Drumbeat: April 7, 2010
Posted by Leanan on April 7, 2010 - 10:16am
Now, if you are wondering why a falling water level in the Venezuelan highlands should be if interest to Americans, the answer is easy. Despite years of political tensions between the Chavez government and Washington, the U.S. is still importing some 800,000 barrels a day of crude from Venezuela. Should these imports go away, it is likely to come suddenly - shipping oil from Venezuela to Louisiana only takes two days -- we are going to see an instantaneous jump in gasoline prices. Given that the U.S. is at the top of President Chavez's least favorite countries list, it does not take much imagination to figure out who would be shut off first if exports have to be curtailed.
The big unknown in the decade ahead is the timing of Peak Oil, that is, when global supply falls irrevocably below baseline demand. As I have stated here many times, I believe we are in the "head-fake" stage when global Depression (oops, "Great Recession") is cutting demand so much that there is still enough surplus production to keep prices relatively low. As the output from supergiant fields falls, then all this surplus production will at best be replacing supply lost to depletion.
When Peak Oil kicks in, then $300/barrel will seem like a "fair price" and the shockwave to the U.S. economy will outstrip the 70s oil price shock by an order of magnitude because the low-hanging fruit of efficiencies have been picked.
But nobody knows when supply will fall irrevocably below demand, as geopolitics and physical supply are both causal factors.
TEHRAN, Iran - Iran's hard-line president on Wednesday ridiculed President Barack Obama's new nuclear strategy, which turns the U.S. focus away from the Cold War threats and instead aims to stop the spread of atomic weapons to rogue states or terrorists.
The fact that people can imagine catastrophe doesn't mean they want to think about it, or do what's necessary to address it when that requires importing a dose of the pain into the present.
(CNN) -- University forecasters predict the 2010 Atlantic hurricane season will be above average, with 15 named storms and eight of those becoming hurricanes.
The Colorado State University report was released Wednesday, nearly two months before the beginning of the Atlantic hurricane season on June 1.
BILLINGS, Mont. – Glacier National Park has lost two more of its namesake moving icefields to climate change, which is shrinking the rivers of ice until they grind to a halt, a government researcher said Wednesday.
BISHKEK, Kyrgyzstan - Anti-government unrest rocked the Central Asian nation of Kyrgyzstan on Wednesday as thousands of protesters stormed the main government building, set fire to the prosecutor's office and looted state TV headquarters.
At least 17 people were killed and least 180 wounded in clashes, the government told the Associated Press, while Reuters reported that an emergency services official said more than 50 people may have been killed.
The eruption of violence upset the relative stability of this mountainous former Soviet nation, which houses a U.S. military base that is a key supply center in the fight against the Taliban in nearby Afghanistan.
Demonstrators furious over government corruption and a recent hike in power prices looted the state television and radio building and were marching toward the Interior Ministry in the capital, Bishkek, according to Associated Press reporters on the scene. Elite police opened fire to drive crowds back from government headquarters.
"It's safe to say that we'll see triple-digit oil prices by the fourth quarter of this year," Jeff Rubin, the former CIBC World Markets Inc. chief economist who accurately predicted oil's surge during the last decade, said in an interview with Bloomberg News. "When we get into 2011 or 2012 and we start to deal with prices of $120 a barrel, $147 a barrel, $160 a barrel, that's where I think at least the global economy becomes very challenged."
Even traditionally conservative Saudi Arabia and the UAE have added production capacity. Put simply, OPEC refuses to cut its quotas under the assumption that global demand will pick up to absorb the spare barrels currently in the system. But when every one of the world’s largest oil producing nations is flooding the system with barrels, the market will need a very large sponge.
KHOBAR: US oilfield services firm Baker Hughes needs oil prices at least around current levels of $86 a barrel, a top executive at the firm said yesterday. “We want oil prices to stay at least where they are which means for us doing business and for projects to continue,” said Belgacem Chariag, president of Baker Hughes for the Eastern Hemisphere.
After months about hearing conflicting reports about shale gas, the dean of oil & gas, Daniel Yergin, stated in a speech that the developments of fracking and seismic have been the greatest changes in the oil & gas industry in a century.
Shale is for real.
So exporting gas to foreign markets might be an option.
American technology to produce shale gas is unleashing a scramble for drilling rights in Poland, where experts believe vast reserves of unconventional gas exist that could help to weaken Russia’s grip on Europe’s energy supplies.
BP is lobbying on Capitol Hill against a federal US environmental agency being given jurisdiction over the use of a controversial method of extracting gas from shale deposits, ahead of an important meeting this week.
