The Oil Drum

This Is a Correction, Not the End of the Commodity Bull Market Part I

Every single day, the world's population uses more oil than the planet can possibly produce. This means the peak oil theory is still alive and well.

How to Burn the Speculators

Whenever economies sour, politicians blame speculators. But on occasion, they are right to do so. Speculators did wreak havoc in 1630s Holland, 1720s France, and in the American stock market in 1929. That crash led to the Great Depression and 60 years of tight controls on speculation. Now, thanks to our 30-year infatuation with free markets, the controls are off, and the mad gamblers are at it again.

Should I buy heating oil in August?

Though pump prices have eased off a bit, energy prices are still a major budget buster for many households. In cold weather states, this is shaping up to be an expensive winter. But no one knows for sure just where heating bills will end up. So is it a good idea to sign up for one of those pre-paid heating plans? Or hope that oil prices will keep falling?

Outsourcing The Fight

In 1992 a relatively little-known, Texas-based oil services firm called Halliburton was awarded a $3.9 million Pentagon contract. Its task was to write a classified report on how private companies, like itself, could support the logistics of U.S. military deployments into countries with poor infrastructure. Conspiracy theories aside, it is hard to imagine that either the company or the client realized that 15 years later this contract (now called the Logistics Civilian Augmentation Program or LOGCAP) would be worth as much as $150 billion.

World's farmers turn to raw sewage for irrigation

The future may not smell too rosy – it may lie in sewage. As cities and industries suck up ever more of the world’s scarce water resources, agriculture is destined to rely increasingly on recycling the contents of urban sewers, according to a new international study of “wastewater agriculture”.

The good news – for farmers at least – is that the irrigation water from sewers comes with free fertiliser in the form of the nitrates and phosphates bound up in human faeces. The bad news is that this coprological cornucopia is filling vegetables sold in city markets with heavy metals, pathogenic bacteria and worms.

Saudi Arabia: Northern fuel shortages widen

AR’AR – A fuel crisis is the last crisis most would not expect in the world’s largest oil exporting country. The northwestern city of Ar’ar already facing a diesel shortage for the last month is now faced with a shortage of fuel.

...Thani Al-Anezi, chairman of the Northern Frontier Region Chamber of Commerce and Industry, said the complaint has been referred to the concerned authorities and will be followed up because the impact falls on citizens, travelers and owners of fuel stations. He called on Saudi Aramco to conduct a field survey and supply fuel as it is required to fuel stations and factories through its own fuel tanker trucks or contracted ones.

Al-Anezi said the shortage was due to a new electronic quota system adopted by Saudi Aramco.

“The electronic system distributes a certain quantity of fuel to each fuel station, but the quantity distributed is not precise and does not meet the market demand,” he said. “The system does not take into consideration that many fuel stations do not own their own fuel tanker trucks, so several fuel stations may help each other.” “Some factories purchase large quantities of fuel reducing the quota for fuel station owners,” he added.

Saudi Writer Urges OPEC to Prepare for Oil Market Surprises, Falling Prices

While some lean towards saying that the recent big drop in oil prices was a corrective response or the international oil market's reaction after prices saw a steep rise, the explanation that is closer to acceptance is the drop in the demand for oil from the countries consuming it, foremost of them the United States where the demand for oil dropped by a large percentage to around half a million barrel a day and also in the Organization for Economic Cooperation and Development countries.

This important factor in the fast drop in oil prices is boosted by OPEC's hasty response to the consumer countries' (false) shouts about shortages in oil supplies and the daily demand to the organization to increase its production. The latest of these appeals, and it will not be the last, was the IAEA director's demand last week to OPEC to increase its production when he said: "Only the OPEC countries are capable of increasing the production capacity effectively." Out of good intentions, OPEC responded to the appeals, though it opposed them sometimes. But the final result was swamping the market with oil and some of the organization's members started to search for buyers but did not find any.

Price of oil independence: Eternal conservation

If oil prices continue to drop, they will also take some pressure off the Federal Reserve to raise interest rates in order to contain inflation. This would be just what the doctor ordered, in view of the precarious state of the economy in general and the housing sector in particular.

