DrumBeat: February 29, 2008
Deutsche Bank’s $150 Call: Peak Oil Light
DB made some good points that might be news to the mainstream but probably not to my readers:
1. The U.S. economy wrung a lot of oil-intensiveness out during the ’70s oil shock when it took oil out of electricity generation and U.S. industry became much more oil-efficient. Those savings cannot be replicated no matter how high the oil price goes.
2. On the other hand, U.S. transportation is vastly inefficient and thus can and will reduce oil use as prices rise. This is the most significant available source of oil savings in the OECD world. Of course, DB probably meant to say “cars†rather than “transportâ€, since trucks which use 1/3rd of transport fuel do not have the same savings potential that cars do.
[break]
Phil Flynn: Remember The Gold old days!
Demand for oil is weak and it is obvious that we are seeing at least some form of demand destruction but as we have seen, rising supply and lower demand does not necessarily translate into lower price.
We have gotten beaten up lately by correctly predicting rising supply and weakening demand. What we failed to realize is that rising supply and lower demand does not always translate in to lower price. Larger market forces have rewritten the laws of gravity as commodity price inflationary pressures have over ruled the basic laws of supply in demand. Even with clear signs of demand destruction in the US and some worrying signs of slowing in Japan and even Europe, oil prices have surged along with inventories.
Oil at $300/barrel? - Matt Simmons on WSJ Report
Alaska to sue BP over 2006 Prudhoe spill
NEW YORK (Reuters) - The state of Alaska is planning to sue BP Plc for “several hundred million dollars” to recover oil revenues lost when corrosion in pipelines at the oil major’s Prudhoe Bay oil field forced a partial shutdown of the field in August 2006, the Anchorage Daily News reported on Friday.
The suit may be filed as soon as September if settlement talks are unsuccessful, the Daily News reported.
Spain sets power, gas network price structure
MADRID, Feb 29 (Reuters) - The Spanish government on Friday set a new pricing structure for the electricity and gas distribution sectors, sending shares in Red Electrica and Enagas higher.
The new structure will only affect installations that are started after Jan. 1 2008, the government said after a weekly cabinet meeting.
UN likely to vote new Iran resolution Saturday
UNITED NATIONS (Itar-Tass) — The UN Security Council is likely to vote a new resolution on Iran on Saturday, however Tehran already made it clear it will not comply, as its nuclear program is the business of the International Atomic Energy Agency (IAEA) rather than of the United Nations.
Morgan Stanley: A Petrodollar Tsunami Is Coming
High energy prices lead to transfers from oil importers to oil exporters, note Stephen Jen and Charles St-Arnaud in Morgan Stanley’s latest Global Economic Forum, and as oil breaches the psychological US$100 a barrel, so investment decisions by the owners of these petrodollars clearly become more important the higher oil prices go.
Earlier this month, The Chronicle ran an interesting interview with General Motors CEO Rick Wagoner, in which he said major car manufacturers need to develop a variety of alternative energy technologies in preparation for the day that world gets off the oil.
The theory goes: Betting on just one — electric cars or fuel cells — would be too risky.
That’s not the party line over at BMW. The German car manufacturer told TED attendees in Monterey Thursday that they are betting the whole hog on hydrogen.
Residents, community leaders and consultants alike, on the other hand, have questioned the viability of a large RV resort in Gunnison. Not only would it add to the many already in the area, but the long-term prospect of the RVing industry has been called into question in light of rising energy costs, peak oil and the general fight against climate change.
Oil price strikes record high above 103 dollars
LONDON (AFP) - The price of New York crude oil hit an all-time high point of 103.05 dollars per barrel on Friday owing to record weakness of the dollar but then fell back, traders said.
And the price of gold reached an historic peak of 976.32 dollars per ounce.
“This was part of a broad-based commodities run based on the continued weakness of the dollar,” said Petromatrix analyst Olivier Jakob.
A weak US currency boosts demand for dollar-denominated raw materials such as crude oil because it makes them cheaper for buyers using stronger currencies. However the increased demand eventually leads to higher prices.
The Peak Oil Crisis: Catenaries and Pantographs
As the availability of liquid fuels dwindles, those supplies that remain will be increasingly allocated to uses for which there are no readily available substitutes — such as powering aircraft and ships. Electric power for land vehicles appears to be the most realistic option for the present. Cellulosic biofuels may come to power some share of land transport, but this is still many years away. Electric power is a proven technology and, more importantly, a widespread distribution system for electricity is already here.
With domestic production falling, it must buy costly oil abroad to sell at subsidized prices at home.
OPEC unlikely to change output at current price: Libya
PARIS (AFP) - OPEC is unlikely to change its production level at a meeting next week if the oil price stays at about 100 dollars per barrel, acting Libyan Oil Minister Chukri Ghanem told AFP on Friday.
Fire at Kuwait’s Shuaiba Oil Refinery Is Contained, KUNA Says
(Bloomberg) — A fire at Kuwait Petroleum Corp’s Shuaiba refinery was extinguished today without any casualties or disruption to output, according to KUNA, the state-run news agency.
The fire broke out at 12:21 a.m. local time in a distillation tower in one of the heavy oil refining units as it was being idled for maintenance, KUNA said, citing Mohammad Al- Mutairi, the refinery’s acting managing director.
North Sea Sullom Voe Oil Terminal Halts Berthing on High Winds
(Bloomberg) — The North Sea Sullom Voe terminal in Scotland’s Shetland Islands, which handles shipments of benchmark Brent crude oil, suspended berthing because of high winds.
Partnership will bid for U.S. oil refineries
Petroplus Holdings, Europe’s largest refiner, said Wednesday that it had entered into a $2-billion deal with private equity firms Blackstone Group and First Reserve to buy crude oil refineries in the United States.
Each partner has committed $667 million to form an investment company to be led by Petroplus Chairman Thomas D. O’Malley.
Ecuador shuts off oil exports after pipeline break
QUITO (AFP) - OPEC member Ecuador on Thursday suspended its oil exports because a landslide cut off its main pipeline, state-run Petroecuador oil company said.
“Exports were suspended and a force majeure was declared to avoid sanctions from our buyers, who already have been notified of the emergency,” an unnamed Petroecuador official told AFP.
Russian paper predicts trouble for South Stream pipeline
MOSCOW (AFP) - A Russian newspaper on Friday predicted trouble ahead for Moscow’s strategic South Stream gas pipeline, saying the project could be held up by difficult relations with neighbouring Ukraine.
Nepal strike over after accord reached
KATMANDU, Nepal - Trucks began transporting gasoline to the fuel-starved Nepalese capital Friday along with much-needed food and other supplies after ethnic-rights groups in southern Nepal ended a paralyzing strike, authorities said.
Japan arranging climate change summit: official
TOKYO (AFP) - Japan said Thursday it was arranging a meeting of national leaders to address climate change as it prepares to hold the Group of Eight summit of major industrial economies this summer.
A newspaper report said Japan has invited heads of state and government from 16 nations, which together account for 80 percent of greenhouse gas emissions, for parallel talks to the G8 summit.
EU nations sound objections to climate change plan
BRUSSELS (AFP) - EU nations raised on Thursday a host of objections to new proposals for fighting climate change, setting the stage for tough negotiations over the package.
In the first debate of the plans since they were proposed in January, EU members lined up to call for more flexibility and greater attention for industrial competitiveness while also pushing their national wish-lists.
Leave a comment!