Blog: TheViewFromThePeak

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2006-02-22T18:04:00.000-08:00

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China & Iran - The Energy Tightrope

2006-02-22T00:07:00.000-08:00

China wants to double its exposure to alternative energy over the next fourteen years, echoing recent remarks by President Bush.

According to China Daily, the Chinese government " is working on a long-term plan to increase the use of alternative fuels to reduce the dependence on oil. Coal, gas and renewable energy sources such as biomass and solar power are expected to become "major alternatives," according to the National Development and Reform Commission (NDRC)."

The report added that eventually China would like to reduce the use of coal and oil and replace it with "nuclear, wind and solar energy."

China's use of solar energy has been increasing "at more than 25 per cent in China" making it "the highest in the world."

( Full story here )

The psychology of a falling dollar

2006-02-22T00:03:00.000-08:00

Given a current-account deficit in excess of 6% of US gross domestic product (GDP), many fear the dollar must decline. At the World Economic Forum in Davos, Switzerland, policymakers disagreed as to the severity of the risk, its causes and cures.

In a nutshell, the United States does not export enough to the rest of the world to balance its own appetite for cheap Asian imports. The American consumer spends too much and saves too little. As a result, dollars are leaving the US in return for goods and services. Unless those dollars are reinvested in US-denominated assets at a rate in excess of US$2 billion a day, the dollar will decline.

( Full story here )

Gold ETFs Changing Market Dynamics

2006-02-21T23:53:00.000-08:00

An expected pullback for gold got underway about two weeks ago and after a $40 retrace the metal has bounced off the technically popular 50-day moving average. Whether that’s it for this pullback remains to be seen, but meanwhile there is little doubt that the dynamics for the gold market are changing, and changing in a profound way.

We lead off with some commentary on Gold ETFs this week. Regular weekly commentary begins below that.

( Full story here )

Concern over oil production capacity

2006-02-21T23:49:00.000-08:00

Furious debate about how much oil the world has left is matched in intensity by the argument about how much it matters.

For producers, consumers and big oil companies, the holy grail of precise measurement for now is less vital than the speed at which barrels are pumped out of the ground.

"Production capacity over the next few years is more important than reserves," said Sadad Husseini, a former top official at Saudi Arabia's state oil company Saudi Aramco.

Controversy over alleged miscalculation of reserves resurfaced this year after a media report said Opec producer Kuwait had only about half as much oil as officially stated and Kuwait stopped short of a robust denial.

( Full story here )

Nigerian oil crisis may be prolonged by politics

2006-02-21T23:40:00.000-08:00

LAGOS, Feb 19 (Reuters) - World energy markets could face a prolonged shortfall of Nigerian oil supply after militants halted 21 percent of the OPEC nation's exports and kidnapped nine foreigners, analysts and diplomats said on Sunday.

The latest Niger Delta crisis feeds into mounting political instability in Africa's top oil producer ahead of elections next year. "Jockeying in the run-up to Nigeria's presidential elections and swelling violence in the unstable Niger Delta threaten the country's unity and could result in the break-up of the ruling party, damage regional stability and roil global oil markets," said Eurasia Group in a recent research note.

( Full story here )

China Huaneng to start building 370 mln usd nuclear plant this year

2006-02-21T23:34:00.000-08:00

China Huaneng Group, the parent company of Hong Kong-listed Huaneng Power International Inc, is expected to start building a 370 mln usd nuclear power plant this year, the China Daily reported.

The planned 190-megawatt reactor, which will be located in east China's Shandong province, will use pebble-bed technology, a method employing a gas-cooled reactor as an alternative to using pressurized water or boiling water reactors, the newspaper said.

( Full story here )

Stop oil subsidies

2006-02-21T23:33:00.000-08:00

Most of us can think of a company suffering under the burdens of high energy prices. Few of us would put the major oil and gas producers in that category.

Why, then, are these companies poised to collect at least $7 billion ... in special federal relief? And why isn't the White House in the forefront of efforts to correct this disgrace?

The windfall is traceable to the mid-1990s, when oil and gas prices were relatively low and energy companies weren't eager to invest in the high-cost, high-risk endeavor of developing new deep-water wells in the Gulf of Mexico.

( Full story here )

‘Get serious’ about oil shock

2006-02-21T23:28:00.000-08:00

The appearance of $3 gas in the wake of Hurricane Katrina last year showed the tenuous U.S. hold on plentiful and cheap fuel.

The worst of it, however, was soon over, and prices declined.

But what if there were a sharp shortfall in oil supplies that was permanent instead of lasting just a few weeks or months? An event so far-reaching that it could transform the American way of life and much of the world economy?

Matthew Simmons has a message for you: Count on it.

( Full story here )

Read My Lips... No New Energy Strategy

2006-02-21T13:33:00.000-08:00

by Byron King
for Whiskey & Gunpowder
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WHAT DID I THINK of President Bush's State of the Union address? Of course, as I am sure any of you who have followed my articles could have predicted, I was (ahem) mesmerized. I soaked in every image of the great and historic chamber of the House of Representatives in the U.S. Capitol building. Probably not unlike many of you, dear readers, I hung onto every word that fell from the lips of the Nation's chief magistrate.

I must start by saying that I was riveted by the broadcast images of this nation's unique species of "politico norteamericano." There they were, this assemblage of selfless public servants, resplendent in their ruby red neckties and sky blue scarves, collectively getting their aerobic exercise as they loudly applauded Mr. Bush while hopping up and down like a room full of Jack La Lannes. The 43rd chief executive may or may not be remembered by history as the "education president." But he sure is headed toward becoming the "workout president."

Not a senator or representative could engage in a bit of body language, and I was reaching for my copy of the Berlitz Body Language Phrase Book. The television camera would, on occasion, point to famous faces. Was that a smile or a smirk on the mug of Hillary Clinton? Was Ted Kennedy sound asleep, or merely in deep contemplation of some important issue? There was my old Harvard classmate, John Roberts, sitting in the front row and thinking to himself (I will wager), "It's good to be the chief justice of the United States." And how can some of those Republican guys smile so hard without breaking their faces? Why do the Democrats frown so much? Bad Botox?

Like the legendary, but now deceased, Pittsburgh bookie Tony Grosso, I took a few notes as I listened to the speech. I was making some hunches, handicapping the chances for new government programs and pondering the odds and fates of old ones. I spent the hour sitting at the edge of my chair. Didn't you?

"Information of the State of the Union"

The State of the Union address, delivered to the nation by a sitting president of the United States, is, as you may know, a mandate of the U.S. Constitution, Article II, Section 3. The wording of the Constitution is precise and elegant in a manner that is, to my way of thinking, almost lost to our current culture. The president...

"shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient."

Originally, and for all of the 19th century, the "Information of the State of the Union" was summarized annually in a written document that the president would send to Congress. Starting in the early 20th century, about coincident with the advent of a national mass media, the president's presentation became a yearly address delivered before a joint session of Congress. Under current practice, the presidential address not only reports on the condition of the nation, but also allows the man who holds the Constitution's "executive power" to outline his legislative agenda and national priorities to Congress.

Few things in this world are more highly scripted than a State of the Union address. By comparison, the Academy Awards are just a bunch of little old ladies at a bingo call down at the fire station.

It takes months of background work to prepare the speech. When it comes to the State of the Union, the entire resources of the U.S. federal government are at the disposal of the Office of the President. What the Man wants, the Man gets. At the same time, there is utterly fierce fighting within the federal bureaucracy to secure a favorable nod, let alone a passing positive mention, of a particular agency or its pet programs. The point papers flow back and forth, eventually being sharpened to such a degree that one could use them like a scalpel to perform brain surgery.

At many federal offices during the run-up to the State of the Union address, you can cut the suspense with a knife. Suppose "Program X" is competing for funding with its arch-rival, "Program Y." If the president says something good about "Program X," then the next day there are small armies of federal employees and additional divisions of private industry contractors, "X" men all, laying out PowerPoint presentations to highlight the president's recognition of the many superior virtues of "X."

And if the president refers positively to "Program Y" in the State of the Union address, then, as the expression goes, "The Ys have it." (Sorry, I couldn't resist.) The next day, the "Y" people will also muster their own small armies of federal employees, and their own divisions of private industry contractors to lay out PowerPoint presentations that highlight the many superior virtues of "Y."

The result? The "X" Men and "Y" People will each send their respective legislative liaisons up to Capitol Hill to brief the congresspersons. And Congress will probably keep both programs, "X" and "Y," going for another year. "Funding," as they say, "is life." And after all, if Congress terminates a program, there will be layoffs down at the plant in somebody's congressional district. We can't have that, can we?

"Addicted to Oil"

According to an account in The Washington Post, the State of the Union speech went through more than 30 drafts before Mr. Bush delivered it. At the end of such an elaborate process, it is more than significant that President Bush devoted a few words (very few) to discussing what passes for a long-term energy strategy in this country. The man from Midland, Texas, said "America is addicted to oil."

"Addicted?" The president did not say "America uses lots of oil" and illustrate the point that this nation with about 5% of the world's population uses about 26% of the world's oil production every day. That would have been a good starting point for the education president, although this one comparative statistic should not control the rest of the discussion. The key point in the comparative statistic is that current patterns of U.S oil use are a product of the unique history of the nation's industrial and social history, and the country's economy and culture. The president could have discussed in front of Congress and American people how the world is changing, and that with these changes, patterns of energy availability and use are going to change, as well. It is surely a discussion that the nation is going to have sooner or later, under one set of circumstances or another. Why not now?

It would have been hoping for too much to expect the president to mention that it has served the U.S. national interest that, for many decades, the U.S. dollar has been the so-called "reserve currency" of the world. In the past, if the U.S. economy needed dollars with which to purchase oil, the U.S. government always had at its disposal, to use the words of a certain newly installed Federal Reserve chairman, "a technology, called a printing press." But I digress. Back to the speech.

Nor did the president say "America uses too much oil," and call people's attention to the obvious point that many of the nation's citizens spend hours every day in their vehicles, which translates into weeks and months each year sitting in traffic. That is something that most people can understand. The education president could, for example, have continued along with this theme and used the occasion as a "teachable moment." He could have explained that the nation uses over 250 barrels of oil per second and compared it with the average U.S. stripper well, which produces an average of about five barrels of oil per day. He could have paid homage to the obvious, that the nation's daily use of imported oil has controlled a good deal of U.S. foreign and military policy over the decades. The president could have told the American people that the medium- and long-term trends in the nation's use of oil are completely unsustainable. Some of you may scoff at this notion that Mr. Bush would say something like this. I happen to believe that Mr. Bush is a pretty smart and informed man (albeit horribly ill advised by many of his court jesters), and I think that he knows this is the case.

But after 30 drafts of his speech, Mr. Bush actually used the "A" word. The phrase "addicted to oil" is hardly original, having been a staple of energy commentary for several decades. But this turn of a phrase from the mouth of a sitting president is powerful, and hits with a lot of psychological momentum.

Addiction is Bad for You

I believe that most Americans have some idea what addiction means, because most Americans know at least a few people who are "addicted" to things like smoking, drinking, or drugs. I also believe that most Americans have at least an intuitive understanding that addiction is bad for you. That is, doing something that is "addictive" over the long term will degrade your quality of life, if not just plain kill you. My hunch is that most Americans are generally in favor of "addicted" people getting some sort of treatment for their issues and, as the saying goes, "getting well." And helping people to get well is a fundamental tenet of Christianity, which is part of Mr. Bush's own personal background and journey.

So for President Bush to characterize the nation as being "addicted to oil" is quite the philosophical opposite of the underlying premise of former President George H.W. Bush's famous comment that "the American way of life is nonnegotiable." Either that or Congress should review the mandatory sentencing guidelines for people convicted of most drug-related crimes. (Memo to George W. Bush: This is probably a good idea in any event.)

The 75% Solution

In the same sentence as the comment about being "addicted to oil," the president set a "goal" of replacing "more than 75% of our oil imports from the Middle East by 2025." Mr. Bush talked about replacing that 75% of the nation's oil imports with ethanol and other so-called "renewable" energy sources.

Replace 75% of U.S. oil imports from the Middle East by 2025? Viewed in another way, this is not a "goal"; it is a prophesy. There is no way that the United States will be importing as much oil from the Middle East in 2025 as it imports today. And there is no way that the nations of the Middle East will be exporting as much oil in 2025 as they are exporting now.

