Wednesday, July 02, 2008

Head over Heels

Just a few hours ago, I was finishing off a report that required me to know what the price of oil is going to be next year, in five years, and for the term of the 20 year project. In the old days, if you wanted to appear very serious, you would quote from EIA or the IEA.

But these days if you want to be close to right, you need to look at a much broader set of data, and you need to look at the opinions of folks who actually know the truth about the world's oil and gas fields.

But now, even the IEA is beginning to tell a different story than it told just a year ago. Here's the story from the Financial Times:

IEA warns of tightening oil supplies
By Carola Hoyos in Madrid and Javier Blas in London
Published: July 1 2008

The oil market will remain tight during the next five years as production from non-Opec countries stalls and demand growth remains relatively strong, the western countries’ energy watchdog warned on Tuesday.

The International Energy Agency’s warning is the starkest sign yet that even record oil prices above $140 a barrel have not yet not done enough to balance demand growth from countries such as China with sluggish supply increases.

The IEA said that annual non-Opec growth would slow to 0.5 per cent between 2008 and 2013, against demand growth of 1.6 per cent per year. The mismatch means the world economy would be more reliant on Opec, the oil cartel, and oil prices are likely to remain at record levels, analysts said.

“Structural demand growth in developing countries and ongoing supply constraints continue to paint a tight market picture over the medium-term,” the IEA said in its Medium-Term Oil Market Report, released on Tuesday in Madrid.

“Poor supply-side performance since 2004, in the face of strong demand pressures from developing countries, has forced oil prices up sharply to curb demand,” the watchdog added.
Crude oil prices surged on Wednesday more than $2.50 to $142.73 a barrel, but still below Monday’s record high of $143.67 a barrel.

The report also said that current oil prices were “justified by fundamentals.” (more)

And what about those evil speculators that so many politicians are falling head over heels to blame for the high cost of filling up your Navigator?

The IEA addressed that specifically:

"the IEA warned governments not to blame speculators. It said: “Like alchemists looking for a way to turn basic elements into gold, everyone wants a simplistic explanation for high prices,” bluntly adding: “Often it is a case of political expediency to find a scapegoat for higher prices rather than undertake serious analysis or perhaps confront difficult decisions.”

Serious analysis?

Confront difficult decisions?

Sorry Pal.

We've got an election going on here.

We don't have time for that kind of sillyness.

Truth is.

We don't have much time, period.

Either we begin to walk boldly towards a new energy age now,

Or we will fall into it.

Head over Heels.

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Anonymous Anonymous said...

With forest fires raging in California it seemed a good time to revisit Bush's "Healthy Forests Initiative", that was the first action that this administration took after taking office. Back when Bush was known as weed whacker Bush the brush clearer, before his Iraq debacle.

September 6, 2002 - Agriculture Secretary Ann Veneman and Interior Secretary Gale Norton delivered several legislative proposals to Congress on Thursday, two weeks after President George W. Bush called on these agencies to support a massive new effort to actively manage forested areas to reduce fire risk. Under the Bush plan, most forest thinning and restoration projects performed in the name of fire management would be exempted from the public and environmental reviews now required by federal law. The Bush plan would also authorize long term stewardship contracts, under which logging companies would perform forest thinning and restoration projects in exchange for access to federal timber.

Well folks it has not gone well. In a 2006 report from the Department of Agriculture it failed miserably. Showing how little this administration has actually accomplished. Here is some of the report info:

Report No. 08601-6-AT September 2006
This report presents the results of our review of the Forest Service’s (FS) Implementation of the Healthy Forests Initiative

Our audit found that FS lacks a consistent analytical process for assessing the level of risk that communities face from wildland fire and determining if a hazardous fuels project is cost beneficial. FS has not developed specific national guidance for weighing the risks against the benefits of fuels treatment and restoration projects. This may result in FS not being able to reduce the total number of acres at risk to severe wildland fire or assure maintenance of areas improved by fuels treatment in the most efficient and cost effective manner.

Both internal and external reviews have raised concerns about the way FS measures performance for the fuels reduction program. A 2004 internal FS report stated that a focus on meeting targets (i.e., acres, outputs) is overriding the need to accomplish more effective and better-integrated treatments that achieve the desired fuel and restoration outcomes.

GAO reported similar problems in their 2003 report noting that FS’ annual performance reports provide misleading information on the overall progress achieved under the fuels reduction program. Therefore, GAO recommended that reporting should distinguish acres treated to reduce wildfire risk, acres requiring multiyear treatments, and maintenance acres separately in performance reports.

Total acres treated are reported in accomplishment reports on a national level. Acres treated are not further broken down to distinguish between region, State, or other geographic area. FS’ reports do not provide details on acres treated in specific regions at greatest risk of wildfires. For example, the majority of catastrophic wildfires occur in the west, but the Southeast States (Region 8) treated over 57 percent of the total hazardous fuels acreage in the United States in FY 2004. By comparison, the Pacific Southwest, where typically the danger of large wildfires is much greater, treated only 6 percent of the total hazardous fuels acres. While this appears to be an inappropriate allocation of resources, there is no way for managers and stakeholders to make determinations based on the limited information contained in the reports. The lack of this detailed information in accomplishment reports may result in ineffective funding and management decisions.

Basically Bush and his congress only succeeded in giving our public forests over to the logging companies without environmental safe guards while doing nothing to prevent forest fires.

And, this is his latest proposal:

Washington Bureau

WASHINGTON - President Bush's proposal to reduce fire-prevention spending in the nation's forests has some on edge in Inland Southern California, where three of the last five Octobers have brought catastrophic wildfires.

The proposal slashes the agency's preparedness funding by $77 million, including a $13 million reduction in money to remove dead trees and overgrown brush that act as kindling for fires in 155 national forests.

11:21 AM  

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