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ENERGY FROM THE SUN
The sun has produced energy for billions of years. Solar energy is the sun’s rays (solar radiation) that reach the earth.
Solar energy can be converted into other forms of energy, such as heat and electricity. In the 1830s, the British astronomer John Herschel used a solar thermal collector box (a device that absorbs sunlight to collect heat) to cook food during an expedition to Africa. Today, people use the sun's energy for lots of things.
Solar energy can be converted to thermal (or heat) energy and used to:
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Heat water – for use in homes, buildings, or swimming pools.
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Heat spaces – inside greenhouses, homes, and other buildings.
Solar energy can be converted to electricity in two ways:
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Photovoltaic (PV devices) or “solar cells” – change sunlight directly into electricity. PV systems are often used in remote locations that are not connected to the electric grid. They are also used to power watches, calculators, and lighted road signs.
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Solar Power Plants - indirectly generate electricity when the heat from solar thermal collectors is used to heat a fluid which produces steam that is used to power generator. Out of the 15 known solar electric generating units operating in the United States at the end of 2006, 10 of these are in California, and 5 in Arizona. No statistics are being collected on solar plants that produce less than 1 megawatt of electricity, so there may be smaller solar plants in a number of other states.
The major disadvantages of solar energy are:
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The amount of sunlight that arrives at the earth's surface is not constant. It depends on location, time of day, time of year, and weather conditions.
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Because the sun doesn't deliver that much energy to any one place at any one time, a large surface area is required to collect the energy at a useful rate.
PHOTOVOLTAIC ENERGY
Photovoltaic energy is the conversion of sunlight into electricity. A photovoltaic cell, commonly called a solar cell or PV, is the technology used to convert solar energy directly into electrical power. A photovoltaic cell is a nonmechanical device usually made from silicon alloys.
Image of how a photovoltaic cell works.Sunlight is composed of photons, or particles of solar energy. These photons contain various amounts of energy corresponding to the different wavelengths of the solar spectrum. When photons strike a photovoltaic cell, they may be reflected, pass right through, or be absorbed. Only the absorbed photons provide energy to generate electricity. When enough sunlight (energy) is absorbed by the material (a semiconductor), electrons are dislodged from the material's atoms. Special treatment of the material surface during manufacturing makes the front surface of the cell more receptive to free electrons, so the electrons naturally migrate to the surface.
When the electrons leave their position, holes are formed. When many electrons, each carrying a negative charge, travel toward the front surface of the cell, the resulting imbalance of charge between the cell's front and back surfaces creates a voltage potential like the negative and positive terminals of a battery. When the two surfaces are connected through an external load, electricity flows.
The photovoltaic cell is the basic building block of a photovoltaic system. Individual cells can vary in size from about 1 centimeter (1/2 inch) to about 10 centimeter (4 inches) across. However, one cell only produces 1 or 2 watts, which isn't enough power for most applications. To increase power output, cells are electrically connected into a packaged weather-tight module. Modules can be further connected to form an array. The term array refers to the entire generating plant, whether it is made up of one or several thousand modules. The number of modules connected together in an array depends on the amount of power output needed.
The performance of a photovoltaic array is dependent upon sunlight. Climate conditions (e.g., clouds, fog) have a significant effect on the amount of solar energy received by a photovoltaic array and, in turn, its performance. Most current technology photovoltaic modules are about 10 percent efficient in converting sunlight. Further research is being conducted to raise this efficiency to 20 percent.
The photovoltaic cell was discovered in 1954 by Bell Telephone researchers examining the sensitivity of a properly prepared silicon wafer to sunlight. Beginning in the late 1950s, photovoltaic cells were used to power U.S. space satellites (learn more about the history of photovaltaic cells). The success of PV in space generated commercial applications for this technology. The simplest photovoltaic systems power many of the small calculators and wrist watches used everyday. More complicated systems provide electricity to pump water, power communications equipment, and even provide electricity to our homes.
Some advantages of photovoltaic systems are:
1.
Conversion from sunlight to electricity is direct, so that bulky mechanical generator systems are unnecessary.
2.
PV arrays can be installed quickly and in any size required or allowed.
3.
The environmental impact is minimal, requiring no water for system cooling and generating no by-products.
Photovoltaic cells, like batteries, generate direct current (DC) which is generally used for small loads (electronic equipment). When DC from photovoltaic cells is used for commercial applications or sold to electric utilities using the electric grid, it must be converted to alternating current (AC) using inverters, solid state devices that convert DC power to AC.
Historically, PV has been used at remote sites to provide electricity. In the future PV arrays may be located at sites that are also connected to the electric grid enhancing the reliability of the distribution system.
SOLAR THERMAL HEAT
Solar thermal(heat) energy is often used for heating swimming pools, heating water used in homes, and space heating of buildings. Solar space heating systems can be classified as passive or active.
Passive space heating is what happens to your car on a hot summer day. In buildings, the air is circulated past a solar heat surface(s) and through the building by convection (i.e. less dense warm air tends to rise while more dense cooler air moves downward) . No mechanical equipment is needed for passive solar heating.
Image of a house with solar cells on the roof.Active heating systems require a collector to absorb and collect solar radiation. Fans or pumps are used to circulate the heated air or heat absorbing fluid. Active systems often include some type of energy storage system.
Solar collectors can be either nonconcentrating or concentrating.
1) Nonconcentrating collectors – have a collector area (i.e. the area that intercepts the solar radiation) that is the same as the absorber area (i.e., the area absorbing the radiation). Flat-plate collectors are the most common and are used when temperatures below about 200o degrees F are sufficient, such as for space heating.
2) Concentrating collectors – where the area intercepting the solar radiation is greater, sometimes hundreds of times greater, than the absorber area.
SOLAR THERMAL POWER PLANTS
Solar thermal power plants use the sun's rays to heat a fluid, from which heat transfer systems may be used to produce steam. The steam, in turn, is converted into mechanical energy in a turbine and into electricity from a conventional generator coupled to the turbine. Solar thermal power generation works essentially the same as generation from fossil fuels except that instead of using steam produced from the combustion of fossil fuels, the steam is produced by the heat collected from sunlight. Solar thermal technologies use concentrator systems due to the high temperatures needed to heat the fluid. The three main types of solar-thermal power systems are:
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Parabolic trough – the most common type of plant.
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Solar dish
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Solar power tower
SOLAR ENERGY AND THE ENVIRONMENT
Solar energy is free, and its supplies are unlimited. Using solar energy produces no air or water pollution but does have some indirect impacts on the environment. For example, manufacturing the photovoltaic cells used to convert sunlight into electricity, consumes silicon and produces some waste products. In addition, large solar thermal farms can also harm desert ecosystems if not properly managed.
http://www.eia.doe.gov/kids/energyfacts/sources/renewable/solar.html
India expands solar energy initiatives
K.C. Krishnadas
(07/01/2008 7:49 AM EDT)
URL: http://www.eetimes.com/showArticle.jhtml?articleID=208801825
BENGALURU, India — In a country where millions of people worship the sun, the government has launched a "National Mission on Solar Energy" that seeks to tie India's economic development to energy efficiency.
A separate initiative on energy efficiency has also been launched. Specific projects and funding will be announced soon. The announcement of the National Action Plan in New Delhi on Monday (June 30) comes as India is participating in United Nations talks on combating climate change.
"We must pioneer a graduated shift from economic activity based on fossil fuels to one based on non-fossil fuels and from reliance on non-renewable and depleting sources of energy to renewable sources of energy," said Prime Minister Manmohan Singh. "The sun occupies a center stage, as it should, being literally the original source of all energy."
Singh said India seeks "to develop solar energy as a source of abundant energy to power our economy and to transform the lives of our people."
Officials said the solar energy initiative will require government financial and institutional support along with private initiatives. India has formed a federal ministry focused on new and renewable energy. The ministry is seeking to generate at least 10 percent of India's power from solar energy over the next several years.
Private investors have put up nearly $20 billion build plants in India to make photovoltaic cells and panels. Some are seeking federal and local subsidies and other concessions under a national program to promote solar manufacturing. One of the projects, announced - Signet Solar - is backed by EDA industry veteran Prabhu Goel.
Government officials concede that the cost of generating power through large solar energy installations faces high initial start-up costs. The federal ministry for new and renewable energy has already funded 33 grid-interactive solar photovoltaic power plants with a total capacity of 2.125 megawatts.
~~ Toyota to equip Prius with solar panels: report
By V. Phani Kumar, MarketWatch
Last update: 9:44 p.m. EDT July 6, 200
Toyota Motor Corp. plans to install a solar power generation system on its Prius hybrid car, when the vehicle goes through a complete makeover as early as next spring, according to a media report Monday.
The move will make Toyota the first major automaker to install a popular model with solar panels. The redesigned Prius will have solar panels on the roof, which will supply part of the two to five kilowatts needed to power the air-conditioning unit, the Nikkei business daily reported.
Toyota (TM:
KYO 91.24, -0.18, -0.2%) .
The Japanese auto giant intends to produce 450,000 units of the Prius in Japan next year, about 60% higher than the vehicle's output in 2007. It also aims to reduce the Prius' weight to improve the gasoline-electric hybrid vehicle's fuel efficiency, the report added. End of Story
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
~~ Oil shoot up ~~ in 90 degree. Have a nice holiday~
~~~
Abusive price bubble for consumers
Power of price manipulation
Power of Goldman
Power of TS Paulson
We have increased demand due to the recent globalization, however, oilers and traders are making millions and billions off of consumers basic need.
Price is being escalated with oil depletion as if we will never have innovative alternative energy development; however, I believe that we will have new energy invention.
We need new “Alternative Energy” innovation which will be the major catalyst for the next economic boom. The best policy is to develop effective and efficient alternative energy. Oil closed at 145.29 near 150 target.
With higher oil price, make billions and trillions off of consumers. Nonsense excuse.
Taking wealth out of consumers exploiting the basic needs with colluded power.
~~~~
Don't blame the buck for high oil price: Paulson
Thu Jul 3, 2008 7:10am EDT
By Matt Falloon and David Lawder
LONDON (Reuters) - A weaker dollar cannot be blamed for soaring oil prices as policymakers around the world tussle with the twin specters of rising inflation and slowing growth, U.S. Treasury Secretary Henry Paulson said on Thursday.
Some of the world's leading oil producers and market analysts say the weak dollar is a key factor spurring many dollar-denominated commodities -- including oil -- to record highs, pushing the cost of living higher across the world.
It is rare for the United States government to say anything about the greenback beyond its mantra that it believes in a strong dollar, but developed nations are ramping up the rhetoric in an effort to get oil producers to increase supply and help tame inflation.
"The dollar has had a very small impact," Paulson told reporters in London, after a meeting with top British bankers and British finance minister Alistair Darling.
"Take a look, the dollar has depreciated roughly 24, a little bit less than 25 percent, since February 2002. Oil has gone up well over 500 percent. It's gone up in every currency."
The dollar is currently languishing near record lows against the euro after a run of aggressive interest rate cuts from the U.S. Federal Reserve and worries over U.S. economic growth.
Oil prices hit a fresh record high above $145 a barrel on Thursday. Prices have doubled in the past year.
Inflation has now taken top billing in most central bankers' deliberations, with markets expecting higher borrowing costs despite sharply slowing growth in Europe and the United States.
Central bankers in Europe have said one factor also helping to boost commodity prices skywards is the policy of fast-developing economies in the Asia and the Middle East of pegging their currencies to the dollar.
Those pegs have triggered a more expansionary monetary policy than might be necessary -- as falling interest rates in the United States have been mirrored to track a weaker dollar -- helping to spur growth and consequently demand for commodities.
