Los carburantes elevan la inflación a niveles de hace 30 meses

CincoDias.com -

La inflación interanual subió cuatro décimas en septiembre, hasta el 3,7%, de acuerdo con el indicador adelantado del índice de precios de consumo armonizado (IPCA), difundido por Estadística. Gobierno y expertos culpan al petróleo y sus derivados (los carburantes), así como a los alimentos frescos, del repunte. La inflación no estaba en el 3,7% desde marzo de 2003, hace 30 meses.

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30/09/2005
• La inflación se dispara







Cinco Días / MADRID (30-09-2005)


Este indicador que elabora el Instituto Nacional de Estadística proporciona un avance de cómo evolucionaron los precios en España en septiembre, antes de difundir el dato definitivo el próximo 14 de octubre. Además, sirve después a Eurostat para incorporarlo al cálculo del índice de inflación en la Unión Europea y su publicación responde a la política de la oficina estadística de la UE y del Banco Central Europeo de ofrecer datos equiparables en tiempo y calidad a los que se publican en Estados Unidos.

El Gobierno, los partidos políticos y diversos expertos coincidieron en atribuir al encarecimiento del crudo la subida del IPC armonizado. El vicepresidente segundo del Gobierno y ministro de Economía, Pedro Solbes, admitió que este dato, cuatro décimas superior al de agosto, supone, 'sin duda, una mala noticia', si bien lo atribuyó al encarecimiento del crudo y de los alimentos frescos.

Solbes recordó que la inflación subyacente, que excluye la variación de los precios energéticos y de los alimentos no elaborados, 'sigue bien', lo que demuestra que el impacto fundamental se concentra en esos componentes, más vulnerables a la coyuntura. Asimismo apuntó que la economía española está asumiendo muy bien el incremento del precio del crudo y confió en que la futura estabilización de éste contribuya a moderar el avance del IPC los próximos meses.

Desde la oposición, el portavoz adjunto del PP en el Congreso, Vicente Martínez Pujalte, incidió en el efecto que la subida de precios tiene para las familias, por el encarecimiento de la cesta de la compra, y criticó que, en este contexto, el Gobierno continúe los aumentos fiscales con el alza de los impuestos especiales.

El portavoz de Economía del PSOE en el Congreso, Ricard Torres, lamentó el 'cinismo político' del PP por criticar esta subida tributaria, y coincidió con Solbes en que el indicador se ha visto afectado por el encarecimiento del crudo.

Meritxell Soler, de Analistas Financieros Internacionales, consideró que debería reducirse el diferencial de inflación de España con la UE, porque incide 'significativamente' en la pérdida de competitividad de la economía.

La analista de Beta Capital Estefanía Ponte dijo que el dato es 'sorprendente' y lo justificó, además de por el alza del precio del petróleo, por el comienzo de la temporada textil, si bien advirtió de que el Gobierno 'poco puede hacer'.

Por último, desde el servicio de estudios de las Cámaras de Comercio, María del Valle advirtió del riesgo de trasladar ese aumento a otros precios y costes y aludió a la repercusión sobre el índice general del precio de los alimentos frescos, influido por la sequía y otros factores coyunturales.

Nueve meses con un punto de diferencial


El diferencial de precios con la zona euro y la Unión Europea quedó en 1,1 puntos en el mes de agosto, y acumula ya nueve meses por encima de 1. En septiembre la inflación ha vuelto a golpear a todos los países de la Unión por las subidas del petróleo. En Alemania ha llegado a la tasa más alta desde hace cuatro años.

'El barril de petróleo a 100 dólares es factible'

CincoDias.com -

Cristina de la Sota / MADRID (30-09-2005)


Gavin Corr no ve nada irracional en la subida en vertical que está experimentando la Bolsa. Un petróleo en 100 dólares, algo que no descarta, sí le asustaría aunque de momento confía más en la fortaleza económica global. Asegura que el mercado está barato y aún le da un potencial del 6%.

¿Después de la escalada reciente de las Bolsas, qué cree que pesará más en la evolución futura del mercado, la elevada liquidez y la falta de alternativas o amenazas como el precio del petróleo?

Lo más importante es que las valoraciones siguen siendo muy atractivas, y no sólo frente a los bonos. La renta variable europea cotiza a niveles interesantes frente a la Bolsa de EE UU, China, Japón y respecto a sus propios múltiplos históricos. Tenemos preocupación por el impacto de los huracanes y los tipos de interés, pero en mi opinión la economía global no se resentirá de manera significativa, incluso con el precio del petróleo en 67 dólares. Creo que el apetito por la renta variable continuará. Ha llevado mucho tiempo para que cambie la aversión al riesgo desde el estallido de la burbuja tecnológica. Está ocurriendo ahora y los flujos de fondos se empiezan a recuperar. La exposición a la renta variable en Europa aún es baja en relación a EE UU.

¿Entonces no considera desmedida la demanda actual?

Los mercados han subido a pesar del huracán Katrina, la subida de tipos de interés en EE UU y el repunte del petróleo, pero no estamos en una situación en la que el mercado es irracional. Es lógico que suba. Los beneficios de las empresas han mejorado de manera significativa. En este ciclo económico las compañías se están comportando mejor que nunca; generan más dinero y pagan más dividendos. Los mercados aún tienen un recorrido del 6% y si los beneficios crecen un 10% en los próximos 12 meses podremos ver rendimientos del 10%.


'Ha llevado mucho tiempo para que cambie la aversión al riesgo'


¿No teme una corrección brusca?

No lo creo porque las valoraciones no son extremas. En el 2000 sí eran excesivas, los tipos de interés estaban subiendo de forma mucho más significativa y el crecimiento económico se estaba ralentizando. No creo que la situación sea como en el pasado, aunque si el petróleo llega a 100 dólares nos obligaría a dudar sobre el crecimiento económico.

¿Cree que el petróleo puede llegar a 100 dólares?

Es perfectamente posible que alcance los 100 dólares en los próximos 18 meses. La oferta de petróleo no es el problema sino la capacidad de refino. Tendremos que ver cómo es de frío el invierno.

¿Habrá que empezar a preocuparse en 18 meses?

Sí, igual sí pero es bueno recordar que el impacto del petróleo en el crecimiento económico es mucho menor que hace 10 o 20 años. La subida del crudo tendrá menos efecto que en crisis anteriores. Y si la capacidad de refino realmente mejora, entonces igual se suaviza la tensión.

Estímulo político en Alemania


Las Bolsas europeas han escalado este ejercicio pese al estancamiento económico de la región. La clave para Gavin Corr se encuentra en las reestructuraciones que han llevado a cabo las empresas para asegurar su competitividad a nivel mundial. 'Las empresas se están ayudando a sí mismas recortando costes, racionalizando los negocios, moviendo la producción a lugares más baratos. Por ello la rentabilidad ha mejorado'.

En Alemania los ejemplos abundan. 'Después de años y años siendo ineficientes las empresas alemanas han recuperado cuotas de mercado a nivel global', explica Corr.

Corr confía en el mercado alemán, y lejos de ver el resultado de las elecciones germanas como una amenaza para Europa ante la falta de un claro ganador, incluso intuye algunas ventajas. 'La inacción política puede estimular a las compañías para ser más agresivas. El mismo día que se conoció el resultado de las elecciones Siemens anunció un recorte de plantilla'.

El único problema temporal que vaticina será la falta de confianza del consumidor alemán.

£1bn power station a step closer for N-plant

News & Star

By Andrea Thompson

SELLAFIELD has moved a step closer to getting a £1billion power station after Tony Blair gave his most public support yet for the nuclear industry.

The Prime Minister told the Labour Party Conference in Brighton that the Government would assess all options for future power generation – including civil nuclear power. He said: “For how much longer can countries like ours allow the security of our energy supply to be dependent on some of the most unstable parts of the world?

“For both reasons the G8 agreement must be made to work so we develop together the technology that allows prosperous nations to adapt and emerging ones to grow, and that means an assessment of all options, including civil nuclear power.”

Most existing nuclear power stations are to shut by 2020, leaving Britain largely dependent on gas and coal-fired power and renewable energy like wind. Industry experts say each new nuclear power station could cost between £1bn to £2bn.

Sellafield’s nuclear power station, Calder Hall, shut down two years ago and was the oldest station in the Magnox fleet when it ceased generating in March 2003. It was commissioned in 1956.

Trade unions at Sellafield have welcomed the Prime Minister’s pledge.

Amicus convener, John Tear, said “What Tony Blair said fits in with all that we have been saying as a trades union – that we need a balanced energy policy and that we can’t rely on gas from unstable parts of the world.”

Peter Kane, of the GMB union, said a new nuclear power station would have massive benefits for Sellafield, which is expected to shed up to 8,000 jobs over the next 10 years through decommissioning. But he warned that it was too early for people to start getting excited.

“We have campaigned for a replacement for Calder Hall and while we welcome Tony Blair’s speech there is still a lot of work to do.”

Copeland MP Jamie Reed said the case for civil nuclear power for Britain in the modern world is irrefutable.

“I will continue to work hard to ensure that the logic of the case is understood and the merits of the industry embraced. There is obviously significant potential for the enhanced development of Copeland and West Cumbria.”

But Martin Forwood of Cumbrians Opposed to a Radioactive Environment, says the proposal to bring back nuclear power is not well founded.

“There are a huge number of tests that the nuclear industry would have to go through first before we get any signs of rebuild. That includes public acceptability, the cost of building power stations and the length of time it would take to build them.”

Chavez proposes to expand oil alliance

Chavez proposes to expand oil alliance


SEP. 29 2:41 P.M. ET Venezuelan President Hugo Chavez said Thursday he is seeking to share his country's oil wealth with every nation in South America, aiming to strengthen ties while offering an alternative to the U.S.-backed Free Trade Area of the Americas.

Chavez says his "Petroamerica" initiative is intended to reach countries across the hemisphere, and that Venezuela has ample reserves to help the region deal with high oil prices for generations to come.

