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Drumbeat: May 17, 2010
Posted by Leanan on May 17, 2010 - 10:09am
Oil down 20 percent since early May: Prices dip below $70; BP spill not slowing drop in crude
Oil prices continue to dramatically spiral downward. A decline in U.S. pump prices apparently will be more drawn out.
Oil fell below $70 Monday for the first time since February due to concerns about the European economy and weakness in the euro. The price has dropped nearly 20 percent since hitting an 18-month high of $87.15 a barrel during trading on May 3.
U.S. Minerals Service Sued Over Whistleblower Claims
(Bloomberg) -- The U.S. Minerals Management Service failed to act on a whistleblower’s warnings that a BP Plc oil and gas platform in the Gulf of Mexico lacked safety and engineering documentation, an environmental watchdog said.
Food & Water Watch filed a suit today asking a U.S. judge to force MMS, which oversees mineral production on federal lands and the Outer Continental Shelf, to shut down London-based BP’s Atlantis platform until the company can prove the system, one of the Gulf’s largest, was built according to engineer-certified designs and is operating safely.
Lawsuit seeks closing of BP platform in the Gulf
NEW ORLEANS (AP) -- A federal judge has been asked to shut down a BP oil and gas platform that operated with incomplete and inaccurate engineering documents in the same part of the Gulf as the massive Deepwater Horizon oil spill.
A lawsuit filed Monday in U.S. District Court says the U.S. Interior Department failed to investigate warnings of possible safety problems with BP's Atlantis platform.
Gazprom offers to fund Ukraine gas network overhaul
KIEV (Reuters) - Russia would be ready to fund a complete overhaul of Ukraine's gas network if Kiev agrees to merge its state energy firm Naftogas with Russia's Gazprom, the head of the Russian gas giant said on Monday.
Pickens: U.S. spent $31B on foreign oil in April
America needs to wean itself off foreign oil, but instead, the situation is worsening, says Dallas billionaire T. Boone Pickens, who released a report that shows the United States sent $31 billion to other countries in April for oil.
“That’s more than $1 billion dollars a day and a sad step in the wrong direction,” Pickens said. "As the economy recovers, demand and prices will continue to increase."
New manager of Nigeria's state oil company fired
ABUJA, Nigeria -- Officials say the new managing director of Nigeria's state oil company has been fired.
A spokesman for President Goodluck Jonathan said Monday that Nigerian National Petroleum Corp. director Shehu Ladan had been removed from his position. The spokesman said Austin Oniwon, director of the state oil firm's refinery and petrochemical division, would take over as managing director.
Chevron, HighMount to cut 654 workers in Houston
Chevron Corp. will lay off 570 workers in the Houston area while HighMount Exploration & Production LLC plans to let go of 84 employees, according to the Texas Workforce Commission.
What the climate bill means for the US way of life
The United States' refusal to limit greenhouse gas emissions infuriates environmentalists – but things may be about to change. Last week, Democratic senator John Kerry and Joe Lieberman, an independent, unveiled the American Power Act – a climate bill that has President Barack Obama's backing. The text's 1000-odd pages contain proposals that would shake up the US economy and reinvigorate global climate-change negotiations. Here's what the bill means for US citizens and the rest of the world.
Tar sands oil extraction spreading rapidly, report warns
The successful development of Canada's tar sands has triggered a rush by Shell and other oil companies to set up similar operations in Russia, Congo and even Madagascar, a new report reveals.
Soaring crude prices and an growing shortage of drilling sites have encouraged the energy industry to look at a series of "unconventional" hydrocarbon deposits threatening vulnerable environment and communities in places such as Jordan, Morocco as well as the US, Friends of the Earth says in a review called Tar sands – fuelling the energy crisis.
Eurozone austerity moves increase threat of deflation
Not everyone buys the deflation scare. Morgan Stanley analysts told clients last week that crisis-fighting efforts will mean looser monetary policy in Europe and the United States. Commodity and stock prices should rise as a result, they say, and that could boost global inflation.
For now, however, the inflation expectation remains a minority view. Commodity prices have fallen amid the Greek crisis. A barrel of oil that sold for $87 on April 6 now costs $71.61, and copper prices dropped 12% over the same period. Given the ongoing debt pay down, or deleveraging, underway in the U.S. and elsewhere, inflation remains a distant concern, Rosenberg said.
Iran Preparing to Block Gulf Oil and Wreck Western Economies
Iran’s recently-concluded war games concentrated on preparations to block the Persian Gulf and wreck Western economies in the event that the United Nations Security Council tries to place harsh sanctions against it.
Forty percent of the world’s oil and gas sails through the Persian Gulf, and an Iranian blockade would cause an inflationary spike in energy prices and a fuel shortage that could cause catastrophe for the West, which is dependent on Iranian crude to fuel their gas-hungry economies.
The Iran chip in Sino-Saudi relations
The fourth joint meeting on economy and trade convened by China and Saudi Arabia in January 2010 in the Saudi capital of Riyadh came and went without much fanfare. Yet the meeting between China, the world's second-largest and fastest-growing oil consumer, and Saudi Arabia, the world's largest producer of oil, cemented a burgeoning bilateral relationship that is attracting increasing international attention for its potential impact on Middle East geopolitics and as a manifestation of China's growing power on the world stage.
Hargrove, Rubin vie for business book prize
A memoir from former Canadian Auto Workers union president Buzz Hargrove and economist Jeff Rubin's examination of the rising cost of oil will vie for this year's National Business Book Award.
Egypt's Maridive Q1 net profit drops 34.3 percent
CAIRO (Reuters) - Egypt's Maridive, the biggest oil services firm by fleet size in the Middle East, posted a first-quarter net profit of $15.4 million, down 34.3 percent from a year earlier, the stock exchange said on Sunday.
THE promised four Es — employment, education, energy, environment — of the current PPP government in Pakistan are disintegrating.
Promises to tackle the recent energy crisis by building 8,000MW of new coal, solar, hydroelectric and wind electric generation plants have fallen through the cracks of the proverbial dilatory Pakistani political and bureaucratic elites.
Electricity for Businesses Cut Off in Rangoon
Electricity for businesses in Rangoon was cut off on Friday by the state-own Myanmar Electric Power Enterprise (MEPE), partly as a result of low-water levels at hydropower generating plants.
The cut off affects private hospitals, shopping centers, small businesses and industry zones, most of which will provide their own electricity supply through the use of private generators.
Aramco invites firms for gas plant deals
State oil firm Saudi Aramco has invited Saudi-based companies to begin the qualification process to compete for deals to build the Wasit and Shaybah gas plants, two industry sources said on Sunday.
The plants form part of a push by the world's top oil exporter to boost gas capacity to meet domestic demand growth of around 7 percent per year.
BP has begun drilling the second relief well to intercept and isolate the wellbore of the leaking Macondo well in the Gulf of Mexico.
British Petroleum Vs. a Sustainable Planet: Time to Ban BP from Doing Business in the United States
BP is the embodiment of mindless growth, an organization that puts profits ahead of people and the planet. Its practices run counter to the prudent economic policies promoted by the Center for the Advancement of a Steady State Economy. BP in fact provides a case study of a corporation fixated on unlimited growth in oil consumption while pretending to be focused on sustainable living.
Prize-winning economist Kenneth Boulding could have used BP as the poster child for his critique of cowboy or frontier economics (see The Economics of the Coming Spaceship Earth). In contrast to an urgently needed spaceship economy for a planet of 6.8 billion people, BP’s cowboy economy exploits natural resources with abandon as if there were no such thing as peak oil. Maximization of throughput and growth of oil usage regardless of consequences underpin BP’s strategy, as it seeks oil in every nook and cranny of our planet and takes risks that jeopardize the well-being of millions.
From the Gulf, a Message in a Bottle
As oil from the Deepwater Horizon spill spreads around the Gulf of Mexico, many people wonder if it will eventually enter the Atlantic and travel up the Florida coast. Brian N. Toder, a lawyer in Minneapolis who was involved in the Exxon Valdez case, says he is certain that it will, but his view is not based on the science of winds or ocean currents, but personal experience.
As BP siphons oil, worry grows over spill's path
NEW ORLEANS - BP said Monday it was siphoning more than one-fifth of the oil that has been spewing into the Gulf for almost a month, as worries escalated that the ooze may reach a major ocean current that could carry it through the Florida Keys and up the East Coast.
Study: BP refineries account for most violations
HOUSTON (AP) -- A Washington-based research group says two BP refineries in the U.S. account for 97 percent of "egregious willful" violations given by the Occupational Safety and Health Administration.
The study by the Center for Public Integrity says the violations were found in the last three years in BP's Texas City refinery and another plant in Toledo, Ohio. In 2005, 15 people were killed in an explosion at the Texas City refinery.
Enough already. Nuke Gulf oil spill, says expert
“Enough is enough,” Christopher Brownfield writes at The Daily Beast. “It’s time to destroy the well and put the matter to rest.”
The Russians have used this tactic on out-of-control wells before, and one Russian newspaper has urged the U.S. to try it now.
A Crude Awakening: Bill McKibben on BP's Mess
What can the oil spill teach us about the industrialized world? According to author and environmental activist, Bill McKibben, environmental damage is no longer the result of something going wrong, but the result of something working pretty much as it's supposed to. He hopes that even if the spill is capped soon, it will lead to a more aggressive approach to protecting the environment.
NEW YORK (CNNMoney.com) -- General Motors returned to profitability in the first three months of the year, the automaker reported Monday, its first profit since 2007.
The company, which emerged from bankruptcy last July, earned $865 million in the period, on revenue of $31.5 billion. A year ago the predecessor company lost nearly $6 billion on revenue of only $22.4 billion, as sales plunged and the company hurdled toward bankruptcy.
As populations grow and the effects of climate change become increasingly evident, the world must face up to a shortage of water.
More than one billion people do not have access to safe drinking water, according to recent figures from the International Atomic Energy Agency. More than 25 countries have reached the per capita water-poverty level, as defined by the UN, including the UAE, GCC and the surrounding countries in the Middle East and North African region.
For the UAE and other countries in a similar position, the challenge is as much about energy as it is about water. Among the critical areas of research at Masdar Institute of Science and Technology in Abu Dhabi are how to tackle this water shortage and how to do so in an energy-efficient way.
There ought to be a word, probably in German, for a book that makes the reader boil over with life-changing eco-enthusiasm only to find himself, a month later, reverting to his old Hummer-driving, planet-destroying ways. An informal survey of Germanists has failed to come up with anything. But Bill McKibben has found a planet where such books sell well. It is a world where environmental news goes from bad to worse, a place where ice caps vanish, crops fail, oceans acidify, activists rally and an oil company makes more money in three years “than any company in the history of money.” The place McKibben has discovered is an unpronounceable land called Eaarth. Where is Eaarth, you may ask? Unfortunately, you’re soaking in it.
How green are the ‘childless by choice’?
Laura S. Scott has surveyed and interviewed more than 170 people for her Childless by Choice Project. "I'm keenly interested in the process of decision-making," she says. "How do we get from assuming parenthood for ourselves to the point where we're saying, ‘No kids, thank you!'?" She shares what she's learned in a new book, Two Is Enough: A Couple's Guide to Living Childless by Choice, and in a forthcoming documentary.
