EIA Revises Up Oil Demand, Prices
Schlumberger: The U.S. Energy Information Administration revised higher its second-half 2005 estimates for oil demand and prices from a month ago, citing robust growth expected in 2005 and 2006.
.....
Fourth-quarter demand is estimated at 87.2 million barrels a day, up 500,000 barrels a day from the June Short-Term Energy Outlook.
Total world petroleum demand for 2005 was revised up by about 300,000 barrels a day to 85 million barrels a day.
Erik Kreil, an analyst at the agency, said the adjustment was due primarily to stronger petroleum consumption by developing Asian countries. "
- posted by gk @ Wednesday, July 13, 2005

 
China: The Gathering Threat :: Intervention Magazine :: War, Politics, Culture
China: The Gathering Threat :: Intervention Magazine :: War, Politics, Culture: "Most historians now believe that the rise of China will prove to be the most significant political challenge the United States faces in the first half of the 21st century. The late Dr. Constantine Menges, a professor of International Relations at George Washington University, certainly took this view.

According to Menges, China is pursuing a multi-phase plan that if successful would leave China as the undisputed master of Asia and ultimately the world. In the initial phase, Menges contends, China is seeking to use normalized relations with the United States to the gain economic and technological resources it needs to emerge as a modern industrial and military power.

At this stage the goal is to leverage China's huge trade surplus with the U.S. into colossal cash reserves. Here the thinking among the Chinese leadership is governed by an ancient Asian proverb: "A rich state has a powerful army." A sentiment, incidentally, not shared by Dick "deficits don't matter" Cheney, one of the chief advocates of the administration's policy of allowing China to control more than $200 billion dollars of U.S. debt."
- posted by gk @ Tuesday, July 12, 2005

 
India must fight off China
"NEW DELHI, JULY 12: India should aggressively step up its hunt for foreign petroleum assets and plan a bigger strategic reserve of crude oil to increase its energy security, a panel set up by the oil ministry said on Monday.


The panel was formed last year to suggest ways to strengthen state firms in the wake of competition from China in the race for foreign oil and gas projects.
'Overseas exploration and production should be pursued aggressively by targeting at least 15 per cent of crude oil imports through the equity oil route within the next two-three years,' the committee said in the report obtained by Reuters"
- posted by gk @ Tuesday, July 12, 2005

 
Oil and Gas 2006: Global ten-year projection
Maritime Global Net: "'Oil and Gas 2006: Global ten-year projection' is published by Energyfiles Ltd in association with Douglas-Westwood. It contains over 275 pages, 500 figures and 250 tables and covers 129 countries and regions."
.....
Until 2010 oil supplies will struggle to keep up with demand causing intermittent upward pressure on prices as the supply/demand ratio swings in and out of balance. After 2010 upward pressure will be permanent. The near term effect on the economies of countries will differ depending on their level of development, location, dependence on imported oil, and availability of other raw energy materials and/or infrastructure to produce fuel alternatives. Gas, the best short-term substitute, will be available only if investment in infrastructure, above all long distant pipelines and LNG conversion and receiving plants, is well advanced.

US Federal Reserve Chairman Alan Greenspan said in 2005 that oil markets might stay turbulent "for some time to come," but he predicted that, "high prices will spur the use of cheaper alternatives well before the world's oil reserves are depleted". "Projections in 'Oil and Gas 2006' show that gas will be this key alternative fuel," Smith says, "but not without the transport industry revolutionising itself. Increasing investment in public electrified systems and reduction in aircraft and automobiles is inevitable, as is fierce global competition and painful conservation."

- posted by gk @ Tuesday, July 12, 2005

 
DOUGLAS-WESTWOOD LTD
Maritime Global Net: "Energyfiles Director Dr Michael R. Smith, and lead analyst, says 'the ten-year data demonstrate that it is no longer appropriate to accept glib demand forecasts from oil companies, financial institutions and governments that predict, with wishful thinking, ever-growing demand levels, contrary to observations on oil supply. Suggestions that oil consumption will grow to up to 120 mm bbls per day by 2020 and that automobile and airline traffic will increase at extraordinary rates are futile and damaging to policy makers.'
'Such forecasts, divorced from reality, fail to take account of tight supply conditions and rising prices. We will be unable to produce oil at these rates without unbelievable step changes in technology. After 2010, and for periods before this, oil supply limitations and prices will seriously subdue energy demand unless suitable liquid alternatives are developed.'
.....
For example Lord Browne of BP has said that oil prices are likely to remain above $40 a barrel but only until new supplies come onstream in a few years. Albert Bressand, a vice president of Shell, offers a scenario coherent with a long-term price range in the $30 to $40 range, whilst the CEO of Shell said in early June that energy demand in the next 30 years will grow faster than in the past three decades. Meanwhile Geoff Curry, head of commodity research at Goldman Sachs recently said, "the real problem is a lack of refining capacity."

Careful forecasts of supply data do not support such speculations. "Projections in 'Oil and Gas 2006' are consistent with rapidly rising prices after 2010 accompanied by painful conservation," Smith says. "Sufficient new supplies will not come onstream to replace the inexorable depletion of existing fields, especially those old, 100 or so, giant fields responsible for around 65% of global supply, such as Ghawar (1948) and Safaniya (1951) in Saudi Arabia, and Burgan (1938) in Kuwait."
- posted by gk @ Tuesday, July 12, 2005

 
65 miners killed in Xinjiang gas explosion
Sixty-five workers were killed in a coal mine gas explosion early yesterday morning in the Xinjiang Uygur Autonomous Region.
.....
This year alone there have been 60 mine accidents each killing more than 10 people, with at least 1,338 people dead in coal mine blasts, fires and other accidents, according to figures from the safety administration.

Although work safety should be a priority, many coal mines, especially small ones, still operate without safety certificates or sound safety facilities.

- posted by gk @ Monday, July 11, 2005

 
Hurricane season breaking records
"Researchers have several ideas why this hurricane season is beginning so ferociously, but they say one thing appears likely:
'If you get these really early big storms,' says senior research meteorologist Hugh Willoughby of Florida International University in Miami, 'that means it is likely to be an active season.
,,,,,
Forecaster William Gray at Colorado State University has strengthened his 2005 Atlantic hurricane forecast three times since December, beginning with 11 named storms, then 13, then 15. Now he is saying the number of named storms will be "significantly above" the long-term average of 9.6 named storms and 5.9 hurricanes. At least four storms might blow up into major hurricanes like Dennis, nearly twice as many as normal.'"
- posted by gk @ Sunday, July 10, 2005

 
As a Storm Rolls Through, Oil Prices Jump Up - New York Times
The Gulf of Mexico accounts for a third of America's domestic oil production and has nearly 4,000 oil-producing sites, including 1,700 staffed platforms and hundreds of smaller single-well rigs. The concentration of so many production sites, as well as many refineries along the coasts of Alabama, Louisiana, Mississippi and Texas, makes the American oil industry particularly vulnerable to storms and hurricanes.
.....
"This year is forecast to have a worse-than-normal hurricane season.
The National Oceanic and Atmospheric Administration said in May that it expected the 2005 season in the Atlantic to include 12 to 15 tropical storms, with 7 to 9 becoming hurricanes and 3 to 5 of them major hurricanes. "
- posted by gk @ Thursday, July 07, 2005

 
FT.com / Markets / Commodities - Crude ends week strong
"Barclays forecasts WTI prices to average about $60 in the third quarter.
One factor that pushed oil prices to its record levels was concern about fourth quarter demand and whether there would be sufficient supply to meet the increase in seasonal demand.
The US Department of Energy said this week that fears of product supply tightness may turn out to be greater than reality.
It said the last three key US product seasons - petrol in 2005, heating oil in 2004-05 and petrol in 2004 - showed a much more dramatic reaction prior to the peak season than the previous three product seasons. Expectations of high prices later are reflected in higher prices prior to the peak seasons, thus giving refiners and importers economic incentive to have enough supply available to actually bring prices down at the beginning of the peak demand season," department officials said." “Whether this pattern holds true again for the upcoming winter season remains to be seen.”
- posted by gk @ Friday, July 01, 2005

