Investing Energy ETF

GPS could save airlines billions in fuel costs

CHICAGO - A World War II-era air traffic network that often forces planes to take longer, zigzagging routes is costing U.S. airlines billions of dollars in wasted fuel while an upgrade to a satellite-based system has languished in the planning stages for more than a decade.

The $35 billion plan would replace the current radar system with the kind of GPS technology that has become commonplace in cars and cell phones. Supporters say it would triple air traffic capacity, reduce delays by at least half, improve safety and curb greenhouse gas emissions.

An Associated Press analysis of federal and industry data found that if the new system were already in place, airlines could have saved more than $5 billion in fuel this year alone.

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Falling gas prices may lure travelers off planes

CHICAGO - So far, U.S. airlines have coped well with a painful economic downturn, but a sharp decline in gasoline prices soon may lure travelers off planes and into cars for short-haul trips.

That would be a departure from a long-held public perception that flying — while increasingly expensive — still makes sense because the cost of driving is almost as bad and driving takes longer.

But with gas prices down more than 15 percent since July and air fares steady, travelers look likely to rethink that logic, said Rick Seaney, chief executive of air fare research site FareCompare.com.

Now THAT’s more like it: Dropping gas prices fuel hope for motorists

Gas prices during the past two weeks have dropped around 50 cents on average for the price of a gallon of gas, and customers such as Shorter College sophomore Jennifer McKee, who filled her tank at the Kroger gas station on Turner McCall Boulevard Friday afternoon, had reason to be happy.

McKee, who lives in Stockbridge, said prices were back to where she could just about afford them again.

Finding Energy to Beat a Recession

The stock market’s record fall in September suggests that the impending global financial crisis is not just some kind of bad dream, but the new reality. With globalization, it is clear that the next few years will be painful for both the world economy as a whole, and for the energy industry — one of its most important sectors — in particular.

OPEC tells IMF bearish oil market to persist

WASHINGTON (Reuters) - The global financial crisis and worsening economic outlook is likely to sustain a bearish oil market and this poses a risk of oversupply in the first half of 2009, OPEC said on Saturday.

North Korea Removed From Terrorism List, U.S. Says

(Bloomberg) — North Korea was removed from a list of state sponsors of terrorism after the communist state agreed to measures to verify its progress in disabling its nuclear facilities, the U.S. State Department said today.

While the final language must still be written, “the North Koreans have committed that the disablement activities at Yongbyon will resume immediately,” said Sung Kim, the U.S. envoy to the six-party nuclear talks, referring to the reactor that is the source of North Korea’s weapons-grade plutonium.

Surviving in Zimbabwe

How do people really survive in a country with 231 million % inflation, worthless money, shortage of fuel, meaningless salaries, where prices go up every day, where medical attention has become a luxury because it has gone beyond the reach of many, where parents can not afford to pay school fees. A country suffering from the yoke of economic sanctions romanticised as targeted travel bans by the all powerful west. The country is with erratic electricity supply and flowing raw sewage. Zimbabwe is suffering from internal political tension, international condemnation and isolation.

Wrong Baby Wrong!

You would have thought we had come as they used to say, “A long way, baby”, but apparently not. When listening to the rhetoric in this presidential election year about how to achieve energy independence, I shake my head in disbelief. What are worse are the chants of the crowds in enthusiastic agreement. As one of Hitler’s top lieutenants Joseph Goebbels famously said, “The bigger the lie, the more people will believe it.” Yep, and if you throw in high prices at the pump, and a recession, then suddenly presto -“it” becomes gospel. The “it” this year is made up of renewed support for allowing off shore oil drilling, and the screams of crowds chanting “Drill Baby Drill” no doubt in the false belief doing so would help us reduce our dependence on foreign oil, lower gas prices and ease our energy woes. Right. You can also put out a three alarm structure fire with a garden hose and by stomping your feet and blowing hard. Drilling is a convenient, expensive, ineffective and unwarranted distraction.

How to Win My Vote for Obama

Obama claims that he is going to create jobs in this country through revamping and revitalizing the energy industry. But his focus is on “green energy” — mainly wind and solar energy. The energy input required to create a ton of steel (450 kW-hours) with wind power costs $29.52, according to the American Wind Energy Association (without the government subsidy - taxpayer money). With solar power the cost is, per Scientific American, $36.00. With nuclear power — which apparently isn’t considered sufficiently “green” enough to merit more than lip service — the cost is $8.10 according to the Department of Energy, including fuel, depreciation, waste fuel storage, and eventual decommissioning. (It is true that this cost of nuclear power does not take into account initial capital costs for building a nuclear power plant and the quoted wind and solar costs do take into account initial capital costs for wind towers and solar panels. But because solar and wind power are intermittent power sources and hence must be backed up by conventional power plants that are always running — generally nuclear and coal power plants, called “spinning reserves” — or not be used, wind and solar power are reliant on capital being expended for coal and nuclear power.) Given the extra costs our country’s businesses will incur because of wind and solar power, why does Obama believe that U.S. employment won’t go down as manufacturing costs go up?

Sarah Palin’s Alaskan Wasteland

The mess of pollutants in Alaska has clearly taken its toll. In general, the state has double the national average of birth defects. While the causes are unknown, environmentalists point to the region that includes the North Slope, an area slightly larger than Minnesota, where most of Alaska’s oil is produced. The byproducts of oil production can cause serious nervous system disorders, and the North Slope and its environs, home to Alaska Natives and itinerant oil workers, has the highest prevalence of birth defects in the state–11 percent–compared with 6 percent statewide and 3 percent nationwide.

Drought in southern Australia declared ‘worst on record’

If you want to know what the U.S. southwest faces in the coming decades if we don’t reverse greenhouse gas emissions trends quickly, just look to Australia:

David Jones, the head of climate analysis at the Bureau of Meteorology, said the drought affecting south-west Western Australia, south-east South Australia, Victoria and northern Tasmania “is now very severe and without historical precedent”.

Dr Jones said Victoria had had “the driest multi-year period on record, but also by far the hottest….”

He said temperatures were running at about one degree “above any previous comparable drought. That is substantially hotter, and that one degree is a global warming signal.”

Fuel rationing could continue a few more weeks for truckers in Alberta

Truckers already experiencing lean times in the wake of rocky economic conditions are facing a new challenge this week – fuel rationing – in the province of Alberta, Canada.

As of Friday, Oct. 10, several of the major refineries in Western Canada were shut down because of scheduled routine maintenance, but unexpected production problems have amplified the fuel shortage there.

Mayne Root, executive director for the Alberta Motor Transport Association, told Land Line in an e-mail on Thursday, Oct. 9, that he has been told that the fuel rationing situation may last another few weeks.

Some trucking companies are only receiving 50 percent of the fuel they need. Root said that producers in Western Canada anticipate being back up to full production by the end of the month.

EPA Approves Fuel Waiver for Phoenix area

As a result of the disruption in the supply of fuel from Gulf-area refineries and pipelines, EPA has exercised its authority under the Clean Air Act to temporarily waive certain requirements for gasoline sold and distributed in Phoenix, Arizona and the surrounding area. The disruption and delays in production and delivery of gasoline to Arizona resulted from effects of Hurricane Ike, as well as a fire at a fuel distribution terminal that temporarily shut down deliveries of gasoline to Arizona.

Counterproductive price-gouging laws

But while supply disruptions cause high prices, they typically don’t cause shortages. We need more than Ike and Gustav to explain the lines and frustration.

For that unhappy coincidence, one should look to the political response to high gas prices. Governors and attorneys general across the South responded to the gas price increases by wielding anti-price gouging laws and issuing threats and subpoenas to gas stations.

Looking back to a grim US future - THE AMERICAN FUTURE: A HISTORY (BBC2)

“IF we succumb to a dream world, we will wake up to a nightmare.” It’s a brilliant oratorical line, worthy of a president, but who uttered it? Barack Obama? John McCain? Sarah Palin? Er, no. Definitely not.

It was Jimmy Carter, the most decent president Americans never knew they had and a central figure in the first part of The American Future: A History, four compelling, documentaries authored by historian Simon Schama that delve into the country’s past for pointers to its future.

Carter was a man of the land, and he was aware of his great country’s tendency to rape itself in the pursuit of happiness. He was preaching conservation long before it was popular.

But he was doing it near the unpopular end of his term, in the middle of a fuel shortage. Americans didn’t heed Carter. They succumbed to the dream world by falling for the Hollywood-cowboy hucksterism of Ronald Reagan, and now they’ve woken up to the nightmare.

Water, not oil, is the great social lubricant and it’s running out.

Credit crisis adds to pressures on dealers

NEW YORK (AP) - Hundreds of thousands of new cars and trucks that would have quickly made their way to people’s driveways a year ago are now stacking up on dealer lots across the country, with potential buyers worried about whether they’ll keep their jobs, be able to pay for gas or qualify for a car loan.

For auto dealers already suffering under the worst U.S. sales downturn in 15 years, the increasing cost of the credit they use to keep inventory in their showrooms means every Ford Focus and Jeep Grand Cherokee with a sale sticker in the window is chipping away at dealers’ razor-thin profit margins every day and threatening to send more of them out of business.

Amtrak feeling love after years of criticism

WASHINGTON - Amtrak felt like an unwelcome relative throughout President Bush’s two terms. The nation’s passenger railroad even feared for its existence after he threatened to shut it down.

But in the final days of the Bush presidency, the passenger rail service is enjoying greater congressional support and public popularity in an era of high gasoline prices and louder calls for alternatives to driving.

Tanzania-Energy-Rationing

APA-Dar es Salaam (Tanzania) Barely days after Tanzanian President Jakaya Kikwete assured investors that his country was well-equipped to contain any energy crisis and that all viable alternative sources of power like natural gas are being exploited to make power crises history, the Tanzania Electric Supply Company (Tanesco) on Friday announced fresh power rationing that would see some parts of the country remain without power for nine hours daily for an unspecified period of time, APA learnt here Friday.

Tanesco said that the national grid had lost 60 megawatts of supply of electricity following technical defects at the two power plants in Dar es Salaam, the commercial capital.

India: Industry expresses shock over power cut order

Coimbatore: Textile industry in the region today urged Tamil Nadu Chief Minister M Karunanidhi to announce a scheme immediately to use the “idle” capacity of around 3500 MW High Speed Diesel oil generators available with the industrial units by reimbursing the cost of generation and prevent the industry from total closure.

The industry expressed shock on the reported instructions by TNEB not to draw power between 6 PM and 10 PM, with a warning of disconnection in case of violation on the part of industrial units, apart from five to eight hours scheduled/unscheduled load shedding.

Pakistan seeks oil bill deferral from Iran

ISLAMABAD: Pakistan has asked the Iranian government to help meet its growing energy crisis by giving oil on deferred payments, and also shown interest in buying additional 1000 megawatts of electricity from the Islamic republic.

Malaysia delays buying rice for stockpile

Malaysia will delay importing another 300,000 tonnes of rice for its stockpile as its current stock of 310,000 tonnes is sufficient and also the world price for the staple is expected to drop further next year after a reaching a record high in 2008.

It’s a poor time to exploit oil shale

We are at a critical moment. As we burn fossil fuels, we are causing a buildup of carbon dioxide in our atmosphere, and our climate is very close to spinning out of control. Demand has outstripped supply of petroleum, causing inflation and putting America in the precarious position of relying on foreign governments for our energy needs

Will cheap gas mean return to gas-guzzling ways?

DENVER (AP) — Prices at the pump are dropping fast, and gas could fall below $3 a gallon in a matter of weeks, if not sooner. Does that mean Americans will return to their heedless, gas-guzzling ways?

Experts say no because most drivers assume the dip in prices will be short-lived, and motorists have adjusted their habits accordingly.

“We’ve been through almost eight years of continuously rising gasoline prices,” AAA spokesman Geoff Sundstrom said. “Any notion that this is a temporary thing has pretty well been erased.”

New technologies are emerging fast, with electric cars expected to hit the market in a couple years. But the question is no longer when gas prices will fall, but when will the next spike come?

Oil’s Drop Squeezes Producers

Big oil-producing countries are showing signs of distress as the global credit crunch and falling crude prices begin to squeeze government budgets and delay projects.

Fears that the boom days are fading appear strongest in Iran and Venezuela, whose governments have come to rely on oil prices to prop up otherwise shaky economies. Both countries this week led a chorus within the Organization of Petroleum Exporting Countries calling for an emergency meeting of the cartel, now set for Nov. 18, to weigh a production cut.

The global economic crisis is eating into oil demand, particularly in the U.S. and Europe, and helping to drive down crude prices. Some forecasters said that despite a strong thirst for oil in Asia and the Middle East, global oil consumption could flatten out next year, potentially ending nearly a decade of steady demand growth.

Oil Demand Falls on Global Economic Woes, Iran’s Nozari Says

(Bloomberg) — Oil demand is faltering as the financial crisis slows global economic growth, Iranian Oil Minister Gholamhossein Nozari said, after crude oil fell below $78 yesterday for the first time in a year.

“Oil demand has decreased due to the current economic situation in the world,” Nozari told reporters today on the sidelines of an oil-refining forum in Tehran. “A way out needs to be found; the balance of the market is essential for oil consumers and oil producers.”

Iran agrees to export natural gas to UAE

TEHRAN (Xinhua) — Iran signed a 2 billion U.S. dollars gas deal with Crescent Petroleum of the United Arab Emirates (UAE), the English-language Press TV reported on Saturday.

According to the 25-year gas deal signed on Friday, Iran will export natural gas from the country’s Salman field to UAE, said the TV report.

Reporter denies newly signing of Iran-UAE gas deal

TEHRAN, Oct. 11 (Xinhua) — An Iranian reporter who writes for Wall Street Journal of the United States denied on Saturday an earlier report on newly signing of Iran-UAE gas deal.

No new gas deal signed between Iran and the United Arab Emirates (UAE) on Friday but there was one in 2001, Roshanak Taghavi told Xinhua through telephone.

Peru president accepts resignation of Cabinet

LIMA, Peru - President Alan Garcia accepted the resignation of his entire Cabinet on Friday without naming replacements in response to an oil kickbacks scandal.

Garcia’s government has been rocked by the public airing of audiotaped conversations discussing kickbacks for steering government contracts to Norwegian oil company Discover Petroleum. Discover denies any wrongdoing.

Mexico Lawmakers’ Draft Oil Bills Leave Major Overhaul in Doubt

(Bloomberg) — Mexican lawmakers negotiating an oil- industry overhaul have drafted bills for the least contentious of President Felipe Calderon’s proposals amid continued wrangling over his plan to let the state oil monopoly use private companies to reverse declining production.

