Article: The price of oil jumped to an 11-month high yesterday, moving even closer to record levels hit last summer as fears mounted over shortages in supply.

Speculation in the world's most actively traded commodity, rapidly rising demand and reports that production would slow over the next five years pushed Brent crude up to $77.07 briefly during early-afternoon trading, within $2 of the all-time high of $78.65 set last August.

Investors said hedge funds and pension funds were key drivers behind the latest rally. "This rally is very much fund driven," said Graham Sharp, director at Trafigura, a commodities trading group. "The entry of long-only hedge funds into the market is a major factor this time around. We wouldn't rule out Brent hitting $80 this summer."

Maintenance work on oilfields in the North Sea has tightened supplies and helped push Brent, seen as the best indicator of the global market, significantly higher.

The unexpected closure of a North Sea pipeline this month cut oil output from at least one group of fields, operator ConocoPhillips said. Chevron's Erskine field, which produced an average of 10,705 barrels a day in March, has also been affected by the shutdown.

The market has been jittery all week after the release of the International Energy Agency's medium-term oil market report warning that demand would increase faster than expected over the next five years while production would struggle to keep up. Traders are nervously awaiting the IEA's latest monthly report out today, which will give an updated snapshot of global oil demand and stocks.

Data from the US Energy Information Administration showed gasoline stocks in the world's largest consuming country remained 8.2m barrels lower than a year ago, and the summer driving season there is expected to last at least another month.

Members of the Organisation of the Petroleum Exporting Countries have refused to bow to calls to pump more crude in an attempt to lower prices.

Saudi Arabia's oil minister, Ali al-Naimi, said tightness in supply and international political tensions were pushing prices higher.

Another three-year-old was kidnapped in Nigeria yesterday, four days after a British girl was released by her kidnappers. The Nigerian boy was snatched from the oil-rich Niger Delta, which has seen many violent attacks recently, pushing up the price of gas and oil.

Later in the trading session, the oil price subsided as the US gasoline market fell sharply on news that a number of refineries were restarting units that had been out of production.

Economists are growing concerned about the renewed surge in oil prices, warning that it could keep upward pressure on inflation in many countries.

Jonathan Loynes, of Capital Economics, said: "The recent renewed rise in oil prices has put something of a dent in the chances that falling energy inflation will bring overall consumer price inflation back into line with the monetary policy committee's 2% target over the coming months."

1b/ PETROLEUM ($US/bbl) (Bloomberg, Fri 13 Jul)

http://www.bloomberg.com/markets/commodities/energyprices.html

PRICE CHANGE % CHANGE TIME

Nymex Crude Future 73.93 1.43 1.97 07/13

Dated Brent Spot 79.64 1.87 2.40 07/13

WTI Cushing Spot 73.93 1.43 1.97 07/13

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2/ A trilogy of Economic articles by Henry C. K. Liu (Asia Times, May/Jun)

Comment: These articles were posted on the Yahoo Energy Resources group by ‘Roger’:

“So far as I am concerned, Henry CK Liu has the best analysis of where the economy is headed and how factors like the housing bubble subprime loans and the trade deficit are logically connected and how a crisis s likely to play out. In essence, he believes that the global economy is poised for deflation that the central banks will not be able to stop by expanding credit further, which has been the standard tactic of the past... Liu lays out the situation in these long pieces with enough facts and details to make his analysis a good starting no matter how you see the situation.”

Henry CK Liu is chairman of a New York-based private investment group. All articles are lengthy and use a lot of finance-specific expressions, but well worth a read. The excerpts below give the gist. Peak Oil or not, the global financial system is beginning to wobble.

2a/ Liquidity boom and looming crisis (Asia Times, Wed 09 May)

http://www.atimes.com/atimes/Global_Economy/IE09Dj05.html

Article: Economic growth in the US slowed to 1.3% in the first quarter (Q1) of 2007, the worst performance in four years of an overextended debt bubble. Yet the Dow Jones Industrial Average (DJIA) rose to an all-time intra-day high of 13,284.53 to close at 13,264.62 last Friday, rising more than 1,000 points or 9% in the same period.

The DJIA is now 82% higher than its low of 7,286.27 on October 9, 2002, during which US gross domestic product (GDP) grew only 38%.

