Article: Crude oil rose to a 10-month high on concern unrest in Nigeria and maintenance of a North Sea oil field will curb supply as unexpected refinery closures cut fuel output.

The main militant group in Nigeria's oil-producing Niger River delta region condemned the kidnapping of a 3-year-old British girl. Brent oil, produced in the North Sea, is also rising because of planned maintenance at a field in the region. Refineries in California, Texas and Kansas have shut or slowed operations this week...

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2a/ Huge Sowings Ease Ethanol Crunch on US Corn (Planet Ark [Reuters], Mon 02 Jul)

http://www.planetark.com/dailynewsstory.cfm/newsid/42907/story.htm

Article: US farmers are on track to grow their biggest corn crop ever, an astonishing 12.8 billion bushels, a government report said on Friday, enough for livestock feeders and the booming fuel ethanol industry.

"There will be enough corn," Agriculture Secretary Mike Johanns said. "It looks to me ... some of the pressure went off."

Ethanol production is forecast to double by the end of 2008 to more than 13 billion gallons. Demand for corn will continue to grow in the near term despite mammoth crops. A bushel of corn, the major feedstock for ethanol, yields 2.8 gallons of the renewable fuel.

Based on a survey of 88,000 growers in the first half of June, the Agriculture Department said farmers planted 92.9 million acres of corn this spring, the largest sowing since 1944 and 3 percent more than growers planned in March.

With normal weather and yields, the crop would top 12.8 billion bushels, 1 billion bushels larger than the record set in 2004. Some analysts, including David Driscoll of Citigroup, said more than 13 billion bushels may be harvested.

"It's just incredible," said USDA chief economist Keith Collins of the possible huge crop and the prospect of a larger corn stockpile. It meant "a little cushion" against bad weather, he said, and will "give livestock feeders some relief."

The corn stockpile could be roughly 500 million bushels larger than expected a month ago because of the upturn in corn plantings and a quarterly USDA report showing more corn was in warehouses than expected.

Some 3.4 billion bushels of this year's crop are forecast to be used for ethanol during the 2007/08 marketing year, up sharply from the 2.15 billion bushels being used from the 2006 crop.

Because of the sudden surge in demand for corn, USDA says the average farm-gate price for corn will run at record levels.

The high prices have resulted in less corn being fed to livestock over the past couple of years.

"Many farmers across the country shifted to planting more corn this year at the expense of soybeans," said USDA.

In Illinois and Iowa, the two leading corn and soybean states, growers cut soybean plantings by a total of 2.1 million acres from 2006.

Soybean plantings were pegged at 64.1 million acres, down 15 percent from the record set last year. Based on USDA's projected yields and estimates of harvest area, the soybean harvest would be 2.62 billion bushels, the smallest since 2003.

Wheat sowings were up 6.0 percent from last year at 60.5 million acres. The wheat harvest would reach 2.178 billion bushels based on harvested acreage of 52.484 million acres.

2b/ Biofuels May Wipe Out UK Wheat Exports (Planet Ark [Reuters], Mon 02 Jul)

http://www.planetark.com/dailynewsstory.cfm/newsid/42908/story.htm

Comment: It is beginning to look like what corn to ethanol is doing to corn prices in the USA and elsewhere, wheat to ethanol may do to wheat prices in the UK.

Article: Surging demand for British grain around 2010 as major bioethanol plants come on line will wipe out the UK's wheat exports unless there is a big jump in output by domestic farmers.

"They (bioethanol plants) are positioned so they can take imports, which is sensible. We are not far from wiping out the exportable surplus," said Mark Isaacson, chief executive of farmer cooperative Fengrain.

Britain's wheat outlook has been transformed this week by news that UK oil major BP Plc, Associated British Foods Plc and US chemical company DuPont plan to build a bioethanol plant in Hull, northeast England.

"The ABF/BP/DuPont project in Hull will change the dynamics of the UK wheat market," said Malcolm Shepherd of consultants BioFuel Matters Ltd.

