Peak Oil and the Fading of the Oil Economy
High Petrol and Gas Prices - unfolding
Period: In the year 2006

History of the rise of the cheap oil and gas economy - commentary and speculation on its fading
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summary   details of fading hydrocarbons   price spikes  translate crude price rises to gas pump price rises
the immediate future
  recession in the USA
    recession overview  
immediate response to recession  medium term response to recession 
recession to depression
Sites of note
oil fields

Oil and gas reserves developed from 140 million years ago. Global depletion of these reserves by humans between1859 until 2005 has now reached the halfway point. The shape of the 'top of the curve' depends on the rate of oil and gas use, which in turn depends on employment and confidence. Recession can flatten the top of the curve. Wars in the 'high volume' suppliers of the Middle East or  Russia could also flatten the top of the curve. Unexpected events such as collapse of mega-oil and gas fields can steepen the shape of the downslope. The story from 140 million years ago until the global peak of oil production in 2005 is available here.

Outlook for 2006
Oil and gas demand continues to rise globally as gas and oil supplies slowly decline, and population numbers in many areas continues to rise. Most demand is fed by burgeoning transport, as global car numbers climb.

With the exception of regions of Africa, tropical Asia and Southeast Asia and tropical South America, all economies are effectively oil-based economies. Oil products provide the majority of the motive power for goods. Many economies also rely heavily on natural gas to generate electricity. This dependance on gas for electricity supply at peak times is becoming critical for more and more countries of the world. Some countries, such as India, Iran, and Iraq, also rely very heavily on bottled natural gas to be able to cook their grain and bean-based foods. Demand for natural gas is surging. The UK and USA in particular, are facing shortfall in domestic supply and an interim period of 2006 - 2007 when domestic importation infrastructure (pipelines and terminals) will likely be insufficient to meet peaks of demand.

All around the world, countries are developing terminals for increased importation of natural gas for electricity generation. Prices are likely to remain high as competition for natural gas on the spot market hots up, especially in winter. New nuclear power plants are a long way off, and coal, especially 'clean burning' coal is becoming shorter in supply and thus more expensive.

Crude oil supply and demand
Crude oil supply and demand will likely be very closely matched. World oil reserve depletion rates are considered to average around 3% a year. New projects in 2006 are believed to bring in an additional about 3.5% of supply. Growth in demand for oil is expected to be at least 3%, barring recession. Some shortfall in supply, and thus higher prices, seem inevitable at some point in the year. Temporary shortages may happen early in 2006 if the weather in USA is particularly cold. If not, prices may rise in the USA 'driving season' later in the year.

More 're-configuring' projects to enable refineries to handle heavy and 'sour' crude are likely to be completed this year, but are unlikely to be large enough to help convert 'heavy' and 'sour' crude into the required marginal volumes of gasoline and diesel. Reduction in demand due to recession is the key to moderate or lower oil prices. Whether or not oil prices increase to a higher band (say US$65-$US75), hover between US$55- US$65, or fall to a lower band (US$45 - US$55) depends on whether or not the vast USA borrowing boom slows down and recession-induced unemployment in USA and China goes up. There is a possibility that China may keep oil prices up even in recessionary conditions by filling strategic reserves - but the capacity and filling schedule for these reserves isn't known, so can't be factored in as yet. On last years experience, any supply 'pinch' in gasoline (specifically) in USA should drift light sweet crude up by around $US20, to around the US$80 - US$85 mark.

As always, Russia and Saudi Arabia are the two countries crucial to high volume oil and gas supply (and to a lesser extent Norway is also a significant volume producer). Both produce roughly 9 million barrels a day of crude each. Russias daily production increases have been dramatic over the last few years. But Russia may have already produced more than 80% of its reserves, as far as can be told, but it is new investment in technology and new management that is holding volumes - for the moment. When Russia commences production decline is uncertain. The commencement is probably not this year, but is likely within 6 years, and decline rates may be significant (any decline rate in a high volume supplier is important - but even a high decline rate in a low volume supplier has no significant impact on supply).

Iraqi production will doubtless hold, and development will not be possible until the future, when it will be helpful but not 'the answer'. Non-OPEC supply is likely to be fairly static over 2006.

Saudi Arabia claims it will be able to reduce oil supply by a million barrels a day in 2006 in order to underpin prices. This seems like a fantasy, given the razor edge margin that exists in supply and demand at the moment. Perhaps they know more about their ability to supply in 2006 than they are publicly revealing. In any event, they are at or just past their likely production peak. So long as pressurisation of their massive fields holds, Saudis are likely to maintain volume this year. Straws in the wind around the secretive Saudi camp suggest pressurisation is becoming insufficient to maintain full volumes. There is no reliable information, but if true, results will speak for themselves by the end of the year. All bets are off after this year.

Recession in 2006 staved off?
The USA backs the US dollar directly with both USA and Iraqi oil (growing more valuable by the day), plus an agreement with Saudi Arabia to denominate international oil sales in US dollars only. Russia may accept Euros and other currencies for oil and gas sales starting 2006. Iran may continue to accept euros and other countries currency, and open an internet based oil bourse to allow other oil producers to do the same. This may weaken the US dollar relative to other countries currencies - especially as the USA Federal Reserve must continue to raise interest rates to attract buyers of USA treasury debt notes. (The USA requires the rest of the world to loan it $US1 billion per day to pay for oil imports, and the cost of securing future Iraqi oil prospects is now $US5 billion per month.)

Continuing to price oil exclusively in US dollars will make oil and gas cheaper for countries needing to use their own currency to buy USA dollars to in turn then buy oil. Whether the market bids up the dollar price of oil and gas to reflect the weaker dollar will remain to be seen. A weaker dollar makes imports of foreign goods more expensive, in turn helping USA domestic manufacturers to survive and to a degree easing recessionary pressures.

The big question is whether or not the USA Fed interest rate hikes will make home mortgage repayments difficult, or even impossible. If mortgage defaults reach a certain point, consumer spending drops, businesses lose confidence, and the USA economy (at least) slides into a recession. A USA recession means less consumer spending. This may have global effects.

China may then be faced with selling its cheap manufactures in a declining USA market, and at the very time that its domestic market is not large enough to 'take up the slack'. At the same time, the central and local governments have made massive numbers of loans (nearly 47% of China's GDP is put into 'investments' of all kinds) to create business start-ups which are not likely to find a sufficient market - or are simply uncompetitive against existing Chinese businesses. China's governing clique believes it must create 7% annual growth in industry to soak up immmigrants to the cities and prevent social unrest in its huge population of impoverished rural workers. Government-subsidised businesses sell at artificially low prices and create domestic and export market oversupply, driving down the profits of already established Chinese manufacturing businesses, and making these otherwise sound businesses less able to survive. But  market-distorting businesses founded on artificially cheap loans to unwise enterprises are not the only artificial subsidy propping up some Chinese (and South East Asian) business.

For decades China has subsidised its businesses with cut-price oil and gas. It has further subsidised industry by allowing it to escape the cost of preventing or mitigating pollution produced by its coal burning power plants, and by its virtually unregulated factories. Environmental controls 'on the books' are either unenforceable or not enforced effectively or regularly.

The true cost of business includes not doing harm to a nations people and to the peoples land. But this cost has not been paid by China's business owners - the cost has been transferred to the poorest working people, through poor education, dangerous and slave-like working conditions, polluted air, polluted water, and food that can be polluted with unacceptable levels of metals (for example arsenic and fluoride from coal) and overuse of pesticides. Estimates are that identified costs of pollution cost 8-12% of GDP. These conditions are causing increasing unrest in China, and the judicial system seems poorly able to resolve injustices.

It is possible that China will aggressively institute 'world's best practise' in mitigating and preventing environmental pollution, and educate its populace to insist on an open, fair and accessible justice system, a healthy environment and healthy working conditions for its people. But it is extremely unlikely. As the rest of the industrialised world found out from the 1960's onward, these problems can be faced and systematically overcome. The danger is that as these problems worsen, China will not invest in overcoming them, will not stop helping to create economically unviable business start-ups, and China will also slip into a recession made worse by unresolved environmental and social grievances. Recession means loss of markets, business failures and slowdowns, bankruptcies, and disillusionment in the middle class.

Protests over illegal land confiscation, punitive taxation of ordinary people, corruption and pollution continue to increase in China.

As China (and businesses) is basically run directly or indirectly by the military, the more xenophobic military elements may use the situation to promote a catastrophic military 'final solution' to China's reluctance to deal with its social, political and environmental challenges.

Aside from 'wild cards' of a sneak Chinese neutron bomb or biological warfare attack on USA, global bird influenza pandemic, a sudden and irrational collapse of the USA dollar, steep collapse of the Saudi Gharwar oil field, insufficient snowfall in the mountains of Eurasia and North America followed by prolonged drought, or other possible but improbable event, economic conditions are possibly likely to be like those of 2005, but perhaps with a 'harder edge'.

The harder edge is likely to be increasing USA interest rates, slowing economic activity, lower profits, increase in business failures, lower tax receipts, cuts in government programmes, increase in personal bankruptcies, slowing of speculation in house buying, lowering house values, slipping value of the USA dollar, derivatives wobbling (if not crashing), holding of value of gold and of the euro, slipping economic activity in Europe with a higher euro value and higher interst rates, razor edged margins of supply of natural gas in those countries that are dependant on it, seasonal spikes in natural gas, petrol and diesel prices, and a move to heightened caution in business investment and planning.

There is likely to be a creeping popular understanding that things are not quite right. In the event of a gas supply/demand mismatch in a severe UK winter, dramatic events may result in a sudden popular understanding.

But even although the warning flags have been raised in Parliaments and congresses around the world, it is a very safe prediction that no government will publicly, actively, positively, and effectively start to plan and provide for the fading of the oil economy and the rise of the solar economy during the course of 2006.

January - Saudi Arabia - Saudi Aramco's operating plan is to increase the number of development wells drilled by 61% relative to last year. These wells are required to "support current production" and  to accomodate future increase in demand. The Saudis plan to double the size of their fleet of offshore drilling rigs.

January 1 - East Eurasia - China - New energy laws come into effect. These include subsidies and tax incentives to develop renewable energy - wind power, solar energy, biomass, and other renewable sources. Renewable biomass-based power fed into the grid will be based on a small premium above the regional price of de-sulphurised coal power. Subsidies decline annually, and stop after 15 years a project has been running. Wind power will be bought as long as it is at or below conventional grid power prices. Solar, wave, and geothermal power will be bought so long as projects are economic and are reasonable in pricing. China aims to derive 15% of its power supply from renewable sources by 2020.

January - China now builds one coal-fired electricity generating plant around every 10 days. Most are relatively inefficient 'electricity-only', and do not re-cycle heat for nearby industrial users.

January - China now builds one gas-fired electricity generating plant around every 3 days. Most are relatively efficient 'electricity-only', and are much less polluting and release less carbon doxide into the atmosphere.

January 1 - USA - Almost 40% of Gulf of Mexico gas production (an important component of the US winter heating supply) remains shut down due to the 2005 hurricanes. Natural gas storage levels are not as high as normal for winter (1.2% lower than 2005, an unusually warm winter). Imported compressed natural gas prices are high due to 'tight supply' in Europe. If january is cold, prices will almost certainly spike high.

January 1 - West Eurasia - Europe - Russian gas firm Gazprom cuts its gas flow to Ukraine by 20 million cubic meters a day (Ukraines own gas needs) as leverage to solve a dispute over how much Ukraine should pay for Russian gas. (Russia is seeking current market prices from Ukraine, but Ukraine wants to continue to be paid in a fixed volume of gas, regardless of current market prices.) Gazprom sends 75% of its gas through Ukraines gas pipeline to Europe under a transit contract. Ukraine replies by using 67 million cubic meters of gas bound for Europe for domestic purposes. Russia claims up to 100 million cubic meters have been "stolen".

January 2 - West Eurasia - Europe - gas supplies to Hungary are down by 40%, France, Austria, Romania and Slovakia by about 30%, Italy is down 24%, and Poland 14%. All due to the cut in gas being transited through Ukraine from Russia. Gas reserves in these countries vary - Italy has 15 days reserves ( 6 billion cubic metres). Gas is used for about 23% of west European energy needs. Some European countries - for example the Netherlands - rely on gas for 50% of their energy needs. Russias Gazprom supplies about a quarter of Europes total consumption (domestic plus imported gas), and makes up about a third of the Eurozones 'foreign' imports. While Germany receives 30% of its gas from Russia via the Ukraine, it is one of the few countries that can source alternate supplies, mainly from Norway. Belgium does not use Russian gas.

Netherlands is self sufficient in gas, and most western European countries use Dutch, Norwegian and UK gas, plus LPG from Algeria, Qatar and Nigeria for the greatest part of their supply anyway.

Of the gas that is imported to supplement domestic supplies (chiefly UK and Netherlands) in the EU (west, central and east europe, excludes Norway, which is not a member) as a whole, around 45% of its gas from Russia, 27% from Africa, about 24% from Norway, and 1.7% from the middle East.

January 3 - Oil prices jump sharply to US$62.40

January 3 - West Eurasia - Europe - Russia restores gas flow volume to Europe/Ukraine.

January - Hungary - badly affected by its dependence on Russian gas, Hungary signs an agreement with Croatia to build an LNG terminal on Croatia's Mediterranean coastline to allow imports of Algerian and other nations gas to Hungary (and Croatia).

January 3 - Africa - Nigeria - Shell ships the first crude oil from the Bonga deepwater oil and gas field for the first time, following its november 2005 start-up. Crude oil production is estimated to be 200,000 barrels per day over the course of 2006. As Bonga (like Agbami) is 100 kms off the coast, it is relatively secure from attack by Nigerian militants.

January 4 - Europe - UK - the continued high gas prices results in some gas-fired electricity generating stations switching to gasoil and kerosene. This sharply increased demand reduces refining capacity available for petrol and diesel production. The result is shortages of wholesale oil for heating, and localised run-downs in petrol stocks, causing delays in re-supply. Supplies are very tight, but are expected to ease.

January 7 - Europe - Netherlands - Shells Pernis oil refinery in Rotterdam is in trouble again, and cuts production of refined product (petrol and diesel) due to a failure in the steam production unit. Pernis processes 418,000 barrels a day, and is Europes's biggest refinery. Petroleum on the spot market will undoubtedly climb, and prices to USA, 'shorted' by hurricanes and committed to refining winter fuel rather than increased gasoline, and as a result increasingly dependant on imports of refined gasoline from the spot market (rather than long-term fixed price contracts), will surely face higher petrol prices. With refineries running at capacity around the world, any disruption to a major refinery has ripple effects due to lack of spare capacity anywhere.

January - Indonesia - Balongan refinery will have to close its 83,000 barrel a day residual cracking unit in february for repairs to the catalytic cooler. Current problems at the refinery mean Indonesia may have to import an additional 800,000 barrels of refined products in January. Indonesia currently imports around 9,000,000 barrels of refined product (mainly petrol and diesel) a month.

January - India - The government resolves to build a 5 million tonne (37 million barrel) crude oil reserve. This amount will supply Indias needs for 5 day, far below the International Eneergy Agencies requirement that countries hold 90 days of imports. India burns about 2.6 million barrels of oil a day, and 2 million barrels a day of that is imported. The reserve is expected to take 9 years to complete and fill.

January 18th  - Russia - Record cold snap, electricity consumption hits a record consumption of 146,000 megawatts. Gas supply to some mid European countries reduced to conserve Russian domestic supply.

January 17th - Iran - cold weather drives up natural gas consumption. Iran cuts gas supply to Turkey from 26 million cubic metres a day to 5 million cubic metres a day.

January 21st - Russia - New record 15,760 megawatt of electricity use in Moscow reached as the intense cold continues. Electricity to industries in and around Moscow is cut back to reduce the load. Residential consumers are urged to minimise electricity use at peak times. One power station runs low on gas, and resorts to fuel switching, burning, coal, diesel, and finally peat.

January 20th - China - gas prices rise as part of government progressive introduction of 'true market' pricing of fuels. A 15-kilogram bottle of LNG now costs 115 yuan (US$14), up from 95 yuan (US$12) 3 weeks ago. Many cities in southern China have a shortage of bottled gas as rising wholesale prices squeeze retailers profit margins and retailers reduce their stock. Use of clean burning LNG is being promoted as way of combatting Chinas air pollution, largely from burning coal with little in the way of effective smokestack pollution control.

January - Central Eurasia - gas pipelines from Russia into Armenia and Georgia are sabotaged by persons unknown. Some claim the explosions are the result of the bad state of repair of the pipelines.

January - Propaganda war over Irans supposed intentions to create a nuclear weapon intensifies as USA seeks to have Iran referred to the UN Security Council for "shoot myself in the foot" sanctions, and Iran baldly states the obvious - it will hurt ultimately USA more than it will hurt Iran. USA does not buy Iranian oil, but suddenly removing a significant part of the 2.5 million barrel a day Iranian oil production from the market would cause competition for the remaining supply and initially raise global oil prices 20-40%.

China, an important long-term customer for Iranian oil and gas (and supplier to Iran of sophisticated 'silkworm' anti-missile missiles) plays the 'cool head'. China hopes to draw Iranian oil from a pipeland overland through Kazakhstan, via China's new Kazak oil concessions. The pipeline intersects with a Russian pipeline into/out of Kazakhstan.

US public deployment of 'bunker-busting' weapons may be aimed at illustrating to Iran that any oil and gas exports it makes cannot be at the expense of future reduced Iranian supply to the west. It may be illustrating that a direct or indirect threat to other Middle East oil and gas supply will not be tolerated. It may be illustrating that a direct or indirect threat to continued substantial denomination of oil in dollars will not be tolerated. USA has already illustrated the effect of targeted missile attacks in neighbouring Iraq. Infrastructure is expensive, and takes a long time and vast amounts of money to repair.

January - Nigeria - insurgents kidnap several oil workers at Shell's 120,000 barrel a day E.A. offshore oilfield. The platform, 25 kilometres off the coast, temporarily closes to safeguard its workers. A few days later, insurgents kill 15 soldiers with rocket fire, then blow up the Benisede oil pipeline pumping facility, cutting oil exports by 100,000 barrels a day. 
A total of 220,000 barrels of Nigerian crude are shut out of global trade, but not as much as in previous years.

Nigeria is the worlds 8th largest oil exporter, exporting about 2.6 million barrels of oil a day, and is soon expected to be number 7 in the world. Nigeria produces 'sweet' light oil, currently in high demand due to limited global refinery capacity for heavy and sour oils.

Both Europe and USA have significant reliance on Nigerian oil.

An insurgent group, MEND, says it will intensify attacks in february, aimed at reducing Nigerias oil exports by a third. MEND says its ultimate goal is to stop Nigerian oil exports entirely.

Nigeria has huge oil revenues, but most of the money is taken by utterly corrupt officials. Little gets spent on infrastructure, development, or social needs. The vast bulk of the population are impoverished.

Corrupt oil workers and corrupt military collude with local delta gangs to 'bunker' oil - divert oil into barges, which is then sold off the coast to tankers. Cosmetic efforts to 'suppress' the delta gangs make the problem worse, as the corrupt military task force tries to take over the 'bunker' trade for itself, and is resisted by other elements of the ministry and by local gangs/political/insurgent/ethnic groups.

January 23rd - oil prices briefly hit $US69 a barrel.

January 23rd - USA - gasoline in USA is about $US2.30 a USA gallon.

January - New Zealand  - Diesel prices are NZ$1.06 cents/litre (US 72.5 cents/litre), farmers complain the fuel cost for their tractors is now 63% higher than two years ago.

January  - USA - Hurricane Katrina and USA's declining natural gas production caused a supply shortfall. Fertiliser companies with existing fixed prices for natural gas took the opportunity to stop producing nitrogenous fertiliser and simply re-sold the gas to the supplier for a tidy profit. Shortening of the nitrogenous fertiliser supply causes prices to drift upward.

Farmers planning spring maize and soybean sowings currently face an increased cost of sowing of about 8%, mostly due to the rise in the cost of nitrogenous fertilisers. These fertilisers are made from natural gas. For crops with a high nitrogen demand, such as maize, the cost of fertiliser is about 30% of the direct growing costs. Harvest, drying,and transport costs are additional. If maize has to be dried (using natural gas) costs are much higher.

January 24th - Saudi Arabian oil minister says "Fundamentals today are in excellent shape and inventories are at reasonable levels, supply plentiful, demand is well-met by supply...There is no reason why prices should be rising - other than these tensions"

January 24th - Russia - Gas supplies to European customers are still curtailed. Countries short of gas cut supplies to industry in favour of households. Work is under way to restore gas to Armenia and Georgia.

January 23rd - Saudi oil minister Ali al-Naimi visits China on a sweep of the Asian region that takes in India, Pakistan, and Malaysia. The Asian region takes 60% of Saudi oil exports.

January 24th - Saudi Arabia and China sign an 'accord' on oil, natural gas, and minerals between the two countries. Details are few, but seem to involve Saudi involvement in 'energy cooperation' and 'infrastructure', with "specific agreements" due to be signed between the two nations state owned oil companies. Reports suggest China and Saudi Arabia plan to jointly build a 25-30 million tonne strategic crude oil storage facility in China's Hainan province, with a contract for an associated oil refinery and natural gas storage facility.

China and Saudi Arabia have cooperated in large-scale energy projects for the last 3 years. Saudi Aramco is involved in a joint venture with Sinopec and Exxon Mobil in building an oil refinery in China's Fujian province, and is working in a joint venture with China's Sinopec to build a refinery in Qingdao city. Sinopec is engaged in a partnership with Saudi Aramco to explore for gas in south of the giant Ghawar oil field.

January - China - imports of crude oil from Saudi Arabia now run at more than 22 million tonnes per year. This is 28% higher than the same time last year. Saudi Arabia is the single largest supplier of China's oil imports of roughly 130 million tonnes a year. Angola is China's second largest supplier.

January - India - Saudi Arabia is the largest supplier of India's oil imports. Saudi Arabia invites Hindustan Petroleum and the Indian Oil Corp to tender for part ownership of a new Saudi Aramco oil refinery at Yanbu, on the Red Sea.

January - Japan remains Saudi Arabias single biggest customer. South Korea is second, India is third, and China fourth.

January - Kuwait's oil reserves, officially about 99 billion barrels, are finally acknowledged in an internal document of the Kuwait Petroleum Corp to be lower, with about 48 billion barrels (proven and non-proven) remaining to be produced. Burgan, one of the biggest oilfields in the world, is said to have around 15 billion barrels of oil. True reserves (already produced and oil in the ground not yet produced) may be somewhere in the region of 85 billion barrels.

January - Spain - Repsol YPF oil and gas group reveals it will have to remove 25% of its previously reported proven reserves.
Over half the revisions are in its Bolivian concessions, where 658m barrels of oil equivalent (BOE) of gas and oil have been removed from the 'proven' category of reserves. It nows books its global reserves as 4.93 billion barrels of oil equivalent (oil, liquids, and gas).

January - China -Shortage of natural gas brings most of China's gas-fired electricity generation power plants to the point of closing. A total of 4 Gigawatt of electricity generation is idle in east China due to lack of gas for the turbines, in spite of being at the terminus of the countries biggest gas pipeline. Gas turbine power stations recently completed in south China remain unused due to lack of gas.

January 25 - China - China launches its first domestically produced LNG tanker, with a capacity of 147,200 cubic meters. China wishes to import LNG in volume, and is planning 16 LNG facilities throughout central, northern, and southwestern China. So far, only 2 have long term gas supply contracts in place, with the Australian LNG contract being for 3 million tons of LNG a year. The facilities in Guangdong and Fujian are due to commence operation in June.

January - LNG is in demand all over Asia for power generation and cooking fuel. World shipyards have orders for 126 natural gas tankers, taking the world fleet to 310 ships. 

January 27 - Turkey - gas supplies from Iran have now increased to 10 million cubic metres a day, enough for households. Some industries have supplies reduced or cut off temporarily. Around 75 million cubic metres of LPG shipped in from Algeria is expected to restore supply to near normal.

January 26 - Itay - gas consumption hits a record 420M cubic metres. Russia, Algeria, Libya and the Netherlands provide the maximum possible amount, 230m cubic metres, and local production provides its maximum of  20m cubic metres. It is not enough. 170m of stored gas is also used, resulting in the limits of the gas distribution capacity being reached. Cuts are made to industrial users gas supply, and to some domestic heating supply. Some electric power stations are switched from natural gas to fuel oil. Italy just squeaks through the crisis. Italy is heavily reliant on gas to generate electricity.

January 25 - price of oil - crude is now $US64.20

January 27th - The International Energy Agency (IEA) announces it is ready to coordinate release of emergency oil stocks if the Nigerian or Iranian supply is disrupted.

January - USA - Ford motor company announces it will dismiss 30,000 employees and close 14 car production plants over the next 6 years. General motors makes a loss of over $US86 million. One quarter of General Motors cashflow comes from sale of gas-guzzling SUVs and  minivans.

