Oil Price Ignores Long-Term Supply Worries

You could be excused for seeing a grim metaphor for the death of the oil age in the scenes of destruction visited on the U.S. Gulf coast this summer.

However, production from the ocean floor is growing more quickly than from any other type of reserve and is supposed to allay concerns about ‘peak oil’, the idea that the amount of crude the world can produce might suddenly decline.

Now, so far, this notion hasn’t had much of an impact on energy prices.

But, as cheaper oil fields are run down and more crude is drawn from expensive, hard-to-reach offshore reserves, the costs of energy supply are starting to rise.

Drilling agency imposes conflict-of-interest rules

WASHINGTON – Scandalized by federal regulators who had sex with oil company executives and negotiated with them for jobs, the agency that oversees offshore drilling is imposing a first-ever ethics policy that bars inspectors from dealing with a company that employs a family member or personal friend.

Michael Bromwich, head of the Bureau of Ocean Energy Management, said the new policy should help restore credibility to his beleaguered agency, which was widely criticized under its former name — the Minerals Management Service — for being too close with oil and gas companies.

President Barack Obama and Interior Secretary Ken Salazar have pledged to end the agency’s “cozy relationship” with industry and slow the revolving door between government and the energy industry.

Pemex looks to shale

Pemex is considering opening an entire line of exploration that concentrates on shale gas wells in the northern state of Coahuila.

Pemex board member Hector Moreira told Market News International the new line could reduce the company’s dependence on natural gas imports.

OPEC oil output falls to lowest since Nov 2009

LONDON (Reuters) – OPEC crude oil supply fell in August to the lowest since November 2009 as reduced supplies from Nigeria, the United Arab Emirates and Iraq offset increased output in Angola, a Reuters survey showed on Wednesday.

Supply from the 11 members of the Organization of the Petroleum Exporting Countries with output targets, all except Iraq, averaged 26.83 million barrels per day (bpd) last month, down from 26.95 million bpd in July, according to the survey of oil companies, OPEC officials and analysts.

The Gas Bulls of Summer Turn into Bears

Recently, the last of the raging bulls on natural gas prices traded in their horns for bear uniforms – and we don’t mean the Monsters of the Midway variety! By throwing in the towel on gas prices for this year, these bulls-turned-bears then proceeded to claw their future gas price forecast by stating they expected $6 per thousand cubic feet (Mcf) to be the long-term average. The reality is that these bulls of summer were really merely acknowledging the power of the market as natural gas prices are about two dollars per Mcf below where they were at the start of 2010, and well below the $7.50/Mcf average gas price the bulls had forecast.

Feds downplay risk of leak when well cap moved

The federal government’s point man on the Gulf of Mexico spill response said Wednesday there is no “significant risk” that more oil will leak into the sea when engineers remove the temporary cap Thursday that first contained the gusher in mid-July.

Retired Coast Guard Adm. Thad Allen said vessels will remain on standby just in case to collect any leaking oil.

FACTBOX – Key political risks to watch in Uganda

(Reuters) – Uganda expects to become an oil-producing nation in 2011, but a protracted dispute with British exploration firm Heritage Oil may delay production and risks unsettling other investors.

With the potential to be a top 50 oil producer, Uganda stands to reduce its budget dependence on foreign aid and improve poor infrastructure.

Nissan starts selling all-electric Leaf sedan today

At long last, Nissan begins taking actual orders today for the first next-generation fully electric car from a major automaker, the Leaf.

Carpooling

Passengers might be the most under-appreciated factor in how much fuel and money you waste. As I write this, for example, a business headline boasts of Toyota’s multi-million-dollar plan to boost fuel efficiency by 25 percent, with the usual discussion of what this will mean for the economy and the climate. Any of us, however, can boost the efficiency of our cars by several hundred percent instantly, with no additional expense or technology, simply by getting more people in the car.

This fact is also forgotten when we judge car owners by the wastefulness of their vehicles. An SUV is a spectacularly inefficient machine compared to a Prius, for example, but pack that Dodge Durango full of people and suddenly it is greener than the electric hybrid driven alone.

Transit systems easier to predict with smart phone apps

Allen Stern says he had a 40-minute wait between buses when he lived in Manhattan. Using a free mobile app that became available about a year ago, he could at least tap into the Metropolitan Transit Authority with his cellphone and find out exactly how far away the next bus was from his stop.

Jatropha: A new form of energy

SINGAPORE – Biotechnology firm JOil is confident that it can breed and genetically engineer the Jatropha plant to be a more sustainable alternative to fossil fuel and other biofuels.

It plans to create a Jatropha hybrid that can produce more fruits and match the four to six tonnes of oil per hectare that palm trees can generate.

Pedal power takes off as exercise produces electricity

Pedal power is gaining traction as thousands of bikes and elliptical machines are retrofitted to produce electricity.

Gyms are using sweat equity to help power their facilities. A Brooklyn eatery uses it to make smoothies. Female inmates at a Phoenix jail pedal to power their TV to watch soap operas. Actor Ed Begley Jr. bikesrides a bike to run his toaster.

Obama lobbied to add solar panels to White House

A campaign to make the White House greener is intensifying as a group of environmentalists plan this month to give President Obama a solar panel that used to sit atop 1600 Pennsylvania Avenue.

Points of departure

There is a strong correlation between energy consumption and economic growth. We can for sure hope for “decoupling” – to be able to have continued economic growth while maintaining or even reducing energy use – but no country has ever managed this Indian rope trick and that does not bode well. Maybe we are high on energy, listening a little to closely to the voice of intoxication, but it will unfortunately all too soon be replaced by a massive hangover.

The Peak Oil Crisis: Prospects for China

The key question in all this is how much longer China’s economic miracle can continue before the realities of finite mineral resources force a slowdown? Another five years of 10 percent annual economic growth will result in Beijing increasing its oil consumption by another 2.5-3 million barrels per day. This alone would likely mop up much of the world’s spare capacity to produce oil and result in very large price increases. When China’s ever growing demand is added to that of India, Brazil and the oil exporting states, the likelihood that we will see a substantial increase in oil prices within the next five years becomes very high.

Secret German military study warns of dramatic oil crisis

Berlin : A confidential German army study warned of a looming oil crisis which could have dramatic political and economic consequences for the world, the Hamburg-based weekly news magazine Der Spiegel said Tuesday.

According to the report, a think-tank of the German army has for the first time ever analyzed the security policy dimensions of the peak oil problem.