The 10-year cycle of financial crises

The historical pattern of a 10-year rhythm of cyclical financial crises looms as a menacing storm cloud over the financial markets.

The 30% US market crash of 1987, in which investors lost 10% of 1987 GDP, was set off by the 1985 Plaza Accord to push down the Japanese yen with an aim of reducing the growing US trade deficit with Japan. The 1987 crash was followed 10 years later by the Asian financial crisis of July 2, 1997, with all Asian economies going broke, and some stock markets such as Thailand's losing 75% of their value, and Hong Kong having to raise its overnight deposit rate to 500%, trying to defend the fixed exchange rates of their currencies.

In South Korea, Daewoo Motors, facing bankruptcy, was forced to be taken over on the cheap by General Motors. In Indonesia, the Suharto government fell because of social instability arising from the financial crisis. A wave of deflation spread over all of Asia from which Japan, already in recession since 1987, has yet to fully recover two decades later. In the United States, the DJIA dropped 7.2% on October 27, 1997, and the New York Stock Exchange had to suspend trading briefly to break the free fall.

Now in 2007, a looming debt-driven financial crisis threatens to put an end to the decade-long liquidity boom that has been generated by the circular flow of trade deficits back into capital-account surpluses through the conduit of US dollar hegemony.

While the specific details of these recurring financial crises are not congruent, the fundamental causality is similar. Highly leveraged short-term borrowing of low-interest currencies was used to finance high-return long-term investments in high-interest currencies through "carry trade" and currency arbitrage, with projected future cash flow booked as current profit to push up share prices.

In all these cases, a point was reached where the scale tipped to reverse the irrational rise in asset prices beyond market fundamentals. Market analysts call such reversals "paradigm shifts". One such shift was a steady fall in the exchange value of the US dollar, the main reserve currency in international trade and finance, to cause a sudden market meltdown that quickly spread across national borders through contagion with selling in strong markets to try to save hopeless positions in distressed markets.

There are ominous signs that such a point is now again imminent, in fact overdue, in globalized markets around the world...

2b/ THE INTEREST RATE CONUNDRUM, Part 1 - Economics of denial (Asia Times, Wed 13 Jun)

http://www.atimes.com/atimes/Global_Economy/IF13Dj01.html

Article: Suddenly this summer, all eyes are trained on rising interest rates around the globe. The prospect of central banks tightening to ward off impending inflation has abruptly interrupted the spectacular rise of all stock markets driven by abnormally ample liquidity, but has yet to precipitate a market crash. Under normal conditions, rising rates lower bond prices as well as equity prices. But in the current liquidity boom that has produced a persistently inverted yield curve, high short-term interest rates have crashed bonds but have left equity prices higher than market fundamentals could justify.

Yet even as rising interest rates will eventually reduce liquidity to reverse the rise of stock markets, it will not arrest the real decline of the US dollar. The anomalous combination of rising interest rates and overpriced stocks is explosive enough by itself; but adding to it the shocking impotence of rising interest rates to arrest the declining value of the dollar, we have an unstable mixture of deadly financial dynamite waiting to be detonated by even seemingly unrelated minor events.

Normally, high interest rates should lift the exchange value of a currency to reduce import prices to constrain inflation, which is one of the offsetting benefits of a tight monetary policy that otherwise slows down the domestic economy. Increased global capital inflow would also be attracted by high interest rates.

But the US dollar is not a normal currency. It is a fiat currency that can be produced at will by the United States, not backed by anything of intrinsic value, yet assuming the role of a reserve currency for international trade and finance. This unique characteristic is what lies behind dollar hegemony...

2c/ THE INTEREST RATE CONUNDRUM, Part 2 - How currency devaluation destroys wealth (Asia Times, Thu 14 Jun)

http://www.atimes.com/atimes/Global_Economy/IF14Dj01.html

Article: In today's financial world, a liquidity boom produces rising nominal or face value in return on investment (ROI) with an increasingly hollow economy in two ways: (1) by devaluing all currencies against real assets and (2) by keeping down wages and worker benefits around the globe.