January 26th - USA - President Bush said he will no longer spend taxpayer money to prop up SUV producing Ford and General Motors Corporation, but would encourage them to build "a product that's relevant." Clearly, Bush is conceding the blindingly obvious - the American gas guzzling cars are irrelevant in an era of declining oil reserves. They are dinosaurs heading for extinction.

January - USA - President Bushs state of the nation address spouts the same old misleading garbage on 'new' sources of energy releasing USA from 'dependance' on the Middle East for oil. The USA imports around 584 million barrels of oil from Canada every year, and about the same amount from Mexico. USA imports a little less (548 million barrels a year) from Saudi Arabia, then 475 million barrels from Venezuela and about 400 million barrels a year from Nigeria. USA's Iraq supplies 256 million barrels a year, and Angola and UK 110 million barrels a year. Smaller amounts come from Algeria and Kuwait.

So the USA is broadly similarly heavily dependant on Canada, Mexico, Venuezuela, Nigeria and Saudi Arabia for its imported oil. Hardly dependant on the Middle East. Of these countries, Canadian production cannot be increased, Mexico's giant Canterell field has started to decline, Saudi Arabia is sound and Venuezuela is sound, and Nigeria may well become so unstable oil exports are severly cut.

There is no excess capacity in the world to make up for the possibility of a sharp drop-off from Mexico, or a 30% cut in exports from Nigeria. There is no 'spare' gas capacity within pipeline reach of USA. There is no alternative fuel available to meet the supply/demand mismatch that is slowly evolving. Alcohol (a relatively low energy fuel) from crops generally takes more energy to produce than is harvested.  Bush knows this, and knows there is no realistic plan 'B' involving 'cheap' energy in abundance. But gives the impression there is.

January - quote of the month:

"Current U.S. energy policy and the President's Advanced Energy Initiative are too modest and overly focused on the goal of increasing domestic production of oil and alternatives to support increasing oil consumption. This is futile and self-defeating because U.S. oil production is in permanent decline and world oil production will follow - perhaps disastrously soon.

...Technology and alternatives are important. However, unless we also use less oil, we won't reduce America's oil imports. Delayed gratification and self-sufficiency are traditional conservative values. That is why the next conservatism should champion policy changes to use less, not more oil through conservation and energy efficiency. Conservatives should recognize that unless we have a national energy conservation program with the commitment, breadth and intensity of the Apollo moon mission and the Manhattan Project to create the atom bomb, our country is unlikely to achieve the goal of replacing "more than 75 percent of our oil imports from the Middle East by 2025" and even less likely to break our oil addiction. "
- Roscoe G. Bartlett,  Republican Senator
(emphases added)

January - high natural gas prices for electricity generation results in the demand for wind turbine power generators intended for commercial wind power supply to be unmet. The cost of these wind powered generators goes up.

January - The International Energy Agency forecasts an increase of 14.5% in the price of natural gas for 2006, relative to 2005. This gives an average residential price of $US14.57 per thousand cubic feet.

Second Quote of the month:
"The proven world gas reserves as of 1 January, 2001 are 164 trillion cm [cubic metres]. It is believed that these reserves will be enough for 62 years. Russia and Iran have 50% of the world's natural gas reserves, while the territory of Russia, Kazakhstan, Turkmenistan, Uzbekistan and Middle East has 70% of the world reserves."
- Institute of Analysis and Prognostication Kazakhstan-USA, a Kazakhstani strategic studies institute

January - Georgia - the pipelines supplying Georgia with Russian natural gas are still not yet repaired. Russian gas routed to Georgia through neighboring Azerbaijan was severely cut back due to a problem with a compressor (according to Russia). Lack of gas for electricity generation causes supply failure in all of Eastern Georgia. The government hands out firewood and sells cheap kerosine. After a few days some electricity is restored in the east, but electricity is rationed in the Georgian capital Tblisi. Iran promises to provide Georgia with 4 million cubic meters a day, also via Azerbaijan. A Georgian official says once Iranian gas begins flowing, "then Russia won't see the usefulness of the energy blockade any longer." The Georgian President hints that Russia is punishing Georgia for its pro-western stance by taking longer than necessary to repair the gas pipeline.

The Georgian case illustrates the danger of dependence on centralised power supply from a few large volume pipelines.

January - USA - Unusually mild winter results in reduced natural gas demand. High gas prices at the start of winter result in switching to electricity, and other fuels. US natural gas supply remains favorable, stored supplies being over 20% higher than the five-year average for this time of year.

February - USA - the 727 million barrel capacity strategic petroleum reserve remains at around 684 million barrels stockpile. Around 20 millions barrels of sweet crude 'loaned' to USA refineries post hurricane Katrina or sold for undetermined reasons has still not been replaced. Congress authorised the reserve to be increased to 1 billion barrels, but so far, it hasn't been implemented.

February - USA - nearly 363,000 barrels a day of crude are still shut-in from last years hurricane Katrina damage.

February 10 - USA -  average daily net oil imports (crude oil plus refined petroleum) are 13,396,000 barrel per day.

February - Nigeria - crude production is still down, by about 26%.

February - Iran - crude production is down by 40,000 barrels a day, due to high rates of depletion in existing fields and  difficulty selling its existing stocks of heavy Soroush and Nowrouz crude. These two offshore fields have been shutdown, and are expected to re-start in may.

February - Mexico - Mexico's oil production for the month averages 3,747,000 barrels per day in total. 

February - ASPO - The Association for the study of Peak oil and Gas estimates world 'regular' (conventional, i.e. cheap) oil production for 2005 at an average of 67 million barrels a day, and 80 million barrels a day if  heavy oils, deep water, polar oil, and natural gas liquids are added in.

February 16th - UK - an accident at the Bravo gas platform off the coast of Yorkshire interrupts operation of the Rough gas storage facility, where the UK stores the vast majority (82%) of its long term gas supplies. (The Rough facility can also meet about 37% of the peak demand load.) The Rough facility is not expected to be back online until early may.

February 18th - USA - record cold weather in Colorado increased peak demand for electricity and gas heating, causing the load on the power grid to suddenly increase. The grid was closed for a short time to prevent collapse. Peak load power is generated in gas fired plants. Insufficient gas supply to meet the demand for peak load power generation was at hand partly due to unplanned demand, partly due to freezing at the wellheads, partly due to breakdowns at local coal-fired power plants, and possibly partly due to insufficient pressure from the fading Colorado natural gas wells.

February 2nd - Saudi Arabia - Saudi terrorists attempt to penetrate the extensive security surrounding the Abqaiq oil export facility. The facility process 5-7 million barrels of crude a day, seperating gas from the oil and removing hydrogen sulphide in readiness for shipping. This latest terrorist attack on Saudi oil facilities fails at the outer perimeter. The terrorists blow themselves and some security guards up 1.5 kilometers from the main gate. Oil prices on the New York bourse jumps to $US62.50 on the news.

February 28th - light sweet crude is now US$61.41

February 24 - USA - US net daily petroleum imports are down about 8% relative same period last year, roughly one million barrels a day.

March 9 - Mexico - Presidential candidate in the forthcoming election announces an intention to stop drilling for oil in deep water and concentrate soley on land and shallow water reserves.  Critics say this is short sighted, as production from deep water will take at least 10 years from commencement of exploratory drilling. Observers say that this is one means of preserving some oil for Mexico's future domestic needs, and deep water production in the hurricane-prone Gulf of Mexico ought to wait until oil prices justify the high cost of extraction in that environment.

March 14 - Mexico - President claims a deepwater exploratory well  (Noxal) indicates a massive find of gas and oil. Industry observers dismiss the claim as more related to the upcoming election than reality.

March 15 - Mexico - President Fox announces US$37.5 million will be invested over the next 20 years to develop the sprawling Chicontepec on-shore oil field. It contains 18 billion barrels of 'oil equivalent' - oil, gas, and gas liquids. How much will be recoverable is uncertain, as it is a difficult field. The field is low permeability, and sprawls across 3,800 square kilometres. The aim is to produce 1 million barrels a day from this field, to replace the declining Canterell field. This would entail drilling 20,000 wells, four times more wells than exist in the entire of Mexico at the moment. Chicontepec contains 38% of Mexicos hydrocarbon reserves.

March 12 - Kuwait - discovers around 35 trillion cubic feet of natural gas, with about 60-70% of the reserves recoverable. The new "free gas' reserves - not associated with an oil play - were discovered at four fields, and in very large quantities at the Sabriya and Um Niga fields.

Initial production is expected by the end of 2007. Kuwait currently produces one million cubic feet of natural gas a day, most of which is used in power generation. Kuwait had entered into initial talks with a view to importing natural gas from Iran, Iraq and Qatar. The new gas find is expected to cover Kuwait’s gas needs for electrical power generation, and with enough left to use in petrochemical industries.

March  - Kuwait - The Kuwait Oil Company announces it has found an estimated 10 to 13 billion barrels of light crude oil in the north, in the Bahra and Rawdatain fields. 31 reservoirs out of 105 known reservoirs have been explored. Most of existing production is heavy oil. The light oil discovery will add 10% to the country’s claimed oil reserves of about 90 billion barrels.

March - India - India hosts Russian Prime Minister Mikhail Fradkov on a state visit and proposes Russia has an involvement in the gas pipeline projected to take Iranian gas to Pakistan and then on to India.

March 23 - Russia - Russia's president Putin visits Beijing and discusses building a new gas-pipeline system, to be called the Altai, to deliver gas from western Siberia to China. This pipeline, plus another from eastern Siberia (the East Siberia-Pacific Ocean Pipeline, or 'ESPO' pipeline) could deliver 80 billion cubic meters of gas a year to China. The route and the gas fields that might be used have not been determined. The cost for this proposal is estimated at about $US10 billion. Russia already supplies 25% of West Eurasia gas.

March  - Russia - Gazprom explores possibly extending Russia's Blue Stream pipeline that runs from Russia to Turkey. It is suggested the pipeline be extended to Italy, with supply to other countries such as Greece en route. Gazprom hopes to enter the retail gas supply and distribution business along the Mediterranean as part of the deal. Gazprom suggests the pipeline could one day take gas as far as Spain. It could also supply Israel.

The pipeline will mean Russia would no longer have to route gas bound for Europe through Ukraine.

It also enable Russia to buy Turkmenistani gas to re-supply to the European market (existing contracts call for gas from Turkmenistan to Russia to eventually reach 70-80 billion cubic meters a year).

Russia is slowly becoming a Eurasian energy major, albeit new giant fields are in extreme environments and far distant from major markets. Significant supply from these fields is many years off as yet.
The Sakhalin and, to a lesser extent, East Siberian gas fields will eventually supply east Eurasia (China, Korea, and Japan) and perhaps a little to North America.
Ultimately, northwest Russian fields on the Barents sea will link with the planned North-European pipeline from the Yamal field in west Siberia (still undeveloped) to supply West Eurasia by pipeline (Germany and adjacent), and possibly UK.
The Barents Sea fields may also supply Canada and the USA Atlantic coast by LNG tanker. Canada is negotiating to promote the building of a gasification plant at Petersburg to ship Barent gas to Quebec.
Norways Statoil is promoting a gasification plant to be built onshore from the field (at Murmansk) capable of  liquefying 25-27 billion cubic meters for export as LNG. Linking with the proposed North-European pipeline will come later. No final decisions have been made.
West Siberian pipelines already supply parts of Europe, and Turkey, with 80% of the gas currently routed via Ukraine.
Extensions to the existing Blue Stream pipeline will directly supply the Mediterranean with Russian gas as far as Spain.

Russia is well placed to buy Turmanistani gas now (rather than the Turkman waiting for the Chinese to build a gas pipeline to Turkmenistan),

Gazprom, currently deeply indebted, aims to be a retailer in the countries it supplies, as well as a wholesaler, the same as other major energy (oil) companies today. It is looking for partners with capital and technological know-how to form joint ventures.

Russia - Domestic gas consumption continues to increase. Most Russian electricity in Russia is generated in gas powered electricity generation plants. Russia's gas-fired electric generators have an average efficiency of 33%. Europe's gas-fired electric generators have an average efficiency of 50% - 55 %.
Over 90% of residential and industrial consumers of gas are un-metered. Russia has abundant coal, but Russia is almost the only country in the world where gas is cheaper than coal.

Russia - It is estimated that the declining western gas fields may be insufficient to supply both Russian domestic users and European customers by winter 2008.

Russia's major large gas fields in west Siberia are mature and declining. The deputy head of Gazprom notes that required new capacity to meet existing needs will not be met until deposits in the north Yamal Peninsular begin to come on stream about 2012. (The only other reserves of note are the Urengoi and Zapolyarny fields gas fields, but these contain 'wet' gas and heavy hydrocarbons, and are thus very expensive to develop).  In the interim, the last of the largest deposits (25-30 billion cubic meters of natural gas a year), the Yuzhno-Russkoye field, in Nadym-Purtazovsky will come onstream in 2008. But it will not be enough. In spite of Gazprom's plans to add 45-55 billion cubic meters of gas from independants such as TNK-BP and LUKoil operating in the Nadym-Purtazovsky region to the Gazprom pipelines, the necessary pipeline infrastructure will not be in place until about 2009.
It is likely that the demand for natural gas in Russia and parts of Europe in the peak winter period will not be able to be met in the coming few years.

March - Russia - Belarus - Russia triples the price of gas to its close ally, Belarus. Former Soviet satellite states have enjoyed artificially low gas prices since gas discovery in the former Soviet Union.

March - Algeria - Russia - President Putin signs an exclusive agreement to help develop certain Saharan gas prospects in return for access to Algerian gas liquification technology.

March  - UK - A very mild winter has meant demand for gas for domestic heating has been lower than would be expected in a normal winter. UK escapes a gas crisis.

March - UK - short term gas storage may reduce to198 gigawatt hours at current usage rates. Daily gas use at this time is around 350 to 389 million cubic metres a day. Draw required from short term storage thereafter could be higher than the actual amount available. Medium term storage holds about 7 days worth of gas at current consumption rates. Gas from the long term store is unavailable. Supplies direct from the North sea fields are insufficient as the fields are declining. A 50% chance of a phase one gas emergency by the end of march now exists. At that point, large industrial users will disconnected. It is hoped that additional supplies of gas from the continental interconnecter will be available in time to avert shut downs. Most gas in the continet is sold on contract, and little is available for the spot market, even when prices spike high. The quantity 'required' by the UK may be unavailable at almost any price at this time.

March - UK - gas prices within UK reach 255 UK pence a therm (a therm is 100,000 Btu's), or the equivalent of US$33 per million British thermal units. World spot prices are US$7.15 per million Btu's.

March - UK - Power stations used 15% less gas this last winter, due to price constraints. Gas fired power stations emit an average of 99 tonnes of carbon for every Gigawatt hour of electricity they generate.
Conversely, power stations used 13% more coal. Coal-fired power stations emit 238 tonnes of carbon for every Gigawatt hour of electricity they generate. This is because burning coal is essentially burning 'pure carbon', whereas burning gas burns both carbon and hydrogen.
The increased use of coal and fuel oil for electricity generation increased UK carbon emissions rose by 1,687,853 tonnes (nearly 7%) between the previous winter and this last one.

"In the deserts of Saudi Arabia, the permafrost vastness of Siberia’s Yamal Peninsula, in the emerald green islands of the Indonesian archipelago, in the depths of the ocean off West Africa and the ancient Persian plateau lies the gas reserves of the planet, the future of the next world energy order. Governments spend untold billions to control reserves, built pipelines and regas plants, lease fleets of LNG tankers. Like crude oil, gas is the currency of power in the new millennium.

As the grim reality of Peak Oil dawns on an increasingly gas guzzling world, the smart money and Big Oil have rearranged the chessboard of international finance and power politics to stake their claim to the priceless reserves of the only hydrocarbon fuel that complement crude oil. Power generation, electricity, winter heating and industry are all derived from gas that, sometime after 2020, could emerge as the planet's dominant energy source....

Pipeline technologies have now linked the world gas markets for the first time in history. The advent of $60 crude oil, intercontinental pipeline networks, the emergence of LNG and sophisticated derivatives market to hedge price risk have created a truly gas market. It is no coincidence that the Russian - Ukraine spat led to nightmares in Western Europe's most powerful boardrooms and diplomats chancelleries, or that Big Oil's multi-billion dollar LNG bet in Qatar is defacto underwritten by the White House, or that bulk methane has made the President of Turkmenistan one of the most potentate in Central Asia or that Gazprom, not Microsoft or GE, will be the most valuable company on earth one day.

The lessons of Hugo Chavez and the 1974 Arab oil embargo mean the US will never allow the Ayatullah’s Iran with the world’s second largest gas reserves to dictate its energy supply ... Gas is the reason the spark spread will one day become as critical a metric of the world’s financial heartbeat as the North Sea Brent or West Texas Intermediate futures price. .. Big Oil wrote the history of the twentieth century. Big gas will define the secret history of the new millennium."

- Matein Khalid, Dubai Investment Banker, writing in the Khaleej Times, April 2006

March - Russia - China - USA - the chairman of the US Senate's Foreign Relations Committee unveils an 'Energy and Diplomacy Act' to be introduced in the USA Congress.
This extraordinary move has come about because USA is beginning to admit its dependance on 'foreign' oil when the rest of the world also demands a share of what is a limited resource, and USA is an energy hog. "Chinese and Indians, with one-third of the world's people between them, know that their economic future is directly tied to finding energy resources to sustain their rapid economic growth. They are willing to negotiate with anyone willing to sell them an energy lifeline ... The demand for energy from these industrializing giants is creating unprecedented competition for oil and natural gas." When the senator says "negotiate with anyone" he means China and India are willing to negotiate with Iran, Russia and Venezuela.

The proposed legislation would "offer a formal coordination agreement with China and India as they develop strategic petroleum reserves. This will help draw them into the international system, providing supply reassurance, and thereby reducing potential for conflict." Presumably this is aimed at Chinese and Indian cooperation with Iran and Saudi Arabia in developing joint venture oil and gas field operations. The 'coordination' agreement referred to is presumably the beginning of an attempt to arrange the 'orderly marketing' of the major oil and gas fields, a sort of consumer bizarro 'reverse OPEC'. The "International system" referred to is presumably pricing in US dollars. "Supply reassurance" is presumably a reassurance by the parties that the USA will continue to be supplied with around 20% or so of the energy resources of the entire world.

This idea of 'orderly marketing', with allocations no doubt based on historic use (so that USA can take an unfair share) stands in contrast to the 'traditional' approach, as outlined by an USA official in 1992, just after the first Gulf war in 1991. In 1991 Saddam Hussein was evicted from Kuwait by blockading all ports, systematically flattening Iraqi infrastructure such as power plants and pipelines, and carpet bombing his under-equipped army. Hussein was left with no option but to withdraw back to Iraq. The whole episode screened live on television.

 “What the American people learned from the Gulf war is that it’s a helluva lot easier and a helluva lot more fun to kick ass in the Middle East than it is to make any sacrifices to limit America’s dependency on imported crude.”
- James Schlesinger, former secretary of defence and director of the CIA and former energy secretary, in an address to the 15th World Energy Congress in september 1992

Given the USA investment in land-based 'unsinkable aircraft carriers' strategically placed across Iraq, it is impossible that USA has decided to abandon the blockade and infrastructure destruction technique in favor of multilateral agreement. Use of multilateral agreement is just another tool in the box for the USA, nice to have if it works, but not essential if it doesn't.

March - Russia - China - USA - the European Union's foreign-policy chief, Javier Solana says "We have to find the right balance between a market-driven and a more strategic approach."  Here "we" refers to USA, China, India and Europe. In a curious echo of the new American call for what is in effect a 'consumer collective', he calls for a 'collective energy dialogue' by major consumers with the producers. "What we need is an orderly combination of markets, law and consensual negotiations ... The role of politics is to balance different considerations ... The time has come to forge a European energy diplomacy, based on common interests and shared principles."

March - Russia - Germany - former German Chancellor Gerhard Schroeder is made chair of the Russian-German consortium to build a natural gas pipeline, the North European Gas Pipeline (NEGP), under the Baltic Sea from Vyborg on the Russian Baltic Coast to Greifswald on the German Baltic shoreline.

March - Russia - the strategic Baltic Pipeline System carrying oil to a Russian export terminus in the Baltic, rather than transiting through NATO aligned countries as before, is now complete.

March 23 - Saudi Arabiathe Haradh oilfield project is officially opened 4 months ahead of time. It is pumping 300,000 barrels per day, and pumping at full output capacity. Over 500,000 barrels of seawater a day are pumped in to maintain high pressure.
The Saudi Oil Minister Ali al-Naimi claims new oil from Haradh has raised Saudi output capacity to 11.3 million barrels per day. Saudi Arabia currently pumps 9.5
million barrels per day.
The minister claims three new oilfield projects will allow the Saudis to pump 12.5
  million barrels per day by 2009. Khursaniyah oilfield is expected to pump 500,000 bpd in 2007, Shaybah and Nuayyim are expected to add 300,000bpd in 2008 and the Khurais oilfield is expected to produce 1.2 million barrels per day in 2009.
The 'extra' capacity by 2009 is expected to be 1.5 to 2 million barrels a day, to be used for contingencies. Production in 2009 is therefore likely to be 10.5 to 11 million barrels a day.

March - USA - USA Army report on energy trends and their implication for the army dated september 2005 is made available for public release and discussed by Senator Roscoe Bartlett in congress ["...Mr. Speaker, I would remind you that this is not an article from some environmental journal. This is from a report, which has kind of been kept under cover now since last September, just released. I think that it was inadvertently released, by the way. But now that it is out, you can get a copy of it. This was done by the Corps of Engineers. This is a U.S. Army publication...."]. In a career killing move, the authors lay out the un-embellished, uncomfortable, stark data, the 'real life' constraints and challenges. Recognising the risk to the functionality of the army, they ignore the inaction and dissembling of the US Government and lay out the sort of program for the army that the US and other governments should be implementing.

There are eerie echos of the US Government action plan that almost happened in 1977.
Read the report.
Quote from the summary, accents added, layout altered -

"Availability. Future availability of customary energy sources is problematic.
Domestic production of both oil and natural gas are past their peak and world petroleum production is nearing its peak.
Growing domestic consumption will continue to increase dependence on foreign and potentially unstable energy sources. Almost half of the existing U.S. natural gas reserves are considered to be either remote or stranded, i.e., they are too far from existing infrastructure, located on restricted Federal lands, or considered too environmentally detrimental to harvest. Construction of an Alaskan natural gas pipe-line and the importation of Liquefied Natural Gas (LNG) are possible solutions to domestic natural gas problems. However, the necessary production and distribution infrastructure will require years to construct....
our electrical transmission grid is aging and overtaxed. It was not designed to accommodate the complex high load traffic it must now handle due to deregulation.
Its reliability will degrade until appropriate investments are made.
• Affordability. As demand for natural gas and petroleum exceeds supply on a national or worldwide basis, prices rise. As the Earth’s population swells and as standards of living are improved for the developing world, competition for finite resources will increase.
• Sustainability. Worldwide consumption of fossil fuels...continue to grow.
The earth’s endowment of natural resources are depleting at an alarming rate—exponentially faster than the biosphere’s ability to replenish them. It took nature 100 million years to create the energy the world uses in 1 year....
Wastes from nuclear power generation plants are accumulating and no viable means exists to safely and effectively dispose of them.
Current energy policies and consumption practices are not sustainable.
They clearly limit and potentially eliminate options for future generations.
• Security. In an age of terrorism, combustible and explosive fuels along with potential weapons-grade nuclear materials create security risks.
The United States currently has 5 percent of the world’s population, but uses 25 percent of the world’s annual energy production. This disproportionate consumption of energy relative to global consumption causes loss of the world’s good will and provides a context for potential military conflicts, at the cost of lives, money, and political capital.
A more equitable distribution of resources is in our best interest for a peaceful future.
Energy Trends
...the United States currently imports 26 percent of its total energy supply and 56 percent of its oil supply...
The domestic supply and demand imbalance would lessen if coal and/or nuclear energy could be made more environmentally acceptable or if the renewable share of our energy portfolio were to vastly increase.
Worldwide energy consumption is expected to increase by 2.1 percent/yr and domestic energy consumption [increase] by 1.4 percent per year.
This will exacerbate global energy competition for existing supplies.
Renewable energy technologies will certainly be a growing part of the energy mix and will penetrate faster and further than conventional energy advocates think... the cost of renewable technologies continues to fall while the cost of conventional energy sources continues to rise.
The electrical system will likely become increasingly problematic over the next 5 to 10 years. Power capacity should suffice....The grid, itself, however is the weak point in the Nation’s electrical system. Investments are not keeping up with power flow demands; consequently, bottlenecks exist in certain regions, which lowers the reliability of the grid as a whole...
Energy consumption is indispensable ...current trends are not sustainable.
The impact of excessive, unsustainable energy consumption may undermine the very culture and activities it supports.
The days of inexpensive, convenient, abundant energy sources are quickly drawing to a close
Domestic natural gas production peaked in 1973.
The proved domestic reserve lifetime for natural gas at current consumption rates is about 8.4 yrs
The proved world reserve lifetime for natural gas is about 40 years
, but will follow a traditional rise to a peak and then a rapid decline.
Domestic oil production peaked in 1970 and continues to decline.
Proved domestic reserve lifetime for oil is about 3.4 yrs
World oil production is at or near its peak and current world demand exceeds the supply
Saudi Arabia is considered the bellwether nation for oil production and has not increased production since April 2003. After peak production, supply no longer meets demand, prices and competition increase.
World proved reserve lifetime for oil is about 41 years, most of this at a declining availability.

