Crude futures rally as oil, product supplies fall

Cold weather, steady global equity markets provide support

MYRA P. SAEFONG | MARKETWATCH

March 7, 2007

 

SAN FRANCISCO (MarketWatch) -- Crude-oil futures climbed Wednesday to touch a high of $62 a barrel after U.S. data showed that supplies of crude declined for the first time in three weeks and distillate and gasoline inventories have been falling for several weeks.

 

"Import dynamics caused surprises in inventory changes," said Jason Schenker, an economist at Wachovia Corp.

 

"Lower crude and gasoline imports engendered a surprise draw in crude inventories and a larger-than-expected gasoline draw," he said an in e-mailed note to clients. And "the distillate inventory draw was mitigated by increased imports."

 

http://www.marketwatch.com/news/story/crude-futures-rallies-62-us/story.aspx?guid=%7b2C489C38-BBCF-4526-BACB-23723EE7263F%7d&print=true&dist=printBottom

http://www.abcmoney.co.uk/news/07200735233.htm

 

Associated Press

Exxon Mobil Plans 20 New Projects

By JOHN PORRETTO 03.07.07, 11:17 AM ET

 

 

 

Exxon Mobil Corp., the world's largest publicly traded oil company, said Wednesday it plans to begin more than 20 new global projects in the next three years, investments expected to add 1 million oil-equivalent barrels a day to its volumes.

 

The Irving, Texas-based company said its project inventory at the end of 2006 has the potential to develop 24 billion oil-equivalent barrels.

 

Chairman and CEO Rex Tillerson said Exxon Mobil (nyse: XOM - news - people )'s capital spending would be about $20 billion a year through at least 2011. The company's capital spending tab in 2006 was nearly $20 billion, up $2.2 billion from 2005, the company said when it reported full-year results last month.

Comments to the National Petreoleum Council

. By Richard Heinberg

(Note: Commentaries do not necessarily represent ASPO-USA's positions; they are personal statements and observations by informed commentators.)

 

On October 5, 2005, U.S. Energy Secretary Samuel Bodman requested that the National Petroleum Council conduct a study of global oil and natural gas supply. The motivating concern stated by the Secretary was an investigation into the timing of and responses to peak oil—the plateauing and subsequent decline of world oil production.

 

Hundreds of organizations and individuals have contributed input to the process. During two multi-hour web-cast teleconference calls on February 23 and March 1, the NPC heard comments from Colin Campbell, Jean Laherrere, Robert L. Hirsch, Steve Andrews, Congressman Roscoe Bartlett, Matt Simmons, Randy Udall, Roger Bentley, Richard Heinberg, and several others. A draft of the study is due during April, with the final report due by late June, 2007. For further information, check periodic postings of informational powerpoint slides on the NPC’s website (www.npc.org).

 

The statement by Heinberg to the NPC is included below.

 

Article found at :

http://www.energybulletin.net/newswire.php?id=27103

 

 

 

 

 

Let's see what this report does to the price of oil....

 

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20070313%5cACQDJON200703130515DOWJONESDJONLINE000115.htm&

 

International Energy Agency Warns On Sharp Oil Stocks Falls

 

DUBAI -(Dow Jones)- The International Energy Agency warned Tuesday that global oil and fuel inventories were being sucked lower at an unusually high pace this year, leading it to fret about demand being met in the coming months and amplifying the need for more crude from the Organization of Petroleum Exporting Countries.

 

The agency's widely-anticipated monthly assessment of the global oil balance said that stockpiles of crudes and fuels held by the Organization for Economic Cooperation and Development group of industrialized nations were falling at a pace of 1.26 million barrels a day so far this year and could spell the largest stock draw in a January-to-March period in more than 10 years.

 

The IEA, which represents the energy security interests of the OECD, also red- flagged an unusual draw down in crude stocks.

 

http://www.greencarcongress.com/GCC-logo.png

 

Auto Industry Leaders Tell Congress They Would Support Mobile Source CO2 Caps in Principle

16 March 2007

 

In testimony before the House Subcommittee on Energy and Air Quality this week, the heads of the United Autoworkers, GM, Toyota North America, Ford, and the Chrysler Group all agreed, in response to a question from the committee, that they would support national caps on mobile source CO2 emissions, depending on the details of the program and especially assuming that it factored in the entire sector—i.e., fuel providers as well as automakers.

