Energy Freedom Summit - First Impressions
Today and tomorrow I’m in Chicago attending the Energy Freedom Summit, organized by the Set America Free Coalition. I wasn’t sure what to expect from this summit, not knowing much about the organization until just two months ago.
My first impression after today’s panels; I’m impressed with the knowledge, experience, focus and pace of this organization - they have a laser-lock on what they intend to do, and are efficient in getting the message out as powerfully as possible.
The panels are impressive leaders in their fields, from geo-political security experts to plug-in hybrid magazine editors. I’m taking many notes.
The attendees are an ambitious and eclectic group of people from a variety of backgrounds who are interested in understanding and solving the current energy crisis. Authors, government officials past and present, entrepreneurs, concerned citizens fill the conference hall - about 150 in all.
I’ve met several authors, a frog farmer, a history professor, a few lawyers, and several “regular joes” who are attending in an effort to ”do something” about this problem.
I’m not yet sure where I fit in here, but I keep talking to people, and am learning quite a lot.
(Update 10/27/08 - I’m home from Chicago, with enough new information to fill this blog for weeks. I’m currently writing a few entries, and will begin posting them as they are completed.)
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Supply and Demand: Oil Prices Dropping
You’ve probably noticed oil and gas prices are the lowest they’ve been all year. Demand has slipped not just here at home, but around the world. Even China’s demand is showing signs of cooling.
Source: IHT.com
At the beginning of the year, OPEC producers felt confident that strong economic growth and tight supplies would keep oil prices high. When oil crossed the $100-a-barrel threshold in February, the cartel’s president blamed speculators and said there was not much OPEC could do.
But now, panic is gripping producers as prices drop. Oil is down by half since July, and the speed of the decline has stunned oil-rich governments that have become dependent on high prices.
OPEC is worried that prices are going to slip too far. This, of course is great news for consumers, who have been suffering for months paying balooning prices at the pump. It’s also a confirmation that basic rules of supply and demand still work to determine the cost of commodities like fuel. Of course lower fuel prices would be even more welcome if not for the global economic downturn.
Were fuel prices a contributor to the economic crisis - a perfect storm of the housing credit and oil bubbles? I’m sure that high fuel prices helped push consumer confidence down. How can you be optimistic about weathering your other economic problems when every day the price of fuel rises, and never seems to fall. High fuel costs may have pushed us over the economic edge we have be teetering at for the last few years.
Early in the year there were numerous reports from government transportation agencies and commercial groups like AAA that Americans were curtailing driving, driving less that they had the year before, indicating the first decrease in driving in decades. In any case, the oil market is finally reacting to months of run-ups, where we found ourselves paying over $140 for a barrel of oil just a few short months ago. We stopped buying as much, and the price slips.
Now OPEC, the largest oil cartel, may attempt to flex its muscle to prop up falling oil prices and protect their profits, by purposely reducing oil supply.
Is it possible to demonstrate more clearly the need to find alternative supplies for energy than this? Is it possible to demonstrate more clearly the effect of energy conservation than this? We all participated in the grandest supply and demand experiment of modern history.
Conservation works - and works quickly, without any new technology required. Finding alternative sources of energy, or just stating the intention of finding alternative sources of oil, also works to reduce prices. It doesn’t take years, as predicted by politicians from each side. Speculators and cartels are discouraged when they hear the largest customer has decided to shop around a little. Sellers tend to sweeten the deal in order to keep the customer. It’s less about actual drops of oil, and more about managing human greed. Let’s not be lulled back into old habits by lower prices.
Let’s also remember that relatively small changes in demand led to fairly substantial changes in price. It’s true that Americans are driving less than last year - but it’s only by a small percentage. Look around, there are cars everywhere - moving around all hours of the day. American’s haven’t abandoned their cars, they are just using them a little less, or using them a little more efficiently. I’d like to think we contributed, however slightly.
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“$4-a-gallon gasoline has clearly killed demand”
A day after plunging as much as $5 a barrel in a dramatic sell-off, crude continued its downward trend Tuesday as traders sold oil contracts on the belief that prices are still too high in relation to demand and have further room to fall.
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The Option to Drill
Is the Option to Drill enough to stop sky-rocketing gas prices?
(For the record, politics stink. Oil is now a hugely political issue, and I try very hard to avoid ”politics” on this blog and website. It’s truely meant to be a resource for everyone, without a personal political axe to grind. Sometimes politics are unavoidable. When the facts speak one way or another, and it coincides with a certain political bent, I’ll do my very best to indicate why you should at least consider the points being made by “the other team”.)
