Saudi Oil Minister Reaffirms Importance of Fossil Fuels, but Forecasts Eventual Shift
On Monday, the Saudi Arabian Oil Minister reiterated the importance that fossil fuels will continue to play for many years into the future:
“Given their massive scale, non-renewables will remain the world’s energy workhorse for many decades to come… While the days of easy oil may be over, the days of oil as a primary fuel source for the people of the world are far form over.”
Yet, the Minister also recognized that Saudi Arabia is preparing for the eventual shift towards clean energy, noting, “The world’s largest oil exporter also hopes to be the world’s leading solar power provider someday… All energy sources will have a role to play in meeting future demand.”
The Tides Are Turning: Obama to Increase Taxes on Offshore Drilling
Offshore drilling would become more expensive under President Obama’s proposed budget. The proposal would levy “a new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes that have given oil companies excessive royalty relief.”
Additionally, new revenues, along with funds from the stimulus bill, would be directed towards clean energy research and development. The proposed budget calls for “significant increases” in spending for renewable energy, carbon sequestration, and power transmission projects. The stated goal of these measures is to position “the United States as the world leader in climate change technology.”
Gasoline Prices Magically Rise as Oil Stagnates
The entire oil production chain stinks. From the cartel of petro-states that drill it to fund their illegitimate regimes, to the traders that hoard it and play market games, to the allegedly independently operated refineries that mysteriously require unexplained maintenance all at the same time, the path to the pump is to corrupt and too easily manipulated. Practically every step along this chain there is the will and the ability to artificially decrease the supply in order to prop up prices.
Despite the fact that a barrel of crude has been sitting around $40, the average price of a gallon of gas is now $1.92, up from $1.79 a month ago.
Gregg Laskoski, managing director of public relations for AAA Auto Club South said that some of the increase in price can be attributed to lower output by U.S. refineries. Laskoski noted the odd situation where “A recession and rising unemployment translates into fewer motorists on the road and diminishing fuel consumption, and yet, retail prices climb higher.”
The sooner we transition off of this corrupt and polluting commodity, the sooner our economy, planet, and way-of-life, can regain some security.
Bush’s Last Minute Oil and Gas Leases in Utah to be Canceled
Interior Department Secretary Ken Salazar, in canceling oil and gas leases in Utah this week, took a big step towards reversing some of the Bush administration’s more controversial eleventh hour environmental decisions. The leases at issue, which were rushed through towards the end of Bush’s term, were criticized for being too close to sensitive national parks and not nearly valuable enough to justify the damage to these areas.
The 77 parcels represent 130,225 acres near Arches and Canyonlands national parks, Dinosaur National Monument and Nine Mile Canyon. The canceled bids are worth around $6 million and those bidders will have their money returned.
Although these leases could be re-granted after a more thorough review, this seems unlikely. Salazar also emphasized that there needs to be a smarter balance between the environment and commercial use. READ MORE
Gasoline and Oil Up, Future Price Direction is Murky
The price at the pump is continuing to rise. Numbers released on Wednesday show that the average price per gallon for regular gasoline in the U.S. rose 6.3 cents to $1.85 and the California average rose by 7.6 cents to $2.06.
The price of crude also rose on Wednesday, climbing 6% to $43.55 a barrel for March delivery. The LATimes notes that there is currently a conflict among oil experts regarding the future price direction for oil. READ MORE
Abu Dhabi to Increase Renewable Energy Production
Gulf emirate Abu Dhabi has announced its goal of producing 7% of its energy from renewable sources by 2020. The United Arab Emirates, which includes Abu Dhabi, is the fifth largest oil exporter in the world. Despite this fact, the emirate has focused quite a bit on clean energy.
Abu Dhabi is currently constructing a “zero emissions” suburb called Masdar City, and is also playing host to the World Future Energy Summit, which is being described as the “Davos of renewable energy.“ The Summit is set to open on Monday and hails itself as the “largest meeting of influential figures within the renewable energy industry.”
Bush Administration: Open California Coast to Offshore Drilling
In a parting gift to the oil industry, the Bush administration has officially proposed opening up 130 million acres of the California coast to oil and natural gas drilling. The proposal was made by the Interior Department, and also includes areas of Alaska’s Bristol Bay.
Offshore drilling in the U.S. has been back on the table ever since Congress foolishly allowed the moratorium to expire last year amid high gas prices and election-season pressures. READ MORE
With Declining Revenues, Venezuela Looks to Bring Back Foreign Companies
With lower oil prices, petro-states have been finding it harder to project their influence across their borders. Venezuela, which has used its excess oil wealth to support a wide-range of social subsidies, including its heating oil program in the U.S., is facing a massive budget crunch due to decreasing oil revenues.
