Here’s a still from the Deepwater Horizon live feed captured on BP’s site just a couple moments ago.
Hopefully what we’re looking at is gushing mud, not gushing oil. There are no fresh updates on “Top Kill,” — nothing to suggest that last night’s progress had been undermined. At some point today, we’re guessing, we’ll get a more definitive answer.
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This is pretty wild. The daily oil forecast has replaced the daily weather forecast in the Gulf.
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The picture basically says it all.
From the Deepwater Horizon Response Flickr:
GULF of MEXICO – Gas from the damaged Deepwater Horizon wellhead is burned by the drillship Discoverer Enterprise May 16, 2010, in a process known as flaring. Gas and oil from the wellhead are being brought to the surface via a tube that was placed inside the damaged pipe. U.S. Coast Guard photo by Petty Officer 3rd Class Patrick Kelley.
Pictures of the oil slick from outer space >
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Let’s do some back-of-the-envelope math
Add it all up: We’re going to get the big T. Boone Pickens endorsed “Climate” bill, which has nothing to do with climate, and everything to do with subsidizing natural gas.
It’s status in the Senate has been in limbo, but now we think it’s a done deal.
Disagree? Not convinced?
Well consider that natural gas is getting absolutely bludgeoned today — down over 8% — and yet many names leveraged to natural gas are doing great.
A few of the companies that would benefit from the passage of the bill are doing nicely.
The oil services companies and folks like BP (BP) are getting slammed today, and natural gas (UNG) is a horror show, but those companies that stand to benefit from a big taxpayer gift are doing quite fine. That’s why T. Boone Pickens is smiling.
Don’t miss: Why natural gas investors perpetually miss their big payoff >
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Here’s a quick summary of the March findings from the IEA:
Global oil demand is revised down by 70 kb/d in 2009 and up by
30 kb/d in 2010 on preliminary data adjustments in the OECD and
non‐OECD (Asia, Africa and Middle East). With demand now seen at
84.9 mb/d in 2009 and 86.6 mb/d in 2010, year‐on‐year growth
averages ‐1.3 mb/d and +1.7 mb/d, respectively.
• Global oil supply fell by 220 kb/d to 86.6 mb/d in March on lower
OPEC output. Non‐OPEC supply was unchanged in March at
52.5 mb/d, and up by 900 kb/d year‐on‐year. Non‐OPEC 2010 output
is revised up 220 kb/d to 52.0 mb/d, reaffirming a more optimistic
supply outlook amid elevated price levels since 2Q09. Non‐OPEC
supply and OPEC NGLs should rise by a combined 1.3 mb/d in 2010.
• OPEC crude production posted its first significant monthly decline in
over a year, falling by 190 kb/d in March to 29.0 mb/d. Yet the lower
output reflected a near 10% decline in Iraqi crude rather than effort
by OPEC‐11 members to rein in above‐target output. OPEC‐11
production, which excludes Iraq, increased by 30 kb/d to 26.7 mb/d.
Here’s a nice global map showing changes in recent years in various regions:
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Don’t just look at the orange chart. Look at the year over year growth of nearly 60%.
Given that China is the marginal buyer of oil, and arguably setting the price with its imports of crude, the connection here is hard to argue. (via Waverly Advisors)
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Last October, The White House famously used its blog to go after auto site Edmunds.com over what it deemed to be faulty analysis of the Cash-For-Clunkers program.
Edmunds.com argued that not only was the sales spike the result of a mere pull-forward in demand, it actually lowered overall car purchasing.
The White House obviously disagreed.
Well it’s April now, and The White House is feeling pretty good about the economy and the car industry, and so it’s revisiting the issue, slamming Edmunds.com again on the blog.
Let’s pick it up at the chart:
So if you don’t know what is going on… the red-dashed line is what Edmunds predicted car sales would do sans-clunkers, and the light-blue dotted line is what Edmunds said car sales would do post-clunkers.
