Drive on biofuels risks oil price surge

Opec on Tuesday warned western countries that their efforts to develop biofuels as an alternative energy source to combat climate change risked driving the price of oil “through the roof”.

This weekend I'm supposed to be driving out to a hydroelectic power station in a car hired by someone on a rostered break from their job at an outback gas field. The hydro dams are low and the gas field only has a few years left, yet these are the prime sources of peaking power. What will replace them? Countries like Germany are shutting down their nukes in favour of importing more Russian gas. Seems like we're speeding down a dead end street.

... In his first book, Confessions of an Economic Hit Man, John Perkins told the story of his work as a highly paid consultant hired to strong-arm leaders into creating policy favorable to the US government and corporations, what he calls the “corporatocracy.” ... John Perkins has just come out with his second book on this issue. It’s called The Secret History of the American Empire: Economic Hit Men, Jackals and the Truth about Global Corruption.

We work many different ways, but perhaps the most common one is that we will identify a third world country that has resources our corporations covet, such as oil, and then we arrange a huge loan to that country from the World Bank or one of its sister organizations. The money never actually goes to the country. It goes instead to US corporations, who build big infrastructure projects -- power grids, industrial parks, harbors, highways -- things that benefit a few very rich people but do not reach the poor at all. The poor aren’t connected to the power grids. They don’t have the skills to get jobs in industrial parks. But they and the whole country are left holding this huge debt, and it’s such a big bet that the country can't possibly repay it. So at some point in time, we economic hit men go back to the country and say, “Look, you know, you owe us a lot of money. You can't pay your debt, so you’ve got to give us a pound of flesh.”

When I was sent to Ecuador as a Peace Corps volunteer in 1968, Texaco had just gone into Ecuador, and the promise to the Ecuadorian people at that time from Texaco and their own politicians and the World Bank was oil is going to pull this country out of poverty. And people believed it. I believed it at the time. The exact opposite has happened. Oil has made the country much more impoverished, while Texaco has made fortunes off this. It’s also destroyed vast areas of the Amazon rainforest.

So the lawsuit today that’s being brought by a New York lawyer and some Ecuadorian lawyers -- Steve Donziger here in New York -- is for $6 billion, the largest environmental lawsuit in the history of the world, in the name of 30,000 Ecuadorian people against Texaco, which is now owned by Chevron, for dumping over eighteen billion gallons of toxic waste into the Ecuadorian rainforest. That’s thirty times more than the Exxon Valdez. And dozens and dozens of people have died and are continuing to die of cancer and other pollution-related diseases in this area of the Amazon. So all this oil has come out of this area, and it’s the poorest area of one of the poorest countries in the hemisphere. And the irony of that is just so amazing.

But what I think -- one of the really significant things about this, Amy, is that this law firm has taken this on, not pro bono, but they expect if they win the case, which they expect to do, to make a lot of money off of it, which is a philosophical decision. It isn’t because they wanted to get rich off this. It’s because they want to encourage other law firms to do similar things in Nigeria and in Indonesia and in Bolivia, in Venezuela and many other places. So they want to see a business grow out of this, of law firms going in and defending poor people, knowing that they can get a payoff from the big companies who have acted so terribly, terribly, terribly irresponsibly in the past.

And Steve Donziger, the attorney -- I was in Ecuador with him just two weeks ago -- and one of the very touching things he said is -- he’s an American attorney with, you know, very good credentials, and he says, “You know, I’ve seen a lot of companies make mistakes and then try to defend themselves in law courts.” And he said, “That’s one thing. But in this case, Texaco didn’t make mistakes. This was done with intent. They knew what they were doing. To save a few bucks, they killed a lot of people.” And now they’re going to be forced to pay for that, to take responsibility for that, and hopefully open the door to make many companies take responsibility for the wanton destruction that’s occurred.