Our current throw-away nuclear cycle will consume the world reserve of low-cost uranium in about 20 years. Unless we dramatically change our consumption practices, the Earth’s finite resources of petroleum and natural gas will become depleted in this century.
Coal supplies may last into the next century depending on technology and consumption trends as it starts to replace oil and natural gas.
We must act now to develop the technology and infrastructure necessary to transition to other energy sources. Policy changes, leap ahead technology breakthroughs, cultural changes, and significant investment is requisite for this new energy future.Time is essential to enact these changes.
The process should begin now.
Our best options
for meeting future energy requirements are energy efficiency and renewable sources.
Energy efficiency is the least expensive, most readily available, and environmentally friendly way to stretch our current energy supplies... The potential savings for the Army is about 30 percent of current and future consumption. ...Renewable options make use of Earth’s resources that are not depleted by our energy consumption practices: namely solar, wind, geothermal, geoexchange, hydrology, tidal movements, agricultural products, and municipal wastes... These options are available, sustainable, and secure.
The affordability of renewable technologies is improving steadily and if the market is pulled by large Army application the cost reductions could be dramatic....Many of the issues in the energy arena are outside the control of the Army. Several actions are in the purview of the national government to foster the ability of all groups, including the Army, to optimize their natural resource management.
The Army needs to prepared to proceed regardless of the national measures that are taken
The following steps by the national government would help the Army with its energy challenges:
Increase supplies.
- Recognize and promote energy efficiency as the cheapest, fastest, cleanest source of new energy.- Recognize and promote that renewable energy technologies make sense for America on a very large scale.
- Promote renewable applications and work to change the image of solar roofs and off-shore wind farms.
- Appropriate the necessary funding to bring Federal facilities to state-of - the- art efficiency.
- Pull renewable technology markets to produce more cost effective solutions with tax incentives and large Federal applications.
- Provide incentives for green power production through continued and expanded tax credits.
- Open up Federal lands for oil and natural gas harvesting where environmentally appropriate.
- Encourage the development of LNG terminals and infrastructure by streamlining approvals and assisting with local approvals.
Modernize infrastructure.
- Support modernizing and expanding the electricity grid.
- Support the construction of a natural gas pipeline from Alaska and Canada.
- Enhance the expansion of LNG terminals and natural gas infrastructure.
Diversify sources.
- Invest in research and development (R&D) in clean coal technologies, renewable technologies, carbon sequestration, breeder reactor nuclear power.
- Invest in R&D in energy efficiency in the built environment.
Optimize end-use.
- Significantly increase Corporate Average Fuel Efficiency (CAFE) standards and expand to all classes of motor vehicles.
- Expand rebate programs for hybrid vehicles.
- Expand appliance and equipment efficiency standards as many states are doing.- Continue and enhance the Federal Energy Management Program.
- Continue and enhance the Energy Star Program.
Minimize Environmental Impact.
Cooperate in global energy markets.

The national and world energy situation mandates strategic planning and action by the Army. The pending challenges of meeting the Army’s ongoing energy requirements in a reliable, affordable, sustainable, and secure fashion demand thoughtful and comprehensive approaches. ... The informed and disciplined management of consumption is imperative. The Army has already begun this necessary strategic planning and its Army Energy Strategy for Installations defines the overarching mission and goals, and outlines broad approaches for reaching the Army’s full potential....Special attention to the diversification of sources is appropriate.
This incorporates a massive expansion in renewable energy purchases, a vast increase in renewable distributed generation including photovoltaic, solar thermal, wind, microturbines and biomass, and the large-scale networking of on-site generation....
The Army must continue to improve and optimize its energy ... management to meet mission requirements."

The US Department of Defense is the single largest buyer of fuel in the USA. The military burn a breath-taking 97% of the total oil burnt by the USA state. The USA government burns about 440,000 barrels of oil a day, around 160 million barrels a year. The Air Force is responsible for burning 53% of this massive amount, the Navy (including the Marines) 32%, and the Army 12%.

According to Senator Roscoe Bartlett the USA military is "doing more than anyone else - in the government or around the country" to try to mitigate the huge dependance on increasingly expensive oil and gas. Including working on new energy efficient battleships, some with masts and sails and clad in photovoltaic panels.

March - USA - Corrosion in a transit pipeline at USA's Prudhoe Bay oilfield in Alaska causes a rupture and spill of 200,000 barrels of crude oil in the western sector of the field. BP tells the USA Senate Energy Committee that the corrosion problem is now under good control.

March - Dubai - the Dubai government and the New York Mercantile Exchange to agree to launch an International Mercantile Exchange dealing mainly in energy futures and derivatives The first offering will be in Middle East sour crude, and may be underwritten by Omani oil. It is hoped the Omani oil will be a benchmark crude for trading crudes from the Middle East to Asia. 

March 20 - Qatar - Qatar announces it is will create what it hopes will be the Middle Easts first International Mercantile Exchange dedicated soley to energy trading in all its forms. The promoters, 'Gulf energy', describing itself as a 'global consortium of energy experts', has signed an agreement with the government-backed Qatar Financial Centre, and expects to 'go live' in a relatively short time.

Qatari state owned 'Qatar Petroleum' is being approached to underwrite the oil supply futures. Qatars energy minister says he goes for long term contracts, and "...we will never go for these activities". Other Qatari government ministers praise it as an excellent fit to Qatars LNG sales and financial hub services. The exchange will operate in a tax free zone.

Qatar currently pumps 840,000 barrels of oil a day.

Qatar has one of the largest gas reserves in the world.

Qatar is strongly 'pro-American' and hosts the command and control base for USA forces in Iraq and in the Gulf.

Qatar is believed to have significant financial connections with USA banking interests, and it is believed that these interests are behind the superficially 'Arab' bourse.

March 20 - Iran  - Iran's planned electronic oil bourse is delayed for several months to a year. It is planned to start trading in petrochemicals first, with crude being the last commodity to be included. It is expected that crude would commence trading in about three years time, probably for direct physical product. British consultant Chris Cook, member of the consortium (headed by the Tehran Stock Exchange) working on implementing the project says "... it's at a much earlier stage than people would think...there will not be a crude oil contract, Gulf-based, in my opinion, within a year -- and that would be really pushing it". The exchange will be located on Kish Island, an Iranian duty and tax free zone.

March - Japan - Iran - The Nippon oil company cuts 15% of its Iranian oil imports by cancelling oil brokers contracts sourcing oil from Iran. Direct imports continue. Japan takes about a quarter of Iranian total crude exports, although in total Japan buys more crude from Saudi Arabia and the United Arab Emirates. The move by Nippon Oil is seen as insurance against supply disruption due to the USA moves against Iran's programme to develop nuclear power, and the possible eventual development (or importation from North Korea) of a nuclear weapon.

"From a business standpoint, the announcement will have no effect on either Japan and Iran. Iran has many options to sell its oil, but how they take the message is another thing...Even if Japan reduces Iranian oil imports, Iran knows China would buy as much oil as it produces"
- Hidenobu Sato, Middle East Research Institute of Japan.

March - Pakistan -
the oil import bill for Pakistan's current financial year (July-June) is expected to be $US6 billion. For the same period last year it was $US4.4 billion.

March - China - retail gasoline and diesel prices are increased by 3% - 5%, the first rise for eight months. Gasoline and diesel are subsidised by the State by regulating the prices refineries can charge. Refineries continue to lose about $US1 on every barrel of crude they refine.

March 30 - Light sweet crude is now $US66.07.

March 31 - Light sweet crude peaks at $US67.15 before sliding back a few dollars. Brief period of low petroleum reserves in USA may have caused the surge, along with USA and UK threats against Iran.

April 16th - the latest IEA report shows world oil supply at 84.5 million barrels a day. This is down by 125,000 barrels a day relative to last month. Reduced production from OPEC countries, North America and the North Sea fields due to a variety of outages (destruction of Iraqi pre-invasion oil commerce and sabotage of the northern Ceyhan pipeline, Iran production down, Nigerian rebels closing out significant Nigerian production) outstripped higher production from elsewhere. If these political constraints didn't exist, production would have shown an increase.

April 4 - Iran - Iran claims to have 'unstoppable' high speed torpedos it could use in the event of being attacked. A clear warning to USA that a USA attack will result in oil tankers or USA aggressor ships being sunk in the narrow Straits of Hormuz. Married to Iran's defensive Russian and Chinese coastal short range missile batteries (which are also effectively unstoppable), the stage is set for the USA to precipitate a massive disruption to world oil supply. Both countries will lose if USA attacks Iranian defense forces.

It is likely the USA has taken a longer term view, and seizing on the fortuituous duplicity of the Iranians as they pursue an ultimate capability of a nuclear weapon (which, paradoxically, they could never ever use without guaranteeing their own total annihilation). This gives an excuse to attack Iranian defenses. Iran would have to be rendered defenseless so that USA/Israeli attack planes can destroy the Iranian nuclear research facilities. With Iran's extremely dangerous and effective coastal defense missiles and radar destroyed, the USA would have total control of the Middle East from its command and control centre in Qatar (a country with vast gas reserves and developing a USA/Qatari oil bourse in competition with Iran's) and its vast new billion dollar "little America" bases strategically placed to protect the USA oil reserves in Iraq. No doubt the bases with be "long term" 'leased' from USA/Iraqi companies...It is almost certain that USA will not only police and control the Middle East oil industry - including all bourses competing with its New York and London-based bourses - but will buy increasingly high prices hydrocarbons with increasingly high priced carbohydrates (USA wheat, sorghum, and maize).

The USA plan continues to unfold.

April - USA - Russia - Iran - USA office of Secretary of State official visitis Moscow and publicly asks Russia to cancel the sale of the Russian Tor-M1 mobile anti-missile missiles to Iran. His request is bluntly rejected by the Russian Chief of Staff.

April 4 - UK - Gazprom (Russia) delivers 85 million cubic meters of gas (140,000 cubic meters of liquid) to UK. This is the first time Gazprom has delivered gas to the UK. Gazprom does not have its own LNG facility, and obtained the LNG from Gaz de France. Gazprom is anxious to diversify into the area of gas distribution and retail throughout western Eurasia, as well as wholesale supply. It plans a similar business expansion in USA and Canada.

Gazprom aims to become one of  the worlds major vertically integrated energy companies.

Gazprom hold roughly 20% of the world's gas reserves.

But 70% of Gazprom's production comes from mature giant fields which are declining rapidly. Newer fields cannot fully compensate for decline. Declining supply is likely to dramatically increase prices by 2010.

The cost of exploring, developing, and piping gas from the new prospects and new fields is conservatively estimated at about $US700 billion over the next 20 years.

April - Russia - Germany - Gazprom signs an agreements with the German company BASF, for the BASF subsidiary gas company Wintershall to jointly develop the Yuzhno Russkoye gas field in west Siberia. The field contains 500 billion cubic meters of gas - enough to supply all Germany's gas needs for 5 years.

April - Germany - Russia - Gazprom signs an agreements with the German company BASF, for the BASF subsidiary gas company Wintershall to jointly build the North European gas pipeline, to transport gas from the Yuzhno Russkoye gas field across the Baltic sea to Germany, and perhaps other parts of western europe.

April - Russia - Germany - the German BASF chemical company and Gazprom joint venture company Achimgaz announces drilling in the Russian Urengoy gas field in west Siberia is due to start this year. The field is believed to hold 200 million
cubic meters of natural gas, and 40 million metric tons of condensates. The field life is anticipated to be 40 years.

April - UK - Russia - UK government illegally tries to block the sale of the UK's largest gas supplier, Centrica, to Gazprom.

April - UK - Russia - EU - In response to the UK's underhand moves, Alexei Miller, Gazprom’s chief executive says, after meeting EU ambassadors:
“It is necessary to note that attempts to limit Gazprom’s activities in the European market and politicise questions of gas supply, which in fact are of an entirely economic nature, will not lead to good results...It should not be forgotten that we are actively familiarising ourselves with new markets, such as North America and China. Gas producers in central Asia are also paying attention to the Chinese market. This is not by chance: competition for energy resources is growing...”

Gazprom said that while it would fulfill its current contracts - signed on rather favorable terms to the EU customers when Russia was desperate for overseas income - "If the European Union wants our gas, it has to consider our interests as well" , referring to Russias wish to become a fully integrated wholesale energy supplier and retail distributor, just like all significant UK, US, and European energy companies.

About a third of Gazprom's gas (by volume) goes to Europe. But sale of that third of the gas that Gaprom supplies brings in two thirds of Gazproms revenue - about $US25.7 billion in 2005. The reason the European market is so profitable is that the two thirds of supply to Russias domestic market has to be made at government-mandated artificially low prices.

Russia is as much dependant on Europe as a market for its gas as Europe is on Russia. These two parts of central and west Eurasia are virtually co-dependant. In the absence of an alternative market for Russia and an alternative high volume supplier for Europe, neither party has 'the upper hand'.

April - Russia - China - Russia signs an 'outline agreement' regarding the possibility of selling West Siberian gas to China. West Siberian gas is Europes main gas source. This West Siberian gas will be very expensive to pipe east to China, and cost overruns in this challenging frozen environment are almost certain. There will virtually only one customer for this gas, China. Price negotiations would be interesting.

April - Russia - Armenia - Gazprom signs an agreement to take control of Armenian pipelines and a power station in return for supplying gas to Armenia at a 50% discount to European current market prices. Even so, supplying gas at half the market rate almost doubles the current artificially low price of gas in Armenia. The cheap rate for gas ends in 2009. Armenia is almost totally dependent on Russia for gas supply.

April -Russia - USA - Turkey - Greece - USA Rice wants Greece and Turkey to exclude Russia's Gazprom from a €600m gas pipeline project of the Turk and Greek state gas companies designed to supply Russian gas already imported into Turkey from Gazprom to go to Greece and also Italy. Rice 'wants' Greece and Turkey to buy Azerbaijani gas from supplies being developed in Azerbaijan by a consortium led by BP (USA) and Statoil (Norway) and due to come on stream next year.
USA is said to be negotiating a military base in Azerbaijan.

April 12  -  Light sweet crude is now $US68.74.

April - Russia -  the massive but isolated Kovykta gas field in East Siberia will now not begin large scale production until 2015. It had been hoped that significant gas would reach Beijing, Dalian, and South Korea by about 2008. It currently produces about 35 billion cubic feet a year.

April - South Korea -  imported LNG now supplies 13% of South Korea's energy requirements. South Koreas long term contracts with Qatar, Malaysia, and Indonesia end within the next two years.

April 14 - Mexico - USA -  Mexico usually exports 50% of its oil production to USA. In the first 2 months of the year Pemex sent 10.6 million more barrels of oil to the USA than it did for the same period last year (up from 99 million barrels to 109.6 million barrels, close to 10% more). This is about 1.77 million barrels a day, and now over 50% of Mexico's production. This time next year, the declining major Mexican oilfield complex (Cantarell) will be producing 1.7 million barrels a day. USA will need the equivalent of all of the Cantarell megafield oil in 2007.

April 14 - Mexico - Mexico's state oil company Pemex had a record revenue of US$4.88 billion for January-February 2006. Mexico is the USA's second largest supplier. (Canada is USA's major supplier by volume.) Mexico is now desperately looking to joint venture partnerships with available rigs as its major field declines. As Mexicos ability to supply starts to diminish, oil revenue will plateau. A third of Mexico's revenue comes from oil. Mexico's population is currently about 107 million people. By 2015 it will be nearly 120 million. By 2015, a social time-bomb will be released. The question is whether Mexico's government will conserve remaining oil for domestic use in the future to reduce the impact of loss of cheap oil, or sell oil as fast as it can right up to depletion to buy short term social harmony - at the price of hugely greater social discord later.

April - Venezuela - President Chavez promises to blow up the Venezuelan oilfields if a USA aggressor attacks. US officials deny plans for attacks, then call the elected President a "threat" to "stability". Presumably "stability" means USA control of Venezuala's oil resources. Venezuela supplies around 40 million barrels a month to USA, around 60% of its production. Much goes to it's USA subsidary distributor, Citgo.

April -
Venezuela's state owned oil company PDVSA (Petroleos de Venezuela) signs a deal with India to supply 2 million barrels of oil a month. India is one of the relatively few countries with refineries able to handle Venezuelas increasing amounts of heavy sour crude.

April - Canada - USA - China - While USA depends on Canadian oil and gas, USA continues to treat Canada with contempt, ignoring judgements in Canada's favor in disputes bought by Canada against USA under the North American Free Trade Agreement. Canada as a result is increasing it's trade relationship with China, with the possibility of shifting up to a quarter of its oil exports from USA to China instead. Canada and China have agreed to a joint project to build a pipeline from Alberta to Canada's west coast to ship oil to China.

April - USA - President Bush orders the Energy Department to delay buying oil to finish replenishing the strategic reserve until USA autumn (september). The given 'reason' was to  'make more oil available' to motorists in the driving season. The only possible effect would be to keep one more major buyer off the market, and to that extent, not fuel oil price rise.

April - USA - daily net oil imports (crude oil plus refined petroleum) are down by about 13% over previous weeks to around 11,634,000 barrels per day.

April 17  -  Light sweet crude briefly touches $US70 in overnight trading before settling at $US69.32. USA petrol stocks prior to the may to september driving season are down around a million barrels, plus razor edge supply: demand, and with possible speculators entering 'plays' on future prices as the USA pre- bombing  of Iran propaganda 'talk up' continues might push prices up for the moment.

April 18 - Anniversary of President Carters prescient televised address warning the USA people time is running out.

April 21 - Light sweet crude for june delivery briefly hits $US75.15 on the New York Mercantile Exchange, a record price.

April 24 - Light sweet crude is now $US73.15

April 24 - USA - gasoline price per (USA) gallon tips over $3 in some areas. Much USA gasoline is imported, some of the borrowed gasoline post hurricane Rita remains to be repaid, and as the USA dollar weakens the cost of gasoline imports rises, even if crude oil prices remain static. The USA consumes around 135 billion gallons of gasoline a year (about 370 million gallons a day).

Repayment of 8.6 million barrels of oil borrowed from overseas to meet the hurricane Katrina shortfall have now been repaid. There are 1.7 million barrels reamining to be repaid. As part of his 'Four Part Plan to Confront High Gasoline Prices', the President directs this 1.7 million not be repaid, as it is 'sweet' oil, and repaying it would make the USA gasoline market even 'tighter' (higher prices) than it would otherwise be. The final 1.7 million barrels will supposedly be delivered around April 2007.

April 27 - UK - gasoline prices now hit a record high of 96.13 pence per litre (roughly $US6.55 per US gallon). Over 60% of the price of  petrol in the UK is government tax (about 61 pence).

April - Middle East - Surging metal (steel, copper, aluminium) and other commodity prices has tripled the cost of energy projects over the last two years. Shortage of some minerals is extreme. Copper stockpiles, in particular, equate to just 2.5 days of daily global consumption.

Quotes of the month:
"It is not just the Australian public, then, that seems to be struggling to come to grips with the fact that the future of oil prices that once seemed inconceivably high is upon us. Service Station Association chief executive officer Ron Bowden this week summed it up: "You're living in a fool's paradise if you think you're just weathering a storm and everything will go back to normal. Normal is high energy prices ... $[AU]2 a litre is quite possible."...Some seemingly obvious answers, such as converting vast natural gas reserves into liquid fuel, may not be as cheap or last as long as expected once the world starts looking at this alternative. The US (which could use up Australia's gas in three years) and Europe have depleted much of their natural gas, and China is buying up Australian gas...Politicians have not led the way in informing the public ...State governments, Victoria's included, are backing huge road projects that keep commuters in cars and promote oil use. The car industry is also built around six-cylinder cars, rather than smaller, fuel-efficient models that motorists are realising are a smarter choice...If Australians and their leaders act now, this country can be ready when oil supplies become unaffordable or unreliable. Planning for the transition from an oil-dependent economy is one of the great challenges of this generation."
Editorial in The Age newspaper, Australia, 23rd April 2006

"Worry now. The problem is enormous. There will be massive shortages unless we act in time. But mitigation takes a long time. Peak oil is not a theory; 33 out of 48 of the largest oil producing countries have hit peak. There is no warning for peak, as production goes up until the peak. After peak, the drop off is sudden."
Robert Hirsch, Senior Energy Program Advisor at the consulting firm SAIC speaking at a Pentagon-sponsored presentation, "Energy: a Conversation about Our National Addiction" on April 24th 2006

April - UK - UK Coal  re-negotiates key contracts with electricity generators. The contract calls for an increase in the price of  coal of 40%. The generators cannot import all their coal as the UK rail network cannot cope with the volume that will be required as gas supplies fade. 50% of UK's power generation now comes from coal fired stations.

April - USA - brief shortages of gasoline appear in some areas as the formula for USA gasoline is changed to exclude environmnetally damaging chemicals. The chemicals are replaced with ethanol. Ethanol absorbs water and can't be shipped in pipelines. It must be trucked to refineries.

April - USA -  gasoline dependant USA cannot buy up enough gasoline from Europe (which predominantly runs on deisel, and whose largest gasoline exporter, Total, has re-jigged refineries to produce more deisel at the expense of gasoline) and, exacerbated somewhat by re-formulated gasoline shortages in some areas, the supply/demand mis-match pushes up the price of transport fuels. The light crude refineries want for the summer driving season is in short supply - as it was last year. There are still insufficient refineries to handle sour and heavy crudes. Many smaller USA refineries are looking for light sweet crude to process for the summer driving season, bidding up the price of this class of crude, and helping bid up the price of the gasoline made from it.

April - USA - Ethanol is mandated in some states as an oxygenate added to gasoline to replace the carcinogenic MTBE. This will require 700 million gallons of ethanol a year in California alone. There is insufficient ethanol supply in the USA to accomplish the government mandated switch-over in those states. Even if it were possible to produce the 6 billion or so gallons of ethanol needed in 2006, this represents only about 4% of the gallons of petroleum the USA uses per year. But ethanol is not volume for volume equivalent to gasoline in the energy it supplies. Ethanol contains only 70% the energy value of an equivalent volume of gasoline. The theoretical 6 billion gallons of ethanol would substitute for less than 3% of USA's petroleum usage.

USA ethanol production increased last season as production of maize for ethanol becomes more competitive with gasoline. There are two main reasons. First, the taxpayers of USA pay the farmers to produce it (farm welfare) via subsidies, presumably in small part to achieve sufficient supply for the ethanol switch-over states, partly for Bush's flawed dream of an ethanol economy, and partly to'pay-off' midwest republican pressure groups. Second, new varieties of maize developed for ethanol production have, in tandem with improved processing techniques, improved yeild of ethanol per bushel of harvested maize. In 1980 a US bushel (56 lbs/25 kg of corn/maize) yielded 2.5 US gallons of ethanol. Now the yield per bushel is about 2.8 US gallons per bushel.

Current USA maize production is very roughly 11 billion (11,000,000,000) bushels.
Most maize is grown for animal feed (pigs and cattle), and the amount grown is relatively static from year to year. Nearly 2 billion bushels are exported, and this amount has also remained fairly static over the last decade or so. Ironically, this years stored-maize surplus will be gone by the time next years harvest is in, and as the current drought has decimated USA planting this spring, next years harvest (2007) will be short over even USA domestic demand by around a billion bushels. This means the subsidized USA beef and pig and poultry fatteners will be competing with the subsidized ethanol producers for that last billion bushels of corn...prices will rise. USA beef and pork will be more expensive. Ethanol will be more expensive.
In 1994 maize production for ethanol was relatively insignificant. But in 2005 it was getting up towards 2 billion bushels.
Clearly, the USA government is 'pork barreling' (paying large taxpayer funded welfare checks to corporate farmers) USA ethanol production from maize. Vast Department of Energy subsidies go to research and development of 'anything ethanol'. But it is both a waste of public money and a subsidy to the already rich.

Nitrogen is the primary fertiliser for corn. Nitrogenous fertilisers are mostly made from natural gas. Nitrogen fertiliser prices have increased dramatically with the increased price of natural gas. Anhydrous ammonia, selling for $US150 a ton a few years ago, reached $US400 a ton in september 2005. Transport costs to isolated farms were an additional $US50 per ton at that time. 

It is uncertain whether maize plantings will remain steady or decrease in future. Some predictions are for over 1 million less acres of maize planted this USA sowing season. And drought has already ruined some sowings.