Whether or not the Bush statement is a "goal," in 2025, the United States will not be importing much in the way of petroleum from anyplace. The oil just will not be there for one side to export or for the other side to import. Welcome to the future. As I said above, this could have been a "teachable moment" for the nation.

As I have noted in other articles, Kuwait has announced that its principal oil field, the super giant Burgan, has entered the phase of irreversible decline. At current depletion and decline rates, by 2025, Kuwait will be exporting negligible amounts of oil, and at prices that most nations of the world will be unable to afford. (This is another discussion for another time.)

Saudi's super giant Ghawar oil field is close to being in irreversible decline. The Saudis are only managing to maintain current oil production volumes by virtue of a massive seawater injection program that pumps more than 7 million barrels of saltwater per day into its oil fields. This pumping helps to maintain production pressures in the oil reservoirs, but is also the source of formation damage due to the presence of oxygen and bacteria in the seawater. By 2025, Saudi Arabia will still export oil, but far less oil than now and each tanker will be of such value as to require its own armed escort. (See note above.)

Iran is not quite at its production peak, but within 20 years, even the most optimistic estimates forecast that Iran will cease to be a net oil exporter. This may also have something to do with Iran's desire to develop a nuclear program for both domestic power production and military uses. Again, here was another "teachable moment" for the nation.

Conservation, Efficiency and Strategy

Two simple words that were missing from the State of the Union speech were (a) "conservation," and (b) "efficiency." Mr. Bush must know that U.S. oil production peaked in 1970. And the president cannot be unaware that, despite nominal price increases over the years, additional government incentives for drilling, and advances in technology for exploration and drilling, U.S. oil production has continued to decline. The only fundamental thing about oil that has increased in the past 35 years is America's tendencies to consume the depleting substance and to obtain it from more-and-more unstable regions of the world. How much longer can this continue?

Would it have been so difficult for Mr. Bush to use his speech as an opportunity to raise the topics of conservation and efficiency to the American people? After all, Vice President Cheney once referred to conservation as a "personal virtue." (Although in the next sentence he made the unfortunate comment that conservation is not something on which a nation can base its energy policy. Oh yeah? Wait and see, Mr. Veep.)

After the energy price spikes caused by Hurricanes Katrina and Rita this past fall, I suspect that the American people are ready to listen to some intelligent discussion of the virtues of conservation. And after watching what has happened to the major U.S. automakers in the past few years, I suspect that the American people are ready to listen to some intelligent discussion of the virtue of efficiency. The American people are ready for some "reachable moments" on this subject.

Another important phrase missing from the State of the Union speech was "energy plan." What is the president's plan for the long term? Mr. Bush spent many months of 2005 trumpeting his plan for the future of Social Security. He sponsored a plan to reform Medicare. So what is his plan for U.S. energy security in the coming years? After all, as the saying goes, "Plans are nothing; planning is everything." This is a famous quote from Gen. Eisenhower that is usually found painted on the wall of every staff college of the U.S. military.

Strategic planning is critical. It is not as if things will exactly follow plan. But it is important that you have at least planned something and thought things through with respect to whatever you hope to accomplish. You have identified your challenge. You have considered your desired end state and determined which pathways might get you there. There are many roads from which to choose, so you have to make choices. What are you going to do? You need to marry up your resources to your action plan. What do you need in order to accomplish your mission and how you are going to get it? And have you considered the alternatives along the way?

Strategic planning requires that you think in terms of "What if this?" and "What if that?" And then you act, starting tomorrow morning, knowing full well that the next day some darn thing will occur to screw you all up. But at least you have a plan for this as well. And whoever has the better plan, the United States or China or Russia or the European Union or the Bolivians or the Venezuelans...they are going to be left standing at the end of the day.

For example, and to put it in terms that some of Mr. Bush's principal advisers can understand, the U.S. Navy has a 50-year plan. Why? Because the Navy builds big ships, some of which have a useful life of 50 years. What will the world look like in 50 years? Beats me, and I am sure that it beats any admiral in the Pentagon. But I will bet that if you are around in 50 years, you will see U.S. Navy nuclear-powered aircraft carriers floating on the waters of the world. The Navy is inventing its own future, Congress permitting and appropriating.

So what is the U.S. energy strategy for the next 50 years? Are we to place our trust in the so-called "free market" to come up with better forms of ethanol from such noted energy storage media as switch grass? Is the Republican president who wanted to restructure Social Security and Medicare afraid of laying out a comprehensive plan for the nation's energy strategy? Apparently so. And without a well-thought-out energy strategy, this nation had better have a workable military strategy. On that note, I will end for now.

Until we meet again...
Byron W. King

Byron W. King is a practicing attorney in Pittsburgh, Pennsylvania, with real clients and real law books on his shelves. After graduating from Harvard University more years ago than he cares to discuss, Byron worked as a geologist in the exploration and production division of a major international oil company. He has followed developments in the oil and gas industry for almost three decades. However, in the process of seeking more excitement than a man can safely obtain from flaring over-pressurized gas whipping out of a 21,000-foot well, Byron also served for many years in both the active and reserve components of the United States Navy.

While in the sea service, Byron logged more flight time in tactical jet aircraft than George W. Bush, as well as 127 more carrier landings than the recently-re-elected commander in chief. Among other assignments, Byron has served as a field historian with the Navy.

Byron looks at current events, economics, and politics through the lens of history. He brings to the table a unique perspective that incorporates many millions of years of the Earth’s geologic history, and blends its significance into the more recent, man-made kind of tale.

India and France Agree to Cooperate on Nuclear Energy

2006-02-20T23:03:00.000-08:00

A visit to India by the president of France has led to an agreement for the two nations to cooperate on civilian nuclear technology. But, lurking in the background is an ongoing dispute between India and Europe over a bid by an Indian-born steel magnate to take over a major European steelmaker.

After an hour of talks in New Delhi, French President Jacques Chirac and Indian Prime Minister Manmohan Singh signed an agreement on future cooperation in the civilian nuclear energy sector.

( Full story here )

Protests hit Ecuador oil exports

2006-02-20T22:59:00.000-08:00

Ecuador's state oil firm Petroecuador has been forced to suspend crude exports after a violent demonstration in Napo province shut a key pipeline.

Petroecuador's halt to its 144,000 barrels per day (bpd) of exports came into effect on Tuesday after the Trans-Ecuadorean pipeline was closed.

Protesters had occupied a pumping station to demand more state resources for the poor province in the Amazon.

( Full story here )

Did US planned to Invade Canada ?

2006-02-20T22:04:00.000-08:00

A recent Washington Post article entitled:

Raiding the Icebox; Behind Its Warm Front, the United States Made Cold Calculations to Subdue Canada, by Peter Carlson (30 December 2005),

focuses on a detailed US Plan to Invade Canada entitled "Joint Army and Navy Basic War Plan -- Red," It was formulated in the late 1920s, approved by the US War Department in 1930, updated in 1934 and 1935, withdrawn in 1939 and declassified in 1974. (See complete WP article below)

Following the publication of the WP article, which was casually presented as political humor, Canadian network TV and print media were quick to dismiss the matter outright.

It was in a bygone era. It no longer applies: the US administration would never dream of actually invading Canada.

Yet upon more careful examination, an ongoing plan to annex Canada to the US, is still (unofficially of course) on the books. The underlying procedure, however, is not straightforward as in the case of an outright military invasion (e.g. under the 1930 "Joint Army and Navy Basic War Plan -- Red"). Today, it involves what the media refer to as "Deep Integration", which constitutes a more polite term for "Annexation".

( Full story here )

Analysts stick with oil price over $US59

2006-02-20T21:48:00.000-08:00

Two more analysts have revised upwards their oil price forecasts for this year, continuing the bullish view despite a dip in price early this year.

The Centre for Global Energy Studies and the National Australia Bank on Monday raised their forecasts for oil prices this year due to rising geo-political risks and strong Chinese demand.

With these revisions and the addition of BNP Paribas, a Reuters poll of 33 analysts' shows the price of benchmark US light crude oil futures in 2006 to average a record $US59.85 a barrel.

( Full story here )

Houston, we have a problem

2006-02-20T18:34:00.000-08:00

President Bush's recent statement that it's time to break America's addiction to oil surprised many Americans not just because it was a man from the "Oil Patch" who called for a move beyond petroleum but because of the way he charted to get there. It was the first time the President called for action on oil security without touting domestic drilling. Instead, he envisioned a shift to battery operated cars and vehicles running on next generation fuels made from domestically available non-petroleum energy resources.

Bush's decision to use the bully pulpit of the presidency for such a goal surely stems from his recognition that it is dangerous to be buying billions of dollars worth of oil from nations that, in his words, "don't particularly like us," and that the petrodollars we provide such nations contribute to the terrorist threats we face. But make no mistake: neither the underwriting of terrorism nor the frantic weather patterns which caused last year's spike in gasoline prices would have been enough to get President Bush to move beyond the traditional drill-as-much-as-you-can strategy if not for the alarm bells sounded by the oil industry itself.

( Full Story here )

Iran, Oil and Euros: The War Scenario

2006-02-20T18:19:00.000-08:00

Here’s the scenario. On March 20 Iran opens a new “bourse” (exchange) on which countries all over the world can buy and sell oil and gas not only for dollars but also for euros. It also establishes a new oil “marker” (oil pricing standard) based on Iranian crude and denominated in euros, in open rivalry to the existing West Texas Intermediate, Norway Brent and UAE Dubai markers, all of which are calculated in US dollars.

The Iranian bourse is an instant success with countries and companies that are unhappy about having to hold huge amounts of overvalued US dollars to finance their oil transactions, all of which must presently be conducted in that currency. Very large sums start to shift from the dollar to the euro, although exactly how much is unknown because the US Federal Reserve System (by pure coincidence, of course) has chosen late March as the time to stop publishing the data that would make it easy to know how fast the hemorrhage was.

( Full Story here )

Precious metals gain on firm oil, soft dollar

2006-02-20T15:49:00.000-08:00

Precious metals advanced in early European trade today, supported by a rise in crude oil prices and weakness in the dollar against the euro, dealers said.

Gold and silver rose to their highest in more than a week, while platinum climbed 1,6% from its close in New York late on Friday.

Spot gold touched $554,25 an ounce before easing to $552,75/553,45 in early trade, still higher than $551,70/552,60 in New York on Friday.

"If gold can hold above $550, the metal could work towards the $565-$568 resistance band while a failure to stay up would lead the yellow metal back into the $535-$550 area," James Moore, analyst at TheBullionDesk.com, said in a daily report.

( Full story here )

Bush: U.S. must not be 'hostage' to foreign oil

2006-02-20T15:41:00.000-08:00

MILWAUKEE (Reuters) - The United States must reduce its dependence on oil from foreign countries that can hold it hostage, President George W. Bush said on Monday as he tried to revive an agenda obscured by controversy over Vice President Dick Cheney's hunting accident.

"Some of the nations we rely on for oil have unstable governments or fundamental differences with the United States," Bush said in a speech at the start a two-day swing through Wisconsin, Michigan and Colorado.

( Full story here )

Oil Firms Bidding Up Canada's Sands

2006-02-20T15:38:00.000-08:00

CALGARY, Canada -- Canada's hottest piece of real estate isn't much to look at, a mix of swamp and scattered spruce and pine trees in northern Alberta.

Underneath the muskeg lie the oil sands, by some measures the world's largest petroleum reserves outside Saudi Arabia. To tap the deposits, companies such as Royal Dutch Shell are paying record prices for undeveloped land. Already this year, the province of Alberta has raised more money from oil sands leases than the record amount earned in all of 2005.

The sands have "become the Beverly Hills of the oil patch," said Gregg Scott, president of Calgary-based Scott Land & Lease, Canada's biggest land broker. "This is the most high-profile play I've seen in my 24 years as a broker."

( Full story here )

T. Boone Pickens, oil tycoon

2006-02-20T13:02:00.000-08:00

T. Boone Pickens Jr. -- who in 1983 as president of Mesa Petroleum mounted an unsuccessful corporate takeover of Gulf Oil -- no longer runs his own independent oil company. But the self-made tycoon from Oklahoma still is very much on top of the day-to-day madness of the global energy business, where prices are spiking, world oil production is said to have peaked and Americans live in daily terror of unfriendly despots in the Middle East and South America.

