David Kirkpatrick

November 28, 2009

Want a reason to wean the US from OPEC?

How about bringers of democracy being “cursed” by a Saudi prince this week.

The link goes to MEMRI, an excellent resource into Mideast media — a resource I don’t tap into near often enough. Long ago I used to read through MEMRI’s offerings on a regular basis, but it’s been out of my usual rotation for a while and ought to get back in there.

From the first link, the intro:

In an op-ed in the Saudi daily Al-Watan, Saudi Prince Saud bin Mansour bin Saud bin ‘Abd Al-‘Aziz  took on Saudi and Arab liberals and reformists and the Western ideal of democracy. Without naming names, he said that these people were promoting Western democracy despite all its flaws and despite the fact that Islam is vastly superior. Calling democracy “demo-khratiyya” (i.e. “demo-mendacity”), the prince said that writers who criticized Saudi Arabia needed an “ideological bloodletting” to purge them of their corrupt ideas.

And here’s some of the prince’s rabbit pellets:

“Those who hasten to endorse the Western ‘openness’ – whose arrows appear gentle but [carry] a fatal load – have they forgotten our principles and our clarity? Have [these people] not noticed that the West is always marketing democracy as a secular and civil system, not a religious [system]? [Struck by] waves of political Alzheimer’s, they keep telling us that Islam is not democratic.

“A curse on anyone who wants to enforce this demo-khratiyya on all political and constitutional issues. A curse on all those dictatorships that masquerade as demokhratiyya in order to destroy what they define as third-world countries!

“It should be remembered that the Kingdom of Saudi Arabia is the Custodian of the Two Holy Places, and that the sons or residents of the homeland have never been denied their rights. Our country’s structure is perfect [thanks to] Islam, which has established the [concept of] shura [i.e consultation] and the protection of rights, freedom, justice and anything [else] of value, as laid down by this generous religion.”

November 17, 2009

Nuclear power may not be the answer

Filed under: Business, Politics, Science — Tags: , , , , — David Kirkpatrick @ 1:11 pm

And the reason might really surprise you — we’re running out of uranium. There’s a lot of talk about building new nuke plants — an idea I like — to help wean the west off of OPEC, et. al. What may come as a shock to many is uranium, the power source for nuclear plants, is going to offer just as many headaches in terms of shortages and being beholden parts of the world with reserves as petroleum provides right now.

Looks like it’s time to redouble the alternative power efforts if we want energy relatively free of the whims of geopolitics.

From the link:

Perhaps the most worrying problem is the misconception that uranium is plentiful. The world’s nuclear plants today eat through some 65,000 tons of uranium each year. Of this, the mining industry supplies about 40,000 tons. The rest comes from secondary sources such as civilian and military stockpiles, reprocessed fuel and re-enriched uranium. “But without access to the military stocks, the civilian western uranium stocks will be exhausted by 2013, concludes Dittmar.

It’s not clear how the shortfall can be made up since nobody seems to know where the mining industry can look for more.

October 10, 2009

Oil shale extraction hits Europe

Filed under: Business, Politics, Science, Technology — Tags: , , , , — David Kirkpatrick @ 3:56 am

I’ve blogged about oil shale extraction in the US and how it can be something of game-changer in the petroleum world. The technology is going global and could very possibly cause a serious, and welcome, shakeup in the international geopolitics surrounding the oil and gas industry.

From the second link:

Italian and Norwegian oil engineers and geologists have arrived in Texas, Oklahoma and Pennsylvania to learn how to extract gas from layers of a black rock called shale. Companies are leasing huge tracts of land across Europe for exploration. And oil executives are gathering rocks and scrutinizing Asian and North African geological maps in search of other fields.

The global drilling rush is still in its early stages. But energy analysts are already predicting that shale could reduce Europe’s dependence on Russian natural gas. They said they believed that gas reserves in many countries could increase over the next two decades, comparable with the 40 percent increase in the United States in recent years.

“It’s a breakout play that is going to identify gigantic resources around the world,” said Amy Myers Jaffe, an energy expert at Rice University. “That will change the geopolitics of natural gas.”

March 11, 2009

OPEC’s production cuts — working?

Filed under: Business — Tags: , , , — David Kirkpatrick @ 2:08 pm

Maybe, maybe not. Oil was heading up, but took a hit today. I’m guessing OPEC has very little real teeth right now for whatever reason. If you believe some of the industry analysts, it looks like compliance within member nations of the cartel for the production cuts isn’t so great.