When all factors of production of ethanol from maize are accounted for - fuel for planting and harvesting, energy cost of making and transporting fertilisers and herbicides, energy costs of pumping irrigation water from ever-depleting underground aquifers, energy cost of manufacturing and transporting the manufactured ethanol - then ethanol from maize takes more energy to produce than it returns. At this time, unsubsidized corn ethanol is estimated to economically break even at the equivalent $US100 barrel of oil. But when oil eventually reached $US100 a barrel, the finishing line is shifted further out because all the costs of producing the ethanol would rise yet again as oil prices rise.

It is only economic now because of obvious and hidden farm welfare subsidy payments extracted from taxpayers and handed to the corporates (710,000 USA farms receive farm subsidies, substantial numbers of which are controlled or owned by rich giant corporations).

April - Sweden - The only country to acknowledge the reality of the end of cheap energy, Swedish taxpayers continue to invest huge capital sums in railway and electric tramline infrastructure and maintainance. Around 90% of Swedens rail network is electrified. A large part of Swedens domestic heating comes from its hydro-electric and nuclear power capacity (Sweden has around 15% of the world uranium reserves, albeit mostly low grade). Increased demand is expected to be met from municipality heat schemes using a variety of co-generation and heat-retrieval sources from industry, burning of waste, some coal, fuel oil generation for peak demand, and efficient wood pellet burners. Transport industry is actively pursuing hybrid cars and trucks, and the use of biofuel, including from the waste produced by the Swedish paper industry. Sweden actively plans and implements projects for the impossible - an oil free economy by 2020.

April - China - Aware of its dependance on imports of foreign oil in a politically unstable region, China moves its strategy of developing coal-to-liquids technology up a click. China's state-owned coal producer, the Shenhua Group, already has a CTL plant under construction in Mongolia, and is planning joint venture plants in South Africa with Sasol and Shell. The South African facilities are being designed to produce the equivalent of 10 million tons of crude oil by 2010, increasing to 30 million tons of crude oil equivalent by 2020. Yanzhou Coal Mining Co, also a major coal producer, plans to complete construction of a CTL plant producing 2 million tons of oil equivalent by 2008.  The estimated production from all the CTL plants in China either under construction, or with construction due to start, is about the equivalent of 16 million tons of crude oil.

The economics of these plants is predicated on a high price for oil and a largely unchanged price for coal. As China gains most of its power from coal-fired electricity generation plants, China's state-owned electricity industry will be increasingly competing with its state-owned coal industry for supply. China says it used 2.19 billion tons of coal in 2005, a 10% increase over 2004. More coal-fired electricity plants are under construction to meet China's rapidly growing demand for electricity. An estimated 300 million people will move into China's industrialised coastal cities over the next 20 years, seriously straining electricity supply. Increased demand for coal for both electricity and to extract oil from would drive up the price of coal in a market-led economy. China is a state-command and control polity, and price increases may be frozen (subsidised) - in effect a new tax on the people of China. Increased coal use will also require a huge investment in rail infrastructure. As with all industrialised nations, the question is whether the investment capital should be applied to gas to liquids or to energy conservation and development of solar and wind power.

April - USA - Rutgers chemists refine and improve the efficiency of the Fischer-Tropsch process that converts coal to oil. The process produces useful gas and useful medium heavy products for deisel, but too much middle hydrocarbons, which have made it uneconomic to convert coal to liquid fuels. The new invention changes the middle weight products to useful forms, making coal to liquid fuels economic for the first time. USA has around 286 billion tons of coal of varying usefulness at varying depths in the ground.

Diesel transports 94% of all USA freight in the U.S. and 95% of buses.USA uses about 56 billion (US) gallons of diesel a year.

April - USA - 22% of the Gulf of Mexico oil production, and 13% of gas production has still not been brought back on stream after last years hurricane season. Many platforms have yet to have underwater damage fully assessed, due to lack of divers and boats. Most work is on permanently sealing off small wells that are uneconomic to repair. The hurricane season starts again in June.

April 17 - USA - Jet fuel in USA is now the equivalent of $US89.55 per barrel when unrefined crude is selling for around $70 per barrel, a difference of around $US9 a barrel. After the dispuptions of Hurricane Katrina, jet fuel in the USA climbed to around $US107 a barrel, when crude was selling for about $US63 a barrel, a difference of around $US44 a barrel.
USA domestic and cargo airlines now consume jet fuel at the rate of 19.9 billion gallons a year (a little less than last year, partly due to the industry achieving fuel efficiencies of around 16%).
Every one cent increase in the price of a gallon of jet fuel adds about $199 million extra to the total annual fuel bill of USA airlines. Some airlines are on the point of bankruptcy already.
USA refineries produce 1.55 million barrels of jet fuel a day. A nett of 92,000 additional barrels a day is imported (a tiny amount of USA production is exported for a variety of reasons).
The USA airline industry cannot afford another hurricane Katrina this year.

April 22 - USA - Canada - Delivery of 50,000 barrels a day of heavy crude from west Canadian oil sands through a link into a 858-mile long pipeline from Illinois to Texas refineries commences. The USA leg of the pipeline has been predominantly unused for some time.

April 22 - USA - Crude imports from Canada in January and February now average of 1.736 million barrels a day, nearly 13% higher than the same period last year.

April - Qatar - with the huge worldwide demand for natural gas products such as urea (Qatar has the largest gas-based fertiliser plant in the Middle East) and plastics, Qatari gas production is now around 11 billion cubic feet a day. At this rate of production, it will be producing 25 billion cubic feet a day by 2011, a production level that was not expected until around 2020. Qatar is re-evaluating reserves in the Northern gas field to see if this rate of production is sustainable into the future. It cancelled two extraction programmes last year. Qatar expects to triple LNG production by 2010. Qatar has the worlds largest gas field, and is of great strategic importance.

April - Russia -  Russia announces stage one of construction of the East Siberia-Pacific Ocean Pipeline (ESPO). This huge project, handled by Transneft, Russia's state-owned pipeline company, will take crude oil from Taishet, near Lake Baikal in East Siberia, to the port of Nakhodka in Perevoznaya Bay on Russia’s Pacific Ocean coastline. The pipeline capacity will be 1.6 million barrels a day. The estimated cost of the pipeline is at least $US11.5 billion. Stage one is scheduled for completion in 2008. Initially, oil will be able to be tankered from Nakhodka to East Asian markets, including China and Japan.

A further pipeline extension between Russia's Blagoveshchensk andChina's Daqing will see part of the oil piped directly to China, and further branch lines could pipe oil directly to North Korea and South Korea. A later stage sees a refinery built near the Chinese border to on-sell value-added refined products to China, Asia, and the Pacific.

April 23 - Russia - West Eurasia - Russia's president of oil pipeline monopoly Transneft observes that Russia has "overfed Europe with oil" and "surplus supply lowers prices". Because current pipelines head to west Eurasia, Russia can't do much to reduce supply to its European customers without losing revenue. But once the Eastern Siberia-Pacific Ocean pipeline (ESPO) opens, around 1.5 million barrels a day will travel east, not west. This will, in Vainshtok's estimation, reduce supply to Europe without cutting income, and presumably leverage higher prices.

April 26 - Iran - Oil Minister Kazem Vaziri Hamaneh says "The need of the world for energy is soaring, and if Iran is taken out of the equation, prices will shoot up and there will be big difficulties in the energy markets...We don't want to cause hardship for any consumers around the world," he said. "We have a commodity and we want to sell it, and we are doing our best and we have shown in the past we are a very reliable source of supply and meeting the demand of the world". He also noted that Iran's willingness to supply the world oil market through all recent disruptions should be noted by the countries of the UN when considering USA's call to aggressively 'punish' Iran for its legitimate nuclear energy program "In my opinion, there are reasonable people in the U.N., and when they are looking at this issue and seeing our activity, they will decide with logic and prudence..."

Iran's virtue in being a reliable supplier is of course dictated by its absolute reliance on oil revenue. Around 40% of revenue is from oil. The birth rate is high, incomes are low, and employment is dependant on a relatively inefficient industrial and agricultural and service sector that is either state owned or subsidised. Iran needs to spend a lot of money on keeping its oilfields pressurised (amongst other elements) if it is to continue to produce the amount of oil it needs to fund the social needs of a young and growing population.

April 26 - Iran - Iran's oil minister admits that the decline rate of it's mature fields averages 6% - 7%. Iran's oil production is stagnant, at about 4 million barrels a day. It consumes at least 1.5 million barrels a day domestically. It exports about 2.5 million barrels a day.

April 26 - Iran - Iran can provide only half it's own gasoline. It must import gasoline to make up the shortfall. Iran's gasoline consumption continues to increase.  The annual increase in the amount of gasoline Iranian's consume has now reached the rate of 10%. Iran now imports around 160,000 barrels a day of refined gasoline, at a cost of around US$4 billion a year. A new refinery is planned to provide sufficient gasoline for domestic needs without having to import. The refinery, once built, will use about 500,000 barrels of oil a day. This will reduce the amount of crude available for export, but increase the amount of diesel and fuel oils available for sale overseas.

April 26 - Iran - Iran plans to spend at least $US25 billion for the next four years on oil and gas development and production to make up for declines. A further $US25 billion will comes from foreign partners. Intensive development of the oil fields may produce an additional pumping capacity of 1.3 million barrels a day. But the oil Minister says that after taking existing declines into account, this represents only an additional 500,000 barrels a day amortised over the four year period.

The conclusion from his statements is that existing mature fields, if left 'untweaked', would have naturally declined by around 800,000 barrels a day over this four year period. The decline rate of big fields is very important. It suggests that by 2014 decline in Irans big oil fields will outstrip new production by at least 300,000 barrels a day, potentially dropping Iran's export production to around 2.2 million barrels by 2014. It also suggests that heavily 'massaged' fields will enter a phase of steep decline some time after 2014.

April  - Iran - Iranian diplomat notes Iran's population has more than doubled since 1979. It's installed electrical generation capacity is 30,000 megawatts, but needs an additional 2,000 megawatts capacity to be brought on line to meet growth in demand. Domestic oil consumption is increasing 8% a year, and "57 of the 60 Iranian oil fields need major repairs, upgrading, and re-pressurising which would require, over a 15-year period, investment of at least US$40 billion...[if current domestic consumption trends continue]...Iran could become a net oil importer by 2010, a catastrophe for a country which relies on oil for 80% of its foreign currency and 45% of its annual budget".

Currently much of the developed Iranian gas is used domestically for electricity generation and for cooking. As few fields new are being developed, there is no extra gas available for export beyond existing contracts - especially as domestic consumption is huge and continuing to increase. Indeed, some commentators believe Iran will be in gas 'deficit' by 2010 if current trends continue.

The diplomat notes that even with massive foreign investment, Iran's electricty needs cannot be met by oil and gas alone, and that "According to the IAEA, "...of the new [nuclear power] plants being built, 18 of 27 are also in Asia, all driven by pressures of economic growth, natural resource scarcity and increasing populations. These are the same pressures faced by Iran.

Iran's uranium ore deposits are sufficient to generate the same amount of electricity as could be obtained from burning of  45 billion barrels of oil.

April 26 - Iran  - Iranian Oil Minister Kazem Vaziri Hamaneh announces that the Iranian Oil Stock Exchange is nearly complete, and the bourse will be launched next week. Presumably its first trades will be in petrochemicals, as previously outlined.

April - USA - The occupation of Iraq, the building of vast new 'regional power extension' bases in Iraq, and control of the Middle East oil resources via Iraq, Qatar and the Gulf fleet now costs over $US 6 billion a month. The initial investment in securing Iraq cost $US320 billion. USA outstanding borrowings (via Treasury 'notes') are around $US660 billion.

April - The USA current account deficit is now a record 7% of GDP. Historically, such levels would push the value of he dollar down by over 33%. The US dollar has hit a year long low against the Euro (the dollar commenced depreciating against the euro since Saddam Hussein switched payments for oil to euros in november 2000 - at the beginning of the year the dollar regained 12% of the 50% it has lost to the euro since 2002, and is now falling again). The dollar continues to fall in value against virtually all major currencies. The International Monetary Fund (comprised chiefly of big USA and European banks) states the obvious, saying the USA dollar will ultimately have to depreciate "significantly" if "global economic imbalances" are to be resolved in an "orderly" fashion. The USA has funded its protection of the oil-backing of the dollar via "guarding" Middle East oil and via dollar payment for oil and ability to print endless dollars. As a result, USA domestic savings are almost non-existant, and consumers are in debt up to their eyebrows. The amount of dollars in circulation has now grown so much that the USA federal reserve no longer dares report it. Only a world that will continue to buy US treasury debt notes because they are backed with oil will keep interest rates down and thus allow USA consumers to remain solvent.

But as the dollar devalues, the cost of imported oil rises due to erosion of the buying power of the USA dollar. In turn, as oil begins to be denominated in other currencies, and particularly the currencies of oil exporting nations and 'balanced budget' countries (some of which are also buying considerable amounts of gold) the increasingly unfavorable USA exchange rate drives up the cost of some oil even when crude prices remain stable. 'Confidence' in the (essentially hugely overvalued) USA fiat currency then begins to erode. USA interest rates must then rise.

This may mark a tipping point, the beginning of 'demand destruction' in USA. That is, costs of transport fuels may cause people to reduce journeys, and commence changing transport options. Peoples discretionary spending power falls. When interest rates rise in order to tempt overseas people to buy yet more dollars, discretionary spending power erodes further. Imported goods become more expensive. (The dollar value of USA goods and services imports is now 60% greater than the dollar value of exports.) Consumer spending drives 70% of the USA gross domestic product, with most of the tradable goods and services being imports. Less spending power means jobs become 'at risk'. At this point, the existng slow slide into recession would normally increase somewhat - if not for USA's unique ability to print money.

The question now is, USA having protected the west's unfettered access to Middle East oil, why has it not taken it's due commission for the service provided? Or has it already been paid?

"Since it is the U.S. that prints the petro-dollars, they control the flow of oil. Period. When oil is denominated in dollars through U.S. state action and the dollar is the only fiat currency for trading in oil, an argument can be made that the U.S. essentially owns the world's oil for free."
- Paul Harris, february 2003

April 28 - Venezuela - Petróleos de Venezuela (PDVSA) buys 100,000 barrels a day of  light crude oil from Russia until the end of 2006 to supply existing customer contracts in Germany. Venezuela may have overcommitted light oils as it trades oil for services within the South American region. Venezuela has to buy the light crude because it's production of light crudes is insufficient to meet the contract. Venezuela produces mainly heavy crudes.

April - Norway - crude production is about 2.22 Million barrels a day for the month, lower then anticipated due to shut-downs for maintenance. The older (1970's) Norwegian giant fields are declining at a rather rapid rate - greater than 12% a year. Their decline has so far been compensated by production from newer fields. Norwegian fields are highly pressurised to maintain production. The rapid decline rate of these giant fields may shift their total depletion profile to more of a cliff than a gentle down-slope as new smaller fields also begin to decline and costs of extraction increase.

April - Saudi Arabia - Asia - Saudi oil exports to Asia (which takes nearly half of Saudi oil) are 350,000 barrels a day lower than march.

April -
Saudi Arabia - production is down to 9.1 million barrels a day, instead of an estimated average of 9.5 million barrels a day for the first quarter of the year. The Saudis claim it is due to reduced world demand for oil, both light and heavy. They also claim the seasonal refinery close downs of recent months in the Atlantic basin and Asian region - which they claim has removed 3 million barrels a day of production capacity (others say april-june refinery closures took out 1.1 million barrels a day of capacity) - has no relevance, as world demand, they claim, is down anyway. The drop in demand is said by the Saudis to be in the Asian markets, with Japan's demand for summer gasoline, for example, said to be less than usual. There remains no transparency or independently verifiable information in Saudi claims on production and production rates.

May 1 - Bolivia - Announcing "The pillage of our natural resources by foreign companies is over", Bolivia's President Evo Morales passes a Presidential decree requiring all foreign oil and gas companies to sell it's products through the Bolivian state. The military immediately moves to control 53  gas fields, pipelines and refineries. Bolivia is the most deeply impoversihed country in South America. Bolivia has the second largest gas reserves (48.7 trillion cubic feet) in South America, after Venezuela. Foreign energy companies controlling Bolivia's two largest gas fields will receive 18% of all nett revenue. Companies operating smaller fields will receive around 50% of their nett revenue. The major foreign companies affected are Petrobras (Brazil), the Spanish-Argentine company Repsol YPF,  British Gas, British Petroleum and Total (France).  Petrobas controls 14% of Bolivia's gas reserves. Currently most of Bolivia's gas is exported to Brazil and Argentina.

May 5 - Light sweet crude is now $US74.61

May 6 -  Mexico - State owned Pemex gasoline stations in Mexicali, Tijuana and the northern Baja cities drop their 'magna' (regular) gasoline price by US66 cents after Mexicali taxi drivers protesting high petrol prices block deliveries of gasoline to towns and tourist destinations. The state governor of Baja California Norte convinces Permex to renege on a 'pact' that links gasoline prices to those in USA cities near the USA/Mexican border. The linkage was designed to discourage people in USA travelling to Mexico to fill up with cheap gas.

May 6 - Mexico - USA - USA recreational boat owners in Southern California travel to Mexico's coastal marinas in Baja California Norte to fill up with cheap diesel. Diesel at the Mexican marinas sells for around $US2 a gallon, and in USA's San Diego it is around $3.80 a gallon.

May - Oil Companies - oil companies, private and state owned, unsuprisingly, report record profits. Exxon Mobil reports a profit of $US8 billion for the last quarter. The profits from state owned oil companies in impoverished and overpopulated countries will go on social investment to try to make up for decades of non-investment during a corrupt colonial past. In other similar countries it goes to corrupt officials and favored classes. The profits from private oil companies goes to rich shareholders and to pension funds for the middle class, where it is re-invested in stocks.
Oil money is a major source of capital for the fading window of opportunity to immediately invest heavily in photovoltaics, electric battery cars, public transport, solar heating and a host of other energy conserving technologies that might make renewable energy not just affordable, but the only choice. One wasted, this enormous capital, this one opportunity, will never re-appear. Time is running out.

May - Russia - Liquified natural gas from Sakhalin phase II, whose startup has been delayed until mid 2008 (the entire cost of the second phase of the Sakhalin gas and oil project is now expected to be double the initial $US10 billion estimate) is now fully pre-sold. Sakhalin energy, a joint project company dominated by Shell, completing a two-train LNG plant with a total capacity of 9.6 million tonnes of LNG year. Almost the entire output of the LNG plant has been sold to Japan's Chubu Electric Power Co. and Osaka Gas Co, with minor amounts going to Hiroshima Gas. As the surrounding seas are only ice-free in summer, special ice-class LNG carriers are needed to maximise the time shipment is possible.

May - Saudi Arabia - exploration to hold off the gradual production decline from the mature Saudi fields cranks up. The Saudis now have about 20 exploration rigs searching for offshore oil, rather than around 7.  The number of onshore exploration rigs is expected to reach 1,120 by the years end, up from 85 at the end of last year.

May - the new 200,000 barrel a day oil pipeline oil from Kazakhstan to neighbouring China commences operation delivering crude oil from Chinese-owned PetroKazakhstan. Talks between China and Kazakhstan on building a new gas pipeline from Iran to China via Kazakhstan continue.

May - Turkmenistan - The Turkman president visits China to discuss building a new pipeline to take Turkman gas to China.

May - USA - vice president Cheney visits Kazakhstan to try to convince the Kazaks to build a new pipeline to take Kazakh gas west to Azerbaijan and then on to Turkey, by-passing Russia. Kazak gas would have to be piped under the Caspian sea, whose adjacent states - including Iran - have yet to agree on the demarcation of offshore borders of their respective countries. Cheney urges Turkmanistan to participate in the proposal by piping its gas to the proposed pipeline and patching it in. One objective appears to be to create an alternative to Russias gas pipeline to Europe.

May 6 - Iran - Iranian oil bourse is licensed by the Iranian Oil Ministry. Trading will be in Euros. This will be the fifth oil trading market, after New York, London, Singapore and Tokyo. Except that it will be the only market trading in Euros, not dollars. Iranian president Mahmoud Ahmadinejad says the oil bourse will supposedly commence business within the next two months. If this is true, it is clearly aimed at oil trading, not petrochemical trading.

May - USA - vice president Cheney accuses Russia of rolling back democracy and bullying its ex-Soviet neighbour states. At  a conference in Lituania attended by European heads of state, he says Russia uses oil and gas as "tools of intimidation and blackmail."

"No legitimate interest is served when oil and gas become tools of intimidation or blackmail, either by supply manipulation, or attempts to monopolise transportation"
-vice president Chney of USA

May 10 - Russia - In the 'State of the Nation' address Russia's president replies to Cheney and his hypocritical remarks
"Where is all this pathos about protecting human rights and democracy when it comes to the need to pursue their own interests?...We are aware what is going on in the world - comrade wolf knows whom to eat, it eats without listening, and it's clearly not going to listen to anyone'', referring to the USA invasion of Iraq to ensure continued dollar hegemony and direct influence over hydrocarbon supply, and USA's looming threat to extend it's feeding ground into Iran.

May 10 - Russia - In the 'State of the Nation' address Russia's president proposes a Russian oil and gas exchange in Russia denominated in the Russian ruble. The aim is to make the rouble an internationally convertible currency by july.
"The rouble must become a more widespread means of international transactions. To this end, we need to open a stock exchange in Russia to trade in oil, gas, and other goods to be paid for in roubles."
- president Putin of Russia
Russia's oil exports are about 15% of the world export oil trade. Russia exports about 25% of the worlds gas. In contrast, Iran has about 6% of the world oil trade, and exports relatively little gas as yet. Clearly, Russia's opening up of an oil and gas bourse will have far more impact on the USA dollar than Iran's move to open a bourse. The move to back currencies with both gold and oil seems to be a widespread trend that cannot easily be reversed. With a weakening USA dollar, oil importing countries outside the USA can buy more oil if their currency is strong relative to the USA currency. Oil exporters are being increasingly 'stuck' with dollars whose worth erodes almost as soon as they receive them. Iran's move to diversify its currency receipts for oil is no more or less than any other major oil exporter is doing, openly, or quietly. Faced with this widespread and unstoppable move away from 'dollar hegemony', Iran's move to other currencies assumes much less importance. Is Iran now safe from USA attack?

May - Russia - UK - Eurasia - USA - As West Eurasia faces the certainty of being dependent on imported gas for 80% of its needs by 2030, the focus of energy security talks amongst the G8 shifts to 'diversifying supply' away from Russia, and G8 investment/control of Russian gas resources. Russia feels its considerations are being ignored, as it is being snubbed.

May 15 - China - Several Chinese economist advocate - "unofficially" - China protect itself against the falling USA dollar and " case of future possible turbulence in the international political and economic situation" by increasing the Chinese central bank gold reserves from 1.3% to between 3% and 5%. As China has a massive $US875 billion of reserves, this would require the purchase of 1,900 tonnes of gold. In spite of record gold prices and regular profit taking by speculators, gold has bounced back in price very rapidly following each dip. Some bullion traders suggest that this could only happen if a major player was quietly buying on the open market. China as yet has not informed the IMF of any 'adjustment' to its bullion reseves.
May - UK - as its indigenous gas supplies fades, the UK scrambles to build infrastructure for a new era of dependancy on imported gas. New interconnectors are being built which will handle 58 billion cubic metres by 2008, capacity for handling LNG is expected to reach 43 billion cubic metres a year by 2010, and additional gas storage of 5.4 billion cubic metres is being planned or built - also to be complete by 2010. These new facilities will be sufficient to store and handle imported gas representing 87% of the forecast gas use in the UK in 2010. The more trenchant question is where reliable long-term supply for these facilities will come from in an increasingly gas-hungry world.

May - Venezuela - China - USA - Venuzuelan state oil company PDVSA signs a memorandum of understanding with the China State Shipbuilding Corporation to buy 18 oil tankers to transport crude and oil products to the Asian market. Venuezuela currently ships 15% of its production to Asia. It ships nearly 70% of its oil to USA. Around 15% goes to the Caribbean region, where, ironically, a large part is refined and the products re-shipped to USA. In order to reduce dependancy on it's USA market, Venezuela wants to increase its sales into various Asian markets to 45% of production by 2012. The shipbuilding deal includes a requirement for technology transfer and training from China to Venuezuelan workers. China is also increasingly able to handle the heavy and extra heavy crude that countries such as Venezuela are starting to have to turn to as lighter oils begin to fade. Venuezuela now produces about 700,000 barrels a day of extra heavy crude.

May - Venezuela - China -Venezuela signs a deal to supply 300,000 barrels of oil a day to China (15 million tonnes per annum) starting within the next few years, and possibly by the end of 2006.

May 13 - Venezuela - UK - An EU-Latin America summit is held in Vienna. Venezuela's president Chavez lambasts the Blair/Thatcher 'hands off' 'neoliberalism' that has delivered Latin America's oil and gas resources into the hands of the rich (many of whom are foreigners) while people starve, saying "neoliberalism has begun its decline and has come to an end" and "a new era has begun in Latin America...There is a big ideological confrontation in the region, some defend the big project of Washington [installation and support of a kleptocracy under the guise of 'investment'] that has smashed our people. We want a profound change, a new socialism and we are going to debate: do we want socialist or capitalism? We say socialism.""

