Saturday January 14, 2006

Soros sees chance of recession in 2007

Billionaire investor George Soros said the U.S. Federal Reserve might overshoot in its bid to tighten monetary policy, deflating housing prices and tipping the economy into recession in 2007. A collapse in U.S. housing prices could be associated with a dollar decline, Soros told an audience at the Singapore Institute of International affairs.

Soros said he believed the U.S. housing bubble, a major factor behind strong U.S. consumption, had reached its peak and was in the process of being deflated. "If housing continues to cool while rates are slowing then it could turn into a hard landing," Soros said. "That's why I expect a recession to happen in 2007, not 2006."

The 75-year-old investor turned philanthropist, said the world economy faced two other significant risks - the U.S.-led war on terror and global warming. Soros said global warming threatened humankind and should be tackled by penalizing carbon emissions, instead of the current system of rewarding companies that reduce pollution. "Our civilization is at stake," he said.

See also :

1. "Affordable Housing"
2. Housing dream fades at petrol pump
3. The housing bubble has burst

(2006-01-14 17:15:06 SGT) [Biz] Permalink

Brazil's status as net oil exporter raises new issues

peakoil.com -> thebusinessonline.com :

In 2006, Brazil is set not only to achieve its decades-old dream of oil self-sufficiency, but should actually turn into a net exporter of crude. On 19 Dec 2005, Petrobras produced 1.86 million barrels of oil from its domestic fields, a figure already above Brazil's forecasted consumption of 1.85 million b/d in 2006. With 4 new offshore rigs coming on stream in 2006, average domestic output is set to jump to 1.91 million b/d. With another 10 platforms due to come onstream between 2007 and 2010, the firm aims to export at least 240,000 b/d of oil and oil products more than it imports.

Becoming an oil exporter should give Brazil's economy greater stability, economists say. In 2005, it rolled up a record trade surplus of $44.76 billion. Oil exports should increasingly support the trade accounts. Oil's weight in the economy is soon expected to reach 10% of gross domestic product. As an oil exporter, Brazil will also be shielded from possible inflationary shocks from rising oil prices.

But while self-sufficiency in oil is welcomed by nearly everyone in Brazil, becoming a net oil exporter stirs bitter criticism from an odd coalition of right-wing nationalists and leftist trade unions. Exporting oil is "an act of treason," reckons Heitor Manoel Pereira, president of the Association of Petrobras Engineers. "Brazil is no Saudi Arabia that can export as it wishes," Pereira said. According to specialists consulted by the association, oil prices will hit $100 a barrel in 2010, and continue to rise "astronomically" after that. Simultaneously, Brazil's oil reserves will decline rapidly, forcing the country to resume oil imports but at much higher prices.

See also :

1. Brazil takes a major step toward oil self-sufficiency

(2006-01-14 15:11:12 SGT) [Energy] Permalink

China signals reserves switch away from dollar

peakoil.com (thread) -> news.ft.com :

China indicated it could begin to diversify its rapidly growing foreign exchange reserves away from the US dollar and government bonds – a potential shift with significant implications for global financial and commodity markets. Economists estimate that more that 70% of the reserves are invested in US dollar assets, which has helped to sustain the recent large US deficits. If China were to stop acquiring such a large proportion of dollars with its reserves – currently accumulating at about $15bn a month – it could put heavy downward pressure on the greenback.

The announcement came from the State Administration of Foreign Exchange (Safe). It gave no more details about whether this meant a big shift in the investment strategy for Chinese reserves, which according to local press reports reached nearly $800bn at the end of last year and are expected by economists to near $1,000bn this year. Some economists have called on Beijing to use the funds to finance infrastructure investment and clean up state-owned companies, or to invest in higher-yielding assets rather than financing US borrowing.

According to Stephen Green, economist for Standard Chartered in Shanghai, although the language was "vague", the statement was the first time Safe has publicly indicated a shift away from dollar assets. "It is a subtle but clear signal that they are interested in moving away from the US dollar into other currencies, and are interested in setting up some kind of strategic commodity fund, maybe just for oil, but maybe for other commodities," he said.

