Article: On Tuesday 26th June 2007, the All Party Parliamentary Group on Peak Oil and Gas (APPGOPO) held its inaugural Annual General Meeting, ensuring that the issue of declining global oil supplies will feature much more prominently in Parliament during the Gordon Brown era.

All Party Parliamentary Groups are composed of politicians from all political parties and have members from the House of Commons and the House of Lords. APPGOPO will enable interested MPs and Lords to discuss Peak Oil and all its surrounding issues. Often it is charged that politicians are not willing to talk about such a difficult subject, but the APPGOPO has the support of over twenty MPs and Lords. This actually makes it the largest political grouping looking at Peak Oil in the world.

The AGM, held at 6.30pm in Committee Room 19 in the House of Commons, made the election of officers the first piece of business. Liberal Democrat MP John Hemming, who has been vocal on this issue since becoming an MP, was elected as Chair, while Colin Challen MP, highly respected for his work on pushing the issue of Climate Change with the APPGCC, and Lord Robin Teverson took the positions of Vice Chair. Labour MP Austin Mitchell, with 30 years of Parliamentary experience, took the position of Secretary, while Mark Williams, Liberal Democrat MP for Ceredigion, was elected Treasurer. David Drew, Labour MP for Stroud, was also present. Many more Parliamentarians who offered their support for the group could not attend.

The AGM also established the initial parameters for its mission. It will use available Parliamentary processes to raise the issue, and there is likely to be regular meetings, open to the public, discussing the issue. The first APPGOPO event may take place before the end of July. The group wants to look at the technological and geological issues, the geopolitical issues, the government viewpoints and those of the industry, the impact of alternative fuels such as biofuels, how peak oil and climate change relate, and mitigation and solution options. Although the group will not produce its own prediction for the date of Peak Oil, it will analyse the various predictions that exist.

The All Party Parliamentary Group on Peak Oil and Gas is the result of several months work of collaboration between PowerSwitch, The Oil Depletion Analysis Centre (ODAC), and John Hemming MP. Although it has no formal powers, and receives no funding, this group is a vital step in raising the necessary awareness of the issue, from which a rational response to the challenges can come. Educating key decision makers and challenging established views on the issue is a task this group must, and can, achieve. The formation group also provides further evidence that Peak Oil is far removed from the days of being a fringe subject. Many of those concerned about the impending decline of global oil supplies may take hope that a significant group of their representatives are finally going to speak about the Peak openly in the corridors of power.

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2a/ Exxon boss calls end of non-OPEC growth by 2010 (David Strahan, Fri 22 Jun)

http://www.davidstrahan.com/blog/?p=29

Comment: David Strahan is author of the just-published ‘The Last Oil Shock’.

Article: Big beasts of the oil jungle don’t come much bigger than Rex Tillerson, in London last week to give a speech at Chatham House. Usually at such events the bigger the beast the duller the platitudes, but during questions afterwards the CEO of ExxonMobil made some significant remarks that underscored the tightness of oil supply outlook, and effectively predicted the end of non-OPEC oil production growth by 2010.

Asked about Iraq, Mr Tillerson said “We look forward to the day when we can partner with Iraq to develop that resource potential…As a business-person not a politician we hold out great hope in our prayers for Iraq to succeed as a nation”. This is no surprise since Iraq’s reserves are not only the world’s third largest, but also uniquely under-exploited. After years of war, sanctions and post-invasion butchery, Iraqi oil production still languishes below 2 million barrels per day, although its officially claimed reserves of 115 billion barrels could support output at perhaps three times that level. As the global peak of oil production approaches, no other country on the planet offers such potential, which is of course why it was invaded in the first place - although this has turned out to be a spectacular miscalculation. No wonder Iraq is in Mr Tillerson’s prayers, and those of his competitors.

On the subject of biofuels, the Exxon boss highlighted the absurdity of US plans to produce 35 billion gallons of corn-based ethanol, explaining that producing just 4.5bn gallons in 2006 had consumed 21% of the entire US corn crop. Do the math. To hit the 35bn gallon target using corn alone would take 140% of the US corn crop. So achieving the target depends on the development of cellulosic ethanol, which he characterised as being at the “laboratory experiment” stage with “significant hurdles to overcome”. Even once the problems had all been cracked, he said, on the basis of previous experience of new technologies it would take 12 to 16 years to scale up to commercial volumes.

Yet having neatly exposed some of the shortcomings of US biofuels, Mr Tillerson went on to make an odd remark: “Our industry is in no way threatened by the development of biofuels or alternatives. In fact we see the enormous challenges in front of us, and we’re concerned that we’re not going to be able to do it out of our traditional sources of energy. So we welcome them.” So having just argued that US biofuels are woefully inadequate as an alternative to crude oil, Mr Tillerson seemed to be saying America couldn’t do without them. What does that tell us?