The dark blue line, which showed a nice spike up in March (the real reason, probably, that the White House is running the chart) was obviously higher than the Edmunds forecast.
Says The White House’s Christopher Carroll a senior economist with the Council of Economic Advisors:
The ‘short-term pull-forward’ view was perhaps most vigorously articulated by automotive industry website Edmunds.com. In late October, Edmunds.com made a widely-reported forecast for the pace of sales in the last quarter of the year: According to Edmunds, light motor vehicle sales in November and December would be only about 10.5 million at an annual rate (the dashed blue line in the figure). Edmunds furthermore argued that, had the CARS program not existed, the pace of sales would have been higher, about 10.8 million, during those two months (the dashed red line in the figure).
But according to the final data now in hand, the actual pace of sales in November and December was about 11.0 million units (the solid blue line in the figure substantially exceeds Edmunds’ October 28 forecast). Last Thursday’s announcement of a strong pace of sales in March also belies Edmunds’ pessimistic trajectory. Indeed, over the seven months following the end of the CARS program in late August, the sales pace has averaged 10.7 million units at an annual rate, much higher than the 9.6 million pace in the three months that preceded the program, and considerably stronger than the forecasts made by private forecasters just before enactment of the CARS program.
A final source of evidence on size and timing of the ‘pull forward’ effect comes directly from the people who purchased a vehicle under the program. According to a survey conducted by the Department of Transportation as part of the program, the average timeframe over which new car purchasers said they would have otherwise sold, traded in, or disposed of their old vehicle was 2.87 years – far longer than the timeframe of a few months that the program’s critics hypothesized. A plausible interpretation of the available data, in fact, is that many of the CARS sales were to the kinds of thrifty people who can afford to buy a new car but normally wait until the old one is thoroughly worn out. Stimulating spending by such people is very nearly the best possible countercylical fiscal policy in an economy suffering from temporarily low aggregate demand.
Over to you Edmunds.
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The worst outcome imaginable: 25 miners died in a blast at the Upper Big Branch Mine in West Virginia after blast yesterday afternoon that collapsed the mine’s roof.
It is the worst US mining disaster since 1984, worse than the infamous Sago Mine disaster of 2006.
The full report from the AP is below:
——-
MONTCOAL, W.Va. — An explosion at a remote coal mine with a history of safety problems killed 25 workers and at least four others were still missing early Tuesday more than a thousand feet underground in the worst U.S. mine disaster since 1984.
Rescuers had been making their way to the area where the miners were believed trapped at Massey Energy Co.’s (MEE) sprawling Upper Big Branch mine, where the blast occurred around 3 p.m. Monday. However, safety officials said at a news conference that the search was suspended because rising methane gas levels in the mine made it a high risk for another explosion.
Earlier, Kevin Stricklin, an administrator for the federal Mine Safety and Health Administration, said officials hoped some of the missing survived the initial blast and were able to reach airtight chambers stocked with food, water and enough oxygen for them to live for four days. However, rescue teams made it to one of two nearby shelters and it was empty. The gas levels prevented them from reaching the second.
Massey Energy and safety officials confirmed that 25 bodies were found. The death toll had risen from seven earlier in the day to 12 at about midnight. A total of 29 miners were in the area when the blast happened, he said.
“It does not appear that any of the individuals made it to a rescue chamber,” Stricklin said at a news conference. “The situation is dire.”
State mining director Ron Wooten said though the situation does not seem promising to reach the four still missing, rescuers wouldn’t give up.
“We haven’t given up hope at all,” he said.
In 1984, 27 were killed by a fire at Emery Mining Corp.’s mine in Orangeville, Utah.
Benny R. Willingham, 62, who was five weeks away from retiring, was among those killed in West Virginia, said his sister-in-law Sheila Prillaman.
He had mined for 30 years, the last 17 with Massey, and planned to take his wife on a cruise to the Virgin Islands next month, she said.
“Benny was the type — he probably wouldn’t have stayed retired long,” Prillaman said. “He wasn’t much of a homebody.”
