BLAIR MADE A FOOL BY ECONOMISTS

A Special Message from Anthony Blair, Prime Minister of the United Kingdom at the World Economic Forum Annual Meeting 2000 Friday, January 28, 2000, Davos, Switzerland:

"Twenty years on from the oil shock of the 70s, most economists would agree that oil is no longer the most important commodity in the world economy. Now, that commodity is information." http://www.asiamedia.ucla.edu/Davos2000/Speeches/Blair.htm

Eight months later... Blair sends for the troops:

"TROOPS were put on standby last night to intervene in the deepening fuel crisis as the health service went on emergency alert, supermarkets began rationing food and schools and businesses closed."

"The problem is, of course, that not only is economics bankrupt but it has always been nothing more than politics in disguise ... economics is a form of brain damage." -- Hazel Henderson

Who should Blair have been listening to? Franco Bernabe, chief executive of the Italian oil company ENI SpA, correctly forecast the 1970s-style oil shocks starting this year! http://www.forbes.com/forbes/98/0615/6112084a.htm ------------------------------------

US GOVERNMENT ENERGY DISINFORMATION CAMPAIGN

"There's plenty of cheap oil, says the US Geological Survey (USGS)." http://www.sciam.com/2000/0900issue/0900scicit4.html

But is the USGS telling the truth? Many energy experts believe that USGS and US Energy Information Agency (EIA) are very wrong about US energy resources. I believe they are lying for national security purposes. There have been numerous email messages attacking USGS and EIA studies. To review critiques by experts, visit http://www.egroups.com/messagesearch/energyresources?query=usgs and http://www.egroups.com/messagesearch/energyresources?query=eia ------------------------------------

OIL UPDATE

"Currently, the US has approximately 600,000 oil wells in operation. Nearly 500,000 of those wells produce less than three barrels a day" http://www.itds.treas.gov/ITDS/ITTA/oilprofile.htm

But are these wells really helping our energy problem? Studies suggest that oil wells and fields are "energy losers" before they become "money losers" and closed down. http://dieoff.com/page197.htm

Petroleum experts Colin Campbell, Jean Laherrere, Brian Fleay, Roger Blanchard, Richard Duncan, Walter Youngquist, and Albert Bartlett, using various methodologies, ALL expect a "peak" in "conventional oil" around 2005. Moreover, the CEOs of Agip (Italian oil company) and Arco have both published estimates of a global oil peak in 2005. So it seems like a reliable estimate.

See this great (and obviously unofficial) USGS poster on oil depletion! http://geopubs.wr.usgs.gov/open-file/of00-320/of00-320.pdf or http://dieoff.com/of00-320.pdf ------------------------------------

THE US NATURAL GAS SUPPLY By Jay Hanson, September 16, 2000

"There is a crime here that goes beyond denunciation. There is a sorrow here that weeping cannot symbolize. There is a failure here that topples all our success." -- THE GRAPES OF WRATH, John Steinbeck Although oil protests are in the news, not much is being said about natural gas. In fact, the US natural gas supply may be even more at risk than the oil supply!

NATURAL GAS

Colin Campbell says that natural gas production is best described as a plateau" followed by a "cliff" due to the high mobility and recovery of gas. Whereas oil declines slowly as it moves through the porespace of the rocks under declining pressure, the decline of gas is a cliff -- not a slope. Thus, the gas market gives no warning of the cliff because it is not more expensive to produce the last cubic foot than the first. Unlike oil, natural gas can not easily be shipped by sea. It must be liquefied prior to shipment, then shipped in specially designed refrigerated ships destined for specially equipped ports, and then regasified for distribution -- at an estimated 15 to 30 percent energy loss. Moreover, natural gas cannot easily be stored like oil or coal. Global natural gas production is expected to "cliff" sometime between 2010 and 2020. [ 1 ]

US NATURAL GAS

In April 26, 2000, industry experts announced that US natural gas suppliers face a tough challenge in meeting the strong demand for the fuel. Chevron Corp. executive Andy Hardiman said that to meet demand of 30 trillion cubic feet by 2020, average daily gas production in the Gulf of Mexico would have to rise from about 14 billion to 22 billion cubic feet. Hardiman pointed to factors such as declining production rates in shallow water fields and the predominance of oil rather than gas in the deepwater where most future exploration and production is expected to take place. "If a lot of things line up... we can get pretty close to 22 billion cubic feet. On the other hand, if a lot of things don't line up, we'll fall way short," he said. [ 2 ]

One industry expert recently analyzed the difference between "wildly optimistic" EIA gas estimates and industry estimates. He found that EIA estimates were not credible:

"Who would have guessed that after 30 years of decline, the lower 48 states were primed for a renaissance that would surprise even Erasmus, or, for that matter, Lazarus? And it will all happen without price increases, since the forecast assumes a wellhead price of $2.81/Mcf (1998 $) in 2020. Unfortunately, EIA is a little vague on how this could possibly happen, other than suggest that technological progress will play a role." [ 3 ]

CANADIAN NATURAL GAS

Canada currently provides about 13% of the US gas supply and is supposed to increase its exports enough to provide 17% by 2005. It is hoped that Canadian imports will rise from 3 trillion cubic feet in 1998 to 4 tcf in 2007. But a March, 2000 study by Canadian industry and government geoscientists casts doubts on the ability of Canada to meet US demands for gas much longer:

"Based on 1993 reserves data, Canada's total marketable endowment of conventional natural gas resources was estimated at 373 Tcf by the CGPC in 1997. Removing the gas consumed through 1998, about 250 Tcf of conventional marketable gas resources remain to be exploited in all of Canada.