Blair says "What countries do in their energy policy when they are energy producers like Bolivia and Venezuela matters enormously to all of us. My only plea is that people exercise the power they have got in this regard responsibly for the whole of the international community." The word "responsibly" means, of course, selling oil to the USA, in US dollars, even as the US dollar slips in value. In other words, continuing to underpin the USA dollar with Venezuelan oil.

May  - UK - President Chavez of Venezuela visits UK to talk to some 'grass roots' social democrat labour party supporters about democratic control of countries resources. Chavez, with huge popular democratic turnout and support (re-elected nine times in free and fair elections, independently monitored), has used oil money to help educate, employ, feed, and treat the huge number of grindingly impoverished people in Venezuela. Chavez also donated heating oil to impoverished USA citizens via USA charities last winter. Chavez decentralised the hugely corrupt Venezuelan government, introduced popular referenda to vote on issues, and enshrined the human rights of previously discriminated against 'mixed blood' Venezuelan's in the constitution for the first time ever. He is absurdly villified by some of the UK press ( 'president' Blair was elected by 20% of the vote), quoting one of the USA's chief architects of the invasion and break-up of Iraq, Rumsfelt, blatantly and manipulatively (and apparently unaware of the rich irony) comparing Chavez to Hitler! America is an even weaker 'model' of a democracy than the UK's non-proportionally represented parliamentary system. In the USA's 'representative' democracy (actually a two party state) only around 33% of eligible American People vote in mid term USA congressional elections!

"Chávez is, of course, a threat, especially to the United States. Like the Sandinistas in Nicaragua, who based their revolution on the English co-operative moment, and the moderate Allende in Chile, he offers the threat of an alternative way of developing a decent society: in other words, the threat of a good example in a continent where the majority of humanity has long suffered a Washington-designed peonage. In the US media in the 1980s, the "threat" of tiny Nicaragua was seriously debated until it was crushed. Venezuela is clearly being "softened up" for something similar. A US army publication, Doctrine for Asymmetric War against Venezuela, describes Chávez and the Bolivarian revolution as the "largest threat since the Soviet Union and Communism"..."
John Pilger, writing in The Guardian newspaper (UK), may 13 2006

The "threat" is not a model of a relatively successful democratic and decent society in South America that might embarrass the USA. The threat is Venuezuela diversifying it's oil sales so a lesser proportion goes to USA. At the moment, the USA is one of the few nations with refineries able to handle heavy Venezuelan crude. This reality currently ties Venezuela to the USA market. But new refineries are being built in Asia and elsewhere that can handle heavy crude. The USA industrial/military/presidential complex needs an excuse to take control of the flow of oil from Venezuela so that the vast bulk of it continues to flow to USA, and not elsewhere - and especially not to Chinese East Eurasia.

Because there is no possible excuse for aggression against a democratic country, the USA therefore needs to spread crude propoganda against Chavez to try to 'justify' to the world its illegal actions in pursuit of its own interests. So long as Venezuela is one of the major suppliers of oil to USA, the politics of overwhelming USA military power say Venezuela will continue to sell most of its oil to USA. 

May - USA - China - Cuba - Cuba's 'possible' oil reserves in the offshore northern Cuban basin are guessed at in a 2005 US Geological Survey report as being between 4.6 and 9.3 billion barrels. USA politicians complain the USA has cut itself out of the action right in its' "own" backyard by embargoing trade with Cuba. Cuba state oil company Cubapetroleo has signed a joint venture deal with China's Sinopec to explore Cuba's offshore resources north of Pinar del Rio. Sinopec will bankroll the exploration, and production from any finds will be jointly shared between the two partners. Many countries, including China, Canada, Brazil, Spain, and France now either have or are seeking joint venture concessions with Cuba to explore the Cuban offshore basins.

May 15 - Libya - USA - Libya is removed from the list of 'terrorist states' in which USA firms may not invest. Libya produces about 1.5 million barrels of oil a day, with production expected to peak about 2010 at about 2 million barrels of oil a day before commencing decline.

May - Iraq - oil production has still not returned to levels available prior to the Gulf war. The USA invasion has resulted in removal of around 1 million barrels a day of oil. Ironically, this 'lost oil' now causes prices to increase on the world market, while at the same time making it an even more valuable asset of the USA - and of other OPEC members (USA, in effect the 'state' owner of Iraqi oil via ultimately-USA traceable contracts,  is now a de facto OPEC participant). About 476,000 barrels a day of USA's Iraqi oil is consigned to mainland USA.

May - Big oil companies scratch hard to find oil concessions to drill. Big oil no longer finds enough to replace declining production from existing fields. Private oil company wells are now having to explore and drill further out to sea, in more difficult environments, and have to drill much deeper. At the same time, there is a worldwide shortage of skilled oil workers and of equipment. As a result, the average well now costs $50 million - five times the cost of a decade ago. Such huge investments investments now have to be very carefully weighed against the 'certainty' of the prospect, it's size - and the political stability of the country whose territory they are drilling in.

May - Saudi - A Saudi Aramco oil spokesman says the Saudi mature fields are expected to decline at a 'gross average rate' of 8.5% a year unless there is additional "maintenance" and drilling. This 8% is an average of the decline rates of all the fields, which varies from 5% to 12%. Even a huge 12% decline rate in a small field such as Halfaa-1 that produces little oil is trivial. But even a 5% decline rate in a world-beating mega field such as North Ghawar is hugely important.

Given that the Saudi mega fields - and the critical North Ghawar in particular -  are already pressurised, the need for even greater pressurisation and re-working is a worrying admission. He claims that the routine drilling of "additional development wells" in the mature fields, plus a "maintain potential" programme (presumably pressurisation and replacing older vertical wells with multiple branched horizontal wells), has lowered the "composite" decline rate to about 2%. But to pressurise and re-work  mid and south Ghawar to a level that will compensate for dropping North Ghawar production - let alone the project to pressurise the very low-flow Khurais field - may require more oil rigs and operators than are readily available in the world.

Four new wellhead production platform at the Safaniya mega-field due to commence operation by late 2007 will increase flows of heavy oil from this field. An additional three production wellheads as the smaller Zuluf field will also increase production of crude from Zuluf. Again, this is heavy crude. Again, it is for the future. And will require specialised refinery expansion to handle this class of crude.

May 15 - South East Asia and Pacific - China has reduced the amount of gasoline it exports. Partly as a result, the benchmark 92-RON gasoline (close to USA's 87 octane gasoline) climbs to a record US$90.55 (HK$706.29) a barrel at Singapore.

May - Thailand - Increased transport costs depress consumer spending. Price exceed ability to pay. Oil companies import less fuel from the international market, gambling on drops in the international price. Reserves in store fall to 40 days supply (they should be 90). Consumption of diesel drops from 55 million litres to 51 million per day. Gasoline consumption drops from 20 million litres a day to18 million litres daily. Thailand imports 90% of its 70 million liter a day total transport fuel requirement.

May - USA - 3 out of 4 consumers surveyed claimed they were reducing their spending as a direct result of increased petrol prices.

May - Saudi - Saudi Aramco and France's Total oil company sign a contract to build a 400,000 barrel a day oil refinery in Saudi Arabia. Presumably this will refine heavy oil. Saudi Arabias largest 'unused' capacity is for the production of heavy crude. The offshore Sanifaya field may be able to ultimately produce over a million barrels a day, but there is no spare capacity in the specialised heavy-oil refineries to deal with it.

May - Brazil - Australia - Brazil announces it will build an uranium enrichment plant to fuel it nuclear reactors which will "save Brazil millions of dollars it now spends to enrich fuel at Urenco, the European enrichment consortium". As Brazil has no vast gas reserves, its plans are not likely to be challenged by the USA.
Australia also announces it wants a 'dialogue' with the nation on whether it should build nuclear power stations. Australia has the world's largest uranium reserves. Concentrated uranium sources will only last 40 years (at best) if there are global moves to nuclear energy. The fossil fuel cost of then decomissioning the plants and burying the most toxic of the wastes will use more energy than the plants themselves produce. 'Investment' in nuclear energy is ultimately the squandering of oil-derived capital needed to aggressively develop localised and decentralised, wind, wave and solar-based energy sources.

May - Australia - Australian crude and gas liquids production is now 29% less than the peak of production in 2000. At this rate of decline, by 2015 Australia will have to import 70% of its daily transport fuel needs. Currently, Australia imports about 30% of the crude it needs for its daily use of 700,000 barrels a day.

May - USA - USA demand for natural gas is increasing as domestic sources deplete in spite of intensified drilling by natural gas companies. Paradoxically, natural gas inventories are now at record springtime levels due to the warm winter and reduced industrial feed-stock use of gas (overseas gas producers are increasingly converting hard-to-ship gas into easy-to-ship relatively 'cheap' chemicals and fertilisers, achieving economies of scale). Prices fall by around 60% from mid-december highs. The USA National Gas Supply Association warns that this supply cushion may not be so large by the end of summer if the weather is hot (the gas will be used in producing electricity to run air-conditioners), and may not exist by next winter. Gas is normally stockpiled in caverns over summer in anticipation of winter peak demand.

May - USA - Afghanistan - Fearful that the next election may see the current USA president replaced and the USA troops end their Afghan occupation, the USA orders astonishingly large volumes of ammunition from Russia for the Kalashnikovs that the northern Afghan government supplies its soldiers with. If the north of Afghanistan remains relatively secure, the pipeline route might be safe.

May - Central Asia - Russia - China - The Shanghai Cooperation Organization, an economic and cultural cooperation organisation of Central Asian oil and gas producing countries plus Russia and China, agree that Iran, Pakistan, and India will remain at observer status only at Junes meeting. The foreign ministers' council feels there is too much politics, too little business orientation, and conflicts of interest (Pakistan-USA) to contemplate adding to the membership at this time. Presumably this rebuffal of Iran carries a message to get serious about business and leave off the politics or face the USA without support of any kind.

May 17 - India - Pakistan - USA - Afghanistan - Indian government decides to join USA's 'TAP' project to pipe gas from Turkmenistan, right across Afghanistan, to Multan in Pakistan. With India on board, the pipeline would then be extended to India's western border. The current price tag is around US$3.5 billion. The TAP concept is a little confounded by the fact that Russia already has an agreement with Turkmenistan to at some point take 100 billion cubic meters of Turkman gas annually, and China has signed up for 30 billion cubic meters a year, starting 2009. These two contracts alone are for more gas than Turkmenistan can produce.

The USA is holding out the prospect of a pipeline in an attempt to convince oil and gas rich Central Asian countries to send their products to South Asian markets (India and Pakistan maybe Afghanistan) rather than allow, firstly, Russia to onsell central Asian gas and oil via Russia's existing pipelines into Europe, and secondly, rather than sell Central Asian gas and oil to China.

The USA is desperate to create a USA-sympathetic 'South Asian' bloc adjacent to oil and gas rich Central Asia. According to a USA state department official, the USA wants "to give South Asians access to the vast and rapidly growing energy resources in Central Asia, whether they are oil and gas in Kazakhstan and Turkmenistan, thermal power in Uzbekistan, or hydropower in Tajikistan and Kyrgyzstan...Within the next few years, we expect to see private investment lead to the establishment of a 500 kilovolt power line transmitting much-needed electricity from Central Asia across Afghanistan to Pakistan and India."
USA fears the growing emergence of a strong Central, North, and East Asian trading bloc that has Iran and Iranian gas trading cooperatively with Central Asian and Russian gas.

May - Pakistan - Disgruntled Pakistani militants blow up two natural gas pipelines in the southwest province of Baluchistan. Locals say the gas is not benefitting the region. Insurgents are increasingly targeting the pipelines, rail infrastructure and army facilities. Pipelines are an easy target for those wishing to make a political point.

May - USA - depletion rates for most significant USA oil wells is about 10%.

May 22 - World - Russia - Saudi - An article by Rafael Sandrea in the Oil & Gas Journal uses the "Hubbert Linearisation" technique on oil fields being developed for further production to estimate reserves in place and oil (and probably 'oil equivalent liquids) that has been used up. This technique suggests the total recoverable reserves in all the worlds oil fields were an initial 2,000 Gigabarrels; 957 gigabarrels have been burned, and 1,043 gigabarrels remain. That is, 48% of the entire world oil stocks have now been used up.
More importantly, the extremely important 'high volume' producer, Russia, has only 23% of its original recoverable oil reserves (estimated at 195 gigabarrels) left. And domestic consumption increases year on year.
Saudi Arabia, the other 'high volume producer', has 39% of its recoverable reserves left.
While around half the worlds 'once-only' oil supply is yet to be used up, the 'bottom half' is from multiple, smaller, lower-volume fields that together cannot make up the pre-peak very high daily flow rate from Russia, Saudi Arabia's North Ghawar, and Mexico (in particular).

May 22 - Russia announces its rouble-based trading market for oil, oil products and gold will commence june 3.

May -  BP - Thanks to a strategy of acquiring as many Gulf of Mexico exploration leases as possible, BP now has 650 lease tracts in the deepwater Gulf, each 9 miles square. As exploratory wells in this difficult region now cost around $US100 million, BP has concentrated only on large reservoirs.The successsful exploratory wells Atlantis, Neptune, Mad Dog, Holstein, and Thunder Horse have been the result.

May - BP - The Thunder Horse oil platform was supposed to be repaired and in production this month. Pressure testing the oil distribution pipes 6,000 feet under the sea revealed that welds had failed under the severe pressure at this depth. In addition, as the oil reservoir is at a total depth of about 5 miles below the water surface, it is already under immense pressure. The pipelines must hold crude oil coming out of the rock at a pressure of over 17,000 pounds per square inch. The pressure at this depth underground is susch that the oil itself is 275 degrees Fahrenheit.

Production is now once more on hold.

May 22 - Mexico - Mexican oil and gas liquids production for the period January to April was 3.351 million barrels a day, mostly from the major Bay of Campeche fields which are being heavily developed to make up for falling production. The major Campeche candidate for extended pressurisation and drilling, the Ku-Maloob-Zaap field, produces heavy oil. Mexico's heavy 'Maya' crude is refined almost entirely in the USA.

May 22 - Mexico - Production of light oil from Mexico is now 976,000 barrels a day.

May 22 - Mexico - Production of heavy oil from Mexico is now 2.376 million barrels a day.

May 22 - Mexico - Oil exports, at 1.969 million barrels per day, are the highest in 6 years. About 1.697 million barrels a day are sent to USA - an increase of around 100,000 barrels a day over the same period last year. Historically, Mexico has sent 90% of its oil, light and heavy, to USA. Overall Mexican oil production has not increased, therefore the additional exports might have come from reduced demand on the domestic market. Domestic oil consumption appears to be about 1.382 million barrels a day. This may be misleading. Given that Mexico depends on importing 25% of its gasoline from USA, it may in fact be the case that increased domestic gasoline consumption in Mexico requires Mexico to export greater volumes of heavy crude for refining and return of the refined product from the specialised heavy oil refineries on the Gulf of Mexico coast of USA.

May 22 - Mexico - Energy ministers admits the deepwater Noxal -1 well 60 miles off the coast of Veracruz
has produced disappointingly. The well had been touted as the first tapping of a field that was supposed to contain "up to"10 billion barrels of crude. Mexico is hoping the deepwater (3,000 feet) field, named 'Deep Coatzacoalcos', will eventually prove a 'world class' find.

May - Mexico - Pemex announces it will spend US$37.5 billion over the next 20 years to develop the Chicontepec reservoir in southern Veracruz. The field covers 38,000 square kilometres, and holds about 40% of Mexico's oil reserves. Production is very poor, only 26,000 barrels a day. Pemex hopes to sink a very large number of wells within the next decade in order to bring production up to 1 million barrels a day.

May - Mexico - Canterell produced just over 1.8 million barrels a day for the month.

May - Kazakhstan - USA - Kazakhstan still refuses to comply with USA calls to pipe its Kashagan oil under the Caspian sea to the head of the USA sponsored $US2 billion Azerbaijan-to-Turkey oil pipline.

May - USA - Under-investment in rail has seen some power companies in southern USA unable to stockpile the full coal stocks they need to burn over the coming southern states peak demand 'airconditioning season'. As these companies have only one product - power - a few take extreme measures to obtain coal - one company purchased 150,000 tons of coal from South America, shipped it to a Texan port, then move all 150,000 tons by truck 140 miles inland to the power station stockpile yards. USA is a huge country. While it has massive coal reserves, the quality is variable, and both the production rate in the face of increased demand and the over-burdened and relatively poorly maintained railway network are creating a bottleneck. Coal is the major energy source for USA electricity.

May - USA - USA ethanol plants use a lot of energy to make ethanol from corn. They are finding the cost of natural gas prohibitive. Almost all the 100 ethanol plants in USA use natural gas. The plants want to use cheaper coal. "Pork barrel' politics in the corn and coal states is pressuring the USA government to change the 'clean air act' to allow ethanol plants to burn coal. There are 190 more ethanol plants due to be built. One analyst claims that all will burn coal, partly due to the high cost of gas, and partly because coal is a domestic energy source and is not subject to the uncertainties around imported energy sources.

May 24 - China - Chinese refineries continue to bleed money as they are not allowed to pass on the cost of the recent rises in crude prices. The state raises the price refineries are permitted to sell at by 10%-12%. This cuts their losses to the level near the beginning of the year.

May - China - China's expanding importation of oil is creating supply and security problems. China now imports around 140 to 150 million tons of oil a year (roughly 900 million barrels, equating to roughly 2,465,753 barrels a day), mostly from Saudi Arabia and Africa. Around 70% of China's oil shipments have to go through the narrow Straits of Malacca sandwhiched between the Malay Peninsular and the large Indonesian island of Sumatra. This channel has become a shipping choke point, limiting the number of large vessels that can pass through. China aims to continue to develop overseas sources of oil and gas diversify the political and geological risk inherent in relying on a few major suppliers, and to diversify the routes away from the Malacca bottleneck.

May - China - Crude oil from Kazakhstan commences flowing for the first time in the new Kazakhstan to China oil pipeline. The 597 mile long pipeline takes oil from Atasu in Kazakhstan to China via the Xinjiang region in China's far west. The pipeline was completed last year at a cost of $US700 million. The pipeline will carry about 140 million barrels a year, and will increase the total amount of oil China imports from Kazakhstan from the current about 9 million barrels a year (about 24,657 barrels a day) to about 33 million barrels a year (about 90,410 barrels a day). China expects to source 56 million barrels of crude oil a year (about 153,424 barrels a day) from Kazakhstan by 2007.

May - China - Plants to convert China's coal reserves into liquid fuels ('coal-to-liquids') under construction or in the planning stage have an estimated capacity of 16 million tons of crude oil equivalent a year.

May 26 - Japan - Iran - Japan has almost run out of time in its contract to implement the main stages preparatory to producing crude from the very large Azadegan oil field in southwest Iran. The field may contain 26 billion barrels of oil, and the production rate when developed has been estimated at 400,000 barrels a day. The contract terminates in september. The Japanese government-owned oil field development company, Inpex, says it has been unable to complete the contract because the Iranian side has not finished de-mining the area. The Iranian partner, Iranian National Oil, agrees that Iran has an obligation to finish de-mining the area, but that the major drill sites have been cleared and there is no barrier to drilling. The joint investment was slated to total $US 2 billion, with Japan supplying most of the capital. Iran says the contract will be terminated at the deadline, with no possiblity of extension of the existing contract. Japanese officials say the project is important to Japan to obtain a stable energy supply. When it is suggested that Japan is deliberately delaying the project at the request of the USA, Iranian Oil Company officials admit they have no specific strategy if Japan is unable to re-negotiate a new contract, but that they would likely partner with whoever was available, including China.

May 27 - the first Caspian sea oil from the Baku to Ceyhan oil pipeline commences loading a tanker at Ceyhan.

May  - Iran - Little progress has been made on upgrading Iran's five refineries to provide more gasoline, let alone build the three proposed new refineries. As a result, the government still has to import around 40% of its domestic gasoline needs. Iran's refineries can produce only 40 million litres a day. The hugely subsidised price of gasoline is US9 cents a litre to the consumer. Iran's government needs to spend 20% more this year than last to keep up with a rapidly growing population and inflation of over 13%.

May - Saudi Arabia - Saudi production for may is 9.05 million barrels a day, down yet again from levels in april. Why? According to the Saudis, it is due to high stock levels and lack of storage in importing countries. The OECD growth in demand for oil has been less than predicted for the last three quarters. Some estimates in USA have a 10% price rise for gasoline dropping usage by 2%, not quite enough to stop overall demand growth of about 1% in USA (with some of the world's cheapest gasoline prices). Other countries may now have reduced demand. Overall, whether the beginning of recessionary conditions is reducing demand, or whether Saudi output is dropping, or a bit of both, is impossible to determine as yet. The jury is out on whether the Saudi explaination is the truth or not.

May - Russia - Russian officials "suggest" that as the three largest 'joint venture' oil projects in Russia - the Sakhalin-2 field operated by Shell, Sakhalin-1, operated by Exxon Mobil,  and the Kharyaga license area held by Total -.are behind schedule and over budget, Russian involvement should be increased and the contracts re-negotiated to 51% Russian ownership. This continues the trend of  re-nationalisation of a nation's major oil and gas fields completed long ago by countries such as Saudi Arabia, Libya, Kuwait and so on. USA and UK oil and gas fields are owned by USA and UK private companies, making them, in effect, nationalised. The strategic importance of oil and gas is a major factor driving nationalisation. But a very important factor is the inequity in return between the partners. The joint ventures still remaining were signed up between the host country and the foreign oil company investor at a time of low oil prices. The foreign investor still made a commercially satisfactory return on investment. With high prices, the foreign investor is making phenomonal 'windfall' profits, profits which were never initially dreamed of when the contract was signed.

May - USA - Exxon Mobil, the world's largest company, pays Lee Raymond, the retiring boss of the company, a retirement package of $US400 million. He will also be paid $US1 million per year to act as a "consultant" to the company. In addition, his salary and bonuses for the year just gone came to $US49 million. Exxon Mobil made the largest profit of any company in the world last year, a staggering $US36.1 billion. Under Raymond, Exxon has donated $19 million of shareholder funds to 'global warming denial' groups. In contrast to BP, Exxon Mobil under Raymond cut funding to developing alternative energy projects such as solar energy. Exxon Mobil was a very important corporate contributor to USA Bush junior's campaign to win govenorship of Texas, a springboard to Bush becoming Commander-in-Chief of the USA military.

May - USA - USA Energy Department proposes a 2007 budget which will cut the 16% ($US152 million) currently allocated to energy efficiency programs of the Industrial Technologies Program. Small scale, practical initiatives of this program are claimed to saves the $US7 worth of energy for each dollar spent. Money is being re-directed to grandiose but hopelessly flawed programmes such as Bush's "Hydrogen Fuel Initiative", which will waste $US1.2 billion over five years.

May - The authors of the 1995 'Hirsch report' complete a new report, 'Economic Impacts of Liquid Fuel Mitigation Options' aimed at finding out the options available for physical dependence on imported oil. It concludes that in the best case a simultaneous crash programme across:
would contribute "significantly" to both saving and producing fuel in USA. They found that because of the time needed to build industrial plant and the $US2.6 trillion cost of implementing such a crash programme, results would take "decades" to bed in. In the best case, there could be combined savings and new production of 44 billion barrels of liquid fuels. The authors don't fully account for the energy required to derive oil from shale. Nor do they fully acccount for the need for increased rail infrastructure for coal transport. Or the use of conventional liquid fuels to blend with coal to liquids.

Finally, the authors note that no such massive 'crash programme' is in place, or even being planned.

June 1 - Light sweet crude is now $US67. USA offers 'conditional' diplomatic discussions with Iran. Some interpret this as diminishing of the USA threat against Iran and therefore lessening the likelihood of disruption of Gulf oil supplies.

June 2- Light sweet crude is now $US70.

June 2 - Canada - over 700 million cubic feet of natural gas is now being used to produce 1 million barrels of oil a day from Canadas massive oil sand reserves. The gas is burnt to make hot water and steam to extract oil from the bituminous sands; and also as a source of hydrogen needed when synthesising oil from the bitumen. The US$90 billion worth of expansion planned for the oil sand production will require an additional 1.4 billion cubic feet of natural gas by 2015 - which is equal to about 13% of Canada's present gas production. The problem is, the Canadian gas production of around 17 billion cubic feet a day is starting a slow decline, and at the same time both Canadian and USA demand for gas for electricity generation is increasing. Large quantities of gas have been found in the McKenzie delta and Beaufort Sea regions, but a pipeline to deliver this gas is still only in the planning stage.

June - USA - 21% of the Gulf of Mexico's oil production and 13% of its natural gas production remains unavailable due to damage from last years hurricanes. An acute shortage of trained people to effect repairs remains a key issue.

June - Qatar - Qatar has revealed that it placed a moratorium on further exploration of its giant North Pars gas field. This field covers about 50% of the surface area of Qatar and is said to contain 900 trillion cubic feet of recoverable natural gas.

