Oil Prices Plunge as IEA Releases Emergency Supplies

June 23, 2011 - The International Energy Agency announced today that 60 million barrels of crude oil stocks would be released immediately by the U.S. and 27 allies. The IEA move comes as an attempt to ease the effects of the recent loss of Libyan crude oil exports. One effect of the IEA move, it is hoped, will be a lowering of gasoline prices for consumers and businesses. (New York Financial Press video report below.) The Telegraph (UK) reports today (at 4:13 PM London time) that oil prices "crashed more than $7 a barrel to a four-month low on Thursday after the world's consumer nations said they would band together to aid the global economy by releasing emergency oil reserves for the third time ever." The IEA announcement coincides with a sharp drop in stocks on Wall Street, partly caused by the IEA's decision. The euro also dropped sharply as oil prices tumbled The fact that there was a higher than expected rise jump in unemployment benefits claims in the U.S. did nothing to increase optimism in the markets. The Telegraph report says that the effect on Wall Street traders was stunning. "The move shocked traders who had been expecting the IEA to give top exporter Saudi Arabia more time to make up for the supply shortfall following OPEC's failed meeting on June 8, when other members blocked Gulf efforts to hike output." On Wall Street, the Dow Jones fell 1.7 percent to 11,904. London's FTSE 100 lost 1.7 percent, France's CAC lost 2.4 percent. Germany's DAX lost 2 percent. The euro fell 1.4 percent against the dollar to $1.4152. In an earlier report this morning (7:39 AM EST), the L.A. Times ran a Bloomberg.com report that said today's move was not the first time that the IEA has influenced the release of crude reserves. Since its foundingin 1974, the IEA "has coordinated the use of emergency stockpiles twice.... The first occasion was during the 1991 Persian Gulf War, and the second when Hurricane Katrina damaged oil rigs and refineries in the Gulf of Mexico in 2005. The IEA is an energy policy adviser to 28 industrialized nations including the U.S., Japan and Germany." Only time will tell how deeply the IEA mandated release of crude oil reserves will affect fuel oil prices. One factor, of course, is the cause of their decision: The unrest in Libya, which has caused the Libyan production to falter. If that conflict continues for any great length of time, today's IEA release will be meaningless in the long run.

Why We Need More Oil Production

Russia is holding Ukraine hostage to energy blackmail. All of Europe is ultimately threatened by this, and the US has lessons to learn from this. Russia cut off all gas via Ukraine to Europe last week. The EU, which gets a fifth of all its gas supplies via that route, has found itself playing arbiter in a bitter power-play between two ex-Soviet states still acting out a separation. (Reuters) "Energy independence" is something every American can agree on, but just how we achieve it provides a point of disagreement. One camp wants to expand our domestic oil drilling and/or build new nuclear power plants, while the other major camp prefers to abandon petroleum and focus on "alternative" energy sources such as wind, solar, and so on. What the latter camp just doesn't seem to understand is this: It will take decades to bring wind, solar and other alternative sources to a point where they can efficiently replace so-called fossil fuels. With our own off-shore oil available sooner, complimented by shale oil from our friend Canada, we have the opportunity to increase our own petroleum availability and thereby reduce our dependence on unstable, unfriendly nations such as Saudi Arabia and the rest of OPEC. There is nothing short of war that would prevent OPEC from blackmailing the US, in the way Russia is now blackmailing Ukraine, if they wanted to. While we probably cannot become completely independent of other nations for oil in the near future, we can at least reduce the damage that a blackmail action would cause. And, yes, conservation and wiser use of resources is something we should include in the whole equation. To try to replace fossil fuels with alternatives too quickly would be counterproductive. Think of it this way: When the very first trains were being built, the materials for the trains and the factories that made them were transported by horses and wagons. Suppose that there had been an anti-horse movement back then. Suppose that those in that movement said, "Look, we must abandon horses as a source of power because they crap everywhere, causing a stink and increasing the possibility of disease being spread. Furthermore, the horses eat grains that could be used for human consumption." Had such a movement been successful, how would the heavy materials been transported to build the trains? How would be have successfully replaced horse-drawn wagons with the next phase of transportation? We face a similar question today: How can we build solar panels, wind turbines, electric cars and other alternative energy devices if we stop using petroleum as a power source? Not only that, but a lot of the components of those devices are made of plastic and other petroleum products. Petroleum powers the vehicles that haul the parts to make the factories that make those devices. The factories are powered by petroleum. The devices are then transported to market by petroleum powered vehicles. To completely abandon petroleum too soon would be, if you'll pardon my expression, putting the cart before the horse. Ironically, we must increase our domestic drilling for petroleum and production of petroleum products in the short term in order to successfully take us to the next phase. History repeats itself metaphorically. Fossil fuels, whether coal, natural gas or petroleum, are what will make it possible for us to one day abandon those resources as primary sources of energy. Let us make maximum use of it now, while we still have it, to evolve to a higher state of energy production and usage. Subscribe to Chicago News Bench

