The following is a transcript of Sen. Barack Obama's speech on May 9, 2008, as provided by Obama's campaign.
It's great to be back in Oregon. Over the last fifteen months, we've travelled to every corner of the United States. Now I know that if you listen to Washington or pay attention to the pundits, you hear a lot about how divided we are as a people. But that's not what I've found as I've travelled across this great country.
Everywhere I go, I've been impressed by the values and hopes that we share. In big cities and small towns; among men and women; young and old; black, white, and brown - Americans share a faith in simple dreams. A job with wages that can support a family. Health care that we can count on and afford. A retirement that is dignified and secure. Education and opportunity for our kids. Common hopes. American dreams.
That's why this election is so important. Because for far too many Americans, those hopes and dreams are slipping away. We just came through the first period of sustained economic growth since World War II that saw incomes drop. People are working harder for less. You're paying more for gas, and groceries, and tuition. Millions of families are facing foreclosure. We've already lost hundreds of thousands of jobs this year.
To be sure, some of these problems are a result of changes in our economy that no one can control. But instead of helping, Washington's policies have made it worse.. Instead of expanding opportunity for working people, we've tried to grow our economy from the top down, and eventually that pain trickled up. Instead of making sure that people can live their dreams on Main Street, we've tilted the scales for special interests and Wall Street. Instead of saying "we're all in this together" as Americans, Washington has sent a message that says - "you're on your own."
John McCain has served his country with honor, and I respect that service. But it was dead wrong when he said recently that he thinks our economy has made "great progress" under George Bush. Is there anyone outside of Washington D.C, who could truly believe that? Do you? Senator McCain is running for President to double down on George Bush's failed policies. I am running to change them, and that will be the fundamental difference in this election when I am the Democratic nominee for President.
We have a difference on taxes. John McCain wants to continue George Bush's tax cuts for the wealthiest Americans; I want to give a tax cut to working people. I admired Senator McCain when he said he could not "in good conscience" support the Bush tax cuts. But now, as the Republican nominee, he's fully embraced them. He wants to give a permanent tax cut to the wealthiest Americans who don't need them and didn't ask for them while working people are struggling. And for all his talk about fiscal responsibility, he's proposed $400 billion in tax cuts without any word about how he'll pay for him. That's exactly the kind of attitude that has shifted the burden on to the middle class, and mortgaged our children's future on a mountain of debt.
I think it's time to restore fairness and responsibility to our tax code. We need to reward work - not just wealth. We need to stop giving tax breaks to companies that ship jobs overseas, and put a tax cut in the pockets of middle class Americans. That's why I've proposed a "Making Work Pay" tax credit of up to $500 for workers, and $1,000 for working families. This will cut taxes for 150 million Americans. It will help you deal with rising costs, and give our economy a boost by easing the burden on Main Street.
We have a difference on health care. John McCain wants to continue a George Bush approach that only takes care of the healthy and the wealthy; that allows insurance companies to discriminate and deny coverage to those Americans who need it most. This is exactly the kind of approach that has left out tens of millions of Americans. It's why you are struggling with rising costs. And it's why we have failed to solve our health care crisis year after year after year.
I think it's time to finally make health care affordable and accessible for every American. We need to stand up to the insurance companies and the drug companies. We need to bring Americans together. And we need to pass a plan that lowers every family's premiums, and gives every uninsured American the same kind of coverage that Members of Congress give themselves.
We have a difference on gas prices. John McCain has embraced a gas tax gimmick that - when it's said and done - will save you less than thirty dollars this summer. This is a classic Washington fix that's more about getting John McCain through an election than solving your problems. It will put more money in the pockets of the oil companies. It's bad for our environment. And it won't bring own gas prices over the long term - most economists think it will send those prices up.
I believe we owe the American people the truth. That's why my plan to lower gas prices raises fuel efficiency standards on cars; invests in alternative energy to end our addiction to oil; and creates millions of new Green Jobs while saving our planet in the bargain. That's the kind of change we need in Washington.
We have a fundamental difference on our priorities for the presidency. John McCain wants to continue George Bush's war in Iraq, losing thousands of lives and spending tens of billions of dollars a month to fight a war that isn't making us safer. I want to end this war. I want to invest that money in America - in our roads and bridges and ports. And I want to invest in millions of Green Jobs, so that we finally develop renewable energy, end our addiction to oil, bring those gas prices down, and save our planet in the bargain.
There will be real differences on the ballot in November. And that's what elections should be about. John McCain will stand with Washington's tried and failed approaches of the past; I will stand with the American people on behalf of a new direction for working people. Because I believe it's time for America to once again be a place where you can make it if you try. I believe it's time for Washington to work for your hopes, for your dreams. That's the choice I'll offer in this campaign. And that's what I'll do every day as President of the United States.
Saturday, June 28, 2008
McCain speech on relationship between U.S. and Canada
The following is a transcript of Sen. John McCain's speech on June 20, 2008, as provided by McCain's campaign.
Thank you all very much. I appreciate the warm welcome to Ottawa, and the hospitality of the Economic Club of Toronto. The reputation of the Economic Club as a place for serious discussion of policy is well known in America, and I am honored by your invitation. There aren't any electoral votes to be won up here in the middle of a presidential election. But there are many shared interests that require our attention today, and many Canadians here I am proud to call friends.
If you've been following the presidential election, you've probably noticed that Canada comes up for discussion quite a bit these days. And this is as it should be -- because no other nation shares so many ties with the United States. And today the strength of that partnership is more vital than ever. The economic community we have founded, together with our alliance and the values we hold in common, have served our people for decades, and served us well. It will fall to the next president to strengthen these ties still further, adding to the security and prosperity of all of North America.
We in the United States are very lucky, in a way that's easy to take for granted. We are surrounded by two great oceans, and by two nations we count as friends. Think of the fate of other nations, and how much of their histories have been shaped by hostile neighbors. Generation after generation, they live in fear, resentment, and competition harmful to the interests of all. Lost in rivalry and distrust are the advantages of regional friendship and stability. What a blessing it is for the United States to have in Canada a neighbor we fear only on ice rinks and baseball diamonds.
The best American statesmen have always understood that Canada is not some adjunct to America. We are firm and fast friends. We are allies, partners in success and adversity alike, and a great deal depends on preserving that unity.
Trade is just a part of what unites us, but a very important part. Last year alone, we exchanged some 560 billion dollars in goods, and Canada is the leading export market for 36 of the 50 United States. This country stands as America's leading overall export market, and America is Canada's leading agricultural market. With 60 percent of all direct foreign investment in Canada originating in the United States -- some 289 billion dollars in 2007 -- our economies draw strength from one another.
A prosperous Canada means a more dynamic and resilient American economy. There are areas where the United States can learn a great deal from your experience. Beginning in 1995, Canada did the hard work to put its fiscal house in order. You reduced spending and brought the budget from deficit to surplus. However, unlike your free-spending neighbor to the south, Canada continued to run budget surpluses even while cutting its corporate and personal tax rates. Lower taxes and spending restraint is a philosophy we should import from Canada.
Our common interests extend to other pursuits as well. The future of our environment, the flows of our energy, and the security of nations -- all of these are aided by the close relations forged by our predecessors in Ottawa and Washington. And if I have anything to say about it after January of next year, America is going to expand these ties of friendship and cooperation between our two nations.
At the forefront of our minds, in these years since the Millennium Plot and the events of 9/11, is the security of our citizens. Our governments have made real progress in keeping our borders closed to terrorists and open to trade. Yet this will remain an ongoing challenge and a key issue for the next American administration. Tens of millions of people and vehicles cross the Canadian-American border every year. The two-way trade that crosses the Ambassador Bridge between Detroit and Windsor equals all American exports to Japan. That transit, and all our crossing points, must remain secure. In extending our security partnership, we can ensure continued flows of people and commerce while maintaining security on which these very flows depend. We need to do an even better job of managing the regular traffic across our border.
Already, we cooperate in preparing for emergencies -- exchanging information and manpower to coordinate our response to danger. We have agreements in place to work together in detecting radiological and nuclear threats, to improve security at ports, borders, and airports, and to assist first responders. We exchange public health officers and have agreed on principles for screening intercontinental air travelers in the event of a pandemic. In all of this, we are drawing upon the skills and knowledge of one another, and we are joined in the crucial work of protecting our people.
At the same time, Canada and America are joined in other vital causes around the world -- from the fight against nuclear proliferation to the fight against global warming, from the fight for justice in Haiti to the fight for democracy in Afghanistan. I, for one, will never forget the response of our Canadian friends to the terrorist attacks of 9/11. It was here in Ottawa, three days later, where tens of thousands of Canadians filled the streets on a National Day of Mourning. The Canadian people even took in Americans who has been left stranded by the shutdown of American air space. We in America have not forgotten your kindness. And we will never forget the solidarity, compassion, and friendship of Canada when it mattered most.
We know as well that Canada, too, has suffered casualties in the years since 9/11, and we honor their memory as we do our own. As always in Canada's history, this nation has been willing to do hard things, even when the costs run high. Along with our other allies, Canada and America are still fighting in defense of Afghanistan -- in the honorable cause of freedom for that long suffering country, and greater security for ourselves. To date, Canada has committed nearly two billion dollars to the rebuilding of Afghanistan, including a recent 50% increase at the Paris Conference. It is a generous investment, and a wise one, and together our countries are going to see this mission through.
Even in Iraq, where Canada has not always agreed with American policies, this nation has done all that those differences would allow to help the Iraqi people. In characteristic form, Canada has given generous humanitarian aid and development assistance. And your government has provided more than 770 million in combined assistance and debt relief to Iraq, helping a struggling young democracy at a critical time.
It's the mark of good friends that they're willing to correct you, and to do so without rancor. Many Canadians have objected to the policies of the United States in dealing with terrorists, and with enemy combatants held at the Guantanamo prison. It happens that I also regard the prison at Guantanamo as a liability in the cause against violent radical extremism, and as president I would close it. I intend as well to listen carefully when close allies offer their counsel. And even when they don't volunteer their advice, I'll ask for it and seek it out.
We're going to need that spirit in many efforts. We have a shared destiny, Canada and the United States. We are both continental powers, nations shaped by our diverse heritage and our frontier experience. We are also both Arctic nations. And because of this common geography, we must be acutely aware of the perils posed by global warming and take immediate steps to reverse its effects.
Three years ago, I traveled with some colleagues, including Senator Hillary Clinton and Senator Lindsey Graham, to Yukon territory, a front line of global warming. We flew over miles of devastated spruce forests, every tree killed by insects that thrive in warm temperatures. As the trees die, fires multiply, and across the region the waters are vanishing. We heard from men and women near Whitehorse whose traditional way of life had been radically disrupted.
All of this is just a glimpse of the grave environmental dangers that global warming can bring, unless we act to prevent it. I was among the first in Congress to introduce legislation to curb greenhouse gasses. If I am elected president, it will be a top priority to enact an energy policy equal to this challenge. A sensible cap-and-trade emissions system, for instance, is a critical part of such a policy. Under U.S. and Canadian leadership, the Montreal Protocol began the process of phasing out gases that were destroying our planet's ozone layer. We also instituted a cap-and-trade system that removed the threat of acid rain. I believe we can apply it to great effect against the threat of climate change. And here, too, Canada and America can work in common purpose against common dangers.
We must also work to ensure reliable energy supplies and increase sources of renewable energy. As you all know, Canada is America's largest energy supplier. Not only does Canada have the second largest proven oil reserves in the world, 60 percent of the energy produced in Canada is hydroelectric, clean energy. We stand much to gain by harmonizing our energy policies, just as have gained by cooperating in trade through NAFTA. Since NAFTA was concluded, it has contributed to strong job growth and flourishing trade. Since the agreement was signed, the United States has added 25 million jobs and Canada more than 4 million. Cross-border trade has more than doubled since NAFTA came into force. We have established North America as the world's largest economic market and the integration of our economies has led to greater competitiveness of American and Canadian businesses. Because of our common market, our workers are better able to compete, and to find opportunities of their own in the global economy.
There is still more work to do. Complying with NAFTA's rules of origin can be cumbersome and costly. Border delays can pose a serious impediment to trade, the equivalent of a tariff. And even now, for all the successes of NAFTA, we have to defend it without equivocation in political debate, because it is critical to the future of so many Canadian and American workers and businesses. Demanding unilateral changes and threatening to abrogate an agreement that has increased trade and prosperity is nothing more than retreating behind protectionist walls. If I am elected president, have no doubt that America will honor its international commitments -- and we will expect the same of others. We will strengthen and extend the open and rules-based international trading system. I aspire to lead a proud, outward-looking America that deepens its partnerships throughout the hemisphere and the world.
Long before NAFTA, America received one of its most valuable exports from Canada in the form of a great statesman, Dean Acheson. He was descended from a great Canadian distilling family and a man who knew Canada well. As secretary of state, Acheson liked to drop by the home of his great friend Hume Wrong, Canada's ambassador to the United States, for consultation and advice over a quiet drink. As I said, Acheson came from a distilling family.
The relationship was not always smooth. But it was productive. Canada and the United States together gave generously for the reconstruction of Europe. And together, too, we helped to forge the new trading system that restored the prosperity of the world after a terrible war.
We've been through an awful lot together, Canada and America, and together we have achieved great things. We have a long shared history to draw from, and deep reserves of good will and mutual admiration. I thank you for all that you have done to advance one of the finest friendships between any two nations in the world today. I thank you for the conviction and clarity you bring to that work ahead for our two nations. And I thank you all for you kind attention here today.
Thank you all very much. I appreciate the warm welcome to Ottawa, and the hospitality of the Economic Club of Toronto. The reputation of the Economic Club as a place for serious discussion of policy is well known in America, and I am honored by your invitation. There aren't any electoral votes to be won up here in the middle of a presidential election. But there are many shared interests that require our attention today, and many Canadians here I am proud to call friends.
If you've been following the presidential election, you've probably noticed that Canada comes up for discussion quite a bit these days. And this is as it should be -- because no other nation shares so many ties with the United States. And today the strength of that partnership is more vital than ever. The economic community we have founded, together with our alliance and the values we hold in common, have served our people for decades, and served us well. It will fall to the next president to strengthen these ties still further, adding to the security and prosperity of all of North America.