"With this mission of energy integration, Venezuela guarantees petroleum and gas for the South American continent for at least 200 years," Chavez said as he arrived for a South American summit in Brazil's capital of Brasilia.

Chavez said Venezuela and Brazil will jointly exploit an oil block in the Orinoco tar belt, and that further deals were planned with Argentina and Uruguay. Officials also announced Brazil and Venezuela agreed to share the cost of building a new US$2.5 billion (euro2.08 billion) refinery in northeastern Brazil to process up to 200,000 barrels of crude a day.

Officials have announced few specifics of future deals under the Petroamerica initiative, but some of its aims include stepping up refining capacity and promoting joint exploitation of oil and natural gas.

Officials have not excluded the possibility that Chavez may also extend new offers of oil sales under preferential terms as he has before.

"Everyone on the continent is looking with a lot of interest," Santiago Chavez, a trade official from Ecuador's embassy in Venezuela said after energy ministers from 12 South American countries signed a declaration in Caracas on Monday pledging to pursue the Petroamerica initiative.

Uruguay's energy subsecretary, Martin Ponce de Leon, has said one example of the type of integration under consideration was a plan for Venezuela to help expand a refinery in Uruguay to process 50,000 barrels of heavy crude a day.

Officials say Petroamerica will integrate previous cooperative oil projects -- Petrosur, Petrocaribe and Petroandina -- under which Venezuela has agreed to sell fuel to other countries in the region under preferential terms and with low-interest financing.

In June, Chavez signed the Petrocaribe deal with 13 Caribbean countries to sell 190,000 barrels of fuel a day under terms that are expected to save them millions of dollars.

Eleven of those countries have since signed more specific deals allowing them to pay only a portion of their debt up front and finance the rest over 25 years at low interest rates. Venezuela has also said they can pay some debts with goods such as rice, bananas or sugar.

Chavez, a close ally of Cuban leader Fidel Castro, has said the regional energy alliances are aimed at challenging U.S. economic domination in the region and distributing fuel directly to avoid costly intermediaries.

The Venezuelan leader has been a harsh critic of capitalism and accused U.S.-backed free trade policies of helping American companies at the expense of Latin countries by drawing away their natural resources, while doing nothing to confront poverty.

Some have accused Chavez of taking advantage of a tight oil market to buy political alliances.

"Who doesn't do that? ... Venezuela uses its petroleum at critical moments," said Professor Mazhar al Shereidah, a Venezuelan oil expert and professor at Central University of Venezuela. "Why would it lose this opportunity?"

Total May Use Atomic Power At Oil-Sand Project

WSJ.com - Total May Use Atomic Power At Oil-Sand Project

Alternative to Costly Gas
Is Sought for Canada Fields;
Fear of Environmentalists
By DAVID GAUTHIER-VILLARS
DOW JONES NEWSWIRES
September 22, 2005; Page B6

PARIS -- French oil giant Total SA, amid rising oil and natural-gas prices, is considering building a nuclear power plant to extract ultraheavy oil from the vast oil-sand fields of western Canada.

This comes as oil prices -- driven even higher by Hurricane Katrina and now the threat of Hurricane Rita -- are removing lingering doubts about the long-term profitability of extracting the molasseslike form of oil from sand, despite the fact that the output is much more expensive to produce and to upgrade than is conventional crude.

At the same time, prices of natural gas -- which oil-sands producers have relied on to produce the steam and electricity needed to push the viscous oil out of the ground -- have risen 45% in the past year. That is prompting Total, which holds permits on large fields in Alberta that contain oil sands, to consider building its own nuclear plant and using the energy produced to get the job done.

Despite the attraction of abundant electricity, industrial companies have been reluctant to install nuclear devices, however small, on their premises because of safety and cost concerns. Small nuclear reactors have been used for purposes other than generating commercial electricity, but mainly to power ships -- submarines, icebreakers and aircraft carriers, for example.

A notable exception was the Soviet Union, which built four small nuclear reactors at Bilibino, inside the Arctic Circle, in the mid-1970s to operate a gold mine. The plant still is in operation.

Even now, despite wanting to cut production costs, few oil-sands producers have been willing to talk openly about the nuclear possibility for fear of protests from environmentalists. Nuclear power doesn't bring back good memories in Alberta, where in the 1950s U.S. and Canadian scientists looked into the possibility -- later abandoned -- of detonating an atomic bomb to bring oil to the surface.

Total would speak about its plan only in general terms. "It's not foolish to look into the nuclear option," Yves-Louis Darricarrère, Total's director for natural gas and power, said in a recent interview. "We have a team looking into it."

Total's interest is the latest sign that nuclear energy is making a global comeback. Finland commissioned a new reactor in 2003, the first such order in Western Europe in 13 years. France has chosen a site in Normandy where a reactor will be built. The U.S. hasn't commissioned a new nuclear plant for three decades, but the industry is talking seriously about a revival, encouraged by the Bush administration and the rising cost of fossil fuel.


In Canada, Total holds half of an oil-sands permit in Alberta and has secured more heavy-oil acreage with the purchase of Deer Creek Energy Ltd., located in the same western province. Total said it plans to invest $7 billion in Deer Creek, on top of the $1.4 billion it expects to pay for the company. The company says it could one day produce 200,000 barrels of heavy crude a day, close to 8% of Total's current global output.

Canada's oil sands contain 174 billion barrels of recoverable reserves, the world's second-largest oil resource behind those of Saudi Arabia, according to Canadian government estimates.

Oil sands, a mixture of grit and a tarlike grade of crude oil known as bitumen, were discovered more than a century ago but have been considered economical to produce only in recent years as the price of oil has surged. In addition to nuclear power, producers are considering burning oil-sands residue and coal as alternatives to natural gas to make the steam needed for extraction.

Mr. Darricarrère said a nuclear power plant would help Total comply with tougher constraints on carbon dioxide and other so-called greenhouse-gas emissions. Although they generate toxic, radioactive waste, nuclear reactors don't emit greenhouse gases that scientists believe contribute to global warming.

The government of Alberta said that although there are no nuclear power plants in the province, there is no moratorium on nuclear energy. "We don't favor one form of energy over another," said Alberta Energy Ministry spokeswoman Donna McColl. "We let the market decide."

Atomic Energy Canada Ltd., the Canadian government-owned nuclear-power developer, has proposed building a regional nuclear power plant in northern Alberta to provide electricity and steam to oil-sands projects, according to company spokesman Dale Coffin. He said the proposal has been received with "great interest" by Alberta oil-sands producers.

Still, Jerry Hopwood, Atomic Energy Canada's general manager of product applications, said it would take several years to get a regulatory application on the table. Among other hurdles, any new nuclear project in Canada would face rigorous environmental scrutiny, from both provincial and national authorities.

Such reviews also would apply to any application for a Total nuclear plant. "I'm not confident that the public in Alberta would be supportive of opening Alberta to the nuclear industry," said Dan Woynillowicz, an oil-sands expert with Pembina, an environmental policy research institute based in the province.

Mr. Darricarrère said Total is relying on Areva SA, the French state-run nuclear engineering company, to define what type of reactor might suit its needs in Canada. Research is focusing on a dedicated reactor significantly smaller than those used by utility companies to produce electricity for large city grids.

Areva said discussions with Total are centering on a new type of reactor, known as a High Temperature Reactor, with a capacity of around 500 megawatts, about a third of the size of a traditional reactor. Areva also has been approached by other oil companies but discussions are most advanced with Total, Jean-Jacques Gautrot, Areva's director for international operations and marketing, said.

A spokesman for Imperial Oil Ltd. of Canada, an affiliate of Exxon Mobil Corp., which operates some of the world's largest oil-sands operations, said it looked into the nuclear option in the past but didn't pursue it because of cost and technology challenges.

Shell Canada Ltd. said it isn't considering nuclear power as part of its oil-sands plans. Rather, the company said it is looking into the possibility of turning asphaltene, very heavy oil, into gas to save on its natural-gas bill.

Refining Incapacity

WSJ.com - Refining Incapacity

September 28, 2005; Page A16

Midway through his press appearance Monday, we wondered if President Bush was going to don a cardigan. He was waxing on about energy "conservation," a la Jimmy Carter, and at one point he even said Americans should "curtail nonessential travel." Maybe they should turn down their thermostats and let their kids tap their keyboards with gloves on, too.

Only belatedly did Mr. Bush get around to the real energy problem that Hurricanes Katrina and Rita revealed for all Americans to see: the degree to which government policy has limited energy production so that a single big storm can deliver a supply shock that sends prices through the roof. Exhibit A is the oil refining industry, which hasn't built a new refinery in America since ... before Jimmy Carter was in office (1976).

Rita shuttered 27% of the nation's capacity to refine crude oil into gasoline, heating oil and other products. This followed Katrina, which shut down 10% of capacity, sending the average price of gasoline up to $3.07 a gallon. Things are now slowly getting back to "normal," though normal is not a synonym for good.

In 1981, there were 325 refineries in the U.S. with a capacity of 18.6 million barrels per day. Today, there are 148, with a capacity of about 17 million barrels -- though U.S. demand for gasoline has increased more than 20%. From 1993 to 2002, the average return on investment in the refining industry was 5.5%, or less than half the S&P industrials average of 12.7%.

One explanation for this performance is the historically low gas prices over much of the past 20 years; there has often been little incentive to build new capacity. But just as big a problem are onerous and costly regulatory burdens that have sucked profits from the industry. This includes a permitting process that is subject to endless bureaucratic delay and court challenges. The one company that is even considering building a new refinery -- Arizona Clean Fuels Yuma -- has been trying to obtain its necessary air permits for nearly seven years.

Refiners have also had to spend some $47 billion in the past 12 years to meet the demands of, among other laws, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act, the Oil Pollution Act, the Resource Conservation and Recovery Act, and the Comprehensive Environmental Response, Compensation and Liability Act. And from 2006 to 2012, refiners will be forced to comply with 14 new major environmental programs.