 

The hearing was exploring the feasibility of using a new version of the Corporate Average Fuel Economy (CAFE) program—specifically the 4% per year increase proposed by the Administration. Although the enthusiasm for such a boost in existing CAFE-style regulations ranged from non-existent to barely tepid, the witnesses agreed to work with the committee on developing regulations targeted at reducing greenhouse gas emissions.

 

More of this article, including specific testimony by auto-industry reps, appears at:

 

http://www.greencarcongress.com/2007/03/auto_industry_l.html#more

Worth reading, printing, copying and sharing with others....

 

http://www.simmonsco-intl.com/files/Coloardo%20College%20March%205%20to%207.pdf

 

Also note the section on page 7 about Ohio being one of the four worst energy parasites (energy-deficit states) in the USA. California, Florida and New York are the other three.

 

In other words, when the shit hits the fan, Ohio's suffering will be among the worst -- unless we change our policies to promote more sustainable transportation and land use practices.

Here's another report worth looking over. But it's awfully long. Portland's Peak Oil Task Force has issued the following document...

 

http://www.portlandonline.com/shared/cfm/image.cfm?id=145732.

Anyone else see a sickening irony in this??

___________________

 

http://news.yahoo.com/s/ap/20070324/ap_on_sc/arctic_bonanza;_ylt=AmnKGQGT.D0DJAhsFi1s_w8PLBIF

 

Riches await as Earth's icy north melts

 

By DOUG MELLGREN, Associated Press Writer

Sat Mar 24, 6:34 PM ET

 

HAMMERFEST, Norway - Barren and uninhabited, Hans Island is very hard to find on a map. Yet these days the Frisbee-shaped rock in the Arctic is much in demand — so much so that Canada and Denmark have both staked their claim to it with flags and warships.

 

The reason: an international race for oil, fish, diamonds and shipping routes, accelerated by the impact of global warming on Earth's frozen north.

 

The latest report by the U.N. Intergovernmental Panel on Climate Change says the ice cap is warming faster than the rest of the planet and ice is receding, partly due to greenhouse gases. It's a catastrophic scenario for the Arctic ecosystem, for polar bears and other wildlife, and for Inuit populations whose ancient cultures depend on frozen waters.

Allow me to suggest several alternative locations on where to post that article...

 

http://www.urbanohio.com/forum2/index.php?topic=5574.0

http://www.urbanohio.com/forum2/index.php?topic=11382.0

 

And probably the most appropriate place for your message, Pope...

 

http://www.urbanohio.com/forum2/index.php?topic=5109.0

thanks, kjp!

Check out the 7 minute CNBC video interview with Mattew Simmons: 

 

http://www.energybulletin.net/28016.html

 

Simmons says that oil shortages this summer are a real possibility.  He also says:  "The best new oil basin we will ever find is the one called 'conservation.'" 

 

 

Can anyone say more rail transportation, urban transit, and land use reform NOW? 

 

Yes I can! :-D  I sez it all da time.

http://www.cleveland.com/business/plaindealer/index.ssf?/base/business/117533050799020.xml&coll=2

 

Corn turns into gold for farmers

More acres being planted this year to meet ethanol demand

Saturday, March 31, 2007

John Funk

Plain Dealer Reporter

 

Corn soon will be coming out of the nation's ears if U.S. farmers have their way -- enough of the golden kernels to make motor fuel and livestock feed. At least for a year.

 

The U.S. Department of Agriculture reported Friday that more than 90.4 million acres of farmland are scheduled for corn planting this spring -- up 15 percent over 2006 and the highest since 1944.

 

John Wallbrown, owner of Deerfield Farms in Portage County, is among those aiming to grow more maize.

Interesting about this whole ethanol thing is that the current boom is more the result of the phasing out of MTBE as an additive to "oxygenate" gasoline than anything.  And as we know, it's already driving up food prices in places like Mexico and it's driving up the price of livestock feed here in the US. There's no way our country could ever grow enough corn to replace gasoline. 