 
WSJ.com - Chesapeake Bets on Rising Demand
"'We think the world has a very poor understanding of what price levels are going to be required to balance the markets in the years ahead,' said Mr. McClendon, 'and with that long-term view, we intend to stay fully invested in energy markets.'
Relatively mild weather in recent years has tended to keep natural-gas prices low, relative to oil, Mr. McClendon said, and that's a trend that can't be counted on to continue. Population patterns in the U.S. also work in favor of higher energy demand, he said.
'As the U.S. population continues to move south and southwest, energy consumption increases because it takes three times more energy to cool a room than it does to heat a room,' he said.
In addition to the factors that drive demand, Mr. McClendon said there are other factors that restrict supply.
Compared to other commodities, it's relatively difficult to create the infrastructure to supply oil and gas, he said, and investors are often averse to the long-term commitments of capital that are required.
'In my view, the pendulum in this industry swings very, very slowly,' said Mr. McClendon.
Mr. McClendon also said he sees investor psychology at work in the tendency to undervalue energy-related assets. 'For most investors to contemplate that oil prices are going to be high for a long time is a real bummer,' he said."
- posted by gk @ Friday, July 01, 2005

 
HoustonChronicle.com - A drama that's all too real: An oil disaster scenario
"Former CIA chief Woolsey described as 'relatively mild' the scenarios that the National Commission on Energy Policy and the advocacy group Securing America's Future Energy simulated. Both groups are pushing for reduced dependence on conventional oil.
'It was striking that by taking such small amounts off the market, you could have such dramatic impact' on world oil prices, said Robbie Diamond, the president of Securing America's Future Energy.
Richard Haass was a top adviser to former Secretary of State Colin Powell until 2003. The simulation taught him how little influence policymakers would have in reversing an oil shock wave.
'I think where most of the work has to happen now, both intellectually and politically, is on demand reduction,' Haass said."
- posted by gk @ Sunday, June 26, 2005

 
WSJ.com
WSJ.com - Unocal Hldrs As Of June 29 Can Cast Votes On Chevron Deal: "Cnooc Ltd. (CEO), controlled by the Chinese government, threw its hat into the ring this week and offered to acquire Unocal for $18.5 billion, higher than Chevron's $16 billion offer Unocal agreed to accept in April. Unocal has said it will consider Cnooc's offer but at this point retains its recommendation to vote in favor of Chevron's bid.
Shares of Unocal closed trading Friday at $65.68 each, well above the $60.04 per-share value of Chevron's cash-and-stock bid. The per-share value of Cnooc's bid is $67."
- posted by gk @ Sunday, June 26, 2005

 
Unocal offer to talk sets up possible bidding war
The Standard- Business Section: "The more immediate question, however, is whether Chevron will sweeten its offer in order to cement its deal with Unocal, perhaps matching or even surpassing CNOOC's bid, which includes a relatively modest 9.4 percent premium to its rival's offer. So far, Chevron has been quiet on the subject, stressing instead that its offer has cleared most regulatory hurdles and is almost ready to be put to a shareholder vote.
The near certainty that a Chevron-Unocal deal could go through without facing legal challenge may be a key point in the California-based oil giant's case. It appears to be banking on the prospect that a takeover of a US oil firm by a state-controlled mainland outfit will raise political hackles in the United States at a time when China's rising trade surplus there has already fueled demands for retaliation.
Already, some lawmakers have raised objections to the proposed CNOOC deal, and USA Today newspaper reported that two former Central Intelligence Agency directors and the Joint Chiefs of Staff have criticized the offer on national security grounds."
- posted by gk @ Sunday, June 26, 2005

 
The Observer | Frank Kane: CNOOC's Unocal offer
There have been takeovers by Chinese groups of such pillars of US capitalism as IBM's PC business and Hoover. These are serious brands - but not in the same league as an oil company with real, strategically significant assets.
....
"Americans will not admit it, but they are almost impotent in the face of Chinese financial firepower. The Cnooc bid is in cash, backed by the near-limitless resources of the Chinese state, and in a country like the US, which has always lived by the epigram 'cash is king', it looks hard to beat. Chevron would certainly struggle to match it. That is why the political lobby is already rolling, with much muttering about the 'national security' implications of the proposed deal.
(Notice, however, that such patriotic concerns do not extend to Wall Street. Goldman Sachs and JP Morgan, perhaps the finest names on the Street of Dreams, are advising the Chinese. Morgan Stanley is waving the flag for Unocal, but its fate will probably be decided by the mainly American hedge funds that dominate its share register. The business of America, it seems, is not business, but finance.)
And - to seal American paranoia - China is also a major holder of US debt. Put simply, the US is in hock to the Chinese to such an extent that if all the bills were called in at once, Uncle Sam would be bust. It's not in China's interests to destabilise the world economy at the moment, but circumstances change. Beijing might just like to keep that card - a financial nuclear option - up its sleeve for some future geopolitical crisis.
Corporate America will climb a traumatic learning curve over this bid, and be forced to confront the growing reality of Chinese economic power. For business people elsewhere, the lesson is far simpler: learn Mandarin - now."
- posted by gk @ Sunday, June 26, 2005

 
FT.com / Commodities - Crude hits $60 again on robust global demand
"This week's crude oil inventory report from the US Department of Energy showed US demand for distillates, which include diesel, jet fuel and heating oil, had grown faster this year than gasoline demand; the four-week average for total distillate demand is about 7 per cent higher than last year, while the four-week average demand for finished gasoline is 2.5 per cent higher.
The department also noted distillate demand is strong in Europe, where diesel car sales account for more than half of new car sales, and in China, where demand for distillates is twice that for petrol, and overall demand is growing rapidly.
"So far we have seen no demand destruction from higher prices," said Mr Barakat. "The market is still wondering how far prices have to go before demand wanes."
- posted by gk @ Friday, June 24, 2005

 
WSJ.com - China's Cnooc Nears Bid For U.S. Oil Company Unocal
"A senior U.S. official also weighed in Wednesday on the potential bid by Cnooc, which trades on the New York and Hong Kong stock exchanges but is controlled by the state-owned China National Offshore Oil Corp. U.S. Energy Secretary Samuel Bodman said an attempt by Cnooc to purchase El Segundo, Calif.,-based Unocal would have to be reviewed by the Committee for Foreign Investment in the U.S., an interagency panel that examines the national security implications of foreign acquisitions of U.S. companies. Congress had already scheduled a hearing Thursday on trade tensions with China, as issues from textile imports to currency valuation have roiled lawmakers in recent months.
But the threat of U.S. protectionism is already causing a split among domestic energy producers. Tuesday, as word of a coming Cnooc bid leaked out, Exxon Mobil Corp. Chief Executive Lee Raymond said it would be a 'big mistake' for the U.S. to block the bid. 'You have to have free trade,' Mr. Raymond said during an appearance at an energy summit sponsored by Reuters. 'If you start to put inefficiencies in the system, all of us eventually pay for that.'"
- posted by gk @ Wednesday, June 22, 2005

 
Peak Oil News and Message Boards >> CERA: Oil Peak Not Coming Soon
"I call it CERA's stand dogma because it seems to be an almost religious spouting of 'the party line' a la Michael Lynch, and is just what the capitalist sector of the world wants to here. As long as there is opportunity for growth and profit in the short run, modern business can - and does - ignore, negative information on the horizon, and listen to the cornucopians. "
.....
It is interesting to follow famous business and investment people like Matt Simmons and T. Boone Pickins as they react to the petroleum crisis. As a matter of fact, I intend to keep a sharp eye out for "cracks in the fortress" of individuals in the investment community for clues to future changes in public perception. I believe that there will be a swift cascade, probably leading to a serious, possibly one-day panic at some unknown point in the near future. However, it is possible that a short to mid-term dip in the U.S. economy dip could cause enough demand destruction for a short and mild recovery before a real crash and long-term (permanent??) depression.
- posted by gk @ Wednesday, June 22, 2005

 
Exxon CEO warns on oil prices - Jun 22, 2005
"Demand from energy thirsty Asian countries like China and India coupled with stretched supplies and turbulence in oil producing nations have driven prices up over the past year.
'Where this cycle will end, we can all speculate on that, but I would suggest to you it will take a few years to sort out where it'll all end,' Raymond said at the Reuters Energy Summit on Tuesday. 'The resolution will not be quick.'
Nevertheless, Raymond cautioned against believing the events of the past year had ushered in a new era for oil prices, pointing out that history has consistently shown that a surge in oil prices has been followed by a fall.
'You need to be very careful about new paradigms. After all, oil is a commodity. And secondly you have to get your mind around a time scale in this industry which says things take a long time to play out. They don't play out quickly.'"
- posted by gk @ Wednesday, June 22, 2005

 
Peak Oil News and Message Boards >> Forums >> Current Events >> CERA: Oil Peak Not Coming Soon
"Who is Cambridge Energy Research Associates? Well, their chairman 'Dr. Yergin is a Trustee of the Brookings Institution and a member of the Committee on Studies at the Council on Foreign Relations. He is a member of the Board of the United States Energy Association and a member of the National Petroleum Council. He is a member of the US Secretary of Energy�s Advisory Board and chaired the US Department of Energy�s Task Force on Strategic Energy Research and Development.'