We in the United States are very lucky, in a way that's easy to take for granted. We are surrounded by two great oceans, and by two nations we count as friends. Think of the fate of other nations, and how much of their histories have been shaped by hostile neighbors. Generation after generation, they live in fear, resentment, and competition harmful to the interests of all. Lost in rivalry and distrust are the advantages of regional friendship and stability. What a blessing it is for the United States to have in Canada a neighbor we fear only on ice rinks and baseball diamonds.
The best American statesmen have always understood that Canada is not some adjunct to America. We are firm and fast friends. We are allies, partners in success and adversity alike, and a great deal depends on preserving that unity.
Trade is just a part of what unites us, but a very important part. Last year alone, we exchanged some 560 billion dollars in goods, and Canada is the leading export market for 36 of the 50 United States. This country stands as America's leading overall export market, and America is Canada's leading agricultural market. With 60 percent of all direct foreign investment in Canada originating in the United States -- some 289 billion dollars in 2007 -- our economies draw strength from one another.
A prosperous Canada means a more dynamic and resilient American economy. There are areas where the United States can learn a great deal from your experience. Beginning in 1995, Canada did the hard work to put its fiscal house in order. You reduced spending and brought the budget from deficit to surplus. However, unlike your free-spending neighbor to the south, Canada continued to run budget surpluses even while cutting its corporate and personal tax rates. Lower taxes and spending restraint is a philosophy we should import from Canada.
Our common interests extend to other pursuits as well. The future of our environment, the flows of our energy, and the security of nations -- all of these are aided by the close relations forged by our predecessors in Ottawa and Washington. And if I have anything to say about it after January of next year, America is going to expand these ties of friendship and cooperation between our two nations.
At the forefront of our minds, in these years since the Millennium Plot and the events of 9/11, is the security of our citizens. Our governments have made real progress in keeping our borders closed to terrorists and open to trade. Yet this will remain an ongoing challenge and a key issue for the next American administration. Tens of millions of people and vehicles cross the Canadian-American border every year. The two-way trade that crosses the Ambassador Bridge between Detroit and Windsor equals all American exports to Japan. That transit, and all our crossing points, must remain secure. In extending our security partnership, we can ensure continued flows of people and commerce while maintaining security on which these very flows depend. We need to do an even better job of managing the regular traffic across our border.
Already, we cooperate in preparing for emergencies -- exchanging information and manpower to coordinate our response to danger. We have agreements in place to work together in detecting radiological and nuclear threats, to improve security at ports, borders, and airports, and to assist first responders. We exchange public health officers and have agreed on principles for screening intercontinental air travelers in the event of a pandemic. In all of this, we are drawing upon the skills and knowledge of one another, and we are joined in the crucial work of protecting our people.
At the same time, Canada and America are joined in other vital causes around the world -- from the fight against nuclear proliferation to the fight against global warming, from the fight for justice in Haiti to the fight for democracy in Afghanistan. I, for one, will never forget the response of our Canadian friends to the terrorist attacks of 9/11. It was here in Ottawa, three days later, where tens of thousands of Canadians filled the streets on a National Day of Mourning. The Canadian people even took in Americans who has been left stranded by the shutdown of American air space. We in America have not forgotten your kindness. And we will never forget the solidarity, compassion, and friendship of Canada when it mattered most.
We know as well that Canada, too, has suffered casualties in the years since 9/11, and we honor their memory as we do our own. As always in Canada's history, this nation has been willing to do hard things, even when the costs run high. Along with our other allies, Canada and America are still fighting in defense of Afghanistan -- in the honorable cause of freedom for that long suffering country, and greater security for ourselves. To date, Canada has committed nearly two billion dollars to the rebuilding of Afghanistan, including a recent 50% increase at the Paris Conference. It is a generous investment, and a wise one, and together our countries are going to see this mission through.
Even in Iraq, where Canada has not always agreed with American policies, this nation has done all that those differences would allow to help the Iraqi people. In characteristic form, Canada has given generous humanitarian aid and development assistance. And your government has provided more than 770 million in combined assistance and debt relief to Iraq, helping a struggling young democracy at a critical time.
It's the mark of good friends that they're willing to correct you, and to do so without rancor. Many Canadians have objected to the policies of the United States in dealing with terrorists, and with enemy combatants held at the Guantanamo prison. It happens that I also regard the prison at Guantanamo as a liability in the cause against violent radical extremism, and as president I would close it. I intend as well to listen carefully when close allies offer their counsel. And even when they don't volunteer their advice, I'll ask for it and seek it out.
We're going to need that spirit in many efforts. We have a shared destiny, Canada and the United States. We are both continental powers, nations shaped by our diverse heritage and our frontier experience. We are also both Arctic nations. And because of this common geography, we must be acutely aware of the perils posed by global warming and take immediate steps to reverse its effects.
Three years ago, I traveled with some colleagues, including Senator Hillary Clinton and Senator Lindsey Graham, to Yukon territory, a front line of global warming. We flew over miles of devastated spruce forests, every tree killed by insects that thrive in warm temperatures. As the trees die, fires multiply, and across the region the waters are vanishing. We heard from men and women near Whitehorse whose traditional way of life had been radically disrupted.
All of this is just a glimpse of the grave environmental dangers that global warming can bring, unless we act to prevent it. I was among the first in Congress to introduce legislation to curb greenhouse gasses. If I am elected president, it will be a top priority to enact an energy policy equal to this challenge. A sensible cap-and-trade emissions system, for instance, is a critical part of such a policy. Under U.S. and Canadian leadership, the Montreal Protocol began the process of phasing out gases that were destroying our planet's ozone layer. We also instituted a cap-and-trade system that removed the threat of acid rain. I believe we can apply it to great effect against the threat of climate change. And here, too, Canada and America can work in common purpose against common dangers.
We must also work to ensure reliable energy supplies and increase sources of renewable energy. As you all know, Canada is America's largest energy supplier. Not only does Canada have the second largest proven oil reserves in the world, 60 percent of the energy produced in Canada is hydroelectric, clean energy. We stand much to gain by harmonizing our energy policies, just as have gained by cooperating in trade through NAFTA. Since NAFTA was concluded, it has contributed to strong job growth and flourishing trade. Since the agreement was signed, the United States has added 25 million jobs and Canada more than 4 million. Cross-border trade has more than doubled since NAFTA came into force. We have established North America as the world's largest economic market and the integration of our economies has led to greater competitiveness of American and Canadian businesses. Because of our common market, our workers are better able to compete, and to find opportunities of their own in the global economy.
There is still more work to do. Complying with NAFTA's rules of origin can be cumbersome and costly. Border delays can pose a serious impediment to trade, the equivalent of a tariff. And even now, for all the successes of NAFTA, we have to defend it without equivocation in political debate, because it is critical to the future of so many Canadian and American workers and businesses. Demanding unilateral changes and threatening to abrogate an agreement that has increased trade and prosperity is nothing more than retreating behind protectionist walls. If I am elected president, have no doubt that America will honor its international commitments -- and we will expect the same of others. We will strengthen and extend the open and rules-based international trading system. I aspire to lead a proud, outward-looking America that deepens its partnerships throughout the hemisphere and the world.
Long before NAFTA, America received one of its most valuable exports from Canada in the form of a great statesman, Dean Acheson. He was descended from a great Canadian distilling family and a man who knew Canada well. As secretary of state, Acheson liked to drop by the home of his great friend Hume Wrong, Canada's ambassador to the United States, for consultation and advice over a quiet drink. As I said, Acheson came from a distilling family.
The relationship was not always smooth. But it was productive. Canada and the United States together gave generously for the reconstruction of Europe. And together, too, we helped to forge the new trading system that restored the prosperity of the world after a terrible war.
We've been through an awful lot together, Canada and America, and together we have achieved great things. We have a long shared history to draw from, and deep reserves of good will and mutual admiration. I thank you for all that you have done to advance one of the finest friendships between any two nations in the world today. I thank you for the conviction and clarity you bring to that work ahead for our two nations. And I thank you all for you kind attention here today.
Oil hits record near $143 on rising investor flows
By Matthew Robinson
NEW YORK (Reuters) - Oil prices rose to a record near $143 a barrel on Friday as a drop in global equities markets sent fresh investors into commodities.
U.S. crude settled 57 cents higher at $140.21 a barrel, as profit taking sent prices from the record $142.99 hit earlier. London Brent crude settled up 48 cents at $140.31 a barrel.
Global stocks slumped to three-month lows on concerns about the outlook for corporate profits and inflation, putting the Dow Jones industrial average on the verge of entering a bear market for the first time since 2001.
"The renewed attraction of commodities as an investment vehicle is contrasting with the unattractiveness of the stock market," analysts Ritterbusch and Associates said in a research note. "As additional traders abandon the stock market, the appeal of commodities as a trading vehicle is enhanced."
Oil prices have jumped more than 45 percent this year, extending a six-year rally, as supply struggles to keep pace with rising demand from emerging economies, such as China and India.
Additional support has come from a flood of cash from new investors buying up commodities to hedge against inflation and the weak U.S. dollar, which fell further on Friday.
Gold hit a one-month record high, while U.S. corn futures jumped to a fresh record.
Rising fuel costs have stirred protests around the globe, prompting some U.S. politicians to call for a reduction in the amount of speculation allowed in the oil market.
The U.S. House of Representatives on Thursday approved legislation that directs the Commodity Futures Trading Commission to use all its authority to curb speculation in energy futures markets.
Oil rose more than $5 on Thursday after Libya said it was studying possible options to cut output in response to potential U.S. actions against members of the Organization of Petroleum Exporting Countries.
Some experts insist supply and demand are behind oil's record rise, while others, including OPEC, say rising flows of speculative cash are behind this year's gains.
"We believe the factors driving oil prices higher are fundamental and not speculative," Deutsche Bank said in a research note. "Oil needs to rise to $150 a barrel for oil as a share of global GDP to reach the levels that occurred in the early 1980s."
"At that point, we will start to see more signs of demand destruction and an eventual tipping point in oil markets."
An oil price poll by Reuters showed analysts' expectations that oil will rise for the foreseeable future.
The poll showed U.S. crude in 2008 would average $113.24 a barrel, up by about $6 from the last poll in May.
NEW YORK (Reuters) - Oil prices rose to a record near $143 a barrel on Friday as a drop in global equities markets sent fresh investors into commodities.
U.S. crude settled 57 cents higher at $140.21 a barrel, as profit taking sent prices from the record $142.99 hit earlier. London Brent crude settled up 48 cents at $140.31 a barrel.
Global stocks slumped to three-month lows on concerns about the outlook for corporate profits and inflation, putting the Dow Jones industrial average on the verge of entering a bear market for the first time since 2001.
"The renewed attraction of commodities as an investment vehicle is contrasting with the unattractiveness of the stock market," analysts Ritterbusch and Associates said in a research note. "As additional traders abandon the stock market, the appeal of commodities as a trading vehicle is enhanced."
Oil prices have jumped more than 45 percent this year, extending a six-year rally, as supply struggles to keep pace with rising demand from emerging economies, such as China and India.
Additional support has come from a flood of cash from new investors buying up commodities to hedge against inflation and the weak U.S. dollar, which fell further on Friday.
Gold hit a one-month record high, while U.S. corn futures jumped to a fresh record.
Rising fuel costs have stirred protests around the globe, prompting some U.S. politicians to call for a reduction in the amount of speculation allowed in the oil market.
The U.S. House of Representatives on Thursday approved legislation that directs the Commodity Futures Trading Commission to use all its authority to curb speculation in energy futures markets.
Oil rose more than $5 on Thursday after Libya said it was studying possible options to cut output in response to potential U.S. actions against members of the Organization of Petroleum Exporting Countries.
Some experts insist supply and demand are behind oil's record rise, while others, including OPEC, say rising flows of speculative cash are behind this year's gains.
"We believe the factors driving oil prices higher are fundamental and not speculative," Deutsche Bank said in a research note. "Oil needs to rise to $150 a barrel for oil as a share of global GDP to reach the levels that occurred in the early 1980s."
"At that point, we will start to see more signs of demand destruction and an eventual tipping point in oil markets."
An oil price poll by Reuters showed analysts' expectations that oil will rise for the foreseeable future.
The poll showed U.S. crude in 2008 would average $113.24 a barrel, up by about $6 from the last poll in May.
Thursday, June 26, 2008
Hong Kong eyes oil commodities exchange
HONG KONG, China (AP) -- Hong Kong plans to launch a new exchange to trade fuel oil and other commodities in an effort to capitalize on the booming market for raw materials in China, officials announced Wednesday.
Traders stare into computers at the Hong Kong Stock Exchange in early June.
The Hong Kong Mercantile Exchange will trade U.S. dollar oil contracts when it opens in the first quarter of 2009, then expand into other commodities trading, the exchange said in a statement.
The fuel oil, to be stored along southern China's border, will be available for delivery on the mainland or overseas.
Backers say the exchange would be a bridge between China and global investors, helping set prices that better reflect the country's surging demand for oil and other raw materials. It would also give traders access to one of the fastest-growing markets for energy.
"There is a huge opportunity for Hong Kong to develop a commodities futures market that can cater to the mainland and we are delighted to see the creation of (a commodities exchange) to accommodate these needs," Hong Kong Financial Secretary John C. Tsang said in a statement.
The exchange will be chaired by Barry Cheung, former Deputy Chairman of Titan Petrochemicals Group., an transportation and oil-storage company.
Possible investors and members include Lehman Brothers, Merrill Lynch, Morgan Stanley and other major companies, officials said.
Traders stare into computers at the Hong Kong Stock Exchange in early June.
The Hong Kong Mercantile Exchange will trade U.S. dollar oil contracts when it opens in the first quarter of 2009, then expand into other commodities trading, the exchange said in a statement.
The fuel oil, to be stored along southern China's border, will be available for delivery on the mainland or overseas.
Backers say the exchange would be a bridge between China and global investors, helping set prices that better reflect the country's surging demand for oil and other raw materials. It would also give traders access to one of the fastest-growing markets for energy.
