ODAC Newsletter - 23 March 2012


Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.

Brent oil prices flirted with $125/barrel again this week before dropping back on news of weaker than anticipated European and Chinese industrial activity. The political and economic pressure of surging prices prompted Saudi oil minister Ali Al Naimi to claim the kingdom can raise production by 25% (2.5 mb/d) immediately if necessary. But that was in flat contradiction to his recent admission that 700mb/d of Saudi’s claimed 2.5 mb/d spare capacity could not be brought on stream in under 90 days – three times longer than the standard definition.

President Obama meanwhile embarked on an “energy blitz” tour, including a stop at Cushing, Oklahoma, to declare his support for the construction of the southern leg of the Keystone XL pipeline (the section which didn’t require his Presidential approval to proceed). The move angered his environmentalist supporters while doing little to assuage the oil and gas lobby and the Republican “drill baby drill” set. Obama made an attempt to add some realism to the petrol price debate saying that "even if we drilled every square inch of this country, we'd still only have 2 or 3 or 4 percent of the world's known oil reserves".  But don’t expect realism to make much impression in the current climate.

Obama’s statement was underlined this week by none other than Peter Voser. In an interview the Shell CEO said “Longer term you will see [oil] demand rising and we will need all investments to cope with that demand. In the very long term we will see prices going up because of high demand and as it gets more expensive to get the resources out of the ground.”  So basically that would be peak oil then. But with Brent at $125 this week, where does he get ‘long term’ and ‘very long term’?

One organisation lamenting the impact of rising oil prices is the European Central Bank. This week ECB economist Pavlos Karadeloglou admitted "For more than 10 years, we have been considerably underestimating the oil price". But then economists have long struggled to understand oil, energy and the depletion of physical resources. Finally the bank is to revise its forecasting model. Not before time: the EU’s import bill for oil jumped from $280bn in 2010 to $402bn in 2011.

In the UK this week Chancellor George Osborne’s budget demonstrated equal cluelessness over our energy and climate crises. “Gas is cheap”, he claimed, “has much less carbon than coal and will be the largest single source of our electricity in the coming years.” Mr Osborne clearly hasn’t read last week’s newsletter, where we debunked the green pretensions of gas. If he had, he wouldn’t have gone on spuriously to blame the truly green technologies for rising energy bills. “Renewable energy will play a crucial part in Britain's energy mix – but I will always be alert to the costs we are asking families and businesses to bear”, he said. That’s in spite of figures from his own government proving that soaring gas prices, not renewable subsidies, are responsible for rising utility bills.

The new dash for gas is only likely to be hastened following news that Professor Dieter Helm has been appointed to head a new Natural Capital Committee (NCC) tasked with valuing the UK's natural resources. An argument about the wisdom of the monetarisation of the natural world is beyond the scope of this newsletter, however there is much to worry about in Helm's appointment. Helm describes peak oil (or at least his interpretation of it) as nonsense. His view of renewables is that they are too expensive. For Helm the future is shale gas and the power of the market to come to the rescue. Energy policy, which showed signs of promise in the early days of the coalition, has taken another lurch in the wrong direction.


Disclaimers

Oil

Saudi Arabia Can Raise Output 25% If Needed, Naimi Says

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Saudi Arabia sends tankers to US with pledge to bring down oil price

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Obama angers both environmentalists and energy companies by supporting Keystone pipeline’s south leg

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US exempts Japan and EU nations from Iran oil sanctions

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Oil Price Set for Long-Term Rise: Shell CEO

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Chevron staff charged over Brazil oil spill

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BP Whistle-Blower Seeks Shutdown of Atlantis Oil Platform

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Gas

Fracking Wells’ Air Emissions Pose Health Risks, Study Finds

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Poland Says Shale Reserves May Be 85% Below U.S. Estimate

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Renewables

Winds of change blow through China as spending on renewable energy soars

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U.S. Sets Duties as High as 4.73% on China Solar Equipment

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UK

Budget 2012: North Sea oil tax reforms 'to lead to £50bn investment'

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Budget 2012: chancellor fires starting gun on dash for gas

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Green Budget 2012: Osborne signals UK is open for renewables business

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Britain mulls replacing corporate CO2 scheme

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US consortium to build carbon capture and storage plant at Grangemouth

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Scots aim to fill marine power funding gap with £100m fossil fuel levy

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Wrexham hails completion of solar success story

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Economy

ECB underestimated oil prices for next 10 years

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OPEC Recycles Dollars Into Debt 50% Faster Than Foreigner

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Bank of England split on more quantitative easing as oil price worries increase

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Disclaimers

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