June - Qatar - continues its projects to enable it to become the worlds largest liquified natural gas exporter. Qatar currently can liquify 3.4 billion cubic feet of its total natural gas production per day, 14% of the world total of LNG. Projects under way will increase liquification capacity to over 10 billion cubic feet per day by 2011. Ultimately Qatar will have at least 7 gas trains producing liquid gas for shipment. Significant quantities have been contracted to USA, Japan, and China.

June 13  - UK - The UK Office for National Statistics records the increase in domestic gas and electricity charges in the year to may at more than 25%. It notes energy costs are rising at ten times the rate of inflation. Electricity and gas tariffs are due to be increased again over the next few months.

June - Gulf States  - Oil producing countries of the Middle East Persian Gulf domestic oil consumption is growing 4.5% a year - the world's highest growth rate. USA, the worlds largest user of world oil and gas supplies, has an annual increase in oil consumption of about 1%. Middle East Gulf countries use about 17% of the oil they produce in domestic consumption.

June - Gulf States  - the Dubai based Gulf Research Centre notes that even although the hot deserts of the Middle East are one of the most favorable places on earth to exploit the power of sunshine (which they also note supplies 15,000 times the amount of energy - as solar radiation - than all the energy used in the world today) very little solar energy is exploited in the Middle East. The report notes that the Gulf countries rely on oil and gas, a depleting resource, and tourism, also liable to diminish as travel costs rise. The Centre notes that Gulf countries could use the emerging renewable technologies to provide employment, conserve oil and gas for use in Gulf petrochemical industries, and prepare for the 'post-fossil fuel era'.

Currently there are very few renewable energy projects in operation -  solar parking meters in Dubai, an apartment complex whose day time air conditioning is solar powered, one hotel with some solar water heating, and a wind power plant on Bani Yas island.

June - Abu Dhabi - Mubadala project launched to establish Abu Dhabi as a centre of exellence for renewable energy research. It will establish a research centre, 'special economic zone', and provide venture capital for renewable energy projects. The ultimate aim is to switch Abu Dhabi from a technology importer to a technology exporter  "over the coming decades". Renewable technologies are seen as at the beginning of their technological development phase, with few barriers to entry, are relatively labour intensive, and ideally suited to the Middle Easts comparative advantage - heat and sunshine. Abu Dhabi is the world's 10th largest oil producer, producing 2.1 million barrels a day in 2005. Like Saudi Arabia (and unlike world number two, Russia) Abu Dhabi's production is expected to remain static about this level until about 2030.

June - wind power  - A recently published University of Stanford 'world atlas' of suitable wind power sites claimed to show that, in theory, if all these sites were use, there would be enough energy generated to meet current world needs several times over.

June - Brunei - The Brunei Minister of Energy says "Without discovery of new reservoirs with large volumes that can be produced at a low cost, we would not be able to lower the current high average cost of production even if the required state-of-the-art technology and expert resources are available," in 2005 the Brunei government subsidised diesel and gasoline to the tune of about B$167 million. The subsidy is expected to cost B$226 2006.

June 13 - China - China announces it will cut gasoline exports for the fourth month in a row. Increasing Chinese domestic demand (car sales have increased by 50% annually) cuts the available surplus and contributes to a gasoline shortfall in the region, as China has been a significant exporter of refined gasoline to Southeast Asian markets. Shipments may drop to only 130,000 tonnes this month.

June - China's first strategic oil reserve, in Zhenhai, near Shanghai, is due to be complete by august. Its capacity is 38.1 million barrels of oil. Planning for oil storage began in 2004, but budgeted on $US20 per barrel oil. Three more reserves are due to be built and filled by 2008. It is not clear whether China will use indigenous or imported oil to fill the reserves. Saudi Arabia currently supplies China with about 445,000 barrels of crude a day, around 17% of the oil China imports.

June - Russia - Currently Russia exports roughly 6.67 million barrels of oil a day. While production is said to be likely to increase by a few percent until 2009, continous increases in domestic demand are likely to negate the small incremental production gains. 

June 12 - BP - The head of BP, Browne, says that "It is very likely that, in the medium term, prices will stand at about $40 on average. In the very long run, even $25 to $30 are possible..." He went on to say 'large' new oilfields were still being found - without mentioning that the few 'large fields' are in difficult terrain and will not make up for the decline in the mature 'mega fields. Interestingly, Browne rebutted the idea that prices could only go up as scarcity increased. He points to oil sands, (and probably has in mind 'liquids to oil' technology Qatar and other stranded gas regions) and to West African offshore oil. These factors might or might not extend the plateau at peak oil. He is correct that in the long run oil prices will be down. He omits to mention that in the long run inevitable world recession will be the driver.

June - BP - BP's 2006 update of its 'Statistical Review of World Energy' is published. This document is one of the most comprehensive and accessible sources of energy information available to the public in the world. Because of that, it is frequently relied on as an authoritative source. But, in line with Chief Executive Browne's predilection for downplaying diminishing conventional crude oil reserves (started in 2004 with the addition of 'unconventional' tar sands and natural gas liquids to the global crude oil inventory), the report continues to count unproduced tars and sands, thus increasing global proven reserves over last year to 1,200 billion barrels of ultimately economically recoverable reserves. The report successfully conflates relatively easily accessible conventional crude with difficult and expensive to extract tar sands, and continues to add-in liquids from natural gas wells. In this way, so-called 'crude oil' reserves appear to be increasing, when fact they are decreasing (production increases or decreases is different to reserves, albeit releated in the long run).

June - Bolivia - Russia - Gazprom, Russia's gas major, explores the possibility of investing $US2 billion in both reworking some of Bolivias abandoned gas wells, and sinking new wells. More importantly, it is in discussion with Bolivia to use its experience as operator of the world's longest gas pipelines to liquify and pipe recently nationalised Bolivian gas for export overseas. Currently Bolivia is trying to re-negotiate the price for the gas it pipes to Argentina and Brazil, with little progress so far.

June 14 - Iran - Iranian Oil Bourse is still at least two years away, according to one of it's architects. He also says existing bourses trade in risk, not physical product, and that speculation by such ''intermediaries" playing hedge funds have dominated and manipulated the market, driving up the price of oil -

"As for trading oil in euro's most commentators tend to forget how limited the supply of Euro's is, and I don't think that will change much soon either bearing in mind how conservative the European Central Bank is. Having said all that I do tend to agree that the dollar's collapse is both inevitable and overdue, and that it MIGHT be precipitated in the next year or so by a "melt-down" in the energy markets caused by rampant speculation by hedge funds. A bit like the Long Term Capital Management fiasco, the difference being that the Federal Reserve Bank cannot print oil to bail market particpants out... "
- Chris Cook
June - quote of the month-

"The most effective and fastest solution to high world oil prices is high world oil prices."
-Robert Blohmn, writing in the China Daily June 13th 2006

June - Iran - The budget to march 2007 cuts money for gasoline imports from $US2.5 billion from $US4 billion. As a result, gasoline imports will cease from september 23, and gasoline rationing  will start from that date.

June 15 - Venezuela - Colombia and Venezuela announce that the construction of a natural gas pipeline connecting Colombia on the Pacific coast with Venezuela on the Atlantic coast. This pipeline will enable the possiblity of shipping to Asian markets (if there were investment in LNG trains in coastal Colombia).  The pipeline is part of a regional plan for energy networking, such as already exists in North America (USA obtains a very large part of its gas from Canada).

June 20 - China - Saudi Arabia - discussions are now under way between the two parties on a contract for the Saudis to supply the oil for China's strategic reserves. It is likely to be sulfur-containing medium-heavy crude oil needing a Chinese refinery capable of de-sulfurising it. Shipping is unlikely until at least beginning 2007.

June - Saudi Arabia - China - Oil from Saudi Arabia now make up more than 17.5% of China's imports of crude. About 57% of the oil China uses comes from domestic fields. (About 40% of the oil USA uses comes from domestic fields - but USA uses around 25 million barrels of oil a day, where China is said to use very roughly 6.2 millon barrels of oil a day.) China's oil demand growth has been running at around 9% a year, but turned up sharply to around 13% in may.

June - Exxon Mobil - New chief executive Rex Tillelrson demands an end to the public subsidy to grow corn for ethanol, saying "We've never been a supporter of subsidies under any conditions because they distort market signals"

June - Exxon Mobil - Taxpayer subsidies known as 'royalty relief' continue to be paid to Exxon Mobil for oil production from the Gulf of Mexico. Exemption of payment for oil and gas found in the Gulf was a 'sweetner' designed to stimulate exploration in public waters at a time of low oil prices. The USA government ommitted to include a 'phase-back-in' point at which royalties would be once more collected should oil prices rise substantially. Estimates of the lost revenue from the very small percentage royalty are around $US10 billion oveer the next 25 years. The USA public is outraged at some oil company attitudes to the companies windfall mega-profits at a time that they are hurting.

June - China - Underground coal-seam fires burning uncontrollably in Shanxi and through much of northern China continue to  incinerate about 200 million tonnes of coal - for comparison, USA uses about 1,000 million tonnes of coal a year. The fires are started by lightning, by mining accidents, or erupt spontaneously when oxygen is continuosly available. Such fires are sometimes impossible to put out, and may burn for decades - or longer.

June 23 - USA - An oil spill in the Calcasieu Ship Channel in Louisiana blocks ship access to some oil refineries. This appears to be enough to allow the President to authorise the 'loan' of  750,000 barrels of oil to several oil companies (including Venezuelan Citgo).

June - USA - costs of road transport sees a swing to cheaper rail transport. But lack of rail infrastructure upgrades, repairs and extensions has seen congestion and frustrating delays in delivery of goods.

June - Iraq - the oil export pipeline from Kirkuk in Northern Iraq to Ceyhan in Turkey re-opens. It had been closed since september, due to insurgents blowing it up.

June - USA - Iraq -  The 'Iraqi' Oil Minister says Iraq hoped to be producing 4.3 million barrels a day by 2010, "challenging Saudi Arabia as the world's largest producer by 2015".

June 20 - Russia - India - Iran - Pakistan - Gazprom announces it is ready to "support" the proposed gas pipeline from Iran to India via Pakistan. Gazprom is effectively an arm of the Russian government. The pipeline will be 2,775 kilometres long, and current costing is in the region of $US10 billion. India and Pakistan hope to receive 70 billion cubic metres of Iranian gas via the pipeline by 2015 Pakistani president Musharraf proposes the pipeline be extended to Yunnan, China, at a future date. Pakistan wants to start construction next year.

June - Iran - Russia - The presidents of the two countries meet at the Shanghai Cooperation Organisation and discuss a proposal to cooperate in the supply and distribution of gas within Eurasia, from west to east. Such a move would provide an East Eurasian market for Iran's gas, and cause Iranian gas to be temporarily excluded from Russia's 'patch' in west Eurasia. Turkmensitan is considering joining the pipeline, linking its existing Iran-Turkman line, and opening up Central Eurasia to the group. Russia and Iran acting together could therefore control around 43% of the world's gas reserves. President Putin says "OPEC is a cartel, but we will have a joint venture."

June 30 - Mexico - Operators of the Bellota oil field commence removing pumps and compressors from scores of oil wells that are no longer productive as Mexico continues its inexorable decline. Bellota was developed in 1992. Bellota now only provides about 35,000 barrels a day. At peak it pumped about 140,000 barrels a day. This illustrates the point that while new fields will be brought into world new production statistics, they are relatively small, and peak and decline relatively quickly. In other words, they make no difference to the reality of world conventional oil having almost certainly peaked.

June 30 - Mexico buys $US 4.5 billion of gasoline from USA as it has little refining capacity. Mexico currently consumes 710,000 barrels of gasoline a day (and 344,000 barrels of diesel a day). Mexico also buys almost $US10 million of petrochemicals, mostly from USA. As the Canterell field declines, so will oil receipts to pay for imports. There is no 'solution'.

June 30 - Mexico - current government projections see Canterell production fall to somewhere between 1.4 million barrels a day and 520,000 barrels a day by 2008. The lower range seems most likely.

June - Mexico - Cantarell production is1.74 million barrels a day - 13% less than june 2005.

June - Russia produces 9.236 million barrels of oil a day - more than Saudi Arabia. Oil and gas now account for over half of the Russian State income.

June  - world - demand for oil in Q2 drops in response to higher prices. Consumption over the last 2 quarters is 83.15 million barrels per day, where it was 85 million barrels per day for the same period last year.

July - UK - The Department of Trade and Industry in its Energy Review suggests the UK will not be a nett energy importer until 2010.

July 11 - OPEC "  We in OPEC do not subscribe to the peak-oil theory." - Acting Secretary General of OPEC, Mohammed Barkindo.

July 14 - Light sweet crude oil surges to $US77.03, a record high. Price increases have been driven by high demand for sweet crude when supply of sweet crude is dimishing and being replaced by heavy crude which has a lower gasoline yield and fewer refineries able to process it. Speculation on oil futures and slightly increased political tension in the Middle East also helps boost speculation. Crude oil futures for december delivery hit $US80 a barrel.

July - OPEC - production for July is 29.61 million barrels a day - down by 250,000 barrels a day relative to June.
Saudi Arabias production is 9.15 million barrels a day, down about 70,000 barrels a day.
Iranian production is 3.8 million barrels a day down about 50,000 barrels a day.
Kuwaiti production is 2.46 million barrels a day, down about 40,000 barrels a day.
Nigerian production is 2.2 million barrels a day, down about 50,000 barrels a day.
Indonesian production is now 900,000 barrels a day, down about 10,000 barrels a day, a 35 year low.
Reduced Persian Gulf demand is blamed on reduced demand for the increasing proportion of high-sulfur oil grades in the Middle East Gulf.
Reduced Nigerian production is due to increasing attacks on oil facilities by domestic insurgents.

According to the IEA, 'oil' production for July is 86.13-milion barrels a day - the highest ever recorded. From the OPEC figures, the IEA figure is unlikely to be conventional crude, but is likely to be inflated by including condensate, ethanol, heavy oil-water emulsions, tar sand oil and similar in the calculation. In other words, 'all liquids', not just crude.

July -  IEA predict non-OPEC oil production will increase by 2.2 million barrel in 2007.

July  - Japan - Indonesia - Japan obtains 50% of its LNG from Indonesia. Faced with falling gas production, Indonesia says it will not export further gas to Japan after contracts expire in 2008 and 2010.

July - Iraq - Oil exports averaged 1.68 million barrels a day over July, the only OPEC country to show an increase in daily production. This is 40,000 barrels day more than June. Almost all the increased exports were from Northern Iraq. Northern Iraq now exports 150,000 barrels a day now that the pipeline from Northern Iraq to Ceyhan in Turkey has re-opened.

July - Iraq - exports of crude to Syria reach 12,000 barrels a day. Syria does a partial swap of Iraqi crude oil for Syrian refined petroleum products .

July - Iraq - leaks develop in one of the two pipelines from Kirkuk to southern Iraq. Both pipelines are closed until the leaks are repaired.

July - Iraq - Oil exports from Basra, Iraqs main export terminal, dropped by about 20,000 barrels a day to 1.51 million barrels a day, in spite of less damage to pipelines and refineries because the focus of violence now turns from the American occupiers to the internal religious-sect and tribal-based struggle to impose belief-based, racist, sexist, intolerant, non-democratic totalitarian control (as exists in most Middle East and South Asian countries).

July - Mexico - Cantarell production is now 1.71 million barrels a day. Decline to this level was not expected until 2007. While politics in Saudi Arabia, Venezuela and Nigeria only might significantly affect USA's energy 'security' by this time next year, at this decline rate, Mexicos failing geology very likely will.

July - Bolivia - Argentina - Argentina agrees to a 25% increase in natural gas prices to $US5 per million Btu's.

July - USA - the Murphy oil refinery at Meraux very badly damaged by hurricane Katrina finally recommences production.

July - China now peaks at 3.7 million barrels a day. Their largest field, Daqing, makes up 25% of  oil produced, but now has a 90% water cut and is in terminal decline.

July - Qatar - Shell and Qatar Petroleum announce a project to build the largest gas-to-liquids complex of its type in the world. The 'Pearl' project is designed to make around 3 billion barrels of oil equivalent over its design life, at a cost of around $US 4-6 a barrel. It is expected to come into production in 2010.

August - Australia - Crude oil production is 113.3 million barrels in the 12 months 2005-2006, down from 126.3 million barrels in the same period last year, a drop of about 10%. In the same period, liquefied natural gas sales increased nearly 16%.

August - UK - oil production for the last 3 months is now 12% less than the same period last year (and counts as the lowest production for the last 28 years).

August - UK - according to new Department of Trade and Industry data, after taking into account the UK's own production of oil and gas, there is a nett excess of foreign energy imports (gas, crude, petroleum products) of about 420,000 barrels of oil and oil equivalent a day. The UK is now a nett energy importer.

August  - Iraq - UN report notes that the money from Iraqi oil is being diminished by growing corruption in the Iraqi administration of the oil resources, including overland 'bunkering' of oil.

August - Iraq - The power plants bombed by the American have still not been fully repaired. Most Iraqi families bought small petrol or deisel generators to supply power. The huge increase in the cost of fuel in Iraq means that most Iraqis cannot afford to run their generators. Now, most people now sit in the dark at night. The civil war intensifies.

The USA bases near major Iraqi oilfields and facilities near completion.

The USA generals are 'priming' the public to understand the situation is 'hopeless'. The next stage will be for the USA military to 'protect' the Iraqi oil infrastructure from damage as the country splits into regional mini-states controlled by local war lords. The Iraqi constitution has been corruptly written and supported under direct USA influence so that Iraq is obliged by law to enter exploration agreements with major private oil companies (excluding any significant share to French, Russian, and Chinese companies). The constitution prevents any future law being able to invalidate these inequitable agreements. The law is due to be validated in december. At that point, most USA troops can then go home (a relatively small  number will remain in the USA regional forts protecting the US-Iraq oil resources and pipelines). But only if oil sales remain centralised. USA cannot afford mini-states to cut their own deals.

August - USA - beginning of the summer 'driving season'.

August - USA - Refinery problems in California have tripled in the first half of the year. State gasoline production is lower as a result. As demand for imported gasoline increases, tankers in California's congested oil docks take three times as long to dock and unload. Over 40% of oil stock for Californian refineries is now imported. Shipment of gasoline and diesel from California to Nevada and Arizona reach a 5 year high, and supply pipelines for Southern Nevada are near the limit of their capacity.

August 7 - USA - BP 'temporarily'closes production from its Alaskan Prudhoe Bay oilfield due to leaks developing in corroded transit pipes. Initially, 400,000 barrels of daily oil production is shut down. This is around 8% of USA daily production, mostly shipped to west coast USA (and Hawaii). 400,000 barrels a day is about 2.6% of total USA daily oil use (made up of imported oil plus USA domestic oil production). Sweet crude prices climb briefly to $US76.98.

August - USA - Saudi Arabia - Saudi Arabia 'quietly' cuts production by 200,000 barrels a day this month. It is unclear if they actually cut production, or have diverted oil to USA to make up for the shortfall from Prudhoe Bay.

August 7 - USA - Gasoline on the west coast is around $US2.85 a gallon, and  around $US3.20 a gallon in the midwest. The national average hits a high of $3.04 a gallon for regular. It is around $US7 a gallon in parts of Europe.

August 13 - USA - The western half of the Prudhoe field remains in operation, but 280,000 barrels a day of crude remains 'shut in'. It is hoped to increase production in the Western segment, (currently 150,000 barrels a day) to 200,000 barrels a day by months end. All 26 kilometres of oil transit pipe will ultimately be replaced. Given the cost of pipeline construction in this environment, this propostion is very expensive. An additional problem is that the corrosion, believed to be caused by sulphate reducing bacteria naturally occuring in the oil flow in cool conditions, appears to have developed because oil is now moving more slowly in the transit pipe as the pressure in the field falls away as reserves are depleted. These bacteria need other conditions, such as acidity, salinity and other factors to also be right in that particular crude. It may mean that at least some pipelines in temperate and sub-arctic zones might be vunerable to corrosion when flow rates drop off as field deplete.

August 13 - USA - OPEC - Opec President Edmund Daukoru says OPEC doesn't need to take special measures in response to the USA need to buy more crude on the world market and the lack of supply to west coast USA refineries -
"We are mindful of the BP volume that is shut in, but I think overall the market is flush. The main constraint is gasoline. I do think we'll be able to ride it until September".

August 13 - USA - Oil industry commentators estimate it will take 2 to 3 months to get the trans Alaskan pipeline back in full production.

August - USA - Colorado has a diesel fuel shortage. Some stations ration trucks to 50 gallons of their 100-300 gallon tank capacity.

August - Chile - Argentina - Natural gas from Argentina supplies 30% to 40% of Chiles electric power generation capacity. Argentina now has to import additional gas from Bolivia to meet seasonal demand. Falling production in Argentina, coupled with increased domestic demand, see Chile with urgent need for new power generation. Chile turns not to coal, but to urgent investigation of renewable power sources such as hydro-electric generation and wind as a long term solution.

August 26 - Chad - The world's most corrupt country (according to Transparency International) breaks apart its joint venture with Mobil, Petronas, and Chevron as it forms its State owned oil company and moves to sieze more of the profits from oil operations. Petronas, the 35% partner, and Chevron, the 25% partner, are kicked out of Chad, in a move seen as priming the scene for a joint venture with China on terms more profitable to Chads government. According to the Chadian government, the oil consortium's $3 billion investment has earned them $5 billion. Chad's share of the earnings after transport costs has been $588 million.

August - world - global oil consumption is now 85.096 million barrels a day. Relative to august 2005, this is a 0.4% increase (309,000 barrels a day), much less than projected year on year demand growth.

September 05 - USA - Chevron announces an exploratory deepwater well ('Jack  number 2) 175 miles offshore has promising oil reserves. Not only is it right in the middle of the area of worst Gulf of Mexico hurricane intensity, it is at water depths (over a kilometre deep) where production has yet to be done, and in highly complex resrvoir structures difficult to characterise under the best of circumstances; it will require enormously expensive testing and very difficult drilling to characterise. This is how desperate the oil industry is to replace declining assets.

September 15  - Iran - Oil Minister Kazem Vaziri-Hamaneh says all the necessary preparations for launching the Iranian oil stock market are now in place, although it yet to be officially launched. This will not be a traditional bourse, where intermediaries control (and manipulate) the sales, but a "Market Network" where buyer and seller contact each other directly. Any risk of default is managed by a dedicated default fund managed by a risk management service organisation -  a form of insurance. Intermediaries will no longeer be able to bet on margins, or 'short' or 'long' the market, making the oil trading market in this system hugely more transparent. It is certain to be vigorously opposed by US and European financial interests.

September 26 - USA - Uranium spot and contract prices continue to climb, to the dismay of the electricity utility operators. Spot price uranium is now $US54 a pound. USA reactors were running at 75% of capacity a decade ago. Now they run at 90% of capacity.

September - USA - gasoline prices drop in the USA in the face of refineries selling off summer product as they change formulations for winter, and speculators losing their bet that Gulf of Mexico hurricanes would disrupt gasoline supply again this august and drive up prices. Demand in USA is up about 3.8% over september last year (and refineries have had to run almost at full capacity of about 17.3 million barrels of crude oil a day - producing around 9.8 million barrels of gasoline a day - all summer), but last year supply was constrained by hurricane Katrina.

In other words, this year's demand and supply was almost 'normal' (historically, 'normal' would be a slightly increased demand of around 1% more than the previous year, which did not eventuate), but 'burnt' speculators were desperately unloading paper gasoline options and driving down price. Demand destruction may also be playing a part, although masked by factors mentioned previously.

Demand for diesel is now very high. Refineries have ample capacity to meet gasoline demand, but cannot use all that capacity (close to 60% of refinery operating capacity) during the winter diesel switch. The 'float' of extra gasoline in storage continues its historic slow lowering.

US crude oil inventories are actually less than reported, as it includes 30 million barrels borrowed from Europe last year (due to hurricane damage), 10 million from Saudi Arabia making up for lost prodution from Prudhoe Bay, and 10 million barrels released from the Strategic Petroleum Reserve.

September - fuel efficient cars - VW abandons its 2 litre petrol engine as too fuel inefficient. It replaces it with the award-winning 'twin charger stratified injection' turbo assisted engine. This engine has similar speed and pull as VW's 2.3 litre naturally aspirated engine, the 1.4litre performance being very close to that of the larger engine. The new enginep roduces 125kW (170bhp) at 6,500rpm, and torque with little fade (175Nm at 1000rpm grading to continuous 240Nm between 1500 rpm and 4750 rpm). Fuel economy is 7.2 litres per 100kms, i.e. about 40mpg.

September - USA - Saudi Arabia - Saudi Arabia's quiet production cut of 200,000 barrels a day continues through this month. It remains unclear if they actually cut production, or have diverted oil to USA to make up for the shortfall from Prudhoe Bay.

September  - USA - exports of around 1.4 million barrels a day of finished gasoline continue.

September - USA - Importation of both finished gasoline and gasoline blending components (mostly from Europe and Venezuela)  increased in the last 9 month period from 260,071,000 barrels to 314,587,000 barrels, an historically very high level.