I called Scott to find out whether environmental concerns were a factor for many of the people she spoke with -- and we also got to talking about whether the feminist movement is supportive of childfree women, how a nurturing instinct is different from a maternal instinct, and why we shouldn't try to save Social Security as we know it.
Pesticides in kids linked to ADHD
Exposure to pesticides used on common kid-friendly foods — including frozen blueberries, fresh strawberries and celery — appears to boost the chances that children will be diagnosed with attention deficit hyperactivity disorder, or ADHD, new research shows.
Youngsters with high levels of pesticide residue in their urine, particularly from widely used types of insecticide such as malathion, were more likely to have ADHD, the behavior disorder that often disrupts school and social life, scientists in the United States and Canada found.
Old has become the new sustainability
For several years, May has been designated National Historic Preservation Month by the National Trust for Historic Preservation. Each year, the trust develops a theme or focus for the month's activities and events, thus ensuring that the public will continue to be educated in a different aspect of historic preservation or adaptive reuse of historic resources.
The theme for 2010 -- Old is the New Green -- is aimed at promoting the concept that in preserving, restoring and reusing existing historic buildings or landscapes, we are promoting what has become one of the main influences on planning, design and construction -- sustainability.
GLACIER NATIONAL PARK, Mont. - Glacier National Park just marked 100 years as crown jewel of the parks system, but questions dot its spectacular landscape as its next century begins.
Will the park's 2 million tourists still come when the glaciers are gone? Is the nation willing to spend $200 million to repair the cliff-hugging Going-to-the-Sun Road? Will climate change destroy the habitat of grizzly bears, bighorn sheep and other iconic animals?
In deep, and falling far short
BP has a big problem in the Gulf of Mexico — and it's not just the oil spill emanating from the wreckage of the Deepwater Horizon.
At another platform in the Gulf — this one owned and operated by BP, unlike the Horizon — the problem is the opposite: Not enough oil is coming out.
Thunder Horse is the massive 60,000-ton, $1 billion production platform that BP, after some engineering difficulties, brought into operation in 2008. It was supposed to produce 250,000 barrels of oil a day.
It hasn't gotten close.
Production from Thunder Horse's main field reached a peak of about 172,000 barrels a day in January 2009, then began declining, falling to 61,000 barrels by December, according to data from the Minerals Management Service.
“The field has collapsed,” said Matthew Simmons, CEO of Houston-based Simmons & Company International, an investment banking firm specializing in energy. Simmons, author of Twilight in the Desert, has studied the Thunder Horse data along with production at most other deep-water wells.
Oil falls below $70 as euro sinks to 4-year low
SINGAPORE – Oil prices dropped below $70 a barrel Monday in Asia as the euro sank to a four-year low and stock markets tumbled on investor concern Europe's economy will wither amid a debt crisis and fiscal austerity measures.
Benchmark crude for June delivery was down $1.64 to $69.97 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The June contract lost $2.79, almost 4 percent, to settle at $71.61 on Friday.
Crude fell as low as $69.82, the lowest since $69.59 on Feb. 5, as the U.S. dollar gained against the beleaguered euro, which was at a four year-low. Oil, which is priced in dollars, becomes more expensive to investors holding other currencies when the dollar advances.
Oil Falls Out of OPEC Comfort Zone, Dipping Below $70 a Barrel
(Bloomberg) -- Oil prices fell below OPEC’s comfort zone as crude futures in New York dipped briefly below $70 a barrel for the first time since February.
Organization of Petroleum Exporting Countries Secretary- General Abdalla El-Badri has repeatedly said prices between $70 and $90 are reasonable to encourage producers to expand exploration, and Saudi Arabian Oil Minister Ali al-Naimi, representing the group’s biggest exporter, said on March 30 he hoped prices would remain in a $70 to $80 a barrel range.
Oil below $70 “does not give them an incentive to invest” in deepwater production, Qatari Energy Minister Abdullah bin Hamad al-Attiyah said today at a forum in Doha. Prices near $75 would be “reasonable,” al-Attiyah said, adding that OPEC does not have any official price target.
Gasoline Premium Peaking Means Nymex Futures Down 43%
(Bloomberg) -- The summer driving season may be ending for gasoline refiners before American travelers even hit the road.
Gasoline futures last week reached the highest premium over crude in 15 months even as U.S. motor-fuel inventories grew 6.3 percent above the five-year average. Refiners are running at 88.4 percent of capacity, building supplies before summer. Futures contracts on the New York Mercantile Exchange show refining margins will collapse 43 percent by September, up from the 24 percent average during the same period since 2005.
Daewoo Ship Offshore Orders to Surge on Energy Demand
(Bloomberg) -- Daewoo Shipbuilding & Marine Engineering Co., the world’s second-largest shipyard by orders, aims to almost triple contracts for offshore facilities this year as economic growth spurs energy demand.
The company may win $5 billion worth of orders for drilling rigs and floating production facilities this year, compared with $1.8 billion last year, Executive Vice President Brendan Jeong said in an interview in Seoul on May 14.
Iraq signs oil field deal with Chinese, Turkish firms
BAGHDAD (AFP) – Iraq signed a deal with Chinese energy giant CNOOC and Turkey's TPAO on Monday to develop a major southern oilfield complex, its 11th deal with foreign energy firms as Baghdad aims to boost crude output.
Among the cluster of fields in the Maysan complex, along Iraq's border with Iran, is a field partially claimed by Tehran, whose forces temporarily took over an oil well in the Fakka oilfield in December for several days but withdrew after talks between the two countries.
Shell to Spend More in Australia Than Other Regions
(Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company by market value, said it expects Australia to attract more of the energy company’s investment than any other region, driven by liquefied natural gas projects.
“It’s the biggest growth area we’ve got,” Ann Pickard, Shell Australia’s executive vice president of oil and gas exploration and production, said in an interview in Brisbane today. Shell said in March it will spend more than $100 billion globally by 2014 to revive production growth.
Unconventional oil found near Paris
Toreador and Hess jointly announced last week that they have signed a definitive agreement, under which Hess may become co-holder of Toreador's exploration permits in the Paris Basin, France, which represent approximately 1 million acres (of which 680,000 acres awarded and 360,000 acres pending).
BP mulls options as tube captures 'some' oil
NEW ORLEANS, Louisiana (AFP) – BP engineers captured some oil gushing from the Gulf of Mexico by plugging a huge tube into the seabed hole and on Monday sought new ways to stem the disaster.
The tube was the first tangible sign of success in more than three weeks of efforts to stop the sea of oil moving slowly toward the US coast.
Models indicate Gulf spill may be in major current
NEW ORLEANS -- Researchers tracking the massive oil spill in the Gulf of Mexico say computer models show the black ooze may have already entered a major current flowing toward the Florida Keys, and are sending out a research vessel to learn more.
Brace Yourself: This Is the Tip of the Iceberg for Oil-Induced Enviro Catastrophes
When it comes to killing addiction, the first stage is always acknowledging one. Optimistic estimations of peak oil theory explain that global supply will start dwindling in 2020, a clear-sighted metaphor if there ever was one. Even without factoring in the always reliable underestimation that leads to disasters like Exxon Valdez and Deepwater Horizon, that's only a decade to get our heads and engines together. In other words, a light-speed snapshot of time compared to the insane workload.
The World Can't Live Without Deepwater Oil
Regardless of the environmental and political fallout from BP's (BP) Deepwater Horizon drill-rig disaster, the larger context remains straightforward: The world, and the U.S., increasingly depends on oil and gas produced by deepwater offshore wells. As existing onshore fields keep declining, the need to develop these offshore fields and so-called unconventional oil deposits will only increase.
Marson looks for equilibrium amid fragile conditions
What about the peak oil argument? I suspect you are not a big fan.
Again: beautiful theory, ugly facts; there is no evidence to suggest peak oil. Michael Lynch at MIT wrote a great paper about 10 years ago, debunking the Hubbert myth.
The rate of growth of the known and global oil reserves in the last 10 years has been faster than the rate of growth of consumption. So we are actually adding to net reserves rather than depleting net reserves.
The problem you have had is known oil reserves have risen faster than consumption – the problem is consumption has risen faster than refinery capacity. So it is the inability to refine the stuff that is the problem. Ultimately, the world will run out of oil at some point in time, there is no doubt. But the key thing is technology adapts along the way as prices rise.
Whether peak oil is real or not to me is irrelevant. What I mean by that is trying to understand if peak oil is real or not is like trying to figure out who shot President Kennedy. We’ll probably never know, because we’re not in the category of “need to know”. Only a few people in the world fall into that category. Possibly all the leaders of the OPEC nations know if peak oil is real or not. But all I try to understand are how markets are rigged, whether those markets are oil, gold, silver, stock markets, etc.
If I can understand these rigging games, then I can understand if oil prices will move up or down regardless of whether peak oil is real or not. We can have all the reports about production levels in Mexico and other oil producing countries drastically falling, but the integrity of these reports are only as good as the people producing them. That’s what most people tend to forget. If you can’t really trust the people producing the reports, then you shouldn’t trust the reports. That’s all I need to understand. I don’t need to understand if peak oil is real or not to make money in the market.
The Financial Crisis Is Far From Over
Where the old game was predicated on perpetual debt roll-overs and rapid economic growth, we now have ample evidence that these features can no longer be counted upon. Yet many persist in acting as if they are 100% certain to return.
Prudent investors, managers, and policy-makers ought to be seriously considering the prospect that our economic landscape has been fundamentally altered. What happens if, just like every other time in history, debt saturation leads to prolonged economic stagnation? Worse, what happens if during our recovery it turns out that Peak Oil is real and we cannot rely on increasing energy throughput to work its magic and stimulate the growth necessary to service increasing interest payments?
Consumers are in denial with social crisis looming
Optimists may have imagined that the current combination of inconvenient truths would cause people to pause and re-examine their habits. We are at, or past, peak oil -its price will inevitably shoot higher in the next five years and could reach $200 a barrel. Our natural resources are becoming more and more expensive as they are inexorably depleted and the cost of mining them (using carbon based energy) increases. Add to this global climate change and the stupendous debts of governments -on top of individual debt -and you have the conditions for a kind of social Armageddon.
But trying to imagine a social movement or a combined, unified movement confronting all of these crises, is a severe test even for those who have spent their lives organizing for, and analyzing, social change. No one in memory has faced this kind of need for change. Many have imagined and fought for change they wanted -a more equitable world, a more sustainable world, a peaceful world. But this is different. The potential for entering a new dark age is real. And it would not be confined to a few countries. The crisis is global.
We’ll eventually kick our fossil fuel habit. We have no choice. If peak oil doesn’t dictate the terms and timing, then climate change will force our hand. And recent events in the Gulf of Mexico reveal more immediate dangers.
Yet our response to these threats remains tepid, insufficient by any measure. Serious action is aggressively opposed by those who hold out an irrational hope that business-as-usual might continue. We seem content to let nature decide the terms and conditions on which we kick the habit. Why?
Living Future 2010: James Howard Kunstler
Despite his generally engaging, joking, and convivial flair as a speaker, much of Kunstler's talk had a pretty gloom and doom tone -- He presented various facts and figures, and scary outlooks of some of the disasters the United States (US) will face if nothing is done to prepare for the end of cheap oil.* At a conference where the theme was all about hope and creating action for a sustainable future, his general pessimism was a strange beginning. However, it seemed that Kunstler’s reputation as someone who doesn’t pull any punches was exactly what conference organizers were looking for as a strategy to push people beyond wishful thinking and into hopeful action. As Joel Sisolak said when introducing Kunstler: “His kind of honesty is the only way to prepare ourselves for a living future.”
