007 - 8:57am
Refinery problems contributed to Friday's gains. Operations at a 172,000 barrel-per-day Petroplus Holdings AG refinery in England are expected to be limited for a month due to a fire earlier this week. And Chevron Corp. said Friday its 330,000 barrel-per-day refinery in Pascagoula, Miss., will run at reduced rates until early next year due to an August fire.
December gasoline rose 9.63 cents to settle at $2.4395 a gallon on the Nymex, and December heating oil rose 6.14 cents to settle at $2.5737 a gallon.
French finance minister Christine Lagarde has called on oil producing countries to 'restock' the market to fight against 'speculation'.
'I am going to ask the executive director of the International Energy Agency to encourage them to do a little more. Obviously we need resources available to put an end to these speculative movements,' she said in an RTL radio interview.
'Today, there is no particular reason to have such increases in petrol prices,' she said, adding 'there is clearly a speculative element that explains this increase in prices'.
Saudi Arabia and other Gulf oil producers followed a US interest rate cut by lowering some borrowing costs yesterday to try to relieve pressure on their dollar-pegged currencies without stoking inflation at home.
In the next three or four years, there's expected to be a 30 to 40 percent shortage of technical and professional oil workers in the Untied States, according to Damon Beyer of Katzenbach Partners, a Houston-based management consultancy that specializes in the energy sector.
Security officials at the nation's largest nuclear power plant detained a contract worker with a small explosive device in the back of his pickup truck Friday, authorities said.
The worker was stopped and detained at the entrance of the Palo Verde Nuclear Generating Station, said U.S. Nuclear Regulatory Commission spokesman Victor Dricks. Security officials then put the nuclear station on lockdown, prohibiting anyone from entering or leaving the facility.
Though it includes such ideas as a solar-powered commode that runs without water, the 2007 World Toilet Summit is no bathroom novelty show.
Participants at New Delhi's four-day gathering of experts, toilet aficionados, and even royalty from 44 countries are grappling with health and sanitation issues that endanger almost one-third of the world's people who don't have toilets.
OPEC raised oil production last month in response to record-high prices above $90 a barrel and in advance of a formal deal to lift supply, a Reuters survey showed on Friday.
OPEC's 10 members bound by output targets, all except Iraq and Angola, pumped 26.98 million barrels per day, up 180,000 bpd from September, according to the survey of oil firms, traders, OPEC officials and analysts.
Super-spiked: The oil price should fall — eventually
BACK in 2005, in an apparent flight of fancy, analysts at Goldman Sachs predicted a “super-spike” in the oil price to $105 a barrel. On Wednesday October 31st, the prediction came as close as it ever has to fulfilment, when the price of West Texas Intermediate reached $94.74 during the New York day and breached $96 after hours. But the investment bank’s seers are no longer sure that it will hit their mark soon: the “downside risks” to the price, they had warned investors the day before, were “gaining momentum”.
"High prices are due to market speculation," Oil Minister Galo Chiriboga told Reuters. "Oil producers have no relation with that speculative process."
In stark contrast to the performance of the integrated oils, single source operators or pure players (upstream) have been showing the positive effects of current oil market developments. American, European, Asian and Arab players have reported record profits, largely based on the fact that they don’t have to beat lower refining margins. Small seems again to be beautiful, on all levels.
UAL Corp.'s United Airlines and US Airways Group Inc. matched a $20 round-trip domestic fare increase led by American Airlines to help combat record fuel prices, according to FareCompare.com.
CHINA is industrialising, demand for iron ore, copper, nickel and aluminium is surging, so commodity prices, profits and share prices of resources companies are going ballistic.
The bulls are on the run in the resources sector with no apparent end in sight. But is that so?
A Polish sea captain was jailed for 12 months on Friday after crashing his ship into an unmanned gas platform in the North Sea while drunk.
Zbigniew Krakowski admitted being nearly three times over the legal alcohol limit and entering a 500-metre exclusion around the Viking Echo gas platform, 40 miles north-east of Cromer.
Japanese auto giant Toyota Motor Corp. is showcasing a new hybrid concept model that is packaged in carbon fibre to reduce weight, fuel consumption and emissions.
The four-seater "1/X" (pronounced one-Xth), with a 500cc engine, boasts a potential fuel efficiency twice that of the Prius, Toyota's popular hybrid vehicle.
MOTORISTS are so fed up with congestion, petrol prices and parking shortages that an increasing number are considering changing to motorbikes and scooters, according to a new study.