Paulson said, however, that market fundamentals were to blame.
"I believe that although there may be a number of factors with regard to oil, the predominant factor by far is supply and demand, is the fact that global production and capacity hasn't increased appreciably over the last 10 years and the demand has continued to grow and inventories are at low levels," he said.
"Only if you acknowledge the issue are we going to be able to deal effectively with finding a solution."
(Writing by Matt Falloon, editing by Mike Peacock)
http://www.reuters.com/articlePrint?articleId=USL0327283220080703
Nice website.
However, there is not much positive development as long as we have crazy power over US.
Have nice holiday.
~~~
~~ anti-American ~ Paulson: Oil, Falling Home Prices to Prolong Slowdown
Whenever this crazy man speaks, markets go crazy including his strong USD policy. His crazy policies are completely anti-Americans.
As long as crazy money and power greeds, there is not much hope.
~~~
U.S. ECONOMY, DOLLAR, PAULSON, EUROPE, SUBPRIME, OIL, DECOUPLING, STOCK MARKET, BANKS
By Reuters
Reuters
| 02 Jul 2008 | 11:55 AM ET
U.S. Treasury Secretary Henry Paulson said on Wednesday that high oil prices, further home price declines and capital markets turmoil will prolong the American economy's slowdown, while Europe and the UK were also showing signs of slower growth.
Paulson, in remarks prepared for delivery to the Chatham House think tank here, said U.S. home foreclosures will remain elevated and "we should not be surprised at continued reports of falling home prices."
"Today, the U.S. economy is going through a rough period. And while we have seen better growth in Europe over the last few quarters, there are signs of a slowdown in Europe in general and the UK specifically," Paulson said. "However, emerging economies are expected to continue a period of strong growth, which will support global growth overall."
Paulson's speech largely focused on his plans to strengthen the unwinding process for large insolvent financial institutions to allow "orderly" failures.
Paulson said financial institutions face a tough earnings environment as they adjust to changes brought about by high oil prices and the housing slowdown.
He reiterated his call for banks to strengthen balance sheets by raising new capital, de-leveraging or reviewing dividend policies.
He said banks in the United States and the UK have raised capital equal to 95 and 96 percent of their recognized credit losses, respectively, but in continental Europe, institutions have covered only 56 percent of recognized losses with new capital so far.
"There is no easy solution that will immediately relieve current financial market stress or protect against future problems and market challenges which will inevitably occur," he said.
Paulson was in London on the final leg of a five-day trip to Russia, Germany and Britain to meet political leaders, finance chiefs and central bankers to discuss economic and trade issues.
More on Fed's Growing Regulatory Role
Adding some flesh to his plan for the Federal Reserve to take a broader regulatory role, Paulson said his first priority was to maintain market stability amid the current turmoil, but he wants to move quickly to address regulatory deficiencies exposed by the credit crisis which began nearly a year ago.
"In my view, looking beyond the immediate market challenges of today, we need to create a resolution process that ensures the financial system can withstand the failure of a large, complex financial firm," Paulson said.
"To do this, we will need to give our regulators emergency authority to limit temporary disruptions. These authorities should be flexible and—to reinforce market discipline—the trigger for invoking such authority should be very high, such as a bankruptcy filing," he added.
He said the perception should be avoided that an institution is "too interconnected to fail or too big to fail" and added that "we must improve the tools at our disposal for facilitating the orderly failure of a large, complex, financial institution."
Paulson was due on Wednesday to meet in London Prime Minister Gordon Brown, finance minister Alistair Darling, Financial Services Authority Chairman Callum McCarthy and Conservative Party Leader David Cameron.
Paulson's remarks, made available in advance, come amid debate over what additional regulation is needed in the wake of a rescue of Wall Street investment bank Bear Stearns.
In March the Fed helped engineer a takeover of Bear Stearns by JPMorgan Chase and guaranteed a $29 billion loan to facilitate the transaction out of concern that a Bear Stearns bankruptcy could trigger a financial panic.
It also started making emergency loans to investment banks for the first time since the Great Depression.
Paulson last month said the Fed should be given permanent authority as a "market stability regulator" to make liquidity available to a broader range of financial institutions under certain circumstances if the financial system's stability is threatened.
Current Insolvency Procedures Inadequate
The United States has procedures for the orderly unwinding of insolvent commercial banks with insured deposits, in which their regulators, including the Fed for smaller state-chartered banks, administer claims and control insolvency proceedings.
Paulson on Tuesday said using these procedures for larger, complex institutions such as investment banks could mitigate market disruption but would not impose enough market discipline on the private sector.
And simply subjecting investment banks to normal bankruptcy proceedings "imposes market discipline on creditors, but in a time of crisis could involve undue market disruption," he said.
He called for a flexible approach that allowed authorities to provide government support focused on areas with the greatest potential for market instability, but said a government backstop should not go too far.
Knowing that Fed support is readily available could cause institutions to willingly take on too much risk, as they did in the run-up to the subprime mortgage crisis, he said.
"For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system."
Legislative Process Starts
Paulson's speech did not reveal any specific plans to ask Congress for legislation, which would be required for such changes.
He and Fed Chairman Ben Bernanke are due to testify on July 10 on proposed regulatory changes before the U.S. House of Representatives Financial Services Committee, one of the panels that would draft such a bill.
The hearing is one of a series expected this summer on the state of the U.S. regulatory system, and Paulson's speech provided a preview of his expected testimony as the legislative process starts.
Along with better insolvency procedures, he said stronger market infrastructure was needed to reduce expectations that some firms cannot be allowed to fail.
"Important work is under way" in strengthening procedures and practices in the over-the-counter derivatives market and the tri-party repo system, he said, the latter referring to a $2 trillion segment of the government bond market in which traders use transactions similar to collateralized loans to "finance" positions.
He said an agreement between the Fed and Securities and Exchange Commission to share information on investment banks also would help inform the political process.
Beyond stabilizing markets and bolstering the Fed's market stability role, Paulson said his third priority was promoting a capital markets regulatory blueprint which would replace today's patchwork of financial regulators with three super-regulators: the Fed for overall stability, a regulator for insured financial and prudential institutions, and a regulator for consumer protection.
Copyright 2008 Reuters. Click for restrictions.
URL: http://www.cnbc.com/id/25487895/
Hmmm, this is interesting, any thoughts on this??
http://www.mygallons.com/
Iraq opens up oil and gas fields to foreign firms
6/30/2008 2:19 PM ET
Iraq's oil ministry has short-listed 35 international oil companies eligible to submit tenders to develop six oil fields and two gas fields in the country, with the new contracts estimated to boost output by 1.5 million barrels per day.
The details of the first round of tenders that will open the world's third largest oil reserves to foreign firms were announced by Iraq's oil minister Hussein al-Shahristani on Monday.
His announcement also marks an unprecedented move of allowing international firms to invest and explore Iraq's lucrative oil fields. This is in contradiction to the policy of major oil-producing Arab nations such as Saudi Arabia, Kuwait and the UAE.
The major oil fields to be developed are Kirkuk, Bai Hassan, Rumaila, West Qurna, Zubair, and Meissan, which consists of three oil fields. Akkas and Mansouriah in western Iraq are the gas fields to be excavated by foreign oil corporations.
The 35 oil companies pre-qualified by Iraq's oil ministry include Exxon Mobil Corp. (XOM), Royal Dutch Shell (RDS-A), BP (BP), Chevron Corp. (CVX), Lukoil Holdings, Gazprom, and China National Petroleum Corp.
By welcoming mainly Western companies and those from Russia, Japan and China, the Iraqi government is loosening control of foreign investment in its oil sectors, different from its neighbors, whose national firms keep major share of investment with them.
Addressing a press conference in Baghdad, al-Shahristani said the oil ministry would prepare the legal framework and conditions for signing the contracts and send them to companies by the end of September.
The contracts to be signed by the end of June 2009 are expected to clear the way for major international investment for the first time in four decades.
Iraq produces around 2.5 million barrels of crude oil a day, close to its pre-war output levels. It could be augmented by an additional 1.5 million barrels with the development of these oil fields, al-Shahristani told reporters.
He added that Iraq aimed to raise output to 4.5 million bpd by 2013, levels prior to the first Persian Gulf War in 1991.
The contracts are not given on a production sharing basis, as firms will be given exclusive rights for long-term development, he said.
Al- Shahristani said talks with oil majors on six separate interim and short-term technical service contracts, or TSC, are on going. Major oil companies have been eyeing on access to Iraq's oil reserves for a long time.
The Iraqi government has announced the first round of tenders, neglecting calls from Iraqi politicians and U.S. senators to postpone signing oil development contracts with international companies until a national consensus on oil and gas law is reached.
Democratic senators have warned that the service contracts could provoke nationalist sentiments that lead to sectarian unrest in the country, which is undergoing an improved security situation.
The list of companies identified as eligible to bid for mining contracts also include firms from Germany, Italy, Australia, Korea, Denmark, Canada, Malaysia, Indonesia, Spain, Netherlands, Norway, and France.
We now know every thing which you said, at least I am. However, as you said, there are billions in the world who do not know that.
The reason which they allow the conspiracy theory to flood media via youtube and other is that they have enough money and power to controlled the world.
Just look at the US national debt and bubble/crashes; they made trillions using bubbles and crashes. Justing seeing the size of national debt, they control US.
Not sure what would be solutions except that God needs to help US... but certainly jumping on the bandwagon is not helping.
Hopefully we have more good ones, like Bill Gates, than bad and ugly.
Before we find solutions we have to know causes...
Solution is simple. Fire Congress. Throw down the banksters, return to sound money get away from petro-dollar, develop hydrogen based energy made from WATER.
Break the grip of the globalists on our country and the US media.
Not all that hard. Not harder than starting a new country. Not harder than beating off the mightiest empire on the face of the earth along with it's largest navy. Not harder than crossing the prairie in covered wagons with Indians shooting at you. Not harder than a lot of things...the sheep have no will because they have no information and no time to discover how badly they are being screwed.
JFK tried to tell them about silver and the pillage of the treasury and he got dead...last guy who was of the people not a tool of the elite. He had his warts but he was one of us. If you look at every president since they come from or are supported by "them." And "they" don't want a self governing republic fucking up their plans for world domination.
Right now they control the energy, and are working on control of the food...they figure with these two things they have it in the bag. They have it wrong...too many have tasted the fruit of liberty in this country after that stale bread and dirty water tastes like stale bread and dirty water.
McCain and Obama share energy goals, not methods
The candidates would take very different steps to greater energy independence for Americans.
By Ariel Sabar | Staff writer of The Christian Science Monitor
from the June 30, 2008 edition
Washington - John McCain and Barack Obama know that most Americans need look no further than the gas pump for proof of America's energy crunch.
With fuel topping $4 a gallon and oil at a record price, energy now ties the economy in polls as voters' top concern, and the presidential candidates spent the past week trying to outflank each other on an issue that's thinning billfolds from Maine to California.
Their plans share key goals – less reliance on foreign oil, a push for cleaner fuels – but their methods differ sharply.
Senator McCain, the presumptive GOP nominee, wants 45 new nuclear power plants by 2030 and an end to the federal moratorium on new offshore drilling. He would use market lures – tax rebates for electric cars, a $300 million prize for a better car battery – to promote alternative sources of energy. He would offer motorists immediate relief in the form of a hiatus in the federal gas tax.
Senator Obama, the presumptive Democratic nominee, opposes new offshore drilling and is wary of nuclear power. He would double auto fuel-efficiency standards within 18 years, subsidize development of ethanol, and force power companies to generate one- quarter of their energy from wind, solar, and other renewable sources by 2025.
