DrumBeat: March 31, 2008
Posted by Leanan on March 31, 2008 - 9:14am
Driven by a painful mix of layoffs and rising food and fuel prices, the number of Americans receiving food stamps is projected to reach 28 million in the coming year, the highest level since the aid program began in the 1960s.
...Because they spend a higher share of their incomes on basic needs like food and fuel, low-income Americans have been hit hard by soaring gasoline and heating costs and jumps in the prices of staples like milk, eggs and bread.
At the same time, average family incomes among the bottom fifth of the population have been stagnant or have declined in recent years at levels around $15,500, said Jared Bernstein, an economist at the Economic Policy Institute in Washington.
No Arab oil industry has witnessed the difficulties and challenges facing the oil sector in Iraq over the past 25 years, especially during the past five years of occupation. Currently, a battle is raging for political control over Basra, Iraq's only marine gateway, its second largest city, and the source of almost 90% of its oil reserves which currently account for two million barrels a day. This is not to mention three huge oil fields with production capacity of over two million barrels a day that have been explored but not developed yet. These are the Majnoun field, the Gharb al-Qurna field, and Nahr bin Omar field. This battle will represent decisive turning point in the modern history of Basra and in the history and future of Iraq's oil industry.
The American West is heating up more rapidly than the rest of the world, according to a new analysis of the most recent federal government temperature figures. The news is especially bad for some of the nation’s fastest growing cities, which receive water from the drought-stricken Colorado River. The average temperature rise in the Southwest’s largest river basin was more than double the average global increase, likely spelling even more parched conditions.
NEW YORK (CNNMoney.com) -- Under the backdrop of record gas prices and record profits, Congress is set to grill executives Tuesday from the world's five biggest oil companies.
Lawmakers are expected to focus their questions on why the cash-rich industry needs $18 billion in tax breaks over ten years with some in Congress looking to take them away and use them to subsidize renewable energy projects.
Beyond the tax breaks though, congress is sure to raise issues surrounding the industry's record profits. But it shouldn't be just lawmakers that get to ask the questions. So CNNMoney.com asked the general public and some industry-watchers: If they could ask oil executives anything, what would they ask?
WELSH households face the misery of being hit by more than £100 extra on their energy bills by the end of the year – on top of the £140 hike they have already faced since Christmas.
The price rises predicted by experts will come as a hammer blow to pensioners and others on low incomes.
It will cost every household in the UK at least £2,000 to comply with the new European Union target of producing 15 per cent of all energy from renewable sources by 2020, according to a report commissioned by the government.
The report also says the UK will have to spend far more to meet the target than other EU countries, because the UK lags behind the rest of Europe on renewables and is a heavy energy user.
QUITO (Reuters) - Italy's Agip Oil crude output in Ecuador remained halted on Saturday, a day after local communities damaged its electricity system to demand more funds for poor villagers, an oil ministry spokesman said.
We decided to examine statistical patterns involving three factors — entrepreneurship, oil wealth and a country’s friendship towards the US. After all, perhaps these three factors create a golden triangle, three points in a relation that could be of use to international organisations and national governments. US diplomats like to deal with big partners — the national oil company, the captains of the industry — and tend to be less aware of the smaller businesses that are typically entrepreneurial. If data show that entrepreneurial countries are indeed friendly and oil countries less friendly, then the US Treasury and the US State Department have a concrete reason to spend more time than they have done to date fostering or at least being aware of small enterprise in foreign countries.
Rose Mateta has been selling charcoal by the Mombasa-Nairobi Highway since 1991. Every day she sits under a shed displaying the bags of charcoal at Kiboko town, some 200km from Nairobi.
With global oil prices steadily on the rise, charcoal trade has given the 50-year-old woman a chance to cash in on an alternative fuel as more customers adopt it. But since both kerosene and LPG gas prices are continuing to rise, charcoal is also becoming rare.