The plant is expected to consume about one million tonnes of wheat a year and follows the announcement of a similar plant from Ensus in Teesside, also in northeast England, financed by two US private equity funds. Both plants should come on line sometime during 2009 and make their impact on Britain's wheat market in 2010. Demand for biofuels is expected to climb in 2010, driven by UK government rules that five percent of motor fuel must come from renewable sources by that year. Britain has an exportable wheat surplus of about 2.5 million tonnes but that total is expected to fall by about 750,000 tonnes later this year when a Cargill sweetener plant in Manchester, which uses wheat as its feedstock, comes on line. Spanish energy and engineering group Abengoa has announced plans to build a plant in Immingham, northeast England, that would consume about one million tonnes of wheat while several smaller projects have also been proposed.

"We never thought there was room for more than two, maybe three plants," Isaacson said.

... "There is potential to increase area if that is what farmers choose to do," he said, adding planting decisions would be dictated by price movements on world markets.

Shepherd said farmers would also strive for increased yields with the assistance of agronomists and seed suppliers.

"Farmers can readily supply the early plants from the current exportable surplus and within a couple of years we will see a major increase in UK wheat production as farmers shift towards growing the high starch wheat varieties that produce higher yields per hectare," Shepherd said.

Isaacson said the spirit yield of grain has so far been mainly a concern for distillers but breeders would begin to focus more intensely on maximising litres of alcohol per tonne for wheat.

If Britain did need imports, he noted, the most likely sources would be the Black Sea region, but world wheat prices would probably be high.

"The game has changed. No one is looking to dump cheap wheat," he said.

2c/ Nestlé chief fears food price inflation (Financial Times, Thu 05 Jul)

http://www.ft.com/cms/s/3a674134-2b1c-11dc-85f9-000b5df10621,_i_nbePage=ff3cbaf6-3024-11da-ba9f-00000e2511c8.html

Comment: It is only in the last month or two that mainstream media have started reporting food price inflation. The biggest threat, from a western point of view, is that interest rates keep rising in an attempt by central banks to control inflation. At the other end of the scale, the poor wherever they live will be able to afford less food.

Article: Food prices are set for a period of “significant and long-lasting” inflation because of demand from China and India and the use of crops for biofuels, according to the head of Nestlé .

Peter Brabeck, chairman of the world’s largest food company, said rises in food prices reflected not only temporary factors but also long-term and structural changes in supply and demand.

“They will have a long-lasting impact on food prices,” he told the Financial Times during a visit to China.

Several food companies have warned about the short-term outlook for prices, but Mr Brabeck’s comments are among the starkest warnings that a long period of rising food prices could stoke broader inflationary pressures.

Mr Brabeck said Nestlé had first forecast higher food prices two years ago and price pressure had become apparent last year.

Corn prices have risen about 60 per cent and wheat about 50 per cent over the last 12 months. Sugar, milk and cocoa prices have also surged, prompting the biggest increase in retail food prices in three decades in some countries.

The Nestlé chairman cited population growth, rising demand from “the phenomena of India and China” and the use of food products by biofuel producers as causes of pressure in international food markets.

Reports from two international organisations this week forecast food price rises of between 20 and 50 per cent over the next decade.

But some analysts believe the long-term risk of higher food prices is exaggerated. Julian Jessop, chief international economist at Capital Economics in London, said biofuels producers would develop technologies that required less raw material or used non-edible parts of food.

“There are good medium-term reasons to think that the biofuels price shock will pass,” he said.

2d/ MARKETS AND INVESTING: Biofuel demand powering long-term food inflation (Financial Times, Thu 05 Jul)

http://search.ft.com/nonFtArticle?id=070705000349

Article: Food prices will rise by between 20 and 50 per cent over the next decade from average levels over the last ten years, supported by the growth of the biofuel industry and increased food demand in emerging countries, a study warned yesterday.