ExxonMobil’s hostility to the idea of an early peak in global oil production is well known, so I knew better than to ask its CEO about that. But when I quizzed him about International Energy Agency (IEA) figures suggesting that non-OPEC oil production might already have peaked, I got the company line anyway: “We don’t do peak oil calculations, because the problem with the whole peak oil debate is that people have to assume they know how much is in the container in order to calculate the peak. And as we’ve learned over time, over the last 15 years, the estimates of what’s in the container, largely by governmental agencies, have gone up three times.” Unfortunately the company line is wrong on two counts.

Mr Tillerson is right to point out that global resource and reserve estimates have risen, but that does not mean that the higher estimates are correct. One of the most important of those he alluded to is the World Petroleum Assessment conducted by the United States Geological Survey (USGS) in 2000, which has already been shown to be wildly over-optimistic.

... But I digress. The IEA forecasts that total non-OPEC oil production will amount to 50 million barrels per day in the second quarter of this year, against 50.6 mb/d in the same period in 2005. It was this that prompted my question about whether non-OPEC oil production might already be in terminal decline. While Exxon ‘doesn’t do’ peak forecasts, Mr Tillerson had this to say: “I think the ability to continue to grow volumes of non-OPEC production substantially is very challenging. So the question is more how long can you sustain with some modest growth, because we do in our outlook see some continued growth in non-OPEC in the near term, the next two to three years. So then the question is how long can the non-OPEC supply maintain a plateau so to speak, and that in some sense is a function of access to non-OPEC countries”.

Mr Tillerson insists that if access to resources improved - particularly to federal lands in the US, or in a more stable Russia - the situation could be transformed. But this hope looks folorn. A quick glance at the interactive oil depletion atlas shows how few countries have significant oil production growth potential, how even fewer are in the non-OPEC camp, and how fewer still are likely to offer the kind of access Mr Tillerson desires in this era of rising resource nationalism. So for all the caveats, the boss of the largest privately traded oil company in the world has effectively said non-OPEC supply growth is over by 2010.

2b/ Energy crisis cannot be solved by renewables, oil chiefs say (The Times, Mon 25 Jun)

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1980407.ece

Comment: A summary of an article in today’s Times by the CEO of Shell, Jeroen van der Veer, and a speech given last week by the CEO of ExxonMobil, Rex Tillerson. For those familiar with Peak Oil, there are sections of both presentations that hint at problems ahead, despite the usual Peak-Oil-is-not-a-problem rhetoric. A European ODAC News subscriber writes:

“Read - if you like - below the same self-interested nonsense of oil company CEOs we have heard so many times. Last week several large Dutch solar energy companies publicly denounced misleading statements regarding their business by the same Shell executive. This article is in English and more relevant internationally.

Of course renewables and efficiency technologies cannot tomorrow replace oil, gas and coal, but with some ambition they can gradually and surely do so much more rapidly than Messrs van der Veer and Tillerson dare to admit to the still ignorant majorities of their shareholders.

And without such "precautionary ambition" it will happen too, but at a much higher social and environmental and therefore financial cost - as we all were recently reminded by Sir Nicholas Stern - which was underlined by Lord John Browne; BTW where is BP in this debate now ?

We all know for years that business-as-usual is a dead end street and oil companies should not have a free lunch (and more) forever.

Politicians better follow the recent advice given by Bill Clinton: for the changes needed to protect the climate and our energy supply we should no longer listen to the old powerful interest groups, but to the innovators who have the many solutions.”

Article: The world is blinding itself to the reality of its energy problems, ignoring the scale of growth in demand from developing countries and placing too much faith in renewable sources of power, according to two leaders of the global energy industry.

The chief executive of Royal Dutch Shell today calls for a “reality check”. Writing in The Times [item 2c], Jeroen van der Veer takes issue with the widespread public opinion that green energy can replace fossil fuels.

Shell’s chief gives warning that supplies of conventional oil and gas will struggle to keep pace with rising energy demand and he calls for greater investment in energy efficiency.

Instead of a great conversion to wind power and solar power, Mr van der Veer predicts, the world will be forced into greater use of coal and much higher CO2 emissions, “possibly to levels we deem unacceptable”.

Alternative energy sources, such as renewables, will not fill the gap, says Mr van der Veer, who forecasts that even with major technological breakthroughs, renewables could account for only 30 per cent of energy supply by the middle of the century.

“Contrary to public perceptions, renewable energy is not the silver bullet that will soon solve all our problems,” he writes.