One of their longest and largest customers is ChevronTexaco, whose CEO David O'Reilly is often the keynote speaker at CERA's week long conferences.

CERA also employed, at one time, Zalmay Khalilzad. Mr. Khalilzad now reports directly to Ms. Rice at the NSC.

I would be more than suspicious of any claims made by CERA as to what the real nature of petrolium depletion is.
fool on the swill | 06.21.05 - 2:08 pm |"
- posted by gk @ Wednesday, June 22, 2005

 
One energy forecast: Oil supplies grow | csmonitor.com
"Seers have written books detailing that time, and websites such as EnergyShortage.com forecast a steady rise in prices - such as Tuesday's oil price of more than $59 a barrel.
Not so fast, maintains a new report issued Tuesday by the widely respected group Cambridge Energy Research Associates (CERA). Instead of the wells running dry, CERA says petroleum supplies will be expanding faster than demand over the next five years, according to an analysis oil field by oil field. In good news for the SUV set, the new oil will be light, sweet crude - ideal for making gasoline. And since supply will grow, CERA forecasts prices will fall, possibly below $40 a barrel."
.....
According to the report, there are approximately 20 to 30 new major projects (producing more than 75,000 barrels per day) coming onstream every year until 2010. These will add 3 million to 4 million barrels of oil per day each year.

Over the next five years, there will be 10 million barrels per day of new light or medium crude and 3 million barrels per day of new heavy crude. Altogether, supply will exceed demand by 6 million to 7.5 million barrels per day later in the decade, according to CERA.

While many of the oil-depletion theories claim that Saudi production will falter, CERA predicts that the oil-rich nation will expand its production by as much as 2 million barrels of oil per day by 2010. In fact, the CERA analysis concludes that OPEC production will expand the fastest - to 45.6 million barrels per day, up from 36.8 million last year.

- posted by gk @ Tuesday, June 21, 2005

 
Bloomberg.com
"Oil producers will boost supplies fast enough to meet demand growth over the next five years, Daniel Yergin's Cambridge Energy Research Associates said in a report that counters arguments that have pushed prices higher. Yergin won a Pulitzer Prize for his book on the history of the oil industry.
The firm, based in Cambridge, Massachusetts, said oil supply capacity may rise as much as 16.4 million barrels to 101.5 million barrels a day by 2010. Supply may exceed demand by as much as 7.5 million barrels a day by 2010, according to a summary of the report, which will be released at the end of this month.
Increases in supply will outstrip demand and might ``take the pressure off prices around 2007 to 2008 or thereafter and even lead to a period of price weakness,'' the study's authors, Peter Jackson and Robert Esser, said in a statement.
Yergin and his firm ``are the most optimistic players on the supply side,'' said Michael Lynch, president of Strategic Energy and Economic Research, a Winchester, Massachusetts-based consultant. ``This is a show me market, we need to see a rise in inventories or increase in OPEC capacity before you see prices fall substantially.'' "
- posted by gk @ Tuesday, June 21, 2005

 
REFCO Global Research > Energies
"PRICE OUTLOOK: A confluence of potentially supply-threatening factors is driving prices higher. A Norwegian strike, less exports from Iraq, the reliability of OPEC production, and refinery output in the US the beginning of the hurricane season. The market is concerned with these issues and more. Behind the run up we have OPEC reassurances of supply the market finds less and less assuring. The near term technical momentum will probably push us to $60 but until a supply disruption occurs it is tough to envisage the fundamental reasons for prices to be much higher. Note products are weakening compared to crude, especially gasoline."
- posted by gk @ Monday, June 20, 2005

 
This Week In Petroleum
"Some analysts look at U.S. crude oil inventories, which have been above the average range for several weeks now, and see a market with plenty of crude oil available. These analysts see speculation and a shortage of global refinery capacity as the main culprits behind the high prices seen this year. This camp would see prices declining significantly later this year after the peak refining season ends, especially if the "speculation bubble" bursts. Concerns about supplies being extremely tight this upcoming winter are unfounded to these analysts, as they expect non-OPEC production to increase significantly between now and the end of the year, adding enough supply to meet the expected increase in demand without much additional oil needed from OPEC countries. These analysts also look for high prices to ultimately slow demand growth; putting downward pressure on prices. Should these analysts be correct, U.S. retail gasoline prices could fall along with any significant decline in crude oil prices. "
However, there are other analysts who do not envision a substantial increase in non-OPEC supplies or a dramatic slowdown in global oil demand growth in 2005 or even 2006. Without significant increases in non-OPEC production or a slowdown in demand growth, these analysts forecast that when product demand peaks during the winter, the currently tight oil market will get even tighter and crude oil prices may once again test historical highs (in nominal terms). Concerns about weather, both on the supply side from the possible impact of hurricanes later this summer, to cold weather this winter increasing demand, also are key factors to these analysts."

- posted by gk @ Thursday, June 16, 2005

 
Morgan Stanley economist sees oil crash
"SINGAPORE (Reuters) - The oil market may be quickly headed for a massive crash as global economic growth slackens, alternative energy gains ground and financial traders sense a price peak, an economist with Morgan Stanley said on Thursday.
His projection for a multi-year bear cycle stands in sharp contrast to the super-spike scenario envisioned three months ago by Goldman Sachs, Morgan Stanley's arch-rival in the world of oil derivatives trading, where they are the two biggest players.
'As evidence of weakening demand and ample supply accumulates, the market may panic,' Andy Xie, Greater China economist in Hong Kong, said in a report. 'I believe it could correct in the most speculative fashion -- it could collapse.'"
- posted by gk @ Wednesday, June 15, 2005

 
Iran Analyst Says Oil Output Won't Meet 4Q Demand -Report
TEHRAN -(Dow Jones)- Global oil producers will fail to meet rising oil demand in the fourth quarter, sparking oil price rises of up to around $60 a barrel, an Iranian oil analyst said Wednesday.
Ali Khatibi, director of the Tehran-based International Center for Energy Studies' OPEC research office, told the Pars news agency that OPEC and non-OPEC producers wouldn't be able to meet demand in the fourth quarter.
The official, from a center affiliated to the oil ministry, said current production of 85 million b/d would be surpassed by projected demand rises to 87 million b/d in the fourth quarter, leaving producing countries having to pump an extra two million b/d, which they won't be able to do."
- posted by gk @ Wednesday, June 15, 2005

 
WSJ.com - OPEC Raises Production Cap In Symbolic Move
WSJ.com - OPEC Raises Production Cap In Symbolic Move: "To sustain current output, all OPEC members except Saudi Arabia are pumping as much as they can. The Saudis say they can produce an additional 1.5 million barrels if customers want high-sulfur medium- and heavy-grade crudes. Many refiners can't process these kinds of crudes to make gasoline, diesel and other fuels, or don't want to at current prices. Underscoring this, Ali Naimi, the Saudi oil minister and the de facto OPEC leader, Tuesday said Saudi output in July would remain unchanged at 9.5 million barrels a day, the amount its customers are willing to buy."
.....
"OPEC is just trying to talk the market down," said Vera de Ladoucette, an analyst at Cambridge Energy Research Associates. She added, "No extra oil is needed at the moment. In any case, the extra oil that Saudi Arabia has is the wrong kind."