These days Pickens, 77, is running BP Capital, a successful hedge fund that invests primarily in oil and gas futures, alternative energy and energy-related companies. I talked to Pickens -- who says he went after Gulf Oil not to move it out of Pittsburgh but because he thought it was being so badly managed -- by telephone on Thursday from his offices in Dallas

( Full story here )

Cheap oil is over

2006-02-20T10:22:00.000-08:00

BELFAST (Feb 20): Are we on the brink of an oil crisis?

A close adviser to the Bush administration, an international economist and a former Irving Oil executive who spoke Saturday in Belfast said, unequivocally, yes. And it is the United States, they say, that must lead the way in instituting drastic measures to reduce oil consumption.

It’s one thing when environmentalists raise an alarm. It’s another matter entirely when the call for federally mandated conservation measures comes from the likes of energy investment banker Matthew Simmons, who advised Vice President Dick Cheney on energy policy.

( Full story here )

Nigeria: Fresh attacks on oil installations

2006-02-20T10:15:00.000-08:00

Militants holding nine foreign hostages in southern Nigeria destroyed an oil pipeline and blew up a boat in violence that has cut about 20% of crude production in Africa's oil giant.

The Movement for the Emancipation of the Niger Delta said they attacked a Shell-operated oil-pipeline switching station known as a "manifold" and a military houseboat in the oil-rich southern region. "Both were destroyed with explosives," the group said in an email.

( Full story here )

Gold May Rise for 2nd Week on Inflation Concern, Survey Shows

2006-02-19T22:22:00.000-08:00

Gold may rise for a second week, extending a rally that sent prices to a 25-year high, as investors buy bullion as a hedge against inflation.

Twenty-three of 37 traders, investors and analysts surveyed from Sydney to Chicago on Feb. 16 and Feb. 17 advised buying gold, which last week rose $1.10 to $554.60 an ounce in New York. Ten respondents advised selling and four were neutral.

Jim Rogers, who co-founded the Quantum hedge fund with George Soros in the 1970s, said in a Feb. 14 interview that gold's rally will continue, eventually topping its record high of $873 an ounce. U.S. wholesale prices rose 0.3 percent in January, and costs excluding food and fuel increased by the most in a year, the government said Feb. 17.

( Full story here )

Warm January saved crippled natural gas supply; hurricanes left nation at crisis point

2006-02-19T22:11:00.000-08:00

HOUSTON -- American consumers are paying for the most expensive winter on record. But consider how much worse it might have been.

When hurricanes Katrina and Rita ripped through the heart of the nation's offshore energy-producing region last year, natural gas experts feared the worst -- record gas prices and supply shortages.

December blew in cold. Prices soared.

Then came the warmest January since at least 1934. Cherry trees budded in Virginia; daffodils began to emerge in the nation's capital.

And gas supplies the last week of January stood at their highest level in 17 years, the federal government reported last week.

( Full story here )

China; Power plants warned of natural gas shortage

2006-02-19T22:07:00.000-08:00

BEIJING, Feb. 19 (Xinhuanet)-- China should remain cautious while developing natural gas-fired power plants due to unstable fuel supply, Wang Yonggan, secretary-general of China Electricity Council (CEC), told a forum here on Sunday.

In East China, insufficient natural gas supply made gas-fired generators with a total installed capability of four million kilowatts stop working last year, Wang said.

Some gas-fired power stations in the southern parts of the country had to suspend production right after they started operation because of gas shortage, which worsened the situation in the power-hungry areas, he added.

( Full story here )

Venezuela's Chavez Says Natural Gas Is for Region, Not U.S.

2006-02-19T21:58:00.000-08:00

Venezuelan President Hugo Chavez said his country's natural gas is for the domestic market and South America, and not the U.S., whose policies remain unfriendly toward his government.

Venezuela's natural gas reserves, which total about 151 trillion cubic feet and are the eighth-largest in the world, are first and foremost for the domestic market, Chavez said during his weekly televised broadcast. The South American market, and specifically Brazil, Argentina, and Uruguay comes next, he said.

``And if we have any gas reserves left, we will send them to the U.S.,'' said Chavez, who again charged during his broadcast that the U.S. aggression toward his country is because Washington covets Venezuela's oil and natural gas reserves.

( Full story here )

'Thousandsmay lose jobs as cost of energy soars'

2006-02-19T15:18:00.000-08:00

THE leader of one of Wales' biggest trade unions has warned the "lights could go out" and employers be forced to shed thousands of jobs because of a mounting energy crisis.

The head of the Transport and General Workers Union (TGWU) in Wales, Andy Richards, said Welsh firms must be protected from wholesale energy prices that have risen by up to 100% since January of last year.

Mr Richards says businesses from Ford, in Bridgend, to Anglesey Aluminium, in North Wales, have expressed concerns about spiralling energy costs.

Business leaders from some of North Wales' largest employers like Airbus and Synthite Ltd will meet Mr Richards and the leaders of Amicus at an energy summit today.

( Full story here )

India, Oil and Nuclear Weapons

2006-02-19T00:02:00.000-08:00

Exploding at the seams with building, investment and trade, India can hardly keep up with itself. Airplanes coming into Delhi and Mumbai routinely end up circling the airports for hours, wasting precious jet fuel, because there are not enough runways or airport gates. City streets originally built for two lanes of traffic are teeming with four and sometimes five lanes of cars, auto-rickshaws, mopeds, buses and trucks. This energy-guzzling congestion will only become worse as India continues producing fairly high-quality goods and services at lower and lower prices — from automobiles that cost only $2,500 to low-budget airline flights for $50.

India's president, A. P. J. Abdul Kalam, sounded exactly like President Bush when he told the Asiatic Society in Manila earlier this month that energy independence must be India's highest priority. "We must be determined to achieve this within the next 25 years, that is, by the year 2030," he said. Unfortunately, Mr. Kalam, like Mr. Bush, is far better at talking than at any real action to reduce energy consumption. In the new enclaves for India's emerging middle class and its rapidly rising nouveau riche, environmentally unsustainable, high-ceilinged houses feature air-conditioning systems that stay on year round.

( Full story here )

End of the U.S. dollar hegemony?

2006-02-18T23:57:00.000-08:00

After the Second World War and following the fall of the Soviet Union in 1989, the so-called “dollar diplomacy”, a policy instituted by William Howard Taft and his Secretary of State Philander C. Knox and designed to enhance U.S. commercial investments in Latin America and the Far East, evolved into “dollar hegemony.” Several years later, today, the American dollar’s great influence on the global economy and its dominance seems to be coming to an end.

The reason why the U.S. has been the depreciating value of the American dollar, especially in comparison to the Euro is mind-boggling to the American nation and the entire world specially the past few months. How long will this trend last? Is it a good thing or a bad thing?

( Full story here )

3 Americans among 9 oil workers kidnapped

2006-02-18T23:45:00.000-08:00

LAGOS, Feb 18: Nigerian militants launched a string of attacks in the world’s eighth largest oil exporter on Saturday, abducting nine foreign workers, bombing a major oil export platform and sabotaging two pipelines.

Royal Dutch Shell suspended exports from the 380,000 barrel-a-day Forcados tanker terminal, a senior industry source said, cutting at least 16 per ent of Nigeria’s 2.4 million barrels of daily supply to world markets.

The Movement for the Emancipation of the Niger Delta said the attacks were a response to military air raids on villages in Delta state earlier this week and would be followed by another wave of violence “on a grander scale”.

( Full story here )

An analysis on global energy crisis and security

2006-02-18T23:12:00.000-08:00

Since the beginning of the new century, crude oil price has been increasing and broken the highest record many times. But the cost of production didn't increase much, what's the reason for the price hike?

During a forum held by the overseas edition of People's Daily, experts have given their analysis about the situation.

Shen Jiru, a research fellow from the World Economic and Political Institute in Chinese Academy of Social Sciences (CASS) says oil supply is certain, but oil demand is increasing. Some accidents such as Hurricane Katrina and regional conflicts like Iraq war, or sanctions and embargo of oil to certain countries, all these can cause oil price hikes.

( Full story here )

Fashion sets off a new gold rush

2006-02-18T17:38:00.000-08:00

Demand has soared while output stayed flat. Angus McCrone explains the driving forces behind the rise and rise of the precious metal

IN the classic 1964 James Bond film Goldfinger, the villain hatches a dastardly plan to corner the world bullion market. If he were around today, he might well decide to drop the scheme and concentrate instead on counting his wealth — the price of gold has surged from $250 a troy ounce in 2001 to a peak of $574 this month.

And, anyway, what would be the point of cornering the market? The increasingly exuberant upswing in the price of gold — and other precious metals — in the past four years seems to have become a self-fulfilling prophecy.

( Full story here )

Nigeria suspends 380,000 bpd oil exports after attack

2006-02-18T16:06:00.000-08:00

LAGOS (Reuters) - Royal Dutch Shell suspended exports from the 380,000 barrel-a-day Forcados terminal on Saturday after militants bombed the tanker loading platform, a senior oil industry source said.

The company is still trying to ascertain the damage to the platform, which is located three miles offshore, but has already begun shutting oilfields in the area which feed the terminal, the source added.

"Of course no ships can go near there now. This is going to be a major deferment," the senior industry source said.

"If we can't export, we can't produce," he added.

( Full story here )

Nigeria: Militants kidnap oil workers

2006-02-18T16:03:00.000-08:00

NIGERIAN militants launched a string of attacks in the world's eighth largest oil exporter overnight, abducting nine foreign workers, bombing a major oil export platform and sabotaging two pipelines.

Royal Dutch Shell suspended exports from the 380,000 barrel-a-day Forcados tanker terminal, a senior industry source said, cutting at least 16 percent of Nigeria's 2.4 million barrels of daily supply to world markets.

The Movement for the Emancipation of the Niger Delta said the attacks were a response to military air raids on villages in Delta state earlier this week and would be followed by another wave of violence "on a grander scale".

( Full story here )

Energy expert is clutching at straws

2006-02-18T13:24:00.000-08:00

By Brian O’Mahony
A RESPECTED authority on fossil fuels has turned the debate on its head claiming the world has enough fossil fuels to energise the globe for at least 500 years. This is the view of a man who, for 20 years, believed the energy situation was grim.

Professor Mark Jaccard is an expert in sustainable energy. He concludes in his new book Sustainable Fossil Fuels that we have plenty of oil, gas and coal to sustain us indefinitely.

It’s a myth, he argued, that we are running out of oil and gas, he told a London audience at the signing of his book last week.

( Full story here )

Nexen, OPTI boost oil sands spending

2006-02-18T12:24:00.000-08:00

CALGARY -- Nexen Inc. and OPTI Canada Inc. plan to spend another $360-million on their Long Lake, Alta., oil sands project -- 10 per cent more than the $3.5-billion budget -- but they're not blaming cost overruns that plague the industry. The companies say the money will add reliability to the operation and cut operating costs.

The companies, which own Long Lake 50-50, said $250-million will be used to increase the generation of steam, which is injected into wells to loosen up gooey bitumen so it can flow to the surface for processing. Having more steam available will decrease the chances of poor bitumen production results.

Nexen described it as "insurance."

( Full Story Here )

OPEC Output Down 120,000 bpd in January

2006-02-17T19:16:00.000-08:00

Overall crude production by oil cartel OPEC fell again in January, dropping by 120,000 barrels per day to 29.68 million barrels per day (mil b/d) from December's 29.8-mil b/d, a Platts survey of OPEC and oil industry officials showed February 13.

That figure includes Iraqi production at 1.53-mil b/d. Excluding Iraq, which does not participate in OPEC output accords, the ten members with crude

production quotas pumped an average 28.15-mil b/d in January, 100,000 b/d down from December's 28.25-mil b/d and just 150,000 b/d above their 28-mil b/d ceiling.

( Full Story Here )

Cantarell — An Omen?

2006-02-17T19:12:00.000-08:00

There are a lot of bad things out there waiting to bite as the world moves towards peak oil— Iran, Iraq, Nigeria, Venezuela, China, globalization, and hurricanes to name a few. Last week a new bogeyman arose — super fast oil depletion.

Our story begins 65 million years ago when the Chicxulub meteor (or perhaps comet) crashed into the sea near the Yucatan Peninsula . This was one big bang, for it not only wiped out all our dinosaurs, but also took out 75% of the species living on earth.

As our 10 km wide meteor was tooling along at 60,000 miles per hour when it hit, there was not much left of the meteor but vapor after the impact, but for a few seconds, there was a monster hole in the earth 100 miles in diameter. I won't go into all the terrible things that happened to our earth in the months after the blast, but few living things survived.

