From the Barrel

A must see for anyone that uses electricity

2010-01-30T19:05:00.002-06:00

I saw the documentary Haynesville the other day. It was awesome. Check out more info here: http://www.facebook.com/haynesvillemovie. It's really a good movie, and doesn't really take that "big oil is so bad" stance like all the other flicks. This one showcases the modern-day necessity of the industry while promoting the benefits of what is indeed a gamechanger for the energy industry.

Latest and Greatest

2010-01-30T18:52:00.002-06:00

My latest assignment is to write a commentary piece on the findings of two studies regarding WTI as a benchmark commodity and its record-shattering price ascent (and decent). Definitely looking forward to writing this one.

Judging from the last time I posted, it's been a damn long time. But I thought I'd share everything since someone may be watching.

How low can you go?

2008-12-01T10:10:00.002-06:00

Turns out that for a while we were all talking about how high oil would go and how it will crash the world's economy.

Well, we were right about crashing the world's economy, but merely months after the Red Leader of the Western Hemisphere predicted $200-300 oil, Hugo Chavez says "fair" the barrel should be $80-100.

What needs to happen to better the global economy is for the barrel to flatten and find the bottom, or what "true value" is. Crude oil, by historical perspective, is cyclical and has had booms and busts. The remarkable thing about this time is the rapidity of its ascent and descent.

One only hopes now that the author can contribute to this page as often as the barrel rises and falls.

Media's Presidential Bias and Decline

2008-10-27T11:02:00.000-05:00

Media's Presidential Bias and Decline
Columnist Michael Malone Looks at Slanted Election Coverage and the Reasons Why
Column By MICHAEL S. MALONE
Oct. 24, 2008

The traditional media are playing a very, very dangerous game -- with their readers, with the Constitution and with their own fates.

The sheer bias in the print and television coverage of this election campaign is not just bewildering, but appalling. And over the last few months I've found myself slowly moving from shaking my head at the obvious one-sided reporting, to actually shouting at the screen of my television and my laptop computer.

But worst of all, for the last couple weeks, I've begun -- for the first time in my adult life -- to be embarrassed to admit what I do for a living. A few days ago, when asked by a new acquaintance what I did for a living, I replied that I was "a writer," because I couldn't bring myself to admit to a stranger that I'm a journalist.

You need to understand how painful this is for me. I am one of those people who truly bleeds ink when I'm cut. I am a fourth-generation newspaperman. As family history tells it, my great-grandfather was a newspaper editor in Abilene, Kan., during the last of the cowboy days, then moved to Oregon to help start the Oregon Journal (now the Oregonian).

My hard-living -- and when I knew her, scary -- grandmother was one of the first women reporters for the Los Angeles Times. And my father, though profoundly dyslexic, followed a long career in intelligence to finish his life (thanks to word processors and spellcheckers) as a very successful freelance writer. I've spent 30 years in every part of journalism, from beat reporter to magazine editor. And my oldest son, following in the family business, so to speak, earned his first national byline before he earned his drivers license.

So, when I say I'm deeply ashamed right now to be called a "journalist," you can imagine just how deep that cuts into my soul.

Now, of course, there's always been bias in the media. Human beings are biased, so the work they do, including reporting, is inevitably colored. Hell, I can show you 10 different ways to color variations of the word "said" -- muttered, shouted, announced, reluctantly replied, responded, etc. -- to influence the way a reader will apprehend exactly the same quote. We all learn that in Reporting 101, or at least in the first few weeks working in a newsroom.

But what we are also supposed to learn during that same apprenticeship is to recognize the dangerous power of that technique, and many others, and develop built-in alarms against them.

But even more important, we are also supposed to be taught that even though there is no such thing as pure, Platonic objectivity in reporting, we are to spend our careers struggling to approach that ideal as closely as possible.

That means constantly challenging our own prejudices, systematically presenting opposing views and never, ever burying stories that contradict our own world views or challenge people or institutions we admire. If we can't achieve Olympian detachment, than at least we can recognize human frailty -- especially in ourselves.

Reporting Bias
For many years, spotting bias in reporting was a little parlor game of mine, watching TV news or reading a newspaper article and spotting how the reporter had inserted, often unconsciously, his or her own preconceptions. But I always wrote it off as bad judgment and lack of professionalism, rather than bad faith and conscious advocacy.

Sure, being a child of the '60s I saw a lot of subjective "New" Journalism, and did a fair amount of it myself, but that kind of writing, like columns and editorials, was supposed to be segregated from "real" reporting, and, at least in mainstream media, usually was. The same was true for the emerging blogosphere, which by its very nature was opinionated and biased.

But my complacent faith in my peers first began to be shaken when some of the most admired journalists in the country were exposed as plagiarists, or worse, accused of making up stories from whole cloth.

I'd spent my entire professional career scrupulously pounding out endless dreary footnotes and double-checking sources to make sure that I never got accused of lying or stealing someone else's work -- not out of any native honesty, but out of fear: I'd always been told to fake or steal a story was a firing offense & indeed, it meant being blackballed out of the profession.

And yet, few of those worthies ever seemed to get fired for their crimes -- and if they did they were soon rehired into even more prestigious jobs. It seemed as if there were two sets of rules: one for us workaday journalists toiling out in the sticks, and another for folks who'd managed, through talent or deceit, to make it to the national level.

Meanwhile, I watched with disbelief as the nation's leading newspapers, many of whom I'd written for in the past, slowly let opinion pieces creep into the news section, and from there onto the front page. Personal opinions and comments that, had they appeared in my stories in 1979, would have gotten my butt kicked by the nearest copy editor, were now standard operating procedure at the New York Times, the Washington Post, and soon after in almost every small town paper in the U.S.

But what really shattered my faith -- and I know the day and place where it happened -- was the war in Lebanon three summers ago. The hotel I was staying at in Windhoek, Namibia, only carried CNN, a network I'd already learned to approach with skepticism. But this was CNN International, which is even worse.

I sat there, first with my jaw hanging down, then actually shouting at the TV, as one field reporter after another reported the carnage of the Israeli attacks on Beirut, with almost no corresponding coverage of the Hezbollah missiles raining down on northern Israel. The reporting was so utterly and shamelessly biased that I sat there for hours watching, assuming that eventually CNNi would get around to telling the rest of the story & but it never happened.

The Presidential Campaign
But nothing, nothing I've seen has matched the media bias on display in the current presidential campaign.

Republicans are justifiably foaming at the mouth over the sheer one-sidedness of the press coverage of the two candidates and their running mates. But in the last few days, even Democrats, who have been gloating over the pass -- no, make that shameless support -- they've gotten from the press, are starting to get uncomfortable as they realize that no one wins in the long run when we don't have a free and fair press.

I was one of the first people in the traditional media to call for the firing of Dan Rather -- not because of his phony story, but because he refused to admit his mistake -- but, bless him, even Gunga Dan thinks the media is one-sided in this election.

Now, don't get me wrong. I'm not one of those people who think the media has been too hard on, say, Republican vice presidential nominee Gov. Sarah Palin, by rushing reportorial SWAT teams to her home state of Alaska to rifle through her garbage. This is the big leagues, and if she wants to suit up and take the field, then Gov. Palin better be ready to play.

The few instances where I think the press has gone too far -- such as the Times reporter talking to prospective first lady Cindy McCain's daughter's MySpace friends -- can easily be solved with a few newsroom smackdowns and temporary repostings to the Omaha bureau.

No, what I object to (and I think most other Americans do as well) is the lack of equivalent hardball coverage of the other side -- or worse, actively serving as attack dogs for the presidential ticket of Sens. Barack Obama, D-Ill., and Joe Biden, D-Del.

If the current polls are correct, we are about to elect as president of the United States a man who is essentially a cipher, who has left almost no paper trail, seems to have few friends (that at least will talk) and has entire years missing out of his biography.

That isn't Sen. Obama's fault: His job is to put his best face forward. No, it is the traditional media's fault, for it alone (unlike the alternative media) has had the resources to cover this story properly, and has systematically refused to do so.

Why, for example to quote the lawyer for Republican presidential nominee Sen. John McCain, R-Ariz., haven't we seen an interview with Sen. Obama's grad school drug dealer -- when we know all about Mrs. McCain's addiction? Are Bill Ayers and Tony Rezko that hard to interview? All those phony voter registrations that hard to scrutinize? And why are Sen. Biden's endless gaffes almost always covered up, or rationalized, by the traditional media?

Joe the Plumber
The absolute nadir (though I hate to commit to that, as we still have two weeks before the election) came with Joe the Plumber.

Middle America, even when they didn't agree with Joe, looked on in horror as the press took apart the private life of an average person who had the temerity to ask a tough question of a presidential candidate. So much for the standing up for the little man. So much for speaking truth to power. So much for comforting the afflicted and afflicting the comfortable, and all of those other catchphrases we journalists used to believe we lived by.

I learned a long time ago that when people or institutions begin to behave in a matter that seems to be entirely against their own interests, it's because we don't understand what their motives really are. It would seem that by so exposing their biases and betting everything on one candidate over another, the traditional media is trying to commit suicide -- especially when, given our currently volatile world and economy, the chances of a successful Obama presidency, indeed any presidency, is probably less than 50/50.

Furthermore, I also happen to believe that most reporters, whatever their political bias, are human torpedoes & and, had they been unleashed, would have raced in and roughed up the Obama campaign as much as they did McCain's. That's what reporters do. I was proud to have been one, and I'm still drawn to a good story, any good story, like a shark to blood in the water.

So why weren't those legions of hungry reporters set loose on the Obama campaign? Who are the real villains in this story of mainstream media betrayal?

The editors. The men and women you don't see; the people who not only decide what goes in the paper, but what doesn't; the managers who give the reporters their assignments and lay out the editorial pages. They are the real culprits.