Both Mr. Naimi and Sheik Ahmad said they would like to see oil prices fall to less than $50 a barrel. Prices higher than this level, OPEC fears, may negatively affect global economic-growth rates, reducing the need for oil. But OPEC has run out of the productive capacity that could force prices lower. Meanwhile, oil markets also are being driven higher by perceptions of product shortages because of tight refinery capacity, something additional supplies of crude can't resolve.

Mr. Naimi's advice to governments and companies: Build more refineries, particularly those that can handle high-sulfur, heavier grades of crude from the Middle East.

- posted by gk @ Wednesday, June 15, 2005

 
Natural Resource Scarcity and Technological Change (don't worry, be happy)
This essay examines whether the potential
scarcity of nonrenewable natural resources is a
reason for concern. Previous research (Barnett
and Morse 1963, Jorgenson and Griliches 1967,
Nordhaus 1973, Brown and Field 1978, Fisher
1979, Hartwick and Olewiler 1986, and Schmidt
1988) is mixed, but it generally has found that
the economic evidence is inconsistent with the
increasing scarcity of nonrenewable natural
resources. In fact, technological change driven
by free market forces has increased natural resource
availability. Given the time elapsed since
the previous research was conducted, however,
it is appropriate to reexamine the evidence.
......
SUMMARY AND CONCLUSIONS
Some observers remain concerned that
increasing natural resource scarcity will limit
future economic growth and human well-being,
while others remain optimistic that technologi-
cal change will overcome geophysical scarcity.
Reliance on free markets can promote the
requisite technological change. The increasing
scarcity of a natural resource increases its price.
When they expect higher prices, consumers
look for technology that lets them use less of a
natural resource. Producers turn to technology
that lowers production costs in expectation of
higher profits.
The question is whether technological
change can outpace geophysical scarcity, and
economic theory suggests a test. Rising real
prices for nonrenewable natural resources
would provide evidence that technological advance
has not offset increased geophysical
scarcity; constant real prices would indicate
that technological advance has just offset increased
geophysical scarcity; and falling real
prices would signify that technological advance
has more than offset increased geophysical
scarcity.
Using econometric tests to examine the
trends in the real prices of thirteen commodities,
we find little evidence of increased natural
resource scarcity from 1870 through 1998. (Emphasis Added)

.....
Authors:
Stephen P. A. Brown is director of energy economics
and microeconomic policy analysis in the Research
Department at the Federal Reserve Bank of Dallas.
Daniel Wolk is a research analyst in the Research
Department at the Federal Reserve Bank of Dallas.
- posted by gk @ Monday, June 13, 2005

 
WSJ.com - Venezuela's Oil Nationalism Stages Comeback Under Chavez
"Chavez's detractors agree getting higher oil rents is desirable, but they criticize what they see as a heavy-handed government.
'Previous governments have actually negotiated with companies, but Chavez's dictates threaten the framework of rules,' said Jose Toro Hardy, a former PdVSA director. Chavez could get short-term gains but damage the country's standing, Hardy said.
Chavez's oil lieutenants are convinced, however, that private and state oil companies will always line up to invest in Venezuela, the country with the largest oil reserves outside the Middle East.
Chavez himself has made that point, and has warned: 'The world should forget about cheap oil.'"
- posted by gk @ Monday, June 13, 2005

 
China to have strategic oil reserve soon
Yahoo! News: "SINGAPORE (Reuters) - China is on track to complete building its first strategic oil reserve storage tanks by August, but Beijing has not indicated when it may start filling them in the face of high oil prices, an industry official said on Friday. "
.....
A top Chinese government official said last week that China would build up its emergency stockpile gradually, lessening the impact on global energy prices.

He did not say when Beijing could begin filling the tanks, a move being closely monitored by oil traders fearful that even a modest build will add stress to a taut global crude market that some fear may struggle to meet global demand later this year.
.....
The United States is due to complete filling its Strategic Petroleum Reserve (SPR) to its 700-million-barrel capacity -- stored in salt rock caverns -- in August.
- posted by gk @ Friday, June 10, 2005

 
Resource Investor - Oil Forecasting Legend Paints Dire Energy Picture
Henry Groppe founded Groppe, Long & Littell in 1955. He has 55 years of experience in the oil, natural gas and petrochemical industries, including positions with Arabian American Oil Company, Dow Chemical, Monsanto and Texaco. He is a fellow of the American Institute of Chemical Engineers and has served as a charter member of the Texas Governor’s Energy Council and a director of the United States Energy Association (the U.S. member committee to the World Energy Council).
.....
"Groppe says that we are at 'a major turning point for world oil and north American natural gas.' According to this veteran, 'We've been down a long road of exploration and exploitation and found everything easy. We've reached the point where all the major initial discoveries have reached their peaks and are declining. The newer ones are too small to offset it, and North American natural gas production has clearly peaked and is irreversibly declining. We think were at that turning point for world oil. From now on we're in a new era where the key question is what prices will be required to cause consumption to decline to match an irreversible decline in supply?'
.....
At the same time, he reiterates that 'for the first time in our history we are now at the point where the huge complex worldwide oil business is operating at total capacity, with every prospect of staying there from here on. Therefore any disruption in supply, or concern about disruption in supply, is going to create very very volatile surges in price on the upside.'
Indeed, Groppe says, 'The difference this time, in our view, is that we are going to have sustained higher prices. In the previous energy crises the big run up in prices produced significant reductions in consumption and significant supply responses, particularly by non-OPEC producers. That is no longer possible, and we think the consumption response is going to be lesser this time because all of the easy things were done previously"
- posted by gk @ Tuesday, June 07, 2005

 
Shell predicts two decades of rising energy prices.
"Worldwide energy prices are set to rise over the next two decades as individual countries become more concerned about ensuring security of supply and governments take a more pro-active role in dictating energy policy and regulating markets, according to the latest global outlook from the oil giant Shell.
Its 'global scenarios' report, the first to be produced since the twin shocks of the terror attacks of 11 September 2001 and the Enron scandal, also suggests that Shell in common with other oil majors will place more emphasis on developing renewable energy sources such as wind and solar than extracting more hydrocarbons through unconventional means."
- posted by gk @ Monday, June 06, 2005

 
Crisis warning as UK energy costs set to soar
"Electricity and gas futures prices have hit record levels for this winter and are set to land Britain with Europe's biggest energy bill.
Household electricity bills could rise by almost a fifth over the next 12 months while industrial users face a massive 60 per cent increase, according to the energy information consultancy EIC.
Industrial companies such as the chemicals manufacturer Ineos Chlor, which uses 1 per cent of the electricity generated in the UK, and industry representatives such as the Energy Intensive Users Group will meet officials from the Department of Trade and Industry on Wednesday to warn of the looming energy crisis.
Without government intervention, companies that use a lot of energy will be forced to cut production and lay off staff this winter, they will say."
- posted by gk @ Sunday, June 05, 2005

 
OPEC Oversupply Not to Affect Prices
TEHRAN, June 5--Iran's OPEC governor said Sunday the surplus oil production of 800,000 barrels per day by the member-states of the Organization of Petroleum Exporting Countries would have little impact on stemming the rise in oil prices given the increase in demand for light crude.
Hossein Kazempour-Ardebili, who is also a senior advisor to the oil minister, told Fars news agency that the demand for light crude is rapidly growing in US and Europe as the vacation season approaches.
He further noted that prices will continue to go up despite the higher supply, adding that OPEC could not help change this course.
The increase in OPEC oil supply would only "lead to further gap between prices of light and heavy crude", he observed."
- posted by gk @ Sunday, June 05, 2005

 
7 Percent Growth Seen in India
"NEW DELHI (AP) - India's economy is likely to grow by 7.2 percent in the current fiscal year despite rising world oil prices and U.S. interest rate hikes, a private industry report said Sunday.
Growth of more than 7 percent in 2005-06 would make India the world's second-fastest growing economy, after China, for the second consecutive year. Last year, India's economy expanded at 8.5 percent, its highest in 15 years.
.....
The report said India's economic growth would have been higher if it weren't for high international oil prices and rising U.S. interest rates.
- posted by gk @ Sunday, June 05, 2005