"There is a huge opportunity for Hong Kong to develop a commodities futures market that can cater to the mainland and we are delighted to see the creation of (a commodities exchange) to accommodate these needs," Hong Kong Financial Secretary John C. Tsang said in a statement.
The exchange will be chaired by Barry Cheung, former Deputy Chairman of Titan Petrochemicals Group., an transportation and oil-storage company.
Possible investors and members include Lehman Brothers, Merrill Lynch, Morgan Stanley and other major companies, officials said.
Oil falls below $134 after drop on U.S. stock build
Thu Jun 26, 2008 12:33pm IST
By Fayen Wong
PERTH (Reuters) - Oil fell below $134 a barrel on Thursday, extending a $2 drop in the previous session after U.S. government data showed a surprise rise in domestic crude stocks, fuelling concerns of a demand slowdown in the world's largest energy consumer.
U.S. light crude for August delivery fell 73 cents to $133.82 a barrel by 0647 GMT, bringing total losses since Wednesday to over $3.
London Brent crude fell 68 cents to $133.65.
"I think the market is still reacting to the overnight U.S. inventory report. The numbers were pretty disappointing," said Tony Nunan, assistant manager of risk management at Mitsubishi Corp in Tokyo.
"Overall, the market is still rangebound between $130-$140 and unless there is a big geopolitical event, demand reduction in the OECD economies is going to keep a lid on prices."
Surging oil prices, which struck a record near $140 a barrel last week, have weighed on the economies of consuming nations.
Many Asian countries, including China, have moved to cut fuel subsidies, prompting worries of a sharp slowdown in oil demand.
U.S. crude oil inventories rose for the first time in six weeks, by 800,000 barrels to 301.8 million barrels, in the week to June 20, the Energy Information Administration reported, countering expectations of a drop.
The build came as U.S. gasoline demand, which has fallen as high fuel prices forced motorists to adjust their driving habits, dipped 2.1 percent over the past four weeks compared with year-ago levels.
Analysts said the market will also eye U.S. economic indicators to have a better gauge of how the economy of the world's largest oil consumer is faring.
Indicators due on Thursday include final gross domestic product for the first quarter and initial claims for jobless benefits, both at 1230 GMT.
On the supply side, U.S. oil major Chevron Corp delayed some exports of Escravos crude oil in Nigeria after armed youths blew up a supply pipeline last week.
Analysts said instability in Nigeria and simmering tensions between Israel and Iran over Tehran's nuclear programme would continue to offer support to oil prices.
By Fayen Wong
PERTH (Reuters) - Oil fell below $134 a barrel on Thursday, extending a $2 drop in the previous session after U.S. government data showed a surprise rise in domestic crude stocks, fuelling concerns of a demand slowdown in the world's largest energy consumer.
U.S. light crude for August delivery fell 73 cents to $133.82 a barrel by 0647 GMT, bringing total losses since Wednesday to over $3.
London Brent crude fell 68 cents to $133.65.
"I think the market is still reacting to the overnight U.S. inventory report. The numbers were pretty disappointing," said Tony Nunan, assistant manager of risk management at Mitsubishi Corp in Tokyo.
"Overall, the market is still rangebound between $130-$140 and unless there is a big geopolitical event, demand reduction in the OECD economies is going to keep a lid on prices."
Surging oil prices, which struck a record near $140 a barrel last week, have weighed on the economies of consuming nations.
Many Asian countries, including China, have moved to cut fuel subsidies, prompting worries of a sharp slowdown in oil demand.
U.S. crude oil inventories rose for the first time in six weeks, by 800,000 barrels to 301.8 million barrels, in the week to June 20, the Energy Information Administration reported, countering expectations of a drop.
The build came as U.S. gasoline demand, which has fallen as high fuel prices forced motorists to adjust their driving habits, dipped 2.1 percent over the past four weeks compared with year-ago levels.
Analysts said the market will also eye U.S. economic indicators to have a better gauge of how the economy of the world's largest oil consumer is faring.
Indicators due on Thursday include final gross domestic product for the first quarter and initial claims for jobless benefits, both at 1230 GMT.
On the supply side, U.S. oil major Chevron Corp delayed some exports of Escravos crude oil in Nigeria after armed youths blew up a supply pipeline last week.
Analysts said instability in Nigeria and simmering tensions between Israel and Iran over Tehran's nuclear programme would continue to offer support to oil prices.
Tuesday, June 24, 2008
Oil (Petroleum) and Gasoline
In 1999, the price of oil hovered around $16 a barrel. By 2008, it had crossed the $100 a barrel mark. The reasons for the surge ranged from the relentless growth of the economies of China and India to widespread instability in oil-producing regions, including Iraq and Nigeria's delta region. Triple-digit oil prices have redrawn the economic and political map of the world, challenging some old notions of power. Oil-rich nations are enjoying historic gains and opportunities, while major importers — including China and India, home to a third of the world's population — confront rising economic and social costs.
Managing this new order is fast becoming a central problem of global politics. Countries that need oil are clawing at each other to lock up scarce supplies, and are willing to deal with any government, no matter how unsavory, to do it.
In many poor nations with oil, the proceeds are being lost to corruption, depriving these countries of their best hope for development. And oil is fueling gargantuan investment funds run by foreign governments, which some in the West see as a new threat.
Countries like Russia, Venezuela and Iran are flush with rising oil revenues, a change reflected in newly aggressive foreign policies. But some unexpected countries are reaping benefits, as well as costs, from higher prices. Consider Germany. Although it imports virtually all its oil, it has prospered from extensive trade with a booming Russia and the Middle East. German exports to Russia grew 128 percent from 2001 to 2006.
In the United States, as already high gas prices rose even higher in the spring of 2008, the issue cropped up in the presidential campaign, with Senators John McCain and Hillary Clinton calling for a federal gas tax holiday during the peak summer driving months. And driving habits began to change, as sales of small cars jumped and mass transit systems across the country reported a sharp increase in riders. — May 13, 2008
Hide
Related: Gas Tax
Managing this new order is fast becoming a central problem of global politics. Countries that need oil are clawing at each other to lock up scarce supplies, and are willing to deal with any government, no matter how unsavory, to do it.
In many poor nations with oil, the proceeds are being lost to corruption, depriving these countries of their best hope for development. And oil is fueling gargantuan investment funds run by foreign governments, which some in the West see as a new threat.
Countries like Russia, Venezuela and Iran are flush with rising oil revenues, a change reflected in newly aggressive foreign policies. But some unexpected countries are reaping benefits, as well as costs, from higher prices. Consider Germany. Although it imports virtually all its oil, it has prospered from extensive trade with a booming Russia and the Middle East. German exports to Russia grew 128 percent from 2001 to 2006.
In the United States, as already high gas prices rose even higher in the spring of 2008, the issue cropped up in the presidential campaign, with Senators John McCain and Hillary Clinton calling for a federal gas tax holiday during the peak summer driving months. And driving habits began to change, as sales of small cars jumped and mass transit systems across the country reported a sharp increase in riders. — May 13, 2008
Hide
Related: Gas Tax
Monday, June 23, 2008
Oil rallies on Nigeria unrest, ignores Saudi pledge
NEW YORK (AFP) - Oil prices rallied Monday on fresh unrest in Nigeria and after Saudi Arabia's pledge to hike output over the weekend failed to allay concerns about tight global supply, analysts said.
New York's main oil futures contract, light sweet crude for August delivery, rose 1.38 dollars to close at 136.74 dollars per barrel.
In London, Brent North Sea crude for August jumped climbed 1.11 dollars to settle at 135.97 dollars.
Most experts agreed the only concrete result of Saudi Arabia's unusual summit Sunday in Jeddah was the OPEC kingpin's widely expected announcement that it was increasing daily production by more than 200,000 barrels to 9.7 million -- and that it could significantly raise output further if necessary.
In the wake of the summit, called in response to the doubling of oil prices to almost 140 dollars a barrel in the past year, market bulls appeared unappeased.
"The Saudis bring more oil to the table at the weekend oil summit as one might expect but it was the promise of plans for the future that was a bit more impressive. Yet will promises be enough to soothe this wild bull market?" said Phil Flynn at Alaron Trading.
John Kilduff, an analyst at MF Global, said that "unfortunately, no consensus emerged between producers and consumers on the cause of high prices. The familiar divide remains: the developed industrial powers keep calling for more supply, while producers blame over-regulation and unchecked speculation."
"The Saudis tried to dazzle the market with its oil and the promise of more oil now and in the future and it might have worked if it were not for the ongoing issues in Nigeria," he added.
Oil prices have been underpinned by recent attacks against foreign oil installations in Nigeria, Africa's largest oil producer. The Nigerian navy has sent two frigates on patrol near a Shell offshore facility in the Bonga oilfield attacked by rebels last week, a military source said Monday.
Armed members of the Movement for the Emancipation of the Niger Delta (MEND). the most high-profile armed group in the oil-rich delta region, attacked the facility Thursday.
On Sunday MEND declared a unilateral ceasefire to begin at midnight Tuesday and lasting until "further notice."
The announcement marked an about-face from an earlier MEND message -- entitled "Declaration of War" -- in which the group warned foreign oil workers to leave the delta while it settled scores with the federal government.
Militants destroyed a major pipeline operated by US oil firm Chevron late Thursday.
"The oil market is more worried about Nigeria and the strength of the US dollar," Kilduff said. The declining dollar has encouraged investment in dollar-denominated oil as a hedge against inflation.
The White House on Monday welcomed Saudi Arabia's output pledge but expressed skepticism the move would have much impact on sky-high US gasoline prices.
"We certainly think that it's welcome that Saudi Arabia will further increase their production," spokeswoman Dana Perino told reporters.
"But we also believe that the fundamental issue of supply and demand continues to rule on this predicament that we are in in our country," said Perino. "We will have to see."
One week ago, crude oil futures hit record highs: 139.89 dollars per barrel in New York and 139.32 in London.
New York's main oil futures contract, light sweet crude for August delivery, rose 1.38 dollars to close at 136.74 dollars per barrel.
In London, Brent North Sea crude for August jumped climbed 1.11 dollars to settle at 135.97 dollars.
Most experts agreed the only concrete result of Saudi Arabia's unusual summit Sunday in Jeddah was the OPEC kingpin's widely expected announcement that it was increasing daily production by more than 200,000 barrels to 9.7 million -- and that it could significantly raise output further if necessary.
In the wake of the summit, called in response to the doubling of oil prices to almost 140 dollars a barrel in the past year, market bulls appeared unappeased.
"The Saudis bring more oil to the table at the weekend oil summit as one might expect but it was the promise of plans for the future that was a bit more impressive. Yet will promises be enough to soothe this wild bull market?" said Phil Flynn at Alaron Trading.
John Kilduff, an analyst at MF Global, said that "unfortunately, no consensus emerged between producers and consumers on the cause of high prices. The familiar divide remains: the developed industrial powers keep calling for more supply, while producers blame over-regulation and unchecked speculation."
"The Saudis tried to dazzle the market with its oil and the promise of more oil now and in the future and it might have worked if it were not for the ongoing issues in Nigeria," he added.
Oil prices have been underpinned by recent attacks against foreign oil installations in Nigeria, Africa's largest oil producer. The Nigerian navy has sent two frigates on patrol near a Shell offshore facility in the Bonga oilfield attacked by rebels last week, a military source said Monday.
Armed members of the Movement for the Emancipation of the Niger Delta (MEND). the most high-profile armed group in the oil-rich delta region, attacked the facility Thursday.
On Sunday MEND declared a unilateral ceasefire to begin at midnight Tuesday and lasting until "further notice."
The announcement marked an about-face from an earlier MEND message -- entitled "Declaration of War" -- in which the group warned foreign oil workers to leave the delta while it settled scores with the federal government.
Militants destroyed a major pipeline operated by US oil firm Chevron late Thursday.
"The oil market is more worried about Nigeria and the strength of the US dollar," Kilduff said. The declining dollar has encouraged investment in dollar-denominated oil as a hedge against inflation.
The White House on Monday welcomed Saudi Arabia's output pledge but expressed skepticism the move would have much impact on sky-high US gasoline prices.
"We certainly think that it's welcome that Saudi Arabia will further increase their production," spokeswoman Dana Perino told reporters.
"But we also believe that the fundamental issue of supply and demand continues to rule on this predicament that we are in in our country," said Perino. "We will have to see."
One week ago, crude oil futures hit record highs: 139.89 dollars per barrel in New York and 139.32 in London.
Oil up as Saudi pledge fails to reassure
Mon Jun 23, 2008 11:26pm IST
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By Rebekah Kebede
NEW YORK (Reuters) - Oil rose on Monday as supply disruptions in Nigeria and escalating tensions between Israel and Iran outweighed Saudi Arabia's pledge to raise output and keep markets well-supplied.
U.S. light crude for August delivery rose 2.52 cents to $137.92 a barrel by 1658 GMT in choppy trading between $134.05 and $138.13 a barrel.
London Brent crude was 2.17 cents up at $136.91.
A cease-fire by rebels halting attacks on facilities in the Niger delta barely tempered the rise after two new attacks over the past week knocked out another tranche of Nigerian output.
Some 340,000 bpd of Nigerian output was halted by fresh militant attacks last week, and more threats to production emerged on Monday as Nigeria's senior oil workers union began a limited strike at Chevron. The strike has yet to affect production.
"Bellicose rhetoric between Israel and Iran and escalated militancy in Nigeria reduced what little optimism there was surrounding the Saudi's meeting in Jeddah over the weekend," said John Kilduff, senior vice president at MF Global.
Oil prices hit a record near $140 a barrel last week and have doubled from a year ago, stoking inflation and triggering protests worldwide. A meeting of top energy policy makers in Jeddah at the weekend offered little hope for a quick fix.
Top exporter Saudi Arabia confirmed it will lift production for a second time to 9.7 million barrels per day (bpd) in July, its highest level of production in more than 30 years, and pledged on Sunday to pump even more if the market demanded it.
It detailed plans to boost capacity to 15 million bpd when future demand warrants the investment, in a bid to soothe growing fears that the world is running out of oil, but those measures failed to allay fears in an anxious market.