The report by the United Nation's Food and Agriculture Organization (FAO) and the Organisation for Economic Cooperation and Development (OECD), added that long-term prices would be up to 30 per cent higher than previously estimated.

... Plantation patterns have already changed because of demand for biofuels.

US farmers have increased their acreage dedicated to corn by 19 per cent from last year, to the highest since 1944. But they have cut cotton acreage by 28 per cent and soyabean by 15 per cent, according to Barclays Capital estimates.

... In the last 12 months, corn prices have risen by 60 per cent, wheat by 53 per cent and soyabean by 40 per cent.

... "Agriculture production costs, such as fertilizer prices and fuel, also increased in the last few years pushed by higher oil prices," added Merrit Cluff, a senior economist at FAO in Rome. Biofuels are produced in the US mainly from corn, wheat and soyabean, while rapeseed oil and wheat are the main ingredients in Europe. The report forecast that in 2016 about 32 per cent of the US maize crop would be devoted to biofuel, up from 20 per cent today.

EU wheat crop transformed into road fuel would surge 12-fold in the next 10 years, it said. By 2016, the EU will use 58 per cent of its rapeseed crop to feed its biofuel industry.

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3a/ European interest rates on the rise (Financial Times, Thu 05 Jul)

http://www.ft.com/cms/s/d2d561c6-2b26-11dc-85f9-000b5df10621,_i_nbePage=ff3cbaf6-3024-11da-ba9f-00000e2511c8.html

Article: European interest rates were on the rise yesterday after the Bank of England announced another increase in borrowing costs and the European Central Bank signalled that eurozone rates were likely to go up in September.

The Bank of England did nothing to confound market expectations of 6 per cent rates before the end of the year as it raised its main interest rate for the fifth time in a year to 5.75 per cent. It cited strong growth, limited spare capacity and indications businesses were poised to raise prices for the rise.

The ECB fears capacity constraints will push up inflation in the 13-member eurozone. Jean-Claude Trichet, the ECB president, also highlighted dangers posed by “vigorous monetary and credit growth in an environment of already ample liquidity”.

The similarity in the European central banks’ thinking was striking. While uncertain about the direction of inflation, they warned that rapid economic growth and limited spare capacity had heightened risks and demanded some action.

Economists and investors suggested the Bank of England would soon raise interest rates again to 6 per cent, a rate not exceeded since 1998. A Reuters poll showed that just over half of the 57 economists surveyed expected UK rates to hit this level by the end of the year.

The Bank of England’s statement gave no hints about future rises but stressed that although inflation would fall this year as gas and electricity prices fell, “most indicators of pricing pressure remain elevated”...

3b/ Cheap mortgage era ends with rate rise (The Times, Fri 06 Jul)

http://business.timesonline.co.uk/tol/business/money/property_and_mortgages/article2034052.ece

Comment: House prices are still rising in the UK, from already ridiculously high levels. A bit like the rise of stock prices in the US early 1929.

Article: The Bank of England pushed ahead with a fifth rise in interest rates in less than a year yesterday, lifting borrowing costs to a six-year high just as millions more homebuyers face a sudden jump in their mortgage bills.

The decision to order another quarter-point increase in base rates, to 5.75 per cent, the highest level since February 2001, will turn up the heat on hard-pressed households. Economists said yesterday that homeowners and businesses should get ready for further increases in rates this year.

The Bank’s move comes as many homeowners are hit by an abrupt end to cheap mortgage deals that have so far insulated them from the four previous rate rises.

Some 750,000 borrowers will reach the end of two-year fixed-rate loan deals, taken out when base rates were just 4.5 per cent, before the end of the year. They face a stark choice between a costlier variable rate from their lender, or switching to a new, but much more expensive, mortgage fix.

... Some two million or more borrowers who are due to see such deals run out over the next 18 months face steep increases in repayments. “Inevitably this will leave more households financially stretched,” Michael Coogan, the council’s director-general, said.

