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DrumBeat: January 16, 2009
Posted by Leanan on January 16, 2009 - 9:53am
Venezuela Says $70 Oil Needed to Maintain Investments
(Bloomberg) -- Oil prices need to rise to about $70 a barrel to sustain investment in fields and avoid shortages, Venezuelan Energy and Oil Minister Rafael Ramirez said.
The South American country is discussing prices with other members of the Organization of Petroleum Exporting Countries, Ramirez said today in an interview today in Machiques, Venezuela.
“We’ve spoken of a price band of $80 to $100 a barrel,” he said, declining to specify an immediate price target. “The priority is to stabilize the market and avoid a cycle of disinvestment,” particularly in projects such as deep water and the Canadian tar sands.
Venezuela to Tap $12 Billion in Bank Reserves, Chavez Says
(Bloomberg) -- Venezuela will use $12 billion of its international reserves to finance spending this year amid a drop in prices for oil, the country’s top export, President Hugo Chavez said today.
Conoco and Exxon PDVSA-supplied refineries normal
NEW YORK (Reuters) - ConocoPhillips (COP.N) and Exxon Mobil Corp (XOM.N) said on Friday their refineries supplied by Venezuelan crude were operating normally after Venezuela announced it had halted oil shipments to them.
Number of active oil rigs drops by 21
HOUSTON — The number of rigs actively exploring for oil and natural gas in the United States dropped by 21 this week to 1,568.
Of the rigs running nationwide, 1,235 were exploring for natural gas and 324 for oil, Houston-based Baker Hughes Inc. reported Friday. A total of nine were listed as miscellaneous.
A year ago, the rig count stood at 1,732.
Petrobras Brazil Dec oil output up 1.1 pct yr/yr
SAO PAULO (Reuters) - State-run oil company Petrobras said Friday its crude output in Brazil in December averaged 1.876 million barrels per day, up 1.1 percent from the same month a year ago.
Last month's output was up 1.7 percent from 1.845 million in November.
Petrobras to Invest $1.1 Billion in Bolivian Gas
(Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva plans to invest $1.1 billion to develop Bolivia’s natural-gas reserves as the Andean nation struggles to meet supply contracts to Brazil and Argentina.
Brazil’s state oil company “has made the commitment to invest $1.1 billion in the coming years,” Lula said at a press conference late yesterday in the Brazilian town of Ladario, which borders Bolivia. “We need gas and we will act with the Bolivian government to fulfill that need.”
Chile to Post ‘Moderate’ Energy Demand Growth, Tokman Says
(Bloomberg) -- Chile, the world’s biggest producer of copper, expects “moderate” growth this year in energy demand after usage shrank for the first time in 26 years in 2008, Energy Minister Marcelo Tokman said.
This year, Chile has more generators running, higher dam reservoir levels and a better distribution network for diesel, which is used during natural-gas shortages, Tokman said.
U.S. Issues Plan for Shipping Nuclear Waste to Yucca
(Bloomberg) -- The U.S. Energy Department released a plan to ship nuclear waste to a repository at Yucca Mountain in Nevada beginning no earlier than 2020.
The report was issued today, the final work day of the Bush administration, in an effort to get comments from state, tribal and local officials, the agency said. The underground Yucca site would hold waste from nuclear power plants nationwide.
Kenya: Kibaki declares famine National Disaster
President Mwai Kibaki on Friday declared the current food shortage facing the country a National Disaster and launched a campaign to raise over 37 billion shillings required to address the situation.
The President further directed all arms of the government to marshal available resources in order to respond effectively to the situation.
Argentina Corn Planting to Drop 26% to 2.38 Million Hectares
(Bloomberg) -- Argentine corn planting will drop 26 percent for the coming harvest as a drought discourages growers from sowing the grain, the Buenos Aires Cereals Exchange said.
Coastal Sensitivity to Sea-level Rise: A Focus on the Mid-Atlantic Region
● Rising water levels are already an important factor in submerging low-lying lands, eroding beaches, converting wetlands to open water, and exacerbating coastal flooding. All of these effects will be increased if the rate of sea-level rise accelerates in the future.
● Most coastal wetlands in the mid-Atlantic would be lost if sea level rises one meter in the next century. Even a 50-cm rise would threaten most wetlands along the Eastern Shore of Chesapeake Bay.
● Possible responses to sea level rise include seawalls, bulkheads, and other shoreline armoring; elevating buildings and land surfaces (including beaches and wetlands); and allowing shorelines to change and moving structures out of harm’s way. Those three approaches have very different environmental and social impacts.
● Preparing now can reduce the eventual environmental and economic impacts of sea level rise.
● Some governmental and nongovernmental organizations are already starting to prepare for sea level rise.
Slight Changes in Climate May Trigger Abrupt Ecosystem Responses
Slight changes in climate may trigger major abrupt ecosystem responses that are not easily reversible.
Some of these responses, including insect outbreaks, wildfire, and forest dieback, may adversely affect people as well as ecosystems and their plants and animals.
The U.S. Geological Survey led a new assessment of the implications of a warming world on "ecological thresholds" in North America. The report, which was commissioned by the U.S. Climate Change Science Program and authored by a team of federal and academic climate scientists, is based on a synthesis of published scientific literature and addresses what research and steps are needed to help mitigate resulting effects.
Great Lakes Water Levels Sensitive To Climate Change
"In the distant past, there were great fluctuations in the water level of the Great Lakes, but it was thought to have been related entirely to the advance and retreat of the glaciers," said URI geological oceanographer John King, who led the study with URI visiting scientist Michael Lewis, emeritus scientist with the Geological Survey of Canada. "But the last time lake levels fell dramatically – down to 20 meters below the basin overflow outlets – it was due to dry climate conditions."
Arctic Heats Up More than Other Places
Temperature change in the Arctic is happening at a greater rate than other places in the Northern Hemisphere, and this is expected to continue in the future.
As a result, glacier and ice-sheet melting, sea-ice retreat, coastal erosion and sea level rise can be expected to continue.
A new comprehensive scientific synthesis of past Arctic climates demonstrates for the first time the pervasive nature of Arctic climate amplification.
For Wind Turbine Manufacturers, the Layoffs Begin
President-elect Barack Obama will spend part of today touring a factory near Cleveland that makes parts for wind turbines — an example of the “green jobs” that he hopes to promote in the stimulus package.
But some of those jobs in the wind industry are becoming casualties of the economic slump. North Dakota-based D.M.I. Industries, which manufactures turbine towers, is laying off 20 percent of its workers across three plants — in Tulsa, Oklahoma, Stevensville, Ontario and West Fargo, North Dakota.
The news comes barely six months after the company announced expansion plans that would make it the “largest wind tower manufacturer in North America.”
“Quite frankly, I was shocked,” the major of West Fargo, Rich Mattern, told The Associated Press earlier this month. “I thought they were bulletproof. I never guessed that they would be in trouble.”
Pemex to fine Weatherford for delays
Pemex is preparing to fine Weatherford International for missing deadlines on two oil drilling contracts awarded to the company last year.
Industry executives said Weatherford is in a tough spot because it underestimated the cost and difficulty of the two projects.
Venezuela confirms $230 mln Lyondell exposure
MACHIQUES, Venezuela (Reuters) - Venezuela's state oil company PDVSA is owed $230 million by bankrupt U.S. chemicals group Lyondell Chemical Co, Oil Minister Rafael Ramirez said on Friday.
Lyondell's U.S. operations filed for Chapter 11 bankruptcy protection on Jan. 6 weighed down by heavy debts, volatility in oil prices and reduced demand due to the economic downturn.
Russian gas, Mideast crisis bare EU divisions
BRUSSELS, Belgium: Who listens to the EU these days? Not Russia and Ukraine, who ignore Europe's pleas to resume gas deliveries to Western Europe. Nor Israel, whose relentless assault on the Gaza strip continues amid EU demands for moderation.
The reason for the shrug off may lie in the challenges Europe faces in speaking with one voice.
Minnesota schools closed after fuel issues in buses
BLOOMINGTON, Minn. -- The Bloomington School District is closing schools Friday, after extremely cold temperatures caused the biodiesel fuel in school buses to clog.
The problem left dozens of students stranded Thursday -- some for up to 30 minutes in the dangerous cold.
Superintendent Les Fujitake said the district could not ensure the buses would not encounter the same issues Friday mornning as temperatures remain below zero in the Twin Cities and therefore they decided to close schools in Bloomington.
Elements in biodiesel fuel turn into a gel-like substance at temperatures below 10 degrees. District spokesman Rick Kaufman said some buses couldn't operate at all and others stalled while picking up students.
Platts survey: December OPEC oil output fell to 30.74 mil. barrels per day
The 13 members of the Organization of the Petroleum Exporting Countries (OPEC) pumped an average 30.74 million barrels per day (b/d) of crude oil in December, according to a Platts survey of OPEC and oil industry officials just released. This is a decline of 640,000 b/d from the November level of 31.38 million b/d. The total includes Indonesia, which left the oil producer group at the end of the year.
Excluding Indonesia, production from the other 12 members fell by 630,000 b/d to 29.86 million b/d from the November estimate of 30.53 million b/d, the survey showed.
"This is nowhere near the amount of cuts needed if OPEC wishes to balance the market, and OPEC knows it," said Platts Global Director of Oil John Kingston. "That's why they were willing in December to make further cuts to production. Outside of the price, the most important number to watch in coming weeks is OPEC's actual production in January."
The current crisis was predicted 30 years ago
The Club's first report, which had the tell-tale title "Limits to Growth," caused a shock. It was compiled by a group of scientists headed by Dennis L. Medows, who decided to create a cybernetic model of global development. Having focused on five global processes: fast industrialization, population growth, increasing shortage of food, depletion of non-renewable resources, and degradation of the environment, they modeled the future on a computer.
The emotionless machine produced an answer that sounded like a verdict: the human race is in for a disaster. Considering that the population was growing at a rate of over two percent annually at that time, while industry was growing at up to five to seven percent, modern civilization was bound to reach the limits of growth in the first decades of the 21st century. Mineral resources will have been depleted; environmental pollution will have become irreversible; a sudden uncontrolled drop in the population and decline in production will have become inevitable. Millions of people will have died as a result of man-made catastrophes, spontaneous economically motivated social conflicts and unknown pandemics.
More Evidence That Peak Oil Is A Reality Just Around the Corner
In the last month or so there have been two very public indications that not even the Middle East’s oil states are counting on endless supplies of the black gold which in the space of one or two generations moved their economies from the 18th century to modernity.
Angola's March oil exports to fall below OPEC target
LONDON (Reuters) - Angola is set to export 1.5 million barrels per day (bpd) of crude oil in March, down from 1.6 million bpd in February due to shipment delays and OPEC supply curbs, trade sources said on Friday.
The drop is the latest indication that members of the Organization of the Petroleum Exporting Countries are delivering on pledges to cut output agreed in response to a $100-a-barrel collapse in oil prices since July.
Proven reserves of Petrobras grow 1.2 pct in 2008
SAO PAULO (Reuters) - Brazil's state-run oil company Petrobras said late Thursday it ended 2008 with proven reserves of 14.09 billion barrels of oil equivalent (boe) in Brazil, up 1.2 percent from 2007.
Crude and condensates totaled 11.97 billion barrels, while natural gas reserves totaled 337,624 billion cubic meters.
Petrobras Oil Reserves Are ‘Comfortable,’ Itau Says
(Bloomberg) -- Petroleo Brasileiro SA’s proven oil and gas reserves put the company in a “comfortable position,” according to Paula Kovarsky, an oil and gas analyst at Itau Corretora.
Reserves fell 4.4 percent to 11.2 billion barrels of oil and natural-gas equivalent at the end of last year, according to U.S. Securities and Exchange Commission standards, as lower oil prices made some resources uneconomic, Rio de Janeiro-based Petrobras, as the company is known, said late yesterday in a statement.
Not just a refinery, a super refinery
The refinery’s most interesting feature is that it is one of the world’s most complex. This enables it to turn cheaper heavy crudes into top quality products that meet increasingly tough specifications in western fuel markets. By doing so it will be able to compete with almost every refinery in the world. Because of its location in Jamnagar, Gujarat, India, it’s also perfectly situated to dispatch cargoes quickly and efficiently to a global customer base.
Obama energy goal ambitious but attainable: IEA chief
TOKYO (Reuters) - President-elect Barack Obama's aim to greatly increase U.S. alternative energy production is ambitious but attainable, the head of the International Energy Agency (IEA) said on Friday.