The warning from Royal Dutch Shell coincides with a critique of public energy policy by Rex Tillerson, the chief executive of ExxonMobil.

Speaking at the Royal Institute for International Affairs in London, Mr Tillerson pointed to a widespread failure by policymakers to understand the extent to which the aspirations of people in developing countries are fuelling growth in demand for energy.

Mr Tillerson said that world energy demand would rise by 45 per cent by 2030, and fossil fuels – oil, natural gas and coal – were the only energy sources of sufficient size, adaptability and affordability to meet the world’s needs.

Mr van der Veer casts doubt today on the oil and gas industry’s ability to keep up with accelerating demand. “Just when energy demand is surging, many of the world’s conventional oilfields are going into decline,” he writes.

Although there is no shortage of oil and gas in the ground, Mr van der Veer says, the industry currently lacks the technology to recover even half of that resource.

Mr Tillerson, speaking at Chatham House, expressed doubts about the oil industry’s ability to raise its game significantly without access to the oil reserves of the Opec countries of the Middle East.

“The supply outlook for nonOpec countries will be modestly up or flat,” Mr Tillerson predicted. He was sceptical about the drive by governments to increase use of biofuels and said that a fifth of America’s corn crop was being used to produce four billion gallons of ethanol, compared with targets of 12 billion gallons by 2012…

2c/ High hopes and hard truths dictate future [CEO of Royal Dutch Shell] (The Times, Mon 25 Jun)

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1980585.ece

Comment: The author is chief executive of Royal Dutch Shell. How about this for putting spin on reserves, baring in mind that we have roughly 1 trillion, give or take a few hundred million, barrels of extractable crude left:

“Overall, the International Energy Agency believes that there could be roughly 20 trillion barrels oil equivalent of oil and natural gas in place. This includes both conventional and unconventional resources, such as oil shale and sands. In theory, this is enough to keep us going for about 400 years at the current rate of consumption. In practice, though, less than half can be recovered with existing technology.”

Article: When it comes to the future of energy, the world needs a reality check. Contrary to public perceptions, renewable energy is not the silver bullet that will soon solve all our problems. Indeed, in the decades ahead, three hard truths will generate turbulence in the global energy system.

We all know that global demand for energy is growing, but the reality of how fast hasn’t really sunk in. The first hard truth is that demand is accelerating…

The second hard truth is that the growth rate of supplies of “easy oil”, conventional oil and natural gas that are relatively easy to extract, will struggle to keep up with accelerating demand. Just when energy demand is surging, many of the world’s conventional oilfields are going into decline. The problem is not the availability of resources as such. Overall, the International Energy Agency believes that there could be roughly 20 trillion barrels oil equivalent of oil and natural gas in place. This includes both conventional and unconventional resources, such as oil shale and sands. In theory, this is enough to keep us going for about 400 years at the current rate of consumption. In practice, though, less than half can be recovered with existing technology. The world now produces 135 million barrels oil equivalent a day of oil and natural gas. We could still raise that number with new technologies, but only gradually and certainly not indefinitely.

The third hard truth is that increased coal use will cause higher CO2 emissions, possibly to levels we deem unacceptable. The IEA believes that coal use could grow by around 60 per cent in the next 20 years. The main reason that countries turn to coal is energy security.

… So what about renewables, such as wind and solar energy? The share of renewables in the global energy mix could go up from its existing very low base of about 1 per cent to about 30 per cent by the middle of the century. The number of wind turbines, for instance, may grow from about 30,000 today to one million and their capacity will be significantly larger than the ones we have built so far. This assumes that the hunt for technological breakthroughs to make renewables cheaper will be successful. But even then, fossil energy will still make up most of the remaining 70 per cent. However, this is out of sync with what opinion polls show that most Americans and Europeans believe – that renewable energy will have replaced most fossil energy by 2050. As the hard truths make clear, this simply isn’t going to happen.

That is why energy efficiency is so important. More than half the energy we generate every day is wasted. In an average car, about 20 per cent of every unit of petrol goes into moving a car forward, the rest is lost as heat. For an aircraft during take-off, the figure is 8 per cent. Only 35 per cent of burnt coal in a power plant becomes electricity; the rest, again, is lost as heat. What’s the point of producing ever more energy if we continue to waste most of it? Instead, we should aim to become twice as efficient in our use of energy by the middle of the century. That is entirely feasible, provided that the will is there.

The world’s energy system is entering a turbulent phase, and the only question is: how turbulent? A cooperative world will respond more effectively than a fragmented one. Provided governments create the right rules and incentives, and don’t throw up barriers, the global market will direct money and brainpower to the best solutions. The alternative is a global market failure, and future generations would pay the price.