As production of biofuels increase to counter dependence on foreign oil and high fuel prices, some scientists worry that the world's phosphorus supply will slowly diminish, limiting our ability to grow crops and forcing fertilizer prices through the roof.
Phosphorous is essential to plant growth. Mined out of phosphate rocks, it is one of the three critical elements found in fertilizer along with potassium and nitrogen.
"From our country's deposits, we could run out in 50 to 100 years, which isn't very long," said Jessica Davis, professor of soil and crop sciences at Colorado State University. "I think that people aren't really aware of it."
There is no alternative to continuing growth, but it comes with deadly side-effects. Overused in industry and agriculture, and under threat from the retreat of the Himalayan glaciers, water is becoming a non-renewable resource. Two-thirds of China's cities face shortages, while deserts are eating up arable land. Breakneck industrialisation is worsening this environmental breakdown, as many more power plants are being built and run on high-polluting coal that accelerates global warming. There is a vicious circle at work here and not only in China. Because ongoing growth requires massive inputs of energy and minerals, Chinese companies are scouring the world for supplies. The result is unstoppable rising demand for resources that are unalterably finite.
BERN, Switzerland: The World Jewish Congress criticized Switzerland on Monday for participating in a gas deal with Iran that it condemned as a propaganda triumph for Tehran's hard-liners.
DUBAI (Reuters) - Iraq and five oil majors are unlikely to sign service deals to boost output from some of the country's largest fields before June after a slowdown in negotiations, oil executives said on Monday.
Baghdad is expected to pay up to $2.5 billion for the firms to help raise the country's output by nearly a quarter, in what would be the largest foreign involvement in Iraq's oil sector for decades.
(Bloomberg) -- BP Plc and partners will expand the capacity of their pipeline from Azerbaijan to Turkey by 20 percent next year, the pipeline's Turkish manager said.
BP is currently pumping about 875,000 barrels of crude a day to the Turkish Mediterranean port of Ceyhan, Can Suphi, the pipeline's manager for Turkey, told reporters in Ceyhan today. Capacity will rise to 1.2 million barrels a day in 2009 and as much as 1.6 million barrels by 2013, he said.
The Libyan government says it will review all future contracts with oil companies in a bid to reap more benefit for the country, a senior Libyan government official told Dow Jones Newswires.
"Libya is going back to renegotiate all its oil contracts," Libya's national representative at the African Petroleum Producers' Association, Seddigui N. Ismail said in an interview at the APPA meeting in Yaounde last week.
China’s four-week-long diesel shortage continues to spread across the map, moving further north into the Beijing area like a stain. With diesel shortages in neighboring provinces, more and more truckers are heading to Beijing to refuel, leading to shortages and rationing in the city’s suburbs.
Karachi Chambers of Commerce and Industry, and leading textile businessman, Haroon Farooki told Daily Times that the power crisis has caused upto 25 percent of small businessmen to shut their business down because the combined attack of load shedding and the increase in fuel prices is more than they can bear. He said that the textile sector is under serious threat of financial crisis as there are more than 25 percent of foreign orders have been cancelled so far. The level of damage to industrialists and businessmen cannot be calculated because the moral degradation after cancellation of international orders is large and cannot be quantified.
The April 1 deadline for KESC’s payment of Rs 2.5 billion to the Pakistan Electric Power Company (PEPCO) is fast approaching and it does not look like this payment can be made. Farooki commented that PEPCO president blatantly said that power would not be bought or sold without money.
WASHINGTON (Reuters) - The U.S. Supreme Court on Monday sided with Delaware and ruled the state can block a $750 million liquefied natural gas plant that BP Plc wants to build on the New Jersey side of the Delaware River.
As the price of gasoline rises, many gas station owners say they're being priced nearly out of business.
"The prices go up and our margin either stays the same or shrinks," said Sam Mousa, who, until last month, was running two gas stations in Salem.
