The Oil Glut of 2009…and Why it Won't Last

• A rude bet on crude prices - $100 before $20,

• Western oil majors feel the political pinch,

• A non-cow dung alternative fuel and plenty more...

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Eric Fry, offering a wild guess about the oil market…

As the price of crude oil continues its death spiral, forward-looking investors have every reason to scratch their heads in amazement. The oil market seems to be pricing in a global economic condition that would be even more dire than a second Great Depression. $35 oil seems to imply that mankind will resume its reliance on ancient energy sources like whale oil, tallow and cow dung.

Maybe so…but we doubt it.

Late last year, the International Energy Agency (IEA) released its World Energy Outlook 2008, which presents a thorough field-by-field analysis of production trends at the world's 800 largest oil fields. This comprehensive study suggests that the oil price is much more likely to rise than fall over the next few years.

The IEA stops short of promoting that "Peak Oil" theory that the planet is running out of hydrocarbons. But the Agency does point out that output from the world's major oil fields is declining much faster than previously believed. More >>>

The Peak Oil Crisis: The Economic Rebound

Thursday, 12 February 2009 10:59 - A few years ago, peak oil was relatively easy to understand. At some point in the future, and estimates varied as to exactly when, oil production was going to start declining due to a combination of geologic and geopolitical factors, prices were going to rise precipitously and a massive civilization-wrenching paradigm shift would start as the world transitioned from oil to other forms of energy.

Those who understood that oil was going to start running out one day spread themselves along a spectrum of just when this unhappy event would happen. Pessimists saw the decline of oil production beginning in 3 to 5 years, optimists said 10, 20 or 30 years, and most of the world's peoples did not have the faintest clue that the oil was ever going to run out. Things were so simple 18 months ago.

In 2007, however, it was revealed that a collection of realtors, appraisers, mortgage brokers, bankers, builders, financiers, insurers, securities raters and assorted others had been making lots of money by selling houses to people who could not afford them and then dumping the tainted mortgages on the world's banking system. When all the dust from these revelations settled, it looked as if many of the world's banks had suffered grievous if not fatal damage and what could turn out to be the greatest economic downturn of modern times had been set loose. So where does oil fit into all this? More >>>

Scientists at UNESCO Forum Call for Action to Halt Rising Acidity in World’s Oceans

2 February 2009: Over 150 leading marine scientists from 26 countries are calling for immediate action by government leaders worldwide to sharply reduce carbon dioxide emissions so as to avoid widespread and severe damage to marine ecosystems from ocean acidification.
The call was made with the release of the Monaco Declaration on Ocean Acidification, which was developed by participants attending a UN Educational, Scientific, and Cultural Organization (UNESCO) symposium on “The Ocean in a High-CO2 World,” from 6-9 October 2008, in Monaco.

The Declaration notes that levels of acidity are accelerating and that its negative socio-economic impacts can only be limited by cutting back on the amounts of greenhouse gases released to the atmosphere. James Orr, UN Marine Environment Laboratory, a Monaco-based subsidiary of the International Atomic Energy Agency (IAEA), stated that “the chemistry is so fundamental and changes so rapid and severe that impacts on organisms appear unavoidable.” [UNESCO Press Release] [IAEA Marine Environment Laboratory] [Monaco Declaration on Ocean Acidification] [IAEA Press Release]

Low–cost LEDs May Slash Household Electric Bills Within Five Years

ScienceDaily (Jan. 30, 2009) — A new way of making LEDs could see household lighting bills reduced by up to 75% within five years. Gallium Nitride (GaN), a man-made semiconductor used to make LEDs (light emitting diodes), emits brilliant light but uses very little electricity. Until now high production costs have made GaN lighting too expensive for wide spread use in homes and offices.

However the Cambridge University based Centre for Gallium Nitride has developed a new way of making GaN which could produce LEDs for a tenth of current prices.

GaN, grown in labs on expensive sapphire wafers since the 1990s, can now be grown on silicon wafers. This lower cost method could mean cheap mass produced LEDs become widely available for lighting homes and offices in the next five years. More >>>

Obama Plans to Overhaul Environmental Policies

January 26, 2009; President Obama today declared a national goal of ending dependence on foreign oil and promised new U.S. leadership in the fight against global warming as he announced a series of steps aimed at making American cars more fuel efficient and reducing greenhouse gas emissions.

In remarks at the White House at the start of his second week in office, Obama called on Congress to pass a massive stimulus package that he said would help "create a new American energy economy." And he directed federal agencies to reexamine two policies that could force automakers to produce more fuel-efficient cars with reduced tailpipe emissions.

The moves are aimed at reversing decisions by Bush administration, which he said had stood in the way of bold action by California and other states to limit greenhouse gas emissions from automobiles.

"The days of Washington dragging its heels are over," Obama said. More >>>

CIBC ramps up alternative energy coverage

January 21, 2009: The CIBC World Markets research department was paying attention to President Barack Obama's focus on solar and win power.

As the new U.S. president devoted a chunk of his inauguration speech to weaning America off fossil fuels, the investment bank announced it was shifting top-ranked forest products analyst, Don Roberts, away from day-to-day involvement in the tree stocks, and asking him to figure out how the firm should cover the alternative energy space.

A change in mind set is required when a large cap-focused investment bank ventures into small-cap alternative energy stocks, and Mr. Roberts gets the honour of writing the business plan that will underpin this shift. The project kicks off next week, and is expected to take until November. More >>>

The Peak Oil Crisis: Cars - Redux

08 January 2009: I hate to keep coming back to cars, but in the last hundred years they have come to be one of the most significant facets of civilization - yet their future is in doubt.

Cars have been much in the news lately. New ones have not been selling too well in recent months and their manufacturers, at least in the U.S., are bankrupt.

Unless you are employed in the automobile industry or indirectly make a living from the manufacture or sale of motor vehicles, the demise of Detroit-as-we-know-it will probably not make too much difference to our mobility.

Shortly, the problem, of course, will not be the cars, but the gasoline and diesel to power them. At the minute, gasoline prices are hovering around an all-time inflation adjusted low; however, this situation is reversing again. OPEC is in the midst of cutting its production by 4.2 million barrels a day (b/d) and U.S. gasoline consumption seems to be inching up again despite increasingly severe economic problems. Within a year or two we could be back over $100 a barrel again. More >>>