2d/ Securing The Future – An Oil Company Perspective [Tony Hayward, BP CEO] (Middle East Economic Survey, Mon 25 Jun)

http://www.mees.com/postedarticles/oped/v50n26-5OD01.htm

Comment: The following is the text of a speech by BP Group Chief Executive Tony Hayward at the EAGE Annual Conference in London on 11 June. He even mentions Peak Oil, but of course avoids all the issues that concern Peakers. Seems like Tony Hayward has the same speech writer as the BP ex-CEO Lord Browne of Madingley.

“I speak as a geologist as well as someone who was, for nearly five years, head of exploration and production at BP - that there are major basins as yet unexplored” – where exactly were you thinking of, and why are they unexplored?

Article: ... And, perhaps most relevant to this conference, a new spectre has been conjured from all these things. This is the fear of insufficient energy supplies, whether due to the self-interested nationalism of some resource-rich countries, or to oil supplies supposedly passing their peak. For those who succumb to these irrational fears it is all downhill from here and only a sinister Petro-Apocalypse lies ahead.

I am glad to say that I regard much of this gloom and doom as vastly overdone.

... But as well as taking clear actions in the short and medium term, we should prepare for the day when production will go into decline. The precise timing of what people call Peak Oil will really be governed by the actions that all parties, producers, consumers and the industry, choose to take over the coming years. As an industry we must also take action to both limit climate change and to mitigate its effects. We can, for instance, expand technology and investment in decarbonising the products we bring to market, particularly through carbon capture and storage. That will require appropriate incentives, such as carbon trading, to create a suitably level playing field so that investment is directed to the most effective solutions.

... In summary, when it comes to dealing in a timely and practical manner with the great insecurities of the early 21st century, the energy industry is not just part of the solution, it is the solution. In that respect, we are providing a great service to the world. Through the development of technology, through long term investment and risk taking, through the application of knowledge and by acting as a catalyst for cooperation between producers and consumers, we are making enormous contributions to human progress. I believe that is something to be proud of.

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3a/ Britain reduces global trade gap to its smallest in nearly two years (The Times, Wed 13 Jun)

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1923612.ece

Comment: The narrowing of the UK trade gap is temporary. Buzzard reaches its peak of production in July 2007, all going to schedule. There are no more big oil fields due to come onstream this side of 2010. Oil and gas are otherwise in steep decline, UK oil and gas (and may be coal too) imports will get bigger, the trade gap will widen.

Article: Stronger flows of oil from the North Sea, boosted by the opening of the new Buzzard oilfield, helped to cut Britain’s trade gap with the rest of the world to its smallest in nearly two years in April, official figures showed yesterday.

The country’s global deficit on trade in goods shrank to a narrower than predicted £6.32 billion in April, the best figure since October 2005, from £7.16 billion in March. Economists had expected a much smaller decline to some £7 billion.

For the three months to April, the figures also showed that the global goods deficit was unchanged at £12.3 billion from the previous three month period.

April’s sharp improvement was driven by a steep fall in Britain’s deficit on trade in crude oil. The decline of the North Sea has left the nation in the red on its trade in crude since last May. But the opening of the Buzzard field cut the deficit for April to a modest £100 million, the lowest in a year, from £500 million in March.

The global deficit with the rest of the world on trade in goods and services combined was also sharply lower, at £3.6 billion in April, down from £4.5 billion in March to its best since July 2005.

Besides the better showing from North Sea production, the improvement in the UK’s April trade performance was substantially a result of weaker British demand for foreign goods as imports of products tumbled by 4 per cent in April, mirroring a drop in retail spending in the month.

The decline in imports outstripped a 0.9 per cent fall in the UK’s export volumes, which economists said raised concern that overseas trade may be faltering in the face of the strong pound. Analysts said these figures questioned the emphasis by Mervyn King, the Bank of England’s Governor, on Monday, on the impact of a robust global economy in boosting demand in the UK.

3b/ SEC opens Bear hedge fund probe (Financial Times, Mon 25 Jun)

http://www.ft.com/cms/s/d9943900-2311-11dc-9e7e-000b5df10621,_i_nbePage=ff3cbaf6-3024-11da-ba9f-00000e2511c8.html

Comment: This FT article gives the impression that the fall in the US housing market still has a long way to go. The words ‘wider mortgage market’ are creeping in. It might seem this has nothing to do with Peak Oil, but rising oil/gasoline prices are causing inflation to rise, which may result in higher interest rates, an additional problem for the housing market/economy.

Article: Shares in Bear Stearns dropped another 3.2 per cent on Monday as the Securities and Exchange Commission sought information from the bank about its two troubled hedge funds and a drop in US home sales sparked more fear about the state of the mortgage market.