His caution came after official figures last week showed that households were already saving the smallest fraction of incomes than at any time since 1960...

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4/ Ration-hit Argentina admits energy crisis (Financial Times, Wed 04 Jul)

http://www.ft.com/cms/s/e6b3956a-298b-11dc-a530-000b5df10621,_i_nbePage=5b566934-3013-11da-ba9f-00000e2511c8,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2Fe6b3956a-298b-11dc-a530-000b5df10621%2C_i_nbePage%3D5b566934-3013-11da-ba9f-00000e2511c8.html&_i_referer=

Comment: Login required for full article. Being a British article, gas means natural gas. Severe gas shortages in Argentina will also affect Chile. Various countries are currently affected by gas shortages, a situation that is likely to get worse as more countries become increasingly dependent on LNG, not least the UK and USA.

Article: Argentina has at last admitted that the energy sector – the Achilles’ heel of its economic policy – is in trouble.

For the first time, President Néstor Kirchner used the word “crisis” to describe the severe shortages that have forced the government to ration gas for factories to guarantee enough energy for heating homes.

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5a/ Crude breaches $74 ahead of inventories (Financial Times, Thu 05 Jul)

No link, from FT e-mail alert.

Comment: Oil prices are now within a cat’s whisker of the previous nominal record prices set last year, as expected.

Article: Oil prices surged on Thursday to above $74 a barrel, less than $5 below the all-time high it reached last summer, propelled by low US petrol and heating oil inventories and an expected surge in summer demand. The opposition of the Organisation of the Petroleum Exporting Countries to raising production quotas is also injecting bullish sentiment. Opec next regular meeting is in early September, and the oil cartel has ruled an early output increase. ICE August Brent rose to $74.20 a barrel, the highest since August last year and less than $5 below the all-time high of $78.65 it hit last summer. In late morning trade in London it was up $1.11 cents to $74.19 a barrel. ICE September Brent contract, which is seeing higher trading volumes and open int! erest, rose to $74.68 a barrel. Nymex August West Texas Intermediate rose 59 cents to $72.00 a barrel. Trading was volatile awaiting the release on US inventories data. Traders anticipated a modest build in petrol and distillates stocks and a decline in crude. The US Department of Energy warned last week that “the petrol market remains tight with inventories remaining below the average range.” US petrol stocks cover now 21.2 days of future demand, down from 22.5 days last year. The International Energy Agency, the industrialized energy watchdog, has urged Opec to increase its production amid rapidly falling, although from a high level, stocks.

5b/ Modest Growth Pushes Oil Demand Well Above Supply (Energy Intelligence, Tue 03 Jul)

No link, from Energy Intelligence daily e-mail update (free).

Comment: The International Energy Agency recently reported that global demand has been outrunning supply by about 1 Mb/d. This is why they, and others, want OPEC (in reality Saudi Arabia) to increase their output. The Saudis are holding off because OECD oil stocks are at historically high levels (or at least they were as of end of 2006, see chart in BP statistics 2007). Energy Intelligence data suggests the daily deficit for June was 1.4 Mb/d.

Article: A modest but steady rise in global oil demand pushed demand well ahead of oil supply in June, and while demand edged up to 86 million barrels per day, supply lagged at 84.6 million b/d, preliminary data show. Though the balances for the second quarter came out just in favor of supply by 100,000 b/d, they fell well short of the more typical 1 million b/d surplus, tightening the crude balance.

5c/ High oil prices are here to stay, analysts warn (Telegraph, Fri 06 Jul)

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/07/06/bcnoil2106.xml

Article: Crude oil is unlikely to give up its almost 20pc gains in price this year and the risks are tilted toward it moving higher, leading oil analysts have warned.

Brent crude traded in London jumped to $76 a barrel, while oil on the New York Mercantile Exchange jumped more than 1pc today to beyond $72 a barrel.

Unrest in Nigeria, including the abduction this week of a three-year old British girl, has helped drive prices higher on concern supplies from the African country will be disrupted.