An opponent of the gas-tax holiday, Obama favors a "windfall profits" tax on multinational oil companies.
In many ways, their approaches square with party ideology. On the Republican side, financial carrots and a significant role for the private sector. On the Democratic side, subsidies, taxes, and regulation.
But in a departure from GOP predecessors, McCain has refused to cede the "green" label to his Democratic rival. His aides say his plan strikes the right balance among short-term relief for consumers, environmental stewardship, and long-term energy independence. They have taken to calling Obama "Dr. No," portraying him as an obstructionist with too narrow a view of the country's energy woes.
In a speech in Las Vegas Wednesday, McCain trumpeted his plan as a breakthrough after "three decades of partisan paralysis."
He vowed Wednesday to wean America of its dependence on foreign oil by 2025 and gave his proposal no less momentous a title than "The Lexington Project," after the Revolutionary War site where "Americans asserted their independence once before."
Obama last week called McCain's proposals a series of "cheap gimmicks" that "will only increase our oil addiction for another four years."
Obama wants to reduce oil use 35 percent by 2030, pass a law to phase out all incandescent light bulbs, and spend $150 billion over the next decade to develop and market clean-energy technology, from hybrid vehicles to biofuels like ethanol.
The campaigns are keen to the politics of their plans in important swing states. Ethanol is an economic engine in corn-growing Iowa and Minnesota; offshore drilling is a divisive issue in Florida; and nuclear power is a lightning rod in Nevada, home of the federal government's proposed nuclear waste repository at Yucca Mountain.
While Obama's plan is more in keeping with traditional interests in those states, McCain frames his proposals as a boon for consumers and another example of his "straight talk."
"With gasoline running at more than four bucks a gallon, many do not have the luxury of waiting on the far-off plans of futurists and politicians," he said this month in a speech in Houston.
With McCain trailing Obama on most domestic issues in voter opinion polls, the Arizona senator has strived to link his energy plan to national security, where his ratings are higher. "When we buy oil, we are enriching some of our worst enemies," he said last week in Las Vegas, naming the Middle East, Venezuela, and Al Qaeda as beneficiaries of America's dependence on overseas oil.
Obama has said that new oil exploration would not lead to lower prices at the pump – not anytime soon, anyway. "We can't drill our way out of the problems we're facing," he said this month in Florida.
The war of words between the senators escalated throughout the week, with dueling conference calls for reporters and new standalone websites devoted to energy.
Both McCain and Obama support tougher government oversight of energy futures traders whose speculation has been blamed for spikes in oil prices. They also agree that the federal government – with its giant fleet of cars and square miles of office space – should become a model of energy efficiency.
But where Obama sees stricter standards as key to a more energy independent and efficient America, McCain looks to domestic oil exploration and entrepreneurialism.
"I won't support subsidizing every alternative, or tariffs that restrict the healthy competition that stimulates innovation and lowers costs," McCain said in a speech last year. "But I'll encourage the development of infrastructure and market growth necessary for these products to compete, and then let consumers choose the winners."
McCain backs a tax credit of up to $5,000 for consumers who buy cars with low- to zero-carbon emissions, and proposes a $300 million prize for the first person to invent a battery for plug-in cars that "leap frogs" current technology and supplies power at 30 percent of today's costs.
In Las Vegas last week, Obama ridiculed the battery prize as a "gimmick."
"When John F. Kennedy decided that we were going to put a man on the moon," Obama said, "he didn't put a bounty out for some rocket scientist to win – he put the full resources of the United States government behind the project and called on the ingenuity and innovation of the American people."
Though McCain's environmental record draws more praise than some Republicans', most environmental advocates have been cool to his energy ideas.
"He's a bit of a Dr. Jekyll and Mr. Hyde," says Navin Nayak, a policy analyst at the League of Conservation Voters in Washington. "The same day he releases an ad touting his commitment to fight global warming, he's in Houston calling for lifting a 20-year moratorium on offshore drilling."
Karen Harbert, executive vice president of the Washington-based Institute for 21st Century Energy, an arm of the US Chamber of Commerce, says enlarging the domestic oil and gas supply has to be part of any solution to energy troubles in the US. "To keep America's economy thriving, we will need all types of new energy sources," Ms. Harbert, a former energy adviser in the Bush administration, said in an e-mail. "There is no single silver bullet."
http://www.csmonitor.com/2008/0630/p01s02-uspo.html
BTW Ron Paul gave a great speach on the house floor against the war.
He will be proven right (again) shortly. The frn and oil will bring this empire down. Hopefully we will replace it by retuyrning to a constitutional republic. Meantime pain.
Oil is going a lot higher. The elite don't care and neither does Congress.
The fact that whole whole nation is getting "Enroned" and the sheep just take makes me want to laff and cry in turns. Can't believe my countrymen have sunk to such depths they can't even protest because they don't know what to protest because the main stream antique media keeps them well fed with anything but the truth and the real issues.
American Idol. Sports. Dancing with the Stars. Britney. Britney's sister. Fake elections.
But oil and energy news? Hell no. War coverage including the death toll? Nah. Ramifications of going to war with regard to the economy and the price of oil. Nope. In fact you'd think they were completely unrelated. Oil men in the white brought up the price of oil and gas...what a surprise.
Pure ugly ahead. The pain will change things quicker than if things were going half-ways decent.
Iraq and Iran (if Congress and the administration get their way) are the only two countries the US has ever attacked preemptively. They are also the only two oil-producing countries that ever went off the petrodollar. The alleged nuclear ambitions of a terrorist-sponsoring country cannot be the real reason for the planned attack – because terrorist-sponsor North Korea was not only allowed to develop nuclear weapons unmolested, it was even allowed to test-launch a potentially nuclear-tipped ICBM at the US without any military repercussions whatsoever.
There goes the "national security" rationalization for this planned attack.
This fact exposes the attacks for what they really are. tools of US monetary policy.
Think oil costs money now wait till Iran war....
See the whole thing:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=30358712
Documentary movie, "The Smartest Guys in the Room", telling Enron/Traders robed off California, the bankrupted state.
You can see the movie, netflex
http://www.imdb.com/title/tt1016268/
Those who made billions and trillions have made from rest.
BSC shorters and ARM crisis shorters made billions, of course, after making billions and trillions going up.
~~~~~
Similar social greed using the very basic need as weapons against them.
Just think about making billions and trillions with higher oil price squeezing consumers using the basic necessity - energy.
The shrub and Kenny-boy lay intimately connected.
http://www.google.com/search?q=enron+bush
And that's just google which censors the good stuff now...the whole reason Arnie is gov of California is because it was cheaper to buy an election than it would have been to lose in court and have to pay all the damages owed, one of the first things Arnie did was was call off the states dogs who were pursuing the gouges in courts and their case was obvious and would have been easily one and the stupid sheep in California fell for even after they had had rolling black outs and lost millions in business...I can only laugh.
Right now the oil companies have a whole admin in the white house and are quite literally raping the country and nobody is doing much about it.
Democracy Now! | Enron: The Bush Connection
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Bush/McCain's gas price scam is an Enron rerun
By Harvey Wasserman
Online Journal Guest Writer
http://onlinejournal.com/artman/publish/printer_3406.shtml
Jun 24, 2008, 00:08
The Bush/McCain gas price escalation is an Enron rerun. It is Chapter 2 of the scam Bush crony "Kenny Boy" Lay used in 1999-2001 to steal $100 billion from California ratepayers.
Now this administration is replicating that crisis to funnel untold billions into the coffers of its oil baron backers . . . and to push the failed strategies of offshore drilling and nuke power.
There is no doubt that we are at the edge of the petro-abyss. Peak oil is upon us, as is the global-warmed finale of Earth's carrying capacity for burning more fossil fuels. It is the perfect storm that must end the age of fossil/nuke.
But the immediate situation is not so clear. Bush/McCain say soaring prices are due to a lack of supply, and there are those who agree.
The Saudis, and others with more credibility, argue the price rise is contrived by bankers and speculators. Their mega-theft comes not only at the gas pump, but in food prices and other essentials.
Whatever the case, remember that during the Enron con, there was no shortage of electric generating capacity. Enron's operatives laughed into their PCs as they selectively shut perfectly operable power stations and jacked up electric prices 700 percent and more. Enron, of course, later went bankrupt, wiping out countless thousands.
Contrived or otherwise, today's soaring gas prices are a tangible bonanza for Bush/McCain. Offshore drilling would put billions in their cronies' pockets, but would not lower gas prices a single cent. Nuke power could mean billions more in radioactive lucre for reactor builders who may never deliver a single electron of electricity.
It's no accident that what Bush/McCain are NOT advocating is a massive shift to increased efficiency and renewable energy.
Prior to the Enron disaster, green power advocates proposed that some 600 megawatts of renewables and efficiency be installed in California. They said this "floor" was needed to protect the state from precisely the kind of gouging Enron then did.
But Southern California Edison's John Bryson helped kill the green power proposal. Bryson now likes to be photographed in front of photovoltaic arrays. But he used a deregulation package promising a "free market in energy" to help pay off failed reactors at San Onofre and Diablo Canyon. Then he stepped back while Enron cashed in.
Today, despite years of grassroots advocacy, Bush has done everything in his power to squelch the conversion to a green-powered economy. Even as gas prices soar there is no meaningful commitment to reviving mass transit, increasing fuel efficiency, or promoting renewable energy.
Indeed, Bush/McCain's two-step obsession with fossil fuels and nuke power is perfectly suited to guarantee that the public's money does NOT go to renewables and efficiency. Those technologies could actually solve both the climate and the energy supply crisis. But they would strip the fossil/nuke cartels of their death grip on the global economy.
Ironically, soaring fossil fuel prices make building reactors even more expensive. Using high gas prices to push nukes that only produce electricity (and radioactive waste) is a complete disconnect.
Today's wind and solar technologies are far cheaper than atomic energy, not to mention quicker to build, safer, more reliable and ecologically sound. The one thing certain about reactor construction is that it will stretch out years longer than planned. Capital costs are certain to at least double or triple before the first reactor could ever come on line, taking atomic energy totally out of the price range of renewables.
New drilling is also absurd. The offshore and other protected areas Bush/McCain would destroy have limited, expensive oil beneath them. The GOP "energy plan" is that of a desperate junkie, tearing apart the planet for a few last grains of white powder to snort up its nose. That there will then be no more does not seem to matter.
The US once had the world's greatest mass transit system, which was consciously destroyed by the auto and oil industries to sell more cars and gas.
It once had a virtual monopoly on the renewable and efficiency technologies that can solve global warming and give us energy independence, with local communities taking control of their energy supply.
Enron's hucksters staged that fake electricity crisis to gouge California while pushing back the transition to a green-powered economy.
Now Enron II, the gas price crisis, is about gouging the whole nation. And about yet again postponing a community-owned, green-powered future.
The Solartopian conversion to renewables and efficiency could put the Bush/McCain barons of fossil nuke out of business. The sooner the better.
Harvey Wasserman's SOLARTOPIA! is at www.solartopia.org. His LAST ENERGY WAR, tells the history of deregulation and the US utility industry. He is senior editor of FreePress.org, where this article first appeared.