"With the immediate benefit of higher Saudi production seemingly already lost, and with limited visibility on capacity expansion plans, there seems to be little here to cool prices," Citi analysts said in a note.
Analysts said the short-term supply situation was still very tight, putting tensions between Iran and Israel back in focus.
Iran said it would give a "devastating" response to any attack on the country, the latest in a war of words centered on Tehran's nuclear program.
The New York Times quoted U.S. officials last week as saying Israel had carried out a large military exercise, in an apparent rehearsal for a potential bombing of Iran's nuclear facilities.
Energy experts are concerned any conflict in Iran could lead to a shutdown of the Strait of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula through which roughly 40 percent of the world's traded oil is shipped.
JEDDAH OVERSHADOWED
Sunday's emergency meeting in Jeddah infused new urgency to the ongoing dialogue of major producers and consumers, participants said, but acknowledged a lack of hard measures for taming oil's rally could leave the market underwhelmed.
"The meeting was a bit disappointing," said a European diplomat. "The only producer that came up with any concrete proposals was Saudi Arabia -- all the other producers just made bland statements about future capacity plans."
OPEC President Chakib Khelil said on Monday oil producers could not pump more without demand for extra supply, and at the moment that demand did not exist.
(Additional reporting by Fayen Wong in Pert and Robert Gibbons
in New York)
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By Rebekah Kebede
NEW YORK (Reuters) - Oil rose on Monday as supply disruptions in Nigeria and escalating tensions between Israel and Iran outweighed Saudi Arabia's pledge to raise output and keep markets well-supplied.
U.S. light crude for August delivery rose 2.52 cents to $137.92 a barrel by 1658 GMT in choppy trading between $134.05 and $138.13 a barrel.
London Brent crude was 2.17 cents up at $136.91.
A cease-fire by rebels halting attacks on facilities in the Niger delta barely tempered the rise after two new attacks over the past week knocked out another tranche of Nigerian output.
Some 340,000 bpd of Nigerian output was halted by fresh militant attacks last week, and more threats to production emerged on Monday as Nigeria's senior oil workers union began a limited strike at Chevron. The strike has yet to affect production.
"Bellicose rhetoric between Israel and Iran and escalated militancy in Nigeria reduced what little optimism there was surrounding the Saudi's meeting in Jeddah over the weekend," said John Kilduff, senior vice president at MF Global.
Oil prices hit a record near $140 a barrel last week and have doubled from a year ago, stoking inflation and triggering protests worldwide. A meeting of top energy policy makers in Jeddah at the weekend offered little hope for a quick fix.
Top exporter Saudi Arabia confirmed it will lift production for a second time to 9.7 million barrels per day (bpd) in July, its highest level of production in more than 30 years, and pledged on Sunday to pump even more if the market demanded it.
It detailed plans to boost capacity to 15 million bpd when future demand warrants the investment, in a bid to soothe growing fears that the world is running out of oil, but those measures failed to allay fears in an anxious market.
"With the immediate benefit of higher Saudi production seemingly already lost, and with limited visibility on capacity expansion plans, there seems to be little here to cool prices," Citi analysts said in a note.
Analysts said the short-term supply situation was still very tight, putting tensions between Iran and Israel back in focus.
Iran said it would give a "devastating" response to any attack on the country, the latest in a war of words centered on Tehran's nuclear program.
The New York Times quoted U.S. officials last week as saying Israel had carried out a large military exercise, in an apparent rehearsal for a potential bombing of Iran's nuclear facilities.
Energy experts are concerned any conflict in Iran could lead to a shutdown of the Strait of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula through which roughly 40 percent of the world's traded oil is shipped.
JEDDAH OVERSHADOWED
Sunday's emergency meeting in Jeddah infused new urgency to the ongoing dialogue of major producers and consumers, participants said, but acknowledged a lack of hard measures for taming oil's rally could leave the market underwhelmed.
"The meeting was a bit disappointing," said a European diplomat. "The only producer that came up with any concrete proposals was Saudi Arabia -- all the other producers just made bland statements about future capacity plans."
OPEC President Chakib Khelil said on Monday oil producers could not pump more without demand for extra supply, and at the moment that demand did not exist.
(Additional reporting by Fayen Wong in Pert and Robert Gibbons
in New York)
Sunday, June 22, 2008
Obama vows to crack down on oil speculation
By Caren Bohan
CHICAGO (Reuters) - U.S. Democratic presidential candidate Barack Obama offered new steps on Sunday to crack down on speculation in oil markets, saying his plan would help rein in runaway fuel costs.
A jump in gasoline prices above $4 a gallon has spurred consumer anger and is a top theme in the race between Obama and his Republican rival in the November election, John McCain, who has proposed more U.S. offshore oil exploration as a way to boost energy supplies.
"I think everyone believes there's too much speculation in the oil markets," said New Jersey Gov. Jon Corzine, an Obama ally who announced the proposals in a conference call with reporters. "A lot of the price of oil, I think, people put at the doorstep of speculators bidding up and holding supplies off the market."
Corzine said Obama's plan aims to close the so-called Enron loophole, which exempts some energy speculators who trade electronically from U.S. regulation. It takes its name from the now-collapsed energy firm that benefited from the law.
Obama would require U.S. energy futures to trade on regulated exchanges. The campaign also said he backed legislation that would direct the Commodity Futures Trading Commission, the top U.S. futures market regulator, to investigate proposals such as increasing margin requirements in the market.
In addition, the Illinois senator wants to see more transparency and oversight of institutional investors in commodities markets.
Oil hit a peak of nearly $140 a barrel last week. It has doubled over the past year, adding to woes such as a housing crisis that are already taking a toll on the faltering U.S. economy.
Soaring oil prices have come as big funds have poured money into commodities, seeking a hedge against inflation and a weak dollar. The hot money has helped extend a six-year rally in oil, as supplies have failed to keep pace with surging demand in emerging economies like China
MCCAIN SAYS BACKS CLOSING LOOPHOLE
The Obama campaign has accused McCain's campaign co-chair, former Sen. Phil Gramm of Texas, of creating the energy-trading loophole at the "behest of Enron."
The loophole is "one example of the special interest politics that put the interests of Big Oil and speculators ahead of the interests of working people," Obama's campaign said in a statement.
But the McCain campaign rejected the effort to link the Arizona senator to that law and said he had broken ranks with many Republicans to try to close the loophole.
"John McCain has been part of an effort to close the Enron loophole," said McCain's top economic adviser Douglas Holtz-Eakin.
"The truth is Barack Obama is following John McCain's lead to close a Wall Street loophole that was signed into law by President Bill Clinton," said McCain spokesman Tucker Bounds.
Since he became the presumptive Democratic presidential nominee earlier this month, Obama has focused his campaign message heavily on the economy while McCain, a Vietnam War hero and former prisoner of war, has emphasized foreign policy.
Many U.S. lawmakers have been discussing ways to limit speculation in crude oil futures, including regulation of overseas trading in a benchmark U.S. oil contract
The Commodity Futures Trading Commission has promised to boost surveillance of energy trading by tracking index funds and getting more information on oil contracts based on American crude that are traded in the United Kingdom.
But Sen. Maria Cantwell, a Washington Democrat, has called the regulator "toothless tiger" and said Congress must act if the CFTC fails to pursue the matter aggressively enough.
Obama's announcement came as major producers, consumers and leading oil company executives gathered for an emergency meeting in Jeddah, Saudi Arabia, on ways to tame the oil-price surge. Host Saudi Arabia vowed to pump yet more oil, but said that alone would not be enough to calm the market.
(Additional reporting by Jeff Mason)
CHICAGO (Reuters) - U.S. Democratic presidential candidate Barack Obama offered new steps on Sunday to crack down on speculation in oil markets, saying his plan would help rein in runaway fuel costs.
A jump in gasoline prices above $4 a gallon has spurred consumer anger and is a top theme in the race between Obama and his Republican rival in the November election, John McCain, who has proposed more U.S. offshore oil exploration as a way to boost energy supplies.
"I think everyone believes there's too much speculation in the oil markets," said New Jersey Gov. Jon Corzine, an Obama ally who announced the proposals in a conference call with reporters. "A lot of the price of oil, I think, people put at the doorstep of speculators bidding up and holding supplies off the market."
Corzine said Obama's plan aims to close the so-called Enron loophole, which exempts some energy speculators who trade electronically from U.S. regulation. It takes its name from the now-collapsed energy firm that benefited from the law.
Obama would require U.S. energy futures to trade on regulated exchanges. The campaign also said he backed legislation that would direct the Commodity Futures Trading Commission, the top U.S. futures market regulator, to investigate proposals such as increasing margin requirements in the market.
In addition, the Illinois senator wants to see more transparency and oversight of institutional investors in commodities markets.
Oil hit a peak of nearly $140 a barrel last week. It has doubled over the past year, adding to woes such as a housing crisis that are already taking a toll on the faltering U.S. economy.
Soaring oil prices have come as big funds have poured money into commodities, seeking a hedge against inflation and a weak dollar. The hot money has helped extend a six-year rally in oil, as supplies have failed to keep pace with surging demand in emerging economies like China
MCCAIN SAYS BACKS CLOSING LOOPHOLE
The Obama campaign has accused McCain's campaign co-chair, former Sen. Phil Gramm of Texas, of creating the energy-trading loophole at the "behest of Enron."
The loophole is "one example of the special interest politics that put the interests of Big Oil and speculators ahead of the interests of working people," Obama's campaign said in a statement.
But the McCain campaign rejected the effort to link the Arizona senator to that law and said he had broken ranks with many Republicans to try to close the loophole.
"John McCain has been part of an effort to close the Enron loophole," said McCain's top economic adviser Douglas Holtz-Eakin.
"The truth is Barack Obama is following John McCain's lead to close a Wall Street loophole that was signed into law by President Bill Clinton," said McCain spokesman Tucker Bounds.
Since he became the presumptive Democratic presidential nominee earlier this month, Obama has focused his campaign message heavily on the economy while McCain, a Vietnam War hero and former prisoner of war, has emphasized foreign policy.
Many U.S. lawmakers have been discussing ways to limit speculation in crude oil futures, including regulation of overseas trading in a benchmark U.S. oil contract
The Commodity Futures Trading Commission has promised to boost surveillance of energy trading by tracking index funds and getting more information on oil contracts based on American crude that are traded in the United Kingdom.
But Sen. Maria Cantwell, a Washington Democrat, has called the regulator "toothless tiger" and said Congress must act if the CFTC fails to pursue the matter aggressively enough.
Obama's announcement came as major producers, consumers and leading oil company executives gathered for an emergency meeting in Jeddah, Saudi Arabia, on ways to tame the oil-price surge. Host Saudi Arabia vowed to pump yet more oil, but said that alone would not be enough to calm the market.
(Additional reporting by Jeff Mason)
Oil rises, Mideast tension offsets Saudi pledge
By Fayen Wong
PERTH (Reuters) - Oil rose 30 cents on Monday as escalating tensions between Israel and Iran countered the impact of Saudi Arabia's promise to pump more oil and a vow by Nigerian militants to halt attacks on oil facilities in the delta.
U.S. light crude for August delivery rose 36 cents to $135.72 a barrel by 0204 GMT, reversing earlier losses of more than $1. London Brent crude rose 17 cents to $135.03.
Oil prices hit a record near $140 a barrel last week and have doubled from a year ago, stoking inflation and triggering protests worldwide, but top energy policy makers meeting in Jeddah at the weekend offered little hope for a quick fix.
Top exporter Saudi Arabia has boosted production twice in as many months toward 9.7 million barrels per day (bpd) next month, its highest in over 30 years, and pledged on Sunday to open the taps wider still if the market demanded it.
It also sketched out plans to boost capacity to 15 million bpd when the future demand warrants the investment, hoping to soothe growing fears that the world is running out of oil, but those measures failed to take the edge off an anxious market.
"The market took the opportunity to take profits earlier on Saudi Arabia's promise to pump more oil, but realistically that alone is not enough to calm the market," said Mark Pervan, senior commodities analyst at Australia and New Zealand (ANZ) Bank in Melbourne.
"The short-term supply situation is still very tight and tensions between Iran and Israel are back in focus."
Iran will give a "devastating" response to any attack on the country, its defence minister was quoted as saying on Sunday, the latest volley in the ongoing war of words centred around Tehran's nuclear programme.
On Friday, the New York Times quoted U.S. officials as saying Israel had carried out a large military exercise, apparently a rehearsal for a potential bombing of Iran's nuclear facilities.
Energy experts are concerned any conflict in Iran could lead to a shutdown of the Strait of Hormuz, a waterway separating Iran from the Arabian Peninsula through which roughly 40 percent of the world's traded oil is shipped.
Despite world powers' offer of economic incentives to coax Tehran into halting such activities, Iran is pressing on with uranium enrichment "non-stop", its envoy to the U.N. nuclear agency was quoted as saying on Saturday.
JEDDAH OVERSHADOWED
Sunday's emergency meeting in Jeddah infused new urgency to the ongoing dialogue of major producers and consumers, participants said, but they acknowledged a lack of hard measures for taming oil's rally could leave the market underwhelmed.
"The meeting was a bit disappointing," said a European diplomat. "The only producer that came up with any concrete proposals was Saudi Arabia -- all the other producers just made bland statements about future capacity plans."
In the end Jeddah was overshadowed by news from Nigeria, where militants in the southern Niger Delta announced a unilateral ceasefire on Sunday, the end of a week that saw two new attacks knock an additional 340,000 bpd offline.
Community elders had appealed for the Movement for the Emancipation of the Niger Delta (MEND) to halt their campaign of sabotage, which has cut oil output by about 40 percent in the world's eighth-largest exporter.
"We are respecting an appeal by the Niger Delta elders to give peace and dialogue another chance," MEND said, announcing the unilateral cease-fire from June 24.
Attention later in the day could shift to new indicators on the economic health of the United States, which consumes nearly a quarter of the world's oil. Consumer confidence for June and the Richmond Fed's manufacturing report are both due at 1400 GMT.
PERTH (Reuters) - Oil rose 30 cents on Monday as escalating tensions between Israel and Iran countered the impact of Saudi Arabia's promise to pump more oil and a vow by Nigerian militants to halt attacks on oil facilities in the delta.