Drafts of the bills by members of the Senate’s energy committee, obtained by Bloomberg News, would increase the use of renewable fuel sources, give the government more control over energy policy and create a board to review exploration projects. The documents cover four of seven proposals derived from Calderon’s plan to loosen the monopoly in what would be the most ambitious revamping of the industry in 70 years.

Exxon Mobil is controversial
but should you buy its stock?

Exxon is the kind of stock I want anchoring my portfolio, particularly when times are tough. The company produces a product people need and use every day and it generates lots of cash. I also believe we are fast approaching the era of “peak oil” and Exxon’s large reserve base will continue to become ever more valuable.

The Perils of the Coming Sugar Economy

Peak oil, skyrocketing fuel costs, and the climate crisis are driving corporate enthusiasm for a “biological engineering revolution” that some predict will dramatically transform industrial production of food, energy, materials, medicine, and the ecosystem. Advocates of converging technologies promise a greener, cleaner post-petroleum future, where the production of economically important compounds depends not on fossil fuels but on biological manufacturing platforms fueled by plant sugars. It may sound sweet and clean. But the “sugar economy” will be the catalyst for a corporate grab on all plant matter as well as the destruction of biodiversity on a massive scale.

Shell’s hilarious attempt to beef up email security

The series of leaked Shell internal emails to our website revealing construction flaws in the Sakhalin-2 project cost Shell many billions of dollars after the Russian government used the evidence as a pretext to take back ownership. The move cost Shell £11 billion UK pounds according to an article by The Sunday Times, which Shell managed to kill just before publication.

…We have even received and published leaked emails from Shell CEO Jeroen van der veer within hours of them being sent. In January of this year we passed to The Times newspaper a confidential Shell internal email authored by Jeroen. It resulted in one of the most important energy related scoops ever. The email contained an astonishing forecast in relation to “peak oil”, saying that demand for oil and gas would outstrip supply within 7 years. The leak and subsequent widespread publication pre-empted Shell’s own plans for making an announcement.

James Taylor Prepares For Peak Oil, Fears Collapse Of Society

Rolling Stone has a great new interview with legendary singer James Taylor about his new album Covers, his desire to go local in the face of rising energy prices, and why society may only become sustainable after a serious collapse. Here are some highlights:

On how rising energy has made him prepare for a more local existence:

“I have the sense that energy will become more and more expensive, and people will need to exist in a more local way,” he says. “And I feel sort of like a citizen of New England. I like living here and working here, so it may just be that my efforts are more and more sort of locally focused as time goes by.”

Arctic stormier as Earth warms, study finds

The Arctic has become more stormy in the past 50 years due to the warming climate, which in turn has quickened the pace of drifting sea ice, a new NASA study finds.

Source:DrumBeat: October 11, 2008

Michael Pollan: Farmer in Chief

After cars, the food system uses more fossil fuel than any other sector of the economy — 19 percent. And while the experts disagree about the exact amount, the way we feed ourselves contributes more greenhouse gases to the atmosphere than anything else we do — as much as 37 percent, according to one study. Whenever farmers clear land for crops and till the soil, large quantities of carbon are released into the air. But the 20th-century industrialization of agriculture has increased the amount of greenhouse gases emitted by the food system by an order of magnitude; chemical fertilizers (made from natural gas), pesticides (made from petroleum), farm machinery, modern food processing and packaging and transportation have together transformed a system that in 1940 produced 2.3 calories of food energy for every calorie of fossil-fuel energy it used into one that now takes 10 calories of fossil-fuel energy to produce a single calorie of modern supermarket food. Put another way, when we eat from the industrial-food system, we are eating oil and spewing greenhouse gases. This state of affairs appears all the more absurd when you recall that every calorie we eat is ultimately the product of photosynthesis — a process based on making food energy from sunshine. There is hope and possibility in that simple fact.

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From the Subprime Crisis to the Financial Meltdown, Peak Oil the Hidden Responsible

The current events that nobody saw coming, were already announced in as early as 2006 by Dr. Colin Campbell, a geologist, former Vice-President of Fina Oil Company and founder of the nowadays respected ASPO (Association for the Study of Peak Oil). On a video interview available on YouTube, he declared:

“Expansion becomes impossible without abundant cheap energy. So I think
that the debt of the world is going bad. That speaks of a financial crisis,
unseen, probably equalling the Great Depression of 1930; it’s probable we face
the Second Great Depression. It would be a chain reaction, one bank would fail,
and another one would fail, industries will close…”

Why hold a Con Con?: Because a Constitutional Convention could allow Hawaii to move from top-down rule to citizen-involved governance

Most frightening, however, is the inability of the present arrangement of power to prepare islanders for the coming major crises caused by soaring oil prices (Peak Oil), and, by the next decade, the effects of global climate change on all facets of our lives.

Australia: Ambitious cycling target for Coast

The Suncoast Cycling Alliance wants at least 15% of all trips made across the Sunshine Coast to be by bicycle within the next three years.

The aggressive target is more than double the 2011 target of 8% – an additional 805,000 bike trips per day – set by the state government for the south-east Queensland region.

Out Of Africa

The U.S. military was content for years to keep half an eye on Africa’s security, sharing oversight of the continent with Europe, but in recent years U.S. strategic interest in Africa has grown. Not only does Al Qaeda have a presence on the continent, but the value of Africa’s oil has soared and China has grown more aggressive in courting African nations. That was the reasoning behind the creation of AFRICOM, the first American strategic military command with sole responsibility for the 53 nations on the African continent, which officially started operations last week.

Despite Africa’s new strategic value, U.S. officials have scaled back AFRICOM’s mission significantly. When the idea was first floated early in 2007, proponents of AFRICOM had hoped to combine a wide range of military and civilian programs under one roof, training and equipping cooperative African security forces but also promoting development and aid projects across the continent. U.S. officials had also hoped to find an African country willing to permanently host a much larger U.S. military contingent. Unable to find a country willing to host American forces, the Pentagon has had to keep AFRICOM’s 1,300 soldiers in Stuttgart, Germany. And it has scrapped, at least for now, plans to make AFRICOM anything other than an umbrella organization for military and security training. AFRICOM will focus exclusively on training the military operations of African nations and leave development work to civilian agencies.

Saudi Arabia, UAE Move to Protect Financial Systems

DUBAI–The United Arab Emirates said it would guarantee domestic bank deposits and, along with Saudi Arabia, promised fresh financial support Sunday to domestic banks.

Officials from both nations have said their banking systems are adequately capitalized and relatively unexposed to plummeting foreign assets that have dragged down firms in the U.S. and Europe. But they and other Persian Gulf leaders have struggled to shore up investor confidence amid the ricocheting global financial crisis.

Since reopening after a long religious holiday earlier this month, Gulf bourses have fallen sharply, wiping away billions of dollars of wealth from the region’s mostly retail investors.

Venezuela’s oil output slumps under Hugo Chavez

Venezuela’s daily oil production has fallen by a quarter since President Hugo Chavez won power, depriving his “Bolivarian Revolution” of much of the benefit of the global boom in oil prices.

Iraq to begin first oil bid round in London

BAGHDAD (AP) — Iraq’s oil minister will meet Monday in London with representatives of international oil companies for the first round of bidding for new contracts in the country since the U.S.-led invasion in 2003, the minister’s spokesman said.

Last April, Iraq chose 35 oil companies out of the 120 that applied to participate in the bidding round to develop six major oil fields and two gas fields.

Oil protest

ABOUT 80 protesters carrying a 12ft-high puppet of American vice-president Dick Cheney marched through central London yesterday to protest against plans to “sell off” Iraq’s oil industry.

2 Endorsements of Nuclear Power, but Sharp Differences on Details

Contrary to what Democrats may think, there is more to John McCain’s energy program than “drill, baby, drill.” And contrary to what Mr. McCain has been saying on the campaign trail, where he proposes the construction of 45 nuclear plants by 2030, Barack Obama does not “oppose the use of nuclear power.”

Both men endorse nuclear energy, although to differing degrees, as part of their strategy to wean the United States from its dependence on foreign oil.

Biofuels and a dwindling water supply

AT LAST, many of the world’s political leaders have begun to realize that diverting land and food crops to produce biofuels leads to higher food prices. But an equally important consequence of this policy folly is being largely ignored in the public and political debate: Producing biofuels will further deplete the world’s already overtaxed water supply.

Indian Tribes See Profit in Harnessing the Wind for Power

ROSEBUD, S.D. — The wind blows incessantly here in the high plains; screen doors do not last. Wind is to South Dakota what forests are to Maine or beaches are to Florida: a natural bounty and a valuable inheritance.

Native American tribes like the Rosebud Sioux now seek to claim that inheritance. If they succeed in building turbine farms to harness some of the country’s strongest and most reliable winds, tribal officials like Ken Haukaas believe, they could create a new economic underpinning for the 29,000 tribal members whose per capita annual income is about $7,700, less than a third the national average.

Maritime Organization Seeks to Cut Air Pollution From Oceangoing Ships

The International Maritime Organization on Thursday adopted stringent new controls on airborne pollution from the world’s 300,000 oceangoing vessels.

Emissions from ships steaming into ports from Rotterdam to Shanghai to Long Beach, are blamed for about 60,000 premature deaths around the world annually.

Bicycle Commuter Tax Break Is a Bittersweet Victory for Measure’s Sponsor

PORTLAND, Ore. — People who pedal to work each day have long sought a kind of commuter equality: a federal tax break for biking similar to those given for parking or riding public transit. Last week, after years of rejection, the credit suddenly became law.

Scheduled to take effect in January, the credit was among a range of energy and tax provisions quickly added to the $700 billion financial rescue.

Yet here in the district of the congressman who first pushed for the bicycle bill, Representative Earl Blumenauer, a Democrat who wears a bicycle lapel pin and founded the Congressional Bike Caucus, no party is being planned.

Thomas Friedman: Hope for a hot, flat and crowded world

In his new, bestselling book, Hot, Flat and Crowded: Why We Need a Green Revolution — and How It Can Renew America, New York Times columnist Thomas L. Friedman describes a world in trouble. With climate change, globalization, and overpopulation, he argues, the central challenge to humanity has now become “to manage what is already unavoidable and avoid what will truly be unmanageable.”

In an exclusive interview for Yale Environment 360, Friedman spoke with New Yorker staff writer Elizabeth Kolbert about the need for an energy technology revolution — a revolution he believes should be led by the United States. The three-time Pulitzer Prize winner told Kolbert that energy technology must be the next great global industry and that “the country that leads that industry is going to have the most national security, economic security, innovative companies and global respect.”

Experts: Low gasoline stocks won’t lead to shortages; demand also has fallen

The nation’s gasoline inventory is lower than usual, but experts say the change has come alongside a drop in demand as gas prices have risen over time, so shortages should not result.

While shortages have struck the Southeast, experts attribute that not to low inventories but to hurricane-related disruptions of supplies, something they say would likely not affect the Northeast.

“The reason for this is that the region is supplied by mostly seaborne imports of gasoline brought in through such ports as Portsmouth, Portland, Providence, Boston, etc.,” John Duff, survey manager for the federal Energy Information Administration’s Weekly Petroleum Status Report, wrote in an email.

Higher taxes and bans on drilling hurt everyone

Politicians are fighting to levy additional tax burdens on U.S. oil and gas companies. There are, however, fundamental problems with specifically raising taxes for energy companies. To various degrees, we all depend on oil and natural gas, whether it’s to heat our homes, to run our businesses, or to transport us and the goods we use every day. In the end, the real target of new taxes is consumers, who will pay every dime of taxes that government imposes on producers in the form of higher prices.

Call for UAE to fund alternative energy

The 15th edition of OGS 2008 will be held in Dubai from October 28 to 30, amid growing calls by business leaders for substantial investments towards alternative and renewable energy projects.

The Show seeks to embrace a spectrum of energy sources and strengthen its contribution to emerging sustainable development initiatives in the UAE and across the Middle East.

Nepal: Cooking gas from waste

Cooking gas plants that generate gas from bio-degradable household waste would be useful in addressing the current fuel crisis and waste disposal problem in the capital. But the technology has largely been ignored.

A New Flexibility With Thin Solar Cells

John A. Rogers of the University of Illinois, Urbana-Champaign, and colleagues have come up with a novel method for creating extremely thin solar cells that can be combined in flexible, even partially transparent, arrays. Described in Nature Materials, it could be called the rubber-stamp approach.

End of the world as we know it

It is not as bad as you might imagine - it’s worse, and before you bury your heads in the sands of collective denial, please consider how it is coming about. The truth will set you free, but first it will probably make you ill.

We have had it too easy with cheap energy for a century and the cheap part is going to disappear. Quickly. Energy is the ubiquitous part of everything we consume, and liquid fuel is getting scarce.

The easy part is to understand how we got to where we are. The difficult part is predicting how we can possibly manage to make our way out of this one. It will draw on our deepest resolve and wisdom, and probably require a “Copernican” shift in our thinking.

Is Cheaper Oil A Good Thing?

How far can it fall? People have been anxiously wondering as they watch the plunging stock market. But increasingly the same question is being asked about another crucial figure: the price of oil. It has plummeted nearly 40% in just three months, from about $147 a barrel in July to below $83 on Friday, with no obvious bottom in sight. If that sounds good, you are probably a driver who winces these days at filling your gas tank. But the downward spiral could mean trouble for oil-rich countries and for the environment.

Oil analysts admit that most of them failed to predict how fast oil prices would drop. Just a few months ago, some were saying oil might reach $200 a barrel by year’s end. “The analysts have been quite surprised by the pace and volatility of the decline,” says David Fyfe, senior oil analyst for the International Energy Agency in Paris, which as a rule does not predict oil prices. “The volatility has been quite marked.”

OPEC wants tighter controls over speculative oil trades

WASHINGTON (AFP) — The OPEC cartel called Saturday for tougher regulations to reduce the impact of speculative investment in the oil market which it blames for the huge volatility in crude prices.

…”The world oil market has been increasingly affected by financial market shocks from outside the physical oil market,” OPEC spokesman Alipour-Jeddi told the International Monetary Fund meeting in Washington.

“The recent wild (price) swings demonstrate the need for concerted action to reduce the impact of financial markets which are damaging for the oil industry, as well as the global economy as a whole,” he said.

“The existing regulatory framework has proved insufficient to properly contain the negative impact of speculative activity … which highlights the need to consider further measures.”

Oil’s Outlook Darkens

Although oil prices have tumbled by almost half since approaching $150 a barrel in July, it looks like black gold still has further to fall.

Iran to study all factors before proposing oil cut

DUBAI (Reuters) - Iran says the recent steep slide in oil prices and worsening global financial crisis will be studied carefully before it makes a proposal on output reductions for OPEC, the Islamic Republic’s OPEC governor said on Sunday.

“It is not fair to say so early. That is why we should consider all factors carefully and look at the supply-demand balance,” Muhammad Ali Khatibi told Reuters.