One of those is a rule to reduce sulfur in gasoline, which will go into its final stage next year. The U.S. refining industry will spend $8 billion to comply, and should be able to meet federal deadlines. But the rule further limits the ability to import extra gasoline, since many foreign firms are unable or unwilling to meet the new standards.

Ditto a new low-sulfur diesel mandate, which carries another $8 billion price tag. Refiners are understandably worried that low-sulfur diesel, which must go through the same pipes as higher-sulfur products, will ultimately fail to meet specifications and will have to be reprocessed -- potentially causing a major diesel-fuel crunch.

The recent energy bill only makes things worse. Its new ethanol mandate, a payoff to Midwest farming interests, will involve complicated refinery changes. And Congress's failure to pass liability protection for makers of MTBE, a fuel additive, will make it difficult for refiners to keep using that product next year. MTBE currently makes up a significant 1.6% of the nation's gasoline supply (more in certain areas), and refiners will have to find something to replace it. Good luck.

Refining companies have actually supported many of these environmental programs. The industry's complaint is that policymakers have put little thought into the timing or cumulative impact of these rules. At the Department of Energy's request, the National Petroleum Council performed two studies of the refining industry (in 2000 and 2004) and among its top recommendations was that regulators sequence environmental programs to give refiners some breathing room. Congress hasn't lifted a finger in response.

Meanwhile, America's energy supply crunch is only going to get worse. Demand for petroleum products is expected to rise by 1.6% annually for the next 25 years. Yet America's refineries are already operating at 95% capacity, while imports are both costly and limited. Assuming the basic law of supply and demand, Americans are looking at sustained Katrina-like gas prices and shortages for years to come.

Congressional Republicans are mulling several ideas, including bills that would speed up refinery permitting or convert old military bases into refinery sites. These are good first steps, but at some point the political class is going to have to find the backbone to ease the rules that it has imposed and that are creating today's energy shortages.

LNG Isn't Just Hot Air

Barron's Online - LNG Isn't Just Hot Air

By DIMITRA DEFOTIS

TURNING NATURAL GAS INTO A LIQUID is getting a lot of attention this week at a conference for investors in energy stocks.

"The light is turning green now for liquefied natural gas [LNG]," says John Parry, a senior equity analyst at John S. Herold, an independent energy research firm which sponsored the weeklong conference in Old Greenwich, Conn.

With U.S. demand for natural gas strong and domestic supplies dwindling, consumers must look overseas for natural gas. But in order for natural gas to make it to U.S. shores cost-effectively, it must be turned into a liquid form for easy shipping.


A number of energy companies are building facilities near natural-gas sources to liquefy gas at -260 degrees Fahrenheit, thereby compacting its volume and cutting transport costs. Then, it is shipped in special tankers to "regasification" plants, which convert the LNG back into gas.

This timing couldn't be better. Natural-gas futures hit a new all-time record at $13.45 per million British thermal units Wednesday after a report said U.S. consumers can expect higher heating bills this winter.

There are about 50 U.S. LNG projects proposed, and LNG should increase to 12% of U.S. natural-gas supply by 2010, from 7% now, says Parry.

Investors in LNG infrastructure say the timeline for getting it to U.S. shores is moving faster than expected.

Marathon Oil, the integrated exploration and refining company, said Tuesday that the race is on to get LNG to market between 2007 and 2009 when profits will be strongest. (See Weekday Trader, "Is Liquid Gas Liquid Gold?" Nov. 17, 2004.)

Marathon told conferees it is poised to start the second phase of its LNG project in Equatorial Guinea, on Africa's western coast, according to Henry Aldorf, a senior vice president at Marathon.

Natural gas is fueling acquisitions, too. Norway's Norsk Hydro this month said it would acquire Spinnaker Exploration, a Houston-based independent exploration and production company, for $2.45 billion. Parry estimates Norsk paid a nearly $1 billion premium for Spinnaker's reserves.

"Natural gas is where the real action is," says John Ryan, a longtime energy investor and an adviser to Windlass Energy Value Partners Fund, an independent Houston-based fund. "We don't have enough in the U.S. and Europe. LNG is going to be a big business."

Parry estimates roughly 15% of Marathon's earnings will come from natural gas in the coming years, making it more exposed to the upside than the biggest LNG investors -- the so-called super-major oil firms including Royal Dutch Shell, BP, Exxon Mobil and Total.

But another way to play the growth of LNG is construction, says John Olsen, who co-manages several Houston-based energy hedge funds. The veteran energy investor with Sanders Morris Harris Group, who says he has "kissed a lot of frogs and chased a lot of rabbits" in the sector, thinks the next five years will be the best of his career.

Olsen's LNG-exposed stock picks include Shaw Group and Foster Wheeler, construction and engineering companies whose energy projects include LNG-related plants. Shares in each are trading at roughly 20x forward earnings, but they deserve a premium to the broader market, he says.

"There are a huge amount of energy construction contracts to be awarded -- especially in Qatar and Saudi Arabia -- and these companies have a longstanding presence in the Persian Gulf," Olsen says.

Of course, energy stocks look rich to many investors. Marathon shares are up roughly 72% in the past year.

And the future price of natural gas is an important question mark. The higher it goes, the more foreign governments controlling reserves will push for a greater share of LNG profits. If prices are high, utilities can still switch to coal and nuclear to turn on the lights.

But expanding coal and nuclear power is problematic. And broadly, bullish investors say energy stocks still have upside because the companies budget for commodity prices at levels well below what the futures market predicts. (See Electronic Q&A, "Still Stoked About Energy," Sept. 27, 2005.)

That's why some stocks looking like the frog now, could turn into the prince.

Rita may have damaged more oil rigs than Katrina

AP Wire | 09/28/2005 | Rita may have damaged more oil rigs than Katrina

STEVE QUINN

Associated Press


DALLAS - Hurricane Rita may have caused more damage to rigs and platforms than any Gulf of Mexico storm - even its formidable predecessor Katrina, oil and gas analysts said on Wednesday.

The double-whammy of those hurricanes has already cost the Gulf almost 7 percent of its annual oil production and 5 percent of its yearly natural gas output, according to a report Wednesday from the U.S. Minerals Management Service.

"The impact on the rigs is something that's never been seen by this country before," said Daniel Naatz, director of federal resources for the Independent Petroleum Association of America.

ODS-Petrodata, which provides data and information to the industry, reported 13 rigs already seriously damaged or destroyed by Rita. Platform damage still is being assessed, said Tom Marsh, ODS analyst.

"You may think that 13 is not a significant amount, but this is 10 percent of the contracted fleet out of service for various lengths of time or in some cases permanently," Marsh said.

Meanwhile, nine of 12 pipelines that move gas and oil onshore remain shut down or operating at less than 100 percent capacity, according to the latest report by the Association of Oil Pipelines.

Refineries in the hardest-hit area of Beaumont and Port Arthur, Texas, plus Lake Charles, La., still are not operating, costing about 1.7 million barrels a day of refined products, according to the U.S. Department of Energy.

They include:

_ Citgo Petroleum Corp.'s 324,000-barrel-a-day facility in Lake Charles.

_ ConocoPhillips Co.'s 239,000-barrel-a-day refinery in West Lake, La.

_ Exxon Mobil Corp.'s 348,000-barrel-a-day Beaumont plant, the largest producer in that area.

_ A 285,000-barrel-a-day joint venture between Royal Dutch Shell PLC's Shell Oil Co. and Motiva Enterprises LLC.

_ Total SA's 233,500-barrel-a-day Port Arthur facility.

_ Valero Energy Corp.'s 255,000-barrel-a-day plant in Port Arthur.

The slow pace of recovery for the Gulf refineries, rigs and platforms, and concerns about demand for heating oil this winter and for gasoline as the economy bounces back from Katrina and Rita, drove up oil futures Wednesday.

Light, sweet crude for November delivery rose $1.28 to $66.35 a barrel on the New York Mercantile Exchange. Natural gas futures for October rose more than $1 to $13.907 per million British thermal units.

Heating oil gained more than 7 cents to settle at $2.1411 a gallon, while gasoline gained more than 17 cents to settle at $2.3393 a gallon - an increase of about 8 percent.

Industry executives and analysts say consumers and companies should brace for an expensive winter. And natural gas prices could soar more than fuel oil because, unlike crude oil, there are no natural gas reserves to tap.

Since Katrina struck, the country has received an occasional oil injection from the Strategic Petroleum Reserve and the Paris-based International Energy Agency.

"This would be a good time to have a warm winter," said Ron Gold, vice president of the Petroleum Industry Research Foundation.

Assessing damage is taking longer than post-Katrina efforts, with some findings not expected until late this week or early next week.

Companies were still evaluating the damage wrought by Katrina when Rita bore down on the country's energy hub.

The U.S. Minerals Management Service reported that 593 platforms and 64 rigs still remain evacuated. That's 72 percent of the 819 manned platforms and 48 percent of the 134 rigs with operations in the Gulf of Mexico.

Rigs are tethered to the Gulf's floor and not nearly as secure in storms. They typically are evacuated before platforms, which are used to pump the oil once the well has been drilled.

"I hate to say with absolute certainty that this is the worst storm damage we've seen, but we have had more rigs reported with severe damage than any other storm I can recall in the last 15 years," said Marsh of ODS-Petrodata.

Marsh said the company's pre-hurricane projections had already called for a rig shortage by early next year, but the back-to-back storms could push that shortage to as early as November.

Oil: Caveat empty

Oil: Caveat empty | thebulletin.org

By Alfred J. Cavallo
May/June 2005 pp. 16-18 (vol. 61, no. 03) © 2005 Bulletin of the Atomic Scientists



ithout any press conferences, grand announcements, or hyperbolic advertising campaigns, the Exxon Mobil Corporation, one of the world's largest publicly owned petroleum companies, has quietly joined the ranks of those who are predicting an impending plateau in non-OPEC oil production. Their report, The Outlook for Energy: A 2030 View, forecasts a peak in just five years.