Here’s my latest post at EnerMax covering this very subject.

From the link:

One area of concern for OPEC, and of interest to petroleum sector analysts, is the level of compliance with the new, lower production quotas among OPEC nations. One analyst says, “OPEC is still having trouble meeting current quotas,” and that cheating remains a problem for OPEC. Qatar’s oil minister, Abdullah Bin Hamad al Attiyah, says he is satisfied with compliance describing the commitment among OPEC nations for the production cuts as, “very good.” This sentiment was echoed by Iran’s OPEC governor Mohammed Ali Khatibi who says, “Adherence is better than everybody expected, 80 percent, 90 percent.”

Khatibi adds, “Up to 2030, we have to build capacity for 45 million barrels a day, just for compensating the (natural) decline. In addition to that, we need to respond to future demand. The current price cannot encourage any investment, everybody expects a better price. The question is how we can achieve this.”

This confidence from OPEC members is not shared by petroleum industry analysts. One analyst says the rally in the price of oil and OPEC influence is “overdone.” The analyst continues, “OPEC is still having trouble meeting current quotas and cheating remains an issue.”

December 31, 2008

Back to 2002

So to speak. I don’t want to be all doom and gloom here on the last day of the year, but this is some sobering news — 2008 saw the loss of six years of market gains. They’ll eventually come back, but the shocking part of this loss is the speed it happened and how it happened across the board.

Petroleum is way down despite the efforts of OPEC. Hedge funds? Investment banking?  Commodities? The only happy folks are those who shorted everything under the sun for the last half of the year.

From the link:

When the New York Stock Exchange closes later this afternoon, virtually anyone with money in stocks will have felt the punishing drop in the market.

The markets were headed for a higher close Wednesday, but overall, it was a very bad year to own stocks, any stocks — indeed, one of the worst ever. The Dow Jones industrial average will end the year down more than 34 percent, the worst year for the index since 1931, and the broader Standard & Poor’s 500-stock index more than 38 percent. Blue-chips like General Motors, Citigroup and Alcoa lost more than 70 percent of their value.

All told, about $7 trillion of shareholders’ wealth — the gains of the last six years — will be wiped out in a year marked by violent market swings.

But what is striking is not just the magnitude of the declines, staggering as they are, but also their breadth. All but 2 of the 30 Dow industrials, Wal-Martand McDonalds, fell by more than 11 percent. Almost no industry was spared as the crisis that emerged in the subprime mortgage market metastasized and the economy sank into what could be a long, gray recession.

December 18, 2008

Oil hits $36 a barrel

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 3:58 pm

Yowzaa — I blogged about how the OPEC daily reduction did nothing to drive crude prices earlier today — but this is just wild. Very wild.

Light, sweet crude went sub-$40 today. OPEC truly has no teeth right now in this economic climate.

From the second link:

U.S. crude prices dropped more than 9 percent to $36 a barrel on Thursday as slumping demand and swelling U.S. inventories offset OPEC’s record supply cut agreement.

The Organization of the Petroleum Exporting Countries on Wednesday agreed to cut output by 2.2 million barrels per day from January to counter oil’s collapse from record highs above $147 a barrel in July.

“Following OPEC’s announcement to cut so aggressively, market participants are (assessing) the degree of this move as being indicative of just how weak demand is globally for crude oil,” said Chris Jarvis, senior analyst at Caprock Risk Management.

OPEC cut has no immediate effect on price of crude

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 1:07 pm

As expected OPEC drastically cut daily production of oil by two million barrels — a historically large cut. The stated goal was ostensibly to stabilize supply with sinking demand. Of course the actual reason is to give the price a little kick in the rear and try to get it up over $75 a barrel.

So far — albeit on a very, very limited time frame — the gambit is a failure. We shall see how it shakes out over the next few months. I’m thinking the world’s financial situation is so crazy and uncertain this cut may have absolutely no effect aside from taking a little unbought crude off the daily table.

From the second link:

Light, sweet crude for February delivery, fell $1.07 to $43.54 barrel on the New York Mercantile Exchange. The January contract, which closes on Friday, fell $1.42 to $38.64 after dropping as low as $37.68, levels last seen in the summer of 2004.

