Peak Oil Linkfest - 07/30/07

Malthusian misery's comeback

The great demographer and economist Thomas Malthus was 23 years old the last time a British summer was this rain-soaked, which was in 1789. The consequences of excessive rainfall in the late 18th century were predictable. Crops would fail, the harvest would be dismal, food prices would rise and some people would starve. It was no coincidence that the French Revolution broke out the same year.


When life hands you vegetable oil, make biodiesel fuel

A teacher at Bloom High School has been awarded a $10,000 grant to fund a student project that will create a waste vegetable oil recycling program.

Barry Latham’s student project is titled "Free Energy for Me." A chemistry and physics teacher, he received an A+ for Energy grant from BP America.


Depleting water level a big problem

An international study group has warned that the water shortages in India and other parts of the world will be a serious problem in days to come. “Scores of countries are overpumping aquifers as they struggle to satisfy their growing water needs, including each of the big three grain producers —China, India, and the US. “More than half the world’s people live in countries where water tables are falling,” Lester Brown of the Earth Policy Institute has said.


Chomsky: There Will Be a Cold War Between Iran and the U.S.

In the energy-rich Middle East, only two countries have failed to subordinate themselves to Washington's basic demands: Iran and Syria. Accordingly both are enemies, Iran by far the more important.

As was the norm during the Cold War, resort to violence is regularly justified as a reaction to the malign influence of the main enemy, often on the flimsiest of pretexts. Unsurprisingly, as Bush send s more troops to Iraq, tales surface of Iranian interference in the internal affairs of Iraq -- a country otherwise free from any foreign interference, on the tacit assumption that Washington rules the world.


Peak oil - expensive food

At one time the need for more food resulted in the worldwide increase in arable land via the clearing of forests and irrigation of arid land. The land available has peaked and is decreasing because of salination of irrigated soils, diversion to bio-fuels and the growth of cities. Cheap fossil fuels allowed pumping of water for irrigation, and cheap food transport encouraged the growth of cities away from the centres of food production.


Forget Big Oil - politicians bowing to Big Ethanol

When the Senate passed an ethanol-friendly energy bill last month, there was no particular scientific or economic reason for setting 36 billion gallons - six times what is used today - as America's renewable fuels requirement within 15 years.

But there was a political reason for that number: Senators wanted to one-up President George W. Bush, who had called for 35 billion gallons in his State of the Union message.


The choice is ours: Big Oil or Chavez?

In the coming century, the world will transition from cars that run on liquid fuels to cars that run on something else, perhaps electricity or hydrogen. Until then, we have a choice. Either support the "Big Oil" companies that are SEC and IRS regulated, traded on the major stock exchanges, contribute to our economy and national security, and whose employees are our neighbors, or butt into energy myths and stand by idly (gleefully?) while Hugo Chavez ejects "Big Oil" from Venezuela.

Peak Oil Linkfest -07/24/07

Cold sore - Russia's relations with the West

In early 2000, the UK embassy in Moscow took a bit of a gamble. They persuaded Tony Blair to make one of his first major foreign policy initiatives a meeting with the new face in the Kremlin and heir apparent, Prime Minister Vladimir Putin. At the time it was a bit of a shocker – a popular, powerful, top-level, democratically elected leader meeting with an unelected, unknown, KGB spy who was failing to manage a bankrupt country over-run by dodgy oligarchs.


Migrating to New Energy Paradigms Part 2 - The Economic Importance of Crude Oil

Peak Oil is defined as the point at which 50% of the world's oil reserves have been consumed, and 50% remain. We all understand that oil is important to the world economy, but just how important is it?

In October 2004 I attempted to answer this question on behalf of a client as part of that client's long range strategic planning process. The amount of work involved was fairly significant so I have chosen to rely on my findings of that time for the purposes of this article. There are two other reasons:


$100-a-barrel oil may be only a few months away

The $100-a-barrel oil that Goldman Sachs Group said would prevail by 2009 may be only a few months away.

Jeffrey Currie, a London-based commodity analyst at the largest brokerage firm, said that $95 crude was quite likely this year unless OPEC unexpectedly increased production and that declining inventories were raising the chances for $100 oil.


The future is solar; politics is ethanol

This seems like a good place to tout Robert Rapier's excellent recent post: "The future is solar." In it, he makes the very simple point that photosynthesis -- the means by which corn, rapeseed, switchgrass, etc. make energy from sunlight -- is not particularly efficient: "when an acre of rapeseed/canola is planted, we get about 0.06% conversion of the sun's energy into oil."


Falling dollar puts pressure on Opec

The falling US dollar is lowering the Organisation of the Petroleum Exporting Countries’ purchasing power by up to a third, making the powerful oil cartel more reluctant to increase production and cut prices.

Although oil is trading near last August’s record $78.65 a barrel, Opec calculations show that, when adjusted for the weaker dollar and inflation, an average of the 12 Opec members’ crude oil prices has fallen in the past year.


British teach less Churchill, more global warming

Once upon a time, the British curriculum was straightforward. There was math, English, science. You learned about Winston Churchill, how to locate Greece, and how to say "My name is John" in French.

But starting next year British teenagers will face an exotic range of new disciplines designed to equip them with more practical skills. Healthy cooking, personal finances, and global warming are in. Charles Dickens, Jane Austen, and the Battle of the Nile may be nudged out.


Nigeria: Tackling the Niger Delta Crisis

From being prided as the region that lays the golden egg for the nation, the Niger Delta gradually slipped into the abyss of underdevelopment and environmental pollution. Today, it has metamorphosed into a zone characterised by militancy, pipeline vandalisation and hostage-taking for ransom. This region that accounts for only about 7.5% of Nigeria's landmass has become a top priority of the President Umaru Yar'Adua's administration, having been similarly prioritised by the regime of former President Olusegun Obasanjo.


The Future of Thought in the Oil and Gas Industry

When I joined Shell Development in January 1983, I was among a group of 11 Ph.D.s, engineers and physicists hired from the best U.S. universities. I entered a venerable research organization shaped by none other than M. King Hubbert, who led Shell Development for 20 years. Over its history, this organization gave the world Hubbert’s peaks and the notion of resource limitations, W. R. Purcell (capillarity), G. E. Archie (modern petrophysics), M. A. Biot (modern geophysics), J. Handin (rock physics), and many others.

Peak Oil Linkfest - 07/22/07

After peak oil: Will America survive?

As public awareness about peak oil continues to grow, and even the big oil companies like Exxon Mobil Corp. are now starting to admit that the future supply of oil looks troublesome (see this Boston Globe article), there's an increasing focus on renewable energy solutions. But most members of the public still don't understand energy very well, and they generally have no idea whether alternative energy sources like solar, wind or CSP (see below) can replace oil. Many people are concerned about a potential collapse of modern society due to the end of cheap oil. So to help answer some of these questions, I've put together a set of uncensored, science-based answers about oil, renewable energy and the future of modern civilization. This is offered in a Q&A format.


PM to discuss Iran crisis at Bush summit

GORDON BROWN is to discuss the looming crisis over Iran with President George W Bush on his first official visit to America as prime minister. The summit may take place next weekend at Camp David, the presidential retreat, although the dates and location are still being finalised.

It comes as one Washington source said the mood in the Bush administration had hardened in favour of military strikes to prevent Iran developing a bomb. “There are increasing signs that Bush will not want to leave a nuclear-armed Iran as his legacy,” the source said.


BNP plans to seek safety in Croatian idyll

When the fossil fuels run out, leaders of Britain's far right hope to survive on a farm in the Balkans.

A few miles from the historic southern Croatian town of Knin lie 1,100 hectares of farmland and a couple of abandoned buildings. A tributary from the river Krka runs through the lush countryside nestled close to the sun-drenched Adriatic coast.


Lots of energy, shortage of policy

The U.S. National Petroleum Council's new report on global energy markets, believed to be one of the most extensive studies of its kind, received mixed reviews this week from greens and others whose policy ideas depend on an ever-present looming catastrophe. Especially put out by the 470-page report, titled Facing the Hard Truths About Energy, were the peak-oil theorists, who believe disaster is imminent as the world supply of conventional oil is set to peak, triggering a catastrophic decline.