In the past, many who expressed such concerns were dismissed as eager catastrophists, peddling the latest Malthusian prophecy of the impending collapse of fossil-fueled civilization. Their reliance on private oil-reserve data that is unverifiable by other analysts, and their use of models that ignore political and economic factors, have led to frequent erroneous pronouncements. They were countered by the extreme optimists, who believed that we would never need to think about such problems and that the markets would take care of everything. Up to now, those who worried about limited petroleum supplies have been at best ignored, and at worst openly ridiculed.

Meanwhile, average consumers have taken their cue from the market, where rising prices have always been followed by falling prices, leading to the assumption that this pattern will continue forever. In truth, the market price of crude oil is completely decoupled from and independent of production costs, which average about $6 per barrel for non-OPEC producers and $1.50 per barrel for OPEC producers. This situation has nothing to do with a free market, and everything to do with what OPEC believes will be accepted or tolerated by the United States. The completely affordable market price--what consumers pay at the gasoline pump--provides magisterial profits to the owners of the resource and gives no warning of impending shortages.

All the more reason that the public should heed the silent alarm sounded by the ExxonMobil report, which is more credible than other predictions for several reasons. First and foremost is that the source is ExxonMobil. No oil company, much less one with so much managerial, scientific, and engineering talent, has ever discussed peak oil production before. Given the profound implications of this forecast, it must have been published only after a thorough review.

Second, the majority of non-OPEC producers such as the United States, Britain, Norway, and Mexico, who satisfy 60 percent of world oil demand, are already in a production plateau or decline. (All of ExxonMobil's crude oil production comes from non-OPEC fields.) Third, the production peak cited by the report is quite close at hand. If it were twenty-five years instead of five years in the future, one might be more skeptical, since new technologies or new discoveries could change the outlook during that longer period. But five years is too short a time frame for any new developments to have an impact on this result.

Also noteworthy is the manner in which the Outlook addresses so-called frontier resources, such as extra-heavy oil, "oil sands," and "oil shale." The report cites the existence of more than 4 trillion barrels of extra heavy oil and "oil sands"--producing potentially 800 billion barrels of oil, assuming a 20-25 percent extraction efficiency. The Outlook also cites an estimate of 3 trillion barrels of "oil shale." These numbers have figured prominently in advertisements that ExxonMobil and other petroleum companies have placed in newspapers and magazines, clearly in an attempt to reassure consumers (and perhaps stockholders) that there is no need to worry about resource constraints for many decades.

However, as with all advertisements, it's best to read the fine print. ExxonMobil's world oil production forecast shows no contribution from "oil shale" even by 2030. Only about 4 million barrels of oil per day from Canadian "oil sands" are projected by 2030, accounting for a mere 3.3 percent of the predicted total world demand of 120 million barrels per day. What explains this striking disconnection between the magnitude of the frontier resources and the minimal amount of projected oil production from them? Canadian "oil sands" are actually deposits of bitumen (tar), which are the result of conventional oil degradation by water and air. Tar sands are of a completely different character than conventional oil deposits; making tar sands usable is a capital-intensive venture that requires special procedures such as heating to separate the tar from the sand, mixing the tar with a diluting agent for pipeline transport, and constructing specially equipped refineries for processing.

The most serious constraint, though, is natural gas supplies. Production of oil from tar sands requires between 400 and 1,000 cubic feet of natural gas per barrel of oil produced, depending on the extraction method used. Natural gas production, despite a near doubling of drilling activity, is flat or decreasing both in Canada and in the United States--which has prompted prices to triple over the past few years. Given these high gas prices, it almost makes more sense just to sell the natural gas directly rather than use it to produce oil from tar sands.

Extracting oil from the 3 trillion barrels of oil shale cited in the Outlook presents its own challenges. The term "oil shale" is also quite misleading, since there is no oil in this mineral, but rather an organic material called kerogen, which is a precursor of petroleum. To extract oil, the shale (typically between 5 and 25 percent kerogen) must first be mined, then transported to a plant where it is crushed, then heated to 500 degrees Celsius, which pyrolyzes, or decomposes, the kerogen to form oil. After processing, most of the shale remains on the surface in the form of coarse sand, so large-scale mining operations will produce immense amounts of waste material. An estimated 1-4 barrels of water are required for each barrel of oil produced, both for cooling the products and stabilizing the sand waste. To satisfy these water requirements, petroleum companies once contemplated diverting the Columbia River--a feat that can be excluded today on political and environmental grounds.

With non-OPEC oil production reaching a plateau and frontier resources not viable, ExxonMobil proposes that increased demand be met in two ways. The first is greater fuel efficiency. (That alone should convey the seriousness of this report: When have you ever heard a petroleum company make a plea for vehicles that use less gas?) New cars in the United States are expected to go 38 miles on a gallon of gas in 2030, instead of the current value of 21 miles per gallon. This goal is actually quite modest, as new cars sold in Europe since 2003 already achieve 35 miles per gallon.

The other way ExxonMobil believes demand will be satisfied is from vastly and rapidly increased OPEC production: "After 2010, the call on OPEC increases quickly, requiring OPEC to add more than 1 MBD [million barrels per day] of capacity every year," notes the Outlook. "OPEC's resources are large enough to achieve this rate of expansion, and we expect that investments will be made in a timely manner."

This assessment is somewhat ominous. OPEC has not expanded production capacity much at all recently. Moreover, such production increases are only possible from Iraq, Saudi Arabia, Kuwait, and the United Arab Emirates. For these countries, and indeed for most OPEC members, petroleum and petroleum products are their only significant export. As such, they have a vested interest in obtaining the best possible price for their non-renewable resources. OPEC nations would be quite unlikely to increase production as rapidly as needed unless compelled to do so. To put this shortfall in perspective, in 2003 Algeria produced 1.1 million barrels per day; a new Algeria would need to be brought on line in the Persian Gulf each and every year beyond 2010 just to keep up with the projected increase in demand. Consequently, once non-OPEC production reaches a peak, conventional world oil production could peak shortly thereafter, and prices (never explicitly mentioned in the Outlook) would rise in accordance with the laws of supply and demand.

What all this means is that the petroleum industry is approaching a turning point. Conventional petroleum production will soon--perhaps in five years, ten at best--no longer be able to satisfy demand. For their part, American consumers would do well to take a cue from their Western European counterparts, who enjoy a comfortable lifestyle despite a per capita use of petroleum that is half of that in the United States. The sooner the United States begins this transition away from oil, the easier it will be. That's a far more attractive option than trying to squeeze oil from stone.

Matt Simmons Issues a Wake Up Call Energy THE Of Future

Matt Simmons Issues a Wake Up Call Energy THE Of Future

By Jeanne Klobnak-Ball

9.28.05

Like the terrorist attacks of 9/11, Hurricane Katrina stands to become a defining moment in our nation's history. While the precise meaning of such moments remains to be interpreted, Matt Simmons believes the natural disaster may well be remembered as the start of "our great energy war." "We're almost at the verge of having real energy shortages," Simmons said last Friday, when he issued a wake-up call to a standing-room only audience at the Center for the Arts. "We could be looking at $10-a-gallon gas this winter."

Author of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy" and founder of Simmons and Company International, a Houston-based energy investment banking firm managing over $60 billion in assets, Simmons is also an energy advisor to President Bush. During his lecture ­ which kicked off a two-day lecture series on the future of energy sponsored by the University of Wyoming's Ruckelshaus Institute of Environment and Natural Resources ­ Simmons reviewed circumstances leading up to the current energy crisis.

Tipping points and false assumptions
Until recently, President Bush has said little about global oil and gas consumption outpacing supply, but, even before hurricanes hit the Gulf Coast, consumption was hovering near 99.8 of the world's percent ability to produce, refine and distribute transportation fuels. Katrina, considered the worst natural disaster ever to hit the oil and gas industry, further weakened domestic supply, tipping the entire global energy market on its collective head. "The storms have shown how fragile the balance is between supply and demand in America," Bush recently said to CNN, "We can all pitch in by being better conservers of energy ­ people need to recognize the storm has caused disruption." Although pump prices rose quickly in Katrina's aftermath, they remain well below what Simmons considers reflective of the resource's true scarcity. Conventional oil discovery peaked in 1960, he said, after which no reserves of greater amounts were found. Simmons joins other energy analysts in claiming we are now at or very near peak production, after which no greater amount of conventional oil can be produced. Despite this geologic imperative, global oil demand escalates at a rapid pace.

"Peak Oil is the single most important issue of the 21st century," Simmons asserted. "The hurricanes, Katrina and Rita, may well be remembered as the start of our great energy war, just as Fort Sumpter was the beginning of our Civil War. "Fort Sumpter was the tipping point of a pending war over slavery that John Adams predicted we were going to have to finally resolve two weeks before he passed away, on the 50th anniversary of the founding of the United States," Simmons noted, adding that it became such a profound crisis because the problem was ignored and left to linger. "Likewise, our energy crisis didn't begin with Katrina or worsen with Rita, it got under way years ago as we laid one false assumption on top of another." The first and perhaps most egregious falsehood was basing the price of oil on political expediency, Simmons said, ignoring its true cost and creating what he lamented as a "false concept of cheap oil forever." Precious resources were wasted as other false assumptions were made. "Our best quality natural gas was simply flared in the 1930s and '40s, seen as having no use," Simmons said. In 1956, Dr. King Hubert, senior scientist for Shell Oil, warned that the U.S. would likely start to exceed peak oil production by the early 1970s. But by 1970, Hubert's reputation was in shatters. "Too many papers were written about 'remember that old geezer who said the United States was gonna run out of oil? Look, we've never produced more.' That was the very year we peaked," Simmons said. When the U.S. did peak in 1970, oil was still being sold for $1 a barrel, 2 cents a gallon, one-tenth of a cent per cup, Simmons noted. By the early 1970s, another false assumption arose, he said. Conventional wisdom assumed that the Middle East's 38 super giant oil fields, discovered after World War I, could easily produce almost unlimited amounts of oil from a small number of fields and wells. Middle East experts hitched their carts to the promising vastness of the region, without stopping to ponder if oil could exist outside the original area of discovery. Further, Simmons claimed, no one ever understood the logic concerning what influences energy demand or how large it could grow. During the 20th century, most investors worried about how energy would be used without creating a glut. "There was this worry about glut, how we handle glut, that always preoccupied people," Simmons said, "as opposed to looking closely at what was really happening to supply."