Interesting about this whole ethanol thing is that the current boom is more the result of the phasing out of MTBE as an additive to "oxygenate" gasoline than anything.  ...There's no way our country could ever grow enough corn to replace gasoline. 

Nailed it, Gildone! :thumbsup: I think that we are close to the limits of what ethanol production from corn can be.  Some of those ethanol distilleries burn coal; that is no climate protection solution.

^I didn't realize that some distilleries burned coal.  We're in a pickle with both energy and climate change if we don't act properly and act fast. Time is running out.

^ I'm pretty sure that the majority of them burn natural gas.  Don't worry though, the US may be running out of natural gas, but now we're liquifying it in the middle east and shipping it over on tankers for offloading in our ports. Seems like another prudent policy move.

^ I'm pretty sure that the majority of them burn natural gas.  Don't worry though, the US may be running out of natural gas, but now we're liquifying it in the middle east and shipping it over on tankers for offloading in our ports. Seems like another prudent policy move.

I am really struggling to imagine what Ohio homes will be heated with in a half a century.  Even a state of the art well insulated home is going to need "some" heat.  We cannot replace most of the housing stock, although clustered housing is the obvious solution in a climate like Ohio's with a significant number of degree days.

But maybe less and less heating-degree days in the future!

 

  ^---- Maybe homes will be heated the same way they are today: with natural gas, heating oil, electricity, solar, and some wood. The key could be that there will be FEWER homes to heat.  :-o

 

    Ohio's population is projected to peak in 2018, according to the U.S. Census.

Better than ethanol

Biobutanol, the plant based fuel similar to ethanol, promises more power and less transport headaches. But can it be done cheaply enough?

By Steve Hargreaves, CNNMoney.com staff writer

April 2 2007: 3:31 PM EDT

 

NEW YORK (CNNMoney.com) -- All of a sudden, everybody hates ethanol.

 

Among the criticisms: Ethanol takes more energy to produce than it yields ... it can't be easily shipped ... it's driving up the price of food ... it's perverse to put food in fuel tanks while people starve.

 

Now a partnership between two corporate heavy weights - BP and DuPont - aims to commercialize Biobutanol, a fuel similar to ethanol but with a few important advantages. The question is: Can they make it cheap enough?

 

Find this article at:

http://money.cnn.com/2007/04/02/news/economy/biobutanol/index.htm?cnn=yes 

 

From the editors at Harrisburg, PA's newspaper...

 

http://www.pennlive.com/editorials/patriotnews/index.ssf?/base/opinion/1175555418198000.xml&coll=1

 

America 'unnecessarily at risk' by looming fall-off in petroleum

Tuesday, April 03, 2007

 

The nation has been put "unnec essarily at risk," according to the nonpartisan Government Accountability Office.

 

The reason: failure of federal agencies to have a "coordinated or well-defined strategy either to reduce uncertainty about the timing of a peak [in oil production] or to mitigate its consequences."

 

Peak oil is the point at which the production of "conventional" oil reaches the highest level it will ever achieve. After that, it will decline at a fairly rapid rate.

US can cut oil imports to zero by 2050:

 

http://news.mongabay.com/2007/0329-lovins.html

^i don't buy it

^well, I have yet to see anyone successfully argue with Amory Lovins.  Few people seem to take him on beyond superficial arguments.  It seems he always has the numbers to back up his arguments and then the debate seems to fizzle out.  It would be nice to see, though, as it would add to the debate. 

 

One thing is true, however, we could become a lot more energy efficient and ultimately use a heck of a lot less energy without any harm to our standard of living or our economy.    It would take many decades to accomplish, but it's doable. 

I saw former Senator Bill Bradley of Face The Nation tell Tim Russert that if we mandated the same mileage as European cars---44 mpg---for all vehicles, we'd cut foriegn oil use to nothing. He also says we should increase the gas tax by a dollar a gallon and cut income taxes by a similar amount, the idea being that we tax what we don't like and cut taxes on what we want.