Copyright © 1998-2007 Online Journal
Email Online Journal Editor
US wealth destroyer ~ Oil leapt to a new record high near $142 a barrel on Friday, extending gains after surging nearly 4 percent in the previous session, as tumbling global stock markets triggered a wider commodities rally.
http://www.yourdailymedia.com/i/u/iUed00tj.jpg
~~
Not developing alternative energy for decades to use up American wealth.
http://oldamericancentury.org/bushco/bush_crime_family.htm
What is good about high prices is that alternative energy plays are accelerating. Nuclear plants permits are coming in. Electric cars, wind power ethenol whether by corn or some other way is all good in the long run. We must strive for energy independence. We are sending $600 billion to to OPEC each year. Terrorist now have plenty of money.
North Korea destroyed the most visible symbol of its nuclear weapons program Friday, according to a news report, in a sign of its commitment to stop making plutonium for atomic bombs.
The reported demolition of the 60-foot tall cooling tower at its main reactor complex was a gesture in response to U.S. concessions after the North delivered a declaration Thursday of its nuclear programs under an agreement at international arms talks.
South Korean TV network MBC said the reactor blast occurred shortly after 4 p.m. before an audience of international TV cameras. There were no other immediate details.
The symbolic explosion came just 20 months after Pyongyang shocked the world by detonating a nuclear bomb in an underground test to confirm its status as an atomic power. The nuclear blast spurred an about-face in the U.S. hard-line policy against Pyongyang, leading to the North's first steps to scale back its nuclear weapons development since the reactor became operational in 1986.
Last year, the North switched off the reactor at Yongbyon, some 60 miles north of the capital of Pyongyang, and it has already begun disabling the facility under the watch of U.S. experts so that it cannot easily be restarted.
The destruction of the cooling tower, which carries off waste heat to the atmosphere, is another step forward but not the most technically significant, because it is a simple piece of equipment that would be easy to rebuild.
Still, the demolition offers the most photogenic moment yet in the disarmament negotiations that have dragged on for more than five years and suffered repeated deadlocks and delays. Those attending the event include the top U.S. State Department expert on the Koreas, Sung Kim, along with broadcasters from the United States, China, Japan, Russia and South Korea.
Featurecool!
SEOUL (AP) —
Interesting. Thanks.
Need to develop alternative energy instead of hyping oil price using wars.
http://beta.investorshub.advfn.com/boards/read_msg.aspx?message_id=30304224
If the talk of war is based on holy conviction; then, it would not be dragged war like Iraq like retard beating around bush wasting money and lives plan.
With Iran, it's better be precise and quick if it is indeed not based on oil hype greed money and power.
And oil price better be falling with a war.
Do you believe that we should be distancing ourselves from oil use in general, both in terms of heat and transportation?
(As opposed to looking for fossil fuels in our own country and surrounding friendly areas)
So how does the concept of Iran gunning for a fight in order to start a holy war that will usher in their Messiah play out?
If you subscribe to the secnario that I posed, there is only one possible outcome and that is war! They are NOT going to allow any other prospect to bear fruit.
Given that there WILL be a war with Iran in the next 10 years, how does the US prepare for the problem created in the energy sector, particularly the oil industry?
So, you see Bush as the real threat to the US, and Ahmadinejad as...??
Using God for their power and money happened to be Bush & Cheney oilers.
We need to ask whether they are for USA or for their power and money; as the evidence of what has happened to US Debt, they robbed USA.
Spiritually dead USA and now getting robed by oilers using wars.
As far as I can see, they are using God, not for God; and hype oil to get themselves gather up more money and power.
I know what N. Korea is about and Iran is about.
Israel and Iran problem is like cat and dog fighting; recently Iran made the remark that Israel and USA are going to be disappeared from map.
That provoked, of course. Bush dragged Iraq war to hype oil price instead of finishing up quickly. They intentionally dragged war to escalate tensions to increase their power and oil price. With the oil scheme, they made billions and trillions off of the hype.
Think about what dragging Iran war will do to USA... the Bush and oilers will eat USA alive!
It is evil money and power game using oil. They used God.
They are serving and fighting for Power/Money/Oil, Not for God or for US.
Hey 1Best, I know this is primarily a discussion of oil, but in a somewhat related issue, I heard someone today commenting on the difference between N. Korea and Iran, in terms of how the US must deal with them.
North Korea doesn't have a desire to see millions of it's people annihilated by nuclear attack.
Iran does. Ahmadinejad would like nothing better than to usher in the return of the Muslim Messiah, which is predicated on some sort of holy war.
Not trying to be either religious or political here. Just wanted to get your take on the powder-keg of the middle east.
The way I see it, we either nuke them or they nuke us. There doesn't seem to be an alternative, as they are dedicated to bringing about the end of the world through forcing the hand of God, as it were.
How does that scenario (assuming it has merit) play into the decisions the US needs to make in the coming years?
If it plays out according to this trend of thought, we lose a huge supply of oil and the markets are completely disrupted, especially in terms of the economic costs of fuel here in the US.
Go to London... then. LOL We just need to say, "No", to oil and plant and control crazy price hype.
With crazy prices, Americans are getting lost big time anyway.
We need to learn to live without oil crazy.
better to RIDE BIKE and tele commute!
Someone will invent next generation alternative energy while riding bikes. LOL
Curbing US speculators will just send them to London etc. Money is fungible in this new world and it will flow to the place of least resistance.
~~re: US House Votes to Curb Energy Market Speculators
http://oldamericancentury.org/bushco/bush_crime_family.htm
If this is true, no wonder.
~~~
OIL PRICES, SPECULATORS, SPECULATION, CFTC, CONGRESS, HOUSE OF REPRESENTATIVES
By Reuters
Reuters
| 26 Jun 2008 | 06:04 PM ET
In response to record oil and gasoline prices, the U.S. House of Representatives on Thursday approved 402 to 19 legislation directing the Commodity Futures Trading Commission to use its authority, including the agency's emergency powers, to "curb immediately" the role of excessive speculation in energy futures markets.
Hedge funds, pension funds and other speculators have been blamed by many lawmakers and some energy experts for doubling the price for crude oil in the last year.
The Bush administration disagrees, saying high prices are the result of world oil production not being able to keep up with growing global fuel demand.
The House legislation requires the CFTC to act against "sudden or unreasonable fluctuations" in energy futures prices and other trading activities that "prevent the market from accurately reflecting the forces of supply and demand for energy commodities." The Senate must still vote on the measure.
"The American people should not be punished at the pump for the actions of oil speculators," said House Speaker Nancy Pelosi.
Copyright 2008 Reuters. Click for restrictions.
URL: http://www.cnbc.com/id/25399924/
That will not change oil prices IMHO...This is a supply vs. demand issue and it will not go away with weak political will and finger pointing!
U.S. House votes to curb energy market speculators
Thu Jun 26, 2008 11:06pm BST
(adds House approves legislation)
By Tom Doggett
WASHINGTON, June 26 (Reuters) - The U.S. House of Representatives on Thursday overwhelmingly approved legislation that directs the Commodity Futures Trading Commission to use all its authority, including the agency's emergency powers, to "curb immediately" the role of excessive speculation in energy futures markets.
Hedge funds, pension funds and other speculators have been blamed by many lawmakers and some energy experts for doubling the price for crude oil in the last year. The Bush administration disagrees, saying high prices are the result of world oil production not being able to keep up with growing global fuel demand.
The bill easily cleared the House in a 402-to-19 vote. The Senate must still take up the measure.
The legislation, sponsored by Rep. Collin Peterson of Minnesota, the chairman of the House Agriculture Committee, would require the CFTC to act against "sudden or unreasonable fluctuations" in energy futures prices and other trading activities that "prevent the market from accurately reflecting the forces of supply and demand for energy commodities."
"It opens up a set of new tools they are not using," said Maryland Democratic Rep. Chris Van Hollen, referring to the agency's emergency powers.
"The American people should not be punished at the pump for the actions of oil speculators," said House Speaker Nancy Pelosi.
CFTC chairman Walter Lukken testified to Congress this week that speculators are needed in the futures markets and they are not to blame for record oil and gasoline prices.
Nonetheless, in response to high energy costs, the CFTC has ordered that more information on energy trading be reported to the agency and is investigating possible market manipulation of oil prices.
But Virginia Republican Bob Goodlatte said while he will support the bill, Congress needs to work harder to increase the supply of oil and natural gas by allowing more drilling offshore and elsewhere.
"I find it appalling we are not doing the job that needs to be done," he said on the house floor.
Added Republican Rep. Dan Burton of Indiana: "It's time we start drilling here in the United States. The minute we do that the price will drop,"
About a dozen bills are pending in the Congress to rein in energy speculators.
Earlier this week, Democratic Sen. Byron Dorgan of North Dakota introduced legislation that would increase the money, or margin, that speculators would have to put up to trade oil futures at the New York Mercantile Exchange (NMX.N: Quote, Profile, Research) to 25 percent of the value of the underlying commodity. Currently, the margin on oil futures is about 7 percent. (Additional reporting by Russell Blinch; Editing by Marguerita Choy)
Dr. Daniel Yergin
Chairman
Cambridge Energy Research Associates
June 25, 2008
Washington, DC
Daniel Yergin, Chairman, Cambridge Energy Research Associates
Chairman Schumer, Vice Chair Maloney, Ranking Members, and, distinguished Members of
the Joint Economic Committee:
It is an honor to appear before the Joint Economic Committee. I would like to express my
appreciation to the Committee for the opportunity to appear this morning. In calling this hearing, the
Committee is expressing its great concern about the impact of energy prices on the American public and
the economy, and demonstrating the seriousness with which the Committee is seeking to understand and
frame the issues. The Committee is wise to undertake and encourage this searching examination while
policies are being considered and before they are framed. I am grateful for the chance to contribute to this
consideration.
This morning I wish to focus on four specific aspects of the issue:
The “Oil Shock” and its causes, including the “traditional fundamentals” (supply and demand,
geopolitics) and the “new fundamentals” (rapidly-rising costs for developing new oil and gas fields, and
the increasing impact of financial markets).
The “Break-Point” world in which we are now living—and the forces set in motion by high prices,
security, and reinforced by climate change.
The considerable opportunity for energy efficiency, which can make a very big impact in the nearand
medium-term.
Observations on policy, including:
· the need to get beyond “either/or” energy debate and instead take a more
ecumenical approach that recognizes the critical requirements of supplying
energy to our $14 trillion economy;
· the importance of encouraging investment, which has to be increased in
order to play “catch-up” with a growing world economy;
· the effectiveness and speed of markets in responding to shocks; and
3
· the way in which expectations going out 3 to 5 years are feeding into
today’s prices and how changes in supply and demand can influence those
expectations.
That we are in an oil shock is clear, whether at the gasoline pump and the toll on consumers, in the
obvious and painful impact on beleaguered industries like autos and airlines, in the effect on food prices,
and in the financial difficulties that other industries are experiencing. This oil shock coincides with the
credit crisis, adding to the pressures. The specter of stagflation—poor economic growth combined with
inflation—supposedly banished since the 1970s, is before us again. Jean-Claude Trichet, the president of
the European Central Bank, starkly outlined the risks when he recently noted the current “similarities” to
the first and second oil shocks of the 1970s:
One of the major similarities of course is that we must avoid unanchoring inflation
expectations, avoid putting economies in general in a situation where they are weakening
their own growth potential, where they are observing slower growth and mass
unemployment…You can date from the first oil shock the start of much lower growth…1
Four years ago oil was around $40 a barrel. Today, it is over $135 a barrel, and there are alarming
predictions of $200 and $250 a barrel—and even higher. What happened? What is happening?
In such circumstances as these, there is a tendency to seek a single explanation. History, however,
demonstrates that changes of this scale and significance result not from a single cause, but rather from a
confluence of factors. And that is the case with the epochal change in energy through which we are now
living. When you consider the pressures in the markets, the impact on consumers and the economy, and
the shifts at hand, we really are at a break point in terms of world oil.