Indeed, lower oil prices could ward off a recession, or, if we are already in one, get us out of it sooner rather than later.

Before we get carried away with all this good news, however, it might be worthwhile for us to examine the other side of this coin: It's called conservation.

Energy policy: Law of the land

In the earliest days of the global oil industry, big international oil companies such as ExxonMobil and Chevron were often granted generous access to develop a country’s oil resources. Since then oil-producing countries have come to realize the value in their resources, and there has been a resulting shift in control of oil reserves from the old oil giants to governments and national oil companies such as China’s CNOOC, Petroleos Mexicanos (Pemex) and Brazil’s Petrobras.

Today, an estimated 77% of total global oil and natural gas reserves are state-owned, and that percentage should only get higher in the future. That trend is also changing the way large independent oil companies — and the oil service companies who work for the majors — do business since they now have to deal more often with state-owned firms rather than the traditional international oil companies. “These are unusual and frustrating times for the majors,” according to a recent article in the Journal of World Energy Law & Business. “The [state-owned firms] have a competitive advantage, because many governments prefer anything other than a western major these days.”

The sacrifice-free election strategy

Neither candidate speaks with much candor about solving the energy crisis. But the GOP will use U.S. oil drilling as a weapon against Obama.

Obama Meets Pickens, Seeks to Unify on Energy Policy

(Bloomberg) -- Democrat Barack Obama met with billionaire oilman T. Boone Pickens today and said the two will address how the country can look past political differences to unify around a comprehensive energy policy.

Why's oil so pricey? It's Big Oil's secret

A trader at Goldman Sachs boasted several months ago that "we move the price of oil when we want to move the price of oil." Mike Greenberg, a former big shot with the Commodity Futures Trading Commission, recently remarked that large banks and hedge funds control 80 percent of oil contract trading and are responsible for a 35 percent increase in the price of crude. Greenberg said, "These speculators sell oil contracts back-and-forth to each other simply to inflate the price and reap windfalls."

I doubt there's a shortage of oil. I don't see lines of cars at the pumps, heating oil and diesel fuel seem plentiful, some United Arab Emirates countries are increasing production, Iraq's huge spigot is open again, Brazil announced a monumental discovery and world demand appears to be declining. So why did the price of oil double in the last 12 months then zoom $16 in less than 24 hours?

India: Govt explores ways to beat diesel crunch

The demand for diesel has risen nearly 25 per cent in recent times as it is increasingly being used in power generation instead of fuel oil and naphtha that are costlier.

“The demand-supply gap seems to have widened because of this,” Deora said.

Kyrgyz PM Wants to Reduce Electricity Exports to Kazakhstan, Uzbekistan

Kyrgyz Prime Minister Igor Chudinov has said that his country should cut down the export of electricity to Kazakhstan and Kyrgyzstan this year due to a shortage of water in the country's major Toktogul reservoir.

Malaysia: Commuters pin hopes on Budget 2009

PUBLIC transportation seems to be the best option to help consumers mitigate the effects of the recent sharp fuel price hike that have burnt large holes in their pockets.

Oman turns to coal for power

Oman plans to build coal-fired power plants to beat a shortage of gas to fuel future projects for economic diversification, an Oil and Gas Ministry official said on Monday.

The Gulf is the world's biggest oil exporting region, but has been slow to develop massive gas reserves. Rapid economic growth has absorbed fuel supplies and left all the countries in the region except Qatar short of gas.

Zambia Copper Mines' Fuel Supply Steady - Indus Official

Zambia's copper mines are continuing to receive a steady fuel supply despite the shortage in the country due to increased demand and inadequate supplies from the country's sole refinery, a senior industry official told Dow Jones Newswires Monday.

More Mexico Reforms Necessary

Failure to advance more rapidly with reform runs the risk of turning Mexico’s dependence on oil and emigration into a chronic addiction.

Chavez Promises Paraguay All the Oil It Needs

Venezuelan President Hugo Chavez promised Saturday to supply Paraguay with all the oil it needs to meet its repeated problems of crude shortages.

Kenya: Fuel Crisis Bites As Companies Seek Black Gold

Even with reports that Kenya could have struck oil in Lodwar, the fuel situation in the country has been declared a crisis at the highest levels of Government. And the situation doesn't look promising.