Divisions could ‘tear Opec apart’

Divisions within Opec are being aired ahead of an emergency meeting the organisation has called for next month, signalling tense discussions to come as oil exporting nations struggle to balance their individual revenue needs with the world economy’s need for more stable oil prices.

The divisions could “tear the organisation apart,” a London oil analyst said.

Credit’s Crunch & Car Sales

Was Peak Oil the reason for the unbelievable price of oil, or was it serious disruptions in the supply and demand equation? Nah. As I pointed out, it was just the massive amount of money thrown into oil by speculators in dark, unregulated futures markets. The media has since accepted my position; as the oil bubble burst, and as you may have noticed, they’re now reporting that the speculators they refused to acknowledge just months ago are leaving the oil futures market en masse. And with the speculators’ departure, the price of oil is collapsing.

Keeping quality medical care

IN SPITE of an alarming array of distracting global problems, including a financial meltdown, climate change, and peak oil, it is critically important not to ignore the immediate challenge we face locally to keep Marin General Hospital open. It is the only hospital in the county providing acute trauma, labor and delivery, and emergency psychiatric services.

Ending Industrial Culture, Building Cultures of Resistance

On October 1 Lierre Keith and Aric McBay spoke with Healing the Earth radio in Guelph, Ontario. Lierre Keith and Aric are both authors, small farmers, and activists, and over the last couple years have been organizing weekend-long conferences entitled Deep Green Resistance. They speak of a systemic analysis of what we’re facing, including the environmental and social costs of industrial culture, tying together the problems of climate change, peak oil, the power of the right-wing/fascist elements, economic collapse, and our responses to this.

They talk about the inherent costs of the industrial system that render any kind of reform or energy alternatives to be simply more of the same, since these false solutions don’t take into account the cost of the infrastructure or the embodied energy required to make ‘green’ consumer items, from smart cars to biofuel and low-energy light bulbs. From this critique of individualist and lifestyle-based solutions, they offer the option of collective, co-ordinated, resistance to the actual power structures.

Most importantly, they ask the crucial questions that not too many are asking: given the crises we face, what, really, are we going to do about it? Thinking with seriousness, long-term strategy, and courage, what can we as caring people do to save this planet? What are some essential elements of a culture of resistance that offers any hope of a securing a peaceful and sustainable future?

The IoS Green List: Britain’s top 100 environmentalists

A host of famous figures – including Prince Philip, David Bellamy, Professor James Lovelock and Richard Branson – who might have expected to be high on the list, were judged not to make the grade at all. The judges set out to identify who is really making a difference in Britain, either directly or by altering public perceptions, rather than those who make most noise. Unlike in some other lists, journalists were excluded from consideration.

Financial crisis clouds EU’s climate change plans

BRUSSELS (AFP) - The financial crisis and slumping economic activity are threatening Europe’s ambitious plans to slash greenhouse gas emissions, with governments eager to avoid saddling companies with additional burdens.

“The Germans are giving up and the Italians are getting ready to follow,” said one European negotiator on condition of anonymity.

Source:DrumBeat: October 12, 2008

As people following our energy situation are aware, many if not most energy stocks are down 60-70% or more from their summer highs. In a bizarre but not completely surprising announcement after the close (we knew someone was liquidating), Chesapeake, (the US largest natural gas producer) CEO Aubrey McClendon has been involuntarily liquidated out of his rougly 30,000,000 remaining shares of CHK in the past 3 days due to margin calls. CHK, which in July was over $70 per share, hit as low as $11.99 today, and then had a 38% rally to close at $16.52 on 5 times normal volume. We don’t typically comment on individual stocks or price movements on TOD but this and related NG stock developments could have a significant impact on the industry’s future - CHK and XTO in addition to being top 2 gas producers also operate over 12% of our nat gas rigs. In addition to McClendons margin call, Chesapeake also announced further reductions in capex budgets going forward which means lower natural gas production, and thus higher prices, ceteris paribus. To make things more complicated, the majority of complicated financial hedges undertaken by CHK, are at Morgan Stanley, which fell to single digits today, (but is rumoured to be being bought out by Citi tonight after the close). This is all very good news for natural gas prices but bad news for the North American energy situation.
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Mr. McClendon, who has been recently highlighted in national TV commercials about expanding future of natural gas usage as recently as July held 33,500,000 shares which at one point traded over $70 per share.

“I am very disappointed to have been required to sell substantially all of my shares of Chesapeake. These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis. In no way do these sales reflect my view of the company’s financial position or my view of Chesapeake’s future performance potential. I have been the company’s largest individual shareholder for the past three years and frequently purchased additional shares of stock on margin as an expression of my complete confidence in the value of the company’s strategy and assets. My confidence in Chesapeake remains undiminished, and I look forward to rebuilding my ownership position in the company in the months and years ahead.”

This news was on top of an announcement to substantially reduce 2009 and 2010 capital expenditures (drilling).

Many (all?)natural gas companies stocks have been in freefall this week, though in hindsight that was perhaps fast money front running the rumour of margin calls on McClendon. But concerns about CHK were real, as pointed out in this Bloomberg story

Investors are concerned that Chesapeake and other U.S. oil and gas producers have hedging contracts with financial firms and other counterparties that won’t be able to pay for their output at the agreed-upon prices because of the global credit crisis, said Robert Goodof, who helps manage $25 billion at Loomis Sayles & Co. in Boston.

Chesapeake also has so-called knockout swap contracts on more than one-third of its 2009 production, and those deals don’t obligate the buyers to take gas when prices drop to $6.28 per thousand cubic feet of the heating and power-plant fuel, according to analyst Joseph Allman of JPMorgan Chase & Co. in New York. U.S. gas futures dropped to $6.65 today and have plunged 50 percent since the end of June.

According to Allman, Morgan Stanley is Chesapeake’s biggest counterparty. Morgan Stanley shares fell 39 percent, dropping for a fifth straight day, after Moody’s Investors Service said it may cut the investment bank’s credit rating.

Allman said that if gas falls to $6 per thousand cubic feet, Chesapeake would have to sell $3.5 billion of assets.

“In our view, getting through 2009 is tough, but Chesapeake has a lot of non-producing assets it could sell and discretionary spending it could cut,” Allman said.

Investors were ostensibly concerned about a natural gas train wreck if Morgan Stanley were to go under, that would cause Chesapeake to follow. I just can’t imagine that happening. The government might let Chuck E Cheese go under, but not our largest natural gas producer and rig operator. I was thinking during the day that the financial types that were shorting Chesapeake and other nat gas companies into the ground (and buying Credit Default Swaps just like they did with Lehman and AIG) would pat themselves on the back for making good coin, then go home to find no heat, plastic bottles or diapers. Yet another juxtaposition of money and energy…But it becoming more clear that hedge fund margin liquidations are contributing to the equity sell-off. The margin clerks typically are instructed to start liquidating positions at 3pm if the account hasn’t come up with margin - all week the volume in the days final hour dwarfed the trading earlier in the day. This has been a vicious cycle as banks are reducing leverage and increasing margin requirements for clients - more selloff equals more margin calls equals more selloff. Personally, I think its worse ‘this time’ because of the number and size of hedge funds, which became more popular after outperforming the bear market of 2000-2003. But I think we’ve seen ‘peak hedge fund’.

Finally, as discussed 2 weeks ago after the first cap-ex cut by Chesapeake, the marginal cost of natural gas is over $8 per MCF, and the average cost being close to $6 in North America. Natural gas is on average getting more expensive to procure. Now that capital is less available, we are going to see more and more production cuts. We need to analyze what it really means - 5% drop? 15% drop? Aubrey McClendon has been seen on TV advocating the Pickens Plan to use natural gas as a vehicle fuel. I wonder if recent events will change the landscape of our natural gas industry and this plan. At prices during mid-day today, I was wondering if ExxonMobils $40 billion in cash (less $10 billion in debt they could just assume) might be put to work. The landscape has seemingly changed daily. I think even people who have never had an ecology class or never heard of theoildrum understand, or at least have an inkling, that natural gas and oil are more precious than dollar bills. Is it too early for nationalization of the energy industry?

Here are some previous TOD posts discussing the natural gas situation in North America, and although we have ‘more’ gas recently, it comes at higher costs:

An Update on the Energy Return on Canadian Natural Gas
At $100 Oil, What Can the Scientist Say to the Investor?
Ten Fundamental Truths about Net Energy
The North American Red Queen - Our Natural Gas Treadmill
A Net Energy Parable - Why is EROI Important?
Natural Gas and Complacency

Please add any comments or links below.

(EDIT: It seems that the contagion spread to CHKs financial twin, XTO, where it was just announced that their Chairman has been selling stock:

XTO Energy Inc. (NYSE: XTO - News) announced today that during the past week Chairman and CEO Bob R. Simpson sold 2.8 million shares of XTO common stock. This sale satisfied all considerations for debt, personal interests and family liquidity. As a Company founder, Mr. Simpson continues to own 6.8 million shares of XTO and has options to purchase an additional 4.0 million shares.

Of equal concern is that CHK operates 130 rigs, and XTO 70, which is fully 1/8 of rigs drilling for natural gas. (1600)

And a bigger question is: WHAT ARE THESE VERY WEALTHY PEOPLE DOING BUYING THEIR OWN STOCK ON MARGIN ?
Having worked for a decade on Wall St, I know the answer to that, and the mechanisms underlying this behaviour are why I see our current situation as unsustainable, even if we were to find more gas and oil. The dopamine feedback loop for more, culturally defined, is nearly unstoppable.

Source:Energy Margin Calls- Chesapeake CEO Forced To Sell All His Stock

Oil prices: Buckle up for a wild ride

Outlook for crude depends largely on the health of the global economy. Analyst predictions range from a fall to $50 or a surge to $150 a barrel.

NEW YORK (CNNMoney.com) — Expect nothing but volatility for oil prices over the next year or two - with the fate of the global economy largely dictating whether crude will fall to $50 or shoot up to $150 a barrel.

The global economy is teetering on the edge, and no one really knows if it will muscle through this credit crunch or succumb to a pronounced recession.

With crude prices so closely linked to the health of the economy - unemployed people tend to drive a lot less - oil analysts don’t really know where oil prices are headed either.

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Oil prices skid to 2008 low on falling demand

NEW YORK - Oil prices fell Wednesday, touching their lowest level this year, — as the government reported a huge spike in crude inventories while giving more evidence of dwindling demand.

Light, sweet crude for November delivery was down $1.23 at $88.83 in afternoon trading on the New York Mercantile Exchange, paring earlier losses after the stock market rose into positive territory after being down most of the day.

Oil prices earlier fell to $86.05, the lowest level since Dec. 6, 2007.

Crude has now fallen about 40 percent since surging to an all-time record $147.27 a barrel on July 11.

But Wednesday’s losses were limited by growing speculation that the Organization of the Petroleum Exporting Countries could cut output to keep prices from falling too hard. OPEC officials, worried about declining oil revenue, in recent days have urged members of the cartel not to pump too much crude in a bid to keep prices above $100.

Preparing for a Financial Crisis, Electric Utilities Unlikely to Spend Despite Critical Needs, Says Analyst Scotto

The needs are everywhere – more power plants, more transmission lines, major upgrades to the existing grid. But even as the threat of blackouts grows daily, in the wake of Wall Street’s meltdown the capital-intensive electric utility is unlikely to carry out desperately-needed improvement projects.

So says Daniel Scotto, veteran Wall Street electric utility financial analyst, one of the few on the Street who understands how Wall Street’s woes are likely to impact the Byzantine, multi-trillion-dollar electric utility industry.

In Wake of Street Crisis, ‘I Wouldn’t Own Any of These Heavy Nuclear Utilities’ - Analyst Scotto (Part 2 of 2)

With Congress on the verge of committing a king’s ransom of taxpayer money to cope with the meltdown on Wall Street, it will have little appetite for guaranteeing billions of dollars in loans for new nuclear power plants, which could end America’s “nuclear revival” before it’s even begun.

That’s according to veteran Wall Street utility financial analyst Dan Scotto, who told EnergyTechStocks.com that federal loan guarantees for new nuclear power plants (without which Wall Street is unlikely to advance utilities the money to build) are now “way, way off Congress’s radar screen.”

Venezuela’s Chavez to survive crisis despite oil fall

CARACAS (Reuters) - Venezuelan President Hugo Chavez will likely emerge unscathed from the current global financial contagion even if tumbling crude prices force the oil-dependent OPEC nation to scale back spending in the coming months.

The crisis, which the socialist Chavez gleefully calls the end of capitalism, has helped push crude oil to an 8-month low after it hit a record near $150 per barrel and sparked dire predictions by Chavez adversaries of an economic meltdown.

But analysts say billions of dollars in cash reserves and widely available financing by political allies will let Chavez ride out a sustained oil price fall of even several years.

Qatar’s Model May Break Gas Price Link With Oil, Analyst Says

(Bloomberg) — Qatar, the world’s biggest producer of liquefied natural gas, may force the decoupling of gas prices from crude oil, an industry analyst said.

“The gas market will become detached from oil when enough surplus LNG capacity appears and when enough LNG carriers become available on a spot basis to transport the surplus LNG,” Leo Drollas, deputy executive director at the Centre for Global Energy Studies, said at the Sparks and Flames conference in Amsterdam.

Tide turning on Nigeria oil delta thefts-Governor

LONDON (Reuters) - Nigeria is winning its fight against militants and criminals in its oil-producing Niger Delta but social and economic conditions must also be improved to solve the problem, a regional governor said on Wednesday.

Rivers State governor Rotimi Amaechi has taken a tough approach to dealing with the violence since he took office last year and is keen to attract more foreign investment.

“Things have got much better — kidnappings are down,” Amaechi told Reuters in an interview.

First council since Second World War set up to look at food security

The production, supply and consumption of food in Britain is to be investigated by a dedicated Government council.

The Council of Food Policy Advisors will sit alongside the National Economic Council set up last week to address the financial crisis.

Hilary Benn, the environment secretary, has set up the council to advise the government on the affordability, security of supply and the environmental impact of food production.

He said the growing world population, climate change and rising fuel costs were all leading to an unprecedented threat to Britain’s food security.

New Zealand: Register planned for car pooling

Car pooling to save on fuel costs may be coming to Oamaru under a plan by the Natural Heritage Society and Waitaki Resource Recovery Trust.

The venture will be launched at the Health Active Living Oamaru (Halo) expo on October 19 encouraging people to share trips, not only to save fuel but to cope with the long-term impacts of climate change and peak oil.

Newly discovered fungus strips pollutants from oil

A humble fungus could help oil companies clean up their fuel to meet tightening emissions standards. The fungus, recently discovered in Iran, grows naturally in crude oil and removes the sulphur and nitrogen compounds that lead to acid rain and air pollution.