Obama Ditches Oil Tax, Breaks Campaign Promise

Not even sworn into office yet, Obama is already breaking a campaign pledge to raise taxes on oil companies. Now, people are asking whether Obama is in the pocket of Big Oil. (Is that the "change" you voted for?) During the campaign, Mr Obama repeatedly promised to submit oil and gas companies to a profits windfall tax, citing the disparity between their huge profits and the struggles of ordinary Americans. More at Telegraph.co.uk...

Who Owns the North Pole?

Russia says it does. It's all about minerals, petroleum and gas, and there is a mad scramble by nations to get access to it. A June, 2007 article in the Daily Mail (UK) noted that "Russian President Vladimir Putin is making an astonishing bid to grab a vast chunk of the Arctic - so he can tap its vast potential oil, gas and mineral wealth." Russian scientists base their claim on an underwater ridge near the North Pole, which they say is actually part of the Russian continental shelf. [Source: Daily Mail] In a July 28 article, the Barents Observer, which specializes in watching such things: According to a press release from the U.S. Geological Survey (USGS), the Arctic accounts for about 13 percent of the undiscovered oil, 30 percent of the undiscovered natural gas, and 20 percent of the undiscovered natural gas liquids in the world. About 84 percent of the estimated resources are expected to occur offshore. FULL ARTICLE at Barents Observer... Today, the Financial Times reports that "The issue of who owns the North Pole was a backburner issue while the region was encased in ice. But warmer temperatures suggest the region, which may hold up to one-quarter of the world's remaining oil and gas reserves, could soon be put into play as thinning ice makes it accessible." FULL ARTICLE at Financial Times... Will the dispute be settled fairly? Doubtful, says the Barents Observer today: There is, however, little chance of everyone playing fair when so much it as stake, journalist Nick Meo writes. According to him, United Nations Convention on the Laws of the Sea, which governs maritime territorial claims, is likely to sow as many disputes as it solves. The legal position of the area is confusing, to say the least, and could set the scene for some potentially spectacular disputes in the future, he believes. FULL ARTICLE at Barents Observer... The Telegraph UK fretted on August 16 that Russia may be stepping into a "confrontation with the other polar powers, who are only now waking up to what is at stake" in terms of incredible resources in the Arctic: The ambitions of today's Russians are equally bold – while the planting of the titanium flag was a largely symbolic gesture, it signalled Russia's intention to claim a vast of territory underneath the icecap that amouts to half the Arctic Ocean's seabed. If they have their way they will tame one of the last true frontiers, making Moscow the master of much of the Earth's remaining energy supplies. The risk, however, is of lurching into confrontation with the other polar powers, who are only now waking up to what is at stake. The great prize is the 25 per cent of the Earth's remaining oil and gas which the Arctic is thought to contain. FULL ARTICLE at Telegraph UK... RELATED: Bad New Bear Is Norway putting relations with Russia in jeopardy? Norway challenged by Russian plans in Spitsbergen waters New oil and gas survey makes the Arctic hot

Time to Squeak

Headline of the day: "Go GOP Go!!! Drill, Drill" at Backyard Conservative. BC's Anne Leary links up to stories about the struggle to get dictator Nancy Pelosi to allow a Congressional vote on the question of drilling for oil domestically. Great links and quotes to be found there. “The squeaky wheel gets the grease,” Rep. Mark Kirk (R-Ill.) told the crowd. “It is time for you all to squeak.”

Calling Nancy Pelosi

Hi, may speak with Mizz Pelosi? Nancy Pelosi gave out the telephone number to the White House, and said call President Bush to get the gas prices down. Yes, yes, and we second the suggestion that folks call Nancy Pelosi! Get her phone numbers HERE. Remember to be polite.

