Houston Chronicle: BP chief says another oil spike is possible

Oil executives and political leaders told a major petroleum conference Monday that the era of cheap energy is over and warned of another price spike if investment in oil production is curtailed.

“Prices are falling, but they’re falling for the wrong reasons: because of reduced demand and a consequence of reduced economic activity, not because we have increased supply or increased energy efficiency,” BP Chief Executive Tony Hayward said at the Abu Dhabi International Petroleum Exhibition and Conference.

( Click the subject line for the story )

Mandelbrot & Taleb Interview on PBS

Mandelbrot & Nassim Taleb on the credit crunch. Watch it here

Taleb is the author of "Black Swan: The Impact of the Highly Improbable"

Tractors for Stockbrokers, Maseratis for Farmers

Says Jim Rogers...

Answers From Schlumberger's Top Brass (SLB)

During the conference call held to discuss the quarter, Chairman and CEO Andrew Gould initial statements included:

• The deterioration in the credit markets will have an effect on its customers, but this will largely impact North America only.
• Management does not know the extent to which current events will hurt 2009 drilling activity.
• Management is still looking for a slowing in the rate of growth in customer spending - not a decline.
• Even if activity is curtailed, due to the "age of the production profile and the decrease in reserve replacement ratios", any significant slowdown in exploration and production investment will cause a sharp drop in production, which will lead to a recovery.

Gould and the other executives were then questioned, some may say "interrogated", by analysts as to the extent and duration of any downturn.

( Click subject line for the entire article )

Motley Fool: Why Oil Prices Will Rise Again

Back in July, around the time the oil price peaked, common consensus went
along the lines of ...
The world is running out of oil.
World demand for oil is high and only going to get higher still in the years and decades ahead.
Most of the world's cheap oil has already been discovered.
Oil exploration companies increasingly have to drill for oil in more and more
difficult places. This adds to the cost of exploration and in the event of a
discovery, the cost of extraction. Either the price of oil stays high and goes
even higher, so that it makes these new discoveries economical for the oil
companies, or the oil stays in the ground. Given the increasing demand and the
world's complete reliance on the naturally depleting natural resource called
oil, it has to come out of the ground.
Oil was seen as a natural hedge for the falling U.S. dollar.

Click the subject line for the link to the Motley Fool article

OPEC Calls Emergency Meeting

IHT: OPEC calls emergency meeting as oil prices fall

Oil prices dropped below $70 a barrel for the first time in 14 months Thursday, prompting the OPEC cartel to call for an emergency meeting next week to establish some stability in prices that have plummeted recently after rising for months.

Oil prices have tumbled by nearly $40 a barrel in just three weeks as indications grow that demand for energy will slow along with weakening economies around the world. As recently as July, oil was trading at a record of $145 a barrel.

The decline in oil prices could provide a form of stimulus to the global economy as consumers pay less to fill up their tanks. If oil prices stay at current levels, American consumers would have $250 billion more, over a year, to save or spend elsewhere, according to Lawrence Goldstein, an energy economist. Some analysts expect oil prices to keep declining, perhaps to as low as $50 a barrel in coming months.

All worries about oil going to $25 is misplaced. While it is true that the price of oil has collapsed more than 50%, it is still higher than where it was just 14 months ago. Just for comparison try the Dow or S&P at multiyear lows.

Oil price still don't reflect a global depression. While a serious global slowdown is on the cards, it will come nowhere close to a depression. Money printing is rampant, the deleveraging will pass and inflation will be sticky.

Many alternative energy startups will go bust, oil sands and deep sea drilling would become unprofitable. Which means there will be severe limitation on future supplies at lower prices, which is price supportive.

At some point all those Asian countries with dollar reserves are likely to use it to stimulate their economies and that is dollar negative. Once the warp speed deleveraging is close to over, the dollar rally will be over as well.

Poll: Whither Price Of Oil?

Collateral Damage

Chesapeak CEO Sold All Stock to Meet Margin Calls

Chesapeake Energy Corp. said its chief executive officer, Aubrey McClendon, involuntarily sold ``substantially all'' of his common shares of the company's stock over the past three days to meet margin loan calls.

