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Critiquing the 2006 Megaprojects report
Stuart Staniford , The Oil Drum
The ASPO-USA folks requested me to offer my opinions on Chris Srebowski et al's 2006 megaproject report, and I had an interesting email debate with them today. Here are my thoughts on it, now that I've had a (middle of the night) chance to study it.
The executive summary is that while I think this report
* was a good deal of work and is a considerable service to the public
* has some improvements from prior "bottom-up" reports
nonetheless, to no-one's surprise perhaps,
* I don't think this methodology is reliable at this time.
* I disagree with the conclusions of the report.
You can find the report here (kindly hosted by the folks at Sydney Peak Oil). Let me start by trying to summarize what it says, and how it differs from last year's report.
The basic conclusion of the report is that, as long as there are no major shocks/disruptions, total oil supply will continue to increase at a modest 1mbpd-2mbpd rate per year through 2010. The report does not analyze beyond 2010. Thus it proposes that the peak of oil supply is later than 2010. However, since 1-2mbpd increases are not likely to sate a fast growing world economy, the report suggests that prices will continue to be high throughout that period.
This picture is markedly more optimistic than last October's report...
(6 April 2006)
Oil prices being pushed ever higher by manipulating oil futures trading
Raymond J. Learsy, The Huffington Post
As readers of these blogs know, I don't buy the oil patch pitch about skyrocketing oil prices being the result of "free market" forces and nothing more. Rather, prices are being manipulated by OPEC with the help of the "oiligopoly", the oil industry and its K Street hires who use their oil patch millions to propagandize and exert enormous influence on government (see "OPEC Agonistes," January 29).
Now comes a series of seemingly unrelated events that reinforce this scenario. Scratch away all the economic babble and oil patch price propaganda, and you'll likely find that the oil futures market itself is being manipulated to artificially raise prices. Consider this:
...So we know that the market was well supplied with oil stocks in March, OPEC had ample spare capacity, and delivery capabilities were not strained, as evidenced by the drop-off in shipping rates. Why then did an already high oil price take yet another jump on March 28, a gain it's held onto since then at prices approaching Katrina levels?
As I noted in my January 15 blog, "A Funny Thing Happened On the Way to The Gas Pump," the market price of oil is fixed in minute-by-minute trading of oil futures contracts on the floor of the New York Mercantile Exchange or its equivalents in London, Singapore, and elsewhere, and now in electronic trading as well. The trading is, for the most part, opaque, and the identity of those originating trades can easily be kept secret by using straw men or by operating through blind accounts. The anonymity lends itself to manipulation of the futures markets if someone has the means and the desire.
And who might that someone be?
Raymond J. Learsy is the author of the book Over a Barrel: Breaking the Middle East Oil Cartel. He made his life in the fast-paced, risk-filled world of commodities trading, beginning in 1959. ... Learsy's richly-informed analysis of the international oil trade, OPEC, and its impact on the American and world economy has been featured in the National Review Online and the New York Times.
(5 April 2006)
Economic brief: E.U. energy policy
Power & Interest News Report
After eastern, central and western European countries suffered the consequences of last January's Russo-Ukrainian dispute over the natural gas supply, the European Union has intensified debates and calls for an effective common energy security policy. The events of last winter highlighted the E.U.'s dramatic dependence on Russia and Middle Eastern countries for crucial fossil energy supply. [See: "Intelligence Brief: Russian Gas Dispute"]
E.U. member states have so far failed to launch a well-coordinated, comprehensive common energy policy, mainly because national strategies in recent years have been planned independently from one another (for instance, France wagered on nuclear energy, but its main partners, such as Germany, did not).
Although a recent E.U. summit in Brussels (March 23-24) reconfirmed member states' commitment toward boosting the industrial implementation of renewable energies, divergences remain among member states over what type of power should be considered as a viable alternative to fossil energy. The Financial Times of April 5 reported how nuclear power is still regarded with diffidence by many in Europe, but also that new generations of nuclear plantations and technology may significantly enhance its security. [See: "Economic Brief: E.U. Plans for Alternative Energy"]
Expect the debate over nuclear power to gain instensity in the coming years, as renewable energies and hydrogen still appear very difficult to launch commercially.
(6 April 2006)
Iran military hints at Strait of Hormuz blockade
Tehran, Iran, Apr. 05 - The Supreme Commander of Iran’s Islamic Revolution Guards Corps, Major General Yahya Rahim Safavi, described on Wednesday the Strait of Hormuz on Iran’s southern shores as “the economic lifeline” of the West and said it could be used to put pressure on Iran’s enemies, state television reported.
About two-fifths of the world's oil supplies pass through the 50-kilometre-wide entrance to the Persian Gulf.
...“Many industrial countries are dependent on the energy from this region. Japan gets 70 percent of its oil from this region, likewise 70 percent of certain European countries’ energy comes from this region”, he said, adding that every day the equivalent of 20 million barrels of oil travelled through the Strait of Hormuz.
“The Strait of Hormuz and the Persian Gulf are … the corner stone of [Iran’s] defence. ...”, General Safavi said.
(5 April 2006)