( Full Story Here )

Riding the rails to $100 oil

2006-02-17T19:09:00.000-08:00

NORWALK, Conn. (MarketWatch) -- Recent meetings of the Organization of Petroleum Exporting Countries have been relatively benign, but when oil ministers meet in Vienna on March 8, you can bet they'll have more on their minds than shopping for chocolate or taking in the sights.

In recent years, these meetings have been watched very closely. How much more so now, with the spike in oil prices and all that's been happening in the world.

Many analysts, including yours truly, believe that the OPEC ministers will tighten production and drastically cut into supply at the next meeting. Gone are the days of easy cheap oil. They've been replaced by strained relations, war, and geopolitical worries over nuclear development, among other things.

We forget OPEC is a cartel, and like all cartels they have one primary goal: to make money and lots of it.

( Full Story here )

Reports: China, Iran Near Oil Field Deal

2006-02-17T19:07:00.000-08:00

SHANGHAI, China — China and Iran are close to setting plans to develop Iran's Yadavaran oil field, according to published reports, a multibillion-dollar deal that comes as Tehran faces the prospect of sanctions over its nuclear program.

The deal is thought potentially to be worth about $100 billion.

According to Caijing, a respected financial magazine, a Chinese government delegation is due to visit Iran as early as March to formally sign an agreement allowing China Petrochemical Corp., also known as Sinopec, to develop Yadavaran.

( Full Story here )

Oil Workers Said Urged to Leave Nigeria

2006-02-17T19:05:00.000-08:00

WARRI, Nigeria — A Nigerian militant leader reportedly warned foreign oil workers to leave the country's troubled delta by midnight Friday as an army helicopter gunship exchanged fire with militants in the latest violence to strike the region.

The British Broadcasting Corp. reported militant commander Godswill Tamuno had announced his Movement for the Emancipation of the Niger Delta was declaring "total war" on foreign oil interests and warned them to leave the oil-rich southern delta by midnight.

( Full Story here )

Chavez says US won't get oil if it "crosses line"

2006-02-17T19:04:00.000-08:00

CARACAS, Venezuela (Reuters) - Venezuelan President Hugo Chavez warned on Friday the U.S. government would not get any more Venezuelan oil if Washington "crosses the line" and said he had started taking measures in preparation.

( Full Story here )

Interview with Chevron Vice Chairman (Audio)

2006-02-17T01:01:00.000-08:00

This week on The Interview, Mike Williams meets Peter Robertson -- a man who sits at the top table in one of the most wealthy and powerful industries.

As vice-chairman of the American oil giant Chevron, he deals with projects from Angola to Australia and last year oversaw profits of more than 14 billion dollars.

But his company is facing up to the end of its life-blood. When the world's finite oil reserves eventually run out, Chevron is starting to ask what comes next. So does Peter Robertson have any answers?

( Click here )

Cost of E85 fuel is higher than gasoline

2006-02-16T23:30:00.000-08:00

The heavily promoted alcohol fuel called E85 might cut America's oil use and help support U.S. agriculture, but it's not reducing motorists' fuel bills. It's boosting them significantly.
A sign advertises E85 fuel at a Chicago gas station.

The price of E85 — a fuel that's 85% ethanol made from grain and 15% conventional gasoline — is higher than that of gasoline, even though E85 has only 72% as much energy. The U.S. Department of Energy says a vehicle has to use 1.4 times as much E85 as gasoline to go the same distance.

( Full Story Here )

A Long Row To Hoe

2006-02-16T23:23:00.000-08:00

Proposals for an alcohol-fueled end to dependence on foreign oil do not sit lightly on the American landscape. Can they fit within our borders at all?

State Of The Union speeches tend to cross using figures with speaking figuratively, and this hybrid rhetoric can bear strange fruit, like the switchgrass mania spreading up K Street like kudzu. Math has never been the Beltway's strongest suit, and it will take a while for many in DC to realize that biofuel, like the solar and wind energy franchises already on offer, suffers from sheer lack of real estate.

( Full story here )

Among Other Things; Where are oil and gas prices heading?

2006-02-16T15:22:00.000-08:00

Have you wondered if the cost of gasoline will ever level off and at what price?

Recently I asked Francis Davidson of Polson where he thought things were heading. Francis has considerable background in the oil industry. After obtaining a degree in chemistry from the University of Houston in 1969, he was employed in the petroleum testing area of the industry. In 1977 he formed his own company and operated it for four years until selling it to Core Laboratories of Dallas. He remained with Core for 11 more years, retiring as a vice president, and moving to Livingston.

There he formed another company and provided testing and processing equipment throughout the Rocky Mountain region, Hawaii and Alaska.Basically, he said, the oil industry is divided into two sectors -- upstream and downstream. The upstream concerns exploration, drilling and production. The downstream, in which Davidson was involved, included refining, distribution and marketing.

( Complete story here )

Boone Pickens is back, better than ever

2006-02-16T15:09:00.000-08:00

SHAWN MCCARTHY

DALLAS -- Boone Pickens may have seen brighter days -- perhaps when he was winning renown as a corporate raider in the 1980s -- but they couldn't have been much better than his current run of good fortune. The legendary 78-year-old U.S. oilman believes he has finally achieved vindication, both for his role in shaking up entrenched oil company management 20 years ago and for his abiding faith that oil and gas markets would turn bullish again after the dismal 1990s.

His market conviction -- backed by adroit trading in energy stocks and commodities -- has in the past two years vaulted him into the ranks of America's wealthiest people, as measured by Forbes magazine.

( For complete story, Click here )

End of the fossil fuel era?

2006-02-16T14:50:00.000-08:00

By Alvin Powell

A car about to run out of gas can be traveling 70 mph until the moment the tank runs dry. Good thing cars have fuel gauges.

While the world economy is humming right along, the fuel gauge for oil production is broken and at least one oil industry expert believes we may be in for a rude shock.
Matthew Simmons, chairman of Simmons & Co. International and author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," used the fuel-gauge analogy to illustrate his concerns about world energy supplies during a Feb. 8 talk in the Science Center.

Simmons said the energy industry is so large that its problems can affect all aspects of modern life. Overall, it is an $8 trillion to $9 trillion business, four to five times larger than the next-largest. The 20th century's explosion in technology and health care, as well as new ways of making war, were largely due to advances made possible by abundant, cheap energy, he said.

( For complete story, Click here )

Is China Preparing for War?

2006-02-16T14:23:00.000-08:00

By Mark W. HughesInfoshop NewsFebruary 15, 2006This analysis will first look at recent developments concerning the Chinese economic and energy policies. This will be followed by an analysis of data concerning global oil consumption and peak oil. Finally, the data concerning China and the data concerning global energy and peak oil will be utilized to examine the possibility that China is preparing to launch a war against Russia to seize Russian far-east oil reserves.

The Chinese central bank holds foreign currency reserves that have reached $819 billion, a foreign currency reserve second only to Japan and expected to exceed that nation's reserves this year. China has invested about three-quarters of this reserve in U.S. Treasury bills and other dollar-dominated assets. China's purchase of Treasury bills, in additions to similar purchasing by Japan and other nations (predominantly OPEC members) is responsible for much of the value of the U.S. dollar, and China uses the purchases to keep its own currency -- the yuan -- undervalued, thus maintaining a balance of trade that vastly favors cheap Chinese manufacturing goods. This also has the effect of holding U.S. interest rates at low levels, besides keeping the dollar at a high value worldwide. Chinese currency reserves are growing at an average rate of $15 billion each month.

However, China is now poised to move much of its currency reserves away from dollars and into other currencies, including the euro, and into commodities purchases -- predominantly oil. China's State Administration of Foreign Exchange has said they will "actively explore more efficient use of our foreign exchange reserves." This followed statements from one of China's central bank monetary policy committee's economist that "The general trend for the U.S. dollar is continually weakening." The economist, Yu Yongding, continued, "Countries with huge foreign-exchange reserves will have their assets shrunken." Finally, in July of 2005 China adjusted its own currency evaluation and increased the yuan by 2-percent against the dollar, and stated that rather than keeping with the system of the yuan's value automatically shifting in accord with the U.S. dollar, the yuan would now fluctuate based upon numerous other currencies such as the euro and the Japanese yen.

( For complete story, Click here )

Gold Gains in London as Fund Investors Buy Metal to Diversify

2006-02-16T12:14:00.000-08:00

Feb. 16 (Bloomberg) -- Gold gained in London as investors sought to diversify their portfolios and get higher returns.

Investors are buying gold because it's outperforming stocks and bonds. Gold rose 90 percent in the five years to the end of 2005, while the Standard & Poor's 500 Index returned 2.7 percent with dividends reinvested. An index of Treasuries maturing in two years or more returned about 30 percent including interest reinvested, Merrill Lynch & Co. indexes show.

( For full story, Click here )

Commodity Strategists: Crude Oil May Reach Record $80

2006-02-16T11:59:00.000-08:00

Feb. 16 (Bloomberg) -- Oil may rise to a record $80 a barrel in the third quarter as an economic expansion in China boosts demand for fuel, according to Sumitomo Corp., Japan's third-largest trading company.

China's oil demand growth may rebound from last year's 2.9 percent, said Keiichi Sano, Sumitomo's chief commodity analyst. Oil rose less than forecast in the past five months because Chinese refiners cut imports, he said. Futures prices, down 5 percent this year, will bottom out this month, he said.

"Demand from China will continue to increase and support further rises in oil prices,'' said Sano. "The country needs more heavy fuel oil for power plants, and fuel for trucks is needed too.''

( For the complete story, Click here )

Qantas sees no oil ease

2006-02-15T18:14:00.000-08:00

QANTAS chief financial officer Peter Gregg today said the company saw no easing in the current strong oil price.

"There's nothing much out there that suggests the strong prices we've seen won't continue," Mr Gregg said.

( For complete story, Click here )

Stoking the Engines of Empires

2006-02-15T17:47:00.000-08:00

By Joel Hilliker

The world is exiting the age of America and entering the age of multiple superpowers. The crunch on resources needed to stoke the engines of emerging global powers is destined to spark a violent revolution.

In the modern world, being a first-rate global power is expensive. It takes a lot of fuel to keep the engine firing.

Modern luxuries such as jetliners and suvs, electronics and computer technology, spacious air-conditioned homes and offices require an unprecedented supply of resources to operate—resources like oil, natural gas and coal, not to mention human laborers. The more elaborate our civilization becomes, the more resource-dependent it becomes—developing from a patchwork of self-sufficient communities using only local resources into a dizzyingly complex, economically interdependent matrix of pipelines, shipping lanes and trade routes that transmit resources to the folks who hunger for them.

( For complete story, Click here )

The great tsunami, the giant wave that will change our lifestyles forever

2006-02-15T17:45:00.000-08:00

By Michael Payne

A long-predicted tsunami is heading toward the shores of America, a wave of incredible proportions, gathering momentum with each passing day. America has had many, many warnings of how this giant wave would develop, but these warnings have been totally ignored. Very soon our American society will experience an extremely painful awakening to the dark specter of "Peak Oil" as it looms on our horizon and then comes crashing down upon our nation. Peak Oil will result in drastic and dramatic changes to our society and our lifestyles, the likes of which we will find extremely difficult to comprehend.

By now, most Americans know what a tsunami is. However, the vast majority of America has no clue as to what Peak Oil is. In the simplest of explanations, Peak Oil is that point when the total world production of oil and all known reserves are surpassed by the world demand. At that point the supply will be steadily reduced and the ravages of Peak Oil will begin.

( For the complete story, Click here )

Bernanke sees more hikes coming

2006-02-15T08:53:00.000-08:00

NEW YORK (CNNMoney.com) - New Federal Reserve Chairman Ben Bernanke told Congress Wednesday that he sees the need for more interest rate hikes in order to keep prices in check.

In his first appearance before Congress as head of the central bank, Bernanke said in prepared remarks that the economy is in danger of overheating and causing an unacceptable increase in prices.

"Gauging the economy's sustainable potential is difficult, and the Federal Reserve will keep a close eye on all the relevant evidence and be flexible in making those judgments," he told the House Financial Services committee in his prepared remarks.

"Nevertheless, the risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately -- in the absence of countervailing monetary policy action -- to further upward pressure on inflation.

(For complete story, Click here )

Big U.S. investors keep the faith on commodities

2006-02-15T00:22:00.000-08:00

NICK BAKER

Bloomberg News

Jim Rogers and Byron Wien are still bullish on commodities after their biggest weekly decline in 15 years. Yet, they view the shares of raw material producers as overvalued.