Peak Oil from a Security Studies Perspective

The Strategic Institute of the German Bundeswehr has now published a document on the implications of peak oil for security (more precisely: the study was leaked). The study is very well written and recommended as an essential read not only for geostrategist but especially for those involved in global sustainability questions. In fact, at least in wording the authors care about such diverse issues as environmental impact of unconventional oils and the impact of global-marked-induced land-use change on indigenous populations. It is worthwhile to have a closer look on some of their results:

Remembering Matt Simmons

Matt Simmons, a long time friend of the Maine coast and its islands and a student of the winds and waters of Gulf of Maine, loved to tell the story of his first trip to Maine, courtesy of a labor strike while he worked construction one summer as a college student in his home state of Utah. When a labor dispute suddenly shut down the construction site, he and a buddy were only too happy to collect their strike checks and head out on a jaunt. They went north into the Canadian Rockies then turned right and headed toward the Inscrutable East, dipping back down into the United States via the border at Jackman, where they drove along the shores of Moosehead Lake before ending up in Boston. On a lark, Matt ducked into the Harvard Business School, which had not had a long history at that point of actively recruiting students from Mormon country in Utah, but the visit was enough to entice him to apply and enroll. Matt loved telling that story because it held the kinds of mutually opposed contradictions he loved to explore-a businessman who owed his right future to a labor strike. If genius is the ability to hold mutually opposing ideas in the mind at the same time without being paralyzed, Matt Simmons would certainly qualify.

Oil Drops, Caps Worst Month Since May, as Hurricane Earl Threatens Demand

Oil tumbled, capping its worst month since May, on forecasts Hurricane Earl will pelt the U.S. East Coast, curbing fuel demand during the Labor Day holiday weekend.

Crude dropped the most in 12 weeks amid speculation that stormy weather will keep beachgoers and travelers at home. Labor Day is the traditional end of the U.S. summer driving season, the peak gasoline demand period. U.S. gasoline demand slid to a 12-week low last week, MasterCard Inc. reported today.

“It’s the last thing we need,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “It’s a big gasoline consumption weekend. Given how poor the gasoline demand has been, it will be a final parting blow for the summer driving season if people won’t hit the beach in droves.”

Ethanol Surpasses Gasoline for First Time Since December

For the first time since December, ethanol prices are higher than gasoline as corn surges and refiners profit from tax breaks.

Gas Prices Explained

So what determines the price of gasoline? Speculators? Evil conspiring oil companies? Well, actually no. It’s demand and supply, of course. On the demand side the American automobile fleet gets better gas mileage than it did a few years ago and Americans, whacked by the recession and high unemployment rates, are driving a bit less than they used to. In addition, thanks to government subsidies, about 9 percent of what goes into our gas tanks is ethanol produced from corn, which also reduces the demand for refined crude. On the supply side, global oil supplies are ample and refiners in the U.S. evidently believed the Obama administration’s rosy “recovery summer” scenarios and stockpiled a lot of gasoline.

Sinopec Plans to Cut September Oil Processing by 4% at Refinery in Hainan

China Petroleum & Chemical Corp., Asia’s biggest refiner, will process 4 percent less crude oil at its Hainan plant in September compared with last month, an official at the refinery said.

FACTBOX-Key political risks to watch in Saudi Arabia

(Reuters) – Saudi Arabia, under the rule of an ageing King Abdullah, has the dilemma of making reforms that keep the austere clerical establishment that opposes change on side and violent Islamist militants at bay.

Any instability at the helm of Saudi Arabia, which controls more than a fifth of the world’s crude oil reserves and is a regional linchpin of U.S. policy in the Middle East, would be a concern for the rest of the Arab Gulf region.

FACTBOX-Key political risks to watch in Yemen

(Reuters) – Rising al Qaeda militancy, a surge in violence in a secessionist south and crushing poverty will be this year’s critical tests for Yemen, neighbour to top oil exporter Saudi Arabia.

Reid hopeful for GOP energy votes after elections

WASHINGTON (Reuters) – Senate Majority Leader Harry Reid said he hoped to pick up Republican votes for a pared-down energy bill after the midterm congressional elections.

“Maybe after the elections we can get some more Republicans to help us on these issues,” Reid, a Democrat, told reporters in a teleconference on Tuesday.

Sinopec Sees Solid Gas Growth Ahead

While oil production experienced sluggishness in the first half, natural gas production showed solid growth. China is ramping up gas production as it seeks to find alternatives to coal, which emits high carbon levels. It is set to raise the country’s energy needs from the current 3% to 10% by 2020.

Insurance likely to reduce BP’s liability for Gulf of Mexico oil spill

BP PLC has taken on some of the blame for the Deepwater Horizon rig that spilled millions of gallons of oil into the Gulf of Mexico earlier this year, but the company is still expected to have limited liability for mistakes made misreading pressure data that indicated a blowout was imminent.

BP Raises $363 Million in Malaysian Asset Sale to Help Pay for Gulf Spill

BP Plc, seeking cash to help pay for the worst U.S. oil spill, agreed to sell its Malaysian chemical assets to Petroliam Nasional Bhd. to focus on projects in China and India.

BP will sell its 15 percent stake in Ethylene Malaysia Sdn and 60 percent interest in Polyethylene Malaysia Sdn for $363 million, the London-based company said today in a statement. It will also be eligible for a possible $48 million dividend from the ethylene unit.

A Nuclear Giant Moves Into Wind

Exelon, a nuclear giant that recently backed away from building new nuclear plants, is moving into wind.

Canada company builds major waste-to-biofuel plant

VANCOUVER, British Columbia (Reuters) – A Canadian company started construction on Tuesday on what it says is the world’s first industrial-scale plant to turn municipal waste into biofuel.

Privately-owned Enerkem Inc said the C$80 million ($75 million) facility in Edmonton, Alberta, will produce enough biofuel to keep more than 400,000 cars a year running on a 5 percent ethanol fuel blend.

Thorium Cures the Free Market

Obama could kill fossil fuels overnight with a nuclear dash for thorium … If Barack Obama were to marshal America’s vast scientific and strategic resources behind a new Manhattan Project, he might reasonably hope to reinvent the global energy landscape and sketch an end to our dependence on fossil fuels within three to five years.

New Warnings About Costs of Nuclear Power

As anticipation grows about a possible renaissance for the nuclear power industry — and about its potential for curbing greenhouse gas emissions — some politicians are stepping up warnings about the high cost of such projects.

Last week, Traicho Traikov, the Bulgarian economy and energy minister, said the cost of building a second plant near the Danube River had reached 9 billion euros, or $11.4 billion, according to the Sofia News Agency.

The original cost of the project for two reactors was expected to be just under $4 billion.

Homeowners Must Pay Off Energy Improvement Loans

Many homeowners who participated in a program that let them repay the cost of solar panels and other energy improvements through an annual surcharge on their property taxes must pay off the loans before they can refinance their mortgages, two government-chartered mortgage companies said Tuesday.

The guidance came from Fannie Mae and Freddie Mac as efforts to resolve a dispute over the program — called Property Assessed Clean Energy, or PACE — have failed.

Calif. rejects ban on plastic shopping bags

SACRAMENTO, Calif. – California lawmakers have rejected a bill seeking to ban plastic shopping bags after a contentious debate over whether the state was going too far in trying to regulate personal choice.

The Democratic bill, which failed late Tuesday, would have been the first statewide ban, although a few California cities already prohibit their use.

A Greener Champagne Bottle

“This is how we’re remaking the future of Champagne,” he said, pointing to the area just below the neck. “We’re slimming the shoulders to make the bottle lighter, so our carbon footprint will be reduced to help keep Champagne here for future generations.”

The Champagne industry has embarked on a drive to cut the 200,000 metric tons of carbon dioxide it emits every year transporting billions of tiny bubbles around the world. Producing and shipping accounts for nearly a third of Champagne’s carbon emissions, with the hefty bottle the biggest offender.