Shockwaves
In 1950, oil demand was 10 million barrels a day globally. By 1970, it was 50 mbd, but while demand grew five-fold, price stayed constant; oil was still selling at $1 a barrel. When U.S. production peaked in 1970, Saudi oil prices soared 18-fold between Jan. 1, 1970 and mid-June 1979, as demand grew another 15 mbd. "So for the concept that high prices quickly killed demand, there was never any supporting data," said Simmons. Iran's and Kuwait's oil production peaked in 1972, but no one noticed. "People continued to have this concept that there's oil in the Middle East and it's going to last forever," Simmons said. The second oil shock hit in 1979, when prices suddenly shot up from $18 to $40 a barrel, or about $105 per barrel in 2005 dollars. As a result, the U.S. finally curbed oil demand for about four years, Simmons said. Between 1979-1985, "We rolled out nuclear power and our coal plants got upgraded so they could operate at 100 percent," Simmons said. "To produce electricity from coal was vastly cheaper than using oil. In one short period of time we backed out oil as a feed stock for boiler fuel and electricity once and for all." At the same time, the U.S. exported "a big chunk of heavy manufacturing to Europe and Japan." The combination above resulted in four years when world demand actually fell, "prompting a great many people to say, 'Whoops, it just goes to show that if prices ever get high, demand just gets cannibalized,' " Simmons said. "Yet there was never any data for that."

Connecting the dots - 'glut' to blackouts
Siberian oil was discovered in 1967, Alaskan North Slope oil in 1968, and the North Sea in 1969, the last great frontiers to come on line.

"It took a decade to bring all these fabulous sources into production," Simmons said, "creating an enormous last amount of brand new oil, but all three peaked years ago, and are all now in steady decline."

Due to low prices, the decade between 1982-1992 crushed the oil industry into a massive depression, according to Simmons. "We put the oil contractors and drilling industry through a giant paper shredder, in which 90 percent of the industry participants collapsed during this sad, tragic 10 years, all based on the concept that there was a massive overhang of too much oil and so much natural gas that it would never have much of a future. Job losses and bank closures ensued due to a perceived glut that was, at best, 10 to 15 percent of demand," Simmons said.

Growth reemerged in fits and starts in the mid-1990s only to run up against a lack of drill rigs. By early 1999, as oil hung around $10/barrel, Simmons said, the perception among industry leaders was that this would never hold, but rather would drop down to $5/barrel and stay there for about a decade. "The Economist published an infamous cover story called 'Drowning in Oil' only four days before the price of oil finally Colin J. Campbell, Association for the Study of Peak Oil This shows the growing gap between discovery and consumption as we move from surplus to deficit. The yellow curve shows exploration drilling. Note that the level of activity barely affects the discovery trend. It destroys the flat earth economists' claim that discovery is driven by market forces.

Colin J. Campbell, Association for the Study of Peak Oil This is a very compelling graph. The red line is discovery smoothed with a ten-year moving average. It shows a clear downward trend, easy to extrapolate, as shown in orange. The green line is production, extrapolated at a 2% growth in demand to match the past trend. The inheritance from past discovery is the area between the red and green lines. The inheritance is being increasingly consumed because future discovery is insufficient, but like all inheritances, it does not last forever. There just is not enough to sustain growth, or even hold current production for long. The blue line shows the inevitable decline.

- klobnak@planetjh.com

To Conserve Gas, President Calls for Less Driving - New York Times

To Conserve Gas, President Calls for Less Driving - New York Times

September 27, 2005
To Conserve Gas, President Calls for Less Driving
By DAVID LEONHARDT, JAD MOUAWAD and DAVID E. SANGER
With fears mounting that high energy costs will crimp economic growth, President Bush called on Americans yesterday to conserve gasoline by driving less. He also issued a directive for all federal agencies to cut their own energy use and to encourage employees to use public transportation.

"We can all pitch in," Mr. Bush said. "People just need to recognize that the storms have caused disruption," he added, and that if Americans are able to avoid going "on a trip that's not essential, that would be helpful."

Mr. Bush promised to dip further into the government's petroleum reserve, if necessary, and to continue relaxing environmental and transportation rules in an effort to get more gasoline flowing.

On Capitol Hill, senior Republicans called for new legislation that they said would lower energy costs by increasing supply and expanding oil refining capacity over the long run.

Even though Hurricane Rita caused much less damage to the oil industry than feared, the two recent hurricanes have disrupted production in the Gulf of Mexico enough to ensure that Americans are facing a winter of sharply higher energy costs. The price of natural gas, which most families use to heat their homes, has climbed even more than the price of gasoline recently.

Households are on pace to spend an average of $4,500 on energy this year, up about $500 from last year and $900 more than in 2003, according to Global Insight, a research firm.

Mr. Bush's comments, while similar to remarks he made shortly after the disruption from Hurricane Katrina pushed gasoline prices sharply higher, were particularly notable because the administration has long emphasized new production over conservation. It has also opted not to impose higher mileage standards on automakers.

In 2001, Vice President Dick Cheney said, "Conservation may be a sign of personal virtue, but it cannot be the basis of a sound energy policy." Also that year, Ari Fleischer, then Mr. Bush's press secretary, responded to a question about reducing American energy consumption by saying "that's a big no."

"The president believes that it's an American way of life," Mr. Fleischer said.

Mr. Bush, speaking yesterday after he was briefed at the Energy Department, did not use the dour tone or cardigan-wearing imagery that proved politically deadly for Jimmy Carter during the oil crisis of the 1970's. Nor did Mr. Bush propose new policies to encourage conservation. But he was more explicit than in the past that Americans should cut back.

Oil companies spent much of yesterday assessing the damage from Hurricane Rita, which seemed to spare many oil and gas facilities. Still, the gulf's entire oil output and about four-fifths of its natural gas production remained shut yesterday, less than a month after Katrina left the industry stretched thin.

The Gulf of Mexico produces about 7 percent of the oil consumed in the United States and provides 16 percent of the nation's natural gas.

About half of the 16 refineries that were forced to shut by Hurricane Rita have said they plan to restart production soon. But delays in refining pushed the average price of gasoline up again for the first time since Labor Day, to $2.80 a gallon for regular gasoline, according to AAA.

Crude oil prices also rose yesterday on the New York Mercantile Exchange, closing up 2.5 percent, to $65.82 a barrel. Natural gas futures rose 12 cents, to $12.44 a thousand cubic feet.

"We've been in a chronic situation here where supplies have not really caught up with demand," said Dave Costello, an analyst at the Energy Information Administration.

In response to higher energy costs, households are likely to spend less on restaurant meals, clothing and other items. That would slow economic growth in coming months, but economists predicted that other forces - like a continuing housing boom and rising corporate investments in factories and equipment - would keep the economy growing.

"I don't think we're talking about a recession or a near recession," said Joshua Shapiro, the chief United States economist at MFR, a research company in New York. "I think we're talking about growth that is slower than people expected."

Households are now spending about $550 billion a year on energy, up by about $150 billion since the start of last year, according to Global Insight. Over the course of an entire year, the increase would be equal to almost 2 percent of overall consumer spending.

Energy costs are likely to be a particular burden on low- and middle-income households, whose income growth has barely matched inflation over the last few years. Wealthier households have done better, government data show, and have helped keep economic growth healthy with spending on second homes, new vehicles and the like.

Although more forecasters, including Federal Reserve officials, remain optimistic, some say that the spike in energy costs could lead to something of a tipping point for consumers. Families have already begun saving less money in response to higher energy costs, and they might eventually decide to rethink other parts of their budget.

"The best leading indicator of consumer spending is real average hourly earnings," which have been hurt by higher energy costs, said Joseph H. Ellis, a former Goldman Sachs partner and the author of a forthcoming book on the business cycle. "I think we're heading into a very difficult 2006."

In Washington, two House committees are expected to consider proposals this week that have been blocked in the past by environmental objections. Beyond making it easier to build new refineries, one proposal would allow states to opt out of Congressional bans on coastal oil drilling, and another would allow drilling for oil and gas in the Arctic National Wildlife Refuge, which has been controversial for years.

"Families who are paying more than $3 for a gallon of gasoline cannot afford to watch Congress block more clean U.S. energy production while they suffer," said Representative Richard Pombo, Republican of California and chairman of the Resources Committee.

The oil and gas industry supported the moves. John B. Walker, chairman of the Independent Petroleum Association of American, said areas now off limits offshore and in Alaska "could supply our nation with more than 100 years of natural gas - and save U.S. consumers upward of $500 billion."

Environmental groups said drilling advocates were trying to take advantage of anxiety from the storms and rising gasoline prices to push proposals that did not survive in the recently passed energy bill.

"It is kind of sad," said Kevin Curtis, legislative director at the National Environmental Trust. "There is nothing here that helps the consumer at the gas pump short term."

While attention has been focused on gasoline prices, the spike in natural gas prices has the potential to pose a bigger economic threat.

Households that use natural gas will pay an average $1,130 to heat their homes this winter, an increase of almost $400, according to federal government estimates. The price of natural gas in futures markets has more than doubled since 2000 and is six times what it was throughout the 1990's.

Oil reserves are double previous estimates, says Saudi

Independent Online Edition > Business News : app5

By Saeed Shah
Published: 28 September 2005
Saudi Arabia, the biggest oil producer, and Exxon Mobil, the largest oil company, yesterday declared that the world had decades' worth of oil to come, in an attempt to calm fears about the record prices experienced in recent weeks.