Thus while all currencies devalue steadily but not at the same pace, all of them devalue faster against real assets and slower against labor cost, because wage adjustments tend to lag behind both real and nominal inflation rates. This translates directly into low real valuation for labor, structurally constraining growth of demand to fall behind growth of supply. This in turn leads to an overcapacity economy of declining consumer purchasing power. Neo-classical economists call this the business cycle, which Keynesians assert must be countered with demand management through full employment supported by deficit financing.

The laws of overcapacity

The first law of overcapacity is that it is deflationary (falling market prices of assets), which in turn requires falling wages to maintain corporate earnings. The second law of overcapacity is that it discourages new plant expansion, so that existing capital assets appreciate in market value in nominal terms as liquidity increases, causing the stock markets to rise even though their economic value remains stagnant...

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3a/ Kuwait says has 100 bln barrel oil reserve (Forbes, Wed 11 Jul)

http://www.forbes.com/markets/feeds/afx/2007/07/11/afx3904247.html

Comment: Kuwait has just announced that it really does have 100B barrels oil reserves. But see items 3b and 3c.

Article: OPEC-member Kuwait reiterated Wednesday that it had oil reserves of 100 bln barrels, again disputing a report that the figure was around half that amount.

'We confirm that Kuwait's oil reserves are 100 bln barrels,' acting oil minister Mohammad al-Olaim told reporters after briefing parliament in a closed-door session about the levels of reserves in the Gulf emirate.

The session was called by a number of opposition MPs who demanded the government provide the exact figures of reserves amid fears that they were much less than the officially announced figures.

In January 2006, the industry newsletter Petroleum Intelligence Weekly (PIW) reported that Kuwait's oil reserves stood at 48 bln barrels, based on internal Kuwaiti records seen by the newsletter.

Former oil minister Sheikh Ahmad Fahd al-Sabah said in March last year that Kuwait was extracting oil from 31 of its 105 oil reservoirs.

One of the two MPs said 'the minister did not provide concrete evidence about the size of the reserves.'

The 100 bln barrels make Kuwait the world's fifth largest after Saudi Arabia, Iran, Iraq and the United Arab Emirates.

BUT:

3b/ Kuwait plans big shake-up in oil sector (Kuwait Times, Sat 12 May)

http://www.kuwaittimes.net/read_news.php?newsid=Mjk4NTc3MTEw

Article: Sheikh Ali also confirmed to Al-Wasat newspaper that the state's proven oil reserves have fallen to 48 billion barrels, as reported last year by Petroleum Intelligence Weekly, down from an announced 100 billion barrels.

3c/ Traditional production unfit for half of Kuwait's oil reserves (Kuwait Times, Tue 15 May)

http://www.kuwaittimes.net/read_news.php?newsid=Mjc1NDI3ODE2

Comment: As an ODAC News subscriber commented on 19 May: “The Kuwaiti saga continues, now it appears half of reserves need techniques to be developed to extract them (If so how can they be classified as reserves ?) and appear to be extra heavy !”

Article: More than half of Kuwait's oil reserves will not be produced through cheap traditional methods, Deputy Director General of the Kuwait Institution for Scientific Research (KISR) Dr. Nader Al-Awadhi said yesterday. Kuwait's oil reserves are estimated at about 95 billion barrels, among the biggest worldwide. Most production, if not all, is being produced through traditional methods, Al-Awadhi told a KISR workshop on "Managing Carbon Dioxide for Improving Oil Production" that started yesterday.

He expected that the traditional methods would produce 45 billion barrels, but could not be used for the rest (i.e. 50 billion barrels). Thus, emerges the necessity of developing new feasible environment-friendly methods for producing heavy oils, he said adding that oil production operations over the past years had focused on light oil.

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4/ Biofuel mania ends days of cheap food (New Zealand Herald, Tue 10 Jul)

http://www.nzherald.co.nz/section/466/story.cfm?c_id=466&objectid=10450519

Comment: This article includes references to climate change.

Article: The era of cheap food is over. The price of maize has doubled in a year, and wheat futures are at their highest in a decade. The food price index in India has risen 11 per cent in one year, and in Mexico in January there were riots after the price of corn flour - used in making the staple food of the poor, tortillas - went up fourfold.

Even in the developed countries food prices are going up, and they are not going to come down again. Cheap food lasted for only 50 years.

