ODAC News
Wednesday 08 Aug
The Oil Depletion Analysis Centre
Economics
1a/ Oil Falls on Concern Subprime Debacle Will Reduce U.S. Growth
(Bloomberg, Mon 06 Aug)
1b/ Fallout from U.S. subprime market
widens, costing the job of a top banker
(International Herald Tribune, Mon 06 Aug)
1c/ Subprime
fallout deepens in Germany
(International Herald Tribune, Mon 06 Aug)
1d/ Mortgage
renewals set to prick U.S. property bubble (International Herald
Tribune, Wed 01 Aug)
Electricity -
2/ Ageing US infrastructure
(Financial Times, Sun 05 Aug)
Solutions – Transition Towns
3/ Towns prepare for
'peak oil' point (BBC News, Mon
06 Aug)
Peak Oil and Dentistry
4/ Peak
Oil and Dentistry
(Transition Network, July 2007)
5a/ Nord Stream’s Underwater Part to Be Built within One Season
(FC Novosti, Mon 06 Aug)
5b/ Sakhalin-1
Gas to Be Sold Domestically (FC
Novosti, Fri 03 Aug)
5c/ RAO
UES, Gazprom Close to Signing Gas Supply Agreement
(FC Novosti, Wed 01 Aug)
5d/ Russia
Needs $275bn to Develop Road Network
(FC Novosti, Fri 27 Jul)
5e/ GAZ
to Produce "People’s Car" Worth $3,000
(FC Novosti, Thu 26 Jul)
6a/ Russia
claims North Pole (The Independent, Fri 03 Aug)
6b/ Professor
Peter Wadhams: A shrewd political move for a planet of finite resources
(The Independent, Fri 03 Aug)
6c/ Arctic
energy (The Financial
Times, Mon 06 Aug)
6d/ Russia
Explorers Snub Critics in North Pole Row
(
7/ Development
of Kazakhstan's giant Kashagan field
(Energy Intelligence, Fri 03 Aug)
Natural Gas –
8/ Cold snap prompts
Chile to seek gas deal with old foe Bolivia (Christian Science
Monitor, Wed 08 Aug)
Oil Prices – 2007 V 2006
9/ Oil Prices for 2007 –
comparison with 2006 (Energy Intelligence, Wed 08 Aug)
Food Prices / Biofuels
10/ Wheat
prices surge to 11-year high (Financial Times, Tue 07 Aug)
**********************************************************************************************************
1a/
http://www.bloomberg.com/apps/news?pid=20601087&sid=acvwN623HqJM&refer=home
Article: Crude oil fell for a second
day in
Any
1b/ Fallout from
http://www.iht.com/articles/2007/08/06/business/mortgage.php
Article: The fallout from the decline
in the
The actions came as credit market jitters finally
reached the executive suite of Wall Street firms Sunday night, costing the job
of Warren Spector, a co-president at Bear Stearns who
some had thought could become the firm's next chief executive.
The problems in
Investors fear that a meltdown in the
... Elsewhere, the subprime market fallout claimed
American Home Mortgage on Monday, the large
More than half a dozen competitors have sought
bankruptcy protection this year as defaults spilled over from subprime
borrowers with the worst repayment records to those with more reliable payment
histories.
With American Home Mortgage's home loan portfolio rapidly
losing value, its financial backers pulled the plug and the company ran out of
cash.
American Home Mortgage's 40 biggest creditors include
virtually all the major names of Wall Street. At the top of the list are
Deutsche Bank, JPMorgan Chase and Wilmington Trust as
trustee for others.
Overseas, exposure to the subprime market has remained
largely limited, with the notable exception of
The crisis claimed another victim in
1c/ Subprime fallout deepens in
http://www.iht.com/articles/2007/08/06/business/gbank.php
Article:
Frankfurt-Trust said the withdrawals from its fund, FT
ABS-Plus, reflected jitters about the subprime lending market in the
... Last week, a German bank, IKB Deutsche Industriebank, roiled financial markets when it disclosed
deteriorating subprime investments. A government-backed group agreed to bail it
out, providing €3.5 billion, or $4.8 billion, to cover IKB's
potential losses on its $24 billion investment in the market.