"In addition to this volume, Canada holds undetermined amounts of conventional gas in frontier basins where no discoveries have been made, and unconventional gas in place in the forms of coalbed methane, tight gas, shale gas and gas hydrates. Estimates of these volumes are highly speculative. Technological and economic uncertainties about these resources are sufficiently high that no forecast of the conversion of these resources into future supply can be justified at this time."

"Demand continues to increase and is expected to continue to increase (particularly for electricity generation). Supply however, is lagging behind. In recent years all export pipelines have been full - often carrying more gas than their rated capacity. This is no longer true, and in 1999 the flow through the ANG/PGT pipeline from Alberta to California has fallen below 80% of capacity. The consensus is that the Alliance Pipeline, when completed in the fall of 2000, will not increase deliveries materially. Rather, gas transported by Alliance will be at the expense of gas moving through TCPL. For the first time since Canadian gas markets were liberalized we have entered into a period during which transportation capacity exceeds supply. Is this just a temporary phenomenon?" [ 4 ]

Canada exports most of its gas to the US under short-term contracts. Canadian law allows it to rein in the petroleum trade whenever it appears to be in its interest (and making the US pay dearly was in its interest in the late 70s). So don't count on Canadian gas much longer...

US: OUT OF GAS

Colin Campbell says that it is not possible to cover the looming US gas shortfall by shipping gas in from the Middle East (energy loss, not enough LNG facilities or tankers). However, the construction of a new gas line to Alaska and the Canadian arctic where there probably are large untapped deposits could temporarily mitigate the US gas cliff.

-- Mrs. Cleaver (Mrs. Cleaver@LITB.xcom), September 18, 2000

Answers

http://biz.yahoo.com/apf/000913/venezuela__2.html

Wednesday September 13, 2:59 pm Eastern Time

OPEC Chief Sees Capacity Crisis

By ALEXANDRA OLSON

Associated Press Writer

CARACAS, Venezuela (AP) -- The president of the Organization of the Petroleum Exporting Countries said Wednesday an energy crisis is imminent in the medium term if worldwide refining and production capacity doesn't grow.

Ali Rodriguez, who is also Venezuela's oil minister, said OPEC's latest output quota agreement is enough to meet worldwide crude oil demand but the sparse production and refining capacity of some OPEC and non-OPEC countries could block efforts to cool record-high oil prices.

``On the horizon there is a very severe crisis if capacity limitations of OPEC and non-OPEC countries stay as they are,'' Rodriguez said in a news conference.

In an effort to lower soaring oil prices, OPEC agreed to raise its target output for the third time this year in its Vienna, Austria meeting last weekend. Its new target, effective Oct. 1, is 26.2 million barrels a day from 25.4 million barrels a day.

International pressure on OPEC to increase production mounted in the weeks leading up to the meeting after soaring fuel prices sparked protests from transport workers in Europe this month and in the United States earlier this year.

OPEC countries produce almost 40 percent of the world's oil.

Rodriguez said OPEC has spare capacity of more than 2 million barrels but ``several OPEC countries are already nearing their capacity ceiling.'' He denied reports that Venezuela was among those countries with no extra capacity.

Norway, which is not an OPEC member but often cooperates with the organization, admitted earlier this month that its oil wells are already producing up to capacity.

Insisting that OPEC's 800,000 barrels a day quota increase is enough to meet worldwide demand for crude, Rodriguez called on consuming countries to increase refining capacity and lower gasoline taxes.

``The principal factor that increases (fuel prices) for the man who goes to the gas station to fill his tank are high taxes,'' Rodriguez said.

OPEC estimates that taxes and refining activities contribute to 84 percent of gasoline prices while the price of crude contributes 16 percent.

Leaders in Britain, Belgium and Germany say they won't lower fuel taxes despite angry protests by truckers and farmers that blocked traffic and forced gasoline stations to close.

Rodriguez said falling refining capacity, especially in the United States, has created a ``bottle neck'' effect that prevents finished oil products -- such as gas -- from reaching the market in time to meet demand.

Rodriguez said OPEC wants to avoid an ``irrational'' production increase that could lead to price crash similar to the one in 1998 when international oil prices reached nine-year lows. The economies of some OPEC countries are still struggling to recover from that crash, Rodriguez said.

Even so, Rodriguez said OPEC is willing increase production a fourth time this year if the market calls for it. OPEC agreed to meet again in Vienna on Nov. 12 to reassess market conditions.

-- (a@capacity.crisis?), September 19, 2000.

What nice flim-flam language. But once upon a mile, and far along away, I met a fellow who ringed truth. They can "dance" the "truth", until they bring into display a "truth seeker", who tells the truth. I saw him, on a distant travel. His Name was "Shakey", for those who seek to discount. I have, myself, been discounted. I wind up with mud on my face, with those who had not the guts, to supercede the impossible. Your Call....

-- Naked Here (Istand@beforeyou.com), September 20, 2000.

http://www.stratfor.com/MEAF/commentary/0009201050.htm

I think this article indicates there IS an oil crisis.

-- helen (b@s.v), September 20, 2000.