Before World War II, most families in developed countries spent a third or more of their income on food, as the poor majority in developing countries still do. But after the war, a series of radical changes, from mechanisation to the green revolution, raised agricultural productivity hugely and caused a long, steep fall in the real price of food.

For the global middle class, it was the good old days, with food taking only a tenth of their income.

It will probably be back up to a quarter within a decade. And it may go much higher than that because we are entering a period when three separate factors are converging to drive food prices up.

... Soaring Asian demand and biofuels mean expensive food now and in the near future, but then it gets worse.

Global warming hits crop yields, but only recently has anybody quantified how hard. The answer, published in Environmental Research Letters in March by Christopher Field of the Carnegie Institution in Stanford, California, and David Lobell of Lawrence Livermore National Laboratory is quite simple: for every 0.5C hotter, crop yields fall between 3 and 5 per cent.

So 2C hotter, which is the lower end of the range of predicted temperature rise this century, means a 12 to 20 per cent fall in global food production.

This is science, so that answer could be wrong - but it could be wrong by being too conservative. Last year in New Delhi, I interviewed the director of a think tank who had just completed a contract to estimate the impact on Indian food production of a rise of just 2C in global temperature.

The answer, at least for India, was 25 per cent. That would mean mass starvation, for if India were in that situation then every other major food-producing country would be too, and there would be no imports available at any price.

In the early stages of this process, higher food prices will help millions of farmers who have been scraping along on very poor returns for their effort because political power lies in the cities.

But later it gets uglier. The price of food relative to average income is heading for levels that have not been seen since the early 19th century, and it will not come down again in our lifetimes.

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5/ Gazprom picks Total for Shtokman field (Financial Times, Thu 12 Jul)

http://www.ft.com/cms/s/dc9ce096-305b-11dc-9a81-0000779fd2ac.html

Article: Gazprom said on Thursday it had chosen France's Total as a partner in developing its vast Shtokman gas field and said more partners could join, finally ending months of indecision over opening the project to foreign participation.

Gazprom chief executive Alexei Miller said Total would receive a 25 per cent stake in a new company that would own the infrastructure running the $20bn project, while Gazprom would hold the remaining 75 per cent.

Total said an agreement with Gazprom was close and that it expected the deal to be signed on Friday

Mr Miller said Gazprom was still considering the possibility of bringing "another or several more foreign partners" to hold a stake of 24 per cent. Gazprom's participation would not fall below 51 per cent, he said.

... Thursday's decision in effect marks a compromise in which Gazprom will be the sole owner of the company holding the licence to the field while Total and possible other partners will participate in the company running the project, allowing them to take a share in the profits and also share the risks.

Alexander Medvedev, Gazprom deputy chief executive, told the FT in an interview last week that the company was nearing agreement on a "new model" of co-operation with foreign majors on developing Shtokman.

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6/ UK's N. Sea oilfields hit by gas pipe closure (Reuters, Thu 12 Jul)

http://investing.reuters.co.uk/news/articleinvesting.aspx?type=allBreakingNews&storyID=2007-07-12T162234Z_01_L12909722_RTRIDST_0_NORTH-SEA-OIL-UPDATE-1.XML

Comment: One little incident in the North Sea, and the price of (Brent) oil stops just short of $80/barrel. What other incidents does the summer have in store for us?

Article: North Sea oil production has been cut by the closure of a pipeline that usually takes associated gas away to Britain, helping push oil prices above $77 a barrel on Thursday.

The ConocoPhillips (COP.N: Quote, Profile , Research) operated J-Block fields, which produced over 44,800 barrels of oil a day (bpd) in March, have been unable to flow because the Central Area Transmission System (CATS) gas pipeline has been shut for repairs since July 1.

Chevron's (CVX.N: Quote, Profile , Research) Erskine field, which produced an average of 10,705 bpd in March, has also been affected by the CATS shutdown, which means the gas coming from the fields in the area has nowhere to go.

"As the wells in J-Block produce both oil and gas, and we have no storage facilities to store the gas which is separated from the oil, J-Block cannot export oil or gas until the problem with CATS has been resolved," a spokeswoman for Conoco said.

"One can't operate without without the other and why would they bring up oil if they can't store the gas?"

Chevron (CVX.N: Quote, Profile , Research) said the CATS shutdown, which could last several more weeks, was also "impacting" production from Erskine but would not say whether it had shut.