Poll: Americans believe Obama will deliver despite down times
Their clear priorities are the issues that hit home. On a list of campaign promises, five pocketbook issues take the five top spots, among them expanding health care for children and reducing health care costs. They include doubling the production of alternative energy, a step Obama says would help reduce reliance on gas and its volatile market.
Thailand: Strong Case For Govt To Float the Price of Gas
If anything, huge subsidies for liquefied petroleum gas (LPG) and the gas shortage last year could serve as a reminder to the National Energy Policy Council that floating the gas price would be the best solution to ensure efficient use of the fuel.
Australia: Govt criticised for unleaded fuel shortage
The Motor Trade Association says the shortage of unleaded fuel is having a substantial effect on some petrol stations around Adelaide.
A delayed Mobil fuel tanker is being blamed for the shortages and it is the second time in nine days that some stations have been left without unleaded petrol.
The Association's executive director John Chapman says it is up to the Government to ensure a constant supply of fuel throughout the state.
Energy Lessons for Europe and the U.S. from the 1973 Arab Oil Embargo
Across eastern and central Europe, anger is rising over the cutoff of Russian natural gas due to the dispute between Russia and Ukraine. While feeling angry is justified in such a crisis, the governments in this region would be best advised not to get mad at Russia but to get more secure in energy supplies and smarter in energy usage. They and the Obama administration could learn valuable lessons from how the United States responded to the 1973 Arab Oil Embargo.
Grazing Assistance Available Through NRCS
"With feed and fuel prices on the rise, more and more farmers are considering grazing for their livestock operations," said Malot. Farmers like Forrest Stricker of Wernersville, Pennsylvania have gained immense benefits from switching to grazing and letting their cows work for them.
Why We'll See $200 Oil Soon (David Kent, President of Rigzone)
Will oil prices drop to $20, or will they catapult to $200? In the short-term, it is anyone's guess. In the long-term, the answer is simple -- if we use a little history and a bit of common sense. Growing up in an oil family and working within the industry for the past decade, I have experienced some interesting times. The oil and gas industry is notorious for its cyclical nature and dramatic ups and downs. And no matter how many times you go through these cycles, it seems "When it is up, we don't see how it can ever go down; and when it is down, we don't see how it can ever go up," as a good friend recently summed it up. With that said, I do not believe low commodity prices and rig counts will be here for long. Simply put, our industry rises and falls with the price of oil and gas, and two simple truths will provide upward pressure on prices for decades to come. Those truths: 1.) supply is finite, and 2.) the world population continues to grow at a tremendous rate.
Mexico, Pakistan face 'rapid and sudden' collapse: Pentagon - Report tries to forecast 25 years into the future
A new Pentagon report that tries to predict the type of challenges the U.S. military will face over the next 25 years warns that Mexico and Pakistan could face a "rapid and sudden" collapse.
...Expect severe shortages. By 2012 "surplus oil production capacity could entirely disappear and as early as 2015, the shortfall in output could reach 10 million barrels a day."
"The implications for future conflict are ominous," it says. "If the major developed and developing states do not undertake a massive expansion of production and refining capabilities, a severe energy crunch is inevitable."
Robert Bryce - Crunching the Data: The Ten Most Coal-Reliant Countries
While there’s no question that other sources of energy -- particularly nuclear and natural gas -- can provide large amounts of electric power and do so with far less carbon dioxide emissions and pollutants than coal, the problem remains one of scale. (Renewables are fine, but they cannot provide the baseload power and large quantities of power needed in the near term.) But there are significant financial, political, and structural constraints on those alternatives to coal. And those obstacles take us back to a familiar question: If not coal, then what?
A bit of data crunching from the latest BP Statistical Review of World Energy yields a list of the most coal-reliant countries. And that list provides some hints as to why achieving a global carbon emissions reduction plan will be so difficult.
Serbia seeks partner to build two power plants
BELGRADE (Reuters) - Serbia announced on Friday a tender for the construction of two coal-powered thermal plants, seeking partners for a 2 billion euro ($2.65 billion) investment, the energy ministry said.
Indian coal imports growing at 17% annually
BL reported that coal imports have recorded a compounded annual growth rate of 17.1% between 2003 and 2008. Simultaneously, exports of coal have come down during this period with a CAGR of (-) 0.1%.
Saudis go it alone with new cut in oil output
Saudi Arabia said yesterday it had unilaterally cut oil production by more than its agreed Opec limit.
Riyadh's decision to step outside the group underlines how severely Opec, the oil cartel that supplies about 40 per cent of the world's oil, is struggling to reverse a slide in prices, in spite of the record 2.2m barrel a day cut it announced last month.
Of continued slide and OPEC's resolve
(MENAFN - Arab News) Producers are deeply concerned because the demand is dropping faster. And there are now very apparent steps to somehow balance the markets. The very issue of demand security that OPEC has been highlighting all these turbulent years seems so pertinent at this stage.
Aramco seeks 400,000T diesel for March-Dec
Saudi Aramco is assessing offers into a semi-term tender to buy a monthly 35,000-40,000 tonnes of gas oil from March to December supplies, traders said on Friday.
The tender closed on Thursday, with offers to stay valid until January 28. The cargoes of 0.5 percent, if awarded, are slated for the region on the Red Sea.
Saudi Arabia has turned a net importer of diesel for at least over the last two years, thanks to petrodollar investment on road and building infrastructure.
Qatar, Exxon, Total Declare ‘Force Majeure’ on LNG
(Bloomberg) -- Exxon Mobil Corp., Total SA and Qatar Petroleum declared “force majeure” after halting output of liquefied natural gas for a ninth day at the Qatargas-1 plant, the project’s biggest buyer said.
Europe gas crisis prompts jokes in Russia, Ukraine
Russian Prime Minister Vladimir Putin and Belarussian President Alexander Lukashenko are roasting Ukrainian President Viktor Yushchenko on a skewer.
Lukashenko asks: "Vladimir Vladimirovich, why are you turning the skewer so quickly? He won't be cooked well enough."
Putin: "Hmmm. When I rotate it slowly, he steals the coal."
Regulators rudely stir Woodside from California dreaming
THE Californian gas supply dreams of Australia's biggest oil and gas producers are dead in the water.
Trumpeted in recent years as a $60 billion market ready for the taking, poor market conditions and California's tough and highly political permitting process for offshore gas-receiving terminals have now killed off the aspirations in that area of both BHP Billiton and Woodside.
Zimbabwe: Govt Departments in Fuel Crisis
A FUEL shortage is looming in the country amid revelations that government departments have run out of fuel.
Officials at National Oil Company of Zimbabwe (Noczim) on Tuesday told businessdigest that most government departments had not received consistent fuel supplies since December because of foreign currency shortages.
Nepali major parties to declare vital sectors "shutdown prohibited zones"
KATHMANDU (Xinhua) -- The major six political parties of Nepal on Friday reached an agreement to declare the indispensable service sectors such as hospital, industries, transportation and custom offices as "shutdown prohibited zones".
French strike cuts 11,235 MW in nuclear capacity-CGT
PARIS (Reuters) - The French CGT union said on Thursday a 24-hour strike in the nuclear sector had cut 11,235 megawatts (MW), or 17 percent of the nuclear capacity, by 1530 GMT, pushing intraday power prices higher.
The union warned that if the management of state-backed nuclear energy operator EDF did not listen to the demands of the workers, who are striking over pay and working conditions, those actions would be repeated.
The strike was taking place in 17 of France's 19 nuclear power plants, the official said.
Korean firm starts feasibility study for Bataan nuclear plant revival
MANILA, Philippines - Experts from Korea have started a feasibility study for the possible revival of the Bataan Nuclear Power Plant (BNPP).
Froilan Tampinco, president of National Power Corporation (Napocor), said in an interview that the team from the Korea Electric Power Corp. (Kepco) arrived in the country Monday and initiated the pre-feasibility studies in the more than 20-year-old and the only nuclear power plant in the Philippines.
Army Green: Why the Pentagon’s Energy Plans Matter
What does the U.S. Army’s planned acquisition of 4,000 golf-cart-looking electric vehicles have to do with America’s clean-energy future?
A lot, potentially. It’s the latest sign that the Pentagon, reeling from high fuel costs and an even higher cost in human life from long and vulnerable fuel-supply lines, is finally starting to take energy efficiency seriously, seven years after first flagging the issue. And when the Pentagon throws its weight and considerable budget behind something, from aviation to the Internet, the innovations inevitably tend to trickle down to the rest of the national fabric.
As the world is looking at ways of fighting an imminent energy crisis and fixing ecological imbalances, adopting green practices has become a business imperative and is not merely a passing fad. What is reinforcing the need to go green is the association of green technology with improvements in business productivity and a significant reduction in energy costs, in addition to its contribution to a healthier environment for the entire ecosystem.
World Oil Demand Poised for First Two-Year Decline Since 1983, IEA Says
(Bloomberg) -- Oil demand will fall for a second year, the first back-to-back contractions since 1983, as a deepening recession erodes consumer spending, the International Energy Agency said.
The adviser to 28 nations cut its global 2009 forecast by 1 million barrels a day on expectations the economic outlook will deteriorate. The IEA estimates consumption will shrink 0.6 percent to 85.3 million barrels a day. Forecasters including OPEC, JPMorgan Chase & Co. and Deutsche Bank AG have already said demand will fall this year.
“It’s a major shift,” said Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd. in London who worked at the IEA. “The weakness in oil demand is significant. This year there will be a lot of attention on their forecasts and they don’t want to be accused of being behind the curve.”
Oil falls after IEA demand report
LONDON (Reuters) -- Oil slipped towards $35 a barrel on Friday after the International Energy Agency sharply cut its forecast for world oil demand and two of the biggest U.S. banks reported massive losses.
...U.S. light crude for February delivery was down 7 cents at $35.33 a barrel by 6:30 ET, after hitting a low of $34.77. The contract, which expires on Tuesday, touched a low of $33.20 on Thursday, the weakest in nearly a month.
The price of oil for delivery in February has fallen about 14% so far this week, as a string of dismal figures from major economies stung investor confidence and portended further weakness in oil demand in months ahead.
Ukraine and EU leaders seek to end gas cutoff
KIEV, Ukraine – The Ukrainian president hosted a bevy of European officials for talks Friday on the natural gas crisis, throwing Russia's plans for a weekend summit in Moscow into disarray.
Russian gas cutoff energizes nuclear comeback
Milan, Italy – Europe's natural gas crisis is causing a nuclear fallout of sorts.
With the squabble between Russia and Ukraine leaving much of the continent with uncertain gas supplies, some governments seem to be getting over their "Chernobyl complexes" and are returning to nuclear energy, hoping it will provide a form of reliable, domestically produced energy.
Alexander Medvedev: Russia Is Trying to Get Gas to Europe, Ukraine is the obstacle
For all the obfuscation surrounding the issue, the reason this has not happened is simple. Gazprom, as required by the agreement, notified Ukraine of its intention to pipe gas to European customers on Tuesday, Wednesday and again yesterday. We opened the taps to start the flow. The Ukrainian transit company, Naftogaz Ukrainy, refused to let the gas through, citing a flurry of contradictory reasons.
Oil price weakness pressures Iran, Venezuela: CIA
WASHINGTON (Reuters) – Weak global oil prices threaten to destabilize major oil producers Iran and Venezuela, but Russia is better able to manage because of its sovereign investments, CIA Director Michael Hayden said on Thursday.
"Here's one (event) that's destabilizing, but it could be positive," Hayden told reporters.
He said global prices hovering around $40 per barrel could increase the bite of sanctions aimed at persuading Iran to give up its nuclear program, and could shake the government of Venezuelan President Hugo Chavez, who has been an irritant to U.S. policy in Latin America.
Senator to push energy issues as Interior chief
WASHINGTON – Sen. Ken Salazar said Thursday he would help wean the U.S. off foreign oil if he leads the Interior Department, telling lawmakers at his confirmation hearing that he would seek to expand renewable energy on public lands and promote the "wise use" of traditional energy sources.
Now everyone worries about a deepening of the global recession, wondering if we'll ever see $50+ oil again. Here's a quote from today's AP report summing up the current attitude:
" "The bull oil era is officially over," said Phil Flynn, an analyst at Alaron Trading Corp..."
I think that says it all, don't you? Still, it might be a little bit premature to write off a future rise in the price of crude oil.