Forming a powerful alliance, the Saudi oil minister Ali al-Naimi said, at an industry conference in Johannesburg, that the country would soon almost double its "proven" reserve base, while Exxon's president, Rex Tillerson, spoke of 3 trillion or more barrels of oil that are yet to be recovered.

Mr Naimi said that Saudi Arabia would "soon" add 200 billion barrels to its current reserves estimate of 264 billion barrels. The level of the kingdom's reserves and future production capacity are a controversial issue, with sceptics suggesting that it is running out of oil. Muhammed-Ali Zainy, of London's Centre for Global Energy Studies, said: "Since these Opec countries [like Saudi Arabia] are closed, the only information available is available to themselves alone. So they can come up with a new reserves figure and the rest of the world will just have to take it."

Mr Naimi also said that there were "no takers" for more oil right now, as a result of constrained refining capacity. Roughly a quarter of US refining capacity is still shut after Hurricanes Katrina and Rita struck the country's southern coast, but global refining capacity - to turn crude oil into petrol and other products - was struggling to keep up with demand even before that.

"Give us the customers and we will pump more oil," the Saudi oil minister told reporters at the 18th World Petroleum Congress, adding that more refineries needed to be built. He said that enough global output would be added in the next three to four years to restore "some margin of safety" to oil markets.

The comments did have a soothing impact on the market. Despite early reports that Rita has sunk several rigs and left at least nine others adrift in the Gulf of Mexico, crude oil slipped 75 cents to end at $65.07 in New York yesterday. US petrol prices, however, continued to rise, leading George Bush to call on Americans to conserve fuel.

Saudi Arabia is the world's key oil power, with more than a third of Middle Eastern reserves - on its existing estimate - and it currently pumps out 9.5 million barrels a day, providing well over 10 per cent of world supply.

Mr Naimi said talk of oil scarcity reminded him of the 1970s, when people also thought the end of the age of oil was at hand. "But in the intervening years, when we were supposedly facing a precipitous decline, world oil reserves more than doubled," he said.

It is widely accepted that demand for oil will rise over the next decade or two. Most projections of how that demand will be met assume that Saudi Arabia will be able to ramp up production to 15 million barrels a day or more by 2020.

However, sceptics, led by the US banker Matthew Simmons, have argued that production in Saudi Arabia's known oil fields is already declining and that no major new fields have been discovered. By extension, these critics suggest the world has reached, or is about to reach, the high point of production.

Separately, Exxon's Mr Tillerson told the convention in South Africa that his company estimated that global energy demand would increase by 50 per cent over the next 25 years. Mr Tillerson said that by some estimates there was as much as 7 trillion barrels of oil yet to be discovered. On a more conservative basis, the world still had more than 3 trillion barrels from conventional fields, oil sands deposits and other sources. "That is more than twice all the oil recovered up to now in all of human history," Mr Tillerson said.

Craig Pennington, an energy analyst at Schroders in London, said: "The message from these two [Naimi and Tillerson] is that, 'Don't worry. We do have enough oil. Just give us time to bring it in'."

Saudi Arabia, the biggest oil producer, and Exxon Mobil, the largest oil company, yesterday declared that the world had decades' worth of oil to come, in an attempt to calm fears about the record prices experienced in recent weeks.

Forming a powerful alliance, the Saudi oil minister Ali al-Naimi said, at an industry conference in Johannesburg, that the country would soon almost double its "proven" reserve base, while Exxon's president, Rex Tillerson, spoke of 3 trillion or more barrels of oil that are yet to be recovered.

Mr Naimi said that Saudi Arabia would "soon" add 200 billion barrels to its current reserves estimate of 264 billion barrels. The level of the kingdom's reserves and future production capacity are a controversial issue, with sceptics suggesting that it is running out of oil. Muhammed-Ali Zainy, of London's Centre for Global Energy Studies, said: "Since these Opec countries [like Saudi Arabia] are closed, the only information available is available to themselves alone. So they can come up with a new reserves figure and the rest of the world will just have to take it."

Mr Naimi also said that there were "no takers" for more oil right now, as a result of constrained refining capacity. Roughly a quarter of US refining capacity is still shut after Hurricanes Katrina and Rita struck the country's southern coast, but global refining capacity - to turn crude oil into petrol and other products - was struggling to keep up with demand even before that.

"Give us the customers and we will pump more oil," the Saudi oil minister told reporters at the 18th World Petroleum Congress, adding that more refineries needed to be built. He said that enough global output would be added in the next three to four years to restore "some margin of safety" to oil markets.

The comments did have a soothing impact on the market. Despite early reports that Rita has sunk several rigs and left at least nine others adrift in the Gulf of Mexico, crude oil slipped 75 cents to end at $65.07 in New York yesterday. US petrol prices, however, continued to rise, leading George Bush to call on Americans to conserve fuel.
Saudi Arabia is the world's key oil power, with more than a third of Middle Eastern reserves - on its existing estimate - and it currently pumps out 9.5 million barrels a day, providing well over 10 per cent of world supply.

Mr Naimi said talk of oil scarcity reminded him of the 1970s, when people also thought the end of the age of oil was at hand. "But in the intervening years, when we were supposedly facing a precipitous decline, world oil reserves more than doubled," he said.

It is widely accepted that demand for oil will rise over the next decade or two. Most projections of how that demand will be met assume that Saudi Arabia will be able to ramp up production to 15 million barrels a day or more by 2020.

However, sceptics, led by the US banker Matthew Simmons, have argued that production in Saudi Arabia's known oil fields is already declining and that no major new fields have been discovered. By extension, these critics suggest the world has reached, or is about to reach, the high point of production.

Separately, Exxon's Mr Tillerson told the convention in South Africa that his company estimated that global energy demand would increase by 50 per cent over the next 25 years. Mr Tillerson said that by some estimates there was as much as 7 trillion barrels of oil yet to be discovered. On a more conservative basis, the world still had more than 3 trillion barrels from conventional fields, oil sands deposits and other sources. "That is more than twice all the oil recovered up to now in all of human history," Mr Tillerson said.

Craig Pennington, an energy analyst at Schroders in London, said: "The message from these two [Naimi and Tillerson] is that, 'Don't worry. We do have enough oil. Just give us time to bring it in'."

Better to cry wolf now than wait until the oil has run out

Better to cry wolf now than wait until the oil has run out | EnergyBulletin.net | Energy and Peak Oil News

by George Monbiot

Are global oil supplies about to peak? Are they, in other words, about to reach their maximum and then go into decline? There is a simple answer to this question: no one has the faintest idea.

Consider these two statements: 1. "Last year Saudi Aramco made credible claims that as much as 500bn-700bn barrels remain to be discovered in the kingdom." 2. "Saudi Arabia clearly seems to be nearing or at its peak output and cannot materially grow its oil production."

The first comes from a report by Energy Intelligence, a consultancy used by the major oil companies. The second comes from a book by Matthew Simmons, an energy investor who advises the Bush administration. Whom should we believe? I have now read 4,000 pages of reports on global oil supply, and I know less about it than I did before I started. The only firm conclusion I have reached is that the people sitting on the world's reserves are liars.

In 1985 Kuwait announced that it possessed 50% more oil than it had previously declared. Had it just discovered a new field? Had it developed a new technology that could extract more oil from the old fields? No. Opec, the price-fixing cartel to which it belongs, had decided to allocate production quotas to its members based on the size of their reserves. The bigger your stated reserve, the more you were allowed to produce. The other states soon followed Kuwait, adding a total of 300bn barrels to their reserves: enough, if it existed, to supply the world for 10 years. And their magic oil never runs out. Though extraction has long outstripped discovery, Kuwait posts the same reserves today as it claimed in 1985.

So we turn to the US Geological Survey for an answer, and find that its estimates of global oil supply are as reliable as the Pentagon's assessments of Iraqi weapons of mass destruction. In 1981 it said we possessed 1,719bn barrels of oil. In 2000, 2,659. Yet the discovery of major oilfields peaked in 1964. Where has it come from?

It is true to say that oil reserves are not fixed. As technology improves or the price increases, oil that was formerly too expensive to extract becomes available. But the oil geologist Jean Laherrère points out that the survey's estimate "implies a five-fold increase in discovery rate and reserve addition, for which no evidence is presented. Such an improvement in performance is in fact utterly implausible, given the great technological achievements of the industry over the past 20 years, the worldwide search, and the deliberate effort to find the largest remaining prospects."

The current high oil prices are the result of a shortage of refineries - exacerbated by the hurricanes in the Gulf of Mexico - rather than a global shortage of crude. But behind that problem lurks another. Last week Chris Vernon of the organisation PowerSwitch published figures showing that while total global oil production has risen since 2000, the production of light sweet crude - the kind that is easiest to refine into motor fuels - has fallen, by 2m barrels a day. This grade, he claims, has already peaked. The refinery crisis results partly from this constraint: there aren't enough plants capable of processing the heavier grades.

And next in the queue? Who knows? All I can say is that George Bush himself does not appear to share the US Geological Survey's optimism. "In terms of world supply," he said in March, "I think if you look at all the statistics, demand is outracing supply, and supplies are getting tight." What has he seen that we haven't?

If the figures have been fudged, we're stuffed. That might sound extreme, but it is not my conclusion. It is that of the consultants hired by the US department of energy. In February this year the department released a report called Peaking of World Oil Production: Impacts, Mitigation and Risk Management. I say "released", for it was never properly published. For several months the only publicly available copy was lodged on the website of the Hilltop high school in Chula Vista, California.

The department's consultants, led by the energy analyst Robert L Hirsch, concluded that "without timely mitigation, the economic, social and political costs will be unprecedented". It is possible to reduce demand and to start developing alternatives, but this would take "10-20 years" and "trillions of dollars". "Waiting until world oil production peaks before taking crash programme action leaves the world with a significant liquid fuel deficit for more than two decades", which would cause problems "unlike any yet faced by modern industrial society".

