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"The Stone Age came to an end not for a lack of stones and the oil age will end, but not for a lack of oil.'' Sheikh Ahmed Zaki Yamani |
David Seaton's Energy Links® Editorial - Palestine and Israel: in the vortex of pain The infernal video of poor Huda Ghalia running in circles around her dead family screaming, “my father, my father” has become yet another world symbol of Palestinian pain. Tragically the world’s recognition of Palestinian pain is actually some sort of progress. In the days of Moshe Dayan and Golda Meir, the Israelis and the Americans refused to recognize that anything called the “Palestinian People” even existed and it often seems that Yassir Arafat himself created them out of little more than their infinite capacity to suffer and then, like a magician, vanished mysteriously leaving a political vacuum impossible to fill. Arafat’s immediate successor, Mahmoud Abbas’s, with western encouragement, has proposed a referendum whose object is to destabilize the democratically elected Hamas government. The proposal would recognize Israel in its 1967 frontiers and permit the return of the refugees. This is simultaneously unacceptable to both Hamas and to Israel. As former Israeli foreign minister, Schlomo Ben-Ami pointed out in the International Herald Tribune, “This is a typical case where the search for an internal consensus could end up being an insurmountable obstacle for a peace deal with the enemy. What may be a potential platform for a Palestinian consensus is clearly a nonstarter from Israel's point of view, just as an Israeli consensus is bound to be rejected as a platform for peace by the Palestinians. In the tragic Israeli-Palestinian conundrum, only divided societies can make peace.”
Bush, Blair and Olmert envision a Palestinian "state",
discontiguous, but "at peace with its neighbors," without an army, without
ultimate control of its own frontiers, (to be defined at some future date)
and without enough farm land or water to be viable and they are looking for
a Palestinian leader to sign all this. Arafat could have but wouldn’t, Hamas
won’t and Abbas would but can’t. If nobody ever signs, Israel will find
itself perpetually holding captive a stateless population, with a high birth
rate, under conditions of apartheid. The horror of that outcome is the
motive behind the idea of Israel’s proposed unilateral retreat behind a wall
fencing off some of the choicest land on the West Bank, while leaving the
Palestinians outside the wall in exactly the “failed state” environment
where al Qaeda thrives. The map shows that the pro-western regime of Jordan
with its majority of Palestinian citizens would live sandwiched between a
terrorist infested West Bank, the insurgent Sunni districts of Iraq and
Osama bin Laden’s prime objective, Saudi Arabia, home of Mecca, Medina and
oil. If the Jordanian monarchy were destabilized, that could affect the
Saudi Monarchy too. That might bring on a worldwide depression. David Seaton's Energy Links®
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Iraqi Oil Shipments to Turkey Stopped- Houston Chronicle |
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World oil reserves grow, but only just: BP - MSN Money The world is not running low on oil reserves, BP Plc said on Wednesday. The amount of recoverable oil known to be in the ground at the end of 2005 was higher than a year earlier, BP said in its Statistical Review of World Energy, continuing the trend that the oil industry each year finds more oil than it produces. "There isn't a shortage of reserves," BP Chief Executive John Browne said at the launch of the review. Browne said the fact that only a small fraction of oil in reservoirs is currently considered recoverable gave plenty of headroom to increase the amount of oil deemed exploitable. "Improvement in recovery factors, notably from the techniques of drilling and the techniques of enhanced oil recovery, lead us to believe that these will continue to grow," he said. Recent record high oil prices and the depletion of aging fields in the United States and the North Sea have raised concerns about future oil supplies. While BP said its data, compiled from official figures from governments, should ease such concerns, the figures also show that it is becoming harder to add new reserves. The rate at which oil reserves are growing has slowed in recent years. Reserves grew by only 0.55 percent in 2005, compared to an average 3 percent per year in 1985-1995. This echoes data from the big western oil majors which in recent years have struggled to match production with new reserves additions. Oil men say it is becoming tougher to find new big