OPEC oil prices hit record high

The daily average oil price of the Organization of Petroleum Exporting Countries (OPEC) hit a new record of 72.83 U.S. dollars per barrel on Monday, up 0.34 dollars from the previous trading day and 0.16 dollars higher than the previous record set last August.

The OPEC's weekly average prices also reached a record high of 71.86 dollars per barrel, 0.14 dollars higher than the previous record set in the second week of August 2006, the cartel's secretariat said on Tuesday.

Credit Bubble Update - 07/18/07

Dollar sinking against other currencies

The dollar is sinking to new lows against the currencies of the major U.S. trading partners — good news for multinational companies and investors in international funds, but not for U.S. tourists and importers.

The Federal Reserve's trade-weighted exchange index has hit its lowest point since the Fed created the index in 1973. The index reflects the dollar's value relative to the currencies of seven major U.S. trading partners.


U.S. tech trade deficit tops $102 billion in 2006; California still first in tech exports

The U.S. technology industry imported more computers, high-tech components and consumer electronics in 2006 than it exported, resulting in a record $102 billion (€74 billion) trade deficit in the sector, according to a new report due out Tuesday.

Total tech imports hit $322 billion (€233.66 billion) in 2006, up 9 percent from the prior year, according to the report from the tech industry's largest trade group, AeA. The U.S. imported more high-tech goods from China than any other nation.


Subprime weakness erodes higher-rated ABX indexes

Investor anxiety over the U.S. housing downturn is spreading to the highest-rated mortgage securities, upsetting the expectations of some that the crisis in the subprime bond market would be contained.

Weakening credit quality in the $575 billion U.S. subprime mortgage market is eroding the value of "AAA" securities, heightening anxiety among investors and raising the cost of insuring that debt against default.


Danger signals on road to global prosperity

The stand-off between Britain and France over the top job at the International Monetary Fund lifts the lid on how these things work. Alistair Darling was done up like a kipper by Nicolas Sarkozy, who united every EU country bar Britain behind the former French finance minister, Dominique Strauss-Kahn.

It goes without saying that Darling had right on his side. The idea that the Fund is a European fiefdom, with the MD chosen not through an open and transparent process but as a result of a deal cut in Brussels is indefensible. But there is a bigger issue at stake.


Foreclosure auctions go silent

100% mortgages leave little profit potential for flippers; more bad news for housing
On a late June afternoon, Laurence Kallen stepped to the podium in the Randolph Street office that serves as his cramped auction house. Mr. Kallen had 11 foreclosed Chicago properties to sell and 10 bidders in attendance. The auction lasted 10 minutes. He didn't get a single bid.

Peak Oil Linkfest - 07/16/07

IEA calls for Opec to increase production

World oil demand growth will accelerate in 2008 to 2.5 per cent from this year’s 1.8 per cent despite high oil prices, the industrialised countries’ energy watchdog said on Friday.

The International Energy Agency’s forecast comes as Brent oil rose to a fresh 11-month high of $77.60 a barrel , about $1 below the all-time high set last August.


World not running out of oil, says report

Proponents of “peak oil”, the theory that global crude oil production is nearing its zenith, are unimpressed with a US oil industry group’s findings that the world has plenty of oil.

This week the US National Petroleum Council, a board of high-level US oil industry executives, releases its study titled, Facing the Hard Truths about Energy, conducted at the behest of US Energy Secretary Sam Bodman.


On the precipice: Energy security and economic stability on the edge

I am a Major in the United States Army. When looking at this report for the first time, one may legitimately ask why an Army officer is writing about energy issues.

The genesis for this project began many months ago when I was conducting research for a project related to the development of the future force in the US Army. I believed it was important to include an effective assessment of what the world might look like in the year the force was projected to complete its initial fielding (2030).


New Oil Reports Add Confusion To 'Peak Oil' Theory

Proponents of "peak oil" -- the theory that global crude oil production has hit its zenith and is headed for a steep decline -- are upset with a U.S. oil industry group's findings that the world has plenty of oil. Next week the U.S. National Petroleum Council -- a board of high-level U.S. oil industry executives -- releases its study titled "Facing the Hard Truths about Energy," conducted at the behest of Energy Secretary Sam Bodman. According to the report's executive summary obtained by Reuters, the world is not running out of oil but there are "accumulating risks" to securing supply through 2030. In a draft letter to Bodman outlining its findings, the National Petroleum Council says, "The world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources relied upon historically."


In West China, saving the go-go juice

I heard about a village two hours from Chongqing City with old city walls surrounding smoke stained wooden beamed homes, cobble stone streets and stone carvings chiseled into cliff faces 400 years ago. Along the way to Lai Tan, I wanted to gaze out of bus windows and simply compare the differences between Chinese and western methods of fossil fuel use and human power, but first I had to get to the bus station.


Energy's Manpower Peak? - Why the biggest problem might not be oil.

For headhunters like Tom Zay, business couldn’t be better. “I have never seen demand like this,” says Zay, a managing director in the Houston office of Boyden, an executive worldwide search firm. “We’ve had cycles in the past. But this is different.”

Indeed it is. While Zay looks for executives and top-level managers, the entire energy industry – from welders, tank builders, and roughnecks to petroleum engineers, nuclear engineers, and technicians – is strapped for talent. And the problems are likely to get substantially worse before they get better. Nor is the labor shortage limited to the U.S. and the hydrocarbon sector. Rather, it is worldwide, and being felt in industries ranging from coal mining to nuclear power. The reasons for the labor crunch are many: an aging workforce, lagging student interest in engineering, a lack of interest in blue-collar jobs like welding, and perhaps most important, the strong commodity prices that have led to a boom in energy projects of all types.


Potential Energy Crunch May Bring Other Fuels to Fore

World oil and gas supplies from conventional sources are unlikely to keep up with rising global demand over the next 25 years, the U.S. petroleum industry says in a draft report of a study commissioned by the government.

In the draft report, oil-industry leaders acknowledge the world will need to develop all the supplemental sources of energy it can -- ranging from biofuels to nuclear power to oil extracted by unconventional means from the oil sands of Canada -- to meet soaring demand. The surge in demand is expected to arise from rapid economic growth in such fast-developing countries as China and India, as well as mounting consumption in the U.S., the world's biggest energy market.


Energy: the new cold war

Since the close of the cold war, we have been growing used to threats such as terrorism where the enemy has no state or territory. But soon we will have to get used to new strategic challenges, such as energy security, where fossil fuels will be used as weapons to achieve political ends. Energy security will be synonymous with national security and economic security.


Oil 'could hit $95 a barrel this year'

The key Middle Eastern members of oil cartel OPEC were tonight coming under pressure for an immediate increase in production after a warning from Goldman Sachs that prices could hit a peak of $95 a barrel by the end of the year.

With a new bout of speculative activity today driving Brent crude to within a few cents of the record $78.65 reached last summer, Goldman said shortages of supply were behind the steady rise in oil prices.


Disaster at the end of the cheap energy era

While warning signs are appearing of associated crises in the rapidly rising Third World populations and the rising prices for diminishing world resources of food and raw materials, the International Energy Authority has belatedly accepted the reality of peak oil and the fearful impact this will have on the future of the world.

The devastating nature of this issue is that humanity has used up half of the world's oil reserves, with the remaining half overwhelmingly lower in quality and in less accessible fields.


Are these the last days of the Oil Age?

Oil ruled the 20th century; the shortage of oil will rule the 21st. There is now no doubt about the rising trend in oil prices. In 2003 a barrel of Brent crude sold for $29; in 2004 it rose to $38; in 2005 it rose to $54.50; in 2006 it rose to $65. Last Friday the price closed at $77.50. Some dealers expect it to test the $80 level quite shortly.