Bear shares are now down about 19 per cent since January on fears that turmoil in the subprime and wider mortgage market could take a heavy toll on the bank’s earnings. Goldman Sachs and Lehman Brothers shares each dropped about 2 per cent on mortgage concerns.

The drops came as new data showed sales of existing homes fell slightly last month to a four-year low as the backlog of unsold homes rose, dampening hopes of a recovery in the sector.

... In a third consecutive monthly decline, 5.99m homes changed hands in May, against the 5.97m economists had expected, and 0.3 per cent fewer than in April, according to the National Association of Realtors. It was the lowest rate of sales since June 2003.

The number of homes for sale rose to a 15-year high of 4.43m, or 8.9 months supply, almost double the supply from two years ago.

... “The current level [of inventory] is approximately a million units above normal, a figure that glaringly illustrates the housing market’s biggest problem,” said Tony Crescenzi, bond strategist at Miller Tabak & Co.

Sales of existing homes make up about 85 percent of the housing market.

Mr Konstam said Moody’s estimated that sales of complex financial instruments, known as Collateralised Debt Obligations reached $506bn in 2006, of which more than half contained subprime exposure. “If there is contagion, the problem certainly has sufficient scale to become a financial event,” said Mr Konstam.

The value of such instruments is derived from conditions in the housing market.

Michelle Meyer of Lehman Brothers said large and rising inventories could lead to higher foreclosure rates for borrowers struggling to pay off mortgages, as high levels of supply make it more difficult to sell homes quickly.

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4a/ Personal debt hits 10-year high (The Independent, Mon 25 Jun)

http://news.independent.co.uk/business/news/article2705563.ece

Comment: One problem with the economy in general is the level of debt, in both the USA and UK, and elsewhere. Increasingly expensive oil, and food, is pressing inflation/interest rates.

Article: The average British family now spends more of its household income on servicing debts than at any time over the past 10 years. Figures published today by the Liberal Democrats show that the average household now spends 9 per cent of its income on interest charges, a fifth more than in 1997.

The figures, based on answers to parliamentary questions tabled by the Liberal Democrats' shadow Chancellor, Vince Cable, reveal that interest costs have risen from 7.5 per cent of household income in 1997 to 9 per cent today.

The figures also reveal that the average family's total personal debt now accounts for 164 per cent of their annual income, the highest figure in the developed world, and the highest figure in the UK's history. In 1997, the figure stood at 105 per cent.

Mr Cable called on Gordon Brown to make tackling debt a key priority of his term as Prime Minister. He said: "Mr Brown will move house this week while thousands of homeowners face severe financial difficulties because of the expected interest rate rises this summer and later this year."

The warning comes amid mounting concern about huge increases in the size of monthly mortgage repayments faced by more than 2 million homeowners.

Figures from Moneyexpert, the personal finance analyst, show 2.3 million mortgages were taken out at a fixed rate of interest in 2004 and 2005, when the cost of borrowing was at rock bottom. The majority of these are due to come to the end of their fixed-rate term at some point this year, at which stage borrowers will automatically move on to lenders' standard variable rate, likely to cost a third more than the deal they were previously on.

Even borrowers who remortgage to a new fixed-rate deal are likely to be substantially worse off, because the best fixed rates available in the mortgage market today are significantly less attractive than what was on offer two to three years ago.

The average fixed rate taken out in 2005 was 5.18 per cent, almost a third cheaper than the average standard variable rate, of 7.5 per cent, charged by lenders today. A borrower with a £150,000 mortgage would face a £207 increase in their monthly repayment by moving to the higher rate…

4b/ New risks posed by the rising cost of borrowing (The Times, Mon 25 Jun)

http://business.timesonline.co.uk/tol/business/economics/article1980421.ece

Comment: Bank for International Settlements – the central bankers’ bank.

Article: An end to the cheap money era that has stoked a global boom in takeovers and property threatens financial turbulence for many banks and companies, the Bank for International Settlements said yesterday.

A turn in the credit cycle, as rising interest rates drive up borrowing costs and tighten financial conditions, is inevitable and risks sparking a period of increased upheaval, the BIS said in its annual report.

The warning follows a rising chorus of alarm from regulators and central bankers over lax lending policies and the ever-growing leverage fuelling the takeover boom.

“Given the key role that a benign credit environment has been playing in boosting the performance of the financial sector over the past years, a turn in the credit cycle represents a significant risk to its outlook,” the BIS said.

Unusually favourable credit conditions, supporting the flood of money into leveraged deals, structured credit products, and property, could not last forever, it said: “These conditions could be characterised as exceptional.”

The BIS gave warning that investors had become complacent as the global economy was in the midst of a “sweet spot” of buoyant growth and low interest rates that could end.