U.S. light crude for August delivery rose 36 cents to $135.72 a barrel by 0204 GMT, reversing earlier losses of more than $1. London Brent crude rose 17 cents to $135.03.
Oil prices hit a record near $140 a barrel last week and have doubled from a year ago, stoking inflation and triggering protests worldwide, but top energy policy makers meeting in Jeddah at the weekend offered little hope for a quick fix.
Top exporter Saudi Arabia has boosted production twice in as many months toward 9.7 million barrels per day (bpd) next month, its highest in over 30 years, and pledged on Sunday to open the taps wider still if the market demanded it.
It also sketched out plans to boost capacity to 15 million bpd when the future demand warrants the investment, hoping to soothe growing fears that the world is running out of oil, but those measures failed to take the edge off an anxious market.
"The market took the opportunity to take profits earlier on Saudi Arabia's promise to pump more oil, but realistically that alone is not enough to calm the market," said Mark Pervan, senior commodities analyst at Australia and New Zealand (ANZ) Bank in Melbourne.
"The short-term supply situation is still very tight and tensions between Iran and Israel are back in focus."
Iran will give a "devastating" response to any attack on the country, its defence minister was quoted as saying on Sunday, the latest volley in the ongoing war of words centred around Tehran's nuclear programme.
On Friday, the New York Times quoted U.S. officials as saying Israel had carried out a large military exercise, apparently a rehearsal for a potential bombing of Iran's nuclear facilities.
Energy experts are concerned any conflict in Iran could lead to a shutdown of the Strait of Hormuz, a waterway separating Iran from the Arabian Peninsula through which roughly 40 percent of the world's traded oil is shipped.
Despite world powers' offer of economic incentives to coax Tehran into halting such activities, Iran is pressing on with uranium enrichment "non-stop", its envoy to the U.N. nuclear agency was quoted as saying on Saturday.
JEDDAH OVERSHADOWED
Sunday's emergency meeting in Jeddah infused new urgency to the ongoing dialogue of major producers and consumers, participants said, but they acknowledged a lack of hard measures for taming oil's rally could leave the market underwhelmed.
"The meeting was a bit disappointing," said a European diplomat. "The only producer that came up with any concrete proposals was Saudi Arabia -- all the other producers just made bland statements about future capacity plans."
In the end Jeddah was overshadowed by news from Nigeria, where militants in the southern Niger Delta announced a unilateral ceasefire on Sunday, the end of a week that saw two new attacks knock an additional 340,000 bpd offline.
Community elders had appealed for the Movement for the Emancipation of the Niger Delta (MEND) to halt their campaign of sabotage, which has cut oil output by about 40 percent in the world's eighth-largest exporter.
"We are respecting an appeal by the Niger Delta elders to give peace and dialogue another chance," MEND said, announcing the unilateral cease-fire from June 24.
Attention later in the day could shift to new indicators on the economic health of the United States, which consumes nearly a quarter of the world's oil. Consumer confidence for June and the Richmond Fed's manufacturing report are both due at 1400 GMT.
Saudi Arabia Boosts Oil Supply, May Pump More Later (Update1)
By Ayesha Daya and Glen Carey
June 22 (Bloomberg) -- Saudi Arabia may increase its oil production beyond a planned 200,000 barrel-a-day increase in July if the oil market requires extra supply, Saudi Oil Minister Ali al- Naimi told consumers at a summit in Jeddah.
Saudi Arabia's commitment to government and business leaders to pump 9.7 million barrels a day next month came after crude rose to a record $139.89 in New York on June 16. Saudi King Abdullah said at today's summit that his country, the world's biggest oil exporter, seeks ``reasonable'' prices. OPEC President Chakib Khelil said a Saudi increase is ``illogical'' because refiners don't need more crude.
The International Energy Agency estimates that world oil use this year will climb 800,000 barrels a day, or 1 percent, as demand increases in emerging markets. Stagnating production from Russia and the North Sea and disruptions in Nigeria are also contributing to higher prices, which have touched off strikes, riots and accelerating inflation in nations around the world.
``Saudi Arabia is prepared and willing to produce additional barrels of crude above and beyond the 9.7 million barrels per day, which we plan to produce during the month of July, if demand for such quantities materializes and our customers tell us they are needed,'' Naimi said.
Saudi Arabia's capacity will be 12.5 million barrels a day by the end of 2009 and may rise to 15 million after that if necessary, he said.
Speculators Blamed
The President of the Organization of Petroleum Exporting Countries, Khelil, blamed $135 oil on speculative investors, the subprime credit crisis and geopolitics, rather than a shortage of supply. Khelil, who is also Algeria's oil minister, today dismissed the argument voiced by consuming nations that possible supply shortages are driving up prices.
``The concern over future oil supply is not a new phenomenon,'' he told reporters in Jeddah.
More than 35 countries, seven international organizations and 25 oil companies took part in today's summit in the Saudi Red Sea port, including U.K. Prime Minister Gordon Brown, U.S. Energy Secretary Samuel Bodman and Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.
The Saudi King and other producer-nation officials including Kuwaiti oil minister Mohammed al-Olaim also called for greater regulation on oil market investors. The U.S. Commodity Futures Trading Commission is currently investigating the role of index- fund investors in the doubling of oil prices during the past year.
OPEC Divided
OPEC itself is divided. While Saudi Arabia is boosting output, other OPEC members including Libya, Algeria, Iran, Venezuela and Qatar are opposed to higher production, saying refiners aren't asking for more crude.
Libya's top oil official, Shokri Ghanem, yesterday said his country may have to cut its own production in response to the Saudi move while Kuwait, OPEC's fourth largest producer, said it's ready to join neighboring Saudi Arabia and raise output, if needed.
Oil rose to $139.89 a barrel on June 16 as investors bought commodities to hedge against a weakening U.S. dollar and concern mounted that demand is growing faster than supply. Gasoline retail prices over $4 a gallon in the U.S. are raising concern that the economy may slip into recession. Crude oil for July delivery closed June 20 in New York at $134.62 a barrel.
U.S. Energy Secretary Bodman rejected calls to put greater control on markets, and said a shortage of supply was responsible for high prices. He disputed the view that speculators are leading the markets to record levels.
Spare Capacity
The market needs between 3 million and 4 million barrels a day of spare oil production capacity, compared with the 2 million barrels a day currently available, Bodman said. OPEC says the world's spare capacity is about 3 million barrels a day, with two- thirds of that in Saudi Arabia.
``Market fundamentals show us that production has not kept pace with growing demand for oil resulting in increasing, and increasingly volatile, prices,'' Bodman said in a speech today.
Italy's Minister of Industry Claudio Scajola and Brazil's Energy Minister Edison Lobao were among consumer-nation officials attending the Jeddah summit that said more supply was needed to ease prices. ``We expect Saudi Arabia to open the taps,'' Austrian Economy Minister Martin Bartenstein said in an interview two days ago. ``One third of inflation in the euro zone comes from energy and inflation is now of importance.''
Speaking in Jeddah today, the Austrian minister said: ``We would like to see more oil on the market. That is the only action I can think of that can discourage the speculators.''
Curtailing Demand
Adam Sieminski, chief energy economist at Deutsche Bank AG, and other analysts maintain that consumers will need to curtail demand before prices head lower. The biggest drop in prices in 11 weeks came on June 18, after the world's second-biggest oil consumer, China, raised gasoline, diesel and power prices to rein in energy use.
Saudi Arabia will increase production capacity to 12.5 million barrels a day of oil by the end of next year and could add a further 2.5 million barrels a day if needed, from some new giant fields, Naimi said.
``The Saudi announcement of a possible increase in capacity to 15 million barrels a day is a robust statement; it would be a huge increase,'' ENI SpA Chief Executive Officer Paolo Scaroni said in an interview in Jeddah today. ``The world is worried about the shortage in spare capacity and any improvement will change this sentiment.''
Zuluf, Shaybah Fields
The further daily capacity includes 900,000 barrels from the Zuluf field, 700,000 barrels from Safaniyah, 300,000 barrels from Berri, 300,000 barrels from Khurais and 250,000 barrels from Shaybah, Naimi said.
U.K. Prime Minister Brown said in Jeddah today he will open Britain's energy industry to investment from oil producing nations as a way of keeping a lid on crude prices and paying for measures to clean up the environment. Further talks may be held between producers and consumers later this year in London, he said.
The U.K. is talking to the Abu Dhabi Investment Authority about new investments and with the government of Qatar about a joint energy fund, Brown said. Saudi Arabia agreed today to work on carbon capture and storage facilities valued at 1 billion pounds ($2 billion), and the U.K. government is poised to approve an 800 million-pound offshore wind farm that Norway's state-owned StatoilHydro ASA plans to build, he added.
To contact the reporters on this story: Ayesha Daya in Jeddah adaya1@bloomberg.net Glen Carey in Jeddah gcarey8@bloomberg.net
Last Updated: June 22, 2008 10:16 EDT
June 22 (Bloomberg) -- Saudi Arabia may increase its oil production beyond a planned 200,000 barrel-a-day increase in July if the oil market requires extra supply, Saudi Oil Minister Ali al- Naimi told consumers at a summit in Jeddah.
Saudi Arabia's commitment to government and business leaders to pump 9.7 million barrels a day next month came after crude rose to a record $139.89 in New York on June 16. Saudi King Abdullah said at today's summit that his country, the world's biggest oil exporter, seeks ``reasonable'' prices. OPEC President Chakib Khelil said a Saudi increase is ``illogical'' because refiners don't need more crude.
The International Energy Agency estimates that world oil use this year will climb 800,000 barrels a day, or 1 percent, as demand increases in emerging markets. Stagnating production from Russia and the North Sea and disruptions in Nigeria are also contributing to higher prices, which have touched off strikes, riots and accelerating inflation in nations around the world.
``Saudi Arabia is prepared and willing to produce additional barrels of crude above and beyond the 9.7 million barrels per day, which we plan to produce during the month of July, if demand for such quantities materializes and our customers tell us they are needed,'' Naimi said.
Saudi Arabia's capacity will be 12.5 million barrels a day by the end of 2009 and may rise to 15 million after that if necessary, he said.
Speculators Blamed
The President of the Organization of Petroleum Exporting Countries, Khelil, blamed $135 oil on speculative investors, the subprime credit crisis and geopolitics, rather than a shortage of supply. Khelil, who is also Algeria's oil minister, today dismissed the argument voiced by consuming nations that possible supply shortages are driving up prices.
``The concern over future oil supply is not a new phenomenon,'' he told reporters in Jeddah.
More than 35 countries, seven international organizations and 25 oil companies took part in today's summit in the Saudi Red Sea port, including U.K. Prime Minister Gordon Brown, U.S. Energy Secretary Samuel Bodman and Exxon Mobil Corp. Chief Executive Officer Rex Tillerson.
The Saudi King and other producer-nation officials including Kuwaiti oil minister Mohammed al-Olaim also called for greater regulation on oil market investors. The U.S. Commodity Futures Trading Commission is currently investigating the role of index- fund investors in the doubling of oil prices during the past year.
OPEC Divided
OPEC itself is divided. While Saudi Arabia is boosting output, other OPEC members including Libya, Algeria, Iran, Venezuela and Qatar are opposed to higher production, saying refiners aren't asking for more crude.
Libya's top oil official, Shokri Ghanem, yesterday said his country may have to cut its own production in response to the Saudi move while Kuwait, OPEC's fourth largest producer, said it's ready to join neighboring Saudi Arabia and raise output, if needed.
Oil rose to $139.89 a barrel on June 16 as investors bought commodities to hedge against a weakening U.S. dollar and concern mounted that demand is growing faster than supply. Gasoline retail prices over $4 a gallon in the U.S. are raising concern that the economy may slip into recession. Crude oil for July delivery closed June 20 in New York at $134.62 a barrel.
U.S. Energy Secretary Bodman rejected calls to put greater control on markets, and said a shortage of supply was responsible for high prices. He disputed the view that speculators are leading the markets to record levels.
Spare Capacity
The market needs between 3 million and 4 million barrels a day of spare oil production capacity, compared with the 2 million barrels a day currently available, Bodman said. OPEC says the world's spare capacity is about 3 million barrels a day, with two- thirds of that in Saudi Arabia.
``Market fundamentals show us that production has not kept pace with growing demand for oil resulting in increasing, and increasingly volatile, prices,'' Bodman said in a speech today.
Italy's Minister of Industry Claudio Scajola and Brazil's Energy Minister Edison Lobao were among consumer-nation officials attending the Jeddah summit that said more supply was needed to ease prices. ``We expect Saudi Arabia to open the taps,'' Austrian Economy Minister Martin Bartenstein said in an interview two days ago. ``One third of inflation in the euro zone comes from energy and inflation is now of importance.''
Speaking in Jeddah today, the Austrian minister said: ``We would like to see more oil on the market. That is the only action I can think of that can discourage the speculators.''
Curtailing Demand
Adam Sieminski, chief energy economist at Deutsche Bank AG, and other analysts maintain that consumers will need to curtail demand before prices head lower. The biggest drop in prices in 11 weeks came on June 18, after the world's second-biggest oil consumer, China, raised gasoline, diesel and power prices to rein in energy use.
Saudi Arabia will increase production capacity to 12.5 million barrels a day of oil by the end of next year and could add a further 2.5 million barrels a day if needed, from some new giant fields, Naimi said.
``The Saudi announcement of a possible increase in capacity to 15 million barrels a day is a robust statement; it would be a huge increase,'' ENI SpA Chief Executive Officer Paolo Scaroni said in an interview in Jeddah today. ``The world is worried about the shortage in spare capacity and any improvement will change this sentiment.''
Zuluf, Shaybah Fields
The further daily capacity includes 900,000 barrels from the Zuluf field, 700,000 barrels from Safaniyah, 300,000 barrels from Berri, 300,000 barrels from Khurais and 250,000 barrels from Shaybah, Naimi said.
U.K. Prime Minister Brown said in Jeddah today he will open Britain's energy industry to investment from oil producing nations as a way of keeping a lid on crude prices and paying for measures to clean up the environment. Further talks may be held between producers and consumers later this year in London, he said.