Kevin Norrish, an analyst at Barclays CapitalGlobal, added: "It is difficult to see why oil prices would fall, brent crude oil has gone higher than we thought, and there are still lots of things that could go wrong, pushing the price higher - hurricanes in the US or tension in Iraq."

Analysts also pointed out that continued strong global economic growth will help sustain prices over the next six months.

Harry Tchilinguirian, an analyst at investment bank BNP Paribas, pointed out that the International Monetary Fund (IMF) expects world GDP of 4.8pc, fuelled by strong growth in emerging markets such as China and India.

Mr Norrish added that: "Living standards in China are rising very fast - car sales are growing 40pc per year. And demand from emerging markets is accelerating - the IEA (International Energy Agency) has doubled its forecast to 1.7m barrels a day."

The market is at a point in the year where energy demand is at its height, while supply continues to tighten.

There is a substantial volume of production offline in Nigeria - 6,000 barrels a day are permanently out of action - the US inventory is "extremely low", OPEC is under performing and the North Sea rigs are undergoing a period of maintenance, according to Mr Tchilinguirian.

Production is falling in mature markets - such as the North Sea, Mexico and the US. North Sea oil producers are also facing rising costs.

Mr Norrish said: "Prices could go up even faster, production is very tight - especially for gasoline and heating oil. The big question this winter might be do we have enough heating oil? The high oil price is justified."

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6/ Angolan oil production (Energy Intelligence, Mon 02 Jul)

No link, from Energy Intelligence daily e-mail update (free).

Comment: Written by Peter Kemp, London. This is the latest of several recent reliable reports that Angola is on schedule for a boom and bust oil production scenario. It currently has the highest rate of oil production growth in the world, it is impressive, but as this item states, it does not have the oil reserves to maintain plateau production let alone growth. Peak expected about 2012-2013, then decline, unless significant new oil fields found. To state the obvious, usually the biggest and best fields are found first.

Article: Total has started oil production from the Rosa field offshore Angola, the world's fastest growing oil producer. Rosa won't be adding barrels, however, as it's a tie-back to the existing Girassol floating production facility. Instead, it will help maintain Girassol's production plateau at 250,000 b/d until early in the next decade. New projects from BP and Exxon are expected to lift Angola's output over 2 million b/d next year and the new Opec member could hit 2.5 million b/d in 2011. But its ambitious production targets are based on modest reserves. Satellite fields like Rosa will sustain output from the big offshore facilities, with ultra-deep projects coming on as the deepwater matures in the next decade. But Angola will need further significant discoveries if it is to sustain its peak production rates beyond 2013.

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7a/ Iran, Oman Gas Sale Progresses -- Some (Energy Intelligence, Wed 04 Jul)

No link, from Energy Intelligence daily e-mail update (free).

Comment: Oman has committed itself to more natural gas sales than it can actually produce – overconfidence in its gas reserves, it is not the only one. It therefore has to import gas, for re-export as LNG. There have been recent media reports that Oman has made a deal with Iran, but this item makes clear there is nothing definite yet, as usual the problem is price. 10 Bcm/yr is roughly 10% UK annual consumption for comparison.

Article: With a second high-level meeting last week in Tehran, Oman and Iran continue to make positive noises about a proposed joint gas development that could send up to 1 billion cubic feet per day (10.2 Bcm/yr) of Iranian gas to Oman's feedgas-starved LNG projects. However, both sides have chosen to put off discussions on price, the variable most likely to scuttle the deal. So any exports are at least three to four years off -- and Iranian gas deals are a long shot in any timeframe.

7b/ Iran draft wording puts pipeline deal in doubt (Business Standard [India], Tue 03 Jul)

http://www.business-standard.com/common/storypage.php?autono=289854&leftnm=3&subLeft=0&chkFlg=

Comment: The Iran-Pakistan-India natural gas pipeline negotiations have apparently been going on for years, have they ever not been in doubt? India and Pakistan both have severe shortages of gas, but want gas from Iran on the cheap. Iran, while it may well have the world’s second largest gas reserves, does not exactly have plenty of spare gas to sell, and knows if it can hold out long enough, Europe will pay top dollars, or Euros.