Just as Matthew Simmons was a little early/wrong in his warnings last summer of $9 and $10 gasoline and possible oil shortages , I think the same might be said (in retrospect) about this latest call from Flynn.
It makes me wonder if this quote might be nearer to heralding a bottom in oil prices than anything else.
Brazil's Petrobras cancels platform tender
SAO PAULO (Reuters) - Brazil's state-run oil company Petrobras said late Thursday it canceled tenders for the construction of the P-61 and P-63 production platforms as it considered the prices bid too high given current market conditions.
Norway's Frontline, one of the world's biggest oil tanker owners, said today oil companies were storing "about" 80 million barrels of crude oil at sea, possibly the highest in a quarter of a century.
"We think it's about 80 million barrels...but we are not 100% certain," the acting chief executive officer Martin Jensen told Reuters.
He said some 30 to 35 very large crude carriers capable of carrying two million barrels each and 10 Suezmaxes with a capacity of a million barrels each were being used by oil companies for floating storage in the last few months.
The Peak Oil Crisis: Renovating Suburbia
There has been a lot written lately about the coming demise of America's suburbs. The general thesis is that without cheap fuels for cars, lawnmowers and heating, suburban living will become untenable.
People will be forced to abandon their homes and make their way to cities, small towns or rural communities where they can survive without gasoline. There is, of course, another side to this coin.
I will be the among the first to grant that suburbia is a creature of cheap energy, particularly gasoline, and unless there are some radical changes in the way we power our homes, feed and clothe ourselves and move about, there will be great difficulties ahead. There are two major problems that need to be solved in order to keep the widely scattered housing of suburbia habitable without cheap energy -- transportation and excessive residential consumption of energy.
Surviving in the Tough Times Ahead
Ian Sample's "Billions face food shortages, study warns", based on findings by researchers at Washington and Stanford Universities, points out some of the progressively difficult conditions that will likely lead to widespread starvation in times ahead. Its conclusions fit well with ones posed in Paul Chefurka's "World Energy and Population Trends to 2100" and "Peak Oil, Carrying Capacity and Overshoot: Population, the Elephant in the Room".
Such reports, certainly, are cause for alarm and dismay. This is because, with increasing credibility, they warn that humankind is quickly approaching critical choices in terms of whether we, collectively, want to undertake the necessary modification to shape the world to reasonably serve life in the future or plan to bequeath a hell onto the generations of people and other life forms that come after ours.
Only part of TVA Coal Ash Disaster is Being Told
If you hold a lump of coal in your hand, it seems harmless enough. But pulverize this, spray the powder into a boiler furnace, and you produce four things: 1) the Electric Power you are seeking; 2) Greenhouse Gases and particulates that go, unscrubbed, up chimneys and into our atmosphere; 3) Coal Ash remains, which, for lack of a safe means of disposal, remain as billions of gallons of toxic waste; and 4) profits for investors.
Why is this waste so many times more toxic than the original coal? Because the traces of unburnable arsenic and other heavy metals in the coal are concentrated a hundred times over in Coal Ash. Eat a helping of powdered coal, and it will make you sick. Eat a helping of Coal Ash, and you will likely die.
Australia: Sustainability task a big one
t is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today:
● Securing the supply of reliable and affordable energy; and
● Effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply.
The New Paranoia: Hedge-Funders Are Bullish on Gold, Guns, and Inflatable Lifeboats
During the final months of 2008, as the financial markets imploded, talk on trading desks turned to food and water stockpiles, generators, guns, and high-speed inflatable boats. “The system really was about six hours from failing,” says Gene Lange, a manager at a midtown hedge fund, referring to the week in September when Lehman went bust and AIG had to be bailed out. “When you think about how close we were to the precipice, I don’t think it necessarily makes a guy crazy to prepare for the potential worst-case scenario.”
Preparations, in Lange’s case, include a storeroom in his basement in New Jersey stacked high with enough food, water, diapers, and other necessities to last his family six months; a biometric safe to hold his guns; and a 1985 ex-military Chevy K5 Blazer that runs on diesel and is currently being retrofitted for off-road travel. He has also entertained the idea of putting an inflatable speedboat in a storage unit on the West Side, so he could get off the island quickly, and is currently considering purchasing a remote farm where he could hunker down. “If there’s a financial-system breakdown, it could take a year to reset the system, and in that time, what’s going to happen?” asks Lange. If New York turns into a scene out of I Am Legend, he wants to be ready.
Turkmen leader fires top officials
ASHGABAT, Turkmenistan – Energy-rich Turkmenistan's president has fired almost one-third of his Cabinet and the head of the state oil company in a large-scale reshuffle reminiscent of his eccentric predecessor's frequent purges.
Toronto Power Outage Shuts Subway, Leaves Homes Cold
(Bloomberg) -- A power outage in Toronto’s west end shut part of the subway service in Canada’s largest city and left homes without light and heat during frigid temperatures.
A section of the Bloor-Danforth line, which provides east- west transport in the city of 2.5 million people, isn’t operating and service has been replaced with shuttle buses, the Toronto Transit Commission said today on its Web site.
Power to the city’s western side has been cut since about 10 p.m. yesterday, when a broken water main flooded a power facility, Toronto Hydro Corp. said. Customers will be without power for a minimum 18 to 24 hours from the time of the outage, the power authority said on its Web site.
China Plans $14.6 Billion High-Voltage Lines Spending
(Bloomberg) -- State Grid Corp. of China, the nation's largest power distributor, plans to spend more than 100 billion yuan ($14.6 billion) to build ultra-high voltage electricity lines over the next three to four years.
Meltdown 101: Why gas prices rise while oil drops
The companies that process crude into products such as gasoline are sharply cutting production, in part because demand has fallen off so much. Less production means less supply, which tends to push prices up.
The gasoline producers are trying to make some money in the wake of a dismal 2008. When crude prices were so high in the first half of last year, refining margins - the difference between what refiners pay for crude and what they get for products they make from oil - were dismal. In the latter half of the year, margins improved as oil prices receded, but refiners continued to struggle because people were simply driving less and buying less gasoline.
End of gas cap didn't cause price spike
The state's suspension of a gasoline price cap hasn't resulted in excessive or inexplicable increases at the pump, according to a report analyzing Hawai'i petroleum pricing data.
The new report also calls attention to the potential for one or both of refineries here to close because of their slim profits and deteriorating outlook.
U.S. solar panel makers prefer overseas
Tax credits for makers of renewable energy products could revive the U.S. industrial sector. But most find other countries more attractive.
Toyota, Honda Widen Production Cuts as Outlook Dims
(Bloomberg) -- Toyota Motor Corp. and Honda Motor co., Japan’s biggest automakers, widened production cuts amid forecasts that U.S. auto sales may hit a 27-year low this year.
Honda trimmed its domestic production plan by a further 56,000 vehicles to 1.17 million vehicles in the year ending March. Its larger rival is paring output through April 3 at U.S. and Canadian plants.
Fuji Heavy Industries Ltd., the maker of Subaru cars, and motorcycle maker Yamaha Motor Co. also announced production cuts today, as the global recession causes vehicle sales to tumble. Sales in the U.S., the world’s largest auto market, may drop to 10.5 million this year, General Motors Corp. said yesterday.
Nuclear the clean way to go - engineers
AUSTRALIA will probably have to go nuclear to tackle climate change, engineers and scientists say.
They say nuclear power is the only reliable, proven source of electricity with a minimal carbon footprint.
They're tipping 15 per cent of the country's electricity will come from nuclear reactors by 2050.
And the first plant could swing into action just 10 years after approval is given.
Paint for victory: new weapon in climate war is brilliant white roofs
Painting your roof white could help slow climate change by reflecting sunlight back into space. So would painting the moon. Wild eco-goose chase or radical thinking?
Switching crop variety could help solve climate change
FARMERS in Europe and North America could help alleviate climate change by changing the varieties of crops they grow, claimed a study by scientists at Bristol University.
Selecting varieties with increased solar reflectivity could lead to an annual global cooling of over 0.1 degrees C – almost 20 per cent of the total global temperature rise.
Lagging behind on energy efficiency
The obstacles that prevent homes from improving energy efficiency are well known. They relate to a lack of access to capital, payback periods that are often too long, a poor understanding of the benefits involved and also the fact that households have to be proactive to improve their energy efficiency – simply, there is too much inertia.
Pakistan on brink of ‘water disaster’
NEW DELHI: Pakistan is on the brink of ‘water disaster’ as a new study has predicted accelerated melting of glaciers and depletion of massive waters in the Indus Basin Rivers. It is believed that Pakistan’s water availability would plunge to 800 cubic meters per capita annually by 2020 from the current 1,200 cubic metres. Just 60 years ago, 5,000 cubic meters of water was available to every Pakistani citizen.
Contact
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Honda explores mobility in 2088
Interesting piece on two marketing departments' pitches for mobility in the future. From greatergreaterwashington.org.
http://greatergreaterwashington.org/post.cgi?id=1591
There's been a ton of oil buying in recent weeks --- by producers and speculators -- just to put the stuff into storage or take it off the market. Now that storage space is just about tapped out, there will be even less demand. It's hard to see anything on the horizon that's going to bring prices back up short of (1) a major geopolitical event, (2) OPEC getting serious, or (3) producers shutting down unprofitable operations. I vote for #3, but we won't see the effect until summer, maybe.
"(2) OPEC getting serious, or..."
what is opec producing currently vs july, '08 ?
According to OPEC's own Monthly Oil Market Report they produced 32.523 mb/d in July of 08. In December they produced 30.282 mb/d, a drop of 2.241 mb/d since July. They are in January, according to various reports, producing about 2 mb/d less than December.
Ron Patterson
thanks ron.
so it would seem that opec is getting serious.
Meanwhile, it appears that Russia' net exports in 2008 fell relative to 2007. Saudi Arabia will show an increase in net exports in 2008, but I estimate that they will be around 700,000 bpd below their 2005 rate.
Of the other top 10 net oil exporters, it looks like all but Algeria and the UAE showed lower net oil exports in 2007 versus 2005.
IMO, in 2009 we are looking at a combination of involuntary reductions in net exports + voluntary reductions.
or:
4)OPEC has been serious all along
It may well be that all this floating storage is merely the flipside of less oil in transit.
In any case, there's not been enough buying to cool down the contango. I wonder why there isn't even more storage.
I once thought that the oil services companies, one of which I work for, were well positioned to weather the storm of the current low oil price. But, even with billions of dollars in backlogs lasting us for at least a year, things are looking scary. Timing is everything. If the price stays in the thirties for this whole year, most of the oil services companies will feel a 1980's flashback.
the hughes rig count for us gas well drilling as of 1-9-09 was 1239, down 28(3%) for the week and down 170(13%) from year ago levels. the last time the count was this low was about 6-'05 and dry gas production was about 51 bcfd and falling.
So, when Houston starts loosing jobs at Detroit's pace, will Washington give us a dime? Or will the money be saved for the worthy?
There won't be any money left, at least any worth anything.
Alan
Given that the Texas political machine produced the likes of Phil Gramm and Shrub 43, do you really think Texas is worthy? Our banking bubble blowing mess can be directly attributed to the free market insanity of Gramm and Ol' Ronnie RayGun. Besides, are there any electric car makers in Texas? Maybe Prez BO will "save" Texas by funding Pickens' wind farms.
E. Swanson
So you "have a dream" also. I do not think so.
I called around this AM looking for an air drilling rig for next month - shallow stuff in N Oklahoma. The last guy, who has the best equipment, indicated a better deal if I could drill this month instead of next. I figured time to be four months out, not two weeks. There are a lot of different segments of the market, but this one had been busy and booking four to six months out just a few months ago. I doubt that I can even get the paperwork ready in two weeks.
According to CNBC a minute ago, Brent crude was 49.05, WTI was 36.63 (I assume that they are using the same month).
$49.05 - $36.63 = $12.42
Brent normally trades at a discount to WTI; last year the average annual WTI spot price was $2.73 higher than Brent, so in round numbers WTI is trading about $15 below the recent premium to Brent.
The price of WTI does not reflect the world market for oil at all at present.
http://www.upstreamonline.com/market_data/?id=markets_crude
Spot prices range from $44 to $48 for all except WTI and Alaskan oil.
This has to be a local effect due to excess supply at Cushing. US demand is down more (or supply has held up better) than in therest of the world.
With this sort of imbalance it is no wonder companies are buying floating storage.
