Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
An eleventh hour political deal on the US debt crisis this week turned out to be just a stepping stone in the ongoing economic and fiscal crisis. By Thursday markets were plunging again on fears that Italy or Spain may default, and on the growing anticipation that the US may be returning to recession after Q1 GDP growth numbers were revised down from 1.9% to 0.4%. The fall in confidence pushed down oil prices in New York to their lowest level for the year, while in London Brent oil dropped to $104/barrel with fears of demand destruction outweighing concerns about supply constraints due to the war in Libya, and the growing violence in Syria.
While analysts rush to adjust their oil demand growth forecasts – Barclays Capital is cutting its 2011 forecast by 460,000 barrels/day – there is relatively little reporting about the degree to which the high oil price has actually been an agent in the continuing economic slump. In a rough calculation Tom Whipple estimates that in the US a $1/gallon increase in the price of petrol takes roughly $300 billion/year out of other consumer spending. High fuel prices do of course also push people to make changes to reduce their fuel consumption. The passing of new automobile fuel efficiency standards this week after much lobbying and political wrangling show that even in the US Life in the fast lane is giving way to Running on empty.
China is to set a cap on its energy consumption as part of a low carbon plan to be announced later this year. The plan follows up on pledges made by China at the Copenhagen climate talks. China is already forging ahead on renewables with $48 billion spent in 2010 according to a UN Global Trends report, and will use the cap to improve energy efficiency in its economy. That said, China will still drive global energy demand growth in the medium term.
When it comes to cutting energy consumption the case study in the spotlight is Japan. With only 16 of its 54 nuclear reactors currently online and significant public pressure to close these down, energy conservation is becoming de rigueur. The government is targeting a 15% reduction between 9am and 8pm, and so far it looks like this is being achieved and even exceeded, though August could be a harsher test as temperatures rise. Japan faces a huge challenge to recover from the tsunami and to rebuild its energy future after Fukushima, but it is already an example of what people are willing to do when sufficiently motivated.
Oil
Crude Oil Heads for Biggest Weekly Decline Since May Amid Rout on Economy
Oil fell to the lowest in eight months in New York, set for the biggest weekly decline since May, on speculation fuel demand will falter as U.S. economic growth stalls and Europe’s debt crisis worsens.
Futures dropped as much as 4.3 percent after slumping 5.8 percent yesterday. The U.S. added 85,000 jobs last month, leaving the 9.2 percent unemployment rate unchanged, according to economists surveyed before data today that will cap a week of economic reports that showed the recovery is slowing. Italian and Spanish bond yields surged to records yesterday after European Central Bank debt purchases failed to reassure investors that officials will solve the region’s fiscal crisis…
The Peak Oil Crisis: Parsing the GDP
Lost in the furor over the debt crisis last week came the news that the U.S. economy expanded at an annual rate of only 0.4 percent in the first quarter and 1.3 percent in the second. As these numbers were well below what economists were expecting, the revelation that the US was not coming out of the “great recession” was quite a shock for those who have not been paying attention.
Even further down in the news stories were revisions to the older GDP numbers that had the U.S. rebounding smartly from the 2007 to 2009 recession. It seems the official GDP numbers that are released shortly after the close of every quarter are partly guesstimates assembled by people biased is to make the incumbent administration look good. These of course are seized upon by the financial press as evidence that the economy is getting better and that projections of a 3 percent annual growth rate starting any day now are plausible…
Exclusive: Oil demand growth forecasts cut as economies slow
A sharp slowdown in economic growth, particularly in the United States, is hitting consumers and companies and forcing economic forecasters and analysts to slash estimates for global oil demand.
In a report to be published in the next few days, Barclays Capital has cut its estimates of world oil demand growth for this year and 2012 to reflect the dramatic slowdown in the United States and elsewhere…
Canadian government accused of ‘unprecedented’ tar sands lobbying
The Canadian government has been accused of an “unprecedented” lobbying effort involving 110 meetings in less than two years in Britain and Europe in a bid to derail new fuel legislation that could hit exports from its tar sands.