Bad Editors
Why? I think I know, because had my life taken a different path, I could have been one: Picture yourself in your 50s in a job where you've spent 30 years working your way to the top, to the cockpit of power & only to discover that you're presiding over a dying industry. The Internet and alternative media are stealing your readers, your advertisers and your top young talent. Many of your peers shrewdly took golden parachutes and disappeared. Your job doesn't have anywhere near the power and influence it did when your started your climb. The Newspaper Guild is too weak to protect you any more, and there is a very good chance you'll lose your job before you cross that finish line, 10 years hence, of retirement and a pension.

In other words, you are facing career catastrophe -- and desperate times call for desperate measures. Even if you have to risk everything on a single Hail Mary play. Even if you have to compromise the principles that got you here. After all, newspapers and network news are doomed anyway -- all that counts is keeping them on life support until you can retire.

And then the opportunity presents itself -- an attractive young candidate whose politics likely matches yours, but more important, he offers the prospect of a transformed Washington with the power to fix everything that has gone wrong in your career.

With luck, this monolithic, single-party government will crush the alternative media via a revived fairness doctrine, re-invigorate unions by getting rid of secret votes, and just maybe be beholden to people like you in the traditional media for getting it there.

And besides, you tell yourself, it's all for the good of the country

Bull vs Bear

2008-09-01T22:53:00.002-05:00

I'd often ask myself, "What's the difference between bull and bear?" in terms of economy and market talk. I never realized the answer was so clear to me than just parallel it to Chicago sports. When you think of the Bulls, you think of good things. 6 championships, etc. But the Bears?? Horrible. Kyle Orton or Rex Grossman?

'Bull' is an optimistic outlook while 'bear' refers to a pessimistic market viewpoint.

The Chicago Bulls of the mid 1990's. Michael Jordan, Scottie Pippen, Dennis Rodman, Horace Grant, The Shot, Steve Kerr, et cetera. Good thoughts.

The Bears. Monsters of the Midway during the mid 80's but during the Bulls reign of supremacy, the Bears were horrible. I know the Bulls this year sure sucked, but you get my point, don't you?

I can see clearly now...

2008-08-25T13:26:00.003-05:00

I've been antsy to fill my car up to capacity for a few weeks now as crude's price retreated from its all time-high. I will only put in like 10-15 bucks, sometimes less, because I follow the futures prices intently.

If I know prices will come down in a few days, why fill it up all the way?

Now that crude has somewhat hit a plateau, on Saturday, I filled up my ride at $3.199/gal. Cheapest gas in the H.O.U. that I have seen in quite sometime, so I decided to top it off.

12 gallons = $38.39. First time in well over 4 months that filling up the Silver Streaker cost under 40 bones.

$3.199/gal = $134.358/bbl. Friday's crude close at $114.59, pits a $19.768/bbl profit margin. I know that its futures price and not exactly what the retailer or the refiner paid for it.

Now what really makes me wonder is at what cost did that particular Chevron buy its crude at? Where did it come from? What API grade was it? How much ethanol is in it? What was the cost of the ethanol?

Well, questions asked, but no immediate answers are available. No wonder the American public doesn't "get it" about the oil market.

Name one other product that is literally unseen by the consumer and goes through the same process as crude oil does: literally is sucked out of the ground under miles and miles of dirt and possibly a shitload of water, pumped into a giant tanker or though a pipeline, fired into a distillation tower, blasted through a cracker, swimming through miles of spaghetti-like pipelines in the refinery, transferred to another giant tank, mixed with corn booze, put into a truck and driven to a station, hosed to underground tanks, then sent up through a retail pump and flushed into your gas tank?

There is a lack of transparency in the oil market. But is it because the physical oil itself cannot be seen? Or is it that the paper traded on oil isn't the transparent part?

A sound energy policy

2008-08-22T14:01:00.004-05:00

Amazing what time can do. Seeing as I haven't posted in well over two months, I think it's time to get off the schneid and return to venting.

Crude spiked to $147 in mid-July and receded to settle $114.59 today. Interesting that prices rocketed up and are falling almost as fast. The barrel keeps looking for that bottom, but as energy becomes a hot-button issue in the election year, I came across a fitting statement in this week OGJ.

The US energy policy as it relates to oil and gas is to hoard crude in strategic storage, limit domestic production with land-use policy, stimulate with tax policies and mandates the manufacture and use of uncompetitive fuels, err on the side of high fuel cost in environmental regulation, and treat oil companies like criminal enterprises when fuel prices rise. This is, in fact a comprehensibe energy policy. It's a poor one, but comprehensive none the less.

It's going to be a real interesting campaign season, and it's just now getting heated up. Obama and the D's really had their heads up his ass on energy policy, but until McCain flop-flipped his course on offshore drilling, his head was going where Obama and cohorts were heading.

Shameful that Paris Hilton seems to have hit the nail on the head here.

Don't pay any attention to the man behind the curtain

2008-06-10T10:24:00.002-05:00

Top Car Dealer Says High Gas Prices Are Good for the U.S. Auto Industry

Detroit's big auto makers are slashing jobs, closing factories and undertaking costly revamps of their product strategies to cope with $4 a gallon gas. What's the worst thing that could happen now? Gas could get cheap again, says the man who runs America's biggest auto retailer.

"For once we actually have viable alternatives and exciting technology that are really game changers" in the effort to wean transportation from petroleum, says Mike Jackson, chairman and chief executive officer of AutoNation Inc. "However, if the price of petroleum goes down … it undercuts the viability of new technology."

This guy is basically saying that if oil and gas goes down, then those that have made forays and ventures into alternative energy technologies and other strategies will lose their shirt. So those same people have vested interests in keeping the price up, you would say right?

Who’s really out there wanting that barrel higher?

New refinery to be built in SD

2008-06-04T14:50:00.000-05:00

South Dakota Voters Approve What Could Be First New U.S. Oil Refinery in Decades
Wednesday, June 04, 2008

Voters in Union County on Tuesday approved rezoning for what would be the first new U.S. oil refinery in more than 30 years.

With all 13 precincts reporting, 3,932 voters, or 58 percent, endorsed their county commission's rezoning of almost 3,300 acres north of Elk Point for the $10 billion refinery while 2,855, or 42 percent, opposed it.

The ballot measure garnered solid support in the southern part of the county, with the Dakota Dunes precinct voting in favor 1,017-237 and the one containing North Sioux City approving the ordinance 492-184.

Most rural precincts strongly rejected the rezoning, but they didn't have the population numbers to overcome support in the county's largest towns.

Also backing the refinery were voters in the city of Alcester and in the city of Elk Point, which hosted several hours-long, controversial public hearings on the project.

Preston Phillips, a project executive for Texas-based Hyperion Resources, said he was ecstatic with the outcome.

"We'll continue to work with everyone in the county," he said. "We want to be a good corporate citizen. We want to be a good corporate neighbor."

Despite the approval of the rezoning, Phillips said Elk Point still is not the only site being considered and that the site selection process will continue.

"Any big project like this has to have options," he said.

Hyperion Resources had said it would leave Union County without a fight if voters rejected the rezoning.

Jason Quam of the group Citizens Opposed to Oil Pollution said late Tuesday his group will sit back and evaluate its next steps.

"It's going to be a long road before anything's done on it," he said of the refinery.

The vote was just one stop in a long process and must go through numerous environmental permitting steps, he added.

Quam also said he doubts the company has the financing to get the refinery built.

Mike Curran, who voted against the zoning change, said the company offered few specifics and instead embarked on a public relations pitch to sell the refinery. He said that when a representative called asking for his support, they couldn't give direct answers to any questions.

"As far as I see they never told as anything about it," said Curran, who lives just east of Elk Point.

Kim Hall said she was thinking about jobs when she cast her "yes" vote in downtown Jefferson Tuesday afternoon.

She said a project of that size would bring not just refinery and construction jobs but also would spawn new positions for teachers, police and other professionals. Teens graduating high school in Union County need good-paying jobs if they're going to settle in the area, she said.

"Everybody leaves, and it would be nice to have something for them to put to use their degrees and stay in the area," Hall said.

Elk Point Mayor Isabel Trobaugh said it was odd to have such a spotlight cast on her small town, but she said she was impressed with the high voter turnout.

"We're just a quiet little town," she said. "This is really exciting."

Trobaugh said the refinery would bring needed jobs to the county and that she didn't think it would harm the environment.

She said she talked to the mayors of Ponca City, Okla., and El Dorado, Kan. -- both towns with oil refineries -- and both assured her their communities had clean air and water.

The refinery is proposed for land just east of Interstate 29 between state highways 48 and 50.

Company executives said it would help the United States reduce its dependence on overseas oil. The refinery would process 400,000 barrels of thick Canadian crude a day,

The company petitioned to put the issue on the ballot after the Union County Commission approved the rezoning in March.

Supporters cited economic development benefits from the refinery. Hyperion officials said the project would mean 1,800 permanent jobs and another 4,500 construction jobs over a four-year period.

Hyperion called it a "green refinery" and said it would produce ultra-low sulfur gasoline and diesel and be among the cleanest and most environmentally friendly in the world.

Opponents raised environmental and quality-of-life concerns, but one project executive said the refinery will have the lowest emission levels of any U.S. refinery and will improve the quality of life for the area.

According to an air quality permit application filed with the state, the center each year would emit nearly 2,000 tons of carbon monoxide, 773 tons of nitrogen oxides, more than 1,000 tons of particulate matter, 863 tons of sulfur dioxide and 473 tons of volatile organic compounds. It would also generate 17.2 million metric tons of carbon dioxide each year.

The South Dakota governor's office has supported the proposal.

Opponents have noted the high-level support and the backing from economic development groups but said the local people would be the ones deciding the rezoning.

Critics of the proposal hit hard on the quality of life issue, saying an oil refinery would produce millions of pounds of toxins during its lifetime. They also said it seemed as if the state and local governments allied themselves with Hyperion and had not asked critical questions.

Plans called for construction to begin in 2010 and last about four years.

How the oil crisis has hit the world

2008-05-31T12:40:00.001-05:00

Shocked! How the oil crisis has hit the world

By Andy McSmith, Jerome Taylor and Nigel Morris
Saturday, 31 May 2008

British pensioners who cannot afford to heat their homes. European hauliers and fishermen whose livelihoods are under threat. Palestinians forced to fill up their cars with olive oil. Americans asked to go down to a four-day week.