End use of fossil fuels in 20 years, UK warned

Britain must abandon using almost all fossil fuels to produce power in 20 years’ time, the government’s climate change watchdog will warn today.

The independent Climate Change Committee will publish its advice to the government that the UK should set a 2050 target of cutting all greenhouse gas emissions by at least 80% - including the emissions from aviation and transport, which were previously excluded.

Because it is unlikely that emissions from aviation and shipping will be cut so dramatically, other sectors, particularly power generation, would have to reduce emissions by much more, with big increases in energy efficiency, wind and tide power, and probably new nuclear generators, Lord Turner of Ecchinswell, the committee chairman, told the Guardian.

George Monbiot: This green subsidy for car makers is just a disguised corporate bail-out

While all eyes were fixed on the banking bail-out, a bucketload of public money was quietly sloshed into the pockets of another undeserving cause. Last week, George Bush agreed to lend $25bn to US car manufacturers. It’s a soft loan, which will cost the government $7.5bn. Few people noticed; fewer fought it. The House of Representatives approved the measure by 370 votes to 58. The great corporate bail-out is spreading like the plague.

Rural communities best equipped to cope with climate change: UN report

Rural communities which protect nature and exploit forests, wetlands and wildlife sustainably will be the best equipped to cope with the droughts and floods that will increasingly hit Africa, Asia and Latin America with climate change, says a new UN-backed report.

Nature-based enterprise, says the report from the World Resources Institute in Washington DC, offers the world’s 2 billion rural poor key survival tools to weather the extreme changes that are expected. It argues that communities must be given secure rights to access, manage and profit from, the natural resources they depend on daily and calls on governments and development agencies to scale up such approaches.

Warming Andes stymies Peruvian potato farmers

“Climate change is bringing new and more frequent diseases during the harvest,” said Cesar Portocarrero, a civil engineer who has been studying the effects of global warming on the Peruvian Andes for decades. “As plagues and temperatures increase, farmers are forced to go higher and higher up the mountains to avoid them. Eventually they’ll have nowhere to go.”

One of the big losers is the 1.8 million potato farmers like Huanuco, who depend on predictable climate. Most are ill prepared to handle new pests and diseases that have materialized as temperature and rainfall patterns have shifted, agronomists say.

How to buy a scooter for your commute

The economy is tanking. Bleak financial headlines are bombarding us every day. And on top of everything else, gasoline prices continue to be painfully high.

If you’re on the prowl for ways to save as much money as possible right now, you may be among the growing numbers of consumers who are showing an interest in scooters. Of course, depending on the weather where you live, a scooter might not be a viable year-round answer for you — but get this: A cute and trendy scooter can cost as little as $4 to fill up. Just $4!

Saving gas, beyond the car

Taking a hard look at the relationship between peak oil (when the maximum rate of oil extraction is reached) and water shortages paints a grim picture.

Oil supplies from non-OPEC sources have already peaked, according to Dr. Peter Wells, an oil industry consultant who works for Toyota. Drilling may produce new sources, but they are likely to be much smaller and many times more expensive to extract than existing wells. Producing energy from untapped sources (such as shale and tar sands), as well as producing alternative energy requires massive amounts of water that the U.S. currently doesn’t have.

Back-to-back presentations on these subjects at the recent Toyota Sustainable Mobility Seminar were enough to dampen the car enthusiasm of a room full of automotive journalists. In the final analysis, nothing is ever likely to be as cheap or convenient as the light, sweet crude oil of years past.

This raises two key questions: As a society, where do we go from here? And if you’re in the business of making cars, how do you plan your future?

The answer to both questions involves learning to use less gas – and soon.

54 Production Platforms Destroyed in GOM

MMS estimates that from September 13, 2008 through September 14, 2008, approximately 1,450 oil and gas production platforms in the Gulf of Mexico were exposed to hurricane conditions, winds greater than 74 miles per hour. As of August 2008, there were more than 3,800 production platforms in the Gulf of Mexico; these structures range in size from single well caissons in water depths of ten feet to a large complex facility in water depth greater than 7,000 feet.

Transocean downgraded on market woes

Analysts at investment bank Dahlman & Rose today moved shares in drilling company Transocean from ‘buy’ to ‘hold’ in light of current activity within the commodities and financial markets, despite steady dayrates on drilling rigs, a move that could be experienced by other major players in the industry.

“We believe the latest drops in oil prices will have an impact on management’s decision-making during the next few months—especially as it relates to the special dividend,” said the bank in a statement.

New Continental Shelf Rights Add to NZ Offshore Exploration Estate

New Zealand’s rights over the Continental Shelf sea floor around its coast have been officially extended by 1.7 million square kilometers or 42% greater than covered by the 200 nautical mile-wide EEZ area.

The Government recently announced that a special United Nations Commission has officially confirmed New Zealand’s claim to the 1.7 million sq km Extended Continental Shelf (ECS) area that includes rights to resources such as petroleum and minerals beneath and on the seafloor.

Somali troops free British oil worker; 1 killed

BOSSASO, Somalia (Map, News) - A Somali government official says troops have freed a British oil worker abducted in northern Somalia.

Energy and Minerals Ministry official Farah Abdi Hussein says one of the abductors has been killed and another wounded during a battle to free the man. The oil worker, an employee of Canada-based Africa Oil Corp., was unharmed.

Egyptian Companies Seek Oil Projects in Iraq

Egypt has formed a delegation of oil companies to probe petroleum projects in Iraq, Egyptian Minister of Petroleum Sameh Fahmi said on Tuesday.

The Egyptian delegation will have talks with Iraqi officials on rehabilitating the oil infrastructure in Iraq, the Egyptian MENA news agency quoted Fahmi as saying.

No crisis for energy start-ups in Calgary

CALGARY • As money drains out of some of Canada’s biggest energy companies, private oil and gas startups led by star management teams are are still capturing hundreds of millions of dollars in cash here in Calgary.

Shell Aims to Grow in Ukraine, Starts Drilling in 2009

Royal Dutch Shell PLC’s subsidiary Shell Ukraine E&P is planning to drill its first well in the country in 2009, and is looking for further opportunities in the country, the company’s general manager, Patrick Van Daele, told Dow Jones Newswires Wednesday.

Pakistan: Draft of new petroleum policy finalised

KARACHI: Petroleum ministry has finalised the draft of new petroleum policy which will be presented for approval in the next meeting of the Economic Coordination Committee (ECC) of the cabinet, Acting Petroleum Secretary G A Sabri told The News.

Petroleum Policy 2008 will help expedite the exploration of oil and gas reserves after last year’s policy failed to generate any activity at a time when the country faced severe energy crisis.

U.S. Welcomes Chinese Firms to Invest in Energy Sector

The United States would welcome Chinese investments in its oil and gas sector, an official with the U.S. department of energy said on Wednesday.

“If they want to invest in our oil and gas sector, I can’t imagine we would have any objections,” Alan Hegburg, deputy assistant secretary in the department, told Reuters on the sidelines of an oil conference in Cape Town.

Time Is Up Congress - And America

Oil will collapse in price to $20/bbl. Unfortunately nobody will have any money to buy gasoline, or a car, so it won’t matter. As in The Depression millions of automobiles will be scrapped after being abandoned by their owners for lack of insurance and registration fee money. Cheap scooters will become the dominant form of transportation for those with jobs, as they will be all most people can afford.

As credit collapses distribution of food and other essentials will break down. Unable to access credit, trucking companies will be unable to get goods to market. The current distribution system for food requires travel of over 500 miles from production to consumption; this is untenable in a market where stable credit is unavailable. Food distribution will be severely impacted and in some areas may break down below critical levels.

Unemployment will reach 25% within two years. Median income will fall by 30% nationally. Foreclosures will reach 20 million homes. The government will step in with HOLC-style remediation but it won’t matter - the unemployed won’t be able to pay irrespective of the price.

House prices will fall to well under $100,000 nationally on a median basis but with lending all but non-existent you’ll need 50% down. A few people will make out like bandits near the bottom, being able to buy up homes for $10,000 each in blocks of 10 at a time - for cash. 60% of America will be renters; nearly half of all homeowners will ultimately lose their homes to foreclosure.

Civil unrest will break out in major cities when incomes fall but the cost of food and essential services fail to come down materially, leaving millions of Americans hungry, broke and homeless. Unlike in the 1930s America will not quietly stand in soup lines - instead they will riot, loot and burn. The National Guard will be called up but will find it impossible to exert meaningful control without shutting down all commerce in the affected areas. The decision will be made to cordon off the cities and deny entry to anyone who does not live in that specific neighborhood, essentially shutting down commercial activity. GDP will fall by 30%.

The S&P 500 will fall to 150 and flatline, a 90% loss. CNBC and Bloomberg will cease broadcasting. Volume will fall to 10% of former levels.

Energy firms likely to trim their spending

The financial crisis that has choked credit markets also may stem the flow of capital spending by oil and natural gas companies as the situation shakes out, analysts said.

“All the oil companies, large and small, will cut back their capital spending,” Fadel Gheit, an oil analyst with Oppenheimer & Co. in New York, predicted. “The ones that keep their capital spending intact will be the exception, not the rule.”

Even if companies have the money for new exploration and production projects, “they will say, ‘We will wait for the market to cool off,’ ” he said.

The industry also is watching crude prices, now at around $90 a barrel after approaching $150 in midsummer.

Some OPEC members float idea of oil supply cut

LAGOS/ANTALYA, Turkey (Reuters) - OPEC may need to intervene to balance the oil market if prices fall further, Nigeria said on Wednesday, making it the latest country in the exporters’ group to float the prospect of supply curbs.

Nigeria joins Libya, Iran and Iraq, fellow members of the Organization of the Petroleum Exporting Countries, in expressing concern this week about the impact of the financial crisis on the oil market.

Business is booming for the prophets of doom

WHAT will happen if, as a consequence of this financial disaster, there is a withdrawal of mass support for the existing economic order? There may be no viable socialist alternative with any credibility, but the loyalty of the population to an increasingly crisis-prone economic system will be severely tested.

There are no obvious solutions to such unprecedented challenges and simultaneous crises. But if nothing else emerges from the maelstrom, the role of the state in rescuing American capitalism from its internal contradictions will be the final antidote to free-market hagiography.

Russian Bombers Escorted By Japanese Fighter Jets

(Bloomberg) — Russian strategic bombers flying over the Sea of Japan were escorted by Japanese fighter jets on two occasions today before returning to base, Russian Air Force spokesman Vladimir Drik said.

The two Tu-22M3 strategic bombers left an air base in Russia’s Far East as part of a training exercise, Stability 2008, Drik said by telephone in Moscow today. As they flew over the Sea of Japan they were accompanied for about 30 minutes by two Japanese F-15 fighter jets, he said.

Later, Japanese F-15 jets from a different air base flew alongside the two bombers for about four minutes before the bombers returned to Russian territory, Drik said. A Japanese Air Self-Defense Force spokesman, Masanori Tsuji, said he hadn’t heard the report about fighters scrambling and couldn’t comment.

Russia is currently holding its largest air force exercises since the 1991 collapse of the Soviet Union, while a naval convoy on its way to Venezuela is staging a show of strength in the Mediterranean.

OPEC would cut output at below $80: source

DUBAI (Reuters) - OPEC was unlikely to cut output at its December meeting unless the price for crude produced by its members fell below $80 a barrel, an OPEC source said on Wednesday.

The price for OPEC’s basket of crude stood just above that threshold on Tuesday, at $80.04 a barrel.

“The price is still reasonable,” the source told Reuters. “If it stays where it is then OPEC will stick to the output levels decided at the last meeting. I think if it falls below $80, OPEC will do more.”

BP’s Forties Crude Oil Output May Fall in January

(Bloomberg) — BP Plc said production of North Sea Forties oil, part of the benchmark used to price two-thirds of the world’s crude, will probably rise 4 percent in December before falling in January.

BP, the operator of the Forties Pipeline System, forecasts December production at 700,000 barrels a day, compared with 673,000 barrels a day in November, according to an update on its Web site. January output is scheduled to decline 2.7 percent to 681,000 barrels a day, it said. October production is forecast at 649,000 barrels a day.

Nigeria targets 4 mln barrels per day by 2010

CAPE TOWN (Reuters) - Nigeria is optimistic that the falling world oil price will stabilise and it expects to lift its production to 4 million barrels per day by 2010, the African nation’s oil minister said on Wednesday.

“We in Nigeria remain optimistic that the oil price will stabilise,” Nigerian Oil Minister Odein Ajumogobia said at the Africa Upstream 2008 oil conference in Cape Town. “Our ambition is to reach 4 million barrels per day by 2010.”

Eq. Guinea sees oil output up to 400,000 bpd in 2009

CAPE TOWN (Reuters) - Equatorial Guinea’s oil production is likely to rise about 5 percent to an average of 400,000 barrels per day next year, an official in the African nation’s energy department said on Wednesday.

“It will probably be about 400,000 barrels (per day),” Diosdado Engono Bengono, director general of hydrocarbons in the nation’s ministry of mines, industry and energy, told Reuters at an oil conference in Cape Town.

Valero says restarting Houston refinery units after Ike

NEW YORK (Reuters) - Valero Energy Corp said Wednesday it will be restarting some units at its 130,000 barrel-per-day oil refinery in Houston, Texas after repairs from Hurricane Ike.

Russia to delay construction of proposed gas pipeline to China - Xinhua

BEIJING (XFN-ASIA) - Russia will delay the construction of proposed gas pipeline to China due to competition from other gas sources in the Chinese market, the official Xinhua News Agency reported, citing Russian media.

The Altai gas pipeline project, designed to ship 30 bln cubic meters of natural gas per year from western Siberia to China, was excluded from Russia’s recently released blueprint for gas industry development through 2030, the agency said.

US oil production at lowest level since 1946-gov’t

WASHINGTON (Reuters) - U.S. crude oil production this year is expected to fall below 5 million barrels per day for the first time since shortly after World War Two, the government’s top energy forecasting agency said on Tuesday.

The lower output is due to hurricanes Gustav and Ike, which at one point shut in almost all the 1.3 million barrels a day in oil production in the Gulf of Mexico, according to the U.S. Energy Information Administration.

About 45 percent of Gulf oil output is still offline weeks after the hurricanes struck.

Oil Rebounds From 10-Month Low After Central Banks Cut Rates

(Bloomberg) — Crude oil rebounded from a 10-month low after central banks in the U.S., Europe and China reduced interest rates to thaw credit markets.

The Federal Reserve, European Central Bank, Bank of England, Bank of Canada and Sweden’s Riksbank each cut their benchmark rates by half a percentage point. Crude had earlier dropped with industrial metals on concerns that bail-out plans already being implemented will fail to avert worldwide recession that cuts energy demand.

