Energy Portfolio Managers Blog

Michael Klare: Life after the Age of Oil

There can be no question that Barack Obama and many members of Congress would like to accelerate a shift from oil dependency to non-polluting alternatives. As the president said in January, “We will commit ourselves to steady, focused, pragmatic pursuit of an America that is free from our [oil] dependence and empowered by a new energy economy that puts millions of our citizens to work.” Indeed, the 7 billion economic stimulus package he signed in February provided billion to modernize the nation’s electrical grid, billion in tax incentives to businesses to invest in renewable energy, billion to states for energy efficiency initiatives, and billions more directed to research on renewable sources of energy. More of the same can be expected if a sweeping climate bill is passed by Congress. The version of the bill recently passed by the House of Representatives, for example, mandates that 20% of US electrical production be supplied by renewable energy by 2020.

But here’s the bad news: even if all these initiatives were to pass, and more like them many times over, it would still take decades for this country to substantially reduce its dependence on oil and other non-renewable, polluting fuels. So great is our demand for energy, and so well-entrenched the existing systems for delivering the fuels we consume, that (barring a staggering surprise) we will remain for years to come in a no-man’s-land between the Petroleum Age and an age that will see the great flowering of renewable energy. Think of this interim period as — to give it a label — the Era of Xtreme Energy, and in just about every sense imaginable from pricing to climate change, it is bound to be an ugly time.

Dust storm blankets Sydney as drought bites

SYDNEY (Reuters) – A huge outback dust storm swept eastern Australia and blanketed Sydney on Wednesday, disrupting transport, forcing people indoors and stripping thousands of tonnes of valuable farmland topsoil.

The dust blacked out the outback town of Broken Hill on Tuesday, forcing a zinc mine to shut down, and swept 1,167 km (725 miles) east to shroud Sydney in a red glow on Wednesday.

By noon on Wednesday the storm, carrying an estimated 5 million tonnes of dust, had spread to the southern part of Australia’s tropical state of Queensland.

Burgan, fabled Kuwait oil field in irreversible decline with high water cut

Production from the world’s second-largest oil field may decline without the help of international oil companies. Kuwait, which produces 2.2 million bbl/day, has failed to renew agreements with several international oil companies including BP and Chevron. The Burgan, second in size only to Ghawar in Saudi Arabia, has an estimated capacity of 1.4-1.5 million bbl/day. It possibly could have been maintained for more than 10 years. Without expertise the production will decline in five years.

Report: China selling fuel to Iran

A newspaper report says Chinese state companies are supplying petrol to Iran, a development that could undermine US-led efforts aimed at curbing Tehran’s nuclear ambitions.

The report is based on unnamed oil traders and bankers.

Total May Get Russian Bids for European Refineries, Chief Says

(Bloomberg) — Total SA, the French oil refiner seeking to reduce surplus capacity, said Russian companies may bid for European plants as they pursue expansion abroad.

“They have a market to develop in Europe and may be interested to buy when we are interested to sell,” Chief Executive Officer Christophe de Margerie said today in a Bloomberg Television interview in New York. “We could do win- win deals with companies like Russians.”

Asheville to lead goal of averting another gas crisis

ASHEVILLE — Fear of gas shortages similar to 2008, when Western North Carolina motorists sat in line for hours sometimes only to find empty pumps, is now spurring counties and towns to create a regional supply plan.

U.K. Reaches Deal on Ivory Coast Toxic Waste Claim

LONDON (AP) — A British court approved Wednesday the settlement of thousands of claims against oil-trading company Trafigura Beheer BV related to the dumping of toxic waste around the Ivory Coast’s main city of Abidjan.

As part of the settlement, Leigh Day & Co., the law firm that represented some 30,000 Ivorians, withdrew allegations that a number of deaths and miscarriages had resulted from the incident three years ago.

Batteries approach energy density limit

Existing battery chemistries are approaching the limits of their energy densities, creating the potential for a “power shortage” as increasingly smaller portable electronics products make growing demands on cells, says analyst NextGen Research.