^if gas taxes were at european levels here, we could eliminate all income taxes on the first $75,000 of income.

 

Also, we need to tax waste, energy, and pollution, then we could also eliminate payroll taxes. 

US can cut oil imports to zero by 2050:

 

http://news.mongabay.com/2007/0329-lovins.html

Lovin's analogy to the end of whale oil is so pedantic it is embarassing.  Whale oil was replaced by a superior resource (petroleum). We don't have any more superior resources that we can exploit.

 

I am extremely skeptical about productizing a carbon-fiber "Hypercar".   I think that any carbon-fiber automobile is going to be too expensive except for those who "have to" drive a lot (for business). (hyperbole car?)

 

^even Lovins maintains that hypercars aren't the sole solution and that alternatives to the automobile and better land use are more important. 

 

The price of carbon fiber is coming down.  A company called FiberForge (spun-off by the Rocky Mountain Institute) has developed a process that can mold a carbon fiber part in one minute instead of the traditional 30 minutes.  CF panels for cars can be molded, including a durable color coat in one step.  Many auto companies have stamping plants that are located no where near where the vehicles are assembled, so there's transportation in-between.  When you take this into account, CF is cost competitive, and likely cheaper than steel, according to Lovins. 

 

If Lovins is wrong, someone needs to show the data as to why. 

 

  Lovins does not address the number of vehicles.

 

  Efficiency standards such as miles per gallon are assumed to refer to a single vehicle. Sure, if you switch from a 20 mpg car to a 50 mpg car, you are going to save gasoline. Likewise, if every driver in the United States did so, we would save gasoline as a whole.

 

    The trouble with that argument is that the number of cars, or the number of miles driven, does not stay constant. Efficiency gains are wiped out by growth in numbers.

 

    Therefore, I don't buy the idea that hypercars will save us. In short, we use all of the oil available to us, whether in hypercars or not.

 

    On the other hand, it is not guaranteed that there will be oil available to import in 2050.

 

When I last discussed "composite" body parts with an application engineer who supports the automobile factories in the United States, he responded that there are not good adhesives or fasteners to assemble carbon-epoxy or plastic body and chassis components.  Lovins does not have a product that costs less than an airplane yet.

$4.00 gas by summer?

 

http://abcnews.go.com/Business/story?id=3007435&CMP=OTC-RSSFeeds0312

When I last discussed "composite" body parts with an application engineer who supports the automobile factories in the United States, he responded that there are not good adhesives or fasteners to assemble carbon-epoxy or plastic body and chassis components.  Lovins does not have a product that costs less than an airplane yet.

 

Apparently they exist for Boeing's 'Dreamliner' and a car is a bit easier to hold together than an airplane. 

Also, Lovins has a concept car, so does GM.  So, they must exist.  Also, as with all concept cars at this development stage, they cost about $150,000.  That's considerably less than an airplane, but yes, way out of reach of the mass market.  However, I mentioned FiberForge's recent advancement with carbon fiber manufacturing and that they can turn a part out in one minute, rather than 30-60 minutes.  This is a very recent development, and it will have a considerable effect on cost.  Here's the link:

 

http://www.fiberforge.com/PAGES/DETAIL_PAGES/fusemedia.html

 

Eighth and State:  Did you not read my first sentence?  As I stated, Lovins says that alternatives to driving and better land use are more important than Hypercars.  Earlier in this thread, or another one here (some weeks ago) I posted a link to an RMI paper about how Hypercars aren't the answer by themselves.  Here it is again:

 

Problems Hypercars Won't Solve:

http://www.rmi.org/sitepages/pid407.php

^if gas taxes were at european levels here, we could eliminate all income taxes on the first $75,000 of income.

 

Also, we need to tax waste, energy, and pollution, then we could also eliminate payroll taxes. 

 

Let's think about that. Tax the stuff you don't like, such as dependence on foreign oil, reduce taxes on what you DO like, such as your earnings.