Petroplus said on Friday output had fallen to nearly half its usual level at its refinery at Coryton in southen England, which was hit by a huge fire two days ago.
The company added that it would take up to a month to resume full operations at the refinery, which has a capacity to process 220,000 barrels of crude oil a day.
Crude oil may rise next week on speculation that OPEC won't increase production as fast as consumption grows this winter.
Opec’s decision to increase oil production, which took effect officially yesterday, is failing to stop surging oil prices because there is no real supply shortage in the market, the group’s ministers said.
About 25 years ago (my God, I'm old!) I was having dinner in New York with a stockbroker friend who was telling me that oil was headed for US$100 a barrel. I said that I didn't think it would ever see US$40 again in real terms. As of yesterday, I'm still right (and my friend is still rich, which proves that it's better to be a stockbroker than smart, although both is preferable).
UPI International Correspondent As Russia and China quietly maneuver for control of the Caspian region's vast energy reserves, both are looking ahead to a post-hydrocarbon world and beginning to cooperate on nuclear power.
Chevron Corp., the second-largest U.S. oil company, said third-quarter earnings dropped for the first time in five years after a glut of gasoline pulled prices lower and refinery crude costs climbed to a record.
If gas prices were lower, several things in John Jackson’s life would be different.
For one thing, the Carlisle resident said, he would probably choose premium gas for his Dodge minivan. For another, he would keep more of his appointments at Lebanon Veterans Affairs Medical Center.
Tenaga Nasional Bhd's chief executive officer Datuk Seri Che Khalib Mohamad Noh says the country needs to face the fact that the cost of energy was rising globally and that there was no escaping from it.
"We can't run away from this problem. Not only Malaysia, many other countries are also facing the same problem and everybody has to look at the way energy prices are going up, in a more realistic way," he said.
Energy Minister Kiraitu Murungi plans to invoke the powers vested on him by the Energy Regulation Act to regulate fuel pump prices.
Kiraitu says his Ministry is closely monitoring international crude oil markets and will not hesitate to implement retail price controls if key petroleum players continue increasing prices unfairly.
China's first oil price increase in 17 months should end fuel shortages that were unnerving the country's leaders, but it leaves Beijing no nearer to the market deregulation needed to ensure stable long-term energy supplies.
It is understood that the government has three options for controlling the crude oil price rise. One is to cut the customs and excise duties; second is to issue additional bond against the higher under recoveries and the third is a mix of both and a slight increase in oil prices.
In Europe, car advertisements may soon carry warnings about fuel efficiency and carbon dioxide emissions. In Japan, one in five cars is a hybrid. In the US, Congress wants to significantly tighten fuel efficiency standards.
But in Australia, at a time when people are buying bigger cars and driving further, the main political parties have failed to tackle greenhouse gas emissions from transport, environment groups say.
Europe’s electricity grids are old and often not capable of providing trans-border, much less trans-continent energy security. Yet one German energy expert has come up with a visionary scenario that would overhaul the grids, increase energy security and at the same time help avoid climate change.
Gregor Czisch’s dissertation has rattled the energy world. Its main claim: Given the political will, Europe could within a few years meet 100 percent of its electricity needs from renewable energy sources, at no cost difference to today’s fossil fuel-based system. The scenario includes the construction of a high-voltage direct current European super grid linking all countries in Europe, and the continent externally to Africa and the Middle East.
Fishermen at one of France's main ports went on strike on Friday to protest against the rising cost of fuel and demand state aid.
Almost all the 300 boats based around the northwestern port of Guilvinec in Brittany took part in the strike and organisers said they hoped fishing fleets along France's Atlantic coast would join their protest.
Record coal prices have plenty more room to rise in their demand-led rally as the fuel is still cheaper in real terms than in the 1980s, those in the industry say, with costs to be passed on to electricity consumers.
"We're going back to the prices of the late 1970s/early 1980s in real terms but the difference this time is that demand is surging and we've got a genuine coal shortage," said Jim Lennon, metals and mining analyst at Macquarie Bank.
AIRLINES claim they are being kept in the dark about potential fuel supply problems and worry that this leaves them unable to adequately plan for disruptions.
Economic powerhouse China is coping with a fuel crisis that is disrupting the trucking industry and threatening to send diesel prices soaring.
Brazil's state-owned Petrobras cut off gas to its large customers in Rio de Janeiro for 24 hours, leading to fears of an energy crisis in the country.
