Fri, Jun 13 2008
MONKEYING WITH OILD RESERVES FIGURES
"big oil producers were glad to go along with under-reporting of proven reserves to help maintain oil's high price". I'll buy that. Makes it easier to spook folks into voting for ANWAR drilling and oilrigs off the Everglades.
Oil shortage a myth, says industry insider
The Independent, UK - There is more than twice as much oil in the ground as major producers say, according to a former industry adviser who claims there is widespread misunderstanding of the way proven reserves are calculated.
Although it is widely assumed that the world has reached a point where oil production has peaked and proven reserves have sunk to roughly half of original amounts, this idea is based on flawed thinking, said Richard Pike, a former oil industry man who is now chief executive of the Royal Society of Chemistry.
Current estimates suggest there are 1,200 billion barrels of proven global reserves, but the industry's internal figures suggest this amounts to less than half of what actually exists.
The misconception has helped boost oil prices to an all-time high, sending jitters through the market and prompting calls for oil-producing nations to increase supply to push down costs.
Flying into Japan for a summit two days after prices reached a record $139 a barrel, energy ministers from the G8 countries yesterday discussed an action plan to ease the crisis.
Dr Richard Pike explains his claims
Explaining why the published estimates of proven global reserves are less than half the true amount, Dr Pike said there was anecdotal evidence that big oil producers were glad to go along with under-reporting of proven reserves to help maintain oil's high price. "Part of the oil industry is perfectly familiar with the way oil reserves are underestimated, but the decision makers in both the companies and the countries are not exposed to the reasons why proven oil reserves are bigger than they are said to be," he said.
Dr Pike's assessment does not include unexplored oilfields, those yet to be discovered or those deemed too uneconomic to exploit.
The environmental implications of his analysis, based on more than 30 years inside the industry, will alarm environmentalists who have exploited the concept of peak oil to press the urgency of the need to find greener alternatives.
"The bad news is that by underestimating proven oil reserves we have been lulled into a false sense of security in terms of environmental issues, because it suggests we will have to find alternatives to fossil fuels in a few decades," said Dr Pike. "We should not be surprised if oil dominates well into the twenty-second century. It highlights a major error in energy and environmental planning – we are dramatically underestimating the challenge facing us," he said.
Proven oil reserves are likely to be far larger than reported because of the way the capacity of oilfields is estimated and how those estimates are added to form the proven reserves of a company or a country. Companies add the estimated capacity of oil fields in a simple arithmetic manner to get proven oil reserves. This gives a deliberately conservative total deemed suitable for shareholders who do not want proven reserves hyped, Dr Pike said.
However, mathematically it is more accurate to add the proven oil capacity of individual fields in a probabilistic manner based on the bell-shaped statistical curve used to estimate the proven, probable and possible reserves of each field. This way, the final capacity is typically more than twice that of simple, arithmetic addition, Dr Pike said. "The same also goes for natural gas because these fields are being estimated in much the same way. The world is understating the environmental challenge and appears unprepared for the difficult compromises that will have to be made."
Jeremy Leggett, author of Half Gone, a book on peak oil, is not convinced that Dr Pike is right. "The flow rates from the existing projects are the key. Capacity coming on stream falls fast beyond 2011," Dr Leggett said. "On top of that, if the big old fields begin collapsing, the descent in supply will hit the world very hard."Fri, Jun 13 2008
THE KIDS ARE ALRIGHT - NOT
"Core inflation, however, which excludes energy and food, edged up a more moderate 0.2 percent in May. That increase was right in line with expectations and should help relieve worries that the big increases in food and energy could be breaking through to more widespread inflation."
So, everything is fine, if you don't factor in the fact that everyone needs to eat, the trucks that take everything everywhere need gas to move. Don't count that and everything is peachy! Yeah, that certainly relieves MY worries as I sit in the parking lot deciding whether to spend my whole paycheck on groceries for my kid or gas so I can get to work! As long as I'm subsidizing Big Oil or Big Agra or Big Pharma, things are cool, right?
Inflation rate jumps by biggest amount in 6 months
WASHINGTON, Associated Press - The inflation rate shot up in May at the fastest pace in six months, pushed higher by soaring costs for gasoline and other types of energy.
The Labor Department reported Friday that consumer prices rose by 0.6 percent last month, the biggest one-month increase since last November, as gasoline costs surged by 5.7 percent. Food prices, which have also been rising sharply, were up 0.3 percent as the cost of beef and bakery products showed big gains.
Core inflation, however, which excludes energy and food, edged up a more moderate 0.2 percent in May. That increase was right in line with expectations and should help relieve worries that the big increases in food and energy could be breaking through to more widespread inflation.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said that the moderate gain in core prices showed price pressures are remaining contained despite fears at the Federal Reserve.
The Fed, which from September through April was aggressively cutting interest rates to fight a mounting economic slowdown, is now indicating that its biggest concern has changed from the threat of a recession to worries about inflation.
In a speech Monday, Fed Chairman Ben Bernanke said that the Fed will "strongly resist an erosion of longer-term inflation expectations." Those comments have raised expectations that the Fed's next move later this year will be to start raising interest rates.
[Note: "strongly resist an erosion of longer-term inflation expectations." WTF does that mean? Ben will stick his fingers in his ears when anyone talks about inflation going up? Hey Ben! Prices going up! Dollar going down! Whatcha gonna do? Ben: "lalalalala, can't hear you!". Fucking retard.]
The 0.6 percent rise in overall prices was slightly higher than the 0.5 percent gain that economists had been expecting while the 0.2 percent rise in core prices matched expectations.
So far this year, consumer prices are rising at an annual rate of 4 percent, compared with a 4.1 percent increase for all of 2007.
Energy prices are rising at a 16.5 percent annual rate, compared with a gain of 17.4 percent for all of 2007, while food prices are rising at a 6.3 percent annual rate, up from a 4.9 percent increase for all of last year.
Analysts said the pressure in both the energy and food areas is likely to continue as global food shortages and rising demand push food prices up and energy costs continue to soar, reflecting a relentless surge in crude oil prices.
The energy increases have pushed the nationwide average for gasoline up to a record of $4.06 and private economists believe that price will keep climbing through the summer driving season.
The combination of rising inflation and weak wage gains contributed to another drop in weekly earnings. After adjusting for inflation, weekly earnings for nonsupervisory workers were down 1.2 percent in May, compared to a year ago, the Labor Department said in a separate report.
Energy prices were up 4.4 percent in May after being unchanged in April. The increase was led by a 5.7 percent jump in gasoline, the biggest one-month increase since last November, and gains of 0.9 percent for electricity, 10.4 percent for home heating oil and 5.6 percent for natural gas.
The 0.3 percent rise in food costs reflected a 1.5 percent jump in beef costs, the biggest rise in 13 months, and another steep increase in cereal and bakery products, which were up 1.6 percent.
Outside of food and energy, clothing costs fell by 0.3 percent and the cost of prescription drugs dropped by 0.7 percent, but airline tickets jumped 3.2 percent, the biggest gain in more than six years, reflecting the surge in fuel costs.All news articles and images provided under the Fair Use Notice.