We can divide the sources of the current high prices between the “traditional fundamentals” and what
we might call the “new fundamentals”.
The starting point is supply and demand. Specifically, in terms of demand, we are talking about the
success of the global economy—five percent growth per year over the past five years—the best global
economic performance in a generation. This has lifted hundreds and hundreds of millions of people out of
1 Jean-Claude Trichet, press conference, June 5, 2008, http://www.ecb.int/press/pressconf/2008/html/is080605.en.html
4
poverty. Countries—most notably China and India—that for decades lived in self-imposed economic
isolation are now integrated with the world economy. Growing incomes and rising standards of living
translate into rising demand for oil and energy and other commodities. We can see the difference. In the
five years between 1998 and 2002, world oil demand grew at an average annual rate of 1.1 percent—for a
total absolute growth of 4.2 million barrels per day. In the five years between 2003 and 2007, world oil
demand grew at 2.1 percent—for a total absolute growth of 8.2 million barrels per day.
Supply has had trouble keeping up. As a result the balance between supply and demand has tightened.
One major reason for the slow supply response is limitations around the world on access to areas for
development. A second is uncertainty about investment, fiscal, and regulatory regimes. Both of these are
global questions. So is the third reason—the shortage of people, equipment, skills, and commodities—to
which I will return in a moment.
Refining issues contribute to the tightness in the markets. Though there is a tendency to see this as a
U.S. issue, it is really a global problem. Diesel fuel is the fastest-growing oil product worldwide; over the
last ten years, transportation diesel demand grew by 34 percent, while gasoline demand grew by 13
percent. It is the fuel of economic growth in Asia; over half of new cars sold in Europe are diesel. Yet
Asia and Europe—the growth markets for diesel—have refining systems that are constrained in terms of
producing diesel fuels.
Geopolitics has to be regarded as one of the traditional fundamentals, for in one way or another it has
always had a major impact on the oil market. Geopolitics can make its influence felt through disruption or
through fears and perceptions of risk regarding the reliability of supply.
We do not today have the mega-disruptions that were characteristic of the 1970s. However, when you
add up various kinds of disruptions, you get an “aggregate disruption” of between two and three million
barrels per day. Particularly noteworthy is Nigeria, one of the key exporting countries and one particularly
important to the United States. For the past few years, 20 to 30 percent of Nigeria’s output disrupted by
rebel attacks. Currently, almost a million barrels a day of Nigerian oil has been removed from the
market—representing a loss of 40 percent of Nigeria’s capacity. Venezuela’s productive capacity has
declined by almost a million barrels per day from its peak. Iraq’s production hovers below the preinvasion
levels. Mexico’s capacity is declining because of inadequate investment and restrictions on
international investment.
The result of all of this is a much tighter market—in terms of the balance between supply and
demand—than had been customary for several decades. The tightness can be measured in terms of “spare
capacity”—the unused production capacity that can be called upon in case of disruption. As recently as
2002, spare capacity was 5 million barrels per day. By 2005, it was down to one million barrels per day. It
5
increased to about 2.5 million barrels per day in 2007, but with the recent increase in Saudi production, it
is again declining. In a tight market, prices go up. And a tight market is also a market that is more crisisprone,
more vulnerable to the impact of disruptions.
The dangers and uncertainties related to Iran’s nuclear program are also a distinctive feature of
today’s oil market. As Iran’s centrifuges whirl, concerns mount about the potential for crisis and
confrontation, which could affect not only the reliability of Iranian supplies, but also could affect some
portion of the oil passing through the Strait of Hormuz—representing 40 percent of traded world oil.
There is clearly an Iranian risk factor in the price of oil today.
What have emerged as the “new fundamentals” are also playing an important role in the sharp upward
movement of oil prices.
The first of the new fundamentals is the rapid rise in the cost of new oil and gas fields. Both the
public and public policy focus in on price. But the dramatic increases in costs are bedeviling the industry,
delaying new supplies, and constitute one of the major reasons for rising prices.
Cambridge Energy and its parent company IHS, which has the world’s largest databases on oil and
gas reserves and production, have created the IHS/CERA Upstream Capital Costs Index to measure the
impact of rising costs. The results are dramatic. The latest analysis shows that costs worldwide have more
than doubled over the last four years (See Figure 1).2 This means that every dollar of investment buys
only half of what it would have bought four years ago. To put it another way, companies have to budget
twice what they would have for the same project four years ago. Some examples are even more extreme:
a deep water drill ship that would have rented for $125,000 per day four years ago now costs $650,000
per day.
Why these cost increases? The reason is that there is an acute shortage of the engineers and scientists,
skilled labor, equipment, and of the steel and other commodities that are required to develop new
supplies. As a result, the cost of everything that is required to develop new oil and gas fields is being bid
up around the world.
2 Capital Costs Analysis Forum—Upstream: Market Review, CERA Special Report, 2008.
6
Why these shortages? In the early 1980s, there was a similar expectation that prices would go skyhigh.
Then the prediction was of “$100 a barrel oil”, which, in today’s dollars, would be about $300.
Instead, the oil market experienced two price collapses—to $10 oil in the mid 1980s and again in the late
1990s. As a result, the industry went through a contraction, preparing for a long haul of low prices.
Indeed, there is a “missing generation” of engineers and technologists in the oil and gas industry. Just as
the contraction was more or less finished, demand started ratcheting up again with the strong global
economic growth. The industry has been scrambling ever since to catch up with this growth. At the same,
overall global demand is driving up the cost of such critical inputs as steel and cement.
The impact of the shortages is two-fold. The first is that projects cost more. Second, the projects are
being delayed, postponed, and in some cases cancelled. Thus, the supply response is taking longer, which
contributes to a tighter market and helps drive up prices.
At the same time, governments around the world are increasing their taxes and take, adding to the
cost squeeze that is constricting supply and putting pressure on the commerciality of new projects.
7
The second of the new fundamentals might be described as “oil as the new gold.” Oil has become a
storehouse of value—reflecting broad global economic trends and imbalances. At the same time, oil is
increasingly seen as an asset class by financial investors, an uncorrelated alternative to equities, bonds,
and real estate. This is a development that has only really emerged in the past few years as more and more
financial investors and investment has come into the oil market. The role of financial markets in the oil
price, as we all know, is a very controversial subject. There are some who believe that “speculators” are
the culprit. There are others who believe that the impact is minor, and that supply and demand largely
explain things.
The role of “speculators” in the commercial oil market has received much attention recently. The
word “speculator” has both a technical meaning and a colloquial meaning. In the technical meeting, it
describes those who trade with the objective of making profit by successfully anticipating future price
movements. Speculators add liquidity to the market, taking the other side of trades that allow commercial
participants—such as independent natural gas producers, airlines in the oil market, or farmers in
agriculture markets—to hedge their risk. In this role, speculators help make markets possible. However,
the colloquial meaning of “speculator” has a range of different connotations, ranging from manipulator to
risk-taker to those who collectively get caught up in “irrational exuberance” and help generate bubbles.
All these are more controversial than the technical meaning. However, the focus on the word
“speculator” is too limited.
Financial markets are today playing an increasingly important role in price formation – responding to,
accentuating, and exaggerating supply and demand, geopolitics, and other trends.
The interests of financial participants in the oil market are varied. Some are doing what traders do,
looking for momentum and trends. Some are doing it as an “alternative investment,” to secure, for their
pension-holders, sufficient income from assets that generate returns not correlated with the performance
of stocks and bonds. Some invest in oil as a proxy for economic growth in China and India. For others,
investing in oil has become a hedge against a variety of risks and threats. Some are investing in oil to
protect themselves against rising global inflation. A pension fund may invest in oil to protect its portfolio
against a possible sharp drop in equity markets in the event of conflict in the Middle East. (One
prominent U.S. pension fund recently explained that it was increasing its investments in commodities as
part of a “new strategy to provide a hedge against inflation while diversifying investments, thus
mitigating losses during equity market downturns.”)
And some anticipate a permanent shortage – in its strongest form, the world’s “running out” of oil. A
“shortage psychology” certainly seems to have become widespread in financial markets as prices have
gone up. This psychology is based partly on current market conditions and partly on expectations of tight
8
markets for many years to come. As prices go up, this psychology becomes self-reinforcing – at least
until the market turns.
The U.S. credit crisis and the weakening U.S. dollar constitute a significant factor. For, when the
credit crisis broke last summer, the response, as would have been anticipated, was interest rate cuts.
These, in turn, led to a fall in the value of the dollar against other currencies, amplified by expectation of
further interest rate cuts. Instead of the traditional “flight to the dollar” during a time of instability, there
has been a “flight to commodities” in search of stability during a time of currency instability and a falling
dollar. While the correlation does not hold week-in and week-out, we believe that this trend—a falling
dollar contributing to higher oil prices—is very strong.3 Figure 2 shows the movements since last
summer, and Figure 3 shows how the fall in the dollar has lowered the “euro price” for oil. There is a
painful irony here. The crisis that started in the subprime mortgage market in the United States has
traveled around the world and, through the medium of a weaker dollar, has come back home to
Americans in terms of higher prices at the pump.
Prices do not usually go straight up forever. Markets respond to higher prices with behavioral
changes, innovation, and substitution, and we are beginning to see that response. Two years ago we
envisioned a scenario of $120-150 oil that we called “Break Point.” The question was how delays and
postponement in the development of supplies, combined with disruptions, could drive prices up to that
$120-150 level.4
3 The Federal Reserve Bank of Dallas estimates that “exchange rate movements accounted for roughly a third of the $60
increase in oil prices from 2003 to 2007.” Stephen P.A. Brown, Raghav Virmani, and Richard Alm, Economic Letter—Insights from
the Federal Reserve Bank of Dallas, May 2008, p. 6. It notes that the dollar has fallen 46 percent against the euro since mid-2001.
4 Break Point Revisited: CERA’s $120 - $150 Oil Scenario, CERA Special Report, 2008.
9
10
But the real focus in the scenarios was on the response. Today, we are seeing the beginning of a
powerful response in terms of public policy, technology, consumer behavior, and company strategies:
· The first increase in automobile fuel efficiency standards in 32 years.
· The sharp shift towards fuel economy in the minds of consumers when they enter an auto
showroom.
· The changes in behavior—whether measured in use of public transport, carpooling,
consolidation of trips, or miles driven.
· Increased focus by companies on reducing their energy costs.
· And, of great significance and lasting importance, changes in the automobile engine itself
and the accelerating speed with which automakers are trying, at great cost and in very
difficult circumstances, to shift their model mix.
As the Committee knows, there is much talk about “peak oil” supply these days. However, we think
something else is at hand— “peak demand” —at least in terms of U.S. gasoline consumption. In our view,
2007 may well have been the top, the peak, in terms of U.S. gasoline demand.5 Both because of changes
in the minds of consumers, and the response of automakers in terms of the efficiency of vehicles, gasoline
demand may well now be in decline. (See Figure 4). This has worldwide effects. For the 9-plus million
barrels of gasoline that the U.S. uses every day is larger than the total oil consumption of any other
nation, including China.
One of the most important consequences of the Break Point scenario is the new focus on energy
efficiency. It was the potential of energy efficiency—conservation—that first drew me into energy
research. It is striking that the United States today uses only about half as much energy per unit of GDP as
in the 1970s. Some of that represents restructuring of the economy towards services. But much of it
represents actual gains in efficiency.
