Fearing Energy Dependency, Bulgarians Demand Re-opening of Nuclear Reactors
Highlighting the complex and widespread impacts of the Russian-Ukrainian natural gas dispute, protesters in Bulgaria demanded on Sunday the reopening of two nuclear reactors in that country. The reactors, which are left-over from the Soviet-era, have been shut-down since 2006 as a requisite for gaining entry into the EU.
Now, with natural gas supplies being sharply reduced as a result of the Russia-Ukraine dispute, Bulgarians are demanding more energy independence.
Reuters reports that “About 2,500 protesters with placards reading ‘Speed up Bulgarian energy’ and ‘Restart’ marched through [Bulgaria's capital] Sofia,” and that “Prime Minister Sergei Stanishev said the government would study all the arguments about possibly restarting the units after meeting the organizers.”
Russian-Ukrainian Deal Reached (Again)
The natural gas stand-off between Russia and Ukraine appears to finally have reached a resolution on Sunday. Despite previous reports of settlements, this international dispute has continued for days, including a 12 day shut-off of Russian natural gas deliveries for Europe via Ukraine.
The agreement reached on Sunday was between the Russian and Ukrainian prime ministers, Valdimir Putin and Yulia Tymoshenko. This was of geopolitical significance for Russia, which has been trying to marginalize Ukraine’s pro-western president, Viktor Yushchenko, in favor of Tymoshenko, who is seen as more friendly to Russia.
The deal sets the price of Ukrainian natural gas at around 20% of market prices paid by European customers. This will likely result in a price of between $208 and $240 per 1,000 cubic meters.
Cellulosic Ethanol Test Plant Opens; Future of Ethanol Lies With This Technology
The largest ethanol producer in the world, Poet, has announced the opening of an $8 million cellulosic ethanol plant in Scotland, South Dakota. This biorefinery is a pilot plant that is a precursor to a $200 million commercial-scale plant scheduled to open in 2011 in Iowa.
The Scotland Plant will generate ethanol from plant waste, like corn cobs, that would normally be discarded. Although it currently costs about a $1 more per gallon to make fuel from corn cobs than kernels, Poet aims to eventually make cellulosic ethanol competitive with food-based ethanol.
With heightened criticism being levied upon ethanol lately, it will be important for the industry to produce evidence in the near future that biofuels can actually reduce greenhouse gas emissions, decrease oil consumption, and not materially damage global food supplies. While it remains to be seen if this is possible, cellulosic technologies are likely that industry’s best bet.
In 2007, 75% of Renewable Tax Benefits Went To Corn-Based Ethanol Industry
Generally, the two biggest criticisms of corn-based ethanol have been that it is actually bad for the environment and increases pressure on the world’s food supplies. However, in spite of these facts, U.S. renewable energy policy has been skewed greatly in-favor of ethanol.
Highlighting this fact, Environmental Working Group (EWG) recently released an analysis of U.S. ethanol policy that finds the following incredible conclusions (among others):
- Corn-based ethanol has accounted for fully three-quarters of the tax benefits and two-thirds of all federal subsidies allotted for renewable energy sources in 2007.
A Critique of the 60 Minutes Oil Speculation Report
Barry Ritholtz at The Big Picture takes issue with the 60 Minutes piece on oil speculation from Sunday night. Ritholtz does not argue that speculation did not play a role in the high prices, but instead he thinks it was only a small component of the overall picture. He argues that 60 Minutes basically missed that picture by focusing solely on the role of speculators.
Here are the 10 factors that Ritholtz believes the 60 Minutes analysis missed: READ MORE
60 Minutes Attributes Much of Recent Oil Spike to Speculators
Part 1:
Part 2:
60 Minutes has an interesting look at the recent oil boom. In its analysis, 60 Minutes attributes the massive price run-up to oil speculators at big financial firms like Morgan Stanley and Goldman Sachs, among others. One of the most intriguing facts was that during the over 100% increase in price last year, global demand for oil actually decreased.
60 Minutes analogizes these recent market conditions to those that were manipulated by Enron during the California energy crisis of 2000-2001.
Russia-Ukraine Gas Dispute Cools Off… For Now
Although Russia and Ukraine have apparently reached an agreement to accept international monitors in order to reestablish natural gas flows to Europe, this is unlikely to be the end of this geopolitical saga. Both countries are still far apart on a final solution, with Moscow insisting that Ukraine pay “market prices” (or higher) and Ukraine insisting it should receive cheaper gas, in part due to its importance as a conduit for Russian gas to Europe.
Illustrating the gamesmanship and hostility involved in this recent stalemate, Russia actually raised its price demands every time Ukraine rejected a prior offer. (Starting at $250 and eventually reaching $450 per 1,000 cubic meters.) READ MORE
Oil Falls and Gas Shoots up
Despite the precipitous drop in oil on Wednesday, the average nationwide price of regular gasoline at the pump increased 3.9 cents to $1.727 per gallon. According to AAA, this was the biggest single day price increase since September.
This comes on the heels of recent price spikes in California.
According to the Energy Department, fuel consumption in the U.S. is down nearly 3% from this time last year.