The president of the Industry Federation of Rio de Janeiro (Firjan), Eduardo Eugenio Gouveia Vieira, told daily O Globo that the interruption in gas supplies had set off alarm signals about the energy shortage.
Belarusian President Alexander Lukashenko sated that power generation became a major world problem of the 21st centaury. "Shortages of electricity, gas and oil become a cause of international tensions and conflict," he stated at the 1st Congress of Belarusian scientists on Friday.
"We already see runaway increases in prices of fuels; and it's a test for Belarus, because we have no oil and gas fields of our own," Lukashenko said.
Cooking fuels kerosene and LPG are priced the lowest in India in the entire South Asia with small and less prosperous nations like Nepal and Bangladesh charging a rate closer to market price.
They say you can get used to anything. Maybe. I never did take a liking to those C rations. But as far as I can tell, we've got used to gasoline costing $3 a gallon. It doesn't stop us from buying cars or going on vacation, it isn't making us demand tiny minicars. The hysteria is gone. We shrug and pay the price.
As oil hovers around US$90 a barrel, the race is on to more heavily tap into the world's second-largest oil reserve, and South Dakota - a major ethanol producer that typically sits on the alternative side of the fuel industry - is finding itself at the crossroads of two major oil projects.
One is a 590,000-barrel-a-day pipeline with plans to deliver Canadian crude to Patoka, Ill., and Cushing, Okla. The other is a proposed refinery that would be the first new U.S. refinery location in more than 25 years.
Supply for both projects would come from the oilsands of northern Alberta, home to some 175 billion barrels of crude, putting the region second only to Saudi Arabia in terms of the world's oil reserves.
Duke Energy Corp. engineers at the McGuire nuclear power plant on Lake Norman, N.C., need the water level in the lake to be above a certain point in order for the plant's backup safety systems to work but the recent drought is causing problems.
China will try its utmost to keep its annual oil imports below 60 percent of its total oil consumption by 2020, a researcher with the country's top oil company said yesterday.
"I can assure you that China's oil and gas production is still huge because of the reserves potential. Currently China's production is rising to its peak season, which may last 30 years," Zhao Wenzhi, director of the Research Institute of Petroleum Exploration & Development affiliated to China National Petroleum Corporation (CNPC), said yesterday.
China's energy-intensive industries are still growing too fast, according to an official with the state planning agency, the National Development and Reform Commission.
The Oil Rush to the Caspian Sea (The Oil and the Glory book review)
The Good A fascinating look at the players and intrigue behind major Caspian region oil deals.
The Bad Lacks a firm assessment on just how important this area's resources are to the global energy picture
The Bottom Line A very good book that fills gaps in our knowledge about a vital subject.
Mexico's Petroleos Mexicanos (Pemex) has been warned it may no longer be allowed to operate in the state of Veracruz following criticism for its poor response to recent accidents and oil spills.
Veracruz State Governor Fidel Herrera Beltran launched the criticism, saying Pemex's various accidents this year have caused losses in the state estimated at 8 billion pesos ($750 million).
The FAO, which has issued at least one report this year on how biofuel production has been causing food prices to rise, said, "We regret the report of the Special Rapporteur has taken a very complex issue, with many positive dimensions as well as negative ones, and characterised it as a 'crime against humanity'."
Mubarak said that the aim of the programme was to diversify Egypt's energy resources and preserve its oil and gas reserves for future generations. He also pledged that his country would work with the International Atomic Energy Agency (IAEA) and would not seek nuclear weapons.
The cost of everything from tortillas to cereals and cornstarch will rise in Canada because America's policy of subsidizing ethanol to cut dependence on foreign oil has led to rising demand for corn, says a report.
Industry insider and writer on oil Matthew Simmons bet $5,000 with a New York Times columnist that oil prices would reach $200 in 2010.
Simmons calculates that $65 a barrel translates to 10 cents a cup, still 10 times cheaper than bottled water
Others use less refined analysis.
"I'd bet on oil going up because governments are crap and refineries get on fire," said Charlie Ryan, a gas worker spending his evening at a betting shop in London's gritty Mile End.
The odds of oil prices hitting the $100 mark by Christmas day are 13-8, according to bookmaker Cantor Index.
EVEN as oil prices continue their climb to the stratosphere, profits for Western oil companies appear to have peaked for the moment - as underscored by a surprisingly weak earnings report from Exxon Mobil.
The reasons include aggressive governments that are grabbing a bigger slice of the oil pie and stingy consumers who are making it hard for companies to pass on higher prices.