Prillaman said family members were angry because they learned of Willingham’s death after reading it on a list Massey posted, instead of being contacted by the company, which said it wouldn’t release names until next of kin were notified.
Though the cause of the blast was not known, the operation about 30 miles south of Charleston has a history of violations for not properly ventilating highly combustible methane gas, safety officials said.
Miners were leaving on a vehicle that takes them in and out of the mine’s long shaft when a crew ahead of them felt a blast of air and went back to investigate, Stricklin said.
They found nine workers, seven of whom were dead. Others were hurt or missing about a mile and a half inside the mine.
Massey Energy, a publicly traded company based in Richmond, Va., has 2.2 billion tons of coal reserves in southern West Virginia, eastern Kentucky, southwest Virginia and Tennessee, according to the company’s Web site. It ranks among the nation’s top five coal producers and is among the industry’s most profitable. It has a spotty safety record.
In the past year, federal inspectors have fined the company more than $382,000 for repeated serious violations involving its ventilation plan and equipment at Upper Big Branch, which is run by subsidiary Performance Coal Co. The violations also cover failing to follow the plan, allowing combustible coal dust to pile up, and having improper firefighting equipment.
The mine has had three other fatalities in the last dozen years.
Methane is one of the great dangers of coal mining, and federal records say the Eagle coal seam releases up to 2 million cubic feet of methane gas into the Upper Big Branch mine every 24 hours, which is a large amount, said Dennis O’Dell, health and safety director for the United Mine Workers labor union.
The colorless, odorless gas is often sold to American consumers to heat homes and cook meals. In mines, giant fans are used to keep methane concentrations below certain levels. If concentrations are allowed to build up, the gas can explode with a spark roughly similar to the static charge created by walking across a carpet in winter, as at the Sago mine, also in West Virginia where 12 were killed in 2006.
Since then, federal and state regulators have required mine operators to store extra oxygen supplies. Upper Big Branch uses containers that can generate about an hour of breathable air, and all miners carry a container on their belts besides the stockpiles inside the mine.
Rescuers trying to reach the trapped miners had found evidence that some workers took emergency oxygen supplies from a cache in the mine, Stricklin said.
West Virginia requires all underground mines to have wireless communications and tracking systems designed to survive explosions and other disasters. However, Stricklin said much of the network near the missing men was likely destroyed in the explosion.
Blankenship said the names of the dead and injured would not be released until next-of-kin were notified.
“West Virginians are tough, we will bind together,” said U.S. Rep. Nick Rahall, whose district includes where the mine is located.
The mine, which cannot be seen from the road, has 19 openings and roughly 7-foot ceilings. Inside, it’s crisscrossed with railroad tracks used for hauling people and equipment. It is located in a mine-laced swath of Raleigh and Boone counties that is the heart of West Virginia’s coal country.
The seam produced 1.2 million tons of coal in 2009, according to the mine safety agency, and has about 200 employees, most of whom work underground on different shifts.
In each of the last three years, Massey has had multiple operations cited by MSHA as repeat violators of safety and health rules and ordered to improve their conditions. Upper Big Branch was not one of them.
Last year, the number of miners killed on the job in the U.S. fell for a second straight year to 34, the fewest since officials began keeping records nearly a century ago. That was down from the previous low of 52 in 2008.
Associated Press Writers Vicki Smith in Eunice, Tim Huber in Charleston and Sam Hananel in Washington contributed to this report.
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Six are reported dead and dozens are trapped in a Raleigh County West Virginia coal mine.
Shares of Massey Energy (MEE) — the owner of the Performance Coal Co. mine — are down over 4% after hours.
The last major mining disaster in the country was in 2006, when 13 were trapped and 12 were killed at the Sago Mine, also in West Virginia. The miners were trapped for two days. One survived.
That event prompted new regulations, including the establishment of a new emergency response team in West Virginia.
It also resulted in various settlements paid out by International Coal Group and others. No financial terms have been disclosed.