5 Drivers Turn the Corner in the United States: Gasoline “Peak Demand,” Sooner than Expected, CERA Decision Brief, 2008.
11
The reality of the current oil shock behooves us, as a nation, to consider what would be required to
double our energy efficiency over a certain number of years. Today, there are tools in terms of
information technology to support greater energy efficiency that were simply not available in earlier
decades. In terms of the nation’s gasoline consumption, savings of 7 to 10 percent—as much as 900,000
barrels per day—may be available with little or no penalty or burden on drivers.
Of course, “energy efficiency” is not a “thing”, unlike a power plant, an oil well, a windmill, or a
solar panel. It is embodied in other things—changes in behavior, in technology, and in the capital stock. It
can be stimulated by regulations, information, and prioritization. But, in a market system, price itself is a
powerful driver, and energy efficiency will get much higher priority now than in years when energy was
cheap. It is not surprising that sales of SUVs and other light trucks took off in the late 1990s. In 1998,
12
owing to the collapse in crude prices, gasoline prices were the lowest in real terms that they had ever
been.6
Climate change considerations will be a further driver of energy efficiency, for it offers the largest
near and medium term way to reduce CO2 output.
One is struck by how energy efficiency is gaining traction and support across the spectrum. As such,
it will help us overcome the “either-or” approach and will be one of the key contributors to underwriting
the energy response on which our nation’s prosperity depends.
So often, it has seemed over the decades, U.S. energy policy divides into an “either-or” debate, which
sets conventional supply against renewables and conservation—as though one partial approach or another
is sufficient. This is unfortunate. We need a more ecumenical approach, and indeed a portfolio strategy.
Our $14 trillion economy runs on 100 quadrillion BTUs of energy per year—50 million barrels of oil
equivalent per day (of which actual oil is currently somewhat over 20 million barrels per day).
Alternatives and renewables have and should have an important role to play in our energy economy,
and their role will grow. Crossing the Divide outlines how that could happen.7 But we also have to keep in
mind the overall scale of our energy needs, costs, and time. A great deal of effort is going into innovation,
and the impact will be significant. But the timing and scale remain uncertain. And, as renewables grow in
scale, the question of how they are integrated into the existing energy infrastructure becomes more
important.
Today, oil and natural gas together represent a little over sixty percent of our total energy
consumption. Most of the rest are coal and nuclear. Renewables are about six percent; most of that is
biofuels and hydropower. Given these proportions, and in light of today’s high prices, it is urgent to ask
how to ensure the adequate supplies of oil and natural gas supplies that are needed on an environmentallysound
basis and at a price that does not damage the overall economy.
6 Gasoline and the American People: 2007, CERA Special Report, page 6.
7 Crossing the Divide: The Future of Clean Energy, CERA Muticlient Study, 2007.
13
The current oil shock underscores the need to encourage timely investment across the energy
spectrum that will relieve the price pressures—both in the United States and abroad. Investment has to be
stepped up in order to play a vigorous game of catch-up with a growing world economy. That, in turn,
requires efficient and timely decision-making, whether in the United States or in resource-holding
countries, as well as the facilitation of large, complex projects that bring on significant new supplies. An
excellent example of the impact that engagement can make is the strong support that the U.S. gave to the
Baku-Tiblisi-Ceyhan pipeline that carries oil from Azerbaijan through Georgia to Turkey. Without that
pipeline, there would not be 700,000 barrels of Caspian oil flowing through to the Mediterranean today—
and the addition to energy security that those supplies provide.
Markets themselves, with their decentralized decision-making, generally provide faster and more
effective mechanisms for responding to high prices and shortages than systems of price control, which
can have unintended and very painful consequences. The classic example is the contrast between the
much-remembered “gas lines” of the 1970s and the surprisingly swift response to the disruption of
Hurricanes Katrina and Rita in 2005—which constituted the largest energy disruption that the United
States had ever experienced. The 1973 and 1979 gas lines were largely self-inflicted—the result of price
controls and an allocation system that determined where gasoline supplies would go. There was little
flexibility to move supplies to where they were most needed. Bureaucratic decision-making at the center
could not possibly keep up with the changing character of the marketplace. Thus, gasoline was available
in rural areas; there was just not enough gasoline in cities to get motorists out to the countryside so that
they could fill up.
The response in 2005 was quite different. Mild relaxation of regulatory restrictions—on which
gasoline grades were required in which cities, and on the Jones Act, which required that oil shipped from
one U.S. port to another U.S. port be in American ships—meant that supplies were moved around
efficiently, and prices subsided much more quickly than anticipated. (This was supported by release from
the Strategic Petroleum Reserve and similar reserves held by other countries). The fears—such as gas
lines spreading across the nation and airports running out of jet fuel—did not come to pass.
The United States is more integrated into the global marketplace than in years past, and yet it has less
leverage over the market. Our oil imports today are twice what they were in the 1970s. Yet our share of
world markets is less. In the 1970s, the U.S. represented 30 percent of world oil consumption. With
14
economic growth elsewhere, the U.S. share is down to 24 percent. The balance is changing in other ways.
National oil companies—which vary greatly in their character and capabilities—control over 80 percent
of world oil reserves. The five “supermajor” oil companies account for less than 15 percent of the world’s
total oil production. China and India are now significant players in the market. The list of shifts goes on.
The realities of the global markets and America’s integration into them emphasize the need for a
cooperative, multifaceted approach to relations with both producers and other consumers and put a
premium on how we manage, think through, and structure our relations with other countries.
The final point to consider is the role of expectations. As suggested earlier, much of the conviction
and buying in those markets where oil and finance intersect is due not only to the short-term—the latest
disruption in Nigeria, the ratcheting up of tension over Iran’s nuclear program—but also due to current
expectations about very tight supplies three or five years down the road, particularly because of the
anticipated high growth in countries like China and India. These longer-term expectations feed back into
current prices.8
To be sure, in the current tight, crisis-prone market, prices would likely spike higher if there were a
major disruption—or even imminent threat of such—particularly in a key region such as the Persian Gulf.
Fortunately, we do have an emergency system built around the International Energy Agency that was
created to respond to such crises.
But that more general expectation of very tight supplies is based upon the assumption that the global
market cannot generate the responses that are warranted—in terms of demand and efficiency, in terms of
new supplies and timely investment, and in terms of renewables, new technologies and alternatives.
Delays and postponements are read as predictions of shortages. Meanwhile, developments of great
importance—such as the very large discoveries in off-shore Brazil—get relatively little attention.
Downward shifts in future demand from what would have been anticipated two years ago, are discounted.
The oil and gas industry is a long lead-time industry. New fields can take five to ten years to develop.
But their impact is anticipated earlier in the price. A major contribution to alleviating today’s oil shock
would be to create an environment, based upon realistic assessments, that ensures that timely investment
is really and convincingly on the way.
8 The importance of longer-term expectations is also emphasized in the Dallas Federal Reserve’s Economic Letter.
15
The answer to the oil shock is not “either-or”. We need an ecumenical approach—a combination of
new supplies, renewables, and greater efficiency—all developed with appropriate environmental and
climate change considerations in mind.
Such an approach would be a great contribution not only to relieving the pain and pressures that the
American people are feeling at the pump and the difficulties that are faced today by American businesses,
small and large alike. It would also be a fundamental contribution to the future prosperity of our nation
and to the global economy of which we are so centrally part.
http://jec.senate.gov/index.cfm?FuseAction=Files.View&FileStore_id=6e9e2a7f-4186-47ac-a336-d47cf19661ac
SEC Proposes Rule Changes to Modernize Oil and Gas Reporting Requirements
FOR IMMEDIATE RELEASE
2008-122
Washington, D.C., June 26, 2008 — The Securities and Exchange Commission today announced that it has proposed revised oil and gas company reporting requirements to help provide investors with a more accurate and useful picture of the oil and gas reserves that a company holds.
The SEC's rule proposal reflects the significant changes that have taken place in the oil and gas industry since the adoption of the original reporting requirements more than 25 years ago. The proposed rule changes incorporate improved technologies and alternative extraction methods, and enable oil and gas companies to provide investors with additional information about their reserves. The more that precise, first-hand information from oil and gas companies is available to investors and the marketplace, the less that the marketplace is forced to rely solely upon information provided by speculators.
"The ability to accurately assess proved reserves is an important part of understanding any energy company's financial position," said SEC Chairman Christopher Cox. "But the current oil and gas disclosure rules often interfere with an investor's analysis because they are tied to outdated technologies."
John White, Director of the SEC's Division of Corporation Finance, added, "I am pleased that the Commission has acted on the staff's recommended proposals to modernize the reporting requirements for oil and gas companies. The proposed rule changes will allow oil and gas companies to determine their reserves in a manner that is consistent with existing technologies. The proposed changes also will require companies to provide additional information that will allow investors to better understand the reserve quantities and the implications of those reserves on future operations. I look forward to hearing commenters' views in this regard."
The SEC's proposed rule changes include:
Permitting use of new technologies to determine proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserves volumes.
Enabling companies to additionally disclose their probable and possible reserves to investors. Current rules limit disclosure to only proved reserves.
Allowing previously excluded resources, such as oil sands, to be classified as oil and gas reserves. Currently these resources are considered to be mining reserves.
Requiring companies to report the independence and qualifications of a preparer or auditor, based on current Society of Petroleum Engineers criteria.
Requiring the filing of reports for companies that rely on a third party to prepare reserves estimates or conduct a reserves audit.
Requiring companies to report oil and gas reserves using an average price based upon the prior 12-month period-rather than year-end prices, to maximize the comparability of reserve estimates among companies and mitigate the distortion of the estimates that arises when using a single pricing date.
On Dec. 12, 2007, the SEC issued a Concept Release for public comment to help determine whether changes in the reporting requirements were needed and appropriate. Comment letters received from the public were generally supportive of updating the reporting requirements to reflect the changes that have taken place in the industry, and the SEC staff considered this public input carefully when developing the recommendations for the Commission's rule proposal.
The full text of the proposing release to update disclosure requirements for oil and gas companies will be posted to the SEC Web site as soon as possible. Public comment on the proposed rule changes should be received by the Commission no later than 60 days after their publication in the Federal Register.
http://www.sec.gov/news/press/2008/2008-122.htm
Aiming at a "green revolution," British Prime Minister Gordon Brown outlined an ambitious investment program of $200 billion to boost the production of renewable energies in line with the European Union's policy of reducing greenhouse gas emission.
Brown made this announcement while addressing a conference on a low-carbon economy Thursday.
The British government will construct 7,000 new wind turbines to help increase the share of renewable energy production to 15 per cent of consumption by 2020, a target set by the EU. These will generate, 000 new jobs, Brown said.
The North Sea, which has reached a saturation point in oil and gas supply, will now be transformed into the global center of the offshore wind industry with the installation of 3,000 wind turbines offshore, Brown said.
Brown envisages turning "the North Sea into the equivalent for wind power to what the Gulf of Arabia is to the oil industry."
Brown claimed that the strategy is "the most drastic change in energy policy since the advent of nuclear power."
The long-term strategy to reduce Britain's dependence on oil would be spread over 12 years.
by RTT Staff Writer
~~ zero-emissions car~~ You could call it California Dreaming, but Honda's sleek, new zero-emissions car, the FCX Clarity, is already all the rage in Hollywood, where celebrities can't wait to own one. Meanwhile, GM is opening hydrogen fueling stations in sunny Southern California.
http://www.cnbc.com/id/25057872
From fossil fuels to alternative ones, there are many sources of energy in the world. Science and industry are busy trying to make the most of them. These snapshots will get you up to speed on the state of play and the players.