Rising energy costs and unreasonable speculation about takeovers may cause the stocks' prices to decline, said Mr. Rogers, who co-founded the Quantum hedge fund with George Soros in the 1970s, and Mr. Wien, who joined Pequot Capital Management Inc. in December after 20 years with Morgan Stanley.

"Don't buy the stocks. Buy the stuff itself," said Mr. Rogers, 63, in an interview from New York. "Costs are going through the roof."

( For complete story, Click here )

Huge oil profits skew earnings picture

2006-02-15T00:18:00.000-08:00

By Matt Krantz, USA TODAY

The boom in U.S. corporate profits may not be as amazing as it seems.
While corporate earnings are in the midst of a record-breaking streak of double-digit growth, the historic profits reported by the energy industry thanks to the soaring price of oil are a big reason why.

Last year, for instance, earnings reported by companies in the Standard & Poor's 500 continued their double-digit streak of growth gaining 13.2%, S&P says. ExxonMobil alone posted the largest annual profit in U.S. corporate history of $36.1 billion.

But take out the contribution from energy companies, and that growth shrivels by a third to a less-impressive single-digit number of 8.9%.

( For complete story, Click here )

Why oil will hit $100 a barrel

2006-02-15T00:09:00.000-08:00

The era of easy oil is over, but growing demand from countries like India and China is forcing oil firms to enter unusual territory.

Mike Watts is a man of deep convictions. For years he was convinced that there was oil in large quantities deep beneath the sand of the Rajastan desert in Western India.

Few other people in the industry agreed with him.

Mike's company - Cairn Energy - was in partnership with the Anglo-Dutch giant Shell to explore the area.

Eventually, after some discouraging early forays, Cairn paid Shell £7m to buy Shell out of the project.

Then, just over two years ago, it struck oil in a big way.

The find was big enough to propel Cairn from a small exploration business to a company with a value of nearly £3bn.

( For complete story, Click here )

Woodside expects oil prices to stay high

2006-02-14T23:57:00.000-08:00

The head of Australia's largest independent oil and gas producer, Woodside Petroleum Ltd, expects the oil price to remain high as the company boosts its production output.

Chief executive Don Voelte unveiled a 54.5 per cent jump in underlying net profit to $1.04 million.

Despite the massive jump in underlying profit, the company's bottom line figure of $1.11 billion was down 3.4 per cent on 2004, when the full year result included $472.8 million from the part-sale of the Enfield project.

( For complete story, Click here )

Threat of Scarcity Draws Oil Companies to Cuba

2006-02-14T21:07:00.000-08:00

Patricia Grogg

HAVANA, Feb 14 (IPS) - The need to find new oilfields to satisfy world demand, which could soon outstrip production, has prompted foreign oil companies to take an interest in offshore prospecting and drilling around Cuba, to explore the country's unconfirmed potential.

According to predictions, global crude oil production is going to fall in terms of both quantity and quality, and by around 2015 demand will have grown by about 60 million barrels a day above 2004 consumption levels, that stood at 75 million barrels a day..

The Spanish-Argentine firm Repsol YPF was the first to take up the challenge issued by the Cuban government in mid-1999, when it put out for tender 59 blocks for oil exploration in an area of 112,000 square kilometres within its exclusive economic zone in the Gulf of Mexico.

http://www.ipsnews.net/news.asp?idnews=32157

Supply, Demand and Reserves - the Oil market towards 2010

2006-02-14T21:04:00.000-08:00

Author: Peter Maass

The largest oil terminal in the world, Ras Tanura, is on the eastern coast of Saudi Arabia. From Ras Tanura's control tower, you can see the totems of oil's dominion - supertankers coming and going, row upon row of storage tanks, and miles of pipes. I visited Ras Tanura because oil is no longer out of mind, thanks to record prices caused by refinery shortages and surging demand - most notably in the US and China - which has strained the capacity of producers, especially Saudi Arabia, the largest exporter.

Unlike the 1973 crisis, when the embargo by the Arab members of the Organisation of Petroleum Exporting Countries (Opec) created an artificial shortfall, today's shortage, or near-shortage, is real. If demand surges even more, or if a producer goes offline because of unrest or terrorism, there may suddenly not be enough to go around.

As Aref al-Ali, my escort from Saudi Aramco, the giant state-owned oil company, pointed out: "One mistake at Ras Tanura today, and the price of oil will go up." This has turned the port into a fortress; its entrances have an array of gates and bomb barriers to prevent terrorists from cutting off the black oxygen that the modern world depends

( For the complete story, Click here )

The long plateau of peak oil

2006-02-14T21:00:00.000-08:00

Oil's peak will be signaled by a decade-long plateau in non-OPEC member production

When might the peak of world oil production arrive, and what might be the peak production rate? These are key questions, with many unknowns but few equations. The most we can do is to make some educated guesses based on past observations.

Global oil production's peak will probably not form a well-defined crest. Instead, it will likely stretch out as an irregular plateau. I will crawl out onto the limb to say that the plateau might begin around 2010 and extend to 2020.

( For the complete story, Click here )

G8: Economic growth at risk from unstable energy supplies

2006-02-13T21:50:00.000-08:00

Ministers from the world's richest countries meet in Moscow seek cooperation amidst heightened fear that energy prices could harm strong global economic growth.

February 11, 2006: 5:41 PM EST
MOSCOW (Reuters) - Finance ministers of world's wealthiest nations sounded the alarm over the cost of energy on Saturday and urged greater international cooperation to ensure stable supplies.

Ministers from the Group of Eight industrialized countries said in a communique that global economic expansion was strong but at risk because of high and volatile energy prices

"We need to develop a civilized strategy which will reliably secure the world with energy at reasonable prices and with minimal damage to the environment," Russian President Vladimir Putin told the ministers.

( For the complete story, Click here )

Chevron chief: Bush misunderstands oil market

2006-02-13T21:46:00.000-08:00

US President George Bush’s desire to cut US dependence on Mideast oil shows a “misunderstanding” of global energy supply and the critical role of Saudi Arabia, the vice chairman of Chevron Corporation said today.Peter Robertson said the US would be better off working for “interdependence” with oil producing countries rather than seeking to cut dependence.

“This notion of being energy independent is completely unreasonable,” Robertson said to a largely Saudi audience at the Jeddah Economic Forum, which opened yesterday.“I don’t think anyone actually believes that the US can end its dependence on oil in the Middle East at all.”

( For the complete story, Click here )

The oil man

2006-02-13T21:41:00.000-08:00

Maryland's most conservative congressman leading charge against fuel dependency

By Alan Zibel
Baltimore Business Journal

U.S. Rep. Roscoe Bartlett, the seven-term congressman from Western Maryland, eagerly flips through the large stack of charts and graphs mounted on white poster board.
"Oh, this is an interesting one," he says, pointing to the chart, propped up against the wall of a conference room in his district office in Frederick.

It's a presentation that Bartlett has given before on the floor of the House of Representatives -- 14 times to be exact, sometimes starting as late as 11 p.m. But that doesn't diminish the folksy 79-year-old Republican's enthusiasm for the subject: a looming crisis, he says, in the worldwide supply of oil.

Bartlett, who was elected to Congress in 1992, has been known in Maryland as a staunch social and fiscal conservative. But over the past year, he has been attracting national attention for his persistent advocacy of the theory that the world's oil production is at or approaching its maximum capacity. In doing so, he is echoing concerns among liberal environmentalists and national security-minded conservatives that the nation's reliance on foreign oil enriches hostile interests and puts the country's security at risk.

( For the complete story, Click here )/

Syria switches to euro amid confrontation with US

2006-02-13T21:34:00.000-08:00

DAMASCUS (Reuters) - Syria has switched all of the state's foreign currency transactions to euros from dollars amid a political confrontation with the United States, the head of state-owned Commercial Bank of Syria said on Monday.

"This is a precaution. We are talking about billions of dollars," Duraid Durgham told Reuters.

The bank, which still dominates the Syrian market although private banks have been allowed to set up in the last few years, has also stopped dealing with dollars in the international foreign exchange flows of private clients.

( For the complete Story, Click here )

Exchange-traded gold funds accumulate 461 tonnes

2006-02-13T16:52:00.000-08:00

LONDON (Reuters) - Gold assets with exchange-traded
funds promoted by the World Gold Council total 429 tonnes worth
about $7.5 billion, equating to the 12th largest gold holding
among central banks, an industry official said on Monday.

"The security has succeeded in giving institutional and
retail investors an investment product that provides cost
effective access to the world's oldest investment," Simon
Village, director of Gold Bullion Securities Ltd., which has
promoted one such fund, said in a statement.

The figure excludes 31.75 tonnes of gold with iShares COMEX
Gold Trust, sponsored by Barclays Global Investors N.A.
The funds, the first of which appeared in gold about two
years ago, are backed by bullion held in vaults on behalf of
investors, allowing them a share of a bar of gold.

The investor can participate in the bullion market without
taking physical delivery of metal. The funds are traded on stock
exchanges including London, New York and South Africa.

StreetTRACKS gold fund, the world's biggest gold ETF
with a 75 percent share of the metal held by such funds,
collected about 80 tonnes in just over a month this year,
compared with 168 tonnes in the whole of 2005.

Investors were attracted towards the funds because of rising
prices, which spiked to a 25-year high of $574.60 an ounce this
month, analysts said. Gold was quoted at around $548 on Monday.

According to the World Gold Council, gold holdings with
central banks and the IMF were 30,988 tonnes by December 2005,
with the United States topping the list with 8,133.5 tonnes.
( Reuters South Africa )

Diesel: Using oil to cut oil use

2006-02-13T12:31:00.000-08:00

The fuel could be the quickest and most efficient way to make a big cut in U.S. oil consumption. But there are problems.
By Chris Isidore, CNNMoney.com senior writer

Could diesel fuel be the methadone needed to help solve the nation's "oil addiction?"
Advocates for diesel -- a less refined fuel than gasoline that burns more completely in the engine, delivering more power -- say it can cut oil use, perhaps more quickly and cost effectively than alternatives such as hybrids and ethanol.

Diesels are more fuel efficient than gasoline engines, and often provide greater fuel savings even than the gas-electric hybrid vehicles garnering attention as gas prices have surged. The Environmental Protection Agency estimates that if one-third of cars and light trucks, such as SUVs and minivans, had diesel engines, it would save the equivalent of U.S. oil imports from Saudi Arabia.

Diesel fuel is also far more widely available than some alternative fuels such as ethanol that were highlighted by President Bush when lamented the nation's oil addiction in his State of the Union address last month.

( Full story here )

Oil to go above a $100 over the next few years

2006-02-13T12:24:00.000-08:00

JEDDAH � Oil and gas prices will continue to surge in days to come and oil would go above a $100 over the next few years, according to Burkhard P. Varnholt, MD, global investments, Credit Suisse, Switzerland.

To a Khaleej Times question that in view of the forecast energy prices scenario, what would the action or reaction of the United States be as President George Bush emphasised in his State of the Union address recently to reduce America�s dependence on oil, Varnholt said there would be a massive investment in alternative renewable sources of energy.

He explained that there was no way around developing renewable sources of energy � hydro, nuclear, solar, and coal. It would all be developed, and there would be �frantic investment.�

�Oil and gas prices, and essentially my case is, which I have made numerous times in Saudi Arabia and the Gulf, we are in a long-term cycle that would take oil prices to in excess of $100 over the next few years,� he said.

( For the complete story, Click here )

Farewell to the 'oil era' ?

2006-02-13T12:21:00.000-08:00

The Swedish government has recently announced its resolution to end its dependence on oil by 2020 through the development of renewable energies. This is a brave and great goal. While other countries think it's impossible, the Swedish have determined to say goodbye to oil.

Meanwhile, in his State of the Union Address, US President George W. Bush also said that the US must break its addiction to oil and replace over 75 % of its oil imports from the Middle East by 2025 through technology.

Currently, 60% of global energy supply comes from oil and natural gas. Oil has become a strategic resource. With the sustained growth of world economy, oil supply faces new test. Geo-political situation in oil production regions has become increasingly complicated. Some analysts think the world has entered an ' insecure era in energy'. It's estimated that 64 out of 100 oil production countries have passed their peak production period while the world oil supply will reach its peak between 2010 and 2020, and then begin to decline.