This particular mine has been targeted by environmentalists angry over the practice of so-called mountaintop removal mining. This is what it looks like, via the Ohio Valley Environmental Coalition:
Here’s what’s on the front page of Massey Energy’s homepage right now:
Here’s where Raleigh County, West Virginia is in the state:
More to come…
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Ok, so the Obama administration is going to allow some offshore drilling.
The surprise decision is being couched in language about creating jobs and reducing dependence on foreign oil.
Yeah yeah.
The real story is that Cap & Trade is back on the table, as Ken Salazar is stating on CNBC right now.
Obama gives a gift to oil drillers, and in exchange he gets the equivalent of an energy tax (though not actually an energy tax) with some corporate support.
Actually, cap & trade has already enjoyed significant corporate support from the likes of Goldman Sachs (GS) and GE (GE), which are eager to make a market in carbon offsets. Now, presumably, we’ll see more corporate support.
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Surprise!
According to the NYT, Obama will today announce a limited end to the US’s moratorium on offshore oil drilling.
Most costs will remain as is, but certain part of the Gulf of Mexico, Alaska, and the Pacific Coast will see activity for the first time.
The entire Pacific Coast — which is arguably the real theater in this battle — will remain unaffected. Any Atlantic coastline New Jersey and above will remain off limits now.
Is this a Nixon-goes-to-China moment, something only a Democrat could accomplish? Maybe, or maybe the need to open up any opportunities for jobs-producing domestic industries is a simple necessity. We’re guessing The White House has al read pre-briefed sympathetic mainstream environmentalists. Farther towards the fringe they’re going to freak out.
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China’s massive game of global resource domination looks set to continue well throughout the decade.
The Chairman of state-owned PetroChina says the company plans to spend $60 billion on a global expansion over the next 10 years, according to Bloomberg. Right now just a tenth of its production comes from overseas, but it’s goal is to bring that to 50% by 2020.
The timing of the announcement is interesting because it comes just as reports emerge about allegedly underhanded tactics used by CNPC (PetroChina’s corporate parent) in securing international oil rights.
The story that’s brewing right now takes place in Kazakhstan, and is therefore complex and disputed.
Here’s the 10-second gist from the WSJ:
Mukhtar Ablyazov, now living in London, accuses Mr. Kulibayev, the chairman of Kazakhstan’s state oil company, of being behind several privatization deals over the past 10 years in which state assets were allegedly sold off at well below market value.
The banker claims some of those transactions were made possible by private payments to Mr. Kulibayev’s associates. One of his most incendiary allegations centers on a 2003 deal in which a Chinese oil company bought a 25% stake in a Kazakh oil producer. As part of that complex transaction, a business partner of Mr. Kulibayev allegedly realized a $166 million gain on an initial investment of $49, corporate documents of the deals indicate.
A longer, but very worthwhile version of the story comes from investigative reporter Steve LeVine the author of The Oil and the Glory: The Pursuit of Empire and Fortune on the Caspian Sea.
LeVine claims that years ago he saw the documents detailing the alleged corruption:
The documents chronicle the 2003 sale of a 25% share of Aktobe Petroleum, a company that controls some 822 million barrels of oil in northwest Kazakhstan, near the Russian border. Nazarbayev announced the winning bid of $150.1 million by China National Petroleum Corp., which already possessed 60.2% of the company. What wasn’t announced was the identity of CNPC’s partner in the deal: interests close to Kulibayev.
A company close to Kulibayev called Darley Investment Services received a $25.9 million payment from CNPC and a 20% share of the acquisition, according to the documents. For this, Darley contributed all of $49 to the deal, the documents say. The documents detail how CNPC ultimately bought out its partner for another $140 million, bringing the payday for the presidential son-in-law’s interests to a total of $165.9 million (details below). CNPC has denied any wrongdoing.
