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Will the curse of oil drag down Vladimir Putin?

Russia’s President Vladimir Putin (R) reviews a map during a meeting with Alexei Miller, the CEO of Russian gas monopoly Gazprom, at Putin’s residence outside Moscow on Oct. 29, 2012.Alexei Nikolsky / AFP / Getty Images We will look back at 2014 as the year Russian President Vladimir Putin pushed all his chips into the center of the table — risking everything to make Russia a world power again. Even his apologists now acknowledge that Putin wants to resurrect the Russian empire with most of the Soviet Union’s lost territories either incorporated into Russia, as with Crimea, or in its orbit, similar to eastern Ukraine and Belarus, as well as the Caucasian and Central Asian states. The range of Putin’s geostrategic tools is also on display: the Eurasian Union, military brawn and proxy militias in the near abroad, and Russia’s petroleum exports as the main source of income and […]

Posted On : Published By : Tom Whipple
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Peak Oil Revisited…

In a lecture to the Columbia University Center on Global Energy Policy in February of 2014 Steven Kopits, who is the Managing Director of the consultancy, Douglas Westwood explains how conventional “legacy” oil production peaked in 2005 and has not increased since. All the increase in oil production since that date has been from unconventional sources like the Alberta Tar sands, from shale oil or natural gas liquids that are a by-product of shale gas production. This is despite a massive increase in investment by the oil industry that has not yielded any increase in ‘conventional oil’ production but has merely served to slow what would otherwise have been a faster decline. More specifically the total spend on upstream oil and gas exploration and production from 2005 to 2013 was $4 trillion. Of that $3.5 trillion was spent on the ‘legacy’ oil and gas system. This is a sum […]

Posted On : Published By : Tom Whipple
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Time to be honest about our energy prospects

THE problem is not that there is not enough coal left underground; there is. But the task of lifting it, transporting it and using it depends on many other factors, most importantly on the continued availability of oil as a lubricant for all the machines involved in the supply chain, and as a fuel for transportation. It is reckoned that there are some 109 years of coal left under current consumption assumptions according to a new report by BP, an energy producer.  Broadly that is in line with forecasts by the International Energy Agency (IEA) in Paris which also predicts the availability of other fuels. Discussions about fossil fuel reserves start by aggregating firm and expected supplies from known and almost unknown sources, equating the resulting volume against fairly loose forecasts of economic activity including the assumption that rising costs will be accepted by consumers. While the EROEI (Energy […]

Posted On : Published By : Tom Whipple
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WTI Falls a Second Day on U.S. Fuel Inventories

West Texas Intermediate fell for a second day after inventories of gasoline and distillate fuels increased in the U.S., the world’s biggest oil consumer. Brent slipped before a meeting of the European Central Bank . Futures dropped as much as 0.4 percent in New York . Gasoline stockpiles increased by 210,000 barrels to 211.8 million in the seven days ended May 30, while distillate inventories, including heating oil and diesel, climbed by 2.01 million barrels to 118.1 million, the Energy Information Administration reported yesterday. The ECB may become the first major central bank to take rates negative today as President Mario Draghi seeks to ward off deflation. “An overall bearish picture resulted from total hydrocarbon stocks increasing,” Harry Tchilinguirian , head of commodity markets strategy at BNP Paribas SA in London , said in a report. “The door is still open for a short-term correction in prompt WTI, possibly […]

Posted On : Published By : Tom Whipple
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Crude oil declines despite US supply drop

Crude oil declined in price Thursday after an unexpectedly large drop in U.S. stockpiles was offset by rising supplies of refined fuels. Benchmark U.S. oil for July delivery was down 42 cents to $102.22 a barrel at 0750 GMT in electronic trading on the New York Mercantile Exchange. The contract shed 2 cents to close at $102.64 on Wednesday. Brent crude, a benchmark for international oils, was down 25 cents to $108.16 a barrel. The Energy Department reported Wednesday that U.S. crude supplies fell by an unexpectedly wide margin of 3.4 million barrels last week. That normally would push prices higher but supplies of diesel and other refined fuels rose and demand was weak. A report from payrolls processor ADP that U.S. hiring slowed in May also pushed down energy prices. In other energy futures trading on Nymex: – Wholesale gasoline was little changed at $2.934 a gallon. – […]