All around the world, in a multitude of ways, the soaring price of oil is hurting rich and poor alike. For the lucky ones, it is simply a matter of changing their lifestyle. But those most vulnerable to the price of oil have been driven on to the streets in angry protests, which raise a fundamental question: what can we do to survive in a world where a barrel of oil costs $127 (£64)?

Great Britain

The rise in the oil price could not come at a worse time for Gordon Brown. After a week that has seen hauliers blocking roads and air passengers facing higher surcharges, yesterday it was the impact on fuel bills that came to the fore. The Prime Minister's attempt to ease the pain felt by pensioners and low-income families from rising fuel bills was dismissed as a "sticking plaster to hold back a catastrophe". It consists mainly of advice on coping with the cost of heating rather than extra money.

The number of Britons in "fuel poverty" – 10 per cent of their income goes on energy – is thought to have reached four million. The average annual household bill for heat and light is now more than £1,000. The Government plans to reform data protection laws so that low-income families can be contacted directly by the companies and offered help. The aim is to ensure that the "social tariffs" get to the people that need them most.

Alistair Darling, the Chancellor, said the energy suppliers had agreed to increase "social assistance" from £50m a year to £150m by 2011. The money will be used to switch consumers to lower tariffs and insulate homes.

Kate Jopling, the head of public affairs at the charity Help the Aged, described the measures as a "sticking plaster to hold back a catastrophe". She said: "While it is welcome news ... this initiative does not go nearly far enough to deal with the looming fuel poverty crisis."

The Government's announcement came at the end of the week in which Mr Brown saw a rerun of the political crisis he faced in his early years as Chancellor. Lorry drivers blockaded roads into London and in Wales to demand that a planned 2p rise in fuel tax be scrapped and that "essential users" should be granted a rebate. The only time between the 1997 and 2001 elections when the Labour government looked vulnerable was when Mr Brown suspended rises in fuel taxes after a similar blockade.

Separately yesterday, Britain's Silverjet airline announced it had stopped flights after failing to get a $5m loan from Abu Dhabi-based investors, becoming the third London to New York business class-only carrier to run out of money.

Europe

Luxembourg's Finance Minister, Jean-Claude Juncker, who chairs the commission of European Union finance ministers, issued a call to all EU governments yesterday to hold their nerve and avoid the temptation to use the tax system to relieve the misery of high oil prices. He reminded them that, when they met in Manchester in 2005, they agreed that such a move would encourage demand and send the wrong message to oil producers.

That is not what France's President, Nicolas Sarkozy, wanted to hear yesterday, after a week of protests by French truckers and fishermen left several motorways blocked and ports paralysed. M. Sarkozy suggested capping fuel taxes if the oil price rose further.

In the Netherlands, the protests caused less inconvenience, but made more noise when, at 11.45am on Thursday, lorry drivers across the country simultaneously blew their horns in protest at diesel prices. In Bulgaria, lorry and bus drivers launched a joint protest.

The protest spread to the seas yesterday, as fishermen across Europe went on a one-day strike, blocking ports. The biggest demonstrations were in Spain and Portugal where 10,000 protesters converged on Madrid. Some handed out free fish to underline their point that, with the current cost of fuel, they are practically giving their catches away. Passers-by pushed and shoved to get their hands on the free hake.

Meanwhile, the Newcastle to Scandinavia ferry route is being cut by the Danish company DFDS Seaways, who said it was a loss-making service incapable of being turned around. The company blamed "dramatically increasing oil prices, over-capacity in the travel marketplace and the economic slowdown".

The United States

There are signs that the fuel crisis is persuading Americans to think about leaving the car in the garage. In March this year, the number of miles driven by American motorists was 11 billion fewer than in March 2007, according to the Transportation Department. That is the sharpest drop year on year that the department has ever recorded, and the first fall of any kind recorded in the month of March since 1979.

The US Energy Department projects that this year, domestic gas consumption will drop by 190,000 barrels a day and overall petroleum use by 330,000 barrels a day, the first annual fall since 1991. But those figures look less impressive when expressed as percentages. Eleven billion fewer miles is a drop of 4.3 per cent and 330,000 barrels is less than 1 per cent of the country's total daily consumption.

Even so, this is good news for the environment, since the US's greenhouse gas emissions fell by nine million tonnes in the first quarter of 2008. And insurance companies report a sharp drop in road accidents.

An increasing number of employers, anxious to keep their staff, are offering them the option of working longer but fewer days, to cut out journeys to work. There is a plan to offer public employees on New York's Long Island the opportunity to work four 10-hour days, instead of five eight-hour days – a move which, it is reckoned, would save more than 30 barrels of oil a day. When Kent State University, in Ohio, offered this opportunity to 94 security staff, 78 of them snapped it up.

But the changing travelling habits have created problems for America's bus and subway systems, which are having to cope with a sudden increase in passengers at the same time that they are paying more for fuel. In Eugene, Oregon, 16 per cent more people took the bus this month than in April, but the town's main bus company, Lane Transit District, is losing money and cannot afford to expand.

Airlines, which are struggling to break even, are reluctant to raise the price of tickets and are introducing fees for baggage handling instead. American Airlines has slapped a $16 fee on the first piece of baggage checked in by economy-class passengers. Other airlines have followed.

But Southwest Airlines, in California, is laughing, because it took a gamble at the start of the year and bought 70 per cent of the fuel it estimated it would need in a full year for a paltry $51 a barrel – two-fifths of the current price. It is probably the only US airline that will be able to make a profit without increasing charges.

In Northern California, one man thought he had found a way to profit from the crisis. He was spotted rummaging around in the garbage behind a Burger King, with a tube and a storage bin. When police caught up with him, they found that he had 2,500 gallons of used fryer grease stolen from various restaurants. Chip pan fat is worth more than four times what it was a few years ago, making that haul worth more than £3,000.

Outside Seattle, the owner of a pizza restaurant is thinking of installing a CCTV camera over its 50-gallon cooking-oil barrel to keep rustlers away. "Fryer grease has become gold," its owner, Nick Damianidis, told The New York Times. "And just over a year ago, I had to pay someone to take it away."

South America

With some of the most prominent oil producers operating outside of the Middle East and a preponderance of left-wing governments insulating their populations from fuel price increases with heavy subsidies, South America has so far managed better than most with the fuel crisis.

In fact soaring oil prices have bulked up budgets to record levels in countries such as Venezuela. Badly scarred by the oil crises of the 1970s, many Latin American nations have since diversified their energy mix by encouraging the use of biofuels. In Brazil, the world's largest ethanol producer, biofuels account for more than half of transport needs. But while biofuels have kept petrol prices down, food prices – particularly in Central American countries such as Mexico and Haiti – have shot up as vast tracts of arable land are switched from producing food to fuel.

Asia

Daily protests have erupted across Indonesia this week after the government removed subsidies on fuel, leading to an overnight price jump of 30 per cent. Despite being south-east Asia's largest oil producer, Indonesia has struggled to meet even domestic demand due to aging wells and declining investment. On Wednesday, Jakarta announced it would quit Opec because it was unhappy with the way the international oil cartel was dealing with the crisis. But Indonesia's poor have been left reeling by the removal of fuel subsidies and have taken to the streets.

Malaysia has told petrol stations to stop selling fuel to Singapore-registered cars. Singaporeans often take advantage of cheaper oil prices in Malaysia by driving over the border and filling up there. At the same time, airlines across the Asia-Pacific region are scrambling to cut flights and increase surcharges to boost their haemorrhaging cashflow.

This week Hong Kong's Cathay Pacific and Taiwan's China Airlines announced they were considering scaling back some long-haul routes whilst Korean Air said it would temporarily cut flights on 12 international routes over the summer. Much of the regional strain placed on Asia's oil reserves comes from China's near-insatiable consumption of energy. But in an indication of how the country is struggling to import enough fuel, at least three major Chinese cities brought in diesel rationing yesterday.

Africa

Africa is at the sharp end of the oil shock and the inter-related surge in food prices. With millions living on the tiny margin between subsistence and starvation, fuel costs can quickly become a matter of life and death. Governments already under pressure from food protests, and in some cases such as Mozambique violent riots, have now to contend with a new problem.

In South Africa, the government announced yesterday that petrol prices for next week alone would rise by 5 per cent. This brings the increase in petrol prices so far this year to 33 per cent, while the price of diesel, used extensively in farming and heavy industry, has leapt 49 per cent.

There are also growing fears that rapidly increasing fuel prices could have a knock-on effect for aid agencies in countries such as Ethiopia, which are struggling to pay for fuel. This week the Red Cross said in its annual report that rising oil and food costs would mean it now needs much more money than last year just to keep the same level of aid distribution. Africa remains the largest area of Red Cross spending, accounting for 45 per cent of the field budget in 2007.

Middle East

Not even the region with the world's largest oil reserves has escaped the pressures. As major importers beg major producers such as Saudi Arabia to release millions more barrels on to the world markets those Middle Eastern countries unlucky enough not to be sitting on lakes of black gold are facing growing resentment from their own populations over fuel prices.

In Egypt, petrol prices have risen by as much as 40 per cent in a year. Yemen has been rocked by riots in the south, which is home to only a fifth of its 22 million population but produces 80 per cent of the country's oil. Young men and separatists, angry that very little of the nation's oil wealth has trickled down to ordinary people in the south, have been protesting since April, raising concerns that Islamic militants could exploit the unrest in the notoriously fractious country.

In Gaza this week, where fuel shortages have long been a major source of seething discontent due to rationing by Israel and Hamas, Palestinians were forced to fill their cars with olive oil instead of diesel.

Iran is acutely vulnerable to rises in fuel prices because, despite being the world's second largest producer, it is still forced to import about 40 per cent of its petrol because of a lack of refining facilities. Protests last year over fuel prices brought in rationing, which is still in place in Tehran and other major Iranian cities.