Cleaner Cars, A to D

The Obama administration has proposed new stickers for cars and light trucks that will make it easier to see whether you are buying a fuel-efficient one or a guzzler, and how much it contributes to global warming. The stickers are a symbol of how far this country has come in providing a wider range of environmentally responsible choices to help ensure cleaner air and a healthier planet.

L.A. mayor, Latino activists take on oil companies over Proposition 23

They say the ballot initiative to suspend the state’s climate change law would hurt low-income communities already suffering the most from pollution.

Jeff Rubin: High energy prices make Copenhagen green

There is certainly much to be said for Denmark’s leadership in green energy. While North American carbon emissions have risen by around 30 per cent since 1990 (the reference point for the Kyoto Accord), Denmark’s emissions are actually lower than they were two decades ago. That’s generally ascribed to the fact that a world-leading 20 per cent of the power generated in Denmark comes from wind.

Less commonly known is the source of the other 80 per cent. I was surprised to discover that it comes from good old King Coal. In fact, coal’s share of power generation in Denmark’s power grid is basically the same as it is in China.

Tiny creatures reveal ancient sea levels

“It was a very big surprise,” says David Barnes, lead author of the study at the British Antarctic Survey, of the find of similar bryozoans 2400 kilometres apart in seas on either side of the West Antarctic ice sheet, which is 2 kilometres thick.

“The most likely explanation of such similarity is that this ice sheet is much less stable than previously thought and has collapsed at some point in the recent past,” he says.

“And if the West Antarctic ice shelf has been lost in recent times we have to re-think the possibility of loss in future with climate change.”

The August 2010 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.24 MB, 33 pp).

The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports.

Below the fold is an executive summary, subscription form to receive the Oilwatch Monthly by e-mail, and latest graphics. For much more detail and a country by country profile, download the .pdf.

Subscribe to receive Oilwatch Monthly by e-mail

Latest Developments:

1) Conventional crude production – Latest figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 103,000 b/d from April to May 2010, resulting in total production of crude oil including lease condensates of 73.34 million b/d.

2) Total liquid fuels production – In July 2010 world production of all liquid fuels increased by 860,000 b/d from June according to the latest fgures of the International Energy Agency (IEA), resulting in total world liquid fuels production of 87.22 million b/d. Liquids production for June 2010 was revised upwards in the IEA Oil Market Report of August from 86.15 to 86.36 million b/d. Average global liquid fuels production in 2009 was 84.94 versus 86.6 and 85.32 million b/d in 2008 and 2007.

3) World oil production capacity – Total oil production capacity in July 2010 increased by 820,000 b/d from 90.16 million b/d in June 2010 to 90.98 million b/d in July. World production capacity is measured here as the sum of world liquids production excluding biofuels plus total OPEC spare capacity excluding Iraq, Venezuela and Nigeria.

4) OPEC Production – Total liquid fuels production in OPEC countries increased by 230,000 b/d from June to July 2010 to a level of 34.28 million b/d. Liquids production for June 2010 was revised upwards in the IEA Oil Market Report of August from 33.97 to 34.05 million b/d. Average liquid fuels production in 2009 was 33.7 million b/d, versus 36.09 and 35.02 million b/d in 2008 and 2007 respectively. All time high production of OPEC liquid fuels stands at 36.4 million b/d reached in July 2008.

Total crude oil production excluding lease condensates of the OPEC cartel increased by 230,000 b/d to a level of 29.2 million b/d, from June to July 2010, according to the latest available estimate of the IEA. Average crude oil production in 2009 was 28.7 million b/d, versus 31.43 and 30.37 million b/d in 2008 and 2007 respectively.

OPEC natural gas liquids remained stable from June to July 2010 at a level of 5.08 million b/d. Average OPEC natural gas liquids production in 2009 was 4.67 million b/d, versus 4.47 and 4.55 million b/d in 2008 and 2007 respectively.

5) Non-OPEC Production – Total liquid fuels production excluding biofuels in Non-OPEC countries increased by 580,000 b/d from June to July 2010, resulting in a production level of 51.11 million b/d according to the International Energy Agency. Liquids production for June 2010 was revised upwards in the IEA Oil Market Report of August from 50.38 to 50.52 million b/d. Average liquid fuels production in 2009 was 49.67 million b/d, versus 49.32 and 49.34 million b/d in 2008 and 2007 respectively.

Total Non-OPEC crude oil production including lease condensates decreased by 165,000 b/d to a level of 42.23 million b/d, from April to May 2010, according to the latest available estimate of the EIA. Crude oil production for April 2010 was revised downwards in the EIA International Petroleum Monthly of August from 42.48 to 42.40 million b/d. Average crude oil production in 2009 was 41.61 million b/d, versus 41.32 and 41.80 million b/d in 2008 and 2007 respectively.

Non-OPEC natural gas liquids production increased by 8,000 b/d from April to May 2010 to a level of 3.38 million b/d. Average Non-OPEC natural gas liquids production in 2009 was 3.34 million b/d, versus 3.65 and 3.79 million b/d in 2008 and 2007 respectively.

6) OPEC spare capacity – According to the International Energy Agency total effective spare capacity (excluding Iraq, Venezuela and Nigeria) increased from June to July 2010 by 10,000 b/d to a level of 5.6 million b/d. Of total effective spare capacity an additional 3.92 million b/d is estimated to be producible by Saudi Arabia within 90 days, the United Arab Emirates 0.36 million b/d, Angola 0.26 million b/d, Iran 0.31 million b/d, Libya 0.12 million b/d, Qatar 0.2 million b/d, and the other remaining countries 0.43 million b/d.

Total OPEC spare production capacity in July 2010 dereased by 10,000 b/d to a level of 4.96 million b/d from 5.05 million b/d in June according to the Energy Information Administration. Of total effective spare capacity an additional 3.75 million b/d is estimated to be producible by Saudi Arabia, the United Arab Emirates 0.30 million b/d, Angola 0.1 million b/d, Iran 0.1 million b/d, Libya 0.15 million b/d, Qatar 0.26 million b/d, and the other remaining countries 0.15 million b/d.

7) OECD liquids demand – No update from last month

Chinese liquids demand – No update from last month

9) OECD oil stocks – Industrial inventories of crude oil in the OECD in June 2010 decreased to 1016 million from 1028 million barrels in May according to the latest IEA statistics. Current OECD crude oil stocks are 46 million barrels higher than the five year average of 970 million barrels. In the July Oil Market Report of the IEA a total stock level of 1041 million barrels was tabulated for May which has been revised downward to 1028 million barrels in the August edition.

Industrial product stocks in the OECD in June 2010 increased to 1440 million from 1435 million barrels in May according to the latest IEA Statistics. Current OECD product stocks are 30 million barrels higher than the five year average of 1410 million barrels. In the July Oil Market Report of the IEA a total stock level of 1417 million barrels was tabulated for May which has been revised upward to 1435 million barrels in the August edition.