"The extent to which this is impacted is commercially sensitive information but it is in the interest of all parties to resume production as soon as we can safely do so," a spokesman for Chevron said in a statement.

BP (BP.L: Quote, Profile , Research) has four fields, which normally produce around 75,000 bpd, connected to the CATS pipeline which it also operates.

A BP spokesman declined to say whether oil production was affected...

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7/ Fuel oil hits record highs - European 3.5% cracked fuel oil prices hit a sixth successive record high on July 10 (Platts, Wed 11 Jul)

http://www.platts.com/Oil/Resources/Podcasts/europe/index.xml

Comment: This week’s “What’s Driving the European Market” podcast (4 min 8 sec) from Platts – a podcast is an audio file that you can listen to online, or save on your computer and listen to later. I have not seen or read this anywhere else, but there seems to be a critical shortage of ‘bunker fuel’ in Europe at the moment. Bunker fuel is ‘petrol for ships’ as explained in the podcast (see Wikipedia), the fuel that keeps big ships moving. Not only are bunker fuel prices at an all time high and therefore very expensive, there is a physical shortage which means that around the Mediterranean ships are waiting in ports for days for fuel to arrive to move on. You may remember that a few weeks ago Platts was telling us that the main shortage was for naphtha, sending petrol prices higher, naphtha being a component of petrol. Bunker fuel now, what next? Seems like there is a bigger story here that is not being reported.

Article: In this podcast Simon Thorne, managing editor for Platts EMEA oil discusses the driving forces behind the record highs witnessed in European fuel oil, including blending economics and high crude oil prices; how this situation has in turn impacted bunker fuel, with prices at Rotterdam, Europe's largest port, having rocketed to an all-time high of $365/mt.

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8a/ Peak Oil: Punctuated Power (Sanders Research Associates Limited, Fri 15 June)

http://sandersresearch.com/index.php?option=com_content&task=view&id=1257

Comment: Railton Frith discusses the problems we will soon face regarding electricity supplies.

Article: Our power, water and communications utilities are now heavily interdependent and are particularly energy hungry — being unable to withstand interruptions to their energy source for more than a few hours or days at most. The impending peak in the world’s production of oil will have unforeseen consequences to the supply of all utilities that are wide ranging and potentially severe. The Hubbert curve which may be used to predict the supply of oil suggests a gentle decline in the oil flows of around 3% to 6% per year. The consequences of that decline will be anything but gentle and unless action is taken beforehand will potentially result in a simultaneous and catastrophic collapse of all our utilities and along with it our present way of life... The long term prospect over months, years and decades is that the current centralised generating plant will become too expensive to operate and, more importantly, too inefficient to remain viable. The centralised power generation and grid will eventually give way to localised power generation with large sections of the population having to either ration the remaining central generators as their section of the grid is switch on for an hour or two each day or return to a lifestyle more akin to that of the 18th and 19th century.

... To mitigate the effects of cascading power failures, a planned program of localised distribution by micro-generators using combined heat and power systems at those locations furthest away from the central generators will be required. Sadly there appears to be little government interest in promoting this forward-looking approach...

8b/ COAL - The Roundup (The Oil Drum: Europe, Thu 12 Jul)

http://europe.theoildrum.com/node/2726#more

Comment: Compiled mostly by yours truly, this post on The Oil Drum lists five reports that have been published / released over the last 5 months. Two are from the same source (2 and 3), but otherwise completely different authors all with the same message. Coal is not nearly as abundant as assumed. The point is the same as that for natural gas – Peak might be some way off, but supply problems could be just around the corner – problems with coal supplies will mean problems with electricity supplies. We ought to planning/preparing for a less-than-rosy scenario now.

The biggest strength of Oil Drum articles is the constructive criticism and analysis that others contribute after the main article.

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9/ On Europe: Spain's property fiesta stopped in its tracks (Financial Times, Fri 13 Jul)

http://us.ft.com/ftgateway/superpage.ft?news_id=fto071320071550324563

Comment: The Financial Times picks up on the problems in Spain’s property market.

Article: Since the start of the year, the Spanish economy has felt like a huge party on the Titanic, cruising heedlessly on to an iceberg of corporate debt.