Chief Adviser (CA) Fakhruddin Ahmed yesterday called for restructuring the country's agricultural system to increase the production of food grains for ensuring food security.
Referring to the recent trend in the world food production, he said it is clearly understood in the changed situation that the strategy to replenish food shortages through import is risky.
Although Asia’s farmers and exporters ought to be laughing all the way to the bank over the rapidly increasing price of rice, they aren’t. All sides – producers and consumers – are suffering and governments are struggling to cope, and farmers in Thailand, the Philippines and other countries are guarding their fields at night to prevent theft.
NASHVILLE, Tennessee: Nobel prize winner and former Vice President Al Gore plans to launch a three-year advocacy campaign calling for the United States to reduce its greenhouse gas emissions.
U.S. Rep. Neil Abercrombie, who met with Aloha employees last week, said, "Their lives are collapsing in front of them."
In the hope of lowering fuel costs and increasing the airline's cash flow to save the airline, Abercrombie said he will send a letter to President Bush today asking him to release fuel from the petroleum reserve, a fuel bank that is held for sustaining energy during a shortage crisis.
While there is no fuel shortage, Aloha and other companies in the commerce and cargo industry are on the verge of a crisis because of high fuel costs, he said.
"It's a national emergency," he said. "The cargo hauling industry, the commerce industry are reaching the crisis point. Truckers are being shut down."
Saudi Arabia’s boast that its southern desert region contains vast reserves of natural gas is facing growing skepticism, amid a string of exploration setbacks by international oil companies operating there.
Mexico City - Mexico's state oil company must modernize and look for new fields to stem a substantial fall in its oil production, a government report found. Mexico's oil fields are becoming tapped-out, and by 2021, it would produce 500,000 fewer barrels a day and bring in 14 billion dollars less per year than it does now, warned an Energy Ministry report on the condition of Petroleos Mexicanos, better known as Pemex.
Since 2005, Pemex has lost 10 billion dollars, largely because of shrinking production at its largest oil field, Cantarell in the Bay of Campeche off the coast of Veracruz state, the report said.
Poor Mexico, Part 1: So far from God — so close to the United States
Somewhere off the northern coast of Mexico, buried under the warm waters of the Gulf, there appears to be a $5 trillion treasure that could power all of America for seven straight years. Just 20 years ago, this multi-trillion-dollar find would have been beyond the grasp of the most advanced technology then known. Today, however, the latest oilfield technology could easily bring this potential 50-billion-barrel oil find to market — if there weren’t a non-technological obstacle in the way of getting these riches to the surface.
The problem certainly is not that Mexico doesn’t need the money; nor is it the fact that the U.S.A. would desperately love to share in this exciting bounty. So what’s the problem? We have the technology, they have the oil and a profound distrust still exists. When it comes to Mexico’s natural resources, the trust between our two countries has never recovered from the grave wounds it endured 70 years ago.
HUMAN beings are remarkably short sighted. Evolution has designed us to be efficient at spotting and avoiding a sabre toothed tiger waiting by the rocks, but we’re not so good with more long-term issues like retirement funds. And global warming. And oil subsidises.
Ah. We remember the good old days of 2004 when petrol cost only RM1.37 a litre, and we could happily bathe in the stuff.
The city witnessed protest against load-shedding in various areas on Thursday, as the angry KESC consumers blocked roads in their localities and chanted slogans against the power utility for being unable to provide uninterrupted electricity supply. The situation resulted in traffic jams in these areas.
The residents of Banaras, Orangi Town, Liaquatabad and Pak Colony took to the streets and blocked traffic flow, while groups of women gathered in Saeedabad and Balida and blocked the Hub River Road for several hours that affected inter-city and intra-city traffic.
The price of oil is rising relentlessly – also due in part to the soaring Asian economies – and it’s making farming and transportation of food more expensive. The energy crisis is also fuelling the heavily subsidized ethanol business. Between one-quarter and one-third of corn crops in the United States are now being diverted into biofuels, squeezing out food crops and driving up their price.