 
There's No Oil Deal With US, Says Saudi Arabia
"JEDDAH, 6 June 2005 Saudi Arabia has not signed any long-term agreement with Washington for supplying the United States with oil at fixed prices, according to Majed Al-Muneef, adviser to the minister of petroleum and mineral resources."
.....
“The US appreciates Saudi Arabia’s strong commitment to accelerating investment and expanding its production capacity to help provide stability and adequately supply the market,” a joint statement issued after Prince Abdullah’s meeting with Bush said.
.....
Muneef said the Organization of Petroleum Exporting Countries (OPEC) had succeeded in achieving two main goals: Increasing their oil revenues and raising their market share. (Emphasis Added)
- posted by gk @ Sunday, June 05, 2005

 
Weekly Analysis of Energy Stocks Using the McDep Ratio
Europe Bids Natural Gas Higher
Futures prices for natural gas in Europe have reached some $12.50 a million btu (mmbtu)
for the first quarter of 2006 (see chart U.K. and U.S. Natural Gas Futures). The level is
42% above oil converted at 6:1 and 58% above U.S. natural gas.
While we may not understand all the dynamic forces, we believe that an increasing
premium for natural gas relative to oil is warranted. The discount of U.S. natural gas
price relative to crude oil price seems likely to reverse. Prices could change quickly with
a hot summer or a cold winter.
- posted by gk @ Sunday, June 05, 2005

 
Crude Oil Rises on Speculation of Supply Strain in Second-Half
"It's more of a speculative run because of what might happen later this year,'' said Robert Montefusco, a broker at Sucden (U.K.) Ltd. in London. ``If we get any outages from forecast hurricanes, for example, there could be shortages. The big stuff is the funds coming in to buy again.''

The odds of at least one major hurricane hitting the U.S. coastline in 2005 are 77 percent, up from 73 percent forecast last month, according to a May 31 report from a team of scientists in Colorado State University. That compares to a long- term probability of 52 percent. Since the study came out, New York oil has gained 5 percent.

In September 2004, Hurricane Ivan sank rigs, buckled pipelines and flooded refineries in the U.S. part of the Gulf of Mexico. The storm idled 83 percent of the region's production, plunging U.S. oil output to a 54-year low. "
- posted by gk @ Saturday, June 04, 2005

 
WSJ.com - EIA Official Expects New High On Crude Prices Later This Year
"The U.S. Department of Energy's top oil statistician believes oil prices will set new record highs during the second half of the year. As growing demand erodes spare production capacity and oil inventories, there won't be enough inventory to cover an unexpected supply hiccup, he said.
In an interview late Thursday, John Cook, director of the petroleum division of the DOE's Energy Information Administration, said the Organization of Petroleum Exporting Countries needs to maintain output at high levels to keep prices from spiraling out of control.
'I think we will see new records, not necessarily by much, but I think we may even average $60 for a month,' Mr. Cook said. 'The demand growth is going to be there, and the inventory surpluses we have are pretty paltry to begin with, and they are going to disappear. We are not going to have much spare capacity at all in the fourth quarter.'
.....
"The data has not changed the big picture," said Mr. Cook, whose agency compiles a much-watched weekly report on U.S. oil inventories and demand. "This is still the weakest period of the year for demand, yet you are seeing very strong structural demand growth in the only place you can really see it [the U.S.] and you got to know there is strong demand growth in China."
Production problems in Iraq could further constrain supplies. Saudi Arabia is the only oil producer in the world with significant spare capacity, and much of that is of heavy, high-sulfur crude that is difficult for many refiners to process efficiently."
- posted by gk @ Friday, June 03, 2005

 
This Week In Petroleum
"For a product like oil that is traded on a global basis and closely linked to world economic activity, the lack of timely data for much of the world makes it difficult to fully assess current market conditions.

There is much information that oil analysts and traders would like to have available on a timelier basis. How much oil is OPEC actually currently producing? How much oil did China consume last week? How much oil did Russia actually produce and export last month? What is current refinery utilization in Europe or Asia? These are examples of the important questions that can not be answered definitively with available data.
.....
While many organizations report what they think OPEC produced in the most recent month, most of this information is compiled using individual analysts' judgements. There is no independent organization that collects forms from OPEC producers on how much they produced last week, last month, or last year.

The lack of accurate and timely information on Chinese oil demand during 2004 is mentioned almost universally by oil market analysts as one of the main reasons oil prices have risen from the low $30s in early 2004 to the $50s currently. Much of this demand growth came as a surprise to markets. Some analysts have attempted to infer China’s oil demand by adding information on Chinese oil imports to estimates of the country’s oil production. But, this calculation is not always a reliable indicator, as it appears that China’s imports are very cyclical. This leads to overestimation of Chinese demand when they are buying extra volumes of crude oil (in order to build inventories) and underestimation when they are buying less (because they are drawing down inventories). Without information on China’s inventory behavior, estimates of current oil demand in China are, at best, educated guesses."

- posted by gk @ Friday, June 03, 2005

 
China exploring ways to use forex reserves to buy oil - report - Forbes.com
Forbes.com: "BEIJING (AFX) - China is exploring ways to use some of its huge foreign exchange reserves to buy imported oil, the Shanghai Securities News reported, citing an unidentified source."
.....
In March, Guo Shuqing, director of the State Administration of Foreign Exchange, suggested China could use some of its foreign exchange reserves to purchase imported oil.

He also said at that time: 'Such a move would not cost us too much of our foreign exchange reserves... Purchasing 100 mln tons of oil would require only some 30 bln usd.'

China is already planning to build a strategic oil reserve though actual stocking of the reserve is said to be moving ahead slowly.

Niu Li, a researcher on global oil issues with the State Information Center, was quoted in the Shanghai Securities News today as saying the government should speed up this plan to shift reserves into oil in order to reduce investment risk.
- posted by gk @ Tuesday, May 31, 2005

 
A Weekly Analysis of Energy Stocks Using the McDep Ratio
Buy natural gas stocks including Anadarko (APC), Burlington Resources (BR) and Devon Energy (DVN) among others while natural gas is priced at a discount to oil signaling that the clean fuel could be more widely used.
.....
The most sensitive clue to natural gas availability is commodity price relative to oil, the world’s largest traded energy source. Natural gas price is at its lowest relative to oil in three years. That seems to be the case for futures price for the next year or the next six years.

The approximate heating value equivalent of natural gas is the oil price in dollars per barrel divided by about six. The current ratio between seven and eight is a steep discount of 20-30%.
- posted by gk @ Monday, May 30, 2005

 
The Coming Oil Crisis by C.J. Campbell
From Page 140 of "The Coming Oil Crisis" written by C.J. Campbell "in the autumn of 1996":
"When stocks are low, prices tend to be in what is termed backwardation, meaning that the price of physical delivery is above the price of future delivery, because a greater value attaches to oil available for immediate needs. The opposite situation, known as contango, arises when stocks are high. This relationship naturally assumes no fundamental supply shortfall and is no more than a short-term response to stocks and market. The large traders are laying off price risk without really speculating about what the future price will be. It could be reversed when a future shortfall in actual supply is perceived. A combination of high physical stocks and contango might be the market's warning signal to watch for, meaning that judgment for the future rather than mechanical hedging was beginning to affect prices."
(Emphasis Added)
- posted by gk @ Monday, May 30, 2005

 
Experts: Petroleum May Be Nearing a Peak
And then it really will be all downhill. The price of oil will increase drastically. Major oil-consuming countries will experience crippling inflation, unemployment and economic instability. Princeton University geologist Kenneth S. Deffeyes predicts "a permanent state of oil shortage."
.....
'This is just silly,' said Michael Lynch, president of Strategic Energy and Economic Research in Winchester, Mass. 'It's not like industrial civilization is going to come crashing down.'
.....
"Even in 30 to 40 years there's still going to be huge amounts of oil in the Middle East," said Daniel Sperling, director of the Institute of Transportation Studies at the University of California, Davis.
.....
"The world has never seen anything like this before and so we just really don't know," said Robert L. Hirsch, an energy analyst at Science Applications International Corp., a Santa Monica, Calif., consulting firm.
.....
"The economists all think that if you show up at the cashier's cage with enough currency, God will put more oil in ground," Deffeyes said.
- posted by gk @ Sunday, May 29, 2005

 
Guardian Unlimited | Special reports | Oil prices to top $60 by autumn, analysts warn
"Federal Reserve Chairman Alan Greenspan attempted to reassure the oil markets on Friday, saying rising stocks had helped to calm the 'price frenzy' that took the cost of crude to record highs earlier in the year.
But Paul Horsnell of Barclays Capital said the $10 price decline over the past month had been a temporary respite, and the market was about to 'tighten significantly', pushing the average price of a barrel of crude above $60 in the third quarter of 2005."
- posted by gk @ Wednesday, May 25, 2005

 
RIGZONE - Saudi's Crude Calculations Don't Add Up
Saudi's Crude Calculations Don't Add Up: "Call it the 4% difference. That's the gap between what Saudi Arabia says it pumped since March and outside estimates of what the world's biggest and most important oil producer actually did. "
.....
The Saudi figure is based on public statements by Saudi officials that put February output at 9.25 million barrels a day, rising to 9.5 million b/d in March and staying there ever since.