The whole story of Africa and the Congo is such a devastating and sad one. And it’s the hidden story, really. We in the United States don’t even talk about Africa. We don’t think about Africa. You know, Congo has something called coltan, which probably most of your listeners may not have even heard of, but every cell phone and laptop computer has coltan in it. And several million people in the last few years in the Congo have been killed over coltan, because you and I and all of us in the G8 countries demand low -- or at least we want to see our computers inexpensive and our cell phones inexpensive. And, of course, the companies that make these sell them on that basis, that “Oh, here, mine’s $200 less than the other company.” But in order to do that, these people in the Congo are being enslaved. The miners, the people mining coltan, they’re being killed. There’s these vast wars going on to provide us with cheap coltan.

I think it’s very sad and very telling, once again, that the Israeli people, for the most part, are led to believe that they’ve been given this land as a payoff, basically, for the Holocaust, because they deserve to be recompensed. And, of course, the Holocaust was terrible, and they do deserve to be taken care of and recompensed and have stability.

But why would we locate that place in the middle of the Arab world, their traditional enemies? Why would we locate that place in such an unstable area? It’s because it is serving as a huge fortress for us in the biggest oil fields known in the world today, and we knew this when Israel was located there. And I think the Israeli people have been terribly exploited in this process.

So, in fact, we built this vast military base, armed camp, in the middle of the Middle Eastern oil fields that are surrounded by the Arab communities, and in the process, we’ve obviously created a tremendous amount of resentment and anger and a situation that it’s very difficult to see any positive outcome there. But the fact of the matter is, our having this military base in Israel has been a huge defense for us. It’s been a place where we could really launch attacks, rely on. It’s been our equivalent of the Crusaders’ castles in the Middle East. ...

http://www.democracynow.org/article.pl?sid=07/06/05/149254

Excuse me if this is too "off topic", but I was wondering if any of our fellow readers has seen any episode of the TV series Jericho (broadcasted in the US, but available in the internets if you know what I mean).

JERICHO is a drama about what happens when a nuclear mushroom cloud suddenly appears on the horizon, plunging the residents of a small, peaceful Kansas town into chaos, leaving them completely isolated and wondering if they're the only Americans left alive. Fear of the unknown propels Jericho into social, psychological and physical mayhem when all communication and power is shut down. The town starts to come apart at the seams as terror, anger and confusion bring out the very worst in some residents. Jake Green (Skeet Ulrich), prodigal son of the town's mayor, becomes a reluctant hero when a school bus crashes as a result of the explosion. Mayor Johnston Green (Gerald McRaney) is conflicted with the return of his estranged son, but is called to action when the town begins to riot. Johnston's wife, Gail (Pamela Reed), is the strong, savvy first lady of the town who runs interference between her husband and her favorite son. Attempting to usurp the mayor's power is Johnston's political adversary, Gray Anderson (Michael Gaston), who is not above putting his personal agenda before the welfare of the very community he wants to lead.

What I found interesting is the similarities between the worst doom and gloom scenarios (caused by peak oil) and some of the situations shown in the series: Jericho makes a deal with a neighborg town in exchange for some wind mills to produce energy, the problems with food, roaming militias, etc, etc.

BTW, the show has been cancelled.

Natural gas liquids

In the weekly inventory reports I noticed that natural gas liquids volumes are running significantly below 2006. Liquids stripping from the natural gas flow should be highly profitable at present gas prices. 8 USD times 6 gives 48 USD btu equivalent oil barrel price.
Are the natural gas streams getting drier?
Is natural gas liquids production supply constrained ?

Summary of Weekly Petroleum Data for the Week Ending June 1, 2007

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) inched higher by 0.1 million barrels compared to the previous week. At 342.3 million barrels, U.S. crude oil inventories are just above the upper end of the average range for this time of year. Total motor gasoline inventories climbed by 3.5 million barrels last week, but remain well below the lower end of the average range. Distillate fuel inventories increased by 1.9 million barrels per day, and are just below the upper end of the average range for this time of year. While heating oil (high-sulfur) inventories were relatively unchanged, regular diesel fuel (low-sulfur) and ultra-low sulfur diesel fuel inventories increased. Propane/propylene inventories rose by 1.6 million barrels last week. Total commercial petroleum inventories increased by 3.7 million barrels last week, and are in the middle of the average range for this time of year.