Looking at the most recent four week running average, it looks like total product supplied in the US was down by about 500,000 bpd, about 2.5%, over the same time period two years ago, but over the same time period it looks like US crude oil production was down by about 350,000 bpd, so the net decline in the demand for net imports was relatively low.
In any case, I certainly agree that oil prices at Cushing do not reflect world oil prices.
nd sweet is about $22 (wednesday):
http://crudeoilpostings.semgrouplp.com/
You're making the same mistake you made the other day! Don't be so quick to believe numbers when you don't see clearly stated what the numbers stand for.
You're comparing February and March. Yes, the spread is bad (a bit less than 5$), but why do you seem to want it worse so badly?
To be precise, CNBC may be comparing different months. If they are using different months, why?
Whichever months Bloomberg is using, they are showing a spread of $9.47, which would be about $12 below the recent WTI premium to Brent.
http://www.bloomberg.com/markets/commodities/energyprices.html
February Brent expired yesterday, that's why.
So, is Bloomberg comparing apples to apples?
WTI and Brent are different grades, not to mention the Cushing bottleneck issue so I don't think you'll ever have a real apples to apples comparison.
I don't know how they get their spot prices but the hours are off (and maybe the days too) so at best it's a rough reading.
I'd rather look at the futures since they're so heavily traded and since you've got futures for this summer, next year and so on to compare.
So, Bloomberg is comparing the same monthly data for WTI and for Brent?
If so, my point is that the current spread is about $12 below the recent premium that WTI had relative to Brent.
No: they're comparing spot prices (and we don't know how they came up with them).
I don't know where you got the figure for the "recent premium" and how you figure it's set in stone in spite of the lower prices and all but 12$ is clearly an exaggeration.
What we know is that the spread between the March futures is a good bit under 5$, which is indeed indicative of a serious glut at Cushing. We also know that the spread between the February futures was worse. Clearly, the spot spread might well be even worse but what are you trying to prove with your 12$?
As noted up the thread, the average annual spread in 2008 between WTI and Brent was $2.73 (EIA), which is what I define as "a recent premium," which BTW is the historical norm, Brent traditionally trades below WTI.
I am not trying to prove anything. I am trying to quantify the spread between where WTI normally trades relative to Brent, and where it is currently trading.
Mish has some comments on this today.
http://globaleconomicanalysis.blogspot.com/
http://www.upstreamonline.com/market_data/?id=markets_crude
IMO people around the world (not just gamblers) are trying to hoard oil above ground at the moment, filling up their strategic reserves etc - when there is no more storage left to fill demand and prices will fall some more ... so why the contango?
It looks to me that Cushing storage is closer to full than the rest of the world - probably because there are more gamblers in the USA.
Mish's assertion is that WTI is a leading indicator of world oil prices. It's possible I suppose, but given what world oil prices are doing, it seems more likely that WTI is out of sync with world prices, because of localized conditions in the mid-continent, but time will tell. In any case, I would think that many Canadian tar sands operations and some other high cost conventional fields are not covering operating costs right now.
Brent blends used to trade at about $1. below WTI, which was at that time the transportation differential. Essentially the same unrefined product discounted for freight, or "placement differential." A lot of these old rules of thumb have gone by the way, but historically held a lot of sway.
I believe that Brent is also a lower gravity oil.
Contango is here because the one who physically stores oil can lock in his profit now, regardless of future price. That's why everybody is hoarding. To turn this the other way around, the only way to convince somebody to store oil now is to pay him a risk free premium. And that happens when futures play contango.
Producers are desperate to sell oil, so spot goes down. As spot goes down, so do the futures. Futures have to fall to a point where some speculator (or hedger, but the hedger is also a kind of a speculator) is ready to take risk thinking the price is low enough to bounce up and he enters the long. His counterparty, the short, will buy spot and sell short later month only if there is price differential.
The rollover loss will be significant and possibly at some point of supply demand mismatch rollover will cease as it did with corporate loans.
The 101 of economy , possibly unknown to Bernanke, is excess liquidity cannot compensate globally dwindling GDPs.
An interesting question is for how long can some OPEC members, such as Iran, and Venezuela, stand out low oil?
And what about Russia?
Ruble is devaluated the fourth time today. The productivity of Russian industry, whatever that is ( has anyone ever seen a simple lawn mover made in Russia?) was, according to last words of German Gref as secretary of economy, at the level of Botswana's. After that Czar Putin made him CEO of Sberbank the lender of last resort of Oligarchs.
Imo the situation with oil is dangerous in the short run.
Russia has to disintegrate further. A wounded tumbling Russian bear is
an unpredictable beast the grumbling and growling bear is just an unpleasant pet.
hjahfran - You must have the highest IQ in the world to say that possibly Bernake does not understand economics 101. Either that, or it is among the lowest.
I would suggest that if Russia, Iran and Venezuela coordinated a 1-month oil export holiday, that they would not have to withstand low oil prices longer than that.
I don't fully subscribe to the demand destruction argument, but there does seem to be much more oil around than at this time last year, otherwise Cushing wouldn't be full.
How much of this inventory that seems to help sustain the contango situation is caused by
- refineries taking their sweet time to ramp up production at better crack spreads
- hedge funds/investment banks dumping their physical crude to meet redemptions/shore up the bank balance sheets
- small producers having to sell everything they produce to generate cash, now that their credit lines are less certain
In particular, is there anecdotal evidence of the final point, that small producers are essentially conducting a firesale to generate as much cash as possible before calling it quits?
When somebody dumps their physical crude, net amount of physical oil stored is not changed. That's if all storage is accounted in commercial inventories and I suspect it is to a high degree (at least in OECD countries). Inventories rise or fall only when the difference between production and consumption exists.
There are probably some storage not accounted for, for example Chinese don't release accurate data often and they were caught with high inventories after Olympics and now are dumping it probably.
I'm not sure how much storage small producers have that is not accounted. Probably some, as lot of these producers are located in the countries that don't report data. However, why should they keep high inventories in the first place? I bet they didn't when price was 140$ and now the price is falling their instinct is to sell ASAP.
I think demand destruction is real. Producers are now rushing to sell, to get cash. Think Russia, Venezuela etc... These countries run unsustainable deficits and debt. They are desperate for cash. It's very likely that most OPEC countries have similar problems (to a lesser extent, of course). So I don't expect to see any production cuts (maybe from the SA). Even if they cut, the fact that ready excess capacity exists will keep price low. As soon as price rebounds, somebody will pump more.
China is telling a different story. They might be lying of course. I, for one, am not claiming to know what "their instinct" is.
Found this (opens only from google cache):
http://209.85.129.132/search?q=cache:WNVGCPsY8AEJ:www.chinastakes.com/st...
"China's Fuel Export Surge Eases Inventory
January 14,2009
by CSC staff, Shanghai
With international oil prices hovering at low levels, calls for “buying crude oil at low prices” are growing louder in China, and China’s biggest crude oil depot began to import oil at the end of last year. But according to figures from China Customs, crude oil imports in December totaled 14.37 million tons (about 3.5 million barrels per day), only 7.6% over November’s number, the lowest in 2008, and 17% lower than in March, with the year’s highest monthly import.
In clear contrast, December’s China’s oil product exports reached 2.01 million tons, an increase of 58.3% over the previous month and 66.1% year on year.
According to Wang Zhen, an expert at the China University of Petroleum, the slowdown in crude oil import is due mainly to weak domestic demand. With production declining from China’s pillar industries, such as power, steel, non-ferrous metals, and automobiles, energy demand is decreasing accordingly.
Tong Lixia, a researcher at the Chinese Academy of International Trade and Economic Cooperation of the Ministry of Commerce, says that China’s strategic oil depots had all stored oil to capacity and there was no room now for more oil inventory even if China wanted to buy at today’s low price.
Another factor affecting China Customs’ figures may be the time difference between order placement and spot buying.
For Wang Zhen, three factors have led to the large increase in oil product export. First, news about China’s oil product prices was released in December. Due to price cut expectations, many commercial oil depots cleared their inventory so they could fill up after the price cut, and oil inventory gathered in the depots of Sinopec and PetroChina. Exporting became the best way to reduce inventory.
Second, China mostly suspended oil product exports in the middle of 2008 due to the oil crunch and to guarantee supplies during the Beijing Olympic Games. The current increase in oil product export is a normal rebound.
Last, China’s two petroleum giants are more than willing to export oil products to neighboring countries and regions where prices are higher."
These are partial numbers, yet they point to stable net imports in spite of the crisis. This to you is dumping?
Some other numbers from the customs: Dec crude imports up 12% YOY (which is a bigger increase than the product exports increase), product imports 3.6 mt (still a good bit more than the exports).
That said, of course they're not going to import more than they're consuming for very long.
They're building additional storage but it won't amount to a lot compared to amount of production the Mid-East needs to cut.
They are still importing less than in March 2008. and export is growing faster than imports. Trend may be changing though. Falling inventories in China would be supportive to price, as it would balance increase in OECD inventories to some extent. However, we still don't know how much they consume and level of their inventories.
No, they are not. They are comparing near term contract prices (on TV, CNBC and Bloomberg.) The Brent contract expires one month from today and the WTI contract expires Tuesday. There is part of the difference. The spot price is posted by the agencies involved and are accurate to within minutes of the last trade. Spot prices can be found at Bloomberg.com/energy and right now the difference is about $9.50.
Ron Patterson
Just a thought.
WTI production is in decline. Brent production is collapsing. Shipping rates crashed. In short, the difference may be caused by allocation? Possibly, demand in UK/Europe may not have decreased as it did in the US, agrevating the price difference.
My laymen's reasoning.
The Brent contract expired yesterday. The WTI contract expires three trading days prior to the 25th, which should be Tuesday.
So the current Brent contract is almost one month out from the current WTI contract. A better guage of the difference between Brent and WTI can be found by looking at the spot price. Right now they is just over nine dollars difference.
Ron Patterson
A lot of financial sites use the "most traded" contracts, which can result in comparing apples to oranges.
most traded apples to most traded oranges.
As of 12pm EST.
Spot Brent 44.80
Spot WTI 34.85
Mar Fut Brent 47.25
Mar Fut WTI 42.85
The February WTI contract closed at $36.51. The March contract closed at $42.57. The nearest term Brent contract, March, closed at $47.60. That is $5.11 above the March WTI contract.
NYMEX Crude Oil (Light)
From here you must click on "Brent Crude Oil" as Brent does not have a seperate URL.
The NYMEX crowd are the masters of "game theory." When, in the 90's, Metalgelselshaft (sp ?)[MG] hedged everyone long in the front month, they played against them, driving the front month down to an untenable roll to the next month [bankrupt MG]. Recently, as prices rose to unrealistic highs, the majority of the oil producers sold into the market, and the majority were subject to margin calls. So the NYMEX drove prices to totally unrealistic high levels to force them to sell out of their hedges because of the margin calls. [ e.g., Semgroup went bankrupt] Then as the prices fell, virtually ALL of the airlines, trucking companies, etc were talked into hedging these "now" bargain prices. At which time the NYMEX players are now FORCING the front month lower and lower [the MG strategy] to force these long players to get out of their long contracts (they certainly cannot afford to keep rolling them). If I wanted to play in the oil futures, at this point I would choose the Brent contract.
Brent has a "grey" futures market.
There is no control over all contracts sold, open interest, and such.
Just as anyone who owns particular stocks can write and sell derivative options on these owners of the commodity oil can do so.
The premium on brent is not due to supply nor to demand.
However Russian Oligarch Deripaska had and still has to be bailed out as he lost a fortune in grey futures on industry metals traded at LME.
If Russia is behind holding up Brent futures it could happen Brent price can drop suddenly and sharply as did nickel.
Fear about the financial crisis seems to be picking up again...
The Crisis Is Global
Fear about the financial crisis seems to be picking up again...
All we're doing now is waiting for the US to run out of $$$.
This latest strategy of Bad Banks(citi just did this)
and ringed fences of Tier 3 Toxic(fraudulent) debt
the latest gambit.
The extension of debt to cure debt caused world economic implosion is mathematically
impossible.