Crude Oil Rises to 11-Month High as North Sea Production Drops

Crude oil rose to an 11-month high in New York and London after a pipeline shutdown and maintenance work reduced North Sea Brent oil production.

Chevron Corp. and ConocoPhillips said they lost output from North Sea fields that produce oil and gas after BP Plc closed the pipeline. BG Group Plc said its Armada oil field in the North Sea has been shut for maintenance since June. The International Energy Agency said in a report today that global oil demand will rise 2.5 percent next year.


A new dawn for nuclear power

Despite its environmentally unfriendly image, nuclear power is firmly back on the world's energy agenda thanks to the need to cut carbon-dioxide emissions. Paul Norman, Andrew Worrall and Kevin Hesketh describe how the next generation of nuclear power stations will be cleaner and more efficient than ever


Peak Oil Passnotes: Peak Oil Zombie Attack

As we have made clear many times in this column we hold little truck with many of the whackos who inhabit the wondrous world of ‘Peak Oil’. Yes, despite the title of the column. No sooner do people start talking about energy supply crunches, plateauing production or acreage inflection then a host of bedraggled crazies rise forth from their graves to tell us a number of scary items.

Firstly, we are often told humanity is going to “die off.” What a great idea. It could almost be a book, or a series of books and a website. Oh wait. It is. Like an energy-related version of the film 28 Days Later. Every lazy person around the planet can argue how many people will be alive in 2050 or 2100 and no one can prove them wrong. Ker-ching!


"Peak oil" advocates blast U.S. industry study

Proponents of "peak oil" -- the theory that global crude oil production has hit its zenith and is headed for a steep decline -- are steamed with a U.S. oil industry group's findings that the world has plenty of oil.

Next week the U.S. National Petroleum Council -- a board of high-level U.S. oil industry executives -- releases its study titled "Facing the Hard Truths about Energy," conducted at the behest of Energy Secretary Sam Bodman.


Net Oil Exports and the "Iron Triangle"

As Matt Simmons pointed out several years ago, the critical problem with post-peak exporting regions is that we would have two exponential functions (declining production and generally increasing consumption) working against net exports. From the point of view of importers, it is quite likely that we are facing a crash in oil supplies. In my opinion, what I have described as the “Iron Triangle” is doing everything possible to keep this message from reaching consumers.


Iran Asks Japan to Pay Yen for Oil, Start Immediately

Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, after Iran's central bank said it is reducing holdings of the U.S. dollar.

Iran wants yen-based transactions ``for any/all of your forthcoming Iranian crude oil liftings,'' according to a letter sent to Japanese refiners that was signed by Ali A. Arshi, general manager of crude oil marketing and exports in Tehran at the National Iranian Oil Co. The request is for all shipments ``effective immediately,'' according to the letter, dated July 10 and obtained by Bloomberg News.

Candidates@Google: Ron Paul

Ron Paul Interviewed at Google on July 13, 2007

Credit Bubble Update - 07/13/07

Banks losing up to $52 bln over subprime
Credit Suisse analysts estimated banks could lose up to $52 billion over time due to their exposure to collateralized debt obligations that invested in U.S. subprime mortgages.

Most of the losses would stem from loans to hedge funds, compared with an expected $5 billion to $10 billion from banks' direct investment in subprime CDOs, the Credit Suisse analysts said in a report dated July 6.


1,300 arrested in Zimbabwe prices crackdown
More than 1,300 shop owners and business managers have been arrested in Zimbabwe as part of a crackdown on firms accused of flouting government-imposed price controls, police said Monday.

Most of the 1,328 bosses had been fined but the number also includes around two dozen company executives arrested since Friday who are due to appear before magistrates, said police spokesman Chief Superintendent Oliver Mandipaka.


Sarkozy's blitz puts paid to pact on policy

French President Nicolas Sarkozy threw down the gauntlet in Brussels last night, vowing to press ahead with his plans for a "fiscal shock" regardless of EU rules on budget policy.

Softening his tone slightly after a blizzard of criticism, he told eurozone finance ministers that his government would "aim" for a balanced budget by 2010, but refused to give real ground.


Bernanke: Anchored expectations mute price swings

Swings in volatile energy and food prices will have minimal impact on inflation as long as expectations of future price gains are held steady, Federal Reserve Chairman Ben Bernanke said on Tuesday.

"If inflation expectations are well anchored, changes in energy (and food) prices should have relatively little influence on 'core' inflation, that is, inflation excluding the prices of food and energy," Bernanke told the National Bureau of Economic Research.


Japan Should Diversify Reserves, Abe Adviser Ito Says

Japan, the largest overseas holder of U.S. Treasuries, should invest $700 billion of its currency reserves in higher-yielding assets such as stocks and corporate bonds, said Takatoshi Ito, an adviser to the prime minister.

The reserves should be managed by a special fund that will gradually diversify into euros, Australian dollars and emerging- market currencies, Ito said in an interview in Tokyo.


Russians Selling Off US Currency

The Central Bank of Russia says the amount of U.S. dollars held by individual citizens of this country is rapidly declining. The bank says Russians are also moving increasing sums abroad. Moscow correspondent Peter Fedynsky follows the money trail and reports that Russians are gaining confidence in their own economy.

New figures released by the Russian Central Bank indicate the amount of U.S. dollars held by private Russian citizens has dropped since 2002 from $35 billion to less than $12 billion as of July 1.

Australian hedge fund warns about withdrawals

An Australian hedge fund manager with $1bn in structured credits and junk-rated loans warned investors yesterday it could restrict withdrawals to ensure its survival as it reported losses of 14 per cent in one fund in June.

Basis Capital, based in Sydney, said in a letter to investors it had been hit by “indiscriminate” repricing of “otherwise fundamentally sound collateral” amid the crisis in US home loans to less creditworthy investors. It said it had deliberately avoided the worst-hit 2006 subprime loans.


Kuwait revalues as dollar weighs on Gulf currencies

Kuwait allowed its dinar to appreciate against the dollar for a second time this year after the US currency’s slide raised pressure on pegged exchange rates throughout the world’s biggest oil exporting region.

The dinar would trade at 0.28690 per dollar from Thursday, an appreciation of 0.4 percent, the central bank said, confirming expectations it would respond to the dollar’s tumble to record lows against the euro this week.


LBO Credit Quality Falls to Lowest in Nine Months

Loans used to finance leveraged buyouts are the riskiest in at least nine months on speculation that losses on subprime mortgage securities will spread to other markets, according to traders of credit-default swaps.

The iTraxx LevX Index of credit-default swaps on loans to 35 European companies fell as much as 1 percent to the lowest since the index started last October, according to Deutsche Bank AG prices. The LCDX index of loans to 100 U.S. companies dropped as much as 0.57 percent to 96, Phoenix Partners Group in New York said.


Dollar Slumps to Record Low Versus Euro as Retail Sales Drop

The dollar dropped to a record low against the euro and slumped versus the yen after a government report showed retail sales fell last month by more than analysts expected.

The data may add to concern that the U.S. economy will slow, lifting speculation the Federal Reserve will cut borrowing costs this year.


Retail sales drop worst in 2 years

Retail sales posted the biggest drop in nearly two years in June, the government reported Friday, fanning worries that consumers were starting to feel the pinch of higher gas prices and the slumping housing market.

"This report is a much weaker report than most analysts expected, and presumably it will come as a shock to people who bought retail stocks yesterday on the basis of [some] 'better' chain store numbers," Ian Shepherdson, chief U.S. economist with High Frequency Economics, wrote in a note Friday.


Foreclosure activity rises dramatically

Foreclosures continued to rise throughout the country, the state and the Bay Area in June, according to a report to be released today. Nationally, 164,644 foreclosure notices were filed in June, up 87 percent from June of last year, said RealtyTrac.com, an online marketplace for foreclosure properties. In the Bay Area, the number of foreclosure notices was 5,018, almost triple the 1,780 in June 2006.


The greatest economic boom ever

Just how red-hot is the current worldwide expansion? "This is far and away the strongest global economy I've seen in my business lifetime," U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune's offices.