Raining hydrocarbons in the Gulf
Below the Gulf of Mexico, hydrocarbons flow upward through an intricate network of conduits and reservoirs. They start in thin layers of source rock and, from there, buoyantly rise to the surface. On their way up, the hydrocarbons collect in little rivulets, and create temporary pockets like rain filling a pond. Eventually most escape to the ocean. And, this is all happening now, not millions and millions of years ago, says Larry Cathles, a chemical geologist at Cornell University.
"We're dealing with this giant flow-through system where the hydrocarbons are generating now, moving through the overlying strata now, building the reservoirs now and spilling out into the ocean now," Cathles says.
He's bringing this new view of an active hydrocarbon cycle to industry, hoping it will lead to larger oil and gas discoveries. By matching the chemical signatures of the oil and gas with geologic models for the structures below the seafloor, petroleum geologists could tap into reserves larger than the North Sea, says Cathles, who presented his findings at the meeting of the American Chemical Society in New Orleans on March 27.
This canvas image of the study area shows the top of salt surface (salt domes are spikes) in the Gas Research Institute study area and four areas of detailed study (stratigraphic layers). The oil fields seen here are Tiger Shoals, South Marsh Island 9 (SMI 9), the South Eugene Island Block 330 area (SEI 330), and Green Canyon 184 area (Jolliet reservoirs). In this area, 125 kilometers by 200 kilometers, Larry Cathles of Cornell University and his team estimate hydrocarbon reserves larger than those of the North Sea. Image by Larry Cathles.
Cathles and his team estimate that in a study area of about 9,600 square miles off the coast of Louisiana, source rocks a dozen kilometers down have generated as much as 184 billion tons of oil and gas — about 1,000 billion barrels of oil and gas equivalent. "That's 30 percent more than we humans have consumed over the entire petroleum era," Cathles says. "And that's just this one little postage stamp area; if this is going on worldwide, then there's a lot of hydrocarbons venting out."
According to a 2000 assessment from the Minerals Management Service (MMS), the mean undiscovered, conventionally recoverable resources in the Gulf of Mexico offshore continental shelf are 71 billion barrels of oil equivalent. But, says Richie Baud of MMS, not all those resources are economically recoverable and they cannot be directly compared to Cathles' numbers, because "our assessment only includes those hydrocarbon resources that are conventionally recoverable whereas their study includes unconventionally recoverable resources." Future MMS assessments, Baud says, may include unconventionally recoverable resources, such as gas hydrates.
Of that huge resource of naturally generated hydrocarbons, Cathles says, more than 70 percent have made their way upward through the vast network of streams and ponds, venting into the ocean, at a rate of about 0.1 ton per year. The escaped hydrocarbons then become food for bacteria, helping to fuel the oceanic food web. Another 10 percent of the Gulf's total hydrocarbons are hidden in the subsurface, representing about 60 billion barrels of oil and 374 trillion cubic feet of gas that could be extracted. The remaining hydrocarbons, about 20 percent, stay trapped in the source strata.
Driving the venting process is the replacement of deep, carbonate-sourced Jurassic hydrocarbons by shale-sourced, Eocene hydrocarbons. Determining the ratio between the younger and older hydrocarbons, based on their chemical signatures, is key to understanding the migration paths of the oil and gas and the potential volume waiting to be tapped. "If the Eocene source matures and its chemical signature is going to be seen near the surface, it's got to displace all that earlier generated hydrocarbon — that's the secret of getting a handle on this number," Cathles says.
Another important key to understanding hydrocarbon migration is "gas washing," Cathles adds. A relatively new process his research team discovered in the Gulf work, gas washing refers to the regular interaction of oil with large amounts of natural gas. In the northern area of Cathles' study area, he estimates that gas carries off 90 percent of the oil.
Ed Colling, senior staff geologist at ChevronTexaco, says that identifying the depth at which gas washing occurs could be extremely useful in locating deeper oil reserves. "If you make a discovery, by back tracking the chemistry and seeing where the gas washing occurred, you have the opportunity to find deeper oil," he says.
Using such information in combination with the active hydrocarbon flow model Cathles' team produced and already existing 3-D seismic analyses could substantially improve accuracy in drilling for oil and gas, Colling says. ChevronTexaco, which funds Cathles' work through the Global Basins Research Network, has been working to integrate the technologies. (Additional funding comes from the Gas Research Institute.)
"All the players are looking for bigger reserves than what's on shore," Colling says. And deep water changes the business plan. With each well a multibillion dollar investment, the discovery must amount to at least several hundred million barrels of oil and gas for the drilling to be economic. Chemical signatures and detailed basin models are just more tools to help them decide where to drill, he says.
"A big part of the future of exploration is being able to effectively use chemical information," Cathles says. Working in an area with more oil by at least a factor of two than the North Sea, he says he hopes that his models will help companies better allocate their resources. But equally important, Cathles says, is that his work is shifting the way people think about natural hydrocarbon vent systems — from the past to the present.
Lisa M. Pinsker
http://www.geotimes.org/june03/NN_gulf.html
re: If Oil Is Fueling Inflation, How Much Can Fed Do?
If the fed is serious about the higher oil price, need to have a serious talk with TS Paulson because he is with the bandwagon.
Mafia wars....
~~~
By Jeff Cox,
Special to CNBC.com
CNBC.com
| 24 Jun 2008 | 02:13 PM ET
The Federal Reserve finds itself in an uncomfortable situation: Staring down the barrel of inflation with limited options on what it can do to stop the bullet.
On previous occasions, with normal market dynamics in play, a shove upward on interest rates would strengthen the dollar, give Americans more purchasing power, and send down the prices of goods and services.
But these aren't normal times, thanks primarily to one factor: Oil.
The price of oil no longer is driven solely by what Americans will pay for it but by a global demand beyond the Fed's reach. The end result is that the central bank has found itself in a position where it is highly limited in what it can do to control inflation.
"The Fed can't do anything about supply shocks," says Doug Elmendorf, a senior fellow at the Brookings Institution. "What it can do is let the economy grow more slowly for a while."
In Elmendorf's assessment, keeping rates steady is about the only strategy the central bank can do to control inflation generated primarily by skyrocketing oil prices, while also tending to an economy teetering on recession.
But some Fed critics think pushing up interest rates could have a profound impact on oil prices and hope that the central bank chooses not to stay on the sidelines but gets proactive in heading off inflation. The Fed, which began a two-day policy meeting today, is widely expected to leave rates unchanged, although speculation is growing that a rate hike could come as soon as August.
"I think it's very critical that we send a signal to the world that we care about inflation, we care about the dollar," Vince Farrell, a principal in Scottsman Capital and proponent for raising rates, said on CNBC. "Once that inflation genie gets out of the bottle it's very hard to get back in."
Farrell believes a stronger dollar would have an appreciable impact on the price of oil, a point disputed by some who say surging global demand and speculators are having a far greater impact on energy costs in the open market.
Farrell says that if the dollar was trading evenly with the euro, that would send oil down to $80 a barrel, about 40 percent less than its current eye-popping price.
But even if a stronger dollar would have only a marginal impact on oil, many believe the Fed at least can contain the damage energy inflation is having on the rest of the economy.
"The Fed has made a mistake, a big one, in fact a number of mistakes, and the only thing it can do now is begin to correct them," says Allan H. Meltzer, a Fed expert at Carnegie Mellon University. "It overreacted to the housing slump, it overestimated the loss in jobs, it underestimated the inflation effect, so it should know by now that for the millionth time its forecast was not very good. It should aim at a low level of inflation for the short term."
Meltzer also backs a rate increase even mindful of the havoc it might trigger for the rest of the economy.
"In the near term there would be screams of outrage from Congress, from the stock market and so forth," he says. "But that's why we're supposed to have an independent Fed. They're supposed to be governed by the interest of the public and they often forget that and they're forgetting it now."
If there were the "screams of outrage" to which Meltzer refers they would have to compete with similar howls coming now from not only consumers but also heads of business whose corporate profits are being eaten up by spiraling energy costs.
Dow Chemical on Tuesday announced its second major price increase in a month, while home improvement retailer Lowe's said it is seeing unprecedented price increases from its suppliers, with both companies citing transportation costs as the main reason for the cost surges.
Dow CEO Andrew Liveris told CNBC, though, that he doesn't think monetary policy will be a big factor in lessening the load of fuel costs.
"I think many people have said on this whole energy thing it's really supply and demand and I fully agree with that," Liveris said. "What we're talking about here is fundamental supply and fundamental demand. Anything monetary on top of that right now does add a factor but, frankly ... I would not give that much weight."
But those in favor of aggressive rate-raising see the squeeze oil is putting on the economy as precisely the reason to move the rates higher regardless of what effect it would have on energy costs. Meltzer wants the fed funds rate moved from 2.0 percent up to 4.0 percent to stay in line nominally with an approximately 4.0 percent rate of inflation, to make the real rate zero percent.
So what does he actually expect the Fed to do during its meeting this week?
"Nothing," he says.
"They'll make some pious statements." But Meltzer adds he "wouldn't bet a wooden nickel" on the Fed raising rates.
Nor would many others, as the fed fund futures are not anticipating a rate increase at least until later in the year.
Elmendorf says the Fed instead will focus this year on preventing a wage-price spiral in which income tries to keep up with expenses, which can result in stagflation.
"I don't expect them to raise rates this year. Actually I think they will wait until the beginning of next year," he says. "They will say in their statement that they're worried about inflation. My guess is they will say the economy is slow enough and inflation is slowing and that will let the Fed wait until next year to raise rates."
But if Farrell had his way, there would be at least two rate hikes before the year is out.
"What we need to do is 1) destroy demand, which high prices (are) starting to do; 2) defend the dollar to contain the rate of inflation," he said. "What we need is some action, we need some leadership."
© 2008 CNBC.com
URL: http://www.cnbc.com/id/25348048/
~~ No brilliant invention ~~ Talking Oil Economics, Pt. 1
Of course, they don't want to invent and to develop next generation energy source. LOL
Using OIL like a mafia market.
~~~
Searching for energy solutions, with James Hackett, Anadarko Petroleum president & CEO; Vince Farrell, Scotsman Capital Management; Dennis Gartman, The Gartman Letter; Shawn Tully, Fortune Magazine; and CNBC's Larry Kudlow.
http://www.cnbc.com/id/15840232?video=776858146
Good morning ~~ crazy ~~ Oil at $138, Iran Denies Rumored Attack
from the top, sold to money using war manipulation. You know what the Book says.
~~~
OIL, OIL PRICES, CRUDE, INVENTORIES, GASOLINE, ENERGY PRICES, EIA, OPEC, DEMAND, SAUDI ARABIA, OPEC, CHINA, ISRAEL, IRAN
By Reuters
Reuters
| 24 Jun 2008 | 07:04 AM ET
Oil rose for a third straight session on Tuesday to more than $138 a barrel, boosted by a rumored attack on Iran's nuclear facilities, which was denied.
"This is just a rumor. No attack against Iran's nuclear facilities has taken place," a senior Iranian nuclear official said.
U.S. light sweet crude for August delivery was up, after settling up $1.38 on Monday. It hit a record high of $139.89 on June 16.
London Brent crude rose.
Tension over Iran's nuclear program has played a big part in oil's rise to record levels near $140 a barrel.
The European Union this week imposed new sanctions on Iran, including as asset freeze on its biggest bank.
Western powers suspect Iran, the world's fourth biggest oil exporter, wants to make nuclear arms, but Tehran denies this.
Friday's New York Times quoted U.S. officials as saying Israel, which is believed to have nuclear weapons of its own, had carried out a military exercise, apparently as a rehearsal for a potential bombing of Iran's nuclear facilities.