"Well, well, well. Olmert got away with dissing Bush and pissing on him not once but twice. We now have proof that our media owners don’t give a hoot about Israel openly insulting our leaders. Russia and China did notice this and put it in their files. Waltzing our rulers into a position where Israel can insult them will be a great game, eh? I am betting on this. But there is this other matter: the European attempts at insulting Russia while begging for energy products from Russia. This is even more insane than the sick US/Israel relationship. For some queer, besotted reason, European leaders think, if they super-irritate Russia, Russia will bend to their collective wills and shrink in size and become their slave state rather than the reverse. This is sheer madness."
http://emsnews2.wordpress.com/2009/01/15/insulting-russia-fails-to-bring...
Contraction of leverage back to 10:1 continues apace.
you can freight an object from China for the cost of fuel.
There's no going back and trying will just lead to nuclear
conflagration.
With Paulson just making up numbers now.
Remember way back when we were told TARP
had only $15 billion when the car makers
were in town looking for handouts?
Bloomberg yesterday:
While departing Treasury Secretary Henry Paulson has allocated all the first half of the financial-rescue fund, at least $57 billion has still to be disbursed, leaving the department some room for emergency rescues. President George W. Bush notified Congress Jan. 12 of the intent to use the next $350 billion of the TARP money, triggering a 15-day period in which lawmakers can object.
It's being tried.
Remember the missile defence shield presently being set up in Poland/Czech Republic?
Remember the missile defence shield presently being set up in Poland/Czech Republic?
I'm laughing cause I'm out of tears.
Russia anticipates and is ready. By the time that
"shield" is up and running the Poland/Czech Republics
will be NATO less. The Ukraine(rook) has been lost and the EU(Queen)
is threatened:
"Look at how brave Germany is! Russia will lose credibility? Well, Europe will loose fingers and toes to frostbite! Not to mention, the collapse of their industries! In this wrestling match, the winner is whoever is stronger in the end. If Russia tosses Europe under the table, Europe looses. They will be sore losers and claim, Russia cheats, Russia started it, etc.
But this isn’t like the Palestinians and the Israeli Jewish invaders. The Palestinians are being offered nothing at any point in time. Less and less territory, less and less food, fewer and fewer civil rights. And one-sided fighting. But Europe CAN do something with Russia: BE NICE. This novel concept is hard to grasp! It is so much fun, barking orders, snubbing someone, killing their troops in bed while Putin is in Beijing for the Olympics.
But if one wants to conduct diplomacy on this level, expect to be destroyed in a nuclear exchange. What gives with Europe? Do they imagine they can escape the grasp of Russian power? If so, they better get used to living with a lot less natural gas. It is possible, incidentally. But they want the gas AND want to kick Russians around, at the same time. This is stupid."
Elaine Supkis
Worse than a crime, it's stupid.
"Some might even say that the ignorance reflected in that belief was almost on a par with the once popular notion that the U.S. would avoid recession in the face of losses of trillions of dollars of housing and equity wealth and the worst financial crisis since the Great Depression."
-financialarmageddon
mcgowanmc - If one were to stretch, maybe you could claim $1 trillion of fraudulent loans. For example, maybe someone who had no money got a $500,000 loan on a house that was only worth $250,000 (so $250,000 fraudulent). The effects of that can lead to more than $1 trillion in losses, but not to a conclusion that multiple trillions were fraudulent loans. That would be like making a claim after a year when there was a total crop failure, that all loans to farmers that year were fraudulent.
But that fraudulent loan was packaged with a thousand other fraudulent loans and sold to a 3rd party for a fat profit. The 3rd party hedged any risk through a CDS and then both parties to the CDS recorded it as an asset on their books. A CDS means you win, I loose. But if we both believe we are going to be the ultimate winner and we therefore both record the liability as an asset then then use that "asset" as collateral for further borrowing, further purchases of fraudulent loans, further hedging via CDS with the results of these transactions generating immediate fee payments AND being listed on the books as "assets," well then when this mess begins to unwind we discover every owes everybody else hundreds of millions of dollars and nobody has any cash because the ponzi scheme has come to an end.
You need to reflect on the fact that the total outstanding amount of derivatives is something like 10 times world GDP. In other words we have paper deals out there for amounts vastly greater than the potential productive capacity of all installed plant and equipment. Hard to believe; but true. Welcome to the "New Economy" where none of the rules apply, deficits do not matter, and the American way of life is non-negotiable. That great sucking sound you hear is America going down the tubes.
You know for certain that the ship of state is sinking and the crew on the bridge are utterly, helplessly, incompetently able to do a thing about it, when smoke and mirrors schemes like that "bad bank" thing are put forward as serious policy proposals - indeed, as just about the only proposal left in their bag of magic tricks.
(Sorry for the festival of mixed metaphors!)
"impossible for US authorities to apply a fiscal and monetary stimulus large enough to return output and unemployment to tolerable levels within the next two years"
Friends, don't be distracted by this B*llSH*T; there is not going to be a recovery resembling modern industrial western civilisation as we knew it, and the easy life that comes with it.
News to GM:
Some people may be wondering why Chevrolet is building a 6.0-liter V8 Tahoe with hybrid technology that costs over $56,000 and gets only a small increase in fuel economy (EPA ratings of 20 miles per gallon city and 20 mpg highway), and the answer is that a lot of people want a full-size truck that can tow over 6,000 pounds.
http://oakhillgazette.com
h/t http://ckm3.blogspot.com/
... so they can commute in it on city freeways.
For WHAT?
The boat (yacht?) that they use 3 times a year?
The four wheeler(s!) that again they use 3 times a year?
The snowmobile(s!) that they use once in a while...?
This is the typical use of this type of truck. (Although the exception is for agriculture, especially 5th wheeling, but that is the EXTREME exception). It's not like the Chevy commercials where a bunch of bricks are dumped in the back of the truck... No, these things are used to haul fossil-fuel using toys around and to leverage more consumption by the owner.
As CITIZEN_ANARCHIST would say, POWER DOWN. I own a Prius, have no use for such toys or for the ability to haul 6,000 pounds, and unless you are a farmer or in construction, most people don't have that 'need' either.
Like a rock... Or like (invading) Iraq...
Trucks, and even SUV's come in real handy for checking oil and gas leases, too. I would have thought that some of the really nice mid-sized SUV's would be cheap by now, but then those pesky oil prices dropped like a rock. Ford's do stand up best on lease roads, though. Had a friend who bought 4 new Chevy full size pickups for his pumpers since those old trucks kept breaking down, but the new ones were in the shop more than those 10 YO ones were. Some things you just have to have horsepower for, and oil and gas lease work is one of those things.
BS
C_A, i doubt you have a clue of what woodchucky is talking about. you ever even been near an oilfield lease operator(pumper) ?
Woody
What gungo-ho BS, you would wonder how a little 2 litre series 1 landrover conquered most of the known world
Probably because it didn't weight 3000 Kg and had a 6 litre motor
Neven
Neven,
Except for two of my pulling units, I do not have anything with more than 5.0 liter motors - even in the big winch trucks. That Landrover would last for a few years, but will not pull a pipe trailer with 15,000# of tubing on it - or stop it. My two pumpers have older Isuzu Troopers which are little heavy but have plenty of pull for just going out and checking leases. But, we cannot do service work in our very hilly area without full size 4 wheel drive pickups. Go to google earth and eyeball the area surrounding the Osage Hills State Park in OK. It will kill anybody's idea that Oklahoma is flat.
BTW, in decent weather, one of my guys just uses a four wheeler we keep out there to pump with. Not everything requires a lot of size an power, and we match the vehicle to the job.
I'll run my business and you run yours.
I've gotta say, however..
My mom and her fella went from two vehicles, she with a really great little civic and he a Ford Van which he used for carpentry/cabinetry work.. to one Ford Escape SUV, which they use to haul firewood and building equip, as well as being their regular car. They do use it for real carrying work, but it's too bad there wasn't a way to keep the sipper for errands and daily stuff.
Anyway, It's not all bravado.
Bob
What? Nobody ever hear of something called a "TRAILER"!
More BS.
What?! Nobody ever heard of a thing called "Towing Capacity"?!
I've hauled a cord of wood with a sipper+trailer before. It was dangerously overloaded.
What?!?!? Nobody ever heard of borrowing or renting a truck for the 3 times a year they legitimately need it?
Oh hellz, I own a truck. Whoops! See ya later ;-)
For folks who need the capacity every few months (or only when they move house) that makes perfect sense.
I'm just pointing out that for folks that do need the capacity on a regular basis that a small passenger car with a trailer is not a reasonable substitute. For someone like a construction contractor a real truck with real hauling and cargo capacity is usually a necessity. Dropping the passenger car to save expenses at that point is just common sense.
The grandparent to my original post looks to me like just such a situation.
For myself, I'm renting for the short-term economic benefit right now. No truck, no snow shoveling, no maintenance on our part beyond keeping the place clean, and a much lower energy profile than an equivalent single-family house. Next time I'll need a truck will be when we move again, and I'm in no hurry. Could be years.
Maybe you're saying this as well.. but all I'm saying is that you should get the appropriate tool for the job, and while Mom was shocked to admit it, the right vehicle turned out to be the stigmatized SUV. That thing, for a suburban 'fluff truck' has worked hard this year! Mom, 70, and her guy 80, built a cabin in our woods up in the White Mts (ours and her 'Cut and Run Bag', if you will) by themselves this summer, clearing land, bringing firewood back to heat her current home, hauling rocks, tools, etc..
When Citizen Anarchist graduates and gets his own BS in a couple years, I'll let him challenge her to some armwrestling..
Trailers are for movies!
Bob
Yes, that's all I was trying to say. If you have truckish duties to do, you need a truck. I do. If you need to tote some stuff around once or twice a year, rent something. Or borrow - I've loaned out my truck any number of times.
From a rural perspective, you have to have a truck - preferably a 4x4 that can do real, serious work. I replaced my "old" 1987 Mazda 4x4 (which replaced a 1957 Jeep 4x4 PU) with a full size 1990 Dodge 4x4 PU because I needed to replace the engine on the other one and this truck was cheaper. One of these days I'll pull the engine when I have time and have, count them, two 4x4's (ranch trucks).
The "new" one mostly sits waiting to do "truck stuff" because it is a gas hog. But when I need it, I really needed it. For a laugh, my "daily driver" is a 1984 Subaru hatch back - they were all real 4x4's with a low range at that time.
Todd
My truck that I use for work on my small plot of land is a 1993 Toyota T100 4X4. Being at the dead end of a gravel road it really comes in handy when the roads are snowed in or heavy rains make the roads impassible for cars. Toyota discontinued this truck in favor of the larger more powerful Tundra because of American tastes for larger pickups. The newest Tundra is a monstrosity. This truck does everything I need, especially with the eight foot bed, from hauling manure to firewood. So what if it isn’t that fast or can’t pull a huge boat or grain cart (you should be using a tractor anyway for the grain cart).
WHEN is a SUV more practical than a pick-up truck ? (Or mini-van if carrying people and not cargo) ?
The SUV is, IMO, an abortion of a design.
Alan
I both agree and disagree with that. The vehicles from which SUVs evolved, ugly, and not designed for driving at high speeds around turns, but able to handle really gnarly terrain, were wonderful vehicles. But only a small number of outdoor enthusiasts, or people with the need to access out of the way terrain in any weather would put up with the compromises. So they were morphed them into status symbols, overweight luxury minivans, with only an illusion of offroad ruggedness. The former were never a threat to society, they just never were going to be enough of them around. The modern monstrosities have no legitimate purpose, and the compromises mean they are very far from optimal for any specific task.
I thought I just gave you an example. But she needed hauling, but also an enclosed vehicle- partly because we live in town.. can't just leave your tools lying out.. she is a block from us and often needs to put in the car seat and accomodate our daughter and a couple passengers. It really works like a Station wagon, with a bit more load capacity.
More stuff.
It is a poor design, ultimately, but it has been the best combination of the two vehicles they replaced, with the ability to get deep into unpaved country.
A crewcab pick-up with lockable toolbox and/or removable camper shell would cost fewer $ and do more IMHO.
Although the manufacturers charge too high a premium for crew-cabs IMO.
At heart, pick-ups were designed for utility (variations depending upon use) and SUVs for "show"/soccer moms. Style over substance.
If/when I build the house I want to, I will buy a used pick-up (I will serve as my own general contractor), likely a Toyota T100, for the duration. Sell it upon completion.
Alan
Fine, Alan;
Let the great be enemy of the good. You're playing this unfortunate game of demonizing a type, a stereotype, and I'm saying that if a vehicle is used well, applied properly.. then to hell with the friggin' stigma already. Pickups get misused as well, bought for status, etc. And almost ALL of our vehicles could be used a lot less if we created infrastructure that opened up options for easier biking, walking and mass transit.