Industry experts now say that there is little the country can do besides planning for the future.

Kenya imports crude oil for national consumption. But it imports just enough to last a month.

Wind power is costly, ineffective source of electricity

Building and installing these turbines requires 5 to 10 times more steel and concrete than is needed to build nuclear plants to generate the same electricity more reliably, says Berkeley engineer Per Peterson. Add in steel and cement needed to build transmission lines from distant wind farms to urban consumers, and the costs multiply.

Wind thus means more quarries, mines, cement plants and steel mills to supply those materials. But greens oppose such facilities. So the Pickens proposal could mean letting existing power plants rust, and importing steel and cement, instead of oil.

Wind turbines across Oregon stir up health scare: Study suggests living close to an energy farm can cause a variety of physical ailments

BOARDMAN, ORE. — Sherry Eaton pulled into the driveway of her rural, high-desert home to see one of several giant wind turbines being assembled a half-mile away.

"I started to cry," Eaton, 57, recalled of her first sight of the Willow Creek Wind Project in late July. "They're going to be hanging over the back of our house, and now there's the medical thing."

"The medical thing" is new research suggesting that living close to wind turbines, as Eaton and her 60-year-old husband, Mike, soon will be doing, can cause sleep disorders, difficulty with equilibrium, headaches, childhood "night terrors" and other health problems.

Recipes for new fuels reviving Maine's mills: Vast forests again pose rich resource

CORINTH, Maine - Over a lifetime working in the forest products industry, Randy Irish watched mills fail and friends lose jobs. It finally happened to him, after 32 years, when Georgia Pacific shut its paper mill near this northern Maine town.

But two years later, Irish has a new future at a new mill. The product this time: energy.

Sri Lanka expert says solar energy too costly without subsidy

(LBO) - Solar energy is still too expensive to be used widely without government subsidies, a Sri Lankan expert has told the island's energy-intensive industries which are grappling with the highest electricity costs in Asia.

Tilak Siyambalapitiya, managing director, Resource Management Associate, said solar energy cost 60 rupees per kilowatt hour whereas now industrialists are not paying over 13 rupees per kilowatt hour for power from the state utility.

The Strange History of Birth Control: Review of Fatal Misconception: The Struggle to Control World Population by Matthew Connelly

Recently, a number of family planning advocates have resumed warning us about the dangers of overpopulation. Wars in the Middle East and Africa, food shortages throughout the developing world, and even global climate change have all recently been attributed to "population pressure." Some of these groups use language that is worryingly similar to that of the "population bomb" alarmists of the 1950s and 1960s.

In fact, population growth alone probably isn't the political or economic threat that so many people feared. In the 1950s, demographers produced studies showing a modest correlation between economic growth and reduced fertility, but these were largely refuted in the 1980s. In any case, it is debatable whether Congo and Kenya would be more stable and prosperous if there were half as many Congolese and Kenyans. The 1994 Rwanda genocide has sometimes been attributed partly to overpopulation, but the brutal eviction of the Tutsis from many of their farms -- which was later seen as a major cause of the genocide -- occurred in 1959, when there were only one third as many Rwandans. Likewise, attributing crises in the Middle East to population growth, as The Economist recently did, overlooks underlying issues of politics and justice.

A Multi-Prong Approach to Carbon Neutrality

Several charges have recently been leveled at the biofuels industry. Misinformed critics have cited indirect land use issues, the food-versus-fuel debate, and the destruction of the Amazon rainforest as reasons to halt or eliminate the production of fuel ethanol. It’s become clear the issues aren’t going away anytime soon.

However, the industry can head in a direction that would leave the accusations baseless. This article depicts an avenue of growth that greatly increases industry profit while eliminating negative connotations permanently.

Using Land to Grow Biofuels a Net Loss for Environment

The production and use of biofuels such as ethanol would contribute to global warming more than simply using gasoline, according to two studies published in the journal Science.

Rice and Circus in East Timor

With the regional and global spike in food prices it is naturally imperative that East Timor corner crucial sources of food, joining a queue of food deficit countries from the Philippines to Singapore. But how and why has East Timor – a land of subsistence agriculturalists and one of the world’s poorest nations- been turned into a net food importer?

