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Peak oil causes problems within OPEC; Canadian “oil sands” demonstrate desperate measures

This Marketplace report on the OPEC summit highlights what we’ve seen revealed in the Wikileaks memo. Don’t think that just because oil prices dropped for a bit that everything’s better now. These fluctuations will continue and the overall trend will be a continued rise.

By Stephen Beard for Marketplace -  APM

The price of crude jumped by more than $2 a barrel today. A key meeting of the Oil Producers’ Cartel — OPEC — failed to find agreement on an increase in production. The meeting in Vienna was a contentious one — and that’s putting it mildly. Now, just weeks after a consumer pullback that prompted gas prices to drop, there are fears of another sharp rise in the price of oil. Which would not bode well for any kind of global economic recovery.

But there’s an even more fundamental divide in the cartel. Between those countries like Saudi Arabia with big reserves that want a stable price for their oil, and those like Iran, Libya and Venezuela who have little spare capacity. Samuel Ciszuk is an oil analyst with IHS Global Insight.

Samuel Ciszuk: Those who are starting to see the end of their reserves are obviously interested in maximizing the amount of money they will get out of it.

That group of countries today refused to back Saudi Arabia’s call to pump more oil and restrain prices, hence the jump in the price of crude. But the Saudis hinted that they may step up production anyway. Chris Skrebowski of Peak Oil Consulting says this could herald the end of OPEC.

Chris Skrebowski: I think it’s probably a 60 or 70 percent chance that this will fundamentally change the cartel. That in practical terms, it will split.

With Saudi Arabia pumping more oil and with OPEC in disarray, that would seem to be good news for beleaguered oil consumers. But as Professor Kent Moors of Duquesne University told the Marketplace Morning Report, don’t bet on it.

Kent Moors: Well, gas prices probably have gone down as much as they’re going down nationally. We’re not going back anywhere close to $3.30 or thereabouts.

Such is the rapid growth in demand for oil — in China, India and elsewhere — the price seems headed inexorably higher.

Meanwhile, the oil sands in Canada which are touted as an alternate solution further reveal how problematic peak oil is becoming as we get closer to spending a barrel of oil to extract one:

By Scott Tong for Marketplace - APM

This pipeline fight is over the most expensive oil in the world. Oil companies drilling in the Canadian oil sands typically spend $60 or more to produce one barrel of crude. It’s what’s called tough oil — it takes a lot of energy, geology, and fancy acronyms.

Drew Zieglgansberger: Probably the most advanced technology right now is called SAGD, or it stands for Steam-Assisted Gravity Drainage.

Drew Zieglgansberger is vice president at the Canadian oil firm Cenovus. We’re on a bus, touring their operations in middle-of-nowhere, Alberta. He says the world’s easy oil is gone.

Zieglgansberger: The oil now that people are looking for are not the nice light oil sitting in pools that you drill into it and it just flows by itself.

What’s left is in remote places, often way underground. As for the oil sands, they’re not even a liquid.

Zieglgansberger: It’s basically a solid matter. It’s very much like a shoe polish. It’s hard and it’s… if you put it in a cup it would be there forever. If you dump it out, it’d be like dumping some wet sand in your sandbox.

Still, processing the oil sands is worth it, ‘cause American import one hundred barrels of crude, every second. That comes out to 24,000 barrels by the time this story is over. Or one million gallons. The key ingredient to oil sands is heat: you send steam down a well, turn the sand into liquid, and pump it.

Zieglgansberger: This is basically a big, big boiler.

The steam source runs almost 3000 degrees Fahrenheit. Great big fire.

Zieglgansberger: This is where we’re burning natural gas. If you look at a normal barbecue, your barbecue is probably about 30,000 or 40,000 BTU of heat, maybe. This one generator is 250 million. It’s a massive amount of energy.

There’s the rub. In some cases, the energy put in equals what you get out.

Not worth it, says Calgary author Andrew Nikiforuk. His book is called Tar Sands.

Andrew Nikiforuk: The returns are absolutely minimal. It takes one barrel of oil or oil equivalent to get one-and-one-half barrels. Some steam plants are getting even negative returns.

Energy use makes the oil sands process emit 17 percent more greenhouse gases than normal oil — according to a U.S. government study. Critics say that makes for one of the dirtiest crudes in the world, not to mention the chemical wastewater, and clearing of forests for mining.

Canadian activist Danielle Droitsch is with the Pembina Institute.

Danielle Droitsch: It’s similar to Venezuela. It is similar to Nigerian oil. So it’s sort of the worst of the worst.

Droitsch moved to D.C. last year, in her view to keep the oil sands industry honest. She’s fighting the expansion of a pipeline carrying Canadian oil sands crude to the United States. And for now it is stalled. The application’s been at the State Department for 33 months. Opponents like Droitsch think choking off supply will help choke off oil addiction quickly. But the reality of driving suggests, maybe not.

Analyst Jim Burkhard at IHS Cambridge Energy says most of us own our cars for a decade or more. So it’ll take a long time to retire a whole generation of oil guzzlers.

Jim Burkhard: So even if we have stunning success in electric vehicles, it will take decades before we see that reduce overall global oil demand.

Read the rest of the article to find out more about the pipeline.  Peak oil isn’t fake science. It’s real. Oil companies have been talking about it for a decade, but try to play it down. We have some time left, but we’re on the down-hill slope at this point.

 


Saudi prince hopes to keep US hooked on cheap oil

Saudi Prince Al-Waleed bin Talal said Sunday that he wants oil prices to drop so that the United States and Europe don’t accelerate efforts to wean themselves off his country’s supply.

