Monday, January 02, 2006

Its the oil stupid!

I presume that most who read this would agree that the economics of fuel energy has a lot to do with how many people in the Austin Texas area are going to be riding bikes and/or shifting their transportation mode behavior away from commuting in cars five and ten years from now. The stuff below should give ample grounds for concern.

We should, IMO, welcome higher fuel costs, and the deteriorating economics of sprawl land development, as perhaps the ONLY factor able to shake up a political system that is locally dominated by the real estate and road lobbies, enough to deliver the possibility of rational transportation planning. We live in a world being trashed out by greenhouse warming.

Leave things to those turkeys on the Austin City Council and about all you'll get is a plea to the car-makers to build more hybrids so we can afford to keep commuting to the suburbs outside the city -- a hopelessly inadequate response in terms of scale, timing, and the likelihood of success, considering the well-documented energy problems we face. -- Roger

Last Updated: Sunday, 1 January 2006, 20:59 GMT

Energy and the new world power play

By Paul Reynolds

... It is ironic that as Russia takes over the 12 months chairmanship of the G8 industrial countries, at the top of whose agenda is security of energy supplies, it chooses to reduce the security of its neighbour's natural gas imports...

...Ukraine fears that it is being none too subtly punished for the Orange Revolution and for its pro-Western policies. Whatever the cause, the case illustrates the new world we are entering, one in which new sources of energy became new sources of potential tension and conflict...

...Oil played its part in a 1953 coup in Iran - organised by the US and Britain. They overthrew an elected prime minister, Mohammed Mossadegh and installed Shah Reza Pahlavi instead, a move that still reverberates in relations with Iran. The West became interested in the Arab world not because a few diplomats fancied themselves as latter-day Lawrences of Arabia (although some did). It wanted its
main source of oil to be secure. We learned from British archives released a couple of years ago that in 1973, the US drew up a plan to seize oilfields in Saudi Arabia, Kuwait and Abu Dhabi in response to the Arab oil embargo...

...With the rapid growth of China in particular, but also of India and a whole raft of middle-sized economies, the rush for the world's remaining oil is under way. China's need for oil is already influencing its foreign policy. It gets oil in Sudan, therefore anyone wanting sanctions against Sudan over Darfur has to reckon with China. The same goes for Iran, where China is also a buyer...

... In 1996, the British government despatched Prince Charles to several of the Central Asian "stans" which used to be part of the Soviet Union - Turkmenistan, Uzbekistan, Kazakhstan. All just happened to be energy rich, in either oil or gas. He also went to Kyrgyzstan but it has no oil or gas, so he just visited an army
veterans' home.

It was a trip he did not enjoy (apart from the pleasures of viewing the Silk Road remains) but his enjoyment was not the point. Diplomacy was. Energy was.

The fact is that Britain's own supplies of gas from the North Sea are not what they were. New horizons have to be opened up. Soon, for example, the sight of huge liquefied natural gas (LNG) ships from Algeria and Venezuela will become familiar in UK ports. That, too, will have an impact on British diplomacy...


About the oil 'super-spike' warning:

The prognosis given here is that oil will tank the world economy and then if there are no wars started over it in the next for years or so, then oil might eventually get a bit cheaper. Of course there are lots other financial advisors who say not to worry, but the guys giving the warning here are the ones who have been making their clients money lately. -- Roger

"It is the seeming insurmountable challenge of OPEC's needing to add real new capacity on a just-in-time basis that gives us so much confidence that we are in the super-spike phase,"

Oil prices enter "super-spike" phase

Goldman analysts disagree with theory that prices peaked in '05; see five more years of price hikes.

December 13, 2005: 10:48 AM EST

LONDON (Reuters) - Already sky-high oil prices have entered a "super spike" phase that could last for four more years as global demand booms and supply growth slows, Goldman Sachs analysts said Tuesday.

"We disagree with what appears to be a growing consensus that crude oil prices reached their peak levels earlier in 2005," said the firm's Global Investment Research.

The analysts said oil demand remained resilient and supply growth lackluster, prompting them to keep their average U.S. crude price forecast for next year unchanged at $68 a barrel...


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