Eight principles of uncivilisation
Those who witness extreme social collapse at first hand seldom describe any deep revelation about the truths of human existence. What they do mention, if asked, is their surprise at how easy it is to die.
The pattern of ordinary life, in which so much stays the same from one day to the next, disguises the fragility of its fabric. How many of our activities are made possible by the impression of stability that pattern gives? So long as it repeats, or varies steadily enough, we are able to plan for tomorrow as if all the things we rely on and don’t think about too carefully will still be there. When the pattern is broken, by civil war or natural disaster or the smaller-scale tragedies that tear at its fabric, many of those activities become impossible or meaningless, while simply meeting needs we once took for granted may occupy much of our lives.
Event in Steamboat to focus on oil’s aftermath
Steamboat Springs — A growing movement to coordinate sustainability and conservation efforts in anticipation of oil’s decline — a debatable topic itself — comes to Steamboat Springs this week.
Michael Brownlee, co-founder of Transition Colorado, hosts a screening of “In Transition 1.0” at 6:30 p.m. Thursday at Bud Werner Memorial Library. In addition to the 50-minute film, the free event includes a discussion about growing “transition” efforts, which coordinate groups and individuals to increase a community’s self-sufficiency in areas including transportation, food production and more, with the goal of drastically reducing carbon dioxide emissions and dependence on fossil fuels.
Kurt Cobb - Saving the casino: America's economic recovery strategy
The first step to curing an addiction is admitting it. Wall Street took the public for a ride, an almost 30-year ride, promising endless prosperity and riches without work! It turned out to be nothing more than a vehicle to enrich the few at the expense of the many. But instead of acknowledging this fact, members of the public are once again being enticed by Wall Street to stick with what is essentially a gambling addiction. The government is abetting the financial industry with the sales pitch that the Congress is going to reform the casino so that it will be a fairer place to gamble. (But, we aren't even going to do that with the current proposed reforms.)
India's April power output up 6.04 pct y/y-govt
NEW DELHI (Reuters) - India's power output grew a
modest 6.04 percent annually in April to 66.57 billion kilowatt
hours, even as coal shortages curbed thermal power generation,
the Central Electricity Authority said in a report on Monday.
S. Africa Cuts Europe Coal Supply, Asia Sales Rise
(Bloomberg) -- South Africa’s Richards Bay Coal Terminal, Europe’s biggest source of the fuel burned for power, cut shipments to the Atlantic region by more than 43 percent in April and increased sales to Asia by 16 percent, a trader said.
Repsol, BG Terminals in Argentina, Chile to Receive LNG Cargoes
(Bloomberg) -- Repsol YPF SA’s Bahia Blanca site and BG Group Plc’s Quintero Bay facility in Latin America may receive at least three liquefied natural gas carriers from the Atlantic Ocean area this month, according to ship-tracking data.
Geothermal projects could meet all Canada’s power needs
Canada could technically meet all its electricity needs and dramatically lower greenhouse-gas emissions if it moved aggressively to develop enhanced geothermal power projects, according to the first comprehensive assessment of the country’s deep geothermal resources.
The study, published online in the Journal of Geophysics and Geoengineering, reports on the potential of using enhanced geothermal systems (EGS) to tap hot temperatures kilometres below the earth’s surface as a way of generating clean electricity.
Miniature Nuclear Plants Set to Seek Approval for Work in U.S
(Bloomberg) -- Manufacturers of refrigerator-sized nuclear reactors will seek approval from U.S. authorities within a year to help supply the world’s growing electricity demand.
John Deal, chief executive officer of Hyperion Power Generation Inc., intends to apply for a license “within a year” for plants that would power a small factory or town too remote for traditional utility grid connections.
Iran to ship uranium to Turkey in nuclear deal
TEHRAN, Iran (AP) — Iran agreed Monday to ship most of its enriched uranium to Turkey in a nuclear fuel swap deal that could ease the international standoff over the country's disputed nuclear program and deflate a U.S.-led push for tougher sanctions.
The deal was reached in talks with Brazil and Turkey, elevating a new group of mediators for the first time in the dispute over Iran's nuclear activities. The agreement was nearly identical to a U.N.-drafted plan that Washington and its allies have been pressing Tehran for the past six months to accept in order to deprive Iran — at least temporarily — of enough stocks of enriched uranium to produce a nuclear weapon.
Iran to resume uranium enrichment despite Turkey deal
(CNN) -- Iran will continue to enrich uranium to 20 percent, it said Monday, despite agreeing hours earlier to ship its low-enriched uranium to Turkey.
Being Bad at Relationships Is Good for Survival
People who do well in relationships have what's called a secure attachment style. They tend to view the world as a safe place, and their optimism allows them to focus on tasks without being bogged down with negative thoughts. They seek out groups and work well in them.
In contrast are those who exhibit insecure attachment styles. Some people are anxious types, always clinging to their significant other, and others are aloof, or avoidant, preferring to deal with problems on their own instead of relying on their partners.
Half-used bars of hotel soap can save a life
A 15-month-old, non-profit group called Clean the World recycles old hotel soaps into new soap and shampoo for impoverished countries and U.S. homeless shelters, the National Geographic Traveler told us earlier this month. Its primary goal is to help children in developing countries combat diarrheal diseases that cause nearly 1.8 million childhood deaths per year, the article says. Proper hygiene practices can elimimate avoidable deaths.
UN picks new climate change chief
Costa Rica's Christiana Figueres is to be the new head of the UN climate convention, BBC News understands.
The UN is expected to confirm her appointment to take over from outgoing chief Yvo de Boer later in the week.
Copenhagen Accord: not a disappointment after all?
Many were disappointed by the outcome of the UN climate negotiations in Copenhagen last December. Instead of binding emissions targets, the Copenhagen Accord proposes action to keep the global temperature increase below 2 °C.
But Veerabhadran "Ram" Ramanathan and Yangyang Xu of the Scripps Institution of Oceanography, US, argue that such action is "significantly more formidable" than requiring 50–80% cuts in carbon dioxide emissions by 2100. Writing in PNAS, the pair detail the three-pronged approach they believe will be necessary to keep to this temperature limit.
Where we're at with geoengineering
PEOPLE tend to have strong opinions about geoengineering - large-scale manipulation of the environment to counteract global warming. These opinions are often highly polarised and, thanks in part to media coverage, usually focus on two extremes. On the one hand, there is the view that geoengineering is the quick-and-easy fix to all of our climate troubles; on the other, we find a picture of mad scientists destroying the world. Unfortunately, both narratives have marketable traction.
Thankfully we now have two books on the subject, written by respected science writers, which paint a more realistic and multicoloured landscape of the options, opportunities and threats that are usually so brutally oversimplified.
Africa's lake Tanganyika warming fast, life dying
ABIDJAN (Reuters) – Africa's lake Tanganyika has heated up sharply over the past 90 years and is now warmer than at any time for at least 1,500 years, a scientific paper said on Sunday, adding that fish and wildlife are threatened.
From climate change to vaccines, evolution to flu, denialists are on the march. Why are so many people refusing to accept what the evidence is telling them?
In this special feature we look at the phenomenon in depth. What is denial? What attracts people to it? How does it start, and how does it spread? And finally, how should we respond to it?
Contact
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This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
If you did not see 60 Minutes’ two segments on the Deepwater Horizon Blowout, then you should watch it now. Both segments are now available online.
According to this report there were several things that caused the disaster. The BOP had a hydraulic leak and a weak battery. Other than this there were three things that led to disaster.
1. The Annular, a rubber seal that is supposed to close off the well had been damaged. That problem was ignored.
2. One of the two control pods had lost some of its function. That problem was ignored.
3. Halliburton was to place three concrete plugs to seal the well. Traqnsocean wanted keep the mud in the column until all three plugs had been placed. But BP overruled them and ordered the mud pulled out before the third plug was in place. They ran a pressure test before pulling the mud but because the BOP was had a damaged gasket the results of the test was not accurate.
Anyway you must watch these two segments from 60 Minutes. It will make you mad as hell but I believe you will then know a whole lot more about what caused the blowout afterwards.
60 Minutes: Deepwater Horizon's Blowout, Part 1
60 Minutes: Deepwater Horizon's Blowout, Part 2
And, as if all this were not enough, the platform Atlantis may also be in danger of a catastrophic failure that would dwarf the Deepwater Horizon disaster.
Ron P.
I want to thank you for posting this, Ron. I had work to do yesterday and was wondering how to access the video.
It is a good overview of how the actions culminated in the disaster.
I would call it a must see.
How long before they start calling it "oil industry's Chernobyl"?
They've been calling it that since it happened. :-)
See Washington Post, Sunday, May 9, front page article. Very end of article, summing up.
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/08/AR201005...
Population growth has at least one benefit. Now there is a sucker born every 15 seconds, or so.
How else to explain the existence of 'investment' advisors like Marson: "Marson looks for equilibrium amid fragile conditions"
He doesn't lack for certainty, that's for sure...
Does anybody know what possible source he might be thinking of when he says:
I would have thought that outside of the wholesale inflating of reserves done by OPEC nations in the late 1980's, there hasn't been any overall NET global reserve growth.
Reserve growth. Ultimately, a metric made meaningless by manipulation.
Production is what counts, and is what is countable, reasonably well. Price is what carries the most information. When the price of oil returns to its historic average, I'll remove Lynch from my list of lunatics.
the price of oil will likely return to its historical average, (not because we have plenty of oil but that we lack the means to pay for it.)
You don't buy Jeff Rubin's claim that Chindia will keep prices up, even as US demand falls?
No.
All Brics are linked at the credit hip. China is almost as leveraged as the rest. Commodities stay firm until they don't. If oil had unlimited storage then it would stay up for longer as China would 'commoditize' into energy some of its paper wealth but that has limits too. Rubin is missing the debt interconnectedness and rapid entropy of sovereign credit generation machines.
Yes, that's pretty much how I see it, too.
I find it odd that Rubin, an economist, doesn't see the debt interconnectedness. For example, he doesn't see how the US mortgage crisis could cause global financial problems.
top two most popular phrases of the past 5 years:
"nobody could have seen this coming..." (or some variant)
economists/analysts/gov't officials/ (fill in some other 'smartest guys in the room' type position) "were surprised" by the sudden drop in the housing market / retail sales / stock market etc etc... (or some variant)
these guys are either completely clueless all the time or are perpetual liars
or both :P
"these guys are either completely clueless all the time or are perpetual liars"
I would bet the latter...a famous line in the political satire film, "Ninotchka", a communist speaks of the capitalists thusly:
"they take loss after loss on every deal until they are flthy rich."
:-) Oh how true...
RC
Actually a lot of economists saw it coming - just not your typical wall st type economist MSM interviews.
The other piece to consider is the amazing amounts of capital required for obtaining any of the remaining resources, including oil. It's quite possible that the resource prices re-equilibrate at a much higher level relative to their historic pricing in real terms, as I too think we are all on the way to getting much poorer.
OMG, WE ALL SEEM TO BE IN CONSENSUS!! (that scares me!)
I think Nate and Leanan are absolutely right on this, "peak money before peak oil" (of course, lack of one means lack of the other doesn't it?) As for Chindia, the question still remains, when the west (Europe, U.S. and Japan) are all on austerity at the same time, who is going to be buying their plastic trinkets and what's its?