Some say we “can’t drill our way out of high oil prices” and that “it will take 10 years to see a result” of renewed off-shore drilling here in the United States. Apparently, however, our government can do a little paperwork and revoke drilling moratorium restrictions - creating an “Option of Drilling” - and immediately see a “correction” to the price of oil - without any actual drilling.
- Since George Bush rescinded the federal moratorium on off-shore drilling and since demand for higher domestic production has increased in the face of $5 per gallon gasoline, the price of crude has dropped over $20 a barrel in less than two weeks.
- The correction for oil prices has lasted two weeks with Brent down 16.3 per cent since hitting a record $147.50 on July 11 while WTI has sunk 16.8 per cent since reaching an all-time high of $147.27 on the same day.
- Technically, the $128/bbl support on WTI did not hold very long, and crude is pushed down further to test how strong the $122/bbl support can be. If $122/bbl does not hold, then we would face another accelerating wave to the next significant support level at $110/bbl.
There is another ban on off-shore drilling - a Congressional ban. Lifting this ban would indicate a strong intention and commitment to the “Option to Drill” - and help continue the “correction” of oil prices. To lift the ban requires a vote. But, Congress being the mess that it is, there are people who’d just rather not vote one way or another on this right now…
- WHY NOT have a vote on offshore drilling? There’s a serious debate to be had over whether Congress should lift the ban on drilling in the Outer Continental Shelf that has been in place since 1981.
The “correction” has certainly had some help form the current high prices. “Pain at the pump” has changed the habits of many drivers. Demand has reduced 2.4% from this time last year. Many people are driving less. It’s not hard to imagine why, when the cost of a fuel stop can easily approach $100 for a full sized pickup or SUV.
- “People have changed their driving habits, and they’re not going to change back anytime soon,” said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group.
- Gasoline price changes typically lag behind oil prices. The price of oil has risen more than 72% over the last 12 months. But as the high cost of fuel cut into demand, crude prices have shed more than $23 a barrel since hitting a record high on July 11.
Without options, America’s economy can be held hostage by the greed of others. FuelClinic is obviously a stong proponet of consumer education, fuel conservation, new fuel technologies, electric cars, and other alternatives to help wean human civilization from the giant oil tit. At the same time, we do not need to needlessly (or stubbornly) slow the world economy by refusing to recognize the power of markets to correct themselves when artificial constraints are removed.
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Fuel Thieves
A report on fuel theft trends and techniques.
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Algae to Fuel
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Americans drive 4.5 billion fewer miles in April: report
Americans drove around 4.5 billion fewer miles in April compared with the same month last year, marking the lowest mileage clocked on US roads for the month since 2003, a report showed Thursday. The Federal Highway Administration (FHA) said in its monthly report that the number of vehicle miles driven in the United States fell by 1.8 percent, to 245.9 billion, based on preliminary data from the state highway authorities across the United States.The number of miles traveled in April 2003 was 239.7 billion, FHA data show.The miles traveled on US roads rose from 132.7 billion miles in 1983 to a peak of 250.9 billion miles in 2004, according to the data on the FHA website. Read more
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Maxine Waters threatens to socialize… err… “nationalize” America’s oil industry
Whoah.
Link: sevenload.com
“And guess what this member* would be all about? This member would be all about socializing — er, uh. [Pauses for several moments] …. would be about … [pause] … basically … taking over, and the government running all of your companies.”
Found At: Hot Air
It’ll never happen in America, but it has happened all over the world in recent years:
First Russia. Then Venezuela. Now Bolivia.
Soaring energy prices are fueling a global wave of natural-resource nationalization that is souring the investment landscape for international oil companies and reshaping energy politics for years to come.
While it is anyone’s guess as to which energy-rich developing nation will be next to assert greater state control over its oil or natural gas assets, analysts say it is only a matter of time before the actions of Russia’s Vladimir Putin, Venezuela’s Hugo Chavez and Bolivia’s Evo Morales inspire a copycat.
More about Chavez of Venezuela in particular:
From: Wikipedia
2007 On May 1, 2007, Venezuela stripped the world’s biggest oil companies of operational control over massive Orinoco Belt crude projects, a controversial component in President Hugo Chavez’s nationalization drive.