Power pooling can aid Africa economies: African Union

ADDIS ABABA (Reuters) – Power must be shared across Africa so the world’s poorest continent can beat an energy crisis that is costing its economies billions of dollars, the African Union (AU) energy chief said on Wednesday.

Power shortages are common in many African nations and can shut down industries and hamper investment, even though the continent is sitting on abundant resources of solar, hydro, oil, gas, coal and geothermal power.

“We are strongly encouraging strategies of interconnectivity that can help economies grow more quickly,” said Elham Ibrahim, infrastructure and energy commissioner of the 53-member state pan-African organisation.

Tom Friedman’s Idiocy Atomique

France’s atomic power industry is a failed radioactive flame. Its 58 reactors are unpopular, unsafe, uneconomical, dirty, direct agents of global warming, weapons proliferators and major generators of atomic waste for which there is no management solution.

But self-proclaimed “green advocate” Thomas Friedman seems to think otherwise. In his just published New York Times op ed “Real Men Tax Gas” Friedman applies the term “wimp” to those who fail to fight global warming. But in true corporate style, he can’t face the hard truths about France’s industrie atomique.

Our emotions can lead us astray when assessing risks, says new CU-Boulder study

If you find yourself more concerned about highly publicized dangers that grab your immediate attention such as terrorist attacks, while forgetting about the more mundane threats such as global warming, you’re not alone.

And you can’t help it because it’s human nature, according to a new study led by University of Colorado at Boulder psychology Professor Leaf Van Boven. That’s because people tend to view their immediate emotions, such as their perceptions of threats or risks, as more intense and important than their previous emotions.

Obama wants worldwide end of fossil fuel subsidies

WASHINGTON – President Barack Obama is calling on the world to end massive government subsidies that encourage the use of fossil fuels blamed for global warming.

The president, who is set to host the G-20 economic summit opening Thursday in Pittsburgh, will propose a gradual elimination, with the time frame to be determined, according to White House officials.

“Later this week, I will work with my colleagues at the G-20 to phase out fossil fuel subsidies so that we can better address our climate challenge,” Obama said Tuesday at the United Nations global warming summit.

Mike Froman, Obama’s national security adviser for economic affairs, said the main value of the proposal would be if it were multilateral. He declined to say if Obama was willing to go it alone and try to eliminate such subsidies just in the United States.

Major Oil Discoveries Spur Energy Outlook Debate

Massive new oil discoveries have enthused investors and analysts alike, but with oil’s near-term supply at multi-decade highs and its price climbing above a barrel, energy faces mixed signals.

The finds have oil enthusiasts debating the theory of peak oil. But no matter the future, several companies stand to benefit.

Anadarko Petroleum Corp.’s (APC) discovery off the coast of West Africa last week marks the third major find this month, following BP PLC’s (BP.LN) discovery in the Gulf of Mexico and Petroleo Brasileiro SA’s (PBR) off the coast of Brazil.

The discoveries will take years to cultivate and develop but are a welcome sign to those who feared a supply shortage could ensue if the global economy recovers faster than anticipated.

Chinese takeaway is paid for with American dollars

The Chinese understand the “peak everything” argument. They are not just worried about peak oil, they are concerned about the fact that the world has run up against the limits of its resources. Their officials were shaken by the spike in oil and food prices last year before the financial crisis hit. In comparison, they seemed to be quite unfazed by the financial crisis. They were much more concerned with the prospect of the world — and therefore China — running out of the hard material which makes the economy tick.

Speaking to some of its top officials, it was evident that they had thought about how they might secure resources and after a few hours talking to them, the strategy became clear.

Something every American should realize: the end might be near

Aside from the climate change debate, it is a fact that sooner rather than later a world wide shift in energy policy is inevitable as many experts foresee peak oil merely years away, if not already reached.

China has already made it possible for a solar energy industry to thrive economically in its borders. Not only that the developing nation has committed to increasing the use of non-fossil fuels and nuclear power to 15 percent in 10 years.

Who’s Looking At Natural Gas Now? Big Oil

In the energy world, Big Oil has long been the key player — with one notable exception: The natural gas business in the United States is dominated by small, independent companies. More than 80 percent of U.S. natural gas supplies are produced by companies with a market capitalization of less than 0 million. On average, these companies have only a dozen employees.