If they have a home market big enough to swallow this crap up, and can keep the building boom going (in China that is roughly 60% of GDP...gee, does that sound like a bubble in the making? Already there are empty office parks and skyscrapers visable...)
RC
Maybe in a managed economy a profit is not required to justify investment?
Craig
Maybe Rubin has come to the conclusion that the world economy no longer orbits around the American economy, and the rest of us are still not comfortable with this idea.
When I think about this sort of thing, I try to put all opinions aka subective facts out of my head and come up with an opinion based STRICTLY on objective facts.
The world has turned upside down ,economically, over the last few decades, but most of us simply have not come to grips with THIS fact.
We are now, in terms of the actual flow of raw materials and finished goods,well into the process of becoming a colony, rather than THE colonizer.The one really big exception is oil, and the dollars we are paying for it would not be worth the paper they aren't even printed on anymore if we were not ( due to long term historical/geographical accidents mostly) the only super power, and still ready , willing, and able to occupy the Middle East.
My take is that the recent real estate bubble had a LOT to do with KEEPING the pressure up in the pressure cooker of our economy, AND a lot to do with our imports binging.
But guess what?When it popped, we found ourselves getting a little long in the tooth, with lots of wrinkles , and flabby muscles.We are still nominally the alpha,but there are a number of countries out there now with the power to twist our noses with impudence;the only reason they refrain is that doing so it not good business, for the most part.
Can anybody here except a neanderthal old conservative remember the meaning and significance of the term "Monroe Doctrine"?
I'm not talking about moralizing and equality and koomby ya , but something a little more fundamental-the actual balance of power in a Darwinian world.
I find it amusing that so many otherwise perceptive people keep up a refrain about nature and the necessity of respecting her laws,while at the same time recoiling from the very existence of such laws because they don't want to carry thier arguments to thier logical conclusions.
Pretending these laws do not exist will not magically maintain our status as the top economic dog.
A general world wide crash might take EVERYBODY down, and before too long.We might still be on top when it arrives.
But every year it is delayed sees a noticeable decline in our relative power and influence visa vis the rest of the world.
Maybe Rubin is premature, but I am of very much the same mind.
Maybe I'm just a deluded old conservative;I have no credentials as a historian, or as an academic of any sort.
But being a conservative in the true sense, I always look at things from the broadest possible perspective, and over the longest possible time frame, and to seperate the obective from the subjective.
All indications are that we are in very deep trouble, and getting in deeper by the year.Our time in the sun has coincided almost exactly with the fossil fuel age as depicted by Hubbert.
If he was/is right, our time is about finished.
Did Kennedy really name a Doctrine after Marilyn?! ;-)
That is clearly the conclusion he has come to. However, I don't think that's all that relevant, whether or not it's true.
It really has nothing to do with whether the world revolves around the American economy. It doesn't matter which economy is in trouble, because they are all so interconnected. Iceland and Greece had global impact, too, but pointing that out is not the same thing as saying the world orbits around either of those countries.
Do you expect production costs to return to their historic average?
Aside from the impact of production costs, I think you are probably underestimating the capacity of the Greater Chindian economy to profitably exploit oil at a price which is four or five times the historic average, if not more. When consumption of the marginal barrel lowers their productivity, as it does in USland, then the immature economies will stop paying whatever price is needed to outbid the mature economies.
As for the debt interconnectedness bit, I think you might find some value in flying your concern by James Galbraith. You'll find some insightful material here: http://utip.gov.utexas.edu/JG/Comments%20and%20Interviews.html
And hopefully you didn't miss this somewhat related interview:
http://voices.washingtonpost.com/ezra-klein/2010/05/galbraith_the_danger...
There is a short term problem in Europe because some countries can't devalue. A political problem that will be solved.
No. Not even close.
Remember, so much of our energy production and infrastructure is based on natural resource inputs that happened long ago and have already been depreciated. As such the global energy gain estimates from oil are largely overstated (or at a minimum, misleading, as they are at the margin, not full cycle)
I think the debt interconnectedness will keep the price up for everyone.
You really need to explain that one Ignorant. I see it as the exact opposite. The ability to get credit is hard in the US and even harder in some parts of the Euro zone. When people are unable to borrow money then the money supply falls, there is less building, less manufacturing and less employment. This keeps prices down for everyone.
As for high oil prices, even in a healthy economy there is a limit to how high the price can go. Eventually high prices kill demand as it did in 2008. But in a sick economy there is just no way prices can go very high. High oil prices cause a sick economy to get even sicker. A collapsing economy drives prices down.
Well that is the case for constant dollars anyway. But if or when the price of a hamburger goes to $50 then oil could easily go to $500 a barrel and still be cheap. But adjusted for inflation I do not believe prices will ever go above their 2008 level.
Ron P.
I'm of the same opinion. When the price peaked in 08 it was probably peak oil and peak economy, and then of course as we know the latter tanked, and is still trying to return to its former glory. However, I don't see the economy bouncing back in spite of MSM trying to convince us otherwise.
For the price of oil to rise to an adjusted for inflation price higher than in 08, it would require years of low priced oil to support big economic expansion, then a slow rise to a higher price. At this point that seems like an unrealistic expectation.
The relevant price for 2008 is the annual average price, not some price achieved in a moment of hysteria.
Secondly, I think there is a tendency, particularly among Americans and Brits to see USland as the world. I would agree with those forecasting (observing) a poorer USA and UK and other parts of Euro/USland. Even those of us with the good luck to hold Canadian citizenship will eventually be affected, depending on such factors as the penetration of woodframe construction in China, the distortive effects of an extremely capital intensive tar pits operation, etc.
But USland is not the world, just that part of the world with mature capitalist economies, which, crudely, refers to the capacity to generate profit and therefore support growth. Greater Chindia, not to mention immature economies elsewhere, provides still ample opportunity for profitable enterprise. The internal economies in this region can suck up much more oil than they are currently doing and continue to improve labour and capital productivity.
The good news for USland is that reduced domestic oil consumption, which will be achieved via a response to price, could improve economic competitivity. For example, fewer cars, can improve freight transport efficiency.
I say could because, frankly, USland has a debilitating level of physical and mental laziness, manifest in obese bodies and uncritical thinking.
toil, most debilitating has been our indoctrination in the pursuit of "the good life." Even the best of us believe that the good life is possible, if you work hard enough. Indeed, I believed this for too many years until I finally came to the realization that the good life was not a worthy goal. I am not an ascetic -- I appreciate a good brew or a good squeeze as much as the next guy -- but I now understand that it is the pursuit of the good life that is killing us and killing the planet.
Best hopes for a more humble and circumspect populace.
We won't kill the planet. We're like parasites on the back of gnat buzzing the backside of a water buffalo. Swat and we're gone. Biodiversity will return.
In the meantime, we might want to work on our idea of what constitutes the good life.
"Biodiversity will return."
And this certainty is based on....faith?
It came back after Chicxulub.
Even life on earth is not forever.
One day the sun will warm to the point that a black swan event (maybe AGW, maybe an asteroid strike , supervolcano) will overwhelm Gaia and the planet will flip into runaway greenhouse, leaving most of it barren rock.
My guess is life has another billion years, tops. We can't afford too many more 90% extinction events if biodiversity is to generate true and stable intelligent life.
But maybe intelligent life is inherently self-destructive. Perhaps that is what SETI tells us.
No, It's based on George Carlin
http://www.youtube.com/watch?v=eScDfYzMEEw
I have followed this discussion with great interest, but I have a question: at what price will exploration and production start to collapse? I have read that at 60 dollars, deep water and oil sands become uneconomic. A serious recession may take 4 or 5 million barrels out of demand, but wouldn't investment in future oil projects plumet, creating a supply crisis in a few years. Couldn't that drive the price of oil to new highs?
By the way, thanks for the insights to all contributors of TOD.
Joe B.
If the demand is high enough, and the supply is low enough, somebody will pay a high price for it. It's like scalped tickets to a ball game.
But scalped tickets to a ballgame are often lower than face value, depending on demand.
This is where the disagreement is. You think this is New York Yankees World Series tickets, while others think it's more like a Florida Marlins regular season game.
I was a hero with my daughter and her friends several years ago, when I stopped by a ticket broker's office to check to see if they had some tickets for a George Strait concert that night. I bought floor level tickets, 10 rows from the stage, for less than face price.
[slap to own's forehead]
Ah, I see the error of my ways....
8^0
Gas will forever be under $3.00/gallon... and we will all drive happily into the 22nd Century.
80)
There! take that James Howard Kunstler! you boogey man you!
P.S. So what's wrong with the Florida Marlins?
;-)
Gas can go to $0.25 per gallon but if you don't have a job and the state itself is too broke to babysit you with foodstamps and welfare, you're not going to be buying much gasoline. I am not saying gas will go that low. I am just saying to get beyond your peak oil fixation and look at the overall economy. Gas was a couple bucks per gallon yet billions of people around the world were too poor for that price. You are assuming those of us in "first world" countries all stay as wealthy as we are now, something you should not be so certain of given the current economic climate.
Of course, my working assumption is that developing countries will continue to outbid developed countries for declining net oil exports, so my forecast for the US is that we are, in all likelihood, going to be forced to make do with a declining share of a falling volume of global net oil exports.
In any case, if we look at post-2005 data & trends, we see generally increasing consumption in developing countries, generally falling consumption in developed countries and global net oil exports that have been, insofar as I know, below the 2005 annual rate since they started declining in 2006.
So, we have seen two factors driving up the price of exported oil, rising consumption in developing countries and constrained volumes of net oil exports, versus one factor driving down down prices, falling demand in developed countries, that have interacted to cause annual oil prices to be above the $57 level that we saw in 2005 for four straight years and for 2010 to date.
As I have previously noted, in the Thirties, it appears that global demand rose throughout the Thirties, after falling in 1930, and US oil prices, after hitting bottom in the summer of 1931, rose at 11%/year from 1931 to 1937.
But what happens in a recession/depression with constrained global oil supplies, instead of rising supplies? I don't know, but I do find it interesting that so many developing countries showed large increases in consumption, even as oil prices rose at 20%/year from 1998 to 2008, and according to Marc Faber, the total size of developing non-OECD countries now exceeds the total size of developed OECD economies.
Of course, my scenario is actually more bleak for the US economy than your scenario.
I'm glad you allued to the fact that after the financial crash of the early 1930s, wholesale and consumer prices actualy rose quite rapidly up until about 1937. In 1937 the Federal Reserve made a major tightening move because they actually reasoned that it would increase lending by banks, but it was a major blunder that Bernanke himself would eventually right a book about.
So contrary to popular opinion, the 1930s depression was not one big long deflationary downtrend.
Adding peak oil to the mix of a poor economy will probably give us some unexpected outcomes. Personally I think the price of oil in the US will eventually exceed even the inflation adjusted high of 2008, although monetary and even environmental factors, such as the GOM oil spill and Icelandic volcanos, make predictions quite uncertain.
There is also a possibility of a tiered world price, where the price of oil trades at different levels around the world. This would be caused by physical bottlenecks, such as port closures, embargoes, or too much/too little refining capacity to deal with the falling quality of oil output.