 

So we raise taxes on oil by $1 a gallon, but cut income taxes to offset that blow. Then jack up the gas tax even more. We offer tax breaks to companies who invest in energy saving devices and ways to cut pollution. Those industries who have more intractible pollution problems could buy tradeoffs in the form of spending on bonds to create transit and high speed rail.

 

Mr. Homeowner could get sizeable breaks for becoming more energy efficient. Federal tax writeoffs for mortgage interest could be rewritten so that those who insist on living in McMansions would get no writeoffs, while those in urban areas would get much more.

 

Hey let's take this all the way and declare a moratorium on new highway construction and use the surplus to completely rebuild our passenger and freight rail infrastructure, along with new transit systems in all of our cities. Give privately owned freight railroads a 100% tax credit for those lines which they own that are used for rail passenger or commuter service.

 

:clap:

The GAO report

 

By Tom Whipple

Last week the Government Accountability Office released its long-awaited report on peak oil. This report is clearly a milestone on our journey through the oil age for it is the first time the staff of a major government agency has looked at the issue and concluded that peak oil is real and, if it occurs soon, could cause a world-wide recession. Even more notable is that the Departments of Energy and Interior generally agreed with the conclusions...

 

 

Original article :

http://www.fcnp.com/index.php?option=com_content&task=view&id=1088&Itemid=33

 

archived at :

http://www.energybulletin.net/newswire.php?id=28280

 

"Hypercars aren't the answer by themselves."

 

Yes, he did say that.

 

In any discussion about peak oil, the talk of replacing cars with some new technology usually comes up. I think the typical American thinks, "If we run out of oil, how am I going to drive to work?"

 

I think the answer is, "You are not going to drive to work." Whether we will have mass transit, more walking communities, telecommuting, gradual population loss, or as some of the doomers predict, a massive catastrophic die-off remains to be seen.

 

Lighter cars are available now. People don't seem to prefer them.

It's quite possible that telecommuting won't be as viable an option as some folks are predicting. A lot of those jobs are in or related to the financial and information services sector, and the post-peak-oil economy will be much more dependent on physical activity that produces tangible goods that satisfy basic needs like food, shelter and clothing.

 

The financial and information services businesses have a relationship that, in the best of cases, is symbiotic with the production of real value, and they have become downright parasitic as they facilitate the takeover of productive businesses  in order to liquidate assets that can be exploited in the short term in financial market manipulations. They will provide far fewer career opportunities as a result of their confrontation with physical reality.

 

It's pretty hard to telecommute to a job mining coal or building and repairing machinery or pulling weeds from soybean rows.

  ^--- All true, but isn't the use of home computers for work growing?  Just imagine the number of professional eBay dealers.

 

I still have visited eBay only a couple of times, just to see what's there. It's too bewildering, and I just don't have time to take on anything else on the web. Most of the time, I'm writing articles on the computer. Only when I'm researching something do I visit more than a few web sites per day.

See article below... Let's see, the oil exploration budgets are going to increase? For oil exploration costs in American coastal waters, those costs are tax-deductible, causing an increasing negative impact on the federal budget. What if highway users (consumers of two-thirds of oil in the US) paid for those costs? For every billion dollars of oil exploration costs in US coastal waters, the cost to highway users would rise 0.66 cents per gallon. That's not a big burden. Instead, you and I subsidize those costs in income tax every April 15 whether we drive a lot or not.

________________________

 

http://www.bloomberg.com/apps/news?pid=20601072&sid=aH57.uZe.sAI&refer=energy

 

Total, Shell Chief Executives Say `Easy Oil' Is Gone

 

By Stephen Voss and Tara Patel

 

April 5 (Bloomberg) -- The days of so-called ``easy oil'' are over, making it harder to meet demand without complicated and expensive projects, the heads of two of Europe's largest oil companies said today.

 

The International Energy Agency, an adviser to energy importing nations, estimates oil supply will have to rise 39 percent to 116 million barrels of oil a day by 2030 from about 86 million barrels a day now to meet world demand.

 

Meeting such targets with conventional oil sources will be ``extremely difficult,'' Christophe de Margerie, the chief executive officer of Total SA, Europe's third-largest oil company and its largest refiner, said at a conference in Paris today. New supply will be based on ``huge high-tech'' projects.