``These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis,'' McClendon said in today's statement. ``In no way do these sales reflect my view of the company's financial position or my view of Chesapeake's future performance potential.''

McClendon, 49, owned 33.5 million shares, or 5.8 percent of the company's common stock, according to a Sept. 30 filing with the U.S. Securities and Exchange Commission. He was the company's third-largest shareholder.

Chesapeake, this year's worst-performing petroleum producer in the Standard & Poor's 500, fell 6.7 percent in New York trading today amid concern hedging contracts won't protect the company against a plunge in natural-gas prices. McClendon's divestiture was announced after the close of regular trading on U.S. stock markets.

``You have to imagine Aubrey's lost a large portion of his fortune,'' Benjamin Dell, an analyst at Sanford C. Bernstein & Co., said today in a telephone interview. He rates the stock at ``market perform'' and owns none.

The Oil Drum has a good thread on this

Admission of Guilt! A Reply to Mish

Mish over at the Global Economic Analysis asks the following in the comments section:

“Can I ask a question?

With oil at $84 ....
Where is Oil Shock?

Mish
Like this comment?
link to the post

Oil Shock was indeed wrong. Yes, I called the bottom at $90 for oil. It was indeed the bottom until Oil declined one more time. Yes, so far it about 7% below that price. I still have called a perfect bottom in gold. Dollar index is about 2% higher than my prediction top.

Australian Dollar cliff dived yesterday, partly due to the unwinding of the carry trade. Just two months ago, the Ozzie was at near parity with the USD, but today you could buy 1 Ozzie for 64 cents U.S. Do you think Australian economy is fundamentally a lot weaker than the U.S economy? Do you think what happened to Iceland and Australia are impossible to happen here?

Much of the strength in dollar index is due to the weakness of Euro, it is not an indication of Dollar strength. Euro is a doomed currency. I heard somebody put it as the Deutsche Mark + some parasites, and that is very true.

Was my bottom and top calls based on any specific formula? No. It was just rhetoric meant to say that inflation is still in play. Did I strongly believe in my prediction? Yes I did. Did I know that for 100% sure that Oil will bottom at $90.00, and Gold at $750? No I did not.

As for all those deflationary derivatives worth 500 trillion floating around, it is all hogwash. Derivatives can go to zero and 80-90% of them do, even in a bull market. Have you read stats on options? Most of them go to zero? If one were to really believe that those derivatives are part of the money supply, what do you think the price of a refrigerator full of groceries would be?

Is there an unwillingness to lend right now? Yes. But all the debt will be monetized away, and some more will be accumulated by the local, state, and federal governments and monetized.

Stop kidding yourself. Oil at $84 is a lot higher than were it was, when Mish started denying that inflation was non-existent, go back, he has a lot of charts and graphs starting from 2005 to prove his point.

Mish has been consistently wrong for many years with his predictions, and yet he needs a great deal of credit for predicting the crisis very accurately as it unfolded. There were a lot of guys predicting shallow recessions, muddle throughs etc. But Mish could see a lot further than those others; he predicted a deeper recession. He was just a little early. Mish is still wrong about deflation.

Real wealth is ability to produce real goods, and that is one area that American economy lacks clearly. Yes, America has a lot of productive capacity, but no where close the purported size of the economy. So, what really is backing our dollar? yes,a lot of productive capacity, and a lot more of hot air.

Middle East Oil Consumption and Exports

CIBC world markets chief economist Jeff Rubin discusses with Erin Burnett and Larry Kudlow of CNBC.

Cool It

If you have exposed yourself to jet set/carbon trader/gazillionaire Al Gore's global warming propaganda (I have), you owe it yourself to know the other side of the debate( debate is hardly over ). I found this book very interesting - "Cool It: The Skeptical Environmentalist's Guide to Global Warming ".

Or you could watch "The Great Global Warming Swindle". It is free on video.google.com

Or you could read this short article - "I was on the global warming gravy train".