That may come as news to many Americans, whose boom-time memories are stuck in the 1990s, when Silicon Valley was the epicenter of our growth fantasies. But the fellow now occupying Paulson's old office at 85 Broad Street in downtown Manhattan shares that upbeat view. Just returned from a ribbon-cutting ceremony in the Middle East, Goldman Sachs (Charts, Fortune 500) CEO Lloyd Blankfein waves out toward the East River as he explains how the rise of the "BRICs" has altered his strategy and his travel schedule. (BRIC is an acronym Goldman coined in 2001 reflecting the rising economic power of Brazil, Russia, India, and China.)


U.S. trade deficit widens

The U.S. trade deficit widened to $60 billion in May as oil prices jumped and the volume of foreign oil coming into the country rose, the government said Thursday. But the overall trend still appears to be improving, economists said.

The Census Bureau said that the trade imbalance - the gap between what is imported and exported - grew 2.3 percent from April in seasonally adjusted terms. For the first five months of the year, however, the deficit grew at a slower pace than it did last year. From January through May, the deficit was $295.5 billion, compared with $317.8 billion in the first five months of 2006.


Moody's May Cut $5 Billion of Subprime-Backed CDOs

Moody's Investors Service may cut $5 billion of collateralized debt obligations after lowering the ratings of subprime mortgage bonds that make up the securities.

A downgrade would affect 184 pieces of 91 CDOs, representing about 3.6 percent of rated CDOs containing asset-backed securities, Moody's said in a statement today. Moody's yesterday sliced ratings on $5.2 billion of subprime bonds that back CDOs, which are also sliced into pieces to allow investors to choose how much risk they bear for the returns they receive.


D.R. Horton home sales plunge; expects loss

Home builder D.R. Horton said Tuesday declining home values would lead to its first quarterly loss since it listed on the New York Stock Exchange in 1995, sending its shares to a three-year low.

Hurt by the deteriorating U.S. housing market, the No. 1 U.S. home builder said net sales orders in its fiscal third quarter, ended June 30, fell 40 percent to 8,559 homes. The dollar value of the orders dropped 47 percent to $2.0 billion.


Zimbabwe: Inflation - the Endless Battle of the Zeros

WHEN Princess Nyathi retired to her rural home after a 20-year flirtation with a furniture shop, she was confident monthly payments in pension would be enough to buy the basic commodities.

But five years down the line, Nyathi is bitter after watching her monthly pension eroded heavily by inflation. "Six hundred dollars five years ago would buy you groceries, now with the $12 900 payment, you can only buy half a loaf of bread," she said.


Jeff Saut Presents: Subprime Sublime?

"Liquidity is a coward, when you need her most she runs away and hides.” That old market axiom has clearly stood the test of time. Most recently, the “liquidity cowardess” ran and hid from the subprime complex, causing the ABX-HE.BBB-Subprime Index to lose nearly 50% of its value. Concurrent with that price decline has been a sentiment slide, as reflected in The New York Times, whose reference to the subprime woes has seen a downward verbiage skein that has the glide path of a stone. To wit, “Largely contained,” “mostly contained,” “reasonably well-contained,” “severe but contained.” “Contained?” ... Well, maybe on a macro basis, but try telling that to investors in certain subprime-focused investment funds that have seen their principal erode and in some cases evaporate. Indeed, just a few weeks ago the Bear Stearns (BSC) “bombshell” brought the issue home to roost with the implosion of a couple of highly-leveraged subprime hedge funds. "

Peak oil Linkfest - 07/13/07

President: Iran not to halt uranium enrichment work

Iran's President Mahmoud Ahmadinejad says the West should not expect his country to suspend uranium enrichment. He made the comment as a delegation from the UN nuclear watchdog arrives in Tehran.


Reader Mail: Peak Oil, Global Economy Shifts Away From US Towards Asia

Some questions about Peak Oil from a reader. And by the way, while we don’t always have space to publish your questions and comments in the e-mail edition of the Daily Reckoning, there is plenty of room in the comments section under any post on the website. You can respond directly to other readers, too. Here’s a question:


Play peak oil before you live it

On April 30, 2007, an oil crisis shook the world. Supply chains were interrupted, and in the ensuing weeks the price of gas pushed higher and higher, peaking around $7 per gallon. The American economy sputtered to a halt as shortages spread -- Detroit's car factories cited lack of demand and shut down for the duration, trucking fleets scrambled for fuel to move their cargo, supermarkets jacked up their prices, and commuters bitched and moaned and grudgingly changed their lifestyles. Looting broke out, along with the occasional riot.


IEA boss denies and confirms peak oil in same breath

It seems that the International Energy Agency, the intergovernmental energy watchdog, has been going in overdrive lately. First, we had the interview of its chief economist warning us that we were going toward a wall without Iraqi oil, then the recent publication of their yearly outlook report predicting shortages within 5 years, and now we have another disquieting interview in Le Monde, the big French daily, with Claude Mandil, the head of the Agency, who pulls no punches, despite an apparent denial of "peak oil". Follow me below the fold for a translation.


OPEC says no plans for increased production; crude prices continue upward

Light, sweet crude for August delivery was up 99 cents a barrel to trade at $73.55 midday on the Nymex. London Brent crude made its way above $76 a barrel before settling at $75.44 a barrel – up $1.36.


Why does Kuwait keep its oil reserves secret?

Kuwait's Acting Oil Minister Mohammad Al-Olaim has reaffirmed the oil reserves at 100 billion barrels under the pressure from the members of parliament.

Some lawmakers had threatened not to pass this year's budget, which is with a projected deficit of around 10.3 billion U.S. dollars, if the oil sector didn't tell them the truth about the country's oil reserves.


Global Warming May Spawn Floods of Beaches and Cities

Global warming may spawn more flooding at northeastern U.S. beaches and cities and disrupt the ski industry unless heat-trapping emissions are curbed, scientists said in a report.


'Swindle' director hits back at critics

THE director of a controversial documentary about global warming airing on ABC television tonight says he's been vilified for challenging popular theory.

Briton Martin Durkin directed The Great Global Warming Swindle, which seeks to debunk the idea that climate change is being caused by human activity.


The Peak Oil Crisis: A Tale of Two Reports

In the last few days, two important reports on the prospects for world oil production were “released.” While these reports reach diametrically opposite conclusions, each of them, in its own way, is likely to make a contribution to the debate over just when the economic troubles occasioned by the peaking of world oil production will occur.


Platts Survey: OPEC Oil Output Up Slightly in June, Well Above Target

The 10 members of the Organization of Petroleum Exporting Countries (OPEC) bound by the group's crude oil output agreements boosted production by 40,000 barrels per day (b/d) to 26.6 million b/d in June, from a revised May level of 26.56 million b/d, a Platts survey showed July 11. This is well above the 25.8 million b/d production target set in February by the so-called OPEC-10.


Net Oil Exports and the "Iron Triangle"

As Matt Simmons pointed out several years ago, the critical problem with post-peak exporting regions is that we would have two exponential functions (declining production and generally increasing consumption) working against net exports. From the point of view of importers, it is quite likely that we are facing a crash in oil supplies. In my opinion, what I have described as the “Iron Triangle” is doing everything possible to keep this message from reaching consumers.


U.K. Parliament Members Form `Peak Oil' Study Group

The U.K. parliament formed a group to study peak oil, the theory that world oil production is approaching its zenith, as British lawmakers face up to the country's future as an energy importer.

The All-Party Parliamentary Group on Peak Oil and Gas, which held its first meeting June 26, comprises 32 members of the House of Commons, or lower chamber, and seven from the House of Lords, or upper chamber.


Ethanol Boondoggle: Your Taxes at Work

In recent years, the price of gasoline has soared as the supply of crude oil has risen in response to unprecedented global demand. But never fear, Uncle Sam is here! Citing the need to decrease our country’s dependence on foreign and potentially unreliable sources of energy, Congress, encouraged by President Bush, has passed laws mandating that ever-greater quantities of corn-based ethanol (CBE) be produced, and subsidizing this production with tens of billions of dollars. Could it be that our leaders are finally demonstrating bipartisan unity for the good of the country? Well, “unity,” yes, “good,” no.