Australasia

As Kevin Rudd's newly elected government tries to stem a wave of discontent over prices at the petrol pumps, the airline Qantas announced this week that it was intending to slash hundreds of jobs, freeze executive pay and shut down some domestic rural routes.

Its low-budget offshoot, Jetstar, announced it would cut the number of routes it flew by 5 per cent angering many of those living in Australia's vast interior who rely on the low budget airlines. In an indication of just how much pressure the world's airline operators are under, Qantas estimated that this year's fuel bill would be £500m more than last year. Petrol prices in Melbourne this week hit an all-time high of 164.9 cents [80p] a litre on Wednesday.

Arctic

With the threat of the world's oil reserves one day running out, energy-hungry nations are frantically looking towards the more inaccessible areas of the world for new sources. This week, the five main powers bordering the Arctic – Canada, Denmark, Norway, Russia and the United States – met in Greenland for a two-day summit to discuss their various claims of sovereignty over the Arctic Ocean seabed.

The summit was a bid to stop the Arctic becoming a flashpoint between the nations because of the natural resources it is thought to contain. Oil prospectors believe it could be home to a quarter of the world's undiscovered hydrocarbon reserves. In August, Russia upped the stakes by planting a flag under the North Pole. The five countries at the summit agreed to let the UN rule on conflicting territorial claims for the region's seabed.

Environmental campaigners, who were not allowed to attend the summit, are concerned that a new scramble for the Arctic has begun and are worried that future exploration could damage the area's sensitive ecosystems. They have called for a similar treaty to that which currently regulates the Antarctic, which bans all military activity and mineral exploitation.

Drill Here, Drill Now, Pay Less

2008-05-30T13:41:00.002-05:00

Sign the petition and send to friends:

Drill Here, Drill Now, Pay Less

A slippery slope

2008-05-29T15:04:00.000-05:00

INSIGHT: Polar bears, politics and petroleum
29 May 2008 15:47 [Source: ICIS news]

By Joe Kamalick

WASHINGTON (ICIS news)--The recent decision by the US Department of the Interior (DOI) declaring the polar bear a “threatened” species may well stand as a watershed event that ultimately could shut down further development of US oil and gas reserves.

Both sides of this heated environmental dispute agree that the department’s 14 May decision to list the arctic polar bear as threatened marks a major turning point in US environmental and energy policy.

The future of domestic oil and especially natural gas production is of crucial interest to the country’s petrochemicals sector and derivative industries because they are heavily dependent on natural gas as both a feedstock and energy source.

Those industries and the broader US manufacturing sector are already facing domestic energy access restrictions and the related four-fold price increases for natural gas that have spurred migration of production capacity and jobs to other countries. Anything that further restricts energy resources is a critical concern.

The Interior Department’s action marks the first time that US regulators have determined that an animal species is threatened or endangered because of current and potential impact of global warming on the creature’s habitat.

In the polar bear’s case, environmentalists successfully argued in federal court that global warming has drastically reduced the amount of arctic sea ice and proportionately diminished the bear’s habitat.

But according to many who oppose the department’s action, the ruling has implications that reach far beyond the polar bear's habitat in Alaska and eventually could block indefinitely access to vast US oil and gas reserves in outer continental shelf (OCS) regions, in the Rocky Mountains and oil shale and tar sands development in the US west.

“This decision will have far-reaching consequences,” said Senator James Inhofe, the Oklahoma Republican and long-time opponent of anthropogenic global warming theories.

“This decision to list the polar bear as ‘threatened’ is based more on politics than science,” Inhofe said, challenging a fundamental part of the Interior Department’s ruling, namely that the arctic polar bear is currently threatened by global warming.

Inhofe, the ranking Republican on the Senate Environment Committee, noted that the arctic polar bear population is now estimated at 20,000 to 25,000 animals, up considerably since the 1950s and 1960s when the creature’s numbers were as few as 5,000.

As the polar bear cannot reasonably be said to be under current threat, given their population growth, Inhofe argued that the department also had no basis to classify the bear as threatened because of what might happen under global warming.

“With the number of polar bears substantially up over the past 40 years, the [department’s] decision appears to be based entirely on unproven computer models,” he said, referring to projections of global warming impacts 40 and 50 years out.

“The implications of the department’s decision,” Inhofe added, “will undoubtedly lead to a drastic increase in litigation and eager lawyers ready to use this listing to do exactly what they have intended to do all along - shut down energy production.”

The State of Alaska agrees with Inhofe. In notifying the Interior Department that it intends to file a civil suit to block and reverse the department’s polar bear ruling, Alaska Attorney General Talis Colberg argued that basing the ruling on what might happen under global warming was beyond the department’s listing authority, which was supposed to be based on the best available scientific data.

“Forecasting events out 40 to 50 years as the ‘foreseeable future’ cannot be considered to be based on the best available scientific and commercial data and are no more than guesses,” Colberg said, “because reliable forecasts of climate change are not possible beyond about 10 years.”

Alaska is worried that the polar bear ruling could jeopardise further production of its oil and gas reserves and perhaps torpedo the massive Alaska pipeline project that is finally beginning to move forward. Oil and gas royalties account for the bulk of Alaska’s state revenues.

However the legal battle turns out, in the meantime the polar bear decision is likely to put a further chill on hopes among some in Congress of reviving oil and gas exploration and development in OCS regions on the US Atlantic and Pacific coasts that have been closed to drilling for 26 years under congressional moratoria.

Don Norman, a top energy economist at the Manufacturers Alliance, says the Interior Department ruling “represents a foot in the door for environmentalists and opens huge potential for attempts to block development of further oil and natgas production, especially in Alaska but elsewhere as well”.

“For those, like me, who favour further development of domestic energy resources, we are concerned about what can happen with this ruling, and rightly so,” he said.

Although the Interior Department’s polar bear ruling included a special provision that would allow energy development to continue in polar bear habitat, Norman was worried that that caveat could easily and quickly be set aside when a new US presidential administration came to power in January next year.

In addition, said Norman, by establishing, however precariously, the distant potential for global warming as grounds for listing a species as threatened or endangered, the department had opened the door for a rash of similar lawsuits.

“It will be easy for environmentalists to find other species in the Rockies or in offshore areas that are ‘threatened’ by global warming,” Norman warned.

“Once you establish the principle that this is a legitimate concern and basis for the ruling,” he said, referring to the global warming element of the department’s decision, “there’s no telling where this can go.”

Indeed, the Center for Biological Diversity, one of the principal plaintiffs in the federal court case that forced the Interior Department to make its ruling, is already taking steps to broaden it.

Kassie Siegel, climate programme director for the centre, said the ruling ultimately would mean any activity within the US that contributes to global warming could be said to be further threatening polar bear habitat.

Even though the department’s ruling specifically held that activity outside of Alaska could not be deemed to have an effect on the bear’s habitat, Siegel said that aspect of the ruling would fall and was already being challenged in court.

“That is illegal because under the Endangered Species Act, you cannot exempt from regulation the very thing - in this case, global warming - that is threatening the species,” she said.

“What we are saying in our litigation is that activities that impact polar bear habitat are not just those in the habitat area itself in Alaska but any activities anywhere in US jurisdiction that cause global warming, including for example oil shale and tar sands development in Utah, Wyoming and New Mexico,” Siegel added.

The centre has already filed a new suit seeking to force the Interior Department to make a similar global warming threat listing for walruses and other Pacific coastal marine life.

“The Bush administration is still trying to avoid regulating greenhouse gas emissions,” Siegel said, “but this Interior Department ruling is the beginning of the end of that failed policy.”

“This is a watershed moment,” she said.

By: Joe Kamalick
+1 713 525 2653

High prices here to stay

2008-05-29T13:23:00.000-05:00

“We thought oil was high back in 1979. This time it doesn’t appear to be a blip on the radar screen; it’s reality.”
MIT airline data research engineer William Swelbar

Barrel is Down $3.34

2008-05-27T17:37:00.002-05:00

Crude settled $3.34 down from Friday on a strengthening dollar and forecasted lower demand in Asia. Asian fuel subsidies are about to expire, which means higher prices for them but possibly lower prices for us.

Hmmmm....

How high

2008-05-21T15:59:00.005-05:00

No, this is not about that idiotic movie starring Redman and Lisa Turtle.

No, the question is how high must a barrel go until we realize that our current energy policy has failed us.

I'm not a gloom-and-doom kind of guy or one that fully subscribes to the Peak Oil theory. And I can't stand those people that just have that frankly wish that society is going to crash and we should flee for the hills. I also don't have high regard for those idiots that say we are damning our climate by burning hydrocarbons.

It's blatant bullshit.

Enough complaining. Enough pandering. Enough speculation.

The time to act is now.

We must open the forbidden areas of the offshore continental shelf to exploration and production.

We must drill in ANWR and other places in Alaska.

We must further allow the usage of nuclear power.

We must get all that coal out of the mountain side.

We must stop burning our food for fuel.

And finally, we must stop shooting ourselves in the foot, preaching all this climate change horseshit.

When will the people get it??

Who's to blame for $4 gas

2008-05-20T11:40:00.003-05:00

A really good article came on CNN today, explaining why we have $4/gal gas. It's scarily dead-on accurate, too, which is saying a lot for most of the garbage that spews from the toxic airwaves of CNN.

Whenever friends/family/colleagues/ignorant folks ask why are gas prices so high and bitch and complain, I offer two simple reasons coupled to a bold explanation. Basically, 1) we're handcuffing ourselves because we can't further explore for our own energy or increase refining and 2) everyone else wants oil, now too.

Imagine going to the store every week to get a gallon of milk, and for the first few weeks, the gallon was on the first aisle, right when you walk in the front. However, each week you notice the milk keeps getting further and further away, causing you to hit the 6th, 7th, 8th aisle. Soon, you have to walk to the far back of the store to get that same gallon. Other factors affecting the milk are that the store will only sell you a half gallon, or perhaps the store only has a certain type of milk. Oh yea, the price of a gallon has increased four-fold in less than a decade, too.

And now, we're at the point where that milk is 4 blocks away...