fields, and to raise production, while demand keeps on rising. This led the Chief Executive of France's Total , the fourth-biggest western oil major by market capitalization, to predict last week that at current trends of demand growth, production could peak in 2020. Browne refused to give a date for when he expected oil production to peak and suggested that the peak could be caused by demand rather than supply tailing off. The improvement in the global reserves balance sheet was partly due to hikes in estimates of oil resources in Iran and Russia, offset by a sharp cuts by Mexico. The Iranian government estimated the country's reserves to be 137.5 billion barrels of oil at the end of 2005, up 3.6 percent on December 2004 because improved technology would allow increased recovery, BP said. Russia's reserves rose 2.8 percent to 74.4 billion barrels. BP did not offer a reason for this. Mexico slashed its reserves figures by 7.4 percent to 13.7 billion barrels. BP's Chief Economist Peter Davies said this was due to the adoption of more stringent reserves accounting standards. BP said global reserves of oil were 1.2 trillion barrels, equivalent to almost 41 years supply at current production rates. Natural gas reserves were estimated at 6,348 trillion cubic feet or 180 trillion cubic metres, equivalent to 65 years supply. Click here to read more Contents |
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US is 'not ready' for Chávez oil ban threat - Financial Times A Venezuelan embargo on oil exports to the US would lead to an immediate 15 per cent surge in world oil prices and crimp economic growth in the short term, according to a US congressional investigation.The study by the Government Accountability Office, Congress's non-partisan investigative agency, obtained by the Financial Times before its release this month, warns that the US is inadequately prepared for a potential loss of oil from Venezuela. The investigation was requested 18 months ago by Senator Richard Lugar, Republican chairman of the Senate foreign relations committee, reflecting growing concerns about the reliability of Venezuelan oil supplies.Mr Lugar, who has described energy as a national security issue, introduced legislation in March that called on the US to expand its international co-operation on energy issues. The findings are likely to embolden his efforts.Hugo Chávez, president of the world's fifth largest oil exporting country, has threatened to "cut off" oil shipments to the US if Washington continues, as he alleges, to "plot" his overthrow. Venezuela supplies 11 per cent of US oil imports while Petróleos de Venezuela (Pdvsa), the state-owned oil company, wholly owns five refineries in the US and partly owns four others through its subsidiary, Citgo. A production shutdown by managers of Pdvsa in a political dispute with the Chávez government cut supplies to the US for three months in early 2003, just before the US-led invasion of Iraq. Disruption to these supplies, the GAO report warns, would boost oil prices significantly. "A loss of 2.2m barrels a day of crude oil for six months," the report said, "would, all else remaining equal, result in a crude oil price spike of up to $11 a barrel in the early stages of the disruption." This increase, equal to about 15 per cent over current prices of about $70 a barrel, would cut US economic output by about $23bn, the report estimated.The warnings from the GAO come as lawmakers from both parties struggle to boost US energy independence in an attempt to address public anger over high petrol prices.A disruption or cut in Venezuelan oil supplies could also have a political impact. In the past two years, Venezuelan officials have floated the idea of selling Citgo's assets in the US. The Venezuelan-owned refineries' closure, at least temporarily, would be likely to prompt major diplomatic repercussions, the GAO warned. "If closing the refineries was deemed a threat to US national security, Venezuela could potentially face sanctions by the US government." The draft GAO report is still subject to final revision by the departments of energy or state.Short-term options available to Washington to mitigate a disruption to Venezuelan oil supplies, the GAO said, could include use of the US Strategic Petroleum Reserve and attempts to persuade other oil-exporting countries to increase output. Industry experts believe, however, only Saudi Arabia, the largest oil producer, enjoys any significant amount of idle capacity. In contrast to Mr Chávez, lower-ranking Venezuelan officials have insisted that the country is a reliable supplier of oil. In the short term, Venezuela would also find it difficult to shift its oil to other countries