Article: The fine print of the $7-billion Iran-Pakistan-India (IPI) pipeline draft agreement given by Iran has dampened the initial euphoria of a breakthrough.

Petroleum ministry officials say the agreement, as proposed by Iran, is totally one-sided.

“The text of the draft agreement that Iran has submitted is worded in a way that gives it a window to seek a price revision at any time during the contract period. This is being fiercely opposed by us and Pakistan,” a senior official in the petroleum ministry said.

“We are increasingly seeing the move as a sign of non-commitment,” another oil ministry official said. Iran could, in fact, turn off the pipe any time, locking billions of dollars of investment, the official added.

Petroleum ministry officials are now saying that the trilateral talks held in New Delhi late last week were a failure.

“While the bilateral meeting with Pakistan was a success as we agreed on the transportation tariff, the trilateral meeting was a failure,” another petroleum ministry official said.

Before the last week’s meetings, pricing of the gas was the only issue agreed upon by all the parties. Now, even this is on the list of thorny issues, in addition to the transit fee, the route of the pipeline and security.

An official in the ministry said Iran’s shifting stand over the two-year-old LNG supply deal had made India more wary. The deal to import 5 million tonne LNG per year from Iran is stuck as Iran is not willing to supply LNG at the contracted price of $3.215 per million British thermal unit (mBtu).

At the time the deal was signed in June 2005, the price of crude oil was at $31 a barrel. Iran now wants $4.78 per mBtu.

“When they are not honouring an already signed contract, why should we sign more contracts with them?” said the official.

The pipeline deal should be linked with the LNG import deal, said a Delhi-based analyst.

There is one more issue bothering the petroleum ministry officials. The 2,100-km pipeline is proposed to be built by each country in its own territory, changing a previous understanding that the three countries will invest jointly in the entire pipeline.

“This puts us at the mercy of the two other countries. As India will have no equity in the pipeline in the other two countries, they will not be answerable to us in case the taps are turned off,” the oil ministry official said.

Iran would lay a 1,100-km pipeline from the Persian Gulf to the Iran-Pakistan border while Pakistan would lay a 1,035-km line from its border with Iran to the Indian border, according to the deal.

On the record, officials are putting up a brave face. Petroleum Minister Murli Deora said last week that he expected a framework agreement to be signed after a ministerial-level meeting scheduled in Pakistan later this month.

Iran has also invited Prime Minister Manmohan Singh and Pakistan President Pervez Musharraf to Tehran in August to sign the final pact.

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8a/ UK oil output shortfall raises fears of dependence on Russia (Guardian, Tue 03 Jul)

http://business.guardian.co.uk/story/0,,2117635,00.html

Comment: “The energy industry warned today that government targets of keeping Britain's oil and gas production at 3m barrels a day by 2010 look like being missed.” UK oil and gas production was 2.9 Mboe/d last year, and will probably be less this year. From next year, with no more Buzzards coming onstream, UK oil and gas production will continue to dive. By 2010, we’ll be lucky if we get 2.4 Mboe/d, very lucky.

“… the industry organisation Oil & Gas UK says the goal looks like being missed after five years of rising hopes.” I have seen nothing in the last 4 years to raise hopes, nothing. Oil and gas industry representatives (there are several) continue to sow the idea that if we throw enough money at the problem plenty more oil/gas will be found and produced. UK oil production peaked in 1999, and 8 years of data suggest only minnow fields are left. The writing is on the wall and the UK is still in denial about the reality of depletion.

“… Britain was still a larger oil and gas producer than Nigeria, Kuwait and Indonesia…” Nigeria and Kuwait both produce much more oil than the UK, and both will be larger “oil and gas“ producers than the UK, at a guess, by 2010. Indonesia has never been a particularly large oil producer, and has recently reneged on its natural gas supply contracts to Japan because it over-estimated how much natural gas it could produce.