But their business is booming. New production techniques in recent years have enabled companies to extract natural gas from shale rock formations deep underground. As a result, estimates of accessible natural gas reserves have been revised dramatically upward. Small gas producers can justifiably take the credit for the transformation of their industry.

Commods rally won’t last unless demand recovers

NEW YORK (Reuters) – Commodities have outperformed the expectations of many analysts who bet on an anemic recovery after last year’s crash, but the climb could start slowing if investors seek more proof the recession is over.

A declining dollar and rallying equities markets have sparked wariness about potential inflation and drawn investors into commodities.

But many wonder whether actual demand for commodities will materialize with the United States losing hundreds of thousands of jobs a month. Investors may want to see improvement in the U.S. employment market, vital to the global economy, before pushing prices of raw materials higher.

Total Targets Petrobras Partnership for Brazil Growth

(Bloomberg) — Total SA, Europe’s third-largest oil producer, is studying expansion in Brazil as part of a plan to reverse falling output by developing new projects.

Decision due soon on Arctic Ocean oil drilling

A group of more than 400 scientists also is joining the public push against Arctic drilling. In a letter to the president timed to the deadline for offshore oil comments, a large group of biologists, oceanographers and other scientists warned that profound physical and biological changes in the Arctic Ocean connected to the rapid shrinking of sea ice leave too many unanswered questions to proceed with new oil and gas development.

Seismic surveys disturb blue whales: biologists

PARIS (AFP) – Seismic surveys used for oil and gas prospecting on the sea floor are a disturbance for blue whales, the world’s biggest animal and one of its rarest species, biologists reported on Wednesday.

Emphasis on Growth Is Called Misguided

Among the possible casualties of the Great Recession are the gauges that economists have traditionally relied upon to assess societal well-being. So many jobs have disappeared so quickly and so much life savings has been surrendered that some argue the economic indicators themselves have been exposed as inadequate.

In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.

France against fuel sanctions on Iran: foreign minister

PARIS (AFP) – France’s foreign minister said in an interview Wednesday he was not in favour of plans mooted by some US lawmakers to impose fuel sanctions on Iran to make it come clean on its nuclear programme.

“I think this is a bit dangerous,” Bernard Kouchner told the International Herald Tribune.

Baluchistan violence thwarts gas prospects

ISLAMABAD, Pakistan (UPI) — Guerrilla attacks in the Pakistani province of Baluchistan targeting the gas sector are responsible for a declining regional economy, a study shows.

A government economic report on Baluchistan province obtained by the Pakistani Daily Times describes a declining security situation as the primary factor to obstacles in the exploration of gas productivity.

Kurdistan Oil Spat With DNO Signals New Risk to Iraq Projects

(Bloomberg) — DNO International ASA’s suspension from producing oil in Iraq highlights the risks for explorers seeking to tap the world’s third-largest reserves.

The Kurdistan regional government shut down operations at Oslo-based DNO, the first foreign company to pump crude in Iraq since the 1970s, for as many as six weeks after its role in a share transaction was disclosed by the Oslo exchange amid an investigation of the deal. The government said on Sept. 21 that DNO must act to repair the damage to its reputation after it was fined by the bourse for a delay in providing information.

Iraq in danger of missing Shell deadline: spokesman

BAGHDAD (AFP) – Iraq risks missing a one-year deadline to strike a deal with energy giant Royal Dutch Shell for a four-billion-dollar gas production deal in southern Iraq, a government spokesman told AFP on Tuesday.

Utility Snubbed by Banks Shows States Pay Too Much for Credit

(Bloomberg) — East Bay Municipal Utility District in Oakland, California, which hasn’t missed a bond payment in 86 years, is being told by banks that its credit isn’t as good as companies that Moody’s Investors Service says are 90 times more likely to default.

While the public utility serves more than 1 million residents and has the highest AAA debt rating, lenders for a 0 million credit line want to charge East Bay as much as triple what banks are seeking from California Water Service Group on a similar facility. The investor-owned company’s bonds are ranked AA-, three levels lower.