After having observed the environmentists for a while, I have come to the conclusion that environmentalism is a religion, a very intolerant one. According to the environmentalists, if you refuse to dogmatically follow the Gaia any other intolerant enviro-doctrine, you will fry along with the rest of the planet. In that respect, environmentalists are very similar to evangelicals - they both peddle salvation.

Radical environmentalists believe that the earth's human carrying capacity is about 400 million. They hope and pray for a massive human die-off that will reduce the population by 90% ( Oil Shock is not making this up ). Their view of the human race is akin to that of a virus/disease that should be stopped.

In other news from the energy universe, protests in europe turn violent

(Images courtesy of Mish's global economic analysis )

Carbon control treaties were meant to raise the price of fuel and reduce consumption. Now that the treaty getting closer to achieving its stated goals, the carbonistas don't like the outcome.

It is even silly to believe that a bunch of Soviet style central planners could just press a few buttons, pull a few levers and there by command and control the global climate.

Am I suggesting that the environmentalists the only reason for the pain at the pump? Not at all. But the NIMBY/BANANA groupies are adding to the troubles.

Matt Simmons on Bloomberg

Simmons discusses Saudi Arabia, Gas prices, Oil prices, Peak Oil etc.

Oil Shock is here!

"Inflation is always and everywhere a monetary phenomenon" - Milton Friedman.

It is not the price of things that is going up, it is the value of money going down. See the chart. (Money supply in green and Gasoline price in Red). Price of gasoline futures are up a good 14 cents, just today.

I believe there is enough evidence to suggest that peak oil is here. But the mainstream public or the financial markets have not bought it completely. There has not been any serious declines in global oil production. Given that scenario, peak oil alone could not possibly explain the current prices.

Oil is bubbling according to the "experts", at the moment. It would seem as though it will climb until it breaks the back of the U.S economy. Prices are likely to be higher 2-3 years from now, regardless of whether it goes down in the near term. Peak Oil come to mind. An attack on Iran and all bets are off.

Bernanke's "strategy" of bailing out crooks through inflation, is clearly not working. Benny is not as fortunate as his predecessor - when greenspan expanded money supply, the price of stocks, bonds and housing (later on) went up. Now, real tangible things have a lot of catching up to do.

Peak Oil Debate Will Rage ( Telegraph UK )

The debate over the cartel's capacity rages as American legislators look to make it pump more black gold, writes Elizabeth Eldridge

It takes a staggering 20 million barrels a day to feed America's addiction to oil. Two thirds goes on keeping America on the move. And, with fuel costs at record levels, the nation's car drivers, airline travellers, haulage firms and train companies are feeling the squeeze.

Boone Pickens on Price oil, alternatives and Speculation

Here is the video link

Robert Hirch on CNBC

Hofmeister vs Simmons

Shell CEO Hofmeister on Peak Oil & Simmons


Matt Simmons Responds -

Peak Oil: What could it mean for Vancouver?

Warren Buffet on Peak Oil and resource depletion

Riding the oil age.

Bird & Fortune on Iraq & Oil

Hilarious - Enjoy.

Global oil production peaked last year - Boone Pickens

Oil continues to rise

Oil price - Outlook

Peak Oil Linkfest - 09/29/07

New York Times: Rising Food Prices Lead to Less US Food Aid

A U.S. newspaper says rising food prices have helped cut U.S. food aid to its lowest level in a decade, and have possibly resulted in more hungry people around the world.

The New York Times cites data from the U.S. Department of Agriculture showing the United States has bought less than half the food aid this year than it bought in 2000.


Lifestyle changes prepare locals for energy changes

Michael Brownlee wants to help you change your life.

The head of Boulder Valley Relocalization has a radically different view of the future, one in which the daily gridlock on U.S. 36 would be a thing of the oil-guzzling past, where farms would dot large swathes of Boulder County open space, Kentucky bluegrass would give way to food crops in suburban yards and businesses would plant rooftop gardens. Solar panels and other renewable energy would supply a large portion of the community's energy. Local businesses would meet many more of the citizenry's daily needs, and customers could even choose to use a local currency.