The London-based oil company wants decisions on drilling techniques such as hydraulic fracturing – which uses high-pressure liquids to force fissures – to be taken at state level, rather than being left to the Environmental Protection Agency (EPA), whose specialist committee meets on Wednesday to discuss its concerns.
Chavez said the suspects, who were detained more than a week ago, had computers and satellite telephones and were using cameras to take photographs of Venezuela's power plants.
"They were moving around the country, taking photos," Chavez said during a televised speech. "Some of them have identification cards from the Colombia's army. The Colombian government will have to clarify that."
Apart from the severe environmental hazards, Obama’s proposal is problematic because of the short-term solution it provides. Experts estimate that the total yield from the new drilling proposal will only provide three years of oil and about two years of natural gas, based on current consumption levels. These are paltry numbers. Nor is this, in fact, really a “solution.” The recovered oil and gas will not be available for many years, and it is possible that once the oil and gas tracts are found, extraction may be prohibitively expensive. In this circumstance, the country would not benefit—perhaps even losing money—and the environmental damage from preliminary research would have occurred needlessly.
At 98 years old, Fenway Park in Boston is the oldest baseball stadium in America, and attending a game from this storied venue is one of the true pleasures of the sport.
Part of the iconography must be the experience of the so-called "Citgo" sign, an 18 by 18 meter 1960s' pop-art inspired light display featuring the trademark red triangle logo of the old Cities Service Petroleum Co on a roof outside the park, but visible inside it. Indeed, its visibility from most of the greater Boston area makes it one of the most recognizable features on the city skyline.
But recently, adult politics have invaded the playground. Between 1986 and 1990, Citgo was taken over by Venezuela's state-owned oil company, Petroleos de Venezuela.
Among the many crises that Pakistan is facing today, undoubtedly the shortage of energy is the most serious one. It has not only stunted the economic growth but also has the potential of disturbing the peace and order in the country, as reflected by the increasingly violent public protests against long power outages.
KARACHI - Total oil consumption during the first 9 months (July-March) of FY10 stood at 14.8 million tons, up 11 per cent from the corresponding period of last year. Oil sales during March 2010 stood at 1.8m tons, up 34 per cent MoM and 4 per cent YoY on the back of robust HSD and petrol sales, according to the latest numbers released by the OCAC.
A new $125 million USAID Energy Program will upgrade five major power stations, replace more than 11,000 tube wells producing water for agriculture, and boost Pakistan’s overall power production by 10 percent.
The crisis threatens the country’s political and economic stability. In volatile Karachi, Pakistan’s largest city, day-long power interruptions that cut off the supply of clean water caused deadly riots for several weeks in May 2009.
Motorists will have to brave the petrol shortage until the end of this week after the government admitted that its reserves at Jinja are empty. State Minister for Energy Simon D’ujanga said the Jinja reserves have no fuel because they are being refurbished.
“We are now relying on the reserves from the fuel companies,” he said while giving government’s view on the shortage at the weekend. The refurbishing of the reserves has been ongoing since the late 2007 political crisis in Kenya broke out, even though Mr D’ujanga said they will be ready by July/August.
South Africa could be faced with countrywide rolling blackouts if Eskom does not receive the massive loan it has requested from the World Bank.
(Reuters) - U.S. climate scientist James Hansen won a $100,000 environmental prize Wednesday for decades of work trying to alert politicians to what he called an unsolved emergency of global warming.
Since independence in 1963, the Akamba’s population has more than doubled. Meanwhile, farm output has risen tenfold. Yet there are also more trees, and soil erosion is much reduced. The Akamba still use simple farming techniques on their small family plots. But today they are producing so much food that when I visited, they were selling vegetables and milk in Nairobi, mangoes and oranges to the Middle East, avocadoes to France, and green beans to Britain.
What made the difference? People. They made this transformation by utilizing their growing population to dig terraces, capture rainwater, plant trees, raise animals that provide manure, and introduce more labor-intensive but higher-value crops like vegetables. For them, “multiplication” of their numbers has been the solution rather than the problem. They have sprung the demographic trap.
Africa's billionth baby, the doom mongers predicted would, if he survived to adulthood, only perish in one of the coming resource wars fought over land or water or oil or minerals, or simply fall victim to the unvarying instability that trails in the wake of over-population.
But there is a counter argument: each new baby is another consumer – and modern economic growth is driven by demand. The billionth baby is the engine of future prosperity.
Like many homeowners, Jonathan Carroll, 44, chose his home for its size and its view. It's a 750-square foot bungalow with purple trim and a southern exposure.