Instead of reposting the whole article, I'll reiterate the main point each year on what the author is saying. Full article here.

2004: Demand pressure
Demand grew and pushed supply to its threshold as economies in third world countries started to surge. Think soccer moms with SUVs, and increased energy usage in China and India.

Why we are finding less oil and using more of it is partly a result of the low prices during the 1990s. Those low prices - partly caused by low gas taxes in the U.S. compared to other developed nations - both encouraged rapid consumption domestically (think SUVs) and underinvestment in new production by the world's oil companies.

Gasoline prices topped $2 a gallon for the first time ever in May of 2004.

2005: The storm
In addition to hurricanes Katrina and Rita (recall that Rita thrashed our refining infrastructure more than Katrina), the BP's Texas City refinery exploded in March, knocking out nearly 500,000 bbl/day of refining capacity. That accounted for 2% of domestic refining capacity.

Basically, 2005 fully explicated how fragile the petroleum refining industry is. 25% of domestic refining capacity is along the US Gulf Coast, and KatRita barreled through that region, making coastal towns and the refineries its bitch. Also, producing platforms in the Gulf were shut down as workers evacuated from offshore.

A new refinery hasn't been built in the United States in three decades.

2006: Hot tempers
Uh oh. Now we have world powers playing a war of words with each other. Nationalism at its finest.

Iran and the spat over its nuclear program dominated the news in early 2006, and combined with Israel's invasion of Lebanon in the summer of that year to cause another spike in gas prices to over $3 a gallon.

Some say the Bush administration's provocation of Iran and Venezuela, coupled with a botched occupation of oil-exporting Iraq, has contributed to the geopolitical tension. But defenders say that, in the long run, the administration's actions will eventually lead to a more democratic - and thus stable - global supply.

However, outlook remained strong, albeit difficult, as a major discovery, Jack 2, was made mid-year by Chevron, Devon and other players in the deepwater Gulf of Mexico. Deepwater technology is still in its infancy, and only now bringing those projects online is it even economical to drill and produce from that deep.

2007: Tight supplies
Reconstruction and demolition/salvage efforts stemming from KatRita still haunted the US refining and production industry. Not only that, a major labor shortage reared its head, in terms of manual labor, such as construction and procurement, but also in white-collar positions like engineers as the industry gets older.

New supplies of oil from non-OPEC countries were supposed to come online in 2007 and ease some of these supply bottlenecks. But problems in Kazakhstan and Russia - as well as sweeping drilling bans in the United States - mean global consumption is growing twice as fast as non-OPEC production.

And now OPEC, which hold two-thirds of the world's oil reserves but sees a global economy humming along despite $130 oil, has little incentive to increase production.

Why would a country further open its reserves and up its production when the big gorilla in the room can’t even find it for himself in his own damn country?

2008: Speculators swarm
With the US economy looking like it is going to slow down and enter a mode of sustainability rather than growth, the commodity markets (oil, gold) have boomed. Banks and investment firms hedge, and continue to push the market up.

Money flowing into oil - and commodities in general - has been especially sharp over the last 6 months as investors look for good returns amid falling stock prices and an inflation hedge against a falling dollar.

Global demand for middle distillate fuels (diesel, kerosene-type jet) has skyrocketed, as the market for such fuels is becoming increasingly tight. Diesel fuels, unlike gasoline, are distillate, meaning it’s not a blend. It’s straight up vaporized from a barrel of crude.

However, as the demand for the middle distillates is ever-increasing, the immediate and easy access to supply of such fuels is shortening. Heavy and sour crudes are becoming more and more prevalent, but the demand is being pulled to the middle of the barrel.

So refiners have to expand their process and add equipment and/or operations to remove sulphur and other unwanted impurities.

"You can't just point the finger at speculators," Michael Haigh, head of U.S. commodities research at the investment bank Société Générale, recently told CNNMoney.com "Fundamentally, the markets are where they are supposed to be."

Others are less certain.

"The fundamental picture to us doesn't justify the price," said Lehman's Crandell. "It's kind of suggestive of a bubble."

Now can you see why we have $4/gal gas??

31,000 scientists said to oppose warming theory

2008-05-19T15:40:00.000-05:00

WASHINGTON (ICIS news)--A US group that has challenged global warming theories said on Monday that 31,000 scientists have signed its petition urging Congress to not impose mandatory limits on greenhouse gas emissions.

However, the petition was dismissed by private environmental officials who charged that some of the petition’s signatures are either false names or lack scientific standing.

The Oregon Institute of Science and Medicine (OISM) said it has received signed petition cards from more than 31,000 US holders of scientific degrees who agree that “There is no convincing scientific evidence that human release of carbon dioxide, methane or other greenhouse gases is causing or will in the foreseeable future cause catastrophic heating of the Earth’s atmosphere and disruption of Earth’s climate”.

The petition is the result of mailings by the institute in partnership with former National Academy of Sciences president Frederick Seitz who in a cover letter argues that the 1997 Kyoto climate treaty is based on flawed concepts.

“Research data on climate change do not show that human use of hydrocarbons is harmful,” Seitz said.

He also said that limits on emissions of carbon dioxide (CO2) and other greenhouse gases would have severe negative effects on developed nations and those emerging economies “that are attempting to lift from poverty and provide opportunities to over 4bn people”.

The petition was challenged by the Environmental Defense Fund (EDF) on Monday, with fund spokesman Dan Cronin charging that some of the petition signatures are false or lack scientific standing.

“The overwhelming consensus is that global warming is happening and that it is man-made and it is something we need to take action to remedy,” Cronin said. He noted that some major US corporations and the administration of President George Bush support the global warming theory and the need to take remedial action.

The US Senate is expected next month to debate a major climate change bill that would impose mandatory limits on industrial and transportation emissions of carbon dioxide and other greenhouse gases. The legislation is opposed by many in the US chemicals industry and the broader manufacturing sector.

($1 = €.65)

To discuss issues facing the chemical industry go to ICIS connect

By: Joe Kamalick
+1 713 525 2653

Are we really too late??

2008-05-06T10:47:00.003-05:00

'Too late’ for ANWR oil exploration - Simmons
05 May 2008 23:01 [Source: ICIS news]

HOUSTON (ICIS news)--Lack of equipment and infrastructure are greater obstacles to drilling for oil in the Arctic National Wildlife Refuge (ANWR) than political resistance, energy investor and author Matthew Simmons said on Monday.

“It’s too late for ANWR,” said the chairman of Simmons & Company investment firm and author of Twilight in the Desert, a 2005 book expounding the peak-oil concept.

“There are not enough rigs, and we don’t know what we’d find up there,” he told ICIS from the sidelines of the Offshore Technology Conference (OTC) in Houston.

With crude oil prices hitting $120/bbl in futures trading on Monday, escalating global demand for energy has led some industry executives and politicians including US President George Bush to renew calls for drilling in the protected 19m-acre (79,318-square-km) area.

Environmentalists and many Democrats oppose the idea of drilling in the wildlife sanctuary.

Demand for natural gas is forecast to grow as chemical and energy producers search for cleaner feedstock alternatives.

But Simmons played down the role natural gas will have as a feedstock in the future, saying the infrastructure needed to extract and process it was “in a worse shape than with oil.”

“What we need to do is figure out how to back natural gas out as a feedstock for electricity,” he said.

Aged infrastructure will be the biggest problem facing the oil and gas industry in the coming years, Simmons said during a presentation at the OTC.

He called the decaying steel at the world’s oil and gas wells, refineries and pipelines “an evil more dangerous than depletion” and said infrastructure concerns, along with decreasing oil supply, would drive traditional energy prices even higher.

“The supply of oil and gas has low likelihood of growing,” he told the audience during his presentation. “Prices have a much higher likelihood of growing.”

Simmons estimated it could cost as much as $150,000 bn to completely renovate the world’s oil and gas infrastructure, adding that number could increase as commodity prices, especially steel, continue to climb.

Fuel from Food and the Ethanol Debate

2008-05-01T10:34:00.006-05:00

Here's a real good article from America's heartland, my birthplace, Kansas City. Loss of fuel economy from ethanol-blended gasoline hits motorists in the wallet

No surprise there. Too bad the only thing people will look at is the price at the pump when filling up.

I did come across another real good article that truly spelled out how when a idea sounds great at first, then over time, we see the consequences of such action. Burning our food for fuel is, in my opinion, the most idiotic and foolish policy we put into practice.

The Law of Unintended Consequences and an IPO
By Paul Goodwin

We have fun with laws all the time. Think of the bumper sticker that says: "Gravity, It's Not Just a Good Idea, It's the Law." Or how about the law that says that your supermarket line is the one that will have the price check? Or even the one that says that toast that falls off the table will fall buttered-side down (probably one of the many variants of Murphy's Law)?

There is, however, one law that's been a favorite of mine since I ran into it in a college history class. It's The Law of Unintended Consequences.

The classic example of the LUC is the Treaty of Versailles that ended the First World War. The victorious allies were somewhat peeved with Germany, and celebrated by imposing harsh reparations and economic restrictions to punish it. (Just a bit of trivia: one of the provisions of the Treaty was that Bayer, the German pharmaceutical giant, was forced to give up two patented pain relievers. The first was being sold under the trademark Aspirin. The second was trademarked Heroin. But more about that later.)

The popular LUC theory is that the huge monetary reparations and strict industrial limitations placed on Germany created the economic chaos that allowed the Nazis to come to power and start WWII. (Some historians disagree about this, but historians will disagree about just about anything, so they don't get a vote.)

True or not, it's the perfect story to illustrate how ignorance, stupidity, short sightedness, malice and the vagaries of chance can turn well-meaning attempts at rule-making into a source of negative outcomes.

Another classic example of bad results from good intentions is America's 13-year experiment with outlawing the sale of alcohol, known variously as the 18th Amendment to the Constitution, The Volstead Act or just plain old Prohibition.

It's universally accepted now that Prohibition was a dismal failure, succeeding only in allowing organized crime to grow into a profitable colossus, encouraging the production of untold gallons of questionable (and sometimes dangerous) brews and liquors, and turning millions of Americans who just wanted a little drink into criminals.