The Coming Conflict in the Arctic

Russian President Vladimir Putin and U.S. President George W. Bush spent most of their time at the “lobster summit” at Kennebunkport, Maine, discussing how to prevent the growing tensions between their two countries from getting out of hand.

The media and international affairs experts have been portraying missile defense in Europe and the final status of Kosovo as the two most contentious issues between Russia and the United States, with mutual recriminations over “democracy standards” providing the background for the much anticipated onset of a new Cold War. But while this may well be true for today, the stage has been quietly set for a much more serious confrontation in the non-too-distant future between Russia and the United States – along with Canada, Norway and Denmark.


Climate Expert Questions Gore's Global Warming Campaign

This past weekend concerts took place around the world to focus attention on the problem of global warming, which former U.S. Vice President Al Gore says is the greatest single threat facing humankind today. Most of the world's scientists agree that it is a problem and that it is largely caused by human use of fossil fuels, which produce so-called greenhouse gases that trap the Earth's heat. Al Gore and scientists who wrote the United Nations report on climate change say the debate is over and the time has come to act. But some prominent climate scientists are objecting to that, claiming that the debate has yet to even begin. VOA's Greg Flakus recently spoke to one of them and filed this report from Fort Collins, Colorado.


The biofuel myths

The term "biofuels" suggests renewable abundance: clean, green, sustainable assurance about technology and progress. This pure image allows industry, politicians, the World Bank, the United Nations and even the International Panel on Climate Change to present fuels made from corn, sugarcane, soy and other crops as the next step in a smooth transition from peak oil to a yet-to-be-defined renewable fuel economy.


Kuwait and IEA Show Declining Oil Production Future

Crude oil prices could reach levels of US$100 per barrel or more if some of the latest production factors in the news become reality.

Not only has the Paris-based International Energy Agency (IEA), the energy watchdog of the Organisation for Economic Co-operation and Development (OECD) countries, warned in its latest medium-term oil market report that a market crunch is looming over around 2012, but some OPEC producers are breaking even more negative news. After a short analysis hype in the beginning of 2006, analysts have been forgetting to cover OPEC countries currently battling reserve issues.


Peak Oil Now?

Demand for oil is continuing to grow, and threatens to burn up excess oil capacity by 2012, according to a new report released today by the International Energy Agency.

Excess capacity in OPEC is forecast to drop by 2 million gallons per day by 2009, and to virtually zero out by 2012. It won’t take until 2012 — or 2009 for that matter — for the cost of that tight supply to ripple through the economy straight down to the American homeowner and car driver.

Peak Oil Linkfest - 07/08/07

Around the Markets: Biofuel demand gives lift to commodities

Sugar, corn, wheat and cotton may be among the best commodity investments in the next one to three years, driven by biofuel demand and rising incomes in China and India, according to UBS, the world's largest money manager.

"Investors can expect to see a 6 to 10 percent plus return per year on those investments," Stuart Fox, UBS's head of commodities in Asia Pacific, said by phone from Hong Kong. His energy and commodities traders and sales team in Asia has more than tripled to 16 people in the past 12 months.


Green facade: Why the state's eco-friendly cars aren't doing the job

During the past two years, Gov. Arnold Schwarzenegger's administration sunk more than $17 million into a state fleet of cars and trucks designed to be environmentally friendly.

So far, the 1,138 "flex-fuel" vehicles have traveled a collective 10 million miles and burned more than 413,202 gallons of gas.


Real Alternative Energy Sources

If Congress is going to subsidize energy to free us from dependence on foreign oil, it should — at the very least — spend our hard-earned taxpayer dollars on something that will work.

The unfortunate truth is that neither ethanol nor any other so-called renewable alternative energy now being discussed on Capitol Hill is likely to make any significant contribution to our energy needs.


Marchetti's Curves

This is a brief account of the Energy Susbstitution Model developed by Cesare Marchetti in the 1970s at IIASA. Using data from the latest BP Statistical Review the evolution of the energy market is compared with the model to understand why the Hubbert Peak of fossils fuels represents a problem today.


World 'building up risks over energy supplies'

The world is not running out of crude oil and natural gas but there are 'accumulating risks' to securing global supplies through 2030, a high-level board of US oil company executives found in a report.Those risks include "political hurdles, infrastructure requirements and availability of trained workforce," according to the study by the US National Petroleum Council, conducted at the behest of US Energy Secretary Sam Bodman.

The NPC, whose members include executives of big oil companies like ExxonMobil and Chevron, will present the study at its July 18 meeting.


Oil hits 10-month high near $75 on Nigeria, demand

Oil surged over 2 percent to nearly $75 a barrel on Thursday on strong demand and as fresh violence in Nigeria spurred supply concerns.

London crude rebounded after slipping from earlier highs on U.S. government data that showed crude supplies rising and refiners ramping up gasoline output to meet summer holiday driving demand.


Is Fear About Climate Change Causing a Nuclear Renaissance?

Some prominent environmentalists are urging that we reconsider nuclear power. But they have been met with resistance from many who believe nuclear power never will be a solution to global warming.

Sitting in the belly of the beast -- Dominion's 2,000-megawatt Millstone nuclear power plant in Waterford, Connecticut -- the company's chief nuclear officer, Dave Christian, seems an unlikely environmentalist. But he says concern about climate change is what got him involved in the peaceful pursuit of the atom in the first place.


IAEA: Iran Slowing Expansion of Nuclear Enrichment Capabilities

The head of the International Atomic Energy Agency says Iran has slowed the expansion of its nuclear enrichment capabilities.

In Vienna Monday, Mohamed ElBaradei said IAEA inspectors have seen a slowing in the installation of centrifuges that enrich uranium at Iran's Natanz nuclear facility.


Opec has little power to ease oil price – Algeria

Algeria’s Energy and Mines Minister Chakib Khelil said yesterday there was “not much” Opec could do to bring down high oil prices as global crude stocks were already sufficient.

“There is plenty of stocks. It’s a problem with capacity and refining,” Khelil said ahead of a gas pipeline conference in Brussels. “Even if it (Opec) increases production, it’s just going to increase stocks and not have any effect because prices are drawn by petroleum product prices.”


World facing oil ‘supply crunch’ as demand soars, agency warns

The world faces an energy squeeze as soaring demand for fuel exceeds the rate of growth in the supply of crude oil, the West’s leading energy forecaster has predicted.

In a gloomy appraisal of the global oil balance, the International Energy Agency yesterday predicted a world of increasing market tightness beyond 2010. The world faces a “supply crunch” by 2012, according to the agency’s Medium-Term Oil Market Report, with weak increases in oil output from nonOpec countries colliding with strong demand and diminished spare capacity within the cartel of oil producers.


Exploding a fair few wordy myths

AFTER recent comments from Defence Minister Brendan Nelson, debate is raging over whether America and Australia went to war in Iraq because of oil.

This is absurd. Nobody was more surprised to discover that Iraq had oil than the Allies. Goodness, with all that fuel around, it was just as well that those weapons of mass destruction were only prevented from exploding by the fact that they didn't exist. Otherwise, the whole country could have gone up in flames. Oh, wait a minute … Anyway, here are some ideas that should probably be blown up.


Iran's oil output to fall without investment - report

Iran's oil production capacity will fall by five percent a year without new investment, a senior oil official was quoted on Sunday as saying by the Iran's student news agency ISNA.

Iranian officials have previously put production capacity at a little more than 4 million barrels per day (bpd), with actual output -- limited to a quota set by the oil cartel OPEC -- running at a little below 4 million bpd.


Corn ethanol could be a dead end

As the nation fights to lower its dependence on foreign oil and Colorado works toward a new energy economy, the buzz word in energy circles is “ethanol,” and using it to power cars, trucks and electricity has become a hot topic.