Let's not forget that China can and is using its vast currency reserves to lock in oil deals, build refineries, and acquire interests in companies to gain a more favorable trade status. So yes, I am saying that it will be China that holds the trump card on oil. Review what happened in 2008 when they made large purchases to build up inventories (which lead to $100+ oil) if you think they are somewhat impotent in this area.
I don't think either is true, but the first does not logically lead to the second.
As Stoneleigh put it, oil could be $10/barrel, but if you don't have a job and can't afford that price, you won't be driving anywhere, happily or not.
And I don't think Kunstler would disagree with that.
As for the Marlins...I think there's just too much sports down there in Florida. Spring training baseball, a whole lotta college football, two major league baseball teams, three NFL teams...supply exceeds demand.
Of course, they may have other problems in the future...
In other news: The Florida Marlins beat the Miami Dolphins in a game of underwater hockey this afternoon.
Yes, Underwater Hockey is a real sport!
http://www.youtube.com/watch?v=suIUd1aOTtQ
Ron, weren't you the one arguing a few months ago that the price of oil was in its proper range in the $80+ area because of shortages, caused by peak oil?
Look, peak oil is important on a long timeline, but right now the economy trumps everything else within the sphere of the "normal". To get outside the "normal" we'd need one or more serious unexpected events (unexpected by the vast majority). The Gulf oil spill is one such unexpected event but it's not likely to raises oil prices, at least not for a few years minimum. In fact, the Gulf oil spill could crater oil prices if the ecological damage is high enough. It might cause loss of entire industries and forced permanent evacuations of many communities on the Gulf coast. Already some coastal towns are experiencing dangerous levels of hydrogen sulfide gas. Air tests from the Louisiana coast reveal human health threats from the oil disaster. The wrong hurricane could cause multi-year damage to watersheds in the Gulf region by contamination from oil. And much of the Gulf region relies on surface water, easily contaminated if the wrong storm surge hits. All of this points to further economic dislocation.
Yet oil was headed down before the spill. Why was the price up? It was not because of demand at all. It was because of anticipated demand. In other words it was speculative behavior betting on a Chinese recovery leading the world out of The Great Recession. Instead, we're getting the second inning of The Great Recession with possibly several more to go.
The price of oil is headed down, folks, and if you believed otherwise then you must have missed 17%+ real unemployment, 40 million on foodstamps (Another Record, Another Foodstamp) which is an all time record and expected to go far higher by the government itself), record deficits, etc. Heck, in Illinois the state legislators are getting eviction notices from their state legislature offices, because Illinois rents them and has not paid rent since sometime last fall. One legislator dipped into his campaign funds to get his phone turned back on. Yet Illinois still refuses to deal with its deficit. What do you think is going to happen when they are finally forced to deal with it? An economic recovery? Puhlease! And reports of retail sales increasing? More Mainstream Media Lies! They are just reporting "same store" sales and since the number of stores is declining due to bankruptcies the remaining stores see small increases in sales. Yet the MSM doesn't report state by state sales tax receipts which are publicly available in almost all states. Those are the honest figure compared to "same store sales" and sales tax receipts are in horrendous decline, which is precisely why so many states are facing huge budget deficits.
The Great Recession never ended people. We don't have soup kitchens. Instead we have 40 million SNAP card users. There are 7.5 million (and growing) households living in houses on which they have not made a mortgage payment in 12 months or more yet not been foreclosed, because foreclosing would force the bank involved to recognize the losses on that loan. And despite SNAP cards and no mortgage payments, total credit in the US continues to contract at alarming rates. Credit is money in the modern economy, folks. This is all hugely deflationary, meaning prices are headed down, not up. For oil prices to rise would require that the rate of decline in production exceed the rate of decline in demand and that's just not happening, at least yet.
For all of you who expected higher oil prices because of peak oil, you were staring at the needle in the haystack and ignoring the haystack. You were staring at a speculative bubble caused by Wall Street traders who were hoping for an economic recovery that is not materializing yet. And now they've been dumping long positions allowing oil to head down towards where it belongs. I fully expect oil to float near $70 for a few months then trend lower as the European economic mess comes into full bloom. Only if we somehow muddle our way out of The Great Recession will oil become a real problem again within the next 2-3 years. Now further down the road? We'll have to see what our rate of actual decline looks like versus the state of the global economy.
P.S. An unexpected event that could raise oil prices would be open warfare in the Middle East. The great majority is not "expecting" that right now or it would be priced in and it's not. As always, reality can surprise us but right now there is simply no reason to expect increasing oil prices in the face of credit contraction that is occurring. Right now, today, the economy is bigger than peak oil.
No, I was definitely not arguing that. Please don't put words in my mouth unless you can give a link to exactly what I said. Nothing pisses me off more than when someone tells me I said this or that when in fact I never said any such thing. I have never argued that $80+ was the proper range for oil to trade. Of course if demand was high enough then oil could very easily trade above $80 a barrel. It already has. But it is just silly to say that a given range is the proper dollar range for oil to trade. The proper range for oil to trade is where it trades.
If you have followed my posts on this list then you should know that I have argued ever since the price collapse that the price of oil would never go through the roof like it did in 2008. I have argued over and over that such prices knock down the economy and prevent the price from going too high. Don't confuse me with people who have been arguing that peak oil will cause extreme high prices. That was Memmel and a few others, not me!
Oil always trades at its "proper" range except for those price swings that never last very long. It is all about supply and demand. The proper range for oil is the price consumers are willing to pay and the price producers are willing to sell.
I was arguing that if oil fell below $60 a barrel then many drillers would be shut down. But oil can fall below $60 if demand is low enough even if it does shut down a lot of production. I was arguing that oil is not in a bubble. Given the current demand, and the current supply, oil is trading at its proper price. But if the recession gets worse, that price will fall. There is no proper price for oil. Oil will trade, in the long run, where the supply and demand tells it to trade.
All that being said I expect oil to trade below $100 a barrel from here on out, (in 2008 dollars), except for swings or spikes by panicky buyers or sellers.
Ron P.
Unlike Ron, I would think that such a thing as a proper price range exists. In my definition of a proper price range, that price would be sustainable for several years -perhaps with a superimposed price trend. Any price outside of the proper price range tends to collapse toward the proper price range -and often overshoot it greatly.
Now, it may not be all that easy to compute what this "price" would be. It clearly depends upon the difficulty of creating more supply, and on the benifit per barrel to the marginal consumer. It might also depend somewhat upon the discount rate of the suppliers, i.e. if a big supplier such as the Saudis decided to save some oil for the kids/grandkids versus pumping selling it all sooner rather than later. Bur presumably the past proper price range can be estimated by time filtering past prices. I don't know if a mechanism can be developed to measure the current proper price range however.
Hell, I know the perfect mechanism to determine the proper price range. It is the same one we have been using for over 100 years. It is called "Supply and Demand". Supply is determined by producers, and whether they are able or willing to produce oil at a given price. Demand is determined by how bad consumers need the product but most important, demand is determined by the consumer’s ability to pay.
Only rationing can hold a commodity inside a price range, and rationing has all kinds of drawbacks. But if you are in favor of a given "proper" price range, then you must be in favor of rationing.
You should be writing this down somewhere Enemy, so you won't forget it next time. ;-)
Ron P.
if someone can tell us what the minimum economically sustainable demand for oil is,the maximum overall world production is,we can speculate all day.
China's debt is primarily held internally. That is materially different from most of the world's debtor countries.
Because of a much higher labor to energy ratio the oil price sensitivity is likely to be much lower. When you use relatively little of something it can increase in price but it doesn't have much of an effect on your total expenditures. Also, my guess is that a good part of Chinese oil consumption is for (export) productive purposes rather than individual recreational purposes. In other words, any increase in costs can potentially be passed through to exporting counties.
Rgds
WeekendPeak
Good to see you still have a minute hereand there for all your fans Nate!;)
Which period of history are you referring to , specifically?I'm guessing the 2002 to 2007 period or thereabouts.
I can't see any possibility of twenty or thirty dollar oil ever again, excepting the possibility of massive monetary deflation.
A chart, produced here by Gail, shows that OPEC has continued to add fictitious reserves to its already unbelievable claims. Also the Tar Sands have recently been added by some to world reserves.
Though the tar sands have been known and mined for years, their recent addition to "world total reserves" give the appearance of huge growth in reserves.
The disconnect between oil reserves and production by Gail E. Tverberg
Ron P.
I disagree strenuously with Gail. Of course.
"Does anybody know what possible source he might be thinking of..."
I think he quotes Lynch.
See what happens when you copy someone elses homework?
Re: In Deep and Falling Short. The Thunder(less) Horse Saga.
Is deepwater worth it? Great question.
Will this story move beyond Houston and TOD?
a ceo of mid-major told me yesterday that total return on GOM for industry since inception is 6%....
Insofar as I know, the Houston Chronicle article by Loren Steffy is the first time that the MSM has run the story of the collapse in production from the main producing structure at Thunder Horse. From here, it will be interesting to see how long the trade journals like the Oil & Gas Journal continue to ignore the story.
"In deep, and falling far short" above got me trying to find out how much oil they were drilling for in the Macondo field. I've found estimates of 100 million barrels (http://www.drillingahead.com/forum/topics/transocean-deepwater-horizon-1). Does that seem right? And if so - I agree with the above question: Is that really worth it?
Best!
Here we are with crude trading down near $70 or so and renewed anxiety about the Euro and that the debt unwind and "great recession" may not be over yet.
It does appear that oil prices will not move significantly higher because peak oil will likely end up looking like continued recession and not $200 oil. The end of 2010 will be generally worse than expected and the recession will continue.
Things seem to be deteriorating rather quickly in my opinion, I can see the European debt/currency crisis easily heading back across the pond and causing a crisis in confidence in the U.S. dollar within the next 12 months or less. Fiat currencies will also continue to be unstable as a symptom of PO and too much debt.
I find it fascinating how accurate Gail’s “Delusions of Finance” presentation has been since 2008. This thesis appears to be spot on and becoming more a reality everyday.
For the moment, most economic indicators are fine. Growth is even higher than predicted. The BIG issue is the financial market that as less and less contant with the real economy. It could collapse anytime squashing the real economy in the process.
Despite all the money-printing...
China grabs more Treasurys
"The biggest increase in Treasury holdings came in the U.K., where purchases of $66 billion brought the total holdings to $279 billion."
You can bet your bottom dollar that this is more fantasy accounting. Almost certainly an extension of a swap facility with the FED and Bank of England. There is no way Britain had a real bonefide $66 billion to spend when our trade deficit is growing along with current account deficit.
What to diversify into? Euros. Oops, they aren't worth so much anymore. Hmmm. Is the West more desperate to buy Chinese goods, or are the Chinese more desperate to sell them? If China disappeared off the map, how would that effect the west. If the West disappeared, how would that effect China?
Of course, the balance of trade must shift. China has to make stuff for the Chinese. But the Chinese government is afraid to let the teeming masses into the 21st century so it taxes the Chinese laborer by hoarding foreign securities which devalues the currency they are paid in so that they can not afford to buy the crap they spend all day making.
Brazil and India by contrast are developing democracies with strong domestic economies. China depends on exports too much.
Does it make sense to develop the developing world with growth limited by energy supply? Why put capital there? Because of the comparative advantage in labor intensive enterprises. However, with a weaker dollar and sunk cost in Western located capital, much of that comparative advantage disappears.