My favorite current example of the Law of Unintended Consequences at work is the adoption of ethanol as the replacement for the 10% of MTBE added to U.S. gasoline supplies. Since MTBE has been shown to be a persistent pollutant of ground water supplies, a change seemed like a good idea, and ethanol was a renewable, plant-based, U.S. product that would help farmers and reduce dependence on foreign oil. Clearly a win/win proposition.

Well, not so much. It turns out that the prime source of raw material for ethanol production is corn. Corn production, in turn, is sensitive to applications of fertilizer.

As the price of corn rose in response to this new demand, the price of fertilizer skyrocketed, tripling in some cases. Together with the diversion of massive amounts of corn from the human food chain to the automotive drive chain, rising prices for fertilizer have increased food prices worldwide, contributing to inflation, hunger and poverty.

And the price of fertilizer is still going up.

The Law of Unintended Consequences is a serious business, but not a solemn one. It can produce misery, and dire results, but it also yields the kind of ironic outcomes that make great stories.

To get back to my bit of Bayer trivia, I like to point out that there have been two attempts to produce a non-addictive form of opium. Everyone wants the pain relief that opium brings, but addiction is a high price to pay. So a German pharmacist, convinced that it was the impurities in opium that made it bad, refined it and named the resulting compound for the Greek god of dreams, Morpheus. Thus was morphine born.

Working on the same principle of purification, Bayer further refined morphine and named the resulting compound after the German word heroisch, which means "heroic." It's not a name most people would apply to heroin these days, but that's the way the Law of Unintended Consequences works.

Electricity Generation in Houston

2008-04-24T15:33:00.004-05:00

Here's an interesting article about the eletricity gap faced by Iran by a good publication. ET is relatively center in their work, looking at all sides of the issue, as should all journalists. Robert Bryce is a model journalist as well, always taking a look at every angle of the debate.

What is most interesting about the article is the graphic concerning the space required for electricity generation for the summertime in the city of Houston. I'd post it up here, but I can't find the source code to do it at the moment.

Here are some reactions after sending the article to fellow colleagues:

While this is interesting, it is also somewhat misleading. Wind, for example, would definitely eat up the space but would be highly unlikely a choice for Houston, given we A. don’t have expensive space to share with wind units, and B. don’t have much wind to fuel them anyway. That renewable is best suited for states such as New Mexico and Nevada. ... We have choices in deciding what alternative energy can be part of an overall solution. A one-size fits all approach is childish. - J.T.

Wind is just hot air when it comes to power generation.- L.K.

Fossil fuels will indeed continue to play the major role in our – and everyone else’s – economy for some time to come. One thing that’s missed from the discussion, it seems to me, is that most – not all, but most – critics of fossil fuels realize they’re important, but also think we have to shift our reliance from them to other forms of energy.G.L.

The debate, ahem, is not over.

Voters Don't Care about Global Warming - but They Should

2008-04-23T15:36:00.000-05:00

Voters Don't Care about Global Warming - but They Should
In what's become Earth Month, the media press on as though it's Public Issue No. 1.

By Amy Menefee
Business & Media Institute
4/23/2008 3:32:32 PM

If you’re not too concerned about global warming, you’re probably a regular American. If you think, however, that it’s on par with World War II as a threat to the nation, you’re the managing editor of Time magazine.

Al Gore’s “We” ad campaign drew a parallel between fighting global warming and storming the beaches of Normandy. Then Time took the iconic photo of Marines raising the flag at Iwo Jima and replaced the Stars and Stripes with a tree.

“[W]e say there needs to be an effort along the lines of preparing for World War II to combat global warming and climate change,” Time Managing Editor Richard Stengel said on MSNBC April 17. “It seems to me that this is an issue that is very popular with the voters, makes a lot of sense to them …”

The election year has the media scrambling to put every issue in the context of “voters.” Newsweek’s April 14 issue devoted 18 pages to “Environment and Leadership,” pondering the presidential candidates: “Who’s the Greenest of Them All?” Yet these magazines are out of touch with what real voters are thinking.

Gallup reported April 21 that “While 61% of Americans say the effects of global warming have already begun, just a little more than a third say they worry about it a great deal, a percentage that is roughly the same as the one Gallup measured 19 years ago.”

Two decades of global warming alarmism and activism, and no more than a third “say they worry about it a great deal”? No wonder Gore’s rustled up $300 million to shout at people. The Washington Post reported April 18 that “the economy and the Iraq war are the top two issues on voters' minds, according to the new Post-ABC poll.”

Yet Newsweek’s Jerry Adler proclaimed: “At this vital juncture in the Earth’s history, it’s clear that the American people are looking for a presidential candidate who will take climate change ‘very seriously.’” His justification: “last year more than three voters in 10 said they would take a candidate’s green credentials into account.”

That’s about 30 percent of voters saying they would even take it “into account.”

Somehow, all the media hype hasn’t fazed us much. It looks as though global warming is more the concern of the media elite than the majority of working, voting Americans.

That shouldn’t be the case.

Voters must start caring, because all three candidates have said they would use government power to try to regulate the climate. And government power always translates to taking our money and controlling our lives.

According to Newsweek, all three favor a cap-and-trade system for carbon dioxide emissions. This is where voters should sit up and pay attention. The economy is our No. 1 concern, and a cap-and-trade system would cause chaos in the economy.

Everyone concerned about a possible recession in 2008 – after GDP grew less than 1 percent in the last quarter of 2007 – should consider the effects of a 4- to 5-percent reduction in economic growth. That’s what prominent economist Arthur Laffer projected under cap-and-trade programs, which he equated to “a potential income loss of about $10,800 for a family of four,” according to his study with Wayne Winegarden.

And that estimate was just for the example of reducing “greenhouse gases” 7 percent below 1990 levels (the original Kyoto Protocol target). Hillary Clinton and Barack Obama vow to cut those emissions 80 percent below 1990 levels by the year 2050.

The media don’t like to talk about how much that would cost us. In the latest study of global warming coverage, the Business & Media Institute found 90 percent of the stories didn’t mention cost at all, even though the networks urged immediate action to stop the “climate crisis.”

If journalists think today’s economy is bad, just wait until it’s gutted by the unlimited costs of climate “action.”

This is what the media aren’t telling you: Global warming policy and the economy are one and the same.

Voters must care, but not for Al Gore’s reasons. Plenty of scientists say we don’t have to fear a global warming apocalypse. The global food riots stemming from forced biofuel policy serve as a chilling clue of what we do have to fear. Instead of global warming causing food shortages, U.S. government policy has done that. Instead of rising sea levels, we must fear rising tax levels. Instead of ice caps melting away, we must fear our jobs evaporating.

Elevating the earth’s temperature to the prominence of our enemies in World War II is abominable. Ignoring what the next president could do to us is dangerous.

Amy Menefee is managing editor for the Media Research Center’s Business & Media Institute. www.businessandmedia.org

A salad bowl of international players

2008-04-23T11:20:00.002-05:00

Was on vacation for a week, so I didn't keep up with the bloggage.

Petrobras, Brazil's nat'l oil company, is bringing the first FPSO project into the Gulf of Mexico, and as many in the industry know, they are stepping up to the plate to bring O&G production to the States.

The Cascade/Chinook project is the first major field development executed by Petrobras in the US, and it is bringing an international scope of partners and contractors together to produce hydrocarbons in the ultradeepwater Gulf. The t\three operator partners (one the national oil company of Brazil, one a large US independent, and the other HQed in France) have contracted a Norwegian company, which in turn, is using a British company to help design the FPSO, which is being modicified and converted at a shipyard in Singaport before sailing to the Gulf.

Whew, that was a mouthful. All to bring energy to your gas tank and home.

Like Mikey McDonald says, higher and higher

2008-04-08T13:59:00.005-05:00

US EIA raises energy price forecasts

HOUSTON (ICIS news)--The Energy Information Administration (EIA) on Tuesday revised its forecast for US benchmark crude oil pricing in 2008, predicting the average cost of West Texas Intermediate (WTI) crude oil to be $101/bbl for 2008 as a whole, compared with predictions of $94 in March.

The EIA cited rising world oil consumption and low surplus capacity combined with investment in commodities for the readjustment in its forecast.

However, the administration said it is forecasting a decline in crude prices to $92.50/bbl on average for next year, but that estimate also represents an increase from the agency’s month-earlier forecast of $86/bbl on average for 2009.

“The increase in non-Organization of the Petroleum Exporting Countries (OPEC) production in the second half of the year, however, is expected to contribute to increases in OPEC surplus crude oil production capacity and ease upward price pressures toward the end of the year,” the administration said, supporting its crude oil price decline prediction for next year.

Based on the projections of weak economic growth and record high crude oil and product prices, the EIA predicted US petroleum consumption to fall by 210,000 bbl/day this year, accounting for projected increases in domestic ethanol production.

...
Read the rest here.

Behind every big crime there's a rich white man waiting for his cut

2008-04-04T15:19:00.007-05:00

I’ve been saying for sometime that we’re facing a greater crisis than so-called manmade climate change. Folks, read this article, take it all in, then tell your sources that this is why prices are seemingly always in an upward spiral.

Judge for yourself, and draw your own conclusion I say. Seems to me that if there is no carbon left to burn, then why the hell are we trying to sequester and place a foolish cap/trade racket on our economy?

The answer is quite simple: follow the money. And when I say follow, I mean watch it all go right into Al Gore’s pocket.

Behind every big crime there's a rich white man waiting for his cut.
James Carter Rush Hour 2

Now read this article about Matt Simmons and Peak Oil.

Yikes...

Tour a refinery

2008-04-03T17:35:00.002-05:00

This is a pretty good video if you have no idea what happens in a refinery or how one works.

This is no April Fool's Joke

2008-04-01T10:51:00.003-05:00

If anyone is interested, and you should be, watch your tax dollars at work, grilling those oil suits:

http://www.c-span.org/watch/cs_cspan3_wm.asp?Cat=TV&Code=CS3

Here are some questions your fearless leaders should be asking (provided by an expert friend of mine):

Who voted to delay drilling ANWR so we could have a $36.5 billion bigger trade deficit, a weaker dollar and higher crude prices?