Peak Oil Passnotes: Neo-Peak Oil

If we think of peak oil as a subject in itself, rather than a subset of general discourse about oil and energy, then we can see it has been around for something approaching 100 years. After World War One there was sustained and popular debate about the prospect of the U.S.’s valuable resource running out. After all there was no more to be found and it was going to be too expensive anyway.

This debate has been repeated a few times since then, most notably in the 1970s, but it has never been stronger than it is now. Nor has it attracted such a wide range of people willing to discuss it.


Al Gore's climate change film 'is propaganda'

Al Gore's climate change documentary, , contains "serious scientific inaccuracies, political propaganda and sentimental mush", the High Court in London has heard.

The attack came as Stewart Dimmock, 45, a father of two, challenged the Government's decision to provide every secondary school in England with a copy of the former American vice-president's film as part of an environmental campaign.


Technological Advances to Quench Thirst for Oil

Oil markets are in turmoil, admits Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi in an interview in New York. With Saudi Arabia currently accounting for almost one-fifth of global crude exports and analysts expecting it to meet a quarter of the world's increasing crude thirst in the near future, the global dependence on Saudi Arabia is set to go up. As the only producer with significant excess capacity, the Kingdom has played a crucial role in alleviating temporary supply disruptions and crises. The Kingdom upped its daily production by 3.1 million barrels during the first Gulf War, for example, when oil production in Iraq and Kuwait dropped by 5.3 million barrels. It was crucial in balancing the global markets then. With geopolitics occupying center stage, the Saudi role would stay crucial to the global well-being.


Global Warming: The Great Equaliser

As the latest summit to discuss a post-Kyoto treaty continues in New York this week, the single most revealing statement has already been spoken: “We need to climate-proof economic growth”. These few words, told to reporters by the UN’s top climate official, Yvo de Boer, during the recent Vienna round of talks, define the blinded establishment approach to tackling climate change.[1] Only if continued trade liberalisation and corporate profits are kept sacrosanct, remains the assumption, is it possible to consider even a broad agreement on future cuts in greenhouse-gas emissions.

Split in group delays vote on sanctions against Iran

The United States, Britain and France chose unity over speed and agreed on Friday to delay until November a United Nations Security Council vote on a third sanctions resolution against Iran.

The delay, a concession to Russia, China and Germany — the other three countries in the fragile coalition of six world powers that are seeking to rein in Tehran's nuclear ambitions — came after a week of haggling on the outskirts of the General Assembly. The six countries issued a statement advising Iran that a diplomatic offer of economic incentives remained on the table if Iran suspended its uranium enrichment program.


Ethanol, schmethanol

SOMETIMES you do things simply because you know how to. People have known how to make ethanol since the dawn of civilisation, if not before. Take some sugary liquid. Add yeast. Wait. They have also known for a thousand years how to get that ethanol out of the formerly sugary liquid and into a more or less pure form. You heat it up, catch the vapour that emanates, and cool that vapour down until it liquefies.


Modeling Oil Production to Estimate URR - Saudi Arabia, Kuwait and World

This is a guest post by Apparent Peak. He started his career as an aeronautical engineer and is currently retired. Now he has more time to study peak oil and write posts for TOD. He has selected "Apparent Peak" for his handle which will become obvious once you have read the post.

1) Background

I have followed the subject of peak oil since the seminal article by Campbell and Laherrère appeared in the March 1998 edition of Scientific American. Approximately one year ago, I began to casually follow some of the discussion threads at TOD. The posts, the ensuing discussions and in particular, discussions on HL, logistic functions and Khebab's The Loglet Analysis caught my interest. I decided to investigate these topics since I did not know what HL was, let alone logistic functions. A quick trip to Wikipedia explained the Logistic function. As it turns out, it is a fancy exponential function that has characteristics similar to the Gaussian distribution.


Alan Greenspan vs. Naomi Klein: who has rights to Iraq's oil?

US Federal Reserve chief Alan Greenspan famously spills the beans in his new memoir, The Age of Turbulence: "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil." (London Times, Sept. 16) On her blog Sept. 25, Arianna Huffington lauds leftist icon Naomi Klein for calling out Greenspan on this point in a Sept. 24 interview with him on Democracy Now: "Are you aware that, according to the Hague Regulations and the Geneva Conventions, it is illegal for one country to invade another over its natural resources?" (Contrast Ann Coulter's "Why not go to war just for oil? We need oil! What do Hollywood celebrities imagine fuels their private jets? How do they think their cocaine is delivered to them?")