But as the conversation continues, ethanol experts and politicians are beginning to agree that corn-based ethanol may not be the magic energy solution many have come to see it as.


Can I diet my way to a lighter eco footprint?

Lose weight and save the planet. It has all the hallmarks of a zeitgeist diet book and perhaps a TV series in which I will travel around putting punters on scales, measuring out their porridge for the day, and perhaps changing their light bulbs. But there is some validity to the idea that you can simultaneously shrink your waistline and your carbon footprint.

An extra 100lb of weight carried in your car, for example, reduces fuel economy by around 2 per cent. Even Richard Branson recently signed up to losing a stone before he takes an inaugural flight on one of the superlight carbon-fibre Boeing jets he has bought in order to save an extra 36lb of CO2. Given that his fleet allegedly produces 7.4m tonnes of CO2 a year, that's not a hugely rewarding diet


Will the coming oil crisis be the end of suburbia?

Three years ago, when I started to teach Introduction to Sociology for Lamar Community College, my brother sent me the DVD, “The End of Suburbia: Oil Depletion and the Collapse of the American Dream,” concerning the “coming oil crisis."

I showed it to my class to help the students better understand “social change” and what would happen to society during such a crisis. They hadn’t even heard that we were going to face such a crisis. It’s no surprise, most Americans hadn’t heard of it either; that was three years ago.


Peak Oil Passnotes: $80 Oil Beckons

The price of a barrel Brent crude is working its way back up to its records of $78.64 set last August 7. A steady and sure combination of factors has pushed it over $75 per barrel.

But when it pushes up against levels of $78 per barrel, which way is it going to go then?


Academic challenges global warming theory

An Australian academic has spoken out against the popular view that global warming is caused by greenhouse gas emissions. He believes that global warming and climate change are caused by cycles in the sun's electro-magnetic radiation. He says scientists are taking a narrow view and politicians are making policy with the wrong information.

Emeritus Professor Lance Endersbee AO is a former Dean of Engineering and Pro-Vice Chancellor of Monash University. He told Tom Harwood, ABC Western Queensland's Morning Program producer that the world has been warming naturally due to increased magnetic radiation from the sun.


Ethanol, Corn, Milk, Prices Increase

It appears that oil and gasoline aren't the only things that are going up in price these days. Milk, everyones favorite beverage, has gone up in price once again.From $3.80 to almost $5.00 a gallon. But milk however, isn't the only thing that will be on the rise. Other dairy products such as butter, cheese, yogurt, and ice cream will too.


Sugar, Grains, Cotton May Be Best Commodity Buys, UBS Forecasts

Sugar, corn, wheat and cotton may be among the best commodity investments in the next one to three years driven by biofuel demand and rising incomes in China and India, according to UBS AG, the world's largest money manager.

``Investors can expect to see a 6 to 10 percent plus return per year on those investments,'' Stuart Fox, UBS's head of commodities in Asia Pacific, said by phone from Hong Kong. His energy and commodities traders and sales team in Asia has more than tripled to 16 people in the past 12 months.


North Sea is running too dry to meet target

The energy industry warned yesterday that government targets of keeping Britain's oil and gas production at 3m barrels a day by 2010 look like being missed. North Sea competitiveness is falling and financial backers are losing confidence in the wake of tax increases introduced 18 months ago.

Civil servants have been working with oil companies to find ways to boost output offshore, but the 2007 Economic Report issued by the industry organisation Oil & Gas UK says the goal looks like being missed after five years of rising hopes.

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Credit Bubble Update - 07/08/07

A Mortgage-Securities Hedge Fund Suspends Payouts

In another sign that troubles in the mortgage market are spreading, a prominent hedge fund that specializes in bonds backed by home loans has suspended redemption requests by investors.

The Horizon ABS Fund managed by John Devaney, a well-known trader of asset-backed securities who is based in Florida, said yesterday that it made the decision to block withdrawals after one investor who accounted for about a quarter of its $650 million in assets sought to leave the fund.


Italease blow-up stokes derivatives fears

A derivative blow-up at the Italian bank Italease has sent tremors through Milan's banking fraternity and exposed the hidden dangers of exotic credit instruments.

The bank has paid off 610 million euros (£419m) in recent days to counter-parties in what amounts to a massive margin call after interest rate rises in Europe caused hedging and derivative losses by clients to mushroom out of control.


Newmont Eliminates Gold Hedges, Creating the World's Largest Unhedged Gold Company, and Announces Strategic Initiatives

Newmont Mining Corporation today announced the elimination of its entire 1.85 million ounce gold hedge position, establishing the Company as the world's largest unhedged gold producer. Newmont also announced plans to monetize components of its royalty and equity portfolio in the next twelve months, resulting in the discontinuation of the Company's Merchant Banking Segment as a separate business unit.


Berlin defends its 'crown jewels'

Germany is drawing up detailed plans to stop strategic assets falling into the hands of "giant locust funds" controlled by Russia, China and Middle East governments.

Finance minister Peer Steinbrück said "telecoms, banks, post, logistics and energy" were among the sectors that would be shielded from sovereign wealth funds, the new state trusts that are fast swamping global asset markets.


Canadian dollar hits high vs. greenback

The Canadian dollar climbed to a 30-year high against the U.S. currency Friday, bolstered by higher oil prices, a strong economy and a looming interest rate hike.

Canada's currency advanced as high as 95.53 U.S. cents Friday, pushing past the 95 U.S. cents mark for the first time since May 1977. It has risen 10.8 percent so far this year.


As 'China effect' reverses, inflation threatens

When the Prime Minister appears on television vowing to "get to grips with inflation", you know that a serious problem is taking shape.

Gordon Brown had the good fortune to be Chancellor over a golden decade as the industrial revolutions of China, India and emerging Asia supplied us ever cheaper manufactures.

In this miracle world, we have had 5pc global growth for five years - the best since the Second World War - without overheating.


Money falls from sky

A German motorist surprised by euro notes swirling in the air around her car hit the brakes and collected a "substantial amount of money" before turning it over to police, authorities in Worms said on Thursday.

A police spokesman in the small western town said the 24-year-old woman saw the money flying through the air in her rear view mirror late on Wednesday. She pulled over and tried to collect all the notes, unsuccessfully.


Subprime risks come home to roost for hedge funds

Bad bets revealed by some hedge funds in recent weeks may mean other funds will be forced to accept the market's deteriorating views on subprime mortgages and report their own losses soon.

Some managers have resisted accepting market views on their assets, claiming declines represent short-term market volatility and not underlying financial value in their subprime bonds, analysts said. Since the bonds trade infrequently, managers' have turned to pricing models that may ignore market sentiment, buoying prices.


Spain selling gold to cover up worsening trade deficit

In an interesting commentary entitled “The Gold of Spain’s Central Bank,” Gerardo del Caz debates the reasoning behind Spain’s massive gold sales, selling off 30% of its reserves (80 tonnes) in just two months. In March of 2004, Spain held eleventh place in the world’s ranking with 523 tonnes, but today has little more than 300 tonnes.


Subprime poor practice risks turning to malpractice

Regulators tread a fine line between the Keystone Cops – galumphing hopelessly after escaping criminals – and Captain Renault in Casablanca. The Financial Services Authority has put paid to the first criticism by warning intermediaries and subprime mortgage lenders before poor practice turns to malpractice. But given the subprime scandal unfolding in the US, the regulator can’t really be “shocked, shocked” to have uncovered market weaknesses.


LBO Loans May Follow Subprime Collapse, Moulton Says

Loans to fund leveraged buyouts may dry up just like subprime mortgages in the U.S., according to Jon Moulton, the British venture capitalist who tried and failed to buy the carmaker MG Rover.

``It's near the top. There are some difficulties beginning to emerge in the debt markets,'' Moulton, who runs the private equity firm Alchemy Partners, told a meeting of the U.K. Parliament's Treasury committee today. ``At some stage no one will be willing to underwrite fresh debt.''