The U.K. is talking to the Abu Dhabi Investment Authority about new investments and with the government of Qatar about a joint energy fund, Brown said. Saudi Arabia agreed today to work on carbon capture and storage facilities valued at 1 billion pounds ($2 billion), and the U.K. government is poised to approve an 800 million-pound offshore wind farm that Norway's state-owned StatoilHydro ASA plans to build, he added.
To contact the reporters on this story: Ayesha Daya in Jeddah adaya1@bloomberg.net Glen Carey in Jeddah gcarey8@bloomberg.net
Last Updated: June 22, 2008 10:16 EDT
Oil May Fall on U.S. Consumption Drop, Survey Shows (Update1)
By Mark Shenk
June 20 (Bloomberg) -- Crude oil may fall next week because of reduced U.S. fuel consumption and signs that crude supplies will increase after a meeting in Saudi Arabia this weekend.
Thirteen of 28 analysts surveyed by Bloomberg News, or 46 percent, said prices will decline through June 27. Eight of the respondents, or 29 percent, said oil will rise and seven forecast little change. Last week 48 percent said futures would fall.
Fuel consumption averaged 20.4 million barrels a day in the past four weeks, down 1.3 percent from a year earlier, the Energy Department said June 18. Saudi Arabian King Abdullah has called for a meeting between oil producers and consumers on June 22 in the Red Sea port of Jeddah.
``The crude-oil market looks like it may, finally, be willing to take notice of faltering demand,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Any confirmed production increase from Saudi Arabia out of Sunday's producer- consumer summit would likely tip the market more firmly to the downside.''
Saudi Arabia plans to increase crude-oil production by 200,000 barrels a day, according to a statement yesterday from the kingdom's embassy in London. The statement didn't specify the timing of the increase. Oil Minister Ali Al-Naimi pledged on May 16 to boost output by 300,000 barrels a day in June.
The country has since indicated that it plans to announce a further addition at the coming meeting.
Crude oil for July delivery fell 24 cents to $134.62 a barrel this week on the New York Mercantile Exchange. Futures reached $139.89 a barrel on June 16, the highest since trading began in 1983.
Analyst responses have been bearish in 22 of the past 23 weeks. The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004. Bloomberg's survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:
RISE NEUTRAL FALL
8 7 13
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net. Last Updated: June 20, 2008 15:25 EDT
June 20 (Bloomberg) -- Crude oil may fall next week because of reduced U.S. fuel consumption and signs that crude supplies will increase after a meeting in Saudi Arabia this weekend.
Thirteen of 28 analysts surveyed by Bloomberg News, or 46 percent, said prices will decline through June 27. Eight of the respondents, or 29 percent, said oil will rise and seven forecast little change. Last week 48 percent said futures would fall.
Fuel consumption averaged 20.4 million barrels a day in the past four weeks, down 1.3 percent from a year earlier, the Energy Department said June 18. Saudi Arabian King Abdullah has called for a meeting between oil producers and consumers on June 22 in the Red Sea port of Jeddah.
``The crude-oil market looks like it may, finally, be willing to take notice of faltering demand,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Any confirmed production increase from Saudi Arabia out of Sunday's producer- consumer summit would likely tip the market more firmly to the downside.''
Saudi Arabia plans to increase crude-oil production by 200,000 barrels a day, according to a statement yesterday from the kingdom's embassy in London. The statement didn't specify the timing of the increase. Oil Minister Ali Al-Naimi pledged on May 16 to boost output by 300,000 barrels a day in June.
The country has since indicated that it plans to announce a further addition at the coming meeting.
Crude oil for July delivery fell 24 cents to $134.62 a barrel this week on the New York Mercantile Exchange. Futures reached $139.89 a barrel on June 16, the highest since trading began in 1983.
Analyst responses have been bearish in 22 of the past 23 weeks. The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004. Bloomberg's survey of oil analysts and traders, conducted
each Thursday, asks for an assessment of whether crude oil
futures are likely to rise, fall or remain neutral in the coming
week. The results were:
RISE NEUTRAL FALL
8 7 13
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net. Last Updated: June 20, 2008 15:25 EDT
Rising Energy Costs Lead to Major Price Hikes
Thanks to the sluggish state of the U.S. economy, many people across the country are becoming increasingly strapped for cash. In recent months, the costs of food, gas and other consumer goods have all been increasing with no relief in sight.
"Consumers hit hard in recent months by sharply higher prices for gasoline and food should prepare to start paying more for various household items following Dow Chemical Co.'s decision to raise its prices by up to 20 percent to offset the soaring cost of energy," according to the Associated Press. "The company, which announced the price increases Wednesday, took the unusual step of directing blame at the nation's energy policy makers."
The price hikes—the largest in the company's 111-year history, according to the Houston Business Journal—will go into effect June 1. The price increases are a necessity for the company as it attempts to mitigate the rising prices of energy and raw materials.
"Dow spent $8 billion on energy and hydrocarbon-based feedstock costs in 2002. At the current rate, those costs would climb to $32 billion this year," according to a written statement released by the company. Dow spent $25 billion on hydrocarbons in 2007, according to Dow Jones Newswires.
“Our first quarter feedstock and energy bill leapt a staggering 42 percent year over year, and that trajectory has continued, with the cost of oil and natural gas climbing ever higher,” Andrew N. Liveris, Dow chairman and CEO, said in the statement. “The new level of hydrocarbons and energy costs is putting a strain on the entire value chain and is forcing difficult discussions with customers about resetting the value proposition for our products.”
Chemical producers such as Midland, Mich.-based Dow and The Woodlands, Texas-based Huntsman Corporation have felt the impact of rising prices from a unique vantage point, because they use hydrocarbons—that is, oil and natural gas—as fuel and as components in their products.
Huntsman announced price increases of up to 25 percent for all of its products Thursday, as well as for an energy surcharge to be imposed on a wide variety of products. The price changes will become effective immediately or else when allowed by contracts.
"The impact of large scale speculation by traders on the price of energy, in addition to the increased costs we are absorbing from our raw material suppliers and service providers, cannot be underestimated," Peter Huntsman, CEO and president, said in a statement. "Having implemented aggressive internal steps to manage these costs, we are now reviewing all Huntsman products and are announcing specific price increases, as well as an energy surcharge to be applied to each product where warranted."
"Already, price increases for certain chemicals products have been dramatic. For instance, the cost of polyethylene—a commodity chemical used in a variety of consumer products, such as plastic shopping bags—has climbed from roughly 30 cents a pound five years ago to about 80 cents a pound now," according to Dow Jones Newswires.
Dow and Huntsman produce chemicals used in numerous industries, from aviation to textiles.
"Consumers hit hard in recent months by sharply higher prices for gasoline and food should prepare to start paying more for various household items following Dow Chemical Co.'s decision to raise its prices by up to 20 percent to offset the soaring cost of energy," according to the Associated Press. "The company, which announced the price increases Wednesday, took the unusual step of directing blame at the nation's energy policy makers."
The price hikes—the largest in the company's 111-year history, according to the Houston Business Journal—will go into effect June 1. The price increases are a necessity for the company as it attempts to mitigate the rising prices of energy and raw materials.
"Dow spent $8 billion on energy and hydrocarbon-based feedstock costs in 2002. At the current rate, those costs would climb to $32 billion this year," according to a written statement released by the company. Dow spent $25 billion on hydrocarbons in 2007, according to Dow Jones Newswires.
“Our first quarter feedstock and energy bill leapt a staggering 42 percent year over year, and that trajectory has continued, with the cost of oil and natural gas climbing ever higher,” Andrew N. Liveris, Dow chairman and CEO, said in the statement. “The new level of hydrocarbons and energy costs is putting a strain on the entire value chain and is forcing difficult discussions with customers about resetting the value proposition for our products.”
Chemical producers such as Midland, Mich.-based Dow and The Woodlands, Texas-based Huntsman Corporation have felt the impact of rising prices from a unique vantage point, because they use hydrocarbons—that is, oil and natural gas—as fuel and as components in their products.
Huntsman announced price increases of up to 25 percent for all of its products Thursday, as well as for an energy surcharge to be imposed on a wide variety of products. The price changes will become effective immediately or else when allowed by contracts.
"The impact of large scale speculation by traders on the price of energy, in addition to the increased costs we are absorbing from our raw material suppliers and service providers, cannot be underestimated," Peter Huntsman, CEO and president, said in a statement. "Having implemented aggressive internal steps to manage these costs, we are now reviewing all Huntsman products and are announcing specific price increases, as well as an energy surcharge to be applied to each product where warranted."
"Already, price increases for certain chemicals products have been dramatic. For instance, the cost of polyethylene—a commodity chemical used in a variety of consumer products, such as plastic shopping bags—has climbed from roughly 30 cents a pound five years ago to about 80 cents a pound now," according to Dow Jones Newswires.
Dow and Huntsman produce chemicals used in numerous industries, from aviation to textiles.
Wednesday, June 18, 2008
Oil's `Bull Run' May Be Over on Supply, JPMorgan Says (Update1)
By Nesa Subrahmaniyan
June 18 (Bloomberg) -- Crude oil's ``bull run'' may be over as prices become increasingly volatile and Saudi Arabia pledged to boost supplies, according to JPMorgan Chase & Co., the third- largest U.S. bank.
Prices are expected to ``correct'' over the next few months, JPMorgan analysts led by Brynjar Eirik Bustnes said in a report today. Spare production capacity may reach 5 million barrels a day by 2010, similar to levels in 2002 to 2003, when oil was $30 a barrel, the analysts said.
Oil price volatility over a 30-day period reached the highest since February 2007 on June 11 after New York crude futures had their biggest one-day gain of $10.75 a barrel on June 6. The Organization of Petroleum Exporting Countries last week cut its 2008 global oil demand forecast for a fifth month as record prices curb consumption while stockpiles have increased.
``Saudi has pledged to increase production by around 500,000 barrels a day over the next two months, which should show up in inventory increases,'' Bustnes said. New production from OPEC and non-OPEC would be enough to meet demand growth in until 2010, he said.
JPMorgan's crude oil price estimate is substantially below the consensus compiled by Bloomberg, Bustnes said in the report. JPMorgan's estimate for Brent crude oil in 2008 is $90 a barrel compared with the consensus analysts' estimate of $108, and from 2009 to 2011 it is forecast at $85 a barrel versus prices of $110, $105 and $100, he said.
Record Price
Crude oil in New York rose to a record $139.89 a barrel on June 16 even after Saudi Arabia, the world's biggest producer, said it is boosting output and called for a meeting in the Red Sea city of Jeddah between producers, consumers and financial institutions on June 22 to discuss ways to stabilize prices.
The International Energy Agency, the energy adviser to 27 nations, on June 10 cut its forecast for global oil demand for a fifth month on falling consumption.
The IEA reduced its 2008 forecast by about 70,000 barrels a day to 86.77 million barrels a day from 86.84 million last month, the Paris-based agency said, leaving demand growth for this year at 0.9 percent.
OPEC in its monthly report said oil demand this year will rise 1.1 million barrels a day to 86.88 million barrels, about 60,000 barrels a day lower than last month's estimate of 86.95 million barrels a day. Saudi Arabia is pumping an additional 300,000 barrels of crude oil a day this month.
OPEC Higher
``Interestingly, OPEC now has higher demand growth than IEA, which is very unusual considering their positions as exporters and importers of crude,'' Bustnes wrote in the report.
Most of the new production coming from OPEC in the next few years to 2010 would probably be part of ``spare capacity'' as non-OPEC increase supplies, he said.
Oil companies, or so-called upstream oil producers such Cnooc Ltd., PTT Exploration & Production Pcl, and Cairn Energy Plc, ``offer the best leverage to oil prices,'' the JPMorgan analysts said in the report. The shares of these companies haven't risen along with the increase in crude oil prices, the analysts said.
Upstream producers have underperformed crude prices in the past four months by 40 percent as higher prices haven't been priced in the shares of the companies, Bustnes and his colleagues wrote.
While using $90 a barrel as the oil price estimate for this year, JPMorgan is using $85 a barrel for its long-term oil price estimate for 2009 onwards, the analysts said.
``If we are wrong on oil prices, so much the better,'' they said in the report. ``Lower oil prices appear to be priced in. High oil prices fuels upgrades in earnings.''
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net.
Last Updated: June 18, 2008 02:45 EDT
June 18 (Bloomberg) -- Crude oil's ``bull run'' may be over as prices become increasingly volatile and Saudi Arabia pledged to boost supplies, according to JPMorgan Chase & Co., the third- largest U.S. bank.
Prices are expected to ``correct'' over the next few months, JPMorgan analysts led by Brynjar Eirik Bustnes said in a report today. Spare production capacity may reach 5 million barrels a day by 2010, similar to levels in 2002 to 2003, when oil was $30 a barrel, the analysts said.
Oil price volatility over a 30-day period reached the highest since February 2007 on June 11 after New York crude futures had their biggest one-day gain of $10.75 a barrel on June 6. The Organization of Petroleum Exporting Countries last week cut its 2008 global oil demand forecast for a fifth month as record prices curb consumption while stockpiles have increased.
``Saudi has pledged to increase production by around 500,000 barrels a day over the next two months, which should show up in inventory increases,'' Bustnes said. New production from OPEC and non-OPEC would be enough to meet demand growth in until 2010, he said.
JPMorgan's crude oil price estimate is substantially below the consensus compiled by Bloomberg, Bustnes said in the report. JPMorgan's estimate for Brent crude oil in 2008 is $90 a barrel compared with the consensus analysts' estimate of $108, and from 2009 to 2011 it is forecast at $85 a barrel versus prices of $110, $105 and $100, he said.
Record Price
Crude oil in New York rose to a record $139.89 a barrel on June 16 even after Saudi Arabia, the world's biggest producer, said it is boosting output and called for a meeting in the Red Sea city of Jeddah between producers, consumers and financial institutions on June 22 to discuss ways to stabilize prices.
The International Energy Agency, the energy adviser to 27 nations, on June 10 cut its forecast for global oil demand for a fifth month on falling consumption.