“The coordinated rate cuts may slow the decline and perhaps even stabilize prices as some market participants view the move as positive for economic and oil demand growth,” said Mike Wittner, London-based head of oil market research at Societe Generale SA.

Nigeria says OPEC may need to act to stop oil slide

LAGOS (Reuters) - Nigeria said on Wednesday that OPEC may need to intervene to balance the oil market if the price of crude continues to slide, making it the latest OPEC member to voice concern about the impact of the global financial crisis.

“There may be a need to intervene to balance the market if the price slide seemingly predicted on (lower) demand and over-supply continues,” Nigerian Oil Minister Odein Ajumogobia told Reuters.

Oil prices could fall more - Eni CEO

ROME (Reuters) - Oil prices could fall further with signs pointing to dropping demand, Italian oil company Eni SpA’s chief executive officer, Paolo Scaroni, said on Wednesday.

He said the company’s international growth would be unaffected by the current market turmoil.

OPEC may need to cut if oil under $90: Iraq

ANTALYA, Turkey (Reuters) - OPEC may need to consider cutting oil output if the price of crude remains below $90, Iraqi Oil Minister Hussain al-Shahristani told Reuters on Wednesday.

“It has been a source of concern since the price has fallen since June and July,” he said on the sidelines of an energy conference in the Turkish coastal city Antalya.

OPEC members move to support oil prices

CALGARY - With oil prices sliding nearly 40% from their July high, and predictions of a return to US$50-a-barrel oil becoming louder, some members of the OPEC cartel seem to be getting nervous their petrodollar hauls are lightening up.

Balts hope Georgia conflict boosts energy case

TALLINN (Reuters) - Ulo Kikas, harbor captain at the port of Muuga, stands at the top of the multi-storey harbor building near Estonia’s capital and points down to a network of vacant railway tracks for oil product wagons.

“That used to be full of trains,” he said. In the distance is an empty quay. “That is the coal terminal. There used to be piles of coal there, you could see them from here. Now there is nothing.”

The reason, Estonian officials say, is that Russia diverted shipments of oil products and coal from Tallinn port after a diplomatic row last year in a display of its willingness to use energy as a political weapon.

How Much Oil is Actually Left On This Planet? Should We Care?

According to Dr. Peter McCabe, a world-renowned scientist currently working at CSIRO in Australia, any realistic analysis of future energy sources can only conclude that, barring some complete and miraculous harmony between all the world’s economic superpowers, fossil fuels will dominate our energy mix for at least the next few decades — and we should just accept it.

… So, if Dr. McCabe is right, will the world have enough fossil fuels to keep up with demand? If we can’t completely switch to renewable energy sources for at least another 30 years (and assuming climate change doesn’t kill us off first) will the problem of peak oil rear it’s ugly head and kill us off anyways?

According to McCabe, in a nutshell the peak oil concept is fundamentally flawed because is doesn’t account for external factors.

GAO opens probe into gas, oil drilling in Utah

SALT LAKE CITY - Congressional investigators are looking at a federal government agency’s quick approvals for oil and gas drilling in Utah, a development applauded by environmental groups but condemned by industry executives as political posturing.

Two Government Accountability Office investigators are in Utah as part of a probe into the federal Bureau of Land Management’s practice of approving some drilling projects without a full environmental study of the consequences.

Nigerian militants threaten anarchy over graft case

LAGOS (Reuters) - Militants in Nigeria’s oil-producing south threatened on Wednesday to create a “state of anarchy” unless local government officials accused of corruption are properly dealt with. The Economic and Financial Crimes Commission (EFCC) has said it is investigating allegations that large sums of money were withdrawn in a suspicious manner from the funds of Rivers state, one of the three main oil-producing states in the Niger Delta.

Turkey says will push ahead with Iran gas deal

ANKARA (Reuters) - Turkey’s Energy Minister said on Wednesday the country would push ahead with a planned deal to produce and export gas from neighbouring Iran, saying cancellation of the deal was “out of the question.”

Turkey and Iran failed to conclude expected energy accords during a visit by Iranian President Mahmoud Ahmadinejad to Turkey in August. The United States, which is seeking to isolate Tehran over it nuclear programme, opposes the plan.

India’s ONGC eyeing Kazakh oil asset - source

ALMATY (Reuters) - Leading Indian explorer Oil and Natural Gas Corp has shown interest in buying a stake in MMG, a Kazakhstan-based oil production company, a Kazakh government source told Reuters on Wednesday.

Gazprom Neft, a unit of Gazprom, had earlier said it wanted to offer Kazakhstan a stake in one of its fields in Western Siberia in exchange for a 49 percent stake in MMG, also known as MangistauMunaiGas, but its offer has been rejected.

Saudi cbank says no need for emergency liquidity

DUBAI (Reuters) - Saudi Arabia’s central bank said on Wednesday there was no need to provide emergency funds to banks in the world’s largest oil exporter as the financial sector faced no shortage in liquidity.

Muhammed al-Jasser, central bank vice governor, said in comments carried by the state SPA news agency that the central bank was ready to provide sufficient liquidity if needed but no bank had approached it for additional funds.

Gazprom May Say Quarterly Profit Reached $9.1 Billion

(Bloomberg) — OAO Gazprom may say profit rose 5.2 percent in the first quarter as Russia’s largest energy producer benefited from higher natural-gas prices at home and abroad.

Net income probably advanced to 221 billion rubles ($9.1 billion) from 210 billion rubles in the same period last year, according to the median estimate of eight analysts surveyed by Bloomberg News. The range was between 171 billion and 286 billion rubles. Sales probably rose 34 percent to 822 billion rubles.

Airlines’ earnings forecast to rise in ‘09, as oil prices drop

The same U.S. airlines that looked to be goners three months ago when oil reached $147 a barrel now may be headed toward healthy 2009 profits.

Several industry analysts are forecasting 2009 gains instead of big losses for Alaska, Delta, Continental and US Airways. Perennial moneymaker Southwest could be more profitable.

US Airways President Scott Kirby said at a recent conference that investors don’t appreciate the magnitude of the changes airlines made to cope with $147-a-barrel oil.

Russia, Indonesia, Ukraine Shut Exchanges as Stock Rout Worsens

(Bloomberg) — Russia, Indonesia, Ukraine and Romania shut their stock exchanges after shares plummeted in the worst week for emerging-markets in at least two decades.

Russia’s Micex Index dropped 14 percent, having already slumped 20 percent this week, before trading stopped at 11:05 a.m. in Moscow. The exchange won’t reopen until Oct. 10 unless the Federal Financial Markets Service says otherwise, Micex spokesman Alexei Gerasyuk said by phone. The Jakarta Composite index fell 21 percent in its biggest weekly slump in at least 25 years, according to data compiled by Bloomberg.

Russian Stocks Tumble, Extending Record Decline, Led by Gazprom

Gazprom, the world’s biggest natural-gas company, fell 19.35 rubles, or 14 percent, to 121.80 rubles in the first 10 minutes of trading. OAO Lukoil, Russia’s largest independent oil producer, slid 181.89 rubles, or 16 percent, to 930.57 rubles at 10:40 a.m. in Moscow.

Jim Cramer: Wall Street, Fall 2009

In terms of investing between now and next fall, I’d buy the stocks of only companies you can’t not use — Kellogg’s, General Mills, Kraft, P&G. You can’t trust anything to do with financial paper — there’s still too much uncertainty (if a bailout bill does pass, at what price will the toxic bonds be marked?). And commodities have been bid up too high—demand soared as investors sought shelter from stocks — to buy for some time. Oil’s going to $50 on weaker demand; when it gets there, we can revisit the oil stocks.

To drill or not to drill is not the question: Renewable resources abound. Let’s use them.

Washington - To drill or not to drill is the wrong question.

Real solutions to the energy and climate crisis are available today if we focus on what we have in abundance instead of arguing over what’s exhaustible and dwindling – namely fossil fuels.

Alcoa stops capital projects on income slump

ALCOA says it will stop all “non-critical” capital projects and suspend its share-buyback program after a slump in metal prices.

The company posted a third-quarter net income drop of 52 per cent, hurt by a charge for layoffs at a Texas aluminium smelter.

Sell-off continues in solar sector

NEW YORK - The rising cost of debt and potentially less generous subsidies in Europe exacerbated what had been part of a broader Wall Street sell-off for the solar sector Tuesday.

Goldman Sachs Global Investment Research said it was moving to a more cautious outlook on the sector.

“The risk of oversupply in the solar market will soon become a reality as considerably less generous demand subsidies take hold just as a wave of supply and tight financing hit the market,” Goldman Sachs wrote in a note. “We believe that liberal subsidies of the past in markets like Germany and Spain are unlikely to be replicated in the future given fears of their ultimate cost in a bad world economy.”

U.S. announces ‘Biofuels Action Plan’

WASHINGTON (UPI) — U.S. government officials have released the National Biofuels Action Plan, an interagency plan to accelerate development of a sustainable biofuels industry.

U.S. Department of Agriculture Secretary Ed Schafer and Department of Energy Secretary Samuel Bodman said the plan is in response to President George Bush’s goal of cutting U.S. gasoline consumption by 20 percent in the next 10 years.

Indonesia Biofuel Policy to Reduce Palm Oil Exports

(Bloomberg) — Exports of palm oil from Indonesia, the largest producer, may decline by as much as 1.5 million metric tons a year after the nation made the use of renewable energy mandatory, a government official said.

“In relation to the mandatory policy for bio-energy issued last month, we see that the use of agricultural products for alternative energy will increase,” Bayu Krisnamurthi, a deputy to Coordinating Minister for Economic Affairs Boediono, said today in Jakarta. “This will cut our exports” of palm oil.

Autumn reds disappearing as global warming blurs boundaries between the seasons

The vibrant palette of autumn is draining away from Europe’s woodlands, as global warming continues to blur the boundaries between seasons, scientists have warned.

Researchers at the Italian Meteorological Society have observed less gold, copper and red foliage in the country’s woodlands, and linked this to rising temperatures and extended springs and summers.

Scientists urge Canadians to ‘vote strategically’ for the environment

OTTAWA - Canada’s top global warming scientists weighed into the election campaign on Tuesday, blasting the Conservative government’s record on climate change and urging Canadians to “vote strategically” for the environment to protect future generations and modern civilization.

EU MPs’ climate package vote brings little joy for industry

BRUSSELS (AFP) - A European parliamentary committee on Tuesday broadly approved ambitious proposals to tackle climate change, refusing to bow to industry pressure to water down the measures.

The global financial crisis and the closure of German auto factories did not prevent the parliament’s environment committee from voting 44 to 20, in favour of a tough stance in talks with the 27 EU member states on how to achieve the agreed goal of cutting CO2 emissions by 20 percent by 2020.

Climate change seen aiding spread of deadly diseases

BARCELONA, Spain (Reuters) - A “deadly dozen” diseases ranging from avian flu to yellow fever are likely to spread more because of climate change, the Wildlife Conservation Society said on Tuesday.

The society, based in the Bronx Zoo in the United States and which works in 60 nations, urged better monitoring of wildlife health to help give an early warning of how pathogens might spread with global warming.

Rainforest dwellers demand more say in climate change efforts

BARCELONA (AFP) - Indigenous leaders in five Amazonian nations, the Democratic Republic of Congo and Indonesia on Wednesday demanded a larger say on how best to manage tropical forests to fight climate change.

More than a billion poor people who depend on forest ecosystems risk economic and cultural devastation if efforts favored by rich nations to reduce greenhouse gases fail to respect their rights and needs, they said at the World Conservation Congress in Barcelona.

House Democrats unveil draft climate change bill

WASHINGTON - With the presidential election less than a month away and the economy reeling, House Democratic leaders on Tuesday unveiled a proposal to reduce the gases blamed for global warming from power plants, transportation and factories by 80 percent come 2050.

The draft legislation, which will be refined in coming months for introduction next year, would begin slowly, capping emissions of heat-trapping gases released by transportation and power plants first, then moving to other sectors of the economy. The money earned from auctioning off some of the permits would be redirected to energy efficiency and clean technologies. In later years, all permits would be sold with the proceeds going back to the taxpayer, unless Congress reauthorizes the bill.

Source:DrumBeat: October 8, 2008

The Official Demise of the Oil Bubble

On Sept. 11, 2007, the price of crude oil closed at $78.23 a barrel — the last time oil closed below $79 a barrel, until Friday. What seemed like a bewildering ascent in the price of crude at the time is now a relief to traders, who watched oil fall $8.98 a barrel to close at $77.61 on the New York Mercantile Exchange, the lowest closing price in more than a year.

Like a number of other commodities, oil’s move went from a steady ascent to a vertical bounce in the spring of 2008, topping out near $150 a barrel before speculative excess started to drain from the market. And those who believed that the oil price was justified by fundamentals — being, as it is, an actual product, rather than an Internet company’s vague promise of revenue — are smarting.

“This is a market that is basically returning to the price level of a year ago which it arguably should never have left,” says Tim Evans, energy analyst at Citigroup. “We pumped up a big bubble, expanded it to an impressive dimension, and now it is popped and we have bubble gum in our hair.”

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OPEC May `Tear Apart’ If Saudis Shun Supply Cut, Bernstein Says

(Bloomberg) — OPEC divisions could “tear the organization apart” as its biggest producer, Saudi Arabia, pursues a more moderate course than other members calling for supply cuts to revive oil prices, a London analyst said.

“Saudi Arabia has not joined the OPEC hawks, led by Venezuela and Iran, in calling for another supply cut, and we think we could be witnessing the beginning of the end for the organization,” Neil McMahon, a London-based analyst at Sanford C. Bernstein & Co., wrote in a report today.

…“As the only country likely to have any real influence on supply within OPEC in the near and longer term, the Saudis are the key to the future existence of OPEC,” the report said.

“However, we do not necessarily think that Saudi wants to cut, as a falling oil price should contain the amount of demand destruction, and secondly if Saudi cuts its share, will the hawks actually cut theirs?,” Bernstein said.

Oil sheds more than $9 to hit 13-month low

NEW YORK (CNNMoney.com) — Oil prices plunged to a 13-month low Friday, following steep stock market declines, as investors worried that the weakening global economy was driving down demand for fuel worldwide.

U.S. crude for November delivery sank $9.50 to a low of $77.09 a barrel during Friday trading, its lowest level since Sept. 11, 2007, when crude hit an intraday low of $77.00.

Prices later recovered slightly to settle down $8.89 to $77.70 a barrel in New York, oil’s lowest close since Sept. 10, 2007, when oil ended the day at $77.49.

Investors remain concerned that a crumbling economy is causing businesses and consumers to cut back on fuel consumption.

Nigerian Oil Workers to Strike

Oil workers in Nigeria say they will embark on an indefinite strike if the government fails to reverse the sale of two state-owned oil and gas companies within two weeks. The government says privatizing the two companies will make them more efficient and profit-driven. Gilbert da Costa reports from Abuja.