What would a shift from growth to preservation and maintenance of existing capital do? In growth it makes more sense to develop what has not been developed yet, to apply existing technology where it has not yet been applied. When input is limited, doesn't it make more sense to feed input to capital where it already exists?
The herd mentality is the driving force in the currency market today. The confirmation is the quickness of the movement. Under the rush for judgement, it is easy to overlook the $12.9 trillion Federal debt growing $4 billion every day. It is easy to overlook the understated Federal debt that the FED, Frannie, FHA and Freddie help to obscure. On the other hand, it is easy to forget that Europe has a 15-18% VAT tax and 4 times the gas tax to mitigate revenue problems. The US has absolutely no political will to correct its revenue problem. Here many major US companies pay little US taxes. Munis, annuities, and mortgage interest deductions make the US treasury poorer than their European counterparts.
With all the stupid liquidity the central banks have created, the musical chairs game will be the game of choice for all traders in stocks, bonds, commodities and currencies. When the music stops, all will rush for chairs, then the stocks,the Euro, oil, gold, commodities will go up, and the US dollar will probably go down. A deflationary spiral would change the probable outcome, particularly in credit, and real estate around the world, but central banks will inflate even more to forestall a deflationary spiral IMO
Fiat currencies are the only ones that have a snowball's chance of being sound. This is because they fall more or less under one jurisdiction whereas specie based currencies are subject to global banking turmoil, eurodollars and Icelandic banks notwithstanding.
its not 'fiat' that's the problem. its a) leverage and b)lack of tether to energy/resources
Yes. We need to stop borrowing from future wealth created by expected growth, and fund all investments from real savings.
Guess I'm old fashioned. I think Greece and every other country in the world needs to live within their means. It's only when you have lived beyond your means for a long time that the rock and hard place you describe becomes a problem. We can't grow out of this pickle. The choice is suffer some pain now or much more pain later.
I think you're probably too much in fashion. If your argument is that deficits are the indicator of whether a country is living within its means.
A country is not a household and is not a business. As Galbraith indicates, governments need to run deficits and when they don't, recessions ensue. In contrast, households need more income than expenditure, or it's time for household re-formation, and enterprises need to make profits to stay in business.
National deficits aren't the problem. State supported retirement for 55 year olds, state expenditures on war making toys, idle state employees, non-compliance with tax codes, these are problems. As are drastic inequalities in income and wealth, unemployment and underemployment, and resource degradation.
But none of this means that it is either just or effective to put the burden of solutions on the ordinary citizen. Which, unfortunately is the direction preferred by many.
Here is some more food for thought from the Ezra Klein interview with James Galbraith, son of John K.
http://voices.washingtonpost.com/ezra-klein/2010/05/galbraith_the_danger...
James Galbraith is wrong. Deficits are bad for the economy. Keynes was wrong...
Deficits Make You Poorer - by Dr. Ron Paul
The next time I need my teeth fixed, I'll go to an economist.
Ron Paul is an obstetrician--delivers babies.
He read Ayn Rand and von Hayek.
He believes in the gold standard.
On economic matters Ron Paul gets all the credibility that a baby doctor who reads Ayn Rand and believes in the gold standard deserves.
Sorry, Majorian, but all you managed to do is attack the messenger. The quote/information GauharJK posted is right on... deficits mean future tax increases. This is the reason that Libertarians and true fiscal conservatives view the presidency of George W Bush as a complete disaster, he turned a surplus into a huge deficit, and passed the bill down to his kids and future Americans.
If you disagree with this assessment, than apparently you view eternal deficits as free money that never needs to be repaid.
As to this comment from toilforoil:
It all makes sense now... deficits aren't the problem, the uncontrolled spending and lack of revenue that cause the deficit is the problem. Brilliant!
My favorite quote however comes from Galbraith himself...
Which begs the question, if said bowling alley starts "giving away" points to everyone who bowls there... how much are those points really going to be worth? Won't the giving away(printing) of large number of points(money) result in cheapening the value of rolling a 300 game(inflation)?
Last one:
Put that in your quotefile to keep. Here Galbraith is arguing that someone will ALWAYS buy federal bonds. This is so staggeringly ridiculous that it is almost beyond belief. Anyone here want to buy some Zimbabwe federal government bonds? There is a point where the finances of any government can get so messed up that "investing" in their bonds is financial suicide. Confederate States of America bonds anyone? I'll take the intelligent libertarian obstetrician, Ron Paul over the fantasyland economics of Galbraith any day of the week.
Indeed. I have no love for Ron Paul, but Galbraith is just flat out wrong on an epic and hilarious level. Good going on proving the adage that most economists know not of what they speak.
Someone better inform the Chancellor at No. 11 Downing Street that our massive deficit is a GOOD thing.
Had Congress listened to Ron Paul, there would have been no TARP and the world economy would have gone off a cliff.
As usual conservatives make up their own economic 'theories' out of whole cloth and accuse opponents of living in a fantasy.
You pay the lowest tax rates in the world but worry about tax raises brought on by tax cuts given to by irresponsible conservative politicans.
It's so silly.
It's conservative economic thinking(dereugulation) that caused the recent global meltdown
Keynesian nonsense is going to lead to sovereign disasters and then the world economy will be going off a cliff. I don't see how Republican control of Congress up until 2006 caused a global financial crisis.
Tax rates are quite high, at one time the U.S. managed to fund itself without an income tax where nearly half did not pay in to. The welfare state is failing, Greece is our future.
It's quite possible to spend yourself into oblivion, California has done an excellent job of this.
http://www.ebudget.ca.gov/pdf/Revised/BudgetSummary/SummaryCharts.pdf
2010-2011 projected
22,859 million spent on Health and Human Services
35,133 K-12 Education
You can not have nearly half the population not paying income taxes and able to vote themselves freebies. Perhaps democracy really is only temporary.
Let me improve your quote with a few alternatives...
"Had Congress listened to Ron Paul, there would have been no ______"
1) National Deficit(never voted to approve one...ever)
2) 2nd Gulf War(one of the few Repubs that voted no)
3) Farm Subsidies
4) Federal Dept of Education (quick, how many kids does the department of Education teach?)
5) Welfare Benefits for Illegal Aliens(no joke)
6) War on Drugs
7) And oh yes, TARP... boy, sure glad that one passed and we gave all that money to Goldman to buy up other banks
Boy, sure glad they don't listen to Ron Paul more... the country might actually be solvent.
economic matters ... the credibility ... Ayn Rand ... gold standard
Perhaps some other voice on Gold who was part of the US money system would be more believable?
http://www.gold-eagle.com/greenspan041998.html
And, well....Ayn!
http://www.noblesoul.com/orc/bio/greenspan-time.html
The only thing you didn't complain about was the Austrian School of Economics!
Government deficits are when spending exceeds taxes. However no money is being 'put into the economy' by deficit spending, only resources are shifted. The money comes from those who buy treasury securities, the resources that money buys are shifted from serving private ends to serving public ends.
If the government suddenly stopped selling treasury securities, then those who formerly bought them would be left with non interest bearing dollars which they would invest.
Of course some method would have to be found to meet existing obligations and that method may or may not be recessionary.
Keynsian spending as has been done in Japan may show up as GDP but unless it is productive spending that earns the 4% return for the Japanese economy then it is malinvestment. Japanese GDP is currentishly below 1995 levels. If you get 4% for owning JGBs ( because of deflation and the interest rate on JGBs ) and GDP has remained stagnant then the government spending was a mistake. That is, Japan is worse off now, another day older and deeper in debt.
Suppose there were no such things as JGBs. Then yen based assets consist of non interest bearing yen which earn the rate of deflation, and other investment in Japan. Non yen based investment abroad involves the equivalent of exchanging yen for foreign currency. Domestic investment grows the economy ( GDP ), investment abroad devalues the yen helping Japanese exports growing GDP indirectly.
Are you mentally ill?!
If you don't control your own currency, then you are subject to others' mental illness. With your own currency, you at least have the option of sanity.
Since at least 1913 the USA has not owned it's own paper money, so though we use it, the gov't IE the people do not control their own money(currency).
I knew that years ago when I starting asking if the Federal Reserve was owned by the Gov't, it is not it is a group of central banks loaning the US money. IE debt.
There are very few countries that control their own Currency, and they are being pressured by the IMF to go the global route(central bank of the world).
There are few truly safe places that you can own yourself in the world, otherwise someone else has control over the land, even if you might have the title deed to it, the gov't of your land(country) can take it from you to plant something they want there more than they want you there.
It is the case in the USA that if a city or county wants your land, they don't have to pay you for it, they can take it, put you on the homeless roles and smile nicely as they dig up your hard fought gardens and fruit trees and everything else.
You only own yourself, and even then you might be surprised about that. Freedom slipped through the fingers of most people who thought they were free, a long time ago.
That is one reason I started the Free Right Now presidental campaign in 2007, you can read about it in my post of July 2007 in my blog.
http://dan-ur.blogspot.com/2007_07_01_archive.html
I wrote a poem, about it, somewhere else I wrote my platform which has changed a bit but not much.
Though it seems a bit tongue in cheek, it was serious and thought provoking for most people I talked to about running for the top office.
Never assume what you read from the MSM is correct, someone pays for them to tell one side of the story, might not be the true side.
Charles,
BioWebScape designs for a better fed and housed future.
"It is the case in the USA that if a city or county wants your land, they don't have to pay you for it, they can take it, put you on the homeless roles and smile nicely as they dig up your hard fought gardens and fruit trees and everything else."
I assume you are referring to the concept of eminent domain. In the US your property cannot be taken without fair compensation and due process of law. You can argue that these are open to manipulation, and they are, but it is definitely not a case of the government being able to simply take your land without compensation.
Yes, that was what I was talking about. But there have been cases where the city condemned the proprety and took the land the unethical way, but got the land anyway. You can only fight in the courts if you have money for a lawyer, some people might stand up for you, but you better be prepared to yell loudly about it.
The way the country is going, don't expect the freedoms you still have from being taken from you, never assume everyone is out for your best interest.
And if you can't afford land, you are just a renter and if you have no money you can be homeless in minutes, In fact you can be homeless in minutes if the storm hits your house, or fire takes it. You can pray it does not happen.
Always remember your freedom is not free, you have to work to keep it.
Charles,
BioWebScape designs for a better fed and housed future.
In the US your property cannot be taken without fair compensation and due process of law.
Would that be before or after the condemenation order to lower the 'fair compensation'?
Would that be during the administrative hearing not in a court room under administrative rules?
I'm thinking of trading my fiat currency in for a Fiat.
Make sure it is one of these
http://www.green-car-guide.com/articles/477/1/Fiat-500/Page1.html
Wildcatter:
Be careful with this assessment.
Remember, the whole world is essentially living under fiat monetary regimes. Ultimately, this means that currencies are not measured against some fixed physical standard, but rather against each other.
The U.S. is largely, and correctly, perceived to be a stable country with a functional political and economic system. There are major cracks starting to develop of course, but not enough to cause a flight from the dollar. Treasuries are basically the only place where countries like China, Japan, and the M.E. oil producers can park their cash. Moreover, if they all of a sudden decided they didn't want to anymore, they would simultaneously crash the value of their own holdings, not to mention cause a severe blow to the only nation able and willing to police the M.E. to secure the needed energy flows. Believe it or not there are actually advantages to being the world's bully warlord: nobody can challenge you unless they are strong, and if they are weak (as everybody is in a global depression), they have no alternative but to join forces with you.