The danger signs were there for all to see: a real estate bubble; corporate borrowing up 37 per cent in a year; frenzied M&A activity, and last but not least a current account deficit that has ballooned to become the second largest in the world in absolute terms after the US.

By and large, these are all symptoms of the same phenomenon: Spain is having the mother of all fiestas, paid for with other people's money. Real estate and construction groups are on a debt-financed acquisition spree, offering overvalued assets as collateral for borrowed funds.

Timid warnings from the Bank of Spain have been ignored. "Spain is different!" the over-borrowed say. There won't be a property crash – foreigners will always want a place in the sun. And who cares about the current account deficit? We are all in the euro now.

But in recent weeks, the flight from risk in Europe and the US – triggered by turmoil in the US mortgage markets – has brought the Spanish fiesta to an abrupt halt.

Banks that freely lent into the Spanish boom are having difficulties syndicating loans. Real estate listings on the Madrid bourse have flopped. Companies once feted as the drivers of the Spanish economy are now treated as pariahs.

"International investors only care about one thing, your exposure to the real estate sector," laments one Spanish banker.

A year ago, foreign lenders were willing to finance up to 120 per cent of a Spanish property group's net asset value. These days, says one senior investment banker in Madrid, real estate groups are lucky to raise 30 per cent of their NAVs. This is the strongest sign yet of the bursting of the Spanish property bubble. In effect, bankers are saying assets of real estate groups, mainly in land, are over-valued.

Although house prices are not falling yet, house sales are. According to the association of Spanish property registrars, property sales fell 7 per cent in 2006. This year, building permits have been issued for 800,000 new homes. And while not all will come on to the market this year, it is difficult to escape the conclusion that the Spanish real estate market is over-heated, over-priced and over-supplied…

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10/ Food Miles (Press and Journal [Aberdeen, Scotland], Sat 14 Jul)

Comment: I do not often read the P&J, however yesterday’s front page headline caught my attention: “THE 66,500 FOOD MILES THAT SHOW WE'RE OFF OUR TROLLEYS”. All these articles are from yesterday’s P&J. Note that it is ok to suggest that we should reduce food miles because of global warming, but not that we will have to because of oil and gas depletion, no mention of peak oil or gas, or last week’s IEA Medium Term Oil Market Report. First two stories start off the same, but are otherwise different.

10a/ THE 66,500 FOOD MILES THAT SHOW WE'RE OFF OUR TROLLEYS

http://www.pressandjournal.co.uk/displayNode.jsp?nodeId=149235&command=displayContent&sourceNode=149218&contentPK=17832587&moduleName=InternalSearch&formname=sidebarsearch

Article: A basket of vegetables bought at a north-east supermarket had travelled more than twice round the world to get there.

A Press and Journal investigation discovered that the 17 different vegetables, which included everyday items such as potatoes, onions and carrots, clocked almost 66,500 miles to reach the Tesco store at Westhill, near Aberdeen.

Now consumers are being warned to change their buying habits or more food could be flown into the UK to the detriment of the environment and British farmers.

Food miles - the distance food travels to consumers - is among many issues being blamed for climate change.

Tesco says producing UK vegetables often requires the use of nitrogen fertiliser which takes huge amounts of energy to produce.

... Tesco maintained that some of the vegetables it sells from overseas have produced far less carbon - even after air freighting - as they do not need nitrogen fertiliser.

A spokesman added: "Food miles tell you nothing."

10b/ SHOPPERS GET SOME FOOD FOR THOUGHT

http://www.pressandjournal.co.uk/displayNode.jsp?nodeId=149235&command=displayContent&sourceNode=149218&contentPK=17832052&moduleName=InternalSearch&formname=sidebarsearch

Article: Consumers are being challenged to change their shopping habits in the wake of a Press and Journal investigation.

We have in recent days bought 17 vegetables from Tesco at Westhill, near Aberdeen, only to find that they had travelled 66,497.65 miles to get there.

Our basket included everyday items that can be grown in the UK.

The potatoes, however, came from Israel; the onions from New Zealand and Egypt; the runner beans from Zimbabwe; tomatoes from Morocco and carrots from Italy, France and Zambia.

Tesco was on our visit selling loose British vegetables, including potatoes, turnips and broccoli, as well as strawberries and raspberries. All the imported goods were in plastic containers.