The allegation comes from Friends of the Earth Europe (FoEE), which claims Ottawa ministers have attempted to mislead European decision-makers by underplaying the carbon-heavy nature of their crude in assessing new petrol standards…
Cairn Energy falls on dry Greenland well
Failing to locate any oil in the first of four wells to be drilled off Greenland this year saw shares in Cairn Energy fall by 5pc yesterday.
The share price dropped 16.4 to 336.3p but the company said it is still “confident” about discovering oil in the Arctic region…
Iran revolutionary guards commander becomes new president of Opec
A senior Iranian revolutionary guards commander targeted by international sanctions has taken over the presidency of Opec after he became Iran’s oil minister on Wednesday.
Rostam Ghasemi, head of the Khatam al-Anbia military and industrial base, was one of four ministersnominated by president Mahmoud Ahmadinejad to join his cabinet last week and approved by Iran’s conservative-dominated parliament…
Syrian rebels urge oil sanctions
Syrian opposition activists are stepping up their lobbying for international sanctions against the oil industry to deprive the regime of a crucial source of revenue and cripple its ability to finance the mounting repression of popular protests.
But while the activists are finding willingness for action in the US, the European Union remains reluctant to broaden its sanctions beyond specific officials and businesses that have direct links to the regime of Bashar al-Assad…
Libya years away from oil recovery
Libyan oil production will take years, not months, to return to full capacity once a political solution to the conflict is found, according to Barclays Capital.
“The reincorporation of Libyan oil into the world market increasingly seems a distant possibility” according to the study, which warns of a lasting political vacuum after the potential fall of the Gaddafi regime…
BP ‘has gained stranglehold over Iraq’ after oilfield deal is rewritten
BP has been accused of taking a “stranglehold” on the Iraqi economy after the Baghdad government agreed to pay the British firm even when oil is not being produced by the Rumaila field, confidential documents reveal.
The original deal for operating Iraq’s largest field — half as big as the entire North Sea — has been rewritten so that BP will be immediately compensated for civil disruption or government decisions to cut production…
Shell accepts liability for two oil spills in Nigeria
Shell faces a bill of hundreds of millions of dollars after accepting full liability for two massive oil spills that devastated a Nigerian community of 69,000 people and may take at least 20 years to clean up.
Experts who studied video footage of the spills at Bodo in Ogoniland say they could together be as large as the 1989 Exxon Valdez disaster in Alaska, when 10m gallons of oil destroyed the remote coastline…
Europe’s Big Oil Sees Output Fall
Most European major oil companies posted a surge in quarterly profits last week, but their results were overshadowed by a trend that continues to trouble Wall Street and corporate boardrooms: Nearly every major oil company reported year-to-year oil-and-gas output declines, often in the double-digits.
Big Oil is throwing huge resources at the problem with more open embrace of unconventional petroleum developments, high-risk exploration in frontier areas and corporate restructuring. But even if these strategies work in some cases, there is little doubt that anemic petroleum output signals a long-term challenge confronting the sector…
Gas
S.E.C. Subpoenas Energy Companies for Records on Shale Gas Wells
The Securities and Exchange Commission sent subpoenas this week to energy companies asking them for documents about how they calculate and publicly disclose the performance of their shale gas wells, according to oil and gas industry lawyers.
The subpoenas reflect the regulators’ interest in determining whether companies are overstating how their gas wells perform and how much gas these companies can profitably extract over the long term…
Shale gas fracking: UK government policy call
Shadow UK Energy Minister Huw Irranca-Davies has called for the UK government to devise a policy on shale gas.
Potential multi-million pound reserves lie under in south Wales but its claimed an extraction method called fracking causes pollution and could lead to earthquakes…
Nuclear
Japanese, in Shortage, Willingly Ration Watts
With Japan suffering from electricity shortages this summer, Michio Kuniyuki has stepped up his conservation patrols of Rikkyo University.
As he has done these past six summers, Mr. Kuniyuki spends his days making sure the lights and air-conditioning have not been left on in empty classrooms. Whenever he finds students in a classroom, he turns off the air-conditioning and inquires about the lights…
Analysis: Energy policy chaos threatens Japan’s economy
Political disarray over Japan’s energy policy will make it tough for Tokyo to avert a total nuclear shutdown next summer and presents a long-term threat to the world’s third-largest economy.