In this post I present an analysis of how OPEC oil supplies have responded to changes in crude oil prices during the last 10 years. My objective was to estimate OPEC’s probable marketable crude oil capacities as of May 2010, based on responses of OPEC oil supplies to price changes.

This approach suggests that as of May 2010, OPEC’s marketable spare crude oil capacity was approximately 2 Mb/d and that a majority of this spare capacity is most likely in Kuwait, Saudi Arabia and UAE.

I also briefly present a recent history of OECD and Non OECD oil supplies/consumption. Based on this analysis, it is probable that demand for OPEC supplies could grow by approximately 2 Mb/d between 2010 and the end of 2011. Putting the estimated current OPEC spare capacity of 2 Mb/d together with the expected increase in demand for OPEC oil supplies of 2 Mb/d suggests that during 2011, OPEC’s spare capacity may be completely eroded–a very serious situation.

DISCLAIMER: The author holds no positions in the oil/energy market that may be affected by the content of this post.

Two energy subjects that often fuel lengthy debates are

• The oil price and its future trajectory
• OPEC’s present marketable spare capacity for crude oil

IEA Oil Market Report for August 2010 estimates OPEC’s crude oil spare capacities at around 6,0 Mb/d, while the EIA Short Term Energy Outlook for August, 2010 provides a corresponding estimate of 5,1 Mb/d for 2010.

Oil prices and OPEC spare capacities are closely linked, and therefore monitored closely by companies planning to invest in new supplies that presently are at the margin–for example, some oil sands developments. Most analysts seem to agree that OPEC presently has spare marketable crude oil capacity, and that this spare capacity could be used to maintain an oil price in the present “comfort zone” of $70-80/bbl. The amount of the this spare capacity would thus define how long investments in new supplies at the margin are deferred.

In this post, I use the same definition of OPEC spare capacity as the IEA. This is capacity that can be reached within 30 days and sustained for 90 days.

Further, it is important to acknowledge that OPEC spare capacities are not static numbers. These amounts are subject to change over time as result of new developments and declines.

NOTE: Scaling among the various diagrams shown in this post varies.

The reason why I start with the above diagram is also to illustrate that if the demand for more oil were present, then new highs of global supplies for both crude oil and all liquids would have occurred. For anyone who has looked at the data, it is apparent that OPEC has spare capacity. What seems to be debatable is how much.

OPEC supplies

What the above diagram illustrates is that OPEC crude oil supplies for all practical purposes remained on a moderately bumpy plateau between July 2004 and late 2008. During this period, crude oil prices grew from around $40/Bbl to more than $140/Bbl. The steep rise in prices are now thought to be the combined result of physically tight supplies and speculators detecting these tight supplies. With the collapse of crude oil prices, OPEC met during the fall of 2008 and agreed to cut supplies to support the oil price. What is interesting is that total OPEC crude oil supply increased by approximately 0,72 Mb/d (using IEA’s criteria of a production that may be sustained for 90 days) during the oil price spike in the summer of 2008 compared to the summer of 2005. It required a doubling of the price to bring this increase in supply into existence.

This suggests that OPEC had little spare crude oil capacity during the summer months of 2008. Despite this increase in supply, data shows that OPEC net exports were lower in 2008 than in 2005, ref Figure 09 below.

Below I present a closer look at groups of OPEC members that will hopefully make it easier to see how crude oil supplies from these groups have responded to crude oil prices in recent years.

The reason I chose to show Angola, Ecuador and Iraq separately is that Angola is a new member of OPEC, Ecuador reentered as a member, and Iraq is presently not subject to OPEC’s quota arrangements. Angola was raising its oil production before becoming an OPEC member, as was Iraq after the war.

Total supplies from these 3 countries have recently reached the same level as during the summer of 2008, and recently this has been driven by growth in Angolan supplies. Supplies for Ecuador have been in a slight decline.

The diagram illustrates that the crude oil supplies for these 6 OPEC members reached what appears to be a plateau during the oil price growth in late 2004 and 2005. Note that the increase in oil prices towards their high in 2008 did not increase supplies from these 6 OPEC members.

Apparently these 6 countries contributed in holding back supplies early in 2009, but the recent growth in oil prices seems to have resulted in some supply growth until they reached what appears as a new and lower plateau.

Could this suggest that total supplies from the 6 OPEC members included above are in decline?

If the 9 OPEC members shown above were pumping flat out to benefit from the high prices during the summer of 2008, then recent responses of oil supply to the recent price growth suggests these countries now have little, if any, spare crude oil capacity.

Total crude oil supplies for these three oil exporters showed some response to the price growth of 2008 and these three were able to increase their total supplies by 0,20 Mb/d relative to 2005 (if only monthly data is used….0,05 Mb/d if IEA’s definition of sustainable capacity is used) as a response to a doubling of the oil price.

Using IEA’s definition for a sustainable capacity these three had a total crude oil capacity of 14,65 Mb/d during the summer of 2008. These numbers then need to be adjusted for additions and declines since then. As of May 2010, these three exporters supplied 12,9 Mb/d, which is 1,75 Mb/d below their sustainable supplies from the summer of 2008.

The net exports from these three declined from 2005 to 2008 due to growing domestic consumption, ref figures 08 and 09.

Actual data suggests that most of present global spare crude oil capacities is to be found amongst the three producers presented above. And if the most recent data is to be believed, it looks like as of May 2010 they have started to eat into their spare capacity.

The strong growth in lease condensates is now believed to also be related to the increased natural gas production from North Dome/South Pars. The growth in OPEC NGL supplies has been more moderate.

Lease condensates and NGLs are presently not part of OPEC quota arrangements.

Data from EIA shows that between 2005 and 2008, petroleum consumption within OPEC increased by more than 1 Mb/d, from 6,5 Mb/d to more than 7,5 Mb/d.

High income from petroleum exports and a growing population have given rise to growth in OPEC petroleum consumption. If the trend in recent years provides any guidance, it should be expected that this trend will continue and thus take up more of OPEC’s capacities.

Development in net petroleum exports is what really matters for petroleum importing countries. The diagram illustrates that as prices started to grow (suggesting a growing demand) OPEC’s net exports grew between 2002 and 2005. As oil prices continued to grow OPEC’s net exports declined. This suggests price rationing was taking place. As oil prices reached their apex in 2008, net exports from OPEC grew a little relative to the previous years, but did not surpass the high from 2005.

Non OPEC supplies

Inasmuch as the development in total global liquids energy supplies was presented in Figure 01 and a more detailed presentation of OPEC was presented above, I will just briefly present development of Non OPEC supplies of crude oil, condensates and NGL’s.

Non OPEC supplies apparently were able to grow to meet demand until supply reached a plateau in 2004. After that, growth in OPEC supply and prices balanced the supply/demand equation. The decline in OPEC net exports, from 2005 to 2007, coincides with the continued growth in oil prices and flat supplies from Non OPEC.

The growing prices seem also to have stimulated more investments amongst Non OPEC producers (even though there is a time lag from the price signal to invest arrives and the oil developed by the investment flows) to bring on new capacity and slow decline rates. The hurricanes hitting Gulf of Mexico had some effect on Non OPEC supply, but recently supplies have grown mostly from Russia and the US.

