Drumbeat: April 29, 2011
Posted by Leanan on April 29, 2011 - 8:53am
WASHINGTON — Americans earned and spent more in March, but much of the extra money went to pay for gas.
Personal incomes rose 0.5 percent last month and consumer spending increased 0.6 percent, the Commerce Department reported Friday. But after adjusting for inflation, spending rose only 0.2 percent and after-tax incomes were essentially flat.
Consumer spending had been expected to post solid gains this year, helped by stronger employment growth and a 2 percentage-point cut in Social Security payroll taxes. But Americans are paying more for gas, prompting economists to scale back their growth forecasts.
NEW YORK (Reuters) - The number of rigs drilling for natural gas in the United States rose by four this week to 882, its first gain in four weeks, data from oil services firm Baker Hughes showed on Friday.
NEW YORK (Reuters) - Gross natural gas production in February in the lower 48 U.S. states fell 1.9 percent from upwardly revised January output, data released on Friday by the U.S. Energy Information Administration showed.
(Reuters) - Chevron Corp is switching to Europe's Brent crude benchmark from West Texas Intermediate (WTI) when calculating production-sharing contract changes, to better reflect moves in international oil prices.
NEW YORK -(Dow Jones)- High oil prices are threatening to disrupt a still-fragile global economic recovery, the International Energy Agency's chief economist said Friday.
"We are in the danger zone now with prices and how the economy is responding," said Fatih Birol, head economist at the Paris-based group that represents major oil consumers.
The economy sits in precarious balance regarding oil prices. As the global economy recovers, demand rises and oil prices go up. At a certain point, they slow the economy so much — including the financial bets associated with energy — that demand collapses and oil prices fall. We can't drill, baby, drill our way out of this conundrum, and we've spent precious years doing nothing to address our limited, antiquated transportation infrastructure.
When faced with an issue of grave concern to the public, a politician has two choices. He can try to solve the problem. That would be the course of a true statesman. Alternatively, however, he can take the path of the demagogue, and seek to exploit the problem by blaming it on scapegoats among or linked to his political adversaries.
In the case of the current energy crisis, President Obama has chosen the second path.
The comments I got in my last blog about oil supply made me realize how confusing it is, even among presumably savvy observers of the oil and gas industry, to distinguish among linguistically similar terms on the quantity of natural gas (and oil) that is currently available for future production.
These include the words “reserves,” “ultimate recovery” and “resource.” The ratio of reserves-to-production (R/P) is another meaningful term that is often misunderstood by writers, members of other industries and politicians. Often, expressed in years, it creates frequent alarms such as “in ten years all oil (or gas) will disappear.” Even more to the point, for the entire 150 years of oil and gas production on at least a dozen occasions misunderstanding of these terms has led to speculation of “peak oil” and “peak gas” and frenzy over escalating prices.
(Reuters) - Iran has secured the release of some funds that India had paid for Iranian oil and that had been frozen in Germany, a news agency reported.
"When Iran sells its oil to a country, it should be able to receive the payments," the Central Bank of Iran's governor, Mahmoud Bahmani, was quoted as saying by Iran's semi-official Mehr news agency.
Prime Minister Naoto Kan said Friday the state shares the blame for the nuclear crisis triggered by accidents at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear power plant.
"Needless to say, TEPCO is primarily responsible, but the state can't escape blame because it promoted the use of nuclear power," Kan said during a House of Representatives Budget Committee session.
CENTRALIA, Wash. (AP) -- Gov. Chris Gregoire has signed legislation that will gradually shut down the TransAlta plant, the only coal-burning power plant in Washington.
WASHINGTON (Reuters) – House Budget Committee Chairman Paul Ryan said on Thursday he supports cutting tax breaks for the oil industry as lawmakers search for ways to battle rising gasoline prices.
In response to a question at a town hall meeting in Waterford, Wisconsin, the Republican congressman said he agreed that oil company subsidies should end.
"We're talking about reforming the safety net, the welfare system, we also want to get rid of corporate welfare," Ryan said to applause.
Gas pump prices across the country rose to within a dime of $4 a gallon Friday, as weather-related refinery outages tightened supplies and pushed prices up.
The national average increased 2 cents to nearly $3.91 a gallon for regular gasoline. It's the highest level since July 31, 2008, when pump prices were falling from a record $4.11 a gallon on July 17 of that year.
Oil was poised to rise for an unprecedented eighth straight month as better-than-expected consumer spending signaled fuel demand may increase.