But numerous outside sources say the Saudis haven't hit 9.5 million b/d since at least December, if ever.

- posted by gk @ Wednesday, May 25, 2005

 
May/June 2005 Bulletin of the Atomic Scientists
Oil: Caveat empty | thebulletin.org: "Without any press conferences, grand announcements, or hyperbolic advertising campaigns, the Exxon Mobil Corporation, one of the world's largest publicly owned petroleum companies, has quietly joined the ranks of those who are predicting an impending plateau in non-OPEC oil production. Their report, The Outlook for Energy: A 2030 View, forecasts a peak in just five years.
In the past, many who expressed such concerns were dismissed as eager catastrophists, peddling the latest Malthusian prophecy of the impending collapse of fossil-fueled civilization."
.....
To put this shortfall in perspective, in 2003 Algeria produced 1.1 million barrels per day; a new Algeria would need to be brought on line in the Persian Gulf each and every year beyond 2010 just to keep up with the projected increase in demand. Consequently, once non-OPEC production reaches a peak, conventional world oil production could peak shortly thereafter, and prices (never explicitly mentioned in the Outlook) would rise in accordance with the laws of supply and demand.

What all this means is that the petroleum industry is approaching a turning point. Conventional petroleum production will soon--perhaps in five years, ten at best--no longer be able to satisfy demand.

- posted by gk @ Wednesday, May 25, 2005

 
Australian Deputy P.M.: Fuel prices reflect the inevitable decline in the world's oil and gas reserves - Australian Dep.PM | Energy and Peak Oil News
"Deputy Prime Minister John Anderson believes high fuel prices reflect the inevitable decline in the world's oil and gas reserves. He expressed deep concern about the long-term future of oil and says fuel prices will have to be high enough to encourage more exploration.

Mr Anderson says the world could reach peak production of oil and gas far sooner than predicted because of the rapid increase in energy demands in China.
- posted by gk @ Wednesday, May 25, 2005

 
The pipeline to change the world opens.
"The first drops of crude will snake their way along a pipeline that traverses some of the most unstable and war-ravaged countries on earth. This is the oil flow that was meant to save the West, and this morning the taps were turned on."
.....
Output is supposed to reach one million barrels a day - more than 1 per cent of world production - from an underground reserve that could hold as many as 220 billion barrels.
.....
The goal of the ambitious project, which makes its tortuous way from the Caspian in Azerbaijan, through Georgia to the Mediterranean coast of Turkey, is to ease the reliance of the West on the Organisation of Petroleum Exporting Countries...
.....

Stripped of the American hype of the 1990s, the crude that began a very modest flow this morning is the first instalment of a reserve many analysts are now convinced is actually only 32 billion barrels - equivalent to that of a small Gulf player such as Qatar.

- posted by gk @ Wednesday, May 25, 2005

 
WSJ.com - Fed Chewed Over Impact of Oil But Viewed Expansion as Solid
"According to the minutes, Fed policy makers paid 'considerable attention' to the run-up in oil prices through April. High energy prices, they said, already appeared to be 'taking a toll on household and business confidence and might be beginning to crimp corporate profits.' They also linked the slow pace of job growth earlier this year to the economic uncertainties caused by high oil prices."
- posted by gk @ Wednesday, May 25, 2005

 
WSJ.com - Buffett Returns to the Deals Table With a Big Bet on Energy Sector
"'The energy field is the single most likely area in which Berkshire -- through MidAmerican -- can find places to put significant capital' to work, Mr. Buffett said in an interview. He added that he expects Berkshire to make power-related acquisitions for another 10 to 20 years. Currently, MidAmerican owns a four-state electric utility, gas-transmission pipelines, merchant generating plants -- which sell electricity on the wholesale market to utilities and others at market rates -- and energy assets in the United Kingdom."
- posted by gk @ Wednesday, May 25, 2005

 
WSJ.com - Oil Industry's Refining Squeeze Limits Prospects of Price Relief
"A slowdown in the world economy could reduce demand for gasoline and other refined products. But the economy continues to grow despite soaring energy prices, and demand for oil remains on the rise. Many industry analysts are forecasting a second peak in crude-oil prices later this year, to more than $60 for a barrel of U.S. benchmark crude, because of tightening refining capacity.
'We don't know if they [refiners] can meet demand for the right products in the fourth quarter,' says Roger Diwan, an analyst at Washington, D.C.-based PFC Energy."
.....
Tight refining capacity has been an often overlooked factor in the rise in oil prices in the past 18 months. The world has plenty of so-called heavy crude -- much of it in Saudi Arabia -- but most refineries around the world aren't equipped to handle this high-sulfur oil.

Even when plants can refine heavy crude, it's a more costly process than refining light crudes, which are lower in sulfur and easier to refine but less widely available. As a result, refiners are in a bidding war for light crudes -- pushing their cost up. (Refined heavy crude also tends to sell at a better price for refiners than light crude.)

- posted by gk @ Monday, May 23, 2005

 
UK - Peak Oil campaign website passes landmark - PowerSwitch.org.uk
"There are now 125 members of the PowerSwitch forums, arranging local meetups and campaigns, talking about alternative energy and ways of living and thinking about the consequences for themselves and society. It is the first UK forum specialising in the topic of Peak Oil and its ramifications.

There are 3 roles of the PowerSwitch.org.uk site - the first to provide news and comment on Peak Oil, the second to provide a forum for debate and the third to provide material and support for spreading awareness at a grass-roots level. It is this combination that has seen PowerSwitch.org.uk grow from attracting 25 visits a day to 25 visits an hour. "
.....
Peak Oil is not a passing fad, it is not going to go away and the people at PowerSwitch believe it is better that people wake up, learn about it – and act upon it – as soon as possible. “ We know it is a tough challenge,” admitted James Howard, “ It asks a lot of big questions of how we live, but it would be a disgrace if those who know about Peak Oil didn’t make their most determined attempt to educate everyone else about it. It would be letting them down and it would be letting ourselves down. We want to see leadership on this issue, but that leadership is going to have to come from every individual. We cannot wait for government action.”
- posted by gk @ Monday, May 23, 2005

 
FT.com / International Economy / Oil - US warns of need for more Opec production
The warning, from Gay Caruso, head of the Energy Information Administration, the statistical arm of the US Department of Energy, is one of the most vocal since George W. Bush was elected president in 2000."
.....
Mr Caruso, who is considered the number two in the department, said Opec would need to pump an average of 30.2m b/d this year. Its production last month was 400,000 b/d below that level, at 29.8m b/d.

He also warned that the world's spare output capacity would fall further next year from the current 1m b/d equivalent to 1 per cent of global demand. Traditionally, a cushion of less than 5 per cent is seen as risky.