Two other asset-backed securities funds with exposure
to subprime mortgages in the
... Yet fund managers and credit analysts said they
fear more unpleasant disclosures from German banks and mutual funds, several of
which appear to have been enthusiastic gamblers in this risky market.
"It's a bit like discovering Easter eggs,"
said Boris Boehm, a money manager at Nordinvest in
... But the problems, analysts said, are likely to
crop up in smaller institutions like IKB, which until last week operated in
comparative obscurity as a lender to mid-size German companies.
"The general impression was that they were quite
a conservative bank," said Simon Adamson, a banking analyst at CreditSights, a research firm in
Adamson said he would not be surprised to see more IKBs: banks, which, because they have little experience in
these markets, rely heavily on credit rating agencies.
Investor confidence in
"The big problem is the lack of disclosure,"
Adamson said. "Since it's hard to be sure of anything, the market quite
understandably fears the worst. It is going hunting for banks with exposure and
losses."
1d/ Mortgage renewals set to prick
http://www.iht.com/articles/2007/08/01/business/leonhardt.php?page=1
Comment: Interesting article
explaining that a lot of mortgages in the
Article: But the fact that this
confusion could have occurred neatly captures the ridiculous state of the
The mortgage meltdown has arrived at something of a
turning point.
So far, the loans that have gone bad were among the
worst of the worst. Some were based on outright fraud, either by the lender or
the borrower. In many cases, buyers were never going to be able to make their
monthly payments and were instead banking on a rapid appreciation in home
values.
But the pool of Americans falling behind on their
house payments is starting to widen beyond this initial group, and
adjustable-rate mortgages are the main reason. Starting in the spring of 2005,
these mortgages began to get a lot more popular, largely because many Americans
could not afford to buy the house they wanted with a regular mortgage.
They turned instead to a mortgage that had an
artificially low interest rate for an initial period before resetting to a
higher rate. When the higher rate kicks in, the monthly mortgage bill typically
jumps by hundreds of dollars. The initial period often lasted two years, and
two plus 2005 equals right about now.
The peak month for the resetting of mortgages will
come this October, according to Credit Suisse, when more than $50 billion in
mortgages will switch to a new rate for the first time. The level will remain
above $30 billion a month through September 2008. In all, the interest rates on
about $1 trillion worth of mortgages, or 12 percent of the
So all the carnage in the mortgage market thus far has
come even before the bulk of mortgages have reset. "The worst is not over
in the subprime mortgage market," analysts at JPMorgan
recently wrote to the firm's clients. "The reason for our pessimism is
that loans originated in late 2005 and all of 2006, the period that saw peak
origination volumes and sharply decreased underwriting quality, are only
starting to reset in large numbers."
It isn't hard to figure out what will happen when
buyers who were already stretching to afford a house are faced with suddenly
higher payments. Many will manage. They will cut back on spending, or refinance
their mortgage and get a new one they can afford.
... But there are also likely to be a shocking number
of people who lose their homes.
From 1994 to 2005, some 3.2 million American
households were able to buy homes thanks to subprime mortgages or other such
loans, according to an analysis by Moody's Economy.com. About 1.7 million of
them will probably lose their homes to foreclosure when all is said and done.
More than half of the homeownership gains from subprime mortgages will be
erased.
The flood of those homes onto the market will further
depress house prices in the
... There has never been a real estate bubble like the
one of the last decade. So it's impossible to know what the bust will bring,
especially when there are still so many mortgages that are about to get a lot
more expensive.
**********************************************************************************************************
2/ Ageing
http://www.ft.com/cms/s/15451bec-4372-11dc-a065-0000779fd2ac,s01=1.html
Comment: There have been a few reports
published over the last year warning of electricity
shortages/brownouts/blackouts in the UK/USA/Europe/elsewhere, not so much
one-off events as in the past but a permanent feature of the future. You might
think the mainstream media would have given this topic a bit more coverage.