Oil Reaches Record High, Closes above $80

Peak Oil Linkfest - 07/28/07

Oil Rises on Signs U.S. Gasoline Supplies Dropped a Fourth Week

Crude oil in New York rose to the highest close since Aug. 15 on speculation that U.S. gasoline supplies declined for a fourth week.

Gasoline supplies fell 2.3 million barrels in the week ended Aug. 24, according to the median of responses by 10 analysts surveyed by Bloomberg News. The crude-oil market often follows gasoline during the summer. Prices were down earlier on speculation that subprime-mortgage losses in the U.S. will spread through the economy, reducing growth and demand for fuels.


The Gasoline Crisis in Iran

In late June 2007, the Iranian government launched a comprehensive gasoline rationing policy, necessitated, in part, by the growing demand for gasoline in Iran's domestic market that could not be met by its oil production infrastructure.

Although Iran is among the world's major exporters of crude oil, it has limited processing and refining facilities, and thus must import most of its refined oil for domestic use. There has been no significant investment in developing its oil refining facilities since the Shah's era, and Iran depends entirely on imported gasoline.


Tomgram: Dilip Hiro, America on the Downward Slope

Pick up the paper any day and you'll find tiny straws in the wind (or headlines inside the fold) reflecting the seeping away of American power. The President of the planet's "sole superpower" and his top diplomats and commanders have been denouncing Iran for months as the evil hand behind American disaster in Iraq as well as Afghanistan.


Energy Report is Handgrenade in Bubblewrap

The working draft of the National Petroleum Council’s forecast of global oil and gas trends runs to nearly 500 pages. Weighing as much as the chunk of foam that brought down the Space Shuttle Columbia, this curious document reads like a hand grenade encased in Bubble Wrap. Since its release, the report (and a more digestible 40-page executive summary) has received 750,000 hits. (www.npc.org.).

Facing the Hard Truths About Energy is perplexing, even schizophrenic. In maddening fashion, it blends numerous cautions about the “accumulating risks” to global oil and gas production with repeated, rosy reassurances that we “aren’t running out,” as if anyone said we were.


The last straw? Alongside debt, rising food prices threaten industrial growth

Just when the world economy seemed to have found immunity to rising world fuel prices, the rising world grain price may be the shock that finally ends its long upturn, as costlier food baskets eat into household budgets.

A surge in world oil prices - to over $70 per barrel this month, almost double the level of two years ago – has not caused a return to the production downturns and price rises (‘stagflation’) that followed previous petroleum shocks in 1973 and 1979. The global economy continues to grow strongly, with emerging markets expanding fast and a pick-up in the EU offsetting signs of slowdown in the US. Relocation of industrial production, and a widening range of services, to low-cost countries is suppressing northern hemisphere inflation rates. Among the biggest of the emerging markets, Russia’s boom is being fed by oil, China’s is still largely powered by coal, Brazil is rapidly substituting its fossil energy needs from biofuel, and India’s rising exports and capital inflows have stopped its growth being checked by rising oil demand.


Meat prices set to soar as production costs mount: analyst

The price of meat may soon increase as production costs mount and demand outstrips supply, a British analyst said Tuesday.

Richard Crane, a London-based analyst with the consulting firm Deloitte, said beef, pork and poultry producers are struggling with rising feed costs. Grain prices reached an unprecedented peak of $7.44 U.S. a bushel on the Chicago Board of Trade market last week after climbing steadily for months.


How Weak Dollar Affects OPEC

When oil price spikes have occurred in the past, the Organization of the Petroleum Exporting Countries has quickly increased supply, taking advantage of the high U.S. dollar selling price, but also thereby eventually driving down the oil price, making Americans and everyone else who uses oil happy.

But now, even with oil prices nearing a record high, opec is not stepping up production. Why?