Buried in this article is a statement from a Saudi bank saying that Saudi Arabian Oil production will be 8.44 mbd in 2007.  What it doesn't mention is that production was 9.12 mbd in 2006.

 

http://archive.gulfnews.com/articles/07/04/01/10115135.html

 

See post from Energy Bulletin.net:

A top Saudi bank expects fall in oil production

Reuters via Gulf News

Original title: "Government spending to boost Saudi Arabia GDP"

 

Riyadh: Economic growth in Saudi Arabia, the largest Gulf Arab economy, could accelerate this year on the back of a projected rise in government spending, Riyadh Bank said in a research report.

 

The kingdom's fifth largest bank by market value expects gross domestic product to grow 4.3 per cent in 2007 compared to 4.2 per cent in 2006.

 

...Saudi oil production is expected to fall from an average 9.12 million barrels per day in 2006 to 8.44 million bpd in 2007. "For 2007 ... we forecast oil prices to rise/fall by $3 per barrel," it said.

 

 

A very interesting historical summary of the Middle East was included in the Association for the Study of Peak Oil's March newsletter. Granted, a region having such a vast history as the Middle East is difficult to summarize in total, so the newsletter focuses on the history as it relates to oil and the western powers. The newsletter can be found at:

 

https://aspo-ireland.org/newsletter/en/pdf/newsletter75_200703.pdf

Sorry for the big picture (double meaning?) below, but I'd been dabbling with this here and there for a few months. I've gotten it to a fairly presentable point (except for that green horizontal line I can't seem to get rid of), so I thought I'd post it and show you all what a geek I really am....

 

Scroll right to see the whole thing:

Passing the buck on fuel economy

Instead of ensuring that we use less gas, politicians and consumers take the easy way out, says Fortune's Alex Taylor.

By Alex Taylor III, Fortune senior editor

April 9 2007: 12:26 PM EDT

 

NEW YORK (Fortune) -- President Bush thinks we should use less gasoline to reduce our dependency on imported oil and limit the emissions of greenhouse gasses. That's a worthy idea, and one that is endorsed by most politicians and a majority of Americans.

 

But rather than change their behavior or make any sacrifices to actually accomplish this, Americans would rather shift the responsibility onto somebody else. In this case, it's the auto companies - and it's a mistake.

 

Bush is right about one thing: Since Americans aren't willing to conserve gasoline on their own, the government should step in. Consumers talk a good game about fuel economy before they arrive at the showroom. But they get dazzled by glitzier features when they walk into a dealership.

 

Find this article at:

http://money.cnn.com/2007/04/09/autos/pluggedin_taylor_fueleconomy.fortune/index.htm?cnn=yes 

 

 

Sorry for the big picture (double meaning?) below, but I'd been dabbling with this here and there for a few months. I've gotten it to a fairly presentable point (except for that green horizontal line I can't seem to get rid of), so I thought I'd post it and show you all what a geek I really am....

 

Scroll right to see the whole thing:

 

 

That would be great if downtown C-town looked like that or something similar in the future.

Is the line down St. Clair LRT, or BRT? I think it would make since to build a high frequency rail line down St Clair.

 

Also what are those grey boxes west of Public Square?

Actually, the dark blue/orange line shown is through Public Square on Superior, not St. Clair. I assumed that to be an LRT operating in a subway through downtown, and as a streetcar or reserved alignment within Detroit and Superior avenues outside of downtown.

 

The grey boxes west of Public Square are buildings, complete with shadows, just to show that the parking lots wouldn't remain. I hadn't gotten around to adding buildings in other areas having lots of parking lots.

"NEW YORK (MarketWatch) -- Reformulated gasoline futures rallied Wednesday to an eight-month high, as a greater-than-expected draw on gasoline stocks helped support the belief that demand will remain strong through the summer driving season.

Crude oil prices flattened, as conflicting supply data and lingering concerns about the price trend sapped earlier strength.

Motor gasoline stocks fell 5.5 million barrels to 199.7 million barrels for the week ending April 6, the U.S. Energy Department said. That was much higher than the expected drop of 1.5 million barrels, according to Fimat.