The search for funds by East Bay is an example of how state and local governments, which almost never default because they can raise taxes and fees, routinely allow taxpayers to pay more than they have to when borrowing. The utility’s operating revenue rose about 6 percent to 0 million in the year ended June 30 after a 3.75 percent water-rate increase and drought surcharge, according to its annual report.

St Petersburg OKs skyscraper by Russian gas giant

ST. PETERSBURG, Russia – Russia’s state natural gas giant Gazprom has won approval to build a skyscraper in St. Petersburg that critics say will ruin the city’s protected skyline.

The city council on Tuesday approved plans for building the 400-meter (1,300-foot) structure — more than three times as tall as the St. Peter and Paul Cathedral that now is the city’s tallest building.

Sustainable investment seen gaining momentum

LONDON (Reuters) – Investing in socially and environmentally responsible companies or sectors which tackle climate change or resource scarcity is gaining momentum as it offers a unique diversifying opportunity, fund manager RCM says. Sustainability investment is an approach designed to pick companies which manage environmental, social and governance (ESG) risks.

U.S. awards 0 million in renewable energy grants

WASHINGTON (Reuters) – The U.S. government on Tuesday awarded 0 million in grants to develop renewable energy projects to help double U.S. renewable energy production over the next few years, an Obama administration goal.

The grants will pay cash to companies in lieu of tax credits to support solar, wind, biomass and other renewable energy production facilities.

Canada’s wind industry aims high

TORONTO (Reuters) – Canada’s wind energy sector has the lofty goal of supplying 20 percent of the country’s electricity by 2025, but that target is out of reach without better financial and policy support, say industry executives.

There is more than mounting concern for the environment at stake, say wind companies attending the Canadian Wind Energy Association conference in Toronto this week.

Canada must bolster its wind business now because the cost of power from aging coal- and natural gas-fired generators is likely to climb with a move to carbon taxes, while the economic of wind energy are seen improving.

German Nuclear Plants’ Future at Stake in Merkel Election Fight

(Bloomberg) — Angela Seidler, a 41-year-old tour guide at E.ON AG’s Grafenrheinfeld nuclear-power plant in southern Germany, may have to find a new career before she retires.

“There are about six years of work” until the plant reaches a government-mandated production limit, Seidler said. After that, she said, “it’s over for Grafenrheinfeld” — unless voters grant a reprieve in Sept. 27 elections.

Italy Nuclear Power Plan May Cost EU40 Billion, Sole Reports

(Bloomberg) — Italy’s plan to increase nuclear power may cost 40 billion euros ( billion,) Enel SpA Chief Executive Officer Fulvio Conti told daily Il Sole 24 Ore.

Italy will probably need about eight reactors that will cost as much as 5 billion euros each, Conti said, according to the newspaper.

New Russian nuclear plant worries residents

SOVETSK (AFP) – Russia’s plans to build a nuclear power plant in its Baltic territory of Kaliningrad, hemmed in between Poland and Lithuania, has local residents and environmentalists worried.

Silicon Valley reinvents the lowly brick

NEWARK, California (Reuters) – Forget microchips.

Silicon Valley sees a profitable future in the humble brick thanks to a low-energy production process that illustrates the greening of the U.S. technology capital.

Senator would drop land-use from U.S. biofuels rule

WASHINGTON (Reuters) – A senator from the U.S. Corn Belt filed an amendment on Tuesday that would bar federal regulators from considering how land is used overseas when they write rules to expand use of biofuels.

The home of America’s worst commute

NEW YORK (CNNMoney.com) — Of all the commuters in America, residents of a small town in eastern Pennsylvania spend the most time behind the wheel, according to the Census Bureau.

Commuters living in the area of East Stroudsburg, a town near the New Jersey border, averaged 40.6 minutes from home to work or vice versa, according to the 2008 Census report released Monday.

Ford Motor Unveils First Small Car In India

NEW DELHI -(Dow Jones)- Ford Motor Co. Wednesday unveiled the Figo – its first small car to be produced in India – as the U.S. automaker seeks to gain a foothold in the emerging South Asian car market and make the country a global production hub for small cars.