“There seems to be a natural tendency in markets for past successes to lead to more risk-taking, more leverage, more funding, higher prices, more collateral and, in turn, more risk-taking,” it said.

Although the BIS expects robust global economic conditions to continue for now, it also expressed concern that risks including a resurgence in inflation and a sharper than expected slowdown in the US had the potential to undermine this.

The BIS also sounded a new warning over leveraged buyouts, where buyout groups load-up acquired companies with debt to make deal financing add up. Yesterday’s report noted that this strategy is dependent on cheap funds that may not remain available.

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5a/ Ageing Europe confronts demographic time bomb (The Times, Fri 22 Jun)

http://business.timesonline.co.uk/tol/business/economics/article1975298.ece

Comment: No discussion of Peak Oil / Gas / Coal / Uranium.

Article: From opening national borders to millions of foreign migrant workers, to compelling citizens to work longer and save more, to encouraging couples to have many more children, Europe’s leaders were urged this week to consider the far-reaching action needed to cope with a rapidly ageing population.

Europe is getting old, and fast. The entire continent is in the throes of fundamental and unprecedented changes in its population. The “demographic turning point” poses political, social and economic challenges that are as daunting in their scale as they are pervasive. The repercussions are set to alter every aspect of our lives.

As the so-called “ticking time bomb” of this demographic change ticks ever louder, this week saw some of the world’s leading experts on these issues gather with top decision-makers from governments, business and finance at the sixth annual Munich Economic Summit to grapple with the implications.

... In Europe, the average age of the population has already climbed to reach 40 as healthier living, improved medical care and innovations in pharmaceuticals stretch longevity. By 2050, the average is set to rise to 50. And by mid-century, there will be 40 million Europeans aged 65 or over.

At the same time, there will be steadily fewer people of working age to support the elderly, thanks to falling birth rates. The average European woman now has fewer than 1.5 children. Within 25 years, there will be roughly 21 million fewer working Europeans...

5b/ Cologne and antiseptic: Russia's killer drinks (The Guardian, Fri 15 Jun)

http://www.guardian.co.uk/russia/article/0,,2103670,00.html

Comment: “Due to the low life expectancy and birthrate, the population in Russia is falling by 700,000 a year.” Russia’s population is falling fast, but for the wrong reasons. Russain population seems to be about 140 million. See Also: Russian population in steep decline (BBC, Oct 2000).

Article: Almost half of working-age men in Russia who die are killed by alcohol abuse, according to a new medical study which says the country's males die in excessive numbers not just because they drink lots of vodka but because they also consume products containing alcohol, such as eau de cologne, antiseptics and medicinal tinctures. Some products contain 95% alcohol by volume, equating to 200 proof.

An international group of scientists looked at a single city in the Urals to establish the effects of the drinking in Russia. Izhevsk was chosen for being a typical industrial city where life is much the same as elsewhere and where death rates match the Russian average.

Underlying the work was the question of why life expectancy in Russia is so low: in 2004 it was 59 years for men and 72 for women. Due to the low life expectancy and birthrate, the population in Russia is falling by 700,000 a year...

5c/ Planet of the slums: UN warns urban populations set to double (The Independent, Wed 27 Jun)

http://news.independent.co.uk/world/politics/article2714169.ece

Comment: By 2030, we will be 15-25 years past peak oil and close to peak gas, although gas supply problems are developing now. This presumably is going to have some effect on the business as usual population forecasts.

Article: The combined forces of population growth and urbanisation are creating a planet of slums, where the urban population will have doubled by 2030, according to a report released by the United Nations today.

The shanty towns that choke the cities of Africa and Asia are experiencing unstoppable growth, expanding by more than a million people every week, according to the "state of the world's population" report.

The UN's findings echo recent predictions that 2008 will see a watershed in human history as the balance of the world's population tips from rural to urban. Many of the new urbanites will be poor and the shelters into which they move, or are born, will be slums.

"The growth of cities will be the single largest influence on development in the 21st century," the report states. It maintains that over the next 30 years, the population of African and Asian cities will double, adding 1.7 billion people - more than the current populations of the US and China combined.

... More than 90 per cent of this underclass are in the developing world, with South Asia having the largest share, followed by eastern Asia, sub-Saharan Africa and Latin America. In sub-Saharan Africa, growth has become synonymous with slums and 72 per cent of the population live in slum conditions.

Growth of urbanisation

* By 2008, more than half of the world's current 6.7billion population will live in cities.

* By 2030, the urban population will have risen to 5 billion, 60 per cent of the world's population.

* Half of the world's urban population is currently under 25. By 2030, young people will make up the vast majority of the 5 billion urban dwellers.