The new company's fleet will consist of 113 vessels. The company has plans for another 32 consisting mostly of tankers and several modern ice-class liquefied gas carriers to be added in the next three years. There is no doubt that the fleet's main task in the next few decades will be to transport hydrocarbons from the Arctic shelf.
Local business groups on Friday downplayed the effects of the current oil price spike on their operations, saying the continued strengthening of the peso was compensating for it.
"Overseas Filipino workers are off to our rescue and they are doing this at their own expense; they have to send more dollars to keep up with the usual value of their remittances," said Alberto A. Lim, executive director of the Makati Business Club.
Since the mid-90s, oil experts have agreed upon one thing that no one has a perfect crystal ball to predict oil prices. Most forecasts made by experts and institutes like the International Energy Agency, the US Department of Energy and the World Bank for 2010 were in the narrow range of $20 to $30 per barrel. It looks like all of them are likely to be proven wrong.
Cheap oil has proved costly for previous transport infrastructure investments. Among these is the Fremantle Passenger Terminal, built in the early 1960s at a cost of £1.5 million, approximately $30 million in today’s dollars, to accommodate growing demand from passengers arriving from Europe during the “populate or perish” immigration era. What Western Australia’s planners did not foresee was that growing world production of cheap oil was simultaneously triggering the explosion of cheap international air travel. Within two decades passenger arrivals plummeted to two per cent of their 1965 peak and the facility became largely redundant.
As the price of oil soars ever closer to $100 a barrel, a mass market for solar power and other cheap renewable energy is rapidly emerging.
A new UN-sponsored program is placing giant, garbage-burning ovens in one of Africa's biggest shantytowns.
But in late 2007, it is no longer farfetched to connect the dots between environmental health or even foreign policy and smart controls. Indeed, Paul Ehrlich, another ES advisor and president of Building Intelligence Group, spent the first part of his keynote address laying the foundation for exactly that line of thought. Climate change, the concept of peak oil, carbon dioxide emissions per capita … again, not typical subject matter at HVAC seminars.
Green roofs have taken root on numerous commercial buildings across the country, but now people are exploring the possibility of planting a little shrubbery atop their own homes.
Sensing that the broader market is finally ready to accept fold-up bicycles as one antidote to global warming and rising obesity rates, Bike Friday hopes that its tikit, which retails for $1,195 — compared with an average cost of about $400 for folding bikes — will turn more people into bike commuters.
...“We want to be part of the solution for global warming, climate change and peak oil,” she said. “We want to make it easier for people to ride bikes where they want to go, instead of driving cars.”
It's August 2009, oil prices have topped 150 dollars a barrel and a secret uranium plant has been detected in Iran.
Tehran and Caracas are slashing oil exports by 700,000 barrels to punish the west for sanctions, and the US military is ready to move its entire Pacific fleet into the Middle East to counter threats.
It may be tomorrow's headlines, but on Thursday a high-powered panel of Washington insiders acting as the US president's national security council found they would face almost impossible choices and be powerless in such a case, baring the United States' growing inability to lead in global crises.
"In this kind of hostile environment (Iran and Iraq) would have the upper hand," said Gene Sperling, who played the treasury secretary in the exercise.
It "would make us look impotent," he added.
"This scenario could start tomorrow," said retired general John Abizaid, the former US Central Command chief.
The rapidly growing appetite for fossil fuels in China and India is likely to help keep oil prices high for the foreseeable future, threatening a global economic slowdown, a top energy expert said on Wednesday.
The unusually stark warning by Fatih Birol, chief economist of the International Energy Agency, about the effect of Asia’s emerging giants comes as the agency prepares to issue its influential annual report next week, which will focus on China and India.
In preparing the report, Mr. Birol said he had experienced “an earthquake” in his thinking.
Fortunately, the consensus view on Wall Street is chances are slim that oil will surpass $100 a barrel and stick for any length of time.
A severe housing slump and attention-getting credit crunch are tapering U.S. economic growth, which will trim energy demand and bring prices down to around $70 to $80 a barrel, predicts Fimat analyst Antoine Halff.
The Organization of Petroleum Exporting Countries will need to pump more than the additional 500,000 barrels a day agreed in September to avoid tight crude and product inventory levels, the head of the U.S. Department of Energy's data section said Thursday. "If no additional supply by OPEC is agreed we will see a shortage in the first quarter of 2008 in inventories. We will see higher draws from inventories," Guy Caruso, who is administrator of the DOE's Energy Information Administration, told an energy conference in Dubai. "US stock inventories for the winter are going to be very tight," he added.
