Production and Prices
Oil prices closed at a six-month high of $58.63 on Friday, capping a week of steady gains. The price surge continues to be tied to investor hopes that economic growth will resume in the second half of the year. Information suggesting that the rate of economic decline is slowing has added to the “accumulating evidence” that the recession is ending while information to the contrary is ignored. A
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Venezuela
Tensions between the Chavez government and the oil service industry have been on the rise for many months over PdVSA’s failure to pay service companies. The total now owed to the companies is said to be over $14 billion. Last week matters came to a head when several firms threatened or actually ceased operations. These companies perform much of the work in the Venezuelan oil industry, from drilling
EU Gas Deal
In recent years, the EU has become increasingly concerned about its precarious energy situation. Disputes between Russia and Ukraine have resulted in reduction of the flow of gas from Russia to the West; North Sea gas fields are going into decline; and there are concerns that Russia’s Gazprom is not making sufficient investments to insure that there will be adequate gas for Europe. Although increased
The Message Sinks In
Last week, the Raymond James & Associates firm of financial advisors published a report discussing the possibility that world oil production has already peaked. The event was noted by no less an authority than the Wall Street Journal environmental blog who facetiously counseled that we should all brush off our survivalist manuals and prepare for dystopia (opposite of utopia). The Raymond James
Briefs May 11, 2009
Chevron Corp. said its $4.7 billion Tahiti field in the Gulf of Mexico began pumping crude yesterday, almost two years after faulty parts delayed the project. The field, located 190 miles from New Orleans in 4,100 feet of water, is expected to produce 125,000 barrels of oil a day when output peaks. (5/7, #17) The US Minerals Management Service has cut its forecast
Peak Oil, Not Speculation
In seeking to explain the run up in oil prices from 2004 to 2008, commentators often turn to ‘speculation’ as the primary cause. While speculation - or at least a kind of piling-on - may have explained the very late stages of the oil price rally, the willingness to attribute oil prices primarily to financial investors - as the CBS news show ‘60 Minutes’ did a few months back - risks
Quote of the Week
“Shale plays represent a disturbing tendency in the E&P business away from critical thinking. The belief in reward without risk is irrational. Failure to acknowledge the marginal economics of the play is bewildering. Unless opinion leaders confront the underlying economic and geological risks of these plays, I fear that a financial crisis may develop that will discredit the E&P industry.” –