September - USA - As of this month, the USA now imports 69% of the crude oil and petroleum products it uses. 

September - USA - the recent introduction of ultra low suphur deisel has meant refineries have had to use more hydrogen gas to clean the sulfur out of their product. Around 25%-40% (depending on how much sulphur is 'naturally' present in the crude to begin with) more hydrogen gas is now needed than before to meet this new standard. Hydrogen is generated from natural gas. Increasing natural gas prices drive up the cost of producing low sulfur deisel.

September 26  - Iraq - USA - Iraqi Oil Minister Hussein al-Shahristani says the federal government won't recognize oil the contracts recently signed by the Kurdistan Regional Government. The rest of Iraq continues its internal sectarian war, rapidly devolving into religio-gangster fiefdoms as in Afghanistan.

September - Canada - Natural gas wells continue to decline in production. Canada produces 6.3 trillion cubic feet of gas  per year, about the same amount as it did in 1998 - but now drills two times as many wells per year to simply maintain production. Canada exports over half its natural gas to the United States.

September - USA - Imported LNG is about 3% of all natural gas gas used in USA.

September  - USA - With the warmest winter on record, natural gas prices slump, and there are large inventories of gas (3.2 trillion cubic feet). An average winter usually requires about 5 trillion cubic feet of natural gas for domestic use (partially supplied from storage). In addition, US industrial users of gas have been steadily relocating overseas - industrial use has fallen 22% over the last 8 years as energy-hungry heavy manufacturing jobs disappear in favour of high tech manufacture and service jobs. For these reasons, prices are at an historic low right now (helped by a major margin trader going bankrupt and being forced to quit all its forward contracts).

September - USA - There are now around 400,000 producing natural gas wells in USA. The average life of a new well in USA is now about 18 months before it is effectively exhausted. A decade ago the average new well produced gas for between 120 and 180 months.

September - Russia  - Russian gas production remains static at about 400 billion cubic metres. There is little investment in new production. Gazprom, which controls 94% of all Russian gas, has commissioned just one new field in twenty years. The projected new gas fields (e.g. Yamal) dates have now slipped by more than a decade. The large West Siberian fields (the main source of gas exports to Europe) are in decline. Some Russian electricity generators cannot always obtain adequate gas and have to switch to diesel. Energy use in Russia, usually increasing by about 2% a year, has now surged to an annualised increase of nearly 5%. The Russo-European gas crisis continues.

September 26 - Russia - Germany - USA - President Putin publicly considers cancelling the proposed ship-borne LNG supply from the huge Shtokman field in the Barent Sea to east coast of USA in favor of additional long-term supply to Europe. Some say this is 'payback' for USA's lack of support for Russia's bid for entry to the World Trade Organisation and embargo on Russia's armaments industry sales. There may be other factors. Others say that since USA is now building additional re-gassifying facilities, Russia's plan to control the largest part of gas imports and distribution on the east coast is no longer viable. In the event, it might be as easy to pipe under the Barents Sea to Murmansk, and then overland to Europe.

However, 'easy' and Shtokman field don't go together. The field is in the arctic, is over 500 kilometres from land, it will require at least 4 huge self-contained ice-reinforced platforms, and will need at least 150 wells drilled into stormy arctic seas in a depth of 350 metres. The drilling rigs and platforms will be iced in for part of the year, and the distance is too great for resupply by helicopter. While the field is the largest offshore gas field in the world, the investment money needed to bring it into production is huge. If all goes well, it is unlikley to reach full production before at least 2016. At that point, in spite of its vast reserves, it will do little more than replace dwindling North Sea and Russian gas production from declining existing fields.

September - Russia - Russia's gas major, Gazprom, fails to gain access to the Royal Dutch Shell controlled Sakhalin-2 project.

September - Russia - Russia's Natural Resources Ministry withdraws an ecological permit for the Sakhalin-2 liquified natural gas project (due on-stream in 2008) on the grounds the budget increase from $10 billion to $20 billion will increase the scale and environmental effect of the project, and on the grounds the clearing of the pipeline route is causing erosion, river silting, and damge to forests. The Ministry also puts pressure on Exxon (Sakhalin-1), whose development budget has also been increased significantly beyond the agreed sum, affecting the agreed production sharing outcomes. The Government is not entitled to a share of the oil until the operators have retrieved their costs; their costs have been recently ramped up heavily. The foreign ministry threatens to withdraw operation licences, but later backs down. These moves are likely to be the beginning of either a re-balancing of profit share, or a partial re-nationalisation of Russias major gas and oil assets.

September - Russia - Russia's Natural Resources Ministry  now says the De Kastri oil terminal of ExxonMobil's Sakhalin-1 gas and oil project does not meet required environmental standards. These moves are likely to be the beginning of either a re-balancing of profit share, or a partial re-nationalisation of Russias major gas and oil assets.

August - Russia - Russian courts rule that the 50:50 joint British-Russian oil venture ('TNK-BP') owes back taxes of $US130 million. The Anglo part is owned by BP, the Russian part is owned by 'private Russian investors'. Presumably the Russian government is beginning to use a similar technique as was used to regain state control of the Yukos oil company.

October 2 - Russia - Rusia Petroleum, a company 63% owned by the Russo-Anglo TNK-BP and 37% owned by Russian 'private interests' is targeted by Russia's Gazprom for acquisition of a stakeholding. Gazproms oil subsidarly, Gazprom Neft, has a very good cashflow, which could easily be leveraged by loans from oil-industry investors to bring together the $US25 billion to buy a controlling share in TNK-BP. Whether the Russian private investors would be willing sellers or not is another matter (BP, as a public company accountable to shareholders, would probably have to accept any good offer that also accounted for future profit increases from the project as energy prices rise).

Rusia Petroleum is developing the $18 billion Kovykta natural-gas project in East Siberia.

October 2 - Russia - The chief engineer in charge of the Rusia Petroleum Kovykta natural-gas project is found murdered, shot three times in the head. The circumstances opens the possibility it is a 'contract killing'.

October - Russia - USA - After quietly acquiring gasoline outlets from Getty Petroleum and Conoco Phillips throughout 13 states of the eastern United States over the last few years, Lukoil finally brands itself in the market with its bold red and black image on all its stations. Lukoil hopes to compete in the eastern USA markets head to head with international oil company brands such as BP and Mobil. Lukoil now owners more gasoline stations in USA (2,000 outlets) than it does in Russia. American consumer acceptance is immediate.

“All we hear is they don’t care whether we are Russian or not. They would certainly care if we were from the Middle East, but there’s no concern over Russia.” - Lukoil Americas CEO Vadim Gluzman

Long term, Lukoil hopes to ship oil from northern Russia to USA and refine it in Lukoil-owned refineries on the east coast of USA. Lukoil has the second largest oil reserves after Exxon Mobil.

October - USA - UK - An energy economist, Peter Odell, claims in an article in the Guardian newspaper that western oil majors, such as Exxon Mobil and BP, are losing their control of global oil exploration and distribution systems. These majors now have only around 10% of the global reserves. The rest are in government hands, and the oilmajors are now limited to minority partners. Odell believes it is "only a matter of time" before Gazprom or Lukoil make a bid for BP or Shell. Similarly, he sees ExxonMobil vulnerable to a Chinese takeover. Certainly, the Chinese government is drowning in American dollars.

"A Chinese bid for Exxon and/or Chevron and/or a Russian bid for Shell and/or BP, backed by funds provided by the wealthy member countries of Opec seem likely to be only a matter of time."

In the face of this, Odell predicts re-nationalisation of such companies as France's Total.

September 25 - China - in an article in the Financial Times, China's Prime Minister and China's vice President confirm that China's massive foreign exchange reserves will be used to secure raw material, fill the near complete oil strategic reserve tanks, and "considering whether to buy gold, considered a hedge against the potential of a falling US dollar". China has $US1,000 billion (1 trillion) in reserves. As a government official has already stated that China needs only about $US700 billion as reserves, and the governor of the Chinese state bank has said China already has enough reserves, there is $US300 billion available to China. China's reserves increase by around $US20 billion a month. $US300 would buy around 15,500 tonnes of gold at current market prices. USA supposedly has reserves of physical gold of around 8,000 tonnes.

September - According to the US Department of Energy figures, world oil supply (demand) is 1 million barrels a day less this september than last. If true, this is interesting - last septembers oil supply was affected by Hurricane Katrina.

September - USA - Japan - Honda announce they will make a range of highly efficient automobile diesel engines and sell them in USA. Diesel engines are far more fuel effcient than gasoline engines, but, unlike Europe, barely have a presence in the USA car market. This is a sea change in strategy, and a very smart move.

September - Global demand for industrial-scale wind turbines is booming. Sales are expanding by 10-20% per annum. Shortages of critical components - gearboxes and bearings - slow deployment.

October - UK - Home handyman chain B&Q offers package-deal wind turbines for $US2,821 installed. The 2 metre high, 1.75 metre turbines can generate a maximum of 1 kilowatt. The 'free' power can be fed straight into the householders ring main (a wiring layout unique to the UK) via a micro-grid tie inverter. Customers are also eligible for a grant of 30% of the capital cost from a government-backed energy saving trust.

October  - Norway - The Government announces a $US3 billion investment fund from oil revenues whose profits will be spent on subsidising renewable energy. A subsidy will be given for every kilowatt hour of energy produced from wind or small hydroelectric projects. The funds will also subsidise energy efficiency and energy conservation programmes. Norway obtains 99% of its electricity from hydropower, but most major sources are now dammed. Worse, global warming is affecting the re-charge of the waterways that feed the dam. Low storage levels may result in electricity rationing this winter.

September - USA - The Department of Energy says it intends to buy oil to finish replenishing the strategic reserve this winter, when winter fuel oil inventories should be in place.

September - USA - Montana State announces it has signed contracts to build a coal-to-liquids plant at Bull Mountain Mine, Roundup, Montana. The combined-cycle plant will gasify coal to synthesize 22,000 barrels per day of diesel. A portion of the gas will be burnt to generate around 300 megawatts of electricity. The promoters claim the carbon dioxide will be re-injected underground, and that the mercury and sulfur in the coal will be captured, and not released to the environment.

September 30 - Iran - Japan - The Iranian parliament's energy commission announces it will not renew Iran's contract with Japan to develop the Azadegan offshore oil and gas play. Japan held 75% of the value of the concession. The contract expires now, with Japan still insisting it has a 10% interest in the field. Iran blames Japan for on-going delays. Iran supplied 14% of Japan's oil needs last year, over 500,000 barrels a day. This huge quantity makes Japan Iran's biggest foreign customer.

September 30 - Indonesia - Japan - Indonesia gives advance notice to its Japanese customers that it will cut exports of liquefied natural gas to Japan by half when current long term supply contracts expire in 2010.

October - Indonesia - Japan - Japan's State-owned Inpex Holdings is in talks with Indonesia over a plan to finance and develop the Abadi gas field off Indonesia at a cost of $US4.2 billion. Japan's plan to buy and operate concessions in overseas oil and gas assets equivalent to 40% of its needs by 2030 looks increasingly hopeless.

October 3 - Light sweet crude oil prices fall to $US58.65.

October 5  - OPEC claims it is going to cut production by 1 million barrels a day in order to stop prices falling further. It says it is going to defend a $US50 - $US55 floor.

October 4  - Nigeria and Venezuela claim they will cut production by a combined total of 170,000 barrels a day.

October 4 - Saudi Arabia - Europe - Saudi Arabia 'sharply increases' the price it charges European refineries for Saudi light crude. The price spread between light and heavy crude continues.

October 10 - China - Strategic reserve tanks are now complete, and available for filling. The tanks in Zhenhai, south of Shanghai, are now being filled from China's domestic production.

October - Syria - Oil production has now fallen to a daily average of 400,000 barrels a day, according to the Syrian Oil Minister. Production in 2005 averaged 414,000 barrels a day. Apart from Shell Oil Company and Petro Canada, there has been relatively little International Investment in Syrian oil prospects, due to perceived instability caused by Syria investing its oil wealth in corruption, invasion of Lebanon and sponsorship of terrorist groups. Syria now eases terms to International oil exploration companies in the hopes of attracting investment capital to 12 new exploration blocks. Syria is pinning its hopes on advanced production techniques to force continuous high volume production from existing wells. The inevitable longer term outcome will be not just earlier depletion, but sudden depletion. Two thirds of Syrias export income is from oil. Syria will be a nett oil importer by about 2010. It has not invested in refineries, so is already an importer of $US1 billion of refined oil products per year.

October  - UK - Head of the UK National Farmers Union claims that current animal-feed wheat surpluses, plus canola (rape) seed grown on the large amount of land (750,000 hectares) currently 'set aside', can meet the UK's target of 5% of fuel from renewable resources by 2010. He claims this will be achieved by petrol blended with ethanol from the 3.5 million tonnes of surplus wheat, and deisel made directly from the oil expressed from the three quarters of a million hectares canola seed crop.

The UK renewable fuel target, if met, is estimated to reduce CO2 emissions by two million tonnes. This is said to be equivalent to removing one million cars from use (already taking into account the carbon released in growing, transporting and processing the crops).

October - Iraq - Iraqi people continue to have to queue in huge lines at petrol stations, as the USA-led invasion has cut operational functionality of the refinery and distribution sytem and corruption and theft of petrol consignments reaches outrageous proportions. Daily domestic demand is about 22 million litres of gasoline. Daily supply is around 10 million litres.

October - Iraq - A small new oil refinery opens in the city of Najaf, designed to meet domestic needs for the immediate area. It can process a meagre 10,000 barrels a day. Iraq's three main oil refineries (Dora, Baiji and Shuaiba) are crippled, working at only half their capacity. Their daily production is only 350,000 barrels a day. Before the American invasion the refineries produced around 700,000 barrels a day. Iraq continues to have to import kerosine, gasoline, and electricity from neighbouring Iran.

October 18 - Iraq - Iraq's largest refinery, the Baiji refinery in central Iraq, shuts down yet again due to lack of electricity from a nearby thermal power station. Internal Iraqi domestic oil and oil product supply is of no strategic importance for the American occupiers.

October 20 - Iraq - USA - Turkey - Israel - the major crude pipeline from northern Iraq to Turkey re-opens. Previously, the US had considered building a new pipeline from Kirkuk to Israel to replace it. But the cost of a new 42 inch pipeline alongside the existing disused old oil pipeline from Kirkuk, through Jordan, to Israel (closed by the Iraqis in 1948 during the first Arab-Israeli war) was estimated to be about $US400,000 per kilometre. Kirkuk currently produces roughly 300,000 barrels of Iraqi oil. The newly repaired Kirkuk to Ceyhan (on the Turkish Mediterranean coast) pipeline can carry 200,000 barrels of unrefined crude a day. This pipeline is of major strategic importance to USA.

Export of unrefined crude via the Persian Gulf (and through the equally narrow Gulf of Aden) are predominantly from southern Iraqi (Basra) oilfields. These fields produce around 1.8 million barrels a day of crude, and are of even greater strategic importance to USA.

October 10 -North Korea explodes a weapon of mass destruction. USA does not invade North Korea.
North Korea has no oil resources.

October 11 - Light sweet crude oil prices drop to $US57.59

October 10 - Russia - Gazprom is to develop the Shtokman gas field itself. The NEGP pipeline project may be expanded to include a parallel pipeline to take Shtokman gas to Germany and West Eurasian markets.

October 20 - Russia - President Putin publicly gives a deadline by which an energy plan must be developed to forestay a Russian domestic gas crisis.

October  - Russia develops a framework for pricing its crude oil via the Russian Fuel and Energy Exchange and Urals REBCO crude as a way of developing its own pricing benchmark instead of using the North Sea Brent Crude benchmark.

October - Indonesia - ExxonMobils contract to develop the large offshore gas field in the Natuna Sea off Borneo is cancelled by the Indonesian government, in spite of the oil companys' protests.

October - USA - drilling reaches the highest levels recorded in 21 years. U.S. About 37,261 oil wells, natural gas wells and dry holes have been drilled so far this year. The number of completed wells in Q3 is the highest since the peak of USA hole drilling  in early 1986. Like Canada, USA has to drill more to try to maintain production, but finds are now smaller and run out sooner.

October - Peak Oil - An update on peak oil is presented by Khebab at the 'Oil drum' blog. It includes 'business as usual' projections from the EIA's 'International Energy Outlook 2006' and total liquid demand for 2006 and 2007 forecast, and assuming a constant per capita oil use. It also includes projections from oil-field by oil-field 'bottom up' peak-oil analysts. It includes analysis by peak oil 'curve fitters', who use the Hubbert linearization technique.

Conventional oil has been in a peak or plateau since at least 2005, and new discoveries of conventional (cheap) oil will not balance out declines in old large fields (estimated at 6%). Agencies - especially the EIA - 'draw out' the plateau or peak by including condensate in their figures, as well as unconventional oil, such as the very heavy Orinoco 'OrimulsionTM' (70% bitumen, 30% water), add in 'non crude liquids' such as ethanol (an oil 'displacer'), liquids from coal and oil shale, and take no account of additional refinery crude oil products required to add to condensates and natural gas liquids to bring them up to saleable specification..

There is little doubt that 'all liquids' - conventional plus unconventional - will not peak until at least 2010 (and perhaps 2015 if economies slow). But adding in 'unconventional' means a premium for this expensive class of oil. Supply and demand for 'cheap' oil remains pretty much matched. Only recession can ease demand pressure for cheap oil. Nothing can increase supply of cheap oil. Collapse of Ghawar or Cantarell remains, as ever, the joker in the pack.

October 19th - Iraq - USA - UK - US and British commanders go on television to 'prime' the public for withdrawal of some US and British troops, following successful completion of the next phase of the US plan to control Iraqi oil. The sudden and large increase in numbers of troops sent into the most dangerous areas of urban Bhagdad and the use of extensive house-to-house ground searchs have predictably resulted in a sudden rise in USA troop deaths. The British have taken similar provocative steps into previously relatively calm areas in some southern urban areas, with similar results.

October 21st - Iraq - USA - UK - With southern ports and major oilfields secure, the major crude pipeline from northern Iraq to Turkey re-opened, and the december sign-over of oil sovereignty to US-UK multinational oil conglomerates (via PSA's embedded in the constitution) in sight, and with Iraq partitioning nicely into discrete regions along tribal lines (with oil-less and troublesome Bhagdad region heavily 'sunni-fied') USA prepares the public for withdrawal of some troops (probably intially a small tranche, of symbolic and political value), in line with the next phase of planning.

In an extended interview, President Bush carefully inserts an 'acknowledgement' that the 'sudden upsurge' in violence in Iraq could be like the Vietcong's 'Tet offensive' in the US war against Vietnam - a factually absurd claim, but with high emotional resonance with the USA target audience.

October - USA - Afghanistan - The planned US-backed pipeline from gas-and-oil-rich Central Eurasia across Afghanistan to the Indian coast is now pointless due to changed political allegiances of the Central Eurasian states. Post invasion, Afghanistan is not only a 'useless' asset, it is now a liability. USA commences 'handing over responsibility' for Afghanistans shaky and localised democracy to NATO forces.

October 22 - Japan - Exxon Mobil reaches a preliminary agreement to sell natural gas from Sakhalin -1 in far East Siberia to China - not Japan as was originally intended.

October 24 - USA - Iraq - Japan - Japan lends Iraq $US3.5 billion for projects to re-develop and upgrade a refinery in Basra, improve oil export infrastructure (popelines) in southern Iraq and develop a facility to produce liquefied petroleum gas. In addition, other Japanese firms are holding talks with the Iraqi 'government' to explore increasing the possibility of improving some Iraqi oil fields in the south.

"We don't want to miss a boat that leads to vast oil reserves in Iraq - the next promising source of oil is Iraq."
- Shin Hosaka, director of the oil and gas division of the Japanese Trade Ministry

October - Russia - Israel - Turkey - Russia and Israel are scheduled to hold talks on extending the existing BTC oiil pipeline from its terminus on the Turkish coast through to Israel's Red Sea oil terminus. This would allow Russia to export their oil to the Far East, and allow Israel to access Russian oil. At the same time, the proposal is for the pipeline route to also carry electricity from Turkey to Israel, and water from Turkey to Israel. Over 90% of Israel's oil now comes from Russia and the Caspian region. Israel burns about 270,100 barrels of oil a day, ranking it a moderately high user - 42nd of the 211 countries of the world. Like many developed countries, by far the largest proportion - 51% - goes on transportation liquids for cars, trucks, buses, and motorbikes, in spite of the small size of the country. Previously, Israel accessed most of its oil from Egypt, West Africa, Mexico, and the North Sea. Mexico and the North Sea oil are in decline. Egypt is not a friend of Israel (and adjacent Iraqi, Syrian, Saudi, Kuwaiti and Iranian oil is unlikely to want to ever supply Israel). West Africa oil supply is unstable. That leaves Russia, a high volume supplier. For now.

October - world - demand for oil continues to reduce. Reduced demand in Asia has seen some speculators having to quit oil to distant markets at considerable shipping cost. Other speculators are using tankers as floating storage. Tanker hire rates have dropped dramatically with falling demand for oil shipment. Singapore is estimated to have a 100,000 tonne surplus of gasoline product. The IEA has lowered global consumption forecast by 95,000 barrels a day - the third lowering of forecast demand this year.

October 26  - Ukraine - Russia - Ukraine agrees to a 36% increase in the previously heavily discounted price of natural gas it buys from Russia. Winter is not far away.

October - Russia - Crude oil plus condensates production are now 9.71 million barrels a day (crude was 9.58 million barrels a day), a further decline in production from september's 9.77 million barrels a day. The Russian economy minister sees a "sharp reduction" in petroleum exports over the next 3 years as a challenge for the Russsian economy. Domestic oil is supplied at a heavily subsidised price - the tax paid price is $US25 a barrel. The government's "moderately optimistic' scenario has increased investment in oil drilling, production, and development result in an increase in production to 507 million tons by 2009. Russia has produced nearly 400 million tons of crude and condensate in the year to date.
Crude oil exports are down just over 2% for the month, a sharp increase over the 0.5% decline for the year to end of september.
Fuel oil is being stored in greater amounts in expectation of a difficult winter for gas supply this year, coupled with old and increasingly unreliable energy infrastructure. Electricity shortages are predicted for 16 regions of Russia this winter, with supply cuts to businesses inevitable at the temperature trigger point of minus 15 degrees celsius.
Oil sales on the domestic market in the year to date are up by over 5%, to 4.35 million barrels a day.

October 30 - USA - Matt Simmons, long time oil industry insider and author of 'Twilight in the desert', observes at the ASPO conference that while several public bodies see oil supply at a plateau (or a 'bumpy' plateau) until some point in the band 2010 - 2015, there are so few oil rigs now left available in the world, and the existing rigs are so old and high maintainance, that not only is it physically impossible to keep supply growing, but also that "sustaining the base" production for the next 5 to10 years is "not impossible but extremely long odds".  October 30 - World - UK - Former World Bank Nicholas Stern economist releases the 'Stern Report'. It is the first ever report by an economist to calculate and bring to book the true cost to human life of the effect of releasing previously permanantly locked-up geological carbon dioxide to the atmosphere - and thereby creating a greenhouse-like blanket around the earth.

Stern explodes the American and Australian myth that carbon taxing to help make non-fossil energy such as solar energy competitive will reduce economic growth.

The report shows that in fact a 'business-as-usual' approach will result in economic losses in the range of 5% to 20%, due to the effects of sea level rises on infrastructure, climate change causing drought, reduced cropping, changes in fisheries. While no account is taken of feedback acceleration of change as oil supply dwindles and increasing amounts of coal are burnt, the author feels carbon dioxide in the atmosphere might eventually be stabilised at 550 part per million by 2050. Just over 200 years ago, at the start of the coal-burning industrial revolution, there were only 280 parts per million of carbon dioxide in the atmosphere. Currently levels are at 430 ppm.

If the use of fossil carbon (coal) and hydrocarbon (oil and gas) is not reduced dramatically, carbon dioxide in the atmosphere will continue to grow.

Stern identifies some quick gains - stopping deforestation forests, which accounts for around 18% of greenhouse gases, better agriculture practises to retain the carbon in organic matter in soils, increased energy efficiency.

Finally, an economist recognises future-eating uncontrolled growth based on ancient sequestered hydrocarbons as cancerous growth. The future of economically sustainable growth is a homeostatic growth, where solar, water, and photosynthesis energy cycle continously through complex human systems; and only as much ancient carbon is burnt as can be permanently re-sequestered in the soil or back underground.

October 31 - Australia -  leading Australia National University researcher Dr. NU's Professor Andrew Blakers urges the installation of two kilowatt photovoltaic panel on the roof of every home in Australia to export power to the national grid. He calculates that because Australia is a sunny nation, this would in effect supply the entire residential sector with its total electricity needs without having to burn fossil carbon. But because coal does not include the economic cost of adding to global warming, existing photovoltaic power cannot compete.

October - Bolivia  - The Bolivian government successfully re-negotiates all its major gas contracts on terms more favorable to the government.