Russia taps oil money for use in stock market

MOSCOW: Prime Minister Vladimir Putin said Friday that his government would go ahead with a plan to spend budget money to buy shares on the Russian stock exchanges, starting Monday, in the hope of lifting the deeply depressed market.

Putin said $6.7 billion would be set aside for the purpose and that the state development bank would place the orders, continuing a strategy that has essentially relied on making the government’s oil windfall profits available to banks, hoping they would in turn lend to companies or buy equity to maintain growth.

Also Friday, the Parliament passed a law unlocking central bank lending to private banks in a $36 billion bailout that had been announced earlier this week.

Meanwhile, the authorities closed both principal stock markets Friday after Asian shares plunged and European markers followed, in falls that did not augur well for the market here.

The meltdown’s silver lining - cheap oil: With experts predicting a global economic slowdown, oil prices could fall to $60 a barrel, or lower - with gas prices soon to follow.

NEW YORK (CNNMoney.com) — As the world loses confidence in the foundations of its economic system, the silver lining may be that oil prices are about to get a whole lot cheaper.

In a new report Friday, Deutsche Bank uses a number of interesting yard sticks to suggest crude is currently way too expensive and may fall to the $60 a barrel range as the economy worsens.

And the bank does expect the economy to worsen, painting a bleak picture - caused be the current financial turmoil - but stopping just short of predicting a multi-year recession.

U.S. says Russia would not cut off gas to Europe

ROME (Reuters) - European dependence on Russian gas is dangerous partly because of future supply shortfalls, not because Russia may cut off supplies over tensions with the West, the U.S. envoy for Eurasian energy diplomacy said on Friday.

“I don’t think it would do that (cut off supplies). It hasn’t done that to Western Europe in the past and I don’t think it’s going to do it intentionally,” C. Boyden Grey said.

Alternative energy outlook clouds up

As hot as the alternative energy sector is, the international credit crunch coupled with falling oil prices could squeeze investment, particularly for startup companies, an analyst said Thursday.

“The concept of alternative energy has a lot of momentum,” said Dan Pickering, head of research for Tudor, Pickering, Holt & Co. Securities in Houston. “But lower oil prices make it harder to justify investment. At $50 a barrel, a lot of that investment will die.”

But even if oil doesn’t fall that far amid global economic woes, access to capital for new ventures is tough to get despite the sector’s political popularity, Pickering said after giving a presentation at an alternative energy forum sponsored by Ernst & Young.

“This is an environment where existing companies have an advantage,” he said. “Wall Street risk tolerance is going down.”

Exxon Mobil shares drop as crude continues slide

Shares of energy giant Exxon Mobil Corp. hit their lowest point in more than two years Friday as crude prices dropped and concern continued to escalate on the state of the global economy.

Shell Leads Oil Stocks to 5-Year Low on Economy Fears

(Bloomberg) — The Dow Jones Europe Stoxx Oil & Gas Index dropped to its lowest in almost five years, led by Europe’s three biggest oil companies, as crude prices slumped on concern the global economy will fall into a recession.

Next president could make huge oil sands deal with Canada

With no silver bullets available to wean the U.S. off oil in the foreseeable future, the next President will likely take a good look at Canada’s oil sands. And this might lead to either Barack Obama or John McCain championing a massive North American oil sands deal, even if it means huge investments to reduce the negative environmental impacts, according to Pierre Fournier, director of research and geopolitical analyst at National Bank Financial. That’s what energy guru T. Boone Pickens has been telling President Bush to do.

British Energy U.K. Power Plants Are Behind Schedule

(Bloomberg) — British Energy Group Plc, the nuclear utility being bought by Electricite de France SA for 12.5 billion pounds ($21.1 billion), said repair work on two reactors is behind schedule and costs will be higher than expected.

The U.K.’s biggest power producer said two of the four reactors at its Hartlepool and Heysham 1 plants, already closed for about a year because of corroded wires, probably won’t start until 2009 instead of this quarter. The delays were announced after work on Heysham 1 Unit 1 took longer than planned.

EU ministers solve energy liberalisation stand-off

LUXEMBOURG (Reuters) - European energy ministers cleared up final disagreements about liberalising energy markets on Friday, agreeing measures to prevent giant utilities from unfairly dominating the market.

They also approved a “Gazprom Clause”, which would prevent energy companies from outside the bloc — such as Russia’s state-owned Gazprom (GAZP.MM: Quote, Profile, Research, Stock Buzz) — from buying up distribution networks without agreement at a political level.

CTA plans 2009 fare increase

The CTA’s announcement Thursday that the agency must hike fares next year was greeted with frustration by riders who are already stressed over the high cost of commuting and the ailing economy.

CTA President Ron Huberman said the agency needs to raise prices for bus and rail passes for the first time in about a decade and for cash fares for the second time since 2004 because the cost of fuel and other materials have soared. They also cited spiraling costs to maintain rickety CTA buses and trains that would have been retired years ago if, in their view, the transit agency had received the necessary capital funds.

BP’s Texas City, Tex refinery back at normal operations

NEW YORK (Reuters) - BP’s 467,000 barrel-per-day refinery in Texas City, Texas was back at normal operations after shutting ahead of Hurricane Ike, a source familiar with refinery operations said Friday.

Richard Heinberg: The End of Growth

Several of us who have been watching the world oil production and depletion picture closely for the last few years are now concluding that the world has now seen the highest rate of production ever. Matt Simmons agrees: It’s all downhill from here.

The worldwide financial crisis, and the decline in available energy, mean that we may also have seen the final year of aggregate world economic growth.

This is a breathtaking statement. I found myself uttering it yesterday at a strategy meeting of some environmental and economic justice organizations organized by the International Forum on Globalization; I surprised even myself, and immediately began wondering whether what I had said could possibly by true.

There are obvious objections. Perhaps the wealthy nations could still wring out a few years of growth by increasing global economic inequality. But this is essentially what they did over the past two decades with the strategy of corporate globalization—and that strategy is losing steam because of high transport costs due to Peak Oil.

As China slows, commodities may feel outsize pain

HONG KONG (Reuters) - An unscripted slowdown in China’s economy may take an exaggerated toll on commodity markets as demand from its construction sector and export-oriented manufacturers, which drove prices sky high, falls back to earth.

As the financial crisis threatens to sink the global economy into recession, the question of China’s future demand for oil, coal, copper and iron ore has taken on new importance for traders more accustomed to pricing in unstoppable growth.

Roger Wiegand: Oil to Reach New Highs by Year-End

Despite severe economic turmoil, demand for oil is rising significantly—in fact, it will land somewhere in the range of $150 to $157, according to Roger Wiegand, editor of Trader Tracks.

Iran Uses Price Power in $2 Billion Gas Deal

TEHRAN, Iran — Oil prices may be softening, but the price of natural gas is climbing sharply in the Persian Gulf, thanks to the booming economies of the Arab petro-states.

Iran looks set to squeeze the region’s highest wholesale gas prices from the United Arab Emirates as part of a 25-year, $2 billion natural-gas export deal between the two countries. Crescent Petroleum, based in the emirate of Sharjah, has offered to pay about $5 per million British thermal units for Iranian gas, according to a person familiar with the matter.

Mexico back to full oil production after Ike

MEXICO CITY: Mexico’s state-run oil company is back at full oil-production levels after repairing the damage Hurricane Ike caused to key refineries in Texas and Louisiana.

Petroleos Mexicanos, or Pemex, cut back production by 250,000 barrels a day on Sept. 23, after Ike hit the refineries.

Third China refinery set to delay start-up to 2009

BEIJING (Reuters) - PetroChina (0857.HK: Quote, Profile, Research, Stock Buzz) is likely to delay the commissioning of a new unit that would double capacity at a Western refinery, the third Chinese project to get pushed into next year, when extra fuel could run into weakening demand.

The 100,000 barrel per day crude distillation unit at the Chinese oil giant’s Dushanzi refinery in the western province of Xinjiang was originally meant to be operational early this year. Dushanzi’s 1 million tonne-per-year ethylene project, also due for completion this year, had already been pushed back to 2009.

Brazil Reiterates No Change to Oil Contracts

Brazil will not alter existing contracts with foreign and local oil producers that have discovered huge reserves in the subsalt cluster deep under the ocean floor, Energy Minister Edison Lobao reiterated on Friday.

Ban lift paves way for oil shale

WASHINGTON, D.C. — There is a tiny glimmer of sunshine breaking through the darkness spreading across the nation over the current economic crisis — a possible solution to gas prices. A moratorium preventing oil shale development on federal lands has been allowed to expire, paving the way for tapping into a possible 800 billion barrels of oil in Utah, Wyoming and Colorado.

Economic Meltdown in America Saves the World from Peak Oil

Why would the price of oil be dropping when supply is in an overall trend of decline if demand is robustly rising?

Well, the world is rapidly changing, and it may be that the economic decline of the US, with the accompanying decline in consumption, and therefore lowering of the demand for oil and its products, is impacting on the world oil markets. Declining demand may be lowering the level of oil scarcity and so allowing the crude prices to fall (Reuters, 2008).

The subprime mortgage industry meltdown, and its knock-on effects, may yet prove to be titanic in their full implications. The full debt problem in the US is so vast and huge, it is ­almost beyond comprehension.

Doubts grow over Belgian plan to cap energy prices

BRUSSELS (Reuters) - Doubts emerged on Friday over a proposal by Belgium’s energy minister to cap wholesale electricity prices at GDF Suez subsidiary Electrabel, with rival politicians clearly opposed to the plan.

Crude Oil Drops Below $80 as Equities Slump on Credit Freeze

(Bloomberg) — Crude oil fell below $80 for the first time in a year and copper headed for its biggest weekly drop in more than 20 years on concern that the deepening financial crisis will push the global economy into a recession.

Oil in New York is heading for its biggest weekly decline since 2003 as plunging share prices in Asia and Europe caused the MSCI World equity index to drop to the lowest since 1970. All commodities with the exception of gold are down on signs that demand for raw material will drop as the global economy falters.

“This is a market that is moving on emotion, not the supply and demand picture,” said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts. “We are looking for a landing place and I have no idea where it is.”

Trade Deficit Down as Oil Imports Dip

WASHINGTON (AP) — The United States trade deficit edged down slightly in August, reflecting a drop in foreign oil from record levels.

But the politically sensitive deficit with China increased as imports from that country hit a record.

OPEC Should Cut Supply at Nov. 18 Meeting, Libya Says

(Bloomberg) — The Organization of Petroleum Exporting Countries should cut oil production when it meets next month in Vienna to halt the decline in oil prices, Libya’s top energy official said, echoing earlier comments from the group’s president.

Doubts cloud outlook for Libyan oil bonanza

RABAT (Reuters) - Majors oil companies are pouring money into Libya, home to Africa’s biggest petroleum reserves, but it is unclear whether the desert country can achieve its goal of almost doubling output within four years.

Tripoli wants to increase output to 3 million barrels of crude oil per day by about 2012 from 1.7 million now, raising extra revenues to help rebuild infrastructure that is crumbling after years of sanctions.

Libya’s peak oil output was around 3.3 million bopd in the late 1960s but analysts said that, with output at mature fields declining, it might be hard to push production above 2 million.

GM says no to bankruptcy

NEW YORK (CNNMoney.com) — General Motors is not considering bankruptcy, the company said in a prepared statement Friday morning. The statement was in response to the company’s precipitous stock price decline the previous day, a spokesman said.

E.ON Foe Sees `End of World’ in Coal as Germany Shuns Reactors

(Bloomberg) — Winfried Schwab-Posselt feels he’s driving toward Armageddon when commuting to work.

Every day, the 56-year-old night-school teacher drives down the main street in the southwest German town of Hainburg under the shadow of five gray-and-white towers spewing clouds of vapor from E.ON AG’s Staudinger coal-fired power plant. Now, Germany’s biggest utility is planning to build a larger facility.

“It’s like moving toward a big wall and facing the end of the world,” Schwab-Posselt says. “Now there’s the fear that an even bigger wall is coming.”

IEA cuts world oil demand forecast on weak economy

LONDON (Reuters) - The International Energy Agency (IEA) on Friday cut its oil demand growth forecast for 2008 to the lowest rate in 15 years, citing economic weakness and “a spiralling liquidity crisis.”

In a monthly report, the agency, adviser to 28 industrialised countries, reduced its 2008 demand growth forecast by 250,000 barrels per day (bpd) to 440,000 bpd. This represents a 0.5 percent growth rate — the lowest in percentage terms since 1993.

The report adds to evidence slowing economies and the worsening financial crisis are reducing oil consumption. Oil prices fell further after it was released to a one-year low near $81 a barrel.

Oil near $83 after fall to 12-month low

LONDON (Reuters) - Oil was near $83 a barrel after a fall to its lowest in 12 months on Friday, depressed by expectations global demand growth will shrink if the credit crisis pushes the world economy into recession.

Economic weakness spurred the International Energy Agency (IEA) to cut its forecasts for world oil demand growth for 2008 to its lowest rate since 1993.

U.S. light crude for November delivery was $3.59 down at $83.00 a barrel by 1133 GMT. It touched a session low of $81.13, its lowest since October 2007.

Prices have dropped nearly 45 percent from a peak of $147.27 in July.

London Brent crude was down $3.47 a barrel at $79.19, below $80 for the first time in a year.

Brown says OPEC output cut would be wrong

LONDON (Reuters) - Prime Minister Gordon Brown said on Friday it would be “wrong” for the Organisation of the Petroleum Exporting Countries (OPEC) to cut production just as oil prices are falling.

“I’m concerned when I hear that the OPEC countries are meeting, or are about to meet, to discuss cutting production — in other words, making the price potentially higher than it should be,” Brown told reporters.

Lacking Credit, Trust, Banks Exiting Physical Energy Markets

NEW YORK (Dow Jones)–Banks are beating a hasty retreat from the physical oil and fuel markets, as the credit crisis cuts financial institutions out of a once-promising line of business.

Much like the credit market itself, the trading of physical barrels of oil or refined products for prompt delivery relies on trust. Deals are arranged between two parties or through a broker, and most agreements aren’t cleared, meaning that if one side doesn’t hold their end, the other takes the loss.

Physical deals are priced off of benchmark futures contracts, which are traded on exchanges in financial transactions that rarely involve exchanging actual commodities.

Companies often use borrowed cash to finance inventories and the transportation of oil and fuel by pipelines or tankers, making it difficult for companies seen as default risks to operate in the market. Over the last month, confidence in the banking sector has been badly shaken, with several failures, a rash of forced mergers and expectations of even more government support. In some energy markets, banks are being kept at arm’s length by oil companies and refineries that are wary of not being paid should a counterparty join the list of failed banks.

