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Page 12 of 20
ENERGY
- After dropping to $88.71 per barrel on November 30, 2007, oil prices rose to $89.65 on December 3, 2007, after rising briefly above $99 less than two weeks earlier.
- Investors worry that the conflicts in the Middle East could disrupt oil supplies from the region. (Oil prices settle just below $96 a barrel, MSNBC and Associated Press, November 2, 2007)
- The rising cost of oil is impacted issues other than dwindling supplies, increased demand and a falling US dollar. There are also outages at global facilities involved in producing and refining the crude, violence and terrorism, particularly in strategic parts of the world like Iran, Iraq and Afghanistan, for example, an attack on an oil pipeline in Yemen disrupted the shipment of 155,000 barrels of oil a day, the fighting between Turkey and the Kurds in oil-rich northern Iraq, or the problems in Nigeria or Venezuela. (Oil Price Rise Causes Global Shift in Wealth, The Washington Post, November 10, 2007)
- Today’s oil price rise is due largely to rising demand in the developing world, a trend that is predicted to intensify with global energy demand projected to grow 53% above 2004 levels by 2030, according to the International Energy Agency (IEA). (Handicapping The Environmental Gold Rush, The Wall Street Journal, October 29, 2007)
- The International Energy Agency (IEA) data show a pronounced loss of momentum in the growth of oil production the last few years while demand is increasing, thus raising oil prices from $50 to nearly $100 a barrel in the past 2 years. Every year since 1984, world oil production has exceeded new oil discoveries. In 2006, the 31 billion barrels extracted far exceeded the discovery of 9 billion barrels. (“Is World Oil Production Peaking, Earth Policy Institute, November 15, 2007)
- The world’s 20 larges oil fields were all discovered between 1917 and 1979 and annual output from these wells is falling. (“Is World Oil Production Peaking, Earth Policy Institute, November 15, 2007)
- Many respected geological groups that have analyzed oil production data have come to the conclusion that production has peaked or is peaking in 2007 and, if so, no country can get more oil unless another gets less. Oil-intensive industries will be hit hard. Air travel, food and the auto business will be among the most vulnerable. And because in the US, 88% of the U.S. workforce travels to work by car, the US will be even more vulnerable than countries that have invested in public transportation systems. (“Is World Oil Production Peaking, Earth Policy Institute, November 15, 2007)
- With winter approaching and the demand of heating oil, in addition to all of these other factors and the falling value of the dollar, analysts believe the price may go above $100 per barrel.
- Meanwhile, the Bush administration is working to steer tens of billions in taxpayer dollars to support the nuclear power industry’s renaissance in America, opening the door for the construction of new power plants with billion dollar subsidies, tax incentives and loan guarantees that go directly to the bottom line of the primary companies in the field, instead of investing in energy conservation, energy efficiency and renewable energy technologies. This is in spite of the nuclear power industry’s inability to find a safe, affordable way to store wastes and the inability of the coal industry to affordably and effectively solve its pollution problems, these methods of energy production. (“Cheney Pursuing Nuclear Ambitions on His Own”, Truthout.org report, November 5, 2007)
- Oil production output peaked in 2005 and will fall seven percent a years, falling by half as soon as 2030, creating a huge problem for the world economy, potentially leading to more wars and social breakdowns, unless new alternatives are developed in time, according to a German-based Energy Watch Group (EWG) report. ." (“Steep Decline in Oil Productions Brings Risk of War and Unrest, Says New Study”, The Guardian UK, October 22, 2007)
- The Lieberman-Warner bill designed to deal with global warming by creating a national cap-and-trade scheme, allows credits to polluters, for the amount of emissions they could emit and could trade among themselves, only achieves a reduction of emissions to 63% of 2005 levels by 2050 which is far less that the required 80% of 1990 levels that is required to avoid the worst effects of global warming. Furthermore, the complex process presents irresistible opportunities for cheating, manipulation, and profiteering by clever polluters and traders, that would deeply compromise its effectiveness. For example, a quarter of the credits would be auctioned and the rest given away, passing out free carbon allowances that are potentially worth billions of dollars to polluters. Those who have polluted the most in the past end up being rewarded while green projects get little or nothing. ( CAP-AND-TRADE BILL IS SCOND-RATE, Los Angeles Times Editorial, October 25, 2007).
- High oil prices are fueling one of the biggest transfers of wealth in history. Oil consumers are paying $4 billion to $5 billion more for crude oil every day than they did just five years ago, pumping more than $2 trillion into the coffers of oil companies and oil-producing nations this year alone. (Oil Price Rise Causes Global Shift in Wealth, The Washington Post, November 10, 2007)
- In the US, the rising bill lowers already anemic consumer savings rates, adds to inflation, worsens the trade deficit, undermines the dollar and makes it more difficult for the Federal Reserve to balance it competing goals of fighting inflation and sustaining growth. (Oil Price Rise Causes Global Shift in Wealth, The Washington Post, November 10, 2007)
- Nations like Venezuela and Iran can defy the US because they have other growing markets like China and India to serve. Russia, the world’s number 2 oil exporter, has built up a $150 billion rainy-day account and has achieved financial independence that has allowed it to become more assertive in the international arena and is also trying to reclaim former Soviet republics as part of its sphere of influence. (Oil Price Rise Causes Global Shift in Wealth, The Washington Post, November 10, 2007)
- Flush with petrodollars, oil-producing countries have embarked on a global shopping spree. The Abu Dhabi Investment Authority is about to become one of the largest shareholders in Citigroup with an outlay of $7.5 billion. This in addition to Saudi Arabia’s Prince Walid bin Talal 5%+ ownership of Citigroup, who cleared the way for the ouster of Citigroup’s CEO, points to the dependence of Citigroup on these factions. Meanwhile, the Dubai stock exchange is negotiating for 20% of a newly merged company that includes Nasdaq and the operator of stock markets in the Nordic region. In late October, Dubai, also bought pat of Och-Ziff Capital Management, a hedge fund in New York. Abu Dhabi invested in Advanced Micro Devices, the chip maker, this month and in September bought into the Carlyle Group, a public equity giant. Experts estimate that oil-rich nations have a $4 trillion cache in petrodollar investments around the world and with oil prices remaining high, this number is bound to increase rapidly. (Oil Producers See the World and Buy It Up, New York Times, November 28, 2007)
- OPEC met on December 5, 2007 in Abu Dhabi and seemed to agree to keep oil prices at high levels, although not taking responsibility for their rise in the high 90s and the general feeling is that they will not fall below $70 or $80 and that higher prices may be tested in the future, leading analysts to believe that this is part of their overall strategy to keep prices and profits rising in order to develop their economies. A second major decision was to not raise output. OPEC’s 13 members, recently augmented by the addition of Ecuador and Angola, account for 40% of world oil exports. (OPEC Finds Price Range to Live With, New York Times, December 6, 2007)
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