The IEA reduced its 2008 forecast by about 70,000 barrels a day to 86.77 million barrels a day from 86.84 million last month, the Paris-based agency said, leaving demand growth for this year at 0.9 percent.
OPEC in its monthly report said oil demand this year will rise 1.1 million barrels a day to 86.88 million barrels, about 60,000 barrels a day lower than last month's estimate of 86.95 million barrels a day. Saudi Arabia is pumping an additional 300,000 barrels of crude oil a day this month.
OPEC Higher
``Interestingly, OPEC now has higher demand growth than IEA, which is very unusual considering their positions as exporters and importers of crude,'' Bustnes wrote in the report.
Most of the new production coming from OPEC in the next few years to 2010 would probably be part of ``spare capacity'' as non-OPEC increase supplies, he said.
Oil companies, or so-called upstream oil producers such Cnooc Ltd., PTT Exploration & Production Pcl, and Cairn Energy Plc, ``offer the best leverage to oil prices,'' the JPMorgan analysts said in the report. The shares of these companies haven't risen along with the increase in crude oil prices, the analysts said.
Upstream producers have underperformed crude prices in the past four months by 40 percent as higher prices haven't been priced in the shares of the companies, Bustnes and his colleagues wrote.
While using $90 a barrel as the oil price estimate for this year, JPMorgan is using $85 a barrel for its long-term oil price estimate for 2009 onwards, the analysts said.
``If we are wrong on oil prices, so much the better,'' they said in the report. ``Lower oil prices appear to be priced in. High oil prices fuels upgrades in earnings.''
To contact the reporter on this story: Nesa Subrahmaniyan in Singapore at nesas@bloomberg.net.
Last Updated: June 18, 2008 02:45 EDT
U.S. Airlines May Lose Up to $13 Billion This Year
By Daniel Whitten and Mary Schlangenstein
June 17 (Bloomberg) -- U.S. airlines may lose as much as $13 billion in 2008 as surging fuel prices outpace fare increases, the chief of the Air Transport Association told a Senate committee.
This year's financial results will be ``on par'' with the industry's worst ever as carriers' combined fuel costs reach $61 billion, ATA Chief Executive Officer James May said today. The record annual loss is $11 billion in 2002, according to the ATA.
``I don't think anybody predicted this extraordinary jump in prices,'' said May, whose group represents the biggest U.S. carriers. ``It's the sole issue, it is the sole issue,'' affecting airlines' financial performance.
May forecast a profit of as much as $4.5 billion for U.S. carriers in January and later projected a ``multibillion- dollar'' loss. His updated forecast today was for a loss of $7 billion to $13 billion.
AMR Corp.'s American Airlines, UAL Corp.'s United Airlines, Delta Air Lines Inc., Continental Airlines Inc. and other carriers have said they will ground as many as 378 planes and cut at least 10,300 jobs in response to the jump in fuel costs.
The higher price also has caused a drop in new plane orders and the discontinuation of service to 100 communities, May told a Senate Agriculture subcommittee. That number may grow to 200 should prices continue to climb.
Jet fuel for immediate delivery in New York Harbor fell 1.4 cents to $3.93 a gallon today. The price hit a record $4.09 a gallon on May 21. Fuel has jumped 81 percent in the past year, surpassing labor as the U.S. airlines' largest expense.
May's fuel-cost estimate marks an increase of about 2.5 percent over the projection he gave May 13, when he said airlines would spend $59.5 billion. The record is $41.2 billion, set last year, the trade group has said.
To contact the reporters on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net
Last Updated: June 17, 2008 15:48 EDT
June 17 (Bloomberg) -- U.S. airlines may lose as much as $13 billion in 2008 as surging fuel prices outpace fare increases, the chief of the Air Transport Association told a Senate committee.
This year's financial results will be ``on par'' with the industry's worst ever as carriers' combined fuel costs reach $61 billion, ATA Chief Executive Officer James May said today. The record annual loss is $11 billion in 2002, according to the ATA.
``I don't think anybody predicted this extraordinary jump in prices,'' said May, whose group represents the biggest U.S. carriers. ``It's the sole issue, it is the sole issue,'' affecting airlines' financial performance.
May forecast a profit of as much as $4.5 billion for U.S. carriers in January and later projected a ``multibillion- dollar'' loss. His updated forecast today was for a loss of $7 billion to $13 billion.
AMR Corp.'s American Airlines, UAL Corp.'s United Airlines, Delta Air Lines Inc., Continental Airlines Inc. and other carriers have said they will ground as many as 378 planes and cut at least 10,300 jobs in response to the jump in fuel costs.
The higher price also has caused a drop in new plane orders and the discontinuation of service to 100 communities, May told a Senate Agriculture subcommittee. That number may grow to 200 should prices continue to climb.
Jet fuel for immediate delivery in New York Harbor fell 1.4 cents to $3.93 a gallon today. The price hit a record $4.09 a gallon on May 21. Fuel has jumped 81 percent in the past year, surpassing labor as the U.S. airlines' largest expense.
May's fuel-cost estimate marks an increase of about 2.5 percent over the projection he gave May 13, when he said airlines would spend $59.5 billion. The record is $41.2 billion, set last year, the trade group has said.
To contact the reporters on this story: Daniel Whitten in Washington at dwhitten2@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net
Last Updated: June 17, 2008 15:48 EDT
Monday, June 16, 2008
Petroleum(Oil) -- A Fossil Fuel
How Was Oil Formed?
Oil was formed from the remains of animals and plants that lived millions of years ago in a marine (water) environment before the dinosaurs. Over the years, the remains were covered by layers of mud. Heat and pressure from these layers helped the remains turn into what we today call crude oil . The word "petroleum" means "rock oil" or "oil from the earth."
Where Do We Get Our Oil?
Crude oil is a smelly, yellow-to-black liquid and is usually found in underground areas called reservoirs. Scientists and engineers explore a chosen area by studying rock samples from the earth. Measurements are taken, and, if the site seems promising, drilling begins. Above the hole, a structure called a 'derrick' is built to house the tools and pipes going into the well. When finished, the drilled well will bring a steady flow of oil to the surface.
The world's top five crude oil-producing countries are:
Saudi Arabia
Russia
United States
Iran
China
Over one-fourth of the crude oil produced in the United States is produced offshore in the Gulf of Mexico. The top crude oil-producing states are:
Texas
Alaska
California
Louisiana
Oklahoma
The amount of crude oil produced (domestically) in the United States has been getting smaller each year. However, the use of products made from crude oil has been growing, making it necessary to bring more oil from other countries. About 58 percent of the crude oil and petroleum products used in the United States comes from other countries.
What Fuels Are Made From Crude Oil?
Products Made from a Barrel of Crude Oil
After crude oil is removed from the ground, it is sent to a refinery by pipeline, ship or barge. At a refinery, different parts of the crude oil are separated into useable petroleum products. Crude oil is measured in barrels (abbreviated "bbls"). A 42-U.S. gallon barrel of crude oil provides slightly more than 44 gallons of petroleum products. This gain from processing the crude oil is similar to what happens to popcorn, it gets bigger after it is popped.
note: The gain from processing is more than 5%.
One barrel of crude oil, when refined, produces about 20 gallons of finished motor gasoline, and 7 gallons of diesel, as well as other petroleum products. Most of the petroleum products are used to produce energy. For instance, many people across the United States use propane to heat their homes and fuel their cars. Other products made from petroleum include: ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, records, tires, ammonia, and heart valves.
How Does Oil Impact The Environment?
Products from oil (petroleum products) help us do many things. We use them to fuel our airplanes, cars, and trucks, to heat our homes, and to make products like medicines and plastics. Even though petroleum products make life easier - finding, producing, moving, and using them can cause problems for our environment like air and water pollution. Over the years, new technologies and laws have helped to reduce problems related to petroleum products. As with any industry, the government monitors how oil is produced, refined, stored, and sent to market to reduce the impact on the environment. Since 1990, fuels like gasoline and diesel fuel have also been improved so that they produce less pollution when we use them.
Exploring and drilling for oil may disturb land and ocean habitats. New technologies have greatly reduced the number and size of areas disturbed by drilling, sometimes called "footprints." Satellites, global positioning systems, remote sensing devices, and 3-D and 4-D seismic technologies, make it possible to discover oil reserves while drilling fewer wells. Plus, the use of horizontal and directional drilling make it possible for a single well to produce oil from much bigger areas. Today's production footprints are only about one-fourth the size of those 30 years ago, due to the development of movable drilling rigs and smaller "slimhole" drilling rigs. When the oil in a well is gone, the well must be plugged below ground, making it hard to tell that it was ever there. As part of the "rig-to-reefs" program, some old offshore rigs are toppled and left on the sea floor to become artificial reefs that attract fish and other marine life. Within six months to a year after a rig is toppled, it becomes covered with barnacles, coral, sponges, clams, and other sea creatures.
If oil is spilled into rivers or oceans it can harm wildlife.When we talk about "oil spills" people usually think about oil that leaks from ships when they crash. Although this type of spill can cause the biggest shock to wildlife because so much oil is released at one time, only 2 percent of all oil in the sea comes from ship or barge spills. The amount of oil spilled from ships dropped a lot during the 1990's partly because new ships were required to have a "double-hull" lining to protect against spills. While oil spills from ships are the most well-known problem with oil, more oil actually gets into water from natural oil seeps coming from the ocean floor. Or, from leaks that happen when we use petroleum products on land. For example, gasoline that sometimes drips onto the ground when people are filling their gas tanks, motor oil that gets thrown away after an oil change, or fuel that escapes from a leaky storage tank. When it rains, the spilled products get washed into the gutter and eventually go to rivers and the ocean. Another way that oil sometimes gets into water is when fuel is leaked from motorboats and jet skis.
A refinery is a factory where crude oil is processed into petroleum products. Because many different pollutants can escape from refineries into the air, the government monitors refineries and other factories to make sure that they meet environmental standards.
When a leak in a storage tank or pipeline occurs, petroleum products can also get into the ground, and the ground must be cleaned up. To prevent leaks from underground storage tanks, all buried tanks are supposed to be replaced by tanks with a double-lining. This hasn't happened everywhere yet. In some places where gasoline leaked from storage tanks, one of the gasoline ingredients called methyl tertiary butyl ether (MTBE) made its way into local water supplies. Since MTBE made water taste bad and many people were worried about drinking it, a number of states banned the use of MTBE in gasoline, and the refining industry voluntarily moved away from using it when blending reformulated gasoline.
Gasoline is used in cars, diesel fuel is used in trucks, and heating oil is used to heat our homes. When petroleum products are burned as fuel, they give off carbon dioxide, a greenhouse gas that is linked with global warming. The use of petroleum products also gives off pollutants - carbon monoxide, nitrogen oxides, particulate matter, and unburned hydrocarbons - that help form air pollution. Since a lot of air pollution comes from cars and trucks, many environmental laws have been aimed at changing the make-up of gasoline and diesel fuel so that they produce fewer emissions. These "reformulated fuels" are much cleaner-burning than gasoline and diesel fuel were in 1990. In the next few years, the amount of sulfur contained in gasoline and diesel fuel will be reduced dramatically so that they can be used with new, less-polluting engine technology.
Last Revised: May 2008
Sources: Energy Information Administration, Petroleum Supply Monthly 2007, February 2007.
U.S. Department of Energy, Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology, October 1999.
National Academies Press, Oil in the Sea III, Chapter 3, 2003.
Oil was formed from the remains of animals and plants that lived millions of years ago in a marine (water) environment before the dinosaurs. Over the years, the remains were covered by layers of mud. Heat and pressure from these layers helped the remains turn into what we today call crude oil . The word "petroleum" means "rock oil" or "oil from the earth."
Where Do We Get Our Oil?
Crude oil is a smelly, yellow-to-black liquid and is usually found in underground areas called reservoirs. Scientists and engineers explore a chosen area by studying rock samples from the earth. Measurements are taken, and, if the site seems promising, drilling begins. Above the hole, a structure called a 'derrick' is built to house the tools and pipes going into the well. When finished, the drilled well will bring a steady flow of oil to the surface.
The world's top five crude oil-producing countries are:
Saudi Arabia
Russia
United States
Iran
China
Over one-fourth of the crude oil produced in the United States is produced offshore in the Gulf of Mexico. The top crude oil-producing states are:
Texas
Alaska
California
Louisiana
Oklahoma
The amount of crude oil produced (domestically) in the United States has been getting smaller each year. However, the use of products made from crude oil has been growing, making it necessary to bring more oil from other countries. About 58 percent of the crude oil and petroleum products used in the United States comes from other countries.
What Fuels Are Made From Crude Oil?
Products Made from a Barrel of Crude Oil
After crude oil is removed from the ground, it is sent to a refinery by pipeline, ship or barge. At a refinery, different parts of the crude oil are separated into useable petroleum products. Crude oil is measured in barrels (abbreviated "bbls"). A 42-U.S. gallon barrel of crude oil provides slightly more than 44 gallons of petroleum products. This gain from processing the crude oil is similar to what happens to popcorn, it gets bigger after it is popped.
note: The gain from processing is more than 5%.
One barrel of crude oil, when refined, produces about 20 gallons of finished motor gasoline, and 7 gallons of diesel, as well as other petroleum products. Most of the petroleum products are used to produce energy. For instance, many people across the United States use propane to heat their homes and fuel their cars. Other products made from petroleum include: ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, records, tires, ammonia, and heart valves.
How Does Oil Impact The Environment?
Products from oil (petroleum products) help us do many things. We use them to fuel our airplanes, cars, and trucks, to heat our homes, and to make products like medicines and plastics. Even though petroleum products make life easier - finding, producing, moving, and using them can cause problems for our environment like air and water pollution. Over the years, new technologies and laws have helped to reduce problems related to petroleum products. As with any industry, the government monitors how oil is produced, refined, stored, and sent to market to reduce the impact on the environment. Since 1990, fuels like gasoline and diesel fuel have also been improved so that they produce less pollution when we use them.