This article refers to the
“Educating consumers that, in the short-term, greener
energy means more expensive energy is painful but paramount. On that front,
calls from Capitol Hill to sue oil producers whenever petrol tops $3 a gallon
offer little encouragement. There are moves to promote efficiency. But, as
support for corn-based ethanol shows, the emphasis remains more on expanding
energy supply by any means possible rather than curbing consumption.”
Article: What do a collapsed bridge in
the US Midwest and Al Gore have to do with switching on your kettle?
Quite a lot. Much of
Building plants takes time, so decisions need to be
taken now. Yet development projects are being stalled. TXU’s
decision in February to scrap plans for eight carbon dioxide-spewing,
coal-fired plants was a watershed. That same week, Mr Gore’s eco-documentary,
An Inconvenient Truth, won an Oscar. In effect, the issue of “energy security”
has collided with “climate security”. Siemens, which installed one-third of
The prevailing view is that the
TXU’s plans were
also scuppered by cost inflation. Its original goal
of costs of $1,200 per kilowatt of coal-fired capacity compares with a current
industry estimate of $2,000. Nuclear capacity is another story altogether: it
is so long since an atomic plant was built in the US that cost estimates are
preliminary to say the least.
With coal falling out of favour, avoiding blackouts
will mean building more gas-fired plants. Yet most existing ones were built
when the fuel was plentiful and cheap. That is no longer the case. Gas prices
have proved volatile, a fact that might prompt many to reconsider their passion
for all things green when it shows up in their bills.
Educating consumers that, in the short-term, greener
energy means more expensive energy is painful but paramount. On that front,
calls from Capitol Hill to sue oil producers whenever petrol tops $3 a gallon
offer little encouragement. There are moves to promote efficiency. But, as
support for corn-based ethanol shows, the emphasis remains more on expanding
energy supply by any means possible rather than curbing consumption...
**********************************************************************************************************
3/ Towns prepare for 'peak oil' point
(BBC News, Mon 06 Aug)
http://news.bbc.co.uk/1/hi/scotland/6932300.stm
Comment: The BBC reporting on a Radio
Scotland Peak Oil program broadcast this morning (Mon 06 Aug) by Mark Stephen.
Mark was the moderator at Depletion Scotland’s Peak Oil UK conference in
Listen to radio program (22min, 31sec)
Article: Globally we are addicted to
oil. Not only are we addicted, but we use it like there was no tomorrow.
We use it for heating and lighting, it powers 95% of
our transportation, we use oil to take low value foodstuffs from one side of
the world to the other, we use it for plastics, manufacturing, clothing,
medicine. Oil is everywhere, but it's not infinite.
Logically, sooner or later demand will exceed supply
and oil will start to get rarer and a lot more expensive.
This point, where the world's oil production starts to
fall forever, is known as peak oil.
As a concept it's not yet as well known as climate
change or global warming, but it will be.
Transition towns
Some forecasters say we'll hit peak oil in 20 years,
some people say we already have. What is a certainty is that we face a future
where oil will become increasingly scarce.
Which is where the concept of transition towns comes
in.
Transition towns are communities which have accepted
that peak oil will happen and have started to take steps to ensure that when it
does start to impact, they're ready for it.
They're not wild-eyed survivalists, they're just
ordinary men and women with an eye to a potentially difficult future.
They believe in relocalisation,
growing their food locally - even if that means digging up the local playpark and planting fruit trees or vegetables.
... They believe in local energy production, community
wind-farms or community woodlands for shared wood-fuelled heating schemes, in
reducing the amount of energy they use in the first place, in car-sharing...
**********************************************************************************************************
4/ Peak Oil and Dentistry
(Transition Network, July 2007)
http://transitiontowns.org/TransitionNetwork/PeakOilDentistry
Comment: While most of the world is
not yet aware of Peak Oil at all, Ben Brangwyn, co-founder of Transition
Network, has been investigating what effects Peak Oil might have on dentistry.
Article: There is a deafening silence
from the world of dentistry on the subject of Peak Oil. As we move into the era
that marks the end of cheap and abundant fossil fuels, all healthcare systems
will need to adapt to the ensuing constraints, dentistry included.