I have ridden in a number of SUVs. The truck based ones simply scream "waste", "inefficiency", "non-functional design", "style over substance" to me.
The car based SUVs are slightly better.
OTOH, the basic pick-up appeals as a utilitarian tool with function(s) Some later "enhancements' fail that test.
Just my engineering aesthetic,
Alan
I practically grew up in SUV-type vehicles. My dad is an agronomist, and we often lived in areas where the roads weren't that good. Everyone used Range Rovers and the like. If you need the clearance to get over rutted roads, and you have a lot of people as well as a lot of equipment, an SUV-type vehicle is what you want.
We usually had more people in the car than would fit in a pickup. Either the whole family, or my dad would take a crew with him out in the field.
"It was dangerously overloaded"
What,,, seems to be the case here is A LOOSE NUT BEHIND THE WHEEL???.
Tis' a poor mechanic that blames his tool for shoddy workmanship.
Absolutely nothing to do with the equipment.
The BS meter seems to work well these days.
I don't know C_A...my field area this winter was between 7600 and 10,000 feet in the mountains of east-central Nevada. I guess I might have made it up to the drill rig some days in a Subaru, but what would I have done with the 20-30 boxes of HQ core (garnet-pyroxene skarn; approx. 70-85 lbs per box)? A trailer would have been cute given the roads and the snow. My '95 Toyota Pickup did the job.
Sounds to me as if you call BS a lot but do you actually know what you are talking about? Pickup trucks existed before they became a fashion statement for dumba$$ yuppies because they are useful for some applications. An SUV is just a panel truck crossed with a 4 x 4.
Aren't you being a little doctrinaire and PC?
your "trailer" is great for hauling potting soil from the garden center to the suburban homestead, not much use around the oilfield. woodchucky pointed out, they sometimes pull around a 15,000 lb rod trailer, you gonna pull that with an izzusu trooper ?
Just put that Trooper in 4 low and don't lock the front hubs. Just one problem, which I tried to point out before - just don't plan on stopping that sucker. I have friend who tried a lot smaller load - about 800 feet of 2 3/8 tubing - about 4.7 pounds to the foot, or 3,760# - plus the weight of the trailer, which jackknifed on him when he tried to stop. No trailer brakes on those tubing trailers, for the most part. He wiped out the 3 year old Toy-ota 4 wheel drive, small size truck and put it in a ditch. And, if the trlr had come loose, it would have been uninsured. I do not think he came out on the insurance settlement anyway. He probably had 6-800 lbs of other stuff in the bed of the truck as well. If he had not jackknifed the truck he would have been in the middle of a highway. And, we have to haul stuff everyday. You normally get about 6 months out of a pump change, and if you have any decent amount of production, just do the math. Of course, changing a pump does not require a lot of tubing, but any tubing leaks do, and with older production, they are frequent as well. The average well in Oklahoma produces 2.3 barrels of oil a day. And, that inclusdes the good ones. http://www.ok.gov/marginalwells/About_MWC/Quick_Facts/index.html
I do not feel comfortable putting any of my business information on here, just know what it takes for me, and don't mind saying why.
6000 lbs is a magic number. Once the gross weight exceeds that, the vehicle goes into a different classification for depreciation in the Internal Revenue Code.
Believe me, I've been to personal finance and taxation seminars where this was extolled as the greatest thing since sliced bread. Millions of people with deductible business travel expenses have been encouraged to buy these monstrosities just for that one and only purpose.
That's right. It is as if we were on Apollo 13, the O2 tank has just blown, and mission control is still trying to figure out how to get back on track for the moon landing!
We need to be in survival mode from this point forward.
WNC,
FanTAStic analogy!
CNBC reports that Circuit City will be fully liquidated. 35,000 employees will lose their jobs.
CNN warned earlier this month that any company that enters bankruptcy in this economic environment will not survive.
Here's a link:
And so the knock on effect will be this merchandise
resale adding to the deflationary spiral forcing the
Best Buys to compete and shoppers to wait 'til
tomorrow looking for cheaper prices.
The Japan Model.
The "knock on effect" you describe will be much less than a reorganization would be. The best of those 35,000 employees will be the first hired at Best Buy, Ultimate Electronics, Conn's, etc. Assuming that the imputed sales of Circuit City in the future will not disappear (may go down) will be shared by the survivors, their sales will increase. Capitalism.
Just to make it simple. How would you feel like if you owned one of 2 Motels in a town, and you were each 65% occupied on average. Then your competitors motel burned to the ground and he said that he would not rebuild because he did not have insurance. You are now scared shitless or happy as a Lark? And, if you were now looking for another experienced maid and another front desk clerk, where on God's earth would you look first?
You first assume that anyone will be hiring anybody.
You been to a shopping center recently?
Like the Baltic Dry, there's nobody there!
Here's America minus the Top 20%.
7. Our political and economic leaders live in a bubble, in the ultimate Ivory Tower. They have no idea what our lives are like, how we suffer. And I don't simply mean physically. I mean the angst that we experience because we do not know where our next meal is coming from, or if in fact we'll be able to take our sick children to a doctor, or if the water that we're drinking will make us sick. Our leaders THINK they understand, but they cannot because they haven't felt the fear that we feel, every day.
Time is running out. If Obama goes through with the Rubin-esque "bad bank" ploy, it will be too late. Vermont(Arkansas) looks better all the time.
http://ashizashiz.blogspot.com/
Bifurcations are piling up. I may never get out of Korea considering how long it can take to process a visa...
Hold on, folks.
Cheers
Circuit City, Alcoa, TDK, Boeing, and nowGE with 11,000
Take manufacturing back home!
Tom
How much structural steel could be removed from one Circuit City Store to make a narrow gauge SpiderWebRiding circuit? I have no idea. Any experts out there to guesstimate? Or is all this steel on track to be stolen at rock bottom prices by China for their transport circuits?
That's not good news for the nation's 15th largest daily paper:
Star Tribune files for Chapter 11 bankruptcy
What's happening with newspapers is kind of scary. The Chicago Tribune and the LA Times are also under bankruptcy protection. The Rocky Mountain News and the Seattle Post-Intelligencer have warned they may have to shut down. Christian Science Monitor went to online-only, and the Detroit papers are online-only four days a week. Gannett is furloughing employees and the Boston Globe has announced layoffs. The NY Times had to mortgage their building to pay their debt.
Lame as the US media is, I don't think replacing them with a bunch of bloggers is an improvement.
I would disagree on that one. Newspapers are almost like typewriters-their daily customer base keeps growing older. guys like Denninger, Mish, etc. (not to mention big guns like Drudge) are now important parts of the evolving US media.
But they're still dependent on the traditional media. All they do is post links to stories that others have investigated, written, and published. Without the traditional media, the blogosphere is nothing.
That may change one day, but we're a long way from that point.
I would agree re Drudge Report, but both Denninger and Mish are very opinionated and IMO not just posting links-both guys are economic journalists and forecasters (obviously they aren't the only ones). I am not sure what % of financial info is currently coming from daily paper news, but I would think it must be very low at this point. Most of what they are printing at this point is poorly disguised advertising and propoganda IMO.
I agree with BrianT, but, for different reasons. Why would people who have enough money to afford a subscription, pay to read BS that is totally opposed to their way of thinking. They, will not.
"What's happening with newspapers is kind of scary."
But unrelated to the Panic of 2008, as this has been going on for years. It is the Internet that is killing the newspapers, and the financial panic is simply administering the coup de grace.
Peak Newspapers could be dated back to the 1950s when television began destroying their audience, then a plateau to the 1990s, and circa now falling off a cliff. In Calgary, circulations of the two newspapers were falling even during the boom, not just because of the Internet but because free papers cannibalized the market.
I haven't bought a newspaper in years. They only have yesterday's news that I read on the Internet the day before.
I think it's definitely related.
Yes, the writing was on the wall for newspapers a long time ago. But they were expected to transition to web-based media. The NY Times, among others, was planning to become a web-based multimedia company. But with the economy the way it is, they can't. They have to bring in money, via print ads or web advertising, but nobody's buying ads in this market.
Newsanchor, Walter Cronkite always had a saying "if you read about it in a paper, it's history, if you hear about it, it's news. ". or something to that effect. As always I stand corrected.
For sure the bankruptcy numbers are on the rise for individuals and businesses:
http://www.bankruptcy-statistics.com/index.php?option=com_content&view=a...
Asa former subscriber, I wouldn't believe or quote The Nation on any subject.
When you hear Salazar say "wise use", you know there will be dead animals, bad air, and cut forests. This was one of Obama's worst choices, and that is saying something, considering the rest of his "business as usual" cabinet.
we can always hope that he will be a better choice than the other coloradan interior secy., gale norton.
What does Ken Salazar stand for? Stewardship of the environment or utilitarian conservation? Salazar supported Gale Norton as Secretary of the Interior.
If this is the Change that we're in for maybe it would be a good idea to keep your powder dry.
Joe
i suppose that makes salizar a provincianalist, or a polititian.
Salazar will fit right in a the BLM (Bureau of Livestock and Mining)
as head of Interior.
My stomach is turning.
Welfare ranching advocate Salazar, corn ethanol shill Vilsack, pro-nuke Chu, border nazi Napolitano, wall street crony Geithner... BAU from the guy who promised "change." I'm beginning to wish I hadn't voted for him.
Well for what it's worth, DD, they'll all be heading from the frying pan into the fire soon.
Small comfort, I guess.
I am not surprised at these appointments, unhappy, but not surprised really.
On the other hand, would you rather see the OTHER two in charge?
I said this around the time of the election and I'll say it again: None of Obama's betrayals surprise me, but I'm still relieved that McCain lost.
I had to listen to Napolitano bitching about the crappy job border security been doing for the last four years. Now she gets to see the problem from the other side of the fence so to speak. Good luck to her.
Robert a Tucson
Buy your own island.
"oil companies were storing "about" 80 million barrels of crude oil at sea, possibly the highest in a quarter of a century."
Which is one day's worth of oil demand, is it not?
Alberta is slowing down as oilsands expansion comes to a stop. Junior petes who operate only on cash flow, not a line of credit, are getting by on conventional oil production.
To tell the old, old story, the high-flyers who had debt and are publicly traded are the ones crashing into the grave. I'm sitting on cash while hunting for good private equity junior petes who have no debt.
1 day's total liquid usage, opec's al badri recently stated that oil in storage was about 5 days above oecd normal(52 days, i think). that is about 250 million barrels. so 80 million is not a lot, but to work that inventory off, demand has to exceed supply. and if demand exceeds supply by 1 million bpd, it would take about 8-9 months to burn off 250 million barrels.
Students, communities pay when schools cut busing
So much for public transportation... I mean, come on, one big yellow bus carrying 30 kids on a well planned route has *got* to use less fuel than 30 SUV's dropping off 30 kids...
Geckolizard - How about 30 kids walking or riding a bike (or skateboard) to school or to soccer practice or to their friends homes etc?
Isn't childhood obesity an epidemic?
Joe
News from the Moist State -
http://www.msnbc.msn.com/id/28674996/
http://www.forbes.com/feeds/ap/2009/01/15/ap5927877.html
Can anyone answer the question as to why the UK is allowing the commercial owners of the UK/Europe pipeline to run the pipeline in export mode at close to maximum capacity while the UK's own gas storage drops to dangerously low levels?
Is this just free market insanity and how will the politicians explain this when the lights go out very shortly? As far as I can see the UK is still importing some gas (needed within the UK) from Norway and then re-exporting it all to Europe. LNG imports seem to be at a very low level as well.
The politicians would have us believe the Russian/Ukraine gas crisis does not affect the UK. They are either blatantly lying or stupid and if the crisis is not resolved very soon they will be caught out and we'll be shivering in the dark.
The current shareholding in Interconnector (UK) Limited is as set out below:
CANADA 33.5% La Caisse de dépôt et placement du Québec
USA 10% ConocoPhillips
BEL 11.41% Distrigas
BEL 5% Electrabel
ITA 5% ENI
GER 25.09% E.ON Ruhrgas
RUS 10% Gazprom
From http://www.interconnector.com/company/shareholders.htm
brilliant observation OMGlikeWTF
UK had never anything to say , or ? Where is BP/UK gov.mt in this picture ?