Article: The energy industry warned today that government targets of keeping Britain's oil and gas production at 3m barrels a day by 2010 look like being missed. North Sea competitiveness is falling and financial backers are losing confidence in the wake of tax increases introduced 18 months ago.

Civil servants have been working with oil companies to find ways to boost output offshore, but the 2007 Economic Report issued by the industry organisation Oil & Gas UK says the goal looks like being missed after five years of rising hopes.

"This shift is indicative of reduced confidence among investors — it now looks as though only 2.6m barrels of oil equivalents will be produced every day in 2010," argues the report, increasing fears that the UK would become dependent on Russian and other foreign gas imports.

The UK pumped 2.9m barrels a day of oil and gas on average during 2006, 9% lower than the year before despite a major increase in investment to £11.5bn. Half of this money was needed just to keep the fields running at a time of rising costs for equipment, people and services.

... "Global cost inflation, a small average discovery size and technically complex reservoirs have all contributed to the average cost of developing new oil and gas reserves in the UK rising to $25 per barrel."

... There was also an urgent need for clarity on who was going to foot the bill for decommissioning older platforms. But Oil & Gas UK also pointed out that Britain was still a larger oil and gas producer than Nigeria, Kuwait and Indonesia and that the industry contributed more than £30bn to the country's balance of trade...

8b/ Nuclear expansion is a pipe dream, says report (Guardian, Wed 04 Jul)

http://business.guardian.co.uk/story/0,,2117711,00.html

Article: A worldwide expansion of nuclear power has little chance of significantly reducing carbon emissions but will add dangerously to the proliferation of nuclear weapons-grade materials and the potential for nuclear terrorism, says a leading research group that has analysed the possible uptake of civil atomic power over the next 65 years.

The Oxford Research Group paper, funded by the Joseph Rowntree charitable trust, says that the worldwide nuclear "renaissance" planned by the industry to provide cheap, clean power is a myth. Although global electricity demand is expected to rise by 50% in the next 25 years, only 25 new nuclear reactors are currently being built, with 76 more planned and a further 162 proposed, many of which are unlikely to be built. This compares with 429 reactors in operation today, many of which are already near the end of their useful lives and need replacing soon.

For nuclear power to make any significant contribution to a reduction in global carbon emissions in the next two generations, the paper says, the industry would have to construct nearly 3,000 new reactors - or about one a week for 60 years.

"A civil nuclear construction and supply programme on this scale is a pipe dream, and completely unfeasible. The highest historic rate [of build] is 3.4 new reactors a year," says the report.

The paper - Too Hot to Handle? The Future of Civil Nuclear Power - comes as the UK government consults on a new generation of nuclear power stations and at a time of increased terrorist activity. It argues that worldwide stocks of high-grade uranium are expected to have run dangerously low within 25 years and that a significant increase in nuclear power beyond then will require a new generation of "breeder" reactor.

... A scramble for uranium to feed the new generation of nuclear plants in China and Russia has led to a huge price increase: the commodity shot up 45% to $138 a pound in the past three months alone - as compared with $10.75 in early 2003, when atomic power was out of favour and nobody wanted to construct facilities. Nuclear is now seen as one way of meeting soaring energy demand while keeping greenhouse gas emissions low.

8c/ Too Hot to Handle? The Future of Civil Nuclear Power (Oxford Research Group, July 2007)

http://www.oxfordresearchgroup.org.uk/publications/briefing_papers/toohottothandle.php

Comment: Report discussed in item 8b.

8d/ Britain has slashed its reliance on Mideast oil (The Telegraph, Thu 06 Jul)

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/07/05/cnoil105.xml

Comment: Has a very good map, but the idea that the UK is somehow less vulnerable to an oil supply shock does because it does not import much oil from the Middle East not seem very realistic.