... More than 90% of the fruit and 50% of the vegetables now sold in the UK are imported, often from nations which do not have the minimum wage rates and regulatory controls that are forced on British producers and which results in farmers here being unable to compete with the far cheaper produce from abroad…

10c/ 'FRESH' PRODUCE IS TOO WELL-TRAVELLED (Editorial)

http://www.pressandjournal.co.uk/displayNode.jsp?nodeId=149235&command=displayContent&sourceNode=149218&contentPK=17831758&moduleName=InternalSearch&formname=sidebarsearch

Article: Potatoes from Israel, carrots from Italy, France and Zambia and broccoli from Kenya. Far fetched, you might think, but increasingly the reality on shelves offering "fresh" produce at retailers across the UK.

The Press and Journal today exposes the fact that vegetables bought at one retailer travelled almost 66,500 miles to get here.

That retailers dismiss food miles as irrelevant is not surprising given that they are the ones responsible for a growing trade that unnecessarily adds billions to the cost of food and which is also damaging the environment, especially as many vegetables are now transported by plane to the UK.

The question we have to ask ourselves is just how sustainable this is, and whether our desire for produce year-round, and outwith traditional seasons, can continue without further seriously damaging the planet.

Do we really need strawberries in December that taste like raw turnips? Must we import potatoes and broccoli from Israel and Kenya when we can grow them here?

Food imports on the scale we are now seeing are not good for the UK economy in the long term. Whatever happened to the notion of food security and being able to feed ourselves?

Cynics would suggest that, far from helping developing economies, the global food giants involved in the trade are merely profiteering from them.

So let's all take steps to resolve this and remember that local is unquestionably better. For starters, it's fresher and more nutritious.

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11/ Let's be honest: signs in Iraq all point to oil (The Age [Australia], Mon 16 Jul)

http://www.theage.com.au/news/opinion/lets-be-honest-signs-in-iraq-all-point-to-oil/2007/07/15/1184438140962.html?page=fullpage#contentSwap1

Comment: The Australian Prime Minister John Howard was probably hoping that he had swept this issue under the carpet, then the defence correspondent for The Age writes this article. Good review.

Article: IT IS truly bizarre that Defence Minister Brendan Nelson has taken such a pasting, politically and in the media, for being honest about the Iraq war and oil.

As the ghastly toll of dead Iraqis has risen steadily over the past four years, all of the "coalition of the willing" governments have carefully avoided linking energy supplies to their invasion or occupation of Iraq.

In 2003, Prime Minister John Howard vehemently rejected the very suggestion, saying: "No criticism is more outrageous than the claim that US behaviour is driven by a wish to take control of Iraq's oil reserves."

The idea that the war, with its awful human cost on both sides, has anything at all to do with securing energy supplies is one the American, British and Australian governments have never been comfortable selling to their publics.

But we all have a responsibility to work out why we chose to invade Iraq and whether it was worth the present carnage.

That's why it was significant that when Mr Howard made a major speech on Australia's strategic future last week, he talked of a range of strategic trends converging in the Middle East, including "energy demand".

Early in his speech, Mr Howard said globalisation could bring a range of events affecting Australia's strategic circumstances that would potentially require military responses.

He said globalisation would facilitate terrorism and other forms of transnational crime, and he went on to say: "It could also spur a resurgence of protectionism and increasing rivalry over globally traded resources, particularly oil."

... That was widely seen as a "blunder" by the forthright Dr Nelson, and it had the PM leaping onto the airwaves later in the day to stress that the war had nothing to do with oil.

The reality is that at this stage none of the original reasons for invading Iraq holds water. There were no weapons of mass destruction, and while Iraq was not a hotbed of terrorism before the invasion, it certainly is now. The war has turned the country into a massive technical college for terrorists who've used the internet to share their considerable bomb-making skills with their brothers in Afghanistan and as far away as South-East Asia.

The US-led coalition's only clear goal now is to stabilise the country and that is becoming a more forlorn hope each day.

If oil was a serious factor in the decision to invade, or to stay, might the hundreds of billions of dollars the war is costing not have been better spent finding alternative energy sources? That could, in the long term, make the Middle East much less of a strategic interest to the world's defence planners — and probably a safer place for all concerned.

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