And yesterday during the French nuclear power strike, the UK electrical interconnector to France was running flat out exporting about 35GWh of energy. I didn't even know there was a French strike until I wondered why French power was not in the UK mix at peak time yesterday and there was an "insufficient safety margin" grid warning.
Had this happened on the highest demand day of the winter so far (6th January), "demand control" (blackouts) would definitely have happened as the safety margin had already been "fiddled" by underestimating the demand for the day by about 500MW.
The UK government had better wake up to the imminent danger to UK energy supplies and stop leaving it to the free market. The free market is rapidly bleeding Britain's short term energy stocks dry as surely as it bled our long term oil and gas supplies beyond the point of no return.
Something has to be done right now.
I could not agree more , Undertow .
Keep in mind , these days are just days of testing ... for real scenes to come.But I had hoped that you folks (UK) had used my nat.gas more wisely.
Anyways, cheers and all the best from Norway. We will also become screwed, but hopefuly a little skewed in time ... :-(
Just to show how quickly we might be screwed here in the UK, this is the Met Office forecast for the rest of the month
Europe plunders us. Business as usual.
Free market insanity is the answer. Spot European gas prices are higher than UK gas prices and therefore the interconnector is flowng export. Gas in store is indeed at perilously low levels and if we get even a relatively cold snap in February or March prices are going to skyrocket. The Government will wash its hands of the problem as storage capacity and operation is not controlled by the State. Being at the end of the pipeline for Russian gas is a major problem for the UK if our gas in store is insufficient (and an even bigger problem for Ireland).
LNG is a real puzzle - Isle of Grain has I believe imported a limited number of cargoes while product is still being shipped to the US market despite the fact that wholesale prices are lower there.
I was speaking to an LNG player yesterday and he said that sellers are actually findng it tough to find buyers at present. It doesn't stack up, with UK and European prices as relatively high as they are any spare LNG cargoes should be ending up in Europe/UK, but UK just isn't operating anywhere near capacity. Grain is taking limited cargoes and Excellerate has not taken a single cargo at Teeside in its history.
The Exxon / Qatar Petroleum regas facility (South Hook) at Milford Haven is currently undergoing commissioning. The Petronas / BG facility (Dragon LNG) at Milford Haven has been delayed again until June or July - 18 months later than the original scheduled start-up date.
Incidentally I heard, from the same source who is well posiitoned to know, that the Force Majeure at Qatar is related to a lack of engineering staff rather than an operational problem, but I cannot substantiate that.
If any government minister thinks they can wash their hands of the problem if the lights go out this winter I think they are in for a shock. Oh, I know they'll try...
When the government said that the falling pound would be good for our exporters I don't think this was one of the exports they had in mind ;-)
What I meant by that is that they'll say that they cannot control flows of gas in and out of storage, nor can they control exports through the interconnector. Nor can they force BP and Sonatrach to import LNG into Isle of Grain. So, if the lights do go out, it will not be their fault......
The UK is the only country in the world who actually that really did deregulate the gas and power businesses. Everyone else paid lip-service to the idea whilst continuing to support adn protect their national champions. Thus, the UK is 100% beholden to the free market where companies with gas storage and interconnector capacity will do what is right to make money today and not give a toss about the potential ramifications in a few short weeks from now.
Indeed, as the Eon (Powergen) bigwig said recently, in response to a question as to what would happen if prices skyrocketed: "We will make a lot more money."
The free market will of course work, just maybe not in a way that we enjoy.
Well unless Brown plans on putting previous government ministers on trial for treason and hanging them in Parliament Square all the anger will be directed at him. The public don't understand the dodgy banks business but they do understand that keeping the lights on must be one of their top priorities. If they go off and the public realise that right up to the last moment they were allowing gas to be shipped out of the UK there will be no escape for Brown this time.
Of course if Brown does string up say Blair and Thatcher he could probably win a snap election. Maybe that's the plan and why he seems to be smiling so much these days :-(
I don't disagree that the public will blame the government (who in turn will blame the utilities). However the truth of the matter is that the government is not capable of stopping gas being shipped down the interconnector and that therefore it is not really a question of "allowing the gas to be shipped out".
No doubt some sort of "emergency powers" legislation does exist that the government could use to prevent gas exports, but I think they are only likely to utilise that particular stable door once the horse has already bolted.... always reaction, never action.
It seems the Daily Mail is on top of it. This story just appeared (wonder if they read TOD)
Gazprom and E.ON tap UK for gas to divert to Europe
So it's ok, there is enough gas "knocking about the UK" says E.ON. I guess that's a technical term. The stats showing that now even the 7 day average storage withdrawals exceed the published daily maximum possible amount must be imaginary :-(
Withdrawing gas faster than the maximum "possible" rate doesn't seem to have been a considered condition by the writers of the reporting software on the National Grid site as it was causing an error in one of the displays (it said Britain had 0 day supply left at current drawdown rate). Seems it's fixed now.
There was an article at the Bloomberg site about LNG spot cargoes being diverted from the United States to Europe. The U.K. is not the only LNG port in Europe. Much of the U.S. LNG comes from the Atlantic Basin with Trinidad being a primary source. The United States dependence on LNG dropped almost in half during 2008 due to emerging shale gas plays and the completion of the Independence hub offshore. At the current prices of natural gas, NG drilling is decreasing in North America. If the UK will need more spot cargoes the price might have to increase.
Not a lot I can add to the perceptive comments here. I have an old chart from Jerome on European gas storage (which I can't upload cos of technical problems) which shows Germany with about 18 BCM, Italy with about 13 BCM and France with about 11 BCM storage. The UK had about 4 BCM storage in 2004.
Figure 19 Destinations of Russian gas exports
If you look at the gas import volumes from Russia you'll see that the storage levels are very large in relation to these, and that Germany, France and Italy will be able to sit out many months of low / no supplies from Russia.
Last update on storage I saw from Rune showed UK storage falling at record rates, and so if this runs dry in Feb as seems possible, the question is whether we are able to import storage gas from France and Germany at sufficient rates and / or LNG.
The real gas crisis at present is in E Europe where countries are largely dependent upon Russian gas and lack the diverse supplies W Europe has. The real crisis will get underway in W Europe when we can no longer source enough gas in summer to fill storage - some time around 2015.
This will be a stern test for the UK reliance on free market to deliver - if our storage runs dry and supplies don't show up from Europe / storage and or LNG to compensate then interruptible supplies will get cut.
Who will be to blame? Well certainly not the government since they are not to blame for anything. Maybe I should write a short post along the lines of Dear Gordon... detailing the many good points made in this thread - so he cannot say he didn't know. The blame will be laid on the Russians, Ukrainians or unseasonal cold weather.
Maybe I missed the comments here somewhere, but it looks like the deflation first prophecies are winning.
Some things are common sensical. Economy collapses, prices go down. Prices will go up when most or all of the crazy debt has been done with and all the moneybeingblown into the system is still there spinning round.
It is very possible to over-think things. It's why all those things we discussed as freshman in the dorm lobby late at night over pizza and snuck-in beer are still bouncing off the walls of the lobby... and have never gone any further.
Cheers
I am not surprised at the deflationary trends in auto, housing & finance and thus the emerging labor surplus (see my ELP Plan article), but I was surprised that the decline in oil demand outpaced (at least in the short term) the long term decline in net oil exports. To their credit, Stoneleigh, et al, had it right regarding oil prices.
Re the labour surplus what will happen to immigration in the downturn? Third worlders will still want to come but there will be no jobs. The government won't be able to afford welfare for them either.
Deflation of property & vehicle, inflation of food, building materials, fuel.. The homeowner/consumer takes a hit coming & going.
does anyone think (as I feel) this will be the last time oil slumps to the lows we are seeing..or others are predicting we will see?
http://www.cnbc.com/id/28691239
and as a result of the slumping econonmy and low prices...what's to become of the oil services workforce:
http://www.cnbc.com/id/28691833
Thought this interesting:
World running out of oil, says ex-CEO
It is not everyday that an oilman says oil has peaked.
Ron Patterson
This one has been saying it for a long time, though. Buckee has been a peak oiler for years.
A second-hand report from the ground:
"The credit crisis has most definitely hit Dubai. The billions of cranes have stopped, traffic is quieter, school spaces are opening up. In one way this was needed, this place was out of control, everyone and his brother was becoming a developer, real estate agent, advertiser etc. But there is ongoing massive job losses. And for all the real estate speculators...they are in big trouble as they can't make their payments for their off plan developments. Of course in Dubai, we are all on work visas, and if you can't make your car, house, investment payments, you go to jail. So, there are tons of people doing runners, basically driving to the airport, getting on a plane, abandoning car, villa, bank account, school etc. and never coming back. One of my patients who is a banker (who still actually has a job) says his bank is getting calls everyday from people telling them where they have left their car at the airport!).
"So, rents will come down, traffic will get better, building will slow down massively, only the strong and serious developers will stay, and maybe Dubai will become liveable again. or. the whole place will collapse and become a ghost town. Hard to say, but with Abu Dhabi having endless oil, I don't think they will let Dubai crumble completely."
Not sure about that "endless oil", though!
Pickup trucks will always have a greater utility value than an SUV postPeak, especially when the time comes to quickly bolt down the rack mounted .50 cal/RPG.
Hello TODers,
Interesting article with some experts saying I-NPK prices up, others saying prices down for awhile longer:
http://www.hpj.com/archives/2009/jan09/jan19/Fertilizerpricescontinuetor...
--------------------
Fertilizer prices continue to rise
..Many factors continue to affect the fertilizer markets including a wide growth in demand, a decrease in capacity--especially in the U.S.--increases in natural gas prices and record high freight costs.
..With the U.S. ammonia supply, imports account for roughly 45 percent of the total U.S. supply.
--------------------
IMO, CF buying Terra is a better indicator for future N-pricing up as the resultant consolidation + Webb-Pomerene makes it easier for them to profitably throttle future JIT supply as we go postPeak in natgas for powering H-B factories.
It would be interesting to know if Obama is proactively considering any national food security plans to boost SCT's ammonia infrastructure ideas plus full-on O-NPK recycling to help moderate postPeak I-NPK pricing.
Have you hugged your bag of NPK today?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
WSJ: Circuit City to Liquidate, Meaning 30,000 Job Losses
Bloomberg: GE Capital May Cut as Many as 11,000 Jobs This Year
Saks. Even the rich aren't spending.
And if you need help keeping up:
http://www.layoffdaily.com/
http://www.fool.com/investing/general/2009/01/16/nitrogen-bomb-hits-wall...
---------------------
Nitrogen Bomb Hits Wall Street
---------------------
Terra [stock symbol: TRA] up 26% today. Perchance that traders are doing more postPeak thinking about my speculative 'Federal Reserve Banks of I-NPK'? Consider that this parallels all those VLCCs sitting around full of crude.
Remember, we can substitute a lot of human energy as FFs deplete, but there are No Substitutes to the Elements NPK to leverage the topsoil above a Liebig Minimum. As detailed in prior postings by me and other TODers: we will do anything for this vital flowrate.
Its complete crap that there are 40 VLCC's floating around full of oil. This is the same kind of rubbish that drove oil to $10.00 a barrel in 1999, "wall of oil etc,etc". Of course it was all crap then to..
Not to let facts get it the way of a good story but..
Total number of VLCC's approx 440.. lets assume global oil demand fell 6% (I don't think it has fallen that much but anyways) from it peak VLCC's rate was Approx 350 with 100% utilization. Lets remove 6% = 413 VLCC's required for "current" oil demand. Hmmm if the market just lost 40 VLCC's why is it that the rates are still falling currently 65.
Another nail in the lots of oil on the water. The Tankers where only booked late last month. Its a big jump from being booked to sailing around full of oil. First they have to sail from where they are to a loading facility etc.. Bear in mind this is real life not a computer game thing's take time.
another nail http://www.tankerworld.com/news/i74801/Morgan_Stanley_and_Citigroup_want...
copy.. "Given that an average VLCC can carry up to 2 million barrels of oil, as much as 70 million barrels of crude oil could eventually be held in floating storage." paste... Note the word EVENTUALLY....
One last thing due to oil having to be shipped further Mexico close Saudi not so much even with flat demand tanker rate's should be rising....
I think you have some good ideas in there somewhere.
It's hard to fish them out though with your apparently random capitalization and punctuation rules.
Yeah, the amount of oil already in floating storage might have been over-hyped... but you're overstating your case as well.