Police in Dakar used tear gas late on Sunday afternoon to disperse a group of protesters planning a march against continuing price increases and deteriorating living conditions in the country.
The march was organised by consumer associations in the country and was attended by prominent opposition leaders, including Ousmane Tanor Dieng, the leader of former ruling Socialist Party.
Pacific ACP Trade Ministers have been told that the global energy crisis is now being felt in the region.
The ministers who’ve just ended a two-day meeting in Nadi have heard that everyone is being affected by the rapid fuel price increase.
Frances Urban knows the value of a penny.
When she was growing up in Wakefield, Mass., one of the coins could buy her four caramels at the candy store.
Now she and other residents of Basilica Place, a senior residence run by Catholic Charities of Baltimore, are collecting cents to contribute to the Fuel Fund of Maryland. The nonprofit helps families pay their heating and home utility bills.
John Sfakianakis, chief economist at SABB bank, said the move would increasing the purchasing power of Saudi families that no longer have to employ chauffeurs, Saudi daily Arab News reported on Saturday.
Sfakianakis said allowing women to drive would also cause a shift in the ownership of vehicles, increase car sales and open up new markets for the automobile industry and those serving it.
(Bloomberg) -- U.S. farmers will plant 18 percent more acres with soybeans this year, more than expected, after price gains made the oilseed more profitable than corn, the government said. Wheat planting also will jump.
As Maine weighs its future electricity needs, a debate has emerged over which sources will truly generate significant amounts of power and fulfill their promise of being environmentally friendly.
When the movers and shakers of Britain's civil nuclear industry assembled in London last week, the mood was upbeat. A speech from John Hutton, the business minister, had removed any lingering doubts about the Damascene scale of the government's conversion to nuclear's future role in the UK energy mix.
New oil and natural gas production in Alaska and in its surrounding waters would immediately be put at risk if the polar bear is listed as "endangered." There would be virtually no chance to open up even a small portion of the Arctic National Wildlife Refuge (ANWR), an area estimated to contain 10 billion barrels of oil. That's enough to replace what we'll import from Saudi Arabia over the next 15 years.
The idea behind "carbon capture and storage" is elegantly simple. Industries that generate carbon dioxide shouldn't pump it into the air. They should "capture" it. And then pump it back underground -- which is where it likely came from in the first place -- where it will stay.
We keep churning out energy, products, money and jobs; we stop making the planet's fever worse. One would think environmentalists would find this quite satisfactory.
But one would be wrong.
Dire predictions about the future of prosperous capitalist living remain trendy, despite decades of well-documented exaggeration. Al Gore claims a consensus in regard to his "planetary emergency" of global climate change from fossil-fuel burning. The science is "settled," the editorial page of Science magazine claimed last year. And note the title of a recent conference at the Baker Institute at Rice University: "Beyond Science: The Economics and Politics of Responding to Climate Change."
But as columnist George F. Will has observed in reference to climate science, "People only insist that a debate stop when they are afraid of what might be learned if it continues."
NASA chief climate scientist James Hansen has written to Prime Minister Kevin Rudd asking him to consider halting plans for mining and export of coal in Australia.
When financial assets disappear, real assets still have real value. You can eat food and live in a house.
Growing populations, rising standards of living and a finite planet argue for resource prices to rise.
Chinese demand for meat, which requires the input of much more vegetable matter than the equivalent calorie value in noodles, almost requires wheat prices to increase — and they are increasing. Whether peak oil is with us now or in 20 years, the oil supply is finite and demand continues to grow. Water, the ultimate in inelastic demand goods, is also finite — and getting scarcer.
Pemex, which produces more crude oil every year than Exxon Mobil Corp., suffers from too little investment, high taxes, laws that forbid competition, corruption and corroding and exploding pipelines. An accident at an offshore platform killed 21 in October.