As prices go up, so does potential: But today, ‘agriculture not a viable industry in Hawaii’

KAHULUI - There is enough fertile land in Hawaii to feed the state's entire population, but it will take even greater plummeting economics to force Hawaii residents, farmers, businesses and the government to make seismic shifts in their approaches to food and fuel, a Pacific islands expert said Saturday.

"I don't know how you would induce it," said Michael Hammett during his keynote address for the first Maui Island Sustainable Living Expo. "The problem is that the farmers and landowners would have to want to do it, and the people would have to want to pay higher prices."

Be prepared to pay extra for local produce, or watch it disappear

VANCOUVER ISLAND -- Fresh, locally grown vegetables and berries are two of the great things about summer, and August is the time when produce stands spring up on country roads across Canada.

But if you look beyond the bucolic fields, there are two troubling issues threatening many of our produce growers: suburban development and a severe shortage of farm workers.

Meals on Wheels feels gas-price pinch

The people who make sure the frail, homebound elderly get a meal every day are feeling the pinch in their pockets and their pantries from skyrocketing gasoline prices.

The cost of gas has driven up food prices and may be keeping some people from volunteering to deliver meals to the nearly 600 elderly people who get their meals each day from two Meals on Wheels programs in Broome County.

Waking up to the threat of 'peak oil'

The recent dip in the world oil market has given consumers relief from surging pump prices, and has investors and commentators waxing with hope that the dip will become a trend.

But don't bet on it, says energy expert Matthew Simmons. Along with the likes of oilman T. Boone Pickens whose celebrated national campaign calls for a radical shift away from oil dependence, Simmons says that all fundamentals remain in place for energy prices to resume their skyward climb to levels quite beyond records of a month ago.

Everything is not peachy (Homer-Dixon)

Self-sufficiency isn't a sexy idea. At best, people who say they're interested in being self-sufficient are stereotyped as dour, old-fashioned rural types. At worst, they're seen as fanatical survivalists planning for an apocalypse. Economists also tell us that self-sufficiency is an anachronism. Instead, it is specialization that produces wealth, and economies - including the world economy - produce the most wealth when everyone, including countries, specializes in what they do best and then trades their products for the other things they need. The more specialization, the more connectivity among specialists, and the more trade along those connections, the better.

But there are problems with this model. As we specialize, we become more dependent on other people, industries and regions in the global economy. That may be fine for non-essential goods such as children's toys and kitchen appliances, but should we depend on others for life's essentials such as food? Also, specialization at the global level tends to reduce the diversity of producers and products - a small number of large, highly efficient producers often comes to dominate the market for specific goods. In complex systems from economies to ecologies, however, lower diversity usually means lower ability to adapt to rapidly changing circumstances. And, finally, all that connectivity among specialized producers around the world makes everyone more vulnerable to cascading system failures: a shock or failure in one part of the global system can propagate through the rest of the system in the blink of an eye, like a row of falling dominoes.

How investors inflate commodities' bubble

Commodities - the stuff that feeds us, runs our cars, heats our homes and provides the basic materials of everyday life - recently enjoyed one of the great bull runs of modern investment history, nearly doubling in price in the space of a year.

In the past month, though, prices of a wide range of commodities, from oil to corn to copper, have come back down with a vengeance as the global economy cools. We now know that the commodities boom was another bubble, not that much different from technology stocks in the 1990s and real estate earlier in this decade, market pros say.

Texas getting a floating oil port

As politicians continue to debate how to reduce U.S. dependency on foreign oil, a Houston partnership is spending $2 billion to prepare for an energy future that inevitably will include oil imports.

The team will announce today that it plans to build and operate an oil terminal 36 miles off the coast of Freeport.

Ethiopia's new famine: 'A ticking time bomb' - Crop failure, global inflation and armed conflict creating crisis

Unlike 1985, when images of a famine that killed 1 million Ethiopians shocked the West — "We are the world!" pop stars sang at the globally televised Live Aid concert that raised more than $250 million — this year aid workers say there probably will be no mass starvation. An expensive, elaborate social welfare apparatus, erected largely by the world's rich nations to avert another 1985, will not permit it.