Analysts are worried heightened tensions between Iran and the West could threaten the Straits of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula through which roughly 40 percent of the world's traded oil flows.
Nigeria Strike
Nigeria's senior oil workers union began a limited strike at Chevron offices on Monday.
The stoppage has not disrupted production yet, but it has added to concerns about further disruption to supplies from the OPEC nation, where militant attacks shut 340,000 barrels of daily production last week.
"The market is focusing on the immediate impact of this Nigerian attack that reduced production," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi.
Supply disruptions in Nigeria have helped push U.S. crude up by more than 40 percent this year.
Kuwait, one of the few OPEC members with spare capacity, will increase its oil output by 300,000 barrels per day starting mid-2009, and would spend $55 billion on oil projects in the coming five years, state news agency KUNA reported, citing Oil Minister Mohammad al-Olaim.
Kuwait's pledge follows a meeting of top energy policy makers in Jeddah at the weekend, where Saudi Arabia, the world's largest oil exporter, said it would pump more oil.
The Saudi increase failed to dampen the market.
The dollar will remain in focus over the next two days as markets wait for U.S. Federal Reserve's decision on interest rates due on Wednesday.
The Fed is widely expected to leave interest rates unchanged, which could be bearish for the dollar and supportive for the oil market, analysts said.
U.S. weekly data on crude oil inventories are also due on Wednesday.
Crude supplies are likely to have risen for the first time in six weeks last week, as imports rose for the second week in a row, a Reuters preliminary poll showed.
The poll showed forecasts for a 200,000-barrel rise in crude stocks last week, a 1.4 million-barrel gain in distillates and a 400,000-barrel rise in gasoline inventories.
Video: Speculation will keep feeding market, says analyst.
Copyright 2008 Reuters. Click for restrictions.
URL: http://www.cnbc.com/id/25337733/
Gas could fall to $2 if Congress acts, analysts say:
Limiting speculation would push prices to fundamental level, lawmakers told
By Rex Nutting & Michael Kitchen, MarketWatch
Last update: 4:24 p.m. EDT June 23, 2008
WASHINGTON (MarketWatch) --
The price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of passage of a law to limit speculation in energy-futures markets, four energy analysts told Congress on Monday.
Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135.
Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets.
Krapels said that it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets.
"Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel."
Futures trading in London has not been a major factor in rising oil prices, testified Sir Bob Reid, chairman of the Chairman of London-based ICE Futures Europe. Rising prices are largely a function of fundamental supply and demand, not manipulation or speculation, he said.
"Energy speculation has become a growth industry and it is time for the government to intervene," said Rep. John Dingell, D-Mich., chairman of the full committee. "We need to consider a full range of options to counter this rapacious speculation." It was Dingell's strongest statement yet on the role of speculators.
There has been much discussion recently about how big a role speculators have been playing in the sharp rise in energy prices, though no consensus has emerged on this point.
Dingell introduced a bill on June 11 that would ask the Energy Department to gather the facts on energy prices, including the role played by speculators.
Dingell introduced a bill on June 11 that would ask the Energy Department to gather the facts on energy prices, including the role played by speculators.
There are two kinds of speculators in the futures markets, Masters said. Traditional speculators are those who need to hedge because they actually take physical possession of the commodities. Index speculators, on the other hand, are merely allocating a portion of their portfolio to commodity futures.
Index speculation damages price-discovery mechanisms provided by futures markets, Masters added.
The committee will likely consider legislation that would rein in index speculation by imposing higher-margin requirements; setting position limits for speculators; requiring more disclosure of positions; and preventing pension funds and investment banks from owning commodities.
The committee will likely consider legislation that would rein in index speculation by imposing higher-margin requirements; setting position limits for speculators; requiring more disclosure of positions; and preventing pension funds and investment banks from owning commodities.
Both major presidential candidates have supported closing loopholes that encourage speculation in the energy markets.
full article:
http://www.marketwatch.com/news/story/gas-could-fall-2-if/story.aspx?guid=%7b2673C102-68E0-41D9-9C9A-10EE2E723948%7d&dist=TNMostRead&print=true&dist=printMidSection
~~ re: Water is fuel BTW, let me prove it again:~~
Many are sold to money from the top officials, so it is hard to put sense to them.
When they run USA like a mafia country with war/money/oil, it is armageddon.
It takes only 25 billions to hype the oil price, but again they run the world like a mafia, so we can't reason with them.
We need big help from the bigger power, GOD!! lol
Keep up with good work, He will reward you. :)
~~~
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=30051574
If we spent half the money we spent on Iraq and Pipelineistan on developing this tech we'd have cars that run on water NOW. Not stupid looking two seaters but Hummers and big trucks from Detroit that are just as fast and powerful as the ones we now have that burn gas or diesel...or Corvettes or...
No Free Lunch, Part 3 of 3: Proof
by
Ugo Bardi & Dale Allen Pfeiffer
http://www.fromthewilderness.com/free/ww3/012805_no_free_pt3.shtml
No Free Lunch, Part 2: If abiotic oil exists, where is it?
by
Dale Allen Pfeiffer
http://www.fromthewilderness.com/free/ww3/011205_no_free_pt2.shtml
OK, why are oil prices going through the roof, and what can or should be done about it? Feel free to post articles, debate, and/or get political, as this topic is sure to be key in the upcoming POTUS '08 election.
Please feel free to express varying viewpoints, but please no personal attacks.
International Energy Outlook 2008
http://www.eia.doe.gov/oiaf/ieo/oil.html
Pricing Differences Among Various Types of Crude Oil
According to The International Crude Oil Market Handbook, 2004,1 published by the Energy Intelligence Group, there are about 161 different internationally traded crude oils. They vary in terms of characteristics, quality, and market penetration. Two crude oils which are either traded themselves or whose prices are reflected in other types of crude oil include West Texas Intermediate and Brent. Comparing these two crude oils with EIA's Imported Refiner Acquisition Cost (IRAC), the OPEC Basket, and NYMEX futures is important to understand the differences among the various types of crude oil that are often referred to in the press and by analysts. Generally, differences in the prices of these various crude oils are related to quality differences, but other factors can also influence the price relationships between each other.
West Texas Intermediate
West Texas Intermediate (WTI) crude oil is of very high quality and is excellent for refining a larger portion of gasoline. Its API gravity is 39.6 degrees (making it a “light” crude oil), and it contains only about 0.24 percent of sulfur (making a “sweet” crude oil). This combination of characteristics, combined with its location, makes it an ideal crude oil to be refined in the United States, the largest gasoline consuming country in the world. Most WTI crude oil gets refined in the Midwest region of the country, with some more refined within the Gulf Coast region. Although the production of WTI crude oil is on the decline, it still is the major benchmark of crude oil in the Americas. WTI is generally priced at about a $5 to $6 per-barrel premium to the OPEC Basket price and about $1 to $2 per-barrel premium to Brent, although on a daily basis the pricing relationships between these can vary greatly.
Brent
Brent Blend is actually a combination of crude oil from 15 different oil fields in the Brent and Ninian systems located in the North Sea. Its API gravity is 38.3 degrees (making it a “light” crude oil, but not quite as “light” as WTI), while it contains about 0.37 percent of sulfur (making it a “sweet” crude oil, but again slightly less “sweet” than WTI). Brent blend is ideal for making gasoline and middle distillates, both of which are consumed in large quantities in Northwest Europe, where Brent blend crude oil is typically refined. However, if the arbitrage between Brent and other crude oils, including WTI, is favorable for export, Brent has been known to be refined in the United States (typically the East Coast or the Gulf Coast) or the Mediterranean region. Brent blend, like WTI, production is also on the decline, but it remains the major benchmark for other crude oils in Europe or Africa. For example, prices for other crude oils in these two continents are often priced as a differential to Brent, i.e., Brent minus $0.50. Brent blend is generally priced at about a $4 per-barrel premium to the OPEC Basket price or about a $1 to $2 per-barrel discount to WTI, although on a daily basis the pricing relationships can vary greatly.
NYMEX Futures
The NYMEX futures price for crude oil, which is reported in almost every major newspaper in the United States, represents (on a per-barrel basis) the market-determined value of a futures contract to either buy or sell 1,000 barrels of WTI or some other light, sweet crude oil at a specified time. Relatively few NYMEX crude oil contracts are actually executed for physical delivery. The NYMEX market, however, provides important price information to buyers and sellers of crude oil in the United States (and around the world), making WTI the benchmark for many different crude oils, especially in the Americas. Typically, the NYMEX futures prices tracks within pennies of the WTI spot price described above, although since the NYMEX futures contract for a given month expires 3 days before WTI spot trading for the same month ceases, there may be a few days in which the difference between the NYMEX futures price and the WTI spot price widens noticeably.
OPEC Basket Price
For a discussion of crude oil pricing in general, and of the OPEC Basket price in particular, see EIA's OPEC Fact Sheet. OPEC collects pricing data on a "basket" of seven crude oils, including: Algeria's Saharan Blend, Indonesia's Minas, Nigeria's Bonny Light, Saudi Arabia's Arab Light, Dubai's Fateh, Venezuela's Tia Juana Light, and Mexico's Isthmus (a non-OPEC crude oil). OPEC uses the price of this basket to monitor world oil market conditions. As mentioned above, because WTI crude oil is a very light, sweet (low sulfur content) crude, it is generally more expensive than the OPEC basket, which is an average of light sweet crude oils such as Algeria's Saharan Blend and heavier sour crude oils (with high sulfur content) such as Dubai's Fateh. Brent is also lighter, sweeter, and more expensive than the OPEC basket, although less so than WTI.
Imported Refiner Acquisition Cost
The Imported Refiner Acquisition Cost (IRAC) is a volume-weighted average price of all crude oils imported into the United States over a specified period. Because the United States imports more types of crude oil than any other country, it may represent the truest “world oil price” among all published crude oil prices. The IRAC is also usually similar to the OPEC Basket price, so it too is typically about $6 to $8 per barrel less than the WTI spot price and about $5 to $6 per barrel less than the Brent price. However, because the IRAC is not reported by EIA until nearly 2 months after the end of the month in question, i.e., the August IRAC average price would be reported sometime in late October, the IRAC is not a particularly timely measure of a “world oil price”. Although EIA is generally the only organization that uses the IRAC, it is used by EIA as the “world oil price” in all of its forecast publications, including the Short-Term Energy Outlook, released monthly, as well as the Annual Energy Outlook and International Energy Outlook, both of which are released annually and provide an annual forecast looking out approximately 20 years in the future.
http://tonto.eia.doe.gov/dnav/pet/hist/r0000____3m.htm
1Energy Intelligence Group, The International Crude Oil Market Handbook, 2004, pp. E1, E287 and E313.
http://tonto.eia.doe.gov/ask/crude_types1.html
How dependent is the U.S. on foreign oil?
In 2007, about 58% of the petroleum consumed in the U.S. was imported from foreign countries. Crude oil accounted for 83% of net petroleum imports and about 66% of the crude oil processed in U.S. refineries was imported.
The top five source countries and their percent share of U.S. total net petroleum imports were:
Canada (18%)
Saudia Arabia (12%)
Venezuela (11%)
Mexico (10%)
Nigeria (9%)
Learn More: Read Overview of U.S. Petroleum Trade, Petroleum Supply and Disposition, Crude Oil Supply and Disposition, and U.S. Net Imports by Country, EIA statistics on U.S. petroleum and crude oil imports, exports and consumption. (PDF)
Last updated: April 11, 2008
http://tonto.eia.doe.gov/ask/crudeoil_faqs.asp#foreign_oil
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