Article: Britain is now importing only the tiniest fraction of its oil from the Middle East, sourcing its crude instead from the Americas, Africa and Norway, according to intriguing new Government figures.

An analysis by experts at the Department for Business Enterprise and Regulatory Reform (formerly the Department for Trade and Industry), reveals how dramatically the map of UK oil sources has changed over the past half-century, with almost three-quarters of UK oil coming produced from Norway.

Whereas in 1950 some 81pc of UK oil came from states in the Middle East, now only 2pc does...

8e/ We should explore low North Sea tax (Sunday Telegraph, Sun 08 Mar)

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/07/08/ccliam308.xml

Comment: The article reports realistic oil production figures for the UK (“So rapid is the North Sea's depletion that, in three years' time, imports will account for 40 per cent of the oil we use, rising to 90 per cent by 2020.”), the first time I have seen such realistic figures in any UK mainstream media article. However, the gist of the article is that lowering taxes will lead to an increase in oil and gas production.

Article: I recently wrote that the UK's North Sea oil production is falling by more than 10 per cent a year. At a time of growing fears about energy security, our crude output is dropping faster than any other major producer.

After years of self--sufficiency, the UK is now a net oil importer. So rapid is the North Sea's depletion that, in three years' time, imports will account for 40 per cent of the oil we use, rising to 90 per cent by 2020.

The Government's recent energy White Paper, despite a lot of rhetoric about renewables, confirmed our growing reliance on fossil fuels - with oil and gas providing 79 per cent of our primary energy at the end of the next decade, up from 75 per cent today.

Last week, the latest Economic Report of Oil & Gas UK - the umbrella group of offshore energy producers - said that while spending on the exploration and development of North Sea oil and gas rose 20 per cent last year, production "struggled to respond".

The producers blame tax. "The North Sea is a fast-maturing basin," says Oil & Gas UK. "So we need investment, but the fiscal regime is stopping that from happening".

Ministers will dismiss this as business-lobby bleating. But the truth is that the Government, too, was wrong-footed by the sudden drop in UK energy production.

Two years ago, the Treasury forecast tax revenues from oil and gas producers of £13.5bn during 2007/08. The official prediction now, despite higher oil prices and higher tax rates, is only £8.1bn.

The Government should remember that if tax rates were lower, revenues could well be higher - the result of higher production. And that would also enhance our energy security.

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9/ ‘Lights Out: The Electricity Crisis, the Global Economy and What It Means to You’ (STLtoday, Sun 08 Jul)

http://www.stltoday.com/stltoday/entertainment/reviews.nsf/book/story/795E0EE4A99BDC1E8625731100488915?OpenDocument

Comment: This is a brief review of a new book. As mentioned before, oil and gas supplies are not the only energy problems. Electricity supplies look dodgy too.

Article: For anybody who believes that electricity will always be easily available with the flip of a wall switch, Jason Makansi's book "Lights Out" provides an important education.

Makansi worries about the availability of electricity — not centuries from now, but next year. Still, he comes across as a realist, not an alarmist. He is confident that plenty of fuel is available. He is less confident that electricity in the future will reach every home and business reliably and affordably.

Makansi's business is electricity. Ever since earning an engineering degree, he has been involved in the electricity industry, much of the time at a specialized magazine, Power. The St. Louisan is president of Pearl Street Inc., a consulting firm focusing on the interlocking need for electricity production and delivery.

After suffering with neighbors through St. Louis' two big electricity outages last year, Makansi decided to write "Lights Out," aiming for a general readership rather than industry insiders. Advertisement

In the book he explores several issues:

— A deteriorating electricity transmission grid that needs centralized leadership to improve.

— The long supply lines, with more natural gas and nuclear fuel imported, and more coal traveling farther within the United States.

— The failure to find ways to store electricity for emergency situations.

— The shortage of trained workers to keep the system operating smoothly.

— The vulnerability of the system to attacks by enemies...

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