The March 11 earthquake and tsunami triggered a meltdown at the Fukushima power plant that shattered the public’s confidence in the safety of the country’s nuclear fleet. Scandals over the government’s cozy relationship with the power industry have exacerbated the concern…
Failing Sellafield fuel plant shuts after losing Japan orders
Britain is to close a nuclear fuel processing site at Sellafield, after losing orders from Japanese companies in the wake of the Fukushima earthquake and meltdown.
Around 800 jobs will be lost at the Mox plant, which opened in 2002 to renew fuel from Britain’s huge stockpiles of civil plutonium. It takes the spent fuel from Sellafield’s Thorp plan and recycles it into “mixed oxide fuel” which can be then be re-used…
Renewables
China Sets Solar Power Price to Boost Profits, Investment
China, the world’s biggest polluter, set a price for electricity supplied by photovoltaic projects approved under non-competitive tenders to boost industry profitability and investment.
Grid operators will pay solar developers 1.15 yuan (18 cents) per kilowatt-hour, the National Development and Reform Commission said today. The projects must have been approved before July 1 or be completed by the year-end, the NDRC said. Projects approved after July 1 will supply power at 1 yuan per kilowatt-hour, according to the top economic planning agency…
Operation Dynamo triggers Overlord beaches furore
For more than 60 years, anyone standing on France’s D-day landing beaches has been able to stare out to sea and imagine the bloody launch of the Allied invasion of Nazi-occupied Europe.
So when the French government recently confirmed plans to install an array of towering wind turbines in the sea off the Normandy coast, some war veterans were appalled…
Thames Water to be solar power giant
A water company is aiming to become Britain’s biggest producer and industrial user of solar power.
Thames Water has agreed a deal which will lead to the installation of solar panels which will provide an annual output of more than 4,500 megawatt hours (MWh) of electricity, which is enough to run about 970 average-sized homes…
UK
Manufacturers want £470m relief from green tax pain
Manufacturers are lobbying for more than £470m in compensation from the taxpayer for having to swallow four green levies by the end of the decade.
They argue that the taxes will make them uncompetitive compared with foreign companies, as electricity prices rise by anywhere between 7pc and 58pc…
Drax coal power station ‘could be transformed to produce biomass fuel’
The UK’s largest coal-fired power station could be turned into one of its biggest sources of renewable energy — if subsidies are increased.
Drax generated about 6% of the UK’s total renewable power in the first half of this year, through burning straw and other biomass at its Yorkshire power station. This was achieved despite burning a much lower proportion of biomass than the plant could sustain if run under optimal conditions…
UK green energy supplier lifts gas, freezes power prices
Britain’s Good Energy will increase gas prices from September but will leave electricity prices unchanged until at least 2012 because of its renewable energy generation, the company said on Wednesday.
Good Energy, which supplies more than 26,000 customers in Britain, will lift gas prices by 9.4 percent from Sept. 6 due to a sharp rise in wholesale gas prices, which has already prompted three of Britain’s largest energy suppliers to increase tariffs this summer…
Climate
China to cap energy use in national low-carbon plan
A cap on Chinese energy consumption is expected to be the highlight of a comprehensive low-carbon plan to be issued later this year, but it might not be as tough as expected, experts say.
Capping energy use will form the cornerstone of China’s efforts to curb surging greenhouse gas emissions, the world’s highest and making up a quarter of the global total…
Cameron backs Aussie carbon tax
David Cameron has praised the Australian prime minister’s decision to introduce a controversial carbon tax policy as “a bold and ambitious move” that will help combat climate change.
According to reports in The Sydney Morning Herald yesterday, the British prime minister penned a letter to Julia Gillard welcoming a new law that will hit Australia’s top 500 emitters with a $23 a tonne carbon tax…
Transport
Obama Reveals Details of Gas Mileage Rules
President Obama announced new automobile fuel-efficiency standards on Friday that require an average 54.5 miles per gallon by 2025. But even if the auto industry manages to meet the new standards, it is unlikely car buyers will see many fuel-economy stickers with such high mileage.
The auto executives, from left in front row, Doug Speck, Alan R. Mulally, Daniel F. Akerson and Sergio Marchionne in Washington during an event about mileage standards. Ray LaHood, the transportation secretary, is in the background…