A new report from the National Center for Policy Analysis titled "The Fiscal Impact of the Offshore Drilling Moratorium" confirms that Obama administration "War on Oil" policies are widening the federal budget deficit.
According to the report, "Due to declining production at existing wells and bureaucratic delays on new wells in the Gulf of Mexico since the Deepwater Horizon oil rig blowout in 2010, the federal government is forfeiting revenues of more than $4.7 million per day." That translates to lost revenues to the federal government in lease rents and royalties of almost $2 billion a year and growing.
NEW YORK (CNNMoney) -- High oil prices are here to stay and they're caused by surging demand and limited new supply, not Wall Street speculators.
That's the message from Fatih Birol, chief economist at the International Energy Agency.
NEW YORK (CNNMoney.com) -- The first three months of the year were good to the oil industry -- although American drivers and their elected leaders are not offering congratulations.
ALBANY -- Want to save money on gas taxes in New York? Get a bicycle -- or head for the state line.
As gas prices move north of $4 per gallon, lawmakers are once again calling for a tax holiday. But despite those good intentions, past experience has shown that tax breaks have a way of vanishing, at least on the local, if not the state, level.
Venezuela’s new windfall oil tax will hurt partners of Petroleos de Venezuela SA more than the state company itself, Barclays Capital said in a report.
Venezuela, South America’s largest OPEC producer, taxes oil companies more than any other country in the world and it recovered about 50 percent of the revenue from each barrel of oil sold over the past five years. On average, more than 90 percent of the gross profit of the oil industry is transferred to the state, according to the e-mailed Barclays report today.
MOSCOW (UPI) -- Petroleum industry analysts in Russia blamed the government for gas shortages in Siberia and questioned whether higher export duties would help.
PARIS (AFP) – There was spectacular growth in global production of natural gas last year, soaring past pre-crisis levels, the international industry association Cedigaz said Thursday.
"The year 2010 was exceptional for natural gas with spectacular growth of 7.3 percent in world production," said the group, which has over 140 members in 40 countries, associating most of the leading international oil and gas companies.
"Such a historic rise was unprecedented. It's never been this strong or this sudden," said Cedigaz secretary general Thierry Rouaud.
One of my greatest concerns coming out of the financial crisis of 2008 was that, eventually, free services like government data would be reduced or lost altogether. This afternoon I learned from EIA Washington that one of the cornerstones of my own work, and also the work of others globally, is about to be suspended: the gathering of International Energy Statistics. For me professionally, this is among the most important gateways to monthly data on global oil production. As I said, after 2008 I came to recognize my own professional dependency on this free data. But, I never actually expected to lose my access. Well, that’s always the way, isn’t it? Below is a portion of today’s EIA Press Release:
There's chatter about how oil sector profits could top the records from 2008 -- even though crude prices are still a good $30 or so below the July 2008 peak.
But if oil prices don't reach new records, it may be tough for profits to surpass 2008 levels. That could mean an end to the big rally for energy stocks, which -- as the chart at the top of this column clearly shows --- have been tracking the price of crude quite closely.
ANCHORAGE, Alaska – The federal agency overseeing offshore drilling in Alaska says the worst-case scenario for a blowout in the Chukchi Sea lease could result in a spill of more than 58 million gallons of oil into Arctic waters.
That's about a quarter of the Deepwater Horizon spill, which put 206 million gallons of oil into the Gulf of Mexico. But it's far more than Shell Oil — the major leaseholder in waters off Alaska's northwest coast — says it could handle under its current response plan.
Although the disastrous accident at Japan's Fukushima Daiichi nuclear complex may lead to new regulations and higher costs for owners of existing U.S. reactors, that risk did not sidetrack merger negotiations between Exelon and Constellation, which began months before the March 11 earthquake and tsunami.
The reason, industry representatives and critics agree, is that the existing plants remain very profitable, even with the decline in electricity prices that followed the market crash and recession in 2008.
PHILADELPHIA (Reuters) – An environmental group said on Wednesday that nearly half of the violations in the Marcellus Shale natural gas formation last year were committed by companies whose representatives sit on Governor Tom Corbett's Marcellus advisory commission.
"It is top heavy with exactly the people who are doing the drilling," said Tom Hoffman, the Western Pennsylvania director of the environmental activist group Clean Water Action.
SAN BERNARDINO, Calif. – A federal assessment shows more than 3,000 desert tortoises that are threatened with extinction would be disturbed by a California solar project, and up to 700 of the young turtles would be killed during construction.