So there really isn't going to be a run on the dollar or Treasuries any time soon. If anything, further lack of confidence in the global economy supports them, as is being dramatically shown with the weakness in the Euro.
Of course, gold will do better than all currencies and debt, but that's another discussion altogether.
The endgame is still breakup of the U.S., replacement of the dollar regime with some sort of global SDR currency fixed to gold/silver. I don't have the guts to predict when this will happen other than I think it will be within 50 years.
If you think the U.S. is going to break up relatively soon, what do you think the new countries will be? Dissolution is obviously inevitable if we go far enough into the future.
I think it will be the most obvious faultline first. The one we split along the last time, and which we've never really recovered from. South vs. North, red states vs. blue states - a division some think has roots back in England.
I don't think it's obvious that there should be a breakup, but urban vs rural seems the most plausible, or red states vs blue states. Still, breakup of the US seems pretty far fetched. At the least it needs alot of support.
I don't know if it's that far fetched, the USSR is long gone now. In 1970 I bet they thought they'd exist in 2010.
Have you read The Untied States of America? The author argues that the U.S. will break up...and he's assuming BAU, and not worried about peak oil or anything like that.
He points to history: nations simply do not stay the same. Why are we special?
Shades of John Titor... ;-p
Yippee!! Hurrah Hurray!
http://news.bbc.co.uk/1/hi/england/tees/8687770.stm
More good news from the free market! Bet those guys are really grateful to neo-classical economics.
Eonomics is a way of looking at the world. I don't know if the call centre workers have enough knowledge of any of the sub-disciplines of economics, including the currently dominant one in much of the world, to be grateful for the insights offered by these ways of seeing the world or to be unhappy with the policy prescriptions that flow from them.
The free market is an ideal, and not a source of news.
The gratitude of the 'guys' who are losing their job in the call centre will depend on a number of factors, including the availability of other opportunities in the labour market, the support provided by the state during their unemployment, and the emotional and even financial support provided by their families. And of course whether they actually liked working the call centre.
I don't why you're so happy, though.
HAcland is being sarcastic here, I think and surely not happy about those people losing their jobs.
He probably just tried to highlight that contrast between all the happy talk about economic recovery, how talking heads in TV are almost having premature orgasms announcing another new recovery sign while in the REAL WORLD, they seem to know nothing about, real people lose their real jobs.
Methinks this was the main idea of HAcland's post..
:(
Thank you ramen.
I would have hoped that my sarcasm was obvious!
Their jobs have been sent over seas.... But don't worry, you see the government has borrowed a gazillion pounds to prop up the economy and so thankfully we are now Growing again!
Yippee! Send the jobs overseas! We don't need employment; we have unfunded and soon-to-be-slashed government benefits. We're a rich country after all! Let the poor people on other continents work instead.
That's neo-classical economics.... Where the CEO sacks all the staff to cut costs so that he can raise his own salary!!! Hurrah!!
Actually, I was just being sarcastic about your sarcasm.
But again, economics, including the neo-classical version, is a way of looking at the world. Your CEO likely turns to neo-classical economics to find a rationalization for an act of greed. The greed is, however, not explained by the way of looking at the world.
Of course, in the particular case in question, it is quite possible that the CEO was running a non-viable operation. He or she may not be able to raise his or her salary.
In any case, I would use the tax system to recoup the income executives are extracting from the economy. Their power is not based on market value, but on favourable rules.
I'd like to propose that TOD institute an award for the most sarcastic comment of the week. I'd like to nominate toilforoil as this weeks top contender so far ;^)
Maybe we could all pitch in and buy the winner this nice Sarcasm Apron available at Target for $19.99
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I am surprised no one seems to understand the potentially huge paradigm shift in what cheap, easily transportable, nuclear "energy" would represent to our future, or more likely the lack of one, should this article carried in Bloomberg news today become a reality (also carried in The Oil Drum above, but which no one has even commented on).
"Miniature Nuclear Plants Seek Approval to Work in U.S"
These are "refrigerator-sized nuclear reactors," deliverable by truck to any location, anywhere in the world, by anyone for any purpose whatsoever.
Hello! Is anyone still capable of reasonable thought out there?
Do you not see the potential -- cheap, easily portable nuclear energy (i.e. "weapons") -- for use anywhere on the planet, by any nationalistic/religious group or government with a grudge (and tell me one that doesn't), easily obtainable on the open market (or the black market), and that can afford the ridiculously cheap price to purchase one?
Hey, I have an idea! Why not simply sell them out of a catalog, no questions asked, like they used to do with guns? They could run a sales campaign to help boost revenues for the investors. Perhaps, I could suggest an add to run on TV like: "Come on in. We're having a 'Nuke Your Neighbor Sale.' This week only! But don't delay, at these prices, they won't last long!"
Well, neither will this species at the rate we are going. And it certainly does not need help heading in that direction.
Assurances by the inventors aside, there is ABSOLUTELY NO WAY to assure proper control of portable nuclear power plants.
We are looking at essentially the same horrors of Hiroshima and Nagasaki again, but no one seems to take notice.
As even the Bloomberg article point outs, this is another potential "Pandora's Box" that we are about to open, but no one seems to even be able to understand the full implications of that fact. This is not, and cannot be, business as usual!
Even if these devices were NOT used for weapons -- a probability I cannot even conceive of, given man's track record -- there is no way that the potential damage to the environment can be properly monitored and controlled. We can't do it with the energy technology we have now, which could be easily monitored, but is not for a multitude of economic and geopolitcal reasons. What makes anyone think we could do it with nuclear reactors the size of a refrigerator?
This is a potential change in nuclear weapons technology comparable to the transition from underground, hardened silos of "mass destruction," to the portable version of that same WMD that now exists, and are literally impossible to control.
It's not the size, it's the portability that matters!
A "truckable" nuclear power plant that requires no infrastructure?! If this isn't a true paradigm shift in cheap energy technology, I don't know what would qualify.
At the very least, it will allow instant expansion of the excesses of capitalism into every possible corner of the world, with all that entails.
Anything man has created, he has abused. And the potential for abuse is absolutely exponential -- no matter how the device is used. Can't you see that?
Just because we can, doesn't mean we should.
Have we learned nothing from what we have done, and are doing to each other, and our environment already?
Gordon 2342
Sell some to Iran.
Hello! Is anyone still capable of reasonable thought out there?
Hi! How are ya!
When you can explain how such things can be kept secure and maintained, then you'll have the right to ask about the reasonableness of others.
A "truckable" nuclear power plant that requires no infrastructure?! If this isn't a true paradigm shift in cheap energy technology, I don't know what would qualify.
So reprocessing and waste disposal infrastructure isn't needed?
And how you went from 'no infrastructure' to 'cheap energy' - my that looks like hand waving. Got any 'proof' to your 'cheap' claim?
Big fire at the Lyondell refinery outside of Houston. Coverage on CNN now.
RiskMetrics report says oilsands could be riskier investment than Gulf of Mexico
RiskMetrics is an influential company....a spinoff of J. P. Morgan.
I would like to see said report, and exactly which risks it has considered and quantified, as I find that claim hard to believe.
Firstly, there is (almost) zero exploration risk in the oilsands. They have been extensively mapped, so you know what is where - you cannot drill a "dry hole". A dry hole in the GOM is about $100m.
All the oilsands are on shore. There are no risks with stuff on boats, people on helicopters, and equipment operating under a mile of sea.
The oilsands do not get hurricanes. Storms/blizzards/mind numbing cold yes, but hurricanes no. Your operations, and people, are not at risk from the weather
The operations are, by their nature, much safer for the people working in them.
So what's left? Environmental considerations, and financial risk/
Environmental protection can be managed far better on land than it ever can at sea. There can be poor environmental management of course, but that is not a risk, that is poor management by a company, and can happen anywhere,including GOM. The risk of having a catastrophic, uncontrollable situation like BP has in the GOM is close to zero in the oilsands.
So then there is financial risk. With oilsands, you knowhow much it is going to cost (lots!) and how much production you will get for it, and neither of these factors change much.
With GOM the costs are much more variable, as is the production (think Thunder Horse). On average, GOM oil can be produced cheaper than oilsands, but drill enough dry holes there first and you'll be well above that average.
Of course, both areas are subject to the same world prices, and neither can control that.
In the end, oilsands oil costs more to produce, on average, but is more controllable and has variability - I would call that less risky.
Since oilsands need, on average, a higher oil price to be profitable, you could say there is more "risk" that it won't make money, but that's the only area where the GOM is ahead.
And given that that this report came from JP Morgan, well, we know how trustworthy these organisations are..
As I write, oilsands expansion plans in Calgary are quietly getting dusted off, at the request of the oil majors, who want to re-evaluate where they invest next. I'd say that avoiding the risk of a BP style problem is more important than it was a month ago.
Oilsand extraction uses water and natural gas to wash the oil off or out of the sand. Since there is a shortage of water, and oil is a finite fossil fuel, well... I guess all it will take is some capital to create more water and NG? Yeah... no risk at all. And we have not begun to talk about the ecological horrors of open pit mining.
Craig
Both water and natural gas are available in very large quantities in the oil sands area. People who talk about water shortages are not aware of the size of the rivers flowing through the oil sands, and people who talk about natural gas shortages are not aware of the shale gas potential nearby in northeastern British Columbia.
Those things have, obviously, been discussed here quite a bit. Maybe you're just not aware some give a good goldarn about the environment, among other things.
Cheers
No, I've actually worked on research projects in the oil sands, read the government reports, analyzed the industry data, and run all the numbers past the computers. It was part of my job before I retired.
The only conclusion I can come to is that a lot of urban myths about the oil sands have found their way into the popular press, and a lot of people who aren't experienced in the industry actually believe them.
+1
I thought that mid-winter river flows in dryer years would require some new tar sands projects to slow operations for a few months.
Alan
Adequate amounts of water and natural gas exist in the oil sands area to support any of the proposed oil sands projects. People who think otherwise haven't looked at the geological and hydrological maps.
Unbeknownst to most people (and you probably won't find this in the RiskMetrics report), the biggest constraint on oil sands production is the availability of natural gas condensate for diluent. They have to dilute the bitumen with condensate to get it to flow through the pipelines, and condensate is in short supply in Alberta.
Solutions to the condensate problem exist, though. The proposed Enbridge Gateway pipeline to take bitumen to the northern B.C. port of Kitimat includes a condensate pipeline running the other direction to take imported condensate to the oil sands. The port facilities will include two tanker berths. One will handle Very Large Crude Carriers (VLCCs) and the other will serve Suezmax condensate tankers.
So let me explain to the innocents here how this works. Giant Chinese state-controlled enterprises such as Sinopec, PetroChina, and China Investment Corp - all of which have invested billions in the oil sands in recent months - will bring in VLCCs to take Canadian bitumen to Chinese oil refineries. Simultaneously they will bring in Suezmax condensate tankers to provide diluent for the pipelines. At the same time, Alberta will curtail natural gas exports to the U.S. to provide fuel for the oil sands plant (this is in the provincial government plans, which apparently nobody in the U.S. reads). All of this oil and natural gas would otherwise have gone to the U.S.
This could become critical because it is likely that U.S. Gulf of Mexico oil and gas production will decline as a result of the public reaction to the recent blowout. Eventually, Americans could find themselves walking to work while Chinese drive in the shiny new cars they are now buying by the millions. At least, this is what the giant Chinese oil companies seem to be planning.