The most recent data shows a slight decline in Non OPEC oil supplies, and the question is: will this continue?

OECD

The economic slowdown within OECD also affected oil consumption. The diagram illustrates that OECD net oil imports declined by approximately 4 Mb/d from their high around 2006.

EIA in their Oil Market Report for August 2010 has forecast a decline in OECD liquid energy supplies of 0,3 Mb/d and a growth in Non OECD supplies of 0,5 Mb/d between 2010 to 2011. A growth in OECD consumption over the next year of 0,5 Mb/d (which is not a lot considering it has declined more than 4 Mb/d in recent years) would thus eat into OPEC spare capacity. Add in uncertainties in the forecasts (which could work both ways) and the possibility exists that OECD demand for growth in supplies from OPEC could become higher than the 0,3 Mb/d as suggested here.

The diagram shows that recently net oil imports into OECD have been growing, and that this has coincided with the growth in oil prices. My current expectation is that for the near term OECD will continue to grow its net oil imports to offset declines within OECD and to feed a growing demand.

Non OECD

The diagram shows that Non OECD demand (on an annual basis) grew by an astonishing 3 Mb/d during a period of a little more than a year, while oil prices almost doubled. This also suggests that demand very much contributed to the growth in oil prices during 2008. This growth was followed by what appears to have been a consolidation phase, and recently started a new and fierce growth cycle. Oil prices apparently were lifted by this continued demand growth for liquid energy from Non OECD countries.

Given this recent growth history, it should not come as a surprise if Non OECD demand for liquid energy grows by another 1 Mb/d over the next year.

The bulk of such a demand growth would most likely be met with increased OPEC supplies.

If we start from the assumption that present global spare crude oil capacity is around 2 Mb/d, then recent data on consumption and supply developments within OECD and non OECD suggests that present global spare crude oil capacities may become eroded by the end of 2011.

EIA STEO for August 2010 forecast a growth in global liquids energy consumption of approximately 1,5 Mb/d for both 2010 and 2011.

In the recent past, I expected oil prices to retreat to around $60/Bbl, and even envisioned they could drop further than that. My expectation of such a decline was anchored in an analysis that suggested that the US economy (that is a GDP related analysis) can now absorb oil prices of around $60/Bbl and still post some growth.

Inasmuch as oil prices have remained around $70 – 80/Bbl, this has suggested a stronger demand than what I expected (ref the diagram showing demand growth from Non OECD), but it may also reflect a combination of factors inclusive of more strained supplies than what is now widely assumed.

$70 – 80/bbl oil suggests a redistribution of spending within several economies; that is more money is used for oil/energy and less for spending on other things. If this is so, then this will show up in statistics from retailers, restaurants, car sales and other service industries. Reduced availability of credit and higher unemployment (amongst other factors) most likely also play a major part in declining discretionary spending.

The fact that prices have remained as high as $70 to $80 a barrel with only a modest rise in global oil demand/consumption suggests that as supplies become even tighter in the future, prices will rise even higher yet. This analysis suggests that we may continue to see strong oil prices as long as all the wheels stay on the major economies.

SOURCES:
[1] EIA, INTERNATIONAL PETROLEUM MONTHLY, AUGUST 2010
[2] EIA, INTERNATIONAL ENERGY STATISTICS
[3] EIA, SHORT TERM ENERGY OUTLOOK, AUGUST 2010
[4] IEA, OIL MARKET REPORT, AUGUST 2010
[5] OPEC, MONTHLY OIL MARKET REPORT, AUGUST 2010

OPEC crude oil production output averaged 29.22 million barrels per day (b d) in July up 100 000 b d from an estimated 29.12 million b d in June

Read more….

The July 2010 edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.24 MB, 33 pp).

The Oilwatch Monthly is a newsletter that is available free of charge with the latest data on oil supply, demand, oil stocks, spare capacity and exports.

Below the fold is an executive summary, subscription form to receive the Oilwatch Monthly by e-mail, and latest graphics. For much more detail and a country by country profile, download the .pdf.

Subscribe to receive Oilwatch Monthly by e-mail

Latest Developments:

1) Conventional crude production – Latest figures from the Energy Information Administration (EIA) show that crude oil production including lease condensates decreased by 100,000 b/d from March to April 2010, resulting in total production of crude oil including lease condensates of 73.52 million b/d.

2) Total liquid fuels production – In June 2010 world production of all liquid fuels decreased by 250,000 b/d from May according to the latest fgures of the International Energy Agency (IEA), resulting in total world liquid fuels production of 86.15 million b/d. Liquids production for May 2010 was revised upwards in the IEA Oil Market Report of July from 86.31 to 86.4 million b/d. Average global liquid fuels production in 2009 was 84.94 versus 86.6 and 85.32 million b/d in 2008 and 2007.

3) World oil production capacity – Total oil production capacity in June 2010 decreased by 80,000 b/d from May 2010, from 90.0 to 89.94 million b/d. World production capacity is measured here as the sum of world liquids production excluding biofuels plus total OPEC spare capacity excluding Iraq, Venezuela and Nigeria.

4) OPEC Production – Total liquid fuels production in OPEC countries decreased by 60,000 b/d from May to June 2010 to a level of 33.97 million b/d. Liquids production for May 2010 was revised downwards in the IEA Oil Market Report of July from 34.23 to 34.03 million b/d. Average liquid fuels production in 2009 was 33.7 million b/d, versus 36.09 and 35.02 million b/d in 2008 and 2007 respectively. All time high production of OPEC liquid fuels stands at 36.4 million b/d reached in July 2008.

Total crude oil production excluding lease condensates of the OPEC cartel decreased by 60,000 b/d to a level of 28.89 million b/d, from May to June 2010, according to the latest available estimate of the IEA. Average crude oil production in 2009 was 28.7 million b/d, versus 31.43 and 30.37 million b/d in 2008 and 2007 respectively.

OPEC natural gas liquids remained stable from May to June 2010 at a level of 5.08 million b/d. Average OPEC natural gas liquids production in 2009 was 4.67 million b/d, versus 4.47 and 4.55 million b/d in 2008 and 2007 respectively.

5) Non-OPEC Production – Total liquid fuels production excluding biofuels in Non-OPEC countries decreased by 190,000 b/d from May to June 2010, resulting in a production level of 50.38 million b/d according to the International Energy Agency. Liquids production for May2010 was revised upwards in the IEA Oil Market Report of July from 50.05 to 50.57 million b/d. Average liquid fuels production in 2009 was 49.67 million b/d, versus 49.32 and 49.34 million b/d in 2008 and 2007 respectively.

Total Non-OPEC crude oil production including lease condensates decreased by 73,000 b/d to a level of 42.48 million b/d, from March to April 2010, according to the latest available estimate of the EIA. Crude oil production for March 2010 was revised upwards in the EIA International Petroleum Monthly of July from 42.34 to 42.55 million b/d. Average crude oil production in 2009 was 41.61 million b/d, versus 41.32 and 41.80 million b/d in 2008 and 2007 respectively.

