Daily Archives: February 18, 2009

Kate Mackenzie

The US $787bn stimulus package has been signed into law, and it includes $38bn in energy-related spending and $20bn in energy related tax incentives, including credits for home solar panels.

It won’t be without some confusion, however. The Council on Foreign Relations highlights the difficulty of defining what is ‘green’ and what is not:

Does a miner who extracts the coke that makes steel for a wind turbine qualify as a green-collar worker (Newsweek)? What about the construction crews excavating the planned second rail tunnel under the Hudson River between New York and New Jersey?  Or a conductor on a diesel train? The list of occupations that might raise objections from one quarter or another–nuclear plant operator, ethanol producer–seems endless.

CFR also points to the disagreement between the market-oriented Institute for Energy Research and the left-leaning Center for American Progress.

Ed Crooks

Another voice suggesting a sharp bounceback: Christof Ruehl, BP’s chief economist, at the International Petroleum Week conference today in London said oil demand was deferred and not, in economic parlance, ‘destroyed’ – or permanently abated.

Ruehl compared the fall in oil demand over the past couple of years to the last period of decline in the early 1980s, and concluded that the forces at play have been very different. Back then, there were structural changes, in particular the shift from oil-fired electricity generation to nuclear power, and higher fuel economy standards for cars.

Today, he said, we are seeing changes in behaviour: people are driving less and flying less, but so far the underlying structures are unchanged.

That suggests that when the world economy recovers – not this year, that is for sure – oil demand could bounce back sharply.

Meanwhile, on the supply side, non-Opec oil production is falling and likely to keep heading on down, with Russia’s output looking particularly dismal. And while oil majors are maintaining their investments - this year, at least – we heard last week that 35 of 150 new Opec drilling projects were being delayed.

It is all setting us up for a painful supply crunch some time in the next decade.

Better get make sure those new fuel economy standards are enforced, and gee up those nuclear programmes and biofuels.

Carola Hoyos

Kuwait says it is looking to tap France’s experience with nuclear power, according to the Al-Watan newspaper – a decision that says much about the role politics plays as a hurdle to producing the energy the world needs. Kuwait has for years been waiting for Iraq to escape its myriad of political and stability problems so that it can develop its gas and export it to its smaller neighbour. And just beyond lies Iran, the country that sits on the world’s largest natural gas field.

Iran’s political troubles are perhaps the crassest example of are how the region’s political troubles are so deep that its oil and gas industries fall far short of their potential – so much so, that many of its countries are now looking to nuclear instead.

But it’s not only oil and gas rich nations that are looking to nuclear; oil and gas rich companies are, too. One of the players Kuwait may well end up talking to regarding nuclear is Total, the French oil and gas company. Christophe de Margerie, Total’s chief executive and an old Middle East hand, has already become involved in bringing nuclear the UAE and may well see Kuwait as another place he will want to go to for nuclear after decades of waiting unsuccessfully for Kuwait to open up its oil industry to foreign companies.

Now that the price of oil (aka black gold) is falling, investors could seek solace on the extraordinary activity in the proper gold market: the yellow precious metal.

Gold holdings at the world’s largest bullion-backed exchange-traded fund, the SPDR Gold Trust, jumped the first time above 1,000 tonnes, as investors sought bullion amid increasing financial turbulence and economic slump.

The SPDR Gold Trust holdings have risen 228.6 tonnes so far this year, to a record 1,008.8 tonnes late on Tuesday, absorbing in the first seven weeks of the year about 10 per cent of the world’s annual mine gold output. The fund is now the world’s seventh largest bullion holder, only behind a handful of central banks.

The latest bout of buying pushed spot gold in London on Wednesday to a fresh 7-month high of $973.5 a troy ounce, less than 6 per cent below the all-time high of $1,030.8 an ounce set last March.

Carola Hoyos

What’s interesting, important and diverting from around the web

- Coal - Life without it is coming sooner than you think

- LNG - liquified natural gas explained by the BBC

- Opec quotas: Kuwaiti oil official bearish on compliance

- Norway‘s state church proposes 5-year moratorium on offshore oil and gas licences

- Turbines make Alaska a frontier for green power

- Algae oil developer signs contract with DOE

- Biomass is main contributor to south Asia’s brown cloud

- Nuclear: Does the US still have a nuclear industry?

- Patents relating to clean energy hit an all time high; fuel cells most popular; Honda, Toyota, GM, GE, and Canon feature

- Electric car update: the five most talked-about upcoming models, and the rest

- Nuclear: New plants must withstand plane attacks

James Fontanella-Khan

Energy news headlines:

- China agrees to lend $25bn to Rosneft and Transneft (Moscow Times)

- Chinese oil giants may see net profits fall 31.3% (Interfax-China)

- EPA reconsiders emissions rule for new power plants (Reuters)

- Shanghai to launch steel futures on March 9 (Reuters)

- Soros management fund increases stakes in Petrobras (Bloomberg)

- UN says food production may fall 25% by 2050 (Reuters)

- US and Japan should aid China on clean energy, says Clinton (Reuters)

- Obama’s EPA to reconsider Bush decision on emissions (Bloomberg)

James Fontanella-Khan

Energy news from the FT:

- Iberdrola’s profits rise despite demand slump
Profits rose 21.5% for Spain’s biggest electricity group

- StatoilHydro chief hails growth potential
Reported proved reserves have been shrinking

- BG raises offer for Australia’s Pure Energy
Group prepared to accept a minority stake

- Sainsbury’s to use ‘green’ trucks
Move seeks to cut carbon footprint

- Corus hit by cuts in credit insurance
Caught by the reduction of cover to its suppliers

- Wildcatter bucks trend in hunt for projects
PetroMark looks for opportunities in the crisis

- Telecom Plus to double workforce
The utility provider was one of FTSE’s best performers in 2008

- Buoyant Hargreaves aims at main market
UK’s leading coal importer says profits up 85%

- Scots wind farm winners named
Boost for ministers’ plans to develop offshore turbines

- Lex: Rio Tinto/Chinalco
Hurdles for cash injection deal can be jumped

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