Oil bulls sharpen horns

Jeff Rubin, chief economist and strategist at CIBC World Markets, has seen his forecast for oil to hit $200 (U.S.) by 2012 take a beating as the price of crude oil goes down, down, down. It was last seen at about $87 a barrel, down more than 40 per cent from its record high in July.

In his updated strategy, Mr. Rubin maintains a bullish outlook, arguing that the fundamentals that drove up oil during its remarkable run are still in place. Speculators may be gone, he said, but the marginal cost of a new barrel of oil is between $90 and $100. As well, the demand for oil has been driven mostly by developing economies, especially China, and not the G7, where economies are contracting and oil demand was stagnant even during good times.

Big Issue: Energy crisis hitting home

MURPHY, N.C. (AP) — When oil topped $100 a barrel earlier this year, and gasoline prices soared above $4 a gallon, Americans cried out for relief.

Some called for more offshore oil drilling. Others pushed for the development of alternative fuels. And many made energy policy a top priority as they consider the presidential campaign.

In an Associated Press-Yahoo News survey of voters taken early in September, 77 percent said gas prices were an important or extremely important issue. Only the economy ranked significantly higher.

Libya to Withdraw $7 Billion From Swiss Bank Accounts

(Bloomberg) — Libya said it will withdraw $7 billion from Swiss bank accounts and halt oil shipments to Switzerland in an escalation of a diplomatic dispute over the July arrest of Libyan leader Muammar Qaddafi’s youngest son.

“All forms of economic cooperation with Switzerland will stop until the motives of this bad treatment are made clear,” the state news agency JANA reported, citing an unidentified foreign ministry spokesman.

BP brings Azeri back on line

A BP-led group resumed oil production at one of its two Azeri offshore platforms shut after a gas leak in September, BP Azerbaijan said today.

“Oil production at Western Azeri was resumed late Thursday,” a company spokeswoman Tamam Bayatly told Reuters.

A source in the consortium told Reuters earlier this month that resumption of oil production at Western Azeri would double production at the Azeri-Chirag-Gyuneshli (ACG) offshore group of fields to around 600,000 barrels per day, down from the usual 900,000 bpd.

BTC Oil Pipe Outage Cuts Supplies Nearly as Much as Hurricanes

(Bloomberg) — Disruptions to BP Plc’s Baku- Tbilisi-Ceyhan crude pipeline may cut oil supplies by nearly as much as Gulf of Mexico production stoppages after Hurricanes Gustav and Ike, according to the International Energy Agency.

Supplies through the link, which transports the Azeri crude blend from the Caspian Sea to Turkey’s Mediterranean coast, have been curbed by a series of disruptions since August. Production from the fields which pump oil via the pipeline is currently about a third of normal output after a gas leak on Sept. 17, the IEA said in its monthly oil market report today.

Hungary bourse suspends MOL trade

BUDAPEST (Reuters) - Shares of Hungarian oil and gas group MOL MOLB.BU were suspended on the Budapest Stock Exchange on Friday, the bourse said.

Dimming the Lights

For the past few years, OI has been selecting investment ideas in companies that appear to have bright futures in a looming era of rising energy and resource demand. And many - most, really - of the investment ideas did well. Some did very well. A lot of readers made a lot of money. Whether it was oil, gold, refineries, cement or energy infrastructure, it seemed like we were investing in places where the world was going. Right?

But now it seems like the investment locomotive - energy, resources and related infrastructure - has derailed. Energy prices are declining. Energy-related stock plays are down. Commodities are down. Mining and infrastructure stocks are in the dumps. The falling tide is leaving us high and dry.

Alternative Fossil Fuels Have Economic Potential, Study Shows

ScienceDaily — Alternative sources of fossil fuels such as oil sands and coal-to-liquids have significant economic promise, but the environmental consequences must also be considered, according to a RAND Corporation study issued October 8.

N.J. vows to ‘race to the sea’ for wind power

ATLANTIC CITY, N.J. - New Jersey is powering up an ambitious plan to become a world leader in the use of wind-generated energy.

Gov. Jon Corzine wants the Garden State to triple the amount of wind power it plans to use by 2020 to 3,000 megawatts. That would be 13 percent of New Jersey’s total energy, enough to power between 800,000 to just under 1 million homes.

“We want to create this generation’s race to the moon, but this time, a race to the sea, to harness this potential wind source off of our coasts, and bring economic development, environmental benefits, and new, green jobs to the Garden State,” Corzine said Monday.

Liveblogging Litquake II

Mander says that our current economical model relies on constantly growing, which means constantly destroying more natural resources. He says given twin economic and ecological crises (and peak oil), that the era of growth may simply be over and we’re going to have to change the way we do things. He predicts doom: We’re not going to see much of a recovery in our lifetimes; there just aren’t enough resources to do it. The idea of never-ending growth is preposterous on a finite planet. The goal of our (environmental) work is to devise a Plan B.

McCain and Obama’s energy proposals

A look at some of the positions of the presidential candidates on energy and global warming.

Report Warns of Great Lakes Perfect Storm

A researcher in Wisconsin warns that climate change may put Great Lakes’ water quality at risk.

Johnathan Patz of the University of Wisconsin School of Medicine and Public Health says an increase in extreme monsoon-like rains, as occurred in some regions last spring, is likely to aggravate the risk of outbreaks of waterborne disease in the Great Lakes region.

Global warming sending tropical species uphill: study

WASHINGTON (AFP) - Global warming is driving tropical plant and animal species to higher altitudes, potentially leaving lowland rainforest with nothing to take their place, ecologists argue in this week’s issue of Science.

Coastal rebuilding awash in debate

Locals and officials throughout the Gulf Coast continue to press for more stringent building requirements and stronger levees and floodwalls to prevent floods. But some coastal analysts argue that coastal erosion is growing too fast and some Gulf Coast towns need to depopulate and move to higher ground.

The debate could be repeated in coastal communities in Florida, Louisiana, Alabama, Mississippi and elsewhere throughout the USA, said Robert Young, professor of coastal geology at Western Carolina University.

“It’s hard to see how the federal government can continue pumping billions of dollars in protecting coastal communities,” Young said. “At some point within the next two decades, some of these vulnerable communities may need to relocate.”

Added Robert Thomas, director of the Center for Environmental Communication at Loyola University in New Orleans: “Once the nation begins this discussion, it opens a Pandora’s box. It applies to everybody.”

Source:DrumBeat: October 10, 2008

This is a guest post by James Ward. James has a background in science and engineering and is ASPO-Adelaide coordinator for ASPO-Australia. This post appeared previously on Energy Bulletin.

Abstract
By fitting a bell curve to historical phosphate production data, the best fit is obtained by assuming an ultimate recoverable resource of approximately 9 billion tonnes (of which about 6.3 billion tonnes have already been mined). This yields a peak in around 1990. Of course, the USGS claims an ultimate recoverable resource of some 24.3 billion tonnes (i.e. 18 billion remaining); however using this value yields a bell curve that is an inferior match to the historical data. A hypothesis is thus presented whereby phosphorus is considered in two broad forms: “easy” which is able to be mined quickly, but already peaked in 1990, and “hard” which has large remaining reserves and is yet to peak, but cannot be mined as quickly. (In reality there are probably many different forms ranging from very easy to very hard.) Just as with oil, estimates that lump all types of reserve in together will yield a theoretical peak that is high and distant, however the true system may involve periods of decline after exhausting easy-to-get reserves before other supplies come online to replace them. Ultimately we must develop a recyclable phosphorus supply if humans are to continue living on this planet.
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Introduction

Phosphorus is absolutely essential to plant, animal and human life. Since the Green Revolution the global human food supply has grown to depend on high-yield agriculture using artificial phosphorus fertilizers. These are derived from finite, exhaustible reserves of guano (bird and animal droppings) and phosphate rock. For those of us who care whether our children will have food to eat, world phosphorus production is literally a life-or-death issue. White & Cordell have already made an excellent start at addressing this critical issue by applying Hubbert-type bell curves to gain insights into “Peak Phosphorus”. Their analysis assumes a known Ultimate Recoverable Resource (denoted RURR), and uses this value to constrain the set of bell curves being fitted to the data.

Calculations

If we assume a remaining resource of 18 billion tonnes of phosphate rock (in line with the stated USGS reserve estimate), and add to this the 6.3 billion tonnes that have already been mined, RURR is 24.3 billion tonnes[*]. Assuming cumulative production Q at time t conforms to the following basic relationship:

where a and k are positive constants, and are the fitting parameters.

It follows that the rate of production P is defined as the derivative

which is a symmetrical bell-curve, underneath which the area is equal to RURR. Figure 1 shows the annual and cumulative production predicted using this theory, based on RURR = 24.3 billion tonnes.

Figure 1

This is, for all intents and purposes, the result of White & Cordell’s model, however they use it to urge planning for a low-phosphorus future. However, recent experience of the Peak Oil and Climate Change debates demonstrates the reluctance among politicians, industry, and community to accept a need to plan for even imminent crises. Urging action on a resource peak as far away as 2033 would most likely elicit zero response. White & Cordell’s critical message could easily disappear over the planning horizon set by myopic governments. A far more urgent message is needed since the phosphate supply situation is almost certainly more pressing than suggested by White and Cordell’s prediction of a 2033 peak at production levels approximately 50% higher than today. This is shown by the compelling predictions obtained when one uses the historical performance of the system (world phosphate mining) to predict future behaviour rather than forcing the behaviour to accommodate the URR estimates of the USGS.

Statistically, the predicted curve for P matches historical production with a coefficient of determination (R2) of 0.882. For Q, the R2 term is 0.911. Visually, it appears that the model could be improved since neither the annual nor cumulative production curves provide a match to historical data. The high production peak of 220 million tonnes per annum in 2033 is therefore questionable.

By allowing the phosphate reserve to be adjusted down from the USGS estimate, we can obtain a better fit to the historical data set, for both annual and cumulative production. Figure 2 shows the curves obtained by assuming an ultimate reserve of 9 billion tonnes (including the 6.3 billion already consumed – i.e. only 2.7 billion remaining).

Figure 2

What we see in Figure 2 can only be described as a perfect match for the cumulative production history, and a very good match to the historical annual production figures, including the downturn of the 1990s. The goodness-of-fit is reflected in the R2 values, which are 0.973 and 0.999 for P and Q respectively.

The critical outcome of this analysis is that it suggests the 1990 downturn is a final peak, with no recovery. That indeed presents an urgent message for governments to act on securing renewable, recyclable phosphorus supplies and transitioning towards more appropriate (less wasteful) agricultural methods.

While it may be somewhat overzealous to suggest that the USGS estimate of remaining reserves should be brought down from 18 billion tonnes to a figure as low as 2.7 billion tonnes, it is compelling to see that this figure results in such a good fit to the historical data. This at least suggests that the USGS reserves should be called into question.

Perhaps the best way to frame the debate from here is to suggest that, like oil, the world has been endowed with a given quantity of “easy” phosphorus (e.g. rich island guano deposits in places like Nauru) that can be – and have been – mined quite rapidly, as well as a larger endowment of lower-grade phosphate rock. While the easy phosphate has passed its peak, the low-grade phosphate should be considered separately. Figure 3 shows an example forecast where the total area under both curves (equal to RURR) is 24.3 billion tonnes, but the “easy” phosphorus (purple) is 9 billion tonnes as in Figure 2. Assuming the production history is mostly related to easy phosphorus, the fitting parameters (a and k) for the “hard” phosphorus cannot be established. Therefore, the height and timing of the secondary peak are unpredictable.

Figure 3

Like unconventional oil, the reserves may be big, and given the crucial role of phosphorus in the world food supply, we can expect heroic efforts to bring new supplies online from low-grade sources. However, several significant questions remain:

How quickly can “unconventional” low-grade phosphate supplies be brought online to replace dwindling conventional supplies, and how will we grow food in the interim?

What is the environmental cost (e.g. waste rock, greenhouse emissions, landscape degradation, heavy metal contamination) of mining low-grade phosphate?

How economic will it be to continue mining low-grade phosphate rock as energy costs rise, and how high must the price of fertilizer be to sustain this?

What will we eat when the low-grade phosphate rock runs out?

This last question is really the main subject of White & Cordell’s website, where they are urgently recommending the rapid, widespread uptake of phosphorus recycling to prevent catastrophic starvation due to exhausting our finite fertilizer sources. Unlike oil (which is simply burnt), we have the opportunity to recover phosphorus by closing loops in our food-nutrient cycle. Furthermore, if we fail to learn how to recycle phosphorus, we will find agriculture disappearing – and us with it.

References:

White & Cordell (2008) Peak Phosphorus – the sequel to Peak Oil
http://phosphorusfutures.net/index.php?option=com_content&task=view&id=1…

Historical data obtained from USGS minerals fact sheets:
http://minerals.usgs.gov/ds/2005/140/

[*] White & Cordell used tonnes of elemental phosphorus, not total phosphate rock, so their reserve and production figures were smaller than those used here; however, we are essentially talking about the same thing.

Related Post:

The Oil Drum reprinted an earlier Energy Bulletin post called Peak Phosphorous, written by Patrick Déry and Bart Anderson.

Source:Peak phosphorus: Quoted reserves vs. production history

The feasibility of non-combustion gas turbines in nuclear reactors

In a discussion about nuclear reactors, a discussion subthread about gas turbines as energy converters ended with this late-arriving statement:

Non-combustion gas turbines are not proven. They’re mostly in pilot/research stages. You say that the conditions in non-combustion lower temp operation are more reasonable than in higher temp combustion gas turbines, but the fact that they are not commercially competing with Rankine steam cycles, even in the higher temperature regimes, should caution us not to trivialize the engineering/commercial issues.

The one-week period for comment on the post ended before I could write a response.

What’s missing from this analysis?  Let me lay out the pieces:

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1. One can already purchase simple-cycle combustion turbines achieving 46% thermal efficiency.
2. These are internal-combustion units running on open cycles, requiring neither hot-side nor cold-side heat exchangers.
3. A turbine using inert gas as a working fluid is not internal combustion, by definition.  The source of heat must be something outside the fluid.  If the heat source is combustion, this requires a hot-side heat exchanger.  This is an unnecessary capital expense.
4. Preserving the inert working fluid against loss requires a cold-side heat exchanger.  This is another unnecessary capital expense for a combustion system.
5. Reducing the operating temperature from ~1100°C to ~800°C would also reduce the thermal efficiency.  If the heat source is combustion, this increases fuel costs.

We can see from a relatively simple analysis that today’s absence of inert-gas turbine generators has nothing to do with technical feasibility.  It is soley a matter of economics.