Unlike many homeowners, he paid off his mortgage on his 40th birthday _ a personal goal _ and it costs him precious little to maintain it. The home _ like much in Carroll's life _ is powered by the sun.
The 140 turbines stand 110 metres tall. Each blade is 45 metres long, the width of a football pitch, weighs 12 tons, and turns at a maximum speed of 140mph. By the time the extensions to Whitelee are completed, in 2012, there will be 215 turbines covering an area of 80 square kilometres.
Everything about wind farms is big, and they are big news too. Every day there are stories in the papers about permission being sought, granted or rejected for a new wind farm in Scotland or elsewhere in the UK. There are plenty of stories, too, about communities divided over the issue of turbines being built in their area.
A total of 162,805 tons of standard coal can be saved annually in Tibet as a result of the wider use of solar energy heating and electricity production, according to the Tibet Autonomous Regional Bureau of Science and Technology.
Tibet is one of the regions in China with most solar photovoltaic power plants as its total capacity of photovoltaic power generating facilities exceeds nine mw, Ma Shengjie, director of the bureau, noted.
B.C. is the first region in Canada to develop with regulations and guidelines for (EV) charging Japanese infrastructure. It's expected that 80 to 90 per cent of charging will take place at home or at work, which involves changes to residential Mitsubishi building codes and the provision of charging stations in both public and private parking lots.
NEW YORK (CNNMoney.com) -- General Motors reported $3.4 billion loss in the fourth quarter of 2009, but is on track to possibly return to profitability in 2010, the company said Wednesday.
NEW YORK (CNNMoney.com) -- General Motors said made it official on Wednesday: It is shutting down the Hummer SUV brand and offering rich rebates in a bid to move the remaining 2,200 vehicles.
Maybe it’s a gesture to the American right, which is still seething over the recent passage of Barack Obama’s national heath care package in Congress. Or maybe it’s just soma for increasingly anxious American motorists, so they can sleep at night without wondering how long their petroleum-based lifestyles can possibly last.
But either way, President Barack Obama’s sudden reversal of the ban on new oil and gas drilling in protected U.S. waters is nothing more than a public relations exercise that will still leave Americans facing the daunting reality that they must learn to consume less, not more, of the one substance they have grown so overwhelmingly dependent on.
A stronger U.S. dollar helped keep oil prices below $87 a barrel Wednesday after a report showed U.S. gasoline supplies fell more than expected last week while crude and distillate inventories rose.
We frequently see peak oil believers who are highly accomplished scientists, but with little economics background. It shows how peak oil theory would make total sense if we existed in a world without economic forces, such as behavioral responses to rising or falling prices.
The funny thing is that Mr. Campbell is now probably too bearish on oil prices with his $100 near-term limit. With oil prices at $86 as it stands, it's pretty feasible they could break $100 if the world economy keeps growing at a decent clip. That's only a 16% move, which from the perspective of a market participant is nothing and definitely within the realm of possibilities.
(Bloomberg) -- Saudi Arabia, the Arab world’s biggest economy, plans to spend $80 billion on expanding its power generation capacity and transmission network in the next decade to meet rising demand.
(Bloomberg) -- Japan’s oil refiners may get higher profit margins for selling fuels such as gasoline in May and June because of maintenance shutdowns next month that will take 27 percent of combined capacity around Tokyo Bay offline.
Tokyo Commodity Exchange gasoline prices for delivery in May and June are higher than for the four months through October, a phenomenon known as backwardation. Refiners are likely to reduce oil imports and draw down fuel inventories, driving up prices ahead of the start of the summer driving season in July, said Anthony Nunan at Mitsubishi Corp. in Tokyo.
PHNOM PENH (AFP) – Cambodian Prime Minister Hun Sen said Tuesday he would terminate his country's contract with Chevron if the US energy giant does not begin oil production from offshore fields by late 2012.
Following the discovery of oil in 2005, Cambodia was quickly feted as the region's next potential petro-state, but production has stalled as the government and Chevron appear to have failed to agree over revenue sharing.
(Bloomberg) -- BP Plc, operator of the Forties pipeline system, said production of the North Sea crude will rise to 624,000 barrels a day in June and 654,000 barrels a day in July, up from 557,000 barrels in May.
(Bloomberg) -- China Petrochemical Corp., the nation’s second-biggest energy producer, completed a $1.3 billion natural-gas pipeline in Brazil before a visit by Chinese President Hu Jintao seeking to deepen bilateral ties.