Demand is down, supply has been cut as well. Oil Movements predicted that there would be over 40 mb less in transit than last month. That's a lot of empty tankers and the Saudis aren't going to fill as many of them as they used to.
Do all of these tankers really need to be unloaded with "transit oil" and reloaded with "storage oil"? I guess not.
The bottom line is that we don't know how much is kept off the market exactly. What we do know is that it's not a whole lot compared to daily global flow.
Hello TODers,
From the UN FAO:
http://www.irinnews.org/Report.aspx?ReportId=82434
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GLOBAL: New tool to measure resilience
A new analysis tool that measures how resilient a household is under severe stress will help humanitarian agencies design aid for beneficiaries based on the extent of their vulnerability.
"The early warning systems approach tries to predict crises, while the resilience framework tries to assess the current state of health of a food system and hence its ability to withstand shocks should they occur."
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Kudos to the UN FAO, and I hope they can continue to refine these methods more towards Asimov's Foundations for predictive collapse and directed decline.
http://www.porkmag.com/news_editorial.asp?pgID=675&ed_id=7014
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Report Measures U.S. Agriculture's Sustainability
A first-of-its-kind report creates a framework for measuring agriculture sustainability...Experts predict demand for agricultural goods will double by 2050 as global population increases by an additional 3 billion people. Agriculture is already the predominant user of all habitable land and 70 percent of fresh water. By 2030 grain-producing land per capita will drop to just a third of what it was in 1950, while the World Water Council predicts in just a decade we will need 17 percent more water than is available to feed the world.
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Sadly, it looks like no postPeak scenario planning was included, but I haven't read the official report yet.
Okay, I did a quick slog thru their report [large PDF Warnings ahead]:
To view the group’s full set of foundational principles, please click here:
http://keystone.org/spp/Foundational_Context_and_Principles.pdf
Full report:
http://keystone.org/spp/documents/Field-to-Market_Environmental-Indicato...
Some comments by me:
1. They used the more optimistic 2007 IEA World Energy Outlook [footnote 5]. They should have used the latest WEO with the forecast postPeak depletion of 6.4%, then extrapolated these trends forward into depleting farming fuels, I-NPK, pesticide, and aquifer water availability.
2. Although I applaud their use of spiderweb diagrams, they should have discussed diminishing returns going forward. IMO, many of the included efficiency graphs already show trending towards flatlining.
3. [from page 33 of 99]:
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Shapouri 2005 provides estimates for the amount of energy required to produce nitrogen, phosphorous and potassium fertilizers. The values are reported to be 24,500 BTUs per pound N, 4,000 BTUs per pound phosphate and 3,000 BTUs per pound of potash fertilizer.
..While the literature provides a wide range for the energy required for production, the values we use are roughly in the middle of the literature values. These values are conservatively assumed to be constant over time. If these values are relatively constant over time, then the value used for BTU/lb nutrient should not affect the overall trend of energy use from fertilizer per crop.
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I would suggest they go back to a broader boundary analysis to account for more energy-embedded over time as P & K ores become less concentrated, and as our increasing import reliance suggests more transport energy will be embedded in the final topsoil square foot.
Again, No free lunch. For example, at the Home Depot near me: a 20 lb bag of Vigoro All-Purpose [NPK 16-16-16] is $9. A gallon of gasoline weigh approx. 6 lbs. 3 & 1/3 gallons of gasoline, or 20 lbs of gasoline is cheaper than this Vigoro.
Okay, enough for now.
May have already been posted, but another bank bites the dust..,
National Commerce, with $430.9 million in assets and $402.1 million in deposits, was shut by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. was named receiver. Republic Bank of Chicago in Oak Brook, Illinois is assuming ownership of the failed bank’s two offices as of tomorrow, the FDIC said.
http://www.fdic.gov/news/news/press/2009/pr09005.html
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFJf5K7zppCg&refer=home
The small ones are allowed to fail, yet B of A, with it's black hole of toxic assets is given $138 Billion more of our money. Not surprising I guess.
We're insolvent as a nation and the shenannigans going on now are merely to hide that reality from the masses for as long as possible. It won't be "official" until we see the proof in the pudding. By then it will be too late to do anything meaningful about it and all of the bailout money will be gone and won't be able to be used to provide basic life necessities for the masses.
TS
If the goal is to increase bank lending, wouldn't it make more sense to give that money to the small, solvent banks without all of that crap on their books?
If the goal is to increase bank lending, wouldn't it make more sense to give that money to the small, solvent banks without all of that crap on their books?
These banks lend only to the credit-worthy; and they are not borrowing much. It's the credit risky borrower who is locked out. The story of Bank Credit 101. Don't lend to the poor and foolish.
I assume you are being sarcastic-8.5 trillion dollars of added taxpayer liabilities equals 85 trillion dollars of new lending if the taxpayer money was used for forming new USA banks. 85 trillion dollars is a lot of money. It is difficult to increase overall bank lending by pouring taxpayer funds into banks with huge capital deficiencies. Anyways, YES it makes more sense to allocate taxpayer funding to the healthiest, least corrupt banks if your goal is improving the health of the USA economy. These guys have far more important goals-it is their country, everyone else is just living in it.
Human-Solar Powered Hybrid Electric Car Unveiled in California
http://www.wikio.com/video/678884
Can someone answer this question for me?
Lets say for a moment that the recent peak in oil (C+C) production that we attained in the summer was within, say, 2% of what, before this recession, would have been the actual peak in production, or the highest moment on the plateau we were sitting on.
What is the likelihood then, that we will be able to actually attain that peak or very near it to return to the plateau?
Put another way, is this recession going to allow more time for new supply to be brought online so that a higher peak can be attained in the future? Or is it more likely that we will essentially lose "momentum" that got us to within that 2% and so will not be able to reach further.
Would love to hear some educated guessing around that. Since I know that's all I can hope for. :)
Thanks
Chris
Depletion never sleeps, now up to 5-9% depending on who you ask. It has taken a growing number of rigs to maintain us on the plateau... we did reach a slightly higher monthly peak in 8/08, but IMO the yearly production will probably not exceed 2005, or not by much, albeit up a little over 06/07. Now, however, new projects are on hold and we are seeing idle rigs for the first time in years, both on and off shore. Meanwhile, major exporters are doing what they can to maintain in-country spending, princes' grip not so secure, nobody wants to have the natives go restless, so many exporters seem likely to continue expanding spending and energy consumption... this means that the decline in exports looks likely to continue over and above cuts in production.
IEA earlier said the world would have to spend a lot of money to maintain or increase production over the coming years... low prices are already slashing expenditures, plus those that spend on credit are having increasing difficulty getting credit. IMO we will in retrospect look at 08 as the end of the plateau and 09 as the beginning of the permanent slide... price might get back to saudi 75/b target by summer, but this will not bother consumers still remembering 147/b... saudi willingness to cut plus their present excess capacity means they will control price to their preferred level for a few years partly on account of continued demand weakness, but eventually world wide falling production will trump this temporary situation, maybe end 2011.
Major project studies implied a good year in 08 but flat 09 and falling 10/11. With projects/infill drilling declining we might see 2% less in 09 followed by 4%/y in 10/11, or 10% cumulative, a loss of 4mb/d by end 2010 and 7mb/d by end 2011. OPEC might accommodate the former but not the latter unless world economy is still contracting.
Well said J. And while folks are smiling over some relief in oil pricing, there may be a NG price shock as early as next winter. The unconventional NG plays, which helped pushed production rates to record levels, will perhaps be declining faster then they rose. We're in the process of cutting such drilling efforts significantly. Most other operators are doing the same. Many are aware of the rapid decline rates of these wells but the ever increasing drilling effort hide that reality.
Even if demand/economy destruction continues thru 2009 consumers may face increasing costs even in the face of declining demand.
hi rockman,
i posted above that the rig count for rigs drilling gas wells has dropped to 1239, a level last seen in about 6'05 when dry ng production was about 51 bcfd and falling.
i have done some modeling of gas demand vs heating or cooling degree days. this is all pretty straightforward, easy to model historical demand.
and then when the model is applied short term to try to forecast gas storage on a week by week basis, production and imports are implicit. what i am coming up with is that dry gas production plus imports amounts to about 60 bcfd, so it is difficult to see how dry gas production is anywhere near the often quoted 60 bcfd, else we would not be seeing any drawdown from storage at all. i have ignored lng as it is relatively minor and also unknown currently.
imports may be off by more than i suspect, as our near northern neighbors are shivering severly. but based on my model, dry gas production is closer to 55 bcfd. we may not yet have seen the effect of the wells brought on since the peak of drilling rigs(about 1600 rigs in july), my guess is that we will see a movement in gas price before the current heating season is over.
Looking at average annual production and rounding off to the nearest one mbpd, 2005 was 74 mbpd (C+C), 2006 was 74, 2007 was 73 and 2008 will probably be 74.
You can look at this way. All of the money spent by the oil industry in the past three years worldwide went basically to keeping production flat. What happens to production as expenditures decline.
Cantarell will be pretty much gone by the end of 2010. At ASPO-USA, Peter Wells predicted that North Ghawar would be effectively watered out by the end of 2010. These two fields accounted for about 10% of world crude production in 2005.
thank you everyone for your responses. Confirms what I was thinking... I was wanting to find that new Pentagon repot he National Post referred to yesterday. Haven't yet. Just want to know if their prediction of 10 mbd shortfall was pre or post stock collapse.
I think the actual report came out in November, so given the slowness of government bureaucracy, it was pre collapse.
I think this is the report:
Joint Operating Environment 2008 (PDF)
if the oil stops, no one has a plan ... until now
The Plan by Edwin Black
http://www.planforoilcrisis.com/index.php?page=143
Hello TODers,
Recall that our own TopTODer Euan Mearns predicted this, or else Putin studies TOD on a daily basis:
http://www.bloomberg.com/apps/news?pid=20601087&sid=akGNctwR.Rco&refer=home
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Putin Seeks Utilities’ Cooperation to End Ukraine Gas Dispute
Jan. 17 (Bloomberg) -- Prime Minister Vladimir Putin sought cooperation from Russia’s biggest European gas customers as he prepared for a meeting today with his Ukrainian counterpart Yulia Timoshenko that may pave the way for supplies to resume.
Putin met representatives of GDF Suez SA, E.ON Ruhrgas AG and Eni SpA in Berlin yesterday to persuade them to form a group to buy fuel needed to operate Ukraine’s pipeline system, which has not shipped Russian gas to Europe for 11 days. OAO Gazprom, Russia’s gas exporter, said the gas would be supplied at a commercial price of about $450 per 1,000 cubic meters.
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Hopefully, Leanan will move this Bloomberg link to tomorrow's DB toplink section so that Euan can rightfully bask in the glory. :)
Great job, Euan! I hope you & Putin can help save hundreds [thousands?] from getting sick, hypothermia, or frostbite.
Hello TODers,
http://nbcsports.msnbc.com/id/28695514/
--------------------------------
A first: Tiger to speak at Obama's inauguration
World's most famous athlete has tried to stay out of politics until now
Tiger Woods, who has tried to stay out of politics during his ascent to one of the world's most famous athletes, has accepted an invitation to speak at the Lincoln Memorial on Sunday as part of President-elect Barack Obama's inauguration festivities.
..Organizers of "We Are One" did not say what Woods would do at the Lincoln Memorial celebration...
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EDIT: another link for your consideration:
http://sports.espn.go.com/espn/blog/index?entryID=3838658&name=sobel_jason
----------------------
..Woods hardly has lived up to the prophecy guaranteed by his father, Earl, who once claimed to Sports Illustrated, "Tiger will do more than any other man in history to change the course of humanity … because he's playing a sport that's international. Because he's qualified through his ethnicity to accomplish miracles. He's the bridge between the East and the West. There is no limit, because he has the guidance. I don't know yet exactly what form this will take. But he is the chosen one. He'll have the power to impact nations. Not people. Nations. The world is just getting a taste of his power."
..On Sunday, Woods will have a front-row seat for history. What might prove to be a pivotal moment for our nation also might serve as a turning point for its greatest golfer, which -- it should go without saying -- pales by comparison. Just don't underestimate what this speech means to Woods, who might hear Earl's voice echo in his head as he speaks to millions.
The chosen one. The power to impact nations. For Tiger Woods, that impact might finally be coming to fruition. It will start with the right words at the right time.
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Is this author also an infrequent TOD poster? I don't know, and I need some shuteye. My thxs to all TODers that emailed Tiger.