The US comments come as Gulf oil producers increase their production and cut sharply their official selling prices. This is the clearest signal yet that the 11 members of Opec want oil inventories to build in order to cool the market.
- posted by gk @ Monday, May 23, 2005

 
FRB: Speech, Greenspan--Energy--May 20, 2005
"The dramatic changes in technology in recent years have made existing oil and natural gas reserves stretch further while keeping energy costs lower than they otherwise would have been. Seismic imaging and advanced drilling techniques are facilitating the discovery of promising new reservoirs and are enabling the continued development of mature fields. But because of inexorably rising demand, these improved technologies have been unable to prevent the underlying long-term prices of oil and natural gas in the United States from rising."
.....
In summary, improving technology and ongoing shifts in the structure of economic activity are reducing the energy intensity of industrial countries, and presumably recent oil price increases will accelerate the pace of displacement of energy-intensive production facilities. If history is any guide, oil will eventually be overtaken by less-costly alternatives well before conventional oil reserves run out. Indeed, oil displaced coal despite still vast untapped reserves of coal, and coal displaced wood without denuding our forest lands.

Innovation is already altering the power source of motor vehicles, and much research is directed at reducing gasoline requirements. Moreover, new technologies to preserve existing conventional oil reserves will emerge in the years ahead. We will begin the transition to the next major sources of energy perhaps before midcentury as production from conventional oil reservoirs, according to central tendency scenarios of the Energy Information Administration, is projected to peak. In fact, the development and application of new sources of energy, especially nonconventional oil, is already in train. Nonetheless, the transition will take time. We, and the rest of the world, doubtless will have to live with the geopolitical and other uncertainties of the oil markets for some time to come.

- posted by gk @ Monday, May 23, 2005

 
FRB: Speech, Greenspan--Energy--May 20, 2005
" Increased demand and lagging additions to productive capacity have combined to eliminate a significant amount of the slack in energy markets that was essential in containing energy prices between 1985 and 2000.
Reflecting a low short-term elasticity of demand, higher prices in recent months have slowed the growth of oil demand, but only modestly. "
.....
In the wake of sharply higher prices, the energy intensity of the United States economy has been reduced about half since the early 1970s. Much of that displacement was achieved by 1985. Progress in reducing energy intensity has continued since then, but at a lessened pace.

This more-modest rate of decline in energy intensity should not be surprising, given the generally lower level of real oil prices that prevailed between 1985 and 2000. With real energy prices again on the rise, more-rapid decreases in the intensity of use in the years ahead seem virtually inevitable. As would be expected, long-term demand elasticities have proved noticeably higher than those evident in the short term.
.....
Aside from uncertain demand, the resolution of current major geopolitical uncertainties will materially affect oil prices in the years ahead. The effect on oil prices, in turn, will significantly influence the levels of investment over the next decade in crude oil productive capacity and, only slightly less importantly, investment in refining facilities.
- posted by gk @ Monday, May 23, 2005

 
Congress receives testimony quoting Jan Lundberg
"The meaning of peak oil is beginning to be explored in The People's House, a.k.a. the U.S. House of Representatives in Washington, D.C. One Congressman, Roscoe Bartlett, a Republican of Maryland, has followed the issues of oil supply for many years and has begun to wake people up in the nation's capital and for the national C-SPAN cable television audience."
.....
In my long career of concern over oil pollution -- from my days of serving the oil industry, to fighting it, to predicting the imminent end of abundant supply -- I have never been as exhilarated as now to think that a change is in the wind. I have previously testified before Congress as an oil marketing expert, and I later enjoyed audiences of millions on many occasions even when my message was radically beyond mainstream news-media priorities. Now, we are witnessing an awakening of the role of oil as a dwindling substance responsible for technological miracles, energy gluttony and strategic/military pursuits. Everyone's differences will have to be put aside as we are starting to enter a new age.

On May 19th I told the Congressman about myself, in a long conversation in which he explained he is a "very conservative Republican." I told him I was about to release a column titled "Goodbye American Dreamland," knowing he could appreciate the concept. I asked Congressman Bartlett, "Is there any chance you can tell President Bush about peak oil?" He replied "I have a half hour scheduled to do so, but I'm bringing two colleagues with me so he doesn't think I'm just one nut."
- posted by gk @ Monday, May 23, 2005

 
OPEC president says cartel fine with price fall into the $40-$45 a barrel range
"OPEC is content to allow oil prices to fall into the $40-$45 a barrel range, seeing no need to cut production when it meets next month, the cartel's president said Friday.

The Organization of the Petroleum Exporting Countries would continue pumping in excess of its own official output limits, at about 30.5 million barrels per day (bpd), allowing stocks to build further on a comfortably-supplied world market, Sheikh Ahmad said. "
.....
Sheikh Ahmad said inventories among OECD countries were now at 53.8 days of forward demand and higher levels would be comfortable for OPEC.

Though stocks were above the average five-year range, more stored oil was needed to meet higher demand, he said.

World demand peaks in the fourth quarter at a projected 86.1 million bpd, up from 83.8 million in the third, according to the Paris-based International Energy Agency.
- posted by gk @ Saturday, May 21, 2005

 
Greenspan says U.S. oil stocks to keep growing - May. 20, 2005
"Speaking to the Economic Club of New York, Greenspan pointed out that he had predicted in April when prices were spiking that he expected to see 'an inventory buffer to damp the price frenzy.'
Since then, inventories have grown to the point where U.S. crude oil stockpiles were near a six-year high, according to a government report issued this week.
'A somewhat lesser, but still important, accumulation of crude oil is evident in other major countries,' Greenspan said. 'Inventory accumulation is likely to continue unless demand rises, output declines, or we run out of storage capacity.' "
- posted by gk @ Saturday, May 21, 2005

 
The Cultural Economist: Oil, Jihad and Destiny
"We must recognize that in addition to production and exploration issues, oil exporting countries are now able to control the price for providing us with an increasingly scarce commodity. In other words, the world oil market has transitioned from a market controlled by consumer demand to one controlled by producer capacity. Producer nation motivation and cultural stability has become a factor in determining the availability and price of oil.

In the final analysis, therefore, corporate behavior, government action, cultural stability, economics, legal agreements, geography, weather, crude oil transportation, military diplomacy and the always potent combination of religion and politics are as important as geology in developing oil production forecasts

Call these the derivative factors of doing business on a global scale. Each poses a potential disruption to the flow of oil. As a result, proven or identified oil reserves are less important than accessible oil reserves - the oil that can actually be produced without disruption. If we want to understand how much oil will be available over the next 20 years, we must consider how these derivative factors are likely to impact oil production and transportation."
- posted by gk @ Friday, May 20, 2005

 
ASPO - Colin J. Campbell
Oil&Gas Journal April 4, 2005
: "Now, the Second Half of the Age of Oil dawns. It will be marked by the decline of oil production, and all that depends on it. The transition is likely to be a time of great tension and difficulty, particularly in respect to financial capital.

Capital was generated during the First Half of the Oil Age on the confidence that tomorrow's expansion provided collateral for today's debt.

It follows that the system will fail during the Second Half if the decline of oil undermines the scope for expansion.

It sounds like a serious topic, underlining the need for greater transparency in reserves reporting. The emphasis is on the word reporting, for engineers can now make good estimates of the size of an oil field early its life, especially with the help of all the remarkable advances in technology and knowledge.

But serious topics are not often popular ones, which explains why many people, including those in government, may prefer not to know. "
- posted by gk @ Thursday, May 19, 2005

 
Just how much oil does the Middle East really have, and does it matterby Colin J. Campbell
Oil&Gas Journal April 4, 2005
: "Some 65 published estimates of the ultimate recovery of conventional oil -many by major oil companies and legitimate government institutions - give an average of 1,930 billion bbl.

The world has so far produced 944 billion bbl, and realistic reserves on the above basis stand at 853 billion bbl, meaning that there are 133 billion bbl yet-to-find if we accept the ultimate estimate.

New discoveries, especially of critical giant fields, have been falling for 40 years, as confirmed by ExxonMobil Corp. being down to less than 10 billion in reserves last year. It suggests that this calculation is not altogether unreasonable.

It sounds as if the world has used about 49% of its endowment of conventional oil, meaning that it is now close to the midpoint of depletion, which normally corresponds with peak production. Peak itself is not a particular significant event but the relentless downward slope that follows it most certainly is. "
- posted by gk @ Thursday, May 19, 2005

 
Bloomberg.com: Asia
Overseas manufacturers are expanding in China to tap rising demand and take advantage of wages that the Asian Development Bank estimates are 4 percent those in the U.S...
....
DaimlerChrysler AG, the world's fifth-largest vehicle maker, last month said it plans to build Chrysler compact cars in China to export to the U.S. to take advantage of lower costs. Volkswagen AG, Honda Motor Co. and General Motors Corp. already manufacture for export in China, contributing to the nation's 6.8 percent increase in auto production last month.