( For the complete story, Click here )

Middle East to dominate oil export market

2006-02-13T12:16:00.000-08:00

By Carola Hoyos in London
Published: February 13 2006 17:24 | Last updated: February 13 2006 17:24

Europe and the US are expected to become increasingly dependent on the Middle East as an exporter of refined petroleum products over the next 10 years.

New FT research shows that refining capacity in the Middle East is to overtake that of Russia and the former Soviet republics, where underinvestment has plagued the energy sector.

Aggressive policies to build big refineries that will boost capacity in the Persian Gulf by 60 per cent will dramatically increase the region’s exports to US and Europe, just as Washington looks to break its dependence on oil from the Persian Gulf.

Ali Naimi, Saudi Arabia’s energy minister, when asked what needed to be done to reduce the high price of oil and its volatility, answered: “Build refineries, build refineries, build them right now!”

But Saudi Arabia is not only building new refineries to reduce price volatility. Helping the world overcome its current shortage in refinery capacity will ensure the Kingdom play’s an increasingly important geopolitical role in the future. The potential financial reward is also high.

( For the complete story, Click here )

Oil India, IOC eye $3-4 bln energy asset buy

2006-02-13T12:13:00.000-08:00

By Simon Webb

LONDON (Reuters) - Indian state-run oil companies Oil India and Indian Oil Corp. (IOC) are planning the joint acquisition of an energy asset worth $3 billion to $4 billion, Oil India's managing director said Monday.

"We have several proposals on the table," Ranjit Kumar Duttar told Reuters on the sidelines of an energy conference in London. "We are having some discussions. We are now trying to acquire some medium-sized properties here and there, (worth) $3 to $4 billion."

He said while several proposals are being evaluated, the companies together would only buy one asset of that value. He would not give details on the proposed acquisition targets, but said they are considering "both companies and properties."

Oil India and IOC have a memorandum of understanding to jointly buy assets abroad, but have so far been in the shadow of state-run Oil and Natural Gas Corp. (ONGC), the main Indian government vehicle for foreign oil acquisitions.

In December, the Indian government took steps to facilitate any moves the companies make together to buy assets abroad, which should speed up the process, Dutta said.

In March last year, India Oil and IOC signed a contract to explore for oil in Libya after a successful bid by the Indian firms for Block No. 86 in the Sirte basin of the oil exporting country.

India, which imports 70 percent of its crude, is actively seeing oil assets abroad to ensure energy security as its energy demand grows rapidly.

The Indian government is encouraging IOC and OIL to bid for foreign projects ONGC already has investments in several foreign projects.

India Oil produced about 65,000 barrels per day of India's 625,000 bpd in December. IOC is India's largest refiner.

China: Dependence on oil needs to be cut, says panel

2006-02-12T22:47:00.000-08:00

The central government is working on a long-term plan to increase the use of alternative fuels to reduce the dependence on oil.

Coal gas and renewable energy sources such as biomass and solar power are expected to become "major alternatives," according to the National Development and Reform Commission (NDRC).

Wu Yin, a senior energy official with NDRC, said at a weekend meeting that the recommendations of a national leading group from several cabinet departments are part of an "oil alternative strategy."

He said "the essence of the report" will be incorporated in China's 11th Five-Year Plan (2006-10), which will be discussed at the annual session of the National People's Congress the supreme legislature next month.

China aims to raise the ratio of renewable energy in total consumption to 13 per cent by 2020, up from the current 7 per cent.

( For the complete story, Click here )

Gold, Dollars and Oil: Life During Wartime

2006-02-12T22:40:00.000-08:00

by Dan Denning

When I got back from my excursion to the Far East in late 2004 and sat down at my desk in London to write up the story, I emphasized three major trends that would create danger and opportunity for investors. First, the bull market in energy (oil, gas, electric, nuclear) was going to be one of the longest and strongest you and I would see in our investment lifetimes.

The big drivers are the growth in demand from China and India. Since then, of course, through the work of Whiskey & Gunpowder editor Byron King, we’ve seen how Peak Oil - the exhaustion of all the world’s cheap, easily recoverable oil - is driving up energy prices even higher and faster than I thought, and also has complicated things geopolitically.

Second, the general rise of Asia into the developed world was causing huge demographic and economic dislocations - and creating enormous investment opportunities as Asian economies began to consume as well as produce, to spend as well as save.

Third, I wrote that the rise of the East was accompanied by the simultaneous collapse of the ruling currency regime of the last 30 years, the dollar standard. This last point is still so inconceivable to many people that they refuse to entertain the possibility. Too much would have to change. Too much wealth would be destroyed. Too many vacations would have to be canceled. Yet the inexorable rise of gold shows that this revolution in money is slowly but surely eroding the dollar’s status.

( For the complete story, Click here )

Lock and Load with a Silver bullet

2006-02-12T22:34:00.000-08:00

JUPITER, Fla. (M&M) -- The teeth-jarring correction in metals earlier this week sent many investors running for cover. Gold dropped over 3% in one day, and silver took even more of a shellacking. But the fundamentals on metals are still bullish, and that makes this a buying opportunity.

I'll get to that. First, let me tell you a story that was related to me by a subscriber at the Orlando Money Show. He recently sold a home in Sarasota, appraised at $250,000. One investor offered him exactly that amount. But my guy brushed off the offer -- after all, Florida real estate is "hot," right?

The next offer came in at $10,000 BELOW the appraisal, also from an investor. My guy wondered: "Only investors want to buy my house... doesn't anybody live in houses anymore?" He shrugged off that offer, too.

It was a while before he received a third offer... and it came in at $20,000 below the appraisal. This time, the seller panicked. He called his broker and shouted: "Take it! Take it!"
As the home sale papers were being signed, thieves broke into the house. All they stole was the copper plumbing.

This story tells me that something Americans have considered a solid investment for quite some time -- home sweet home -- may not be as solid as we think. Meanwhile, another long-neglected asset -- metals -- is becoming more rock-solid all the time. Unlike many assets -- including some bonds and stocks -- the value of precious metals will never go to zero.

( For the complete story, Click here )

Chinese demand for oil forecast to grow by 5.8%

2006-02-12T00:44:00.000-08:00

Larry Elliott

Saturday February 11, 2006, The Guardian

Demand for oil this year is likely to grow less rapidly than expected but will remain strong due to the continued growth of the Chinese economy, the world's leading energy watchdog said yesterday.

The International Energy Agency predicts demand growth of an extra 1.78m barrels per day, down from its previous forecast of 1.83m bpd, and also shaved its growth forecast for 2005. In China, second only to the United States in its appetite for oil, 5.8% growth is forecast.

The IEA blamed geopolitical tensions in Iran and Nigeria, and supply losses in Russia and Australia for high oil prices.

U.S. drawing up plans for Iran attack

2006-02-12T00:36:00.000-08:00

London-based Sunday Telegraph says American Central Command, Strategic Command planners were ‘identifying targets, assessing weapon-loads and working on logistics for an operation’; U.N. nuclear watchdog agency strips most surveillance equipment from Iranian nuclear sites
Associated Press

U.S. military strategists are reportedly drawing up plans for an attack on Iran as a last resort to stop the Islamic republic from developing nuclear weapons.

In a front-page dispatch from Washington, the Sunday Telegraph newspaper in London said Central Command and Strategic Command planners were "identifying targets, assessing weapon-loads and working on logistics for an operation."

The planners are reporting to the office of Defense Secretary Donald Rumsfeld with a view to having a military option if diplomatic efforts fail to put the brakes on Iran's suspected quest for nuclear weaponry.

(For the complete story, Click here )

Hugo Chavez aims for $100 a barrel

2006-02-12T00:22:00.000-08:00

Venezuelan President Hugo Chavez is seeking to raise world oil prices to $100 a barrel this year. Chavez needs a high and rising stream of oil revenues in 2006-2007 because Venezuela’s oil production capacity is collapsing, and his Bolivarian revolution can only be sustained by evergreater public spending. Chavez, who is seeking re-election to a second six-year term in December 2006, plans to spend up to $65 billion this year on social programs and infrastructure projects. He needs significantly more fiscal revenues, and oil is Venezuela’s only cash cow.

To advance his goal of $100 per barrel oil, Chavez is aligning Venezuela’s government with Iran and Syria, which are challenging the West over Tehran’s nuclear plans and the U.S. military presence in Iraq. Chavez this year also will embrace the Harakat al-Muqawamah al-Islamiyya (Islamic Resistance Movement), Hamas, which on Jan. 25 won 76 of 132 seats in the Palestinian parliamentary elections, giving the group the right to form the next Cabinet. The U.S. government considers Hamas a terrorist organization. Hamas leaders already vowed they will never recognize Israel and refused to renounce violence to achieve their political aims.

Hamas already has singled out Cuba, Venezuela, Brazil and Bolivia officially as the most important countries in Latin America for the Palestinian group’s geopolitical needs. Mohammed Nazzal, a member of the radical Palestinian militant group’s political bureau, revealed its foreign policy agenda on Feb. 9 in Damascus. “First we’re visiting the countries of the Middle East, and then we will go to Latin America,” he said. “We are very interested in Bolivia, Brazil, Cuba and Venezuela. Up to now we have not made contacts (with the governments of those countries), but we are going to visit them.”

Iran and Venezuela have enjoyed close relations for over 20 years, based largely on oil and shared interests in OPEC. Last year, they signed bilateral investment and cooperation agreements worth over $7 billion. The Chavez government also has quietly established good relations with the Syrian government. Tehran and Damascus consider Chavez a friend and strategic ally because of his virulent opposition to the U.S. military presence in Iraq and his strong support for Iran’s nuclear development program. Chavez also endorses an independent Palestinian state, and soon he will embrace Hamas publicly as the legitimate democratic ruled of the Palestinian people.

( For the complete story, Click here )

Canales: Output will drop at Cantarell field

2006-02-11T12:46:00.000-08:00

Petróleos Mexicanos, the nation´s oil monopoly, may face plummeting production at its largest oil field in the next several years, increasing the likelihood the nation´s exports will decline, said Energy Secretary Fernando Canales.

Canales said Pemex has done a study that shows production may decline. Pemex said Dec. 8 that Cantarell will decline 6 percent this year to 1.9 million barrels per day. Last year, Pemex exported 1.82 million barrels per day, most of it to the United States.

"Parallel to the decline of Cantarell, which is a fact, we are exploring and drilling new fields that will replace this capacity," Canales said in an interview in Houston.

The study, reported on Thursday in the Wall Street Journal, has sparked a discussion over how rapidly Cantarell, the world´s second-largest oil field, will decline and whether Pemex can increase production in other fields to make up for the drop, said John Padilla, director of IPD Latin America, an energy consulting firm with offices in Mexico City, Caracas and New York.

( For the complete story, Click here )

Iran's euro-denominated oil bourse to open in March: US Dollar Crisis on the Horizon

2006-02-10T20:06:00.000-08:00

by William R. Clark

"A successful Iranian bourse will solidify the petroeuro as an alternative oil transaction currency, and thereby end the petrodollar's hegemonic status as the monopoly oil currency. Therefore, a graduated approach is needed to avoid precipitous U.S. economic dislocations."

"This notion that the United States is getting ready to attack Iran is simply ridiculous... Having said that, all options are on the table."
-- George W. Bush, February 2005

William R. Clark writes: Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity.

Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran's nuclear intentions, and likely include a proposed Iranian "petroeuro" system for oil trade.

Similar to the Iraq war, military operations against Iran relate to the macroeconomics of 'petrodollar recycling' and the unpublicized but real challenge to US$ supremacy from the euro as an alternative oil transaction currency.

( For the complete story, Click here )

Three Predictions - David J O'Reilly CEO of Chevron

2006-02-10T19:54:00.000-08:00

It is a pleasure to be here - to see old friends, renew acquaintances and strike up new friendships.

It's especially important to have this kind of camaraderie at the present time - when many of us are dealing with the recovery from Hurricane Katrina and its impact on global energy markets.

Katrina was a tragic event - the worst natural disaster to hit the United States. And even now, we are still assessing its impact on human lives. But the incident also highlighted the resiliency and spirit of our industry. I visited our operations in the Gulf of Mexico region just a week after the hurricane hit. The industry response I saw was massive.

It also demonstrated the fundamental character of our business in a time of crisis. Equipment and other resources were shared. Supplies from other parts of the world were rerouted. Support from longstanding partners was instantaneous.