Who voted to not drill off of California? Florida? The East Coast? Etc?

Who voted to increase the cost of making gasoline by 48¢/gallon so we could have cleaner, lead free air to breathe?

Who debated increasing CAFÉ for years so America could need more gasoline and be more dependent on imported oil supplied by people who do not like us?

Who voted to increase the use of ethanol that increases NOx and VOC emissions and gives back at most back 1.5 times the energy required to make it while essentially ignoring renewable diesel fuel which reduces NOx, VOC, PM, CO and Air Toxics emissions while giving back 3.5 times the energy required to make it?

When do we investigate the corn farmers who are reported (DOA in this morning's WSJ) to be conspiring to plant 8% fewer acres this year?

Who thanked the refining industry for making fuels that decrease automotive pollution 99%?

Remember, I am not on the bankroll of oil producers or a lackey for the industry. I pay for gasoline, jet fuel, plastics, beer, corn and everything else the same way you do.

Seems to me that if we didn’t consume over 20% of the world’s daily supply while restricting ourselves to over 85% of our own offshore resources, we probably wouldn’t be where we are. And legislative attempts at trying to reduce our impact on climate as well as using our food for fuel doesn’t help either.

But that is just me thinking. Who the hell am I? A rational, taxpaying American just like you.

Not only Weird, but Bad Science

2008-03-14T18:28:00.004-05:00

Read this op-ed from the Washington Times. Some effective quotes:

The researchers who created the hockey stick used the wrong time scale to establish the mean temperature to compare with recorded temperatures of the last century.

The IPCC ... failed to provide the most basic requirement for effective climate policy: accurate temperature statistics.

Those that are for taxing American industries and promoting that frivilous and economically detrimental cap and trade emission are slowly, but surely, trying to redistribute the wealth in this country while holding the guise of promoting the environment.

It literally brings tears to my eyes.

Like Shooting Yourself in the Foot

2008-03-14T10:56:00.001-05:00

Our Thorny Oil Patch
from CNN Money

When America's biggest oil refiner contemplates putting almost a third of its refineries on the market, Congress should sit up and take notice. The business climate it has created is hurting our economy.

Valero Energy Corp. is an industry leader that refines more oil than any other in the U.S. The San Antonio, Texas, company had a good run in the stock market this decade, rising 1,400% before earnings topped last year. But it's no longer so easy for the company or any refiner.

Valero will probably sell three of its 17 refineries this year and maybe two more later to focus on its core operations amid what CEO Bill Klesse acknowledged on Tuesday is a weak economy.

But maybe that's because the environment for the energy business in the U.S. has turned downright hostile.

Upstream, oil drilling is off-limits, crimping supply and driving prices ever higher. Downstream, refiners are hit by not only high energy prices, but also bureaucratic regulations, environmental lobbies and special interests that make moving to Asia, where economic growth is still valued, more attractive.

The sorry fact that no new refinery has been built in America since 1983 has been cited so many times that we would have thought someone in Washington would have done something about it by now. But no -- it just keeps getting worse.

In 1982, the U.S. economy was served by 301 refineries. By 2007, the number had dwindled to 149. Productivity has kept output steady over the years at 17 million barrels a day. But the U.S. economy has grown by 125%.

"Valero believes there will never be another refinery built in the U.S.," spokesman Bill Day told IBD. He cited costs, environmental regulations, neighborhood activism and lawsuits.

"For a new refinery, it would take five years for a permit and five years for construction, and it's very expensive. A company would have to know it would pay off."

Congress has been of no help whatsoever. Mandates requiring certain ethanol percentages in gasoline composition are chopping down refiners' market share at the pump.

Refiners are undercut by the subsidies ethanol producers get that refiners don't. Ethanol producers are also protected by high tariffs on overseas ethanol, while imported gasoline comes in duty-free. This brings in a lot of competition for refiners.

Given these conditions, is it any wonder companies such as Valero are looking for friendlier climes?

The laws by which Congress hamstrings energy producers have had the lethal effect of slowing down the economy while driving up prices. It's high time for measures that do just the opposite.

Want to help with global warming?

2008-03-11T11:33:00.004-05:00

Want to help with global warming? Then hold your breath.

Valero CEO William Klesse
March 11, 2008
106th annual NPRA meeting

Insert noun here

2008-03-06T13:45:00.005-06:00

Remember those ad-lib booklets where you insert words like an adjective, noun, or place to complete a story and the story all silly and crazy?

I did one here and this is what I got:

Hello, folks. We're live at the Olympics. Everyone is very excited about the typing race. All eyes will be on Gene Hackman who is representing Afghanistan. Gene Hackman has already won 420 medals here at the stadium. Here come the athletes now! Gene Hackman looks a little cold as she gets ready to race. And they're off. Gene Hackman and John Wilkes Boothe are neck and neck as they near the finish line. The crowd is on their feet throwing. Gene Hackman has won, and it's a world record!
We quickly move to the medal ceremony. This is very emotional. We just heard that this is Gene Hackman's last Olympics. Tears are in Gene Hackman's eyes as Afghanistan's flag is raised and Life in the Fast Lane is played. It's a loud day for Gene Hackman and all the people from Afghanistan.

That was funny, now try it for yourself.

See what I am getting at is it seems there are so many reasons why the barrel is climbing and hitting a new record everyday. News reporters, and we all know how smart and spot-on they are, seem to be just inserting any reason on why crude oil rises without doing any real research.

Tonight, on Local 6 News, oil prices hit a new record today because:

The weakening dollar
Inventory draws
Geopolitical tensions

In actuality, while those suggestions equate to the situation and make sense, there is, as Paul Harvey would say, the rest of the story.

There are a few reasons why energy values are rising, and one major reason is that the standard turnaround season has hit where refineries will switch from producing more middle grade fuels, such as diesels and heating oil, to producing lighter products. Refineries are shutting down units so they can make more gasoline.

Why? Summer driving season approaches.

Additionally, heating oil and other distillates have sharply increased in relation to the NYMEX, sparking from a 0.25 cent discount last week to nearly a nickel premium today. A trader that I spoke with indicated exports have risen, with many market players sending a lot of material to South America and some across the pond.

I spoke with a seasoned colleague (not Lefty Johnson) and this is what he said:

The spring maintenance period allows refiners to make repairs as necessary and to shift production from the maximum amount of middle distillates to maximum gasoline yields. This really means about a 5% change in the amount of the products that is made. While the turnarounds will lower production, refiners tend to build inventories of refined products ahead of the maintenance work.

LSD inventories should decline in part due to the usage by trucks as well as increased demand from the ag sector for field preparations and planting. Also stocks will decline due to the lower production rate. Some of this should be offset by an increase in imports if LSD and other distillate grades. Overall, things should remain relatively well balanced, but price movements will be dictated by hedge funds and dentists that have no clue how the system works.

Oh, and don't count out the fact that there is a major industry event next week in San Diego, CA and many market players will be there, leaving inexperienced participants and noobs to deal the dirt.

Should be an interesting week. I know I am stoked about San Diego.

FYI - crude settled at $105.47 today. An all-time high.

Tax and Hike, or Hands off

2008-03-05T09:53:00.007-06:00

Exxon is going to invest a shitload of money ->Exxon Mobil will put $125 billion in big projects, CEO says

There you have it folks. The key reason why we should not tax energy companies further. Substantial investments need to be made in all aspects of energy production because we continue to be a demanding society.

I had an email exchange with a very intelligent, yet liberal, colleague of mine. We'll call him Johnson. We definitely don't see eye to eye, but I respect the man because his personal convictions are just that way. He holds them strong. We've had hours of talk about global warming, presidential campaigns, rock music, etc. He's a good guy, but leans left.

One particular response went like this:

I feel we have a big problem on our hands, and it comes down to national security and energy independence. Bottom line. Think about this for a second: if we are not to secure energy sources and have access to affordable energy (and not just for us, but have our military available for protection of say, European energy supplies), can you imagine if crude hits $150 because some nutball radical takes a major refinery hostage or just bombs it? What about $200?

You must understand supply and demand economics. We are in a global market. I think it is completely possible. I think we are a headline away from having $5/gallon gas. What if the Iran leader actually decides to bomb Israel? You don’t know whether he will or will not. He certainly talks like he will.

The more preaching on why we need to tax the energy companies even is so completely irrational to me that it literally makes me sick. Sick to my stomach. How the hell is taxing a company on a product (gasoline) that we NEED to survive as a society going to lower costs? And then how the hell are we supposed to develop energy independence if we handcuff ourselves by not allowing development of ALL energy sources? We need more research. More E&P. More cellulose and renewable energy production. More drilling. But safety and environmental factors FIRST and FOREMOST, always.

Houston in the 1980’s was not a good place to find work from what I have read about. The restriction of oil exploration and the windfall profit tax held on the energy companies killed the Houston economy.

What it boils down to Johnson, is basically what one person thinks about the role of government. Should the government promote what the people say is the best for the people, or should the people decide that the government knows best and the people will do what the government says?

In my opinion, the role of government is to promote the welfare and social responsibility for the people, while keeping their hands in tune to what the market and economy determines. Whether that is to regulate and tax, or to have the laissez faire attitude, the government should do what the majority of the people desire, to do what is best for the next generation, i.e. the future.

It’s how I feel about many issues, abortion, global warming. Government should not tell a woman what she can and can’t do to her body, but government shouldn’t promote it either. How is killing the next generation good for a society?

Now, equate that to the whole global warming/climate change debate. What is it? Global warming? Or climate change? The earth has been warming since the ice age, right? The climate has changed, is constantly changing, and always will change. There are much larger factors affecting climate than how CO2 emissions, which account for only a fraction of a percent of atmospheric composition. Solar activity has a much larger affect on our climate.

And we DO NOT KNOW if we are actually changing it at a more rapid pace. Evidence points both ways. Face facts from both sides of the aisle.