Peak Oil Linkfest - 07/04/07

Bill Boyne: Oil reserves are drying up rapidly

A worldwide oil shortage is due in four years -- not 40 years.

That is the prediction of the Oil Depletion Analysis Centre in London, an organization of scientists and oil industry experts. It was reported by The Independent newspaper in England.


Canadian Spot Natural Gas Declines on Weather, U.S. Holiday

Natural gas at Canada's largest trading point fell as moderate weather is forecast for the country's largest cities and a U.S. holiday lessens demand.

The weather in Toronto is predicted to stay within a normal range until at least July 6, according to a forecast from the government's Environment Canada. Temperatures in Montreal, the country's second-biggest city after Toronto, may reach 24 degrees Celsius (75 degrees Fahrenheit) tomorrow, about 7.7 percent below its range.


Lake in Chile disappears; climate change blamed

Scientists on Tuesday blamed global warming for the disappearance of a glacial lake in remote southern Chile that faded away in just two months, leaving just a crater behind.
The disappearance of the lake in Bernardo O'Higgins National Park was discovered in late May by park rangers, who were stunned to find a 130-foot deep crater where a large lake had been.


Why the U.S.' Oil Dependence is Bad for the U.S. Economy

Energy policy -- or more specifically U.S. oil dependence -- comes and goes in media focus. Its prominence usually increases in direct proportion to the current price of oil or gas. In addition, there has been a growing movement called the "peak oil" movement, which argues world supplies are actually at or near their highest and will continually decline from here on out. While I can't comment on the veracity of peak oil's claims, I can state without a doubt that the U.S.' national energy policy -- and specifically our oil dependence -- is economically disadvantageous.


Iran's First Nuclear Power Plant to Go Online Soon

Russian news agencies are reporting that Iran will put its first nuclear power plant online shortly after the Russian-built facility is completed in September.

The news agencies Itar-Tass and Interfax quoted Iranian officials Tuesday as saying that the nuclear facility in Bushehr will be completed in two months.


Özyürek: World will see a uranium crisis

If the CHP forms the government, Özyürek will definitely become the energy and natural resources minister. Özyürek does not like nuclear energy. He argues that Turkey should abandon its nuclear energy plans. Instead, renewable energy resources should be given priority. He cautions the world about a uranium crisis similar to the infamous oil crisis. Therefore, existing and future nuclear power stations will become idle, he says. Özyürek notes that Turkey’s plans to become an energy corridor are about to be disrupted by Russia. Özyürek elaborated on his ideas about energy policies in an interview with Today’s Zaman.


Revenues from North Sea shrink as costs soar

Britain is earning less from the North Sea as soaring costs, a weak gas price and dwindling output erode company margins and crimp government tax receipts from oil industry profits.

UK Oil & Gas (UKOG), which represents Britain’s offshore oil industry, predicts that revenues will fall well short of Treasury forecasts. The lobby group said that weaker profit margins and higher taxes would drive investment overseas and cause a more rapid fall-off in UK oil and gas production.


'Peak oil' is coming soon say BP critics

Last month, the oil company BP, reported that there were sufficient oil reserves to meet current demands for another 40 years. It said there was no need to be concerned about global scarcity, despite cutting its estimates for proven reserves for the first time in 16 years. These claims have since been hotly disputed.


Crisis, what energy crisis?

The energy gap left by declining fossil Solar fuels may be filled by alternative sources of energy. In short, the Earth has ample supplies of energy to sustain human population and economic growth. Discuss....


Mexico President Calderon: Oil Exports Will Fall Further

Mexican President Felipe Calderon said Friday he expected the country's crude oil exports to slip further this year and next, continuing a decline seen in 2006.
"Starting in 2006, the volume of our oil exports has been falling at an alarming rate and from what we have observed up until now, this year and the next will be no exception," Calderon told a banking event.


North Sea output continues to drop despite record investment

The decline in oil and gas production in the UK North Sea continued in April, despite record investment in 2006, in what economists at Royal Bank of Scotland said was another sign that the province is maturing rapidly.

The latest oil and gas index from Royal Bank shows that combined average daily oil and gas production for the UK Continental Shelf stood at 2,823,141 barrels of oil equivalent per day (boe/d) in April. This was about 2.3% lower than in March, ending a run of six consecutive monthly increases. The underlying rate of production continued on a firmly downward trend, falling 7.8% compared with April last year.


The Rising and Falling Power of Hydrocarbon States

The global economy runs on oil. Unequal distribution of oil throughout the world bestows power on the few states with ample supplies. Venezuela is one example of a nation that uses oil as leverage in foreign affairs: Besides consolidating his popular base at home, President Hugo Chavez has helped debt-ridden countries in that region, openly mocks the US and signed an arms-procurement deal with Russia. Chavez also fosters ties with China, just in case the US decides to stop importing Venezuelan oil. Steady demand allows oil-rich nations to act without regard to the international opinion. The US cannot complain. The one-time leading producer of oil used its own supplies to manipulate foreign policy throughout the 1900s. But as the US has learned, the supply of oil is limited; nations and companies can conserve and seek alternatives. Author Dilip Hiro warns that the power derived from oil is only temporary. – YaleGlobal


A Nuclear Phoenix?

Sitting in the belly of the beast—Dominion’s 2,000-megawatt Millstone nuclear power plant in Waterford, Connecticut—the company’s chief nuclear officer, Dave Christian, seems an unlikely environmentalist. But he says concern about climate change is what got him involved in the peaceful pursuit of the atom in the first place.

“I started studying climate science in the 1970s after reading a book [published in 1974] entitled Technology, Society and Man by Richard C. Dorf,” Christian says. “It was a very thoughtful study of the feedback mechanisms that go into global warming.”


Business View: Why not pay them not to pump their oil?

Here's an idea. There are billions of barrels of oil left in the ground, much of it belonging to the world's poorer countries. And money from rich countries is pouring into carbon-offsetting projects, many of them of questionable science. So why not just pay countries to keep their oil in the ground and avoid the emissions in the first place?


Biofuels: The Five Myths of the Agro-fuels Transition

Biofuels. The term invokes a life-giving image of renewability and abundance—a clean, green, sustainable assurance in technology and the power of progress. This image allows industry, politicians, the World Bank, the United Nations, and even the Intergovernmental Panel on Climate Change to present fuels made from corn, sugarcane, soy and other crops as the next step in a smooth transition from peak oil to a yet-to-be-defined renewable fuel economy. Drawing its power from a cluster of simple cornucopian myths, “biofuels” directs our attention away from the powerful economic interests that benefit from this transition. It avoids discussion of the growing North-South food and energy imbalance. More fundamentally, it obscures the political-economic relationships between land, people, resources and food. By showing us only one side, “biofuels” fails to help us understand the profound consequences of the industrial transformation of our food and fuel systems—The Agro-fuels Transition.

Credit Bubble Hysteria - 07/02/07

S&P, Moody's Mask $200 Billion of Subprime Bond Risk

Standard & Poor's, Moody's Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans.

The highest default rates on home loans in a decade have reduced prices of some bonds backed by mortgages to people with poor or limited credit by more than 50 cents on the dollar and forced New York-based Bear Stearns Cos. to offer $3.2 billion to bail out a money-losing hedge fund. Almost 65 percent of the bonds in indexes that track subprime mortgage debt don't meet the ratings criteria in place when they were sold, according to data compiled by Bloomberg.


Pound hits 26-year high against dollar

The pound today hit a new 26-year high against the dollar, lifted by expectations that the Bank of England will hike interest rates on Thursday, to 5.75 per cent.

Sterling hit $2.0160 in afternoon deals. The dollar was also weaker against the euro, falling to within half a cent of a record low against the shared currency.


Who's behind the global credit bubble?

The storm warnings are coming thick and fast.

The Telegraph business section this morning has a distinctly bearish tone - even by The Telegraph’s standards.

We’re certainly not ones to criticise - it’s refreshing to see the concerns we’ve been raising for a considerable length of time now getting a serious airing in the mainstream press.