( For the complete speech, click here )

Danish island touts clean energy, but reality sets in

2006-02-10T18:11:00.000-08:00

By Mary Jacoby, The Wall Street Journal

SAMSOE, Denmark -- In the late 1990s, Denmark set out to turn this farming and summer-vacation island in the Kattegat Sea into a showcase for clean energy. The government dangled generous financial subsidies. A former environmental studies teacher, Soren Hermansen, was hired to persuade residents to invest in wind turbines, solar panels, electric cars and giant straw-burning furnaces.

Today, Mr. Hermansen hands out glossy brochures at energy conferences depicting an ecofriendly Samsoe awash in wildflowers. But Samsoe's 4,300 permanent residents never gave up their gasoline-fueled cars. Only a third of the island's 18 villages signed onto a cooperative heating program. Elimination of a tax credit for solar power brought installation of panels to a halt. Wind power, which once showed the most promise, also faces an uncertain future.

The mixed results on tiny Samsoe demonstrate the hurdles of taking alternative energy mainstream. Last week in his State of the Union address, President Bush proposed ramping up federal funds for researching new solar, wind and nuclear technologies. Mr. Bush also linked energy independence to national security and freedom from Middle Eastern oil -- echoing Europe's long-standing argument for fostering renewable energy sources.

( For the complete story, Click here )

When the Oil runs out

2006-02-10T18:06:00.000-08:00

Are we heading for the end of civilization -- or are the warnings of a coming apocalypse just another case of Chicken Little?

JONATHON GATEHOUSE

The Four Horsemen have upgraded to SUVs. Not the hybrid ones either, but those gas-guzzling, bunny-crushing behemoths that Arnold Schwarzenegger favours. In oil-rich Babylon, whores are so thick on the ground that it's a little hard to pick just one. Although everyone can agree on what the Antichrist is up to -- running a multinational petroleum company. Yes, the End is nigh, if you believe the consensus that has been brewing in the halls of academe and the non-fiction aisle at the local bookstore. Starting in 2010, no later than 2020 or 2030, according to the latest vision of secular apocalypse, global oil supplies will peak, and the world will begin to unravel at the seams.

Could that have been the reason behind last week's surprise admission by a former Texas petroleum executive turned president that "America is addicted to oil"? George W. Bush's sudden embrace of the obvious in his State of the Union address, and his new "national goal" to cut Middle East oil imports by 75 per cent by 2025, has environmentalists blowing the dust off plans for hydrogen filling stations, fields of wind turbines and giant ethanol plants. (Although VP Dick Cheney quickly assured supporters that plans to start drilling in an Alaskan wildlife refuge "are not off the table by any means.") But even a modest change in direction for a president who had supported the bottomless U.S. appetite for energy as "an American way of life" suggests his advisers have caught a whiff of brimstone on the breeze.

( For the complete story, Click here )

UK plunges into the red on annual crude trade

2006-02-09T23:48:00.000-08:00

By Gary Duncan, Economics Editor

THE demise of Britain’s self-sufficiency in oil loomed larger yesterday as it emerged that the country plunged into the red on trade in crude in 2005 for the first full year since the late Seventies.

After becoming a net importer of crude for most of the second half of last year, Britain recorded its first annual deficit on trade in oil since Margaret Thatcher came to power in 1979.

Over 2005, Britain exported 50.2 million tonnes of North Sea oil worth £10.9 billion. But this trade was eclipsed by imports of 55 billion tonnes, worth £11.4 billion, to meet the needs of an energy-hungry nation, the official figures revealed.

( For the complete story, Click here )

Bush's Call for Energy Independence Unattainable

2006-02-09T23:45:00.000-08:00

To: National Desk, Energy Reporter

DALLAS, Feb. 9 /U.S. Newswire -- An unfettered market rather than President Bush's call for energy independence is the best solution to America's energy crisis, according to NCPA Senior Fellow H. Sterling Burnett.

"Energy independence is a myth," said Dr. Burnett. "And it is ironic that throughout the State of the Union address, the president stressed the benefits of open markets and derided calls for economic isolationism and protectionist measures except in the area of energy production."
Burnett cites two key drawbacks to government subsidies for domestic, renewable fuels. First, if a renewable fuel cannot survive in the marketplace without a subsidy, then producing it wastes scarce resources. A study from scientists in New York and California, for instance, has shown that it takes as much or even more energy to make ethanol than the energy it produces. In other words, burning ethanol could actually increase our need for oil and gas imports.

In addition, when government dedicates funds to particular technologies, it stifles innovation because private capital often follows government dollars. Thus the public is denied technological innovations which might have occurred without government interference in energy markets. Improved energy technologies, fuel sources, combustion or delivery systems which might have produced cheaper, cleaner energy than current technologies go undiscovered or wither from lack of funding.

"In the 1990s government promoted natural gas as the fuel of choice while doing nothing to reduce barriers to new development," said Dr. Burnett. "This resulted in increased demand, decreased supply, and high prices consumers are suffering under today."
---
The NCPA is an internationally known nonprofit, nonpartisan research institute with offices in Dallas and Washington, D. C. that advocates private solutions to public policy problems. We depend on the contributions of individuals, corporations and foundations that share our mission. The NCPA accepts no government grants.

http://www.usnewswire.com/

Psychology of a Falling Dollar

2006-02-09T23:00:00.000-08:00

by Axel Merk

Given a current account deficit in excess of 6% of gross domestic product (GDP), many fear the US dollar must decline. At the World Economic Forum in Davos, policy makers disagreed as to the severity of the risk, its causes and cures. In a nutshell, the United States does not export enough to the rest of the world to balance its own appetite for cheap Asian imports. The American consumer spends too much and saves too little. As a result, dollars are leaving the US in return for goods and services. Unless those dollars are reinvested in US denominated assets at a rate in excess of $2 billion a day, the dollar will decline.

According to the Financial Times, the top international affairs official at the US Treasury warned that if the US were to instigate policies to rein in the consumer, it would plunge the US into a deep depression; fallout to other countries would also be severe. While we have explained in the past why the US has no interest in a consumer slowdown, this is the first time we hear the US Treasury warn about the risk of a depression.

http://www.safehaven.com/article-4564.htm

Home Inventories are rising sharply

2006-02-09T09:27:00.000-08:00

By Ruth Simon and James R. Hagerty, The Wall Street Journal

With the key spring selling season about to get under way, the inventory of homes on the market is climbing sharply in a number of major cities.

It is the latest sign that the balance of power between buyers and sellers is shifting as the once red-hot housing market continues to cool. The slowdown is affecting both existing homes and new homes. Tuesday, the nation's largest builder of luxury homes, Toll Brothers Inc., reported a 29 percent decline in new orders in its first quarter, which ended Jan. 31. That was below many analysts' expectations and prompted a sharp selloff in Toll Brothers stock. And Ryland Group Inc., a Calabasas, Calif., builder that sells homes in a wide range of prices, recently announced that new orders declined 4.7 percent for its quarter ended Dec. 31.

http://www.post-gazette.com/pg/06039/652164.stm

The hard truth about oil

2006-02-09T09:17:00.000-08:00

No matter what the president says, conservation is America's only route to energy independence.

By Nelson D. Schwartz, FORTUNE Europe editor
February 9, 2006: 11:31 AM EST
NEW YORK (FORTUNE) - Presidents going back to Richard Nixon have been talking about energy independence. It's one of those vote-getting platforms that no one could possibly be against -- like world peace, mom and apple pie. It gives us the illusion of control over our energy destiny, which we don't have, at least in a fossil-fuel based economy.

But its a lost cause.

The only way we're ever going to be able to boost oil supplies here at home is through conservation, and that's something the government is going to have push aggressively, at least until technological advances like cellulosic ethanol, hydrogen and other alternative energy forms become available.

Don't take my word for it. Just listen to what Big Oil has to say

( For the complete story, Click here )

Venezuela buys more arms, reveals U.S. nukes goals

2006-02-09T09:15:00.000-08:00

Speaking to a huge rally of supporters earlier, Venezuelan President Hugo Chavez said he wants to buy more weapons to protect his country from invasion, the BBC reported.

“100,000 Kalashnikov assault rifles already on order from Russia were not enough,” Mr Chavez, wearing his trademark red army beret, told the rally, adding that Venezuela needs a million well-armed men and women.

"Venezuela needs to have one million well-equipped and well-armed men and women."
( Full story here )

Saudi questions Bush oil plan

2006-02-09T09:12:00.000-08:00

Minister says cuts could affect production plans
By DAVID IVANOVICH and LYNN J. COOKCopyright 2006 Houston Chronicle

Saudi Arabian Oil Minister Ali Naimi on Tuesday challenged President Bush's call to reduce the nation's dependence on Middle Eastern oil, warning that such talk could discourage further expansion of his country's production capacity.

Responding to the White House's push to replace 75 percent of the oil that steams here from the Middle East with alternative "homegrown" fuels like ethanol, Naimi said the Saudis will have to keep Bush's message in mind when considering whether to boost their production capacity beyond an already-planned expansion

( For the complete story, Click here )

PEAK OIL AND THE SORRY STATE OF THE UNION

2006-02-08T11:53:00.000-08:00

by Byron King

In his State of the Union speech, President Bush said, "America is addicted to oil," and set a goal of replacing 75 percent of the nation's Mideast oil imports by 2025 with ethanol and other energy sources.

Who is he kidding?

Saudi's Ghawar field is close to being in irreversible decline. The Saudis are only managing to maintain current oil production volumes by virtue of a massive seawater injection program that pumps more than seven million barrels of salt water per day into its oil fields. This pumping helps to maintain production pressures in the oil reservoirs, but is also the source of formation damage due to the presence of oxygen and bacteria in the seawater. By 2025, Saudi will still export oil, but far less oil than now and each tanker will be of such value as to require its own armed escort.

United States Peak Oil: Iran and Iraq

Iran is not quite at its production peak, but within 20 years, even the most optimistic estimates forecast that Iran will cease to be a net oil exporter. (This may also have something to do with Iran's desire to develop a nuclear program.)

And Iraq? By 2025, Iraq may be an oil exporter, not to mention an eastern province of Iran. But considering the looming and inevitable decline in daily world oil production, who will be able to afford whatever gets exported? (Hint, do you speak Chinese?)

The point is, on the other side of Peak Oil, the United States will be fortunate to receive any oil at all from the Mideast, let alone the Bush goal of only 25% of current (or forecasted) imports. The planners, who are connecting the dots of the past, and mechanistically extrapolating out into the future with no allowance for Peak Oil, are living in a fantasyland. They are planning, if anything, for the failure of the American economy and the attendant decline of American civilization.

Still, our Mr. President raised the subject. To recall an old phrase: "What does the President know, and when did he know it?" If G.W. Bush is onboard with Peak Oil, he failed to bring up the subject with specificity in his State of the Union speech and give the concept the publicity and credibility that such a speech would merit. Then again, maybe the president saw the movie A Few Good Men. Maybe he is imitating Jack Nicholson's character, a colonel in the Marines, who said, "You want the truth? You can't handle the truth." Maybe, to Mr. Bush's way of thinking, he is just doing the best that he can.

There are people who plan for the long term. There are Japanese companies with 100-year business plans. Can anyone predict what the world will be like in 100 years? No. But these companies, reputedly, intend to be around when the next century rolls over. One way or the other. It might be the founder's great grandchildren, but they will be around. As the saying goes, "It's not the plan, it is the planning." (This is a famous quote from General Eisenhower that is painted on the wall of every staff college of the U.S. military.)

United States Peak Oil: Strategy

Strategic planning, operational planning, tactical planning...they all have their place in this world. It is not that things will follow exactly the plan. It is that you have at least planned something and thought things through. You have identified your challenge. You have considered your "desired end state," and determined which pathways might get you there. There are many roads from which to choose, so ya gotta choose. What are you going to do? You need to marry-up your resources to your action plan. What do you need in order to accomplish your mission? You need to identify what you need, and how you are going to get it. And you have to consider the alternatives along the way.

You need to think in terms of "what if this?" and "what if that?" And then you act, starting tomorrow morning, knowing full well that the next day, some freaking damn thing will occur to screw you all up. But at least you have a plan for this as well. And whoever has the better plan, the United States, China, Russia, the European Union, or the Bolivians...they are going to be left standing at the end of the day.

Few things in this world are more scripted than a U.S. President’s State of the Union address. By comparison, the Oscars are a little-old-lady Bingo game down at the fire hall. The entire resources of the U.S. federal government are at the disposal of Herr POTUS. If el Presidente says "X," then the next day there are small armies of federal employees power-pointing "X." If el Pres. says "Y" in the SOTU address, then...you get the picture.