The North McElroy oil field here in West Texas has long been a tableau of rusty tanks and worn-out pump jacks. "NOT IN USE" is painted across broken electrical panels affixed to an abandoned building. With oil prices setting records, years of neglect finally appear to be coming to an end. The energy company Apache is drilling new wells. Workers are flocking to this sparsely populated part of the state, living in motels and trailer parks. Dishwashers and teachers are fleeing their jobs for $60,000 salaries in the fields.
But for all the new wealth and activity, the best the industry can hope to accomplish is to slow the decline of U.S. oil production. The good times here are not nearly as good as they were in the last big oil boom, in the 1970s and 1980s, and nobody expects that they will get that way, however high prices rise.
The Alabama Supreme Court on Thursday threw out nearly all of a record $3.6 billion verdict that the state government won against Exxon Mobil Corp. in a dispute over natural gas royalties.
We knew the war was built on lies - but to have increased petrol prices as well as terror will surely seal history's verdict.
China's oil giants Sinopec and PetroChina moved yesterday to more than double diesel imports this month after Beijing unexpectedly raised domestic fuel prices by up to 10 per cent, giving profit margins a fillip.
The main suppliers to the world's second-largest energy user are seeking to buy an extra 120,000 tonnes of the fuel in November, trade sources based in China and Singapore told Reuters, adding to the 90,000 tonnes they have already purchased and potentially lifting imports to their highest in three years.
"Gasoline prices can't keep pace with the sharp runup in crude oil prices," says Fadel Gheit, senior energy analyst for Oppenheimer & Co.. "Going forward, whatever an oil company can get for crude oil [production], it will forfeit at the pump."
Eleven years ago, I wrote an article for the Atlantic Monthly with various predictions and warnings on oil and energy technology and climate. Since those subjects remain hot today -- concern over oil prices and peak oil is at a three-decade-high, and Shellenberger and Nordhaus have reignited the technology debate with a variety of historically inaccurate claims about the clean energy R&D message -- and since this is probably the best thing I wrote in the 1990s, I am going to reprint it here. It is a long piece so I will divide it up into several posts.
Dr. Sabonis-Helf said that oil is the most widely used energy source in the world and that the U.S. is the biggest consumer worldwide. She said we expect to see a 43 percent increase in oil demand between 2003 and 2030, and a 15 percent increase by 2010. And since oil does not power our homes, this rise is expected to come from an increase in the number of cars being purchased.
With demand increasing globally, the world market is facing two potential threats: capacity and catastrophic events, such as a terrorist attack.
Lawmakers led by Rep. Terry Backer and Sen. Bob Duff on Thursday warned of potential dire consequences if Connecticut ignores the soaring price and plummeting worldwide availability of oil.
To understand why yields were lower for plots that received the most nitrogen, Khan and his colleagues analyzed samples for organic carbon in the soil to identify changes that have occurred since the onset of synthetic nitrogen fertilization in 1955. "What we learned is that after five decades of massive inputs of residue carbon ranging from 90 to 124 tons per acre, all of the residue carbon had disappeared, and there had been a net decrease in soil organic carbon that averaged 4.9 tons per acre. Regardless of the crop rotation, the decline became much greater with the higher nitrogen rate," said Khan.
Former President Bill Clinton told more than 100 mayors Thursday that stopping global warming depends on them demonstrating that it makes economic sense. He said his foundation is teaming up with Wal-Mart Stores Inc. to save cities money on environmentally friendly supplies by buying in bulk.
From his desk in an office in Chicago, Jeff Smith has a bird’s-eye view of the American landscape. Combing through a huge database of information compiled by the EPA, he can, almost literally, peer down every smokestack in the nation and figure out what’s going on inside.
And what he sees is heat. Waste heat—one of the country’s largest potential sources of power, pouring up out of those smokestacks. If it could be recycled into electricity, that heat would generate immense amounts of power without our having to burn any new fossil fuels. By immense, I mean, speaking technically, humongous. Even after he’s winnowed the nation’s half a million smokestacks down to the most likely customers, that leaves twenty-five thousand stacks. “An astronomical number,” Smith says.
Lawmakers took the first step Thursday on a bipartisan global warming bill that would impose mandatory cuts in greenhouse gases from power plants, industrial facilities and transportation.
When it comes to passing climate change legislation, the U.S. Senate has plenty of options to choose from - nine bills to cut greenhouse gases have been rolled out since the start of the year. Yet none has managed to achieve a groundswell of support among key activist groups.