Now, tell me again, how the government is supposed to act? If we don’t actually know whether or not we are changing our climate, and to what degree we are changing it, and how we are to react to a it, then how is the government supposed to act in the best interests of the people?

You know one positive thing I get from this debate, Johnson, and what really makes me happy, is FINALLY we as a society are getting the underlying message: sustainability of our society and the promotion that we need to protect and maintain the environment.

Bottom line: use energy more efficiently, develop energy in a more efficient manner, and use energy to sustain our economy and society, not to line our pockets excessively. And do it in a responsible manner to the environment.

But that leads me back to the top and the lack of faith in the leaders we have in front of us. I sincerely feel most just do not seem genuine and for the best interests of the people.

Just remember folks, the opposite of right is wrong...

Blend this

2008-03-03T17:00:00.002-06:00

US oxygenate statistics were released today, providing further evidence that we are using more and more ethanol in our gasoline.

MTBE began its near-overnight phase-out back in 2005, and since then, ethanol's production and usage has skyrocketed while MTBE has essentially been used in small markets and for the most part, exported.

This brings up quite a few issues when you pull back and look at the big picture of the US gasoline market.

Why did we make the switch to ethanol? Decrease our reliance on imported oil, perhaps. Reduce pollutants and lower our carbon emissions, maybe. There are many reasons, of course, but my gut tells me that the people with the ability to make ethanol really lobbied to get their product in our market.

The farmers really got their way, and seeing as we have a man running for leader of the free world from Illinois, a top-corn producing state, you can probably bet that

Granted, MTBE is indeed a potent chemical, but everytime you see 'MTBE' in the media, you get 'suspected carcinogen' right before it. The reason why you hear that it is harmful is not because the oil companies want to poison you, it's because corrosive underground storage tanks leaked the material in the groundwater.

Remember the movie, A Civil Action, with John Travolta? Same concept where pollutants from a chemical used by a tanning company leaked in the groundwater.

I'm not too sure where I am really going with this, but to me it just seems so DAMN silly that we are using our food for fuel.

Why couldn't they repair the tanks? Why can't we produce more switchgrass ethanol than corn ethanol?

It's easy to say that farmers would rather grow corn than cabbage if they can get more money for corn, and they are subsidized for doing it.

This country needs to learn sustainability and not wasting so damn much. Maybe then our air will be cleaner, but probably not.

It's well known that the air in SoCal is pretty filthy, and I will see first hand how polluted it is next week when I head to San Diego for the NPRA's annual meeting.

During this trip, I will journal many of my adventures, including a trip to the La Brea tar pits, and tips on how to travel greenly.

Beyond Rationality

2008-02-27T15:53:00.003-06:00

So BP has decided they might get out of the 'green' business, which I can't say I don't blame them.

Their track record over the past few years has been marred by pipeline leaks and refinery explosions, most notably the Texas City blast in 2005.

With such a giant target on their backs as well as impending demand from shareholders to squeeze profits, what did you expect them to do?

I said from Day 1 that their marketing gimmick of 'Beyond Petroleum' was image fodder. No one with a brain would put any investment into that.

But the significance of this announcement is the fact that BP has realized alternative energy ventures are just too expensive and not profitable at this time.

When will the rest of America wake up?

Oil hits a high; some in U.S. see $4 gas by spring

2008-02-26T23:09:00.004-06:00

Know what the scariest part about the rise in gasoline is?

Oil hits a high; some in U.S. see $4 gas by spring
By Jad Mouawad

Wednesday, February 27, 2008

Gasoline prices, which for months lagged the big run-up in the price of oil, are suddenly rising quickly, with some experts fearing they could hit $4 a gallon by spring. Diesel is hitting new records daily and oil closed at an all-time high on Tuesday of $100.88 a barrel.

...

As oil prices spiked last fall, low wintertime gasoline demand helped keep prices in check. But now, experts say, the price of oil is finally showing up at the pump.

...

"We've gone this high without the normal summer dynamics," said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. "That's when I think we will have the big jump of 50 cents to 75 cents a gallon."

Kloza said he expects gasoline to peak around $3.50 to $3.75 a gallon nationwide. Geoff Sundstrom, AAA's spokesman, echoed that view and added that $4-a-gallon gasoline is possible this summer. "We've gone from a worrying situation for gasoline to one that is quite alarming," Sundstrom said.

...

While demand keeps growing, producers are struggling to catch up. They are not replacing the oil they are pumping out of the ground fast enough because of various restrictions on access to fields, as well as rising costs. Meanwhile, demand from China, India and the Middle East is expected to push oil consumption up by more than 1 million barrels a day, each year, for the next decade.

"An oil crisis is coming in the next 10 years," John Hess, the chairman of Hess Corporation, said at a recent conference in Houston hosted by Cambridge Energy Research Associates. "It's not a matter of demand. It's not a matter of supplies. It's both."

###

Russel Casse: Good God! I’ve been sayin’ it. I’ve been sayin’ it for ten damn years. Ain’t I been sayin’ it, Miguel? Yeah, I’ve been sayin’ it.

movieactors.com

Red but mostly a blue Monday

2008-02-25T16:20:00.007-06:00

Wanting to touch on more than just the energy industry, I'd like to digress and discuss politics, for just a second.

Thomas Edison said once that not everything that counts can be counted, and not everything that can be counted counts. I feel sometimes the average American just doesn't count to these big head politico machines.

The major media outlets and their political cohorts on both sides of the aisle are pushing the smaller guy out the window, saying what they say just doesn't count. Why? What makes them count less than the other, big name pandering pool of political pinheads pushing their party's plan?

There is too much talk and not enough action. Too many pundits. Too many talking idiotic heads on 24 hour news channels pushing entertainment and not journalistic integrity.

Why can't someone offer a decent answer to a question?

The answer, quite frankly, is, the decent questions that count aren't being asked.

That is all I have to say. If given the opportunity to ask the candidates one question, it would run along the lines of:

Why is the country handcuffing ourselves when it comes to domestic energy production, yet all rhetoric surrounds "energy security" and "energy independence" in addition to "reducing emissions"?

At this point in our world, you can't possibly have one without affecting the other.

Energy independence You want to stop imports of oil from the Middle East and elsewhere around the world? Well the people need to push for more domestic drilling and expansion of all energy production projects. AND NO MORE TAXES!
Energy security You want to have cheap, affordable energy without supply interruptions? Well then the people need to use less and make sacrifices.
Reducing emissions You want a world without carbon emissions? Impossible, but the people can try if they stop breathing.

I actually enjoyed what the GM exec Bob Lutz said about global warming, that it's a "crock of shit." Fantastic. Finally, someone saying it like it is.

But what is lost in the muck is the second part of what he said: "I'm motivated more by the desire to replace imported oil than by the CO2 [argument]."

Basically, the guy is saying that in order for me to run my company successfully and make money, he is more driven by what the market desires, i.e. a more economical car. He knows that rising gasoline prices and the desire of the people to demand a car that can move from point A to point B in a more fuel efficient manner will sell cars, not by the hot air about trying to combat global warming.

Does what Lutz said count?

What counts more for you? That ever-increasing dent in your wallet thanks to skyrocketing energy prices, or the slight potential that the byproduct of your energy usage may increase the world's temperature 1 degreee?

The wheel in the sky keeps turning

2008-02-22T17:38:00.003-06:00

The markets have closed, and business has wrapped up by the time I am writing this on a sunny Friday in Houston. Another day, another million made or lost for the business. More than likely, it's a few million made. But as we see with the escalating cost of a barrel, operating costs are also ascending, too. When the cost of operating a business gets higher, prices get higher. And when prices get higher, the consumer (usually you) gets a bigger hit to the wallet.

While shuffling through the bustle of the internet, I stumbled across this gem of an article. Authored over a year ago, Verleger puts it in some pretty plain English the 6 reasons as to why energy costs are burgeoning. His main points are bolded, and my commentary is in italics.

First, global economic growth would boost energy and particularly oil use at near-record rates if supply were available.
Think China and India.
Second, twenty years of underinvestment have created supply constraints that make it impossible to meet growing demand.
Remember the Houston economy in the 1980’s, when the barrel collapsed? No one in Houston wants to recall that time.
Third, spreading nationalism in countries holding the largest reserves of easily accessible oil and gas further worsen the supply problem.
Think Venezuela.
Fourth, needed investment in private-sector capacity expansion is being discouraged by uncertainty created by efforts to reduce global warming gases.
Fear trumps rationality. And dare you go against the enviro-crowd.
Fifth, supply will be limited by conflicts in oil-exporting countries.
Think Nigeria.
Finally, efforts to substitute away from hydrocarbons or to conserve will be hampered by the problem’s enormity.

Everyone needs energy, either fuel for cars or food for humans, and it takes energy to produce energy. Usage of ethanol, solar, and any other “alternative” energy source is not, and will not be in the near future, capable of replacing hydrocarbon-based fuel in this lifetime.

Chew on that. Meanwhile, wish me well as I drive home and jam some Journey.

Welcome to From the Barrel, a blog dedicated to the energy industry

2008-02-21T23:19:00.001-06:00

Thanks for checking in on the first post for FtB. It's late Thursday 21 February, and crude dived down over 2 bucks on the NYMEX today, following two consecutive settles over $100. It seems this $100/bbl is just the next level, and each headline seems to either push it up or down, like a roller coaster. Or better yet, like the Showcase Showdown on the Price is Right. You know, where the guy gets an extra grand if his price hits $1.00. If a barrel spikes $100, traders and brokers get like an extra $1,000 from Bob Bar---Drew Carey, I mean. Ridiculous.

The market will keep spinning, businesses will keep running, Americans will continue to commute to their office over 20 minutes away, sometimes an hour. Nothing is going to happen overnight. The supernova will not kill us all.

Calm down, lets all get on the right foot. Maybe both messages from the environmental crowd and the industry honks are right. How about we come to a compromise? When was the last time you heard someone say, "Tell you what, I think I am right, and you think you are right. Let's just call it a truce and work together."

Back to the History Channel.