Ok...this is really starting to get ridiculuous.

June 2nd:
Iran sees higher oil price, warns on supply

Khatibi also suggested that most Opec members were operating close to capacity. Iran is Opec’s No. 2 producer. “Therefore in the situation of an increase in the demand, there is no other way but to use the reserves,” he said.
“In the most optimistic situation, in the future supply and demand will seriously get close to each other and we will not have any additional supply,” he said. “In the pessimistic situation, oil demand in winter will reach an amount which supply can not meet ...

This pretty much is a confirmation that KSA is dead in the water and sinking fast, since we already knew no other OPEC member had any tangible excess capacity.

June 5th:

OPEC needs to boost 2nd-half output: EIA

WASHINGTON (Reuters) - OPEC will need to boost its output in the second half of 2007 to meet winter heating demand, but it's too late for the producers' group to have much impact on U.S. oil supplies this summer, the U.S. government's top energy forecaster told Reuters on Monday.

"We see a need for OPEC to produce more crude in the second half of 2007 than they produced in the first half," due to projected demand increases, Guy Caruso, head of the U.S. Energy Information Administration (EIA), told the Reuters Energy Summit.

OPEC, source of about a third of world oil, appears unlikely to boost its output before its regular meeting in September.

Even if OPEC were to act soon, crude oil from big producers like Saudi Arabia is at least a 45-day tanker journey away from the U.S. Gulf Coast, Caruso said.

"Summer supplies of crude in terms of the long-haul suppliers, that's pretty much in train now," he said.

So, if they won't increase until at least September, then write off September and October. See Ace's projections below....ouch.

With potential outages from Venezuela and Iraq, there are few reasons to think that global oil prices will fall anytime soon, he said.

"Most of the price risk is on the upside," he said.

That is a conservative statement. There was a bunch on Nigeria being a key "problem" as well. Nice framing - "it's all above ground factors"

Definitely supporting Ace's bottom analysis with large supply/demand gaps opening up this fall.

Here is Ace's latest world production update (May 30) -
Updated World Production Forecasts including UK Oil Production Decline

TODAY, June 6th:

Members Could Rethink Post-'12 Expansion Plan

But a further 9 million barrels a day of capacity in place by 2020, costing anywhere between $250 billion and $500 billion, could be in doubt because "we don't see the situation after 2012," el-Badri said.

"There's not much dedication to have excess capacity that will be idle," he said, "and the money we might invest can be used somewhere else."

What situation don't they see? If they can produce the excess capacity, the world will use it - Global Warming or not. 9MMBPD of excess capacity would be impressive, but they would need more like 6-8 MMBPD of new projects to offset the admitted declines or 8-12% from KSA.

Definitely, an admission that CHEAP oil is gone, since at 65-70 a barrel, another 9MMBPD would be fantastic. I imagine the CEO of any organization would say "Bring it on! Hurry!"

Looks like another smokescreen...blame game - "we will are cutting back because you are using renewables and reducing demand with 50MPG cars...you brought this on yourselves"

"There's not much dedication to have excess capacity that will be idle," he said, "and the money we might invest can be used somewhere else."

Some in the group, he added, "have problems in education, in housing, in health."

Makes me think of WT. I see net exports squeezing in here as well..."Sorry, we need that oil for ourselves"

Looking forward to todays gasoline report and RR's and FTX's table.

Think EROEI.