More detailed coverage of the RiskMetrics report:
Oil sands report warns of investor risk
Water Adds New Constraints to Power
Once again TOD and its many knowledgeable contributors have raised an important point that all too often entirely evades mainstream media attention - the cost of energy (primarily, but not limited to, electrical power) in terms of water supply and impacts on water sources. Belatedly, NY Times has published the following:
The number quoted here - 41% - is huge, a real eye-opener. Add this to your growing list of constraints in the real world - fundamental limits to growth.
Dick Lawrence
ASPO-USA
I agree -41% is huge and much higher than I would have guessed.
But the figure as given is somwhat misleading if I understand the way it is computed.It is probably accurate in that this much water flows INTO power plants;but it leaves out the key fact that most of it flows right out the other end, and back into the river or lake from which it is withdrawn,and just about as clean as it was initially.
But it is going to be significantly hotter than before.The extra heat can and does severely disrupt the downstream environment.Fish kills and so forth are just the tip of the iceberg.
The changes are not always percieved as harmful by the public, however.Lake Anna in Virginia is a good example.The lake is referred to by the locals as having a "hot side" and a "cold side".The hot side, more properly referred to as the cooling lagoon, is actually the smaller of two adjacent lakes,and there is (or was, when I lived in the area) no public boat landing.One of my most prized possessions in those days was a gate key given to me by a hot side property owner,meaning I could launch my boat from his private landing.The bass were so big and plentiful that jokes about radioactive fish were told endlessly.
My point is that using such a figure, without adding the qualifiers, provides the anti environmental faction with a fine opportunity to put out effective sound bite propaganda making the environmental pov look over blown or even dishonest.These sound bites work, believe me.
The local citizenry, including yours truly at the time,thought of the lake as a gold mine and an ecological gem, so help me;we had thousands of high paid nuclear jobs, and countless local people became millionaires as a result of the associated residential and commercial development.
Incidentally I still believe in nuclear power, after learning a good deal about it first hand as a contract maintainence employee at NAPS I and NAPS II.These two nukes in particular have exemplary on line and safety records, and continue to provide enough coal free electricity to supply the needs of a huge swath of central Virginia.
The large water use by power plants is a real issue, in my opinion. The reason for all the concern in Georgia a couple of years ago when our rainfall was low was that there were too many electrical power plants built for the supply of water coming through the rivers and streams. I understand that one nuclear plant almost had to be taken off line because of the drought. There is litigation and disputes among the states, because of this issue--if not all of the power plants can be operated, whose needs to be shut down.
There was a series of presentations at the 2010 EIA conference on the problem of water supply and electric power. I had good intentions of making a post about the information, but haven't gotten there yet. Incidentally, one issue that was brought up in these talks was that Carbon Capture and Storage, because it would require the burning of more coal (to power the movement of CO2 to storage) would require either more water, or a more expensive design that would use less water, Because we are bumping up against water limits in many parts of the country, it may be that more expensive plant construction will be needed, to get around the need for more water.
I'll take California's energy planning seriously when they sacrifice a length of beachfront and set up a solar thermal plant there that will produce both energy and cogenerated water desalination. And, again, as a congenerated product, pump desalinated water far enough inland to matter.
California needs this and refuses to do it for esthetic reasons.
California does not need to desalinate water, it needs to use the water is has more efficiently (this also applies to the rest of the US and Canada, but Ca is running out first).
Desalinating seawater is a huge energy consumer. California already uses 20% of it electricity for water related use. Adding desal only increases energy use even more, so that people can continue their water wasting ways. It is the water equivalent of making hydrogen fuel by electrolysis.
To refuse to do it for esthetic reasons is not unreasonable. Ca makes a lot of money from tourism and real estate from it's beaches - why spoil a non renewable resource?
There are so many opportunities for efficiency in water use, and re-use, that doing desal should be on the bottom of the list.
As for solar thermal, do it in the desert where you get the most sunshine!
Well done, Vancouver !
In Vancouver, Wastewater and Sewage Provide Energy
See: http://www.nytimes.com/2010/05/18/business/energy-environment/18iht-renv...
And on a related but less encouraging note....
Germany Cuts Renewable Heating Support Scheme
See: http://www.renewableenergyworld.com/rea/news/article/2010/05/germany-cut...
Cheers,
Paul
The whole renewable energy plan in EU is in some danger now. The reckless rebates of the past few years in Spain etc will be gone. PV related ETFs like TAN are tanking.
evnow,
Yes, and all European willingness to sacrifice in the interest of carbon reduction are pretty much dead too...Europe has been a voice for the cause of anti greenhouse gas emissions, and an educator in the developing world in places where the U.S. is not trusted.
Some of the bets seem to be turning the other direction on the attack on the Euro. Goldman Sach's analyst O'Neil was saying on Bloomberg that he felt the Euro was nearly at a bottom, a complete reversal for Goldman from only a few days ago...have they switched sides again? Who is is willing to jump with them?
Even if the Euro survives (a question still up in the air) Europe will be essentially in recovery mode for some time, on stiff austerity measures and unable to play the role of leader on environmental and renewable energy development. The contributions of the Europeans will be badly missed, as "tea party" America is pretty much applying political pressure for American isolationism, and Japan is too small and right now under austerity of its own.
To repeat what I have said in prior posts, this enhances the cultural/economic/technical influence of the Eastern powers, China and India, but are they up to the job? Every thing hinges now on a growing China/India bloc, but can that be expected to hold? Whoever can bet that one correctly hits the exacta...:-)
RC
So your thought is Chindia will buoy up the world economy, helping the developed countries stay afloat?
Isn't it possible the only reason Chindia is continuing to grow their economy's is because they aren't relying on imported oil (relative to other forms of energy that are less expensive), to the same extent as the developed countries? Could we go so far as to say Chindia are coal based economy's, whereas developed countries are oil based economies?
And, even if Chindia are doing well, how does that have a direct impact on the developed countries? I'm of the mind that until the price of oil drops far enough to once again provide the cheap energy needed to grow the developed countries economy's, we will be lucky if we can pay the bills.
Remember after the 08 drop into the abyss the price of oil dropped to 30 something a barrel, and it seemed to help get things going again? Well, what I keep wondering is what is the ideal price for oil where the economy expands, but is also high enough to encourage continued oil exploration? Don't get me wrong - I'm not in favor of BAU forever, just trying to get a handle on price points and their effect on the economy. Presumably the price of oil now at 70 will provide more feedback.
Now if only Vancouver could send some of its technology over to its fellow provincials in Victoria, who are still working on the sewage and wastewater treatment portion, rather than the energy portion. Mr Floatie lives!
http://www.seattlepi.com/connelly/277267_joel12.html
and with pictures...
http://www.poopreport.com/node/4017/print
Yes, Victoria, the capital city of British Columbia, continues to discharge raw sewage into the Strait of Juan de Fuca. And then they wonder why the Americans on the other side of the Strait, who have spent a fortune on their own sewage processing systems, get upset about it.
Especially since the current takes the sewage straight into the San Juan Islands!
I consider this to be an "export" to the US, and under NAFTA, once you start, you can;t stop..
That is a question nagging me much more than the ongoing oil spill: How much of the financial crisis stems from the fact that the lack of growth in energy production makes economic growth impossible? And, without economic growt, no solution to the financial crisis?
Norway has a huge oil based fund, placed in foreign papers all over the planet.
It corresponds to three to four national budgets. I keep saying that all of this is lost, since wo do not invest it in infrastructure etc at home. The "responsible politicians" claim that investments at home will drive prices high, and thereby reduce our competitiveness. Then, with a straight face, they spend 4-6% of the fund annually on operational costs (health care and elderly support, etc).
If the economy collapses, who is responsible then?
Along this lines of questioning, I saw something today on CNBC that caught my attention. CNBC tends to be very rah-rah about the economy, but what I do like about the panel discussions is some of the questions that come up and how the guests answer them.
Today there was some guy on there - don't have a name - sorry. But he started talking and wouldn't be silenced, even though several people tried to talk over him. He said, we are at the same debt stage as we were before WWI & WWII. He was saying the Euro is in the process of completely failing. It was quite a moment for CNBC. The modertor simply reset the situation by ignoring his statements and focusing on current stock trends.
It was kind of a strange moment though having been so familiar with discussions here on TOD about peak oil and its economic ramifications, yet at the same time watching the other disbelieving people on the panel playing the role of the rest of society - the cornucopians that are sure the guy is a crackpot.
It made me wonder if the guy was right - one of many poignant moments that will be tattoed into my memory as the consequences of peak oil play out.
Good one, Earl.
I, too, saw an interesting CNBC exchange on Kudlow, whom was out, and sitting in for him were Michelle Caruso-Cabrera and Simon Hobbes. Hobbes got apoplectic when his guests, Dan Fitzpatrick and, darn, I forget the other guy's name, advised people to have a position in gold. Michelle and Hobbes got very agitated, even angry and started calling the gold position, "irresponsible", etc. It was quite an eye opener. Kudlow, think what one may about his views, would never have reacted with that level of anger and panic.
Now neither Hobbes nor Caruso-Cabera are dopes. Quite the contrary, Caruso-Cabrera went to Harvard and I'm sure Hobbes is very well educated, too. My basic conclusion is that after ignoring the relentless ten year run in the gold market (and oil market, and the stagnant equity market, the collapsing financial/credit market, etc.) the meaning of the gold price is finally at the point where it can simply no longer be ignored. Gold is telling us (screaming to us actually) that the gig is up. It's over. We're in the process of slow-mo collapse (or rapid decline, whichever phrase one prefers).
I think even the "Talking Heads" are starting to "get it". The denial phase is ebbing now. And they are taking it badly; with anger, panic, fear. I don't blame them. After all, they're only human. They should be feeling anger, panic and fear. I'm feeling a good bit of panic and fear myself;)
Yeah jabberwock, I happened to see that segment too. The english guy has a bit of a rough style (more indicative of the UK culture in which they are more confrontational if they feel the subject demands it, which our MSM tends not to do) and ticked off one of those guys talking about gold as an investment - the guy just glared back at him. Then it kicked into a verbal melee for a while.
Some really heated exchanges are starting to happen on that show, and I agree its because they are starting to freak out about what's going on. This ongoing collapse is raising its ugly head again, but not so suddenly or obviously as when it dropped in 08. You can tell they are searching for answers and all the rah-rah is starting to get replaced by resignment to further market retracements, which will end up who knows where.
The other thing that I keep wondering about is all these reports of increasing profits for HP, Walmart, etc. They talk about if the profits fell short or exceeded 'the street'. But what is the measuring stick for those profits? Is it based on improvements since just after the 08 collapse? If so, then those profit increases may not actually be that much. If it is a profit increase over some other period of time that was more productive, then maybe its something to cheer. I just think its one of those ways they fool investors, and its ashame too because it doesn't accurately reflect the true mood of the economy.
Some of the fund will survive. Norway recently built a hydroelectric dam in Chile for example.
Buying half of a second Finnish nuclear reactor may not be such a bad idea.
Alan
According to the rules, the oil fund can only make financial investments, not industrial or strategic investment. Silly politicians....
I suggested once to buy Southern Italy, and use it for our elderly care (with an airbridge). Now it may be a part of Greece instead, but still...:-)