In this document, two
Both dentists have chosen to remain anonymous for the
moment. They are identified, rather unimaginatively, as Dentist #1 and Dentist
#2…
**********************************************************************************************************
5a/ Nord Stream’s Underwater Part to
Be Built within One Season (FC Novosti, Mon 06
Aug)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Comment:
Article: The underwater part of the Nord Stream gas pipeline can be built within one season,
said Gazprom’s spokesman Sergei Kupriyanov,
recalling that gas supply to
... The pipeline is being built by Russian energy
giant Gazprom and
5b/ Sakhalin-1 Gas to Be Sold Domestically
(FC Novosti, Fri 03 Aug)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Article: The Authorised State Agency
of the Sakhalin-1 oil and gas offshore project in
... The Sakhalin-1 project is operated under a
production sharing agreement (PSA) by Exxon Neftegas
Limited, a subsidiary of US oil major Exxon. Apart from the
The consortium is developing the Chaivo,
Odoptu and Arkutun-Dagi
deposits, with recoverable reserves estimated at 307mn metric tons (2.26bn bbl)
of oil and 485bn cu m of natural gas.
5c/ RAO UES, Gazprom Close to Signing Gas Supply Agreement
(FC Novosti, Wed 01 Aug)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192
Article: Electricity monopoly RAO UES
and energy giant Gazprom have entered the final stage of coordinating a
bilateral gas supply agreement, said company CEO Anatoly Chubais.
He added that the talks might be completed soon if Gazprom takes a constructive
stance.
... They also confirmed the volume of gas supplies to
generating companies under long-term contracts, including 162.9bn cu m in 2007,
166.9bn in 2008, 174.8bn in 2009, and 186bn in 2010, in compliance with
government decision of November 30, 2006.
Gazprom will annually supply 103bn cu m of natural
gas, and additional volumes will be bought from independent gas producers on
the trading floor of Mezhregiongaz, a subsidiary of
Gazprom that manages domestic sales.
5d/
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3352
Article:
5e/ GAZ to Produce "People’s Car" Worth $3,000
(FC Novosti, Thu 26 Jul)
http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3353
Article: Russian automaker GAZ Group in
Nizhni Novgorod will produce a people’s car worth
RUR75,000 ($3,000). Governor Valery Shantsev said the plant would turn out about 1mn such cars
annually. It is not clear when the production line will start working yet.
The closest rival of GAZ’s
project is Nissan, which plans to produce cheap cars, worth about
$5,000-$7,000, for
**********************************************************************************************************
6a/
http://news.independent.co.uk/sci_tech/article2831111.ece
Comment: Most articles on this topic (
Article:
In a dramatic technical feat testing international
law, the Russians dispatched two mini-submarines 2.5 miles to the ocean floor
in what is believed to be the first expedition of its kind.
Both submersibles, with crews of three on board,
completed their dangerous return to the surface yesterday after what was
described as a "smooth landing".
But the expedition raised the hackles of
A brains trust of 135 Russian scientists, led by a
68-year-old personal envoy of President Vladimir Putin, the explorer Artur Chilingarov, plan to map
out part of the 1,240-mile ridge.
But yesterday's scientific achievement of dropping a
titanium capsule containing the Russian flag on to the seabed could not conceal
the political advantage gained by Mr Putin. Once again, he has demonstrated to
the
... But four other countries - the US, Canada, Norway
and Denmark - also have claims on the ocean floor which could hold as much oil
and gas as Saudi Arabia. According to the US Geological Survey, the Arctic
seabed and subsoil account for 25 per cent of undiscovered oil and gas
reserves...
6b/ Professor Peter Wadhams: A shrewd political move for a planet of finite
resources (The Independent, Fri 03 Aug)
http://comment.independent.co.uk/commentators/article2831083.ece
Comment: Peter Wadhams, head of the
Article: There is more than meets the
eye about
The first is that the leader of the dive, Artur Chilingarov, has been
described in the press as a "polar explorer". Indeed, that was how he
started out; he was head of the Hydrometeorological
Service of the
This dive is a completely political exercise, designed
to cement
The key is the Lomonosov
Ridge, which stretches across the Arctic Ocean from Siberia to north
The point has been made that the continued deployment
of
6c/
Article: At the height of the cold
war, the
That
Green activists will protest, but for many politicians
and energy companies starved of access to new exploration areas, an opening of
the
Within any Russian area, Total might hope to expand on
its recent entry to the offshore Shtokman gas field. Ultimately, though,
Gazprom and Rosneft would assume pole position on any projects. Given their
relative lack of experience, that might slow development.