The Pemex crisis that critics have warned about for the past decade has arrived: Production at the company's largest oil field, Cantarell, fell 18 percent last year, and Pemex has little petroleum lined up to replace it. Yet the government of President Felipe Calderon finds itself unable to act to prevent what could be a disaster for both Pemex and the country, whose budget relies heavily on Pemex sales.
There's a topic to be discussed at the intersection of economics and the environment that doesn't get the attention it deserves. The topic is "peak oil."
HONG KONG - Guangdong province, one of China's economic power engines, this year will suffer its worst electricity shortage in three decades. And despite China's power supply and demand nationwide expected to reach a balance this year, power supply in the coastal regions will remain tight.
BEIRUT, Lebanon: Lebanon's top Shiite Muslim cleric has issued a religious edict banning attacks on public utilities in Iraq, mainly the oil industry.
Grand Ayatollah Mohammed Hussein Fadlallah says in a statement that Iraqis should work for stability in their country otherwise they will be helping the "occupation."
MOSCOW (Reuters) - Russia's gas export monopoly Gazprom acknowledged on Monday it was facing delays and cost overruns at two key projects, a pipeline to Europe and an Arctic oil development.
(Bloomberg) -- India, Asia's third-largest consumer of oil, will focus on obtaining energy assets in Angola after failing to secure supplies closer to home.
``Angola is the next country where we are going to concentrate,'' Indian Oil Minister Murli Deora said in an interview in New Delhi. ``We lost because our bid wasn't good enough'' in previous auctions, he said. ``We have learned from this,'' the minister said.
Dark days are coming. Oil will run out, temperatures will rise, governments will crumble and survivors will be forced to scratch out a preindustrial existence amid the detritus of the 20th Century.
James Howard Kunstler warned as much in his 2006 book of social criticism, "The Long Emergency." And he stays on-message in his new novel, "World Made by Hand," which sketches post-apocalyptic life in the fictional upstate New York town of Union Grove.
New rules designed to help homeowners, schools and hospitals to install climate-friendly generators will be announced today by the Energy Minister.
Malcom Wicks will give details of the funding as part of changes to the Low Carbon Buildings Programme in which the cap on grants will be raised to 50 per cent of the costs.
Facing mounting diesel fuel costs and shrinking profits, some truckers nationwide are making plans to protest this week by parking their semis or clogging traffic by driving slowly.
The truckers say average diesel gas prices, which AAA reported had risen over the past month from $3.38 to $3.91 a gallon nationally as of Friday, are forcing some drivers out of business.
The world is faced with a triple crisis: climate change, peak oil and global resource depletion. These are interrelated and interactive problems which makes the subject extremely complex. The certainties are that there will be great changes to contend with in the future in order to produce and deliver food to maintain the present world population, let alone a balanced diet for everyone. At the present time there are roughly one billion people that are underfed and/or on imbalanced diets lacking essential micro nutrients that are provided by animal protein.
The primary resource depletion is that of fossil fuel energy since the world has been using more fossil energy than is being discovered and it appears that the reserves of oil that can be cheaply mined are now at peak production (half these resources have been combusted). As oil reserves are depleted it is predictable that, just as with any other commodity, prices will rise with increasing scarcity. World population expansion has been promoted by the availability of inexpensive oil, which has supported increased world food production by providing inexpensive inputs including fertilizers, insecticides, herbicides, traction power( lowering the need for labour and reducing the numbers of people in farming) and in places irrigation water. Inexpensive oil allowed food to be produced cheaply but this will change greatly as oil prices rise creating the potential for major disruptions in food availability.
JAKARTA (AFP) - With prices for key commodities at record highs, Indonesia -- Southeast Asia's biggest economy and a key exporter -- should, at first glance, be enjoying good times.
But with high oil prices leading to a government fuel subsidy blowout and rising food prices hitting the poor, analysts say most Indonesians are being squeezed.