* Between 2000 and 2030, Asia's urban population will increase from 1.3 billion to 2.64 billion. Africa's population will rise from 294 million to 742 million, Latin America and the Caribbean from 394 million to 609million.

* Mega-cities do not have a monopoly on population growth. More than half of the urban world lives in cities with a population of less than 500,000.

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6a/ Biofuels to blame as beer prices soar 40 per cent in Germany (The Independent, Sun 24 Jun)

http://news.independent.co.uk/business/news/article2699083.ece

Comment: As the pursuit of biofuels pushes up food and beer prices, the general public may be thinking it is not quite such a good idea after all.

Article: Biofuels may be good for the environment, but they are bad news for German beer drinkers. Prices in the country's pubs look set to rise by 40 per cent this year, because Germany's farmers are growing less barley for beer production and more crops for biodiesel and bioethanol.

The head of the German brewers' association, Richard Weber, has caused outrage among friends of the annual Oktoberfest beer jamboree by predicting the hefty price rise. He pointed out that the German barley crop has been halved this year and that prices have soared by 50 per cent within 12 months. Poor-quality harvests, caused by unusually hot weather, have not helped either.

As a result, Germany's brewers, which insist on the purity of their beer and offer organic brands to emphasise their green-tinged credentials, have turned over a new leaf. They are now demanding an end to the use of crops to make fuel.

"The energy and food sectors are competing for the same raw materials and the same acreage," said Mr Weber.

6b/ A milestone on the road to green fuel [UK wheat to ethanol] (The Independent, Wed 27 Jun)

http://news.independent.co.uk/business/analysis_and_features/article2714200.ece

Article: Biofuels: saviours of the planet or a green con?

The question comes into sharper focus as BP, Du Pont and the ABF subsidiary British Sugar announce a £200m bioethanol plant.

The investment, in which BP and British Sugar would each hold 45 per cent with DuPont owning the remaining 10 per cent, will be built on BP's chemicals site in Hull. Due in 2009, it will produce some 420 million litres of bioethanol a year (derived from wheat): about a third of the UK's demand. Although minuscule (less than 1 per cent of sales), that demand will be stimulated by the Government's Renewable Transport Fuel Obligation, which means that, by 2010, 5 per cent of fuel sold on forecourts should be biofuels. (Ministers expect this will save 1 million tonnes of carbon dioxide a year, the equivalent of taking 1 million cars off the road.)

In the future a more car friendly fuel, biobutanol, could be produced.

The European Union too wants to see more biofuels: 10 per cent of the total by 2020. The White House aims to double the use of biofuels by 2012, with substantial subsidies. Countries such as Thailand, China, Malawi and Colombia are mandating the use of biofuels. According to the United Nations, global production of biofuels has doubled in five years and will "likely double again" by 2011.

... Yet there are also well-advertised difficulties. The amount of corn used to make ethanol in America has tripled since 2000; Ethanol distilleries take a fifth of the US corn crop now. Research by Goldman Sachs has suggested that the price of biofuels (per unit of energy) has risen to that of petrol, and the price of corn and crude oil, the main feedstocks for the two, have converged. This is so-called "agflation".

Yet it is a complex picture. Western food surpluses have long depressed Third World incomes. And while there have been food riots in Mexico and there is pricier pork in Chinese butchers' windows, Mexican and Chinese agricultural producers are likely to be winners. The urban poor - including those in the West - will be the likely victims...

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7a/ Lehman Raises Oil Price Forecast on Lower Supplies, High Demand (Bloomberg, Fri 22 Jun)

http://www.bloomberg.com/apps/news?pid=20601072&sid=aDYLArXEPRfI&refer=energy

Article: Lehman Brothers Holdings Inc. raised its forecast for average Brent crude oil prices this year 3.7 percent because of limits in supply growth.

The fourth-biggest U.S. securities firm increased its estimate for 2007 Brent oil prices to $70 a barrel from $67.50. Oil will average $75 a barrel in 2008, up from the previous forecast of $72, Edward Morse, Lehman's New York-based chief energy economist, said today in an e-mailed report.

``Disappointing non-OPEC supplies, OPEC's refusal to increase output, and rising product demand are tightening markets,'' Morse and colleagues Adam Robinson and Michael Waldron said in the report.

... May oil production in Norway, the world's fifth-largest exporter, slid 7.4 percent from a month earlier to an average 2.2 million barrels a day...

7b/ Oil Price Surge a Risk as Non-OPEC Production Peaks, BIS Says (Bloomberg, Sun 24 Jun)

http://www.bloomberg.com/apps/news?pid=20601072&sid=aH6K3ZWkTOwY&refer=energy

Comment: The Bank for International Settlements, BIS, is the central bankers’ bank. The report is the same one referred to in item 4b.