(2006-01-14 12:50:33 SGT) [Biz] Permalink

China welcomes small cars back to its streets

peakoil.com -> planetark.org :

China will encourage the manufacture and use of small, low-emission cars, overturning current restrictions on them to help curb its growing appetite for oil (China imports more than 40% of its crude oil).

Parking fees for small cars should be lower, officials should lead the way in using them and limits on their use as taxis should be lifted, the National Development and Reform Commission, the country's top economic planning body, said. "The safety, power and appearance of energy saving and environmentally friendly low-emission cars have all improved greatly." China will also promote the development of cars that use fuels other than gasoline and diesel and draft tax policies to coax customers towards smaller and more efficient vehicles.

At present 84 Chinese cities restrict the purchase and use of small cars. Authorities in Guangzhou had stopped issuing license plates for cars with engines under 1.0 litre in 2001. The commission said small cars had been discouraged because of "noise and air pollution, poor safety and unattractive appearance". But as oil prices rise, the appetite for smaller cars has been growing - and car makers are keen to capitalise on the opportunities the new policy offers.

See also :

1. Small cars staging big comeback
2. Eco-Cities in China

(2006-01-14 12:29:17 SGT) [Energy] Permalink

France will run trains free from fossil fuel

peakoil.com -> timesonline.co.uk :

Jacques Chirac, the French President, has stolen a march on Tony Blair's proposed energy review by pledging that no train in his country would be powered by conventional fossil fuels by 2026. M Chirac used a new year's address to cement France's commitment to nuclear power as well as urging an accelerated development of solar energy and electronic and hybrid diesel cars. In addition, the French President wants to see a fivefold increase in biomass fuels production over the next two years.

M Chirac's continued support for nuclear power - France is the world's second-biggest producer of atomic energy behind the US - also comes at a critical time for Europe. Although the gas-supply stand-off between Russia and Ukraine appears resolved, it highlighted Europe's dependence on Russian gas. In Britain, a cold spell of weather intensified fears that the country, already an importer of gas, would face supply shortages. Support for increased nuclear power generation in Britain is gathering momentum and its backers will have been buoyed further by M Chirac's declarations.

France's present "second generation" reactors are expected to be replaced by a third generation from 2012. France has 58 nuclear reactors spread across 19 atomic power plants. No new large power plants have been built since 1993, despite increased electricity demand. State-owned Electricité de France, which generates a quarter of Europe's electricity, three quarters of it from nuclear power, welcomed Chirac's address. EdF has already launched plans to start a third-generation 1,600 megawatt European pressurised water reactor.

See also :

1. French PM : "We have entered the post oil era."
2. Russia, Ukraine reach breakthrough deal ending gas war
3. UK : Grid alert as families face cold weather power cuts
4. UK Oil Production Down 12.8%

(2006-01-14 12:01:02 SGT) [Energy] Permalink

Shell awards basic design job for proposed cracker in Singapore

business-times.asia1.com.sg :

Shell is drawing ever closer to a final decision on its planned US$1 billion world-scale petrochemical cracker here. It said that it had awarded the basic design engineering package for the sole downstream, or secondary plant linked to the ethylene cracker. The deal went to Mitsubishi Chemical Engineering Corporation (MEC) and Foster Wheeler Energy Limited (FWEL).

While the new cracker is slated to be sited next to its 500,000 barrel Bukom refinery, the proposed 750,000 tonne per annum (tpa) mono-ethylene glycol (MEG) downstream plant will be located on Jurong Island. MEG - for which there is growing Chinese demand - is an intermediate used to make products from polyester fibres to plastic water bottles and engine coolants. Both the new cracker and MEG plant are targeted to begin operations in 2009.

Shell said that the MEG plant will use both its proprietary ethylene oxide technology, as well as Mitsubishi's glycol technology. Shell's latest Bukom cracker will be its third here.

(2006-01-14 11:41:02 SGT) [Biz] Permalink

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