Coal-to-Liquids is Doable

Major oil companies and private enterprises are working on a series of technologies that turn coal to liquids. The idea is to take an abundant resource such as coal and gasify it -- a process that cleanses it of its impurities. That byproduct can then supplement the use of crude oil, which would lessen the country's thirst for foreign oil and help ease prices. In fact, developers of the technology say that a barrel of coal-to-liquids is considerably less than a barrel of crude oil, which now stands at $63 a barrel.

"If coal-derived liquids were added to the world oil market, such liquids would cause world oil prices to be lower than what would be the case if they were not produced," says James Bartis, with the Rand Corp., in testimony before the Senate Energy and Natural Resources Committee. If production of such fuel ever reached 6 million barrels per day, he said it would yield a world oil price decline of 6-10 percent.

And maybe some BS too?

This is funny?! Canada can't use its own tar sands production, nor can California or the Northeast. All Texas has to do is not accept those standards, and they'll have plenty cheap oil. Oh, yeah. they have to build a pipeline....

Arnold terminates the tar

_{California standards could crimp Canada oil boom
Schwarzenegger's deals might affect Alberta's tar sands}

Gov. Arnold Schwarzenegger has signed environmental agreements with two Canadian provinces that could slow down the biggest oil boom in North American history -- the tar sands of Alberta.

Last week's agreements commit Ontario and British Columbia to adhere to California's low-carbon fuel standard, which will cut the use of petroleum sources such as Alberta's that cause high levels of global-warming emissions. Other provinces and U.S. states are expected to join the standard, thus shrinking the market for the fast-growing Alberta oil industry, which U.S. officials hope will overtake the Middle East as America's main source of imported petroleum.

The agreements, signed in Toronto with Ontario Premier Dalton McGuinty and in Vancouver with British Columbia Premier Gordon Campbell, require the provinces to reduce the greenhouse gas output of gasoline and diesel fuels by at least 10 percent by 2020, in accordance with the new California standard. This includes all emissions resulting from production and use of the fuels, from exploration to refining to combustion.

Later this month, the California Air Resources Board is expected to announce detailed regulations to implement the standard.
The California measure is designed to address the often-overlooked, emissions-spewing ways in which fuels are created, thus complementing the state's other global warming policies such as cuts in vehicle tailpipe emissions.

Nine Northeast states are expected to eventually join California's fuel standard, along with Illinois, Quebec and Manitoba. Together, these steps will advance Schwarzenegger's stated goal of forcing oil companies to reduce emissions -- such as oil production processes that capture and store greenhouse gases underground, or cellulosic ethanol, or even electricity.
Experts say the fuel standard will make the vast amounts of tar-like petroleum underneath Alberta's boreal forests seem less attractive to oil companies.

"It's difficult to overstate the impact of the low-carbon fuel standard on tar sands production," said Drew Kodjak, executive director of the International Council on Clean Transportation, an alliance of air-quality scientists and regulators with offices in Washington and San Francisco.

While the lack of pipelines from Alberta to California means the state receives little oil sands output, Ontario and British Columbia consume about 15 percent of total oil sands production and Illinois takes about 20 percent, according to Canadian and U.S. government data.

"This sends a wake-up call to the tar sands industry, and they're going to have to clean up their emissions if they want to sell to British Columbia, Ontario, California, and pretty soon the rest of the United States and Canada," said Ian Bruce, a climate change specialist at the David Suzuki Foundation, an environmental group in Vancouver.

From the front page of USA Today: Many investors feel like running away from homes

Buying real estate seemed a no-brainer five years ago. Cheap loans were easy to get. Home prices were soaring. Stocks were dead money.

How things have changed.

For-sale signs are sitting ignored in some cities. Interest rates on exotic loans are doubling. Insurance premiums and property taxes are skyrocketing. Wannabe real estate tycoons stuck with properties they can't sell have been turned into landlords, forced to fix toilets and take tenant calls in the middle of the night. Many are "under water" — owing more on the mortgage than they could get by selling.

