Monthly Archives: March 2010

By Izabella Kaminska

We didn’t say that..

Stephen Schork of the daily energy Schork report did. And here’s the graph, charting exactly that. Gasoline versus err, bimbos, by which he actually means entertainment spending in the US as a percentage of total consumption expenditure (the reference is to Snooki in case you’re really curious):

Now, the reason he’s pointing the above out is because gasoline spending as a percentage of total expenditure, according to his stats, has been heading steadily higher since January 2009. Spending on entertainment, meanwhile, has been falling. Which appears to indicate a fine balance between the two.

Although, as he also points out, savings — which dropped to their lowest point since November 2008 — should be considered in that equation too.

Nevertheless, the point is, will refiners shortly be coming up against a consumer demand threshold with respect to the prices consumers will or will not be capable of tolerating? And if they do, how will they respond?

Kate Mackenzie

- Saudi Arabian-Indian economics, geopolitical ties strengthen

- Humans are too stupid to prevent climate change

- A US official names 2011 as possible decline point for oil production

- A new race for the US: lithium-ion batteries

- Sierra Club would fight a climate bill that took away new EPA powers

- Hydro-fracturing hits roadblocks in NYC

- The future of oil production in Venezuela

- The UK’s oceanology offshore engineering adventure

- Sweden wants more nuclear power

Ed Crooks

A new climate bill in the US senate that puts a tax on oil companies might be expected to raise howls of protest from the industry, but ConocoPhillips’ chief executive Jim Mulva likes the sound of the bill expected to be published by senators John Kerry, Lindsey Graham and Joe Lieberman.

He may not agree with everything in the senators’ plan. But given that carbon dioxide emissions need to be controlled, he believes the senators’ plan is likely to be clearly superior to the other options. In particular, it looks much better for the oil and gas industry than the Waxman-Markey bill passed in the House of Representatives last year.

The most striking thing is that he is backing something that looks very much like a carbon tax.

Kate Mackenzie

In the video below, the International Energy Agency’s executive director Nobuo Tanaka told the FT’s Carola Hoyos that the group, which represents the energy interests of western oil-consuming countries, may be becoming less relevant as growth in energy demand shifts to emerging markets:

Some highlights follow:

It’s a very good question. Our relevance is under question. Half of already the energy consumption is in non-OECD countries. For oil, it soon happens that the majority of consumption is in non-OECD countries.

Kate Mackenzie

Most players in energy outside the country are fascinated and intrigued by China. Everyone wants more clarity on its international oil and gas plans, its coal consumption, and, more than anything else, what its long-term strategic plans are with regards to climate and energy security. Because China, of course, does plan ahead. It is clear from the country’s numerous efforts to secure long-term supplies of fossil fuels that it takes energy security very seriously – and this ties in well with expanding its own renewables capacity and regulations, such as supporting low-emissions cars.

But is all this enough to counter its fast-growing fossil fuel consumption?

We know that China wants the social stability that economic growth has so far brought. But how much does China care about climate change, once energy security is addressed?

Kate Mackenzie

Sinopec to buy more upstream assets (FT)

Mexico’s Pemex wrestles with oil decline (FT)

World Bank urges Washington to back S. African coal loan (FT)

Opec looks to oil in $70-$80 range (FT)

China’s drought raises coal prices, lowers hydropower (Bloomberg)

Arctic states meet to discuss fossil fuel exploration (Dow Jones)

Petrobras in talks for additional $10bn loan with China (Dow Jones)

Kate Mackenzie

The global push for action on climate change has put the long-term predictions of major energy companies in an oddly contingent light. Investors want to know about their long-term assumptions, but it is difficult for anyone to forecast how the wrangling over international climate policy will pan out; not to mention complex debates over peak oil, future price levels, and their interaction with the wider economy.

Not everyone is happy with how the oil majors are making their forecasts. FairPensions, a UK campaign currently urging investors in BP and Shell to seek clarification on oil sands investments, argues that the companies are not adequately considering the effects of environmental policies, high oil prices, and changes in demand, as their briefing for investors shows. The economic argument has focused on the assumptions that the companies use for their long-term outlook on oil prices, demand, and the likely effect of climate legislation.

A look at a few of the oil majors’ recent remarks does suggest they very much favour a business-as-usual scenario in their own long-term outlooks, rather than one that foresees either a sharp change in oil pricing or strong action on climate change.

Kate Mackenzie

On FT Energy Source:

- Just when it looked safe to talk carbon offsets

- Cap-and-trade is/not dead – and what it means

- Falklands Islands oil hopes dampened somewhat

- T. Boone Pickens makes his move on water

- Pachauri finding, PetroChina’s bribery warning in Energy headlines

Further reading:

- Who, what, where of the new deepwater GoM projects

- Energy prices should rise the more you use

- Japanese trading firms, not oil companies, pursue shale gas and CBM

- All you wanted to know and more about power exchanges

- Why the US shouldn’t worry about China’s green leadership

- Can business do the job on its own?

- Tracing the demise of cap-and-trade

- Whoops: Energy Star approves ‘gas-powered alarm clock’

Kate Mackenzie



Proponents of the Clean Development Mechanism – the UN’s scheme for approving projects in the developing world to generate carbon offsets for use by developed countries covered by the Kyoto protocol – have some more bad news to contend with. Reuters reports:

The reputation of a Kyoto Protocol carbon finance scheme was dealt another blow after a UN climate panel late on Friday suspended the third emissions cut verifier in 15 months, and partially suspended a fourth.

The scheme’s executive board suspended emissions auditors TUEV SUED and partially suspended Korea Energy Management Corporation (KEMCO) after spot checks at the companies’ offices revealed procedural breaches.

The board, an arm of the UN’s climate change secretariat, said it will work with TUEV SUED and KEMCO to ensure timely resolution of the issues.

This follows the suspension of two other auditors in the past year (one has since been reinstated), all of which will fuel accusations that the whole offset system is fundamentally unworkable.

Kate Mackenzie

A New York Times story late last week looked at why cap-and-trade died as the climate policy tool of choice. The themes will be familiar to readers of this blog:

The short answer is that it was done in by the weak economy, the Wall Street meltdown, determined industry opposition and its own complexity.

In fact surveys suggest that even in the good times, few were enthusiastic about cap-and-trade beyond economic, financial trading and policy wonk circles. And a crucial voting constituency those groups do not make. The arguments that capping is necessary (it’s difficult to achieve an actual reduction target without one) and trading saves money (it allows emissions to be reduced in the cheapest possible way) either weren’t made clearly or were lost amongst a growing suspicion of derivatives, and loud opposition to any form of carbon pricing from some energy lobbyists.

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