As production of cars, computers and other goods increases, China's power supplies are being strained. Power cuts affected 24 of the nation's 27 provinces last year and shortages are the government predicts more shortages this year.

China's electricity generation increased 13 percent in April and coal output rose 5.4 percent, lagging growth in overall production.

- posted by gk @ Wednesday, May 18, 2005

 
EnergyBulletin.net
"We take for granted that we need Banks to create credit but perhaps do not realise that this bank-created credit constitutes the bulk of our money supply. The effect of a monetary unit created as a debt is that - to take the UK as an example - more than 97% of all money in circulation has come into existence through the creation of loans (two-thirds of them in respect of mortgage loans secured against property) by 'credit institutions' such as banks and building societies.

However, when credit institutions create money through a loan they do not create the money necessary to repay the interest on that loan. So the simple and inexorable mathematics of compound interest on the loans backing our money drives the unsustainable imperative for economic growth at the heart of our malaise. "
- posted by gk @ Wednesday, May 18, 2005

 
Is oil priced in dollars or are dollars priced in oil?
Reversing the Polarity - Bretton Woods revisited?: "There has been a growing realisation on the part of major oil producers such as Iran and Saudi Arabia that oil is not priced in dollars but rather that dollars are priced in oil. The reality underpinning this epiphany is the fact that oil has "Value" ie "money's worth" - in exchange for commodities, goods and services - whereas the financial object we are accustomed to think of as the "dollar" is merely a "claim over value" or IOU issued by the US Federal Reserve Bank.

If we look at the current structure of the global energy market, we are accustomed to think that the "big bad wolf" is a "cartel" of OPEC members. However, the fact of the matter is that while there has been a cartel extracting extraordinary profits from energy markets in recent years this has consisted of intermediary investment banks and energy traders who control the global market platform on which oil is traded and benchmark prices set. In other words, the derivative tail has been wagging the oil market dog. "
- posted by gk @ Wednesday, May 18, 2005

 
CIBC World Markets: Not Just A Spike
On the financial market front, energy stocks will
become almost as dominant in equity markets as tech
stocks were in the last decade. As oil prices continue
to rise, energy stock valuations, already characterized
by some as a bubble, should follow a similar
trajectory to the one they charted in the 1970s.
Between 1973 and 1979, the oil and gas index of the
TSX more than doubled. While long-term oil price
expectations embedded in the oil strip curve have
moved up sharply over the last three months, longdated
contract prices for 2010 still show oil prices at
only $50/bbl, half of what they are likely to be trading
at by the end of the decade (see pages 2-6).
- posted by gk @ Friday, May 13, 2005

 
Clusterfuck Nation by Jim Kunstler
"Everywhere I look I see things that are not going to work in the years ahead, and see people making plans for conditions that will no longer exist. State DOT officials in Texas are planning to build a new statewide super-mega highway network just as the global oil peak forecloses a future of easy motoring. Where I live, at the rural edge of New York's Capital District, suburban housing pods are springing up in every cow pasture in complete faith that supernaturally cheap mortgages and long commutes will continue to be the norm. Municipalities everywhere are investing in multi-million dollar parking structures in the belief that we will be using cars in 2019 exactly the way we do now. Even the enviros are enraptured. I get letters every day from bio-diesel fans who plan to run the interstate highway system and Disney World on oil derived from algae farms."
- posted by gk @ Friday, May 13, 2005

 
So the White House wants cheap oil?
So the White House wants cheap oil? - May. 12, 2005: "NEW YORK (CNN/Money) - Yeah, and I want to be 10 pounds lighter, a foot taller and blonde.
In fairness to Allan Hubbard, the relatively new director of the White House Economic Council, he did admit it's going to take 'a while' for the world markets to expand oil production to boost supply enough to lower prices. And an administration mouthpiece said $25 is just a theoretical goal. "
...
Yes, inventories are growing. And, yes, many traders figure oil could easily head back toward $40 a barrel -- or even lower.

But painful and aggravating as it may be to pay well more than $2 a gallon at the pump, it would be much worse to pay a dollar or so a gallon as you drive to the unemployment office.

And if oil were to fall to $25 right now, chances are it would be because Americans were losing jobs and the economy was running out of gas.



- posted by gk @ Friday, May 13, 2005

 
The Austin Chronicle: Columns
Letters at 3AM: "America is over. America is like Wile E. Coyote after he's run out a few paces past the edge of the cliff - he'll take a few more steps in midair before he looks down. Then, when he sees that there's nothing under him, he'll fall. Many Americans suspect that they're running on thin air, but they haven't looked down yet. When they do ... "
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Gas prices can only go up. Oil production is at or near peak capacity. The U.S. must compete for oil with China, the fastest-growing colossus in history. But the U.S. also must borrow $2 billion a day to remain solvent, nearly half of that from China and her neighbors, while they supply most of our manufacturing ("Benson's Economic and Market Trends," quoted in Asia Times Online) – so we have no cards to play with China, even militarily. (You can't war with the bankers who finance your army and the factories that supply your stores.) China now determines oil demand, and the U.S. has no long-term way to influence prices. That means $4 a gallon by next spring, and rising – $5, then $6, probably $10 by 2010 or thereabouts. Their economy can afford it; ours can't. We may hobble along with more or less the same way of life for the next dollar or so of hikes, but at around $4 America changes. Drastically.
- posted by gk @ Friday, May 13, 2005

 
$4 a gallon | Energy and Peak Oil News
: "Can America face reality? If the government responds to the coming changes by attempting to remain a superpower no matter what, there is no way to underestimate the harm. The numbers speak for themselves. Soon we'll no longer have the resources to remain a military superpower and sustain a livable society that is anything like what we know today. It happened to England; it happened to Russia; it's about to happen to us. England sustained the transformation more or less gracefully; it lost its dominance while retaining its essential character. Russia is still in a period of transformation, but has remained a player thanks to its oil reserves. Europe in general � France, Germany, Italy, and Spain (all world powers in the fairly recent past) � is creating a post-national society, the most experimental form of governance since America's revolution. We have no appreciable oil, and we no longer have a manufacturing base. So what will the United States do? Sanely recognize its declining status and act accordingly, or make one last ignoble stab to retain its position by force?

Half a century ago James Baldwin wrote: 'Confronted with the impossibility of remaining faithful to one's beliefs, and the equal impossibility of becoming free of them, one can be driven to the most inhuman excesses.' Americans believe they're 'No. 1,' destined to lead the world. That is the America that's over. If we insist on that illusion, then this world is in for tough times. We will neither hold on to what we have nor create what we might have, but we will wreak untold harm (if we don't destroy the species altogether). Or we can face and embrace reality. And that reality is: There is no such thing as 'No. 1' ... there is no such thing as an ideal destined country that is better than any other ... there is no such thing as an ideal destined country that is better than any other ... there is only us, doing the best we can, trying to live free and sanely, within limits that are about to become only too clear. Our glory days are done. What's next?

Remember, we're not talking about the far future. We're talking about the next decade."
- posted by gk @ Friday, May 13, 2005

 
World Facing Energy Crisis Says Chavez
EnergyBulletin.net : "The world is about to face an energy crisis because the demand for oil keeps growing even though production is already at its maximum, Venezuelan President Hugo Chavez said yesterday.

Chavez, whose country is the world's fifth largest crude oil exporter, said that all OPEC members were "producing at full steam."

"There's a worldwide energy crisis around the corner," Chavez told reporters at the end of the first Summit of South American-Arab Countries in Brazil."
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“We are producing at maximum capacity,” he said, adding that non-OPEC members such as Russia and the US were doing the same.

Leaders and high-ranking government officials from 12 South American and 22 Arab countries ended the summit yesterday with a commitment for closer political and economic ties, while also staking out positions at odds with US policy on several fronts.

They rejected terrorism “in all its forms and manifestations,” but also called for an international forum to define terrorism, saying the current definition has been set by wealthy countries.



- posted by gk @ Friday, May 13, 2005