Massive Oil Deposit Could Increase US reserves by 10x
America is sitting on top of a super massive 200 billion barrel Oil Field that could potentially make America Energy Independent and until now has largely gone unnoticed. Thanks to new technology the Bakken Formation in North Dakota could boost America’s Oil reserves by an incredible 10 times, giving western economies the trump card against OPEC’s short squeeze on oil supply and making Iranian and Venezuelan threats of disrupted supply irrelevant.In the next 30 days the USGS (U.S. Geological Survey) will release a new report giving an accurate resource assessment of the Bakken Oil Formation that covers North Dakota and portions of South Dakota and Montana. With new horizontal drilling technology it is believed that from 175 to 500 billion barrels of recoverable oil are held in this 200,000 square mile reserve that was initially discovered in 1951. The USGS did an initial study back in 1999 that estimated 400 billion recoverable barrels were present but with prices bottoming out at $10 a barrel back then the report was dismissed because of the higher cost of horizontal drilling techniques that would be needed, estimated at $20-$40 a barrel…
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Ethanol and the law of unintended consequences
Fuel or folly?
Cinnamon Stillwell
Wednesday, April 2, 2008In the pantheon of well-intentioned governmental policies gone awry, massive ethanol biofuel production may go down as one of the biggest blunders in history. An unholy alliance of environmentalists, agribusiness, biofuel corporations and politicians has been touting ethanol as the cure to all our environmental ills, when in fact it may be doing more harm than good. An array of unintended consequences is wreaking havoc on the economy, food production and, perhaps most ironically, the environment.
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Oil Prices Hold Near $90 a Barrel on Speculative Buying
VIENNA, Austria (AP) — Oil prices held near $90 a barrel Friday, a barrier crossed for the first time in after-hours trading in New York on speculative buying.Investors are being drawn to energy futures as a hedge against the weakening U.S. dollar. That, plus worries over tensions between Turkey and Kurdish rebels in northern Iraq, has lifted crude oil prices to new records for five straight days.Light, sweet crude for November delivery rose to $90.02 a barrel in Thursday evening electronic trading on the New York Mercantile Exchange. By midday Friday in Europe, the contract was trading at $89.92 a barrel, up 45 cents from Thursday’s close.In London, December Brent crude rose $1.47 to settle at $84.60 a barrel on the ICE Futures exchange. By midday Friday, it had fallen back 25 cents to $84.34 a barrel.While oil prices have risen sharply in recent days, the weak U.S. dollar is seen as somewhat moderating the impact of high oil prices in other currencies. The dollar had regularly been setting new lows against the euro and has also sagged against the yen.
Analysts said investors were also buying more oil to hedge further losses in the currency.
“The main way the weak U.S. dollar is actually relevant to oil and possibly other commodities such as gold, is that you may have seen some investment in those commodities as a hedge against U.S. dollar weakness and that has pushed up their price,” said David Moore, commodity strategist at the Commonwealth Bank of Australia in Sydney.
Vienna’s PVM Oil Associates said the surge “cannot be fully explained by market fundamentals, as the related factors are generally more bearish than bullish.”
Data released in recent weeks shows speculative buying of oil futures is on the rise.
“While oil markets are tight, there is a question as to whether the current price is sustainable,” Moore said.
In Thursday’s Nymex floor session, the November contract rose $2.07 to a record close of $89.47 a barrel.
On Wednesday, the U.S. Energy Department reported that oil and gasoline supplies rose more than expected last week, countering suggestions that supplies are tight. However, crude supplies at the closely watched Nymex delivery point of Cushing, Oklahoma, fell last week. And several reports in recent days have predicted oil supplies will tighten in the fourth quarter.
Thursday was the fifth day in a row crude prices have set new records. The new record has taken the price of oil nearer, but still below, inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
Nymex gasoline futures dropped 0.21 cent to $2.183 a gallon (3.8 liters) while heating oil prices added 0.35 cent to $2.3528 a gallon.
November natural gas futures fell 3.2 cents to $7.341 per 1,000 cubic feet as investors shrugged off an Energy Department report that inventories rose by 39 billion cubic feet last week, less than analysts had expected. Supplies are high by historical standards.
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Air Force Secretary to DARPA: Free Us from the Oil Cartels
From DANGER ROOM -
Developing an alternative to today’s petroleum-based fuels would obviously translate to big cost savings for the military, but according to Air Force Secretary Michael Wynne, it would have a geo-political advantage as well. Speaking today at the DARPA conference here in Anaheim, Wynne told the audience to “think of the withdrawal of leverage it [alternative fuels] would bring from petty dictators or cartels.”
If anyone can do it, DARPA can.
As the largest consumer of oil in the federal government, the Air Force has an obvious interest in alternative fuels. Every $10 increase in the price of a barrel of oil costs the Air Force another $600 million, according to Wynne. The Air Force is also thinking about worst-case scenarios. “In the event of another war, those costs could double again,” Wynne told the audience here. The question, he says, is “how to hedge your bet,” both against the rising cost of petroleum as well as a disruption in supply.
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