Non-OPEC natural gas liquids production decreased by 52,000 b/d from March to April 2010 to a level of 3.38 million b/d. Average Non-OPEC natural gas liquids production in 2009 was 3.34 million b/d, versus 3.65 and 3.79 million b/d in 2008 and 2007 respectively.

6) OPEC spare capacity – According to the International Energy Agency total effective spare capacity (excluding Iraq, Venezuela and Nigeria) increased from May to June 2010 by 17,000 b/d to a level of 5.59 million b/d. Of total effective spare capacity an additional 3.85 million b/d is estimated to be producible by Saudi Arabia within 90 days, the United Arab Emirates 0.43 million b/d, Angola 0.22 million b/d, Iran 0.25 million b/d, Libya 0.19 million b/d, Qatar 0.18 million b/d, and the other remaining countries 0.47 million b/d.

Total OPEC spare production capacity in June 2010 dereased by 5,000 b/d to a level of 5.2 million b/d from 5.25 million b/d in May according to the Energy Information Administration. Of total effective spare capacity an additional 3.95 million b/d is estimated to be producible by Saudi Arabia, the United Arab Emirates 0.30 million b/d, Angola 0.15 million b/d, Iran 0.10 million b/d, Libya 0.15 million b/d, Qatar 0.25 million b/d, and the other remaining countries 0.15 million b/d.

7) OECD liquids demand – Oil consumption in OECD countries decreased by 500,000 b/d from April to May 2010, resulting in a consumption level of 43.43 million b/d. Average OECD oil consumption in 2009 was 43.92 million b/d, versus 46.10 and 47.68 million b/d in 2008 and 2007 respectively.

Chinese liquids demand – Oil consumption in China decreased by 24,000 b/d from April to May 2010, resulting in a consumption level of 9.12 million b/d according to JODI statistics. Average oil consumption in China in 2009 was 8.05 million b/d, versus 6.92 and 7.29 million b/d in 2008 and 2007 respectively.

9) OECD oil stocks – Industrial inventories of crude oil in the OECD in May 2010 increased to 1041 million from 1036 million barrels in April according to the latest IEA statistics. Current OECD crude oil stocks are 71 million barrels higher than the five year average of 970 million barrels. In the June Oil Market Report of the IEA a total stock level of 1023 million barrels was tabulated for April which has been revised upward to 1036 million barrels in the July edition.

Industrial product stocks in the OECD in May 2010 increased to 1417 million from 1399 million barrels in April according to the latest IEA Statistics. Current OECD product stocks are 8 million barrels higher than the five year average of 1409 million barrels. In the June Oil Market Report of the IEA a total stock level of 1424 million barrels was tabulated for April which has been revised downward to 1399 million barrels in the July edition.

• China set to consume 50% of global coal production this year
• Production and consumption roughly in balance
• Coal imports used for stock pile growth?
• Consumption growing >10% year on year in line with economic growth
• Rest of world consumption declined 7% in 2009

Figure 1 Chinese coal consumption compared with the rest of the world.

How long can this go on?

Data

Data are taken from the 2010 BP statistical review of world energy – both a priceless but flawed resource. BP provide annual coal production figures in tonnes and tonnes oil equivalent (TOE) from 1981 and consumption figures in TOE only from 1965. Hence to make a production / consumption balance comparison it is necessary to use TOE. In China, 1 TOE is close to 2 tonnes coal – so simply double the TOE numbers to get at the approximate tonnages. Note that the energy content of coal varies by rank and from region to region and conversion factors to TOE vary from 1.5 to 3.

The coal monster

Like everything else in China, coal production statistics are simply immense. China now consumes and produces close to 50% of all the coal in the world. Thus, changes in Chinese consumption and / or production may have a dramatic impact upon the global coal market.

Figure 2 Since 1965, China has steadily increased its percentage share of global coal consumption and looks set to account for 50% of global coal consumption this year. Virtually all consumption is met from Chinese domestic coal production (Figure 3)

Coal production and consumption are in balance

In light of press stories describing rapid growth in Chinese coal imports, I was both surprised and puzzled when I plotted the Chinese coal production and consumption data and saw that these have always been roughly in balance (Figure 3). I sent the chart around the TOD email list and copied to Professor Dave Rutledge at Cal Tech. It was DaveR who came up with a possible explanation.

DaveR pointed out that in countries like the UK, coal stock piles equivalent to roughly 4 months consumption are maintained. If China does similar then stock piles will be around one third of 3 Gt equal to 1 Gt. With consumption growing at 12% in 2009, stock pile growth would need to be around 120 Mt to maintain the 4 month buffer. China People’s Daily reported that Chinese net coal imports were 104 Mt in 2009 – barely sufficient to maintain stock pile growth.

Figure 3 Despite stories of ballooning coal imports, China produces as much coal as it consumes. It seems imports merely contribute to domestic coal stock piles.

Global coal trade

The top 20 coal producers account for 98% and the top 5 producers account for 79% of global coal production. It is therefore possible to get a handle on global coal trade by looking at the top few producers. China as we have already seen is roughly in production / consumption balance, and India is a major importer of coal. The main export nations are the USA, FSU, Australia, Indonesia and South Africa. Looking at the production / consumption balance of these 5 nations shows an export surplus of 450 million TOE (roughly 900 million tonnes coal). Chinese coal imports of 100 Mt therefore account for roughly 11% of global coal trade (contrary to the People’s daily report) – and that is just to maintain stockpiles!

Figure 4 The top 20 coal producers. The dashed grey line marks approximate zero growth for the last decade. All the growth in coal supplies comes from the nations above that line with growth dominated by China with contributions from India and Indonesia.

Figure 5 The global export market is dominated by 5 nations. Export growth has come mainly from Australia and Indonesia.

Threat to global economy

Should China ever fail to match coal consumption with indigenous production then 1 of 3 things may happen. The first option is that consumption is pegged back to match stalled production and this would stall Chinese economic growth with knock on effects to the global economy. The second option is that China tries to meet any shortfall buying coal on the international market. As already pointed out China is such a huge consumer of coal this would create great competition in the international market for limited supplies leading to severe upwards pressure on coal prices. The third option is that China somehow manages to install sufficient nuclear capacity to plug any energy gap.

The People’s Daily reports a doubling of Chinese coal imports for the first 5 months of 2010 and upwards pressure on coal prices and it therefore looks like option 2 may be under way. Should Chinese coal imports double this year and next then China will be competing for about 50% of the coal on the world market and that may be like a wrecking ball going through the global economy that is founded on abundant and cheap supplies of energy.

Reserves and peak production

Finally a note on reserves. BP report China to have 114.5 Gt of coal reserves. BP in fact report coal reserves figures from the World Energy Council and the figure of 114.5 Gt has been reported every year since 1992. Thus we have the same unsatisfactory non-varying reserves reporting for Chinese coal that exists for Middle East OPEC crude oil reserves. Since 1992 China has produced 31 Gt of coal and the reserves should be reduced by that amount leaving 83.5 Gt reserves as of end 2009.

In 2006, the German based Energy Watch Group (47 page pdf) reported Chinese reserves to be 96.3 Gt. They produced a Hubbert curve forecast scenario that has proven to be inaccurate thus far (Fig. 6).