Some of the documents were posted on the Web site of a weekly newspaper owned by Mukhtar Ablyazov, a controversial Kazakh banker seeking political asylum in Britain. Ablyazov’s United Kingdom assets have been frozen since last summer, when Kazakh prosecutors accused him of embezzling more than $300 million while BTA Bank, of which he was chairman until February 2009, lost more than $6 billion. Ablyazov, living in London, denies the accusations. Meanwhile, he is in a death grip with Kulibayev.
Assuming there’s something to the story, it’s worth asking: is this a China story or a Kazakhstan story? That Chinese SOEs (state owned enterprises) would use all manner of tactics to secure resource rights wouldn’t be particularly shocking. And as PetroChina embarks on its massive expansion plan, this will be a story to watch.
On the other hand, we know that Kazakhstan is a home of resource scandals, and the securing of energy rights there is going to be rich with controversy and politics. Last May we wrote about the controversial manner by which Bill Clinton ally Frank Giustra secured Uranium rights there.
In a post-soviet, resource rich state like such as this one, this is all par for the course.
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For months now, the pundits have predicted doom and gloom for Barack Obama and the Democrats come November.
But we’re not totally convinced.
A very likely storyline goes something like this (as we’ve already written): Healthcare passes. On Friday, April 2 at 8:30 AM the March jobs numbers come in, and they show for the first time decisive job growth (very possible). Finally Case-Shiller shows the housing rebound that stalled out over the winter, and voila, the recovery looks credible. Obama then uses the next 8 months to keep juicing the economy, thus riding to a narrow, not-devastating loss in November.
It’s very possible.
But it’s also very easy to envision the nightmare.
Healthcare fails. The jobs numbers look ugly and suddenly there will only be one storyline: why on earth did the Democrats spend so much time pursuing a healthcare bill, when unemployment hovered around 10%, and there was no job growth to speak of?
What the hell were they thinking?
And it’s not just jobs. Calculated Risk lays out various downside risks to the economy: the savings rate begins to creep up rapidly again (something that should happen, though for the right-now that’s seen as a negative), wage deflation picks up again, while small businesses continue to suffocate without access to credit.
In just a few days, starting tomorrow, this could all be the storyline, and then that will go from here until November, at which point John Boehner & Co. will mop the floor with the Democrats, removing the gavel from Nancy Pelosi’s hands for good.
If Obama doesn’t get much sleep tonight, we won’t blame him.
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Oil industry analyst Matthew Simmons is one of the most influential proponents of the idea the notion that oil is growing increasingly scarce, and that our future will be characterized by shortages and price spikes.
At a recent, he recently delivered an excellent presentation on the coming oil and water shortage.
It’s a great presentation, and though it would probably be somewhat better hearing him deliver it, it actually holds up very well on its own.
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Global demand for oil has stayed roughly steady at 2 liters/capita/day for the past few decades according to a paper by Joyce M. Dargy and Dermot Gately (via EconBrowser).
But this apparent stability masks a violent underlying reality.
Since 1971, OECD countries have made major efficiency strides, the Soviet Union saw an economic collapse, and the non-OECD developing world has seen soaring demand.
And as Dargy and Gately put it, the “low-hanging fruit” is over. There are no more developed-world magic bullets. the Former Soviet Union (FSU) isn’t collapsing again, and the developing world, notably China, isn’t in place to start making big efficiency gains.
As such, expect the global oil “problem” to get more severe.
Beyond that — and this is really the crux of Dargy and Gately’s paper — the new global energy mix is much less sensitive to price spikes than the old mix. In otherwords, whereas price spikes in the 70s caused major pullbacks in consumption (keeping things in equilibrium), similar price spikes these days don’t result in the same.
This doesn’t tell you anything about short or medium-term (probably) prices, but the suggestion is that if the global economy continues to grow at a steady pace, oil prices will get A LOT higher.
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Having spent a ton of money to build up its own high-speed rail system, Chinese engineers are obviously feeling pretty confident about their ability to create good rail systems.
Let’s hope they’re right!
Because they’re about to come build ours.