The four-door hatchback will be produced at Ford India’s factory in the port city of Chennai, the company said.

Ford said the Figo – which is colloquial Italian for “cool” – will be sold in India and exported to international markets.

D.C. train crash probe prompts nationwide rail alert

WASHINGTON (CNN) — Federal safety investigators said Tuesday they fear flaws found in Washington’s Metro subway system after a deadly crash this summer may endanger other transit systems, and they sent out an urgent recommendation asking that other rail operators check for similar problems.

ARC’s ‘green’ transport plan ignores reality

Regional transport strategists aim to reduce private car use by developing a “more sustainable urban form”. Their first stated goal is to “support and contribute to a compact and contained urban form consisting of centres, corridors and rural settlements”. Their other goals and priorities flow from that fundamental mistake.

Auckland is not and never will be a “compact and contained urban form”. Its environment and terrain invite sprawl. The regional plan has been trying for 10 years to contain coastal ribbon development and force population growth into higher-density concentrations near railway stations.

Aucklanders have resisted for good reason. They have come to the region for its coastlines and climate. Planners of land use and transport need to work with the demonstrable demand, not against it.

Energy Security and Climate Change

The shorter the timeframe for reducing fossil fuel dependence of the economy and society, the higher the costs and greater the complexity. Large spending on energy transition, added to current and massive deficit spending to bail out the bank, finance and insurance sector (and other industries), appears convergent, and coherent to political deciders.

High oil prices are held to be bad for inflation and economic growth; the fossil fuels are not only declining and higher cost, but also high carbon; renewable and alternate energy sources and systems are local, more secure, and in some cases may be less expensive than fossil energy; the green economy may be able to generate more jobs than are destroyed by winding down the fossil-based economy, and so on.

Peak oil in transition

I wondered, then, whether the environmental debate could truly be taking this direction, and, if it were not, whether this might be an opportune time to turn it this way. It was nearly five years ago that I discovered the peak oil debate, and at the time, it was all doom and gloom. In fact, Matt Savinar’s primer, The Oil Age Is Over (sadly now out of print), ends with a discussion about the depression one typically suffers after the penny drops about peak oil. Arguably, though, the debate is still one of doom and gloom today, and the purists among us are only too ready to howl down anything touted as a solution.

We can do better.

Local Dirt aims to help focus on local food

SAN DIEGO–Earlier this summer, I wrote about the blossoming transition movement, in which local communities around the country and the world are beginning to prepare themselves for a post-peak oil world.

One of the best ways for communities to do this is to focus on local food supplies. With oil prices at peak prices, it won’t be economical to truck in food from around the country, and those that do continue such a dependence are likely to experience major financial problems.

But those towns and cities that do put an emphasis on building more sustainable local food infrastructures are the ones that are going to be in the best position to take care of themselves with as little outside assistance as possible.

Building resilient cities

Halt the sprawl once and for all and we’ll be able to protect and restore the ragged biodiversity and watersheds surrounding our cities. The reckless paving-over of essential peri-urban agricultural land can also come to an end as we recall farmers and market gardeners to their central place in community life.

Electrifying public transport by installing light rail along strategic corridors will lighten our vulnerability to rising oil prices and help prevent the horror of future oil wars. Demoting private cars from their pre-eminent position in the planning hierarchy will improve public health and reduce obesity, because every public transport trip starts with a walk or a cycle.

Brazil plants trees as Rio mounts ‘green’ Olympics bid

RIO DE JANEIRO (AFP) – Brazilians have planted more than 3,000 trees in Rio de Janeiro to offset carbon dioxide emissions as the city goes green in its bid to host the 2016 summer Olympics.

Poland, Estonia Win Challenge to CO2-Emission Limits

(Bloomberg) — Poland and Estonia won court challenges to European Union limits on carbon-dioxide emissions for energy and manufacturing companies, pulling down the price of EU pollution allowances as much as 5 percent.

The European Court of First Instance in Luxembourg said today that the European Commission has “very restricted” authority to review national plans for allocating CO2 permits in the EU emissions-trading system, the world’s biggest greenhouse- gas market. The commission set stricter CO2-allowance limits on Poland and Estonia than the two countries sought.