In an interview broadcast Sunday on “CNN’s Fareed Zakaria GPS,” the grandson of the founding king of modern Saudi Arabia said the oil price should be somewhere between $70 and $80 a barrel, rather than the current level of over $100 a barrel.

"We don’t want the West to go and find alternatives, because, clearly, the higher the price of oil goes, the more they have incentives to go and find alternatives," said Talal, who is listed by Forbes as the 26th richest man in the world.   Source

 


Analysts predict price of gas will continue to rise; possibly up to $6

Tom Petrie, Bank of America Merrill Lynch vice chairman, says oil prices per barrel will increase another 5-10 dollars at least.  He says by 2015 Iraqi oil output will be a critical factor in supply-demand balance.  Does everyone remember why we REALLY went into Iraq?

CNBC points out that the prices could go a LOT higher:

A dollar plumbing three-year lows is hitting Americans squarely in the gas tank, and one economist thinks it could drive prices as high as $6 a gallon or more by summertime under the right conditions.

One result has been a surge higher in gasoline prices to nearly $4 a gallon before the summer driving season even starts, a trend that economists say will be aggravated as demand increases and the summer storm season threatens to disrupt oil supplies.

"All we have to have is a couple badly placed hurricanes which could constrain some of the refinery output capacity in some key locations," says Richard Hastings, strategist at Global Hunter Securities in Charlotte, N.C. "If you get weakness in the dollar concurrent with the strong driving season concurrent with the impact of one or two hurricanes in the wrong place, prices could go up in a quasi-exponential manner."

 


Oil prices likely to keep rising until June

Consumers leery of oil prices topping $111 a barrel may want to brace for more sticker shock in the coming months. With a 4% gain so far this month, following March’s 10% rise, benchmark oil futures are keeping up with a long-running trend — advancing in March, April and May before taking a breather in June.

Source

 


Pattern Recognition: Food Crisis Round-up - late April 2011

Food riots over rising prices in Uganda grow more violent

Kenya, DarfurZambiaAfghanistan, Yemen, Guatemala, Papua, and Ghana, just to name a few, continue to wrestle with food shortage and rising food and fuel costs.

Soaring food prices will be expensive for rich countries

The combination of rising gasoline prices and the steepest increase in the cost of food in a generation is threatening to push the US economy into a recession. Source

Japan’s food crisis goes beyond recent panic buying

Spiking food prices have pushed the world’s poor countries to “one shock away from a full-blown crisis,” the head of the World Bank warned Saturday. Source

A dollar plumbing three-year lows is hitting Americans squarely in the gas tank, and one economist thinks it could drive prices as high as $6 a gallon or more by summertime under the right conditions. Source

McDonald’s Corp forecast higher prices for beef, dairy and other items and said it would cautiously raise prices to keep attracting diners, who are grappling with higher grocery and gas bills. Source

Global sugar inventories are at a two-decade lows and grain production has fallen short of supply for the past seven seasons out of 11. Source

Robert Zoellick, World Bank President, said, “Of particular concern is food prices. This is the biggest threat today to the world’s poor, where we risk losing a generation. We are one shock away from a full-grown crisis. The financial crisis taught us that prevention is better than cure. We cannot afford to forget that lesson.” Source

The World Bank, whose primary responsibility is to support the poorest economies worldwide, said that wheat and maize prices had soared by 69 and 74% respectively over the past year – pushing to crisis levels the cost of living for the poorest on the planet. Source

The Outlook on the food shortage from Purdue University agriculture economics professor Chris Hurt at the Food News Seminar in Charleston SC:

The United States plays a huge role in the food supply. “We are the biggest country feeding the rest of the world,” Hurt said. “Corn is our largest crop, soybeans the second, wheat third. We are the largest supplier of cotton and rice. It’s dramatic the production base we have built up to sustain the rest of the world.”

Besides the 21.2 million acres of U.S. corn that now are used for ethanol production, 20 million acres of U.S. soybeans are going to China, and Russia’s wheat production is declining.

There’s no surplus or inventory of these commodities in the world anymore,” Hurt said. “That’s a big part of our food system.”

The USDA estimates global food prices rose 25 percent last year and set a record in February.

Hurt said U.S. prices for pork are up 6 percent to 7 percent, and estimated it will go to 9 percent this year. Beef, veal and seafood prices are up 4.5 percent to 5.5 percent; poultry has risen 2.5 percent to 3.4 percent; and fruits and vegetables are up 3 percent to 4 percent.

He said in the past 11 years, there were seven years when the world wasn’t able to grow enough food to feed itself. This might be surprising to many U.S. families whose cupboards and refrigerators are full of food. Source

China Crops in Short Supply as Fewer Farms Spur Food Prices

Flooding in southern Manitoba, one of the world’s most productive agricultural regions, will have impact on world food supply. Source

"We tend to feel we’re insulated from the food riots," she said, referring to recent events in India, Haiti and several African nations. "Most of the food we grow is exported around the world. We eat very little of what we produce."

Even in a nightmare scenario, Manitoba is no danger of losing its ability to feed itself. A handful of large grain and vegetable farms could feed all 1.2 million people in the province, Doucette said.

But Manitoba’s ability to help feed the world is diminished when farmers quit the business, as thousands have in recent decades. Manitoba lost 2,023 of its 21,071 farms between 2001 and 2006, the year of the most recent Canadian census, a drop of 9.6 per cent over five years.

"It’s easy to become complacent about going to Safeway and Superstore and Sobey’s and buying all your groceries," he said. "You take your ability to produce food locally for granted when the shelves are full."  Source


Time to think seriously about……Food Storage — Not Just for Natural Disasters

 


 


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Posted at 11:40pm
Tagged fuel prices gas prices

 


Posted at 11:38pm
Tagged gas prices fuel prices