Supertankers Being Used to Store Crude at Sea for Delivery When High Prices Return
Anyone who thinks the days of high oil prices are in the past should think about this:
Both oil traders and oil producers have recently begun using supertankers to store extra reserves of oil for delivery later this year. Although prices are still relatively low right now (around $48 per barrel) oil futures for delivery later in the year are almost 30% higher. As a result, investors see money to be made by purchasing oil today at a relatively low price, paying to store it at sea, with the plan of reselling it back into the market later in the year when the prices are substantially higher.
Frontline Ltd., which is the world’s biggest owner of supertankers, said oil traders have already chartered 25 vessels and may take as many as 10 more in order to store crude for future sales. Traders are seeking to lease the supertankers for three to nine months. Each barrel stored would cost approximately 90 cents a barrel per month for storage. READ MORE
Venezuela Ends Heating Oil Program to U.S. Poor Due to Budget
For the past three years, Venezuela’s state oil company has provided heating oil to low-income households in the U.S. through it’s subsidiary, Citgo Petroleum. Venezuelan leader, Hugo Chavez, began this program after meeting with the Reverend Jesse Jackson a few years ago. For Chavez, the program was a chance to tweak the U.S. government, with which he is constantly at odds.
However, with the dramatically lower price of oil, Venezuela is no longer able to afford these subsidies and has announced it will be ending the program. And while Chavez relies heavily on payments to the poor in order to maintain his legitimacy, once oil fell below $90 per barrel, Venezuela’s budget became unsustainable. Naturally, foreign subsidies like this program are the first to be cut. Whether he has the money, or not, Chavez cannot afford to allow his massive domestic subsidies to wither– which is a fundamental reason why he has so strongly supported OPEC’s efforts to increase the price of oil.
Interactive Map Highlights Our Dependency on Foreign Oil
Check out this cool interactive map that was created by the Rocky Mountain Institute, as part of a grant from Google.org. The map shows how much oil the U.S. has imported, from where, and how much we have spent every month since 1973.
Google explains:
“By clicking on the green light to play, you can see the countries supplying oil to the U.S. (either in terms of barrels or dollar value) and how our imports have changed over the last 35 years. The thicker the line in the map, the more oil produced or imported.”
Watching this dynamic map just further drives home the point that we need to get off of oil now. And to answer those who chant “DBD,” we would suggest pressing the “ANWR” and “Offshore Drilling” buttons on the lower left side of the map.
Europe Being Dragged Into Russia-Ukraine Natural Gas Dispute
Despite claims this week that Ukraine would permit natural gas intended for the EU from Russia to be delivered, there are reports from Poland and Hungary that deliveries from the pipeline have begun to fall. Poland is reporting a 6% decrease in deliveries and Hungary a 25% decrease.
Russia claims that Ukraine is illegally siphoning off gas intended for these countries, while Ukraine asserts that it is Russia that has decreased the output. Leaders of both nations are currently trying to make their case to EU leaders.
Russian natural gas monopoly, Gazprom says that Ukraine can no longer be trusted and that it will have to find an alternative route to get gas to Europe. Whether this is practicable remains to be seen. Fortunately, the EU nations have substantial natural gas reserves, having experienced a similar situation in 2006, the last time these two neighbors reached an impasse.
Via AFP (link may expire)
Oil falls but gas prices increase in San Diego
San Diego, which traditionally has some of the higher gas prices in the country, is experiencing a new increase in gas prices. Strangely enough, this increase is occurring as the price of oil continues to fall.
With oil hovering around $35 per barrel this week, the average price for a gallon of gas in San Diego has risen to $1.81. This is up ten cents from a week and a half ago. This increase is being attributed to a decrease in supply from California refiners. The refiners, who have complained about losing money on sales of gasoline, have cutback their production by 6.4% in the last week. This has created a situation where refiners are apparently back in the black for their wholesale gasoline sales. READ MORE
EPA Administrator Makes Last Ditch Attempt to Tie Obama’s Hands re CO2 Regulation
In a naked political maneuver, EPA Administrator Stephen Johnson has issued a memorandum saying that CO2 is not a pollutant that should be considered when approving new power plants.
This memorandum comes in response to a decision by an EPA panel that requires the consideration of CO2 mitigation processes in the permitting process for new coal fired plants.
GreenBiz reports on this issue:
U.S. EPA Administrator Stephen Johnson has issued a memorandum saying that carbon dioxide is not a pollutant that is subject to regulation when approving new power plants. READ MORE
The Colorado River, and the Civilization Dependent Upon it, Faces Dramatic Threats
Although climate change takes most of the headlines nowadays, the environmental threats we are facing are even more widespread. While climate change will exacerbate many of these problems, there are a number of other external issues that must also be urgently addressed.
One of those environmental disasters that is being worsened by climate change, but which also is being worsened by external events, is the destruction of the Colorado River.
SignOnSanDiego expands on this crisis:
The Colorado River has endured drought, climate changes, pollution, ecological damage from dams and battles by 7 states to draw more water. Now energy companies are sucking up the river’s water to support increased development of oil, natural gas and uranium deposits. Yet, the river must provide drinking water for 1 out of 12 Americans and 15% of our crops. READ MORE
