September 2007 Archives

It's not true that the price of everything oil-related is up. Just ask the producers of ethanol.

On May 17, Platts assessed the price of ethanol at approximately $2.62/gal. On Tuesday, we assessed it at $1.63/gal. (Editor's note: The Barrel has corrected an earlier incorrect figure.)

I couldn't really believe my eyes the other day. But there it was in my inbox. The latest in a string of news releases that I get each day from the public affairs office of the multinational forces in Baghdad. This one was entitled, somewhat intriguingly, thus: "It's all happening at the Zoo."

'Wow', I thought. Amidst all the mayhem in that benighted country, someone has a sense of humor.

I've always wondered why Tom Friedman of The New York Times often invokes such venom. He has always seemed to be a cool, moderate observer of trends both political and economic; maybe that's why he's so reviled by people on the far fringes of American political thought. Somebody on the far left figures somebody on the far right is just nuts, but somebody who's moderate -- who sometimes agrees with them -- is more of an apostate, thereby drawing more venom. And vice-versa.

Consider this passage on a website criticizing a Friedman column: "He is the imperial chronicler, the man responsible for promoting the narrow interests of elites and transforming the crimes of the empire into a narrative of generosity and goodwill. If one can decode Friedman's bi-weekly hieroglyphic, they can also understand how elites use the media to manage public perceptions."

Gunmen in Nigeria are increasingly kidnapping children of well-to-do families for ransom, a troubling indication in the cash-for-kidnap culture that is shaking Africa's top oil producer.

A 13-year-old son of a prominent traditional ruler in the country's restive oil-rich south was snatched on Monday while being taken to school in Port Harcourt.

For much of its time in office, the Bush administration stiff-armed the international community on climate change. It rejected the Kyoto Treaty, resisted binding greenhouse gas emission targets, questioned the growing body of science that pointed to the dangers posed by climate change, and cooked the books by removing or downplaying passages in reports that linked global warming with human activities. (The oil industry, through its financial support of front groups and politically conservative think tanks, helped write the administration's playbook).

More recently, the administration has sought a leadership role, organizing a handful of Asia/Pacific nations into a "partnership" to promote clean-energy technologies development and deployment; and sponsoring a multilateral conference in Washington September 27 and 28, to consider "how to deal with global climate change after the Kyoto Protocol expires in 2012."

"Hogwash" said the minister, jovially. "Hogwash," chanted the journalists as they marched into the hotel lobby following a brisk morning walk in beautiful Vienna. Bemused onlookers must have thought we were extras from a new Harry Potter movie. Hogwash.

The minister was jokingly responding to our request for a comment on a report by a prominent firm of oil analysts speculating that OPEC's 12 ministers were actually going to discuss a production increase of 500,000 to 1 million b/d in Vienna on September September 11. Hogwash?

A 7.1 million barrel fall in US commercial crude stocks last week was the key number in Wednesday's EIA weekly data. NYMEX front-month crude prices burst through $79/barrel for the first time in a knee-jerk reaction to the numbers.

Why the sudden stock draw? Imports fell 674,000 b/d, far outweighing a 337,000 b/d drop in crude runs.

However, the initial reaction might have been overdone, since 4.1 million of the drop was on the US West Coast, which is largely isolated.

The International Energy Agency has cut its forecasts for world oil demand, blaming the impact of high prices and mild weather as it watches for signs of demand destruction in the wake of the US credit crunch.

In its latest monthly report, the IEA said its latest figures show mild summer temperatures in Europe and the Pacific have dented fuel oil and heating oil demand and expectations of another mild winter are already being reflected in lower-than-seasonal stock buying.

The Chinese engine behind world oil demand growth might have a bit less horsepower this year.

That was the message at a presentation made in Singapore by C1 Energy, a Guangzhou-based publishing and research firm that specializes in Chinese petroleum.

Rocky Mountain oil producers have a lot to be happy about: output is up about 30% since 2002 and Wyoming sweet spot prices have increased during that same timeframe from about $35/b in 2003 to $70/b in 2007.

But that didn't stop producers from complaining at an Interstate Oil and Gas Compact Commission conference in Denver this week that they are not getting as much value for their oil as they should.

Platts' chief Africa correspondent Jacinta Moran, based in Cape Town, has compiled her latest summary of the amount of oil production offline in Nigeria.

Among her main points:

It is all but required that when you visit the oil sands in Fort McMurray, Alberta, that you try to get your picture taken next to one of the giant ore haulers. You stand next to the tire, which towers over you, and whoever is viewing the picture gets some sense of how big these machines are. A driver of one is said to have described it in this way: think of going into your house, climbing the stairs, walking to a window and then driving the house.

Safety concerns have taken away all the fun, and unless you’re very important, you can’t get right next to the truck anymore. So on a visit to the oil sands, a delegation of Platts’ sales and editorial staffers got the next best thing: standing next to a tire set up solely for the purpose of shutterbugs. The tire in question here costs $60,000 apiece, and it’s not even the most expensive tire used at the site.

A more detailed account of the trip to the oil sands is described in the August 17 entry.

Several years ago Zhu Qihua, a property developer in Lanzhou, China, proposed flattening a 900-foot hill to vent the haze, smoke and dust that shrouded Lanzhou, an industrial city in Northwest China.

The city sits in a narrow Yellow River valley surrounded by mountains and hills, and was reputed to have the world's worst air. Zhu's solution was to level Daqinshan (Big Green Hill), to let out the bad air.

The mid-July closure of a major nuclear power plant by Tokyo Electric Power Co. is posing some interesting questions that economists and watchers of markets can ponder.

The closure is very real in the Tepco offices, where The Barrel and some colleagues paid a visit earlier this week. At least two elevators are shut; the air conditioning is operating at minimal level; and lights are not operating in many places. It's all part of a conservation effort that they hope the rest of the country will follow.