OPEC has set unofficial target price of 70 usd per barrel for oil - IEA

OPEC has set an unofficial target oil price of around 70 usd per barrel, which could weigh on growth, said Claude Mandil, director general of the International Energy Agency, in an interview with the Arab Oil & Gas monthly.

'The market has become aware' that OPEC 'has set an implicit new objective of keeping prices at or around 70 usd per barrel and that the organisation is trying to defend this level,' said Mandil.


July oil output drops at Mexico's Cantarell field

Crude oil output dropped in July at Mexico's aging Cantarell offshore field, according to data published on the energy ministry's Web site on Monday. Cantarell, closely watched by the oil industry after sharp dips in output in recent months, produced an average of 1.526 million barrels per day versus 1.570 million bpd in June.

The figure meant Cantarell accounted for just 48.2 per cent of Mexico's overall crude oil output last month, continuing a steady decline over the past year at the field, which once produced around 60 per cent of the country's oil.


The end of oil is not a possibility but a certainty

Regardless of how long you've been alive, whether you're 16 or 60, it's never been a problem to get gasoline. The ability to fill our gas tanks has often felt as guaranteed to Americans as free speech and free press. However, the privilege of gas may become a thing of the past quicker than we may think.

There is one fact often overlooked when dealing with the issue of oil and that is this: We cannot make a finite resource infinite.


How Corn Ethanol Could Pollute the Bay

Despite rising food prices, it seems that nearly everyone is turning to corn-based ethanol as their choice for alternative fuel. Hidden behind these headlines, though, is an equally important but less visible cost: water pollution.

Corn is a "leaky" crop, losing more nitrogen per acre than most other crops. In the Washington region, much of this excess nitrogen ends up polluting the Chesapeake Bay and robbing fish, crabs and oysters of oxygen.

Energy Briefs : From Peak Oil Review

• The Yemeni government's share of the country’s oil output declined by 42% in the first half of this year. Total oil production fell to 20 million barrels in the six months to June 30 from 34.5 million barrels in the year-earlier period
• Lebanon is on the verge of a blackout within three to four days due to the lack of fuel in most of the power stations. Rationing of electricity consumption began in Beirut and areas in the north and south regions of the country, with suspension periods reaching over 14 hours a day,
• The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.
• Cultists killed 20 people in Rivers state, Nigeria leading to imposition of a curfew. Since January, 2006, armed gangs have abducted more than 200 local and foreign oil workers in the Niger Delta. Total SA fired a geologist earlier this month after he refused a job in Nigeria.
• Saudi Arabia's domestic oil consumption last year grew by 6.2 per cent to 2 million b/d up from 1.89 million b/d in 2005. Analysts attributed the growth to the surge in economic development, especially the decision to set up economic cities, industrial estates and IT parks in different parts of the Kingdom.
• Chevron's largest U.S. refinery continued production at reduced levels while teams assessed damage caused by a fire last week. There are already reports that crude shipments to the refinery have been diverted elsewhere.
• Refinery maintenance in Europe next month is expected to shut in about 630,000 barrels of oil a day, double the amount of production that was idle in August. Globally, the number of refineries undergoing scheduled maintenance is expected to increase in September, with around 1.85 million barrels a day off line.
• Kazakhstan's environment ministry has ordered a halt to all work at the giant Kashagan oil field in the Caspian Sea, which is being developed by an Eni-led consortium, over violations of the country's environmental laws. ENI’s CEO said "friendly negotiations" with the Kazakh government over the Kashagan oil field will begin today.
• OPEC's newest member Angola is likely to stay free of the group's output constraints so long as oil prices remain strong, giving the country scope to start up several new oilfields in coming months. Under the most optimistic estimates, Angola could reach 3 million bpd by the end of 2010.
• Japan is forming a program that will allow countries in East Asia to share oil reserves in the event of a disaster. The Ministry of Economy, Trade and Industry believes that an emergency-oil-sharing program in East Asia, where demand for oil continues to soar, will help stabilize oil prices and the region's economies when shortages hit.
• Venezuela exported to the US an average of 1.31 million b/d of crude oil and byproducts in June, a drop of 202,