How does a nuclear heat source change the economics?  Comparing to the points above:

1. One cannot buy a steam turbine operating at 650°C and higher temperatures.  The most feasible option for taking advantage of the high temperature of molten-salt and pebble-bed reactors is gas turbines.
2. The hot-side heat exchanger is either inherent (in a gas-cooled reactor) or required to separate the nuclear materials and the working fluid (molten-salt reactor).
3. Nuclear plants do not chemically modify the working fluid of their heat engines, so are the equivalent of “external combustion”.
4. The cold-side heat exchanger is required (like the condenser in a steam turbine).
5. The reduced operating temperature is a given, set by the nuclear heat source.
6. Since the gas turbine can operate at a higher source temperature than a steam turbine and can thus achieve greater thermal efficiency, it improves the return on the capital investment in the rest of the plant.  This reduces costs relative to revenue.

The thermodynamic properties of inert gases are well-understood.  Designing a fractional gigawatt gas turbine to run on e.g. helium would require design changes such as gas bearings (to eliminate petroleum lubricants or water which would cause corrosion or coking in the hot side), but these have already been proven in other applications.  The only reason we aren’t running helium turbines today is that it would increase both capital and operating expenses.  If the heat source was a high-temperature nuclear reactor, the helium turbine would generate more revenue than a steam turbine for the same capital expense in the reactor.  This is why we can expect to see inert-gas turbines as part and parcel of any Pebble Bed Modular Reactor (PBMR) or Molten Salt Reactor (MSR) powerplant.

Source:On the hazards of ignorance of thermodynamics

Senators Obama and McCain are both aware that energy is central to Americas future. However, they differ on the details, and since confidence and authority can sway peoples beliefs, it is important, as always, to ‘check the facts’. In last nights debate, Obama, while acknowledging the US holds 3% of world oil reserves but uses 25% of world oil production, implied we will be unable to become ‘energy independent’ and need to ‘change the way we view energy in our lives’. In contrast, while McCain agreed on ‘ridding ourselves of dependence on foreign oil’, his discussion of the “Drill Here Drill Now” strategy implied that such a plan would achieve both lower prices and more energy independence. How much of the energy debate issues are ‘politics’ vs. facts?

Below the fold is a guest commentary by Professor Cutler Cleveland, providing a needed ‘fact-check’ on recent political claims being made on offshore drilling.
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FACT CHECK

In the run-up to the election, this is the first in a short series of brief fact-checking exercises regarding the major energy issues in the campaign.

Senators McCain and Obama have expressed support for increased offshore oil drilling as part of their respective plans for energy. Senator McCain specifically suggests that opening offshore waters in the U.S. to oil exploration will (a) significantly increase domestic production, and (2) put downward pressure on oil prices.

Is this true? The short answer is no.

The federal government controls access to the Outer Continental Shelf (OCS), which refers to the submerged lands under the ocean farther than about 3.3 miles from the coast (about 10 miles from Texas and the Gulf coast of Florida). Land closer than that is under state jurisdiction; land beyond about 230 miles is in international water. Beginning in 1982, Congress passed and has subsequently renewed moratoria on the leasing of federal land off the coast of all states except Texas, Louisiana and parts of Alaska. All existing moratoria on leasing in the OCS will expire in 2012. Debate now centers on whether or not to renew the moratoria.

The Minerals Management Service (MMS) of the U.S. Department of Interior estimates that there are about 86 billion barrels of technically recoverable oil in the federal Outer Continental Shelf; the Lower 48 OCS accounts for about 59 billion barrels. By way of comparison, U.S proved reserves of oil are about 21 billion barrels.

The Energy Information Administration (EIA) of the U.S. Department of Energy used the MMS data to assess what impact a lifting of the ban in 2012 for the Lower 48 OCS would have on U.S. oil production. Basically, the EIA estimated what fraction of the technically recoverable oil would be economical to recover, and how fast it could be produced after 2012. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. The EIA found that access to the Pacific, Atlantic, and eastern Gulf of Mexico regions would not have a significant impact on domestic crude oil production or prices before 2030. Total domestic production of crude oil from 2012 through 2030 is projected to be 1.6 percent higher than in EIA’s “no access” reference case.

The effect of that quantity of oil on the price of oil would be indiscernible. Oil prices are determined on the international market, and the addition of about 0.16 million barrels per day from the OCS in 2030 to total world oil production would have no significant impact on oil market fundamentals. The world consumed about 86 million barrels per day in 2007, and will consume about 112 million barrels per day in 2030, according to EIA forecasts.

Adding the Alaska OCS to the mix would not appreciably alter this conclusion, as that oil would be even more costly and in terms of dollars and time compared to Lower 48 OCS resources.

Thus, lifting the ban on offshore drilling will not significantly increase domestic production, nor will it put downward pressure on oil prices.

There may be other arguments for offshore drilling, such as domestic job creation and tax revenue, improved balance of payments, among others. But those are subjects for another analysis….

Professor Cutler Cleveland
Boston University
10/08/2008

Sources:
–Energy Information Administration, Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf, Annual Energy Review 2007.
–Minerals Management Service, Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation’s Outer Continental Shelf, 2006.

Some of Dr. Clevelands previous work posted on theoildrum:

On Energy Transitions Past and Future - Cutler Cleveland
Ten Fundamental Principles of Net Energy Analysis - Cutler Cleveland
Energy Return from Wind - Cutler Cleveland and Ida Kubiszewski

Source:Presidential Energy Debate Fact Check #1: Is Offshore Drilling the Answer?

It seems that every election season, conspiracy theories arise that the oil companies are trying to bring down gasoline prices in order to influence elections. The thinking is that oil companies tend to favor Republicans (true) and that they bring prices down to help Republican candidates. When I hear this sort of talk, I try to explain to people that U.S. oil companies control so little of the world oil market that there isn’t much they can do to influence prices. They simply don’t have the stroke that people think they have.

But a poll in 2006 showed that nearly half of Americans thought Bush had successfully manipulated prices down as the election approached:

Almost half of all Americans believe the November elections have more influence than market forces. For them, the plunge at the pump is about politics, not economics.

Retired farmer Jim Mohr of Lexington, Ill., rattled off a tankful of reasons why pump prices may be falling, including the end of the summer travel season and the fact that no major hurricanes have disrupted Gulf of Mexico output. “But I think the big important reason is Republicans want to get elected,” Mohr, 66, said while filling up for $2.17 a gallon. “They think getting the prices down is going to help get some more incumbents re-elected.”

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No doubt that incumbents like to see gas prices falling ahead of an election. But having any real power to influence price is a different matter. Since gas prices are once again falling as we head toward an election, I thought I would try to put this myth to rest. So, I decided to tabulate the price behavior of gasoline stretching back over the past three presidential elections. I chose to track the price from the beginning of summer driving season - Memorial Day - until the first part of November when the elections take place.

The results are shown below:

Year	Memorial Day	November 1	% Change	Comments
1996	$1.32	$1.27	-3.8	Presidential election (PE)
1997	$1.26	$1.22	-3.2	No elections (NE)
1998	$1.11	$1.05	-5.4	Congressional elections (CE)
1999	$1.15	$1.27	10.4	NE
2000	$1.58	$1.57	-0.6	PE
2001	$1.74	$1.25	-28.2	NE; 9/11
2002	$1.43	$1.49	4.2	CE
2003	$1.53	$1.58	3.3	NE
2004	$2.09	$2.08	-0.5	PE
2005	$2.14	$2.42	13.1	NE; Hurricane Katrina
2006	$2.94	$2.25	-23.5	CE; refining capacity recovers
2007	$3.25	$3.06	-5.9	NE; gas prices set records
2008	$3.99	?	-?	PE; gas prices set records

Table 1. Comparison of Gasoline Prices Between Memorial Day and Elections Source: Energy Information Administration

Personally, I think one would be hard-pressed to find a pattern there. The biggest price drop happened in a non-election year, albeit it was an anomaly caused by 9/11. Of the thirteen years recorded, gasoline prices fell between Memorial Day and November during nine of the years. This is what I generally tell people: Prices fall for seasonal reasons, and do so even when there are no elections. The reason prices fall is that demand for gasoline falls after the summer. The price generally peaks in early summer, and following Labor Day in early September the price falls. (The details of why this generally occurs was explained in The Transition to Winter Gasoline).

Of the presidential election years, the price fell in 1996 when President Clinton was running for reelection, was essentially unchanged in 2000 and 2004 when President Bush ran against Al Gore and then John Kerry, and will almost certainly fall this year as oil prices pull back from their record highs.

In fact, if you take out the major anomalies on the graph - the slowdown caused by the 9/11 attacks, and the 2005 run-up of price in the wake of Hurricane Katrina, followed by easing in 2006 as refineries recovered, the truth is that gas prices usually don’t change dramatically between May and November - election year or not.

So why does this myth persist? There are a couple of reasons I can think of, but I think they generally fall under the category of confirmation bias. There really isn’t a strong pattern of gas price behavior (other than a stair-step up year after year); people just notice it more in an election year. In addition, because prices rise and fall over the course of any year, you can always point to a price drop in an election year to support possible biases. But if you use objective analyses (e.g., start and stop the price check on the same date every year) the non-pattern becomes obvious. Had I allowed my dates to be variable, no doubt I could have shown prices falling during any election year. Or, I could have shown them rising.

As for the idea that the president has that much power, all he can really do is go with his hat in hand and beg the Saudis to pump more oil in an attempt to ease prices. OPEC has indeed had historical pricing power, but even that is eroding as spare capacity dwindles. But the idea that Bush can pull any strings and get Big Oil to manipulate gas prices demonstrates that people give him, and Big Oil for that matter, far too much credit. Besides, as Joanne Shore, an analyst at the EIA noted in the previously linked article “What company in their right mind would step forward to kill their profit?”

I won’t go so far as to say that gas and oil prices can’t be manipulated. OPEC as a group can manipulate prices if they still have a couple million barrels of spare capacity. But U.S. oil companies do not have the power to manipulate prices to impact elections. I would further argue that for those who do think oil prices are presently being manipulated down, do you also believe that they were being manipulated upward as they rose to near $150/bbl? After all, that manipulation argument can cut both ways.

Source:The Myth of Election Year Price Manipulation

In what feels like the middle of a multi-round heavyweight bout, the world financial markets continue to be buffeted tonight, following the recent trend of lower equities, stronger dollar (vs Euro, SF and Sterling), sinking energy and commodities prices and considerably less confidence in the overall system than in weeks prior. Theoildrum.com has historically focused on the biophysical aspects of a world economy based on energy (and occasionally the human aspects that impact energy demand). Most research here attempts to predict what world oil and gas production might look like in a future where depletion inexorably overtakes technology, and the costs of procuring large amounts of quality fuels continue to increase. However, the spiralling of recent events make it likely that, at least for a time, be it a week - or several years - oil and gas depletion might be more than offset by the reduction in demand due to the manifold implications of the reduction in global financial leverage and resulting credit contractions and dislocations in the real economy. The linkages between finance and energy are becoming more direct, but I’m quite certain there are many under the surface we are yet unaware of.

Below are a few article links followed by some open ended questions. Please deposit data, charts and links of relevance.
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From Nouriel Roubini’s article in Forbes:

In a solvency and credit crisis that goes well beyond illiquidity, no one is lending to counter-parties as no one trusts any counter-party (even the safest ones), and everyone is hoarding the liquidity that is injected by central banks. And since this liquidity goes only to banks and major broker-dealers, the rest of the shadow banking system has no access to this liquidity as the credit transmission mechanisms are blocked.

From Bloomberg, on European Union Leaders Stop Short of Regional Plan on Bailouts:

Sarkozy said that “all actors” must be supervised, including rating firms and hedge funds. Executive-pay systems must also be reviewed, he said.

“We want a new world to come out of this,” Sarkozy said. “We want to set up the basis for a capitalism of entrepreneurs, not speculators.”

Anticipating increased spending, declining tax revenue, and government bank takeovers, they called for “greater flexibility” in the application of European Union competition and budget rules.

And in addition to an earlier announcement that Germany would guarantee all bank depositors (much like Ireland announced last week), HYPO did get a 50 billion Euro government led bailout. This on the heels of BNP Paribas buying out Fortis earlier today.

Tonight the Euro continues to weaken, and is now at levels not seen since late 2004. It is difficult to keep tabs on all that is happening, both globally, nationally, and locally. My personal view of our future continues to be a probabilistic distribution of many possible outcomes, the odds and timing of each, periodically adjusted based on the actions and feedbacks of important world actors. The ‘public’ is likely to become as important an actor as any.

The odds that peak oil is now behind us are now (in my opinion) nearly 100%. The odds of global economic expansion (and growth) now being over are also high (this has been oft-analyzed but here is a good overview of the reasoning). Whether we will have inflation or deflation of ‘money’ (as opposed to the four real capitals: natural, built, social and human), is still an open question and depends on what path world central banks choose. History suggest that the news has been so bad for so long that we are due some respite from concerted central bank intervention that props up confidence and the markets for a time. But history has been based on growing energy surplus, and ultimate confidence that one will get a return OF capital in addition to a return ON capital. Thus, the current financial/energy landscape may accelerate the popular modern timing of exchanging bank digits for real capital from the end of ones career, to somewhat earlier. Yes, this time it may be different.

Recent events are certainly stirring the pot of possibilities - here are a few questions for general discussion: (no right or wrong answers…;-)

- If/when the dollar rally ends will the oil sell-off end as well? Or do they have fundamentally different causes? (Here I would suggest that oil selloff is largely capital flow/hedge fund driven, and dollar rally has been largely flight to quality and repayment of debt denominated in dollars and leverage is mandatorily reduced.) (Note: Dollar rally vs Euro is 82% correlated with rise in 30 Yr Treasury prices

-What impact would a demise of the Euro have on the future for energy? (Note: tonights ECB call for ‘greater flexibility’ does not seem consistent with formal limits on borrowing and fiscal deficits by EU members under the Stabilization Pact)

-Will the fall out from the credit crisis cement peak ‘energy’? (Presumably, we are headed for a depression and concomitant demand reduction - will the time gap brought about by credit crisis in creating/financing of new energy infrastructure now be overtaken by ongoing depletion in coal, nuclear, and oil industries?)

-Given what is happening, would a ‘fast-crash’ scenario be, in many respects, preferred to a long drawn out slow crash? (In the sense that a fast crash leaves more quality resources in the ground, and creates enough pain and recognition that our current ‘ends’ are not the best way to spend our remaining fossil energy surplus?)

-If Peak Oil means the end of growth (I think this likely but not certain), what do people do with IRA’s/401ks that aren’t due to be redeemed for 10-30 years?

-Would a concerted 100 basis point global ease this week do anything?

-What other Black Swans could make this situation better, or worse?

It seems (at least one) genie is out of the bottle. The time to ask comfortable questions and get comfortable answers may be passed. But uncomfortable answers probably still have a window.

Source:Energy/Credit/Currency Crisis Open Thread