October - USA - gasoline stocks are about 215 million barrels.

November - Brazil - Brazils oil production has now more than doubled over the last ten years. Its ethanol production has increased at about half that rate.

November - Japan - an unusually mild winter (so far) this year meant demand for kerosene used for heating dropped by about 3% over the month (to around 560,000 barrels a day). Kerosene is largely used for space heating rooms, as few Japanese homes have central heating, in spite of most houses having little or no insulation. Commercial buildings use electric central heating from nuclear or coal-powered electricity generation plants.

November  - India - India generates 130,000 megawatts of electricity, mainly from fossil fuel sources (coal, fuel oil, natural gas). The supply is notoriously unreliable, with more than 60% of middle sized and larger businesses owning and running their own oil-burning generators to keep businesses operational during power cuts. India's rapidly growing population and economy means it is forecast to 'need' 60% more oil (almost all imported) and 300% more natural gas by 2010. In light of this impending energy crisis, wind power is being promoted. Around 6,000 megawatts of electricity now comes from wind power. The number of installed wind plants increased by almost 50% last year. India's President says 16% of India's electricity needs "could" come from wind power by 2030.

November - A large natural gas field is discovered in southeastern Turkmenistan. Reserves are estimated at 7 billion cubic meters. Turkmenistan's proven reserves are about 2.8 trillion cubic meters. Russia's Gazprom controls the pipeline route for Turkmen gas exports Europe and former Soviet states. Turkmenistan plans alternative pipelines to circumvent Russian transit fees. Four pipeline projects have been mooted by the Turkmen dictator. One to China, of 30 billion cubic meter capacity, due to commence 2007 and complete 2009;  the Trans-Afghan Pipeline to Pakistan and India, also with a capacity of 30 billion cubic meters; a pipeline along the Caspian coast to access Europe; and another through Afghanistan and Pakistan to supply the United Arab Emirates with gas to pressurise some of their failed oil fields. How many of these 'ambitious' ideas become real is in serious doubt. The 'President' of Turkmenistan has pledged "to supply the world with 200 billion cubic meters".

November  - USA - The 727 million barrel strategic petroleum reserve is now full, at 688.5 million barrels in store. Only 11.5 million barrels remain to be replaced to previous levels, or 38.5 million barrels to fill it completely.

November - China - China commences filling its strategic oil reserves. China has been buying oil (mainly contracting oil from Saudi Arabia) as well as using its domestic supply, and is aiming for a 7 day cushion in the first phase of filling its first 4 strategic reserves. It has accumulated 3 million barrels so far, with another 4.4 million barrels expected to be in place by the end of december. An additional 3 reserves are planned for completion 2008, with an ultimate object of acquiring a months cushion, about 100 million barrels.

November - China - crude oil imports are now approximately 15% more than last year. But the oil now costs almost one third more than last year. Oil product imports have increased by roughly the same amount. But the oil products now cost almost 50% more than last year.

Unlike countries such as USA which primarily use natural gas as a feedstock for petrochemicals, China has little natural gas and committed to using oil, rather than coal as it modernised in the time of cheap oil of the last few decades. China's heavy investment in new infrastructure has 'locked' it into an oil-based manufactury (apart from fertiliser production) from which only massive recession and drop in demand will release it.

November - China - 60% of irrigation water is now moved by deisel powered pumps. Farmers are given preferential supply. In many rural areas electric pumps can't be used, as the power draw would exceed the capacity of the local grid.

November - China  - Automobile manufacturers sell 5.76 million new cars in the year to date. This is an increase of 25% over the same period last year.

November 25 - Iran - China - Sinopec, China's oil major, signs a deal with Iran to develop the Yadavaran oil field near the Iraqi border. China hopes to ultimately sign for a controlling 51% stake in the field. Royal Dutch Shell, the technical advisors, are looking for 20%. Yadavaran is said to have reserves of 3 billion barrels, and when the field is fully developed it is claimed to be able to produce 300,000 barrels of oil a day. The longer term deal, if signed, would allow China 150,000 barrels a day for 25 years at market rates. It would also cover sales to China of 250 million tonnes of liquified natural gas.

These kinds of bilateral long term contracts are a partial return the one to one exporter/customer contracts that existed prior to the 1973 oil shock. It is the beginning of a virtual oil 'country allocation' system, where importing countries assure themselves of exclusive supply into the future by dealing directly (one way or another) with the producing country, rather than buying on the spot market.

Quote of the month:

"Russia, China, India and the rest of the world outside the West have little fundamental attraction or loyalty to the US-supported global oil market or the governing institutions from which (such as the IEA and the Organization for Economic Cooperation and Development) they have largely been excluded. They do not feel an integral part of the global system they see as greedily and inordinately dominated by the multinational oil companies of the West, with which their relations are growing ever more tense. As such, they certainly cannot be expected to bolster the US-led model, and they are not doing so."
- W Joseph Stroupe, writing in the Asia Times Online, November 23

November - OPEC - a cut of around 1.2 million barrels a day has been voted by OPEC members in order to support prices. As always, some members will 'free ride' and not cut as deeply as they say they will. Oil takes about 45 days to move from the Middle East Gulf, but  physical shipment shouldn't be necessary to send a signal to traders if demand is greater than supply. Prices should adjust the instant there is a shortfall. They haven't.

November - Poland - Russia - Poland agrees to a large increase in price for Russian gas this winter.

November 27  - Russia - Belarus - Latvia - Lithuania - Estonia - a leaked report sees these former Soviet Republic states paying market rates for its natural gas from 2007. Belarus currently pays Russian gas giant Gazprom a hugely subsidised price of $US46 per 1,000 cubic metres. Next year Belarus will have to pay $US200 per 1,000 cubic metres. Latvia and Lithuania also face European Union average maket prices of a similar level.

November - Russia - Gazprom is budgetting for an average price of its export gas in 2007 of  $US293 per 1,000 cubic metres of gas - 14% higher than the present budgetted price.

November - Russia - Gazprom is budgetting for an average price of its domestic gas in 2007 of  $US49 per 1,000 cubic metres of gas - 15% higher than the present budgetted price, but massively subsidised relative to the prevailing EU market price.

November - Russia - Russia faces a small shortage of gas going into 2007 - perhaps around 4 billion cubic metres. Russian has roughly a quarter of the world's gas reserves, either producing or on-selling (Central Asian land-locked gas) a total of around 786 billion cubic metres, but has huge contracts for supply (mostly to Europe) at the same time as domestic consumption is increasing and the 'old gas fields' are depleting. Vast new gasfields exist, but are in difficult arctic areas, out at sea, and often isolated from existing pipelines.

90% of Russian gas is controlled by Gazprom, which has been slow to invest to the level required to bring new supplies on-stream. Rapidly escalating costs have worked against Gazprom. Current fields are increasingly more expensive to operate, with operational costs tripling from the 1990's, and now stand at $US6 per 1,000 cubic metres of gas produced. The new permafrost areas are even more expensive to operate. Costs there are closer to $US20 per 1,000 cubic metres.

While cuts have been made to the internal industrial market, the CIS, there is reluctance to cut domestic industries and exports. If new high-volume supplies aren't produced soon, it is expected, on current trends, that Russia will have a shortfall of 30 billion cubic metres by 2010. It will then have to chose whose supply to cut.

November - Saudi Arabia - production of crude oil plus condensate is 8.8 million barrels per day

December  - Iran - China - A deal is signed between Iran's Pars LNG Company (co-owner by Iran, Total, and Petronas Malaysia) and PetroChina Company to sell 3 million tons of liquefied natural gas (LNG) a year to China for the next 25 years. The price of gas will be linked to the price of crude. The huge Pars project is expected to be implemented about the middle of 2007.

December  - Iran - China - Chinese state-owned oil producer Zhuhai Zhenrong Corporation switches out of the US dollar to other currencies to pay for its 240,000 barrels of oil a day from Iran.

December - Southeast Asia - UK consultants Energyfiles Ltd present data showing the Southeast Asian region crude oil production is expected to peak about 2013 at a peak production of 3.3 million barrels a day. New deepwater Malaysian and Vietnamese production coming on-stream will save South East Asia from an earlier peak (in conjunction with increaasing Thai production).

Southeast Asias natural gas production will be substantial in 2013 - about 4.7 million barrels a day of oil-equivalent. At that point, Southeast Asia will theoretically be a net gas exporter, able to export a surplus of about 1.6 million barrels a day of oil-equivalent. Gas production will continue to grow, until it, too peaks, around 2020, before declining. Given that Southeast Asian crude production will commence declining just when a surplus of gas becomes available to export suggests that what is in theory exportable looking ahead from 2006, will more likely in fact be eaten up by increased domestic demand in 2013.

December - Russia - China  - Rosneft, Russia's state-owned oil business, announces a joint venture between itself and China National Petroleum Corporation (CNPC). The joint venture will build a oil refinery hundreds of petrol stations in China. As part of the deal, CNPC will be licenced to produce oil in Russia's far Eastern oil fields. Rosneft will also increase its sales of crude oil to China from around 13 million tonnes a year at the moment, to about 20 million tonnes in 2007.

December - USA - refineries are now working at close to 90% or their capacity.

December - USA - about 2.2 billion bushels of corn (maize) was exported in the year to date. US corn is heavily subsidised via a taxpayer 'corporate welfare' system, aimed mainly at further enriching rich corporate corn producers. A rapidly escalating policy of subsidised ethanol production means the US taxpayer gives two welfare checks to the corporations. Exports of corn may be reduced as demand for corn for ethanol increases - unless additional corn is planted this (northern hemisphere) spring, in reaction to the high world prices.

December - China - China's largest coal producer, Shenhua, is likely produce 200 million tons of coal by the end of this year, (versus 150 million tons in 2005), exceeding the record of the USA's Peabody Energy, likely to produce 225 million tons by years end (versus 240 million tons in 2005). This will make the Shenhua Group the world's largest coal producer.

December - Japan - some indications are that Japan has imported about 8% less crude over the last few months. Japan uses about 20% of its fuel in gasoline engines. Japanese cars are small and highly fuel efficient; few urban Japanese use their cars during the week, major roads are tolled heavily, the national public transport system is excellent, and the aging workforce is probably less inclined to travel on roads that are consistantly choked in the weekends. Unlike many other industrialised countries, Japan has almost no ability to cut domestic vehicle use in the event of a sudden oil shortfall. Therefore, a shortfall would hit industry particularly severely.

December -  China  - car production and sales this year are about 7 million vehicles. Relatively little of China's oil consumption is for transport - around 36% - and an even smaller proportion of that (maybe 5% or so) is for personal transport.

December - China - The state-owned Chery automotive company now sells 305,236 cars a year - over double the volume sold in 2005. Most are exported. In 2000, it built and sold only about 2,000 vehicles.

December - China  - China now exports 340,000 vehicles a year, 33% of which are sedans.  Most are sold in the Middle East, Southeast Asia, Africa, Russia, and Latin America. Chery Automotive and vehicles built by the privately owned Geely Group are the major exporters.

December - USA - China - a deal by a USA entrepreneur to establish a joint venture with China's Chery Automobile company to importChinese built fuel-efficient small cars fails.

December - USA - China - the USA's DaimlerChrysler AG and China's state-owned Chery Automobile Co announce a joint venture to build small cars in China and distribute them worldwide via DaimlerChrysler AG under their 'Dodge' brand. China can offer very cheap car manufacture - a Chinese auto assembler typically earns $US1.95 an hour, where a German assembly worker earns $US49.50 an hour.

December - USA -  small cars  -  sales of small cars such as the Toyota Yaris (Echo), Honda Fit, Nissan Versa, Kia Rio and Hyundai Accent have taken off as consumers react to higher gasoline prices. All the small cars have fuel economy of at least 30 miles per gallon (highway), and the Yaris (Echo) achieves 40 mpg. Only some diesel cars and the gasoline-electric hybrids have better fuel efficiency. But relative to the deisels and the hybrids the small cars are very inexpensive, at around $US12,500 for the Toyota Yaris to around $US14,500 for the Honda Fit. The Yaris, Fit, and Versa sell in a quarter of the time it normally takes to move a new car from the dealers showroom. Demand is currently outstripping supply.

December - USA - Europe - Japan -  less than 15% of  car owners are first-time car owners.

December - China  - around 80% of China's car owners are first time car owners. Calculations by General Motors suggest that because of China's rapid growth, most middle class families, while still a small percent of Chinas's overall population, could afford to buy a car if they chose to. GM reckons that amounts to a potential customer base of 74 million families.

December 5 - USA - Venuezuela - U.S. Senator Richard Lugar at the NATO suggests the rules of NATO be changed so that an energy boycott of any NATO member state is regarded as an act of coercion akin to a military attack. He suggests that such an 'attack' be met with a 'collective response'. While most commentators see it as a response to Russia's actions in shutting down some gas supplies in Europe last winter, the likely target will be Venezuela. Venezuelan oil imports are now of critical importance to USA.

December 5 - Iran - USA - Iran's Oil Ministry now includes a clause allowing it to substitute the euro for the USA dollar in almost all its oil dealings. The price tag may still be expressed in dollars, as this is the global trusted 'benchmark' currency (for the moment), but the payment is in euros. Presumably this contract provision will be for non-Asian and non-European oil dealings. The majority of Iran's sales are in Asia and Europe and are already largely denominated in euros; the existing policy already results in a considerable saving to Iran in currency exchange. There is no exchange costs for its European customers, and exchange costs to go from US dollars to euros is borne by the Asian customer. Iran may also want to avoid having dollar assets tied up in the international banking-go-round, where they are vunerable to being 'frozen' by America in times of conflict.

December - Iran - USA - Iran has cut its dollar reserves in the last quarter by $US4 billion.

December - Qatar - USA - Qatar has cut its dollar reserves in the last quarter by $US2.4 billion.

Are both these countries reducing their holdings for the same reason?

December  - USA - Energy Industry economists at their conference in Houston claim that while world oil consumption and demand have only around 400,000 barrels a day of padding between them, the high oil prices have allowed enough refinery expansion and 'new-build' to handle the increasing proportion of heavy and sour crudes, such that overall through-put volumes will increase and oil prices will likely plateau - by 2010.

December - Iraq - USA - As part of its job of preparing the USA public for the final phase of operation Iraqi Oil, a bipartisan 'study group' releases its recommendations. While the father of the report, James Baker, publicy states at the time of the release that it is "not about oil" the report publicly reveals a continuation of the plan - which at base, is all about oil:
Recommendation No. 63:  USA should "assist Iraqi leaders to reorganize the national oil industry as a commercial enterprise" to "encourage investment in Iraq's oil sector by the international community and by international energy companies" and to "provide technical assistance to the Iraqi government to prepare a draft oil law." This re-afirms the plan to privatise Iraqi oil resources and open them to USA and selected European oil firms.
Recommendation No. 26: a review of the constitution should be "pursued on an urgent basis." The USA crafted constitution slipped up in not explicitly stating whether or future revenue from undeveloped oilfields should be held by the province the oilfield is in, or go to a central government.
Recommendation No. 28 control of Iraq's oil revenues to be put into the hands of the central government. As Iraq breaks up into a nominal federation of three states, the USA needs the revenue to go largely to several central strongmen (representing the 3 factions) so that they can sub-contract access to exploration and development rights in their region. USA cannot afford to have regions selling their (USA'S) oil rights to outsiders.

December - OECD - oil stocks on hand in OECD countries are now being used at the rate of 1 million barrels a day. Stocks on hand at the end of the year are 2.67 billion barrels, equivalent to about 53 days of demand.

December - Russia - Netherlands - Russia stalls the Sakhalin-2 project once more on the grounds of breach of environmental rules. Shell realises it is over a barrel and agrees to reduce its majority holding of 55% down to 25%. Japanese joint venture partners  Mitsui will divest from their current 25% holding down to 15% and Mitsubishi will sell down its 20% stake to a 10% holding. Gazprom will pick this 45% up in return for cash and some 'field assets' in eastern Siberia.

December - Russia - Belarus - Russia imposes a $US180 per tonne export duty on Russian oil sold to Belarus. Belarus has been importing cheap oil subsidised by Russia, and refining and re-selling it at a handsome margin. Russia estimates this gambit by Belarus has cost Russia more than 3 billion dollars a year in foregone revenue.

December - Russia - Belarus - Belarus imposes an import duty of $US45 per tonne on Russian oil that transiting its territory via the Druzhba pipeline to Europe. Belarus enjoys duty free trade with Russia, and has done for many years.

December 13 - Angola - The offshore Dalia deepwater oil field commences production. Full production is expected mid 2007, when it will produce about 240,000 barrels of oil per day. Like most modern fields, the field pressure is maintained with 31 water injectors and 3 gas injectors. When this field eventually declines, it will likely decline relatively steeply.

December - USA - Angola - oil supply to USA surges 41%.

December 15 -Azerbaijan - Turkey - the Shah Deniz gas and condensate field in Azerbaijan’s sector of the Caspian Sea commences production. It is one of the largest producing fields in the world, with gas reserves estimated at around 50 to 100 billion cubic meters. The 'wet' gas is believed to have condensate reserves of around 400 million cubic meters. Most of the gas will be piped via the new 690 kilometre long South Caucasus pipeline. This pipeline runs in parallel with the Baku-Tblisi-Ceyhan oil pipeline from Azerbaijan, across Georgia, to Turkey. Georgia will also buy some of the gas.

December - Saudi Arabia  - South Korea - Taiwan - Japan - Saudi Aramco tells refiners in Japan, South Korea and Taiwan that it will cut their contracted crude oil supplies by 4% - 5% below their contracted annual volumes for this month, then cut their allocation in january 2007 by 8% - 9%. For whatever reason, temporary or permanent, Saudi Arabia seems to be allocating a reduced supply.

December 14  - OPEC - OPEC agree to further cut supply by 500,000 barrels per day (2% of current production) starting on February 1st 2007, after the northern winter.

December - OPEC quote of the month
"...since peak oil output is not about the time at which oil will run out, but the time at which production can no longer be increased to cope with increased demand, it seems the only way the oil price can go is up.
This conclusion seems to be in line with the view held by the peak oil output advocates who argue that the ongoing oil price rises are mainly due to supply-demand imbalances. This is because we are at, or near, the production peak of world oil, if not on the downward slope of Hubbert’s peak curve."
-Senior OPEC member Dr Shokri Ghanem, writing in the december OPEC bulletin

December - Algeria - starting 2007, Algeria will now tax oil company "excess" profits when oil is over $30 a barrel. In future Algerias national oil company must have a 51% controlling interest in all oil and refining contracts. All existing foreign oil company contracts will have to be renewed, and on these terms.

December 25  - Azerbaijan - Turkey - Production at the Shah Deniz gas and condensate field is stopped due to a leak deep in the well hole. It is not expected to be repaired until mid january 2007. Just one well is (was) operational at the field, with others due to drilled next year.

 December 29 - Light sweet crude oil is now $US61.05.

December 31 - Russia - Belarus - Belarus reluctantly agrees to pay increased natural gas prices of $100 per thousand cubic meters (tcm) for Russian natural gas. This is still far below the market price of around $235 per tcm. In turn, Belarus will pay $US70 cash and $US30 as shares in the Belarus pipeline company Beltrangaz. The price will gradually rise over the next 4 years to to the full market price, when Gazprom will have received shares equally a 50% stake in Beltrangaz, at an ultimate cost to Gazprom of US$2.5 billion.

December -  Saudi Arabia - exports this month have been 1.1 million barrels a day lower than october, when OPEC called for production cuts of a million barrels a day (upped to 1.2 million barrels a day in november). December production has therefore been about 7.7 million barrels per day.

December - Mexico - Cantarell crude production is now down to an 'average' of 1.5 million barrels a day for the year according to figures from the Mexican Energy Ministry. This is an apparent drop of almost 250,000 barrels a day in the last 6 months, but as it is the year average taken from the July production, it is likely to have been a somewhat larger drop in december. Cantarells's collapse continues.

December - Mexico - total production (all fields) is now 2,978,000 barrels of oil per day, (crude plus condensate). Mexican domestic consumption continues to increase.

Brazil - Oil production was about 1,800,000 barrels of oil per day, (crude plus condensate).Brazilian domestic consumption was about 2,100,000 barrels of oil per day.

Iraq - in 2006, a total of 44 million barrels of oil 'disappear' into the black market.

End 2006

Oil Production - the average combined crude oil plus condensates used in 2006 was 73.48 million barrels per day (according to America's 'Energy Information Administration', the EIA)

Domestic oil consumption by the top 10 oil producing nations is estimated to have increased by at least 6% relative to end 2005. Increasing domestic demand in export nations decreases the amount available for export.

Revised (2007) IEA (International Energy Agency) estimates of crude oil plus all other liquids (demand) for 2006 was 85.5 million barrels a day, slightly lower than last year.

America's EIA estimate total natural gas liquids produced in 2006 was 7.9 million barrels a day (up 140,000 barrels a day)

America's EIA estimate total 'other liquids' produced in 2006 was 3.3 million barrels a day (up 80,000 barrels a day)

America's EIA estimate of average total liquids use for 2006 was 84.6 million barrels a day - about 1 million barrels a day lower than the International Energy Agency estimate.

Saudi Arabia decreased their exports by about 8% for the year, mostly from mid to end year. It remains unclear if this is a result of reduced year end demand, reduced production of light crude and lack of refinery capacity for heavy crude, slowing demand, increased internal consumption, efforts to support the price at above $50 a barrel, decline in production from Ghawar, or a bit of everything.

This year the top 10 nett oil exporting countries increased their domestic consumption by an additional 500,000 barrels a day.

Russia increased their liquids production by 200,000 barrels a day. Russia's total oil output was 3.5 billion barrels (480.02 million tonnes), an increase on 2.1% over last year.

China's oil production peaked this year, with the annual depletion rate estimated to now be about 320,000 barrels a day. Crude production at Daqing, China's largest oilfield, dropped by 3.5% this year.

China's total crude oil imports for the year was 138.8 million tonnes - almost 17% more than 2005.

Angola is now second largest supplier of crude oil to China, beaten by Saudi Arabia by only 2%.

China exported 26.1 million tonnes of coal.

Venezuelan oil production dropped 5.5% this year (IEA). Production averaged over the year was 2.56 million barrels a day. Spare capacity of 210,000 is mainly in four partially completed heavy oil projects, but limited domestic capital means the production potential is 'on hold' for the moment.

USA - natural gas - Around 32,000 new natural gas wells were drilled this year. More wells than ever have to be drilled to keep up supply, but new finds are small, and relatively low volume. They are used up relatively quickly. The decline rate since USA natural gas peaked has been about 1.3 trillion cubic feet per year. Some new fields such as the Barnett Shale prospect in Texas may come on stream soon, but at best, will halt the decline, and then only for a few years. The concern is that after that, current feverish in-fill drilling of existing fields may cause rapid decline rates in all the largest remaining fields - such as occurred with the very large near-Gulf gas basin, which declined by 42% in the short space of about 6 years.

Canada  - natural gas - Around 17,700 new natural gas wells were drilled this year.

USA - electricity - natural gas - 40% of all USA electric power generation is now from gas-fired plants, with %US100 billion of new plant having been built over the last 6 years.

USA - electricity - natural gas - The US's EIA february forecast that the natural gas consumption to generate electricity for the year would be 5.36 trillion cubic feet in 2006 is wrong - it is around 6.2 trillion cubic feet a year.

USA - small cars  - Demand for small cars has doubled, but from a tiny base - they are now 2% of new car sales. Around 16.6 million new vehicles were sold in USA.

USA - compact cars - sales of so-called 'compact' cars increased in USA this year. Toyota corolla sales are up 13%.

UK - petroleum production fell 9.3% to 1.63 million barrels a day, natural gas production fell 9.1% and coal production fell 8.3%.

UK - due to the North Sea oil fields passing their peak of production, the UK is now a nett oil importer once again. It was last a nett oil importer in 1980.

USA  - the USA now imports 10.095 million barrels of crude oil a day, only a fraction less than last year (when hurricane Katrina shut down significant domestic production).
Canada supplied USA with 1.782 million barrels a day - up about 9% on last year.
Saudi Arabia supplied USA with 1.42 million barrels a day - down 1.7% on last year.
Venezuela supplied USA with 1.139 million barrels a day - making it fourth largest supplier.
Angola (Africa offshore) supplied USA with 513,000 barrels a day - up by 12.5% on last year.

Kuwait supplied USA with 179,000 barrels a day - down by 21%.

USA - oil imports - USA now imports more (by a tiny margin) oil from Africa - just over 2.23 million barrels a day - than from the Middle East. Both regions supply about 22% of USA needs.

Oil companies - Exxon Mobil makes a net profit of $US10.25 billion for the last quarter, a little down on last years record profit. Exxon Mobil is the world's largest publicly traded oil company.

Norway - Norway is now the world's fifth largest oil producer. Previously it was third largest. The decline is due to falling North Sea oil production.

Renewable energy - according to the United Nations Environment Program, global investment in renewable energy - particularly solar, wind and biofuel - was $US100 billion.

Go to 2007

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