Peak oil is forcing its way to the top of the agenda with stark warnings from the International Energy Agency and others repeated on ABC radio and television this week, after an investigation by the Catalyst program.
The infrastructure Australia needs to respond to the world's dwindling oil supply is not the sort we are building.
There is a whole genre of advice on peak oil sites for how to deal, at a personal level, with peak oil, most of which is so inane that I have tended to steer clear of the whole subject. Things like gardens, solar panels, etc, can be overemphasized. I also am wary because everyone's situation is completely different and so there's a limited amount of advice that really generalizes.
But this morning, I feel inspired to offer a few suggestions, mostly with a focus on the situation in the US, and focussed on people in the struggling middle. They may only be worth what you are paying for them.
Americans want walkable neighborhoods, poll says. So why haven't they been built?
SEOUL: The world's crop farming is facing a serious challenge due to climate change and there is a prediction that the global grain shortage will last for the next 10 years, Yonhap news agency reported.
Statoil thinks the find—now called Skrugard—as well as surrounding areas might eventually yield 500 million barrels of oil. That is not a huge discovery, but it has sent a frisson of excitement through the industry. "It is phenomenal; it confirms that the Barents Sea after so many disappointments is worthwhile," says A. Bjarne Moe, the lanky, bearded director general of the Norwegian Ministry of Petroleum and Energy.
Skrugard comes as a huge relief, since Norway's status as one of the world's great oil producers is under threat. Oil production has fallen by 48 percent from its 2000 peak as old fields found decades ago are depleted—bad news for an industry that accounts for about one-quarter of Norway's economy.
Oil declined from a 31-month high in New York, trimming an unprecedented eighth monthly gain as signs of a faltering global economic recovery stoked speculation that demand for crude will decline.
Futures slid as much as 0.5 percent after data showed South Korea’s industrial production and U.S. economic growth missed analysts’ forecasts. Reports today may show U.S. spending cooled and businesses grew at a slower pace in the world’s biggest crude-consuming nation.
China, the world’s fastest-growing major economy, may face a summer power shortage of 30 million kilowatts as supply lags behind demand growth, the China Electricity Council said.
Some regions are facing shortfalls that are “bigger and earlier” than last year, the council said in a report on its website yesterday. Supplies in provinces in the north, east and south will be “tight.”
The Iranian deputy oil minister says the country will increase its crude oil production by more than 100,000 barrels per day by March 2012.
Masjed Soleiman, Yadavaran, Mansouri and Hengam oilfields are the main four drilling projects that will contribute to the hike, Ahmad Qalebani told Mehr news agency on Friday.
An Energy Department official has warned oil companies found guilty of abusing the high demand for petroleum products during Holy Week will be prosecuted.
In an interview by Howie Severino on News to Go, Energy Undersecretary Jose Layug Jr. said the department will look at the pre-Holy Week oil price hikes that happened in the past years.
Russia, the world's largest oil producer, will hike its gasoline export duty 44 percent from May 1 instead of an expected 34 percent to fight local fuel shortages, the government said in a regulation on Friday.
Libya’s army and rebel forces fought for control of a key western border crossing into Tunisia, near an area where a government offensive against the Berber minority has gone on with little foreign attention.
There’s no mystery in why all the unrest in North Africa and the Middle East would cause oil and gasoline prices to soar. Libya’s high quality sweet crude is almost off the market entirely, and it’s anyone’s guess when the next oil producer is going to suffer a revolution that could cripple production.
But PFC Energy, a leading strategy advisory firm, has come up with another reason why political developments in several OPEC countries are driving prices higher, despite Saudi Arabia’s assurances that the kingdom will boost production to make up for any gaps. In a report this week, PFC calculated that populist spending policies are contributing to the need for higher revenues from oil sales.
OMAHA, Neb — Rises in fuel prices have led to an increase in the number of used fryer grease rustlers roaming restaurant alleys in the United States.
Grease thefts have spiked whenever fuel prices climbed during the last four years and this spring is no different, according to Tom Cook, president of the National Renderers Association.
"It's on the rise and it's because of higher oil prices," Cook told Reuters in a telephone interview. "I have one member who told me it's costing his business $1 million a year."
Gas prices in the Dayton area hit as high as $4.15 per gallon Thursday at local gas stations. And with prices at the pump for gas and diesel soaring above the key $4 per gallon mark, drivers are looking for answers for rising prices.