Of course, we have been here before. Oil analysts and environmentalists have warned of disappearing reserves ever since drilling began, and they have always been proved wrong. According to people such as the Danish statistician Bjorn Lomborg, this is because the industry is self-regulating. "High real prices deter consumption and encourage the development of other sources of oil and non-oil energy supplies," he says. "Since searching costs money, new searches will not be initiated too far in advance of production. Consequently, new oilfields will be continuously added as demand rises ... we will stop using oil when other energy technologies provide superior benefits."

It is beginning to look as if he is wrong on all counts. As the Economist magazine pointed out on September 10, "demand for petrol is pretty inelastic in the short term", because people still have to go to work, however much it costs. According to the analyst it cites, "it would take a doubling of petrol prices to reduce American petrol consumption by just 5%".

Lomborg's idea that companies can just go out and find new oil when demand rises suggests that he believes geology is as malleable as statistics. One day - or so we should hope - a superior technology will certainly emerge, but cheap alternatives to liquid fuels are currently decades away. Yes, the pessimists have been crying wolf for almost a century. But better that, perhaps, than crying "sheep" when the wolves appear.

The Hirsch report has no truck with those who believe in the magic of the markets. "High prices do not a priori lead to greater production. Geology is ultimately the limiting factor." There are plenty of oil shales, tar sands and coal seams available for turning into liquid fuels, but it would take years and a massive investment before enough came online. Hirsch compares the projections of the oil optimists to those of the gas optimists in the late 1990s, who promised "growing supply at reasonable prices for the foreseeable future" in the US and Canada. Today the same people are bemoaning the deficit. "The North American natural gas market is set for the longest period of sustained high prices in its history, even adjusting for inflation ... Gas production in the United States (excluding Alaska) now appears to be in permanent decline."

"The bottom line," Hirsch says, "is that no one knows with certainty when world oil production will reach a peak, but geologists have no doubt that it will happen." Our hopes of a soft landing rest on just two propositions: that the oil producers' figures are correct, and that governments act before they have to. I hope that reassures you.

The end of cheap oil

WorkingForChange-The end of cheap oil

Rising prices at the pump are only the beginning


At the end of the 18th century, Thomas Malthus predicted population growth would outpace food production, resulting in widespread starvation. But within 50 years the industrial revolution was in full swing in England, powered by coal-fired steam engines. In 1866, in Clarion County, Pa., the first oil wells started production and the industrial age truly began.
Malthus' dreary view seemed overblown.

The astounding differences in daily life between Malthus' time and ours all result from the availability and use of cheap energy. The pace of technological advancement is so rapid that the average citizen can't keep up. This wizardry -- coupled with the mid-20th century "green revolution" in food production -- leads many people, unfortunately including many political leaders, to assume that we can invent, exploit and develop our way out of almost any problem.

If we can, it is time to start.

Continued prosperity in the developed countries and any hope of significant advancement in undeveloped countries depend on availability of inexpensive energy. In the United States, about 40 percent of energy comes from oil. And we're running out. Not out of oil per se. There’s lots of oil in Canadian tar sands and Colorado shale. We're running out of oil we can pump from the ground and market for under $60 a barrel. Most people alive today will see the end of cheap oil.

Consider the production and distribution of food without that oil. The tractors that till the soil and harvest the crops across the modern world run on oil. The energy that transforms raw farm products into neatly wrapped items on supermarket shelves derives, in part, from oil. The trucks that transport the raw and finished products run on oil.

How much of what the average American uses daily, particularly perishable foodstuffs, has to be inexpensively transported over significant distance? I live in Colorado and I can buy a 5-pound bag of Florida oranges for less than $5. Absent the current distribution system, it is not unreasonable to think that I would never have tasted a fresh orange had I lived all my life here.

How much of what is readily available today will be priced out of reach if transportation costs double? Triple? Quadruple?

There are alternative energy sources, but none that can now serve transportation needs. Oil and oil-based fuels are so useful because of their easy portability and relative safety. It is not difficult to convert engines to use natural gas, but it has to be liquified. Liquified natural gas in large quantity is dangerous to store, and the expense of refitting fuel stations nationwide to sell it would add significantly to its cost. What’s more, natural gas will become more scarce and costly, perhaps within two decades after oil.

Hydrogen is often proposed as a safe, non-polluting alternative, but making it in usable form takes more energy than the hydrogen can provide as fuel. This means an inexpensive, environmentally acceptable and widely available energy source will be required to produce the hydrogen. No such energy source now exists. Developing one and building a hydrogen economy will be a huge task. Coal and nuclear power are sometimes suggested, but nuclear plants are expensive and the environmental problems of coal use and nuclear waste storage are daunting.

Representatives of the oil industry and the Department of Energy say there's no immediate problem, that discovery of new oil fields, coupled with improved recovery from existing fields, will provide the time we need to find solutions. But independent petroleum geologists point out that really huge fields, because of their size, are easy to find and no new ones have been found for over a decade. The world burns oil faster than new oil is discovered -- four times faster, according to some reports.

Recovery from existing fields is improving, but it's still expensive, and money matters. The end of cheap oil, followed by the end of cheap natural gas, threatens to cripple strong economies and devastate weak ones.

This is a looming crisis and we must work harder to figure a way out. Otherwise, the Rev. Malthus and his unhappy vision may yet prove right. David Bacon, a physician and retired Army colonel living in Denver, has had a long interest in the world’s energy picture. He wrote this for the Land Institute’s Prairie Writers Circle, Salina, Kan.

Go Ahead and Drive Less, if You Can - New York Times

Go Ahead and Drive Less, if You Can - New York Times

September 25, 2005
Go Ahead and Drive Less, if You Can
By DANNY HAKIM and JEREMY W. PETERS
DETROIT

FOR three straight weeks, Americans have been buying less gasoline than they did a year ago. Consumption is dropping at a rate not seen since drivers were waiting in gas lines back in the early 1980's. And people are turning to mass transit in record numbers in some cities.

"Normally we'd expect to see a decline of about 400,000 barrels a day from August to September just for seasonal reasons, as people stop taking vacations," said Doug MacIntyre, a senior oil market analyst for the Energy Information Administration.

But Americans consumed an average of 8.8 million barrels of gas a day for the week ending Sept. 16, down from 9.4 million the week before Hurricane Katrina struck New Orleans and roughly 200,000 fewer barrels per day than in mid-September last year.

"That sort of gives an indication of the price impact," Mr. MacIntyre said. "It's a big decline."

There are any number of reasons - from hurricanes to Middle East instability to China's growing thirst for oil - to be pessimistic that the era of $1.50-a-gallon gasoline will ever return.

So how much can Americans cut back on their driving? How much time behind the wheel is discretionary?

Consider that the average American household used its cars and trucks for 496 shopping trips in 2001, according to an exhaustive survey of 160,000 Americans conducted by the Transportation Department. Trips were 7.02 miles in length, on average, for a total of 3,482 miles per household per year. That much driving could almost get you from New York to Juneau, Alaska, give or take a few hundred miles.

That's a lot farther than in 1990, when the average household's shopping trips could only get you from New York to Denver. Part of the difference stems from the fact that the length of an average shopping trip was 5.1 miles in 1990. Blame greater suburban sprawl for longer trips these days.

But the average household also took just 341 shopping trips in 1990, back in a pre-latte era when there were just a few dozen Starbucks stores and coffee was something to be brewed at home. People are now taking more shopping trips than trips to and from work.

Of course, determining how driving miles are put to use through surveys is hardly an exact science. "Not only is it difficult, it's getting more difficult, because more people are blending work and pleasure," said Doug Hecox, a spokesman for the Federal Highway Administration.

What seems clear is that American consumers have been unnerved by the record-breaking gasoline prices this year. The big gas-guzzling sport utility vehicles that have been a Detroit favorite have landed on dealer lots with a resounding thud, with steep discounting required to keep them selling.

Some people are considering carpooling, while others are turning to public transportation, and in record numbers in some cities, according to statistics the American Public Transportation Association will release tomorrow.

The Washington Metropolitan Area Transit Authority recorded the busiest month ever for its Metro system in June, and ridership was up 10 percent for the year through August, compared with a normal annual growth rate of 2 percent.

In Texas, traffic on the Trinity Railway Express, which links Dallas to Fort Worth, was up 16.4 percent for the first four weekdays of September compared with the same period a year earlier. St. Louis reported a 17 percent increase in mass transit ridership from April to June, compared with a year ago. In San Francisco, traffic on the Bay Area Rapid Transit system was up almost 4 percent during the first two weeks of September, compared with a year ago, and Sept. 15 was the busiest day for the system in a year.

"These are probably the highest growth levels in four decades," said William W. Millar, the president of the public transportation association, a nonprofit group representing transit authorities across the country.

Drivers can only bend so far, however.

"People can't change where they live," said Richard Porter, an economics professor at the University of Michigan. "They can't change where they work, and there aren't any clear substitutes to gas. You can't run your car on much else. It's not like switching from oranges to grapefruits."

But people can squeeze some savings here and there, even if less shopping is out of the question. Consider other areas of driving inflation. The average household is making 47 trips to doctors and dentists each year, up from 18 in 1990, according to the highway administration's surveys. The number of trips to school or church has risen to 105 per year from 89. Driving vacations have quadrupled from two to eight.

About the only thing Americans have been cutting back on is visiting friends and relatives, with such trips down to 129 per year from 149 in 1990. At 14.89 miles per visit on average, cutting out an additional 20 would save 300 more miles per year. Don't worry, your mother-in-law won't miss you.

Storms Cast Spotlight on Energy's New Reality - New York Times

Storms Cast Spotlight on Energy's New Reality - New York Times

September 26, 2005
Storms Cast Spotlight on Energy's New Reality
By JAD MOUAWAD
The vast energy complex spread along the hurricane-battered Gulf Coast apparently escaped serious damage in the latest storm. But for an industry still reeling from the impact of Hurricane Katrina, the recovery will be long and arduous, leaving global energy markets at the mercy of other natural disasters - or unforeseen twists in unpredictable oil-producing countries like Nigeria and Iran.