The NYT reported on Wednesday that this decline is due to a combination of factors, including the failure of Venezuela’s national oil company, Petróleos de Venezuela, to produce enough oil for sale and a decline in other sectors of that nation’s economy, due to capital flight stemming from the nationalization of these industries by President Hugo Chavez. READ MORE
Presidential Directive Lays Out U.S. Policy Towards Rapidly Changing Arctic Region
The White House on Monday released a Presidential Directive laying out U.S. policy towards the rapidly changing Arctic region. With the melting of the arctic ice, a whole slew of new issues, ranging from access to new shipping lanes to extraction of natural resources such as oil and natural gas, are being created.
With the list of nations bordering the arctic including the United States, Canada, Denmark (Greenland), Finland, Iceland, Norway, the Russian Federation, and Sweden, there is a wide range of disputes that are likely to arise in the future. The Directive lays out some general policies to guide the U.S. approach towards these issues:
1. Meet national security and homeland security needs relevant to the Arctic region;
2. Protect the Arctic environment and conserve its biological resources; 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.
Not a Drop to Drink… But Plenty to Use For Drilling and Mining
Foreshadowing the impending conflicts of the 21st century, a battle is heating up in the American West between water and oil interests. On the one side are those in favor of exploiting the massive oil shale reserves under the Rocky Mountains. These reserves are one of the biggest remaining oil resources in the world– containing three times as much oil as that remaining in Saudi Arabia.
Although oil shale extraction is extremely costly, energy intensive, and polluting, it is the massive amount of water that it consumes that is really bringing out the political opposition. Opponents worry that the Colorado River, which is already being taxed to its limits, can not support the enormous draw that would be required for wide scale shale mining in the region. READ MORE
California’s Mini-Price Spike for Gasoline Continues
California, which traditionally has some of the highest gasoline prices in the nation, is continuing to see a mini-price spike that began a few weeks ago. On Friday, the average price per gallon of gas in San Diego County rose to $1.865. This marks the 16th day out of the last 18 that the price of gas has increased in that region. In comparison, the national average price is at $1.626 per gallon.
Although California prices are still way below record highs seen during the summer (San Diego peaked at $4.63), the recent volatility is a reminder of the continuing vulnerability we have as a society to this finite and polluting resource. Maybe this little price spike will act as a reminder that we cannot enter another phase of complacency.
Plant-Based Bioplastics Provide Promising Alternative
Unless you’ve been to the Santa Monica Farmer’s Market or are in the plastics industry, you are probably not familiar with the idea of plant-based plastic bags, cups, and utensils.
Called “bioplastics,” these alternative materials are derived mostly from corn, but can also be based on other plants such as switch-grass, among others. Similar to biofuels, bioplastics are intended to reduce our consumption of oil and to be more environmentally friendly than its petrochemical based competitor. However, also like biofuels, there are some questions regarding their effectiveness in this regard. READ MORE
Ethanol stations coming online as gas prices sit well below E85
By the end of February, there will be 29 new E85 ethanol stations open near Sacramento, CA. These stations are part of a $3.5 million project by the state to make the relatively scarce alternative fuel more available to drivers. The intent of the plan was to create an “ethanol island” where enough E85 would be regionally available to encourage drivers to use flex-fuel cars and fill up with E85.
However, now that these E85 pumps are opening, the price of gas has plummeted below ethanol and station owners are concerned that drivers will opt for the less expensive choice. With ethanol nearly twice as expensive as gas right now, it is unlikely drivers will choose to fill their flex-fuel cars with E85.
The original intent of the government program was to help reduce greenhouse gases and dependency on foreign oil. Of course, even under ideal price conditions, the former is debatable and the latter is unrealistic– since it is unclear whether ethanol is actually good for the environment, and without advancements in cellulosic techniques, we’re replacing one unsustainable situation with another.
Oil and gas drilling in the U.S. falls 12% from peak
A recent report from oil services company, Baker Hughes Inc., shows that the number of oil and gas drilling rigs in the U.S. that are online has fallen by 12% from this September’s peak and is down 2% from this time last year. The total number of working drilling rigs currently sits at 1,790.
This slowdown in domestic oil and gas production (sub req) is being attributed to falling energy prices and tight credit. Higher cost wells and fields are being taken offline and less cash is available to pursue general operations. READ MORE