Those good intentions, however, have helped produce another problem: A nation that has long seen itself as the most independent in Africa faces an ever-growing dependence on food aid from countries who now must deal with increasing food problems of their own.

Filling backpack a burden for more families

More than 2,000 children came to the Brevard Zoo in Melbourne, Fla., this month for free supplies. Hundreds more visited the Brevard Schools Foundation to pick up leftover items. "Families are barely making it. They can't even afford the basics for their kids," says foundation director Lynn Clifton.

Dear 44: Science vs. technology

In 1988, NASA scientist James Hansen testified before Congress that “global warming has reached a level such that we can ascribe with a high degree of confidence a cause-and-effect relationship between the greenhouse effect and observed warming.” The science behind that statement is today irrefutable. So, too, is the fundamental environmental and economic logic behind measures to combat climate change.

This summer’s extreme weather events and record energy prices warn us that we must quickly switch from high-carbon, high-priced fossil fuels to low-carbon, low-cost renewable energy. This year’s record oil, gasoline, coal and natural gas prices are draining the wallets of middle and low-income Americans. And at the macroeconomic level, the effects of global warming will exact a huge economic cost — an estimated 5 percent to 20 percent of annual global gross domestic product.

Inventors are sure cars can fly

LOS ANGELES — The auto industry has seen its share of technological leaps, whether it was the advent of electric starters, automatic transmissions or hybrid gas-electric powertrains. And don't forget hideaway headlights.

One leap that engineers and tinkerers have never quite made, however, but refuse to let die: the flying car.

Drive 55 campaign gaining speed

LOS ANGELES — Though it lasted longer than disco and leisure suits, the national 55-miles-per-hour speed limit was another remnant of the 1970s that did not endure.

Yet with high fuel costs reviving memories of the energy crisis of that decade, proposals to bring back the "double nickel" or something like it are emerging, with backers saying federal speed limits could save fuel, money and perhaps lives.

Peak Oil Now? If so, Oil Prices Not Likely to Decline--Ever

There has been a lot of talk in recent years about "peak oil" - defined as the point where the maximum amount of oil that can be recovered is being pumped. After that, oil becomes increasingly scarce and expensive.

If sticker shock at the gas pumps hasn't convinced you, talk to Dr. Darrel Schmitz, head of the Department of Geosciences, Mississippi State University.

"World oil reserves have probably peaked yesterday, today or tomorrow - literally right about now," Schmitz said. "Production worldwide will start declining relatively soon. We are right at that point."

Did you hear that Alaska has more oil than the Middle East?

Busting the myths about cheap and unlimited oil being broadcast by Rush Limbaugh, Jerome Corsi and other ignoramuses.

Are we being fuellish?

A NB Power meter reader leaving a truck running while reading meters inspired a citizen to write a letter to the editor. The complaint about the choice of vehicle and the apparent lack of concern for the extra cost of fuel drew mixed responses from readers. Of course, running a business is complicated but energy should not be ignored especially when we are nearly at peak oil.

Venezuela sends Colombia fuel to slow smuggling

CARACAS, Venezuela - Venezuela's government said Sunday that it will ship gasoline to neighboring Colombia in an attempt to slow cross-border smuggling of cheap Venezuelan fuel.

Venezuela's Oil Ministry plans to send Colombia's Norte de Santander state at least 50,000 barrels (8 million liters) of oil a month starting Thursday and could double that supply, the state-run Bolivarian News Agency reported Sunday.

Iran and Syria, in the role of Russia

Now that the fighting in Georgia has died down, policy shapers and pundits in the West are free to analyze the maneuvers and results, and draw lessons. The picture that emerges is a dismal one. Vladimir Putin's Russia exercised brutal force with the object of bringing a rebellious neighbor to its knees. The United States, which encouraged Georgian President Mikheil Saakashvili to defy Moscow, did not give him any real support. Former Soviet republics and satellites will now think twice before confronting Russia, or will be tempted to seek shelter beneath the cover of the U.S., NATO or the European Union. Oil is now much less likely to reach the Caspian Sea without Russia's involvement.