Once again, Hurricane Rita illustrated the energy market's new reality: with little production or refining capacity to spare, any disruption can have a big impact on tight and increasingly edgy markets. Until investments are made in new supplies, or demand slows down enough to ease the capacity squeeze, analysts warn that markets will remain volatile.

In the short run, much will depend on how quickly oil companies can restart their refineries and bring gasoline, natural gas and other products back to consumers. Energy prices, which had already soared in recent months because of fears that supplies were lagging demand, peaked last month after Hurricane Katrina cut production in the Gulf of Mexico and crimped many refiners.

By now, with the summer driving season at an end, refineries should have started building stockpiles of heating oil for the winter. Instead, most of them have been struggling to churn out more gasoline to make up for the lost refining capacity. Ahead of the peak winter demand, this leaves markets for heating oil and natural gas on shaky foundations and could mean higher prices in coming months.

"We really could have a very tight squeeze in October or November because we have no padding," said Amy Myers Jaffe, the associate director of Rice University's energy program.

"Anything that might have had a minor impact in the past, will have a major impact today - a war in the Middle East, an accident in Latin America, an explosion in Iraq," she said. "Anything could turn this into an even bigger crisis."

The most immediate concern for oil companies was the condition of the coastal refining system. The industry was already suffering from bottlenecks and shortfalls that caused retail shortages, gas lines and gasoline prices above $3 a gallon earlier this month. While oil, natural gas and gasoline prices have since retreated, more delays could send them shooting up again.

The Gulf Coast is by far the most sensitive region for America's energy supplies. Refineries in Texas and Louisiana account for nearly half the country's refining capacity, while the offshore waters produce nearly a third of the nation's oil and gas output. Most of those operations were shut down by Hurricane Rita and remained closed yesterday.

Rick Perry, the governor of Texas, speaking to CNN yesterday morning, gave an upbeat assessment. He said the state's refineries had suffered "a glancing blow, at worst," adding, "hopefully they'll be back in production very soon." He also said that the offshore oil platforms appeared to be "in relatively good shape also."

The news helped ease some of the concerns that had built up on oil markets last week. At the New York Mercantile Exchange and London's International Petroleum Exchange, both open for special sessions yesterday, oil futures dropped.

In New York, crude oil for November delivery fell $1.14, to $63.05 a barrel. On Friday, the price fell 3.5 percent as Hurricane Rita's course shifted away from the main refining centers. By then, oil futures were down 9.4 percent from their peak of $70.85 a barrel, reached in the aftermath of Hurricane Katrina.

Initial estimates by insurance specialists put the damage from Hurricane Rita at $5 billion or less, far below the estimated $35 billion in damage inflicted by Hurricane Katrina.

"We do not expect to see significant structural damage to the refineries," said Dr. Jayanta Guin, vice president of research at AIR Worldwide, a Boston firm that tracks hurricanes and the damage they inflict.

Still, on the Texas coast, the focus through the weekend was on how long it would take to restart the 16 refineries that were shut down by the storm.

Those refineries can process 4 million barrels of oil a day, or 23 percent of the country's total capacity, according to the Energy Department. Another four refineries, accounting for 5 percent of capacity, are undergoing repair after the damage caused by Hurricane Katrina.

Also, there was little sign of damage to the offshore infrastructure, according to the United States Coast Guard, whose initial survey found only two damaged drilling platforms and no traces of oil spills. By contrast, Hurricane Katrina destroyed about 50 small facilities and damaged a handful of major platforms.

Even if the damage from the latest storm proves to be light, oil production from the Gulf of Mexico is likely to be months away from returning to its normal level. Oil companies evacuated 80 percent of all the manned platforms operating in the gulf in anticipation of Hurricane Rita and shut down the region's oil production, about 1.5 million barrels a day.

The storm also forced the shutdown of oil import terminals along the coast, including the largest one, the Louisiana Offshore Oil Port, which has a daily capacity of a million barrels, or about 10 percent of oil imports. In Texas, Port Arthur, Freeport, Corpus Christi and the port of Houston were also shut down.

The country's largest refinery, in Baytown, Tex., which is owned by Exxon Mobil and has a capacity of 557,000 barrels a day, seemed to have suffered only light damage from Hurricane Rita. The company said it was beginning to restart the refinery and had already delivered gasoline out of its storage tanks.

But the storm disruptions led Exxon Mobil, the world's largest publicly traded oil company, to issue an unusual recommendation to the nation's motorists.

"We ask that you use fuel wisely," the company said in newspaper advertisements yesterday. It suggested that drivers "conserve fuel by reducing trips" and "defer discretionary purchases to ease supply pressures."

Oil rise sparks concern at IMF

FT.com / Home UK - Oil rise sparks concern at IMF

By Chris Giles and Andrew Balls in Washington
Published: September 25 2005 20:53 | Last updated: September 25 2005 20:53

Finance ministers and central bank governors of the world's leading industrial countries have warned of economic disruption from high oil prices and and vulnerabilities in financial markets.


The mood at the International Monetary Fund and World Bank annual meetings was downbeat, with senior politicians and officials airing their fears that global economic expansion may have peaked and that more challenging times lie ahead.

Jean-Claude Trichet, president of the European Central Bank, said that high oil prices were having a "very significant impact" on growth and inflation.

The communiqué of the international monetary and financial committee - the ministerial board that oversees the IMF - said: "Global growth is expected to continue, although downside risks to the outlook have increased, especially high and volatile oil prices, recently exacerbated by the effects of Hurricane Katrina, increasing protectionist sentiment and the possibility of tighter financial market conditions."

A senior US Treasury official said: "We freely acknowledged the things that we worry about - do interest rates appropriately reflect the risks?"

Private sector financial institutions shared the concern of officials about credit markets. William Rhodes, vice-chairman of the Institute of International Finance and vice-chairman of Citigroup, said that low bond spreads were indicative of high market liquidity and investors seeking yield in riskier areas.

The other main concern of policy makers was the continued rise of global imbalances, driven this year by a surge in China's trade surplus.

Kristin Forbes, a professor at MIT and former economic advisers to President George W. Bush, said that time might be running out to deal with imbalanced trade between the US, Asia and oil exporters. "I am concerned that the past few weeks have pushed us closer to the tipping point on global imbalances," she said.

"Leaders and investors have become too complacent on the risks involved."

Zhou Xiaochuan, governor of the People's Bank of China, told bankers at a dinner that China would stick to a policy of gradual rather than rapid change in its currency arrangements.

He argued that China's surging trade surplus this year was not caused by currency misalignments, but by uncertainties among Chinese consumers, limiting the growth of consumption and imports, and also criticised the many papers circulating in Washington that analysed China's trade imbalances.

Speaking about the IMF surveillance programme, he said: "Surveillance to me is like a doctor looking at a patient to find out the problem, but this doctor is only responsible for diagnosis and not responsible for giving you a syrup. As a patient, you need a diagnosis, but you also need a syrup."

Gerard Lyons, chief economist at Standard Chartered, said the global economic cycle had peaked, pointing to rising interest rates, the potential for slower growth in the US and China and the fact that the Japanese and eurozone economies were not in a position to take up the slack.

"The next six months will be a challenging time, dealing with the high oil price, and global imbalances loom. The global economy has peaked and liquidity conditions are set to tighten. When things turn around you can have significant fallout."

Combating Peak Oil With Sunshine and Aluminium

Combating Peak Oil With Sunshine and Aluminium

T Ray Deal, futurist author of 'Unlimited Energy,' reveals how the world will use Sunlight and Aluminium as a fuel to provide renewable energy in the near future.

(PRWEB) September 22, 2005 -- There are two major ways of using sunlight. The first is by direct conversion into electricity with solar panels and either transmission where distance permits, or by conversion into a renewable fuel.

The second use of sunlight is to heat up very large areas similar to greenhouses and use the hot air produced. The hot air then rises up a chimney and drives turbines which produce electricity.

Countries with hot deserts are the ideal sites for making renewable fuels. Large area, low cost panels are already in an advanced stage of development. As oil is depleted investment will replace oil production with renewable energy products. Such countries are usually free from Mother Nature producing Hurricanes such as Rita.

The Australian Solar Tower project, already being financed, will provide electricity for 200,000 homes from one such site. Google...Solar Tower Australia... This site has a video of how the tower works.

Such a chimney would also provide water for desert islands and clear air in cities suffering from long term pollution. The book ‘Unlimited Energy’ details how.

Renewable fuels have always been thought of as Hydrogen based, but transport and safety is a major problem. Aluminum is currently used as an explosion enhancer and is being developed as a rocket fuel and bio-fuel enhancer. The next stage is to use it as renewable fuel.

Electricity from sunlight is the means of recycling aluminium with no carbon cost to the Planet. Shipping to countries via boat is easy and existing oil tankers can be converted.

Volume for volume, aluminium gives off twice as much heat as oil when burnt in oxygen, with no pollution, and burns fiercely. Oxygen can be easily be made with machines already in use by the steel industry or collected from the recycling process. The resultant oxide can then be recycled back to aluminium.

A fuel cell, that uses Aluminium wire, has been developed. It produces hydrogen and oxygen in enough quantities to efficiently run a car. The spent fuel is then electro-chemically recycled back to Aluminium and used again.

When there is low flight activity the weather changes. Finding a way of reducing the effects of aircraft double glazing the world with their flight trails is still a long way off. Until then it is essential to use aircraft that are efficient.

...Napoleon served food for his honored guests on Aluminium whilst the less favoured ate off pure Gold...A Roman Emperor is said to have killed the only man to make Aluminum from clay, in fear that it would devalue his store of gold...

...Dubai, the Gold Capital of the Middle East, has just completed a large investment in Aluminium production in India... Just as oil companies are now merging, also look for Aluminium companies doing the same thing... PRNs may be a good indicator of investment potential...

T Ray Deal

‘Unlimited Energy’ Sci Fi for women and men is available from all on-line stores and please don’t forget to use your walk-in store.

Authors site www.tridi.com