(Reuters) - Wholesale UK gas prices should fall this summer as liquefied natural gas shipments rapidly replenish plentiful stocks, helping soften the blow of record high transport fuel prices for battered British business.
After an unprecedented surge in gas costs last summer, Britain's gas market should return to its normal mid-year price lull, offering some short-term relief to big industrial users who buy on the wholesale market in an economy barely staggering out of recession.
THE AGE of cheap oil is now over – and that’s official.(Transcript: Peak oil: just around the corner)
For the first time, the International Energy Agency has conceded that global crude oil production has already peaked and that the commodity will become more and more expensive.
In the Catalyst programme broadcast last night on Australia’s ABC1 television, the agency’s chief economist, Fatih Birol, said “peak oil” was reached in 2006.
It seems politicians everywhere are suddenly waking up to the implications of peak oil. When will it arrive? Has it already passed? What does it mean for prices? And what do those prices mean for economic growth, and geopolitical risk? Most are finding that whatever action they are thinking of taking now, they should have been doing decades ago.
“Sinopec’s oil-stockpiling capacity allowed the company to use cheaper crude for a longer time,” Yin Xiaodong, the chief oil analyst at Beijing-based Citic Securities Co., said by telephone after the earnings announcement.
Fuel sales rose 15 percent and Sinopec’s losses from turning crude into gasoline and diesel were less than a tenth of PetroChina’s. Earnings growth at China’s biggest oil companies lagged behind Exxon Mobil Corp.’s 69 percent gain and a 60 percent profit increase at Royal Dutch Shell Plc, which aren’t restrained by government controls on fuel prices.
BEIJING - A subsidiary of the China Petrochemical Corporation (Sinopec Group) breached the group's internal rules by handing out millions of yuan in bonuses to executives and employees between 2008 and 2010, the Beijing News reported on Thursday, citing a company document.
ExxonMobil warned that any new government regulations on hydraulic fracturing could stop shale exploration.
"Government policies did not cause the shale gas revolution in this country, but they could stop it in its tracks," Ken Cohen, vice president of public and government affairs, said in remarks to reporters.
Korea has secured stable annual supplies of 91.25 million barrels of crude oil from Iraq in an emergency like a crude oil shortage. That amounts to 250,000 barrels per day.
(Reuters) - China has short-listed six firms for its first auction of shale gas exploration blocks, according to an official Xinhua News Agency newsletter published on Friday.
The head of the International Atomic Energy Agency said Thursday that a target destroyed by Israeli warplanes in the Syrian desert in 2007 was a covertly built nuclear reactor, countering assertions by Syria.
VIENNA — The International Atomic Energy Agency is setting the stage for potential U.N. Security Council action on Syria as it prepares a report assessing that a Syrian target bombed by Israeli warplanes was likely a secretly built nuclear reactor meant to produce plutonium, diplomats say.
KADUNA, Nigeria — Among the debris of burned homes, destroyed businesses and lives lost on one dirt road in this city on a fault line between Nigeria's two major faiths, the bright green ballot boxes stood out Thursday against the misery inflicted here.
Both Christians and Muslims inked their fingers to cast their vote in gubernatorial elections held in Bauchi and Kaduna states Thursday, delayed by the postelection violence last week that killed at least 500 people across Nigeria's north. Voting went smoothly, but both areas saw low voter turnout as soldiers took over security for the hard-hit states and many remain displaced by the rioting.
Soaring oil prices and cost-cutting efforts lifted Russian state-owned oil company Rosneft to record profits in the first quarter.
Profit at Canadian Oil Sands, which has the biggest stake in the Syncrude Canada oil sands consortium, rose 84% in the first quarter due to higher production and prices, the company said on today.
Exxon Mobil Corp. earned 69 percent more money in the first quarter than in the same period last year largely because of higher oil and gasoline prices.
U.S. average regular gasoline prices on Thursday hit $3.89 a gallon, a dollar higher than last year. Along with Exxon, several other Big Oil companies also saw fat profit increases because of higher oil and fuel prices.
NEW YORK — Exxon made almost $11 billion and practically apologized for it.
Sensing public outrage over gasoline prices that have topped $4 in some states, the company struck a defensive posture Thursday after posting some of its best quarterly financial results ever.
Soaring oil company profits and yawning federal deficits are making long-protected industry tax breaks a bipartisan target in Washington.
Democrats have rebranded $4 billion a year in oil-industry tax incentives as a subsidy big oil companies don't deserve.