for technical reasons. Venezuela's heavy crude oil is suited to its refineries in the US. But Mr Chavez's suggestions that he could divert oil exports to China are unrealisable, analysts say, because Chinese refineries are not configured to process Venezuela's heavy crude. Transport costs would also be much higher. A cut in oil exports would also lead to economic ructions in Venezuela, a factor that casts doubt on the probability of such a scenario. Mr Chávez is dependent on oil for his political survival. Oil accounts for half of Venezuelan government income and 80 per cent of export revenue. Nevertheless, the GAO also warned of long-term consequences for the US. "The US government's programmes and activities to ensure a reliable long-term supply of oil from Venezuela have been discontinued," it said. Venezuela is currently almost doubling tax rates on most foreign-operated oilfields, a move that could discourage future investment and reduce output. The GAO said Venezuelan oil production had fallen by 16 per cent since 2001, to about 2.6m b/d. Venezuelan officials say output is above 3m b/d. Members of Congress frequently request GAO studies to help bolster the case for their policy proposals."Oil exporting states wield power for which we must account," he said at the time. "Not working with these states will lead to unproductive political showdowns and conflict. Even in challenging relationships such as Venezuela and Russia, we must explore how to improve our energy dialogue."Mr Lugar has suggested co-ordination with China and India as they develop strategic petroleum reserves and proposed a western hemisphere energy forum to promote co-operation. Contents |
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IEA: Oil demand growth withstands high prices -The New Straits Times - Malasia |
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Iran's oil at heart of nuclear standoff - Houston Chronicle How far might Iran play its oil card to further its nuclear ambitions? That question is rattling nerves from Houston to Riyadh to Tokyo. While negotiations continue between the Western powers and the world's fourth-largest oil exporter over Iran's nuclear program, the energy markets are bracing for a possible showdown. Analysts worry that a cornered Iran could cut off oil exports to the world or even try to interfere with shipments from neighboring Persian Gulf producers. "The capacity to create mischief is huge," said Iranian-born Fereidun Fesharaki, a senior fellow at the Honolulu-based East-West Center. Iranian leader Ayatollah Ali Khamenei hinted at just such a possibility last week, warning Western nations: "If you make any mistake, definitely shipments of energy from this region will be seriously jeopardized." As long as the markets are jittery, Tehran is sure to receive top dollar for its crude. Indeed, oil analysts calculate some $15 worth of the price of crude — oil futures closed up $1.28 on Friday in New York at $71.63 a barrel — represents nervousness about Iran. While still near record highs, oil prices eased last week, partly in reaction to Iran's relatively favorable response to the proposal offered by Western powers to try to encourage Tehran to abandon any effort to produce nuclear weapons. Iran ships about 2.4 million barrels of oil each day and will earn about $50 billion this year on those exports, noted Julia Nanay, a senior director at Washington-based PFC Energy. Iran's exports satisfy only about 3 percent of the world's thirst for oil. But with demand for crude growing as the economies of China and India expand, those Iranian barrels are much needed. Iran also borders the critical Strait of Hormuz, one of the world's most important waterways. Tankers loaded with 15 million barrels, or nearly one-fifth of the world's oil supplies, steam through those waters every day. With the balance of supply and demand in the world oil markets "so precarious . . . even small acts of sabotage or local insurrection can have a significant impact on oil prices," former Federal Reserve Chairman Alan Greenspan told Congress last week. Analysts are busily working through all the possible scenarios. Shutting off the spigot, as former Iraqi leader Saddam Hussein repeatedly did, would be a painful decision for Iran. After all, the bulk of the country's export revenue and nearly half of the government's budget comes from oil exports, according to the U.S. Department of Energy's Energy Information Administration. "If they shut off the flow of oil, pretty quickly their economy would be in shambles," said Daniel Yergin, chairman of Cambridge Energy Research Associates. The Iranian oil ministry, not wanting to lose customers to competitors, has