Despite a drop in the volume of oil imports, South Korea's import bill rose sharply this month from a year earlier as international crude prices shot up, government data showed Sunday.
MEXICO CITY, March 30 (Reuters) - Mexico will start afresh this week with multiparty talks over a planned oil reform, the government said on Sunday, further reducing the chances of a law being passed before Congress winds up at the end of April.
NAJAF -- Iraqi Shi'ite cleric Moqtada al-Sadr called on his followers on Sunday to stop battling government forces after a week of fighting in southern Iraq and Baghdad threatened to spiral out of control. A crackdown on Shi'ite militants in the southern oil port of Basra has sparked an explosion of violence that has risked undoing the past year's improvements in Iraq's security.
ADDIS ABABA, March 30 (Reuters) Ethiopia said on Sunday security forces had arrested eight men suspected in connection with a deadly rebel raid last year on a Chinese-run oil field.
The state-run Ethiopian News Agency said the detainees belonged to the separatist Ogaden National Liberation Front (ONLF), which killed 74 people during the April 2007 attack in the remote eastern Ogaden region.
DUBAI: According to BP's latest "Statistical Review of World Energy," Iran and Qatar sit on 30 percent of the world's total natural gas reserves.
Yet within the Gulf, the ability to meet the growing local demand for natural gas is being frustrated by underdeveloped supply mechanisms and limited regional cooperation.
Western analysts say they expect little to change politically as a result of Medvedev's elevation and Putin's shift into the prime minister's seat: and economic analysts equally expect little change to emerge from the long-term plan.
There is in fact no shift in strategy, said a Russian oil industry analyst with an international organization in Paris, who requested anonymity because of the sensitivity of the authorities in Russia to criticism. In the absence of new thinking, "the only strategy is accumulation of assets in state hands and appropriation of the largest possible share of the oil and gas rent," he said.
Russian oil output may fall this year for the first time in a decade as the world's second-biggest supplier struggles with rising costs and harder-to-reach fields, Natural Resources Minister Yuri Trutnev said.
``Two years ago, we said the growth rate was falling, and we said this was bad for Russia, remember?'' Trutnev said in televised remarks after a government meeting in Moscow today. ``Now we're saying the production rate is falling this year. This is not a bogeyman, unfortunately, this is real,'' Trutnev said, without giving a specific forecast.
Could the oil sands, Canada's greatest economic project, come undone simply because no one thought about water?
For years, Bruce Crawford dreamed of putting solar panels on his one-story house to cut his power bill and "do something good for the environment." But he couldn't see past some dark clouds — the $20,000 to $30,000 purchase price.
"I wanted to do it, but I was choking on what I had to" spend, says the software engineer who lives in Pleasanton, Calif.
Then, a Silicon Valley start-up called Sun Run offered Crawford a way to go green without straining his wallet. Last month, the company installed a 3.8-kilowatt system on his pitched roof for $6,000. Crawford, 62, says he'll immediately save money on his electric bill. Sun Run monitors and maintains the system, replacing worn parts at no extra cost.
KHUN SAMUT CHIN, Thailand (AFP) - Crabs scuttle across the wet floor of the near-deserted Khun Samut temple, the only building left in a Thai village that has disappeared beneath the rising and advancing sea.
Waging a battle against an encroaching tide that has sent all the villagers fleeing inland, a monk in orange robes and faded tattoos meant to ward off evil spirits stalks the newly-built sea wall, planting mangrove shoots.
VIENNA (AFP) - Austria's glaciers retreated more than 22 metres (24 yards) on average last year, in the biggest shrinking for five years, the country's Alpine Club said Saturday.
"All glaciers experienced melting and retreated... an average of 22.2 metres" in the 2006-2007 period, the Alpine Club said, citing measurements of 93 glaciers by its specialists who blamed milder than normal temperatures.