Posted On : Published By : Tom Whipple
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Natural-Gas Prices Set 4-Week High on Long-Term Supply Concerns

By Timothy Puko NEW YORK–Natural gas prices hit their highest closing price in four weeks Wednesday as traders worried about how quickly producers are refilling depleted stockpiles. Prices for the front-month July contract settled up 1.1 cents, or 0.2%, at $4.64 a million British thermal units on the New York Mercantile Exchange, a level not seen since early May. Wall Street analysts and brokers on Wednesday predicted the gas producers made the year’s largest addition to storage last week, but that wasn’t enough to convince the market that prices will drop. The forecast of a 117-billion-cubic-feet surplus is 26% better than average for this time of year, but traders want to see record additions before they will sell, said Tom Saal, a broker at INTL FCStone Latin America in Miami. "Until we see an injection of … biblical proportions, the market is still not going to be convinced …" […]

Posted On : Published By : Tom Whipple
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OPEC Loses Price Power as Saudis Take Control

OPEC isn’t moving oil markets like it used to. As Saudi Arabia , the world’s largest oil exporter, has acted with more independence and crude prices stabilized, the group’s gatherings in Vienna to discuss output have lost potency. The CHART OF THE DAY shows how the Organization of Petroleum Exporting Countries, which produces about 40 percent of the world’s oil, is meeting less frequently and having a smaller effect on prices. The impact of OPEC’s output decisions, measured by how much the price of international benchmark Brent crude moved after meetings compared with the daily average for that year, was ten times greater in 2008 than 2013, according to data compiled by Bloomberg. “OPEC meetings used to be a race for any sound-bite from oil ministers, but in such a stable price environment they’re more likely to produce a snore,” said Olivier Jakob , managing director at Petromatrix GmbH, […]

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Oil could be $15 more per barrel without more Middle East investment

If the Middle East fails to invest adequately in its oil fields, global oil prices could spike by an additional $15 per barrel in the 2020s. That comes from the  International Energy Agency  in a new report assessing global energy investment needs through 2035. The report estimates the investment in energy required to meet global demand over the next several decades. For example, $1.6 trillion was spent on energy supplies across the globe in 2013. That figure is expected to climb to $2 trillion annually over the next 20 years, with more than half of the annual sum going to offset declining production. In other words, the world will be forced to cough up over $1 trillion each year just to keep energy production flat. While those figures are hard to fathom, they point to a future in which fossil fuels – oil in particular – become more expensive […]

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World needs $48 trillion in investment to meet its energy needs to 2035

IEA World Energy Outlook special report sees rising role of governments in shaping investment decisions Meeting the world’s growing need for energy will require more than $48 trillion in investment over the period to 2035, according to a special report on investment released today by the International Energy Agency (IEA) as part of the World Energy Outlook series. Today’s annual investment in energy supply of $1.6 trillion needs to rise steadily over the coming decades towards $2 trillion. Annual spending on energy efficiency, measured against a 2012 baseline, needs to rise from $130 billion today to more than $550 billion by 2035. “The reliability and sustainability of our future energy system depends on investment,” said IEA Executive Director Maria van der Hoeven . “But this won’t materialise unless there are credible policy frameworks in place as well as stable access to long-term sources of finance. Neither of these conditions should be taken for […]

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Crude Supplies Adequate for World to Cut Imports From Iran, White House Says

The White House on Wednesday said global crude-oil supplies were sufficient to allow other nations to cut imports from Iran, though efforts to further curtail such sales were on hold while nuclear talks continue. "The United States has committed to pause efforts to further reduce Iran’s crude-oil sales for a six-month period," spokesman Jay Carney said. "In return for this and other limited relief measures, Iran has committed to take steps that halt—and in key respects roll back—progress on its nuclear program." The Obama administration has sought to squeeze Iran financially by limiting its access to financial markets and hard currency. The White House statement came in a statement required by Congress regarding the global supply of petroleum products from countries other than Iran. The statement was referring to existing agreements on Iran nuclear talks. "There currently appears to be sufficient supply of non-Iranian oil to permit foreign countries […]

Posted On : Published By : Tom Whipple