Bush to Lift Ban on Offshore Oil Drilling

The president plans to officially lift the ban and then explain his actions in a Rose Garden statement, White House press secretary Dana Perino said. Wait, hold on. That's not the whole story: But the move, by itself, will do nothing unless Congress acts as well. [Source] The accomplish-nothing Pelosi Congress has a chance to actually do something about fuel prices. When Nancy Pelosi took became Speaker of the House a couple of years ago, she told the nation that she and her fellow Democrats had a plan to bring down the price of gasoline. Since then, the price at the pump has about doubled. The U.S. has more oil in the ground (including shale oil) than Saudi Arabia does. It makes no sense to import the stuff at $130 per barrel when we are literally sitting on so much of it right here. RELATED: Bush to Lift Ban on Oil, Gas Drilling off US Coasts (Update1) Bloomberg Bush to lift ban on some offshore oil exploration USA Today Bush Administration Rejects Regulating Greenhouse Gases Red Orbit

Dick Durbin's Inferno

Which circle of Hell will U.S. Senator Dick Durbin (D-IL) spend eternity on? I don't know, but Anne Leary has some thoughts about this at Backyard Conservative: It's Dick Durbin's deathbed conversion. How long have you been in the Senate Dick? And only now you want to drill for oil in the US? Now that we're croaking on high gas prices, having to import 70% of our oil because you Democrats have been blocking drilling in major fields for 30 years!!! She continues: There should be a special circle in hell for you Dick Durbin. THE FULL SCATHING THING... Also see: DURBIN'S HELL ON EARTH

Putin's Vice Grip Wrench

"North Stream" is what the Russians call their oil pipeline. Now, writes Spiegel Online, Putin wants a new gas pipeline project to cut through Bulgaria. This will give competition to the troubled European pipeline Nabucco, "but also entrenches Europe's dependence on Russian gas." Hoo boy. Russia's plan is to make Europe dependent on its natural gas. If that happens, Moscow could one day wield more influence in the West than ever. Putin has again thrown a wrench in the system. In Sofia on Friday and Saturday, he secured Bulgarian agreement for a new pipeline to cross the country on its way further into Europe. The project is called South Stream, and it's in direct competition with the EU joint project known as Nabucco. The pipeline named after a Giuseppe Verdi's opera connects Europe directly to the sources of gas in the Caspian Sea and in Central Asia -- and the idea was to circumvent Russia altogether. FULL STORY...

Changing the Oil

Congress giveth and Congress taketh away. The nation's largest oil and gas companies are about to lose some big tax breaks. This could be good. It could be bad. It's probably a little of both. Donny Shaw's article at OpenCongress today sums it up: Now it appears that House Speaker Nancy Pelosi (D-CA) is planing on reattaching the House's recision of $14 billion in tax breaks and subsidies for oil companies and the mandate for utilities to produce 15 percent of their energy through renewable fuels. House and Senate Democrats on Wednesday unveiled a $ 21 billion energy tax package that in large part repeals tax breaks for the biggest oil and gas companies to fund long-term extension of renewable-energy tax credits and encourages biofuels and energy efficiency. FULL ARTICLE...

Taking On Big Oil

No explanation needed, really. An excerpt, then the link. "Courageous House Democrats took on the sinister entity known as “Big Oil” yesterday, and vowed to bring down any other industries with the word “Big” in their name as well. Big Pharmaceuticals, Big Tobacco, Big Cheese – any corporation that makes profits at the expense of the people and fails to dump those profits into the People’s Party will now be held accountable." Here's the link.

Oil Prices Fall Even Further. But...

Get cheap gas while you can. Let's hope this is the beginning of a trend. Crude oil futures prices settled just above $50 per barrel on Jan. 18, their lowest settlement price since May 2005. Crude prices dropped sharply over the last couple of weeks in response to above normal product inventory levels and lower demand. Gasoline and natural gas prices followed suit while propane prices were fairly constant, according to the Missouri Department of Natural Resources Energy Center's semimonthly Energy Bulletin. FULL STORY... Hat tip to theoilpipeline.blogspot Related: U.S. FOES LOBBY OPEC TO TIGHTEN OIL SUPPLY (NY Post)