From NYT ---->

Turkey Says Troops Crossing Into Iraq
E-MailPrint Save

By THE ASSOCIATED PRESS
Published: June 6, 2007
ANKARA, Turkey (AP) -- Several thousand Turkish troops crossed into northern Iraq early Wednesday to chase Kurdish guerrillas who operate from bases there, Turkish security officials told The Associated Press.

Two senior security officials, speaking on condition of anonymity because they were not authorized to speak to the media, said the raid was limited in scope and that it did not constitute the kind of large incursion that Turkish leaders have been discussing in recent weeks.

http://www.nytimes.com/aponline/world/AP-Turkey-Iraq.html?hp

http://www.brookings.edu/comm/policybriefs/pb161.htm
This policy brief proposes that Congress legislate product-by-product and factory-by-factory disclosure of greenhouse gas emissions to create immediate incentives for companies to cut those emissions.
http://www3.brookings.edu/comm/policybriefs/pb161.pdf

http://www.aceee.org/pubs/e075.htm
ACEEE developed this report as a comprehensive ranking of state energy efficiency policies and identified exemplary programs and policies within each policy category.
http://www.aceee.org/getfile.cfm?publicationid=88

And the money/debt side:
http://www.nclc.org/news/content/press_upd.pdf
“Utilities and Payday Lenders: Convenient Payments, Killer Loans,” a report released today by NCLC, found more than 650 instances where payday lenders act as authorized bill payment agents for regulated utilities.
Utilities that direct customers to pay electricity, natural gas and telephone bills at payday loan stores make those customers targets for marketing of predatory loans, a National Consumer Law Center report has found.

China, India, and the U.S. did not sign the Kyoto treaty.

California left many street lights on all night, it seems they have not given up driving either. Windmill generator-turbines were sold forward and are on backorder. California wants to make a statement, but cannot afford a solution. Check their YOY energy consumption and see if it went up.

Tar will flow with steam flood. Recovery rates were improving through the years. There were heavy oil projects such as new steam flood projects planned for the Alaskan North Slope, Oman, and the Saudi-Kuwaiti neutral zone. California heavy oil has been extracted with steam flood for awhile.

The CAGR of the Alberta projects may bring about greater development than was thought possible three years ago.

What do you think are the chances we'll see accurate climate models before the computers that do the calculations disappear under water?

Antarctica: the "dynamic" nature of melting glaciers

Fears that global sea levels this century may rise faster and further than expected are supported by a study showing that 300 glaciers in Antarctica have begun to move more quickly into the ocean.

Scientists believe that the accelerated movement of glaciers in the Antarctic Peninsula indicates a dramatic shift in the way melting ice around the world contributes to overall increases in global sea levels.

Instead of simply adding huge volumes of meltwater to the sea, scientists have found rising temperatures are causing glaciers as far apart as Alaska, Greenland and now Antarctica to break up and slip into the ocean at a faster rate than expected.

The findings will raise concerns within the UN's Intergovernmental Panel on Climate Change (IPCC) which, earlier this year, downplayed the so-called "dynamic" nature of melting glaciers - when rising temperatures cause them to break up quickly rather than simply melt slowly.

Using radar images taken between 1993 and 2003, scientists at the British Antarctic Survey in Cambridge mapped a 12 per cent increase in the average rate of movement of more than 300 glaciers in the Antarctic Peninsula over the period.

The scientists believe that their findings are among the first to suggest that as glaciers being to melt they experience a physical transformation that causes an acceleration in their movement into the sea.

Thunder? That's the sound of Greenland melting

Atop Greenland's Suicide Cliff, from where old Inuit women used to hurl themselves when they felt they had become a burden to their community, a crack and a thud like thunder pierce the air.

"We don't have thunder here. But I know it from movies," says Ilulissat nurse Vilhelmina Nathanielsen, who hiked with us through the melting snow. "It's the ice cracking inside the icebergs. If we're lucky we might see one break apart."