The U.S. Navy, for example, has a 50-year plan. Why? It is because we are building ships with a useful life of 50 years. What will the world look like in 50 years? Beats me; beats anybody. But I bet that you will see U.S. Navy nuclear-powered aircraft carriers floating on the waters of the world. The Navy is inventing its own future, Congress permitting and appropriating. They are designing berthing compartments and kitchen sinks, not to mention nuclear reactors and gear reduction systems and catapult systems, for sailors who will not be born for another 25 years. And when the time comes, these young lads & lassies will be sleeping and washing up, and sailing and shooting airplanes, off of something that some guy designed at a drafting table in Newport News, like, maybe, yesterday.

United States Peak Oil: Reduction of Dependence

Yes, we have been hearing this "We will have to reduce our dependence on foreign oil" B.S. for 30 years. And for 30 years, it was easier to let the daily oil markets dictate that the nation did not have to get serious. What were we going to do, put a $4.00-per-gallon tax on gasoline and kill the driving-based economy? Sorry, guys. Democracy gave you Hamas in Palestine, and Ahmadinejad in Iran, right? Well it also has given cheap gas in the United States for the past century. It was fun while it lasted. Now, Mother Nature is at the door, telling you that it's payback time. Uh-oh.

So, we had our $8.00-per-barrel oil in the 1980s, and our $10.00-per-barrel oil as recently as 1999. We sprawled all over the land, from sea to shining sea, paving over the amber waves of grain, running condos up the sides of purple mountains, and laying out housing tracts where the deer and the antelope used to play. We choke the land with Interstates from the Redwood Forests to the Gulf Stream Waters. This land was made for you and me, huh?

And we plugged a hell of a lot of stripper wells along the way, too. So long to those marginal barrels, at three or five units per day, times 100,000 wells.

Now we see and hear G.W. Bush, who is pals with Matt Simmons and Richard Rainwater (ahem...), saying we are going to reduce out oil imports from the Mideast by 75% in the next 20 years. We never heard Herr Clinton say that...did you? Or if he did, he was just trying to pick up some cute girl, sitting in the front row wearing a wet T-shirt that said "No Blood For Oil" (Whatever works, right Slick?). Considering the reality of Peak Oil, G.W. Bush's statement is a freaking no-brainer. Finally ("Hallelujah!!"), the Bush Administration gets it right, even if it may well be for all of the wrong reasons.

Wisdom may come late, but it seldom never arrives.

Then again, maybe Bush is talking alternative energy for the right reasons, but sometimes a president just can't tell people what is going on. Why did the United States decide, almost overnight, to implement the Safeguard Antiballistic Missile System in late 1968 and early 1969? Did it have anything to do with Soviet submarine K-129, and its abortive nuclear strike at Pearl Harbor? Do you think that President Johnson or President Nixon could have come out and said, "Hey, we almost got nuked on March 8, 1968, by some Red Star Rogue (hey, catchy title...), so we need an ABM system.” Sorry, there are some factual secrets that you just have to keep.

This applies to motive as well. Why alternative energy? Why now? Hmmm. The gears are turning, slowly maybe. But they are turning. I can hear the medulla oblongata, grinding away in the Oval Office. "I cannot really say 'Peak Oil.' The only people who know what it is are a bunch of too-smart people at the margins. Besides, whatever I say, it won't be enough for them. And I have to talk to the center. And we all know how stupid they are out there in the center.

“The lumpenproles in Florida cannot even push a stick through a piece of paper on election day. Do I want to lay the Peak Oil gig on them? It will be panic-city. What will happen to the stock markets if the masses wake up and realize that their 401(k) funds are invested in utter trash, in an economy whose long-term business model is just plain busted.

“Besides, we have 60 Minutes peddling all that crap about how the Alberta tar sands are our salvation. People are confused, and I cannot hold school for the entire freaking country during a one-hour SOTU speech. So, I will say as much as I can get away with, and not get myself assassinated by the...well, I'm not supposed to even think about those people."

Something is going on. Something big.

Byron King
for The Daily Reckoning

P.S. Not all nations suffer equally in the event of a crude crisis. Since the United States accounts for roughly 25% of the oil being consumed, even a minor shortfall in the production and distribution of oil around the globe portends disproportionate economic downsides here in America...

Editor's Note: Byron King currently serves as an attorney in Pittsburgh, Pennsylvania. He received his Juris Doctor from the University of Pittsburgh School of Law in 1981 and is a cum laude graduate of Harvard University. He is a regular contributor to the free e-letter, Whiskey and Gunpowder, which covers resources, oil, geopolitics, military history, geology and personal freedom. To get your free subscription, click below:

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Exxon: Bush's energy goal 'not feasible'

2006-02-08T10:00:00.000-08:00

Oil company executive says president's aim to wean America off foreign oil is unrealistic, cites energy independence 'misperception.'
HOUSTON (Reuters) - The United States will rely on foreign imports of oil for the foreseeable future to feed its energy needs and should stop trying to become energy independent, a top Exxon Mobil Corp. executive said Tuesday. "Realistically, it is simply not feasible in any time period relevant to our discussion today," Exxon Mobil Senior Vice President Stuart McGill said, referring to what he called the "misperception" that the United States can achieve energy independence.

( Full story here )

US urging Iraq to develop oil "roadmap"

2006-02-07T18:53:00.000-08:00

HOUSTON (Reuters) - The United States is urging Iraqi officials to create a roadmap for developing its vast oil reserves, as one of the first steps to attracting foreign investment, a U.S. official said on Tuesday.

The United States wants Iraq to come up with a model that spells out the legal and regulatory framework that foreign oil companies would work within, said Paul Simons, the U.S. state department deputy assistant secretary for Energy and Sanctions.

Such a model would specify, for example, what shape a national oil company in Iraq would take, he said. The United States has not suggested a preference for any particular model that Iraq should pursue, he said.

( For the complete story, Click here )

Occidental Petroleum 4Q Profit Skyrockets

2006-02-07T18:45:00.000-08:00

LOS ANGELES - Occidental Petroleum Corp. on Tuesday said high oil and gas prices drove its fourth-quarter profit up 55 percent.

Quarterly earnings totaled $1.15 billion, or $2.80 per share, up from $742 million, or $1.83 per share, in the prior-year period.

Total sales rose to $4.33 billion from $3.08 billion in the year-earlier quarter. Los Angeles-based Occidental's largest oil and gas segment reported $3.03 billion in sales, up from $2.07 billion a year ago, while its chemicals segment increased sales to $1.26 billion from $985 million at the same time.

Analysts expected profit of $2.76 per share and sales of $4.27 billion, according to a Thomson Financial poll.

Worldwide production in the fourth quarter averaged 589,000 barrels of oil equivalent per day versus 558,000 barrels in the 2004 quarter.

Full-year profit expanded to $5.28 billion, or $12.91 per share, from $2.57 billion, or $6.40 per share, in 2004. Sales for the year jumped to $15.21 billion from $11.37 billion in 2004.
Shares of the company fell $3.89, or 4.1 percent, to close at $90.10 Tuesday on the New York Stock Exchange.

(Associated Press )

The Next Conservative Energy Policy

2006-02-07T14:47:00.000-08:00

By Roscoe G. Bartlett
Feb 7, 2006

President George W. Bush was half right and half wrong about oil in his State of the Union speech. "America is addicted to oil, which is often imported from unstable parts of the world," he said. However, we can't "break this addiction through technology" alone. Two words conservatives should champion were missing from his speech: conservation and efficiency.

Current U.S. energy policy and the President's Advanced Energy Initiative are too modest and overly focused on the goal of increasing domestic production of oil and alternatives to support increasing oil consumption. This is futile and self-defeating because U.S. oil production is in permanent decline and world oil production will follow - perhaps disastrously soon.

( For the complete story, Click here )

After Peak Oil: Apocalypse or Opportunity?

2006-02-07T01:39:00.000-08:00

Source: Ventura County Star [Feb 06, 2006]

SYNOPSIS: West Coast Asset Management Inc.'s co-founders discuss the investment implications of peak oil.

In 1942, 17-year-old Pvt. Harold Zatkowsky sat down for his first breakfast in the U.S. Army. "That was the first time in my life when I got enough to eat."

America hasn't always been rich, but most of our generation always had enough to eat. Too many of us younger than 60 see films like "Seabiscuit" and view the Depression as some sort of literary device. But not so long ago, Americans lived very differently than we do now. With our accelerated rate of change, how differently will we live 20 or 40 years from now? Will the end of cheap oil destroy our standard of living or create new opportunities to improve our lives? Or both?

Last month's article prompted some readers to look up "Peak Oil" on the Internet, where they found predictions of continuous Middle East resource wars and all-out nuclear conflict with China, Russia, India, etc. They found charges that the entire Peak Oil discussion is prompted by oil interests (and investors like ourselves) to increase prices and profits, and they saw life-after-the-peak scenarios that make the "Mad Max" movies look like a romp through Disneyland. The pessimists' vision evokes Treasure Island's Long John Silver, who declared, "Them that dies will be the lucky ones."

( To read the complete story, Click here )

High Oil Prices Fuel Middle East Growth

2006-02-06T18:16:00.000-08:00

By Brad Foss, AP Business Writer
The Middle East Takes on New Role As One of World's Fastest-Growing Areas for Energy Consumption

WASHINGTON (AP) -- The Middle East, long recognized as a top oil producer, is taking on a new role as one of the world's fastest-growing regions for energy consumption.
The increased clip at which it burns petroleum -- twice its historical average and close to the growth rate of the Asia-Pacific region -- is contributing to tight oil supplies around the globe while demand continues to rise in the United States and China.

The growing thirst for fuel in countries such as Saudi Arabia, Qatar and Kuwait reflects strong economic growth induced by soaring global energy prices. Another factor is that U.S. military operations in Iraq and Afghanistan greatly depend on diesel and jet fuel purchased in the Persian Gulf.

This increased demand, which is only now starting to register with many experts, comes at a time when a debate is intensifying about whether a supply glut may develop in the next few years.

( For the complete story, Click here )

Iran's message to the west: back off or we retaliate

2006-02-06T16:51:00.000-08:00

Ewen MacAskill and Simon Tisdall
Thursday February 2, 2006
The Guardian

Iran's foreign minister yesterday threatened immediate retaliation over a move to refer its nuclear activities to the United Nations security council in comments which deepen his country's confrontation with the international community.

In an interview with the Guardian - his first with western media - Manouchehr Mottaki accused the US of manufacturing the crisis and insisted there was still time to avoid a collision. But he warned that any military action by the US or Israel against Iran would have "severe consequences" and would be countered "by all means" at Iran's disposal.

( Read the complete story here )

Rising star warns of economic risks ahead

2006-02-06T11:12:00.000-08:00

By Greg Burns
Chicago Tribune

WASHINGTON — These are quiet times in the global economy, just the sort of lull that worries Raghu Rajan, one of the University of Chicago's leading stars.

On loan to the International Monetary Fund, where he became the youngest-ever chief economist and the first from a developing country, the 42-year-old native of India sees risks on the rise in housing markets, hedge funds, pensions — all across the seemingly tame landscape of world finance.

Difficult to track and often disguised, the steady accumulation of risks has increased the odds of what Rajan cautiously terms "a greater [albeit still small] probability of a catastrophic meltdown."

A sharp decline in home prices, for instance, could cripple the job market, trigger loan defaults, hurt anyone invested in mortgage securities and eventually undermine every moving part of the interconnected financial system.

( To read the rest of the story, Click here )

Credit Agricole’s brokerage declares "start hoarding" gold!

2006-02-06T01:05:00.000-08:00

St. LOUIS - Cheuvreux, the equity brokerage house of the French bank Credit Agricole, distributed a 56-page report today endorsing the findings of the Gold Anti-Trust Action Committee (GATA) that the price of gold has been surreptitiously suppressed by Western central banks and that those banks do not have the gold they claim to have.

The report, written by Cheuvreux’s mining sector analyst in London, Paul Mylchreest, is titled "Remonetisation of Gold: Start Hoarding." It repeatedly cites GATA by name and foresees an "unprecedented" rise in the gold price. But what is more, the report accuses central banks of “covert selling.”

According to the report, Cheuvreux has raised its mid-cycle gold price estimate to $900/oz from $750/oz, and sees the possibility of a spike to $2,000/oz, or higher.

( To read the rest of the story, Click here )