Peak oil forecasters win converts on Wall Street to $200 crude

Peak Oil proponents say global oil production is now at or near its zenith. Once the flow crests and starts to decline - and some geologists say it already has - oil will no longer be able to slake the world's growing thirst for energy. The result will be the oil shock to end all oil shocks. The price of a barrel of crude will spiral to $200 - and keep rising. To the peaksters, today's energy crunch is nothing next to the pain that will follow.

As energy prices soar and violence convulses the Middle East, the peak-oil movement - an unlikely alliance of geologists, physicists, oil industry consultants and environmental activists - is winning converts. Peak-oil ideas are bubbling up from scientific journals and offbeat Web sites, much the way warnings of global warming did a decade ago. For the first time, the peaksters have begun to grab the attention of Washington and Wall Street.

Billionaire Boone Pickens says he's a peak believer. So does Peter Thiel, who co-founded PayPal and now runs Clarium Capital Management, a $2.1 billion hedge fund firm. Pickens, Thiel and other investors are positioning themselves to profit from what they say will be the biggest oil squeeze of all time. Even some oil companies and industry veterans sound nervous. Chevron has run a series of full-page ads in U.S. newspapers that declare, "The era of easy oil is over." Thierry Desmarest, CEO of Total SA, told the World Gas Conference in Amsterdam in June that global oil production would peak in 2020. Matthew Simmons, whose investment bank Simmons & Co trades oil and gas stocks, says Saudi Arabia's production may decline soon.

- That is just a small excerpt of a long article on Bloomberg - probably the biggest coverage of peak oil on Bloomberg ever.

Now that the "Investing for Peak Oil" story is out among the investment elite, I have only one regret - I wish I had put in much, much more money, and much, much earlier. Only problem : I don't have much, much more money than I have already put in, and I didn't act on it until relatively recently. Well, as a small consolation, a 45% portfolio gain ain't bad.

But you know, I aim for 100% - or better ... :)

(2006-08-31 12:41:03 SGT) [Energy] Permalink

RadioShack lays off 400 employees via e-mail

news.yahoo.com :

RadioShack followed through on its announced plans to cut about 400 jobs, but the electronics retailer has been forced on the defensive about its method of notifying laid-off employees by e-mail. Employees received an e-mail telling them they were being dismissed immediately. "The work force reduction notification is currently in progress," the notice stated. "Unfortunately your position is one that has been eliminated."

Management experts expressed surprise at RadioShack's use of electronic notification instead of face-to-face meetings with supervisors. Derrick D'Souza, a management professor at the University of North Texas, said he had never heard of such a large number of terminated employees being notified electronically. He said it could be seen as dehumanizing to employees.

- This has got to rank right up there with the "SMS divorce" in Malaysia some time back.

(2006-08-31 12:30:11 SGT) [Biz] Permalink

Russian $30 billion aluminum merger creates world leader

news.yahoo.com :

Russia's leading aluminum firm, RUSAL, will take over its main competitor SUAL and the aluminum industry assets of Glencore to create a world market leader. The transaction, which may be finalized by October and create a company worth around $30 billion, would confirm Russia's renaissance as a world powerhouse in energy and strategic commodities after the post-Soviet economic collapse.

"The new company will be the world's number one aluminum producer with output of 4 million tonnes per year, and also the top alumina producer with output of 11 million tonnes," a source said. Putin has capitalized on booming oil and commodities prices as a means to recover Russia's lost status as a great power. A national aluminum champion would join state-controlled gas monopoly Gazprom in projecting power abroad.

(2006-08-31 12:21:52 SGT) [Biz] Permalink

Wednesday August 30, 2006

Betting billions on liquefied natural gas

peakoil.com -> money.cnn.com :

An estimated $30 billion a year is pouring into developing liquefied natural gas. Despite concerns over the safety and the cost of importing it, analysts say the fuel will make up a larger and larger share of America's energy mix and may help prevent seasonal natural gas price spikes. The reasons for the boom are primarily twofold. The first is that the United States is using more and more natural gas because it's both cleaner burning than oil and economical. Previously much of U.S. natural gas demand was met by Canada, easily shipped via pipeline. But Canada's natural gas production, like America's, is expected to be flat or slightly declining. Canada may export less natural gas as it is increasingly being used to extract crude oil from its massive tar sands reserve in Alberta.

This growing demand and limited domestic supply, coupled with the fact that under-ocean pipeline construction is not feasible, means there's money to be made by liquefying it (which reduces its volume by 600 times), putting it on a boat and shipping it around the world. Because pipelines are not global, natural gas is a regional market, subject to wide price swings whenever a localized event threatens supply. But as more and more gas is liquefied, a shortfall in the United States could easily be covered by sending over supplies from, say, Europe.

- Recall what I said, that there is nothing cheap about LNG. The infrastructure - terminals and tankers - will cost billions of dollars. LNG spot prices are about $12 while natural gas prices are around $6, making LNG easily twice the price of natural gas per unit (mbtu/mcf). That kind of makes sense, since around 30% of net energy is lost during the conversion of the gas to liquid and back, plus factoring in a few dollars per unit to cover the cost of transportation and markup along the supply chain.

(2006-08-30 13:28:28 SGT) [Energy] Permalink

Malaysia may go for nuke energy

peakoil.com -> thestar.com.my :

Malaysia may explore the use of nuclear technology for power if the oil price shoots up to US$100 a barrel. It would be a matter of national interest and economic survival, Science, Technology and Innovation Minister Datuk Seri Dr Jamaluddin Jarjis said.

He said Malaysia wanted to know how Japan, where two major cities – Hiroshima and Nagasaki – were destroyed by atomic bombs during World War II, could convince its people to go along with the use of nuclear technology to generate power. "We have more than 60 nuclear scientists and we want Japan to share with us their experience," he added.

He said some European countries were already moving towards using nuclear technology with the latest being Britain. Closer to home, Vietnam also has plans to switch to nuclear technology to generate power, he noted.

(2006-08-30 12:55:05 SGT) [Energy] Permalink

Oil prices drop below $70

wrex.com :

Oil prices fell below $70 a barrel as Tropical Storm Ernesto veered away from the oil and gas region of the Gulf of Mexico, easing concern that output would be disrupted. Concerns about threats to supply were further eased when BP said it had restored output from its Prudhoe Bay field in Alaska to about 200,000 barrels a day, half the daily production capacity. Traders also remain watchful of Iran's stand-off with the West over its nuclear program.

bloomberg.com :

Crude oil dropped below $70 as Tropical Storm Ernesto veered away from the oil and gas fields in the Gulf of Mexico. Natural gas has plunged 15% in two days because of the change in the storm's course. Crude oil touched $69.30, the lowest since June 21. Natural gas fell to $6.09, down 44% from a year ago. Americans were less confident in August than at any time in the past nine months. The Conference Board's index of confidence dropped to 99.6 from 107.0 in July, the biggest decline since last September.

(2006-08-30 01:29:58 SGT) [Energy] Permalink

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