India May Trade Gap Widens to $6.2 Billion on Imports

India's trade deficit widened in May from a year earlier as imports of machinery and other goods surged in an economy that's growing at the fastest pace in almost 20 years.

The trade deficit was $6.22 billion in May compared with $4.26 billion a year earlier, the Ministry of Commerce and Industry said in a statement in New Delhi today. Imports grew 26.4 percent, outpacing an 18.1 percent rise in exports. The trade deficit reached a record $7.1 billion in April.


Wall Street played role in creating subprime troubles

Some on Wall Street want to blame the little guy for the latest hedge-fund mess. People with shoddy credit histories couldn't pay their mortgages so that pushed some funds to the brink of collapse and sent shock waves through financial markets.

Talk about a cop-out — that shifts blame away from the Wall Street firms and banks that had a hand in creating the subprime-mortgage mess but aren't taking responsibility for it.


When will the credit bubble burst?

To understand why there’s a credit bubble, how it’s inflating the price of stocks and what it will mean for you when it bursts, let’s consider the acquisition of Avaya.

The large telecommunications equipment maker recently announced it is being acquired by two private-equity firms, Texas Pacific Group and Silver Lake Partners.


Subprime problems hit WaMu

The Chicago job market continues to be haunted by problems in the nation's subprime mortgage industry, even as federal regulators fashion guidelines they hope will improve conditions in the sector.

Washington Mutual Inc. has disclosed that it is closing a subprime mortgage office at One Pierce Place in Itasca, leaving more than 100 employees out of work, according to a filing this week with the Illinois Department of Commerce and Economic Opportunity.


Liquidity Nightmare... Drowning In Cash

In 2005, Stephen King, managing director of economics at HSBC and also a columnist for the Independent.uk news site stated that there was a crisis of faith among central bankers. Two years later, we can see why this confession should have read as: central bankers must stick to their pseudo-religious tones to proliferate public delusions of invincibility.


Zimbabwe: IMF Says Govt Inflation Figures Understated

THE International Monetary Fund (IMF) this week painted a bleak picture of Zimbabwe's economic crisis predicting that annual inflation will hit the five-digits mark by year-end.

The Bretton Woods institution in written responses to the Zimbabwe Independent on Wednesday said the country was now experiencing hyperinflation as its month-on-month rate had shot above 50%.


Inflation risks still skewed to the upside

US. Core inflation fell more quickly than anticipated so far thanks to lower owners’ equivalent rents and the markdowns for apparel. In the short term, it could even still slide into the Fed’s comfort zone. But the tight labor market, recordhigh energy prices as well as strongly rising import prices will lead to higher trend inflation again over the medium term (pages 4-6).


Move away from U.S. dollar reserves still all talk

Central bank holdings of U.S. dollars continue to mount, despite talk of diversification into other currencies, but questions remain about the sustainability of the rise in dollar reserves.

On Friday, the International Monetary Fund said global central banks' hit a new record in reserves held in U.S. dollars at $2.24 trillion in the first quarter, a 4.0 percent increase from the final quarter of 2006.


Rolling in gold but still poverty-stricken

IN 1865, Jamsetji Nusserwanji Tata - a one-time opium trader and scion of a sparkling line of Parsee priests, Zoroastrians who had fled to western India from persecution in Iran - attended a lecture in Manchester given by Thomas Carlyle.

Carlyle, a cantankerous Scot, was known for his historical and philosophical essays, but he also put his mind to the budding field of political economy.


Report: China raises minimum wages

China's government has ordered minimum wages raised to help the poor cope with soaring food costs, a state news agency reported Friday.

Chinese leaders have been alarmed by a spike in inflation that saw the price of eggs rise 37.1 percent in May from their price in the same month last year. Meat and poultry were 26.5 percent more expensive in May compared to a year ago.

Energy Briefs - from ASPO's Peak Oil Review

• James Mulva, CEO of Conoco-Phillips, said last week that he questioned whether the supply will be developed to meet the US Energy Information Administration’s demand expectations. He believes demand is going to be constrained by supply.

• U.S. House Speaker Pelosi Thursday outlined her "Energy Independence" package - crafted from nearly a dozen committee bills - that she says represents a consensus among lawmakers.
• The estimated costs of boosting Iraq's oil output to six million barrels per day has soared to as high as $75 billion. Constant sabotage attacks on the country's pipelines have left crude oil production stuck at around two million bpd since the 2003 invasion. A bomb exploded Friday under an oil pipeline south of Baghdad, spilling crude oil and sparking a huge fire.

• Asian business and government leaders accused rich countries of hypocrisy and "green imperialism," saying they run polluting industries with cheap labor in China and then blame the country for worsening global warming and climate change.

• Nigeria’s four refineries, with the combined capacity to process 445,000 b/d, are operating at less than 15 percent of normal. Most of the fuel being consumed today is being imported. Nigeria’s shut-in crude oil output topped one million barrels per day in May as violence cut production to its lowest level since early 2003.

• The Movement for the Emancipation of Niger Delta has threatened to resume hostilities in the Niger Delta should the Federal Government fail to give in to their demands on or before July 3. The group, among other things, had called on government to allow the region to control its resources.

• Japan's crude oil imports fell 11.0% in May from a year earlier, the Ministry of Economy, Trade and Industry said Friday. It was the 13th consecutive month of declines.

• Chevron said it would delay its $3.5 billion Tahiti project in the Gulf of Mexico because of metallurgical problems in the mooring shackles of its drilling rig. The project was to begin operations in mid-2008.

• Mexican President Felipe Calderon said on Friday he expected the country's crude oil exports to slip further this year and next. Mexico's oil exports slipped 1.3 percent in 2006 and have slid a further 4.4 percent from the 2006 average in the first five months of 2007.

• Production at Cantarell, the world's third-largest oil field, declined 17 percent in the first five months of 2007 from the same period a year ago, driving down Mexico's overall crude production to 3.15 million barrels. In May, production dropped to 3.11 million barrels per day, the lowest this year.

• Petro-Canada, the third-largest oil company in Canada, and its partners will spend C$26.2 billion ($24.6 billion) to build a new oil-sands project in northern Alberta,. The Fort Hills

project is to produce 280,000 barrels a day of synthetic crude by 2014, with output starting in the second quarter of 2012.

• The president of the OPEC said Tuesday that swelling oil inventories in the US meant there is no need for the group to meet ahead of its Sept. 11 policy talks to discuss injecting additional supplies into the market.

• The cost of hiring supertankers to transport Middle East crude oil on the busiest shipping route to Asia, which fell every day last week, may continue to decline as demand for July cargoes fails to cut an oversupply of vessels.

• Western Canada's crude exports to the US are expected to rise by about 94% between now and 2015, according to a study published by the Canadian Association of Petroleum Producers.

• The total stock of cars globally is expected to rise from 700 million in 2005 to 1.2 billion by 2030, OPEC said, with a considerable amount of this forecast rise seen coming from developing countries.

• Nearly half of US car owners are willing to buy a more fuel efficient car should gas prices increase $1, but a strong majority rule out using alternative transportation to offset rising gas prices and are more likely to cut discretionary spending, according to a survey by Discover Financial Services.

• India will receive natural gas from Iran via a multi-billion-dollar pipeline through Pakistan which is to be completed in four years.

• China National Petroleum Corp. secured rights to explore oil sands in Canada's Alberta province, a breakthrough by the largest Chinese oil company in Canada, said a statement Friday on the Chinese Ministry of Commerce website.

• An All Party Parliamentary Group on Peak Oil and Gas has been formed in the British parliament, ensuring that the issue of declining global oil supplies will be much more prominent during the Gordon Brown era.

• There has been a double-digit increase in the proportion of Americans who say environmental problems are a major global threat - from 23 percent to 37 percent, according to a comprehensive survey published this week by the Pew Centre in Washington. In most Western European countries, large majorities view global warming as a serious problem, ranging from 57 per cent in Italy to 70 per cent in Spain.