Article: Oil prices have a ``substantial'' risk of surging higher and boosting inflation because non-OPEC production may soon peak, the Bank for International Settlements said in its annual report.

``The short-run risks of sharp increases in oil prices remain substantial,'' the Basel, Switzerland-based BIS said in its 77th annual report today. ``The impact of oil price increases could be significant; a recent analysis estimates that a supply- induced doubling of prices would boost inflation in emerging Asia by as much as 1.4 percent points above baseline.''…

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8/ Oil Export Duty in Russia to Be Raised to $223-$224 from August 1 (FC Novosti, Mon 25 Jun)

http://www.fcinfo.ru/themes/basic/materials-rfcm-index.asp?folder=3192

Comment: Oil export duties were raised substantially June 1^st. Increases in export duties tend to decrease exports. The full article states that taxes on light oil products and dark petrochemicals are also going up.

Article: Oil export duty in Russia may be raised to $223-$224 per metric ton from August 1, said Alexander Sakovich, deputy head of the customs payments department at the Finance Ministry.

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9/ San Francisco Bans Bottled Water for City Staff (Planet Ark [Reuters], Tue 26 Jun)

http://www.planetark.com/dailynewsstory.cfm/newsid/42805/story.htm

Article: Thirsty San Francisco city workers will no longer have bottled water to drink under an order by Mayor Gavin Newsom, who says it costs too much, worsens pollution and is no better than tap water.

Newsom's executive order bars city departments, agencies and contractors from using city funds to serve water in plastic bottles and in larger dispensers when tap water is available.

"In San Francisco, for the price of one 1 gallon (3.8 litres) of bottled water, local residents can purchase 1,000 gallons (38,000 litres) of tap water," according to the mayor's order.

Newsom estimates San Francisco could save US$500,000 a year under his directive, which also addresses environmental concerns over the amount of oil used to make and transport plastic water bottles.

"All of this waste and pollution is generated by a product that by objective standards is often inferior to the quality of San Francisco's pristine tap water," according to the order.

The ban on the ubiquitous plastic bottles follows a prohibition in March by city officials on plastic shopping bags in large supermarkets because recycling efforts had largely failed.

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10/ Resource nationalism is on the march (Energy Intelligence, Wed 27 Jun)

No link. From Energy Intelligence’s daily (e-mail) ‘Energy Alert’.

Article: Resource nationalism is on the march. Less than a week after BP opted for voluntary Russian expropriation of its big Kovytka gas field in order to preserve its remaining assets, Exxon Mobil and ConocoPhillips are on their way out of Venezuela's Orinoco heavy crude projects because they were unable to agree to new terms imposed by Caracas. Unlike Total, Statoil, BP and Chevron, who are hanging on to much reduced positions in Orinoco projects, Exxon and Conoco will try to negotiate compensation or possibly resort to international arbitration. Conoco is especially hard hit, losing large stakes in 130,000 b/d Petrozuata and 190,000 b/d Hamaca. The mounting pressures of resource nationalism on international majors in Russia and Venezuela only serve to heighten the critical importance of remaining options elsewhere. Despite high oil prices and record profits, major oil companies face a further narrowing of horizons for access to large new reserves and shrinking options for successfully achieving organic growth.

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11/ OPEC releases its 2007 World Oil Outlook (OPEC, Tue 26 Jun)

http://www.opec.org/opecna/Press%20Releases/2007/pr062007.htm Press Release (html)

http://www.opec.org/library/World%20Oil%20Outlook/pdf/WorldOilOutlook.pdf World Oil Outlook 2007, PDF report (3.86 Mb)

Comment: OPEC released their World Oil Outlook 2007 yesterday. A quick scan of the PDF file indicates that the words ‘Peak Oil’ and ‘depletion’ do not appear in the document. Odd given that most of the document covers “Oil supply and demand outlook to 2030”, but not at all odd given that it is OPEC, a flag-bearer for the Peak Oil deniers.

Article: From p24, ‘Oil Supply’. Some of these forecasts are on the wild side.

A central tenet of the OPEC long-term supply perspective assessment is that resources are sufficient to meet future demand. The resource base, as defined by estimates from the US Geological Survey (USGS) of ultimately recoverable reserves (URR), does not constitute a constraint to supplying the rising levels of oil demanded in the reference case. Indeed, the methodologies developed and applied to derive the regional crude supply figures revolve around the assessment of remaining resources (resources minus cumulative production), so supply projections are, by definition, plausible from the resource perspective. Moreover, it is worth noting that these URR estimates have practically doubled since the early 1980s, from just 1,700 billion barrels to ove