Dave Rutledge is currently estimating 139 Gt for ultimate recovery of Chinese coal. Cumulative production 1896 to 2009 is 51 Gt indicating 88 Gt remaining.

Figure 6 A Chinese coal production scenario produced by The Energy watch Group in 2006 (page 28 of report linked to above) illustrating how difficult it is to forecast production scenarios, especially pre-peak. One possible outcome is that Chinese coal production peaks earlier than shown and then enters rapid decline. Alternatively, substantially larger reserves may produce a taller and broader peak than shown here.

Chinese coal production will peak one day but it is very difficult to predict when that day will come based on these figures. The indications are that China has used about 37% of its coal. It has to be assumed that the best resources have been mined first and that for every year that passes the challenge of first meeting and then exceeding the previous year will become increasingly difficult. But the Chinese are an enterprising people.

Useful links

Dave Rutledge: Hubbert’s Peak, The Coal Question, and Climate Change

Richard Heinberg: China’s coal bubble…and how it will deflate U.S. efforts to develop “clean coal”

China: Summary of Coal Industry

OPEC on Monday said its oil price rose to $72.79 at the end of last week.

Read more….

OPEC on Wednesday said its oil price dropped $2.11 on the previous day amid worries about European financial and global economic recovery.

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The Organization of the Petroleum Exporting Countries (OPEC) said Monday that its oil price inched up to 72.29 dollars at the end of last week stabilizing after three days of increases.

Read more….

BP Collected 6,077 Barrels Friday at Well

BP PLC collected 6,077 barrels of oil on Friday, the first full day after a new containment cap was placed over the deepwater well in the Gulf of Mexico that has been leaking for more than six weeks, the company said early Saturday on its website.

The first daily estimate of oil collected indicates that possibly between half and one-third of the oil that is spewing from the BP-owned Macondo Well is being captured. Last week, scientists led by the U.S. Geological Survey estimated that between 12,000 and 19,000 barrels a day were gushing into the Gulf.

“Optimization continues and improvement in oil collection is expected over the next several days,” BP said in the update.

Carbon Capture on the Cheap?

Skyonic, which has developed a system for converting smokestack fumes into sodium bicarbonate (baking soda) and other minerals, is moving toward commercialization and says that early data from its pilot plant indicate that it will be able to undercut many of the industry estimates for the cost of capturing the gas.

“We can capture carbon for less than $22 a metric ton” at scale, said CEO Joe Jones in an interview. The cost figure does not include revenue generated from selling minerals produced in the process.

By contrast, McKinsey & Co. has estimated that early traditional techniques for carbon capture, i.e., storing it in underground caves, will cost $80 to $120 a ton and go down to the $30-to-$60 range over time. Some of the cost can be defrayed by selling pressurized streams of CO2 to oil companies for enhanced oil recovery.

BP Funneling Some of Leak to Surface

“I would say that things are going as planned,” Kent Wells, a BP executive, said at a briefing Friday afternoon. “I am encouraged. But remember, we only have 12 hours’ experience.”

Later, BP reported on its Web site that in the first 12 hours of operation the cap had diverted 76,000 gallons of oil to a ship on the surface. Current estimates are that oil is leaking from the well at a rate of 500,000 to 800,000 gallons a day.

With Drilling Stopped, Losses Could Multiply

One oil industry group, the Louisiana Mid-Continent Oil and Gas Association, has estimated that each exploration and production job represents four supporting jobs in and around the region. If that is the case, thousands of jobs — and millions of dollars in wages — could be affected by the work stoppage, the group said.

With that in mind, a growing chorus of residents, business owners and local politicians in the gulf region are imploring the Obama administration to reconsider the deep-water drilling ban.

BP chief Tony Hayward sold shares weeks before oil spill

Tony Hayward cashed in about a third of his holding in the company one month before a well on the Deepwater Horizon rig burst, causing an environmental disaster.

Mr Hayward, whose pay package is £4 million a year, then paid off the mortgage on his family’s mansion in Kent, which is estimated to be valued at more than £1.2 million.

There is no suggestion that he acted improperly or had prior knowledge that the company was to face the biggest setback in its history.

Canada’s Oil Sands May Gain From Deepwater Drilling’s Pain

The inadvertent benefit to the oil-sands industry from the spill may be more than just cosmetic, with deepwater drilling likely to face higher costs from new regulations as a result of the disaster. The great expense and particular environmental risks of oil-sands development could look ever more bearable compared with the potentially catastrophic consequences of deepwater drilling. Any eventual shift of investment from the Gulf into the oil sands could also be a boon for the Canadian dollar and the country’s economy.

Crude from oil sands and deepwater wells has only become economical to extract over the past several years as oil prices have risen and technology has advanced. Both sources are much more expensive than conventional oil production. Both methods require oil prices of between $50 and $60 a barrel to be profitable, said BMO Capital Markets analyst Randy Ollenberger. The Gulf spill, however, is likely to lead to regulations that could increase the costs of deepwater oil production beyond that of developing oil sands, he said.

Stopping A Spill? There’s Always the Nuclear Option

The Soviets nuked several out-of-control gas wells, according to reports. In the Central Asian republic of Turkmenistan, a fire has raged for nearly 40 years after a drilling rig ignited underground gas. And in some places on earth, leaking and oozing oil has been blithely ignored for decades.

Here are some examples of oil and gas blowouts around the world that have produced strange results — and equally strange efforts to fix them:

Panel recommends continued use of oil dispersant

A federal panel of about 50 experts is recommending the continued use of chemical dispersants to break up the oil gushing in the Gulf of Mexico, despite its harm to plankton, larvae and fish.

Panel member Ron Tjeerdema (juh-DEER’-muh) said Friday they decided the animals harmed by the chemicals underwater had a better chance of rebounding quickly than birds and mammals on the shoreline. Tjeerdema chairs the Department of Environmental Toxicology at the University of California, Davis.

Governor Rell vetoes Connecticut energy bill

Citing concerns that recently passed energy legislation would increase energy costs, Governor M. Jodi Rell this week vetoed Senate Bill No. 493, An Act Reducing Electricity Costs and Promoting Renewable Energy. Governor Rell’s action will now trigger a special legislative session to consider whether to override the gubernatorial veto.
Governor Rell, in her veto message, said that “in the midst of both this great recession and our well-known state budget challenges I cannot ask our already over-burdened and over-taxed residents and businesses to bear the additional burden of the costs associated with this bill.”

Lawmakers Eager to Take Action

WASHINGTON—Congressional Democrats plan an aggressive legislative response to the oil disaster in the Gulf of Mexico, led by proposals to raise liability limits for oil companies that cause spills and a renewed push to enact legislation to promote “clean energy.”

Among other initiatives likely to be considered, beyond raising the cap on oil-spill liability to $10 billion or more: Improvements in oil-worker safety, a toughening of environmental protections for offshore drilling and a further revamping of the Minerals Management Service, the bureau in the Interior Department that manages the nation’s oil resources. President Barack Obama has already ordered a wide-ranging overhaul of the MMS, dividing its current responsibilities across three other agencies.