Following the news, May reformulated gasoline rose 3 cents, or 1.4%, at $2.1530 a gallon on the New York Mercantile Exchange. It reached a high of $2.1700 a gallon moments after the supply data was released, the highest price seen for the May contract since August 2006.

Data from the American Petroleum Institute confirmed that gasoline supplies fell more than expected. The API said motor gasoline supplies fell 3.2 million barrels in the latest week."

http://www.marketwatch.com/news/story/gasoline-rallies-supply-data-crude/story.aspx?guid=%7B3A3DC105%2DA59E%2D4F5A%2DB6BB%2DD9B1C2837126%7D

 

Someone better get on top of this or this summer is going to be rough and this doesn't factor in the forcasted above average hurricane season.

The Desert Sun does some excellent peak oil reporting. Consider the implications of a collapse of Cantarell on Mexico's economy, the flow of illegal immigrants into the U.S. and the impact on the U.S. in a wide variety of ways. And this is just one piece of the whole peak oil picture...

___________________

 

 

http://www.thedesertsun.com/apps/pbcs.dll/article?AID=/20070415/COLUMNS03/704150303/1238/business

 

Shrinking oilfields alarm observers

 

Morris R. Beschloss

Special to The Desert Sun

April 15, 2007

 

-- ------------------------------------------------------------------------------

Almost a year ago, this column reported the conceivable implosion of Mexico's Cantarell Oilfield, second largest in the world. This prediction proved to be correct as Cantarell lost a fifth of its production from January 2006 through February 2007. This meant a loss of 400,000 daily barrels of production from this field, dropping from two million daily barrels to 1.6 million during this time period.

If this shrinkage continues as expected, Cantarell will be down to 1.2 million daily barrels by 2010, and a possible extinction within a few years thereafter.

 

This event alone could prove catastrophic to Mexico's economy, which depends on oil exports to fund 40 percent of its prolific government expenditures. Even worse, this turn of events would foreclose a critical import source for the U.S. and could turn previously oil-rich Mexico into a net importer. Mexican/American border violations would be increasingly significant under such circumstances.

 

Saudi Arabia, the world's largest oil exporter, is facing similar problems in its huge Ghawar oil field, as reported in our column earlier this year. In the case of Ghawar, the massive 5.6 million barrels shipped every day is expected to revert to 5 million daily barrels by 2010. Despite Saudi protestations to the contrary, Riyadh's four other giant fields are also expected to be on a precipitous decline.

http://money.cnn.com/2007/04/16/news/economy/bc.energy.gasoline.price.reut/index.htm

 

Gas shoots up 7.4 cents, highest since August

Price driven up by demand, refinery outages and lowered imports says Energy Information Administration.

April 16 2007: 5:41 PM EDT

 

 

WASHINGTON (Reuters) -- Soaring U.S. retail gasoline prices show no signs of easing, jumping another 7.4 cents over the last week to an average $2.88 a gallon, the government said Monday.

 

The national price for regular unleaded gasoline has increased 58 cents in the last two months to the highest level since last August and is up 9.3 cents from a year ago, according to the federal Energy Information Administration's weekly survey of service stations.

 

Pump prices are increasing because of strong gasoline demand, oil refinery outages and low gasoline imports, which are tightening U.S. motor fuel supplies.

Lets make some predictions for the new year and see who was closest this time next year.

 

1) highest price of a gallon of gas for one week in 2007 (US average)

2) highest price for a barrell of light sweet crude for 2007

3) lowest price of a gallon of gas 2007

4) the exact price of gas on december 13, 2007

 

all prices are in US$, all gas prices are for 87 octane (whatever is cheapest at a legitimate gas station, don't count Costco, Sams Club or Kroger Fuels or whoever offers discount shopper rates)

 

1: $2.85

2: $73.50

3: $1.60

4: $1.85

 

Already missed #1

 

WASHINGTON (Reuters) -- Soaring U.S. retail gasoline prices show no signs of easing, jumping another 7.4 cents over the last week to an average $2.88 a gallon, the government said Monday.