Greenland, the world's largest island, is mostly covered by an ice cap of about 2.6 million cubic km that accounts for a 10th of all the fresh water in the world.

Over the last 30 years, its melt zone has expanded by 30 per cent, and now the cap loses 100 to 150 cubic km of ice every year - more than all the ice in the Alps.

"Some people are scared to discover the process is running faster than the models," said Konrad Steffen, a glaciologist at University of Colorado at Boulder and a Greenland expert who serves on a US government advisory committee on abrupt climate change.

In the past 15 years, winter temperatures have risen about 5 degrees Celsius on the cap, while spring and autumn temperatures increased about 3 degrees Celsius. Summer temperatures are unchanged.

Mr Green goes motoring
Scourge of cars George Monbiot now owns one.

George Monbiot, the environmental campaigner, scourge of the automobile industry and champion of not owning cars, has finally bought himself . . . a car.

Notwithstanding pledges to live a green lifestyle and be a model to others, he has given in to temptation and acquired a secondhand Renault. The car industry will be silently celebrating the news. Monbiot has championed an anticar movement that has grown rapidly in influence to the point where many owners now feel guilty about using their cars.

http://driving.timesonline.co.uk/tol/life_and_style/driving/features/art...

Wow, you mean there is actually more news on this site than GONU for the last two days?

Wow, you mean there is actually more news on this site than GONU for the last two days?

Re: The 5 Myths of the Transition to Biofuels

Well aside from the usage/demand bruhaha above, I wanted to make a quick commentary on this hit-piece from LeMonde Diplo - a paper I typically hold in high regard.

1) Biofuels are most certainly clean and although I wouldn't go so far as to say that they 'protect' the evironment I would, however, state that biofuels can be carbon neutral if not a carbon negative source of LTF.

2) True - in some cases biofuels do cause deforestation. The assertion that Brazil is cutting down rainforest for ethanol is false.

3) Unfounded scaremongering. The latest UN report on bioenegy directly contradicts Diplo's claim and nowhere does it mention PO nor outline a nice and breezy transition through it to a biofuel world.

4) Here we go again with the starving Mexican bullshit. I proved otherwise for TODers here sometime ago.

5) More nonsense. There are 6 DOE funded, commerical ethanol projects underway in the U.S. as I write this. My money is on Poet Ethanol to be the first to hit their targets.

All in all, a pretty sad attempt and I'm rather discouraged that Diplo would put their name behind such a shoddy piece.

Saudi Aramco is starting to plan celebrations for its 75th Anniversary in 2008

In May 1933, Saudi Arabia granted its first oil concession to Standard Oil of California.

The theme of the 75th anniversary celebrations will be "Energy for Generations" and will focus on the human side of the company.

Also info from this link
http://www.saudiaramco.com/irj/portal/anonymous#clr=N&lang=EN&category=O...

"Americans not very big on very small cars."

There are two big problems with this article. The first is the automotive analyst's propaganda. "Americans not very big on very small cars."

If that's true, then why can't I buy the little Messerschmitt Kr201 that I have been lusting over for a decade for less than 15,000?

If Americans truely were not "big" on little cars, I should be able to get a Heinkel Kabine, Goggomobil, American Bantam, BMW Isetta, NSU Prinz, Vespa 400 or Ape', Bianchina, or Nash Metropolitan for peanuts.

Sadly, for me, very small cars (classic and modern) have very big price tags. Look at the price of Mini both classic and new and tell me that Americans are not big on small cars.

"Americans not very big on very small cars." Liar.

However, the second problem is even if we move to more efficient automobiles, we are sustaining and encouraging car culture.

Even if we as Americans switch to small cars, we are still stuck with the current automobilization of China and India. And that will eat up any savings.

My bicycle has become my primary transport around town this year. And in an oil scarce future, the title might be "Americans not very big on small bicycles".

Charles

Next time, Take the Trolley.
http://www.northshoreline.com/carsign.jpg