Oil prices fall on weak euro, US jobs report

NEW YORK: Oil skidded more than three dollars a barrel on Friday as a sharply weaker euro and a disappointing US jobs report sparked fresh concerns about the strength of economic recovery.

Electric car goes 623 miles on single charge

A car group in Tokyo recently drove an electric car 1,003.184 kilometers (about 623 miles) on a single charge, breaking its own record for greatest distance traveled without recharging.

I’d like to know how many times the drivers stopped–and how this affected battery performance. Also, how do you fit more than 8,320 batteries (albeit small ones) into a car as tiny as the Mira? I doubt that there was much leg room left.

Stanford Kids Develop An Open-Air Electric Car (Video)

Some Stanford graduate students have created a concept vehicle that may see some large-scale production and distribution. It’s called the WENG, which stands for Where Everyone Needs to Go, and it’s a four-seater, golf-cart like vehicle with some design-y elements meant for short trips near home. As one of the team members, John Stanfield, says, “Why are people driving 4 to 6,000-pound internal combustion cars to the grocery store?”

Commuter Bikes Answer the Call for “Greener” Modes of Getting Around

Performance Bicycle, the nation’s No. 1 specialty bike retailer, recently launched the TransIt line of city and commuter bikes to help people make cycling part of their everyday routine. “I think we’re in the midst of a renaissance of the American bicycle, and commuter bicycles are going to play a larger role in that trend,” says Performance CEO Jim Thompson.

Many cities across the country are taking the initiative to encourage local commuters to bike to work by developing commuter bike paths and bike lanes on city streets. They also are providing bike “parking.” Cycling to work and around town definitely takes planning, so commuters should take the time to map the best route, know how long the ride takes in order to leave in plenty of time, and possibly bring a change of clothes if it is hot.

A primary pivot point for California transit

As primaries approach, inquiring transit-obsessed voters want to know what each of the candidates might do about all the crumbling bus systems, the rusty rails, the ruby red budgets and the push to reduce greenhouse gas emissions. But the leading gubernatorial pols haven’t said much about transit issues (and did not respond when this reporter asked them directly). Still, we can piece together some idea of how each potential governor would alter California’s transportation environment.

Q&A: Abdalla Salem EL Badri, Secretary General, OPEC

How is Opec looking at the future?

Since its formation, Opec has been committed to three main objectives: Securing a steady income for producing countries; ensuring an efficient, economic and regular supply of petroleum to consuming nations; and bringing about a fair return on capital for those investing in the petroleum industry.

Oil producers are faced with the challenge of security of demand and how to better decipher demand patterns and trends. Without the confidence that there will be additional demand for oil, there is little incentive for producers to invest in new capacity. Our data show that as early as 2020, demand for Opec crude could be as low as 29 million barrels per day, or as high as 37 million barrels per day. This translates into an uncertainty gap for upstream investments in Opec member-countries of over $250 billion.

What are your projections for world oil demand and world oil supply? Also what are current OECD stock levels?

In OPEC’s latest Monthly Oil Market report, we are forecasting world oil demand growth for 2010 at 0.9 million b/d. Oil supply from non-Opec producers is expected to grow by 5,00,000 b/d. We also see a steady increase in OPEC NGLs, which we are forecasting will grow by 5,00,000 b/d in 2010. Meanwhile, our latest estimate for April showed OECD stock levels at 2.74 billion barrels, which corresponds to an overhang of 174 million barrels. This overhang is split between crude and products.

Euro sinks to four-year low as Hungary fears being the next Greece

The euro sank to a four-year low against the dollar today amid warnings that Hungary could be the next European country to suffer a Greek-style debt crisis.

Fresh fears around unwieldy European sovereign debts sent the euro falling through $1.20 and knocked stock markets in Europe and the US. A spokesman for Hungarian prime minister Viktor Orban set off alarm bells among investors when he conceded in a television interview that the Hungarian budget was in a “much worse” state than the previous government had indicated and “skeletons were continuously falling out of the closet”.

Thames Water opens first large-scale desalination plant in UK

Thames Water has spent £250m building the plant and pipes, and has said that the equipment will only be turned on at times of drought, when it can supply up to 1 million people.

However opponents have claimed that the plant will use too much energy and the company should be doing more to stop leaking pipes and reduce the average water use of customers by installing more water meters and better promotions.

Elsewhere, water industry experts have speculated that Thames Water could in the long-term connect the desalination plant directly to the next-door Beckton sewage plant, in east London, to produce recycled water. The recycling process uses similar technology and is usually cheaper than desalting water, but has so far been too unpopular to be accepted by homes anywhere in the world except the Namibian capital Windhoek.

Q&A: Upmanu Lall Gives Insight to India’s Nexus of Energy, Food and Water

There’s a powerful nexus, some might even say a vortex, where water, energy, and food all combine. It takes energy to treat and move water; it takes water to grow food. Upmanu Lall knows these intersections well. He’s the Director of the Water Center at Columbia University and studies the wide reaching impacts of water and climate. We spoke with him recently at a meeting of the World Economic Forum’s Global Agenda Council.

So, water’s a major issue; energy is a major issue; food is emerging as a major issue–yet they’re closely connected. Give us a picture of the nexus.

Upmanu Lall: Well, water and food are very easy to establish. Many people don’t seem to realize it, but worldwide, 70 percent of all freshwater used goes for growing food and so the connection there is very clear. One thing that’s not pointed out is that much of the pollution of aquifers and rivers also comes because of poor agricultural practices with regard to fertilizer used and pesticides, so there’s duel impact on water from agriculture and food on quantity and quality.

The next part is the water and energy linkage. In many places in the world, population densities are now high enough that locally grown food can’t be sustained via natural rain fall or natural stream flow. So people end up on being ground watered–this is a very large energy consumer. Similarly, if we are looking for drinking water at high quality–and this is a health issue obviously–then we require treatment of water: this is a major energy consumer. This is the direction in which energy influences water use. On the other side, if you look at thermal energy production–whether it is through coal fired, oil, gas or nuclear means, and now solar thermal as well–then you require a fair amount of water for cooling. That actually can be avoided if one takes air cooling methods, as are in practice now in Arizona and Southern California, but then you take an energy efficiency hit. Either way, you have to recognize that there’s an issue.

Lead poisoning from mining kills 163 in Nigeria

Dr Henry Akpan, the health ministry’s chief epidemiologist, told Reuters 355 cases in at least six locations in the northern Zamfara state had been reported so far and 111 of the dead were children, many of them under five.

“We discovered unusual cases of abdominal pains with vomiting, nausea and some having convulsions,” Akpan said. “These people were around the area where they were digging for gold. The fatality rate is 46 percent.”

Many victims died after coming into contact with tools, soil and water contaminated with large concentrations of lead.

Mexico’s May Crude Numbers Show Output Stabilizing

Mexico’s state-owned oil company Petroleos Mexicanos, or Pemex, produced an average of 2.603 million barrels a day of crude from May 1 to May 30, according to preliminary figures by the National Hydrocarbons Commission posted on its website Friday.

Output was slightly higher in the May period compared to April when Pemex averaged 2.593 million barrels a day. In May 2009, crude output was 2.609 million barrels a day.