been stating publicly that it anticipates no interference with oil supplies. Yergin suspects if a confrontation develops, Iran might curtail exports but not stop the flow completely. "It may not be all or nothing," Yergin said. "It may be somewhere in the middle." Tehran could then hope to recoup some of the revenue that otherwise would be lost from reduced exports, thanks to a higher world price for crude. Fesharaki, an Iranian energy adviser under the deposed shah, thinks the Iranians will want to continue exporting their own crude. "Even if there is a limited military attack, limited air bombings, they may still not interfere with the flow of oil," Fesharaki said in a phone interview from Beijing, adding: "There is incentive on the Iranian side just to continue and reap any benefit from the confusion." Iran, however, has its own military capability. Tehran could, for example, mine the Strait of Hormuz to keep other producers from exporting crude if Iranian exports were shut down. "They can create interruptions in supply, maybe not long-lasting, but in the short-term they can," Fesharaki said. Iran already lacks friends in its neighborhood. And if Tehran were to try to block tanker traffic in the strait, "Saudi Arabia would be quite within its rights to consider it an act of war," noted Leo Drollas, chief economist for the Centre for Global Energy Studies in London. Fesharaki does not think Iran would take such a drastic step unless U.S. forces were to launch an attack. The United States, which has long had sanctions against Tehran, receives no oil directly from Iran. Japan is Tehran's biggest customer, according to a report by Congress' Joint Economic Committee. Iran is almost sure to be a major topic of discussion on June 29, when Japanese Prime Minister Junichiro Koizumi travels to Washington for talks with President Bush and then again in July, when leaders of the Group of Eight industrialized nations meet in Russia. The United States and other industrialized nations have stockpiled about 1.4 billion barrels of oil to cushion the blow from a crisis such as a showdown with Iran. In theory, those stockpiles would be sufficient to offset the loss of Iranian exports for more than a year and a half. "On paper, there's no real reason to fret and panic and worry," Drollas said. The United States alone has 689 million barrels in the Strategic Petroleum Reserve. "We certainly can handle it for a while," Energy Secretary Samuel Bodman told reporters last week. "If push were to come to shove, there is the Strategic Petroleum Reserve." Western states could ratchet up the pressure on Iran by shutting off gasoline supplies to the country. Despite its vast oil wealth, Iran is the world's second-largest gasoline importer, the report by the Joint Economic Committee noted. Last year, Iran spent $4 billion buying fuel from elsewhere, according to the U.S. Energy Information Administration. In part, that's because Iran heavily subsidizes fuel purchases. Iranians pay about 40 cents a gallon for gasoline, a system that encourages wasteful use. In fact, much of the country's gasoline is smuggled back out of the country, where black marketers can obtain substantially higher prices for the fuel. But the Iranian government is moving to wean its public off its gas habit. Under this new policy, Iranian consumers will soon be able to purchase only a portion of their fuel needs at the subsidized price. Any fuel purchases above that threshold would cost substantially more. As a result, Nanay argues that any attempt to block gasoline imports into Iran would be largely ineffectual. "There will be some social dislocation, and clearly it will cause some problems, but ultimately it gets the government around this issue of out-of-control gasoline use," Nanay said. A war with Iran would almost surely send oil prices soaring, perhaps $10 to $15 a barrel above current levels, Fesharaki said. Other analysts have suggested prices could reach $90 a barrel or higher. By releasing oil from their emergency stockpiles, industrialized nations could push prices back down again. In fact, Fesharaki argues that if the uncertainty were over, if the markets no longer had to wonder whether the Western powers would attack Iran, oil prices could fall back below $60 a barrel. Fesharki does not believe the Iranians will really be willing to give up on acquiring nuclear weapons. India, Pakistan and almost certainly Israel have them. "If you have nuclear technology, you will be taken seriously," Fesharaki said. Whether the United States ultimately will be able to accept a nuclear-armed Iran remains unclear. Click here to read more Contents
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