Canada's Suncor Energy expects to start gas production in Syria by the middle of this year, with the head of the company's Syrian operations adding its is interested in bidding for blocks with oil potential.
LONDON (Reuters) - British oil explorer Heritage Oil said the Ugandan government supports the sale of its interests in two Ugandan oil fields to Tullow Oil and said it would need to drill deeper at a test well in Iraq.
(Bloomberg) -- Uganda won’t swap oil for six Russian Su-30 fighter jets because no Russian companies are currently prospecting for crude in the East African nation, New Vision reported, citing Defense Minister Crispus Kiyonga.
Brussels - The European Union's energy commissioner made Russia the destination of his first official trip outside the EU on Wednesday as building work started on a controversial gas pipeline from Russia to Germany.
Russia is by far the EU's largest supplier of natural gas, but member states in Central and Eastern Europe accuse it of abusing that position for political reasons, making the question of energy supplies a hot diplomatic issue.
MOSCOW (Itar-Tass) - Gazprom has confirmed that Ukraine paid for the Russian gas supplied in March in full, the press service of the country’s gas giant told Itar-Tass on Wednesday.
Naftogaz fully paid for the actual volume of gas exported in March.
Ukraine's new leaders said today only a deal with Russia on a new price for gas supplies was holding up this year's draft state budget, adding they expressed confidence in reaching an agreement with Moscow.
(Bloomberg) -- Russia’s government may limit its first sale of foreign-currency bonds since 1998 to $10 billion as rising oil prices reduce the need to borrow, UralSib Financial Corp. said.
Nigeria's Acting President Goodluck Jonathan has sacked the head of the national oil company Mohammed Barkindo.
He will be replaced by Shehu Ladan, who was himself dismissed from the state-run NNPC by President Umaru Yar'Adua before he fell ill last November.
NEW DELHI (Reuters) - Reliance Industries is unable to hit peak gas production at its D6 block off the east coast due to customers not buying allocated volumes and a lack of pipeline infrastructure, a top official at the energy major said.
SINGAPORE/KUALA LUMPUR (Reuters) - While on the surface a trade tussle about dumping of Chinese goods, the subtext of Beijing's move to restrict Argentine soyoil imports is China's record edible oil stockpiles and struggling oilseed processors. China has accumulated massive reserves of soybean, palm and rapeseed oil, putting pressure on the country's crushing industry that is operating at just half its 94 million tonnes a year capacity.
(Bloomberg) -- The mine in West Virginia where 25 people were killed is among sites where Massey Energy Co., the largest coal producer in Central Appalachia, disputed U.S. findings of safety violations, records show.
The U.S. Mine Safety and Health Administration has issued more than $900,000 in fines for the Upper Big Branch mine in the past year, according to federal data compiled by Bloomberg. Massey is appealing more than $250,000 of the largest fines, among them one in January for ventilation systems that are supposed to prevent the buildup of methane gas and coal dust that can cause explosions.
Though Massey's reputation could suffer because of the explosion, Wall Street remains impressed with its long-term ability to ramp up production to reap higher prices for steel-making coal.
The giant explosion that killed 25 coal miners in West Virginia on Monday comes at a difficult time for the coal industry. It's faced with slumping demand because of the Great Recession and is feeling the pressure being put on U.S. and other countries to cut emissions of greenhouse gases that come from burning coal and other fuels.
Here are some questions and answers about the state of the coal mining industry.
Coal mines will always have methane, often in explosive concentrations, geologists and engineers say. The only question is how diligently miners and mining companies will work to avoid explosions.
Peabody is battling commodity supplier Noble Group Ltd., which is backed by China’s $300 billion sovereign wealth fund, for control of Macarthur’s future as shipments of coal to China last year tripled and prices doubled. China’s demand for coal used to make steel is forecast to rise 5.6 percent to 38 million metric tons this year, according to a Macquarie forecast.
JOHANNESBURG — The Obama administration, caught in an awkward bind between its own ambitions on climate change and Africa’s pressing energy needs, is facing the first test of its new guidelines discouraging coal-fired power projects in developing nations.
MANILA, Philippines - Power outages in Luzon will continue for the next 2 weeks but will not affect the country's first nationwide automated elections on May 10, the Department of Energy said Wednesday.
(Bloomberg) -- Environmentalist Jeff Spoelstra says an 80-mile stretch of the Kalamazoo River that runs through toxin-laced land in southwestern Michigan was on its way to becoming safe again. The area, once home to Potawatomi Indians and Dutch celery farmers, was finally on the verge of getting cleaned up.