Exploring and drilling for oil may disturb land and ocean habitats. New technologies have greatly reduced the number and size of areas disturbed by drilling, sometimes called "footprints." Satellites, global positioning systems, remote sensing devices, and 3-D and 4-D seismic technologies, make it possible to discover oil reserves while drilling fewer wells. Plus, the use of horizontal and directional drilling make it possible for a single well to produce oil from much bigger areas. Today's production footprints are only about one-fourth the size of those 30 years ago, due to the development of movable drilling rigs and smaller "slimhole" drilling rigs. When the oil in a well is gone, the well must be plugged below ground, making it hard to tell that it was ever there. As part of the "rig-to-reefs" program, some old offshore rigs are toppled and left on the sea floor to become artificial reefs that attract fish and other marine life. Within six months to a year after a rig is toppled, it becomes covered with barnacles, coral, sponges, clams, and other sea creatures.
If oil is spilled into rivers or oceans it can harm wildlife.When we talk about "oil spills" people usually think about oil that leaks from ships when they crash. Although this type of spill can cause the biggest shock to wildlife because so much oil is released at one time, only 2 percent of all oil in the sea comes from ship or barge spills. The amount of oil spilled from ships dropped a lot during the 1990's partly because new ships were required to have a "double-hull" lining to protect against spills. While oil spills from ships are the most well-known problem with oil, more oil actually gets into water from natural oil seeps coming from the ocean floor. Or, from leaks that happen when we use petroleum products on land. For example, gasoline that sometimes drips onto the ground when people are filling their gas tanks, motor oil that gets thrown away after an oil change, or fuel that escapes from a leaky storage tank. When it rains, the spilled products get washed into the gutter and eventually go to rivers and the ocean. Another way that oil sometimes gets into water is when fuel is leaked from motorboats and jet skis.
A refinery is a factory where crude oil is processed into petroleum products. Because many different pollutants can escape from refineries into the air, the government monitors refineries and other factories to make sure that they meet environmental standards.
When a leak in a storage tank or pipeline occurs, petroleum products can also get into the ground, and the ground must be cleaned up. To prevent leaks from underground storage tanks, all buried tanks are supposed to be replaced by tanks with a double-lining. This hasn't happened everywhere yet. In some places where gasoline leaked from storage tanks, one of the gasoline ingredients called methyl tertiary butyl ether (MTBE) made its way into local water supplies. Since MTBE made water taste bad and many people were worried about drinking it, a number of states banned the use of MTBE in gasoline, and the refining industry voluntarily moved away from using it when blending reformulated gasoline.
Gasoline is used in cars, diesel fuel is used in trucks, and heating oil is used to heat our homes. When petroleum products are burned as fuel, they give off carbon dioxide, a greenhouse gas that is linked with global warming. The use of petroleum products also gives off pollutants - carbon monoxide, nitrogen oxides, particulate matter, and unburned hydrocarbons - that help form air pollution. Since a lot of air pollution comes from cars and trucks, many environmental laws have been aimed at changing the make-up of gasoline and diesel fuel so that they produce fewer emissions. These "reformulated fuels" are much cleaner-burning than gasoline and diesel fuel were in 1990. In the next few years, the amount of sulfur contained in gasoline and diesel fuel will be reduced dramatically so that they can be used with new, less-polluting engine technology.
Last Revised: May 2008
Sources: Energy Information Administration, Petroleum Supply Monthly 2007, February 2007.
U.S. Department of Energy, Environmental Benefits of Advanced Oil and Gas Exploration and Production Technology, October 1999.
National Academies Press, Oil in the Sea III, Chapter 3, 2003.
oil
From Wikipedia, the free encyclopedia
Etymology
Oil is a colloquial term used to refer to certain diverse and unrelated compounds sharing the same physical properties (such as viscosity and a hydrophobic nature), while ignoring related compounds. The compounds found in cooking oil are chemically very similar, almost identical, to those found in butter and very different from those found in diesel fuel, but while diesel is an oil, butter is not. Indeed diesel is once again very similar to natural gas, but gas is certainly not oil. This disparity stems partly from the fact that oils must be liquid at room temperature, and thus only certain liquid chemicals in many unrelated families are recognised, collectively, as 'oil'. Scientists, instead of using the term 'oil', adopt the terms lipids and other terms to denote them instead.
Types of oils
Mineral oil
All oils, with their high carbon and hydrogen content, can be traced back to organic sources or space. Mineral oils, found in porous rocks underground, are no exception, as they were originally the organic material, such as dead plankton, accumulated on the seafloor in geologically ancient times. Through various geochemical processes this material was converted to mineral oil, or petroleum, and its components, such as kerosene, paraffin waxes, gasoline, diesel and such. These are classified as mineral oils as they do not have an organic origin on human timescales, and are instead derived from underground geologic locations, ranging from rocks, to underground traps, to sands.
Other oily substances can also be found in the environment, the most well-known being asphalt, occurring naturally underground or, where there are leaks, in tar pits .
Petroleum and other mineral oils, (specifically labelled as petrochemicals), have become such a crucial resource to human civilization in modern times they are often referred to by the ubiquitous term of 'oil' itself.
Organic oils
Oils are also produced by plants, animals and other organisms through organic processes, and these oils are remarkable in their diversity. Oil is a somewhat vague term to use chemically, and the scientific term for oils, fats, waxes, cholesterol and other oily substances found in living things and their secretions, is lipids.
Lipids, ranging from waxes to steroids, are somewhat hard to characterize, and are united in a group almost solely based on the fact that they all repel, or refuse to dissolve, in water, and are however comfortably miscible in other liquid lipids. They also have a high carbon and hydrogen content, and are considerably lacking in oxygen compared to other organic compounds and minerals.
Etymology
Oil is a colloquial term used to refer to certain diverse and unrelated compounds sharing the same physical properties (such as viscosity and a hydrophobic nature), while ignoring related compounds. The compounds found in cooking oil are chemically very similar, almost identical, to those found in butter and very different from those found in diesel fuel, but while diesel is an oil, butter is not. Indeed diesel is once again very similar to natural gas, but gas is certainly not oil. This disparity stems partly from the fact that oils must be liquid at room temperature, and thus only certain liquid chemicals in many unrelated families are recognised, collectively, as 'oil'. Scientists, instead of using the term 'oil', adopt the terms lipids and other terms to denote them instead.
Types of oils
Mineral oil
All oils, with their high carbon and hydrogen content, can be traced back to organic sources or space. Mineral oils, found in porous rocks underground, are no exception, as they were originally the organic material, such as dead plankton, accumulated on the seafloor in geologically ancient times. Through various geochemical processes this material was converted to mineral oil, or petroleum, and its components, such as kerosene, paraffin waxes, gasoline, diesel and such. These are classified as mineral oils as they do not have an organic origin on human timescales, and are instead derived from underground geologic locations, ranging from rocks, to underground traps, to sands.
Other oily substances can also be found in the environment, the most well-known being asphalt, occurring naturally underground or, where there are leaks, in tar pits .
Petroleum and other mineral oils, (specifically labelled as petrochemicals), have become such a crucial resource to human civilization in modern times they are often referred to by the ubiquitous term of 'oil' itself.
Organic oils
Oils are also produced by plants, animals and other organisms through organic processes, and these oils are remarkable in their diversity. Oil is a somewhat vague term to use chemically, and the scientific term for oils, fats, waxes, cholesterol and other oily substances found in living things and their secretions, is lipids.
Lipids, ranging from waxes to steroids, are somewhat hard to characterize, and are united in a group almost solely based on the fact that they all repel, or refuse to dissolve, in water, and are however comfortably miscible in other liquid lipids. They also have a high carbon and hydrogen content, and are considerably lacking in oxygen compared to other organic compounds and minerals.
oil and the world
We know the oil price has risen over many times. Today the oil price has reach to $ 140 per barrel whereas the early year oil price is only $ 100. Certainly, the great companies like Exxon Mobil, British Petroleum, Total Oil, and Petrobras have get profit over many times from oil sales. On the other hand, the consumer country has deficit budget. Moreover, the countries, which subsidize the oil price, like my country. They have no choice besides raising the oil price.
Today the oil is essential for the economic. Some country like China and India need oil in large quantity. They need more fuel to run their production machine. Meanwhile the politic condition of Middle East is uncertain. Iran has strong commitment to develop their nuke. They have larger oil reserves in the world. In Iraq, the company also threatened by struggler bomb. They could attack oil pipe or oil field anytime. The oil field damage could barrier the oil production so the oil price could rise over many times. Another producer country like Nigeria has bad politic condition too. The government opposite could attack the foreign oil field because they do not like the foreign oil company.
The change of regime could affect the oil prices too. In Bolivia, The foreign company has to improve the contract or they may out. Evo Morales, Bolivia President, force the oil foreign company to give higher return to Bolivia Government. Evo Morales want the fair cooperation with the oil company. In my country, the opposite government desire to improve the contract. The economic experts say that the oil company is not fair because the government just received little money. If many governments ask the fair cooperation, the oil company will get lower income. Certainly, the stock price will decrease.
We can see that the oil price will rise over many times. You could get high dividend too. When you decide to buy energy stock, you must realize that the stock has overvalued now. Since the oil price rise, other investor has bought the stock before. You should check the fundamental of the stock too. You should notice the potential well and the capacity of production. If the company has developed well, you can choose that stock. On the other hand, you should avoid the company, which have large depletion well. They could not raise their production and the stock will decrease soon.
I believe the blue chip company has large well so you do not have to worry. Alternatively, you can construct portfolio to reduce your risk. You should buy variety company stock.
About the Author
Andri Faisal is a financial consultant and live at Indonesia. My Blog http://www.firstinvestor.blogspot.com
Today the oil is essential for the economic. Some country like China and India need oil in large quantity. They need more fuel to run their production machine. Meanwhile the politic condition of Middle East is uncertain. Iran has strong commitment to develop their nuke. They have larger oil reserves in the world. In Iraq, the company also threatened by struggler bomb. They could attack oil pipe or oil field anytime. The oil field damage could barrier the oil production so the oil price could rise over many times. Another producer country like Nigeria has bad politic condition too. The government opposite could attack the foreign oil field because they do not like the foreign oil company.
The change of regime could affect the oil prices too. In Bolivia, The foreign company has to improve the contract or they may out. Evo Morales, Bolivia President, force the oil foreign company to give higher return to Bolivia Government. Evo Morales want the fair cooperation with the oil company. In my country, the opposite government desire to improve the contract. The economic experts say that the oil company is not fair because the government just received little money. If many governments ask the fair cooperation, the oil company will get lower income. Certainly, the stock price will decrease.
We can see that the oil price will rise over many times. You could get high dividend too. When you decide to buy energy stock, you must realize that the stock has overvalued now. Since the oil price rise, other investor has bought the stock before. You should check the fundamental of the stock too. You should notice the potential well and the capacity of production. If the company has developed well, you can choose that stock. On the other hand, you should avoid the company, which have large depletion well. They could not raise their production and the stock will decrease soon.
I believe the blue chip company has large well so you do not have to worry. Alternatively, you can construct portfolio to reduce your risk. You should buy variety company stock.
About the Author
Andri Faisal is a financial consultant and live at Indonesia. My Blog http://www.firstinvestor.blogspot.com
Facing up to peak oil
Published by Steve Piersonon June 16, 2008in economy, labour, national, tax and workers' rights.
Tags: peak oil, petrol.
The Government’s independent report on petrol prices is bit of a sop to be the public, really. The world oil price is driving petrol prices; any efficiencies that could be gained in New Zealand would be small and would not change the upward trend. Nor is a Fuel Watch website like Australia’s going to do anything to bring prices down. Calls by the AA and other organisations for petrol companies to hold off a few days on increases are also pretty useless – the price is going up anyway, why get wound up over whether it happens on Monday or Wednesday? Like governments worldwide, Labour and National have rightly rejected removing fuel tax.
Tinkering on the margins of the price of petrol doesn’t matter. It’s going up and nothing New Zealand does will stop that. We need to acknowledge that the supply of oil is peaking and serious effort needs to go into adapting our economy a world without cheap oil.
So, it was interesting to hear both Helen Clark and John Key mention peak oil in the last few days. This morning on Breakfast, Clark said prices aren’t coming down. “..at some point you reach peak oil supply… but we are changing our behaviour in this country, people are buying small cars, they’re looking for the fuel efficiency label… and taking public transport”. In an interview with Mikey Havoc, Key said “I’m not in the camp that we’re at peak oil” and proposed turning our coal reserves into diesel.
Neither is presenting a strategy to get us through peak oil with minimal pain, but at least Clark acknowledges it is real. National has shown that on this major issue, like so many others, they have no answers to offer and their head firmly in the sand.
I’m looking forward to Labour and the Greens presenting a suite of election policies that keep wages growing, so workers don’t lose out on the increased cost of fuel, and major investment in public transport so kiwis can cut their petrol use.
Tags: peak oil, petrol.
The Government’s independent report on petrol prices is bit of a sop to be the public, really. The world oil price is driving petrol prices; any efficiencies that could be gained in New Zealand would be small and would not change the upward trend. Nor is a Fuel Watch website like Australia’s going to do anything to bring prices down. Calls by the AA and other organisations for petrol companies to hold off a few days on increases are also pretty useless – the price is going up anyway, why get wound up over whether it happens on Monday or Wednesday? Like governments worldwide, Labour and National have rightly rejected removing fuel tax.
Tinkering on the margins of the price of petrol doesn’t matter. It’s going up and nothing New Zealand does will stop that. We need to acknowledge that the supply of oil is peaking and serious effort needs to go into adapting our economy a world without cheap oil.
So, it was interesting to hear both Helen Clark and John Key mention peak oil in the last few days. This morning on Breakfast, Clark said prices aren’t coming down. “..at some point you reach peak oil supply… but we are changing our behaviour in this country, people are buying small cars, they’re looking for the fuel efficiency label… and taking public transport”. In an interview with Mikey Havoc, Key said “I’m not in the camp that we’re at peak oil” and proposed turning our coal reserves into diesel.
Neither is presenting a strategy to get us through peak oil with minimal pain, but at least Clark acknowledges it is real. National has shown that on this major issue, like so many others, they have no answers to offer and their head firmly in the sand.
I’m looking forward to Labour and the Greens presenting a suite of election policies that keep wages growing, so workers don’t lose out on the increased cost of fuel, and major investment in public transport so kiwis can cut their petrol use.
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