It may be true, as many have said, that the next revolution—the green revolution—will be the first revolution in history that cannot promise material advancement in the same way that people have traditionally construed such advancement. But that does not mean we will be living immaterial lives, or that living much more modestly upon the earth will not prove to be quite sublimely satisfying. Teach that, please! And bring your poets, not your polymaths, to the front lines of the green revolution.
Hybrids have been on the market since the late ‘90s. What’s new are electric vehicles, which is why I took a test drive in the new Chevrolet Volt to see if this car is the answer to Staples students’ fuel problems.
First let me explain what makes the Volt unique. This car is called an extended range electric vehicle. According to Chevrolet, this means it can run for about 35 miles solely on an electric charge, after which the gas generator kicks in, giving the car a total range of 375 miles for one tank of gas and a full charge.
Tokyo Electric Power Co. slowed the pace of water injection into one of the six reactors at its crippled Fukushima Dai-Ichi nuclear station after a drop in pressure and temperature increased the risk of an explosion.
The Nuclear Regulatory Commission has not yet said what changes it will order at American reactors in response to the Fukushima disaster, but at a briefing on Thursday morning, some clues emerged about areas that might require further study.
An environmental consulting firm named as a defendant in a racketeering suit filed by Chevron Corp. over a landmark pollution lawsuit in Ecuador is continuing to work on another blockbuster case: the Deepwater Horizon oil spill investigation.
The South has so much to teach us about Transition. I think what we in the North can do is focus attention on what's happening in the South. For example, Vivir Bien in Bolivia, Agro-ecology. The campesino movement.
Students and faculty members are staging an alternative commencement to protest the choice of Rex Tillerson, CEO of oil giant ExxonMobil, as commencement speaker at Worcester Polytechnic Institute. Peak Oil scholar and educator Richard Heinberg, a senior fellow at the Post Carbon Institute, will give the alternative address on graduation day, May 14, at a location close to the official ceremony.
University officials informed the dissenting student group that any students leaving the official ceremony to listen to Richard Heinberg will not be allowed to return to receive their diplomas. The students are seeking legal assistance to determine if the university is within its rights with this threat.
PASIG CITY, METRO MANILA – Soaring food prices worldwide is pushing further millions of Asian to poverty, according to a report by the Asian Development Bank (ADB).
The report “Global Food Price Inflation and Developing Asia” showed that global food prices have increased by at least 30 percent, which has also affected domestic prices for affected Asian countries.
Like a massive Christo project but without the advance publicity, installations have been popping up across New Jersey for about a year now, courtesy of New Jersey’s largest utility, the Public Service Electric and Gas Company. Unlike other solar projects tucked away on roofs or in industrial areas, the utility is mounting 200,000 individual panels in neighborhoods throughout its service area, covering nearly three-quarters of the state.
The solar installations, the first and most extensive of their kind in the country, are part of a $515 million investment in solar projects by PSE&G under a state mandate that by 2021 power providers get 23 percent of their electricity from renewable sources. If they were laid out in a solar farm, the 5-by-2.5-foot panels would blanket 170 acres.
NEW YORK – Sen. Tom Udall's Lonely Climate-Change CrusadeThe New Mexico senator is determined to warn America about climate change. But as Eleanor Clift reports, the political climate is clearly stacked against him.
Serious legislation to combat climate change is dead for now on Capitol Hill, but that doesn’t stop Sen. Tom Udall (D-NM) from sounding the alarm whenever he can. Concern about the environment is in his DNA.
Climate scientists have long theorized that global warming, by increasing precipitation and melting Arctic ice, could eventually destabilize the Gulf Stream, the ocean conveyor belt that carries tropical waters into the North Atlantic and warms Western Europe. The paradoxical result would be a cooling trend for the region, even as the rest of the globe continued to heat up.
Now, a new study suggests that the circulation of warm water in the Atlantic may be tougher to disrupt than previously thought.
Even if the United States takes no explicit action to regulate greenhouse gases, emissions of carbon dioxide and other climate-altering substances will grow slowly over the next two decades, not returning to 2005 levels until 2027, according to a new projection from the Energy Information Administration, the research branch of the Energy Department.
Carbon dioxide emissions fell by 3 percent in 2008 and 7 percent in 2009, largely because of the recession. But even as economic activity picks up, emissions will grow at a modest pace because of growing use of renewable technologies and fuels, improved energy efficiency, slower growth in demand for electricity and the growing substitution of natural gas for coal in power production, the agency reports in its annual energy outlook.