—–
Joe McDonald
BEIJING — China plans to bid for contracts to build U.S. high-speed train lines and is stepping up exports of rail technology to Europe and Latin America, a government official said Saturday.
China has built 4,000 miles (6,500 kilometers) of high-speed rail for its own train system and President Barack Obama issued a pledge in November with his Chinese counterpart, Hu Jin tao, to cooperate in developing the technology.
“We are organizing relevant companies to participate in bidding for U.S. high-speed railways,” Wang Zhiguo, a deputy railways minister, told a news conference.
Wang gave no details of where China’s railway builders might seek contracts, but systems are planned in California, Florida and Illinois. He said state-owned Chinese companies already are building high-speed lines in Turkey and Venezuela.
Beijing plans to construct a 16,000-mile (25,000-kilometer) high-speed rail network by 2020 in a 2 trillion yuan ($300 billion) project it hopes will spur economic and technology development. A new line linking the central city of Wuhan with Guangzhou near Hong Kong on China’s southern coast is billed as the world’s fastest at 237 miles (380 kilometers) per hour.
China produces high-speed trains using French, German and Japanese technology. Its manufacturers have developed a homegrown version but have yet to produce a commercial model.
Chinese rail authorities have signed cooperation memos with California and Russia and state companies plan to bid on a line in Brazil linking Rio de Janeiro with Sao Paulo, Wang said. He said Saudi Arabia and Poland also have expressed interest.
The White House announced $8 billion in grants in January for rail projects including the high-speed systems in California, Florida and Illinois.
“China is willing to share its mature and advanced technology with other countries to promote development of the world’s high-speed railways,” Wang said.
So far, China’s government has completed 2,295 miles (3,676 kilometers) of rail lines with top speeds of up to 220 mph (350 kph) and 1,795 miles (2,876 kilometers) with speeds up to 155 mph (250 kph), according to Wang.
Another 6,000 miles (10,000 kilometers) of lines are under construction, he said.
Once the network is completed, it will cut travel time from Beijing to Hong Kong from 24 hours to 10.
Some critics say high-speed train fares are too high for average Chinese and question whether the lines can recover their construction costs.
Wang said high-speed trains already have higher occupancy rates than regular trains, though he gave no details.
Associated Press researcher Bonnie Cao contributed to this report.
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While the US dithers in Iraq, and boots away its opportunity to reap the spoils of war, China continues to make big gains among our neighbors.
WSJ:
Cnooc Ltd. said Sunday it has agreed to form an oil-production joint venture with Argentina’s Bridas Energy Holdings Ltd. for US$3.1 billion to boost its oil production and reserves.
The Beijing-based oil company’s unit Cnooc International Ltd. and Bridas Energy Holdings will each hold a 50% stake in the joint venture, which has exploration and production activities in Argentina, Bolivia and Chile through its 40% interest in Pan American Energy LLC, the statement said.
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Big move from the energy world.
WSJ:
British oil giant BP PLC is the leading candidate to buy a big swath of oil assets from U.S. independent oil and gas producer Devon Energy Corp. in a $5 billion-plus deal that would vault BP into the hot new oil region off the shores of Brazil, people familiar with the matter said.
The deal would also reinforce BP’s dominant position in the Gulf of Mexico and give it a stake in Devon’s operations in Canada. It is expected to be announced in the next several days, said people familiar with the matter.
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The hunt for lithium — green gold, because it’s crucial to hybrid vehicles — is going to be a bigger and bigger story all the time.
In January the Miami New Times ran a long, and excellent feature on the hunt for lithium in Bolivia, and now the New York Times is following suit:
In Bolivia, which has almost half of the world’s reserves, the leftist government is building a pilot production plant and is drilling exploratory holes. That Bolivia is a remote, unstable country often hostile to foreign investment has helped spur interest in producing lithium in neighboring Argentina and Chile, in Australia, and in the United States. Several Canadian and American companies are making claims about future production prospects in Nevada, though few analysts foresee large-scale production from that state.
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