Georgia: More trouble in the pipeline

The crisis in Georgia has focused minds on the supply of oil to western Europe via lines that cross - and avoid - Russia.

CNOOC in surprise exit of Nigeria oil block - source

BEIJING (Reuters) - China's CNOOC Ltd has quit most of its 35 percent share in the smaller of its two Nigerian oil stakes even after the Nigerian operator drilled two successful wells, a source close to the matter said.

It was not immediately clear why CNOOC decided to relinquish its working interest in oil mining license (OML) 141, formerly oil prospecting license (OPL) 229, after two exploration wells in the shallow-water block sunk last year struck oil.

The move is a rare setback in Chinese state firms' dash into resource-rich Africa, although some are also suffering a rising number of kidnaps of Chinese workers on the continent and growing criticism from rights groups.

Gazprom Neft Cuts Prices for Gasoline and Other Fuels

(Bloomberg) -- OAO Gazprom Neft, the crude oil arm of natural gas exporter OAO Gazprom, lowered prices for oil products sold by its refineries after Prime Minister Vladimir Putin said the authorities should ``wake up'' to the problem of high fuel prices.

BP's troubles in Russia show Big Oil's clout fading

Gone are the days when BP manhandled reserves out of foreign countries, as it did in Iran the early years of the last century. Once the lion of British enterprise, Russia has brushed it aside like a kitten.

It's not alone. The rise in oil prices has emboldened foreign governments with petro-fed economies, from Russia to Venezuela. Western oil companies have been shut out of major new oil finds around the globe for years. Now, they're finding it increasingly difficult to hold onto assets they already have.

Even when drilling rights are sold at auction, the majors often lose, outbid by state-owned oil companies that can afford to sacrifice profitability for supply.

In other words, Big Oil doesn't seem so big these days.

Why Iraq is Still Oil Poor

Roughly once a week a flotilla of half a dozen or so tankers heaves into the steamy southern Iraqi port of Khur al-Zubar, and the normally sleepy docks jump to life. Teams of workers scramble over ships arriving mainly from Dubai, Bahrain and other points around the Persian Gulf to connect hoses for the flow of diesel, kerosene and gasoline. Old-fashioned gas station tickers beside the ships clatter as thousands of liquid tons begin moving.

All that would seem business as usual at a harbor for a major oil producer, except that much of what's flowing through Khur al-Zubar is coming into Iraq rather than heading out.

Turkey: Oil flow to resume to soon

Turkey's energy minister says oil flow in the Baku-Tbilisi-Ceyhan pipeline through Georgia might resume soon.

Hilmi Guler said on Monday -- nearly two weeks after the critical pipeline was shut down due to a fire -- that the pipeline was being fixed and the oil flow could resume "in a few days."

Angola oil exports at 1.98 mln bpd in Oct-traders

(Reuters) - Angola is set to export about 1.98 million barrels per day of crude oil in October, traders said on Monday.

The October volume is slightly higher than the estimated 1.96 million bpd in September.

The future of 'nowhere'

Urban planners love to hate the suburbs, but what's going to become of them? Will Bellevue eventually become a post-carbon ghost town or a new urban hybrid? Some reflections on the urban/suburban debate.

Oxfam calls for more investment in arid and semi-arid areas for pastoralists to adapt to, and survive climate change

Nairobi – Pastoralists in the East Africa region are well placed to adapt to climate, with investment in appropriate policies, Oxfam said today.

In a report released today, Survival of the fittest, Oxfam calls for governments and development partners in the region to invest in more sustainable development polices in arid and semi-arid (ASAL) areas, which will ensure pastoralists, cope with the impact of climate change.

Stark warning on Britain's shrinking coast: Abandon homes to the rising sea, warns Britain’s new environment chief

Stretches of Britain's coastline are doomed and plans will soon have to be drawn up to evacuate people from the most threatened areas, the new head of the Environment Agency warns today.

In his first interview since taking office, Lord Smith of Finsbury says Britain faces hard choices over which areas of our coast to defend and which to allow the sea to reclaim. He said detailed work was already far advanced on identifying areas of the east and south coasts which were most vulnerable to erosion, and called on ministers to give emergency help to families whose homes will be lost.