Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (65556)	6/27/2005 4:46:53 AM
From: shades	Read Replies (1) \| Respond to of 74559

Industry feels pinch from rising oil prices >By Dan Roberts in New York, Bertrand Benoit in Berlin and David Turner in Tokyo >Published: June 26 2005 22:48 \| Last updated: June 26 2005 22:48 >> Energy prices appear to have reached a tipping point for many industrial users as the hectic pace of energy inflation outstrips the capacity of companies to pass on higher costs to consumers. US, European and Asian stock markets all fell last week as oil reached $60 per barrel and corporate leaders around the world issued a series of high-profile profit warnings. Shares in energy-intensive companies such as manufacturing and transport were hardest hit. Yet even those companies that have previously minimised the pain by passing on price increases to their customers are finding it harder to do so. FedEx, for example, the US delivery group that has been a leading beneficiary of booming global trade, broke its winning streak by warning that this quarter's earnings would be hit by jet fuel costs despite an automatic surcharge for customers. And the metals industry, enjoying its best growth for years, is squeezed between the high cost of energy-related inputs such as electricity and coal and slowing demand from leading customers. Complaints from US industry will have a particular urgency this week as Congress considers an energy bill that many claim should help ease pressure on oil, electricity and natural gas prices. John Engler, president of the National Association of Manufacturers, is leading the lobbying by arguing that current problems will get far worse if policymakers do not respond soon. Andrew Liveris, chief executive of Dow Chemical, is particularly concerned that high energy costs in the US are making its manufacturing industries permanently uncompetitive. “In the past two years, the chemical industry's natural gas costs, alone, have increased by over $10bn at a cost of $50bn in sales lost to foreign competition,” he said. “And, since the first natural gas spike in 2000, more than 100,000 jobs one-tenth of the US chemical industry workforce have disappeared.” But across the Pacific few rival Japanese companies are immune from energy problems either. Asahi Kasei, one of Japan's largest chemical manufacturers, warned its variable costs were increasing by Y3bn ($27.5m) for every Y1,000 per kl rise in the price of naphtha, an oil product. Despite this, it has no plans to reduce the capacity of its plants or move them to China perhaps because many of the same cost pressures exist across Asia. Few companies, wherever they are, can escape rising energy prices entirely, and most will eventually look to pass costs on. Vimal Shah, chief executive officer of Bidco, a Kenyan manufacturer of cooking oils and soaps, has seen its energy and transport costs rise 20 per cent. He says: “You cannot scale back, it's not only our company that is affected, everyone is affected across the board, so in terms of competitiveness we are not better or worse off. Ultimately, it's the consumer who pays, and the consumer is going to have to spend more money.”

To: energyplay who wrote (65556)	6/27/2005 4:52:08 AM
From: shades	Respond to of 74559

10K oil employees would NOT be recalled - this is pure FANTASY by this group - if anything they would find another 10K to go take a bullet for some extra danger pay. 2 of my cousins are there now for that EXTRA money. washingtonpost.com Outcome Grim at Oil War Game Former Officials Fail to Prevent Recession in Mock Energy Crisis By John Mintz Washington Post Staff Writer Friday, June 24, 2005; Page A19 The United States would be all but powerless to protect the American economy in the face of a catastrophic disruption of oil markets, high-level participants in a war game concluded yesterday. The exercise, called "Oil Shockwave" and played out in a Washington hotel ballroom, had real-life former top U.S. officials taking on the role of members of the president's Cabinet convening to respond to escalating energy crises, culminating in $5.32-a-gallon gasoline and a world wobbling into recession. Former CIA director R. James Woolsey and former EPA administrator Carol Browner said the United States needs to reduce dependence on overseas oil. (Michael Williamson - The Washington Post) "The American people are going to pay a terrible price for not having had an energy strategy," said former CIA director Robert M. Gates, who took on the role of national security adviser. Stepping out of character, he added that "the scenarios portrayed were absolutely not alarmist; they're realistic." The exercise began with ethnic unrest in Nigeria, leading to the collapse of the oil industry in that west African nation. Then al Qaeda launched crippling attacks on key energy facilities in Valdez, Alaska, and Saudi Arabia. But the war game's participants -- including former CIA director R. James Woolsey, former Marine Corps commandant Gen. P.X. Kelley and former EPA administrator Carol Browner, soon realized the U.S. government had few options in the short term to prevent an economic crash in this country and worldwide. When the exercise's planners first met last year, oil was in the $40-a-barrel range. As they fantasized where oil prices would be for the war game's start in an imagined late 2005, they said, they set them at $58 but worried they were being absurdly pessimistic. Yesterday, the closing price for a barrel of oil was $59.42. The war game players also referred several times to other real-life events of today. A major feature of the exercise was how China's voracious appetite for oil is driving up world prices, and only yesterday it was announced the Beijing government, in a bold and unprecedented act, is bidding to buy the U.S. oil company Unocal. The exercise was organized by two nonprofit groups that focus on the national security implications of U.S. dependence on foreign oil: the National Commission on Energy Policy and Securing America's Future Energy (SAFE). The scenarios were dreamed up by a team of former oil industry executives and government officials, including Rand Beers, a White House counterterrorism official who quit in 2003 to protest the Iraq war. The underlying situation dramatized in the exercise -- and accepted by most energy analysts -- is that tolerances are so tight between supply and demand, that even small disruptions in the delivery of oil and natural gas can cause cascades of unpleasant developments. The war game contemplated that when oil prices spiked and the Cabinet met to consider its options, it realized it had almost no clout to influence events. The standard response, drawing on the Strategic Petroleum Reserve, was symbolic at best. The president should not give in to Saudi offers that the kingdom would lower prices if he stopped pressing for Saudi democracy, the participants agreed. Within weeks conditions were worsening -- the Valdez oil terminal was on fire, as was a major Saudi oil port, and Western technicians were being killed there. Foreign oil firms soon pulled tens of thousands of workers out of Saudi Arabia. Suddenly lacking technical expertise, Saudi facilities could no longer play their decades-long role of guaranteed "swing" provider of oil in response to disruptions elsewhere. As the global recession deepened, there was no "central banker" of oil to smooth out temporary dislocations. The participants concluded almost unanimously that they must press the president to invest quickly in promising technologies to reduce dependence on overseas oil, such as hybrid cars powered by gasoline and plug-in electricity; and cars that run on fuels derived from prairie grasses, animal waste and other products. They all agreed these projects would take years to yield any benefit but should not wait for the kind of crisis they were dramatizing. "If you want to put a frown on the face of [Saudi] Wahhabis, talk about 100-mile-per-gallon vehicles," Woolsey said. "We don't need a Manhattan Project to do it."

To: energyplay who wrote (65556)	6/28/2005 7:10:58 AM
From: TobagoJack	Read Replies (2) \| Respond to of 74559

EP, <<1) That tariff proposal ? 2) CNOOC - bidding too high ?>> First on 2, too high for what price per barrel? and even more interestingly, is the USD worth anything? Second on 1, the tariff will do the unintended, because if it does get a go, the Chinese/Overseas Chinese-owned companies will flow outward in larger still quantities to do still more change all around. Interestingly, a guy with garment factories in China and one in Mauritius just reported that his factory in Mauritius is staffed with 25% mainland Chinese workers imported on 3 year contract, and the 25% produces 75% of the output and the 75% locals produce 25% of the output. How do folks think the overseas Chinese of SEAsia, consitituting 3-5% of the local population, came to own 90+ % of the economy? Being daunted officialdom dictate? No. Chugs, J