The geopolitical implications are gloomier. Canadian
and US officials quickly dismissed the dive as a stunt, but both countries are
also interested in the
In spite of the green lobby's clout,
6d/
http://www.planetark.com/dailynewsstory.cfm/newsid/43523/story.htm
Comment: For all the propaganda, Putin
makes clear that
Article:
… President Vladimir
Putin cautiously told the returning expedition members that their achievement
should provide the groundwork for
"This, of course, must
be discussed with our colleagues and be proven in international bodies,"
Russian media [quoted] him as saying…
**********************************************************************************************************
7/ Development of
No link. From newsletter.
Comment: From the commentary section,
‘World Watch -- Comment & Interpretation on Today's News’, of the daily
newsletter.
Article: A massive bust-up is looming
over the development of
**********************************************************************************************************
8/ Cold snap prompts
http://www.csmonitor.com/2007/0808/p12s01-woam.html
Article: A South American cold snap is
causing Chileans to pay up to four times more for heat and electricity, and
could spur the government to speed reconciliation with its bitter – but
gas-rich – foe,
As temperatures dropped to near-record lows in recent
weeks, neighboring
Now, an increasingly disgruntled Chilean public is
pressing the government to seek gas deals with other countries, including
"I believe that we need to leave behind these
historic feuds once and for all and start an open and frank dialogue with
In 1995,
Still, what was then perceived to be the cure-all to
"Depending on
In response to the shortages, many Chilean businesses,
particularly electricity-generating companies, have reluctantly switched to
diesel fuel. The situation reached a low point in June, the first month since
the 1995 agreement that
The consequences have been disastrous: electricity
bills have risen sharply. Some industry analysts expect them to rise by as much
as another 13 percent by winter's end...
**********************************************************************************************************
9/ Oil Prices for 2007 – comparison with 2006
(Energy Intelligence, Wed 08 Aug)
No link. From newsletter.
Comment: From the commentary section,
‘World Watch -- Comment & Interpretation on Today's News’, of the daily
newsletter.
Article: Crude oil markets peaked at
this time a year ago and then headed into a long slide. With markets having
followed a similar upward trend this year, and also having come off by about $7
a barrel or almost 10% in just the last week, it is worth considering if the
rest of this year will follow the 2006 pattern. Many of the same factors are at
work including heavy buying by hedge funds and other investors and worries
about hurricanes and geopolitical tensions. While the tightness of the supply
demand balance may ease some, bringing prices down, a drop to below $60 as
occurred last year seems less likely. The main reason is that this year the
forward curve has shifted from contango into
backwardation, a sign of tighter inventories that also gives Opec a stronger hold over prices. And Opec
would like to maintain this tighter hold and also see prices come down a bit
from recent lofty levels -- but only a bit.
**********************************************************************************************************
10/ Wheat prices surge to 11-year high
(Financial Times, Tue 07 Aug)
http://www.ft.com/cms/s/610f6bb2-44e0-11dc-82f5-0000779fd2ac.html
Comment: No mention of increasing
quantities of wheat being used to produce biofuels, in
Article: Wheat prices surged to a
fresh 11 year highs on Tuesday amid concerns about further production losses
after extreme weather damaged the Australian and European cereals crops.
Middle East and North African countries, such as
Chicago CBOT September wheat pushed above the $6.70 a
bushel level for the first time since 1996 and later was trading up 5¼ cents to
$6.69 ¼ a bushel.
European milling wheat futures rose in
Rainer Guntermann, analyst
at Dresdner Kleinwort in Frankfurt, said: “”Extremely hot and dry weather
conditions in Southern Europe and
**********************************************************************************************************