There is no demand for oil right now, said analyst Peter Beutel of Cameron Hanover.

Higher prices for the February contract suggest that oil brokers and traders believe OPEC’s unprecedented 2.2 million-barrel daily production cut, announced Wednesday, will tighten supply. The Organization of Petroleum Exporting Countries had already taken 2 million barrels of oil out of production, bringing total cuts to more than 4 million barrels per day.

Also from the link:

Oil prices have tumbled 73 percent since July. What started as a crisis in the U.S. subprime mortgage sector last year has mushroomed into a recession in most developed countries and a sharp downturn in emerging nations.

Actions by OPEC and tumbling fuel prices have failed to stimulate demand.

“OPEC is virtually powerless right now,” said Jim Ritterbusch, president of Ritterbusch and Association. “They’ll simply have to be patient and wait for some semblance of demand improvement.”

Beutel said it could be several more months before there is a response to lower prices.

December 17, 2008

OPEC announces deep crude production cut

Filed under: Business — Tags: , , , — David Kirkpatrick @ 12:16 pm

As has been expected.

From the link:

OPEC oil ministers met on Wednesday to remove a record 2 million barrels per day from oil markets in a race to balance supply with the world’s rapidly crumbling demand for fuel.

The 12 members of the Organization of the Petroleum Exporting Countries were also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel.

As the ministers convened a meeting which was expected to proceed smoothly, oil was trading just above $44 a barrel.

Saudi Arabia, the world’s biggest oil exporter, has led by example — reducing supplies to customers even before a cut has been agreed to help push prices back toward the $75 level Saudi King Abdullah has identified as “fair.”

Ali al-Naimi, the kingdom’s oil minister, was first to publicly call for curbs of 2 million bpd ahead of the meeting.

“The purpose of the cut is to bring the market into balance and avoid the gyrations of the price,” he said. “The cut may lead to higher prices or may not.”

Others in the group that pumps more than a third of the world’s oil said at least two million barrels needed to go from daily output to prevent a massive build in inventories.

I like how OPEC tries to sugar-coat the message as though this isn’t purely a move to boost prices. The sooner we can unyoke heavy dependence on these fickle sheiks and banana republic dictators, the better.

December 16, 2008

Oil heading back toward $50 per barrel …

Filed under: Business — Tags: , , , — David Kirkpatrick @ 11:26 am

… on news OPEC is expected to announce a production cut.

From the link:

Light, sweet crude for January delivery was up $3.24 to $49.52 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Europe. The contract briefly reached $50.05 before falling back. On Friday, it fell $1.70 to settle at $46.28.

In London, January Brent crude gained $3.40 to $49.81 on the ICE Futures exchange.

The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, has signaled it plans to announce a substantial reduction of output quotas at its meeting Wednesday in Algeria.

“The extent of such cuts is still unclear and this uncertainty has been a source of continuing volatility in futures markets,” said a report by analysts at KBC Market Services in Great Britain.

Kuwaiti oil minister Mohammed al-Eleim said Monday that OPEC was “undoubtedly inclined” to cut production. But he added that any decision would balance the need for a cut with its impact on the ailing world economy and producer nations’ need for revenue to fund development projects.

In other oil and gas news, here’s a report on Iraq’s petroleum industry and a recent expo held to promote that rebuilding effort.

December 1, 2008

Oil in the $40s

Filed under: Business — Tags: , , , — David Kirkpatrick @ 7:28 pm

We’ll see how deep this well is. Under fifty a barrel and still dropping. A relative of mine with something of a dog in this fight is predicting a floor of around $25 a barrel for light, sweet crude. Like I said, we shall see.

From the link:

Oilprices on Monday fell below $50 a barrel for only the second time this year after Opec delayed a further production cut until mid-December.

The oil cartel, which controls 40 per cent of the world’s production, said demand was weakening fast with the global economic crisis but it agreed to wait until a meeting in Oran, Algeria, on December 17 to further reduce its output.

In late trade, Nymex January West Texas Intermediate fell $5.15 to $49.28 a barrel.

ICE January Brent fell $5.52 to $47.97 a barrel.

Abdalla El-Badri, Opec secretary-general, said the cartel was heading for a cut. “We are all geared towards a cut in Algeria…There will be action there.”

The cartel has promised to lower its production by about 2m barrels a day in the past two months but analysts said it had so far cut about 1m-1.2m b/d.