Then, in January 2009, Lyondell Chemical Co. filed for bankruptcy protection. The Houston-based petrochemical giant argued in court that as it reorganized, it could avoid what the U.S. Environmental Protection Agency said were about $2.5 billion in cleanup costs for the river, which flows into Lake Michigan, and another $2.5 billion in liabilities at 10 other polluted spots across the country.
(Bloomberg) -- Australia may expand the tracking of vessels beyond the northern parts of the Great Barrier Reef, Prime Minister Kevin Rudd said, as a salvage crew prepares to drain oil from a Chinese coal vessel stranded in the marine park.
The ship ran aground four days ago “in broad daylight in the middle of the Great Barrier Reef,” Rudd said today in a radio interview from the northern Queensland city of Townsville. “We’ll be demanding some answers on this one.”
(Reuters) - For the first time in 10 years Americans are more likely to say the United States should give more priority to developing oil, natural gas and coal than to protecting the environment, according to a poll on Tuesday.
If someone gave you a gift, would you throw it away in hope that one day something better might come along? Washington may be doing just that by overlooking America's latest industrial success story — the remarkable resurgence of natural gas.
Technology, ingenuity and nature's bounty have dramatically transformed the domestic supply outlook. Natural gas is so abundant that it promises a viable path to energy supply security and affordability, economic growth, job creation and lower greenhouse gas emissions. No longer just a bridge to the future, natural gas can be part of the long-term energy solution.
Unfortunately, many in Washington believe that renewable energy can easily and cheaply replace carbon-based fuels. But the facts argue otherwise. Even with vigorous growth, renewable sources cannot ramp up fast enough to displace the carbon-based fuels that carry the energy load today.
The PM needs to put flesh on his population policy before the issue explodes.
NEW YORK (Reuters) – Pennsylvania's plan to put tolls on Interstate 80 was rejected by the federal government, Governor Ed Rendell said on Tuesday, which means other revenue-raising options -- from privatizing to taxing oil companies -- must be reconsidered.
"There's no doubt in my mind they were wrong," the Democratic governor told reporters on a conference call. "In these issues, the Bush administration was much more favorable," Rendell said, declining to conjecture as to what caused the shift in policy.
ZURICH (AFP) – The Solar Impulse aircraft, a Swiss bid to fly around the world on solar energy, will make its first test flight Wednesday at a military airbase in western Switzerland, organisers said.
SAN FRANCISCO — The Carbon Disclosure Project, an investor-backed nonprofit organization that has persuaded some of the world’s largest corporations to disclose their greenhouse gas emissions, will announce on Wednesday that it is asking 302 global companies to begin issuing detailed reports on their water use.
Many streams and rivers in the United States are getting warmer, with the greatest increases in urbanized areas, according to research to be published in an upcoming edition of the journal Frontiers of the Ecology and the Environment.
Twenty major streams and rivers, including the Colorado, Potomac, Delaware and Hudson Rivers, are warming at statistically significant rates, the study found.
(Bloomberg) -- A plan to auction European Union carbon-dioxide allowances for the third phase of the bloc’s emissions trading market will limit the “negative impact” on existing exchanges and brokers, the regulator said.
“The allowances auctioned should be available for delivery within five days at the latest,” the European Commission said yesterday in a proposal on its Web site. “Such short-term delivery deadlines would limit any potential negative impact on competition between the auction platforms and trading places in the secondary market for allowances.”
How to fight climate change? Well, you could start by just saving some electricity. Or saying no to plastic bags. Or turning off the tap while you brush your teeth.
Simple. It doesn’t take a superhero.
That, in essence, is the message of some of the delightful video entries for a competition held by the Asian Development Bank to highlight the risks posed by climate change. The contest was open to citizens of the bank’s 67 member countries.
An inventory conducted by Metro concludes that driving our cars and heating our homes aren't the region's biggest sources of greenhouse gas emissions.
It's how we make, move and toss away all the stuff we consume.
According to the inventory, manufacturing products and food, moving freight and managing waste produce an estimated 14.9 million metric tons of greenhouse gases annually, or 48 percent of the emissions produced in the tri-county Portland area.
Natural gas and fossil fuels account for 27 percent, and emissions from transit, cars and light trucks accounts make up 25 percent of the total.
"Consumption matters as much as energy and transportation," the report concludes.
BERLIN – The European Space Agency is launching a satellite that scientists hope will help them pin down the effects of global warming on the Earth's ice packs more precisely.
The CryoSat 2 mission, which starts Thursday after years of delays, will be able to pinpoint details of changes in polar ice so scientists can better understand the alarming picture of the world's retreating ice caps.