Deal on climate change is elusive

Two years ago, more than 180 nations made a bold promise: By the end of 2009, they would draft a sweeping treaty to slow climate change.

Yvo de Boer, the United Nations’ top climate-change official, called the agreement “a real breakthrough,” and British Prime Minister Gordon Brown expressed confidence it would produce “a deal … in 2009 to address the defining challenge of our time.”

Now the deadline is nearing, and hope is fading. The treaty is supposed to be finalized at talks that start Dec. 7 in Copenhagen, but diplomats have made almost no progress toward an agreement — a point made repeatedly by world leaders Tuesday at the U.N. climate summit in New York.

Climate change – where the centre leads

Analysis by Lord Stern and many others has shown that the economic case for taking measures now to mitigate and adapt to climate change is overwhelming.

The meetings this month in New York and Pittsburgh should focus on this.

The importance of these meetings can hardly be overstated. Success at December’s UN climate meeting in Copenhagen, where leaders will gather with the hope of reaching a new global agreement, will be determined in no small part on the progress made now.

China keeps ‘room to manoeuvre’ on climate change

BEIJING (AFP) – Chinese President Hu Jintao offered few details in his UN speech on climate change, but the lack of specifics could just mean he wants to keep some room for manoeuvre, observers said Wednesday.

A Wind Shift in Global Warming Debate?

Negotiations over a new global climate change treaty to replace the expiring and flawed Kyoto Protocol – meant to culminate at the U.N. climate change summit in Copenhagen at the end of the year – have all but ground to a halt in recent months. Despite the election of U.S. President Barack Obama, who pledged to reverse eight years of climate inaction by former President George W. Bush’s Administration, developed and developing nations remain gridlocked over who should be cutting carbon emissions – and who should be paying for it. Yvo de Boer, the head of the United Nations Framework Convention of Climate Change (UNFCCC), told reporters on Sept. 21 that the wording for a new agreement now being negotiated is “an absolute mess” so full of contradictions U.N. staff said it couldn’t even be translated. “Climate change policy tends to be a roller-coaster ride, but it seems to be getting rougher and rougher,” he said.

Collapse or survive: the stark choice facing our species

Every continent has the same option. The entire energy needs of the US could be met by covering 200 square kilometres of its empty deserts with solar plants: it would cost about 10 years’ worth of oil purchases, with none of the wars, tyrannies, or blowback Islamism. China and India have similar options. It is achievable, with the kind of great effort we made to defeat the Nazis. We too could be a great generation – one that came close to the brink, but then came together in a great collective effort to change course. We would leave a lean, green civilisation that will run for millennia.

But instead, our leaders are fiddling with the old dirty technologies, too addicted and too addled to move us on and up. In Britain, we are actually turning back to coal, mining 15 per cent more this year than last. Professor Jim Hansen, the head of Nasa and the world’s leading climatologist, calls coal power stations “death factories” that condemn millions to drown, or starve, or burn. Across Europe, solar power is being allowed to wither: Germany’s biggest solar company, Q-Cells, has seen its stock fall from €100 to €10 in a year. The other market-leader, Spain, has seen a similarly disastrous fallback.

Warming ocean melts Greenland glaciers

Curry and her colleagues from the Woods Hole Oceanographic Institution in Massachusetts zigzagged between majestic icebergs in the Sermilik fjord last month in search of proof that waters from warmer latitudes, or subtropical waters, are flushing through this remote and frigid region.

They found it — all the way up to the base of the outlet glaciers that spill into the ocean like tongues of ice from Greenland’s massive ice sheet.

Utility Quits Alliance Over Climate Change

Amid a growing split in the business community over climate policy, Pacific Gas and Electric, a major California utility, is withdrawing from the United States Chamber of Commerce, citing “fundamental differences” with the chamber’s approach to global warming.

“We find it dismaying that the chamber neglects the indisputable fact that a decisive majority of experts have said the data on global warming are compelling and point to a threat that cannot be ignored,” Peter A. Darbee, the chairman of PG&E, wrote in a letter to the chamber.